2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2014
April 2015
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of
SHENZHEN ZHONGHENG HUAFA CO., LTD. (hereinafter referred to as the Company)
hereby confirm that there are no any fictitious statements, misleading statements, or
important omissions carried in this report, and shall take all responsibilities, individual
and/or joint, for the reality, accuracy and completion of the whole contents.
Other directors attended the board meeting on deliberating the report except for the following
directors:
Name of absent director Position of absent director Reason for absence Attorney
Li Xiaodong Independent Director On a business trip Zhang Zhaoguo
The Company has no plan of cash dividends carried out, bonus issued and capitalizing of
common reserves either.
Li Zhongqiu, Principal of the Company, Cao Li, person in charger of accounting works and
Wu Aijie, person in charge of accounting organ (accounting principal) hereby confirm that
the Financial Report of 2014 Annual Report is authentic, accurate and complete.
Concerning the forward-looking statements with future planning involved in the Report, they
do not constitute a substantial commitment for investors. Majority investors are advised to
exercise caution of investment risks.
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Contents
Section I Important Notice, Contents and Paraphrase ................................................................. 2
Section II Company Profile ............................................................................................................... 6
Section III Accounting data and summary of finnaical indexes .................................................. 9
Section IV Report of the Board of Directors ................................................................................ 11
Section V Important Events .......................................................................................................... 27
Section VI Changes in shares and particular about shareholders............................................... 30
Section VII Preferredstock………………………………………………………………………..35
Section VIII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 36
Section IX Corporate Governance ................................................................................................. 48
Section X Internal Control .............................................................................................................. 49
Section XI Financial Report ............................................................................................................ 50
Section XII Documents available for reference ........................................................................... 131
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Paraphrase
Items Refers to Contents
Company, Shen Huafa Refers to SHENZHEN ZHONGHENG HUAFA CO., LTD.
Hengfa Technology Refers to Wuhan Hengfa Technology Co., Ltd.
Huafa Property Refers to Shenzhen Zhongheng Huafa Property Co., Ltd
Huafa Lease Refers to Shenzhen Huafa Property Lease Management Co., Ltd
Huafa Trade Refers to Wuhan Zhongheng Huafa Trade Co., Ltd.
Wuhan Zhongheng Group Refers to Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd.
HK Yutian Refers to Hong Kong Yutian International Investment Co., Ltd.
Hengsheng Photoelectricity Refers to Wuhan Hengsheng Photoelectricity Industry Co., Ltd.
Hengsheng Yutian Refers to Wuhan Hengsheng Yutian Industrial Co., Ltd.
Yutian Henghua Refers to Shenzhen Yutian Henghua Co., Ltd.
Huafa Hengtian Refers to Shenzhen Huafa Hengtian Co., Ltd.
Huafa Hengtai Refers to Shenzhen Huafa Hengtai Co., Ltd.
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Warning of major risks
Please pay attention to the risks factors the Company facing, that well-described
in section IV “Report of the Board of Directors”
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section II Company profile
I. Company information
Short form of the stock SHEN HUAFA Stock code 000020 200020
Stock exchange for listing Shenzhen Stock Exchange
Name of the Company (in Chinese) 深圳中恒华发股份有限公司
Short form of the Company (in Chinese) 深华发
Foreign name of the Company(if applicable) SHENZHEN ZHONGHENG HUAFA CO., LTD.
Legal representative Li Zhongqiu
Registrations add. 411 Bldg., Huafa (N) Road, Futian District, Shenzhen
Code for registrations add
Offices add. 6/F, East Tower of 411 Bldg., Huafa (N) Road, Futian District, Shenzhen
Codes for office add.
Website of company http://www.hwafa.com.cn
E-mail hwafainvestor@126.com.cn
II. Person/Way to contact
Secretary of the Board Rep. of security affairs
Name Weng Xiaojue Niu Yuxiang
6/F, East Tower, Huafa (N) Road, Futian 6/F, East Tower, Huafa (N) Road, Futian
Contact add.
District, Shenzhen District, Shenzhen
Tel. (0755) 83352206 (0755) 61389198
Fax. (0755) 61389001 (0755) 61389001
E-mail hwafainvestor@126.com.cn hwafainvestor@126.com.cn
III. Information disclosure and preparation place
Newspaper appointed for information disclosure China Securities Journal; Securities Times; Hong Kong Commercial Daily
Website for annual report publish appointed by CSRC http://www.cninfo.com.cn
Preparation place for annual report Office of the Board of SHENZHEN ZHONGHENG HUAFA CO., LTD.
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
IV. Registration changes of the Company
Registration NO. for
No. of taxation
Date for registration Place for registration enterprise legal Organization code
registration
license
411 Bldg., Huafa (N)
Initial registration 1981-12-08 Road, Futian 440301501120670 440301618830372 61883037-2
District, Shenzhen
411 Bldg., Huafa (N)
Registration at end
2007-11-23 Road, Futian 440301501120670 440301618830372 61883037-2
of report period
District, Shenzhen
Before the change of controlling shareholders: the main business was production and
sales of color TV, printed circuit board and injection molded parts etc.
Changes of main business since listing (if
After the change of controlling shareholders: the main business gradually adjusted to
applicable)
production and sales of injection molded parts, foam part (light packaging materials) and
LCD whole machine.
The Company‘s predecessor was Shenzhen Huafa Electronic Co., LTD, which was
founded in 1981, initiated and established by three legal persons-- Shenzhen Electronics
Group Co., LTD, China Zhenhua Electronic Group Co., LTD and Hong Kong Luks
Industrial Co., LTD. In June 2005, Wuhan Zhongheng Group transferred the 44.12%
Previous changes for controlling
equity of company, held by original first and second largest shareholder of the Company
shareholders (if applicable)
Shenzhen Electronics Group Co., LTD and China Zhenhua Electronic Group Co., LTD,
and equity transfer formalities completed in April 2007; Wuhan Zhongheng Group
became the controlling shareholder of the Company. In September 2007, the company
officially changed its name to ―Shenzhen Zhongheng Huafa Co., Ltd‖.
V. Other relevant information
CPA engaged by the Company
Name of CPA Shinewing Certified Public Accountants LLC
9/F, Block A, Fu Hua Mansion No.8 Chaoyang Men, Bei da jie, Dong Cheng District, Beijing,
Offices add. for CPA
P.R.China
Signing Accountants Zhang Weijian, Zhang Yongde
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section III. Accounting data and summary of financial indexes
I. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting
error correction or not
□ Yes √ No
2014 2013 Changes over last year 2012
Operating income (RMB) 694,839,760.10 626,821,044.64 10.85% 723,891,496.54
Net profit attributable to shareholders
7,687,620.27 -6,517,401.44 217.96% 3,241,897.70
of the listed company(RMB)
Net profit attributable to shareholders
of the listed company after deducting 2,322,082.33 -5,934,309.10 139.13% 3,856,768.38
non-recurring gains and losses(RMB)
Net cash flow arising from operating
119,492,159.01 -69,353,440.38 272.29% 18,419,090.98
activities(RMB)
Basic earnings per share
0.0271 -0.0230 217.96% 0.0114
(RMB/Share)
Diluted earnings per share
0.0271 -0.0230 217.96% 0.0114
(RMB/Share)
Weighted average ROE 2.77% -2.35% 3.51 percentage points up 1.16%
Changes over end of last
End of 2014 End of 2013 End of 2012
year
Total assets (RMB) 1,162,740,984.93 731,348,499.86 58.99% 681,645,093.97
Net assets attributable to shareholder
281,351,269.74 273,663,649.47 2.81% 280,181,050.91
of listed company (RMB)
II. Items and amounts of extraordinary profit (gains)/loss
√Applicable □Not applicable
In RMB
Item Amount in 2014 Amount in 2013 Amount in 2012 Note
Gains/losses from the disposal of
non-current asset (including the write-off 1,587,819.80 104,043.85 3,843.23
that accrued for impairment of assets)
Governmental subsidy reckoned into current
4,159,795.00 1,652,600.00
gains/losses (not including the subsidy
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
enjoyed in quota or ration according to
national standards, which are closely
relevant to enterprise‘s business)
Other non-operating income and expenditure
149,500.69 -1,736,569.94 -978,232.33
except for the aforementioned items
Other gain/loss items satisfying the
983,612.12
definition of nonrecurring gain/loss account
Less: impact on income tax 1,515,189.67 603,166.25 -359,518.42
Total 5,365,537.94 -583,092.34 -614,870.68 --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section IV. Report of the Board of Directors
I. Introduction
In 2014, the differentiation of the world economic recovery intensified, the growth of the developing economic entities slowed down;
despite the downward pressure, China''s economy has still remained the smooth and steady development with progress and quality
improved, the economic development has entered a new normal which changes from the extensive growth in scope and speed to the
intensive growth in quality and efficiency, the personalized and diversified consume is becoming the mainstream, the importance to
ensure the product quality and safety and activate the needs by innovative supply rises significantly. Under the current political and
economic environment that the downward pressure of macro economy increases and the demands for home-appliance industry are in
downturn and no favorable policy is released, the sales growth of most home-appliance categories has slowed down, some are even
in negative growth, the sales volume of refrigerators and air conditioners is weak, the traditional home-appliance manufacturers
transform to the new business mode and the products transform to the smart home, and the consumption upgrade is in a clear trend.
As an industrial manufacturing and processing enterprise providing the supporting products and services for the home-appliance
industry, the Company has withstood the market pressure and maintained a stable situation, though the gross margin of some
businesses has slid down because of the undercut price competition in sales and increase of production costs, the overall business
performance has fundamentally kept the same as the same period of last year; the leasing business of own property has grown
substantially as most of the unused places are leased. In 2014, the company achieved the operating income of 694,839,800 Yuan, an
increase of 10.85% compared to the same period last year; and net profits of 7.6876 million Yuan, which turned losses into gains.
●The injection molding business has realized the annual operating income of 275,568,100 Yuan, an increase of 12.90% compared to
the same period last year. In the case of poor overall market, the injection business division has taken measures in time to decisively
readjust the product mix, significantly reduce the costs by saving the energy and strengthening the internal management, and has
made new achievements. The company has focused on maintaining the customer relations, appropriately adjusted the strategy to
receive orders, reduced the order shares of the products with small gross margin, increased the cooperation businesses with high
profitability, and undertaken the orders for new products; the company has strengthened the fine management, strictly controlled the
production site, and improved the product quality so as to well withstand the well-known manufacturers and customers to make
excessive demands for the quality and repeated spot checks, and continued to maintain a good quality reputation and has been
honored as a leading enterprise of injection products and the annual excellent supplier; the company also has updated some old
injection molding machines based on the previously introduced injection molding machine manipulator and servo system which
made the energy-saving effects continue to show, the automation improvement and process optimization progress have greatly
reduced the waste of human input and manufacturing materials, and the production efficiency has been significantly enhanced.
●The Styrofoam business has achieved the annual revenue of 75,274,200 Yuan, a decrease of 2.02% compared to the same pe
