Hvsen Biotechnology Co.Ltd(300871)
Work report of the board of directors in 2021
In 2021, the second board of directors of Hvsen Biotechnology Co.Ltd(300871) (hereinafter referred to as “the company”) conscientiously performed the responsibilities entrusted by the general meeting of shareholders, implemented various resolutions of the general meeting of shareholders, continuously standardized corporate governance and scientific decision-making, and promoted the smooth development of all work of the company in strict accordance with the company law, the securities law and other relevant laws and regulations as well as the articles of association. The report on the work of the board of directors in 2021 is as follows:
1、 Overall operation of the year
During the reporting period, great changes have taken place in the company’s downstream aquaculture industry and upstream veterinary API industry. The production capacity of the downstream pig breeding industry recovered rapidly, and there was overcapacity due to production inertia. During the year, the pig price decreased by as much as 70%, and most pig breeding enterprises suffered serious losses. On the one hand, the upstream API industry was pushed up by the rise of commodity prices, on the other hand, the supply was limited due to environmental protection inspection, dual control of energy consumption, “double carbon” policy, power restriction and other factors, and the price of API rose sharply during the year. Under the adverse external environment, the company faces the dual pressure of tight demand and rising product costs. The management of the company led all employees to overcome difficulties and forge ahead, and achieved ideal results in marketing development, scientific and technological innovation, intelligent manufacturing, quality control, operation and management.
(1) Operating income bucked the trend
During the reporting period, the downstream pig breeding industry continued to decline and once entered a deep loss stage. Under the background of sluggish market demand, the company achieved a historic breakthrough in sales performance, with an operating revenue of 996 million yuan, an increase of 28.14% over the same period last year. The market penetration was further improved, the group’s customer revenue increased by 41.03% year-on-year, and 449 direct sales customers were added. Under the situation of serious losses of pig breeding enterprises, the ability of risk control was strengthened and differentiated credit policies were implemented. The proportion of accounts receivable in total assets decreased by 3.05% year-on-year. The construction of marketing system has achieved certain results. Aquatic products, e-commerce, pets and ruminants have built a marketing team with exquisite business, and the marketing pattern of letting a hundred flowers bloom has gradually taken shape. In particular, the marketing of aquatic products has achieved remarkable results, and the sales amount has increased by 169.62% year-on-year, becoming a new growth point of the company. (2) Continuous improvement of R & D capability
During the reporting period, the company obtained the new veterinary drug certificates of teloxacin (class II), teloxacin injection (class II) and gongamaran Zhili powder (Class III), and 7 newly authorized invention patents, and the R & D results gradually appeared. The company signed a strategic cooperation with Huazhong Agricultural University and launched a 100 million yuan cooperation plan. The “Huanong Huisheng Research Institute” was officially listed, opening up a new model for the company’s scientific and technological innovation and development. The two sides jointly carried out research in the fields of prevention and treatment of major animal diseases, development of new veterinary drugs, market strategy research and technical services, which further improved the R & D and innovation level of the company. The construction of R & D platform has been continuously enriched, the pet drug research center has been built, and the biotechnology research center of animal health products in Hubei Province has been gradually consolidated. The company’s testing center has officially obtained the accreditation certificate issued by China National Accreditation Service for conformity assessment (CNAs), marking that the technology and management level of the testing center has reached the world-class level. The company actively carried out the construction of management team and talent echelon of R & D division, formulated the management measures for professional and technical development channel, and established a clear career promotion channel for employees.
(3) Intelligent manufacturing upgrade
During the reporting period, the company’s Xingou intelligent chemical plant was successfully put into operation, realizing industry-leading automation and information production, and comprehensively improving production quality, production efficiency and production safety. The design capacity of the project is 10200 tons / year, which effectively alleviates the problem of limited capacity of the company. The projects under construction are advancing rapidly. The traditional Chinese medicine extraction workshop and Hubei Huisheng comprehensive preparation workshop have submitted GMP application. The 1000 t / a tylosin project and the 600 t / a tylosin production line expansion project have entered the stage of equipment installation and commissioning. The construction of the new powder / premix production line expansion project has started, and the pet line of Baiquan factory and the reconstruction of Zhonghua Road building Huanong Huisheng Research Institute laboratory and other projects have been started. With the continuous improvement of information construction, suppliers’ collaborative SRM system, human resources EHR system, logistics management system, sales self-service system and CRM projects have been put into use, which has greatly improved the operation efficiency and information level of the company. (4) Continuous optimization of quality control system
During the reporting period, the company always adhered to the principle of product quality above all else, continuously improved the product quality control system, and kept the batch of unqualified products at zero in the veterinary drug quality supervision and sampling organized by the Ministry of agriculture and rural areas for 10 consecutive years. Professional institutions were hired to guide the improvement of quality control management, the quality system was more perfect, the integrity and systematicness of the document system were improved, the foundation of team construction was more solid, and the quality management was continuously promoted in breadth and depth. Xingou intelligent chemical plant and shibilong production line have successfully passed GMP acceptance with high scores. Hubei Huisheng has completed the risk assessment of 9 production lines and the cleaning verification risk assessment of 11 GMP lines.
(5) Building a new system of corporate governance
During the reporting period, the company implemented new changes in organization and talent construction. First, the accounting unit has been further reduced. The company has successively established pet business department, e-commerce business department, ruminant business department and poultry business department; The pet drug research center was established to strengthen the assessment and incentive through the product LED project team responsibility system. Second, further improve the density of talents. This year, the number of employees has increased by 21.05% year-on-year, 35 talents have been introduced for key positions, and the construction level of youth and specialization of talent team has been greatly improved, which has injected fresh blood into the company. Give the R & D division more independent decision-making power to stimulate the market-oriented operation vitality of scientific research departments. Third, further improve the talent development system. The company has organized various kinds of high-level training, especially the training of instructors and the application of etiquette, which has helped to improve the vision of middle-level and external employees. Fourth, further enhance the construction of corporate culture. More than 20 corporate cultural activities were organized throughout the year.
During the reporting period, the company still achieved an operating revenue of 9962168 million yuan against the background of weakening market demand, an increase of 28.14% over the same period last year, mainly due to the company’s strengthening of marketing expansion and increasing customer stickiness, especially the penetration rate of group customers. The operating cost of the company in 2021 was 7254962 million yuan, an increase of 48.18% over the same period last year, mainly due to the fact that the upstream API industry, on the one hand, increased production costs due to the rise of commodity prices, and on the other hand, limited supply due to environmental protection inspection, dual control of energy consumption, “double carbon” policy, power restriction and other factors, resulting in a sharp rise in API prices during the year. The company’s sales expense in 2021 was 471542 million yuan, a decrease of 10.28% over the same period last year, mainly due to the disclosure of transportation expenses in operating costs this year. In 2021, the company’s R & D expenditure was 468876 million yuan, an increase of 65.20% over the same period last year, mainly due to the company’s strengthening of R & D investment and in-depth promotion of technological innovation driven strategy.
In 2021, the net cash flow from the company’s operating activities was 1557185 million yuan, an increase of 222.07% over the same period last year, mainly due to the growth of the company’s operating revenue and the strengthening of accounts receivable management. The net cash flow from the company’s investment activities in 2021 was -185145100 yuan, an increase of 72.38% over the same period last year, mainly due to the due redemption of cash management funds. In 2021, the balance of cash and cash equivalents at the end of the period was 966140700 yuan, an increase of 238.39% over the same period last year, mainly due to the funds raised by issuing convertible bonds and operating accumulation. The company’s cash flow was in good condition.
2、 Daily operation of the board of directors in 2021
(I) convening of the board of directors
During the reporting period, the board of directors of the company held 9 meetings in total. The convening and convening procedures of the meeting, the qualifications and voting procedures of the convener and attendees of the meeting were in line with the provisions of relevant laws, regulations, normative documents and the articles of association, and the resolutions of the meeting were legal and effective. The details are as follows:
Meeting time to consider proposals
1. Deliberated and passed the proposal on the work report of the board of directors in 2020. 2. Deliberated and passed the proposal on the work report of the general manager in 2020. 3. Deliberated and passed the proposal on the annual report of the company in 2020 and its summary. 4 Deliberated and passed the proposal on the company’s 2020 financial final accounts report
5. Proposal on the company’s internal control self-evaluation report in 2020
6. The proposal on the special report on the deposit and use of the company’s raised funds in 2020 was reviewed and approved
7. The second session of the board of directors deliberated and approved the proposal on profit distribution in 2020 and the plan for converting capital reserve into shares on March 26, 2021
Thirteenth meeting
8. The proposal on the application of comprehensive credit line and guarantee of subsidiaries to financial institutions was passed
9. Deliberated and passed the proposal on the company’s 2020 Social Responsibility Report
10. Deliberated and passed the proposal on the renewal of the company’s audit institution in 2021. 11. Deliberated and passed the proposal on the remuneration of directors, supervisors and senior managers in 2020 and the remuneration scheme in 2021
12. Deliberated and passed the proposal on Amending the Hvsen Biotechnology Co.Ltd(300871) articles of Association
13. The proposal on Amending the rules of procedure of Hvsen Biotechnology Co.Ltd(300871) shareholders’ meeting was deliberated and adopted
14. The proposal on Amending the rules of procedure of Hvsen Biotechnology Co.Ltd(300871) board of directors was deliberated and adopted
15. Deliberated and passed the proposal on Revising other systems related to corporate governance
16. Deliberated and passed the proposal on changes in accounting policies
17. The proposal on convening the 2020 annual general meeting of shareholders of the company was deliberated and adopted
1. The proposal on the company’s report for the first quarter of 2021 was deliberated and adopted
2. The proposal on the company meeting the conditions for issuing convertible corporate bonds to unspecified objects was deliberated and adopted
3. The proposal on the company’s plan to issue convertible corporate bonds to unspecified objects was deliberated and adopted one by one
4. The proposal on the company’s plan for issuing convertible corporate bonds to unspecified objects was deliberated and adopted
5. The proposal on the feasibility analysis report on the use of funds raised by the company by issuing convertible corporate bonds to unspecified objects was deliberated and adopted
6. Deliberated and passed the proposal on the demonstration and analysis report on the issuance of convertible corporate bonds by the company to unspecified objects
7. The second session of the board of directors deliberated and adopted the proposal on diluting the issuance of convertible corporate bonds to unspecified objects, that is, the return and filling measures and commitments of relevant subjects at the 14th Meeting on April 26, 2021
8. Deliberated and adopted the “on the company’s future three years (2021-2)”
