Disclosure Date: March 13, 2020

By-Health Co., Ltd 2019 Annual Report (Compact Edition)

Stock Code: 300146 Stock Abbreviation: By-Health Bulletin No.: 2020-014

Annual Report 2019 (Compact Edition)

Disclosure Date: March 13, 2020


Chairman’s Message to Shareholders

Dear shareholders of By-Health,

The first Spring Festival of 2020s was weighed down so massively by the sudden outbreak of the coronavirus

(COVID-19). We feel regret for the lives lost, for the unimaginable price paid by Wuhan to stop the spread of

the epidemic, and for the unimaginable sacrifices made by frontline health workers who had been tireless and

unceasing in their fight against the outbreak. We pay our respects to those brave and unhesitating rescuers

who rushed to the epicenter of the virus.

If we say the year 2018 was the turning point, the year 2019 would be called a “difficult” year, and the year

2020 would be a year of “suffering”. Chinese enterprises are facing enormous difficulties and challenges. For

some of them, this will be even the “life-or-death” year.

In 2019, the Vitamin & Dietary Supplements (“VDS” for short) industry in China also experienced the throes

of intensive policies issued over the years. Relevant state departments jointly launched a crackdown on the

industry chaos and illegal behaviors in the healthcare industry and continued to reform and regulate the drug

retail industry, which brought unprecedented pressures and challenges for the entire industry.

We are more soberly aware that these short-term throes will lead to the long-term healthy development of the

VDS industry. Without health as the number “1”, we will eventually return back to nothing no matter how

many “0” we add to the development later.

An enterprise in connection with food is placed upon the point of sword. Since the day of its emergence,

China’s VDS industry has been developing amid controversies over and negative effects of “health food”,

struggling to survive and grow with resilience.

We firstly proposed the concept of VDS in the prospectus issued by By-Health in 2010. In China, VDS is not

yet a statutory name and covers health food, dietary supplements, functional foods, foods for special dietary

uses, sports nutrition, some special medical foods, etc. They are called Vitamin & Dietary Supplements

(“VDS” for short) in the United States, Food Supplements in Europe. But in China, most people still call them

“health food”. VDS started to develop late in China. The Chinese people have not yet had the awareness and

habit to use VDS. The popularity and per capita consumption of VDS are far lower than that of developed

countries.

VDS can be briefly summarized in three sentences: (a) its ingredients include vitamins, minerals, animal and

plant extracts, etc.; (b) its functions are to balance nutrition intake and regulate body functions of specific

populations; (c) its position is neither a substitute for diet nor a substitute for medication. When consumers’

expectation for VDS returns to “supplements” from “only functions” and when they stop doubting the


regulating effect of VDS on health status and expecting VDS to be a substitute for medication, the spring of

VDS will come. China still has a long way to go in national health education, and the education on VDS.

Let’s take a look at China’s regulatory system for VDS, which can be called the most stringent regulatory

system in the world. It conducts all-round and full-chain supervisions over product safety, efficacy and quality

reliability. This covers the most stringent review and approval, registration and market access systems, the

most stringent standards and GMP, the most supervisions and sampling inspections at the national, provincial

and prefectural levels, and the most stringent market administration such as advertising approval. The

regulators have done a lot of works, but there has been a poor overall response from all walks of life. Starting

from granting the first approval number for health food in 1996 to the “100-day campaign” in 2019, there

have always been controversies and negative news. The regulatory authorities have never ceased the strict

governance and periodic rectifications. However, risks and hidden dangers still exist and the price gets higher

and higher. In the process of standardizing the drug retail industry, the “one-size-fits-all approach” was

implemented in some localities, which have affected the independent operation of designated pharmacies and

the market environment to a certain degree.

According to the Research on the Development Strategy of China’s Food Industry during the 13th Five-year

Plan period, realizing every 300 million yuan of output value, the healthcare industry would contribute 40

million yuan to the tax revenue and reduce the public medical expenses by 500 million yuan. During the 12th

Five-year Plan period, nutritional and health food manufacturing industry contributed nearly 1% of the GDP.

China Dietary Supplement Industry Development Report 2019 pointed out that, in 2018, China’s health food

market exceeded 460 billion yuan with an industry growth rate of 10%-15%.

An analysis based on Euromonitor’s 2017 data stated: VDS has six times growth potential in China, and the

key driving forces include the per capita income above USD 8,000 which is just the stage of rapid

development of health consumption; the lower level of penetration, stickiness and per capita consumption of

VDS in China compared with that in the United States and Japan; the rapidly aging population, which will

account for a quarter of the total population by 2030; the increasingly growing health awareness of Chinese

citizens.

In China, there is no lack of market. What’s lacking is the trust of consumers while integrity and transparency

are the best ways to build consumer confidence. By-Health proposed the “three-step” global ingredient

procurement strategy in 2004, and constructed its transparent factory in 2012. We are proud to have

established this global leading VDS manufacturing base in China. We are not proud of the hardware but the

entire quality control philosophy and system. The transparent factory is open to all people from across the

world, including professionals, for visits, exchanges and supervisions, which has set a benchmark for the

world’s VDS industry. On July 31, 2018, the eight concepts for quality control based on our rule of “Integrity

Over Intelligence” was further summed up as the ballast for corporate survival and development. The

Nutrition Exploratorium opened in July 2019 will become an important base for consumer health education.


After a dozen of years of efforts, By-Health has gradually built three core DNAs, namely global nutrition,

transparent factory, and world-class quality supplements that treat consumers as family and friends. We will

do subtraction in marketing and addition in product.

Entering 2020, the impact of the macroeconomic environment and industry policies combined with the

COVID-19 outbreak will exceed expectations in terms of severity and duration. The direct impact on the VDS

industry will still be there.

As the industry leader, what should we do?

Firstly, only by extending the timeline could we see the general trend more clearly. In the short term, it’s full

of volatility, uncertainly, and problems. In the long term, it’s more important and clearer to see the trend

strategically. “Healthy China 2030” as a national strategy proposed the concepts of “big sanitation, big

health”, and the requirement for focusing on disease prevention and bringing supervision forward. In July

2019, the State Council issued the plan for implementation of “Healthy China Action (2019-2030)”, raising

“Healthy China” to the national strategic height, shifting the focus from disease treatment to health promotion

in positioning and shifting from passive disease treatment to active disease prevention in strategy, which will

bring great development opportunities for the VDS industry.

Secondly, By-Health needs to change from “pressure-fed growth” to leading the entire VDS industry towards

restorative growth. By-Health boasts two extremely strong advantages: six times VDS growth potential and

industry leading position. As a leading player, By-Health needs to make breakthroughs first and lead China’s

VDS industry towards long-term and healthy development.

By-Health designated “activation” as the word for 2020.

First, it’s to activate consumers.

Second, it’s to re-activate the VDS business in China. The growth rate of VDS retail sales of Chinese

pharmacies dropped from 5.4% in 2017 to 2.3% in 2018, and even to 0.8% in 2019. In 2019, By-Health

realized a VDS growth rate of 19.9% in domestic offline channels, much higher than the industry average

level. However, we need to be soberly aware that such “pressure-fed growth” will not sustain the momentum

of development. As a Chinese saying goes, “When the nest is upset, no egg is left intact.” In this case,

By-Health must change from such “pressure-fed growth” to leading the entire VDS industry towards

restorative growth.

Third, it’s to re-activate the Life-Space business. By-Health has been pursuing a very stable and even

conservative financial policy. And I have warned myself and my team for years that it’s easy to conclude an

M&A but difficult to swallow and even more difficult to digest it. After getting listed, By-Health has been


looking for strategic cooperation and M&A opportunities in global VDS markets. In recent years, we’ve

basically seen the main target enterprises in global markets and given up multiple opportunities for M&A.

Unexpectedly, our first overseas M&A led to a huge impairment of goodwill in a short period of time and

directly brought the company’s first loss after going public.

We learned from the bitter experience and followed three logics in acquiring LSG, namely cross-border

e-commerce, internationalization and probiotic market segment. Now, we still uphold these three logics in

M&A. “Antibody would not form without going through a crisis.” We set off again at the lowest point.

Fourth, it’s to activate the brand power. More investment in brand asset is more investment in the future.

In 2020, the company will have some innovations and changes in management:

First, it’s the change to applying the 4+2+1 core market strategy with the focus on multiple varieties so as to

change the current situation of sales of varieties as “ice and fire”;

Second, it’s the change to rebuild a core sales model suitable for multiple hero products and launch the

1,000-dealer fission plan;

Third, it’s to implement “By-Health 12 Rules for Talent Structure Upgrade”, including work shift across the

board, full enabling of the high-potential young talent, the successor plan, mandatory performance grading

distribution for each job level, and internal promotion propriety, etc.

Fourth, it’s the trial implementation of a dynamic budget control mechanism that applies to all key categories

of costs based on the status quo of revenue-cost ratios.

In 2020, By-Health will also stay focus on the three strategic projects representing the group, namely “user

asset operation”, “e-commerce digitalization” and “super supply chain”, and try to make breakthroughs again

from lessons.

This is an ever-changing era as we are seeing new technology application, and changing retail environment,

changing channels and scenarios, changing policies and supervisions, and changing users under consumption

classification. The raging epidemic will have a profound impact on individuals’ behaviors and the VDS

industry, and even lead to substitutions.

This is an era in which risks and opportunities co-exist. Economy downturn is accompanied by opportunities,

and M&A is accompanied by risks. Making innovations and changes is the most essential capacity of

By-Health. For us, deviating from the ear is risky and adapting to the era is an opportunity. Being complacent

and conservative will lead to a crisis, but actively making changes will bring us opportunities. We must


realize that the factors that brought tremendous pressures and challenges to the VSD industry and By-Health

in 2019 are not yet eliminated, and will affect the VSD industry for a long period of time.

A new continent can never be discovered with an old map. When the industry changes discontinuously, there

would be a great cognitive challenge. Such cognitive challenge determines where we should go and how we

look at the ultimate industry objectives. We should make new judgements based on the old map and explore

new growth opportunities with new cognitions. We would not have the future by clinging to what we know

before.

“In turbulent times, turmoil itself is not terrible. What’s terrible is to follow the logic of the past.”

In the new 2020s, we should make changes quickly to adapt to the ever-changing times.

In 2020, we will rise from the ashes.

The COVID-19 is still spreading across the world. We must prepare for the worst and strive for the best. At

this critical juncture, By-Health must assume the responsibility as a corporate citizen. Following the

10-million-yuan donation for setting up “a special relief fund to fight against the COVID-2019”, By-Health

also donated a total of 149,000 pieces of Vitamin C, protein powder, probiotics and non-contact infrared

thermometers in two batches.

Life always comes first, and every life is equally worthy of respect.

“No winter lasts forever; no spring skips its turn.”

By-Health Chairman of the Board: LIANG Yunchao

March 12,2020


Chapter I Important Notes, Contents and Definition

1. The Company calls investors’ attention to carefully read the full text of the semi-annual report,

and pay special attention to below risk factors

(1) Risk of the epidemic

Since the COVID-19 outbreak, all provinces and cities progressively initiated the “first-level response to

a major public health emergency” and adopted various measures to prevent and control the spread of the virus,

which have taken a toll on consumption and production to a certain extent and affected all regions and

multiple industries in the short term. Dealers, suppliers, retailers, among other stakeholders of By-Health have

been affected to varying degrees. As a result, the company’s production, market and marketing activities are

unable to be carried out normally. It’s expected to have a certain impact on the company’s operation in the

short run.

In response, the company set up an anti-epidemic emergency management team to make overall

arrangements for epidemic prevention and control. The team has closely followed and assessed the epidemic

situation, timely adjusted the operating plans, adopted various measures to ensure staff safety, and actively

communicated with upstream and downstream stakeholders and provided them with supports when needed.

At the same time, the company has supported the fight against the virus through donations in cash and in kind

to actively fulfill its corporate social responsibility.

(2) Product Quality and Food Safety Risk

Dietary supplements have large varieties and involve with multiple raw and auxiliary materials, which

have resulted in certain product quality risk. Any quality management problem in the purchasing of raw

materials, production and sales process or product quality problems arising from other reasons would

influence the reputation and product sales of the Company. Therefore, the Company constantly places quality

and safety at the top priority and continuously enhances the quality management, optimizes production

process, purchases precision testing equipment and brings up quality management personnel. Meanwhile, the

Company takes advantage of third party testing agency to support and improve the quality management.

Besides, the Company has prepared special emergency plans to cope with potential risks.

“ Integrity over intelligence” is one of core values that have been followed and adhered to by the

Company for years. On July 31, 2018, Chairman Liang Yunchao summarized basic quality control philosophy

as followed by the Company over the years and proposed eight concepts for quality control to be taken as a

ballast for an enterprise’ survival and development. Including: National standards and regulations are

minimum requirements and bottom lines, and the Company has to outperform all national standards.

Nonconformity is a redline not be touched and contemplated, fluke mind is not to be had and any thought of

this will be guilty. No known health risk will be allowed even if it does not violate any laws and regulations. It

is unforgivable as well! An enterprise in connection with bite and taste of food is placed upon the point of

sword, always with a sword above its head and walking upon thin ice every day without any moment of

relaxation. Quality is the lifeline for a food enterprise, and market will not give you any chance of making one

mistake. Ultimately, quality problem is concerned with the moral quality of an enterprise rather than money


and technology. Gods will be watching, and we have to revere every life. It’s nothing but indecency to

sacrifice or increase quality risk under any high-sounding pretext. Efficiency, effectiveness, cost, stock-out

and other factors, all shall give way to quality, and no cause shall be justified before quality. Quality control

shall be professional, authoritative and independent and segregated from business operations. It is necessary to

practice in accordance with the philosophy and brand DNA that nutrition products with the world’s quality are

produced for families and friends rather than for clients. What our kids, families and friends dare not eat in no

way shall be produced and let go out of our gate! “Integrity is over intelligence”, and the foundation of our

factory in Zhuhai, and the seal of good faith, weighing up to 100 tons, stands before us like a bright mirror to

warn everyone.

(3) Policy risk

With the gradual introduction and implementation of relevant national policies, industry regulations and

standards, the regulation over the VDS industry is getting more stringent and the industry standardization and

access are further improved. This will have a critical impact on the long-term development and competitive

landscape of the industry. Meanwhile, enterprises are facing increasing pressures and challenges. The impact

of industry rectifications and the ongoing reform and regulation of the drug retail industry in 2019 is not yet

eliminated, and the price is getting higher and higher.

For that matter, the company will actively take part in the formulation and revision of industry laws,

regulations and standards, keep standardizing the company’s internal management, continuously entrench the

company’s core competence and technological innovation capacity so as to maximize the company’s capacity

to calmly respond to changes in the industry and market environment.

(4) Risks brought by purchase of raw materials to sales of main products

The Company, committed to differentiation, has chosen high-quality raw materials across the world.

There are a great variety of products, raw materials are dispersed, and price rise of raw materials will have

certain effect on products’ gross profit margin. Meanwhile, with growing sales, the demand for raw materials

is also increasing, and some materials are likely to be in short supply and unable to satisfy the Company’s

production and sale demand.

The company has tried to meet the material demand through reserving multiple suppliers, looking for

alternative raw materials and strengthening production management control. The company has also strived to

control the risk of rising raw material prices through strategic cooperation for exclusive base and forward

price. However, we still can’t rule out the certain impact on the company’s production and operation.

(5) Control risk of the ever-expanding dealer system

To support the operation of multiple hero products and the long-term development of more new brands

and new varieties in the future, the company will comprehensively upgrade the dealer system in 2020. The

number of dealers will rise dramatically, so the market control risks will increase, which have raised higher

requirements for the company’s sales management capacity in terms of dealer management and regional

market coordination.

To this end, the company has clarified the standards for the establishment of regional dealer companies,

which shall be based on the fission of original dealers. In regions where dealers fail to meet the company’s

standards for establishment, new dealers will be recruited. The company will strictly implement dealer sales


policies and assessment standards, reinforce trainings and supports for dealers and enhance the dealer team’s

attention and motivation so as to improve sales management and regional operation and promote deeper

channel development and terminal refined management.

(6) Risk in the Increasing Competition in the Industry

Due to rapid expansion of the market capacity in recent years, the Company faces increasing risk in the

industry due to world leading enterprises entry into Chinese market and the introduction of large

pharmaceutical companies and food enterprises. In particular, overseas brands making use of new commercial

activities like e-commerce have gradually changed the industry competition ecology and brought more

uncertainties to the industry. Moreover, in the new era, the applications of the new media, channels and

technology provides opportunities for the rapid development of new categories and new brands. Under such

situations, the important proposition faced by the Company is to seize the historical opportunity to achieve

another leapfrog development, and lead the strategic upgrade of the Company and changes in the profit

ecology of the industry.

In light of this, the Company, on the one hand, has strategically upgraded from product marketing to

value marketing, gradually turned from a single product provider to an integrated solution provider for health

intervention based on the mission of “health management for healthy people", and consistently cultivated and

improved core competitiveness in respect of product, brand name, channel, service and so on, to enable the

Company to maintain leading position in the market. On the other hand, the Company has actively extended

to new businesses and channels, and explored merger & acquisition, reorganization and investment in industry

funds and other means to seize a vantage point.

(7) Risk of New Business and New Projects

As a leading producer of vitamin and dietary supplements, the Company has been customer-oriented to

create more health value for consumers and to keep on expanding the health industry and introducing new

brands and businesses. New brands and businesses are quite uncertain in respect of patterns of business and

profit, and have to be consistently explored, practiced, integrated and summarized, and whether they are as we

have expected is uncertain.

(8) Integration risk after completion of cross-border acquisition

The company completed the cash acquisition of Life-Space Group Pty Ltd (LSG) and took control of it

in August 2018. Then, the company indirectly has realized 100% control of LSG after Guangzhou By Saint

Co., Ltd. completed the change of registration with the industrial and commercial authority on July 31, 2019.

Located in Australia, LSG is different from the Company in respect of governing law, accounting and

taxation, business practice, operation philosophy and corporate culture, etc. For the purpose of the effect of

synergy and integration, the Company has to start with its overall operation and resource allocation to further

integrate with LSG in respect of finance management, client management, resource management, business

expansion and corporate culture. It is uncertain whether subsequent integration can be successfully

implemented and whether the effect of integration will be as expected.

The company has developed and gradually carried out a series of integration measures, such as asset and

business integration, financial system integration, corporate governance integrant and operation arrangement

integration, and has conducted resource integration by making full use of LSG’s complementarity with the


company in terms of brand, channel, R&D, production operation and global supply chain in a bid to produce

synergistic effects.

(9) Goodwill impairment risk

At the end of 2018, the book value of goodwill in the company’s consolidated statement recorded

2.1656612 billion yuan, and the intangible assets formed by acquiring LSG stood at 1.4139812 billion yuan.

Affected by the implementation of The E-Commerce Law, LSG’s performance in the Australian market

failed to meet the expectations in 2019. According to relevant provisions of the Accounting Standard for

Business Enterprises No. 8 - Impairment of Assets, the company carried out a test of the goodwill

impairment formed by acquiring LSG. The company accrued 1.0087089 billion yuan as provision for

impairment of goodwill, accrued 561.7689 million yuan as provision for impairment of intangible assets, and

write-off 168.5307 million yuan of deferred income tax, representing a showing a material negative effect on

the company’s performance in 2019.

At closing of the report, the book value of goodwill in the company’s consolidated statement registered

1.1835685 billion yuan. If LSG’s operating environment in the Australian market continues to deteriorate or

its business promotion in the Chinese market fails to meet expectations, the company will still be at risk of

goodwill impairment, which may have a certain impact on the company’s current profits.

2. Profit distribution plan or increase plan of share capital through transfer of accumulative funds

reviewed by the Board of Directors in the reporting period

The company’s 2019 profit distribution plan adopted at the 33rd Meeting of the Fourth Session of the

Board of Directors was: with 1,582,492,554 shares as the base, a cash dividend of 3.60 yuan (tax included)

will be distributed to all shareholders for every 10 shares they hold, 0 bonus share (tax included) will be

granted, and 0 share will be turned into share capital for every 10 shares.


Table of Contents

Chapter I Important Notes, Contents and Definition ........................................................................................6

Chapter II Company Profile and Main Financial Indicators ............................................................................12

Chapter III Company Business Summary .........................................................................................................13

Chapter IV Operation Status Discussion and Analysis .....................................................................................17

Chapter V Important Events .............................................................................................................................35

Chapter VI Changes in Shares and Particulars about Shareholders ..................................................................42

Chapter VII Information about Directors, Supervisors, Senior Management Personnel and Employees ......48

Chapter VIII Financial Report ..........................................................................................................................51


Definitions

Definition Item Definition Content CSRC Refers to China Securities Regulatory Commission SZSE Refers to Shenzhen Stock Exchange

Depository and Clearing Corporation Refers to Shenzhen Branch of China Securities Depository and Clearing Corporation Limited

By-Health, the Company, Company Refers to By-Health Co., Ltd CITICS, sponsor, independent financial adviser Refers to CITIC Securities Co., Ltd.

GP Certified Public Accountants, Accountant Refers to GP Certified Public Accountants (Special General Partnership)

Dietary and nutritional Supplement Refers to

The product which, with vitamins, minerals and animal and plant extracts as ingredients, are intended for specific groups of people to balance nutritional intake and adjust body functions by supplementing necessary nutritional and bioactive substances. Dietary and nutritional supplements are intended neither for curing any illness nor for replacing normal diet, and they will not have any acute, sub-acute or chronic hazard to humans.

VDS Refers to Vitamin & Dietary Supplements

Health Food Refers to

Foods that are claimed to have specific health functions or are intended to supplement vitamins and minerals. Foods that are suitable for consumption by a specific group of people, have the function of regulating the body, do not aim at treating diseases, and do not cause any acute, sub-acute or chronic harm to the human body.

OTC Refers to

Over The Counter, refers specifically to over-the-counter drugs in the pharmaceutical industry, which are made public by the drug regulatory department of the State Council, do not require prescriptions from licensed physicians and licensed assistant physicians, and consumers can judge, buy, and use on their own.

Non-direct sales channels and non-direct sales sectors Refers to

Non-direct sales is a sales model corresponding to direct sales. It is a traditional sales method. Generally, the complete production and sales chain is: manufacturer-distributor (wholesaler)-retail terminal-customer.

TVC Refers to Television Commercial

Guangzhou By Saint Refers to Guangzhou By Saint Co., Ltd is a wholly-owned subsidiary of the Company

Hongkong Bysen Refers to Hongkong Bysen Company Limited, a wholly-owned subsidiary of Guangzhou By Saint

Australia By Saint Refers to Australia By Saint Pty Ltd is a wholly-owned subsidiary of Hongkong Bysen Company Limited

LSG, target company Refers to Life-Space Group Pty Ltd (Registration No. of the company in Australia: 621 102 636)

HongKong BioCarna Refers to HongKong BioCarna Company Limited, a wholly-owned subsidiary of the Company

Australia BioCarna Refers to Biocarna Pty Ltd, is a wholly-owned subsidiary of HongKong BioCarna

Guangdong Beyond Refers to Guangdong Beyond Co., Ltd is a wholly-owned subsidiary of the Company

Xinde Aodong Refers to Jilin Aodong Innovation Industry Fund Management Center (limited partnership)

Zhongping Guo Jing Refers to Shanghai Zhongping Guo Jing M&A Equity Investment Fund Partnership (limited partnership)

Jiaxing Zhongping Refers to Jiaxing Zhongping Guo Jun Equity Investment Fund Partnership (limited partnership)

Xinde Houxia Refers to Guangzhou Xinde Houxia Equity Investment Fund Partnership (limited partnership)

Stock of the Company Refers to A-share Stock of By-Health


Listing Rules Refers to Rules of Shenzhen Stock on Listing of Shares on the Growth Enterprise Board

Guidelines for standardized operation Refers to Guidelines of Shenzhen Stock Exchange for standardized operation of Companies Listed on the Growth Enterprise Board

Articles of Association Refers to Articles of Association of By-Health Co., Ltd. E-commerce Law Refers to Electronic Commerce Law of People’s Republic of China Yuan, Ten Thousand Yuan Refers to CNY, 10,000 Yuan, except as otherwise specified Reporting period, current year Refers to January 1, 2019 to December 31, 2019 Beginning of the year Refers to January 01, 2019 End of Reporting Period Refers to December 31, 2019 Same Period in Previous Year, Previous Year Refers to January 1, 2018 to December 31, 2018

http://law.foodmate.net/show-194259.html


Chapter II Company Profile and Main Financial Indicators

I. Company Information

Stock Abbreviation By-Health Stock Code 300146

Chinese Name of the Company 汤臣倍健股份有限公司

Chinese Abbreviation of the Company 汤臣倍健

English Name of the Company BY-HEALTH CO., LTD Abbreviation for the English Name of the Company BY-HEALTH

Legal Representative of the Company Lin Zhicheng

Registered Address: No. 19, Xinghan Road, Sanzao Science and Technology Industrial Park, Jinwan District, Zhuhai, Guangdong

Zip Code of the Registered Address 519040

Office Address No. 3, Kehuijingu Third Road, No. 99, Kehui Avenue Middle, Science City, Guangzhou, Guangdong

Zip Code of the Office Address 510663 International Website www.by-health.com E-mail [email protected]

II. Contact Person and Contact Information

Secretary of the Board of Directors Securities Affairs Representative

Name Tang Jinyin Liu Pingping

Contact Address No. 3, Kehuijingu Third Road, No. 99, Kehui Avenue Middle, Science City, Guangzhou, Guangdong

No. 3, Kehuijingu Third Road, No. 99, Kehui Avenue Middle, Science City, Guangzhou, Guangdong

Telephone 020-28956666 020-28956666

Fax 020-28957901 020-28957901

E-mail [email protected] [email protected]

III. Main Accounting Data and Financial Indicators

2019 Years 2018 Years Year-on-year increase/decrease 2017 Years

Operating Income (Yuan) 5,261,799,439.25 4,350,775,627.15 20.94% 3,110,795,387.73 Net Profit Belongs to the Shareholders of Public Listed Company (Yuan)

-355,889,615.46 1,002,184,999.85 -135.51% 766,255,562.79

Net profit attributable to listed company shareholders, after deduction of non-recurring profit and loss (Yuan)

-430,518,920.11 913,814,927.36 -147.11% 644,028,328.29

Net Cash Flow Generated from Operating Activities (Yuan) 1,536,520,103.03 1,349,053,224.88 13.90% 954,308,997.11


Basic Earnings per Share (Yuan/share) -0.24 0.69 -134.78% 0.52

Diluted Earnings per Share (Yuan/share) -0.24 0.69 -134.78% 0.52

Weighted Average Return On Equity -6.50% 19.00% down by 25.50

percentage points 15.80%

End of 2019 End of 2018 Year-on-year increase/decrease End of 2017

Total Assets 8,330,710,280.66 9,790,445,489.84 -14.91% 6,113,609,642.75 Net Assets Belongs to the Shareholders of Public Listed Company (Yuan)

5,992,173,961.90 5,591,786,199.13 7.16% 5,100,825,081.79

Total Share Capital as at the Previous Transaction Date of the Date of Disclosure: Total Share Capital as at the Previous Transaction Date of the Date of Disclosure (Share) 1,582,492,554

Comprehensive diluted earnings per share calculated with latest share capital (Yuan/share) -0.2249

IV. Main Financial Indicators, By Quarter

Unit: Yuan Q1 Q2 Q3 Q4

Operating Income 1,571,070,999.36 1,398,703,936.01 1,411,194,136.66 880,830,367.22 Net Profit Belongs to the Shareholders of Public Listed Company

497,464,007.84 369,387,358.24 324,088,641.05 -1,546,829,622.59

Net profit attributable to listed company shareholders, after deduction of non-recurring profit and loss

488,983,719.01 359,613,591.19 286,448,048.55 -1,565,564,278.86

Net Cash Flow Generated from Operating Activities 7,245,233.28 472,822,853.18 277,362,988.64 779,089,027.93

V. Non-recurring Profit or Loss Subjects and Amount

Unit: Yuan Subject Amount in 2019 Amount in 2018 Amount in 2017 Description

Profit or Loss Arising from the Disposal of Non-Current Assets (including the write-off part in the asset impairment reserves accounted)

2,942,505.59 -160,902.22 102,802,620.05

The amount in 2017 was investment income from disposal of the equity of Belter and Find.

Governmental subsidies accounted into the current profit and loss (excluding government subsidies in close connection with enterprise businesses enjoyed at fixed quota or amount according to unified standard of the Country)

71,435,347.93 65,977,810.47 24,274,451.05

The amount of government subsidies received in accordance with relevant government policies and recorded in the current profit and loss


Profit and loss from the changes in fair value of trading financial assets and derivative financial assets, trading financial liabilities and derivative financial liabilities, and investment income acquired from the disposal of trading financial assets and derivative financial assets, trading financial liabilities and derivative financial liabilities, and other debt investment, excluding valid hedging business in connection with normal operation business of the Company

-3,445,190.80 14,645,868.22 5,727,789.54

Other Operating Income and Expenditure not Listed Above -1,334,617.75 -13,255,832.59 -8,664,530.11

Other Profit and Loss Subjects Meeting the Definition of Non-recurrent Profit and Loss 24,183,381.67 37,875,554.23 22,433,731.78 Income from Financial

Products Less: Influencing Amount of Income Tax 19,117,822.10 19,493,269.96 24,207,111.46 　　Influencing Amount to Minority Stockholder's Equity (After-tax) 34,299.89 -2,780,844.34 139,716.35

Total 74,629,304.65 88,370,072.49 122,227,234.50 -- In case the Company has listed any non-recurring profit or loss items defined in the No. 1 Explanatory Statement for the

Information Disclosure of the Company with Public Offering of Securities –nonrecurring Profit or Loss or specified any

non-recurring profit or loss subjects defined in the No. 1 Explanatory Statement for the Information Disclosure of the Company

with Public Offering of Securities –nonrecurring Profit or Loss as the recurring profit or loss items, the Company shall explain

the reasons

In the reporting period, the Company did not list any non-recurring profit or loss subjects defined in the No. 1 Explanatory

Statement for the Information Disclosure of the Company with Public Offering of Securities –nonrecurring Profit or Loss as

recurring profit or loss subjects.


Chapter III Company Business Summary

I. Main Businesses Engaged by the Company in the Reporting Period

The Company is engaged in dietary and nutritional supplements, which, with vitamins, minerals and

animal and plant extracts as ingredients, are intended for specific groups of people to balance nutritional

intake and adjust body functions by supplementing necessary nutritional and bioactive substances. Dietary and

nutritional supplements are intended neither for curing any illness nor for replacing normal diet, and they will

not have any acute, sub-acute or chronic hazard to humans.

The Company is positioned to produce world-class and high-quality nutrition products for families and

friends rather than for clients. The Company has fully integrated renowned domestic and foreign nutrition and

health research institutes, focused on innovative research of “new functions, new materials and new

technologies” and established, either self-built or acquired, a comprehensive and scientific system of dietary

and nutritional supplements, including protein, vitamins, natural animal or plant extracts and other functional

dietary and nutritional foods. In addition to providing high-quality nutrition products, the Company is more

concerned with resolving health problems and enhancing life quality.

After years of development, the Company has formed a rich brand matrix through internal incubation of

brands and M&A of overseas brands. Brands form a good mutual complementary relationship in brand

positioning, consumer groups and their needs, and effectively enhance brand value.

II. Significant Changes in Main Assets

1. Significant Changes in Main Assets

Main Assets Description for Significant Changes

Equity Assets The book value of long-term equity investment at the end of the year was 171.1978 million Yuan, a decrease of 31.63% from the beginning of the year, which was mainly due to the provision for impairment of long-term equity investment.

Fixed Assets

The book value of fixed assets at the end of the year was 828.3417 million Yuan, an increase of 25.93% from the beginning of the year, which was mainly due to the conversion of the nutrition exploratorium, visitor center and equipment to be installed into fixed assets in the current year

Intangible Assets

The book value of intangible assets at the end of the year was 867.6198 million Yuan, a decrease of 44.49% from the beginning of the year, which was mainly due to the provision for impairment of trademarks and brand management rights and customer relationship.

Construction in Progress The book value of construction in progress at the end of the year was 121.4829 million Yuan, an increase of 96.11% from the beginning of the year, mainly due to the increase in equipment in the fourth period.

Goodwill The book value of goodwill at the end of the year was 1,183.5685 million Yuan, a decrease of 45.35% from the beginning of the year, mainly due to the provision for goodwill impairments.

2. Information about Main Overseas Assets


Specific Contents of

Assets

Cause of Formation Asset Size Location Operation

Mode

Control measures to ensure asset

security

Income Status

Proportion of overseas

assets in the Company's net assets

Whether there is a

significant impairment

risk

Subsidiary

Mergers and

Acquisitions (M&A)

Net assets of 1,749.8294

million Yuan

Hongkong, Australia

Independent Operation

Articles of Association Loss 29.50% No

Other Information Description

During the reporting period, the Company conducted impairment tests on the goodwill formed by the merger of LSG, withdrawn 1,008.7089 million Yuan in provision for goodwill impairment, 561.7689 million Yuan in provision for impairment of intangible assets, and resold deferred income tax liabilities of 168.5307 million Yuan.

III. Core Competitiveness Analysis

1. The Company’s core competitiveness

(1) Product power

The Company has consistently stepped up research and development of new products, and every year,

will invest a considerable amount for product R&D. By the end of the reporting period, the Company had a

total of 144 health food approvals and 90 health food registration certificates The Company adheres to a set of

nearly harsh raw material source auditing systems, and selects high-quality raw materials worldwide to realize

the differentiated advantages in product quality. It adheres to the eight concepts for quality control and strict

internal control standards. The Company's testing center was evaluated by China in 2013. The Committee

(CNAS) and obtained the CNAS accreditation certificate. The Company has formulated a number of internal

control indicators that are stricter than national standards to create reassuring high-quality products meeting

stringent requirements.In 2017, the Company passed BRC certification (BRC Food Technical Standard) and

obtained a Grade-A certificate, and received the Zhuhai Mayor’s Quality Award, being the first in the food

and pharmaceutical sector in Zhuhai to ever receive this honor. By-Health’s Transparent Factory is included

into the third batch of “Green Factory” enterprises as officially published by the MIIT in October 2018. In the

same month, By-Health’s Transparent Factory was granted the title of “Grade-AAAA Tourist Attraction”,

being the first “Grade-AAAA Tourist Attraction” in the health food sector in Guangdong Province.

“Good faith is more important than cleverness” is one of core values, and the Company desires to

produce world-class high-quality nutrition products for families and friends rather than for clients.

(2) Brand power

The Company sets aside a portion of sales income for brand promotion every year, and is moving from

channel-driven to brand-riven and from channel brand to renowned popular brand. In 2018, the Company

officially launched a new brand proposition - Nutrition from 23 Countries for A Better You (23FOR1),

creating a brand new visual image as an international brand, showing the brand's characteristics of

internationalization and fashion. Also, relying on the implementation of the e-commerce branding strategy, it

assumes responsibilities for building By-Health's brand among young consumers, creating a younger and

more fashionable brand. In addition, a matrix of diverse brands was established by overseas acquisition and

internal brand incubation, and these brands had fair complementarity in respect of positioning, targeted

population and demand, and brand value was significantly improved.

(3) Channel power


The Company enjoys high-quality distributor and retailer resource, and outperforms in respect of retail

sales in non-direct sale sector. The Company has steadily expanded its competitive advantage in the pharmacy

channel by implementing a major brand promotion strategy and a large single product strategy, consolidating

its market leadership, and further expanding the market share. Benefiting from the e-commerce branding

strategy, the "By-Health" brand has maintained a leading position in mainstream e-commerce platforms such

as Ali family (including Tmall, Taobao, JD.com, and Vipshop. Meanwhile, the Company also stepped up

effort in supermarkets, baby stores and so on, and builds and consolidates all-channel sales system to promote

channel differentiation and diversification.

(4) Service power

Through Health Express, Nutrition School, Member Club and other carriers, the Company has extended

the service to consumers, retailers, distributors and the like. A large-scale public welfare event entitled

“Health Checking Vans China Tour” was launched in 2011. As of the end of the reporting period, nearly

3,500 activities have been held, benefiting more than 1.5 million people nationwide. The Nutrition Academy

provides nutrition knowledge training for retail outlet assistants and distributors, and brings consumers with

health knowledge. More than 8,000 special training camps were carried out during 2019, serving a total of

about 300,000 retail outlet assistants; nutritionists mainly provides consumer-oriented basic consulting

services and value-added services such as recipes, nutrition knowledge, and health management to members

through the nutritionist service platform.

2. Land Use Rights

As of the end of the reporting period, the Company had the right to use toward 8 pieces of land, without

any change in the reporting period, and for details, see the 2016 Annual Report and the 2017 Annual Report.

3. Patent and Patent Use Rights

As of the end of the reporting period, the Company and its subsidiaries had a total of 199 patent rights,

including 38 new ones added during the reporting period; 21 of them became invalidated due to the

elimination of design patents of old products, which did not affect the Company's operations.

4. Registered Trademark

① Domestic Registered Trademark

As of the end of the reporting period, the Company and its subsidiaries had registered a total of 3,054

trademarks in China, with an increase of 834 trademarks during the reporting period; one of them was

invalidated because it has not been used for three years and therefore was revoked.

② Foreign trademarks

As of the end of the reporting period, the Company and its subsidiaries had acquired 340 overseas registered

trademarks, including 180 registered trademarks newly acquired in the reporting period.

5. Changes of Approval Documents

By the end of the reporting period, the Company had a total of 144 health food registration approvals and

90 health food registration certificates During the reporting period, the Company obtained 9 health food

registration approval certificates and 3 filing certificates; another 9 original nutrient supplements were

invalidated, and one filing certificates were revoked. Within the Reporting Period


6. Research Articles and Reports

The Company has attached great importance to employees’ writing and publishing research articles, and

formulated relevant incentive measures to clearly provide for the writing, publication and reward of research

articles. In 2019, a total of 46 research articles were published, not only enlivening the Company’s academic

atmosphere but also significantly expanding its academic influence.


Chapter IV Operation Status Discussion and Analysis

1. General

In 2019, the Company is facing a more severe external market environment. Factors such as the

rectification of the "health care" industry by the related national departments, the reform and regulation of the

drug retail industry, and the implementation of the "E-commerce Law" have increased the pressure on and

challenges to market stakeholders, and will have a continuous impact on the industry over a longer period of

time. The Company adheres to its strategic plan for the consumer heath sector and adopted a moderately

aggressive market strategy under guidance of the business plan established for year 2019: launched the main

brand“By-Health” elevation strategy with protein powder as the image product; further enriched and

consolidated the strategy of the hero product strategy; initiated e-commerce brand 3.0 strategy; accelerated

construction of supermarket and department store channel and mother & baby channels, etc.; and laid the

foundation for the company's performance growth.

During the reporting period, the Company realized operating income of 5.262 billion Yuan, an increase

of 20.94% over the same period of the previous year; net profit attributable to shareholders of listed company

was -356 million Yuan, compared with 1.02 billion Yuan in the same period last year; in the absence of

impairment of the goodwill and intangible assets formed as a result of the merger of LSG, the Company's net

profit attributable to shareholders of the listed company was 1.046 billion Yuan.

In terms of domestic business: (1) In the main business income, the main brand "By-Health" realized

operating income of 3.212 billion Yuan, a year-on-year increase of about 8%; the joint care brand" Keylid"

achieved operating income of 1.190 billion Yuan, a year-on-year increase of approximately 47%;

"Life-Space" domestic products achieved operating income of 129 million Yuan. (2) With regard to channels,

the revenue from offline channels accounted for about 80% of domestic operating revenues, a year-on-year

increase of approximately 20%; the revenue from online channels increased approximately 17% year-on-year.

In terms of overseas business: LSG achieved operating income of 458 million Yuan, and its consolidated

operating income for 2018 was 273 million Yuan.

Below are major business developments in the reporting period

1. The main brand image promotion strategy has achieved initial results

In the reporting period, the Company further stepped up brand building and market cultivation, and

strategically made resource input in protein powder as a major brand image product and a brand contact point.

The Company started to launch new TVCs for protein powder on CCTV, satellite TV and provincial TV in

May 2019, and promoted them on new social media, offline building media, etc. focusing on the concept that

protein powder can cover more consumption attributes of people with weakened immune systems, to broaden

young consumer groups and continue to improve distribution and terminal coverage. In 2019, protein powder

strengthened its absolute leading position, effectively driving major brands to overcome policy factors and

achieve squeezed growth under the severe external environment, and further consolidated the market leader

position.

2. “Shoot three arrows at the same time” to further enrich and strengthen the major single product

strategy


During the reporting period, the Company focused on the three product categories, namely joint care, eye

health, and probiotics, and further consolidated its strategy for hero product. Continue to increase the brand

promotion of "Keylid" to further enhance the professionalism and influence of the brand. Broaden and

consolidate consumer groups, ensure continuous and rapid growth of "Keylid", and steadily increase its

market share by launching new packing and new products, accelerating channel sinking, etc. Steadily

expand the "Jianshijia" pilot area to 6 key provinces, and target those who are susceptible to eyestrain. In June

2019, "Jianshijia" launched a new TVC for key markets, focusing on continuous and accurate communication

with the middle-aged and aged people, improving brand awareness, and promoting category expansion.

With the help of the cooperative effect of the Company's original business, “Life-Space” domestic products

were launched in domestic pharmacies, mother and children stores and other channels and launched

corresponding resources in March 2019. Due to product approval restrictions, the business development of

"Life-Space" in the pharmacy channel has not met expectations.

3. Affected by the implementation of the "E-commerce Law", the revenue of LSG business has

fallen significantly.

During the reporting period, the implementation of the E-commerce Law led to the withdrawal of some

individual purchasers, and other purchasers and distributors also reduced inventory and transactions to cope

with the operational risks brought by the policy changes, which had a large negative impact on LSG business.

On the one hand, the Company proactively implemented a series of management measures such as

business and organizational structure adjustment, product optimization, inventory management, price control,

and adjustment of market investment direction, to cope with the challenges brought by market changes; on the

other hand, the Company continued to carry out various forms of brand building and consumer education

activities, in order to further consolidate and strengthen "Life-Space"’s position as the number one brand in

the probiotics segment of cross-border e-commerce in Australia and China. Through the above measures,

LSG's sales to local Australian customers have maintained steady growth, and China's cross-border platform

business has achieved substantial growth above the industry average.

4. Launch the e-commerce brand strategy 3.0

During the reporting period, the Company continued to create online professional brands for young

people: personal appearance management series YEP and weight management series IWOW, launched a

number of online exclusive supplies, endowed the products with social attributes, and broadened their use

scenarios. Moreover, the Company carried out a series of brand promotion activities to increase brand

exposure and brand power, increase the attention and favorability of the target population, and promote the

brand attract more younger people. Also, actively expand social e-commerce, content e-commerce, etc., build

diversified e-commerce platforms, and cover more young consumer groups.

In 2019, affected by the industry environment, the competitive landscape of e-commerce platforms, and

changes in the policies of some e-commerce platforms, the growth rate of online channels in the Company's

domestic business has slowed. With the continuous promotion of the e-commerce branding strategy and the

"customer-centric" e-commerce digital strategy, the Company still has confidence in the long-term

development of online channels.

5. Speed up the building of the supermarket channel

During the reporting period, the Company launched more new categories of products according to the


characteristics of the supermarket channels, to further enrich the varieties sold on the supermarket. In 2019,

nutrition soft sweets appeared on the market. The launch of new products and the promotion of terminal

activities have increased the visibility and attention of the "By-Health" brand and products, laying the

foundation for future product promotion and the stability of the overall sales model of the supermarket. In

addition, the Company continued to expand the coverage of modern supermarkets, improve the distribution

system of supermarket and stores, and innovate the terminal sales model, thereby accelerate the construction

of supermarket channels, and further explore the market opportunities of supermarket channels.

6. Continue to deepen the building of the mother & baby channel

During the reporting period, the Company increased investment in professional resources, strengthened

the construction of mother and infant professional capabilities, and expanded its influence in industry

channels through cooperation with top domestic exhibitions and industry forums. Additionally, the company

will broaden on-line and off-line influence through product recommendation by celebrities and promotion of

products for the season; promote dynamic marketing by diverting customers to the shops and stores through

targeted advertising. In March 2019, the "Life-Space" products were launched through the mother and infant

channel, and the TVC was officially released by throughout the country to accurately and efficiently launch

the products offline and improve sales conversion.

In 2019, professional pregnant, infant and children-oriented nutrition brands "Nature's Bay" and

"Life-Space" are orderly distributed in the mother-and-infant channel, with strong sales performance, and the

channel expansion and the number of outlets have further increased.

7. Collaborate for innovation and strengthen R&D

During the reporting period, in order to further promote collaborative innovation and cooperation and

continue to improve the technological innovation ability, the Company newly established a Guangdong

Enterprise Workstation for Academicians & Experts, Zhuhai VDS Function Research Academicians

Workstation of By-Health Co., Ltd.; and co-built the "Nutrition and Anti-Aging Research Center" with

Shanghai Institute of Nutrition and Health, CAS, and also reached partnership with four global raw material

suppliers (BASF, Fonterra Limited, DuPont Nutrition & Biosciences, IFF Health, etc.) to jointly conduct

research on anti-aging and nutrition interventions.

8. Launch the construction of Smart Factory

During the reporting period, the Company started the construction of a smart factory, completed a

one-step continuous production line for granules and tablets, a continuous production line for direct-mixed

tablets, and a continuous production line for protein powder, as well as related trial production, and obtained

the production permits. Also, in order to facilitate continuous production, a fully automated raw material

high-rack warehouse has also been completed. Intelligent manufacturing assists with the Transparent Factory

to gradually realize production continuity, interconnection of materials, informationization of processes,

real-time detection and unmanned site, and significantly enhance per capita hourly output and plant

utilization, and reduce production cycle.

In October 2018, our transparent factory was awarded the license of national AAAA-level tourist

attraction. In 2019, 230,000 people visited the transparent factory, covering government, media, industry

experts and scholars, upstream and downstream enterprises, consumers, investors, etc.; In July of the same

year, the Company’s Nutrition Exploratorium is opened. With the theme of “nutrition exploration”, it applied


cutting-edge technologies, integrated nutrition science popularization, health check-ups, and entertainment

sharing, and was dedicated to the spread of nutrition knowledge.

II. Analysis of the Main Business

1. Income and Cost

(1) Composition of operating income

Overall operating revenue Unit: Yuan

2019 Years 2018 Years

Amount Proportion of operating income Amount Proportion of

operating income

Year-on-year Increase or Decrease

Total Operating Income 5,261,799,439.25 100% 4,350,775,627.15 100% 20.94%

By sector Main Operating Business 5,240,780,068.88 99.60% 4,328,374,092.95 99.49% 21.08%

Other Businesses 21,019,370.37 0.40% 22,401,534.20 0.51% -6.17% By Product Tablets 2,062,443,015.89 39.20% 1,943,343,522.43 44.67% 6.13% Powder 1,103,346,363.70 20.97% 804,381,138.51 18.49% 37.17% Capsule 1,065,492,846.06 20.25% 1,032,542,902.06 23.73% 3.19% Others 1,030,517,213.60 19.58% 570,508,064.15 13.11% 80.63% By Region Domestic 4,836,443,391.13 91.92% 4,052,978,380.98 93.16% 19.33% Overseas 425,356,048.12 8.08% 297,797,246.17 6.84% 42.83%

(2) Sectors, products or regions accounting for 10% of operating income or profit


Unit: Yuan

Operating Income Operating Cost Gross Margin

Increase or Decrease of Operating

Income YOY

Increase or Decrease of

Operating Cost YOY

Increase or Decrease of Gross Margin YOY

By sector Main Operating Business 5,240,780,068.88 1,772,502,750.66 66.18% 21.08% 27.98% Down by 1.82

percentage points By Product

Tablets 2,062,443,015.89 491,382,749.20 76.17% 6.13% 9.34% Down by 0.70 percentage point

Powder 1,103,346,363.70 420,068,190.65 61.93% 37.17% 19.09% Up by 5.78 percentage points

Capsule 1,065,492,846.06 407,269,583.47 61.78% 3.19% 18.62% Down by 4.97 percentage points

Others 1,030,517,213.60 481,977,287.56 53.23% 80.63% 84.36% Down by 0.95 percentage point

By Region

Domestic 4,836,443,391.13 1,578,153,332.54 67.37% 19.33% 25.53% Down by 1.61 percentage point

Overseas 425,356,048.12 222,544,478.34 47.68% 42.83% 48.61% Down by 2.03 percentage point

(3) Whether the Company’s physical sale income is greater than labor service income?

Classification Subject Unit 2019 Years 2018 Years Year-on-year Increase or Decrease

Sales 10,000 tablets 535,593.27 547,327.59 -2.14% Production 10,000 tablets 712,531.68 712,089.21 0.06% Tablets Inventory 10,000 tablets 153,503.57 126,341.87 21.50%

Sales kg 5,602,199.79 5,185,005.72 8.05% Production kg 8,005,708.11 6,656,218.58 20.27% Powder Inventory kg 1,569,110.75 1,341,494.85 16.97%

Sales 10,000 capsules 239,041.90 286,083.01 -16.44% Production 10,000 capsules 446,906.34 351,192.78 27.25% Capsule Inventory 10,000 capsules 63,382.31 49,256.77 28.68%

Sales piece, set 31,256,354.00 13,654,645.00 128.91% Production piece, set 21,718,315.00 12,026,054.00 80.59% Others Inventory piece, set 7,762,857.00 7,328,669.00 5.92%

The reason for over 30% year-on-year change of relevant data During the reporting period, the sales volumes and production quantities of “other” items increased significantly year-on-year,

mainly due to the substantial increase in sales revenue of products in gift sets in response to market demand.

(4) Composition of operating cost

Unit: Yuan 2019 Years 2018 Years

product category Subject Amount Proportion of

operating cost Amount Proportion of operating cost

Year-on-year Increase or Decrease

Tablets Tablets 491,382,749.20 27.29% 449,425,682.55 31.94% 9.34% Powder Powder 420,068,190.65 23.33% 352,724,204.82 25.07% 19.09% Capsule Capsule 407,269,583.47 22.62% 343,336,815.79 24.40% 18.62%


Others Others 481,977,287.56 26.76% 261,435,028.36 18.58% 84.36%

(5) Major clients and suppliers

Major clients Aggregate sales to top 5 clients (RMB) 1,459,714,428.82 Proportion of aggregate sales to top 5 clients in total annual sales 27.74%

Proportion that sales to related parties in connection with sales to top 5 clients accounts for total annual sales 0.00%

Information of the Company’s top 5 customers No. Customer name Sales volume (Yuan) Ratio in total annual sales 1 Customer 1 744,671,096.71 14.15% 2 Customer 2 370,545,268.22 7.04% 3 Customer 3 118,746,193.24 2.26% 4 Customer 4 114,682,640.58 2.18% 5 Customer 5 111,069,230.07 2.11%

Total -- 1,459,714,428.82 27.74% Other information of major customers The Company has no affiliated relationship with the top five customers. The directors, supervisors, senior management

personnel, core technical staff, shareholders holding more than 5% of shares, actual controllers and other related parties do not

have direct or indirect interests in major customers.

Major suppliers Aggregate purchase from top 5 suppliers (RMB) 519,571,343.93 Proportion of aggregate purchase from top 5 suppliers in total annual purchase 30.62%

Proportion that purchase from related parties in connection with purchase from top 5 clients accounts for total annual purchase

0.00%

Information of the Company’s top 5 suppliers No. Supplier name Purchase amount (Yuan) Ratio in total annual purchase amount 1 Supplier 1 239,255,613.98 14.10% 2 Supplier 2 72,269,966.84 4.26% 3 Supplier 3 69,644,421.63 4.11% 4 Supplier 4 69,458,820.76 4.09% 5 Supplier 5 68,942,520.72 4.06%

Total -- 519,571,343.93 30.62% Other information of major suppliers The Company has no affiliation with the top five suppliers. The directors, supervisors, senior management personnel, core

technical staff, shareholders holding more than 5% of shares, actual controllers and other related parties do not have direct or

indirect interests in major suppliers.

2. Expenses

Unit: Yuan

2019 Years 2018 Years Year-on-year Increase or Decrease

Description for Major Changes

Sales Expenses 1,650,399,754.51 1,280,078,079.79 28.93% Management Expense 429,626,755.08 400,911,499.60 7.16%


Financial Expenses 10,665,253.96 -21,200,744.40 -150.31%

In the reporting period, financial expense rose by 150.31% on a year-on-year basis to be up to RMB10.6653 million, mainly due to interest payment in connection with acquisition financing.

Research and Development Expenses 126,041,296.39 103,489,887.46 21.79%

3. R&D Input

(1) Construction of R&D institutes

By the end of the reporting period, the Company has 6 innovative research platforms at provincial and

above, including a branch of National Postdoctoral Research Workstation Substation, Guangdong Provincial

Enterprise Technology Center, Guangdong Provincial Engineering Technology R&D Center, Guangdong

Enterprise Workstation for Academicians & Experts, Guangdong Provincial Enterprise Technical Envoy

Workstation and Guangdong Innovation and Industrialization Demonstration Base for Private Enterprises.

By the end of the reporting period, the Company's large-scale scientific research laboratories mainly

include R&D bench-scale laboratories, R&D pilot test platforms, and testing centers, equipped with various

preparation research instrument, such as Germany Pfister tablet press, BOCH capsule filling machine, dry

type granulator, etc. The Company also researches and develops testing equipment, such as inductively

coupled plasma source mass spectrometer, automatic dried blood spot detection system, liquid

chromatograph-mass spectrometer, etc., to ensure innovative research and technological transformation.

The Company's testing center was evaluated by the China National Accreditation Service for Conformity

Assessment (CNAS) in 2013 and obtained the CNAS accreditation certificate; the testing capabilities of

multiple heavy metal items, vitamin C, mold yeast, sulfur dioxide and other indicators passed the capacity

verification organized by British FAPAS (Food Analysis Performance Assessment Scheme) in 2017 and

obtained FAPAS international capacity certificate; the Company has formulated a number of internal control

indicators that are stricter than national standards, in order to create reassuring high-quality products with

stringent requirements.

The Company actively participates in scientific research projects such as research on the catalogue of

health food ingredients and formulation of group standards. By the end of the reporting period, the Company

had taken the lead in developing two group standards: "Determination of Minerals and Heavy Metals in Dried

Blood Spots - Inductively Coupled Plasma Mass Spectrometry" and "Determination of Vitamins in Health

Foods in Dried Blood Spots - HPLC-MS. The Company also participated in the formulation of the "Propolis

Health Food Ingredients Catalogue Research Project" and the development of group standards for "Detection

of Vitamin ADE in Health Foods".

(2) Industry-study-research cooperation

In September 2019, the Company signed the "Innovation Strategic Cooperation Agreement" with DuPont

Nutrition Biosciences ApS. Both parties will work together on technical research and development and market

application focusing on probiotics.

In October 2019, the Company and the Shanghai Institute of Nutrition and Health, CAS jointly

established the "Nutrition and Anti-Aging Research Center". In the future, both parties will carry out related

technical project cooperation in the field of nutrition and anti-aging, including but not limited to: aging and


anti-aging mechanism research, establishment of aging evaluation and anti-aging substance screening system;

establishment and improvement of multi-omics databases and accurate nutrition assessment and chronic

disease prediction models; establishment and development of elder health management models and precise

nutrition intervention programs.

In October 2019, the Company signed a "Strategic Cooperation Agreement" with Fonterra Limited, and

the two parties will jointly carry out extensive cooperation around lactoprotein and specific probiotics fields.

In 2019, the By-Health Biosciences Scientific Research Foundation provides funding in the field of

probiotics, and cooperates with domestic colleges and universities, scientific research institutes and other

institutions to carry out related research.

The amount of R&D investment in the past three years and the proportion in the Company's operating income 2019 Years 2018 Years 2017 Years

R&D persons 289 270 242 Proportion of R&D persons 11.23% 11.16% 10.51% R&D investment (RMB) 126,041,296.39 103,489,887.46 83,324,681.82 R&D investment as a percentage of operating income 2.40% 2.38% 2.68%

Capitalization of R&D expense 374,314.97 925,584.61 6,070,230.53 Capitalization of R&D expense as a percentage of R&D investment 0.30% 0.89% 7.29%

Capitalization of R&D expense as a percentage of current net profit. 0.09% 0.10% 0.79%

4. Cash Flows

Unit: Yuan

Subject 2019 Years 2018 Years Year-on-year Increase or Decrease

Sub-total of Cash Inflow from Operating Activities 6,238,951,876.52 5,275,792,889.87 18.26%

Sub-total of Cash Outflow from Operating Activities 4,702,431,773.49 3,926,739,664.99 19.75%

Net Cash Flow Generated from Operating Activities 1,536,520,103.03 1,349,053,224.88 13.90%

Sub-total of Cash Inflow from Investment Activities 1,571,021,726.38 3,311,939,848.97 -52.56%

Sub-total of Cash Outflow from Investment Activities 1,820,222,207.18 7,352,905,613.67 -75.24%

Net Amount of Cash Flow Generated from Investment Activities

-249,200,480.80 -4,040,965,764.70 -93.83%

Sub-total of Cash Inflow from Financing Activities 701,535,141.63 2,474,178,949.00 -71.65%

Sub-total of Cash Outflow from Financing Activities 1,966,595,558.81 730,130,358.40 169.35%

Net Amount of Cash Flow Generated from Financing Activities

-1,265,060,417.18 1,744,048,590.60 -172.54%

Net Increased Amount of Cash and Cash Equivalents 23,840,581.77 -928,695,927.22 -102.57%

Explanation of major influencing factors of significant year-on-year changes in related data (1) In the reporting period, Net Amount of Cash Flow Generated from Investment Activities was RMB-249.2005 million, a

change of 93.83% over the same period of last year, mainly because the company acquired LSG and Pentavite, an Australian


brand, in 2018.

(2) In the reporting period, Net Amount of Cash Flow Generated from Financing Activities was RMB -1,265.0604 million, a

change of 172.54% over the same period of last year, mainly because the company received loans and repaid loans in 2018.

(3) During the reporting period, the increase in cash and cash equivalents was RMB 23.8405 million, a change of 102.57% over

the previous year, which was mainly due to the acquisition of LSG in 2018 and the purchase of the Australian Penvitite brand.

Reasons for the significant difference between the net cash flow generated by the Company's operating activities during the

reporting period and the current year's net profit

During the reporting period, in accordance with the relevant provisions of the "Accounting Standard for Business Enterprises

No. 8 - Impairment of Assets", the Company made provision for impairment of goodwill formed by the merger of LSG (RMB

1,008.7089 million) and provision for impairment of intangible assets (RMB 561.7689 million) and resale of deferred income

tax liabilities (RMB 168.5307 million); and provision for impairment of assets of RMB 102.1172 million for long-term equity

investments in some shareholding enterprises.

III. Non-main business

Unit: Yuan

Amount Proportion Taken in Total Profit

Descriptions for Cause of Formation Sustainable or Not

Investment Income 18,447,741.70 -4.34%

Income from financial products and period profit or loss recognized by joint stock companies using the equity method

Some investment income may be sustained

Profit and Loss of Changes in Fair Value

-4,952,050.16 1.17% Changes in the fair value of fund investment

Change with the Fund operations

Asset Impairment -1,693,108,961.18 398.50%

Goodwill, intangible assets, long-term equity investment impairment and inventory falling price reserves

Some regular items change with the Company's operating conditions

Non-operating Income 46,616,501.67 -10.97% Mainly are governmental subsidies Adjusted pursuant to

government policies. Non-operating Expenditure 6,068,562.44 1.43% Mainly are donation outlay Change with the Company's

external donation behavior

IV. Assets and Liabilities

1. Significant Changes of Subjects under Assets

Unit: Yuan End of 2019 Beginning of 2019

Amount

Proportion Taken in

Total Assets

Amount

Proportion Taken in

Total Assets

Increase or

Decrease of the

Proportion

Description for Major Changes

Cash and Cash Equivalents 1,821,553,419.42 21.87% 1,812,995,783.26 18.33% 3.54%

Account Receivables 113,530,032.72 1.36% 221,472,269.01 2.24% -0.88%

Inventory 742,463,814.53 8.91% 671,493,076.88 6.79% 2.12% Investment Real Estate 171,759,174.27 2.06% 176,686,866.43 1.79% 0.27%


Long-term Equity Investment 171,197,803.13 2.06% 250,395,406.42 2.53% -0.47%

The book value of long-term equity investment at the end of the year decreased by 31.63% from the beginning of the year, which was mainly due to the provision for impairment of long-term equity investment

Fixed Assets 828,341,732.08 9.94% 657,780,070.86 6.65% 3.29%

The book value of fixed assets at the end of the year increased by 25.93% from the beginning of the year, mainly due to the conversion of the Nutrition Exploratorium, visitor center and equipment to be installed into fixed assets in the current year

Construction in Progress 121,482,943.14 1.46% 61,945,017.15 0.63% 0.83%

The book value of construction in progress at the end of the year increased by 96.11% from the beginning of the year, mainly due to the increase in equipment in the fourth period

Intangible Assets 867,619,841.17 10.41% 1,562,931,784.51 15.80% -5.39%

The book value of intangible assets at the end of the year decreased by 44.49% from the beginning of the year, which was mainly due to the provision for impairment of intangible assets

Goodwill 1,183,568,526.23 14.21% 2,165,661,155.00 21.90% -7.69%

The book value of goodwill at the end of the year decreased by 45.35% from the beginning of the year, mainly due to the provision for goodwill impairment

Short-term Borrowings 43,650,075.44 0.52% 158,112,698.00 1.60% -1.08%

Balance of Short-term Borrowings dropped by 72.39% when compared with the year beginning, mainly due to repayment of loans.

Long-term Loans 307,500,000.00 3.69% 892,500,000.00 9.02% -5.33%

The year-end balance of long-term loans decreased by 65.55% from the beginning of the year, mainly due to repayment of loans

2. Assets and Liabilities Measured at Fair Value

Unit: Yuan

Subject Initial Balance

Profit and Loss from the

Changes in Fair Value in the Current

Period

Changes in Accumulative

Fair Value Recognized in

Equity

Impairment

Accounted in

Current Period

Amount Purchased in

Current Period

Amount Sold in Current Period

Amount

Other Changes Ending Balance

Financial Assets 1. Trading Financial Assets

865,000,000.00 - - - 750,000,000.00 -925,000,000.00 - 690,000,000.00

2. Other Equity Instruments Investment

142,923,650.51 - 39,962,002.95 - 151,193,898.30 - 565,000.00 316,917,517.25

3. Other Non-current Financial Assets

611,847,690.42 -4,952,050.16 73,362,115.76 - 18,000,000.00 -3,694,569.54 2,663,090.86 623,864,161.58


Financial Assets Subtotal

1,619,771,340.93 -4,952,050.16 113,324,118.71 919,193,898.30 -928,694,569.54 3,228,090.86 1,630,781,678.83

Total of Above 1,619,771,340.93 -4,952,050.16 113,324,118.71 919,193,898.30 -928,694,569.54 3,228,090.86 1,630,781,678.83

3. Restriction of Assets Rights as at the End of the Reporting Period

Subject Carrying Value at the End of the Period

Reason for Restriction

Cash and Cash Equivalents 73,264,500.00 Australia By Saint’s term deposits pledged for LSG borrowings

Other Non-current Assets 2,771,448.90 deposit from lease

Fixed Assets 182,571,781.12 Mortgaged for the Company’s borrowings

Intangible Assets 42,497,405.35 Mortgaged for the Company’s borrowings

Total 301,105,135.37

As of December 31, 2019, the following shares were pledged to guarantee the Company’s borrowings: 100% shares

of LSG held by Australia By Saint; 100% shares of Australia By Saint held by Hong Kong By Saint; 100% shares

of By-Health Pharmaceutical Co., Ltd, Guangdong Bajia Pharmaceutical Co., Ltd. and By-Health Pharmaceutical

Co., Ltd., 53.33% shares of Guangzhou By Saint and 70% shares of Guangdong Beyond Co., Ltd. held by the

Company.

Besides, Australia By Saint, LSG and its subsidiaries guaranteed Australia By Saint’s acquisition financing with all

their assets obtained and to be obtained.

V. Investment Status Analysis

1. Overall Situation

Investment Amount in the Reporting Period (Yuan)

Investment Amount in Same Period in Previous Year (Yuan) Variation Range

1,961,860,000.00 288,264,000.00 580.58%

2. Significant Equity Investment Acquired in the Reporting Period

Unit: Yuan

Name of Invested

Company

Main business

Mode Amount Shareholding

Proportion Fund

Source Cooperation Party Investment Duration Product Type Expected

Income

Investment Cost or Loss in

Current Period profit and loss

Whether Involved with any Litigation

Date of disclosure

Disclosure Index

Hong Kong By Hong Co., Ltd.

“By-Health” brand operation

New Establishmen

t 30,000,000.00 100.00% Owned

Fund Not Applicable Long-term Not Applicable Not Applicable Not Applicable No None None

Guangzhou Weilai Zhuoshi Equity Investment Fund (Limited Partnership)

stock right Investment

New Establishmen

t 30,000,000.00 29.70% Owned

Fund

Guangzhou Zhuoshi Mingyu Investment Management Co., Ltd, Zhuhai Hengqin Zhuoshi Yongshang Equity Investment Fund (Limited Parternship), Chengcheng Investment Holding Co., Ltd., and Weilai Equity Investment Management (Guangzhou) Co., Ltd.

7 years Not Applicable Not Applicable -3,736,057.00 No 2018-03-07 CNINF

Guangzhou By-Health By Saint Co., Ltd

Investment holding

Acquisition 1,400,000,000.00 100.00%

Stock offering, stock exchan

ge

Not Applicable Long-term Not Applicable Not Applicable Not Applicable No 2019-08-05; 2019-08-16 CNINF


Investment holding

Capital Increase 483,860,000.00 100.00% Owned

Fund Not Applicable Long-term Not Applicable Not Applicable Not Applicable No None None


Guangzhou Redhill Venture Investment Fund Partnership (limited partnership)

Venture investment consulting business

Capital Increase 18,000,000.00 11.88% Owned

Fund (Note 1) Long-term Not Applicable Not Applicable 6,210,053.94 No

2018-07-17; 2018-10-10; 2018-10-19; 2019-03-08; 2019-05-22

CNINF

Total -- -- 1,961,860,000.00 -- -- -- -- -- Not Applicable 2,473,996.94 -- -- --

Note 1: The Cooperation Party of Guangzhou Redhill Venture Investment Fund Partnership includes the Guangzhou Redhill Equity Investment Management Co., Ltd., Guangzhou Redhill Venture Investment Fund Partnership (limited partnership), Ningbo Meishan Bonded Area Sequoia Taixin Investment Management Partnership (limited partnership), Starquest New Economy Equity Investment Fund (Shenzhen) Partnership (limited partnership), Guangdong Wens Investment Co., Ltd., Guangzhou Danfeng Venture Investment Partnership (limited partnership), SDIC Venture Capital Guidance Fund Of Emerging Industry (limited partnership), Guangzhou SME Development Fund Co., Ltd., Guangzhou Nansha Industry Investment Management Co., Ltd, Ningbo Daxie Xutengchuang Equity Investment Partnership (limited partnership), YU Miao, Jiangsu Liyang Guangkong Equity Investment Partnership (limited partnership), Hunan Guangkong Xingchen Equity Investment Partnership (limited partnership)

VI. Analysis for Main Holding Companies and Stock Participating Companies

Information about Main Subsidiaries and Stock Participating Enterprise with the Net Profit Influencing Amount above 10% Unit: Million Yuan

Company Name Company

Type Main Business Registered

Capital Total

Assets Net

Assets Operating Income

Operating Profit Net Profit

Guangdong Baijia Pharmaceutical Co., Ltd

Subsidiary

Responsible for management and operation of products in domestic market for brands “Keylid”, “Jianshijia” and “Life-Space”.

13.33 526.84 226.57 1,380.90 141.87 115.35

By-Health Pharmaceutical Co., Ltd

Subsidiary Management and operation of the brand “By-Health”

100.00 676.89 164.08 3,145.02 -55,08 -26.81


Subsidiary

A domestic Special Purpose Vehicle which takes an indirect holding in Life-Space Group Pty Ltd

3,483.86 2,356.46 1,843.70 457.53 -1,812.65 -1,552.55

Acquisition and Disposal of Subsidiaries in the Reporting Period

Company Name

Acquisition and Disposal Method of Subsidiaries in the Reporting Period

Influence to the Overall Production, Operation and Performance

Hong Kong By Hong Co., Ltd. New Establishment Responsible for operation of brand "BY-HEALTH” By-Health Nutrient Exploration (Zhuhai) Co., Ltd. New Establishment Responsible for providing related services and support for the

Transparent factory and Nutrition Exploratorium of By-Health Australia By Saint Pty Ltd New Establishment Responsible for Australia-related business HongKong BioCarna Company Limited New Establishment Wholly own the Australia BioCarna Pty Ltd Guangdong By Yi Health Technology Co., Ltd. New Establishment Responsible for export business

Haojianshi Pharmaceutical (Hainan) Co. , Ltd. New Establishment Responsible for OTC drugs

The Supershot Beverages Co., Ltd Sale of some equity Result in change of the Company's consolidation scope, become the Company's joint stock company

VII. Development Prospect

(I) Industry pattern and trends


In 2016, the CPC Central Committee and the State Council issued the “Healthy China 2030” Scheme. In

2017, the 19th National Congress of the Communist Party of China further made major decisions on the

implementation of a Healthy China strategy and clarified the roadmap for building a Healthy China. In 2019,

the State Council successively issued relevant documents such as "Opinions on the Implementing Healthy

China Action" and "Actions on Healthy China Action (2019-2030)" to continuously promote the transition

from "focusing on disease treatment" to "focusing on people's health", mobilize the whole society to

implement the "prevention-oriented" policy. The goals are: the health industry will achieve a total scale of 16

trillion Yuan by 2030, becoming a pillar industry of the national economy; the health literacy level of the

entire population will be greatly improved; the average life expectancy of life will be greatly improved; the

main health indicators of residents will enter the ranks of high-income countries; and health equity will be

basically achieved.

With the support of the Healthy China Strategy, the national policy has continued to increase support for

the massive health industry, and the nutrition and health food industry has gradually received attention as an

important pillar of the massive health industry. Along with the rise of the concept of “Comprehensive Health”,

per capita disposable income, consumption market upgrade and population aging, consumers will be more

concerned with healthy lifestyles, and health market demand thus arising will facilitate the healthy and

sustainable development of the health food industry, with bright prospect for the industry and huge growth

potential in some segments of market.

As a subdivision of the nutrition and health food industry, Vitamin & Dietary Supplements (VDS) started

late in China. The residents' awareness and habits of using VDS have not been fully established. The

penetration rate of products and per capita consumption are far lower than those of developed countries. There

is huge room for future market rise.

The amended PRC Food Safety Law became effective on October 1, 2015, providing for legal status,

regulatory requirements for health food to ensure strict and proper regulation of overall health food market.

On July 1, 2016, Health Food Registration and Filing Management Method became effective. In 2018, the

State Administration of Market Regulation set up a special food safety supervision and management

department to comprehensively promote the reform of the review and approval system. The "Regulations for

the Implementation of the Food Safety Law" came into effect on December 1, 2019, and the " Measures for

Administration of the Catalogue of Health Food Ingredients and Health Functions" and "Naming of Health

Food (2019 Edition)" were released and implemented in the same year.

As new industry regulations will be gradually introduced for some time to come, the new regulatory

spirit and detailed rules will have an important impact on the development of the future industry. By-Health,

as the leader of the VDS industry, will definitely benefit from the environment of industry integration.

(II) Company development strategy

The company is committed to creating value for user health and adheres to the core principle of “Total

Customer-oriented Approach” to actively deploy in the consumer health field. The path to achieve the

company’s strategic objective is to take the high-quality and differentiated “product power” as the

cornerstone, rely on the “brand power” and “channel power”, and continuously promote the construction of

“service power”. On the basis of the company’s main popular brand “By-Health”, the company actively

expands the subdivision field, successively launches many self-owned brands including joint care brand


“Keylid”, eye health nutrition professional brand “Jianshijia”, sports nutrition brand “GymMax” and

professional maternity-baby-children nutrition brand “Nature's Bay” and acquires overseas brands such as

baby-children nutritional supplement brand ”Pentavite” and Australian probiotics leading brand ”Life-Space”

through acquisitions to continuously build and enrich the company’s brand matrix and effectively enhance the

brand value. Meanwhile, the company is building and continuously consolidating its online and offline omni

channel sales system to form differentiated and diversified channels and build the company’s comprehensive

competitiveness.

(III). Business Plan for 2020

The factors that bring huge operating pressure to the industry and the company in 2019 have not been

completely cleared. Under the severe external environment, the company will continue to firmly implement

the strategic measures and layout of consumer health in 2020, with “activation” as the keyword to activate

“people”, continue to activate brand power, reactivate the VDS business and “Life-Space” business, expecting

to lead the industry to achieve restorative growth.

1. Activate “people” and greatly promote the upgrading of talent structure

In order to effectively support the company’s strategic layout and business development demands, the

company has identified the “Twelve Guidelines for By-Health Talent Structure Upgrade” as the guiding

principle for upgrading the talent structure. In 2020, the company will implement forced distribution of

performance rating and last-elimination system by level, full job rotation and internal promotion priority,

make full use of highly potential young talents, establish shadow board of directors and take other measures to

fully revitalize human resources and maximize the organization’s innovation vitality.

2. Continue to activate the brand power and increase investment in the future

Brand asset is one of the core assets of consumer goods companies. Increasing investment in brand asset

is increasing investment in the future. The company has always firmly insisted on the core marketing strategy

of continuous and moderately aggressive investment in the brand power. In 2020, the company will continue

to greatly invest in brand asset, set mandatory indicators on media costs to reduce unit prices and increase

view counts and to achieve cost reduction and efficiency increase, and establish higher quality and stronger

business-driven mechanisms for brand cost input and output standards, decision-making, evaluation and

accountability to continually activate the brand power.

3. Reactivate the VDS business: core market strategy of all-line attacks by 4+2+1 various products

In 2020, the company will launch all-line attacks with “four hero products + two image products + one

star product” and adopt an aggressive core market strategy. Through share and breakthrough in different

sub-categories, drive sales of all categories, activate the whole VDS business and increase the market share.

(1) Four hero products are developed together

In 2020, the company will launch a new reserve hero product based on the existing three hero products

and build a hero product matrix with products developing together. First, the market space of “Keylid” is still

huge. The company will continue to invest greatly and expand the bone and joint care market and will enter

the youth market after new product approvals. Second, the company will fully build the “Life-space” domestic

product as the second hero product with the same height as “Keylid”. Third, “Jianshijia” will continually be

positioned as a reserve hero product. The company will adjust and expand the pilot area and continue to


enhance its brand influence through channel expansion, brand packaging image upgrade, media strategy

optimization and other measures. Finally, the company will launch a new reserve hero product for the liver

protection market. Relying on the unique advantages of scarce approval and compound formulation, the

company will mainly promote it in the five major provinces to expand the liver protection blue ocean market.

(2) Image products strike out like double fists

In 2020, the company will continue to take the protein powder as the main brand image product, keep

high investment in marketing and maintain rapid growth for the category by upgrading new packaging and

improving terminal image strategies. Meanwhile, the company will include the “multivitamin mineral tablets”

series of products covering more product groups as the image product. Continue to consolidate the main brand

image with double fists attack. The company will increase its investment in this product, and through various

promotion measures, make every effort to build multivitamin products and reactivate the basic nutrition series.

(3) Star product makes more development

In 2020, the company will launch an independent promotion strategy for the star product of “bovine

colostrum plus calcium chewable tablets”. Based on differentiated products and through investment in large

amount special promotion costs, the company will create hot-sale products targeted at children and drive the

increase of children’s series of products.

4. Reactivate the VDS business: construct a new sales mode suitable for the operation of multiple

hero products

In order to support the company’s implementation of the core market strategy of all-line attacks with

“four hero products + two image products + one star product” in 2020 and to support the company’s operation

of multiple hero products and long-term development of new brands and categories in the future, the company

will comprehensively upgrade the distributor system and build a new sales mode suitable for the operation of

multiple hero products. In 2020, the company will launch a distributor fission plan and establish three

completely independent distributor systems in the VDS business: main business, “Keylid” and “Life-space”.

The increase of distributors is mainly based on the fission of the original distributors. Establish the distributor

system with prefecture-level city as the unit, and new distributors will be recruited in areas where the fission

standard is not satisfied.

5. Reactivate the “Life-Space” business

The company’s acquisition of LSG is mainly based on strategic considerations of three aspects:

probiotics subdivision market, cross-border e-commerce and internationalization. Although the LSG

performance in 2019 did not meet expectations, the three logics of mergers and acquisitions are still valid. In

2020, the company will actively deploy and reactivate the “Life-Space” brand business. In the Chinese

market, the company will fully create the “Life-Space” domestic products with the same height as “Keylid”,

continue to increase market investment, enrich the product matrix by relying on the “life.space® probiotics

powder” health food registration approval obtained in January this year and speed up penetration and terminal

coverage in pharmacies and mother-baby channels. In the Australian market, due to the continued impact of

e-commerce laws on private overseas shopping channels, business growth remains uncertain. The company

will adapt to market changes. On the one hand, it will continue to consolidate the top-selling probiotics brand

position of “Life-Space” in Australia, and highlight its unique product advantages of multi-strains and


personalized formulations based on different life stages; on the other hand, it will accelerate the integration of

private overseas shopping channels and optimization of Australian export distributors, continue to promote

brand building and consumer education in the Australian market, continuously strengthen the development of

cross-border e-commerce platforms and resource investment, establish distributor matrix for China’s

cross-border platforms, further develop other new online platforms based on the existing mainstream

platforms and take the initiative to manage “Life-Space” export business to China.

6. Start the OTC project and step into the new track for consumer health

The company is committed to creating value for user health, adheres to the core principle of “Total

Customer-oriented Approach” and actively deploys in the consumer health field on the basis of making the

VDS business stronger and more outstanding. In 2020, the company will officially launch the OTC project to

step into the new track of the consumer health field. By setting up the holding subsidiary Haojianshi as the

operating body of the OTC project, the company focuses on the development of the core category of

gastrointestinal drugs, gradually builds rich and differentiated product lines and develops it in multiple

channels including pharmacies, self-operated e-commerce platforms and third terminals by aid of the

company’s channel advantages and platform resources. Drive with the two wheels of brands and channels to

promote the rapid development of business.

7. Focus on strategic projects and promote business innovation

In 2020, the company will launch a budget dynamic control mechanism of full costs and full cost ratio

and focus on strategic projects representing the company’s future such as user asset operations, e-commerce

digitization and ERP platform digital transformation to promote business innovation and lay out the future.

(1) Promote user asset operation

In 2020, the company will iteratively upgrade member operation, continuously improve user asset

operation from multiple perspectives such as digitizing core scenarios and building precise marketing

applications and after-sales service systems, focus on breakthrough of paying by rewards points experience

and take the repurchase rate as an important indicator for user operation.

(2) Speed up the e-commerce digitization construction

In 2020, the company will focus on e-commerce digitization, build a path from member digitization to

media placement digitization then to e-commerce channel digitization, accelerate the construction of

e-commerce digitization systems centered on consumer users to achieve accurate reaching of media placement

and marketing promotion and improve the circulation efficiency of people buying the brand products and

loyal to the brand. Digitization drives the growth of online channels to create a new e-commerce pattern with

multiple modes coexisting.

(3) Promote digital transformation of ERP platform

In 2020, the company will comprehensively upgrade and integrate the ERP platform, build a digital ERP

platform with full links and full channels from product R&D to product sales and supply. Achieve digital

restructuring of various business modules including R&D, production, supply, quality control, sales,

inventory, logistics and finance based on middle platform architecture, and build it with the digitalization

operating capability that supports the company’s business to drive the visual operation of full business and full

channels.


8. Construct a multi-business R&D system and consolidate the innovation strength

In 2020, in accordance with the company’s strategy and product layout, the company will build multiple

completely independent R&D systems including Vitamin & Dietary Supplements and OTC, continue to drive

up the construction of “overseas R&D centers”, deepen nutrition and anti-aging research and related product

transformation, promote research on platelet function-related nutritional interventions and the application of

related new functions and conduct cutting-edge research on “homeostasis” health assessment and personalized

nutritional interventions with Shanghai Institute of Nutrition and Health, Chinese Academy of Sciences.

9. Transparent factory deepens efficiency increase, quality improvement and cost reduction and

enables market sales

In 2020, the company’s transparent factory will focus on building a fast and flexible super supply chain

system, accelerate the launch of new dosage forms and new products to improve the response speed to the

market, carry out the Australian TGA certification work, continue to promote the construction of smart

factory, implement lean management and strictly control operating costs. Meanwhile, the Nutrition Discovery

Museum was officially opened in July last year, and the company will clearly position it and make appropriate

adjustments based on user experience and benefits.


Chapter V Important Events

I. Profit distribution for ordinary shares and conversion of capital reserve into share capital

Formulation, Execution or Adjustment of Profit Distribution Policy, Especially Cash Dividend Policy for Ordinary Shares

during the Reporting Period

In the reporting period, pursuant to the CSRC Guiding Opinions on Further Defining and Refining Profit Distribution

Policies of Listed Companies, relevant requirements of Shenzhen Stock Exchange as well as the Dividend Distribution

Management System formulated by the Company in 2012 and the Dividend Distribution Plan (2017-2019) formulated by the

Company in 2017, the Company implemented the 2018 profit distribution plan, paying RMB5.00 in cash (tax included) for

every 10 shares. The Company has formulated and implemented its cash dividend distribution policies in conformity with the

Articles of Association, defined relevant standards and percentages and followed sound decision making procedures, and

independent directors have diligently performed their duties and fully safeguarded lawful rights and interests of medium and

small shareholders.

Special note on cash dividend policy

Whether it conforms to the Articles of Association or the resolution of the Shareholders’ Meeting:

The Company’s profit distribution plan of 2018 is executed in strict accordance with relevant provisions of the Articles of Association, approved in the deliberation of the Annual Shareholders’ Meeting 2018 and strictly carried out within prescribed time.

Whether the standard and ratio of dividend are explicit and clear:

Article 214 of the Company’s latest Articles of Association explicitly stipulates the principles, forms, time and conditions for profit distribution as well as the decision-making mechanism and approval procedures for profit distribution policy, all conforming to the latest CSRC requirements on dividend distribution policy of listed company, with explicit and clear standard and ratio for dividends.

Whether relevant decision-making procedure and mechanism are complete:

The Company’s Proposal on Preliminary Plan for Profit Distribution in 2018 has been approved by the 21st Session of the 4th Board of Directors, 12nd Session of the 4th Board of Supervisors and the Annual Shareholders’ Meeting in 2018. Relevant decision-making procedures have been completed and distribution of equity been completed on 3 April 2019.

Whether Independent Director performed his/her duty and played his/her role:

In the opinion of the Independent Director, the Company’s Proposal on Preliminary Plan for Profit Distribution in 2018 complies with the actual conditions of the Company and the Company’s cash dividend ratio in recent 3 years exceeds 30% of the average annual distributable profits in such period, conforming to relevant provisions of the Company Law and the Articles of Association, and benefiting the regular operation and sound development of the Company without harming the rights and interests of shareholders, especially minority shareholders.

Have minority shareholders fully expressed their opinions and demands and whether their legitimate rights and interests been fully protected:

The decision-making procedures and mechanism of the Company’s profit distribution are complete, which has practically protected the rights and interests of all shareholders.

Where cash dividend policy is adjusted or amended, whether relevant conditions and procedures are compliant and transparent:

Not Applicable

The preliminary plans for profit distribution and increase of share capital using capital reserve during the reporting period are consistent with relevant provisions of the Articles of Association and the Dividend Management Measures. The preliminary plans for profit distribution and increase of share capital using capital reserve during the reporting period conform to relevant provisions of the Articles of Association and the Dividend Management Measures. Plan for Profit Distribution and Share Capital Transferred and Increased from Capital Reserve in the Current Year Bonus shares per 10 shares 0 Dividend per 10 shares (tax included) 3.60 Conversion per 10 shares 0 Share capital base for the distribution plan (shares) 1,582,492,554


Cash dividend (RMB, tax included) 569,697,319.44 Cash dividend in other forms (e.g. share repurchase) (RMB) 0 Cash dividend (including other forms) (RMB) 569,697,319.44 Profit available for distribution 691,796,454.40 Cash dividend (including other forms) as a percentage of total profit distribution 100%

Cash dividend Where the Company is in the stage of growth and has arrangements for major capital expenditure, ratio of cash dividend in the profit distribution shall be at least 20%.

Details on preliminary plan of profit distribution or share capital increase by capital reserve The Proposal on Preliminary Plan for Profit Distribution in 2019 approved by the 33rd Session of the 4th Board of Directors held

on 12 March 2020 stipulates the issuance of cash RMB 3.60 (tax included) to all shareholders for every 10 shares, based on the

Company’s total share capital of 1,582,492,554 shares.

Where the distribution plan changes due to circumstances including the listing of new shares, exercise of equity reward and share

repurchase between its disclosure and implementation, distributable ratio will be adjusted accordingly based on the principle of

keeping cash dividend total unchanged.

Company’s plans (preliminary) for profit distribution and share capital increase using capital reserve in recent 3 years (including the reporting period)

(1) On 20 March 2018, the Company’s Annual Shareholders’ Meeting 2017 approved the Proposal on Preliminary Plan for

Profit Distribution in 2017, which stipulates the issuance of cash RMB 3.30 (tax included) to all shareholders for every 10

shares, based on the Company’s total share capital of 1,469,271,880 shares, to be completed on 4 April 2018.

(2) On 22 March 2019, the Company’s Annual Shareholders’ Meeting 2018 approved the Proposal on Preliminary Plan for

Profit Distribution in 2018, which stipulates the issuance of cash RMB 5.00 (tax included) to all shareholders for every 10

shares, based on the Company’s total share capital of 1,469,271,880 shares, to be completed on 3 April 2019.

(3) On 12 March 2020, the 33rd Session of the 4th Board of Directors and the 19th Session of the 4th Board of Supervisors

approved the Proposal on Preliminary Plan for Profit Distribution in 2019, which stipulates the issuance of cash RMB 3.60 (tax

included) to all shareholders for every 10 shares, based on the Company’s total share capital of 1,582,492,554 shares. This

Preliminary Plan for Profit Distribution is to be submitted to the Annual Shareholders’ Meeting 2019 for approval before

implementation.

Cash dividend distribution for ordinary shares in the latest three years (including the reporting period) Unit: Yuan

Year Cash dividend (tax

included) (Tax included)

Net profit attributable to ordinary shareholders of listed companies as stated in the consolidated statement

Cash dividend as a percentage of net profit attributable to ordinary shareholders of listed companies as stated in

the consolidated statement

Cash dividend in other forms

2019 Years 569,697,319.44 -355,889,615.46 -160.08% - 2018 Years 734,408,940.00 1,002,184,999.85 73.28% - 2017 Years 484,859,720.40 766,255,562.79 63.28% -

1. Appointment and Dismissal of Accounting Firm

1. Appointed accounting firm

Currently appointed accounting firm Domestic accounting firm GP Certified Public Accountants (Special General Partnership) Remuneration of domestic accounting firm (RMB 10,000) RMB 2.28million Years of continuous serving in auditing of domestic accounting firm 13 Years


CPA of domestic accounting firm Feng Kuncong, Duan Shoufeng

Years of continuous serving of CPA in auditing in domestic accounting firm

As of the issuance date of the Audit Report 2019, undersigned CPA Feng Kuncong has provided auditing service in 4 continuous years for the company; and Duan Shoufeng 2 continuous years.

Employment of internal control audit accounting firm, financial consultant or sponsor During the Reporting Period, the Company appointed CITIC Securities as the financial consultant for purchase of assets due to

issuance of shares and paid the latter in total RMB 4million.

2. Major Guarantee

(1) Guarantee

Unit: Ten Thousand Yuan External guarantee of the Company and its subsidiaries (excluding the one for subsidiaries)

Name of the guaranteed

Date of disclosure of relevant announcement on

guarantee limit

Guarantee limit

Date of actual occurrence

Actual guaranteed

amount

Type of guarantee

Period of guarantee

Whether it’s

perform completel

y

Whether it’s

guarantee for

related parties

None Total limit of external guarantee approved during the Reporting Period (A1)

0 Total actual amount of external guarantee during the Reporting Period (A2)

0

Total limit of approved external guarantee at the end of Reporting Period (A3)

0

Total actual balance of external guarantee at the end of Reporting Period (A4)

0

Guarantee provided by the Company for subsidiaries



guarantee limit

Guarantee limit


Actual guaranteed

amount

Type of guarantee

Period of guarantee

Whether it’s

perform completel

y

Whether it’s

guarantee for

related parties

Australia By Saint Limited 2018/7/30 51,285.15 2018/8/22 48,843.00 Pledge 22 August 2018 to 20 August 2023

No No

Life-Space Group Pty Ltd 2019/2/28 24,421.50 - 0 - - - -

Total limit of guarantee for subsidiaries approved during the Reporting Period (B1)

24,421.50

Total actual amount of guarantee for subsidiaries during the Reporting Period (B2)

0

Total limit of guarantee for subsidiaries approved at the end of Reporting Period (B3)

75,706.65

Total actual balance of guarantee for subsidiaries at the end of Reporting Period (B4)

48,843.00

Guarantee provided by subsidiaries for other subsidiaries



guarantee limit

Guarantee limit


Actual guaranteed

amount

Type of guarantee

Period of guarantee

Whether it’s

perform completel

y

Whether it’s

guarantee for

related parties


Australia By Saint Limited 2018/7/30 7,326.45 2018/8/29 7,326.45 Pledge 22 August 2018 to 20 August 2023

No No

Total limit of guarantee for subsidiaries approved during the Reporting Period (C1)

0

Total actual amount of guarantee for subsidiaries during the Reporting Period (C2)

0

Total limit of guarantee for subsidiaries approved at the end of Reporting Period (C3)

7,326.45

Total actual balance of guarantee for subsidiaries at the end of Reporting Period (C4)

7,326.45

Total guarantee amount (total of the aforesaid three items)

Total limit of guarantee approved during the Reporting Period (A1+B1+C1)

24,421.50

Total actual amount of guarantee during the Reporting Period (A2+B2+C2)

0

Total limit of approved guarantee at the end of Reporting Period (A3+B3+C3) 83,033.10

Total actual balance of guarantee at the end of Reporting Period (A4+B4+C4)

56,169.45

Ratio of total actual guarantee amount (i.e. A4+B4+C4) in the Company's net asset 9.37%

Wherein, Balance of guarantee provided for shareholders, actual controller and their related parties (D) 0

Balance of guarantee provided for the debts of the guaranteed with direct or indirect asset-liability ratio over 70% (E) 0

Amount of total guarantee amount exceeding 50% of the net asset (F) 0

Total of the aforesaid three guarantee amounts (D+E+F) 0 Note on complex guarantee:

The 15th Session of the 4th Board of Directors held on 30 July 2018 deliberated the Proposal on Provision of Guarantee by the

Company and Subsidiaries and approved the guarantee provided for subsidiary Australia By Saint Pty Ltd, i.e. to secure the

application of Australia By Saint Pty Ltd for oversea bank loans of no more than AUD 120million, the Company was to provide

the bank with SLC (standby letter of credit), Hongkong Bysen Company Limited was to pledge 100% shares it held in Australia

By Saint Pty Ltd to oversea commercial bank, and Australia By Saint Pty Ltd was to mortgage or pledge all assets and equities

as well as the assets and equities of its purchased company LSG and its subsidiaries to oversea commercial bank. On August 17,

2018, the company's 4th Extraordinary General Meeting in 2018 considered and passed the resolution about the above matters.

In 2018 and 2019, the Company and subsidiaries provided guarantee for the loan of AUD 100million for AUSTRALIA BY

SAINT PTY LTD, with the guarantee period of 5 years.

3. Other Major Contract

Name of the Company

Signing the Contract

Name of the Counterpart of the

Contract Object of Contract Signature Date

of the Contract Implementation

Status Disclosure

Date Disclosure

Index

R&D strategic cooperation agreement

BASF SE、BASF Personal Care and Nutrition GmbH

Establish cooperation relationship for scientific research and development and application for precise nutrition

2017/5/23 On-going 2017/5/23 CNINF

Innovative strategic cooperation agreement

Bioiberica S.A.U.

R&D of terminal functional health food based on mature raw materials, research and product development of new functional raw materials for joint health, etc.

2018/10/24 On-going 2018/10/24 CNINF


Innovative strategic cooperation agreement

DuPont Nutrition Biosciences ApS

R&D in the area of intestinal microecology and probiotics 2019/9/27 On-going 2019/9/27 CNINF

Strategic cooperation agreement

Fonterra Limited Extensive cooperation in the area of lactoprotein and special probiotics 2019/10/14 On-going 2019/10/14 CNINF

III. Information about Social Responsibility

1. Fulfillment of social responsibilities

“Every life has equal value no matter where he/she was born and lives.” The philosophy for public welfare of By-Health is

“Gain More and Share More”. We are only gaining through giving to others, and the more you give, the more you will receive in

return. Since its listing, the Company has been actively performing its corporate social responsibility (CSR), attending to major

CSR topics especially the ones concerning operation performance, compliance and law-abidance, product quality, employee

development, safety production, environmental protection, employee rights and benefits, occupational health, public welfare and

community development, and making positive efforts to benefit all interested parties including shareholder, investor, employee,

consumer, dealer, supplier, government agency, industrial association, media and NGO.

The Company holds it the basic principle for corporate operation to abide by the law and emphasizes mutual success for

both corporate profits and social benefits. The Company strictly follows relevant provisions of state laws, regulations and

policies in its operations and supports the development of local economy by contributing taxes and increasing employment in an

active manner. In its daily operation, the economic responsibility centered on “operation performance, research and development

and quality management, the environmental protection responsibility centered on “energy-saving and emission reduction,

recycled utilization and environmental protection and public welfare” and the social responsibility centered on "consumer,

employee development, client relation, supply chain management, public welfare and community participation”, have all been

well carried out. On such basis, the Company continues organizing and conducting the following activities:

In 2005, launched the 1+1+ Hope Project; 16 Hope Primary Schools have been constructed with the 17th under

construction as of the end of Reporting Period;

In 2011, launched the large health public benefit program “Health Checking Vans China Tour”; approximately 3,500

activities have been held accumulatively as of the end of Reporting Period;

In 2012, jointly launched "Improvement Program of School-age Children's Nutrition in Poverty-stricken Areas" with

Chinese Nutrition Society (CNS) and Global Child Nutrition Foundation (GCNF); The three-year program provided

free nutrient enrichment formula powder for students of 18 rural primary schools in Guangdong, Hubei and Hebei

Provinces to supplement their nutrients in a targeted way and benefited over 6,000 students by dint of nutrition

propaganda and education;

In 2013, jointly launched "Hope Project - By-Health Nutritional Supporting Education Program” with China Youth

Development Foundation to help improve nutrition and health of children and teachers in impoverished areas in a

sustainable manner through cultivation of nutrition teachers, nutrition knowledge class and donation of nutrients. In

August 2019, the program was held in Zhuhai, Guangdong in the form of Nutrition Discovery Summer Camp for the

very first time. 150 students and teachers from Guangdong, Guangxi and Hubei experienced a wonderful three-day

tour of nutrition discovery there. As of the end of Reporting Period, nutrition supplements were provided to more

than 140 primary schools across the country and 460 nutrition education teachers has been trained; over 200

volunteers brought vivid and interesting nutrition knowledge classes to children, benefiting over 50,000 students.

The Company cooperated with Yao Foundation for 7 consecutive years since 2013 to support Yao Foundation

Basketball Season of Hope Primary School by donating nutrition products to tens of thousands of students to help

them to supplement nutrition and better enjoy the happiness from health and exercise.

In the meantime, to support the fighting against COVID-19 and actively shoulder its CSR, on 27 January 2020, the

Company established "Special Funds against COVID-19" with the donation of RMB 10 million made via China Charity


Federation (CCF). On February 10, the Company donated over 83,000 pieces of Vc and protein powder to support designated

rescue hospitals in Hubei and Guangdong Provinces, and also 1,000 infrared thermometers to "Zhuhai emergency headquarters

for epidemic prevention and control". On February 20, the Company again donated over 65,000 pieces of vitamin & dietary

supplements (VDS) such as Vc, protein powder and probiotics to 12 designated rescue hospitals including Leishenshan Hospital,

and frontline medical personnel in several places.

IV. Description for Other Major Events

1. Asset Purchase by Share Issuance

In the Reporting Period, the company issued shares to purchase total 46.67% shares of Guangzhou By Saint from

counterparties, and on July 2 received the Reply on By-Health Co., Ltd’s Asset Purchase by Share Issuance to Shanghai

Zhongping Guosheng M&A Equity Investment Fund Partnership (Limited Partnership) and Other Entities issued by China

Securities Regulatory Commission (CSRC Approval [2019] No.1029).

On 13 July 2019, Guangzhou By Saint Co., Ltd completed the administrative formalities on the transfer of this transaction

asset. The Company newly issued 113,728,674 shares in a non-public manner (restricted shares after IPO), listed on 21 August

2019 and total shares of the Company would be 1,582,492,554 shares after non-public offering. Upon completion, the Company

indirectly holds 100% shares of LSG.

V. Major Events of Subsidiaries of the Company

1. Establishment of Hong Kong By Hong Co., Ltd.

On January 10, 2019, the company set up a new wholly owned subsidiary named Hong Kong By Hong Co., Ltd., which,

with a registered capital of HK$1, is responsible for operation of brand “By-Health”.

2. Establishment and change of business scope of By-Health Nutrient Exploration (Zhuhai) Co., Ltd.

On March 26, 2019, the company set up a new wholly owned subsidiary named By-Health Nutrient Exploration (Zhuhai)

Co., Ltd, which, with a registered capital of RMB 10 million and Jiang Gang as the legal representative, provides related

services and support for the Transparent Factory and Nutrient Exploration Hall.

On 26 November 2019, the business scope of By-Health Nutrition Exploration (Zhuhai) Co., Ltd. is changed by adding

“medical room service; health examination service; gene test service” to its original scope, with relevant administrative

formalities of change completed.

3. Change of residence and place of business of By-Health Pharmaceutical Co., Ltd.

On July 18, 2019, By-Health Co., Ltd. changed its residence and finished relevant industrial and business formalities; and

its residence has changed from “Commercial Service Center-99, Industrial Park of Guangdong-Macao Cooperation in Chinese

Medicinal Science and Technology, No.2522 Huandao North Road, Hengqin New District, Zhuhai City (Centralized office

area)” to “Room 301-002, S & T Research Headquarters Building, Industrial Park of Guangdong-Macao Cooperation in Chinese

Medicinal Science and Technology, No.1 Doukou Road, Hengqun New District, Zhuhai City (centralized office area)”

On 12 October 2019, the operation premise of By-Health Pharmaceutical Co., Ltd was changed from “Room 601, No. 19,

Haihe Street, Hengqin Town, Zhuhai” to “Floor 4, No. 19, Shangcun Village, Hengqin Area, Zhuhai”, with relevant

administrative formalities of change completed.

4. Establishment of HongKong BioCarna Company Limited and Australia BioCarna Pty Ltd

On August 22, 2019, the company set up a new wholly owned subsidiary named HongKong BioCarna Company Limited

with a registered capital of HK$1. On 2 September 2019, HongKong BioCarna Company Limited set up the wholly-owned

subsidiary Australia BioCarna Pty Ltd with the registered capital of AUD 1, to be in charge of businesses in Australia.

5. Establishment of Guangdong Baiyi Health Technology Co., Ltd.

On 29 November 2019, the Company newly established the wholly -owned subsidiary Guangdong Baiyi Health

Technology Co., Ltd. with the registered capital of RMB 10million, to be in charge of export business.

6. Establishment of Haojianshi Pharmaceutical (Hainan) Co. , Ltd.


On 17 October 2019, the Company and Guangzhou Baiying Investment Partnership (Limited Partnership) jointly

established Haojianshi Pharmacy (Hainan) Co., Ltd. with the registered capital of RMB 10million, where the Company

subscribed for RMB 8million, holding 80% of the shares and Guangzhou Baiying Investment Partnership (Limited Partnership)

for RMB 2million, holding 20% of the shares. Haojianshi is to be in charge of OTC drug business.

7. Capital increase of Guangzhou By Saint Co., Ltd, Hongkong Bysen Company Limited and Australia By Saint Pty

Ltd.

During Reporting Period, the Company used RMB 483,860,000 in cash to increase the capital of Guangzhou By Saint Co.,

Ltd who then used the foreign currency exchanged from such increased capital to increase the capital of Hongkong Bysen

Company Limited who in turn increased the capital of Australia By Saint Pty Ltd. By so doing, the capital of Australia By Saint

Pty Ltd is increased to AUD 100,000,000, with relevant formalities for capital increase completed.

8. Stock Transfer of the SuperShot Beverages Co., Ltd.

During Reporting Period, the Company sold 8% shares of the Supershot Beverages Co., Ltd to non-related party and

completed relevant administrative formalities on 2 September 2019. After the transaction, the Supershot Beverages Co., Ltd

became a participating company, instead of a controlling subsidiary of the Company.


Chapter VI Changes in Shares and Particulars about Shareholders

I. Information about Changes in Shares

1. Information about Changes in Shares

Unit: Stock

Before This Change Increase or Decrease in the Current Change (＋,-) After This Change

Quantity Proportion Issuing of

New Shares

Grant of New

Shares

Shares Transferred from Accumu

lation Funds

Others Subtotal Quantity Proportion

I. Shares with Restriction on Sales 589,403,047 40.1277% 113,728,674 　 -2,520,000 111,208,674 700,611,721 44.2727%

1. Shares Held by the Country 　　　　　

2. Shares Held by State-owned Legal Person 　　　　　

3. Share Held by Other Internal Investors 589,228,047 40.1158% 113,728,674 　　 -2,445,000 111,283,674 700,511,721 44.2664%

Including: Shares Held By Domestic Legal Person 0　 0%　 113,728,674 　　　 113,728,674 113,728,674 7.1867%

　　　 Shares Held by Domestic Natural Person 589,228,047 40.1158% 　　　 -2,445,000 -2,445,000 586,783,047 37.0797%

4. Shares Held by Foreign Investors 175,000 0.0119% 　　　 -75,000 -75,000 100,000 0.0063%

Including: Shares Held By Overseas Legal Person 　　　　　　　

　　　 Shares Held by Overseas Natural Person 175,000 0.0119% 　　　 -75,000 -75,000 100,000 0.0063%

II. Shares without Restriction on Sales 879,414,833 59.8723% 　　　 2,466,000 2,466,000 881,880,833 55.7273%

1. RMB Common Stock 879,414,833 59.8723% 　　　 2,466,000 2,466,000 881,880,833 55.7273% 2. Domestically Listed Foreign Shares 　　　　　　　

3. Overseas Listed Foreign Shares 　　　　　　　

4. Other 　　　　　　　 III. Total Number of Shares 1,468,817,880 100% 113,728,674 　　 -54,000 113,674,674 1,582,492,554 100%


2. Changes in Stocks with Restriction on Sales

Unit: Stock

Shareholder Name

Shares with

Restriction on

Sales

2019.1.2

Shares with

Restriction on Sales

that Have Been

Released in 2019

Shares with

Restriction on

Sales

Increased

Shares with

Restriction

on Sales

2019.12.31

Reason for

Restriction on

Sales

Expected Date for

the Release of the

Restriction

Liang Yunchao 532,958,806 0 0 532,958,806 Stock Targeted for

Senior Executive

Tang Hui 6,187,000 0 330,000 6,517,000 Stock Targeted for

Senior Executive

Chen Hong 15,410,000 0 210,000 15,620,000 Stock Targeted for

Senior Executive

Liang Shuisheng 15,678,500 0 210,000 15,888,500 Stock Targeted for

Senior Executive

Sun Jinyu 9,884,541 0 0 9,884,541 Stock Targeted for

Senior Executive

Jiang Gang 304,200 0 0 304,200 Stock Targeted for

Senior Executive

Lin Zhicheng 50,000 0 300,000 350,000 Stock Targeted for

Senior Executive

Cai Liangping 40,000 0 240,000 280,000 Stock Targeted for

Senior Executive

Locked shares of senior executive will be unlocked by 25% on the first trading day of each year

Incentive Objects of the Restrictive Stock Incentive Plan in 2016

8,890,000 3,810,000 0 5,080,000

Restricted Stock

for Stock Option

Incentive

Unlock the restrictions according to relative regulations in the Restrictive Stock Incentive Plan in 2016 (Draft)

Jilin Aodong Innovation Industry Fund Management Center (limited partnership)

0 0 4,061,738 4,061,738 Restricted shares

after IPO August 20, 2022

Shanghai Zhongping Guoyu Asset Management Co., Ltd. – Shanghai Zhongping Guojing M&A Equity Investment Fund Partnership (limited partnership)



Shanghai Zhongping Guoyu Asset Management Co., Ltd. – Jiaxing Zhongping Guojun Equity Investment Fund Partnership (limited partnership)



GF Xinde Investment Management Co., Ltd. - Guangzhou XindeHouxian Equity Investment Partnership (limited partnership)



Total 589,403,047 3,810,000 115,018,674 700,611,721 -- --


II. Issuance and Listing Status of Securities

1. Issuance of securities (excluding preferred shares) during Reporting Period

Stock and its derivative securities Date of issuance

Issuance price

(or rate)

Issuance amount Date of listing

Approved amount for

listing

Transaction Ending Date

Stock A-share Stock of By-Health August 09, 2019 RMB 12.31

per share 113,728,674

shares August 21, 2019 113,728,674 shares -

Convertible company bond, convertible bond for separate trading, corporate bond (none) Other derivative securities (none) Note on issuance of securities (excluding preferred shares) during Reporting Period

During the Reporting Period, transaction counterparts of the shares issued by the Company have in total held 46.67% shares

of Guangzhou By Saint Co., Ltd; upon approval by CSRC, the Company issued 113,728,674 shares in a non-public manner.

Such new shares are listed on 21 August 2019 as restricted shares.

2. Change of the Company’s total shares and shareholder structure, as well as the asset-liability structure

During the Reporting Period, the Company repurchased and canceled 54,000 restricted shares and newly issued

113,728,674 shares in a non-public manner, raising the total share capital from 1,468,817,880 shares in the beginning of the

Period to 1,582,492,554 shares in the end. During the Reporting Period, pursuant to relevant provisions of the Accounting

Standard for Business Enterprises No. 8 - Impairment of Assets, the Company prepared RMB 1,008,708,900 as provision for

impairment of goodwill due to merger of LSG, RMB 561,768,900 as provision for impairment of intangible assets and wrote-off

deferred income taxes of RMB 168,530,700; and prepared RMB 102,117,200 as provision for impairment of assets for the

long-term investment of some participating enterprises.

III. Shareholders and Actual Controllers

1. Number of Shareholders and Their Shareholding Status

Unit: Stock

Total Number of common shareholders at the End of the Reporting Period

56,666

Total ordinary shareholders by the end of the month prior to the date of disclosure of annual report

43,128

Total number of preferred shareholders with restored voting rights at the end of the period

0

Total holders of preferred shares with voting rights restored by the end of the month prior to the date of disclosure of annual report

0

Shareholders with shareholding proportion above 5% or top ten shareholders in shareholding proportions Pledge or Freeze

Status Shareholder Name Shareholder

Nature Shareholding

Proportion

Shareholding Quantity At the

End of the Reporting

Period

Increase or Decrease in

the Reporting

Period

Quantity of Stocks with Restriction

on Sales

Quantity of Stocks without Restriction on

Sales Share Status Quantity

Liang Yunchao Domestic Natural Person

44.90% 710,611,742 0 532,958,806 177,652,936 Pledge 43,509,900

GF Xinde Investment Management Co., Ltd. - Guangzhou XindeHouxian Equity Investment

Others 3.34% 52,802,599 52,802,599 52,802,599 0 None 0


Partnership (limited partnership) Shanghai Zhongping Guoyu Asset Management Co., Ltd. – Shanghai Zhongping Guojing M&A Equity Investment Fund Partnership (limited partnership)

Others 3.08% 48,740,861 48,740,861 48,740,861 0 None 0

Hohhot Branch of China Minsheng Banking Corp. Ltd.

Non-state-owned Legal

Person within the Territory

3.06% 48,424,981 48,424,981 0 48,424,981 None 0

Hong Kong Securities Clearing Company Ltd.

Overseas Legal Person 1.78% 28,224,335 10,698,583 0 28,224,335 None 0

Liang Shuisheng Domestic Natural Person

1.20% 18,938,600 -2,619,400 16,168,500 2,770,100 None 0

Chen Hong Domestic Natural Person

1.16% 18,300,000 -2,900,000 15,900,000 2,400,000 None 0

Central Huijin Assets Management Co., Ltd

State-owned Legal Person 1.15% 18,174,200 0 0 18,174,200 None 0

Huang Kun Domestic Natural Person

0.88% 13,904,000 0 0 13,904,000 None 0

Social Security Fund Portfolio 117 Others 0.87% 13,831,832 500,000 0 13,831,832 None 0

Status of strategic investors or general legal person that became top 10 shareholders due to new stock offering

Not Applicable

Description for the related party relationship or concerted action of above shareholders

Among the aforesaid 10 shareholders, there is no relation or concerted action between Liang Yunchao, Liang Shuisheng, Chen Hong, Huang Kun, GF Xinde Investment Co., Ltd. - Guangzhou Xinde Houxia Equity Investment Fund Partnership (limited partnership) and Shanghai Zhongping Guo Jing M&A Equity Investment Fund Partnership (limited partnership); besides that, the Company knows not whether there’s any relation or concerted action between other shareholders.

Shareholding status of top 10 shareholders for shares without restriction on sales Share Type

Shareholder Name Quantity of Shares without Restriction on Sales Held at the End of the Report Share Type Quantity

Liang Yunchao 177,652,936 RMB Common Stock 177,652,936

Hohhot Branch of China Minsheng Banking Corp. Ltd. 48,424,981 RMB Common Stock 48,424,98

1

Hong Kong Securities Clearing Company Ltd. 28,224,335 RMB Common Stock 28,224,33

5

Central Huijin Assets Management Co., Ltd 18,174,200 RMB Common Stock 18,174,20

0

Huang Kun 13,904,000 RMB Common Stock 13,904,000

Social Security Fund Portfolio 117 13,831,832 RMB Common Stock 13,831,83

2

Gong Binghui 8,260,000 RMB Common Stock 8,260,000


E Fund GEM ETF Index Securities Investment Fund 8,143,185 RMB Common Stock 8,143,185

Xie Jianyong 7,742,400 RMB Common Stock 7,742,400

Shanghai Pinpoint instruments Co. Ltd – Pinpoint Zijing Nufang Private Equity Fund

7,670,498 RMB Common Stock 7,670,498

Description for related party relationship or concerted actions among top ten shareholders for circulated shares without restriction on sales, and between top ten shareholders for circulated shares without restriction on sales and top 10 shareholders

Of top 10 shareholders without sale restriction, Liang Yunchao, Huang Kun and Gong Binghui are neither connected with each other nor act in concert, and the Company does not known any other shareholders to be connected or act in concert.

Description for shareholders participating in securities margin trading

Among the aforesaid shareholders, Xie Jianyong held 12,700 shares via ordinary security account and another 7,729,700 shares via the guarantee security account for client credit transaction of China Merchants Securities Co. Ltd.

There was not any regulated repurchasing transactions implemented in the Reporting Period among top 10 shareholders for common stocks and top 10 shareholders for common stock without restriction on sales.

2. Information about Controlling Shareholders

Controlling shareholders of the Company during the Reporting Period have not changed.

3. Actual controllers and persons acting in concert

Nature of actual controller: domestic natural person Name of actual controller Nationality Right of residence in other countries or regions or not

Liang Yunchao China Yes (Hong Kong, China)

Main positions Chairman of the Company from Sept 2008 until now; legal representative and chairman of Chengcheng Investment Holding Limited from Oct 2013 until now.

Domestic and foreign listed companies ever controlled in the past 10 years None

梁允超 Liang Yunchao

44.90%（截至报告期末） 44.90% (by the end of the reporting period)

汤臣倍健股份有限公司 By-Health Co., Ltd


Chapter VII Information about Directors, Supervisors, Senior

Management Personnel and Employees

I. Changes in Shareholding of Directors, Supervisors and Senior Management Personnel

Name Position State of position Gender Age

Date of Beginning of Office

Date of Termination

of Office

Shares held at the beginning

Shares increased

Shares decreased

Other changes (share)

Shares held at the end

Liang Yunchao Chairman Incumbent M 51 September

16, 2008 September 21, 2020 710,611,742 0 0 0 710,611,742

Liang Shuisheng

Vice Chairman: Incumbent M 55 September

26, 2011 September 21, 2020 21,558,000 0 2,619,400 0 18,938,600

Lin Zhicheng

Director CEO

Incumbent M 52 September 26, 2014

September 21, 2020 1,000,000 0 250,000 0 750,000

Tang Hui Director Incumbent M 52 September 16, 2008

September 21, 2020 9,276,000 0 1,571,000 0 7,705,000

Liu Heng Independent director Incumbent M 56 September

26, 2014 September 21, 2020 0 0 0 0 0

Zhang Ping Independent director Incumbent M 50 January 25,

2016 September 21, 2020 0 0 0 0 0

Li Wenjing Independent director Incumbent M 41 September

22, 2017 September 21, 2020 0 0 0 0 0

Wang Wen Board of

Supervisors Chairman

Incumbent F 54 March 20, 2017

September 21, 2020 0 0 0 0 0

Jiang Gang Supervisor Incumbent M 52 September 16, 2008

September 21, 2020 405,600 0 100,000 0 305,600

SHI Huizhen Supervisor Incumbent F 33 March 27,

2018 September 21, 2020 0 0 0 0 0

Chen Hong Deputy GM Incumbent M 54 September 16, 2008

September 21, 2020 21,200,000 0 2,900,000 0 18,300,000

Cai Liangping Deputy GM Incumbent M 46 September

26, 2014 September 21, 2020 800,000 0 200,000 0 600,000

Wu Zhuoyi Chief

Financial Officer

Incumbent F 42 February 27, 2017

September 21, 2020 0 0 0 0 0

Tang Jinyin Secretary of the Board of

Directors Incumbent F 35 April 10,

2018 September 21, 2020 0 0 0 0 0

Total -- -- -- -- -- -- 764,851,342 0 7,640,400 0 757,210,942

II. Remuneration Information about Directors, Supervisors and Senior Management Personnel

Decision-making procedures, basis for determination and actual payment of the remuneration of Directors, Supervisors and Senior Management

Decision-making procedures of the remuneration of Directors, Supervisors and Senior Management

Remuneration (allowance) of Directors and Supervisors will be determined by the Shareholders’ Meeting upon approval by the Board of Directors and Board of Supervisors, respectively and the remuneration of Senior Management shall be approved by the Board of Directors.

Grounds for remuneration of Directors, Supervisors and Senior

Remuneration (allowance) of Directors, Supervisors and Senior Management will be determined upon consideration of multiple factors including the stipulations of the


Management Personnel Company’s Rules on Remuneration of Board of Directors and Works of Appraisal Committee and Management System on Remuneration of Directors, Supervisors and Senior Management, their performance of duties as well as completion of annual performance.

Actual Remuneration paid to Directors, Supervisors and Senior Management Personnel

The Company now has in total 14 Directors, Supervisors and Senior Management and the remuneration for such personnel in 2019 is RMB 41.8773 million in total. Basic remuneration of internal Directors, Supervisors and Senior Management is paid by month while the allowance of Independent Director by quarter.

Remuneration of directors, supervisors and senior management officers in the reporting period Unit: Ten Thousand Yuan

Name Position Gender Age State of position

Total pre-tax remuneration

received from the Company

Whether receive remuneration

from the Company’s

related parties Liang Yunchao Chairman M 51 Incumbent 60 No

Liang Shuisheng Vice Chairman: M 55 Incumbent 379.80 No Lin Zhicheng Director, GM M 52 Incumbent 419.80 No

Tang Hui Director M 52 Incumbent 1,984.99 No

Liu Heng Independent

director M 56 Incumbent 9 No

Zhang Ping Independent


Li Wenjing Independent


Wang Wen Board of

Supervisors F 54 Incumbent 57.20 No

Jiang Gang Supervisor M 52 Incumbent 163.85 No Shi Huizhen Supervisor F 33 Incumbent 37.51 No Chen Hong Deputy GM M 54 Incumbent 379.80 No

Cai Liangping Deputy GM M 46 Incumbent 441.08 No

Wu Zhuoyi Chief Financial

Officer F 42 Incumbent 170.90 No

Tang Jinyin Secretary of the

Board of Directors

F 35 Incumbent 65.80 No

Total -- -- -- -- 4,187.73 -- Incentive Shares Granted to Directors and Senior Management Officers in the Reporting Period

Unit: Stock

Name Position

Shares that can

be exercised in the

reporting

period

Shares exercised in the reporting period

Exercise price for shares

exercised in the reporting period

(RMB per share)

Market price at the end of the reporting

period (RMB per

share)

Restricted shares held

in the beginning

of the period

Shares vested in

the current period

Restricted shares

granted in the

reporting period

Grant price for restricted

shares (RMB per

share)

Restricted shares at

the end of the period

Liang Shuisheng

Vice Chairman: 0 0 0 16.29 658,000 210,000 0 6.35 493,500

Lin Zhicheng

Director GM

0 0 0 16.29 1,000,000 300,000 0 6.35 750,000

Tang Hui Director 0 0 0 16.29 1,100,000 330,000 0 6.35 925,000 Chen Hong

Deputy GM 0 0 0 16.29 700,000 210,000 0 6.35 700,000

Cai Liangping

Deputy GM 0 0 0 16.29 800,000 240,000 0 6.35 600,000

Total -- 0 0 -- -- 4,258,000 1,290,000 0 -- 3,468,500


Remark (If any)

As the Company implemented equity distribution plan in 2016 to 2018, pursuant to relevant provisions of the

Company’s Incentive Program of Restricted Shares 2016 (Draft), repurchase price of restricted shares (RMB 6.35 per

share) was adjusted accordingly, which became RMB 5.26 per share as of the end of the Reporting Period.

III. Employees

1. Amount, profession and education background of employees

Incumbent employees of parent company 1,017 Incumbent employees of major subsidiaries 1,556 Total incumbent employees 2,573 Total paid employees in the current period 2,616 Total retired employees expenses of which to be borne by parent company and major subsidiaries 0

Specialty composition Specialty category Number of persons

Production personnel 363 Sales personnel 830

Technical personnel 509 Finance personnel 68 Other personnel 803

Total 2,573 Education

Education level Number of persons Master’s degree and above 217

Bachelor 1,156 Junior college 798

Others 402 Total 2,573

2. Labor outsourcing

Total hours of labor outsourcing (hour) 369,348.44 Total remuneration for labor outsourcing (RMB) 21,643,378.15


Chapter VIII Financial Report

Financial Statements

Unit of statement in financial notes: RMB

1. Consolidated Balance Sheet

Preparation Unit: By-Health Co., Ltd Unit: Yuan

Subject December 31, 2019 December 31, 2018 Current Assets: 　　Cash and Cash Equivalents 1,821,553,419.42 1,812,995,783.26 　　Settlement Funds 　　Loans to Other Banks 　　Trading Financial Assets 690,000,000.00 　　Financial Assets Measured at Fair Value with Changes Accounted into the Current Profit and Loss

　　Derivative Financial Assets 　　Notes Receivables 27,064,209.70 　　Account Receivables 113,530,032.72 221,472,269.01 　　Account Receivable financing 44,318,539.03 　　Payment In Advance 76,116,380.39 56,216,032.82 　　Premium Receivables 　　Reinsurance Account Receivables 　　Reinsurance Contract Reserve Receivables

　　Other Receivables 8,454,360.79 32,485,538.07 　　　Of which: interest receivable 19,942,197.58 　　　　　　Dividend Receivable 　　Buying Back Financial Assets for Resales

　　Inventory 742,463,814.53 671,493,076.88 　　Contract assets 　　Assets Held for Sale 160,000,000.00 　　Non-current Liabilities due within One Year

　　Other Current Assets 311,478,184.83 1,113,906,809.71 Total Current Assets 3,807,914,731.71 4,095,633,719.45 Non-current Assets: 　　Loans and advances 　　Debt investment 　　Financial Assets available for Sales 658,737,731.36

　　Other debt investment 　　Investment Held to Maturity 　　Long-term Receivables 　　Long-term Equity Investment 171,197,803.13 250,395,406.42


　　Others Equity Instruments Investment 316,917,517.25

　　Other Non-current Financial Assets 623,864,161.58

　　Investment Real Estate 171,759,174.27 176,686,866.43 　　Fixed Assets 828,341,732.08 657,780,070.86 　　Construction in Progress 121,482,943.14 61,945,017.15 　　Productive Biological Assets 　　Oil and Gas Assets 　　Right-of-use assets 　　Intangible Assets 867,619,841.17 1,562,931,784.51 　　Development Expenditure 34,390,211.87 36,544,856.67 　　Goodwill 1,183,568,526.23 2,165,661,155.00 　　Long-term Deferred Expenses 1,545,256.06 2,717,666.68 　　Deferred Income Tax Assets 166,196,915.34 102,260,338.96 　　Other Non-current Assets 35,911,466.83 19,150,876.35 Total Non-current Assets 4,522,795,548.95 5,694,811,770.39 Total Assets 8,330,710,280.66 9,790,445,489.84 Current Liabilities: 　　Short-term Borrowings 43,650,075.44 158,112,698.00 　　Borrowings from Central Bank 　　Loans from Other Banks 　　Trading Financial Liabilities 　　Financial Liabilities Measured at Fair Value with Changes Accounted into Current Profit and Loss

　　Derivative Financial Liabilities 　　Notes Payables 　　Account Payables 338,550,370.25 339,170,602.91 　　Advance from Customers 515,392,220.69 330,537,995.34 　　Contract liabilities 　　Financial Assets Sold for Repurchase

　　Absorption of Deposit and Dues to Banks

　　Agented Transactions for Trading Securities

　　Acting Underwriting Securities 　　Payroll Payables 125,680,753.54 251,834,197.67 　　Tax Payable 104,724,624.52 105,422,005.70 　　Other Payables 418,936,907.25 306,104,592.78 　　　Of which: interest payable 3,481,501.95 　　　　　　Dividend Payables 　　Handling Charge and Commission Payables

　　Reinsurance Amount Payables 　　Held-for-trading liabilities 　　Non-current Liabilities due within One Year 209,640,735.91

　　Other Current Liabilities 327,071.88 Total Current Liabilities 1,756,902,759.48 1,491,182,092.40


Non-current Liabilities: 　　Reserve for Insurance Contracts 　　Long-term Loans 307,500,000.00 892,500,000.00 　　Bonds Payables 　　　Including: Preferred Stock 　　　　　　Perpetual Capital Securities

　　Lease liabilities 　　Long-term Payables 　　Long-term Payroll Payables 914,157.65 2,130,498.00 　　Accrued Liabilities 　　Deferred Income 109,880,887.35 110,177,269.12 　　Deferred Income Tax Liabilities 224,120,196.18 406,506,343.39 　　Other Non-current Liabilities Total Non-current Liabilities 642,415,241.18 1,411,314,110.51 Total Liabilities 2,399,318,000.66 2,902,496,202.91 Owners' Equity: 　　Share Capital 1,582,492,554.00 1,468,817,880.00 　　Other Equity Instruments 　　　Including: Preferred Stock 　　　　　　Perpetual Capital Securities

　　Capital Reserve 3,213,209,595.38 2,023,087,882.52 　　Less: Treasury Stock 26,720,800.00 51,206,400.00 　　Other Comprehensive Income 64,880,261.64 -36,924,178.58 　　Special Reserve 　　Surplus Reserve 466,515,896.48 461,438,879.22 　　General Risk Reserve 　　Undistributed Profit 691,796,454.40 1,726,572,135.97 Total Equity Belonging to Owners of Parent Company 5,992,173,961.90 5,591,786,199.13

　　Minority Stockholder's Interest -60,781,681.90 1,296,163,087.80 Total Owners' Equity 5,931,392,280.00 6,887,949,286.93 Total Liabilities and Owners' Equity 8,330,710,280.66 9,790,445,489.84

2. Parent Company's Balance Sheet

Unit: Yuan Subject December 31, 2019 December 31, 2018

Current Assets: 　　Cash and Cash Equivalents 663,753,292.45 1,015,195,977.42 　　Trading Financial Assets 620,000,000.00 　　Financial Assets Measured at Fair Value with Changes Accounted into the Current Profit and Loss

　　Derivative Financial Assets 　　Notes Receivables 3,350,000.00 　　Account Receivables 146,783,774.02 126,396,421.73 　　Account Receivable financing 2,643,225.60 　　Payment In Advance 46,280,843.22 21,399,971.90


　　Other Receivables 560,321,372.06 563,148,738.99 　　　Of which: interest receivable 19,077,448.87 　　　　　　Dividend Receivable 　　Inventory 521,944,880.52 368,134,899.00 　　Contract assets 　　Assets Held for Sale 160,000,000.00 　　Non-current Liabilities due within One Year

　　Other Current Assets 266,043,068.58 966,437,213.24 Total Current Assets 2,827,770,456.45 3,224,063,222.28 Non-current Assets: 　　Debt investment 　　Financial Assets available for Sales 463,136,531.36

　　Other debt investment 　　Investment Held to Maturity 　　Long-term Receivables 　　Long-term Equity Investment 2,771,871,423.69 2,383,834,798.03 　　Others Equity Instruments Investment 287,989,969.22

　　Other Non-current Financial Assets 463,754,025.61

　　Investment Real Estate 73,972,227.16 76,757,564.44 　　Fixed Assets 758,689,471.37 586,304,227.03 　　Construction in Progress 102,962,287.48 56,761,697.89 　　Productive Biological Assets 　　Oil and Gas Assets 　　Right-of-use assets 　　Intangible Assets 71,999,923.22 74,209,861.38 　　Development Expenditure 34,059,262.59 35,806,882.55 　　Goodwill 　　Long-term Deferred Expenses 1,446,731.16 2,338,214.37 　　Deferred Income Tax Assets 28,801,469.74 25,381,336.48 　　Other Non-current Assets 19,411,566.13 19,077,326.83 Total Non-current Assets 4,614,958,357.37 3,723,608,440.36 Total Assets 7,442,728,813.82 6,947,671,662.64 Current Liabilities: 　　Short-term Borrowings 　　Trading Financial Liabilities 　　Financial Liabilities Measured at Fair Value with Changes Accounted into Current Profit and Loss

　　Derivative Financial Liabilities 　　Notes Payables 　　Account Payables 290,675,184.21 262,819,093.94 　　Advance from Customers 177,043,101.75 186,378,077.35 　　Contract liabilities 　　Payroll Payables 44,353,551.17 61,329,973.65 　　Tax Payable 67,388,827.67 63,235,508.40 　　Other Payables 145,176,196.55 111,977,933.68


　　　Of which: interest payable 527,425.68 　　　　　　Dividend Payables 　　Held-for-trading liabilities 　　Non-current Liabilities due within One Year 63,053,124.31

　　Other Current Liabilities Total Current Liabilities 787,689,985.66 685,740,587.02 Non-current Liabilities: 　　Long-term Loans 307,500,000.00 410,000,000.00 　　Bonds Payables 　　　Including: Preferred Stock 　　　　　　Perpetual Capital Securities

　　Lease liabilities 　　Long-term Payables 　　Long-term Payroll Payables 　　Accrued Liabilities 　　Deferred Income 109,880,887.35 110,177,269.12 　　Deferred Income Tax Liabilities 31,823,888.00 9,110,383.58 　　Other Non-current Liabilities Total Non-current Liabilities 449,204,775.35 529,287,652.70 Total Liabilities 1,236,894,761.01 1,215,028,239.72 Owners' Equity: 　　Share Capital 1,582,492,554.00 1,468,817,880.00 　　Other Equity Instruments 　　　Including: Preferred Stock 　　　　　　Perpetual Capital Securities

　　Capital Reserve 3,339,625,846.70 2,021,300,919.33 　　Less: Treasury Stock 26,720,800.00 51,206,400.00 　　Other Comprehensive Income 39,028,136.67 　　Special Reserve 　　Surplus Reserve 464,134,371.82 460,040,624.64 　　Undistributed Profit 807,273,943.62 1,833,690,398.95 Total Owners' Equity 6,205,834,052.81 5,732,643,422.92 Total Liabilities and Owners' Equity 7,442,728,813.82 6,947,671,662.64

3. Consolidated Income Statement

Unit: Yuan Subject Year 2019 Year 2018

I. Total Operating Income 5,261,799,439.25 4,350,775,627.15 　　Including: Operating Income 5,261,799,439.25 4,350,775,627.15 　　　　　Interest Income 　　　　　Premium Earned 　　　　　Handling Charge and Commission Income

II. Total Operating Cost 4,076,269,758.63 3,233,330,360.14 　　Including: Operating Cost 1,800,697,810.88 1,406,921,731.52 　　　　　Interest Cost


　　　　　Handling Charge and Commission Expenditure

　　　　　Insurance Surrender Fund 　　　　　Net Amount of Loss Expenditure

　　　　　Net of Reserve for Insurance Liability Withdrawn

　　　　　Bond Insurance Expense 　　　　　Reinsurance Expenses 　　　　　Business Taxes and Surcharges 58,838,887.81 63,129,906.17

　　　　　Sales Expenses 1,650,399,754.51 1,280,078,079.79 　　　　　Management Expense 429,626,755.08 400,911,499.60 　　　　　Research and Development Expenses 126,041,296.39 103,489,887.46

　　　　　Financial Expenses 10,665,253.96 -21,200,744.40 　　　　　　Of which: Interest Expense 44,498,900.36 17,586,256.06

　　　　　　　　　Interest Income 40,891,064.20 43,550,846.14 　　Plus: Other Income 30,761,247.56 26,332,186.35 　　　　Investment Income (Loss should be listed with "-") 18,447,741.70 47,982,281.87

　　　　Including: Income from Investment in Cooperative Enterprises and Affiliated Enterprises

-10,638,506.59 -5,535,140.58

　　　　　　Income from termination of financial assets measured at amortized cost

　　　　Exchange Gains (Loss should be listed with "-")

　　　　Net open hedge income (loss marked with “-”)

　　　　Income from Fair Value Change (Loss should be listed with "-") -4,952,050.16

　　　　Credit impairment loss (loss marked with “-”) -1,926,053.91

　　　　Assets impairment loss (loss marked with “-”) -1,693,108,961.18 -89,001,682.46

　　　　Gains from Disposal of Assets (Loss should be listed with "-") -167,958.28 -160,902.22

III. Operating Profit (Loss should be listed with "-") -465,416,353.65 1,102,597,150.55

　　Add: Non-operating Income 46,616,501.67 48,163,783.17 　　Less: Non-operating Expenditure 6,068,562.44 21,773,991.64 IV. Total Profit (Total loss Should Be Listed with “-”) -424,868,414.42 1,128,986,942.08

　　Less: Tax Expenses -9,822,707.24 220,555,175.44

V. Net Profit （Net loss should be listed with -") -415,045,707.18 908,431,766.64

　(I) Classification by business continuity

　　1. Going Concern Net Profit (Net loss Should Be Listed with “-”) -410,928,075.86 1,090,727,416.32

　　2. Discontinued Operation Net Profit (Net loss Should Be Listed with “-”)

-4,117,631.32 -182,295,649.68


　(II) Classification by ownership 　　1. Net Profit Belonging to Owners of Parent Company -355,889,615.46 1,002,184,999.85

　　2. Minority Stockholders' Interest -59,156,091.72 -93,753,233.21 VI. Net Amount of Other Comprehensive Income after Tax 53,930,902.95 -90,882,784.52

　Net Amount of Other Comprehensive Income After Tax Belonging to Owners of Parent Company

79,251,274.45 -47,061,461.99

　　(I) Other Comprehensive Income Not to be Reclassified into Loss and Profit

10,521,518.93

　　　　　1. Change from Re-measurement of Defined Benefit Plan

　　　　　2. Other Comprehensive Income that Cannot Be Transferred to Loss and Profit under the Equity Method

　　　　　3. Changes in fair value of other equity facilities 10,521,518.93

　　　　　4. Changes in fair value of the enterprise's own credit risk

　　　　　5. Others 　　(II) Other Comprehensive Income to be Reclassified into Loss and Profit 68,729,755.52 -47,061,461.99

　　　　　1. Other Comprehensive Income that Can be Transferred to Loss and Profit under the Equity Method

　　　　　2. Changes in fair value of other debt investments

　　　　　3. Gains and Losses Arising from Changes in the Fair Value of Financial Assets Available for Sale

-7,704,269.17

　　　　　4. Amount of financial assets reclassified into other comprehensive income

　　　　　5. Gains and Losses from Re-classifying Investment Held to Maturity into Financial Assets Available for Sale

　　　　　6. Credit impairment reserve for other debt investments

　　　　　7. Cash flow hedge reserve 　　　　　8. Translation Differences of Financial Statements in Foreign Currencies

68,729,755.52 -39,357,192.82

　　　　　9. Others 　After-tax Net Amount of Other Comprehensive Income Belonging to Minority Shareholders

-25,320,371.50 -43,821,322.53

VII. Total Comprehensive Income -361,114,804.23 817,548,982.12 　　Total Comprehensive Income Belonging to Owners of Parent Company -276,638,341.01 955,123,537.86

　　Total Comprehensive Income Belonging to Minority Shareholders -84,476,463.22 -137,574,555.74

VIII. Earnings Per Share: 　　(I) Basic Earnings per Share -0.24 0.69 　　(II) Diluted Earnings per Share -0.24 0.69


4. Parent Company's Income Statement


I. Operating Income 3,431,591,909.69 2,833,823,758.05 　　Less: Operating Cost 1,593,940,595.07 1,286,961,696.55 　　　　Business Taxes and Surcharges 35,764,739.88 36,731,920.29

　　　　Sales Expenses 200,946,866.51 155,598,890.75 　　　　Management Expense 118,657,380.15 110,580,644.76 　　　　Research and Development Expenses 114,289,683.70 93,011,014.12

　　　　Financial Expenses -5,691,587.90 -24,534,890.15 　　　　　Of which: Interest Expense 25,142,257.66 8,297,950.68 　　　　　　　　Interest Income 31,429,434.38 24,955,058.12 　　Plus: Other Income 29,472,925.05 25,926,524.96 　　　　Investment Income (Loss should be listed with "-") 12,605,383.39 45,592,293.46

　　　　Including: Income from Investment in Cooperative Enterprises and Affiliated Enterprises

-10,638,506.59 -5,535,140.58

　　　　　　Income from termination of financial assets measured at amortized cost (loss marked with “-”)

　　　　Net open hedge income (loss marked with “-”)

　　　　Income from Fair Value Change (Loss should be listed with "-") 8,656,963.37

　　　　Credit impairment loss (loss marked with “-”) -413,019.67

　　　　Assets impairment loss (loss marked with “-”) -1,549,982,258.28 -46,103,939.84

　　　　Gains from Disposal of Assets (Loss should be listed with "-") -162,256.07 -239,466.71

II. Operating Profit (Loss should be listed with "-") -126,138,029.93 1,200,649,893.60

　　Add: Non-operating Income 7,939,574.70 13,093,078.72 　　Less: Non-operating Expenditure 5,767,481.93 1,839,741.24 III. Total Profit (Total loss Should Be Listed with “-”) -123,965,937.16 1,211,903,231.08

　　Less: Tax Expenses 204,944,162.74 169,958,154.03

IV. Net Profit （Net loss should be listed with -") -328,910,099.90 1,041,945,077.05

　　(I) Going Concern Net Profit (Net loss Should Be Listed with “-”) -328,910,099.90 1,041,945,077.05

　　(II) Discontinued Operation Net Profit (Net loss Should Be Listed with “-”)

V. Net Amount of Other Comprehensive Income after Tax 16,474,970.90 -7,704,269.17

　　(I) Other Comprehensive Income Not to be Reclassified into Loss and Profit

16,474,970.90

　　　　　1. Change from Re-measurement of Defined Benefit Plan


　　　　　2. Other Comprehensive Income that Cannot Be Transferred to Loss and Profit under the Equity Method

　　　　　3. Changes in fair value of other equity facilities 16,474,970.90

　　　　　4. Changes in fair value of the enterprise's own credit risk

　　　　　5. Others 　　(II) Other Comprehensive Income to be Reclassified into Loss and Profit -7,704,269.17

　　　　　1. Other Comprehensive Income that Can be Transferred to Loss and Profit under the Equity Method

　　　　　2. Changes in fair value of other debt investments

　　　　　3. Gains and Losses Arising from Changes in the Fair Value of Financial Assets Available for Sale

-7,704,269.17

　　　　　4. Amount of financial assets reclassified into other comprehensive income

　　　　　5. Gains and Losses from Re-classifying Investment Held to Maturity into Financial Assets Available for Sale

　　　　　6. Credit impairment reserve for other debt investments

　　　　　7. Cash flow hedge reserve 　　　　　8. Translation Differences of Financial Statements in Foreign Currencies

　　　　　9. Others VI. Total Comprehensive Income -312,435,129.00 1,034,240,807.88 VII. Earnings Per Share: 　　(I) Basic Earnings per Share 　　(II) Diluted Earnings per Share

5. Consolidated Cash Flow Statement


I. Cash Flow Generated from Operating Activities:

　　Cash Received from Sales of Good and Providing of Services 6,095,586,238.97 5,072,927,290.57

　　Net Increase in Customer Deposits and Deposit From Other Banks

　　Net Increase in Borrowings from Central Bank

　　Net Increase in Loans from Other Financial Institutions

　　Cash Acquired from Receiving Premium of Original Insurance Contracts

　　Net Cash Received from Reinsurance Businesses


　　Net Increase in Deposits and Investment Funds of the Insured

　　Cash Received from Collecting Interest, Handling Charges and Commission

　　Net Increase in Loans from Other Banks

　　Net Increase in Repurchasing Business Funds

　　Net cash received from securities buying and selling by agents

　　Tax Rebate Received 329,763.00 　　Other Cash Received in Connection with Operating Activities 143,365,637.55 202,535,836.30

Sub-total of Cash Inflow from Operating Activities 6,238,951,876.52 5,275,792,889.87

　　Cash Paid for Purchasing of Products and Receiving of Labor Service

1,722,606,877.36 1,581,296,732.93

　　Net Increase in Customer Loans and Advances

　　Net Increase in Deposits in Central Bank and Deposits Other Banks

　　Cash Paid for Loss of Original Insurance Contract

　　Net increase in funds lent 　　Cash Used in Paying Interest, Handling Charges and Commission

　　Cash Paid for Policy Bonus 　　Cash Paid to and Paid for Employees 798,318,062.07 602,833,905.46

　　Various Taxes and Expenses Paid 681,081,888.74 741,170,639.46 　　Other Cash Paid in Connection with Operating Activities 1,500,424,945.32 1,001,438,387.14

Sub-total of Cash Outflow from Operating Activities 4,702,431,773.49 3,926,739,664.99

Net Cash Flow Generated from Operating Activities 1,536,520,103.03 1,349,053,224.88

II. Net Amount of Cash Flow Generated from Investment Activities:

　　Cash Received from the Collection of Investment 1,538,694,569.54 3,261,874,172.19

　　Cash Received from the Acquisition of Investment Income 32,165,075.32 49,640,816.48

　　Net Cash Collected from the Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets

162,081.52 424,860.30

　　Net Cash Received from the Disposal of Subsidiaries and Other Operation Units

　　Other Cash Received in Connection with Investment Activities

Sub-total of Cash Inflow from Investment Activities 1,571,021,726.38 3,311,939,848.97

　　Cash Paid for the Acquisition of Fixed Assets, Intangible Assets and Other Long-term Assets

331,841,130.83 250,687,415.67


　　Cash Paid for Investment 1,488,000,000.00 3,787,816,000.00 　　Net Increase in Pledge Loans 　　Net Cash Paid for the Acquisition of Subsidiaries and Other Operation Units

3,314,402,198.00

　　Other Cash Paid in Connection with Investment Activities 381,076.35

Sub-total of Cash Outflow from Investment Activities 1,820,222,207.18 7,352,905,613.67

Net Amount of Cash Flow Generated from Investment Activities -249,200,480.80 -4,040,965,764.70

III. Cash Flow Generated from Financing Activities:

　　Cash Received from Absorption of Investment 1,418,000,000.00

　　Including: Cash Received from Absorption of Investment from Minority Shareholders

1,418,000,000.00

　　Cash Received from Acquisition of Borrowings 690,437,641.63 1,056,178,949.00

　　Other Cash Received in Connection with Financing Activities 11,097,500.00

Sub-total of Cash Inflow from Financing Activities 701,535,141.63 2,474,178,949.00

　　Cash Paid for Repayment of Debts 1,180,733,698.72 106,465,041.00 　　Cash Paid for Distribution and Profit and Payment of Interest 781,359,091.42 503,827,777.40

　　Including: Dividend and Profit Paid by Subsidiaries to Minority Shareholders

　　Other Cash Paid in Connection with Financing Activities 4,502,768.67 119,837,540.00

Sub-total of Cash Outflow from Financing Activities 1,966,595,558.81 730,130,358.40

Net Amount of Cash Flow Generated from Financing Activities -1,265,060,417.18 1,744,048,590.60

IV. Influence of Changes in Exchange Rate to Cash and Cash Equivalents 1,581,376.72 19,168,022.00

V. Net Increased Amount of Cash and Cash Equivalents 23,840,581.77 -928,695,927.22

　　Add: Initial Balance of Cash and Cash Equivalents 1,720,730,990.26 2,649,426,917.48

VI. Ending Balance of Cash and Cash Equivalents 1,744,571,572.03 1,720,730,990.26

6. Parent Company's Cash Flow Statement


I. Cash Flow Generated from Operating Activities:

　　Cash Received from Sales of Good and Providing of Services 3,710,143,940.31 3,580,788,046.67

　　Tax Rebate Received 　　Other Cash Received in Connection with Operating Activities 81,145,902.38 141,597,193.74


Sub-total of Cash Inflow from Operating Activities 3,791,289,842.69 3,722,385,240.41

　　Cash Paid for Purchasing of Products and Receiving of Labor Service

1,545,786,831.95 1,304,368,163.28

　　Cash Paid to and Paid for Employees 237,371,955.55 218,065,675.29

　　Various Taxes and Expenses Paid 471,539,019.62 426,103,646.43 　　Other Cash Paid in Connection with Operating Activities 350,164,462.61 230,786,847.95

Sub-total of Cash Outflow from Operating Activities 2,604,862,269.73 2,179,324,332.95

Net Cash Flow Generated from Operating Activities 1,186,427,572.96 1,543,060,907.46

II. Net Amount of Cash Flow Generated from Investment Activities:

　　Cash Received from the Collection of Investment 1,468,694,569.54 3,080,874,172.19

　　Cash Received from the Acquisition of Investment Income 31,474,664.36 47,818,499.30

　　Net Cash Collected from the Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets

131,905.05 187,832.38

　　Net Cash Received from the Disposal of Subsidiaries and Other Operation Units

　　Other Cash Received in Connection with Investment Activities 299,600,000.00

Sub-total of Cash Inflow from Investment Activities 1,500,301,138.95 3,428,480,503.87

　　Cash Paid for the Acquisition of Fixed Assets, Intangible Assets and Other Long-term Assets

291,939,294.59 123,651,780.90

　　Cash Paid for Investment 1,931,860,000.00 5,106,750,000.00 　　Net Cash Paid for the Acquisition of Subsidiaries and Other Operation Units

　　Other Cash Paid in Connection with Investment Activities 13,920,000.00 125,816,000.00

Sub-total of Cash Outflow from Investment Activities 2,237,719,294.59 5,356,217,780.90

Net Amount of Cash Flow Generated from Investment Activities -737,418,155.64 -1,927,737,277.03

III. Cash Flow Generated from Financing Activities:

　　Cash Received from Absorption of Investment

　　Cash Received from Acquisition of Borrowings 500,000,000.00 410,000,000.00

　　Other Cash Received in Connection with Financing Activities

Sub-total of Cash Inflow from Financing Activities 500,000,000.00 410,000,000.00

　　Cash Paid for Repayment of Debts 540,000,000.00 　　Cash Paid for Distribution and Profit and Payment of Interest 759,525,499.03 496,075,245.40

　　Other Cash Paid in Connection with Financing Activities 4,502,768.67 2,615,040.00


Sub-total of Cash Outflow from Financing Activities 1,304,028,267.70 498,690,285.40

Net Amount of Cash Flow Generated from Financing Activities -804,028,267.70 -88,690,285.40

IV. Influence of Changes in Exchange Rate to Cash and Cash Equivalents 123.73 523.39

V. Net Increased Amount of Cash and Cash Equivalents -355,018,726.65 -473,366,131.58

　　Add: Initial Balance of Cash and Cash Equivalents 1,015,195,977.42 1,488,562,109.00

VI. Ending Balance of Cash and Cash Equivalents 660,177,250.77 1,015,195,977.42

7. Consolidated Statement of Changes in Owners' Equity

Amount in Current Period Unit: Yuan

Year 2019 Total Equity Belonging to Owners of Parent Company

Other Equity Instruments

Subject Share Capit

al Preferred

Stock

Perpetual

Capital

Securities

Others

Capital Reserv

e

Less: Treasu

ry Stock

Other Comprehensi

ve Incom

e

Special

Reserve

Surplus

Reserve

General Risk Reserv

e

Undistributed Profit

Others Subtotal

Minority

Stockholder's Interes

t

Total Owner

s' Equity

I. Ending Balance in the Previous Year

1,468,817,880.0

0

2,023,087,88

2.52

51,206,400.0

0

-36,924,178.

58 461,438,879.

22

1,726,572,13

5.97

5,591,786,19

9.13

1,296,163,08

7.80

6,887,949,28

6.93

　　Add: Changes in Accounting Policies

15,067,979.3

3 5,825,535.90

62,200,681.6

9 83,094,196.9

2 83,094,196.9

2

　　　　Correction for Previous Errors

　　　　Merger of Enterprises under Same Controlling Party

　　　　Others

II. Initial Balance in the Current Year

1,468,817,880.0

0

2,023,087,88

2.52

51,206,400.0

0

-21,856,199.

25 467,264,415.

12

1,788,772,81

7.66

5,674,880,39

6.05

1,296,163,08

7.80

6,971,043,48

3.85

III. Amount of Increase or Decrease in the Current Year (Decrease shall be listed with "-")

113,674,674.00

1,190,121,71

2.86

-24,485,600.

00

86,736,460.8

9 -748,5

18.64 -1,096,976,36

3.26 317,293,565.

85

-1,356,944,76

9.70

-1,039,651,20

3.85

(I) Total Comprehensive Income

79,251,274.4

5

-355,889,615

.46

-276,638,341

.01

-84,476,463.

22

-361,114,804

.23


(II) Capital Paid in or Reduced by Owners

113,674,674.00

1,318,324,92

7.37

-284,040.00 58,860

.00 1,432,342,50

1.37

1,432,342,50

1.37 1. Common Stock Invested by Owners

113,728,674.00

1,282,291,39

3.29

1,396,020,06

7.29

1,396,020,06

7.29 2. Capital Input by Holders of Other Equity Instruments

3. Amount of Share Payment Accounted into the Owners' Equity

36,322,434.0

8

36,322,434.0

8 36,322,434.0

8

4. Others -54,000.00 -288,9

00.00 -284,040.00 58,860

.00

(III) Profit distribution -4,445,

000.00 -734,408,940

.00

-729,963,940

.00

-729,963,940

.00 1. Withdrawal of Surplus Reserve

2. Withdrawal of General Risk Reserve

3. Distribution to Owners (or Shareholders)

-4,445,000.00

-734,408,940

.00

-729,963,940

.00

-729,963,940

.00 4. Others (IV) Internal Carry-over of Owners' Equity

7,485,186.44 -748,5

18.64 -6,736,667.80

1. Capital (Share Capital) Transferred and Increased from Capital Reserve

2. Capital (Share Capital) Transferred and Increased from Surplus Reserve

3. Loss Recovery with Surplus Reserve

4. Changes of defined benefit plan carried forward to retained earnings

5. Retained earnings from carry-over of other comprehensive income

7,485,186.44 -748,5

18.64 -6,736,667.80

6. Others (V) Special Reserve


1. Withdrawal Amount in Current Period

2. Used Amount in Current Period

(VI) Others -128,203,214

.51

-19,756,560.

00

-108,446,654

.51

-1,272,468,30

6.48

-1,380,914,96

0.99

IV. Ending Balance in Current Period

1,582,492,554.0

0

3,213,209,59

5.38

26,720,800.0

0

64,880,261.6

4 466,515,896.

48 691,796,454.

40

5,992,173,96

1.90

-60,781,681.

90

5,931,392,28

0.00

Amount in Previous Period Unit: Yuan

Year 2018 Total Equity Belonging to Owners of Parent Company


Subject Share Capit

al Preferred Stoc

k

Perpetual Capit

al Securities

Others

Capital Reserv

e

Less: Treasu

ry Stock

Other Comprehensi

ve Incom

e

Special

Reserve

Surplus

Reserve

General Risk Reserv

e


Others Subtotal

Minority

Stockholder's Interest

Total Owners' Equity


1,469,271,880.0

0

2,031,911,54

2.64

80,692,500.0

0

10,137,283.4

1 357,244,371.

51

1,312,952,50

4.23

5,100,825,08

1.79

31,134,595.45

5,131,959,677.

24



　　　　Merger of Enterprises under Same Controlling Party

　　　　Others


1,469,271,880.0

0

2,031,911,54

2.64

80,692,500.0

0

10,137,283.4

1 357,244,371.

51

1,312,952,50

4.23

5,100,825,08

1.79

31,134,595.45

5,131,959,677.

24


-454,000.0

0 -8,823,

660.12

-29,486,100.

00

-47,061,461.

99 104,194,507.

71

413,619,631.

74 490,961,117.

34

1,265,028,492.

35

1,755,989,609.

69


-47,061,461.

99

1,002,184,99

9.85 955,123,537.

86

-137,574,555.7

4

817,548,982.12



-454,000.0

0 9,529,

387.97 -2,615,040.00 488,86

0.00 12,179,287.9

7

1,418,000,000.

00

1,430,179,287.

97

1. Common Stock Invested by Owners

1,418,000,000.

00

1,418,000,000.

00 2. Capital Input by Holders of Other Equity Instruments


12,179,287.9

7

12,179,287.9

7 12,179,

287.97

4. Others -454,000.0

0 -2,649,

900.00 -2,615,040.00 488,86

0.00

(III) Profit distribution -4,372,

500.00 104,194,507.

71

-589,054,228

.11

-480,487,220

.40

-480,487,220.4

0 1. Withdrawal of Surplus Reserve

104,194,507.

71

-104,194,507

.71

2. Withdrawal of General Risk Reserve


-4,372,500.00

-484,859,720

.40

-480,487,220

.40

-480,487,220.4

0 4. Others (IV) Internal Carry-over of Owners' Equity










(VI) Others -18,353,048.

09

-22,498,560.

00 4,145,

511.91 -15,396,951.91

-11,251,440.00

IV. Ending Balance in Current Period

1,468,817,880.0

0

2,023,087,88

2.52

51,206,400.0

0

-36,924,178.

58 461,438,879.

22

1,726,572,13

5.97

5,591,786,19

9.13

1,296,163,087.

80

6,887,949,286.

93

8. Parent Company's Statement of Changes in Owners' Equity

Amount in Current Period Unit: Yuan

Year 2019 Other Equity Instruments

Subject Share Capital Preferr

ed Stock

Perpetual

Capital Securit

ies

Others

Capital Reserve

Less: Treasury

Stock

Other Compreh

ensive Income

Special Reserve

Surplus Reserve


Others Total

Owners' Equity


1,468,817,880.

00 2,021,30

0,919.33 51,206,4

00.00 460,040,624.64

1,833,690,398.

95 5,732,643,

422.92


15,067,979.33 5,825,53

5.90 52,429,823.05 73,323,33

8.28


　　　　Others -983,270.08

-8,849,430.68 -9,832,700

.76 II. Initial Balance in the Current Year

1,468,817,880.

00 2,021,30

0,919.33 51,206,4

00.00 15,067,9

79.33 464,882,890.46

1,877,270,791.

32 5,796,134,

060.44


113,674,674.0

0 1,318,32

4,927.37 -24,485,

600.00 23,960,1

57.34 -748,518.64

-1,069,996,84

7.70 409,699,9

92.37


16,474,970.90

-328,910,099.9

0 -312,435,1

29.00


113,674,674.0

0 1,318,32

4,927.37 -284,040

.00 58,860.00 1,432,342,

501.37


113,728,674.0

0 1,282,29

1,393.29 1,396,020,067.29


2. Capital Input by Holders of Other Equity Instruments


36,322,434.08 36,322,43

4.08

4. Others -54,000.00 -288,900

.00 -284,040

.00 58,860.00

(III) Profit distribution -4,445,0

00.00 -734,408,940.0

0 -729,963,9

40.00

1. Withdrawal of Surplus Reserve


-4,445,000.00

-734,408,940.0

0 -729,963,9

40.00

3. Others (IV) Internal Carry-over of Owners' Equity

7,485,186.44 -748,518

.64 -6,736,667.80






7,485,186.44 -748,518

.64 -6,736,667.80




(VI) Others -19,756,560.00 19,756,56

0.00 IV. Ending Balance in Current Period

1,582,492,554.

00 3,339,62

5,846.70 26,720,8

00.00 39,028,1

36.67 464,134,371.82

807,273,943.6

2 6,205,834,

052.81

Amount in Previous Period


Unit: Yuan Year 2018


Subject Share Capital Preferr

ed Stock

Perpetual

Capital

Securities

Others

Capital Reserve

Less: Treasury Stock

Other Comprehensive Income

Special Reserve

Surplus Reserve

Undistributed

Profit Others

Total Owners' Equity


1,469,271,88

0.00

2,011,771,531.

36

80,692,500.00

7,704,269.17 355,846

,116.93 1,380,310

,690.01 5,144,211,987.47



　　　　Others


1,469,271,88

0.00

2,011,771,531.

36

80,692,500.00

7,704,269.17 355,846

,116.93 1,380,310

,690.01 5,144,211,987.47


-454,000.00 9,529,3

87.97 -29,486,

100.00 -7,704,2

69.17 104,194,507.71

453,379,708.94 588,431,43

5.45


-7,704,269.17 1,041,945

,077.05 1,034,240,807.88


-454,000.00 9,529,3

87.97 -2,615,0

40.00 488,860.00 12,179,287.

97


2. Capital Input by Holders of Other Equity Instruments


12,179,287.97 12,179,287.

97

4. Others -454,000.00 -2,649,9

00.00 -2,615,0

40.00 488,860.00

(III) Profit distribution -4,372,5

00.00 104,194,507.71

-589,054,228.11 -480,487,22

0.40 1. Withdrawal of Surplus Reserve

104,194,507.71

-104,194,507.71


-4,372,500.00 -484,859,

720.40 -480,487,220.40

3. Others


(IV) Internal Carry-over of Owners' Equity









(VI) Others -22,498,560.00 22,498,560.

00 IV. Ending Balance in Current Period

1,468,817,88

0.00

2,021,300,919.

33

51,206,400.00 460,040

,624.64 1,833,690

,398.95 5,732,643,422.92