About Us
We, Lanzhou Zhuangyuan Pasture Co., Ltd.* (the “Company”, together with its subsidiaries,
the “Group”) are one of the leading dairy companies in Gansu Province and Qinghai Province in the PRC where our
operations and sales are primarily located and we operate on a vertically integrated business model. Our business model
covers the critical links of the dairy industry value chain, from dairy farming, to manufacturing, and then to marketing and
sales of dairy products. Our dairy farming operations aim to ensure a stable supply of high quality raw milk for our dairy
product manufacturing. We believe our business model allows stringent control over each important process of dairy
production and thereby guarantees the high quality and safety of our dairy products.
* For identification purpose only
Contents
2 Corporate Information
4 Interim Results Highlights
5 Management Discussion and Analysis
27 Other Information
31 Review Report
32 Consolidated Balance Sheet
35 Consolidated Income Statement
36 Consolidated Cash Flow Statement
37 Consolidated Statement of Changes in
Shareholders’ Equity
39 Balance Sheet of the Parent Company
41 Income Statement of the Parent Company
42 Cash Flow Statement of the Parent Company
43 Statement of Changes in Shareholders’ Equity
of the Parent Company
45 Notes to the Financial Statements
INTERIM REPORT 2021 1
Corporate Information
BOARD OF DIRECTORS REMUNERATION AND APPRAISAL
Non-Independent Directors COMMITTEE
Mr. Yao Gexian Mr. Wang Haipeng (Chairman)
Mr. Lian Enzhong Mr. Ma Hongfu
Mr. Zhang Yu Mr. Zhang Yubao
Mr. Yang Yi
Mr. Ma Hongfu NOMINATION COMMITTEE
Ms. Zhang Qianyu Mr. Sun Jian (Chairman)
Mr. Yao Gexian
Independent Directors Mr. Wang Haipeng
Mr. Wang Haipeng
Mr. Zhang Yubao STRATEGY COMMITTEE
Mr. Sun Jian Mr. Yao Gexian (Chairman)
Mr. Zhang Yubao
Supervisors Mr. Xun Jian
Ms. Du Wei
Mr. Wang Fengming AUTHORISED REPRESENTATIVES
Mr. Wang Xuefeng Mr. Ma Hongfu
Ms. Ho Wing Yan (ACG, ACS(PE))
AUDIT COMMITTEE
Mr. Wang Haipeng (Chairman) JOINT COMPANY SECRETARIES
Mr. Zhang Yubao Ms. Zhang Qianyu (Executive Director)
Mr. Sun Jian Ms. Ho Wing Yan (ACG, ACS(PE))
STOCK CODE
1533
PRINCIPAL PLACE OF BUSINESS IN
HONG KONG
Suite 2703, 27/F
Shui On Centre
Nos. 6-8 Harbour Road
Wanchai, Hong Kong
REGISTERED OFFICE
Sanjiaocheng Village
Sanjiaocheng Town
Yuzhong County
Lanzhou, Gansu
PRC
2 LANZHOU ZHUANGYUAN PASTURE CO LTD
Corporate Information
PRINCIPAL PLACE OF BUSINESS AND PRINCIPAL BANK
HEAD OFFICE IN THE PRC Agricultural Development Bank of China,
25th-26th Floors, Block B Yuzhong County Branch
Shanghui Building of Gansu Province No. 19, Tai Bai Road
No. 601, Yanyuan Road Yuzhong County
Chengguan District Lanzhou, Gansu
Lanzhou City, Gansu Province PRC
PRC
AUDITORS
H SHARE REGISTRAR AND TRANSFER WUYIGE Certified Public Accountants LLP
OFFICE 22F., Xueyuan International Tower
Union Registrars Limited No. 1 Zhichun Road
Suites 3301-04, 33/F Haidian District
Two Chinachem Exchange Square Beijing
338 King’s Road
North Point, Hong Kong COMPANY WEBSITE
http://www.lzzhuangyuan.com
LEGAL ADVISOR (AS TO HONG KONG
LAW)
Wan & Tang
23/F, Somptueux Central
52 Wellington Street
Central
Hong Kong
INTERIM REPORT 2021 3
Interim Results Highlights
FINANCIAL HIGHLIGHTS
Results
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Revenue 480,820 324,987
Gross profit 149,560 93,634
Profit for the period attributable to equity shareholders of the Company 22,854 (1,975)
Earnings per share (RMB)(1) 0.10 (0.01)
Revenue increased by 47.95% as compared to the corresponding period in 2020.
Gross profit increased by 59.73% as compared to the corresponding period in 2020.
Profit for the period attributable to equity shareholders of the Company was RMB22,853,790.54 as compared to a
loss of RMB1,975,054.39 for the corresponding period in 2020
(1) The calculation of earnings per share is based on the profit attributable to ordinary equity shareholders of the Company and the
weighted average of ordinary shares in issue during the interim periods.
4 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
BUSINESS OVERVIEW
We are one of the leading dairy companies in Gansu, Shaanxi and Qinghai in the PRC where our operations and sales
are primarily located and we operate on a vertically integrated business model. Our vertically integrated business model
covers the critical links of the dairy industry value chain, from dairy farming, to manufacturing, and then to marketing and
sales of dairy products. Our dairy farming operations aim to ensure a stable supply of high quality raw milk for our dairy
product manufacturing. We owned and operated seven dairy farms as at 30 June 2021. Our strategy is to expand the
herd size of dairy cows in our self-operated dairy farms and existing collectively-operated dairy farms so as to maintain
quality of our raw milk at source to satisfy our dairy product manufacturing needs. We believe our vertically integrated
business model allows stringent control over each important process of dairy production and thereby guarantees the high
quality and safety of our dairy products.
We offer a broad range of dairy products tailored to the needs and taste preferences of different consumer groups. Our
principal products sold to retail consumers, mainly through distributors and sales agents, include (i) liquid milk products,
which comprise pasteurised milk (i.e. fresh milk), sterilised milk, modified milk and yogurt; and (ii) milk beverages. We
place strong emphasis on our product development to continuously develop new products that meet the evolving tastes
and preference of our consumers, which differentiates us from our competitors in the region.
We are a major player in the sales of “Cold Chain Liquid Milk Products” (i.e. liquid milk product(s) that has a short shelf
life between 3 days to 21 days and need to be stored at low temperature of 2 C–6 C, which include pasteurised
milk and yogurt products) in the Gansu, Qinghai and Shaanxi regional markets. We believe that we are well positioned
to compete in the Cold Chain Liquid Milk Products market in Gansu, Shaanxi and Qinghai due to our close proximity to
the local market and our established local distribution network. We plan to continue to expand our cold chain production
capacity and distribution network to increase the sales of Cold Chain Liquid Milk Products in the Gansu, Qinghai and
Shaanxi regional markets and then further expand into other provinces in the northwestern China market.
While focusing on the Cold Chain Liquid Milk Products market, we also leverage on our strong brand recognition in the
regional market to continue to strengthen the sales of our popular modified milk, thereby maintaining our diversified
product offerings. Going forward, we intend to continue our efforts in the sales of our pasteurised milk, fermented milk
and modified milk products that are popular among local customers to maintain our diversified product offerings.
INTERIM REPORT 2021 5
Management Discussion and Analysis
Dairy farming
Number of dairy cows
During the Reporting Period, our biological assets comprised dairy cows. Dairy cows are further
categorised into calves, heifers and milkable cows. The following table sets out the number of our dairy
cows as at 30 June 2021 and 30 June 2020:
At 30 June At 30 June
2021 2020
Heads Heads
Milkable cows 8,840 5,085
Heifers 6,074 7,361
Calves 1,520 1,070
Total 16,434 13,516
Milk yield
We produced approximately 43,387 tonnes of raw milk for the Reporting Period (for the corresponding
period in 2020: approximately 25,426 tonnes), representing a year-on-year increase of approximately
70.64%. Such increase was mainly attributable to a significant increase in the number of milkable cows as
compared with the corresponding period last year.
Our average milk yield per milkable cow per annum was 6.1~10.61 tonnes (during the six months ended
30 June 2020: 6.7~11.5 tonnes).
Dairy products production
China constantly attaches great importance to the revitalisation and development of the dairy industry. In 2018, the
“Opinions on Accelerating the Revitalisation of the Dairy Industry and Ensuring the Quality and Safety of Dairy Products”
( ) was adopted in the executive meeting of the State Council. The
No.1 Central Documents for 2019, 2020 and 2021 all mentioned “Implementing the Revitalisation of the Dairy Industry
Program”. The “14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the
Year 2035 of the People’s Republic of China” ( 2035
) issued on 12 March 2021 clearly stated that “we should secure the supply of important agriculture products
such as grain, cotton, oil, sugar, meat and milk”, navigating the remarkable development of China’s diary industry. On 2
July 2021, the Ministry of Agriculture and Rural Affairs and the Ministry of Finance jointly issued the “Key Policies Toward
Boosting Agriculture and Bringing Benefits to Farmers for 2021” ( 2021 ), in which “promoting the
revitalisation of dairy industry” was explicitly incorporated.
6 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
In order to improve the quality and safety of dairy products and promote the high-quality development of dairy products
industry, the State Administration for Market Supervision issued the “Action Plan for Improving the Quality and Safety of
Dairy Products” ( ) at the end of 2020. With the national strict restrictions on the market
access of dairy products processing industry and the rectification of existing dairy products processing enterprises,
the market concentration of China’s dairy industry will enhance, and a majority of market shares will be seized by large
enterprises with high brand awareness, great strength and remarkable scale benefits. This trend will become more
obvious in the future. The nationwide market shares will be highly occupied by the national tier-1 brands and the regional
market shares will be highly occupied by regional strong brands.
The industrial chain of dairy products manufacturing covers many links which are closely related such as forage, dairy
farming, dairy products processing and end sales, and calls for a high degree of integration. With the narrowing of the
gap between urban and rural per capita disposable income and consumption expenditure level, consumers pay more
attention to healthy meals, and the overall dairy consumption market will continue to grow. In particular, given that
consumers are paying more attention to the safety of milk sources, dairy enterprises will become more competitive in
terms of milk sources.
In the first half of 2021, relying on stable and reliable milk sources and advanced production and processing technology,
the Company consolidated traditional channels and actively explored new retail models. The “reconstruction and
expansion project with daily processing 600 tons of liquid milk” project of the Company (production line number: CEMA-
N032PL01) won the title of National “Quality Milk Engineering Demonstration Factory” ( ) at the end
of June 2021. Ninxia Ruiyuan Pasture Co., Ltd. ( ) (Pasture No.: CEMA-N032DF001), Lanzhou
Ruixing Animal Husbandry Co., Ltd. ( ) (Pasture No.: CEMA-N032DF003) and Gansu Ruijia Animal
Husbandry Co., Ltd. ( ) (Pasture No.: CEMA-N032DF004), which are wholly-owned subsidiaries of
the Company, were awarded the national title of “Demonstration Pasture for High Quality Milk Engineering”, respectively.
In the first half of 2021, the Company achieved operating income of RMB481 million, an increase of 47.95% over the
same period of last year; and the net profit was RMB22.8538 million, an increase of 1,257.12% over the same period
of last year. As of the end of June 2021, the Company had total assets of RMB2,713 million, net assets of RMB1,610
million and asset-liability ratio of 40.65%.
Quality control
Product safety management and quality control are our core values and of paramount importance to our business. We
implement stringent quality control and production safety management measures throughout our production process
from the procurement of feeds, dairy farming, raw milk sourcing and processing to production, packaging, storage and
delivery of our products.
Our quality control system is designed based on the Good Manufacturing Practices (GMPs), the Hazard Analysis and
Critical Control Points (HACCP) and the Sanitation Standard Operating Procedures (SSOPs).
GMPs are the foundation for our milk safety and milk quality program. GMPs are implemented in four main areas of our
dairy processing, specifying control measures in respect of (i) personnel hygiene; (ii) building and facilities; (iii) equipment
and utensils; and (iv) production and process control.
INTERIM REPORT 2021 7
Management Discussion and Analysis
In addition, we have also applied the principles of HACCP in the management of our milk safety. Our HACCP plan
focuses on areas where problems potentially may occur and requires that production facilities be prepared to deal with
problems immediately if they occur. Under our HACCP plan, we conducted a hazard analysis in order to identify any
hazardous biological, chemical or physical properties in raw materials and processing steps. Based on the analysis,
we identify the critical control points and establish monitoring procedures and use the monitoring results to streamline
processes on a continuous basis. As a testament of our efforts in complying with HACCP, our production plants in
Gansu, Shaanxi and Qinghai received the HACCP Certification issued by the China Quality Certification Centre and
Beijing Continental Hengtong Certification Co. Ltd., respectively.
Furthermore, we have also implemented the SSOPs specifying step-by-step procedures needed for processes related
to sanitation. Following the SSOPs, we focus on key sanitation conditions and requirements, such as the safety of
water that comes into contact with dairy products, condition and cleanliness of contact surfaces, prevention of cross-
contamination from insanitary objects to dairy product, protection of dairy products and packaging materials, labelling,
storage, and use of cleaning solutions and pesticides, control of employee health conditions, and exclusion of pests from
the production plant.
Our quality control system is divided into six stages: (i) control over the quality of feeds; (ii) control over the quality of dairy
cows; (iii) control over sourcing and processing of raw milk; (iv) control over raw materials and suppliers; (v) control over
production process; and (vi) control over storage and delivery of finished products.
Brand building
Adhering to the tenet of “Offering Excellent Quality and Creating a Brand of the Times”, the Company offers products
in dozens of varieties under the series of “Zhuangyuan Ranch” ( ), “Shenghu” ( ) and “Dongfang Duoxian
Zhuangyuan” ( ), including pasteurized milk, sterilised milk, modified milk, fermented milk and milk-
containing beverages, etc., in order to meet the needs of different consumer groups. After the Company completed
the copyright registration of its own brand cartoon image at the end of 2020, it launched WeChat stickers and popular
science animation for key products in terms of strengthening consumer engagement, popularised the knowledge of
fresh low-temperature milk and conducted other activities, for which we received significant positive feedback. As the
star product of the Company, “Manor Concentrated Milk” was selected as the most influential product brand in Gansu
Province in the first half of 2021.
8 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
We believe the demand for premium Cold Chain Liquid Milk Products will continue to rise along with the increased
awareness of the importance of nutritional products to the health and well-being of consumers. To capture the increasing
demand for Cold Chain Liquid Milk Products, we plan to continue to rely on our brand advantages to expand our cold
chain distribution network in Gansu, Shaanxi and Qinghai and further in northwestern China.
Financial Overview
Revenue
The following table sets out the breakdown of sales amount, sales volume and average selling price by product types for
the six months ended 30 June 2021 and 2020:
Six months ended 30 June
2021 2020
Average Average
Sales Sales selling Sales Sales selling
amount volume price amount volume price
RMB/ RMB/
RMB’000 Tonne Tonne RMB’000 Tonne Tonne
Liquid Milk Products
Pasteurised Milk 37,673 4,488 8,394 21,273 2,688 7,914
Sterilised Milk 192,284 29,597 6,497 81,433 11,426 7,127
Modified Milk 157,909 17,030 9,272 118,110 13,044 9,055
Fermented Milk 80,808 6,738 11,992 92,082 7,898 11,659
Subtotal 468,674 57,853 8,101 312,899 35,057 8,925
Milk Beverage 2,977 522 5,701 2,310 676 3,417
Other Dairy Products 1,031 38 26,886 2,418 106 22,904
Total 472,682 58,414 8,092 317,627 35,838 8,863
Our revenue increased by 48.82% from RMB317.6 million for the six months ended 30 June 2020 to RMB472.7 million
for the Reporting Period, primarily due to the decline in revenue of the Company in the first half of 2021 compared
with the corresponding period in last year because of at the beginning of 2020, the Company’s sales declined due to
the influence of COVID-19. In the first half of 2021, the Company operated smoothly and the market demand for dairy
products fully recovered.
INTERIM REPORT 2021 9
Management Discussion and Analysis
Gross profit and gross profit margin
The following table sets forth the breakdown of our cost of sales and gross profit by our product types, as well as their
respective gross profit margin after biological assets fair value adjustments, for the periods indicated:
Six months ended 30 June
2021 2020
Gross Gross
Cost of Gross profit Cost of Gross profit
sales Profit margin sales Profit margin
RMB’000 RMB’000 % RMB’000 RMB’000 %
Liquid Milk Products
Pasteurised Milk 23,017 14,657 38.9 13,571 7,702 36.2
Sterilised Milk 145,932 46,351 24.1 67,098 14,335 17.6
Modified Milk 101,812 56,097 35.5 79,612 38,498 32.6
Fermented Milk 52,995 27,813 34.4 64,326 27,756 30.1
Subtotal 323,756 144,918 30.9 224,608 88,291 28.2
Milk Beverage 2,146 832 27.9 1,765 545 23.6
Other Dairy Products 1,396 (365) (35.4) 1,582 837 34.6
Total cost of sales/
Total gross profit/
Overall gross profit margin 327,297 145,385 30.8 227,955 89,672 28.2
Our overall gross profit margin of our dairy products after taking into account biological assets fair value adjustments
was approximately 30.8% for the Reporting Period and approximately 28.2% for the corresponding period in 2020. The
increase in the overall gross profit margin during the Reporting Period was primarily due to the fact that in the first half of
2020, due to the influence of COVID-19, the Company’s products were slow-moving, and the gross profit margin was
reduced due to the marketing policies implemented to promote sales. In 2021, the dairy product consumption market
fully recovered, which was demonstrated by the strong sales of our products.
Gain/loss arising from initial recognition of agricultural produce at fair value less the cost of sales at the point
of harvest
Our gain arising from initial recognition of agricultural produce at fair value less the cost of sales at the point of
harvest increase from the loss of approximately RMB5.5 million for the six months ended 30 June 2020 to the gain of
approximately RMB1.4 million for the Reporting Period. The increase in gains during the Reporting Period was primarily
due to the increase in the price of raw milk as compared with the corresponding period of last year.
10 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
Gain/loss arising from changes in fair value less the cost of sales of biological assets
We recorded loss arising from changes in fair value less the selling expenses of biological assets amounting to
approximately RMB6.3 million for the Reporting Period, compared to the gain of approximately RMB0.3 million for the
corresponding period in 2020, and the change from gain into loss was primarily attributable to the feeding cost of cow as
a result of the impact of market conditions.
Other income
Other income mainly includes amortization of deferred income and government grants received in the current period.
Government grants are generally obtained from our agricultural activities. For the six months ended 30 June 2021 and
2020, other income recognized by us amounted to approximately RMB1.8 million and approximately RMB2.9 million,
respectively.
Operating expenses
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Selling expenses 40,906 30,767
Administrative expenses 48,265 34,431
Total operating expenses 89,171 65,198
Our operating expenses increased from approximately RMB65.2 million for the six months ended 30 June 2020 to
approximately RMB89.2 million for the Reporting Period.
The increase in selling and distribution expenses during the Reporting Period was mainly due to the fact that in the first
half of 2021, compared with the corresponding period of last year, the dairy product consumption market fully recovered,
and the sales expenses of the Company have increased with the increase of sales volume.
The increase in administration expenses was mainly due to the fact that, compared with the corresponding period of last
year, Ruijia Animal Husbandry ( ), one of manors of the Company, added new management personnel due to
the construction, promotion and the continuous production of dairy cows, and compared with the corresponding period
of last year, the Company no longer enjoyed the social insurance relief policy that was implemented by the government in
response to the influence of COVID-19.
Financial expenses
Our net finance costs decreased by approximately 43.94% from approximately RMB16.5 million for the six months ended
30 June 2020 to approximately RMB9.2 million for the Reporting Period, primarily due to the decrease in the amount of
loans as compared with the corresponding period of last year.
INTERIM REPORT 2021 11
Management Discussion and Analysis
Current ratio
As at 30 June 2021, our current ratio (current assets/current liabilities) was approximately 0.83 compared to
approximately 0.95 as at 31 December 2020.
Liquidity and capital resources
During the Reporting Period, we financed our operations primarily through net cash inflows from our daily operating
activities. As at 30 June 2021 and 31 December 2020, we had approximately RMB310.0 million and approximately
RMB631.6 million in cash and cash equivalents, respectively, which was mainly denominated in Renminbi and primarily
consisted of cash on hand and bank deposits.
Capital expenditures
We had capital expenditures of approximately RMB264.9 million and approximately RMB123.3 million for the six months
ended 30 June 2021 and 2020, respectively, which were primarily used in purchasing property, plant and equipment, and
procuring dairy cows.
Gearing ratio
As at 30 June 2021, the Company had a gearing ratio of approximately 40.65% (as at 31 December 2020: approximately
48.33%).
Working capital
As at 30 June 2021, we had net current assets of approximately RMB(118.9) million (31 December 2020: net current
assets of approximately RMB52.3 million).
Indebtedness
During the Reporting Period, our borrowings were denominated in Renminbi. As at 30 June 2021, our outstanding short-
term bank loans, including long-term loans due within one year, amounted to approximately RMB220.5 million at interest
rates ranging from 5.00% to 6.09% per annum. As at 30 June 2021, our outstanding long-term bank loans, net of
amount due within one year, amounted to approximately RMB303.8 million at interest rates ranging from 4.15% to 5.70%
per annum.
The management believes that the existing financing resources will be sufficient to meet current operations, current and
future expansion plans and, if necessary, we will be able to obtain additional financing with favorable terms. There is no
material effect of seasonality on our borrowing requirements.
For the Reporting Period, we were not subject to significant exposure to interest rate risk. Hence, no financial instrument
for hedging was employed.
Contingent liabilities
As at 30 June 2021 and 31 December 2020, there were no significant contingent liabilities.
12 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
Foreign exchange risk and pledge of assets
The Group operates in the PRC with most of its transactions denominated and settled in RMB. The Group’s assets
and liabilities, and transactions arising from its operations do not expose the Group to material foreign exchange risk as
the Group’s assets and liabilities as at 30 June 2021 were denominated in the respective Group companies’ functional
currencies.
For the Reporting Period, we were not subject to significant exposure to interest rate risk. Hence, no financial instrument
for hedging was employed. The management will continue to monitor foreign currency risk and adopt prudent measures
as and when appropriate.
The book value of our restricted assets was approximately RMB610.9 million as at 30 June 2021 (31 December
2020: approximately RMB787.4 million). The net book value of the restricted assets are as follow: (1) monetary capital:
approximately RMB134.0 million (31 December 2020: approximately RMB215.2 million); (2) fixed assets: approximately
RMB363.6 million (31 December 2020: approximately RMB454.8 million); (3) intangible assets: approximately RMB78.0
million (31 December 2020: approximately RMB82.2 million); and (4) long-term equity investments: approximately
RMB35.3 million (31 December 2020: approximately RMB35.3 million).
Capital structure
Save as disclosed in this report, there was no material change in the capital structure of the Group during the Reporting
Period. The capital of the Group only comprises ordinary shares.
Significant investments
The Company was established in April 2000. Its production base located in Sanjiaocheng, Yuzhong County, Lanzhou
City, Gansu Province was built according to the then market size, consumer demand and industry characteristics, and
was completed and put into production in 2003. After nearly 20 years, some workshops look outdated with some
equipment getting obsolete. Due to limited plant area and fixed plant layout, the Company’s dairy processing base in
Yuzhong County is now unable to fully meet the growing demand for product diversification in the dairy consumer market
and introduction of advanced dairy production processes such as filling technology.
In view of its future long-term planning and sustainable development, the Company started the “reconstruction and
expansion project with daily processing 600 tons of liquid milk” in 2018. This “reconstruction and expansion project
with daily processing 600 tons of liquid milk” will be built on the land where the existing production and processing base
is locate with a site area of 35.70 acres and 113.82 acres of newly purchased land in 2018, that is, a total of 149.52
acres of land. An experienced and qualified engineering design institute was engaged to provide a rational and modern
plan for overall layout for investment and construction. Existing obsolete production equipment with low utilization rate,
long service life and outdated production technology will be demised. At the same time, new production lines will be
purchased and built to increase the Company’s production capacity. The capacity and output realized after the project is
completed and put into operation will include the existing capacity and output of the Yuzhong processing base with some
enhancement.
The Company invested approximately RMB14.5 million in 2018, approximately RMB316.7 million in 2019. As of 31
December 2019, the accumulated investment was approximately RMB 331.2 million, accounting for 12.50% of the total
assets of the Company of RMB 3,080.6 million as at 31 December 2020.
INTERIM REPORT 2021 13
Management Discussion and Analysis
The completion and acceptance work for the “reconstruction and expansion project with daily processing 600 tons of
liquid milk” has been completed during the Reporting Period, and the Company has obtained the Housing Construction
Project and Municipal infrastructure Project Completion Acceptance Recording Form (No. 17 2020) (
2020 17 ), issued by the Housing and Urban-rural Development Bureau of
Yuzhong County. The operation of this project will help optimize the production process and enrich the product structure;
improve production efficiency and reduce labor costs; improve production standards and strengthen product quality
control; and integrate the Group’s production resources for long-term development.
Currently, the Company is a professional dairy production enterprise integrating dairy farming, technology research and
development, dairy processing and sales, and has formed a whole industrial chain management mode in which we
process and sell liquid milk products with milk source from our own pasture as the main raw milk. The reliability of raw
milk quality has been highly valued by the industry and consumers, and has become an important embodiment of our
core competitiveness in the industry. In order to further strengthen the control of product quality at source, the Company
invested in the construction of “Recycling Industrial Park Project of a Dairy Farm with 10,000 Dairy Cows in Jinchuan
District” ( ) in Shuangwan Town, Jinchuan District, Jinchang City, Gansu Province
from 2019. As of 31 December 2020, the Company has made aggregate investments of RMB200.4 million in the project,
accounting for 6.51% of its total assets of RMB3,080.6 million as at 31 December 2020. As of 30 June 2021, the
Company has made aggregate investments of RMB268.3 million in the project, accounting for 9.89% of its total assets
of RMB2,712.7 million as at 30 June 2021.
Continuing Connected Transaction — Master Purchase Agreement
On 9 February 2021, the Company entered into a master purchase agreement (the “Master Purchase Agreement”)
with Gansu Nongken Tianmu Dairy Company Limited* (“Tianmu Dairy”, a limited
company established under the laws of the PRC and is a fellow subsidiary of the holding company of Gansu Nongken
Asset Operation Company Limited* (“Gansu Nongken Asset”), a substantial
shareholder of the Company) in relation to the possible purchase of raw milk from Tianmu Dairy for the year ending 31
December 2021.
As Tianmu Dairy is a fellow subsidiary of Gansu Nongken Asset, a substantial shareholder of the Company, Tianmu
Dairy is regarded as an associate of a connected person of the Company under Chapter 14A of the Listing Rules. The
transactions contemplated under the Master Purchase Agreement constitute continuing connected transactions of the
Company under Chapter 14A of the Listing Rules. Therefore, the entering into of the Master Purchase Agreement is
subject to the reporting, announcement and the Company’s independent shareholders’ approval requirements under
Chapter 14A of the Listing Rules.
The entering into the Master Purchase Agreement will contribute to the business of the Group by providing a stable
source of quality raw milk required in the production process and operations of the Group. As a result of the increase in
production, the Group’s revenue and net profit is expected to increase.
* For identification purpose only
14 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
The Company considers that the entering into of the Master Purchase Agreement will allow the Group to secure a stable
source of quality raw milk so as to achieve the increase in production capacity brought by the expansion of its production
facilities for the processing of 600 tonnes of liquid milk per day in Sanjiaocheng Village, Sanjiaocheng Town, Yuzhong
County, Lanzhou, Gansu in 2018.
The Master Purchase Agreement has been approved by the Shareholders of the Company (the “Shareholders”) at the
extraordinary general meeting of the Company held on 18 March 2021. In the first half of 2021, the amount of related
party transactions was RMB27.66 million, which was within the cap of RMB200,000,000 as approved by the general
meeting.
Details of the entering into the Master Purchase Agreement are set out in the announcement of the Company dated 15
January 2021 and 9 February 2021, and the circular of the Company dated 3 March 2021.
Material acquisitions and disposals of subsidiaries, associates and joint ventures
Save as disclosed herein, the Group had no material acquisitions and disposals of subsidiaries, associates and joint
ventures during the Reporting Period.
Details of future plans for material investments or capital assets and expected sources of funding
As at 30 June 2021, the Company had no future plans for material investments or capital assets.
Use of proceeds from the A Share Listing
Basic information on the proceeds raised from the A Shares Listing
As approved by the “Approval for the initial public offering of Shares of Lanzhou Zhuangyuan Pasture Co., Ltd.* (
) 2017 No. 1779” issued by the CSRC on 29 September 2017, the Company carried out the public
offering of 46,840,000 A Shares of RMB1 each via offline placing through price consultations to qualified investors and
online issuance at an issue price of RMB7.46 per share to public investors who hold the market value of non-restricted
A Shares circulated in the Shenzhen market (“A Shares”) on 31 October 2017 (the “A Shares Listing”). The total sum
of funds raised was RMB349,426,400 and the total net proceeds after deduction of the related issuance expenses of
RMB39,922,700 (exclusive of value-added taxes) amounted to RMB309,503,700 (the “Raised Fund”).
The funds utilized during the Reporting Period were RMB278,100.00 the temporary supplemental liquidities were
RMB50,000,000 and the interest income of the special account for funds raised after deducting handling charges for the
Reporting Period was RMB27,507.37. As of 30 June 2021, the Company had cumulatively utilized RMB260,926,230.25
out of the funds raised from the A Shares Listing. The cumulative net interest income from raised funds deducted handling
fees is RMB1,501,548.01. The balance of the Raised Fund deposited in the special account was RMB50,079,017.76,
and the balance of the Raised Fund unutilized was RMB50,079,017.76.
* For identification purpose only
INTERIM REPORT 2021 15
Management Discussion and Analysis
We set out below the status of the application of the net proceeds from the A Shares Listing to 30 June 2021:
Table of actual use of raised funds from the public offering of A Shares in 2017
(RMB’000)
Total raised fund 309,504 Total raised funds invested during 278
this year
Total raised funds which changed purpose during Total raised funds invested 260,926
the reporting period accumulatively
Total accumulatively raised funds which changed 256,104
purpose
The proportion of total accumulatively raised 83.00%
funds which changed purpose
Whether Investment Whether
the project Total Accumulated progress as of The date when there are
has been committed Total The amount amount invested the end of the project The benefit Whether it significant
changed investment investment invested during as of the end of the Reporting reaches a realized during has achieved changes on
Committed investment projects (including of raised after the Reporting the Reporting Period (%) redetermined the Reporting expected the feasibility
and use of excessive raised funds some changes) funds adjustment(1) Period Period(2) (3)=(2)/(1) usable state Period benefit of the project
Committed investment projects
1. The project of cult vation and Yes 260,193 53,400 53,400 100.00% N/A N/A N/A No
construction of 10,000 i ported
good dairy cows
2. The construction project of self- Yes 49,310 N/A N/A N/A Yes
service mi k sel i g machines and
anci l ry faci i y
3. The acquis t on of 82% equity 150,000 150,000 100.00% 2018 N/A N/A No
i terest of Xi’an Dongfang Dairy
4. Recycl ng Industria Park Project of a 106,104 278 57,526 54.22% N/A N/A N/A No
Dairy Farm for 10,000 Dairy Cows (Note)
i Jinchuan District
Total 309,504 309,504 278 260,926 84.30%
Sub-total of committed investment
projects 309,504 309,504 278 260,926 84.30%
Use of excessive raised funds
No
Repayment of bank l an (if any)
Supplemental l quid t es (if any)
Sub-total of use of excessive raised
funds
Total 309,504 309,504 278 260,926 84.30%
Note: The balance is expected to be fully utilized by the end of 2022.
16 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
USE OF PROCEEDS FROM NON-PUBLIC ISSUANCE OF A SHARES UNDER
SPECIFIC MANDATE
On 5 December 2019, the Board approved the proposed non-public issuance of A Shares. The proposed non-public
issuance of A Shares has been approved by the Shareholders at the extraordinary general meeting and the class
meetings of the Company held on 17 January 2020.
On 3 April 2020, the Board approved the adjustments to non-public issuance of A Shares. The Shareholders approved
the adjustments to non-public issuance of A Shares at the extraordinary general meeting and the class meetings of the
Company held on 25 May 2020.
On 10 August 2020, the application for the non-public issuance was approved at the Issuance Examination Committee’s
119th meeting in 2020 by voting and the Issuance Examination Committee had no audit opinion. On 25 August 2020, the
Company received the Reply on Approval of Non-public Issuance of Shares by Lanzhou Zhuangyuan Pasture Co., Ltd.*
(Zheng Jian Xu Ke 2020 No. 1864) ( 2020
1864 ) issued by China Securities Regulatory Commission.
On 25 December 2020, an aggregate of 43,000,000 A Shares was allotted and issued (the “Non-public Issuance”) to 4
subscribers at the subscription price of RMB8.78 per A Share.
Number of
A Shares
Subscriber subscribed Subscription price
Gansu Nongken Asset 37,931,665 RMB8.78 per A Share
Xie Kai ( ) 2,050,113 RMB8.78 per A Share
Gao Aiping ( ) 1,651,480 RMB8.78 per A Share
Su Guimin ( ) 1,366,742 RMB8.78 per A Share
Total 43,000,000
Each of Xie Kai, Gao Aiping and Su Guimin is a merchant. Gansu Nongken Asset is a company established in the PRC
with limited liability and is principally engaged in equity investment and enterprise equity custody; project investment and
investment management; enterprise asset reorganization, economic information, investment, financial advisory service. To
the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of Xie Kai,
Gao Aiping, Su Guimin and Gansu Nongken Asset and its ultimate beneficial owner was a third party independent of the
Company and its connected persons prior to the Non-public Issuance.
* For identification purpose only
INTERIM REPORT 2021 17
Management Discussion and Analysis
The subscription price of RMB8.78 per subscription A Share represents (i) no less than 80% of the average trading
price of the A Share for the 20 trading days preceding the price determination date, i.e. not be less than RMB8.78 per A
Share (the average trading price of the A Shares of the Company for the 20 trading days prior to the price determination
date = total trading amount of shares for the 20 trading days prior to the price determination date/total trading volume
of A Shares for the 20 trading days prior to the price determination date); (ii) a discount of approximately 21.5% to the
closing price of RMB11.18 per A Share as quoted on The Shenzhen Stock Exchange on the price determination date
of the Non-public Issuance, i.e. 20 November 2020, the first day of the issue period of the Non-public Issuance of the
Company; and (iii) a discount of approximately 15.8% to the closing price of RMB10.43 per A Share as quoted on The
Shenzhen Stock Exchange on the day before the listing of A Share.
The aggregate gross proceeds of the Non-public Issuance were approximately RMB377,540,000. The aggregate net
proceeds of the Non-public Issuance, after the deduction of related expenses, were approximately RMB368,878,786.79.
The net price of each A Share allotted and issued under the Non-public Issuance were approximately RMB8.78.
The Company intends to apply the net proceeds of the Non-public Issuance for the purpose to the repayment of bank
loan and finance the investment project, which can further enhance the supply ratio of the Company’s own raw milk,
strengthen the product quality control, address the Company’s increasing demand for raw milk in the future, optimize
the product mix, improve its profitability, enhance the Company’s core competitiveness and promote the Company’s
sustainable development, which is in the interests of the Company and all Shareholders.
Please refer to the circulars of the Company dated 31 December 2019 and 6 April 2020, and the announcements of the
Company dated 5 November 2020 and 22 December 2020 for details of the Non-public Issuance.
Information about the use of raised funds from the non-public offering of A Shares in 2020:
As approved by the “Reply on Approval of Non-public Issuance of Shares by Lanzhou Zhuangyuan Pasture Co., Ltd.
(Zheng Jian Xu Ke 2020 No. 1864) ( 2020
1864 )” issued by the CSRC on 18 August 2020, the Company carried out the offering of 43,000,000 A Shares of
RMB1 each through non-public issuance method to specific investors at an issue price of RMB8.78 per share. The total
sum of funds raised was RMB377,540,000 and the total net proceeds after deduction of the related issuance expenses
of RMB8,661,213.21 (exclusive of value-added taxes) amounted to RMB368,878,786.79. As of 30 November 2020, the
Company has received the monetary funds raised through the public offering of A Shares. Such proceeds were verified
by WUYIGE Certified Public Accountants LLP which accordingly issued its capital verification reports (Da Xin Yan Zi 2020
No. 35-00010). The Company deposited the proceeds in a special account for management purposes.
The funds utilized during the Reporting Period were RMB82,314,762.32, the temporary supplemental liquidities were
RMB100,000,000.00 and the interest income of the special account for funds raised after deducting handling charges
for the Reporting Period was RMB1,130,411.24. As of 30 June 2021, the Company had utilized RMB223,023,079.76
out of the funds raised from the A Shares Listing. The net interest income from the Raised Funds after deduction of
handling charges was RMB1,130,411.24. The balance of the Raised Funds deposited in the special account was
RMB46,986,118.27, and the balance of the Raised Funds unutilized was RMB146,986,118.27.
18 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
Table of actual use of raised funds from the non-public offering of A Shares in 2020
Unit: RMB’000
Total raised funds Total raised funds invested during the
368,879 Reporting Period 82,315
Total raised funds which changed purpose Total raised funds invested accumulatively
during the reporting period 223,023
Total accumulatively raised funds which
changed purpose
The proportion of total accumulatively raised
funds which changed purpose
Whether
the project Investment
has been Total Accumulated progress as of The date when Whether there
changed committed Total The amount amount invested the end of the project The benefit Whether it are significant
(including investment investment invested during as of the end of the Reporting reaches realized during has achieved changes on the
Committed investment projects some of raised after the Reporting the Reporting Period (%) a predetermined the Reporting expected feasibility of the
and use of excessive raised funds changes) funds adjustment(1) Period Period(2) (3)=(2)/(1) usable state Period benefit project
Committed investment projects
Recycl ng Industria Park Project of a No 328,879 328,879 82,315 223,023 67.81% N/A N/A N/A No
Dairy Farm for 10,000 Dairy Cows (Note)
i Jinchuan District
Repayment of bank l an No 40,000 40,000 40,000 100.00%
Sub-total of committed investment 368,879 368,879 82,315 263,023 71.30%
projects
Use of excessive raised funds
No
Repayment of bank l an (if any)
Supplemental l quid t es (if any)
Sub-total of use of excessive raised
funds
Total 368,879 368,879 82,315 263,023 71.30%
Note: The balance is expected to be fully utilized by the end of 2023.
INTERIM REPORT 2021 19
Management Discussion and Analysis
Human Resources
We had 1,318 employees in Mainland China and Hong Kong as at 30 June 2021 (31 December 2020: 1,268 employees).
During the Reporting Period, total staff costs, including the portion accounted for in the profit and loss statement and
capitalised to assets but excluding independent non-executive directors’ fees, were approximately RMB46.2 million (the
corresponding period in 2020: approximately RMB32.4 million).
Our remuneration policies aim to attract, retain and incentivize talents to ensure competency of our team in implementing
our business strategies and to maximize shareholder value. We will regularly review our remuneration policies and
employee benefits with reference to market practices and performance of individual employees.
For the employees in the PRC, we have participated in defined contribution retirement plans and social insurance plans
organised by the relevant local governmental authorities.
The Restricted Shares Incentive Scheme for 2019 (draft) was considered and approved at the meeting of the Board
held by the Company on 11 March 2019; the general meeting was held on 23 May 2019 to consider and approve the
Restricted Shares Incentive Scheme for 2019 (draft); the meeting of the Board was held on 21 June 2019 to consider
and approve “first granting 3,341,000 restricted shares to the 84 incentive targets after adjustments” ; “Application
Materials for Completion of Registration of Equity Incentive Grant” was submitted to Shenzhen Stock Exchange and
China Securities Depository and Clearing Corporation Limited on 27 June 2019; the registration of restricted shares grant
was completed on 12 July 2019. The Resolution on the Repurchase and Cancellation of All Restricted Shares in the First
Release of Locked Period under the 2019 Restricted Shares Incentive Scheme was considered and approved at the
Board meeting and general meeting convened by the Company on 15 January 2021 and 18 March 2021 respectively
due to the Company’s performance assessment failed to meet the releasing conditions in the First Release of Locked
Period under the Restricted Shares Incentive Scheme, allowing the Company to repurchase and cancel a total of
874,728 Restricted Shares held by 77 Incentive Participants involved, and also allowing the Company to repurchase and
cancel all of the 424,840 Restricted Shares granted but restrictions not yet released from the 7 Incentive Participants who
have resigned. The procedures for the repurchase and cancellation of Restricted Shares were completed on 16 June
2021.
Corporate Social Responsibility
We believe that social responsibility is the foundation for the development of an enterprise. In our opinion, taking part
in industrial poverty alleviation and social welfare activities is an important method for an enterprise to give back to the
society, as well as a key way for an enterprise to achieve mutual development and advancement with the society.
20 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
FUTURE OUTLOOK
1. The Company will continue to take the production of quality dairy products as the goal on the basis of a complete
set of production facilities and processes such as large-scale concentrated farming, concentrated unified milking,
specialized storage, transportation and processing of fresh milk and further improve the level of dairy farming
through production demonstration and technology radiation; we will strengthen the cooperation with external
professional dairy farming institutions with large farming scale, rich farming experience and high product quality
to form balanced, complementary and diversified supply sources of fresh and raw milk while strengthening the
construction of our own milk source base. We will continue to ensure the effective connection of safe and reliable
milk source with dairy product processing link to achieve the security and controllability of product quality during
the whole process.
2. We will continue to strengthen the study on the consumption behaviors of dairy products consumers within
the region, perfect the formula of products and optimization configuration of processes and equipment on a
consumer-oriented basis, make the products to own targeted and characteristic advantages, and establish a
system of consumption analysis triggering research and development, research and development satisfying
consumption demands under different scenarios and maintaining the loyalty of consumers to the brand with
upgrading products.
3. We will further deepen and penetrate sales channels, increase the sinking efforts of sales channels, actively
expand the markets of third-tier cities and rural areas and vigorously promote the in-depth development of
channels, so as to consolidate and increase market share and enhance market occupancy rate.
4. The Company will continue to conduct various forms of on-the-job trainings, improve work skills, enhance work
efficiency and tamp the construction of the middle-level team. The Company will strengthen the recruitment of
professional talents with market qualifications or excellent skills and give full development space and positive
incentive policies to ensure the stability of the talent team and the echelon construction of the talent reserve and
enhance the core competitiveness of the Company.
IMPORTANT EVENTS THAT HAVE OCCURRED SINCE 30 JUNE 2021
Continuing Connected Transaction — Silage Purchase Agreement
On 19 August 2021, the Company entered into a silage purchase agreement (the “Silage Purchase Agreement”) with
Gansu Nongken Jinchang Farm Company Limited* (“Nongken Jinchang”, a limited
liability company established under the laws of the PRC) in relation to the possible purchase of silage from Nongken
Jinchang for the year ending 31 December 2021.
* For identification purpose only
INTERIM REPORT 2021 21
Management Discussion and Analysis
Nongken Jinchang is a wholly owned subsidiary of Gansu Nongken Group Limited Liability Company*
, “Gansu Nongken Group”). Gansu Nongken Group is the controlling Shareholder (as defined under
the Listing Rules) and is interested in 68,826,365 A Shares, representing approximately 34.89% and 29.62% of (i) the
total issued A Shares; and (ii) the total issued A Shares and H Shares, respectively. Accordingly, Nongken Jinchang is an
associate of a connected person of the Company under Chapter 14A of the Listing Rules. The transactions contemplated
under the Silage Purchase Agreement constitute continuing connected transactions of the Company under Chapter 14A
of the Listing Rules.
Since the completion of the expansion project for processing 600 tons of liquid milk per day of the Company pursuant to
the Company’s announcement dated 15 May 2020, the production capacity of the Group’s milk products has increased
and the demand for silage, which is one of the Group’s main raw materials (i.e. feeds for its dairy cows) used in the
Group’s production, has increased accordingly. In addition, pursuant to one of the overall arrangements made by Gansu
Nongken Group which intended to consolidate the operations of dairy farms for higher efficiency, transportation distance
of corn silage and alfalfa and other forage grass should be shortened, effectively reducing the breeding cost, improve
the large-scale breeding efficiency, and promote the high-quality development of green and circular agricultural industry.
The transactions contemplated under the Silage Purchase Agreement will contribute to the business of the Group by
providing a stable and relatively nearby source of silage required in the production process and operations of the Group.
Details of the entering into the Silage Purchase Agreement are set out in the announcement of the Company dated 19
August 2021.
Save as disclosed herein, subsequent to 30 June 2021, there had been no significant change in our principal business,
pricing policy and costs structure.
CORPORATE GOVERNANCE
We are committed to ensuring high standards of corporate governance at all times and in all aspects of our operations.
The Board believes that good corporate governance is an essential element in enhancing the confidence of current and
potential shareholders, investors, employees, business partners and the community as a whole. The Board strives to
adhere to the principles of corporate governance and has further strengthened and improved its internal controls in order
to undertake sound corporate governance code provisions and practices to meet the relevant statutory and commercial
standards by focusing on internal control, fair disclosure and accountability to all shareholders.
Save as disclosed herein, the Company has complied with all applicable Code Provisions of the Corporate Governance
Code (the “CG Code”) and Corporate Governance Report as set out in Appendix 14 to the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) during the Reporting Period, except the
following deviation.
CODE PROVISION A.2.1
According to code provision A.2.1 of the CG Code, the roles of chairman and chief executive should be separate and
should not be performed by the same individual. The division of responsibilities between the chairman and chief executive
should be clearly established and set out in writing.
* For identification purpose only
22 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
Mr. Ma Hongfu concurrently held the position of the chairman of the Board and the general manager of the Company, a
position equivalent to a chief executive in the PRC, until 29 June 2021. This deviates from code provision A.2.1 of the CG
Code as set out in Appendix 14 of the Listing Rules which requires that the roles of chairman and chief executive should
be separated and should not be performed by the same individual.
The Board believed the vesting of the roles of both the chairman of the Board and the general manager of the Company
in the same person can help to maintain the continuity of the policies and the stability of the operations of the Company.
The Company has been in compliance with code provision A.2.1 of the CG Code when Mr. Ma Hongfu ceased to act as
the chairman of the Board and Mr. Yao Gexian was appointed as the chairman of the Board on 29 June 2021.
SECURITIES TRANSACTIONS BY DIRECTORS AND SUPERVISORS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”)
as set out in Appendix 10 to the Listing Rules regarding directors’ securities transactions. Having made specific enquiry
of all Directors and the supervisors of the Company (the “Supervisors”), all the Directors and Supervisors confirm that
they have complied with the required standards of the Model Code during the Reporting Period, save and except as
follows:
As disclosed in the overseas regulatory announcement of the Company dated 12 March 2021, the shareholder Mr. Ma
Hongfu (“Mr. Ma”) pledged (the “Share Pledge”) 30,000,000 of his A shares to Gansu Jinkong Investment Co. Ltd.
, “Gansu Jinkong”) for the purpose of third party financing guarantee.
The Board is aware that as at the date of the Share Pledge (i.e. 2 March 2021), the Directors were under the Company’s
black-out period under Provision A.3(a)(i) of Appendix 10 to the Listing Rules. In addition, it is noted that the Share Pledge
was not done under exceptional circumstances. Hence, the Board considers that Mr. Ma, albeit inadvertently, did not
comply with the dealing prohibition as the Share Pledge occurred during the black-out period.
The Company has taken, amongst others, the following remedial actions to improve its internal control system to ensure
compliance of the Model Code by the Company and its directors and supervisors and prevent similar incidents in the
future:
(1) reminding all directors and supervisors of their obligations in relation to dealings in securities as set out in the
securities dealing code adopted by the Company (following the Model Code);
(2) recommending all directors and supervisors to circulate a set of comprehensive training materials;
(3) circulating the template of a notification letter which would be required to be submitted by the director and
supervisor to the Company at least 5 working days before any proposed dealing of the securities of the Company;
and
(4) planning to organise training sessions in the near future for all directors and senior management of the Company.
INTERIM REPORT 2021 23
Management Discussion and Analysis
PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY
On 18 March 2021, the Company convened the first extraordinary general meeting in 2021, at which the Proposal on the
Repurchase and Cancellation of All Restricted Shares in the First Release of Locked Period under the 2019 Restricted
Shares Incentive Scheme was considered and approved, allowing the Company to repurchase and cancel a total of
874,728 Restricted Shares held by 77 Incentive Participants involved in the First Release of Locked Period due to the
Company’s performance assessment failed to meet the requirements under the Restricted Shares Incentive Scheme,
and allowing the Company to repurchase and cancel 424,840 Restricted Shares granted but restrictions not yet released
from the 7 Incentive Participants who have resigned.
During the Reporting Period, 1,299,568 A Shares were repurchased on the Shenzhen Stock Exchange and subsequently
cancelled by the Company. The summary details of the repurchases are as follows:
Price per A Share
Number
of A
Shares Total price
Month repurchased Highest Lowest paid
(RMB) (RMB) (RMB)
June 2021 1,299,568 6.84 6.84 8,889,045.12
Total 1,299,568 8,889,045.12
The total amount of RMB8,889,045.12 of the repurchase was paid wholly out of self-owned funds and 1,299,568
repurchased A Shares were cancelled during the Reporting Period.
Save as disclosed herein, during the Reporting Period, there was no repurchase, sale or redemption by the Company, or
any of its subsidiaries, of any listed securities of the Company.
24 LANZHOU ZHUANGYUAN PASTURE CO LTD
Management Discussion and Analysis
MATERIAL LITIGATION AND ARBITRATION PROCEEDINGS
1. On 13 February 2018, according to the Notice on the Closing and Relocation of Livestock Farms in the Livestock
and Poultry Prohibited Area ( ) issued by the People’s Government
of Litong District of Wuzhong City, Ningxia Zhuangyuan Pasture Co., Ltd. a wholly-owned subsidiary of the
Company, was listed as the livestock farms planned to be closed and relocated, and the Company responded
positively to the government’s work arrangement and carried out the closure work. The Company has been
actively negotiating compensation matters with the Litong District People’s Government, but has not yet signed
a compensation agreement with the People’s Government of Litong District. The Company filed a lawsuit
with the Intermediate People’s Court of Wuzhong City and requested the People’s Court to order the People’s
Government of Litong District of Wuzhong City to fulfil statutory obligations in accordance with the requirements
of Article 25 of the Regulations on the Prevention and Control of Pollution Caused by Scale Livestock and Poultry
( ) and the Regulations on Expropriation and Compensation of Houses on State-
owned Land ( ) and make compensation for the loss caused by the closure
and relocation of the Company’s farms. Ningxia Manor received the administrative judgment issued by Wuzhong
Intermediate People’s Court of Ningxia Hui Autonomous Region in early August 2020 ((2020) Ning 03 Xing Chu
No.6). Wuzhong Intermediate People’s Court of Ningxia Hui Autonomous Region held that, because the request
for administrative compensation claimed by the plaintiff Ningxia Zhuangyuan Pasture Co., Ltd. (
) is still subjected to investigation and discretion by the people’s government of Litong District, Wuzhong in
order to determine the scope, standard and amount of compensation, the people’s government of Litong District,
Wuzhong City should handle the application for compensation for the closure and relocation submitted by the
plaintiff Ningxia Zhuangyuan Pasture Co., Ltd. ( ). As of the date of this report, the parties
are still in negotiation in respect of the specific amount of compensation.
2. On 25 July 2017, according to the notice on the Plan for Delineation of the Prohibited Area and Restricted Area of
Livestock and Poultry in Xining City (Trial) (Ningzhengban 2017 No. 143) (
) issued by the General Office of the People’s Government of Xining City, Qinghai Shengyuan Plateau
Pasture Co., Ltd. a subsidiary of the Company, was included in the scope of the prohibited area. The Company
respected environmental protection work arrangements and responded actively to close the relevant farm. The
Company has requested the People’s Government of Huangyuan County of Xining City to compensate for the
relocation losses but has not yet received any response. Therefore, the Company submitted an administrative
complaint to the Intermediate People’s Court of Xining City in Qinghai Province in accordance with the
requirements of Article 25 of the Regulations on the Prevention and Control of Pollution Caused by Scale Livestock
and Poultry ( ) and the Regulations on Expropriation and Compensation of Houses
on State-owned Land ( ), requesting the People’s Government of Huangyuan
County of Xining City to make compensation. Qinghai Shengyuan had received the Administrative Judgment (2020
Qing 01 Xing Chu No. 16) served by the Intermediate People’s Court of Xining City, Qinghai Province at beginning
of September 2020. The Intermediate People’s Court of Xining City, Qinghai Province held that the request for
administrative compensation raised by the plaintiff Qinghai Shengyuan Pasture Co., Ltd. (
) was still subject to investigation and assessment by the people’s government of the defendant Huangyuan
County People’s Government of Xining City to determine the scope, standard and amount of compensation,
therefore, the defendant Huangyuan County People’s Government of Xining City should handle the application for
compensation for the closure and relocation submitted by the plaintiff Qinghai Shengyuan Ranch Co., Ltd.. After
INTERIM REPORT 2021 25
Management Discussion and Analysis
the judgment was made in the first instance, on 30 November 2020, the People’s Government of Huangyuan
County sent the Reply Letter from the People’s Government of Huangyuan County on the Closing and Relocation
of Qinghai Shengyuan Pasture Co., Ltd. (Yuan Zheng Han 2020 No. 27) to the Qinghai Shengyuan Pasture Co.,
Ltd., and decided to grant land transfer fees of RMB498,000.00 to 80 households in Chihan Village, Dahua Town
in 2019 and 2020 after the closure of the pasture of Shengyuan Pasture. In accordance with the Article 25 of the
Regulations on the Prevention and Control of Pollution Caused by Scale Livestock and Poultry (
) and the Regulations on Expropriation and Compensation of Houses on State-owned Land (
), the plaintiff Qinghai Shengyuan Pasture suffered from economic losses due to
policy relocation, and the defendant Huangyuan County People’s Government of Xining City should compensate
Qinghai Shengyuan Pasture according to the laws. However, the defendant Huangyuan County People’s
Government of Xining City did not make substantive compensation plans or opinions on the losses incurred by
the plaintiff Qinghai Shengyuan Pasture due to policy relocation, and its reply neither conformed to the objective
fact that the plaintiff Qinghai Shengyuan Pasture suffered from huge economic losses due to policy relocation, nor
conformed to the legal provisions. In order to safeguard the legitimate rights and interests of the Company and all
shareholders, Qinghai Shengyuan Pasture submitted an administrative complaint to Xining Intermediate People’s
Court of Qinghai Province on 18 February 2021. Qinghai Shengyuan Pasture received a court summons issued
by Xining Intermediate People’s Court of Qinghai Province on 2 July 2021 on the administrative compensation
case of Qinghai Shengyuan Pasture suing Huangyuan County People’s Government of Xining City. The summons
informed that Qinghai Shengyuan Pasture sued Huangyuan County People’s Government of Xining City for
administrative compensation, and a court hearing will be on 21 July 2021. After that, Qinghai Shengyuan Pasture
received the notice of temporary change of hearing date from Xining Intermediate People’s Court on 20 July 2021,
and the trial date for the case in which Qinghai Shengyuan Ranch sued Huangyuan County People’s Government
of Xining for administrative compensation was changed to 3 August 2021. The above-mentioned case was heard
normally on 3 August 2021. As at the date of this report, the results of trial were not released.
SHARE OPTION SCHEME
There is no share option scheme (pursuant to Chapter 17 of the Listing Rules) adopted for the Company during the
Reporting Period.
26 LANZHOU ZHUANGYUAN PASTURE CO LTD
Other Information
DIRECTORS’ AND SUPERVISORS’ INTERESTS AND/OR SHORT POSITIONS IN
SHARES, UNDERLYING SHARES AND DEBENTURES
As at 30 June 2021, the interests and/or short positions of the Directors, Supervisors and the chief executive of the
Company and their associates in the shares, underlying shares and debentures of the Company and its associated
corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) which have been notified to
the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to Divisions 7 and 8 of
Part XV of the SFO, or which were recorded in the register required to be kept pursuant to Section 352 of the SFO or as
otherwise notified to the Company and the Stock Exchange pursuant to the Model Code set out in Appendix 10 to the
Listing Rules were as follows:
Approximate
Approximate percentage in
percentage of the issued share
Total Number total issued capital of the
Name of Director Nature of Interest of Shares A Shares Company
A Shares
Ma Hongfu (Note 2) Beneficial owner 32,197,400 (L) 16.32% 13.86%
Interested in controlled
corporation 15,000,000 (L) 7.60% 6.45%
Zhang Qianyu Beneficial owner 75,600 0.04% 0.03%
Wang Xuefeng Beneficial owner 18,900 0.01% 0.01%
Notes:
(1) All interests in shares were long positions.
(2) Mr. Ma Hongfu holds 39.44% equity interests in Gansu Lucky Cow Business Consulting Co., Ltd.*
(“Lucky Cow”). Under the SFO, he is deemed to be interested in the shares held by Lucky Cow.
Save as disclosed above, as at 30 June 2021, none of the Directors, Supervisors or chief executive of the Company nor
their associates had any interest and/or short positions in the shares, underlying shares or debentures of the Company,
its specified undertakings or any of its other associated corporations (within the meaning of Part XV of the SFO) which
had to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which
were required, pursuant to Section 352 of the SFO and the Companies Ordinance (Cap. 622 of the Laws of Hong Kong),
to be entered in the register referred to therein or which were required, pursuant to the Model Code, to be notified to the
Company and the Stock Exchange.
* For identification purpose only
INTERIM REPORT 2021 27
Other Information
SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND/OR SHORT POSITIONS IN THE
SHARES AND UNDERLYING SHARES OF THE COMPANY
As at 30 June 2021, as far as known to the Directors, the following persons or entities (not being a Director, a Supervisor
or a chief executive of the Company) who had interests and/or short positions in the shares and underlying shares of the
Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the
SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO were as
follows:
Approximate Approximate
percentage of percentage in
total issued the issued share
Name of Substantial Total Number A Shares/H Shares capital of the
Shareholder Nature of Interest of Shares (as applicable) Company
A Shares
Gansu Nongken Group Limited Interest of controlled 68,826,365 34.89% 29.62%
Liability Company* corporation
(“Gansu
Nongken Group”) (Note 2)
Gansu Nongken Asset Beneficial owner 37,931,665 19.23% 16.32%
(Note 2)
Lanzhou Zhuangyuan Investment Beneficial owner 30,894,700 (L) 15.66% 13.29%
Co., Ltd.*
( )
(“Zhuangyuan Investment”)
(Note 2)
Gansu Lucky Cow Business Beneficial owner 15,000,000 (L) 7.60% 6.45%
Consulting Co., Ltd.*
( )
(Note 3)
H Shares
Hu Keliang Beneficial owner 5,844,000 (L) 16.64% 2.51%
Li Yanling (Note 4) Interests of spouse 5,844,000 (L) 16.64% 2.51%
Wang Wei (Note 5) Beneficial owner 800,000 (L) 2.28% 0.34%
Interest of controlled 2,800,000 (L) 7.97% 1.20%
corporation
Li Qi (Note 5) Interests of spouse 3,600,000 (L) 10.25% 1.55%
28 LANZHOU ZHUANGYUAN PASTURE CO LTD
Other Information
Approximate Approximate
percentage of percentage in
total issued the issued share
Name of Substantial Total Number A Shares/H Shares capital of the
Shareholder Nature of Interest of Shares (as applicable) Company
Venko Limited (Note 5) Beneficial owner 2,800,000 (L) 7.97% 1.20%
Ren Qifeng (Note 6) Interest of controlled 3,523,000 (L) 10.03% 1.52%
corporation
Ren Songliu (Note 6) Interests of spouse 3,523,000 (L) 10.03% 1.52%
Technoart Investments Beneficial owner 3,523,000 (L) 10.03% 1.52%
Limited (Note 6)
Zhang Fenmei Beneficial owner 3,379,000 (L) 9.62% 1.45%
Notes:
1. All interests in shares were long positions.
2. The share capital of Gansu Nongken Asset and Zhuangyuan Investment were wholly owned by Gansu Nongken Group.
Accordingly, Gansu Nongken Group was deemed to be interested in the A Shares held by Gansu Nongken Asset and
Zhuangyuan Investment.
3. Mr. Ma Hongfu holds 39.44% equity interests in Lucky Cow. Under the SFO, he is deemed to be interested in the shares held
by Lucky Cow.
4. Ms. Li Yanling is the spouse of Mr. Hu Keliang. Therefore, Ms. Li Yanling is deemed to be interested in the shares in which Mr.
Hu Keliang is interested by virtue of the SFO.
5. The entire issued share capital of Venko Limited is beneficially owned by Mr. Wang Wei who is deemed to be interested in the
shares held by Venko Limited by virtue of the SFO. Mr. Wang Wei is also beneficially interested in 800,000 H Shares. Ms. Li Qi is
the spouse of Mr. Wang Wei. Therefore, Ms. Li Qi is deemed to be interested in the shares in which Mr. Wang Wei is interested
by virtue of the SFO.
6. The entire issued share capital of Technoart Investments Limited is beneficially owned by Mr. Ren Qifeng who is deemed to be
interested in the shares held by Technoart Investments Limited by virtue of the SFO. Ms. Ren Songliu is the spouse of Mr. Ren
Qifeng. Therefore, Ms. Ren Songliu is deemed to be interested in the shares in which Mr. Ren Qifeng is interested by virtue of
the SFO.
Save as disclosed above, as at 30 June 2021, the Company had not been notified by any other persons (other than
Directors and chief executive of the Company) who had interests or short positions in the shares or underlying shares of
the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of the Part XV of
the SFO, or which were recorded in the register required to be kept by the Company under section 336 of the SFO.
INTERIM REPORT 2021 29
Other Information
REVIEW OF INTERIM RESULTS
The Company has established the audit committee (the “Audit Committee”) with written terms of reference in
compliance with the Listing Rules. The Audit Committee comprises three independent non-executive Directors, namely
Mr. Wang Haipeng, Mr. Zhang Yubao, Mr. Sun Jian and Mr. Wang Haipeng is the chairman of the Audit Committee. The
Audit Committee is responsible for, amongst other matters, reviewing and supervising the Group’s financial reporting
process and internal control system and providing advice and recommendations to the Board. The Audit Committee
has amongst others, reviewed and discussed with the management the accounting principles and practices adopted by
the Group and the Group’s internal controls and financial reporting matters, including the review of the unaudited interim
results of the Group for the Reporting Period.
DIVIDEND
The Board has resolved not to declare any interim dividend for the Reporting Period (the six months ended 30 June
2020: Nil).
SUFFICIENCY OF PUBLIC FLOAT
Based on information known to the Directors and publicly available to the Company, as at the date of this report, the
Company has maintained a sufficient public float of 25% of the Company’s issued share capital as required under the
Listing Rules.
By order of the Board
Lanzhou Zhuangyuan Pasture Co., Ltd.*
Yao Gexian
Chairman of the Board
Lanzhou, the PRC, 27 August 2021
* For identification purpose only
30 LANZHOU ZHUANGYUAN PASTURE CO LTD
Review Report
To all shareholders of Lanzhou Zhuangyuan Pasture Co., Ltd.,
We have reviewed the accompanying financial statements of Lanzhou Zhuangyuan Pasture Co., Ltd. (“Zhuangyuan
Pasture”), which comprise the consolidated and the parent company’s balance sheets as at 30 June 2021, and the
consolidated and the parent company’s income statements, the consolidated and the parent company’s cash flow
statements for January to June 2021 and the consolidated and the parent company’s statements of changes in
shareholders’ equity for January to June 2021, and the notes to the financial statements. The preparation of these
financial statements is the responsibility of Zhuangyuan Pasture’s management. Our responsibility is to issue a report on
review of these financial statements based on our review.
We conducted our review in accordance with China Certified Public Accountant Review Standard No. 2101 — Review
of Financial Statements. This Standard requires us to plan and perform the review to obtain limited assurance about
whether these financial statements are free from material misstatements. A review is limited primarily to procedures as
enquiry of entity’s personnel and analytical review procedures applied to the financial information and thus provides less
assurance than an audit. We have not performed an audit, and therefore we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial
statements are not prepared in accordance with the requirement of Accounting Standards for Business Enterprises and
cannot present fairly, the reviewed entity’s consolidated and the parent company’s financial position as at 30 June 2021,
and the consolidated and the parent company’s operating results and cash flows for January to June 2021.
WUYIGE Certified Public Accountants LLP Chinese Certified Public Accountant: Li Zongyi
Beijing, the PRC Chinese Certified Public Accountant: Zhang Yingli
27 August 2021
INTERIM REPORT 2021 31
Consolidated Balance Sheet
As at 30 June 2021 - unaudited
(Expressed in RMB)
30 June 2021 31 December 2020
Item Note RMB’000 RMB’000
Current assets:
Monetary funds 444,019 846,729
Trade receivables II. 1 37,260 41,586
Prepayments 5,044 7,998
Other receivables 6,980 20,792
Including: Interest receivable
Dividend receivable
Inventories 91,776 113,625
Other current assets 10,951 10,738
Total current assets 596,029 1,041,467
Non-current assets:
Other equity instrument investments 44 44
Fixed assets 1,135,472 1,179,537
Construction in progress 225,978 152,093
Bearer biological assets II. 2 509,132 494,691
Right-of-use assets 46,754 53,784
Intangible assets 96,530 97,156
Long-term deferred expenses 3,837 4,246
Deferred tax assets 2,516 2,502
Other non-current assets 96,434 55,037
Total non-current assets 2,116,698 2,039,091
Total assets 2,712,727 3,080,558
32 LANZHOU ZHUANGYUAN PASTURE CO LTD
Consolidated Balance Sheet (Continued)
As at 30 June 2021 - unaudited
(Expressed in RMB)
30 June 2021 31 December 2020
Item Note RMB’000 RMB’000
Current liabilities:
Short-term borrowings 158,160 322,337
Bills payable 260,000 431,160
Accounts payable II. 3 159,172 214,105
Contract liabilities 7,637 10,669
Employee remuneration payable 4,873 6,226
Taxes payable 6,601 6,419
Other payables 50,285 52,990
Including: Interests payable
Dividends payable II. 13 4,674
Non-current liabilities due within one year 67,213 48,422
Other current liabilities 1,011 1,448
Total current liabilities 714,952 1,093,777
Non-current liabilities:
Long-term borrowings 303,815 311,281
Lease liabilities 41,108 40,483
Estimated liabilities 497 490
Deferred income 36,875 37,059
Deferred income tax liabilities 5,467 5,633
Total non-current liabilities 387,762 394,947
Total liabilities 1,102,714 1,488,724
INTERIM REPORT 2021 33
Consolidated Balance Sheet (Continued)
As at 30 June 2021 - unaudited
(Expressed in RMB)
30 June 2021 31 December 2020
Item Note RMB’000 RMB’000
Shareholders’ equity:
Share capital 232,381 233,681
Capital reserve 846,834 854,580
Less: Treasury stocks 14,206 23,251
Surplus reserve 43,387 43,387
Undistributed profits 501,617 483,437
Total equity attributable to shareholders of the parent 1,610,014 1,591,834
Minority Shareholders’ equity
Total Shareholders’ equity 1,610,014 1,591,834
Total liabilities and Shareholders’ equity 2,712,727 3,080,558
34 LANZHOU ZHUANGYUAN PASTURE CO LTD
Consolidated Income Statement
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January to January to
June 2021 June 2020
Item Note RMB’000 RMB’000
I. Total operating income 480,820 324,987
Including: operating income II. 4 480,820 324,987
II. Total operating cost 438,850 321,243
Including: Operating cost II. 4 331,259 231,353
Taxes and surcharges 5,261 3,024
Selling expenses II. 5 40,906 30,767
Administrative expenses II. 6 48,265 34,431
Research and development expenses II. 7 3,915 5,178
Financial expenses II. 8 9,244 16,490
Including: Interest expenses 12,388 15,750
Interest income 3,361 2,241
Add: Other income 1,776 2,943
Investment income (3,344) (5,175)
Including: Investment income from associates and
joint ventures
Gain on derecognition of financial assets
measured at amortised cost (3,344) (5,175)
Gains from changes in fair value II. 9 (4,951) (5,164)
Impairment losses on credit 113 (119)
Impairment losses on asset (591)
Gains from asset disposal (538)
III. Operating profit 34,434 (3,771)
Add: Non-operating income 780 365
Less: Non-operating expenses 9,519 238
IV. Total profit 25,695 (3,644)
Less: Income tax expenses II. 11 2,841 (1,669)
V. Net profit 22,854 (1,975)
(I) Classification by operating continuity:
1. Net profit from continuing operations 22,854 (1,975)
2. Net profit from discontinued operations
(II) Classification by ownership:
1. Net profit attributable to shareholders of the Parent
Company 22,854 (1,975)
2. Minority shareholders’ profits and losses
VI. Other net comprehensive income after tax
VII. Total comprehensive income 22,854 (1,975)
Total comprehensive income attributable to the owners of
the Parent Company 22,854 (1,975)
Total comprehensive income attributable to minority
shareholders
VIII. Earnings per share
(I) Basic earnings per share (RMB/share) II. 12 0.1 (0.01)
(II) Diluted earnings per share (RMB/share) 0.1 (0.01)
INTERIM REPORT 2021 35
Consolidated Cash Flow Statement
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January to January to
June 2021 June 2020
Item Note RMB’000 RMB’000
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of
services 536,650 358,527
Refund of taxes and levies 914
Other cash received relating to operating activities 12,047 36,134
Sub-total of cash inflows from operating activities 548,697 395,575
Payment for goods and services 297,053 207,073
Payment to and for employees 47,549 31,276
Payment of various taxes and levies 40,473 13,468
Payment for other cash relating to operating activities 57,278 54,144
Sub-total of cash outflows from operating activities 442,353 305,962
Net cash flows from operating activities 106,344 89,614
II. Cash flows from investing activities:
Net cash recovered from disposal of fixed assets,
intangible assets and other long-term assets 11,262 11,439
Other cash received relating to investing activities 14,106 41,233
Sub-total of cash inflows from investing activities 25,368 52,672
Cash paid for acquisition of fixed assets, intangible
assets and other long-term assets 264,893 123,284
Sub-total of cash outflows from investing activities 264,893 123,284
Net cash flows from investing activities (239,525) (70,612)
III. Cash flows from financing activities:
Cash received from borrowings 122,000 308,500
Other cash received relating to financing activities 241,320 194,492
Sub-total of cash inflows from financing activities 363,320 502,992
Cash paid for repayments of borrowings 272,749 295,484
Cash paid for dividends, profit distributions or interest 12,388 15,710
Including: Dividend and profit paid by the subsidiaries to
minority shareholders
Other cash paid relating to financing activities 266,545 97,008
Sub-total of cash outflows from financing activities 551,682 408,202
Net cash flow from financing activities (188,362) 94,789
IV. Effect of foreign exchange rate changes on cash
and cash equivalents (4) 9
V. Net increase in cash and cash equivalents (321,546) 113,800
Add: Balance of cash and cash equivalents at the
beginning of the period 631,565 248,235
VI. Balance of cash and cash equivalents at the end of
the period 310,019 362,035
36 LANZHOU ZHUANGYUAN PASTURE CO LTD
Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January to June 2021
Attributable to shareholders of the parent company
Less: Other Minority Total
Share Capital treasury comprehensive Surplus Retained shareholders’ shareholders’
capital reserves shares income reserves earnings Sub-total equity equity
Item RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
I. Balance at the end of the previous
year 233,681 854,580 23,251 43,387 483,437 1,591,834 1,591,834
Add: Change in accounting policies
Prior-period error correction
Business combination under the
common control
Others
II. Balance at the beginning of the year 233,681 854,580 23,251 43,387 483,437 1,591,834 1,591,834
III. Increase/decrease amount during
the period (1,300) (7,745) (9,045) 18,180 18,180 18,180
(I) Total comprehensive income 22,854 22,854 22,854
(II) Invested and reduced capitals of
shareholders (1,300) (7,745) (9,045)
1. Common share contributed by
shareholders (1,300) (7,745) (9,045)
2. Capital contributed by other
equity instrument holders
3. Amount of share-based
payment included in
shareholders’ equities
4. Others
(III) Appropriation of profits (4,674) (4,674) (4,674)
1. Withdrawal of surplus reserve
2. Appropriation to general risk
provision
3. Distributions to shareholders (4,674) (4,674) (4,674)
4. Others
(IV) Internal carry-over of shareholders’
equity
1. Share capital transferred with
capital reserves
2. Share capital transferred with
surplus reserves
3. Surplus reserve to cover the
losses
4. Transferred the balance of
defined benefits plan to
retained earnings
5. Transferred other
comprehensive income to
retained earnings
6. Others
IV. Balance at the end of the period 232,381 846,834 14,206 43,387 501,617 1,610,014 1,610,014
INTERIM REPORT 2021 37
Consolidated Statement of Changes in Shareholders’ Equity (Continued)
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January to June 2020
Attributable to shareholders of the parent company
Less: Other Minority Total
Share Capital treasury comprehensive Surplus Retained shareholders’ shareholders’
capital reserves shares i come reserves earnings Sub-total equity equity
Item RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
I. Balance at the end of the previous
year 190,681 531,119 23,251 43,387 483,471 1,225,407 1,225,407
Add: Change in accounting policies
Prior-period error correction
Business combination under the
common control
Others
II.Balance at the beginning of the year 190,681 531,119 23,251 43,387 483,471 1,225,407 1,225,407
III. Increase/decrease amount during
the period (if decrease, denoted as
“-”) (204) (12,462) (12,666) (12,666)
(I) Total comprehensive income (1,975) (1,975) (1,975)
(II) Invested and reduced capitals of
shareholders (204) (204) (204)
1. Common share contributed by
shareholders
2. Capital contributed by other
equity instrument holders
3. Amount of share-based
payment included in
shareholders’ equities (204) (204) (204)
4. Others
(III) Appropriation of profits (10,487) (10,487) (10,487)
1. Withdrawal of surplus reserve
2. Appropriation to general risk
provision
3. Distributions to shareholders (10,487) (10,487) (10,487)
4. Others
(IV) Internal carry-over of shareholders’
equity
1. Share capital transferred with
capital reserves
2. Share capital transferred with
surplus reserves
3. Surplus reserve to cover the
losses
4. Transferred the balance of
defined benefits plan to
retained earnings
5. Transferred other
comprehensive income to
retained earnings
6. Others
IV. Balance at the end of the period 190,681 530,916 23,251 43,387 471,008 1,212,741 1,212,741
38 LANZHOU ZHUANGYUAN PASTURE CO LTD
Balance Sheet of the Parent Company
As at 30 June 2021 - unaudited
(Expressed in RMB)
30 June 2021 31 December 2020
Item Note RMB’000 RMB’000
Current assets:
Monetary funds 153,515 468,006
Bills receivable 17,527 15,097
Prepayments 2,690 5,312
Other receivables 484,514 495,026
Including: Interests receivable
Dividends receivable
Inventories 25,701 27,705
Other current assets 10,944 10,731
Total current assets 694,892 1,021,877
Non-current assets:
Long-term equity investments 1,002,734 1,002,734
Other equity instrument investment 44 44
Fixed assets 450,422 486,667
Construction in progress 39,054 18,260
Right-of-use assets 1,959 2,669
Intangible assets 56,532 56,460
Long-term deferred expenses 3,837 4,246
Deferred income tax assets 2,368 2,348
Other non-current assets 56,667 20,544
Total non-current assets 1,613,617 1,593,973
Total assets 2,308,509 2,615,849
Current liabilities:
Short-term borrowings 110,092 282,268
Bills payable 260,000 431,160
Accounts payable 52,377 78,542
Contract liabilities 4,985 8,375
Employee benefits payable 2,940 3,358
Taxes payable 3,621 3,937
Other payables 185,762 120,867
INTERIM REPORT 2021 39
Balance Sheet of the Parent Company (Continued)
As at 30 June 2021 - unaudited
(Expressed in RMB)
30 June 2021 31 December 2020
Item Note RMB’000 RMB’000
Including: interest payable
Dividends payable 4,674
Non-current liabilities due within one year 63,830 43,795
Other current liabilities 648 1,108
Total current liabilities 684,255 973,409
Non-current liabilities:
Long-term borrowings 163,625 185,129
Lease liabilities 735 1,879
Estimated liabilities 5 6
Deferred income 14,555 15,036
Deferred income tax liabilities 1,215 1,215
Total non-current liabilities 180,135 203,265
Total liabilities 864,390 1,176,674
Shareholders’ equity:
Share capital 232,381 233,681
Capital reserves 869,346 877,091
Less: treasury shares 14,206 23,251
Other comprehensive income
Surplus reserves 43,387 43,387
Retained earnings 313,210 308,266
Total shareholders’ equities 1,444,119 1,439,175
Total liabilities and shareholders’ equities 2,308,509 2,615,849
40 LANZHOU ZHUANGYUAN PASTURE CO LTD
Income Statement of the Parent Company
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January to January to
June 2021 June 2020
Item Note RMB’000 RMB’000
I. Operating income 312,423 221,444
Less: operating costs 234,506 179,778
Taxes and surcharges 2,808 1,224
Selling expenses 27,266 17,950
Administrative expenses 17,391 15,113
R&D expenses 2,554 4,505
Financial expenses 10,380 15,287
Including: interest expenses 11,646 14,557
Interest income 1,399 2,118
Add: other income 955 1,053
Impairment losses on credit (24) 25
Impairment losses on asset (591)
Gain on disposal of assets (146)
II. Operating profit 17,713 (11,335)
Add: non-operating income 225 227
Less: non-operating expenses 6,592 23
III. Total profits 11,346 (11,132)
Less: income tax expense 1,728 (1,670)
IV. Net profit 9,618 (9,462)
1. Net profit from continuing operation 9,618 (9,462)
2. Net profit from discontinued operation
V. Net other comprehensive income after tax
VI. Total comprehensive income 9,618 (9,462)
VIII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
INTERIM REPORT 2021 41
Cash Flow Statement of the Parent Company
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January - January -
June 2021 June 2020
Item Note RMB’000 RMB’000
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of
services 345,821 241,148
Refund of taxes and levies 914
Other cash received relating to operating activities 120,066 198,139
Sub-total of cash inflows from operating activities 465,887 440,201
Payment for goods and services 138,641 103,081
Payment to and for employees 19,971 13,052
Payment of various taxes 9,667 4,105
Payment for other cash relating to operating activities 39,958 38,376
Sub-total of cash outflows from operating activities 208,237 158,614
Net cash flows from operating activities 257,650 281,587
II. Cash flows from investment activities:
Cash from redemption of investments
Cash received from investment gains
Net cash recovered from disposal of fixed assets,
intangible assets and other long-term assets 576
Net cash received from disposal of subsidiaries and other
business units
Other cash received relating to investing activities 14,106 22,333
Sub-total of cash inflows from investing activities 14,106 22,910
Cash paid for acquisition of fixed assets, intangible assets
and other long-term assets 70,764 20,810
Cash paid for investments 170,000
Net cash paid for acquisition of subsidiaries and other
business units
Payment paid for other cash relating to investing activities
Sub-total of cash outflows from investing activities 70,764 190,810
Net cash flows from investing activities (56,658) (167,900)
III. Cash flows from financing activities:
Cash received from investments
Cash received from borrowings 268,500
Other cash received relating to financing activities 78,364 35,507
Sub-total of cash inflows from financing activities 78,364 304,007
Cash paid for debt repayment 232,749 286,174
Cash paid for dividends, profit distributions or interest 16,320 14,467
Other cash paid relating to financing activities 263,610 94,749
Sub-total of cash outflows from financing activities 512,680 395,390
Net cash flows from financing activities (434,316) (91,383)
IV. Effect of foreign exchange rate changes on cash
and cash equivalents (4) 9
V. Net increase in cash and cash equivalents (233,327) 22,313
Add: Balance of cash and cash equivalents at the
beginning of the period 252,842 193,920
VI. Balance of cash and cash equivalents at the end of
the period 19,515 216,233
42 LANZHOU ZHUANGYUAN PASTURE CO LTD
Statement of Changes in Shareholders’ Equity of the Parent Company
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January - June 2021
Less: Other Total
Share Capital treasury comprehensive Surplus Retained shareholders’
capital reserves shares income reserves earnings equity
Item RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
I. Balance at the end of the previous year 233,681 877,091 23,251 43,387 308,266 1,439,175
Add: Change in accounting policies
Prior-period error correction
Others
II. Balance at the beginning of the year 233,681 877,091 23,251 43,387 308,266 1,439,175
III. Increase/decrease amount during the
period (1,300) (7,745) (9,045) 4,944 4,944
(I) Total comprehensive income 9,618 9,618
(II) Invested and reduced capitals of
shareholders (1,300) (7,745) (9,045)
1. Common share contributed by
shareholders (1,300) (7,745) (9,045)
2. Capital contributed by other equity
instrument holders
3. Amount of share-based payment
included in shareholders’ equities
4. Others
(III) Appropriation of profits (4,674) (4,674)
1. Withdrawal of surplus reserve
2. Distributions to shareholders (4,674) (4,674)
3. Others
(IV) Internal carry-over of shareholders’ equity
1. Share capital transferred with capital
reserves
2. Share capital transferred with surplus
reserves
3. Surplus reserve to cover the losses
4. Transferred the balance of defined
benefits plan to retained earnings
5. Transferred other comprehensive
income to retained earnings
6. Others
(V) Special reserve
1. Withdraw amount in the period
2. Utilized amount in the period
(VI) Others
IV. Balance at the end of the period 232,381 869,346 14,206 43,387 313,210 1,444,119
INTERIM REPORT 2021 43
Statement of Changes in Shareholders’ Equity of the Parent Company (Continued)
For the six months ended 30 June 2021 - unaudited
(Expressed in RMB)
January - June 2020
Less: Other Total
Share Capital treasury comprehensive Surplus Retained shareholders’
capital reserves shares income reserves earnings equity
Item RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
I. Balance at the end of the previous year 190,681 553,631 23,251 43,387 353,213 1,117,662
Add: Change in accounting policies
Prior-period error correction
Others
II. Balance at the beginning of the year 190,681 553,631 23,251 43,387 353,213 1,117,662
III. Increase/decrease amount during the
Period (if decrease, denoted as “-”) (204) (19,949) (20,153)
(I) Total comprehensive income (9,462) (9,462)
(II) Invested and reduced capitals of
shareholders (204) (204)
1. Common share contributed by
shareholders
2. Capital contributed by other equity
instrument holders
3. Amount of share-based payment
included in shareholders’ equities (204) (204)
4.Others
(III) Appropriation of profits (10,487) (10,487)
1. Withdrawal of surplus reserve
2. Distributions to shareholders (10,487) (10,487)
3. Others
(IV) Internal carry-over of shareholders’ equity
1. Share capital transferred with capital
reserves
2. Share capital transferred with surplus
reserves
3. Surplus reserve to cover the losses
4. Transferred the balance of defined
benefits plan to retained earnings
5. Transferred other comprehensive
income to retained earnings
6. Others
IV. Balance at the beginning of the period 190,681 553,427 23,251 43,387 333,264 1,097,509
44 LANZHOU ZHUANGYUAN PASTURE CO LTD
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
I. BASIS OF PREPARATION
The interim financial report has been prepared in accordance with the applicable disclosure provisions of the
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and the “Accounting
Standards for Business Enterprises – Basic Standards” (issued by the Ministry of Finance Order No. 33 and
amended by the Ministry of Finance Order No. 76), the 42 specific accounting standards issued and amended
on 15 February 2006 and thereafter, the Application Guideline of the Accounting Standards for Business
Enterprises, the Interpretation of the Accounting Standards for Business Enterprises and other relevant provisions
(collectively, the “Accounting Standards for Business Enterprises”) as well as the disclosure requirements of the
Information Disclosure Rule No. 15 of Public Offerings Company — Financial Reporting General Provisions (2014
Amendments) issued by CSRC. The interim financial report was authorised to issue on 27 August 2021.
The interim financial report has been prepared assuming the Group will continue as a going concern
notwithstanding the net current liabilities of the Group at 30 June 2021. The Directors are of opinion that, based
on the working capital forecast of the Group, the Group will have necessary liquid funds to finance its working
capital expenditure requirements for a reasonable period of time.
The preparation of an interim financial report in conformity with the Accounting Standards for Business Enterprises
requires management to make judgements, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ
from these estimates.
The interim financial report contains condensed consolidated financial statements and selected explanatory
notes. The notes include an explanation of events and transactions that are significant to an understanding of
the changes in financial position and performance of the Group since the publication of 2020 annual financial
statements. The condensed consolidated interim financial statements and notes thereon do not include all of the
information required for full set of financial statements prepared in accordance with the Accounting Standards for
Business Enterprises of China.
The interim financial report is unaudited, but has been reviewed by WUYIGE Certified Public Accountants LLP
in accordance with the China’s Auditing Standards for the Chinese Certified Public Accountants No. 2101 —
Review of Financial Statements.
INTERIM REPORT 2021 45
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS
1 Accounts receivable
(1) The analysis on accounts receivable classified by bad debts provision method is as
follows:
At 30 June At 31 December
Type 2021 2020
RMB’000 RMB’000
Accounts receivable from affiliates
Accounts receivable from non-affiliated companies 38,420 42,912
Sub-total 38,420 42,912
Less: Provision for bad debts 1,160 1,326
Total 37,260 41,586
(2) The analysis on accounts receivable by ageing is as follows:
At 30 June At 31 December
Ageing 2021 2020
RMB’000 RMB’000
Within 1 year 37,049 41,052
Including 0-6 months 34,098 38,021
7-12 months 2,951 3,031
Over 1 year but within 2 years 419 727
Over 2 years but within 3 years 48 208
Over 3 years 905 925
Sub-total 38,420 42,912
Less: Provision for bad debts 1,160 1,326
Total 37,260 41,586
(3) Provision for bad debts made, recovered or reversed during this year:
At 30 June At 31 December
2021 2020
RMB’000 RMB’000
Balance at the beginning of the year 1,326 878
Provision made during this year 449
Provision recovered or reversed during this year 166 —
Written off during this year —
At 30 June/31 December 1,160 1,326
46 LANZHOU ZHUANGYUAN PASTURE CO LTD
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
2 Bearer biological assets
(1) Nature of the Group’s agricultural activities
Bearer biological assets of the Group are dairy cows held to produce raw milk. The Group’s
dairy cows are milkable cows held for milk production and heifers and calves that have not
reached the age to produce raw milk.
The number of cows owned by the Group as at 30 June 2021 and 31 December 2020 is as
follows:
At 30 June At 31 December
2021 2020
Heads Heads
Calves 1,520 3,550
Heifers 6,074 4,308
Milkable cows 8,840 8,236
Total 16,434 16,094
In general, the heifers are inseminated when they reach approximately 14 months old. After a
gestation period of approximately 10 months, a calf is born and the heifers begin to produce
raw milk and the lactation periods begin. The heifers, at this time, will be transferred to the
group of milkable cows. A milkable cow is typically milked for approximately 300 days in each
lactation period. The male calves newly born are sold while the female calves are bred for 6
months and then transferred to the group of heifers for preparation of insemination.
(2) Value of the Group’s bearer biological assets
Calves Heifers Milkable cows Total
RMB’000 RMB'000 RMB'000 RMB'000
Balance as at
31 December 2020 43,778 111,986 338,928 494,691
Balance as at
30 June 2021 21,499 152,241 335,392 509,132
INTERIM REPORT 2021 47
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
3 Accounts payable
(1) Ageing analysis
At 30 June At 31 December
2021 2020
Ageing RMB’000 RMB’000
Within 1 year (inclusive) 147,066 203,441
Over 1 year but within 2 years (inclusive) 9,734 9,369
2-3 years (inclusive) 1,557 786
Over 3 years 815 508
Total 159,172 214,105
4 Operating income and operating costs
(1) Operating income and operating costs
Six months ended 30 June
2021 2020
Income Cost Income Cost
RMB'000 RMB'000 RMB'000 RMB'000
Principal activities 472,682 327,297 317,627 227,955
Other operating activities 8,138 3,962 7,361 3,398
Total 480,820 331,259 324,987 231,353
48 LANZHOU ZHUANGYUAN PASTURE CO LTD
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
4 Operating income and operating costs (Cont’d)
(1) Operating income and operating costs (Cont’d)
Details of operating income
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Operating income from principal activities
— Sale of goods 472,682 317,627
Sub-total 472,682 317,627
Other operating income
— Income from sales of feed
— Others 8,138 7,361
Total 480,820 324,987
5 Selling expenses
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Staff cost 11,036 8,694
Freight and miscellaneous charges 11,327 7,148
Low cost and short-lived consumable items 6,053 6,029
Travel expenses 975 1,011
Promotional fees 4,572 2,910
Rents and property management fees 654 755
Depreciation and amortization 1,079 1,354
Labor dispatch fee 3,646 1,457
Others 1,565 1,409
Total 40,906 30,767
INTERIM REPORT 2021 49
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
6 Administrative expenses
Six months ended 30 June
January to June January to June
in 2021 in 2020
Staff cost 15,872 9,601
Depreciation and amortization 10,618 7,154
Maintenance fees 6,508 5,692
Professional service fees 2,914 2,257
Greening and sewage charges 1,958 1,483
Office expenses 1,628 1,036
Premium for property insurance 689 1,030
Utilities expenses 1,057 914
Auditing fees 779 860
Inspection fees 236 580
Freight and miscellaneous charges 972 463
Business entertainment expenses 500 282
Travel expenses 915 271
Others 3,619 2,807
Total 48,265 34,431
7 Research and development expenses
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Item
Research and development of new products 3,915 5,178
Total 3,915 5,178
50 LANZHOU ZHUANGYUAN PASTURE CO LTD
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
8 Financial expenses
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Interest expenses from loans and payables 12,388 15,750
Including: Interest expenses 12,388 15,800
Interest subsidies for policy-related preferential
loans (50)
Less: Capitalized interest expenses
Interest income from deposits 3,361 2,241
Net exchange (gains)/losses 4 (12)
Others 213 2,993
Total 9,244 16,490
9 Gains/(losses) from changes in fair value
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Gains in fair value less costs to disposal of bearer
biological assets (6,310) 293
Gain arising on initial recognition of agricultural
produce at fair value less costs to sell at the point
of harvest 1,358 (5,457)
Total (4,951) (5,164)
INTERIM REPORT 2021 51
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
9 Gains/(losses) from changes in fair value (Cont’d)
The Company’s bearer biological assets are the cows. On the balance sheet date, the Company hired
qualified and professional assets valuer to determine the fair value of these cows. Any change over each
period is included in the profit or loss of the current period.
The agricultural products harvested from the Company’s bearer biological assets are the raw milk. At
the time of harvest, the fair value of such agricultural products less the selling expenses (subject to the
quotation in the local market) is recognized as the initial costs of the inventory. Any profit or loss (that is,
the fair value of agricultural products at the time of harvest less the selling expenses and farming costs)
generated from the recognition based on such fair value on the date of harvest shall be recognized in the
income statement. Thereafter, during the sales, the inventory amount initially recognized based on such fair
value is transferred to selling costs.
10 Government grants
(1) Government grants related to assets
Amount
included in
Grant amount the profit or
31 December added during loss during
Subsidy projects 2020 this period this period 30 June 2021
RMB’000 RMB’000 RMB’000 RMB’000
Dairy farming project 19,945 670 19,275
Dairy product 4,698 134 4,564
production
project
Biogas project 3,751 88 3,662
Others 8,666 1,000 292 9,374
Total 37,059 1,000 1,184 36,875
52 LANZHOU ZHUANGYUAN PASTURE CO LTD
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
10 Government grants (Cont’d)
(2) Government grants related to income
Amount
included in
the profit or
Item loss of the
Category Amount represented current period
RMB’000 RMB’000 RMB’000
Funds under Dairy Development Project of
Bureau of Agriculture and Rural Affairs of
Jinchuan District of Jincang City 1,000 Deferred income 8
Funds for 2020 Grain-to-feed Program in
Animal Husbandry Development Center of Non-operating
Linxia County 150 income 150
Grain-to-feed project of Animal Husbandry
and Veterinary Technology Extension Non-operating
Center of Liangzhou District 197 income 197
Funds for rewarding, supplementing and
supporting the development of agricultural
industrialization of Agriculture and Rural
Bureau of Liangzhou District 115 Other income 115
Special funds for the vocational skills
improvement action of the Employment
Service Center of Yuzhong County 385 Other income 385
Grants for the vocational skills improvement
action of the Employment Service Center
of Yuzhong County 57 Other income 57
Subsidy for the new certification of "Three
Products and One Standard" by the
Agricultural Products Quality and Safety
Supervision Center of Yuzhong County 10 Other income 10
Total 1,914 — 922
INTERIM REPORT 2021 53
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
11 Income tax expenses
Six months ended 30 June
2021 2020
RMB’000 RMB’000
Current tax expense 3,022 128
Deferred tax expense (180) (1,797)
Total 2,841 (1,669)
12 Basic earnings per share
Basic earnings per share is calculated as dividing consolidated net profit attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares outstanding:
Six months ended 30 June
Item 2021 2020
RMB’000 RMB’000
Consolidated net profit attributable to ordinary
shareholders of the Company 22,854 (1,975)
Weighted average number of ordinary shares outstanding 232,381 190,681
Basic earnings per share (RMB/share) 0.10 (0.01)
54 LANZHOU ZHUANGYUAN PASTURE CO LTD
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
13 Dividends
(i) The board of directors of the Company has resolved not to declare an interim dividend for
the six months ended 30 June 2021.
(ii) Dividends payable to equity shareholders attributable to the previous financial year, approved
during the interim period
Six months ended 30 June
Item 2021 2020
RMB’000 RMB’000
Final dividend in respect of the previous financial
year, approved during the following interim period,
of RMB0.02 per share (six months ended
30 June 2021: Nil) 4,674 10,487
Total 4,674 10,487
It was resolved at the 2020 annual general meeting of the Company convened on 29 June
2021 to distribute dividends in cash at RMB0.02 per share (tax inclusive) to all shareholders
with the profit available for distribution realized in 2020 and the total dividends distributed
amounted to approximately RMB4.7 million.
14. Segment reporting
Considering the framework of internal organisation, requirements of management and the system
of internal reporting, the Group has presented two reportable segments, which are Dairy Farming
and Dairy Products Production. Each reportable segment is a separate business unit which
offers different products and services, and is managed separately because they require different
technology and market strategies. The financial statements of the different segments is regularly
reviewed by the Group’s management to make decisions about resources to be allocated to each
segment and assess its performance.
Segment Principal activities
Dairy farming Breeding dairy cows to produce and sell raw milk
Dairy products production Producing and selling Pasteurised Milk, Ultra High Temperature
Milk, Modified Milk, Yogurt and Other Dairy Products
INTERIM REPORT 2021 55
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
14. Segment reporting (Cont’d)
(1) Segment results, assets and liabilities
For the purposes of assessing segment performance and allocating resources between
segments, the Group’s management regularly reviews the assets, liabilities, revenue, expenses
and financial performance, attributable to each reportable segment on the following bases:
Segment assets include all tangible, intangible, other non-current and current assets, such as
receivable, with the exception of deferred tax assets and other unallocated corporate assets
(if any). Segment liabilities include current and non-current liabilities, such as payables, bank
borrowings, attributable to the individual segments, but exclude deferred tax liabilities (if any).
Financial performance is operating income (including operating income from external
customers and inter-segment operating income) after deducting operating costs, taxes and
surcharges, selling and distribution expenses, general and administrative expenses, financial
expenses and non-operating income and expenses attributable to the individual segments
but exclude unallocated corporate expenses (if any). Transfer pricing of income among
reportable segments is in accordance with the similar terms of transaction with external
parties.
56 LANZHOU ZHUANGYUAN PASTURE CO LTD
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
14. Segment reporting (Cont’d)
(1) Segment results, assets and liabilities (Cont’d)
Information regarding the Group’s reportable segments set out below is the measure of segment
profit or loss and segment assets and liabilities reviewed by the chief operating decision maker or
is otherwise regularly provided to the chief operating decision maker, even if not included in the
measure of segment profit or loss and segment assets and liabilities:
Dairy Products Elimination among
Dairy farming Segment Production Segment Segments Total
January to January to January to January to January to January to January to January to
June in June in June in June in June in June in June in June in
Item 2021 2020 2021 2020 2021 2020 2021 2020
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenue from external
transactions 97,646 34,499 383,174 290,489 480,820 324,987
Revenue from
inter-segment
transactions 119,183 105,786 (119,183) (105,786)
Depreciation and
amortization
expenses 18,500 16,966 29,047 28,858 47,546 45,823
Interest income 1,921 93 1,440 2,147 3,361 2,241
Interest expense 1,450 1,851 10,938 13,899 12,388 15,750
Total profits / (losses) 7,643 2,431 18,052 (6,075) 25,695 (3,644)
Income tax expenses 2,841 (1,669) 2,841 (1,669)
Net profits / (losses) 7,643 2,431 15,211 (4,406) 22,854 (1,975)
Total assets 1,550,819 1,138,744 1,911,943 2,175,006 (750,035) (654,820) 2,712,727 2,658,930
Total liabilities 916,080 771,370 936,669 1,329,639 (750,035) (654,820) 1,102,714 1,446,189
Increase in non-current
assets 59,820 73,457 17,787 (44,443) 77,608 29,014
(2) Geographic information
As the Group’s revenue is derived from customers located in the Mainland China and non-
current assets are mainly taken from and wholly located in Mainland China and all the branches
are managed on a national basis due to their similar customer classifications or classification and
similar regulatory environment in all regions, no information has been provided to the management
of the Group by geographical area in Mainland China.
(3) Major customers
In period from January to June in 2021 and 2020, there is no case in which revenue to a single
customer exceeds 10% of the total revenue of the Company.
INTERIM REPORT 2021 57
Notes to the Financial Statements
(Expressed in RMB unless otherwise indicated)
II. NOTES TO THE ITEMS OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)
15. Rate of return on net assets and earnings per share
Unit: RMB
Profit during the report
period Earnings per share
Rate of return on weighted
average net assets (%) Basic earnings per share Diluted earnings per share
January to January to January to January to January to January to
June in 2021 June in 2020 June in 2021 June in 2020 June in 2021 June in 2020
Net profit attributable
to the Company’s
ordinary
shareholders 1.43 (0.16) 0.10 (0.01) 0.10 (0.01)
Net profit attributable
to the ordinary
shareholders of the
Company after a
deduction of non
recurring profit or
loss 1.83 (0.39) 0.13 (0.02) 0.13 (0.02)
58 LANZHOU ZHUANGYUAN PASTURE CO LTD
