Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
Stock code: 000058 200058 Stock abbreviation: SHEN SEG、SHEN SEG B Notice No.: 2015-045
Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
1. Importance Notice
This summary is excerpts from the full-text of the 2015 semi-annual report of Shenzhen SEG Co., Ltd. For more details, investors
shall read carefully the full-text of the semi-annual report published on the websites specified by China Securities Regulatory
Commission (CSRC), such as, the Cninfo Website (http://www.cninfo.com.cn ) and the website of Shenzhen Stock Exchange
(www.szse.cn ).
Company Profile:
Stock abbreviation SHEN SEG Stock code 000058
Changed stock abbreviation (if any) Shenzhen SEG Co., Ltd.
Listed on Shenzhen Stock Exchange
Contact information Secretary of the Board of Directors Securities affairs representative
Name Zheng Dan Zhang Xin
Phone 0755-83747939 0755-83747939
Fax 0755-83975237 0755-83975237
E-mail segcl@segcl.com.cn segcl@segcl.com.cn
2. Major Financial Data and Shareholder Changes
(1) Major Financial Data
Are retrospective adjustments made to previous financial statements due to accounting policy changes or accounting errors?
□ Yes √ No
The same period of the Year-on-year
This report period
previous year increase/decrease
Operating revenue (Yuan) 374,555,135.61 316,141,381.01 18.48%
Net profit attributable to shareholders of
34,906,133.61 37,645,842.28 -7.28%
the listed company (Yuan)
Net profit attributable to shareholders of
the listed company after deduction of 34,698,254.31 36,738,936.70 -5.55%
non-recurring gains and losses (Yuan)
Net cash flow arising from operating
-98,587,833.62 -104,382,196.59 -23.19%
activities (Yuan)
Basic EPS (Yuan/Share) 0.0445 0.0480 -7.29%
Diluted EPS (Yuan/Share) 0.0445 0.0480 -7.29%
Weighted average ROE 2.55% 2.97% -0.42%
Amount at end of the report Amount at end of the Year-on-year
period previous year increase/decrease
Total assets (Yuan) 2,495,946,288.44 2,659,717,718.28 -6.16%
Net assets attributable to shareholders of
1,435,903,974.96 1,298,970,719.85 10.54%
the listed company (Yuan)
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Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
(2) List of top 10 ordinary shareholders
Unit: Share
Total number of ordinary
shareholders at the end of the report 67,495
period
Shareholding information of the top 10 ordinary shareholders
Quantity of Information on pledged or
Name of Nature of Shareholding Quantity of restricted ordinary frozen shares
ordinary
shareholder shareholder percentage shares held
shares held Share status Quantity
Shenzhen SEG State-owned
30.24% 237,359,666 0 Pledged 83,679,833
Group Co., Ltd. legal person
Domestic
Zeng Ying 0.98% 7,679,449 0
natural person
Domestic
Liu Guocheng 0.85% 6,691,302 0
natural person
Taifook
Securities
Overseas legal
Company 0.52% 4,119,656 0
person
Limited-Accoun
t Client
Domestic
Liu Guohong 0.40% 3,127,958 0
natural person
Overseas
Gong Qianhua 0.37% 2,940,000 0
natural person
Domestic
Wang Jianguang 0.32% 2,497,771 0
natural person
KGI ASIA Overseas legal
0.30% 2,334,076 0
LIMITED person
Shaanxi
International
Trust Co., Ltd. –
Shaanxi
International
Investment Others 0.29% 2,249,943 0
Weicai
Securities &
Investment
Capital Trust
Scheme
Phillip
Securities Overseas legal
0.28% 2,206,196 0
(Hong Kong) person
Groups
Explanations on the association Shenzhen SEG Group Co., Ltd has no associated relationship with other shareholders, nor it is a
relationship or concerted action concerted action unit as described by the Management Methods for Disclosure of Information on
among the above-mentioned Changes of Shareholding Status of Shareholders of Listed Companies It is unknown whether
shareholders other shareholders have an associated relationship or are concerted action units or not.
Information of the shareholders
participating in financing None
business (if any)
(3) List of top 10 preferential shareholders
□ Applicable √ Not applicable
No shareholders hold preferred shares in the report period.
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Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
(4) Changes of the Controlling Shareholders or Actual Controllers
Changes of the controlling shareholders in the report period
□ Applicable √ Not applicable
In the report period, the controlling shareholders of the Company did not change.
Changes of the actual controllers in the report period
□ Applicable √ Not applicable
In the report period, the actual controllers of the Company did not change.
3. Management Discussion and Analysis
(1) Overview
In the first half of the year 2015, the domestic and international situation of economy confronted by our country became more
complex and severe, the pressure from economic downstream became increasingly heavy, multiple difficulty and challenge multiply
twisted, and the physical economy remained stable at low level but was weak for recovery. Facing the increasingly severe economic
situation and furious market competition, in the report period, according to the operating policy of “transformation, innovation and
development”, and through adopting a series of effective measures including organizational structure reform, implementing project
system, and resources to be distributed to the first-line business preferentially, the Company made continuous innovation in
management tool, endeavored to enhance the level of management and operation, and ceaselessly strengthened the core business
competence, so that the major economic indicators of the Company and each investment company increase over the previous year.
In the report period, the Company achieved a total operating income of 425,220,000 Yuan, a 26.10% increase over the previous year,
mainly due to: (1) substantial increase in the income of the agent purchasing and channel retailing terminal business; (2) substantial
increase in the income of the microcredit; and (3) year-on-year income of the Suzhou SEG Digital and Xingsha store of Mellow
Orange Hotel.
In the report period, the Company achieved a total profit of 72,190,000 Yuan, a 2.45% increase over the previous year, mainly due to
the increase in the income and profit of the microcredit business.
(2) Analysis of Main Business
Main business of the Company includes development and operation of specialized electronics market and supporting projects,
property lease service, IT product channel retail terminal service, e-commerce and value-added microcredit service.
① Operation of the electronics markets
In the first half year, facing the intense market competition and the impact from new-type commercial pattern, the Company actively
explored the new development pattern, constantly enhanced the operating capability and innovation capability of electronics market
mainly operated, built and optimized the operating mode of “physical store + e-commerce + channel” and duplicated this mode in
other SEG electronics markets outside Shenzhen, at the same time, the Company strengthened the building of physical channel and
continued to cultivate Tmall of SEG electronics market. In the field of selecting products, the Company achieved precision and
novelty, as well as lowered down the costs.
The Company seizes the opportunity that Shenzhen Municipal Government intends to build Huaqiang North as the maker center.
Based on its own advantages, the Company established the SEG International Maker Product Exhibition and Promotion Center. The
Company intends to attract high-quality and innovative products through SEG electronics market, build vertical O2O channel with
segmentation, take smart hardware and maker’s products as the core concept, fully exert the capability of distributing resources, link
the upstream and downstream channels of market, and finally for the Company’s own platform. It will be beneficial to attract
consumers to market, achieve the diversified competition with other professional markets, and to promote the Company’s business
transformation and upgrading.
In the report period, the Company's electronics market business achieved a total operating income of 158,490,000 Yuan, a decrease
of 0.47% over the previous year and a total profit of 44,790,000 Yuan, a decrease of 11.69% over the previous year, mainly due to
the decrease of the rental income of Nanning SEG market and the earlier-stage fees incurred by Suzhou SEG Digital.
② Business of property leasing service
In the report period, the property rental business of the headquarters and the Company's subsidiary SEG Baohua continues to increase
steadily.
With the continuous depression in the property rental industry in the entire Shenzhen Huaqiang North area, the vacancy rate of the
surrounding offices continues to increase, and the rental level maintains the status quo or has a slight decline. SEG Baohua has
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Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
overcome the difficulties by improving service levels and by taking effective management measures, such as grasping the golden
opportunity of Huaqiang North Maker Center and so on. In combination with the popular maker center concept of Huaqiang North,
SEG Baohua actively explores new performance growth points and stabilizes the occupancy rate at 99% or higher in the report period.
Meanwhile, SEG Baohua remains the rental at the highest level among the surrounding offices in Huaqiang North.
In the report period, the Company's property rental service yielded a total operation income of 37,380,000 Yuan, a year-on-year
increase of 6.98%, and a total profit of 8,760,000 Yuan, a year-on-year increase of 46.97%.
③ Business of the channel retailing terminal of IT products
In the report period, the overall business in the channel retailing terminal of IT products of SEG Industry, the wholly owned
subsidiary of the Company, is in good conditions, and each economic indicator achieved a dramatic increase compared with that of
the previous year. In the first half of 2015, SEG Industry has formally signed a memorandum of cooperation documents with Apple
and officially obtained the authorized Apple distributor for big customers in the China Southern Region. In mid-June, SEG Industry
has achieved good results in the first App recommended council for big customers held in Shenzhen after the cooperation.
In the report period, the Company's channel business achieved a total operating income of 149,890,000 Yuan, a 73.99% increase over
the previous year, mainly due to the increase of the mobile phone distribution and communications distribution business over the
previous year.
④ E-commerce
In the report period, the SEG E-commerce achieved a total operating income of 14,830,000 Yuan, a 36.54% decrease over the
previous year, and the total profit decreased over the previous year, mainly due to the decrease of the supply chain business in the
current report period.
Till the date of disclosure of this report, the Company's board had approved the Proposal for Transferring 51% of the SEG
E-commerce Share Held by Shenzhen SEG. At present, the Company has submitted the application for the equity transfer issue to the
related departments, and the third-party organization is orderly implementing the auditing and evaluation. It is expected to complete
the share transfer work in the third quarter. The Company will timely disclose the related information according to the specific
progress.
⑤ Business of small loan
The SEG Microcredit business runs well in the report period, and the indicators are increased considerably on year-on-year basis. At
present, SEG Microcredit has reached strategic cooperation with major commercial tenants of SEG Electronics Market. Based on the
warehouse receipt pledge mode, SEG Microcredit provides the agent purchasing business, therefore relieving the cash flow pressure
of the commercial tenants and achieving a win-win situation.
In the report period, SEG Microcredit achieved a total operating income of 48,060,000 Yuan, a 128.06% increase over the previous
year, a total profit of 16,380,000 Yuan, a 27.37% increase over the previous year, mainly due to the increase of the loan scale and
loan interests over the previous year.
⑥ Hotel Business
Up to the report period, SEG Baohua, the subsidiary controlled by the Company, invested in three chain business hotels in total,
including Mellow Orange Hotel Changsha Branch, Mellow Orange Hotel Xingsha Branch and Mellow Orange Hotel Bao’an Branch,
mainly dealing in the business of accommodation, catering and conference service and so on.
In the report period, the Company's hotel business achieved a total operating income of 12,900,000 Yuan, a 24.77% increase over the
previous year, and a total profit of 1,963,000 Yuan, a 0.39% increase over the previous year, mainly because the increase of Mellow
Orange Hotel Xingsha Branch is newly added in, and the increase of hotel quantity makes that of income and profit.
Year-on-year changes of the main financial data
Unit: Yuan
Amount of the report The same period of the Year-on-year Reason for change
period previous year increase/decrease (%)
Operating income 374,555,135.61 316,141,381.01 18.48% The trade business is
increased over the
previous year in the
report period.
Operating cost 317,303,931.44 248,349,208.37 27.77% The trade business is
increased over the
previous year in the
report period.
Sale expenses 941,405.12 1,002,320.62 -6.08% The store expenses of the
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Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
trade business decreased
in the report period.
Management expenses 16,004,563.26 15,637,568.42 2.35%
Financial cost 843,057.23 388,862.46 116.80% The short-term financing
bonds and bank
borrowings are increased
over the previous year,
and the accrued loan
interest is increased
accordingly.
Income tax 20,121,370.92 18,633,100.05 7.99%
Research spending 0.00 759,513.21 -100.00% No investment is put into
the research and
development of the SEG
Universal software in the
report period.
Net cash flow from -98,587,833.62 -104,382,196.59 -23.19%
operating activities
Net cash flow from 76,375,411.91 -30,287,254.56 The bank financial
investing activities investment in the report
period was reduced over
the same period of last
year.
Net cash flow arising -204,572,249.79 428,415,242.53 -147.75% The Company has paid
from financing activities back the mature
short-term financing
bonds and bank
borrowings in the report
period.
Net increase in cash and -226,784,670.23 293,745,798.77 -177.20% The comprehensive
cash equivalents influence exerted by the
cash flow of the activities
above caused the increase
in the project.
Major changes occur in the profit structure or the profit sources of the Company in the report period.
□ Applicable √ Not applicable
No major changes occur in the profit structure or the profit sources of the Company in the report period.
The prospectus, fund-raising notes, and asset restructuring reports of the Company disclose the future development and plans
proceeding in the report period
□ Applicable √ Not applicable
The prospectus, fund-raising notes, and asset restructuring reports of the Company do not disclose the future development and plans
proceeding in the report period
(3) The company reviews and summarizes how the previously disclosed operation plan is progressed in the
report period.
In the first half of 2015, according to the Company's "transformation, innovation, and development" guideline for management, the
Company actively develops new business while maintaining the steady development of the existing business. Driven by the capital
and resources, the Company creates a multi-channel profit model and mainly implements the following work in the report period:
① Organizational reformation
Given the changes in the external business environment and customer needs, the Company is required to accelerate the pace of
business transformation and innovation, deepen the customer value, build a multi-channel profit model, and integrate various
resources, to build a capital-driven and resource-driven business-oriented development model. For this purpose, the Company has
adjusted the original organizational structure in the first half of 2015 and introduced the project system. Till now, the Company has
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Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
set up dozens of project teams.
The new organizational structure adopts a flexible organizational structure and matrix management. It functions in a "fixed and
flexible" combined mode. This organizational structure promotes the Company to rapidly and flexibly respond to the market,
technical, and user changes. It helps the Company to efficiently integrate the resources and improve management decision-making
efficiency.
In the first half of 2015, the Company has completed the organizational structure adjustment, work transfer in new departments, and
department-level organizational performance assessment principles, according to the plan. The newly introduced project system is
implemented orderly. Each project team functions in accordance with the plans.
② Actively developing new markets and exploring new service model of the electronics market
In the current environment, the Company uses the asset-light model to explore new markets. In the first half of 2015, the Company
has been completed the signing of the Tangshan SEG and Nanchang SEG entrust management projects.
Faced with the impact of increasingly severe competition in the market and shock of new business model, led by the Internet, the
Company has continued to research and try the new models of the electronics market. The Company actively develops and attempts
the Internet+ business development model by taking advantage of the entity resources in the national market chains and ensuring
smooth operation of the stock market. .
③ Orderly promoting the commercial real estate project
The Nantong SEG Times Square project has obtained the sales license for three towers in the late March 2015. The permitted total
construction area for pre-sale is 29,911.11 square meters, mainly for SOHO and LOFT office area.
To improve the attractiveness and competitiveness of the entire project, the Company is currently planning to build China's first
animation industry entrepreneurs and makers base, together with Nantong municipal government, Gangzha district government,
Kungfu Animation company, venture capital institutions, and universities and colleges. On June 18, the Nantong SEG Times Square
project was officially received the "Nantong Animation Industry Base" award. Meanwhile, three animation-related companies had
signed the settlement agreements with the Company. In the future, it is expected to have dozens of animation companies and
auxiliary business companies settled in Nantong SEG Times Square. To provide comprehensive supporting facilities and living and
office areas for the animation industry practitioners in the base, the loft product with 5.4-meter storey height is temporarily
suspended for sales.
Nantong SEG Times Square is expected to become the animation industry base in Nantong. By means of integrating the upstream
and downstream resources in the animation industry and gradually developing the Nantong animation industry innovation park,
Nantong SEG Times Square integrates the technology, experience and business investment themes and intends to build an integrated
business complex. Meanwhile, the international animation museum is expected to become the first batch of well-known museum of
international animation brands in China.
④ Actively researching the new projects
A. To promote the transformation and upgrading of the Company's main industry and extension to the upstream of the industry chain,
the Company has established a strategic cooperation partnership with Dongguan EONTEC company (hereinafter referred to as
EONTEC), making use of own advantages in technology research and resources. The cooperation intends to promote the
development and application in the consumer electronics and related fields of new materials such as liquid metal. Both parties signed
the Strategic Cooperation Framework Agreement of EONTEC and Shenzhen SEG on May 27, 2015.
B. Establishing the SEG International Maker Product Exhibition and Promotion Center
In the report period, the Company seizes the opportunity that Shenzhen Municipal Government intends to build Huaqiang North as
the maker center and therefore sets up a project team. The project team has researched the feasibility of building the SEG
International Maker Product Exhibition and Promotion Center. The SEG International Maker Product Exhibition and Promotion
Center will set up field service areas, provide appropriate space, and introduce resource parties or partners to provide resource and
service support for the makers; give advice and suggestions to the pilot production, marketing, planning and packaging, and brand
development of the makers' products; function as a maker brand incubator; and build China's largest intelligent hardware-based,
international, and never-ending promotion platform to exhibit online and offline products.
Till the date of disclosure of this report, the Company's board had approved the Proposal for Setting up the SEG International Maker
Product Exhibition and Promotion Center. The Company will establish the Shenzhen SEG Maker Product Collection Company and
provide financial support services for the promotion center by means of setting venture capital funds.
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Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
(4) Constitutes of Main Business
Unit: Yuan
Year-on-year Year-on-year
Year-on-year
Operating increase/decrease increase/decrease
Operating cost Gross Profit Rate increase/decrease
income of operating of gross profit
of operating cost
income rate
Classified by industry
Electronics
markets and
195,872,817.87 143,745,324.31 26.61% 0.88% 9.21% -5.60%
property lease
business
Trade 153,550,908.27 150,697,647.62 1.86% 73.99% 73.31% 0.39%
Finance 48,064,462.25 3,300,242.35 93.13% 128.06% 64.30% 2.66%
Classified by product
Not applicable
Region
Shenzhen 321,511,517.45 223,229,790.02 30.57% 35.47% 34.34% 0.58%
Xi’an 29,443,257.17 20,713,438.12 29.65% 7.93% 7.17% 0.50%
Su Zhou 34,087,416.94 32,359,314.25 5.07% 23.46% 43.68% -13.36%
Changsha 17,940,235.52 15,375,226.87 14.30% 21.75% 24.67% -2.01%
Nanjing 16,104,715.99 16,513,882.66 -2.54% -26.50% -19.32% -9.13%
Foshan 1,126,574.84 1,006,893.56 10.62% 0.27% -2.49% 2.53%
Wuxi 3,547,872.49 2,882,602.37 18.75% 110.66% 40.24% 40.79%
Nanning 1,457,463.69 5,222,783.59 -258.35% -73.68% 17.50% -278.08%
Nantong 0 0 0 0 0 0
(5) Analysis of Core Competence
The Company has formed its major business segments, including the development and operation of professional electronics market
and auxiliary projects, property lease service, channel retail terminal of IT products, E-commerce, and small loan.
The Company directly operates Shenzhen SEG Electronics Market, which has a leading position in the industry and is the founder of
the professional electronics market operation model in China. The Company has won various honorary titles such as "China Five-star
Electronics Market", "Most Influential Professional Market in Shenzhen in 30 years", and "China Influence Company".
Up to now, the Company has operated nearly 30 professional electronics markets in China in direct operation, joint operation, and
entrusted operation modes. The electronics market covers the Pearl River Delta and Yangtze River Delta, with a radiation to the
entire China. SEG Electronics Market has successfully combined IT complex self-construction, leasing and trusted management,
combined market service and value-added financial service, and combined professional market, SEG factory store and distribution
channels. SEG Electronics Market stood out as the largest specialized electronics markets in China and even in Asia covering
electronic components, IT products, and communications products and has great brand influence at home and abroad.
Confronting increasingly severe market competition environment and under the impact from new-type commercial pattern
represented by Internet, the Company takes electronics market business and “O2O” e-commerce as the entry point, and starts with
the three aspects including e-commerce platform building, exploration of whole-sale channel, and sales in physical store, so to
implement the combined-type business pattern of “physical store + e-commerce + channel”; at the same time, based on SEG MIS
system and SEG Tone and relying on “PC + mobile terminal”, the Company builds up and integrates the platform to share resources
between market tenants, suppliers and purchasers and consumers and to achieve the interaction between on-line and off-line and the
linkage of resources in markets nationwide.
Under the time background of “public starting-up and mass innovation”, the Company fully takes advantage of locating in Huaqiang
North area and the distributing center of the electronics product industry such as the electronics components. Relying on the rich
experience accumulated in 27 years and the industry position, and through the establishment of SEG International Maker Product
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Summary of 2015 Semi-Annual Report of Shenzhen SEG Co., Ltd.
Exhibition and Promotion Center, the Company forms SEG’s new platform value, at the same time, also provides SEG makers’
ecosphere with the channel to demonstrate and promote their products. The Company will utilize its own unique advantages in
locality, market, brand, resources and channel to deeply explore and comprehensively satisfy the makers’ demand, push the
capitalization and industrialization of makers’ products and results, stimulate the innovative vitality of physical store, ceaselessly
extend and enrich the business value chain, and finally to promote the Company’s transformation and upgrading in business.
4. Relevant Issues relating to Financial Report
(1) Information on changes in accounting policies, accounting estimates and accounting methods compared
with the financial reports of 2014
□ Applicable √ Not applicable
There is no change in the Company's accounting policies, accounting estimates and accounting methods in the report period.
(2) Information on retroactive restatements in corrections of major accounting errors in the report period
□ Applicable √ Not applicable
There is no retrospective restatement due to corrections on significant accounting errors in the report period.
(3) Information of changes in the scope of consolidation compared with the financial report of the previous
year
□ Applicable √ Not applicable
There are no changes in the scope of consolidation in the report period.
(4) Explanations of the Board of Directors and Board of Supervisors to the Non-standard Audit Report
made by the accounting firm in the report period
□ Applicable √ Not applicable
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