China Putian Food : PRELIMINARY UNAUDITED ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CHINA PUTIAN FOOD HOLDING LIMITED

中 國 普 甜 食 品 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01699)

PRELIMINARY UNAUDITED ANNUAL RESULTS ANNOUNCEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

FINANCIAL HIGHLIGHTS

. Revenue increased to approximately RMB636,715,000 for the year ended 31 December 2020, representing an increase of 0.7% as compared with approximately RMB632,271,000 for the year ended 31 December 2019.

. Gross profit increased by 3.4% to approximately RMB102,493,000 for the year ended 31 December 2020 as compared with approximately RMB99,140,000 for the year ended 31 December 2019.

. Profit for the year was approximately RMB7,510,000 for the year ended 31 December 2020 as compared with approximately RMB57,997,000 for the year ended 31 December 2019.

DELAY IN PUBLICATION OF AUDITED ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020

The board (the ''Board'') of directors (the ''Directors'') of China Putian Food Holding Limited (the ''Company'', together with its subsidiaries as the ''Group'') wishes to announce that as the Company is in the process of (i) negotiating on a matter which may constitute insider information (the ''Inside Information'') and the result of which may affect the opinion of the auditors of the Company (the ''Auditors'') towards the audited annual results of the Group for the year ended 31 December 2020; and (ii) addressing certain outstanding evidence concerning the Company's ability to continue as a going concern, the publication of the audited annual results announcement for the year ended 31

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December 2020 has to be delayed in order to avoid providing possible misleading information to the shareholders and potential investors of the Company. For details of the Insider Information, please refer to the announcement of the Company dated 15 April 2021.

Given that the auditing process has not been completed, the Company is not able to publish the audited annual results announcement of the Group for the year ended 31 December 2020 in accordance with Rule 13.49(2) of the Rules Governing the Listing of Securities (the ''Listing Rules'') on The Stock Exchange of Hong Kong Limited (the ''Stock Exchange'').

PUBLICATION OF UNAUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020 IN THIS ANNOUNCEMENT

Rule 13.49(3) of the Listing Rules provides that where an issuer is unable to issue its financial results in accordance with Rules 13.49(1) and 13.49(2), it must, so far as the information is available, announce its results based on the financial results which have yet to be agreed with the auditors. In order to keep the shareholders and potential investors informed of the business operation and financial position of the Group, the Board publishes the unaudited annual results of the Company for the year ended 31 December 2020 together with the audited comparative figures for the corresponding period in 2019 in this announcement.

The Group's unaudited annual financial results for the year ended 31 December 2020 has been reviewed by the Audit Committee.

An announcement relating to the audited results announcement and the annual report will be made when the auditing process is completed in accordance with Hong Kong Standards on Auditing issued by Hong Kong Institute of Certified Public Accountants, together with the material differences (if any) as compared with the unaudited annual results contained herein.

It is expected that the auditing process will be completed as soon as practicable after the Company has completed the negotiation in relation to the Inside Information. It is expected that the Company will despatch the audited annual results announcement for the year ended 31 December 2020 as and when appropriate, according to the Listing Rules and, in any event, not later than Thursday, 6 May 2021.

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The Board is pleased to announce the unaudited financial results of the Group for the year ended 31 December 2020 (the ''Reporting Period'') together with the comparative audited figures for the corresponding period in 2019 as follows:

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2020

		2020		2019
	Notes	RMB'000	RMB'000
		(Unaudited)	(Audited)
Revenue	5	636,715		632,271
Cost of sales		(534,222)	(533,131)
Gross profit		102,493		99,140
Other income and losses	6	7,276		14,685
(Loss)/gain arising from change in fair value
less costs to sell of biological assets		(66)	34,220
Selling and distribution expenses		(36,406)	(31,488)
Administrative expenses		(43,995)	(42,668)
Finance costs	7	(21,792)	(24,747)
Gain arising from fair value change of derivative
financial liability		-		8,855
Profit before taxation		7,510	57,997
Taxation	8	-		-
Profit for the year	9	7,510		57,997
Other comprehensive income/(loss) for the year,
net of income tax:
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translating foreign operations		15,275		(7,096)
Other comprehensive income/(loss) for the year, net of
income tax		15,275		(7,096)
Total comprehensive income for the year		22,785		50,901
Profit for the year attributable to the owners of
the Company		7,510		57,997
Total comprehensive income for the year
attributable to the owners of the Company		22,785		50,901
Earnings per share
Basic and diluted (RMB cents per share)	11	0.40		3.07

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UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

		2020		2019
	Notes	RMB'000	RMB'000
		(Unaudited)	(Audited)
Non-current assets
Property, plant and equipment	12	552,482		563,128
Right-of-use assets		88,259		95,507
Biological assets		20,043		18,093
Deposits paid for property, plant and equipment		12,430		10,000
		673,214		686,728
Current assets
Inventories		74,846		64,745
Biological assets		164,149		184,201
Trade receivables	13	139,267		135,221
Deposits paid, prepayments and other receivables		194,668		157,727
Pledged bank deposits		4,080		3,075
Cash and bank balances		5,764		8,841
		582,774		553,810
Current liabilities
Trade and bills payables	14	18,782		22,774
Accruals, deposits received and other payables		56,726		29,156
Borrowings	15	365,035		401,424
Lease liabilities		8,114		14,332
Deferred revenue		90,355		65,003
		539,012		532,689
Net current assets		43,762	21,121
Total assets less current liabilities		716,976		707,849

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	2020		2019
Notes	RMB'000	RMB'000
	(Unaudited)	(Audited)
Non-current liabilities
Other payables	-	20,891
Lease liabilities	5,385		6,595
Amount due to a shareholder	8,498		8,548
Deferred revenue	10,667		2,174
	24,550		38,208
Net assets	692,426		669,641
Equity
Share capital	77,894		77,894
Share premium and reserves	614,532		591,747
Total equity	692,426		669,641

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

1. GENERAL INFORMATION
   The unaudited consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (''HKFRSs''), Hong Kong Accounting Standards (''HKASs''), and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the ''HKICPA''), and accounting principles generally accepted in Hong Kong. In addition, the unaudited consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Listing Rules'') and by the Hong Kong Companies Ordinance.
   The Company was incorporated as an exempted company with limited liability in the Cayman Islands. The addresses of the registered office and principal place of business of the Company are disclosed in the corporate information of the annual report.
   The principal activity of the Company is investment holdings. The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on 13 July 2012. The directors considered that the immediate and ultimate holding company is Zhan Rui Investments Limited, a company incorporated in British Virgin Islands.
   The unaudited consolidated financial statements are presented in Renminbi (''RMB''), which is the functional currency of the Company and all values are rounded to the nearest thousand (RMB'000) except otherwise indicated.
   The unaudited consolidated financial statements have been prepared on the historical cost basis, with the exception of biological assets, which are measured at their fair values.
2. APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS (''HKFRSs'')
   Amendments to HKFRSs that are mandatorily effective for the current year
   In the current year, the Group has applied the following Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the consolidated financial statements:

Amendments to HKAS 1 and HKAS 8	Definition of Material
Amendments to HKFRS 3	Definition of a Business
Amendments to HKFRS 9, HKAS 39	Interest Rate Benchmark Reform
and HKFRS 7

The application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current year had no material impact on the Group's financial positions and performance for the current and prior years and/or on the disclosures set out in these unaudited consolidated financial statements.

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New and revised HKFRSs in issue but not yet effective

The Group has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective:

HKFRS 17

Amendment to HKFRS 16 Amendments to HKFRS 3 Amendments to HKFRS 9, HKAS 39,

HKFRS 7, HKFRS 4 and HKFRS 16 Amendments to HKFRS 10 and

HKAS 28

Amendments to HKAS 1

Amendments to HKAS 16

Amendments to HKAS 37

Amendments to HKFRSs

Insurance Contracts and the related Amendments1

Covid-19-Related Rent Concessions4

Reference to the Conceptual Framework2

Interest Rate Benchmark Reform - Phase 25

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture3

Classification of Liabilities as Current or Non-current and related amendments to Hong Kong Interpretation 5 (2020)1

Property, Plant and Equipment - Proceeds before Intended Use2 Onerous Contracts - Cost of Fulfilling a Contract2

Annual Improvements to HKFRSs 2018-20202

1

2

3

4

5

Effective for annual periods beginning on or after 1 January 2023. Effective for annual periods beginning on or after 1 January 2022. Effective for annual periods beginning on or after a date to be determined. Effective for annual periods beginning on or after 1 June 2020.

Effective for annual periods beginning on or after 1 January 2021.

The directors of the Company anticipate that the application of all new and amendments to HKFRSs will have no material impact on the unaudited consolidated financial statements in the foreseeable future.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation of unaudited consolidation financial statements

The unaudited consolidated financial statements have been prepared in accordance with HKFRSs issued by the HKICPA. For the purpose of preparation of the unaudited consolidated financial statements, information is considered material if such information is reasonably expected to influence decisions made by primary users. In addition, the unaudited consolidated financial statements include applicable disclosures required by the Listing Rules on the Stock Exchange and by the Hong Kong Companies Ordinance.

The unaudited consolidated financial statements have been prepared on the historical cost basis, with the exception of certain financial instruments that are measured at fair values at the end of each reporting period.

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4. SEGMENT INFORMATION

The Group currently operates in one operating segment which is the sales of pork operation. A single management team reports to the Group's Chief Executive Officer (being the chief operating decision-maker) who allocates resources and assesses performance based on the consolidated results of the preceding year for the entire business comprehensively. Accordingly, the Group does not present segment information separately.

During the Reporting Period, all revenue was derived from customers in the People's Republic of China (the ''PRC'') and almost all the non-current assets of the Group are located in the PRC.

Segment revenue

For the year ended 31 December 2020, revenue from the sales of pork increased to approximately RMB636,715,000 (2019: approximately RMB632,271,000).

Furthermore, revenue of approximately RMB68,870,000 (2019: approximately RMB94,987,000) arose from sales to the Group's largest customer.

Information about the largest customer

Revenue from customers contributing over 10% of the total revenue of the Group for the year ended 31 December

2019 and 2020 are as follows:

	2020	2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Customer A	N/A*	64,018
Customer B	68,870	N/A*
Customer C	N/A*	94,987
Customer D	N/A*	71,730

* Revenue from the customer is less than 10% of the total revenue of the Group.

Geographical Information

During the years ended 31 December 2019 and 2020, the Group mainly operated in the PRC and most of the Group's revenue was derived from the PRC. As at 31 December 2019 and 2020 most of the non-current assets of the Group were located in the PRC. No analysis of the Group's results and assets by geographical area is disclosed.

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5. REVENUE

Revenue represents the net invoiced value of goods sold, excluding value added tax or other sales tax. Disaggregation of revenue from contracts with customers by major products is as follows:

		2020		2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
	Recognition at a point in time
	- Retail of pork	402,537		368,870
	- Wholesale of pork	202,316		232,818
	- Retail of frozen pork	20,866		21,833
	- Wholesale of commodity hogs	10,996		8,750
		636,715		632,271
6.	OTHER INCOME AND LOSSES
		2020		2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
	Interest income on:
	- bank deposits	60		74
	- amortisation of deferred revenue	253		253
	Total interest income	313		327
	Loss on disposal of property, plant and equipment	(40)	(113)
	Gain on disposal of hog droppings	-	145
	Gain on disposal of biological assets	3,413		2,586
	Government grants (Note)	3,111		11,924
	Sundry income/(expenses)	479		(184)
		7,276		14,685

Note: Government grants include subsidies income received by a subsidiary of the Group which operates in the PRC in accordance with the subsidy policies of local government authorities and in relation to the construction of hog farms and slaughterhouses and government tax grants. Subsidies income received by a subsidiary of the Group is recognised in the unaudited consolidated statement of profit or loss and comprehensive income when received and no specific conditions are required. Those government grants on the construction of hog farms and slaughterhouses are recognised as deferred revenue and the other government grants are recognised as other income. The government grants recognised during the year are non-recurring. There are no unfulfilled conditions or contingencies relating to these government grants.

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7. FINANCE COSTS

		2020		2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
	Interests on:
	- Borrowings wholly repayable within five years	12,210		13,903
	- Other interest bearing payable wholly repayable within five years	773		2,296
	- Imputed interest charged on convertible bonds	-	3,582
	- Interest charged on non-convertible bonds	6,669		3,022
	- Interest expenses on lease liabilities	2,140		1,944
		21,792		24,747
8.	TAXATION
		2020		2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
	Income tax expenses	-	-
	Notes:

1. Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands (the ''BVI''), the Group is not subject to any income tax in the Cayman Islands and the BVI during the Reporting Period.
2. For the year ended 31 December 2017, Hong Kong Profits Tax was calculated at 16.5% on the estimated assessable profits. On 21 March 2018, the Hong Kong Legislative Council passed the Inland Revenue (Amendment) (No.7) Bill 2017 (''Bill'') which introduces the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazette on the following day. Under the two-tiered profits tax rate regime, the first HK$2,000,000 of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2,000,000 will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%.
   No provision for Hong Kong profits tax has been made as the Group did not have any assessable profits subject to Hong Kong profits tax during the years ended 31 December 2019 and 2020.
3. Pursuant to the Enterprise Income Tax Law (''EIT LAW'') of the PRC, the statutory tax rate of Enterprise Income Tax (the ''EIT'') for both domestic enterprises and foreign investment enterprises is 25%. Income derived by an enterprise from engaging in the raising of livestock and poultry shall be exempted from EIT.
   Meat processing of primary produce is on the list of The Range of Processing of Primary Agricultural Produces to Be Given Preferential Enterprise Income Tax Treatment (Trial Implementation) (2008 version) (享受企業所得 稅優惠政策的農產品初加工範圍(試行)(2008年版)) promulgated by the Ministry of Finance (財政部) and the State Administration of Taxation (國家稅務總局) on 20 November 2008. Tianyi (Fujian) Modern Agriculture Development Co., Ltd and Putian (Beijing) Food Limited meet the required standard for preferential PRC EIT treatment.

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According to the prevailing tax rules and regulations, Tianyi (Fujian) Modern Agriculture Development Co., Ltd and Putian (Beijing) Food Limited operating in the business of primary processing of agricultural products were exempted from the PRC EIT during the years ended 31 December 2019 and 2020.

1. According to the EIT LAW and implementation of the regulations issued by the State Council, income tax at the rate of 5% is applicable to any dividends payable to investors that are ''non-resident enterprises'' (and that do not have an establishment or place of business in China, or that have such establishment or place of business but the relevant income is not effectively connected with the establishment or place of business) to the extent such dividends have their source within the PRC. Tianyi (Fujian) Modern Agriculture Development Co., Ltd. and 莆
   田市鄉里香黑豬開發有限公司 (Putian Xianglixiang Black Pig Development Co., Ltd.*) are considered as
   ''resident enterprises'' by the Chinese government, and those required to pay withholding tax on the dividend payable to the foreign shareholders and foreign shareholders also have to pay PRC income tax on gains on transfer of shares.
   Since the Group can control the quantum and timing of distribution of profits of the Group's subsidiaries in the PRC, deferred tax liabilities are only provided to the extent that such profits are expected to be distributed in the foreseeable future.

9. PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging/(crediting):

	2020		2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Allowance for/(reversal of) expected credit loss on trade receivables, net	606		(858)
Depreciation of property, plant and equipment	29,351		30,530
Depreciation of right-of-use assets	7,138		8,014

1. DIVIDENDS
   The Directors do not recommend the payment of any dividend for the year ended 31 December 2020 (2019: Nil).
2. EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY

The calculation of the basic earnings per share attributable to the owners of the Company is based on the following data:

Earnings	2020		2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Earnings attributable to owners of the Company
for the purpose of calculating basic earnings per share	7,510		57,997

• For identification purposes only

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Number of shares	2020		2019
	'000	'000
	(Unaudited)	(Audited)
Weighted average number of ordinary shares
for the purpose of calculating basic earnings per share	1,889,000		1,889,000

The calculation of basic earnings per share for the year is based on the profit attributable to the owners of the Company for the year ended 31 December 2020 of approximately RMB7,510,000 (2019: approximately RMB57,997,000) and the weighted average number of approximately 1,889,000,000 (2019: 1,889,000,000) ordinary shares in issue for the year ended 31 December 2020.

1. PROPERTY, PLANT AND EQUIPMENT
   For the year ended 31 December 2020, the Group incurred costs for (i) buildings, (ii) plant and machinery, (iii) motor vehicles; (iv) office equipment and (v) construction in progress of approximately RMB1,150,000 RMB3,108,000 RMBNil, RMB26,000 and RMB14,466,000 respectively.
2. TRADE RECEIVABLES

	2020		2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Trade receivables	139,983		135,331
Less: Allowance for expected credit loss	(716)	(110)
	139,267		135,221
The fair values of trade receivables approximate their carrying amount.

The Group normally allows a credit period ranging from cash upon delivery to 60-90 days depending on the customer's creditworthiness and the length of business relationship with the customers. The ageing analysis of trade receivables based on the invoice date as at 31 December 2020 and 2019 is as follows:

		2020		2019
		RMB'000	RMB'000
		(Unaudited)	(Audited)
Within 30 days	45,908		35,730
31	to 90 days	45,033		88,915
91	to 180 days	47,257		10,681
Over 180 days	1,785		5
		139,983		135,331

The trade receivables are denominated in RMB. The Group does not hold any collateral over these balances.

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14. TRADE AND BILLS PAYABLES
	2020		2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Trade payables	5,182		12,524
Bills payables	13,600		10,250
	18,782		22,774
The ageing analysis of trade payables is as follows:
	2020		2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Within 30 days	1,118		4,067
31 to 90 days	624		3,359
91 to 180 days	3,440		5,098
	5,182		12,524

The average credit period on purchases of certain goods is generally within 15 days to 90 days.

The Group normally obtains credit terms within 60 days from its suppliers. The bills payables are matured within twelve months (2019: twelve months) from the end of the Reporting Period.

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15. BORROWINGS
	2020		2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Borrowings - secured	355,410		378,424
Borrowings - unsecured	9,625		23,000
	365,035		401,424
	2020		2019
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Borrowings at:
- bank borrowings at floating interest rate	130,417		138,958
- other unsecured borrowings at fixed interest rate	9,625		23,000
- non-convertible note at fixed interest rate	92,580		98,536
- non-convertible bond at fixed interest rate	132,413		140,930
	365,035		401,424

The contractual floating and fixed interest rates per annum in respect of borrowings were within the following ranges:

	2020		2019
	%		%
	(Unaudited)	(Audited)
Floating rate	3.35-5.13	3.30-6.09
Fixed rate	5.00-11.63	4.35-10.00

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MANAGEMENT DISCUSSION & ANALYSIS

The national large-scale vertically integrated pork products supply service of the Group ranges from hog farming, hog slaughtering to pork distribution with a well-developed operation model. The Group owns a slaughterhouse in Fujian Province that meets the national ''5-star'' standard and three hog farms in Xuanhua in Hebei, Shiti (石梯) and Xianglixiang (鄉里香) in Putian, respectively. The major physical sales markets of the Group are Fujian and Beijing. The main pork products of the Group include chilled whole hog carcasses, separated pork, frozen pork (for retail), and by-products of internal organs, etc. The Group intends to focus on the development of black hog products in the future.

Industry Review

Since the outbreak of COVID-19 in late 2019, the overall industry sales performance has declined significantly in the first quarter of 2020 (''Q1'') due to the severe disruption to industry businesses in China and other regions caused by the subsequent outbreak control and other quarantine measures. However, thanks to the Chinese government's implementation of strict pandemic prevention and control measures to bring the pandemic under control in China, production and other economic activities in China resumed rapidly in the second quarter of 2020 (''Q2''), leading to a gradual recovery of the domestic economy and a return to sound growth in Q2. Despite the fact that China's economy shrank sharply in Q1 by 6.8% in terms of GDP on an annualised basis, the economy rebounded beyond expectation in Q2 with 3.2% GDP growth. Given that the spread of COVID-19 has plunged the global economy into a severe recession, the continuing growth of China's GDP in the third and fourth quarters of 2020 reflects a strong momentum for economic growth.

Driven by domestic demand, the focus on China's economic development continued to shift from quantity to quality. China's GDP in 2020 still recorded RMB101.6 trillion. In terms of industry, according to the data released by the National Bureau of Statistics of China (NBS), grain production in 2020 had another bumper harvest, with the total grain output reaching 1.339 trillion jin (斤), representing an increase of 11.3 billion jin (斤) or 0.9% over last year. The output has remained above

1.3 trillion jin (斤) for six consecutive years, indicating a continuous increase in people's consumption demand.

The demand for pork in China remains stable, but the supply chain and logistics have been affected by the pandemic, resulting in supply falling short of demand, which led to a continuous rise in pork price. As the Chinese Central Government further strengthened the animal pandemic prevention measures by September 2020, the number of live hogs ready for slaughter in China has increased for nine consecutive months. The supply of live hogs has increased significantly, and the price of pork has decreased moderately.

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After the outbreak of African Swine Fever, the State Council of the People's Republic of China issued the ''Opinions on Stabilizing Live Hogs Production and Promoting Transformation and Upgrading'' (國務院辦公廳關於穩定生豬生產促進轉型升級的意見) to promote the transformation and upgrading of live hogs production, and to focus on high-quality development and ensure the stability of supply in the pork market. The live hogs industry eliminates the weak and keeps the strong; thus, large-scale enterprises are more competitive in the industry. Furthermore, with the increase of the domestic population's average income, the continuous improvement in living quality, the growth of domestic demand and the upgrading of consumption structure, consumers have gradually improved their awareness of high-end pork products in recent years, and tend to have more confidence in branded and safe pork. As a result, the demand for branded pork continues to rise, further expanding the market share of domestic black pork.

Business Review

For the Reporting Period, the Group recorded a revenue of approximately RMB636,715,000, representing an increase of approximately 0.7% as compared with approximately RMB632,271,000 for the year ended 31 December 2019. The increase in revenue was mainly due to increased selling prices of the products during the Reporting Period. The net profit for the Reporting Period was approximately RMB7,510,000 as compared with net profit of RMB57,997,000 last year. The decrease in net profit was mainly due to the following reasons: (i) decrease in other income and losses; (ii) decrease in gain arising from the change in fair value less costs to sell of biological assets; and (iii) no gain arising from fair value change of derivative financial liability during the Reporting Period.

''Putian Black Pearl'', the Group's black hog brand, has continued to develop as planned in a stable manner. The black hog farm in Xuanhua, Hebei has maintained good operation and production conditions. The new hog farms are still at the early stage of introducing boars for reproduction by batches and the quantification stage of producing commodity hogs from boars. As a result, the current capacity utilisation rate is still low. The capacity utilisation rate of farms in Hebei is increasing gradually. Approximately 14,534 black hogs were ready for slaughter in the Shiti and Xianglixiang farms in Putian, Fujian, representing an increase of 2,122 hogs from 12,412 last year. The capacity utilisation rate increased significantly to approximately 52.3 %.

For the sales business, the Group added five retail points in supermarkets in Beijing and Fujian to its portfolio during the Reporting Period, including Wu Mart (物美超市), Fuwang Supermarket (福旺超 市), Han Guo Xian Sheng (憨果鮮生) and Fresh Food Market (時鮮豐). In addition, sales channels have been further diversified to combine offline supermarkets and distributors, franchisee, VIP and gift companies with e-commerce, which have been actively developed and promoted on new media so as to increase traffic, improve store rankings and to attract consumers at different levels. The market penetration rate of ''Putian Black Pearl'' and the high-end brand of the Group, were further improved. During the Reporting Period, products under ''Putian Black Pearl'' were well-accepted in key markets including Fujian and Beijing. The Group's black pork products achieved outstanding sales especially in Fujian and Beijing, due to effective promotion measures, rising income levels of local residents and optimized consumption structure. Revenue derived from the sales of ''Putian Black Pearl'' contributed to 29% of the total revenue of the Group during the Reporting Period.

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Financial Review

1. Revenue

The following table sets out the breakdown of the revenue of the Group by sales segments and their relevant percentage of the total revenue during the Reporting Period:

	For the year ended 31 December
	2020		2019
				% of total					% of total
	RMB'000	revenue		RMB'000	revenue
	(Unaudited)			(Audited)
Revenue
Retail of pork	402,537			63.2	368,870			58.3
Wholesale of pork	202,316			31.8	232,818			36.8
Retail of frozen pork	20,866			3.3	21,833		3.5
Wholesale of commodity hogs	10,996			1.7		8,750		1.4
	636,715			100		632,271			100

• Note: the sum of the percentages may not be equal to the total due to rounding.

The total revenue of the Group increased by 0.7% from approximately RMB632,271,000 for the year ended 31 December 2019 to approximately RMB636,715,000 for the year ended 31 December 2020. During the Reporting Period, the increase in revenue was mainly due to the increased selling prices of the products. The Group will continue to implement its new sales strategy in order to further penetrate its products under the brand of ''Putian'' into the pork market.

Revenue from Retail of Pork

The Group's revenue from the retail of pork increased by around 9.1% from approximately RMB368,870,000 for the year ended 31 December 2019 to approximately RMB402,537,000 for the year ended 31 December 2020. Such change in revenue was mainly because of the increased selling prices of the products during the Reporting Period.

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The Group continued to expand its sales network to improve its retail market share. During the Reporting Period, the Group established five new retail points in the supermarkets, among which three are located in Beijing and two in Fujian, including Wu Mart (物美超市), KuanGuang Supermarket (寬廣超市), Dong Sheng Lian Yi Supermarket (東盛聯億超市) and Yue Lai Yue Hao Supermarket (悅來悅好超市). As at 31 December 2020, the Group had 83 retail counters, mainly in supermarkets and department stores with regional influence over places such as New Huadu, Walmart, China Resources Vanguard, Century Lianhua, RT-Mart, etc. In Beijing, the Group launched retail sales through certain influential counters in supermarkets or department stores such as New World and C.P. Lotus Corporation. The Group had 11 direct sales outlets located in Putian and Fuzhou. Under the impact of the COVID-19 pandemic, commercial channel sales, community store channels and family delivery membership have become the main channels of high-end pork. Therefore, the Group actively developed its online business during the Reporting Period. During the Reporting Period, new e-commerce channels were established, and in particular, sales in Beijing recorded an increase. Through internet advertising campaigns and favorable recommendations among customers, ''Putian'' brand has gradually gained recognition for being reliable and savory, particularly from high-spending customers, who are highly concerned with their living standards. The management of the Company expects that the revenue from retail of pork can be further increased by leveraging the further expansion of the distribution networks of the ''Putian'' brand.

Revenue from Wholesale of Pork

For the year ended 31 December 2020, revenue from the wholesale of pork of the Group was approximately RMB202,316,000, representing a decrease of approximately 13.1% as compared to RMB232,818,000 for the year ended 31 December 2019. Such change in revenue was mainly because of the decrease in the sales volume of the products, and the focus of the sales strategy of the Group on retail business during the Reporting Period.

Revenue from Retail of Frozen Pork

Sales revenue from frozen pork products decreased by 4.4% from approximately RMB21,833,000 for the year ended 31 December 2019 to approximately RMB20,866,000 for the year ended 31 December 2020. Our frozen pork products are mainly sold to renowned meat processors in the Fujian Province. Revenue from the retail of frozen pork decreased over the last year, mainly due to the decrease in sales volume of the products during the Reporting Period. Also, the Group decreased its storage of frozen pork when the pork price was high, to ensure freshness.

Revenue from Wholesale of Commodity Hogs

Revenue from wholesale of commodity hogs increased significantly by 25.7% from approximately RMB8,750,000 for the year ended 31 December 2019 to approximately RMB10,996,000 for the year ended 31 December 2020. Such change in revenue was mainly because of the increased selling prices of piglets during the Reporting Period.

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2. Gross Profit and Gross Profit Margin

		For the year ended 31 December
	2020	2019
		Gross Profit			Gross Profit
		Margin			Margin
	RMB'000	(%)	RMB'000	(%)
	(Unaudited)		(Audited)
Gross Profit and Gross Profit
Margin
Retail of Pork	67,765	16.8	65,407		17.7
Wholesale of pork	27,618	13.7	28,790		12.4
Retail of frozen pork	1,738	8.3	2,600		11.9
Wholesale of commodity hogs	5,372	48.9	2,343		26.8
	102,493	16.1	99,140		15.7

The overall gross profit of the Group increased by approximately 3.4% from approximately RMB99,140,000 for the year ended 31 December 2019 to approximately RMB102,493,000 for the year ended 31 December 2020. The overall gross profit margin of the Group increased from approximately 15.7% for the year ended 31 December 2019 to approximately 16.1% for the year ended 31 December 2020. The gross profit increased slightly, which corresponded to the increase in revenue.

Gross Profit and Gross Profit Margin for the Retail of Pork

Gross profit for the retail of pork increased from approximately RMB65,407,000 for the year ended 31 December 2019 to approximately RMB67,765,000 for the year ended 31 December 2020. The gross profit margin of the retail of pork decreased from approximately 17.7% for the year ended 31 December 2019 to approximately 16.8% for the year ended 31 December 2020. The change in gross profit and gross profit margin of the retail of pork was mainly due to the sales strategy and promotions of the Group being focused on the retail business during the Reporting Period.

Gross Profit and Gross Profit Margin for the Wholesale of Pork

Gross profit for the wholesale of pork decreased from approximately RMB28,790,000 for the year ended 31 December 2019 to approximately RMB27,618,000 for the year ended 31 December 2020. The gross profit margin of the wholesale of pork increased from approximately 12.4% for the year ended 31 December 2019 to approximately 13.7% for the year ended 31 December 2020. The

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change in gross profit and gross profit margin for the wholesale of pork was due to the decrease in sales volume of the products, and the sales strategy of the Group being focused on the retail business during the Reporting Period.

Gross Profit and Gross Profit Margin for the Retail of Frozen Pork

The frozen food business is relatively new to the Group. Gross profit of frozen pork products decreased from approximately RMB2,600,000 for the year ended 31 December 2019 to approximately RMB1,738,000 for the year ended 31 December 2020. The gross profit margin of frozen pork products decreased from approximately 11.9% for the year ended 31 December 2019 to approximately 8.3% for the year ended 31 December 2020. The change in gross profit and gross profit margin of frozen products was due to the fact that hogs ready for slaughter decreased in amount and the price of pork increased as a result of by African Swine Fever, leading to the sale of fresh pork prevailing the market.

Gross Profit and Gross Profit Margin for the Wholesale of Commodity Hogs

For the year ended 31 December 2020, gross profit of wholesale of commodity hogs was approximately RMB5,372,000, representing an increase of approximately 129.3% as compared with approximately RMB2,343,000 for the year ended 31 December 2019. The gross profit margin increased to approximately 48.9% for the year ended 31 December 2020 from approximately 26.8% for the year ended 31 December 2019. The significant increase in gross profit and gross profit margin was due to the Group's sale of mainly piglets, which has a higher selling price and lower farming costs, during the Reporting Period.

3. Profit for the year

For the year ended 31 December 2020, the Group recorded a profit of approximately RMB7,510,000, representing a decrease of approximately 87.1% as compared with approximately RMB57,997,000 for the year ended 31 December 2019. The decrease in net profit was mainly due to the following reasons: (i) the decrease of other income and losses of approximately RMB7,409,000 mainly resulting from the decrease in government grants; (ii) the increase in loss arising from the change in fair value less cost to sell of biological assets of approximately RMB66,000 for the Reporting Period, from the gain of approximately RMB34,220,000 for the year ended 31 December 2019; (iii) no gain arising from fair value change of derivative financial liability; and (iv) the increase of selling and distribution expenses of approximately RMB4,918,000; despite the increase of gross profit of approximately RMB3,353,000 mainly resulting from the increase in selling price.

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LIQUIDITY AND FINANCIAL RESOURCES

Financial Resources

The Group's working capital requirement was principally financed by internally generated cashflow and bank facilities. As at 31 December 2020, cash and cash equivalents amounted to approximately RMB5,764,000 (31 December 2019: approximately RMB8,841,000). As of 31 December 2020, the net cash generated from operating activities amounted to approximately RMB62,556,000 (31 December 2019: net cash generated from operating activities amounted to approximately RMB82,748,000).

Redemption of Convertible Bond and Note

References are made to the announcements of the Company dated 29 May 2020 (the ''Announcement''). The terms used in this announcement shall have the same meaning as those defined in the Announcement, unless the context otherwise requires. According to the Announcement, the Maturity Date will be further extended to 31 May 2021. For the detail of the current status of the Convertible Bond and the Note, please refer to the announcement of the Company dated 15 April 2021. The Company will continue to keep its shareholders and potential investors of the Company updated of any material development of the Convertible Bond and the Note as and when appropriate.

Bank Borrowings and Pledged Assets

As at 31 December 2020, the total amount of interest-bearing bank borrowings was approximately RMB140,042,000 (31 December 2019: bank borrowings were RMB141,958,000). The total amounts of interest-bearing bank borrowings and bank overdrafts were denominated in RMB and HKD and bore a floating interest rate.

As at 31 December 2020, bank borrowings of approximately RMB222,997,000 were secured by pledge/ charge over the Group's property, plant and equipment and right-of-use asset with a total carrying value of approximately RMB85,535,000 (31 December 2019: approximately RMB94,728,000), and secured by guarantees provided by the Company and Mr. Cai Chenyang, who is the director, chairman of the Board and a major shareholder of the Company.

Gearing Ratio

As at 31 December 2020, the gearing ratio of the Group was 55.9% (31 December 2019: 64.3%). This was calculated by dividing interest-bearing borrowings, the amount due to a shareholder, bank overdrafts and lease liabilities by the total equity of the Group as at 31 December 2020.

Foreign Exchange Risk

The Group's main operations are located in Putian City, Fujian Province of the PRC. Most of the assets, income, payments and cash balances are denominated in RMB. In addition, the Group has not entered into any foreign exchange hedging arrangement. The Directors consider that exchange rate fluctuation had no material impact on the Group's performance.

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Material Acquisitions and Disposals of Subsidiaries

The Group had no material acquisitions and disposals of subsidiaries during the Reporting Period.

Winding-Up Petition Made Against the Company

References are hereby made to the announcements (collectively, the ''Announcements'') of the Company dated 2 July 2020, 11 September 2020, 21 September 2020, 30 September 2020 and 12 October 2020, relating to and in connection with a winding-up petition (the ''Petition'') filed by Financial Asia Limited (the ''Petitioner'') against the Company and/or the application to strike out the Petition made by the Company (the ''Application''). Please refer to the Announcements for the details of the development of the Petition.

As disclosed in the announcement dated 12 October 2020, Judge Linda Chan heard the hearing of the Petition and the hearing of the Application (collectively, the ''Hearings''). After hearing the statement made by the counsel of the Company and in the absence of the Petitioner at the Hearings, the High Court ordered that, among other things, the Petition be struck out and the costs of the Petition and Application shall be paid by the Petitioner to the Company.

Contingent Liabilities

As at 31 December 2020, the Group had no material contingent liabilities (2019: Nil).

Capital Commitments

As at 31 December 2020, the Group had capital commitments of approximately RMB65,544,000 (31 December 2019: approximately RMB69,024,000), which mainly comprised commitments for the construction in process in Hebei and Fujian.

Human Resources

As at 31 December 2020, the Group had 486 (31 December 2019: 503) employees. Staff costs (including share option scheme, sales commission, staff salaries and welfare expenses, contributions to retirement benefit schemes and staff and workers' bonus and welfare fund) amounted to approximately RMB17,458,000 (31 December 2019: approximately RMB23,329,000) during the Reporting Period. All the Group's companies treat all their employees equally, with the selection and promotion of individuals being based on their suitability for the position offered. The Group operates a defined contribution mandatory provident fund retirement benefits scheme for our employees in Hong Kong, and provides our PRC employees with various welfare schemes as required by the applicable laws and regulations in the PRC.

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Prospects

1. Commit to Expanding Territory to Meet the Demands of Domestic Consumers
   Despite the impact of COVID-19, pork is an essential consumer product for people's livelihood. Domestics demand for live hogs increased notwithstanding high prices in early 2020. Therefore, the Group is confident that the domestic demand for hogs will remain stable the next year. In the future, the Group will continue to build the high-end brand image of ''Putian Black Pearl'' to expand its sales territory, and continue to input resources to expand the Group's retail outlets in Beijing. At the same time, in order to adapt to different market demands and changes in the market, the Group will improve its retail strategy through big data and other statistical models, so as to meet the demands of consumers in various regions in China and provide appropriate high- quality food ingredients. In Beijing, the Group will continue to increase the publicity of the ''Putian Black Pearl'' brand, and in Fujian, the Group will mainly promote the Putian pork brand. In the coming year, the Group plans to add 5 retail outlets in Hualian, Wal-Mart and Carrefour, respectively, and 10 retail outlets in Wu Mart in Beijing, reaching a total of 25 retail outlets.
2. Focus on the Expansion of Retail Channels and Search for Online Sales Opportunities
   China's e-commerce market witnessed rapid development, with increasing consumers in China shopping online. Prior to the outbreak of COVID-19, the proportion of online food shopping was far less than that of non-food shopping. However, since the outbreak of COVID-19, buying food products through online channels has become the new norm. As the scale of online retail continues to grow, the Group is optimistic about the development potential of online retail and believes that it is the business trend in the future. Therefore, the Group will continue to fortify efforts on the expansion of online retail channels, and focus on expanding e-commerce, community stores and family delivery membership as the main sales channels of high-end pork by investing in more comprehensive distribution services and other new food ingredient sales strategies. The Group expects that this will not only expand its revenue source, but also help the brand to reach deeper into the households of consumers, thus laying the foundation for the Group's future development.
3. Meet the Demands of the Live Hog Market and Improve the Capacity Utilisation Rate
   Despite the effect of COVID-19 in 2020, the demand for live hogs remained stable. The Group believes that the current domestic live hog market still has development potential. However, having noticed the market changes in the first half of the year, the Group adjusted its business strategy by developing its retail pork and wholesale pork businesses and expanding its sales channels. Currently, the production progress of farms in Xuanhua in Hebei, Shiti and Xianglixiang in Putian is stable. It is expected that the number of live hogs ready for slaughter will increase next year to raise the supply of the Group and achieve remarkable sales results.

FINAL DIVIDEND

The Board does not recommend the payment of any dividend for the year ended 31 December 2020 (2019: Nil).

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CLOSURE OF REGISTER OF MEMBERS

The Hong Kong branch register of members of the Company will be closed from Tuesday, 22 June 2021 to Monday, 28 June 2021, both days inclusive, during which period no transfer of shares of the Company will be effected. In order to determine the identity of members who are entitled to attend and vote at the annual general meeting to be held on Monday, 28 June 2021, all share transfer documents accompanied by the relevant share certificates must be lodged not later than 4:30 p.m. on Monday, 21 June 2021 with the Company's Hong Kong branch share registrar, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong.

PURCHASE, SALES OR REDEMPTION OF LISTED SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the year ended 31 December 2020.

AUDIT COMMITTEE

The audit committee of the Company (the ''Audit Committee'') consists of three independent non- executive Directors, namely, Mr. Xue Chaochao, Mr. Cai Zirong and Mr. Wang Aiguo. Mr. Xue Chaochao is the chairman of the Audit Committee. During the Reporting Period, the Audit Committee has reviewed the accounting principles and standards adopted by the Group, and has discussed and reviewed the internal control, risk management and reporting matters. The preliminary unaudited annual results of the Group for the year ended 31 December 2020 have been reviewed by and agreed with the Audit Committee.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the ''Model Code'') as set out in Appendix 10 to the Listing Rules as the code of conduct regarding securities transactions by the Directors. Upon specific enquiries of all the Directors, each of them confirmed that they have complied with the required standards set out in the Model Code for the year ended 31 December 2020.

CORPORATE GOVERNANCE

The Company has adopted the code provisions of the Corporate Governance Code (the ''Code'') set out in Appendix 14 to the Listing Rules. Save as disclosed below, none of the Directors is aware of any information which would reasonably indicate that the Company has not, during the 12 months ended 31 December 2020, complied with all applicable code provisions of the Code.

Code Provision A.2.1

Code A.2.1 of the Code stipulates that the roles of the chairman and the chief executive officer should be separate and should not be performed by the same individual. Mr. Cai Chenyang is the chairman and the chief executive officer of the Company. The Board considers that this structure will not impair the

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balance of power and authority between the Board and the management of the Company. The balance of power and authority is ensured by the operations of the Board, which comprises experienced and high calibre individuals who meet regularly to discuss issues affecting the operation of the Company. The Board believes that this structure, in the period of rapid business development of the Company, is conducive to strong and consistent leadership, enabling the Group to make and implement decisions promptly and efficiently. The Board has full confidence in Mr. Cai Chenyang and believes that having Mr. Cai Chenyang perform the roles of chairman and chief executive officer is beneficial to the business prospect of the Group.

PUBLICATION OF FINANCIAL RESULTS ON THE WEBSITE OF THE STOCK EXCHANGE

This preliminary unaudited annual results announcement is available for viewing on the websites of the Stock Exchange and the Company. The annual report for the year ended 31 December 2020 will be dispatched to shareholders of the Company and published on the websites of the Stock Exchange and the Company in due course.

By order of the Board

China Putian Food Holding Limited

Cai Chenyang

Chairman

Hong Kong, 15 April 2021

As at the date of this announcement, the Board comprises Mr. CAI Chenyang, Mr. CAI Haifang and Ms. MA Yilin as executive Directors, Mr. CHENG Lian and Mr. CAI Zhiwei as non-executive Directors and Mr. XUE Chaochao, Mr. CAI Zirong and Mr. WANG Aiguo as independent non-executive Directors.

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