2013Annual Report of Shenzhen Zhongheng Hwafa Co, Ltd Stock Code: 000020, 200020
Public Notice No.: 2014-11
Short Form of the Stock: SHEN Huafa-A, SHEN Huafa-B
Shenzhen Zhongheng Huafa Co., Ltd.
Summary of Annual Report 2013
1. Important Notice
The summary is abstract from full-text of annual report, for more details information, investors should found in the full-text of annual report that published on website of Shenzhen Stock Exchange and other website appointed by CSRC.
Company Profile
||||||
|-|-|-|-|-|
|Short form of the stock|SHEN HUAFA|Stock code||000020|
|Stock exchange for listing|Shenzhen Stock Exchange||||
|Person/Way to contact|Secretary of the Board||Rep. of security affairs||
|Name|Weng Xiaojue||Niu Yuxiang||
|Tel.|(0755) 83352206||(0755) 61389198||
|Fax.|(0755) 61389001||(0755) 61389001||
|E-mail|hwafainvestor@126.com.cn||hwafainvestor@126.com.cn||

2. Main financial data and changes of shareholders
(1) Main financial data
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not
□ Yes√ No
||||||
|-|-|-|-|-|
||||Changes over last||
||2013|2012||2011|
||||year (%)||
|Operating income (RMB)|626,821,044.64|723,891,496.54|-13.41%|875,778,275.09|
|Net profit attributable to shareholders|-6,517,401.44|3,241,897.70|||
||||-301.04%|10,374,521.20|
|of the listed company(RMB)|||||
|Net profit attributable to shareholders|||||
|of the listed company after deducting|-5,934,309.10|3,856,768.38|-253.87%|10,892,370.66|
|non-recurring gains and losses(RMB)|||||
|Net cash flow arising from operating|-69,353,440.38|18,419,090.98|||
||||-476.53%|48,170,937.23|
|activities(RMB)|||||
|Basic earnings per share (RMB/Share)|-0.023|0.0114|-301.75%|0.0366|
|Diluted earnings per share|-0.023|0.0114|||
||||-301.75%|0.0366|
|(RMB/Share)|||||
||||3.51 percentage||
|Weighted average ROE (%)|-2.35%|1.16%||3.82%|
||||points down||
||||Changes over end of||
||End of 2013|End of 2012||End of 2011|
||||last year (%)||
|Total assets (RMB)|731,348,499.86|681,645,093.97|7.29%|668,385,621.82|
|Net assets attributable to shareholder of|273,663,649.47|280,181,050.91|||
||||-2.33%|276,939,153.21|
|listed company (RMB)|||||

2013Annual Report of Shenzhen Zhongheng Hwafa Co, Ltd (2) Statement of shares held by top 10 shareholders
||||||||
|-|-|-|-|-|-|-|
|||||Total shareholders ended as the|||
|Total shareholders at end of|||||||
|||26,022||5th trading day before annual|25,751||
|reporting period|||||||
|||||report disclosed|||
|Particular about shares held by top ten shareholders|||||||
|||Proportion of|||Shares pledge or frozen||
||||Amount of||||
|Shareholders|Nature|shares held||Amount of the restricted shares|||
||||shares held|held|Status|Amount|
|||(%)|||||
|WuhanZhonghengGroup|Domesticnon-state-ownedlegal person|41.14%|116,489,894|116,489,894|Pledged|116,489,894|
||||||Frozen|0|
|SEG (HONGKONG) CO.,LTD.|Overseas legalperson|5.58%|16,569,560|0|Pledged|0|
||||||Frozen|0|
|GOOD HOPECORNERINVESTMENTS LTD|Overseas legalperson|4.91%|13,900,000|0|Pledged|0|
||||||Frozen|0|
|Xie Deqing|Domestic natureperson|0.33%|948,290|0|Pledged|0|
||||||Frozen|0|
|Li Jianfeng|Domestic natureperson|0.33%|924,100|0|Pledged|0|
||||||Frozen|0|
|BINGHUA LIU|Domestic natureperson|0.31%|876,213|0|Pledged|0|
||||||Frozen|0|
|Zhu Ming|Domestic natureperson|0.22%|611,348|0|Pledged|0|
||||||Frozen|0|
|Specific accountfor agreed torepurchase ofCaida SecuritiesCo., Ltd.|State-ownedlegal person|0.21%|600,000|0|Pledged|0|
||||||Frozen|0|
|Lin Song|Domestic natureperson|0.18%|516,000|0|Pledged|0|
||||||Frozen|0|
|Wu Jingmin|Domestic natureperson|0.17%|477,561|0|Pledged|0|
||||||Frozen|0|
|||Among the top ten shareholders, Wuhan Zhongheng New Science & Technology Industrial|||||
|||Group Co., Ltd. neither bears associated relationship with other shareholders, nor belongs to the|||||
|Explanation on associated||consistent actor that are prescribed in Measures for the Administration of Disclosure of|||||
|relationship among the aforesaid||Shareholder Equity Changes of Listed Companies. The Company neither knew whether there|||||
|shareholders||exists associated relationship among the other tradable shareholders, nor they belong to|||||
|||consistent actors that are prescribed in Measures for the Administration of Disclosure of|||||
|||Shareholder Equity Changes of Listed Companies.|||||
|Explanation on shareholders|||||||
|involving margin business (if||N/A|||||
|applicable)|||||||

(3)Property right and controlling relationship between the actual controller and the Company is as follow: Li Zhongqiu
99%
Wuhan Zhongheng New Science& Technology Industrial Group Co., Ltd
41.14%
2
Shenzhen Zhongheng Huafa Co., Ltd.
2013Annual Report of Shenzhen Zhongheng Hwafa Co, Ltd 3. Discussion and analysis by the Management Team
The year 2013, the changing global economy, economy of the U.S. slowdown in growth, Euro zone continues to shrink, economy shows a stable operation in China and presents an active sign of new normal changed, is crucial for accelerate the transformation of development pattern under the transform background of growing stage. In face of the new economic situation of structural adjustment and transformation, the Company proactively takes actions to overcome difficulties. The overall business performance in industrial operations have a slight down compared with same period of last year, however, due to some of the sites fails to absorb tenants, revenue of leasing business from self-owned property declined dramatically, which impact a lot in operation performance of the Company for the Year: during the reporting period, the Company achieved operation revenue of RMB 626,821,000, down 13.41 percent over same period of last year; net profit loss RMB 6,517,400, a decrease of 301.04 percent compared to same period of last year.
●operating revenue of RMB 244,090,900 was realized in injection molding business, an increase of 26 percent compared to same period of last year. In the reporting period, the Company resist pressure of weak demand in appliance industry and maturity of the subsidy policy of energy-saving, decisively adjusted product structures, focus on close cooperation with original clients, further to enlarge the order quota of Gree Electric, the new client introduced last year, more than 3 million sets of the A/C housing injection molding have been produced and sold in the whole year, which was at an all-time high. Fundamentally, effectively controlling and solving the quality difficulties, in field of injection molding business, in aspect of dark spot, impurity and aberration for home appliance, maintain permanent sound delivery record, and rated as the “Excellent Supplier” by several well-known clients as Gree, Haier and TCL successively; after introduction of the injection molding machine manipulator and servo system, part of the aged injection molding machine equipment have been renewal, energy-saving effect continues to presented with dramatically improved in production efficiency.
●operating revenue of RMB 76,827,900 was realized in polystyrene business, an increase of 21 percent compared to same period of last year. In the reporting period, based on market demand oriented, seized opportunity of product innovation from current clients, adjusted and improved product structure, expanded new clients to enlarge market shares; starting from cost controlling, equipment facility management, reducing production cost and improved production efficiency, listed improvement of quality, reducing scrap rate and increase productivity as the main items in appraisal for production staffs; carried out target management, strictly accordance with operation process and technological process, arranged the production reasonably, put more efforts to operates with a sound operation results achieved.
●operating revenue of RMB 264167400 was realized in LCD whole set business, decrease approximately 37 percent compared to last year. During the reporting period, orders from major clients declined dramatically, video business division made a major adjustment in aspect of business and product strategy consequently: put more efforts into the planning and design as well as research for new products, production items extends to the small-screen products as Touch Tablet Pcs, which has multiple functions and wide screen products as the multi-media interactive teaching electronic white board; make an attempt on contracted for new-type case display products with outside business and import self-owned brand to the electricity trade platform and regional retail outlet, based on maintain whole set business of traditional display.
●operating revenue of RMB 33.27 million was realized in property leasing business, decrease approximately 14 percent compared to last year. During the reporting period, as the pillar property with major shares occupied in property leasing business, Huafa Building has to introduce the clients for rented again due to leasing contract for some of the sites are expired in 3Q of last year, moreover, most of the roads are enclosed for implementation of the metro No.7 Line “Huaqiangbei” around, people counting declined dramatically, business environment depressed relatively, the attraction of investment is hard to complete. With all, the Company communicated and negotiated actively with multiple parties, expected to introduced qualified cooperation clients with orientation of commercial district required and needs of the Company as soon as possible; in that period some of the shops open successively, but the main attraction of investment has not been completed; venue rental has a gap terms, which resulted in the sharply down in wholeyear’s rental revenue and profit.
(II) Composition of main business
In RMB
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|||
||||||Increase/decrease|Increase/decrease|
||Operating||Gross profit ratio|of operating|||
|||Operating cost|||of operating cost|of gross profit|
||revenue||(%)|revenue y-o-y|||
||||||y-o-y (%)|ratio y-o-y (%)|
|||||(%)|||
|According to products|||||||
|||||||0.88 percentage|
|Display|264,167,431.84|256,565,145.64|2.88%|-36.81%|-36.23%||
|||||||points down|
|Plastic injection||||||2.99 percentage|
||244,090,890.04|221,533,947.18|9.24%|26.14%|30.43%||
|hardware||||||points down|
|||||||2.58 percentage|
|Foam|76,827,912.39|67,571,640.16|12.05%|21.54%|25.21%||
|||||||points down|
|According to region|||||||

2013Annual Report of Shenzhen Zhongheng Hwafa Co, Ltd
||||||||
|-|-|-|-|-|-|-|
|||||||0.88 percentage|
|Hong Kong|264,167,431.84|256,565,145.64|2.88%|-36.81%|-36.23%||
|||||||points down|
|||||||2.91 percentage|
|Central China|320,918,802.43|289,105,587.34|9.91%|25.01%|29.18%||
|||||||points down|

 (II) Operation plans for new period
◆liquidize remnant assets
Focus on the completion of venue rental for 1/F to 3/F of Huafa Building, the self-owned property of the Company; on one hand, maintaining the current tenant relationship, on the other hand, actively absorbed leasing and introduce investment, rapid up the tenant negotiation, make great efforts to achieved operation profit from the current idle venues in Huafa Building. Meanwhile, close to the market, improving market consciousness of the property leasing and earnings profit from increasing revenues and cutting expenditures.
◆promote urban renewal projects
Boost implementation of the renewal projects of Huafa Area in Gongming street, Guangming New District, complete entity confirmation for the development implementation, as well as serial pre-phase process of EIA project approval, additional premium, re-signed of the land grant contract and examination& approval of specific renewal projects, try hard to construct and implement first phase project in later two years. At the same time, for the renewal project of Huafa Building, continues to negotiate with some of the minority proprietors, complete compensation and resettlement of relocation, and strive to complete entity application as soon as possible.
◆extending industrial business orders
Priority in extended thinking, broaden customers, maintain orders, and on basis of integration and establishment of main business center in 2013, to play synergistic effect in full on vary business resources from business unified communication window; continues to maintain current orders quota in Admiral and Haier, enlarge supporting quota from new clients of Gree and TCL to gains more market shares; attaches great importance to the detail management, focus on quality and productivity improvement; strengthen cost controlling, conducts technical reform for the production equipments, emphasized the promotion of automated management, reduce energy consumption and downsizing for efficiency.
◆intensified promotion andR&D for the industrial new products
Focus on development and promotion of new products and derivative products, rich the category and production line for video products on the premise that costs are under control, realized product diversification according to the needs of clients; deeper understand the upstream supply condition of LCD, combine needs from terminal market, adjusted self-owned machine size and types; developed potential and strength distributors, expanded marketing channel for the self-owned brand; with the help of current industrial production resources, newly plan out a OEM production line for A/C assembly, and trying to conduct new OEM business. 4. Relevant items involving financial report
(1) Explanation on changes on accounting policies, accounting estimation and calculation compare with lastyear’s annual financial report
Not applicable
(2)Major accounting errors within reporting period that needs retrospective restatement
Not applicable
(3) Compare with lastyear’s financial report; explain changes in consolidationstatement’s scope
Compared with 2012 Annual report, this year the company added two wholly owned subsidiaries, during the reporting period the company each to a 1 million RMB investments in a new two wholly owned subsidiaries: shenzhen Huafa hengtian co., LTD and shenzhen Yutianhenghua co., LTD.
(4)Explanation on “Qualified Opinion” from the Certified Public Accountants in the report period by the Board of Directors and Supervisory Committee
Not applicable
Board of Directors of Shenzhen Zhongheng Huafa Co., Ltd.
22 April 2014