中粮家佳康(01610) - 2021 - 年度财报

Company Overview and Annual Highlights Corporate Information This section provides key corporate details for COFCO Joycome Foods Limited, including listing information, board composition, and contact details for principal offices and advisors - The company was listed on the Main Board of The Stock Exchange of Hong Kong on November 1, 2016, with the stock code 1610[23] - Mr. Jiang Guojin serves as the Chairman and an executive Director, alongside Mr. Xu Jianong as an executive Director[23] 2021 Highlights The company achieved significant milestones in industrial layout, brand building, and technological upgrades during the year - Became one of the first designated delivery warehouses for live hog futures on the Dalian Commodity Exchange, completing 76% of the market's total deliveries in 2021[24][31] - Capacity continued to expand with the Chifeng Phase IV project adding 552,000 head, the Henan Phase III project completed, and the Jilin slaughtering project (1 million head/year) and a core hog farm (55,200 head/year) commencing operations[26][33][34][35] - Released the "Flaxseed-fed Pork" product group standard and launched related meat products, achieving doubled sales growth for flaxseed-fed pork through a differentiated brand strategy[26][27][30] - Launched a genomic breeding project and imported 1,500 breeding pigs from Denmark to upgrade its breeding technology platform and enhance core competitiveness[28][29] Financial and Operational Summary Financial Summary The company navigated a sharp decline in hog prices by increasing output, though revenue fell due to reduced imports, resulting in a net loss after fair value adjustments 2021 Key Operational Data | Indicator | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Hog Output (thousand head) | 3,437 | 2,046 | +68.0% | | Average Selling Price of Commercial Hogs (RMB/kg) | 18.26 | 32.33 | -43.5% | | Fresh Pork Sales Volume (thousand tons) | 166 | 109 | +52.3% | | Branded Packaged Pork Sales Volume (thousand boxes) | 50,167 | 34,942 | +43.6% | | Imported Meat Sales Volume (thousand tons) | 124 | 356 | -65.2% | 2021 Key Financial Data (RMB'000) | Indicator | 2021 (Before Fair Value Adjustment) | 2021 (After Fair Value Adjustment) | 2020 (After Fair Value Adjustment) | | :--- | :--- | :--- | :--- | | Revenue | 13,227,606 | 13,227,606 | 18,922,112 | | Profit/(Loss) for the Year | 2,353,715 | (483,801) | 4,024,634 | | Profit/(Loss) Attributable to Company Owners | 2,377,819 | (459,697) | 3,995,124 | | Basic Earnings/(Loss) Per Share (RMB) | 0.6094 | (0.1178) | 1.0239 | - The Board of Directors recommended a final dividend of HKD 0.180 per share for 2021, subject to approval at the Annual General Meeting[41] Chairman's Statement The Chairman highlighted strong operational performance and strategic advancements despite market challenges, outlining a focus on cost control and risk management for 2022 - Core business operational capabilities were significantly enhanced, with the breeding business effectively controlling African Swine Fever and the fresh pork business boosting capacity utilization[42] - The full industry chain layout continued to advance, with newly completed projects adding a total of 600,000 head of capacity and a new fresh pork plant in Jilin commencing operations[43] - The meat import business achieved counter-cyclical growth through a differentiated procurement strategy, proactively reducing pork volume while seizing opportunities in beef[43] - The outlook for 2022 focuses on epidemic prevention, cost reduction, optimizing futures hedging, and strengthening risk control across the value chain[43] Management Discussion and Analysis Company Profile The company operates as a leading vertically integrated meat enterprise in China under the COFCO Corporation, with a full industry chain and two core consumer brands - The company is a leading vertically integrated meat enterprise in China, with business covering feed, breeding, slaughtering, fresh pork, processed meat products, and meat imports[44] - The company owns two core brands, "Joycome" for chilled fresh pork and "Maverick" for low-temperature processed meat products, primarily targeting consumer markets in China's first-tier cities[44] Market Overview China's hog market faced oversupply and price declines in 2021, leading to industry-wide losses and capacity reduction while elevating the importance of cost efficiency - In 2021, national live hog output increased by 27.4% and pork production grew by 28.8%, leading to a sharp decline in hog prices and deep industry losses[45] - Amid falling hog prices, industry capacity began to decline, with the national sow inventory decreasing by 5.15% from its peak in June[45] - The normalization of African Swine Fever has raised industry barriers, highlighting the competitive advantages of enterprises leading in cost and efficiency[46] - Pork import volume decreased by 15.5% year-on-year, while beef import volume increased by 9.9%[45] Operating Performance The company achieved solid profitability before biological asset adjustments by leveraging operational efficiencies and innovative strategies across its business segments - During the reporting period, the company achieved an overall net profit of RMB 2.354 billion before fair value adjustments of biological assets[47] Hog Breeding Business The hog breeding segment significantly increased output and controlled costs through refined management, achieving a segment profit of RMB 2.68 billion - Hog output reached 3.437 million head, a year-on-year increase of 68.0%; the average selling price of commercial hogs was RMB 18.26/kg[48] - Effectively controlled breeding costs by strengthening raw material procurement analysis, optimizing feed formulas, and raising sow culling standards[49] - Year-end hog breeding capacity reached 6.021 million head, and approximately 1,500 purebred Danish pigs were imported to secure high-quality genetic resources[50] Fresh Pork Business The fresh pork business expanded its capacity and saw strong sales growth, driven by brand enhancement and successful differentiated product strategies - Fresh pork sales volume reached 166,000 tons, a significant year-on-year increase of 52.3%; packaged pork sales grew by 43.6% to 50.167 million boxes[52] - Brand awareness continued to rise as the "Designated Product for National Team Athletes' Preparation" and a supplier to the Chinese National Weightlifting Team[53] - The differentiated brand strategy proved effective, with the flaxseed-fed pork product achieving doubled sales growth[53] Meat Import Business The meat import business achieved a significant profit turnaround by strategically managing its portfolio and focusing on risk control and end-user clients - Distributed 124,000 tons of imported meat, a year-on-year decrease of 65.2%; segment profit reached RMB 370 million, a turnaround of RMB 906 million from a loss[54] - Strategically reduced pork imports with nearly 100% back-to-back locked-in orders while opportunistically procuring beef, achieving growth in both business volume and profit[54] Financial Review The Group's revenue declined due to reduced imports, but gross margin improved, and expenses were well-controlled, reflecting enhanced operational efficiency - Revenue was RMB 13.228 billion, a year-on-year decrease of 30.1%, primarily due to reduced pork import volume in the meat import business[56] - Gross profit margin before fair value adjustments of biological assets was 26.6%, an increase of 2.8 percentage points year-on-year[57] - Total selling, distribution, and administrative expenses were RMB 771 million, a year-on-year decrease of 17.4%[57] Key Financial Ratios | Indicator | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Return on Equity | -5.3% | 51.1% | | Return on Assets | -2.5% | 21.9% | | Current Ratio | 0.89 | 1.05 | | Net Debt to Equity Ratio | 60.0% | 83.3% | Capital Resources Analysis The Group maintained a strong liquidity position and optimized its capital structure, with a lower debt ratio and continued investment in production facilities - As of year-end, cash and bank balances were approximately RMB 1.041 billion (2020: RMB 417 million), with undrawn bank facilities of RMB 17.585 billion[62] - The net debt-to-equity ratio improved from 83.3% in the previous year to 60.0%, indicating an enhanced capital structure[64] - Capital expenditure in 2021 was RMB 1.473 billion, primarily for the construction of hog farms and other production facilities[66][67] - The fair value of biological assets decreased to RMB 1.853 billion due to lower hog prices, resulting in a net loss of RMB 2.838 billion on profit for the period[69] Human Resources The Group expanded its workforce and increased total remuneration while providing comprehensive benefits and encouraging employee development - As of December 31, 2021, the Group employed 8,965 staff, an increase from 7,253 in 2020[70] - Total remuneration for the year ended December 31, 2021, was approximately RMB 1.151 billion, an increase from RMB 1.047 billion in 2020[70] Material Risks and Uncertainties The Group actively manages key risks including disease, price volatility, and safety through comprehensive control systems and emergency preparedness plans - Key risks include disease (African Swine Fever, COVID-19), price volatility (feed raw materials, live hogs), production safety, food safety, and environmental risks[71][72][73] - To mitigate disease risks, the Group has established a "Biosecurity Control Procedure" and a "Major Animal Epidemic Emergency Plan"[72] Outlook The company's 2022 strategy focuses on enhancing core competencies through disease control, optimized hedging, supply chain integration, and brand differentiation - In 2022, the company will continue to normalize the prevention and control of African Swine Fever and enhance refined management to solidify its core competitive advantages[74] - The company will dynamically optimize its futures hedging strategy to seize opportunities and lock in breeding profits[74] - A key focus will be on strengthening the promotion of flaxseed-fed pork and new product R&D to drive differentiation and branding in the fresh pork business[73] Directors and Corporate Governance Biographies of Directors and Senior Management This section details the professional backgrounds of the company's experienced Board of Directors and senior management team - The Board of Directors comprises seven members: two executive Directors, two non-executive Directors, and three independent non-executive Directors[75] - Mr. Jiang Guojin serves as Chairman and executive Director, while Mr. Xu Jianong serves as executive Director, Managing Director, and General Manager[75][76] Corporate Governance Report The company maintained high standards of corporate governance, complying with the Corporate Governance Code and operating with a robust committee structure and risk management system - The company complied with the code provisions of the Corporate Governance Code throughout the year ended December 31, 2021[84] - The Board has established four committees: the Audit Committee, Nomination Committee, Remuneration Committee, and Food Safety Committee[95] - The company has adopted a board diversity policy with measurable objectives regarding independence, skills, experience, and gender[96] - The Board has reviewed the Group's risk management and internal control systems and considers them effective and adequate[103] Report of the Directors Principal Business and Financial Review This section outlines the Group's core business activities and confirms the proposed final dividend and dividend policy - The Group's principal business is investment holding and operating a vertically integrated pork business from feed production to meat import and distribution[113] - The Board recommended a final dividend of HKD 0.180 per share for 2021[114] - The company's dividend policy targets a total payout of 20% to 70% of the net profit before fair value adjustments of biological assets for the year[114] Disclosure of Interests This section details the shareholdings of directors and substantial shareholders, including COFCO Corporation as the controlling shareholder - Executive Director Mr. Xu Jianong beneficially owned 1,014,320 shares, representing approximately 0.03% of the issued share capital[117] - Substantial shareholder COFCO Corporation and its concerted parties held a total of 1,135,392,782 shares, representing 29.10% of the issued share capital[119] - The company operates a share award scheme, with outstanding options for 8,614,259 shares as of year-end[122] Continuing Connected Transactions The company engaged in various continuing connected transactions with its controlling shareholder, COFCO Group, on normal commercial terms, which were reviewed for fairness - The company has a financial services agreement with connected party COFCO Finance for deposit and loan services; in 2021, the maximum daily deposit was RMB 995 million and the maximum daily loan balance was RMB 700 million[128][131][133] - Under a mutual supply agreement with COFCO Group, the company purchased feed and other materials totaling approximately RMB 1.508 billion in 2021[136][139] - The company leases office premises in Beijing and Hong Kong from COFCO Group and receives administrative services[163] - The independent non-executive Directors have reviewed all continuing connected transactions and confirmed they were conducted on normal commercial terms and in the interests of the company and its shareholders[171] Environmental, Social and Governance Report Reporting Description and Responsibility Management The Board oversees the ESG strategy, which is guided by stakeholder engagement and focuses on material issues such as food safety and quality management - The Board of Directors is responsible for evaluating and managing ESG-related matters, ensuring an effective ESG risk management and internal control system is in place[178] - Core disclosure topics, including food safety, full-chain quality management, and employee health and safety, were identified through stakeholder communication and materiality assessments[185] Food Safety The company prioritizes food safety through a comprehensive, full-chain quality management system, achieving a 100% pass rate in regulatory inspections - In 2021, 734 batches of products were inspected by government regulatory bodies, with a 100% pass rate[188] - A full-chain quality and safety risk management system has been established, certified by ISO9001, ISO22000, HACCP, and other standards[190] - A full-chain traceability system covering all segments has been implemented, enabling end-to-end product tracking via an electronic system[193] - In 2021, 181 customer complaints were received and handled with a 100% resolution rate, with no product recall incidents occurring[193] Environmental Protection The company is committed to sustainable development through its ecological farming model, resource efficiency improvements, and long-term carbon neutrality goals - Promotes an ecological "crop-livestock integration" farming model, with 37 waste resource utilization facilities to recycle livestock manure[197] - In 2021, the comprehensive energy consumption intensity was approximately 0.071 tonnes of standard coal per RMB 10,000 of revenue, an 11% decrease compared to 2018[202] - Greenhouse gas emissions in 2021 were approximately 260,000 tonnes, with an emission intensity of about 0.25 tonnes per RMB 10,000 of revenue[208] - The company has set carbon peak and carbon neutrality targets, aiming to achieve operational carbon neutrality by 2060[211] Harmonious Win-Win The company actively contributes to industry standards and social welfare, with significant investment in community and industrial poverty alleviation programs - Participated as a drafting member in the revision of the national standard for "Bacon" and contributed to several group standards[214] - Total public welfare investment in 2021 exceeded RMB 15 million, a year-on-year increase of approximately 40%, with a focus on industrial poverty alleviation[215] Employee Development The company fosters a safe and supportive work environment, focusing on employee rights, career development through structured training, and anti-corruption measures - As of the end of the reporting period, the employee turnover rate was 12.02%[222] - In 2021, the Group recorded 2,180 lost workdays due to work-related injuries and one work-related fatality[224][225] - The "Seven-Star Program" training system was established; in 2021, senior management received an average of 38.38 training hours, and general staff received an average of 17.46 hours[228][229] - In 2021, five anti-corruption training sessions were conducted, covering 800 participants, with no instances of legal or disciplinary violations[233] Financial Statements and Notes Independent Auditor's Report The auditor issued an unqualified opinion on the financial statements, identifying the valuation of biological assets as a key audit matter due to its significance and estimation uncertainty - The auditor issued an unqualified opinion on the consolidated financial statements for the year 2021[237] - The key audit matter was the "Valuation of biological assets" due to the material balance and significant estimation uncertainty involved in determining fair value[240] Consolidated Statement of Profit or Loss and Other Comprehensive Income The company's revenue decreased to RMB 13.228 billion, and a net loss of RMB 484 million was recorded due to a significant negative fair value adjustment of biological assets Key Data from Consolidated Statement of Profit or Loss (RMB'000) | Indicator | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 13,227,606 | 18,922,112 | | Gross Profit | 1,715,553 | 90,814 | | (Loss)/Profit Before Tax | (1,356) | 3,937,574 | | (Loss)/Profit for the Year | (483,801) | 4,024,634 | | (Loss)/Profit Attributable to Owners of the Company | (459,697) | 3,995,124 | Consolidated Statement of Financial Position The company's total assets decreased to RMB 18.029 billion, with net assets standing at RMB 8.609 billion as of year-end Key Data from Consolidated Statement of Financial Position (RMB'000) | Indicator | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Assets | 18,029,427 | 20,561,996 | | Total Liabilities | 9,420,657 | 10,979,716 | | Net Assets | 8,608,770 | 9,582,280 | | Current Assets | 7,605,355 | 10,640,452 | | Current Liabilities | 8,508,620 | 10,132,761 | | Equity Attributable to Owners of the Company | 8,459,867 | 9,409,273 | Consolidated Statement of Changes in Equity Equity attributable to company owners decreased to RMB 8.460 billion, primarily due to the net loss for the year and dividend distributions - Equity attributable to owners of the Company decreased from RMB 9.409 billion at the beginning of the year to RMB 8.460 billion at year-end[253] - The decrease in equity was mainly due to the loss for the year of RMB 460 million and the recognition of dividend distributions of RMB 669 million[253] Consolidated Statement of Cash Flows The Group generated strong net cash from operating activities of RMB 3.082 billion, resulting in a net increase in cash and cash equivalents for the year Key Data from Consolidated Statement of Cash Flows (RMB'000) | Indicator | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 3,081,599 | 2,961,852 | | Net Cash Used in Investing Activities | (1,470,633) | (1,721,551) | | Net Cash Used in Financing Activities | (983,561) | (1,455,688) | | Net Increase in Cash and Cash Equivalents | 627,405 | (215,387) | | Cash and Cash Equivalents at End of Year | 1,040,980 | 416,650 | Notes to the Consolidated Financial Statements The notes provide detailed explanations of financial items, highlighting biological asset valuation, segment performance, and the use of financial instruments for risk management - Biological assets (live hogs) had a fair value of RMB 1.853 billion at year-end, determined by an independent professional valuer using market or replacement cost approaches, classified as Level 3 fair value measurement[315][368] - Segment results show that the hog breeding segment was the main profit source, achieving a profit of RMB 2.68 billion in 2021, while the meat import segment successfully turned profitable with a result of RMB 370 million[326] - The company used commodity futures contracts to manage price risks for live hogs and soybean meal, realizing a net fair value gain of RMB 1.423 billion, and also used foreign currency forward contracts to manage foreign exchange risk[402]