(Incorporated in the Cayman Islands with limited liability) Stock Code : 01610 Annual 2019 Report CONTENTS Corporate Information 2 Major Events in COFCO Meat in 2019 4 Financial Highlights 7 Chairman’s Statement 8 Management Discussion and Analysis 10 Biographies of Directors and Senior Management 21 Corporate Governance Report 29 Directors’ Report 42 Environmental, Social and Governance Report 61 Independent Auditor’s Report 77 Consolidated Statement of Profit or Loss and 80 Other Comprehensive Income Consolidated Statement of Financial Position 81 Consolidated Statement of Changes in Equity 83 Consolidated Statement of Cash Flows 84 Notes to the Consolidated Financial Statements 86 Financial Summary 169 Investors’ Calendar 170 Glossary 171 Corporate Information Legal Name of the Company Remuneration Committee COFCO Meat Holdings Limited Mr. Li Michael Hankin (Chairman) Mr. Lee Ted Tak Tai Place of Listing and Stock Code Mr. Jiang Guojin The shares of the Company were listed on the Main Board of the Stock Exchange on November 1, 2016 Food Safety Committee Mr. Xu Jianong (Chairman) Stock Code: 1610 Dr. Huang Juhui Ms. Yang Hong Company Website www.cofcomeat.com Auditor Deloitte Touche Tohmatsu Directors Chairman of the Board and Executive Director Legal Advisers Mr. Jiang Guojin Clifford Chance (as to Hong Kong law) Executive Director Principal Banks Mr. Xu Jianong Agricultural Bank of China Limited Beijing Branch of Bank of Communications Co., Ltd. Non-executive Directors Industrial and Commercial Bank of China Limited Ms. Yang Hong Mr. Wolhardt Julian Juul Authorised Representatives Dr. Cui Guiyong Mr. Xu Jianong Mr. Zhou Qi Ms. Chau Hing Ling Mr. Zhang Lei Dr. Huang Juhui Share Registrar and Transfer Office Principal Independent Non-executive Directors Tricor Services (Cayman Islands) Limited Mr. Fu Tingmei P.O. Box 10008, Willow House, Cricket Square Mr. Li Michael Hankin Grand Cayman KY1-1001, Cayman Islands Mr. Lee Ted Tak Tai Dr. Ju Jiandong Hong Kong Branch Tricor Investor Services Limited Joint Company Secretaries Level 54, Hopewell Centre Dr. Zhang Nan 183 Queen’s Road East, Hong Kong Ms. Chau Hing Ling Registered Office Audit Committee Tricor Services (Cayman Islands) Limited Mr. Lee Ted Tak Tai (Chairman) P.O. Box 10008, Willow House, Cricket Square Mr. Fu Tingmei Grand Cayman KY1-1001, Cayman Islands Dr. Cui Guiyong Mr. Li Michael Hankin Nomination Committee Mr. Jiang Guojin (Chairman) Mr. Fu Tingmei Dr. Ju Jiandong 2 COFCO Meat Holdings Limited Corporate Information Principal Place of Business in Hong Kong 33/F, COFCO Tower 262 Gloucester Road Causeway Bay Hong Kong Head Office in the PRC COFCO Fortune Plaza No.8, Chao Yang Men South St. Chao Yang District, Beijing, China Annual Report 2019 3 Major Events in COFCO Meat in 2019 April-May June COFCO Joycome carried out “The Secret of Strong and Stage I of COFCO Meat Jilin Company Project (Phase III) Healthy Kids(萌娃健康強壯的秘密)” online campaign and “Five commenced operation. Phase III of the project is scheduled Checkpoints • Aerospace Quality-Ignited the Space Dreams of to build integrated farming lines from sows to finishing hogs, Children with Aerospace On-Campus (五重守護•航天品質— sow farms for contract farming and nucleus farm, which will 航天科普進校園，點燃學童航天夢)” offline activities in Wuhan increase our annual production capacity to 830,000 hogs and Nanjing respectively, to promote the spirit of learning and 12,000 breeding hogs. Following the commencement of aerospace science in campuses as well as importance of operation of stage I, the total production capacity of the Jilin consuming high-quality, healthy meat, thus creating valuable Company has exceeded 900,000 heads. opportunities for children to learn aerospace science and experience the charm of aerospace technology, and sowing seeds of hope for the “Chinese Dream” and “Aerospace Dream”. July COFCO Joycome invited local families from Wuhan and Nanjing, staff representatives of our partners, front-line factory staffs and outstanding employees to visit the Xichang Satellite Launch Center and the Xichang Military Museum in Sichuan, for them to gain a better understanding of China’s aerospace June development, to witness China’s aerospace dream and the The Phase III (328,400 heads) of the COFCO Meat Chifeng tremendous success achieved so far in the aerospace industry. Company Hog Production Project was put into operation. The project consists of one integrated farming line from sow to finishing hogs and two facilitating sow farms for contract farming. Following the commencement of operation, the total production capacity of the Chifeng Company has exceeded 800,000 heads. 4 COFCO Meat Holdings Limited Major Events in COFCO Meat in 2019 August September The signing ceremony between COFCO Joycome and the COFCO Joycome held the “Safety of the Food, Honor for the Training Bureau of the General Administration of Sport was Country” food festival at the athletes’ canteens of the Training held in Beijing. COFCO Joycome was awarded the title of Bureau of the General Administration of Sport. Through “guaranteed preparation product for competition by national events such as “Serving Meals with Featured Meat” and “Best team athletes of National Sports Training Center (NSTC) (體育• Wishes for the National Day”, COFCO Joycome provided 訓練局國家隊運動員備戰保障產品)” by the Training Bureau of safe and quality meat products for national team athletes the General Administration of Sport. training for competition, to show support and cheer for the Chinese Gymnastics Team in the World Artistic Gymnastics Championships. September Construction of the main structure of COFCO Meat Industrial Park Project (Phase I) in Huanggang, Hubei has been August completed. After the completion of the Huanggang Industrial From August 8 to 18, 2019, The 2nd Youth Games of the PRC Park Project, the scale of slaughtering and meat product was successfully held. After being repeatedly tested, COFCO processing has further expanded. Joycome was selected to supply pork and processed pork products to athletes from all over the country in the athlete villages of the Youth Games, and the quality of the pork products won unanimous acclaim. Annual Report 2019 5 Major Events in COFCO Meat in 2019 October December From October 18 to 27, 2019, the 7th CISM Military World In a cross-industry innovative collaboration with CAR Inc. and Games was successfully held in Wuhan. During the Games, KOL, COFCO Joycome produced the travel and food VLOG COFCO Joycome supplied pork and processed pork products “Watching the rocket launch with COFCO Joycome and CAR to nearly 10,000 athletes from over 100 countries in the Inc.”, taking viewers to witness the great launch of the Long athlete villages. By achieving “zero” accidents during cold March 5 Y3 Rocket. The interactive Vlog has built a brand chain transportation, “zero” stimulant identified in the pork reputation for the Company on Weibo. supplied and “zero” incidents on food quality and safety, COFCO Joycome successfully completed the task of ensuring food supplies for athletes’ canteens in the athlete villages of the CISM Military World Games, and firmly safeguarded the smooth holding of the event. November At the Second China International Import Expo (CIIE), COFCO Meat entered into agreements of intention for purchase with three companies, namely Danish Crown Group and Rioplatense and Arrebeef (both based in Argentina), respectively. Entering into these agreements at the CIIE allowed COFCO Meat to have better interaction with upstream partners, promote the integration of various quality meat resources at home and abroad while furthering its development, and achieve the enrichment of procurement categories, diversification of our international supplier portfolio and sustainable procurement. The Company will introduce premium European pork and South American beef to China to fill the gap of China’s meat protein supply and satisfy the people’s consumption needs for meat. 6 COFCO Meat Holdings Limited Financial Highlights Key operating data 2019 2018 Change (%) Average selling price of finishing hogs (RMB/kg) (1) 16.16 11.56 39.8% Hog production volume (unit: ’000 heads) (1) 1,985 2,550 -22.2% Fresh pork sales volume (unit: ’000 tons) (2) 146 190 -23.3% Branded small-packed fresh pork sales volume (unit: ’000 boxes) (3) 26,426 18,202 45.2% Ratio of revenue from branded business of total fresh pork business (3) 32.0% 30.8% 1.2 percentage points Meat import sales volume (unit: ’000 tons) (4) 179 93 93.3% Key financial data 2019 2018 Before After Before After biological biological biological biological assets assets assets assets fair value fair value fair value fair value adjustments adjustments adjustments adjustments RMB’000 RMB’000 RMB’000 RMB’000 Revenue (5) 11,078,665 11,078,665 7,168,488 7,168,488 Profit for the period (6) 373,406 1,522,223 -216,667 -646,649 Profit attributable to the owners of the Company (7) 424,910 1,573,727 -204,052 -627,667 Basic earnings per share (8) RMB0.1094 RMB0.4033 RMB-0.0523 RMB-0.1609 Notes: 1. With domestic severe epidemic of African swine fever this year, the Group strengthened its capabilities of disease prevention and control under biosecurity system through comprehensive upgrade of related infrastructures to ensure hog supply. Despite the 22.2% year-on-year decrease in hog production volume in 2019, the income and profit from hog production business increased significantly due to the year-on-year increase in average selling price of finishing hogs by 39.8% as a result of decreased hog supply across the country. 2. Affected by the country-wide shortage of hog supply, hog procurement volume of the Group’s fresh pork segment declined. In addition, the Group also increased certain pork inventory strategically. As a result, fresh pork sales volume decreased year on year. 3. “Ratio of revenue from branded business of total fresh pork business” refers to revenue from branded fresh pork divided by total fresh pork revenue.