Tianshui Zhongxing Bio-Technology Co.Ltd(002772)
Work report of the board of directors in 2021
In 2021, the board of directors of the company strictly complied with the company law, the securities law, the Listing Rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board, the articles of association, the rules of procedure of the board of directors and other relevant laws and regulations, normative documents and the provisions of the company’s system, and scrupulously performed its duties and Actively and effectively exercised its functions and powers, earnestly implemented the resolutions of the general meeting of shareholders, diligently carried out the work of the board of directors, continuously standardized the corporate governance structure, and promoted the sustainable, healthy and stable development of the company.
During the reporting period, the company successfully completed the general election of the board of directors. The board of directors and all special committees work diligently, constantly strengthen internal control management, actively provide advice and suggestions for major decisions of the company, and promote the development of various businesses of the company. Now the work of the board of directors in 2021 is reported as follows:
1、 Overall operation during the reporting period
2021 is an extraordinary year for the whole edible fungus industry. Due to the superposition of multiple factors such as market supply, repeated outbreaks in China, and the double squeeze between the purchasing end and the sales end, companies in the edible fungus industry experienced a rare overall loss in the first three quarters in history. In the face of the adverse situation of “squeezing at both ends”, the company timely adjusted the management focus, fully implemented the assessment policy of “three improvements and six reductions” at the production end, strengthened market development at the sales end and strengthened brand construction.
In 2021, the company realized an operating revenue of 1556146700 yuan, a year-on-year increase of 4.92%; The net profit attributable to the shareholders of the listed company was 54.968 million yuan, a year-on-year decrease of 70.91%. The sales volume of edible fungi of the company reached 310500 tons, an increase of 6.40% over the previous year. On the one hand, the change of the company’s operating performance is affected by the general decline of the overall profit margin of the industry: (1) affected by the trade of bulk goods, the overall purchase price of raw materials for Flammulina velutipes production has increased, and the product cost has increased significantly; (2) In the post epidemic era, the consumption in the downstream market of edible fungi is weak, especially the sales price of Flammulina velutipes products remains low, and the market performance in the traditional peak sales season is poor; (3) Repeated epidemics, rainstorms and other factors lead to the scrapping of some finished products and products in process; On the other hand, the company’s Agaricus bisporus varieties increased with the production of phase II of Wuhe base and the full production of phase II of Jiangsu base this year.
From the perspective of gross profit rate, the gross profit rate of Flammulina velutipes and Agaricus bisporus in 2021 was 14.48% and 23.89%. It can be seen that with the continuous completion of raised investment and self built projects, the production capacity of the company is released rapidly and the gross profit rate is relatively high. Due to the higher technical barriers and greater investment of Agaricus bisporus, the industry is still in the development stage. The competition mainly comes from the enterprise industrialized production and greenhouse cultivation, that is, it is in the stage of enterprise industrialization gradually replacing greenhouse cultivation, so its profit prospect is relatively better. In addition, the annual selling price of this variety is relatively stable, and the stable profit output will become an important contributor to the company’s future performance.
2、 Daily work of the board of directors during the reporting period
(I) convening of the board meeting
In 2021, the board of directors of the company held 12 board meetings in accordance with the relevant provisions of the company law, the securities law and the articles of association. The convening, convening and voting procedures of the board of directors and the attendance of personnel were in line with the provisions of the company law, the articles of association and the rules of procedure of the board of directors. The details are as follows:
1. On March 25, 2021, the 36th meeting of the third board of directors deliberated and adopted the proposal on reviewing the work report of the general manager in 2020, the proposal on reviewing the work report of the board of directors in 2020, the proposal on reviewing the financial final accounts report in 2020, and the proposal on reviewing the audit report in 2020 The proposal on reviewing the special report on the deposit and use of raised funds in 2020, the proposal on reviewing the self-evaluation report on internal control in 2020, the proposal on reviewing the self-examination form for the implementation of internal control rules, the proposal on reviewing the profit distribution plan in 2020, the proposal on reviewing the annual report in 2020 and the summary of the annual report in 2020 Proposal on reviewing the 2021 annual financial budget report, proposal on renewing the company’s 2021 annual audit institution, proposal on reviewing the 2021 annual remuneration (allowance) performance plan for directors and senior managers, proposal on accounting policy change, proposal on applying for comprehensive credit line from the bank in 2021 The proposal on providing guarantee for subsidiaries in 2021, the proposal on using some idle self owned funds for entrusted financial management, the proposal on the proposed amendment of the articles of association, the proposal on the general election of the company’s board of directors and the nomination of candidates for non independent directors of the Fourth Board of directors, the proposal on the general election of the company’s board of directors and the nomination of candidates for independent directors of the Fourth Board of directors Proposal on proposing to convene the 2020 annual general meeting of shareholders of the company.
2. On March 30, 2021, the 37th meeting of the third board of directors deliberated and adopted the proposal on wholly-owned subsidiaries providing guarantee for bank loans of the parent company.
3. On April 2, 2021, the 38th meeting of the third board of directors deliberated and adopted the proposal on the participation of holding subsidiaries in project bidding.
4. On April 16, 2021, the first meeting of the Fourth Board of directors deliberated and approved the proposal on electing the chairman of the Fourth Board of directors, the proposal on electing the vice chairman of the Fourth Board of directors, the proposal on electing the members of the special committee of the Fourth Board of directors, the proposal on appointing the senior management of the company, the proposal on appointing the head of the internal audit department of the company Proposal on appointment of securities affairs representative of the company.
5. On April 20, 2021, the second meeting of the Fourth Board of directors deliberated and adopted the proposal on reviewing the report of the first quarter of 2021.
6. On May 24, 2021, the third meeting of the Fourth Board of directors deliberated and adopted the proposal on increasing the registered capital of wholly-owned subsidiaries.
7. On July 16, 2021, the fourth meeting of the Fourth Board of directors deliberated and adopted the proposal on the company’s financial leasing business and the proposal on the wholly-owned subsidiary providing guarantee for the financing of the parent company.
8. On August 9, 2021, the fifth meeting of the Fourth Board of directors deliberated and approved the proposal on the full text and summary of the company’s semi annual report in 2021 and the proposal on the special report on the deposit and use of raised funds in 2021.
9. On October 25, 2021, the sixth meeting of the Fourth Board of directors deliberated and adopted the proposal on the company’s report for the third quarter of 2021.
10. On November 4, 2021, the 7th Meeting of the 4th board of directors deliberated and approved the proposal on changing the purpose and cancellation of the remaining shares of (phase I) repurchased shares, the proposal on changing the registered capital of the company and amending the articles of association, and the proposal on proposing to convene the first extraordinary general meeting of shareholders in 2021 Proposal on convening the first bondholders’ meeting of “Zhongxing convertible bonds” in 2021.
11. On December 14, 2021, the 8th meeting of the 4th board of directors deliberated and approved the proposal on the wholly-owned subsidiary’s intention to participate in the bidding for the use right of state-owned land and the proposal on requesting the convening of the second extraordinary general meeting of shareholders in 2021.
12. On December 24, 2021, the 9th meeting of the 4th board of directors deliberated and approved the proposal on terminating the proposed bidding for state-owned land use rights of wholly-owned subsidiaries and the proposal on canceling the second extraordinary general meeting of shareholders in 2021.
(II) performance of each special committee under the board of directors
The board of directors of the company has four special committees: Strategy Committee, audit committee, nomination committee and salary and assessment committee. Each special committee performs its duties and conducts research on professional matters in accordance with the company law, the securities law, the guidelines for the governance of listed companies and the detailed rules for the work of the strategy committee of the board of directors, the detailed rules for the work of the audit committee of the board of directors, the detailed rules for the work of the nomination committee of the board of directors and the detailed rules for the work of the remuneration and assessment committee of the board of directors formulated by the board of directors, Put forward professional opinions and suggestions on the decision-making of the board of directors.
1. Strategy Committee
In accordance with the relevant provisions of the working rules of the strategy committee, the strategy committee of the board of directors actively carried out work and earnestly performed its duties. During the reporting period, the strategy committee of the board of directors put forward reasonable suggestions on the company’s future development and investment plan, deeply understood the company’s business status, development prospects, risks and opportunities in its industry, and put forward valuable suggestions for the formulation and implementation of the company’s development strategy.
2. Audit Committee
Conscientiously perform their duties and carry out their work in accordance with the working rules of the audit committee and other relevant provisions. During the reporting period, the company carefully reviewed the company’s periodic reports, understood the company’s financial status and operation in detail, reviewed the storage and use of the company’s raised funds, supervised and guided the implementation and implementation of the company’s internal control system, reviewed the situation of foreign investment projects, the self-evaluation report of internal control and the internal audit work report of the audit department in detail. It has guided and supervised the company’s financial situation and operation, and put forward opinions and suggestions in time.
3. Nomination Committee
In accordance with the working rules of the nomination committee and other relevant provisions, the nomination committee of the board of directors actively carried out its work and earnestly performed its duties. During the reporting period, the company nominated candidates for the new board of directors, conducted qualification examination on the candidates, fully studied the composition and needs of the company’s management personnel, conducted qualification examination on the nominated senior managers of the company, and issued examination opinions and suggestions.
4. Remuneration and assessment committee
According to the working rules of the salary and assessment committee and other relevant provisions, the salary and assessment committee earnestly performs its duties and actively carries out its work. During the reporting period, according to the main scope of responsibilities of the company’s directors and senior managers, the company’s business performance in 2020 and the completion of assessment indicators, the annual performance assessment of the company’s directors and senior managers was carried out, and the salary distribution plan of the company’s directors and senior managers was formulated in detail; In combination with the assessment in 2020, the remuneration plan for directors and senior managers of the company in 2021 was formulated; According to the completion of the company’s performance and the performance evaluation of all holders in 2020, complete the evaluation of the company and all holders in the first unlocking period of the company’s phase I ESOP.
(III) implementation of resolutions of the general meeting of shareholders by the board of directors
In 2021, the company held two general meetings of shareholders, all of which were convened by the board of directors. The board of directors carefully implemented the resolutions adopted by the general meeting of shareholders in strict accordance with the resolutions and authorization of the general meeting of shareholders, safeguarded the interests of all shareholders, ensured that shareholders could exercise their rights according to law, and promoted the long-term, steady and sustainable development of the company. (IV) corporate governance
In 2021, the company actively carried out the construction of internal control. In combination with the new requirements of relevant laws and regulations and internal management requirements, the board of directors organized and improved the company’s internal control system, further improved the company’s system, prevented risks and protected the rights and interests of investors and the company’s interests.
(V) self evaluation of the company’s internal control
The company has conducted self-evaluation on the effectiveness of the company’s internal control design and operation as of December 31, 2021 in accordance with the basic norms of internal control, evaluation guidelines and other relevant laws and regulations.
According to the identification of major defects in the company’s internal control over financial reporting, there are no major defects in the internal control over financial reporting on the benchmark date of the internal control evaluation report.
According to the identification of major defects in the company’s internal control over non-financial reports, the company found no major defects in the company’s internal control over non-financial reports on the benchmark date of the internal control evaluation report.
From the base date of the internal control evaluation report to the day when the internal control evaluation report is issued, there are no factors affecting the evaluation conclusion of the effectiveness of internal control.
(VI) Investor Relations Management
In 2021, according to relevant regulations, the company strengthened communication and exchange with investors, especially public investors, through the interactive platform of Shenzhen Stock Exchange, the telephone hotline of the company’s securities and investment department and e-mail, so as to answer the concerns of public investors and effectively protect the investors’ right to know.
(VII) information disclosure and insider information management
In 2021, the board of directors of the company strictly implemented the internal reporting system of major information, information disclosure management system, insider information registration management system and other rules and regulations as well as the provisions of relevant laws and regulations, and disclosed a total of 132 periodic reports and temporary announcements; During the reporting period, insiders of inside information were registered and reported in accordance with the law. All directors, supervisors, senior managers and other relevant insiders were able to strictly implement the obligation of confidentiality in the window period and sensitive period when major events such as regular reports were not disclosed to the public. The company did not disclose inside information or insider illegally traded or advised others to buy and sell the company’s shares, Successfully completed the information disclosure and insider information management in 2021.
3、 Attendance of independent directors at the board of directors and their independent opinions
The independent directors of the company shall, in accordance with the requirements of the company law, the standards for the governance of listed companies, the guiding opinions on the establishment of independent director system in listed companies, the stock listing rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board, the articles of association, the working system of independent directors of the company and other relevant laws and regulations, Fulfill obligations, exercise power, actively attend relevant meetings, carefully consider various proposals of the board of directors, fully express opinions on major matters related to the company, and express prior approval or independent opinions on relevant independent directors
