DEKON FOOD and AGRICULTURE GROUP 四川德康農牧食品集團股份有限公司 (The “Company”) (A Joint Stock Company Incorporated in the People’S Republic of China with Limited Liability)

The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, 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 Application Proof.

Application Proof of

DEKON FOOD AND AGRICULTURE GROUP 四川德康農牧食品集團股份有限公司 (the “Company”) (A joint stock company incorporated in the People’s Republic of China with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and the Securities and Futures Commission (the “Commission”) solely for the purpose of providing information to the public in Hong Kong.

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, its sole sponsor, advisers or members of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;

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(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;

(d) the Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on the Stock Exchange;

(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;

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DEKON FOOD AND AGRICULTURE GROUP 四川德康農牧食品集團股份有限公司 (A joint stock company incorporated in the People’s Republic of China with limited liability)

[REDACTED] Number of [REDACTED] under the : [REDACTED] H Shares (subject to the [REDACTED] [REDACTED]) Number of [REDACTED] : [REDACTED] H Shares (subject to [REDACTED]) Number of [REDACTED] : [REDACTED] H Shares (subject to [REDACTED] and the [REDACTED]) Maximum [REDACTED] : [REDACTED] per H Share, plus brokerage fee of 1.0%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005% (payable in full on application in Hong Kong dollars and subject to refund on [REDACTED]) Nominal value : RMB[1.00] per Share Stock code : [REDACTED]

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Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this [REDACTED], 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 [REDACTED]. A copy of this [REDACTED] with the documents specified in the paragraph headed “Documents delivered to the Registrar of Companies in Hong Kong and Available for Inspection” in Appendix VII to this [REDACTED], has been registered with the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this [REDACTED] or any other documents referred to above. Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this [REDACTED], including but not limited to the risk factors set out in “Risk factors” in this [REDACTED]. The [REDACTED] is expected to be determined by an agreement between the [REDACTED] (for themselves and on behalf of the [REDACTED]) and the Company on the [REDACTED], which is expected to be on or around [REDACTED] or such later date as may be agreed between the parties, but in any event no later than [REDACTED]. The [REDACTED] will not be more than HK$[REDACTED] per [REDACTED] and is currently expected to be not less than HK$[REDACTED] per [REDACTED], unless otherwise announced. Applicants for [REDACTED] are required to pay, on application, the maximum [REDACTED]of HK$[REDACTED] for each [REDACTED] together with brokerage fee of 1.0%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%, subject to refund if the [REDACTED] is lower than HK$[REDACTED]. If, for any reason, the [REDACTED] (for themselves and on behalf of the [REDACTED]) and we are unable to reach an agreement on the [REDACTED] on or before [REDACTED], the [REDACTED] will not proceed and will lapse. The [REDACTED] (for themselves and on behalf of the [REDACTED]) may, with our consent, reduce the number of [REDACTED] and/or the indicative [REDACTED] range stated in this [REDACTED] at any time on or prior to the morning of the last day for lodging applications under the [REDACTED]. In such case, a notice of such reduction will be published on the Stock Exchange’s website at www.hkexnews.hk and our website at [www.dekanggroup.com], not later than the morning of the last day for lodging applications under the [REDACTED]. Further details are set out in “Structure of the [REDACTED]” and “How to apply for [REDACTED]” in this [REDACTED]. We are incorporated, and substantially all of our businesses are located, in the PRC. Potential investors should be aware of the differences in the legal, economic and financial systems between the PRC and Hong Kong and that there are different risk factors relating to investments in PRC-incorporated businesses. Potential investors should also be aware that the regulatory framework in the PRC is different from the regulatory framework in Hong Kong and should take into consideration the different market nature of the H Shares. Such differences and risk factors are set out in “Risk factors”, “Summary of Principal PRC and Hong Kong Legal and Regulatory Provisions” in Appendix IV to this [REDACTED] and “Summary of the Articles of Association” in Appendix V to this [REDACTED]. The obligations of the [REDACTED] under the [REDACTED] to subscribe or purchase, and to procure applicants for the subscriptions or purchase of, the [REDACTED], are subject to termination by the [REDACTED] (for themselves and on behalf of the [REDACTED]) upon the occurrence of any of the events set forth in “[REDACTED]” in this [REDACTED] at any time prior to 8:00 a.m. (Hong Kong time) on the [REDACTED]. It is important that you refer to that section for further details. The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offered, sold, pledged or transferred within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. The [REDACTED] are being offered and sold outside the United States in offshore transactions in accordance with Regulation S under the U.S. Securities Act. ATTENTION

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IMPORTANT NOTICE TO INVESTORS

This [REDACTED] is issued by the Company solely in connection with the [REDACTED] and the [REDACTED] and does not constitute an offer to sell or a solicitation of an offer to buy any security other than the [REDACTED] offered by this [REDACTED] pursuant to the [REDACTED]. This [REDACTED] may not be used for the purpose of making, and does not constitute, an offer or invitation in any other jurisdiction or in any other circumstances. No action has been taken to permit a [REDACTED] of the [REDACTED] in any jurisdiction other than Hong Kong and no action has been taken to permit the distribution of this [REDACTED] in any jurisdiction other than Hong Kong. The distribution of this [REDACTED] for purposes of a [REDACTED] and the [REDACTED] and sale of the [REDACTED] in other jurisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdictions pursuant to registration with or authorisation by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this [REDACTED] to make your investment decision. The [REDACTED] is made solely on the basis of the information contained and the representations made in this [REDACTED]. Neither the Company nor any of the [REDACTED] has authorised anyone to provide you with any information or to make any representation that is different from what is contained in this [REDACTED]. Information contained on the Company’s website at www.dekanggroup.com does not form part of this [REDACTED].

Page

Expected Timetable ...... i

Contents ...... iv

Summary ...... 1

Definitions ...... 17

Glossary of Technical Terms ...... 30

Forward-looking Statements ...... 35

Risk Factors ...... 37

Waivers from Strict Compliance with the Listing Rules ...... 70

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Information about this [REDACTED] and the [REDACTED] ...... 76

Directors, Supervisors and Parties Involved in the [REDACTED]...... 81

Corporate Information ...... 85

Industry Overview ...... 87

Regulatory Overview ...... 107

History and Corporate Structure ...... 122

Business ...... 143

Financial Information ...... 238

Connected Transactions ...... 304

Directors, Supervisors and Senior Management ...... 308

Relationship with Controlling Shareholder(s) ...... 325

Substantial Shareholders ...... 332

Share Capital ...... 336

Future Plans and [REDACTED] ...... 341

[REDACTED] ...... 344

Structure of the [REDACTED] ...... 356

How to Apply for [REDACTED] ...... 367

Appendix I – Accountants’ Report ...... I-1

Appendix II – [REDACTED] Financial Information ...... II-1

Appendix III – Taxation and Foreign Exchange ...... III-1

Appendix IV – Summary of Principal PRC and Hong Kong Legal and Regulatory Provisions ...... IV-1

Appendix V – Summary of the Articles of Association ...... V-1

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Appendix VI – Statutory and General Information ...... VI-1

Appendix VII – Documents Delivered to the Registrar of Companies in Hong Kong and Available for Inspection ...... VII-1

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This summary aims to give you an overview of the information contained in this [REDACTED]. As this is a summary, it does not contain all the information that may be important to you. You should read this [REDACTED] in its entirety before you decide to invest in the [REDACTED]. There are risks associated with any investment. Some of the particular risks in investing in the [REDACTED] are set out in the section entitled “Risk Factors” in this [REDACTED]. You should read that section carefully before you decide to invest in the [REDACTED].

OVERVIEW

We are one of the leading enterprises dedicated to the breeding and farming of pigs and yellow-feathered broilers in the PRC. Leveraging our experience and established market position in breeding and farming, we are expanding our business into slaughtering and food processing. We ranked 7th among all pig suppliers in China and second among all pig suppliers in Southwest China(1) in terms of both revenue and sales volume of pigs in 2020, according to the Frost & Sullivan Report. We ranked 10th among all breeding pig suppliers in China in terms of revenue in 2020, according to the Frost & Sullivan Report. We were the largest yellow-feathered Parent Stock DOCs supplier in China in terms of revenue and sales volume and the 3rd largest yellow-feathered broiler supplier in China in terms of revenue and sales volume in 2020, according to the Frost & Sullivan Report. Our business had grown rapidly during the Track Record Period. Our revenue increased from approximately RMB3,282.0 million in 2018 to RMB8,145.3 million in 2020, with a CAGR of 57.5%. Our gross profit increased from approximately RMB385.5 million in 2018 to RMB3,163.9 million in 2020, with a CAGR of 186.5%. We have extensive experience in modern breeding and farming of pigs and yellow- feathered broilers. Over the years, we received a number of recognitions from various authorities in the PRC, including Agriculture Industrialisation National Key Enterprises (農業產業化國家重點龍頭企業). Our operations cover 14 provinces, municipalities and autonomous regions across China, with more than 7,000 employees. Our current business has three segments: pig, poultry and ancillary products segments. Our pig and poultry segments are our core business. Our pig products primarily include market hogs, breeding pigs and market piglets. Our poultry products primarily include yellow-feathered broilers, chicks and eggs. For the years ended 31 December 2018, 2019 and 2020, the revenue contributed by our pig products accounted for approximately 43.6%, 53.3% and 70.6% of our total revenue, respectively; the revenue contributed by poultry products accounted for approximately 55.3%, 44.1% and 28.1% of our total revenue, respectively. The remaining revenue contribution came from the sale of ancillary products (such as feed ingredients), accounting for 1.1%, 2.5% and 1.3% of our total revenue, respectively. Our vertically integrated business model covers the whole industry chain of breeding and farming of pigs and yellow-feathered broilers including feed production, breeding, multiplication, farming and sales of pigs and yellow-feathered broilers. Such model enables us to closely monitor production processes to ensure disease control and food safety. Furthermore, with the enhanced enforcement of environmental regulations across China, the rise of labour costs and the influence of African Swine Fever, the gaps of economy and output efficiency between small scale farming companies and large-scale pig farming companies have gradually widened in recent years. Large-scale pig farming companies are expected to rapidly and continuously expand their market shares with relatively low costs and advanced technology, according to Frost & Sullivan. In anticipation of this market concentration trend, we have actively expanded our scale and gradually increased our market share in China’s pig production market. We are currently building our slaughtering and food processing business. We are expecting to complete three projects for our slaughtering and food processing business with a total annual slaughtering capacity of 8 million pigs and meat processing capacity of 200,000 tonnes by June 2023. For our project in Meishan City, Sichuan Province, we have been

Note:

1 Southwest China includes Sichuan Province, Yunnan Province, Guizhou Province and Chongqing municipality.

–1– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT SUMMARY cooperating with Tönnies, a leading integrated meat enterprise in Germany, to construct a slaughterhouse with an annual capacity of 2 million heads of hogs (phase I), which will employ the technology and know-how of Tönnies, and is expected to commence production in June 2023. The commencement of such projects will mark the expansion of our business lines into downstream slaughtering and food processing, which we believe will enable us to create a high-quality pork industry value chain covering from feed production, pig breeding and farming, to production of fresh pork and meet products. We have a rich gene pool of pigs and yellow-feathered broilers. We are a leading breeding pig supplier in terms of stock of Great Grandparent nucleus breeding herd and pig genetic materials in China, according to the Frost & Sullivan Report. We have multiple national and ministerial level breeding platforms including the National Nucleus Pig Breeding Farm (國家生豬核心育種場), the Key Laboratory of Poultry Breeding and Genetics of the Ministry of Agriculture (農業部家禽遺傳育種重點實驗室) and the National Spark Programme Leading Enterprise Technology Innovation Centre (國家星火計劃龍頭企業技術創新中心). We also participated in national high-tech projects such as the National 863 Plan and 948 Major Special Projects. Our pig and broiler breeding system allows us to rapidly increase the production performance of our pigs and yellow-feathered broilers, which we believe will give us an advantage when competing with pig or broiler producers without any breeding capabilities. For our pig segment, our breeding pigs include Landrace, Duroc, Yorkshire, Z-line Yorkshire, Tempo terminal sires and crossbred breeding pigs. The number of our breeding pigs had been growing rapidly during the Track Record Period. Our nucleus breeding herd increased from 5,373 heads as at 1 January 2018 to 13,093 heads as at 31 December 2020, which enabled us to establish a herd of 200,000 heads of sows and gilts in multiplying farms. The sales volume of our pigs has increased from 992,650 heads in 2018 to 1,370,604 heads in 2020. For our poultry segment, in terms of the stock of yellow-feathered broiler breeders as at 31 December 2020, we had approximately 267,000 birds of pure lines, approximately 272,000 sets of Grandparent Stocks, and approximately 1.1 million sets of Parent Stocks. Our annual sales of yellow-feathered broilers increased from 50.3 million birds in 2018 to 72.4 million birds in 2020, and the sales of Parent Stock DOCs increased from approximately 2.6 million sets in 2018 to 4.2 million sets in 2020. Our Business Model and Products

Our current business consists of three segments, namely pig, poultry, and ancillary products. Breeding and farming of pigs and yellow-feathered broilers are our core business. Our vertically integrated business model covers the whole industry value chain of breeding and farming of pigs and yellow-feathered broilers including feed production, breeding, multiplication, farming and sales of pigs and yellow-feathered broilers. We are in the process of expanding our business to the slaughtering and processing of pigs, as well as the production and sales of fresh pork and processed meat products.

waste disposal

Breeding end Farming end Sales channel

Sales of breeding pigs, market piglets and market hogs

Customers Company farms external internal Food end Nucleus breeding Feed Feed mills Multiplying farms farms ingredients Family farms Sales of yellow- feathered broilers, Proprietary breeding technology, achieving the control of chicks and eggs Slaughtering + Deep production process in the entire industry value chain Food Processing

Breeding Scientific prevention Precise nutrition technology and control Layout in progress

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The following table sets out a breakdown of our revenue by business segment and product category (after elimination of inter-segment transactions) for the Track Record Period: Year ended 31 December 2018 2019 2020 % of total sales %oftotal sales % of total sales RMB’000 revenue volume RMB’000 revenue volume RMB’000 revenue volume (heads/ (heads/ (heads/ birds/units) birds/units) birds/units) Revenue Sales of pigs Market hogs 1,382,555 42.1 934,588 2,830,017 51.3 1,187,911 5,518,420 67.7 1,282,034 Breeding pigs 36,415 1.1 19,745 93,132 1.7 27,586 148,167 1.8 23,264 Market piglets 11,888 0.4 38,317 18,082 0.3 26,563 80,682 1.0 65,306 Boar semen 1,271 0.0 N/A 522 0.0 N/A 428 0.0 N/A

Subtotal 1,432,129 43.6 2,941,753 53.3 5,747,697 70.6 ------Sales of poultry Yellow-feathered broilers 1,702,960 51.9 50,287,765 2,250,639 40.8 62,900,220 2,161,790 26.5 72,350,245 Chicks and eggs 111,873 3.4 91,693,204 184,115 3.3 96,253,831 125,993 1.5 90,027,361

Subtotal 1,814,833 55.3 2,434,754 44.1 2,287,783 28.1 ------Sales of ancillary products 35,084 1.1 139,598 2.5 109,869 1.3

Total 3,282,046 100.0 5,516,105 100.0 8,145,349 100.0

The diagram below illustrates the geographical location and annual production capacity of our main production facilities and family farms as at 31 December 2020.

Food factories

Feed mills

Pig farms

Poultry farms

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Pig farms Feed mills Existing projects Number Output volume Existing projects Number Production capacity Our pig farms Family farms (’000 heads) (10,000 tons) Southwest China 68 1,874 1,233.4 Southwest China 4 40 South China 7 68 29.9 South China 1 12 East China 9 50 73.7 North China 1 18 North China 8 19 33.7 Total 6 70 Total 92 2,011 1,370.7 New projects(2) Number Designed output New projects(3) Number Designed volume(1) production capacity Our pig farms (’000 heads) (10,000 tons) Southwest China 51 4,889.4 Southwest China 9267 South China 1 135.0 East China 145 East China 11 2,851.0 South China 236 North China 7 411.0 Total 12 348 Total 70 8,286.4

Poultry farms Slaughterhouses and food processing plants (to commence) Existing projects Our poultry Family farms Output volume New projects Number Designed farms and farming bases of broiler production capacity (10,000 birds) Southwest China 8 1,913 3,408.5 Yibin, Sichuan 1 3 million heads and 100,000 tons South China 6 1,543 3,826.5 Meishan, Sichuan 1 2 million heads Total 14 3,456 7,235.0 Sihong, Jiangsu 1 3 million heads and 100,000 tons Total 3 8 million heads and 200,000 tons

Notes: (1) Designed output volume represents the theoretical estimated number of market hogs that could be produced, which is calculated by multiplying (i) the theoretical maximum number of sows that could be raised on our pig farms based on the number of sow stalls available in our own pig farms, by (ii) piglets weaned per sow per year (or PSY) of 18 (2) Including the farms that have commenced production after 31 December 2020 or are currently under construction (3) Including the improved production capacities of existing feed mills Breeding and farming business

We breed and raise all of our breading pigs in our own farms to ensure the growth traits and competitiveness of our breeding pigs. Our market hog and market piglets farming includes No. 2 Family Farm model, No. 1 Family Farm model and Company Farming model: • No. 2 Family Farm model refers to a model under which sows are transferred to and raised in family farm for breeding. The family farm owner builds a pig farm according to our standards. Upon passing our inspection, the family farm owner receives crossbreeding sows, feed, vaccine, medicine and other materials from us for breeding and fattening. After the market hogs are sold, we settle the contract farming fee with the family farm owner. In 2018, 2019 and 2020, 192,879 heads, 318,201 heads and 401,012 heads of pigs we sold were raised under the No. 2 Family Farm model, which accounted for 19.4%, 25.6% and 29.3% of the total sales of pigs, respectively. • No. 1 Family Farm model refers to market hog finish farm. Under this model, the family farm owner builds a pig farm according to our standards. Upon passing our inspection, the family farm owner receives weaned piglets as well as feed, vaccine, medicine and other materials from us. After the pigs are sold, we settle the contract farming fee with the family farm owner. In 2018, 2019 and 2020, approximately 609,973 heads, 779,756 heads and 815,840 heads of pigs we sold were raised under the No. 1 Family Farm model, which accounted for 61.5%, 62.8% and 59.5% of the total sales of pigs, respectively.

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• The Company Farming model refers to the model under which we build the pig farm and employ labour force to carry out scaled farming, and we are responsible for breeding, finishing and other related process. This model has the advantage of economy of scale which allows us to implement a high intelligent management system, hence reducing our dependence on manpower. In 2018, 2019 and 2020, approximately 189,798 heads, 144,103 heads and 153,752 heads of pigs we sold were raised under our Company Farming model, which accounted for 19.1%, 11.6% and 11.2% of the total sales of pigs, respectively. We believe that our pionneering No. 2 Family Farm model has the following advantages compared with other farming models: • Biosecurity and animal diseases prevention and control: As we only have to transport sows to the family farms instead of a large number of weaned piglets, the entire production cycle of “breeding pigs-piglets-market pigs” is completed at the family farms, thereby reducing the flow and transportation risks of pigs which makes it easier to prevent animal diseases and maintain biosecurity. • Rapid expansion of “asset-light” production: The crossbreeding sows are maintained at family farms. In addition, we do not need to bear the cost of land, labour, water and electricity in connection with the breeding and reproduction of sows which enable us to save breeding costs and expand in relatively short amount of time. • Promotion and upgrading of local industry: We train family farm owners with the modern breeding techniques including sow breeding and reproduction to enable them to operate family farms with a long-term vision, hence promoting the industry upgrade in local regions. • High entry barriers and long-term stable cooperation: The breeding process of our No. 2 family farm involves breeding of sows, not merely the finish of weaned piglets, which requires the family farm owners to grasp more sophisticated breeding technologies. We conduct rigorous training for the family farm owners of No. 2 family farms, and have a longer-term contract with them. Therefore, No. 2 Family Farm model has technical and management barriers to our competitors, which help us form a long-term stable and cooperative relationship with No. 2 family farms. As at 31 December 2020, we operated a total of 92 pig farms, and contracted with a total of 2,011 family farms. We raise yellow-feathered broiler breeders and hatch fertile eggs in our own poultry farms. We sell externally chicks (including Parent Stock DOCs and commodity DOCs) hatched from fertile eggs. Regarding the farming of yellow-feathered broilers, we mainly operate through Family Farm model and Farming Base model: • The Family Farm model is a model under which we provide chicks, feed, medicines and breeding technical services to family farm owners. The family farm owners are required to rear the chicks into yellow-feathered broilers according to our requirements. We settle the contract farming fee with the family farm owners once the broilers are sold. Our yellow-feathered broilers are mainly produced under the Family Farm model, which enables us to effectively reduce our investment in farming facilities, focus on improving breeding and nutrition technology and food safety, which are our core competitiveness. In 2018, 2019 and 2020, approximately 47.6 million birds, 60.1 million birds and 69.4 million birds of yellow-feathered broilers we sold were raised under the Family Farm model, which accounted for 94.7%, 95.5% and 95.9% of the total broiler sales, respectively. • The Farming Base model is a model under which we build facilities by ourselves and lease such facilities to farmers for production. This model provides an important platform for us to experiment new management methods and promote hardware upgrade. This model is the same as that of the Family Farm model other than the fact that we own the farming bases. In 2018, 2019 and 2020, approximately 1.5 million

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birds, 1.7 million birds and 1.5 million birds of yellow-feathered broilers we sold were raised under the Farming Base model, which accounted for 3.0%, 2.7% and 2.0% of the total broiler sales, respectively. As at 31 December 2020, we operated a total of 14 poultry farms, and contracted with a total of 3,456 family farms and farming bases. Slaughtering and food processing business (to commence)

We are currently in the process of establishing our food processing business which will cover the slaughtering and processing of pigs, the production and sales of fresh pork and processed meat products (as shown in the following diagram).

Procurement and inspection

Pig slaughtering

Sales of half carcassCutting and processing By-product processing

Sales Deep processing

Refined processed High-temperature Low-temperature meat products including portk products pork products pre-prepared pork products

As at the Latest Practicable Date, we had three projects under construction, which were located in Yibin City and Meishan City, Sichuan Province, and Sihong County, Suqian City, Jiangsu Province. We strategically build our projects in fine baijiu (白酒) regions in China and close to our high-quality pig farms. OUR COMPETITIVE STRENGTH

We believe that the following competitive strengths contribute to our success and differentiate us from our competitors: • Our business platform covers the whole industry value chain of breeding and farming of pigs and yellow-feathered broilers in China, which allows us to implement strict control in our production to meet the market’s growing demand for safe and high-quality pig and poultry products. • We have in-depth know-how on the breeding and farming of pigs and yellow- feathered broilers that covers the key technical areas of the breeding and farming industry such as precision nutrition and disease prevention and control. • We are one of the largest domestic breeding and farming enterprises in China and our integrated breeding and farming business enables us to ramp up productions quickly to meet changing market demand. • We pioneered No. 2 Family Farm model among large-scale breeding and farming enterprises in China which enables us to establish a stable long-term cooperative relationship with our family farm owners.

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• We have advanced technologies on environmental protection and sustainable development of our breeding and farming business which is an important competitive advantage for our future growth. • We have an experienced management team and a talented work force. OUR BUSINESS STRATEGIES

We plan to further implement the following strategies: • Further expand our business to downstream slaughtering and production of high quality fresh pork and meat products by leveraging our pig breeding and farming capabilities. • Increase investment in research and development with a focus on the development of new meat products and improving genetic performance of our breeding pigs to strengthen our core competitiveness. • Expand our sales network by leveraging our strength in pig and poultry genetic resources to develop new product varieties that caters to different customer demands. • Develop our brand influence and awareness and increase market share by fully leveraging our strength in food safety controls in our upstream breeding and farming business. • Continue to promote our pioneered No. 2 Family Farm model, and expand into the upstream and downstream business upon achieving sizable farming in the region. Continue to recruit and cultivate talents to ensure a strong talent reserve and our market competitiveness. • Continue to recruit and cultivate talents to ensure a strong talent reserve and our market competitiveness. COMPETITION

We mainly compete with pig and yellow-feathered broiler breeding and farming companies in the PRC. According to the Frost & Sullivan Report, unlike the low entry barriers for small-scale farmers, large-scale pig and poultry breeding and farming enterprises face high barriers in terms of management, funds, technologies, channels, talents, etc. According to the Frost & Sullivan Report, in 2020, we were one of the top ten breeding pig providers in the PRC and top five breeding pig providers in Southwest China, in terms of sales volume of breeding pigs; we ranked 7th and 2nd, respectively, among all pig provides in the PRC and in Southwest China, in terms of pig revenue and sales volume; we were the largest yellow-feathered Parent Stock broiler breeders in the PRC in terms of revenue and sales volume of yellow-feathered Parent Stock DOCs; and we ranked 3rd among all yellow-feathered broiler providers in the PRC in terms of yellow-feathered broiler revenue and sales volume in 2020. It is expected that the trend of industry concentration will continue to accelerate due to growing scrutiny over food safety matters. Competition for our products in the PRC is primarily based on large-scale batch production capability, brand recognition, quality, genetic traits, price, marketing strategies as well as distribution network.

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ENVIRONMENTAL PROTECTION

In contrast with small-scale farming companies, we have devoted significant resources to research and development in environmental protection techniques and facilities and the sustainable development of our breeding and farming. We have established a dedicated team focusing on developing an eco-friendly farming model. We focus on reducing the impact of our business on environment through various treatment processes of waste water, waste gas and solid waste. QUALITY CONTROL AND BIOSECURITY

We are committed to providing safe, high-quality and reliable products. We adopt strict quality control and food management systems from raw material procurement, feed production, pig and poultry production to fully cover all stages of our operation. None of our products has ever had any food safety issues on veterinary medicine residues or prohibited substances in the tests conducted by the Ministry of Agriculture and Rural Affairs (“農業部”) or the State Administration for Market Regulation (“市場監管總局”). We closely monitor animal disease outbreak on our farms and family farms and have developed various disease cleansing programmes in response to reports of disease outbreaks. We implement strict biosecurity measures and promptly eliminate diseased animals once identified. We also divide our pigs and broilers into smaller groups during farming process to prevent the spreading of the disease. During the Track Record Period and up to the Latest Practicable Date, none of our pig farms had been depopulated due to the African Swine Fever. OUR CUSTOMERS

We have different types of customers for our products. Market hog customers are mainly pig dealers and slaughterhouses. Our market piglets and breeding pig customers are mostly large pig breeding and farming companies, and to a lesser extent, small and medium-sized pig farms. Our yellow-feathered broiler customers are mainly dealers. Chicks customers are mainly breeder farming companies. In 2018, 2019 and 2020, our sales to the top five customers accounted for approximately 10.0%, 9.4% and 8.6% of the Group’s total revenue, respectively. Our sales to our largest customer accounted for approximately 3.4%, 3.0% and 2.5% of our total revenue during the period. During the Track Record Period, none of the Directors, their respective associates or shareholders who own 5% or more of the Company’s issued share capital had any interest in the top five customers. OUR SUPPLIERS

For the years ended 31 December 2018, 2019 and 2020, our purchases from the top five suppliers were RMB2,249.8 million, RMB956.0 million and RMB1,369.9 million, respectively, accounting for approximately 85.5%, 27.5% and 25.6% of our total purchase of products and services. For the same period, our purchases from the largest supplier were RMB1,853.5 million, RMB251.4 million and RMB324.0 million, respectively, accounting for approximately 70.4%, 7.2% and 6.1% of our total purchase of products and services. The decrease in our purchases from the single largest supplier from 2018 to 2019 was due to our strategic decision to diversify the supply base and reduce our reliance on few material suppliers, which include, among other things, our acquisition of three feed manufacturing companies from Tequ Husbandry in December 2018 in order to become more self-sufficient in relation to feed. As a result of such acquisition, such companies became the wholly-owned subsidiaries of our Company and our demand for feed from Tequ Husbandry was significantly reduced. See “History and Corporate Structure – Acquisitions and Disposals during the Track Record Period.” During the Track Record Period, except for Tequ Husbandry and Qian Southwest Hope, all our top five suppliers are Independent Third Parties, and no Directors, their respective associates or shareholders who own 5% or more of the Company’s issued share capital have any interest in the top five suppliers.

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RISK FACTORS

Our business and the [REDACTED] involve certain risks, which are set out in “Risk Factors”. You should read that section in its entirety before you decide to invest in the [REDACTED]. Some of the major risks we face include: • Our results of operations are substantially affected by cyclical fluctuations in the selling prices of pigs and poultry products, which affect our revenue, and by fluctuations in the purchase prices of our feed and feed ingredients, which affect our costs. • Our historical financial and operating results are not indicative of future performance, and we may not be able to achieve and sustain the historical level of revenue and profitability. • Outbreak of African Swine Fever, avian influenza, and other diseases among the livestock or attributed to livestock or zoonoses and adverse publicity of these diseases can significantly affect our production, supply and demand for our products and our business. • Any perceived or actual food safety or health issues related to our raw materials, products or the food industry generally could adversely affect our reputation, our ability to sell our products and our financial performance, and subject us to liability claims and regulatory actions. • Our business and financial results are sensitive to market prices of the products we offer. • The fair value of our biological assets may fluctuate significantly from period to period, causing our results of operations to be highly volatile. • Our business depends on the strength of our reputation and brands. If we fail to maintain and enhance our reputation and brands, consumers’ recognition of and trust in us and our brands and products may be materially and adversely affected. • The recent outbreak of COVID-19 has caused, and may continue to cause, damage to the economy and as a result may adversely affect our business, financial condition and results of operations. • We may not be able to continue improving our breeding, nutrition and feeding technologies or update our breeding hardware equipment in a timely manner to improve the performance of our breeding pigs and yellow-feathered broilers, and we may not succeed in our development, launching and promoting of new products which cater to consumer preferences. • We are subject to risks associated with managing future growth and expansion. OUR CONTROLLING SHAREHOLDERS

Immediately following the completion of the [REDACTED], assuming the [REDACTED] is not exercised, each of Desheng Ronghe and Mr. Wang Degen (王德根), will directly held and be interested in 131,067,169 Shares and 11,915,198 Shares respectively, representing approximately [REDACTED] of the issued share capital of our Company. Desheng Ronghe is wholly owned by Mr. Wang Degen. Each of Desheng Ronghe and Mr. Wang Degen will be regarded as our Controlling Shareholder under the Listing Rules. The following tables set forth a summary of our historical financial information for the Track Record Period, extracted from the Accountants’ Report set out in Appendix I. The summary of historical financial information set forth below should be read together with, and is qualified in its entirety by reference to, the historical financial information in this [REDACTED], including the related notes. Our historical financial information has been prepared in accordance with IFRS.

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Selected Consolidated Statements of Profit or Loss and Comprehensive Income

Our consolidated statements of profit or loss and other comprehensive income for each of 2018, 2019 and 2020 as set out below are derived from our historical financial information included in Appendix I to this [REDACTED]. For the years ended 31 December 2018 2019 2020 (RMB’000) Revenue 3,282,046 5,516,105 8,145,349 Cost of sales (2,896,559) (3,981,351) (4,981,457)

Gross profit 385,487 1,534,754 3,163,892

Net changes in fair value of biological assets 60,711 1,077,875 1,295,726 Other net income 61,501 21,835 77,956 Selling expenses (38,109) (53,636) (70,091) Administrative expenses (261,013) (399,438) (700,290) Provision for expected credit loss of trade and other receivables (2,189) (4,415) (2,240)

Profit from operations 206,388 2,176,975 3,764,953 Finance costs (51,827) (84,645) (155,589) Share of losses of associates – – (347)

Profit before taxation 154,561 2,092,330 3,609,017 Income tax (7) (507) (666)

Profit and total comprehensive income for the year 154,554 2,091,823 3,608,351

Attributable to: Equity shareholders of the Company 115,066 2,002,548 3,488,173

Non-controlling interests 39,488 89,275 120,178

Non-IFRS Financial Measures

To supplement our historical financial information which are presented in accordance with IFRS, we also use adjusted profit for the year (defined below) and adjusted profit margin for the year (which is calculated by dividing adjusted profit for the year by revenue) as additional financial measures, which are not required by, or presented in accordance with IFRS. We believe that the presentation of these non-IFRS measures facilitates comparisons of operating performance from period to period and company to company by eliminating potential impacts of items that our management does not consider to be indicative of our operating performance such as net changes in fair value of biological assets for the year as a result of value changes of our pigs and poultry in the stocks arising from the changes of pigs and poultry in volume and prices. We believe that these measures provide useful information to investors in understanding and evaluating our consolidated results of operations in the same manner as they help our management. However, the use of non-IFRS measures has limitations as an analytical tool, and you should not consider them in isolation from, or as a substitute for analysis of, our results of operations or financial conditions as reported under IFRS. In addition, the non-IFRS financial measures may be defined differently from similar terms used by other companies.

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Adjusted profit for the year refers to profit after tax adjusted for fair value changes on biological assets. For the years ended 31 December 2018, 2019 and 2020, our adjusted profit for the year was approximately RMB93.8 million, RMB1,013.9 million and RMB2,312.6 million, respectively. The following tables set forth the reconciliations of our non-IFRS financial measure for the years ended 31 December 2018, 2019 and 2020 to the nearest measure prepared in accordance with IFRS. Adjusted profit for the year

The following table reconciles our profit for the year under IFRS to our definition of adjusted profit for the year for the years indicated: For the years ended 31 December 2018 2019 2020 (RMB’000, except for percentages) Profit for the year 154,554 2,091,823 3,608,351 Adjustment: net changes in fair value of biological assets (60,711) (1,077,875) (1,295,726) Adjusted profit for the year(1) 93,843 1,013,948 2,312,625 Adjusted profit margin for the year(1) 2.9% 18.4% 28.4%

Note:

(1) We define adjusted profit for the year as profit for the year adjusted for the impact of the significant fair value changes that have little or no bearing on our day-to-day operating cashflow, such as net changes in fair value of biological assets for the year as a result of value changes of our pigs and poultry in the stocks arising from the changes of pigs and poultry in volume and prices. Adjusted profit margin for the year is calculated by dividing adjusted profit for the year by revenue. Summary of Consolidated Statements of Financial Position

We had net current liabilities of RMB414.3 million and net current assets of RMB1,231.3 million, RMB1,828.8 million and RMB2,819.2 million as at 31 December 2018, 2019 and 2020 and 30 April 2021. The following table sets out a breakdown of our current assets and current liabilities as at the dates indicated: At At 31 December 30 April 2018 2019 2020 2021 (RMB’000) (unaudited) Current assets Inventories 238,076 257,171 444,081 572,205 Current biological assets 910,255 1,941,524 3,244,529 3,914,326 Trade receivables 16,308 7,560 1,591 16,681 Prepayments, deposits and other receivables 46,841 98,782 142,095 246,301 Financial assets at fair value through profit or loss (“FVTPL”) 31,233 60,066 655,198 1,138,105 Cash at bank and on hand 445,293 696,492 1,837,832 1,961,728

1,679,006 3,061,595 6,325,326 7,849,347

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At At 31 December 30 April 2018 2019 2020 2021 (RMB’000) (unaudited)

Current liabilities Interest-bearing borrowings 1,145,618 723,119 2,445,481 2,883,039 Trade and bills payables 207,770 392,190 628,362 866,859 Accruals and other payables 533,301 692,642 1,378,031 1,224,050 Amounts due to related parties 195,000––– Lease liabilities 11,574 21,829 44,265 56,222 Current taxation 5 487 383 –

2,093,268 1,830,267 4,496,522 5,030,171

Net current (liabilities)/ assets (414,262) 1,231,328 1,828,804 2,819,176

Financial Ratios 2018 2019 2020 or as at or as at or as at 31 December 31 December 31 December 2018 2019 2020

Return on equity(1) 23.0% 63.6% 50.4% Return on total assets(2) 4.4% 34.0% 24.0% Current ratio(3) 0.8 1.7 1.4 Quick ratio(4) 0.7 1.5 1.3 Gearing ratio(5) 260.3% 44.0% 76.1% Debt to equity ratio(6) 194.1% 22.8% 50.5% Interest coverage(7) 4.0 25.7 24.2

Notes:

(1) Return on equity is calculated as profit for the year divided by the closing balance of total equity as at the respective reporting dates.

(2) Return on total assets is calculated as profit for the year divided by the closing balance of total assets as at the respective reporting dates.

(3) Current ratio is calculated as current assets divided by current liabilities as at the respective reporting dates. (4) Quick ratio is calculated as current assets minus inventories, then divided by current liabilities as at the respective reporting dates. (5) Gearing ratio is calculated as total interest-bearing bank borrowings plus lease liabilities, divided by total equity at the respective reporting dates. (6) Debt to equity ratio is calculated as net debts divided by total equity as at the respective reporting dates. The net debts are defined as the sum of interest-bearing borrowings, amount due to related parties and lease liabilities net of cash and cash equivalents. (7) Interest coverage is calculated as profit before interest and tax divided by interest.

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BIOLOGICAL ASSETS AND VALUATION

The following table sets out the value of our biological assets as at the end of each reporting period during the Track Record Period: At 31 December 2018 2019 2020 (RMB’000) Breeding stocks – Sows and boars 163,110 369,740 1,253,662 – Gilts and studs 39,754 361,307 1,182,760 – Mature breeders 33,322 44,452 47,873 – Immature breeder 13,908 34,699 29,312 Commodity stocks – Piglets 23,527 27,205 104,574 – Nursery pigs 19,236 60,703 119,850 – Growers 581,723 1,465,140 2,708,075 – Broilers 222,207 297,245 226,597 – Chicken breeders 22 208 224 – Fertile eggs 7,310 11,872 8,024

Total 1,104,119 2,672,571 5,680,951

The fair value of our biological assets increased by 142.1% from RMB1,104.1 million as at 31 December 2018 to RMB2,672.6 million as at 31 December 2019, primarily due to the significant increase of market price of pigs in 2019 as a result of the impact of the African Swine Fever. The fair value of our biological assets further increased by 112.6% from RMB2,672.6 million as at 31 December 2019 to RMB5,681.0 million as at 31 December 2020, primarily due to an increase in the stock volumes of pigs in 2020. DIVIDENDS

In 2018 and 2019, we didn’t declare any cash dividends to our Shareholders. In 2020, we declared cash dividends of RMB80 million to our Shareholders, which was fully settled in cash in October 2020. On 4 June 2021, We declared an interim dividend of RMB300,000,000 to the Shareholders. Such dividend is subject to and conditional upon the completion of the [REDACTED]. Past payments and non-payments of dividends are not indicative of our future dividend policy. Our Board may declare dividends in the future after taking into account our operations, earnings, financial condition, cash requirements and availability and other factors as it may deem relevant at such time. Any declaration and payment as well as the amount of dividends will be subject to our constitutional documents and the applicable laws, including the approval of our Shareholders. Our future declarations of dividends may or may not reflect our historical declarations of dividends and will be at the absolute discretion of the Board. DISTRIBUTABLE RESERVES

As at 31 December 2020, the Company had reserves of approximately RMB109.9 million available for distribution to our Shareholders, being retained profits.

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[REDACTED] EXPENSES [REDACTED] expenses represent professional fees, [REDACTED] commissions and other fees incurred in connection with the [REDACTED]. We expect to incur [REDACTED] expenses of RMB[REDACTED] million, representing approximately [REDACTED]% of the [REDACTED] from the [REDACTED] (based on the mid-point of the indicative [REDACTED] range and assuming the [REDACTED] is not exercised and without taking into account any discretionary incentive fees, if applicable), of which RMB[REDACTED] will be directly attributable to the issue of our Shares and will be deducted from capital reserve upon [REDACTED]. The [REDACTED] expenses of RMB[REDACTED] is expected to be charged to consolidated statement of profit or loss and other comprehensive income in 2021. Our Directors do not expect such expenses to materially impact our results of operations in 2021. LEGAL PROCEEDINGSS AND COMPLIANCE

During the Track Record Period, save as disclosed in the section headed “Business – Licences and Permits” and “Business – Properties” above, our Directors confirm that the Group has obtained all material approvals, permits, consents, licences and registrations necessary for our business operations in the PRC, all of which are valid currently. During the Track Record Period and up to the Latest Practicable Date, we did not encounter any issues in the routine review by the PRC regulatory authorities, nor were rejected in any application for renewal of the licences necessary for our operations. As advised by our PRC Legal Adviser, save as disclosed in this [REDACTED], we did not materially violate applicable laws and regulations in our operations in the PRC during the Track Record Period and up to the Latest Practicable Date. [REDACTED] STATISTICS Based on an Based on an [REDACTED] of [REDACTED] of [REDACTED] per [REDACTED] per H Share H Share

Market capitalization of our H Shares(1) [REDACTED][REDACTED] [REDACTED] adjusted net tangible assets [REDACTED][REDACTED] attributable to equity shareholders of the Company per Share(2)

Notes:

(1) The calculation of market capitalization is based on [REDACTED] H Shares expected to be in issue immediately upon completion of the [REDACTED].

(2) The [REDACTED] adjusted net tangible assets attributable to equity shareholders of the Company per Share has been arrived at after adjustments referred to in the section entitled “[REDACTED]” FUTURE PLANS AND [REDACTED] We intend to use the [REDACTED] from the [REDACTED] for the following purposes (assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the mid-point of the [REDACTED] range stated in this [REDACTED]), after deducting the [REDACTED] fees and commissions and other estimated expenses in connection with the [REDACTED] and the [REDACTED] is not exercised): • Approximately [REDACTED]% of our estimated [REDACTED], or approximately HK$[REDACTED] (equivalent to approximately RMB[REDACTED]) will be used for necessary capital expenditures to build our slaughtering and food processing business, as detailed in “Business – Our business model and products – Food processing business”;

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• Approximately [REDACTED]% of our estimated [REDACTED], or approximately HK$[REDACTED] (equivalent to approximately RMB[REDACTED]) will be used for necessary capital expenditures to expand our pig and poultry farms; • Approximately [REDACTED]% of our estimated [REDACTED], or approximately HK$[REDACTED] (equivalent to approximately RMB[REDACTED]) will be used to repay certain outstanding bank loans with interest rates ranging from [2.45]% to [8.50]%; • Approximately [REDACTED]% of our estimated [REDACTED], or approximately HK$ [REDACTED] (equivalent to approximately RMB[REDACTED]) will be used for necessary capital expenditures to strengthen our research and development on pig and poultry breeding; and • Approximately [REDACTED]% of our estimated [REDACTED], or approximately HK$[REDACTED] (approximately RMB[REDACTED]) is planned to be used for our working capital and general corporate purposes. RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE Impact of COVID-19 Outbreak

An outbreak of a respiratory disease COVID-19 was first reported in December 2019 and continues to expand across the globe. The World Health Organisation is closely monitoring and evaluating the situation, and it declared such outbreak as a public health emergency of international concern and a global pandemic on 30 January 2020 and on 11 March 2020, respectively. To cope with such outbreak, China was completely locked down at the beginning of 2020, with closure of workplaces and restrictions on the movement and travel of people, in order to prevent the spread of the virus. As at the Latest Practicable Date, most cities in the PRC have eased or lifted the travel restrictions and resumed work and production therein. The outbreak of the COVID-19 has impacted our business in many aspects including the following: • Impact on supply chain. As affected by the COVID-19 pandemic, local governments in certain parts of China imposed restrictions on enterprises to resume work, which resulted in delays of resuming feed production in our feed plants and by our feed suppliers. Also, as lockdown of cities or road closures were implemented in certain areas such as Yunnan Province and Guizhou city, family farms in those affected regions experienced a temporary shortage of feeds as the suppliers were unable to deliver in time. Government authorities subsequently issued policies requiring that, during the prevention and control of the COVID-19 outbreak, the supply of meat and other necessities shall be ensured, and the transportation of agricultural raw materials including livestock, poultry and feeds shall not be intercepted. For details, please refer to the section headed “Regulatory Overview” in this [REDACTED]. Since February 2020, as far as our Directors are aware of, we and our major suppliers have resumed work. • Impact on sales. Due to the impact of COVID-19 pandemic in 2020, (i) certain local governments suspended live poultry markets as part of the pandemic control measures, and (ii) social distancing, travel and traffic restrictions resulted in a significant decline in the consumption of chicken, which resulted in a temporary mismatch of supply and demand. Followed by consequent oversupply of yellow- feathered broilers, the average selling price and average gross profit of our yellow-feathered broilers fell in 2020. The average market selling price was RMB15.76/kg in 2019 and RMB13.54/kg in 2020, representing a decline of 14% in 2020. The COVID-19 outbreak did not have a material adverse impact on the sales of our pig products.

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• Other impacts. Due to the restrictions on the logistics in certain abovementioned regions, our inventory of frozen chicken increased. With the gradual resumption of normal economic and business activities in the PRC in 2020 and based on our financial performance in 2020, as at the Latest Practicable Date, our Directors confirmed that the COVID-19 outbreak did not have any material adverse impact on our business operation and financial performance, mainly due to the facts that (i) pork and chicken are the most important protein sources for Chinese people, and the per capita consumption thereof remained stable during the COVID-19 outbreak; (ii) government authorities have implemented policies and measures to ensure the stable supply of pork and other necessities during the COVID-19 outbreak, as well as uninterrupted transportation of agricultural production materials (including livestock, poultry and feeds) across regions; (iii) we recorded a significant increase in both revenue and profit in 2019 and 2020; and (iv) we have established a system for prevention and control of the COVID-19 pandemic and adopted strict biosecurity measures for our farms and employees. Impact of Pig Prices

Our profitability is significantly affected by the selling price of pigs, which are one of our main products. The price of our pigs is generally determined by the prevailing market price. Historically, market prices of pig products in China have been volatile, primarily due to fluctuations in the supply and demand of these products. The average market price of pigs in China had experiences significant decline in 2021, from RMB35.8/kg in January 2021 to RMB19.6/kg in May 2021, which has dropped to the price level around the mid-2019. We expect such price drop will have a material and negative impact on our results of operations for the first six months of 2021. Please refer to the section headed “Risk Factors – Our results of operations are substantially affected by cyclical fluctuations in the selling prices of pigs and poultry products, which affect our revenue, and by fluctuations in the purchase prices of our feed and feed ingredients, which affect our costs.” Launch of Pig Futures

To mitigate the market price risks, we have started to utilize derivative instruments in our operations to hedge our exposure to the price risks relating to pigs. Since China’s launch of the pig futures trading in January 2021, we have become one of the pioneering Chinese pig breeding companies to introduce the pig futures to hedge the pig prices, and one of the first Chinese delivery houses for pig futures. As the pig future trading market in China matures gradually, we may hedge the pig prices when we determine conditions are appropriate to mitigate price risks. No Material Adverse Change

After performing sufficient due diligence work which our Directors considered adequate and after due and careful consideration, our Directors confirm that, up to the date of this [REDACTED], save as disclosed in this [REDACTED], there has been no material adverse change in our financial or trading position or prospects since 31 December 2020 and there has been no event since 31 December 2020 which would materially affect the information shown in our historical financial information included in the Accountants’ Report set forth in Appendix I to this [REDACTED], in each case except as otherwise disclosed herein.

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In this document, unless the context otherwise requires, the following terms shall have the meanings set out below. Certain other terms are explained in the section entitled “Glossary of Technical Terms” in this document.

“Articles of Association” the articles of association of the Company, as amended from time to time, conditionally adopted on 10 May 2021 with effect from the [REDACTED], a summary of which is set out in Appendix V to this [REDACTED]

“associates” has the meaning ascribed to it under the Listing Rules unless otherwise specified

“Board” or “Board of Directors” the board of Directors of the Company

“Business Day” or a day on which banks in Hong Kong are generally open “business day” for normal banking business to the public and which is not a Saturday, Sunday or public holiday in Hong Kong

“CAGR” compound annual growth rate

[REDACTED]

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[REDACTED]

“CEL Maiming” Shanghai CEL Maiming Investment Centre (Limited Partnership)* (上海光控麥鳴投資中心(有限合夥)), a limited partnership established in the PRC on 27 February 2015, and one of the [REDACTED] Investors of the Company. For details, please refer to the section headed “History and Corporate Structure – [REDACTED] Investments”

“Chengdu Jiakun” Chengdu Jiakun Growing Enterprise Management Centre (Limited Partnership)* (成都嘉坤成長企業管理中心(有限合夥)), a limited partnership established on 22 January 2017, and one of the [REDACTED] Investors of the Company. For details, please refer to the section headed “History and Corporate Structure – [REDACTED] Investments”

“Chinese government” or the central government of the PRC and all governmental “PRC government” subdivisions (including provincial, municipal and other regional or local government entities) and implementing agencies thereof or, where the context requires, any of them

“Chongqing Dekon/Chongqing Chongqing Dekon Agriculture and Animal Husbandry Tequ” (Group) Co., Ltd.* (重慶德康農牧(集團)有限公司), formerly known as Chongqing Tequ Agriculture and Animal Husbandry Co., Ltd., a company established on 21 April 2008 with limited liability, and a wholly-owned subsidiary of the Company

“close associate(s)” has the meaning ascribed to it under the Listing Rules

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

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“Companies (Winding Up and the Companies (Winding up and Miscellaneous Miscellaneous Provisions) Provisions) Ordinance, (Chapter 32 of the Laws of Hong Ordinance” Kong), as amended, supplemented or otherwise modified from time to time

“Company” or “our Company” or Dekon Food and Agriculture Group (四川德康農牧食品 “the Company” 集團股份有限公司), a joint stock company incorporated under the laws of the PRC and, if the context requires, include its predecessor. See the section headed “History and Corporate Structure” in this [REDACTED]

“Connected Person(s)” or has the meaning ascribed to it under the Listing Rules “connected person(s)”

“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rules and, unless the context requires otherwise, refers to Mr. Wang Degen and Desheng Ronghe

“COVID-19” the respiratory illness caused by a new form of coronavirus that emerged in 2019

“CSDCC” China Securities Depository and Clearing Corporation Limited

“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會), a regulatory body responsible for the supervision and regulation of the PRC securities markets

“Desheng Ronghe” Sichuan Desheng Ronghe Group Co. Ltd.* (四川德盛榮和實業集團有限公司), formerly known as Sichuan Desheng Ronghe Industrial Co. Ltd.* (四川德盛榮和實業有限公司), a company established in the PRC on 8 June 2017, which is wholly owned by Mr. Wang Degen as at the Latest Practicable Date, and is our Controlling Shareholder

“Director(s)” or “our Director(s)” the director(s) of our Company

“Domestic Share(s)” ordinary share in our capital, with a nominal value of RMB1.00 each, which are subscribed for and paid up in Renminbi

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“DT Food” Sichuan Dekon-Tönnies Premium Food Co., Ltd. (四川德康通內斯食品有限公司), a limited liability company established in the PRC on 25 March 2021, a subsidiary of the Company

“EIT” PRC’s enterprise income tax

“EIT Law” the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法》), as amended, supplemented or otherwise modified from time to time

“Employee Shareholding Tongchuang Deheng and Zhongcheng Jinyi Platforms”

“Exchange Participant(s)” a person: (a) who, in accordance with the Listing Rules, may trade on or through the Stock Exchange; and (b) whose name is entered in a list, register or roll kept by the Stock Exchange as a person who may trade on or through the Stock Exchange

“Extreme Conditions” extreme conditions caused by a super typhoon as announced by the government of Hong Kong

“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., the industry consultant

“Frost & Sullivan Report” an industry report commissioned by us and independently prepared by Frost & Sullivan in connection with the [REDACTED]

[REDACTED]

“Group” or “our Group” or “we” our Company and, except where the context otherwise or “us” requires, all of its subsidiaries or where the context refers to any time prior to its incorporation, the business which its predecessors or the predecessors of its present subsidiaries were engaged in and which were subsequently assumed by it

–20– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

“H Share(s)” overseas listed foreign shares in our ordinary share capital with a nominal value of RMB1.00 each, to be subscribed for and traded in Hong Kong dollars and listed on the Stock Exchange

[REDACTED]

“HK$” or “Hong Kong dollars” Hong Kong dollars and cents respectively, the lawful or “HK dollars” or “cents” currency of Hong Kong

[REDACTED]

“Hong Kong” or “HK” the Hong Kong Special Administration Region of the PRC

“Hong Kong Legal Adviser” Slaughter and May, our legal advisor as to HK laws

“Hong Kong Listing Rules” or the Rules governing the Listing of Securities on The “Listing Rules” Stock Exchange of Hong Kong Limited (as amended from time to time)

[REDACTED]

–21– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

[REDACTED]

“IFRS” International Financial Reporting Standards, which includes all applicable International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board

“Independent Third Party(ies)” an individual or a company who, as far as the Directors are aware after having made all reasonable enquiries, is not a connected person of the Company within the meaning of the Listing Rules

“Indemnity Undertaking” the indemnity undertaking dated [●] executed by our Controlling Shareholders in favour of our Company (for itself and as trustee for each of our Company’s subsidiaries), details of which are set out in the section headed “Appendix VI – Statutory and General Information – Other Information – 10. Indemnity Undertaking” in Appendix VI to this document

–22– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

[REDACTED]

–23– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

“Latest Practicable Date” 21 June 2021, being the latest practicable date for the purpose of ascertaining certain information in this prospectus prior to its publication

[REDACTED]

“Listing Committee” the Listing Committee of the Hong Kong Stock Exchange

[REDACTED]

“Main Board” the stock market (excluding the option market) operated by the Stock Exchange which is independent from and operated in parallel with the GEM of the Stock Exchange

“Mandatory Provisions” the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (《到境外上市公司章程必備條款》), for inclusion in the articles of association of companies incorporated in the PRC to be listed overseas, promulgated by the former State Council Securities Committee and other PRC government departments on 27 August 1994, as amended, supplemented or otherwise modified from time to time

“MARA” the Ministry of Agriculture and Rural Affairs of the People’s Republic of China (中華人民共和國農業農村部)

“MOF” the Ministry of Finance of the People’s Republic of China (中華人民共和國財政部)

“MOFCOM” the Ministry of Commerce of the People’s Republic of China (中華人民共和國商務部)

“mu” the traditional Chinese unit of area (畝), one mu is equivalent to approximately 666.67 square metres

“NEEQ” the National Equities Exchange and Quotations Co., Ltd. (全國中小企業股份轉讓系統有限責任公司), a PRC over- the-counter system for trading shares of listed companies

–24– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

[REDACTED]

“PBOC” the People’s Bank of China (中國人民銀行), the central bank of the PRC

“PRC” or “China” People’s Republic of China, but for the purpose of this [REDACTED] and for geographical reference only and except where the context requires otherwise, references in this [REDACTED] to “China” and the “PRC” do not include Hong Kong, Macau and Taiwan

“PRC Company Law” the Company Law of the PRC (《中華人民共和國公司法》) (as amended, supplemented or otherwise modified from time to time)

“PRC Legal Adviser” Beijing Kangda Law Firm, our legal advisor as to PRC laws

–25– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

[REDACTED]

“Qian Southwest Hope” Qian Southwest Hope Agriculture and Husbandry Co., Ltd.* (黔西南希望農牧有限公司), a limited liability company established in the PRC on 19 April 2006, an associate of Sichuan Tequ and a connected person of the Company

“QIB” a qualified institutional buyer within the meaning of Rule 144A

“Regulation S” Regulation S under the U.S. Securities Act

“related companies” has the same meaning as associates as referred to in the Accountants’ Report set out in Appendix I to this [REDACTED]

“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC

“Rule 144A” Rule 144A under the U.S. Securities Act

“SAFE” State Administration of Foreign Exchange of the PRC (中華人民共和國國家外匯管理局)

“SAT” the State Administration of Taxation of the PRC (中華人民共和國國家稅務總局)

“Securities and Futures the Securities and Futures Ordinance (Chapter 571 of the Ordinance” or “SFO” Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Securities Law” the Securities Law of the PRC (《中華人民共和國證券法》), issued on 29 December 1998 and last amended and newly effective on 31 August 2014

“SEC” the United States Securities and Exchange Commission

“SFC” the Securities and Futures Commission of Hong Kong

–26– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

“Share(s)” shares in the share capital of our Company, with a nominal value of RMB1.00 each, comprising our Domestic Share(s) and our H Share(s)

“Shareholder(s)” holder(s) of our Shares

“Sichuan Tequ” Sichuan Tequ Investment Group Limited (四川特驅投資集團有限公司), formerly known as Sichuan Tequ Investment Limited (四川特驅投資有限公司), a company established in the PRC on 28 June 2005 with limited liability, and a connected person of the Company. For details, please refer to the section headed “Connected Transactions” in this [REDACTED]

“Sole Sponsor” Huatai Financial Holdings (Hong Kong) Limited, a licensed corporation under the SFO permitted to carry on Type 6 (advising on corporate finance) regulated activities for the purpose of the SFO

“Special Regulations” Special Regulations of the State Council on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies (《國務院關於股份有限公司境外募集股份及上市的特別規定》), promulgated by the State Council on 4 August 1994

[REDACTED]

“State” the People’s Republic of China or the PRC

“State Council” the State Council of the PRC (中華人民共和國國務院)

“Stock Exchange” or “HKEX” The Stock Exchange of Hong Kong Limited

“subsidiary(ies)” has the meaning ascribed thereto in section 15 of the Companies Ordinance

“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules

“Supervisor(s)” supervisor(s) of our Company

–27– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT DEFINITIONS

“Suzhou Houqi” Suzhou Houqi Equity Investment Centre (Limited Partnership) (蘇州厚齊股權投資中心(有限合夥)), a limited partnership established in the PRC on 5 January 2018, and one of the [REDACTED] Investors of the Company. For details, please refer to the section headed “History and Corporate Structure – [REDACTED] Investments”

“Tequ Husbandry” Sichuan Tequ Agriculture and Animal Husbandry Technology Group Co., Ltd.*(四川特驅農牧科技集團有限公司) (formerly known as Sichuan Tequ Agriculture and Animal Husbandry Technology Group Co., Ltd.* (四川特驅農牧科技有限公司)), a limited liability company established in the PRC on 28 April 2016, a connected person of the Company. For details, please refer to the section headed “History and Corporate Structure – Acquisitions and Disposals during the Track Record Period”

“Tongchuang Deheng” Chengdu Tongchuang Deheng Enterprise Management Centre (Limited Partnership) (成都同創德恒企業管理中心(有限合夥)), a limited partnership established in the PRC on 13 December 2019, and one of the [REDACTED] Investors of the Company. For details, please refer to the section headed “History and Corporate Structure – [REDACTED] Investments” in this [REDACTED]

“Track Record Period” the period comprising the years ended 31 December 2018, 2019 and 2020

[REDACTED]

“US$” or “U.S. dollars” United States dollars, the lawful currency of the United States

“U.S.” or “United States” the United States of America, its territories, its possessions and all areas subject to its jurisdiction

“U.S. Securities Act” the United States Securities Act of 1933, as amended and supplemented or otherwise modified from time to time, and the rules and regulations promulgated thereunder

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“Valuer” or “JLL” Jones Lang LaSalle Corporate Appraisal and Advisory Limited, our biological asset valuer and an Independent Third Party

“Yixing CEL” Yixing CEL Investment Limited, a company established in the PRC on 26 September 2008 with limited liability, and one of the [REDACTED] Investors of the Company. For details, please refer to the section headed “History and Corporate Structure – [REDACTED] Investments” in this [REDACTED]

“Zhongcheng Jinyi” Chengdu Zhongcheng Jinyi Enterprise Management Centre (Limited Partnership) (成都眾誠金宜企業管理中心(有限合夥)), a limited partnership established in the PRC on 18 April 2019, and one of the [REDACTED] Investors of the Company. For details, please refer to the section headed “History – [REDACTED] Investments” in this [REDACTED]

“Zhuhai Mailun” Zhuhai Mailun Investment Centre (Limited Partnership) (珠海麥侖投資中心(有限合夥)), a limited partnership established in the PRC on 19 May 2017, and one of our Shareholders.

“%” per cent

Unless the content otherwise requires, references to “2018”, “2019” and “2020” in this document refers to our financial year ended 31 December of such year.

Certain amounts and percentage figures included in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

For ease of reference, the names of the PRC laws and regulations, governmental authorities, institutions, natural persons or other entities (including certain subsidiaries) have been included in the document in both the Chinese and English names and in the event of any inconsistency, the Chinese names shall prevail. English translations of official Chinese names are for reference purpose only.

–29– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT GLOSSARY OF TECHNICAL TERMS

This glossary contains certain definitions and technical terms in this [REDACTED] which relate to our business and the industries and sectors that we operate in. As such, some terms and definitions may not correspond to standard industry definitions or usage of such terms.

“boar(s)” male pig(s) for mating purpose

“boar stud(s)” farm(s) that are used to collect boar semen from breeding boars, which is then used to breed sows

“breeding pig(s)” pig(s) that are one of our products, including gilts, studs, boars and sows and primarily used for breeding

“broiler(s)” the mature chickens which are grown from chicks. A broiler is a type of chicken bred for the production of chicken products rather than for eggs. It is bred in a highly controlled environment. Broilers are usually slaughtered when they reach a required weight. After slaughtering, it will be processed into chicken meat products for sale. Broilers mainly include white- feathered broilers and yellow-feathered broilers

“broiler breeder(s)” chicken breeders that are bred for the purpose of producing chicks. The stock volumes relating to the Group’s broiler breeders included in this document are based on the Group’s internal records

“chick(s)” the chicks hatched from fertile eggs, which will then be delivered to broiler farms for breeding into broilers

“chicken breeder(s)” collectively, the immature and mature chicken breeders

“clenbuterol” anabolic agent that has sometimes been used in livestock to increase the amount of lean muscle

“commercial production collectively, our market hog farms, No. 1 family farms facilities” and No. 2 family farms

“commodity DOC(s)” the day-old chicks that are bred for the purpose of growing into broilers

“Company Farming model” the model under which our Group build farms and employ labour force to carry out scaled farming, and are responsible for breeding, fattening, farming and other related process

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“crossbred pigs” pig(s) produced by mating or hybridising two different breeds or varieties

“crossbred sows” sows(s) produced by mating or hybriding two different breeds or varieties

“DLY crossbreeding model” a crossbreeding production model between the Landrace boars and Yorkshire sows to produce crossbred sows with high standard of breeding performance and excellent stress resistance and maternal characteristics inherited from Yorkshire, and then crossbreeding between Duroc boars and crossbred sows to produce market hogs with good growth performance, slaughtering performance and meat quality

“DLY market hog(s)” market hog(s) that are produced by using the DLY crossbreed model

“DOC(s)” day-old chick(s)

“dressing percentage” the percentage of the live animal weight that becomes the carcase weight at slaughter

“family farm(s)” collectively, the pig farms under our No. 1 Family Farm model, No. 2 Family Farm model, and poultry farms under our Family Farm model for our Group according to contract, as applicable

“Family Farm model” the model for our poultry segment, under which the Group provide the farm(s) with chicks, feed, vaccine and veterinary medicine. Such farm(s) will raise those chicks into broilers and return the broilers to the Group for an agreed fee

“Farming Base model” the model for our poultry segment, under which our Group build the farms and lease to farmers for yellow- feathered broiler farming. Farmers will raise chicks into broilers and return the broilers to the Group for an agreed fee

“farrow” to give birth to a litter of piglets

“feed conversion rate” feed conversion rate is the ratio of inputs to outputs, which means how many kilograms of feed does an animal need to get to gain one kilogramme of body weight

“fertile egg(s)” the fertilised eggs laid by breeders, which are incubated for approximately 21 days and hatched into chicks

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“finish” pigs are raised to the finisher stage

“finisher(s)” pigs ready for sale

“gilt(s)” female pig(s) used for breeding and not yet mated. Gilts become sows, since they are mated naturally or inseminated artificially for the first time

“Grand Parent” or “GP” the second layer purebred mating pigs or chicken in specialised synthetic mating system

“Grandparent Stock(s)” chickens that are bred for the purpose of laying eggs that produce Parent Stock DOCs

“Great Grandparent” or “GGP” the first layer purebred mating pigs or chicken in specialised synthetic mating system

“grower(s)” pig(s) that age(s) around 74 to 183 days

“high-temperature pork product” cooked pork produces that its center temperature reaches 72˚C-85˚C when being processed

“immature chicken breeder(s)” the chickens of less than 24 weeks old which are grown from Parent Stock DOCs for the purpose of laying fertile eggs

“JDE system” the JD Edwards software created by JD Edwards EnterpriseOne, an integrated application suite consisting of enterprise resource planning software, and includes management tools for supply chain, financial and quality management business functions

“lean yield” lean yield is an estimate of the amount of muscle tissue in a pork carcase

“litter” unit of young animals that are born and raised in a single batch to an animal with multiple births (such as pig)

“low-temperature pork product” semi-finished pork produces that its center temperature reaches 115˚C-121˚C when being processed

“market hog(s)” pigs primarily used for production of pork products

“market hog farm(s)” farm(s) that produce DLY market hogs

“market piglets” market hogs weighing between 6-25kg

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“mature chicken breeder(s)” the mature chickens of 24 weeks old or more which are grown from Parent Stock DOCs and used for laying fertile eggs. Such mature chicken breeders will usually start to lay eggs from approximately the 25th week to the 65th week after their birth. After the 65th week, mature chicken breeders will be sold and will not be used for the production of chicken meat products

“multiplying” or “multiplication” collectively, first-level multiplying (purebreeding) and second-level multiplying (crossbreeding)

“multiplying farm(s)” farm(s) that use breeding pigs and semen from the nucleus breeding farm for production of sows

“No. 1 Family Farm model” the model for our pig segment, under which the Group provide the farm(s) with weaned piglets, feed, vaccine and veterinary medicine. Such farm(s) will finish and fatten those weaned piglets into market hogs or market piglets, and return the pigs to the Group for an agreed fee

“No. 2 Family Farm model” the model for our pig segment, under which the Group provide the farm(s) with crossbreeding sows, boar semen, feed, vaccine and veterinary medicine. Such farm(s) will breed sows and piglets, and fatten weaned piglets into market hogs or market piglets, and return the pigs to the Group for an agreed fee

“nucleus breeding herd” the swine breeding herd is often thought of as a pyramid. The top tier of the pyramid represents nucleus breeding herd. These animals are usually purebred in a genetic improvement programme selected for specific traits. The stock volumes and numbers relating to the Group’s nucleus breeding herd included in this document are based on the Group’s internal records

“nursery pig(s)” young pig(s) of around 22-73 days old that have been weaned off sow and consuming feed

“Parent Stock(s)” chickens that are bred for the purpose of laying eggs that produce commodity chicks

“Parent Stock DOC(s)” the day-old chicks that are bred for the purpose of laying fertile eggs

“parity” the number of litters a sow has carried

“PED” porcine epidemic diarrhoea, which causes diarrhoea and vomiting in pigs

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“pedigree” the record of descent of an animal

“porcine circovirus” a common virus of pigs

“porcine eperythrozoonosis” an infectious disease of pigs that can infect human

“porcine parvovirus” a common virus causing infectious infertility in swine

“PRRS” or “blue-ear disease” porcine reproductive and respiratory syndrome, a disease that causes a decrease in reproductive performance in breeding animals and respiratory disease in pigs

“pseudorabies” a disease of swine that can also affect cattle, dogs, cats, sheep, and goats

“PSY” piglets weaned per sow per year, means the total number of piglets weaned in a given period, expressed on a yearly basis, divided by the average number of sows in this period

“purebred” (of an animal) bred from parents of the same breed

“pure line(s)” (of birds) bred from parents of the same line

“sows” female pig(s) which have been mated naturally or inseminated artificially once. We use sows to give birth to litters in our pig farming process

“stall” or “shed” an enclosure, in which gilts, sows and boars of similar age are kept individually

“stud(s)” male pig(s) that are kept for breeding and not yet mature

“suckling piglet(s)” young piglets between birth and weaning (0-21 days of age)

“terminal boars(s)” boar(s) of the terminal sire

“terminal sire(s)” pig(s) used in the breeding system which generally determine the traits or features of market hogs

“weaning” separating the piglets and its mother, and made them accustom to feed other than its mother’s milk

“yellow-feathered broiler(s)” indigenous species of chicken from China, and therefore can be domestically produced

–34– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FORWARD-LOOKING STATEMENTS

This [REDACTED] contains forward-looking statements and information relating to our Company and our subsidiaries that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this [REDACTED], the words “aim”, “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “going forward”, “intend”, “may”, “might”, “ought to”, “plan”, “potential”, “project”, “seek”, “should”, “will”, “would” and the negative of these words and other similar expressions, as they relate to the Group or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, operations, liquidity and capital resources, some of which may not materialise or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this [REDACTED]. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. The risks and uncertainties facing our Company which could affect the accuracy of forward-looking statements include, but are not limited to, the following:

• our operations and business prospects;

• our ability to maintain and enhance our market position;

• the effects of competition in the industries or markets in which we operate and its potential impact on our business;

• developments in, or changes to, laws, regulations, government policies, taxation or accounting standards or practices affecting our operations, especially those related to the PRC poultry industry;

• general political and global economic conditions, especially those related to the PRC, and macro-economic measures taken by the PRC government to manage economic growth;

• our ability to successfully implement any of our business strategies, plans, objectives and goals;

• our ability to expand and manage our business operations;

• our ability to obtain or extend the terms of the licences and leases required for the operation of our business;

• changes to our expansion plans and estimated capital expenditures;

• adverse changes or developments in the industries in which we operate;

• inflation, fluctuation in interest rates and exchange rates;

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• changes in the availability of, or in the event of any new requirements, for financing;

• our success in accurately identifying future risks to our business and managing the risks arising from the aforementioned factors; and

• all other risks and uncertainties described in the section headed “Risk factors”.

Subject to the requirements of applicable laws, rules and regulations, we do not have any and undertake no obligation to update or otherwise revise the forward-looking statements in this [REDACTED], whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this [REDACTED] might not occur in the way we expect or at all. Accordingly, you should not place undue reliance on any forward-looking information.

In this [REDACTED], statements of or references to our intentions or those of the Directors are made as at the date of this [REDACTED]. Any such information may change in light of future developments.

All forward-looking statements contained in this [REDACTED] are qualified by reference to the cautionary statements set out in this section.

–36– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

You should carefully consider all of the information in this [REDACTED], including the risks and uncertainties described below before making an investment in our Shares. You should pay particular attention to the fact that we conduct significant operations in China, the legal and regulatory environment of which differs in certain respects from that which prevails in other countries. Our business, financial condition, results of operations or prospects may be materially and adversely affected by any of these risks and the trading price of our Shares may decline as a result. You may lose all or part of your investment.

We believe that there are certain risks involved in our operations, some of which are beyond our control. These risks can be broadly categorised into: (i) risks relating to our business and our industry; (ii) risks relating to conducting business in the PRC; and (iii) risks relating to the [REDACTED].

RISKS RELATING TO OUR BUSINESS AND OUR INDUSTRY

Our results of operations are substantially affected by cyclical fluctuations in the selling prices of pigs and poultry products, which affect our revenue, and by fluctuations in the purchase prices of our feed and feed ingredients, which affect our costs.

Our results of operations are significantly affected by the selling prices of pigs and poultry products, which affect our revenue, and by the purchase prices of feed and feed ingredients, which are our primary raw materials and affect our costs. All of these prices are determined by constantly changing and volatile market supply and demand as well as other factors, over which we have limited or no control. These factors include:

• economic conditions;

• government regulations and actions, in particular with regards to government intervention in pig price and environmental protection;

• competition;

• livestock diseases;

• weather conditions, including the impact of weather on water supply, and the supply and pricing of grains;

• competing demand for corn, for use in the manufacturing of ethanol and other alternative fuels; and

• transportation and storage costs.

–37– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

Pig and poultry product prices typically fluctuate cyclically over periods of years, reflecting changes in market demand and supply. These fluctuations can be significant, as shown in recent years.

Soybean meal and corn, which are the primary raw materials, have experienced volatility due to various factors such as the policies of the PRC government and changes in supply and demand of such commodities in the global markets. We may have difficulty passing the increases in our raw material costs on to customers in a timely manner or at all. Any inability to pass on to our customers all or part of any increased costs experienced by us from time to time, in a timely manner or at all, could have a material adverse impact on our results of operations.

Our historical financial and operating results are not indicative of future performance, and we may not be able to achieve and sustain the historical level of revenue and profitability.

You should not rely on our historical results to predict our future financial performance. We have realised significant growth during the Track Record Period. Our revenue increased by 68.1% from approximately RMB3,282.0 million in 2018 to approximately RMB5,516.1 million in 2019, and further increased by 47.7% to approximately RMB8,145.3 million in 2020. Our profit for the year increased by 1,253.0% from approximately RMB154.6 million in 2018 to approximately RMB2,091.8 million in 2019, and further increased by 72.5% to approximately RMB3,608.4 million in 2020. There is inherent risk in using such historical financial information of us to project or estimate our financial performance in the future, as they only reflect our past performance under particular conditions. There is no assurance that we will be able to maintain our historical growth in the future. Our revenue and profitability may vary from period to period in response to a variety of factors beyond our control. These factors can include general economic conditions, special events, increasing competition, government regulations and policies affecting our industry and/or our ability to control costs and operating expenses. Our financial and operating results may not meet the expectations of public market analysts or investors, which could cause the future price of our H Shares to decline.

Outbreak of African Swine Fever, avian influenza, and other diseases among the livestock or attributed to livestock or zoonoses and adverse publicity of these diseases can significantly affect our production, supply and demand for our products and our business.

We take precautions to ensure that our pigs and yellow-feathered broilers are healthy and that our farms and other facilities operate in a sanitary manner. Nevertheless, we are subject to risks relating to our ability to maintain animal health and control diseases. An occurrence of swine diseases (such as African Swine Fever, PRRS), porcine circovirus, PED, pseudorabies, porcine parvovirus and porcine eperythrozoonosis), poultry diseases (such as foot-and-mouth disease and avian influenza) or any outbreak of other serious animal diseases or epidemics in China, might adversely impact our production.

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African Swine Fever is a fatal disease for pigs and currently there is no vaccine available in the market. Pig farms dispose of infected pigs and result in direct loss under the impact of an outbreak. As African Swine Fever is highly contagious, once an outbreak occurs in one pig farm, all pigs would be disposed in extreme cases. The outbreak of African Swine Fever in China has caused the decrease of the stock volume of market hogs and breeding pigs. Diseases affecting pigs can reduce the number of pigs produced, hamper the growth of pigs to finishing size, result in expensive medication and vaccination costs, require quarantine or disposal of infected pigs and, in extreme cases, cull large quantities of pigs and temporarily suspend our business operations in the affected facilities, any of which could adversely affect our production or our ability to sell our products. In addition, porcine epidemic diarrhoea is also a disease with high morbidity, high mortality and high infection rate, to which newborn piglets are most susceptible. Although we took biosecurity measures and vaccinated our pigs, we were still unable to fully prevent the occurrence of porcine epidemic diarrhoea.

Avian influenza, in particular H5N1 virus, H7N9 virus and H5N6 virus, is a type of disease which spreads through poultry and is capable of killing millions of poultry and may, in some circumstances, be transmitted to humans, causing symptoms such as fever, cough, sore throat, muscle aches and, in severe cases, breathing problems and pneumonia that may be fatal. The outbreak of avian influenza in the past few years, particularly in 2016 and 2017, caused considerable damage to the national and local economies in the PRC and other Asian countries. When outbreaks of avian influenza had taken place in the PRC during the Track Record Period, a large number of poultry were culled, and the sales of chicken meat products in the PRC dropped significantly due to the widespread fear of H5N1 virus and H7N9 virus by the public. Outbreak of diseases in neighbouring areas of any of our production facilities could raise concerns of the public and our customers on the safety and quality of our products. Furthermore, in order to prevent the spread of certain infectious diseases, the PRC government may order a mass culling of animals in the affected areas, which could result in the loss of healthy breeders and broilers in our breeder and broiler farms situated in neighbouring areas.

Adverse publicity concerning any disease or health issue could also cause customers to lose confidence in the safety and quality of pigs and poultry. In addition, outbreaks of zoonoses similar to avian influenza will curb consumption and cause significant decrease in demand for related meat products. There can be no assurance that there will be no recurrence of outbreaks of animal diseases or zoonoses in China in the future. If we experience any outbreaks of animal diseases or zoonoses, our business, results of operations and financial condition may be adversely and materially affected.

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Any perceived or actual food safety or health issues related to our raw materials, products or the food industry generally could adversely affect our reputation, our ability to sell our products and our financial performance, and subject us to liability claims and regulatory actions.

Market hogs and broilers are primarily purchased for meat production. We are subject to risks affecting the food industry generally, including risks posed by the following:

• food spoilage;

• food contamination;

• contamination of raw materials;

• consumer product liability claims;

• product tampering;

• product labelling errors;

• expenses and possible unavailability of product liability insurance; and

• potential costs and disruption of a product recall.

If our raw materials or our products are found to be spoiled, contaminated, tampered with, incorrectly labelled, or reported to be associated with any such incidents, we may be subject to product liability claims, adverse publicity and government scrutiny or investigations. During the Track Record Period, our products were not found to have contaminants or reported to be associated with any contamination incidents, and we were not subject to any product liability claims. Despite the measures we have in place to control the quality of our raw materials and products, there can be no assurance that contamination of our raw materials or products will not occur during the transportation, production, distribution and sales processes due to reasons unknown to us or out of our control. Any product contamination could also subject us to product liability claims, adverse publicity and government scrutiny, investigation or intervention, any of which could have a material and adverse impact on our reputation, business, financial condition, results of operations and prospects.

Any product liability claim made or threatened to be made against us in the future, regardless of its merits, could result in costly litigation and adverse publicity and put a strain on our administrative and financial resources. Such incidents will also affect the confidence of customers in our products, which will in turn adversely affect the sales of our products. Any of these events could have a material and adverse impact on our reputation, business, financial condition, results of operations and prospects.

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Additionally, the pork industry in the PRC has experienced significant issues related to food safety, such as the use of clenbuterol hydrochloride (clenbuterol) in pig production by certain industry participants. While these events may not have any direct connection to us, these types of issues may cause customers to lose confidence in the safety and quality of pork products generally, which will in turn adversely affect the sales of our pigs and pork products. Even if these events do not involve our products or operations, they could adversely affect our reputation, business, financial condition, results of operations and prospects.

Our business and financial results are sensitive to market prices of the products we offer.

The profitability of our operations is affected by the selling prices of our products. The prices of our pigs and poultry products are generally determined by the prevailing market prices of similar quality and attributes in China. Historically, pig and poultry products in China have been volatile, primarily due to fluctuations in the supply and demand of these products, which are out of our control. If the prices for our pigs and poultry products decline in the future, and we are unable sell more products and/or reduce our cost of sales, our revenues will decrease and our profitability will be adversely affected.

To mitigate the market price risks, we may utilise derivative instruments in our operations to hedge our exposure to changing prices and rates. Since China kick-started the trading of pig futures in January 2021, we became one of the pioneering Chinese pig breeding companies to introduce the pig futures. However, there is no assurance that the pig futures can lend some stability and predictability to the price and supply of pigs in China. We hedge the pig prices when we determine conditions are appropriate to mitigate price risk. While this hedging tool reduce our exposure to changes in prices for pigs, the use of such instruments may ultimately limit our ability to benefit from favourable trends in pig prices.

The fair value of our biological assets may fluctuate significantly from period to period, causing our results of operations to be highly volatile.

We have significant biological assets, primarily consisting of piglets, nursery pigs, growers, gilts, studs, sows, boars, fertile eggs, commodity chicks, broilers, and immature/mature chicken breeders, which we record at fair value less costs to sell at each reporting date in accordance with IFRS. Fair value gains or losses with respect to our biological assets, which are non-cash in nature, are attributable to changes in the physical attributes of the biological assets or changes in market prices for biological assets.

The fair values of our biological assets at each reporting date during the Track Record Period were determined by an independent professional valuer and we intend to engage an independent professional valuer to determine the fair values of our biological assets going forward. In valuing our biological assets, the independent valuer has relied on a number of major parameters and assumptions which may vary from time to time, such as quantity and body weight of biological assets and market price of biological assets, as well as future trends in political, legal and economic conditions in China. See “Financial Information – Biological Assets and Valuation” for details.

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The fair value of our biological assets could be affected by factors including the accuracy of those parameters and assumptions, as well as the quality of our biological assets and changes in the pig and poultry farming industry. Market prices for biological assets are highly volatile and susceptible to significant fluctuations from period to period. As a result of revaluations of our biological assets from period to period, our financial position and results of operations may change significantly from period to period. In addition, an increase or decrease in market prices for biological assets will increase or reduce our revenue and gains or losses arising from changes in fair value less costs to sell of biological assets, which makes our reported profit more volatile. We recognised gains of RMB97.1 million, gains of RMB1,062.5 million, and gains of RMB1,338.5 million for the changes in fair value of biological assets in our pig segment, for the years ended 31 December 2018, 2019 and 2020, respectively. We recognised losses of RMB36.4 million, gains of RMB15.4 million, and losses of RMB42.8 million for the changes in fair value of biological assets in our poultry segment for the years ended 31 December 2018, 2019 and 2020, respectively. The net changes in fair value of biological assets were RMB60.7 million, RMB1,077.9 million and RMB1,295.7 million for the years ended 31 December 2018, 2019 and 2020, respectively. We cannot assure that the fair value of our biological assets will not decrease in the future, which in turn will adversely affect our financial results.

Although we may recognise fair value gains from increases in the fair value of our biological assets, these changes will not represent changes in our cash position as long as the relevant assets continue to be held by us. See “Financial Information – Key Factors Affecting Our Results of Operations and Financial Conditions – Changes in the fair value of biological assets” for details.

Our business depends on the strength of our reputation and brands. If we fail to maintain and enhance our reputation and brands, consumers’ recognition of and trust in us and our brands and products may be materially and adversely affected.

We rely on the strength of our reputation and brands in marketing and selling our products. We use “Lingnan Yellow® (嶺南黃)”, “Yu Pinfeng® (御品鳳)” and “Dexiang® (德鄉)” brands to sell our yellow-feathered broilers. Our reputation and brands could be harmed by product defects, ineffective customer service, product liability claims, consumer complaints, or negative publicity or media reports. In addition, we plan to establish and promote our brand in the foods segment. If the brand failed to be widely recognised by consumers as planned, the growth of our value in the future may be lower than expected.

Any claim against us, even if meritless or unsuccessful, could divert our management’s attention and resources from other business, which may adversely affect our business and results of operations. Negative media coverage regarding the safety, quality or nutritional value of our products and the resulting negative publicity could materially and adversely affect consumers’ recognition of and trust in us and our brands and products. In addition, adverse publicity about any regulatory or legal action against us could damage our reputation and brand image, undermine our customers’ confidence in us and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or immaterial to our operations.

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Furthermore, negative publicity relating to our products, raw materials, brands, operations, the food industry or products similar to ours may adversely affect consumers’ perceptions of our products and result in decreased demand for our products. In particular, negative publicity relating to any one of our brands may be particularly harmful as we use only a few core brands to sell our products, and therefore face risks from brand concentration. Negative publicity concerning any perceived or actual health risks associated with our brands or products could also cause customers to lose confidence in the safety and quality of our products, which could adversely affect our reputation, business, financial condition, results of operations and prospects. We could also be adversely affected by perceived or actual health risks associated with similar products produced by other companies since these types of risks could cause consumers to lose confidence in the safety and quality of these types of products generally and consumers may therefore opt for other meat products that are perceived as safer.

The recent outbreak of COVID-19 has caused, and may continue to cause, damage to the economy and as a result may adversely affect our business, financial condition and results of operations.

The outbreak of COVID-19 pandemic at the end of 2019 has already caused, and may continue to cause, an adverse and prolonged impact on both economic and social conditions in China, and the exacerbation, continuance or reoccurrence of COVID-19 pandemic in China may interrupt our business operations.

The COVID-19 pandemic has resulted in quarantines, travel restrictions, stay-at-home policies, and temporary closures of many corporate offices, manufacturing facilities and factories across China and around the world. Our feeds, pig and poultry production was also adversely impacted by the COVID-19 pandemic. Such adverse impacts include, but are not limited to, the following aspects. Certain of our employees were unable to resume work, causing disruption to our normal production and operating activities. In addition, due to shortage of supplies such as masks and disinfectants during the pandemic, we encountered procurement difficulties and delayed our resumption of work. Local governments in certain parts of China also imposed restrictions on enterprises to resume work, which made our feed mills and our feed suppliers unable to resume feed production. Also, as lockdown of cities or road closures was implemented in certain regions, production supplies for some of our regional contracted farmers were unable to be delivered in time, leading to a shortage of pigs and yellow-feathered broiler feeds. In addition, as the trade of pigs and live poultry was prohibited in various regions in the PRC, we were unable to deliver them for sale and had to continue to hold, our market hogs and yellow-feathered broilers that have reached maturity for sale, which has led to a spike in our breeding costs.

In addition, during the outbreak of the COVID-19 pandemic, the average selling price and average gross profit of broilers fell in 2020 mainly because of (i) the adoption of pandemic control measures by some local governments to suspend live poultry markets, and (ii) the various social distancing, quarantines and travel restrictions imposed in response to the

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Although the impact of COVID-19 pandemic has been lessening in China, there remains substantial uncertainty about the dynamic of the COVID-19 pandemic, which may have continuing impacts on subsequent periods if the global pandemic and the resulting disruption were to extend over a prolonged period or if a widespread outbreak of COVID-19 pandemic reoccurred or other disease outbreak occurred in the PRC. If any of these events eventuate, our business, financial condition and results of operations may be materially and adversely affected.

We may not be able to continue improving our breeding, nutrition and feeding technologies or update our breeding hardware equipment in a timely manner to improve the performance of our breeding pigs and yellow-feathered broilers, and we may not succeed in our development, launching and promoting of new products which cater to consumer preferences.

We are reliant on our breeding, nutrition and feeding technologies in order to continue enhancing the performance of our breeding pigs and yellow-feathered broilers. We imported 868 purebreds from abroad in 2013 and were granted the right to use its pig genetic material. Based on this group of imported purebreds and their genetic material, we have established our first core breeding pig and developed our own set of breeding technology. Further, we imported 500 purebreds from a Netherlands-based pig breeding company in 2020. Although we have successfully improved the genetic functions of the pigs such as survival rate, growth speed, feed conversion rate, and meat quality in the past, we cannot assure you that we can continue to develop or improve our breeding technology and improve the functions of our breeding pigs. In addition, we increased our breeding efficiency of the pig and poultry segments by continuously improving our nutrition plans, enhancing our breeding technologies and increasing investment in breeding hardware equipment. Failure to develop and improve our breeding, nutrition and feeding technologies or update our breeding hardware equipment could have a material adverse effect on our business, financial condition, results of operations and prospects.

Meanwhile, we have consistently devoted our efforts to developing new breeds and varieties of pigs and yellow-feathered broilers in order to adapt to evolving client preferences. Consumer preferences are dynamic and consumer habits are constantly changing, and therefore any new products that we launch may not be able to meet the particular tastes or requirements of consumers. Our failure to anticipate, identify or react to these particular tastes or preferences could result in reduced demand for our products. We therefore cannot assure you that the products we launch would be popular or profitable. This could in turn lead to our inability to recover our research and development, production and marketing costs, thereby materially and adversely affecting our business, results of operations and financial position.

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We are subject to risks associated with managing future growth and expansion.

Our future growth may depend on establishing new production facilities, expanding our existing production facilities, ramping up our production capabilities, launching new products, expanding our sales network and entering new markets or new sales channels. Our business plans set forth in “Business – Our Business Strategies” and “Future Plans and [REDACTED]’” are based on assumptions of future events which may entail certain risks and are inherently subject to uncertainties. Our ability to achieve growth will be subject to a number of factors, including:

• competing with other companies in the relevant industry;

• maintaining effective quality control and sustaining high quality standards;

• expanding our sales network and strengthening our existing relationships with customers;

• enhancing our research and development capabilities;

• hiring and training qualified personnel;

• controlling our costs and expenses of our operations;

• prioritising our operational, financial and management controls and systems in an efficient and effective manner;

• acquiring or renting land parcels of suitable size and location for our operation, in particular for pig and poultry breeding, slaughtering and processing; and

• managing our various suppliers and leveraging our procuring power.

In addition, we may require additional fund to realise our expansion plans and may have difficulty obtaining such financing. There is no assurance that we will be able to enhance our production capabilities in time or implement our future plan effectively. We may be subject to unexpected delays and cost overruns resulting from a number of factors, many of which may be beyond our control, including increases in the prices of raw materials and production equipment, shortages of skilled employees, disputes with customers or suppliers as well as equipment malfunctions. In addition, our efforts to enhance our production capabilities may not achieve the expected benefits. If the demand for our pig and chicken products is weaker than anticipated, we may experience problems associated with overcapacity and under- utilisation of personnel and other resources, which may have an adverse effect on our business, financial condition and results of operations.

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Expansion into new geographic markets and new sales channels present operating and marketing challenges that are different from those we currently face in our existing markets and sales channels. New markets and sales channels may have different competitive dynamics, consumer preferences and discretionary spending patterns compared to our existing markets and sales channels. Consumers in new markets and sales channels are likely to be unfamiliar with our brands and products and we may need to build or increase brand awareness in the relevant markets and sales channels by increasing investments in advertising and promotional activities. Additionally, our expansion plans and business growth could strain our managerial, operational and financial resources. Our ability to manage future growth will depend on our ability to continue to implement and improve operational, financial and management systems on a timely basis and to expand, train, motivate and manage our workforce. We cannot assure you that our personnel, systems, procedures and control measures will be adequate to support our future growth. Failure to effectively manage our expansion may lead to increased costs and reduced profitability and may adversely affect our growth prospects.

Our operations are subject to the risks associated with acquisitions and investments in joint ventures and associates.

On 26 October 2020, we cooperated with Tönnies International Management GmbH (“Tönnies”), a German limited liability company, and established DT Food in Renshou County, Sichuan Province to expand into slaughtering and food processing business. For further information, please see the sections headed “History and Corporate Structure – Acquisitions and Disposals During The Track Record Period” and “Business – Food Processing Business (to commence).” There can be no assurance that our investment in DT Food will bring the anticipated strategic benefits to us. We have relatively limited experience in operating the food processing business and we may not be able to successfully integrate DT Food into our existing business.

In addition, from time to time, we may review opportunities for strategic growth through acquisitions or through investment in joint ventures (including breeding enterprises overseas). These acquisitions and investments may involve large transactions or realignment of existing investments. These transactions present financial, managerial and operational challenges, including:

• diversion of management attention from managing our existing business;

• complexities in integrating new businesses, operations, personnel, and financial and other systems;

• lack of operating experience in the new industry, geographical or product markets of the acquired business;

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• increase of the operational risks of our overseas business, such as complying with the trade barriers and other protective measures of overseas countries, different regulatory framework and environment, etc.;

• failure to achieve the anticipated synergies, cost savings or incomes, enhance opportunities resulting from the acquisition of new businesses and operate those businesses at a level of profitability acceptable to us;

• difficulty in maintaining control and supervision over the newly acquired business, including failure to implement our risk management procedures;

• potential loss of key employees and customers of the acquired business;

• assumption of and exposure to unknown or contingent liabilities of the acquired businesses;

• increased levels of debt, potentially adversely impacting our various financial ratios;

• potential disputes with the sellers or joint venture partners; and

• potential lack of common business goals and strategies with, and cooperation of, our joint venture partners.

We may experience financial or other setbacks if any of the businesses that we have acquired or may acquire or any joint ventures we have established or may establish have problems or liabilities that we are not aware of or exceed our expectations. Failure to effectively manage our acquisitions or investment in joint ventures may adversely affect our growth prospects.

Our environmental-related costs may increase if Chinese environmental protection laws become more onerous, and non-compliance with relevant environmental protection laws could lead to the imposition of fines and penalties and harm our business.

Our business is subject to extensive and increasingly stringent environmental protection laws and regulations of China. These laws and regulations require us to adopt measures to effectively control and properly dispose of dead pigs and chicken, manure, waste gases, waste water, noise and other environmental waste materials. During the breeding, farming and slaughtering of pigs and chicken, we may produce sewage, solid waste, waste gas, noise and we are subject to the restrictions of PRC environmental protection laws and regulations in relation to the discharge of such pollutants. For 2018, 2019 and 2020, the environmental protection expenses amounted to RMB27.3 million, RMB60.2 million and RMB148.6 million, respectively. We cannot assure that we will always be able to comply with all existing or future environmental protection laws or regulations. Failure to comply with these laws and regulations may result in significant consequences to us, including administrative, civil and criminal penalties, liability for damages and negative publicity. If the breach is serious, the

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PRC government may suspend or close any operation for failing to comply with such laws or regulations. We were ordered to pay penalties in the amount of RMB1.9 million, nil and RMB0.5 million for 2018, 2019, 2020 in relation to environmental protection regulations.

We have incurred environmental costs to comply with environmental protection laws. We will continue to incur costs in order to comply with environmental protection laws and regulations. In addition, new environmental issues could arise and lead to unanticipated investigations, assessments or costs. There can be no assurance that the PRC government will not change existing laws or regulations or impose additional or stricter laws or regulations, compliance with which may require us to incur significant costs and capital expenditures. We may not be able to pass such costs and capital expenditures on to our customers by increasing products prices and hence resulting in a material adverse effect on our results of operations.

We rely substantially on our external suppliers for feeds and feed ingredients and family farms to raise pigs and yellow-feathered broilers.

Feeds and feed ingredients are the main raw material we use in our operations, and a continuous and stable supply of feeds and feed ingredients that meet our standards is crucial to our operations. All of the feed ingredients we purchased were from selected suppliers during the Track Record Period. We expect to continue to rely on external suppliers for the supply of feeds and feed ingredients. We also rely on external suppliers for other raw materials such as medicines and farm equipment. There can be no assurance that we will continue to be able to source feed and raw materials meeting our requirements at reasonable prices or terms or at all. In the event that our supply of feed and feed ingredients is disrupted for whatever reason, our business, financial condition, results of operations and prospects may be materially and adversely affected. For example, during the COVID-19 outbreak, we encountered temporary feed and feed ingredients shortage due to the fact that some of our feed and feed ingredients suppliers failed to supply feeds and feed ingredients in a timely manner. For further information, please see “– The recent outbreak of COVID-19 has caused, and may continue to cause, damage to the economy and as a result may adversely affect our business, financial condition and results of operations” above.

Most of our market hogs and most of our yellow-feathered broilers are raised by family farms. There can be no assurance that we will continue to be able to contract with family farms which meet our requirements and quality standards on favourable terms or at all. In the event that our family farms operation is disrupted for whatever reason, our business, financial condition, results of operations and prospects may be materially and adversely affected.

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Our operations are subject to the risks associated with our family farms.

We cooperate with third parties under our family farm models, under which we engage third parties for sow breeding and fattening (No.2 Family Farm model), piglet fattening (No.1 Family Farm model) as well as broiler farming services (Family Farm model). We may provide family farms with sows, piglets, chicks, feeds and veterinary medicine. We may not be able to monitor the performance of these family farms as directly and efficiently as with our own farms. We cannot assure the quality of the pigs and broilers raised in our family farms. We may be liable for our family farms’ default. These events may have an impact on our profitability, financial performance and reputation, as well as expose us to litigation or damages claims. In addition, we are exposed to fraud or other misconduct committed by family farm owners, which could subject us to financial losses, third party claims, regulatory investigations or reputational damages. Although we have implemented measures to detect and deter the misconduct of family farm owners, we cannot assure you that our measures are sufficient to prevent, or that we could properly manage the conduct of family farm owners. Any such conduct committed by family farm owners could have an adverse effect on our reputation, business, financial condition and results of operations.

Our operations are extensively regulated by the PRC government and subject to inspections and examinations by Chinese regulatory authorities and various licence and permit requirements. The costs associated with compliance with such regulations and requirements can be substantial. Our results of operations and future growth prospects may be adversely affected by future changes in government regulations.

Our operations are subject to extensive regulation by PRC governmental authorities, which have broad discretion and authority to regulate many aspects of the breeding, farming, slaughtering, processing, processed pork and chicken meat production and sale in China, including setting hygiene and safety standards for production, quality standards for meat products and environmental requirements on the treatment of dead pigs and chicken, sewage and wastes; and handling filings of facility agricultural-use land. Although our products are generally not subject to any price control or regulation by the competent PRC government authorities, we cannot assure that the competent PRC government authorities will not impose price control measures in our industry in the future. In the heat of the African Swine Fever, local governments in certain regions implemented policies to regulate prices and guarantee supply. Even though the PRC government normally would not interfere with market prices directly, it may still inhibit prices indirectly through expanding import, releasing meat reserves and other measures. Our business and results of operations may be adversely affected as a result of price control measures in the pig or chicken farming industry.

In addition, we are required to obtain and maintain various licences, permits and filings in order to operate our business. These mainly include, among others, Certificate for Production and Operation of Breeding Livestock and Poultry (種畜禽生產經營許可證), Certificate for Animal Epidemic Disease Prevention (動物防疫條件合格證), Veterinary Medicine Operation Permit (獸藥經營許可證), and Feed Production Licence (飼料生產許可證). We are also required to obtain various government approvals and comply with hygiene and

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Our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position.

As at 30 April 2021, we had outstanding indebtedness of RMB6,978.0 million, which comprised borrowings and lease liabilities. This significant indebtedness could have important consequences for our business and operations including, but not limited to:

• limiting or impairing our ability to obtain financing, refinance our indebtedness, obtain share capital or debt financing on commercially reasonable terms or at all, which could cause us to default and materially impair our liquidity;

• restricting or impeding our ability to obtain financing in capital markets at attractive rates and increasing the cost of future borrowings;

• reducing our flexibility to respond to changing business and economic conditions or to take advantage of business opportunities that may arise;

• requiring us to dedicate a substantial portion of our cash flow from operations to payments of principal and interest on our indebtedness, thereby reducing the availability of our cash flow for other purposes;

• placing us at a competitive disadvantage compared to our competitors that have lower leverage ratio or better access to capital resources;

• limiting our ability to dispose of assets that secure our indebtedness or utilise the proceeds of such dispositions and, upon an event of default under any such secured indebtedness, allowing the lenders thereunder to foreclose upon our assets pledged as collateral; and

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• increasing our vulnerability to downturns in general economic, or industry conditions, or in our business.

Furthermore, the terms of our indebtedness may contain affirmative and negative covenants. Should market conditions deteriorate, or if our operating results were to be depressed, we may need to request amendments or waivers to the covenants and restrictions under our debt agreements. There can be no assurance that we will be able to obtain such relief should it be needed. A breach of any of these covenants or restrictions could result in a default that would permit our lenders to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest, trigger cross-default provisions under other debt agreements and, as applicable, cause the termination of commitments of relevant lenders to make further extensions of credit under our financing agreements or credit facilities. If we were unable to repay our indebtedness to our lenders in such an event, the lenders could, among other things, dispose of collateral, which could include substantially all of our assets. Our future ability to comply with financial covenants and other conditions, make scheduled payments of principal and interest or refinance existing borrowings depends on our business performance, which is subject to economic, financial, competitive and other factors, including the other risks described in this [REDACTED]. Any failure to comply with the covenants of our financing agreements or to obtain financing for our business could have a material adverse effect on our business, financial condition, results of operations and prospects.

We recorded net current liabilities and net operating cash outflows during the Track Record Period, and we cannot assure you that we will not continue to record net current liabilities or net operating cash outflows, which might expose us to certain liquidity risks.

As at 31 December 2018, we had net current liabilities of approximately RMB414.3 million. Please see the section headed “Financial Information – Current Assets and Current Liabilities” in this [REDACTED] for further details regarding our net current liabilities. Although we recorded net current assets of RMB1,231.3 million and RMB1,828.8 million as at 31 December 2019 and 2020, respectively, there can be no assurance that we will not have net current liabilities in the future. Significant net current liabilities could constrain our operational flexibility and adversely affect our ability to expand our business. In addition, during 2018, our net operating cash outflows amounted to RMB12.5 million. If we do not generate sufficient cash flow from our operations to meet our present and future financial needs, we may need to rely on external funding. If adequate external funds are not available on commercially reasonable terms, we may face liquidity issues and our business, financial condition and results of operations may be materially and adversely affected.

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Changes in our relationships with our major customers, or in the trade terms with these customers, may reduce our sales and profits.

Our sales to five largest customers accounted for approximately 10.0%, 9.4% and 8.6% of our total revenue for 2018, 2019 and 2020, respectively. We do not have long-term sales agreements or other contractual assurances as to future sales to these major customers. Our business could suffer significant setbacks in sales and operating income if our customers’ business plans or markets change significantly or if we lose one or more of our large customers.

In the event that we provide concessions or trade terms that are more favourable to our large customers, our profit margins may be reduced. The loss of a significant customer or a material reduction in sales to, or adverse change to trade terms with, a significant customer could materially and adversely affect our product sales, financial condition, results of operations and prospects.

We sold pigs and poultry products to dealers, and we have limited control over our dealers.

We sell a significant amount of our pig and poultry products to third party dealers, which is in line with industry norm. As at 31 December 2020, we had a total of 1,951 pig dealers, and a total of 6,344 dealers for our yellow-feathered chicks and broilers. In 2018, 2019 and 2020, a significant majority of our revenue from sales of pigs were contributed by the pig dealers, which accounted for 71.9%, 71.2% and 71.0% of the total sales of our market hogs, respectively; 42.5%, 17.8% and 26.9% of the total sales of our breeding pigs, respectively; and 86.4%, 59.6% and 36.4% of the total sales of our market piglets, respectively. For the same period, our sales through dealers accounted for 50.3%, 50.7% and 41.5% of the total sales of our chicks, respectively; and 98.9%, 98.9% and 98.8% of the total sales of our yellow- feathered broilers, respectively. Any one of the following events could cause fluctuations or declines in our revenue and could have an adverse effect on our financial condition and results of operations:

• reduction, delay or cancellation of orders from one or more material dealers;

• the quality of customer service provided by dealers, which could harm our reputation or brand image;

• failure to renew sales contracts or dealership agreement and maintain relationships with our existing dealers; and

• our ability to extend existing dealership arrangements.

Our relationships with dealers for our pig and poultry products are characterised as seller and buyer relationships which do not grant us control over their operations or inventories. We may not be able to compete successfully against larger and better-funded sales and marketing campaigns of our competitors, especially if these competitors provide their dealers with more

–52– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS favourable arrangements. We cannot assure you that we will not lose any of our dealers to our competitors, which could cause us to lose some or all of our favourable arrangements with such dealers and may result in reductions in the coverage of our dealership network or decreases in our sales volume. Any significant disruption of our sales to our dealers, including as a result of the inability or unwillingness of these dealers to continue purchasing our products, or their failure to properly manage their business, could materially and adversely affect our business, results of operations, financial condition and cash flows.

The preferential tax treatment, government grants and financial incentives that we currently enjoy may be altered or terminated, which could have a material adverse effect on our business, financial position, results of operations and prospects.

We enjoy preferential tax treatment. According to the EIT Law and the related implementation rules and the Circular of the Ministry of Finance and the State Tax Administration on Scope of Agricultural Products’ Primary processing Entitled to Preferential Policies on Enterprise Income Tax (Trial Implementation) (Cai Shui [2008] No.149) (《財政部、國家稅務總局關於發佈享受企業所得稅優惠政策的農產品初加工範圍（試行）的通知》(財稅 [2008]149號)), our Chinese subsidiaries that engage in livestock and poultry breeding, primary processing of agricultural products, are entitled to full income tax exemptions. In addition, according to the Interim Value-Added Tax Regulations of the People’ Republic of China (《中華人民共和國增值稅暫行條例》) and the relevant regulations, our Chinese subsidiaries that engage in livestock and poultry breeding and feed production, are exempt from VAT on income derived from sale of self-produced agricultural products. For more details, please see the sections headed “Financial Information – Principal Components of Consolidated Statements of Profit or Loss and Other Comprehensive Income – Taxation and preferential tax treatment – Taxation and Government Grants” and “Financial Information – Period to Period Comparison of Results of Operation – Income Tax.”

Additionally, we enjoy a number of government grants in China, including financial subsidies in relation to the introduction of breeding technology, research on breeding pig, and pig farm construction. For 2018, 2019 and 2020, we recognised total government grants amounted to RMB25.4 million, RMB30.5 million and RMB41.0 million, respectively.

There can be no assurance that the preferential tax treatment, government grants and financial incentives that we enjoy will not be altered or terminated. Any alteration or termination of our current preferential tax treatments, government grants or financial incentives could have a material adverse effect on our business, financial condition, results of operations and prospects.

We are subject to potential adverse effect in respect of our existing properties owned and leased in the PRC.

As at the Latest Practicable Date, we had not obtained filings for facility agricultural-use land and real estate ownership certificates for certain farm parcels of land and building ownership certificates for certain of our buildings, which are mainly used for office and

–53– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS production facilities. For details, please see the section headed “Business – Properties”. There is no assurance that we will not be subject to any administrative penalties for these non-compliances in the future, and if this were to happen, our business, results of operation and financial position may be adversely affected. Several of our pig and poultry farms occupied forest land. For details, please refer to the section headed “Business – Legal Proceedings and Compliance – Non-compliance” in this [REDACTED]. We may be subject to fines and administrative penalties for these defects and we may need to demolish the relevant production facilities and relocate the relevant farms. This could have an adverse effect on our business and results of operations.

For some of our leased offices and production sites in the PRC, the lessors may not be able to provide property title certificates or other documents evidencing the authorisation or consent from the property owners for subleasing. In such case, our rights in relation to such properties might not be entirely protected. Any claim or disputes related to the title of the properties leased by us may affect our ability to continue to lease such properties and may result in relocation. We cannot guarantee that the legality of our use and occupation of the relevant buildings will not be challenged. If we have to find alternative properties, additional relocation costs will be incurred, and our business operations may be disrupted, any of which may have a material and adverse effect on our business, financial condition and results of operations. Furthermore, under the PRC law, certain leases are required to be registered with the PRC government. We have several leases that have not been registered with the relevant PRC government authorities. Although non-registration of lease agreements will not affect the validity of such lease agreements, we may be subject to penalties and may result in adverse effects on our results of operations, financial position or prospects. For details, please see “Business – Properties – Leased Properties.”

We may not be able to adequately protect our intellectual property rights and technologies, which could adversely affect our business.

We believe that our current intellectual property rights including our software patent and trademarks provide protection to our business and are necessary for our operations. However, there can be no assurance that our intellectual property rights applications will be approved, our intellectual property rights will adequately protect our intellectual property, we will be able to detect breaches of our intellectual property rights, our intellectual property rights will not be challenged by third parties or found to be invalid or unenforceable, or our intellectual property rights will be effective in preventing third parties from utilising similar business models, processes or brand names to offer similar products. We may also be subject to disputes, claims or litigation involving our intellectual property rights or third-party intellectual property rights and there may be claims that we infringe third-party intellectual property rights. Any of these could disrupt our business and divert our management’s attention from our operations. The costs associated with these types of disputes, claims or litigation may be substantial and could have a material adverse effect on our brand image, business, financial condition, results of operations and prospects.

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We rely on our pig and poultry farms for our business operations. Any failure to secure renewal of the current leases of our pig and poultry farms on commercially acceptable terms or at all could adversely affect our growth prospects and business condition.

We (i) leased the collectively-owned land use right to build our own farms and (ii) leased farms directly from third-party property owners to operate our pig and poultry farms. Such leases generally have a term of 5-30 years. We cannot assure we can obtain renewal of the lease agreements upon expiry on at least the same terms or at all.

The rural land parcels we leased were obtained through contract and circulation. As provided by the Rural Land Contracting Law of the PRC (《中華人民共和國農村土地承包法》) and the Measures for the Administration of Circulation of Rural Land Contracted Management Right (《農村土地經營權流轉管理辦法》), the rural land contracted management right lawfully obtained by a contractor may be circulated by way of leasing (interchanging), shareholding or other methods in compliance with laws and national policies and family farm owners may entrust the contract-letting party or intermediary organisation to distribute the contracted management right of rural land. Pursuant to the Land Administration Law of the PRC, the land use right owned by collectives shall not be granted, transferred or leased for non-agricultural construction, except in the case of legal transfer of the land that conforms to the general plan for the utilisation of land and legally obtained by enterprises due to bankruptcy or acquisition.

There can be no assurance that the above laws and regulations will not be altered or terminated. Default risk of our lease agreements may increase if the land use right owned by collectives can be granted, transferred or leased for non-agricultural construction, in which case we will need to relocate, but may not be able to successfully find alternative sites to locate our pig or poultry farms on commercially reasonable terms, or at all. Our business operations and future growth may be adversely disrupted, and this could have a material adverse effect on our business and results of operations.

Our non-compliances with social insurance and housing provident fund contribution laws and regulations in the PRC could lead to imposition of fines and penalties.

During the Track Record Period, we did not make full contributions to the social insurance and housing provident fund for certain employees. Pursuant to the Social Insurance Law of the PRC (《中華人民共和國社會保險法》), we were informed by our PRC Legal Adviser, relevant authority may require us to pay the unpaid social insurance within a prescribed term, and pay the overdue fine equivalent to 0.05% of the unpaid amount of each late payment day. If we failed to repay the unpaid social insurance within a prescribed term, we may be fined a penalty of one to three times the amount of the unpaid social insurance. We made provisions of approximately RMB3.3 million, RMB12.7 million and RMB4.0 million, respectively, for the social insurance payments shortfall for 2018, 2019 and 2020.

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We were further informed by our PRC Legal Adviser, according to the Regulation on the Administration of Housing Provident Fund (《住房公積金管理條例》), employers shall make full contributions to the housing provident fund in a timely manner. In the event that the employers default in payment or underpay the fund as at the due date of the housing provident fund, relevant housing provident administration centres may order relevant employers to pay a supplemental provident fund within a prescribed term. If the relevant employers fail to make contributions to the provident fund within a prescribed term, applications can be submitted to the PRC courts for compulsory enforcement. This could have an adverse effect on our business and results of operations. We made provisions of approximately RMB2.9 million, RMB4.5 million and RMB8.0 million, respectively, for the housing provident fund shortfall for 2018, 2019 and 2020. For details, please refer to the section headed “Business – Legal Proceedings and Compliance – Non-compliance incidents” in this [REDACTED].

Our success depends on our ability to retain our core management team and other key personnel.

Our future business performance and prospects depend significantly on our Directors and senior management as they are in charge of the overall planning, development and execution of our business and operations. Our executive Directors including Mr. Wang Dehui (王德輝), Mr. Yao Hailong (姚海龍), Mr. Hu Wei (胡偉) and Mr. Zeng Min (曾民), who form a core management team that develops our business strategies to drive our growth. If any of our Directors and/or any members of senior management were to terminate their services or employment with us, we may not be able to find suitable replacements in a timely manner, at acceptable cost or at all. In addition, competition for qualified personnel in China is intense and the availability of suitable candidates may be limited. Failure to attract and retain key personnel could materially and adversely affect our results of operations and business prospects.

Our performance depends on favourable labour relations with our employees, and any deterioration in labour relations, shortage of labour or material increase in wages may have an adverse effect on our results of operation.

Our business is labour intensive, and our success depends on our ability to hire, train, retain and motivate our employees. As at 31 December 2020, we had a total of 7,562 employees and 68 dispatched workers. We consider favourable labour relations as an important factor that can affect our performance, and any deterioration of our labour relations could cause labour disputes, which could result in disruptions to production and operations.

Over the last three decades, China has experienced rapid economic growth, with significant increases in labour costs. Our staff costs recognised in our cost of sales, selling expenses and administrative expenses were approximately RMB280.5 million, RMB400.8 million and RMB589.4 million in 2018, 2019 and 2020, respectively. Average labour wages in China are expected to continue to increase. In addition, we may need to increase our total compensations to attract and retain experienced personnel required to achieve our business

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Our insurance coverage may not be sufficient to cover all of our potential losses.

We have purchased and maintained insurance policies that we believe are in line with the industry practice and as required by the relevant laws and regulations. For additional details of our insurance coverage, please see the section headed “Business – Insurance” in this [REDACTED]. However, we do not maintain insurance policies against product liability claims, disruptions to business operations, or third-party liability claims against claims for environmental liabilities. Any product liability claim to be made against us in the future could result in costly litigation. If there are any product liability claims, disruptions to business operations or third-party liability claims with respect to which we are not covered by insurance or in relation to which our insurance coverage is inadequate, our business, financial condition and results of operations could be materially and adversely affected.

We operate in a highly competitive industry and may face increased competition. New competitors who enter the market could have an adverse impact on our businesses and prospects.

We face intense competition in terms of safety and quality, brand recognition, costs, price and distribution. The pig and poultry farming industry in China is highly fragmented. We face increasing competition from local, national and foreign producers. Competitors may develop products of a comparable or superior quality to ours, increase cost competitiveness by improving the operating model, or adapt more quickly than we do to evolving consumer preferences or market trends. In addition, developments in government regulation have driven consolidation in the Chinese pig and poultry farming industry, with smaller operating enterprises unable to bear the increasing costs of regulatory compliance such as environmental protection regulations. The consolidation among industry participants in China may produce stronger domestic competitors as well as competitors more specialised in particular segments and geographic markets. Furthermore, our competitors may form alliances to achieve scales of operations or sales networks that would make it more difficult for us to compete. To expand market share and enter into new markets, some of our competitors may use aggressive pricing strategies, greater incentives and subsidies for customers. We may not be able to compete effectively with our current or potential competitors, and our inability to compete successfully against competitors could result in loss of market share or reduced gross profit margins, either of which could adversely impact our results of operations.

We face risks relating to fluctuations in the prices of substitute products.

Fluctuations in the market prices of substitutes for our products, especially decreases in the prices of substitute protein products (such as beef, lamb and seafood) relative to pork and poultry, affect the prices of pork and poultry products. As a result of decreases in the prices of substitute protein products relative to pork and poultry or changes in consumer habits,

–57– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS consumers may purchase less pork and poultry. Even if we are able to adjust our selling prices in response to decreases in the prices of substitute products, our profit margin may experience contraction, which would in turn have a material and adverse impact on our business, financial condition, results of operations and prospects.

Additionally, China’s pig and poultry industry has experienced problems related to food safety. For example, past outbreaks of avian influenza in various parts of the world reduced global demand for poultry and created temporary surpluses of poultry products. The surplus of poultry products placed downward pressure on poultry prices and also negatively affected meat prices including pork. While these events may not have any direct connection with us, these types of problems may cause consumers to lose confidence in the safety and quality of pork and poultry products generally and lead them to opt for other meat products that are perceived as safer. In the event that the demand for pork and poultry products is reduced, our business, financial condition, results of operations and prospects may be materially and adversely affected.

Our results of operations may fluctuate from period to period due to seasonality.

Our business is subject to seasonal fluctuations. Demand for our products is typically relatively higher in the second half of the year due to Chinese consumers’ consumption patterns. Demand for our products is also typically higher before festivals, such as Mid-Autumn Festival, China’s National Day and Spring Festival. Consequently, sales volumes of our pork and poultry products are typically higher in the second half of the year than those in the first half of the year. This seasonal trend in our financial results may be offset or amplified by fluctuations in prices of commodities that are our raw materials or products. Therefore, our interim financial results may not be indicative of our annual financial results.

Our operations may be disrupted by production difficulties due to mechanical failures, utility shortages or explosions, fires, acts of God or other calamities at or near our facilities.

We rely on machinery and equipment to achieve mass production of our products. Any mechanical failures or breakdowns could disrupt our production and cause us to incur additional costs to repair or replace the affected mechanical systems. There can be no assurance that we will not experience problems with our machinery and equipment or that we will be able to address any such problems or obtain replacements in a timely manner. Problems with key machinery and equipment in one or more of our production facilities may affect our ability to produce our products or cause us to incur significant expenses to repair or replace the affected machines or equipment. Any of these factors could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Furthermore, our production and operations depend on a continuous and sufficient supply of utilities, such as electricity, water and gas. If there are any shortages of electricity, water, gas or other utilities in regions where our production facilities are located, the local government may require our production facilities to be shut down. Any disruption in the supply

–58– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS of electricity, water or gas at our production facilities would affect our production, and could cause deterioration or loss of our products. This could adversely affect our ability to fulfil our sales orders and consequently may have an adverse effect on our business and operations.

In addition, explosions, fires, earthquakes, natural disasters or extreme weather, including droughts, floods, excessive cold or heat, typhoons or other storms could cause power outages, gas or water shortages, damage our production and processing facilities and warehouses or damage our transportation channels, any of which could significantly affect our operations. Outbreaks of health pandemics such as COVID-19 could also materially and adversely affect our business operations. There can be no assurance that similar or more serious incidents will not occur in the future or that we will be fully insured or otherwise compensated for such incidents. Any failure to take adequate measures to mitigate the potential impact of unforeseeable incidents, or to effectively respond to such incidents if they occur, could adversely affect our business, financial condition and results of operations.

Malfunctions or security breaches of our information technology systems could disrupt our operations and negatively impact our business.

We use information technology systems to monitor our production process, increase efficiencies in our facilities and inventory management, and manage and analyse our operations and financial information. We also use information technology to process financial information for internal reporting purposes and to comply with regulatory, legal and tax requirements. In addition, we rely on information technology for electronic communications with our facilities, personnel, customers and suppliers. Our information technology system may face various threats including unauthorised disclosure of information, tampering of data, cyber attacks, power outages, system configuration errors and telecommunication malfunctions. Although we have implemented protection and back-up schemes for our information technology system, these may not be sufficient. Any serious system malfunction or system failure could negatively affect our operations, financial condition and reputation. Any unauthorised disclosure of information could compromise our trade secrets, confidential information and customer information, which could in turn adversely affect our results of operation, financial condition and reputation.

Personal injuries, damage to property or fatal accidents may occur in our production facilities.

We use machinery and equipment in our production processes such as heating machines and biogas generation equipment which are potentially dangerous and may cause industrial accidents and personal injuries to our employees. In addition, our employees may violate safety measures or other related rules and regulations, which may cause industrial accidents. During the Track Record Period, there were seven accidents at our farms, resulting in the death of seven of our employees. According to the investigation reports issued by the relevant governmental authority, these incidents were purely accidents or caused by the relevant employees’ violation of standard operating procedures.

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Any significant accident could interrupt production and result in personal injuries, damages to properties, fatal accidents and legal and regulatory liabilities. In addition, potential industrial accidents leading to significant property loss or personal injury may subject us to claims and legal proceedings, and we may be liable for medical expenses and other payments to employees and their families as well as fines or penalties. As a result, our reputation, brand, business, results of operations and financial condition may be materially and adversely affected.

Our operations are subject to the general risks of litigation.

During the ordinary course of business, we may be involved in litigation or legal proceedings related to, among other things, product or other types of liability, labour disputes or sales contract disputes that could have a material and adverse effect on our financial condition. These actions could also expose us to negative publicity, which might adversely affect our brands, reputation and customer preference for our products. If we become involved in any litigation or other legal proceedings in the future, the outcome of these types of proceedings could be uncertain and could result in settlements or outcomes that adversely affect our financial condition. In addition, any litigation or legal proceedings could result in substantial legal expenses to us and distract significant time and attention of our management, diverting their attention from our business and operations.

RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC

Changes in China’s economic, political and social conditions, as well as regulatory policies, could have a material and adverse effect on our business and operations.

We are incorporated, and our operations and all of our assets are located, in the PRC. Accordingly, our financial condition and results of operations are subject to the economic, political and legal developments in China. China’s economy differs from the economies of developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. The PRC government continues to play a significant role in regulating industry development and exercise significant control over China’s economic growth through allocation of resources, controlling payment of foreign currency-denominated indebtedness, setting monetary policy, and providing preferential treatment to specific industries or companies. Some of these measures may benefit the overall PRC economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations.

While China’s economy has experienced significant growth in the past few decades, growth has been uneven across different regions and economic sectors and we cannot assure you that such growth is sustainable. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws and regulations in China could have a material and adverse effect on the overall economic growth of China. Such developments could adversely affect our business and results of operation.

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The PRC government’s control over foreign currency conversion may limit our foreign exchange transactions, including dividend payment to holders of our H Shares.

All of our income is denominated in Renminbi. Currently, Renminbi still cannot be freely converted into any foreign currency, and conversion and remittance of foreign currencies are subject to the PRC foreign exchange regulations. A portion of our income must be converted into other currencies in order to meet our foreign currency debts. Under the current PRC foreign exchange control system, foreign exchange transactions under the current account conducted by us, including the payment of dividends following the completion of the [REDACTED], do not require advance approval from the SAFE, but we are required to present written evidence of such transactions and conduct such transactions at designated foreign exchange banks within the PRC that have the requisite licences to carry out foreign exchange business. Foreign exchange transactions under the capital account conducted by us, however, must be approved in advance by the SAFE.

The policies regarding foreign exchange transactions under the current account and the capital account may not necessarily continue in the future. In addition, these foreign exchange policies may restrict our ability to obtain sufficient foreign exchange, which could have an adverse effect on our foreign exchange transactions and the fulfilment of our other foreign exchange requirements. If there are changes in the policies regarding the payment of dividends in foreign currencies to shareholders or other changes in foreign exchange policies resulting in insufficient foreign exchange, our payment of dividends in foreign currencies may be affected.

Interpretation of the PRC laws and regulations involves uncertainty and the current legal environment in the PRC could limit the legal protections available to shareholders.

Our business and operations in China are governed by the PRC laws and regulations. The legal system in the PRC is a civil law system based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. The legal system in the PRC evolves rapidly, and the interpretations of many laws, regulations and rules may contain inconsistencies. We cannot predict the effect of future legal developments in China, including the promulgation of new laws, changes in existing laws or their interpretation or enforcement, or the pre-emption of local regulations by national laws. As a result, there is substantial uncertainty as to the legal protection available to us. Furthermore, due to the limited volume of published cases and the non-binding nature of prior court decisions, the outcome of dispute resolution may not be as consistent or predictable as in other more developed jurisdictions, which may limit the legal protection available to us. In addition, any litigation in the PRC may be protracted and result in substantial costs and diversion of resources and management attention. All of these uncertainties may limit the legal protections available to our investors and Shareholders.

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The national and regional economies in the PRC and our prospects may be adversely affected by natural disasters, acts of God and the occurrence of epidemics.

Our business is subject to general economic and social conditions in the PRC. Natural disasters, epidemics and other acts of God or terrorism which are beyond our control may adversely affect the economy, infrastructure and livelihood of the people in the PRC. Some regions in the PRC are under the threat of earthquake, sandstorm, snowstorm, fire, drought, or epidemics such as Severe Acute Respiratory Syndrome, H5N1 avian flu, human swine flu, also known as Influenza A (H1N1), H7N9, Ebola virus, Middle East Respiratory Syndrome and COVID-19. Any of the foregoing may result in material disruption of our business, which in turn may adversely affect our financial condition and results of operations.

You may experience difficulties in effecting service of legal process or enforcing foreign judgments against us, our Director, Supervisors and senior management.

We are incorporated under the laws of the PRC and all of our business and operations are located in the PRC. In addition, all of our Directors, Supervisors and officers reside in the PRC and substantially all of their assets are located in the PRC. As a result, it may be difficult for investors to effect service of process upon those persons residing in China or to enforce against us or them in China any judgments obtained from non-PRC courts. The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan and many other countries. As a result, recognition and enforcement in the PRC of judgments of a court in any of these abovementioned jurisdictions may be difficult or even impossible.

On 14 July 2006, the Supreme People’s Court of the PRC and the Government of the Hong Kong Special Administrative Region signed an Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters (《關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排》) (the “2006 Arrangement”). Under the 2006 Arrangement, a party with an enforceable final court judgment rendered by any designated People’s court of China or any designated Hong Kong court requiring payment of money in a civil and commercial case according to a written choice of court agreement, may apply for recognition and enforcement of the judgment in the relevant court of China or Hong Kong court. A written choice of court agreement is defined as any agreement in writing entered into between parties after the effective date of the Arrangement in which a Hong Kong court or a Chinese court is expressly designated as the court having sole jurisdiction for the dispute. Therefore, it may not be possible to enforce a judgment rendered by a Hong Kong court in China if the parties in the dispute did not agree to enter into a choice of court agreement in writing. As a result, it may be difficult or impossible for investors to effect service of process against certain of our assets or Directors in China in order to seek recognition and enforcement of foreign judgments in China. Although the 2006 Arrangement became effective on 1 August 2008, the outcome and effectiveness of any action brought under the 2006 Arrangement remains uncertain.

–62– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

On 18 January 2019, the Supreme People’s Court of the PRC and Hong Kong entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong Special Administrative Region (《關於內地與香港特別行政區法院相互認可和執行民商事案件判決的安排》) (the “2019 Arrangement”). The 2019 Arrangement will broaden the scope of judgments that may be enforced between China and Hong Kong under the 2016 Arrangement. Whereas a choice of jurisdiction needs to be agreed in writing in the form of an agreement between the parties for the selected jurisdiction to have exclusive jurisdiction over a matter under the 2016 Arrangement, the 2019 Arrangement provides that the court where the judgment was sought could apply jurisdiction in accordance with the certain rules without the parties’ agreement. The 2019 Arrangement will replace the 2016 Arrangement when the former becomes effective. However, as at the Latest Practicable Date, the 2019 Arrangement has not become effective and no specific date has been determined as its effective date. We cannot assure you that any action brought in China by holders of H Shares to enforce a Hong Kong arbitration award made in favour of holders of H Shares would succeed.

Furthermore, although we will be subject to the Listing Rules and the Takeovers Code upon the [REDACTED] of our H Shares on the Stock Exchange, the holders of H Shares will not be able to bring actions on the basis of violations of the Listing Rules and must rely on the Stock Exchange to enforce its rules. Moreover, the Takeovers Code do not have the force of law and provide only standards of commercial conduct considered acceptable for takeover and merger transactions and share repurchases in Hong Kong.

Payment of dividends is subject to restrictions under PRC law.

Under PRC law, dividends may be paid only out of distributable profit. Distributable profit is our profit as determined under PRC GAAP or IFRS, whichever is lower, less any recovery of accumulated losses and appropriations to statutory and other reserves that we are required to make. As a result, we may not have sufficient profit or any distributable profit to enable us to make dividend distributions to our Shareholders, even in years in which we are profitable. Any distributable profit not distributed in a given year is retained and available for distribution in subsequent years.

In addition, we are required to comply with the dividend distribution rules prescribed by the PRC regulatory authorities when determining our dividend pay-out ratios. The PRC regulatory authorities may further amend the dividend distribution rules for listed companies in the future, which could significantly affect the amount of capital available to support the development and growth of our business.

Holders of H Shares may be subject to PRC taxation.

Non-PRC resident individuals and non-PRC resident enterprises are subject to different tax obligations with respect to dividends received from us or income realised upon the sale or other disposition of our H Shares in accordance with applicable PRC tax laws, rules and regulations.

–63– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

Pursuant to the PRC Individual Income Tax Law (《中華人民共和國個人所得稅法》), non-PRC resident individuals are subject to a 20% PRC individual income tax on their dividend income derived from the PRC and we are required to withhold such tax from our dividend payments. If there is an applicable tax treaty to avoid double taxation and taxation evasion between China and the jurisdiction where the foreign individual resides, the applicable tax rate shall be determined in accordance with such tax treaty. Considering that the applicable tax rate on dividends is usually 10% according to tax treaties or tax agreements and that the number of shareholders is large for a listed company, to simplify the tax administration, generally a domestic non-foreign-investment enterprise with shares listed in Hong Kong can withhold dividend income tax at a rate of 10%. There remains uncertainty as to whether income realised by non-PRC resident individuals on disposition of H Shares are subject to PRC individual income tax.

Pursuant to the Enterprise Income Tax Law (《企業所得稅法》) and other applicable PRC tax rules and regulations, non-PRC resident enterprises that do not have establishments or premises in the PRC, or have establishments or premises in the PRC but their income is not related to such establishments or premises are subject to a 10% PRC enterprise income tax rate on dividend income received from a PRC company and income realised upon the sale or otherwise disposal of equity interest in a PRC company. The 10% tax rate is subject to reduction under any special arrangements or applicable treaties entered into between China and the jurisdiction where the non-resident enterprise domiciles.

There remains substantial uncertainty as to the interpretation and implementation of the EIT Law and other applicable PRC tax rules and regulations by the PRC tax authorities, including whether and how non-PRC resident H shareholders are subject to enterprise income tax on income realised upon the sale or otherwise disposal of their H shares. In addition, the value of your investment in our H Shares may be materially affected if there were any unfavourable changes in the applicable tax rates currently stipulated by the PRC tax authorities.

For more information, please refer to “Taxation and Foreign Exchange” in Appendix III to this [REDACTED].

RISKS RELATING TO THE [REDACTED]

There has been no prior public trading market for our H Shares, an active trading market for our H Shares may not develop, and their trading price may fluctuate significantly.

Prior to the completion of the [REDACTED], no public trading market existed for our H Shares. The initial [REDACTED] range to the public for our H Shares is determined after negotiations between us and the [REDACTED], and the [REDACTED] may differ significantly from the market price for our H Shares following the [REDACTED]. There can be no assurance that an active trading market for our H Shares will develop following the [REDACTED] or, if it does develop, that it will be sustained or that the market price for our H Shares will not decline below the initial [REDACTED].

–64– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

The trading volume and market price of our H Shares may be volatile, which could result in substantial losses for investors who purchase our H Shares in the [REDACTED].

The price and trading volume of our H Shares may be highly volatile and could fluctuate widely in response to factors beyond our control. Factor impacting the price and trading volume of our H Shares include, but are not limited to, actual or anticipated fluctuations in our revenue, earnings and cash flow, changes in our pricing policy as a result of competition, potential strategic alliances or acquisitions, the addition or departure of key personnel, changes in ratings by financial analysts and credit rating agencies, fluctuations in the market prices and demand for our products, public perception or negative news about our products, unexpected business disruptions resulting from natural disasters or power shortages, our inability to obtain or maintain regulatory approval for our operations, litigation, government investigation or other legal or regulatory proceeding, or political, economic, financial and social developments in China, Hong Kong and elsewhere in the world. In addition, the Stock Exchange and other securities markets have, from time to time, experienced significant price and volume fluctuations that are not related to the operating performance of any particular company. These fluctuations may also materially adversely affect the market price of our H Shares.

Since there will be an interval of several days between the [REDACTED] and the commencement date of trading of our H Shares, holders of our H Shares are subject to the risk that the price of our H Shares could fall during the period before the trading of our H Shares begins.

The [REDACTED] of our H Shares under the [REDACTED] will be determined on the [REDACTED]. However, trading of our H Shares on the Stock Exchange will only commence after they are delivered, which is expected to be several business days after the [REDACTED]. During that period, investors of our H Shares may not be able to sell or otherwise deal in our H Shares. Accordingly, holders of our H Shares are subject to the risk that the price of our H Shares could fall before trading begins as a result of adverse market conditions or other unfavourable circumstances that may arise during the period between the [REDACTED] and the date on which the trading of our H Shares begins.

As the [REDACTED] is higher than our net tangible book value per Share, you will experience immediate dilution and you may experience further dilution if we issue additional H Shares or equity-linked securities in the future.

The [REDACTED] is higher than the net tangible book value per share issued to existing holders of our Shares. Therefore, purchasers of [REDACTED]inthe[REDACTED] will experience an immediate dilution in [REDACTED] net tangible book value while the existing holders of our Shares, including our Controlling Shareholders, will receive an increase in net tangible book value per share of their shareholdings. In addition, if we issue additional Shares or equity-linked securities in the future, purchasers of our Shares may experience further dilution in the net tangible assets book value per Share as additional Shares are issued at a price lower than the net tangible assets book value per Share at the time of their issuance.

–65– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

Future sales or perceived sales of substantial amount of our Shares in the public market and conversion of our Domestic Shares into H Shares could materially adversely affect the prevailing market price of our H Shares and our ability to raise capital in the future.

Although the H Shares beneficially owned by our Controlling Shareholders are subject to certain lock-up periods under the Listing Rules and further undertakings in favour of us, however there is no assurance that our Controlling Shareholders (whose interests may differ from those of other Shareholders) will not dispose of their Shares following the expiration of the lock-up periods. Future sales or perceived sales of substantial amount of our Shares by us or our Shareholders in the public market and conversion of our Domestic Shares into H Shares, or the perception that such offerings, sales or conversion could occur, could materially adversely affect the prevailing market price of our H Shares and our ability to raise capital in the future. In addition, our Shareholders would experience a dilution in their holdings upon the issuance of additional securities for any purpose. If additional funds were raised through our issuance of new equity interest other than on a pro-rata basis to existing Shareholders, the shareholding percentage of such Shareholders could be reduced and such new securities might confer rights and privileges that take priority over those conferred by the H Shares.

Upon the completion of the [REDACTED], we will have two classes of ordinary shares, H Shares and Domestic Shares. All of our Domestic Shares are unlisted Shares which are not listed or traded on any stock exchange. Our unlisted Shares may be converted into H Shares, and such converted H Shares can be [REDACTED] or traded on an overseas stock exchange, provided that, prior to the conversion and trading of such converted Shares, any requisite internal approval processes shall have been duly completed and the approval from the relevant regulatory authorities, including the CSRC, shall have been obtained in accordance with the regulations of the State Council’s securities regulatory authorities as well as the regulations, requirements and procedures of relevant overseas stock exchanges. The [REDACTED] of such converted Shares on the Hong Kong Stock Exchange will also require approval by the Hong Kong Stock Exchange. No class shareholder vote is required for the conversion of such Shares and the [REDACTED] and trading of the converted Shares on an overseas stock exchange. Future sales, or perceived sales, of the converted Shares in public market may adversely affect the trading price of H Shares.

Our future financing may cause dilution of your shareholding or impose restrictions on our operations.

In order to raise capital and expand our business, we may consider offering and issuing additional Shares or other securities convertible into or exchangeable for our Shares in the future other than on a pro rata basis to our then existing Shareholders. As a result, the equity interest of those Shareholders may experience dilution in net asset value per Share. If additional funds are to be raised through debt financing, certain restrictions may be imposed on our business operations, which may further limit our ability or discretion to pay dividends, increase our risks in adverse economic conditions, adversely affect our cash flows or limit our flexibility in business development and strategic plans.

–66– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

There is no assurance of whether or when we will pay dividends.

We cannot guarantee when, if and in what form or amount dividends will be paid following the [REDACTED]. The declaration of dividends is required to be proposed by our Board of Directors and is based on our business and financial performance, capital and regulatory requirements, general business conditions and other factors that our Board of Directors deem relevant. We may not have sufficient or any profits for dividend distributions in the future, even if our financial statements indicate that our operations have been profitable. For details, please refer to the section headed “Financial Information – Critical Accounting Policies and Estimates - Revenue Recognition - Dividends” in this [REDACTED].

Our Company has been, and will continue to be, controlled by our Controlling Shareholders, whose interests may differ from those of other Shareholders.

As at the Latest Practicable Date, Mr. Wang Degen (王德根) and Desheng Ronghe, a company wholly-owned by him, held approximately 39.72% of our issued Shares in aggregate. Immediately following the completion of the [REDACTED] (without taking into consideration the Shares that may be issued pursuant to the exercise of the [REDACTED]), Mr. Wang Degen (王德根) and Desheng Ronghe will own [REDACTED]% of the issued Shares in aggregate. Our Controlling Shareholders are able to control our operation and influence the selection of our senior management. Therefore, Mr. Wang Degen (王德根) will have significant influence with respect to the following matters relating to:

• our business strategies and policies;

• amendments to our constitutional documents;

• the timing and amount of dividend payments;

• mergers or other business combinations;

• acquisitions or dispositions of assets; and

• issuance of any additional Shares or other equity securities.

However, the interests of our Controlling Shareholders may differ from the interests of other Shareholders, and may therefore take actions in the future that are not in the best interests of other Shareholders.

–67– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

You should read the entire [REDACTED] carefully and should not rely on any information contained in press articles or other media in making investment decisions with respect to our H Shares.

Prior to the publication of this [REDACTED], there may have been press and media coverage regarding us and the [REDACTED], which may include certain information not contained in this [REDACTED]. We have not authorised the disclosure of any such information in the press or other media. We make no representation as to the appropriateness, accuracy, completeness or reliability of such information, and disclaim responsibility for such information. Accordingly, prospective investors are cautioned to make their investment decisions with respect to our H Shares on the basis of the information contained in this [REDACTED] only and should not rely on any other information. By applying to purchase our H Shares in the [REDACTED], you will be deemed to have agreed that you will not rely on any information other than that contained in this [REDACTED].

There can be no assurance of the accuracy or completeness of certain facts, forecasts and other statistics obtained from various public official publications from the government, market data providers and other independent third-party sources, including the industry expert report, contained in this [REDACTED].

Certain facts, forecasts and other statistics relating to China, its economic conditions and the industry in which we operate contained in this [REDACTED] have been derived from various public official publications from the government, market data providers and other independent third-party sources. We believe that the sources of the information are appropriate sources for such information, and we have taken reasonable care in extracting and reproducing such information. However, we cannot guarantee the accuracy and completeness of such information. These facts, forecasts and other statistics have not been independently verified by us, the Sole Sponsor, [REDACTED], their respective directors and advisers or any other parties involved in the [REDACTED], and none of them make any representation as to the correctness, accuracy or completeness of such information. Collection methods of such information may be flawed or ineffective, or there may be discrepancies between published information and market practice, which may result in the statistics being inaccurate or not comparable to statistics produced for other economies. You should therefore not place undue reliance on such information. In addition, we cannot assure you that such information is stated or compiled on the same basis or with the same degree of accuracy as or consistent with similar statistics presented elsewhere, and such information may not be complete or up-to-date. In any event, you should consider carefully the importance placed on such information or statistics.

–68– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT RISK FACTORS

Forward-looking statements contained in this [REDACTED] are subject to risks and uncertainties.

This [REDACTED] contains certain statements and information that are forward-looking and uses forward-looking terminology such as “believe,” “expect,” “estimate,” “predict,” “aim,” “intend,” “will,” “may,” “plan,” “consider,” “anticipate,” “seek,” “should,” “could,” “would,” “continue,” and other similar expressions. You are cautioned that reliance on any forward-looking statement involves risks and uncertainties and that any or all of those assumptions could prove to be inaccurate and as a result, the forward-looking statements based on those assumptions could also be incorrect. In light of these and other uncertainties, the inclusion of forward-looking statements in this [REDACTED] should not be regarded as representations or warranties by us that our plans and objectives will be achieved and these forward-looking statements should be considered in light of various important factors, including those set forth in this section. Subject to the requirements of the Listing Rules, we do not intend publicly to update or otherwise revise the forward-looking statements in this [REDACTED], whether as a result of new information, future events or otherwise. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements in this [REDACTED] are qualified by reference to this cautionary statement.

–69– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

In preparation of the [REDACTED], we have sought the following waivers from strict compliance with the relevant provisions of the Listing Rules:

MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rule 8.12 of the Listing Rules, an issuer must have sufficient management presence in Hong Kong. This normally means that at least two of its executive directors must ordinarily reside in Hong Kong. Rule 19A.15 of the Listing Rules further provides that the requirement in Rule 8.12 of the Listing Rules may be waived by the Stock Exchange in its discretion.

Since the business, operation and production bases of the Group are principally located, managed and conducted in the PRC, and the Group’s head office situates in and all of the executive Directors and most of the senior management members of the Group are, and will continue to be, based in the PRC, the Company considers that it would be burdensome to maintain sufficient management presence in Hong Kong for the sole purpose of satisfying the requirements under Rules 19A.15 of the Listing Rules. The Company therefore does not have, and does not contemplate in the foreseeable future that it will have a sufficient management presence in Hong Kong for the purpose of complying with the Listing Rules.

An application for a waiver from strict compliance with the requirement to have a sufficient management presence in Hong Kong under Rules 8.12 and 19A.15 of the Listing Rules has been made to the Stock Exchange and the Stock Exchange [has granted] such waiver subject to the following arrangements to ensure that there is an effective channel of communication between us and the Stock Exchange:

• Authorised Representatives: pursuant to Rule 3.05 of the Listing Rules, we have appointed and will continue to maintain two authorised representatives, namely Mr. Zeng Min, the executive Director, the secretary to the Board and the joint company secretary, and Mr. Li Kin Wai, the joint company secretary, as our authorised representatives (the “Authorised Representatives”) and the Company’s principal communication channel at all times between the Stock Exchange and the Company. We will ensure that the Directors who do not ordinarily resident in Hong Kong possesses or can apply for valid travel documents to visit Hong Kong and can meet with the Stock Exchange within a reasonable period. The Authorised Representatives will also provide their usual contact details, and each of the Authorised Representatives has confirmed that he will be readily contactable by the Stock Exchange and will be available to meet with the Stock Exchange to discuss any matters within a reasonable time frame upon request of the Stock Exchange. The Authorised Representatives have access to contact all Directors promptly at all times as and when the Stock Exchange wishes to contact the Directors on any matters. Each of the Directors, through the Authorised Representatives, can be reached by telephone, facsimile and email. The Company will also inform the Stock Exchange as soon as practicable in respect of any change in the Company’s Authorised Representatives.

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• Directors: When the Stock Exchange wishes to contact the Directors on any matter, each Authorised Representative will have all necessary means to contact all Directors (including the independent non-executive Directors) promptly at all times. To enhance communication between the Stock Exchange, the Authorised Representatives and the Directors, the Company has implemented the following measures: (i) each Director must provide his mobile number, office number, e-mail address and facsimile number to the Authorised Representatives; (ii) in the event that a Director expects to travel and/or otherwise be out of office, he will provide phone number of the place of his accommodations or other contact details to the Authorised Representatives; and (iii) the Company will provide the mobile number, office number, e-mail address, facsimile number and residential address of each Director to the Stock Exchange in accordance with Rule 3.20 of the Listing Rules.

The Company currently has one independent non-executive Director (namely, Mr. Li Ka Fai David) who is ordinarily resident in Hong Kong and he will act as additional channel of communication between the Stock Exchange and the Company.

Each of the Directors who does not ordinarily reside in Hong Kong possesses or can apply for valid travel documents to visit Hong Kong and can meet with the Stock Exchange within a reasonable period.

• Compliance Adviser: the Company has appointed Maxa Capital Limited as its compliance adviser (the “Compliance Adviser”) pursuant to Rule 3A.19 of the Listing Rules which will provide the Company with professional advice on its continuing obligations under the Listing Rules and act as an additional communication channel with the Stock Exchange for the period commencing on the [REDACTED] and ending on the date on which the Company complies with Rule 13.46 of the Listing Rules in respect of its financial results for the first full financial year commencing after the [REDACTED]. The Compliance Adviser will be available to answer enquiries from the Stock Exchange and will act as the Company’s principal channel of communication with the Stock Exchange when the Authorised Representatives are not available.

The Company has provided the Stock Exchange with the names, office telephone numbers, facsimile numbers and e-mail addresses of the Compliance Adviser’s officers who will act as the Compliance Adviser’s contact persons between the Stock Exchange and the Company pursuant to Rule 19A.06(4) of the Listing Rules.

Pursuant to Rule 19A.05(2) of the Listing Rules, the Company shall ensure that the Compliance Adviser will have access at all times to the Authorised Representatives, the Directors and other officers. The Company shall also procure that such persons will provide promptly such information and assistance as the Compliance Adviser may need or may reasonably request in connection with the performance of the Compliance Adviser’s duties as set forth in Chapter 3A and Rule 19A.06 of the Listing Rules. The Company shall ensure that there are adequate and efficient means of communication between the Company, the Authorised Representatives, the Directors and other officers and the Compliance Adviser, and will keep the Compliance Adviser informed of all communications and dealings between the Company and the Stock Exchange.

–71– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

• Legal Advisers: The Company shall also retain the Hong Kong Legal Adviser after the [REDACTED] to (i) inform the Company on a timely manner of any amendment or supplement to the Listing Rules and any new or amended laws, regulations or codes in Hong Kong applicable to the Company; (ii) to provide advice to the Company on the continuing requirements under the Listing Rules and applicable Hong Kong laws and regulations as required under Rule 19A.06(3) of the Listing Rules; and (iii) to provide advice to the Company on the application of the Listing Rules and other applicable Hong Kong laws and regulations relating to the Company after the [REDACTED].

WAIVER IN RESPECT OF JOINT COMPANY SECRETARIES

Pursuant to Rules 3.28 and 8.17 of the Listing Rules, a company secretary must be an individual who, by virtue of his or her academic or professional qualifications or relevant experience is, in the opinion of the Stock Exchange, capable of discharging the functions of a company secretary.

Pursuant to Note (1) to Rule 3.28 of the Listing Rules, the Stock Exchange considers the following academic or professional qualifications to be acceptable:

– a member of The Hong Kong Institute of Chartered Secretaries;

– a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159 of the Laws of Hong Kong); or

– a certified public accountant as defined in the Professional Accountants Ordinance (Chapter 50 of the Laws of Hong Kong).

Pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing “relevant experience”, the Stock Exchange will consider the individual’s:

• length of employment with the issuer and other issuers and the roles he or she played;

• familiarity with the Listing Rules and other relevant law and regulations including the SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Takeovers Code;

• relevant training taken and/or to be taken in addition to the minimum requirement under Rule 3.29 of the Listing Rules; and

• professional qualifications in other jurisdictions.

–72– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

The Company appointed Mr. Li Kin Wai, an Associate of The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute in the United Kingdom, who meets the requirements under Note 1 to Rule 3.28 of the Listing Rules, as a joint company secretary to work closely with and to provide assistance to Mr. Zeng Min in discharge of his functions as a joint company secretary.

For the details of Mr. Zeng Min and his experience within the Group and professional qualifications, please see “Directors, Supervisors and Senior Management” in this [REDACTED].

Accordingly, while Mr. Zeng Min does not possess the formal qualifications required of a company secretary under Rule 3.28 of the Listing Rules, we have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules such that Mr. Zeng Min may be appointed as a joint company secretary of our Company.

The waiver [was granted] for a three-year period from the [REDACTED]onthe conditions that: (i) Mr. Li Kin Wai is appointed as a joint company secretary to assist Mr. Zeng Min in discharging his functions as a company secretary and in gaining the relevant experience stipulated under Rule 3.28 of the Listing Rules; (ii) the waiver will be revoked immediately if Mr. Li Kin Wai, during the three-year period, ceases to provide assistance to Mr. Zeng Min as the joint company secretary; and (iii) the waiver can be revoked if there are material breaches of the Listing Rules by our Company. In addition, Mr. Zeng Min will comply with the annual professional training requirement under Rule 3.29 of the Listing Rules and will enhance his knowledge of the Listing Rules during the three-year period from the [REDACTED]. Our Company will further ensure that Mr. Zeng Min has access to the relevant training and support that would enhance his understanding of the Listing Rules and the duties of a company secretary of an issuer listed on the Stock Exchange. Before the end of the three-year period, the qualifications and experience of Mr. Zeng Min and the need for on-going assistance of Mr. Li Kin Wai will be further evaluated by our Company. We will liaise with the Stock Exchange to enable it to assess whether Mr. Zeng Min, having benefited from the assistance of Mr. Li Kin Wai for the preceding three years, will have acquired the skills necessary to carry out the duties of company secretary and the relevant experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further waiver will not be necessary.

CONNECTED TRANSACTIONS

We have entered into certain transactions which will constitute connected transactions of the Company under the Listing Rules after [REDACTED]. We have applied to the Stock Exchange, and the Stock Exchange [has granted], a waiver from strict compliance with the announcement requirements under Chapter 14A of the Listing Rules for our partially exempted continuing connected transactions as stated in the section headed “Connected Transactions” of this [REDACTED]. Please see the section headed “Connected Transactions” for details.

–73– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

WAIVER IN RESPECT OF PUBLIC FLOAT REQUIREMENTS

Rule 8.08(1)(a) and (b) of the Listing Rules require that there shall be an open market in the securities for which listing is sought and a sufficient public float of an issuer’s listed securities shall be maintained. This normally means that (i) at least 25% of the issuer’s total issued share capital must at all times be held by public; and (ii) where an issuer has more than one class of securities apart from the class of securities for which listing is sought, the total securities of the issuer held by public (listed on all regulated market(s) including the Stock Exchange) at the time of listing must be at least 25% of the issuer’s total issued share capital.

Based on the [REDACTED] of HK$[REDACTED] per [REDACTED] (being the low-end of the [REDACTED] range stated in this document) and assuming no exercise of the [REDACTED], the Company expects that its market capitalisation will be not less than HK$[REDACTED] at the time of [REDACTED] and that the quantity and scale of the issued securities would enable the market to operate properly with a lower percentage of public float.

We have applied to the Stock Exchange to request the Stock Exchange to exercise its discretion under Rule 8.08(1)(d) of the Listing Rules, and the Stock Exchange [has granted] our Company a waiver from strict compliance with the requirements of Rule 8.08(1)(a) of the Listing Rules, pursuant to which, the public float of the Company may fall below 25% of the issued share capital of the Company (assuming the [REDACTED] is not exercised) or such higher percentage of Shares held by the public (if the [REDACTED] is fully or partially exercised).

The Stock Exchange [has agreed to grant] the requested waiver on the conditions that:

(i) the minimum public float of the Company should be at the higher of (a) [15.0]% being the percentage of Shares to be held by the public immediately after completion of the [REDACTED], assuming the [REDACTED] is not exercised; and (b) such percentage of Shares held by the public immediately after completion of the [REDACTED], as increased by the Shares to be issued upon any exercise of the [REDACTED], of the enlarged issued share capital of the Company;

(ii) we will make appropriate disclosure of the lower percentage of public float required by the Stock Exchange in this [REDACTED];

(iii) we will as soon as practicable announce the percentage of Shares held by the public immediately after completion of the [REDACTED] (but before the exercise of the [REDACTED]) and upon any exercise of the [REDACTED] such that the public will be informed of the minimum public float requirement applicable to the Company;

(iv) we will confirm sufficiency of public float in the successive annual reports of the Company after the [REDACTED];

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(v) we will implement appropriate measures and mechanisms to ensure the continual maintenance of the minimum [REDACTED] of public float of Shares (or such higher percentage upon the completion of the [REDACTED] as increased by the Shares to be issued upon any exercise of the [REDACTED]); and

(vi) in the event that the public float percentage falls below the minimum percentage prescribed by the Stock Exchange, the Directors will take appropriate steps to ensure the minimum percentage of public float prescribed by the Stock Exchange is complied with.

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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For further information on our Directors, see “Directors, Supervisors and Senior Management”.

DIRECTORS

Name Address Nationality

Executive Directors

Mr. Wang Dehui (王德輝) No. 40-18 Faxing Street Chinese Qiantang town Hechuan District Chongqing PRC

Mr. Yao Hailong (姚海龍) No. 68 Zheng Street Chinese Pingtou Township Peng’an County, Sichuan Province PRC

Mr. Hu Wei (胡偉) No. 21, Unit 3 Chinese Tieqiao Village Chengjia town Gongjing District Zigong City, Sichuan Province PRC

Mr. Zeng Min (曾民) No. 12, Unit 1, Building 3 Chinese No. 10 Puyuan South Second Road Jinniu District Chengdu, Sichuan Province PRC

Non-executive Directors

Ms. Liu Shan (劉珊) Room 103, No. 6, Lane 41, Chinese Rongcheng Road Pudong New Area, Shanghai PRC

Mr. Xiang Chuan (向川) No 701, Unit 1, Building 18 Chinese NO 177 Tianfu Avenue Middle High-tech District Chengdu, Sichuan Province PRC

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Independent Non-executive Directors

Mr. Li Ka Fai David (李家暉) Flat C, 2/F, Pinewood Garden Chinese 39 Perkins Road Jardine’s Lookout Hong Kong

Dr. Ni Xueqin (倪學勤) No. 2002, 20/F, Unit 2, Building 15 Chinese 1111 Gongping Jiangping Road Wenjiang District Chengdu, Sichuan Province PRC

Mr. Zhang Shaohua (張韶華) No. 304, Building 6 Chinese Wanliu Fengshang Mingju Haidian District Beijing PRC

Supervisors

Ms. Zhu Hui (朱惠) No. 12, Unit 2 of Building 3 Chinese No. 9 Chuangye Road High-Tech Zone Chengdu, Sichuan Province PRC

Ms. Gong Shuang (龔爽) No. 1405, 14/F, Unit 1 Chinese Building 5, No. 788 Qingshui Binhe Road, Qingyang District Chengdu, Sichuan Province PRC

Ms. Zhou Zhexu (周哲旭) No. 3002, 30/F, Unit 2, Building 4 Chinese No. 59 Tianchang Road, High-Tech Zone Chengdu, Sichuan Province PRC

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PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor Huatai Financial Holdings (Hong Kong) Limited 62F, The Center 99 Queen’s Road Central Hong Kong

[REDACTED]

Legal Advisers to our Company as to Hong Kong law and U.S. law:

Slaughter and May 47/F Jardine House 1 Connaught Place Central Hong Kong

as to PRC law:

Beijing Kangda Law Firm 5/F, Block C International Wonderland Xindong Road, Chaoyang District Beijing PRC

Legal Advisers to the Sole Sponsor and as to Hong Kong law: [REDACTED] Jingtian & Gongcheng LLP Suites 3203-3207, 32/F Edinburgh Tower, The Landmark 15 Queen’s Road Central Hong Kong

as to PRC law:

Jia Yuan Law Office Suite 2511 Landmark 4028 Jintian Road Futian District Shenzhen PRC

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Auditors and Reporting Accountants KPMG Certified Public Accountants 8/F, Prince’s Building 10 Chater Road Central Hong Kong

Independent biological assets valuer Jones Lang LaSalle Corporate Appraisal and Advisory Limited 7/F, One Taikoo Place 979 King’s Road Hong Kong

Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. Room 2504 Wheelock Square 1717 Nanjing West Road Shanghai PRC

[REDACTED]

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Head office and principal place Unit 901-909, 9th Floor, Building 2 of business in the PRC Chengdu East Aviation Center 32 Lingang Road Shuangliu District Chengdu, Sichuan Province PRC

Registered office in Hong Kong Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

Company website [www.dekanggroup.com] (The information contained on this website does not form part of this document)

Company joint secretaries Mr. Zeng Min (曾民) No. 10, Puyuan South Second Road Jinniu District Chengdu, Sichuan Province PRC

Mr. Li Kin Wai (李健威) (HKICS, CGI) Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

Authorised representatives Mr. Zeng Min (曾民) No. 10, Puyuan South Second Road Jinniu District Chengdu, Sichuan Province PRC

Mr. Li Kin Wai (李健威) Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

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Compliance Adviser Maxa Capital Limited Unit 1908, Harbour Centre 25 Harbour Road Wanchai Hong Kong

Audit committee Mr. Li Ka Fai David (李家暉) Dr. Ni Xueqin (倪學勤) Ms. Liu Shan (劉珊)

Remuneration committee Mr. Zhang Shaohua (張韶華) Mr. Xiang Chuan (向川) Mr. Li Ka Fai David (李家暉)

Nomination committee Mr. Wang Dehui (王德輝) Mr. Zhang Shaohua (張韶華) Dr. Ni Xueqin (倪學勤)

[REDACTED]

Principal Banks Agricultural Bank of China Limited Chengdu Jincheng branch No. 8, Jinli East Road Qing Yang District Chengdu, Sichuan Province PRC

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Certain information and statistics set out in this section and elsewhere in this [REDACTED] relating to the industry in which we operate are derived from the Frost & Sullivan Report prepared by Frost & Sullivan, an independent industry consultant we commissioned. We believe that the sources of this information are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading. However, the information has not been independently verified by our Company, the Sole Sponsor, [REDACTED], any of their respective directors, employees, agents or advisers, or any other person or party involved in the [REDACTED] (except for Frost & Sullivan), and no representation is given as to its accuracy. Certain information and statistics contained herein may not be consistent with other information and statistics compiled within or outside China. As such, investors are cautioned not to place any undue reliance on the information, including statistics and estimates, set forth in this section or similar information included elsewhere in this document. For a discussion of the risks relating to our industry, please refer to the section headed “Risk Factors.”

SOURCES OF THE INDUSTRY INFORMATION We commissioned Frost & Sullivan to analyse on and prepare a report regarding China’s pig breeding and farming market, yellow-feathered broilers breeding and farming, pork market, as well as pig and poultry feed market. Frost & Sullivan is an independent global consulting firm, which was founded in 1961 in New York, offering industry research and market strategies and provides growth consulting and corporate training. We agreed to pay a commission fee of RMB560,000 to Frost & Sullivan pursuant to a service agreement reached by arm’s length negotiation. Except as otherwise noted, all of the data and forecasts contained in this section are derived from the Frost & Sullivan Report. We have also referred to certain information in the “Summary”, “Risk Factors”, “Business” and “Financial Information” sections to provide a more comprehensive presentation of the industry in which we operate. In preparing for the report, Frost & Sullivan conducted both primary and secondary research and relied on various sources. The primary research was conducted via interviews with key industry experts and leading industry participants. The secondary research involved analysis of market data obtained from several publicly available data sources, such as National Bureau of Statistics of China and other industrial associations. The market projections in the Frost & Sullivan Report are based on the following key assumptions: (i) the overall social, economic, and political environment in China are expected to remain stable during the forecast period; (ii) China’s economic and industrial development are likely to maintain a steady growth in the forecast period; (iii) related industry key drivers are likely to drive the growth of the pig breeding and farming, pork products, pig and poultry feed, and broiler market in China in the forecast period, such as rapid growth of consumption upgrade in China, favourable policies, stable demand from downstream industries and rise of scale pig farming; and (iv) there is no extreme force majeure or industry regulation in which the market may be affected dramatically or fundamentally. Our Directors confirm that, to the best of their knowledge, after making reasonable inquiries and exercising reasonable care, there is no material adverse change in the market information since the date of the relevant data contained in the Frost & Sullivan Report which may qualify, contradict or have an impact on the information in this section. CHINA’S PORK MARKET Overview Pork is the most commonly consumed meat worldwide. Pork generally consists of (i) fresh pork, which has three main categories according to the storage temperature after slaughtering, namely warm fresh pork, chilled fresh pork and frozen pork, and (ii) pork products, which are processed pork products that have additives and a different texture than the fresh pork, such as high temperature pork products, low temperature pork products, pre-prepared pork products, and others such as cured pork products, smoke dried pork products, pork snacks, etc.

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Driven by the solid growth of China’s economy and disposable income, the Chinese per capita annual expenditure increased from RMB17,111 in 2016 to RMB21,559 in 2019. As impacted by the COVID-19, the per capita annual expenditure in China declined slightly by 1.6% to RMB21,210 in 2020, yet still represented a CAGR of 5.5% from 2016 to 2020. As supported by the growing per capita disposable income in the forecast period, the per capita annual expenditure is expected to reach RMB30,016 in 2025, with a CAGR of 7.2% from 2020. As one of the most important part of Chinese meat consumption, per capita pork consumption has maintained a relatively stable growth in the past five years. Due to the African Swine Fever, the pork consumption in China temporarily declined in 2019, and gradually recovered from 2020. According to Frost & Sullivan, per capita pork consumption is projected to increase from 20.5kg in 2020 to 23.7kg in 2025 at a CAGR of approximately 3.0%. Following the trend of per capita pork consumption in recent years, the pork production in China was relatively stable during 2016 to 2018, maintained above 54.0 million tons. Due to the outbreak of the African Swine Fever in the PRC since August 2018, the pork production declined sharply by 21.3% to 42.6 million tons in 2019 and hit record low of 41.1 million tons in 2020 as African Swine Fever continued to impact China’s pig industry, representing a CAGR of -6.7% from 2016 to 2020. However, the supply decline is expected to bottom out in 2021, driven by robust slaughtering activity and inventory recovery in 2021. According to Frost & Sullivan, the pork production is expected to reach 50.0 million tons in 2021 and further increase to 57.5 million tons in 2025, with a CAGR of 6.9% from 2020 to 2025. As at 2020, China was the world’s largest pork production and consumption country, accounting for 37.6% and 43.2% of world’s pork production and consumption, respectively. Production Volume of Pork by Category (China), 2016-2025E

Growth Rate Fresh Pork Pork Products CAGR: 6.9% CAGR: -6.7% 57.5 60 55.5 56.5 30 54.3 54.5 54.0 50.0 54.0 50 20 21.6% 42.6 41.1

8.0% Growth Rate (%) 40 10 2.8% 41.8 42.8 40.6 41.4 44.6 44.6 43.8 30 -3.3% 38.9 0 1.8% 1.8% 0.5% -0.9% 33.7 32.3

(Million Tons) -3.9% 20 -10

Production Volume of Pork Volume Production -21.3% 10 -20 13.4 14.1 14.7 14.7 9.6 10.0 10.2 8.8 8.8 11.1 0 -30 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: National Bureau of Statistics, Frost & Sullivan

Market Drivers of China’s Pork Market

Continuous consumption upgrade. The substantial increase in consumption power has prompted consumers in China to seek better-quality and higher-grade foods, such as branded pork products. Such demand will become the major driving force to promote the development of pork products. Consumer’s demand for product diversity. Due to traditional dietary habit and limited variety of processed pork products, pork consumption in China has been mainly concentrated in fresh pork. In recent years, leading pork products suppliers are committed to developing various pork products with different flavours in order to meet the diverse consumption preference among different consumer groups, which is expected to drive the consumption of pork products in the near future.

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Transformation brought by the generation Z. The post-80s and post-90s, especially the generation Z which refers to the generation born in 1995-2009, have gradually become the mainstream of consumption. The new generation wants to have a more convenient and healthy lifestyle and free themselves from tedious cooking and have more demand for healthier food and convenience for direct consumption. Low-fat, low-salt pork products which are easy-to-eat and cook perfectly caters to their preferences and will inject new power into the consumption of pork products. Increasing concentration in the pig slaughtering industry. The State Council executive meeting passed the “Regulations on the Administration of Pig Slaughter (Revised Draft)《生豬屠宰管理條例(修訂草案)》 in May 2021 to better safeguard food safety of pork products. More stringent regulations on pig slaughter limiting the supply of warm fresh pork will promote the slaughter industry to upgrade its production capacity, increase industry concentration, reduce disorderly competition and increase food safety.

Trends of China’s Pork Market

Shift from warm fresh pork to chilled fresh pork. The limited availability of freshly slaughtered warm fresh pork has accelerated the conversion of warm fresh pork to chilled fresh pork, as well as the consumption shift from unbranded pork to branded pre-packaged pork and high-end pork. The African Swine Fever has also sped up this shift across the country. More diverse pork products. Generation Z have become mainstream of consumption and they want to have a more convenient and healthy lifestyle. Pre-prepared pork products are favoured by catering companies as well as central kitchens of schools and hospitals since they are easy to process and have consistent standard. According to canyin88.com (紅餐網), among the chain catering brands with over 10 outlets, 68.3% of them have adopted a central kitchen model for centralised distribution of the dishes. Central kitchen has a prominent scale effect in terms of the number of outlets. In addition, snack pork products have the advantages of convenience, rich flavours, more added-nutrition, which represent one of the future development of pork products and have a broad prospect, given that generation Z has increasing demand for such diverse pork products. Preference for healthy pork products. Chinese consumers, especially the young generation, have become more health-conscious and placed greater importance on balanced diet and diversified nutrients. Low-temperature pork products have less nutrition loss, and pork products with low-fat, low-salt, and high nutritional value, are expected to have promising market. The evolving consumer preferences for tasteful and ready-to-eat pork products and consumption structure also present significant market opportunities for industry participants and drive the pork products market growth. CHINA’S BREEDING PIG MARKET Overview of Breeding Pig

The pig breeding system includes three layers, namely Great Grandparent (GGP), Grand Parent (GP) and Parent (P). Breeding pigs mainly include purebred pigs and crossbreeding pigs. Purebreds of an animal are bred from parents of the same breed. GGP can further be categorised into nucleus breeding herd and first-level multiplying herd. The nucleus breeding herds are used for cultivation and test in the pig industry to determine the quality of breeding pigs in the breeding system. First-level multiplying herd means breeding pigs selected from nucleus breeding herd, with scale enlarged to support the production of crossbreeding pigs and market hogs. Crossbreeding pigs are breeding pigs produced by crossbreeding breeding pigs with two different breeds or varieties. In DLY crossbreed model, it specifically refers to LY (or YL) breeding pigs. Breeding pig providers focus on finding high-quality genes through introducing high quality GGP and growing GP and P-generation pigs. Compared with local breeding pigs, imported purebreds have better performance in breeding ability, feed conversion rate and speed of growth. Species of breeding imported by China mainly contain Yorkshire (約克), Duroc (杜洛克), Landrace (長白), Berkshire (巴克夏). It is most popular and commercially valuable to adopt crossbreed pigs in China’s breeding pig market.

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Breeding pigs include sows and boars. A boar can be generally mated with around 150 sows. In China, the total stock volume of breeding pigs experienced a sharp decline in 2018 to 2019 because of African Swine Fever, while it rebounded to 41.9 million in 2020, with a CAGR of 3.2% from 2016 to 2020. The total stock volume of breeding pigs will increase slightly and reach 45.3 million in 2025, representing a CAGR of 1.6% from 2020 to 2025, according to Frost & Sullivan. Total Stock Volume of Breeding Pigs (China), 2016-2025E

CAGR: 1.6% 50 CAGR: 3.2% 45.3 43.2 41.9 40.8 38.5 36.9 36.9 34.5 29.9

20.6

Total Stock Volume of Breeding Pigs (Million) Volume Stock Total 0 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: Frost & Sullivan

“Pig Cycle” and the Breeding Pig Market

The pig cycle refers to the cyclical pork price change which is affected by the supply of breeding pigs and market hogs and a full pig cycle usually last around 4 to 5 years in China. The price of breeding pig mainly depends on the species, weight, and supply and demand. On average, the price of breeding pigs has dropped slightly from RMB1,976 per head in 2016 to RMB1,830 per head in 2018 and then increased significantly to RMB4,529 per head in 2020, with a CAGR of 23.0% from 2016 to 2020. It is expected that the average price of breeding pigs had reached the peak point in 2020, and therefore the average price will go downward from 2021 to 2025, reaching RMB3,021 in 2025, with a CAGR of approximately -7.8% from 2020 to 2025. Average Price of Breeding Pigs (China), 2016-2025E

CAGR 16-20 CAGR 20-25E 8,000 23.0% -7.8%

4,529 3,638 3,675 4,000 3,339 3,208 3,145 3,105 (RMB/Head) 1,976 1,929 1,830 Average Price of Breeding Pigs Average

0 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: Frost & Sullivan

The breeding pig market in China is cyclical and the demand for breeding pig fluctuates with the demand of downstream products. From 2014 to 2018, China has experienced a “pig cycle”, and the market size in terms of revenue of breeding pig market reached the peak point in 2016 during that cycle. Due to the outbreak of the African Swine Fever in late 2018, a large

–90– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT INDUSTRY OVERVIEW number of breeding pigs were disposed. Therefore, the market size of breeding pig market dropped sharply from late 2018 to 2019. Afterwards, as the African Swine Fever has been effectively controlled, the supply for breeding pig both overseas and nationwide has recovered. In 2020, the size of breeding pig market rose significantly to RMB189.7 billion, the highest from 2016, with a CAGR of 27.0% from 2016 to 2020. In the future, according to regular “pig cycle”, the market size of breeding pig market is expected to decrease, with a CAGR of -5.8% from 2020 to 2025. Market Size of Breeding Pig Market (China), 2016-2025E

CAGR: 27.0% CAGR: -5.8%

200 189.7 212.2

150 135.8 135.7 140.5 128.7 130.8

100 72.9 66.6 74.9 54.8 (RMB Billion) 50

Market Size of Breeding Pig Market Market 0 20162017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: Frost & Sullivan

Competitive Landscape

As an industry norm, some large-scaled pig breeding companies adopt the “Company Farming” mode (as discussed below), which means some breeding pigs are only used internally and are not sold externally. For leading breeding pig providers, the majority of breeding pig is used internally so as to maintain the cultivation of market hogs. As a result, China’s breeding pig market is relatively concentrated in terms of external sales. In 2020, we were one of the top ten breeding pig providers in China in terms of sales volume. We are a leading pig supplier in terms of stock of Great Grandparent nucleus breeding herd and genetic material in the PRC. The table below shows details of our major competitors and our respective rankings in China. Top Ten Breeding Pig Providers in terms of Sales Volume (China), 2020

Breeding pig Sales volume of breeding Market share Ranking providers pigs (thousand) (%) 1 Company A 643.0 1.5% 2 Company B 350.0 0.8% 3 Company C 263.3 0.6% 4 Company D 232.8 0.6% 5 Company E 160.4 0.4% 6 Company F 90.0 0.2% 7 Company G 85.2 0.2% 8 Company H 50.0 0.1% 9 Company I 40.0 0.1% 10 The Group 23.3 0.1% Top Ten 1,938.0 4.6% Total 41,887.4 100.0%

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Notes:

1. The Group’s data is provided by the Group. 2. Company A is a listed company which focuses on raising and providing breeding pigs and market hogs. 3. Company B is a private company based in Guangxi, mainly raising and providing breeding pigs and market hogs. 4. Company C is a listed company which provides pigs and aquatic feeds. 5. Company D is a listed company which provides pigs, pork and feeds. 6. Company E is a listed company which provides pigs, poultry and feeds. 7. Company F is a private company based in Sichuan, mainly raising and providing pigs and market hogs. 8. Company G is a listed company which provides pigs and feeds. 9. Company H is a private company based in Inner Mongolia, mainly raising and providing breeding pigs and market hogs. 10. Company I is a private company based in Hebei, mainly raising and providing breeding pigs and market hogs. Source: Frost & Sullivan The breeding pig market in Southwest China which includes less than 100 breeding pig providers is also relatively concentrated. In 2020, we were one of the top five breeding pig providers in Southwest China in terms of sales volume. The table below shows details of our major competitors and our respective rankings in Southwest China. Top Five Breeding Pig Providers in Terms of Sales Volume (Southwest China), 2020

Sales volume of breeding pigs Ranking Breeding pig providers (thousand) 1 Company G 85.0 2 Company E 65.0 3 Company F 54.0 4 The Group 13.4 5 Company V 12.6 Top five 230.1

Notes:

1. The Group’s data is provided by the Group.

2. Company E is a listed company which provides pigs, poultry and feeds.

3. Company F is a private company based in Sichuan, mainly raising and providing pigs and market hogs.

4. Company G is a listed company which provides pigs and feeds. 5. Company V is a private company based in Sichuan, which provides pigs, poultry and feeds. Source: Frost & Sullivan CHINA’S PIG FARMING MARKET Value Chain

The upstream and midstream of the pig farming industry includes raw material suppliers, which consists of feed suppliers, equipment suppliers, animal health care suppliers, as well as breeding suppliers and farming companies. The downstream consists of slaughtering companies and pork products manufacturers.

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Upstream Midstream Downstream

Raw material supplier Pig farming participant Pork manufacturer

Commercial hogs Slaughtering companies Feed suppliers farming companies

Scaled farmers

Animal health Dealers care suppliers Individual farmers

Equipment Pork products suppliers Pig Breeding Suppliers manufacturers

Major Pig Farming Models

China’s pig farming models mainly include individual farming (農戶散養), “Company Farming (公司自營)” and “Company + Farmers (公司+家庭農場)” farming. “Company Farming” means a company builds farming base and employs labour force to carry out scaled farming, and is responsible for breeding, fattening and other related process. The scale farming model of “Company + Farmers” can be further divided into “Company + Piglet Fattening Farm” and “Company + Sow Breeding and Fattening Farm” according to the type of pigs the Company provides to farmers. “Company + Sow Breeding and Fattening Farm” model is the unique model pioneered and successfully promoted on a large scale by the Group in the domestic pig farming industry. We adopt a combination of “Company Farming,” “Company + Piglet Fattening Farm” and “Company + Sow Breeding and Fattening Farm” models. The table below illustrate the details of each type under “Company + Farmers” models:

Company + Piglet Fattening Farm Company + Sow Breeding and Fattening Farm

• Company provides farmers with weaned • Company provides farmers with sows, feed, piglets, feed, vaccines and drugs. The farmers vaccines and drugs when the farmer reaches the Definition fatten the pigs and return the finished pigs to the standard of the company. After the farmer company for an agreed fee raises the piglets born by the sows into finished pigs, they will returns the finished pigs to the company for an agreed fee • Easy to scale up • Reduce pig movement and transportation risk, • Scientific management system and unified which facilitates the prevention and control of Advantage epidemic prevention standards severe pandemic • Relatively low capital requirements • Asset-light model to achieve rapid expansion • Promote industrial upgrading via enabling farmers to master the full set of techniques from breeding to fattening • Higher producton cost including land, labor, • Higher entry barriers so as to develop a longer water and electricity costs compared to relationship with qualified farmers Disadvantage “Company + Sow Breeding Farm and • Require a more scientific and accurate Fattening” model cooperative model with farmers and management system. It takes relatively longer time for the Company to train farmers

Source: Frost & Sullivan

Output and Stock Volume of Pigs

The output volume of pigs which includes breeding pigs and market hogs remained relatively steady during 2016 to 2018 and decreased to 527.0 million heads in 2020, due to the outbreak of the African Swine Fever in the PRC in late 2018. As the consumer demand for pigs is strong, the output volume of pigs is expected to gradually recover in the future as the impact of African Swine Fever gradually fades and more pig farming companies expand on a larger scale. The output volume of pigs is anticipated to increase to 659.5 million heads in 2025, representing a CAGR of 4.6% from 2020 to 2025. The pig market in China is highly fragmented, where the output volume of scaled farms with an annual output of over 500 heads

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800 CAGR: -6.9% CAGR: 4.6% 100

80 700.7 702.0 693.8 600 656.4 658.9 659.5

646.3 Growth Rate (%) 613.0 60 544.2 527.0 40 400 16.3% 20 5.4% 1.6% 0.2% -1.2% -3.2% 0.4% 0.1% 0 200 -21.6% -20 Output Volume of Pigs (Million Heads) Volume Output 0 -40 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: National Bureau of Statistics, Frost & Sullivan

Similar to the output volume of hogs, the stock volume of pigs in China was also negatively impacted by African Swine Fever and environmental protection restriction in 2019. In 2020, under the promotion of the market demand and positive policy, the whole industry resumed production actively, and the year-end stock volume of pigs rose enormously to 406.5 million heads by the end of 2020. In 2021, the stock volume of pigs is expected to return to the level of normal year before African Swine Fever and reach 439.0 million heads. Looking forward, with the improvement of technology and scaled breeding and farming, the stock volume of pigs is expected to remain stable in line with the output volume of hogs and increase to 455.0 million heads in 2025, representing a CAGR of 2.3% from 2020 to 2025. Year-end Stock Volume of Pigs (China), 2016-2025E

100 CAGR: -2.1% CAGR: 2.3% 80 500 447.8 452.3 454.5 455.0 442.1 441.6 428.2 439.0

406.5 Growth Rate (%) 400 60 310.4 40 300 31.0% 20 8.0% 200 -0.1% -3.0% 2.0% 1.0% 0.5% 0.1% -27.5% 0 100 -20 Stock Volume of Pigs (Million Heads) Volume Stock 0 -40 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: National Bureau of Statistics, Frost & Sullivan

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Market Price of Pigs

The pig cycle follows the rule: pork price increases – number of sows increases – hog supply increases – pork price decreases – number of sows decreases – hog supply decreases – pork price increases. Obviously, when pork price increases, more farmers are willing to raise more pigs and, accordingly, increases hog supply, so the increase of pig supply will cause pork price to go down. The price of pigs is mainly determined by the differences between supply and demand. In 2019, the average market price of pigs rose rapidly in the face of a sharp decline in pig production due to African Swine Fever, as well as relatively stable downstream demand. In 2019, the average price of pigs reached RMB21.9 per kg. Entering 2020, the average price of pigs fluctuated at a high level, with the average price of RMB34.1 per kg, much higher than the past three pig cycles since 2006. From January 2021 to May 2021, the monthly average pig price declined from RMB35.8 per kg to RMB19.6 per kg. Looking forward, as the demand of pigs in the PRC is expected to be stable in the future, and the impact of the African Swine Fever is decreasing, the supply and price of pigs are expected to recover to the normal year level. Average Market Price of Pigs (China), January 2016-May 2021

Monthly Average Pig Price Unit: RMB per kg 40 35 30 25 20 15 10 5 0 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21

Source: Chinaswine.com (中國種豬信息網)

Market Drivers of Pig Farming Market

Improved operational efficiency. Through increasing adoption of modern management procedures and cutting-edge technologies, pig farms in China have been streamlining and optimising business operations. In addition, the transformation in China’s pig farming industry, featured by the exit of small-scale farms, and prevalence of medium- and large-scale farms, has further driven economies of scale and the operational efficiency in the entire industry. Stable downstream demand. Along with the improvement of living standard and dietary habbits, Chinese consumers’ demand for animal-based food continues to grow. Driven by the consumers’ consumption upgrading and population growth, China’s pork consumption will increase steadily. Supportive government policy. The PRC government has been a key advocate in promoting the development of the pig farming industry. Since the outbreak of African Swine Fever in 2019, the PRC government has introduced a series of policies to stabilise pig production and promote large-scale and modern farming of pig. For example, the State Council of the PRC promulgated the “Opinions on Stabilising Pig Production and Promoting Transformation and Upgrading” (《關於穩定生豬生產促進轉型升級的意見》), which calls for scaled farming operations of over 65% in 2025 and self-sufficiency of pork supply of more than 95%. Such favourable government policies have provided a sound fundamental for the development of China’s pig farming industry in the long-term.

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Market Trends of Pig Farming Market

Rising market concentration. In terms of the annual output of pigs, the proportion of scaled pig farms with no less than 500 heads of hogs increased from approximately 45.0% in 2016 to approximately 57.0% in 2020. In the coming years, with the rise of labour costs and the subsequent influence of African Swine Fever, the gap between the economy of individual farmers and large-scale hogs farming companies as well as the output efficiency has gradually widened, large-scale hogs farming companies are expected to rapidly and continuously expand their market share with the relatively low cost and advanced technology. Stricter environment regulation compliance requirement. In recent years, the PRC Government has stepped up enforcement of environmental laws and regulations such as the Environmental Protection Law, the Administrative Measures on the Prevention and Cure of Pollution Caused by Breeding of Livestock and Poultry, the Regulations on the Prevention and Control of Pollution from Large-scale Breeding of Livestock and Poultry and the Action Plan to Control Water Pollution which have led to either reconstruction or closing down a large number of small-scale market hog farming companies in the country. In 2019, the State Council issued Opinions on Stabilising Hog Production and Promoting Transformation and Upgrading, which regulated a series of hog production requirements. More scientific operations and management. Scaled business operation makes it possible for large-scale hogs farming companies in China to adopt more scientific operation and to improve the efficiency and profitability. In the meantime, these hogs farming companies are investing more resources in research and development on cutting-edge technologies and methods, which will allow hogs farming companies to significantly optimise their business operations. The intelligent management of hogs farm is expected to provide more comprehensive data and technical support for all participants, such as the government, hogs farming companies, and helps to improve operational efficiency from more aspects. Consumer demand for safe and high quality products. Food safety and quality has become one of the most important factors for Chinese consumers’ choice of food. Pig farms are using new technology and applying more reasonable management methods in their daily operation. For example, using traceable ear tags would make it possible for consumers to check the life path of hogs and better ensure the safety of the meat they purchase. The improved application of technology for food safety will drive the industry to pursue safer products and attain higher margins. Entry Barriers to Pig Farming Market

The pig farming market in China generally has the following entry barriers: • Talent barriers. Large-scale farming needs to utilise many professional technology in the process such as the breeding, feeding, epidemic prevention, etc., therefore, large-scale farming especially needs a large number of experienced technical personnel and management personnel who are specialised in breeding and disease prevention. A large-scale pig farming company can only function well through the systematic coordination and collaboration of various talents. It takes time to cultivate technical personnel and accumulate relevant experience, therefore certain talent barriers exist for new entrants.

• Technical barriers. With the development of pig farming industry from traditional and scattered mode to modern and scaled mode, the economic benefit of scaled farming depends on the efficiency of various technical skills such as breeding and farming management, animal nutrition, biological health, production management piggery construction. Building a large-scale pig farming can efficiently minimise costs and resist market risks, while it requires a high and strict technical level. • Feeding environment. Epidemic prevention is a key part of pig farming, and large-scale pig farming companies have higher requirements on the feeding environment. The pig farming location is generally required to be an area with high terrain, good isolation conditions, minimal surrounding personnel activities and minimal pollution sources. For large-scale pig farming companies, it is required that the pig farming site has a large environment that can bear the load.

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• Sales channel. A stable sales channel is an important force for the development of an enterprise. The breadth and depth of sales channel determines the development and competitiveness of large-scale pig farming companies. • Initial capital investment. It is crucial for new entrants to have sufficient capital for the construction of production sites, the purchase of production equipment and the establishment of epidemic prevention system. For players who want to achieve sizable scales in pig farming market, sufficient set-up capital is necessary, which sets a barrier for new entrants. Competitive landscape of pig market

China’s pig market is highly fragmented. According to Frost & Sullivan, the top ten players accounted for aggregate market share of 11.5% and 11.1%, respectively, in terms of the sales value of pigs and the sales volume of pigs in 2020. We ranked seventh in both terms of sales value and sales volume of pigs, respectively. Top Ten Pig Providers in Terms of Sales Value and Sales Volume (China), 2020

Sales value of pigs Market share Hogs Sales volume of hogs Market share Ranking Pig providers Ranking (RMB billion) (%) providers (million heads) (%) 1 Company A 56.3 3.1% 1 Company A 18.1 3.4% 2 Company J 46.3 2.6% 2 Company K 9.6 1.8% 3 Company K 34.8 1.9% 3 Company J 9.5 1.8% 4 Company E 24.8 1.4% 4 Company E 8.3 1.6% 5 Company L 21.2 1.2% 5 Company L 5.2 1.0% 6 Company C 8.0 0.4% 6 Company C 3.1 0.6% 7 The Group 5.7 0.3% 7 The Group 1.4 0.3% 8 Company D 3.9 0.2% 8 Company O 1.3 0.2% 9 Company M 3.8 0.2% 9 Company N 1.3 0.2% 10 Company N 3.5 0.2% 10 Company M 1.1 0.2% Top ten 208.3 11.5% Top 10 58.9 11.1% Total 1,797.7 100.0% Total 527.0 100.0%

Notes: Notes:

1. The Group’s data is provided by the Group. 1. The Group’s data is provided by the Group.

2. Company J is a listed company based in 2. Company O is a listed company based in Fujian, Guangdong, which focuses on raising and which provides feeds, and hogs. providing broilers and hogs.

3. Company K is a listed company based in Jiangxi, mainly focuses on raising and providing hogs.

4. Company L is private company based in Jiangxi, mainly focuses on raising and providing hogs. 5. Company M is a listed company based in Beijing, which provides feeds, hogs, animal vaccines, etc. 6. Company N is a listed company based in Xinjiang, which provides feeds, hogs, animal vaccines, etc.

Source: Frost & Sullivan The total revenue of top five players in Southwest China reached RMB23.9 billion in 2020. The total sales volume of top five players in Southwest China reached 5.8 million heads in 2020. The Group ranked second in both terms of the sales value and volume of hogs, with a sales value of RMB5.2 billion and sales volume of 1.2 million heads in 2020.

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Top Five Pig Providers in Terms of Sales Value and Sales Volume (Southwest China), 2020

Sales value of pigs Sales volume of pigs Ranking Pig providers Ranking Pig providers (RMB billion) (million heads)

1 Company J 9.7 1 Company J 2.0

2 The Group 5.2 2 The Group 1.2

3 Company K 3.6 3 Company E 1.1

4 Company E 3.3 4 Company K 1.0

5 Company L 2.1 5 Company L 0.5

Top five 23.9 Top five 5.8

Note: The Group’s data is provided by the Group.

Source: Frost & Sullivan

CHINA’S YELLOW-FEATHERED BROILER BREEDING MARKET Overview of Yellow-Feathered Broilers

Chicken can be broadly divided into broilers and layers by purpose. Broiler is a type of mature chicken which is grown from broiler breeds and is raised to produce chicken meat products for sale instead of laying eggs. Broilers mainly include yellow-feathered broilers and white-feathered broilers. These two types of broilers have dominated China’s broiler meat production. White-feathered broilers is closely related to the light meal market due to its higher protein, lower fat, lower cholesterol, lower calorie content and more economical and environmentally-friendly breeding costs. White-feathered broilers are more suitable for western cooking, and frying is the most common cooking method. Yellow-feathered broilers are indigenous species from China, and therefore can be domestically produced (two main varieties of which include green-footed chicken and yellow-footed chicken). Compared to white-feathered broilers, yellow-feathered broilers are more expensive due to its longer growing period. Traditionally, meat from yellow-feathered broilers is preferred by Chinese consumers as it is considered by many Chinese consumers as more flavourful and tasteful than white-feathered broiler meat, and is more suitable for Chinese cuisine, with various cooking methods. Market size of Yellow-feathered Parent Stock Broiler Breeders

Yellow-feathered parent stock broiler breeders are chickens that are bred for the purpose of producing chicks. Over the past few years, due to the impact of African Swine Fever on the pig breeding industry, the total stock volume of yellow-feathered parent stock broiler breeders in China has achieved stable growth as consumers considered chicken as alternative to pork, increased from 36.7 million sets in 2016 to 41.2 million sets in 2019. The total volume of yellow-feathered parent stock broiler breeders still represented a CAGR of 4.0% from 2016 to 2020. According to Frost & Sullivan, the total volume of yellow-feathered parent stock broiler breeders is expected to reach 45.0 million sets in 2025, representing a CAGR of 0.9% from 2020.

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Stock Volume of Yellow-feathered Parent Stock Broiler Breeders (China), 2016-2025E

Stock Volume of Parent Stock Yellow-feathered Broiler Breeders Growth rate

CAGR: 0.9% CAGR: 4.0%

50 45.0 30 43.0 42.8 43.8 41.2 40.0 41.5 37.5 25 40 36.7 34.9 20 Growth Rate (%) 30 15 (Millions Sets) 20 10 5 10 9.9% 7.4% 4.3% 3.8% 3.1% 2.3% 2.7% 0 -4.9% 0 -7.0% -5 -10 -10 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E Stock Volume of Yellow-feathered Parent Stock Broiler Breeders Parent Yellow-feathered of Volume Stock Source: China Animal Agriculture Association (“CAAA”), Frost & Sullivan Driven by the temporary shift from pork consumption to other protein such as chicken consumption due to African Swine Fever, the market size of yellow-feathered parent stock broiler breeders in terms of revenue in China has achieved high growth, increased from RMB183.6 million in 2016 to RMB400.1 million in 2020, representing a CAGR of 21.5% from 2016. The sharp growth of 55.2% from RMB248.7 million in 2018 to RMB385.9 million in 2019 was mainly due to the substantial price growth of yellow-feathered parent stock broiler breeders, while the stock volume maintained a relatively stable increase. The market size of yellow-feathered parent stock broiler breeders is expected to reach RMB450.0 million in 2025, representing a CAGR of 2.4% from 2020. Market Size of Yellow-feathered Parent Stock Broiler Breeders (China), 2016-2025E

Market Size of Yellow-feathered Parent Stock Broiler Breeders Growth rate

CAGR: 2.4% CAGR: 21.5% 500 60 450.0 419.4 433.6 400.1 400.5 400 385.9 380.0 50 40 Growth Rate (%) 300 248.7 55.2% 30 (RMB Millions) 200 183.6 192.0 20 100 29.5% 3.7% 10 4.6% 5.4% 4.7% 3.8% -5.0% 3.4% 0 0

-100 -10 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E Market size of Yellow-feathered Parent Stock Broiler Breeders Parent Yellow-feathered size of Market Source: CAAA, Frost & Sullivan

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Competitive Landscape of Yellow-feathered Parent Stock Broiler Breeding Market in China China’s yellow-feathered parent stock broiler breeding market is relatively concentrated. The top five players accounted for aggregate market share of 36.8% and 29.0%, respectively, in terms of the sales value and sales volume of yellow-feathered Parent Stock DOCs in 2020. We were the largest yellow-feathered parent stock broiler breeder provider in terms of both the sales value and sales volume of yellow-feathered Parent Stock DOCs, with a market share of 13.3% and 9.8%, respectively, in 2020. Top Five Yellow-feathered Parent Stock Broiler Breeder Providers in Terms of Sales Value and Sales Volume (China), 2020

Yellow-feathered Sales value of Yellow-feathered Sales volume of Parent Stock yellow-feathered Market Share Parent Stock yellow-feathered Market Share Ranking Ranking broiler breeder Parent Stock DOCs (%) broiler breeder Parent Stock DOCs (%) providers (RMB million) providers (million sets) 1 The Group 53.2 13.3% 1 The Group 4.2 9.8%

2 Company J 52.0 13.0% 2 Company J 4.0 9.3%

3 Company P 20.0 5.0% 3 Company P 2.0 4.7%

4 Company Q 20.0 5.0% 4 Company Q 2.0 4.7%

5 Company R 2.0 0.5% 5 Company R 0.2 0.5%

Top five 147.2 36.8% Top five 12.4 29.0%

Total 400.1 100.0% Total 43.0 100.0% Notes: 1. The Group’s data is provided by the Group. 2. Company P is a private yellow-feathered broiler breeding company based in Foshan, which operates poultry breeding and farming. 3. Company Q is a private yellow-feathered broiler breeding company based in Nanning, which operates poultry breeding and farming. 4. Company R is a private yellow-feathered broiler breeding company based in Chengdu, which operates poultry breeding and farming. Source: Frost & Sullivan CHINA’S YELLOW-FEATHERED BROILER MARKET Market Size of Yellow-Feathered Broilers The output volume of yellow-feathered broilers in China remained steady from 2016 to 2018, and increased rapidly from 3,963.0 million birds in 2018 to 4,559.0 million birds in 2019, due to the decrease in pork supplies as a result of the outbreak of African Swine Fever in China in 2019, and subsequently increased demand for poultry drove the expansion of the yellow-feathered broiler industry. However, in 2020, this increase started to slow down due to the recovery of China’s swine herd. In addition, the outbreak of COVID-19 also had an impact on the yellow-feathered broiler industry in the long-run. Live bird markets and wholesale wet markets are the primary sales outlets for yellow-feathered broilers, as opposed to factories, canteens, and fast food restaurants in the case of white-feathered broilers. Since January 2020, many live bird markets have been closed due to COVID-19 concerns and although most Chinese cities have lifted transportation restrictions, many live bird markets remained closed. As such, the output volume of yellow-feathered broilers declined to 4,432.0 million birds in 2020. Output Volume of Yellow-feathered Broilers (China), 2016-2025E

CAGR: 4.4% 6,000 CAGR: 3.2% 5,500.0 5,182.6 5,000 4,770.0 4,889.3 4,559.0 4,432.0 4,500.0 3,907.0 3,963.0 4,000 3,690.0

3,000

2,000 (Million Birds)

1,000

0 20162017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E Output Volume of Yellow-feathered Broilers Yellow-feathered of Volume Output Source: CAAA, Frost & Sullivan

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The average wholesale price of yellow-feathered broilers realised a rapid growth from RMB13.0 per kg in 2016 to RMB16.7 per kg in 2019, which was primarily attributable to the shortage of pork as affected by the African Swine Fever outbreak since late 2018. As China’s hog and pork supply recovered in 2020, the poultry prices have weakened. In addition, due to the overcapacity, decline in catering service revenue and COVID-19 restrictions in 2020, the average wholesale price of yellow-feathered broilers dropped significantly in 2020. Average Wholesale Price of Yellow-feathered Broilers (China), 2016-2020

(RMB per kg) 20

16.7 15.7

15 14.3 13.0 13.3

10 2016 2017 2018 2019 2020

Source: CAAA

The market size of yellow-feathered broilers grew rapidly from RMB76.2 billion in 2016 to RMB144.6 billion in 2019, supported by both of the output volume and average market price. However, it dropped to RMB112.0 billion in 2020, which was primarily attributable to the decline in the market price of yellow-feathered broilers due to the overcapacity, decline in catering service revenue and COVID-19 restrictions in 2020. Due to the achievements of COVID-19 prevention and control as well as economic development, the market size of yellow-feathered broilers is expected to recover since 2021, with a CARG of 8.3% from 2020-2025, according to Frost & Sullivan. Market Size of Yellow-feathered Broilers (China), 2016-2025E

CAGR: 8.3% 200 CAGR: 10.1% 167.2 153.6 150 144.6 142.1 131.4 119.7 111.6 112.0 100 87.2 76.2 (RMB Billion) 50

Market Size of Yellow-feathered Broilers Yellow-feathered Size of Market 20162017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: CAAA, Frost & Sullivan

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Market Drivers

Growth of China’s economy and sustained urbanisation. With the steady growth of China’s economy and continuing urbanisation, the level of consumption has increased, and increasing number of Chinese consumers are willing to consume high-protein and low-fat meat, such as chicken meat. Thriving new retail models and Chinese cuisine market. Broilers manufacturers leverage the thriving online retail model and China’s fast and convenient delivery network to penetrate into regional markets. The emergence of data-driven new retail models and the efficient supply chain have driven the sales of chilled/frozen chicken products and offered superior customer experience in recent years. In addition, Chinese cuisine, as a major consumption scenarios for yellow-feathered broilers accounted for the largest part in China’s catering market, showed a growing trend during the past several years, and is expected to increase at a CAGR of 13.3% from 2020 to 2025. These have transformed the yellow-feathered broilers industry in China and is expected to drive up chicken consumption. Scale development and industry chain extension. Industrial scale development helps reduce management costs and facilitates the implementation of new technologies. The integration of the broiler industry is expected to improve the product quality and safety and extend the industry chain to downstream deep-processing to enhance the value of the products, such as prepared chicken, and chicken snacks. Moreover, compared with companies that participated in only part of the value chain, integrated companies are expected to guarantee the supply of upstream raw materials, the stability of raw material prices, and the quality of downstream products. Therefore, integrated companies with whole industry chain can better step over the “chicken cycle” (as discussed below). Diversified chicken offerings to meet consumers’ various demand. The chicken products on the market are becoming increasingly diversified in terms of variety, such as green-footed chicken and yellow-footed chicken as well as in terms of eating, to cater for consumers’ various needs and the consumption habits of different regions. As a result, more consumer groups are expected to be covered in the future. Changes in consumption structure and nutritional structure. With changes of consumption habits, consumers pay more and more attention to healthy diet. Lower fat, lower calories, less sugar as well as rich in fibre and nutrition has gradually become a consumer trend. Due to its advantages of low fat and high protein, chicken is expected to have a better development in the future. Market Trends

Branding. Since there are only a few well-known chilled products brands, there is still a gap in the brand awareness of the yellow-feathered broilers downstream market. Consumers are not familiar with brands of chilled and deep processed foods, so the consumption volume of these products are relatively small. In the future, with the development of the chilled products and the establishment of downstream deep processed food brands, it is expected that the consumption of yellow-feathered broilers will gradually increase in the future. Changes in business model. “Company + farmer” is currently the main production method for companies. However, due to the high cost of supervision, quality control problem and other issues, business model of “company + farmer” is expected to shift to integrated operation in the future. Integrated operation helps companies strengthen control over the supply of upstream products, and better supervises production process, which can effectively reduce the diseases occurrence. Chilled and deep processed products. Traditionally, over 80% of yellow-feathered broilers are sold live. However, the number of live markets and urban wet markets are shrinking due to the avian influenza outbreak and COVID-19, as a result, increasingly large number of yellow broilers are being slaughtered outside of populated areas and brought to market chilled. Large poultry producers have increased their new chilled products, including

– 102 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT INDUSTRY OVERVIEW pre-cut packages for convenience in home preparation. Companies are more willing to develop more products. As such, diversification of products has been improved, and consumer groups are further expanded. Consumers are becoming increasingly receptive to deep processed products. Entry Barriers of China’s Yellow-feathered Broilers The yellow-feathered broiler market in China generally has the following entry barriers: • Capital investment. Since there are many types of yellow-feathered broilers, this puts forward higher requirements on breeding equipment. Companies generally purchase automatic breeding and slaughtering facilities to improve product quality and efficiency, which requires a large capital investment. This can be a financial burden for small manufacturers and new market entrants. In addition, the current broiler farming is developing towards integration. The plant equipment and testing instruments required for livestock and poultry breeding, feed production, and epidemic prevention construction all require large capital investment. Therefore, capital investment is one of the entry barriers for the new market entrants. • Technology barriers. Influenced by the outbreak of H7N9 in 2014, African Swine Fever in 2018 and COVID-19 in 2019, consumers pay more attention to food safety. Therefore, manufacturers need to adopt advanced technologies to monitor the real-time conditions of farms and slaughterhouses in order to detect and control the outbreak of the epidemic in time. In addition, in order to respond to the increasing requirements in the market, manufacturers also need to adopt better feed formulation technology, disease prevention and control technology. Therefore, the technologies including disease prevention, food safely, and processing create entry barriers for new entrants. • Talents barriers. With the expansion of production scale, the companies continuously introduce new technologies and develop towards scale and integration, which have higher requirements for the professional ability of employees. Therefore, companies need to carry out employee skills training to ensure that the capabilities of employees match the update iterations of technical equipment. This constitutes the talent barrier for new companies entering the market. Competitive Landscape China’s yellow-feathered broilers market is relatively concentrated. The top five players accounted for aggregate market share of 32.1% and 35.5%, respectively, in terms of the sales value and the sales volume of yellow-feathered broilers in 2020. The Group ranked third in terms of both sales value and sales volume of yellow-feathered broilers in 2020, with market share of 2.0% and 1.6% in 2020, respectively. Top Five Yellow-feathered Broilers Providers in Terms of Sales Value and Sales Volume (China), 2020

Yellow-feathered Sales value of yellow-feathered Market Share Yellow-feathered Sales volume of yellow-feathered Market Share Ranking Ranking broilers providers broilers (RMB billion) (%) broilers providers broilers (million birds) (%)

1 Company J 22.9 20.4% 1 Company J 1,037.0 23.4%

2 Company S 7.3 6.5% 2 Company S 323.0 7.3%

3 The Group 2.2 2.0% 3 The Group 72.4 1.6% 4 Company T 1.8 1.6% 4 Company T 70.0 1.6%

4 Company U 1.8 1.6% 4 Company U 70.0 1.6%

Top Five 36.0 32.1% Top Five 1,572.4 35.5%

Total 112.0 100.0% Total 4,432.0 100.0%

Notes: 1. The Group’s data is provided by the Group. 2. Company S is a listed agriculture company, headquartered in Jiangsu. It principally engaged in breeding and sales of yellow-feathered broilers, pigs and geese. 3. Company T is a private company, headquartered in Guilin. It principally engaged in grain, oil, livestock and poultry breeding, etc. 4. Company U is a private company, headquartered in Guangxi. It principally engaged in poultry and broiler breeding. Source: Frost & Sullivan

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In Southwest China, the Group ranked second in terms of both sales value and sales volume of yellow-feathered broilers in 2020. Top Three Yellow-feathered Broilers Providers in Terms of Sales Value and Sales Volume (Southwest China), 2020

Sales value of yellow- Sales volume of yellow- Yellow-feathered Yellow-feathered Ranking feathered broilers Ranking feathered broilers broilers providers broilers providers (RMB million) (million birds)

1 Company J 1,813.0 1 Company J 70.0

2 The Group 1,192.5 2 The Group 34.1 3 Company S 400.0 3 Company S 15.0

Top three 3,405.5 Top three 119.1

Notes:

1. The Group’s data is provided by the Group. 2. Company J is a listed company based in Guangdong, which focuses on raising and providing broilers and hogs. Source: Frost & Sullivan

IMPACT OF AFRICAN SWINE FEVER ON PIG AND BROILER FARMING INDUSTRY Impact on Pig Farming Industry

Hog production and price. As the African Swine Fever intensified in the second half of 2018, the stock volume of sows and supply of hogs has dropped sharply. Therefore, the price of hogs witnessed a rapid increase from 2018 to 2019, rising from RMB12.7 per kg to RMB21.9 per kg. The average price of hogs continues to increase and reached RMB34.1 per kg in 2020 and it is expected to slightly decrease in 2021. Establishment of a pig epidemic prevention system. According to the “Opinions on Strengthening the Prevention and Control of African Swine Fever” (《關於加強非洲豬瘟防控工作的意見》) issued by the State Council in 2019, it is necessary to strengthen the sharing of departmental information systems, implement “Internet +” supervision of all links in the prevention and control of the African Swine Fever. The monitoring of pig epidemic prevention has been further improved by using information intelligence, and big data to ensure the development of pig farming industry in the future. Impact on Broiler Farming Industry

Promotion of chicken meat consumption. Driven by the substitution effect of protein sources impact by the African swine fever outbreak in late 2018, the consumption of white-feathered broilers increased, and consumption continues to increase in 2019. Since demand exceeds supply, the price of white-feathered broilers has risen. The substitution effect gradually shift from white-feathered broilers to yellow-feathered broilers, and therefore also become a driver for the price of yellow-feathered broilers. Influence on chicken cycle. A chicken cycle operates as: chicken price increases – number of parent breeders increases – commodity chicks supply increases – broilers supply increases – chicken price decreases – commodity chicks demand decreases – number of parent broilers decreases – commodity chicks supply decreases – broilers supply decreases – chicken price increases. A full chicken cycle in the PRC usually lasts around three years. Due to the influence of external factors in recent years, such as avian influenza and the African Swine Fever, the chicken cycle was disturbed and lengthened to approximately four years.

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Promotion of the cold chain development. Long-distance transportation of live livestock and poultry is an important cause of the spread of animal epidemics. Restriction on the long-distance transportation of live livestock and poultry can prevent the spread of animal diseases. While actively responding to the impact of African Swine Fever on the pig industry chain, China has also strengthened defensive measures in poultry and pig industries. The live poultry transactions are being gradually cancelled, and therefore promote the development of chilled fresh products. Triggered by the African Swine Fever, consumers pay more attention to food health. Therefore, the development of cold chain technology is further promoted. CHINA’S PIG AND POULTRY FEED MARKET

Overview

Feeds for pig and poultry account for the majority of the costs for daily rearing operation, which can be classified into compound feed (配合飼料), concentrate feed (濃縮料), and premix feed (預混料). Feeds for pig and poultry primarily consist of corn and soybean meal. The market prices for corn and soybean meal are subject to various factors, including demand and supply dynamics, government policies, weather conditions, pests and other acts of nature. For the past few years, the average market price for both corn and soybean meal has been relatively stable with a mild uptrend. And it is expected to remain such trend from 2020 to 2025, according to Frost & Sullivan.

Average Market Price of Corn and Soybean Meal (China), 2016-2020

Corn Soybean Meal

3,000 6,000

2,500 2,333 5,000 2,076 2,016 1,907 2,040 2,000 4,000 3,298 3,345 3,418 3,222 3,336 1,500 3,000

1,000 2,000

500 1,000

0 0 Average Market Price (RMB per Ton) 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Average Market Price of Corn (RMB per Ton)

Source: Ministry of Agriculture and Rural Affairs of China

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Price of Pig Feed and Broiler Feed in China

For the past few years, the market prices for both compound feed and concentrate feed for pig and broiler have been relatively stable with a mild uptrend, and it is expected to remain steady or slightly increase from 2020 to 2025. The market price for premix feed for both pig and broiler witnessed a downward trend from 2018 to 2020. Average Market Price of Pig Feed Average Market Price of Broiler Feed (China), 2016-2020 (China), 2016-2020

Compound feed Compound feed Concentrate feed Concentrate feed Premix feed Premix feed 5.9 6.0 6.0 5.8 d 7 6 5.6 e 6.1 6.2 6.3 e F 6 g 5.0 5.3

i 5.2 5 5.0 5.0 4.2 4.3 P

f 5 3.8 3.8 3.9 o 4 e

c r i 4.8 4.7

r 4 e p P

3 t B e 3 3.1 3.1 3.1 3.0 3.1 k

M 3.4 r 3.1 3.1 3.2 (RMB per kg) R a 2.9 2 (kg) 2 M

g 1 1 a r e v 0 0 Average Market Price of Brolier MarketAverage Brolier Price of Feed A 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

Source: CAAA

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POLICIES RELATING TO LIVESTOCK AND POULTRY BREEDING, FEED PRODUCTION AND FOOD PROCESSING INDUSTRY

In recent years, China has put in place comprehensive laws and regulations for the husbandry and related industries, which are mainly based on the Animal Husbandry Law of the PRC (《中華人民共和國畜牧法》), which was approved by the Standing Committee of the NPC on 29 December 2005 and implemented on 1 July 2006, and last amended on 24 April 2015 and implemented on the same date, the Animal Epidemic Prevention Law of the PRC (《中華人民共和國動物防疫法》) (the “Animal Epidemic Prevention Law”), which was approved by the Standing Committee of the NPC on 3 July 1997 and implemented on 1 January 1998, and last revised on 22 January 2021 and implemented on 1 May 2021, the Food Safety Law of the PRC (《中華人民共和國食品安全法》), which was approved by the Standing Committee of the NPC on 28 February 2009 and implemented on 1 June 2009, and last amended on 29 April 2021, the Agricultural Product Quality and Safety Law of the PRC (《中華人民共和國農產品質量安全法》) approved by the Standing Committee of the NPC on 29 April 2006 and implemented on 1 November 2006, and last amended on 26 October 2018.

Establishment and Operation of Livestock and Poultry Farms

Record Filing of Livestock and Poultry Farms

According to the Animal Husbandry Law of the PRC, the entity establishing a livestock and poultry farm or breeding area shall file the name, address of the farm and breeding area, species of livestock and poultry as well as scale of breeding for record with the stockbreeding and veterinary administrative department under the people’s government at the county level where the farm or breeding area is located, and to obtain labels and codes for the livestock and poultry. To establish a livestock and poultry farm or breeding area, an entity should meet the following conditions:

(1) To have production premises and supporting facilities commensurate with its scale of breeding;

(2) To have animal husbandry and veterinary technicians in its service;

(3) To possess the conditions for epidemic prevention, as provided for by laws and administrative regulations and the provisions of the stockbreeding and veterinary administrative department of the State Council;

(4) To have facilities such as firedamp pool for the comprehensive utilisation of the livestock dung, waste water and other solid wastes, or having other innocuous disposal facilities; and

(5) To meet other conditions provided for by laws and administrative regulations.

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Production and Operation of Breeding Livestock and Poultry

According to the Animal Husbandry Law of the PRC, an entity or individual engaged in the production and operation of breeding livestock and poultry or in the commercial production of new born livestock and poultry shall obtain a licence for production and operation of breeding livestock and poultry. An applicant shall meet the following conditions in order to be granted with the licence for production and operation of breeding livestock and poultry:

(1) The breeding livestock and poultry for production and operation must be the breeds and the synthetic strains that have gone through the verification or identification by the national commission for genetic resources of livestock and poultry, or the breeds and synthetic strains introduced from abroad upon approval;

(2) To have animal husbandry and veterinary technicians commensurate with the scale of production and operation;

(3) To have the breeding facilities and equipment commensurate with the scale of the production and operation;

(4) To meet the conditions for epidemic prevention among the breeding livestock and poultry, as provided for by laws and administrative regulations and the provisions of the stockbreeding and veterinary administrative department of the State Council;

(5) To have sound systems for quality control and for recording the breeding of strains; and

(6) To meet other conditions as provided for by laws and administrative regulations.

Animal Epidemic Prevention

According to the Animal Epidemic Prevention Law, the entity operating the animal farms and quarantine facilities, animal slaughtering and processing facilities, as well as facilities for innocuous treatment of animals and animal products shall apply to the competent agricultural and rural authorities of the local people’s government at or above the county level for a certificate for animal epidemic disease prevention. Animal farms, quarantine facilities, animal slaughtering and processing facilities and facilities for innocuous treatment of animals and animal products shall comply with the following requirements:

(1) The facilities are located at a distance from public places, such as residential areas, sources of drinking water, schools and hospitals as prescribed by the competent department of agriculture and rural affairs of the State Council.

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(2) The enclosure and isolation of the production and operation area and the engineering design and relevant processes shall meet the requirements for animal epidemic prevention.

(3) The sewage and waste treatment facilities, the facilities and equipment for the innocuous treatment or refrigeration of animals dead of diseases and products of diseased animals, and the facilities and equipment for cleaning and disinfection shall be commensurated with their scale.

(4) The licensed veterinarians or technicians for animal epidemic prevention shall be commensurated with the scale.

(5) Animal epidemic prevention systems on isolation and disinfection, purchase and sale records and routine inspection shall be sound.

(6) Other conditions for animal epidemic prevention as prescribed by the competent department of agriculture and rural affairs of the State Council shall be met.

(7) In addition to meeting the conditions prescribed in the preceding paragraph, there shall be pathogen detection equipment, detection capability, and special vehicles in compliance with the requirements for animal epidemic prevention.

Prevention and Control of African Swine Fever

The prevention and control of African Swine Fever are mainly governed by the Animal Epidemic Prevention Law of the PRC, the Regulation on Handling Major Animal Epidemic Emergencies (《重大動物疫情應急條例》), which was issued by the State Council on 18 November 2005 and implemented on the same date, and last amended on 7 October 2017, the Regulation on the Administration of Slaughtering of Pigs (《生豬屠宰管理條例》), which was issued by the State Council on 19 December 1997 and implemented on 1 January 1998, and last amended on 6 February 2016, the National Plan for Handling Major Animal Epidemic Emergencies (《國家突發重大動物疫情應急預案》), which was issued by the State Council on 27 February 2006 and implemented on the same date, and Measures for Administration of Animal Quarantine (《動物檢疫管理辦法》) which was issued by the former Ministry of Agriculture on 24 May 2002 and implemented on 1 July 2002, and revised by the MARA on 25 April 2019 and implemented on the same date.

Pursuant to the requirements of the Opinions of the General Office of the State Council on Strengthening Prevention and Control of African Swine Fever (Guo Ban Fa [2019] No. 31 (《國務院辦公廳關於加強非洲豬瘟防控工作的意見》(國辦發[2019]31號)) issued by the General Office of the State Council on 22 June 2019 and implemented on the same date, local people’s governments are responsible for implementing measures to strengthen the prevention and control of African Swine Fever. This policy encourages the promotion of standardised large-scale farming of pigs and gradual reduction of the proportion of free-range farming, and urges the implementation of farming management systems such as closed farming and

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According to the requirements of the Notice of the Ministry of Agriculture and Rural Affairs on Effectively Strengthening the Supervision of the Movement of Live Pigs and Their Products (《農業農村部關於切實加強生豬及其產品調運監管工作的通知》) (Nong Ming Zi [2018] No. 29) (issued by the MARA on 31 August 2018 and implemented on the same date), live pigs and their products shall not be transported from high-risk to low-risk areas; breeding pigs from the infected province shall be subject to laboratory testing and quarantine for African Swine Fever before they can be transported out of the province; and inter-provincial transportation of pigs by land shall be diverted around the affected province. According to the requirements of the Notice of the Ministry of Agriculture and Rural Affairs on Further Strengthening the Supervision of Inter-provincial Transport of Live Pigs and Their Products (Nong Ming Zi [2018] No. 33) (《農業農村部關於進一步加強生豬及其產品跨省調運監管的通知》)(農明字[2018]第33號)) (issued by the MARA on 11 September 2018 and implemented on the same date), the provinces adjacent to the province where the African Swine Fever occurred shall suspend inter-provincial transport of live pigs and temporarily shut down all the live pig trading markets in those provinces. The suspension period shall span from the occurrence of the epidemic in any neighbouring province to the lifting of the blockade in all its neighbouring provinces.

According to the requirements of the Notice of the Ministry of Agriculture and Rural Affairs on Regulating the Transport of Live Pigs and Pig Products (Nong Mu Fa [2018] No. 23) (《農業農村部關於規範生豬及生豬產品調運活動的通知》)(農牧發[2018]23號)) (issued by the MARA on 27 December 2018 and implemented on the same date), breeding pigs and market piglets from the counties other than the infected areas are subject to testing and quarantine for African Swine Fever before they can be transported out of the province.

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The Opinions of the General Office of the State Council on the Stabilisation of Live Pig Production to Promote the Transformation and Upgrading (Guo Ban Fa [2019] No. 44) (《國務院辦公廳關於穩定生豬生產促進轉型升級的意見》)(國辦發[2019]44號)) requires more convenient measures to facilitate the transportation of eligible breeding pig and piglets, and prohibits sanctions and restrictions at all levels; it instructs the inclusion of piglets and chilled pork into the scope of the “Green Channel” policy for the transport of fresh and live agricultural products. At the same time, it requires the relevant authorities to observe the objective requirements of pork consumption upgrade and pig disease prevention and control to realise the shift from “pig transport” to “pork transport”, and gradually reduce the long- distance cross-province/region/city transport of live pigs. It also requires the relevant authorities to strengthen the coupling of production and sale of live pigs in large areas, and the main pig-selling provinces should take the initiative to establish long-term and stable relations with the main pig-producing provinces, so as to achieve a general balance between supply and demand in such areas. In principle, live pigs must not be transported across a large distance, except for breeding pig and piglets. According to the Emergency Notice of the General Office of the Ministry of Agriculture and Rural Affairs, General Office of the National Development and Reform Commission, General Office of the Ministry of Transport on Solving the Current Actual Difficulties and Accelerating Resumption of Work and Production in the Farming Industry (Nong Ban Fa [2020] No. 14) (《農業農村部辦公廳、國家發展改革委辦公廳、交通運輸部辦公廳關於解決當前實際困難加快養殖業復工復產的緊急通知》)(農辦發[2020]14號)) (issued by the General Office of the MARA, the General Office of the National Development and Reform Commission, and the General Office of the Ministry of Transport on 15 February 2020 and implemented on the same date), feed products and feed ingredients such as corn and soybean meal, breeding livestock and poultry, piglets, aquatic fry, fully-grown livestock and poultry, raw milk, dairy products, fresh aquatic products, chilled pork, and transferring bees shall be included in the scope of emergency transport guarantee as life necessities, so as to effectively realise the Green Channel policy for convenient and fast passage. Transport channels shall open up for farming materials to move to the remote areas and products to cities and processing plants as soon as possible. Vehicles carrying calves, chicks and breeding pigs, feed ingredients and products, livestock and aquatic products shall be allowed to move freely.

The Notice of the Ministry of Agriculture and Rural Affairs on the Circulation of the Plan on Separated Prevention and Control of African Swine Fever and other Major Animal Diseases (Trial Implementation) (Nong Mu Fa [2021] No. 12) (《農業農村部關於印發<非洲豬瘟等重大動物疫病分區防控工作方案(試行)>的通知》)(農牧發[2021]12號)) (issued by the MARA on 16 April 2021 and implemented on the same date) divided China into five areas to carry out separated prevention and control work. The Notice requires the regulation of pig transport, pursuant to which, in principle, pigs shall not be transported outside the area except for breeding pigs, piglets and pigs in the areas and subareas free from African Swine Fever and other major animal disease, so as to promote the shift from “pig transport” to “pork transport”. It also requires step-by-step improvement and implementation of the cross-regional/provincial “point-to-point” transport policy, which allows “point-to-point” transport of qualified pigs between the areas, if necessary.

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Use of Veterinary Medicines, Feed and Feed Additives

The operation of livestock and poultry farms also involves the use of veterinary medicines, feed and feed additives, which are governed by the Regulations on Administration of Feed and Feed Additives (《飼料和飼料添加劑管理條例》) issued by the State Council on 29 May 1999 and implemented on the same date, and last revised on 1 March 2017 and implemented on the same date, the Regulations on Administration of Veterinary Medicines (《獸藥管理條例》) issued by the State Council on 21 May 1987 and implemented on 1 January 1988 and last amended on 27 March 2020, and the Medicines Varieties Catalogue Regarding the Prohibition on Use in Feed and Animal Drinking Water (《禁止在飼料和動物飲用水中使用的藥物品種目錄》) issued by the former Ministry of Agriculture (原農業部), the former Ministry of Health (原衛生部), the National Medical Products Administration (國家藥品監督管理局) on 21 March 2002 and implemented on the same date.

According to the Regulations on Administration of Feed and Feed Additives (《飼料和飼料添加劑管理條例》), enterprises applying to engage in the production of feed and feed additives should apply to the relevant competent authorities and obtain a Feed Production Licence (飼料生產許可證).

Pursuant to the Regulations on Administration of Veterinary Medicines (《獸藥管理條例》), an enterprise dealing in veterinary medicines which meet relevant conditions should apply to the relevant competent authorities to obtain a Veterinary Medicine Operation Licence (獸藥經營許可證).

Production Safety

The Production Safety Law of the PRC (《中華人民共和國安全生產法》), which was issued on 29 June 2002 by the Standing Committee of the NPC and implemented on 1 November 2002, amended on 31 August 2014 and implemented on 1 December 2014, and last amended on 10 June 2021 and will take effect on 1 September 2021, is the principal law governing the supervision and administration of production safety. Based on the law, the State implements a system of accountability for production safety accidents. The production and operation entities shall comply with the production safety conditions as stipulated under relevant laws, administrative regulations and national or industry standards before engaging in production and operation activities.

Environment Protection

Pursuant to the Environmental Impact Assessment Law of the PRC (《中華人民共和國環境影響評價法》) issued by the Standing Committee of the NPC on 28 October 2002 and implemented on 1 September 2003, and last amended on 29 December 2018, the State practises classified management on the environmental protection assessment of construction projects in accordance with the extent of environmental impact of the construction projects. The construction entities shall work out the environmental impact report, the environmental impact report form or the environmental impact registration form according to the Classified Management Catalogue of Environmental Impact Assessments (《環境影響評價分類管理目錄》).

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Pursuant to the Classified Management Catalogue of Environmental Impact Assessments for Construction Projects (《建設項目環境影響評價分類管理名錄》) issued by the Ministry of Ecology and Environment on 30 November 2020 and implemented on 1 January 2021, the livestock and poultry farms and breeding areas shall prepare environmental impact reports or fill out environmental impact registration forms, under which, (1) large-scale livestock farming with an annual output of 5,000 pigs (other livestock and poultry species equivalent to the scale of pig farming) and above/large-scale livestock and poultry farming with 2,500 pigs in stock (other livestock and poultry species equivalent to the scale of pig farming) and above without output, livestock and poultry farms and breeding areas involving large-scale livestock and poultry farming in environmentally sensitive areas (referring to national parks, nature reserves, scenic spots, world cultural and natural heritage sites, marine special protection areas, drinking water source protection areas; areas where the main functions are residential, medical and health care, culture and education, scientific research, administrative offices, etc., as well as heritage conservation units) should prepare environmental impact reports; (2) other livestock and poultry farms and breeding areas shall fill out environmental impact registration forms.

For pig breeding projects, according to the Notice on Further Work Related to Environmental Assessment Management of Pig Breeding Scale (Huan Ban Huan Ping Han [2019] No. 872) (《關於進一步做好當前生豬規模養殖環評管理相關工作的通知》 (環辦環評函[2019]872號)) issued by the General Office of Ministry of Ecology and Environment and the General Office of the MARA on 29 November 2019 and implemented on the same date, more than 96% of pig breeding projects (pig breeding projects with an annual production capacity of less than 5,000 pigs) are required to fill in the environmental impact registration form online, other than obtaining environmental evaluation approval. For pig breeding projects with annual output volume of 5,000 pigs or above, an environmental assessment and approval pilot project is introduced and carried out. The construction entity shall submit the signed notification and commitment letter, environmental impact report and other necessary documents to the Environmental Assessment and Approval Department before the construction begins. Upon receipt of the commitment letter and the environmental impact report, the Environmental Assessment and Approval Department may directly decide on the approval without going through evaluation and acceptance inspections. The pilot period starts from the date of publication of the notice to 31 December 2021. Pig breeding projects below a certain scale or above a certain scale but without sewage outfalls shall not apply for the pollutant discharge permits or obtain economic aggregates. For new pig breeding projects (including reconstruction and expansion of pig breeding projects), supporting facilities for recycling feces and sewage shall be constructed simultaneously, and the cultivated land occupied shall be returned in line with the breeding scale. If feces and sewage cannot be recycled and reused, pollution disposal measures shall be made clear, and the discharge shall be up to the standard in accordance with national and local regulations.

According to the Interim Measures for the Acceptance Inspections of Environmental Protection Facilities of Construction Projects (《建設項目竣工環境保護驗收暫行辦法》) issued by the former Ministry of Environmental Protection on 20 November 2017 and implemented on the same date, the construction entity is the party subject to the environmental protection inspection and acceptance of the completed construction project. It shall organise

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The Regulations on the Prevention and Control of Pollution from Large-scale Breeding of Livestock and Poultry (《畜禽規模養殖污染防治條例》) issued by the State Council on 11 November 2013 and implemented on 1 January 2014, provides that the construction, reconstruction and expansion of livestock and poultry farms and breeding areas shall comply with the development plan of animal husbandry and pollution prevention and control plan of livestock and poultry breeding, meet the requirements of animal epidemic prevention, and go through environmental impact assessment. The State encourages and supports comprehensive use of waste from the breeding of livestock and poultry by way of returning manure to the field, producing biogas and organic fertilisers, etc. For infected livestock and poultry and their excrement, products of infected livestock and poultry products, sick or dead livestock and poultry carcases and other diseased livestock and poultry breeding waste, shall be treated in accordance with the relevant laws, regulations and the requirements of the competent departments of agriculture and animal husbandry of the State Council, through innocuous treatment such as deep burial, chemical treatment, and incineration, and no arbitrary disposal shall be allowed.

The Classification and Administration List of Pollutant Discharge Permits for Stationary Pollution Sources (《固定污染源排污許可分類管理名錄》) issued by the Ministry of Ecology and Environment on 20 December 2019 and implemented on the same date provides that, the trial implementation of pollution registration shall be carried out for entities that produce and discharge pollutants but have a minimal impact on the environment. Pollutant discharging entities on the list are not required to apply for a pollutant discharge permit, but should fill in a pollutant discharge registration form on the National Pollution Discharge Permits Administration Information Platform to register basic information, pollutant discharge destination, pollutant discharge standards implemented and the pollution prevention and control measures taken. For large-scale livestock and poultry farms and breeding areas without sewage outfalls, and for livestock and poultry farms and breeding areas with sewage outfalls under a certain scale, they are only required to fill in the pollutant discharge registration form on the National Pollution Discharge Permits Administration Information Platform for registration and management.

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Product Quality and Safety and Liability

The Product Quality Law of the PRC (《中華人民共和國產品質量法》) issued by the Standing Committee of the NPC on 22 February 1993 and implemented on 1 September 1993, and last amended on 29 December 2018 and implemented on the same date is the principal law governing the supervision and administration of product quality. According to the Product Quality Law of the PRC, products are subject to approval of quality inspection, and substituting a fake product for a genuine one is prohibited. The producers are liable for the quality of the products they produce and the content of the product or the label on its packaging must be authentic. If a defect in the product causes personal injury or damage to property other than the defective product, the producer shall be liable for compensation. The producer may not be liable for compensation if it can prove that: (1) the product has not been put into circulation; (2) the defect causing the damage did not exist at the time the product was put into circulation; or (3) the existence of the defect could not have been detected by the state of science and technology at the time the product was put into circulation.

Pursuant to the Agricultural Product Quality and Safety Law of the PRC, the agricultural administrative competent authority of the people’s government at the county level or above shall take charge of the supervision over and inspection of agricultural product quality and safety. The State establishes and improves a system of agricultural product quality and safety standards. The agricultural product quality and safety standards shall be compulsory technical norms. The agricultural products for sale must meet the agricultural product quality and safety standards. The animals and plants required by the law to be subject to quarantine, as well as their products, shall be attached with quarantine marks and certificates of conformity.

The Civil Code of the PRC (《中華人民共和國民法典》), issued by the National People’s Congress on 28 May 2020 and implemented on 1 January 2021, stipulates that producers shall bear tort liability for the damage caused to others by their defective products. If defective products are identified after they have been put into circulation, the producers or the sellers shall take remedial measures such as cease of sales, issuance of a warning, recall of products, etc. in a timely manner. The producers or the sellers shall also be liable under tort if they fail to take remedial measures in a timely manner or have not made efforts to take remedial measures, thus causing more damages. In the event of a recall, the producer or seller shall bear the necessary expenses so incurred by the tort victim.

LAWS AND REGULATIONS RELATING TO LAND USE

According to the Land Administration Law of the PRC (《中華人民共和國土地管理法》) issued by the Standing Committee of the NPC on 25 June 1986 and implemented on 1 January 1987, and last amended on 26 August 2019), land in China is classified into agricultural land, construction land and unused land. Land in urban areas is owned by the State; land in rural areas and suburban areas is owned collectively by peasants, except for those that belong to the state under the law. Land collectively owned by peasants belongs to village peasants collectively in accordance with the law, and shall be operated and managed by the village collective economic organisation or village committee.

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Use of State-Owned Land

According to the Land Administration Law of the PRC and Rules for Implementation of the Land Administration Law of the PRC (《中華人民共和國土地管理法實施條例》) issued by the State Council on 27 December 1998 and implemented on 1 January 1999, and last amended on 29 July 2014 and implemented on the same date) and the Provisional Regulations of the People’s Republic of China Concerning the Grant and Transfer of the Right to Use State Land in Urban Areas (《中華人民共和國城鎮國有土地使用權出讓和轉讓暫行條例》) issued by the State Council on 19 May 1990 and implemented on the same date, and last amended on 29 November 2020 and implemented on the same date, except for assignment by the State under the law as state-owned land use rights, the State implements a system of compensated use of state-owned land in accordance with the law. The methods of compensated use of state-owned land mainly include transfer of state-owned land use rights, leasing of state-owned land, and using state-owned land use rights as a way of capital contribution or investment in exchange for equity. Transfer of land use rights can be conducted by means of agreement, tender, and auction. Transfer of land use rights requires the signing of a land use right transfer contract and payment of land premium.

Collectively Owned Land

Contracting of collectively owned land

According to the Rural Land Contracting Law of the PRC (《中華人民共和國農村土地承包法》) issued by the Standing Committee of the NPC on 29 August 2002 and implemented on 1 January 2003, and last amended on 29 December 2018 and implemented on 1 January 2019), the Organic Law of Villagers’ Committees of the PRC (《中華人民共和國村民委員會組織法》) revised and approved by the Standing Committee of the NPC on 4 November 1998 and implemented on the same date, and last amended on 29 December 2018 and implemented on the same date, and the Regulations on the Prevention and Control of Pollution from Large-scale Breeding of Livestock and Poultry, the State implements a rural land contracting management system. Project establishment and contracting plans involving the village’s land contracting management plan and the village collective project shall be handled upon approval by the villagers’ meeting after deliberation.

Rural land contracting takes the form of household contracting within the rural collective economic organisation. For rural lands such as barren mountains, barren ditches, barren hills, and barren swamplands that are not suitable for household contracting, contracting can be accomplished through tenders, auctions, and public negotiations, and on a pari passu basis, members of the collective economic organisation shall have right of first refusal to contracting rural lands through the above-mentioned channels. The State encourages the use of abandoned land and unused land such as barren mountains, barren ditches, barren hills and barren swamplands to carry out large-scale and standardised livestock and poultry breeding. Land for livestock and poultry breeding shall be managed as agricultural land, and the land for production facilities and necessary pollution prevention and control and other auxiliary facilities shall be designated in accordance with relevant regulations of the State.

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The awarding party may contract out the rural land to entities or individuals other than the collective economic organisation with prior consent of more than two-thirds of the members of the collective economic organisation or more than two-thirds of the villager representatives and shall report the contracting to and obtain approval from the people’s government at the township level.

A written contract shall be signed by the awarding party and the contractor. The contracting period for arable land is 30 years, 30 to 50 years for grassland, and 30 to 70 years for woodland.

Circulation of land operation rights

According to the Rural Land Contracting Law of the PRC (《中華人民共和國農村土地承包法》), the contractor can independently decide to circulate the land operation rights to others through leasing (subcontracting), exchange for shares or by other means according to the law, provided that the transfer shall be filed with the awarding party. The circulation of land operation rights shall follow the following principles: (1) it shall be lawful, voluntary, and compensated, and no organisation or individual may force or hinder the circulation of the land operation rights; (2) the nature of land ownership and the agricultural use of land shall not be changed, and the comprehensive agricultural production capacity and agricultural ecosystem concerned shall not be impaired; (3) the transfer period shall not exceed the remaining period of the contract period; (4) the transferee must have the ability or qualifications for agricultural operations; (5) on a pari passu basis, members of the collective economic organisation shall have right of first refusal.

According to the Measures for the Administration of Circulation of Rural Land Management Right (《農村土地經營權流轉管理辦法》) issued by the MARA on 26 January 2021 and implemented on 1 March 2021, when effecting circulation of land operation rights, the contractor shall negotiate with the transferee and a written transfer contract shall be signed on agreed terms. The circulation contract for rural land operation rights shall be in quadruplicate with each party holding one copy, and a copy should be filed with the awarding party and the department in charge of land contracting of the people’s government at the township level. After the expiration of the circulation period, the transferee has the right to first renew the contract on a pari passu basis. The transferee is prohibited from changing the agricultural use of the land.

Where the contractor voluntarily entrusts the awarding party, intermediary organisation or others to circulate its land operation rights, the contractor shall issue a letter of trust for the circulation which shall specify the entrusted matter, authority and term and be signed or affixed with official chop by the trustor and the trustee. The transferee of the circulation of land operation rights shall be organisations and individuals with agricultural operation capabilities or qualifications. Under the following circumstances, the contractor can unilaterally terminate the land operation right circulation contract, and if otherwise, the awarding party has the right to terminate the land operation right circulation contract: (1) unauthorised change of the agricultural use of the land; (2) farmland being deserted and left desolate for more than two consecutive years; (3) serious damage being caused to the land or serious damage being inflicted on the ecosystem of the land; (4) other serious breaches of contract.

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Administration of Land used for Agricultural Facilities

According to the Circular of the Ministry of Natural Resources and the Ministry of Agriculture and Rural Affairs on Matters Concerning the Administration of Land used for Agricultural Facilities (Zi Ran Zi Gui [2019] No. 4) (《自然資源部、農業農村部關於設施農業用地管理有關問題的通知》(自然資規[2019]4號)) issued by the Ministry of Natural Resources and the MARA on 17 December 2019 and implemented on the same date, effective for 5 years, land for facility agriculture use includes land directly used for crop planting and livestock and poultry aquaculture facility in agricultural production. Land for livestock and poultry aquaculture facility includes land for breeding production and directly associated manure disposal, inspection and quarantine facility, excluding land for slaughtering and meat processing sites. Application shall be filed regarding the land used for agricultural facilities with the township government by the rural collective economic organisation or the operator, and the township government regularly summarises the information and submits it to the competent county-level natural resources authority. Where replenishment of permanent basic farmland is involved, the related construction must be approved by the competent county-level natural resources authority before commencing construction.

According to the Notice of the General Office of the Ministry of Natural Resources on Issues Concerning the Guarantee of Land for Pig Breeding (Zi Ran Zi Dian Fa [2019] No. 39) (《自然資源部辦公廳關於保障生豬養殖用地有關問題的通知》(自然資電發[2019]39 號)) issued by the Ministry of Natural Resources on 4 September 2019 and implemented on the same date, land for pig breeding is regarded as land used for agricultural facilities and shall be managed as agricultural land, and is not subject to the approval procedures for construction land. The scale of the land used for production facilities such as pig breeding pens, passageways in the production plant and green isolation belts shall be determined according to the scale of breeding; the scale of supporting facilities have been increased and the 15-mu upper limit has been cancelled to ensure the demand of land use for facilities of waste disposal in pig breeding.

LAWS AND REGULATIONS RELATING TO INTELLECTUAL PROPERTY RIGHTS

Patent Law

According to the Patent Law of the PRC (《中華人民共和國專利法》) issued by the Standing Committee of the NPC on 12 March 1984 and implemented on 1 April 1985, and last amended on 17 October 2020 and implemented on 1 June 2021 and the Implementation Rules of the Patent Law of the PRC (《中華人民共和國專利法實施細則》) issued by the State Council on 15 June 2001 and implemented on 1 July 2001, and last amended on 9 January 2010 and implemented on 1 February 2010, there are three types of patents in the PRC: invention patents, utility model patents and design patents. The protection period is 20 years for an invention patent, 10 years for a utility model patent and 15 years for a design patent, commencing from their respective application dates.

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Trademark Law

According to the Trademark Law of the PRC (《中華人民共和國商標法》) issued by the Standing Committee of the NPC on 23 August 1982 and implemented on 1 March 1983, and last amended on 23 April 2019 and implemented on 1 November 2019 and the Implementation Regulations of the Trademark Law of the PRC (《中華人民共和國商標法實施條例》) last revised by the State Council on 29 April 2014 and implemented on 1 May 2014, the period of validity for a registered trademark is 10 years, commencing from the date of registration. Upon expiry of the period of validity, the registrant who intends to keep using the trademark shall go through the formalities for renewal within twelve months prior to the date of expiry. Where the registrant fails to do so, a grace period of six months may be granted. The period of validity for each renewal of registration is 10 years, commencing from the day immediately after the expiry of the preceding period of validity for the trademark.

According to the Copyright Law of the PRC (《中華人民共和國著作權法》) issued by the Standing Committee of the NPC on 7 September 1990 and implemented on 1 June 1991, and last amended on 11 November 2020 and implemented on 1 June 2021, works by Chinese citizens, legal persons or other organisations, including literature, art, natural sciences, social sciences, engineering technologies and computer software works created in writing, oral or other forms, whether published or not, all enjoy copyright. Copyright holders enjoy multiple rights, including the right of publication, the right of authorship and the right of reproduction.

Domain Name

In accordance with the Measures for the Administration of Internet Domain Names (《互聯網域名管理辦法》) last amended by the Ministry of Industry and Information Technology (工業和信息化部) on 24 August 2017 and implemented on 1 November 2017, those who are engaged in service provision, operation and maintenance as well as supervision and administration of Internet domains and related activities within the PRC shall be subject to the said measures. The Ministry of Industry and Information Technology is the main regulatory authority responsible for the management of domain names for Internet users in China. The registration of a domain name shall follow the principle of “registration being granted to the first applicant”. Upon completion of the application process, the domain name applicant becomes the domain name holder.

REGULATIONS RELATED TO LABOUR AND EMPLOYMENT

Labour Contract

According to the Labour Law of the PRC (《中華人民共和國勞動法》) issued by the Standing Committee of the NPC on 5 July 1994 and implemented on 1 January 1995, and last amended on 29 December 2018 and implemented on the same date, labour relations shall be established by concluding a labour contract. Employees have the right to equal employment and choice of occupation, the right to labour remuneration, the right to rest and leave, the right to occupational safety and health protection, the right to vocational skills training, the right to

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The Labour Contract Law of the PRC (《中華人民共和國勞動合同法》) issued by the Standing Committee of the NPC on 29 June 2007 and implemented on 1 January 2008, and last amended on 28 December 2012 and implemented on 1 July 2013 and the Implementation Regulations of the Labour Contract Law of the PRC issued by the State Council on 18 September 2008 and implemented on the same date provide for the conclusion and termination of labour contracts, the duration of labour contracts and the probationary period.

The labour contract must be concluded in writing, and the labour relationship is established from the date of employment. Labour contracts are divided into fixed-terms labour contracts, unfixed-term labour contracts, and labour contracts that last up to the completion of certain tasks. In any of the following situation, other than the employee’s proposal to enter into a fixed-term labour contract, an unfixed-term labour contract shall be concluded: (1) the employee has worked for the employer for ten consecutive years; (2) when the employer effects the labour contract system for the first time or when it deems necessary to enter into a new labour contract following the restructuring of a state-owned enterprise, the employee concerned has worked for the employer for ten consecutive years and is less than ten years from the legal retirement age; (3) when a fixed-term labour contract has been entered into twice consecutively and the employee is not subject to special legal requirements. If the employer fails to enter into a written contract with the employee for one year from the date of employment, the employer and the employee shall be deemed to have entered into an unfixed-term labour contract.

If the employer uses dispatched workers provided by a labour dispatch unit, the labour dispatch unit shall conclude a dispatch agreement with the employer.

Social Insurance

According to the Law of Social Insurance of the PRC (《中華人民共和國社會保險法》) issued by the Standing Committee of the NPC on 28 October 2010 and implemented on 1 July 2011, and last amended on 29 December 2018 and implemented on the same date, the Chinese social insurance includes five major categories, namely basic endowment insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to guarantee the rights of citizens to legally obtain material assistance from the State and society in case of old age, illness, work-related injury, unemployment and childbirth. Employers shall apply to social insurance agencies for social insurance registration for their employees within 30 days from the date of employment, and shall actively complete the filing procedure and pay corresponding social insurance premiums in full and on time.

Pursuant to the Opinions of the General Office of the State Council on Comprehensively Promoting the Implementation of the Merges of Maternity Insurance and Basic Medical Insurance for Employees (Guo Ban Fa [2019] No. 10) (《國務院辦公廳關於全面推進生育保險和職工基本醫療保險合併實施的意見》(國辦發[2019]10號)) issued by the General Office of

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If the employer fails to pay the social insurance premiums in full and on time, the social insurance premium collection agency shall order the payment or replenishment within a prescribed period, and shall impose a late payment fee of 0.05% per day from the date on which the payment is overdue. If the employer still fails to do so, the relevant administrative department shall impose a fine of one to three times the amount of the unpaid social insurance premiums.

According to the Urgent Notice of the General Office of the Ministry of Human Resources and Social Security on Implementing the Spirit of the Standing Meeting of the State Council in Stabilising the Collection of Social Security Contributions (Ren She Ting Han [2018] No. 246) (《人力資源社會保障部辦公廳關於貫徹落實國務院常務會議精神切實做好穩定社保費徵收工作的緊急通知》(人社廳函[2018]246號)) issued by the Ministry of Human Resources and Social Security on 21 September 2018 and implemented on the same date, before the reform of social security collection agencies has been completed, the prevailing social security contribution bases, rates and other related collection policies adopted in different regions of the country shall remain unchanged. Local authorities in charge of social insurance premiums collection are strictly prohibited from acting on their own to enforce settlement of social insurance premiums defaulted on by enterprises over the years.

Housing Provident Fund

According to the Regulation on the Administration of Housing Provident Fund (《住房公積金管理條例》) issued by the State Council on 3 April 1999 and implemented on the same date, and last amended on 24 March 2019 and implemented on the same date, employers in China should register with the Housing Provident Fund Management Centre for contributions and go through the procedures of setting up housing provident fund accounts for their employees, and each employee can only have one housing provident fund account. If the employer hires an employee, it should register with the Housing Provident Fund Management Centre within 30 days from the date of employment and go through the procedures of setting up or transferring the employee’s housing provident fund account. The monthly contribution to the employee’s housing provident fund is the employee’s average monthly salary for the previous year multiplied by the housing provident fund contribution ratio, which shall not be less than 5%.

In case that the employer fails to register for the housing provident fund contributions or establish a housing provident fund account for an employee, the Housing Provident Fund Management Centre shall order the employer to do so within a prescribed period. If the employer fails to do so within the said period, a fine ranging from RMB10,000 to RMB50,000 will be imposed. If the employer fails to contribute or make full contribution to the housing provident fund, the Housing Provident Fund Management Centre shall order the employer to do so within a prescribed period; otherwise, it may apply for compulsory enforement with the people’s court.

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OUR HISTORY

Overview

We are one of the leading enterprises dedicated to the breeding and farming of pigs and yellow-feathered broilers in the PRC. The Group’s history can be traced back to 2011 when our Controlling Shareholder, Mr. Wang Degen (王德根) recognised the potential of the husbandry industry and personally acquired a 42% equity interest in Chongqing Tequ from Sichuan Tequ, a connected person of our Company, and became the largest single shareholder of Chongqing Tequ, which was renamed as Chongqing Dekon in 2012. Chongqing Dekon continued to develop pig and poultry business, and expanded to food processing. For details of the establishment and change of shareholding of Chongqing Dekon, please refer to the section headed “– The Establishment and Development of our Company – The Corporate Development of our Company before Establishment”. For the industry experience of Mr. Wang Degen, please refer to the section headed “Relationship with Controlling Shareholder(s)”.

On 11 April 2014, we established our Company as the holding company of the Group under the laws of the PRC to regulate the corporate structure of our pig, poultry, food processing and other businesses. Since the establishment of our Company, we have undergone several capital increases and equity transfers. As at the Latest Practicable Date, Mr. Wang Degen, through his wholly-owned company, Desheng Ronghe is our Controlling Shareholder. For details of the capital increases and equity transfers of our Company, please refer to the sub-section headed “– The Establishment and Development of our Company – Major Changes in our Company’s Shareholding Structure and Registered Capital”.

Over the years, we received a number of recognitions from various authorities in the PRC, including Agriculture Industrialisation National Key Enterprises (農業產業化國家重點龍頭企業). Our operations cover 14 provinces, municipals and autonomous regions across China, with more than 7,000 employees.

Milestones

Set out below are the key milestones of our business development:

Year Event

September 2011 Mr. Wang Degen acquired a 42% equity interest in Chongqing Tequ to continue to develop pig and poultry business.

July 2013 We completed our first introduction of 868 breeding pigs from overseas to establish our nucleus breeding pig herd and to build our own pig breeding system.

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April 2014 The Company was established with the equity of Chongqing Dekon and cash capital contribution.

September 2015 Our farming projects of 500,000 heads of pigs in Hechuan District, Chongqing City was executed and implemented to develop our whole industry chain in Hechuan area.

December 2015 We acquired approximately 18% of the equity interest of Guangdong Wizagricultural Science & Technology Co., Ltd.* (廣東智威農業科技股份有限公司), an Agriculture Industrialisation National Key Enterprise, which equipped us with a key laboratory of poultry genetic breeding under the Ministry of Agriculture and a new matching system for national livestock and poultry validation for the “Lingnanhuang” series.

2016 We established the No. 2 Family Farm model.

February 2018 We set up AI projects to implement smart farming. Through 2 years of research and development, our “AI Pig Farming” platform has been put into operation in Hechuan District of Chongqing and Sihong County of Jiangsu.

November 2018 Our Jianshan Nucleus Breeding Pig Farm in Zigong City, Sichuan Province was awarded the “National Nucleus Pig Breeding Farm” (國家生豬核心育種場) qualification certificate by the MARA, making us one of the 100 Nucleus breeding pig farms in China.

July 2019 Our gene bank and breeding base for yellow-feathered broilers located in Yingde City, Guangdong Province has been completed and put into production, which provides a trustworthy guarantee to our high-quality chicken breeders and broilers product structure.

September 2019 We signed a cooperation agreement with Tönnies, the largest integrated meat product enterprise in Germany. We will establish a slaughterhouse with an annual slaughtering capacity of 2 million heads of pigs in Renshou County, Meishan City, Sichuan Province, marking our firm step toward high quality food production (EU standard).

March 2020 We imported 500 terminal sire from Topigs Norsvin International BV (“Topigs”), a Dutch company.

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October 2020 Our pigs slaughtering and refined meat product processing project with an annual capacity of 3 million pigs in Nanxi District, Yibin City, Sichuan Province was officially launched.

December 2020 Our pig farm in Taiping, Sihong County, Jiangsu Province was accredited as National African Swine Fever Free Zone, indicating the acknowledgement by the authorities for the Group’s prevention and control efforts toward African Swine Fever.

Three of our pig farms were accredited as demonstration farms for livestock farming standardisation recognised by the Ministry of Agriculture and Rural Affairs of PRC, indicating that our livestock and poultry farming management standard has risen to an advanced level of industry development.

January 2021 We became one of the pioneering enterprises in China to introduce and implement pig futures, indicating our employment of financial instruments to effectively manage the risks of pig price fluctuations.

THE ESTABLISHMENT AND DEVELOPMENT OF OUR COMPANY

The Corporate Development of our Company before Establishment

On 21 April 2008, Sichuan Tequ, being a connected person of our Company, and our executive Director, Mr. Hu Wei (胡偉), contributed 85% and 15%, respectively to establish Chongqing Tequ, with a registered capital of RMB20 million. Our Controlling Shareholder, Mr. Wang Degen (王德根), and our executive Director, Mr. Hu Wei (胡偉), were elected as Directors upon its establishment. At the early stage of its establishment, Chongqing Tequ was engaged in pig and poultry business. On 7 September 2011, Mr. Wang Degen (王德根) acquired 42% equity interest in Chongqing Tequ from Sichuan Tequ at a consideration of RMB10.4 million, and Sichuan Tequ transferred the remaining equity interest to Mr. Chen Yuxin (陳育新) for 35% at RMB7 million, Mr. Liu Guofeng (劉國峰) for 3% at RMB0.75 million, Mr. Rao Hui (饒暉) for 3% at RMB0.75 million and Mr. Wang Dehui (王德輝) for 2% at RMB0.50 million. On the same date, Mr. Hu Wei (胡偉) transferred 5% of the equity interest in Chongqing Tequ to Mr. Tang Jianyuan (唐健源) at RMB1.24 million.

Our Company was established as a limited liability company in the PRC on 11 April 2014 with a registered capital of RMB100 million. In April 2014, seven individuals, including Mr. Wang Degen (王德根), Mr. Chen Yuxin (陳育新), Mr. Hu Wei (胡偉), Mr. Tang Jianyuan (唐健源), Mr. Rao Hui (饒暉), Mr. Liu Guofeng (劉國峰) and Mr. Wang Dehui (王德輝), jointly established the Company through (1) contribution of their equity in Chongqing Dekon valued at RMB70 million and (2) cash of RMB30 million in proportion to their then shareholding in

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Chongqing Dekon. The shareholding structure of our Company upon its establishment is as follows: Mr. Wang Degen (王德根) (42.00%), Mr. Chen Yuxin (陳育新) (35.00%), Mr. Hu Wei (胡偉) (10.00%), Mr. Tang Jianyuan (唐健源) (5.00%), Mr. Rao Hui (饒暉) (3.00%), Mr. Liu Guofeng (劉國峰) (3.00%) and Mr. Wang Dehui (王德輝) (2.00%). Upon completion of the abovementioned capital contribution and transfer of equity interest, our Company became the sole shareholder of Chongqing Dekon.

Mr. Wang Degen (王德根) is the younger brother of Mr. Wang Dehui (王德輝). Mr. Chen Yuxin (陳育新) is one of the substantial shareholders of the Company. For details, please refer to the section headed “Substantial Shareholders”. Mr. Wang Dehui (王德輝) and Mr. Hu Wei (胡偉) are our executive Directors. For details, please refer to the section headed “Directors, Supervisors and Senior Management”. Mr. Tang Jianyuan (唐健源), Mr. Rao Hui (饒暉) and Mr. Liu Guofeng (劉國峰) are Independent Third Parties.

Major Changes in our Company’s Shareholding Structure and Registered Capital

Since the establishment of our Company, our Company has undertaken a series of capital increases to raise funds for the development of its business and to bring in new Shareholders to the Company. The major shareholding changes of our Company are set out below:

a) Pursuant to an equity transfer agreement dated 18 January 2015, Mr. Wang Degen (王德根) transferred 2% equity interest he held in our Company, representing RMB2 million of the registered capital, to Mr. Chen Yuhe (陳玉和), an Independent Third Party, at a price of RMB20 million. The consideration was settled on 13 February 2015. Mr. Chen Yuhe (陳玉和) is one of our investors in the [REDACTED] Investments. For details, please refer to the section “– [REDACTED] Investments”.

b) Pursuant to an equity transfer agreement dated 11 July 2015, Mr. Chen Yuxin (陳育新) transferred 5% equity interest he held in our Company, representing RMB5 million of the registered capital, to Mr. Peng Benping (彭本平), an Independent Third Party, at a price of RMB55 million. The consideration was settled on 24 August 2015. Mr. Peng Benping (彭本平) is one of our investors in the [REDACTED] Investments. For details, please refer to the section headed “– [REDACTED] Investments”.

c) Pursuant to an equity transfer agreement dated 5 November 2016, Mr. Chen Yuxin (陳育新) transferred 6% equity interest he held in our Company, representing RMB6 million of the registered capital, to Shanghai CEL Maiming Investment Centre (Limited Partnership) (上海光控麥鳴投資中心(有限合夥)) at a consideration of RMB120 million, which was settled on 24 November 2016. CEL Maiming is one of our investors in the [REDACTED] Investments. For details, please refer to the section headed “– [REDACTED] Investments”.

d) Pursuant to an equity transfer agreement dated 30 March 2017, Mr. Chen Yuxin (陳育新) transferred 3% equity interest he held in our Company, representing RMB3 million of the registered capital, to Chengdu Jiakun at a consideration of RMB60.60

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million, which was settled on 26 April 2017. Pursuant to another equity transfer agreement dated 30 March 2017, Mr. Chen Yuxin (陳育新) transferred 2% equity interest he held in our Company, representing RMB2 million of the registered capital, to Sichuan Hebang Investment Group Co., Ltd.* (四川和邦投資集團有限公司) at a consideration of RMB40.40 million, which was settled on 27 April 2017. Mr. Liu Guofeng (劉國峰) and Sichuan Hebang Investment Group Co., Ltd.* (四川和邦投資集團有限公司) entered into an equity transfer agreement dated 30 March 2017, pursuant to which Mr. Liu Guofeng (劉國峰) transferred 1% equity interest he held in our Company, representing RMB1 million of the registered capital, to Sichuan Hebang Investment Group Co., Ltd.* (四川和邦投資集團有限公司)ata consideration of RMB20.20 million, which was settled on 27 April 2017. Sichuan Hebang Investment Group Co., Ltd.* (四川和邦投資集團有限公司)isan Independent Third Party which is not our Shareholder as at the Latest Practicable Date, thus it is not considered a [REDACTED] investor. Chengdu Jiakun is one of our investors in the [REDACTED] Investments. For details, please refer to the section headed “– [REDACTED] Investments”.

e) Pursuant to an equity transfer agreement dated 22 December 2017, Mr. Wang Degen (王德根) transferred 40% equity interest he held in our Company, representing RMB40 million of the registered capital (at an actual transfer consideration of RMB119.30 million) to Desheng Ronghe, wholly-owned by him, as equity contribution. Desheng Ronghe became the single largest Shareholder of our Company.

f) Pursuant to an equity transfer agreement dated 1 June 2018, Mr. Hu Wei (胡偉) transferred 6% equity interest he held in our Company, representing RMB6 million of the registered capital, to Ms. Song Fuxian (宋福賢), who was a connected person of Mr. Hu Wei (胡偉), at nil consideration. Such transfer was not considered a [REDACTED] investment. Pursuant to another equity transfer agreement on 1 June 2018, Mr. Hu Wei (胡偉) transferred 1% equity interest he held in our Company, representing RMB1 million of the registered capital, to Mr. Wang Degen (王德根) at a price of RMB20 million. The consideration was settled dated 27 March 2019.

g) Pursuant to an equity transfer agreement dated 13 September 2018, Mr. Chen Yuxin (陳育新) transferred 4% equity interest he held in our Company, representing RMB4 million of the registered capital, to Desheng Ronghe at a consideration of RMB80 million, which was settled on 13 September 2018. Pursuant to an equity transfer agreement dated 13 September 2018, Mr. Rao Hui (饒暉), transferred 3% equity interest he held in our Company, representing RMB3 million of the registered capital, to Mr. Wang Degen (王德根) at a consideration of RMB60 million, which was settled on 12 May 2021.

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h) On 27 November 2018, the registered capital of our Company was increased from RMB100 million to RMB101.70 million, with the additional RMB1.70 million subscribed at par value by Mr. Yao Hailong (姚海龍), Mr. Xu Wei (徐偉) and Mr. Tang Xiaoping (唐小平) for RMB1 million, RMB0.5 million and RMB0.2 million, respectively. Mr. Yao Hailong (姚海龍) is a member of the senior management of our Company. For details, please refer to the section headed “Directors, Supervisors and Senior Management”. As at the Latest Practicable Date, Mr. Xu Wei (徐偉) and Mr. Tang Xiaoping (唐小平) are the employees of our Company. The subscription by Mr. Yao Hailong (姚海龍), Mr. Xu Wei (徐偉) and Mr. Tang Xiaoping (唐小平), was considered employee subscription of our Shares instead of a [REDACTED] investment.

i) Pursuant to an equity transfer agreement dated 7 December 2018, Sichuan Hebang Investment Group Co., Ltd.* (四川和邦投資集團有限公司) transferred 2.94985% equity interest it held in our Company, representing RMB3 million of the registered capital, to Ms. Song Yuanfang (宋遠芳), an Independent Third Party, at a price of RMB72 million. The consideration had been settled on 7 December 2018. Song Yuanfang is one of our investors in the [REDACTED] Investments. For details, please refer to the section headed “– Pre- [REDACTED] Investments”.

j) On 9 May 2019, our Company converted the audited net assets of the Company on a pro rata basis into the share capital comprising 250,000,000 Shares with a nominal value of RMB1 each, which were alloted to the then Shareholders in proportion to their respective capital contribution to our Company, and our Company was converted into a joint stock company with limited liability.

k) On 29 June 2019, the Company issued an additional 33,295,430 ordinary Shares with a nominal value of RMB1 each. The registered capital was increased from RMB250 million to RMB283,295,430, which was subscribed by Mr. Shu Dingming (舒鼎銘) as to 3,807,107 Shares at a price of approximately RMB15 million (RMB4 per share), Zhongcheng Jinyi as to 7,814,213 Shares at a price of approximately RMB0.77 million (RMB9.85 per Share); the remaining 16,255,549 Shares were issued to CEL Maiming at a price of RMB180,000,000 (RMB 11.07 per Share), which was paid by way of debt-to-equity swap pursuant to the debt-to-equity swap agreement dated 17 December 2018 and Suzhou Houqi as to 5,418,561 Shares at a price of RMB60,000,000 (RMB11.07 per Share). As at the Latest Practicable Date, Mr. Shu Dingming (舒鼎銘) is the chief scientist of our Company and the issuance of Shares to him was considered benefits to our chief scientist, instead of a [REDACTED] Investment. Zhongcheng Jinyi is an employee shareholding platform of our Company and the issuance of Shares to Zheongcheng Jinyi was considered benefits to our Directors and employees, instead of a [REDACTED] Investment. For details, please refer to the section headed “– Employee Shareholding Platform”.

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l) On 14 November 2019, our Company issued an additional 5,665,909 ordinary Shares with a nominal value of RMB1 each. The registered capital increased from RMB283,295,430 to RMB288,961,339, which was subscribed in full by Yixing CEL at a price of RMB200,000,000 (RMB35.30 per Share). Yixing CEL is one of our investors in the [REDACTED] Investments. For details, please refer to the section headed “– [REDACTED] Investments”.

m) On 15 December 2019, our Company issued an additional 1,422,221 ordinary Shares with a nominal value of RMB1 each. The registered capital increased from RMB288,961,339 to RMB290,383,560, which was subscribed in full by Tongchuang Deheng at a price of approximately RMB42.8 million (RMB30.11 per Share). Tongchuang Deheng is an employee shareholding platform of our Company and the issuance of Shares to Tongchuang Deheng was considered benefits to our Directors and employees, instead of a [REDACTED] Investment. For details, please refer to the section headed “– Employee Shareholding Platform”.

n) On 21 April 2020, our Company issued an additional 6,701,159 ordinary Shares with a nominal value of RMB1 each. The registered capital increased from RMB290,383,560 to RMB297,084,719, which was subscribed in full by Yixing CEL at a price of RMB300 million (RMB44.77 per Share), which was paid by way of debt-to-equity swap pursuant to the debt-to-equity swap agreement dated 14 November 2019.

o) Pursuant to an equity transfer agreement dated 25 June 2020, Yixing CEL transferred 2,233,720 Shares it held in our Company, representing a shareholding of 0.75%, at a price of RMB100 million to Zhuhai Mailun. Zhuhai Mailun is a related company of Yixing CEL and CEL Maiming and the transfer was not considered a [REDACTED] investment. For details, please refer to the section headed “– [REDACTED] Investments”.

p) On 30 October 2020, our Company resolved to increase the registered capital of the Company out of the undistributed profits of the Company of RMB62,915,281 pro rata to the shareholding ratios of the existing Shareholders (the “Capitalisation Issue”). After the completion of the Capitalisation Issue, the registered capital of our Company increased to RMB360,000,000.

q) Pursuant to an equity transfer agreement dated 28 December 2020, Mr. Peng Benping (彭本平) transferred 2,978,799 Shares he held in our Company to his brother, Mr. Peng Bengang (彭本剛), at a transfer price of RMB11 million. Pursuant to the equity transfer agreement on 4 January 2021, Mr. Peng Bengang (彭本剛) transferred the 2,978,799 Shares to his spouse, Ms. Song Yuanfang (宋遠芳), at a transfer price of RMB11 million, which was settled on 5 January 2021. As Mr. Peng Benping (彭本平), Mr. Peng Bengang (彭本剛) and Ms. Song Yuanfang (宋遠芳) are related to each other, the transfers from Mr. Peng Benping (彭本平) to Mr. Peng Bengang (彭本剛) and from Mr. Peng Bengang (彭本剛) to Ms. Song Yuanfang (宋遠芳) were not considered [REDACTED] investment.

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As advised by the PRC Legal Adviser, our Company has obtained all the applicable regulatory approvals for and completed all previous changes in its share capital, which are legal, compliant, truthful and valid.

Employee Shareholding Platform

To incentivise our Directors and employees to make greater contributions to the Group, our Company issued additional 7,814,213 Shares at a consideration of RMB9.85 per Share to Zhongcheng Jinyi on 29 June 2019, and additional 1,422,221 Shares to Tongchuang Deheng on 15 December 2019 at a consideration of RMB30.11 per Share. Both Zhongcheng Jinyi and Tongchuang Deheng are limited partnership enterprises whose interests are all held by the Directors or employees of our Company. The purpose of establishment is to subscribe for and hold the Shares. As at the Latest Practicable Date, the interests in Zhongcheng Jinyi were held by 38 Directors and employees, and the interests in Tongchuang Deheng were held by 31 Directors and employees.

After the completion of the [REDACTED], the shareholding directors and employees of Zhongcheng Jinyi and Tongchuang Deheng may, at their own discretion, reduce and encash their shareholding in our Company subject to regulatory requirements through: (i) collective reduction of their shareholding in the secondary market through a collective account on the shareholding platform, and then corresponding cash payment is made to employees who have reduced their shareholding; or (ii) a direct transfer of the shares to their individual stock accounts via a collective account on the shareholding platform.

The general partner of Zhongcheng Jinyi and Tongchuang Deheng is Sichuan Dinghui Ronghe Enterprise Management Co., Ltd.* (四川鼎輝榮和企業管理有限公司), which is wholly-owned by Mr. Wang Dehui (王德輝), and collectively exercises the voting rights of the Shares held by Zhongcheng Jinyi and Tongchuang Deheng. As at the Latest Practicable Date, Zhongcheng Jinyi and Tongchuang Deheng held approximately 2.63% and 0.48% of the issued share capital of our Company, respectively. For the interests of our Directors on the Employee Shareholding Platform, please refer to the section headed “Appendix VI – Statutory and General Information – Further Information about our Directors, Supervisors and Substantial Shareholders – 3. Directors” in this [REDACTED].

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Our Principal Subsidiaries

As at the Latest Practicable Date, our Company has a total of 128 subsidiaries, out of which seven are directly held by the Company. The principal business activities, the dates of establishment and the dates of commencement of business of each member of our Group that has made major contributions to our operating results during the Track Record Period are set out below:

Our Company’s interest (as at the Latest Place and date Principal Practicable No. Name of company of establishment business activity Date)

1. Chengdu Dekon Chicken Breeding Co., PRC, 10 October Holding company 100% Ltd.* (成都德康雞業有限公司) 2014 2. Chengdu Dekon Animal Husbandry PRC, 29 Holding company 100% Technology Co., Ltd.* (成都德康畜牧 December 2017 科技有限公司) 3. Chengdu Xindekon Food Co., Ltd.* (成 PRC, 17 August Holding company 100% 都新德康食品有限公司) 2020 4. Yuechi Yincheng Dekon Animal PRC, 21 January Pig farming 100% Husbandry Co., Ltd.* (岳池銀城德康 2008 畜牧有限公司) 5. Anshun Dekon Agriculture and Animal PRC, 9 May 2011 Pig farming 100% Husbandry Co., Ltd.* (安順德康農牧有限公司) 6. Songtao Dekon Agriculture and Animal PRC, 1 March Pig farming 100% Husbandry Co., Ltd.* (松桃德康農牧 2012 有限公司) 7. Jiangan Dekon Pig Farming Co., Ltd.* PRC, 27 April Pig farming 100% (江安德康生豬養殖有限公司) 2012 8. Quxian Dekon Pig Farming Co., Ltd.* PRC, 17 May Pig farming 100% (渠縣德康生豬養殖有限公司) 2012 9. Mianzhu Dekon Pig Farming Co., Ltd.* PRC, 13 June Pig farming 100% (綿竹德康生豬養殖有限公司) 2012 10. Xishui Dekon Agriculture and Animal PRC, 4 July 2012 Pig farming 100% Husbandry Co., Ltd.* (習水德康農牧有限公司) 11. Xuanwei Dekon Pig Farming Co., Ltd.* PRC, 18 October Pig farming 98.4% (宣威德康生豬養殖有限公司) 2012

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Our Company’s interest (as at the Latest Place and date Principal Practicable No. Name of company of establishment business activity Date)

12. Chongqing Hechuan Dekon Pig Farming PRC, 28 October Pig farming 100% Co., Ltd.* (重慶市合川區德康生豬養 2015 殖有限公司) 13. Horqin Right Front Banner Dekon PRC, 13 Pig farming 69% Agriculture and Animal Husbandry December 2016 Co., Ltd.* (科爾沁右翼前旗德康農牧有限公司) 14. Sihong Dekon Farming and Technology PRC, 18 April Pig farming 65% Co., Ltd.* (泗洪德康農牧科技有限公 2018 司) 15. Guangdong Wizagricultural Science & PRC, 10 July Yellow-feathered 92% Technology Co., Ltd.* (廣東智威農業 2003 broiler farming 科技股份有限公司) 16. Chongqing Bishan Dekon Poultry PRC, 27 April Yellow-feathered 88% Farming Co., Ltd.* (重慶市璧山區德 2007 broiler farming 康家禽養殖有限公司) 17. Guangdong Zhicheng Foods Co., Ltd.* PRC, 23 August Yellow-feathered 92% (廣東智成食品有限公司) 2007 broiler farming 18. Xifeng Dekon Poultry Farming Co., PRC, 16 Yellow-feathered 99% Ltd.* (息烽德康家禽養殖有限公司) December 2008 broiler farming 19. Deyang Dekon Poultry Farming Co., PRC, 24 Yellow-feathered 100% Ltd.* (德陽德康家禽養殖有限公司) September 2009 broiler farming 20. Kunming Dekon Poultry Farming Co., PRC, 30 Yellow-feathered 98% Ltd.* (昆明德康家禽養殖有限公司) September 2009 broiler farming 21. Shilin Dekon Poultry Farming Co., PRC, 28 January Yellow-feathered 95% Ltd.* (石林德康家禽養殖有限公司) 2011 broiler farming 22. Guizhou Guian New Area Dekon PRC, 20 May Yellow-feathered 99% Poultry Farming Co., Ltd.* (貴州貴安 2011 broiler farming 新區德康家禽養殖有限公司) 23. Kaiping Jinjiwang Poultry Co., Ltd.* PRC, 11 Yellow-feathered 92% (開平金雞王禽業有限公司) November 2002 broiler farming 24. Chengdu Dekon Animal Health PRC, 6 November Trading 100% Technology Service Co., Ltd.* (成都 2018 德康動物健康技術服務有限公司)

For changes in the share capital of our principal subsidiaries, please refer to the section headed “Appendix VI – Statutory and General Information – Further Information about our Group – 5. Changes in share capital of our principal subsidiaries” in this [REDACTED].

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ACQUISITIONS AND DISPOSALS DURING THE TRACK RECORD PERIOD

During the Track Record Period, our Company has completed certain acquisitions and disposals as follows, and as advised by our PRC Legal Adviser, such acquisitions and disposals have received relevant approvals and have been properly completed and settled in accordance with the applicable laws.

Acquisition of the entire equity interest in Xuanwei Dekon Feed Co., Ltd.* (宣威德康飼料有限公司), Anshun Dekon Feed Co., Ltd.* (安順德康飼料有限公司) and Jiang’an Dekon Feed Co., Ltd.* (江安德康飼料有限公司)

In December 2018, Chengdu Dekon Animal Husbandry Technology Co., Ltd.* (成都德康畜牧科技有限公司), our wholly-owned subsidiary, entered into an equity transfer agreement with Tequ Husbandry, pursuant to which, our Group acquired 100% equity interest in Xuanwei Dekon Feed Co., Ltd.* (宣威德康飼料有限公司), Anshun Dekon Feed Co., Ltd.* (安順德康飼料有限公司) and Jiang’an Dekon Feed Co., Ltd.* (江安德康飼料有限公司) from Tequ Husbandry at a total consideration of RMB25.646 million, which was determined based on three asset valuation reports issued by an independent valuer. According to the valuation reports, the market value of Xuanwei Dekon Feed Co., Ltd.* (宣威德康飼料有限公司), Anshun Dekon Feed Co., Ltd.* (安順德康飼料有限公司) and Jiang’n Dekon Feed Co., Ltd.* (江安德康飼料有限公司) were RMB4.1 million, RMB11.5 million and RMB15 million as at 30 November 2018, respectively. The purchase price was settled on 20 January 2019. Following the completion of the acquisition, Xuanwei Dekon Feed Co., Ltd.* (宣威德康飼料有限公司), Anshun Dekon Feed Co., Ltd.* (安順德康飼料有限公司) and Jiang’an Dekon Feed Co., Ltd.* (江安德康飼料有限公司) became the wholly-owned subsidiaries of our Company. This acquisition was a critical decision made under the backdrop of the outbreak of the African Swine Fever at the end of 2018, in order to prevent and control biosecurity breaches, build a stringent biosecurity prevention and control system, establish a set of “Dekon” standards which are higher than industry standards, monitor and trace the level of biosecurity of every batch of feed from production despatch, as well as secure the operation of the farmers in a safe and effective manner.

Tequ Husbandry was owned as to 99.5% by Sichuan Tequ, a connected person of our Company.

Acquisition of 85% equity interest in Xishui Runkang Livestock Breeding Co., Ltd.* (習水潤康畜牧養殖有限公司)

Chengdu Dekon Animal Husbandry Technology Co., Ltd.* (成都德康畜牧科技有限公司) entered into an equity transfer agreement with Leshan Jinxin Agricultural Development Co. Ltd.* (樂山錦鑫農業發展有限公司) dated 21 April 2020, pursuant to which, our Company acquired 85% equity interest in Xishui Runkang Livestock Breeding Co., Ltd.* (習水潤康畜牧養殖有限公司) from Leshan Jinxin Agricultural Development Co. Ltd.* (樂山錦鑫農業發展有限公司), an Independent Third Party, at a total consideration of RMB17 million, which was determined based on the asset valuation report issued by an independent valuer. Pursuant to the valuation report, the aggregate book value of the equity interest were RMB19.9 million as at 29 February 2020. The purchase price was settled on 8 April 2020. Following the completion of the acquisition, the Company held 85% equity interest in Xishui Runkang Livestock Breeding Co., Ltd.* (習水潤康畜牧養殖有限公司), and the remaining 15% equity interest were held by the original shareholder. Following the completion of the transaction, our Company became the largest shareholder of Xishui Runkang Livestock Breeding Co., Ltd.* (習水潤康畜牧養殖有限公司).

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Xishui Runkang Livestock Breeding Co., Ltd.* (習水潤康畜牧養殖有限公司) was engaged in the business of pig farming in Xishui County, Guizhou Province. This acquisition will benefit the Group in its regional development and expansion of production scales.

Disposal of the entire equity interest in Kaijiang Dekon Duck Breeding Co., Ltd.* (開江德康鴨業有限公司)

Chongqing Dekon, our wholly-owned subsidiary, entered into an equity transfer agreement with Sichuan Yixin Trading Co., Ltd.* (四川毅信商貿有限公司) dated 15 May 2018, pursuant to which, our Company disposed of the entire equity interest in Kaijiang Dekon Duck Breeding Co., Ltd.* (開江德康鴨業有限公司) to Sichuan Yixin Trading Co., Ltd.* (四川毅信商貿有限公司), an Independent Third Party, at a total consideration of RMB11.24 million, which was determined based on the asset valuation report issued by an independent valuer. Pursuant to the valuation report, the aggregate book value of the equity interest were RMB11.3 million as at 31 August 2017. The purchase price was settled on 6 July 2018. Following the completion of the disposal, our Group no longer held any equity interest in Kaijiang Dekon Duck Breeding Co., Ltd.* (開江德康鴨業有限公司). Kaijiang Dekon Duck Breeding Co., Ltd.* (開江德康鴨業有限公司) was engaged in the business of duck breeding and accounted for a very minimal percentage of our Group’s turnover before the disposal. The reason for the disposal was to focus on the business of pig and yellow-feathered broiler farming and to streamline the structure of our Group.

Disposal of 45% equity interest in Guizhou Tequ New Agriculture Group Co., Ltd.* (貴州特驅新農業集團有限公司)

On 15 February 2018, Chongqing Dekon, our wholly-owned subsidiary, entered into an equity transfer agreement with Tequ Husbandry which was owned as to 99.5% by Sichuan Tequ, pursuant to which, our Company disposed of 45% equity interest in Guizhou Tequ New Agriculture Group Co., Ltd.* (貴州特驅新農業集團有限公司) to Tequ Husbandry, at a total consideration of RMB14.274 million, which was determined based on the asset valuation report issued by an independent valuer. Pursuant to the valuation report, the aggregate book value of the equity interest were RMB27.7 million as at 30 June 2017. The purchase price was settled on 20 April 2018. Following the completion of the disposal, our Group no longer held any equity interest in Guizhou Tequ New Agriculture Group Co., Ltd.* (貴州特驅新農業集團有限公司). Guizhou Tequ New Agriculture Group Co., Ltd.* (貴州特驅新農業集團有限公司) was engaged in the business of tea leaf production and construction and accounted for a very minimal percentage of our Group’s turnover before the disposal. The reason for the disposal was to focus on the business of pig and yellow-feathered broiler farming and to streamline the structure of our Group.

Tequ Husbandry was owned as to 99.5% by Sichuan Tequ, a connected person of our Company.

None of the above acquisitions constitute an acquisition of a major subsidiary under Rule 4.05A of the Listing Rules. During the Track Record Period and up to the Latest Practicable Date, save as disclosed above, we did not have any other significant acquisitions, disposals or mergers.

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[REDACTED] INVESTMENTS

Overview

Our Company has received several rounds of [REDACTED] Investments since its establishment, the principal terms of which are summarised as follows:

Full settlement Cost per Date of the date of the Share on the Amount investment investment date of Discount/ received by Investor agreement Investment amount amount investment Premium(2) the Company

Chen Yuhe 18 January RMB20,000,000 13 February RMB10(1) [REDACTED] nil (陳玉和) 2015 2015 Peng Benping 11 July 2015 RMB55,000,000 4 August 2015 RMB11(1) [REDACTED] nil (彭本平) CEL Maiming 5 November RMB120,000,000 24 November RMB20(1) [REDACTED] nil 2016 2016 Chengdu Jiakun 30 March 2017 RMB60,600,000 26 April RMB20.2(1) [REDACTED] nil 2017 Song Yuanfang 7 December RMB72,000,000 7 December RMB24(1)(3) [REDACTED] nil (宋遠芳)(3) 2018 2018 CEL Maiming 17 December RMB180,000,000 20 December RMB11.07(4) [REDACTED] RMB180,000,000 2018 (debt-to-equity 2018 swap agreement)(4) Suzhou Houqi 29 June 2019 RMB60,000,000 24 May 2019 RMB11.07 [REDACTED] RMB60,000,000 Yixing CEL 14 November RMB300,000,000 21 April RMB44.77(5) [REDACTED] RMB300,000,000 2019 (debt-to-equity 2020 swap agreement)(5) Yixing CEL 26 November RMB200,000,000 2 December RMB35.3 [REDACTED] RMB200,000,000 2019 2019

Notes:

(1) For illustration purpose only. Before the Company was converted to a joint stock company on 9 May 2019, the Company did not have any shares. Cost per Share was calculated with reference to the investment amount and the corresponding registered capital.

(2) Calculated based on the [REDACTED] of HK$[REDACTED] per Share (being the mid-point of the indicative [REDACTED] range) and a total of 360,000,000 Shares, being the total number of Shares in issue before the [REDACTED].

(3) In addition to the aforementioned [REDACTED] Investments, Ms. Song Yuanfang (宋遠芳) received 2,978,799 Shares from her spouse, Mr. Peng Bengang (彭本剛), pursuant to the equity transfer agreement on 4 January, 2021. Mr. Peng Bengang (彭本剛), received the same number of shares from his brother, Mr. Peng Benping (彭本平) pursuant to an equity transfer agreement dated 28 December 2020.

(4) On 29 June 2019, CEL Maiming subscribed for 16,255,549 Shares at a price of RMB11.07 per Share. The total investment amount of RMB180 million was paid by way of debt-to-equity swap pursuant to a debt-to-equity swap agreement dated 17 December 2018.

(5) On 21 April 2020, Yixing CEL subscribed for 6,701,159 Shares at a price of RMB44.77 per Share. The total investment amount of RMB300 million was paid by way of debt-to-equity swap pursuant to a debt-to-equity swap agreement dated 14 November 2019.

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Use of proceeds from the [REDACTED] Investments

We used the proceeds from the [REDACTED] Investments by CEL Maiming, Yixing CEL and Suzhou Houqi, being RMB180 million, RMB500 million and RMB60 million, respectively, in our daily business development and operation. As at the Latest Practicable Date, we had utilised the above-mentioned proceeds from the [REDACTED] Investments in full.

Other [REDACTED] Investments were paid directly to the Shareholders who transferred the equity interest, and the selling Shareholders will be in possession of the investment amount.

Strategic benefits the [REDACTED] Investors brought to our Company

At the time of the [REDACTED] Investments, our Directors were of the view that our Company could benefit from the knowledge and experience of the [REDACTED] Investors, as well as the additional capital brought by the investments to our Company through [REDACTED] Investments by CEL Maiming, Yixing CEL and Suzhou Houqi.

Our Directors believed that our Company could benefit from their industry insights and guidance. Our Directors also believed that our Company could benefit from the [REDACTED] Investors’ commitment to our Company, as their investment demonstrates their confidence in and endorsement of the performance, management and prospects of our Group.

Basis of determining the consideration paid

The consideration for each [REDACTED] Investment was determined on arm’s length negotiations between our Company or Shareholders and the [REDACTED] Investors after taking into account the timing of the subscription and the illiquidity of the Shares of our Company as a private company when the [REDACTED] Investments were made.

Lock-up

Pursuant to the PRC Company Law and the undertakings made by each of the [REDACTED] Investors, the Shares held by each of the [REDACTED] Investors shall not be transferred within one year from the [REDACTED].

BACKGROUND OF THE [REDACTED] INVESTORS

CEL Maiming and Yixing CEL

CEL Maiming is a limited partnership established in the PRC on 27 February 2015. CEL Huiling Investment (Shanghai) Limited (光控匯領投資(上海)有限公司) is its general partner. CEL Huiling Investment (Shanghai) Limited (光控匯領投資(上海)有限公司) is a wholly- owned subsidiary of CEL Venture Capital (Shenzhen) Limited (光大控股創業投資(深圳)有限公司), which is a wholly-owned subsidiary of China Everbright Limited.

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Yixing CEL, a limited company established in the PRC on 26 September 2008, is a wholly-owned subsidiary of CEL Venture Capital (Shenzhen) Limited (光大控股創業投資(深圳)有限公司), which is a wholly-owned subsidiary of China Everbright Limited.

China Everbright Limited (a company whose shares are listed on the Main Board of the Stock Exchange, stock code: 165) is principally engaged in the provision of financial service business through its subsidiaries and associates, and persistently pursues the cross-border macro asset management strategy, with specific focuses on fund management and investment business.

Apart from CEL Maiming and Yixing CEL, China Everbright Limited also holds equity interest in our Company through Zhuhai Mailun. Zhuhai Mailun is a limited partnership established in the PRC on 19 May 2017. CEL Huiling Investment (Shanghai) Limited (光控匯領投資(上海)有限公司) is its general partner. For details of the shareholding of China Everbright Limited in our Company, please refer to the section headed “– Special Rights of the [REDACTED] Investors – Share Capital of our Company” in this chapter.

Suzhou Houqi

Suzhou Houqi is a limited partnership enterprise established in the PRC on 5 January 2018 and a private equity investment fund with a capital contribution of RMB1 billion. It mainly invests in the coffee, food packaging, catering and consumer product industries. The executive partner of Suzhou Houqi is Beijing Housheng Investment Management Centre (Limited Partnership). As at the Latest Practicable Date, Suzhou Houqi was owned as to 67.0% by Suzhou Houqi Zhengde Investment Centre (Limited Partnership)* (蘇州厚齊正德股權投資中心(有限合夥)), 23.0% by South Hope Industry Company Limited* (南方希望實業有限公司)), 5.0% by Xijie (Liaocheng) Biotech Company Limited * (希杰(聊城)生物科技有限公司), 5.0% by Huafeng (Shanghai) Investment Management Company Limited* (華烽(上海)投資管理有限公司) and 0.0001% by Beijing Housheng Investment Management Centre* (北京厚生投資管理中心(有限合夥)).

Mr. Peng Benping (彭本平)

Mr. Peng Benping is the chairman of Sichuan Hengbang Tianfu Group Co., Ltd.* (四川恒邦天府集團有限公司) and Sichuan Hengbang Energy Group Co., Ltd.* (四川恒邦能源股份有限公司), which are mainly engaged in businesses related to real estate development, hotel investment, urban fuel gas operation and clean energy development. Mr. Peng Benping is an individual [REDACTED] Investor and an Independent Third Party.

Ms. Song Yuanfang (宋遠芳) and Chengdu Jiakun

Ms. Song Yuanfang holds 97.38% interests in Chengdu Jiakun, both being Independent Third Parties. Ms. Song Yuanfang’s spouse is Mr. Peng Bengang; Mr. Peng Bengang and Mr. Peng Benping are brothers.

Mr. Chen Yuhe (陳玉和)

Mr. Chen Yuhe is mainly engaged in real estate project investments, and is currently the chairman of Shanghai Chengtai Real Estate Development Co., Ltd.* (上海丞泰房地產開發有限公司). Mr. Chen Yuhue is an individual [REDACTED] Investor and an Independent Third Party.

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SPECIAL RIGHTS OF THE [REDACTED] INVESTORS

Pursuant to the shareholder agreements entered into between CEL Maiming, Yixing CEL and Suzhou Houqi with our Company, respectively, CEL Maiming, Yixing CEL and Suzhou Houqi have the following special rights: (i) pre-emptive rights; (ii) anti-dilution rights; (iii) tag-along rights; (iv) rights to know; (v) exclusive rights and no more favourable terms; and (vi) financial compensation rights. Such special rights will no longer exist after the [REDACTED].

Share capital of our Company

The following table sets out our shareholding structure as at the date of this document and following the completion of the [REDACTED], assuming that the [REDACTED]isnot exercised.

Shareholding ratio following Amount of Percentage as at the completion Class of share Number of issued share the date of this of the Shareholder capital(1) Shares capital (RMB) document (%) [REDACTED](2)

Desheng Ronghe(3) Domestic Shares 131,067,169 131,067,169 36.4075% [REDACTED] Chen Yuxin (陳育新) Domestic Shares 44,681,989 44,681,989 12.4117% [REDACTED] CEL Maiming(4) Domestic Shares 37,570,873 37,570,873 10.4364% [REDACTED] Song Fuxian (宋福賢) Domestic Shares 17,872,796 17,872,796 4.9647% [REDACTED] Tang Jianyuan (唐健源) Domestic Shares 14,893,996 14,893,996 4.1372% [REDACTED] Yixing CEL(4) Domestic Shares 12,279,343 12,279,343 3.4109% [REDACTED] Wang Degen (王德根)(3) Domestic Shares 11,915,198 11,915,198 3.3099% [REDACTED] Song Yuanfang (宋遠芳)(5) Domestic Shares 11,915,197 11,915,197 3.3098% [REDACTED] Peng Benping (彭本平) Domestic Shares 11,915,197 11,915,197 3.3098% [REDACTED] Zhongcheng Jinyi(7) Domestic Shares 9,469,072 9,469,072 2.6303% [REDACTED] Hu Wei (胡偉) Domestic Shares 8,936,398 8,936,398 2.4823% [REDACTED] Chengdu Jiakun(5) Domestic Shares 8,936,398 8,936,398 2.4823% [REDACTED] Suzhou Houqi Domestic Shares 6,566,080 6,566,080 1.8239% [REDACTED] Wang Dehui (王德輝)(6) Domestic Shares 5,957,599 5,957,599 1.6549% [REDACTED] Liu Guofeng (劉國峰) Domestic Shares 5,957,599 5,957,599 1.6549% [REDACTED] Chen Yuhe (陳玉和) Domestic Shares 5,957,599 5,957,599 1.6549% [REDACTED] Shu Dingming (舒鼎銘) Domestic Shares 4,613,359 4,613,359 1.2815% [REDACTED] Yao Hailong (姚海龍) Domestic Shares 2,978,799 2,978,799 0.8274% [REDACTED] Zhuhai Mailun(4) Domestic Shares 2,706,767 2,706,767 0.7519% [REDACTED] Tongchuang Deheng(7) Domestic Shares 1,723,413 1,723,413 0.4787% [REDACTED] Xu Wei (徐偉) Domestic Shares 1,489,399 1,489,399 0.4137% [REDACTED] Tang Xiaoping (唐小平) Domestic Shares 595,760 595,760 0.1655% [REDACTED] Other Public Shareholders H Shares – ––[REDACTED]

Total 360,000,000 360,000,000 100.0000% 100.0000%

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Notes:

(1) Pursuant to Rule 8.08 of the Listing Rules, the Domestic Shares will not constitute a part of the public float.

(2) Assuming that the [REDACTED] is not exercised.

(3) Desheng Ronghe is wholly owned by Mr. Wang Degen (王德根).

(4) Each of CEL Maiming, Yixing CEL and Zhuhai Mailun is controlled by China Everbright Limited. For details, please refer to the section headed “- Background of the [REDACTED] Investors”.

(5) Ms. Song Yuanfang (宋遠芳) holds 97.38% interests in Chengdu Jiakun as at the Latest Practicable Date. For details, please refer to the section headed “- Background of the [REDACTED] Investors”. Ms. Song Yuanfang (宋遠芳) is the spouse of Mr. Peng Bengang (彭本剛); Mr. Peng Bengang (彭本剛) and Mr. Peng Benping (彭本平) are brothers.

(6) Mr. Wang Degen (王德根) and Mr. Wang Dehui (王德輝) are brothers.

(7) Both Zhongcheng Jinyi and Tongchuang Deheng are the Employee Shareholding Platforms of our Company.

Public float

Pursuant to Rule 8.08 of the Listing Rules, the Domestic Shares (including the Shares held by the [REDACTED] Investors) will not constitute a part of the public float. The Company has applied for waiver in relation to the public float requirement under Rule 8.08(1) of the Listing Rules. Please refer to the section headed “Waivers from Strict Compliance with the Listing Rules” in this [REDACTED] for details.

Compliance with Interim Guidance and Guidance Letters

Based on the documents provided by our Company relating to the [REDACTED] Investments, the Sole Sponsor confirms that the [REDACTED] Investments are in compliance with Guidance Letter HKEX-GL29-12 issued by the Stock Exchange in January 2012 and updated in March 2017, Guidance Letter HKEX-GL43-12 issued by the Stock Exchange in October 2012 and updated in July 2013 and March 2017, and Guidance Letter HKEX-GL- 44-12 issued by the Stock Exchange in October 2012 and updated in March 2017.

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Our Group’s Shareholding Structure Immediately prior to the [REDACTED]

As at the Latest Practicable Date, the Company has a total of 128 subsidiaries, out of which seven are directly held by the Company. The

following diagram illustrates our shareholding structure and the structure of our principal subsidiaries which have made major contributions to our STRUCTURE CORPORATE AND HISTORY operating results during the Track Record Period immediately prior to the [REDACTED]:

Wang Degen

(100%) Zhuhai Mailun Suzhou Houqi Suzhou Zhongcheng Jinyi Hu Wei Song Yuanfang Wang Dehui Liu Guofeng Chen Yuhe Yao Hailong Xu Wei Tang Xiaoping Shu Dingming Yixing CEL Tongchuang Deheng Chen Yuxin Song Fuxian CEL Maiming Tang Jianyuan Peng Benping Chengdu Jiakun Desheng Ronghe 3 – 139 –

3.3099% 36.4075% 12.4117% 4.9647% 10.4364% 4.1372% 3.3098% 2.4823% 3.3098% 2.4823% 1.6549% 1.6549% 1.6549% 0.8274% 0.4137% 0.1655% 1.2815% 2.6303% 1.8239% 3.4109% 0.7519% 0.4787%

The Company(1)

(100%) (100%) (100%) (100%) Chengdu Dekon Animal Chengdu Dekon Animal Health Chengdu Dekon Chicken Chengdu Xindekon Husbandry Technology Technology Service Co., Ltd.* Breeding Co., Ltd.*(3) Food Co., Ltd.*(4) Co., Ltd.*(2) ( 成都德康動物健康技術 (成都德康 (成都新德康 (成都德康畜牧服務有限公司) 雞業有限公司) 食品有限公司) 科技有限公司)

(100%) (100%) (100%) (100%) (100%) (100%) (98.4%) (100%) (100%) (69%) (65%) (92%) (88%) (99%) (100%) (98%) (95%) (99%) * Yuechi Yincheng Chongqing Hechuan Jiangsu Dekon Chongqing Bishan Guizhou Guian New Anshun Dekon Songtao Dekon Jiangan Dekon Quxian Dekon Xishui Dekon Xuanwei Dekon Mianzhu Dekon Hog Guangdong Wizagricultural Xifeng Dekon Kunming Dekon Poultry Dekon Animal Dekon Hog Farming Jilin FarmingDekon and Technology Dekon Poultry Deyang Dekon Area Dekon Poultry Agriculture and Animal Agriculture and Animal Hog Farming Co., Ltd.* Hog Farming Co., Ltd.* Agriculture and Animal(5) Hog Farming Co., Ltd.* Farming Co., Ltd.* Science & Technology Shilin Dekon Poultry Co., Ltd.* Investment Co., Ltd.*Co., Ltd.* Poultry Farming Farming Co., Ltd.*(11) Husbandry Co., Ltd. (6) (7) Co., Ltd.* Farming Co., Ltd.(9) (10) Poultry Farming (12) Farming Co., Ltd.*(13) * Husbandry Co., Ltd.* Husbandry Co., Ltd.* Husbandry Co., Ltd.* (8) * Co., *Ltd. Farming Co., Ltd.* (江安德康 (渠縣德康 (宣威德康 (綿竹德康 Co.,* Ltd. (昆明德康 (岳池銀城 (重慶市合川區 (吉林德康 (江蘇德康 (廣東智威 (重慶市璧山區 (息烽德康 (石林德康家禽 (貴州貴安 (安順德康 (松桃德康生豬養殖生豬養殖 (習水德康生豬養殖生豬養殖 (德陽德康家禽家禽養殖德康畜牧德康生豬養殖投資有限公司) 農牧科技農業科技德康家禽家禽養殖養殖有限公司) 新區德康家禽農牧有限公司) 農牧有限公司) 有限公司) 有限公司) 農牧有限公司) 有限公司) 有限公司) 養殖有限公司) 有限公司) 有限公司) 有限公司) 有限公司) 股份有限公司) 養殖有限公司) 有限公司) 養殖有限公司)

(100%) (100%) (100%) (100%)

Horqin Right Front BannerSihong Dekon Farming Dekon Agriculture and and Technology Guangdong Zhicheng Kaiping Jinjiwang Animal Husbandry Co., Ltd.* Co., Ltd.* Foods Co., Ltd.* Poultry Co., Ltd.*

(科爾沁右翼 (泗洪德康 (廣東智成 (開平金雞王前旗德康農牧科技食品有限公司) 禽業有限公司) 農牧有限公司) 有限公司) HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS

Notes:

(1) As at the Latest Practicable Date, in addition to the four subsidiaries, including Chengdu Dekon Animal Husbandry Technology Co., Ltd.* (成都德康畜牧科技有限公司), Chengdu Dekon Animal Health Technology Service Co., Ltd.* (成都德康動物健康技術服務有限公司), ChengduDekon Chicken Breeding Co., Ltd.* (成都德康雞業有限公司) and Chengdu Xindekon Food Co., Ltd.* (成都新德康食品有限公司), our Company has another three direct holding subsidiaries.

(2) As at the Latest Practicable Date, Chengdu Dekon Animal Husbandry Technology Co., Ltd.* (成都德康畜牧科技有限公司) has a total of 96 direct or indirect holding subsidiaries. ITR N OPRT STRUCTURE CORPORATE AND HISTORY (3) As at the Latest Practicable Date, Chengdu Dekon Chicken Breeding Co., Ltd.* (成都德康雞業有限公司) has a total of 22 direct or indirect holding subsidiaries.

(4) As at the Latest Practicable Date, Chengdu Xindekon Food Co., Ltd.* (成都新德康食品有限公司) has a total of 3 direct or indirect holding subsidiaries.

(5) The remaining 1.6% equity interest of Xuanwei Dekon Pig Farming Co., Ltd.* (宣威德康生豬養殖有限公司) are held by an individual, who is an Independent Third Party.

(6) The remaining 31% equity interest of Jilin Dekon Investment Co., Ltd.* (吉林德康投資有限公司) are indirectly held by a corporate shareholder, which is an Independent Third Party.

(7) The remaining 35% equity interest of Jiangsu Dekon Agriculture and Animal Husbandry Technology Co., Ltd.* (江蘇德康農牧科技有限公司) are indirectly held by a corporate

4 – 140 – shareholder, which is an Independent Third Party.

(8) On December 12, 2019, Guangdong Techology Venture Capital Co., Ltd.* (廣東省科技風險投資有限公司) entered into the Equity Transaction Contract (《產權交易合同》) with Chengdu Dekon Chicken Breeding Co., Ltd.* (成都德康雞業有限公司), pursuant to which, Guangdong Techology Venture Capital Co., Ltd. transferred its 18.52% shares in Guangdong Wizagricultural Secience & Technology Co., Ltd.* (廣東智威農業科技有限公司) to Chengdu Dekon Chicken Breeding Co., Ltd. at a price of RMB68 million. After the completion of the transaction, the Group holds 92% equity interest in Guangdong Wizagicultural Science & Technology Co., Ltd., the remaining equity interest are held as to 4.6296% by Guangdong Agricultural Science Asset Operation Co., Ltd.* (廣東省農科資產經營有限公司) and 3.3704% by Pasturage Research Institute of Guangdong Academy of Agricultural Sciences* (廣東省農業科學院畜牧研究所).

(9) The remaining equity interest of Chongqing Bishan Dekon Poultry Farming Co., Ltd.* (重慶市璧山區德康家禽養殖有限公司) are held as to 12.0% by five individuals, who are Independent Third Parties.

(10) The remaining 1% equity interest of Xifeng Dekon Poultry Farming Co., Ltd.* (息烽德康家禽養殖有限公司) are held by an individual, who is an Independent Third Party.

(11) The remaining 2% equity interest of Kunming Dekon Poultry Farming Co., Ltd.* (昆明德康家禽養殖有限公司) are held by two individuals, who are Independent Third Parties.

(12) The remaining 5% equity interest of Shilin Dekon Poultry Farming Co., Ltd.* (石林德康家禽養殖有限公司) are held by two individuals, who are Independent Third Parties.

(13) The remaining 1% equity interest of Guizhou Guian New Area Dekon Poultry Farming Co., Ltd.* (貴州貴安新區德康家禽養殖有限公司) are held by an individual, who is an Independent Third Party. Our Group’s Shareholding Structure after the [REDACTED] BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS

The following diagram illustrates our shareholding structure and the structure of our principal subsidiaries which have made major contributions to our operating results during the Track Record Period immediately following the completion of the [REDACTED], assuming the [REDACTED] is not exercised: ITR N OPRT STRUCTURE CORPORATE AND HISTORY

Wang Degen

100% Desheng Ronghe Chen Yuxin Song Fuxian CEL Maiming Tang Jianyuan Peng Benping Hu Wei Song Yuanfang Chengdu Jiakun Wang Dehui Liu Guofeng Chen Yuhe Yao Hailong Xu Wei Tang Xiaoping Shu Dingming Zhongcheng Jinyi Suzhou Houqi Yixing CEL Zhuhai Mailun Tongchuang Deheng Public ShareholdersofHShares

[REDACTED][REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED][REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 4 – 141 –

The Company(1)

(100%) (100%) (100%) (100%) Chengdu Dekon Animal Chengdu Dekon Animal Health Chengdu Dekon Chicken Chengdu Xindekon Husbandry Technology Technology Service Co., Ltd.* (3) (4) * Breeding Co., Ltd.* Food Co., Ltd.* Co., Ltd. (2) ( 成都德康動物健康技術 (成都德康 (成都新德康 (成都德康畜牧服務有限公司) 雞業有限公司) 食品有限公司) 科技有限公司)

(100%) (100%) (100%) (100%) (100%) (98.4%) (98%) (100%) (100%) (69%) (65%) (92%) (88%) (99%) (100%) (98%) (95%) (99%)

Yuechi Yincheng Chongqing Hechuan Jiangsu Dekon Chongqing Bishan Guizhou Guian New Anshun Dekon Songtao Dekon Jiangan Dekon Quxian Dekon Xishui Dekon Xuanwei Dekon Mianzhu Dekon Hog Guangdong Wizagricultural Xifeng Dekon Dekon Animal Dekon Hog Farming Jilin FarmingDekon and Technology Dekon Poultry Deyang Dekon Kunming Dekon Poultry Area Dekon Poultry Agriculture and Animal Agriculture and Animal Hog Farming Co., Ltd.* Hog Farming Co., Ltd.* Agriculture and Animal (5) Hog Farming Co., Ltd.* Farming Co., Ltd.* Science & Technology Shilin Dekon Poultry Co., Ltd.* Co., Ltd.* Poultry Farming (10) Husbandry Co., Ltd.* Investment(6) Co., Ltd.* (7) Co., Ltd. Farming Co., Ltd.*(9) Poultry Farming Farming Co.,Farming Ltd.* Co., Ltd.*(12) Farming Co., Ltd.*(13) Husbandry Co., Ltd.* Husbandry Co., Ltd.* Husbandry Co., Ltd.* *(8) Co., Ltd.* (江安德康 (渠縣德康 (宣威德康 (綿竹德康 Co., Ltd.* (昆明德康 (岳池銀城 (重慶市合川區 (吉林德康 (江蘇德康 (廣東智威 (重慶市璧山區 (息烽德康 (石林德康家禽 (貴州貴安新區 (安順德康 (松桃德康生豬養殖生豬養殖 (習水德康生豬養殖生豬養殖 (德陽德康家禽家禽養殖德康畜牧德康生豬養殖投資有限公司) 農牧科技農業科技股份德康家禽養殖家禽養殖養殖有限公司) 德康家禽養殖農牧有限公司) 農牧有限公司) 有限公司) 有限公司) 農牧有限公司) 有限公司) 有限公司) 養殖有限公司) 有限公司) 有限公司) 有限公司) 有限公司) 有限公司) 有限公司) 有限公司) 有限公司)

(100%) (100%) (100%) (100%)

Horqin Right Front BannerSihong Dekon Farming Dekon Agriculture and and Technology Guangdong Zhicheng Kaiping Jinjiwang Animal Husbandry Co., Ltd.* Co., Ltd.* Poultry Co., Ltd. Foods Co., Ltd.* * (科爾沁右翼 (泗洪德康 (廣東智成 (開平金雞王前旗德康農牧農牧科技食品有限公司) 禽業有限公司) 有限公司) 有限公司) HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS

Notes:

(1) As at the Latest Practicable Date, in addition to the four subsidiaries, including Chengdu Dekon Animal Husbandry Technology Co., Ltd.* (成都德康畜牧科技有限公司), Chengdu Dekon Animal Health Technology Service Co., Ltd.* (成都德康動物健康技術服務有限公司), Chengdu Dekon Chicken Breeding Co., Ltd.* (成都德康雞業有限公司) and Chengdu Xindekon Food Co., Ltd.* (成都新德康食品有限公司), our Company has another three direct holding subsidiaries.

(4) As at the Latest Practicable Date, Chengdu Xindekon Food Co., Ltd.* (成都新德康食品有限公司) has a total of 3 direct or indirect holding subsidiaries.

(5) The remaining 1.6% equity interest of Xuanwei Dekon Pig Farming Co., Ltd.* (宣威德康生豬養殖有限公司) are held by an individual, who is an Independent Third Party.

(6) The remaining 31% equity interest of Jilin Dekon Investment Co., Ltd.* (吉林德康投資有限公司) are indirectly held by a corporate shareholder, which is an Independent Third Party.

(7) The remaining 35% equity interest of Jiangsu Dekon Agriculture and Animal Husbandry Technology Co., Ltd.* (江蘇德康農牧科技有限公司) are indirectly held by a corporate

4 – 142 – shareholder, which is an Independent Third Party.

(8) On December 12, 2019, Guangdong Techology Venture Capital Co., Ltd.* (廣東省科技風險投資有限公司) entered into the Equity Transaction Contract (《產權交易合同》) with Chengdu Dekon Chicken Breeding Co., Ltd.* (成都德康雞業有限公司), pursuant to which, Guangdong Techology Venture Capital Co., Ltd. transferred its 18.52% shares in Guangdong Wizagricultural Science & Technology Co., Ltd.* (廣東智威農業科技有限公司) to Chengdu Dekon Chicken Breeding Co., Ltd. at a price of RMB68 million. After the completion of the transaction, the Group holds 92% equity interest in Guangdong Wizagricultural Science & Technology Co., Ltd., the remaining equity interest are held as to 4.6296% by Guangdong Agricultural Science Asset Operation Co., Ltd.* (廣東省農科資產經營有限公司) and 3.3704% by Pasturage Research Institute of Guangdong Academy of Agricultural Sciences* (廣東省農業科學院畜牧研究所).

(10) The remaining 1% equity interest of Xifeng Dekon Poultry Farming Co., Ltd.* (息烽德康家禽養殖有限公司) are held by an individual, who is an Independent Third Party.

(11) The remaining 2% equity interest of Kunming Dekon Poultry Farming Co., Ltd.* (昆明德康家禽養殖有限公司) are held by two individuals, who are Independent Third Parties.

(12) The remaining 5% equity interest of Shilin Dekon Poultry Farming Co., Ltd.* (石林德康家禽養殖有限公司) are held by two individuals, who are Independent Third Parties.

(13) The remaining 1% equity interest of Guizhou Guian New Area Dekon Poultry Farming Co., Ltd.* (貴州貴安新區德康家禽養殖有限公司) are held by an individual, who is an Independent Third Party. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS

OVERVIEW

We have extensive experience in modern breeding and farming of pigs and yellow- feathered broilers. Over the years, we received a number of recognitions from various authorities in the PRC, such as Agriculture Industrialisation National Key Enterprises (農業產業化國家重點龍頭企業). Our operations cover 14 provinces, municipalities and autonomous regions across China, with more than 7,000 employees. Our current business consists of three segments: pig, poultry and ancillary products segments. Our pig and poultry segments are our core business. Our pig products primarily include market hogs, breeding pigs and market piglets. Our poultry products primarily include yellow-feathered broilers, chicks and eggs. For the years ended 31 December 2018, 2019 and 2020, the revenue contributed by our pig products accounted for approximately 43.6%, 53.3% and 70.6% of our total revenue, respectively; the revenue contributed by poultry products accounted for approximately 55.3%, 44.1% and 28.1% of our total revenue, respectively. The remaining revenue contribution came from the sale of ancillary products (such as feed ingredients), accounting for 1.1%, 2.5% and 1.3% of our total revenue, respectively.

Note:

1 Southwest China includes Sichuan Province, Yunnan Province, Guizhou Province and Chongqing municipality.

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The following table sets out a breakdown of our revenue by business segment and product category (after elimination of inter-segment transactions) for the Track Record Period:

Year ended 31 December 2018 2019 2020 % of total sales % of total sales % of total sales RMB’000 revenue volume RMB’000 revenue volume RMB’000 revenue volume (heads/ (heads/ (heads/ birds/units) birds/units) birds/units) Revenue Sales of pigs Market hogs 1,382,555 42.1 934,588 2,830,017 51.3 1,187,911 5,518,420 67.7 1,282,034 Breeding pigs 36,415 1.1 19,745 93,132 1.7 27,586 148,167 1.8 23,264 Market piglets 11,888 0.4 38,317 18,082 0.3 26,563 80,682 1.0 65,306 Boar semen 1,271 0.0 N/A 522 0.0 N/A 428 0.0 N/A

Subtotal 1,432,129 43.6 2,941,753 53.3 5,747,697 70.6 ------

Sales of poultry Yellow-feathered broilers 1,702,960 51.9 50,287,765 2,250,639 40.8 62,900,220 2,161,790 26.5 72,350,245 Chicks and eggs 111,873 3.4 91,693,204 184,115 3.3 96,253,831 125,993 1.5 90,027,361

Subtotal 1,814,833 55.3 2,434,754 44.1 2,287,783 28.1 ------

Sales of ancillary products 35,084 1.1 139,598 2.5 109,869 1.3

Total 3,282,046 100.0 5,516,105 100.0 8,145,349 100.0

Our vertically integrated business model covers the whole industry chain of breeding and farming of pigs and yellow-feathered broilers including feed production, breeding, multiplying, farming and sales of pigs and yellow-feathered broilers. Such model enables us to closely monitor production processes to ensure disease control and food safety. Furthermore, with the enhanced enforcement of environmental regulations across China, the rise of labour costs and the influence of African Swine Fever, the gaps of economy and output efficiency between small scale farming companies and large-scale pig farming companies have gradually widened in recent years. Large-scale pig farming companies are expected to rapidly and continuously expand their market share with relatively low costs and advanced technology, according to Frost & Sullivan. In anticipation of this market concentration trend, we have actively expanded our scale and gradually increased our market share in China’s pig production market.

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We are currently building our slaughtering and food processing business. We are expecting to complete three projects for our slaughtering and food processing business with a total annual slaughtering capacity of 8 million pigs and meat processing capacity of 200,000 tonnes by June 2023. For our project in Meishan City, Sichuan Province, we have cooperated with Tönnies, a leading integrated meat enterprise in Germany, to construct a slaughterhouse with an annual capacity of 2 million heads of hogs (phase I), which will employ the technology and know-how of Tönnies, and is expected to commence production in June 2023. The commencement of such three projects will mark the expansion of our business lines into downstream slaughtering and food processing, which we believe will enable us to create a high-quality pork industry value chain covering from feed production, pig breeding and farming, to production of fresh pork and meet products.

We breed and raise all of our breading pigs in our own farms to ensure the growth traits and competitiveness of our breeding pigs, which will in turn have a considerable impact on the quality and economic value of our market hogs and market piglets. Our market hog and market piglets are raised under a combination of three models, namely the No. 2 Family Farm model, No. 1 Family Farm model and Company Farming model:

• No. 2 Family Farm model refers to a model under which sows are transferred to and raised in family farm for breeding. The family farm owner builds a pig farm according to our standards. Upon passing our inspection, the family farm owner receives crossbreeding sows, feed, vaccine, medicine and other materials from us for breeding and fattening. After the market hogs are sold, we settle the contract farming fee with the family farm owner.

• No. 1 Family Farm model refers to market hog finish farm. Under this model, the family farm owner builds a pig farm according to our standards. Upon passing our inspection, the family farm owner receives weaned piglets as well as feed, vaccine, medicine and other materials from us. After the pigs are sold, we settle the contract farming fee with the family farm owner.

As at 31 December 2020, we operated a total of 92 pig farms, and contracted with a total of 2,011 family farms.

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We raise yellow-feathered broiler breeders and hatch fertile eggs in our own poultry farms. Our broiler breeders are not for external sales. We sell externally chicks hatched from fertile eggs. Regarding the farming of yellow-feathered broilers, we mainly operate through Family Farm model and Farming Base model:

• The Family Farm model is a model under which we provide chicks, feed, medicines and breeding technical services to family farm owners. The family farm owners are required to rear the chicks into yellow-feathered broilers according to our requirements. We settle the contract farming fee with the family farm owners once the broilers are sold. Our yellow-feathered broilers are mainly produced under the Family Farm model, which enables us to effectively reduce our investment in farming facilities, focus on improving breeding and nutrition technology and food safety, which are our core competitiveness.

• The Farming Base model is a model under which we build facilities by ourselves and lease such facilities to farmers for production. The operation under this model is the same as that of the Family Farm model other than that fact that we own the farming facilities. This model provides an important platform for us to experiment new management methods and promote hardware upgrade.

As at 31 December 2020, we operated a total of 14 poultry farms, and contracted with a total of 3,456 family farms and farming bases.

We have a rich gene pool of pigs and yellow-feathered broilers. We are a leading breeding pig supplier in terms of stock of Great Grandparent nucleus breeding herd and pig genetic materials in China, according to Frost & Sullivan Report. We have multiple national and ministerial level breeding platforms including the National Nucleus Pig Breeding Farm (國家生豬核心育種場), the Key Laboratory of Poultry Breeding and Genetics of the Ministry of Agriculture (農業部家禽遺傳育種重點實驗室) and the National Spark Programme Leading Enterprise Technology Innovation Centre (國家星火計劃龍頭企業技術創新中心). We also participated in national high-tech projects such as the National 863 Plan and 948 Major Special Projects. Our pig and broiler breeding system allows us to rapidly increase the production performance and economic value of our pigs and yellow-feathered broilers, which we believe will give us an advantage when competing with pig or broiler producers without any breeding capabilities. For our pig segment, our breeding pigs include different types such as Landrace, Duroc, Yorkshire, Z-line Yorkshire, Tempo terminal sires and crossbred breeding pigs. The number of our breeding pigs had been growing rapidly during the Track Record Period. Our nucleus breeding herd increased from 5,373 heads as at 1 January 2018 to 13,093 heads as at 31 December 2020, which enabled us to establish a herd of 200,000 heads of sows and gilts in multiplying farms. The sales volume of our pigs has increased from 992,650 heads in 2018 to 1,370,604 heads in 2020. For our poultry segment, in terms of the stock of yellow-feathered broiler breeders as at 31 December 2020, we had approximately 267,000 birds of pure lines, approximately 272,000 sets of Grandparent Stocks, and approximately 1.1 million sets of Parent Stocks. The stock of our yellow-feathered broiler breeders ultimately determine the

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We will continue to focus on the safety and quality of our products, expand the scale of our breeding and farming business and increase our market share in the breeding and farming industry. We will continue to uphold our mission of “engaging in breeding and farming with food safety and quality in mind” and to strive for the goal of building a “high-end food ecosystem”. We endeavour to create value for shareholders and society through production of high-quality products.

OUR COMPETITIVE STRENGTHS

We believe our following competitive strengths enable us to continue to be one of the leading pig and yellow-feathered broiler producers in the PRC. Leveraging our strong market positioning and in-depth knowledge of the pig and yellow-feathered broiler breeding industry, economies of scale, stringent production requirements, strict food safety management, strong management expertise and robust financial position, we believe we are well positioned to compete in the relevant industry and markets. Our competitive strengths include:

Our business platform covers the whole industry value chain of breeding and farming of pigs and yellow-feathered broilers in China, which allows us to implement strict control in our production to meet the market’s growing demand for safe and high-quality pig and poultry products.

We are one of the leading pig and poultry breeding and farming enterprises in China, with footprint in 14 provinces, municipalities and autonomous regions across China and more than 7,000 employees. Over the years, we received a number of recognitions from various authorities in the PRC, including Agriculture Industrialisation National Key Enterprises (農業產業化國家重點龍頭企業). Our business platform covers the whole industry chain of breeding and farming of pigs and yellow-feathered broilers in China, including feed processing, breeding, multiplication, farming and sales of pigs and yellow-feathered broilers. Compared to our competitors who focus on either farming or breeding only, we can better control the cost and maintain the quality of our overall production process through the integrated breeding, farming and sales of pig and yellow-feathered broiler.

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Our feed mills supply part of the feed we use in our pig and poultry business. For the feed and feed ingredients we procure from third-party suppliers, we have implemented stringent quality standards, and inspections and control procedures to ensure that the quality of the feed and feed ingredients we procure from third-party suppliers meets the national standards and our specification. We usually enter into biosecurity agreements with third-party feed suppliers and require such supplier to follow the same quality control standards as our feed mill. We also set up a special inspection department to spot check the production of our feed suppliers through surprise inspections and on-site visit to ensure the safety of the feed we procure from suppliers.

Our Company Farming and family farm models facilitate our control of food safety during production.

• Our Company Farming model allows us to develop and maintain strict safety specifications and procedures for each step of our production process. None of our products has ever had any food safety issues on veterinary medicine residues or prohibited substances in the tests conducted by the Ministry of Agriculture and Rural Affairs (“農業部”) or the State Administration for Market Regulation (“市場監管總局”).

• We have established a sound product traceability system. Our product traceability system helps us monitor the flow of our products and the specific conditions under which our products are produced. In addition, our traceability system can provide detailed product information to downstream slaughterhouse and other meat product producers to help them track and manage the source of their products. The product traceability system also enables us to track how various materials are used in every major step of our production such as the usage of piglets, chicks, feed, vaccine and medicines.

• We set high standards for the construction of family farms and have a set of strict management policies, covering all major aspects of operation including farm site selection, construction, personnel management, disinfection management, animal immunity management, quality control of pigs and broilers, water quality, feed and veterinary medicine management, and medicine residue monitoring. Our sound family farm management enables us to maintain healthy conditions of our pigs and broilers, which in turn reduces the amount of medicines used and improve product quality.

• We closely monitor animal disease outbreak on our farms and family farms and have developed various disease cleansing programmes in response to reports of disease outbreaks. We implement strict biosecurity measures and promptly eliminate diseased animals once identified. We also divide our pigs and broilers into smaller groups during farming process to prevent the spreading of the disease.

We have developed and maintained supplier management and control measures across our operations and established a supplier admission system to ensure the quality of our raw materials. We have also put in place a strict selection process for raw material suppliers. First,

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We have in-depth know-how on the breeding and farming of pigs and yellow-feathered broilers that covers the key technical areas of the breeding and farming industry such as precision nutrition and disease prevention and control.

Since our establishment, we have been focusing on the research and development (“R&D”) of our proprietary technologies on modern breeding and farming. We have established various national and ministrial level breeding and farming technology research platforms, including the National Spark Programme Leading Enterprise Technology Innovation Centre (國家星火計劃龍頭企業技術創新中心), the Key Laboratory of Poultry Breeding and Genetics of the Ministry of Agriculture (農業部家禽遺傳育種重點實驗室) and the National Nucleus Pig Breeding Farm (國家生豬核心育種場). In addition, we also cooperate with leading research institutions around the world and first-class domestic animal husbandry research institutes to conduct technology research and development. Our research and development capabilities give us advantages in the following breeding and farming technologies:

In-depth know-how on the breeding of pigs and yellow-feathered broilers

Breeding technology is the core competitiveness of a breeding enterprise, and is often called the “chip” of the breeding industry. Our pig breeding system is equipped with elite Canadian breeding pigs and Topigs terminal sire groups which provide us with abundant pig genetic resources for production of pigs with excellent growth efficiency and slaughter performance. After years of selection and breeding, we have developed Dekon breeding stock with high meat output, good farming rate, fast daily weight gain, good feed conversion ratio, high slaughter rate and good meat quality. Through our poultry breeding system, we can offer a variety of poultry products and provide our customers with different types of yellow- feathered chicken with excellent growth efficiency. We are the largest supplier of yellow- feathered Parent Stock DOCs in China, with annual sales of Parent Stock DOCs are approximately 4.2 million sets, accounting for about 9.8% market share in China in terms of sales volume in 2020, according to Frost & Sullivan.

Scientific animal disease prevention and control system which reduces our exposure to major animal diseases

In response to fatal animal diseases such as African Swine Fever, PRRS, porcine epidemic diarrhoea and avian influenza that threaten the pig and poultry industry, we have established an effective disease prevention and control system and detailed implementation measures. For example, in response to the outbreak of African Swine Fever in the PRC, we have implemented a prevention and control plan with strict biosecurity measures and refined production management process in response to the latest trend of such disease. In addition, we monitored

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Precision nutrition technology to achieve the best production efficiency

We precisely measure the nutritional needs of pigs and yellow-feathered broilers at different growth stages and design feed nutrition formulas that are easy to be digested by pigs and yellow-feathered broilers to achieve the best feeding and production efficiency. For example, we have implemented a set of dynamic sow body condition management system which allows us to regularly monitor the back fat of sows and adjust feeding strategies so that the sows can reach a desirable reproductive body condition and achieve high performance. In addition, we also engage external experts in animal nutrition to help us design feed nutrition formula for pigs to be implemented among the Group.

Established sales prediction model to predict the best timing for the sales of pigs to maximise profits

As the market prices of pigs are constantly changing, a pig producer often faces the problem of how to time the sales according to different parameters such as the age and weight of pigs in order to maximise the profits. Leveraging our years of market research and accumulated big data, we have developed a visual forecasting model which has taken into considerations of various parameters (such as pig growth curve, fixed farming cost and sales price) to predict the best weight and time for the sales of pigs.

In-depth know-how on design of farms and the related equipment

We have done ample research on large-scale farming of pigs and yellow-feathered broilers and have accumulated in-depth know-how on site selection, design and operation of pig and yellow-feathered broiler farms. With our experience and in-depth know-how, we are able to improve our labour efficiency and disease prevention and control capabilities through automation, standardisation and refinement of breeding process. For example, our pig farms are equipped with modern ventilation and environmental control equipment and we utilise modern production technologies such as automated equipment and online monitoring to improve the production efficiency of our farms. We have standardised the design and hardware requirements for our chicken farms which include enclosed chicken house, automatic environmental control, automatic lighting and automatic manure removal system.

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We are one of the largest domestic breeding and farming enterprises in China and our integrated breeding and farming business enables us to ramp up productions quickly to meet changing market demand.

We are one of China’s largest enterprises focused on the breeding and farming of pigs and yellow-feathered broilers. According to the Frost & Sullivan Report, we ranked seventh among all pig suppliers in China and second among all pig suppliers in Southwest China in terms of revenue and sales volume of in 2020. We ranked 10th among all breeding pig suppliers in China in 2020 in terms of revenue. We are the largest yellow-feathered Parent Stock DOCs supplier in China in 2020 in terms of revenue and sales volume and third among all yellow-feathered broiler suppliers in China in 2020 in terms of revenue and sales volume.

China’s pig and yellow-feathered broiler breeding and farming industry is rapidly changing from small-scale and household farming to large-scale farming. This change is driven by factors including increasingly stringent enforcement of environmental regulations, accelerated urbanisation, and the government policies to encourage large-scale breeding and farming. Large-scale pig farming companies are expected to rapidly and continuously expand their market share with relatively low costs and advanced technology. According to Frost & Sullivan, the proportion of scaled pig farms with no less than 500 heads of pigs in terms of annual output of pigs increased from approximately 45.0% in 2016 to approximately 57.0% in 2020. In anticipation of this market concentration trend, we have actively expanded our scale and gradually increased our market share in China’s pig production market. We believe our scale of business enables us to improve operation efficiency as we can standardise our operations.

Our pig and broiler breeding system allows us to rapidly increase our production capacity in a short amount of time which we believe will give us an edge when competing with other pig or broiler producers without any breeding capabilities. For our pig segment, we currently have breeding pigs including Landrace, Duroc, Yorkshire, Z-line Yorkshire, Tempo terminal sires and crossbred breeding pigs. The number of our breeding pigs had been growing rapidly during the Track Record Period. For example, our nucleus breeding herd increased from 5,373 heads on 1 January 2018 to 13,093 heads on 31 December 2020, which enabled us to establish a herd of 200,000 heads of sows and gilts in our multiplying farms. The sales volume of our pigs has increased from 992,650 heads in 2018 to 1,370,604 heads in 2020. For our poultry segment, in terms of the stock of yellow-feathered broiler breeders as at 31 December 2020, we had approximately 267,000 birds of pure lines, approximately 272,000 sets of Grandparent Stocks, and approximately 1.1 million sets of Parent Stocks. Our sales volume of yellow- feathered broilers increased from 50.3 million birds in 2018 to 72.4 million birds in 2020. Our ability to scale up our production in a short amount of time enables us to provide a large number of pig and broiler products for customers in different regions in response to changing market conditions.

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We pioneered No. 2 Family Farm model among large-scale breeding and farming enterprises in China which enables us to establish a stable long-term cooperative relationship with our family farm owners.

We pioneered the No. 2 Family Farm model among large-scale breeding enterprises in China. Under this model, the family farm owner builds a pig farm according to our specifications. Upon our inspection and acceptance of the pig farm, the family farm owner deposits certain earnest fund and in return receives from us crossbred sows, feed, vaccine, medicines and other materials for breeding and production. After the pigs are released for slaughter from the family farm, we settle the contract farming fee with the family farm owner as agreed in the contract. In 2018, 2019 and 2020, 192,879 heads, 318,201 heads and 401,012 heads of pigs we sold were raised under the No. 2 Family Farm model, which accounted for 19.4%, 25.6% and 29.3% of the total sales of pigs, respectively. We plan to continue to promote No. 2 Family Farm model and expect the revenue generated from our No. 2 family farm to continue to increase in future.

In addition, we also have No. 1 Family Farm model with some family farm owners. Under this model, the family farm owner builds a pig farm according to our specifications. Upon our inspection and acceptance of the pig farm, the family farm owner deposits certain earnest fund and receives from us weaned piglets as well as feed, vaccine, medicines and other materials. After the pigs are released for slaughter, we settle the contract farming fee with the family farm owner as agreed in the contract. In 2018, 2019 and 2020, approximately 609,973 heads, 779,756 heads and 815,840 heads of pigs we sold were raised under the No. 1 Family Farm model, which accounted for 61.5%, 62.8% and 59.5% of the total sales of pigs, respectively. We provide No.1 family farm owners with weaned piglets, feed, medicine and technology, and the farmer are only responsible for the finish of the weaned piglets we provide. The No. 1 Family Farm model is a prevalent farming model in the industry.

We believe that our pionneering No. 2 Family Farm model has the following advantages compared with other farming models:

• Biosecurity and animal diseases prevention and control: As we only have to transport sows to the family farms instead of a large number of weaned piglets, therefore, the entire production cycle of “breeding pigs-piglets-market pigs” is completed at the family farm, thereby reducing the flow and transportation risks of pigs which makes it easier to prevent animal diseases and maintain biosecurity.

• Rapid expansion of “asset-light” production: The crossbreeding sows are maintained at family farms. In addition, we do not need to bear the cost of land, labour, water and electricity in connection with the breeding and reproduction of sows which enable us to save breeding costs and expand in relatively short amount of time.

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• Promotion and upgrading of local industry: We train family farm owners with the modern breeding techniques including sow breeding and reproduction to enable them to operate family farms with a long-term vision, hence promoting the industry upgrade in local regions.

• High entry barriers and long-term stable cooperation: The breeding process of our No. 2 family farm involves breeding of sows, not merely the finish of weaned piglets, which requires the family farm owners to grasp more sophisticated breeding technologies. We conduct rigorous training for the family farm owners of No. 2 family farms, and have a longer-term contract with them. Therefore, No. 2 Family Farm model has technical and management barriers to our competitors, which will help us form a long-term stable and cooperative relationship with No. 2 family farms.

We have advanced technologies on environmental protection and sustainable development of our breeding and farming business which is an important competitive advantage for our future growth.

In recent years, China’s pig and poultry breeding industry has been highly regulated by the introduction of new environmental protection laws and regulations. In 2014, Regulations on the Prevention and Control of Pollution from Large-scale Breeding of Livestock and Poultry (《畜禽規模養殖污染防治條例》) were implemented, and in 2015, the amended Environmental Protection Law of the PRC came into force. In addition, the Environmental Impact Assessment Law of the People’s Republic of China (which came into effect in 2018) and the Construction Project Environmental Impact Assessment Classification Management Directory (which came into effect in 2021) require livestock and poultry farms and farming bases to prepare and file environmental impact reports or environmental impacts registration forms. As a result, small-scale and household farming enterprises have been and will continue to be required to upgrade their equipment for functions such as heating and pollutant discharge. Many small-scale and household farms have been unable to comply with these new environmental protection requirements and therefore have been forced to exit from the industry. These developments are also expected to make it more challenging and difficult for farmers who have exited from the industry to return when favourable market conditions appear.

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In contrast with small-scale farming companies, we have devoted significant resources to research and development in environmental protection techniques and facilities and the sustainable development of breeding and farming business. We have established a dedicated team focusing on developing an eco-friendly farming model. We have made the following technical achievements in this area:

• Wastewater treatment. We discharge wastewater after they meet our discharging standard to the surrounding farmland for irrigation. Such treatment process can ensure that the wastewater will not cause pollution to surrounding farmland contribute to our development of an eco-friendly integrated farming model, which combines breeding and farming to realise sustainable agricultural and farming development.

• Waste gas treatment. We reduce the emission of odour from farms by optimising breeding process, adjusting feed composition, controlling farming density and cleaning pig and chicken houses regularly. In addition, we seal off the odour- producing section of the farm, regularly spray deodorants, plant plants around the farm, and install environmental protection equipment such as biological filters or spray towers on sites. Besides, we set up a biogas collection during the sewage treatment. After the biogas is collected, desulfurised, and transported into the gas storage tank, it is used as a fuel in the living area of the pig farms to realise the effective use of biogas energy.

• Solid waste treatment. We collect pig and chicken manure and send them to organic fertiliser factory as semi-finished fertiliser to produce organic fertiliser, so as to achieve waste reuse. Some of our farms have implemented fermentation equipment to conduct harmless treatment of manure, realising the comprehensive reuse of pig and chicken manure. Dead chickens and eggshells are directly fermented through organic fertiliser fermentation tanks.

We have an experienced management team and a talented work force.

Our senior management team members have an average of more than 10 years of industry experience in all major aspects of our business, and the majority of our management hold a bachelor’s degree or above. Many of the management team members have been working in breeding and farming industry for years. On their management positions, they have gained rich experience in corporate management. Many of our senior management team members have in-depth knowledge and experience in modern pig and poultry breeding and farming industry, which has contributed to our development as a leader in the industry.

We have a highly qualified R&D team. As at the Latest Practicable Date, our R&D team had more than 100 employees, among which 39 held master’s degree or above, including 8 holding doctor’s degree and above. The majority of our employees are holders of bachelor’s degrees or above. We have established the Key Laboratory of Poultry Breeding and Genetics of the Ministry of Agriculture (農業部家禽遺傳育種重點實驗室) and the National Spark

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Programme Leading Enterprise Technology Innovation Centre (國家星火計劃龍頭企業技術創新中心), which are equipped with advanced equipment for our R&D work. In addition, we have also established a multi-disciplinary research and development team with experts in fields such as genomics, genetics, mathematical statistics, breeding, nutrition, and veterinary medicine. Furthermore, we also cooperate with external research institutions and universities such as China Agricultural University, Sichuan Agricultural University, Huazhong Agricultural University, Guangdong Academy of Agricultural Sciences, State Key Laboratory of Livestock and Poultry Breeding as well as other domestic first-class animal husbandry research institutes in research and development.

We have a comprehensive training programme for talent development. Our employees participate in new employee orientation training to understand our corporate culture. Our training system is divided into different levels according to the needs and characteristics of our employees. We conduct annual appraisals to all employees and we include top performing employees in our talent reserve pool. We also provide remuneration incentives to outstanding talents.

OUR BUSINESS STRATEGIES

Further expand our business to downstream slaughtering and production of high quality fresh pork and meat products by leveraging our pig breeding and farming capabilities.

Pork has traditionally been the primary meat source for Chinese consumers. According to Frost & Sullivan Report, the per capita annual disposable income increased to RMB32,189 in 2020 from RMB23,821 in 2016, representing a CAGR of 7.8%, which is expected to reach 8.1% in the next five years. Driven by continuous growth in average income level of Chinese households and a rising population, the pork consumption in China has been growing at a steady pace in recent years. According to Frost & Sullivan Report, China’s per capita pork consumption has increased from 19.6 kg in 2016 to 20.5 kg in 2020, with a CAGR of 1.1%. The CAGR is expected to reach approximately 3.0% in the next five years with per capita pork consumption of 23.7 kg in 2025.

We have an established pig breeding and farming business which enables us to offer a stable high-quality pig supply in a cost effective manner to our downstream slaughtering and food processing business. In the pork industry value chain, fresh pork and meat products generally enjoy a high profit margin. We have cooperated with Tönnies, the largest integrated meat enterprise in Germany, to construct a slaughterhouse with an annual capacity of 2 million heads of pigs (phase I) in Meishan City, Sichuan Province, which will use the technology and knowhow Tönnies. The project is expected to commence production in June 2023. The commencement of the project will mark the expansion of our business lines into downstream production and sales of fresh pork and meat products. We believe such expansion will enable us to create a high-quality pork industrial chain covering from breeding to production of fresh pork and meet products which will bring the new development opportunities to our business.

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Production of Safe and High-quality Fresh Pork and Meat Products

In recent years, food safety events have frequently occurred in China, which have caused a significant social impact and made consumers highly concerned about food safety issues. According to the Frost & Sullivan Report, food safety and quality has become one of the most important factors affecting Chinese consumers’ food preference.

In sharp contrast to consumers’ increasing demands for high-quality meat products, the pork production in China is highly fragmented and there has been a bottleneck to the production of high-quality and safe meat products. We believe it will provide favourable market conditions for our expansion into the downstream slaughtering and fresh port and meat products market. For years, we have been upholding the mission of “engaging in breeding and farming with food safety and quality in mind” in our operation and production. Our strict quality control in our upstream farming business has enabled us to provide high-quality stable pig supply in a cost effective manner to our downstream slaughtering and food processing business which will give our downstream fresh pork and meat product business an advantage which cannot be provided by most of our competitors. We believe that once our slaughterhouses commence operation, we will be able to provide competitive, high-quality and safe fresh pork and meat products to the market.

Scale and Standardised Production

As affected by the African Swine Fever and the ongoing COVID-19 pandemic, the market prices of meat products in China have fluctuated significantly in recent years. According to Frost & Sullivan Report, China’s slaughtering and meat products production industry is still highly fragmented. Integration of upstream breeding and farming of pigs with downstream slaughtering and scale production of fresh pork and meat products has become a trend in pork industry as it enables an enterprise to improve its production scale and management level, adapt to changing market conditions faster standardise the production of pork and meat products in a cost effective manner, which in turn allows an enterprise to to rapidly enhance its capability to cope with market changes and risks.

We have started the construction of slaughterhouses and meat product production facilities in the neighbouring areas of our pig farms to expand to the downstream businesses of slaughtering and production of fresh pork and meat products. We believe by integrating our breeding and farming business with our slaughtering and fresh pork and meat products business, we will be able to reduce our production costs, control our product quality and expand the geographical coverage of our products. Our slaughterhouses and food processing plants currently under construction are located in Yibin City and Meishan City of Sichuan Province and Sihong county, Suqian City, Jiangsu Province. Please see “– Our business model and products – food processing business (to commence)” for more details.

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Production of Pre-Prepared Pork Products

As consumers’ living standard continues to improve in China, the demands for safe, nutritious, convenient and flavoured meat products have been rising in recent years. In particular, the market demands for convenient and ready-to-eat prepared products have created a huge opportunity for meat products manufacturers. Prepared products which refer to the prepared dishes which have already been washed, cut, prepared and can be cooked directly has become more popular among Chinese consumers and catering business. The prepared products are made from farm produce, livestock, poultry and aquatic products. Prepared dishes are featured by convenience, freshness and health with abundant choices which can cater to the tastes of different groups in regions across the country, and have therefore gradually become a product favoured by households and catering industry.

Standardisation of dishes in terms of appearance and taste has been a bottleneck issue for the development of chain catering business. In order to solve this issue, many chain catering enterprises have increasingly turned to prepared food products to accelerate their expansion. In addition, the rapid growth of delivery services has posed higher requirements on the operating efficiency of catering enterprises, while prepared food products can improve the serving efficiency and turnover rate of catering enterprises to achieve fast serving of dishes and improve customers’ consumption experiences. Furthermore, catering enterprises face increasingly greater pressures on rentals and labour costs which motivate them to procure more standardised prepared food materials so as to save rentals and labour for kitchen operation, thereby reducing costs.

We believe the market demand for Pre-prepared food will provide us with an opportunity for our food processing business.

Increase investment in research and development with a focus on improving genetic performance of our breeding pigs and the development of new meat products to strengthen our core competitiveness.

We plan to focus on cultivating varieties of pigs and poultry in our breeding and farming business. Breeding, as a core competitiveness in modern agricultural industry, is often called the “chip” in the breeding and farming industry. To maintain our strengths in breeding, we plan to increase our investment in R&D on breeding to improve genetic performance of our products. We intend to further increase our investment in breeding and farming technologies through the National Spark Programme Leading Enterprise Technology Innovation Centre (國家星火計劃龍頭企業技術創新中心) and the R&D platform at the Key Laboratory of Poultry Breeding and Genetics of the Ministry of Agriculture (農業部家禽遺傳育種重點實驗室)as well as our interdisciplinary R&D team, thereby improving our market competitiveness and reducing our production costs. We also plan to leverage on advanced genomic selection technology to advance the selective breeding of pig and chicken, and further improve the genetic performance of our products. For breeding of chicken breeders, we plan to make use

– 157 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS of our domestically leading genetic resource pool to further breed new varieties of yellow-feathered chicken breeders to enhance the market strengths of our chicken breeders, including the stable quality and performance.

Furthermore, we plan to make continuous improvements in disease prevention and control technology, feed nutrition management, precise feeding technology and best-time-for-sale forecast application to further boost our production efficiency. We believe our investment in breeding and farming technologies will further improve our production efficiency to maintain our position as one of the leading breeding and farming enterprises in China.

As part of our plan to establish our food business, we plan to develop and launch high- and low-temperature meat products, Chinese-style meat products, prepared dish products, fermented hams and leisure meat products. As a result, we plan to focus on the research and development of meat products once we establish our food business. We will focus on the development of products which cater to consumers’ taste preferences and demands for healthier products. We will actively advance our plan for new product development through a series of measures, such as expansion of our existing R&D team by including members with R&D experience on meat products and improvement of R&D hardware facilities. In addition, our sales and marketing department plans to conduct market studies on meat products and collect market data on a regular basis to assist in our development of new products.

We also intend to continuously deepen our cooperation with universities and research institutions at home and abroad, such as Aarhus University, China Agricultural University, Sichuan Agricultural University, Huazhong Agricultural University, South China Agricultural University. We plan to organise a wide range of technology exchanges, resource sharing and promote industry-teaching-research cooperation. In addition, we have engaged renowned experts as our advisers. We will discuss with experts and advisers for any material issues we encounter during our research and development. We believe the cooperation will provide technical support for our research on breeding, animal health management, food processing and farming technology.

Expand our sales network by leveraging our strength in pig and poultry genetic resources to develop new product varieties that caters to different customer demands.

Our pig and chicken farms spread across 14 provinces, municipalities and autonomous regions accross China, including Guangdong, Zhejiang, Fujian and other major traditional pig consumption provinces. For sales of our breeding pig and market piglets, we have covered the major regions in China. For our yellow-feathered broilers, we have mainly covered the markets in Sichuan, Chongqing, Yunnan, Guizhou, Guangdong and Guangxi.

We plan to leverage on our strengths in pig and poultry genetic resources to expand our customer network to new markets. We have strong technology capabilities and have developed technology improvement plans for all of our major target customers in the market. We plan to expand a professional sales team for breeding pigs and market piglets. We also plan to promote the sales of breeding pigs and market piglets through developing large farming customers,

– 158 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS small and medium-sized breeding and farming customers, developing brokers for our breeding pigs and market piglets and enhancing external publicity and advertising for our breeding pigs and market piglets. For wholesale markets which have a large transaction amount and stable customer requirement, we carefully cultivate each wholesale market to establish a predominant stable position. For retail end-markets, we plan to focus on key market to enhance our recognition and gradually expand to nearby markets by leveraging on the influence of such key market.

For online markets, we intend to further cooperate with third parties to distribute our products through online e-commerce channels, such as JD.com and Jingxi (京喜) platforms. We believe by collaborating with such e-commerce channels and expanding the coverage areas of our products to markets across the country, we can deliver to our consumers healthy, high-quality and fresh food products while our customers are at their homes.

For our food business, we plan to develop sales channels, which we believe have high growth potentials and greater potentials to meet our consumers’ needs. We will continue to develop new customers through different channels, platforms and fields, such as live streaming and other e-commerce channels to expand the exposure of our products to consumers. We also plan to develop offline customers such as supermarkets and hypermarkets, community grocery stores, catering hotels, food processing companies, dealers and other key customers.

In recent years, the development of chain catering enterprises and the booming development of delivery services have promoted the growing demands for standardised prepared food products, in particular during the COVID-19 pandemic period when people have to stay at home, many of whom tend to order takeaway foods, which also makes the delivery of prepared food products exceptionally popular. According to canyin88.com (紅餐網), among the chain catering brands with over 10 outlets, 68.3% of them have adopted a central kitchen model for centralised distribution of the dishes. Central kitchen has a prominent scale effect in terms of the number of outlets. More outlets will bring more revenue to the catering erterprises. We plan to, through the standardised operation and management, conduct pre-processing of the food, such as washing, splitting and matching, on a centralised basis as required by our customers including restaurants, canteens and food processors, and then distribute the prepared food products to various outlets of customers for sales to terminal consumers upon secondary processing.

Develop our brand influence and awareness and increase market share by fully leveraging our strength in food safety controls in our upstream breeding and farming business.

According to Frost & Sullivan, continuous consumption growth and upgrade in China drives the demand for pork products, especially the demand for branded high-end pork products. Such demand will become the driving force to promote the development of pork products.

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We will strive to establish our high-end food brand in China with the guiding principle of “becoming a builder of high-end food ecosystem”. We believe by leveraging our strength in food safety controls in our upstream breeding and farming business, we will be able to develop our high-end food brands and reinforce brand recognition of our food safety advantage through interaction with consumers. In order to enhance consumers’ recognition of our product brand, we plan to implement the following marketing strategies:

• We plan to enhance consumers’ recognition of our brand by promoting our food products as quality products produced with technologies and know-how in accordance with European standards as well as our breeding strategies and eco-friendly farming model;

• We will formulate a designated publicity plan targeting different middle-to-high- income class consumer groups, and invite specific groups, such as kindergarten students, internet celebrities and government leaders, to visit our plants, conduct product promotions and displays, and advocate environmental friendly concept;

• We will adopt diversified brand promotion strategies such as increasing marketing through Key Opinion Leaders (“KOLs”) on popular channels to feed consumers with a brand image of food safety, thereby gradually build up consumers’ trust and recognition on our products;

• We will conduct market surveys on our competitors’ products on regular basis and adjust our packaging and promotion strategies based on consumers’ feedbacks to create a high-end brand image and improve our brand recognition;

• We will make brand interaction plans on regular basis, and sponsor customer meetings and product tastings events to strengthen interactions with our dealers, consumers and users, thereby improving our product awareness and reputation;

• We will conduct regular trainings on creative marketing ideas to improve our marketing personnel’s as well as our external dealers’ marketing skills and creativity, so as to move and attract consumers, and gain a better market image for our products; and

• We will add a product experience centre in our food production facilities to increase consumers’ experience, satisfaction and affinity.

Continue to promote our pioneered No. 2 Family Farm model, and expand into the upstream and downstream business upon achieving sizable farming in the region.

We plan to continuously promote No. 2 Family Farm model, and gradually increase the number of No. 2 family farms to drive our business expansion. In recent years, the PRC government has continuously introduced new policies to support the development of farming industry in rural areas. For example, the State Council issued the Opinion on Comprehensively

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Promoting Rural Revitalisation and Modernisation of Agriculture and Villages in 2021, which encourages the development of a modern breeding system and promotes the stable and orderly development of the pig industry. Aided by relevant government policies, we plan to cooperate with more No. 2 family farm owners on county basis in selected regions, and establish local feed plants, slaughterhouses and food processing plants in regions where local farms has reached significant farming scale in order to further expand our business to the upstream and downstream feed and food processing. We believe the expansion of our No. 2 Family Farm model will provide a stable driving force for the sustainable development of our business.

Meanwhile, we also plan to develop and provide better environmentally-friendly technologies to our family farms. We will continue to reduce the impact on environment to eventually achieve the goal of developing eco-friendly and sustainable agriculture and food business practices. We plan to select areas and counties suitable for a combination of planting and farming to carry out the “Hundred Villages and Million Pigs (百村百萬)” project. For example, we plan to promote the application of fermentation equipment for innocuous treatment of feces to realise the comprehensive reuse of livestock and poultry feces, thereby improving the local soil quality so that it is suitable for planting of green vegetables and fruit.

Continue to recruit and cultivate talents to ensure a strong talent reserve and our market competitiveness.

Talents are fundamental to our development. The sustained growth of an enterprise requires outstanding professional talents and management talents. We are cooperating with Tönnies to expand our food processing sector. In the future, we will demand a large number of outstanding talents with international visions with respect to food business. We intend to cultivate relevant talents through strengthening external exchanges and internal trainings while enhancing our recruitment efforts to seek new talents. We carry out campus recruitment in universities and colleges across the country every spring and autumn, and establish cooperation programmes with a large number of universities and colleges to introduce ourselves to students.

New employees will attend orientation training upon joining us to gain an understanding of our corporate culture and strengths, and we will arrange different types of trainings for new comers to help them adapt to the requirements for different jobs.

Meanwhile, we will also organise ongoing trainings for our business partners, such as technical guidance for our cooperative family farm owners or farmers to improve their breeding and farming skills. Moreover, we will also organise ongoing assessment and guidance for our suppliers to improve their biosecurity measures.

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OUR BUSINESS MODEL AND PRODUCTS

Our current business consists of three segments, namely pig, poultry, and sales of ancillary products. Breeding and farming of pigs and yellow-feathered broilers are the core of our current business. Our vertically integrated business model covers the whole industry value chain of breeding and farming of pigs and yellow-feathered broilers including feed production, breeding, multiplication, farming and sales of pigs and yellow-feathered broilers. We are in the process of expanding our business to the slaughtering and processing of pigs, as well as the production and sales of fresh pork and processed meat products.

waste disposal

Breeding end Farming end Sales channel

Sales of breeding pigs, market piglets and market hogs

Breeding Scientific prevention Precise nutrition technology and control Layout in progress

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Main Products of Pig Segment

Our pig products mainly include breeding pigs, market hogs and market piglets.

Breeding Pigs

Our breeding pigs include purebred and crossbreeding pigs. The table below sets out our main varieties of breeding pigs and their respective features:

Tempo breeding pig Yorkshire Z-line Landrace breeding pig breeding pig

• Terminal sire imported • A female parent breeding • Excellent female parent from Topigs pig formed by Topigs’ breeding pig • Fast growth continuous improvement • Large litter size • Good feed conversion on the basis of Yorkshire • Strong resilience rate • High breeding • Strong and plump size performance, large litter size and high litter carrying performance

Yorkshire breeding pig Duroc breeding pig Crossbreeding pig

• Terminal sire • Terminal sire • Breeding sow • Fast growth • Fast growth • Excellent breeding • Healthy, strong with • Healthy, strong with performance plump muscles plump muscles • Good feed conversion • Good feed conversion rate, high lean yield and rate high meat quality • High lean yield and high meat quality

Market hogs and market piglets

Market hogs are pigs primarily held for trading and production of pork products. The pigs that are not selected as breeding pig candidates will be raised and sold as market hogs. In addition, breeding pig candidates that are not later sold as breeding pig will also be sold as market hogs. Market piglets are small market hogs weighing between 6 to 25kg.

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Main Products of Poultry Segment

The main products of our poultry segment include yellow-feathered chicks, eggs and yellow-feathered broilers.

Chicks and eggs

We sell externally chicks hatched from fertile eggs, which can be bred into yellow- feathered breeders or broilers, and are divided into Parent Stock DOCs and commodity chicks. In addition, we also sell fertile eggs that do not meet our production requirements. The following table sets out the main categories of our Parent Stock breeders and their respective features:

Fast-feathering and fast-growing Dwarf and fast-growing New native 3 (新土三) (快羽快長) (節糧快長) • Parent Stock breeders are of • Parent Stock cocks are of • Parent Stock breeders are of normal sizes, fast-feathering normal sizes and fast- normal sizes and fast- growth, pure yellow, neat and feathering growth feathering growth consistent feather • Hens are of short sizes, slow- • Parent Stock cocks are of feathering growth, low feed crimson feather colour and red consumption and high egg cockscomb production

Native 4 (土四) Partridge (麻黃) Native 2 (土2) • Parent Stock cocks are of • Parent Stock cocks are of • Parent Stock cocks are of normal sizes and fast- normal sizes and slow- normal sizes, crimson feather feathering growth feathering growth colour and red cockscomb • Hens are of short sizes, slow- • Hens are of short sizes, slow- • Hens are of short sizes, low feathering growth, low feed feathering growth feed consumption and high consumption and high egg • Low feed consumption and egg production production high egg production

Native 1.5 (土1.5) Silky chicken (竹絲雞) • Parent Stock cocks are of • Parent Stocks are of typical normal sizes, golden yellow features such as silk feathers, feather colour and red cherry-sized heads, rose cockscomb crowns, green ears, five or • Hens are of short sizes, fast- six toes, hairy feet, black feathering growth, low feed bones, black skin and black consumption and high egg meat production

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Yellow-feathered broilers

We offer to our customers yellow-feathered broilers, which are mainly used for the production of chicken products. In particular, “Lingnan Yellow®”(嶺南黃), “Yu Pinfeng® (御品鳳)”, “Xiangyuema® (香粵麻)” and “Dexiang® (德鄉)” are our well-known brands. The meat texture is generally firm and chewy. The main breeds are set out below:

Bearded chicken (胡須雞) Xiangyuema (香粵麻) Tuhuang 2 (土皇2) (such as “Yu Pinfeng®”)

Dekon Red (德康紅) Native 1.5 (土1.5) Yushan Red (雲山紅) (such as “Dexiang®”)

Ancillary Products

Our ancillary products mainly include feed ingredients.

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Food Processing Business (to commence)

Procurement and inspection

Pig slaughtering

Sales of half carcassCutting and processing By-product processing

Sales Deep processing

Refined processed High-temperature Low-temperature meat products including pork products pork products pre-prepared pork products

As at the Latest Practicable Date, we had three projects under construction, which were located in Yibin City, Sichuan Province (“Yibin Project”), Meishan City, Sichuan Province (“Meishan Project”), and Sihong County, Suqian City, Jiangsu Province (“Sihong Project”). We strategically build our projects in fine wine, or baijiu (白酒) regions in China and close to our high-quality pig farms for the following main reasons:

• The regions where fine baijiu are produced in China, such as Yibin City (Wuliangye production base) and Suqian City (Shuanggou and Yanghe production bases), typically have favourable environmental conditions. The quality of the surrounding natural environment is critical to the quality of food products. The above fine Baijiu regions have (i) sufficient supply of water sources rich in minerals, (ii) wide vegetation coverage, and (iii) good air quality which, we believe, make the region a very attractive site for our farms and our slaughterhouses. The excellent natural conditions are in line with our mission of “engaging in breeding and farming with food safety and quality in mind”, and provide the geographic advantage for the development of food processing business.

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• We plan to continue constructing new pig farms in those regions, and expect the number of our sows in such regions will be able to support the majority of the pigs required for our food processing business by 2023 (the year when our food processing business is expected to commence). Building a slaughterhouse and food processing plant near our pig farms can (i) effectively reduce various risks such a biosecurity risks associated with long-distance pig transportation, (ii) lower the transportation costs and other costs on implementation of biosecurity measures.

Reasons for establishing our food processing business

Driven by continuous consumption upgrade and rising population, China’s pork consumption has been growing in a steady pace. According to the Frost & Sullivan Report, per capita pork consumption in China has increased from 19.6 kg in 2016 to 20.5 kg in 2020, with a CAGR of 1.1%. Per capita pork consumption in China is expected to increase to 23.7 kg in 2025, with a CAGR reaching of 3.0% from 2020. With the increase in meat consumption, the proportion of pork products, such as low temperature pork products will continue to increase with the improvement of living standards and the strengthening of healthy eating habits in China. On the other hand, pre-prepared pork products are favoured by catering companies as well as central kitchens of schools and hospitals, since they are easy to process and have unified standards. Snack pork products are convenient, flavourful and nutritional, which represent one of the future developments of pork products and have a broad prospect. With the improvement of living standards in China, the consumption demand increases continuously. The difference in consumption demand will offer more market opportunities. We believe we are well-positioned to capture such opportunities by leveraging our upstream strengths in breeding and farming business.

Since 2019, national and local governments in the PRC at all levels have continuously strengthened the policies encouraging the restoration of pig production and slaughtering industry. Meanwhile, our existing pig segment has grown and is able to provide a stable supply of high-quality pigs for our downstream slaughterhouse and food processing business, which could reduce costs and better control the product quality of our downstream food business. We plan to expand into slaughtering and food processing business to capture the market opportunities.

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Development plan for the food processing business

To roll out our food processing business, we will initially focus on the markets where we have sufficient market hog output volume for our slaughtering business and with strong demand for fresh pork and processed meat products, such as Sichuang Province and Jiangsu Province, and gradually expand to other areas such as the Northeast China, East China and South China at a steady pace.

According to our expansion plan, we expect approximately RMB[REDACTED] (of which approximately RMB[REDACTED] will be funded by the [REDACTED] from the [REDACTED] as shown below) will be invested in our Yibin Project, Meishan Project and Sihong Project to build three pig slaughterhouses and two food processing plants, with a total annual slaughtering capacity of 8 million pigs and annual meat processing capacity of 200,000 tonnes.

Facility and designed Total expected annual production Expected investment Utilisation of Project capacity completion time cost [REDACTED] (RMB million) (RMB million)

Yibin Project Slaughterhouse 592.3 [REDACTED] (3 million heads) Food processing plant (100,000 tonnes) December 2022

Meishan Project Slaughterhouse 581.1 [REDACTED] (2 million heads) June 2023

Sihong Project Slaughterhouse 492.0 [REDACTED] (3 million heads) June 2023 Food processing plant (100,000 tonnes)

Total 1,615.3 [REDACTED]

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Cooperation with Tönnies

On 26 October 2020, we started to cooperate with Tönnies, a market leader in Europe in the business of slaughtering, butchering and sale of pigs and beef cattle, the development, production and sale of high quality frozen meat products, convenience foods, refined and packaged meat products for the retail market and the respective packaging. Tönnies has deep know-how regarding the operation of pig slaughterhouses, quality and product safety, product development and brand operation. It also has know-how with respect to production and processing technology and process technology to obtain the highest product freshness.

In March 2021, we started to implement our cooperation. Together we established DT Food in Meishan, Sichuan Province with an initial term of 99 years. We and Tönnies will combine our respective operational expertise and know-how to provide high quality pork products to meet consumer demand in Sichuan and other areas of China. DT Food will construct a slaughterhouse, which is expected to commence production in June 2023. The slaughterhouse shall have an initial annual capacity of one million pigs, which shall subsequently be increased to two million pigs (phase I). DT Food has a total investment of EUR 85 million, with a registered capital of EUR 19 million.

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PRODUCTION

The diagram below illustrates the geographical location and annual production capacity of our main production facilities and family farms as at 31 December 2020.

Food factories

Feed mills

Pig farms

Poultry farms

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Pig Production

Based on the most widely used DLY crossbred model in the world, we have established a pig breeding system that mainly includes the nucleus breeding farms, boar studs, multiplying farms, and commercial production farms (including our market hog farms, No. 1 and No. 2 Family Farms) as shown in the diagram below.

Studs Nucleus breeding farms

Semen Boar Multiplying studs farms

Semen

Commercial production farms

(including our market hog farms, No. 1 and No. 2 family farms)

The below table sets out the function and number of each type of production facilities of our pig breeding system as at 31 December 2020:

Production facility Description of function Number

Breeding facilities Nucleus breeding The nucleus breeding farms include the nucleus breeding pig farms 8 farms and nucleus terminal sire farms which are for cultivation of excellent breeding herds and exploration of more efficient crossbreeding models. They also serve as a base for preserving and multiplying high quality breeding pigs. We sell high quality Grand Parent breeding pigs to external parties from time to time.

Boar studs They provide quality semen using boars from nucleus breeding 3 farms.

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Production facility Description of function Number

Multiplying farms The multiplying farms use high-quality breeding pigs and semen 37 from the nucleus breeding farm for production. Purebreeding is conducted in multiplying firms for first-level multiplying herds in order to provide quality purebred breeding pigs for multiplying herds, and crossbreeding is conducted for second-level multiplying herds in order to provide quality crossbreding sows for our own market hog farms and No. 2 Family Farm, as well as for external sales.

Commercial Production farms Our market hog Our own market hog farms are mainly responsible for using the 44 farms high-quality terminal boars or their semen provided by boar studs and the crossbreeding sows from the multiplying farms for production of DLY crossbred hogs. Such piglets will be transferred to No. 1 Family Farms for fattening. Part of the weaned piglets from the our market hog farms (or weaned non- breeding pigs from breeding pig farms) will be put in our own market hog farms for fattening before sale.

No. 2 Family The farm owners use the terminal boars or their semen provided by 1,011 Farms boar studs and the crossbreeding sows from the multiplying farms for production of DLY crossbred hogs, and ultimately produce market hogs and market piglets for sale.

No. 1 Family The farm owners take on part of the weaned piglets from our 1,000 Farms market hog farms (or weaned non-breeding pigs from breeding pig farms) for fattening before sale.

The table below sets out the maximum and actual stock volume of sows and estimated and actual output capacities of sows at our production facilities (including No. 1 and No. 2 Family Farms) during the Track Record Period.

Actual Maximum Actual Estimated output of Beginning of number of number of Utilisation output of pigs pigs for the year sows(1) sows(2) rate(3) for the year(4) the year(4) (heads) (heads) (heads) (heads)

1 January 2018 53,950 50,046 92.8% 2018 900,828 992,650 1 January 2019 78,930 65,703 83.2% 2019 1,242,060 1,242,060 1 January 2020 93,920 77,849 82.9% 2020 1,370,604 1,370,604 1 January 2021 242,020 211,299 87.31% 2021 3,803,382 N/A

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Notes:

(1) Represents the theoretical maximum number of sows that could be raised on our pig farms and family farms based on the estimated number of sow stalls available in our own pig farms and family farms. The maximum number of sows increased during the Track Record Period primarily due to the commencement of operation or expansion of our new pig farms and family farms. The total output volume is determined by the number of sows.

(2) Represents the actual number of sows in our own pig farms and family farms as at the beginning day of the relevant year.

(3) Utilisation rate is calculated by dividing the actual number of sows by the theoretical maximum number of sows. The decrease in the utilisation rate in 2019 was primarily because we rapidly expanded our production capacity but we didn’t fill the increased capacity with sows in time as it usually takes 18 months for a gilt to grow up to sow. As a result, our utilisation rate of our production facilities dropped in 2019 as compared with 2018. the growth period of gilts is 180 days. With rapid expansion of production capacities, the cultivation of gilts had lagged behind the construction of our pig farms.

(4) Represents the theoretical estimated number of market hogs that could be produced, which is calculated by multiplying (i) the actual number of sows at the beginning of the relevant year, by (ii) the piglets weaned per sow per year (or PSY) of 18. The mortality and farrowing rate of our pig farms and family farms were in line with the pig farming industry.

Pig Breeding

We focus on pig breeding technologies which are the core to our competitiveness. We use the DLY crossbred model for pig production and breeding (as shown in the diagram below), which refers to a crossbreeding production model between the Landrace boars and Yorkshire sows to produce LY sows with high standard of breeding performance and excellent stress resistance and maternal characteristics inherited from Yorkshire, and then crossbreeding between Duroc boars and LY sows to produce market hogs with excellent growth performance, slaughtering performance and meat quality. As at the Latest Practicable Date, we had foreign breeding pig resources such as the Landrace, Duroc and Yorkshire breeding pigs, which were imported from Fast Genetics Inc., a Canadian pig genetics company specialised in pig breeding (“FAST”), and Z-line Yorkshire and Tempo terminal boars, which were imported from Topigs. We have been experimenting on different combinations of such breeding pig resources based on the characteristics of these breeding pig resources, and seeks to establish a more efficient crossbreeding production model.

Explanation: DD: Duroc breeding pigs (including Canadian and Topigs terminal sire), mainly using their boars.

LL: Landrace breeding pigs, mainly using their boars.

YY: Large White breeding pigs (including Canadian and Topigs Yorkshire parent sows), mainly using their sows.

LY: Crossbreed progeny of Landrace boars and Large White sows, mainly using sows.

DLY: Crossbreed progeny of Duroc boars and LY sows, which are generally market hogs.

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Our breeding pig resources

Breeding pig resources, also referred to as the “chip” of the pig breeding industry, is the most important aspect for pig breeding and our core competiveness. In order to safeguard the breeding pig resources for our pig farming, and provide high-quality genetic materials for subsequent breeding, we have imported five foreign breeding pig varieties (lines) from reputable breeding enterprises at home and abroad, as well as a domestic local pig line, as at the Latest Practicable Date. We also plan to import another foreign breeding pig variety (line) resource from Topigs in the near future.

In March 2013, we entered into a one-off purchase contract with FAST to import 868 pure breeding pigs. FAST also granted us non-exclusive rights to use its breeding pig genetic resources. Using this batch of imported breeding pigs, we formed our first nucleus breeding herd. In order to ensure the smooth transition of breeding after the introduction of breeding pig, we entered into a cooperation agreement with the Canadian Centre for Swine Improvement (“CCSI”) on joint breeding, which remains in force and effect to date. We sent some employees to Canada for training, and also had breeding experts from CCSI visit our breeding pig farms for on-site training and guidance. Since 2013, the genetic performance of our nucleus breeding herd has continued to improve and the size has continued to expand.

To enhance the competitiveness of market hogs as our business grows, we entered into a one-off purchase contract with Topigs in July 2019. We chose Topigs after comparing with other pig breeding companies. Topigs is renowned for its innovative genetic solutions for cost-efficient pig production. We imported 500 breeding pigs from Topigs to form our terminal sire herd, providing excellent terminal sire boars for subsequent large-scale commercial production.

Nucleus breeding herd

Nucleus breeding herd is our “flagship” for pig production. We established nucleus breeding farms in different regions, mainly to (i) comply with the government requirements in different regions relating to prevention and control of pig epidemic and diseases and restrictions on the large-scale transportation of pigs, and (ii) adapt to different consumer demands and consumer preference of each regional market. The main task of our nucleus breeding farm is to establish a nucleus breeding herd of purebred breeding. Through continuous pig selection, mating, genetic evaluation and elimination of unsuitable breeding pigs, we cultivate high-quality breeding pigs suitable for the Chinese market, and ultimately provide excellent purebred boars and sows to our multiplying farms and excellent terminal sire breeding pig for commercial production farms.

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As at the Latest Practicable Date, we have established eight nucleus breeding farms in Sichuan, Guizhou, Guangxi, Jiangxi and Inner Mongolia. Our nucleus breeding herd increased from 5,373 heads on 1 January 2018 to 13,093 heads on 31 December 2020, which enabled us to establish a downstream herd of 200,000 heads of sows and gilts in our multiplying farms.

The below table sets out the stock of our nucleus breeding herd during the Track Record Period:

For the years ended 31 December Type of breeding pigs 2018 2019 2020 heads heads heads

Purebred sows 4,833 5,412 11,927 Purebred boars 280 316 556 Terminal sires 260 241 610

Note:

(1) The number of breeding pigs in the table only refers to the number of our nucleus breeding herd (excluding the purebreds in the multiplying herd); the number of purebred boar/sow herds includes terminal sires; terminal sires include the original Duroc herds and herds (boars and sows) introduced from Topigs. Herds introduced from Topigs are still in the multiplying phase (replenishment not started yet).

Our breeding progress

Breeding is the R&D process in pig production, and is also the key to ensuring our competitiveness in breeding pig. Our breeding goal is to breed breeding pig with fast reproduction and growth rate in pursuit of efficient production and high-quality products. We set our breeding goals based on the characteristics of the breeding pig production herd and the market demand.

We apply new breeding technology to accelerate our breeding progress. We started to apply the genome-wide association technology to the breeding of our nucleus breeding herd in 2019. In 2020, we achieved full coverage of genome-wide association on all of our varieties (lines). In addition, we have actively cooperated with experts in the field of breeding from universities and scientific research institutions at home and abroad, in particular:

• Since the beginning of the establishment of our nucleus breeding herd in 2013, we started to cooperate with CCSI and continued to have CCSI support and standardise the breeding work of our breeding pigs through use of their software database, operation training on breeding pig production and monitoring feedback from time to time;

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• Through cooperation with Sichuan Agricultural University, China Agricultural University and other universities and biotech companies such as Compass Biotechnology, we applied the molecular breeding technology and genomic breeding technology to our breeding pig farms;

• We cooperated with domestic breeding and scientific research institutions such as Chongqing Academy of Animal Sciences and Sichuan Academy of Animal Sciences (四川省畜牧科學院) which helped us to analyse and monitor the data of our breeding pig, provide feedback and on-site guidance to our breeding work in a timely manner;

• We engaged the team led by Professor Li Zhu (朱礪) from Sichuan Agricultural University, Professor Su Guosheng (蘇國生) from Aarhus University Denmark (丹麥奧斯胡大學), and other well-known breeding experts at home and abroad to directly guide our breeding work.

Through the aforesaid efforts, we have made good progress in breeding. Since 2013, the genetic performance of our nucleus breeding herd has continuously improved.

Pig farming

The following diagram illustrates the general process of our pig farming:

90 days gestating sows gilts

80 days 114 days

lactating sows suckling piglets nursery pigs market hog 21 days 49 days 115 days

Our pig farming includes No. 2 Family Farm, No. 1 Family Farm and Company Farming models:

• No. 2 Family Farm model refers to a model under which we cooperate with family farm owners to breed sows and raise the piglets. In 2018, 2019 and 2020, 192,879 heads, 318,201 heads and 401,012 heads of pigs we sold were raised under the No. 2 Family Farm model, which accounted for 19.4%, 25.6% and 29.3% of the total sales of pigs, respectively.

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• No. 1 Family Farm model refers to a model under which family farm owners raise and finish our weaned piglets according to contract. In 2018, 2019 and 2020, approximately 609,973 heads, 779,756 heads and 815,840 heads of pigs we sold were raised under the No. 1 Family Farm model, which accounted for 61.5%, 62.8% and 59.5% of the total sales of pigs, respectively.

• Company Farming model refers to the model under which we build the farm and employ labour force to carry out scaled breeding, fattening and other related process. This model has the advantage of high centralisation which allows us to implement an efficient management system. In 2018, 2019 and 2020, approximately 189,798 heads, 144,103 heads and 153,752 heads of pigs we sold were raised under our Company Farming model, which accounted for 19.1%, 11.6% and 11.2% of the total sales of pigs, respectively.

In particular, No. 2 Family Farm model is a unique model pioneered by us in the domestic pig industry. We plan to make greater efforts to develop No. 2 Family Farm model. This model has the following advantages:

• Biosecurity and animal diseases prevention and control: Under No. 2 Family Farm model, as we only have to transport sows to the family farm, instead of a large number of weaned piglets, therefore, the production cycle of “breeding pigs-piglets- market pigs” is all completed at the family farm, thereby reducing the flow and transportation of pigs which makes it more easy to prevent animal diseases and control biosecurity.

• Rapid expansion of “asset-light” production: In the No. 2 Family Farm model, the crossbreeding sows are maintained at family farms. In addition, we do not need to bear the cost of land, labour, water and electricity in connection with the breeding and reproduction of sows which enable us to save breeding costs and carry out production expansion in relatively short amount of time.

• Promotion and upgrading of local industrial industry: In the No. 2 Family Farm model, we teach family farm owners the professional techniques including sow reproduction to enable them to acquire modern breeding techniques so that farmers may operate family farms with a long-term vision, hence promoting the upgrading of local industries.

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• High entry barriers and long-term stable cooperation: The breeding process of our No. 2 Family Farm involves breeding of sows, not merely the finish of weaned piglets which requires family farm owners to grasp more sophisticated breeding technologies. We typically conduct rigorous training for the family farm owners of No. 2 Family Farms, and reach a longer-term cooperative relationship with them in the farm contract. Therefore, our cooperative relationship with No. 2 Family Farm has technical and management barriers to our competitors, which will help us form a long-term stable cooperative relationship with No. 2 Family Farm.

In addition to breeding pigs, we also raise and finish market hogs on certain of our pig farms. Due to the insufficient supply of pigs in the market as a result of the impact of African Swine Fever in 2019, we have increased the portion of our market hog farms in order to meet the increasing market demand for pigs. In addition, our market hog farms can take up the weaned piglets from our breeding pig farms. We have also built our market hog farms in areas where local farmers are not willing to build family farms. As a result, we will continue to have the Company Farming model.

In 2018, 2019 and 2020, approximately 19.1%, 11.6% and 11.2% of the pigs we sold were raised through Company Farming model, and the revenue generated from the sales of pigs during such periods was approximately RMB164.4 million, RMB239.7 million and RMB525.0 million, respectively; approximately 19.4%, 25.6% and 29.3% of the pigs we sold were raised through No. 2 Family Farm model, and the revenue generated from the sales of pigs during such periods was approximately RMB316.9 million, RMB786.3 million and RMB1,597.0 million, respectively; approximately 61.5%, 62.8% and 59.5% of the pigs we sold were raised through No. 1 Family Farm model, and the revenue generated from the sales of pigs during such periods was approximately RMB950.8 million, RMB1,915.7 million and RMB3,625.7 million, respectively.

(a) Company Farming model

As at the Latest Practicable Date, we operated 122 pig farms, the majority of which were located in Sichuan Province, Chongqing municipality, Guizhou Province, Jiangsu Province and Inner Mongolia, while the remaining pig farms were located in Guangxi Province, Jiangxi Province and Jilin Province. Among such pig farms, 45 pig farms are leased by us. The leased pig farms (including its buildings and equipment) are constructed and owned by Independent Third Parties, some of whom are the local governments. We raise the pigs in the leased pig farms without the need of any further major alteration work or installation of equipment.

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The following diagram illustrates the changes in the number of our pig farms during the Track Record Period.

As at 31 December 2018 2019 2020

Pig farms Owned 33 41 57 Leased 4 11 35

We plan to construct new farms and expand our existing farms in order to increase our capacity. Please refer to the section headed “Future Plans and [REDACTED]” in this [REDACTED] for details.

Our pig farms adopt batch production model. Through optimising the pig farming process, we adjust the production of the pig farm to a regular schedule of mating, farrowing, weaning and immunisation within a fixed time with more regular production, so that we can manage the production of pigs more efficiently. Furthermore, we use data management software to manage production data online and achieve more efficient production.

(b) No. 1 and No. 2 Family Farm models

All the family farms we contracted with were operated by Independent Third Parties, which were mainly located in Sichuan Province and Chongqing municipality, Guizhou Province and Yunnan Province. The following table illustrates the movement of the family farms we have worked with during the Track Record Period:

2018 2019 2020

No. 1 Family Farm At the beginning of the year 329 537 726 Addition for the year 342 344 579 Termination in the year(1) (134) (155) (305) At the end of the year(2) 537 726 1,000

No. 2 Family Farm At the beginning of the year 524 653 879 Addition for the year 206 303 262 Termination in the year(1) (77) (77) (130) At the end of the year(2) 653 879 1,011

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Notes:

1. In 2020, the number of terminated No.1 family farms and No.2 family farms increased, mainly because we terminated the agreements with (i) certain family farms that failed to meet our increasingly higher standards for biosecurity, environmental protection requirements and farm house conditions; and (ii) certain family farms which were less advanced in terms of production skills and were not being cooperative to continue improving production indicators and reducing costs.

2. During the Track Record Period, the number of our No. 1 and No. 2 family farms has continuously increased, mainly due to the expansion of our production scale.

Contract farming arrangement

Under both No. 2 Family Farm and No. 1 Family Farm models, we cooperate with selected family farm owners who meet our criteria. The family farm owners are responsible for completing the land filing and procedures, and construct the pig house in accordance with our requirements and design drawings.

After acceptance of pig houses, we enter into contract farming agreements with the family farm owners. The terms of contract farming agreements with No. 1 family farms are typically 5 years, while the terms for No. 2 family farms are typically 10 years.

During the term of the contract, a farm owner is not allowed to enter into any other contracts with other parties for breeding of pigs, the breach of which will give us the right to terminate the contract and require the farm owner to pay liquidated damages. A farm owner may not unilaterally terminate the contract prior to the expiry date without breach and a payment of a early terminate fee. After collecting pigs, feed, vaccines and medicines from us, the farm owner is obligated to breed and raise the pigs in accordance with our standards. After market hogs are put for sale, we will settle the contract farming fee with the farm owner. We have the ownership of the pigs raised by the farm owner.

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The contract farming fee is calculated by reference to a predetermined price of pigs, and production indicators of pigs. The following table sets out the contract farming fee we paid to the farm owners during the Track Record Period:

Total output Average capacity of contract Contract pigs raised farming fee Year farming fee by farms per head (RMB’000) (heads) (RMB/head)

2018 No. 1 family farm 102,968 609,973 186.5 No. 2 family farm 45,759 192,879 265.0 2019 No. 1 family farm 181,711 779,756 240.0 No. 2 family farm 93,709 318,201 328.7 2020 No. 1 family farm 290,235 815,840 328.2 No. 2 family farm 172,509 401,012 423.3

During the Track Record Period, the average contract farming fee we paid to No. 2 family farm is higher than that paid to No. 1 family farm because sow breeding requires more labour work and involves higher level of technical skills than piglet fattening. During the Track Record Period, the average contract farming fee to the No. 1 and No. 2 family farm owners increased significantly, mainly because our increase of rewards to family farm owners to better align our interests and establish a win-win cooperative arrangement when the pig market performed well.

Selection and supervision of family farm owners

We select the family farm owners with reference to their ages, funds, education background, integrity as well as conditions of the family farms (such as distance, epidemic prevention conditions, land area, water, electricity, roads and surrounding environment). We have a higher standard for No. 2 family farm owners as sow breeding requires more expertise and efforts as compared to piglet fattening.

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We work closely with and supervise family farm owners. Our production management specialists visit the family farms to give instructions on a weekly basis, conduct stocktaking of materials and pig quantity, and check key issues such as biosecurity, production operations, data records, environmental control and regulation, water resource and water quality, environmental sanitation and environmental treatment. Production management specialists are required to (i) check on-site key production processes such as immunisation, mating, farrowing, weaning, sales and output, (ii) define and confirm the number and conditions of pigs, and; (iii) require the farmer to sign on the relevant documents for confirmation. When a farmer reports that the pigs are culled or abnormal, the production management specialist will promptly provide feedback about treatment plan, and try to check the pigs on-site on the same day, and issue a document for harmless treatment upon signing and confirmation by the family farm owners. If production management specialist cannot be on-site on the same day, he/she will be there within a week to check the evidence of culled pigs retained by the farm owner. In addition, we will also conduct stocktaking of the family farm owners on a monthly basis. Our relevant employees also conducts random inspections from time to time. We regularly collect and file all original production records and documents, and treat them as data inspection and settlement vouchers.

Training and management of family farm owners

Before we provide pigs to family farm owners, we train family farm owners on building and construction of family farm, farming technology as well as our corporate culture. We also arrange family farm owners to go to the designated training base for training on farming technology (with the cumulative training hours of not less than 3 months). After the completion of training, we will assess the family farm owners, and only those who meet the requirements can start production. During the transition period, we will assign production management specialists to carry out on-site production management training and guidance. In subsequent daily management, we will arrange production management specialists to train farmers in different regions at least once a month. The training content generally includes biosecurity, production technology, case analysis and management structure of our Group. The manager of our service department will organise seasonal production training, quarterly production review, and maintain our relationship with family farm owners on a quarterly basis. In addition, we select model family farm owners and encourage other farm owners to learn from such model farm owners.

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In addition, we provide control and technical training and guidance to No. 2 family farm owners in all material aspects, so as to improve the sow farrowing rate and increase the number of quality market hogs that can be put for sale:

• We use timed artificial insemination technique, that is, artificial insemination through adjusting the oestrus of sows according to the batch mating time, to realise batch production and improve reproductive efficiency.

• We strictly check the hardware facilities and require family farm owners to adopt stringent biosecurity measures. Family farm owners are also required to adjust stalls regularly, purify drinking water, control the density of pig houses, and provide a suitable growth environment for pigs.

• We require family farm owners to use rubber mats for heat preservation, and feed pigs with porridge feeders during the entire nursing period. The boars and sows shall be raised in separate groups.

Poultry Production

We mainly engage in the breeding, multiplication, farming and sales of yellow-feathered broilers. The following diagram illustrates our general production process from broiler breeders, chicks (including Parent Stock DOCs and Commodity DOCs) to yellow-feathered broilers.

Brooding and breeding of Laying of Grandparent Hatching of Grandparent Stocks breeder eggs fertile eggs Parent Stock DOCs External sales (0-161 days) (162-462 days) (21 days)

Brooding and breeding Laying of Parent Hatching of External sales of Parent Stock Chicken breeders fertile eggs Commodity DOCs (0-161 days) (162-462 days) (21 days)

Brooding of broilers Growing of broilers Finishing of broilers External sales (0-30 days) (31-60 days) (61-150 days)

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Poultry Breeding

Breeding is the core of our poultry business. We breed and select breeders in our breeder farms. The specific process is shown in the following diagram:

Genetic resources Nucleus breeding Genetic improvement Pure lines Pedigree selection Excellent genes and health are passed on Feedback and adjustment Great Grandparent Stocks from generation to XXXX Grandparent Stocks Multiplying X X Parent Stocks X Broilers Production Live/fresh broiler products

Yellow-feathered Broilers Pyramid Genetic Transmission/Production System

Nucleus breeding technology

By leveraging on our gene bank and core proprietary breeding technology, we independently breed our own varieties of yellow-feathered broilers. As at the Latest Practicable Date, we had established one National Spark Programme Leading Enterprise Technology Innovation Centre (國家星火計劃龍頭企業技術創新中心) and one Key Laboratory of Poultry Breeding and Genetics of the Ministry of Agriculture (農業部家禽遺傳育種重點實驗室), and had 13 patents in chicken breeding and farming technology and management. We offer a wide varieties of yellow-feathered broilers. As at the Latest Practicable Date, we had 45 varieties and lines of yellow-feathered broilers.

Compared with other types of chickens, yellow-feathered broilers are known for their product diversity. Our nationwide sales network enables us to have an in-depth understanding of the market and a precise forecast of the changes in different customer demands for the yellow-feathered chicks and broilers.

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In addition, the utilisation of genetic resources, accurate and efficient character determination technology, precise genetic evaluation technology and large-scale genetic selection are the four key elements for successful breeding. We have adopted the following genetic technologies for breeding:

• We have adopted internationally advanced genetic evaluation methods such as genomic selection to realise DNA selection, and the selection has been transformed from individual differences to genetic differences.

• We expand the base population on a large scale and create more types of gene combinations to select the best broiler breeders from the populations and maximise the genetic progress.

• With modern facilities and equipment, we continue to carry out compatibility determination experiments and crossbreed combination experiments, and select the breeds that can meet the market demand. Compatibility determination refers to the matching of cocks and hens of different varieties and lines, and determining the production performance of their self-crossbreed progeny to assess the combining ability of the parents breeders.

• To produce healthy chicken, we strive to eradicate avian leukosis, pullorum, mycoplasma and other provenance pathogens that seriously affect the production of chicken breeders and broilers.

Poultry farms

We carry out the selection of chicken breeders and hatching of fertile eggs on our breeder farms. As at the Latest Practicable Date, we had 14 breeder farms and 10 hatcheries, which are located in Sichuan Province, Chongqing municipality, Guizhou Province and Guangdong Province. The table below sets out the details of our self-operated production facilities as at the Latest Practicable Date:

Existing Total site area facilities Function description Quantity (square metres) (approximately)

Breeder farms Selection of breeders 14 1,665,740 Hatcheries Hatching of fertile eggs 10 658,865

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The following table sets out the production capacity and utilisation rates of our self-operated breeder farms during the Track Record Period:

For the year ended 31 December Existing facilities 2018 2019 2020 ’000 ’000 ’000

Breeder farm(1) Designed production capacity (sets)(2) 1,038.1 1,096.9 1,507.2 Actual capacity (sets)(3) 937.9 980.3 1,297.4 Utilisation rate (%)(4) 90.3 89.4 86.1 Hatchery Designed production capacity (pieces)(5) 135,040.0 160,740.0 188,160.0 Actual capacity (pieces)(6) 111,105.2 136,113.2 167,312.6 Utilisation rate (%)(7) 82.3 84.7 88.9

Notes:

(1) Each female-breeder that has been matched with a male breeder for fertilisation constitutes one set of breeders. The mating ratio of female breeders to male breeders is approximately 35:1. Therefore, the number of female breeders is equivalent to the number of sets of breeders.

(2) The estimated number of cages of mature chicken breeders in chicken breeder farms as at 31 December of respective years.

(3) The number of mature chicken breeders produced throughout the year in our breeder farms.

(4) Utilisation rate is calculated as the actual production capacity as a percentage of the designed production capacity for the relevant year. The year-to-year decrease of utilisation rate of breeder farms in 2020 was mainly due to the commencement of production of one breeder farm in July 2020, and there was no mature breeder after the commencement of production during the year.

(5) The number of fertile eggs hatched in hatchery at full capacity throughout the year.

(6) The number of fertile eggs actually hatched in hatchery throughout the year.

(7) Utilisation rate is calculated as the actual production capacity as a percentage of the designed production capacity for the relevant year.

With the growth of the production capacity of our yellow-feathered broilers, the demand for chicken breeders and their Parent Stock DOCs has also increased significantly. Therefore, we plan to gradually expand our chicken breeder farms, so as to increase the production capacity of chicken breeders and Parent Stock DOCs.

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Chicken breeders rearing

Our enclosed chicken farms are installed with automatic environmental control, lighting and manure cleaning system, creating the perfect living environment for our chicken breeders. We adopt different feeding methods with refined management for breeders at different growth stage, to maximise the production performance of chicken breeders:

• During the brooding period, we strictly follow the relevant biosecurity measures and implement a fully enclosed management. The purpose of the brooding phase is to condition the chicks to manage growth and maximise the flock uniformity.

• During the rearing period, we focus on the uniformity of weight and sexual maturity of the chickens, formulate different feeding restrictions according to the characteristics of the different breeds, and carry out a full range of weighing and grouping of the chickens multiple times, and adopt the hierarchical feeding method after grouping, so as to eliminate defected individuals whose weight and appearance do not conform to the characteristics of the breed in a timely manner, effectively improving the uniformity of the chickens and reduce waste.

• During the laying period, we focus on the management of feed volume and artificial insemination to maximise produce fertile settable eggs and meet the broiler production demands. Through weekly analysis of the laying situation of the chickens, we regularly monitor the chickens, comprehensively evaluate them, and formulate reasonable feeds to minimise the eggs laying performance of chickens.

Fertile eggs hatching

We adopt advanced equipment to hatch fertile eggs which maintain a stable hatching environment through an automated environmental control system, to ensure a high hatching rate of fertile eggs and stable quality of chicks. To safeguard our production, we also use a centralised control system and video surveillance to monitor production process. We have a big data analysis mechanism in place for hatching effect, which can present clear and reliable comparison of counter-check data, facilitate the stable growth of production indicators, and make the quality of chicken breeders more orderly and reliable.

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Broiler farming

For broiler farming, we adopt the Family Farm model and Farming Base model:

• The Family Farm model is a model under which family farms provide the land and facilities and raise the yellow-feathered broilers according to our standards, while we provide chicks, feed, medicines and technical support. We settle the contract farming fee with the family farm after collection and sales of yellow-feathered broilers. In 2018, 2019 and 2020, approximately 47,607,041 birds, 60,058,402 birds and 69,383,427 birds of yellow-feathered broilers we sold were raised under the family farm model, which accounted for 94.7%, 95.5% and 95.9% of the total broiler sales, respectively.

• The Farming Base model is a model under which we build facilities by ourselves and lease the land and facilities to farmers while the farmers will raise the yellow- feathered broilers. This model is the same as that of the Family Farm model other than that fact that we own the farming bases. In 2018, 2019 and 2020, approximately 1,512,921 birds, 1,722,057 birds and 1,464,164 birds of yellow-feathered broilers we sold were raised under the Farming Base model, which accounted for 3.0%, 2.7% and 2.0% of the total broiler sales, respectively.

Our yellow-feathered broilers are mainly raised under the Family Farm model, which enables us to effectively reduce the investment in fixed assets, and focus on technological breakthroughs, product development, nutritional formula research, and enhance our competitiveness through improving the capacity of product, technology and nutrition. We develop the Farming Base model and experiment new production process management methods on such site to increase production efficiency and improve production results. We experiment with new advanced environmental control and feeding equipment on such site and prepare for equipment upgrades in family farms. Also, we raise new varieties or lines on such site to test production performance, and carry out various experimental programmes such as nutrition adjustment and disease prevention to provide guarantee for the refinement of overall production management.

In 2018, 2019 and 2020, approximately 95.0%, 95.6% and 96.0% of the yellow-feathered broilers we sold were raised through the Family Farm model, and the revenue generated from the sales of yellow-feathered broilers during such periods was approximately RMB1,617.4 million, RMB2,151.1 million and RMB2,074.4 million; approximately 2.9%, 2.8% and 2.3% of the yellow-feathered broilers we sold were raised through the Farming Base model, and the revenue generated from the sales of yellow-feathered broilers during such periods was approximately RMB50.0 million, RMB63.4 million and RMB50.3 million, respectively.

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Family farm and farming base

All the family farms and farming bases we contracted with were operated by Independent Third Parties, which were mainly located in Sichuan, Chongqing, Yunnan, Guizhou, Guangdong and Guangxi provinces.

The following table illustrates the movement of the farms or bases we have worked with during the Track Record Period:

2018 2019 2020

Family farm At the beginning of the year 2,207 2,612 3,155 Addition for the year 910 1,104 1,110 Termination in the year(1) (506) (560) (814) At the end of the year(2) 2,611 3,156 3,451

Farming base At the beginning of the year 7 7 7 Addition for the year 0 0 0 Termination in the year(3) 0 0 (2) At the end of the year 7 7 5

Notes:

1. The reason of termination is generally the failure of farms to meet the contract standards (for example, the loss of the manpower, the expropriation of the farms and failure to operate the farms according to our standards).

2. During the Track Record Period, the number of our family farms has continuously increased, mainly due to the expansion of production scale.

3. The number of farming bases decreased by two in 2020 was because we converted the two farming bases into our breeder farms.

Contract farming arrangement

We select farmers who meet our standards before we decide to cooperate with them under either the Family Farm model or Farming Base model. According to the Family Farm model, a farmer shall provide the site, equipment and labour for farming, while under the Farming Base model, the farmer leases our site. Both models use the same form of contract farming agreement. After collecting chicks, feed, vaccines and medicines from us, the farmers raise the chicks into broilers according to our requirements. All the chicks, feed, medicines, vaccines and other materials we provide to farmers are our properties. We train farmers and provide technical guidance and support throughout the process. After each batch of yellow-feathered broilers has been sold, we will settle the contract farming fee with the farmer. Before the completion and sale of a batch, the farmer is not allowed to

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unilaterally terminate the contract. If both the farmer and us are willing to continue the cooperation after each batch, the contract farming agreement will automatically be extended. There is no contractual limitation on the term. We have the ownership of the chicken raised by the farmer.

Contract farming fee is calculated with reference to the agreed price, weight, production costs of yellow-feathered broilers, subsidies and rewards, and penalties and deductions. The following table sets out the contract farming fee we paid to the farmers under the Family Farm model and Farming Base model during the Track Record Period:

Total sales of Average contract Contract broilers raised farming fee Year farming fee by farmers per bird (RMB’000) (birds) (RMB/bird)

2018 176,587 49,119,962 3.6 2019 273,393 61,780,459 4.4 2020 260,010 70,847,591 3.7

The increase in average contract farming fee we from 2018 to 2019 was mainly because (i) the overall market price of broilers increased from 2018 to 2019, (ii) we increased the rewards to farmers who meet our targets, and (iii) we provided phased subsidies to farmers to incentivize them expand the size of production. The average contract farming fee decreased in 2020, mainly due to (i) the decline in the market prices of yellow-feathered broilers due to the impact of COVID-19, (ii) our reduction of the proportion of rewards and subsidies based on changes in market prices, and (iii) we moderately lowered the overall level of contract farming fee to reduce cost.

Training and supervision of farmers

We have established a complete account opening standard, farmer rating standard and dynamic rating to manage farmers. We hold at least two large-scale training seminars every year to provide trainings on new production technology and the Group’s management standards. The Group issue feeding management standards and manual to the farmers, and assign the regional technical administrators to provide small-scale and one-to-one technical guidance and training to the farmers. The regional administrator will timely correct the farmers who deviate from our standards, and report any abnormal situation.

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Chicks procurement

Our poultry farms supply most of the chicks we use for our yellow-feathered broilers production. We have also purchased and will continue to purchase chicks from external suppliers for certain niche chicks. For the years ended 31 December 2018, 2019 and 2020, we purchased approximately 29.1 million, 30.0 million and 16.3 million chicks from external parties, which accounted for approximately 50.4%, 40.8% and 21.9% of the chicks we used for broiler farming, respectively. We expect the proportion of procured chicks will continue to decrease.

We determine the annual external procurement requirements of chicks according to our budget, and we communicate with suppliers in advance to reserve their production capacity in advance, we select high-quality suppliers, and typically enter into procurement contracts with fixed price.

We conduct regular reviews on suppliers’ background and production performance data of the suppliers’ chicks. Prior to the delivery of chicks by our suppliers, we inspect pathogens and antibody standards of our suppliers’ chicks and fertile eggs. We regularly inspect the production sites of the suppliers, test samples of their chicks, fertile eggs and chicken breeders, and adjust the suppliers’ grades based on quality of their chicks, and select the best supplier for our future cooperation.

Feed Production

As at the Latest Practicable Date, we had nine feed mills, including one poultry feed mill and eight pig feed mills occupying a site area of approximately 304,822.6 square metres, with a gross floor area of approximately 342,702.3 square metres.

The following table sets out the production capacities and utilisation rates of our feed mills during the Track Record Period:

Year ended 31 December Existing facilities 2018 2019 2020

Feed mill(1) Number 2 5 6 Designed annual production(2) capacity (tons) 127,500 510,000 700,000 Actual annual production capacity (tons) 70,326 274,624 446,877 Utilisation rate (%)(3) 55.2 53.8 63.8

Notes:

(1) The designed annual production capacity in 2018 includes part of the annual designed production capacity of Jiang’an feed mill, which is due to our acquisition of Jiang’an feed mill at the end of 2018.

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(2) The designed annual production capacity for feed mills has been calculated as the total designed production capacity of the feed mills in operation at the end of the year.

(3) Utilisation rate is calculated as the actual capacity as a percentage of the designed production capacity for the relevant year.

In 2018, 2019 and 2020, our own feed mills produced approximately 5.0%, 37.0% and 42.0% of feeds used in our breeding and farming business. The continuous increase in such ratio during 2018 to 2020 was mainly because since the outbreak of the African Swine Fever at the end of 2018, we established a strict biosecurity system and decided to build more feed mills to ensure biological and food safety from the source of feed.

To ensure food safety from the source of feed, we have established stringent quality standards and, inspection and control procedures covering the whole feed production process starting from the procurement of feed ingredients, feed production and processing, to feed transportation, to ensure the feed we produced meet our quality requirement. The main measures are as follows:

• We conduct on-site inspections of the main production areas of our suppliers, select high-quality and reliable suppliers. We have also established a comprehensive system of raw material evaluation, acceptance and use. For details on the selection criteria and quality control procedures of our feed and feed ingredient suppliers, please refer to the paragraph headed “Suppliers, Raw Material and Inventory – Our Raw Material Procurement – Feed and Feed Ingredients Procurement”.

• We have stringent feed quality control standards in place to ensure that the feed quality meets the national standards as well as the needs of our pig and broiler farms. We strictly control health indicators and ensure that the entire feed processing process can be traced and controlled at key stages.

• We regularly maintain and repair feed production equipment to ensure that the equipment is in good operating condition and improve utilisation rate of the equipment.

• We have implemented feed quality and safety management standards, and developed a traceable system covering source control, process control and raw material procurement management. We analyse and control each key stage that may affect feed safety, such as production process, product quality control, product storage and transportation, product complaints and recalls.

In addition to quality control measures, we also focus on the formula design of our feed. For example, for pig feed, we analyse the ingredients of the raw materials for formula design, so as to meet the nutritional needs of pigs at different growth stages, and achieve precise nutrition and cost control. For details of our nutrition technology, please refer to the section headed “Research and Development”.

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SALES

Structure of Sales Team

We have separate sales teams for the pig and poultry segments. Our headquarters-based pig marketing centre, which oversees the overall sales efforts of our pig segment, has main divisions such as breeding pig and market piglet sales management office, and market hog sales management office. Our headquarters-based poultry marketing department is responsible for the overall sales of the poultry segment.

Sales of Our Pig Segment

Market hog customers are mainly pig dealers and slaughterhouses. Customers for our breeding pigs and market piglets are mainly large-scale pig breeding and farming companies and to a lesser extent, small and medium-sized farms.

The vast majority of our pig segment customers make payment via online banking transfers, and we generally do not grant credit term to such customers.

We sell pigs through the “Dekon Group Pig Selling Platform (德康集團生豬銷售平台)” by way of bidding. Our customers need to register with the platform as its users, pay a deposit before they can engage in pig ordering activities on the platform. We update the information of pig sales on the platform. Once customers enter the quantity and bidding prices of hogs on the platform, the system will automatically rank the orders based on the bid price and the time when such orders are put. The purchase and sale contract with a customer takes effect immediately after we confirm the orders. We also have entered into cooperation agreements with certain core customers, the term of which is generally one year. Such core customers agree to purchase from us a minimum volume of pigs as set forth in the agreements.

Pig dealers

Most of our market hogs and market piglets are sold to pig dealers, which is in line with industry norm. Pig dealers are generally self-employed individuals, intermediaries between breeding enterprises and farmers and butchers. After pigs are sold to pig dealers, the responsibility of the pigs’ transportation is borne by the pig dealers, which in turn reduces our transportation risks. In addition, as compared with slaughterhouses which have longer credit periods, pig dealers generally have no credit period and settle payment upon delivery on the spot. During the Track Record Period, most of our top five customers are pig dealers. All pig dealers are Independent Third Parties.

As at 31 December 2018, 2019 and 2020, the revenue of market hogs through our pig dealers was approximately RMB994.4 million, RMB2,014.1 million and RMB3,916.5 million, respectively, representing 71.9%, 71.2% and 71.0% of the total sales of market hogs; the revenue of breeding pigs through pig dealers was approximately RMB15.5 million, RMB16.6 million and RMB39.9 million, respectively, representing 42.5%, 17.8% and 26.9% of the total

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The table below illustrates the changes of our dealers during the Track Record Period:

2018 2019 2020

Pig dealers At the beginning of the year 356 1,856 1,602 Addition for the year 1,718 1,213 1,513 Termination for the year(1) (218) (1,467) (1,164) At the end of the year(2) 1,856 1,602 1,951

Notes:

(1) The increase in termination in 2019 was mainly because (i) the pig dealers are self-employed individuals, who are less stable as compared to slaughterhouses and (ii) the pig dealers changed the regions of their operation as the local governments in PRC implemented certain restrictions on the transfer of pigs since late 2018. Please refer to the section headed “Regulatory Overview – Prevention and Control of African Swine Fever” for details.

(2) The increase in the number in 2020 was mainly due to (i) the overall expansion of our business, and (ii) development of new customers in different regions as the local governments implemented certain restrictions on transfer of pigs across regions, while retaining our quality customers with long-standing relationship.

Our relationships with pig dealers are characterised as seller and buyer relationships which do not grant us control over their operations or inventories, and they are free to formulate their own pricing policies and compete with one another. To our best knowledge, pig dealers usually resell our products to slaughterhouses. Once our products are sold to pig dealers, we recognise the sales and the ownership and risks related to the products will be transferred to the pig dealers. If the pig dealers fail to sell the products subsequently, they shall have no right of recourse against the Group after their acceptance of the relevant products.

Sales of Our Poultry Segment

Broiler customers mainly include dealers and restaurants, canteens of enterprises and institutions, supermarkets, community fresh food stores, food processing plants and other market terminals. Our chicks customers mainly include dealers and broiler farmers. Most of our customers for the poultry segment make payments via bank transfer, and we generally do not offer credit term.

Chicks and broilers dealers

We sell some of our yellow-feathered chicks and broilers through dealers, which is in line with industry norm. Given that (i) chicks and yellow-feathered broilers are fresh and live agricultural products; (ii) dealers shall bear all risks related to the products after we deliver

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All our yellow-feathered chicks and broilers dealers are Independent Third Parties. We formulate assessment standards for dealers’ sales volume and contribution, and formulate tiered incentive policies based on sales volume to encourage broiler dealers to develop more sales channels and expand sales scale. Besides, we implement systematic management of broiler dealers. Through skills training, corporate value recognition building and pipeline development assistance, we enhance dealers’ marketing skills, promote the integration of values between dealers and the Group, and expand distribution channels and customer groups, thereby increasing the market share and profitability of our core products.

As at 31 December 2018, 2019 and 2020, the revenue of chicks through dealers was approximately RMB52.2 million, RMB90.0 million and RMB49.2 million, respectively, accounting for 50.3%, 50.7% and 41.5% of the total sales of chicks, respectively. The revenue of yellow-feathered broilers made through dealers was approximately RMB1,684.7 million, RMB2,226.8 million and RMB2,135.9 million, respectively, accounting for 98.9%, 98.9% and 98.8% of the total sales of yellow-feathered broilers, respectively.

The table below illustrates the changes of our dealers during the Track Record Period:

2018 2019 2020

Dealers of chicks and yellow-feathered broilers At the beginning of the year 2,296 2,940 3,917 Addition for the year 1,499 2,148 4,092 Termination in the year(1) (855) (1,171) (1,665) At the end of the year(2) 2,940 3,917 6,344

Notes:

(1) The reasons for the termination in relevant years generally include (i) the dealers’ switching into a different industry or other companies; and (ii) non-renewal of dealership relationship due to the adjustment of our sales structure for yellow-feathered chicks and broilers.

(2) The increase in the number of dealers was mainly due to the continuous expansion of the Company’s market share.

During the period from 1 January 2018 to 31 December 2020, we did not unilaterally terminate any contracts with dealers before the date of expiration, and there were no material disputes between the Group and dealers.

As at the Latest Practicable Date, our relationship with our dealers lasts for approximately one year. Our dealers are mainly engaged in sales in designated areas in China.

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We typically entered into dealership agreements with our dealers for sales of our yellow-feathered chicks and broilers. The main terms of our dealership agreements generally include the following:

• Term: Generally one year.

• Designated distribution regions and/or channels: Certain dealers for our broilers are not allowed to resell our products outside of their designated regions and/or sales channels.

• Sales target and reward plan: Dealers are encouraged to achieve phased sales targets. Incentive plans are generally in the form of rebates.

• Minimum purchase volume: Certain dealers for our broilers are required to purchase a minimum purchase volume from us.

• Pricing policy: We set the price at which we sell products to dealers based on market conditions.

• Termination: If the dealer breaches certain material terms or the dealer fails to meet the minimum purchase amount, we may terminate the dealership agreement.

Our relationships with dealers for our chicks and yellow-feathered broilers are characterised as seller and buyer relationships which do not grant us control over their operations or inventories. To our best knowledge, the dealers usually resell our products to wholesale markets, supermarkets or canteens, etc. Once our products are sold to the dealers, we recognise the sales and the ownership and risks related to the products will be transferred to the dealers. In case of their failure to sell the products subsequently, dealers shall have no right of recourse against the Group after their acceptance of the relevant products.

Our Customers for Ancillary Products Segment

Our customers for ancillary product are mainly trading companies and feed manufacturers. All payments are made via online bank transfer, and the credit term is generally within one month.

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Return Policy

We do not have a return policy. Our customers are generally not allowed to return our products after acceptance of the products. During the Track Record Period and up to the Latest Practicable Date, our directors confirmed that we did not receive any material complaints and did not make any material refund.

Major Customers

In 2018, 2019 and 2020, our sales to the top five customers accounted for approximately 10.0%, 9.4% and 8.6% of the Group’s total revenue, respectively. Our sales to our largest customers accounted for approximately 3.4%, 3.0% and 2.5% of our total revenue during the period. During the Track Record Period, none of the Directors, their respective associates or shareholders who own 5% or more of the Company’s issued share capital had any interest in the top five customers.

The table below provides details about our top five customers during the Track Record Period:

2020 Year of Products commencement purchased Percentage of the from our of our total business Settlement Credit No. Customer Background Locations Group Revenue revenue relationship method term (RMB‘000) (%)

1. Customer A Pig dealer PRC Market Hogs 202,874.0 2.5% 2016 Bank N/A transfer 2. Customer B Slaughter PRC Market Hogs 128,122.7 1.6% 2018 Bank N/A house transfer 3. Customer C Slaughter PRC Market Hogs 128,087.8 1.6% 2019 Bank N/A house transfer 4. Customer D Pig dealer PRC Market Hogs 126,032.9 1.5% 2016 Bank N/A transfer 5. Customer E Pig dealer PRC Market Hogs 113,939.8 1.4% 2017 Bank N/A transfer Total 699,057.2 8.6%

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2019 Year of Products commencement purchased Percentage of the from our of our total business Settlement Credit No. Customer Background Locations Group Revenue revenue relationship method term (RMB‘000) (%)

1. Customer F Pig dealer PRC Market Hogs 166,005.5 3.0% 2018 Bank N/A transfer 2. Customer G Slaughter PRC Market Hogs 100,436.0 1.8% 2018 Bank N/A house transfer 3. Customer D Pig dealer PRC Market Hogs 98,587.1 1.8% 2016 Bank N/A transfer 4. Customer H Slaughter PRC Market Hogs 79,115.7 1.4% 2018 Bank N/A house transfer 5. Customer I Slaughter PRC Market Hogs 74,409.3 1.4% 2018 Bank N/A house transfer Total 518,553.6 9.4%

2018 Year of Products commencement purchased Percentage of the from our of our total business Settlement Credit No. Customer Background Locations Group Revenue revenue relationship method term (RMB‘000) (%)

1. Customer E Pig dealer PRC Market Hogs 111,529.5 3.4% 2017 Bank N/A transfer 2. Customer J(1) Pig dealer PRC Market Hogs 70,082.1 2.1% 2016 Bank N/A transfer 3. Customer I Slaughter PRC Market Hogs 52,270.6 1.6% 2018 Bank N/A house transfer 4. Customer K Slaughter PRC Market Hogs 49,456.9 1.5% 2015 Bank N/A house transfer 5. Customer L Pig dealer PRC Market Hogs 46,418.8 1.4% 2013 Bank N/A transfer Total 329,757.9 10.0%

Note:

1. To the Group’s knowledge, our relationship with Customer J terminated in 2018 because Customer J started to partner with Customer F after 2018.

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Pricing

Our products are generally not subject to any price controls or regulations imposed by the Chinese government. Our Directors confirmed that our products were not subject to any price control regulations by the PRC governmental authorities during the Track Record Period and up to the Latest Practicable Date. Our pricing for pig and poultry products varies by product, in particular:

• Market hogs. We adopt daily pricing with reference to major factors such as the sales prices set by our competitors, slaughtering companies and wholesale meat markets, our current inventory and the prediction of future market conditions, policy trends and epidemic situation.

• Breeding pigs and market piglets. We generally adopt monthly pricing with reference to factors such as the sales prices set by our competitors, the current purchase prices of our major purchasers, the quality of our breeding pigs, geographical distribution, quantity, and our breeding pig inventory.

• Yellow-feathered broilers and chicks: We adopt daily pricing for yellow-feathered broilers. Commodity DOCs are priced three days before the sale. Parent Stock DOCs are priced uniformly throughout the year. The major factors for pricing include prices set by our competitors, output quantity and quality, internal and external supply in the market, low and peak consumption seasons, consumption habits, epidemics and other factors. Some of our chicks (chicks that are sold externally) are priced uniformly as stipulated in the contract. As at 31 December 2018, 2019 and 2020, the external sales of chicks products subject to uniform pricing as stipulated in the contract accounted for 27.1%, 20.8% and 11.5% of the total sales of chicks.

Seasonality

There are seasonal patterns in respect of pork and poultry consumption during the year. Consumer purchases more pork and poultry products in China during the periods before the major traditional Chinese festivals, such as the Chinese Lunar New Year, Qingming Festival, Mid-Autumn Festival and National Day. Due to higher demand for pigs and broilers during such periods, sales volumes of our pig and poultry products are typically higher.

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LOGISTICS AND TRANSPORTATION

Depending on the products and sales contracts with our customers, we are sometimes responsible for transporting our products to the customers. During the Track Record Period and as at the Latest Practicable Date, we outsourced most of our product transportation to logistics service providers that are Independent Third Parties. As at the Latest Practicable Date, we had over 45 logistics service providers.

Our transportation arrangements with third party logistics providers allow us to invest less capital investment without having to develop and maintain our own large-scale logistics system. Outsourcing such services also allows us to avoid bearing most of the risks associated with the transportation and delivery of our products. During the Track Record Period and as at the Latest Practicable Date, neither did we experience any material delays or improper handling of our products by logistics providers that would have a material adverse impact on business operations, nor suffer from any shortage of logistics services. The current logistics service market provides us with sufficient options of alternative logistics service providers that can provide similar terms as our existing logistics service providers do.

BRAND AND MARKETING

Our fundamental marketing strategy is to provide safe and high-quality products to our customers. We also adopt diversified brand promotion strategies to continuously increase the brand influence and popularity of our products, in particular:

Breeding pigs are currently the focus of brand promotion in our pig segment. Our major marketing channels include participation in large-scale animal fairs and exhibitions, sponsorship of various conferences, online advertising (such as industry portal websites), offline advertising (such as high-speed road signs and wall advertisements), publication of various promotional materials and promotional items. Because most of our customers for market hogs are pig dealers and slaughtering companies, we mainly promote our market hogs by regular visits to customers, attending regular customer forums and pig slaughtering events.

We promote our yellow-feathered broilers and breeders through various advertising channels, including poultry industry magazines (such as Poultry Raising and Poultry Disease Prevention), offline advertising such as sponsoring community tasting events and influential conferences (such as China Animal Agriculture Association, National Chicken Culture Promotion Alliance (國雞文化推廣聯盟). Furthermore, we have also registered trademarks including Lingnanhuang (嶺南黃), Yupinfeng (御品鳳), Xiangyuema (香粵麻), Dexiang (德鄉). We have put such trademarks on the ankle ring logos of broilers to increase end consumers’ recognition of our products. Our Lingnanhuang (嶺南黃) chickens have been recognised by the Ministry of Agriculture as the National Agricultural Leading Variety. The “Lingnanhuang, Lingnanhuang II, and Lingnanhuang No. 3” varieties of “Lingnanhuang” series have been

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SUPPLIERS, RAW MATERIAL AND INVENTORY

Our Raw Material Procurement

During the Track Record Period, our raw materials mainly included feed and feed ingredients (such as corn, soybean meal, and other by-products), veterinary medicines and vaccines. We adopt a hybrid procurement strategy combining “centralised procurement” by the headquarters and “decentralised procurement” by the subsidiaries. The vast majority of our raw materials are purchased in bulk by the headquarters through centralised procurement to leverage economies of scale, while the materials which are procured in small quantities are procured by our subsidiaries directly. We have three categories of suppliers: strategic suppliers, core suppliers and general suppliers. We have entered into strategic cooperation framework agreements with our strategic and core suppliers, with terms ranging from 5 to 10 years. Our supply agreements with general suppliers last for 6 to 12 months. The credit term typically ranges from 7 to 45 days.

Feed and feed ingredients procurement

We adopt strict measures to select suppliers of feed and feed ingredients to control food safety from the source. We conduct on-site inspections in the main raw material producing areas, select quality and stable suppliers from the source, and establish a complete raw material evaluation, raw material acceptance and raw material use system. The procurement specialists of our raw materials and feed division take the lead in organising a supplier evaluation team to evaluate or re-evaluate the suppliers of feed and feed ingredients in accordance with our management measures for material suppliers, and prepare and submit for approval of a qualified supplier list. We have developed and maintained supplier management and control measures across our operations and established a supplier admission system to ensure the quality of our raw materials. We have also put in place a strict selection process for raw material suppliers. First, we conduct a preliminary screening of supplier qualifications and only the products of the top-ranked suppliers are picked for laboratory evaluation. Suppliers whose products with satisfactory laboratory evaluation results will be included in our trial supplier list. After passing our on-site inspections of the suppliers, we will include the suppliers in our qualified supplier list. We conduct annual performance evaluation of our suppliers based on their product quality and service standards.

In addition, we implement the same management and control standards as our feed mills by signing biosecurity and quality safety agreements with externally sourced feed suppliers. We have set up a special inspection department to supervise feed suppliers through surprise inspections and on-site residence to ensure the safety of externally sourced feed. We have clarified the inspection rules and work content, and collected relevant quality information from six different aspects: human, machine, material, method, measurement, and environment to ensure stable product quality in the process and ensure that product quality meets the specified requirements.

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The supplier shall provide the required conformity certification documents for each batch of raw materials delivered. The samples of raw materials will be taken and sent to the laboratory for inspection upon its arrival. The inspector inspects the nutritional and sanitary indicators of the samples, and the person in charge of quality control communicates with the purchasing department based on the inspection results and issues an inspection report. The purchasing department provides relevant documents and reports to the finance department for settlement, when the delivery is completed.

The purchasing manager prepares monthly and weekly feed purchasing plans and submits it to the purchasing department. The purchasing department formulates a purchasing strategy according to the weekly purchasing plan and market conditions, and through inquiries, price comparisons and negotiation with qualified suppliers, finally forms a purchasing application, which is submitted for approval and signing of a procurement contract.

Procurement of veterinary medicines and vaccines

Our animal healthcare products purchasing department reviews the suppliers of veterinary medicines and vaccines every year and determines the Qualified Supplier List. We conduct procurement bidding from qualified suppliers for the required products, and select the most cost-effective products to be included in the Procurement Catalogue. We enter into annual framework contracts with product suppliers listed in the Procurement Catalogue. Our breeding subsidiary formulates monthly veterinary medicines and vaccine procurement schedules, and after the schedules are submitted for review.

In addition to rigorously screening and monitoring suppliers, we conduct random inspections of veterinary medicines every year to ensure there are no ingredients other than the labelled ingredients in the veterinary medicines.

Major Suppliers

For the years ended 31 December 2018, 2019 and 2020, our purchases from the top five suppliers were RMB2,249.8 million, RMB956.0 million and RMB1,369.9 million, respectively, accounting for approximately 85.5%, 27.5% and 25.6% of our total purchase of products and services. For the same period, our purchases from the single largest supplier were RMB1,853.5 million, RMB251.4 million and RMB324.0 million, respectively, accounting for approximately 70.4%, 7.2% and 6.1% of our total purchase of products and services. The decrease in our purchases from the then single largest supplier from 2018 to 2019 was due to our strategic decision to diversify the supply base and reduce our reliance on few material suppliers, which include, among other things, our acquisition of three feed manufacturing companies from the largest supplier, Tequ Husbandry in December 2018 in order to become more self-sufficient in relation to feed. As a result of such acquisition, such companies became the wholly-owned subsidiaries of our Company and our demand for feed from Tequ Husbandry was significantly reduced. See “History and Corporate Structure – Acquisitions and Disposals during the Track Record Period.” During the Track Record Period, except for Tequ Husbandry and Qian Southwest Hope, all our top five suppliers are Independent Third Parties, and no Directors, their respective associates or Shareholders who own 5% or more of the Company’s issued share capital have any interest in the top five suppliers.

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The table below sets out the details of our top five suppliers during the Track Record Period:

2020 Percentage Year of of our total commencement Products purchase of of the supplied to Purchase products business Settlement No. Supplier Background Location our Group amount and services relationship method Credit term (RMB‘000) (%)

1. Supplier A(1) Feed mill PRC Feed 324,014.9 6.1% 2018 Bank transfer 30 days 2. Supplier B(1) Feed mill PRC Feed 289,440.8 5.4% 2018 Bank transfer 30 days(4) 3. Supplier C Feed mill PRC Feed 278,790.1 5.2% 2018 Bank transfer 30 days 4. Supplier D(1) Feed mill PRC Feed 267,958.1 5.0% 2018 Bank transfer 30 days 5. Tequ Husbandry(2) Feed mill PRC Feed 209,722.2 3.9% 2016 Bank transfer 30 days Total 1,369,926.1 25.6%

2019 Percentage Year of of our total commencement Products purchase of of the supplied to Purchase products business Settlement No. Supplier Background Location our Group amount and services relationship method Credit term (RMB‘000) (%)

1. Supplier C Feed mill PRC Feed 251,394.9 7.2% 2018 Bank transfer 30 days 2. Supplier B Feed mill PRC Feed 199,029.8 5.7% 2018 Bank transfer 30 days(4) 3. Supplier D Feed mill PRC Feed 188,978.5 5.5% 2018 Bank transfer 30 days 4. Supplier A Feed mill PRC Feed 184,412.2 5.3% 2018 Bank transfer 30 days 5. Supplier E(1) Feed mill PRC Feed 132,156.7 3.8% 2018 Bank transfer 30 days Total 955,972.1 27.5%

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2018 Percentage Year of of our total commencement Products purchase of of the supplied to Purchase products business Settlement No. Supplier Background Location our Group amount and services relationship method Credit term (RMB‘000) (%)

1. Tequ Husbandry(2) Feed mill PRC Feed 1,853,549.2 70.4% 2016 Bank transfer 30 days 2. Supplier F Trading PRC Veterinary 239,652.4 9.1% 2013 Bank transfer 7 days Company medicines, vaccines 3. Supplier G Feed mill PRC Feed 101,720.7 3.9% 2017 Bank transfer 30 days 4. Supplier H Feed mill PRC Feed 34,951.8 1.3% 2018 Bank transfer 30 days 5. Qian Southwest Feed mill PRC Feed 19,952.5 0.8% 2018 Bank transfer 30 days Hope(3) Total 2,249,826.6 85.5%

Notes:

1. Suppliers A, B, D and E were also customers of the Group. For 2018, 2019 and 2020, our sales to such entities were nil, RMB34.3 million and RMB54.6 million, amounting for approximately nil, 0.6% and 0.7% of our total revenue, respectively. For 2018, 2019 and 2020, our purchases from such entities were RMB881.3 million, RMB704.5 million and nil, amounting for 16.5%, 20.3% and nil, respectively. Such entities purchased a small amount of feed from the trading companies of the Group, while they also supplied feed to our farming companies. Our sales and purchases with such entities were independent transactions which were not inter-connected or interconditional.

2. Tequ Husbandry is a PRC company, which was owned as to 99.5% by Sichuan Tequ, a connected person of our Company, as at the Latest Practicable Date.

3. Qian Southwest Hope is a PRC company, which was owned as to 40% by Sichuan Tequ, a connected person of our Company, as at the Latest Practicable Date. As such, Qian Southwest Hope is an associate of Sichuan Tequ.

4 Revolving credit within certain limit.

Hedging

During the Track Record Period, we did not conduct any hedging activities. We formulated the Financial Derivatives Operation Plan in March 2021, and we intend to use financial instrument to manage the forward purchase positions of bulk raw materials. The raw materials are primarily soybean meal, soybean oil, corn and wheat. To mitigate the market price risks, we have started to utilize derivative instruments in our operations to hedge our exposure to the price risks relating to pigs. Since China’s launch of the pig futures trading in January 2021, we have become one of the pioneering Chinese pig breeding companies to introduce the pig futures to hedge the pig prices, and one of the first Chinese delivery houses for pig futures. As the pig future trading market in China matures gradually, we may hedge the pig prices when we determine conditions are appropriate to mitigate price risks.

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Inventory

Our inventory mainly includes feed and feed ingredients, veterinary medicines and vaccines and inventory commodities.

In view of the perishable nature of most inventories, we seek to strike a balance between the flexibility of our operations at an appropriate inventory level and the unnecessary waste of excess inventory. We maintain strict inventory control and appropriate inventory and regularly review inventory to determine whether the inventory is slow-moving, obsolete, or whether its market value has declined. We have implemented detailed warehousing procedures, such as first-in first-out inventory management practices, batch accounting for consumable assets, timely records, proper labelling and regular inventory. We manage our inventory based on expected demand, production estimates for the next period, seasonality, existing inventory levels, and prevailing market rates of raw materials. For more data, please refer to “Financial Information-Analysis on Selected Items in the Statements of Financial Position – Inventory”.

QUALITY CONTROL AND FOOD SAFETY

Quality Control of Raw Material Procurement

For the quality control of our raw material procurement, please refer to the paragraph under “– Suppliers, Raw Material and Inventory – Our Raw Material Procurement”.

Quality Control of Feed Production

For the quality control of our feed production, please refer to the paragraph under “– Production – Feed Production”.

Quality Control of Pig Production

In the process of pig breeding and farming, we have adopted the following strict quality control and biosecurity measures to reduce the risk of disease introduction and spread, and to ensure the health and quality of pigs:

Biosecurity measures

In order to continue the prevention and control of African Swine Fever, we strictly implement the following biosecurity measures:

• Site selection of pig farms. We develop and implement strict biosecurity specifications for pig farm site selection, including topography, separation of clean roads for entry and exit, and straight-line distance from dangerous areas (other farms, slaughter plants, harmless treatment areas, garbage dumps, public roads).

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• Equipment protection. We adopt a four-level protection circle outside the pig farm (first-level decontamination at the initial cleaning point/food material disinfection point, second-level decontamination at the standard decontamination centre/pre- storehouse/off-site personnel isolation point, and third-level decontamination at the pre-disinfection point of the pig farm, four-level decontamination at the gate of the pig farm) and the five-level protection circle inside the farm (isolation area, living area, production area, pig house, environmental protection and harmless treatment area) to realise the one-way biosecurity flow of people, vehicles, logistics, pigs, etc. Both our farms and family farms are equipped with multiple peripheral and internal biosecurity equipment.

• Monitoring infection pressure. We conduct investigation of infection pressure in the periphery of pig farms and early warning of infection pressure in the surrounding environment. Through real-time tracking and investigation of the disease infection of pig farms and farmers outside the Group’s pig farms, and virus detection and monitoring of personnel, vehicles, and materials on the pig farms, we comprehensively assess the pressure of peripheral infections and adjustment of the biological safety level according to the assessment results, and prepare an early warning plan for epidemic prevention and control.

Disease cleansing

The key to pig herd management lies in isolation and purification of breeding pigs. We formulate corresponding purification plans for our pig farms based on local investigations of different diseases, adopt strict biological safety measures, immune preventive measures, pathogenic testing, immune antibody monitoring, and achieve disease purification by weeding out poisoned animals and way of grouped breeding.

Pig herd health monitoring

We have designed and deployed a laboratory system based on the regional distribution of the Group’s pig farms to clarify the positioning and functions of the laboratories at all levels, and are equipped with a series of standards for the construction and operation of laboratories at all levels, and established pathogens, serology and other detection technologies. We formulate a pig herd health monitoring plan for different pig herds to monitor the overall antibody level and pathogen prevalence of the pig herd.

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Quality Control of Poultry Production

In the poultry production process, we have adopted the following strict biosecurity and quality control measures to reduce the risk of disease introduction and spread, and to ensure the health and quality of the chicken flock:

Biosecurity measures

• Breeding farm site selection and planning. We start with site selection to perform a comprehensive assessment of the chicken coops, including water quality assessment, air assessment, and pathogen infection risk assessment. In terms of chicken house construction, we strictly follow the bio-safety requirements (taking measures that are not conducive to the spread of pathogenic microorganisms), the distribution of chicken houses (based on the feeding requirements of small, medium, and large chickens or chicken flocks of different breeds), and orientation (to ensure good ventilation) and other aspects in planning and construction.

• Environmental control. We comprehensively upgrade the environmental control equipment of the chicken house to make the environmental control (air quality, temperature, etc.) in the chicken house more stable and reduce the risk of disease. In particular, we carry out a comprehensive environmental control transformation of the hatchery, and the slightly adjustment of various parameters may achieve a stable incubation environment, which plays a very important role in the stability of the quality of the chicks. We monitor the microorganisms in the hatchery environment every month to prevent pathogenic bacteria from being brought to the broiler farms and reduce the incidence of diseases. We also strengthen water quality management and purification by checking the compliance of water quality microorganisms every month to prevent pathogenic bacteria from passing through orally to chickens. We perform cleaning of the weeds around the chicken house regularly, and strictly prohibit littering of vaccine bottles, dead chickens, garbage, etc.

• Immunisation management. We formulate immunisation procedures according to different seasons and regions, and strictly manage immunisation operations to ensure that vaccine immunisation is in place. Meanwhile, each subsidiary established a laboratory to monitor antibodies and evaluate the effectiveness of immunity.

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• Management systems for personnel and disinfection. According to the Management Measures on Poultry Farm Epidemic Prevention of the Company, we implement strict disinfection management measures, personnel, vehicle management, medication management, isolation, chicken sales management, and harmless management. Specialised personnel are designated to conduct inspections on each subsidiary every month to ensure the strict compliance with the standards. In terms of disinfection, we have specialists to evaluate various disinfection operations and optimise the disinfection procedures to ensure effective disinfection.

• Other control measures. We strictly prohibit bringing any non-local poultry products into the breeder farm. And it is strictly forbidden to cross the house at will, especially the management personnel who has managed the diseased chicken flock. In principle, the arrangement of all personnel should be carried out in the order of “small chicken → medium chicken → big chicken”. If there are arrangements for sick chicken visits on the same day, healthy chickens shall be checked first and then the sick chickens.

Disease cleansing

To raise healthy chickens, we start with healthy chicks. We have reduced the level of germ-derived disease pathogens in our chicks, such as leukaemia, salmonella, mycoplasma, etc. The positive rate of leukaemia pathogens and salmonella in our chicks has reached a very low level.

Medicine residue monitoring

We strictly implement the medicine withdrawal period management system, in other words, all chickens must reach the medicine withdrawal period before sampling for medicine residue testing. We have established a special medicine residue testing system, and regularly train and evaluate the operation of testing personnel to ensure accurate operation and stability of testing. Besides, we pay close attention to the updates of the Chinese medicine residue detection methods and items of relevant national departments and industries, and update the Group’s medicine residue detection methods in a timely manner. The staff of our production department must provide the medicine residue test report, the status of the medicine withdrawal period of the chickens, the status of the feed withdrawal period, etc., and the sales staff may market the chickens only after all the indicators are qualified.

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Traceability System

We have established a complete quality traceability system for our breeding pigs, market hogs, market piglets, yellow-feathered chicks and broilers to help us track the flow of products as well as detailed product information for downstream customers. We can trace the use and the suppliers of procured chicks, feed, vaccine and medicines via the information system.

INFORMATION SYSTEM

Our major information system includes the following:

Artificial Intelligence (“AI”) Pig Farming Platform

Through two years of research and development, our “AI Pig Farming” platform has been put into practical use. As at the Latest Practicable Date, we applied such platform on two pig farms.

Application of AI Solutions Application of AI Solutions in Sihong Dekon Taiping in Hechuan Dekon Taihe Planting Farm (Exterior) Planting Farm (Interior)

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Our “AI Pig Farming” platform is equipped with images, videos, acoustic feature analysis technology, intelligent sensor Internet of Things (“IoT”), cloud computing and big data technology, which improves breeding management, breeding technology, and disease prevention and control, biological safety and data collection in our pig breeding and farming business. The details are set out below: Production process Traditional approach Our approach Benefit Feeding • Manual cleaning, feeding, • The feeding process has a high degree of • Save 1.5 hours per person water release and feeding standardisation. The intelligent feeding and per day during the inspections twice a day, it cleaning system is used instead of labour. It feeding session. takes 1 hour for 5 takes the staff only 2-3 minutes a day to personnel each time (600 confirm the normal operation of the system • Save feed resources. sows house). feeding programme and parameter settings. The system automatically identifies the pig • After each feeding, 2 ID via AI technology, automatically generates personnel must inspect the feeding curve and daily feeding amount the feed intake of the for each pig based on pig age, stage, oestrus pigs and make manual state, back fat, stall and other information, records. Each time it and feeds them according to the standard. takes 1 hour for each person. • After feeding, the post-feeding margin is automatically recorded through video inspection and the data is sent to the staff, who will conduct key inspections of abnormal pigs in accordance with the system prompts, which takes about 30 minutes. Through the staff’s feedback on the cause of the abnormality, the system automatically analyses and feeds the results back to the upstream links, such as feed issues. Induction and • The staff check the • AI intelligent equipment runs automatically, • Effectively shorten the checking oestrus status of the sow comprehensively taking use of image number of non-productive twice a day, and it takes recognition, thermal imaging, radar, and days (NPD), reducing at 2 hours each time for 3 intelligent equipment to automatically least 10 days per head people. determine whether the sow is in heat, and per year on average. predict the historical oestrus data to • The staff diagnose intelligently specify the mating time. • Effectively improve PSY whether each pig was in and sow utilisation. heat relying on • Routine investigations are completed by AI, experience, and manually and personnel use AI feedback information to • Each person saves 1 hour registered the pigs in perform spot checks, re-checks, and abnormal per day on average. heat and set the mating checks on the results, and deal with pigs that time. are not in heat within the time limit, focusing on pregnancy check, return check, and backfat determination. Mating • There is no analysis and • Based on the analysis of the historical • The birth rate and healthy requirements for the use production information of sows and boars, a baby rate have increased, of boar semen, and it is semen usage model is established, and and PSY may achieve an used in order or at will. breeding semen is designated in consideration increase of more than 3 of the current semen quality and status of the heads. sow, in accordance with the requirements of the best combination. • The actual mating and insemination operations are no longer random or sequential, and the boar semen must be designated after the analysis of the sows and boars in accordance with the AI system, which has stricter implementation requirements than before.

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Production process Traditional approach Our approach Benefit Work plan and • The staff of each house • The AI system automatically generates • The original work method immunisation arrange and carry out immunisation tasks based on pig age, stage is unplanned, which is their work by themselves, status, etc., specific to each pig. The staff prone to omissions in and the field director executes according to the system instructions, part of the work. Through gives instructions on key and the execution is confirmed in real time the AI application, the issues. The immunisation on the mobile terminal. At the same time, the planning of personnel is carried out in AI system automatically drives the video work is enhanced, and accordance with the equipment and conduct on-site monitoring, feedback and monitoring headquarters’ and conduct video inspections in accordance measures are adopted for immunisation plan. The with the time requirements for immunisation. the implementation of the accuracy and time plan. requirements of the • The AI application system automatically implementation are only generates and schedules work tasks for each recorded in paper, and it stage of the pig house on the basis of is impossible to supervise standard immunisation plans and standard whether it is work processes, and corresponds to personnel implemented. The actual through mobile devices one-to-one, interacts operation is still done during work, and provides timely feedback on manually by the staff, results. and paper registration is carried out afterwards. Disease monitoring • The staff observe the • The body temperature, heart rate, and • Traditionally, when the status of the pigs visually respiratory frequency are detected through staff discovers problem during routine thermal imaging and radar equipment, and pig from the body surface inspections, and judge the behaviour (lying, standing, walking, feeding, characteristics, the pig is health condition of the drinking, defaecation) data are considered to in seriously ill and the pigs based on experience. compare with disease models, and early cure rate is relatively warning is issued based on data and feature low. AI assists staff to fit. detect and treat affected pigs as early as possible. • During routine inspections, staff conduct one- by-one check taking use of the disease warning content in the mobile terminal. Data recording and • It takes the supervisor • Pig ID and breeding pig management card is • There is a large amount system entry 2-3 hours a day to automatically identified through computer, of repetitive work in complete the filling of which can collect and automatically identify traditional methods, with the record form. changes in the position of pigs many errors and poor (turning/transitioning, leaving the field, death) timeliness. With the aid and the image content of the breeding pig of AI, the staff shifts management card, and generate corresponding from the original data production business data, and form daily entry to data inspection, business reports. data analysis and outlier processing, improving the • Save hours in the data entry session. The overall efficiency. staff receives data collected in real time and business reports, can check and analyse the data, and deal with abnormality in a timely manner. The focus is on automatic data collection to lay the foundation for pig farm- based data management, and to grasp comprehensive data (production, operation, etc.) of the pig farm in real time.

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The graph below shows the big data platform. The platform aggregates and records the key indicators of our farm in real time, which helps to improve the efficiency of breeding and farming management.

Smart Farming Management System

We developed the smart farming management system on mobile app in collaboration with a third party based on the JDE system for our poultry segment, which has the following functions:

• Automatic reminders and record templates have been set up for key production process, which remind family farms or farming bases and our administrators in time. Persons in charge can keep track of the production progress to ensure that there are no omissions.

• Based on the timely entry of mobile software data and automatic benchmarking, our administrator can be alerted of any issues in the management process of the family farms or farming bases in time, and can quickly follow up and deal with such issue. Various abnormal deviations are automatically pushed to the corresponding level of management according to the settings.

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EMPLOYEES

As at 31 December 2020, we had 7,562 employees. The table below sets out the breakdown of our employees by function as at 31 December 2020:

Number of Functions: employees

Production 6,057 Finance, human resources and administration 1,111 Sales and marketing 287 Research and development 107

Total 7,562

Employee remuneration package includes salary, bonus and allowance. In accordance with PRC laws and regulations, we participate in social insurance schemes operated by relevant local government authorities, and maintain mandatory pension contribution schemes, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance for employees. We also pay housing provident fund contributions for our employees.

We provide continuous education and training courses to our employees to improve their skills and develop their potential. We have also adopted evaluation programmes, based on which employees can receive feedback. We promote strong employee relationships by providing various employee benefits and personal development support. Our Company values talents and will maintain long-term communication and tracking with target talents.

Our subsidiaries in China have established labour unions in accordance with applicable PRC laws. We do not need to comply with any collective bargaining agreement. During the Track Record Period and up to the Latest Practicable Date, we did not encounter any material labour disputes or claims.

RESEARCH AND DEVELOPMENT

Our R&D team is committed to the preservation and exploration of livestock and poultry breed resources, the selection and breeding of new breeds of livestock and poultry, precision nutrition technology, livestock and poultry health management, food safety control, and optimisation of production. As at the Latest Practicable Date, our R&D team had more than 100 employees. Most team members have more than two years of relevant work experience, of which 39 held master’s degree or above, including 8 holding doctor’s degree and above.

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We have established the National Spark Programme Leading Enterprise Technology Innovation Centre (國家星火計劃龍頭企業技術創新中心), the National Nucleus Pig Breeding Farm (國家生豬核心育種場) and the Key Laboratory of Poultry Breeding and Genetics of the Ministry of Agriculture (農業部家禽遺傳育種重點實驗室). As at the Latest Practicable Date, we had undertaken multiple scientific research projects such as the National 863 Plan and 948 Major Special Projects have obtained a number of scientific and technological achievements.

We cooperate with domestic and foreign universities and research institutions for technology development, including China Agricultural University, Sichuan Agricultural University, Huazhong Agricultural University, Guangdong Academy of Agricultural Sciences, State Key Laboratory of Livestock and Poultry Breeding and other domestic first-class animal husbandry research institutes. In addition, we hire reputable experts in breeding as consultants to provide us with relevant technical services.

For the years ended 31 December 2018, 2019 and 2020, our research and development expenses were approximately RMB54.8 million, RMB47.3 million and RMB75.0 million, respectively.

We focus on the research and development of the following core technologies:

• Breeding technology. Our breeding technology is in the leading position in the industry, which mainly focuses on genomic selection, target group selection (for example, pure line selection and breed evaluation), directional selection (crossing between excellent individuals to produce better offspring after directional crosses) and the measuring point technology based on artificial intelligence and induction technology (i.e., marking the breeding value measurement, and performing selected cultivation according to the index). Through the development and application of these technologies, we have developed new varieties of breeding pigs and yellow-feathered broilers with outstanding advantages. For our breeding technology and achievement, please refer to the sections under “Production – Pig Production – Pig Breeding” and “Production – Poultry Production – Poultry Breeding – Nucleus Breeding Technology”, respectively.

• Nutrition technology. We carry out the evaluation and development of the nutritional value of feed ingredients to determine the nutritional needs of livestock at different stages of production. The feed formula is designed by animal nutrition experts according to the nutritional needs of livestock and poultry at different stages. For example, according to different pig breeds and production goals, we use near- infrared and detection results to establish a dynamic feed database, analyse the feed ingredients for formulation design, so as to meet the nutritional needs of pigs at different physiological stages, and achieve precise nutrition and cost control. In addition, based on business needs, the multi-stage precision feeding of pigs and best output efficiency of the breed can be achieved by matching the best cost-effective, fastest growth rate and best meat quality nutrition plan.

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• Disease control technology. We focus on to the research and development of prevention and control technologies for major diseases, and fully consider factors such as site selection, introduction, production management, and nutritional feeding to form a comprehensive disease prevention and control plan that meets the requirements of large scale pig farms, and monitor pig herds by using multiple detection methods. For diseases (such as African Swine Fever, epidemic diarrhoea, bacterial diseases, etc.), we developed precision immunisation methods for epidemic diarrhoea, and precision medication methods for bacterial diseases; and established disease purification technology (purification of blue-ear disease and pseudorabies of pigs, foot-and-mouth disease of pigs, and avian leukaemia of poultry) to reduce losses caused by diseases.

• Feeding technology. We accurately determine the nutritional needs of pigs and yellow-feathered broilers at different growth stages according to the breeds of pigs and yellow-feathered broilers and production goals, and design feed nutrition formulas that are conducive to the digestion of pigs and yellow-feathered broilers to achieve precise feeding and cost control. The precision feeding technology and control feeding strategy we have developed for breeding sows enable the sows to achieve a reasonable reproductive body condition, ensure high reproductive performance of breeding pigs, and reduce the annual feed consumption of each sow by more than 30 kg.

• Food safety control technology. We focus on the three major research directions of breeding production safety technology, meat processing safety technology and traceability monitoring and analysis technology, for solving the key common technologies of meat food safety production, and providing technical support for the meat food industry.

• Optimisation in the R&D of production technology. The research and development of production technology in the production and feeding process, and the implementation of regulated management and standardised tools, can help us to reduce production costs, improve management efficiency, and improve the overall quality of our products.

• Technology for forecasting sales time. We collect basic data such as pig growth curve, fixed cost, activity cost, sales price and related functional relationships to establish a visualised best sales time forecasting model, and use years of market research and accumulated big data to accurately predict the best weight and timing for market hogs, so as to maximise profits.

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• Data management and analysis technology. We use data management software to realise online data management, which can greatly improve per capita efficiency. For our pig segment, we have launched and applied our “AI Pig Farming” platform on two pig farms, which includes features of cloud computing and big data analysis. For our poultry segment, we used the “Smart” farming management system built upon the JDE system to digitalize our production process and data. Please refer to the section under “– Information System”.

INTELLECTUAL PROPERTY

We hold a variety of intellectual properties including various trademarks, patents and computer software copyrights and domains in the PRC. For details, please refer to the section headed “Statutory and General information – Further information about our business” in this [REDACTED].

During the Track Record Period and up to the Latest Practicable Date, we were not aware of any intellectual property rights infringement that had a material impact on us. We may be subject to claims from third parties claiming that we are infringing on their intellectual property rights.

ENVIRONMENTAL AND SOCIAL MATTERS

We acknowledge our responsibilities on environmental protection, social responsibilities and are aware of the climate-related issues that may have impact on our business. We are committed to comply with environmental, social and governance (“ESG”) reporting requirements upon [REDACTED]. We plan to set up metrics and targets for these ESG issues and to review our key ESG performance on a regular basis. Our Directors will actively participate in designing our ESG strategies and targets, and will evaluate, determine and address our ESG-related risk. We may from time to time engage independent professional third parties to help us make necessary improvements.

Social Responsibility

Leveraging our resources and expertise, we have been and will continue to be highly committed to sustainable corporate responsibility. We strive to help local farmers develop their skills through our family farm models and alleviate the poverty in rural areas in the PRC. In addition, we are committed to contributing for charitable purposes, including education, assistance to handicapped persons, medical supporting and the alleviation of poverty and post-disaster recovery such as earthquake and the recent COVID-19 pandemic.

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Environmental Protection

We are subject to PRC environmental laws and regulations including the Law on Prevention and Control of Water Pollution of PRC (《中華人民共和國水污染防治法》), the Law of the PRC on the Prevention and Control of Atmospheric Pollution (《中華人民共和國大氣污染防治法》), Management Approach of Pollutant Discharge Permits (《排污許可證管理辦法》), the Classification Administration List of Pollution Discharge Licensing for Fixed Pollution Sources (《固定污染源排污許可分類管理名錄》) and the Regulations on the Prevention and Control of Pollution from Large-scale Breeding of Livestock and Poultry (《畜禽規模養殖污染防治條例》). Please refer to the section headed “Regulatory Overview” in this [REDACTED] for details. We are subject to annual inspections by regulatory authorities with respect to these laws and regulations. During the Track Record Period and up to the Latest Practicable Date, the Group did not receive any material administrative penalties due to violations of applicable PRC laws or regulations related to environmental protection.

To comply with the increasingly stringent environmental laws and regulations in the PRC and ensure a “Green and Sustainable” growth of our business, we have taken various environmental protection measures such as the following:

• Wastewater treatment. We are committed to creating a circular ecosystem that combines planting, breeding and farming (as shown in the graph below) and reduces the impact of our business on the environment. We have adopted various processes to treat wastewater from our pig and poultry farms. After the treatment, wastewater meeting the standard can be transported to the surrounding farmland through the irrigation pipes without being externally or directly discharged.

Sihong Dekon’s “Plantation Plus Pig Farming” model

Breeding area

Area for environmentally- friendy treatment

Plantation-based absorption system

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• Exhaust gas treatment. We control the nutritional structure of feed to reduce the production of odour pollutants, and reduce odour by controlling the stocking density, timely cleaning, ventilation, spraying deodorants, and odour treatment facilities. We also collect and use the biogas that has been harmlessly treated for fuel in living quarters.

• Noise treatment. We adopt fully enclosed pig houses and chicken houses, and take building and wall noise reduction measures to effectively reduce noise, while using low-noise equipment, and strengthening equipment maintenance and management to avoid high noise caused by abnormal equipment operation.

• Solid waste treatment. We use dry manure as a resource and sell pig manure and chicken manure as fertiliser to organic fertiliser manufacturers. We use a harmless high-temperature biodegradation machine for sick and dead animals to treat sick and dead pigs in pig houses. We use organic fertiliser fermentation tanks and Japan’s mature and efficient waste harmless treatment technology to treat chicken farm waste.

• Energy conservation and emission reduction measures. We have adopted a variety of water-saving and emission-reduction measures from the source to reduce production costs.

In addition, we have formulated plans for environmental emergencies in accordance with applicable PRC laws and regulations, after taking into account the different conditions of our farms, and implemented plans to prevent delays in emergency response due to poor organisation or chaotic on-site rescue work. We have adopted rescue methods that are used by emergency rescue organisations, and we believe we have the ability to deal with various emergencies that may occur during the course of our business. We take the protection of public health and the safety of life and property as our primary task, and try to minimise the casualties and environmental hazards caused by environmental emergencies.

For the years ended 31 December 2018, 2019 and 2020, we incurred costs relating to environmental protection of approximately RMB27.3 million, RMB60.2 million and RMB148.6 million, respectively. Such costs mainly include construction costs and consumables for the operation of environmental protection processing system, and the wages and benefits of environmental protection staff. The increase in environmental protection expenditure was mainly due to our increased investment in environmental protection, purchase and construction of new and upgraded environmental treatment systems, and continuous recruitment of environmental protection experts.

Occupational Health and Safety

We are subject to PRC laws and regulations regarding labour, safety and work-related incidents. During the Track Record Period and up to the Latest Practicable Date, we complied with relevant PRC workplace safety regulatory requirements in all material respects.

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In order to reduce potential exposure to work injury, we have established a comprehensive occupational health and safety production management system. After taking into consideration of the industry practice and our specific conditions, we have formulated safety production goals, as well as safety production and occupational health related rules and regulations, and adopted a series of prevention and control measures on employee training management, equipment and facility management and control, internal inspection and remediation projects and emergency management. The specific measures are as follows:

• We require new employees pass the three-level safety training and education assessment before they can start work. For existing employees, we also regularly carry out safety production education and training to ensure they have the knowledge and skills required for safe operation, self-rescue and emergency response. Employees engaged in special operations and special equipment operations are required to receive special safety operation training from the regulatory authorities and obtained corresponding qualification certificates before they start to work.

• Each subsidiary of our Group conducts standardised management of equipment and facilities, has established equipment and facilities management accounts, and is equipped with dedicated personnel to be responsible for the inspection and maintenance of various equipment and facilities to ensure that they are always in a safe and reliable operating state. In addition, our subsidiaries formulate comprehensive inspection and maintenance plans every year, strengthen daily inspection and maintenance and regular inspection and maintenance management, and implement the “five regulars” principles (regular inspection and maintenance plan, regular inspection and maintenance personnel, regular safety measures, regular inspection and maintenance quality, regular inspection and maintenance progress).

• In accordance with the requirements of the hidden danger inspection and governance system, all subsidiaries and functional departments of our Group adopt various methods such as comprehensive inspection, professional inspection, seasonal inspection, holiday inspection and daily inspection for hidden danger investigation. Based on the results of the hidden danger investigation, they formulate a hidden danger management plan to timely manage the hidden dangers, and implement closed-loop management of hidden dangers.

• In terms of emergency management, the subsidiaries of our Group formulate corresponding emergency rescue measures based on the specific condition on the site, set up a part-time rescue team composed of relevant personnel, and are equipped with fire hydrants, fire extinguishers, alarm devices, and safety helmets safety belts, gas masks and other emergency materials according to the types of accidents that may occur on the site, and arrange for dedicated personnel to manage them. In addition, we regularly organise emergency rescue training drills for production safety accidents, so that employees can master emergency rescue knowledge.

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ANIMAL WELFARE

Although as confirmed by our PRC Legal Adviser, there are no prevailing PRC laws and regulations on animal welfare applicable to our business and operations, we strive to ensure the physical and psychological well-being of animals by adopting internal control procedures during the breeding and farming process. In particular, we ensure the welfare of animals in the following aspects:

Animal Welfare of Pigs

Scientific design and construction of pig houses. We renovate old pig farms by increasing ventilation and temperature control measures. For our new pig farms, we (i) start with a scientific design; (ii) install modern ventilation, heat preservation and cooling equipment to realise automatic environmental control; (iii) install anti-bird nets and screen windows in pig houses and pig-driving channels to prevent pigs from being disturbed by mosquitoes and flies, and the spread of diseases caused by small animals such as birds and rats; and (iv) plant trees and flowers in the open area of pig farms to change the impression of dirty, messy and poor pig farms that people typically had before.

Scientific feeding, optimised feed formula and clean drinking water supply. We formulate diets that meet the nutritional needs of our different breeds of pigs at different stages of their growth, and prohibit the illegal use of additives. In addition, we install drinking water purification and disinfection devices to ensure an adequate and clean drinking water supply, and regularly check the water quality and install suitable drinking fountains so that the pigs can drink.

Fine management and reduce the density. Our pig houses are equipped with a fully slatted floor, automatic temperature control and mechanical ventilation and wet curtain devices, which can better maintain the temperature, humidity and air quality in the pig house. A stable microclimate environment can improve the health conditions of pigs, reduce the use of medicines and antibiotics and ultimately improve the meat quality. Furthermore, the automatic feed line system effectively reduces the risk of manual errors and infection with foreign pathogens.

Treating pigs humanely. We strictly forbid our staff and contract farmers to treat the pigs roughly, let alone beat them. Our staff are required to get along with or care about our pigs. We also provide regulator trainings to our staff on animal psychology.

Increase entertainment facilities. Our pig houses have installed certain entertainment facilities such as hammer balls, tyre, and soil analogues for pigs to play, which improves the psychological welfare of pigs, reduces the trauma caused by pig fighting as well as the pigs’ response to stress stimuli, and improve production performance and ketone quality. In addition, suitable light and brisk music in our pig houses can reduce pig fighting and stress on environmental noise, improving the meat quality of our pigs.

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Preserve the sexual welfare of pigs. We adopt bionic insemination technology, exogenous reproductive hormone stimulation and other means to compensate for the lack of sexual behaviour of pigs, to improve artificial insemination.

Animal Welfare of Poultry

Selection of locations for poultry farms. We built our breeder and broiler farms and select family farms far away from main traffic roads, industrial areas, and residential areas. High, dry, sunny and ventilated terrain can avoid the impact of intensive traffic of vehicles and people and avoid industrial pollution.

Living conditions. We provide the chickens with sufficient feed and clean drinking water. We insulate chicken house and control temperature within the chicken house throughout the production process in order to prevent heatstroke. We also provide a good ventilation environment to ensure that the chickens remain comfortable. Both of our breeder farms and family farms are equipped with pastures, which provide additional playground for chickens. We also strictly controls the density of the chickens to ensure sufficient living space for the chickens.

Biosecurity measures. We apply poultry vaccines to prevent chicken diseases in strict accordance with applicable laws and regulations, regularly clean and disinfect the breeding grounds, and provide a good breeding environment. We also follow procedures to prevent insects, rodents and safety isolation measures in our breeder farms and family farms to protect chickens from being disturbed by noise and wild animal frights.

An internal view of a Dekon An internal view of chicken breeder farm a Dekon family farm

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LICENCES AND PERMITS

Our PRC Legal Adviser has confirmed that, during the Track Record Period and up to the Latest Practicable Date, we had obtained material requisite licences, approvals and permits from relevant PRC authorities for our operation in the PRC, and our requisite licences and permits were valid as at the Latest Practicable Date. The following table sets forth the material permits and licences related to our business operation:

Business Licence and permit Issuing authority Validity period Expiry date

Pig and yellow- Certificate for Municipal or county Three years 2021.07.22 – feathered broiler Production and level branch of the 2024.07.04 farming Operation of Ministry of Breeding Livestock Agriculture and Poultry (種畜禽生產經營許可證)(1)

Pig and yellow- Certificate for Animal Municipal or county N/A(3) N/A feathered broiler Epidemic Disease level branch of the farming Prevention (動物防 Ministry of 疫條件合格證)(2) Agriculture

Feed production Feed Production Feed management Five years 2022.06.04 – Licence (飼料生產 department under 2026.03.08 許可證) the municipal or county government

Veterinary medicine Veterinary Medicine Municipal or county Four years 2022.03.08 – operation Licence (獸藥經營 level branch of the 2024.03.21 許可證) Ministry of Agriculture

Purchase of feed Cereals Purchase Feed management Three years 2023.09.03 ingredients Licence (糧食收購 department under 許可證) the municipal or county government

Sales of Parent Stock Certificate for New National Commission Validity period N/A DOCs Breeds (Synthetic for the Livestock unspecified Lines) of Livestock and Poultry Genetic and Poultry (畜禽新 Resources (國家畜品種(配套系)證書) 禽遺傳資源委員會)

Notes:

(1) As at the Latest Practicable Date, 18 of our farms under operation had applied for but had not yet obtained the Certificate for Production and Operation of Breeding Livestock and Poultry (種畜禽生產經營許可證), 6 of our farms under operation had applied for but had not yet obtained the Certificate for Animal Epidemic Disease Prevention (動物防疫條件合格證). During the Track Record Period and up to the Latest Practicable Date, we had not been subject to any administrative penalties due to the lack of certificates, licenses or permits.

(2) The Animal Epidemic Prevention Law of the PRC does not specify a validity period. Competent authorities have the authority to determine the validity periods and the practice varies among different authorities.

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COMPETITION

We mainly compete with pig and yellow-feathered broiler breeding and farming companies in the PRC. According to the Frost & Sullivan Report, unlike the low entry barriers for small-scale farmers, large-scale pig and poultry breeding and farming enterprises face high barriers in terms of management, funds, technologies, channels, talents, etc. According to the Frost & Sullivan Report, in 2020, we were one of the top ten breeding pig providers in the PRC and top five breeding pig providers in Southwest China, in terms of sales volume of breeding pigs; we ranked 7th and 2nd, respectively, among all pig providers in the PRC and in Southwest China, in terms of pig revenue and sales volume; we were the largest yellow-feathered Parent Stock DOCs providers in the PRC in terms of revenue and sales volume; and we ranked 3rd among all yellow-feathered broiler providers in the PRC in terms of revenue and sales volume in 2020. It is expected that the trend of industry concentration will continue to accelerate due to growing scrutiny over food safety matters. Competition for our products in the PRC is primarily based on large-scale batch production capability, brand recognition, quality, genetic traits, price, marketing strategies as well as distribution network.

For details of our competitive advantages, please refer to “– Our Competitive Strengths” above. For challenges and threat we encounter during our business operation, please refer to “Industry Overview”.

MAJOR AWARDS

We received some awards and recognitions in respect of our product quality, brand recognition and social contributions, including the key awards and recognitions set forth in the table below:

Name of Name of award company Name of issuing authority Year of issue Expiry date

Agriculture Industrialisation National Key The Company Ministry of Agriculture, National November November Enterprise (農業產業化國家重點龍頭企 Development and Reform Commission, 2018 2021 業) Ministry of Finance, Ministry of Commerce, People’s Bank of China, State Administration of Taxation, China Securities Regulatory Commission and All China Federation of Supply and Marketing Cooperatives

National Nucleus Pig Breeding Farm Zigong Dekon Ministry of Agriculture 2018 N/A (國家生豬核心育種場) Livestock Farming Company Ltd.

Chengdu Enterprise Technology Centre Technology Chengdu Municipal Bureau of Economic September N/A (成都市企業技術中心) Centre of the and Information Technology (成都市經 2020 Company 濟和信息化局)

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Name of Name of award company Name of issuing authority Year of issue Expiry date

2020 Chengdu Top 100 Tertiary The Company Chengdu Enterprises Confederation (成都 November N/A Enterprises (2020成都服務業百強企業), 企業聯合會), Chengdu Entrepreneurs 2020 Chengdu Top 100 Private Enterprises Association (成都企業家協會), and (成都民營百強企業), Chengdu Top 100 Chengdu Enterprise Culture Association Enterprises (成都百強企業), and (成都企業文化協會) Chengdu Top 20 Private Enterprises for Employment (成都民營企業就業20強)

2020 Top 10 Ecology-empowered Platform The Company Organising Committee of China Animal December N/A Enterprises in Animal Husbandry and Husbandry and Feed Technology and 2020 Feed Industry (2020畜牧飼料行業十大生 Economy High-level Forum (中國畜牧態型賦能平台企業) 飼料科技與經濟高層論壇組委會)

National High-tech Industrialisation Model The Company National Development and Reform 2011 N/A Project (國家高技術產業化示範工程) Commission

Guangdong High-tech Enterprise (廣東省 Guangdong Department of Science and Technology of December December 高新技術企業) Wizagricultural Guangdong Province (廣東省科學技術 2019 2022 Science & 廳), Department of Finance of Technology Guangdong Province (廣東省財政廳), Co., Ltd. and Guangdong Provincial Tax Service, State Administration of Taxation (國家稅務總局廣東省稅務局)

Demonstration Forms for Livestock Three pig Ministry of Agriculture and Rural Affairs 2020 N/A Farming Standardisation (畜禽養殖標準 farms of the 化示範場) Group

African Swine Fever Free Zone One pig farm Ministry of Agriculture and Rural Affairs February 2021 N/A of the Group

“Broiler Industry Poverty Alleviation The Company China Animal Agriculture Association (中 May 2018 N/A Award” for the Fifth Advanced 國畜牧業協會) Enterprises in the Animal Husbandry Industry of the PRC (第五屆中國畜牧行業先進企業「肉雞產業扶貧獎」)

“Annual Influential National Chicken The Company National Chicken Cultural Promotion November N/A Enterprise” and “Annual Landmark and League (國雞文化推廣聯盟), and 2019 National Chicken Promotion Award” in Guangdong xinm123.com and Xin Qin Kuang (新牧 the 2018 National Chicken Industry Wizagricultural 網新禽況) Awards (2018年國雞產業風雲榜「年度 Science & 風雲國雞企業」和「年度地標國雞推廣 Technology 獎」) “Annual National Chicken Co., Ltd. Industry Promotion Award”, “Annual National Chicken Technical Service Contribution Award” and “Annual National Chicken Breeding Technology Innovation Enterprise” in the 2019 National Chicken Industry Awards (2019 年國雞產業風雲榜「年度國雞產業推動獎」、「年度國雞技術服務貢獻獎」和「年度國雞育種技術創新企業」)

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RISK MANAGEMENT

With our business development and expansion, there are also increasing potential risks relating to our business. To identify, assess and control the risks which may hinder our business growth, we have formulated and implemented a risk management system to cope with various potential risks identified in our operation, including strategy risk, legal risk, operational risk, market risk, financial risk and credit risk. Our risk management system contains relevant procedures for the identification, analysis, classification, resolving and monitoring of various risks, as well as the reporting grade related to the risks identified in our operation. Each of the business departments and functional departments is responsible for identifying and assessing the risks relating to its business scope, and implementing its risk management and internal control system.

Our audit committee is responsible for supervising the management in implementing the overall risk management and internal control system and assessing the risk management and internal control system. For details of qualifications and experiences of the members of our audit committee, please refer to section headed “Directors, Supervisors and Senior Management”.

For our measures against quality control and other risks, please refer to section headed “– Quality Control and Food Safety” above and “Financial Information – Market and Other Financial Risks”.

INTERNAL CONTROL

The Board is responsible for ensuring that the Group maintain sound and effective internal controls to safeguard the Shareholders’ investments and the Group’s assets. We have adopted, or expect to adopt before the [REDACTED], a series of internal control policies, procedures and plans designated to provide reasonable assurance for achieving objectives including effective and efficient operations, reliable financial reporting and compliance with applicable laws and regulations, including the following:

• Internal control manual. We have formulated an internal control manual, which covers the corresponding systems and standards, flow charts, risk control matrix, etc. for key business procedures of various business segments of the Group and elaborates risk points and control points of the key procedures. Internal control standards for business operations are formed and executed and promoted via training on the internal control manual.

• Authority system. We have developed a manual of rights and responsibilities, which clearly specifies the authorised subjects, conditions, scopes and limits, etc. for various posts involved in our internal controls, and no organisation or individual is allowed to make any risk decision which exceeds the relevant limits of authority.

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• Internal audit. Our internal audit department regularly monitors key controls and procedures in order to assure our management and Board that the internal control system is functioning as intended. The internal audit department is also responsible for monitoring the reporting management affairs. The audit committee under our Board is responsible for supervising our internal audit function.

• Compliance with the Listing Rules. Our various policies aim to ensure compliance with the Listing Rules, including but not limited to the aspects related to corporate governance, connected transactions and securities transactions by our Directors.

• Compliance adviser. We have engaged Maxa Capital Limited as the compliance adviser to the Group to advise on our ongoing compliance with the Listing Rules and other applicable securities laws and regulations in Hong Kong.

INSURANCE

We consider our insurance coverage to be adequate and in line with the commercial practices in the PRC. Our insurance coverage in China primarily consists of property insurance, pig and yellow-feathered broiler farming insurance and employee related insurance. Our property insurance mainly covers our buildings, facilities and equipment. Our pig and yellow-feathered broiler farming insurance mainly covers the prices and deaths of our pigs and yellow-feathered broilers. Our employer related insurance mainly consists of contributions to or provisions of the employee pension insurance, work-related injury insurance, maternity insurance, unemployment insurance, medical insurance and housing provident funds as required by the PRC laws and regulations.

IMPACT OF DISEASE AND EPIDEMIC

Impact of African Swine Fever

African Swine Fever is a fatal disease for pigs. In August 2018, China’s first African Swine Fever case was discovered in the Northeast China and subsequently spread from north to south. In April 2019, all provinces, municipalities and autonomous regions in the PRC had reported African Swine Fever cases. As African Swine Fever is highly contagious, once an outbreak happens in one pig farm, all pigs on that pig farm would be disposed in extreme cases. In 2020, the African Swine Fever has subsided compared with 2019. Since 2021, only sporadic African Swine Fever cases have occurred in certain provinces in China. Currently, there is no vaccine available in the market. The impact of the African Swine Fever on our operation are set out below.

Demands for pigs and pork products. During the Track Record Period, due to the African Swine Fever, the stocks of pigs in China fell sharply, and the speed and scale of restocking pigs could not keep up, which led to a shortage of pigs in the market. On the other hand, according to the Frost & Sullivan Report, despite a temporary decline in 2019, the pork consumption in China remained relatively stable during the Track Record Period. Furthermore, the government

– 226 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS imposed restrictions on the transport of pigs to prevent and control the African Swine Fever, resulting in an imbalance between the supply and demand of pigs among regions. For details of the restrictions on the transport of pigs, please refer to the section headed “Regulatory Overview – Policies Relating to Livestock and Poultry Breeding, Feed Production and Food Processing Industry – Animal Epidemic Prevention – Prevention and Control of African Swine Fever.”

Demands for yellow-feathered broilers. Due to temporary short supply of pork as a result of the impact of the African Swine Fever in 2019, demand for chicken products as alternative increased. Accordingly, the average selling price and average gross profit of our yellow- feathered broilers increased from 2018 to 2019.

Operation of pig farms. We have taken measures to ensure our compliance with all applicable laws and regulations in relation to the African Swine Fever and strengthened our measures to control the African Swine Fever. In 2018, we did not incur any expenses relating to the strengthening of biosecurity measures. In 2019 and 2020, we incurred approximately RMB66.3 million and RMB140.4 million, respectively, of expenses relating to strengthening of the biosecurity measures. Such mainly represented the expenses on the procurement of extra disinfectants and the setup of additional sterilisation equipment. We managed to eliminate the African Swine Fever’s route of transmission by strengthened biosecurity measures, such as implementing quarantine measures on our pig farms and disinfecting feed and materials coming in or out of the area of our pig farms. We did not experience any material disruption of our pig farming operation as a result of African Swine Fever and other swine diseases.

Supply chain. We did not experience any major shortage of feed as a result of the outbreak of the African Swine Fever and other swine diseases.

Expansion plan. In general, the African Swine Fever and other swine diseases have not caused any material adverse impact on our business strategy and expansion plan.

In light of the facts that none of our pig farms have been depopulated due to the African Swine Fever during the Track Record Period and up to the Latest Practicable Date and that the stock of pigs in the PRC is recovering, our Directors believe that (i) our strengthened biosecurity measures are adequate and effective at this stage, and (ii) the outbreak of the African Swine Fever had subsided since late 2019 in the PRC and no material adverse impact caused by the African Swine Fever is expected on the Group going forward. For details of the impacts of the African Swine Fever on the pig farming industry, please refer to the section headed “Industry Overview – Impact of African Swine Fever on Pig and Broiler Farming Industry” in this [REDACTED]. For details of the risks relating to the African Swine Fever and other swine diseases, please refer to the section headed “Risk Factors – Risks Relating to Our Business and Our Industry Outbreak of African Swine Fever, avian influenza, and other diseases among the livestock or attributed to livestock or zoonoses and adverse publicity of these diseases can significantly affect our production, supply and demand for our products and our business”.

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Impact of Avian Influenza

As confirmed by our Directors, during the Track Record Period and up to the Latest Practicable Date, there were no avian influenza infection cases on our farms, family farms and farming bases.

Impact of COVID-19 Outbreak

The outbreak of the COVID-19 has impacted our business in many aspects including the following:

• Impact on supply chain. As affected by the COVID-19 pandemic, local governments in certain parts of China imposed restrictions on enterprises to resume work, which resulted in delays of resuming feed production in our feed plants and by our feed suppliers. Also, as lockdown of cities or road closures were implemented in certain areas such as Yunnan Province and Guizhou Province, family farms in those affected regions experienced a temporary shortage of feeds as the suppliers were unable to deliver in time. Government authorities subsequently issued policies requiring that, during the prevention and control of the COVID-19 outbreak, the supply of meat and other necessities shall be ensured, and the transportation of agricultural raw materials including livestock, poultry and feeds shall not be intercepted. For details, please refer to the section headed “Regulatory Overview” in this [REDACTED]. Since February 2020, we and our major suppliers have resumed work.

• Impact on sales. Due to the impact of COVID-19 pandemic in 2020, (i) certain local governments suspended live poultry markets as part of the pandemic control measures, and (ii) social distancing, travel and traffic restrictions resulted in a significant decline in the consumption of chicken, which resulted in a temporary mismatch of supply and demand. Followed by consequent oversupply of yellow- feathered broilers, the average selling price and average gross profit of our yellow-feathered broilers fell in 2020. The average market selling price was RMB15.76/kg in 2019 and RMB13.54/kg in 2020, representing a decline of 14% in 2020. The COVID-19 outbreak did not have a material adverse impact on the sales of our pig products.

• Other impacts. Due to the restrictions on the logistics in certain abovementioned regions, our inventory of frozen chicken increased.

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With the gradual resumption of normal economic and business activities in the PRC in 2020 and based on our financial performance in 2020, as at the Latest Practicable Date, our Directors confirmed that the COVID-19 outbreak did not have any material adverse impact on our business operation and financial performance, mainly due to the facts that (i) pork and chicken are the most important protein sources for Chinese people, and the per capita consumption thereof remained stable during the COVID-19 outbreak; (ii) government authorities have implemented policies and measures to ensure the stable supply of pork and other necessities during the COVID-19 outbreak, as well as uninterrupted transportation of agricultural production materials (including livestock, poultry and feeds) across regions; (iii) we recorded a significant increase in both revenue and profit in 2019 and 2020; and (iv) we have established a system for prevention and control of the COVID-19 pandemic and adopted strict biosecurity measures for our farms and employees.

PROPERTIES

We occupy certain properties in connection with our business operation. Our properties are mainly used for non-property activities as defined under Rule 5.01(2) of the Listing Rules, which mainly include premises for our pig farms, yellow-feathered broiler, hatcheries and breeder farms, feed mills, waste treatment facilities, offices and dormitories.

Pursuant to section 6(2) of the Companies (Exemption of Companies and [REDACTED] from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong), this [REDACTED] is exempted from compliance with the requirements of section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance which requires a valuation report with respect to all of the Group’s interests in lands or buildings, for the reason that as at 31 December 2020, none of the properties held or leased by us had a carrying amount of 15% or more of our consolidated total assets. Pursuant to Chapter 5 of the Listing Rules, this [REDACTED] is not required to include the valuations of our properties.

Owned Properties

Land use rights

As at the Latest Practicable Date, we owned land use rights of 16 parcels of lands in China with an aggregate site area of approximately 693,197.74 square metres, which are primarily used for feed mills and related ancillary facilities. We have obtained land use right certificates for 14 parcels of lands with an aggregate floor area of approximately 650,697.88 square metres, representing 93.9% of our total owned land use rights. None of our owned land use rights has been pledged.

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Land use rights pending title certificates

As at the Latest Practicable Date, we had not yet obtained land use rights title certificates for two parcels of lands with an aggregate floor area of approximately 42,499.86 square metres, representing 6.1% of our total owned land use rights. Those parcels of land were used for our poultry trading platforms, dormitories, offices and feed mills. We have initiated the process of application to the competent authority for the pending title certificate regarding the parcel used for feed mills. The competent authority as confirmed by our PRC Legal Adviser confirmed that our relevant subsidiary did not breach any land administration laws or regulations, or received any fines during the Track Record Period. With respect to the other parcel of land used for the poultry trading platform, dormitories and offices, the competent government authorities as confirmed by our PRC Legal Adviser issued confirmation letters, stating that the relevant subsidiary did not breach any land administration laws or regulations by using such land before obtaining the title certificate, or received any administrative fines during the Track Record Period. The People’s Government of Xifeng County also confirmed that it will not impose any form of administrative penalties on our relevant subsidiary. Accordingly, we do not expect these incidents would result in any material adverse effect on our business.

Defects in land uses

During the Track Record Period, two parcels of our owned lands were used by our subsidiaries not in accordance with the approved “industrial” purpose stated in the title certificates. One parcel was used for the construction of office and hatchery plants with a gross floor area of 2,200 square metres, and the other parcel was used for the construction of farms with a gross floor area of 15,575 square metres. According to the Land Administration Law of the PRC, failure to use a stated-owned land in accordance with the approved purpose will subject the land use right owners to orders by competent natural resources authorities at the county level or above to surrender the land as well as fines. As a result, due to our failure to use such stated-owned land in accordance with the approved purpose, we are subject to the risk of being ordered to surrender the land and being fined.

The relevant competent authorities as confirmed by our PRC Legal Adviser have issued letters, confirming our relevant subsidiaries did not violate the land-related laws and regulations, or received any administrative penalties by the relevant competent authorities during the Track Record Period. [Our Controlling Shareholder has undertaken to indemnify the Group against all fines, penalties or losses, if any, incurred by the Group as a result of or in connection with the aforementioned non-compliance.] In addition, as the hatchery and farms on the lands above represent a small proportion of our total assets (our revenue from such hatchery and farms amounted to approximately RMB5.0 million and RMB15.1 million, respectively, during the Track Record Period), we do not expect such incidents would result in any material adverse effect on our business or operations.

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Buildings

As at the Latest Practicable Date, we owned property ownership certificates in respect of five properties with a total gross floor area of approximately 14,344.67 square metres.

Buildings pending ownership certificates

As at the Latest Practicable Date, we had not yet obtained building ownership certificates for properties on seven parcels of land with a total gross floor area of approximately 143,490.81 square metres. Those buildings are mainly used as feed mills and relevant ancillary facilities, poultry trading platform and office buildings. As advised by our PRC Legal Adviser, according to applicable PRC laws and regulations, the Group may be required to dismantle the buildings and its ancillary facilities.

Two feed mills on such properties commenced the operation of feed mill before obtaining the Construction Project Planning Permit (建設工程規劃許可證) and Construction Project Commencement Permit (建設工程施工許可證). As advised by our PRC Legal Adviser, according to the applicable PRC laws and regulations, the competent government authorities may impose fines or require our relevant subsidiary to rectify and dismantle the facility, if necessary.

For properties on such land, we have received confirmation letters from the competent government authorities as confirmed by our PRC Legal Adviser, confirming that we were not subject to any administrative penalties by competent authorities due to violations of any laws or regulations relating to land construction management during the Track Record Period.

We have initiated the process of applying for the ownership certificates above. [Our Controlling Shareholder has undertaken to indemnify the Group against all fines and penalties, if any, incurred by the Group as a result of or in connection with the aforementioned defects in titles.] We do not expect such defects would result in any material adverse effect on our business or operations.

Buildings on contracted lands

In addition, as at the Latest Practicable Date, we had built and commenced production of a total of 94 pig and poultry farms and ancillary facilities on rural collective lands with a total gross floor area of approximately 2,686,977.03 square metres. As advised by our PRC Legal Adviser, as such farms belong to facility agricultural-use lands and are managed as agricultural-use lands, there is no need to go through approval procedures for construction land nor to obtain building ownership certificates. Facility agricultural-use lands shall be filed with the township government by the rural collective economic organisation or the operator. As at the Latest Practicable Date, five of our farms had not yet made the filings for the facility agricultural-use lands, and had submitted an application for filing. Our PRC Legal Adviser is of the view that the possibility that we will be subject to administrative penalties is remote given that the competent governmental authorities has issued confirmation letter, confirming

– 231 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT BUSINESS that our relevant subsidiaries were not subject to any administrative penalties during the Track Record Period and there are not substantive impediment to the completion of filings by our subsidiaries regarding the facility agriculture-use lands. [Our Controlling Shareholder has undertaken to indemnify the Group against all fines and penalties, if any, incurred by the Group as a result of or in connection with the aforementioned defects in titles.] We do not expect such defects would result in any material adverse effect on our business or operations.

Leased Properties

Leased lands

As at the Latest Practicable Date, we leased rural collective lands with an aggregate floor area of approximately 24,165,347.8 square metres. Such leased lands have been mainly used for farms and ancillary production facilities. Certain leased lands occupied by our farms are forest lands. Please see “– Legal Proceedings and Compliance – Non-compliance” for details.

Leased farms

As at the Latest Practicable Date, we leased 73 farms with a total gross floor area of approximately 1,339,748.5 square metres.

Failure to perform filing procedures regarding the facility agricultural-use lands

As at the Latest Practicable Date, we had not yet completed filing procedures regarding the facility agricultural-use lands for eight leased farms, of which five are built by the government, and three are built by non-government entities or individuals. As advised by our PRC Legal Adviser, according to the lease contracts and applicable laws and regulations, the lessors are responsible for completing the filing procedures regarding the facility agricultural- use lands. The local competent authorities have issued letters confirming that our relevant subsidiaries were not subject to any administrative penalties by the relevant competent authorities as a result of the said matter during the Track Record Period, and our PRC Legal Adviser is of the view that the risk of any administrative penalties on the Group is low.

Other leased properties

As at of the Latest Practicable Date, among all the other leased properties, we leased 298 other properties with each exceeding 100 square metres. Such properties are mainly used for warehouses, staff dormitories, laboratories, quarantine facilities, office premises, etc.

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Title defect and lack of registration related to leased properties

As at the Latest Practicable Date, for 14 properties leased by us or our subsidiaries, the lessors fail to provide the corresponding property ownership certificates or credentials entitling them to lease such properties. As advised by our PRC Legal Adviser, relevant lease contracts are subject to the risk of being deemed invalid by competent authorities under PRC laws. The leased properties constructed without approval or permit by relevant competent authorities are subject to the risk of demolition as ordered by competent authorities.

In addition, as at the Latest Practicable Date, none of properties leased by us or our subsidiaries, had registered with the relevant housing authorities. Pursuant to the provisions of the Administrative Measures for Commodity House Leasing (《商品房屋租賃管理辦法》), for lease agreements that are not registered with the relevant housing authorities, we may be subject to a maximum fine of RMB10,000 per incident. Our PRC Legal Advisers have advised us that our failure to register the lease agreements does not affect the validity or enforceability of the lease agreements. During the Track Record Period and up to the Latest Practicable Date, we had not received any notice from the relevant housing authorities to rectify or any penalty in relation to our failure to register these leases.

As there are multiple alternatives to such leased properties in the relevant areas, our Directors believe that such defects in our leased properties described above will not have a material adverse impact on our operation and financial position, if we have to terminate the occupation of such leased properties.

Save as disclosed above, our PRC Legal Adviser is of the view that (i) there are no defects in titles to our land use rights; and (ii) the uses of our self-owned and leased properties have complied, in all material aspects, with all applicable laws and regulations during the Track Record Period and up to the Latest Practicable Date.

LEGAL PROCEEDINGS AND COMPLIANCE

We have detailed legal compliance procedures to identify and control the legal risks relating to our operations. According to our PRC Legal Adviser, we have complied, in all material aspects, with all applicable laws and regulations during the Track Record Period and up to the Latest Practicable Date.

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Legal Proceedings

We were from time to time involved in legal proceedings arising from the ordinary course of our business during the Track Record Period, but none of them is material to us. As at the Latest Practicable Date, none of our Company, subsidiaries or Directors was a party to any pending or threatened litigation, arbitration or administrative proceeding that could have a material adverse effect on our financial position or results of operations.

Non-compliance

During the Track Record Period, save as disclosed in “– Licences and Permits” and “– Properties” above, our Directors confirm that the Group has obtained all material approvals, permits, consents, licences and registrations necessary for our business operations in the PRC, all of which are valid currently. During the Track Record Period and up to the Latest Practicable Date, we did not encounter any issues in the routine review by the PRC regulatory authorities, nor were rejected in any application for renewal of the licences necessary for our operations. As advised by our PRC Legal Adviser, we did not materially violate applicable laws and regulations in our operations in the PRC during the Track Record Period and up to the Latest Practicable Date.

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Non-compliance Relevant laws and regulations, legal consequences Rectification measures and Preventive incidents Reason(s) for non-compliance and potential maximum penalty potential impact on Group measures taken Failure to make full contributions to PRC social insurance and housing provident fund During the Track Record Our failure to make full As advised by our PRC Legal Adviser, pursuant to the Social Insurance Law, we Each of the Company and its relevant subsidiaries has We will also continue to Period, we did not make contributions was mainly because may be required by relevant authorities to pay the outstanding social insurance obtained a certificate issued by the local social insurance regularly communicate with the full contributions to the (i) our failure to make timely within a prescribed period, and pay an overdue fee equivalent to 0.05% of the and housing provident fund management authorities (the relevant local government social insurance and payments upon arrival of new outstanding amount for each late payment day. If we fail to pay the outstanding competent authorities as confirmed by our PRC Legal authorities and, where necessary, housing provident fund employees, (ii) certain employees social insurance within the prescribed period, we may be subject to a fine Adviser) where they are located, confirming none of consult our PRC Legal Adviser, for certain employees. are reluctant to afford their parts of equivalent to one to three times of the outstanding social insurance amount. them was subject to any administrative penalties due to a in respect of the applicable bases social insurance and housing Meanwhile, according to the Emergency Notice of the General Office of the violation of the laws, regulations or regulatory for calculation of the social provident funds as they have Ministry of Human Resources and Social Security on Implementation of the documents relating to labour and social insurance by insurance and housing provident contributed to other medical Spirit of the Executive Meeting of the State Council in Stabilising the Collection failure to make full contributions to various social fund contributions at the rates insurance programmes, and (iii) of Social Insurance Premiums (Ren She Ting Han [2018] No. 246) (《人力資源 insurance premiums and housing provident funds in a approved by relevant government certain employee information we 社會保障部辦公廳關於貫徹落實國務院常務會議精神切實做好穩定社保費徵收工作 timely manner. authorities, and will update our have are incomplete or incorrect. 的緊急通知》(人社廳函[2018]246號)), the prevailing base and rate of social Based on the foregoing, our PRC Legal Adviser advised relevant contribution policies in insurance contributions and other relevant collection policies in each place shall that the risk that we would be ordered by the competent accordance with such remain unchanged until the reform of social insurance collection authorities is government authorities to comprehensively make up the consultations; we will properly completed. None of the local social insurance collection authorities is allowed to shortfall for social insurance and housing provident prepare and maintain written organise any settlement of the historical outstanding amounts by enterprises on a contributions is remote. Based on the reasons above, our records on payments for social separate basis. Directors are of the view that such non-compliance insurance and housing provident We are further advised by our PRC Legal Adviser that according to the relating to social insurance and housing provident fund fund contributions and have the Regulation on Housing Provident Fund, in the event that the employer makes contributions will have no material adverse impact on the records reviewed by designated overdue or inadequate contributions as at the due date of the housing provident operation and financial position of the Group. personnel on a monthly basis. Such designated personnel fund, relevant housing provident administration centre may order such employer We made provisions of RMB3.3 million, RMB12.7 to make supplemental contributions within a prescribed period. If such employer include the Company’s social million and RMB4.0 million for the social insurance insurance personnel, the manager fails to make such contributions within the prescribed period, a fine of more than contribution shortfalls for 2018, 2019 and 2020, RMB10,000 but less than RMB50,000 may be imposed, or an application may beBUSINESS of the finance department and respectively. We also made provisions of RMB2.9 the general manager. made to the PRC court for enforcement. million, RMB4.5 million and RMB8.0 million for the

3 – 235 – As at the Latest Practicable Date, we had not received any notice or request from housing provident fund contributions shortfalls for 2018, the said PRC regulatory authorities or other competent authorities ordering us to 2019 and 2020, respectively. make retrospective payments or any differences of the payments for the social insurance fund and housing provident fund contributions. We were also not aware of any employee’s accusation or request for payment of social insurance or housing provident fund contributions. HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS Non-compliance Relevant laws and regulations, legal consequences Rectification measures and Preventive incidents Reason(s) for non-compliance and potential maximum penalty potential impact on Group measures taken Occupation of forest lands by our farms As at the date of this Such non-compliance was mainly As advised by our PRC Legal Adviser, our occupation of forest lands for Our PRC Legal Adviser confirmed that such defects of We have delegated our legal document, one of our due to oversight and inexperience construction of farms without review and approval by competent authorities our farms does not constitute a material violation of the affairs department to supervise farms occupied forest of the relevant staff of our violated the Forest Law of the PRC and the Rules for Implementation of the laws and regulations, and the risk of us being subject to the nature of land use before we lands without obtaining subsidiaries in selecting location of Forest Law of the PRC, which exposes us to the legal risk of being required to administrative penalties is remote, given the competent lease or own a new farm. relevant approvals or our farms. suspend our operations and a fine of RMB10 to RMB30 per square metre of the government authorities (as confirmed by our PRC Legal Meanwhile, we will review the completion of filings for forest lands with illegally changed use, thereby impacting our continual operation Adviser), have issued letters confirming that our relevant relevant land certificates of the use of such forest lands. and use of such farms. subsidiaries were not subject to any administrative lessor according to our internal The occupied forest lands penalties due to violations of forestry-related laws and procedures before leasing a new had a total site area of Our Directors estimated that the potential maximum fine is approximately regulations by the relevant competent authorities during farm, and will lease such farm if approximately 142 mu RMB2.84 million accordingly. the Track Record Period. it is qualified; for our self-built (94,666.67 square meter). farms, we will conduct site In addition, based on the facts that (i) the forest lands selection on the principle of no occupied represent a small proportion of the Group’s occupation of forest lands. If it farms; and (ii) our Controlling Shareholders have is inevitable to occupy a small undertaken to indemnify the Group against all fines, amount of forest lands to the penalties and losses, if any, incurred by the Group as a extent permissible by the laws result of or in connection with the aforementioned non- and regulations and policies, we compliance, we do not expect such defects would result shall only commence in any material adverse effect on our business or construction upon performing operations. relevant compliance procedures in advance. BUSINESS 3 – 236 – HSDCMN SI RF OM NOPEEADSBETT HNEADTEIFRAINMS BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS Non-compliance Relevant laws and regulations, legal consequences Rectification measures and Preventive incidents Reason(s) for non-compliance and potential maximum penalty potential impact on Group measures taken Non-compliance incidents related to environmental protection During the Track Record Such non-compliance was mainly According to the Law of the PRC on the Prevention and Control of Air We have paid administrative fines with a total amount of We have implemented the Period and up to the because: (i) certain employees of Pollution, the Law of the PRC on the Prevention and Control of Water Pollution, approximately RMB2.9 million in relation to such non- following measures relating to Latest Practicable Date, our subsidiaries lack of operational Regulations on the Prevention and Control of Pollution from Large-scale compliance relating to environmental protections. environmental protection: (i) we among all the skills or mishandled certain Breeding of Livestock and Poultry, Law of the People’s Republic of China on the According to the confirmation letters we received from will continue to strengthen our administrative fines that equipment and operation; and Prevention and Control of Solid Waste Pollution, Environmental Impact competent government authorities (as confirmed by our employees’ awareness of we had paid exceeding (ii) certain subsidiaries lack of Assessment Law of the PRC, Environmental Protection Regulations of Sichuan PRC Legal Adviser), such non-compliance incidents are environmental protection and RMB10,000, 15 of them sufficient trainings on Province, Ecological Environmental Protection Regulations of Guizhou Province not material. Given that we have paid such penalties in improve their operational skills; relate to breach of environmental protection. and other relevant laws and regulations, certain farms of the Group received full and the competent government authorities have (ii) we conduct regular trainings environmental protections administrative fines because they did not (i) take relevant measures in issued confirmation letters, our Directors believe that and seminars on the latest laws or regulations, accordance with the above regulations; (ii) collect and discharge relevant such non-compliance incidents do not have material environmental laws and totalling RMB2.9 pollutants in accordance with relevant standards; (iii) obtain environmental adverse effect on our business or operations. regulations of the PRC, as well million. protection impact assessment and environmental protection administrative as the Group’s internal policies procedures before commencing construction; and (iv) obtain acceptance before on environmental protection; and Such incidents were commencing production. (iii) we will develop strict mainly caused by internal reward and punishment discharge of wastewater, measures and phase-out system exhaust gas and solid to incentivise our employees to waste that did not meet abide by the environmental the national or local protection requirements. standards. BUSINESS 3 – 237 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION

The following discussion of our financial condition and results of operations should be read in conjunction with our historical financial information and the accompanying notes of the Group as at and for the years ended 31 December 2018, 2019, and 2020 included as Appendix I to this [REDACTED]. The historical financial information included as Appendix I has been prepared in accordance with IFRS.

The following discussion and analysis contain certain forward-looking statements that reflect the current views with respect to future events and financial performance. These statements are based on assumptions and analysis made by our Group in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors our Group believes are appropriate under the circumstances. However, whether actual outcomes and developments will meet our Group’s expectations and projections will depend on a number of risks and uncertainties over which our Group does not have control. For further information, you should refer to the sections headed “Risk factors” and “Forward-looking statements” in this [REDACTED].

OVERVIEW

For the years ended 31 December 2018, 2019 and 2020, the revenue contributed by our pig products accounted for approximately 43.6%, 53.3% and 70.6% of our total revenue, respectively; the revenue contributed by poultry products accounted for approximately 55.3%, 44.1% and 28.1% of our total revenue, respectively. The remaining revenue contribution came from the sale of ancillary products (such as feed ingredients), accounting for 1.1%, 2.5% and 1.3% of our total revenue, respectively.

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Our business has grown rapidly during the Track Record Period. Our revenue increased by 68.1% from approximately RMB3,282.0 million in 2018 to approximately RMB5,516.1 million in 2019, and further increased by 47.7% to approximately RMB8,145.3 million in 2020. Our profit for the year increased by 1,253.0% from approximately RMB154.6 million in 2018 to approximately RMB2,091.8 million in 2019, and further increased by 72.5% to approximately RMB3,608.4 million in 2020.

BASIS OF PREPARATION

We were established in PRC on 11 April 2014 as a private-owned enterprise with limited liability. The Company was registered in Sichuan Province and converted into a joint stock company on 10 May 2019.

The historical financial information has been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”) which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (“IASB”). The IASB has issued a number of new and revised IFRSs. For the purpose of preparing this historical financial information, we have adopted all applicable new and revised IFRSs to the Track Record Period, including IFRS 16 Leases, consistently throughout the Track Record Period. We have not adopted any new standards or interpretations that are not yet effective for the accounting period beginning 1 January 2021. The revised and new accounting standards and interpretations issued but not yet effective for the accounting year beginning 1 January 2021 are set out in note 39 in Appendix I to this [REDACTED].

The historical financial information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The accounting policies set out in note 2 in Appendix I to this [REDACTED] have been applied consistently to all periods presented in the historical financial information.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS

Our results of operations and financial conditions have been and will continue to be affected by a number of factors, including, in particular, the follows:

Fluctuations in the selling prices and sales volumes of our products

Our results of operations are significantly affected by the selling prices and sales volumes of our pig and poultry products. The selling prices and sales volumes of our pig and poultry products are determined by changing and volatile market forces of supply and demand as well as other factors over which we have little or no control, such as economic conditions, government regulations and actions, competition, animal disease outbreak, weather conditions and import restrictions.

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For the years ended 31 December 2018, 2019 and 2020, the revenue contributed by our pig products accounted for approximately 43.6%, 53.3% and 70.6% of our total revenue in 2018, 2019 and 2020, respectively. Our pig segment has the most significant effect on our overall results. The revenue contribution by our pig segment has been increasing during the Track Record Period. Among our pig products, market hogs accounted for approximately 96.5%, 96.2% and 96.0% of our total revenue contributed by our pig segment in 2018, 2019 and 2020, respectively. As a results, the results of our pig segment are substantially affected by the selling price and sales volume of market hogs. The average selling price for our market hogs increased 61.0% from RMB1,479 per head in 2018 to RMB2,382 per head in 2019 and our sales volume of market hogs increase from 934.6 thousand in 2018 to 1.2 million in 2019. As a result, our pig segment’s gross profit increased from RMB109.9 million in 2018 to RMB1,032.1 million in 2019 from external customers. The average market price for our market hogs in China increased 80.7% from RMB2,382 per head in 2019 to RMB4,304 per head in 2020 and our sales volume of market hogs increase from 1.2 million in 2019 to 1.3 million in 2020. As a result, our pig segment’s gross profit increased from RMB1,032.1 million in 2019 to RMB3,208.9 million in 2020 from external customers.

The results of our poultry segment also has significant impact on our financial results. The revenue contributed by sales of poultry products accounted for approximately 55.3%, 44.1% and 28.1% of our total revenue in 2018, 2019 and 2020. Among our poultry products, yellow-feathered broilers accounted for approximately 93.8%, 92.4% and 94.5% of our total revenue contributed by sales of our poultry products in 2018, 2019 and 2020, respectively. The results of our poultry segment are substantially affected by the market price and sales volume of yellow-feathered broilers. The average selling price for our yellow-feathered broilers increased 5.7% from RMB33.9 per bird in 2018 to RMB35.8 per bird in 2019 and our sales volume of yellow-feathered broilers increase from 50.3 million in 2018 to 62.9 million in 2019. As a result, our poultry segment’s gross profit increased from RMB272.9 million in 2018 to RMB495.9 million in 2019. The average selling price for our yellow-feathered broilers in China decreased 16.5% from RMB35.8 per bird in 2019 to RMB29.9 per bird in 2020 and our sales volume of yellow-feathered broilers increase from 62.9 million in 2019 to 72.4 million in 2020. As a result, our poultry segment’s gross profit decreased from RMB495.9 million in 2019 to RMB-49.3 million in 2020.

The average selling prices of our market hog and yellow-feathered broilers are substantially affected by the market prices of market hogs and yellow-feathered broilers in China. The price of pigs in China is mainly determined by the differences between supply and demand. In 2019, the average market price of pigs rose rapidly in the face of a sharp decline in pig production due to African Swine Fever, as well as relatively stable market demand. In 2019, the average market price of pigs reached RMB21.9/kg. In 2020, the average market price of pigs fluctuated at a high level, with an average price of RMB34.1/kg, which is much higher than the past three pig cycles since 2006. As the demand of pigs in the PRC is expected to be stable in the future, and the decreasing impact of the African Swine Fever, we expect the supply of market hogs to recover to the normal year level. The average wholesale price of

– 240 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION yellow-feathered broilers realised a rapid growth from RMB13.0 per kg in 2016 to RMB16.7 per kg in 2019, which was primarily attributable to the shortage of pork as affected by the African Swine Fever outbreak since 2018. As China’s swine herd and pork supply recovered in 2020, the poultry prices have weakened. In addition, due to (i) the adoption of pandemic control measures by some local governments to suspend the live poultry markets, and (ii) the restrictions of the movement of people as well as the restriction on social gathering, Chicken consumption in China has experienced a significant decline since the outbreak of COVID-19. The average wholesale price of yellow-feathered broilers dropped significantly from RMB16.7/kg in 2019 to RMB13.3/kg in 2020. During the Track Record Period, the average market price for market hogs and yellow-feathered broilers in China fluctuated with pig cycle and chicken cycle, respectively. For more information on pig cycle and chicken cycle, please refer to “Industry Overview – China’s Breeding Pig Market – “Pig Cycle” and the Breeding Pig Market” and “Industry Overview – China’s Yellow-Feathered Broiler Breeding Market”, respectively.

Although the average selling prices and sales volumes of our market hogs and yellow-feathered broilers have historically had the most significant effect on our overall profitability, other factors also have had and are expected to continue to have influence on our profitability. See “– Results of Operation” for a discussion of our historical results.

Fluctuations in the prices of raw materials

Our primary costs of sales is our feed and raw materials which are mainly used in our production of pigs and poultry. Our results of operations are affected by feed costs, which mainly comprises costs of corn and soybean meal. Cost of feed and feed ingredients represented 67.3%, 64.2% and 64.1% of our total cost of sales for 2018, 2019 and 2020, respectively. We currently have 9 feed mills including eight pig feed mills and one poultry feed mill. We produce or procure from third-party suppliers the feed we need for our breeding and farming operations.

Our costs of feed for pig and poultry production depend primarily on the market prices for corn and soybean meal. These raw materials are commodities and thus are subject to significant price fluctuations. The market price for corn and soybean meal are subject to various factors, including demand and supply dynamics, government policies, weather conditions, pests and other acts of nature. For the past few years, our average purchase price for both corn and soybean meal has been fluctuating along with the market prices. We expect that costs of feed will continue to be important to our results of operations.

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The average prices for procuring corn and soybean meal per ton for the Track Record Period are set out below:

Years ended 31 December 2019 as 2020 as compared compared 2018 2019 2020 to 2018 to 2019 Changes Changes % %

Average purchase price of corn (RMB/tonne) 2,019.5 2,142.7 2,441.9 6.1 14.0 Average purchase price of soybean meal (RMB/tonne) 3,245.6 3,060.2 3,144.5 (5.7) 2.8

Fluctuations in our costs of feed and our ability to pass on any increase in raw material costs to our customers will affect our total cost of sales and our gross margins. For illustrative purposes only, the following table illustrates the changes in the percentage of our gross profit margin as a result of changes in the operating costs in the event that there is a 5.0% or 10.0% increase or decrease in the prices of each of corn and soybean meal (while keeping the prices of the other cost of sales constant) during the Track Record Period:

Corn prices Soybean meal prices (10%) (5%) Base case 5% 10% (10%) (5%) Base case 5% 10%

Gross profit margin of the Group for the year ended 31 December 2018 15.1% 13.4% 11.7% 10.1% 8.4% 13.2% 12.5% 11.7% 11.0% 10.3% Gross profit margin of the Group for the year ended 31 December 2019 30.2% 29.0% 27.8% 26.6% 25.4% 28.8% 28.3% 27.8% 27.4% 26.9% Gross profit margin of the Group for the year ended 31 December 2020 41.4% 40.1% 38.8% 37.5% 36.3% 39.7% 39.3% 38.8% 38.4% 38.0%

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Product mix and segment portfolio

Our overall profitability is significantly affected by our business segments’ revenue mix. Our pig segment and poultry segment are our two main business segments. The revenue contributed by sales of our pig products accounted for approximately 43.6%, 53.3% and 70.6% of our total revenue in 2018, 2019 and 2020, respectively. The revenue contributed by sales of poultry products accounted for approximately 55.3%, 44.1% and 28.1% of our total revenue in 2018, 2019 and 2020, respectively.

Among our pig products, market hogs accounted for approximately 96.5%, 96.2% and 96.0% of our total revenue contributed by sales of our pig products in 2018, 2019 and 2020, respectively. Among our poultry products, yellow-feathered broilers accounted for approximately 93.8%, 92.4% and 94.5% of our total revenue contributed by sales of our poultry products in 2018, 2019 and 2020, respectively. The gross profit margin of our market hogs was 6.7%, 34.0% and 55.2% in 2018, 2019 and 2020, respectively. The gross profit margin of our boilers was 15.2%, 19.1% and -2.3% in 2018, 2019 and 2020, respectively. The gross profit margin for our market hogs and boilers typically experiences volatility because of fluctuations in the prices for market hogs and yellow-feathered broilers as well as the cost of feed and feed ingredients.

Our mix of product offerings has affected, and will continue to affect, our overall gross profit margin and our financial performance.

Changes in the fair value of biological assets

Our financial results have been, and will continue to be, affected by changes in the fair value of our biological assets. Because of our production and sale of these biological assets in our business, in each reporting period we recognise gains or losses arising from net changes in the fair value our biological assets. Net changes in fair value of biological assets represent the changes in fair value of biological assets due to the changes in the physical attributes and market-determined price of the biological assets in our two segments of pigs and poultry. We recognised gains of RMB97.1 million, gains of RMB1,062.5 million, and gains of RMB1,338.5 million for the changes in fair value of biological assets in our pig segment, and recognised losses of RMB36.4 million, gains of RMB15.4 million, and losses of RMB42.8 million for the changes in fair value of biological assets in our poultry segment for 2018, 2019 and 2020, respectively.

Our biological assets were revalued at each reporting date by the Valuer. For more information about the valuation methods adopted by the Valuer in valuing the biological assets, please refer to the sub-section headed “– Biological Assets and Valuation” below. In applying valuation methods, the Valuer has relied on a number of valuation parameters. The fair value of the biological assets could be affected if those valuation parameters vary. Our Directors expect that our financial results will continue to be affected by the changes in the fair value of our biological assets.

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Force majeure events affecting clients’ demand

Any outbreak of other serious animal diseases or infectious diseases and the consequent concerns about such diseases could result in material disruptions to our operations or operations of our customers or suppliers, or a weak food retail industry in China or any of the said events could have a material and adverse effect on our operations and revenue.

In addition, as we engage in the business of breeding and farming of pigs and yellow-feathered broilers, we may be directly required to temporarily suspend our business operations during any outbreak of poultry or pig diseases or other animal diseases. If any of our pigs or yellow-feathered broilers are suspected of being infected, our farms and family farms may have to cull their pigs or yellow-feathered broilers in large numbers. Our employees and family contract farmers may also need to be quarantined if they are identified as potential sources of disease transmission.

As disclosed in the paragraphs of “Quality control and food safety” in the section headed “Business” of this [REDACTED], we have implemented strict biosecurity and disease prevention and control measures on our farms and family farms. We believe that our strict control measures can significantly reduce the risk of diseases during our business operations.

Production capacity and capacity utilisation rate

Our results of operations are significantly affected by the growth in capacity and utilisation of our pig and poultry production facilities. We believe that the expansion of our hog and poultry production facilities as well as family farms and farming base can help us increase the sales volume of our pigs and yellow-feathered broilers, which in turn help us significantly broaden our market reach, and will continue to drive our growth in the foreseeable future. For our pig production, our pig farms and family farms had an aggregate annual production capacity of 1.0 million, 1.3 million and 1.6 million heads for 2018, 2019 and 2020, respectively. Our actual pig output volume increased by 25.1% from 992.7 thousand heads in 2018 to 1.2 million heads in 2019, and further by 10.3% to 1.4 million heads in 2020. For our poultry production, our breeder farms had an aggregate annual production capacity of 1.0 million, 1.1 million and 1.5 million units for 2018, 2019 and 2020, respectively.

In addition, the production utilisation rates of our own pig farms and poultry farms have significantly affected our sales volume and profit margin. Our own pig farms and farming farms under the pig segment had an average utilisation rate of 92.8%, 83.2% and 82.9% as at 2018, 2019 and 2020, respectively. The utilisation rate of our pig farms and family farms dropped during the Track Record Period, primarily because we put several new pig farms into production at the end of 2019 and 2020 and we didn’t populate such new farms in time. Our breeder farms had an aggregate average utilisation rate of 90.3%, 89.4%, and 86.1% as at 31 December 2018, 2019 and 2020, respectively. For details, please refer to the sections headed “Business – Production – Pig production – Pig farming” and “Business – Production – Poultry Production – Poultry Breeding”.

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Regulatory Environment

We operate in pig and yellow-feathered broiler breeding and farming industry, which requires us to obtain and maintain various licences, permits and government approvals in the PRC, and comply with the relevant environmental laws and regulations of the PRC. These include, amongst others, “Certificate for Production and Operation of Breeding Livestock and Poultry” (種畜禽生產經營許可證), “Certificate for Animal Epidemic Disease Prevention” (動物防疫條件合格證), “Certificates of New Livestock and Poultry Species (Synthetic Strains)” (畜禽新品種(配套系)證書), “Feed Production Licence” (飼料生產許可證) and “Veterinary Medicine Operation Permit” (獸藥經營許可證). Our financial condition and results of operations will be adversely affected if we are unable to obtain and maintain relevant licences, permits and government approvals.

Seasonality

Demand for our products is typically relatively higher in the second half of the year due to Chinese consumers’ consumption patterns. Demand for our products is also typically higher before traditional festivals, such as the Mid-Autumn Festival, China’s National Day (October 1) and China’s Spring Festival. Consequently, sales volumes of our pig and poultry products are typically higher in the second half of the year than in the first half of the year. Therefore, our interim financial results may not be indicative of our annual financial results.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have identified certain accounting policies that are significant to the preparation of our historical financial information. Our significant accounting policies, which are important for you to understand our financial condition and results of operations, are set forth in details in Note 2 to the Accountant’s Report in Appendix I to this [REDACTED]. Some of our accounting policies involve subjective assumptions and estimates, as well as complex judgements relating to accounting items. In each case, the determination of these items requires management judgements based on information and financial data that may change in future periods. When reviewing our historical financial information, you should consider (i) our selection of critical accounting policies, (ii) the judgements and other uncertainties affecting the application of such policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions. We have set forth below those accounting policies that we believe involve the most significant estimates and judgements used in preparing our financial statements.

Revenue recognition

Income is classified by the Group as revenue when it arises from the sale of goods or the provision of services in the ordinary course of the Group’s business. Revenue is recognised when control over a product or service is transferred to the customer, at the amount of promised consideration to which the Group is expected to be entitled, excluding those amounts collected on behalf of third parties. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts.

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Our revenue and other income recognition policies are as follows:

Sale of goods

Revenue is recognised when the customer takes possession of and accepts the products. If the products are a partial fulfilment of a contract covering other goods and/or services, then the amount of revenue recognised is an appropriate proportion of the total transaction price under the contract, allocated between all the goods and services promised under the contract on a relative stand-alone selling price basis.

Dividends

Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established.

Interest income

Interest income is recognised as it accrues under the effective interest method using the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of the financial asset. For financial assets measured at amortised cost or fair value through other comprehensive income (recycling) that are not credit-impaired, the effective interest rate is applied to the gross carrying amount of the asset. For credit impaired financial assets, the effective interest rate is applied to the amortised cost which is the gross carrying amount net of loss allowance of the asset.

Government grants

Government grants are recognised in the statement of financial position initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognised as income in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are recognised as deferred income and consequently recognised in profit or loss on a systematic basis over the useful life of the asset.

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Biological assets

Our biological assets include commodity hogs (piglets, nursery pigs and growers) and commodity chickens (eggs, commodity chicks and broilers) and chicken breeders held for own use to produce commodity chicks which are classified as current assets, and hog breeders held for own use to produce commodity hogs which are classified as non-current assets of the Group. Biological assets are measured at fair value less costs of disposals. The feeding costs and other related costs such as staff costs, depreciation and amortisation expenses and utilities cost incurred for raising gilts and studs and immature chicken breeders are capitalised until the gilts and studs and chicken breeders begin to mate or transfer to the group of sows and boars or mature chicken breeders. Such costs incurred for sows and boars or mature chicken breeders are also capitalised while upon pregnancy and transferred to the piglets farrowed or eggs. Gains or losses arising from initial recognition of biological assets at fair value less costs of disposal and from a change in fair value less costs of disposal of biological assets are included in profit or loss in the period in which it arises.

Inventories

Inventories are carried at the lower of cost, on the weighted average basis, and net realisable value after making due allowance for any obsolete or slow-moving items. Cost comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised.

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Property, plant and equipment

The following items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses:

(i) right-of-use assets arising from leases over freehold or leasehold properties where we are not the registered owner of the property interest; and

(ii) items of plant and equipment, including right-of-use assets arising from leases of underlying plant and equipment.

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The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads and borrowing costs.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows: –

• Plant and buildings 20 years • Right-of-use assets Over the term of lease • Machinery and equipment 10 years • Vehicles, furniture, and others 3 – 5 years

Leased assets

At the lease commencement date, we recognise a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets. When we enter into a lease in respect of a low-value asset, we decide whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

Intangible assets (other than goodwill)

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources and the intention to complete development.

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Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (where the estimated useful life is finite) and impairment losses.

Expenditure on internally generated goodwill and brands is recognised as an expense in the period in which it is incurred.

Amortisation of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets’ estimated useful lives. The following intangible assets with finite useful lives are amortised from the date they are available for use and their estimated useful lives are as follows:

• Software 3-10 years

Both the period and method of amortisation are reviewed annually.

Fair value measurement of biological assets

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:

Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.

Level 3 valuations: Fair value measured using significant unobservable inputs.

The fair value measurements of biological assets fall into level 3 of the fair value hierarchy.

During the years ended 31 December 2018, 2019 and 2020, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. Our policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period and in which they occur. All of our biological assets were revalued as at 31 December 2018, 2019 and 2020. The valuations were carried out by Jones Lang LaSalle (Beijing) Consultants, Inc. (“JLL”). Our finance manager and the chief financial officer have discussion with the Valuer on the valuation assumptions and valuation results when the valuation is performed at the end of each reporting date.

A significant increase/decrease in the estimated market price and replacement cost of the Group’s biological assets in isolation would result in a significant increase/decrease in the fair value of the biological assets. As at 31 December 2018, 2019 and 2020 if market price of nursery pigs, growers, gilts, studs, eggs, commodity chicks and broilers and replacement cost of piglets, sows, boars, immature and mature breeders held for own use increases by 10%, the estimated fair value of biological assets would have increased by RMB108,686,000, RMB267,082,000 and RMB563,805,000, respectively, and if market price and replacement

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RESULTS OF OPERATION

For the years ended 31 December 2018 2019 2020 (RMB’000)

Revenue 3,282,046 5,516,105 8,145,349 Cost of sales (2,896,559) (3,981,351) (4,981,457)

Gross profit 385,487 1,534,754 3,163,892

Profit from operations 206,388 2,176,975 3,764,953 Finance costs (51,827) (84,645) (155,589) Share of losses of associates – – (347)

Profit before taxation 154,561 2,092,330 3,609,017 Income tax (7) (507) (666)

Profit and total comprehensive income for the year 154,554 2,091,823 3,608,351

Attributable to: Equity shareholders of the Company 115,066 2,002,548 3,488,173

Non-controlling interests 39,488 89,275 120,178

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As we carry out agricultural activity, the accounting standard IAS 41, Agriculture, is applicable to us. IAS 41 requires the biological assets to be measured at fair value less costs to sell. This method should be used when initially measuring the biological assets and then at every reporting date.

Accordingly, as required by IAS 41, we remeasure our pigs and poultry at their fair values less costs of sales. Gain or loss arising from changes in the fair value of such biological assets is included in the profit or loss during the Track Record Period.

Non-IFRS Financial Measures

For the years ended 31 December 2018 2019 2020 (RMB’000, except for percentages)

Adjusted profit for the year(1) 93,843 1,013,948 2,312,625 Adjusted profit margin for the year(1) 2.9% 18.4% 28.4%

Note:

(1) We define adjusted profit for the year as profit for the year adjusted for the impact of net changes in fair value of biological assets for the year as a result of value changes of our pigs and poultry in the stocks arising from the changes of pigs and poultry in volume and prices. Adjusted profit margin for the year is calculated by dividing adjusted profit for the year by revenue.

The presentation of such unaudited non-IFRS financial measures is not intended to be read or considered in isolation from, as a substitute for, or as superior to, the financial information prepared and presented in accordance with IFRS. The non-IFRS financial measures we present may not be comparable to similarly titled financial measures of other companies as other companies may exclude items different from the items we exclude. Accordingly, the non-IFRS financial measures should be read in conjunction with our IFRS financial measures.

None of adjusted profit for the year and adjusted profit margin for the year is a recognised term under IFRS. These non-IFRS financial measures do not have a standardised meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies, and they should not be construed as an alternative to other financial measures determined in accordance with IFRS. You should not consider our definition of adjusted profit for the year or adjusted profit margin for the year in isolation or construe it as an alternative to profit for the year indicated or as an indicator of operating performance or any other standard measure under IFRS.

See “– Reconciliation of Non-IFRS Financial Measures” for reconciliations of our profit for the year under IFRS to our definition of adjusted profit for the year and profit margin for the year.

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PRINCIPAL COMPONENTS OF CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

The following discussion is based on our historical results of operations and may not be indicative of our future operating performance.

Revenue

We generate our revenue from the following segments:

• Pig segment, consisting (i) sale of market hogs sub-segment, (ii) sale of breeding pigs sub-segment, (iii) sale of market piglets, and (iv) sale of boar semen sub-segments;

• Poultry segment, consisting (i) sale of yellow-feathered broilers sub-segment, (ii) sale of chicks and eggs sub-segments;

• Sales of ancillary products sub-segment, including sale of feed, ingredients and others.

There are inter-segment sales among our segments, and accordingly we record inter- segment elimination among these segments for the relevant revenue and cost of sales. Unless otherwise specified, in this [REDACTED], (i) all discussion about revenue, cost of sales, gross profit and gross profit margin are based on the amounts after all inter-segment elimination among the segments (being the figures reflected in our statements of profit or loss and other comprehensive income), and (ii) all discussion about the segment revenue and the segment cost of sales are based on the amounts after any inter-segment elimination of such segment; all discussion about the segment gross profit and segment gross profit margin are based on the amounts before any inter-segment elimination of such segment.

– 252 – The following table sets forth a breakdown of our revenue by segment/sub-segment and each segment/sub-segment as a percentage of total BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS revenue for the years indicated:

For the years ended 31 December 2018 2019 2020

Segment/ Segment/ Segment/ sub- sub- sub- Revenue segment segment segment Intersegmentrevenue % of total Intersegmentrevenue % of total Intersegmentrevenue % of total (1) revenue(2) (3) revenue Revenue(1) revenue(2) (3) revenue Revenue(1) revenue(2) (3) revenue (RMB in thousands, except the percentage) Sales of pigs Market hogs 1,382,555 5,003 1,387,558 42.1% 2,830,017 – 2,830,017 47.8% 5,518,420 16 5,518,436 59.4% Breeding pigs 36,415 1,711 38,126 1.2% 93,132 – 93,132 1.5% 148,167 – 148,167 1.6% INFORMATION FINANCIAL Market piglets 11,888 1,122 13,010 0.4% 18,082 8 18,090 0.3% 80,682 – 80,682 0.9% Boar semen 1,271 – 1,271 0.0% 522 – 522 0.0% 428 – 428 0.0%

Subtotal 1,432,129 7,836 1,439,965 43.7% 2,941,753 8 2,941,761 49.6% 5,747,697 16 5,747,713 61.9% ------

------5 – 253 – Sales of poultry Yellow-feathered broilers 1,702,960 2 1,702,962 51.7% 2,250,639 1 2,250,640 38.0% 2,161,790 11 2,161,801 23.3% Chicks and eggs 111,873 40 111,913 3.4% 184,115 3 184,118 3.1% 125,993 2 125,995 1.3%

Subtotal 1,814,833 42 1,814,875 55.1% 2,434,754 4 2,434,758 41.1% 2,287,783 13 2,287,796 24.6% ------

------

Sales of ancillary products 35,084 4,131 39,215 1.2% 139,598 408,980 548,578 9.3% 109,869 1,141,763 1,251,632 13.5%

Total 3,282,046 12,009 3,294,055 100.0% 5,516,105 408,992 5,925,097 100.0% 8,145,349 1,141,792 9,287,141 100.0%

Notes:

(1) Represents the revenue of each business segment or sub-segment after any inter-segment elimination.

(2) Inter-segment revenue mainly arises from the inter-segment sales made by the sales of ancillary products segment to pig and poultry segment.

(3) Represents the revenue of each business segment or sub-segment before any inter-segment elimination. The following table sets out the sales volume of the pig segment and poultry segment by product category for the Track Record Period: BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS

For the years ended 31 December 2018 2019 2020

%of %of %of Total Total Total Total Total Total segment/ segment/ segment/ segment/ segment/ segment/ External Intersegment sub- sub- sub- sub- sub- sub- sales sales segment segment External Intersegmentsegment segment External Intersegmentsegment segment sales sales sales salessales sales sales salessales sales (1) (1) (1) IACA INFORMATION FINANCIAL Sales of pigs (heads, except the percentage) Market hogs 934,588 3,480 938,068 93.9% 1,187,911 – 1,187,911 95.6% 1,282,034 3 1,282,037 93.5% Breeding pigs 19,745 508 20,253 2.0% 27,586 – 27,586 2.2% 23,264 – 23,264 1.7% Market piglets 38,317 2,634 40,951 4.1% 26,563 6 26,569 2.1% 65,306 – 65,306 4.8% Total 992,650 6,622 999,272 100.0% 1,242,060 6 1,242,066 100.0% 1,370,604 3 1,370,607 100.0%

Sales of poultry (birds or eggs, except the percentage)

Yellow-feathered – 254 – broilers 50,287,765 100 50,287,865 35.4% 62,900,220 22 62,900,242 39.5% 72,350,245 384 72,350,629 44.6% Chicks and eggs 91,693,204 112,038 91,805,242 64.6% 96,253,831 6,840 96,260,671 60.5% 90,027,361 3,470 90,030,831 55.4% Total 141,980,969 112,138 142,093,107 100.0% 159,154,051 6,862 159,160,913 100.0% 162,377,606 3,854 162,381,460 100.0%

Note:

(1) It represents inter-segment sales from pig and poultry segment to the ancillary products segment. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION

The following table sets out the average selling prices to our customers without taking into consideration of inter-segment sales during the Track Record Period:

2018 2019 2020 External Average External Average External Average Sales selling Sales selling Sales selling volume price(1) volume price(1) volume price(1) (heads) (RMB) (heads) (RMB) (heads) (RMB)

Sales of pigs Market hogs 934,588 1,479 1,187,911 2,382 1,282,034 4,304 Breeding pigs 19,745 1,844 27,586 3,376 23,264 6,369 Market piglets 38,317 310 26,563 681 65,306 1,235 (birds (birds (birds or eggs) or eggs) or eggs) Sales of poultry Yellow-feathered broilers 50,287,765 33.9 62,900,220 35.8 72,350,245 29.9 Chicks and eggs 91,693,204 1.2 96,253,831 1.9 90,027,361 1.4

Notes:

(1) Average selling price represents the revenue for the period divided by the external sales volume of the product category for the respective period.

Pig segment. The average selling price of breeding pigs, market hogs and market piglets increased significantly from 2018 to 2020, which was mainly due to a significant short supply of market hogs and breeding pigs as a result of the African Swine Fever starting in 2019, thereby causing rising market price of breeding pigs and market hogs.

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Poultry segment. The average selling price of yellow-feathered broilers increased from 2018 to 2019, which was due to a temporary short supply of pork as a result of the impact of the African Swine Fever in 2019 and a temporary short supply of chicken meat as a result of a huge increase in the consuming amount of chicken meat which was taken as an alternative of pork, causing a significant increase in the price of chicken meat in 2019. The average selling price and average gross profit of yellow-feathered broilers fell in 2020 due to the impact of COVID-19 pandemic in 2020 which resulted in (i) the adoption of pandemic control measures by some local governments to suspend live poultry markets, and (ii) the restrictions of the movement of people as well as the reduction or restrictions of all sorts of banquets and travel, resulting in a significant decline in the end consumption of chicken and a temporary conflict of supply and demand, and the consequent oversupply has caused the price to fall.

Cost of sales

Our cost of sales of our pig and poultry segments mainly consists of costs of stock breeding costs, contract farming fee, veterinary medicine, staff costs, depreciation and others.

Cost of sales of ancillary products mainly consists of costs of raw materials.

– 256 – The following table sets forth a breakdown of our cost of sales of each segment and each sub-segment as a percentage of total cost of sales BE MUST DOCUMENT INFORMATION THIS THE OF COVER AND THE CHANGE ON TO “WARNING” SUBJECT HEADED AND SECTION INCOMPLETE THE WITH FORM, CONJUNCTION DRAFT IN IN READ IS DOCUMENT THIS for the years stated:

For the years ended 31 December 2018 2019 2020

Segment/ Segment/ Segment/ sub- sub- sub- Costs segment segment segment Intersegment costs % of cost Intersegment costs % of cost Intersegment costs % of cost (1) costs(2) (3) of sales Costs(1) costs(2) (3) of sales Costs(1) costs(2) (3) of sales (RMB in thousands, except the percentage) Sales of pigs Market hogs 1,289,512 5,003 1,294,515 44.5% 1,869,116 – 1,869,116 42.6% 2,474,938 16 2,474,954 40.4% Breeding pigs 19,595 1,067 20,662 0.7% 28,363 – 28,363 0.6% 35,451 – 35,451 0.6% INFORMATION FINANCIAL Market piglets 11,576 2,331 13,907 0.5% 11,757 2 11,759 0.3% 28,272 – 28,272 0.5% Boar semen 1,028 – 1,028 0.0% 430 – 430 0.0% 153 – 153 0.0%

Subtotal 1,321,711 8,401 1,330,112 45.7% 1,909,666 2 1,909,668 43.5% 2,538,814 16 2,538,830 41.5% ------

------5 – 257 – Sales of poultry Yellow-feathered broilers 1,444,141 2 1,444,143 49.6% 1,819,743 1 1,819,744 41.5% 2,212,350 11 2,212,361 36.1% Chicks and eggs 97,814 40 97,854 3.4% 119,106 3 119,109 2.7% 124,733 2 124,735 2.0%

Subtotal 1,541,955 42 1,541,997 53.0% 1,938,849 4 1,938,853 44.2% 2,337,083 13 2,337,096 38.2% ------

Sales of ancillary products 32,893 4,131 37,024 1.3% 132,836 408,196 541,032 12.3% 105,560 1,138,984 1,244,544 20.3%

Total 2,896,559 12,574 2,909,133 100.0% 3,981,351 408,202 4,389,553 100.0% 4,981,457 1,139,013 6,120,470 100.0%

Notes: (1) Represents the cost of sales of each business segment or sub-segment after any inter-segment elimination. (2) Inter-segment cost of sales mainly arises from the inter-segment sales made by sales of ancillary products segment to pig and poultry segment. (3) Represents the cost of sales of each business segment or sub-segment before any inter-segment elimination. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION

The following table sets forth the components of our cost of sales and each component as a percentage of our total cost of sales for the years indicated:

2018 2019 2020 % of total % of total % of total cost of cost of cost of RMB’000 sales RMB’000 sales RMB’000 sales

Feed and feed ingredients 1,948,878 67.3% 2,555,804 64.2% 3,193,531 64.1% Contract farming fee 325,314 11.2% 548,813 13.8% 722,754 14.5% Stock breeding 120,896 4.2% 149,270 3.7% 144,816 2.9% Staff cost 152,335 5.3% 173,902 4.4% 226,881 4.6% Veterinary medicine 148,379 5.1% 328,888 8.3% 470,147 9.4% Depreciation and amortisation 57,541 2.0% 64,415 1.6% 77,809 1.6% Utilities 29,281 1.0% 25,622 0.6% 22,862 0.5% Others(1) 113,935 3.9% 134,637 3.4% 122,657 2.5%

Total 2,896,559 100.0% 3,981,351 100.0% 4,981,457 100.0%

Note:

(1) Others include cost of materials we consumed during production and cost related to prevention of animal diseases, etc.

Costs of feed and feed ingredients accounted for a substantial portion of our total cost of sales. Our feed and feed ingredients cost represented 67.3%, 64.2% and 64.1% of our total cost of sales for 2018, 2019 and 2020, respectively.

Contract farming fees represents fees paid to our family farm owners to raise our pigs and yellow-feathered broilers. Stock breeding represented fees paid to external suppliers to purchase piglets and chicks. Veterinary medicines primarily consists of costs for medicines and vaccines for animal disease prevention. Staff cost and benefits mainly represent wages, insurance and other employee benefits of our workers. Utilities mainly include costs for electricity, water and maintenance. Depreciation and amortisation represent the depreciation and the amortisation of our production facilities and right of use assets.

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Gross profit and gross profit margin

The following table sets forth a breakdown of our gross profit by segment and gross profit margin of each business segment/sub-segment for the years indicated:

Years ended 31 December 2018 2019 2020 Segment/ Segment/ Segment/ Segment/ Segment/ Segment/ subsegment subsegment subsegment subsegment subsegment subsegment gross gross profit gross gross profit gross gross profit profit(1) margin(2) profit(1) margin(2) profit(1) margin(2) (RMB in thousands, except the percentage)

Sales of pigs Market hogs 93,045 6.7% 960,901 34.0% 3,043,482 55.2% Breeding pigs 17,464 45.8% 64,769 69.5% 112,716 76.1% Market piglets (897) -6.9% 6,331 35.0% 52,410 65.0% Boar Semen 243 19.1% 92 17.6% 275 64.3%

Subtotal gross profit and gross profit margin 109,853 7.6% 1,032,093 35.1% 3,208,883 55.8% ------Sales of poultry Yellow-feathered broilers 258,819 15.2% 430,896 19.1% (50,560) -2.3% Chicks and eggs 14,059 12.6% 65,009 35.3% 1,260 1.0%

Subtotal gross profit and gross profit margin 272,878 15.0% 495,905 20.4% (49,300) -2.2% ------Sales of ancillary products 2,191 5.6% 7,546 1.4% 7,088 0.6% Elimination of inter- segment gross profit 565 N/A (790) N/A (2,779) N/A

Total gross profit and gross profit margin(3) 385,487 11.7% 1,534,754 27.8% 3,163,892 38.8%

Notes:

(1) Calculated based on the revenue of each segment or sub-segment (before any inter-elimination) minus the cost of sales of such segment or sub-segment (before any inter-segment elimination).

(2) Calculated based on the gross profit of each segment or sub-segment calculated according to note (1) divided by the revenue of such segment or sub-segment (before any inter-segment elimination).

(3) Gross profit equals total revenue (being the revenue reflected in our historical financial information) minus total cost of sales (being the cost of sales reflected in our historical financial information). Overall gross profit margin equals total gross profit divided by total revenue.

Gross profit margins of our different products are mainly affected by the different average selling price.

Net changes in fair value of biological assets

Net changes in fair value of biological assets represents the value changes of our pigs and poultry in the stocks arising from the changes of volume and market prices of pigs and poultry which are the difference of the following two items: (i) realised fair value changes in respect of biological assets held as at the opening of each reporting date and (ii) unrealised fair value

– 259 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION changes in respect of biological assets stated at fair value as at the end of each reporting date. At the point of sale of our pigs and poultry, we recognised our cost of pig and poultry farming at historical cost in cost of sales. The net changes in fair value of biological assets thus will not affect our gross profit. During the Track Record Period, our biological assets were revalued at each reporting date by the Valuer, with any resultant gain or loss recognised in profit or loss for the year in which it arose. The fair value of a pig or poultry delivered and sold in the same year thus will also not generate net changes in fair value of biological assets. For more information about the valuation method adopted by the Valuer, please refer to the sub-section headed “Biological Assets and Valuation” below.

Other net income

Our other net income primarily consists of government grants, interest income, net gain on disposal of interests in subsidiaries and associates, impairment loss on property, plant and equipment, net loss on disposal of property, plant and equipment and tangible assets, net loss on biological assets, change in fair value of financial assets at fair value through profit or loss (“FVTPL”) and others.

We benefit from government grants in China, including subsidies to support our development, such as subsidies in relation to the import of overseas breeding pig technology, research on breeding pig, and pig and poultry farms construction. For 2018, 2019 and 2020, total government grants we received amounted to RMB25.4 million, RMB30.5 million and RMB41.0 million, respectively. There can be no assurance that the preferential tax treatment, government grants and economic incentives that we enjoy will not be altered or terminated.

Selling expenses

The following table sets out our selling expenses during the Track Record Period:

Years ended 31 December 2018 2019 2020 (RMB in thousands, except the percentage)

Staff costs 19,597 51.4% 25,672 47.9% 30,021 42.8% Transportation costs 8,318 21.8% 15,207 28.4% 18,904 27.0% Advertising and marketing expenses 1,452 3.8% 2,562 4.8% 4,655 6.6% Service fee 1,792 4.7% 1,810 3.4% 4,054 5.8% Travel and transportation expenses 2,850 7.5% 3,193 6.0% 3,675 5.2% Others 4,100 10.8% 5,192 9.7% 8,782 12.5%

Total 38,109 100.0% 53,636 100.0% 70,091 100.0%

Note:

(1) Others include cost relating to the materials consumed during selling activities and other depreciation costs, etc.

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Selling expenses primarily consist of staff costs, transportation costs, advertising and marketing expenses, service fee which include cleaning and maintenance fee, travel and transportation expenses and other selling expenses during the Track Record Period.

Administrative expenses

The following table sets out our administrative expenses during the Track Record Period:

Years ended 31 December 2018 2019 2020 (RMB in thousands, except the percentage)

Staff costs 97,232 37.3% 184,090 46.1% 322,811 46.1% Research and development costs 54,811 21.0% 47,326 11.8% 74,999 10.7% Materials costs 2,422 0.9% 22,388 5.6% 50,797 7.3% Depreciation and amortisation 14,260 5.5% 19,577 4.9% 36,669 5.2% Professional service fee 9,611 3.7% 10,715 2.7% 31,660 4.5% Travel and transportation expenses 13,216 5.1% 18,930 4.7% 28,512 4.1% Insurance costs 33,356 12.8% 17,495 4.4% 27,755 4.0% Maintenance costs 6,278 2.4% 16,140 4.0% 22,304 3.2% Office expenses 8,773 3.4% 11,293 2.8% 21,062 3.0% Service fee 2,092 0.8% 13,198 3.3% 20,865 3.0% Others(1) 18,962 7.3% 38,286 9.6% 62,856 9.0%

Total 261,013 100.0% 399,438 100.0% 700,290 100.0%

Note:

(1) Other include expenses related to our business activities, etc.

Administrative expenses primarily consist of staff costs, research and development costs, material costs which are mainly material cost relating to prevention of African Swine Fever, depreciation and amortisation, professional service fee, insurance costs, maintenance costs, office expenses, service fee which include cleaning and maintenance fee and travel and transportation expenses.

Provision for expected credit loss of trade and other receivables

Provision for expected credit loss of trade and other receivables refer to the provision of expected credit losses for trade and other receivables based on expected credit losses. In 2018, 2019 and 2020, we made provision of RMB2.2 million, RMB4.4 million and RMB2.2 million for the expected credit losses of our trade and other receivables, respectively.

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Finance costs

Our finance costs represent interest expenses on interest-bearing borrowings and lease liabilities after deducting interest expense capitalised. The following table sets forth the main components of our finance costs for the years indicated:

For the years ended 31 December 2018 2019 2020 (RMB’000)

Finance costs Interest expenses on interest-bearing borrowings 45,048 66,265 117,151 Interest on lease liabilities 7,424 19,446 58,351

52,472 85,711 175,502 Less: interest expense capitalised (645) (1,066) (19,913)

51,827 84,645 155,589

Taxation and preferential tax treatment

In 2018, 2019 and 2020, our income tax expenses were RMB7 thousand, RMB507 thousand and RMB666 thousand, respectively. The rate of income tax chargeable on companies in the PRC may vary depending on the availability of preferential tax treatments or subsidies based on their industry or location. According to the EIT Law and the related implementation rules and the Circular of the Ministry of Finance and the State Tax Administration on Scope of Agricultural Products’ Primary processing Entitled to Preferential Policies on Enterprise Income Tax (Trial Implementation) (Cai Shui [2008] No. 149), our Chinese subsidiaries that engage in animal-husbandry, for example, pig and poultry farming, are entitled to full income tax exemptions. In addition, according to the Interim Value-Added Tax Regulations of the People’s Republic of China (《中華人民共和國增值稅暫行條例》) and the relevant regulations, our subsidiaries that sell self-produced agricultural products, such as live pigs, poultry and feed, are exempt from VAT on income derived from those sales.

If we fail to satisfy the requisite requirements for entitlement to the waiver of the PRC EIT and VAT tax in the future or if there is any change in the existing PRC policy relating to preferential tax treatments applicable to us, we may no longer be entitled to the preferential tax treatments currently enjoyed by us. There is no assurance that we will continue to receive the preferential tax treatments currently enjoyed by us in the future. Any loss or substantial reduction of the tax benefits enjoyed by us would adversely affect our financial condition and performance.

Our effective tax rate (income tax expense/profit before taxation) is close to nil during the Track Record Period. Our pig and poultry farming business is tax exempted. The effective tax rate is mainly affected by the proportion of taxable profits generated from ancillary products in our total profits.

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RECONCILIATION OF NON-IFRS FINANCIAL MEASURES

Adjusted profit for the year refers to profit for the year adjusted for fair value changes on biological assets. For the years ended 31 December 2018, 2019 and 2020, our adjusted profit for the year was approximately RMB93.8 million, RMB1,013.9 million and RMB2,312.6 million, respectively. The following tables set forth the reconciliations of our non-IFRS financial measure for the years ended 31 December 2018, 2019 and 2020 to the nearest measure prepared in accordance with IFRS.

Adjusted profit for the year

The following table reconciles our profit for the year under IFRS to our definition of adjusted profit for the year for the years indicated:

For the years ended 31 December 2018 2019 2020 (RMB’000, except for percentages)

Profit for the year 154,554 2,091,823 3,608,351 Adjustment: net changes in fair value of biological assets (60,711) (1,077,875) (1,295,726) Adjusted profit for the year(1) 93,843 1,013,948 2,312,625 Adjusted profit margin for the year(1) 2.9% 18.4% 28.4%

Note:

(1) We define adjusted profit for the year as profit for the year adjusted for net changes in fair value of biological assets for the year as a result of value changes of our pigs and poultry in the stocks arising from the changes of pigs and poultry in volume and prices. Adjusted profit margin for the year is calculated by dividing adjusted profit for the year by revenue.

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PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS

2020 as compared to 2019

Revenue

Our revenue increased by 47.7% from RMB5,516.1 million for 2019 to RMB8,145.3 million for 2020, mainly due to the growth of the revenue of pig segment.

Pig segment

Our revenue of the pig segment increased by 95.4% from RMB2,941.8 million for 2019 to RMB5,747.7 million for 2020, mainly due to the growth of the revenue of market hog sub-segment.

Our revenue of the market hog sub-segment increased by 95.0% from RMB2,830.0 million for 2019 to RMB5,518.4 million for 2020, mainly because of (i) a significant increase in the average selling prices of market hogs from RMB2,382 per head in 2019 to RMB4,304 per head in 2020 along with rising market prices and (ii) a rising sales volume from 1.2 million heads in 2019 to 1.3 million heads in 2020.

Our revenue of the breeding pig sub-segment increased by 59.2% from RMB93.1 million for 2019 to RMB148.2 million for 2020, mainly because of an increase of the average selling price of breeding pigs from RMB3,376 per head to RMB6,369 per head along with rising market prices which was caused by the decrease in stock of sows caused by African Swine Fever, the effect of such increase in average selling price was partially offset by the decrease in sales volume from 27.6 thousand heads in 2019 to 23.3 thousands heads in 2020.

Our revenue of the market piglet sub-segment increased by 345.9% from RMB18.1 million for 2019 to RMB80.7 million for 2020, mainly because of rising sales volumes from 26.6 thousand heads in 2019 to 65.3 thousand heads in 2020, primarily as a result of increase in market demand and a significant increase of the average selling prices from RMB681 per head in 2019 to RMB1,235 per head in 2020 of market piglets along with rising market prices.

Our revenue of the boar semen decreased by RMB94 thousand from RMB522 thousand for 2019 to RMB428 thousand for 2020.

Poultry segment

Our revenue from the poultry segment decreased by 6.0% from RMB2,434.8 million for 2019 to RMB2,287.8 million for 2020, mainly because of the decrease in the revenue of the yellow-feathered broilers sub-segment.

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Revenue of our yellow-feathered broilers sub-segment decreased by 3.9% from RMB2,250.6 million in 2019 to RMB2,161.8 million in 2020, which was primarily due to the decrease in the average selling price of yellow-feathered broilers from RMB35.8 per bird to RMB29.9 per bird along with the market price. The market price of yellow-feathered broilers fell in 2020 due to the impact of COVID-19 pandemic in 2020 which resulted from (i) the adoption of pandemic control measures by local governments to suspend live poultry markets, and (ii) the restrictions of the movement of people as well as the reduction or restrictions of banquets and travel, resulting in a significant decline in the consumption of chicken and the consequent oversupply has caused the price to fall. The decrease in average selling price of our yellow-feathered broilers was partially offset by an increase in sales volume from 62.9 million birds in 2019 to 72.4 million birds in 2020 which was mainly due to the increase of the scale of our business.

Our revenue of the chicks and eggs sub-segments decreased by 31.6% from RMB184.1 million for 2019 to RMB126.0 million for 2020, mainly because of a decrease of the average selling price of chicks and eggs from RMB1.9 per bird/egg in 2019 to RMB1.4 per bird/egg in 2020 along with the market price.

Ancillary products segment

Our revenue of the ancillary products segment decreased by 21.3% from RMB139.6 million for 2019 to RMB109.9 million for 2020 because of the decrease in sales of ingredients.

Cost of sales

Our cost of sales increased by 25.1% from RMB3,981.4 million for 2019 to RMB4,981.5 million for 2020.

The increase in our total cost of sales from 2019 to 2020 was primarily due to the increase of the sales volume of pigs and poultry. For the effect of changes in cost of sales of each business segment/sub-segment, please refer to the discussion of gross profit margin for each business segment.

Gross profit and gross profit margin

Our total gross profit increased by 106.1% from RMB1,534.8 million for 2019 to RMB3,163.9 million for 2020. Our overall gross profit margin was 27.8% and 38.8% for 2019 and 2020, respectively.

The segment gross profit and segment gross profit margin are based on the amounts before any inter-segment elimination of such segment.

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Pig segment

Our gross profit from the pig segment increased by 210.9% from RMB1,032.1 million for 2019 to RMB3,208.9 million for 2020. Our gross profit margin from the pig segment was 35.1% and 55.8% for 2019 and 2020, respectively.

Our gross profit from market hogs sub-segment increased by 216.7% from RMB960.9 million for 2019 to RMB3,043.5 million for 2020, and our gross profit margin of market hogs sub-segment increased from 34.0% to 55.2% for the period, mainly because of the increase in selling price of market hogs due to the shortage of supply caused by the African Swine Fever.

Our gross profit from breeding pig sub-segment increased by 73.9% from RMB64.8 million for 2019 to RMB112.7 million for 2020 mainly because of the increase in selling price of breeding pig as a result of the decrease in the stock of sows caused by African Swine Fever which was partially offset by the decrease in sales volume. The gross profit margin increased from 69.5% to 76.1% for the period primarily.

Our gross profit from market piglets sub-segment increased by 731.7% from RMB6.3 million for 2019 to RMB52.4 million for 2020, mainly because of (i) the increase in the selling price of our market piglet as a result of rising market price; and (ii) the increase in the sales volume of our market piglets from 26.6 thousand heads to 65.3 thousands heads. Our gross profit margin of market piglets sub-segment increased from 35.0% to 65.0% for the period mainly because of the increase in the seling price of our market piglet as a result of rising market price.

Our gross profit from boar semen increased by RMB183 thousand from RMB92 thousand for 2019 to RMB275 thousand for 2020.

Poultry segment

Our gross profit from the poultry segment decreased from RMB495.9 million for 2019 to RMB-49.3 million for 2020. Our gross profit margin from the poultry selling segment was 20.4% and -2.2% for 2019 and 2020, respectively.

Our gross profit from yellow-feathered broilers sub-segment decreased from RMB430.9 million for 2019 to RMB-50.6 million for 2020, and our gross profit margin of yellow- feathered broilers sub-segment decreased from 19.1% to -2.3% for the period, mainly because of the decrease in average selling price of yellow-feathered broilers along with the market price.

Our gross profit from chicks and eggs sub-segment decreased from RMB65.0 million for 2019 to RMB1.3 million for 2020 mainly because of a decrease of the average selling price of chicks and eggs along with the market price.

Ancillary products segment

Our gross profit from the ancillary products segment decreased by 5.3% from RMB7.5 million for 2019 to RMB7.1 million for 2020. Our gross profit margin from the ancillary products segment was 1.4% and 0.6%, respectively.

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Net changes in fair value of biological assets

We recorded gain arising from net changes in fair value of biological assets of RMB1,077.9 million for 2019 and RMB1,295.7 million for 2020. The increase of net change in fair value of biological assets recorded for 2020 was primarily due to the increase of the stock volume of pigs in 2020.

Other net income

Our other net income increased from RMB21.8 million in 2019 to RMB78.0 million in 2020, which was primarily due to (i) the net gains of RMB15.4 million from subsidies for the demolition and relocation of Zhiwei Breeding Farm of Guangdong (廣東智威養殖場) in 2020, and (ii) the net increase in interest income and change in fair value of financial assets at FVTPL of RMB28.3 million compared to 2019.

Selling expenses

Our selling expenses increased by 30.8% from RMB53.6 million for 2019 to RMB70.1 million for 2020 which was primarily due to the increase of our staff cost of our sales personnel and transportation costs to deliver chicks to our customers as a result of the increase of our sales.

Administrative expense

Our administrative expenses increased by 75.3% from RMB399.4 million for 2019 to RMB700.3 million for 2020 which was primarily due to (i) the increase of the number of our employees resulting in an increase of our labour costs, (ii) the increase in our research and development costs as we increased our R&D activities in connection with our breeding and feed production and (iii) the increase in our material expenses as a result of the measures taken to prevent African Swine Fever in 2020.

Provision for expected credit loss of trade and other receivables

Our provision for expected credit loss of trade and other receivables decreased from RMB4.4 million for 2019 to RMB2.2 million for 2020.

Finance costs

Our finance costs increased by 83.9% from RMB84.6 million for 2019 to RMB155.6 million for 2020, which was primarily due to the increase in our borrowing as a result of the expansion of our breeding and farming scale, our borrowing amount and interest expenses thereof.

Share of profits less losses of associates

In 2020, we recorded share of profits less losses of associates of RMB0.3 million.

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Profit before taxation

As a result of the foregoing, our profit before taxation increased by 72.5% from RMB2,092.3 million for 2019 to RMB3,609.0 million for 2020.

Income tax

Our income tax was RMB507 thousand for 2019 and RMB666 thousand for 2020. We recorded low income tax for 2019 and 2020 mainly because of the tax exemption treatment granted to us due to the nature of our business.

Profit for the year

As a result of the foregoing, our profit for the year increased by 72.5% from RMB2,091.8 million for 2019 to RMB3,608.4 million for 2020, while our net profit margin increased from 37.9% for 2019 to 44.3% for 2020, primarily due to the increase in our gross profit as a result of the rise in pig prices.

2019 as compared to 2018

Revenue

Our revenue increased by 68.1% from RMB3,282.0 million for 2018 to RMB5,516.1 million for 2019.

Pig segment

Our revenue from the pig segment increased by 105.4% from RMB1,432.1 million for 2018 to RMB2,941.8 million for 2019, mainly because of rising sales volume and a significant increase of the average selling prices of pigs along with rising market prices.

Our revenue of the market hogs sub-segment increased by 104.7% from RMB1,382.6 million for 2018 to RMB2,830 million for 2019, mainly because of (i) a significant increase of the average selling prices from RMB1,479 per head in 2018 to RMB2,382 per head in 2019 of market hogs along with rising market prices; and (ii) a rising sales volume from 934.6 thousand heads in 2018 to 1.2 million heads in 2019.

Our revenue of the breeding pig sub-segment increased by 155.8% from RMB36.4 million for 2018 to RMB93.1 million for 2019, mainly because of (i) an increase of the average selling price of breeding pigs from RMB1,844 per head in 2018 to RMB3,376 per head in 2019 along with rising market prices; and (ii) a rising sales volume from 19.7 thousand heads in 2018 to 27.6 thousand heads in 2019.

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Our revenue of the market piglets sub-segment increased by 52.1% from RMB11.9 million for 2018 to RMB18.1 million for 2019, mainly because of a significant increase of the average selling prices of market piglets from RMB310 per head in 2018 to RMB681 per head in 2019 along with rising market prices partially offset by a decrease in sale volume from 38.3 thousand heads in 2018 to 26.6 thousand heads in 2019.

Our revenue of the boar semen decreased by RMB749 thousand from RMB1,271 thousand for 2018 to RMB522 thousand for 2019.

Poultry segment

Our revenue from the poultry segment increased by 34.2% from RMB1,814.8 million for 2018 to RMB2,434.8 million for 2019, mainly because of an increase of the average selling price of yellow-feathered broilers along with market prices and an increase of sales volume.

Our revenue from the yellow-feathered broilers sub-segment increased by 32.2% from RMB1,703.0 million for 2018 to RMB2,250.6 million for 2019, mainly because of (i) an increase of the average selling price of yellow-feathered broilers from RMB33.9 per bird in 2018 to RMB35.8 per bird in 2019 along with market prices; and (ii) an increase of sales volume from 50.3 million birds in 2018 to 62.9 million birds in 2019.

Our revenue of the chicks and eggs sub-segment increased by 64.5% from RMB111.9 million for 2018 to RMB184.1 million for 2019, mainly because of (i) an increase of the average selling prices of chicks and eggs from RMB1.2 per bird/egg in 2018 to RMB1.9 per bird/egg in 2019 along with market prices; and (ii) an increase of sales volume from 91.7 million birds/eggs in 2018 to RMB96.3 million birds/eggs in 2019.

Ancillary products

Our revenue of the ancillary products segment increased by 297.9% from RMB35.1 million for 2018 to RMB139.6 million for 2019, mainly because we started our feed ingredients business in 2019.

Cost of sales

Our cost of sales increased by 37.5% from RMB2,896.6 million for 2018 to RMB3,981.4 million for 2019.

The increase in our total cost of sales from 2018 to 2019 was primarily due to the increase in the sales volume of pigs and poultry. For the effect of changes in cost of sales of each business segment/sub-segment, please refer to the discussion of gross profit margin for each business segment/sub-segment.

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Gross profit and gross profit margin

Our total gross profit increased by 298.1% from RMB385.5 million for 2018 to RMB1,534.8 million for 2019. Our overall gross profit margin increased from 11.7% for 2018 to 27.8% for 2019.

The segment gross profit and segment gross profit margin are based on the amounts before any inter-segment elimination of such segment.

Pig segment

Our gross profit from the pig segment increased by 839.1% from RMB109.9 million for 2018 to RMB1,032.1 million for 2019. Our gross profit margin from the pig selling segment was 7.6% and 35.1% for 2018 and 2019, respectively.

Our gross profit from market hogs sub-segment increased from RMB93.0 million for 2018 to RMB960.9 million for 2019, mainly because of (i) the increase in selling price of market hogs due to the shortage of supply caused by the African Swine Fever; and (ii) the increase in sales volume from 934.6 thousand heads in 2018 to 1.2 million heads in 2019. Our gross profit margin of market hogs sub-segment increased from 6.7% to 34.0% for the period mainly because of the increase in selling price of market hogs due to shortage of supply caused by African Swine Fever.

Our gross profit from breeding pigs sub-segment increased from RMB17.5 million for 2018 to RMB64.8 million for 2019 mainly because of an increase in selling price of breeding pigs as well as an increase in sales volume. The gross profit margin increased from 45.8% to 69.5% for the period primarily because of the increase in selling price of breeding pigs due to shortage of supply caused by the African Swine Fever.

Our gross profit from market piglets sub-segment increased from a loss of RMB897 thousand for 2018 to a profit of RMB6.3 million for 2019, and our gross profit margin of market piglets sub-segment increased from -6.9% to 35.0% for the period, mainly because of the increase in the selling prices of market piglets.

Our gross profit from boar semen decreased from RMB243 thousand for 2018 to RMB92 thousand for 2019.

Poultry segment

Our gross profit from poultry segment increased by 81.7% from RMB272.9 million for 2018 to RMB495.9 million for 2019. Our gross profit margin from the poultry selling segment was 15.0% and 20.4% for 2019 and 2020, respectively.

Our gross profit from yellow-feathered broilers sub-segment increased from RMB258.8 million for 2018 to RMB430.9 million for 2019, and our gross profit margin of yellow- feathered broilers sub-segment increased from 15.2% to 19.1% for the period, mainly because of the increase in average selling price of yellow-feathered broilers.

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Our gross profit from chicks and eggs sub-segment increased from RMB14.1 million for 2018 to RMB65.0 million for 2019 mainly because of an increase of the average selling price of chicks and eggs along with the market price.

Ancillary products segment

Our gross profit from ancillary products segment increased by 240.9% or RMB5.3 million from RMB2.2 million for 2018 to RMB7.5 million for 2019. Our gross profit margin from the ancillary products segment was 5.6% and 1.4%, respectively.

Net changes in fair value of biological assets

We recorded gains arising from changes in fair value of RMB60.7 million and RMB1,077.9 million for 2018 and 2019, respectively. The increase in gains recorded in 2019 was primarily due to the increase of the market price of pigs as well as increase in our pig stock in 2019.

Other net income

Our other net income decreased by 64.6% from RMB61.5 million for 2018 to RMB21.8 million for 2019. The decrease was primarily due to net gain of RMB32.6 million arising from the disposal of interests in subsidiaries and associates in 2018.

Selling expenses

Our selling expenses increased by 40.7% from RMB38.1 million for 2018 to RMB53.6 million for 2019, which was primarily due to the increase of our staff cost as a result of our increased number of employees and rising compensation to our employees for our sales personnel and transportation costs to deliver chicks to our customers as a result of the increase in our sales.

Administrative expenses

Our administrative expenses increased by 53.0% from RMB261.0 million for 2018 to RMB399.4 million for 2019, which was primarily due to (1) rising staff cost as a result of an increase in our employee number as well as rising compensation to our employees and (2) the increase in our material expenses as a result of expenses incurred in connection with prevention of African Swine Fever in 2019.

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Provision for expected credit loss of trade and other receivables

In 2018 and 2019, we made provision for expected credit loss of our trade and other receivables of RMB2.2 million and RMB4.4 million, respectively.

Finance costs

Our finance costs increased by 63.3% from RMB51.8 million for 2018 to RMB84.6 million for 2019, which was primarily attributable to increase in interest expenses as a result of the increase in the amount of loans for expansion of our breeding and farming of our pigs.

Profit before taxation

As a result of the foregoing, our profit before taxation increased by 1,253.4% from RMB154.6 million for 2018 to RMB2,092.3 million for 2019.

Income tax

Our income tax increased by RMB500 thousand from RMB7 thousand for 2018 to RMB507 thousand for 2019, mainly because of the tax exemption treatment granted to us due to the nature of our business.

Profit for the year

As a result of the foregoing, our profit for the year increased by 1,253.0% from RMB154.6 million for 2018 to RMB2,091.8 million for 2019, while our net profit margin increased from 4.7% in 2018 to 37.9% in 2019, which was mainly due to the increase in our gross profit as a result of the increase in prices of pigs and poultry.

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CURRENT ASSETS AND CURRENT LIABILITIES

At At 31 December 30 April 2018 2019 2020 2021 (RMB’000) (unaudited)

Current assets Inventories 238,076 257,171 444,081 572,205 Current biological assets 910,255 1,941,524 3,244,529 3,914,326 Trade receivables 16,308 7,560 1,591 16,681 Prepayments, deposits and other receivables 46,841 98,782 142,095 246,301 Financial assets at fair value through profit or loss (“FVTPL”) 31,233 60,066 655,198 1,138,105 Cash at bank and on hand 445,293 696,492 1,837,832 1,961,728

1,679,006 3,061,595 6,325,326 7,849,347

2,093,268 1,830,267 4,496,522 5,030,171

Net current (liabilities)/ assets (414,262) 1,231,328 1,828,804 2,819,176

Out net current assets increased from RMB1,828.8 million as at 31 December 2020 to RMB2,819.2 million as at 30 April 2021, which was mainly due to the increase in current biological assets which are mainly due to the increase in our pig stock and the increase in cash generated from our business operations which was partially offset by an increase in interest-bearing borrowings as a result of an increase in our working capital requirement.

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Our net current assets increased from RMB1,231.3 million as at 31 December 2019 to RMB1,828.8 million as at 31 December 2020, primarily due to significant increase in current biological assets which is caused by an increase in pig stock as well as an increase in cash at bank and on hand, partially offset by an increase in interest bearing borrowings as a result of an increase in our working capital requirement.

Our net current liabilities of RMB414.3 million as at 31 December 2018 turned to net current assets of RMB1,231.3 million as at 31 December 2019, primarily due to significant increase in current biological assets as a result of increase in both market prices of our products as well as an increase in the number of pigs and yellow-feathered broilers in stock.

DISCUSSION OF CERTAIN KEY STATEMENT OF FINANCIAL POSITION ITEMS

Property, plant and equipment

Our property, plant and equipment include the pig farms, chicken farms and ancillary structures required for breeding and farming, and the machines and equipment purchased for the construction or operations of our breeding farms and environmental protection.

Our net book value of other property, plant and equipment amounted to RMB1,569.2 million, RMB2,320.5 million and RMB6,197.8 million as at 31 December 2018, 2019 and 2020, respectively. The increase was mainly attributable to the fact that we constructed pig and chicken farms, feed mills, and construction-in-progress in order to expand our business and the increase in right-to-use assets.

Intangible assets

The following table sets out a breakdown of our intangible assets as at the dates indicated:

At 31 December 2018 2019 2020 (RMB’000)

Software 9,336 223 1,856

Total 9,336 223 1,856

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Our intangible assets include the right of use of the office or breeding system software, such as Foidn breeding and analysis software and JDE enterprise resource planning management software.

Our intangible assets decreased from RMB9.3 million on 31 December 2018 to RMB223 thousand on 31 December 2019, because we used an internally developed software management system in lieu of the third-party software management system we purchased. The increase of our intangible assets in 2020 was due to our purchase of new office software.

Goodwill

Our goodwill arose from the acquisition of Guangdong Wizagricultural Science & Technology Co., Ltd. The cost and carrying amount of our goodwill was RMB14.7 million as at each of the dates of 31 December 2018, 2019 and 2020.

Inventories

Our inventories comprise raw materials, finished goods and spare parts and consumables. The following is a summary of balance of our inventories as at the end of each reporting period during the Track Record Period:

At 31 December 2018 2019 2020 (RMB’000)

Raw materials 218,978 228,229 372,613 Finished goods 6,541 646 8,221 Spare parts and consumables 12,557 28,296 63,247

Total 238,076 257,171 444,081

We adopt stringent inventory control and maintain low level of inventory. We periodically review our inventory levels for slow moving inventory, obsolescence or declines in market value. We manage our inventory levels principally based on the anticipated demand.

Balance of inventories increased from RMB238.1 million as at 31 December 2018 to RMB257.2 million as at 31 December 2019 as a result of an increase in turnover materials as a result of the increase in the number of our feed mills. As at 31 December 2020, our balance of inventories increased to RMB444.1 million due to we increased stock of the feed ingredients, feed, and veterinary medicine as a result of our business growth.

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The following table sets out the average inventory turnover day(s) for the Track Record Period:

Years ended 31 December 2018 2019 2020

Average inventory turnover day(s) 21.2 22.7 25.7

Note: Average inventory turnover day(s) for each of 2018, 2019 and 2020 are equal to the average inventory divided by cost of materials and multiplied by 365 days for 2018, 2019 and 2020. Average inventory is equal to the average of inventory at the beginning of the year and inventory at the end of the year.

The average inventory turnover day(s) is increased from 21.2 days for 2018 to 22.7 days for 2019. The average inventory turnover day(s) in 2020 have increased compared to 2019, which was primarily because we increased our inventory for feed ingredients used for production of feed due to the expansion of our feed mills in 2020.

As at 30 April 2021, RMB384.6 million or 86.6% of our inventory has been utilised or consumed after 31 December, 2020.

Prepayments, deposits and other receivables

Our prepayments, deposits and other receivables mainly consist of loans and advances to our contract farmers from farmers, reserves, guarantees and deposits, dividends receivables, borrowings and advances from government and others. The following table sets out a breakdown of our prepayments, deposits and other receivables as at the dates indicated:

At 31 December 2018 2019 2020 (RMB’000)

Other receivables relating to disposal of interest in a subsidiary 1,939 – – Loans and advances to contract farmers 12,259 33,594 36,634 Deposits 21,061 22,455 37,542 Dividend receivables 4,470 – – Loans and advances to local government 4,514 27,963 17,447 Others 4,319 1,964 2,155 Less: expected credit loss (12,980) (17,682) (19,921)

Prepayments for purchase of inventory – Related parties – – 56 – Third parties 9,671 25,773 57,461 Prepaid expenses 1,588 4,715 10,721

46,841 98,782 142,095

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Our prepayments, deposits and other receivables increased 43.8% from RMB98.8 million as at 31 December 2019 to RMB142.1 million as at 31 December 2020 primarily attributable to the increase in (i) prepayment for purchase of feed, veterinary medicine and feed ingredients as a result of our business growth, (ii) deposit in connection with guarantees paid to acquire a parcel of land for our feed mill.

Our prepayments, deposits and guarantees and other receivables increased by 111.1% from RMB46.8 million as at 31 December 2018 to RMB98.8 million as at 31 December 2019 primarily attributable to the (i) prepayment for purchase of feed, veterinary medicine and feed ingredients as a result of our business growth, (ii) loans and advances to our contract farmers as a result of increase our stock volume.

Trade receivables

Our trade receivables decreased from RMB7.6 million as at 31 December 2019 to RMB1.6 million as at 31 December 2020 primarily due to our recovery of prior outstanding trade receivables in connection with our anciliary products.

Our trade receivables decreased by 53.4% from RMB16.3 million as at 31 December 2018 to RMB7.6 million as at 31 December 2019, primarily due to our disposal of the subsidiaries that engaged in sales of ancillary products and the acquisition of feed company in 2018. Trade receivables and subsequently collected.

The following table sets out the aging analysis of our trade receivables, based on the invoice date and net of allowance for doubtful debts, as at the end of each reporting period during the Track Record Period:

At 31 December 2018 2019 2020 (RMB’000)

Within one year 15,757 7,528 1,435 One to two years 512 28 154 Two to three years 39 4 2

Total 16,308 7,560 1,591

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As at 30 April 2021, RMB1.2 million or 74.5% of our total trade receivables for the year ended 31 December 2020 had been subsequently settled.

Our policy for expected credit loss on trade receivables is based on our estimated rate of credit loss which requires the use of judgment and estimates. Our management closely reviews the trade receivables balances and any overdue balances on an ongoing basis and assessments are made by our management on the collectability of overdue balances. We do not provide credit period to our customers in the contracts.

As our business is mainly based on payment on delivery, the Directors of the Company considered that the analysis of the average turnover days of trade and bills receivable was not significant.

Trade and bills payables

Our trade and bills payables primarily related to feed, veterinary medicine and contract farming fees. Our suppliers generally grant a fixed credit limit for our purchases and we settle the part of the purchase amount which is over the credit limit.

Our trade and bills payables increased by 60.2% from RMB392.2 million as at 31 December 2019 to RMB628.4 million as at 31 December 2020 which was primarily due to the increase in feed, veterinary medicine and feed ingredients purchased with the expansion of our business, the increase in contract farming fees as a result of the increase in our stock volume in our family farms.

Our trade and bills payables increased by 88.7% from RMB207.8 million as at 31 December 2018 to RMB392.2 million as at 31 December 2019 because of the increase in feed, veterinary medicine and feed ingredients purchased with the expansion of farming scale and the increase in contract farming fees as a result of the increase in our stock volume in our family farms.

Payment arrangements with suppliers include payment on delivery and the general credit period of 7 to 45 days. We usually settle our outstanding fees with our contract farmers within 7 days.

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The following table sets out the aging analysis of our trade and bills payables, based on invoice date, as at the end of each reporting period during the Track Record Period:

At 31 December 2018 2019 2020 (RMB’000)

Within one year 206,588 390,113 620,144 One to two years 722 1,017 7,349 Two to three years 137 697 118 Over three years 323 363 751

Total 207,770 392,190 628,362

As at 30 April 2021, RMB514.6 million or 81.9% of our total trade and bills payables as at 31 December 2020 had been subsequently settled.

The following table sets out the average trade and bills payables turnover days for the Track Record Period:

Years ended 31 December 2018 2019 2020

Average trade and bills payables turnover day(s) 32.4 27.5 37.4

Note: Average trade and bills payables turnover day(s) for each of 2018, 2019 and 2020 are equal to the average trade and bills payables divided by costs of sales and multiplied by 365 days for 2018, 2019 and 2020. Average trade and bills payables is equal to the average of trade and bills payables at the beginning of the year and trade and bills payables at the end of the year.

The decrease of average trade and bills payables turnover day(s) from the 32.4 days for 2018 to 27.5 days for 2019. Average trade and bills payables turnover days increased from 27.5 days for 2019 to 37.4 days for 2020 primarily due to (i) the increase in feed, veterinary medicine and feed ingredients purchased with the expansion of our business and (ii) the increase in contract farming fees as a result of the increase in our stock volume of family farms.

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Accruals and other payables

Our accruals and other payables consist of payables for staff related costs, deposit from contract farmers and other guarantees to third-party contractors, other tax payables, interest payable, payables relating to purchase of property, plant and equipment, and contract liabilities. The following table sets out a breakdown of our accrued expenses and other payables as at the dates indicated:

At 31 December 2018 2019 2020 (RMB’000)

Payables for staff related costs 53,949 114,147 240,423 Deposits received 396,273 476,524 737,103 Other taxes payable 3,677 2,070 3,859 Interest payable 1,920 1,027 4,737 Payables relating to purchase of property, plant and equipment – related parties 153 16 1,647 – third parties 22,822 56,342 295,352 Dividends payable 18,034 9,250 – Others 20,224 17,611 48,671

Contract liabilities – third parties 16,249 15,655 46,239

Total 533,301 692,642 1,378,031

Our accruals and other payables increased by RMB685.4 million or 99.0% from RMB692.6 million as at 31 December 2019 to RMB1,378.0 million as at 31 December 2020 primarily attributable to the increase in (i) the increase of deposits received from farmers as a result of an increase in the number of farmers; (ii) payables relating to purchases of property, plant and equipment relating to our construction of new farms and (iii) payables for staff related costs as a result of our increased number of employees.

Our accruals and other payables increased by RMB159.3 million or 29.9% from RMB533.3 million as at 31 December 2018 to RMB692.6 million as at 31 December 2019 primarily attributable to the increase in (i) deposit received from farmers as a result of an increase in the number of farmers, (ii) payables for staff related costs as a result of increased monthly payable due to increase in employee numbers; and (iii) payables relating to purchases of property, plant and equipment relating to our construction of new farms.

Our contract liabilities mainly comprise advances from customers while the underlying goods or services are yet to be provided. Our contract liabilities remained stable from 31 December 2018 to 31 December 2019, and increased from RMB15.7 million as at 31 December 2019 to RMB46.2 million as at 31 December 2020 as our customers prepaid part of the purchase price to us in 2020.

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CAPITAL EXPENDITURE

The following sets forth our Group’s capital expenditure for the years indicated:

Years ended 31 December 2018 2019 2020 (RMB’000)

Investing activities Payment for the purchase of property, plant and equipment 311,222 648,329 2,944,567

Total 311,222 648,329 2,944,567

Our capital expenditure primarily comprised of expenditures for the construction and upgrades of our production and ancillary facilities during the Track Record Period.

Based on our current expansion plan, we currently estimate that our capital expenditures in 2021 would be approximately RMB2,737.7 million. We expect to fund our future capital needs mainly by cash generated from our operating activities, bank loans as well as the [REDACTED] from the [REDACTED]. See “Future Plans and [REDACTED]”.

CAPITAL COMMITMENTS

During the Track Record Period, our capital commitments were primarily related to the purchase of property, plant and equipment in connection with our production. The following table sets forth our capital commitments outstanding but not provided for in our consolidated financial statements as at the dates indicated:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Contracted for 260,407 345,731 1,104,512 Authorised but not contracted for 57,798 704,070 355,150

318,205 1,049,801 1,459,662

CONTINGENT LIABILITIES

As at 31 December 2018, 2019 and 2020, we guaranteed certain bank loans made to the contract farmers. As at 31 December 2018, 2019 and 2020, we do not consider it probable that a claim will be made against the Group under any of the guarantees. The maximum liability of the Group as at 31 December 2018, 2019 and 2020 under such guarantees issued is the outstanding amount of the bank loans of the contract farmers which were nil, nil and RMB76,855,000, respectively.

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The Directors confirm that, there had been no material change in our contingent liabilities from 31 December 2020 up to the Latest Practicable Date.

RELATED PARTIES TRANSACTIONS

Guaranteed provided by related parties

During the Track Record Period, our related parties provided guarantees to our loans from financial institutions. During the year of 2018, 2019 and 2020, the guarantees provided by related parties amounted to approximately RMB980.0 million, RMB848.5 million and RMB2,857.4 million, respectively. For the outstanding amount of loan as at the Latest Practicable Date, the guarantee provided by related parties to us amounted to an aggregated amount of RMB2,333.7 million. The guarantees provided by the related parties will be released upon [REDACTED].

Related party transactions

We enter into transactions with our related parties from time to time. During the Track Record Period, we had entered into a number of related party transactions in relation to the sales and purchases of products and services. Please see note 37 of the Accountants’ Report set out in Appendix I to this document for details.

Our Directors confirm that all transactions with related parties described in note 37 of the Accountants’ Report set out in Appendix I to this document were conducted in the ordinary course of business on an arm’s length basis and with on normal commercial terms and/or on terms not less favourable than terms available from independent third parties, which are considered fair, reasonable and in the interest of the Shareholders of our Company as a whole. Our Directors are of the view that our related party transactions during the Track Record Period would not distort our track record results or cause our historical results to become non-reflective of our future performance.

For further details, please see note 37 to the Accountants’ Report as set out in Appendix I.

BIOLOGICAL ASSETS AND VALUATION

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The following table sets out the value of our biological assets as at the end of each reporting period during the Track Record Period:

At 31 December 2018 2019 2020 (RMB’000)

Breeding stocks – Sows and boars 163,110 369,740 1,253,662 – Gilts and studs 39,754 361,307 1,182,760 – Mature breeders 33,322 44,452 47,873 – Immature breeder 13,908 34,699 29,312 Commodity stocks – Piglets 23,527 27,205 104,574 – Nursery pigs 19,236 60,703 119,850 – Growers 581,723 1,465,140 2,708,075 – Broilers 222,207 297,245 226,597 – Chicken breeders 22 208 224 – Fertile eggs 7,310 11,872 8,024

Total 1,104,119 2,672,571 5,680,951

The volumes of our biological assets are summarised as follows:

At 31 December 2018 2019 2020 (Units) (Units) (Units)

Commodity stocks – Hogs – Piglets (Heads) 97,187 90,732 269,279 – Nursery pigs (Heads) 39,112 53,721 130,549 – Growers (Heads) 555,929 567,761 1,126,065

Commodity stocks – Poultry – Eggs (Pieces) 7,622,631 9,508,164 10,029,818 – Breeder chicks (Birds) 2,550 51,318 53,072 – Broilers (Birds) 14,477,788 20,890,929 16,435,672

Breeding stocks – Hogs – Sows and Boars (Heads) 67,031 79,422 214,455 – Gilts and Studs (Heads) 18,098 65,361 199,290

Breeding stocks – Poultry – Mature Breeders (Birds) 648,854 773,370 827,316 – Immature Breeders (Birds) 552,973 814,207 844,106

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Our Group’s biological assets were independently valued by the Valuer. The Valuer is an independent professional valuer not connected with us, and has appropriate and extensive experience in the valuation of biological assets.

Information about the independent valuer of our biological assets

We have engaged JLL, an independent valuer, to determine the fair values of our biological assets as at 31 December 2018, 31 December 2019 and 31 December 2020 (the “Valuation Date(s)”) respectively. The key valuers of the JLL team include Mr. Simon Chan and Professor Tan Zhankun.

Mr. Simon Chan, executive director at JLL, is a fellow of the Hong Kong Institute of Certified Public Accountants (HKICPA) and a fellow of CPA Australia. He is also a Certified Valuation Analyst (CVA), a member of The International Association of Consultants, Valuers and Analysts (IACVA), a member of Canadian Institute of Mining, Metallurgy and Petroleum (CIM), and a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Simon oversees the business valuation services of JLL and has over 20 years of accounting, auditing, corporate advisory and valuation experiences. He has provided a wide range of valuation services to numerous listed and listing companies of different industries in China, Hong Kong, Singapore and the United States. Simon oversaw the valuation of biological assets for the initial public offerings and subsequent financial reports of China Modern Dairy Holdings Ltd (stock code: 1117.HK), China Huishan Dairy Holdings Company Limited (stock code: 6863.HK), YuanShengTai Dairy Farm Limited (stock code: 1431.HK) and WH Group Limited (stock code: 288.HK). He also led the valuation of other biological assets, such as pigs, trees, rabbits and chickens, for financial reporting purpose of Hong Kong listed companies including Chenming Paper (stock code: 1812.HK), China Mengniu Dairy Company Limited (stock code: 2319.HK) and China Kangda Food Company Limited (stock code: 834.HK), as well as numerous private companies.

Appointment of expert

The Valuer appointed an expert consultant, Professor Tan Zhankun (譚占坤), to assist in the valuation. Professor Tan Zhankun, with a PhD degree, is the Associate Professor of Animal Husbandry, the Deputy Director of Animal Science Teaching and Research office in Tibet Agriculture and Animal Husbandry University (西藏農牧學院), and a member of the Tibet Animal Husbandry and Veterinary Medicine Society (西藏自治區畜牧獸醫學會). He is mainly engaged in the teaching and research of animal nutrition and feed science. JLL determined Professor Tan to be suitably qualified given his expertise and past experience. JLL is satisfied that the basis of advice presented by Professor Tan Zhankun and believes it is reasonable.

Based on market reputation and relevant background research, our Directors and the Sole Sponsor are satisfied that JLL is independent from us and is competent in conducting a valuation on our biological assets.

Valuation methodology

In arriving at the assessed value, three generally accepted approaches have been considered, namely, the market approach, cost approach and income approach.

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Market Approach considers prices recently paid for similar assets, with adjustments made to market prices to reflect the condition and utility of the appraised assets relative to the market comparatives. Assets for which there is an established used market may be valued by this approach.

Cost Approach considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation or obsolescence present, whether arising from physical, functional or economic causes. The cost approach generally furnishes the most reliable indication of value for assets without a known used market.

Income Approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for the project than an amount equal to the present worth of anticipated future benefits (income) from the same or a substantially similar project with a similar risk profile.

The following valuation methods were adopted:

Piglets

The cost approach was adopted for valuing piglets. As they are only around three-week old and there is insignificant biological transformation that takes place since the initial cost incurrence, the recent costs incurred approximates the replacement costs, including depreciation due to use of breeding stock and other associated costs.

Nursery pigs, growers, gilts, and studs

The market approach was adopted for valuing nursery pigs, growers, gilts and studs. nursery pigs and growers were assumed to be sold live or slaughtered when they reach the stage of finisher as the market hogs (for production of pork products).

The fair value of nursery pigs and growers were derived by obtaining the market prices of the market hogs, multiplying the unit price by the corresponding quantities, less the expected costs to complete. The fair value of the gilts and studs were derived by multiplying the market prices of the gilts and studs for different species by their corresponding quantities.

Sows and boars

The replacement cost approach under cost approach was adopted for valuing sows and boars. As there were no actively trading markets for mature breeding stock at specific ages, the market prices for new breeding stock (mature biological physical condition) were obtained and adjusted based on the parities (number of times giving birth) for sows and service lives (number of years mating) for Boars.

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Fertile eggs, and commodity chicks

The fair value of the fertile eggs and commodity chicks were derived through the market approach, by multiplying the market prices for different species/categories by their corresponding quantities, less the expected expenses (if any) to complete.

Broilers

The market approach was adopted for valuing broilers. Broilers were assumed to be sold live or slaughtered when they reach certain age (for production of chicken products). The fair value of broilers were derived by assuming the market prices of the broilers for sale as the estimated price receivable upon completion, multiplying the unit price by the corresponding quantities, less the expected costs to complete.

Immature Breeders and Mature Breeders

The replacement cost approach under cost approach was adopted for valuing immature/mature breeders. As there were no actively trading markets for immature/mature Breeders at specific ages during the production cycles, the market prices for the day-old chicks and the culled breeders were obtained. The feeding costs for rearing the chicken breeders were also taken into consideration to assess the fair value of immature breeders. The value of mature breeders was adjusted based on the egg production (number of eggs laying) for breeding hens and service lives (number of years mating)

Key assumptions and inputs

The key inputs and assumptions include the following:

Quantity

The valuation has relied on the figures and information provided by our Group for the biological assets as at the Valuation Dates.

Market Prices

The market price is based on the transacted prices of nursery pigs, growers, gilts, studs, fertile eggs, commodity chicks, broilers, day-old chicks and culled breeders observed at or near the Valuation Dates in the respective market. We operate our business across different provinces, and each province has its own specific supply and demand dynamics because of differences in factors such as local sow supply, rearing cost (in particular feeding cost), and transportation cost and consumption habits. These factors lead to different market prices for pigs or broilers that we produced and sold in different locations on the same date. Hence the market price assumption adopted for biological assets in the valuation process is displayed as a range of price across the markets in which we operate.

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Set forth below are the range of market price by types of biological assets adopted in the valuation process as well as the actual historical results:

Assumptions used As at 31 December 2018

Current biological assets – Piglets Replacement cost RMB186.87 to RMB364.16 per head – Nursery Pigs and Growers Market price RMB9.74 to RMB19.12 per kilogramme – Fertile Eggs Market price RMB0.96 per piece – Commodity Chicks Market price RMB8.93 per bird – Broilers Market price RMB11.51 to RMB19.32 per kilogramme Non-current biological assets – Sows and Boars Replacement cost RMB2,100 to RMB6,200 per head – Gilts and Studs Market price RMB1,300 to RMB5,400 per head – Mature Chicken Breeders Replacement cost RMB17.47 to RMB72.07 per bird – Immature Chicken Breeders Replacement cost RMB5.68 to RMB61.66 per bird

Assumptions used As at 31 December 2019

Current biological assets – Piglets Replacement cost RMB256.75 to RMB409.62 per head – Nursery Pigs and Growers Market price RMB31.03 to RMB36.95 per kilogramme – Fertile Eggs Market price RMB1.25 per piece – Commodity Chicks Market price RMB3.77 to RMB5.01 per bird – Broilers Market price RMB9.92 to RMB19.4 per kilogramme Non-current biological assets – Sows and Boars Replacement cost RMB4,940 to RMB9,800 per head – Gilts and Studs Market price RMB4,140 to RMB9,000 per head – Mature Chicken Breeders Replacement cost RMB22.85 to RMB99.12 per head – Immature Chicken Breeders Replacement cost RMB8.69 to RMB78.53 per head

Assumptions used As at 31 December 2020

Current biological assets – Piglets Replacement cost RMB277.59 to RMB447.40 per head – Nursery Pigs and Growers Market price RMB33.99 to RMB36.67 per kilogramme – Fertile Eggs Market price RMB0.80 per piece – Commodity Chicks Market price RMB2.78 to RMB5.11 per bird – Broilers Market price RMB10.87 to RMB19.00 per kilogramme Non-current biological assets – Sows and Boars Replacement cost RMB5,400 to RMB12,700 per head – Gilts and Studs Market price RMB4,600 to RMB11,900 per head – Mature Chicken Breeders Replacement cost RMB25.57 to RMB106.86 per head – Immature Chicken Breeders Replacement cost RMB13.68 to RMB87.29 per head

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In valuing the fair value of nursery pigs and growers, key assumptions and parameters including mortality rate, age for sale, weight and cost to complete were considered:

Mortality Rate

As there is the probability that the pigs might be dead due to diseases, epidemics, accidents or natural forces during rearing cycle, the mortality since the Valuation Date until complete and sold has been taken into consideration. The mortality rate from weaning to the stage of finisher was with reference to the historical actual mortality rate.

Age for sale

With reference to the historical sales records and to the best estimation of the management, nursery pigs and growers are to be sold as the market hogs when they reach a certain age.

Weight

The average body weight of the market hogs when they are sold is determined based on our operating and rearing experience.

Cost to Complete

The costs required to feed nursery pigs and growers since the Valuation Date until they were sold were incorporated and were estimated based on the historical average costs. The costs include feed cost, veterinary medicine and vaccination, staff costs and production overheads.

In valuing the fair value of sows and boars, key assumptions and parameters including parity, service lives and residual value were considered:

Parity

To the best estimation of the management, sows normally give birth to piglets for six times at most and would be culled and sold at residual value. The value of sows is depreciated on straight-line basis over the six parities based on the price of new breeding stock (mature biological physical condition).

Service Lives

To the best estimation of the management, boars normally used for mating for 2.5 years at most and would be culled and sold at residual value. The value of boars is depreciated on straight-line basis over the three-year service lives based on the price of price of new breeding stock (mature biological physical condition).

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Residual Value

To the best estimation of the management, the residual value of sows and boars at the maximum parities or at the end of service lives is assumed to be RMB800 per head.

In valuing the fair value of commodity chicks, the following key assumptions and parameters were considered:

Cost to Complete

The sale of the commodity chicks normally requires shipments to the customers. Therefore, the cost to complete has been estimated based on the historical transportation expenses in valuing the value of commodity chicks.

In valuing the fair value of broilers, the following key assumptions and parameters were considered.

Mortality Rate

As there is the probability that Broilers might be dead due to diseases, epidemics, accidents or natural forces during rearing cycle, the mortality since the Valuation Date(s) until complete and sold has been taken into consideration. The mortality rate for the broilers was with reference to the historical actual mortality rate.

Age for sale

With reference to the historical sales records and to the best estimation of the management, broilers are assumed to be sold when they reach the certain age.

Weight

The average body weight of the broilers when they are sold was determined based on our operating and rearing experience.

Cost to Complete

The costs required to feed broilers since the Valuation Date(s) until they were sold were incorporated and were estimated based on the historical average costs provided by the Company. The costs include feeding cost, medication and vaccination, labour, production overheads, etc.

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In valuing the fair value of immature/mature chicken breeders, the following key assumptions and parameters were considered:

Service Lives

To the best estimation of the management, mature chicken breeders normally used for mating until the age of 66 weeks at most and would be culled and sold at residual value. The value of male mature chicken breeders is depreciated on straight-line basis over the service lives, while the value of female mature chicken breeders is depreciated on units-of-production basis over the service lives.

Other Assumptions

The Valuer assumed that all proposed facilities and systems will be operated efficiently and have sufficient capacity for future expansion. The Valuer also assumed that the historical trend and data will be maintained and there will be no material change in the existing political, legal, technological, fiscal or economic condition that may adversely affect the business of the Company.

The Valuer confirmed that they have conducted their valuation in accordance with International Financial Reporting Standards 13 (“IFRS 13”) & International Accounting Standards 41 (“IAS 41”) issued by the International Accounting Standards Board and with reference to the International Valuation Standards issued by the International Valuation Standards Council. The Valuer planned and performed our valuation so as to obtain all the information and explanations that we considered necessary in order to provide us with sufficient evidence to express our opinion on the subject asset. The Valuer is of the opinion that the valuation procedures we employed provide a reasonable basis for their opinion.

The Reporting Accountants have performed their work on the Historical Financial Information in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200, Accountants’ Report on Historical Financial Information in Investment Circular (“HKSIR 200”). As part of their work on the Historical Financial Information, the Reporting Accountants have considered the results of audit procedures performed in connection with the valuation techniques and key inputs used in valuation of the biological assets. They have satisfied themselves in respect of the valuation technique chosen and the key inputs used in the valuation for the purpose of forming an opinion on the Historical Financial Information as a whole.

The Sole Sponsor held various discussions with JLL in relation to its valuation procedures, valuation bases and assumptions, valuation techniques and information required to prepare the valuation report of the biological assets to better understand the valuation process and reviewed the qualification and relevant valuation experience of JLL and its professional valuers. In addition, the Sole Sponsor discussed with our management and the Reporting Accountants with respect to the techniques chosen and the inputs used in the valuations. The Sole Sponsor further compared the valuation technique chosen, bases and assumptions of the

– 290 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT FINANCIAL INFORMATION valuation with those used in other similar transactions and market practice. In addition, the Sole Sponsor has discussed with the Reporting Accountants regarding the valuation of biological assets compiled by the Valuer and noted that the Reporting Accountants had considered the audited procedures performed in accordance with the relevant auditing standards. Given the above, the Sole Sponsor is satisfied that the valuation techniques chosen and the inputs used in the valuation technique are appropriate and reasonable.

Sensitivity analysis

A significant increase/decrease in the estimated market price and replacement cost in isolation would result in a significant increase/decrease in the fair value of the biological assets. As at 31 December 2018, 2019 and 2020, if transaction price increases by 10%, the estimated fair value of biological assets would have increased by RMB109 million, RMB267 million and RMB564 million, respectively, and if transaction price decreases by 10%, the estimated fair value of biological assets would have decreased by RMB114 million, RMB274 million and RMB557 million, respectively.

Stock take and internal control

We have established standard procedures to ensure accuracy of headcount of our biological assets and other relevant information. For example, through our JDE system, we can track the progress of pig batches when pigs are delivered, transferred to nursing sheds, growing sheds and final sales to ensure the accuracy of pig health and headcount and track the number and the progress of pig hatches remaining pigs.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of funds in the past have historically been our equity capital, cash generated from our operations and borrowings. Our primary liquidity requirements are to finance our working capital needs, and fund our capital expenditures and growth of our operations. Going forward, we expect these sources to continue to be our principal sources of liquidity, and we may use a portion of the [REDACTED] from the [REDACTED] to finance a portion of our liquidity requirements.

As at 30 April 2021, being the latest practicable date for the purpose of the disclosure of our liquidity position, we had cash and bank balances of RMB1,961.7 million.

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Cash flows

The following table sets forth a summary of our cash flows for the Track Record Period:

Years ended 31 December 2018 2019 2020 (RMB’000)

Net cash (used in)/generated from operating activities (12,487) 1,136,814 1,671,484 Net cash used in investing activities (212,175) (789,921) (3,775,833) Net cash generated from/(used in) financing activities 443,749 (96,397) 3,149,466 Net increase in cash and cash equivalents 219,087 250,496 1,045,117 Cash and cash equivalents at 1 January 197,174 416,261 666,757 Cash and cash equivalents at 31 December 416,261 666,757 1,711,874

Net cash (used in)/generated from operating activities

Net cash (used in)/generated from operating activities primarily consisted of profit before taxation (adjusted for depreciation charge on property, plant and equipment, amortisation of intangible assets, finance costs, net loss/(gain) on sale of property, plant and equipment and intangible assets, net changes in fair value of biological assets, impairment loss on property, plant and equipment, provision for expected credit loss of trade and other receivables, share of losses of associates, government grants and the effect of changes in working capital such as changes in inventories, biological assets, trade receivables, prepayments, deposits and other receivables, trade and bills payables, accrued and other payables, other non-current assets and restricted deposits).

In 2018, 2019 and 2020, the respective differences between our profit before taxation and our cash (used in)/generated from operations were mainly due to the changes in working capital, including in particular the change of biological assets and trade and bills payables, net changes in fair value of biological assets, depreciation charge on property, plant and equipment, finance costs and government grant.

In 2020, our net cash generated from operating activities was RMB1,671.5 million, mainly reflecting profit before taxation of RMB3,609.0 million, added back by the finance costs of RMB155.6 million, increase of accruals and other payables of RMB422.5 million and the increase in trade and bills payables of RMB236.2 million, which was partially offset by the gains from net changes in fair value of biological assets of RMB1,295.7 million and the increase of biological assets of RMB1,338.2 million.

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In 2019, our net cash generated from operating activities was RMB1,136.8 million, primarily reflecting the profit before taxation of RMB2,092.3 million, added back by finance costs of RMB84.6 million, and increase in accruals and other payables of RMB137.8 million, which was partially offset by the net changes in fair value of biological assets of RMB1,077.9 million and the increase of biological assets of RMB346.5 million.

In 2018, our net cash used in operating activities was RMB12.5 million, primarily reflecting the profit before taxation of RMB154.6 million, added back by finance costs of RMB51.8 million, and the depreciation charge on property, plant and equipment of RMB87.4 million and increase of accruals and other payables of RMB221.6 million, which was offset by the increase of biological assets of RMB200.2 million, increase of inventories of RMB122.0 million, and trade and bills payables of RMB118.1 million.

Net cash used in investing activities

During the Track Record Period, our cash used in investing activities include the payment for purchase of breeding stock and property, plant and equipment.

During the Track Record Period, our cash generated from investing activities include government grants received and [REDACTED] from disposal of property, plant and equipment.

In 2020, 2019 and 2018, we recorded net cash used in investing activities of RMB3,775.8 million, RMB789.9 million and RMB212.2 million, respectively, which mainly reflected the cash used in the expansion of pig and poultry farms.

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Net cash generated from/(used in) financing activities

During the Track Record Period, our cash generated from financing activities include proceeds from borrowings and issue of ordinary shares, while our cash used in financing activities include dividends paid, repayment of interest-bearing borrowings, other interest paid, capital element of lease rental paid and interest element of lease rentals paid.

In 2020, we recorded net cash generated from financing activities of RMB3,149.5 million, which was primarily due to the proceeds from interest-bearing borrowings of RMB3,871.1 million, partially offset by the repayment of interest-bearing borrowings of RMB724.4 million.

In 2019, we recorded net cash used in financing activities of RMB96.4 million, which was primarily due to the proceeds from interest-bearing borrowings of RMB868.2 million and proceeds from issue of ordinary shares and capital contribution from non-controlling equity owners of subsidiaries of RMB430.1 million, which was partially offset by the repayment of interest-bearing borrowings of RMB1,145.0 million.

In 2018, we recorded net cash generated from financing activities of RMB443.7 million, which was primarily due to the proceeds from interest-bearing borrowings of RMB1,012.0 million, partially offset by the repayment of interest-bearing borrowings of RMB703.2 million.

INDEBTEDNESS

As at 30 April 2021, the latest practicable date for the purpose of the indebtedness statement, we had outstanding indebtedness of RMB6,978.0 million, which comprised borrowings and lease liabilities. Our Directors confirmed that, as at the Latest Practicable Date, there was no material covenant on any of our outstanding debt and there was no breach of any covenants during the Track Record Period and up to the Latest Practicable Date. Our Directors further confirmed that we did not experience any unusual difficulty to obtaining bank loans and other borrowings, default in payment of bank loans and other borrowings or breach of covenants during the Track Record Period and up to the Latest Practicable Date.

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Borrowings

The table below sets out our borrowings as at the respective dates:

At At 31 December 30 April 2018 2019 2020 2021 (RMB’000) (unaudited)

Bank Loans – guaranteed 1,147,500 739,500 2,868,903 3,164,083 – unguaranteed and unsecured 618 10,000 766,528 1,433,275 Subtotal 1,148,118 749,500 3,635,431 4,597,358

Other Loans – guaranteed – – 200,000 500,000 – secured 30,000 60,000 75,000 75,000 – guaranteed and secured 110,000 201,192 145,505 141,353 – unguaranteed and unsecured 2,030 2,030 103,494 102,652 Subtotal 142,030 263,222 523,999 819,005

Total 1,290,148 1,012,722 4,159,430 5,416,363

The interest-bearing borrowings were repayable as follows:

At 31 December 2018 2019 2020 (RMB’000)

Within 1 year or on demand 1,145,618 723,119 2,445,481 ------

After 1 year but within 2 years 144,530 79,974 738,451 After 2 years but within 5 years – 209,629 837,212 After 5 years – – 138,286

Total non-current loans 144,530 289,603 1,713,949 ------

1,290,148 1,012,722 4,159,430

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As at 31 December 2018, 2019 and 2020 and 30 April 2021, we had total outstanding borrowings of RMB1,290.1 million, RMB1,012.7 million, RMB4,159.4 million and RMB5,416.4 million, respectively.

During the Track Record Period, we primarily used bank loans and other loans to supplement our liquidity, daily production and operations and construct new farms. Our total bank and other loans decreased from RMB1,290.1 million as at 31 December 2018 to RMB1,012.7 million as at 31 December 2019, primarily because we repaid certain of our bank loans at the end of 2019 in order to replace guarantors under those loans, causing our total outstanding bank loan amount to drop temporarily at the end of 2019. Our total bank loans and other loans increased from RMB1,012.7 million as at 31 December 2019 to RMB4,159.4 million as at 31 December 2020 and further to RMB5,416.4 million as at 30 April 2021, primarily because we borrowed more bank loans to fund the construction of our new farms to expand our business. The interest rates of our bank loans ranged approximately from 4.35% to 7.40 % as at 31 December 2018, approximately from 4.10% to 6.18% as at 31 December 2019, approximately from 2.05% to 6.18% as at 31 December 2020, and approximately from 2.45% to 8.50% as at 30 April 2021. The interest rates of our other loans ranged approximately from 5.6% to 6.5% as at 31 December 2018, approximately from 3.29% to 7.76% as at 31 December 2019, approximately from 2.45% to 8.50% as at 31 December 2020, and approximately from 2.92% to 8.5% as at 30 April 2021.

Our bank loans and other loans were guaranteed by our Controlling Shareholders and the spouse of one of our Controlling Shareholders. Our bank loans and other loans are subject to customary affirmative and negative loan covenants, such as restriction on use of loans, restriction on external guarantee, requirement on certain financial ratios and continuing reporting obligations. During the Track Record Period and up to the Latest Practicable Date, we did not have any material breach of covenants.

Most of our other loans are (i) guaranteed by our Shareholders; (ii) Secured by FVTPL; and (iii) secured by our restricted deposits and guaranteed by our Shareholder.

Our Directors confirm that we have not defaulted in the repayment of the bank loans or other loans during the Track Record Period. To the best knowledge of the Directors, we have complied with the covenants in our financing agreements and have not breached any cross-default provisions during the Track Record Period and up to the Latest Practicable Date. During the Track Record Period and up to the Latest Practicable Date, to the best knowledge of our Directors, we did not experience any difficulty in obtaining bank loans.

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As at 30 April 2021, we had total available credit facility of RMB8,990.0 million and the unutilised portion of the credit facility was RMB3,684.6 million. In general, we will be able to utilise our banking facilities by following the customary procedures of the relevant lending banks.

Leases liabilities

We lease various properties in the PRC mainly as our pig/chicken farms and ancillary production facilities, and these lease liabilities were measured at net present value of the lease payments during the lease terms that are not yet paid. We had leases liabilities of RMB265.0 million, RMB433.5 million, RMB1,292.6 million and RMB1,561.7 million as at 31 December 2018, 2019 and 2020 and 30 April 2021. The following table sets out the breakdown of our current and non-current lease liabilities as at the dates indicated.

At At 31 December 30 April 2018 2019 2020 2021 RMB’000 (unaudited)

Current Leases liabilities 11,574 21,829 44,265 56,222

Non-current Leases liabilities 253,379 411,705 1,248,376 1,505,459 Total lease liabilities 264,953 433,534 1,292,641 1,561,681

Except as disclosed above, during the Track Record Period and up to the close of business on April 30 2021, being the date for the purpose of the indebtedness statement, we did not have any other material mortgages, charges, debentures, loan capital, debt securities, loans, bank overdrafts or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits, which are either guaranteed, unguaranteed, secured or unsecured. Our Director confirm there had been no material adverse change in our indebtedness since 30 April 2021 [and up to the date of this document.]

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KEY FINANCIAL RATIOS

2018 2019 2020 or as at or as at or as at 31 December 31 December 31 December 2018 2019 2020

Notes:

(1) Return on equity is calculated as profit for the year divided by the closing balance of total equity as at the respective reporting dates.

(2) Return on total assets is calculated as profit for the year divided by the closing balance of total assets as at the respective reporting dates.

(3) Current ratio is calculated as current assets divided by current liabilities as at the respective reporting dates.

(4) Quick ratio is calculated as current assets minus inventories, then divided by current liabilities as at the respective reporting dates.

(5) Gearing ratio is calculated as total interest-bearing bank borrowings plus lease liabilities, divided by total equity at the respective reporting dates.

(6) Debt to equity ratio is calculated as net debts divided by total equity as at the respective reporting dates. The net debts are defined as the sum of interest-bearing borrowings, amount due to related parties and lease liabilities net of cash and cash equivalents.

(7) Interest coverage is calculated as profit before interest and tax divided by interest.

Return on equity

Our return on equity decreased from 63.6% in 2019 to 50.4% in 2020, which was mainly because the increase in our profit for the year was lower than the increase in total equity as a result of injection of external capital in 2020.

Our return on equity increased from 23.0% in 2018 to 63.6% in 2019, which was mainly due to the increase in our profit for the year.

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Return on total assets

Our return on total assets decreased from 34.0% in 2019 to 24.0% in 2020, primarily because the growth of profit for the year was outpaced by our total assets, which was attributable to the increase of biological assets and property, plant and equipment.

Our return on equity increased from 4.4% in 2018 to 34.0% in 2019, primarily due to the growth of our profit for the year, which outpaced the growth of our total assets.

Current ratio

Our current ratio decreased from 1.7 in 2019 to 1.4 in 2020 primarily due to the increase in current liabilities.

Our current ratio increased from 0.8 in 2018 to 1.7 in 2019 primarily due to the increase in consumable biological assets.

Quick ratio

The quick ratio increased from 0.7 in 2018 to 1.5 in 2019 and decreased from 1.5 in 2019 to 1.3 in 2020, which was in line with the change of current ratio.

Gearing ratio

Our gearing ratio decreased to 44.0% in 2019 from 260.3% in 2018, primarily due to the rapid increase in total equity as a result of the increase in retained earnings.

Our gearing ratio increased to 76.1% in 2020 from 44.0% in 2019, primarily attributable to the increase of interest-bearing borrowings and leased liabilities.

Debt to equity ratio

Our debt to equity ratio was 22.8% in 2019 and increased to 50.5% in 2020. The increase was primarily due to increase in bank borrowings.

Our debt to equity ratio was 194.1% in 2018 and decreased to 22.8% in 2019. The decrease was primarily due to repayment of bank borrowings at the end of 2019.

Interest coverage

Our interest coverage increased from 25.7 in 2019 to 24.2 in 2020 primarily due to increase in bank borrowing and interest.

Our interest coverage increased from 4.0 in 2018 to 25.7 in 2019 primarily due to the increase in profit before interest and tax.

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OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

As at the Latest Practicable Date, we did not have any material off-balance sheet commitments and arrangements.

FINANCIAL RISK DISCLOSURE

We are exposed to a variety of financial risks, including interest rate risk, credit risk and liquidity risk.

Interest rate risk

Interest rate risk is the risk that the value/future cash flows of a financial instrument fluctuates because of changes in market interest rates. Floating rate instruments expose us to cash flow interest rate risk, whereas fixed rate instruments expose us to fair value interest rate risk.

Our profit and operating cash flows are substantially independent from changes in market interest rates and we do not have significant interest-bearing assets except for cash and cash equivalents and financial assets at fair value through profit or loss.

Credit risk

Our credit risk is primarily attributable to our trade and other receivables. We have an internal team responsible for determining credit limits, credit approvals and monitoring of procedures to ensure follow-up actions are taken to recover overdue debts. We also review the recoverable amount of each individual debt at the end of each reporting period to ensure adequate impairment losses are made for irrecoverable amounts. We have no significant concentration of credit risk on trade and bills and other receivables, with exposure spread over a large number of counterparties and customers. Our credit risk on bank deposits is limited because our counterparties are financial institutions with good credit standing.

Liquidity risk

Liquidity risk is the risk of not having access to sufficient funds or being unable to liquidate a position in a timely manner at a reasonable price to meet our obligations as they become due. We aim to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the underlying businesses, we maintain flexibility in funding by maintaining adequate cash and cash equivalents.

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DIVIDENDS

Our Board may declare dividends in the future after taking into account our operations, earnings, financial condition, cash requirements and availability and other factors as it may deem relevant at such time. Any declaration and payment as well as the amount of dividends will be subject to our constitutional documents and the applicable laws, including the approval of our Shareholders. Our future declarations of dividends may or may not reflect our historical declarations of dividends and will be at the absolute discretion of the Board.

DISTRIBUTABLE RESERVES

As at 31 December 2020, the Company had reserves of approximately RMB109.9 million available for distribution to our Shareholders, being retained profits.

[REDACTED] EXPENSES

[REDACTED] expenses represent professional fees, [REDACTED] commissions and other fees incurred in connection with the [REDACTED]. We expect to incur [REDACTED] expenses of RMB[REDACTED], representing approximately [REDACTED]% of the [REDACTED] from the [REDACTED] (based on the mid-point of the indicative [REDACTED] range and assuming the [REDACTED] is not exercised and without taking into account any discretionary incentive fees, if applicable), of which RMB[REDACTED] will be directly attributable to the issue of our Shares and will be deducted from capital reserve upon [REDACTED]. The [REDACTED] expenses of RMB[REDACTED] is expected to be charged to consolidated statement of profit or loss in 2021. Our Directors do not expect such expenses to materially impact our results of operations in 2021.

[REDACTED] STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

The following is an illustrative and [REDACTED] statement of adjusted net tangible assets of the Group which has been prepared in accordance with Rule 4.29 of the Listing Rules is for illustrative purposes only, and is set out below to illustrate the effect of the [REDACTED] on the consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 December 2020 as if the [REDACTED] had taken place on 31 December 2020.

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The [REDACTED] statement of adjusted consolidated net tangible assets has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the [REDACTED] been completed as at 31 December 2020 or any future date.

[REDACTED] Consolidated Subsequent adjusted net tangible dividend consolidated assets declared subject net tangible attributable to to and assets the equity conditional attributable to [REDACTED] adjusted shareholders of upon Estimated the equity consolidated net tangible assets the Company as completion of [REDACTED] shareholders attributable to the equity at 31 December the from the of the shareholders of the Company 2020(1) [REDACTED](2) [REDACTED](3) Company per Share(4) RMB’000 RMB’000 RMB’000 RMB’000 RMB(4) HK$(5)

Based on an [REDACTED] of [REDACTED] per Share [6,829,278] [(300,000)] [REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED] of [REDACTED] per Share [6,829,278] [(300,000)] [REDACTED][REDACTED][REDACTED][REDACTED]

Notes:

(1) The consolidated net tangible assets attributable to equity shareholders of the Company as at 31 December 2020 is compiled based on the consolidated statements of financial position included in the Accountants’ Report set out in Appendix I to this [REDACTED], which is based on the consolidated total equity attributable to the equity shareholders of the Company as at 31 December 2020 of RMB[6,845,864,000] after deducting intangible assets and goodwill of RMB[1,856,000] and RMB[14,730,000] respectively.

(2) On 4 June 2021, the Company declared an interim dividend of RMB300,000,000 to the shareholders of the Company. Such dividend is subject to and conditional upon the completion of the [REDACTED].

(3) The estimated [REDACTED] from the [REDACTED] are based on the indicative [REDACTED]of HK$[REDACTED] per Share (being the minimum [REDACTED]) and HK$[REDACTED] per Share (being the maximum [REDACTED]) and [REDACTED] H Shares expected to be issued under the [REDACTED], after deduction of the [REDACTED] fees and other related expenses payable by the Company, and does not take into account any Shares which may be issued upon exercise of the [REDACTED]. The estimated [REDACTED]ofthe[REDACTED] have been converted to Renminbi at the PBOC rate of HK$1.0000 to RMB0.8416 prevailing on 31 December 2020. No representation is made that Hong Kong dollar amounts have been, could have been or may be converted to Renminbi, or vice versa, at that rate or at any other rate or at all.

(4) The [REDACTED] adjusted consolidated net tangible assets attributable to the equity shareholders of the Company per Share is arrived at by dividing the [REDACTED] adjusted consolidated net tangible assets attributable to equity shareholders of the Company by [REDACTED] Shares, being the number of shares expected to be in issue immediately following the completion of the [REDACTED], and does not take into account any Shares which may be issued upon exercise of the [REDACTED].

(5) The [REDACTED] adjusted consolidated net tangible assets attributable to equity shareholders of the Company per Share amounts in RMB are converted to Hong Kong dollar with the PBOC rate of RMB0.8416 to HK$1.0000 prevailing on 31 December 2020. No representation is made that Renminbi amounts have been, could have been or may be converted to Hong Kong dollar or vice versa, at that rate or at any other rate or at all.

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DISCLOSURE REQUIRED UNDER THE LISTING RULES

Our Directors have confirmed that, as at the Latest Practicable Date, there were no circumstances which would have given rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing Rules.

WORKING CAPITAL CONFIRMATION

Our Directors are of the opinion that, taking into consideration the financial resources presently available to our Group, including the available banking facilities, other internal resources and the estimated [REDACTED] from the [REDACTED], our Group has sufficient working capital for our present requirements, that is, for at least in the next 12 months commencing from the date of this [REDACTED].

NO MATERIAL ADVERSE CHANGE

After performing sufficient due diligence work which our Directors considered adequate and after due and careful consideration, our Directors confirm that, up to the date of this [REDACTED], save as disclosed in this document, there has been no material adverse change in our financial or trading position or prospects since 31 December 2020 and there has been no event since 31 December 2020 which would materially affect the information shown in our historical financial information included in the Accountants’ Report set forth in Appendix I to this [REDACTED], in each case except as otherwise disclosed herein.

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OVERVIEW

We have entered into a number of agreements with our connected persons, details of which are set out below. Our Directors confirm that the following transactions will continue after the [REDACTED] and will constitute continuing connected transactions for our Company under Chapter 14A of the Listing Rules.

OUR CONNECTED PERSONS

The table below sets out certain details about our connected persons who will have transactions with the Group upon [REDACTED] and the nature of their relationship with the Group.

Nature of the connected person’s relationship with Name of our connected person the Group and details of our connected person

Sichuan Tequ (together with its A company in which one of the Company’s subsidiaries, “Tequ Group”) substantial shareholders, Mr. Chen Yuxin (陳育新) and his spouse, Ms. Zhao Guiqin (趙桂琴), ultimately hold 55% of the equity. The Controlling Shareholders of the Company, Mr. Wang Degen (王德根), Desheng Ronghe and Wang Degen’s spouse, Ms. Zhang Qiang (張強), control Sichuan Puhua Agricultural Technology Development Limited* (四川普華農業科技發展有限公司) and hold another 45% of the company’s equity.

Chengdu Tequ Agriculture and A company wholly owned by Sichuan Tequ Animal Husbandry indirectly. Technology Co., Ltd. (“Chengdu Tequ”)* (成都特驅農牧科技有限公司)

Kunming Tequ Feed Co., Ltd. A company wholly owned by Sichuan Tequ. (“Kunming Tequ”)* (昆明特驅飼料有限公司)

Guiyang Tequ Hope Agricultural A company in which Sichuan Tequ holds 85% of the Technology Co., Ltd. equity. (“Guiyang Tequ”)* (貴陽特驅希望農業科技有限公司)

Sichuan Zhenghu Wisdom A company in which the Controlling Shareholder, Technology Co., Ltd. Desheng Ronghe, directly holds 40% of the equity. (“Sichuan Zhenghu”)* (四川正狐智慧科技有限公司)

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FULLY EXEMPT CONTINUING CONNECTED TRANSACTIONS

Purchase of AI equipment

During the Track Record Period and up to the Latest Practicable Date, our Group purchased AI equipment from Sichuan Zhenghu in the usual and ordinary course of our business to optimise our AI breeding and laboratory information system, and such transactions are expected to continue after the [REDACTED]. The price paid or payable by our Group for purchasing AI equipment from Sichuan Zhenghu for the years ended 31 December 2018, 2019 and 2020 were nil, RMB2.2 million and RMB1.6 million, respectively.

As the above transactions will be conducted on normal commercial terms or better, and all the applicable percentage ratios are less than 0.1%, such transactions are fully exempt from the independent Shareholders’ approval, annual review and all disclosure requirements under Rule 14A.76(1) of the Listing Rules.

Sales of pig and poultry

During the Track Record Period and up to the Latest Practicable Date, the Group has sold pigs and poultry to Tequ Group in the usual and ordinary course of its business, and such transactions are expected to continue after the [REDACTED]. The pigs and poultry sold by the Group to Tequ Group were mainly used in its staff canteen. The price paid or payable to our Group for the sales of pig and poultry from Tequ Group for the years ended 31 December 2018, 2019 and 2020 were RMB2.1 million, RMB0.49 million and RMB0.9 million, respectively.

PARTIALLY EXEMPT CONTINUING CONNECTED TRANSACTIONS

Purchase of Feed

During the Track Record Period and up to the Latest Practicable Date, we purchased feed from the group members of Tequ Group (including Kunming Tequ, Chengdu Tequ and Guiyang Tequ). Our Group has planned to gradually increase our feed production; however, our production capacity is unable to meet our production needs and it is estimated that we will still need to purchase portions of feed externally after the [REDACTED] to satisfy the needs of our daily production. The purchase of feed has been and will be conducted by our Group in the usual and ordinary course of our business.

In anticipation of the [REDACTED], our Company entered into the feed supply framework agreements (the “Feed Supply Framework Agreements”) with Chengdu Tequ, Guiyang Tequ and Kunming Tequ on 7 June 2021, 11 June 2021 and 18 June 2021, respectively.

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Pursuant to the Feed Supply Framework Agreements, Chengdu Tequ, Guiyang Tequ and Kunming Tequ will provide feed to the Group. Each Feed Supply Framework Agreement has a term of three years from the date of signing.

Pricing Policy and Annual Cap

The purchase price payable to our Group by Chengdu Tequ, Guiyang Tequ and Kunming Tequ under the Feed Supply Framework Agreements will be determined based on (i) arm’s length negotiations between Chengdu Tequ, Guiyang Tequ and Kunming Tequ and the Group and (ii) with reference to the market price for the same products that the Group sells to Independent Third Parties in similar quantities in the open market. The aggregate annual cap for the transactions contemplated under the Feed Supply Framework Agreements will be RMB300 million under the agreement with Chengdu Tequ, RMB60 million under the agreement with Kunming Tequ and RMB20 million under the agreement with Guiyang Tequ each year, respectively. In setting the annual cap, our Directors have considered factors including the historical transaction amounts and the estimated feed purchase amount in the next year.

Historical Transaction Amounts

The total price paid or payable by our Group for purchasing feed from Kunming Tequ, Chengdu Tequ and Guiyang Tequ for 2018, 2019 and 2020 were RMB451 million, RMB102 million and RMB145 million, respectively. The decrease was mainly due to the increase in our feed production capacity.

Listing Rules Implications

Such transactions are conducted on normal commercial terms in the usual and ordinary course of our business. Currently, our Directors estimate, each of the applicable percentage ratios under Chapter 14A of the Listing Rules is more than 0.1% but less than 5%. According to Rule 14A.76(2)(a) of the Listing Rules, the above transactions will be exempted from independent Shareholders’ approval requirements but are subject to the reporting, annual review and announcement requirements under Chapter 14A of the Listing Rules.

Waiver granted by the Stock Exchange

Pursuant to the Listing Rules, the transactions contemplated under each of the Feed Supply Framework Agreement constitute our continuing connected transactions, which are exempted from independent Shareholders’ approval requirements but are subject to the reporting, annual review and announcement requirements under the Listing Rules. In connection with such partially-exempt continuing connected transactions, according to Rule 14A.105 of the Listing Rules, we have applied for, and the Stock Exchange [has granted], a waiver from strict compliance with the announcement requirements under Chapter 14A of the Listing Rules in respect of the continuing connected transactions disclosed in the paragraph “Partially Exempt Continuing Connected Transactions” in this section, subject to the

– 306 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT CONNECTED TRANSACTIONS conditions that (i) such partially-exempt continuing connected transactions will be carried out in compliance with the requirements of the Listing Rules, and we are required to comply with the relevant requirements under Chapter 14A of the Listing Rules in relation to continuing connected transactions; and (ii) the aggregate amount of the partially-exempt continuing connected transactions for the financial year will not exceed the relevant amount of each annual cap set out above. Apart from the granted waiver of announcement requirements, we will comply with all other applicable requirements under Chapter 14A of the Listing Rules. The independent non-executive Directors and auditors of the Company will review whether the above transactions under the continuing connected transactions are entered into in accordance with the major terms and pricing policy of the relevant agreements. The confirmation letters of the independent non-executive Directors and auditors will be disclosed on an annual basis according to the requirements under the Listing Rules.

DIRECTORS’ CONFIRMATION

Our Directors (including the independent non-executive Directors) are of the view that the exempt continuing connected transactions set out above have been entered into in the ordinary and usual course of our business, on normal commercial terms or better, are fair and reasonable and in the interest of our Company and our Shareholders as a whole, and that the proposed annual caps in respect of partially exempt continuing connected transactions are fair and reasonable and in the interest of our Company and our Shareholders as a whole.

THE SOLE SPONSOR’S CONFIRMATION

Based on the relevant documents and information provided by the Company and reviewed by the Sole Sponsor, the Sole Sponsor is of the view that the above partially exempt continuing connected transactions for which a waiver has been sought have been entered into in the usual and ordinary course of our Group’s business, on normal commercial terms or better, are fair and reasonable and in the interest of our Company and our Shareholders as a whole.

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DIRECTORS

The Board consists of nine Directors, including four executive Directors, two non- executive Directors and three independent non-executive Directors.

Members of the Board

Relationship with other Directors, Date of joining Date of Roles and Supervisors, and Name Age the Group appointment Position responsibilities senior management

Executive Directors Mr. Wang Dehui (王德輝) 59 7 September 2011 8 March 2019 Chairman of the Convening and presiding over None Board and the general meeting, leading executive the work of the Board, Director convening and presiding over meetings of the Board, and reporting to the general meetings. Mr. Yao Hailong (姚海龍) 52 7 September 2011 30 November Executive The daily operations of the None (Note 1) 2019 Director and Group and the operations and president management of the pig business department Mr. Hu Wei (胡偉) 52 7 September 2011 7 September 2011 Executive Related work of the marketing None Director and centre vice president Mr. Zeng Min (曾民) 38 1 October 2017 10 May 2021 Executive Management of the work of None (Note 2) Director and the Board Office and the Secretary to the promotion of key projects Board of the Group

Non-Executive Directors Ms. Liu Shan (劉珊) 39 29 March 2017 29 March 2017 Non-Executive Financial regulation and None Director provision of independent advice to the Board Mr. Xiang Chuan (向川) 63 4 June 2021 4 June 2021 Non-Executive Supervision and provision of None Director independent advice to the Board Independent non-executive Directors Mr. Li Ka Fai David (李家暉) 66 10 May 2021 10 May 2021 Independent Supervision and provision of None (Note 2) (Note 2) non-executive independent advice to the Director Board Dr. Ni Xueqin (倪學勤) 53 10 May 2021 10 May 2021 Independent Supervision and provision of None (Note 2) (Note 2) non-executive independent advice to the Director Board Mr. Zhang Shaohua (張韶華) 53 10 May 2021 10 May 2021 Independent Supervision and provision of None (Note 2) (Note 2) non-executive independent advice to the Director Board

Notes:

(1) Mr. Yao Hailong was appointed as a Director on 29 March 2017, and later resigned on 8 March 2019.

(2) The appointment will take effect on the [REDACTED].

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Executive Directors

Mr. Wang Dehui (王德輝), aged 59, is our chairman of the Board and executive Director. He was appointed as our Director and chairman of the Board in March 2019 and November 2019, respectively, mainly responsible for convening and presiding over the general meeting, leading the work of the Board, convening and presiding over meetings of the Board, and reporting to the general meetings.

Mr. Wang was one of the initial Shareholders of the Company. He holds or once held directorships, supervisorships and senior management positions in various companies in which the Company was interested. From November 2011 to June 2014, he served as the general manager of Chongqing Dekon, a subsidiary of the Company. From July 2014 to April 2019, he served as the district general manager of the Company in eastern Sichuan Province, and he served as the director of Chongqing Detianfeng Modern Agricultural Development Co., Ltd.* (重慶德添豐現代農業發展有限公司) in which the Company has investment and held equity interest, since May 2019.

He taught in Guangxian Junior High School (廣賢初中) in Hechuan District, Chongqing City from September 1983 to July 1989 and from September 1991 to July 1995, and taught in Qiantang Middle School (錢塘中學) in Hechuan District, Chongqing City from September 1995 to July 2003. He served as the general manager of Chongqing Tequ (later renamed to Chongqing Dekon), which became a subsidiary of the Company in 2014, from July 2003 to November 2011.

Since May 2019, Mr. Wang has also been an executive director and general manager of Sichuan Dinghui Ronghe Enterprise Management Co., Ltd.* (四川鼎輝榮和企業管理有限公司), which is individually wholly-owned by him and a general partner of our Employee Shareholding Platforms.

Mr. Wang completed two-year courses in maths and graduated from Chongqing Teaching College (渝州教育學院) in June 1991.

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Mr. Yao Hailong (姚海龍), aged 52, is our executive Director and president. He was appointed as a Director of the Company in November 2019. Mr. Yao is responsible for the daily operations of the Group and the operations and management of the pig business department.

Mr. Yao joined the Group in September 2011. He holds or once held directorships, supervisorships and senior management positions in various companies in which the Company was interested. He successively served as the vice president of the Company and the president of the pig business department from May 2013 to December 2019. From December 2008, he served as a supervisor of Xifeng Dekon Poultry Farming Co., Ltd.* (息烽德康家禽養殖有限公司), a subsidiary of the Company. From September 2014, he served as a supervisor of Chengdu Dekon Chicken Breeding Co., Ltd.* (成都德康雞業有限公司), a subsidiary of the Company. From April 2015, he served as a director of Tweibi Hope (Sichuan) Food Co., Ltd.* (特威比希望(四川)食品有限公司), a subsidiary of the Company. From July 2016, he served as a director of Jilin Dekon Investment Co., Ltd.* (吉林德康投資有限公司), a subsidiary of the Company. From April 2018, he served as a supervisor of Peng’an Dekon Breeding Stock Production Co., Ltd.* (蓬安德康種豬繁育有限公司), a subsidiary of the Company and a director of Sihong Dekon Farming and Technology Co., Ltd.* (泗洪德康農牧科技有限公司), a subsidiary of the Company. From December 2020, he served as a director of Jiangsu Dekon Farming and Technology Co., Ltd.* (江蘇德康農牧科技有限公司), a subsidiary of the Company. From March 2021, he served as a director of DT Food, a subsidiary of the Company.

Prior to joining the Group, Mr. Yao served as a secretary and a political counsellor of the youth league committee of Pingto High School (平頭中學) in Peng’an County from September 1993 to June 1997. From July 1997 to April 2000, he successively served as district supervisor of subsidiaries, assistant to the manager of the market department, and the manager of the market department of Chongqing Tongwei Feed Co., Ltd.* (重慶通威飼料有限公司). From May 2001 to August 2001, he held a teaching position in Pingto High School in Peng’an County. From September 2001 to August 2002, he served as the Chongqing cluster manager of Sichuang Neijiang Wanqian Feed Co., Ltd.* (四川省內江萬千飼料有限公司). From September 2002 to May 2005, he served as the manager of the sales department of Guang’an Wanqian Group Co., Ltd.* (廣安萬千集團有限公司). From June 2005 to February 2013, he successively served as the general manager of Chongqing Tequ Feed Co., Ltd.* (重慶特驅飼料有限公司), Guanghan Tequ Feed Co., Ltd.* (廣漢特驅飼料有限公司) and Liangping Tequ Food Co., Ltd.* (梁平特驅食品有限公司).

Mr. Yao graduated from Southwest University of Political Science & Law (西南政法大學) with an associate degree in April 1993.

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Mr. Hu Wei (胡偉), aged 52, is our executive Director and vice president, and he was appointed as a Director of the Company in September 2011. Mr. Hu is in charge of marketing centre and related work of the Company.

Mr. Hu was one of the initial Shareholders of the Company. He holds or once held directorships and senior management positions in various companies in which the Company was interested. From April 2012 to March 2018, he served as the president of Chongqing Dekon, a subsidiary of the Company. From August 2015 to June 2016, he concurrently served as the general manager of Chengdu Dekon Chicken Breeding Co., Ltd.* (成都德康雞業有限公司), a subsidiary of the Company. He served as a director of Guangdong Wizagricultural Science & Technology Co., Ltd. (廣東智威農業科技股份有限公司), a subsidiary of the Company, from February 2016.

Prior to joining the Group, Mr. Hu was a private business owner mainly engaging in feed distribution related business from October 1992 to June 2004. He successively acted as a dealer of feed brands including Chongqing Tongwei Dazu (重慶通威大足) and Neijiang Wanqian (內江萬千), etc. From July 2004 to March 2007, he served as the general manager of Chongqing Zhongya Animal Pharmaceutical Industry Limited* (重慶中亞動物藥業有限公司). From April 2007 to March 2012, he served as the general manager of Chongqing Tequ, which was subsequently renamed to Chongqing Dekon.

Mr. Zeng Min (曾民), aged 38, is our executive Director and secretary to the Board. He was appointed as the Director of the Company in May 2021, which is to take effect on the [REDACTED]. Mr. Zeng is mainly responsible for the management of the work of the Board Office and the promotion of key projects of the Group.

Mr. Zeng joined the Group in September 2017. From September 2017 to March 2019, he served as the assistant to the chairman and head of the president office of the Group. From March 2019 to July 2019, he served as the secretary to the Board and head of the president office of the Group. From July 2019 to July 2020, he served as the secretary to the Board of the Group and the district general manager in western Sichuan Province. Since July 2019, he served as the secretary to the Board of Dekon Group. Mr. Zeng currently holds directorships in two companies in which the Company hold interests. From November 2018, he served as a director of Chengdu Dekon Animal Health Technology Service Co., Ltd.* (成都德康動物健康技術服務有限公司), a subsidiary of the Company. From March 2021, he served as a director of DT Food, a subsidiary of the Company.

Prior to joining the Group, Mr Zeng served as the section chief of Sichuan Provincial Department of Commerce (四川省商務廳) from March 2011 to February 2016. From February 2016 to October 2017, he served as the deputy director of the management department of Sichuan Tequ.

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Mr. Zeng obtained a bachelor’s degree of science in Biotechnology from Sichuan Agricultural University in September 2005 and obtained a master’s degree in biochemistry and molecular biology from Sichuan Agricultural University in July 2009. He obtained the qualification of intermediate economist certified by the Ministry of Human Resources and Social Security of the People’s Republic of China in November 2014.

Non-executive Directors

Ms. Liu Shan (劉珊), aged 39, is our non-executive Director. She was appointed as our Director in March 2017. Ms. Liu is responsible for financial regulation and providing independent advice to the Board.

Ms. Liu was a tax adviser of Deloitte Touche Tohmatsu from July 2004 to October 2006. From November 2006 to May 2008, she served as a senior auditor of Ernst & Young Hua Ming. From May 2008 to January 2011, she served as a manager of Deloitte Financial Advisory (Shanghai) Limited. From January 2011 to May 2012, she served as an executive director of Mingly China Growth Fund (名力中國成長基金). She has served as the director of the capital investment and financing department in China Everbright Limited since May 2012. She has served as a director of Sichuan Hope Education Industry Group Limited since September 2016. She has served as a director of Horgost Tequ Mayflower Information Technology Co., Ltd.* (霍爾果斯特驅五月花信息科技有限公司) since January 2018. She has served as a director of Nanyang Muyuan Maiming Industry Development Co., Ltd.* (南陽市牧原麥鳴產業發展有限公司) since January 2020. She has served as a director of Sichuan Tequ Mayflower Education Management Co., Ltd. since October 2020.

Ms. Liu graduated from Fudan University with a bachelor’s degree of science in July 2004. She became a qualified certified public accountant certified by the Chinese Institute of Certified Public Accountants in August 2010.

Mr. Xiang Chuan (向川), aged 63, is our non-executive Director, and is responsible for supervising and providing advice to the Board.

Mr. Xiang Chuan served as a director and secretary to the board of Tongwei Co., Ltd. and chairman of Henan Tongwei Feed Co., Ltd.* (河南通威飼料有限公司) (a subsidiary of Tongwei Co., Ltd.) from October 1997 to May 2004. From June 2004 to October 2018, Mr. Xiang Chuan served as the vice president and secretary to the board of New Hope Liuhe Co., Ltd (新希望六和股份有限公司).

Mr. Xiang Chuan has served as an independent director of Xi’an Triangle Defense Co., Ltd. (西安三角防務股份有限公司) (300775.SH) since March 2017, Tianqi Lithium Corporation (天齊鋰業股份有限公司) (002466.SH) since February 2020, Lonten Semiconductor Co., Ltd.* (龍騰半導體股份有限公司) since October 2019 and Shanghai Menon Animal Nutrition Technology Co., Ltd.* (上海美農生物科技股份有限公司) (873489.NEEQ) since October 2020. He was an independent non-executive director of Sichuan Qiang Mountain Agriculture and Animal Husbandry Science and Technology Co., Ltd. (四川省羌山農牧科技股份有限公司) (833302.NEEQ) from April 2020 to May 2021.

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From 2005 to 2017, Mr. Xiang Chuan was awarded honours of outstanding secretary to the board and Gold Medal Board Secretary several times, and he was enlisted in the 15th session Hall of Fame for New Wealth Gold Medal Board Secretaries in May 2018.

Mr. Xiang Chuan completed his studies for a master’s degree in commercial economics from the department of finance and trade economics of the Graduate School of Chinese Academy of Social Sciences in July 1998.

Independent non-executive Directors

Mr. Li Ka Fai David (李家暉), aged 66, is our independent non-executive Director. He was appointed as our Director in May 2021 and such appointment will be effective from the [REDACTED]. Mr. Li is responsible for supervising and providing independent advice to the Board.

Mr. Li has extensive experience in finance and accounting. From April 1992 to December 2019, he worked in Li, Tang, Chen & Co. CPA (Practising) as the deputy managing partner, and has been the senior adviser of SHINEWING (HK) CPA Limited since January 2020.

Mr. Li currently serves as an independent non-executive director of a number of companies listed on the Hong Kong Stock Exchange. He has been an independent non- executive director of China-Hongkong Photo Products Holdings Limited (stock code: 1123) since September 2004, an independent non-executive director of Cosmopolitan International Holdings Limited (stock code: 120) since December 2006, an independent non-executive director of China Merchants Port Holdings Company Limited (stock code: 144) since June 2007, an independent non-executive director of AVIC International Holding (HK) Limited (stock code: 232) since December 2007, an independent non-executive director of Goldlion Holdings Limited (stock code: 533) since August 2010, an independent non-executive director of Shanghai Industrial Urban Development Group Limited (stock code: 563) since July 2010, an independent non-executive director of Wai Yuen Tong Medicine Holdings Limited (stock code: 897) since March 2015. He was an independent non-executive director of CR Construction Group Holdings Limited (stock code: 1582) from September 2019 to June 2021.

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Mr. Li was a director of the following companies which were dissolved.

Nature of Place of Date of Nature of business before Name of company incorporation dissolution dissolution dissolution

Akahala Enterprise Hong Kong 20 November Deregistration Management and Limited 2009 (Note) consultancy services Dragon Rise Enterprise Hong Kong 14 January Deregistration Shares and Limited 2011 (Note) properties investment LTC (China Services) Hong Kong 14 September Deregistration Management and Limited 2007 (Note) financial consultancy services LTC FINFO CPA Hong Kong 16 October Deregistration Accountancy LIMITED 李湯陳會計 2020 (Note) services 師事務所有限公司 Power Wisdom Limited Hong Kong 15 July 2011 Deregistration No business (Note) operation

Note: Under section 291AA of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) as in force from time to time before 3 March 2014, an application for deregistration can only be made if (a) all members of such company agree to such deregistration; (b) such company has never commenced business, or has ceased to carry on business or ceased operation for more than three months immediately before the application; and (c) such company has no outstanding liabilities.

Mr. Li confirmed that the above-mentioned companies were solvent at the time of dissolution and there was no wrongful act on his part leading to the dissolution of the companies.

Mr. Li graduated and obtained a bachelor of science with honours in chemical & administrative sciences from City University of London in July 1978. He was admitted as a fellow of the Hong Kong Institute of Certified Public Accountants in December 1991, a fellow of the Institute of Chartered Accountants in England and Wales, a fellow of The Chartered Association of Certified Accountants in August 1989, and a fellow of The Hong Kong Institute of Company Secretaries in August 1994. At present, Mr. Li maintains his fellowship in the Society of Chinese Accountants and Auditors.

Mr. Li confirmed that as a senior consultant, he is mainly responsible for providing strategic advice to SHINEWING (HK) CPA Limited. Mr. Li further confirmed that generally he will spend approximately 40% to 50% of his total working time per year for handling matters of SHINEWING (HK) CPA Limited. Notwithstanding Mr. Li’s existing commitments and directorships as an independent non-executive director of seven other listed companies as at the Latest Practicable Date, our Directors believe that his ample knowledge and experience of serving as an independent non-executive director in Hong Kong listed companies can be applied to his duties as an independent non-executive Director of our Company. Mr. Li

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Our Directors wish to emphasise that Mr. Li’s ample knowledge and experience of serving as an independent non-executive director of seven other listed companies covering different businesses will be invaluable to our Company and can be applied to his duties as an independent non-executive Director of our Company. On the basis that (i) Mr. Li fully understands his obligations, duties and responsibilities as an independent non-executive Director; (ii) Mr. Li had previously spent at least 50 hours per year handling matters of each of the seven other listed companies; and (iii) he was able to attend all board and committee meetings and there were no complaints about his performance since the date he was appointed as an independent non-executive director of these listed companies, our Directors are confident that Mr. Li will be able to properly allocate his time to discharge all his responsibilities.

Our Board will continue to closely monitor the time allocation of Mr. Li and the other independent non-executive Directors such as the attendance of Board and committee meetings and participation in discussions of important matters of our Company to make sure that they will have sufficient time to focus on the matters of our Group. Where necessary, our Board will (i) individually discuss with the independent non-executive Directors on the possibility to reduce the number of external commitments and job duties; and (ii) review the composition of our Board by way of replacement of independent non-executive Directors to ensure that the independent non-executive Directors are able to devote sufficient time to discharge their duties. Based on the above, our Directors are of the view and the Sole Sponsor concurs that Mr. Li will be able to devote sufficient time to discharge his responsibilities as an independent non-executive Director of our Company.

Dr. Ni Xueqin (倪學勤), aged 53, is our independent non-executive Director. She was appointed as our Director in May 2021 and such appointment will be effective from the [REDACTED]. Dr. Ni is responsible for supervising and providing independent advice to the Board.

From January 2000 to December 2009, Dr. Ni served as an associate professor of the College of Veterinary Medicine of Sichuan Agricultural University, and a professor of the College of Veterinary Medicine of Sichuan Agricultural University since January 2010. Dr. Ni’s main research direction is the animal microecology of preventive veterinary medicine.

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Dr. Ni served as the deputy secretary general of animal microecology branch of Chinese Association of Animal Science and Veterinary Medicine (中國畜牧獸醫學會) from November 1998 to October 2002, the secretary general of animal microecology branch of Chinese Association of Animal Science and Veterinary Medicine from November 2002 to April 2008, the vice president of animal microecology branch of Chinese Association of Animal Science and Veterinary Medicine from May 2008 to October 2014, the president of animal microecology branch of Chinese Association of Animal Science and Veterinary Medicine since November 2014, and the standing director of Sichuan Veterinary Association (四川省獸醫協會) since May 2021.

Dr. Ni obtained a bachelor’s degree of veterinary-sanitary inspection of the Department of Veterinary Medicine from Sichuan Agricultural University in 1990, a master’s degree of preventive veterinary medicine of the College of Veterinary Medicine from Sichuan Agricultural University in 1993, and a doctor’s degree of preventive veterinary medicine of the College of Veterinary Medicine from Nanjing Agricultural University in 1998.

Mr. Zhang Shaohua (張韶華), aged 53, is our independent non-executive Director. He was appointed as our Director in May 2021 and such appointment will be effective from the [REDACTED]. Mr. Zhang is responsible for supervising and providing independent advice to the Board.

Mr. Zhang has extensive experience in the field of mercantile law. He has been a lawyer and partner of Beijing JunZeJun Law Offices since April 2001 and a director and partner of JunZeJun (Haikou) Law Offices since July 2020.

Mr. Zhang is currently a member of the Finance and Securities Committee of All China Lawyers Association and a public interest lawyer of China Securities Investor Service Centre. He was a member of the 12th session of the Main Board Issuance Examination Committee of CSRC from April 2010 to May 2011, and an independent director of Vanfund Real Estate Co., Ltd. (萬方地產股份有限公司) (stock code: 000638.SZ) (formerly known as China Liaoning International Cooperation (Group) Holdings Ltd. (中國遼寧國際合作(集團)股份有限公司), and currently known as Vanfund Urban Investment & Development Co., Ltd. (萬方城鎮投資發展股份有限公司)) from August 2003 to June 2010, an independent director of Tibet Tianlu Co., Ltd. (西藏天路股份有限公司) (stock code: 600326.SH) from May 2009 to January 2016, an independent director of Beijing Jetsen Technology Co., Ltd. (北京捷成世紀科技股份有限公司) (stock code: 300182.SZ) from October 2009 to August 2013, an independent director of Lens Technology Co., Ltd. (藍思科技股份有限公司) (stock code: 300433.SZ) from September 2011 to June 2017, an independent director of Tangshan Sunfar Silicon Industry Co., Ltd. (唐山三孚矽業股份有限公司) (stock code: 603938.SH) from August 2011 to October 2017, an independent director of Western Mining Co., Ltd. (stock code: 601168.SH) from April 2014 to August 2020 (西部礦業股份有限公司), an independent director of Beijing Jingyuntong Technology Co., Ltd. (北京京運通科技股份有限公司) (stock code: 601908.SH) from November 2014 to March 2021, an independent director of Beijing Sanfo Outdoor Products Co., Ltd. (北京三夫戶外用品股份有限公司) (stock code: 002780.SZ) from June 2017 to February 2021, and an independent director of Beijing LongRuan Technologies Inc. (北京龍軟科技股份有限公司) (stock code: 688078.SH) from May 2018 to December 2020.

Mr. Zhang graduated from China University of Political Science and Law with a bachelor’s degree in law in July 1990, obtained a master’s degree in law from Renmin University of China in July 2003 and obtained an EMBA in business administration from Guanghua School of Management of Peking University in July 2006.

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SUPERVISORS

The board of Supervisors consists of 3 Supervisors.

Members of our Supervisors

Relationship with other Directors, Date of joining Date of Supervisors, and Name Age the Group appointment Position Roles and Responsibilities senior management

Ms. Zhu Hui (朱惠) 42 1 September 2017 8 March 2019 Chairlady of the Leading the organisation of and None (Note 1) board of presiding over the board of Supervisors Supervisors Ms. Gong Shuang (龔爽) 38 1 June 2017 8 March 2019 Supervisor Coordinating human resources None and related work of the Company, and performing relevant duties as a shareholder representative Supervisor Ms. Zhou Zhexu (周哲旭) 44 25 February 2014 8 March 2019 Employee Exercising rights and None (Note 2) representative performing duties as a Supervisor Supervisor on behalf of employees

Note 1: Ms. Zhu Hui was appointed as a Supervisor on 8 March 2019 and the chairlady of the board of Supervisors on the same date

Note 2: Ms. Zhou Zhexu was appointed as an employee representative Supervisor on 8 March 2019

Ms. Zhu Hui (朱惠), aged 42, is the chairlady of our board of Supervisors. She joined the Group in September 2017, and has since served as the head of the department of brand marketing of the Company. She was appointed as the chairlady of our board of Supervisors in March 2019. Ms. Zhu is responsible for leading the organisation of and presiding over the board of Supervisors.

Prior to joining the Group, Ms. Zhu served as the senior manager of the marketing department of Huaxi Hope Group (華西希望集團) from March 2003 to May 2012. From May 2012 to September 2017, she served as the head of the marketing department of Sichuan Tequ.

Ms. Zhu completed her studies in Journalism at Sichuan University (四川大學) in June 2002.

Ms. Gong Shuang (龔爽), aged 38, is our Supervisor. She joined the Group in June 2017, and has since served as a human resource director of the Company. She was appointed as our Supervisor in March 2019. Ms Gong is responsible for coordinating human resources and related work of the Company, and performing relevant duties as a shareholder representative Supervisor.

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Prior to joining the Group, Ms. Gong was the president of the training institute of Sichuan Tequ from November 2012 to December 2016.

Ms. Gong graduated from University of Electronic Science and Technology of China (電子科技大學) with a bachelor’s degree in Computer Science and Technology in July 2005 and a master’s degree in management from Sichuan University (四川大學) in December 2013.

Ms. Zhou Zhexu (周哲旭) (formerly known as Zhou Jie (周潔)), aged 45, is our Supervisor. She joined the Group in 2014, and was appointed as our employee representative Supervisor in March 2019. Ms. Zhou is responsible for exercising rights and performing duties as a Supervisor on behalf of employees.

From February 2014 to April 2014, Ms. Zhou successively served as the head of the capital division and head assistant of Chongqing Dekon, a subsidiary of the Company. Since May 2014, she has served as the head assistant of the Company.

Prior to joining the Group, Ms. Zhou successively served as the cashier, accountant and accounting and auditing deputy manager of Sichuan South Hope Industrial Co., Ltd.* (四川南方希望實業有限公司) from August 1998 to June 2009. From July 2009 to December 2011, she served as the senior capital manager of Sichuan New Hope Agriculture and Animal Husbandry Co., Ltd.* (四川新希望農牧有限公司). From January 2012 to November 2012, she served as the senior capital manager of Sichuan New Hope Liuhe Agriculture and Animal Husbandry Co., Ltd.* (四川新希望六和農牧有限公司). From January 2013 to November 2013, she served as the assistant to the general manager of the auditing department of Sichuan Chuangrui Asset Management Co., Ltd.* (四川創瑞資產管理有限公司).

Ms. Zhou graduated from Wuhan University of Hydraulic and Electrical Engineering (武漢水利電力大學) in June 1998 with an associate degree and finished her studies in Civil Engineering (specialised in project costs) at Southwest Jiaotong University (西南交通大學)in July 2018. From August 2019, she has been studying for a master’s degree in finance at Brest Business School (法國布雷斯特商學院) (teaching centre in China). In May 2001, she obtained the junior accountant professional qualification issued by the Ministry of Finance of the People’s Republic of China.

Save as disclosed above, each of our Directors and Supervisors did not hold any other directorships in listed public companies in the three years immediately preceding the date of this [REDACTED].

Save as disclosed herein, to the best of the knowledge, information and belief of our Directors and Supervisors, having made all reasonable inquiries, there were no additional matters with respect to the appointment of our Directors or Supervisors that need to be brought to the attention of the Shareholders and there were no additional information relating to our Directors or Supervisors that are required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules as at the Latest Practicable Date.

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SENIOR MANAGEMENT

Our senior management is responsible for the daily management of our business. The table below sets out certain information in respect of the senior management of our Group:

Members of our Senior Management

Relationship with other Directors, Date of joining Date of Supervisors, and Name Age our Group appointment Position Roles and Responsibilities senior management

Mr. Yao Hailong (姚海龍) 52 7 September 2011 30 November 2019 President Daily operations of our Group None and the operations and management of the pig business department Mr. Hu Wei (胡偉) 52 7 September 2011 8 March 2019 Vice president Marketing centre and related None work of the Company Mr. Wu Chengli (吳成利) 50 1 March 2018 8 March 2019 Vice president Management of engineering None pipelines and all engineering- related work of the Company Mr. Jiang Yongjun (蔣勇君) 43 1 February 2016 8 March 2019 Chief financial Financial work of the Company None officer and the participation in major operations and investment decision Mr. Zeng Min (曾民) 38 1 October 2017 8 March 2019 Secretary to the Management of the work of the None Board Board Office and the execution of key projects of the Group

Mr. Yao Hailong (姚海龍), aged 52, is our president. He joined the Group in September 2011 and is responsible for the daily operations of the Group and the operations and management of the pig business department. For further details of Mr. Yao, please also refer to the paragraph headed “– Executive Directors” above.

Mr. Hu Wei (胡偉), aged 52, is our vice president. He co-founded the Group with other Shareholders in September 2011 and is in charge of the marketing centre and related work of the Company. For further details of Mr. Hu, please also refer to the paragraph headed “– Executive Directors” above.

Mr. Wu Chengli (吳成利), aged 50, is our vice president. He is mainly responsible for the management of engineering pipelines and all engineering-related work of the Company.

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Mr. Wu joined the Group in March 2018. He has served as the vice president and head of the engineering and environmental protection centre of the Group since March 2018, and has concurrently served as an executive director of Sichuan Kangcheng Demu Engineering Management Consulting Co., Ltd.* (四川康誠德牧工程管理諮詢有限公司), a subsidiary of the Company, since August 2019.

Prior to joining the Group, Mr. Wu served as a salesman of the Supply and Marketing Cooperative Office in Zhoupo Town, Jingyan County* (井研縣周坡供銷社) from September 1991 to February 1995. From February 1995 to October 2007, he served as the district president of East Hope Group. From October 2007 to March 2018, he served as the assistant president of Sichuan Tequ.

Mr. Wu obtained an associate degree in law from Beihang University (北京航空航天大學) through online distance learning on 4 January 2014.

Mr. Jiang Yongjun (蔣勇君), aged 43, is our chief financial officer. He joined the Group in February 2016 and is mainly responsible for the financial work of the Company and participates in major operations and investment decision.

Prior to joining the Group, Mr. Jiang served as the chief accountant and information implementation manager of the headquarter of New Hope Co., Ltd.* (新希望股份有限公司) from October 2000 to June 2004. From June 2004 to August 2008, he successively served as the financial manager of Hainan New Hope Agricultural Company Limited* (海南新希望農業有限責任公司) and Guanghan Guoxiong Feed Co., Ltd.* (廣漢國雄飼料公司). From August 2008 to May 2011, he successively served as Assistant to the General Manager of the feed business department and general manager of the subsidiary of New Hope Liuhe Co., Ltd. From May 2011 to January 2016, he served as the deputy general manager of the finance department and chief financial officer of the overseas centre of New Hope Liuhe Co., Ltd.

Mr. Jiang finished his undergraduate studies in financial management from Southwestern University of Finance and Economics (西南財經大學) in January 2018. He obtained the professional qualification of senior management accountant certified by China Association of Chief Financial Officers in October 2019.

Mr. Zeng Min (曾民), aged 38, is our secretary to the Board. He joined the Group in October 2017 and is mainly responsible for management of the work of the Board Office and the promotion of key projects of the Group. For further details of Mr. Zeng, please also refer to the paragraph headed “– Executive Directors” above.

Each of our senior management members did not hold any directorships in listed public companies in the three years immediately preceding the date of this [REDACTED].

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JOINT COMPANY SECRETARIES

Mr. Zeng Min was appointed as the joint company secretary of the Company on 20 May 2021. For further details of Mr. Zeng, please refer to the paragraph “– Executive Directors” above. Mr. Zeng Min does not possess the formal qualifications required of a company secretary under Rule 3.28 of the Listing Rules. We have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules such that Mr. Zeng Min may be appointed as a joint company secretary of our Company. Please refer to the section headed “Waiver from Strict Compliance with the Listing Rules – Waiver in Respect of Joint Company Secretaries” in this [REDACTED].

Mr. Li Kin Wai (李健威), was appointed as the joint company secretary of the Company on 20 May 2021. Mr. Li serves as a manager in Tricor Services Limited, a global professional services provider specialising in integrated business, corporate and investor services. He has over 10 years of experience in the field of corporate secretary.

Mr. Li currently serves as the joint company secretary of Sinco Pharmaceuticals Holdings Limited (a company listed on the Stock Exchange, stock code: 6833) and the company secretary of Zhengye International Holdings Company Limited (a company listed on the Stock Exchange, stock code: 3363).

Mr. Li is a chartered secretary and an associate member of The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute (formerly known as The Institute of Chartered Secretaries and Administrators) in the United Kingdom. He has a master’s degree in corporate governance from the Open University of Hong Kong.

MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rule 8.12 and Rule 19A.15 of the Listing Rules, our Company must have sufficient management presence in Hong Kong. This normally means that at least two of our executive Directors must be ordinarily resident in Hong Kong.

Since the principal business and operations of our Group are conducted in China, members of our senior management are, and expected to continue to be, based in China. Further, as our executive Directors have a vital role in our Group’s operations, it is crucial for them to remain in close proximity to our Group’s core management located in China. Our Company does not and, in the foreseeable future, will not have a sufficient management presence in Hong Kong. We have applied for, and the Stock Exchange [has granted], a waiver from strict compliance with Rule 8.12 of the Listing Rules. Please refer to the section headed “Waivers from strict compliance with the Listing Rules – Management Presence in Hong Kong” in this [REDACTED].

CORPORATE GOVERNANCE

Our Directors recognise the importance of incorporating elements of good corporate governance in the management structures and internal control procedures of our Group as to achieve effective accountability.

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Our Company has adopted the code provisions stated in the Corporate Governance Code (“CG Code”) as set out in Appendix 14 to the Listing Rules. Our Company is committed to achieving high standards of corporate governance which are crucial to our development and safeguard the interests of our Shareholders. Our Company is also of the view that the Board should include a balanced composition of executive Directors and independent non-executive Directors so that there is a strong independent element on the Board, which can effectively exercise independent judgement.

BOARD COMMITTEES

We have established the following committees within our Board: an audit committee, a remuneration committee and a nomination committee. The committees operate in accordance with terms of reference established by our Board.

Audit committee

Our Company has established an audit committee on 20 May 2021, with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 of the CG Code as set out in Appendix 14 to the Listing Rules. The audit committee consists of three members, namely Mr. Li Ka Fai David, Dr. Ni Xueqin and Ms. Liu Shan. Mr. David Li Ka Fai has been appointed as the chairman of the audit committee and is our independent non-executive Director with the appropriate professional qualifications. The primary duties of the audit committee are to assist our Board by providing an independent view of the effectiveness of the financial reporting system, risk management and internal control system of our Group, to oversee the audit process, to develop and review our policies and to perform other duties and responsibilities as assigned by our Board.

Remuneration committee

Our Company has established a remuneration committee on 20 May 2021, with written terms of reference in compliance with Rule 3.25 of the Listing Rules and paragraph B.1 of the CG Code as set out in Appendix 14 to the Listing Rules. The remuneration committee consists of three members, namely Mr. Zhang Shaohua, Mr. Xiang Chuan and Mr. Li Ka Fai David. Mr. Zhang Shaohua has been appointed as the chairman of the remuneration committee. The primary duties of the remuneration committee are to establish and review the policy and structure of the remuneration of our Directors and senior management, and make recommendations to the Board on the terms of remuneration packages, bonuses and other compensation payable to our Directors and other senior management.

Nomination committee

Our Company has established a nomination committee on 20 May 2021, with written terms of reference in compliance with paragraph A.5 of the CG Code as set out in Appendix 14 to the Listing Rules. The nomination committee consists of three members, namely Mr. Wang Dehui, Mr. Zhang Shaohua and Dr. Ni Xueqin. Mr. Wang Dehui has been appointed as the chairman of the nomination committee. The primary duties of the nomination committee are to make recommendations to our Board on the appointment of members of our Board.

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BOARD DIVERSITY POLICY

Our Company has adopted a board diversity policy which sets out the approach to achieve diversity on our Board. Our Company recognises and embraces the benefits of having a diversified Board and sees increasing diversity at Board level as an essential element in supporting the attainment of our Company’s strategic objectives and sustainable development. Our Company seeks to achieve Board diversity through the consideration of a number of factors, including but not limited to talents, skills, gender, age, ethnicity, experience, independence and knowledge. We will continue to implement measures and steps to promote and enhance gender diversity at all levels of our Company. We will select potential Board candidates based on merit and his/her potential contribution to our Board while taking into account our board diversity policy and other factors. Our Company will also take into consideration our own business model and specific needs from time to time. All appointments of the members of the Board shall be based on meritocracy, and candidates will be considered against objective criteria, having due regard to the benefits of diversity on our Board.

After [REDACTED], the nomination committee of our Board will review the board diversity policy and its implementation from time to time to ensure its implementation and monitor its continued effectiveness, and the same will be disclosed in our corporate governance report in accordance with the Listing Rules after [REDACTED].

COMPLIANCE ADVISER

We have appointed Maxa Capital Limited (邁時資本有限公司) as our compliance adviser (“Compliance Adviser”) pursuant to Rule 3A.19 and Rule 19A.05 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, the Compliance Adviser will advise our Company, among others, in the following circumstances:

a. before the publication of any regulatory announcement, circular, or financial report;

b. where a transaction, which might be a notifiable or connected transaction, is contemplated, including share issues and share repurchases;

c. where we propose to use the [REDACTED] from the [REDACTED] in a manner different from that detailed in this document or where the business activities, development or results of our Group deviate from any forecast, estimate or other information in this document; and

d. where the Stock Exchange makes an inquiry to our Company regarding unusual movements in the price or trading volume of its listed securities or any other matters in accordance with Rule 13.10 of the Listing Rules.

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Pursuant to Rule 19A.06 of the Listing Rules, our Compliance Adviser will, in a timely manner, inform us of any amendment or supplement to the Listing Rules that are announced by the Stock Exchange. Our Compliance Adviser will also inform us of any amendment or supplement to applicable laws and guidelines.

The term of appointment of the Compliance Adviser shall commence on the [REDACTED] and is expected to end on the date on which our Company complies with Rule 13.46 of the Listing Rules in respect of the distribution of our financial results for the first full financial year commencing after the [REDACTED].

REMUNERATION AND COMPENSATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Our Directors, Supervisors and senior management receive compensation from our Company in the form of remuneration, including salaries, allowances and benefits in kind, discretionary bonuses, retirement scheme contributions and share-based payments.

The aggregate amount of remuneration (including salaries and other emoluments, discretionary bonuses, share-based payments and retirement scheme contributions) for the five highest paid individuals, out of which three, three and two individuals were Directors for 2018, 2019 and 2020, was RMB760,000, RMB28,715,000 and RMB5,277,000. For further details, see “Appendix I – Accountants’ Report – 9 INDIVIDUALS WITH HIGHEST EMOLUMENTS”.

The aggregate amount of remuneration (including salaries, allowances and benefits in kind, discretionary bonuses, share-based payments and retirement scheme contributions) paid to our Directors and Supervisors for 2018, 2019 and 2020 was approximately, RMB1,458,000, RMB5,079,000 and RMB7,544,000, respectively.

No remuneration was paid by us to our Directors or the five highest paid individuals as an inducement to join or upon joining us or as a compensation for loss of office in respect of 2018, 2019 and 2020. Further, none of our Directors or Supervisors had waived or agreed to waive any remuneration during the same years.

Under the arrangements currently in force, the aggregate amount of remuneration (including salaries, allowances and benefits in kind, discretionary bonuses, share-based payments and retirement scheme contributions) of our Directors and Supervisors for the year ending 31 December 2021 is approximately RMB9.6 million.

Save as disclosed above, no other payments have been paid or are payable by our Company to our Directors or Supervisors or senior management in respect of 2018, 2019 and 2020. Our Board will review and determine the remuneration and compensation packages of our Directors and senior management and, following the [REDACTED], will receive recommendation from the remuneration committee which will take into account salaries paid by comparable companies, time commitment and responsibilities of our Directors and performance of our Group.

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OVERVIEW

The background of Mr. Wang Degen (王德根)

Mr. Wang Degen (王德根) served as the general manager of Neijiang Wanqian Feed Co., Ltd.,* (內江萬千飼料有限公司) a subsidiary of Chengdu Huaxi Hope Group Co., Ltd., from September 1999. Neijiang Wanqian Feed Co., Ltd.* (內江萬千飼料有限公司) is principally engaged in processing, production and sale of feed. From August 2005 to June 2020, he was the chairman of Sichuan Tequ, which is principally engaged in processing, production and sale of feed. In 2011, he recognised the potential of the husbandry industry and acquired 42% equity interest of Chongqing Tequ from Sichuan Tequ and became the single largest shareholder of Chongqing Tequ, which was renamed as Chongqing Dekon in 2012. Since the Company’s establishment to November 2019, he had served as a Director of the Company. He resigned from the directorship of the Company due to other work commitments.

Mr. Wang Degen (王德根) has extensive experience in breeding and livestock feed industry and received numerous awards. Mr. Wang Degen (王德根) has held important social positions such as the president of the swine division of China Animal Agriculture Association, the vice president of China Meat Association, the vice chairman of Sichuan Youth Federation, and the executive vice president of the General Association of Sichuan Entrepreneurs, and received distinguished titles such as Top Ten Innovative Persons of the Year of China, etc. On 20 November 2018, Mr. Wang Degen (王德根) was named Outstanding Private Entrepreneur of Sichuan Province by Sichuan provincial government and party committee.

Other businesses of our Controlling Shareholders

Sichuan Tequ

As at the Latest Practicable Date, Mr. Wang Degen (王德根) and his spouse held 61.2% equity interest in Sichuan Puhua Agricultural Technology Development Limited 四川普華農業科技發展有限公司, which in turn held 45% equity interest in Sichuan Tequ. The remaining 55% equity interest of Sichuan Tequ was held by Mr. Chen Yuxin, one of the substantial shareholders of our Company, and his spouse. During the Track Record Period, Sichuan Tequ and its subsidiaries entered into certain transactions with the Group, which are expected to continue after the [REDACTED]. For details, please refer to the section headed “Connected Transactions” in this [REDACTED].

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Sichuan Tequ is principally engaged in the business of feed production and education investment. As (i) all the feed produced by the Group is used for internal consumption, which therefore do not constitute a direct competition with the business of Sichuan Tequ in all material aspects; and (ii) the Group is not the sole customer of Sichuan Tequ, the Board considers that the Group does not compete with Sichuan Tequ and has no plan to incorporate it in the Group’s structure.

Sichuan Zhenghu

As at the Latest Practicable Date, Mr. Wang Degen held 40% equity interest in Sichuan Zhenghu through Desheng Ronghe. During the Track Record Period, Sichuan Zhenghu entered into certain transactions with the Group, which are expected to continue after the [REDACTED]. For details, please refer to the section headed “Connected Transactions” in this [REDACTED].

Sichuan Zhenghu is a technology company specialising in the research and development of artificial intelligence farming products, which cover various agriculture and animal husbandry fields such as feed processing, pig and poultry farming and slaughtering. As (i) the business of Sichuan Zhenghu does not overlap with that of the Group so that does not constitute a direct competition; and (ii) the Group is not the sole customer of Sichuan Zhenghu, the Board considers that the Group does not compete with Sichuan Zhenghu and has no plan to incorporate it in the Group’s structure.

Others

Apart from the businesses of the Group and those mentioned above, our Controlling Shareholders and their close associates have other investment interests, including those in the education sector. Such investments do not form part of the Group. As the principal activities of such investments are independent of and separate from our business, they do not compete with the business of our Group.

To ensure that there will be no competition in the future, our Controlling Shareholders have entered into a non-competition agreement in favour of the Company, pursuant to which they will not, and will procure that their close associates will not, directly or indirectly, engage or hold any rights or interests in, or otherwise engage in any business which may compete with our business. For details, please refer to “– Non-competition agreement” below.

INDEPENDENCE FROM CONTROLLING SHAREHOLDERS

Having considered the following factors, our Directors believe that we are capable of carrying on our business independently of Mr. Wang Degen (王德根) and his close associates after the [REDACTED].

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Management Independence

Our Company’s management and operational decisions are managed and conducted by our Board and senior management in a collective manner. Upon [REDACTED], our Board comprises four executive Directors, two non-executive Directors and three independent non-executive Directors. For details, please refer to the section headed “Directors, Supervisors and Senior Management” in this [REDACTED].

We believe that our Directors and members of the senior management are able to perform their roles in our Company in managing our business independently from Mr. Wang Degen (王德根) for the following reasons:

(i) Our Group does not rely on Mr. Wang Degen (王德根) in respect of management. Since November 2019, Mr. Wang Degen (王德根) has ceased to be a Director or member of the senior management of the Company, and the management and operation of the Group are the responsibility of the Directors and members of the senior management of the Company. Our executive Directors and senior management of the Group have an average of more than ten years of industry experience. Except for Mr. Wang Dehui (王德輝), none of the executive Directors and members of the senior management of the Company is related to Mr. Wang Degen (王德根); and

(ii) each of our Directors is aware of his/her fiduciary duties as a director, which require, among other things, that he/she acts for the benefit and in the best interests of our Company and he/she must not allow any conflict between his/her duties as a Director and his/her personal interests.

Operational Independence

Our Company is able to make all decisions on, and to carry out, our own business operations independently. We make business decisions independently and hold all the relevant licences, intellectual properties, and qualifications required to carry on our current business. We have sufficient capital, equipment, facilities, technology and employees to operate the business independently from Mr. Wang Degen (王德根). The transaction amount of the business between Mr. Wang Degen (王德根) and the Group during the Track Record Period was immaterial and we consider that the Group is not dependent on Mr. Wang Degen (王德根) and is able to operate independently. Our Group has established its own organisational structure made up of individual departments, each with specific areas of responsibilities. We have independent access to suppliers, dealers and customers. Our Group has established a set of internal control system to facilitate the effective operation of our business.

As at the Latest Practicable Date, there were no significant business transactions between us and our Controlling Shareholders. All such transactions were determined on normal commercial terms after arm’s length negotiation. In respect of our total revenue after the [REDACTED], we expect to be able to maintain the aggregate amount of the continuing connected transactions with our Controlling Shareholders or their respective associates within the annual limit. Accordingly, such continuing connected transactions are not expected to affect our overall operational independence.

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Financial Independence

We have an independent financial system and make financial decisions according to our Group’s own business needs. We have internal control and accounting systems and an independent finance department for discharging the treasury function.

No loans provided by, or granted to, our Controlling Shareholders or their respective associates will be outstanding as at the [REDACTED].

After the [REDACTED], we expect that our working capital will be funded by cash flows generated from operating activities, bank loans as well as the [REDACTED] from the [REDACTED].

Based on the above, our Directors are of the view that they and our senior management are capable of carrying on our business independently of, and do not place undue reliance, on our Controlling Shareholders and their respective close associates after the [REDACTED].

DISCLOSURE UNDER RULE 8.10 OF THE LISTING RULES

As at the Latest Practicable Date, apart from the Group’s business, none of our Controlling Shareholders were engaged or had interest in any business which, directly or indirectly, competes or is likely to compete with the Group’s business and which would require disclosure under Rule 8.10 of the Listing Rules. None of our Directors had an interest in any business which competes or is likely to compete, either directly or indirectly, with our business.

Non-competition agreement

In order to avoid any potential competition after the [REDACTED], our Controlling Shareholders entered into a non-competition agreement with us on [●]. In the non-competition agreement, our Controlling Shareholders confirmed that as at [●], they or any of their associates are not engaged or involved in in any form in any business that competes or may compete, directly or indirectly, with the business we are or may be carrying out in the future, except that such restriction does not apply to any other company (which is engaged in a business that competes with our business (whether [REDACTED] or not)) that any of our Controlling Shareholders or their close associates invest in, hold, engage in or participate in less than 5% equity interest thereof and is not involved in the management of the business.

Our Controlling Shareholders agree that they will not, and will procure that any of their associates will not:

• engage or participate or assist in engaging or participating, on its own or jointly with other parties, directly or indirectly, in any business that competes or may compete directly or indirectly with our business in any form, including but not limited to investment, merger or acquisition, joint venture, joint equity, cooperation, partnership, contracted or lease operations, purchase of shares of listed companies or equity participation;

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• support in any form any party other than the Group to engage in any business that directly or indirectly competes or may compete with our business; and

• involve in whatever manner (whether directly or indirectly) in any business that directly or indirectly constitutes or may constitute competition with our business.

Other than the above undertaking, pursuant to the non-competition agreement, should our Controlling Shareholders or any of their associates become aware of any new business opportunity that constitutes or may constitute competition, directly or indirectly, with our business, they should immediately notify us in writing of such opportunities and endeavour to procure that such business opportunity be offered to our Group on reasonable and fair terms and conditions on a priority basis. The Board shall decide whether to pursue such new business opportunity within 60 days after receipt of such notification. In accordance with our internal corporate governance rules, any Director who has a conflict of interest should abstain from voting on the resolution for considering such new business opportunity at the Board meeting. In the event that our Controlling Shareholders or any of their respective associates are to take advantage of the aforementioned business opportunity to commence a new business with our consent, we have an option to acquire such new business under the non-competition agreement and, within the term of the non-competition agreement, should our Controlling Shareholders or any of their associates intend to transfer, sell, lease, permit the use of or otherwise transfer or permit the use of the new business, we shall have the pre-emptive right in respect of such new business. The Board shall determine whether to exercise such option or pre-emptive right in accordance with the same procedures as described above with respect to the consideration of new business opportunity notified by any Controlling Shareholder. In considering whether to exercise the option or pre-emptive right, the Board shall take into account, among other factors, the valuation and results of the relevant business, the compatibility of the strategy of the relevant business with that of our Company, the prevailing market conditions, the resources available to our Company and other options available to our Company in relation to the acquisition of a similar business from a third party or the start-up of a similar business. The non-competition agreement shall take effect from the date of signing and will remain in force until the earlier of our Controlling Shareholders and any of their associates hold, directly and/or indirectly, less than 30% of the Shares in aggregate; or the Shares cease to be listed on the Stock Exchange (except for suspension of trading in the Shares for any reason).

Our Controlling Shareholders have agreed that they will provide us with a confirmation of their compliance with the non-competition agreement for disclosure in our annual report. Our Controlling Shareholders have further undertaken to provide all necessary information for the independent non-executive Directors’ annual review and execution of the non-competition agreement. The independent non-executive Directors will review annually the information provided by our Controlling Shareholders in relation to compliance and execution of the non-competition agreement. We will disclose to the public decisions made by the independent non-executive Directors in relation to their review of compliance and execution of the non-competition agreement, either in the form of annual report or by way of announcement.

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CORPORATE GOVERNANCE MEASURES

Our Directors recognise the importance of good corporate governance to protect the interests of our Shareholders. Our Directors believe that there are adequate corporate governance measures in place to manage existing and potential conflicts of interest. In order to further avoid potential conflicts of interest, we have implemented the following measures:

(1) where a Board meeting is held for the matters in which a Director has a material interest, such Director shall abstain from voting on the relevant resolutions and shall not be counted in the quorum for the voting;

(2) a Director with material interests shall make full disclosure in respect of matters that conflict or potentially conflict with our interest and absent himself/herself from the Board meetings on matters in which such Director or his/her close associates has a material interest, unless the attendance or participation of such Director at such meeting of the Board is specifically requested by a majority of the independent non-executive Directors;

(3) our Board will consist of a balanced composition of executive and non-executive Directors, including not less than one-third of independent non-executive Directors, to ensure that our Board is able to effectively exercise independent judgment in its decision-making process and provide independent advice to our Shareholders. Our independent non-executive Directors, individually and collectively, possess the requisite knowledge and experience. They are committed to providing impartial and professional advice to protect the interests of our minority Shareholders. Details of our independent non-executive Directors are set out in the section headed “Directors, Supervisors and Senior Management” in this [REDACTED];

(4) our independent non-executive Directors will review, on an annual basis, compliance with the non-competition undertaking given by our Controlling Shareholders. Our Company will disclose decisions relating to compliance and enforcement of the non-competition undertaking of our Controlling Shareholders (including our independent non-executive Directors’ views for such decisions) in its annual reports and/or announcements;

(5) in the event that our independent non-executive Directors are required to review any conflict of interest between our Group and our Controlling Shareholders, our Controlling Shareholders shall provide the independent non-executive Directors with all necessary information and our Company shall disclose the decisions of the independent non-executive Directors either in its annual report or by way of announcements;

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(6) we have appointed Maxa Capital Limited as our Compliance Adviser, which will provide advice and guidance to us in respect of compliance with the applicable laws and the Listing Rules, including various requirements relating to Directors’ duties and corporate governance; and

(7) we have established our audit committee, remuneration committee and nomination committee with written terms of reference in compliance with the Listing Rules and the Code on Corporate Governance and Corporate Governance Report in Appendix 14 of the Listing Rules. All of the members of our audit committee, including the chairman of the said committee, are non-executive Directors.

Based on the above, our Directors are satisfied that sufficient corporate governance measures have been put in place to manage conflicts of interest between our Group and our Controlling Shareholders and/or Directors to protect minority Shareholders’ rights after the [REDACTED].

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So far as our Directors are aware, immediately following the completion of the [REDACTED] and assuming that the [REDACTED] is not exercised, the following persons will have interests or short positions in our Shares or our underlying Shares which would be required to be disclosed to us under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of the issued voting shares of our Company:

Approximate Approximate percentage of percentage of shareholding in the shareholding in the Number of Shares relevant class of total share capital Class of Shares held immediately Shares immediately of our Company held after the after the after the immediately after Name of Shareholder Nature of Interest [REDACTED] [REDACTED](1) [REDACTED](2) the [REDACTED](3)

Mr. Wang Degen Beneficial Owner (王德根) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Interest of a controlled corporation(4) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Ms. Zhang Qiang Interest of spouse(5) (張強) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Desheng Ronghe(4) Beneficial Owner Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Mr. Chen Yuxin Beneficial Owner (陳育新) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Ms. Zhao Guiqin(6) Interest of spouse (趙桂琴) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

CEL Maiming(7) Beneficial Owner (光控麥鳴) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

CEL Huiling Interest of controlled Investment corporations (Shanghai) Limited* (光控匯領投資(上海) 有限公司)(“CEL Huiling”)(7) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

CEL Venture Capital Interest of controlled (Shenzhen) Limited corporations (“CEL Shenzhen”)(7) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

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China Everbright Interest of controlled Limited (“CEL”)(7) corporations Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Honorich Holdings Interest of controlled Limited corporations (“Honorich”)(7) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Datten Investments Interest of controlled Limited corporations (“Datten”)(7) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

China Everbright Interest of controlled Holdings Co., corporations Limited (中國光大集團有限公司)(“CE Hong Kong”)(7) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

China Everbright Interest of controlled Group Ltd. corporations (“China Everbright Group”)(7) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Central Huijin Interest of controlled Investment Ltd. corporations (“Huijin”)(7) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Beijing CEL Anya Interest of a Investment Centre controlled (Limited corporation Partnership) (北京光控安雅投資中心(有限合夥)(“CEL Anya”)(8) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Shanghai CEL Jiaxin Interest of a Equity Investment controlled Management corporation Limited (上海光控嘉鑫股權投資管理有限公司)(“Shanghai CEL”)(8) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

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CEL Capital Prestige Investment manager Asset Management Co., Ltd. (首譽光控資產管理有限公司) (“CEL Capital”)(8) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Chongqing CEL Interest of a Equity Investment controlled Management corporation Limited (重慶光控股權投資管理有限公司)(“Chongqing CEL”)(8) Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Yixing CEL(8) Beneficial Owner Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Interest of a controlled corporation Domestic Shares [REDACTED] (L) [REDACTED][REDACTED]

Notes:

(1) The letter “L” denotes the person’s long position in our Shares.

(2) The calculation is based on the percentage of shareholding in Domestic Shares after the [REDACTED].

(3) The calculation is based on the total number of [REDACTED] Shares in issue after the [REDACTED].

(4) Desheng Ronghe is wholly owned by Mr. Wang Degen (王德根). By virtue of the SFO, Mr. Wang Degen (王德根) is deemed to be interested in the Shares held by Desheng Ronghe.

(5) Ms. Zhang Qiang (張強) is the spouse of Mr. Wang Degen (王德根). By virtue of the SFO, Ms. Zhang Qiang (張強) is deemed to be interested in the same number of Shares held by Mr. Wang Degen (王德根).

(6) Ms. Zhao Guiqin (趙桂琴) is the spouse of Mr. Chen Yuxin (陳育新). By virtue of the SFO, Ms. Zhao Guiqin is deemed to be interested in the same number of Shares held by Mr. Chen Yuxin (陳育新).

(7) CEL Huiling is the general partner of CEL Maiming and the general partner of Zhuhai Mailun, which held 2,706,767 shares, representing approximately 0.75% of the issued share capital of the Company as at the Latest Practicable Date.

As at the Latest Practicable Date, CEL Huiling was wholly-owned by CEL Shenzhen, which was in turn wholly-owned by CEL.

Yixing CEL, which held 12,279,343 Shares, representing approximately 0.75% of the issued share capital of the Company as at the Latest Practicable Date, was wholly-owned by CEL Shenzhen, which was in turn wholly-owned by CEL.

Accordingly, CEL Huiling is deemed to be interested in the Shares held by each of CEL Maiming and Zhuhai Mailun, whereas each of CEL Shenzhen and CEL is deemed to be interested in the Shares held by each of CEL Maiming, Yixing CEL and Zhuhai Mailun under the SFO.

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(8) CEL was owned as to approximately 49.386% by Honorich Holdings Limited and 0.358% by Everbright Investment & Management Limited (光大投資管理有限公司), respectively. Honorich was wholly-owned by Datten, and each of Everbright Investment & Management Limited (光大投資管理有限公司) and Datten was in turn wholly-owned by CE Hong Kong, which was in turn wholly-owned by China Everbright Group. China Everbright Group was owned as to approximately 63.16% by Huijin, which was indirectly wholly-owned by the State Council of the People’s Republic of China. Accordingly, each of CEL, Honorich, Datten, CEL Hong Kong, China Everbright Group and Huijin is deemed to be interested in the Shares held by each of related controlled corporation under the SFO.

(8) CEL Anya is a limited partnership holding approximately 40.8% of the limited partnership interest in CEL Maiming.

The general partner of CEL Anya is Shanghai CEL, holding approximately 0.02% of the interest. CEL Capital is a special asset management company and a limited partner of CEL Anya, holding approximately 99.98% of its limited partnership interest. As at the Latest Practicable Date, Shanghai CEL was wholly-owned by Chongqing CEL, which was in turn wholly-owned by Yixing CEL.

Accordingly, each of CEL Anya, CEL Capital, Shanghai CEL, Chongqing CEL and Yixing CEL is deemed to be interested in the Shares held by CEL Maiming under the SFO.

Save as disclosed herein, our Directors are not aware of any person who will, immediately following completion of the [REDACTED], without taking into account any H Shares that may be allotted and issued pursuant to the exercise of the [REDACTED], have an interest or a short position in any Shares which would be required to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or be directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company and are therefore regarded as substantial shareholders under the Listing Rules.

We are not aware of any arrangement which may result in any change of control in our Company at any subsequent date.

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As at the Latest Practicable Date, the total issued share capital of our Company was RMB[360,000,000.00], divided into [360,000,000] Shares, with a nominal value of RMB[1.00] each.

Assuming the [REDACTED] is not exercised, the share capital of our Company immediately after the completion of the [REDACTED] will be as follows:

Approximate percentage of Number of total share Shares Description of Shares capital

360,000,000 Domestic Shares [REDACTED]

[REDACTED] H Shares to be issued under the [REDACTED][REDACTED]

[REDACTED] [100.00%]

Assuming the [REDACTED] is exercised in full, the share capital of our Company immediately after the completion of the [REDACTED] will be as follows:

Approximate percentage of Number of total share Shares Description of Shares capital

360,000,000 Domestic Shares [REDACTED]

[REDACTED] H Shares to be issued under the [REDACTED][REDACTED]

[REDACTED] [100.00%]

PUBLIC FLOAT REQUIREMENTS

Rule 8.08 of the Listing Rules requires there to be an open market in the securities for which listing is sought and for a sufficient public float of an issuer’s listed securities to be maintained. This normally means that (i) at least 25% of the issuer’s total issued shares must at all times be held by the public; and (ii) where an issuer has one class of securities or more apart from the class of securities for which listing is sought, the total securities of the issuer held by the public (on all regulated market(s) including the Stock Exchange) at the time of listing must be at least 25% of the issuer’s total issued shares. However, the class of securities for which listing is sought must not be less than 15% of the issuer’s total issued shares and must have an expected market capitalisation at the time of listing of not less than HK$125 million.

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Rule 8.08(1)(d) of the Listing Rules further provides that for issuer with large market capitalisation of over HK$10 billion at the time of listing, the Hong Kong Stock Exchange may, at its discretion, accept a lower public float percentage of between 15% and 25%, where the Hong Kong Stock Exchange is satisfied that (a) the number of shares concerned; and (b) the extent of their distribution would enable the market to operate properly with a lower public float.

The Company has applied for, and the Hong Kong Stock Exchange [has agreed] to exercise its discretion under Rule 8.08(1) of the Listing Rules. Please refer to the section headed “Waivers from Strict Compliance with the Listing Rules” for details.

The Company undertakes that it will meet the public float requirement under Rule 8.08(1)(a) of the Listing Rules at the time of [REDACTED] and after the completion of the [REDACTED]. We will make appropriate disclosure of our public float and confirm the sufficiency of our public float in successive annual reports after the [REDACTED].

SHARE CLASSES

Upon the completion of [REDACTED], the Shares of our Company will be divided into two categories: Domestic Shares and H Shares. The two classes of Shares are both ordinary shares in the share capital of our Company. H Shares may only be subscribed for and traded in Hong Kong dollars. Domestic Shares may only be subscribed for and traded in RMB. Apart from certain qualified domestic institutional investors in the PRC, the qualified PRC investors under the Shanghai-Hong Kong Stock Connect, the Shenzhen-Hong Kong Stock Connect or other persons who are entitled to hold our H Shares pursuant to relevant PRC laws and regulations or upon approvals of any competent authorities, H Shares generally cannot be subscribed for by or traded between legal or natural persons of the PRC. Domestic Shares, on the other hand, can be subscribed for by and traded between legal or natural persons of the PRC and qualified foreign institutional investors. We must pay all dividends in respect of H Shares in Hong Kong dollars and all dividends in respect of Domestic Shares in RMB.

Except as described above and in relation to the despatch of notices and financial reports to our Shareholders, dispute resolution, registration of Shares in different parts of our register of Shareholders, methods of share transfer and the appointment of dividend receiving agents, which are all provided for in the Articles of Association and summarised in Appendix V to this [REDACTED], our Domestic Shares and H Shares will rank equally with each other in all respects and, in particular, will rank equally for all dividends or distributions declared, paid or made after the date of this [REDACTED] (save for the dividends payment in RMB for Domestic Shares, in foreign currency except for RMB for unlisted Shares and in Hong Kong dollars for H Shares). However, the transfer of unlisted Shares is subject to such restrictions as PRC laws may impose from time to time. Save for the [REDACTED], we do not propose to carry out any public or private issue or to place securities simultaneously with the [REDACTED] or within the next six months from the [REDACTED]. We have not approved any share issue plan other than the [REDACTED].

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CONVERSION OF OUR DOMESTIC SHARES INTO H SHARES

We have two classes of ordinary shares, Domestic Shares and H Shares. According to the stipulations by the State Council’s securities regulatory authority and the Articles of Association, our unlisted Domestic Shares may be converted into H Shares, and such converted shares may be [REDACTED] or traded on an overseas stock exchange, provided that prior to the conversion and trading of such converted shares any requisite internal approval processes shall have been duly completed and the approval from the relevant PRC regulatory authorities, including the CSRC, shall have been obtained. In addition, such conversion, trading and [REDACTED] shall in all respects comply with the regulations prescribed by the State Council’s securities regulatory authority and the regulations, requirements and procedures prescribed by the relevant overseas stock exchange.

Approval of the Stock Exchange is required for the [REDACTED] of such converted shares on the Stock Exchange. Based on the methodology and procedures for the conversion of our unlisted Shares into H Shares as described in this section, we can apply for the [REDACTED] of all or any portion of our unlisted Shares on the Stock Exchange as H Shares in advance of any proposed conversion to ensure that the conversion process can be completed promptly upon notice to the Stock Exchange and delivery of shares for entry on the H Share register. As any [REDACTED] of additional Shares after our [REDACTED] on the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely administrative matter, it does not require such prior application for [REDACTED] at the time of our [REDACTED] in Hong Kong.

No Shareholder voting by class is required for the [REDACTED] and trading of the converted shares on an overseas stock exchange. Any application for [REDACTED]ofthe converted shares on the Stock Exchange after our initial [REDACTED] is subject to prior notification by way of announcement to inform Shareholders and the public of any proposed conversion.

In view of the above, our PRC Legal Adviser has advised us that the Articles of Association of our Company does not contradict any PRC laws and regulations in the conversion of unlisted Shares.

MECHANISM AND PROCEDURE FOR CONVERSION

After all the requisite approvals have been obtained, the following procedures will need to be completed in order to effect the conversion: the relevant unlisted Shares will be withdrawn from the Domestic Share register and we will re-register such Shares on our H Share register maintained in Hong Kong and instruct the [REDACTED] to issue H Share certificates. Registration on our H Share register will be conditional on (a) the [REDACTED] lodging with the Stock Exchange a letter confirming the proper entry of the relevant H Shares on the H Share register and the due despatch of H Share certificates and (b) the admission of the H Shares to trade on the Stock Exchange in compliance with the Listing Rules, the General Rules of CCASS and the CCASS Operational Procedures in force from time to time. Until the converted shares are re-registered on our H Share register, such Shares would not be [REDACTED]as H Shares.

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So far as our Directors are aware, none of our existing Shareholders currently proposes to convert any of the Domestic Shares held by it into H Shares.

TRANSFER OF SHARES ISSUED PRIOR TO [REDACTED]

The PRC Company Law provides that in relation to the public offering of a company, the shares issued prior to the public offering shall not be transferred within a period of one year from the date on which the publicly offered shares are [REDACTED] on any stock exchange. Accordingly, Shares issued by our Company prior to the [REDACTED] shall be subject to this statutory restriction and not be transferred within a period of one year from the [REDACTED].

LOCK-UP PERIODS

Pursuant to Article 141 of the PRC Company Law, shares issued prior to any public offering of shares by a company cannot be transferred within one year from the date on which such shares are [REDACTED] and traded on the relevant stock exchange. As such, the Shares issued by our Company prior to our issue of the H Shares will be subject to such statutory restriction on transfer within a period of one year from the [REDACTED].

Our Directors, Supervisors and members of the senior management shall declare their shareholdings in our Company and any changes in their shareholdings. Shares transferred by our Directors, Supervisors and members of the senior management each year during their term of office shall not exceed 25% of their total respective shareholdings in our Company. The Shares that the aforementioned persons held in our Company cannot be transferred within one year from the date on which the Shares are [REDACTED] and traded on a stock exchange, nor within half a year after they leave their positions in our Company. The Articles of Association may contain other restrictions on the transfer of our Shares held by our Directors, Supervisors and members of the senior management.

REGISTRATION OF SHARES NOT [REDACTED] ON THE OVERSEAS STOCK EXCHANGE

According to the Notice of Centralised Registration and Deposit of Non-overseas Listed Shares of Companies Listed on an Overseas Stock Exchange (《關於境外上市公司非境外上市股份集中登記存管有關事宜的通知》) issued by the CSRC, an overseas listed company is required to register its shares that are not listed on the overseas stock exchange with CSDCC within 15 Business Days upon the listing and provide a written report to the CSRC regarding the centralised registration and deposit of its unlisted shares as well as the current offering and listing of shares.

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CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING ARE REQUIRED

For details of circumstances under which our Shareholders’ general meeting and class Shareholders’ meeting are required, please refer to the section headed “Summary of the Articles of Association” in Appendix V to this [REDACTED]. Furthermore, we need to obtain approvals from the CSRC and other relevant PRC authorities for the actual issuance of H Shares.

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FUTURE PLANS

Please refer to the section headed “Business – Our Business Strategies” in this [REDACTED] for a detailed description of our future plans.

[REDACTED]

The table below sets forth the estimated [REDACTED]ofthe[REDACTED] which we will receive after deducting the [REDACTED] fees and commissions and estimated expenses payable by us for the [REDACTED]:

Assuming the Assuming the [REDACTED] is [REDACTED] is not exercised exercised in full

Assuming an [REDACTED]of HK$[REDACTED] per [REDACTED] (being the mid-point of the [REDACTED] Approximately Approximately range stated in this [REDACTED]) [REDACTED] [REDACTED] Assuming an [REDACTED]of HK$[REDACTED] per [REDACTED] (being the high end of the [REDACTED] Approximately Approximately range stated in this [REDACTED]) [REDACTED] [REDACTED] Assuming an [REDACTED]of HK$[REDACTED] per [REDACTED] (being the low end of the [REDACTED] Approximately Approximately range stated in this [REDACTED]) [REDACTED] [REDACTED]

We intend to use the [REDACTED] from the [REDACTED] for the following purposes (assuming an [REDACTED]of[REDACTED] per [REDACTED] (being the mid-point of the [REDACTED] range stated in this [REDACTED]), after deducting the [REDACTED] fees and commissions and other estimated expenses in connection with the [REDACTED] and the [REDACTED] is not exercised):

• Approximately [REDACTED] of our estimated [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) will be used for necessary capital expenditures to build our slaughtering and food processing business, as detailed in “Business – Our business model and products – Food processing business”:

(a) Approximately [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) is planned to be used to construct a slaughterhouse and a food processing plant in Yibin City, Sichuan Province (“Yibin Project”), of which (i) approximately [REDACTED]

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(equivalent to approximately [REDACTED]) will be spent on building construction, (ii) approximately [REDACTED] (equivalent to approximately [REDACTED]) will be spent on purchase of equipment and (iii) approximately [REDACTED] (equivalent to approximately [REDACTED]) will be spent on construction of other ancillary buildings. The Yibin Project is designed to have a pig slaughtering capacity of 3 million heads per year and a processed meat production capacity of 100,000 tonnes per year.

(b) Approximately [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) is planned to be used to construct a slaughterhouse in Meishan City, Sichuan Province (“Meishan Project”), of which (i) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on land acquisition, (ii) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on building construction, (iii) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on purchase of equipment and (iv) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on construction of other ancillary buildings.

For our Meishan Project, we cooperated with Tönnies to establish DT Food to develop the project. Tönnies is an integrated meat company in Germany, with the world’s leading meat slaughtering and processing technology. We will establish a slaughterhouse with an annual capacity of 2 million heads in Meishan City, Sichuan Province, which will use technology and knowhow of Tönnies.

(c) Approximately [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) is planned to be used to construct a slaughterhouse and a food processing plant in Sihong County, Jiangsu Province (“Sihong Project”), of which (i) approximately [REDACTED] (equivalent to approximately [REDACTED]) will be spent on land acquisition, (ii) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on building construction, (iii) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on purchase of equipment and (iv) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on construction of other ancillary buildings. The Sihong Project is expected to have a pig slaughtering capacity of 3 million heads per year and a processed meat production capacity of 100,000 tonnes per year.

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• Approximately [REDACTED] of our estimated [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) will be used for necessary capital expenditures to expand our pig and poultry farms, among which (i) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on facilities construction, and (ii) [REDACTED] (equivalent to approximately [REDACTED]) will be spent on purchase of equipment and construction of other ancillary buildings.

• Approximately [REDACTED] of our estimated [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) will be used to repay certain outstanding bank loans with interest rates ranging from [2.45]% to [8.50]%.

• Approximately [REDACTED] of our estimated [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) will be used for necessary capital expenditures to strengthen our research and development on pig and poultry breeding. We plan to use overseas GGP nucleus breeding pig to conduct breeding experiment to further advance our breeding process. Furthermore, we plan to establish our intelligent breeding measurement platform and breeding evaluation platform. On poultry breeding research, we plan to carry out selective breeding to select new products with excellent slaughter traits.

• Approximately [REDACTED] of our estimated [REDACTED], or approximately [REDACTED] (equivalent to approximately [REDACTED]) is planned to be used for our working capital and general corporate purposes.

The above allocation of the [REDACTED] will be adjusted on a pro rata basis in the event that the [REDACTED] is fixed at a higher or lower level compared to the mid-point of the [REDACTED] range stated in this [REDACTED]. If the [REDACTED] is exercised in full, we intend to apply the additional [REDACTED] to the above uses in the proportions stated above.

To the extent that the [REDACTED] are not immediately applied to the above purposes and to the extent permitted by applicable law and regulations, we intend to deposit the [REDACTED] into demand deposits with licensed banks or financial institutions and/or money market instruments. We will make an appropriate announcement if there is any change to the above proposed use of [REDACTED].

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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The following is the text of a report set out on pagesI–1toI–75,received from the Company’s reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this [REDACTED].

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF 四川德康農牧食品集團股份有限公司 DEKON FOOD AND AGRICULTURE GROUP AND HUATAI FINANCIAL HOLDINGS (HONG KONG) LIMITED

Introduction

We report on the historical financial information of 四川德康農牧食品集團股份有限公司 (Dekon Food and Agriculture Group) (the “Company”) and its subsidiaries (together, the “Group”) set out on pagesI–5toI–75,which comprises the consolidated statements of financial position of the Group and the statements of financial position of the Company as at 31 December 2018, 2019 and 2020, the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity and the consolidated cash flow statements, for each of the years ended 31 December 2018, 2019 and 2020 (the “Track Record Periods”), and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pagesI–5toI–75forms an integral part of this report, which has been prepared for inclusion in the [REDACTED] of the Company dated [●] (the “[REDACTED]”) in connection with the initial [REDACTED] of shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.

Directors’ responsibility for Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information, and for such internal control as the directors of the Company determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

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Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants’ judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Historical Financial Information gives, for the purpose of the accountants’ report, a true and fair view of the Company’s and the Group’s financial position as at 31 December 2018, 2019 and 2020, and of the Group’s financial performance and cash flows for the Track Record Periods in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page I-4 have been made.

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Dividends

We refer to Note 31(b) to the Historical Financial Information which contains information about the dividends paid by the Company in respect of the Track Record Periods.

No statutory financial statements for the Company

No statutory financial statements have been prepared for the Company during the Track Record Periods.

KPMG Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong

[●]

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HISTORICAL FINANCIAL INFORMATION

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The consolidated financial statements of the Group for the Track Record Periods, on which the Historical Financial Information is based, were audited by KPMG Huazhen LLP in accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying Financial Statements”).

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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (Expressed in Renminbi (“RMB”))

Year ended 31 December Note 2018 2019 2020 RMB’000 RMB’000 RMB’000

Revenue 4 3,282,046 5,516,105 8,145,349 Cost of sales (2,896,559) (3,981,351) (4,981,457)

Gross profit 385,487 1,534,754 3,163,892

Net changes in fair value of biological assets 12 60,711 1,077,875 1,295,726 Other net income 5 61,501 21,835 77,956 Selling expenses (38,109) (53,636) (70,091) Administrative expenses (261,013) (399,438) (700,290) Provision for expected credit loss of trade and other receivables (2,189) (4,415) (2,240)

Profit from operations 206,388 2,176,975 3,764,953 Finance cost 6(a) (51,827) (84,645) (155,589) Share of losses of associates – – (347)

Profit before taxation 154,561 2,092,330 3,609,017 Income tax 7(a) (7) (507) (666)

Profit and total comprehensive income for the year 154,554 2,091,823 3,608,351

Attributable to: Equity shareholders of the Company 115,066 2,002,548 3,488,173 Non-controlling interests 39,488 89,275 120,178

Profit and total comprehensive income for the year 154,554 2,091,823 3,608,351

Earnings per share 10 Basic and diluted (RMB) 0.39 6.17 9.76

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in RMB) At 31 December Note 2018 2019 2020 RMB’000 RMB’000 RMB’000 Non-current assets Property, plant and equipment 11 1,569,237 2,320,524 6,197,815 Non-current biological assets 12 202,864 731,047 2,436,422 Intangible assets 13 9,336 223 1,856 Goodwill 14 14,730 14,730 14,730 Interests in associates 16 – – 9,653 Deferred tax assets 28(b) –11 Other non-current assets 17 33,672 27,751 52,517

1,829,839 3,094,276 8,712,994 ------Current assets Inventories 18 238,076 257,171 444,081 Current biological assets 12 901,255 1,941,524 3,244,529 Trade receivables 19 16,308 7,560 1,591 Prepayments, deposits and other receivables 20 46,841 98,782 142,095 Financial assets at fair value through profit or loss (“FVTPL”) 21 31,233 60,066 655,198 Cash at bank and on hand 22 445,293 696,492 1,837,832

1,679,006 3,061,595 6,325,326 ------Current liabilities Interest-bearing borrowings 25 1,145,618 723,119 2,445,481 Trade and bills payables 23 207,770 392,190 628,362 Accruals and other payables 24 533,301 692,642 1,378,031 Amounts due to related parties 37 195,000 – – Lease liabilities 26 11,574 21,829 44,265 Current taxation 28(a) 5 487 383

2,093,268 1,830,267 4,496,522 ------Net current (liabilities)/assets (414,262) 1,231,328 1,828,804 ------Total assets less current liabilities 1,415,577 4,325,604 10,541,798 ------Non-current liabilities Interest-bearing borrowings 25 144,530 289,603 1,713,949 Lease liabilities 26 253,379 411,705 1,248,376 Deferred income 29 315,262 303,460 385,543 Other non-current liabilities 30 30,000 34,200 34,200

743,171 1,038,968 3,382,068 ------NET ASSETS 672,406 3,286,636 7,159,730

CAPITAL AND RESERVES Issued capital 31 101,700 290,384 360,000 Reserves 425,054 2,844,544 6,485,864

Total equity attributable to equity shareholders of the Company 526,754 3,134,928 6,845,864 Non-controlling interests 145,652 151,708 313,866

TOTAL EQUITY 672,406 3,286,636 7,159,730

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STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Expressed in RMB)

At 31 December Note 2018 2019 2020 RMB’000 RMB’000 RMB’000

Non-current assets Property, plant and equipment 2,870 6,211 7,049 Intangible assets 177 223 1,856 Interests in subsidiaries 15 319,355 362,050 363,850 Amounts due from subsidiaries 577,533 503,695 1,292,850

899,935 872,179 1,665,605 ------

Current assets Inventories – 184 1,679 Prepayments, deposits and other receivables 8,670 1,340 844 Amount due from subsidiaries 954,668 915,752 2,834,681 Financial assets at fair value through profit or loss (“FVTPL”) 21 31,233 60,066 655,198 Cash at bank and on hand 22 216,882 543,319 1,632,772

1,211,453 1,520,661 5,125,174 ------

Current liabilities Interest-bearing borrowings 25 1,145,000 641,000 2,158,000 Trade and bills payables – 10,000 20,000 Amounts due to related parties 485,236 667,111 2,287,317 Accruals and other payables 20,072 28,874 58,121 Lease liabilities – 1,565 2,036

1,650,308 1,348,550 4,525,474 ------

Net current (liabilities)/assets (438,855) 172,111 599,700 ------

Total assets less current liabilities 461,080 1,044,290 2,265,305 ------

Non-current liabilities Interest-bearing borrowings 25 142,500 240,000 811,500 Lease liabilities – 1,820 1,202

142,500 241,820 812,702 ------

NET ASSETS 318,580 802,470 1,452,603

CAPITAL AND RESERVES Issued capital 31 101,700 290,384 360,000 Reserves 216,880 512,086 1,092,603

TOTAL EQUITY 318,580 802,470 1,452,603

– I-7 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX I ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in RMB)

Attributable to equity shareholders of the Company Issued capital PRC Non- Paid-in Share Capital statuary Other Retained controlling Total Note capital capital reserve reserve reserve earnings Total interests equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at 1 January 2018 100,000 – – 7,479 – 302,509 409,988 117,333 527,321 Changes in equity for 2018: Profit and total comprehensive income for the year –––––115,066 115,066 39,488 154,554 Paid-in capital contributions from shareholders 31(c) 1,700–––––1,700 – 1,700 Capital contribution from non-controlling equity owners of subsidiaries –––––––5,080 5,080 Appropriation to reserve 31(d) – – – 6,851 – (6,851) – – – Dividends declared during the year –––––––(16,249) (16,249)

Balance at 31 December 2018 101,700 – – 14,330 – 410,724 526,754 145,652 672,406

Balance at 1 January 2019 101,700 – – 14,330 – 410,724 526,754 145,652 672,406 Changes in equity for 2019: Profit and total comprehensive income for the year –––––2,002,548 2,002,548 89,275 2,091,823 Capitalisation issue 31(c) 148,300 – 3,351 – – (151,651) – – – Conversion into a joint stock company with limited liability 31(c) (250,000) 250,000 ––––––– Issue of ordinary shares 31(c) – 40,384 534,635 – – – 575,019 – 575,019 Capital contribution from non-controlling equity owners of subsidiaries –––––––35,070 35,070 Recognition of share-based payments 27 – – 29,024 – – – 29,024 – 29,024 Acquisition of non-controlling interests (“NCI”) 33 ––––(2,632) – (2,632) (97,737) (100,369) Disposal of interests in subsidiaries –––––––(353) (353) Disposal of interests in subsidiaries to the shareholder of non-controlling interest ––––4,215–4,215 (4,215) – Dividends declared during the year –––––––(15,984) (15,984)

Balance at 31 December 2019 – 290,384 567,010 14,330 1,583 2,261,621 3,134,928 151,708 3,286,636

Balance at 1 January 2020 – 290,384 567,010 14,330 1,583 2,261,621 3,134,928 151,708 3,286,636 Changes in equity for 2020: Profit and total comprehensive income for the year –––––3,488,173 3,488,173 120,178 3,608,351 Issue of ordinary shares 31(c) – 6,701 293,299 – – – 300,000 – 300,000 Capital contribution from non-controlling interests –––––––55,890 55,890 Capitalisation issue 31(c) – 62,915 – – – (62,915) – – – Appropriation to reserve 31(d) – – – 30,522 – (30,522) – – – Recognition of share-based payments 27 – – 5,567 – – – 5,567 – 5,567 Business combination 32(b) –––––––3,092 3,092 Acquisition of non-controlling interests 33 ––––(2,804) – (2,804) (3,897) (6,701) Dividends declared during the year 31(b) –––––(80,000) (80,000) (13,105) (93,105)

Balance at 31 December 2020 – 360,000 865,876 44,852 (1,221) 5,576,357 6,845,864 313,866 7,159,730

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CONSOLIDATED CASH FLOW STATEMENTS (Expressed in RMB)

Year ended 31 December Note 2018 2019 2020 RMB’000 RMB’000 RMB’000

Profit before taxation 154,561 2,092,330 3,609,017 Adjustments for: Depreciation charge on property, plant and equipment 11(a) 87,439 129,122 250,877 Impairment loss on property, plant and machinery 11(a) – 1,949 959 Amortisation of intangible assets 13 1,444 1,136 190 Provision for expected credit loss of trade and other receivables 2,189 4,415 2,240 Finance costs 6(a) 51,827 84,645 155,589 Interest income 5 (1,693) (4,872) (16,143) Share of losses of associates – – 347 Net loss/(gain) on sale of property, plant and equipment and intangible assets 5 1,335 10,344 (13,013) Net gain on disposal of interests in subsidiaries and associates 5 (32,585) (569) – Net changes in fair value of biological assets 12 (60,711) (1,077,875) (1,295,726) Net changes in fair value of financial assets at FVTPL 5 (2,932) (2,314) (19,338) Equity-settled share-based payment expenses 27 – 29,024 5,567 Government grants 5 (25,438) (30,534) (41,022)

Changes in working capital: Increase in inventories (121,959) (19,526) (186,910) Increase in biological assets (200,203) (346,509) (1,338,158) Decrease/(increase) in trade receivables 3,791 (3,068) 5,969 Decrease/(increase) in prepayments, deposits and other receivables 56,197 (59,024) (10,138) (Decrease)/increase in trade and bills payables (118,058) 193,963 236,172 Increase in accruals and other payables 221,591 137,777 422,482 Increase in other non-current assets (248) (2,871) (484) Increase in restricted deposits (29,032) (703) (96,223)

Cash (used in)/generated from operations (12,485) 1,136,840 1,672,254 Tax paid 28(a) (2) (26) (770)

Net cash (used in)/generated from operating activities (12,487) 1,136,814 1,671,484 ------

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Year ended 31 December Note 2018 2019 2020 RMB’000 RMB’000 RMB’000

Investing activities Payment for the purchase of property, plant and equipment (311,222) (648,329) (2,944,567) Payment for purchase of breeding livestocks (122,660) (144,068) (374,496) Payment for purchase of intangible assets (175) (69) (1,823) Government grants received 29 81,173 18,732 123,105 Proceeds from disposal of property, plant and equipment 8,865 2,632 24,005 Investments in an associate – – (10,000) Acquisition of subsidiaries, net of cash acquired 32 (18,994) – (16,263) Payment for the purchase of financial assets at FVTPL 34(d) (415,000) (985,000) (6,080,000) Proceeds from disposal of interests in subsidiaries 22(d) 8,713 3,230 – Proceeds from disposal of associates 16,284 – – Dividends received from interests in associates 4,625 4,470 – Proceeds from disposal of financial assets at FVTPL 34(d) 536,216 958,481 5,504,206

Net cash used in investing activities (212,175) (789,921) (3,775,833) ------Financing activities Proceeds from interest-bearing borrowings 22(b) 1,012,030 868,192 3,871,083 Proceeds non-interest bearing government loans 22(b) 20,000 4,200 – Repayment of interest-bearing borrowings 22(b) (703,196) (1,145,000) (724,375) Proceeds from issue of ordinary shares 1,700 395,019 300,000 Capital contribution from non-controlling equity owners of subsidiaries 5,080 35,070 55,890 Acquisition of non-controlling interests 33 – (100,369) (6,701) Interest element of lease rentals paid 22(b) (7,424) (19,446) (58,351) Capital element of lease rentals paid 22(b) (18,266) (27,137) (72,284) Other interests paid 22(b) (44,926) (67,158) (113,441) Dividends paid (16,249) (24,768) (102,355) Gross amounts of advances from the related parties 22(b) 195,000 – – Gross amounts of repayments to the related parties 22(b) – (15,000) –

Net cash generated from/(used in) financing activities 443,749 (96,397) 3,149,466 ------Net increase in cash and cash equivalents 219,087 250,496 1,045,117

Cash and cash equivalents at 1 January 22(a) 197,174 416,261 666,757

Cash and cash equivalents at 31 December 22(a) 416,261 666,757 1,711,874

– I-10 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX I ACCOUNTANTS’ REPORT

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

四川德康農牧食品集團股份有限公司 (Dekon Food and Agriculture Group) (the “Company”) was established in the People’s Republic of China (the “PRC”) on 11 April 2014 as a private-owned enterprise with limited liability. The Company was previously known as 四川德康農牧科技有限公司 (Sichuan Dekon Agro-livestock Technology Company Limited) before it was converted into a joint stock company on 9 May 2019.

The Company and its subsidiaries are principally engaged in: (i) providing market hogs, breeding pigs, market piglets and boar semen (ii) providing yellow-feathered broilers, chicks and eggs; and (iii) providing ancillary products such as feed, ingredients and others.

As at the date of this report, no audited financial statements have been prepared for the Company, as it is an investment holding company and not subject to statutory audit requirements under the relevant rules and regulations in the jurisdiction of incorporation. The financial statements of the subsidiaries of the Group for which there are statutory requirements were prepared in accordance with the relevant accounting rules and regulations applicable to entities in the countries in which they were incorporated and/or established.

The Historical Financial Information has been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”) which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (“IASB”). Further details of the significant accounting policies adopted are set out in Note 2.

The IASB has issued a number of new and revised IFRSs. For the purpose of preparing this Historical Financial Information, the Group has adopted all applicable new and revised IFRSs to the Track Record Periods, including IFRS 16 Leases, consistently throughout the Track Record Periods. The Group has not adopted any new standards or interpretations that are not yet effective for the accounting period beginning 1 January 2021. The revised and new accounting standards and interpretations issued but not yet effective for the accounting year beginning 1 January 2021 are set out in Note 39.

The Historical Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The accounting policies set out below have been applied consistently to all periods presented in the Historical Financial Information.

2 SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of measurement

The measurement basis used in the preparation of the financial statements is the historical cost basis except that the following assets and liabilities are stated at their fair value as explained in the accounting policies set out below:

– other investments in debt and equity securities (see Note 2 (f))

– biological assets (see Note 2 (g))

(b) Use of estimates and judgements

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

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Judgements made by management in the application of IFRSs that have significant effect on the financial data and major sources of estimation uncertainty are discussed in Note 3.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances, transactions and cash flows and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For each business combination, the Group can elect to measure any non-controlling interests either at fair value or at the non-controlling interests’ proportionate share of the subsidiary’s net identifiable assets.

Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from equity attributable to the equity shareholders of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statement of profit or loss and other comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling interests and the equity shareholders of the Company. Loans from holders of non-controlling interests and other contractual obligations towards these holders are presented as financial liabilities in the consolidated statement of financial position in accordance with Notes 2(p) or (q), depending on the nature of the liability.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (see Note 2(f)) or, when appropriate, the cost on initial recognition of an investment in an associate (see Note 2(d)).

In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses (see Note 2(k)(iii)), unless the investment is classified as held for sale (or included in a disposal Group that is classified as held for sale).

(d) Associates

An associate is an entity in which the Group or company has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions.

An investment in an associate is accounted for in the consolidated financial statements under the equity method, unless it is classified as held for sale (or included in a disposal Group that is classified as held for sale). Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Group’s share of the acquisition-date fair values of the investee’s identifiable net assets over the cost of the investment (if any). The cost of the investment includes purchase price, other costs directly attributable to the acquisition of the investment, and any direct investment into the associate that forms part of the Group’s equity investment. Thereafter, the investment is adjusted for the post acquisition change in the Group’s share of the investee’s net assets and any impairment loss relating to the investment (see Note 2(k)(iii)). At each reporting date, the Group assesses whether there is any objective evidence that the investment is impaired. Any acquisition-date excess over cost, the Group’s

– I-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX I ACCOUNTANTS’ REPORT share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in the consolidated statement of profit or loss, whereas the Group’s share of the post-acquisition post-tax items of the investees’ other comprehensive income is recognised in the consolidated statement of profit or loss and other comprehensive income.

When the Group’s share of losses exceeds its interest in the associate, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Group’s interest is the carrying amount of the investment under the equity method, together with any other long-term interests that in substance form part of the Group’s net investment in the associate.

Unrealised profits and losses resulting from transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the investee, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately in profit or loss.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method.

In all other cases, when the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee at the date when significant influence is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (see Note 2(f)).

In the Company’s statement of financial position, investments in associates are stated at cost less impairment losses (see Note 2(k)(iii)), unless classified as held for sale (or included in a disposal Group that is classified as held for sale).

(e) Goodwill

Goodwill represents the excess of:

(i) the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree; over

(ii) the net fair value of the acquiree’s identifiable assets and liabilities measured as at the acquisition date.

When (ii) is greater than (i), then this excess is recognised immediately in profit or loss as a gain on a bargain purchase.

Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating unit, or groups of cash generating units, that is expected to benefit from the synergies of the combination and is tested annually for impairment (see Note 2(k)(iii)).

On disposal of a cash generating unit during the year, any attributable amount of purchased goodwill is included in the calculation of the profit or loss on disposal.

(f) Other investments in debt and equity securities

The Group’s policies for investments in debt and equity securities, other than investments in subsidiaries, associates and joint ventures, are set out below.

Investments in debt and equity securities are recognised/derecognised on the date the group commits to purchase/sell the investment. The investments are initially stated at fair value plus directly attributable transaction costs, except for those investments measured at fair value through profit or loss (“FVTPL”) for which transaction costs are recognised directly in profit or loss. For an explanation of how the Group determines fair value of financial instruments, see Note 33(d). These investments are subsequently accounted for as follows, depending on their classification.

Non-equity investments held by the Group are classified into one of the following measurement categories:

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– amortised cost, if the investment is held for the collection of contractual cash flows which represent solely payments of principal and interest. Interest income from the investment is calculated using the effective interest method (see Note 2(u)(iii)).

– fair value through other comprehensive income (“FVOCI”) – recycling, if the contractual cash flows of the investment comprise solely payments of principal and interest and the investment is held within a business model whose objective is achieved by both the collection of contractual cash flows and sale. Changes in fair value are recognised in other comprehensive income, except for the recognition in profit or loss of expected credit losses, interest income (calculated using the effective interest method) and foreign exchange gains and losses. When the investment is derecognised, the amount accumulated in other comprehensive income is recycled from equity to profit or loss.

– fair value at profit or loss (“FVTPL”) if the investment does not meet the criteria for being measured at amortised cost or FVOCI (recycling). Changes in the fair value of the investment (including interest) are recognised in profit or loss.

(g) Biological assets

The biological assets of the Group include commodity hogs (piglets, nursery pigs and growers) and commodity chickens (eggs, commodity chicks and broilers) and chicken breeders held for own use to produce commodity chicks which are classified as current assets, and hog breeders held for own use to produce commodity hogs which are classified as non-current assets of the Group.

Biological assets are measured at fair value less costs of disposals.

The feeding costs and other related costs such as staff costs, depreciation and amortisation expenses and utilities cost incurred for raising gilts and studs and immature chicken breeders are capitalised until the gilts and studs and chicken breeders begin to mate or transfer to the group of sows and boars or mature chicken breeders. Such costs incurred for sows and boars or mature chicken breeders are also capitalised while upon pregnancy and transferred to the piglets farrowed or eggs.

Gains or losses arising from initial recognition of biological assets at fair value less costs of disposal and from a change in fair value less costs of disposal of biological assets are included in profit or loss in the period in which it arises.

(h) Property, plant and equipment

The following items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see Note 2(k)):

– right-of-use assets arising from leases over freehold or leasehold properties where the Group is not the registered owner of the property interest; and

– items of plant and equipment, including right-of-use assets arising from leases of underlying plant and equipment (see Note 2(j)).

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the [REDACTED] and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.

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– Plant and buildings 20 years – Right-of-use assets Over the term of lease – Machinery and equipment 10 years – Vehicles, furniture, and others 3-5 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually. No depreciation is provided in respect of construction in progress until it is completed and ready for its intended use.

(i) Intangible assets (other than goodwill)

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (where the estimated useful life is finite) and impairment losses (see Note 2(k)).

Expenditure on internally generated goodwill and brands is recognised as an expense in the period in which it is incurred.

– Software 3-10 years

Both the period and method of amortisation are reviewed annually.

(j) Leased assets

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

As a lessee

Where the contract contains lease component(s) and non-lease component(s), the Group has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

At the lease commencement date, the Group recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets. When the Group enters into a lease in respect of a low-value asset, the Group decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

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The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses (see Notes 2(h) and 2(k)(iii)).

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Group will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a lease that is not originally provided for in the lease contract (“lease modification”) that is not accounted for as a separate lease. In this case the lease liability is remeasured based on the revised lease payments and lease term using a revised discount rate at the effective date of the modification. The only exceptions are any rent concessions which arose as a direct consequence of the COVID-19 pandemic and which satisfied the conditions set out in paragraph 46B of IFRS 16 Leases. In such cases, the Group took advantage of the practical expedient set out in paragraph 46A of IFRS 16 and recognised the change in consideration as if it were not a lease modification.

In the consolidated statement of financial position, the current portion of long-term lease liabilities is determined as the present value of contractual payments that are due to be settled within twelve months after the reporting period.

(k) Credit losses and impairment of assets

(i) Credit losses from financial instruments and contract assets

The Group recognises a loss allowance for expected credit losses (ECLs) on the following items:

– financial assets measured at amortised cost (including cash and cash equivalents, trade receivables, and prepayment, deposits and other receivables);

– contract assets as defined in IFRS 15 (see Note 2(m));

Other financial assets measured at fair value are not subject to the ECL assessment.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive).

The expected cash shortfalls of fixed-rate financial assets, trade and other receivables and contract assets are discounted using effective interest rate determined at initial recognition or an approximation thereof where the effect of discounting is material.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

In measuring ECLs, the Group takes into account reasonable and supportable information that is available without undue cost or effort. This includes information about past events, current conditions and forecasts of future economic conditions.

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ECLs are measured on either of the following bases:

– 12-month ECLs: these are losses that are expected to result from possible default events within the 12 months after the reporting date; and

– lifetime ECLs: these are losses that are expected to result from all possible default events over the expected lives of the items to which the ECL model applies.

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs. ECLs on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the reporting date.

For all other financial instruments (including loan commitments issued), the Group recognises a loss allowance equal to 12-month ECLs unless there has been a significant increase in credit risk of the financial instrument since initial recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs.

Significant increases in credit risk

In assessing whether the credit risk of a financial instrument (including a loan commitment) has increased significantly since initial recognition, the Group compares the risk of default occurring on the financial instrument assessed at the reporting date with that assessed at the date of initial recognition. In making this reassessment, the Group considers that a default event occurs when (i) the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or (ii) the financial asset is 90 days past due. The Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward- looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

– failure to make payments of principal or interest on their contractually due dates;

– an actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if available);

– an actual or expected significant deterioration in the operating results of the debtor; and

– existing or forecast changes in the technological, market, economic or legal environment that have a significant adverse effect on the debtor’s ability to meet its obligation to the Group.

Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed on either an individual basis or a collective basis. When the assessment is performed on a collective basis, the financial instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings.

ECLs are remeasured at each reporting date to reflect changes in the financial instrument’s credit risk since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt securities that are measured at FVOCI (recycling), for which the loss allowance is recognised in other comprehensive income and accumulated in the fair value reserve (recycling).

Basis of calculation of interest income

Interest income recognised in accordance with Note 2(u)(iii) is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on the amortised cost (i.e. the gross carrying amount less loss allowance) of the financial asset.

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At each reporting date, the Group assesses whether a financial asset is credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable events:

– significant financial difficulties of the debtor;

– a breach of contract, such as a default or past due event;

– it becoming probable that the borrower will enter into bankruptcy or other financial reorganisation;

– significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; or

– the disappearance of an active market for a security because of financial difficulties of the issuer.

Write-off policy

The gross carrying amount of a financial asset or contract asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.

(ii) Credit losses from financial guarantees issued

Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

Financial guarantees issued are initially recognised within “accruals and other payables” at fair value, which is determined by reference to fees charged in an arm’s length transaction for similar services, when such information is obtainable, or to interest rate differentials, by comparing the actual rates charged by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees not been available, where reliable estimates of such information can be made. Where consideration is received or receivable for the issuance of the guarantee, the consideration is recognised in accordance with the Group’s policies applicable to that category of asset. Where financial guarantees in relation to loans of joint ventures and associates are provided for no such consideration received or receivable, the fair values are accounted for as contributions and recognised as part of the cost of the investment. Subsequent to initial recognition, the amount initially recognised as deferred income is amortised in profit or loss over the term of the guarantee as income from financial guarantees issued.

The Group monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial guarantees are determined to be higher than the amount carried in “accruals and other payables” in respect of the guarantees (i.e. the amount initially recognised, less accumulated amortisation).

To determine ECLs, the Group considers changes in the risk of default of the specified debtor since the issuance of the guarantee. A 12-month ECL is measured unless the risk that the specified debtor will default has increased significantly since the guarantee is issued, in which case a lifetime ECL is measured. The same definition of default and the same assessment of significant increase in credit risk as described in Note 2(k)(i) apply.

As the Group is required to make payments only in the event of a default by the specified debtor in accordance with the terms of the instrument that is guaranteed, an ECL is estimated based on the expected payments to reimburse the holder for a credit loss that it incurs less any amount that the Group expects to receive from the holder of the guarantee, the specified debtor or any other party. The amount is then discounted using the current risk-free rate adjusted for risks specific to the cash flows.

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(iii) Impairment of other non-current assets

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased:

– property, plant and equipment, including right-of-use assets;

– intangible assets;

– goodwill;

– prepayment for property, plant and equipment; and

– investments in subsidiaries and associates in the Company’s statement of financial position.

If any such indication exists, the asset’s recoverable amount is estimated. In addition, for goodwill, intangible assets that are not yet available for use and intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment.

– Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

– Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

– Reversals of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

(l) Inventories

Inventories are assets which are held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

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When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised.

(m) Contract assets and contract liabilities

A contract asset is recognised when the Group recognises revenue (see Note 2(u)) before being unconditionally entitled to the consideration under the payment terms set out in the contract. Contract assets are assessed for expected credit losses (ECL) in accordance with the policy set out in Note 2(k)(i) and are reclassified to receivables when the right to the consideration has become unconditional (see Note 2(n)).

A contract liability is recognised when the customer pays non-refundable consideration before the Group recognises the related revenue (see Note 2(u)). A contract liability would also be recognised if the Group has an unconditional right to receive non-refundable consideration before the Group recognises the related revenue. In such cases, a corresponding receivable would also be recognised (see Note 2(n)).

For a single contract with the customer, either a net contract asset or a net contract liability is presented. For multiple contracts, contract assets and contract liabilities of unrelated contracts are not presented on a net basis.

When the contract includes a significant financing component, the contract balance includes interest accrued under the effective interest method (see Note 2(u)).

(n) Trade and other receivables

A receivable is recognised when the Group has an unconditional right to receive consideration. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due. If revenue has been recognised before the Group has an unconditional right to receive consideration, the amount is presented as a contract asset (see Note 2(m)).

Receivables are stated at amortised cost using the effective interest method less allowance for credit losses (see Note 2(k)(i)).

(o) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement. Cash and cash equivalents are assessed for expected credit losses (ECL) in accordance with the policy set out in Note 2(k)(i).

(p) Trade and other payables

Trade and other payables are initially recognised at fair value. Except for financial guarantee liabilities, trade and other payables are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(q) Interest-bearing borrowings

Interest-bearing borrowings are measured initially at fair value less transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method. Interest expense is recognised in accordance with the Group’s accounting policy for borrowing costs (see Note 2(v)).

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(r) Employee benefits

(i) Short-term employee benefits and contributions to defined contribution retirement plans

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

(ii) Share-based payments

The fair value of shares granted to employees is recognised as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date, taking into account the terms and conditions upon which the shares were granted. If the shares granted do not vest until the completion of services for a period, the total estimated fair value of the shares is spread over the vesting period, taking into account the probability that the shares will vest.

During the vesting period, the number of shares that is expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognised in prior years is charged/credited to the profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognised as an expense is adjusted to reflect the actual number of shares that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Company’s shares.

(iii) Termination benefits

Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of those benefits and when it recognises restructuring costs involving the payment of termination benefits.

(s) Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

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The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related dividends is recognised.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

– in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or

– in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

– the same taxable entity; or

– different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.

(t) Provisions, contingent liabilities and onerous contracts

(i) Provisions and contingent liabilities

Provisions are recognised when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(ii) Onerous contracts

An onerous contract exists when the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Provisions for onerous contracts are measured at the present value of the lower of the expected cost of terminating the contract and the net cost of continuing with the contract.

(u) Revenue and other income

Income is classified by the Group as revenue when it arises from the sale of goods or the provision of services in the ordinary course of the Group’s business.

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Revenue is recognised when control over a product or service is transferred to the customer, at the amount of promised consideration to which the Group is expected to be entitled, excluding those amounts collected on behalf of third parties. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts.

Further details of the Group’s revenue and other income recognition policies are as follows:

(i) Sale of goods

(ii) Dividends

Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established.

(iii) Interest income

Interest income is recognised as it accrues under the effective interest method using the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of the financial asset. For financial assets measured at amortised cost or FVOCI (recycling) that are not credit-impaired, the effective interest rate is applied to the gross carrying amount of the asset. For credit-impaired financial assets, the effective interest rate is applied to the amortised cost (i.e. gross carrying amount net of loss allowance) of the asset (see Note 2(k)(i)).

(iv) Government grants

(v) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

(w) Related parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

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(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same Group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a Group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a Group of which it is a part, provides key management personnel services to the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(x) Segment reporting

Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products, the nature of production processes, the type or class of customers, the methods used to distribute the products, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

3 ACCOUNTING JUDGEMENT AND ESTIMATES

Note 12 contains information about the assumptions and their risk factors relating to fair value of biological assets. Other significant sources of estimation uncertainty are as follows:

(a) Impairment losses for non-current assets

If circumstances indicate that the carrying amount of a non-current asset may not be recoverable, the asset may be considered “impaired”, and an impairment loss may be recognised in accordance with accounting policy for impairment of non-current assets as described in Note 2(k)(iii). These assets are tested for impairment whenever the events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable.

When such a decline has occurred, the carrying amount is reduced to recoverable amount. The recoverable amount is the greater of the fair value less costs of disposal and the value in use. In determining the value in use, expected future cash flows generated by the asset are discounted to their present value, which requires significant judgement relating to the level of revenue and amount of operating costs. The Group uses all readily available information in determining an amount that is a reasonable approximation of the recoverable amount, including estimates based on reasonable and supportable assumptions and projections of the level of revenue and amount of operating costs. Changes in these estimates could have a significant impact on the recoverable amount of the assets and could result in additional impairment charge or reversal of impairment in future periods.

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(b) Expected credit loss for trade receivables

The impairment provisions for trade receivables and other receivables are based on assumptions about the expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. For details of the key assumptions and inputs used, set Note 34(a).

Changes in these assumptions and estimated could materially affect the result of the assessment and it may be necessary to make additional impairment charge to the consolidated statements of profit or loss and other comprehensive income.

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual values, if any. The Group reviews the estimated useful lives and residual values, if any, of the property, plant and equipment regularly in order to determine the amount of depreciation expense to be recorded during any reporting period. The determination of the useful lives and residual values, if any, are based on historical experience with similar assets after taking into account the anticipated changes on how such assets are to be deployed in the future. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.

4 REVENUE AND SEGMENT REPORTING

(a) Revenue

The principal activities of the Group are (i) providing market hogs, breeding pigs, market piglets and boar semen; (ii) providing yellow-feathered broilers, chicks and eggs; and (iii) providing ancillary products such as feed, ingredients and others. Further details regarding the Group’s principal activities are disclosed in Note 4(b).

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Revenue from contracts with customers within the scope of IFRS 15 Disaggregated by major products Sales of pigs 1,432,129 2,941,753 5,747,697 Sales of poultry 1,814,833 2,434,754 2,287,783 Sales of ancillary products 35,084 139,598 109,869

3,282,046 5,516,105 8,145,349

Revenue from contracts with customers is recognised at a point in time when the customers obtain control of promised goods. During the Track Record Periods, no revenue from a single external customer accounts for 10% or more of the Group’s revenues in the respective years.

The Group’s obligations to provide a refund for faulty products are under the standard warranty terms. Accumulated experience is used to estimate such returns at the time of sale. It is highly probable that a significant reversal in the cumulative revenue recognised will not occur. Therefore, no refund liability for goods return was recognised. The validity of this assumption and the estimated amount of returns are reassessed at each reporting date.

The Group takes advantage of the practical expedient in paragraph 121 of IFRS 15 and does not disclose the remaining performance obligation as all of the Group’s sales contracts have an original expected duration of less than one year.

The Group does not adjust the promised amount of consideration for the effects of a significant financing component as the period between when the Group transfers a promised good to a customer and when the customer pays for that good will be one year or less.

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(b) Segment reporting

The Group manages its businesses by divisions, which are organised by business lines. In a manner consistent with the way in which information is reported internally to the Group’s most senior executive management for the purposes of resource allocation and performance assessment, the Group has presented the following three reportable segments. No operating segments have been aggregated to form the following reportable segments.

• Sales of pigs: sales of market hogs, breeding pigs, market piglets and boar semen;

• Sales of poultry: sales of yellow-feathered broilers, chicks and eggs;

• Sales of ancillary products: sales of feed, ingredients and others.

(i) Segment results

For the purposes of assessing segment performance and allocating resources between segments, the Group’s senior executive management monitors the results, assets and liabilities attributable to each reportable segment on the following bases:

Revenue and expenses are allocated to the reportable segments with reference to sales generated by those segments and the expenses incurred by those segments. The measure used for reporting segment profit is gross profit. Inter-segment sales are priced with reference to prices charged to external parties for similar orders.

The Group’s other operating income and expenses, such as other income and selling and administrative expenses, and assets and liabilities are not measured under individual segments. Accordingly, neither information on segment assets and liabilities nor information concerning capital expenditure, interest income and interest expenses is presented.

Information regarding the Group’s reportable segments as provided to the Group’s most senior executive management for the purposes of resource allocation and assessment of segment performance during the Track Record Periods is set out below.

Year ended 31 December 2018 Sales of Sales of ancillary Sales of pigs poultry products Total RMB’000 RMB’000 RMB’000 RMB’000

Revenue from external customers 1,432,129 1,814,833 35,084 3,282,046 Inter-segment revenue 7,836 42 4,131 12,009

Reportable segment revenue 1,439,965 1,814,875 39,215 3,294,055

Reportable segment gross profit 109,853 272,878 2,191 384,922

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Year ended 31 December 2019 Sales of Sales of ancillary Sales of pigs poultry products Total RMB’000 RMB’000 RMB’000 RMB’000

Revenue from external customers 2,941,753 2,434,754 139,598 5,516,105 Inter-segment revenue 8 4 408,980 408,992

Reportable segment revenue 2,941,761 2,434,758 548,578 5,925,097

Reportable segment gross profit 1,032,093 495,905 7,546 1,535,544

Year ended 31 December 2020 Sales of Sales of ancillary Sales of pigs poultry products Total RMB’000 RMB’000 RMB’000 RMB’000

Revenue from external customers 5,747,697 2,287,783 109,869 8,145,349 Inter-segment revenue 16 13 1,141,763 1,141,792

Reportable segment revenue 5,747,713 2,287,796 1,251,632 9,287,141

Reportable segment gross profit 3,208,883 (49,300) 7,088 3,166,671

(ii) Reconciliations of reportable segment gross profit

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Revenue Reportable segment profit (gross profit) 384,922 1,535,544 3,166,671 Elimination of inter-segment profit 565 (790) (2,779)

Consolidated gross profit 385,487 1,534,754 3,163,892

(iii) Geographic information

The Group’s revenue is substantially generated from the sales of pigs, poultry and ancillary products in the PRC. The Group’s operating assets are substantially situated in the PRC. Accordingly, no segment analysis based on geographical locations of the customers and assets is provided.

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5 OTHER NET INCOME

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Interest income 1,693 4,872 16,143 Government grants (Note 29) 25,438 30,534 41,022 Net gain on disposal of interests in subsidiaries and associates 32,585 569 – Impairment loss on property, plant, and equipment – (1,949) (959) Net (loss)/gain on disposal of property, plant and equipment and intangible assets (1,335) (10,344) 13,013 Net loss on biological assets* (373) (2,206) (2,377) Change in fair value of financial assets at FVTPL 2,932 2,314 19,338 Others 561 (1,955) (8,224)

61,501 21,835 77,956

* The net loss on biological assets represents the loss due to virulent diseases of RMB373,000, RMB2,206,000 and RMB2,377,000 in 2018, 2019 and 2020, respectively.

6 PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging/(crediting):

(a) Finance costs

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Interest on interest-bearing borrowings (Note 22(b)) 45,048 66,265 117,151 Interest on lease liabilities (Note 11(b) and Note 22(b)) 7,424 19,446 58,351

52,472 85,711 175,502

Less: interest expense capitalised* (645) (1,066) (19,913)

51,827 84,645 155,589

* The borrowing costs have been capitalised at a rate of 4.35%, 4.35% and 3.50%-4.35% per annum in 2018, 2019 and 2020, respectively.

(b) Staff costs

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Salaries, wages and other benefits 263,825 349,370 579,530 Contributions to defined contribution retirement plan 16,682 22,446 4,274 Equity-settled share-based payment expenses (Note 27) – 29,024 5,567

280,507 400,840 589,371

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The employees of the entities comprising the Group established in the PRC participate in a defined contribution retirement benefit scheme managed by the local government authority, whereby these entities are required to contribute to the scheme at a rate of 16%-20% of the minimum local base of retirement schemes. Employees of these entities are entitled to retirement benefits, calculated based on a percentage of the average salaries level in the PRC, from the above-mentioned retirement scheme at their normal retirement age. During the year ended 31 December 2020, the Group has been granted certain exemption on the contributions to defined contribution retirement plans by the local government authority as a result of the COVID-19 impact for the period from February 2020 to December 2020.

The Group has no further obligation for payment of other retirement benefits beyond the above contributions.

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Amortisation cost of intangible assets (Note 13)# 1,444 1,136 190

Depreciation charge (Note 11)# – owned property, plant and equipment 76,135 103,582 174,633 – right-of-use assets 11,304 25,540 76,244

87,439 129,122 250,877

Auditors’ remuneration – audit services 1,655 1,305 1,723 Research and development expense 54,811 47,326 74,999

Cost of sale of biological assets# 2,845,951 3,829,450 4,848,377 Cost of inventories# 50,608 151,901 133,080

# Cost of sale of biological assets and inventories includes RMB209,876,000, RMB238,317,000 and RMB304,690,000 relating to staff costs, depreciation and amortisation expenses for the years ended 31 December 2018, 2019 and 2020 respectively, which are also included in the respective total amounts disclosed separately above or in Note 6(b) for each of these types of expenses.

7 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(a) Taxation in the consolidated statements of profit or loss and other comprehensive income represents:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Current tax Provision for the year 7 508 666 Deferred tax Origination and reversal of temporary differences – (1) –

7 507 666

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(b) Reconciliation between tax expense and accounting profit at applicable tax rates:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Profit before taxation 154,561 2,092,330 3,609,017

Notional tax on profit before taxation at PRC statutory tax rate 38,640 523,083 902,254 Tax effect of non-deductible expenses 1,327 2,352 3,487 Tax effect of unused tax losses and temporary differences not recognised 14,757 33,188 27,705 Tax effect of unused tax losses and temporary differences not recognised in previous years but utilised in current year (1,718) – (777) Tax concessions (Note (ii)) (52,999) (558,116) (932,003)

Actual tax expense 7 507 666

Notes:

(i) The Company and its subsidiaries established in the PRC and are subject to PRC Corporate Income Tax rate of 25% during the Track Record Periods.

(ii) Pursuant to the article 27 of Law of the People’s Republic of China on Enterprise Income Tax (No. 63 Order of the President of the People’s Republic of China), certain subsidiaries are entitled to full income tax exemptions on their animal husbandry business.

8 DIRECTORS AND SUPERVISORS’ EMOLUMENTS

Details of the emoluments of the directors and supervisors of the Company during the Track Record Periods are as followings:

Year ended 31 December 2018 Salaries, allowances Retirement Directors’ and benefits Discretionary scheme Share-based fees in kind bonuses contributions Sub-total payments Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Directors Wang Degen – 475 54 18 547 – 547 Chen Yuxin – – – – – – – Yao Hailong – 380 54 18 452 – 452 Hu Wei – 333 108 18 459 – 459 Liu Shan – – – – – – – Supervisor Rao Hui – – – – – – –

– 1,188 216 54 1,458 – 1,458

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Year ended 31 December 2019 Salaries, allowances Retirement Directors’ and benefits Discretionary scheme Share-based fees in kind bonuses contributions Sub-total payments Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Directors Wang Degen (resigned on 30 November 2019) – 731 659 15 1,405 – 1,405 Chen Yuxin (resigned on 8 March 2019) – – – – – – – Yao Hailong (resigned on 8 March 2019, and appointed on 30 November 2019) – 512 358 18 888 47 935 Hu Wei – 355 553 15 923 – 923 Wang Dehui (appointed on 8 March 2019) – 600 47 – 647 139 786 Liu Shan – – – – – – – Li Xuewei (appointed on 8 March 2019) – – – – – – – Supervisors Rao Hui (resigned on 8 March 2019) – – – – – – – Zhu Hui (appointed on 8 March 2019) – 149 56 10 215 21 236 Gong Shuang (appointed on 8 March 2019) – 271 144 12 427 44 471 Zhou Zhexu (appointed on 8 March 2019) – 200 90 8 298 25 323

– 2,818 1,907 78 4,803 276 5,079

Year ended 31 December 2020 Salaries, allowances Retirement Directors’ and benefits Discretionary scheme Share-based fees in kind bonuses contributions Sub-total payments Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Directors Wang Dehui – 827 647 – 1,474 543 2,017 Yao Hailong – 992 660 1 1,653 894 2,547 Hu Wei – 1,033 300 1 1,334 – 1,334 Liu Shan – – – – – – – Li Xuewei – – – – – – – Supervisors Zhu Hui – 229 100 1 330 31 361 Gong Shuang – 375 300 1 676 66 742 Zhou Zhexu – 361 144 1 506 37 543

– 3,817 2,151 5 5,973 1,571 7,544

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During the Track Record Periods, no emoluments were paid by the Group to the directors or supervisors as an inducement to join or upon joining the Group or as compensation for loss of office. No emoluments were paid to independent non-executive directors during the Track Record Periods as the independent non-executive directors were appointed on 10 May 2021 and 4 June 2021, respectively, and such appointment will be effective from date of the [REDACTED] of the Company’s shares on the Stock Exchange.

9 INDIVIDUALS WITH HIGHEST EMOLUMENTS

During the Track Record Periods, of the five individuals with the highest emoluments, three, three and two are directors for each of the years ended 31 December 2018, 2019 and 2020, respectively, whose emoluments are disclosed in Note 8. The aggregate of the emoluments in respect of the remaining individuals during the Track Record Periods are as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Salaries and other emoluments 573 1,227 2,634 Discretionary bonuses 168 411 2,060 Share-based payments – 27,069 581 Retirement scheme contributions 19 8 2

760 28,715 5,277

The emoluments of the individuals who are amongst the five highest paid individuals of the Group are within the following bands:

Year ended 31 December 2018 2019 2020 Number of Number of Number of individuals individuals individuals

HKDNil – HKD1,000,000 2 – – HKD1,000,001 – HKD1,500,000 – 1 – HKD1,500,001 – HKD2,000,000 – – 1 HKD2,000,001 – HKD2,500,000 – – 2 HKD30,500,001 – HKD31,000,000 – 1 –

10 EARNINGS PER SHARE

The calculation of the basic earnings per share during the Track Record Periods is based on the profit for the year attributable to ordinary shares in issue or deemed to be in issue.

As described in Note 31, the Company issued 250,000,000 shares of RMB1 each on 9 May 2019 and converted into a joint stock limited liability company. For the purpose of computing basic and diluted earnings per share, the weighted average number of ordinary shares deemed to be in issue before the Company’s conversion into a joint stock company was determined assuming the conversion into joint stock company had occurred since 1 January 2018, at the exchange ratio established in the conversion in May 2019.

In addition, pursuant to the resolution passed by the general meeting of shareholders of the Company on 9 May 2019, the Company issued 1.4581 shares for each share in issue by transferring RMB148,300,000 from retained earnings to share capital. And that on 30 October 2020, the Company issued 0.2118 shares for each share in issue by transferring RMB62,915,000 from retained earnings to share capital. Accordingly, the weighted average number of shares has also been adjusted retrospectively from 1 January 2018 for such capitalisation issue.

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(a) Profit of the year attributable to ordinary equity shareholders of the Company

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Profit of the year attributable to all equity shareholders of the Company 115,066 2,002,548 3,488,173

(b) Weighted average number of shares

Weighted average number of ordinary shares deemed to be in issue

2018 2019 2020 ’000 ’000 ’000

Ordinary shares at 1 January deemed to be in issue 100,000 101,700 290,384 Effect of ordinary shares deemed to be in issue 163 – – Effect of ordinary shares in issue – 17,778 4,669 Effect of capitalisation issue 198,203 205,009 62,485

Weighted average number of ordinary shares deemed to be in issue 298,366 324,487 357,538

The Company did not have any potential dilutive shares throughout the Track Record Periods. Accordingly, diluted earnings per share is the same as basic earnings per share.

11 PROPERTY, PLANT AND EQUIPMENT

(a) Reconciliation of carrying amount

The Group

Vehicles, Machinery furniture, Plant and Right-of-use and and Construction buildings assets equipment others Sub-total in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost: At 1 January 2018 690,422 101,547 289,749 46,013 1,127,731 130,975 1,258,706 Additions 12,388 201,332 23,129 16,706 253,555 269,711 523,266 Disposals (4,652) – (5,554) (4,317) (14,523) – (14,523) Business combinations 33,264 11,505 23,562 2,728 71,059 3,424 74,483 Transfer in/(out) 126,408 – 51,348 13,471 191,227 (191,227) –

At 31 December 2018 857,830 314,384 382,234 74,601 1,629,049 212,883 1,841,932

At 1 January 2019 857,830 314,384 382,234 74,601 1,629,049 212,883 1,841,932 Additions 63,829 196,267 61,411 64,145 385,652 501,636 887,288 Disposals (3,228) – (3,763) (2,116) (9,107) (1,010) (10,117) Transfer in/(out) 292,388 – 137,652 12,954 442,994 (442,994) –

At 31 December 2019 1,210,819 510,651 577,534 149,584 2,448,588 270,515 2,719,103

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At 1 January 2020 1,210,819 510,651 577,534 149,584 2,448,588 270,515 2,719,103 Additions 45,397 1,034,774 111,755 131,698 1,323,624 2,788,885 4,112,509 Disposals (7,959) – (5,459) (4,880) (18,298) (1,301) (19,599) Business combination – – 5 – 5 27,605 27,610 Transfer in/(out) 752,881 – 386,553 28,025 1,167,459 (1,167,459) –

At 31 December 2020 2,001,138 1,545,425 1,070,388 304,427 4,921,378 1,918,245 6,839,623 ------

Accumulated depreciation: At 1 January 2018 (90,547) (2,964) (70,986) (25,082) (189,579) – (189,579) Charge for the year (35,856) (11,304) (30,552) (9,727) (87,439) – (87,439) Written back on disposals 1,128 – 1,263 1,932 4,323 – 4,323

At 31 December 2018 (125,275) (14,268) (100,275) (32,877) (272,695) – (272,695)

At 1 January 2019 (125,275) (14,268) (100,275) (32,877) (272,695) – (272,695) Charge for the year (44,577) (25,540) (42,182) (16,823) (129,122) – (129,122) Impairment loss – – – – – (1,949) (1,949) Written back on disposals 749 – 2,646 1,792 5,187 – 5,187

At 31 December 2019 (169,103) (39,808) (139,811) (47,908) (396,630) (1,949) (398,579)

At 1 January 2020 (169,103) (39,808) (139,811) (47,908) (396,630) (1,949) (398,579) Charge for the year (66,970) (76,244) (69,431) (38,232) (250,877) – (250,877) Impairment loss – – – – – (959) (959) Written back on disposals 1,315 – 4,459 2,833 8,607 – 8,607

At 31 December 2020 (234,758) (116,052) (204,783) (83,307) (638,900) (2,908) (641,808) ------

Net book value: At 31 December 2018 732,555 300,116 281,959 41,724 1,356,354 212,883 1,569,237

At 31 December 2019 1,041,716 470,843 437,723 101,676 2,051,958 268,566 2,320,524

At 31 December 2020 1,766,380 1,429,373 865,605 221,120 4,282,478 1,915,337 6,197,815

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Certain of the Group’s property, plant and equipment in mainland China with an aggregate net carrying amount of RMB nil, RMB21,340,000 and RMB18,423,000 at 31 December 2018, 2019 and 2020 respectively were used to secure certain bank borrowings of the Group (Note 25(c)).

(b) Right-of-use assets

The analysis of the net book value of right-of-use assets by class of underlying asset is as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Property, plant and equipment leased for own use, carried at depreciation cost: – Land use rights and leased land 111,810 149,857 284,238 – Pig and chicken farms and office buildings 157,825 265,415 908,196 – Machinery and equipment 30,481 55,571 236,939

300,116 470,843 1,429,373

The analysis of expense items in relation to leases recognised in profit or loss is as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Depreciation charge of right-of-use assets by class of underlying asset: – Land use rights and leased land 5,923 8,391 17,074 – Pig and chicken farms and office buildings 4,646 13,850 46,835 – Machinery and equipment 735 3,299 12,335

11,304 25,540 76,244

Interest on lease liabilities (Note 6(a)) 7,424 19,446 58,351 Expense relating to short-term leases 4,245 3,110 1,188

Details of total cash outflow for leases and the maturity analysis of lease liabilities are set out in Notes 22(c) and 26, respectively.

12 BIOLOGICAL ASSETS

The Group

Breeding Commodity Breeding stocks – Commodity stocks- stocks – Hog Chicken stocks- Live Broilers and breeders breeders swine broiler eggs Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost: At 1 January 2018 173,972 50,282 321,341 174,950 720,545 Increase due to purchase/raising/transfer 244,272 76,972 1,633,333 1,791,918 3,746,495 Decrease due to sales/disposal/transfer (215,485) (72,282) (1,427,182) (1,708,683) (3,423,632) Changes in fair value 105 (7,742) 96,994 (28,646) 60,711

At 31 December 2018 202,864 47,230 624,486 229,539 1,104,119

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Breeding Commodity Breeding stocks – Commodity stocks- stocks – Hog Chicken stocks- Live Broilers and breeders breeders swine broiler eggs Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019 202,864 47,230 624,486 229,539 1,104,119 Increase due to purchase/raising/transfer 356,098 99,242 2,346,335 2,229,063 5,030,738 Decrease due to sales/disposal/transfer (236,006) (82,241) (2,072,181) (2,149,733) (4,540,161) Changes in fair value 408,091 14,920 654,408 456 1,077,875

At 31 December 2019 731,047 79,151 1,553,048 309,325 2,672,571

At 1 January 2020 731,047 79,151 1,553,048 309,325 2,672,571 Increase due to purchase/raising/transfer 2,607,763 137,704 4,541,096 2,623,966 9,910,529 Decrease due to sales/disposal/transfer (1,637,645) (127,440) (3,764,913) (2,667,877) (8,197,875) Changes in fair value 735,257 (12,230) 603,268 (30,569) 1,295,726

At 31 December 2020 2,436,422 77,185 2,932,499 234,845 5,680,951

Notes:

(i) Breeding stocks represent hogs and chicken of required qualities that are selected as breeding stock held for own use, including boars, sows, gilts, studs, immature and mature chicken breeders. Boars are male hogs for mating purpose, sows are female hogs which have farrowed and mature chicken breeders are chicken which have mated. Boars, sows and mature chicken breeders held for the production of piglets and eggs for sale and/or further raising to become swine parent stock/chicken breeders or market hogs/chicken. Gilts, studs and immature chicken breeders are pigs/chicken that are selected to be transferred into boars, sows and mature chicken breeders but haven’t been mated or farrowed. Since there was no active market for boars, sows, immature and mature chicken breeders at specific age, the replacement cost approach has been adopted. Market prices for different species of boars, sows, immature and mature chicken breeders have been obtained as a basis for the replacement cost, and adjusted for the reduction/consumption of economic useful life by applying the respective metrics to estimate the fair value of breeding stock in different species. The fair value of the gilts and studs were derived by multiplying the market prices of the gilts and studs for different species by their corresponding quantities.

Breeding stocks may transfer to Commodity stocks, when the pigs/chicken held for own use will be sold as market hogs/chicken.

(ii) Commodity stocks include pigs (piglets, nursery pigs, growers) and chickens (eggs, commodity chicks and broilers). Piglets are newborn pigs between birth and weaning between zero to three weeks of age. Nursery pigs are young hogs of around 22-73 days old that have been weaned off and consuming feeding stuff. Growers are hogs that age around 74 to 183 days. Eggs are the fertilized eggs laid by chicken breeders which are incubated for around 21 days and hatched into chicken breeds, chicken breeds will be raised for around 90-120 days to broilers or chicken breeders.

The replacement cost approach was adopted for valuing piglets as they are only around three-week old and there is insignificant biological transformation that take place since the initial cost incurrence, the recent cost incurred approximates the replacement costs, including depreciation due to use of breeding stock and other associated costs.

Nursery pigs, growers, eggs, chicken breeds, broilers were assumed to be sold live or slaughtered when they become mature, breeding stock or as the hogs/chickens for production of pork/chicken products (the “Market Hogs”/”Broilers”). The fair value of nursery pigs, growers, eggs, chicken breeds and broilers is derived by assuming the market prices of the Market Hogs, eggs or broilers as the estimated price receivable upon sale or slaughtering, multiplying the unit price for different categories or species by the corresponding quantities, less the expected costs required to raise the hogs or chickens, adjusting with mortality rate and the respective profit margin.

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Commodity stocks may transfer to breeding stocks, when the pigs/chickens are selected as breeding stock held for own use after growers.

(iii) The quantities of biological assets owned by the Group at the end of reporting period are as follows:

At 31 December 2018 2019 2020 (Units) (Units) (Units)

Commodity stocks – Hogs – Piglets (Heads) 97,187 90,732 269,279 – Nursery pigs (Heads) 39,112 53,721 130,549 – Growers (Heads) 555,929 567,761 1,126,065

Commodity stocks – Poultry – Eggs (Pieces) 7,622,631 9,508,164 10,029,818 – Commodity chicks (Birds) 2,550 51,318 53,072 – Broilers (Birds) 14,477,788 20,890,929 16,435,672

Breeding stocks – Hogs – Sows and Boars (Heads) 67,031 79,422 214,455 – Gilts and Studs (Heads) 18,098 65,361 199,290

Breeding stocks – Poultry – Mature Breeders (Birds) 648,854 773,370 827,316 – Immature Breeders (Birds) 552,973 814,207 844,106

(iv) Fair value measurement of biological assets

Fair value hierarchy

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:

• Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.

• Level 3 valuations: Fair value measured using significant unobservable inputs.

The fair value measurements of biological assets fall into level 3 of the fair value hierarchy.

During the years ended 31 December 2018, 2019 and 2020, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The Group’s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period and in which they occur.

All of the Group’s biological assets were revalued as at 31 December 2018, 2019 and 2020. The valuations were carried out by Jones Lang LaSalle (Beijing) Consultants, Inc. (“JLL”). The Group’s finance manager and the chief financial officer have discussion with the valuers on the valuation assumptions and valuation results when the valuation is performed at the end of each reporting date.

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Information about Level 3 fair value measurements

Significant unobservable inputs 31 December 2018

Commodity stocks – Piglets Replacement cost RMB186.87 to RMB364.16 per head – Nursery Pigs and Growers Market price RMB9.74 to RMB19.12 per kilogram – Eggs Market price RMB0.96 per piece – Commodity Chicks Market price RMB8.93 per bird – Broilers Market price RMB11.51 to RMB19.32 per kilogram Breeding stocks – Sows and Boars Replacement cost RMB2,100 to RMB6,200 per head – Gilts and Studs Market price RMB1,300 to RMB5,400 per head – Mature chicken breeders Replacement cost RMB17.47 to RMB72.07 per bird – Immature chicken breeders Replacement cost RMB5.68 to RMB61.66 per bird

Significant unobservable inputs 31 December 2019

Commodity stocks – Piglets Replacement cost RMB256.75 to RMB409.62 per head – Nursery Pigs and Growers Market price RMB31.03 to RMB36.95 per kilogram – Eggs Market price RMB1.25 per piece – Commodity Chicks Market price RMB3.77 to RMB5.01 per bird – Broilers Market price RMB9.92 to RMB19.40 per kilogram Breeding stocks – Sows and Boars Replacement cost RMB4,940 to RMB9,800 per head – Gilts and Studs Market price RMB4,140 to RMB9,000 per head – Mature chicken breeders Replacement cost RMB22.85 to RMB99.12 per bird – Immature chicken breeders Replacement cost RMB8.69 to RMB78.53 per bird

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Significant unobservable inputs 31 December 2020

Commodity stocks – Piglets Replacement cost RMB277.59 to RMB447.40 per head – Nursery Pigs and Growers Market price RMB33.99 to RMB36.67 per kilogram – Eggs Market price RMB0.80 per piece – Commodity Chicks Market price RMB2.78 to RMB5.11 per bird – Broilers Market price RMB10.87 to RMB19.00 per kilogram Breeding stocks – Sows and Boars Replacement cost RMB5,400 to RMB12,700 per head – Gilts and Studs Market price RMB4,600 to RMB11,900 per head – Mature chicken breeders Replacement cost RMB25.57 to RMB106.86 per bird – Immature chicken breeders Replacement cost RMB13.68 to RMB87.29 per bird

A significant increase/decrease in the estimated market price and replacement cost in isolation would result in a significant increase/decrease in the fair value of the biological assets.

As at 31 December 2018, 2019 and 2020 if market price of nursery pigs, growers, gilts, studs, eggs, commodity chicks and broilers and replacement cost of piglets, sows, boars, mature and immature chicken breeders held for own use increases by 10%, the estimated fair value of biological assets would have increased by RMB108,686,000, RMB267,082,000 and RMB563,805,000, respectively, and if market price and replacement cost decreases by 10%, the estimated fair value of biological assets would have decreased by RMB114,036,000, RMB274,447,000 and RMB557,228,000, respectively.

Changes in fair value of biological assets are presented in “Net changes in fair value of biological assets” in the consolidated statements of profit or loss and other comprehensive income.

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13 INTANGIBLE ASSETS

The Group

Software RMB’000

Cost: At 1 January 2018 13,812 Additions 175

At 31 December 2018 13,987

At 1 January 2019 13,987 Additions 69 Disposals (13,241)

At 31 December 2019 815

At 1 January 2020 815 Additions 1,823

At 31 December 2020 2,638 ------

Accumulated amortisation: At 1 January 2018 (3,207) Charge for the year (1,444)

At 31 December 2018 (4,651)

At 1 January 2019 (4,651) Charge for the year (1,136) Disposal 5,195

At 31 December 2019 (592)

At 1 January 2020 (592) Charge for the year (190)

At 31 December 2020 (782) ------

Net book value: At 31 December 2018 9,336

At 31 December 2019 223

At 31 December 2020 1,856

The amortisation charge for the year is included in “administrative expenses” in the consolidated statement of profit or loss.

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14 GOODWILL

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Carrying amount 14,730 14,730 14,730

Impairment tests for cash-generating units containing goodwill

Goodwill is allocated to the Group’s cash-generating units (CGU) in sales of poultry segment.

The recoverable amount of the CGU is determined based on value-in-use calculations. In 2018, 2019 and 2020, these calculations use cash flow projections based on financial budgets approved by management covering a five-year period and cash flows beyond the five-year period are extrapolated using an estimated weighted average growth rate of 0%. The growth rates used are based on past performance and expectation of market developments. The cash flows are discounted using a discount rate of 12.99%, 13.15% and 14.42% at 31 December 2018, 2019 and 2020, respectively. The discount rates used reflect specific risks relating to the relevant segments.

15 INVESTMENTS IN SUBSIDIARIES

Particulars of the principal subsidiaries are as follows:

Group’s effective interest Place of establishment/ incorporation/ Particulars operation and Date of of issued/ At At At As of legal form of establishment/ paid-up 31 December 31 December 31 December date of Principal Name of company the entity incorporation capital 2018 2019 2020 report activities RMB’000

Chengdu Dekon the PRC, limited 29 December 140,000 100% 100% 100% 100% Holding company Animal Husbandry liability 2017 Technology Co., company Ltd. 成都德康畜牧科技有限公司 (Note (ii)) Chengdu Dekon the PRC, limited 10 October 72,000 100% 100% 100% 100% Holding company Chicken Breeding liability 2014 Co., Ltd. 成都德 company 康雞業有限公司 (Note (ii)) Chengdu Xindekon the PRC, limited 17 August 850 N/A N/A 100% 100% Holding company Food Co., Ltd. 成 liability 2020 都新德康食品有限 company 公司 (Note (ii)) Chengdu Dekon the PRC, limited 6 November 50,000 100% 100% 100% 100% Trading Animal Health liability 2018 Technology company Service Co., Ltd. 成都德康動物健康技術服務有限公司 (Note (ii)) Mianzhu Dekon Pig the PRC, limited 13 June 2012 20,000 100% 100% 100% 100% Pig farming Farming Co., Ltd. liability 綿竹德康生豬養殖 company 有限公司 (Note (ii))

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Sihong Dekon the PRC, limited 18 April 2018 185,000 55% 55% 65% 65% Pig farming Farming and liability Technology Co., company Ltd. 泗洪德康農牧科技有限公司 (Note (ii)) Horqin Right Front the PRC, limited 13 December 10,000 100% 69% 69% 69% Pig farming Banner Dekon liability 2016 Agriculture and company Animal Husbandry Co., Ltd. 科爾沁右翼前旗德康農牧有限公司 (Note (ii)) Chongqing Hechuan the PRC, limited 28 October 30,000 90% 90% 100% 100% Pig farming Dekon Pig liability 2015 Farming Co., Ltd. company 重慶市合川區德康生豬養殖有限公司 (Note (ii)) Xuanwei Dekon Pig the PRC, limited 18 October 50,000 96% 98% 98.40% 98.40% Pig farming Farming Co., Ltd. liability 2012 宣威德康生豬養殖 company 有限公司 (Note (ii)) Xishui Dekon the PRC, limited 4 July 2012 20,000 100% 100% 100% 100% Pig farming Agriculture and liability Animal Husbandry company Co., Ltd. 習水德康農牧有限公司 (Note (ii)) Quxian Dekon Pig the PRC, limited 17 May 2012 10,000 100% 100% 100% 100% Pig farming Farming Co., Ltd. liability 渠縣德康生豬養殖 company 有限公司 (Note (ii)) Jiangan Dekon Pig the PRC, limited 27 April 2012 10,000 91% 100% 100% 100% Pig farming Farming Co., Ltd. liability 江安德康生豬養殖 company 有限公司 (Note (iii)) Songtao Dekon the PRC, limited 1 March 2012 20,000 93% 100% 100% 100% Pig farming Agriculture and liability Animal Husbandry company Co., Ltd. 松桃德康農牧有限公司 (Note (ii))

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Anshun Dekon the PRC, limited 9 May 2011 10,000 95% 100% 100% 100% Pig farming Agriculture and liability Animal Husbandry company Co., Ltd. 安順德康農牧有限公司 (Note (ii)) Yuechi Yincheng the PRC, limited 21 January 5,000 100% 100% 100% 100% Pig farming Dekon Animal liability 2008 Husbandry Co., company Ltd. 岳池銀城德康畜牧有限公司 (Note (ii)) Guizhou Guian New the PRC, limited 20 May 2011 10,000 99% 99% 99% 99% Yellow-feathered Area Dekon liability broiler farming Poultry Farming company Co., Ltd. 貴州貴安新區德康家禽養殖有限公司 (Note (ii)) Shilin Dekon the PRC, limited 28 January 5,000 95% 95% 95% 95% Yellow-feathered Poultry Farming liability 2011 broiler farming Co., Ltd. 石林德 company 康家禽養殖有限公司 (Note (ii)) Kunming Dekon the PRC, limited 30 September 3,000 90% 98% 98% 98% Yellow-feathered Poultry Farming liability 2009 broiler farming Co., Ltd. 昆明德 company 康家禽養殖有限公司 (Note (ii)) Deyang Dekon the PRC, limited 24 September 2,000 80.5% 100% 100% 100% Yellow-feathered Poultry Farming liability 2009 broiler farming Co., Ltd. 德陽德 company 康家禽養殖有限公司 (Note (ii)) Xifeng Dekon the PRC, limited 16 December 12,000 99% 99% 99% 99% Yellow-feathered Poultry Farming liability 2008 broiler farming Co., Ltd. 息烽德 company 康家禽養殖有限公司 (Note (ii)) Guangdong the PRC, limited 23 August 10,000 73% 92% 92% 92% Yellow-feathered Zhicheng Foods liability 2007 broiler farming Co., Ltd. 廣東智 company 成食品有限公司 (Note (iii))

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Chongqing Bishan the PRC, limited 27 April 2007 10,000 67% 88% 88% 88% Yellow-feathered Dekon Poultry liability broiler farming Farming Co., Ltd. company 重慶市璧山區德康家禽養殖有限公司 (Note (iii)) Guangdong the PRC, limited 10 July 2003 54,000 73% 92% 92% 92% Yellow-feathered Wizagricultural liability broiler farming Science & company Technology Co., Ltd. 廣東智威農業科技股份有限公司 (Note (iii)) Kaiping Jinjiwang the PRC, limited 11 November 6,000 73% 92% 92% 92% Yellow-feathered Poultry Co., Ltd. liability 2002 broiler farming 開平金雞王禽業有 company 限公司 (Note (iii))

Notes:

(i) The official names of all these entities are in Chinese. The English translation is for identification only.

(ii) No audited financial statements have been prepared for these companies.

(iii) The financial statements of the certain subsidiaries of the Company for the years ended 31 December 2018 and 2019 have been audited by Sichuan Huaxin (Group) CPA LLP 四川華信(集團)會計師事務所 (特殊普通合夥), and that for the year ended 31 December 2020 have been audited by Shaoguan Gongxin Certified Public Accountants Co., Ltd. 韶關市公信會計師事務所有限公司.

The above table lists out the subsidiaries of the Company which, in the opinion of the directors, principally affected the Group’s profits and losses or formed a substantial portion of the Group. To give details of all the other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

16 INTERESTS IN ASSOCIATES

The principal associates of the Group are as follows:

Proportion of ownership interest Place of establishment/ incorporation/ Particulars operation and Date of of issued/ At At At As of legal form of the establishment/ paid-up 31 December 31 December 31 December date of Principal Name of company entity incorporation capital 2018 2019 2020 report activities RMB’000

Jilin Songfa Dekon the PRC, limited 3 January 2017 10,000 40% 40% 40% 40% Pig farming Agricultural Industry liability company Development Co., Ltd. 吉林松發德康農業產業發展有限公司

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Chongqing Detianfeng the PRC, limited 14 September 20,000 N/A 5% 5% 5% Pig farming Modern Agricultural liability company 2019 Development Co., Ltd. 重慶德添豐現代農業發展有限公司 (i) Jilin Jinlongfeng the PRC, limited 22 July 2020 40,000 N/A N/A 20% 20% Pig farming Agriculture and liability company Animal Husbandry Technology Co., Ltd. 吉林金隆豐農牧科技有限公司

(i) The Group has voting right in the meeting of the board of the entity and has significant influence on the entity.

(ii) The Group disposed the shares of Guizhou Huawu Brand Management Co., Ltd. 貴州花舞品牌管理有限公司 and Guizhou Tequ New Agricultural Group Co., Ltd. 貴州特驅新農業集團有限公司 in March 2018.

Information of associates that are not individually material:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Carrying amount of individually immaterial associates in the Historical Financial Information – – 9,653

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Amounts of the Group’s share of individually immaterial associates’ profit and total comprehensive income – – (347)

17 OTHER NON-CURRENT ASSETS

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Prepayment for property, plant and equipment 30,992 22,200 46,203 Others 2,680 5,551 6,314

33,672 27,751 52,517

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18 INVENTORIES

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Raw materials 218,978 228,229 372,613 Finished goods 6,541 646 8,221 Spare parts and consumables 12,557 28,296 63,247

238,076 257,171 444,081

19 TRADE RECEIVABLES

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Trade receivables due from: – related parties – 5 – – third parties 16,601 7,561 1,598

16,601 7,566 1,598 Less: expected credit loss (293) (6) (7)

16,308 7,560 1,591

All of the trade receivables, net of allowance for doubtful debts (if any), are expected to be recovered within one year.

All of the trade receivables were due upon issuing the invoices.

Ageing analysis

As of the end of the reporting period, the ageing analysis of trade receivables based on the invoice date and net of loss allowance, is as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within 1 year 15,757 7,528 1,435 1 to 2 years 512 28 154 2 to 3 years 39 4 2

16,308 7,560 1,591

Further details on the Group’s credit policy and credit risk arising from trade receivable are set out in Note 34(a).

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20 PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Other receivables relating to disposal of interest in a subsidiary 1,939 – – Loans and advances to contract farmers 12,259 33,594 36,634 Deposits 21,061 22,455 37,542 Dividend receivables 4,470 – – Loans and advances to local government 4,514 27,963 17,447 Others 4,319 1,964 2,155 Prepayments for purchase of inventories – Related parties – – 56 – Third parties 9,671 25,773 57,461 Prepaid expense 1,588 4,715 10,721 Less: expected credit loss (12,980) (17,682) (19,921)

46,841 98,782 142,095

All of the prepayments and other receivables are expected to be recovered or recognised as expense within one year.

21 FINANCIAL ASSETS AT FVTPL

The Group/Company

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

RMB wealth management products 31,233 60,066 655,198

22 CASH AT BANK AND ON HAND AND OTHER CASH FLOW INFORMATION

(a) Cash at bank and on hand comprise:

The Group The Company At 31 December At 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cash on hand 56 – – 40 – – Cash at bank 445,237 696,492 1,837,832 216,842 543,319 1,632,772

Cash at bank and on hand included in the consolidated statements of financial position 445,293 696,492 1,837,832 216,882 543,319 1,632,772

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The Group The Company At 31 December At 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Include: restricted deposits 29,032 29,735 125,958 29,000 29,550 103,300 Cash and cash equivalents included in the consolidated cash flow statements 416,261 666,757 1,711,874

(b) Reconciliation of liabilities arising from financing activities

The table below details changes in the Group’s liabilities from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the Group’s consolidated cash flow statement as cash flows from financing activities.

Amounts Other Interest- due to non- bearing Interest related current Lease borrowings payable parties liabilities liabilities Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 25) (Note 24) (Note 37) (Note 30) (Note 26)

At 1 January 2018 981,314 1,798 – 10,000 89,729 1,082,841 ------

Changes from financing cash flows: Proceeds from interest-bearing borrowings 1,012,030 ––––1,012,030 Proceeds from non-interest-bearing government loans – – – 20,000 – 20,000 Repayment of interest-bearing borrowings (703,196) ––––(703,196) Capital element of lease rental paid ––––(18,266) (18,266) Interest element of lease rentals paid ––––(7,424) (7,424) Other interests paid – (44,926) – – – (44,926) Net increase in the amounts due to related parties – – 195,000 – – 195,000

Total changes from financing cash flows 308,834 (44,926) 195,000 20,000 (25,690) 453,218 ------

Other changes: Increase in lease liabilities from entering into new leases during the year ––––193,490 193,490 Interest expenses (Note 6(a)) – 45,048 – – 7,424 52,472

Total other changes – 45,048 – – 200,914 245,962 ------

At 31 December 2018 1,290,148 1,920 195,000 30,000 264,953 1,782,021

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At 1 January 2019 1,290,148 1,920 195,000 30,000 264,953 1,782,021 ------

Changes from financing cash flows: Proceeds from interest-bearing borrowings 868,192––––868,192 Proceeds from non-interest bearing government loans – – – 4,200 – 4,200 Repayment of interest-bearing borrowings (1,145,000) ––––(1,145,000) Capital element of lease rentals paid ––––(27,137) (27,137) Interest element of lease rentals paid ––––(19,446) (19,446) Other interests paid – (67,158) – – – (67,158) Net decrease in the amounts due to related parties – – (15,000) – – (15,000)

Total changes from financing cash flows (276,808) (67,158) (15,000) 4,200 (46,583) (401,349) ------

Other changes: Increase in lease liabilities from entering into new leases during the year ––––195,718 195,718 Disposal of a subsidiary (618) ––––(618) Interest expenses (Note 6(a)) – 66,265 – – 19,446 85,711 Other changes* – – (180,000) – – (180,000)

Total other changes (618) 66,265 (180,000) – 215,164 100,811 ------

At 31 December 2019 1,012,722 1,027 – 34,200 433,534 1,481,483

* The amounts represented liabilities converted into equity.

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Interest- Other bearing Interest non-current Lease borrowings payable liabilities liabilities Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 25) (Note 24) (Note 30) (Note 26)

At 1 January 2020 1,012,722 1,027 34,200 433,534 1,481,483 ------

Changes from financing cash flows: Proceeds from interest- bearing borrowings 3,871,083 – – – 3,871,083 Repayment of interest- bearing borrowings (724,375) – – – (724,375) Capital element of lease rental paid – – – (72,284) (72,284) Interest element of lease rentals paid – – – (58,351) (58,351) Other interests paid – (113,441) – – (113,441)

Total changes from financing cash flows 3,146,708 (113,441) – (130,635) 2,902,632 ------

Other changes: Increase in lease liabilities from entering into new leases during the year – – – 931,391 931,391 Interest expenses (Note 6(a)) – 117,151 – 58,351 175,502

Total other changes – 117,151 – 989,742 1,106,893 ------

At 31 December 2020 4,159,430 4,737 34,200 1,292,641 5,491,008

Amounts included in the consolidated cash flow statements for leases comprise the following:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within operating cash flows 4,245 3,110 1,188 Within investing cash flows 11,505 – – Within financing cash flows 25,690 46,583 130,635

41,440 49,693 131,823

These amounts relate to the following:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Lease rentals paid 29,935 49,693 131,823 Additions of land use rights 11,505 – –

41,440 49,693 131,823

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(d) Net cash inflow arising from the disposal of subsidiaries

The disposals of subsidiaries during the Track Record Periods had the following effects on the Group’s assets and liabilities on the disposal dates:

2018 2019 RMB’000 RMB’000

Non-current assets 882 – Current assets 20,496 13,387 Current liabilities (18,907) (12,303)

2,471 1,084 Less: non-controlling interests – (353)

Net assets 2,471 731

Net gain on disposal of interests in subsidiaries arising from the disposal has been recognised as follows:

2018 2019 RMB’000 RMB’000

Consideration transferred 24,271 1,300 Net assets (2,471) (731)

Net gain on disposal of interests in subsidiaries 21,800 569

An analysis of the cash flows in respect of the disposal of the subsidiaries is as follows:

2018 2019 RMB’000 RMB’000

Considerations 24,271 1,300 (Increase)/decrease in consideration receivables (1,939) 1,939

Cash and cash equivalents disposed of (13,619) (9)

Net cash inflow included in cash flows used in investing activities 8,713 3,230

23 TRADE AND BILLS PAYABLES

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Trade payables due to: – related parties 1,509 7,137 17,149 – third parties 179,261 375,053 591,213

180,770 382,190 608,362 Bills payables 27,000 10,000 20,000

207,770 392,190 628,362

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At 31 December 2018, 2019 and 2020, the ageing analysis of trade and bills payables, based on the invoice date, is as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within 1 year 206,588 390,113 620,144 1-2 years 722 1,017 7,349 2-3 years 137 697 118 Over 3 years 323 363 751

207,770 392,190 628,362

As at 31 December 2018, 2019 and 2020, all trade and bills payables of the Group and the Company are or expected to be settled within one year or are payable on demand.

24 ACCRUALS AND OTHER PAYABLES

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Payables for staff related cost 53,949 114,147 240,423 Deposits received 396,273 476,524 737,103 Other taxes payable 3,677 2,070 3,859 Interest payable 1,920 1,027 4,737 Payables relating to purchase of property, plant and equipment – related parties 153 16 1,647 – third parties 22,822 56,342 295,352 Dividends payable 18,034 9,250 – Others 20,224 17,611 48,671 Contract liabilities – third parties 16,249 15,655 46,239

Total 533,301 692,642 1,378,031

Notes:

(a) All of the accruals and other payables are expected to be settled or recognised as revenue within one year or are repayable on demand.

(b) Movements in contract liabilities

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

At 1 January 26,673 16,249 15,655 Decrease in contract liabilities as a result of recognising revenue during the year that was included in the contract liabilities at the beginning of the year (26,673) (16,249) (15,655) Increase in contract liabilities as a result of receipt in advance of transferring goods 16,249 15,655 46,239

At 31 December 16,249 15,655 46,239

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25 INTEREST-BEARING BORROWINGS (a) The interest-bearing borrowings comprise: The Group The Company At 31 December At 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Bank loans: – Guaranteed by Substantial Shareholder 300,000 – – 300,000 – – – Guaranteed by a company controlled by one of the shareholders 847,500 – – 847,500 – – – Guaranteed by Substantial Shareholder, controlling party of Substantial Shareholder, spouse of controlling party of Substantial Shareholder and a company controlled by the spouse of controlling party of Substantial Shareholder – 602,500 1,912,000 – 602,500 1,912,000 – Guaranteed by Substantial Shareholder, controlling party of Substantial Shareholder and a company controlled by the spouse of controlling party of Substantial Shareholder – 100,000 699,500 – 100,000 699,500 – Guaranteed by controlling party of Substantial Shareholder – – 165,403 – – – – Guaranteed by a company controlled by one of the Directors of a subsidiary – 37,000 92,000 – – – – Unsecured and unguaranteed 618 10,000 766,528 – – –

Total bank loans 1,148,118 749,500 3,635,431 1,147,500 702,500 2,611,500 ------

Other loans – Guaranteed by Substantial Shareholder, controlling party of Substantial Shareholder and a company controlled by the spouse of controlling party of Substantial Shareholder – – 200,000 – – 150,000 – Secured by restricted deposits and guaranteed by Substantial Shareholder, controlling party of Substantial Shareholder and a company controlled by the spouse of controlling party of Substantial Shareholder – 178,500 133,000 – 178,500 133,000 – Secured by restricted deposits and guaranteed by a company controlled by one of the shareholders 110,000 – – 110,000 – – – Secured by financial assets at FVTPL 30,000 60,000 75,000 30,000 – 75,000 – Secured by property, plant and equipment and guaranteed by a company controlled by one of the shareholders – 22,692 12,505 – – – – Unsecured and unguaranteed 2,030 2,030 103,494 – – –

Total other loans 142,030 263,222 523,999 140,000 178,500 358,000 ------

1,290,148 1,012,722 4,159,430 1,287,500 881,000 2,969,500

For the outstanding amount of loan as at 31 December 2020, the guarantee provided by related parties to the Group for an aggregated amount of RMB1,492,000,000 will be automatically released upon the [REDACTED].

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(b) The interest-bearing borrowings were repayable as follows:

The Group The Company At 31 December At 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Within 1 year or on demand 1,145,618 723,119 2,445,481 1,145,000 641,000 2,158,000 ------

After 1 year but within 2 years 144,530 79,974 738,451 142,500 60,000 565,500 After 2 years but within 5 years – 209,629 837,212 – 180,000 246,000 After 5 years – – 138,286 – – –

Total non-current loans 144,530 289,603 1,713,949 142,500 240,000 811,500 ------

1,290,148 1,012,722 4,159,430 1,287,500 881,000 2,969,500

The Group The Company At 31 December At 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Property, plant and equipment – 21,340 18,423 – – – Restricted deposits for interest-bearing borrowings 29,000 29,550 88,300 29,000 29,550 88,300 Financial assets at FVTPL 31,322 60,066 – 31,322 60,066 –

60,322 110,956 106,723 60,322 89,616 88,300

26 LEASE LIABILITIES

The lease liabilities of the Group were repayable as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within 1 year 11,574 21,829 44,265 ------

After 1 year but within 2 years 7,071 20,749 41,748 After 2 years but within 5 years 20,156 50,454 96,020 After 5 years 226,152 340,502 1,110,608

253,379 411,705 1,248,376 ------

264,953 433,534 1,292,641

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27 EQUITY SETTLED SHARE-BASED TRANSACTIONS

On 29 June 2019, a share incentive scheme (“First Restricted Share Award Scheme”) was approved at the Company’s first extraordinary general meeting of 2019. The Company granted 3,807,107 restricted shares to an employee at a subscription price of RMB4.00 per share and 7,814,213 restricted shares to the eligible directors and employees (the “Participants”) at a subscription price of RMB9.85 per share of the Group under First Restricted Share Award Scheme.

On 15 December 2019, a share incentive scheme (“Second Restricted Share Award Scheme”) was approved at the Company’s fifth extraordinary general meeting of 2019. The Company granted 1,422,221 restricted shares to the eligible directors and employees (the “Participants”) of the Group under Second Restricted Share Award Scheme to subscribe the Company’s restricted shares at RMB30.11 per share.

(a) The terms and conditions of the grants are as follows:

Number of instruments Vesting conditions Contractual life

Restricted shares granted to directors: – On 29 June 2019 under First 2,281,219 Service period conditions 1-3 years Restricted Share Award Scheme apply (Note (i)) – 15 December 2019 under Second 391,593 Service period conditions 1-3 years Restricted Share Award Scheme apply (Note (i))

Restricted shares granted to employees: – On 29 June 2019 under First 3,807,107 Released once upon 1 year Restricted Share Award Scheme granted – On 29 June 2019 under First 5,532,994 Service period conditions 1-3 years Restricted Share Award Scheme apply (Note (i)) – 15 December 2019 under Second 1,030,628 Service period conditions 1-3 years Restricted Share Award Scheme apply (Note (i))

Total Restricted shares granted 13,043,541

Note:

(i) The restricted shares will vest over a three-year period, with 33%, 33% and 34% of restricted shares vest after the first, second and third anniversary from the date of the registration of grant, upon meeting the achievement of vesting conditions with reference to service period the directors and employees.

(b) Set out below are details of the movements of the restricted shares:

At 31 December 2019 2020 ’000 ’000

Outstanding at the beginning of the year – 9,237 Granted during the year 13,044 – Unlocked during the year (3,807) (3,048)

Outstanding at the end of the year 9,237 6,189

The restricted shares granted on 29 June 2019 to an employee were valued at RMB7.07 per share, and that to the Participants were valued at RMB1.22 per share, and that on 15 December 2019 to the Participants were valued at RMB5.19 per share, which is the difference between the market price of the ordinary share at the grant date and the proceeds received from the employees.

During the Track Record Periods, the Group has recognised share-based payment expenses of RMBnil, RMB29,024,000, and RMB5,567,000 for the years ended 31 December 2018, 2019 and 2020, respectively.

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28 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(a) Current taxation in the consolidated statements of financial position represents:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

At the beginning of the year – 5 487 Provision for the year 7 508 666 Income tax paid (2) (26) (770)

At the end of the year 5 487 383

(b) Deferred tax assets and liabilities recognised:

Deferred tax assets represent the tax effect of temporary difference from expected credit loss. Movements of deferred tax assets are as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

At the beginning of the year – – 1 Charged to profit or loss – 1 –

At the end of the year – 1 1

In accordance with the accounting policy set out in Note 2(s), the Group has not recognised deferred tax assets in respect of tax losses and other temporary difference of RMB105,413,000, RMB238,164,000 and RMB336,482,000 during the years ended 31 December 2018, 2019 and 2020, respectively, as it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entity.

As at 31 December 2018, tax losses of RMB1,000, RMB9,394,000, RMB27,787,000, RMB9,203,000, RMB59,028,000 will expire, if unused by the end of 31 December 2019, 2020, 2021, 2022 and 2023, respectively.

As at 31 December 2019, tax losses of RMB9,394,000, RMB27,787,000, RMB9,203,000, RMB59,028,000, RMB132,752,000 will expire, if unused by the end of 31 December 2020, 2021, 2022, 2023 and 2024, respectively.

As at 31 December 2020, tax losses of RMB27,787,000, RMB9,203, 000, RMB58,237,000, RMB130,444,000, RMB110,820,000 will expire, if unused by the end of 31 December 2021, 2022, 2023, 2024 and 2025, respectively.

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29 DEFERRED INCOME

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

At 1 January 259,527 315,262 303,460 Additions 81,173 18,732 123,105 Credited to profit or loss (25,438) (30,534) (41,022)

At 31 December 315,262 303,460 385,543

Deferred income represents government grants relating to construction of property, plant and equipment, which are recognised as income on a straight-line basis over the expected useful life of relevant assets.

30 OTHER NON-CURRENT LIABILITIES

The Group

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Non-interest-bearing government loans 30,000 34,200 34,200

The other non-current liabilities were repayable as following:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

After 1 year but within 2 years – – 10,000

After 2 years but within 5 years 30,000 34,200 24,200

30,000 34,200 34,200

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31 CAPITAL, RESERVES AND DIVIDENDS

(a) Movements in components of equity

The reconciliation between the opening and closing balances of each component of the Group’s consolidated equity is set out in the consolidated statement of changes in equity. Details of the changes in the Company’s individual components of equity between the beginning and the end of the year are set out below:

Issued capital Statutory Paid-in Share Capital surplus Retained Note capital capital reserve reserve earnings Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Balance at 1 January 2018 100,000 – – 7,479 68,892 176,371 Changes in equity for 2018: Total comprehensive income for the year ––––68,509 68,509 Paid-in capital contributions from shareholders 31(c) 1,700––––1,700 Appropriation to reserves 31(d) – – – 6,851 (6,851) – Transfer of shares of subsidiaries within the Group – – 72,000 – – 72,000

Balance at 31 December 2018 and 1 January 2019 101,700 – 72,000 14,330 130,550 318,580 Changes in equity for 2019: Total comprehensive income for the year ––––(120,153) (120,153) Capitalisation issue 31(c) 148,300 – 3,351 – (151,651) – Conversion into a joint stock company with limited liability 31(c) (250,000) 250,000–––– Issue of ordinary shares 31(c) – 40,384 534,635 – – 575,019 Recognition of share- based payments 27 – – 29,024 – – 29,024

Balance at 31 December 2019 and 1 January 2020 – 290,384 639,010 14,330 (141,254) 802,470 Changes in equity for 2020: Total comprehensive income for the year ––––424,566 424,566 Issue of ordinary shares 31(c) – 6,701 293,299 – – 300,000 Appropriation to reserves 31(d) – – – 30,522 (30,522) – Recognition of share- based payments 27 – – 5,567 – – 5,567 Capitalisation issue 31(c) – 62,915 – – (62,915) – Dividends declared and paid during the year 31(b) ––––(80,000) (80,000)

Balance at 31 December 2020 – 360,000 937,876 44,852 109,875 1,452,603

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(b) Dividends

Dividends declared during the Track Record Periods.

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Dividend declared during the year – – 80,000

Dividend per ordinary share (RMB) – – 0.27

In October 2020, the Company declared dividends to its shareholders with amounts of RMB80,000,000, which was fully settled in cash in October 2020.

(i) Registered and paid-up capital

For the purpose of this report, the paid-in capital of the Group represents the paid-in capital of the Company before it was converted into a joint stock company with limited liability.

RMB’000

At 1 January 2018 100,000 Paid-in capital contributions from shareholders 1,700

At 31 December 2018 and 1 January 2019 101,700

Capitalisation issue (Note (iii)) 148,300 Conversion into a joint stock limited liability company (Note (i)) (250,000)

At 31 December 2019 –

(ii) Issued share capital

Number of ordinary shares Amount ‘000 RMB‘000

Issued and fully paid:

At 1 January 2019 – – Issue of ordinary shares upon conversion into a joint stock company with limited liability (Note(i)) 250,000 250,000 Issuance of ordinary shares (Note(ii)) 40,384 40,384

At 31 December 2019 and 1 January 2020 290,384 290,384

Issuance of ordinary shares (Note(ii)) 6,701 6,701 Capitalisation issue (Note(iii)) 62,915 62,915

At 31 December 2020 360,000 360,000

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Notes:

(i) On 9 May 2019, the Company was converted into a joint stock company with limited liability under the Company Law of the PRC. Based on the approval obtained from authorities, the Company issued and allotted 250,000,000 ordinary shares with par value of RMB1.00 each to the respective then equity holders of the Company in accordance with the proportion of their paid-in capitals to the Company.

(ii) On 29 June 2019, 14 November 2019, 15 December 2019 and 21 April 2020, the Company entered into four investment agreements with several independent investors, pursuant to which the investors made total investments of RMB332,199,000 (which includes RMB152,199,000 settled by cash and RMB180,000,000 converted from liabilities as disclosured in Note 22(b)), RMB200,000,000, RMB42,820,000 and RMB300,000,000, respectively, in the Company as consideration for subscription of 33,296,000 shares, 5,666,000 shares, 1,422,000 shares and 6,701,000 shares of the Company respectively.

(iii) On 9 May 2019, pursuant to the resolution passed by the equity shareholders of the Company, the Company converted RMB148,300,000 from retained earnings to share capital and RMB3,351,000 to capital reserve. And on 30 October 2020, the Company converted RMB62,915,000 from retained earnings to share capital.

(d) Nature and purpose of reserves

(i) Capital reserve

The capital reserve comprises the following:

– the proceeds in excess of the par value upon shares issuance received by the Company as disclosed in Note 31(c).

– the portion of the grant date fair value of unexercised shares granted to employees of the Company that has been recognised in accordance with the accounting policy adopted for share-based payments in Note 2(r)(ii).

(ii) PRC statutory reserve

Pursuant to the Articles of Association of the Company’s subsidiaries in the PRC, appropriations to statutory surplus reserve were made at a certain percentage of after-tax profit (after offsetting prior year losses) determined in accordance with the accounting rules and regulations of the PRC until such reserve reaches 50% of the registered capital of the Company. The PRC statutory reserve can be utilised, upon approval by the relevant authorities, to offset accumulated losses or to increase capital of the Company and is non-distributable other than in liquidation.

(iii) Other reserve

Other reserve represents the changes in the Group’s interests in subsidiaries that do not result in a loss of control, whereby adjustments made to the amounts of non-controlling interests within consolidated equity to reflect the change in relative interests.

(e) Capital management

The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.

The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

The Group monitors its capital based on the total equity reported in the statement of changes in equity.

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32 ACQUISITIONS OF SUBSIDIARIES

(a) Xuanwei Dekon Feed Co., Ltd., Anshun Dekon Feed Co., Ltd. and Jiangan Dekon Feed Co., Ltd.

In December 2018, the Group acquired the entire interest of Xuanwei Dekon Feed Co., Ltd. (“Xuanwei Dekon Feed”), Anshun Dekon Feed Co., Ltd. (“Anshun Dekon Feed”) and Jiangan Dekon Feed Co., Ltd. (“Jiangan Dekon Feed”) from Sichuan Tequ Agriculture and Animal Husbandry Technology Group Co., Ltd. (“Sichuan Tequ”), a company controlled by a shareholder of the Company at a consideration of RMB4,096,000, RMB11,476,000 and RMB10,064,000 respectively, Xuanwei Dekon Feed, Anshun Dekon Feed and Jiangan Dekon Feed are mainly engaged in sales of feed productions. These acquisitions are accounted for as business combinations. Consideration for the acquisitions were fully settled during the year 2018. During the acquisitions no transaction cost was incurred.

The fair values of the identifiable assets and liabilities of the subsidiary acquired through business combinations during the year as at the date of acquisition are set out as follow:

Xuanwei Anshun Jiangan Dekon Feed Dekon Feed Dekon Feed RMB’000 RMB’000 RMB’000

Property, plant and equipment 26,791 11,533 24,654 Land use right 3,284 3,582 4,639 Inventories 8,522 6,999 2,287 Trade receivables 13,024 3,668 – Prepayments, deposits and other receivables 4,456 817 93 Cash and cash equivalents 3,476 2,665 501 Trade payables (10,149) (3,862) (1,777) Accruals and other payables (45,308) (13,926) (20,333)

Total identifiable net assets at fair value 4,096 11,476 10,064

Satisfied by cash (4,096) (11,476) (10,064)

An analysis of the cash flows in respect of the acquisition of subsidiaries is as follows:

Xuanwei Anshun Jiangan Dekon Feed Dekon Feed Dekon Feed RMB’000 RMB’000 RMB’000

Cash consideration 4,096 11,476 10,064 Cash and cash equivalents acquired (3,476) (2,665) (501)

Net cash outflow included in cash flows used in investing activities 620 8,811 9,563

The values of assets and liabilities recognised on acquisition are their fair values. In determining the fair values of property, plant and equipment, including right-of-use assets, the directors of the Group have referenced the fair value adjustments to valuation reports issued by independent valuers.

The fair values of property, plant and equipment located in PRC is determined by replacement cost approach, where based on the prevailing market prices for reconstruction of the properties of equal quality/repurchasing of the same equipment, adjusting with the useful life.

The right of use asset represents the land use right located in PRC and the fair value is determined using the prevailing market price basis with reference to comparable sales transactions as identified in the relevant markets.

The fair value of measurement of property, plant and equipment and right-of-use assets fall into level 3 of the fair value hierarchy.

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(i) Acquired receivables

The fair value and gross contractual amounts of acquired account receivables for Xuanwei Dekon Feed, Anshun Dekon Feed and Jiangan Dekon Feed is RMB13,024,000, RMB3,668,000 and RMBNil respectively.

(ii) Revenue and profit contribution

Since these acquisitions, Xuanwei Dekon Feed, Anshun Dekon Feed and Jiangan Dekon Feed contributed RMB2,622,000 to the Group’s revenue, and a profit of RMB326,000 to the consolidated net profit for the year ended 31 December 2018.

Had these business combinations taken place on 1 January 2018, the revenue of the Group would have been RMB3,362,189,000 for the year ended 31 December 2018; and the net profit of the Group would have been RMB147,664,000 for the year ended 31 December 2018.

(b) Xishui Runkang Livestock Breeding Co., Ltd.

In April 2020, the Group acquired 85% of the total equity interest in Xishui Runkang Livestock Breeding Co., Ltd. (“Xishui Runkang Livestock”), from Leshan Jinxin Agricultural Development Co., Ltd. at a consideration of RMB17,000,000. Xishui Runkang Livestock has become the Company’s non-wholly-owned subsidiary thereon. Xishui Runkang Livestock is mainly engaged in hogs stockbreeding. Consideration for the acquisition was fully settled during the year 2020. During the acquisition, no transaction cost was incurred.

The fair values of the identifiable assets and liabilities of the subsidiary acquired during the year as at the date of acquisition are set out as follow:

RMB’000

Property, plant and equipment 27,610 Other non-current assets 279 Prepayments, deposits and other receivables 19,272 Cash and cash equivalents 737 Accruals and other payables (27,806)

Total identifiable net assets at fair value 20,092 NCI (3,092)

Total consideration 17,000

Satisfied by cash (17,000)

An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows:

During the year ended 31 December 2020 RMB’000

Cash consideration 17,000 Cash and cash equivalents acquired (737)

Net cash outflow included in cash flows used in investing activities 16,263

The values of assets and liabilities recognised on acquisition are their fair values. In determining the fair values of property, plant and equipment, the directors of the Group have referenced the fair value adjustments to valuation reports issued by independent valuers.

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The fair value of measurement of property, plant and equipment fall into level 3 of the fair value hierarchy.

(i) Revenue and profit contribution

Since the acquisition, Xishui Runkang Livestock contributed RMB1,284,000 to the Group’s revenue, and a loss of RMB2,996,000 to the consolidated net profit for the year ended 31 December 2020.

Had the business combination taken place on 1 January 2020, the revenue and the net profit of the Group would have been RMB8,145,349,000 and RMB3,608,222,000, respectively for the year ended 31 December 2020.

33 CHANGES IN NON-CONTROLLING INTERESTS

The information of changes in the non-controlling interests during the Track Record Periods are as follows:

A (decrease)/ Carrying increase in amount of total equity non- Consideration attributable to Ownership Ownership controlling paid to non- equity before after interests controlling shareholders Subsidiaries acquisition acquisition acquired interests of the Group RMB’000 RMB’000 RMB’000

During the year 2019 Yuechi Dekon Poultry Farming Co., Ltd. 岳池德康家禽養殖有限公司 90% 100% 729 (732) (3) Changning Dekon Zhuhai Farming Co., Ltd. 長寧縣德康竹海養殖有限公司 95% 100% (337) – (337) Kunming Dekon Poultry Farming Co., Ltd. 昆明德康家禽養殖有限公司 90% 98% 865 (939) (74) Xuanwei Dekon Pig Farming Co., Ltd. 宣威德康生豬養殖有限公司 96% 98% 677 (712) (35) Xuanwei Dekon Pig Farming Co., Ltd. 宣威德康生豬養殖有限公司 98% 98.4% 337 (200) 137 Chongqing Bishan Dekon Poultry Farming Co., Ltd. 重慶市璧山區德康家禽養殖有限公司 67% 88% 8,784 (12,645) (3,861) Anshun Dekon Agricultural and Animal Husbandry Co., Ltd. 安順德康農牧有限公司 95% 100% 1,115 (1,013) 102 Songtao Dekon Agricultural and Animal Husbandry Co., Ltd. 松桃德康農牧有限公司 93% 100% 4,134 (3,395) 739 Jiangan Dekon Pig Farming Co., Ltd. 江安德康生豬養殖有限公司 91% 100% 7,338 (6,299) 1,039 Deyang Dekon Poultry Farming Co., Ltd. 德陽德康家禽養殖有限公司 80.5% 100% 6,045 (6,434) (389) Guangdong Wizagricultural Science & Technology Co., Ltd. 廣東智威農業科技股份有限公司 (i) 73% 92% 68,050 (68,000) 50

97,737 (100,369) (2,632)

Carrying An increase in amount of Consideration total equity non- received from attributable to Ownership Ownership controlling non- equity before after interests controlling shareholders Subsidiary disposal disposal disposed interests of the Group RMB’000 RMB’000 RMB’000

During the year 2019 Horqin Right Front Banner Dekon Agriculture and Animal Husbandry Co., Ltd. 科爾沁右翼前旗德康農牧有限公司 100% 69% 4,215 – 4,215

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During the year 2020 Jiangsu Dekon Farming and Technology Co., Ltd. 江蘇德康農牧科技有限公司 (ii) 55% 65% (3,182) – (3,182) Chongqing Wanzhou Dekon Agriculture and Animal Husbandry Technology Co., Ltd. 重慶萬州德康農牧科技有限公司 60% 76% 1,017 (3,201) (2,184) Chongqing Hechuang Dekon Pig Farming Co., Ltd. 重慶市合川區德康生豬養殖有限公司 90% 100% 6,062 (3,500) 2,562

3,897 (6,701) (2,804)

Notes:

(i) The acquisition of non-controlling interest of Guangdong Wizagricultural Science & Technology Co., Ltd. 廣東智威農業科技股份有限公司 includes its subsidiaries Guangdong Zhicheng Foods Co., Ltd. 廣東智成食品有限公司 and Kaiping Jinjiwang Poultry Co., Ltd. 開平金雞王禽業有限公司.

(ii) The acquisition of non-controlling interest of Jiangsu Dekon Farming and Technology Co., Ltd 江蘇德康農牧科技有限公司 includes its subsidiary Sihong Dekon Farming and Technology Co., Ltd. 泗洪德康農牧科技有限公司.

34 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Exposure to credit, liquidity and interest rate risks arises in the normal course of the Group’s business.

The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.

(a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group’s credit risk is primarily attributable to trade and other receivables. The Group’s exposure to credit risk arising from cash and cash equivalents is limited because the counterparties are banks and financial institutions with a minimum credit rating assigned by the management of the Group, for which the Group considers to have low credit risk.

Except for the financial guarantees given by the Group as set out in Note 36, the Group does not provide any other guarantees which would expose the Group to credit risk. The maximum exposure to credit risk in respect of these financial guarantees at the end of the reporting period is disclosed in Note 36.

Trade receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer rather than the industry in which the customers operate and therefore significant concentrations of credit risk primarily arise when the Group has significant exposure to individual customers. At 31 December 2018, 2019 and 2020, 29.5%, 21.28% and 12.56% of the total trade receivables, respectively, were due from the Group’s largest debtor, and 60.21%, 62.04% and 49.39% of the total trade receivables, respectively, were due from the Group’s five largest debtors.

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Individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer’s past history of making payments when due and current ability to pay, and take into account information specific to the customer as well as pertaining to the economic environment in which the customer operates. Trade receivables are due from the date of billing. Normally, the Group does not obtain collateral from customers.

The Group measures loss allowances for trade receivables at an amount equal to lifetime ECLs, which is calculated using a provision matrix. As the Group’s historical credit loss experience indicate significantly different loss patterns for different customer segments, the loss allowance based on past due status is distinguished between the Group’s different customer bases.

The following table provides information about the Group’s exposure to credit risk and ECLs for trade receivables at 31 December 2018, 2019 and 2020:

At 31 December 2020 Expected loss Gross carrying rate amount Loss allowance % RMB’000 RMB’000

Less than 1 year 0.1% 15,770 13 1 to 2 years 1.5% 520 8 2 to 3 years 4.9% 41 2 Over 3 years 100.0% 270 270

16,601 293

At 31 December 2019 Expected loss Gross carrying rate amount Loss allowance % RMB’000 RMB’000

Less than 1 year 0.1% 7,533 5 1 to 2 years 2.5% 29 1 2 to 3 years 4.8% 4 – Over 3 years 100.0% – –

7,566 6

At 31 December 2018 Expected loss Gross carrying rate amount Loss allowance % RMB’000 RMB’000

Less than 1 year 0.1% 1,436 1 1 to 2 years 2.9% 159 5 2 to 3 years 37.3% 3 1 Over 3 years 100.0% – –

1,598 7

Expected loss rates are based on actual loss experience over the past years. These rates are adjusted to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions and the Group’s view of economic conditions over the expected lives of the receivables.

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Movement in the loss allowance account in respect of trade receivables during the year is as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Balance at 1 January 2,852 293 6 Impairment loss (reversed)/recognised during the year (2,559) (287) 1

Balance at 31 December 293 6 7

Movement in the loss allowance account in respect of other receivables during the year is as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Balance at 1 January 8,232 12,980 17,682 Impairment loss recognised during the year 4,748 4,702 2,239

Balance at 31 December 12,980 17,682 19,921

(b) Liquidity risk

The following tables show the remaining contractual maturities at 31 December 2018, 2019 and 2020 of the Group’s non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of each reporting period) and the earliest date the Group can be required to pay:

At 31 December 2018 Contractual undiscounted cash outflow More than More than Within 1 year but 2 years but 1 year or less than less than More than Carrying on demand 2 years 5 years 5 years Total amount RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 1,180,488 146,250 – – 1,326,738 1,290,148 Lease liabilities 19,043 14,175 39,393 281,197 353,808 264,953 Amounts due to related parties 195,000 – – – 195,000 195,000 Trade paybles and bill payables 207,770 – – – 207,770 207,770 Accruals and other payables 517,052 – – – 517,052 517,052 Other non-current liabilities – – 30,000 – 30,000 30,000

2,119,353 160,425 69,393 281,197 2,630,368 2,504,923

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At 31 December 2019 Contractual undiscounted cash outflow More than More than Within 1 year but 2 years but 1 year or less than less than More than Carrying on demand 2 years 5 years 5 years Total amount RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 755,389 95,127 219,655 – 1,070,171 1,012,722 Lease liabilities 33,983 31,812 77,504 388,460 531,759 433,534 Trade payables and bill payables 392,190 – – – 392,190 392,190 Accruals and other payables 676,987 – – – 676,987 676,987 Other non-current liabilities – – 34,200 – 34,200 34,200

1,858,549 126,939 331,359 388,460 2,705,307 2,549,633

At 31 December 2020 Contractual undiscounted cash outflow More than More than Within 1 year but 2 years but 1 year or less than less than More than Carrying on demand 2 years 5 years 5 years Total amount RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 2,578,840 810,082 912,405 149,963 4,451,290 4,159,430 Lease liabilities 63,346 58,579 135,036 1,199,455 1,456,416 1,292,641 Trade paybles and bill payables 628,362 – – – 628,362 628,362 Accruals and other payables 1,331,792 – – – 1,331,792 1,331,792 Other non-current liabilities – 10,000 24,200 – 34,200 34,200

4,602,340 878,661 1,071,641 1,349,418 7,902,060 7,446,425

Financial guarantees issued: Maximum amount guaranteed (Note 36) 76,855 – – – 76,855 –

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The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings issued at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively.

(i) Interest rate risk profile

The following table, as reported to the management of the Group, details the interest rate risk profile of the Group’s borrowings at 31 December 2018, 2019 and 2020:

At 31 December 2018 At 31 December 2019 At 31 December 2020 Effective Effective Effective interest rate Amounts interest rate Amounts interest rate Amounts % RMB’000 % RMB’000 % RMB’000

Fixed rate borrowings Lease liabilities 6.33% 264,953 6.39% 433,534 6.53% 1,292,641 4.35% – 4.10% – 2.05% – Bank loans 7.40% 520,618 5.70% 107,000 5.98% 1,467,458 5.60% – 3.29% – 2.45% – Other loans 6.50% 142,030 7.76% 263,222 8.50% 523,999

Total fixed rate borrowings 927,601 803,756 3,284,098 ------

Variable rate borrowings 4.56% – 4.35% – 2.05% – Bank loans 5.99% 627,500 6.18% 642,500 6.18% 2,167,973

Total variable rate borrowings 627,500 642,500 2,167,973 ------

Total borrowings 1,555,101 1,446,256 5,452,071

Fixed rate borrowings as a percentage of total borrowings 60% 56% 60%

(ii) Sensitivity analysis

At 31 December 2018, 2019 and 2020, it is estimated that a general increase/decrease of 100 basis points in interest rates, with all other variables held constant, would have decreased/increased the Group’s profit after tax and retained profits by approximately RMB6,275,000, RMB6,425,000 and RMB21,689,000 respectively.

The sensitivity analysis above indicates the instantaneous change in the Group’s profit after tax and retained profits that would arise assuming that the change in interest rates had occurred at the end of the each reporting period. The impact on the Group’s profit after tax and retained profits is estimated as an annualised impact on interest expense of such a change in interest rates. The analysis is performed on the same basis during the Track Record Periods.

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(d) Fair value measurement

The fair value measurement of RMB wealth management products fall into level 3 of the fair value hierarchy. During the Track Record Periods, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The Group’s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

Information about Level 3 fair value measurements

The fair value of RMB wealth management products is determined based on the discounted cash flow method. The main level 3 inputs used by the Group for RMB wealth management products are the expected rates of return. At 31 December 2018, 2019 and 2020, if the expected rate of return of the investment in RMB wealth management products held by the Group had been one percentage point higher/lower, the Group’s profit for the year and retained profits would have been RMB233,000, RMB18,000 and RMB1,793,000 higher/lower respectively.

The movements during the year in the balance of Level 3 fair value measurements are as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

RMB wealth management products (Note 21): At 1 January 149,517 31,233 60,066 Additions in investments 415,000 985,000 6,080,000 Change in fair value recognised in profit or loss during the year 2,932 2,314 19,338 Disposal of financial assets (536,216) (958,481) (5,504,206)

At 31 December 31,233 60,066 655,198

(i) Fair values of financial assets and liabilities carried at other than fair value

The carrying amounts of the Group’s financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2018, 2019 and 2020.

35 COMMITMENTS

Capital commitments outstanding at respective reporting period end dates not provided for in the Historical Financial Information were as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Contracted for 260,407 345,731 1,104,512 Authorised but not contracted for 57,798 704,070 355,150

318,205 1,049,801 1,459,662

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36 CONTINGENT LIABILITIES

At 31 December 2018, 2019 and 2020, the Group guaranteed in respect of loans made by banks to the contract farmers. As at 31 December 2018, 2019 and 2020, the directors of the Company do not consider it probable that a claim will be made against the Group under any of the guarantees. The maximum liability of the Group at 31 December 2018, 2019 and 2020 under the guarantees issued is the outstanding amount of the bank loans of the contract farmers of RMB nil, RMB nil and RMB76,855,000, respectively.

The directors do not believe it probable that the contract farmers will default on the contract and fail to make payment when due, and the Group will make specified payments to reimburse the beneficiary of the guarantee for a loss the bank incurs.

37 MATERIAL RELATED PARTY TRANSACTIONS

(a) Names and relationships of the related parties that had material transactions with the Group during the Track Record Periods:

Name of related party Relationship

Sichuan Desheng Ronghe Industrial Group Co., Substantial Shareholder Ltd. 四川德盛榮和實業集團有限公司 Wangdegen 王德根 Controlling party of Substantial Shareholder Zhangqiang 張強 Spouse of controlling party of Substantial Shareholder Shanghai Guangkong Maiming Investment Center One of the shareholders of the Company (Limited Partnership) 上海光控麥鳴投資中心(有限合伙) Huwei 胡偉 Director of the Company Sichuan Puhua Agricultural Technology A company controlled by the spouse of controlling Development Co., Ltd. party of Substantial Shareholder 四川普華農業科技發展有限公司 Da’an Jinlongfeng Agriculture and Animal Associate Husbandry Co., Ltd. 大安市金隆豐農牧有限公司 Sichuan Zhenghu Wisdom Technology Co., Ltd. A company controlled by Substantial Shareholder 四川正狐智慧科技有限公司 Sichuan Tequ Investment Group Co., Ltd. A company controlled by one of the shareholders 四川特驅投資集團有限公司 Sichuan Neijiang Wanqian Feed Co., Ltd. A company controlled by one of the shareholders 四川省內江萬千飼料有限公司 Guang’an Wanqian Group Co., Ltd. A company controlled by one of the shareholders 廣安萬千集團有限公司 Chengdu West Hope Agricultural Science and A company controlled by one of the shareholders Technology Research Institute Co., Ltd. 成都華西希望農業科學技術研究所有限公司 Sichuan Tequ Agriculture and Animal Husbandry A company controlled by one of the shareholders Technology Group Co., Ltd. 四川特驅農牧科技集團有限公司 Sichuan Hope Huawu Agricultural Tourism A company controlled by one of the shareholders Development Co., Ltd. 四川希望花舞農業旅遊開發有限公司 Sichuan Lvkepuhua Trading Co., Ltd. A company controlled by one of the shareholders 四川綠科普華商貿有限公司 Guigang Wanqian Feed Co., Ltd. A company controlled by one of the shareholders 貴港市萬千飼料有限責任公司 Xichang Wanqian Feed Co., Ltd. A company controlled by one of the shareholders 西昌萬千飼料有限責任公司 Guangyuan Tequ Feed Co., Ltd. A company controlled by one of the shareholders 廣元特驅飼料有限公司 Zhumadian Tequ Feed Co., Ltd. A company controlled by one of the shareholders 駐馬店特驅飼料有限公司 Zhanjiang Tequ Feed Co., Ltd. A company controlled by one of the shareholders 湛江特驅飼料有限公司 Baoding Wanqian Feed Co., Ltd. A company controlled by one of the shareholders 保定萬千飼料有限公司

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Name of related party Relationship

Shenyang Wanqian Agriculture and Animal A company controlled by one of the shareholders Husbandry Technology Co., Ltd. 瀋陽萬千農牧科技有限公司 Yichang Tequ Feed Co., Ltd. A company controlled by one of the shareholders 宜昌特驅飼料有限公司 Nanchong Tequ Feed Co., Ltd. A company controlled by one of the shareholders 南充特驅飼料有限公司 Kunming Tequ Feed Co., Ltd. A company controlled by one of the shareholders 昆明特驅飼料有限公司 Tangshan Wanqian Feed Co., Ltd. A company controlled by one of the shareholders 唐山萬千飼料有限公司 Chengdu Bond Technology Co., Ltd. A company controlled by one of the shareholders 成都邦得科技有限公司 Chengdu Tequ Agriculture and Animal Husbandry A company controlled by one of the shareholders Technology Co., Ltd. 成都特驅農牧科技有限公司 Xinjin Bond Technology Co., Ltd. A company controlled by one of the shareholders 新津邦得科技有限公司 Yibin Tequ Feed Co., Ltd. 宜賓特驅飼料有限公司 A company controlled by one of the shareholders Chongqing Rongchang District Tequ Feed Co., Ltd. A company controlled by one of the shareholders 重慶市榮昌區特驅飼料有限公司 Chongqing Shengbo Feed Co., Ltd. A company controlled by one of the shareholders 重慶生搏飼料有限公司 Suzhou Wanqian Feed Co., Ltd. A company controlled by one of the shareholders 宿州萬千飼料有限公司 Wuhu Tequ Agriculture and Animal Husbandry A company controlled by one of the shareholders Technology Co., Ltd. 蕪湖特驅農牧科技有限公司 Leshan Tequ Feed Co., Ltd. 樂山特驅飼料有限公司 A company controlled by one of the shareholders Deyang Tequ Feed Co., Ltd. 德陽特驅飼料有限公司 A company controlled by one of the shareholders Guiyang Tequ Hope Agricultural Technology Co., A company controlled by one of the shareholders Ltd. 貴陽特驅希望農業科技有限公司 Sichuan Aoruijia International Trade Co., Ltd. A company controlled by one of the shareholders 四川澳瑞佳國際貿易有限公司 Chengdu Qilongkang Animal Health Products Co., A company controlled by one of the shareholders Ltd. 成都奇龍康動物保健品有限公司 Guanghan Tequ Agriculture and Animal Husbandry A company controlled by one of the shareholders Technology Co., Ltd. 廣漢特驅農牧科技有限公司 Guangdong Tequ Biotechnology Co., Ltd. A company controlled by one of the shareholders 廣東特驅生物科技有限公司 Siping Tequ Feed Co., Ltd. 四平特驅飼料有限公司 A company controlled by one of the shareholders Yichun Tequ Feed Co., Ltd. 宜春特驅飼料有限公司 A company controlled by one of the shareholders Chongqing Tequ Feed Co., Ltd. A company controlled by one of the shareholders 重慶特驅飼料有限公司 Sichuan Zhongbo Animal Husbandry Co., Ltd. A company controlled by one of the shareholders 四川眾搏牧業有限公司 Xishui Xianyuan Honggu Tea Industry Co., Ltd. A company controlled by one of the shareholders 習水仙源紅古茶樹茶業有限公司 Guizhou Hope Xingchu Food Co., Ltd. A company controlled by one of the shareholders 貴州希望星廚食品有限公司 Chongqing Lvke Xianggang Logistics Co., Ltd. A company controlled by one of the shareholders 重慶綠科祥港物流有限公司 Guiyang Huawu Benchu Food Co., Ltd. A company controlled by one of the shareholders 貴陽花舞笨廚食品有限公司 Guizhou Hope Nitui Information Technology Co., A company controlled by one of the shareholders Ltd. 貴州希望泥腿信息技術有限公司 Sichuan Deyuan Shenghe Trading Company A company controlled by one of the shareholders 四川德源勝和商貿有限公司 Anshun Tequ Feed Co., Ltd. 安順特驅飼料有限公司 A company controlled by one of the shareholders (ii) Xuanwei Tequ Feed Co., Ltd. 宣威特驅飼料有限公司 A company controlled by one of the shareholders (ii) Jiangan Tequ Feed Co., Ltd. 江安特驅飼料有限公司 A company controlled by one of the shareholders (ii)

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Name of related party Relationship

Quxian Yang Ersao Feed Co., Ltd. A company controlled by one of the shareholders 渠縣楊二嫂飼料有限公司 (iii) Luohe Tequ Biological Technology Co., Ltd. A company controlled by one of the shareholders 漯河特驅生物科技有限公司 Sichuan Nitui Agricultural Technology Co., Ltd. A company controlled by one of the shareholders 四川泥腿農業科技有限公司 (iv) Sichuan Nitui Wisdom Construction Engineering A company controlled by one of the shareholders Co., Ltd. 四川泥腿智慧建築工程有限公司 (iv) Guizhou Nitui Wisdom Construction Engineering A company controlled by one of the shareholders Co., Ltd. 貴州泥腿智慧建築工程有限公司 (iv) Jilin Huixin Tiancheng Investment Co., Ltd. Non- controlling shareholder of a subsidiary 吉林匯鑫天成投資有限公司 Leshan Jinxin Agricultural Development Co., Ltd. Non- controlling shareholder of a subsidiary 樂山錦鑫農業發展有限責任公司 Sichuan Deyuan Dingsheng Industrial Co., Ltd. A company controlled by one of the directors of 四川德源鼎盛實業有限公司 (v) Substantial Shareholder

Notes:

(i) The official names of these entities are in Chinese. The English translation is for identification purpose only.

(ii) In December 2018, the Group acquired the shares of Anshun Tequ Feed Co., Ltd. 安順特驅飼料有限公司, Xuanwei Tequ Feed Co., Ltd. 宣威特驅飼料有限公司 and Jiangan Tequ Feed Co., Ltd. 江安特驅飼料有限公司. Therefore these companies have been classified as subsidiaries, instead of companies controlled by one of the shareholders since then.

(iii) In December 2018, the controlling shareholder of Quxian Yang Ersao Feed Co., Ltd. 渠縣楊二嫂飼料有限公司 disposed the shares of the company to a third party. Therefore the company is no longer a company controlled by one of the shareholders since then.

(iv) In September 2018, Mr Rao Hui disposed the shares of the Group, therefore he is no longer a shareholder of the Group and Sichuan Nitui Agricultural Technology Co., Ltd. 四川泥腿農業科技有限公司, Sichuan Nitui Wisdom Construction Engineering Co., Ltd. 四川泥腿智慧建築工程有限公司 and Guizhou Nitui Wisdom Construction Engineering Co., Ltd. 貴州泥腿智慧建築工程有限公司 are no longer companies controlled by a shareholder since then.

(v) In May 2021, the director of Substantial Shareholder disposed the shares of Sichuan Deyuan Dingsheng Industrial Co., Ltd. 四川德源鼎盛實業有限公司. Therefore the company is no longer a company controlled by one of the directors of Substantial Shareholder since then.

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(b) Transactions with related parties during the Track Record Periods

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Sales of goods to a company controlled by one of the directors of Substantial Shareholder 8 – – Sales of goods to a company controlled by one of the shareholders 2,052 494 901 Sales of goods to associates – – 11,832 Purchase of goods from a company controlled by one of the shareholders 1,876,735 132,048 210,003 Purchase of goods from a company controlled by Substantial Shareholder – 2,173 1,645 Increase in the amounts due to the related parties 195,000 – – Proceeds of interest-bearing borrowing from non- controlling shareholder of a subsidiary – – 62,000 Guarantees provided by controlling party of Substantial Shareholder – – 165,403 Guarantees provided by Substantial Shareholder 300,000 – – Guarantees provided by controlling party of Substantial Shareholder, spouse of the controlling party of Substantial Shareholder and Substantial Shareholder – 268,500 1,020,000 Guarantees provided by controlling party of Substantial Shareholder, Substantial Shareholder, spouse of controlling party of Substantial Shareholder and the company controlled by the spouse of the controlling party of Substantial Shareholder – 550,000 1,672,000 Guarantees provided by a company controlled by one of the shareholders 680,000 30,000 – Interest payables to non-controlling shareholders of a subsidiary – – 1,899

The Group’s balances with related parties as at the end of each reporting period are as follows:

The Group

At 31 December Note 2018 2019 2020 RMB’000 RMB’000 RMB’000

Trade in nature: – Trade receivables 19 –5– – Trade and bills payables 23 1,509 7,137 17,149 Non-trade in nature: – Amounts due to shareholders* 195,000 – – – Accruals and other payables 24 153 16 1,647

Interest-bearing borrowings from certain non- controlling shareholders of subsidiaries – – 62,000

* The amounts due to shareholders are unsecured, non-interest bearing and have no fixed terms of repayment, and is repayable on demand.

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(d) Key management personnel remuneration

Remuneration for key management personnel of the Group, representing the remuneration payable to the Company’s directors and supervisors as disclosed in Note 8, is as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Salaries and other emoluments 1,188 2,818 3,817 Discretionary bonuses 216 1,907 2,151 Retirement scheme contributions 54 78 5 Share-based payments – 276 1,571

1,458 5,079 7,544

Total remuneration is included in “staff costs” (see Note 6(b)).

38 NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD

On 4 June 2021, the Company declared an interim dividend of RMB300,000,000 to the shareholders of the Company. Such dividend is subject to and conditional upon the completion of the [REDACTED].

39 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2020

Up to the date of issue of these financial statements, the IASB has issued a number of amendments, and a new standard, IFRS 17, Insurance contracts, which are not yet effective for the year ended 31 December 2020 and which have not been adopted in these financial statements. These developments include the following which may be relevant to the Group.

Effective for accounting periods beginning on or after

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, 1 January 2021 Interest Rate Benchmark Reform – Phase 2

Amendments to IFRS 16, Covid-19 – Related Recent Concessions 1 April 2021 beyond 30 June 2021

Amendments to IFRS 3, Reference to the Conceptual Framework 1 January 2022

Amendments to IAS 16, Property, Plant and Equipment: Proceeds 1 January 2022 before Intended Use

Amendments to IAS 37, Onerous Contracts – Cost of Fulfilling 1 January 2022 a Contract

Annual Improvements to IFRSs 2018-2020 Cycle 1 January 2022

Amendments to IAS 1, Classification of Liabilities as Current or 1 January 2023 Non-current

Amendments to IFRS 17 Insurance contracts 1 January 2023

Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure 1 January 2023 of Accounting Policies

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Effective for accounting periods beginning on or after

Amendments to IAS 8, Definition of Accounting Estimates 1 January 2023

Amendments to IFRS 4, Extension of the temporary exemption from 1 January 2023 applying IFRS 9

Amendments to IAS 12, Deferred Tax related to Assets and Liabilities 1 January 2023 arising from a Single Transaction

Amendments to IFRS 10 and IAS 28, Sale or contribution of assets To be determined between an investor and its associate or joint venture

The Group is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements.

SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company and its subsidiaries comprising the Group in respect of any period subsequent to 31 December 2020.

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The following information does not form part of the Accountants’ Report received from KPMG, Certified Public Accountants, Hong Kong, the Company’s reporting accountants, as set out in Appendix I to this [REDACTED], and is included herein for information purposes only. The [REDACTED] financial information should be read in conjunction with the section headed “Financial information” in this [REDACTED] and the Accountants’ Report set out in Appendix I to this [REDACTED].

A. [REDACTED] STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The following [REDACTED] statement of adjusted consolidated net tangible assets of our Group prepared in accordance with Rule 4.29 of the Listing Rules is for illustrative purposes only, and is set out below to illustrate the effect of the [REDACTED]onthe consolidated net tangible assets of our Company attributable to the equity shareholders of the Company as of 31 December 2020 as if the [REDACTED] had taken place on 31 December 2020.

[REDACTED] Consolidated Subsequent adjusted net tangible dividend consolidated assets declared subject net tangible attributable to to and assets the equity conditional attributable to [REDACTED] adjusted shareholders of upon Estimated the equity consolidated net tangible assets the Company as completion of [REDACTED] shareholders attributable to the equity of 31 December the from the of the shareholders of the Company 2020(1) [REDACTED](2) [REDACTED](3) Company per Share(4) RMB’000 RMB’000 RMB’000 RMB’000 RMB(4) HK$(5)

Based on an [REDACTED]of HK$[REDACTED] per Share [6,829,278] [(300,000)] [REDACTED][REDACTED][REDACTED][REDACTED] Based on an [REDACTED]of HK$[REDACTED] per Share [6,829,278] [(300,000)] [REDACTED][REDACTED][REDACTED][REDACTED]

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Notes:

(1) The consolidated net tangible assets attributable to equity shareholders of the Company as of 31 December 2020 is compiled based on the consolidated statements of financial position included in the Accountants’ Report set out in Appendix I to this [REDACTED], which is based on the consolidated total equity attributable to the equity shareholders of the Company as of 31 December 2020 of RMB[6,845,864,000] after deducting intangible assets and goodwill of RMB[1,856,000] and RMB[14,730,000] respectively.

(2) On 4 June 2021, the Company declared an interim dividend of RMB300,000,000 to the shareholders of the Company. Such dividend is subject to and conditional upon the completion of the [REDACTED].

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[REDACTED]

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[REDACTED]

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[REDACTED]

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[REDACTED]

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TAXATION

This appendix contains a summary of laws and regulations in respect of taxation and foreign exchange in the PRC and Hong Kong.

This section does not address any aspect of taxation of the PRC or Hong Kong other than income tax, capital tax, value-added tax, stamp duty and estate duty. Prospective investors are advised to consult their own tax advisers regarding the PRC, Hong Kong and other tax consequences of investing in H Shares.

PRC TAXATION

Taxation on Dividends

Individual Investors

In accordance with the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法》) (hereinafter referred to as “IIT Law”) issued by the Fifth Session of the Standing Committee of the NPC on 10 September 1980, last amended on 31 August 2018 and came into effect on 1 January 2019, and the Regulation on the Implementation of the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法實施條例》) (hereinafter referred to as “IIT Rules”) issued by the State Council on 18 December 2018 and came into effect on 1 January 2019, dividends paid by Chinese companies to individual investors shall general be subject to withholding tax at a rate of 20%. Meanwhile, according to the Notice of the MOF, SAT and CSRC on Issues Concerning Differentiated Individual Income Tax Policies on Dividends and Bonuses of Listed Companies (《財政部、國家稅務總局、證監會關於上市公司股息紅利差別化個人所得稅政策有關問題的通知》) (No. 101 [2015] of the MOF) issued by the MOF on 7 September 2015 and was partially invalid on 1 July 2019, which means the Notice does not apply to the differentiated individual income tax policies on dividends and bonuses of companies quoted on the National Equities Exchange and Quotations, where an individual acquires the stocks of a listed company from public offering of the company or from the stock market, if the stock holding period is more than one year, the dividend incomes shall be exempted from personal income tax. Where an individual acquires the stocks of a listed company from public offering of the company or from the stock market, if the stock holding period is one month or less, the income from dividends shall be included into the taxable incomes in full amount; if the stock holding period is more than one month and up to one year, the dividend income shall be included into the taxable incomes at the reduced rate of 50% for the time being. Individual income taxes on the aforesaid incomes shall be collected at the uniform rate of 20%.

For a foreign individual who is not a resident of the PRC, his/her receipt of dividends from a PRC company is normally subject to withholding tax of 20% unless specifically exempted by the taxation authority of the State Council or reduced by an applicable tax treaty. Pursuant to the Notice of the SAT on Issues Concerning Taxation and the Administration of Individual Income Tax Collection After the Annulment of the Document Guo Shui Fa [1993]

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No. 045 (《國家稅務總局關於國稅發[1993] 045號文件廢止後有關個人所得稅徵管問題的通知》) (No. 348 [2011] of the SAT) issued by the SAT on 28 June 2011, domestic non-foreign-invested enterprises issuing shares in Hong Kong may generally, when distributing dividends, withhold individual income tax at a rate of 10%.

For individual holders of H Shares receiving dividends who are identified as tax residents of countries that have entered into a tax treaty with the PRC with tax rates lower than 10%, the distributing non-foreign-invested enterprise whose shares are listed in Hong Kong may apply on behalf of such holders for enjoying the lower preferential tax rate, and, upon approval by the tax authorities, the amount which is over-withheld will be refunded. For individual holders of H Shares receiving dividends who are identified as tax residents of countries that have entered into a tax treaty with the PRC that provides for tax rates higher than 10% but lower than 20%, the non-foreign-invested enterprise is required to withhold the tax at the applicable rate under the treaties, and no application to the tax authorities is required. For individual holders of H Shares receiving dividends who are identified as tax residents of countries without taxation treaties with the PRC, the non-foreign-invested enterprise is required to withhold the tax at a rate of 20%.

Pursuant to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) signed on 21 August 2006, the PRC government may impose tax on dividends paid to a Hong Kong resident by a PRC company, but such tax shall not exceed 10% of the total amount of the dividends payable. If a Hong Kong resident directly holds 25% or more of the equity interest in a PRC company, then the amount of such shall not exceed 5% of the total dividends payable by the PRC company. Announcement of the SAT on the Entry into Force and Implementation of the Protocol IV to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (《國家稅務總局關於 <內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排>第四議定書生效執行的公告》) (Announcement No. 12 [2016] of the SAT) becoming effective on 29 December 2015 states that such provisions shall not apply to arrangement made for the primary purpose of gaining such tax benefits.

Enterprise Investors

In accordance with the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法》) (hereinafter referred to as “EIT Law”) which was promulgated on 16 March 2007 and last amended on 29 December 2018, and the Regulation on the Implementation of the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法實施條例》) (hereinafter referred to as “EIT Rules”) which became effective on 1 January 2008 and last amended on 23 April 2019, a non-resident enterprise is generally subject to a 10% enterprise income tax on PRC-sourced income, including dividends received from a PRC resident enterprise whose shares are issued and listed in Hong Kong, if such non-resident enterprise does not have an establishment or premises in the PRC or has an establishment or premises in

– III-2 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX III TAXATION AND FOREIGN EXCHANGE the PRC but the PRC-sourced income is not connected with such establishment or premises in the PRC. The aforesaid income tax must be withheld at source, with the payer of the income being the withholding agent. Such withholding tax may be reduced or eliminated under an applicable treaty for the avoidance of double taxation.

The Notice of the SAT on the Issues Concerning Withholding the Enterprise Income Tax on the Dividends Paid by Chinese Resident Enterprises to H-Share Holders Which are Oversea Non-resident Enterprises (《國家稅務總局關於中國居民企業向境外H股非居民企業股東派發股息代扣代繳企業所得稅有關問題的通知》) issued by the SAT and became effective on 6 November 2008, further clarified that a PRC resident enterprise must withhold enterprise income tax at a rate of 10% on dividends paid to non-PRC resident enterprise H-Shareholders which are derived out of profit generated after 1 January 2008. A non-PRC resident enterprise H-Shareholder which is entitled to a preferential tax rate under an applicable tax treaty or arrangement may, directly or through its agent, apply to the competent tax authorities for a refund of the excess amount of tax withheld. The Reply of the SAT on Imposition of Enterprise Income Tax on B-share and Other Dividends of Non-resident Enterprises (《國家稅務總局關於非居民企業取得B股等股票股息徵收企業所得稅問題的批覆》) issued by the SAT on 24 July 2009 further provides that any PRC-resident enterprise that is listed on overseas stock exchanges must withhold enterprise income tax at a rate of 10% on dividends that are distributed to non-PRC resident enterprise shareholders.

Pursuant to Arrangement between the Mainland China and Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》) signed on 21 August 2006, a PRC resident enterprise which distributes dividends to its Hong Kong shareholders shall pay income tax according to PRC laws, however, if the beneficiary of the dividends is a Hong Kong resident enterprise, which directly holds not less than 25% equity interest of the aforesaid enterprise (i.e. the dividend distributor), the tax levied shall be not more than 5% of the distributed dividends. If the beneficiary is a Hong Kong resident enterprise, which directly holds less than 25% equity interest of the aforesaid enterprise, the tax levied shall be not more than 10% of the distributed dividends.

Furthermore, pursuant to the Circular of the SAT on Issues Relating to the Implementation of Dividend Clauses in Tax Treaty Agreement (《國家稅務總局關於執行稅收協定股息條款有關問題的通知》), which was promulgated and with effect from 20 February 2009, all of the following requirements should be satisfied where a fiscal resident of the other party to the tax agreement needs to be entitled to such tax agreement treatment as being taxed at a tax rate specified in the tax agreement for the dividends paid to it by a Chinese resident company: (i) such a fiscal resident who obtains dividends should be a company as provided in the tax agreement; (ii) owner’s equity interest and voting shares of the Chinese resident company directly owned by such a fiscal resident reaches a specified percentage; and (iii) the equity interest of the Chinese resident company directly owned by such a fiscal resident, at any time during the 12 consecutive months prior to the obtainment of the dividends, reach a percentage specified in the tax agreement.

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In addition, according to the Measures for Non-resident Taxpayers’ Enjoyment of Treaty Benefits (《非居民納稅人享受協定待遇管理辦法》) promulgated on 14 October 2019 and became effective on 1 January 2020, a non-resident taxpayer satisfying the terms and conditions for enjoying the taxation treatment may be entitled to the taxation treaties treatment itself/himself when filing a tax declaration or making a withholding declaration through a withholding agent, and retain relevant documents and information subject to the subsequent administration by the tax authorities.

Taxation of Capital Gains

Individual Investors

In accordance with the IIT Law and the IIT Rules, individuals are subject to individual income tax at the rate of 20% on gains realised on the sale of equity interest in PRC resident enterprises. Under the Notice of the MOF and SAT on Declaring that Individual Income Tax Continues to be Exempted over Individual Income Tax from Transfer of Shares (《財政部、國家稅務總局關於個人轉讓股票所得繼續暫免徵收個人所得稅的通知》) (No. 61 [1998] of the MOF) issued by the MOF and SAT on 30 March 1998, from 1 January 1997, gains of individuals from the transfer of shares of listed companies continue to be exempted from individual income tax. After the last amendment to the IIT Law on 31 August 2018 which came into effect on 1 January 2019 and its implementation rules last amended on 18 December 2018 and implemented on 1 January 2019, the SAT has not explicitly stated whether it will continue to exempt individuals from income tax on income derived from the transfer of listed shares. However, on 31 December 2009, the MOF, SAT and CSRC jointly issued the Notice of MOF, SAT and CSRC on Issues Concerning the Individual Income Tax on Individual Income from Transfer of Non-tradable Shares of Listed Companies (《財政部、國家稅務總局、證監會關於個人轉讓上市公司限售股所得徵收個人所得稅有關問題的通知》) (No. 167 [2009] of the MOF), which provides that individual income from transferring listed shares on certain domestic exchanges shall continue to be exempted from individual income tax, except for shares of certain specified companies (as defined in the Supplementary Notice of MOF, SAT and CSRC on Issues Concerning the Individual Income Tax on Individual Income from Transfer of Non-tradable Shares of Listed Companies issued on 10 November 2010) (《財政部、國家稅務總局、證監會關於個人轉讓上市公司限售股所得徵收個人所得稅有關問題的補充通知》) (No. 70 [2010] of the MOF). As at the Latest Practicable Date, the aforesaid provision has not expressly provided that individual income tax shall be collected from non-PRC resident individuals on the sale of shares of PRC resident enterprises listed on overseas stock exchanges such as the Stock Exchange. In practice, the PRC tax authorities have not collected income tax from non-PRC resident individuals on gains from the sale of shares of PRC resident enterprises listed on overseas stock exchanges.

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Enterprise Investors

In accordance with the EIT Law and the EIT Rules, a non-resident enterprise is generally subject to withholding tax at a rate of 10% with respect to PRC-sourced income, including gains derived from the disposal of equity interest in a PRC resident enterprise, if such non-resident enterprise does not have an establishment or premises in the PRC or has an establishment or premises in the PRC but the PRC-sourced income is not connected with such establishment or premises in the PRC. As at the Latest Practicable Date, no legislation has expressly provided that withholding tax shall be collected from non-resident enterprises on their income derived by them from sale of the shares in PRC companies listed on overseas stock exchange. However, the possibility cannot be entirely excluded that taxation authorities will seek to collect withholding tax on such income in the future.

Taxation Policy of Shanghai – Hong Kong Stock Connect

On 31 October 2014, the MOF, SAT and CSRC jointly issued the Notice of MOF, SAT and CSRC on Taxation Policy concerning the Pilot Programme of an Interconnection Mechanism for Transaction in the Shanghai and Hong Kong Stock Markets (《財政部、國家稅務總局、證監會關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知》) (No. 81 [2014] of the MOF) (hereinafter referred to as “Shanghai-Hong Kong Stock Connect Taxation Policy”). Enterprise income tax will be levied according to law on transferring spread income (included in total income) derived from investment by mainland enterprise investors in stocks listed on the Stock Exchange through Shanghai-Hong Kong Stock Connect.

Under the Notice of the MOF, SAT and CSRC on Continuing to Implement the Relevant Individual Income Tax Policy for the Shanghai and Hong Kong Stock Markets Interconnection Mechanism (《財政部、稅務總局、證監會關於繼續執行滬港股票市場交易互聯互通機制有關個人所得稅政策的通知》) (No. 78 [2017] of the MOF) came into effect on 1 November 2017, from 17 November 2017 to 4 December 2019, gains on price difference from transfer of shares derived by mainland individual investors through investment into shares listed on the Stock Exchange via the Shanghai-Hong Kong Stock Connect shall be exempted from individual income tax. For dividends and bonus obtained by mainland individual investors investing in H Shares listed on the Stock Exchange through Shanghai-Hong Kong Stock Connect, the H-Share companies shall apply to China Securities Depository and Clearing Co., Ltd. (hereinafter referred to as CSDCC) for provision by CSDCC to the H-Share companies of the register of mainland individual investors, and the H-Share companies shall withhold individual income tax at the rate of 20%.

Under the Announcement of the MOF, SAT and CSRC on Continuing to Implement the Relevant Individual Income Tax Policy for the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Markets Interconnection Mechanism and Mutual Recognition Between the Mainland and Hong Kong Funds (《財政部、稅務總局、證監會關於繼續執行滬港、深港股票市場交易互聯互通機制和內地與香港基金互認有關個人所得稅政策的公告》) (No. 93 2019 of the MOF Announcement) came into effect on 5 December 2019, from 5 December 2019 to 31 December 2022, gains on price difference from transfer of shares derived by mainland individual investors through investment into shares listed on the Stock Exchange via the Shanghai-Hong Kong Stock Connect shall continue to be exempted from individual income tax.

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Enterprise income tax will be levied according to law on dividends and bonus income (included in total income) obtained by mainland enterprise investors from investing in stocks listed on the Stock Exchange through Shanghai-Hong Kong Stock Connect. In particular, enterprise income tax will be exempted according to law for dividends and bonus income obtained by mainland resident enterprises which hold H Shares for at least 12 consecutive months. For dividend and bonus income obtained by mainland enterprise investors, the H-Share companies will not withhold dividend and bonus income tax for mainland enterprise income. The tax payable shall be declared and paid by the enterprises themselves.

Taxation Policy of Shenzhen – Hong Kong Stock Connect

On 5 November 2016, the MOF, SAT and CSRC jointly issued the Notice of MOF, SAT and CSRC on the Relevant Taxation Policies for the Pilot Programme of the Interconnection Mechanism for Transactions in the Shenzhen and Hong Kong Stock Markets (《財政部、國家稅務總局、證監會關於深港股票市場交易互聯互通機制試點有關稅收政策的通知》) (hereinafter referred to as “Shenzhen-Hong Kong Stock Connect Taxation Policy”). Pursuant to the Shenzhen-Hong Kong Stock Connect Taxation Policy, personal income tax will be temporarily exempted for transfer spread income derived from investment by mainland individual investors in stocks listed on the Stock Exchange through Shenzhen-Hong Kong Stock Connect from 5 December 2016 to 4 December 2019. Enterprise income tax will be levied according to law on price difference (included in total income) derived from investment by mainland enterprise investors in stocks listed on the Stock Exchange through Shenzhen- Hong Kong Stock Connect.

Under the Announcement of the MOF, SAT and CSRC on Continuing to Implement the Relevant Individual Income Tax Policy for the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Markets Interconnection Mechanism and Mutual Recognition Between the Mainland and Hong Kong Funds (《財政部、稅務總局、證監會關於繼續執行滬港、深港股票市場交易互聯互通機制和內地與香港基金互認有關個人所得稅政策的公告》) (No. 93 2019 of the MOF Announcement) came into effect on 5 December 2019, from 5 December 2019 to 31 December 2022, gains on price difference from transfer of shares derived by mainland individual investors through investment into shares listed on the Hong Kong Stock Exchange via the Shenzhen-Hong Kong Stock Connect and transfer spread income from buy and sell of Hong Kong funds through mutual recognition of funds shall continue to be exempted from individual income tax.

For dividends and bonus income obtained by mainland individual investors investing in H Shares listed on the Stock Exchange through Shenzhen-Hong Kong Stock Connect, the H-Share companies shall apply to CSDCC for provision by CSDCC to the H-Share companies of the register of mainland individual investors, and personal income tax shall be withheld by CSDCC at the tax rate of 20%. Individual investors who have paid withholding tax overseas may apply for tax credit to the competent tax authority of CSDCC by producing the tax credit document. For dividends and bonus income obtained by mainland securities investment funds investing in stocks listed on the Stock Exchange through Shenzhen-Hong Kong Stock Connect, personal income tax will be levied according to the aforesaid provisions.

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Enterprise income tax will be levied according to law on dividend and bonus income (included in total income) obtained by mainland enterprise investors from investing in stocks listed on the Stock Exchange through Shenzhen-Hong Kong Stock Connect. In particular, enterprise income tax will be exempted according to law for dividend and bonus income obtained by mainland resident enterprises which hold H Shares for at least 12 consecutive months. The H-Share companies listed on the Stock Exchange shall apply to CSDCC for provision by CSDCC to the H-Share companies of the register of mainland individual investors, and the H-Share companies will not withhold dividend and bonus income tax for mainland enterprise income. The tax payable shall be declared and paid by the enterprises themselves.

PRC Stamp Duty

Under the Provisional Regulation of the PRC on Stamp Tax (《中華人民共和國印花稅暫行條例》) amended on 8 January 2011 and the Detailed Rules for Implementation of Provisional Regulations of the PRC on Stamp Tax (《中華人民共和國印花稅暫行條例施行細則》) came into effect on 1 October 1988, PRC stamp duty is imposed on documents that are legally binding in the PRC and governed by the PRC laws. Therefore, PRC stamp duty does not apply to acquisitions or dispositions of H Shares outside PRC.

Estate Duty

The PRC currently has not imposed any estate duty.

MAJOR TAXATION OF THE COMPANY IN THE PRC

Enterprise Income tax

The EIT Law and the EIT Rules provide that the EIT rate applicable to all enterprises, resident or non-resident, shall be 25% generally.

Value-added Tax

Pursuant to the Provisional Regulations on Value-added Tax of the PRC (《中華人民共和國增值稅暫行條例》) promulgated on 13 December 1993 and further amended on 19 November 2017, and the Detailed Rules for the Implementation of the Provisional Regulations of the PRC on Value-Added Tax (《中華人民共和國增值稅暫行條例實施細則》), entities or individuals engaging in sale of goods, provision of processing services, repairs and replacement services and importation of goods within the territory of the PRC are subject to the payment of VAT. The VAT payable is calculated as “output VAT” minus “input VAT”. The VAT rate is 17% for entities that engage in the sales of goods. Domestic entities and individuals who engage in cross-border sales of services or intangible assets that are within the scope prescribed by the State Council shall be subject to zero-rated VAT.

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Pursuant to the Notice on Implementing the Pilot Plan for Levying Value-added Tax in lieu of Business Tax Nationwide (《關於全面推開營業稅改徵增值稅試點的通知》) issued by the MOFCOM and SAT on 23 March 2016 and effective from 1 May 2016, from 1 May 2016 onwards, the pilot reform for the transition from business tax to VAT (“Business Tax to VAT”) is implemented nationwide. Pursuant to the Implementation Measures for Transition from Business Tax to Value-added Tax (《營業稅改徵增值稅試點實施辦法》), entities and individuals engaging in the sales of services, intangible assets or real property within the territory of the PRC shall pay VAT instead of business tax. Sales of services refers to the provisions of transportation services, postal services, telecommunication services, construction services, financial services, modern services and livelihood services.

Pursuant to the Notice of the MOF and SAT on Adjusting Value-added Tax Rates (《財政部、稅務總局關於調整增值稅稅率的通知》) implemented by the Ministry of Finance and the SAT, the tax rates of 17% and 11% applicable to any taxpayer’s VAT taxable sale or import of goods shall be adjusted to 16% and 10%, respectively. As for exported goods to which the tax rate of 17% applies and whose export tax refund rate is 17%, the export tax refund rate shall be adjusted to 16%. As for exported goods and cross-border taxable acts to which the tax rate of 11% applies and whose export tax refund rate is 11%, the export tax refund rate shall be adjusted to 10%.

TAXATION IN HONG KONG

Tax on Dividends

Under the current practice of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong in respect of dividends paid by us.

Capital Gains and Profit Tax

No tax is imposed in Hong Kong in respect of capital gains from the sale of the H Shares. However, trading gains from the sale of H Shares by persons carrying on a trade, profession or business in Hong Kong, where such gains are derived from or arise in Hong Kong from such trading, will be chargeable to Hong Kong profit tax. Currently, profit tax is imposed on corporations at the rate of 16.5% and on unincorporated businesses at a rate of 15%. Gains from sales of the H Shares effected on the Stock Exchange will be considered to be derived from or arise in Hong Kong. Liability for Hong Kong profits tax would thus arise in respect of trading gains from sales of H Shares effected on the Stock Exchange realised by persons carrying on a business of trading or dealing in securities in Hong Kong.

Stamp Duty

Hong Kong stamp duty will be payable by the purchaser on every purchase, and by the seller on every sale, of the H Shares. The duty is charged at the ad valorem rate of 0.1% of the consideration for, or (if greater) the value of, the H Shares transferred to or from each of the seller and purchaser. In other words, a total of 0.2% is currently payable on a typical sale and purchase transaction of H Shares. In addition, a fixed duty of HK$5.00 is charged on each instrument of transfer (if required). If stamp duty is not paid on or before the due date, a penalty of up to ten times the duty payable may be imposed.

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Estate Duty

Currently, Hong Kong has no estate duty.

PRC LAWS AND REGULATIONS CONCERNING FOREIGN EXCHANGE CONTROL

The lawful currency of the PRC is the RMB, which is currently subject to foreign exchange control and is not freely convertible into foreign exchange. The SAFE under the PBOC is responsible for administration of all matters relating to foreign exchange, including the enforcement of foreign exchange control regulations.

On 29 January 1996, the State Council promulgated new Regulations of the PRC on the Management of Foreign Exchanges (《中華人民共和國外匯管理條例》) (hereinafter referred to as the “Regulations of the Management of Foreign Exchanges”) which became effective on 1 April 1996. The Regulations of the Management of Foreign Exchanges classifies all international payments and transfers into current account items and capital account items. Most of the current account items are no longer subject to SAFE’s approval, while capital account items still are. The Regulations of the Management of Foreign Exchanges were subsequently amended on 14 January 1997 and 5 August 2008. The latest amendment to the Regulations of the Management of Foreign Exchanges clearly states that the State will not impose any restriction on international current account payments and transfers.

On 20 June 1996, the PBOC promulgated the Circular of the People’s Bank of China on Issuing the Provisions on the Settlement and Sale of and Payment in Foreign Exchange (《中國人民銀行關於印發<結匯、售匯及付匯管理規定>的通知》) (No. 210 [1996] of the PBOC) (hereinafter referred to as the “Settlement Provisions”) which became effective on 1 July 1996. The Settlement Provisions abolished the remaining restrictions on convertibility of foreign exchange under current account items, while retaining the existing restrictions on foreign exchange transactions under capital account items.

According to the Announcement of the PBOC on Improving the Reform of the RMB Exchange Rate Regime (《中國人民銀行關於完善人民幣匯率形成機制改革的公告》) (No. 16 [2005] of the PBOC Announcement, expired on 22 February 2018), issued by the PBOC on 21 July 2005, the PRC began to implement a managed floating exchange rate system in which the exchange rate would be determined based on market supply and demand and adjusted with reference to a basket of currencies. The RMB exchange rate was no longer pegged to the U.S. dollar. The PBOC would publish the closing price of the RMB against foreign currencies such as the U.S. dollar in the inter-bank foreign exchange market after the closing of the market on each business day, which would be used as the central parity for RMB transactions on the following business day.

The Decisions of the State Council on a Group of Administrative Approval Items Cancelled or Adjusted and Other Matters (《國務院關於取消和調整一批行政審批項目等事項的決定》) (No. 50 [2014] of the State Council) promulgated on 23 October 2014 has cancelled the approval requirement of the SAFE and its branches for the remittance and settlement of the proceeds raised from the overseas listing of the foreign shares into RMB domestic accounts.

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Pursuant to the Notice of the SAFE on Issues Concerning the Foreign Exchange Administration of Overseas Listing (《國家外匯管理局關於境外上市外匯管理有關問題的通知》) (No. 54 [2014] of the SAFE) issued by the SAFE on 26 December 2014, a domestic issuer shall, within 15 business days from completion of its initial public offering overseas, register the overseas listing with the SAFE’s local branch at the place of its incorporation. The proceeds from an overseas listing of a domestic issuer may be remitted to a domestic account or deposited overseas, and the use of the proceeds shall be consistent with the content of the document and other disclosure documents.

Pursuant to the Notice of the SAFE on Reforming and Regulating the Policies for the Administration of Foreign Exchange Settlement under the Capital Accounts (《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》) (No. 16 [2016] of the SAFE) promulgated by the SAFE on 9 June 2016, discretionary settlement of foreign exchange capital income can be settled at the banks based on the actual operating needs of the domestic companies. The proportion of discretionary settlement of foreign exchange capital income for domestic companies is temporarily set at 100%. The SAFE may timely adjust the above proportion based on international balance of payments.

Pursuant to the Notice of the SAFE on Further Facilitating Cross-border Trade and Investment (《國家外匯管理局關於進一步促進跨境貿易投資便利化的通知》) (Hui Fa No. 28 [2019]), which was promulgated by the SAFE on 23 October 2019, non-investment foreign-invested enterprises are permitted to use their capital funds to make equity investments in the PRC, provided that such investments do not violate the Special Administrative Measures for the Access of Foreign Investment (Negative List) (外商投資准入特別管理措施(負面清單)) and the target investment projects in the PRC are genuine and in compliance with laws.

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This Appendix sets out summaries of certain aspects of PRC laws and regulations, which are relevant to the Company’s operations and business, as well as certain major differences between PRC Company Law, the Companies Ordinance and Companies (Winding Up and Miscellaneous Provisions) Ordinance and regulations relating to taxation in the PRC are discussed separately in “Appendix III – Taxation and Foreign Exchange” to this [REDACTED]. The principal objective of this summary is to provide potential investors with an overview of the principal laws and regulatory provisions applicable to the Company. This summary is not intended to include all the data which may be important to the potential investors. For discussion of laws and regulations which are relevant to our business, see “Regulatory Overview” in this [REDACTED].

THE PRC LAWS AND REGULATIONS

The PRC Legal System

The PRC legal system is based on the Constitution of the People’s Republic of China (the “Constitution”) and is made up of written laws, administrative regulations, local regulations, autonomous regulations, separate regulations, rules and regulations of State Council departments, rules and regulations of local governments, laws of special administrative regions and international treaties of which the PRC government is a signatory, and other regulatory documents. Court judgements do not constitute legally binding precedents, although they are used for the purposes of judicial reference and guidance. The Constitution is China’s fundamental law, formulated by the National People’s Congress (the “NPC”), and has the highest legal effect.

The NPC and the Standing Committee of the NPC (the “Standing Committee”) are empowered to exercise the legislative power of China. The NPC is responsible for formulating and amending basic laws governing civil affairs, criminal offences, state organs and other matters. The Standing Committee is empowered to formulate and amend laws with the exception of those which should be formulated by the NPC and may supplement and amend, when the NPC is not in session, parts of laws formulated by the NPC provided that such supplements and amendments do not contravene the basic principles of these laws. The State Council is the highest administrative authority of the PRC and has the power to formulate administrative regulations based on the Constitution and laws. The people’s congresses of provinces, autonomous regions and municipalities and their respective standing committees may formulate local regulations based on the specific circumstances and actual needs of their own respective administrative areas, provided that such local regulations do not violate any provision of the Constitution, laws or administrative regulations. The people’s congresses of national autonomous areas have the power to enact autonomous regulations and separate regulations in light of the political, economic and cultural characteristics of the ethnic groups in the areas concerned, provided that such autonomous and separate regulations do not violate the basic principles of the laws or administrative regulations; no adaptations shall be made to specific provisions on national autonomous areas contained in the Constitution, autonomy law of national areas and other relevant laws and administrative regulations. The people’s

– IV-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX IV SUMMARY OF PRINCIPAL PRC AND HONG KONG LEGAL AND REGULATORY PROVISIONS congresses of cities divided into districts and their respective standing committees may formulate local regulations on aspects such as urban and rural construction and management, environmental protection and historical and cultural protection based on the specific circumstances and actual needs of such cities, provided that such local regulations do not contravene any provision of the Constitution, laws, administrative regulations and local regulations of their respective provinces or autonomous regions. If the law provides otherwise on the matters concerning formulation of local regulations by cities divided into districts, those provisions shall prevail. Such local regulations will become enforceable after being reported to and approved by the standing committees of the people’s congresses of the relevant provinces or autonomous regions. The standing committees of the people’s congresses of the provinces or autonomous regions examine the legality of local regulations submitted for approval, and such approval should be granted within four months if they are not in conflict with the Constitution, laws, administrative regulations and local regulations of such provinces or autonomous regions. Where, during the examination for approval of local regulations of cities divided into districts by the standing committees of the people’s congresses of the provinces or autonomous regions, conflicts are identified with the rules and regulations of the people’s governments of the provinces or autonomous regions concerned, a decision should be made by the standing committees of the people’s congresses of provinces or autonomous regions to resolve the issue.

The ministries and commissions of the State Council, the PBOC, the National Audit Office and the subordinate institutions with administrative functions directly under the State Council may formulate departmental rules within the jurisdiction of their respective departments based on the laws and administrative regulations, and the decisions and orders of the State Council. Provisions of departmental rules should be the matters related to the enforcement of the laws and administrative regulations, and the decisions and orders of the State Council. The people’s governments of the provinces, autonomous regions, municipalities and cities or autonomous prefectures divided into districts may formulate rules and regulations based on the laws, administrative regulations and local regulations of such provinces, autonomous regions and municipalities.

According to the Constitution, the power to interpret laws is vested in the Standing Committee of the NPC. Pursuant to the Resolution of the Standing Committee of the NPC Providing an Improved Interpretation of the Law (《全國人民代表大會常務委員會關於加強法律解釋工作的決議》) passed on 10 June 1981, questions involving the application of laws in court trials shall be interpreted by the Supreme People’s Court; questions involving the application of laws in the procuratorial work of the procuratorates shall be interpreted by the Supreme People’s Procuratorate, and questions involving laws in areas unrelated to judicial and procuratorial work shall be interpreted by the State Council and the competent departments. The State Council and its ministries and commissions are also vested with the power to give interpretations of the administrative regulations and departmental rules which they have promulgated. At the regional level, the power to interpret regional laws is vested in the regional legislative and administrative authorities which promulgate such laws.

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The PRC Judicial System

Under the Constitution and the Law of the People’s Republic of China on the Organisation of the People’s Courts (《中華人民共和國人民法院組織法》), the PRC judicial system is made up of the Supreme People’s Court, the local people’s courts, the military courts and other special people’s courts. The local people’s courts are divided into three levels: the basic people’s courts, the intermediate people’s courts and the higher people’s courts. A basic people’s court may set up a civil division, a criminal division and an economic division, and may set up a number of people’s tribunals according to the conditions of the locality, population and cases. The intermediate people’s courts have divisions similar to those of the basic people’s courts and may set up other special divisions as needed, such as the intellectual property division. These two levels of people’s courts are subject to supervision by people’s courts at higher levels. The Supreme People’s Court is the highest judicial organ of the PRC. It supervises the administration of justice by the people’s courts at all levels and by the special people’s courts. The Supreme People’s Procuratorate is authorised to supervise the judgement and ruling of the people’s courts at all levels which have been legally effective, and the people’s procuratorate at a higher level is also authorised to supervise the judgement and ruling of a people’s court at a lower level which have been legally effective.

A people’s court adopts the system whereby the second instance is the last instance, that is, judgements or rulings of second instance of a people’s court are judgments or rulings of last instance. A party may appeal against the judgement or ruling of the first instance of a local people’s court, and the people’s procuratorate may present a protest to the people’s court at the next higher level in accordance with the procedures stipulated by laws. Judgments or rulings of first instance of the people’s court are judgments or rulings of final instance if, within the period for appeal, none of the parties have appealed and the procuratorate has not protested. Judgments or rulings of second instance of intermediate people’s courts, higher people’s courts and the Supreme People’s Court and judgments or rulings of first instance of the Supreme People’s Court are all judgments or rulings of last instance. However, if the Supreme People’s Court finds some definite errors in a legally effective judgement, ruling or conciliation statement of the people’s court at any level, or if the people’s court at a higher level finds such errors in a legally effective judgement, ruling or conciliation statement of the people’s court at a lower level, it has the authority to review the case itself or to direct the lower-level people’s court to conduct a retrial. If the president of a people’s court finds some definite errors in a legally effective judgement, ruling or conciliation statement, and considers a retrial is preferred, such case shall be submitted to the judicial committee of the people’s court at the same level for discussion and decision. Cases involving sentences of death, except for judgement imposed by the Supreme People’s Court, shall be submitted to the Supreme People’s Court for approval.

The Civil Procedure Law of the People’s Republic of China (《中華人民共和國民事訴訟法》) (the “PRC Civil Procedure Law”) issued on 9 April 1991 by the Standing Committee of the NPC, last revised on 27 June 2017, and implemented on 1 July 2017, prescribes the conditions for instituting a civil action, the jurisdiction of people’s courts, the procedures for

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Foreign nationals, stateless individuals and foreign enterprises and organisations which initiate or respond to actions in the people’s courts shall have equal procedural rights and obligations as citizens, legal persons and other organisations of the People’s Republic of China. Where the courts of a foreign country impose any restrictions on the procedural rights of citizens or organisations of the PRC, the courts of the PRC shall apply the principle of reciprocity to the citizens and enterprises of such a foreign country. Foreign nationals, stateless individuals and foreign enterprises and organisations must engage a PRC lawyer in case he or it needs to engage a lawyer for the purpose of initiating or responding to actions in a PRC court.

If any party to a civil action refuses to perform acts specified in a judgment or written order or any other legal document in accordance with the execution notice, the people’s court may carry out compulsory execution or entrust such performance to a relevant unit or other persons, and the person subjected to execution shall bear the expenses thus incurred. The time limit for the submission of an application for enforcement shall be two years. The termination or suspension of the time limit for the submission of an application for enforcement shall be governed by the provisions on the termination or suspension of the statute of limitation.

In accordance with the international treaties to which the PRC is a signatory or participant or according to the principle of reciprocity, a people’s court and a foreign court may request each other to serve documents, conduct investigation and collect evidence and conduct other actions on its behalf. A people’s court shall not accommodate any request made by a foreign court which will result in the violation of sovereignty, security or public interests of the PRC. Where a party applies for enforcement of a legally effective judgement or ruling made by a people’s court, and the opposite party or his property is not within the territory of the People’s Republic of China, the applicant may directly apply to a foreign court with jurisdiction for recognition and enforcement of the judgement or ruling, or the people’s court may, in accordance with the provisions of international treaties to which the PRC is a signatory or in which the PRC is a participant or the principle of reciprocity, request recognition and enforcement by a foreign court, unless the people’s court considers that the recognition or enforcement of such judgement or ruling would violate the basic legal principles of the PRC, its sovereignty or national security or the public’s interests.

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The PRC Company Law, the Special Regulations and the Mandatory Provisions

The PRC Company Law (the “Company Law”) issued on 29 December 1993 by the Standing Committee of the NPC, last revised on 26 October 2018 and implemented on the same date, regulates companies to protect the legitimate rights and interests of companies, shareholders and creditors.

The Special Regulations of the State Council on the Overseas Offering and the Listing of Shares by Joint Stock Limited Companies (《國務院關於股份有限公司境外募集股份及上市的特別規定》) (the “Special Regulations”) issued by the Standing Committee of the State Council on 4 August 1994 and implemented on the same date, were formulated in accordance with the Company Law, and are applicable to the overseas stock raising and listing matters. The Mandatory Provisions to the Articles of Association of Overseas Listed Companies (《到境外上市公司章程必備條款》) (the “Mandatory Provisions”) jointly issued by the former State Council Securities Committee and the former National Economic System Reform Commission on 29 September 1994 and implemented on the same date, stipulated the terms of a company’s Articles of Association for overseas listed companies.

Set out below is a summary of the major provisions of the PRC Company Law, the Special Regulations and the Mandatory Provisions.

General

A “joint stock limited company” (“company”) refers to a corporate legal person incorporated in China under the PRC Company Law with independent legal person properties and entitlements to such legal person properties. The liability of the company for its own debts is limited to all the properties it owns and the liability of its shareholders for the company is limited to the extent of the shares they subscribe for.

Incorporation

A company may be incorporated by promotion or public subscription. A company may be incorporated by 2 to 200 promoters, but at least half of the promoters must reside in the PRC. A company incorporated by promotion is the one with registered capital entirely subscribed for by the promoters. Where a company is incorporated by public subscription, unless otherwise provided, the promoters are required to subscribe for not less than 35% of the total shares of the company, and the remaining shares can be listed to the public or specific parties.

For companies incorporated by way of promotion, the registered capital shall be the total capital subscribed for by all promoters as registered with the relevant administrative bureau for industry and commerce. Shares in the company shall not be issued to others unless the registered capital has been fully paid up.

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For companies incorporated by way of public subscription, the registered capital is the amount of total paid-up capital as registered with the relevant administrative bureau for industry and commerce. The promoters shall subscribe for the shares required to be subscribed for by them and pay up their capital contributions. Procedures relating to the transfer of titles to non-monetary assets shall be duly completed in accordance with laws if such assets are to be contributed as capital.

The present and effective vision of the Company Law no longer imposes restrictions on minimum amount or requirements for payment deadlines of paid-up registered capital. However, if there are laws, administrative regulations and other requirements imposed by the State Council provide for payment deadlines of paid-up registered capital or minimum amount of a limited liability company or a joint stock limited company, such laws, administrative regulations and requirements shall prevail.

The promoters shall convene an inaugural meeting within 30 days after the issued shares have been completely paid up and shall give notice to all subscribers or make a public announcement of the date of the inaugural meeting 15 days prior to the meeting. The inaugural meeting may be convened only with the presence of promoters and subscribers holding shares representing more than 50% of the total issued shares of the company. Matters to be dealt with at the inaugural meeting include adopting the draft Articles of Association proposed by the promoters and electing the board of directors and the board of supervisors of the company. Any resolution of the meeting shall be approved by subscribers with more than half of the voting rights of those present at the meeting.

Within 30 days after the conclusion of the inaugural meeting, the board of directors shall apply to the registration authority for registration of the incorporation of the company. A company is formally established and has the qualification of a legal person once the registration has been approved by the relevant registration authority and a business licence has been issued.

A company’s promoter shall be liable for the followings: the debts and expenses incurred in the establishment process jointly and severally if the company cannot be incorporated; the refund of subscription monies paid by the subscribers together with interests at bank’s rate for a deposit of the same period jointly and severally if the company cannot be incorporated; the compensation for the company for damages caused by negligence of the promoters in the process of establishing the company.

Share Capital

The promoters may make a capital contribution in currencies, or non-monetary assets such as in kind or intellectual property rights or land use rights which can be appraised with monetary value and transferred lawfully, except for assets which are prohibited from being contributed as capital by the laws or administrative regulations. If a capital contribution is made in non-monetary assets, a valuation of the assets contributed must be carried out pursuant to the provisions of the laws or administrative regulations on valuation without any over-valuation or under-valuation.

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The issuance of shares shall be conducted in a fair and impartial manner. Shares of the same class must have the same rights and benefits. For shares issued at the same time and within the same class should carry equal prices and each share should have the same issue terms. The price of each share subscribed by any organisation or individual must be the same. The shares may be issued in par value or above the par value, but not lower than the par value.

A company must obtain the approval of CSRC to offer its shares to the overseas public.

According to the Special Regulations and the Mandatory Provisions, the shares issued to foreign investors and listed overseas by a company shall be in registered form, denominated in Renminbi and subscribed for in foreign currency. Shares issued to foreign investors (including the investors from the territories of Hong Kong, Macau and Taiwan) and listed in Hong Kong are classified as H Shares, and those shares issued to investors within the PRC, except those regions above, are known as Domestic Shares. Under the Special Regulations, upon approval of CSRC, a company may agree, in the underwriting agreement in respect of an issue of H Shares, to retain not more than 15% of the aggregate number of such overseas listed Foreign Shares proposed to be issued in addition to the number of underwritten shares.

Under the PRC Company Law, a company issuing registered share certificates shall maintain a shareholder registry which sets forth the following matters: the name and address of each shareholder, the number of shares held by each shareholder, the serial numbers of shares held by each shareholder, the date for acquiring the shares by each shareholder.

Increase in Share Capital

Under the PRC Company Law, an increase in the capital of a company by means of an issue of new shares must be approved by shareholders in a general meeting. In accordance with the Articles of Association, the following resolutions must be passed on the general meeting: the class and quantity of the new shares, the issue price of the new shares, the opening and closing dates for the issue of the new shares and the class and quantity of the new shares to be issued to existing shareholders.

If a company has been approved by CSRC to make public offer of new shares, a new share offering prospectus and financial accounting report must be published and application forms for subscription must be prepared. After the issue of new share the company has been paid up, the change must be registered with the relevant administration bureau for industry and commerce and a public announcement must be made accordingly. Where an increase in registered capital of a company is made by means of an issue of new shares, the subscription of new shares by shareholders shall be made in accordance with the relevant provisions on the payment of subscription monies for the establishment of a company.

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Reduction of Share Capital

A company may reduce its registered capital in accordance with the following procedures prescribed by the PRC Company Law:

• the company shall prepare a balance sheet and an inventory of assets;

• the reduction of registered capital must be approved by shareholders at a general meeting;

• the company shall notify its creditors of the reduction in share capital within 10 days and publish the relevant announcement in newspapers within 30 days of the resolution approving the reduction being passed;

• the creditors of the company may require the company to repay its debts or provide guarantees for covering the debts within 30 days of receipt of the notification or within 45 days of the date of the announcement if he/she/it has not received any notification; and

• the company must apply to the relevant administration bureau for industry and commerce for registration of the change on the reduction of registered capital.

Repurchase of Shares

No company shall purchase its shares except for any one of the following purposes:

1. to reduce its registered capital;

2. to merge with a company which is one of its existing shareholders;

3. to grant its shares for carrying out an employee stock ownership plan or equity incentive plan;

4. to purchase the company’s shares upon request from shareholders who are against the resolution regarding the merger or division of the company at a general meeting;

5. to use the shares for conversion of convertible corporate bonds issued by a listed company; or

6. to maintain its company value and protect its shareholders’ equity for a listed company.

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The purchase of shares of the company on the grounds set out in Item 1 and Item 2 above shall be subject to a resolution of the general meeting. The purchase of shares of the company on the grounds set out in Item 3, Item 5 and Item 6 above may be subject to a resolution of the board meeting with more than two thirds of directors present, according to the provisions of the Articles of Association or upon authorisation by the general meeting.

Following the purchase of shares of the company in accordance with the first paragraph of this Article, such shares shall be cancelled within ten days from the date of purchase in the case of Item 1 above and transferred or cancelled within six months from the date of purchase in the case of Item 2 or 4 above. Shares of the company acquired in accordance with Item 3, 5 or 6 above shall not exceed 10% of the total number of the company’s issued shares and shall be transferred and cancelled within three years from the date of purchase.

Any company that purchases its own shares shall perform the information disclosures obligations specified in the Securities Law of the PRC. Any purchase of its own shares by a listed company in case of Item 3, 5, or 6 of the first paragraph of this Article shall be made by way of a public centralised trading.

No company may take a pledge of its own stock.

Transfer of Shares

Shares held by shareholders may be transferred in accordance with the relevant laws and regulations. Transfer of shares by shareholders shall be carried out at a legally established securities exchange or in other ways prescribed by the State Council. Transfer of registered shares by shareholders must be endorsed or otherwise prescribed by laws or administrative regulations. Transfer of bearer shares requires delivery of the stock to the assignee.

Under the PRC Company Law, the company promoter shall not transfer the shares held within one year after the company’s incorporation date. The shares issued by the company before the public offering of shares may not be transferred within one year from the date of listing of the company’s shares on the stock exchange. The directors, supervisors and senior management of the company shall not transfer more than 25.0% of their respective company shares during their term of office and shall not transfer any of their company shares within one year from the company’s listing date.

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Shareholders

The company’s Articles of Association set forth the rights and duties of its shareholders, which are binding on all shareholders. Pursuant to the Company Law and the Mandatory Provisions, the rights of shareholders include:

• the right to attend or appoint a proxy to attend shareholders’ general meetings and to vote in respect of the number of shares held;

• the right to transfer their shares in accordance with the applicable laws, regulations and the company’s Articles of Association;

• the right to inspect the company’s Articles of Association, share register, counterfoil of company debentures, minutes of shareholders’ general meetings, resolutions of board meetings, resolutions of meetings of the board of supervisors and financial and accounting reports and to make proposals or enquires on the company’s business operations;

• where a resolution passed by shareholders’ general meetings or the board of directors violates the Articles of Association or infringes the lawful rights and interests of shareholders, the right to institute an action in a people’s court, demanding the cessation of such unlawful infringement;

• the right to receive dividends based on the number of shares held; and

• any other rights specified in the company’s Articles of Association.

The obligations of a shareholder include: to abide by the company’s Articles of Association, to pay the subscription monies in respect of the shares subscribed for; to be liable for the company’s debts and liabilities to the extent of the amount of subscription monies agreed to be paid in respect of the shares subscribed for; not to abuse the shareholders’ rights to prejudice the interests of the company or other shareholders thereof; not to abuse the independent status of the company as a legal person and a joint stock limited company to prejudice the interests of the creditor(s) of the company; and any other obligations specified in the company’s Articles of Association.

General Meetings

The general meeting is the organ of authority of the company, which exercises its powers in accordance with the PRC Company Law. The general meeting may exercise its powers:

• to decide on the company’s operational objectives and investment plans;

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• to elect and dismiss the directors and supervisors (not being representative(s) of employees) and to decide on the matters relating to the remuneration of directors and supervisors;

• to review and approve the reports of the board of directors;

• to review and approve the reports of the board of supervisors;

• to review and approve the company’s annual financial budgets and final accounts;

• to review and approve the company’s profit distribution proposals and loss recovery proposals;

• to decide on any increase or reduction of the company’s registered capital;

• to decide on the issue of corporate bonds;

• to decide on merger, division, dissolution and liquidation of the company or change of its corporate form;

• to amend the company’s Articles of Association; and

• to exercise any other authority stipulated in the Articles of Association.

A general meeting is required to be held once every year. An extraordinary general meeting is required to be held within two months after the occurrence of any of the following:

• the number of directors is less than the number stipulated by the PRC Company Law or less than two-thirds of the number specified in the Articles of Association;

• the losses of the company which are not recovered reach one-third of the company’s total paid-in share capital;

• shareholders alone or in aggregate holding 10% or more of the company’s shares request the convening of an extraordinary general meeting;

• the board of directors deems necessary;

• the board of supervisors proposes to hold; or

• any other circumstances as provided for in the Articles of Association.

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A general meeting shall be convened by the board of directors and presided over by the chairman of the board of directors. In the event that the chairman is incapable of performing or is not performing his/her duties, the meeting shall be presided over by the vice chairman. In the event that the vice chairman is incapable of performing or is not performing his/her duties, a director nominated by half or more of the directors shall preside over the meeting. Where the board of directors is incapable of performing or is not performing its duties to convene the general meeting, the supervisory board shall convene and preside over the general meeting in a timely manner. If the board of supervisors fails to convene and preside over the general meeting, shareholders alone or in aggregate holding 10% or more of the company’s shares for 90 days or more consecutively may unilaterally convene and preside over the general meeting.

In accordance with the PRC Company Law, a notice of annual general meeting shall be given to all shareholders 20 days prior to the meeting. A notice of extraordinary general meeting shall be given to all shareholders 15 days prior to the meeting.

Shareholders alone or in aggregate holding 3% or more of the shares of the company may submit interim proposals in writing to the board of directors 10 days prior to the general meeting. The board of directors shall notify other shareholders within 2 days after receiving such proposals, and submit the interim proposals to the general meeting for review and approval if such proposals are within the scope of its duties and powers.

Under the PRC Company Law, shareholders present at a general meeting have one vote for each share they hold, save that the company’s shares held by the company are not entitled to any voting rights.

An accumulative voting system may be adopted for the election of directors and supervisors at the general meeting pursuant to the provisions of the Articles of Association or a resolution of the general meeting. Under the accumulative voting system, each share shall be entitled to the number of votes equivalent to the number of directors or supervisors to be elected at the general meeting, and shareholders may consolidate their votes for one or more directors or supervisors when casting a vote.

Under the PRC Company Law, resolutions of the general meeting must be passed by more than half of the voting rights held by shareholders present at the meeting, with the exception of matters relating to merger, division or dissolution of the company, increase or reduction of registered share capital, change of corporate form or amendments to the Articles of Association, which in each case must be passed by at least two-thirds of the voting rights held by the shareholders present at the meeting. According to the Mandatory Provisions, the increase or reduction of share capital, the issuance of shares of any class, warrants or other similar securities and corporate bonds, the division, merger, dissolution and liquidation of the company, the amendments to the Articles of Association and any other matters, which, as resolved by way of an ordinary resolution of the general meeting, may have a material impact

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The Mandatory Provisions require a special resolution to be passed at the general meeting and a class meeting to be held in the event of a variation or derogation of the class rights of a class shareholder.

Minutes shall be prepared in respect of matters considered at the general meeting and the chairperson and directors attending the meeting shall endorse such minutes by signature. The minutes shall be kept together with the shareholders’ attendance register and the proxy forms.

Board

A company shall have a board of directors, which shall consist of 5 to 19 members. The term of a director shall be stipulated in the Articles of Association, provided that no term of office shall last for more than three years. A director may serve consecutive terms if re-elected. A director shall continue to perform his/her duties as a director in accordance with the laws, administrative regulations and the Articles of Association until a duly re-elected director takes office, if re-election is not conducted in a timely manner upon the expiry of his/her term of office or if the resignation of directors results in the number of directors being less than the quorum.

Under the PRC Company Law, the board of directors may exercise its powers:

• to convene general meetings and report on its work to the general meetings;

• to implement the resolutions of the general meetings;

• to decide on the company’s operational plans and investment proposals;

• to formulate the company’s annual financial budgets and final accounts;

• to formulate the company’s profit distribution proposals and loss recovery proposals;

• to formulate proposals for the increase or reduction of the company’s registered capital and the issue of corporate bonds;

• to formulate proposals for the merger, division or dissolution of the company or change of corporate form;

• to decide on the setup of the company’s internal management organs;

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• to appoint or dismiss the company’s manager and decide on his/her remuneration and, based on the manager’s recommendation, to appoint or dismiss any deputy general manager and financial officer of the company and to decide on their remunerations;

• to formulate the company’s basic management system; and

• to exercise any other authority stipulated in the Articles of Association.

Meetings of the board of directors shall be convened at least twice each year. A notice of each meeting shall be given to all directors and supervisors 10 days before the meeting. Interim board meetings may be proposed to be convened by shareholders representing more than 10% of the voting rights, more than one-third of the directors or the board of supervisors. The chairman shall convene the meeting within 10 days of receiving such proposal and preside over the meeting. The board of directors may otherwise determine the means and the period of notice for convening an interim board meeting. Board meetings shall be held only if more than half of the directors are present. Resolutions of the board shall be passed by more than half of all directors. Each director shall have one vote for a resolution to be approved by the board of directors. Directors shall attend board meetings in person. If a director is unable to attend for any reason, he/she may appoint another director to attend the meeting on his/her behalf by a written power of attorney specifying the scope of authorisations.

If a resolution of the board of directors violates the laws, administrative regulations or the Articles of Association or resolutions of the general meeting, and as a result of which the company sustains serious losses, the directors participating in the resolution are liable to compensate the company. However, if it can be proved that a director expressly objected to the resolution when the resolution was voted on, and that such objection was recorded in the minutes of the meeting, such director shall be released from that liability.

Under the PRC Company Law and the Mandatory Provisions, the following persons may not serve as a director in a company:

• a person who is unable or has limited ability to undertake any civil liability;

• a person who has been convicted of an offence of corruption, bribery, embezzlement, misappropriation of property or destruction the order of the socialist market economy, or who has been deprived of his political rights due to his crimes, in each case where less than five years have elapsed since the date of completion of the sentence;

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• a person who has been a former director, factory manager or manager of a company or an enterprise that has entered into insolvent liquidation and who was personally liable for the insolvency of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise;

• a person who has been a legal representative of a company or an enterprise that has had its business licence revoked due to violations of the law or has been ordered to close down by law and the person was personally responsible, where less than three years have elapsed since the date of such revocation; and

• a person who is liable for relatively large amount of debt that is overdue. or other circumstances under which a person is disqualified from acting as a director of a company as set out in the Mandatory Provisions.

Where a company elects or appoints a director to which any of the above circumstances applies, such election or appointment shall be null and void. A director to which any of the above circumstances applies during his/her term of office shall be released of his/her duties by the company.

Under the PRC Company Law, the board of directors shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman shall be elected with approval of more than half of all the directors. The chairman shall convene and preside over board meetings and review the implementation of board resolutions. The vice chairman shall assist the chairman to perform his/her duties. Where the chairman is incapable of performing or is not performing his/her duties, the duties shall be performed by the vice chairman. Where the vice chairman is incapable of performing or is not performing his/her duties, a director nominated by more than half of the directors shall perform his/her duties.

Board of Supervisors

A company shall have a board of supervisors composed of not less than three members. Each term of office of a supervisor is three years and he/she may serve consecutive terms if re-elected. A supervisor shall continue to perform his/her duties as a supervisor in accordance with the laws, administrative regulations and the Articles of Association until a duly re-elected supervisor takes office, if re-election is not conducted in a timely manner upon the expiry of his/her term of office or if the resignation of supervisors results in the number of supervisors being less than the quorum.

The board of supervisors shall consist of representatives of the shareholders and an appropriate proportion of representatives of the company’s staff, of which the proportion of representatives of the company’s staff shall not be less than one-third, and the actual proportion shall be stipulated in the Articles of Association. Representatives of the company’s staff at the board of supervisors shall be democratically elected by the company’s staff at the staff

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The chairman of the board of supervisors shall convene and preside over meetings of board of supervisors. Where the chairman of the board of supervisors is incapable of performing or is not performing his/her duties, the vice chairman of the board of supervisors shall convene and preside over meetings of board of supervisors. Where the vice chairman of the board of supervisors is incapable of performing or is not performing his/her duties, a supervisor recommended by more than half of the supervisors shall convene and preside over meetings of board of supervisors.

The board of supervisors may exercise its powers:

• to review the company’s financial position;

• to supervise the directors and senior management in their performance of their duties and to propose the removal of directors and senior management who have violated laws, regulations, the Articles of Association or resolutions of the general meetings;

• when the acts of directors or senior management personnel are detrimental to the company’s interests, to demand rectification from the directors and senior management;

• to propose the convening of extraordinary general meetings and to convene and preside over general meetings when the board of directors fails to perform the duty of convening and presiding over general meetings under the PRC Company Law;

• to submit proposals to general meetings;

• to bring actions against directors and senior management personnel pursuant to the relevant provisions of the PRC Company Law; and

• to exercise any other authority stipulated in the Articles of Association.

Supervisors may be present at board meetings and make inquiries or proposals in respect of board resolutions. The board of supervisors may investigate any irregularities identified in the operation of the company and, when necessary, may engage an accounting firm to assist its work at the cost of the company.

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Manager and Senior Management

Under the PRC Company Law, a company shall have a manager who shall be appointed or removed by the board of directors. The manager, who reports to the board of directors, may exercise the following powers:

• to take charge of the management of the production and business operations of the company and arrange for the implementation of resolutions of the board of directors;

• to arrange for the implementation of the company’s annual business plans and investment proposals;

• to formulate proposals for the establishment of the company’s internal management organs;

• to formulate the fundamental management system of the company;

• to formulate the company’s specific rules and regulations;

• to recommend the appointment or dismissal of any deputy manager and any financial officer of the company;

• to appoint or dismiss management personnel (other than those required to be appointed or dismissed by the board of directors); and

• to exercise any other authority granted by the board of directors.

Other provisions in the Articles of Association on the manager’s powers shall also be complied with. The manager shall be present at board meetings. However, the manager shall have no voting rights at board meetings unless he/she concurrently serves as a director.

According to the PRC Company Law, senior management refers to the manager, deputy manager, financial officer, secretary to the board of a listed company, and other personnel as stipulated in the Articles of Association.

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Duties of Directors, Supervisors, General Managers and Other Senior Management

Directors, supervisors and senior management are required under the PRC Company Law to comply with the relevant laws, administrative regulations and the Articles of Association, and have their duties of loyalty and diligence to the company. Directors, supervisors and senior management are prohibited from abusing their authority in accepting bribes or other unlawful income and from misappropriating the company’s property. Directors and senior management are prohibited from:

• misappropriating company funds;

• depositing company funds into accounts under their own names or the names of other individuals;

• loaning company funds to others or providing guarantees in favour of others supported by company’s properties in violation of the Articles of Association or without approval of the general meeting or the board of directors;

• entering into contracts or transactions with the company in violation of the Articles of Association or without approval of the general meeting;

• using their position to procure business opportunities for themselves or others that should have otherwise been available to the company or operating businesses similar to that of the company for their own benefits or on behalf of others without approval of the general meeting;

• accepting commissions paid by a third party for transactions conducted with the company;

• unauthorised divulgence of confidential information of the company; and

• other acts in violation of their duty of loyalty to the company.

Income generated by directors or senior management in violation of aforementioned provisions shall be returned to the company.

A director, supervisor or senior management who contravenes any law, administrative regulation or Articles of Association in the performance of his/her duties resulting in any loss to the company shall be liable to the company for compensation.

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Where a director, supervisor or senior management is required to attend a general meeting, such director, supervisor or senior management shall attend the meeting and answer the inquiries from shareholders. Directors and senior management shall furnish all true information and data to the board of supervisors, without impeding the discharge of duties by the board of supervisors or supervisors.

The Special Regulations and the Mandatory Provisions provide that a company’s directors, supervisors, manager and other senior management shall have duty of loyalty to the company. They are required to faithfully perform their duties, to protect the interests of the company and not to use their positions in the company for their own benefits. The Mandatory Provisions contain detailed stipulations on these duties.

Finance and Accounting

A company shall establish its own financial and accounting systems according to the laws, administrative regulations and the regulations of the competent financial department of the State Council. At the end of each financial year, a company shall prepare a financial report which shall be audited by an accounting firm as required by law. The financial and accounting reports shall be prepared in accordance with the laws, administrative regulations and the regulations of the financial department of the State Council.

A company’s financial reports shall be made available at the company for shareholders’ inspection 20 days before the convening of an annual general meeting. A joint stock limited company that makes public stock offerings must publish its financial reports.

When distributing each year’s profits after taxation, the company shall set aside 10% of its profits after taxation into a statutory reserve fund until the fund has reached 50% or more of the company’s registered capital. When the company’s statutory reserve fund is not sufficient to make up losses for the previous years, profits of the current year shall first be used to make up losses before any allocation is made to the statutory reserve fund. After allocations of the statutory reserve fund from its profits after taxation, it may, upon passing a resolution at the general meeting, allocate discretionary reserve fund from its profits after taxation. After the company has made up losses and made allocations to its discretionary reserve fund, the remaining profits after taxation shall be distributed in proportion to the number of shares held by the shareholders, except for the non-pro rata distributions as stipulated in the Articles of Association.

Profits distributed to shareholders by a resolution of a general meeting or the board of directors before losses have been made up and allocations have been made to the statutory reserve fund in violation of the requirements described above must be returned to the company. The company shall not be entitled to any distribution of profits in respect of shares held by it.

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The premium received from issuance of shares by a company at prices above par value and other income required by the CSRC to be allocated to the capital reserve fund shall be allocated to the company’s capital reserve fund. The reserve fund of a company shall be applied to make up the company’s losses, expand its business operations or increase its capital. The capital reserve fund, however, shall not be applied to make up the company’s losses. Upon the conversion of the statutory reserve fund into capital, the balance of the reserve fund shall not be less than 25% of the registered capital of the company before such conversion.

The company shall have no other accounting books except the statutory accounting books. The company’s assets shall not be deposited in any account opened under the name of any individual.

Appointment and Retirement of Accounting Firms

Pursuant to the PRC Company Law, the engagement or dismissal of accounting firms responsible for the company’s auditing shall be determined by a general meeting or the board of directors in accordance with the Articles of Association. The accounting firm should be allowed to make representations when the general meeting or the board of directors conducts a vote on the dismissal of the accounting firm. The company should provide true and complete accounting evidence, accounting books, financial and accounting reports and other accounting information to the accounting firm it engages without any refusal, withholding, misrepresentation of information.

The Special Regulations provide that a company shall engage an independent qualified accounting firm to audit the company’s annual reports and to review and check other financial reports of the company. The accounting firm’s term of office shall commence from the end of the shareholders’ annual general meeting to the end of the next shareholders’ annual general meeting.

Profit Distribution

According to the PRC Company Law, a company shall not distribute profits before losses are covered and the statutory reserve fund is provided. The Special Regulations require that any dividend and other distribution to shareholders of H Shares shall be declared and calculated in RMB and paid in foreign currency.

Under the Mandatory Provisions, a company shall appoint receiving agents on behalf of holders of the overseas listed and foreign invested shares to receive on behalf of such shareholders dividends and other distributions payable in respect of their overseas listed and foreign invested shares.

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Amendments to the Articles of Association

Pursuant to the PRC Company Law, the resolution of a general meeting regarding any amendment to a company’s Articles of Association requires affirmative votes by at least two-thirds of the votes held by shareholders attending the meeting. Pursuant to the Mandatory Provisions, the company may amend its Articles of Association according to the laws, administrative regulations and the Articles of Association. Any amendment to the Articles of Association regarding of the Mandatory Provisions shall only be effective upon approval by the companies’ approval department under the State Council and the securities regulatory department of the State Council, while the amendment relating to the registration of the company, the company shall conduct registration of the change with the relevant authority in accordance with the law.

Dissolution and Liquidation

Under the PRC Company Law, a company shall be dissolved by reason of the following:

• the term of its operation set out in the Articles of Association has expired or other events of dissolution specified in the Articles of Association have occurred;

• the shareholders have resolved at a general meeting to dissolve the company;

• the company is dissolved by reason of merger or division;

• the business licence is revoked or the company is ordered to close down or to be dissolved in accordance with the laws; or

• the company is dissolved by the people’s court in response to the request of shareholders holding shares that represent more than 10% of the voting rights of all shareholders of the company, on the grounds that the operation and management of the company has suffered significant hardships that cannot be resolved through other means, rendering ongoing existence of the company a cause for significant losses to the shareholders.

In the event of first point above, the company may carry on its existence by amending its Articles of Association. The amendments to the Articles of Association in accordance with the provisions described above shall require approval of more than two-thirds of voting rights of shareholders attending a general meeting.

Where the company is dissolved under the circumstances set forth in subparagraphs 1, 2, 4 or 5 above, a liquidation committee shall be established within 15 days after the occurrence of an event of dissolution. The members of the company’s liquidation committee shall be composed of its directors or any other personnel appointed by the general meeting. If a liquidation committee is not established within the prescribed period to conduct a liquidation,

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The liquidation committee may exercise the following powers during the liquidation period:

• to liquidate the company’s properties and to prepare a balance sheet and an inventory of properties;

• to notify the company’s creditors or publish announcements;

• to deal with any outstanding businesses related to liquidation;

• to pay any overdue tax as well as tax amounts arising from the process of liquidation;

• to claim the company’s credits and pay off debts;

• to handle the company’s remaining properties after its debts have been paid off; and

• to represent the company in any civil lawsuits.

The liquidation committee shall notify the company’s creditors within 10 days after its establishment and publish an announcement in newspapers within 60 days.

A creditor shall lodge his claim with the liquidation committee within 30 days after receiving the notification, or within 45 days of the date of the announcement if he/she did not receive any notification. A creditor shall state all matters relevant to his claimed creditor’s rights and furnish relevant evidence. The liquidation committee shall register such creditor’s rights. The liquidation committee shall not make any settlement to creditors during the period of claim.

Upon liquidation of the company’s properties and preparation of the required balance sheet and inventory of properties, the liquidation committee shall draw up a liquidation plan and submit this plan to a general meeting or the people’s court for endorsement. The remaining part of the company’s properties, after payment of liquidation expenses, employee wages, social insurance expenses and statutory compensation, outstanding taxes and debts, shall be distributed to shareholders in proportion to shares held by them. The company shall continue to exist during the liquidation period, although it cannot engage in operating activities that are not related to the liquidation. The company’s properties shall not be distributed to shareholders before repayments are made in accordance with the foregoing provisions.

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Upon liquidation of the company’s properties and preparation of the required balance sheet and inventory of properties, if the liquidation committee becomes aware that the company does not have sufficient assets to meet its liabilities, it must apply to the people’s court for a declaration for bankruptcy in accordance with the laws. Following the company being declared insolvent by a ruling of the people’s court, the liquidation committee shall transfer all matters arising from the liquidation to the people’s court.

Upon completion of the liquidation, the liquidation committee shall prepare a liquidation report and submit it to the general meeting or the people’s court for confirmation of its completion. Following such confirmation, the report shall be submitted to the registration authority of the company, and apply for cancellation of the company’s registration, and an announcement of its termination shall be published. Members of the liquidation committee shall discharge their duties in good faith and perform their duties regarding liquidation in compliance with the laws. Members of the liquidation committee shall be prohibited from abusing their powers in accepting bribes or other unlawful income and from misappropriating the company’s properties. Members of the liquidation committee are liable to indemnify the company and creditors in respect of any loss suffered by the company or creditors due to intentional or gross negligence.

Liquidation of a company declared bankrupt according to laws shall be processed in accordance with the laws on corporate bankruptcy.

Overseas Listing

The shares of a company shall only be listed overseas after obtaining approval from CSRC, and the listing must be arranged in accordance with procedures specified by the State Council. Pursuant to the Special Regulations, a company may issue shares to overseas investors and list its shares overseas upon approval from CSRC. Subject to approval of the company’s plans to issue overseas listed Foreign Shares and Domestic Shares by CSRC, the board of directors of the company may make arrangement to implement such plans for issuance of the Foreign Shares and Domestic Shares, respectively, within fifteen months from the date of approval by CSRC.

Loss of Share Certificates

A shareholder may, in accordance with the public notice procedures set out in the PRC Civil Procedure Law, apply to a people’s court if his share certificate(s) in registered form is either stolen, lost or destroyed, for a declaration that such certificate(s) will no longer be valid. After the people’s court declares the invalidity of such certificate(s), the shareholder may apply to the company for a replacement share certificate(s). A separate procedure regarding the loss of share certificates and H Share certificates of the overseas-listed foreign shareholders of the PRC is provided for in the Mandatory Provisions, details of which are set out in the Articles of Association.

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Merger and Division

Corporate merger may take the form of either merger by absorption or merger by the establishing a new corporation. If it merges by absorption, the company which is absorbed shall be dissolved. If the companies merges by forming a new corporation, both companies will be dissolved.

The PRC Securities Laws, Regulations and Regulatory Regimes

The PRC has promulgated a number of regulations that relate to the issue and trading of the shares and disclosure of information of companies. In October 1992, the State Council established the Securities Committee and CSRC. The Securities Committee is responsible for coordinating the drafting of securities regulations, formulating securities-related policies, planning the development of securities markets, directing, coordinating and supervising all securities-related institutions in the PRC and administering CSRC. CSRC is the regulatory arm of the Securities Committee and is responsible for the drafting of regulatory provisions governing securities markets, supervising securities companies, regulating public offerings of securities by PRC companies in the PRC or overseas, regulating the trading of securities, compiling securities-related statistics and undertaking relevant research and analysis. In April 1998, the State Council consolidated the Securities Committee and CSRC and reformed CSRC.

On 22 April 1993, the State Council promulgated the Provisional Regulations Concerning the Issue and Trading of Shares (《股票發行與交易管理暫行條例》) governing the application and approval procedures for public offerings of shares, issuance of and trading in shares, the acquisition of listed companies, deposit, clearing and transfer of shares, the disclosure of information, investigation, penalties and dispute resolutions with respect to a listed company.

On 25 December 1995, the State Council promulgated the Regulations of the State Council Concerning Domestic Listed Foreign Shares of Joint Stock Limited Companies (《國務院關於股份有限公司境內上市外資股的規定》). These regulations principally govern the issue, subscription, trading and declaration of dividends and other distributions of domestic listed Foreign Shares and disclosure of information of joint stock limited companies having domestic listed Foreign Shares.

The Securities Law of the PRC (《中華人民共和國證券法》) (the “PRC Securities Law”) was enacted by the Standing Committee of the NPC on 29 December 1998, which became effective on 1 July 1999 and was latest revised on 28 December 2019. It was the first national securities law in the PRC, and is divided into 14 chapters and 226 articles comprehensively regulating activities in the PRC securities market, including the issue and trading of securities, takeovers by listed companies, securities exchanges, securities companies and the duties and responsibilities of the State Council’s securities regulatory authorities. Article 224 of the PRC Securities Law provides that domestic enterprises issuing securities overseas directly or indirectly or listing their securities overseas shall comply with the relevant provisions of the State Council. Currently, the issue and trading of foreign issued securities (including shares) are principally governed by the regulations and rules promulgated by the State Council and CSRC.

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Arbitration and Enforcement of Arbitral Awards

The Arbitration Law of the PRC (《中華人民共和國仲裁法》) (the “PRC Arbitration Law”) was enacted by the Standing Committee of the NPC on 31 August 1994, which became effective on 1 September 1995 and last amended on 1 September 2017, and implemented on 1 January 2018. It is applicable to, among other matters, economic disputes involving foreign parties where all parties have entered into a written agreement to resolve disputes by arbitration before an arbitration committee constituted in accordance with the PRC Arbitration Law. The PRC Arbitration Law provides that an arbitration committee may, before the promulgation of arbitration regulations by the PRC Arbitration Association, formulate interim arbitration rules in accordance with the PRC Arbitration Law and the PRC Civil Procedure Law. Where the parties have agreed to settle disputes by means of arbitration, a people’s court will refuse to handle a legal proceeding initiated by one of the parties at such people’s court, unless the arbitration agreement has lapsed.

The Listing Rules and the Mandatory Provisions require an arbitration clause to be included in the Articles of Association of a company listed in Hong Kong and, in the case of the Listing Rules, also in contracts between the company and each director or supervisor. Pursuant to such clause, whenever a dispute or claim arises from any right or obligation provided in the Articles of Association, the PRC Company Law or other relevant laws and administrative regulations concerning the affairs of the company between (i) a holder of overseas listed Foreign Shares and the company; (ii) a holder of overseas listed Foreign Shares and a holder of Domestic Shares; or (iii) a holder of overseas listed Foreign Shares and the company’s directors, supervisors or other management personnel, such parties shall be required to refer such dispute or claim to arbitration at either the China International Economic and Trade Arbitration Commission (“CIETAC”) or the Hong Kong International Arbitration Centre (“HKIAC”). Disputes in respect of the definition of shareholder and disputes in relation to the company’s shareholder registry need not be resolved by arbitration. If the party seeking arbitration elects to arbitrate the dispute or claim at the HKIAC, then either party may apply to have such arbitration conducted in Shenzhen in accordance with the securities arbitration rules of the HKIAC.

Under the PRC Arbitration Law and PRC Civil Procedure Law, an arbitral award shall be final and binding on the parties involved in the arbitration. If any party fails to comply with the arbitral award, the other party to the award may apply to a people’s court for its enforcement. The people’s court can issue a ruling prohibiting the enforcement of an arbitral award made by an arbitration commission after verification by collegial bench formed by the people’s court if there is any procedural irregularity (including but not limited to irregularity in the composition of the arbitration tribunal or arbitration proceedings, the jurisdiction of the arbitration commission, or the making of an award on matters beyond the scope of the arbitration agreement).

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Any party seeking to enforce an award of a foreign affairs arbitral body of the PRC against a party who or whose property is not located within the PRC may apply to a foreign court with jurisdiction over the case for recognition and enforcement of the award. Likewise, an arbitral award made by a foreign arbitral body may be recognised and enforced by a PRC court in accordance with the principle of reciprocity or any international treaties concluded or acceded to by the PRC.

The PRC acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (《承認及執行外國仲裁裁決公約》) (the “New York Convention”) adopted on 10 June 1958 pursuant to a resolution passed by the Standing Committee of the NPC on 2 December 1986. The New York Convention provides that all arbitral awards made in a state which is a party to the New York Convention shall be recognised and enforced by other parties thereto subject to their rights to refuse enforcement under certain circumstances, including where the enforcement of the arbitral award is against the public policy of that state. At the time of the PRC’s accession to the Convention, the Standing Committee of the NPC declared that (i) the PRC will only apply the Convention to the recognition and enforcement of arbitral awards made in the territories of other parties based on the principle of reciprocity; and (ii) the New York Convention will only be applied to disputes deemed under PRC laws to be arising from contractual or non- contractual mercantile legal relations.

An arrangement for mutual enforcement of arbitral awards between Hong Kong and the Supreme People’s Court of China was reached. The Supreme People’s Court of China adopted the Arrangements on the Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (《關於內地與香港特別行政區相互執行仲裁裁決的安排》) on 18 June 1999, which took effect on 1 February 2000. The arrangements reflect the spirit of the New York Convention. Under the arrangements, the awards by the Mainland arbitral bodies recognised by Hong Kong may be enforced in Hong Kong and the awards by the Hong Kong arbitral bodies according to the Arbitration Ordinance (《仲裁條例》) of Hong Kong SAR may also be enforced in the Mainland China. If the Mainland court finds that the enforcement of awards made by the Hong Kong arbitral bodies in the Mainland will be against public interests of the Mainland, or the court of Hong Kong decides that the enforcement of the arbitral awards in Hong Kong SAR will be against public policies of Hong Kong, the awards may not be enforced.

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HONG KONG LAWS AND REGULATIONS

Summary of Material Differences Between Certain PRC Company Law Matters in the PRC and Hong Kong

Hong Kong law applicable to a company incorporated in Hong Kong is based on the Companies Ordinance, Companies (Winding Up and Miscellaneous Provisions) Ordinance and supplemented by Common Law and Rules of Equity that are applicable to Hong Kong. The Company, which is a joint stock limited company established in the PRC, is governed by the PRC Company Law and all other rules and regulations promulgated pursuant to the PRC Company Law.

Set out below is a summary of the material differences between the Hong Kong law applicable to a company incorporated in Hong Kong and the PRC Company Law applicable to a joint stock limited company incorporated and existing under the PRC Company Law. This summary is, however, not intended to be an exhaustive comparison.

(1) Corporate Existence

Under Hong Kong law, a company with share capital is incorporated upon issuance of the certificate by the Registrar of Companies in Hong Kong and the company will acquire an independent corporate existing. A company may be incorporated as a public company or a private company.

Under the PRC Company Law, a joint stock limited company may be incorporated by promotion or public subscription. A joint stock limited company has no minimum registered capital requirement except for the special provisions of any other laws, administrative regulations and decisions of the State Council.

Hong Kong law does not prescribe any minimum registered capital requirement for a Hong Kong company.

(2) Share Capital

Under Hong Kong law, shares of a Hong Kong company have no nominal value and the directors of a Hong Kong company may, with the prior approval of the shareholders, if required, cause the company to issue new shares up to the maximum number (if any) set out in its Articles of Association. The PRC Company Law does not provide for authorised share capital other than registered capital. For joint stock limited companies incorporated by promotion, the registered capital is the total share capital subscribed by all promoters that registered at the registration authority. Where a joint stock limited company is incorporated by public subscription, the registered capital is the total paid-up capital that registered at the registration authority. Any increase in registered capital must be approved by the shareholders in a general meeting and by the relevant PRC governmental and regulatory authorities when applicable.

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Under the PRC Company Law, the shares may be subscribed for in the form of money or non-monetary assets that may be valued in currency and lawfully transferable. For non- monetary assets to be used as capital contributions, appraisals and verification must be carried out to ensure no over-valuation or under-valuation of the assets. There is no such restriction on a Hong Kong company under Hong Kong law.

(3) Restrictions on Shareholding and Transfer of Shares

Under the PRC Company Law, shares in a joint stock limited company held by its promoters cannot be transferred within one year after the date of establishment of the company. Shares in issue prior to the company’s public offering cannot be transferred within one year from the listing date of the shares on the stock exchange. Shares in a joint stock limited company held by its directors, supervisors and senior management and transferred each year during their term of office shall not exceed 25% of the total shares they held in the company, and the shares of the company held by such person cannot be transferred within one year from the listing date of the shares, and also cannot be transferred within half a year after such person has left office. The Articles of Association may set other restrictive requirements on the transfer of the company’s shares held by its directors, supervisors and senior management. There are no such restrictions on shareholdings and transfers of shares under Hong Kong law except for the six-month lock-up on the company’s issue of shares and the 12-month lock-up on controlling shareholders’ disposal of shares, as described in the section entitled “[REDACTED]” in this [REDACTED].

(4) Financial Assistance for Acquisition of Shares

Although the PRC Company Law does not contain any provision prohibiting or restricting a joint stock limited company or its subsidiaries from providing financial assistance for the purpose of an acquisition of its own or its holding company’s shares, the Mandatory Provisions contain certain restrictions on a company and its subsidiaries providing such financial assistance similar to those under Hong Kong Company Law.

(5) Variation of Class Rights

The PRC Company Law has no special provision relating to variation of class rights. However, the PRC Company Law states that the State Council can promulgate regulations relating to other kinds of shares. The Mandatory Provisions contain elaborate provisions relating to the circumstances which are deemed to be variations of class rights and the approval procedures required to be followed regarding variations of class rights. These provisions have been incorporated in the Articles of Association, which are summarised in Appendix V of this [REDACTED].

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Under the Companies Ordinance, no rights attached to any class of shares can be varied except (i) with the approval of a special resolution of the holders of the relevant class at a separate meeting; (ii) with the consent in writing of the holders of at least three-fourths of the total voting rights of the issued shares in the class in question; (iii) by agreement of all the members of a Hong Kong company; or (iv) if there are provisions in the Articles of Association relating to the variation of those rights, then in accordance with those provisions. The Company (as required by the Listing Rules and the Mandatory Provisions) has adopted the Articles of Association provisions protecting class rights in a similar manner to those found in Hong Kong law. Holders of Foreign Shares and Domestic Shares are defined in the Articles of Association as different classes of shareholders, provided however that the special procedures for approval by separate class shareholders shall not apply to the following circumstances: (i) the Company issues Domestic Shares and Foreign Shares, separately or simultaneously, once every 12-month period, pursuant to a Shareholders’ special resolution, not more than 20% of each of the issued Domestic Shares and issued overseas listed foreign invested shares existing as at the date of the Shareholders’ special resolution; (ii) the plan for the issue of Domestic Shares and listed foreign invested shares upon its establishment is implemented within 15 months following the date of approval by the CSRC; and (iii) upon approval by the CSRC, the shareholders of Domestic Shares of the Company transfer their shares to overseas investors and such shares are listed and traded in foreign markets.

(6) Directors

The PRC Company Law, unlike Hong Kong Company Law, does not contain any requirements relating to the declaration of directors’ interests in material contracts; restrictions on directors’ authority in making major dispositions; restrictions on companies providing certain benefits, prohibitions against compensation for loss of office without shareholders’ approval. The PRC Company Law provides restrictions on interested directors voting on the resolution at a board meeting when such resolution relates to an enterprise which the director is interested or connected. The Mandatory Provisions, however, contain requirements and restrictions on major dispositions and specify the circumstances under which a director may receive compensation for loss of office, all of which provisions have been incorporated in the Articles of Association, a summary of which is set out in Appendix VI of this [REDACTED].

(7) Board of Supervisors

Under the PRC Company Law, directors and senior management of a joint stock limited company are subject to the supervision and inspection of a board of supervisors, but there is no mandatory requirement for the establishment of a board of supervisors for a company incorporated in Hong Kong. The Mandatory Provisions provide that each supervisor owes a duty, in the exercise of his powers, to act in good faith and honestly in what he considers to be in the best interests of the company and to exercise the care, diligence and skill that a reasonably prudent person would exercise under comparable circumstances.

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(8) Derivative Action by Minority Shareholders

Hong Kong law permits minority shareholders to initiate a derivative action on behalf of all shareholders against directors who have committed a breach of their fiduciary duties to the company if such directors control a majority of votes at a general meeting, thereby effectively preventing a company from suing the directors in breach of their duties in its own name. The PRC Company Law provides that, in the event where the directors and senior management of a joint stock limited company violate their duties to the company and result in loss to the company, the shareholders who individually or jointly hold more than 1% of the shares in the company for more than 180 consecutive days have the right to request in writing the board of supervisors to initiate proceedings in the people’s court, and in the event that the board of supervisors violates its duties to the company and results in loss to the company, the aforesaid shareholders may send written request to the board of directors to initiate proceedings in the people’s court. If the board of supervisors or the board of directors refuses to initiate such proceedings after receiving a written request from the aforesaid shareholders proceedings, or has not initiated proceedings within 30 days upon receipt of the request, or if the situation is so urgent that the proceeding is not initiated immediately, such cases may cause irremediable damages to the company, while the aforementioned shareholders shall have the right to initiate proceedings directly to the people’s court in their own names for the interest of the company. The Mandatory Provisions further provide remedies to the company against the directors, supervisors and senior management in breach of their duties to the company.

(9) Protection of Minorities

Under Hong Kong law, a shareholder who complains that the affairs of a company incorporated in Hong Kong are conducted in a manner unfairly prejudicial to his interests may petition to court to either wind up the company or make an appropriate order regulating the affairs of the company. In addition, on the application of a specified number of members, the Financial Secretary of Hong Kong may appoint inspectors who are given extensive statutory powers to investigate the affairs of a company incorporated in Hong Kong. The PRC Company Law provides that where any company encounters any serious difficulty in its operations or management such that the interests of the shareholders will face serious loss if the company continues to exist and such difficulty cannot be resolved by any other means, the shareholders holding 10% or more of the voting rights of all issued shares of the company may plead the people’s court to dissolve the company. The Mandatory Provisions, however, contain provisions to the effect that, except for the duties required by laws, administrative regulations or the Listing Rules to the stock exchange where company’s shares are listed, a controlling shareholder may not exercise its voting rights to relieve a director or supervisor of his duty to act honestly in the best interests of the company or to approve the expropriation by a director or supervisor of the company’s assets or the individual interests of other shareholders which is prejudicial to the interests of the shareholders generally or of a proportion of the shareholders of a company.

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(10) Notice of General Meetings

Under the PRC Company Law, notice of an annual general meeting must be given not less than 20 days before the meeting, or, not less than 15 days before an extraordinary general meeting. For a limited company incorporated in Hong Kong, the minimum notice period of a general meeting other than an annual general meeting is 14 days; and the notice period for an annual general meeting is 21 days.

(11) Quorum for General Meetings

Under Hong Kong law, the quorum for a general meeting is two members unless the Articles of Association of the company otherwise provide. For companies with only one member, the quorum must be one member. The PRC Company Law does not specify any quorum requirement for a general meeting.

(12) Voting

Under Hong Kong law, an ordinary resolution is passed by a simple majority of votes cast by members present in person or by proxy at a general meeting and a special resolution is passed by a majority of not less than three-fourths of votes cast by members present in person or by proxy at a general meeting. Under the PRC Company Law, the passing of any resolution requires more than half of the votes cast by shareholders present in person or by proxy at a general meeting except in cases of proposed amendments to the Articles of Association, increase or reduction of share capital, and merger, division or dissolution of a joint stock limited company or change of corporation form, which require two-thirds or more of votes cast by shareholders with the right to vote present at a general meeting.

(13) Financial Disclosure

A company is required under the PRC Company Law to make available at its office for inspection by shareholders its financial reports and other relevant annexes 20 days before the annual general meeting. In addition, a company established by way of public offering under the PRC Company Law must publish its financial position. The annual balance sheet has to be verified by registered accountants. The Companies Ordinance requires a company to send to every shareholder a copy of its balance sheet, auditors’ report and directors’ report, which are to be laid before the company in its annual general meeting, not less than 21 days before such meeting. A company is required under the PRC law to prepare its financial statements in accordance with the PRC accounting standards. The Mandatory Provisions require that a company must, in addition to preparing accounts according to the PRC standards, have its accounts prepared and audited in accordance with international accounting standards or Hong Kong accounting standards and its financial statements must also contain a statement of the financial effect of the material differences (if any) from the financial statements prepared in accordance with the PRC accounting standards.

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The Special Regulations require that there should not be any inconsistency between the information disclosed within and outside the PRC and that, to the extent that there are differences in the information disclosed in accordance with the relevant PRC and overseas laws, regulations and requirements of the relevant stock exchanges, such differences should also be disclosed simultaneously.

(14) Information on Directors and Shareholders

The PRC Company Law gives shareholders of a company the right to inspect the Articles of Association, minutes of the general meetings and financial and accounting reports. Under the Articles of Association, shareholders of a company have the right to inspect and copy (at reasonable charges) certain information on shareholders and on directors which is similar to that available to shareholders of Hong Kong companies under Hong Kong law.

(15) Receiving Agent

Under both the PRC Company Law and Hong Kong law, dividends once declared become debts payable to shareholders. The limitation period for debt recovery action under Hong Kong law is six years, while that under the PRC law is three years. The Mandatory Provisions require that the company should appoint a trust company registered under the Trustee Ordinance of Hong Kong (Chapter 29 of the Laws of Hong Kong) as a receiving agent to receive on behalf of holders of Foreign Shares dividends declared and all other monies owed by a joint stock limited company in respect of such Foreign Shares.

(16) Corporate Reorganisation

Corporate reorganisations involving a company incorporated in Hong Kong may be effected in a number of ways, such as a transfer of the whole or part of the business or property of the company to another company in the course of voluntary winding up pursuant to Section 237 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance or a compromise or arrangement between the company and its creditors or between the company and its members pursuant to Section 673, Division 2 of Part 13 of the Companies Ordinance, which requires the sanction of the court. Under PRC Company Law, the merger, division, dissolution, liquidation or change the form of a company has to be approved by shareholders at general meeting.

(17) Arbitration of Disputes

In Hong Kong, disputes between shareholders on one hand, and a company incorporated in Hong Kong or its directors on the other, may be resolved through the courts. The Mandatory Provisions provide that such disputes should be submitted to arbitration at either the HKIAC or the CIETAC, at the claimant’s choice.

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(18) Statutory Deduction

Under the PRC Company Law, a company shall draw 10% of the profits as its statutory reserve fund before it declares any dividends after taxation. The company may not be required to deposit the statutory reserve fund if the aggregate amount of the statutory reserve fund has accounted for 50% of the company’s registered capital. After the company has drawn statutory reserve fund from the profit after taxation, it may, upon a resolution made by the shareholders, draw a discretionary reserve fund from the profit after taxation. There are no such requirements under Hong Kong law.

(19) Remedies of a Company

Under the PRC Company Law, if a director, supervisor or senior management in carrying out his duties infringes any law, administrative regulation or the Articles of Association of a company, which results in damage to the company, that director, supervisor or senior management should be responsible to the company for such damages. In addition, remedies of the company similar to those available under the Hong Kong law (including rescission of the relevant contract and recovery of profits made by a director, supervisor or officer) have been in compliance with the Listing Rules.

(20) Dividends

Under Hong Kong law, the limitation period for an action to recover a debt (including the recovery of dividends) is six years, whereas under PRC laws, the relevant limitation period is three years. A company shall not exercise its powers to forfeit any unclaimed dividend in respect of its listed Foreign Shares until after the expiry of the applicable limitation period.

(21) Fiduciary Duties

In Hong Kong, there is the Common Law concept of the fiduciary duty of directors. Under the PRC Company Law and the Mandatory Provisions, directors, supervisors, senior management owe loyalty and dilligence duty towards a company and shall not compete with the company in any forms without the informed consent of the general meeting.

(22) Closure of Register of Shareholders

The Companies Ordinance requires that the register of shareholders of a company must not generally be closed for the registration of transfers of shares for more than 30 days (extendable to 60 days under certain circumstances) in a year, whereas the Articles of Association of a company provide, as required by the Mandatory Provisions, that share transfers may not be registered within 30 days before the date of a general meeting or within five days before the record date set for the purpose of distribution of dividends.

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Listing Rules

The Listing Rules provide additional requirements applicable to an issuer which is incorporated in the PRC as a joint stock limited company and seeks a primary listing or whose primary listing is on the Stock Exchange. Set out below is a summary of such principal additional requirements which apply to the Company.

(1) Compliance Adviser

A company seeking listing on the Stock Exchange is required to appoint a compliance adviser acceptable to the Stock Exchange for the period from its listing date up to the date of the publication of its first full year’s financial results, to provide the company with professional advice on continuous compliance with the Listing Rules and all other applicable laws, regulations, rules, codes and guidelines, and to act at all times, in addition to the Company’s two authorised representatives, as the principal channel of communication with the Stock Exchange. The appointment of the compliance adviser may not be terminated until a replacement acceptable to the Stock Exchange has been appointed.

If the Stock Exchange is not satisfied that the compliance adviser is fulfilling its responsibilities adequately, it may require the Company to terminate the compliance adviser’s appointment and appoint a replacement.

The compliance adviser must keep the Company informed on a timely basis of changes in the Listing Rules and any new or amended law, regulation or code in Hong Kong applicable to the Company.

It must act as the Company’s principal channel of communication with the Stock Exchange if the authorised representatives of the Company are expected to be frequently outside Hong Kong.

(2) Accountants’ Report

An accountants’ report for a PRC issuer will not normally be regarded as acceptable by the Stock Exchange unless the relevant accounts have been audited to a standard comparable to that required in Hong Kong or under International Standards on Auditing or China Auditing Standards. Such report will normally be required to conform to Hong Kong or international accounting standards or China Accounting Standards for Business Enterprises in the case of a PRC issuer that has adopted China Accounting Standards for Business Enterprises for the preparation of its annual financial statements.

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(3) Process Agent

The Company is required to appoint and maintain a person authorised to accept service of process and notices on its behalf in Hong Kong throughout the period during which its securities are listed on the Stock Exchange and must notify the Stock Exchange of his appointment, the termination of his appointment and his contact particulars.

(4) Public Shareholdings

If at any time there are existing issued securities of a PRC issuer other than Foreign Shares (“Foreign Shares”) which are listed on the Stock Exchange, the Listing Rules require that the aggregate amount of such Foreign Shares held by the public must constitute not less than 25% of the issued share capital and that such Foreign Shares for which listing is sought must not be less than 15% of the total issued share capital if the Company has an expected market capitalisation at the time of listing of not less than HK$125,000,000.

The Stock Exchange may, at its discretion, accept a lower percentage of between 15% and 25% if the Company has an expected market capitalisation at the time of listing of over HK$10,000,000,000.

(5) Independent Non-executive Directors and Supervisors

The independent non-executive directors of a PRC issuer are required to demonstrate an acceptable standard of competence and adequate commercial or professional expertise to ensure that the interests of the general body of shareholders will be adequately represented. The supervisors of a PRC issuer must have the character, expertise and integrity and be able to demonstrate a standard of competence commensurate with their position as supervisors.

(6) Restrictions on Purchase and Subscription of its own Shares

Subject to governmental approvals and the provisions of the Articles of Association, the Company may repurchase its own H shares on the Stock Exchange in accordance with the provisions of the Listing Rules. Approval by way of special resolution of the holders of Domestic Shares and the holders of H shares at separate class meetings conducted in accordance with the Articles of Association is required for share repurchases. In seeking approvals, the Company is required to provide information on any proposed or actual purchases of all or any of its equity securities, whether or not listed or traded on the Stock Exchange. The Directors must also state the consequences of any share repurchase which will arise under either or both of the Takeovers Code and any similar PRC law of which they are aware, if any.

Any general mandate given to the directors to repurchase Foreign Shares must not exceed 10% of the total amount of existing issued Foreign Shares of the Company.

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(7) Mandatory Provisions

With a view to increasing the level of protection afforded to investors, the Stock Exchange requires the incorporation, in the Articles of Association of a PRC company whose primary listing is on the Stock Exchange, of the Mandatory Provisions and provisions relating to the change, removal and resignation of auditors, class meetings and the conduct of the board of supervisors of the Company. Such provisions have been incorporated into the Articles of Association, a summary of which is set out in Appendix V.

(8) Redeemable Shares

The Company must not issue any redeemable shares unless the Stock Exchange is satisfied that the relative rights of the holders of the Foreign Shares are adequately protected.

(9) Pre-emptive Rights

Except in the circumstances mentioned below, the directors of a company are required to obtain the approval by a special resolution of shareholders in general meeting, and the approvals by special resolutions of the holders of Domestic Shares and Foreign Shares (each being otherwise entitled to vote at general meetings) at separate class meetings convened in accordance with the Company’s Articles of Association, prior to (1) authorising, allotting, issuing or granting shares or securities convertible into shares, or options, warrants or similar rights to subscribe for any shares or such convertible securities; or (2) any major subsidiary of the company making any such authorisation, allotment, issue or grant so as materially to dilute the percentage equity interest of the company and its shareholders in such subsidiary. No such approval will be required, but only to the extent that, the existing shareholders of the company have by special resolution in general meeting given a mandate to the directors, either unconditionally or subject to such terms and conditions as may be specified in the resolution, to authorise, allot or issue, either separately or concurrently once every 12 months, not more than 20% of the existing Domestic Shares and Foreign Shares as at the date of the passing of the relevant special resolution or of such shares that are part of the company’s plan at the time of its establishment to issue Domestic Shares and Foreign Shares and which plan is implemented within 15 months from the date of approval by the CSRC; or where upon approval by securities supervision or administration authorities of State Council, the shareholders of domestic invested shares of the Company transfer its shares to overseas investors and such shares are listed and traded in foreign markets.

(10) Supervisors

The Company is required to adopt rules governing dealings by its Supervisors in securities of the Company in terms no less exacting than those of the model code (set out in Appendix 10 to the Listing Rules) issued by the Stock Exchange.

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The Company is required to obtain the approval of its Shareholders at a general meeting (at which the relevant Supervisor and his associates shall not vote on the matter) prior to the Company or any of its subsidiaries entering into a service contract of the following nature with a Supervisor or proposed Supervisor of the Company or its subsidiaries: (1) the term of the contract may exceed three years; or (2) the contract expressly requires the Company to give more than one year’s notice or to pay compensation or make other payments equivalent to the remuneration more than one year.

The Remuneration Committee of the Company or an independent board committee must form a view in respect of service contracts that require Shareholders’ approval and advise Shareholders (other than shareholders with a material interest in the service contracts and their associates) as to whether the terms are fair and reasonable, advise whether such contracts are in the interests of the Company and its Shareholders as a whole and advise Shareholders on how to vote.

(11) Amendment to the Articles of Association

The Company is required not to permit or cause any amendment to be made to its Articles of Association which would cause the same to cease to comply with the Listing Rules, the Mandatory Provisions and the PRC Company Law.

(12) Documents for Inspection

The Company is required to make available at a place in Hong Kong for inspection by the public and its Shareholders free of charge, and for copying by Shareholders at reasonable charges of the following:

(a) a complete duplicate register of Shareholders;

(b) a report showing the state of the issued share capital of the Company;

(c) the Company’s latest audited financial statements and the reports of the Directors, auditors and Supervisors (if any) thereon;

(d) special resolutions of the Company;

(e) reports showing the number and nominal value of securities repurchased by the Company since the end of the last financial year, the aggregate amount paid for such securities and the maximum and minimum prices paid in respect of each class of securities repurchased (with a breakdown between Domestic Shares and H Shares);

(f) a copy of the latest annual return led with the State Administration for Industry and Commerce or other competent PRC authority; and

(g) for Shareholders only, copies of minutes of general meetings.

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(13) Receiving Agents

The Company is required to appoint one or more receiving agents in Hong Kong and pay to such agent(s) dividends declared and other monies owing in respect of the H Shares to be held, pending payment, in trust for the holders of such H Shares.

(14) Statements in H Share Certificates

The Company is required to ensure that all of its listing documents and H Share certificates include the statements stipulated below and to instruct and cause each of its share registrars not to register the subscription, purchase or transfer of any of its shares in the name of any particular holder unless and until such holder delivers to such share registrar a signed form in respect of such shares bearing statements to the following effect that the acquirer of shares:

(a) agrees with the Company and each Shareholder of the Company, and the Company agrees with each Shareholder of the Company, to observe and comply with the PRC Company Law, the Special Regulations, the Articles of Association and other relevant laws and administrative regulations;

(b) agrees with the Company, each Shareholder, Director, Supervisor, manager and officer of the Company, and the Company acting for itself and for each Director, Supervisor, manager and officer of the Company agrees with each Shareholder, to refer all differences and claims arising from the Articles of Association or any rights or obligations conferred or imposed by the PRC Company Law or other relevant laws and administrative regulations concerning the affairs of the Company to arbitration in accordance with the Articles of Association, and any reference to arbitration shall be deemed to authorise the arbitration tribunal to conduct hearings in open session and to publish its award results. Such arbitration shall be final and conclusive;

(c) agrees with the Company and each Shareholder of the Company that the H Shares are freely transferable by the holder thereof; and

(d) authorises the Company to enter into a contract on his behalf with each Director, Supervisor, manager and officer of the Company whereby each such Director and officer undertakes to observe and comply with his obligation to Shareholders as stipulated in the Articles of Association.

(15) Compliance with the PRC Company Law, the Special Regulations and the Articles of Association

The Company is required to observe and comply with the PRC Company Law, the Special Regulations and the Articles of Association.

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(16) Contract between the Company and its Directors, Officers and Supervisors

The Company is required to enter into a contract in writing with every Director and officer containing at least the following provisions:

(a) an undertaking by the Director or officer to the Company to observe and comply with the PRC Company law, the Special Regulations, the Articles of Association, the Takeovers Code and an agreement that the Company shall have the remedies provided in the Articles of Association and that neither the contract nor his office is capable of assignment;

(b) an undertaking by the Director or officer to the Company acting as agent for each Shareholder to observe and comply with his obligations to Shareholders as stipulated in the Articles of Association;

(c) an arbitration clause which provides that whenever any differences or claims arise from any rights or obligations conferred or imposed by that contract, the Articles of Association or the PRC Company Law or other relevant law and administrative regulations concerning the affairs of the Company between the Company and its Directors or officers and between a holder of H Shares and a Director or officer of the Company, such disputes or claims will be referred to arbitration at either the CIETAC in accordance with its rules or the HKIAC in accordance with its securities arbitration rules, at the election of the claimant and that once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body elected by the claimant. Such arbitration will be final and conclusive;

(d) if the party seeking arbitration elects to arbitrate the dispute or claim at HKIAC, then either party may apply to have such arbitration conducted in Shenzhen according to the securities arbitration rules of HKIAC;

(e) PRC laws shall govern the arbitration of disputes or claims referred to above, unless otherwise provided by law or administrative regulations;

(f) the award of the arbitral body is final and shall be binding on the parties thereto;

(g) the Company is also required to enter into a contract in writing with every Supervisor containing statements in substantially the same terms; and

(h) disputes over who is a shareholder and over the share registrar do not have to be resolved through arbitration.

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(17) Subsequent Listing

The Company will not apply for the listing of any of its Foreign Shares on a PRC stock exchange unless the Stock Exchange is satisfied that the relative rights of the holders of Foreign Shares are adequately protected.

(18) English Translation

All notices or other documents required under the Listing Rules to be sent by the Company to the Stock Exchange or to holders of H Shares are required to be in the English language, or accompanied by a certified English translation.

(19) General

If any change in the PRC law or market practices materially alters the validity or accuracy of any of the basis upon which the additional requirements have been prepared, then the Stock Exchange may impose additional requirements or make listing of the equity securities of a PRC issuer, including the Company, subject to special conditions as the Stock Exchange considers appropriate. Whether or not any such changes in the PRC law or market practices occur, the Stock Exchange retains its general power under the Listing Rules to impose additional requirements and make special conditions in respect of the Company’s [REDACTED].

OTHER LEGAL AND REGULATORY PROVISIONS

Upon the Company’s [REDACTED], the provisions of the Securities and Futures Ordinance, the Takeovers Code and such other relevant ordinances and regulations as may be applicable to companies listed on the Stock Exchange will apply to the Company.

Securities Arbitration Rules

The Articles of Association provide that certain claims arising from the Articles of Association, PRC Company Law and other applicable laws shall be arbitrated at either the CIETAC or the HKIAC in accordance with their respective rules. The securities arbitration rules of the HKIAC contain provisions allowing an arbitral tribunal to conduct a hearing in Shenzhen for cases involving the affairs of companies incorporated in the PRC and listed on the Stock Exchange so that PRC parties and witnesses may attend.

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Where any party applies for a hearing to take place in Shenzhen, the tribunal shall, where satisfied that such application is based on bona fide grounds, order the hearing to take place in Shenzhen conditional upon all parties, including witnesses and the arbitrators, being permitted to enter Shenzhen for the purpose of the hearing. Where a party (other than a PRC party), or any of its witnesses, or any arbitrator is not permitted to enter Shenzhen, then the tribunal shall order that the hearing be conducted in any practicable manner, including the use of electronic media. For the purpose of the securities arbitration rules, a PRC party means a party domiciled in the PRC other than the territories of Hong Kong, Macau and China Taiwan.

Any person wishing to have detailed advice on PRC law and the laws of any jurisdiction is recommended to seek independent legal advice.

– IV-41 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION

POWER OF DIRECTORS, SUPERVISORS AND OTHER SENIOR OFFICERS TO ALLOT AND ISSUE SHARES

There is no provision in the Articles of Association empowering the Directors, Supervisors or other senior officers to allot and issue shares. Proposals to increase registered capital of the Company must be formulated by the Board of Directors and submitted for approval by an affirmative vote of at least two thirds or more of the voting rights at the general meeting. Any such increase is subject to the formal formalities prescribed by relevant laws and administrative regulations.

POWER TO DISPOSE OF FIXED ASSETS OF THE COMPANY

Without the prior approval of the general meeting, the Board of Directors may not dispose or agree to dispose of the fixed assets where the sum of the expected value of the consideration for the proposed disposal and the value of the consideration for disposed fixed assets within four months immediately preceding the proposed disposal exceeds 33% of the value of the fixed assets shown in the last balance sheet presented at the general meeting.

A disposal of fixed assets referred hereto shall include the transfer of certain interests in assets other than by way of providing security interest by using fixed assets as collaterals.

The validity of transactions whereby the Company disposes of fixed assets shall not be affected by the breach of above-mentioned restrictions contained in the Articles of Association.

EMOLUMENTS, COMPENSATION OR PAYMENTS FOR LOSS OF OFFICE

The Company shall enter into a written contract with each Director and Supervisor of the Company concerning his/her emoluments. Such contracts shall be approved by the general meeting before they are entered into. The above-mentioned emoluments shall include:

1. emoluments in respect of his/her service as a Director, Supervisor or senior management member of the Company;

2. emoluments in respect of his/her service as a Director, Supervisor or senior management member of a subsidiary of the Company;

3. other emoluments in connection with the provision of management and other services to the Company or any subsidiary thereof;

4. funds as compensation for his/her loss of office or retirement to the aforementioned Directors and Supervisors.

A Director or Supervisor shall not sue the Company for any benefits due to him/her on the basis of the above-mentioned matters, except under a contract as mentioned above.

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The contract entered into between the Company and each Director or Supervisor of the Company in respect of his/her emolument should provide that in the event of a takeover of the Company, a Director or Supervisor of the Company shall, subject to prior approval of the general meeting, have the right to receive the compensation or other funds obtainable for loss of office or retirement.

The term “takeover of the Company” in the above paragraph shall refer to any of the following circumstances:

1. anyone makes a tender offer to all the Shareholders;

2. anyone makes a tender offer so that the offeror will become a Controlling Shareholder as defined in the Articles of Association.

If the relevant Director or Supervisor fails to comply with the above-mentioned provisions, any fund received by him/her shall belong to those persons who have sold their shares as a result of their acceptance of the above-mentioned offer, and the expenses incurred in distribution of such fund on a pro rata basis shall be borne by the relevant Director or Supervisor and may not be paid out of such fund.

LOANS TO DIRECTORS, SUPERVISORS AND OTHER SENIOR OFFICERS

The Company shall not, directly or indirectly, provide a loan or loan guarantee to its Directors, Supervisors, general manager or other senior officers or the Directors, Supervisors, general manager or other senior officers of its Controlling Shareholder; and shall not provide a loan or loan guarantee to the related persons of any of the aforementioned personnel.

The above provisions shall not apply where:

1. the Company provides a loan to its subsidiaries or provides a loan guarantee for the benefits of its subsidiaries;

2. pursuant to the service contract upon approval by the general meeting, the Company provides a loan, loan guarantee or other funds to any of its Directors, Supervisors, general manager or other senior officers to pay any expenditures incurred or to be incurred by him/her for the purpose of the Company or for the purpose of enabling him/her to perform his/her duties properly in accordance with the terms of a service contract approved by the general meeting, or

3. the Company may provide a loan or loan guarantee to the relevant Directors, Supervisors, general manager or other senior officers or any of their related persons on normal commercial terms and conditions should the provision of loan or loan guarantee be within the ordinary business scope of the Company.

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FINANCIAL ASSISTANCE FOR ACQUISITION OF THE COMPANY’S SHARES

The Company or its subsidiaries shall not at any time provide any financial assistance in any form to purchasers or prospective purchasers of the shares in the Company. Such purchasers of the Company’s shares referred to above shall include persons that directly or indirectly undertake obligations for the purpose of purchasing shares in the Company.

The Company or its subsidiaries shall not at any time provide any financial assistance in any form to the above obligators in order to reduce or discharge their obligations. However, the following acts are not prohibited:

1. where the Company provides the relevant financial assistance truthfully for the benefit of the Company and the main purpose of the financial assistance is not to purchase shares of the Company, or the financial assistance is an incidental part of an overall plan of the Company;

2. lawful distribution of the Company’s property in the form of dividends;

3. distribution of dividends in the form of shares;

4. a reduction of registered capital, repurchase of shares, adjustment to shareholding structure effected in accordance with these Articles of Association;

5. provision of a loan by the Company within its scope of business and in the ordinary course of its business (provided that the same does not lead to a reduction in the net assets of the Company or that if the same results in a reduction, the financial assistance is paid out of the Company’s distributable profits);

6. the provision of funds by the Company for an employee shareholding plan (provided that the same does not lead to a reduction in the net assets of the Company or that if the same results in a reduction, the financial assistance is paid out of the Company’s distributable profits).

For these purposes, “financial assistance” shall include but not be limited to:

1. gift;

2. guarantee (including undertaking of liability or provision of property by the guarantor to ensure the fulfilment of the obligation by the obligator), indemnity (excluding indemnity arising from the Company’s own fault) and release or waiver of rights;

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3. provision of a loan or conclusion of a contract under which the obligations of the Company are to be fulfilled prior to the obligation of performance by the other party to the contract, and a change in the party to such loan or contract as well as the assignment of rights under such loan or contract; and

4. financial assistance in any other form when the Company is insolvent or has no net assets or when such assistance will lead to a major reduction in the Company’s net assets.

“undertake obligations” shall include the undertaking of an obligation by the obligator by entering into a contract or making an arrangement or by changing its financial position in any other way; whether or not such contract or arrangement is enforceable and whether or not such obligation is undertaken by the obligator individually or jointly with any other person.

DISCLOSURE OF CONTRACTUAL INTERESTS WITH THE COMPANY

When a Director, a Supervisor, the general manager or other senior management of the Company is, directly or indirectly, interested materially in any contract, transaction or arrangement concluded or to be concluded by the Company (except for his/her service contract with the Company), he/she shall disclose the nature and extent of his/her interest to the Board of Directors at the earliest opportunity, whether or not the matter is normally subject to the approval of the Board of Directors.

The Company shall have the right to revoke the contract, transaction or arrangement unless the interested Director, Supervisor, general manager or other senior management of the Company has made such disclosure to the Board of Directors as required under the preceding paragraph hereof and the matter has been approved by the Board of Directors at a meeting in which he/she is not counted in the quorum and was abstained from voting, except the other party is a bona fide party acting without knowledge of the breach of obligation by the Director, Supervisor, general manager or other senior management of the Company concerned.

When a related person of the Company’s Director, Supervisor, general manager and other senior management is directly or indirectly interested in any contract, transaction or arrangement, such Director, Supervisor, general manager and senior management shall also be deemed as having such interest.

If a Director, Supervisor, the general manager or other senior management of the Company gives a written notice to the Board of Directors before the conclusion of the contract, transaction or arrangement is first considered by the Company, stating that due to the contents of the notice, he/she has an interest in the contract, transaction or arrangement that may subsequently be made by the Company, such Director, Supervisor, general manager or other senior management shall be deemed for the purposes of the above paragraphs hereof to have declared his/her interest to the extent stated in the notice.

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REMUNERATION

The remuneration of Directors and Supervisors shall be approved by the Shareholders of the Company at the general meeting, as referred to in “– Emoluments, Compensation or Payments for Loss of Office” above.

RETIREMENT, APPOINTMENT AND REMOVAL

The Company shall set up a Board of Directors, which comprises nine Directors. The Board of Directors shall have one chairman and may have vice-chairmen.

Directors shall be elected or replaced at the general meeting and serve a term of office of three years. Except for independent non-executive Directors, who are limited to a maximum term of six years, a Director may serve consecutive terms if re-elected upon the expiration of his/her term. Subject to the requirement of relevant laws and administrative regulations, the general meeting may remove any Directors by ordinary resolution (but without prejudice to any claims for damages under any contracts) prior to the expiration of the term of such Directors.

None of the following persons may serve as a Director, Supervisor, general manager or other senior management of the Company:

1. persons without capacity or with limited capacity for civil acts;

2. persons who have been sentenced for crimes of corruption, bribery, encroachment or embezzlement of property or disruption of the social or economic order, and five years term has not expired since the completion date of the execution of the sentence; or persons having been deprived of political rights for committing a crime and five years term has not expired since the completion date of the execution of the sentence;

3. Directors, factory directors or managers who bear personal liability for the bankruptcy or liquidation of their companies or enterprises where three years term has not expired since the date of completion of such bankruptcy or liquidation;

4. the legal representatives of companies or enterprises that had their business licences revoked or that had been shut down for violation of law(s), where such representatives bear individual liability therefore and three years term has not expired since the date of revocation of such business licences;

5. persons with relatively heavy individual debts that have not been settled upon maturity;

6. persons who is under criminal investigation by the judicial authorities, and such cases have not been closed;

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7. persons who shall not act as leaders of enterprises according to laws and administrative regulations;

8. non-natural persons;

9. persons convicted of violating relevant securities laws and regulations by the competent regulatory authority, and such conviction involves a finding that he or she has acted fraudulently or dishonestly, where less than five years have elapsed since the date of conviction;

10. other contents stipulated by listing rules for stock exchanges where the Company’s Share are listed.

The validity of an act of a Director, Supervisor, general manager or other senior management of the Company on behalf of the Company towards a bona fide third party shall not be affected by any irregularity in his/her current position, election or qualifications.

Shareholders holding individually or jointly at least 3% of the shares of the Company with voting rights shall have the right to nominate candidates for election to the Board of Directors or the Board of Supervisors (except for Directors or Supervisors representing employees) at the general meeting by submission of a written proposal, provided that the number of the nominated candidates shall be in compliance with the Articles of Association and not more than the proposed number.

There is no provision in the Articles of Association which requires retirement of Directors at a limited age or allows no retirement of Directors.

DUTIES

In addition to obligations imposed by laws or listing rules of the stock exchange on which shares of the Company are listed, the Company’s Directors, Supervisors, general manager and other senior management members shall have the following obligations to each Shareholder in the exercise of the functions and powers granted to them by the Company:

1. not to cause the Company to act beyond the scope of business stipulated in its business licence;

2. to act honestly in the best interests of the Company;

3. not to deprive the Company of its property in any way, including (but not limited to) any opportunities that are favourable to the Company; and

4. not to deprive any Shareholders of their individual rights or interests, including (but not limited to) rights of distribution and voting, unless pursuant to a restructuring plan of the Company submitted to and adopted by the general meeting in accordance with the Articles of Association.

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The Company’s Directors, Supervisors, general manager and other senior management shall have an obligation, in the exercise of their rights or discharge of their obligations, to act with due care, diligence and skills as a reasonable and prudent person should do under similar circumstances.

The Company’s Directors, Supervisors, general manager and other senior management must, in the exercise of their duties, abide by the fiduciary principle and shall not place themselves in a position where there is a conflict between their personal interests and their duties. This principle shall include (but not limited to) the fulfilment of the following obligations:

1. to act honestly in the best interests of the Company;

2. to exercise powers within the terms of office and not to act beyond that;

3. to personally exercise the discretion vested in him/her, not to allow himself/herself to be manipulated by another person and, not to delegate his/her discretion to another party unless permitted by laws or with the consent of the general meeting under informed situation;

4. to be impartial to Shareholders of the same category and fair to Shareholders of different categories;

5. not to enter into a contract, transaction or arrangement with the Company except as otherwise provided in the Articles of Association or with the informed consent of the general meeting;

6. not to use the Company’s property for his/her own benefit in any way without the informed consent of the general meeting;

7. not to use his/her positions and powers as a means to accept bribes or other forms of illegal income, and not to appropriate the Company’s property in any way, including (but not limited to) any opportunities that are favourable to the Company;

8. not to accept commissions in connection with the Company’s transactions without the informed consent of the general meeting;

9. to abide by the Articles of Association, perform his/her duties faithfully, protect the interests of the Company and not to seek personal gain by virtue of his position, functions and powers in the Company;

10. not to compete with the Company in any way without the informed consent of the general meeting;

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11. not to embezzle the Company’s funds, not to deposit the Company’s assets or funds in accounts opened in his/her own or in another person’s name, and not to use the Company’s assets as security for the debts of any Shareholder of the Company or any other person;

12. not to disclose confidential information relating to the Company obtained during his/her term of office without the informed consent of the general meeting, and not to use such information except for the interests of the Company; however, such information may be disclosed to the court or other governmental authorities if:

(a) required by laws;

(b) required for the public interest;

A Director, a Supervisor, the general manager or other senior management of the Company may not procure the following persons or organisations (“Related Persons”) to do what such Director, supervisor, general manager or other senior management may not do:

1. the spouse or minor children of such Director, Supervisor, general manager or other senior management member of the Company;

2. the trustee of a Director, Supervisor, general manager or other senior management of the Company or of any person referred to in the aforesaid item;

3. the partner of a Director, Supervisor, general manager or other senior management of the Company or of any person referred to in the aforesaid two items;

4. a company under actual and sole control of a Director, Supervisor, general manager or other senior management of the Company, or a company under actual joint control of any person referred to in the aforesaid three items or of any other Director, Supervisor, general manager or other senior management of the Company; and

5. a Director, a Supervisor, the general manager or other senior management of a company being controlled as referred to in aforesaid items.

The fiduciary duty of a Director, Supervisor, general manager and other senior management of the Company does not necessarily cease with the termination of his/her term of office. His/her confidentiality obligation in relation to the Company’s trade secrets shall remain upon termination of their term of office. The term for continuance of other obligations shall be decided upon in accordance with the principle of fairness, depending on the time lapse between the termination and the occurrence of the matter as well as the circumstances and conditions under which the relationship with the Company terminates.

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If a Director, Supervisor, the general manager or other senior management of the Company breaches his/her obligations to the Company, the Company shall, in addition to any rights and remedies provided by laws, have the right to:

1. require the relevant Director, Supervisor, general manager or other senior management of the Company to compensate for the losses sustained by the Company as a consequence of his/her dereliction of duty;

2. rescind any contract or transaction concluded by the Company with the relevant Director, Supervisor, general manager or other senior management of the Company and contracts with a third party (where such third party is aware or should be aware that the Director, Supervisor, general manager or other senior management representing the Company was in breach of his/her obligations to the Company);

3. require the relevant Director, Supervisor, general manager or other senior management of the Company to surrender the gains derived from the breach of his/her obligations;

4. recover any funds received by the relevant Director, Supervisor, general manager or other senior management of the Company that should have been received by the Company, including (but not limited to) commissions;

5. require the relevant Director, Supervisor, general manager or other senior management of the Company to return the interest earned or possibly earned on the funds that should have been given to the Company; and

6. take legal procedures to obtain a rule that the property acquired by a Director, Supervisor, the general manager or other senior management due to his/her dereliction of duty shall belong to the Company.

BORROWING POWERS

The Articles of Association do not specify the manner in which borrowing powers may be exercised nor do they contain any specific provision in respect of the manner in which such borrowing powers may be amended, except for:

1. provisions which authorise the Board of Directors to formulate proposals for the issuance of debentures and other securities by the Company;

2. provisions which provide that the issuance of debentures and other securities shall be approved at the general meeting by a special resolution.

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AMENDMENTS TO CONSTITUTIONAL DOCUMENTS

The Company may amend the Articles of Association in accordance with laws and the provisions of the Articles of Association.

An amendment to the Articles of Association in connection with the Mandatory Provisions shall be subject to approval of the relevant supervisory and regulatory authorities of the State Council or CSRC. Where an amendment in the Articles of Association shall be subject to registration, the Company shall register the amendment according to the applicable law.

VARIATION OF RIGHTS OF EXISTING SHAREHOLDERS OF DIFFERENT CLASSES

Shareholders who hold different categories of shares in the Company shall be Shareholders of different classes. Shareholders of different classes shall enjoy rights and assume obligations in accordance with laws, administrative regulations and the Articles of Association.

In addition to Shareholders of other categories of shares, Shareholders of domestic-listed shares and foreign-listed shares shall be deemed as Shareholders of different classes of shares.

Upon the approval by securities regulatory authorities of the State Council, holders of Domestic Shares of the Company may transfer, in whole or in part, the shares held by them to overseas investors and list or trade such shares on an overseas stock exchange; all or part of Domestic Shares of the Company may be converted into Foreign Shares, and upon such conversion, the Foreign Shares may be listed and traded on an overseas stock exchange. The listing of shares so transferred or converted on an overseas stock exchange shall be in compliance with relevant supervisory regulations, rules and requirements effective at the place of listing. Neither the listing of transferred shares on an overseas stock exchange nor the conversion of Domestic Shares into Foreign Shares or the listing of such Foreign Shares on an overseas stock exchange requires approval at a general meeting or a class meeting. Domestic Shares, after being converted into overseas listed Foreign Shares, are of the same class as the original overseas listed Foreign Shares.

Any proposal by the Company to change or abrogate the rights of any class of Shareholders shall be approved by the general meeting by a special resolution and by a separate general meeting convened by the affected Shareholders of that classes conducted in accordance with the Articles of Association.

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The rights of Shareholders of a class shall be deemed to have been changed or abrogated in the following conditions:

1. an increase or decrease in the number of shares of a class or an increase or decrease in the voting rights, distribution rights or other privileges of shares of a class;

2. conversion of all or part of the shares of a class into shares of another class, or vice versa or the grant of a right to convert;

3. cancellation or reduction of rights to accrued dividends or cumulative dividends attached to shares of a class;

4. cancellation or reduction of a dividend preference or property distribution preference during liquidation of the Company, attached to shares of a class;

5. an addition, cancellation or reduction of share conversion rights, options, voting rights, transfer rights, pre-emptive rights of placing or rights to acquire securities of the Company attached to shares of a class;

6. cancellation or reduction of rights to receive amounts payable by the Company in a particular currency attached to shares of a class;

7. creation of a new class of shares with voting rights, distribution rights or other privileges which are equal or superior to shares of a class;

8. imposition of restrictions or additional restrictions on the transfer or ownership of shares of a class;

9. issue of rights to subscribe for, or convert into, shares of a class or another class;

10. an increase in the rights and privileges of shares of another class;

11. restructuring of the Company which causes Shareholders of different classes to bear liability on a disproportionate basis during the restructuring; or

12. an amendment or cancellation of “special voting procedures for Shareholders of different classes” as contained in the Articles of Association.

Interested Shareholders (as defined below) shall not have the right to vote at different class meetings.

Resolutions of a class meeting may be passed only by way of poll by two-thirds or more of the voting rights of the class Shareholders who are entitled to vote at that meeting.

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When the Company is to convene a class meeting, a written notice shall be issued to all registered Shareholders of the corresponding class before 45 days of the meeting, specifying the matters to be reviewed and the date and place of the meeting.

Notice regarding convening a class meeting needs to be delivered only to the Shareholders who are entitled to vote.

The procedures of a class meeting shall, to the extent possible, be identical to the procedures of a general meeting. Provisions of the Articles of Association in relation to procedures of a general meeting shall be applicable to class meetings.

The special voting procedures for Shareholders of different classes shall not apply to the following:

1. where, as approved by way of a special resolution of the general meeting, the Company issues, either separately or concurrently, Domestic Shares listed within the PRC and foreign investment shares listed outside the PRC every 12 months, and the number of the Domestic Shares and foreign shares listed outside the PRC intended to be issued does not exceed 20% of the issued and outstanding shares of the respective categories;

2. where the plan for issuance of domestic investment shares listed within the PRC and foreign shares listed outside the PRC upon the incorporation of the Company is completed within 15 months since being approved by the securities regulatory authorities of the State Council;

3. where, upon approval by securities regulatory authorities of the State Council, the shares held by the promoters of Company are converted to overseas listed foreign shares and are listed on an overseas stock exchange.

For the purpose of the provisions of the rights of Shareholders of different classes, the “interested Shareholders” shall have the following meanings:

1. if the Company has made a repurchase offer to all Shareholders in the same proportion or has repurchased its own shares through open transactions on a stock exchange in accordance with the Articles of Association, the controlling Shareholders as defined in the Articles of Association shall be the “interested Shareholders”;

2. if the Company has repurchased its own Shares by an agreement outside a stock exchange in accordance with the Articles of Association, Shareholders in relation to such an agreement shall be the “interested Shareholders”;

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3. under a restructuring proposal of the Company, Shareholders who will bear liability in a proportion smaller than that of the liability borne by other Shareholders of the same class, or Shareholders who have an interest that is different from the interest of other Shareholders of the same class shall be “interested Shareholders.”

RESOLUTION-MAJORITY REQUIRED

Resolutions of the general meeting are divided into ordinary resolutions and special resolutions.

Ordinary resolutions made by the general meeting shall be passed by more than half of voting shares represented by the Shareholders attending the general meeting (including their proxies).

Special resolutions made by the general meeting shall be adopted by two-thirds or more of voting shares represented by the Shareholders attending the general meeting (including their proxies).

VOTING RIGHTS (GENERALLY, THE RIGHT TO A POLL AND TO DEMAND A POLL)

Shareholders (including their proxies) exercise voting rights according to the voting shares they hold, and each share shall have one voting right. However, the Shares of the Company held by the Company shall not carry voting right and shall not be counted in the aggregate amount of shares carrying voting right in attendance of the general meeting.

The matters of the general meeting shall be resolved by show of hands.

A poll demanded on a vote regarding the election of the chairman of the meeting or an adjournment of the meeting, shall be taken immediately. A poll demanded on any other matters shall be taken at the time as the chairman of the meeting decides and the meeting may proceed to other matters. The result of the poll shall still be a resolution of the meeting.

On a poll taken at a meeting, a Shareholder (including his/her proxy) entitled to two or more votes need not cast all his votes in the same way.

In case of an equality of votes, the chairman of the meeting shall be entitled to a casting vote.

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REQUIREMENTS FOR THE ANNUAL GENERAL MEETING

The annual general meeting shall be held once every year within six months after the end of the last financial year.

ACCOUNTS AND AUDIT

The Company shall formulate its accounting system in compliance with laws, administrative regulations and relevant stipulations of PRC formulated by the relevant regulatory authorities.

The Board of Directors of the Company shall submit to its Shareholders at every annual general meeting such financial reports as required by the relevant laws and regulations.

The financial statements of the Company shall, in addition to being prepared in accordance with the PRC accounting standards and regulations, be prepared in accordance with either international accounting standards or that of the place outside China where the Company’s shares are listed. If there is any material difference between the financial statements prepared respectively in accordance with the aforesaid accounting standards, such difference shall be stated and explained in the financial statements. For the purposes of distribution of the Company’s after-tax profits in a financial year, the lower of the after-tax profits as shown in the different set of financial statements shall be adopted.

The financial reports of the Company shall be made available at the Company for inspection by Shareholders 20 days before the annual general meeting. Each Shareholder of the Company is entitled to a copy of the financial reports.

A copy of the above financial reports shall, at least 21 days before the date of the general meeting, be delivered or sent by pre-paid post to the registered address of every holder of Foreign Shares.

The interim result or financial information that the Company announces or discloses shall be prepared according to both PRC accounting standards, laws and regulations, and international accounting standards or accounting standards of the place at which shares of the Company are listed.

The Company shall disclose its financial reports twice in each accounting year. That is, its interim financial reports within sixty days of the end of the first six months of a financial year and its annual financial reports within 120 days of the end of its financial year.

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NOTICE OF THE MEETING AND MATTERS TO BE CONSIDERED

There are two types of general meetings: the annual general meetings and the extraordinary general meetings.

The extraordinary general meeting shall be convened within two months upon the occurrence of any of the following events:

1. the number of Directors is less than the number stipulated by PRC Company Law or less than two-thirds of the number required by the Articles of Association;

2. the outstanding balance of the Company’s loss that had not been made-up reaches one-third of the Company’s total paid-in share capital;

3. Shareholders holding severally or jointly 10% or more of the Company’s shares presents a request to convene an extraordinary general meeting;

4. the Board of Directors deems it as necessary, or the Board of Supervisors proposes that the meeting be convened;

5. two or more independent non-executive Directors propose in writing that the meeting be convened; and

6. other situations, as stipulated in laws and the Articles of Association.

When the Company is to convene a general meeting, the Shareholders holding, individually or aggregately, 3% or more of all the Shares of the Company may propose and submit in writing to the Board of Directors special proposals ten days prior to the proposed date of such meeting; the Board of Directors shall, within two days upon receipt of such proposals, notify the other Shareholders thereof and submit the proposals to the general meeting for review. The special proposals shall fall within the scope of duties of the general meeting and include specific subject and particular matters to be resolved.

When the Company is to convene a general meeting, it shall notify each Shareholder of the date and place of the meeting and the matters to be reviewed at the meeting 20 days prior to the proposed date of such meeting. When the Company is to convene an extraordinary meeting, it shall give such notice to each Shareholder 15 days prior to the proposed date of such meeting.

The notice of a general meeting shall be delivered to the Shareholders (whether or not entitled to vote on the general meeting) by courier or pre-paid mail to the recipient’s address shown in the register of Shareholders or by public announcement. The public announcement referred to in the preceding paragraph shall be published in one or more newspapers or periodicals designated by the securities regulatory authorities of the State Council as well as the website of the Company and the relevant stock exchange during the period between 20 and

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25 days prior to the convening of any general meeting or between 15 and 20 days prior to the convening of any extraordinary meeting. Once the announcement is made, all Shareholders of Domestic Shares shall be deemed to have received the notice of the relevant general meeting.

For Shareholders of foreign shares, notice of the general meeting, Shareholders’ circulars and relevant documents may be issued on the website of the Company and the website of the Stock Exchange provided that the requirements of laws, administrative regulations, and the listing rules of the jurisdictions where the shares of the Company are listed as well as the Articles of Association are complied with.

A meeting and the resolutions adopted to thereof shall not be invalidated as a result of accidental omission to give notice of the meeting to, or the failure of receiving such notice by, a person entitled to receive such notice.

The notice of a general meeting shall meet the following requirements:

1. it shall be made in writing;

2. it shall specify the time, place and period of the meeting;

3. it shall describe the matters to be considered at the meeting;

4. it shall provide necessary information and explanations to the Shareholders so as to enable them fully understand the matters to be considered and make decisions accordingly. This principle shall apply (but not limited to) when the Company proposes a merger, repurchase of shares, reorganisation of share capital or other restructuring, it shall provide the specific conditions and contracts (if any) of the transaction under consideration and earnestly explain the cause and result of the transaction;

5. it shall disclose the nature and extent of material interests, if any, of any Director, Supervisor, general manager or other senior management of the Company in any matter to be considered; and provide an explanation of the differences, if any, between the way in which the matter to be considered would affect such Director, Supervisor, general manager or other senior management of the Company in his/her capacity as Shareholders and the way in which such matter would affect other Shareholders of the same class;

6. it shall contain the full text of any special resolutions proposed to be voted at the meeting;

7. it shall contain a conspicuous statement that the Shareholders are entitled to attend and vote, and have the right to appoint one or more proxies to attend and vote on their behalf and that such proxy is not required to be a Shareholder;

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8. it shall state the time and place for the delivery of the meeting’s proxy forms;

9. equity determination date of the Shareholders entitled to attend Shareholders’ Meeting;

10. name and phone number of the general contact person of the meeting.

At a general meeting, no resolution shall be made in respect of any matter which is not specified in the notices set out in the Articles of Association.

Without the prior approval of the Shareholders’ meeting, the Company shall not enter into any contract with any party other than the Directors, Supervisors, general manager or other senior management members pursuant to which such party shall be responsible for managing the whole or any substantial part of the Company’s business.

Resolutions on the following items shall be adopted in the form of ordinary resolutions by a general meeting:

1. working report of the Board of Directors and the Board of Supervisors;

2. plans made by the Board of Directors on profit distribution and loss make-up;

3. election and removal of members of the Board of Directors and the Shareholder representative Supervisors and their remunerations and methods of payment;

4. annual budget and final accounts reports, balance sheet, profit statements and other financial statements of the Company;

5. matters other than those stipulated by laws, administrative regulations or the Articles of Association to be adopted by special resolutions.

The following items shall be adopted in the form of special resolutions:

1. increase or reduction of the Company’s registered capital or issuance of any class of shares, warrants of share subscription or other similar securities;

2. issuance of bonds;

3. division, merger, dissolution, liquidation of the Company;

4. change of the organisational form of the Company;

5. purchase or sale of material assets, or guarantee with an amount exceeding 30% of the latest audited total assets value of the Company;

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6. amendment of the Articles of Association;

7. review and approval of the stock incentive plan;

8. other matters stipulated by laws, administrative regulations or the Articles of Association, and other matters decided in the form of ordinary resolutions adopted by the general meeting as having significant impact on the Company and requiring adoption by way of special resolutions;

TRANSFER OF SHARES

Upon the approval by securities regulatory authorities of the State Council, holders of Domestic Shares of the Company may transfer the shares held by them to overseas investors and list and trade such shares on an overseas stock exchange; all or part of Domestic Shares of the Company may be converted into Foreign Shares and upon such conversion, the Foreign Shares may be listed and traded on an overseas stock exchange. The listing of shares so transferred or converted on an overseas stock exchange shall be in compliance with relevant supervisory regulations, rules and requirements effective on the overseas stock exchange. Neither the listing of transferred shares on an overseas stock exchange nor the conversion of Domestic Shares into Foreign Shares nor the listing of such Foreign Shares on an overseas stock exchange requires approval at a general meeting or a class Shareholders’ meeting. Domestic Shares, after being converted into overseas listed Foreign Shares, are of the same class as the original overseas listed Foreign Shares.

Unless otherwise provided by laws and administrative regulations, fully paid-up shares in the Company shall be freely transferable without any lien. Transfer of overseas listed shares listed in Hong Kong shall be registered with a local shares registrar in Hong Kong that is entrusted by the Company.

Any changes to or correction of any parts of the register of Shareholders shall be conducted in accordance with the laws of the place where such parts of the register of Shareholders are kept. No changes resulting from share transfers may be made to the register of Shareholders within 30 days prior to a general meeting or five days prior to the record date set by the Company for the purpose of distribution of dividends.

POWER OF THE COMPANY TO REPURCHASE ITS OWN SHARES

After being approved under the procedures stipulated by laws and the Articles of Association and obtaining approvals from the administrative department authorised by the State Council, the Company may repurchase Shares of the Company in the following circumstance:

1. to cancel the Shares for the purpose of reducing the registered capital of the Company;

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2. to merge with other companies holding the Shares of the Company;

3. to give employees the shares for employee stock ownership plan or stock ownership incentive;

4. to be requested to repurchase the shares held by the Shareholders who object to the resolutions adopted at the general meeting concerning consolidation and division of the Company;

5. to convert the shares to corporate bonds that are issued by the Company and convertible to stocks;

6. to be necessary to safeguard the value of the Company and the interests of its Shareholders;

7. other circumstances where laws and administrative regulations so permit.

The purchase by the Company of its own shares for the reasons set forth in items (1) and (2) above shall be subject to the resolutions adopted at the general meeting; the purchase of shares under items (3), (5) and (6) above, shall be subject to the resolutions adopted at the Board meeting where over two-thirds of the Directors are present, in accordance with provisions of the Articles of Association or the authorisation by the Board.

Where laws, administrative regulations, department regulations, the Articles of Association as well as the stock exchange and securities regulatory authority of the place where the stocks of the Company are listed require otherwise with respect to matters relating to repurchase of shares stated above, such requirements shall be complied with.

The repurchase of the Company’s shares, upon the approval by the relevant competent governmental authorities, may be conducted in any of the following manners:

1. making a repurchase offer pro rata to all Shareholders;

2. repurchase through open transactions on a stock exchange;

3. repurchase through contractual arrangements outside a stock exchange;

4. other means approved by laws, administrative regulations or administrative departments authorised by the State Council.

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When the Company is to repurchase shares through contractual arrangements outside a stock exchange, prior approval shall be obtained from the general meeting in accordance with the Articles of Association. Upon prior approval of the general meeting obtained in the same manner, the Company may rescind or change contracts concluded in the manner set forth above or waive any of its rights under such contracts.

1. for the purpose of the above paragraph, contracts for the repurchase of shares shall include (but not limited to) agreements whereby repurchase obligations are undertaken and repurchase rights are acquired.

2. the Company may not assign contracts for the repurchase of its own Shares or any of its rights thereunder.

3. the Company shall apply to the original registration authority for the change of the registered capital registration in the event that the repurchased shares are cancelled due to the repurchase thereof.

4. the amount of the Company’s registered capital shall be reduced by the total par value of the shares so cancelled.

Unless the Company has already entered the liquidation stage, it must comply with the following provisions in buying back its issued and outstanding shares:

1. where the Company buys back shares at their par value, the amount thereof shall be deducted from the book balance of distributable profit and from the proceeds of a new share issuance made to repurchase the old shares;

2. where the Company buy backs shares at a price higher than their par value, the portion corresponding to their par value shall be deducted from the book balance of distributable profit and from the proceeds of a new share issuance made to buy back the old shares. The portion in excess of the par value shall be handled according to the following methods:

(a) where the shares bought back were issued at their par value, the amount shall be deducted from the book balance of distributable profit;

(b) where the shares bought back were issued at a price higher than their par value, the amount shall be deducted from the book balance of distributable profit and from the proceeds of a new share issuance made to buy back the old shares; however, the amount deducted from the proceeds of the new share issuance may not exceed the total premium obtained at the time of issuance of the old shares nor may it exceed the amount in the Company’s share premium account (or capital reserve funds account) (including the premiums from the new share issuance) at the time of buy-back;

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3. the amount paid by the Company for the purposes set forth below shall be paid out of the Company’s distributable profits:

(a) acquisition of the right to repurchase its own Shares;

(b) modification of any contract for repurchase of its own Shares;

4. after the par value of the cancelled shares has been deducted from the registered capital of the Company in accordance with relevant regulations, that portion of the amount deducted from the distributable profit and used to buy back shares at the par value shall be included in the Company’s share premium account (or capital reserve account).

DIVIDENDS AND OTHER METHODS OF PROFITS DISTRIBUTION

The Company may distribute the dividends in the form of cash or shares (or a combination of both).

The Company shall appoint recipient agents for Shareholders of foreign investment shares listed outside the PRC. The recipient agents shall collect on behalf of the relevant Shareholders the dividends distributed and other funds payable in respect of foreign investment shares listed outside the PRC, and to keep such amounts for the future payment to the relevant Shareholders.

The recipient agents appointed by the Company for Shareholders of foreign shares listed in Hong Kong shall be a company which is registered as a trust company under the Trustee Ordinance (Chapter 29 of the Laws of Hong Kong).

Subject to the PRC laws, the Company may expropriate dividends no one claimed for, but such right of expropriation shall only be exercised upon the expiration of the applicable statutory limitation.

PROXIES

Any Shareholders entitled to attend and vote at a general meeting shall have the right to appoint one or more persons (who need not be Shareholders) as his/her proxies to attend the meeting and vote on his/her behalf. Such proxy may exercise the following rights according to the entrustment by the Shareholder:

1. the Shareholder’s right to speak at the general meeting;

2. right to vote by poll;

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3. the exercise of voting rights by a show of hands or by poll. If more than one person of proxies is appointed, such proxies shall only be permitted to exercise the voting right by poll.

Shareholders shall entrust the proxy in writing, and the form of proxy shall be signed by the appointer or the agent authorised by the Shareholders in writing. If the appointer is a legal person, the form of proxy shall be sealed with the legal person’s stamp or signed by its Director or formally authorised agent.

Legal person Shareholders shall be represented by its legal representative or the representative authorised by its board of directors or any other decision-making body to attend the meeting. When a proxy is entrusted to attend the meeting, he/she shall present his/her identification card and written form of proxy or authorisation letter signed by the legal person Shareholder or legal representative of the legal person Shareholder. Legal representative attending the meeting shall present his/her identification card and effective proof to his/her qualification as a legal representative appointed by the board of the legal person or other authority of the legal person or any effective proof permitted by the Company.

The form of proxy issued by a Shareholder to entrust proxy to attend a general meeting shall contain in the following contents: number of shares represented by proxy; name of the proxy; whether the proxy has voting right; instructions on exercising any voting right if the proxy has voting right; issue date and effective date. In the case of several persons acting as proxies, the form of proxy shall state the number of shares represented by each such proxy.

Any form of proxy issued by the Board of Directors of the Company to the Shareholders for the appointment of proxies shall give the Shareholders free choice to instruct their proxies to cast an affirmative, negative or abstention vote and enable the Shareholders to give separate instructions on each matter to be voted during discussions at the meeting. The form of proxy shall specify that in the absence of instructions from the Shareholder, the proxy may vote as he/she thinks fit.

If, before voting, the appointer has passed away, lost his/her ability to act, withdrawn the appointment, withdrawn the authorisation to sign the proxy form, or transferred all his/her shares, the vote cast by the proxy in accordance with the proxy form shall remain valid so long as the Company has not received the written notice regarding such matters before the commencement of relevant meeting.

CALLS ON SHARES AND FORFEITURE OF SHARES

Shareholders are entitled to receive interest on any payment of shares prior to the payment of call, but shall not participate subsequently in the declaration of dividend of shares.

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If the following conditions are met and the Company is unable to contact the holder of the foreign shares listed outside the PRC within the specified time, the Company has the right to sell the relevant shares:

1. the Company has declared dividend in respect of such shares of at least three times within 12 years, but such dividend has never been collected by any person during that period; and

2. after the expiration of the 12-year period, the Company shall publish an announcement in one or more magazines in the jurisdiction where the Company is listed, stating its intention to sell such shares, and notify the Stock Exchange.

RIGHTS OF SHAREHOLDERS (INCLUDING INSPECTION OF REGISTER)

Shareholders of ordinary shares of the Company shall enjoy the rights pursuant to the applicable laws and the Articles of Association as follows:

1. collect dividends and other kinds of interests distributed based on the number of shares held by them;

2. attend or entrust a proxy to attend Shareholders’ meetings and exercise relevant voting right in accordance with the applicable laws;

3. supervise and administrate the business operation of the Company, and make suggestions and enquiries accordingly;

4. transfer, donate or pledge shares held by the Shareholders in compliance with laws, administrative regulations, relevant requirements of securities regulatory authorities in the places where the shares are listed and the Articles of Association. If Shareholders holding 5% or more of the Company’s shares pledge the shares he/she shall report to the Company within 3 business days after the pledge;

5. obtain relevant information in accordance with the Articles of Association, including: the right to obtain the Articles of Association subject to payment of costs; the right to inspect the following documents for free and make copies of the documents subject to payment of costs:

(1) all parts of the register of Shareholders;

(2) the personal materials of a Director, Supervisor, general manager and other senior management of the Company;

(3) a report of the status of issued share capital of the Company;

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(4) the latest audited financial statements of the Company and the Reports of the Board of Directors, auditors and the Board of Supervisors;

(5) special resolutions of the general meeting, the resolutions of Board meeting, and resolutions of the Board of Supervisors of the Company;

(6) a report of the aggregate par value, number of shares, and highest and lowest prices of each class of shares repurchased by the Company since the last accounting year as well as all the expenses paid by the Company;

(7) minutes of the general meeting;

(8) copy of corporate bond

6. participate in the distribution of the Company’s remaining assets based on the number of shares held by the Shareholders when the Company is terminated or liquidated;

7. request the Company to repurchase its shares if they object to the resolutions adopted by the general meeting on merger or division;

8. other rights conferred by laws, administrative regulations and the Articles of Association.

RIGHTS OF MINORITY SHAREHOLDERS IN RELATION TO FRAUD OR OPPRESSION

In addition to obligations imposed by laws, administrative regulations or the listing rules of the stock exchange(s) on which the shares of the Company are listed, while exercising Shareholder’s rights, the controlling Shareholders shall not make such decisions by exercising their voting rights to the detriment of all or part of the Shareholders’ interests as below:

1. relieving a Director or Supervisor of the responsibility to act honestly in the best interest of the Company;

2. approving a Director or a Supervisor for his/her own or other person’s benefit to deprive the Company of its property in any form, including (but not limited to) any opportunities that are favourable to the Company; or

3. approving a Director or a Supervisor for his/her own or other person’s benefit to deprive other Shareholders of their rights or interests, including (but not limited to) rights to distributions and voting rights, unless pursuant to a restructuring of the Company submitted to and adopted by the general meeting in accordance with the Articles of Association.

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The term “Controlling Shareholder(s)” in the Articles of Association shall refer to the person(s) satisfying any of the following conditions:

1. acting alone or in concert with others, has the power to elect half or a greater number of the Directors;

2. acting alone or in concert with others, has the power to exercise or control the exercise of 30% or more of the Company’s voting rights;

3. acting alone or in concert with others, holds 30% or more of the shares of the Company;

4. acting alone or in concert with others, can obtain actual control of the Company in any other manner.

OBLIGATIONS OF SHAREHOLDERS

Shareholders of ordinary shares of the Company shall undertake the following obligations:

1. abide by laws, administrative regulations and the Articles of Association;

2. contribute share capital according to the number of shares subscribed by them and the methods of capital contribution;

3. the liability of the Shareholders to the Company is limited to the extent of the shares subscribed by them;

4. unless otherwise stipulated by laws and administrative regulations, Shareholders shall not withdraw their share capital;

5. other obligations imposed by laws and the Articles of Association.

PROCEDURES ON LIQUIDATION

Should any of the following circumstances occur, the Company shall be dissolved and liquidated pursuant to law:

1. if the business term has expired or any other circumstance for dissolution as stipulated in the Articles of Association occurs;

2. if the general meeting resolves to dissolve the Company;

3. if a dissolution is necessary as a result of the merger or division of the Company;

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4. if a people’s court declares the Company’s bankruptcy as the assets are insufficient to settle the debts.

5. if the Company’s business licence is lawfully suspended, or the Company is lawfully declared to be closed or revoked;

6. if no other solutions can be pursued when the Company has significant difficulties in its operation and management, and its continued existence will cause great loss to the Shareholders’ interests, Shareholders with 10% or more of all the voting rights of the Company may file a lawsuit with the court to dissolve the Company;

If the Board of Directors decides that the Company should be liquidated (except for the liquidation as a result of the Company’s declaration of insolvency), the notice of the general meeting convened for such purpose shall include a statement to the effect that the Board of Directors has made full investigation into the position of the Company and that the Board of Directors is of the opinion that the Company can settle its debts in full within 12 months after the announcement of liquidation.

The functions and powers of the Board of Directors shall terminate immediately after the general meeting has adopted a resolution regarding liquidation.

During the period of liquidation, the Company still exists but shall not engage in any business activities irrelevant to such liquidation.

Upon completion of liquidation, the liquidation committee shall prepare a liquidation report, an income and expenditure statement and a financial book for the period of liquidation and, after they are certified by a PRC certified public accountant, submit to the general meeting or the people’s court for confirmation.

OTHER PROVISIONS MATERIAL TO THE COMPANY OR ITS SHAREHOLDERS

GENERAL PROVISIONS

The Company is a joint stock limited company. From the date on which the Articles of Association came into effect, the Articles of Association constitute a legally binding public document regulating the Company’s organisation and activities, and the rights and obligations between the Company and each Shareholder and among the Shareholders.

In light of the demands of operation and business development, and based on relevant laws and regulations, after obtaining separate resolutions of the general meeting, the Company may increase its capital through the following ways:

1. offering new shares to the public;

2. private offering of shares;

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3. allotment of new shares to existing Shareholders;

4. offering bonus shares to existing Shareholders;

5. converting capital reserve funds to share capital;

6. other methods provided by laws and administrative regulations or permitted by the administrative departments authorised by the relevant China securities regulatory and management authorities.

The Company’s issuance of new shares shall be handled in accordance with the procedures provided in the relevant State laws and administrative regulations after having been approved in accordance with the Articles of Association.

The Company may reduce its registered capital in accordance with the provisions of the Articles of Association. The reduction of registered capital shall follow the procedures set forth in the PRC Company Law and other regulations and provisions of the Articles of Association.

When the Company is to reduce its registered capital, it must prepare a balance sheet and an inventory of assets.

The Company shall notify its creditors within 10 days of adopting the resolution to reduce its registered capital and shall publish an announcement about the resolution in the newspapers designated by the relevant regulatory authorities in the jurisdiction where the Company is listed at least three times within 30 days. Creditors shall, within 30 days since receiving a written notice or within 90 days since the date of the first public announcement for those who have not received a written notice, be entitled to require the Company to settle its debts in full or to provide a corresponding guarantee for repayment.

The reduced registered capital of the Company may not be less than the statutory minimum.

SECRETARY OF THE BOARD OF DIRECTORS

The Board of Directors shall have a secretary appointed by the chairman and dismissed by the Board. The secretary of the Board of Directors is a member of the senior management of the Company.

The major duties of the secretary of the Board of Directors shall include:

1. to ensure the Company keep the relevant documents and records of the organisation and activities; to keep and administrate the relevant documents of Shareholders; to assist the routine of the Board of Directors for the Directors;

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2. to organise and prepare for the meetings of the Board of Directors and the general meetings, take minutes of the meetings and keep the documents and minutes of the meetings;

3. to organise, prepare and submit the reports and documents required by the relevant supervisory and regulatory authorities and to be responsible for all relevant task from regulatory authorities as the contact person between the Company and the relevant supervisory and regulatory authorities of the State Council or CSRC;

4. to be responsible for the Company’s information disclosure, to attend all relevant meetings, and to obtain information and relevant materials on major operating decisions in a timely manner;

5. to ensure the Company set up the register of Shareholders; to ensure the persons entitled to access to the relevant documents and records are furnished with such documents and records without delay;

6. to exercise other powers conferred by the Board of Directors and other powers as may be required or provided under laws of the places where the Company’s shares are listed.

BOARD OF SUPERVISORS

The Company shall have a Board of Supervisors, which shall comprise three supervisors, one of whom shall be elected as the chairman of the Board of Supervisors. The chairman of the Board of Supervisors shall be elected and replaced by two-thirds or more of all the Supervisors. The term of office of each supervisor shall be 3 years. A Supervisor may serve consecutive terms if re-elected upon the expiration of his/her term.

Directors and senior management members of the Company may not serve as Supervisors concurrently.

The Board of Supervisors shall perform the following duties:

1. to supervise the performance of duties by the Directors, the general manager and senior management members of the Company, and propose dismissal of the Directors and senior management of the Company who violate laws, the Articles of Association or resolutions of the general meeting;

2. to require the Directors and senior management of the Company to correct any act that is harmful to the Company’s interests;

3. to supervise the financial activities of the Company;

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4. to exam the financial reports, operation reports, profit distribution plans and other financial documents which the Board of Directors intend to submit to the general meeting, and to entrust certified accountant or certified auditor on behalf of the Company to review relevant financial documents in case of any doubt;

5. to propose to hold an extraordinary general meeting, and to convene and preside over a general meeting when the Board of Directors fails to perform its duty of convening and presiding over such meeting pursuant to laws;

6. to make proposals to the general meetings;

7. to propose to hold an extraordinary Board meeting;

8. to bring legal proceedings against the Directors and the senior management members in accordance with laws;

9. other authority prescribed by laws, administrative regulations and the Articles of Association.

A Supervisor can attend the meetings of the Board of Directors as a non-voting attendee.

A Supervisor shall abide by laws and the Articles of Association and perform his/her supervising responsibilities honestly and diligently.

GENERAL MANAGER OF THE COMPANY

The general manager of the Company shall be accountable to the Board of Directors and shall have the right to exercise the following powers:

1. to be in charge of business operation and management, and report to the Board of Directors;

2. to organise the implementation of resolutions of the Board of Directors and annual operation and investment plans;

3. to draw up an annual financial budget plan and final account plan, and make suggestions to the Board of Directors;

4. to formulate the draft of the basic administrative system and internal management establishment structure;

5. to formulate the specific regulations of the Company;

6. to propose to the Board of Directors for the appointment or dismissal of the deputy general manager, the financial administrator and other senior management;

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7. to appoint or dismiss other management or ordinary employees that shall not be appointed or dismissed by the Board of Directors;

8. to propose to convene extraordinary Board meetings;

9. to decide on other matters of the Company within the scope authorised by the Board of Directors;

10. to decide on the investment, acquisition or sale, financing and other items except for those that must be made by the Board of Directors and the general meetings;

11. other duties and powers authorised by the Articles of Association and the Board of Directors.

The general manager shall abide by laws and the Articles of Association and perform his duties faithfully, honestly and diligently.

BOARD OF DIRECTORS

The Board of Directors shall be responsible to the general meetings and exercise the following functions and powers:

1. to convene the general meetings and report to Shareholders at such meetings;

2. to execute the resolutions of the general meetings;

3. to decide on the business plans and investment proposals;

4. to formulate the proposed annual budgets and final accounts;

5. to formulate the profit distribution plans and plans for recovery of losses;

6. to formulate proposals for increases or reductions in the registered share capital, and proposals for issuance of bonds or other marketable securities and listing plans;

7. to formulate proposals for material acquisition, repurchase of shares, merger, separation, dissolution, or change of the nature of the Company;

8. to determine the establishment of internal management system and basic administrative system;

9. to appoint or dismiss the Company’ s general manager and secretary of the Board of Directors, to appoint or dismiss the senior management members including the deputy general manager and the financial administrator based on the nomination of the general manager, and to determine their remunerations;

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10. to formulate the Company’s basic management system;

11. to formulate proposals for any amendment to the Articles of Association;

12. to decide on the investment, acquisition or sale of assets, financing, connected transactions and other matters that require the Board of Directors to make decisions in accordance with the Listing Rules of the Stock Exchange;

13. to propose to the general meeting about appointment or dismissal of an accounting firm;

14. to decide on other material matters of the Company except for the matters stipulated in the PRC Company Law and the Articles of Association to be resolved by the general meeting;

15. other authorities conferred by the general meetings or prescribed by the laws or the Articles of Association.

At least four regular meetings of the Board of Directors shall be held each year. Meetings of the Board of Directors shall be convened by the chairman of the Board of Directors. The notice of a regular meeting of the Board of Directors and a special meeting of the Board of Directors shall be served in writing to all the Directors, Supervisors and the general manager 14 days and 5 days respectively before such meetings are convened. The chairman of the Board of Directors shall convene and preside over a special meeting of the Board of Directors within 5 days under one of the following circumstances:

1. Shareholders representing one tenth or more of voting rights propose;

2. one third or more of the Directors propose jointly;

3. the chairman of the Board of Directors proposes;

4. two or more independent non-executive Directors propose;

5. the Board of Supervisors proposes;

6. the general manager of the Company proposes.

Meetings of the Board of Directors may be held only if more than half of the Directors (including proxies) attend. Resolutions of the Board of Directors shall be adopted by the affirmative votes of more than half of all the Directors except for the following matters where an affirmative vote of at least two thirds or more of all the Directors shall be required:

1. formulating proposals for increases or reductions in the registered share capital, and proposals for issuance of bonds or other marketable securities and listing plans;

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2. formulating proposals for material acquisition, repurchase of shares, merger, separation, dissolution, or change of the nature of the Company;

3. formulating proposals for any amendment to the Articles of Association.

Each Director shall have one vote. If the number of dissenting votes is equal to that of affirmative votes, the chairman of the Board of Directors shall have a casting vote.

The special committees set up under the Board of Directors include but not limited to: the Audit Committee, the Nomination Committee and the Remuneration Committee.

ENGAGEMENT OF AN ACCOUNTING FIRM

The Company shall engage an independent accounting firm that complies with relevant State regulations to audit the annual financial reports and other financial reports of the Company. The term of engagement of an accounting firm engaged by the Company shall be between the end of the current annual general meeting of the Company and the end of the next annual general meeting.

The general meeting may, by means of an ordinary resolution, dismiss the accounting firm prior to the expiration of its term of engagement, notwithstanding any provisions in the engagement contract between the accounting firm and the Company, without prejudice to such accounting firm’s right, if any, to claim damages from the Company in respect of such dismissal.

The engagement, dismissal or refusal of the renewal of the engagement of an accounting firm shall be decided upon by the general meeting and reported to the securities regulatory authorities of the State Council.

DISPUTE RESOLUTION

If any disputes or claims related to the Company’s business based on the rights or obligations provided in the Articles of Association, the PRC Company Law and other relevant laws arise between the Shareholders of foreign investment shares listed outside the PRC and the Company, between the Shareholders of foreign investment shares listed outside the PRC and the Directors, Supervisors, the general manager and other senior management members of the Company or between the Shareholders of foreign investment shares listed outside the PRC and other Shareholders of domestic investment shares, the parties concerned may submit such dispute or claim for arbitration.

When such disputes or claims as described above are submitted for arbitration, such disputes or claims shall be submitted in their entirety, and all persons that have a cause of action due to the same events or whose participation is necessary for the settlement of such disputes or claims, and if such persons being the Company or Shareholders, Directors, Supervisors, the general manager or other senior management members of the Company, shall abide by the arbitration.

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Disputes concerning the definition of Shareholders and the register of Shareholders shall not be required to be settled by means of arbitration.

A dispute or claim submitted for arbitration may be arbitrated, at the option of the arbitration applicant, by either the China International Economic and Trade Arbitration Commission in accordance with its arbitration rules or the Hong Kong International Arbitration Centre in accordance with its securities arbitration rules. After the arbitration applicant has submitted the dispute or claim for arbitration, the other party must carry out arbitration in the arbitration institution selected by the applicant.

If the arbitration applicant opts for arbitration by the Hong Kong International Arbitration Centre, either party may request arbitration to be conducted in Shenzhen in accordance with the securities arbitration rules of the Hong Kong International Arbitration Centre.

Unless otherwise provided by laws or administrative regulations, the laws of the PRC shall apply to the settlement by means of arbitration of disputes or claims referred in the above paragraph.

The award of the arbitration institution shall be final and binding upon each party.

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FURTHER INFORMATION ABOUT OUR GROUP

1. Incorporation of our Company

The predecessor of the Company was incorporated as a limited liability company in the PRC on 11 April 2014 under the corporate name Sichuan Dekon Agro-livestock Technology Company Limited (四川德康農牧科技有限公司). On 10 May 2019, our Company was converted to a joint stock company with limited liability and renamed as Dekon Food and Agriculture Group (四川德康農牧食品集團股份有限公司). We have established a principal place of business in Hong Kong at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, and was registered as a non-Hong Kong company in Hong Kong under Part 16 of the Companies Ordinance on 10 June 2021. We have appointed Zeng Min (曾民) and Li Kin Wai (李健威), as the Authorised Representatives of our Company for the acceptance of service of process and notices on behalf of our Company in Hong Kong. The address for service of process on our Company in Hong Kong is the same as its principal place of business in Hong Kong as set out above.

As we are established in the PRC, our corporate structure and Articles of Association are subject to the relevant laws and regulations of the PRC. A summary of relevant provisions of our Articles of Association is set out in Appendix V to this [REDACTED]. A summary of certain relevant aspects of the laws and regulations of the PRC is set out in Appendix IV to this [REDACTED].

2. Changes in the share capital of our Company

At the time of our establishment on 11 April 2014, our registered capital was RMB100,000,000. In April 2014, seven individuals, including Mr. Wang Degen (王德根), Mr. Chen Yuxin (陳育新), Mr. Hu Wei (胡偉), Mr. Tang Jianyuan (唐健源), Mr. Rao Hui (饒暉), Mr. Liu Guofeng (劉國峰) and Mr. Wang Dehui (王德輝), jointly established the Company through (1) contribution of their equity in Chongqing Dekon valued at RMB70 million and (2) cash of RMB30 million in proportion to their then shareholding in Chongqing Dekon. The shareholding structure of the Company upon the establishment is as follows: Mr. Wang Degen (王德根) (42.00%), Mr. Chen Yuxin (陳育新) (35.00%), Mr. Hu Wei (胡偉) (10.00%), Mr. Tang Jianyuan (唐健源) (5.00%), Mr. Rao Hui (饒暉) (3.00%), Mr. Liu Guofeng (劉國峰) (3.00%) and Mr. Wang Dehui (王德輝) (2.00%).

On 27 November 2018, the registered capital of the Company increased from RMB100 million to RMB101.70 million, with the additional RMB1.70 million subscribed at par value by Mr. Yao Hailong (姚海龍), Mr. Xu Wei (徐偉) and Mr. Tang Xiaoping (唐小平) for RMB1 million, RMB0.5 million and RMB0.2 million, respectively.

On 20 February 2019, the then Shareholders (also as the promoters), entered into the promoters’ agreement pursuant to which they agreed to convert the Company into a joint stock company with limited liability with a registered capital of RMB250,000,000 divided into 250,000,000 Domestic Shares with a par value of RMB1.00 each, which was determined with reference to the net audited asset value of the Company of RMB605,566,600 as at 30

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November 2018, as appraised and verified by an independent accountant. Upon completion of the said conversion on 9 May 2019, the Company was converted into a joint stock company with limited liability and we were incorporated under the name of Dekon Food and Agriculture Group (四川德康農牧食品集團股份有限公司). The then Shareholders and their respective equity interest in our Company remained unchanged immediately before and after the conversion of our Company into a joint stock company with limited liability.

On 29 June 2019, the Company issued an additional 33,295,430 ordinary Shares with a nominal value of RMB1 each. The registered capital increased from RMB250 million to RMB283,295,430, which by Mr. Shu Dingming (舒鼎銘) as to 3,807,107 Shares at a price of RMB4 per share, Zhongcheng Jinyi as to 7,814,213 Shares at a price of RMB9.85 per share, CEL Maiming as to 16,255,549 Shares at a price of RMB11.07 per share and Suzhou Houqi as to 5,418,561 Shares at a price of RMB11.07 per share.

On 14 November 2019, the Company issued an additional 5,665,909 ordinary Shares with a nominal value of RMB1 each. The registered capital increased from RMB283,295,430 to RMB288,961,339, which was fully subscribed by Yixing CEL at a price of RMB35.30 per share.

On 15 December 2019, the Company issued an additional 1,422,221 ordinary Shares with a nominal value of RMB1 each. The registered capital increased from RMB288,961,339 to RMB290,383,560, which was fully subscribed by Tongchuang Deheng at a price of RMB30.11 per share.

On 21 April 2020, the Company issued an additional 6,701,159 ordinary Shares with a nominal value of RMB1 each. The registered capital increased from RMB290,383,560 to RMB297,084,719, which was fully subscribed by Yixing CEL at a price of RMB44.77 per share. The registration of such increase of registered capital with the Chengdu Administration for Industry and Commerce was completed on 23 April 2020.

On 30 October 2020, the Company resolved to increase the registered capital from RMB297,084,719 to RMB360,000,000. The Company’s undistributed profit of RMB62,915,281 was transferred to registered capital in the same proportion as the then Shareholders’ shareholding ratio.

Save as disclosed in this [REDACTED], there has been no alteration in our share capital since our establishment and as at the Latest Practicable Date.

Assuming the [REDACTED] is not exercised, upon the completion of the [REDACTED], the issued share capital of our Company will be increased to [REDACTED], made up of 360,000,000 Domestic Shares and [REDACTED] H Shares with a nominal value of RMB1.00 each fully paid up or credited as fully paid up, representing approximately [REDACTED] of our registered share capital, respectively.

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3. Restriction of share repurchase

For details of the restrictions on the Share repurchase by our Company, please refer to “Summary of the Articles of Association” in Appendix V to this [REDACTED].

4. Resolutions passed at our Company’s extraordinary general meeting held on 10 May 2021

At the extraordinary general meeting of our Company held on 10 May 2021, among other things, the following resolutions were passed by the Shareholders:

(a) the issue of H Shares with a nominal value of RMB1.00 each by the Company and such H Shares to be listed on the Main Board of the Stock Exchange;

(b) subject to the completion of the [REDACTED], the Articles of Association has been approved and adopted, which shall only become effective on the [REDACTED], and the Board has been authorised to amend the Articles of Association in accordance with any comments from the Stock Exchange and the relevant PRC regulatory authorities; and

(c) authorising the Board to handle all relevant matters relating to, among other things, the implementation of issue of H Shares and the [REDACTED].

5. Changes in share capital of our principal subsidiaries

Our principal subsidiaries are referred to in the Accountants’ Report set out in Appendix I to this [REDACTED].

The following alterations in the share capital of our principal subsidiaries have taken place within two years immediately preceding the date of this [REDACTED]

Chengdu Dekon Animal Husbandry Technology Co., Ltd.* (成都德康畜牧科技有限公司)

On 15 October 2019, Chengdu Dekon Animal Husbandry Technology Co., Ltd. decreased its registered share capital from RMB150 million to RMB140 million.

Chengdu Dekon Animal Health Technology Service Co., Ltd. (成都德康動物健康技術服務有限公司)

On 20 January 2019, Chengdu Dekon Animal Health Technology Service Co., Ltd. increased its registered share capital from RMB5 million to RMB50 million.

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Sihong Dekon Farming and Technology Co., Ltd. (泗洪德康農牧科技有限公司)

On 26 December 2019, Sihong Dekon Farming and Technology Co., Ltd. increased its registered capital from RMB20 million to RMB32 million.

On 4 November 2020, Sihong Dekon Farming and Technology Co., Ltd. increased its registered capital from RMB32 million to RMB185 million.

Horqin Right Front Banner Dekon Agriculture and Animal Husbandry Co., Ltd. (科爾沁右翼前旗德康農牧有限公司)

On 7 February 2021, Horqin Right Front Banner Dekon Agriculture and Animal Husbandry Co., Ltd. increased its registered capital from RMB10 million to RMB20 million.

On 30 April 2021, Horqin Right Front Banner Dekon Agriculture and Animal Husbandry Co., Ltd. decreased its registered capital from RMB20 million to RMB10 million.

Save as disclosed in this [REDACTED], there has been no alternation in the share capital or registered capital of any of the principal subsidiaries of our Company within the two years immediately preceding the date of this [REDACTED].

FURTHER INFORMATION ABOUT OUR BUSINESS

1. Summary of material contracts

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of our Group within the two years preceding the date of this [REDACTED] that are or may be material:

(a) the Indemnity Undertaking;

(b) the non-competition agreement entered into between our our Controlling Shareholders and the Company on [●]; and

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2. Intellectual property rights of our Group

(a) Trademarks

As at the Latest Practicable Date, the Group had registered the following trademarks which, in the opinion of the Directors, are material to our business:

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

1 19 China 41865417 2020.06.21- The 2030.06.20 Company 2 14 China 41865358 2020.06.21- The 2030.06.20 Company 3 8 China 41864428 2020.06.21- The 2030.06.20 Company 4 30 China 41863017 2020.06.21- The 2030.06.20 Company 5 24 China 41862797 2020.06.21- The 2030.06.20 Company 6 4 China 41861609 2020.06.21- The 2030.06.20 Company 7 25 China 41859974 2020.06.21- The 2030.06.20 Company 8 29 China 41856128 2020.06.21- The 2030.06.20 Company 9 26 China 41856016 2020.06.21- The 2030.06.20 Company 10 13 China 41852623 2020.06.21- The 2030.06.20 Company 11 22 China 41848723 2020.06.21- The 2030.06.20 Company 12 21 China 41848708 2020.06.21- The 2030.06.20 Company 13 28 China 41847833 2020.06.21- The 2030.06.20 Company 14 1 China 41847437 2020.06.21- The 2030.06.20 Company 15 5 China 41845010 2020.06.21- The 2030.06.20 Company 16 23 China 41844635 2020.06.21- The 2030.06.20 Company 17 17 China 41844177 2020.06.21- The 2030.06.20 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

18 15 China 41841332 2020.06.21- The 2030.06.20 Company 19 10 China 41842839 2020.06.28- The 2030.06.27 Company 20 2 China 41861551 2020.06.28- The 2030.06.27 Company 21 27 China 41849549 2020.06.28- The 2030.06.27 Company 22 20 China 41839306 2020.06.28- The 2030.06.27 Company 23 3 China 41858838 2020.07.14- The 2030.07.13 Company 24 6 China 41863941 2020.07.14- The 2030.07.13 Company 25 16 China 41864506 2020.07.14- The 2030.07.13 Company 26 18 China 41839246 2020.07.14- The 2030.07.13 Company 27 37 China 41872201 2020.08.21- The 2030.08.20 Company 28 43 China 41875868 2020.08.21- The 2030.08.20 Company 29 33 China 41876067 2020.08.21- The 2030.08.20 Company 30 38 China 41876472 2020.08.21- The 2030.08.20 Company 31 45 China 41882722 2020.08.21- The 2030.08.20 Company 32 9 China 41844495 2020.08.28- The 2030.08.27 Company 33 35 China 41877458 2020.08.28- The 2030.08.27 Company 34 34 China 41870607 2020.08.28- The 2030.08.27 Company 35 31 China 41881636 2020.08.28- The 2030.08.27 Company 36 39 China 41882493 2020.08.28- The 2030.08.27 Company 37 40 China 41882530 2020.08.28- The 2030.08.27 Company 38 32 China 41884316 2020.08.28- The 2030.08.27 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

39 41 China 41891633 2020.08.28- The 2030.08.27 Company 40 36 China 41892769 2020.08.28- The 2030.08.27 Company 41 44 China 41889720 2020.09.07- The 2030.09.06 Company 42 12 China 41841245 2020.09.14- The 2030.09.13 Company 43 11 China 41865826 2020.09.21- The 2030.09.20 Company 44 7 China 41853576 2020.10.07- The 2030.10.06 Company 45 42 China 41881103 2020.11.07- The 2030.11.06 Company 46 4 China 41865250 2020.06.21- The 2030.06.20 Company

47 26 China 41862878 2020.06.21- The 2030.06.20 Company

48 22 China 41862737 2020.06.21- The 2030.06.20 Company

49 18 China 41860560 2020.06.21- The 2030.06.20 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

50 20 China 41855564 2020.06.21- The 2030.06.20 Company

51 17 China 41855166 2020.06.21- The 2030.06.20 Company

52 1 China 41854125 2020.06.21- The 2030.06.20 Company

53 30 China 41850253 2020.06.21- The 2030.06.20 Company

54 19 China 41850210 2020.06.21- The 2030.06.20 Company

55 29 China 41845243 2020.06.21- The 2030.06.20 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

56 27 China 41844862 2020.06.21- The 2030.06.20 Company

57 10 China 41844534 2020.06.21- The 2030.06.20 Company

58 13 China 41841270 2020.06.21- The 2030.06.20 Company

59 25 China 41840571 2020.06.21- The 2030.06.20 Company

60 16 China 41838669 2020.06.21- The 2030.06.20 Company

61 14 China 41837946 2020.06.21- The 2030.06.20 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

62 2 China 41858803 2020.06.28- The 2030.06.27 Company

63 23 China 41849521 2020.06.28- The 2030.06.27 Company

64 24 China 41848295 2020.06.28- The 2030.06.27 Company

65 6 China 41838114 2020.06.28- The 2030.06.27 Company

66 8 China 41857013 2020.06.28- The 2030.06.27 Company

67 3 China 41841001 2020.06.28- The 2030.06.27 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

68 5 China 41838085 2020.06.28- The 2030.06.27 Company

69 21 China 41852983 2020.06.28- The 2030.06.27 Company

70 15 China 41852002 2020.07.14- The 2030.07.13 Company

71 28 China 41865503 2020.07.21- The 2030.07.20 Company

72 35 China 41876121 2020.08.21- The 2030.08.20 Company

73 45 China 41882726 2020.08.21- The 2030.08.20 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

74 32 China 41880919 2020.08.21- The 2030.08.20 Company

75 40 China 41881639 2020.08.21- The 2030.08.20 Company

76 36 China 41882472 2020.08.21- The 2030.08.20 Company

77 44 China 41886840 2020.08.21- The 2030.08.20 Company

78 33 China 41888818 2020.08.21- The 2030.08.20 Company

79 37 China 41892806 2020.08.21- The 2030.08.20 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

80 38 China 41892827 2020.08.21- The 2030.08.20 Company

81 39 China 41896935 2020.08.21- The 2030.08.20 Company

82 12 China 41847637 2020.08.28- The 2030.08.27 Company

83 43 China 41875871 2020.08.28- The 2030.08.27 Company

84 34 China 41870612 2020.08.28- The 2030.08.27 Company

85 41 China 41872022 2020.08.28- The 2030.08.27 Company

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Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

86 40 China 41876531 2020.09.07- The 2030.09.06 Company

87 11 China 41848596 2020.09.14- The 2030.09.13 Company

88 7 China 41851557 2020.10.07- The 2030.10.06 Company

89 9 China 41862231 2020.10.07- The 2030.10.06 Company

90 42 China 41867338 2020.11.07- The 2030.11.06 Company

91 42 China 33395357 2019.06.14- The 2029.06.13 Company 92 31 China 33387300 2019.06.14- The 2029.06.13 Company 93 44 China 33381578 2019.06.14- The 2029.06.13 Company

– VI-14 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

94 35 China 33379248 2019.06.14- The 2029.06.13 Company 95 29 China 33375414 2019.06.14- The 2029.06.13 Company 96 35 China 30032110 2019.04.14- The 2029.04.13 Company 97 41 China 30030851 2019.02.07- The 2029.02.06 Company 98 44 China 30029593 2019.04.14- The 2029.04.13 Company 99 43 China 30024854 2019.04.14- The 2029.04.13 Company 100 31 China 30022129 2019.03.14- The 2029.03.13 Company 101 42 China 30018273 2019.04.21- The 2029.04.20 Company 102 40 China 30014735 2019.02.07- The 2029.02.06 Company 103 33 China 17565763 2016.09.21- The 2026.09.20 Company 104 30 China 17565710 2016.09.21- The 2026.09.20 Company 105 29 China 17565652 2016.09.21- The 2026.09.20 Company 106 30 China 46262363 2020.12.28- The 2030.12.27 Company 107 33 China 46283461 2020.12.28- The 2030.12.27 Company 108 29 China 46283598 2020.12.28- The 2030.12.27 Company 109 29 China 17565599 2016.09.21- The 2026.09.20 Company 110 29 China 46273936 2020.12.28- The 2030.12.27 Company 111 29 China 17565557 2016.10.21- The 2026.10.20 Company

112 29 China 46283159 2020.12.28- The 2030.12.27 Company

– VI-15 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

113 31 China 16891580 2016.07.07- The 2026.07.06 Company 114 31 China 46277621 2020.12.28- The 2030.12.27 Company 115 43 China 15633201 2015.12.21- The 2025.12.20 Company 116 31 China 15633061 2015.12.21- The 2025.12.20 Company 117 30 China 15632917 2015.12.21- The 2025.12.20 Company 118 29 China 15632829 2015.12.21- The 2025.12.20 Company 119 29 China 14246487 2015.05.07- The 2025.05.06 Company 120 29 China 46251442 2020.12.28- The 2030.12.27 Company 121 44 China 11704803 2014.07.28- The 2024.07.27 Company 122 40 China 11704772 2014.04.14- The 2024.04.13 Company 123 31 China 11704733 2014.04.14- The 2024.04.13 Company 124 29 China 11704689 2014.04.07- The 2024.04.06 Company 125 40 China 46261891 2021.01.28- The 2031.01.27 Company 126 31 China 46277597 2021.01.28- The 2031.01.27 Company 127 29 China 46285973 2021.01.28- The 2031.01.27 Company 128 40 China 11635406 2014.07.07- The 2024.07.06 Company

129 31 China 11629783 2014.05.28- The 2024.05.27 Company

– VI-16 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

130 44 China 11629542 2014.06.21- The 2024.06.20 Company

131 40 China 11629515 2014.05.14- The 2024.05.13 Company

132 31 China 11629491 2014.04.28- The 2024.04.27 Company

133 29 China 11629422 2014.07.28- The 2024.07.27 Company

134 31 China 41888278 2020.08.21- The 2030.08.20 Company

135 40 China 41880088 2020.08.21- The 2030.08.20 Company

136 5 China 41838069 2020.10.07- The 2030.10.06 Company

137 17 China 41841991 2020.10.07- The 2030.10.06 Company

138 20 China 41842391 2020.10.07- The 2030.10.06 Company

139 941870612 China 41844509 2020.10.07- The 2030.10.06 Company

140 30 China 41850259 2020.10.07- The 2030.10.06 Company

141 6 China 41851460 2020.10.07- The 2030.10.06 Company

– VI-17 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

142 11 China 41855383 2020.10.07- The 2030.10.06 Company

143 26 China 41860018 2020.10.07- The 2030.10.06 Company

144 8 China 41862164 2020.10.07- The 2030.10.06 Company

145 24 China 41864588 2020.10.07- The 2030.10.06 Company

146 12 China 41865274 2020.10.07- The 2030.10.06 Company

147 29 China 41865534 2020.10.07- The 2030.10.06 Company

148 1 China 41861000 2020.10.14- The 2030.10.13 Company

149 21 China 41865460 2020.10.28- The 2030.10.27 Company

150 34 China 41868924 2020.10.28- The 2030.10.27 Company

151 19 China 41841465 2020.11.07- The 2030.11.06 Company

152 37 China 41872208 2020.11.07- The 2030.11.06 Company

153 43 China 41875865 2020.11.07- The 2030.11.06 Company

– VI-18 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

154 39 China 41882501 2020.11.21- The 2030.11.20 Company

155 35 China 41885084 2020.11.21- The 2030.11.20 Company

156 7 China 41851613 2020.11.28- The 2030.11.27 Company

157 40 China 46252719 2021.02.21- The 2031.02.20 Company

158 31 China 46261042 2021.02.21- The 2031.02.20 Company

159 28 China 41840670 2021.06.07- The 2031.06.06 Company

160 31 China 11529182 2014.02.28- The 2024.02.27 Company 161 40 China 11529081 2014.02.28- The 2024.02.27 Company 162 40 China 46276190 2020.12.28- The 2030.12.27 Company 163 31 China 46142241 2021.02.21- The 2031.02.20 Company 164 31 China 10907025 2014.06.14- The 2024.06.13 Company 165 31 China 46284366 2020.12.28- The 2030.12.27 Company 166 29 China 10648258 2015.03.28- The 2025.03.27 Company 167 29 China 46283084 2020.12.28- The 2030.12.27 Company

– VI-19 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

168 42 China 41891970 2020.10.14- The 2030.10.13 Company

169 40 China 41885629 2020.10.28- The 2030.10.27 Company

170 35 China 41868500 2020.11.07- The 2030.11.06 Company

171 43 China 41880387 2020.11.07- The 2030.11.06 Company

172 31 China 41891847 2020.11.07- The 2030.11.06 Company

173 44 China 41870086 2020.11.28- The 2030.11.27 Company

174 29 China 41871587 2020.11.28- The 2030.11.27 Company

– VI-20 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

175 41 China 41885644 2020.11.28- The 2030.11.27 Company

176 30 China 41894626 2020.11.28- The 2030.11.27 Company

177 35 China 41873076 2020.10.28- The 2030.10.27 Company 178 41 China 41876886 2020.10.28- The 2030.10.27 Company 179 40 China 41882369 2020.11.07- The 2030.11.06 Company 180 44 China 41890151 2020.11.07- The 2030.11.06 Company 181 30 China 41894622 2020.11.07- The 2030.11.06 Company 182 29 China 41896994 2020.11.07- The 2030.11.06 Company 183 43 China 41870057 2020.11.21- The 2030.11.20 Company 184 42 China 41890119 2020.11.28- The 2030.11.27 Company 185 29 China 48445012 2021.04.07- The 2031.04.06 Company 186 30 China 48452683 2021.04.07- The 2031.04.06 Company 187 31 China 48446633 2021.04.07- The 2031.04.06 Company 188 32 China 48461235 2021.04.07- The 2031.04.06 Company 189 33 China 48460709 2021.04.07- The 2031.04.06 Company 190 35 China 48453790 2021.04.07- The 2031.04.06 Company 191 40 China 48464741 2021.04.07- The 2031.04.06 Company

– VI-21 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

192 41 China 48442664 2021.04.07- The 2031.04.06 Company 193 43 China 48468263 2021.04.07- The 2031.04.06 Company 194 44 China 48459336 2021.04.07- The 2031.04.06 Company 195 29 China 48876247 2021.03.21- The 2031.03.20 Company 196 30 China 48867125 2021.03.21- The 2031.03.20 Company 197 31 China 48878404 2021.03.21- The 2031.03.20 Company 198 35 China 48864831 2021.03.21- The 2031.03.20 Company 199 40 China 48882608 2021.03.21- The 2031.03.20 Company 200 43 China 48877680 2021.03.21- The 2031.03.20 Company 201 44 China 48874256 2021.03.21- The 2031.03.20 Company 202 31 China 46261029 2021.04.21- The 2031.04.20 Company

203 40 China 46271564 2021.04.21- The 2031.04.20 Company

204 44 China 46276239 2021.04.21- The 2031.04.20 Company 205 44 China 46268060 2021.04.21- The 2031.04.20 Company

206 31 China 35551941 2019.08.28- Neijiang 2029.08.27 Dekon Husbandry Limited 207 35 China 35540145 2019.08.28- Neijiang 2029.08.27 Dekon Husbandry Limited

– VI-22 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

208 29 China 35536059 2019.09.14- Neijiang 2029.09.13 Dekon Husbandry Limited 209 31 China 26995773 2018.10.14- Anshun 2028.10.13 Dekon Husbandry Limited 210 31 China 11544405 2014.03.07- Yuechi 2024.03.06 Dekon Poultry Limited 211 31 China 11544403 2014.03.07- Yuechi 2024.03.06 Dekon Poultry Limited 212 29 China 10428271 2013.03.21- Yuechi 2023.03.20 Dekon Poultry Limited 213 31 China 10428215 2013.03.21- Yuechi 2023.03.20 Dekon Poultry Limited 214 43 China 15108718 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 215 31 China 15108718 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 216 30 China 15108718 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd.

– VI-23 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

217 35 China 15108718 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 218 29 China 15108718 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 219 5 China 15108565 2016.01.07- Guangdong 2026.01.06 Wizagricultural Science & Technology Co., Ltd. 220 21 China 15108565 2016.01.07- Guangdong 2026.01.06 Wizagricultural Science & Technology Co., Ltd. 221 35 China 15108565 2016.01.07- Guangdong 2026.01.06 Wizagricultural Science & Technology Co., Ltd. 222 31 China 15108565 2016.01.07- Guangdong 2026.01.06 Wizagricultural Science & Technology Co., Ltd. 223 30 China 15108565 2016.01.07- Guangdong 2026.01.06 Wizagricultural Science & Technology Co., Ltd. 224 29 China 15108565 2016.01.07- Guangdong 2026.01.06 Wizagricultural Science & Technology Co., Ltd.

– VI-24 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

225 40 China 15108565 2016.01.07- Guangdong 2026.01.06 Wizagricultural Science & Technology Co., Ltd. 226 21 China 15108469 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 227 29 China 15108469 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 228 40 China 15108469 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 229 30 China 15108469 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 230 31 China 15108469 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 231 5 China 15108469 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 232 35 China 15108469 2015.09.21- Guangdong 2025.09.20 Wizagricultural Science & Technology Co., Ltd. 233 29 China 10311333 2013.03.07- Guangdong 2023.03.06 Wizagricultural Science & Technology Co., Ltd.

– VI-25 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

234 29 China 9659198 2012.08.14- Guangdong 2022.08.13 Wizagricultural Science & Technology Co., Ltd. 235 31 China 9659065 2012.07.28- Guangdong 2022.07.27 Wizagricultural Science & Technology Co., Ltd. 236 35 China 9659726 2012.08.21- Guangdong 2022.08.20 Wizagricultural Science & Technology Co., Ltd. 237 35 China 9659498 2012.07.28- Guangdong 2022.07.27 Wizagricultural Science & Technology Co., Ltd. 238 29 China 9659386 2012.07.28- Guangdong 2022.07.27 Wizagricultural Science & Technology Co., Ltd. 239 31 China 9658975 2012.07.28- Guangdong 2022.07.27 Wizagricultural Science & Technology Co., Ltd. 240 29 China 9659300 2012.08.14- Guangdong 2022.08.13 Wizagricultural Science & Technology Co., Ltd. 241 31 China 9658910 2012.07.28- Guangdong 2022.07.27 Wizagricultural Science & Technology Co., Ltd. 242 35 China 9659648 2012.08.14- Guangdong 2022.08.13 Wizagricultural Science & Technology Co., Ltd.

– VI-26 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

243 29 China 9659251 2015.03.28- Guangdong 2025.03.27 Wizagricultural Science & Technology Co., Ltd. 244 31 China 9654603 2012.09.14- Guangdong 2022.09.13 Wizagricultural Science & Technology Co., Ltd. 245 31 China 3708541 2015.04.14- Guangdong 2025.04.13 Wizagricultural Science & Technology Co., Ltd. 246 29 China 3708544 2015.10.14- Guangdong 2025.10.13 Wizagricultural Science & Technology Co., Ltd. 247 7 China 3708546 2015.11.14- Guangdong 2025.11.13 Wizagricultural Science & Technology Co., Ltd. 248 29 China 3708543 2015.10.21- Guangdong 2025.10.20 Wizagricultural Science & Technology Co., Ltd. 249 40 China 3708540 2015.11.14- Guangdong 2025.11.13 Wizagricultural Science & Technology Co., Ltd. 250 44 China 3708538 2015.10.28- Guangdong 2025.10.27 Wizagricultural Science & Technology Co., Ltd. 251 29 China 1482349 2020.11.28- Guangdong 2030.11.27 Wizagricultural Science & Technology Co., Ltd.

– VI-27 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

252 31 China 1478916 2020.11.21- Guangdong 2030.11.20 Wizagricultural Science & Technology Co., Ltd. 253 31 China 27623128 2019.01.14- Kaiping 2029.01.13 Jinjiwang Poultry Co., Ltd. 254 29 China 21150219A 2017.11.21- Kaiping 2027.11.20 Jinjiwang Poultry Co., Ltd. 255 29 China 12992411 2014.12.21- Kaiping 2024.12.20 Jinjiwang Poultry Co., Ltd. 256 31 China 12992349 2014.12.14- Kaiping 2024.12.13 Jinjiwang Poultry Co., Ltd. 257 31 China 4051572 2016.05.21- Kaiping 2026.05.20 Jinjiwang Poultry Co., Ltd. 258 31 China 30562638 2019.04.14- Guangdong 2029.04.13 Zhicheng Foods Co., Ltd. 259 29 China 30555264 2019.6.14- Guangdong 2029.6.13 Zhicheng Foods Co., Ltd. 260 31 China 9346250 2012.08.14- Guangdong 2022.08.13 Zhicheng Foods Co., Ltd. 261 9 China 48791530 2021.04.14- Deyang 2031.04.03 Dekon Poultry Farming Co., Ltd. 262 16 China 48801130 2021.04.14- Deyang 2031.04.03 Dekon Poultry Farming Co., Ltd.

– VI-28 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

263 29 China 48813302 2021.04.14- Deyang 2031.04.03 Dekon Poultry Farming Co., Ltd. 264 31 China 48804455 2021.04.14- Deyang 2031.04.03 Dekon Poultry Farming Co., Ltd. 265 35 China 48804453 2021.04.14- Deyang 2031.04.03 Dekon Poultry Farming Co., Ltd. 266 38 China 48791531 2021.04.14- Deyang 2031.04.03 Dekon Poultry Farming Co., Ltd. 267 42 China 48813899 2021.04.14- Deyang 2031.04.03 Dekon Poultry Farming Co., Ltd. 268 9 China 48455073 2021.04.07- Deyang 2031.04.06 Dekon Poultry Farming Co., Ltd. 269 16 China 48460261 2021.04.07- Deyang 2031.04.06 Dekon Poultry Farming Co., Ltd. 270 29 China 48473034 2021.04.07- Deyang 2031.04.06 Dekon Poultry Farming Co., Ltd. 271 31 China 48456597 2021.04.07- Deyang 2031.04.06 Dekon Poultry Farming Co., Ltd.

– VI-29 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Type Place of Registration Registered No. Trademark and class registration number Expiry date owner

272 35 China 48463250 2021.04.07- Deyang 2031.04.06 Dekon Poultry Farming Co., Ltd. 273 38 China 48442901 2021.04.07- Deyang 2031.04.06 Dekon Poultry Farming Co., Ltd. 274 42 China 48442903 2021.04.07- Deyang 2031.04.06 Dekon Poultry Farming Co., Ltd. 275 31 China 47269507 2021.05.07- Chengdu 2031.05.06 Tiantian Husbandry Co., Ltd.

– VI-30 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

As at the Latest Practicable Date, we had applied for registration of the following trademarks which, in the opinion of the Directors, are material to our business:

Application Place of Application No. Trademark Applicant Category Number Registration Date

1 The 25, 29, 30, 305579119 Hong Kong 2021-03-31 Company 31, 35, 39, 40, 43, 44 2 The 25, 29, 30, 305579128 Hong Kong 2021-03-31 Company 31, 35, 39, 40, 43, 44 3 The 25, 29, 30, 305579128 Hong Kong 2021-03-31 Company 31, 35, 39, 40, 43, 44 4 The 2 41865204 China 2019-10-24 Company

5 The 3 41844446 China 2019-10-24 Company

6 The 4 41857765 China 2019-10-24 Company

7 The 10 41851824 China 2019-10-24 Company

8 The 13 41845132 China 2019-10-24 Company

9 The 14 41841899 China 2019-10-24 Company

10 The 15 41838019 China 2019-10-24 Company

– VI-31 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Application Place of Application No. Trademark Applicant Category Number Registration Date

11 The 16 41852800 China 2019-10-24 Company

12 The 18 41839254 China 2019-10-24 Company

13 The 22 41862743 China 2019-10-24 Company

14 The 23 41849914 China 2019-10-24 Company

15 The 25 41840554 China 2019-10-24 Company

16 The 27 41840619 China 2019-10-24 Company

17 The 28 41840670 China 2019-10-24 Company

18 The 29 50219053 China 2020-09-30 Company 19 The 29 41916721 China 2019-10-28 Company 20 The 29 52540064 China 2020-12-28 Company 21 The 29 52549562 China 2020-12-28 Company 22 The 29 46251456 China 2020-05-13 Company 23 The 29 46276382 China 2020-05-13 Company

24 The 30 50222183 China 2020-09-30 Company 25 The 30 52556097 China 2020-12-28 Company

– VI-32 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Application Place of Application No. Trademark Applicant Category Number Registration Date

26 The 30 52535748 China 2020-12-28 Company 27 The 30 46259145 China 2020-05-13 Company 28 The 31 50196824 China 2020-09-30 Company 29 The 31 41876832 China 2019-10-25 Company 30 The 31 52547933 China 2020-12-28 Company 31 The 31 52535457 China 2020-12-28 Company 32 The 31 46283416 China 2020-05-13 Company 33 The 31 54696776 China 2021-03-26 Company 34 The 31 54679801 China 2021-03-26 Company 35 The 32 50226873 China 2020-09-30 Company 36 The 32 41875973 China 2019-10-25 Company

37 The 32 41885352 China 2019-10-25 Company 38 The 32 52556493 China 2020-12-28 Company 39 The 32 52524935 China 2020-12-28 Company 40 The 32 41892656 China 2019-10-25 Company

41 The 33 50218958 China 2020-09-30 Company 42 The 33 41879008 China 2019-10-25 Company 43 The 33 41870229 China 2019-10-25 Company

– VI-33 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Application Place of Application No. Trademark Applicant Category Number Registration Date

44 The 33 52535316 China 2020-12-28 Company 45 The 33 52522775 China 2020-12-28 Company 46 The 33 41892686 China 2019-10-25 Company

47 The 35 50223488 China 2020-09-30 Company 48 The 35 52528284 China 2020-12-28 Company 49 The 35 52538283 China 2020-12-28 Company 50 The 35 54681778 China 2021-03-26 Company 51 The 36 41872156 China 2019-10-25 Company

52 The 38 41868957 China 2019-10-25 Company

53 The 40 50230723 China 2020-09-30 Company 54 The 40 52557718 China 2020-12-28 Company 55 The 40 52532780 China 2020-12-28 Company 56 The 40 54695295 China 2021-03-26 Company 57 The 40 54680055 China 2021-03-26 Company 58 The 41 50235831 China 2020-09-30 Company 59 The 41 52517397 China 2020-12-28 Company 60 The 41 52520745 China 2020-12-28 Company 61 The 41 41889355 China 2019-10-25 Company

– VI-34 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Application Place of Application No. Trademark Applicant Category Number Registration Date

62 The 42 41892853 China 2019-10-25 Company

63 The 43 50229636 China 2020-09-30 Company 64 The 43 52514045 China 2020-12-28 Company 65 The 43 52557473 China 2020-12-28 Company 66 The 43 46268882 China 2020-05-13 Company 67 The 43 54674586 China 2021-03-26 Company 68 The 43 54684579 China 2021-03-26 Company 69 The 44 50233846 China 2020-09-30 Company 70 The 44 52557832 China 2020-12-28 Company 71 The 44 52521611 China 2020-12-28 Company 72 The 44 41868769 China 2019-10-25 Company

73 The 44 54678952 China 2021-03-26 Company 74 The 44 54673501 China 2021-03-26 Company 75 The 45 41868794 China 2019-10-25 Company

76 Kaiping 29 54176174 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 77 Kaiping 29 54192630 China 2021-03-10 Jinjiwang Poultry Co., Ltd.

– VI-35 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

Application Place of Application No. Trademark Applicant Category Number Registration Date

78 Kaiping 29 54200996 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 79 Kaiping 29 54179758 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 80 Kaiping 29 54179204 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 81 Kaiping 29 54190997 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 82 Kaiping 29 54187513 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 83 Kaiping 29 21150219 China 2016-08-30 Jinjiwang Poultry Co., Ltd. 84 Kaiping 31 54187643 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 85 Kaiping 31 54183694 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 86 Kaiping 31 54177666 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 87 Kaiping 31 54197459 China 2021-03-10 Jinjiwang Poultry Co., Ltd.

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Application Place of Application No. Trademark Applicant Category Number Registration Date

88 Kaiping 31 54192224 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 89 Kaiping 31 54200940 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 90 Kaiping 31 54179236 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 91 Kaiping 31 21150197 China 2016-08-30 Jinjiwang Poultry Co., Ltd. 92 Kaiping 35 54192204 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 93 Kaiping 35 54203227 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 94 Kaiping 35 54187665 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 95 Kaiping 35 54175704 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 96 Kaiping 35 54172390 China 2021-03-10 Jinjiwang Poultry Co., Ltd. 97 Kaiping 35 54172424 China 2021-03-10 Jinjiwang Poultry Co., Ltd.

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Application Place of Application No. Trademark Applicant Category Number Registration Date

98 Kaiping 35 54177022 China 2021-03-10 Jinjiwang Poultry Co., Ltd.

(b) Patents

As at the Latest Practicable Date, the Group had registered the following patents which, in the opinion of the Directors, are material to the business:

Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

1 ZL201610160898.8 A type of Invention The Company China 2016.03.21 systematic method for selection and breeding of nucleus-herd purebred sows 2 ZL201720705017.6 A type of constant- Utility The Company China 2017.06.16 temperature model breeding house water supply system 3 ZL202020615756.8 A type of chick Utility The Company China 2020.11.10 house with model negative-pressure dust reduction and ventilation 4 ZL201820636732.3 A multi-level Utility Xishui Dekon China 2018.04.28 circular waste- model Agriculture and water treatment Animal Husbandry device of pig Co., Ltd. houses 5 ZL201521123755.7 Warmth-retention Utility Xishui Dekon China 2015.12.31 sprung roof model Agriculture and Animal Husbandry Co., Ltd.

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

6 ZL201520242442.7 A pig-house Utility Xishui Dekon China 2015.04.21 ventilation system model Agriculture and Animal Husbandry Co., Ltd. 7 ZL201520242476.6 A type of pig house Utility Xishui Dekon China 2015.04.21 model Agriculture and Animal Husbandry Co., Ltd. 8 ZL201520242620.6 A type of pig-house Utility Xishui Dekon China 2015.04.21 ventilation system model Agriculture and Animal Husbandry Co., Ltd. 9 ZL201520242753.3 Anti-bagging device Utility Xishui Dekon China 2015.04.21 model Agriculture and Animal Husbandry Co., Ltd. 10 ZL201520093313.6 A type of feed Utility Xishui Dekon China 2015.02.10 dispenser model Agriculture and Animal Husbandry Co., Ltd. 11 ZL201520089631.5 Feed sanitising Utility Xishui Dekon China 2015.02.09 room model Agriculture and Animal Husbandry Co., Ltd. 12 ZL201810444559.1 Feed with Chinese Invention Xishui Dekon China 2018.05.10 traditional Agriculture and medicine for Animal Husbandry infant pigs Co., Ltd. 13 ZL201510712465.4 A type of feed for Invention Songtao Dekon China 2015.10.28 7-day to 30-day Agricultural and old piglets and Animal Husbandry the preparation Co., Ltd. and raising method thereof 14 ZL201410251519.7 A type of Invention Songtao Dekon China 2014.06.09 management Agricultural and method of feed Animal Husbandry for farrowing Co., Ltd. sows

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

15 ZL201520695383.9 A type of pig ring Utility Songtao Dekon China 2015.09.10 structure model Agricultural and Animal Husbandry Co., Ltd. 16 ZL201520698759.1 A type of pig ring Utility Songtao Dekon China 2015.09.10 used in pig farms model Agricultural and Animal Husbandry Co., Ltd. 17 ZL201520698808.1 A type of auto- Utility Songtao Dekon China 2015.09.10 cleaning pig ring model Agricultural and Animal Husbandry Co., Ltd. 18 ZL201520698809.6 A type of anti- Utility Songtao Dekon China 2015.09.10 pollution pig ring model Agricultural and Animal Husbandry Co., Ltd. 19 ZL201520691882.0 A type of waste- Utility Songtao Dekon China 2015.09.09 water treatment model Agricultural and image monitoring Animal Husbandry device based on Co., Ltd. power line carrier 20 ZL201520691884.X A type of level-3 Utility Songtao Dekon China 2015.09.09 biogas model Agricultural and fermentation real- Animal Husbandry time audio- Co., Ltd. monitoring device based on power line carrier 21 ZL201520691885.4 A type of level-3 Utility Songtao Dekon China 2015.09.09 biogas model Agricultural and fermentation real- Animal Husbandry time water Co., Ltd. pressure monitoring device based on power line carrier 22 ZL201520691896.2 A type of waste- Utility Songtao Dekon China 2015.09.09 water treatment model Agricultural and real-time audio- Animal Husbandry monitoring device Co., Ltd. based on power line carrier

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

23 ZL201520691898.1 A type of waste- Utility Songtao Dekon China 2015.09.09 water treatment model Agricultural and audio-monitoring Animal Husbandry device based on Co., Ltd. power line carrier 24 ZL201520691900.5 A type of level-2 Utility Songtao Dekon China 2015.09.09 biogas model Agricultural and fermentation real- Animal Husbandry time water Co., Ltd. temperature monitoring device based on power line carrier 25 ZL201520691972.X A type of level-2 Utility Songtao Dekon China 2015.09.09 biogas model Agricultural and fermentation real- Animal Husbandry time water Co., Ltd. pressure monitoring device based on power line carrier 26 ZL201520694464.7 A type of level-2 Utility Songtao Dekon China 2015.09.09 biogas model Agricultural and fermentation real- Animal Husbandry time audio- Co., Ltd. monitoring device based on power line carrier 27 ZL201520694599.3 A type of level-3 Utility Songtao Dekon China 2015.09.09 biogas model Agricultural and fermentation real- Animal Husbandry time ultrasound- Co., Ltd. monitoring device based on power line carrier

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

28 ZL201520694652.X A type of level-3 Utility Songtao Dekon China 2015.09.09 biogas model Agricultural and fermentation real- Animal Husbandry time water Co., Ltd. temperature monitoring device based on power line carrier 29 ZL201520694719.X A type of water- Utility Songtao Dekon China 2015.09.09 pressure model Agricultural and monitoring device Animal Husbandry for waste-water Co., Ltd. treatment equipment based on power line carrier 30 ZL201520694749.0 A type of water- Utility Songtao Dekon China 2015.09.09 treatment real- model Agricultural and time image- Animal Husbandry monitoring device Co., Ltd. based on power line carrier 31 ZL201520694819.2 A type of Utility Songtao Dekon China 2015.09.09 monitoring device model Agricultural and for waste-water Animal Husbandry treatment based Co., Ltd. on power line carrier 32 ZL201520694844.0 A type of water- Utility Songtao Dekon China 2015.09.09 temperature model Agricultural and monitoring device Animal Husbandry for waste-water Co., Ltd. treatment equipment based on power line carrier

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

33 ZL201520694858.2 A type of waste- Utility Songtao Dekon China 2015.09.09 water treatment model Agricultural and real-time water- Animal Husbandry temperature Co., Ltd. monitoring device based on power line carrier 34 ZL201520694865.2 A type of waste- Utility Songtao Dekon China 2015.09.09 water treatment model Agricultural and real-time water- Animal Husbandry pressure Co., Ltd. monitoring device based on power line carrier 35 ZL201520595281.X A type of pig-house Utility Songtao Dekon China 2015.08.10 auto diverter model Agricultural and structure Animal Husbandry Co., Ltd. 36 ZL201520596757.1 A type of pig feed Utility Songtao Dekon China 2015.08.10 blending device model Agricultural and Animal Husbandry Co., Ltd. 37 ZL201520596836.2 A type of pig-house Utility Songtao Dekon China 2015.08.10 feed-dispensing model Agricultural and system Animal Husbandry Co., Ltd. 38 ZL201520596840.9 A type of separated Utility Songtao Dekon China 2015.08.10 pig trough model Agricultural and Animal Husbandry Co., Ltd. 39 ZL201520596896.4 A type of pig-house Utility Songtao Dekon China 2015.08.10 feed-diverting model Agricultural and structure Animal Husbandry Co., Ltd. 40 ZL201921123951.2 A type of pig Utility Songtao Dekon China 2019.07.17 trough that model Agricultural and prevents rooting Animal Husbandry Co., Ltd. 41 ZL201921134299.4 A type of energy- Utility Songtao Dekon China 2019.07.17 efficient heating model Agricultural and delivery device Animal Husbandry for pig houses Co., Ltd.

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

42 ZL201921119834.9 A type of pig house Utility Songtao Dekon China 2019.07.17 with air model Agricultural and purification Animal Husbandry structure Co., Ltd. 43 ZL201921178928.3 A type of multi- Utility Songtao Dekon China 2019.07.25 angle adjustable model Agricultural and spray cleaning Animal Husbandry device for pig Co., Ltd. houses 44 ZL201921127324.6 A type of pig house Utility Songtao Dekon China 2019.07.17 with circular model Agricultural and ventilation Animal Husbandry structure Co., Ltd. 45 ZL201921184423.8 A type of separated Utility Songtao Dekon China 2019.07.25 pig house stool model Agricultural and collection device Animal Husbandry Co., Ltd. 46 ZL201921178719.9 A type of fast Utility Songtao Dekon China 2019.07.25 dispensing pig model Agricultural and feed blending Animal Husbandry device Co., Ltd. 47 ZL201921179768.4 A type of pig house Utility Songtao Dekon China 2019.07.25 ventilation device model Agricultural and Animal Husbandry Co., Ltd. 48 ZL201921690058.8 A type of easily Utility Qianxi South Dekon China 2019.10.10 cleanable pig model Husbandry Co., cage Ltd. 49 ZL201921690056.9 A type of pig Utility Qianxi South Dekon China 2019.10.10 weight scale model Husbandry Co., device with Ltd. protective functions 50 ZL201921690170.1 A type of low- Utility Qianxi South Dekon China 2019.10.10 morbidity model Husbandry Co., domestic piglet Ltd. growing ring 51 ZL201921689804.1 A type of concaved Utility Qianxi South Dekon China 2019.10.10 pig house that model Husbandry Co., facilitates stool Ltd. collection

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

52 ZL201921662754.8 A type of multi- Utility Qianxi South Dekon China 2019.09.30 level ventilated model Husbandry Co., stereoscopic pig Ltd. house 53 ZL201921663385.4 A type of Utility Qianxi South Dekon China 2019.09.30 multifunction model Husbandry Co., delivery bed for Ltd. sows and piglets 54 ZL201921663331.8 A type of multi- Utility Qianxi South Dekon China 2019.09.30 angle insect- model Husbandry Co., trapping device Ltd. 55 ZL201921690059.2 A type of pig cage Utility Qianxi South Dekon China 2019.10.10 that facilitates model Husbandry Co., collective caging Ltd. 56 ZL201921663333.7 A type of pig house Utility Qianxi South Dekon China 2019.09.30 that can change model Husbandry Co., in size for pigs at Ltd. different growing stages 57 ZL201921663383.5 A type of adjustable Utility Qianxi South Dekon China 2019.09.30 pig house sun model Husbandry Co., shed Ltd. 58 ZL201921597850.9 A type of mobile Utility Qianxi South Dekon China 2019.09.24 pig house model Husbandry Co., Ltd. 59 ZL201921597618.5 A type of mobile Utility Qianxi South Dekon China 2019.09.24 pig house model Husbandry Co., epidemic- Ltd. prevention water- spraying pipeline 60 ZL201921587559.3 A type of efficient Utility Qianxi South Dekon China 2019.09.24 pig ring insect model Husbandry Co., repellent Ltd. 61 ZL201921597736.6 A type of piglet Utility Qianxi South Dekon China 2019.09.24 fixing device for model Husbandry Co., vaccination Ltd. 62 ZL201921597848.1 A type of heating Utility Qianxi South Dekon China 2019.09.24 floor for pig model Husbandry Co., houses Ltd. 63 ZL201821279083.2 A type of intelligent Utility Anshun Dekon China 2018.08.09 barn for pig model Husbandry Limited raising

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

64 ZL201821270891.2 A type of pig house Utility Anshun Dekon China 2018.08.08 walls with quick- model Husbandry Limited release structure 65 ZL201821264810.8 A type of Utility Anshun Dekon China 2018.08.07 multifunction model Husbandry Limited auto-cleaning device for pig houses and pig rings 66 ZL201821265965.3 A type of anti- Utility Anshun Dekon China 2018.08.07 pollution delivery model Husbandry Limited bed for farrowing breeding pigs 67 ZL201821266286.8 A type of auto feed Utility Anshun Dekon China 2018.08.07 dispenser that model Husbandry Limited improves structural pig farming 68 ZL201621042666.4 A type of pig ring Utility Anshun Dekon China 2016.09.08 for farming model Husbandry Limited 69 ZL201621043028.4 A type of intelligent Utility Anshun Dekon China 2016.09.08 water-drinking model Husbandry Limited device for pigs 70 ZL201520966468.6 A type of Utility Anshun Dekon China 2015.11.30 multifunction pig model Husbandry Limited pen device 71 ZL201520957911.3 A type of pig house Utility Anshun Dekon China 2015.11.27 with cleaning and model Husbandry Limited soaking device 72 ZL201520959409.6 Breastfeeding Utility Anshun Dekon China 2015.11.27 device for piglets model Husbandry Limited 73 ZL201520952752.8 A type of device for Utility Anshun Dekon China 2015.11.26 leveling piglet model Husbandry Limited smells 74 ZL201520946957.5 A type of auto- Utility Anshun Dekon China 2015.11.25 feeding tank for model Husbandry Limited pig farming 75 ZL201520951541.2 Material tank Utility Anshun Dekon China 2015.11.25 control device model Husbandry Limited 76 ZL201520944271.2 A type of adjustable Utility Anshun Dekon China 2015.11.24 shoe dryer model Husbandry Limited

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

77 ZL201520932686.8 A type of sweat- Utility Anshun Dekon China 2015.11.23 absorbing insole model Husbandry Limited 78 ZL201410233468.5 A type of breeding Invention Anshun Dekon China 2014.05.29 pig cleaning Husbandry Limited method 79 ZL201410169916.X A type of method of Invention Anshun Dekon China 2014.04.25 breeding pig Husbandry Limited farming and breeding 80 ZL201420281500.2 A type of sow Utility Anshun Dekon China 2014.05.29 delivery bed model Husbandry Limited 81 ZL201420285633.7 A new type of Utility Anshun Dekon China 2014.05.30 breeding pig farm model Husbandry Limited 82 ZL201410236126.9 A type of collective Invention Guiyang Dekon China 2014.05.30 pressured Husbandry Co., flushing and Ltd. sanitising system 83 ZL201621220418.4 A type of auto- Utility Guiyang Dekon China 2016.11.14 feeding device model Husbandry Co., for pig farming Ltd. feed 84 ZL201621214701.6 A type of circular Utility Guiyang Dekon China 2016.11.11 pig house model Husbandry Co., cleaning system Ltd. 85 ZL201621207489.0 A type of pig farm Utility Guiyang Dekon China 2016.11.09 auto-feeding model Husbandry Co., device Ltd. 86 ZL201921124030.8 A type of slide-rail Utility Guiyang Dekon China 2019.07.17 spray cleaning model Husbandry Co., device for pig Ltd. houses 87 ZL201921124422.4 A type of multi- Utility Guiyang Dekon China 2019.07.17 level feed model Husbandry Co., ingredient blender Ltd. 88 ZL201921177013.0 A type of multi- Utility Guiyang Dekon China 2019.07.25 channel loading model Husbandry Co., machine for feed Ltd. ingredient sorting 89 ZL201921177012.6 A type of piglet Utility Guiyang Dekon China 2019.07.25 grabbing device model Husbandry Co., for swine disease Ltd. testing

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

90 ZL201921124078.9 A type of multi- Utility Guiyang Dekon China 2019.07.17 compartment cart model Husbandry Co., for transporting Ltd. piglets 91 ZL201921124077.4 A type of pig semen Utility Guiyang Dekon China 2019.07.17 freezing storage model Husbandry Co., device Ltd. 92 ZL201921124004.5 A type of training Utility Guiyang Dekon China 2019.07.17 device to promote model Husbandry Co., muscle growth in Ltd. piglets 93 ZL201921124080.6 A type of pig hair Utility Guiyang Dekon China 2019.07.17 spay cleaning model Husbandry Co., device Ltd. 94 ZL201921177011.1 A type of protective Utility Guiyang Dekon China 2019.07.25 fixing device for model Husbandry Co., piglet disease Ltd. testing 95 ZL201921175514.5 A type of spiral pig Utility Guiyang Dekon China 2019.07.25 feed adding model Husbandry Co., device Ltd. 96 ZL201510111907.X A type of molecular Invention Guangdong China 2015.03.13 testing method Wizagricultural for identifying Science & chicken feed Technology Co., utilisation Ltd. efficiency was well as its application and test kits 97 ZL201510030339.0 A type of storage Invention Guangdong China 2015.01.21 method that Wizagricultural increases the Science & hatching rate of Technology Co., black-mane geese Ltd. (烏鬃鵝) which have long egg setting time

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

98 ZL201310714390.4 Molecular markers Invention Guangdong China 2013.12.20 for the antibody Wizagricultural level of Science & Newcastle disease Technology Co., in chickens and Ltd. its identification method and application 99 ZL201210246014.2 A type of method to Invention Guangdong China 2012.07.16 acquire purebreds Wizagricultural when hens are Science & mated with Technology Co., different cocks Ltd. 100 ZL201010557295.4 A type of testing Invention Guangdong China 2010.11.24 for genetic Wizagricultural mutation Science & Technology Co., Ltd. 101 ZL201010531819.2 A type of molecular Invention Guangdong China 2010.11.04 marker related to Wizagricultural chicken skin Science & color and its Technology Co., identification Ltd. method and application 102 ZL200910038749.4 A type of utilisation Invention Guangdong China 2009.04.17 method of Wizagricultural dominant muff Science & and beard gene Technology Co., tags Ltd. 103 ZL200910038750.7 A type of local Invention Guangdong China 2009.04.17 chicken Wizagricultural production Science & method and its Technology Co., use Ltd. 104 ZL201320809032.7 A type of chicken Utility Guangdong China 2013.12.10 breeder feeder model Wizagricultural with trough- Science & cleaning Technology Co., functions Ltd. 105 ZL201730553137.4 Rings (leg rings) Exterior Kaiping Jinjiwang China 2017.11.10 design Poultry Co., Ltd.

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

106 ZL201921164113.X A type of protective Utility Taijiang Dekon China 2019.07.23 pig house for model Husbandry Co., farrowing sows Ltd. 107 ZL201921080690.0 A type of pig feed Utility Taijiang Dekon China 2019.07.11 fining and model Husbandry Co., grinding machine Ltd. 108 ZL201921078931.8 A type of farming Utility Taijiang Dekon China 2019.07.11 ring with insect model Husbandry Co., repellent Ltd. functions 109 ZL201921164114.4 A type of anti- Utility Taijiang Dekon China 2019.07.23 trample sow model Husbandry Co., feeding pig house Ltd. 110 ZL201921080661.4 A type of spiral and Utility Taijiang Dekon China 2019.07.11 multi-level pork model Husbandry Co., fresh-keeping Ltd. device 111 ZL201921237840.4 A type of multi- Utility Taijiang Dekon China 2019.08.01 level pig house model Husbandry Co., Ltd. 112 ZL201921080758.5 A type of swing- Utility Taijiang Dekon China 2019.07.11 open pig house model Husbandry Co., protective barrier Ltd. 113 ZL201921237356.1 A type of movable Utility Taijiang Dekon China 2019.08.01 feed adding model Husbandry Co., addition tank for Ltd. animal feed 114 ZL201921080634.7 A type farm stool Utility Taijiang Dekon China 2019.07.11 collection and model Husbandry Co., treatment device Ltd. 115 ZL201921164279.1 A type of stool Utility Taijiang Dekon China 2019.07.23 shaving device model Husbandry Co., that cleans Ltd. dropping board 116 ZL201921164115.9 A type of multi- Utility Taijiang Dekon China 2019.07.23 level piglet model Husbandry Co., confinement Ltd. rearing pig house 117 ZL201921164276.8 A type of dropping Utility Taijiang Dekon China 2019.07.23 board to divert model Husbandry Co., solid and liquid Ltd. manure

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

118 ZL201921237837.2 A type of multi- Utility Taijiang Dekon China 2019.08.01 layer partitioned model Husbandry Co., pig trough Ltd. 119 ZL201921237746.9 A type of multi- Utility Taijiang Dekon China 2019.08.01 level pig hair model Husbandry Co., drying device Ltd. 120 ZL201921237702.6 A type of pig farm Utility Taijiang Dekon China 2019.08.01 with energy- model Husbandry Co., efficient Ltd. ventilation function 121 ZL201921273986.4 A type of water- Utility Zhenning Dekon China 2019.08.07 saving domestic model Husbandry Co., pig water-feeding Ltd. device 122 ZL201921265248.5 A type of water- Utility Zhenning Dekon China 2019.08.06 feeding device model Husbandry Co., that can adjust Ltd. water levels 123 ZL201921273570.2 A type of pig Utility Zhenning Dekon China 2019.08.07 trough that handy model Husbandry Co., for adding Ltd. medicine for diseased pigs 124 ZL201921273823.6 A type of pig Utility Zhenning Dekon China 2019.08.07 trough that can model Husbandry Co., adjust feed Ltd. amount 125 ZL201921265878.2 A type of spiral pig Utility Zhenning Dekon China 2019.08.06 head shaving model Husbandry Co., device Ltd. 126 ZL201921265200.4 A type of pig Utility Zhenning Dekon China 2019.08.06 manure collection model Husbandry Co., bin equipped with Ltd. pressure release structure 127 ZL201921265198.0 A type of fully- Utility Zhenning Dekon China 2019.08.06 enclosed model Husbandry Co., livestock Ltd. machinery sanitation device

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

128 ZL201921265148.2 A type of spiral pig Utility Zhenning Dekon China 2019.08.06 house that can model Husbandry Co., increase the Ltd. amount of exercise for domestic pigs 129 ZL201921265933.8 A type of split-type Utility Zhenning Dekon China 2019.08.06 device that model Husbandry Co., automatically Ltd. removes iron slag in livestock feed processing 130 ZL201921273699.3 A type of Utility Zhenning Dekon China 2019.08.06 pressurisable pork model Husbandry Co., pickling device Ltd. 131 ZL201921273824.0 A type of biogas Utility Zhenning Dekon China 2019.08.07 pool that recycles model Husbandry Co., and reuses pig Ltd. manure 132 ZL201921273825.5 A type of pig pen Utility Zhenning Dekon China 2019.08.07 with lifting model Husbandry Co., partitions Ltd. 133 ZL201921273698.9 A type of livestock Utility Zhenning Dekon China 2019.08.07 liquid medicine model Husbandry Co., pot with feed Ltd. sorting structure 134 ZL201921273988.3 A type of constant- Utility Zhenning Dekon China 2019.08.07 temperature model Husbandry Co., livestock drinking Ltd. bowel 135 ZL201921265249.X A type of spiral Utility Zhenning Dekon China 2019.08.06 feed dispensing model Husbandry Co., device Ltd. 136 ZL201921177133.0 A type of lifting Utility Ziyun Dekon Pig China 2019.07.25 ground-spraying model Farming Co., Ltd. cooling structure in pig houses 137 ZL201921175967.8 A type of livestock Utility Ziyun Dekon Pig China 2019.07.25 paddocks using model Farming Co., Ltd. ecological farming

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

138 ZL201921257180.6 A type of constant- Utility Ziyun Dekon Pig China 2019.08.05 temperature model Farming Co., Ltd. pigsty 139 ZL201921237298.2 A type of floor- Utility Ziyun Dekon Pig China 2019.08.01 spraying hog model Farming Co., Ltd. house cooling system 140 ZL201921237701.1 A type of easy-to- Utility Ziyun Dekon Pig China 2019.08.01 move elevated model Farming Co., Ltd. sow delivery bed 141 ZL201921257324.8 A type of anti- Utility Ziyun Dekon Pig China 2019.08.05 crushing model Farming Co., Ltd. separated piglet incubator 142 ZL201921237703.0 A type of hog house Utility Ziyun Dekon Pig China 2019.08.01 with quick- model Farming Co., Ltd. changing pig barrier 143 ZL201921237750.5 A type of hangable Utility Ziyun Dekon Pig China 2019.08.01 hog house model Farming Co., Ltd. cleansing device 144 ZL201921252918.X A type of boar Utility Ziyun Dekon Pig China 2019.08.05 training device model Farming Co., Ltd. capable of whipping 145 ZL201921257325.2 A type of massage Utility Ziyun Dekon Pig China 2019.08.05 device for sow model Farming Co., Ltd. breeding 146 ZL201921177131.1 A type of solid- Utility Ziyun Dekon Pig China 2019.07.25 liquid integrated model Farming Co., Ltd. piglet feeding device 147 ZL201921237300.6 A type of hog house Utility Ziyun Dekon Pig China 2019.08.01 ventilator with model Farming Co., Ltd. disinfection system 148 ZL201921177015.X A type of filth Utility Ziyun Dekon Pig China 2019.07.25 scraping model Farming Co., Ltd. cleansing equipment for pig trough

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

149 ZL201921177132.6 A type of stool Utility Ziyun Dekon Pig China 2019.07.25 mixture device model Farming Co., Ltd. for pig rings 150 ZL201921237807.1 A type of hog house Utility Ziyun Dekon Pig China 2019.08.01 with adjustable model Farming Co., Ltd. light intake 151 ZL201921175596.3 A type of water Utility Huishui Dekon China 2019.07.25 drinking device model Husbandry Co., for pig rings with Ltd. water purification function 152 ZL201921176204.5 A type of feed Utility Huishui Dekon China 2019.07.25 feeding device model Husbandry Co., for pig farms Ltd. equipped with feed sorting system 153 ZL201921249774.2 A type of pig Utility Huishui Dekon China 2019.08.02 trough preventing model Husbandry Co., pigs from Ltd. trampling on pig feed 154 ZL201921248676.7 A type of hog house Utility Huishui Dekon China 2019.08.02 lamp for model Husbandry Co., concentrated Ltd. treatment of mosquitoes 155 ZL201921257323.3 A type of pig Utility Huishui Dekon China 2019.08.05 breeding shed model Husbandry Co., with fogging and Ltd. cooling system 156 ZL201921252920.7 A type of pig Utility Huishui Dekon China 2019.08.05 trough with model Husbandry Co., sliding track for Ltd. easy refilling 157 ZL201921257176.X A type of feed Utility Huishui Dekon China 2019.08.05 grinding machine model Husbandry Co., with dusting Ltd. system

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

158 ZL201921248680.3 A type of pig fur Utility Huishui Dekon China 2019.08.02 draining device model Husbandry Co., with waste water Ltd. recycling 159 ZL201921248459.8 A type of 360° Utility Huishui Dekon China 2019.08.02 rotatable air- model Husbandry Co., drying stand for Ltd. pork 160 ZL201921177014.5 A type of push-pull Utility Huishui Dekon China 2019.07.25 floor cleansing model Husbandry Co., device for pig Ltd. breeding room 161 ZL201921265821.2 A type of hog house Utility Huishui Dekon China 2019.08.05 with waste model Husbandry Co., recycling device Ltd. 162 ZL201921176205.X A type of pig feed Utility Huishui Dekon China 2019.07.25 mixing device model Husbandry Co., with adjustable Ltd. feed sorting volume 163 ZL201921175513.0 A type of rotary Utility Huishui Dekon China 2019.07.25 feed spraying model Husbandry Co., device Ltd. 164 ZL201921252919.4 A type of double- Utility Huishui Dekon China 2019.08.05 layered trough for model Husbandry Co., pigs to prevent Ltd. feed clumping 165 ZL201921257177.4 A type of anti-feed Utility Huishui Dekon China 2019.08.05 clogging feed model Husbandry Co., trough Ltd. 166 ZL201921676577.9 A type of pig feed Utility Cheheng Dekon China 2019.10.09 grinding device model Husbandry Co., with dust Ltd. filtration 167 ZL201921647999.3 A type of pig Utility Cheheng Dekon China 2019.09.29 delivery bed for model Husbandry Co., breeding and Ltd. nursing 168 ZL201921675055.7 A type of hog house Utility Cheheng Dekon China 2019.10.09 ventilator with air model Husbandry Co., purifying function Ltd.

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

169 ZL201921676205.6 A type of sow Utility Cheheng Dekon China 2019.10.09 farrowing shed model Husbandry Co., with massage Ltd. facility 170 ZL201921676576.4 A type of anti- Utility Cheheng Dekon China 2019.10.09 arching hog model Husbandry Co., house barrier Ltd. 171 ZL201921676579.8 A type of anti-food- Utility Cheheng Dekon China 2019.10.09 snatching pig model Husbandry Co., trough Ltd. 172 ZL201921647845.4 A type of pig stool Utility Cheheng Dekon China 2019.09.29 cleansing device model Husbandry Co., with solid-liquid Ltd. separation function 173 ZL201921647262.1 A type of rotary pig Utility Cheheng Dekon China 2019.09.29 feed mixing model Husbandry Co., device Ltd. 174 ZL201921647996.X A type of sow Utility Cheheng Dekon China 2019.09.29 delivery bed with model Husbandry Co., adjustable activity Ltd. space for sows 175 ZL201921647998.9 A type of Utility Cheheng Dekon China 2019.09.29 temperature model Husbandry Co., control device for Ltd. hog house with hot air circulation 176 ZL201921597739.X A type of four-sided Utility Cheheng Dekon China 2019.09.24 rotating trough model Husbandry Co., for piglets Ltd. 177 ZL201921597617.0 A type of quick- Utility Cheheng Dekon China 2019.09.24 fixing device for model Husbandry Co., piglet castration Ltd. stand 178 ZL201921597738.5 A type of quick Utility Cheheng Dekon China 2019.09.24 cleansing device model Husbandry Co., for breeding pig Ltd. troughs 179 ZL201921597846.2 A type of Utility Cheheng Dekon China 2019.09.24 deworming model Husbandry Co., device for Ltd. breeding pigs

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

180 ZL201921597619.X A type of device to Utility Cheheng Dekon China 2019.09.24 be used in pig model Husbandry Co., breeding pig Ltd. rings to eliminate mosquitoes and flies 181 ZL202021507494.X A type of feed Utility Jiang’an Dekon Feed China 2020.07.28 packaging model Co., Ltd. production line 182 ZL202021507521.3 A type of automatic Utility Jiang’an Dekon Feed China 2020.07.28 stacking device model Co., Ltd. for finished packaged feed 183 ZL202021507495.4 A type of mixing Utility Jiang’an Dekon Feed China 2020.07.28 system for solid model Co., Ltd. and liquid feed material 184 ZL202021509250.5 A type of solid feed Utility Jiang’an Dekon Feed China 2020.07.28 material feeder model Co., Ltd. 185 ZL202021480257.9 A type of selection Utility Jiang’an Dekon Feed China 2020.07.24 device model Co., Ltd. 186 ZL202021478545.0 A type of raw Utility Jiang’an Dekon Feed China 2020.07.24 material sieve model Co., Ltd. plate for feed processing 187 ZL202021482656.9 A type of spreader Utility Jiang’an Dekon Feed China 2020.07.24 plate for liquid model Co., Ltd. feed material 188 ZL202021478553.5 A type of multi- Utility Jiang’an Dekon Feed China 2020.07.24 layer drying model Co., Ltd. device for feed production 189 ZL202021478543.1 A type of feed Utility Jiang’an Dekon Feed China 2020.07.24 processing model Co., Ltd. facility for equalized input of liquid feed 190 ZL202021506930.1 A type of feed pre- Utility Jiang’an Dekon Feed China 2020.07.24 sorting device for model Co., Ltd. solid and liquid feed material

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Patent Patent Place of Application No. Patent number Patent name type Patent holder registration Date

191 ZL202021406420.7 A type of drying Utility Jiang’an Dekon Feed China 2020.07.16 device model Co., Ltd. 192 ZL202021404621.3 A type of feed Utility Jiang’an Dekon Feed China 2020.07.16 quantifying model Co., Ltd. device 193 ZL202021406418.X A type of feeding Utility Jiang’an Dekon Feed China 2020.07.16 facility for feed model Co., Ltd. weighing 194 ZL202021404605.4 A type of cleansing Utility Jiang’an Dekon Feed China 2020.07.16 device for model Co., Ltd. pretreatment of raw feed material 195 ZL202021404610.5 A type of feed Utility Jiang’an Dekon Feed China 2020.07.16 grinding device model Co., Ltd. with adjustable sieve plate

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As at the Latest Practicable Date, we had registered the following patents which, in the opinion of the Directors, are material to our business:

Application Application No. Number Patent Name Applicant Patent type Date

1 CN201810444559.1 Chinese herb Xishui Dekon Invention 2018-05-10 medicine feed for Agriculture and announcement piglets Animal Husbandry Co., Ltd. 2 CN201810462015.8 A type of ventilated Xishui Dekon Invention 2018-05-15 hog house Agriculture and announcement Animal Husbandry Co., Ltd. 3 CN201810405036.6 Harmless ecological Xishui Dekon Invention 2018-04-28 treatment device Agriculture and announcement for dead pigs Animal Husbandry Co., Ltd. 4 CN201810455593.9 Hog house feed Xishui Dekon Invention 2018-05-14 delivery and Agriculture and announcement monitoring device Animal Husbandry Co., Ltd. 5 CN201810405050.6 Hog house automated Xishui Dekon Invention 2018-04-28 water dispensing Agriculture and announcement device Animal Husbandry Co., Ltd. 6 CN201810449877.7 Delivery room with Xishui Dekon Invention 2018-05-11 controlled Agriculture and announcement temperature and Animal Husbandry humidity Co., Ltd. 7 CN201810405062.9 Hog house Xishui Dekon Invention 2018-04-28 wastewater multi- Agriculture and announcement level recycling Animal Husbandry treatment device Co., Ltd. 8 CN201810405156.6 Hog house indoor air Xishui Dekon Invention 2018-04-28 monitoring and Agriculture and announcement warning device Animal Husbandry Co., Ltd. 9 CN201810405164.0 Pig growth smart Xishui Dekon Invention 2018-04-28 monitoring hog Agriculture and announcement house Animal Husbandry Co., Ltd. 10 CN201810402736.X Pig harmless Xishui Dekon Invention 2018-04-28 ecological Agriculture and announcement slaughtering device Animal Husbandry Co., Ltd.

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Application Application No. Number Patent Name Applicant Patent type Date

11 CN201810449879.6 A type of Chinese Xishui Dekon Invention 2018-05-11 herb medicine feed Agriculture and announcement Animal Husbandry Co., Ltd. 12 CN201810451381.3 Pig feed supply Xishui Dekon Invention 2018-05-11 system Agriculture and announcement Animal Husbandry Co., Ltd. 13 CN201810445283.9 A type of feed for Xishui Dekon Invention 2018-05-10 pregnant sows Agriculture and announcement Animal Husbandry Co., Ltd. 14 CN201810451341.9 Feed for postpartum Xishui Dekon Invention 2018-05-11 sows Agriculture and announcement Animal Husbandry Co., Ltd. 15 CN202010323324.4 A type of hatchery Sichuan Dekon Agro- Invention 2020-04-22 negative pressure livestock and food announcement dust fall and fresh Group Co., Ltd. air system 16 CN201910709331.5 A type of smart hog Taijiang Dekon Invention 2019-08-01 house simulating Husbandry Co., announcement ecological farming Ltd. environment 17 CN201910960701.2 A type of farming Qianxi South Dekon Invention 2019-10-10 hog house with Husbandry Co., announcement windbreaking and Ltd. damp-proofing functions 18 CN201910724792.X A type of hog house Zhenning Dekon Invention 2019-08-07 with controlled Husbandry Co., announcement temperature Ltd. through wind circulation 19 CN201910719171.2 A type of automated Ziyun Dekon Pig Invention 2019-08-05 feed dispensing Farming Co., Ltd. announcement device for husbandry with integrated feed sorting and feed delivery 20 CN201910715058.7 A type of energy Huishui Dekon Invention 2019-08-02 conserving Husbandry Co., announcement ecological pig Ltd. farming shed

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Application Application No. Number Patent Name Applicant Patent type Date

21 CN201910952693.7 A type of staged sow Cheheng Dekon Invention 2019-10-09 farrowing device Husbandry Co., announcement and method Ltd. 22 CN201910674353.2 A type of data-based Guiyang Dekon Invention 2019-07-25 recording method Husbandry Co., announcement of market hog Ltd. farming 23 CN201810892352.0 A type of anti- Anshun Dekon Invention 2018-08-07 pollution breeding Husbandry Limited announcement pig farrowing birth bed 24 CN201810901539.2 A type of smart Anshun Dekon Invention 2018-08-09 livestock house for Husbandry Limited announcement pig farming 25 CN201810895473.0 A type of hog house Anshun Dekon Invention 2018-08-08 wall structure Husbandry Limited announcement based on quick- disassembly structure 26 CN201810892659.0 A type of improved Anshun Dekon Invention 2018-08-07 structural Husbandry Limited announcement automated feeding device for pig farming 27 CN201810890485.4 A type of multi- Anshun Dekon Invention 2018-08-07 function automatic Husbandry Limited announcement cleaning device in pig rings 28 CN201610808747.9 A type of Chinese Anshun Dekon Invention 2016-09-08 medicine additive Husbandry Limited announcement for breeding pig feed

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As at the Latest Practicable Date, our Group had registered the following computer software copyrights in the PRC which, in the opinion of our Directors, are material to our business:

Registration Copyright No. Number Copyright Name Owner Date

1 2011SR053930 Feed plant production and Guangdong 2011.08.02 management system Wizagricultural Science & Technology Co., Ltd 2 2011SR053705 Hatchery production and Guangdong 2011.08.02 management system Wizagricultural Science & Technology Co., Ltd 3 2011SR053830 Company and farmers Guangdong 2011.08.02 integrated farming Wizagricultural consolidated management Science & system Technology Co., Ltd 4 2011SR053907 Quality broiler breeding data Guangdong 2011.08.02 management and analysis Wizagricultural system Science & Technology Co., Ltd 5 2017SR529988 Livestock farm anaerobic Guiyang 2017.09.20 waste liquid ecological Dekon recycling treatment and Husbandry utilization system Co., Ltd. 6 2017SR529858 Livestock farming wastewater Guiyang 2017.09.20 treatment bio- Dekon electrochemical degradation Husbandry system Co., Ltd. 7 2017SR529853 Livestock farm house Guiyang 2017.09.20 environmental control Dekon system Husbandry Co., Ltd.

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Registration Copyright No. Number Copyright Name Owner Date

8 2017SR529849 Livestock farming wastewater Guiyang 2017.09.20 treatment system Dekon Husbandry Co., Ltd.

As at the Latest Practicable Date, our Group had registered the following works copyrights in the PRC which, in the opinion of our Directors, are material to our business:

Registration Registration No. Number Copyright Name Owner Date

1 Guo Zuo Deng Zi Feng (abstract graph) Chongqing 2014.05.05 -2014-F-00135905 Dekon

(d) Domain name

As at the Latest Practicable Date, our Group owned the following domain names in the PRC which, in the opinion of our Directors, are material to our business:

No. Domain Name Expiry Date Registered Owner

1 dekongroup.cn 2029.08.15 The Company 2 dekanggroup.com.cn 2029.08.15 The Company 3 dekanggroup.cn 2029.08.15 The Company 4 dekanggroup.com 2029.08.15 The Company

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FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND SUBSTANTIAL SHAREHOLDERS

3. Directors

Disclosure of interests – Interests and short positions of the Directors, Supervisors and the chief executives of our Company in the registered share capital of our Company

Immediately following completion of the [REDACTED] and assuming that the [REDACTED] is not exercised, the interests or short positions of our Directors or chief executives of our Company in the Shares, underlying Shares and debentures of our Company or its associated corporations (within the meaning of Part XV of the SFO) which (a) will be required to notify to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or (b) which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (c) which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to our Company and the Stock Exchange, once the H Shares are listed will be as follows:

Interest in our Company

Approximate Approximate percentage of percentage of shareholding in shareholding in the total share Number of the relevant capital of our Shares held class of Shares Company Class of Shares immediately immediately immediately Director/ Nature of held after the after the after the after the Supervisor Interest(1) [REDACTED] [REDACTED] [REDACTED](2) [REDACTED](3)

Mr. Hu Wei (胡偉) Beneficial Domestic shares [REDACTED][REDACTED][REDACTED] owner(L) Mr. Wang Dehui Beneficial Domestic shares [REDACTED][REDACTED][REDACTED] (王德輝) owner(L) Interests of Domestic shares [REDACTED][REDACTED][REDACTED] controlled corporations (L)(1) Mr. Yao Hailong Beneficial Domestic shares [REDACTED][REDACTED][REDACTED] (姚海龍) owner(L)

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Interests in Domestic shares [REDACTED][REDACTED][REDACTED] the Employee Shareholding Platforms(L) Mr. Zeng Min (曾民) Interests in Domestic shares [REDACTED][REDACTED][REDACTED] the Employee Shareholding Platforms(L)

Notes:

(1) Sichuan Dinghui Ronghe Enterprise Management Co., Ltd.* (四川鼎輝榮和企業管理有限公司), which is wholly-owned by Mr. Wang Dehui (王德輝), is the general partner of the employee shareholding platform Zhongcheng Jinyi and Tongchuang Deheng, which held 9,469,072 Shares and 1,723,413 Shares, respectively, as at the Latest Practicable Date, and he exercises his voting rights uniformly to exercise the voting rights of the shares of the Company.

(2) The letter “L” denotes the person’s long position in our Shares.

(3) The calculation is based on the percentage of shareholding in Domestic Shares after the [REDACTED].

(4) The calculation is based on the total number of [REDACTED] Shares in issue after the [REDACTED].

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4. Substantial shareholders

Save as disclosed in “Substantial Shareholders”, our Directors are not aware of any other person who will, immediately following the [REDACTED], have interests or short positions in our Shares or underlying Shares which would be required to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, directly or indirectly, be interested in 10% or more of the nominal value of any class of share capital carrying the rights to vote in all circumstances at general meetings of our Company.

5. Further information about our Directors and Supervisors

(a) Particulars of service contracts and letters of appointment

Pursuant to Rules 19A.54 and 19A.55 of the Listing Rules, each of our Directors and Supervisors has entered into a service contract or letter of appointment with our Company. The principal particulars of these service contracts and the letters of appointment are (i) for an initial fixed term of three years commencing from the date of appointment; and (ii) subject to termination in accordance with their respective terms. The service contracts and letters of appointment may be renewed in accordance with our Articles of Association and the applicable laws, rules and regulations from time to time.

Save as disclosed above, none of our Directors or Supervisors has entered, or is proposed to enter a service contract with any member of our Group (other than contracts expiring or determinable by the employer within one year without the payment of compensation (other than statutory compensation)).

(b) Remuneration of Directors and Supervisors

The aggregate amount of remuneration (including salaries, allowances and benefits in kind, discretionary bonuses, Share-based payments and retirement scheme contributions) paid to our Directors and Supervisors for 2018, 2019 and 2020 was approximately, RMB1,458,000, RMB5,079,000 and RMB7,544,000, respectively.

Save as disclosed above, no other payments have been paid or are payable by the Group to the Directors and Supervisors in respect of the years ended 31 December 2018, 2019 and 2020.

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There is no arrangement under which any Director or Supervisor has waived or agreed to waive future emoluments, nor has there been any waiver of emoluments by any Director or Supervisor during the current financial year.

According to the currently effective arrangements, the Directors and Supervisors will be entitled to receive an aggregate remuneration (including s salaries, allowances, benefits in kind, discretionary bonuses, Share-based payments and retirement scheme contributions) of approximately RMB 9.6 million for the year ending 31 December 2021.

Each of the Directors and Supervisors is entitled to reimbursement for all reasonable expenses properly incurred in the performance of his or her duties.

6. Agency Fees or Commissions Paid or Payable

Save as disclosed in “[REDACTED]”, no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any share or loan capital of the Company or any of the subsidiaries within the two years ended on the date of this [REDACTED].

7. Related Party Transactions

Details of the related party transactions are set out in note 37 to the Accountants’ Report.

8. Disclaimers

Save as disclosed in this [REDACTED]:

a. taking no account of any Shares which may be taken up or acquired under the [REDACTED] or upon the exercise of the [REDACTED], our Directors are not aware of any person who will, immediately following the completion of the [REDACTED], have an interest or a short position in Shares or underlying Shares which would fall to be disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who will, directly or indirectly, be interested in 10% or more of the issued voting shares of any member of our Group;

b. none of our Directors, Supervisors or members of senior management of our Company has any interest or short position in our shares, underlying shares or debentures of our Company or any of its associated corporation (within the meaning of the SFO) which will have to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required to be notified to our Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers once the Shares are listed on the Stock Exchange;

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c. none of our Directors, Supervisors or the experts named in [“– Other Information – 16. Consents of Experts”] in this Appendix has any direct or indirect interest in the promotion of our Company, or in any assets acquired or disposed of by or leased to, any member of our Group within the two years immediately preceding the date of this [REDACTED], or which are proposed to be acquired or disposed of by or leased to any member of our Group;

d. none of our Directors, Supervisors or the experts named in “– Other Information – 16. Consents of Experts” in this Appendix is materially interested in any contract or arrangement subsisting at the date of this [REDACTED] which is significant in relation to the business of our Group taken as a whole;

e. none of our Directors or Supervisors has an existing or proposed service contracts with any member of our Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation));

f. none of the experts listed in “Other Information – 16. Consents of Experts” in this Appendix has any shareholding in any member of our Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member in our Group;

g. save for the [REDACTED], none of the parties listed in “– Other Information – 16. Consents of Experts” in this Appendix:

(i) is interested legally or beneficially in any of our Shares or any shares of any of our subsidiaries; or

(ii) has any right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe securities in any member of our Group;

h. so far as is known to our Directors and save as disclosed in this [REDACTED], as at the Latest Practicable Date, none of our Directors, their respective close associates or Shareholders of our Company who are interested in more than 5% of the issued share capital of our Company has any interests in the five largest customers or the five largest suppliers of our Group; and

i. none of the Directors or Supervisors is interested in any business (other than the business of our Group) which competes or is likely to compete, directly or indirectly, with our business.

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OTHER INFORMATION

9. Estate duty

Our Directors have been advised that no material liability for estate duty is likely to fall on our Company or any of our subsidiaries.

10. Indemnity undertaking

The Controlling Shareholders have given the indemnity undertaking in favour of our Company (being the contract referred to in paragraph (a) of “Further Information about our Business – 1. Summary of material contracts” above) to provide full indemnities in respect of, among other matters, taxation resulting from income, profits or gains earned, accrued or received as well as any economic losses due to historical non-compliance incidents (as mentioned in the section headed “Business” in this [REDACTED]) to which we may be subject and payable on or before the date when the [REDACTED] becomes unconditional.

11. Litigation

As at the Latest Practicable Date, we were not aware of any litigation, arbitration or claim of material importance pending or threatened by or against our Company or any of its subsidiaries or any of our Directors that could have a material adverse effect on the results of operations or financial condition of our Group.

12. Sole Sponsor

The Sole Sponsor has made an application for and on behalf of our Company to the [REDACTED] for the [REDACTED] of, and permission to deal in, the H Shares in issue and to be issued pursuant to the [REDACTED]. All necessary arrangements have been made to enable the H Shares to be admitted into [REDACTED] for clearing and settlement.

The Sole Sponsor satisfies the independence criteria applicable to sponsors as set out in Rule 3A.07 of the Listing Rules. The Sole Sponsor will receive an aggregate of [REDACTED] for acting as the sponsor for the [REDACTED].

13. Preliminary expenses

We have not incurred any material preliminary expense.

14. Promoter

Our promoters are Desheng Ronghe, Chen Yuxin (陳育新), Song Fuxian (宋福賢), CEL Maiming, Tang Jianyuan (唐健源), Peng Benping (彭本平), Wang Degen (王德根), Hu Wei (胡偉), Song Yuanfang (宋遠芳), Chengdu Jiakun, Wang Dehui (王德輝), Liu Guofeng (劉國峰), Chen Yuhe (陳玉和), Yao Hailong (姚海龍), Xu Wei (徐偉), Tang Xiaoping (唐小平). Save as

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15. Qualification of Experts

The qualifications of the experts who have given opinions or advice in this [REDACTED] are as follows:

Name Qualification

Huatai Financial Carrying out Type 1 (dealing in securities), Type 2 (dealing in Holdings (Hong futures contracts), Type 4 (advising on securities), Type 6 Kong) Limited (advising on corporate finance), and Type 9 (asset management) regulated activities (as defined under the SFO) according to the Securities and Futures Ordinance

KPMG Certified Public Accountants Public Interest Entity Auditor registered in accordance with the Financial Reporting Council Ordinance

Frost & Sullivan Industry Consultant

Beijing Kangda Law PRC Legal Adviser Firm

Jones Lang LaSalle Biological Asset Valuer Corporate Appraisal and Advisory Limited

16. Consents of Experts

Each of the experts listed in “Other Information – 15. Qualification of Experts” in this Appendix has given and has not withdrawn its respective written consents to the issue of this [REDACTED] within the inclusion of its reports and/or letters and/or opinions and/or the references to its name included herein the form and context in which it is respectively included.

None of the experts named in paragraph 15 above has any shareholding interests in the Group or any right or option (whether legally enforceable or not) to subscribe for, or nominate persons to subscribe for, securities in any member of the Group.

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17. Binding effect

This [REDACTED] shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so far as applicable.

18. Taxation of holders of H Shares

The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty. The current rate chargeable on each of the seller and purchaser is HK$1.00 for every HK$1,000 (or part thereof) of the consideration or, if higher, the fair value of the H Shares being sold or transferred. Subject to the completion of the legislative process to increase the stamp duty rate, the rate chargeable on each of the seller and purchaser will be increased with effect from 1 August 2021 to HK$1.30 for every HK$1,000.

19. Miscellaneous

(i) Save as otherwise disclosed in this [REDACTED], within two years immediately preceding the date of this [REDACTED]:

(aa) no share or loan capital of our Company or any of its subsidiaries has been issued, agreed to be issued or is proposed to be issued fully or partly paid either for cash or for a consideration other than cash;

(bb) no commissions, discounts, brokerages or other special terms have been granted or agreed to be granted in connection with the issue or sale of any share or loan capital of our Company or any of its subsidiaries;

(cc) no commission has been paid or is payable for subscribing or agreeing to subscribe, or procuring or agreeing to procure the subscriptions of any Share in our Company or any of our subsidiaries;

(dd) no share or loan capital of our Company or any of its subsidiaries is under option or is agreed conditionally or unconditionally to be put under option; and

(ee) no amount, securities or benefit has been paid, allotted or given within the two years preceding the date of this [REDACTED] to the promoter nor is any such amount, securities or benefit intended to be paid, allotted or given. None of the Directors is interested in any business which competes or is likely to compete, either directly or indirectly, with our business.

– VI-71 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VI STATUTORY AND GENERAL INFORMATION

(ii) our Directors confirm that there has been no material adverse change in the financial or trading position or prospects of our Group since 31 December 2020 (being the date which the latest audited consolidated financial statements of our Group were made up).

(iii) there is no arrangement under which future dividends are waived or agreed to be waived.

(iv) there has not been any interruption in the business of our Group which may have or has had a significant effect on the financial position of our Group in the 12 months preceding the date of this [REDACTED].

(v) the principal register of members of our Company will be maintained by our [REDACTED] in Hong Kong, [REDACTED]. Unless our Directors otherwise agree, all transfer and other documents of title of H Shares must be lodged for registration with and registered by our [REDACTED] and may not be lodged in the PRC.

(vi) all necessary arrangements have been made to enable the H Shares to be admitted to CCASS for clearing and settlement.

(vii) save as otherwise disclosed in this [REDACTED], there are no founder, management or deferred shares in our Company or any of its subsidiaries.

(viii) save as otherwise disclosed in this [REDACTED], our Company has no outstanding convertible debt securities or debentures.

(ix) no company within our Group is presently listed on any stock exchange or traded on any trading system.

(x) our Company is a joint stock limited company and is subject to the PRC Company Law.

20. Bilingual [REDACTED]

The English language and Chinese language versions of this [REDACTED] are being published separately, in reliance upon the exemption provided under section 4 of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

– VI-72 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG AND AVAILABLE FOR INSPECTION

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to the copy of this [REDACTED] delivered to the Registrar of Companies in Hong Kong for registration include:

(a) a copy of the [REDACTED];

(b) the written consents referred to in the section headed “Statutory and General Information – Other Information – 16. Consents of experts” in Appendix VI to this [REDACTED]; and

(c) a copy of each of the material contracts referred to in the section headed “Statutory and General Information – Further information about our Business – 1. Summary of material contracts” in Appendix VI to this [REDACTED].

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Slaughter and May at 47/F, Jardine House, 1 Connaught Place, Central, Hong Kong, during normal business hours up to and including the date which is 14 days from the date of this [REDACTED]

(a) the Articles of Association;

(b) the Accountants’ Report prepared by KPMG, the text of which is set out in Appendix I to this [REDACTED];

(c) the report from KPMG in respect of the [REDACTED] financial information, the text of which is set out in Appendix II to this [REDACTED];

(d) the audited consolidated financial statements of our Group for the years ended 31 December 2018, 2019 and 2020;

(e) the material contracts referred to in the section headed “Statutory and General Information – Further information about our Business – 1. Summary of material contracts” in Appendix VI to this [REDACTED];

(f) the service contracts referred to in the section headed “Statutory and General Information – Further Information about our Directors, Supervisors and Substantial Shareholders – 5. Further Information about our Directors and Supervisors – (a) Particulars of service contracts and letters of appointment” in Appendix VI to this [REDACTED];

– VII-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG AND AVAILABLE FOR INSPECTION

(g) the written consents referred to in the section headed “Statutory and General Information – Other Information – 16. Consents of experts” in Appendix VI to this [REDACTED];

(h) the legal opinions issued by Beijing Kangda Law Firm, our PRC Legal Adviser, in respect of certain aspects of our Group and the property interests of our Group;

(i) the valuation report considering the fair values of biological assets belonging to our Group prepared by JLL;

(j) the industry report issued by Frost & Sullivan; and

(k) copies of the following PRC laws, together with the unofficial English translations

thereof:

(i) the PRC Company Law;

(ii) the PRC Securities Law;

(iii) the Mandatory Provisions; and

(iv) the Special Regulations.

– VII-2 –