THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or
other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in Lanzhou Zhuangyuan Pasture Co., Ltd.*, you should at once hand this
circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through
whom the sale or transfer was effected for transmission to the purchaser or transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the
contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever
for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
Lanzhou Zhuangyuan Pasture Co., Ltd.*
(a joint stock limited liability company incorporated in the People’s Republic of China)
(Stock Code: 1533)
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF BOARD OF DIRECTORS FOR 2021
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF THE SUPERVISORY COMMITTEE FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE ANNUAL REPORT AND ITS HIGHLIGHTS OF THE COMPANY FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF INTERNAL CONTROL EVALUATION FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE PRELIMINARY PROFIT DISTRIBUTION PLAN FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE SPECIAL REPORT ON THE ACTUAL DEPOSIT AND
USE OF 2021 PROCEEDS RAISED OF THE COMPANY,
TO CONSIDER THE RESOLUTION IN RELATION TO THE SPECIAL REPORT OF THE OCCUPATION OF NON-OPERATING CAPITAL
AND THE TRANSACTION OF OTHER RELATED FUNDS FOR 2021 OF LANZHOU ZHUANGYUAN PASTURE CO., LTD.,
TO CONSIDER THE RESOLUTION IN RELATION TO THE APPLICATION TO BANKS OF THE LIMITS OF COMPOSITE CREDIT
FACILITIES FOR 2022,
TO CONSIDER THE RESOLUTION IN RELATION TO THE FINAL FINANCIAL REPORT FOR 2021 OF THE COMPANY,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REAPPOINTMENT OF THE AUDITOR OF THE COMPANY FOR 2022,
TO CONSIDER THE RESOLUTION IN RELATION TO REMUNERATION OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT OF THE COMPANY FOR 2022,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPURCHASE AND CANCELLATION OF ALL RESTRICTED SHARES IN
THE SECOND RELEASE OF LOCKED PERIOD UNDER THE 2019 RESTRICTED SHARES INCENTIVE SCHEME,
TO CONSIDER THE RESOLUTION FOR APPROVAL OF THE SHARE BUY-BACK OFFER AND
THE VOLUNTARY WITHDRAWAL OF LISTING,
TO CONSIDER THE RESOLUTION FOR AUTHORISING THE BOARD OF DIRECTORS TO PROCURE THE COMPLETION OF THE
SHARE BUY-BACK OFFER AND THE VOLUNTARY WITHDRAWAL OF LISTING,
NOTICE OF AGM,
NOTICE OF A SHAREHOLDERS’ CLASS MEETING AND
NOTICE OF H SHAREHOLDERS’ CLASS MEETING
The Company will convene the AGM, A Shareholders’ Class Meeting and H Shareholders’ Class Meeting at 2:00 p.m. on
Wednesday, 29 June 2022 at 26th Floor, Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan Road, Chengguan
District, Lanzhou City, Gansu Province, the PRC. Notice of AGM, Notice of A Shareholders’ Class Meeting and Notice of H
Shareholders’ Class Meeting are set out in this circular.
If you intend to appoint a proxy to attend the AGM, A Shareholders’ Class Meeting and H Shareholders’ Class Meeting, you are
required to complete and return the accompanying form of proxy in accordance with the instructions printed thereon. For holders
of H Shares, the form of proxy should be returned to Union Registrars Limited and for holders of A Shares, the form of proxy
should be returned to the Company’s head office in the PRC not less than 24 hours before the time fixed for holding the AGM,
A Shareholders’ Class Meeting and H Shareholders’ Class Meeting or any adjourned meeting thereof. Completion and return of
the form of proxy will not preclude you from attending and voting in person at the AGM, A Shareholders’ Class Meeting and H
Shareholders’ Class Meeting or at any other adjourned meeting should you so wish.
* For identification purpose only
8 June 2022
CONTENTS
Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
APPENDIX I — REPORT OF INDEPENDENT DIRECTORS FOR 2021 . . . . . . . . . . I-1
APPENDIX II — REPORT OF THE SUPERVISORY COMMITTEE FOR 2021 . . . . . II-1
APPENDIX III — REPORT OF INTERNAL CONTROL EVALUATION FOR 2021 . . . III-1
APPENDIX IV — ANNOUNCEMENT IN RELATION TO THE PRELIMINARY IV-1
PROFIT DISTRIBUTION PLAN FOR 2021 . . . . . . . . . . . . . . . . . . .
APPENDIX V — SPECIAL REPORT ON ACTUAL DEPOSIT AND USE OF V-1
THE PROCEEDS DURING 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX VI — THE FINAL FINANCIAL REPORT FOR 2021 . . . . . . . . . . . . . . . . . . VI-1
APPENDIX VII — ANNOUNCEMENT IN RELATION TO THE APPLICATION TO VII-1
BANKS OF THE LIMITS OF COMPOSITE CREDIT
FACILITIES FOR 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX VIII — ANNOUNCEMENT ON THE REPURCHASE AND VIII-1
CANCELLATION OF ALL RESTRICTED SHARES IN THE
SECOND RELEASE OF LOCKUP PERIOD UNDER THE 2019
RESTRICTED SHARES INCENTIVE SCHEME. . . . . . . . . . . . . . . . .
NOTICE OF AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-1
NOTICE OF A SHAREHOLDERS’ CLASS MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-5
NOTICE OF H SHAREHOLDERS’ CLASS MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-7
–i–
DEFINITIONS
In this circular, unless the context otherwise requires, the following expressions shall have the
following meanings:
“acting in concert” has the meaning ascribed thereto in the Takeovers Code, and
“concert parties” shall be construed accordingly
“AGM” the annual general meeting for 2021 or any adjourned meeting
to be held by the Company at 26th Floor, Block B, Shanghui
Building of Gansu Province, No. 601, Yanyuan Road, Chengguan
District, Lanzhou City, Gansu Province, the PRC at 2:00 p.m. on
Wednesday, 29 June 2022
“Articles” or the Articles of Association of the Company (as amended, modified
“Articles of Association” or otherwise supplemented from time to time)
“A Shares” Renminbi-denominated ordinary share(s) of the Company of
RMB1.00 each, all of which are issued in the PRC, subscribed
in Renminbi and listed on the Shenzhen Stock Exchange (stock
code: 002910)
“A Shareholders’ Class Meeting” the class meeting of A Shareholders or any adjourned meeting to
be held at 2:30 p.m. on Wednesday, 29 June 2022 at 26th Floor,
Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan
Road, Chengguan District, Lanzhou City, Gansu Province, the
PRC or immediately after the conclusion of the AGM or any
adjournment thereof (whichever is the later)
“A Share Offering” the Company ’ s initial public offering of 46,840,000 A Shares
listed on the Shenzhen Stock Exchange, which has been
completed on 31 October 2017
“Board of Directors” or “Board” the board of directors of the Company
“Company” Lanzhou Zhuangyuan Pasture Co., Ltd.* (
), a joint stock limited company incorporated in the PRC,
whose H Shares are listed on the Hong Kong Stock Exchange
“Director(s)” director(s) of the Company
“Executive Director(s)” executive director(s) of the Company
“Group” the Company and its subsidiaries
* For identification purpose only
–1–
DEFINITIONS
“H Shareholders’ Class Meeting” the class meeting of H Shareholders or any adjourned meeting to
be held at 2:45 p.m. on Wednesday, 29 June 2022 at 26th Floor,
Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan
Road, Chengguan District, Lanzhou City, Gansu Province, the
PRC or immediately after the conclusion of the A Shareholders’
Class Meeting or any adjournment thereof (whichever is the later)
“H Shares” overseas listed foreign shares in the Company’s share capital with
a nominal value of RMB1.00 each, which are subscribed for and
traded in Hong Kong dollars and listed on the Hong Kong Stock
Exchange
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the People’s
Republic of China
“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited
“Independent H Shareholders” H Shareholders other than (i) the Directors and parties acting in
concert with any of the Directors and the Company and (ii) any
H Shareholder who has a material interest in the Share Buy-back
Offer and the Voluntary Withdrawal of Listing that is different
from the interests of all other Shareholders (as stipulated under
Rule 3.2 of the Share Buy-backs Code)
“Independent Non-executive independent non-executive director(s) of the Company
Director(s)” or “Independent
Director(s)”
“Latest Practicable Date” 2 June 2022, being the latest practicable date prior to the printing
of this circular for ascertaining certain information contained
herein
“Listing Rules” the Rules Governing the Listing of Securities on the Hong Kong
Stock Exchange
“Non-executive Director(s)” non-executive director(s) of the Company
“Notice of AGM” the notice convening the AGM
“Notice of A Shareholders’ Class the notice convening the A Shareholders’ Class Meeting
Meeting”
–2–
DEFINITIONS
“Notice of H Shareholders’ Class the notice convening the H Shareholders’ Class Meeting
Meeting”
“Offer Document” the offer document dated 6 June 2022 and issued by the Company
to the Shareholders in connection with the Share Buy-back
Offer and Voluntary Withdrawal of Listing in compliance with
the Takeovers Code, the Share Buy-backs Code and the Listing
Rules containing, among other things, details of the Share Buy-
back Offer and the Voluntary Withdrawal of Listing (accompanied
by the form of acceptance and transfer of H Share(s)) and the
respective letters of advice from Elstone Securities Limited, the
Board and Veda Capital Limited
“PRC” or “China” the People’s Republic of China
“Renminbi” or “RMB” Renminbi, the lawful currency of the PRC
“Share Buy-backs Code” the Code on Share Buy-backs
“Share Buy-back Offer” the share buy-back offer being made by Elstone Securities
Limited, on behalf of the Company, to buy-back H Shares not
already owned or agreed to be acquired by the Company and the
Directors in accordance with the Takeovers Code as detailed in
the Offer Document dated 6 June 2022
“Shareholder(s)” holder(s) of shares
“Shares” shares in the share capital of the Company, with a nominal value
of RMB1.00 each, comprising the Company’s A Shares and H
Shares
“Supervisor(s)” supervisor(s) of the Company
“Supervisory Committee” the board of supervisors of the Company
“Takeovers Code” the Code on Takeovers and Mergers
“Voluntary Withdrawal of Listing” the proposed conditional voluntary withdrawal of listing of the
H Shares from the Hong Kong Stock Exchange as detailed in the
Offer Document dated 6 June 2022
“%” per cent.
–3–
LETTER FROM THE BOARD
Lanzhou Zhuangyuan Pasture Co., Ltd.*
(a joint stock limited liability company incorporated in the People’s Republic of China)
(Stock Code: 1533)
Executive Directors: Registered office in the PRC:
Mr. Yao Gexian No. 398 Sanjiaocheng Commune
Mr. Ma Hongfu Sanjiaocheng Village
Mr. Zhang Yu Chengguan Town
Mr. Yang Yi Yuzhong County
Mr. Lian Enzhong Lanzhou City, Gansu Province
Ms. Zhang Qianyu PRC
Independent Non-executive Directors: Principal place of business and
Mr. Wang Haipeng head office in the PRC:
Mr. Zhang Yubao 25th-26th Floors, Block B
Mr. Sun Jian Shanghui Building of Gansu Province No.
601, Yanyuan Road
Chengguan District
Lanzhou City, Gansu Province
PRC
Principal place of business in Hong Kong:
Unit 2703, 27/F
Shui On Centre
Nos. 6-8 Harbour Road
Wanchai,
Hong Kong
8 June 2022
To the Shareholders
Dear Sir or Madam,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF BOARD OF DIRECTORS FOR 2021
INCLUDING THE REPORT OF INDEPENDENT DIRECTORS FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF THE SUPERVISORY COMMITTEE FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE ANNUAL REPORT AND ITS HIGHLIGHTS OF THE COMPANY FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF INTERNAL CONTROL EVALUATION FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE PRELIMINARY PROFIT DISTRIBUTION PLAN FOR 2021,
TO CONSIDER THE RESOLUTION IN RELATION TO THE SPECIAL REPORT ON THE ACTUAL DEPOSIT AND
USE OF 2021 PROCEEDS RAISED OF THE COMPANY,
TO CONSIDER THE RESOLUTION IN RELATION TO THE SPECIAL REPORT OF THE OCCUPATION OF NON-OPERATING CAPITAL AND THE TRANSACTION OF OTHER
RELATED FUNDS FOR 2021 OF LANZHOU ZHUANGYUAN PASTURE CO., LTD.,
TO CONSIDER THE RESOLUTION IN RELATION TO THE APPLICATION TO BANKS OF
THE LIMITS OF COMPOSITE CREDIT FACILITIES FOR 2022,
TO CONSIDER THE RESOLUTION IN RELATION TO THE FINAL FINANCIAL REPORT FOR 2021 OF THE COMPANY,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REAPPOINTMENT OF THE AUDITOR OF THE COMPANY FOR 2022,
TO CONSIDER THE RESOLUTION IN RELATION TO REMUNERATION OF DIRECTORS, SUPERVISORS
AND SENIOR MANAGEMENT OF THE COMPANY FOR 2022,
TO CONSIDER THE RESOLUTION IN RELATION TO THE REPURCHASE AND CANCELLATION OF ALL RESTRICTED SHARES IN THE SECOND RELEASE OF LOCKED
PERIOD UNDER THE 2019 RESTRICTED SHARES INCENTIVE SCHEME,
TO CONSIDER THE RESOLUTION FOR APPROVAL OF THE SHARE BUY-BACK OFFER AND THE VOLUNTARY WITHDRAWAL OF LISTING,
TO CONSIDER THE RESOLUTION FOR AUTHORISING THE BOARD OF DIRECTORS TO PROCURE THE COMPLETION OF THE SHARE BUY-BACK OFFER AND THE
VOLUNTARY WITHDRAWAL OF LISTING,
NOTICE OF AGM,
NOTICE OF A SHAREHOLDERS’ CLASS MEETING AND
NOTICE OF H SHAREHOLDERS’ CLASS MEETING
* For identification purpose only
–4–
LETTER FROM THE BOARD
INTRODUCTION
The purpose of this circular is to give you the Notice of AGM and provide you with relevant
information to enable you to make informed decision on whether to vote for or against the resolutions
(among others) to be proposed at the meeting for the following issues, to be approved by way of
ordinary resolutions and special resolutions:
Ordinary Resolutions
1. To consider the resolution in relation to the Report of the Board of Directors for 2021
2. To consider the resolution in relation to the Report of the Supervisory Committee for 2021
3. To consider the resolution in relation to the Annual Report and Its Highlights of the
Company for 2021
4. To consider the resolution in relation to the Report of Internal Control Evaluation for 2021
5. To consider the resolution in relation to the Preliminary Profit Distribution Plan for 2021
6. To consider the resolution in relation to the Special Report on the Deposit and Actual Use
of 2021 Proceeds Raised of the Company
7. To consider the resolution in relation to the Special Report of the Occupation of Non-
Operating Capital and the Transaction of Other Related Funds for 2021 of Lanzhou
Zhuangyuan Pasture Co., Ltd.
8. To consider the resolution in relation to the Application to Banks of the Limits of
Composite Credit Facilities for 2022
9. To consider the resolution in relation to the Final Financial Report for 2021 of the
Company
10. To consider the resolution in relation to the Reappointment of the Auditor of the Company
for 2022
11. To consider the resolution in relation to remuneration of Directors, Supervisors and senior
management of the Company for 2022
12. To consider the resolution in relation to the Repurchase and Cancellation of All Restricted
Shares in the Second Release of Locked Period under the 2019 Restricted Shares Incentive
Scheme
–5–
LETTER FROM THE BOARD
Special Resolutions
13. To consider the resolution for approval of the Share Buy-back Offer and the Voluntary
Withdrawal of Listing
14. To consider the resolution for authorising the Board to procure the completion of the
Share Buy-back Offer and the Voluntary Withdrawal of Listing
(1) TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF THE BOARD
OF DIRECTORS FOR 2021
An ordinary resolution on the resolution in relation to the report of Board of Directors for 2021
will be proposed at the AGM. For details, please refer to the sections headed “Directors’ Report” and
“Independent Directors’ Report” in the annual report of the Company dated 29 April 2022. Independent
Directors of the Company will make debriefing in respect to their work performed during 2021 at the
AGM. Please refer to the announcement of the Company dated 30 March 2022 and the contents of
Appendix I of this circular for the full text of the Report of Independent Directors for 2021.
(2) TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF THE
SUPERVISORY COMMITTEE FOR 2021
An ordinary resolution on the resolution in relation to the report of the Supervisory Committee
for 2021 will be proposed at the AGM. For details, please refer to the section headed “Supervisory
Committee’s Report” in the annual report of the Company dated 29 April 2022. Please refer to the
announcement of the Company dated 30 March 2022 and the contents of Appendix II of this circular for
the full text of the Report of Supervisory Committee for 2021.
(3) TO CONSIDER THE RESOLUTION IN RELATION TO THE ANNUAL REPORT AND
ITS HIGHLIGHTS OF THE COMPANY FOR 2021
An ordinary resolution on the resolution in relation to the annual report and its highlights of the
Company for 2021 will be proposed at the AGM, details of which is set out in the Company’s annual
report dated 29 April 2022.
–6–
LETTER FROM THE BOARD
(4) TO CONSIDER THE RESOLUTION IN RELATION TO THE REPORT OF INTERNAL
CONTROL EVALUATION FOR 2021
In accordance with the relevant requirements of the Basic Standards for Enterprise Internal
Control and its supporting guidelines, and other internal control regulatory requirements, together with
the internal control system and assessment methods of the Lanzhou Zhuangyuan Pasture Co., Ltd., based
on the daily supervision and special supervision of internal control, the Board believes that the Company
has maintained the effective internal control in relation to the financial statements established in
accordance with the standards of the Basic Standards for Enterprise Internal Control as at 31 December
2021.
For details, please refer to the announcement of the Company dated 30 March 2022 and the
content of the resolution as set out in Appendix III to this circular in relation to the evaluation report of
the internal control for 2021.
(5) TO CONSIDER THE RESOLUTION IN RELATION TO THE PRELIMINARY PROFIT
DISTRIBUTION PLAN FOR 2021
An ordinary resolution on the resolution in relation to the preliminary profit distribution plan for
2021 will be proposed at the AGM.
According to the Articles, an ordinary resolution will be proposed at the AGM to approve the
Company’s profit distribution plan. The Board proposed the distribution of a final dividend of RMB0.47
per 10 shares (tax inclusive) in cash in an aggregate amount of approximately RMB10,900,000 for the
year ended 31 December 2021. Such dividend will be paid to holders of A Shares and domestic investors
investing in H Shares through the Shenzhen–Hong Kong Stock Connect in Renminbi and to holders
of H Shares in Hong Kong dollars. The actual amount of H Share dividend attributable to holders
of H Shares to be distributed and paid in Hong Kong dollars is calculated according to the average
benchmark exchange rate of Renminbi against Hong Kong dollars as published by the People’s Bank of
China for the five business days preceding the date of the AGM. If the proposed profit distribution plan
is approved at the AGM, the final dividend of H Shares will be paid to the Shareholders whose names
are registered in the Company’s register of members on Monday, 11 July 2022. The Company expects to
pay the dividend before Wednesday, 31 August 2022. The resolution in relation to the preliminary profit
distribution plan for 2021 is subject to approval by the A Shareholders and the H Shareholders at the A
Shareholders’ Class Meeting and H Shareholders’ Class Meeting by way of ordinary resolutions. The
resolution is set out in Appendix IV to this circular.
–7–
LETTER FROM THE BOARD
In order to determine the holders of shares who are entitled to receive the above-mentioned
final dividend, the register of members of the Company will be closed from Wednesday, 6 July 2022
to Monday, 11 July 2022, both days inclusive. To be eligible to receive the final dividend for the year
ended 31 December 2021 (subject to the approval of the Shareholders), unregistered holders of H Shares
of the Company shall lodge share transfer documents with the Company’s H Share registrar and transfer
office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange
Square, 338 King’s Road, North Point, Hong Kong for registration not later than 4:00 p.m. on Tuesday,
5 July 2022.
We hereby recommend Shareholders to authorize the Board to implement the above profit
distribution plan, and recommend the Board to further grant its authority to the Company’s management
for implementing all relevant matters relating to the above profit distribution plan, having obtained the
above authority.
In accordance with the Enterprise Income Tax Law of the People’s Republic of China (
) and its implementation regulations which came into effect on 1 January
2008, the Company is required to withhold and pay enterprise income tax at the rate of 10% on
behalf of the non-resident enterprise shareholders whose names appear on the register of members
of H Shares when distributing the cash dividends. Any H Shares not registered under the name of an
individual Shareholder, including HKSCC Nominees Limited, other nominees, agents or trustees, or
other organisations or groups, will be deemed as shares held by non-resident enterprise Shareholders.
Therefore, enterprise income tax will be withheld from dividends payable to such Shareholders. If
holders of H Shares intend to change its shareholder status, please enquire about the relevant procedures
with your agents or trustees. The Company will strictly comply with the law or the requirements of the
relevant government authority and withhold and pay enterprise income tax on behalf of the relevant
Shareholders based on the register of members for H Shares as at the record date of the proposed final
dividend.
In accordance with the “Circular on Certain Issues Concerning the Policies of Individual Income
Tax ” (Cai Shui Zi [1994] No.020) ( ( [1994] 020
)) promulgated by the Ministry of Finance and the State Administration of Taxation on 13 May
1994, overseas individuals are, temporarily, exempted from the PRC individual income tax for dividend
or bonuses received from foreign invested enterprises. In accordance with the “Letter of the State
Administration of Taxation concerning Taxation Issues of Dividends Received by Foreign Individuals
Holding Shares of Companies Listed in China” (Guo Shui Han Fa [1994] No. 440) (
( [1994] 440 )) as promulgated
by the State Administration of Taxation on 26 July 1994, dividends (capital bonuses) received by foreign
individuals holding B Shares or overseas shares (including H Shares) from Chinese enterprises issuing
such B Shares or overseas shares are temporarily exempted from individual income tax. Accordingly,
the Company will not withhold and pay the individual income tax on behalf of individual Shareholders
when the Company distributes the final dividend to individual Shareholders whose names appear on the
register of members of H Shares of the Company.
–8–
LETTER FROM THE BOARD
The Company assumes no responsibility and disclaims all liabilities whatsoever in relation to
the tax status or tax treatment of the individual H Share Shareholders and for any claims arising from
any delay in or inaccurate determination of the tax status or tax treatment of the individual H Share
Shareholders or any disputes over the withholding mechanism or arrangements.
(6) TO CONSIDER THE RESOLUTION IN RELATION TO THE SPECIAL REPORT ON
THE ACTUAL DEPOSIT AND USE OF 2021 PROCEEDS RAISED OF THE COMPANY
An ordinary resolution on the resolution in relation to the special report on the actual deposit
and use of 2021 proceeds raised of the Company will be proposed at the AGM. The full text of such
resolution is set out in Appendix V in this circular.
(7) TO CONSIDER THE RESOLUTION IN RELATION TO THE SPECIAL REPORT OF
THE OCCUPATION OF NON-OPERATING CAPITAL AND THE TRANSACTION OF
OTHER RELATED FUNDS FOR 2021 OF LANZHOU ZHUANGYUAN PASTURE CO.,
LTD.
An ordinary resolution on the resolution in relation to the approval on the special report of the
occupation of non-operating capital and the transaction of other related funds for 2021 of the Company
will be proposed at the AGM.
On the basis of auditing the consolidated and Company balance sheet as at 31 December 2021,
the consolidated and Company income statement, the consolidated and Company cash flow statement,
the consolidated and Company statements of changes in shareholders’ equity for the year of 2021 and
the corresponding notes to the financial statements of Lanzhou Zhuangyuan Pasture Co., Ltd., WUYIGE
Certified Public Accountants LLP (Special General Partnership) conducted a special audit on the
Summary Statement of Occupation of Non-operating Capital and Other Related Capital Transactions of
the Listed Company in 2021 ( 2021
) (hereinafter referred to as the “Summary Statement”). It is the responsibility of the management
of the Company to prepare and disclose the summary statement in accordance with the provisions of the
Notice on Several Issues in respect of Regulating the Capital Transactions between Listed Companies
and Related Parties and External Guarantees of Listed Companies (
) (Zhengjianfa [2003] No.56) issued by China
Securities Regulatory Commission and State-owned Assets Supervision and Administration Commission
of the State Council and provide true, legal and complete audit evidence. The responsibility of the audit
agency is to issue special audit opinions on the summary statement on the basis of performing the audit
work.
For details, please refer to the announcement of the Company dated 30 March 2022, in relation to
a special audit report on the summary statement of occupation of non-operating capital and other related
capital transactions; and the audited financial statements set out in the annual report of the Company.
–9–
LETTER FROM THE BOARD
(8) TO CONSIDER THE RESOLUTION IN RELATION TO THE FINAL FINANCIAL
REPORT FOR 2021 OF THE COMPANY
An ordinary resolution on the resolution in relation to the final financial report for 2021 of
the Company will be proposed at the AGM. For details of the financial reports for the year ended 31
December 2021, please refer to the financial statements set out in the Company’s annual report dated 29
April 2022.
The final financial report of the Company for the year ended 31 December 2021 was considered
and approved by the Board on 30 March 2022. The details of the resolution are set out in Appendix
VI to this circular and is hereby proposed as ordinary resolution at the AGM for consideration and
approval.
(9) TO CONSIDER THE RESOLUTION IN RELATION TO THE APPLICATION TO
BANKS OF THE LIMITS OF COMPOSITE CREDIT FACILITIES FOR 2022
An ordinary resolution on the resolution in relation to the application to banks of the limits of
composite credit facilities for 2022 of the Company will be proposed at the AGM.
In order to fulfill the manufacturing and operating requirements of the Company, the Company
proposed to apply to a bank for a composite credit facility not exceeding RMB2,500,000,000 after
considering the capital arrangement of the Company. The types of credit facilities mainly include:
investment loans for liquidity and fixed assets, domestic letter of credit, banker ’s acceptance, bills
discounting, non-financing letters of credit and factoring guarantee of buyers. The amount of composite
credit facility set out above is subject to final actual amount approved by the bank. The specific
financing amount will be determined in accordance with the actual operation needs of the Company.
During the credit period, the amount of credit facility can be used on a revolving basis.
The Company authorized the legal representative of the Company or authorized agent appointed
by the legal representative of the Company, with full power to execute various legal documents in
relation to the aforesaid composite credit facility, including but not limited to application forms,
contracts or agreement in relation to credit facility, loans and financing on behalf of the Company.
The relevant resolution is set out in Appendix VII to this circular.
The above authorization shall commence on the date of approval by the annual general meeting
for 2021 and end on the date of approval of a new resolution by the annual general meeting for 2022.
– 10 –
LETTER FROM THE BOARD
(10) TO CONSIDER THE RESOLUTION IN RELATION TO THE REAPPOINTMENT OF
THE AUDITOR OF THE COMPANY FOR 2022
An ordinary resolution on the Resolution in relation to the Reappointment of the Auditor of the
Company for 2022 regarding the reappointment of WUYIGE Certified Public Accountants LLP as the
auditor of the Company for 2022 and the grant of authority to the Board to determine its remuneration
will be proposed at the AGM. The Board will then grant the authority to the management of the
Company to determine the remuneration of the auditor for 2022 according to actual conditions.
(11) RESOLUTION IN RELATION TO REMUNERATION OF DIRECTORS, SUPERVISORS
AND SENIOR MANAGEMENT OF THE COMPANY FOR 2022
At the AGM, an ordinary resolution will be proposed to approve the remuneration plan
for Directors, Supervisors and senior management for the year ended 31 December 2022. Such
remuneration plan is made with reference to the level of remuneration for 2021 and in accordance with
internal policies of the Company as follows:
Considering its future development needs, the Company, with reference to level of remuneration
of Directors, Supervisors and senior management of domestic listed peers and on the basis of actual
operations of the Company, formulates the following plan for remuneration of Directors, Supervisors
and senior management of the Company for 2022 in order to enhance its operation and management
efficiency, thus promoting its sustainable development:
1. Applicable scope
Directors, Supervisors (excluding employee representative supervisor) and senior
management (general manager, deputy general manager, financial director and secretary of the
Board) entitled to remuneration (allowance) and performance-based pay in the Company.
2. Applicable period
1 January 2022 to 31 December 2022
3. Remuneration scale
(1) Remuneration of independent Directors
Annual allowance of independent Directors of the Company is RMB35,000 per
person (before tax).
– 11 –
LETTER FROM THE BOARD
(2) Remunerations of non-independent Directors, Supervisors (excluding employee
representative supervisor), and senior management shall be fixed in accordance
with the relevant management system of the Company for remunerations and
performance assessment as follows:
Basic
Remuneration/ Performance-
Applicable Post Year based Pay/Year
Chairman/Vice Chairman/Chairman of RMB100,000- RMB200,000-
Board of Supervisors/General Manager RMB500,000 RMB300,000
Director/Deputy General Manager/ RMB100,000- RMB150,000-
Financial Director/Secretary of RMB400,000 RMB200,000
the Board
Supervisor RMB100,000- RMB50,000-
RMB150,000 RMB100,000
(12) TO CONSIDER THE RESOLUTION IN RELATION TO THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES IN THE SECOND RELEASE OF
LOCKED PERIOD UNDER THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
At the 14th meeting of the fourth session of the Board of Directors and the 10th meeting of the
fourth session of the Board of Supervisors held on 2 June 2022, the Company considered and approved
the Proposal on Repurchase and Cancellation of All Restricted Shares in the Second Release of Lockup
Period Under the 2019 Restricted Shares Incentive Scheme, pursuant to which the Company agreed
to repurchase and cancel 869,508 restricted shares held in aggregate by 76 incentive participants that
became involved due to failure to satisfy the unlocking conditions for the second release of lockup
period under the 2019 Restricted Shares Incentive Scheme (the “Incentive Scheme”) in terms of the
performance assessment at level of the Company; and to repurchase and cancel all 12,180 restricted
shares that have been granted to one retired incentive participant but remain locked-up. 881,688
restricted shares granted but remaining locked-up will be subject to repurchase and cancellation
contemplated hereunder, which accounts for 0.38% of the current share capital of 232,381,032 shares
of the Company, and 0.45% of A share capital of 197,251,032 shares of the Company. In accordance
with Measures for Administration of Equity Incentive of Listed Companies (the “ Administrative
Measures”), the above matter is subject to consideration at the general meeting of the Company. The
relevant resolution is set out in Appendix VIII to this circular.
– 12 –
LETTER FROM THE BOARD
(13) TO CONSIDER THE RESOLUTION FOR APPROVAL OF THE SHARE BUY-BACK
OFFER AND THE VOLUNTARY WITHDRAWAL OF LISTING
(14) TO CONSIDER THE RESOLUTION FOR AUTHORISING THE BOARD TO PROCURE
THE COMPLETION OF THE SHARE BUY-BACK OFFER AND THE VOLUNTARY
WITHDRAWAL OF LISTING
Reference is made to (i) the announcement made by the Company on 25 April 2022 in relation
to the Share Buy-back Offer and the Voluntary Withdrawal of Listing under Rule 3.5 of the Takeovers
Code, (ii) the Offer Document, and (iii) the announcement of the Company dated 7 June 2022 in relation
to, amongst others, the Offer Document and the cancellation of the 2022 second extraordinary general
meeting, the 2022 second A Shareholders class meeting and the 2022 second H Shareholders class
meeting (the “Update Announcement”).
A board meeting of the Company was held on 25 April 2022, whereby the Board has resolved,
among other matters, that subject to compliance with the Takeovers Code, the Share Buy-backs Code
and the Listing Rules, the Share Buy-back Offer shall be made to buy-back all H Shares in issue. All
H Shares bought-back under the Share Buy-back Offer will be cancelled. If the Share Buy-back Offer
becomes unconditional in all respects, the Company will make an application for the listing of the H
Shares to be withdrawn from the Hong Kong Stock Exchange in accordance with Rule 6.15(2) of the
Listing Rules by way of capital reorganisation.
If the Share Buy-back Offer materialises and becomes unconditional, such H Shares which will
be bought back by the Company will be cancelled, and the listing of H Shares of the Company will
be withdrawn pursuant to the Takeovers Code, the Share Buy-backs Code and the Listing Rules. The
Share Buy-back Offer, together with the Voluntary Withdrawal of Listing, are subject to the fulfilment
of a number of conditions as set out in the Offer Document (as updated by the Update Announcement),
including the passing of resolutions approving the Share Buy-back Offer and the Voluntary Withdrawal
of Listing at the AGM, H Shareholders ’ Class Meeting and A Shareholders ’ Class Meeting and
minimum valid acceptances of the Share Buy-back Offer being received amounting to at least 90% of
the H Shares held by the Independent H Shareholders. The Directors believe the Share Buy-back Offer
will be in the best interest of the Company and its Shareholders as a whole.
In respect of the abovementioned matter, it is proposed at the meeting for the Shareholders to
consider the resolution for authorising the Board to procure the completion of the Share Buy-back Offer
and the Voluntary Withdrawal of Listing.
WARNING
H Shareholders and potential investors of the Company should note that the Share Buy-
back Offer is subject to the satisfaction of the Conditions in all respects. Accordingly, the Share
Buy-back Offer may or may not become unconditional. H Shareholders and potential investors
of the Company should therefore exercise caution when dealing in the securities of the Company.
Persons who are in doubt as to the action they should take should consult their licensed securities
dealers or registered institutions in securities, bank managers, solicitors, professional accountants
or other professional advisers.
– 13 –
LETTER FROM THE BOARD
The Directors make no recommendation as to the fairness or reasonableness of the Share
Buy-back Offer and the Voluntary Withdrawal of Listing or as to the acceptance of the Share
Buy-back Offer in this circular, and strongly recommend the Independent H Shareholders not to
form a view on the Share Buy-back Offer and the Voluntary Withdrawal of Listing, unless and
until they have received and read the letter from the Independent Financial Adviser containing
its advice to the Independent H Shareholders in respect of the Share Buy-back Offer and the
Voluntary Withdrawal of Listing, which is included in the Offer Document dated 6 June 2022
despatched to the Shareholders.
The Company has no rights under the laws of the PRC and the articles of association of the
Company to compulsorily acquire the H Shares that are not tendered for acceptance pursuant to
the Share Buy-back Offer. Accordingly, Independent H Shareholders are reminded that if they
do not accept the Share Buy-back Offer, and if the Share Buy-back Offer subsequently becomes
unconditional in all respects and the H Shares are delisted from the Hong Kong Stock Exchange,
this will result in the Independent H Shareholders holding unlisted H Shares and the liquidity
of the H Shares may be severely reduced. In addition, the Company will no longer be subject
to the requirements under the Listing Rules and may or may not continue to be subject to the
Takeovers Code (depending on whether it remains as a public company in Hong Kong under the
Takeovers Code) after the completion of the Share Buy-back Offer, and the rights of Independent
H Shareholders to certain information of the Company will be reduced. In view of the implications
on the H Shareholders who have not accepted the Share Buy-back Offer upon the extended
closing date, the Company will notify the relevant H Shareholders in writing by way of issuing an
announcement in one (1) week prior to the extended closing date to remind the H Shareholders
of the extended closing date and the implications if they choose not to accept the Share Buy-back
Offer.
Shareholders should also note that if they do not agree to the terms of the Share Buy-back
Offer, they can vote against the Share Buy-back Offer and the Voluntary Withdrawal of Listing
at the H Shareholders Class Meeting, A Shareholders Class Meeting and/or the AGM (as the case
may be). If more than 10% of the votes attaching to all the H Shares held by the Independent
H Shareholders are voted against the Share Buy-back Offer and the Voluntary Withdrawal of
Listing at the H Shareholders Class Meeting, the Share Buy-back Offer would lapse and the H
Shares would remain listed on the Hong Kong Stock Exchange.
For further details of the terms and conditions of the Share Buy-back Offer and the Voluntary
Withdrawal of Listing, please refer to the Offer Document and the Update Announcement.
– 14 –
LETTER FROM THE BOARD
AGM AND CLASS MEETINGS
The Company will convene the AGM on Wednesday, 29 June 2022 at the Company’s head office
in the PRC at 26th Floor, Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan Road,
Chengguan District, Lanzhou City, Gansu Province, the PRC, to consider and, if thought fit, approve,
inter alia, the matters as set out in the notice convening the AGM set out in pages N-1 to N-4 of this
circular. The A Shareholders’ Class Meeting will be held immediately after the conclusion of the AGM,
at the same place, and the H Shareholders’ Class Meeting will be held immediately after the conclusion
of the A Shareholders ’ Class Meeting, at the same place, to consider and, if thought fit, approve
the proposed dividends. Notice of AGM, Notice of A Shareholders’ Class Meeting and Notice of H
Shareholders’ Class Meeting are set out in this circular.
In order to determine the holders of shares who are eligible to attend and vote at the AGM and H
Shareholders’ Class Meeting, the register of members of the Company is closed from Monday, 30 May
2022 to Wednesday, 29 June 2022, both days inclusive. To be eligible to attend and vote at the AGM and
H Shareholders’ Class Meeting, unregistered holders of H Shares of the Company shall lodge relevant
share transfer documents with the Company’s H Share registrar and transfer office in Hong Kong, Union
Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North
Point, Hong Kong for registration not later than 4:00 p.m. on Friday, 27 May 2022.
Shareholders who intend to appoint a proxy to attend the AGM and H Shareholders’ Class
Meeting shall complete and return the accompanying form of proxy in accordance with the instructions
printed thereon. For holders of H Shares, the form of proxy should be returned to Union Registrars
Limited and for holders of A Shares, the form of proxy should be returned to the Company’s head office
in the PRC in person or by post not less than 24 hours before the time fixed for holding the AGM or any
adjourned meeting thereof.
As at the Latest Practicable Date, the Company has 35,130,000 H Shares in issue, and no H
Shares are held by the Company, the Directors and parties acting in concert with any of them, and
hence, all H Shareholders are considered as Independent H Shareholders in respect of the Share Buy-
back Offer and the Voluntary Withdrawal of Listing. Therefore, all H Shareholders (being Independent
H Shareholders) are eligible to vote at the H Shareholders Class Meeting and the AGM in respect of the
resolutions relating to the Share Buy-back Offer and the Voluntary Withdrawal of Listing.
As at the Latest Practicable Date, the Company has 197,251,032 A Shares in issue. As there is no
restriction under the articles of association of the Company and the laws and regulations in the PRC in
relation to the voting rights of the Directors and parties acting in concert with any of the Company and
the Directors at the A Shareholders Class Meeting and the AGM, all A Shareholders are eligible to vote
at the A Shareholders Class Meeting and the AGM in respect of the resolutions relating to the Share
Buy-back Offer and the Voluntary Withdrawal of Listing.
– 15 –
LETTER FROM THE BOARD
VOTING BY POLL AT AGM
Pursuant to Rule 13.39(4) of the Listing Rules, all votes of shareholders of a listed issuer at the
issuer ’s general meeting must be taken by poll except where the chairman, in good faith, decides to
allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show
of hands. The chairman of the AGM, A shareholders’ Class Meeting and H Shareholders’ Class Meeting
will therefore demand a poll for every resolution put to the vote at the AGM pursuant to Article 85 of
the Articles.
Pursuant to Rule 2.9 of the Takeovers Code, the Company has appointed the Company’s auditor,
WUYIGE Certified Public Accountants LLP, as scrutineer for the vote-taking at the AGM and the H
Shareholders Class Meeting.
On a poll, every Shareholder present in person or by proxy (or being a corporation by its duly
authorized representative) shall have one vote for each Share registered in his/her/its name in the register
of members. A Shareholder entitled to more than one vote needs not use all his/her/its votes or cast all
the votes he/she/it uses in the same manner.
RECOMMENDATION
The Board considers that all resolutions set out in the Notice of AGM, Notice of A Shareholders’
Class Meeting and Notice of H Shareholders ’ Class Meeting for Shareholders ’ consideration and
approval are in the best interests of the Company and its Shareholders. As such, the Board recommends
the Shareholders to vote in favour of the said resolutions set out in the Notice of AGM, Notice of A
Shareholders’ Class Meeting and Notice of H Shareholders’ Class Meeting which are to be proposed at
such meetings.
By order of the Board
Lanzhou Zhuangyuan Pasture Co., Ltd.*
蘭州莊園牧場股份有限公司
Yao Gexian
Chairman of the Board
* For identification purpose only
– 16 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
Lanzhou Zhuangyuan Pasture Co., Ltd.
Work Report of Independent Directors for 2021
(Wang Haipeng, Sun Jian, Zhang Yubao)
As independent directors of the 4th session of the Board of Lanzhou Zhuangyuan Pasture Co.,
Ltd. (hereinafter referred to as the “Company” or “Zhuangyuan Pasture”), in 2021, we performed our
duties carefully and diligently according to applicable laws, regulations and normative documents,
such as the Company Law, the Guiding Opinions on Establishing Independent Director System for
Listed Companies ( ), the Code of Corporate
Governance for Listed Companies, the Self-regulatory Guideline No. 1 for Companies Listed on the
Shenzhen Stock Exchange – the Standardized Operation of Main Board Listed Company (
1 – ), as well as the Articles of
Association and the Working System of Independent Directors, actively participated in Board meetings,
and carefully considered various proposals. We had sufficient communication with the management
in respect of production and operation, financial management, related parties transactions, external
guarantees, use of raised funds, appointment of senior management, remuneration plans for directors,
supervisors and senior management, commitment exemption, etc., and expressed independent opinions
on major matters of the Company based on our professional knowledge and capabilities. We maintained
our complete independence during daily work and safeguarded the interests of the Company and
minority shareholders effectively. Taking the opportunity of participation in the Board meetings and
general meetings and communicating with the management at other time, we got ourselves fully known
and understood the Company’s production and operation. Performance of our duties as independent
directors in 2021 is as follows:
I. ATTENDANCE AT THE BOARD MEETINGS AND GENERAL MEETINGS IN 2021
In 2021, the Company held 8 meetings of the 3rd session of the Board, 8 meetings of the 4th
session of the Board and 3 general meetings. We have participated in all of the meetings of the 4th
session of the Board. We delivered affirmative vote for relevant proposals considered at each Board
meeting and earnestly fulfilled our duties as independent directors. In addition, we got ourselves known
and understood production and operation details of the Company in a timely manner and paid great
attention to comprehensive development and growth of the Company.
Number of
Board meetings
should be Number of Number of
Name of attended Number of attendance Number of attendances in
independent director this year attendances by proxy absence general meeting
Wang Haipeng 8 8 0 0 1
Sun Jian 8 8 0 0 1
Zhang Yubao 6 6 0 0 0
Xie Zhongkui 2 2 0 0 1
– I-1 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
II. EXPRESS INDEPENDENT OPINIONS
As independent directors of the Company, we have jointly expressed independent opinions on
relevant matters of the Company:
On 29 June 2021, we issued independent opinions for approval on the Resolution on
Appointment of General Manager for the Company, the Resolution on Appointment of Deputy
General Manager for the Company, the Resolution on Appointment of the Financial Controller
for the Company and the Resolution on Appointment of Secretary to the Board of the Company
considered at the first meeting of the 4th session of the Board.
On 5 August 2021, we issued prior approval opinion and independent opinions for
approval on the Resolution on the New Forecast on Daily Related Parties Transaction in 2021
for the Company, and issued independent opinions for approval on the Resolution on By-election
of independent directors, the Resolution on the Remuneration of the Directors, Supervisors
and Senior Management for 2021, the Resolution on Exempting Shareholders’ Voluntary
Shareholding and Reduction Intention Commitment, the Resolution on Exempting Senior
Management from Voluntary Share Lock-up Commitments and the Resolution on Provision for
Asset Impairment and Disposal of Certain Fixed Assets considered at the second meeting of the
4th session of the Board.
On 27 August 2021, we issued independent opinions for approval on the Resolution on
the Special Report on the Deposit and Use of Proceeds Raised for 1H2021 for the Company
considered at the third meeting of the 4th session of the Board. We have also carefully reviewed
and verified the capital occupation by the controlling shareholder and other related parties and
external guarantees provided by the Company as of 30 June 2021, prepared special statements
and issued independent opinions.
On 6 September 2021, we issued independent opinions for approval on the Resolution on
the Use of Partial Idle Proceeds as Temporary Liquid Funds considered at the fourth meeting of
the 4th session of the Board.
On 30 December 2021, we issued prior approval opinion and independent opinions for
approval on the Resolution on the Forecast on Daily Related Parties Transaction in 2022 for the
Company at the eighth meeting of the 4th session of the Board.
– I-2 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
III. PERFORMANCE OF THE SPECIAL COMMITTEES
During the reporting period, the 4th session of the Audit Committee actively performs its duties
in accordance with the Company Law, the Articles of Association, the Working Rules of the Audit
Committee of the Board and other relevant regulations and diligently and fully fulfilled its professional
functions and supervision role. The 3rd session of the Audit Committee provided reasonable suggestions
on the deposit and use of proceeds raised for 1H2021 for the Company and submit it to the Board for
approval, and reviewed and audited the Interim Report and the Third Quarterly Reports in 2021. The
Audit Committee plays an effective supervisory role for major issues such as corporate risk management
and internal control, management, procedures, implementation and effectiveness of financial and risk
control as well as corporate governance, which further enhance the effectiveness of internal control and
operations of the Company.
During the reporting period, the 4th session of the Nomination Committee actively performs
its duties in accordance with the Company Law, the Articles of Association, the Working Rules of the
Nomination Committee of the Board and other relevant regulations. During the reporting period, Mr. Xie
Zhongkui resigned as an independent director for personal reasons. Mr. Zhang Yubao was nominated
as an independent director candidate for the 4th session of the Board by the Company ’ s major
shareholders. To this end, the Nomination Committee comprehensively examined the qualifications of
independent director candidates, held a special committee meeting and submitted it to the Board for
approval, ensuring the stable and effective operation of the Board.
During the reporting period, the 4th session of the Remuneration and Appraisal Committee
actively performs its duties in accordance with the Company Law, the Articles of Association, the
Working Rules of the Remuneration and Appraisal Committee of the Board and other relevant
regulations. During the reporting period, the Remuneration and Appraisal Committee reviewed the 2021
Remuneration Plan of the Company’s Directors, supervisors and senior management with reference to
the remuneration levels of directors, supervisors and senior management of domestic listed companies
within the industry and the Company’s actual operation, and considered that the plan is in line with
the actual situation of the current operation and management and production and operation scale of the
Company and is in accordance with the relevant laws, regulations, normative documents and the Articles
of Association, which is conducive to encouraging the Company ’s Directors, supervisors and senior
management to perform their duties carefully and diligently. The plan was submitted to the Board for
approval.
During the reporting period, the 4th session of the Strategy Committee actively performs its
duties in accordance with the Company Law, the Articles of Association, the Working Rules of the
Strategy Committee of the Board and other relevant regulations. During the reporting period, the
Strategy Committee held a special meeting on the planning and discussion and preliminary preparations
for the H-share repurchase and delisting plans based on the Company’s development strategy and submit
it to the Board for approval, which played an important role in the Company ’s future development
planning and overall development strategy.
– I-3 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
IV. ON-SITE INSPECTION OF THE COMPANY
In 2021, due to the impact of COVID-19 pandemic, Mr. Sun Jian, an independent director,
was not able to carry out on-site inspection of the Company; instead, he communicated matters of
the Company by means of remote communication. Mr. Wang Haipeng and Mr. Zhang Yubao, being
the independent directors, attended the Board meeting and general meetings and conducted on-
site inspections to understand the production and operation and financial positions of the Company.
Independent Directors actively communicated with other directors and the management to know
about their views and suggestions on business, internal control and standardized operation. Based
on our concern and understanding of the macro policy environment, we provided suggestions and
recommendation in respect of business operations, finance and auditing.
V. WORK DONE TO PROTECT THE RIGHTS AND INTERESTS OF INVESTORS
1. Supervision on information disclosure of the Company
We focused on information disclosure work of the Company, and urged the Company
be in strict compliance with the Stock Listing Rules of the Shenzhen Stock Exchange, the
Self-regulatory Guideline No. 1 for Companies Listed on the Shenzhen Stock Exchange – the
Standardized Operation of Main Board Listed Company and the Main Board Listing Rules on
the Hong Kong Stock Exchange and other applicable laws, regulations and other normative
documents, in order to ensure the truthfulness, accuracy, timeliness and integrity of information
disclosed by the Company both in mainland China and Hong Kong.
2. Performance of duties by independent directors
We performed our duties carefully and diligently, actively participated in Board
meetings, and carefully considered various proposals. We communicated with the Company’s
management about the production and operation, financial management, use of raised funds,
related transactions, external guarantees, appointment of senior management, remuneration plans
for directors, supervisors and senior management, commitment exemptions, and construction
and implementation of internal control systems and express independent opinions on major
issues of the Company based on our professional knowledge and expertise. We maintained full
independence in work and earnestly safeguarded the interests of the Company and minority
shareholders.
We continued to study and improve our knowledge and understanding of relevant laws and
regulations, especially those related to regulating corporate governance structure and protecting the
rights and interests of public shareholders, and actively participate in relevant training organized
by Shenzhen Stock Exchange, in order to enhance and improve the awareness of protecting the
legitimate rights and interests of the Companies and investors, particularly medium– and small-
sized investors.
– I-4 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
VI. OTHER WORK AND PERFORMANCE
1. No proposal in relation to employment or dismissal of accounting firm;
2. No proposal in relation to convening any Board meeting;
3. No appointment of external auditor or consultant institution.
VII. CONTACT INFORMATION
1. Wang Haipeng: 2500805419@qq.com
2. Sun Jian: sunjian@huiyelaw.com
3. Zhang Yubao: zyubao@lzb.ac.cn
The afore-mentioned is our report on duties performance for 2021. In 2022, we will continue to
perform the duties of independent directors in accordance with relevant laws, regulations, normative
documents and the Articles of Association and other regulations and requirements for independent
directors, use our professional knowledge and experience to provide constructive suggestions for the
Company’s development strategy, internal control, optimization management, etc., and strengthen
communication with other directors, supervisors and management to better perform the duties of
independent directors, as well as safeguard the overall interests of the Company and the legitimate
rights and interests of minority shareholders, and thereby promoting the standardized operation of the
company.
Independent directors: Wang Haipeng Sun Jian Zhang Yubao
30 March 2022
– I-5 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
Lanzhou Zhuangyuan Pasture Co., Ltd.
Work Report of Independent Directors for 2021
(Liu Zhijun, Zhao Xinmin, Wong Cho Hang Stanley)
As independent directors of the 3rd session of the Board of Lanzhou Zhuangyuan Pasture Co.,
Ltd. (hereinafter referred to as the “Company” or “Zhuangyuan Pasture”), in 2021, we performed our
duties carefully and diligently according to applicable laws, regulations and normative documents,
such as the Company Law, the Guiding Opinions on Establishing Independent Director System for
Listed Companies ( ), the Code of Corporate
Governance for Listed Companies, the Self-regulatory Guideline No. 1 for Companies Listed on the
Shenzhen Stock Exchange – the Standardized Operation of Main Board Listed Company (
1 – ), as well as the Articles of
Association and the Working System of Independent Directors, actively participated in Board meetings,
and carefully considered various proposals. We had sufficient communication with the management
in respect of production and operation, financial management, related parties transactions, significant
guarantees, use of raised funds, equity incentive, change of senior management, engagement of auditor,
general election etc., and expressed independent opinions on major matters of the Company based on
our professional knowledge and capabilities. We maintained our complete independence during daily
work and safeguarded the interests of the Company and minority shareholders effectively. Taking the
opportunity of participation in the Board meetings and general meetings and communicating with the
management at other time, we got ourselves fully known and understood the Company’s production and
operation. During the preparation of 2020 Annual Report of the Company, we communicated with the
certified public accountant who conducts the annual audit to supervise the auditing and facilitated the
auditing report to be prepared in time. Performance of our duties as independent directors in 2021 is as
follows:
– I-6 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
I. ATTENDANCE AT THE BOARD MEETINGS AND GENERAL MEETINGS IN 2021
In 2021, the Company held 8 meetings of the 3rd session of the Board, 8 meetings of the 4th
session of the Board and 3 general meetings. We have participated in all of the meetings of the 3rd
session of the Board. We delivered affirmative vote for relevant proposals considered at each Board
meeting and earnestly fulfilled our duties as independent directors. In addition, we got ourselves known
and understood production and operation details of the Company in a timely manner and paid great
attention to comprehensive development and growth of the Company.
Number of
Board meetings
should be Number of Number of
Name of attended this Number of attendance by Number of attendances in
independent director year attendances proxy absence general meeting
Liu Zhijun 8 8 0 0 2
Zhao Xinmin 8 8 0 0 2
Wong Cho Hang Stanley 8 8 0 0 2
II. EXPRESS INDEPENDENT OPINIONS
As independent directors of the Company, we have jointly expressed independent opinions on
relevant matters of the Company:
On 15 January 2021, we issued prior approval opinion and independent opinions for
approval on the Resolution on the Forecast of Daily Related Parties Transactions in 2021, and
issued independent opinions for approval on the Resolution on Repurchase and Cancellation of
All Restricted Shares at the End of First Lock-up Period of the 2019 Restricted Stock Incentive
Plan considered at the 46th meeting of the 3rd session of the Board.
On 29 January 2021, we issued independent opinions for approval on the Resolution on
the Use of Partial Idle Proceeds for Cash Management, the Resolution on Provision for Asset
Impairment and Disposal of Certain Fixed Assets in 2020 and the Resolution on Exempting the
Controlling Shareholders and De facto Controllers from Undertakings to Hold Shares and Reduce
Shareholdings considered at the 47th meeting of the 3rd session of the Board.
On 16 March 2021, we issued independent opinions for approval on the Resolution on
Dismissal of Deputy General Manager for the Company at the 50th meeting of the 3rd session of
the Board.
– I-7 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
On 29 March 2021, we issued independent opinions for approval on the Resolution on
Approval of 2020 Annual Report and its Highlights, the Resolution on Approval of the Evaluation
Report on Internal Control for 2020 and Implementation Inspection on Internal Control Rules,
the Resolution on Approval of Profit Distribution for 2020, the Resolution on Approval of
Special Report on the Deposit and Actual Use of Proceeds Raised for 2020, the Resolution on
Approval of the Final Financial Report for 2020 of the Company, the Resolution on Approval
of the Financial Budget for 2021 of the Company, the Resolution on the Application to Banks
for the Limits of Composite Credit Facilities for 2021 and the Resolution on the Estimated
Guarantee Limit of the Company and its Holding Subsidiaries for 2021 at the 51st meeting of
the 3rd session of the Board. We have also carefully reviewed and verified the capital occupation
by the controlling shareholder and other related parties and external guarantees provided by the
Company as of 31 December 2020, prepared special statements and issued independent opinions.
On 28 April 2021, we issued independent opinions for approval on the Resolution on the
Use of Partial Idle Proceeds as Temporary Liquid Funds considered at the 52nd meeting of the
3th session of the Board.
On 25 May 2021, we issued prior approval opinion and independent opinions for
approval on the Resolution on Reappointment of Auditors of the Company for 2021, and issued
independent opinions for approval on the Resolution on Election of Non-Independent Directors
for the 4th Session of the Board of the Company and the Resolution on Election of Independent
Directors for the 4th Session of the Board of the Company at the 53rd meeting of the 3rd session
of the Board.
III. PERFORMANCE OF THE SPECIAL COMMITTEES
During the reporting period, the 3rd session of the Audit Committee actively performs its duties
in accordance with the Company Law, the Articles of Association, the Working Rules of the Audit
Committee of the Board and other relevant regulations and diligently and fully fulfilled its professional
functions and supervision role. The Audit Committee communicated with the external auditor on the
audit work of the 2020 annual financial report, supervised its progress, and ensured the independence
of the audit and the completion of the audit work as scheduled. The 3rd session of the Audit Committee
provided reasonable suggestions on the Resolution on Approval of Profit Distribution for 2020, the
Resolution on Approval of the Deposit and Use of Proceeds Raised for 2020, the Resolution on the
Estimated Guarantee Limit of the Company and its Holding Subsidiaries for 2021, the Resolution on
the Application to Banks for the Limits of Composite Credit Facilities for 2021 and the Resolution
on Reappointment of Auditors of the Company for 2021 and submit it to the Board for approval. The
3rd session of the Audit Committee reviewed and audited the 2020 Annual Report and 2021 First
Quarterly Report. Special meetings were held by the 3rd session of the Audit Committee on corporate
risk management and internal control, management, procedures, implementation and effectiveness of
financial and risk control as well as corporate governance, which further enhance the effectiveness of
internal control and operations of the Company.
– I-8 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
During the reporting period, the 3rd session of the Nomination Committee actively performs
its duties in accordance with the Company Law, the Articles of Association, the Working Rules of the
Nomination Committee of the Board and other relevant regulations. During the reporting period, upon
the conclusion of the 3rd session of the Board, the Nomination Committee reviewed the qualifications,
selection procedures and term of office of the candidates for the 4th session of the Board, held a
special committee meeting and submitted it to the Board for approval, ensuring the stable and effective
operation of the Board.
IV. ON-SITE INSPECTION OF THE COMPANY
In 2021, due to the impact of COVID-19 pandemic, Mr. Wong Cho Hang Stanley, an independent
director, was not able to carry out on-site inspection of the Company; instead, he communicated
matters of the Company by means of remote communication. Ms. Liu Zhijun and Mr. Zhao Xinmin,
being the independent directors, attended the Board meeting and general meetings and conducted on-
site inspections to understand the production and operation and financial positions of the Company.
Independent Directors actively communicated with other directors and the management to know
about their views and suggestions on business, internal control and standardized operation. Based
on our concern and understanding of the macro policy environment, we provided suggestions and
recommendation in respect of business operations, finance and auditing.
V. WORK DONE TO PROTECT THE RIGHTS AND INTERESTS OF INVESTORS
1. Supervision on information disclosure of the Company
We focused on information disclosure work of the Company, and urged the Company
be in strict compliance with the Stock Listing Rules of the Shenzhen Stock Exchange, the
Self-regulatory Guideline No. 1 for Companies Listed on the Shenzhen Stock Exchange – the
Standardized Operation of Main Board Listed Company and the Main Board Listing Rules on
the Hong Kong Stock Exchange and other applicable laws, regulations and other normative
documents, in order to ensure the truthfulness, accuracy, timeliness and integrity of information
disclosed by the Company both in mainland China and Hong Kong.
2. Performance of duties by independent directors
We performed our duties carefully and diligently, actively participated in Board
meetings, and carefully considered various proposals. We communicated with the Company’s
management about the production and operation, financial management, use of raised funds,
related transactions, significant guarantees and construction and implementation of internal
control systems and express independent opinions on major issues of the Company based on our
professional knowledge and expertise. We maintained full independence in work and earnestly
safeguarded the interests of the Company and minority shareholders.
– I-9 –
APPENDIX I REPORT OF INDEPENDENT DIRECTORS FOR 2021
VI. OTHER WORK AND PERFORMANCE
1. No proposal in relation to employment or dismissal of accounting firm;
2. No proposal in relation to convening any Board meeting;
3. No appointment of external auditor or consultant institution.
VII. CONTACT INFORMATION
1. Liu Zhijun: liuzhj2007@163.com
2. Wong Cho Hang Stanley: stanley@chuanchiong.com.hk
3. Zhao Xinmin: 18919995599@189.cn
The afore-mentioned is our report on duties performance for 2021.
Upon the conclusion of the 3rd session of the Board on 29 June 2021, we ceased to be the
Independent Directors of the Company. We would like to express our respect and heartfelt gratitude
to the Board, management and relevant personnel for the strong support and active cooperation in the
performance of our duties. We hope that the Company will continue to develop in a sustainable, healthy
and stable manner, and return shareholders with better performance under the leadership of the Board.
Independent directors: Liu Zhijun Wong Cho Hang Stanley Zhao Xinmin
30 March 2022
– I-10 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
LANZHOU ZHUANGYUAN PASTURE CO., LTD.
THE REPORT OF SUPERVISORY COMMITTEE FOR 2021
The Supervisory Committee of Lanzhou Zhuangyuan Pasture Co., Ltd. (hereinafter referred to
as the “Company” or “Lanzhou Zhuangyuan”) strictly follows relevant laws and regulations, such as
the Company Law of People’s Republic of China (the “Company Law”), the Securities Law of People’s
Republic of China (the “Securities Law”), the Rules Governing the Listing of Stocks on Shenzhen
Stock Exchange (amended in 2022), the Self-Regulatory Supervision Guidelines for Listed Companies
in the Shenzhen Stock Exchange No.1 – Standard Operation of Listed Companies on the Main Board,
the Articles of Association of Lanzhou Zhuangyuan Pasture Co., Ltd. (the “Articles of Association”),
the Rules of Procedures of the Supervisory Committee and the laws and regulations as well as the
company’s systems and procedures to effectively fulfill the duties of the Supervisory Committee and
exercise its authority and rights, supervise and inspect the production and operating activities, significant
events, financial position of the Company and performance of directors and senior management of the
Company, ensure the implementation of the resolutions passed at general meetings, and safeguard the
legitimate rights and interests of shareholders. The work and performance of Supervisory Committee in
2021 is detailed as follows:
I. MEETINGS AND RESOLUTIONS OF THE SUPERVISORY COMMITTEE DURING
THE REPORTING PERIOD
In 2021, the Company held 11 meetings of the Supervisory Committee. The convening by the
board of directors, proposal, attendance, consideration, voting, resolutions and meeting minutes of
meetings of the Supervisory Committee were strictly in accordance with the relevant provisions of the
Company Law, the Articles of Association and the Rules of Procedure for Meetings of Supervisory
Committee. All supervisors of the Company attended the meetings in person or through other
communication means. Details are as follows:
Time Name of the meeting Resolutions considered and approved
15 January 2021 The 31st meeting of 1. Resolution for Approving the
the 3rd session of the Estimation of Ordinary Connected
Supervisory Committee Transactions of the Company for 2021
2. Proposal in relation to the Repurchase
and Cancellation of All Restricted
Shares in the First Release of Locked
Period under the 2019 Restricted
Shares Incentive Scheme
– II-1 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
Time Name of the meeting Resolutions considered and approved
29 January 2021 The 32nd meeting of 1. Resolution on the Use of Idle
the 3rd session of the Proceeds for Cash Management
Supervisory Committee
2. Proposal in relation to Provision for
Asset Impairment and Demolition of
Certain Fixed Assets for 2020
3. P r o p o s a l o n t h e Wa iv e r o f t h e
Undertakings of Intention to
Acquire Shareholding and Reduce
Shareholding of Controlling
Shareholders and De Facto Controller
of the Company
29 March 2021 The 33rd meeting of 1. Resolution in relation to the Report of
the 3rd session of the the Supervisory Committee for 2020
Supervisory Committee
2. Resolution in relation to the Annual
Report and Its Highlights of the
Company for 2020
3. Resolution in relation to the Report
of Internal Control Self-Evaluation
and the Self-Inspection Table for
the Implementation of the Internal
Control Rules for 2020
4. Resolution in relation to the Profit
Distribution Plan for 2020
5. Resolution in relation to the Special
Report on the Deposit and Actual
Use of 2020 Proceeds Raised of the
Company
6. Resolution in relation to the Auditing
Report for 2020
7. Resolution in relation to the Special
Report of the Occupation of Non-
Operating Capital and the Transaction
of Other Related Funds for 2020 of
Lanzhou Zhuangyuan Pasture Co.,
Ltd.
– II-2 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
Time Name of the meeting Resolutions considered and approved
8. Resolution in relation to the Final
Financial Report for 2020 of the
Company
9. Resolution in relation to the Financial
Budget for 2021 of the Company
10. Resolution in relation to the
Application to Banks of the Limits of
Composite Credit Facilities for 2021
11. Resolution in relation to the
Projection of the Guarantee Limit
of the Company and Its Holding
Subsidiaries for 2021
12. Resolution in relation to the
Achievement of Performance
Commitments of Xi ’ an Dongfang
Dairy Co., Ltd. for 2020
28 April 2021 The 34th meeting of the 1. Resolution in relation to the Full and
3rd session of the Official Text of First Quarterly Report
Supervisory Committee of the Company for 2021
2. Resolution in relation to the
Unaudited Quarterly Results of the
Company for the three months ended
31 March 2021
3. Resolution on the Use of Partial Idle
Proceeds as Temporary Liquid Funds
25 May 2021 The 35th meeting of the 1. Resolution in relation to the
3rd session of the Reappointment of the Auditor of the
Supervisory Committee Company for 2021
2. Resolution in relation to the Election
of Non– Employee Representative
Supervisors for the 4th session of the
Supervisory Committee
– II-3 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
Time Name of the meeting Resolutions considered and approved
29 June 2021 The 1st meeting of the 1. Resolution on Election of Chairman
4th session of the of the Supervisory Committee
Supervisory Committee
5 August 2021 The 2nd meeting of the 1. Resolution for Approving the Addition
4th session of the of Estimation of Ordinary Connected
Supervisory Committee Transactions of the Company for 2021
2. Resolution on the Remuneration of
the Directors, Supervisors and Senior
Management of the Company in 2021
3. R e s o l u t i o n o n t h e Wa i v e r f o r
the Undertakings of Intention to
Voluntarily Acquire Shareholding
and Reducing Shareholding of
Shareholders
4. R e s o l u t i o n o n t h e Wa i v e r f o r
t h e Vo l u n t a r y S h a r e L o c k -
up Undertakings from Senior
Management
5. Resolution on the Provision for Asset
Impairment and Disposal of Scrapped
Partial Fixed Assets
27 August 2021 The 3rd meeting of the 1. Resolution in relation to the Interim
4th session of the Report and Its Highlights of the
Supervisory Committee Company for 2021
2. Resolution in relation to the Interim
Results Announcement of the
Company for the six months ended 30
June 2021
3. Resolution in relation to the Special
Report on the Actual Deposit and Use
of First Half of 2021 Proceeds Raised
of the Company
– II-4 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
Time Name of the meeting Resolutions considered and approved
6 September 2021 The 4th meeting of the 1. Resolution on the Use of Partial Idle
4th session of the Proceeds as Temporary Liquid Funds
Supervisory Committee
29 October 2021 The 5th meeting of the 1. Resolution in relation to the Third
4th session of the Quarterly Report of the Company for
Supervisory Committee 2021
2. Proposal on Adjustment of the
Product Mix for External Sale
30 December 2021 The 6th meeting of the 1. Resolution for Approving the
4th session of the Estimation of Ordinary Connected
Supervisory Committee Transactions of the Company for 2022
II. SUPERVISION AND INSPECTION BY THE SUPERVISORY COMMITTEE DURING
THE REPORTING PERIOD
(I) Legal operation of the Company
All supervisors supervise the legal operation of the Company and ensure that the decision-
making procedures are legal and there is no illegal operation, by convening meetings of the
Supervisory Committee, attending meetings of the board of directors and general meetings and
other means. The directors and senior management personnel of the Company have not violated
any laws, regulations and the Articles of Association or harmed the interests of the Company in
the performance of their duties. The Company has established a relatively complete corporate
governance structure, internal control system and internal control rules for standard operation.
No major non-compliance of laws and regulations have been identified to cause losses to the
Company.
– II-5 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
(II) Regular report verification and inspection of the Company’s financial position
The Supervisory Committee has carried out supervision and inspection on the financial
statements, regular reports and related documents for each period in 2021. It is of the view that
the preparation and review procedures for the 2021 annual regular report by the Company’s board
of directors are in compliance with the laws, administrative regulations and the requirements
of the CSRC and the Shenzhen Stock Exchange. The authenticity, accuracy and completeness
of the contents in the report reflect the actual condition of the Company, and there are no false
representations, misleading statements and material omissions in the reports. The financial
statements and regular reports of the Company for each period have been prepared in accordance
with the Accounting Standards for Business Enterprises in all material aspects, fairly reflecting
the financial position, operating results and cash flow.
(III) The condition of the Evaluation Report on Internal Control
The Supervisory Committee has verified the Evaluation Report on Internal Control
for 2021 of the Company as well as the establishment and implementation of internal control
rules. It is of the view that the Company has established a relatively complete internal control
system which has been effectively implemented. The Evaluation Report on Internal Control of
the Company gives a true and fair reflection of the establishment and implementation of the
Company’s internal control system.
(IV) The deposit and use of proceeds raised of the Company
The Supervisory Committee have conducted supervision and inspection on the deposit
and use of proceeds raised of the Company. It is of the view that the Resolution in relation to the
Special Report on the Actual Deposit and Use of 2021 Proceeds Raised of Lanzhou Zhuangyuan
Pasture Co., Ltd. issued by the board of directors gives a true, accurate and complete reflection of
the deposit and use of proceeds raised of the Company during the reporting period, with no false
records, misleading statements or material omissions. On 7 December 2021, when the fundraising
account was closed, the balance of RMB12,155.43 was transferred to the Company’s general
account. The Company subsequently discovered the problem and returned it to the fundraising
account on 14 March 2022.
Save as disclosed above, the Company has deposited, used and managed the proceeds in
strict accordance with the Regulatory Guidelines on the Listed Companies No. 2 – Regulatory
Requirements for the Management and Utilisation of Funds Raised by Listed Companies and the
Self-Regulatory Supervision Guidelines for Listed Companies in the Shenzhen Stock Exchange
No.1 – Standard Operation of Listed Companies on the Main Board, and the management system
for the use of proceeds raised of the Company. All the information disclosed is timely, true and
accurate.
– II-6 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
(V) Inspection of related party transactions
During the reporting period, the Supervisory Committee has supervised and verified the
expected situation of the Company’s ordinary connected transactions. It is of the view that the
ordinary connected transactions of the Company expected to occur in 2021 are required for
the Company’s daily business activities and are beneficial to the business development of the
Company. The pricing of the transactions is determined based on the rights and obligations of
both parties and the market price negotiation, which is based on the market price, and follows
a fair and reasonable pricing mechanism. The payment arrangements and settlement methods
are implemented in accordance with the contract or with reference to the generally accepted
standards in the industry, with no transfer of any interests or benefits transfer and no harmful
behavior to the interests of the Company and minority shareholders.
(VI) Implementation of the Insider Registration and Management System
The Supervisory Committee has inspected the establishment and implementation of the
insider registration and reporting system of the Company. It is of the view that the Company
has established a relatively complete insider registration and reporting system, which can be
effectively implemented.
III. KEY WORK OF THE SUPERVISORY COMMITTEE IN 2022
In 2022, the Supervisory Committee will continue to comply with the requirements of the
Company Law, the Securities Law, the Articles of Association and other laws and regulations. It will
continue to earnestly perform various duties and strive to achieve new results in strengthening daily
supervision, improving mechanisms, focusing on business and promoting the Company’s standardized
and steady development. It will further exert the independence, professionalism and effectiveness of
the supervision of the Supervisory Committee, and improve the level of corporate governance. The
Supervisory Committee will continue to supervise the performance of duties and integrity of the
directors and senior management personnel, including the supervision of the following works: major
corporate decisions, financial management, regular reports, related transactions, information disclosure
etc., thus promoting the scientific and standardized decision-making procedures of the Company, and
ensuring the legal and compliant operation of the Company. In order to give full play to the role of the
Supervisory Committee in the corporate governance structure and enhance the core competitiveness of
the Company, the Supervisory Committee will focus on the following aspects:
– II-7 –
APPENDIX II REPORT OF THE SUPERVISORY COMMITTEE FOR 2021
(I) Strengthen daily supervision and promote the standardized operation of the
Company
As an important part of the Company’s internal supervision, the Supervisory Committee
will continue to strengthen the daily supervision of the Company ’s operating activities in the
form of participating in meetings, field research, reviewing reports and listening to reports. It will
continue to enforce strict compliance with the Company Law, the Securities Law, the Articles
of Association and other requirements, supervise the performance of the board of directors and
management of the Company, focus on supervising directors and senior management personnel
to exercise their powers within the terms of reference prescribed by the laws and regulations.
At the same time, the Supervisory Committee will deepen financial supervision and ensure the
standardized operation of the Company through careful review of the Company’s regular reports,
Evaluation Report on Internal Control, financial reports, etc.
(II) Strengthen self-construction and improve the ability to perform duties
The Supervisory Committee will follow up new industry regulations and regulatory
requirements in real time, strengthen the dynamic grasp of regulatory orientation, continue to
pay attention to the industry peers and the development of various businesses of the Company,
comprehensively improve the ability to supervise, combine with the actual work of each business
line, expand work ideas, and promote supervision more in line with business development.
At the same time, the Supervisory Committee will enhance its learning, actively participate
in professional training, and continue to strengthen its own construction. The Supervisory
Committee values the study, discussion and exchange of experience with the shareholders,
directors and the supervisory committee of the peers, fully taps the professional abilities of the
members of the Supervisory Committee, and effectively improves the performance of duties.
(III) Improve supervision mechanism and innovate working methods
The Supervisory Committee will focus on the important sections and key contents of the
Company’s business development, firmly establish a sense of supervision, continue to improve
and optimize the working system, and enhance the effectiveness of performance supervision
and evaluation. With the major decisions of the Company, the research and judgment of market
development trend, risk prevention and control and other aspects as the side focus, and with field
research and information communication as the base, the Supervisory Committee continues to
explore and innovate supervision methods, and actively participates in the research on major
issues of the Company ’ s development strategy and business innovation. The Supervisory
Committee earnestly safeguards the legitimate rights and interests of the Company and all
shareholders, especially the minority shareholders.
The Supervisory Committee of Lanzhou Zhuangyuan Pasture Co., Ltd.
30 March 2022
– II-8 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
2021 ASSESSMENT REPORT ON INTERNAL CONTROL OF
LANZHOU ZHUANGYUAN PASTURE CO., LTD.
In accordance with the relevant requirements of the Basic Standards for Enterprise Internal
Control and its supporting guidelines, and other internal control regulatory requirements (“Standards
System for Enterprise Internal Control”), together with the internal control system and assessment
methods of Lanzhou Zhuangyuan Pasture Co., Ltd. (the “Company”), based on the daily supervision and
special supervision of internal control, we have assessed the effectiveness of the internal control of the
Company at 31 December 2021.
I. IMPORTANT STATEMENT
It is the responsibility of the Board of the Company to establish and effectively implement sound
internal control, to evaluate its effectiveness and to truthfully disclose the assessment report on internal
control in accordance with the requirements of the Standards System for Enterprise Internal Control.
The supervisory committee supervises the establishment and implementation of internal control by
the Board. The manager level is responsible for organizing and leading the daily operation of internal
control of enterprise. The Board of the Company, supervisory committee and Directors, supervisors and
senior management officers ensure that there are no false representations, misleading statements and
material omissions in this report, and are severally and jointly responsible for the authenticity, accuracy
and completeness of the contents herein.
The goal of the Company’s internal control is to reasonably ensure the legal compliance of
operation and management, assets security, the truthfulness and completeness of financial reports and
related information, to improve operational efficiency and operating results and to boost the achievement
of development strategies. Since the internal control is subject to inherent limitation, it can only provide
reasonable assurance to achieve the above objectives. Moreover, as changes in circumstances may
render internal control inappropriate or reduce the degree of compliance with internal control policy or
procedures, it is risky, to a certain extent, to predict the effectiveness of internal control in the future
based on the evaluation results of internal control.
– III-1 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
II. CONCLUSION OF THE ASSESSMENT ON INTERNAL CONTROL
According to the identification of material internal control defects of the financial reports,
since there are no material internal control defects in financial reports as at the benchmark date of the
assessment report on internal control, the Board considered that the Company has complied with the
requirements of the Standards System for Enterprise Internal Control and related regulations to maintain
effective internal control in financial reports in all material aspects.
According to the identification of material internal control defects in non-financial reports, as at
the benchmark date of the assessment report on internal control, the Company found no material internal
control defects in non-financial reports.
No factors that affect the assessment conclusion of internal control effectiveness between the
benchmark date of the assessment report on internal control and the issuance date of the assessment
report on internal control was identified.
III. ASSESSMENT ON INTERNAL CONTROL
(I) Scope of internal control evaluation
The Company has 11 level 2 subsidiaries and their affiliated enterprises, including the
head office of Lanzhou Zhuangyuan Pasture Co., Ltd., and Qinghaihu Dairy Co., Ltd. (“Qinghaihu
Dairy”) and Xi’an Dongfang Dairy Co., Ltd. (“Xi’an Dongfang Dairy”). Zhuangyuan Pasture the
parent company, Qinghaihu Dairy, a subsidiary of the Company, and Xi’an Dongfang Dairy, a
subsidiary of the Company, primarily engaged in manufacturing and marketing of dairy products,
and the dairy farms are engaged in breeding of dairy cows. The raw milk produced by the farms
is mainly supplied to the Company, Qinghaihu Dairy and Xi’ an Dongfang Dairy.
The Company determines the main units, business, events and the high-risk areas included
in the scope of the assessment in accordance with the risk-oriented principle. The main units
included in the scope of the assessment are Zhuangyuan Pasture the parent company, Qinghaihu
Dairy, Xi’ an Dongfang Dairy and all dairy farms.
– III-2 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
The main business and events included in the scope of the assessment are as follows:
1. Organizational structure
Pursuant to the Company Law, the Securities Law and the requirements of
applicable laws and regulations, the Company established the sound corporate governance
structure and formed the shareholders ’ general meeting, the Board, the supervisory
committee and the management system, which discharge the duties of leading, decision-
making, and executive and supervising functions in accordance with laws. The Company
established reasonable internal organization and branches with clear segregation of
duties based on its business needs, all of which ran smoothly. The Company set up the
Rules and Procedures for the Shareholders’ General Meetings, the Rules and Procedures
for the Board Meetings, the Rules and Procedures for the Supervisory Committee,
“Three Important and One Large” decision-making system, the Working Manual for the
Independent Directors, the Terms of Reference for the Strategy Committee, the Terms
of Reference for the Nomination Committee, the Terms of Reference for the Audit
Committee, the Terms of Reference for the Remuneration and Appraisal Committee, the
Working Rules for General Manager, the Working System for Secretary to the Board, etc.,
all of which constitute comprehensive framework documents for corporate governance.
The shareholders ’ general meeting is entitled to the legal rights specified by laws,
regulations and the Articles of Association of the Company, and exercises the right to
make decisions on major issues such as operation guidelines, fund raising, investment
and profit distribution of the Company pursuant to laws. The Board is accountable to the
shareholders’ general meeting and exercises the right to make decisions on the operation
of the enterprise pursuant to laws. The Board has established four specialized committees,
namely the Strategy Committee, the Nomination Committee, the Audit Committee
and the Remuneration and Appraisal Committee to improve the operation efficiency of
the Board. Three out of the nine directors are independent Directors. An independent
director acts as the conveners of three specialized committees, namely the Nomination
Committee, the Audit Committee and the Remuneration and Appraisal Committee.
The specialized committees operate and discharge their duties efficiently in accordance
with the rules of procedure for the specialized committees set up by the Company. The
Supervisory Committee is accountable to shareholders ’ general meeting and conducts
review and supervision on the operation, finance and internal control pursuant to laws.
The management is responsible for implementing resolutions of the shareholders ’
general meeting and the Board, and presiding over the Company ’s daily operation and
management.
– III-3 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
2. Development strategy
The Company formulated the Management System for Development Strategy in
accordance with the requirements of the Company Law and the Basic Norms of Corporate
Internal Control ( ), and established the strategy formulation
and management process for the internal control according to its own characteristics,
which stipulated that the Strategy Committee organizes the research on the Company’s
medium and long-term development strategies and makes recommendations to the Board
on the development strategies, product strategies, technology and innovation strategies,
investment strategies, etc. The relevant systems of the Company conform to the internal
control norms and are implemented efficiently, which ensure that proper approval
process is followed in respect of the analysis, formulation, implementation and alteration
of strategic planning, and that the Company ’s strategy formulation are in compliance
with laws and regulations, and are in line with the Company ’s actual situations, so as
to promote the development of the Company and form a hierarchical management and
guarantee system in respect of the strategic control. The Company always takes its
medium and long-term development planning as the guidelines for every task.
3. Human resources
In terms of human resources, the Company implements uniform management on
recruitment, development, training, promotion, change in position, remuneration, labor
disciplines, etc. Pursuant to the Labor Law and other applicable laws and regulations,
the Company implements a labor contract system for all its employees. By adopting a
number of human resources management systems, such as the Management System for
Recruitment and Employment, the Staff Regular Rotation System, and Auditing System
for Resignation, the Company specified the post qualifications, competency of personnel,
appraisal criteria and training measures, forming an effective performance appraisal and
incentive mechanism.
In terms of recruitment, the Company formulated the Management System
for Recruitment and Employment and the recruitment process. The Company makes
recruitment on a regular or irregular basis. The human resources department makes
recruitment planning based on the annual plan of each department on defined posts and
personnel quota, specifies the requirements on education background, gender, specialty,
working experience and recruitment process, and submits the same to the general manager
for approval. The Company shall enter into a labor contract with each employee from
the date of becoming a regular employee, and the contract term shall include a probation
period. The Company shall recruit the ordinary employees by itself, and special external
recruitment channels, such as head-hunting companies, are used for the recruitment
of special talents. High talents recruited through special channels must enter into the
Commercial Confidentiality Agreement and the Non-competing Restrictive Agreement.
– III-4 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
In terms of staff training, the Company formulated the Management Measures
on Staff Training, to strengthen the training and continuing education of the staff and
continuously improve their competency.
The Company formulated the Employee Performance Appraisal Methods, which
specifies the appraisal content and grades for each post of the Company. The appraisals
are classified into monthly appraisals, year-end appraisals and performance appraisals. The
Company determines the basis for the monthly pay for each employee based on the results
of his/her monthly appraisals, and the basis for the year-end bonus based on the results of
year-end appraisals. The Company motivates its employees and safeguards their interests
through various measures, so as to achieve the corporate objectives.
The Company formulated the Management Measures for Employee Insurance in
accordance with the relevant national and local laws and regulations, pursuant to which
the Company made contributions in respect of the “Five Insurances and Housing Provident
Fund” for its employees, and the part of individual contribution was deducted by our
finance department from monthly salary of the employee.
4. Social responsibilities
The Company earnestly implements the national and local laws and regulations
on production safety, environmental protection and occupational health. It set up a strict
production safety management system and various emergency plans, and formulated a
series of social responsibility management systems, such as the Management System
for Production Safety Goals, the Product Delivery Inspection System, System for Recall
of Nonconforming Products, the System for Environmental Protection and Resource
Conservation and the Emergency Response Plan for Environmental Pollution Incidents,
with a view to specifying the responsibility for production safety and ensuring production
safety.
5. Corporate culture
The administration department is responsible for building up the corporate culture.
At the corporate level, the Company specified the enterprise core values, enterprise
mission, enterprise vision, enterprise spirit, corporate slogan, and promoted our corporate
culture through a number of ways, such as the employee manual, meetings, trainings, and
compilation and distribution of the journal “Zhuangyuan People ( )”.
– III-5 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
In terms of system implementation, the Company issued the Culture Handbook,
the Prohibitive Provisions on Commercial Bribery and Management of Legal Affairs
etc. as the norm guiding its daily cultural management, specifying the provisions on
the implementation and management of the corporate culture, which has become the
guidelines for daily culture management.
6. Monetary Fund
(1) Monetary asset management
The Company formulated the Management System on Monetary Funds. A
treasury department was established by the finance department of the Company to
handle business concerning monetary funds, and the business concerning monetary
fund shall not be processed by any person without prior authorization. Pursuant
to the Signature Approval System for Funds and Fees, the application for, and the
examination and approval, review and payment of, monetary fund in respect of
different projects shall be subject to a maximum amount that the authorized persons
at different levels are able to approve. The seal used in the collection and payment
of monetary fund is kept and used by the different designated person(s). The use of
monetary fund is fully recorded in the cash journal and bank deposit journal. All
the vouchers and invoices of the Company are issued and maintained by the finance
department.
A certificate of indebtedness, setting out the purpose of the borrowing,
completed by the borrower who is an employee, and signed by the senior officers
in charge at different levels together with a certificate of indebtedness signed by
the finance department, shall be treated as evidences of the borrowing. Lending of
money by the Company must be approved by a general manager’s office meeting,
or the Board and the shareholders’ general meeting.
(2) Financing management
The Company formulated the Investment and Financing Management
System, and the finance department is designated to manage the financing business.
– III-6 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
The system stipulates that, in terms of borrowings from financial institutions,
such as a bank, an initial financing plan shall be proposed by the finance
department based on a number of factors, such as the operation strategies, budget
and financial situation of the Company. The financing plan, involving the financing
amount, form of financing, interest rate, maturity of financing, purpose of the fund
raised, etc., shall be submitted to the Board or general meeting for approval after
the review by the parent company’ s financial controller. In terms of financing
activities such as capital contribution and issue of corporate bonds, a financing
plan will be proposed by the securities department and reviewed by the parent
company’s financial controller, and be subject to the approval of the shareholders’
meeting pursuant to legal process under the Articles of Association. In terms of
financing lease activities, a financing plan will be proposed by the procurement
center and will be submitted to the chairman of the Board for approval after review
by the chief financial officer, and a contract in that effect will be entered into by the
Chairman of the Board or the authorized representative(s).
7. Procurement business
Procurement business comprises of the procurement of biological assets and
non-biological assets. According to the Procurement Management System of Lanzhou
Zhuangyuan Pasture Co. Ltd., the Company specified matters such as the duty,
procurement principles, procurement method, procurement plan, procurement scheme,
contract management, inspection and acceptance of materials, financial settlements and
management of suppliers as well as business monitoring of different procurement activity
management departments.
7.1 Procurement of biological assets
The procurement of biological assets comprises of the procurement of cows
and feed.
The dairy farm division of the Company is responsible for the procurement
of dairy cows. The plan for the procurement of dairy cows will be made by the
dairy farm division based on the construction of relevant farms, and will be
submitted to the general manager ’s office meeting and the Board for approval,
subject to the limits of authority of examination and approval. The dairy farm
division will later make enquiry, fix the procurement plan after screening the
qualified cow suppliers, and make procurement upon the approval of the person in
charge of the farms or the general manager’s office meeting with the authority of
approval. Inspection will be made before the cows are accepted to the farms.
– III-7 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
The dairy farms are responsible for the procurement of feed. The workers
in charge of breeding dairy cows in the farms will make a procurement plan based
on the remaining of feed and procurement cycle. A procurement requisition form is
made and subject to the approval of the general manager after the review by head
of farm and the director of the farm division. Upon the approval of the general
manager, the procurement center will implement the procurement process, and the
warehouse keepers of the relevant farm will handle the registration of warehouse
entry.
7.2 Procurement of non-biological assets
The procurement of non-biological assets comprises of the procurement of
raw milk, auxiliary materials, packing materials and fixed assets.
The procurement center of the Company is responsible for the procurement
of raw milk. The quality control department of the Company is responsible for
the inspection of the quality of raw milk. Procurement prices are determined by
the procurement center with reference to the prices of raw milk in local market,
and are subject to the approval of the general manager before execution. The raw
milk, received by the procurement center from suppliers, will be inspected by
the laboratory of the product department, and will be delivered to the warehouse
keepers for making registration of warehouse entry once it passes the inspection.
The procurement center of the Company is responsible for the procurement
of auxiliary materials, packing materials and fixed assets. The demand management
department reports the procurement plan to the procurement center, which then
submits it to the procurement committee. The procurement committee implements
decision-making procedures for procurement pursuant to the Procurement
Management System of the Company, selects suppliers and determines prices
through competitive negotiation. The procurement center will report the suppliers
selected by the procurement committee to the general manager and sign the
contract.
– III-8 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
8. Production Safety management
The Company formulated the production management system, the quality
management system and the project construction management system. The Company’s
plant design meets the relevant industrial standards and hygiene regulations, and ensures
food production safety. The Company establishes the ISO9001 quality management system
in the whole process of procurement, production and sales, and standardizes management,
implements quality management which covers procurement of raw materials, product
inspection and after-sales services, and ensures that the operations are in strict compliance
with the operating procedures and sanitary requirements.
9. Assets Management
The assets management of the Company comprises of the management of biological
assets and non-biological assets. The Company formulated the Fixed Assets Management
System, the Biological Assets Management System and the Intangible Assets Management
System, setting out in details the provisions on the acquisition, inspection and acceptance,
maintenance, disposal and transfer, accounting records, internal supervision and review
of fixed assets, biological assets and intangible assets. Various measures, such as clear
segregation of responsibilities and periodic stocktaking of physical items, are taken to
prevent the destruction and loss of assets.
9.1 Management of biological assets
The Group’s biological assets, comprising of dairy cows, are managed by
dairy farms. Before entering the farms, dairy cows shall be registered for entry
after the satisfactory inspection by farms, and managed by ear marks. Through the
biological asset management information system, each dairy farm keeps detailed
records of biological assets, including cow number, cow age, cow category, milk
yield, dates of birth and death, and records relevant biological assets information
for the purpose of monitoring. The information on biological assets is encrypted,
and the use of the information shall be authorized, and such authorization shall be
supported by documents and records. At the end of each month, each farm shall
conduct stocktaking on the inventory of biological assets and feed. Upon the advice
from the dairy farm, dairy cows may be disposed by completing the Approval Form
for Culling of Dairy Cows, subject to the examination and approval of the person in
charge of the dairy farm and the director of the dairy farm division.
– III-9 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
9.2 Management of non-biological assets
Upon arrival of non-biological assets, they are first inspected by the
procurement and supply department and the demand management department
before the registration of assets is made. Fixed assets with satisfactory inspection
are numbered by the operation department in a timely manner. The operation
department will later set up a fixed assets ledger and organize the fixed asset
stocktaking annually. Before disposal, fixed assets shall be reviewed with caution
and on-site checked by the department using them and the operation department,
to confirm if they meet scrap conditions. If so, the disposal will be examined and
approved by the finance department, the operation department and the general
manager after taking into account of the advice from the leaders of department
using such fixed assets.
The operation department of the Company arranges year-end stocktaking on
inventory, biological assets and fixed assets at each end of the year. In case of any
discrepancy in the stocktaking, the accounting scheme for the discrepancy will be
examined and approved by the departments with authority on a level-by-level basis.
10. Sales activities
The Company formulated the Management System for Marketing Center, the
Internal Control Process of Marketing Center, the Contract Management System and
the Customer Credit Management System, which set out the provisions on development
of customers and markets, credit management, price management, management of
receivables and notes, and clarified the procedures for approval and operation.
The marketing center is responsible for making monthly sales plans, customer
development and credit management, sales pricing, entering into sales contracts, collection
of payments, making call on receivables, reconciliation, and the control of delivery
process. The marketing department is responsible for the preparation of price lists of
goods. The finance department is responsible for accounting treatments, collection of
payment for goods, etc.
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APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
The marketing center is responsible for entering into sales contracts with
customers. A sales contract contains, including but not limited to, the legal entities of
both parties, the subject matters of the contract, the quantity, the price (specifying tax
inclusive or exclusive, failing of which, the price shall be deemed to be tax inclusive), the
settlement of purchase prices, the rights and obligations of both parties, default clauses
and resolution of disputes. After entering into a sales contract, the marketing center shall
complete the procedures of opening an account with the finance department, and the
accounting personnel will enter the basic information in the finance system, such as the
names, contact persons and telephone numbers of the customers, sales territory in which
the customers operate, and the marketing center will record the sales policies, credit limits
and credit term approved.
The sales modes of the Company include direct selling, distribution and dealing.
Under the direct sale model, the Company is responsible for arranging for the third party
logistics provider to deliver goods to the site designated by the direct selling customers in
general, and revenue is recognized by the Company when the goods are delivered to the
direct selling customers. Under the distribution model (mainly adopted in Lanzhou, Xining
and Xi’an), the distributors arrange the goods transport voluntarily and shall voluntarily
undertake the loss if the goods are damaged in the transit. Revenue is recognized by the
Company when the distributors extract the goods from warehouse. Under the dealing
model (mainly adopted outside Lanzhou, Xining and Xi’an), if the Company arranges for
the third party logistics provider to deliver goods, revenue is recognized by the Company
when the goods are delivered to the dealer; If the dealer voluntarily arranges the transport
of goods, the dealer shall voluntarily undertake the loss due to damage of products in
the transport, and revenue is recognized by the Company when the dealer withdraws the
goods from the warehouse. The Company measures the sales amount of commodity as
per the anticipated consideration that it is entitled to obtain due to commodity transfer to
customers. The marketing center is responsible for chasing outstanding payments. The
Company sets different qualifications for direct customers, distributors and dealers.
The price lists of goods are prepared by the marketing department with reference to
the similar products of competitors and market conditions, and are reviewed and approved
by the general manager before execution. The marketing center will enter into sales
contracts with customers based on the price lists approved. Staff of the finance department
prepares the sales delivery invoice according to the customer order, and the logistic
department is responsible for delivery of goods. Upon receipt by the customers, the
finance department will issue the invoice for sales and the income vouchers in accordance
with the Accounting Standards for Business Enterprises.
– III-11 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
The finance department prepares the “aging breakdown of accounts receivable ”
when closing accounts every month. The marketing center will review and follow up
the collection work with credit sales customers in a timely manner. Should there exist
uncollectible balances, the finance department will treat them as bad debts, which shall
be subject to the consideration and approval of the marketing director and the general
manager office.
11. Research and Development
The research and development work focuses on the development of new products.
Development of new products is undertaken mainly by the technology department. The
Company formulated the Product R&D Management System of Lanzhou Zhuangyuan
Pasture Co., Ltd., which set out the provisions on market research, project approval and
development operation.
The research and development department, the marketing department and the sale
department will file project proposals in the Project Proposal ( )
based on their market research and understanding. After the research and development
department gathers and screens project proposals, a feasibility discussion with various
departments will be arranged by the production director at the monthly operation meetings
on such proposals. The project proposals approved will be gathered by the marketing
department, which will prepare the plan for promoting the R&D project, subject to the
approval of the general manager. Implementation of projects may take forms of in-house
research and development, acquisition of patents, cooperation in technologies, etc. In
terms of projects carried out in the form of cooperation in technologies, the research and
development department will screen the partners enter into cooperation contracts, and
supervise such projects based on the requirements and needs of the Company.
The research and development department is responsible for the research and
development activities. A number of tests are required as at the project initiating and up to
the product launching. The marketing department will arrange tasting and inspection on
the new products and report the information of the tasting and inspection to the research
and development department that will make minor adjustments to the product process and
formula accordingly. Before the launch of products, the finance department will propose
the unit price of the products after taking into account the product formula and prices of
raw materials provided by the research and development department, and such price shall
be subject to the final approval by the sale department.
– III-12 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
12. Projects
The operation department is responsible for the supervision and implementation
of the Company’s projects. The Company follows the management process of project
approval, design, competitive negotiation, construction, inspection and acceptance, etc. in
operation, and keeps the relevant archives.
Project planning and project budget are required before any increase in fixed
assets and carrying out of reconstruction and extension projects, which are subject to the
approval of the general manager’s office meeting or the Board within authority. At each
end of year, the operation department will review the project progress. Following the
completion of a project, it will arrange the inspection and acceptance of the project and
will issue an inspection report upon the completion of a trial production. At the stage of
the production, with the coordination of the operation department, the audit department
will issue an audit report to the finance department for accounting treatments. The project
payment is subject to the approval of the Chairman of the Board.
13. Investment
In order to control the investment risk, the authority for approving an external
investment is mainly conferred to the parent company. The shareholders’ general meeting
and the Board serve as the decision-making body in respect of external investments, and
make decisions on external investments of the Company under the authority as defined
in the Articles of Association, the Rules and Procedures for the Shareholders ’ General
Meetings and the Rules and Procedures for the Board Meetings. Any other department or
individual has no right to make decisions on external investments. The parent company
shall manage the approval, assessment, decision-making, implementation, management,
income and disposal of the investment projects.
The finance department of the Company is responsible for gathering the
information in financial statements of the investees and ensuring the accuracy of the
information in financial accounting. Where there is any indication of impairment, it shall
prepare an impairment report, and make accounting treatment subject to approval of the
Board of the Company.
– III-13 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
14. Guarantee
The Company formulated the Administrative Measures for External Guarantees,
which sets out the provisions on guarantee objects, approval authority, information
disclosure, etc. The Company implements uniform management on external guarantees.
The subsidiaries and branches of the Company may not provide external guarantees or
mutual guarantees without the approval of the Board of the Company. External guarantees
of the Company must be considered and approved by the Board or the shareholders’
general meeting with the stipulated authority. The Company may not provide external
guarantee without the approval of the Board or the shareholders’ general meeting.
A guarantee contract/or counter-guarantee contract is required to be entered into
in respect of an external guarantee of the Company. A guarantee contract is entered into
by the Chairman of the Board or the authorized representative with guaranteed party.
All departments and persons participating in an external guarantee are obliged to report
the issues related to the external guarantee to the secretary to the Board and provide the
information required for information disclosure in a timely manner. The issues in relation
to the guarantee are recorded by the secretary to the Board, and used in the disclosures
made in the financial reports with approval of the Chairman of the Board.
The Company provided guarantee to its subsidiaries in 2021, including Xi’ an
Dongfang Dairy, Ruixing Pasture and Ruijia Pasture. The issues in relation to the
guarantee were resolved by the Board and the shareholders ’ general meeting and
published. With sound procedures and complete approval authority, the implementation of
internal control is effective.
15. Financial report
(1) Related party and related party transactions
The Company formulated the Related Party Transactions Decision-making
Rules of Lanzhou Zhuangyuan Pasture Co., Ltd., pursuant to the requirements of
the Company Law of the People’s Republic of China, the Securities Law of the
People’s Republic of China, the Rules Governing the Listing of Securities on the
Stock Exchange of Hong Kong Limited and the Rules Governing the Listing of
Stocks on the Shenzhen Stock Exchange. The Rules contain specific provisions
on the scope of related party relationships, the type of related party transactions,
authorities for decision-making and the consideration procedure, the voting
abstention mechanism for related parties and information disclosures, which ensure
the related party transactions of the Company are on the principles of openness,
fairness and justness.
– III-14 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
The Company defined the related party in accordance with relevant laws
and regulations, such as the Corporate Governance Code issued by the Hong Kong
Stock Exchange, the Rules Governing the Listing of Stocks on the Shenzhen Stock
Exchange, the Accounting Standards for Business Enterprises, the Preparation
Rules for Information Disclosure by Companies Offering Securities to the
Public No.15 and Administrative Measures for Information Disclosure of Listed
Companies, taking into account of its own situation. The Company provides
trainings for persons within the scope defined by the related party, such as the
shareholders, directors, supervisors and senior management members, and requires
them to perform the duty of declaration. The list of related parties is reviewed by
the chief financial officer and the secretary to the Board at the end of the year.
(2) Financial accounting
The Company formulated the Financial Management System of Lanzhou
Zhuangyuan Pasture Co., Ltd. ( )
in accordance with the Accounting Law, the Accounting Standards for Business
Enterprises, the Preparation Rules for Information Disclosure and Preparation
Rules by the Companies Offering Securities to the Public No.15 and Administrative
Measures for Information Disclosure of Listed Companies.
The Company’s critical accounting estimates are determined in accordance
with the discussion and analysis of the management or the industry practices,
and are implemented subject to the consideration and approval of the Board.
Adjustments in accounting policies and accounting estimate, required to be
made due to changes in the Accounting Standards for Business Enterprises or the
Company’s businesses, will be submitted by the finance department to the Board
for consideration and approval. Impact on financial statements arising from changes
in accounting policies or accounting estimates will be dealt with using the methods
stipulated in the Accounting Standards for Business Enterprises, and be disclosed in
the financial statements. The Company includes the subsidiaries in the consolidated
financial statements to prepare the financial statements of the parent company and
the consolidated financial statements and the corresponding notes. The consolidated
financial statements are prepared in accordance with the Accounting Standards for
Business Enterprises. An accounting report is reviewed and signed by the head of
the accounting department, the chief accountant and a legal representative, and
disclosed upon consideration and approval of the Board.
– III-15 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
16. Contract management
The Company formulated the Contract Management System and the Management
Measures of Legal Affairs, which regulated the procedures for approval and execution
of contracts, and specified the entities, form, content, signing, execution, alteration and
termination of contracts, mediation, arbitration and litigation of contract disputes, custody
and filing of contracts, to better regulate the contract management, prevent and control the
contract risks and efficiently safeguard the legal interests of the Company.
17. Communications of internal information
The Company established various policies, such as the Management System for
Inside Information, the Information Management Measures, the Internal Reporting System
for Significant Non-public Information and the Management System for the Submission
and Use of External Information, to regulate the Company’s management of information
communication activities and safeguard the Company’s information safety. The Company
specified the collection, processing, communication and scope of communication in
relation to the internal control to ensure timely communication of information.
With dedicated IT staff maintaining its websites and information system, the
Company is able to ensure swift and smooth communications between the management
at different levels, departments, business divisions, and employees and the management,
through the modern information platform, such as the internet.
With respect to the communication with regulators, the Company is subject to
regular production quality inspection by government authorities to ensure the production
safety, and from time to time, subject to the inspection by industrial and commercial
authorities and tax bureau. With respect to the communication with the capital market,
the Company appointed the secretary to the Board to keep communications with the
Hong Kong Stock Exchange, the Shenzhen Stock Exchange and the CSRC. With respect
to the communication with investors, in addition to the information published by the
Company through statutory information disclosure channels, investors can learn about
the information of the Company by means of EasyIR platform of the Shenzhen Stock
Exchange, telephone, e-mail, direct visit and meetings, and enhance their understanding
and trust for the Company through communications.
– III-16 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
18. Internal audit
The Company established the Internal Audit System of Lanzhou Zhuangyuan
Pasture Co., Ltd. The Company set up the audit department which is responsible for audit
affairs within the Company. The audit department is accountable to the Audit Committee,
which reports its work to the Board. The audit department is responsible for formulating
the work schedule for annual internal audit, which will be subject to the approval of the
Board for implementation.
The audit department performs the proper review procedures in accordance with the
related requirements, evaluates the effectiveness of the internal control of the Company,
and submits an evaluation report of internal control to the Board at least once in a year.
Where any significant defects or risks in internal control are identified during the review
process by the audit department, it shall promptly report to the Audit Committee. The
Company shall disclose in an announcement the significant defects and risks in internal
control, the consequences that have been or may be caused, and the measures that have
been taken or are to be taken.
(2) Basis of internal control evaluation and identification criteria of internal control
defects
The Company organized and conducted internal control evaluation work in
accordance with the internal control system.
The Board distinguished the internal control of financial reports from those of
non-financial reporting, studied and determined the criteria for identifying internal
control defects applicable to the Company as in line with that in last year with reference
to factors such as the scale of the Company, the characteristics of the industry, the risk
preference and the degree of risk tolerance according to the identification requirements
of the Standard System for Enterprises Internal Control in respect of material defects,
major defects and general defects. The identification criteria for internal control defects
determined by the Company are as follows:
– III-17 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
1. Identification criteria for internal control defects in financial reports
Quantitative criteria for identifying internal control defects in financial reports of
the Company are as follows:
Criteria for
defects type Material defects Major defects General defects
1 (inclusive)
Operating revenue ≥2 2 1
The latest audited 1 (inclusive)
net assets ≥2 2 1
Qualitative criteria for identifying internal control defects in financial reports of the
Company are as follows:
Indicators of material defects in financial reports include:
(1) fraud of directors, supervisors and senior management of the
Company;
(2) the correction of the published financial reports by the Company;
(3) material misstatement in the current financial reports found by a
certified public accountant, but not identified through internal control
of the Company;
(4) Invalid supervision by the Audit Committee and the audit department
on the Company’s internal control on external financial reports and
financial reports.
Indicators of major defects in financial reports include:
(1) Accounting policies have not been selected and applied in accordance
with generally accepted accounting principles;
(2) No procedures and control measures of anti-fraud having been
established;
– III-18 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
(3) No corresponding control mechanism or compensatory control having
been set up or implemented for the accounting treatment of unusual
or special transactions;
(4) There exist one or more defects in the control on the final financial
reporting process, and the truthfulness and completeness of financial
statements cannot be reasonably ensured.
General defects are other internal control defects in addition to the above
material defects and major defects.
2. Identification criteria for internal control defects in non-financial reporting
Quantitative criteria for identifying internal control defects in non-financial
reporting of the Company are as follows:
Criteria for
defects type Material defects Major defects General defects
1 (inclusive)
Operating revenue ≥2 2 1
The latest audited 1 (inclusive)
net assets ≥2 2 1
Qualitative criteria for identifying internal control defects in non-financial reporting
of the Company are as follows:
Indicators of material defects in non-financial reporting include:
(1) Lack of democratic decision-making procedures, such as the lack of
“Three Important and One Large” decision-making system;
(2) Corporate decision-making being not scientific, such as decision-
making failure leading to failure in merger and acquisitions;
(3) Violations against national laws and regulations, such as
environmental pollution;
– III-19 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
(4) Loss of management members or technical personnel;
(5) Frequent negative publicity;
(6) Lack of system control on, or the system failure of important
business;
(7) Other circumstances having material impact on the Company.
Other circumstances are identified as major defects or general defects
according to the extent of impact.
(3) The status of identification of internal control defects and rectification
1. The status of identification of internal control defects in financial reports and
rectification
According to the above identification criteria of internal control defects in financial
reports, the Company had no material internal control defects in financial reports during
the reporting period.
2. The status of identification of internal control defects in non-financial
reporting and rectification
According to the above identification criteria of internal control defects in non-
financial reports, the Company found no material internal control defects in non-financial
reporting.
IV. EXPLANATIONS ON OTHER SIGNIFICANT EVENTS IN RELATION TO
INTERNAL CONTROL
No explanation was made by the Company on other significant events in relation to
internal control.
– III-20 –
APPENDIX III REPORT OF INTERNAL CONTROL EVALUATION FOR 2021
V. THE COMPANY’S SELF-ASSESSMENT ON INTERNAL CONTROL
As a result of the foregoing, the Board of the Company believes that, as at 31 December
2021, the Company has maintained effective internal control in relation to financial statements
in all material aspects, which was established pursuant to the “Internal Accounting Control
Standards – Basic Standards” issued by the Ministry of Finance of the People’s Republic of
China.
The assessment on internal control has been approved by the Board of the Company.
The Board of Lanzhou Zhuangyuan Pasture Co., Ltd.
30 March 2022
– III-21 –
APPENDIX IV ANNOUNCEMENT IN RELATION TO THE PRELIMINARY
PROFIT DISTRIBUTION PLAN FOR 2021
Lanzhou Zhuangyuan Pasture Co., Ltd.
Announcement on the Preliminary Profit Distribution Plan for 2021
The Company and all members of the Board warrant that the contents of the announcement are
true, accurate and complete, and there are no false records, misleading statements or major omissions.
I. CONTENTS OF PRELIMINARY PROFIT DISTRIBUTION PLAN
1. A s o f 31 D e c e m b e r 2021, d i s t r i bu t a b l e p r o fi t o f t h e p a r e n t c o m p a ny wa s
RMB320,998,090.39 in accordance with the relevant requirements of the Company Law
and the Articles of Association, which is the result of the unappropriated profits of the
parent company of RMB308,266,324.31 as at the beginning of 2021 plus the net profit of
RMB19,339,308.98 realized in 2021 and minus the cash dividend of RMB4,673,612.00
paid in 2020 and appropriated surplus reserve of RMB1,933,930.90.
2. As audited by Daxin Certified Public Accountants (Special General Partnership), the net
profit attributable to shareholders of the listed company in the consolidated statement
of the Company for 2021 was RMB53,533,055.78. Based on the characteristics of the
industry in which the Company operates, and such factors as business model, profit
level and capital expenditure arrangement of the Company and considering long-term
development and investors’ interests of the Company, the Board resolved that a total of
cash dividend of RMB10,921,908.50 was proposed to be paid, which was based on that
share capital at the end of 2021 was RMB232,381,032, and a cash dividend of RMB0.47
was proposed to be paid for every 10 shares (including tax, the actual distribution amount
may be slightly different due to rounding). In 2021, profits distributed by the Company in
cash accounted for 20.40% of the distributable profits realized throughout the year (and
net profits attributable to shareholders of the listed company).
3. If the total share capital of the Company changes before the date of record for the
implementation of equity distribution, it is proposed to remain the total distribution
unchanged and adjust the distribution ratio per share accordingly. If the total share capital
subsequently changes, announcement will be made in relation to specific adjustment.
4. This preliminary profit distribution plan is subject to consideration at the general meeting.
– IV-1 –
APPENDIX IV ANNOUNCEMENT IN RELATION TO THE PRELIMINARY
PROFIT DISTRIBUTION PLAN FOR 2021
5. Feasibility of preliminary profit distribution plan
The preliminary profit distribution plan is in line with the Company Law, Accounting
Standards for Business Enterprises, CSRC Notice on Further Implementing Issues Concerning
Cash Dividends of Listed Companies, and CSRC Supervision Guidelines for Listed Companies
No.3–Cash Dividends of Listed Companies, Articles of Association and Shareholder Return Plan
for the Next Three Years (2020 –2022).
Fully considering actual operating situation of the Company, and the development
characteristics and development cycle of dairy industry, the profit distribution plan of the
Company provides investors with reasonable returns, which is conducive to sustainable
development of the Company and to realize obligations and responsibilities of the Company,
matches the operating results and future development of the Company, and is in line with
development plan of the Company.
II. CONSIDERATION BY THE BOARD AND OPINIONS OF INDEPENDENT DIRECTORS
Proposal on Profit Distribution of the Company for 2021 was considered and approved at the
11th meeting of the fourth session of the Board, and the proposal was submitted it to the annual general
meeting for consideration.
The independent directors of the Company are of the view that the profit distribution plan not
only fully considers actual operating situation of the Company, and the development characteristics
and development cycle of dairy industry, but also provides investors with reasonable returns, which is
conducive to sustainable development of the Company and to realize obligations and responsibilities
of the Company, matches the operating results and future development of the Company, and is in line
with development plan of the Company. Based on those, the independent directors agree upon the profit
distribution plan put forward by the Board.
III. OPINIONS OF THE BOARD OF SUPERVISORS
The Board of Supervisors are of the view that this profit distribution plan complies with the
Company Law, Accounting Standards for Business Enterprises, CSRC Notice on Further Implementing
Issues Concerning Cash Dividends of Listed Companies, and CSRC Supervision Guidelines for Listed
Companies No.3–Cash Dividends of Listed Companies, Articles of Association and Shareholder
Return Plan for the Next Three Years (2020 –2022), and relevant preliminary plans comply with the
profit distribution policy, profit distribution plan, long-term plan for shareholder return and relevant
commitments made by the Company, and therefore they are legal, compliant and reasonable.
– IV-2 –
APPENDIX IV ANNOUNCEMENT IN RELATION TO THE PRELIMINARY
PROFIT DISTRIBUTION PLAN FOR 2021
IV. RELEVANT RISK WARNING
The preliminary profit distribution plan is uncertain as it is subject to consideration and approval
at the annual general meeting of the Company. Investors are advised to make reasonable investment and
to be aware of the investment risks involved.
V. DOCUMENTS AVAILABLE FOR INSPECTION
1. Resolution of the 11th Meeting of the Fourth Session of Board of Directors of the
Company
2. Resolution of the 7th Meeting of the Fourth Session of Board of Supervisors of the
Company
3. Independent Opinions of Independent Directors on Issues Concerning the 11th Meeting of
the Fourth Session of board of directors.
Board of Directors of Lanzhou Zhuangyuan Pasture Co., Ltd.
30 March 2022
– IV-3 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
Special Report on Actual Deposit and
Use of the Proceeds during 2021 of
Lanzhou Zhuangyuan Pasture Co., Ltd.*
All the directors of the Company undertake that the contents of this report are true, accurate and
complete and there are no false records, misleading statements or material omissions.
Pursuant to relevant requirements such as the Provisions on the Report on the Use of the
Proceeds Previously Raised (Zheng Jian Fa Xing Zi [2007] No. 500) (
( [2007]500 )) and, the Guidelines for the Supervision and Control
of Listed Companies No. 2 – Regulation Requirements for the Management and Use of Proceeds of
Listed Companies (Revision 2022) ( 2 –
(2022 )) issued by the CSRC, and the Guidelines of Shenzhen Stock Exchange
for Self-Regulatory Supervision by Listed Companies (No. 1) – Standardized Operations of Listed
Companies on the Main Board ( 1
), No. 21 Information Disclosure Announcement Format for Listed Companies in Shenzhen
Stock Exchange: Format of Special Report on Annual Actual Deposit and Use of the Proceeds of Listed
Companies ( 21
) issued by the Shenzhen Stock Exchange, the Board of Directors
of Lanzhou Zhuangyuan Pasture Co., Ltd.* (hereinafter referred to as the “Company”) has prepared the
Special Report on Actual Deposit and Use of the Proceeds as of 31 December 2021.
I. BASIC INFORMATION ON THE PROCEEDS
(I) Actual Proceeds Raised in Cash (after Deduction of the Issuance Expenses) and the
Time of Receipt of Proceeds Raised
1. Basic Information of Proceeds Raised from Public of A Shares in 2017
As approved by the “Approval for the Issue of Shares of Lanzhou Zhuangyuan
Pasture Co., Ltd.* (Zheng Jian Xu Ke [2017] No. 1779)” (
( [2017]1779 )) issued by
China Securities Regulatory Commission, the Company the public offering of 46,840,000
ordinary shares (A Shares) of RMB1.00 each at an issue price of RMB7.46 per share to
the public. The total proceeds were RMB349,426,400 and after deducting underwriting
expenses and sponsor’s fee, issuance registration fee and other transaction expenses of
RMB39,922,700 in total, the net proceeds amounted to RMB309,503,700.
On 24 October 2017, KPMG Huazhen LLP has inspected the availability of the
proceeds from the initial public offering of A Shares by the Company and issued KPMG
Huazhen Yan Zi No. 1700634 capital verification report for verification and confirmation.
– V-1 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
2. Basic Information of Proceeds Raised from Non-public Issuance of A Shares in
2020
As approved by the “Approval for the Non-public Issuance of Shares of Lanzhou
Zhuangyuan Pasture Co., Ltd.* (Zheng Jian Xu Ke [2020] No. 1864)” (
( [2020]1864 ))
issued by China Securities Regulatory Commission, the Company carried out the non-
public offering of not exceeding 43,000,000 ordinary shares (A Shares) of RMB1.00 each
at an issue price of RMB8.78 per share to the specific investors. The total proceeds were
RMB377,540,000 and after deducting underwriting expenses and sponsor’s fee, issuance
registration fee and other transaction expenses of RMB8,661,200 in total, the net proceeds
amounted to RMB368,878,800.
On 30 November 2020, WUYIGE Certified Public Accountants LLP. has
inspected the availability of the proceeds from the non-public offering of A Shares by the
Company and issued WUYIGE Yan Zi [2020] No. 35-00010 capital verification report for
verification and confirmation.
(II) Amount Used in Prior Years, Amount Used during the Year and Current Balance
1. Use of Proceeds Raised from Public Issuance of A Shares in 2017
In 2021, the Company had used the proceeds raised from public issuance of
A Shares of RMB7,944,246.46, and the interest income of the raised funds in special
account after deducting handling fees in amount of RMB67,142.59. The Company has
used A-share proceeds of RMB268,592,376.71, the accumulated interest income of the
raised funds deducted the net handling fee in amount of RMB1,541,183.23. The balance
of unused raised funds was RMB42,452,506.52, and the amount of the raised funds
deposited in special account as at the end of 2021 was RMB12,452,506.52.
– V-2 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
2. Use of Proceeds Raised from Non-public Issuance of A Shares in 2020
In 2021, the Company utilized raised funds of RMB104,306,458.41, and the interest
income of the raised funds in special account after deducting handling charges for the
period was RMB1,761,333.38. The Company also received a refund of RMB31,850,000
in relation to the payment for purchase of cows made in 2020. The Company had utilized
RMB213,164,775.85 out of the funds raised from the non-public issuance of A shares.
The net interest income from the raised funds after deducting handling charges was
RMB1,835,768.08. The balance of the unutilized raised funds was RMB157,549,779.02.
As at the end of 2021, the amount deposited in the special account for raised funds was
RMB57,537,623.59.
II. MANAGEMENT OF RAISED FUNDS
In order to regulate the management and use of raised funds and to protect the interests of
investors, with reference to the Articles of Association and the actual situation of the Company, the
Company formulated the Management System for the Use of Raised Fund of Lanzhou Zhuangyuan
Pasture Co., Ltd. ( ) (hereinafter referred
to as “Administrative Measures”) in accordance with the relevant provisions of laws and regulations,
such as the Administrative Measures for Securities Issuance and Listing Sponsorship Business (
), the Listed Companies Supervision Guidelines No. 2-Regulatory
Requirements for the Management and Use of Funds Raised by Listed Companies (
2 –– ), the Share Listing Rules of Shenzhen
Stock Exchange ( ), the Guidelines of Shenzhen Stock Exchange
for Self-Regulatory Supervision by Listed Companies (No. 1) – Standardized Operations of Listed
Companies on the Main Board ( 1
). According to the Administrative Measures, the Company implemented special account
placement for raised funds, it opened a special account for raised funds in a bank, and signed the
Tripartite Supervision Agreement on Raised Funds with the sponsor China Dragon Securities Co., Ltd.
and the commercial banks where the raised funds deposited. There is no major difference between the
main content of these agreements and the Tripartite Supervision Agreement on Raised Funds (Model) of
the Shenzhen Stock Exchange. The Company and each party to the agreement have fulfilled their rights
and obligations in accordance with the relevant terms of the agreement.
– V-3 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(I) Deposit and Management of Funds Raised From the Public Issuance of A Shares in
2017
After the funds raised from the public issuance of A Shares are in place, the Company
opened four special accounts for raised funds, among which account 1, account 2, and account
3 (the account numbers in this report are all referred to in the table below) are used for the
placement and use of funds raised from “The Construction Project of Cultivation of 10,000
Imported Good Dairy Cows”. Account 4 is used for the placement and use of funds raised from
“construction project of milk vending machines and ancillary facilities”.
The “Resolution on Increasing the Registered Capital of Wholly Owned Subsidiary (
)” was considered and passed by the Company at the
33th meeting of the third session of the Board of Directors convened on 5 March 2020, which
authorized the Company to increase the registered capital of the wholly-owned subsidiary Gansu
Ruijia Farming Co., Ltd. (hereinafter referred to as “Ruijia Farming”) with its own funds and
proceeds from initial public offering of A Shares at a total amount of RMB170 million, of which
RMB107,485,478 (including interest income) was funded by proceeds from the public issuance
of A Shares. On 10 March 2020, the “Resolution on Opening Special Accounts for Raised Funds
( )” was considered and passed by the Company at the
34th meeting of the third session of the Board of Directors, pursuant to which Ruijia Farming
opened a special account (Account no. 8210000110120100084325) (Account 5) for raised funds
in China Zheshang Bank Co., LTD, Lanzhou East Branch. Such special account is specially used
for the placement and use of funds raised from the Recycling Industrial Park Project of a Dairy
Farm with 10,000 Dairy Cows in Jinchuan District. The Company (including Ruijia Farming),
China Zheshang Bank Co., LTD, Lanzhou East Branch ( )
and China Dragon Securities Co., LTD ( ), the continuous supervision
institution (hereinafter referred to as “China Dragon Securities ”) entered into the Tripartite
Agreement on Supervision of Proceeds. On 7 April 2020, the Company published Announcement
on Entering into the Tripartite Agreement on Supervision of Proceeds from Lanzhou Zhuangyuan
Pasture Co., Ltd. (Announcement No.: 2020-030). For ease of management, the Company
cancelled Account 1, 2, 3 and 4, and carried out the procedure for issuing announcements.
– V-4 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
As at 31 December 2021, balance of the special account for the proceeds raised from the
Company’s public issuance of A Shares was RMB12,452,506.52, breakdown of which was set
forth below:
Unit: RMB
Account Number of
Bank for the Deposit of Special Account for
No. Proceeds Raised the Proceeds Raised 31 December 2021
Account 1 Xinglong Sub-branch of 101472000568575 Cancelled
BANK OF LANZHOU
Account 2 Lanzhou East Sub-branch of 8210000110120100058409 Cancelled
China Zheshang Bank
Account 3 Lanzhou Jinchang Road 104059529335 Cancelled
Sub-branch of Bank of China
Account 4 Lanzhou Hi-tech Sub-branch of 48170078801800000030 Cancelled
Shanghai Pudong
Development Bank
Account 5 Lanzhou East Sub-branch of 8210000110120100084325 12,452,506.52
China Zheshang Bank
Total 12,452,506.52
(II) Deposit and Management of the Proceeds Raised from Non-public Issuance of A
shares in 2020
The Company considered and approved Resolution in Relation to Opening Special
Accounts for Proceeds to be Raised at the 43rd meeting of the third session of the Board of the
Company convened on 26 November 2020. Together with the sponsor, China Dragon Securities
Co., Ltd. ( ), the Company signed the Tripartite Supervision Agreement
on the Proceeds with Xinglong Sub-branch of BANK OF LANZHOU CO., Ltd. and Lanzhou
Branch of China CITIC Bank Corporation Limited, respectively, and opened special accounts
for proceeds raised. After the proceeds raised from non-public issuance of A Shares are readily
available, the Company opened Account 6 and Account 7 with Xinglong Sub-branch of BANK
OF LANZHOU and Lanzhou Branch of China CITIC Bank, respectively, which would be used
for the deposit and usage of the proceeds to be raised for “Recycling Industrial Park Project of A
Dairy Farm for 10,000 Dairy Cows in Jinchuan District”.
– V-5 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
On 22 December 2020, the Company published Announcement on Entering into the
Tripartite Agreement on Supervision of Proceeds from Lanzhou Zhuangyuan Pasture Co., Ltd.
(Announcement No.:2020-086).
The Company considered and approved Resolution in Relation to the Implementation of
Main Capital Increase by using the Proceeds to be Raised for the Investment Projects Funded
with the Proceeds at the 44th meeting of the third session of the Board and the 29th meeting of
the third session of Supervisory Committee of the Company convened on 23 December 2020, for
the purpose of capital increase with the raised proceeds for Ruijia Farming, the implementation
entity of “Recycling Industrial Park Project of A Dairy Farm for 10,000 Dairy Cows in Jinchuan
District”, the investment project financed by the proceeds from the non-public issuance. The
amount for the capital increase was RMB328,945,000.00.
The Company considered and approved Resolution in Relation to Opening Special
Accounts for Proceeds to be Raised at the 44th meeting of the third session of the Board of the
Company convened on 23 December 2020. Together with the sponsor, China Dragon Securities,
the Company signed the Tripartite Supervision Agreement on the Proceeds with Xinglong Sub-
branch of BANK OF LANZHOU CO., Ltd., and opened a special account for proceeds raised.
Ruijia Farming opened Account 8 with Xinglong Sub-branch of BANK OF LANZHOU which
would be used for the deposit and usage of the proceeds to be raised for “Recycling Industrial
Park Project of A Dairy Farm for 10,000 Dairy Cows in Jinchuan District”.
On 22 December 2020, the Company published Announcement on Entering into the
Tripartite Agreement on Supervision of Proceeds from Lanzhou Zhuangyuan Pasture Co., Ltd.
(Announcement No.:2020-091).
For ease of management, the Company cancelled Account 6 and 7 in December 2021, and
carried out the procedure for issuing announcements.
– V-6 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
As at 31 December 2021, balance of the special account for the proceeds raised from the
Company’s non-public issuance was RMB57,537,623.59, breakdown of which was set forth
below:
Account Number of
Bank for the Deposit of Special Account for
No. Proceeds Raised the Proceeds Raised 31 December 2021
Account 6 Xinglong Sub-branch of 101472000640515 Cancelled
BANK OF LANZHOU
Account 7 Lanzhou Branch of 8113301013900110603 Cancelled
China CITIC Bank
Account 8 Xinglong Sub-branch of 101472000641778 57,537,623.59
BANK OF LANZHOU
Total 57,537,623.59
Note: On 7 December 2021, the Company transferred the balance of RMB12,155.43 in Account 6 to the
general account of Lanzhou Zhuangyuan at Xinglong Sub-branch of BANK OF LANZHOU (account
no.: 7029709110591012) when Account 6 was cancelled. Subsequently, the Company found that it was
not appropriate and transferred the funds to Account 8 (which is for fundraising) on 14 March 2022.
III. ACTUAL USE OF THE PROCEEDS DURING THE YEAR
(I) Actual Use of the Proceeds Raised
1. Use of the Proceeds Raised from Public Issuance of A Shares in 2017
Please see Schedule 1 for the actual use of proceeds raised from public issuance of
A Shares as of 31 December 2021.
2. Use of the Proceeds Raised from Non-public Issuance of A Shares in 2020
Please see Schedule 2 for the actual use of proceeds raised from non-public
issuance of A Shares of the Company as of 31 December 2021.
– V-7 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
Schedule 1:
Actual use of proceeds raised from public issuance A Shares in 2017
Unit: RMB
Total proceeds
invested during
Total proceeds 309,503,700.00 the period 7,944,246.46
Total proceeds with changes in use during the reporting period Total proceeds
Accumulated total proceeds with changes in use 256,103,700.00 invested
Proportion of accumulated total proceeds with changes in use 83% accumulatively 268,592,377.71
Whether the project Accumulated Investment Date of
Committed investment projects has been changed Total committed amount invested progress as of the project reaches Whether the project
and investment directions of (including partial investment of Total investment after The amount invested as of the end of end of the period the scheduled The benefit Whether the expected feasibility has been
over-subscription funds changes) proceeds adjustment (1) during the period the period (2) (3)=(2)/(1) usable status during the period benefits are reached changed significantly
Committed investment projects
1. The Construction Project
of Cultivation of 10,000
Imported Good Dairy Cows Yes 260,193,300.00 53,400,000.00 53,400,000.00 100.00% December 2021 7,545,865.31 N/A No
2. The construction project
of self-service milk selling
machines and ancillary
facility Yes 49,310,400.00 N/A N/A N/A Yes
3. The acquisition of 82%
equity interest of Xi’an
Dongfang Dairy 150,000,000.00 150,000,000.00 100.00% 31 October 2018 N/A N/A No
4. The Recycling Industrial
Park Project of A Dairy
Farm for 10,000 Dairy
Cows in Jinchuan District 106,103,700.00 7,944,246.46 65,192,376.71 61.44% December 2021 7,545,865.31 N/A No
Subtotal of committed
investment projects 309,503,700.00 309,503,700.00 7,944,246.46 268,592,376.71 86.78% 7,545,865.31
Investment directions of
over-subscription funds
Nil
Repayment of bank loans
(if any)
Replenishment of
current capital (if any)
Subtotal of investment
directions of over-
subscription funds
Total 309,503,700.00 309,503,700.00 7,944,246.46 268,592,376.71 86.78% 7,545,865.31
Circumstances and reasons The Recycling Industrial Park Project of a Dairy Farm for 10,000 Dairy Cows in Jinchuan District achieved a net profit of RMB7,545,900 in 2021, and has not yet become fully operational by the end of 2021.
for failure to meet the
schedule or expected revenue
Descriptions of significant See IV. (I)
changes in the feasibility
of projects
Amount, use and progress of N/A
over-subscription funds
Changes in implementation See IV. (I)
location of investment
projects of proceeds
Adjustments in implementation N/A
approach of investment
projects of proceeds
Pre-investment and replacement N/A
of investment projects of
proceeds
Replenishment of the working See III. (III) 1.
capital by idle raised
proceeds temporarily
Amount and reasons on the N/A
balance of raised proceeds of
project implementation
Use and directions of See III. (VI) 1.
unused proceeds
Problems or other circumstances See V. (I)
in use and disclosure of
proceeds
– V-8 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
Schedule 2:
Actual use of proceeds raised from non-public issuance A Shares in 2020
Unit: RMB
Total proceeds
invested during
Total proceeds 368,878,787.79 the period 104,306,458.41
Total proceeds with changes in use during the reporting period Total proceeds
Accumulated total proceeds with changes in use invested
Proportion of accumulated total proceeds with changes in use accumulatively 213,164,775.85
Committed investment Whether the project Accumulated Investment Date of Whether
projects and investment has been changed Total committed The amount amount invested progress as of the project reaches Whether the project feasibility
directions of over- (including partial investment of Total investment after invested during as of the end of end of the period the scheduled The benefit the expected benefits has been changed
subscription funds changes) proceeds adjustment (1) the period the period (2) (3)=(2)/(1) usable status during the period are reached significantly
Committed investment projects
The Recycling Industrial
Park Project of A Dairy
Farm for 10,000 Dairy
Cows in Jinchuan District 328,878,786.79 328,878,786.79 104,306,458.41 173,164,775.85 52.65% December 2021 7,545,865.31 N/A No
Repayment of bank loans 40,000,000.00 40,000,000.00 40,000,000.00 100.00% N/A N/A N/A No
Subtotal of committed
investment projects 368,878,786.79 368,878,786.79 104,306,458.41 213,164,775.85 57.79% 7,545,865.31
Investment directions of over-subscription funds
Nil
Repayment of bank loans
(if any)
Replenishment of
current capital (if any)
Subtotal of investment
directions of over-
subscription funds
Total 368,878,786.79 368,878,786.79 104,306,458.41 213,164,775.85 57.79% 7,545,865.31
Circumstances and reasons for The Recycling Industrial Park Project of a Dairy Farm for 10,000 Dairy Cows in Jinchuan District achieved a net profit of RMB7,545,900 in 2021, and has not yet become fully operational by the end of 2021.
failure to meet the schedule
or expected revenue
Descriptions of significant N/A
changes in the feasibility
of projects
Amount, use and progress of N/A
over-subscription funds
Changes in implementation N/A
location of investment
projects of proceeds
Adjustments in implementation N/A
approach of investment
projects of proceeds
Pre-investment and replacement See III. (II) 2.
of investment projects of
proceeds
Replenishment of the See III. (III) 2.
working capital by idle
raised proceeds temporarily
Amount and reasons on the N/A
balance of raised proceeds
of project implementation
Use and directions of See III. (VI) 2.
unused proceeds
Problems or other circumstances See V. (II)
in use and disclosure of
proceeds
– V-9 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(II) Use of Raised Funds to Replace Investment Projects Invested In Advance with Raised
Funds
1. Proceeds from the Public Issuance of A Shares in 2017
As of 31 December 2021, there had been no proceeds from the public issuance of
A Shares of the Company in 2017 used to replace investment projects invested in advance
with raised funds.
2. Proceeds from the Non-public Issuance of A Shares in 2020
In order to ensure the smooth progress of the fundraising projects, the Company
has made the following arrangements for the replacement of the initial investment of
raised funds in “Preplan for Non-public Issuance of A Shares” and the revised draft: “If
the Company has used bank loans or its own funds to invest in some related projects
before the funds raised are in place, such invested funds will be replaced with the raised
funds after such funds are in place. ” On 28 December 2020, The “Proposal on Using
Proceeds from Non-Public Issuance of Shares to Replace Self-raised Funds That Have
Been Invested in Fund-raising Projects in Advance” was considered and passed at the 45th
meeting of the third session of the Board of Directors and the 30th meeting of the third
session of the Supervisory Committee of the Company.
The Company has used self-raised funds to invest in advance in the Recycling
Industrial Park Project of a Dairy Farm with 10,000 Dairy Cows in Jinchuan District
before the funds raised from the non-public issuance are in place, with self-raised funds
invested in advance in fundraising projects totaling RMB100,708,317.44. Therefore, the
raised funds that have been used to replace the funds from fundraising projects invested in
the early stage was RMB100,708,317.44.
In 2021, there had been no proceeds from the non-public issuance of A Shares of
the Company in 2020 used to replace investment projects invested in advance with raised
funds.
– V-10 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(III) The Use of Idle Raised Funds to Temporarily Supplement Liquidity
1. Proceeds from the Public Issuance of A Shares in 2017
On the premise of ensuring that the implementation progress of the investment
project with raised funds is not affected, the Company used RMB350 million of idle raised
funds to temporarily supplement liquidity according to the fund use plan of the A-share
fund-raising investment project, to meet the Company ’s growing demand for working
capital, improve the efficiency of the use of raised funds, and reduce financial expenses.
The “Resolution on the Use of Partial Idle Proceeds as Temporary Liquid Funds
( ) ” was considered
and passed at the 6th meeting of the third session of the Board of Directors and the 4th
meeting of the third session of the Supervisory Committee of the Company convened on
26 July 2018. Independent Directors have expressed their independent opinions on such
resolution, which agreed that the idle proceeds of RMB100 million would be used by the
Company as temporary liquid funds for a term of not exceeding 12 months from the date
of adoption of the resolution by the Board of Directors. On 12 July 2019, the Company
has returned all of the temporary liquid funds in the amount of RMB100 million to the
Company ’ s special account for raised funds in advance, and notified the Company ’ s
sponsor China Dragon Securities Co., Ltd. and the Sponsor representative of the return
of the above-mentioned raised funds. So far, the use of idle raised funds to supplement
liquidity has been completed.
The “Resolution on the Use of Partial Idle Proceeds as Temporary Liquid Funds
( )” was considered and
passed at the 23th meeting of the third session of the Board of Directors of the Company
convened on 5 August 2019. Independent Directors have expressed their independent
opinions on such resolution, which agreed that the idle proceeds of RMB100 million
would be used as temporary liquid funds for a term of not exceeding 12 months from
the date of adoption of the resolution by the Board of Directors. The Company will fully
return such fund to the special account for raised funds in a timely manner before the
expiry date. On 27 December 2019, the Company has returned all of temporary liquid
funds in amount of RMB100 million to the Company’s special account for raised funds in
advance, and notified the Company’s sponsor China Dragon Securities Co., Ltd. and the
sponsor representative of the return of the above-mentioned raised funds. So far, the use of
idle raised funds to supplement liquidity has been completed.
– V-11 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
The “Resolution on the Use of Partial Idle Proceeds as Temporary Liquid Funds
( )” was considered and
passed at the 37th meeting of the third session of the Board of Directors of the Company
convened on 8 April 2020, which agreed that the idle proceeds of RMB50 million would
be used as temporary liquid funds for a term of not exceeding 12 months from the date
of adoption of the resolution by the Board of Directors. The Company will fully return
such fund to the special account for raised funds in a timely manner before the expiry
date. On 13 April 2021, the Company has returned all of the temporary liquid funds in the
amount of RMB50 million to the Company’s special account for raised funds in advance,
and notified the Company’s sponsor China Dragon Securities Co., Ltd. and the Sponsor
representative of the return of the above-mentioned raised funds. So far, the use of idle
raised funds to supplement liquidity has been completed.
The “Resolution on the Use of Partial Idle Proceeds as Temporary Liquid Funds
( )” was considered and
passed at the 52nd meeting of the third session of the Board of Directors convened on 28
April 2021, which agreed that the idle proceeds of not exceed RMB50 million would be
used as temporary liquid funds for a term of not exceeding 12 months from the date of
adoption of the resolution by the Board of Directors. The Company will fully return such
fund to the special account for raised funds in a timely manner before the expiry date.
On 12 May 2021, the Company has returned all of temporary liquid funds in amount of
RMB50 million to the Company’s special account for raised funds in advance, and notified
the Company’s sponsor China Dragon Securities Co., Ltd. and the sponsor representative
of the return of the above-mentioned raised funds. So far, the use of idle raised funds to
supplement liquidity has been completed.
The “Resolution on the Use of Partial Idle Proceeds as Temporary Liquid Funds
( )” was considered and
passed at the fourth meeting of the fourth session of the Board of Directors convened on
6 September 2021, which agreed that the idle proceeds of not exceed RMB150 million (in
which, RMB100 million from the proceeds from the non-public issuance of A Shares in
2020, RMB50 million from the proceeds raised from initial public issuance of A Shares
in 2017) would be used as temporary liquid funds for a term of not exceeding 12 months
from the date of adoption of the resolution by the Board of Directors. The Company will
fully return such fund to the special account for raised funds in a timely manner before the
expiry date. On 14 December 2021, the Company has returned temporary liquid funds in
amount of RMB20 million to the Company’s special account for raised funds in advance,
and notified the Company’s sponsor China Dragon Securities Co., Ltd. and the sponsor
representative of the return of the above-mentioned raised funds. As of 31 December 2021,
the remaining temporary liquid funds is RMB30 million.
– V-12 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
2. Proceeds from the Non-public Issuance of A Shares in 2020
The “Resolution on the Use of Partial Idle Proceeds From Non-public Issuance as
Temporary Liquid Funds (
)” was considered and passed at the 45th meeting of the third session of the
Board of Directors and the 30th meeting of the third session of the Supervisory Committee
of the Company convened on 28 December 2020, which agreed that the idle proceeds of
not exceed RMB100 million would be used by the Company as temporary liquid funds
for a term of not exceeding 12 months from the date of adoption of the resolution by
the Board of Directors. The Company will fully return such fund to the special account
for raised funds in a timely manner before the expiry date. On 3 September 2021, the
Company has returned all of temporary liquid funds in amount of RMB100 million to
the Company’s special account for raised funds in advance, and notified the Company ’s
sponsor China Dragon Securities Co., Ltd. and the sponsor representative of the return
of the above-mentioned raised funds. So far, the use of idle raised funds to supplement
liquidity has been completed.
The “Resolution on the Use of Partial Idle Proceeds as Temporary Liquid Funds
( )” was considered and
passed at the fourth meeting of the fourth session of the Board of Directors convened on
6 September 2021, which agreed that the idle proceeds of not exceed RMB150 million (in
which, RMB100 million from the proceeds from the non-public issuance of A Shares in
2020, RMB50 million from the proceeds raised from initial public issuance of A Shares
in 2017) would be used as temporary liquid funds for a term of not exceeding 12 months
from the date of adoption of the resolution by the Board of Directors. The Company will
fully return such fund to the special account for raised funds in a timely manner before the
expiry date.
As of 31 December 2021, the Company’ s temporary liquid funds of RMB100
million has not yet expired.
(IV) USE OF IDLE PROCEEDS TO PURCHASE WEALTH MANAGEMENT
PRODUCTS
As of 31 December 2021, the Company did not use any idle proceeds to purchase wealth
management products.
(V) USE OF PROCEEDS BALANCE
As of 31 December 2021, there was no surplus in the Company’s proceeds balance.
– V-13 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(VI) USE AND DIRECTION OF UNUSED PROCEEDS
1. Proceeds Raised from Public Issuance of A Shares in 2017
As of 31 December 2021, unused amount of the proceeds raised from public
issuance of A Shares of the Company was RMB42,452,506.52 (including interest
income), of which RMB30,000,000 was used for replenishing the working capital, and
RMB12,452,506.52 was the deposit balance in the special account for raised funds of
the Company. Such unused amount will continue to be used to invest in the Recycling
Industrial Park Project of a Dairy Farm with 10,000 Dairy Cows in Jinchuan District in the
future.
2. Proceeds Raised from Non-public Issuance of A Shares in 2020
As of 31 December 2021, the unused amount of funds raised from the Company’s
non-public issuance of A Shares in 2020 was RMB157,549,779.02 (including interest
income), of which temporary liquid funds was RMB100,000,000.00, RMB57,537,623.59
was the deposit balance in the special account for raised funds of the Company,
RMB12,155.43 was the deposit balance of the general account of the Company (the
staff mistakenly transferred the balance of RMB12,155.43 to the general account when
handling the cancellation of the special account for raised funds, and transferred it to the
raised funds account on 14 March 2022). Such unused amount will continue to be used to
invest in the Recycling Industrial Park Project of a Dairy Farm with 10,000 Dairy Cows in
Jinchuan District in the future.
IV. CHANGE THE USE OF FUNDS OF INVESTMENT PROJECTS TO BE FUNDED WITH
THE PROCEEDS
(I) The Change of Use of Proceeds Raised by the Public Issuance of A Shares in 2017 for
the Investment Projects
For changing the use of funds of investment projects of proceeds raised from issuance of
A Shares, please refer to “Table of the change of investment projects for the proceeds raised from
A Shares” (Schedule 3).
– V-14 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
1. Reason for changes
(1) Reasons for changing the use of all funds of “the self-service milk machine
and supporting facilities construction project ” to “acquire 82% equity
interests in Dongfang Dairy”
From the distribution area, coverage areas of the Company’s self-service
milk machine include Lanzhou City in Gansu Province and Xining City in Qinghai
Province. The locations covered include schools, banks, hospitals, airports,
high-speed rail stations, bus stations, gas stations, residential communities and
commercial office buildings, etc., all of which have a large population, a high
liquidity, and a relatively high level of consumption. Since the self-service
machines in Lanzhou and Xining markets are currently saturated, and some self-
service machines invested previously by the Company have not been put into use,
therefore, if we continue to promote and implement the project with proceeds in
the future, self-service milk machines will be placed more in prefecture-level cities
and districts, second-tier county markets and third-line township markets outside
Lanzhou and Xining. Those regions are relatively sparsely populated and their
economic level is relatively low. Also it will compete with the Company’s original
distribution channels in areas where consumption is relatively limited. At the same
time, some county towns and township markets are relatively remote, far from the
Lanzhou and Xining production bases, and the cold chain products sold by self-
service milk machines require regular and frequent replenishment and maintenance,
which raises higher requirements on operating costs of the project. In addition,
the daily purchases in the relatively remote and backward county and township
areas are still mainly based on cash payment, which is not conducive to the smooth
progress and implementation of the project.
Based on the above considerations, the Company has re-examined and
evaluated the self-service milk machine and supporting facilities construction
project, and considered that there is a certain uncertainty in the expected income of
the project, which is not conducive to the use efficiency of proceeds, and terminated
the self-service milk machine and supporting facilities construction project, and the
project’s proceeds of RMB49,408,785.05 (including interest income) are all being
used to acquire 82% equity interests in Dongfang Dairy.
– V-15 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(2) Reasons for changing the use of a part of funds of the “Construction Project
of Cultivation of 10,000 Imported Good Dairy Cows ” to “acquire 82%
equity interests in Dongfang Dairy”
According to the feasibility study report of the project, the Company would
implement the project in three years according to the stage development plan of
the pasture, which would be 2018, 2019 and 2020 respectively. Therefore, part
of the project’s proceeds will be idle in the next two years, greatly reducing the
efficiency of the use of proceeds. Thus, in order to improve the efficiency of the use
of proceeds, the Company changed part of the project’s proceeds to acquire 82%
equity interests in Dongfang Dairy.
Among the Company’s subordinate farms, Yuzhong Ruifeng, Linxia Li’an
and Ningxia Zhuangyuan adopt a joint business model. In view of the good effect
of joint farming and the positive significance on local poverty alleviation, some of
the Company’s pastures will retain the adoption of the joint farming model in the
future. Therefore, partial proceeds of the project are being changed to acquire 82%
equity interests in Dongfang Dairy.
In view of the frequent fluctuations in market price of raw milk in recent
years and the expectation of further increase in the Company’s raw milk supply
ratio, in order to prevent the risk of raw milk price fluctuations and the risk of cost
fluctuations caused by it, the Company changed part of the project’s proceeds to
acquire 82% equity interests in Dongfang Dairy.
– V-16 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(3) Reasons for Changing the Use of Part of Raised Funds of “The Construction
Project of Cultivation of 10,000 Imported Good Dairy Cows” to “Recycling
Industrial Park Project of A Dairy Farm for 10,000 Dairy Cows in Jinchuan
District”
In April 2018, our subsidiary, Ningxia Zhuangyuan received the “Notice
on Closure and Relocation of Farms in Animal and Poultry Forbidden Areas
( )”, and the “Litong District
Implementation Plan for Closure or Relocation of Farms (Communities) in Animal
and Poultry Forbidden Areas (
)”, issued by the People’s Government of
Litong District, Wuzhong City, the core dairy breeding area in Jinyin Beach, where
Ningxia Zhuangyuan is located, had been included in the Animal and Poultry
Breeding Forbidden Areas and the scope of closure and relocation to further
promote the feedback rectification opinions of the inspector from the Central
Environmental Protection Inspection Team, control the pollution of animal and
poultry breeding, and protect the ecological environment. Ningxia Zhuangyuan is
one of the implementation entities of the “Construction Project of Cultivation of
10,000 Imported Good Dairy Cows” to be invested by proceeds raised by the initial
public offering of A Shares of the Company. As the local government’s Investment
Promotion and capital introduction project led to Ningxia Manor Ranch being
included in the forbidden breeding area, the proposed implementation subject to
undertake cow breeding sites at the time of A-share initial launch decreased, and
additional breeding land was required. Therefore, the change of the fund-raising
project was based on the fact that Ningxia Zhuangyuan, the original implementation
entity, could not carry out cow breeding due to being included in the forbidden
breeding area, which was helpful to further promote the fund-raising project.
– V-17 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
Since the outbreak of the melamine-related incident, in order to strengthen
the Company’s product quality control and ensure a clean, sanitary and fresh raw
milk supply, the Company has successively invested in the construction of eight
standardized breeding pastures in Gansu, Qinghai and Ningxia. Some pastures
adopted the joint breeding model of “company + farmer + base” and the Company
established standard large-scale breeding farms, which were responsible for the
professional management of breeding, and dairy farmers must sign contracts before
entering the pasture and strictly implemented the standardized management model
of the Company. Since the implementation of the joint breeding model, the feeding
level and work enthusiasm of contracted dairy farmers in breeding pastures have
been improved, without occurrence of any material raw milk-related accidents
so far, which has not only guaranteed the supply of raw milk produced by the
Company, but also consolidated the local farming resources, increased the dairy
farmers’ income and facilitated the local economic development. In order to ensure
the implementation of the “Construction Project of Cultivation of 10,000 Imported
Good Dairy Cows”, the Company changed from the original joint breeding with
Wuwei Ruida ( ) to self-breeding in early 2018. In view of the good
effect of joint farming and the positive significance on local poverty alleviation,
some of the Company’s pastures (Yuzhong Ruifeng and Linxia Li’an) will retain
the adoption of the joint farming model in the future. As the joint pastures could
not undertake its own dairy farming and based on the Company’s future operation
plan, the Company required additional breeding land to ensure the smooth
implementation of the original fund-raising project, and therefore it intended to
carry out the change of the fund-raising project.
– V-18 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
Moreover, the Company ’ s subsidiary, Qinghai Shengyuan received the
Notice of Closure within the Time Limit issued by Huangyuan County People’s
Government in April 2019. According to the relevant requirements of the Notice
of the General Office of Xining City People ’ s Government on Printing and
Distributing the Relocation Plan of the Farms along the Huangshui River in Xining
City (Ning Zheng Ban [2016] No. 107), the Ordinance on Pollution Prevention
and Control in Huangshui Watershed of Qinghai Province, the Work Plan of
Water Pollution Prevention and Control in Qinghai Province, the Notice of the
General Office of Xining City People’s Government on Printing and Distributing
the Delimitation Plan for Forbidden Areas & Restriction Areas for Animal and
Poultry Breeding in Xining City (Trial) (Ning Zheng Ban [2017] No. 143) and the
Delimitation Plan of Forbidden Areas, Restricted Areas and Breeding Areas for
Animal and Poultry Breeding in Huangyuan County (Yuan Zheng Ban [2016] No.
163), the breeding area of Qinghai Shengyuan has been delimitated into forbidden
areas for animal and poultry and included in the range of closure and relocation.
Due to the actual fact that Qinghai Shengyuan and Ningxia Zhuangyuan had
been closed and relocated due to being included in the forbidden breeding area
for environmental protection requirements, in order to cope with the relocation
risks of other farms under the Company due to the new environmental protection
requirements and smoothly promote the previous fundraising project, the Company
intended to change the project implementation entity to Ruijia Farming, our wholly-
owned subsidiary, which is located at a standardized and large-scale industrial park
which is beyond the forbidden area as confirmed by Jinchuan District People’s
Government of Jinchang City and the Bureau of Agriculture and Rural Areas of
Jinchuan District of Jinchang City.
– V-19 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(4) Reasons for Changing the Implementation Location of Part of the Raised
Funds of “The Construction Project of Cultivation of 10,000 Imported Good
Dairy Cows”
In April 2018, our subsidiary, Ningxia Zhuangyuan received the “Notice on
Closure and Relocation of Farms in Animal and Poultry Forbidden Areas (
)”, and the “Litong District Further
Implementation Plan for Closure or Relocation of Farms (Communities) in Animal
and Poultry Forbidden Areas (
)”, issued by the People’s Government of
Litong District, Wuzhong City, the core dairy breeding area in Jinyin Beach, where
Ningxia Zhuangyuan is located, had been included in the Animal and Poultry
Breeding Forbidden Areas and the scope of closure and relocation to further
promote the feedback rectification opinions of the inspector from the Central
Environmental Protection Inspection Team, control the pollution of animal and
poultry breeding, and protect the ecological environment.
As Ningxia Zhuangyuan, the original implementation entity, was included
in the forbidden breeding area and currently was closed, the pasture could not
undertake the breeding of the cattle purchased this time. Meanwhile, Wuwei
Ruida, Linxia Ruiyuan, and Lanzhou Ruixing currently have their cattle stocks
approaching or close to saturation, while Yuzhong Ruifeng and Linxia Li’an are
currently jointly farmed, the cows in stock are owned by local dairy farmers, and
the cows newly purchased in stock are not convenient for daily management.
Therefore, in order to smoothly promote the previous fund-raising project, the
Company intended to change the project implementation entity to Ruijia Farming,
our wholly-owned subsidiary, which is located at a standardized and large-scale
industrial park which is beyond the forbidden area as confirmed by Jinchuan
District People ’ s Government of Jinchang City and the Bureau of Agriculture
and Rural Areas of Jinchuan District of Jinchang City, and Ruijia Farming will
undertake the breeding of approximately 3,000 cows funded by RMB53.4 million
under the “Construction Project of Cultivation of 10,000 Imported Good Dairy
Cows”.
– V-20 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
2. Description of Decision-making Procedures and Information Disclosure
(1) Description of Decision-making Procedures and Information Disclosure for
Acquisition 82% Equity Interests in Dongfang Dairy
On 26 July 2018 and 26 September 2018, the Company held the 6th meeting
of the 3rd session of Board of Directors and the 2nd Extraordinary General Meeting
(EGM) of 2018, which considered and approved the Proposal on Acquisition of
Equity of the Subsidiary Xi ’an Dongfang Dairy Co., Ltd., and the Proposal on
Changing the Use of Proceeds to Acquire Equity of Xi’an Dongfang Dairy Co.,
Ltd., thus RMB100,591,214.95 of “ The Construction Project of Cultivation of
10,000 Imported Good Dairy Cows ” and all the funds of RMB49,408,785.05
(including interest) of the “self-service milk machine and supporting facilities
construction project ” , namely the two investment projects of proceeds raised
by initial public offering of A Shares, totalling RMB150,000,000, was changed
to acquire 82% equity interests in Xi’an Dongfang Dairy Co., Ltd. (“Dongfang
Dairy”).
The independent Directors of the Company considered the Proposal on
Acquisition of Equity of the Subsidiary Xi’an Dongfang Dairy Co., Ltd. and gave
an independent opinion that the Company changed the use of partial proceeds
to acquire equity, which was an adjustment based on the actual situation of the
Company, and it was in line with the actual operation requirement of the Company
and conducive to improve the use efficiency of proceeds; the Company has carried
out a serious analysis and argumentation on this acquisition, and considered it was
in line with the national industrial policies and relevant laws, regulations and rules;
this change in the use of proceeds fulfilled the necessary legal procedures, and it
complied with relevant provisions of the Stock Listing Rules of Shenzhen Stock
Exchange, and the Standardization Operation Guidelines for Listed Companies in
SME Board of Shenzhen Stock Exchange. Therefore, we unanimously agreed to the
proposal to change partial proceeds to acquire equity interests in Xi’an Dongfang
Dairy Co., Ltd., and submitted it to the general meeting of shareholders of the
Company for consideration.
– V-21 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
On 6 November 2018, Zhuangyuan Pasture disclosed the “Announcement
on Completing the Registration of Industry and Commerce Change for Acquisition
of 82% Equity of the Subsidiary Xi’an Dongfang Dairy Co., Ltd. (Announcement
No.: 2018-079): Dongfang Dairy completed the registration procedures for
industrial and commercial changes, and it obtained the Business License issued by
Xi’an Administration for Industry and Commerce, then the Company became the
sole shareholder and owns 100% equity interests of Dongfang Dairy.
(2) Description of Decision-making Procedures and Information Disclosure for
“Recycling Industrial Park Project of A Dairy Farm for 10,000 Dairy Cows
in Jinchuan District”
On 19 September 2019, the 25th meeting of the 3rd session of the Board of
Directors of the Company considered and approved the Proposal on Changes of
Partial Investment Projects of Proceeds (
), and agreed the matter relating to changes of the investment projects of
proceeds and agreed to submit such matter to the general meeting of shareholders
of the Company for approval.
The independent Directors of the Company consider that: after review, the
matter relating to changes of the investment projects of proceeds is determined
based on the specific implementation of the fund-raising project, market
environment, regulatory requirements, actual operating conditions and future
development plans of the Company, which is in line with the development direction
of the main business and the interests of the Company and all shareholders, and
is conducive to improving the efficiency of the use of raised funds, the objective
requirements of the operation and future development of the Company without
damaging the interests of minority shareholders; the matter relating to changes of
the investment projects of proceeds fulfilled the necessary legal procedures, and
complied with relevant provisions of the Stock Listing Rules of Shenzhen Stock
Exchange, and the Standardization Operation Guidelines for Listed Companies in
SME Board of Shenzhen Stock Exchange. Therefore, we unanimously agreed to
the proposal on changes of the investment projects of proceeds, and submitted it to
the general meeting of shareholders of the Company for consideration.
– V-22 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
On 30 December 2019, the Company convened the 2019 Second
Extraordinary General Meeting, 2019 Third A Shareholders’ Class Meeting and
2019 Third H Shareholders’ Class Meeting, at which the Proposal on Changing the
Implementation Entity and the Implementation Location of the Partial Investment
Projects of Proceeds (
) was considered and adopted with a simple majority of shareholders.
(3) Description of Decision-making Procedures and Information Disclosure for
Changing the Implementation Location of the Proceeds
On 17 December 2019, the 30th meeting of the 3rd session of the Board of
Directors of the Company considered and approved the Proposal on Changing the
Implementation Entity and the Implementation Location of the Partial Investment
Projects of Proceeds (
), pursuant to which it agreed to change the implementation entity
to Ruijia Farming in relation to purchasing cows with the proceeds of RMB53.4
million under the “Construction Project of Cultivation of 10,000 Imported Good
Dairy Cows”, and change the implementation location of the proceeds accordingly.
The independent Directors of the Company reviewed the Proposal on
Changing the Implementation Entity and the Implementation Location of the
Partial Investment Projects of Proceeds (
) and issued an independent opinion: the changes of
the implementation entity and the implementation location of the partial investment
projects of proceeds complies with the relevant provisions of the administration
measures for raised funds and the actual implementation of the investment projects,
is conducive to the Company ’ s strategic development and reasonable layout,
can give full play to the Company’ s existing resource integration advantages,
help the projects to bring better returns, and is in line with the Company’s long-
term development plan, which does not affect the normal operation of the raised
investment projects without any disguised change in the investment direction of
the raised funds and damage to the interests of shareholders. The matter relating
to changes of the Implementation Entity of Part of the Raised Funds fulfilled
the necessary legal procedures, and complied with relevant provisions of the
Stock Listing Rules of Shenzhen Stock Exchange, the Standardization Operation
Guidelines for Listed Companies in SME Board of Shenzhen Stock Exchange, the
Articles of Association and the Administrative Measures for the Use of Proceeds.
Therefore, we unanimously agreed to the Matter on Changing the Implementation
Entity and the Implementation Location of the Partial Investment Projects of
Proceeds.
– V-23 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
As the implementation entities before and after this change are all wholly-
owned subsidiaries of the Company, which are all principally engaged in dairy
cow breeding, and this change does not involve changes in the investment direction
and use of proceeds. Therefore, the change of the implementation entity and
the implementation location of the partial investment projects of proceeds is not
required to be submitted to the general meeting of shareholders of the Company for
consideration.
The Company has fulfilled the necessary decision-making procedures
for the above-mentioned change of use of proceeds, and was consistent with the
announcements and disclosures related to the changes of proceeds.
(II) The Change of Use of Proceeds Raised by the 2020 Non-Public Issuance of A Shares
for the Investment Projects
There was no change in the investment projects and use of funds raised by the 2020 non-
public issuance of A Shares.
– V-24 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
Schedule 3:
Table of the changes of investment projects funded by the proceeds raised by the 2017 public
issuance of A Shares
Unit: RMB
Total proceeds Actual accumulated Investment progress Date when Whether the project
Corresponding raised intended to The actual amount amount invested as of the end of the project reaches Whether feasibility has been
original committed invest into projects invested during as of the end of the period (%) the scheduled The benefit realized the expected changed significantly
Projects after changes projects after changes (1) the period the period (2) (3)=(2)/(1) usable status during the period benefits are realized after changes
The Construction Project of The Construction 53,400,000.00 53,400,000.00 100% December 2021 7,545,865.31 N/A No
Cultivation of 10,000 Project of
Imported Good Dairy Cows Cultivation of
10,000 Imported
Good Dairy Cows
The acquisition of 82% equity The construction 49,310,400.00 49,310,400.00 100% 31 October 2018 N/A N/A No
interest of Dongfang Dairy project of
self-service milk
selling machines and
ancillary facility
The acquisition of 82% equity The Construction 100,689,600.00 100,689,600.00 100% 31 October 2018 N/A N/A No
interest of Dongfang Dairy Project of Cultivation
of 10,000 Imported
Good Dairy Cows
Recycling Industrial Park Project of The Construction 106,103,700.00 7,944,246.46 65,192,376.71 61.44% December 2021 7,545,865.31 N/A No
a Dairy Farm for 10,000 Project of Cultivation
Dairy Cows in Jinchuan District of 10,000 Imported
Good Dairy Cows
Total 309,503,700.00 7,944,246.46 268,592,376.71 86.78% 7,545,865.31
Illustration of the reason for change, decision-making procedures and See IV. (I)
information disclosure
The circumstances and reasons for not meeting the planned schedule or Recycling Industrial Park Project of a Dairy Farm with 10,000 Dairy Cows in Jinchuan District ( ) has not
expected revenue fully reached its design capacity by the end of 2021 as its net profit was RMB7,545,900 in 2021.
Illustration significant changes on the feasibility of the project after changes Nil
(II) Transfer or Replacement of the Investment Projects Funded by the Proceeds
The investment projects funded by the proceeds of the Company have not yet been
transferred or replaced.
– V-25 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
V. PROBLEMS IDENTIFIED IN THE USE AND DISCLOSURE OF THE PROCEEDS
RAISED
(I) Problems Identified in the Use and Disclosure of the Proceeds Raised by the 2017
Public Issuance of A Shares
In September 2019, the Company signed the Agency Agreement for Imported Cows
(Agreement No.: ZYMC-2019-0903) to prepay RMB4.74 million for the cows purchased from
the third-party manufacturer Tianjin Aohaihaode Import & Export Co., Ltd. (
), and the financial personnel of the Company made the payment from the
special fund-raising account due to the negligence. In December 2019, the Company immediately
returned the amount of RMB4.74 million to the special account for proceeds once it discovered.
In December 2019, when the Company conducted the acceptance bills business with
Shanghai Pudong Development Bank Lanzhou Branch, it transferred RMB60 million from
the fund-raising account to the acceptance bill margin account opened in the bank, of which
RMB20 million was returned to the special account for raised funds from the margin account
in January 2020. The Company has regulated and rectified in a timely manner in accordance
with the requirements of the internal audit agency, the audit committee, the audit agency and
the continuous supervision agency during the verification and transferred RMB40 million to the
special account for proceeds in March 2020.
On 8 April 2020, with the approval at the 37th meeting of the third session of Board and
the 23rd meeting of the third session of Board of Supervisors, idle proceeds of RMB50 million
were used for supplementing the working capital on a temporary basis for no more than 12
months commencing from the date on which the relevant proposal was considered and approved
by the Board of the Company (from 8 April 2020 to 7 April 2021). Due to the negligence of our
staff, the Company failed to return the proceeds to the special account of proceeds as scheduled
before the expiration of the specified period during which the proceeds are used to temporarily
supplement the working capital, as a consequence of which the Company used the proceeds to
temporarily supplement the working capital for more than 6 days beyond the agreed period. After
knowing that it had been using the proceeds to temporarily supplement the working capital for
more than twelve months beyond the agreed period on 13 April 2021, the Company made timely
rectification on the same day against suggestions as agreed upon with the continuous supervision
organization by repaying the RMB50 million that was temporarily used for supplementing the
working capital into the special account of proceeds.
– V-26 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(II) Problems Identified in the Use and Disclosure of the Proceeds Raised by the 2020
Public Issuance of A Shares
When the Proceed Account 6 was being cancelled on 7 December 2021, its balance of
RMB12,155.43 was transferred into the general account of Zhuangyuan Pasture opened with
Bank of Lanzhou Xinglong Branch (Account Number: 7029709110591012), and the Company
subsequently identified such transfer, and returned the fund into the Proceed Account 8 on 14
March 2022.
Save as disclosed above, the Company has placed, used and managed the proceeds raised
by strictly compliance with relevant requirements of the Guidelines for the Supervision and
Control of Listed Companies No. 2 – Regulation Requirements for the Management and Use of
Proceeds of Listed Companies 2 –
and the Regulations on the Standardization Operation Guidelines for Listed
Companies on Shenzhen Stock Exchange ( ) and
the Administrative Measures for Special Storage and Use of the Proceeds of the Company, and
has disclosed the information timely, truly, accurately and completely.
VI. OTHER MATTERS
The accounts for the proceeds raised by the 2017 public issuance of A Shares of the
Company:
Account 1 Xinglong Branch of Bank of Lanzhou Co., Ltd. (account number:
101472000568575), which has cancelled on 7 July 2020;
Account 2 Lanzhou East Branch of China Zheshang Bank Co., Ltd. (account number:
8210000110120100058409), which has cancelled on 8 July 2020;
Account 3 Lanzhou Jinchang Road Sub-branch of Bank of China (account number:
104059529335), which has cancelled on 13 July 2020;
Account 4 Lanzhou High-tech Branch of Shanghai Pudong Development Bank (account
number: 48170078801800000030), which has cancelled on 10 July 2020.
– V-27 –
APPENDIX V SPECIAL REPORT ON ACTUAL DEPOSIT AND
USE OF THE PROCEEDS DURING 2021
(II) The accounts for the proceeds raised by the 2020 public issuance of A Shares of the
Company:
Account 6 Xinglong Branch of Bank of Lanzhou Co., Ltd. (account number:
101472000640515), which has been cancelled on 7 December 2021;
Account 7 Lanzhou Branch of China CITIC Bank (account number:
8113301013900110603), which has been cancelled on 3 December 2021.
The Board of Lanzhou Zhuangyuan Pasture Co., Ltd.*
30 March 2022
– V-28 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
Lanzhou Zhuangyuan Pasture Co., Ltd.
Annual Financial Final Account Report for 2021
I. OVERVIEW OF AUDIT OF FINANCIAL STATEMENTS OF THE COMPANY FOR 2021
The annual financial statements of the Company for 2021 have been audited by Daxin Certified
Public Accountants (Special General Partnership), for which a standard unqualified audit report has been
issued.
In the opinion of the accountant, the financial statements of the Company are prepared in
accordance with the provisions of Accounting Standards for Business Enterprises in all material respects
and present fairly the consolidated and parent financial position of Zhuangyuan Pasture Company as
at 31 December 2021 and the consolidated and parent operating results and cash flows for the year of
2021.
II. PRINCIPAL ACCOUNTING DATA AND FINANCIAL INDICATORS
Unit: RMB
Increase/
decrease as
compared
with the
2021 2020 previous year 2019
Operating revenue (RMB) 1,021,431,541.67 739,820,698.20 38.06% 813,554,461.19
Net profit attributable to
shareholders of
the listed company (RMB) 53,533,055.78 10,453,468.09 412.11% 51,321,171.73
Net profit attributable to
shareholders of the listed
company after deduction of
non-recurring gain or loss
(RMB) 50,479,780.10 3,216,161.76 1469.57% 7,845,388.19
Net cash flows from
operating activities (RMB) 206,991,243.70 141,646,871.16 46.13% 140,276,744.73
Basic earnings per share
(RMB/share) 0.23 0.05 360.00% 0.27
Diluted earnings per share
(RMB/share) 0.23 0.05 360.00% 0.27
Weighted average rate of
return on net assets 3.31% 0.85% 2.46% 4.24%
– VI-1 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
Increase/
decrease as
compared with
At the end of At the end of the end of the At the end of
2021 2020 previous year 2019
Total assets (RMB) 2,810,379,800.62 3,080,558,015.83 –8.77% 2,492,726,974.51
Net assets attributable
to shareholders of
the listed company (RMB) 1,640,693,050.51 1,591,833,606.73 3.07% 1,225,407,188.36
Note: The above data are the consolidated data
III. ANALYSIS ON FINANCIAL POSITION OF THE COMPANY FOR 2021
I) Asset structure
Unit: RMB
31 December 31 December Percentage of
Item 2021 2020 change
Current assets:
Monetary funds 403,688,542.41 846,728,942.97 –52.32%
Trading financial assets
Bills receivable
Receivables 38,980,803.20 41,585,884.40 –6.26%
Prepayments 2,751,705.56 7,997,596.05 –65.59%
Other receivables 9,129,972.95 20,791,553.57 –56.09%
Including: Interest receivable
Dividend receivable
Inventory 176,459,492.20 113,625,024.22 55.30%
Other current assets 2,427,825.62 10,738,310.25 –77.39%
Total current assets 633,438,341.94 1,041,467,311.46 –39.18%
Non-current assets:
Other equity instruments
investment 44,471.00 44,471.00 0.00%
Fixed assets 1,466,960,921.76 1,179,537,375.25 24.37%
Construction in progress 1,979,040.00 152,092,981.56 –98.70%
Productive biological assets 534,963,500.00 494,690,800.00 8.14%
Right-of-use assets 47,079,093.54 53,784,254.41 –12.47%
Intangible assets 97,826,814.19 97,156,312.67 0.69%
Goodwill
Long-term deferred expenses 3,495,145.61 4,245,503.13 –17.67%
Deferred income tax assets 2,399,020.58 2,502,403.35 –4.13%
Other non-current assets 22,193,452.00 55,036,603.00 –59.68%
Total non-current assets 2,176,941,458.68 2,039,090,704.37 6.76%
Total assets 2,810,379,800.62 3,080,558,015.83 –8.77%
– VI-2 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
At the end of the reporting period, the total assets of the Company decreased by 8.77%
compared with the end of the previous year, which is mainly due to the following factors:
(1) The monetary fund decreased by 52.32% compared with the previous period,
which is due to the continuous increase in investment in the Recycling Industrial
Park Project of a Dairy Farm with 10,000 Dairy Cows in Jinchuan District, and
repayment of bank loans and the due payment of bills payable;
(2) Prepayments decreased by 65.59% compared with the previous period, which is
caused by the Company’s adjustment of inventory reserve plan during the reporting
period;
(3) Other receivables decreased by 56.09% compared with the previous period, which
is due to the receipt of performance compensation during the reporting period;
(4) Inventory increased by 55.30% compared with the previous period, which is due to
the corresponding increase in forage and other reserves during the reporting period;
(5) Construction in progress decreased by 98.70% compared with the previous period,
which is mainly due to the fact that the Recycling Industrial Park Project of a Dairy
Farm with 10,000 Dairy Cows in Jinchuan District became ready for intended use.
– VI-3 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
(II) Liability structure
Unit: RMB
31 December 31 December Percentage of
Item 2021 2020 change
Current liabilities:
Short-term borrowings 214,666,056.62 322,336,936.66 –33.40%
Bills payable 80,000,000.00 431,160,000.00 –81.45%
Accounts payable 253,384,536.76 214,105,178.10 18.35%
Contract liabilities 18,717,096.18 10,669,316.26 75.43%
Employee remuneration payable 5,940,108.25 6,226,334.94 –4.60%
Taxes payable 4,606,023.94 6,419,248.92 –28.25%
Other payables 42,905,811.23 52,990,259.17 –19.03%
Including: Interests payable
Dividends payable
Non-current liabilities due
within 1 year 110,348,905.45 48,421,754.16 127.89%
Other current liabilities 2,429,202.46 1,448,412.01 67.71%
Total current liabilities 732,997,740.89 1,093,777,440.22 –32.98%
Non-current liabilities:
Long-term borrowings 353,447,610.09 311,281,479.94 13.55%
Lease liabilities 40,941,595.71 40,483,271.07 1.13%
Long-term payable
Estimated liabilities 506,196.19 490,275.50 3.25%
Deferred income 36,493,248.38 37,059,181.71 –1.53%
Deferred income tax liabilities 5,300,358.85 5,632,760.66 –5.90%
Total non-current liabilities 436,689,009.22 394,946,968.88 10.57%
Total liabilities 1,169,686,750.11 1,488,724,409.10 –21.43%
At the end of the reporting period, total liabilities of the Company decreased by 21.43%
compared with that at the end of the previous year, which is mainly due to the following factors:
(1) Short-term loans decreased by 33.40% compared with the previous period, which is
due to the repayment of loans during the reporting period;
(2) Bills payable decreased by 81.45% compared with the previous period, which is
due to the Company’s reduced use of bills for payment.
– VI-4 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
(III) Owner’s equity
Unit: RMB
31 December 31 December Percentage of
Item 2021 2020 change
Shareholders’ equity:
Share capital 232,381,032.00 233,680,600.00 –0.56%
Capital reserves 846,834,119.60 854,579,544.88 –0.91%
Less: Treasury stocks 14,205,582.72 23,250,576.00 –38.90%
Surplus reserves 45,321,343.15 43,387,412.25 4.46%
Retained earnings 530,362,138.48 483,436,625.60 9.71%
Total equity attributable to
the shareholders of
the Parent Company 1,640,693,050.51 1,591,833,606.73 3.07%
Total shareholders’ equity 1,640,693,050.51 1,591,833,606.73 3.07%
At the end of the reporting period, the total shareholders’ equity increased by 3.07%
compared with the end of the previous year, which is mainly affected by the following factors:
(1) Treasury stocks decreased by 38.90% compared with the previous period, which
is due to the repurchase of restricted shares by the Company during the reporting
period.
IV. ANALYSIS ON OPERATING RESULTS
Unit: RMB
Amount incurred Amount incurred
for the for the Percentage of
Item current period previous period change
I. Operating revenue 1,021,431,541.67 739,820,698.20 38.06%
Less: Operating cost 778,503,600.85 553,389,451.17 40.68%
Taxes and surcharges 9,509,700.04 7,744,816.81 22.79%
Selling expenses 60,732,421.57 52,675,556.26 15.30%
Administrative expenses 101,257,306.12 68,815,010.49 47.14%
Research and development expenses 9,246,921.52 9,103,148.03 1.58%
Financial expenses 12,606,738.56 23,890,970.82 –47.23%
Including: Interest expenses 18,692,909.65 27,549,672.46 –32.15%
Interest income 6,587,038.06 5,470,259.43 20.42%
– VI-5 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
Amount incurred Amount incurred
for the for the Percentage of
Item current period previous period change
Add: Other income 7,081,932.73 6,503,220.92 8.90%
Investment income (“-” means loss) –3,343,998.00 –12,925,168.22 74.13%
Income from derecognition of
financial assets at amortised cost –3,343,998.00 –12,925,168.22 74.13%
Gains from changes in fair value
(“-” means loss) 9,901,498.25 74,262,924.90 –86.67%
Impairment losses on credit
(“-” means loss) 296,534.29 –1,512,831.18 119.60%
Impairment loss on assets
(“-” means loss) –590,914.73 –75,837,966.82 99.22%
Gains from asset disposal
(“-” means loss) –574,803.44 313,094.36 –283.59%
II. Operating profit (“-” means loss) 62,345,102.11 15,005,018.58 315.50%
Add: Non-operating income 3,623,063.05 9,005,986.62 –59.77%
Less: Non-operating expenses 10,840,647.87 11,650,412.65 –6.95%
III. Total profit (“-” means total loss) 55,127,517.29 12,360,592.55 345.99%
Less: Income tax expenses 1,594,461.51 1,907,124.46 –16.39%
IV. Net profit (“-” means net loss) 53,533,055.78 10,453,468.09 412.11%
(I) Classification by continuity
of operation:
1.Net profit from continuing operations
(“-” means net loss) 53,533,055.78 10,453,468.09 412.11%
(II) Classification by the ownership:
1. Net profits attributable to
shareholder of the parent company
(“-” means net loss) 53,533,055.78 10,453,468.09 412.11%
V. Other net comprehensive
income after tax
– VI-6 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
Amount incurred Amount incurred
for the for the Percentage of
Item current period previous period change
VI. Total comprehensive income 53,533,055.78 10,453,468.09 412.11%
(I) Total comprehensive income
attributable to the owners of
the Parent Company 53,533,055.78 10,453,468.09 412.11%
VII. Earnings per share
(I) Basic earnings per share 0.23 0.05 360.00%
(II) Diluted earnings per share 0.23 0.05 360.00%
During the reporting period, the total comprehensive income attributable to shareholders of the
parent company increased by 412.11%, which is mainly due to the following factors:
(1) The operating revenue increased by 38.06% compared with the previous period, which is
due to the steady growth of revenue with the alleviation of COVID-19 epidemic during the
reporting period;
(2) The operating cost increased by 40.68% compared with the previous period, which is due
to the corresponding increase in cost as a result of increase in revenue;
(3) The administrative expenses increased by 47.14% compared with the previous period,
which is due to the increase in labor costs, depreciation expense and amortization expenses
of the Company during the reporting period;
(4) Financial cost decreased by 47.23% compared with the previous period, which is due to
the decrease in bank loans during the reporting period;
(5) Investment income increased by 74.13% compared with the previous period, which is due
to the decrease in bill discount during the reporting period;
(6) Gains from changes in fair value decreased by 86.67% compared with the previous period,
which is due to the decrease in the fair value of the Company’s biological assets during
the reporting period;
(7) Impairment loss on assets decreased by 99.22% compared with the previous period, which
is due to provision for asset impairment made by the Company in the previous period;
(8) Non-operating income decreased by 59.77% compared with the previous period, which is
due to recognition of performance compensation by the Company in the previous period.
– VI-7 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
V. CASH FLOW ANALYSIS
Unit: RMB
Amount incurred Amount incurred
for the for the Percentage of
Item current period previous period change
I. Cash flow from operating activities:
Cash received from sale of
goods and rendering of services 1,145,380,311.45 816,686,267.77 40.25%
Tax refund received 914,079.53 –100.00%
Cash received in connection with
other operating activities 33,714,273.39 43,869,334.03 –23.15%
Sub-total of cash inflow from
operating activities 1,179,094,584.84 861,469,681.33 36.87%
Cash paid for purchase of
goods and receipt of labor services 758,254,800.99 527,721,139.36 43.68%
Cash paid to and for employees 95,225,281.87 67,527,729.17 41.02%
Payment of various taxes 35,015,786.86 30,574,103.92 14.53%
Cash paid for other operating activities 83,607,471.42 93,999,837.72 –11.06%
Cash paid for other operating activities 972,103,341.14 719,822,810.17 35.05%
Net cash flows from
operating activities 206,991,243.70 141,646,871.16 46.13%
II. Cash flows from investing activities:
Net cash received from disposal of
fixed assets, intangible assets and
other long-term assets 27,908,822.94 21,619,436.00 29.09%
Cash received from
other investing activities 14,106,479.42 41,233,249.23 –65.79%
Sub-total of cash inflows from
investing activities 42,015,302.36 62,852,685.23 –33.15%
Cash paid for acquisition of fixed assets,
intangible assets and
other long-term assets 374,861,265.69 409,795,754.90 –8.52%
Cash paid for investments
Cash paid for other investing activities
Sub-total of cash outflows from
investing activities 374,861,265.69 409,795,754.90 –8.52%
Net cash flows from investing activities –332,845,963.33 –346,943,069.67 4.06%
– VI-8 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
Amount incurred Amount incurred
for the for the Percentage of
Item current period previous period change
III. Cash flows from financing activities:
Cash received from accepting
investments 368,878,786.79 –100%
Including: Cash received by subsidiaries
as minority shareholders’ investments
Cash from borrowings 468,000,000.00 551,000,000.00 –15.06%
Cash received in connection with
other financing activities 291,820,001.00 540,792,000.00 –46.04%
Sub-total of cash inflows from
financing activities 759,820,001.00 1,460,670,786.79 –47.98%
Cash paid for repayments of borrowings 470,640,091.66 469,496,745.42 0.24%
Cash payments for distribution of
dividends and profits or
interest expenses 26,430,054.52 38,037,105.46 –30.52%
Including: Dividend and profit paid to
minority shareholders by subsidiaries
Other cash payments relating to
financing activities 405,543,502.28 364,534,276.63 11.25%
Sub-total of cash outflows from
financing activities 902,613,648.46 872,068,127.51 3.50%
Net cash flows from
financing activities –142,793,647.46 588,602,659.28 –124.26%
IV. Effect of foreign exchange rate
changes on cash and cash equivalents –9,699.14 23,858.01 –140.65%
V. Net increase in cash and
cash equivalents –268,658,066.23 383,330,318.78 –170.09%
Add: Cash and cash equivalents
at the beginning of the period 631,564,941.97 248,234,623.19 154.42%
VI. Cash and cash equivalents
at the end of the period 362,906,875.74 631,564,941.97 –42.54%
– VI-9 –
APPENDIX VI THE FINAL FINANCIAL REPORT FOR 2021
The net increase in cash and cash equivalents in the reporting period decreased by 170.09%
compared with the same period of last year, which is mainly due to the following factors:
(1) The net cash flow from operating activities increased by 46.13% compared with the
previous period, which is mainly due to the increase in cash inflow from operating
activities as a result of the alleviation of epidemic situation and the increase in sales during
the current period;
(2) The net cash flow from investing activities increased by 4.06% compared with the
previous period, which is mainly due to the land purchase price paid by the Company in
the previous period;
(3) The net cash flow from financing activities decreased by 124.26% compared with the
previous period, which is mainly due to the reduction of bank loans during the reporting
period and the completion of the non-public offering of 43 million A shares by the
Company in the previous period, resulting in proceeds of RMB368, 878,786.79;
(4) Cash and cash equivalents decreased by 170.09% compared with the previous period,
which is mainly due to increase in proceeds of RMB368,878,786.79 from non-public
offering of A shares completed by the Company at the end of the previous period, resulting
in a high base of cash and cash equivalents at the end of the previous period. During the
reporting period, the proceeds were used for the construction of intended projects, and
bank loans were reduced, resulting in a decrease in cash and cash equivalents at the end of
the reporting period.
Lanzhou Zhuangyuan Pasture Co., Ltd.
30 March 2022
– VI-10 –
APPENDIX VII ANNOUNCEMENT IN RELATION TO THE
APPLICATION TO BANKS OF THE LIMITS OF
COMPOSITE CREDIT FACILITIES FOR 2022
Lanzhou Zhuangyuan Pasture Co., Ltd.
Announcement on applying for a comprehensive credit amount from banks in 2022
The Company and all members of the Board guarantee that the contents of the announcement
are true, accurate and complete, and there are no false records, misleading statements or major
omissions.
On 30 March 2022, the 11th meeting of the 4th session of Board of Lanzhou Zhuangyuan Pasture
Co., Ltd. (hereinafter referred to as the “Company”) reviewed and approved the “Proposal on Applying
for a Comprehensive Credit Amount from Banks in 2022”, and the relevant contents were as follows:
In order to meet the needs of the Company ’ s production and operation activities, after
comprehensive consideration of the Company’s funding arrangements, the Company intends to apply
to banks for a comprehensive credit amount of no more than RMB2,500,000,000. The credit categories
mainly include: working capital loan, fixed assets investment loans, domestic letters of credit, bank
acceptance bills, discounted commercial acceptance bills, non-financial guarantee, buyer’ s factor
guarantee, etc., and the above credit lines are subject to the actual credit amount approved by relevant
banks, and the specific financing amount will be determined according to the actual operating needs of
the Company. The credit line can be renewed during the credit period.
The authorized legal representative or its designated authorized agent shall, on behalf of the
Company, sign the various legal documents (including but not limited to applications, contracts,
agreements, etc. in relation to credit, loan, financing, etc.) within the above comprehensive credit line.
The above-mentioned authorization is valid from the date of approval at 2021 Annual General
Meeting of the Company to the date of the new resolution passed at 2022 Annual General Meeting.
The comprehensive credit line shall be submitted to the Company’s general meeting for approval.
Announcement is hereby made.
The Board of Lanzhou Zhuangyuan Pasture Co., Ltd.
30 March 2022
– VII-1 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
Stock Code: 002910 Stock Abbreviation: Zhuangyuan Pasture Announcement No.: 2022-035
Lanzhou Zhuangyuan Pasture Co., Ltd.
ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES IN THE
SECOND RELEASE OF LOCKUP PERIOD UNDER THE 2019
RESTRICTED SHARES INCENTIVE SCHEME
The Company and all members of the Board warrant that the contents of the announcement
are true, accurate and complete, and there are no false records, misleading statements or
material omissions.
At the 14th meeting of the fourth session of the Board of Directors and the 10th meeting of
the fourth session of the Board of Supervisors held on 2 June 2022, Langzhou Zhuangyuan Pasture
Co., Ltd. (the “Company”) considered and approved the Proposal on Repurchase and Cancellation
of All Restricted Shares in the Second Release of Lockup Period Under the 2019 Restricted Shares
Incentive Scheme, pursuant to which the Company agreed to repurchase and cancel 869,508 restricted
shares held in aggregate by 76 incentive participants that became involved due to failure to satisfy the
unlocking conditions for the second release of lockup period under the 2019 Restricted Shares Incentive
Scheme (the “Incentive Scheme”) in terms of the performance assessment at level of the Company;
and to repurchase and cancel all 12,180 restricted shares that have been granted to one retired incentive
participant but remain locked-up.
881,688 restricted shares granted but remaining locked-up will be subject to repurchase
and cancellation contemplated hereunder, which accounts for 0.38% of the current share capital
of 232,381,032 shares of the Company, and 0.45% of A share capital of 197,251,032 shares of the
Company. In accordance with Measures for Administration of Equity Incentive of Listed Companies (the
“Administrative Measures”), the above matter is subject to consideration at the general meeting of the
Company. The following announcement is hereby made in relation to the relevant issues:
– VIII-1 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
I. SUMMARY OF IMPLEMENTATION OF THE COMPANY ’ S EQUITY INCENTIVE
SCHEME
1. On 28 September 2018, the Company convened the 10th meeting of the third session of
the Board of Directors to consider and approve the Proposal on 2018 Restricted Shares
Incentive Scheme (Draft) of Lanzhou Zhuangyuan Pasture Co., Ltd. and its Summary,
the Proposal on Measures for Implementation of Evaluation and Management of 2018
Restricted Shares Incentive Scheme of Lanzhou Zhuangyuan Pasture Co., Ltd. and the
Proposal on Requesting the General Meeting of Shareholders to Authorise the Board to
Handle Equity Incentives Related Matters; the Company convened the 6th meeting of the
third session of the Board of Supervisors to verify the list of Incentive Participants for the
Company’s 2018 Restricted Shares Incentive Scheme, and to consider and approve the
Proposal on 2018 Restricted Shares Incentive Scheme (Draft) of Lanzhou Zhuangyuan
Pasture Co., Ltd. and its Summary, the Proposal on Measures for Implementation of
Evaluation and Management of 2018 Restricted Shares Incentive Scheme of Lanzhou
Zhuangyuan Pasture Co., Ltd. and the Proposal on Verifying the List of Incentive
Participants of the Company’s 2018 Restricted Shares Incentive Scheme. The independent
directors of the Company expressed independent opinions of approval on such Incentive
Scheme.
The meeting considered and approved the number of Restricted Shares that may be
granted under the 2018 Restricted Shares Incentive Scheme shall be 4,734,100 Shares, of
which 3,834,100 Shares will be granted under the First Grant, and 900,000 Shares will be
reserved. The total number of Incentive Participants under the First Grant is 115, and the
grant price is RMB8.60 per share.
– VIII-2 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
2. On 11 March 2019, the Company convened the 16th meeting of the third session of the
Board of Directors to consider and approve the Proposal on Agreeing to Change the 2018
Restricted Shares Incentive Scheme (Draft) of Lanzhou Zhuangyuan Pasture Co., Ltd., the
Proposal on the 2019 Restricted Shares Incentive Scheme (Draft) of Lanzhou Zhuangyuan
Pasture Co., Ltd. and its Summary, the Proposal on Measures for Implementation of
Evaluation and Management of 2019 Restricted Shares Incentive Scheme of Lanzhou
Zhuangyuan Pasture Co., Ltd. and the Proposal on Requesting the General Meeting of
Shareholders to Authorise the Board to Handle Equity Incentives Related Matters; the
Company convened the 11th meeting of the third session of the Board of Supervisors to
consider and approve the Proposal on Agreeing to Change the 2018 Restricted Shares
Incentive Scheme (Draft) of Lanzhou Zhuangyuan Pasture Co., Ltd., and meanwhile to
verify the list of Incentive Participants for the Company’s 2019 Restricted Shares Incentive
Scheme, and to consider and approve the Proposal on the 2019 Restricted Shares Incentive
Scheme (Draft) of Lanzhou Zhuangyuan Pasture Co., Ltd. and its Summary, the Proposal
on Measures for Implementation of Evaluation and Management of 2019 Restricted Shares
Incentive Scheme of Lanzhou Zhuangyuan Pasture Co., Ltd. and the Proposal on Verifying
the List of Incentive Participants of the Company ’s 2019 Restricted Shares Incentive
Scheme. The independent directors of the Company expressed independent opinions of
approval on such incentive scheme.
The meeting considered and approved the number of Restricted Shares that may be
granted under the adjusted 2019 Restricted Shares Incentive Scheme shall be 4,792,800
Shares, of which 4,192,800 Shares will be granted under the First Grant, and 600,000
Shares will be reserved. The total number of Incentive Participants under the First Grant is
100, and the grant price is RMB6.96 per share.
3. On 6 May 2019, the Company publicised the name and position of the intended Incentive
Participants through its internal system. The publicity period was from 6 May 2019 to
16 May 2019, which was more than 10 days. Upon expiration of the publicity period,
the Board of Supervisors of the Company did not receive any objection to the proposed
Incentive Participants. On 17 May 2019, the Company disclosed the Explanation of the
Publicity Status of Incentive Participants List for the Company’s 2019 Restricted Shares
Incentive Scheme and the Verification Opinions of the Board of Supervisors of Lanzhou
Zhuangyuan Pasture Co., Ltd.
– VIII-3 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
4. On 23 May 2019, the Company convened the 1st extraordinary general meeting in 2019
to consider and approve the Proposal on the 2019 Restricted Shares Incentive Scheme
(Draft) of Lanzhou Zhuangyuan Pasture Co., Ltd. and its Summary, the Proposal on
Measures for Implementation of Evaluation and Management of 2019 Restricted Shares
Incentive Scheme of Lanzhou Zhuangyuan Pasture Co., Ltd., the Proposal on Requesting
the General Meeting of Shareholders to Authorise the Board to Handle Equity Incentives
Related Matters, and the Proposal on Agreeing to the First Grant of Restricted A Shares to
Executive Directors and Other Related Persons.
The general meeting considered and approved the number of the Restricted Shares that
may be granted under the 2019 Restricted Shares Incentive Scheme shall be 4,792,800
shares, of which 4,192,800 shares will be granted under the First Grant, and 600,000
shares will be reserved. The total number of Incentive Participants under the First Grant is
100, and the grant price is RMB6.96 per share.
5. On 21 June 2019, the Company convened the 21st meeting of the third session of the
Board of Directors and the 13th meeting of the third session of the Board of Supervisors,
at which the Proposal on Matters Related to the Adjustment of 2019 Restricted Shares
Incentive Scheme and the Proposal on the First Grant of Restricted Shares to Incentive
Participants were considered and approved. The independent directors of the Company
expressed independent opinions of approval thereon, and believed that the subject
qualifications of Incentive Participants were legal and valid, the grant date as determined
complied with relevant regulations, the grant conditions were satisfied, which would not
damage the interests of the listed company and its shareholders as a whole. The Board of
Supervisors of the Company would verify the adjusted list of Incentive Participants and
deliver verification opinions.
The number of the Restricted Shares granted under the adjusted 2019 Restricted Shares
Incentive Scheme as considered and approved by such meeting shall be 3,940,600 shares,
of which 3,340,600 shares will be granted under the First Grant, and 600,000 shares will
be reserved. The total number of Incentive Participants under the First Grant is 84, and the
grant price is RMB6.96 per share.
6. On 9 July 2019, the Board of the Company implemented and completed the registration
of Restricted Shares grants. The grant date was 21 June 2019, and the listing date of
Restricted Shares was 12 July 2019. The number of grantees under the 2019 Restricted
Shares Incentive Scheme of the Company is 84, and the number of shares granted was
3,340,600 shares, and the grant price was RMB6.96 per share.
– VIII-4 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
7. On 15 January 2021, the Company convened the 46th meeting of the third session of the
Board of Directors and the 31st meeting of the third session of the Board of Supervisors to
consider and approve the Proposal on the Repurchase and Cancellation of All Restricted
Shares in the First Release of Lockup Period under the 2019 Restricted Shares Incentive
Scheme, and the independent directors expressed independent opinions of approval
thereon.
8. 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 Lockup 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 Lockup 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.
9. The Company published Announcement of Lanzhou Zhuangyuan Pasture Co., Ltd. on
the Repurchase and Cancellation of All Restricted Shares in the First Release of Lockup
Period under the 2019 Restricted Shares Incentive Scheme to Reduce Registered Capital
and Notice to Creditors on the qualified information disclosure media, namely Securities
Daily, Securities Times, Shanghai Securities News, China Securities Daily and www.
cninfo.com.cn on 19 March 2021.
10. On 16 June 2021, the Company completed the procedures for repurchase and cancellation
of all restricted shares for the first release of lockup period under the 2019 restricted share
incentive scheme with Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited.
11. On 2 June 2022, the Company held the 14th meeting of the fourth session of the Board
of Directors and the 10th meeting of the fourth session of the Board of Supervisors,
respectively, at which Proposal on Repurchase and Cancellation of All Restricted Shares in
the Second Release of Lockup Period Under the 2019 Restricted Shares Incentive Scheme
was considered and approved. Independent directors expressed independent consent
opinion regarding the proposal. The proposal is subject to consideration and approval at
the general meeting of the Company.
– VIII-5 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
II. E X P L A N AT I O N O N M AT T E R S R E L AT E D T O T H E R E P U R C H A S E A N D
CANCELLATION OF THE COMPANY’S RESTRICTED SHARES
(1) Explanation on the reasons for repurchase and cancellation and number of shares
repurchased and cancelled
1. Resignation of the Incentive Participants
One Incentive Participant under the incentive scheme have resigned for personal
reasons, and according to the provisions on the treatment of changes in the Company’s
Incentive Participants under the 2019 Restricted Shares Incentive Scheme (Draft): For
the Incentive Participants who cease to hold office in the Company due to retirement or
resignation, their Restricted Shares shall be repurchased and cancelled by the Company.
Such Incentive Participants shall pay the individual income tax for the part of the
Restricted Shares that have been released from the lockup period before resignation.
A total of 12,180 Restricted Shares granted but restrictions not yet released shall be
repurchased and cancelled by the Company, accounting for 0.36% of the total Restricted
Shares granted under the Incentive Scheme, 0.005% of the Company’s current total share
capital of 232,381,032 shares, and 0.006% of the Company’s total A Shares capital of
197,251,032 shares.
2. Failure to meet the performance assessment targets
According to the requirements of release conditions under the 2019 Restricted
Shares Incentive Scheme (Draft), the performance assessment requirement at company-
level in the second release period of Incentive Scheme is: the growth rate of operating
income in 2020 shall not be less than 20%, based on the reasonably adjusted operating
income in 2018.
– VIII-6 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
Since the Company completed the acquisition of 82% equity interests in
Dongfang Dairy in early November 2018 and became the sole shareholder of Dongfang
Dairy, Dongfang Dairy has been incorporated into the scope of consolidation. In
future, the annual financial statements of the Company need to incorporate the data
of Dongfang Dairy. In order to ensure the accuracy, rationality and scientificity of the
future performance evaluation indicators under the Incentive Scheme, it is assumed
that the Company would have completed the acquisition of 82% equity interests in
Dongfang Dairy in early 2018, that is, the accounts of Dongfang Dairy would have been
incorporated in January 2018, and the Company’s 2018 annual operating income has been
reasonably adjusted, and adopted the reasonably adjusted 2018 annual operating income
as the benchmark for the share incentive performance evaluation. According to the Pro
Forma Review Report issued by Ruihua Certified Public Accountants (Special General
Partnership), the reasonably adjusted operating income of the Company in 2018 was
RMB836.4894 million.
The audited operating income of the Company in 2020 was RMB73,982.07 million,
which failed to meet the performance assessment requirement in the first release of lockup
period under the incentive scheme.
As provided by the 2019 Restricted Shares Incentive Scheme (Draft) that “In the
event the Company fails to meet the performance assessment targets above, all Restricted
Shares which can be released by the Incentive Participants in the respective assessment
year shall not be released and shall be repurchased and cancelled by the Company at
the grant price plus the interest rate of bank deposits of the same term ”, the Company
repurchased and cancelled 869,508 Restricted Shares held by 76 Incentive Participants
involved in the Second Release of Lockup period due to the failure of satisfying the
release conditions under the Incentive Scheme, accounting for 26.03% of the total
Restricted Shares granted under the Incentive Scheme, 0.37% of the Company ’s current
total share capital of 232,381,032 shares, and 0.44% of the Company’s total A Shares
capital of 197,251,032 shares.
(2) Number of shares to be repurchased and cancelled
The Company repurchased and cancelled Restricted Shares held by 76 Incentive
Participants involved in the Second Release of Lockup period due to the failure of satisfying the
release conditions under the Incentive Scheme and all Restricted Shares (i.e. 881,688 shares)
granted but restrictions not yet released of such 1 resigned Incentive Participants, accounting
for 0.38% of the Company’s current total share capital of 232,381,032 shares, and 0.45% of the
Company’s total A Shares capital of 197,251,032 shares.
– VIII-7 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
(3) Repurchase price
In August 2019, the Company implemented the profit distribution plan for 2018:
Distribution of a cash dividend of RMB0.68 (inclusive of tax) per 10 shares held, being a total
of RMB12,739,120.00 in cash, out of the available-for-distribution profits realized for 2018 to
all shareholders based on a total of share capital of 187,340,000 shares (including 152,210,000 A
shares and 35,130,000 H shares) as of 31 December 2018. No bonus shares were awarded in this
distribution of profits, nor was the capital reserve converted into shares. During the period from
the disclosure of the 2018 interest distribution plan to its implementation, the total share capital
of the Company increased to 190,680,600 shares (including 155,550,600 A shares and 35,130,000
H shares) due to the completion of the registration of the grant of restricted shares. Under the
principle that the total profit to be distributed of RMB12,739,120.00 remains unchanged, the
amount of dividend per share was adjusted accordingly. After the adjustment, a cash dividend of
RMB0.668087 (inclusive of tax) per 10 shares held was distributed to all shareholders.
In August 2020, the Company implemented the profit distribution plan for 2019:
Distribution of a cash dividend of RMB0.55 (inclusive of tax) per 10 shares held, being a total
of RMB10,487,433.00 in cash, out of the available-for-distribution profits realized for 2018 to
all shareholders based on a total of share capital of 190,680,600 shares (including 155,550,600 A
shares and 35,130,000 H shares) as of 31 December 2019. No bonus shares were awarded in this
distribution of profits, nor was the capital reserve converted into shares.
In August 2021, the Company implemented Profit Distribution Plan for 2020: Based on
the total share capital of 233,680,600.00 shares at the end of 2020, the cash dividends of RMB0.2
(tax inclusive) per 10 shares shall be distributed (tax inclusive, and actual amount of payment of
dividends may be different due to rounding), resulting in an aggregate cash dividend payment
of RMB4,673,612.00. If total share capital of the Company changes prior to the record date for
the implementation of equity distribution, the total distribution amount will remain unchanged,
and the distribution ratio per share will be adjusted accordingly. During the period from the
disclosure of the 2020 annual equity distribution plan to its implementation, the total share
capital of the Company decreased by 1,299,568 shares due to the cancellation of restricted share
repurchase, and the total share capital decreased to 232,381,032 shares (including 197,251,032 A
shares and 35,130,000 H shares). According to the principle in which if total share capital of the
Company changes prior to the record date for the implementation of equity distribution, the total
distribution amount will remain unchanged, the Company hereby adjusts the equity distribution
plan as follows: based on the Company’s existing total share capital of 232,381,032 shares, a
cash dividend of RMB0.201118 (tax inclusive) will be paid for every 10 shares.
– VIII-8 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
In accordance with the requirements of the incentive scheme on release of the lockup
conditions:
1. The provisions on the treatment of changes in the Company/Incentive Participants:
“For the Incentive Participants who cease to hold office in the Company due to
retirement or resignation, their Restricted Shares granted but restrictions not yet
released shall not be released from the lockup period, and shall be repurchased and
cancelled by the Company. Such Incentive Participants shall pay the individual
income tax for the part of the Restricted Shares that has been released the lockup
period before resignation.”
2. “ If the Company fails to meet the above performance assessment targets, all
Restricted Shares of such Incentive Participants that can be released in the
corresponding assessment year shall not be released from lockup period, and shall
be repurchased and cancelled by the Company at the grant price plus the interest on
bank deposits for the same period.”
According to the provisions on the repurchase and cancellation principles of Restricted
Shares under the Incentive Scheme that “Upon completion of registration of the Restricted Shares
granted to the Incentive Participants, in case of capitalisation issue, bonus issue, sub-division of
share capital, rights issue, share consolidation or distribution of dividends, the Restricted Shares
which have been granted to the Incentive Participants but restrictions not yet released and the
shares of the Company obtained by the Incentive Participants based on such Restricted Shares
shall be repurchased by the Company according to the quantity adjusted. If the repurchase
price and quantity are required to be adjusted according to the Incentive Scheme, the following
methods shall be applied to make corresponding adjustments.”, and as authorised by the first
extraordinary general meeting in 2019, the specific adjustment method of repurchase price of
Restricted Shares under the Incentive Scheme is as follows:
Distribution of dividends P P0-V
Where: P0 represents the repurchase price per restricted share prior to adjustment; V
represents the amount of dividends per share; P represents the repurchase price per restricted
share after adjustment. After the adjustment through distribution of dividends, P shall still be
greater than 1.
In summary, the adjusted repurchase price of Restricted Shares P=RMB6.82 per share
(4) Total amount and sources of funds for such repurchase
The total amount to be used for such repurchase of the Restricted Shares is
RMB6,537,109.74, including interest of RMB506,265.25 and cash dividend of RMB17,732.33
not paid to the Incentive Participants for 2020 (only corresponding to the 881,688 shares, which
represents number of shares to be repurchased), all of which are self-owned funds.
– VIII-9 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
III. CHANGES IN THE SHARE CAPITAL STRUCTURE AFTER THE REPURCHASE AND
CANCELLATION OF RESTRICTED SHARES
After the completion of such repurchase and cancellation, the Company ’s total share
capital was changed from 232,381,032 shares (including 197,251,032 A Shares and 35,130,000
H Shares) to 231,499,344 shares (including 196,369,344 A shares and 35,130,000 H shares). The
changes in the share capital structure of the Company are as follows:
Before such change After such change
As a As a
percentage percentage
of the of the
Number Company’s Current Number Company’s
Category of of shares total share change of shares total share
shareholders (share) capital (share) (share) capital
1. Outstanding 26,189,082 11.27% –881,688 25,307,394 10.93%
shares/ non-
tradable shares
subject to selling
restrictions
Locked shares 24,148,050 10.39% 24,148,050 10.39%
held by the senior
management
Restricted shares 2,041,032 0.88% –881,688 1,159,344 0.50%
under the share
incentive scheme
2. Outstanding 206,191,950 88.73% 206,191,950 89.07%
shares not
subject to selling
restrictions
3. Total share 232,381,032 100.00% –881,688 231,499,344 100%
capital
The completion of such repurchase and cancellation would not result in any change
in controlling shareholder and actual control person of the Company and the shareholding
distribution of the Company is still eligible for listing.
– VIII-10 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
IV. IMPACT OF REPURCHASE AND CANCELLATION OF THE RESTRICTED SHARES
INVOLVED IN THE SECOND RELEASE OF LOCKUP PERIOD DUE TO THE
FAILURE OF SATISFYING THE RELEASE CONDITIONS UNDER THE INCENTIVE
SCHEME ON THE COMPANY
According to the relevant requirements of Accounting Standards for Business Enterprises, the
Company will no longer recognise the share-based payment expenses incurred in connection with the
cancelled incentive shares during the current period, and the share-based payment expenses recognised
in the previous period will be reversed. The repurchase and cancellation of the incentive scheme will not
cause material effects on financial position and shareholders’ rights and interests of the Company. The
impact of the final share-based payment on the company’s net profit will be subject to the audit report
issued by an accounting firm.
Such repurchase and cancellation comply with relevant laws, regulations, and regulatory
documents, which is not detrimental to the interests of the Company and its shareholders. The
management team, core business and technical personnel of the Company will continue to perform their
duties diligently to create value for shareholders and make contribution to the business development of
the Company.
According to the Administrative Measures, the repurchase and cancellation is required to be
submitted to the Company’s general meeting for consideration.
V. OPINIONS OF INDEPENDENT DIRECTORS
Independent directors are of the view that the Company proposes to repurchase and cancel
869,508 restricted shares held in aggregate by 76 incentive participants that became involved due
to failure to satisfy the unlocking conditions for the second release of lockup period under the 2019
Restricted Shares Incentive Scheme in terms of the performance assessment at level of the Company;
and to repurchase and cancel all 12,180 restricted shares that have been granted to one retired incentive
participant but remain locked-up. The repurchase and cancellation are in compliance with the Measures
for the Administration of Equity Incentives of Listed Companies and other relevant laws and regulations,
and 2019 Restricted Shares Incentive Scheme of the Company (Draft), and will not affect operation of
the Company on going concern basis and the diligence and diligence of the management team, not exert
material effects on daily operations and financial position of the Company, and not harm the interests of
the Company and all shareholders in any way.
Independent directors agree upon the Company’s repurchase and cancellation of all restricted
shares in the second release of lockup period under the 2019 restricted share incentive scheme, and
agree to submit such proposal to the general meeting of the Company for consideration.
– VIII-11 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
VI. OPINIONS OF BOARD OF SUPERVISORS
The Board of Supervisors is of the view that the Company proposes to repurchase and cancel
869,508 restricted shares held in aggregate by 76 incentive participants that became involved due
to failure to satisfy the unlocking conditions for the second release of lockup period under the 2019
Restricted Shares Incentive Scheme in terms of the performance assessment at level of the Company;
and to repurchase and cancel all 12,180 restricted shares that have been granted to one retired incentive
participant but remain locked-up. The repurchase and cancellation are in compliance with the Measures
for the Administration of the Equity Incentives of Listed Companies and other relevant laws and
regulations, and 2019 Restricted Shares Incentive Scheme of the Company (Draft), and will not affect
operation of the Company on going concern basis and the diligence and diligence of the management
team, not exert material effects on daily operations and financial position of the Company, and not harm
the interests of the Company and all shareholders in any way.
The Board of Supervisors agrees upon the Company ’ s repurchase and cancellation of all
restricted shares in the second release of lockup period under the 2019 restricted share incentive scheme,
and agrees to submit such proposal to the general meeting of the Company for consideration.
VII. LEGAL OPINIONS AND CONCLUDING OBSERVATIONS
The lawyer of the law firm is of the view that:
As of the date of issuance of this legal opinion, necessary procedures for this repurchase and
cancellation have been completed, and the repurchase and cancellation are in compliance
with the Measures for the Administration of the Equity Incentives of Listed Companies (the
“Administrative Measures”) and other relevant laws, regulations and normative documents, as
well as the relevant provisions of the 2019 Restricted Stock Incentive Plan (Draft) of Lanzhou
Zhuangyuan Pasture Co., Ltd. (the “Incentive Plan (Draft)”); this repurchase and cancellation
are subject to consideration and approval at the general meeting of the Company, and subject
to fulfillment of the corresponding information disclosure obligations and completion of the
procedures of share cancellation and capital reduction in accordance with the Company Law
and relevant regulations; and that the reasons for, number of shares under, price of and source of
funds of this repurchase and cancellation are in line with the Administrative Measures and other
relevant laws, regulations and normative documents, as well as the relevant provisions of the
Incentive Plan (Draft).
– VIII-12 –
APPENDIX VIII ANNOUNCEMENT ON THE REPURCHASE AND
CANCELLATION OF ALL RESTRICTED SHARES
IN THE SECOND RELEASE OF LOCKUP PERIOD UNDER
THE 2019 RESTRICTED SHARES INCENTIVE SCHEME
VIII. DOCUMENTS AVAILABLE FOR INSPECTION
1. Resolution of the 14th Meeting of the Fourth Session of Board of Directors
2. Resolution of the 10th Meeting of the Fourth Session of Board Of Supervisors
3. Independent opinions of Independent Directors on Matters Related to the 14th Meeting of
the Fourth Session of Board of Directors
4. Legal Opinions on Lanzhou Zhuangyuan Pasture Co., Ltd.* Repurchase and Cancellation
of All Restricted Shares in the Second Release of Locked Period under the 2019 Restricted
Shares Incentive Scheme
Announcement is hereby given.
The Board of Directors of Lanzhou Zhuangyuan Pasture Co., Ltd.
2 June 2022
– VIII-13 –
NOTICE OF AGM
Lanzhou Zhuangyuan Pasture Co., Ltd.*
(a joint stock limited liability company incorporated in the People’s Republic of China)
(Stock Code: 1533)
NOTICE OF 2021 ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 2021 annual general meeting (“AGM”) of Lanzhou
Zhuangyuan Pasture Co., Ltd.* (the “Company”) will be held at 26th
Floor, Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan Road, Chengguan District,
Lanzhou City, Gansu Province, the People’s Republic of China (“PRC”), at 2:00 p.m. on Wednesday, 29
June 2022 for the following purposes:
AS ORDINARY RESOLUTIONS
To consider and approve the following matters for passing as ordinary resolutions:
1. To consider the resolution in relation to the Report of the Board of Directors for 2021
2. To consider the resolution in relation to the Report of the Supervisory Committee for 2021
3. To consider the resolution in relation to the Annual Report and Its Highlights of the
Company for 2021
4. To consider the resolution in relation to the Report of Internal Control Evaluation for the
Implementation of the Internal Control Rules for 2021
5. To consider the resolution in relation to the Preliminary Profit Distribution Plan for 2021
6. To consider the resolution in relation to the Special Report on the Actual Deposit and Use
of 2021 Proceeds Raised of the Company
* For identification purpose only
– N-1 –
NOTICE OF AGM
7. To consider the resolution in relation to the Special Report of the Occupation of Non-
Operating Capital and the Transaction of Other Related Funds for 2021
8. To consider the resolution in relation to the Application to Banks of the Limits of
Composite Credit Facilities for 2022
9. To consider the resolution in relation to the Final Financial Report for 2021 of the
Company
10. To consider the resolution in relation to the Remuneration of Directors, Supervisors and
Senior Management for 2022
11. To consider the resolution in relation to the Reappointment of the Auditor of the Company
for 2022
12. To consider the resolution in relation to the Repurchase and Cancellation of All Restricted
Shares in the Second Release of Locked Period under the 2019 Restricted Shares Incentive
Scheme
AS SPECIAL RESOLUTIONS
To consider and pass the following resolutions as special resolutions:
13. To consider the resolution for approval of the Share Buy-back Offer and the Voluntary
Withdrawal of Listing
14. To consider the resolution for authorising the Board to procure the completion of the
Share Buy-back Offer and the Voluntary Withdrawal of Listing
By order of the Board
Lanzhou Zhuangyuan Pasture Co., Ltd.*
蘭州莊園牧場股份有限公司
Yao Gexian
Chairman of the Board
Lanzhou, the PRC, 8 June 2022
– N-2 –
NOTICE OF AGM
Notes:
1. Important: A circular setting out further details of the resolutions and the form of proxy will be despatched and published
by the Company in due course. The Company has published the Company’s annual report for 2021 in due course.
Shareholders of the Company (“Shareholders”) who wish to appoint a proxy to attend and vote at the AGM shall first
read the Company’s annual report for 2021 published on the websites of The Stock Exchange of Hong Kong Limited and
the Company, or despatched to relevant Shareholders. The annual report for 2021 comprises of the Directors’ Report for
2021, the Independent Directors’ Debriefing Report for 2021, the Supervisory Committee’s Report for 2021, the audited
financial statements and the Auditor’s Report for 2021, etc.
2. In order to determine the holders of shares who are eligible to attend and vote at the AGM, the register of members of
the Company is closed from Monday, 30 May 2022 to Wednesday, 29 June 2022, both days inclusive. To be eligible to
attend and vote at the AGM, unregistered holders of H Shares of the Company shall lodge share transfer documents with
the Company’s H Share registrar and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F.,
Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong for registration not later than 4:00 p.m. on
Friday, 27 May 2022.
In order to determine the holders of shares who are entitled to receive the proposed 2021 final dividend, the register of
members of the Company will be closed from Wednesday, 6 July 2022 to Monday, 11 July 2022, both days inclusive.
To be eligible to receive the final dividend for the year ended 31 December 2021 (subject to the approval of the
Shareholders), unregistered holders of H Shares of the Company shall lodge share transfer documents with the Company’s
H Share registrar and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem
Exchange Square, 338 King’s Road, North Point, Hong Kong for registration not later than 4:00 p.m. on Tuesday, 5 July
2022.
In accordance with the Enterprise Income Tax Law of the People’s Republic of China (
) and its implementation regulations which came into effect on 1 January 2008, the Company is required to withhold
and pay enterprise income tax at the rate of 10% on behalf of the non-resident enterprise Shareholders whose names
appear on the register of members for H Shares when distributing the cash dividends. Any H Shares not registered under
the name of an individual Shareholder, including HKSCC Nominees Limited, other nominees, agents or trustees, or other
organisations or groups, will be deemed as shares held by non-resident enterprise Shareholders. Therefore, enterprise
income tax will be withheld from dividends payable to such Shareholders. If holders of H Shares intend to change its
shareholder status, please enquire about the relevant procedures with your agents or trustees. The Company will strictly
comply with the law or the requirements of the relevant government authority and withhold and pay enterprise income tax
on behalf of the relevant Shareholders based on the register of members for H Shares as at the record date of the proposed
final dividend.
In accordance with the “Circular on Certain Issues Concerning the Policies of Individual Income Tax” (Cai Shui Zi [1994]
No.020) ( ( [1994] 020 )) promulgated by the Ministry of Finance
and the State Administration of Taxation on 13 May 1994, overseas individuals are, temporarily, exempted from the PRC
individual income tax for dividend or bonuses received from foreign invested enterprises. In accordance with the “Letter
of the State Administration of Taxation concerning Taxation Issues of Dividends Received by Foreign Individuals Holding
Shares of Companies Listed in China” (Guo Shui Han Fa [1994] No. 440) (
( [1994] 440 )) as promulgated by the State Administration of Taxation
on 26 July 1994, dividends (capital bonuses) received by foreign individuals holding B Shares or overseas shares (including
H Shares) from Chinese enterprises issuing such B Shares or overseas shares are temporarily exempted from individual
income tax. Accordingly, in the payment of final dividend, the Company will not withhold and pay the individual income
tax on behalf of individual Shareholders when the Company distributes the final dividend to individual Shareholders
whose names appear on the register of members of H Shares of the Company.
– N-3 –
NOTICE OF AGM
The Company will determine the resident status of the individual H Share Shareholders based on the registered address as
recorded in the register of members of the Company on Monday, 11 July 2022 (the “Registered Address”). If the resident
status of any individual H Share Shareholder is not in consistency with that indicated by the Registered Address, such
individual H Share Shareholder shall notify the Company’s H Share registrar and transfer office in Hong Kong not later
than 4:00 p.m. on Tuesday, 5 July 2022, and provide relevant supporting documents to the Company’s H Share registrar
and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square,
338 King’s Road, North Point, Hong Kong. Any individual H Share Shareholder who fails to provide relevant supporting
documents within the time period stated above, may either personally or appoint an agent to attend to the relevant
procedures in accordance with the requirements under the tax treaty notice.
The Company assumes no responsibility and disclaims all liabilities whatsoever in relation to the tax status or tax
treatment of the individual H Share Shareholders and for any claims arising from any delay in or inaccurate determination
of the tax status or tax treatment of the individual H Share Shareholders or any disputes over the withholding mechanism
or arrangements.
3. A Shareholder entitled to attend and vote at the AGM may appoint one or more proxies (whether he/she is a Shareholder)
to attend and vote at the AGM on his, her or its behalf.
4. The instrument to appoint a proxy shall be signed by the appointer or his/her attorney duly authorized in writing or, in the
case of a legal person, must be either executed under its common seal or under the hand of its director or attorney duly
authorized.
5. To be valid, the form of proxy must be lodged with the Company’s H Share registrar and transfer office in Hong Kong,
Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point,
Hong Kong (for holders of H Shares of the Company) or the Company’s head office in the PRC (for holders of A Shares
of the Company) not less than 24 hours prior to the holding of the AGM. If such instrument is signed by another person
under a power of attorney or other authorization documents given by the appointer, such power of attorney or other
authorization documents shall be notarized. The notarized power of attorney or other authorization documents shall,
together with the form of proxy, be deposited at the specified place at the time set out in such form of proxy.
6. If the appointer is a legal person, its legal representative or any person authorised by resolutions of its board or other
governing bodies may attend the AGM on behalf of the appointer.
7. The Company has the rights to request a Shareholder or a proxy who attends the AGM on behalf of a Shareholder to
provide proof of identity.
8. The AGM is expected to take less than half a day. Shareholders who attend the AGM shall be responsible for their own
travel and accommodation expenses.
9. The contact of the Company is as follows:
Address: Units 2703, 27/F., Shui On Centre, Nos. 6-8 Harbour Road, Wanchai, Hong Kong
Contact person: Ho Wing Yan
Telephone number: (852) 2593 9610
10. As at the date of this notice, the non-independent directors of the Company are Mr. Yao Gexian, Mr. Ma Hongfu, Mr.
Zhang Yu, Mr. Yang Yi, Mr. Lian Enzhong and Ms. Zhang Qianyu; and the independent directors of the Company are Mr.
Wang Haipeng, Mr. Zhang Yubao and Mr. Sun Jian.
– N-4 –
NOTICE OF A SHAREHOLDERS ’ CLASS MEETING
Lanzhou Zhuangyuan Pasture Co., Ltd.*
(a joint stock limited liability company incorporated in the People’s Republic of China)
(Stock Code: 1533)
NOTICE OF A SHAREHOLDERS’ CLASS MEETING
NOTICE IS HEREBY GIVEN that the A Shareholders’ Class Meeting of Lanzhou Zhuangyuan
Pasture Co., Ltd.* (the “ Company ” ) will be held at 2:30 p.m. on Wednesday, 29 June 2022 or
immediately after the conclusion of the AGM or any adjournment thereof (whichever is the later) at 26th
Floor, Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan Road, Chengguan District,
Lanzhou City, Gansu Province, the PRC, for the purposes of considering, approving and authorizing the
following matter:
AS ORDINARY RESOLUTION
To consider and pass the following resolution as an ordinary resolution:
1. To consider the resolution in relation to the Preliminary Profit Distribution Plan for 2021
AS SPECIAL RESOLUTIONS
To consider and pass the following resolutions as special resolutions:
2. To consider the resolution for approval of the Share Buy-back Offer and the Voluntary
Withdrawal of Listing
3. To consider the resolution for authorising the Board to procure the completion of the
Share Buy-back Offer and the Voluntary Withdrawal of Listing
By order of the Board
Lanzhou Zhuangyuan Pasture Co., Ltd.*
Yao Gexian
Chairman
Lanzhou, the PRC, 8 June 2022
* For identification purpose only
– N-5 –
NOTICE OF A SHAREHOLDERS ’ CLASS MEETING
Notes:
1. A Shareholders whose names appear on the A Share register of members of the Company on Thursday, 23 June 2022 will
be entitled to attend and vote at the A Shareholders’ Class Meeting.
2. Shareholders may, by completing the form of proxy of the Company, appoint one or more proxies to attend and vote at
the A Shareholders’ Class Meeting (or any adjournment thereof) on his behalf. A proxy need not be a shareholder of the
Company.
3. Shareholders must use the form of proxy of the Company for appointing a proxy and the appointment must be in writing.
The form of proxy must be signed by the relevant shareholder of the Company or by a person duly authorized by the
relevant shareholder of the Company in writing. If the form of proxy is signed by the person authorized by the relevant
shareholder of the Company as aforesaid, the relevant power of attorney and other relevant documents of authorization
(if any) must be notarized. If a corporate shareholder of the Company appoints a person other than its legal representative
to attend the A Shareholders’ Class Meeting (or any adjournment thereof) on its behalf, the relevant form of proxy must
be affixed with the company seal of the corporate shareholder of the Company or duly signed by its director or any other
person duly authorized by that corporate shareholder of the Company as required by the Articles of Association of the
Company.
4. To be valid, the form of proxy and the relevant notarized power of attorney (if any) and other relevant documents of
authorization (if any) as mentioned in note 3 above must be delivered to the Company’s Department of Securities Affairs
(address: 26th Floor, Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan Road, Chengguan District,
Lanzhou City, Gansu Province, the PRC) (contact person: Pan Lai, Tel: +86 931 875 3001, Fax: +86 931 875 3001) not
less than 24 hours before the time appointed for the A Shareholders’ Class Meeting (or any adjournment thereof).
5. A shareholder of the Company or his proxy should produce proof of identity when attending the A Shareholders’
Class Meeting (or any adjournment thereof). If a corporate shareholder’s legal representative or any other person duly
authorized by such corporate shareholder attends the A Shareholders’ Class Meeting (or any adjournment thereof), such
legal representative or other person shall produce his proof of identity, and proof of designation as legal representative or
the valid authorization document (as the case may be).
6. The A Shareholders’ Class Meeting (or any adjournment thereof) is expected to last less than half a day. Shareholders or
their proxies who attend the A Shareholders’ Class Meeting (or any adjournment thereof) shall bear their own travelling
and accommodation expenses.
7. The Company’s principal place of business in the PRC is situated at:
26th Floor, Block B
Shanghui Building of Gansu Province
No. 601, Yanyuan Road
Chengguan District
Lanzhou City, Gansu Province
PRC
Tel No.: (86) 931 875 3001
Fax No.: (86) 931 875 3001
8. As at the date of this notice, the non-independent directors of the Company are Mr. Yao Gexian, Mr. Ma Hongfu, Mr.
Zhang Yu, Mr. Yang Yi, Mr. Lian Enzhong and Ms. Zhang Qianyu; and the independent directors of the Company are Mr.
Wang Haipeng, Mr. Zhang Yubao and Mr. Sun Jian.
– N-6 –
NOTICE OF H SHAREHOLDERS ’ CLASS MEETING
Lanzhou Zhuangyuan Pasture Co., Ltd.*
(a joint stock limited liability company incorporated in the People’s Republic of China)
(Stock Code: 1533)
NOTICE OF H SHAREHOLDERS’ CLASS MEETING
NOTICE IS HEREBY GIVEN that the H Shareholders’ Class Meeting of Lanzhou Zhuangyuan
Pasture Co., Ltd.* (the “ Company ” ) will be held at 2:45 p.m. on Wednesday, 29 June 2022 or
immediately after the conclusion of the A Shareholders ’ Class Meeting or any adjournment thereof
(whichever is the later) at 26th Floor, Block B, Shanghui Building of Gansu Province, No. 601, Yanyuan
Road, Chengguan District, Lanzhou City, Gansu Province, the PRC, for the purposes of considering,
approving and authorizing the following matters:
AS ORDINARY RESOLUTION
To consider and pass the following matter as an ordinary resolution:
1. To consider the resolution in relation to the Preliminary Profit Distribution Plan for 2021
AS SPECIAL RESOLUTIONS
To consider and pass the following resolutions as special resolutions:
2. To consider the resolution for approval of the Share Buy-back Offer and the Voluntary
Withdrawal of Listing
3. To consider the resolution for authorising the Board to procure the completion of the
Share Buy-back Offer and the Voluntary Withdrawal of Listing
By order of the Board
Lanzhou Zhuangyuan Pasture Co., Ltd.*
Yao Gexian
Chairman
Lanzhou, the PRC, 8 June 2022
* For identification purpose only
– N-7 –
NOTICE OF H SHAREHOLDERS ’ CLASS MEETING
Notes:
1. In order to determine the list of Shareholders who will be entitled to attend and vote at the H Shareholders’ Class
Meeting, the registers of members of the Company is closed from Monday, 30 May 2022 to Wednesday, 29 June 2022,
both days inclusive, during which no transfer of shares will be effected. Holders of H Shares whose names appear on the
registers of members of the Company on Friday, 27 May 2022, shall be entitled to attend and vote at the H Shareholders’
Class Meeting. In order for the Shareholders to qualify to attend and vote at the H Shareholders’ Class Meeting, all
transfer documents accompanied by the relevant share certificates must be lodged with the Company’s H share registrar
and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square,
338 King’s Road, North Point, Hong Kong no later than 4:00 p.m. on Friday, 27 May 2022 for registration.
2. Shareholders may, by completing the form of proxy of the Company, appoint one or more proxies to attend and vote at
the H Shareholders’ Class Meeting (or any adjournment thereof) on his behalf. A proxy need not be a shareholder of the
Company.
3. Shareholders must use the form of proxy of the Company for appointing a proxy and the appointment must be in writing.
The form of proxy must be signed by the relevant shareholder of the Company or by a person duly authorized by the
relevant shareholder of the Company in writing. If the form of proxy is signed by the person authorized by the relevant
shareholder of the Company as aforesaid, the relevant power of attorney and other relevant documents of authorization
(if any) must be notarized. If a corporate shareholder of the Company appoints a person other than its legal representative
to attend the H Shareholders’ Class Meeting (or any adjournment thereof) on its behalf, the relevant form of proxy must
be affixed with the company seal of the corporate shareholder of the Company or duly signed by its director or any other
person duly authorized by that corporate shareholder of the Company as required by the Articles of Association of the
Company.
4. To be valid, the form of proxy and the relevant notarized power of attorney (if any) and other relevant documents of
authorization (if any) as mentioned in note 3 above must be delivered to the Company’s H share registrar and transfer
office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s
Road, North Point, Hong Kong not less than 24 hours before the time appointed for the H Shareholders’ Class Meeting (or
any adjournment thereof).
5. A shareholder of the Company or his proxy should produce proof of identity when attending the H Shareholders’
Class Meeting (or any adjournment thereof). If a corporate shareholder’s legal representative or any other person duly
authorized by such corporate shareholder attends the H Shareholders’ Class Meeting (or any adjournment thereof), such
legal representative or other person shall produce his proof of identity, and proof of designation as legal representative or
the valid authorization document (as the case may be).
6. The H Shareholders’ Class Meeting (or any adjournment thereof) is expected to last less than half a day. Shareholders or
their proxies who attend the H Shareholders’ Class Meeting (or any adjournment thereof) shall bear their own travelling
and accommodation expenses.
7. The address of the Company’s H Shares registrar and transfer office in Hong Kong, Union Registrars Limited is:
Suites 3301-04, 33/F
Two Chinachem Exchange Square
338 King’s Road, North Point
Hong Kong
Tel No.: (852) 2849 3399
Fax No.: (852) 2849 3319
8. As at the date of this notice, the non-independent directors of the Company are Mr. Yao Gexian, Mr. Ma Hongfu, Mr.
Zhang Yu, Mr. Yang Yi, Mr. Lian Enzhong and Ms. Zhang Qianyu; and the independent directors of the Company are Mr.
Wang Haipeng, Mr. Zhang Yubao and Mr. Sun Jian.
– N-8 –
