Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Shanghai Zhenhua Heavy Industries
Co., Ltd.
（Stock code：600320 900947）
Annual Report 2012
Mar. 27, 2013
1
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Important Notice
I. Hereunder, the Board of Directors, the Supervisory Board, directors, supervisors and
senior executives of the Company guarantee that the Annual Report is of authenticity,
accuracy and integrity; it contains no major omission, false record or serious misleading
statement; they will be responsible both individually and jointly for any of above guaranty.
II. Directors who failed to attend the Board meeting
Post of director who Name of director Name of
Reasons of failure
failed to attend who failed to attend entrustee
director Liu Wensheng on business trip Song Hailiang
director Lu Jianzhong on business trip abroad Yan Yunfu
director Liu Qizhong on business trip abroad Yan Yunfu
III. PricewaterhouseCoopers Zhong Tian CPAs Co. Ltd. ssued standard unqualified audit
report for the Company.
IV. The Company’s responsible person and Board Chairman Song Hailiang, responsible
person for finance and President Lu Jianzhong and Finance Department chief (Chief
Financial Controller) Wang Jue hereby declare that the financial reports in this Annual
Report are true, accurate and complete.
V. Report period profit distribution preplan or preplan for capital reserve transfer to
increase capital stock as audited by the board: not to distribute profit; not to convert
reserve into capital stock
VI. Whether non-operational fund occupancy by the controller and its related parties exists
with the Company:
No.
VII. Whether there is external guaranty provision violating regulation or procedural
decision-making within the Company:
No.
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Contents
Chapter I Definition and Substantial Risk Reminding……………………………………4
Chapter II Company Profiles…… ……………………………………………. ………………5
Chapter III Summary of Accounting Data and Operational Indicators…… ……………… 9
Chapter IV Report of the Board of Directors ………………………….. ………………11
Chapter V Substantial Events…… ………………………………………………………… 34
Chapter VI Equity Movement and Shareholder's Profile… ……………………………… 39
Chapter VII Directors, Supervisors, Senior Executives and Employees ………………… 44
Chapter VIII Corporate Governance… ……………………………………. ……………… 54
Chapter IX Internal Control… ………………………………………………. ……………… 59
Chapter X Financial Report …………………………………………………. ………………60
Chapter XI Reference Available… …………………………………………. ………………61
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter I Definition and Substantial Risk Reminding
I. Definition
Terms used in this report means the following except for otherwise specified:
Definition of frequently used terms
Shanghai Zhenhua Heavy Industries
the Company Refers to
Co., Ltd.
China Communications Construction
CCCC, controlling shareholder Refers to
Co., Ltd.
China Communications Construction
effective controller Refers to
Group
II. Substantial Risk Reminding
The Company has detailed in this report risks the Company may face. Please consult
related description in the chapter of Report of the Board.
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter II Company Profiles
I. Company information
Statutory company name in Chinese 上海振华重工(集团)股份有限公司
Statutory Chinese Abbreviation of the Company 振华重工
SHANGHAI ZHENHUA HEAVY INDUSTRIES
English name of the Company
CO.,LTD.
English abbreviation of the Company ZPMC
Legal representative Song Hailiang
II. Contact information
Board secretary Securities Affair Agent
Name Wang Jue Li Min
3261 Dongfang Road, 3261 Dongfang Road,
Address
Shanghai Shanghai
Tel. 021-50390727 021-50390727
Fax 021-31193316 021-31193316
Email IR@zpmc.com IR@zpmc.com
III. Basic information of the Company
Registered address 3470, Pudong Road South, Shanghai
Post code 200125
Office address 3261 Dongfang Road, Shanghai
Post code 200125
Website http://www.zpmc.com
Email zpmc@public.sta.net.cn
(IV) Information disclosure and reference
Shanghai Securities News, Hong Kong Wen
Designated media for information disclosure
Wei Po
Website designated by China Security
Regulatory Commission for disclosure of annual http://www.sse.com.cn
report:
Securities and Law Affairs Office of the
Annual report available at
Company
V. Stock Profiles of the Company
Stock Profiles of the Company
Short form of
Stock exchange Short form of
Stock type Share code stock before
listed at stock
change
Shanghai Stock Zhenhua Heavy
A-share 600320 ZPMC
Exchange Industries
Shanghai Stock
B-share Zhenhua B-share 900947 -
Exchange
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
VI. Business registration alterations in report period
(I) Basic information
Registration date Feb. 14,1992
Registered address 3470, Pudong Road South, Shanghai
Registered code for business license of
310000400519752（Municipal Bureau）
corporation
Registered code of tax 310115607206953
Organizational code 60720695-3
(II) Major business operation changes since listing
The Company went public in 1997, and has since 1998 been ranked as first global winner of
container crane orders. In search of better development, while searching consolidation of port
machinery market, the Company is actively exploring the large steel and heavy marine equipment
market; current operating range: design, construction, installation and contracting of large port
handling systems and equipment, heavy marine equipment, construction machinery, engineering
ships, and large metal structures, their parts and accessories; ship repair; self-produced crane
rental business, selling self-made products; engaged in international maritime shipping using
special transport ships for shipping whole-machinery; steel structure engineering professional
contracting (subject to licensing in case of such requirement).
(III) Successive changes of the controlling shareholders since listing
1. Promoter shareholders at incorporation
In July 1997, as approved by the Securities Commission of the State Council coded Zengwei Fa Zi
[1997] No. 42, Shanghai Port Machiery, Hong Kong Zhenhua and former Zhonggang Group
together with Macau Zhenhua and Rongjin Investment as promoters, incorporated Shanghai
Zhenhua Port Machinery Co., Ltd. by way of stock floatation, and issued 100 million b-shares to
overseas investors.
2. Successive changes of promoters and controlling shareholders
(1) On November 26, 2001, Shanghai Port Machinery signed Equity Transfer Agreement with the
former Zhonggang Group, agreed that Shanghai Port Machinery transfer all the founder
shares of 96,112,500 shares it held of the Company to the former Zhonggang Group. On
February 10, 2002, Ministry of Finance issued Ministry of Finance’s Reply to Issues
Concerning Shanghai Zhenhua Port Machinery Co., Ltd. Transfer of State-owned Shares (Cai
Qi [2002] No. 41), which stated the approval of the mentioned share transfer. In 2002, former
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Zhonggang Group signed Equity Transfer Agreement with Rongjin Investment, agreeing that
Rongjin Investment transfer all its founder’s shares of 368,500 shares to the former
Zhonggang Group. In July 2002, CSRC issued Letter of Exemption of Obligation of China
Harbor Engineering Corporation (CHEC) Tender Offer to Purchase "Zhenhua Port Machinery"
Stock (Zhengjian Han [2002]123), agreeing on the exemption of obligation of former
Zhonggang Group concerning above shares transfer. After the completion of the share
transfer, former Zhonggang Group became the Company's largest shareholder, holding
35.17% of the Company's total share capital.
(2) As approved by State-owned Asset Commission of State Council via Notification on
Reorganization of China Harbor Engineering Corporation (CHEC) and China Road and Bridge
Corporation (Guozi Gaige [2005] No. 703), former Zhonggang Group merged with former
Road and Bridge Group on December 18, 2005 into China Communications Construction. As
approved by State-owned Asset Commission of State Council with Reply to Matters
Concerning Changes of Corporate Holders and Equity Transfer of State-owned Shares of 6
Companies including Shanghai Zhenhua Port Machinery Co., Ltd. (Guozi Chanquan [2006]
37), equity of the Company held by former Zhonggang Company is changed to that held by
China Communications Construction.
In March 2006, CSRC issued the Reply to Agreement on China Communications
Construction Group Announcing on Shanghai Zhenhua Port Machinery Co., Ltd. Purchase
Report and Exemption of Its Tender Offer Obligation, agreeing to exempt China
Communications Construction from its tender offer obligations.
(3) On August 16, 2006, State-owned Asset Commission of State Council issued Reply to Issue
on China Communications Construction Co., Ltd. Overall Restructuring and Listing Home and
Abroad (Guozi Gaige [2006] 1063), approved the overall reorganization of China
Communications Construction, the exclusive incorporation of CCCC program. On September
30, 2006, State-owned Asset Commission of State Council issued Reply to Matters Regarding
State-owned Share Management of China Communications Construction Co., Ltd. (Guozi
Chanquan [2006] 1072), approved that assets including equity held by China Communications
Construction transferred to CCCC. After the CCCC was established on October 8, 2006,
China Communications Construction put the equity of the Company it held into CCCC as
investment. On October 30, 2006, CSRC issued Reply to Agreement on China
Communications Construction Co., Ltd. Announcing Roads and Bridges Group International
Construction Company Limited, Shanghai Zhenhua Port Machinery Co., Ltd. Purchase Report
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
and Exemption of Tender Offer Obligations (Zhengjian Gongsi Zi [2006] 227), granting the
exemption of CCCC from purchase offer obligations. On Oct. 25, 2006, equity of the Company
held by China Communications Construction was transferred to CCCC and thus CCCC
became controlling shareholder of the Company.
VII. Miscellaneous:
PricewaterhouseCoopers Zhong Tian
Title
CPAs Co. Ltd.
CPAs’ employed by the Office address 11th Floor, No. 202 Hubin Road, Shanghai
Company (Domestic) Zhao Bo
CPAs to sign
Jin Wen
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter III Summary of Accounting Data and Operational
Indicators
I. Major accounting data and financial indicators of last three years as of report period
end
(I) Major accounting data
Unit: RMB yuan
Growth over
Major accounting data 2012 2011 same period 2010
prior year (%)
Operating income 18,255,152,096 19,129,251,012 -4.57 17,116,177,415
Net profit attributable to
shareholders of the listed -1,043,665,841 30,294,335 -3,545.09 -694,837,984
company
Net profit after deducting
non-recurring gains/losses
-1,259,289,200 -377,879,951 n.a. -738,179,639
attributable to shareholders of
the listed company
Net cash flow from operating
3,065,603,998 1,541,917,739 98.82 5,177,920,274
activities
Growth over
same period
End of 2012 End of 2011 End of 2010
end prior year
(%)
Net asset attributable to
shareholders of the listed 14,210,952,596 15,241,378,606 -6.76 15,268,046,094
company
Total assets 46,779,696,343 44,059,465,622 6.18 45,287,126,334
(II) Major financial data
Growth over same
Major financial index 2012 2011 2010
period prior year (%)
Basic EPS (yuan/share) -0.24 0.01 -2,500.00 -0.16
Diluted EPS (yuan/share) -0.24 0.01 -2,500.00 -0.16
Basic EPS after deducting
non-recurring gains/losses -0.29 -0.09 n.a. -0.17
(yuan/share)
Weighted average net Less 7.29 percentage
-7.09 0.20 -4.48
assets earnings ratio (%) points
Weighted average net
assets earnings ratio after Less 6.08 percentage
-8.56 -2.48 -4.76
deducting non-recurring points
gains/losses (%)
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
II. Items and amount of non-recurring gains/losses
Unit: RMB yuan
2012
Items of non-recurring gains/losses 2011 Amount 2010 Amount
Amount
Gains and losses from disposal of non-current
97,051,399 309,460,277 -16,852,834
assets
Government subsidy into current profit and loss
statement except for those closely related to the
28,730,126 64,641,129 65,779,633
Company’s operation, enjoyed by certain state
standard or certain quota
Gains/losses from fair value movement of tradable
financial assets, tradable financial liabilities held
except for valid hedging business related with
company’s normal operation, and investment 143,917,526 101,066,137 42,967,863
income acquired from disposal of tradable
financial assets, tradable financial liabilities and
financial assets available for sale
Non-operating income/expense apart from above -13,639,165 7,112,466 -32,470,015
Minor shareholders’ equity impact -622,804 -2,141,455 -4,186,052
Income tax impact -39,813,723 -71,964,268 -11,896,940
Total 215,623,359 408,174,286 43,341,655
III. Items calculated by fair value
Unit: RMB yuan
Starting Closing Current Impact on
Item name
balance balance movement current profit
Forward foreign exchange
61,678,770 26,009,477 -35,669,293 -35,669,293
contract-Fair value appraisal income
Forward foreign exchange
contract-Fair value appraisal income -2,289,600 0 2,289,600 2,289,600
loss
Equity tool available for sale-Jiangxi
108,661,535 124,222,545 15,561,010 0
Huawu
Total 168,050,705 150,232,022 -17,818,683 -33,379,693
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter IV Report of the Board of Directors
I. Discussion and analysis of business operation in report period by the management
In the year 2012 the Company continued to face critical internal and external situation, with
domestic and international market demand still insufficient. The Board of Directors and the
management team led the staff to overcome production difficulties, focusing on change of way of
thinking, strived to develop external markets, adjust management structure, strengthen basic
management, and the overall operations remained stable. In 2012, the Company realized an
Operating income of 18.255 billion yuan, of which exports accounted for 69.2%, net profit
attributable to the owners of the parent company amounting to -1.044 billion yuan, net operating
cash inflows of 3.066 billion yuan for the year.
(I) Major business analysis
1. P&L and Cash Flow Statements related item movement analysis
Unit: RMB yuan
Item Report Year Prior Year Growth (%)
Operating income 18,255,152,096 19,129,251,012 -4.57
Operating cost 17,362,670,351 18,171,294,303 -4.45
Selling expenses 49,290,059 59,378,293 -16.99
General expenses 1,126,863,747 1,130,888,776 -0.36
Financial expenses 680,506,612 -151,425,776 -549.40
Net cash flow from operating
3,065,603,998 1,541,917,739 98.82
activities
Net cash flow from investment
-390,855,294 -622,960,367 -37.26
activities
Net cash flow from financing activities -2,309,758,070 -132,974,986 1,636.99
R&D expenses, cost of expenses 598,968,230 565,212,544 5.97
Asset impairment losses 394,362,789 269,782,394 46.18
Changes in the fair value gain or
-33,379,693 33,444,020 -199.81
loss-NET
Investment income 141,093,032 13,049,092 981.25
Non-operating income 132,357,962 385,977,803 -65.71
Non-operating expenses 20,215,602 4,763,931 324.35
Income tax expense -72,132,581 18,109,717 -498.31
Minority interest gains/losses -55,392,041 -639,339 8,563.95
Analysis:
1. Increase of financial expenses is mainly due to exchange gaining decrease and interest cost
increase as a result of slowdown of RMB appreciation against US dollar in report year.
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
2. Net cash flow from operating activities saw big increase over same period prior year mainly
because the Company strengthened account payment collection, made reasonable use of funds
and decreased the level of inventory.
3. Net cash flow from investment activities changed mainly because investment in infrastructure
decreased.
4. Net cash flow from financing activities changed mainly the Company strengthened account
payment collection, made reasonable use of funds and decreased bank loans.
5. Asset impairment losses increased mainly due to increase in bad debt loss, inventory
impairment loss and expected contract loss.
6. Fair value change gains/losses decreased mainly due to delivery and the reversal upon
expiration of tradable financial assets and liabilities.
7. Investment income increased mainly because investment income from the financial assets
available for sale the Company held increased in report period.
8. Non-operating income decreased mainly because of the decrease of remaining compensation
income confirmed regarding to the completion of the levy of the Company’s Industrial Park with
Changxing Land Reserve Center.
9. Non-operating expenses increased mainly because fixed asset disposal loss and other
non-operating expenses increased.
10. Income tax expense decreased mainly because deferred income tax confirmed due to loss in
report of the Company.
11. Loss of minority interest gains/losses increased mainly because loss of the Company’s
subordinate share-participating companies increased.
2. Revenue
(1) Analysis of the factors driving the business income changes
The global economic recovery has been slow and uneven; construction all major ports has
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
slowed down; overall demand has been low for international engineering and machinery
products; in the area of port machinery, demand is shrinking significantly while competition is
increasingly fierce; the contract unit prices fell in a larger scale; the Company’s port machinery
market faces more pressure; energy prices kept on fluctuating and still remain unstable; large
risks lie in the fluctuations of demand for marine products.
(2) Analysis of the factors affecting revenue from products mainly sold in kind
Under the influence of external market environment featuring low demand, sales income is
difficult to quickly improve; production remains insufficient; revenue from sales for 2012 is
18.255 billion yuan, down 4.57% year on year, while port machinery products see more and
more competition; contract unit prices are still low; transformation products also need to be
quickly developed; all the above factors and other factors have had an impact on the Company's
product revenues.
(3) Order analysis
During the report period, "ZPMC" brand was further consolidated in traditional areas of port
machinery and further recognized in the field of emerging markets; the Company achieved new
contract value of $3.781 billion for the year, including new contract amount of $2.876 billion for
traditional markets of port machinery, new contract in marine engineering and steel structure
market values $905 million. Port machinery products continued to maintain a global leadership
position; on the increasingly competitive port machinery market, the Company's container bank
bridge products kept a 70% per cent global market share; the Company's products have
marched into over 83 countries and regions.
(4) Top buyer analysis
Operating income from top 5 clients is 2,021,921,089 yuan, taking up 11% of the Company’s
total operating income.
3. Cost
(1) Cost analysis statements
Unit: yuan
In product category
Same Report
Report
period period
period Same period
Cost Report period prior amount
Product rate in prior year
composition amount year rate same
total Amount
in total period
cost (%)
cost (%) prior year
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
movement
ratio (%)
raw material,
container labor
9,802,797,463 57.49 9,801,783,004 54.52 0.01
cranes production
cost
raw material,
Ocean
labor
heavy 3,333,677,227 19.55 3,381,257,980 18.81 -1.41
production
equipment
cost
raw material,
bulk-cargo
labor
machinery 2,889,954,429 16.95 3,210,322,572 17.86 -9.98
production
parts
cost
raw material,
steel labor
749,503,259 4.40 1,386,142,375 7.71 -45.93
structures production
cost
labor, fuel
vessel
consumption,
shipping 274,886,981 1.61 199,754,780 1.11 37.61
depreciation
and others
etc.
Total \ 17,050,819,359 100 17,979,260,711 100 -5.16
(2) Key suppliers
Purchase from top 5 suppliers is 605,203,437 yuan, covering 10% of total purchase of the year.
4. R&D expenses
(1) R&D expenses breakdown
Unit: yuan
R&D into cost expenses 598,968,230
R&D into capital expenses 63,102,559
R&D expenses total 662,070,789
Total R&D expenses ratio in net assets (%) 4.59
Total R&D expenses ratio in Operating
3.63
income (%)
In the year 2012, based on the overall development strategy: the Company has made a number of
key technologies and other achievements in science and technology with independent intellectual
property rights in port machinery and other traditional major breakthroughs relating to the
enterprise's survival and development in the field of business, and continued to remain a world
leader, and strived to achieve optimization, upgrading of port machinery, formed "integrated
development" advantage; In marine engineering and other new expansion business areas, focusing
on the three aspects like Ocean heavy equipment with the high-tech content, and high added value,
meaning various sea engineering vessels, marine drilling platforms and specialized marine
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
engineering supporting equipment, regarded as the Company’s technology innovation development
directions and important profit growth points, the Company tackled them one by one; while at the
same time the Company sped up the development of general contracting capacity with “package"
features of overall design, integrated system, sets production and supporting service; to reach as
soon as the international advanced level, and occupy industry competition vantage point. In the area
of steel structures, the main work target is on the "heavy, large and fine" projects, to master the high
standard manufacturing processes, technology and quality, and gradually develop the general
contracting capacity in "turn-key" projects, to maintain industry advanced level.
5. Cash flow
Net cash flow from operating activities increase over same period prior year mainly because the
Company strengthened account payment collection, made reasonable use of funds and decreased
the level of inventory.
6. Miscellaneous
(1) Detailed description of significant change in the Company's profit composition or source
The main causes of loss in 2012: under the influence of low demand in external market
environment , sales income was difficult to quickly improve; accompanying market intensified
competition, contract unit price drop saw big drop, content of value reduced, in order to seize the
market opportunity and stabilize the staff, orders for some items are even below cost price;
production capability was in excess; capital investments were too heavy; serious shortage of
production incurred; fixed assets depreciation increased; historical problems existed regarding to a
high inventory of high-price steel and the Spain $2.2 billion order; high bank liabilities, heavy interest
burden; because of development cycle and process of product transformation, a certain amount of
upfront investment and cost-sharing also required; internal control weaknesses still existed.
(II) Analysis of operation by industry, product or region
1. Major business by industry and product
Unit: RMB yuan
Major business by industry
Operati
Operati
ng
ng cost
Gross income Gross margin
increase
By product Operating income Operating cost margin increase increase over prior
over
(%) over year （%）
prior
prior
year (%)
year (%)
container cranes 10,665,511,120 9,802,797,463 8.09 2.83 0.01 Up 2.59 percentage
15
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
points
Ocean heavy Less 5.12
3,458,011,185 3,333,677,227 3.60 -6.65 -1.41
equipment percentage points
bulk-cargo Up 6.7 percentage
2,907,233,682 2,889,954,429 0.59 -3.91 -9.98
machinery parts points
Less 23.88
steel structures 640,310,882 749,503,259 -17.05 -56.96 -45.93
percentage points
vessel shipping Less 37.15
239,953,121 274,886,981 -14.56 -7.01 37.61
and others percentage points
Up 0.19 percentage
Total 17,911,019,990 17,050,819,359 4.80 -4.97 -5.16
points
2. Major business by region
Unit: RMB yuan
Operating income increase over prior
Region Operating income
year (%)
Main land, China 5,514,344,061 -26.14
Asia (Excluding Main
3,808,763,314 -26.61
Land, China)
America 3,251,058,441 -3.65
Europe 2,751,062,479 138.43
Africa 949,993,166 39.01
Main land, China
931,882,457 27.68
(export)
Oceania 703,916,072 180.95
Total 17,911,019,990 -4.97
Note: In this part, amounts listed in the Mainland China (export) for the years 2012 and 2011
items refer to the major operating income and cost the Company firstly exports to its
subsidiary ZPMC Hong Kong Co., Ltd. or related party Chuwa Bussan Co., Ltd., who then
sells to domestic customers.
(III) Assets and liabilities analysis
1. Assets/liabilities statements
Unit: yuan
Report period
end amount
Report
Prior period over prior
period end
Item Report period end Prior period end end over total period end
over total
assets（%） amount
assets（%） change ratio
（%）
Monetary capital 5,380,769,224 11.50 2,053,780,508 4.66 161.99
Tradable financial
26,009,477 0.06 61,678,770 0.14 -57.83
assets
Notes receivable 115,069,863 0.25 80,556,568 0.18 42.84
Interest receivable 33,231,552 0.07 0 0.00 100
Accounts
3,710,721,111 7.93 4,788,249,121 10.87 -22.50
receivable
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Other receivables 413,305,303 0.88 809,660,285 1.84 -48.95
Inventory 7,581,683,025 16.21 6,186,736,599 14.04 22.55
Work completed
payment not 6,620,155,339 14.15 7,385,580,108 16.76 -10.36
cleared
Other current
1,000,000,000 2.14 0 0.00 100
assets
Long-term equity
203,719,472 0.44 152,874,005 0.35 33.26
investment
Real estate as
402,411,440 0.86 0 0.00 100
investment
Fixed assets 14,075,197,757 30.09 14,254,180,211 32.35 -1.26
Construction in
3,692,553,744 7.89 4,552,618,260 10.33 -18.89
progress
Short-term loans 11,936,687,998 25.52 8,036,435,881 18.24 48.53
tradable financial
0 0.00 2,289,600 0.01 -100.00
liabilities
Notes payable 980,906,529 2.10 577,862,463 1.31 69.75
Accounts payable 2,603,418,685 5.57 2,255,724,884 5.12 15.41
Prepayment
1,035,763,588 2.21 115,627,343 0.26 795.78
received
Work not
completed, 2,389,804,893 5.11 1,946,769,101 4.42 22.76
payment cleared
Taxes and charges
-46,966,814 -0.10 -461,588,744 -1.05 -89.82
payable
Dividends payable 33,825,412 0.07 53,453,390 0.12 -36.72
Other payables 292,150,492 0.62 869,378,012 1.97 -66.40
Non-current
liabilities due 3,667,922,000 7.84 3,571,294,900 8.11 2.71
within one year
Long-term loans 873,684,500 1.87 3,083,527,600 7.00 -71.67
Bonds payable 7,984,665,674 17.07 7,978,615,674 18.11 0.08
Projected liabilities 193,307,685 0.41 133,639,971 0.30 44.65
Analysis:
1. Monetary capital increased mainly because in report period the Company strengthened collection of
accounts receivable and increased fixed-term deposit.
2. Tradable financial assets decreased mainly because forward foreign exchange contract was
delivered upon due.
3. Notes receivable increased mainly because the Company increased notes receivable endorsed to
clear purchase payment.
4. Interest receivable increased mainly because in report period the Company accrued undue interest
of new fixed-term loans.
5. Accounts receivable decreased mainly because in report year sales income decreased and in the
17
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
mean time strengthened collection of accounts receivable.
6. Other receivables: Other receivables decreased mainly because in report period the Company
received levy compensation on land and real estate from Changxing Land Reserve Center.
7. Inventory increased mainly because in report period the Company increased raw material purchase
as a result of heavy marine project development.
8. Work completed payment not cleared decreased mainly because in report year business volume
declined and thus start-ups of projects dropped.
9. Other current assets increased mainly because in report period the Company purchased short-term
bank financing products.
10. Long-term equity investment increased mainly because in report period the Company had more
external investment in corporate and gains from associates and joint ventures adjusted on equity
basis.
11. Real estate as investment increased mainly because in report period the Company converted part
of the office buildings, production base and related land use right for leasing.
12. Fixed assets decreased mainly because in report year regular depreciation of fixed assets,
disposal of part of production equipment, converted part of the office buildings, production base and
related land use right for leasing, carried forward to real estate as investment.
13. Construction in progress decreased mainly because in report year the Company carried forward
Dongfang Road office building, Nantong production base infrastructure construction and the base’s
large equipment to fixed assets.
14. Short-term deposits increased mainly because the Company borrowed new loans from banks.
15. Tradable financial liabilities decreased mainly because forward foreign exchange contract
delivered upon maturity.
16. Notes payable increased mainly because in report period the Company issued notes to pay for
materials.
17. Accounts payable increased mainly because in report period the Company increased payables for
purchase of materials and product manufacturing as a result of further efforts on development of
heavy marine projects.
18. Prepayment received increased mainly because the Company received advances for certain new
contracts from clients in report year.
19. Work not completed, payment cleared increased mainly because in report period the Company
settled new projects.
20. Taxes and charges payable increased mainly because in report period the Company issued more
invoices for domestic projects and meanwhile timely filed tax return for to-be-cleared VAT.
21. Dividends payable decreased mainly because paid income tax on behalf of shareholders.
18
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
22. Other payables decreased mainly because the Company timely filed tax return for to-be-cleared
VAT.
23. Non-current liabilities due within one year increased mainly because part of the long-term loans
that would be due within one year are reclassified into non-current liabilities due within one year.
24. Long-term loans decreased mainly because part of the long-term loans that would be due within
one year are reclassified into non-current liabilities due within one year.
25. Bonds payable increased mainly because of amortization of cost of issuance in report year.
26. Projected liabilities increased mainly because of increase of post-sale service cost accrued as a
result of increase of delivery of completed machinery projects.
(IV) Core competitiveness analysis
Since the company was founded 21 years ago, pioneering and continuously hard work has
developed into a series of core competence:
(1) Market advantages: container port machinery products remain the global market leader, at
70% market share, customers spotted in 83 countries and regions; market share and
customer base is the survival roots of the enterprise; it required strengthening to self
marketing-driven practice, enhance integrated marketing, multi-tier marketing, high-end
marketing, effective marketing.
(2) Talents advantages: in the field of design of port machinery the Company owns a design
and R&D team of more than 2000 people with independence, all-round professions and clear
task-division; in marine areas the Company is also nurturing and gradually forming a design
team with some capacity; In the area of international business, the company has an excellent
language, business experienced operating personnel; in the ongoing implementation of major
projects at home and abroad, it has been training a group of strong dedication, skilled
professional personnel; in terms of manufacturing, it has been training a large number of
specialized technicians, technologists and superintendents. In a word, the Company has built
up a good environment and platform to attract qualified talents.
(3) The advantages of technological innovation: the Company holds a large number of
innovations, patents and a number of the world's first, such as the "Development and
Application of Key Technologies of New Generation Port Container Cranes" first prize of
national scientific and technological progress and can quickly translate them into higher value
added products and services; innovation drives development; innovation system is complete;
innovation speed, basis and outcome quality leads the industry.
19
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
(4) Platform advantages: after 20 years of development, the Company has the combined
strengths consisting of listed-company platform, internationalization platform and national flag
manufacturing platform, which provides a big platform and opportunity to attract talents,
expand business, invest and finance.
(5) Brand and reputation advantages: ZPMC has created a number of world's firsts,
undertaken a large number of mega-engineering projects and flagship projects at home and
abroad; it is the container's flagship and port machinery manufacturing leader, the bridge to
spread Chinese civilization, culture and friendship; it has widely spread international market,
posing great international influence; meanwhile ZPMC is simultaneously the representative of
"New Technologies, High Standard, High Credibility". The intangible value of brand and the
value space is huge.
(6) Financing and capital advantages: the Company possesses ample, steady cash flow,
financing ability, which is conducive to developing new target markets.
(7) Outstanding industry chain comprehensive strength advantage: the Company has an
industry chain combining complete design, manufacturing, marketing, research and
development facilities, 5 km deepwater coastline, large fleets of transport, installation and
after-sales service of machinery etc.; its production capacity is huge and its comprehensive
strength is big.
(V) Investment analysis
1. External equity investment overall analysis
Unit: yuan
Investment amount as of period end 203,719,472
Investment amount movement 50,845,467
investment amount same period prior
152,874,005
year
investment amount movement ratio (%) 33%
20
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Invested companies
equity ratio
Name of invested company Operational activities in invested
company
CCCC Highway Long and Large 10%
Bridge Construction State Project Mainly engaged in construction project management.
Research Centre Co., Ltd. (i)
CCCC Dredging Technology & 8%
Equipment State Project Research Mainly engaged in dredging and filling works.
Centre Co., Ltd.
CCCC Marine Engineering Vessel Mainly engaged in steel ships and relevant equipment design,
Technology Research Centre Co., development, marketing and supply of technology transfer, 25%
Ltd. technology consultation and technology services.
(2) Equity holding in other listed companies
Unit: yuan
Owner’s
Proportion Gains/
equity Origin
Stock Initial in total Closing loss in Accounting
Short form movement of
Code investment equity book value report entry
in report equity
（%） period
period
financial
Huawu assets
300095 19,400,000 12.99 124,222,545 0 15,561,010 funding
Share available
for sale
Total 19,400,000 / 124,222,545 0 15,561,010 / /
Shares held of non-listed financial enterprises
amount equity
closing
Name of initial held gains/losses movement
Equity book accounting
shares investment report year report share origin
ratio（%） value entry
held (yuan) (yuan) year
(share) (yuan)
(yuan)
Shenyin
&
Long-term
Wanguo
200,000 161,942 0.002978 200,000 0 0 equity subscription
legal
investment
person
shares
Total 200,000 161,942 / 200,000 0 0 / /
21
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
2. Non-financial companies entrusted investment financing and derivatives
(1) Entrusted financing
Entrusted financial products breakdown
Unit: RMB yuan
Principal related suit
expected Income via legal
Partner Pro. type Amount Starting day Ending day reward actually trade or involved
proceeds actually gained procedure
covered not or not
Bank
interest upon
BANK A Financial 500,000,000 2012-3-28 2012-7-3 6,068,807 500,000,000 6,068,807 Yes No No
maturity
Product
Bank
interest upon
BANK A Financial 489,000,000 2012-3-29 2012-7-3 6,148,870 489,000,000 6,148,870 Yes No No
maturity
Product
Bank
interest upon
BANK A Financial 450,000,000 2012-3-30 2012-7-3 5,658,469 450,000,000 5,658,469 Yes No No
maturity
Product
Bank
interest upon
BANK A Financial 500,000,000 2012-4-27 2012-8-2 5,817,123 500,000,000 5,817,123 Yes No No
maturity
Product
Bank
interest upon
BANK A Financial 250,000,000 2012-6-27 2012-10-10 3,174,065 250,000,000 3,174,065 Yes No No
maturity
Product
Bank
interest upon
BANK A Financial 250,000,000 2012-6-28 2012-10-10 3,113,606 250,000,000 3,113,606 Yes No No
maturity
Product
Bank
interest upon
BANK A Financial 500,000,000 2012-8-31 2012-10-10 2,237,313 500,000,000 2,237,313 Yes No No
maturity
Product
Bank
interest upon
BANK B Financial 500,000,000 2012-4-13 2012-8-13 9,855,616 500,000,000 9,855,616 Yes No No
maturity
Product
Bank
interest upon
BANK B Financial 500,000,000 2012-4-13 2012-8-17 9,542,740 500,000,000 9,542,740 Yes No No
maturity
Product
Bank
interest upon
BANK B Financial 400,000,000 2012-6-19 2012-12-19 13,837,808 400,000,000 13,837,808 Yes No No
maturity
Product
Bank
interest upon
BANK C Financial 850,000,000 2012-4-10 2012-10-12 21,797,260 850,000,000 21,797,260 Yes No No
maturity
Product
Bank
interest upon
BANK C Financial 435,000,000 2012-5-15 2012-11-22 11,811,740 435,000,000 11,811,740 Yes No No
maturity
Product
Bank
interest upon
BANK C Financial 880,000,000 2012-7-9 2012-12-28 20,083,288 880,000,000 20,083,288 Yes No No
maturity
Product
Bank
interest upon
BANK C Financial 1,000,000,000 2012-12-18 2013-12-3 4,600,000 0 0 Yes No No
maturity
Product
Total / 7,504,000,000 / / / 123,746,705 6,504,000,000 119,146,705 / / /
Cumulative amount of principal or proceeds unrecovered upon maturity (yuan) 0
22
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
(2) Entrusted loans
There exists no such status in report period.
(3) Other investment financing and derivative product investment
There exists no such status in report period.
3. Use of raised funds
In report period, the Company has no raised funds or utilized fund raised in previous period.
4. Non-raised funds
During report period the Company’s major non-raised fund investment projects include Nantong,
Changxing, Nanhui base infrastructure construction, Dongfang Road Office and R&D Building
etc. As of Dec. 31, 2012, project investment, progress, proceeds are as follows:
Nantong base infrastructure construction, 143.14 million yuan invested in report year, progress
94%;
Changxing base infrastructure construction, 48.04 million yuan invested in report year, progress
77%;
Base large machinery and engineering equipment construction under progress, 31.79 million
invested in report year, progress 94%;
Nanhui base infrastructure construction, 7.4 million invested in report year, progress 84%;
Office and R&D building on Dongfang Road, 116.54 million yuan invested report year, progress
100%;
Most of above projects started prior year, having increased the production capacity of the
Company. Other projects are rather small in amount, belonging to technical reformation and
minor filing items.
23
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
5. Key subsidiaries and share-participating companies
Unit: RMB yuan
Registered
Company Major product or service Asset scale Net profit
capital
Shanghai Zhenhua Port large container cranes and the gear box 5,500,000 329,392,928 401,818
Machinery Heavy gear processing and marketing; ship
Industries Co., Ltd manufacturing, processing, marketing
Shanghai Zhenhua Production of precision foundry, metal 5,000,000 192,271,003 283,476
Heavy Industries cutting and cooling process.
Machinery Co., Ltd.
Shanghai Zhenhua Port Design, manufacturing and sales of port 50,000,000HKD 3,049,802,492 1,669,658
Machinery (Hong Kong) machinery, engineering vessel, steel
Co., Ltd. structure and other parts
Shanghai Zhenhua Operation of sea transportation in coastal 120,000,000 1,593,781,230 -113,035,508
Shipping Co., Ltd. waters; ordinary transportation in the
middle and lower reaches of Yangtze
River; transportation of port machinery
Nantong Zhenhua Installation of heavy port equipment, 854,936,900 1,012,397,772 19,289,873
Heavy Equipment engineering vessels, heavy metal
Manufacturing Co. Ltd. structure and its parts; Gear box, container
yard crane, super heavy-duty bridge steel
structure, heavy marine machinery
equipment, weaving, installation; lease of
cranes; contracting of steel structures etc.
Shanghai Zhenhua Construction and installation of large-scale 300,000,000 1,915,133,274 -1,132,142
Heavy Industries Group port equipment, engineering vessels,
(Nantong) Transmitter offshore heavy equipment, machinery and
Co., Ltd. equipment, wind power generation
equipment to use the gearbox; large
slewing bearings, transmission, dynamic
positioning, large anchor cutter, offshore
oil platform lifting device and components,
accessories related weaving
Shanghai Zhenhua International land, air, maritime freight 100,000,000 100,101,501 101,501
Heavy Industries Vessel forwarding business, domestic freight
Transport Co., Ltd. forwarding, undertaking large-scale port
equipment, marine equipment, marine
engineering materials sales, marine
construction and engineering and ship
leasing, engaged in import and export of
goods and technologies, transit trade,
trade between enterprises and trade
agents within the free trade zone
Shanghai Zhenhua technical development, technical 7,000,000 7,000,369 0
Testing Technology consultancy, technical services, transfer of
Consulting Co., Ltd. technology in the field of testing;
construction engineering testing,
construction project management
services, physical and chemical testing of
metallic materials and consulting, except
metal, mechanical equipment, ships and
steel structure equipment (subject to
special approval) non-destructive testing
services, test equipment sales,
maintenance, and self-owned equipment
rental (except financial leases), engaged
in the import and export of goods and
technology business
24
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Shanghai Zhenhua Design, construction, installation and 300,000,000 457,559,576 -48,636,794
Heavy Industries Group contracting large port handling systems
(Nantong) Co. Ltd. and equipment, engineering vessels and
large metal structure very parts,
accessories,; special heavy-duty Steel,
bridge structure, the weaving of heavy
machinery and equipment by sea, the
installation; engineering ship, lifting
machinery leasing; engineering consulting
service, Steel structure engineering
contractor; cargo storage and handling,
loading and unloading containers
Shanghai Zhenhua Industrial automation equipment, electrical 50,000,000 51,851,900 38,238
Heavy Industries Electric equipment research and development,
Co., Ltd. design, testing, electrical and electrical
equipment, computer hardware and
software development, manufacturing,
sales, technical services, systems
integration, engaged in the import and
export of goods and technology business
Nantong Zhenhua machinery manufacturing and installing, 100,000USD 78,862,753 108,066
Heavy Industries Steel steel structure processing, hardware
Structure Processing Co. processing, de-rusting and painting,
Ltd. machinery engineering contracting etc.
Jiangyin Zhenhua Steel Port machinery spare parts production; 100,000USD 3,345,872 28,019
Structure Manufacturing steel structure production engineering,
Co. Ltd. mechanical equipment, electrical
equipment installation; and to provide
relevant technology and post-sales
service
Shanghai Zhenhua Manufacturing and sales of steel 150,000USD 5,361,494 151,436
Heavy Industries Steel structures and port machinery parts;
Structure Co. Ltd. installation of electric & port machinery
equipment; providing related technology &
service
ZPMC Netherlands B.V. Port equipment technical service, sales, 18,000Euro 1,204,024 0
spare parts, offshore installation and steel
structure
ZPMC GmbH Hamburg Sales, transport, maintenance of port 25,000Euro 86,696,585 3,060,433
equipment, ship steel structure parts and
other parts
CCCC Shanghai Port Sale of port bulk & container cranes & 2,184,730,000 2,087,587,964 -49,816,557
Machinery Plant Co., machinery, port engineering vessel (incl.
Ltd. barge engineering vessel), cargo carrying
machinery and parts; sale, technical
service, maintenance, installation and
technical consulting of key parts & original
and associate instruments of machinery
Shanghai Jiangtian Organizing construction of composite 157,000,000 110,039,766 -5,960,554
Industrial Co., Ltd. buildings; business info consulting; sale
and service of mechanic & electric
equipment & product, building material,
decorating material, hardware, goods,
metal; toll park; affiliating branches
Shanghai Port Manufacturing of port cranes and parts; 18,120,000USD 868,552,336 -18,343,107
Machinery Heavy making of cargo carrying machinery &
Industry Co., Ltd. parts, tunnel digging machinery, express
railway special equipment, steel structure;
repair, design & making of large
engineering vessel ( incl. barge crane) &
ocean engineering equipment, sales of
25
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
own products and provides related
installation and maintenance service and
technical advice.
Shanghai Zhenhua Making, processing, repair and rebuilding 15,000,000 472,736,031 1,338,919
Heavy Industries of port crane, bulk & container machinery
(Group) Zhangjiagang
Assembly Co., Ltd.
Jiangsu Zhenhua Steel structure fabrication and installation, 260,000,000 368,333,908 40,957,340
Longyuan Marine Foundation construction of offshore wind
Engineering Co., Ltd. power facilities, equipment installation and
maintenance, submarine cable system
construction, maintenance, marine
construction, equipment installation and
maintenance, and installation of
equipment leasing
CCCC Marine Mainly engaged in steel ships and relevant 60,000,000 60,000,000 0
Engineering Vessel equipment design, development,
Technology Research marketing and supply of technology
Centre Co., Ltd. transfer, technology consultation and
technology services.
Shanghai Zhenhua Epoxy, polyurethane resin coating 49,800,000 177,847,511 6,433,342
Heavy Industries manufacturing and processing.
(Group) Changzhou
Paint Co., Ltd.
II. Board of Director’s discussion and analysis of the Company’s future development
(I) Sector competition pattern and development trend
The year 2013 is the crucial linking year for the Company’s "Twelfth-Five-Year-Plan"
development; the year to achieve the "Twelfth-Five-Year-Plan" strategic objectives, and more
than anything else the key year to lay the basis for sustained and healthy development of the
Company. In 2013, the company is still facing the general situation combining challenges and
opportunities, with opportunities outweighing challenges.
The world economy is still in a slow recovery phase. United States and major European
countries lack economic recovery. Economic restructuring encounters difficulties in emerging
countries; Domestic economy faces considerable downward pressure. Macroeconomic
uncertainties have enhanced. Domestic inflation endures pressures. Labor cost tends to rise
considerably. International exchange rates change and RMB faces pressure for appreciation.
These factors make market competition more brutal. Machinery market has fully marched into
the meager profit era. Low-cost competition became inevitable.
(1) Traditional manufacturing powerhouses have returned, and new layout and post
promotion pose as an important way of resolving our financial difficulties, and thus
greater challenges are facing the Company’s operation in the international market.
26
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
(2) Global economy is weak; international shipping market sees surplus of capacity;
container transport and energy companies tend to be cautious; market volume as
compared to a historical high still suffers major gaps.
(3) Total port throughput will increase over a given period, but the growth slows down; ships
are becoming larger and larger; modern logistics port features enhanced; ports are
focusing more on content, quality, and transformation; therefore rapid growth and
explosive demand is difficult to emerge in the short term.
(4) Duplicability and transparency of products, technologies and services are increasing and
homogenization of competition increased. The practice of "One Trick Dominates"
monopoly profit and opportunity profit is difficult to maintain.
(II) The Company’s development strategy
The Board systematically and scientifically studied the basic situation, opportunities and
challenges (combined with four elements including internal and external environment,
resources, and capacity and value), analyzed internal self-owned disadvantage, developed
the 2013-2015 overall development thought and expected planning target, called out the
management layer and all employees together to face challenges, strengthen confidence,
guide with strategy, seek scientific development, endeavor for full construction of an
internationally excellent brand.
2013-2015 overall development thought and expected planning objectives
1. The Company's strategic positioning: to build up ZPMC around the "4, 3, 2, 1" pattern
(1) 4—types: stick to the shaping of ZPMC with "learning-type, innovation-type, high
efficiency type and core values-type";
(2) 3-Xtions: adhere to the "vertical integration, restricted horizontal diversification and
internationalization" approach of business and industrial layout;
(3) 2—Megas: stick to the "Mega machinery, mega civil engineering" development road;
(4) 1—excellent: adhere to the goal of building an international excellent company enjoying
sustainable and healthy development, including becoming the world's leading supplier of
equipment, leading systems integrator, engineering general contractor and investor.
27
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
2. Guiding ideology
Maintain steady improvement; move fast while keeping healthy; keep strong while seeking
being big; keep quality while maintaining change. Correctly handle the relationship between
reform, development and stability; correctly handle relationships between inheritance, learning
and innovation; rightly deal with relationship between size, quality and benefits; correctly
handle relationship between policy-making, implementation and monitoring; seek full
realization of balanced and harmonious development of five elements like benefits, size,
quality, sustainability and improved employee happiness index.
3. General philosophy
Guided by the conception of scientific development point of view, seek world-class standard,
integrated with international mainstream, emancipation way of thinking; reform and innovation;
Follow-up to CCCC's overall deployment and implement the Company's development
strategy; stick to improving development efficiency and quality as the main line, with "solid
foundations, constant innovation, adjusting structure, changing ways of working, reorganizing
resources, stronger management, fostering culture, maintaining quality" as the general policy;
pushing forward the three management priorities of strategy and details, optimization and
upgrading, standardization and digitization; in 2013, the Company will focus on the full
implementation of the Year of "Turn around from loss to profitability, reform and tackle crucial
difficulties"; at a higher level, with higher standards, promote international excellence on the
Company's construction, in order to achieve sustainable and healthy development of the
Company.
4. Key planning objectives
Business structure and objectives: focusing on "1, 5, 2, 1" business development and
distribution, to achieve 1 “strong”, 5 leaps, 2 breakthroughs, and 1 promotion.
(1) 1 “strong” means clinging to and doing fine and strong the core port machinery market,
particularly the container machinery market, leading the development of container machinery
in the world.
(2) 5 major “leaps” and market fostering
28
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Offshore markets; Large, heavy, special steel structure market; Electrical products, software
development and integration; Transport and installation market; Energy and environmental
protection markets.
(3) 2 key new markets
System integration, engineering general contracting and project management market;
Investment projects market.
(4) 1 market for full promotion
Integration, specialization and a global network of paid value-added services and key
accessory parts market.
Main measures for achieving the development goals of the Company
1. Place priority on strategic management, put strategy management into full play in
positioning, propulsion, navigation and binding effect.
2. Promote the "adjusting structure, changing way of working and improving quality"; to
deepen the reform as a means of going the way of quality and efficiency development.
3. Seek to be strong via management, and increase enterprise’s core competitiveness.
4. Focus on fostering talents, and take the road of enterprise thriving with talents.
5. Promoting scientific and technological progress and technical innovation, build an
innovation-oriented enterprise, taking the road of strengthening the enterprise with technology
and capacity.
6. Focus on building the advanced culture gene, to provide strong impetus to the development
of the Company.
(III) Business planning
In the year 2013 the Company intends to achieve steady growth in operating income, stick to
the road of development with quality and efficiency, focusing around the vertical integration,
horizontal diversification strategy, based on creating an adaptable organization, depending on
seizing the market, restructuring, transformation and upgrading as the main line, to fulfill all
the tasks of the year 2013. The Company will rely on overall transforming, vertical integration
29
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
expansion to increase revenue; At the same time, it will strengthen the internal control,
improve the gross margin level, to reach the annual target of turning loss into profitability, to
lay a solid foundation for sustained and healthy development of the Company.
(IV) The Company’s fund demand for maintaining current business and completing
investment in progress
Daily operating expenses and capital expenditure are mainly the Company's own funds, as
well as through a variety of means of financing; capital expenditure is mainly used for items
such as capital construction of the production base of the Company.
(V) Possible risks and counter measures
(1) Market risk: mainly seen as slow international economic recovery, international
market management pressure increasing, main domestic ports construction slowing
down sharply, the market situation still grim: total number of orders shrinking, order
value shrinking, business structure too simple, business layout and development space
narrow, relying too much on port machinery, profit pattern and growth mode timely
adjustment and innovation not enough, poor ability to resist risks and weak ability of
sustainable development.
Countermeasures: in the face of the severe business situation, through the "restructuring,
transferring business mode, improving quality", take the road of deepening reform, the
development way of quality and benefit. Around the "1.5.2.1" model, optimize and adjust the
market and business structure, thus to maintain a leading position for ZPMC port machinery in
the global market while improving the marine engineering, steel structure, general contract,
investment, customer service and independent supporting business, advancing structural
adjustment and resource integration, to promote the sustainable development of the enterprise.
(2) Business risks: mainly featuring a larger gap between the management and
production operation mechanism and the international first-class company
benchmarking, heavy asset management, profit model mainly depending on size, product
gross margin too low.
Countermeasures: broaden revenue channels, to increase comprehensive income; set up
comprehensive budget management system, to dig up for more income potentials; optimize
asset structure, to improve the quality of assets; strengthen process management, to make
more efficiency out of management. Establish a group management mode and system centering
30
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
the product business unit, service unit as the main body of market competition and profit center;
focusing on the company system, business unit system, shareholding system, project system,
build a comprehensive, integrated clear industry chain and value chain and cost control chain, to
meet the market demand, with clear responsibility, right, and benefits; deepen reform and
adjustment of organization structure and management mode, improve the overall control
capacity and efficiency. Guided by the idea of "market as the leading of the dragon, technology
as the dragon backbone, production as the dragon ribs, quality and safety as the dragon muscle,
customer service as the dragon tail", enhance the overall brand value of ZPMC, strive to become
the high-end, fully grasping the company value chain creation. Through the main business,
grasp the high-end, stabilize the intermediate end, optimize the low-end, in the pursuit of a high
starting point, high-quality, high efficiency; transform to integrated operation, system solutions,
enhance the added value, promote new profit model; move from stressing production operation
to stressing both capital operation and production management; promote the Company’s low
cost expansion through the trading strategy; change the mode of operation, and enhance the
ability to resist risks to promote the sustainable development of the Company.
(3) Financial risk: mainly featuring exchange rate risk and credit risk, international
exchange rate changes and the pressure of RMB appreciation, the credit crunch, the cost
of capital soaring
Countermeasures: make rational planning of forward exchange rate lock, control the exchange
rate risk; the Company has always attached great importance to the study of foreign exchange
risk management policy and strategy, paid close attention to changes in the exchange rate,
prepared regular exchange rate movement trends, conducted strict implementation of the
examination and approval procedures related to financial derivatives transactions; make good
exchange rate statistics concerning the currency of products, to further strengthen foreign
exchange management, reduce the risk of exchange rate. Through the arrangement of a
favorable settlement clause in the contract (such as signing contract pegged to RMB exchange
rate, payment proportion increase and early settlement etc.), or within the scope of permission
by the state's financial foreign exchange policy, use appropriate financial tool or means such as
foreign exchange hedging and factoring to control and lock the exchange rate risk. For credit
risk, through the reduction of the reserves of raw materials, the Company compresses
infrastructure spending, through a variety of ways (such as the medium-term notes, bills
discounting, non-public directional debt financing instruments), adjusts the Company’s debt
structure, strengthens the accounts receivable collection, to gradually reduce bank debt and
business risk.
31
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
III. Explanation of the Board about the “Non-Standard Auditor’s Report” from the CPAs
Firm
(I) Remarks from the Board of Directors and the Supervisory Board of the Company on the
“Non-standard Audit Report” provided by the CPA firm
√ n.a.
(II) Specification by the Board of Directors on the causes and effects of changes in accounting
policies, accounting estimates and accounting method
√ n.a.
(III) Specification by the Board of Directors on cause and effect of important corrections of
prior period errors
√ n.a.
IV. Pre-plan for profit distribution or capital reserve transfer to increase capital stock
(I) Cash dividend policy formulation, implementation and adjustment
According to CSRC Notification on Further Implementation of Issues Concerning Listed
Company Cash Dividends Sharing (Zhengjian Fa [2012] 37), as proposed by the 10th meeting of
the Company’s fifth session of Board, amendment would be made to the Articles of Association
of the Company concerning profit distribution and cash dividends policy, and as a result
dividends sharing standard and proportion are clearer, related decision-making program and
mechanism complete, with full maintenance of small shareholders’ legitimate rights and
interests, giving them full excess to expressing their views and demands.
Because the year 2012 is negative in profit and interest bearing bank liabilities amount fairly
large, plus accounting for a higher proportion of the total liabilities, in order to lower liquidity and
operational risks, the Company’s profit distribution program for the year 2012 is: not to distribute
profit, not to convert reserve into capital stock.
(II) In case it is profitable in report period and retained profit of parent company is positive but
no cash dividend distribution pre-plan is proposed, the company should disclose in detail
reasons and the purpose and use plans of undistributed profit
√ n.a.
32
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
(III) Profit distribution pre-plan or plan, capital reserve converted into share capital plan or
preplan of the Company for last three years (including report period)
Unit: RMB yuan
Dividend
Bonus for every Shares Cash
net profit attributable to
share for 10 shares converted dividend
listed company
Year every 10 (yuan) for every amount
shareholders in
shares （before 10 shares (before
profit-sharing year
(share) s(share) tax)
tax）
2012 0 0 0 0 -1,043,665,841
2011 0 0 0 0 30,294,335
2010 0 0 0 0 -694,837,984
V. Active fulfillment of social responsibilities
(I) Social responsibility work
The Company has been actively fulfilling its social responsibilities. In the respective of safe
production and civilized environment, the Company made full implementation of "safety first,
prevention top priority and comprehensive governance" approaches; through such activities as
safe production and civilized production, great efforts have been made to create a civilized and
safe production, working and living environment.
The Company also actively participates in social welfare, promotes harmonious social
development, commitments to corporate social responsibility. In the hot season, cooling stuff
against high temperature is delivered to the front-line workers; it provides high-temperature
lounges and other convenience to show their concern about workers ' health. It helps migrant
workers solve difficulties such as sudden serious illness.
33
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter V Substantial Events
I. Substantial lawsuits, arbitrations and media generally questioned events:
In report period, there are no lawsuits, arbitrations or events questioned by the media.
II. Reporting period funds occupancy and debts clearing progress
√ n.a.
III. Restructuring on bankruptcy
The Company has no such events like reorganization upon bankruptcy in report period.
IV. Assets trading and business combination events
√ n.a.
V. Company's equity incentive in report period
√ n.a.
VI. Magnificent related transactions
(I) Related transactions in connection with routine operations
34
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Events not disclosed in provisional announcement
Unit: RMB yuan
Types
of Pricing principle Related
Incidence Content of related Price of related
Related party transaction related of related transaction
relation transaction transaction
transac transaction amount
tion
Parent
company’s Purchase port
CCCC First Harbor Engineering Co., wholly-owned Sell machinery from the Based on market
Ltd. subsidiary goods Company price 409,262,264 2.28
Parent
company’s Purchase port
wholly-owned Sell machinery from the Based on market
Friede & Goldman, Llc. subsidiary goods Company price 346,400,234 1.93
Parent
company’s Purchase port
wholly-owned Sell machinery from the Based on market
China Harbour Engineering Co., Ltd. subsidiary goods Company price 290,815,565 1.62
Parent
company’s Purchase port
wholly-owned Sell machinery from the Based on market
CCCC Shanghai Dredging Co., Ltd. subsidiary goods Company price 128,409,573 0.72
Parent
company’s Purchase port
wholly-owned Sell machinery from the Based on market
CCCC Tianjin Dredging Co., Ltd. subsidiary goods Company price 100,787,687 0.56
Purchase port
Jiangsu Longyuan Zhenhua Marine Joint venture Sell machinery from the Based on market
Engineering Co., Ltd. goods Company price 88,536,202 0.49
Parent
company’s Purchase port
CCCC Third Harbor Engineering Co., wholly-owned Sell machinery from the Based on market
Ltd. subsidiary goods Company price 36,392,562 0.20
Parent
Company’s Purchase port
CCCC Shanghai Equipment controlled Sell machinery from the Based on market
Engineering Co., Ltd. subsidiary goods Company price 5,458,020 0.03
Purchase port
Parent Company Sell machinery from the Based on market
CCCC goods Company price 2,964,862 0.02
Parent
company’s Purchase port
CCCC No. 2 Harbor Engineering wholly-owned Sell machinery from the Based on market
Bureau Co., Ltd. subsidiary goods Company price 2,371,795 0.01
Parent Receivi
Company’s ng Entrusted
Tianjin CCCC Bomesc Marine Industry controlled service processing for the Based on market
Co., Ltd. subsidiary s Company price 78,539,419 0.46
Receivi
ng Entrusted
Parent Company
service processing for the Based on market
CCCC s Company price 45,299,902 0.27
Shanghai Zhenhua Heavy Industries Affiliated Purcha Supply material for Based on market
(Group) Changzhou Paint Co., Ltd. company ses the Company price 78,436,778 0.86
Parent
Company’s
CCCC Shanghai Equipment controlled Purcha Supply material for Based on market
Engineering Co., Ltd. subsidiary ses the Company price 61,510,825 0.68
Parent Receivi
CCCC Shanghai Dredging Equipment company’s ng Build base and
Industry Co., Ltd. wholly-owned service workshop for the Based on market
subsidiary s Group price 2,882,000 0.83
Parent Receivi
company’s ng Build base and
CCCC Third Harbor Engineering Co., wholly-owned service workshop for the Based on market
Ltd. subsidiary s Group price 160,500 0.05
Note: June 28, 2010, the Company 2009 Annual General Meeting approved "Motion on the
Company Signing Framework Agreement with CHINA COMMUNICATIONS
35
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
CONSTRUCTION CO., LTD. on Routine Related Transactions." From 2010 to 2012, our
company and its subordinate units and the China Communications Corporation and its
subsidiary bodies could undertake related party transactions in the daily operation on annual
basis with transaction amount not exceeding 3 billion yuan. The Annual General Meeting has
authorized the Company’s management to handle relevant specific matters.
(II) Significant related transaction involving joint external investment
1. Events disclosed in the provisional announcement and without changes or progresses of
follow-up implementation.
Events overview Index
The 7th meeting of the 5th session of Board of
Directors reviewed and approved on Mar. 22,
2012 Bill for Holding Shares in CCCC
Engineering Ship Technology Research Centre Shanghai Stock Exchange website:
Co., Ltd., Bill for Holding Shares in CCCC www.sse.com.cn and Shanghai Securities
Dredging Technology & Equipment State News and Hong Kong Wen Wei Po on Mar. 24,
Project Research Centre Co., Ltd., Bill for 2012
Shareholding in CCCC Highway Long and
Large Bridge Construction State Project
Research Centre Co., Ltd.
(III) Current accounts of credits and liabilities with related parties
1. Events not disclosed in the provisional announcement.
Unit: RMB yuan
The Company providing fund to Related party providing fund to the
related party Company
Related party Incidence relation
Beginning Current Ending Beginning Current Ending
balances amount balance balances amount balance
China
Communications
Construction
Co., Ltd. Parent Company 0 0 0 75,536,745 0 75,536,745
Hong Kong Parent
Zhenhua company’s
Engineering Co. wholly-owned
Ltd. subsidiary 0 0 0 19,606,950 -19,260,945 346,005
Macau Zhenhua Parent
Harbor company’s
Engineering Co., wholly-owned
Ltd. subsidiary 0 0 0 373,626 -367,033 6,593
the current amount of funding during the
reporting period the Company provided to its
0
controlling shareholder and its subsidiaries
(yuan)
the ending amount of funding during the
reporting period the Company to its
0
controlling shareholder and its subsidiaries
(yuan)
Reasons for the related credits and liabilities Dividends payable by the Company to related parties
36
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
VII. Major contracts and their implementation
(I) Entrusting, contracting and leasing.
√ n.a.
(II) Guaranty
External guaranty (excluding those for held subsidiaries)
Total guaranties for subsidiaries incurred in report period 0
Total guarantee balance at the end of report period（A）
(excluding those for held subsidiaries)
0
Guaranties for subsidiaries
Total guaranties for subsidiaries incurred in report
1,970,504,250
period
Total guaranties for subsidiary balance in report
2,404,203,750
period (B)
Total guaranties of the Company（including those for subsidiaries）
Total guarantee amount（A+B） 2,404,203,750
Proportion of net assets of the Company (%) 16.68
Including:
Amount guaranties to shareholders, effective
0
controller and its related parties （C）
Direct or indirect guarantees for the guaranteed
2,404,203,750
parties with an assets-liabilities ratio over 70% (D)
Amount of guaranties exceeding 50% of net assets
0
（E）
Total of the above 3 kinds of guarantee（C+D+E） 2,404,203,750
Note: The 2008 first interval general meeting held on Sep. 22, 2008 reviewed and passed
“Proposal on the Company Providing Financial Guaranties to Subsidiary Shanghai Zhenhua
Port Machinery (Hong Kong) Co., Ltd.”, agreeing to provide support on financing to Shanghai
Zhenhua Port Machinery (Hong Kong) Co., Ltd., providing guaranties for bank loans,
maximum $500 million. All guaranties the Company provided in report period are those to
Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd.
(III) Other substantial contracts
The company has no other substantial contracts in report period.
37
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
VIII. Commitments
(I) Commitment with shareholders holding over 5% shares in report period or lasting to report
period.
Type of
The Commitments Fulfillment
Commitments
On Oct. 18, 2012 the Company’s controlling shareholder
China Communications Construction Co., Ltd. （hereafter
CCCC”） via Shanghai Stock Exchange trading platform
purchase increased its holding of the Company’s A-shares
by 4,999,902 shares, covering 0.114% of the total capital Commitment time and
stock issued publicly. CCCC plans to continue increasing its term is 12 months starting
holding of the Company’s shares in the future 12 months from Oct. 18, 2012; Up to
(starting from Oct. 18, 2012) in its own name via the trading now, China
Other commitments platform of Shanghai Stock Exchange. Cumulative holding Communications
ratio shall not exceed 2% (including the mentioned increased Corporation has strictly
holding) of the Company’s total issuance of capital shares. followed their
CCCC promises it will not decrease its holding of the commitments.
Company’s shares during the period of increasing
shareholding and in lawful period. Such promises were
posted on Shanghai Securities News, Hong Kong Wen Wei
Po on Oct. 20, 2012 and Shanghai Stock Exchange website
(www.sse.com.cn).
IX. Appointment and dismissal of accounting firm
Unit: RMB 10,000 yuan
Whether to hire other accounting firms No
Current appointment
PricewaterhouseCoopers Zhong Tian CPAs Co.
Domestic accounting firm
Ltd.
Domestic accounting firm payment 315
Domestic accounting firm audit period 19
Name Payment
Internal control audit PricewaterhouseCoopers Zhong Tian
120
accounting firm CPAs Co. Ltd.
X. Punishment and rectification of the Listing Corporation and its directors,
supervisors, senior management personnel, shareholders holding over 5% of the
shares, the actual controller, acquirers.
During the reporting period, neither the company nor its directors, supervisors, the senior
management personnel, shareholders holding over 5% of the shares, the actual controller,
acquirer, have experienced inspection, administrative penalty, notice of criticism by China
Securities Regulatory Commission, or public condemnation by the Stock Exchange.
XI. Other significant events
The Company has no other significant events during report period.
38
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter VI Equity Movement and Shareholder's Profile
I. Particulars about equity movement:
(I) Particulars about capital stock change
1. Particulars about capital stock change
Unit: share
Prior to the movement Increase/Decrease(+,-) After the movement
Proportion
Proportion
Transferred from
surplus reserve
New Issues
Subtotal
Others
Bonus
(%)
(%)
Qty Qty
I. Shares subject to
984,696,284 22.43 -984,696,284 -984,696,284 0 0
conditional sales
1.State-owned Shares
2 .Shares owned by
220,733,084 5.03 -220,733,084 -220,733,084 0 0
state-owned legal person
3. Shares owned by other
domestic parties
Including: shares owned
by domestic
non-state-owned legal
person
Shares owned by
domestic natural person
4. Shares with foreign
763,963,200 17.40 -763,963,200 -763,963,200 0 0
investment
Including: Shares owned
763,963,200 17.40 -763,963,200 -763,963,200 0 0
by overseas legal persons
Shares owned by
overseas natural persons
II. Total of shares not
subject to conditional 3,405,598,300 77.57 984,696,284 984,696,284 4,390,294,584 100
sales
1. A share 2,547,598,300 58.03 220,733,084 220,733,084 2,768,331,384 63.06
2. B share 858,000,000 19.54 763,963,200 763,963,200 1,621,963,200 36.94
3. Shares issued in
overseas market
4. Others
III. Total shares 4,390,294,584 100 0 0 4,390,294,584 100
Explanation on the changes of shares:
Note:
1. On September 22, 2008, the Company’s first interim shareholders general meeting of 2008
39
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
considered and adopted related motions concerning the Company buying 100% equity of
Shanghai Port Machinery and 60% equity of Jiangtian Industrial from China Communications
Construction Co., Ltd. through non-public offering, directional add-issuance of 220,733,084
shares with sales restriction conditions for listing, trading day being Mar. 20, 2012.
Announcement of the said listing of restricted shares was posted on Shanghai Securities
News and Hong Kong Wen Wei Po on Mar. 16, 2012.
2. According to China Securities Regulatory Commission ("CSRC") "Notification on Issue
Concerning Non—B Shares Circulation of Company with Domestically Listed Foreign
Investment Shares (B-shares), a total of 763,963,200 shares of the foreign legal person shares
held by the Company’s foreign investment legal person shareholder Hong Kong Zhenhua
Engineering Co. Ltd. and Macao Zhenhua Harbour Engineering Co., Ltd. Started to circulate
on Shanghai Stock Exchange B share market on December 25, 2012. Announcement on the
circulation of restricted shares was posted on Shanghai Securities News and Hong Kong Wen
Wei Po on Dec. 20, 2012.
(II) Table of movement of shares with sales limitations
Unit: share
Current Ending
Beginning
amount of amount
amount of Restricted Date of relieving
Shareholder’s name relieving of
restricted reason restricted
restricted restricted
shares
shares shares
Private
China Communications
220,733,084 220,733,084 0 Placement 2012-03-20
Construction Co., Ltd.
of shares
Foreign
ZHEN HUA ENGINEERING legal
749,677,500 749,677,500 0 2012-12-25
COMPANY LIMITED person
shares
Foreign
ZHEN HWA HARBOUR
legal
CONSTRUCTION COMPANY 14,285,700 14,285,700 0 2012-12-25
person
LIMITED
shares
Total 984,696,284 984,696,284 0 \ \
II. Particulars about securities issuance and listing of the Company
(I) Stock issuance activities in the Company in the three years before the report period
In the three years before the report period, there were no stock issuance activities in the
Company.
(II) Changes of total number of stock and shareholder composition and changes of asset and
liability composition
In report period there incurred no change in the Company’s total shares or stock structure as
40
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
caused by bonus shares or allocated shares.
(III) Existing internal staff shares
By end of report period, there exist no internal employee shares.
III. Particulars about shareholder and effective controller of the Company
(I) Number of shareholders and their shareholding profile:
Unit: share
Total shareholders end of 5th
Number of shareholders at
360,825 trading day prior to release 357,327
period end
day of current annual report
Shareholding profile of top 10 shareholders
shares
Share Share
held
holde Movement s
Ratio Total shares subjec
Shareholder’s Name r’s During the pledge
(%) held t to
Natur Year d or
conditi
e frozen
onal
sales
State
legal
China Communications Construction Co., perso
28.83 1,265,637,849 4,999,902 0 None
Ltd. n
share
holder
Overs
ZHEN HUA ENGINEERING COMPANY eas
17.08 749,677,500 0 0 None
LIMITED institu
tion
TOYO SECURITIES ASIA LTD. A/C Unkn
0.50 22,112,478 -3,600,486 Unknown
CLIENT own
SCBHK A/C GOVERNMENT OF
Unkn
SINGAPORE INVESTMENT 0.41 18,046,654 -5,430,095 Unknown
own
CORPORATION - A/C "C"
Unkn
NAITO SECURITIES CO., LTD. 0.34 15,093,553 -1,497,680 Unknown
own
Overs
ZHEN HWA HARBOUR CONSTRUCTION eas
0.33 14,285,700 0 0 None
COMPANY LIMITED institu
tion
Minsheng Life Insurance Co., Ltd. － Unkn Unknown
0.30 13,265,084 7,320,869
traditional insurance products own
Shaoxing Far East Thermal Power Co., Unkn Unknown
0.20 8,777,800 265,266
Ltd. own
Unkn Unknown
AIZAWA SECURITIES CO.,LTD. 0.16 7,172,094 -998,432
own
Unkn Unknown
Sanya Cheng Da Investment Co., Ltd. 0.14 6,176,801 -1,165,176
own
Particulars about top 10 shareholders of shares not subject to conditional sales
Shares not subject to
Type and quantity of
Shareholder’s Name conditional sales held at
shares
period end
China Communications Construction Co., Ltd. 1,265,637,849 RMB common shares
ZHEN HUA ENGINEERING COMPANY LIMITED 749,677,500 Shares with foreign
41
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
investment listed on
domestic market
Shares with foreign
TOYO SECURITIES ASIA LTD. A/C CLIENT 22,112,478 investment listed on
domestic market
Shares with foreign
SCBHK A/C GOVERNMENT OF SINGAPORE INVESTMENT
18,046,654 investment listed on
CORPORATION - A/C "C"
domestic market
Shares with foreign
NAITO SECURITIES CO., LTD. 15,093,553 investment listed on
domestic market
Shares with foreign
ZHEN HWA HARBOUR CONSTRUCTION COMPANY LIMITED 14,285,700 investment listed on
domestic market
Minsheng Life Insurance Co., Ltd.－traditional insurance products 13,265,084 RMB common shares
Shaoxing Far East Thermal Power Co., Ltd. 8,777,800 RMB common shares
Shares with foreign
AIZAWA SECURITIES CO.,LTD. 7,172,094 investment listed on
domestic market
Sanya Chengda Investment Co., Ltd. 6,176,801 RMB common shares
Among above top 10 shareholders, CHINA
COMMUNICATIONS CONSTRUCTION CO.,
LTD. constitutes related party relationship with
ZHEN HUA ENGINEERING COMPANY
LIMITED, ZHEN HWA HARBOUR
CONSTRUCTION COMPANY LIMITED, with
ultimate controller being China
Explanation on the above related relationship or consistent action
Communications Group Corporation. The
Company is not aware of whether they have
associated relationship among them or belong
to the consistent actionists as defined in
Administrative Rules on Disclosure of
Information on Stock Change of Listed
Company’s Shareholders.
IV. Controlling shareholders and actual controllers
(I) Particulars about the corporate controlling shareholder
1. Legal person
Unit: RMB yuan
Name China Communications Construction Co., Ltd.
The person in charge of the
Zhou Jichang
unit /legal representative
Date of incorporation 2006-10-8
Organizational Code 71093436-9
Registered capital 14,825,000,000
Engaging in the general contracting of construction projects for ports, channels,
highways and bridges both home and abroad, including technical and economic
consultation of engineering, feasibility study, survey, construction, supervision,
procurement and supply for related complete set of equipment or materials, and
Principal business
equipment installation; undertaking the general contracting of the construction of
activities industrial and civil works, railway, metallurgy, petrochemical, power and water
conservancy facilities, channel, mine and municipal works; import and export
business; real estate development and property management, investment and
management of logistics, transportation, hotel and tourist industries.
42
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
(II) Particulars about the actual corporate controller
1. Legal person
Unit: RMB yuan
Name China Communications Construction Group
The person in charge of the
Zhou Jichang
unit /legal representative
Date of incorporation 2005-12-08
Registered capital 4,754,016,800
International tender for contracting overseas projects and domestic projects; a
variety of professional ship general contracting construction, leasing and
maintenance of specialized ships, construction machinery; marine towing, marine
engineering-related professional services; technical advisory services for ships
and port equipment; commitment to domestic and foreign ports, waterway,
highway and bridge construction Item, the general contractor (including the
Principal business
technical and economic consulting, feasibility studies, survey, design, construction,
activities supervision and related equipment, materials procurement and supply, equipment
installation); commitment to the industrial and civil buildings, railway metallurgy,
petrochemical, tunnels, power, mining, water conservancy, municipal construction
project contracting; import and export business; real estate development and
property management; transport, hotel industry, tourism, investment and
management.
2. Block Diagram Showing Property and Controlling Relationship between the Actual
Controller and the Company
State-owned
Assets Regulatory
Commission of the
State Council
China Communications
Construction Group
Co., Ltd.
China
Communications
Construction Co.,
Ltd.
Holding Holding
100% 100%
Hong Kong Zhenhua Macau Zhenhua Harbor
Engineering Co. Ltd. Engineering Co., Ltd.
Holding Holding Holding 0.33%
17.08% 28.83%
Shanghai Zhenhua Heavy Industries Co.,
Ltd.
V. Other corporate shareholders holding over 10% of the Company’s shares
As of end of report period, there existed no such shareholders.
43
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter VII Directors, Supervisors and Senior Executives
I. Chang of holdings and remuneration
(I) Share holding changes and remuneration of directors, supervisors and senior executives
under employment or retired during report period
Unit: share
Total
Paid by Total
the Paid by
Compa the
Shares Reas ny sharehol
held at Shares Change on during ders
Start of End of
Name Title Sex Age the at end of in report for report units
Tenure Tenure
beginnin year period chan period( during
g of year ge RMB report
10,000 period(R
) MB
(before 10,000)
tax)
Zhou Chairman of the
M 63 2011-05-20 2012-09-18 0 0 0 0 105.7
Jichang board
Chairman of the
Song
board, secretary of M 50 2012-09-18 2014-05-20 0 0 0 0 -
Hailiang
the party committee
Liu
Director M 53 2011-05-20 2014-05-20 0 0 0 0 88.7
Wensheng
Chen Qi Director F 51 2011-05-20 2014-05-20 0 0 0 0 53.2
Kang Executive director,
M 55 2011-05-20 2012-08-21 0 0 0 55.84 -
Xuezeng President
Lu President, vice Party
M 50 2011-10-20 2014-05-20 0 0 0 59.92 -
Jianzhong Secretary
Executive director,
Yan Yunfu M 54 2011-05-20 2014-05-20 0 0 0 70.37 -
Vice president
Executive director,
Liu Qizhong M 49 2011-05-20 2014-05-20 0 0 0 73.16 -
Vice president
Executive director,
Dai Wenkai M 46 2011-05-20 2014-05-20 0 0 0 72.32 -
Vice president
Bao Qifan Independent director M 62 2011-05-20 2014-05-20 0 0 0 12 -
Li Liguang Independent director M 51 2011-05-20 2014-05-20 0 0 0 12 -
Mi Weijian Independent director M 57 2011-05-20 2014-05-20 0 0 0 12 -
Liu
Independent director M 55 2011-05-20 2014-05-20 0 0 0 12 -
Ningyuan
Tang Fuxin Independent director F 57 2011-05-20 2014-05-20 0 0 0 12 -
Zhang Chairman of board of
M 51 2011-05-20 2014-05-20 20,259 20,259 0 60.09 -
Minghai supervisors
Chen Bin Supervisor M 39 2011-05-20 2014-05-20 89,440 89,440 0 52.32 -
Zhao
Supervisor M 52 2011-05-20 2014-05-20 0 0 0 35.57 -
Guangjing
Cao
Vice president M 57 2011-05-20 2014-05-20 0 0 0 58.24 -
Weizhong
Huang
Vice president M 59 2011-05-20 2014-05-20 0 0 0 59.93 -
Hongyu
Sun Li Vice president M 41 2011-05-20 2014-05-20 0 0 0 60.62 -
Huang
Vice president M 38 2011-05-20 2014-05-20 0 0 0 60.85 -
Qingfeng
Zhou Qi Vice president M 41 2011-05-20 2014-05-20 0 0 0 63.42 -
Fei Guo Vice president M 51 2011-05-20 2014-05-20 0 0 0 66.14 -
Chen Gang Vice president M 46 2011-05-20 2014-05-20 0 0 0 70.2 -
Liu Jianbo Vice president M 50 2011-05-20 2014-05-20 0 0 0 63.45 -
CFO, Secretary of
Wang Jue the Board of M 49 2011-05-20 2014-05-20 0 0 0 59.56 -
Directors,
Total / / / / / 109,699 109,699 0 / 1,102 247.6
44
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
1. Zhou Jichang, born in 1950, male, master, senior engineer; was Vice President with No. 1
Highway Survey & Design Institute of Ministry of Communications, deputy general manager and
vice chairman of board of directors with China Highway & Bridge Construction Co. Ltd., chairman
of board of directors, president and Party Secretary with China Highway and Bridge Construction
Co. Ltd.; is now chairman of the board of directors, general manager and vice chairman of Party
committee with China Communications Construction Group Co. Ltd., Chairman and chairman of
Party committee with China Communications Construction Co. Ltd., was chairman of board of
directors of the Company since 2006. On Sep. 18, 2012, resigned from the post of board
chairman.
2. Song Hailiang, born in1963, male, professor-level senior engineer, B.E. in port machinery
design and manufacture at Wuhan Institute of Water Transport Engineering, doctor of
management at Tianjin University, started to .work from July 1987, served as engineer, Design
Office director, Vice President, member of Party Committee, Vice Secretary of the Party
Committee, Chairman of the Board and simultaneously General Manager with CCCC Water
Transportation Planning and Design Institute Co., Ltd.; currently Assistant to the President of
China Communications Construction Co., Ltd. and simultaneously Chairman of the Board and
Party Secretary of Zhenhua Heavy Industries.
3. Liu Wensheng, born in 1960, male, MBA, senior engineer; was assistant and deputy director
with Tianjin Shipping Channel Bureau, vice chief economist and general manager of planning
office with China Harbor Construction (Group) Company, is now secretary of board of directors
and chief economist with China Communications Construction Co. Ltd., has been director of the
Company since 2006.
4. Chen Qi, born in 1962, female, master, senior engineer, was project manager of China Harbour
Engineering Co., Ltd. Import and Export Port Machinery Division, China Harbour (Group) Co., Ltd.
Industry and Trade Business Unit deputy general manager, general manager; is now CHINA
COMMUNICATIONS CONSTRUCTION CO., LTD. Industry and Trade Business Unit general
manager and director of the Company.
5. Kang Xuezeng, born in 1958, male, master, senior economist, senior engineer, was CCCC First
Navigation Engineering Bureau Co., Ltd. First Company vice secretary of Youth League, deputy
general manager, general manager, CCCC First Navigation Engineering Bureau Co., Ltd. vice
45
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
bureau director, member of Party committee, Director, general manager, vice chairman of Party
committee, director of the Company, president; resigned from the posts of director and president of
the Company on Aug. 21, 2012.
6. Lu Jianzhong, born in 1963, males, MBA, management science and engineering doctor, senior
accountant, senior economist; started to work in July 1983, successively CCCC First Highway
Engineering Co., Ltd. Beijing-Tianjin-Tanggu Expressway Tianjin viaduct project general manager,
director of the Bureau's Corporate Management Division, Bureau deputy chief economist, the ring
road of the capital of Ethiopia project general manager, overseas subsidiary General Manager and
Secretary of the Party Committee, the Bureau’s chief economist, deputy managing director, local
Party committee member; is now director, president and vice chairman of Party committee of the
Company.
7. Yan Yunfu, born in 1959, male, master of engineering management, professor-level senior
engineer，was Vice Chief of Technical Department, Manager of Mechanical Design Department,
Vice General Engineer, General Engineer and VP of the Company. Is now the company’s standing
VP and simultaneously president of Land Heavy Industry Design and Research Institute; is
director of the Company since 2004.
8. Liu Qizhong, born in 1964, male, MBA, senior economist, doctor; was Vice Manager, Manager
of Operating Department and VP of the Company; is now the Company’s standing VP; is director
of the Company since 1997.
9. Dai Wenkai：born in 1967, male, master of physics, MBA, EMBA, senior engineer. Started to
work in 1993, was Manger of Operating Department, Vice Chief Economist, Chief Economist, VP
of the Company; is now the standing VP and director of the Company.
10. Bao Qifan: born in 1951, male, master, professor-level senior engineer; former Shanghai Port
fourth loading and unloading zone machine repair shop deputy director, Shanghai Port Timber
Handling Technology Co., Ltd. technology section chief, deputy manager in technology of
Shanghai Port Nanpu Port Co, Ltd., Shanghai Port Longwu Port Co., Ltd. manager, vice director of
Shanghai Port Bureau, Shanghai International Port (Group) Co., Ltd. VP; now Shanghai municipal
government counselor, part-time vice chairman of Chinese Mechanical Engineering Society, China
Water Transport Engineering Association vice chairman, Vice-Chairman of Shanghai Science and
Technology Association etc.; independent director of the company since 2011.
46
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
11. Li Liguang, born in 1962, male, doctor, professor, instructor of doctorate students; associate
professor and doctorate instructor with Jilin Industrial University’s Auto School Diesel Engine
Department; professor with School of Machinery and Diesel Engine of Shanghai Jiaotong
University; vice president with Graduate School of Tongji University; is now president with
Mechanical School of Tongji University; independent director of the Company since 2007.
12. Mi Weijian, born in 1956, male, doctor, professor, instructor of doctorate students; was
assistant professor at Shanghai Shipping Institute, lecturer, associate professor; is now president
of Logistics and Engineering School of Shanghai Marine University; independent director of the
Company since 2007.
13. Liu Ningyuan, born in 1958, male, master, professor, instructor of doctorate students; currently
East China University of Politics and International Law School Dean and Secretary of the Party
committee, part-time Chinese Private International Law Society executive director, Chinese
Arbitration Law executive director, Shanghai Law Society International Law Studies vice president,
Shanghai Arbitration Commission arbitrator, Shanghai Zhongxin Zhengyi Law Firm lawyer;
independent director of the Company since 2011.
14. Tang Fuxin, born in 1956, female, MBA, senior accountant; served as accountant of Finance
Department and vice director of Inspection Division of the Ministry of Posts, former Guoxin Paging
Co,, Ltd. finance manager, China Unicom Group financial department deputy general manager
and general manager of the department of Finance; China Unicom Co., Ltd. financial department
general manager; currently China Unicom Group General Manager of Audit Department, also as
China Unicom Co., Ltd. supervisor; independent director of the Company since 2011.
15. Zhang Minghai, born in1962, male, master ， senior engineer; formerly Shanghai Port
Machinery Plant Technology Division engineer; mechanical office deputy manager, deputy chief
engineer, general manager of Mechanical Office Shore Bridge First Company, of the machinery
to do the shore bridge, general manager of Land-base Heavy Industry Co., Ltd. with Shanghai
Zhenhua Heavy Industries (Group) Co., Ltd.; currently Land-based Heavy Industry Research
Design vice president and also Shore Bridge Design Institute director; chief supervisor of the
Company since 2011.
16. Chen Bin, born in 1974 , male, MBA, senior engineer; deputy manager of tire crane office of
47
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
quality control office, manager of quality control office, deputy general manager and general
manager of quality control company, vice director of quality and safety office, manager of Quality
Safety Office; supervisor of the Company since 2008.
17. Zhao Guangjing, born in 1961, male, college diploma, served with the second training team of
East China Sea Fleet; Shanghai Port Machinery Plant discipline inspection and supervision audit
office director, vice secretary and chief director of the discipline inspection and supervision audit
office, the organs of the Party branch secretary, asset management vice general manager;
Shanghai Zhenhua Heavy Industries (Group) Co., Ltd. Quality Security Comprehensive Office
deputy manager, comprehensive room of the executive office deputy manager; currently Audit and
Supervision manager of the company; from 2011 supervisor of the Company.
18. Cao Weizhong, born in 1956, male, worked as Vice Manager of Installation Section, Managing
General Manager of Jiangyin Base, Vice Manager of Production Department of the Company,
General Manager of QC Company, Assistant to General Manager and VP; now standing VP，has
been chairman of the Trade Union since 2006.
19. Huang Hongyu, born in 1954, male, master’s degree in engineering administration, senior
engineer; worked as Vice General Engineer of the Company. He has been Vice President of the
Company since 1997.
20. Sun Li, born in 1972, male, doctor, senior engineer; was Project Supervisor of Operating
Department, Vice Manager and Assistant of General Manager of the Company. He has acted as
Director and Vice President of the Company since 2001.
21. Huang Qingfeng, born in 1975, male, master, senior engineer; used to be quality project chief,
director of field bridge office of quality management department; deputy manager of after-sales
department, general manager of Quality Inspection Company; vice director of off-shore office,
assistant president of the Group; from Jan. 2005 on is VP of the Company.
22. Zhou Qi, born in 1972, male, master’s degree in engineering administration, senior engineer;
was manager and deputy general engineer, general manager of the Electric Appliance Office of
the Company; is now VP of the Company and simultaneously VP of Land Heavy Industry Design
and Research Institute.
48
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
23. Fei Guo, born in 1962, male, master’s degree in engineering administration, senior engineer;
was engineer with Shanghai Port Machinery Plant; director of Electric Appliance Office 5 and vice
general engineer with Shanghai Zhenhua Port Machinery Co., Ltd.; is now VP of the Company and
simultaneously chairman of the board of Shanghai Zhenhua Heavy Electric Co. Ltd.
24. Chen Gang, born in 1967, male, doctor, senior engineer; was deputy manager of
Technological Office of the Company; Mechanical Design manager, Mechanical Office director,
vice chief engineer, chief engineer, is now VP of the Company and simultaneously VP of Land
Heavy Industry Design and Research Institute.
25. Liu Jianbo, born in 1963, male, master’s degree in engineering administration ，senior
engineer; was engineer at technological office of Shanghai Port Machinery Plant; assistant
director in engineering with Technology Office of Shanghai Container Dock Co., Ltd., deputy
general manager and general manager of ZPMC Changxing Base; is now VP of the Company.
26. Wang Jue, born in 1964, male, MBA, CPA and senior accountant, successively held the posts
of director of the Financial Office of No.3 Engineering Co., Ltd. Of CCCC Third Harbor Engineering
Co., Ltd., General Accountant of CCCC 5th and 7th Harbor Engineering Co., Ltd., Director of the
Audit Section, Director of the Financial Section and Vice General Accountant of Third Harbor
Engineering Co., Ltd.; is the Chief Controller and Secretary of the Board of Directors of the
Company since November of 2005.
Note:
1. As of the end of the reporting period, serving directors, supervisors and senior executives’
remuneration disclosure is that of a period of 12 months; remuneration disclosure period of
resigned directors, supervisors and senior executives is the period from present report period
start till the term termination.
2. In report period, the remuneration disclosure of chairman of the board Zhou Jichang,
director Liu Wensheng, director Chen Qi paid by shareholders companys is that of a period of
12 months.
49
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
II. Office holding profile of directors, supervisors and senior executives in office or
retired during report period
(I) Particulars about office-holding with shareholding companies:
Name of shareholding Starting date of
Name Title
companies service term
Zhou China Communications
Chairman of the board 2009-12-29
Jichang Construction Co., Ltd.
Song China Communications
Assistant President 2012-08-14
Hailiang Construction Co., Ltd.
Secretary with the
Liu China Communications
Board, Economist 2009-12-29
Wensheng Construction Co., Ltd.
General
General manager of
China Communications
Chen Qi Industry and Trade 2009-12-29
Construction Co., Ltd.
Department
Chairman of the board、
Kang CCCC Tianjin Dredging Co.,
Xuezeng Ltd. Deputy Secretary of the 2013-01-18
Party committee
(II) Particulars about office-holding with other companies:
Name Name of companies Title
Shanghai Municipal Government, Chinese
Counselor, Vice
Mechanical Engineering Society, China Water
Bao Qifan Director-General, Vice
Transportation Association, Shanghai Association
Chairman
for Science & Technology
School of Mechanical Engineering Tongji
Li Liguang President
University
Logistics Engineering College of Shanghai
Mi Weijian President
Maritime University
International Law Faculty of the East China
University of Politics and Law, China Association Dean and Secretary of
of Private International Law, China Academy of the Party committee,
Liu Ningyuan Arbitration Law, International Law Research Standing Director,
Association of Shanghai Law Society, Shanghai Vice-chairman, arbiter,
Arbitration Commission, Shanghai Trust Justice Lawyer
Law Office
China United Network Communications Group General Manager of
Tang Fuxin Co., Ltd, China United Network Communications Audit Department,
Ltd. Supervisor
III. Remuneration of Directors, Supervisors and senior executives
Decision-making
In accordance with the Articles of Association, the remuneration of
procedures for
Directors and Supervisors are subject to the approval of Annual
remuneration of
Shareholder’s General Meeting and the remuneration of the
Directors, Supervisors
management are assessed and approved by the President.
and senior executives
Calculation basis for Basic salary plus performance bonus, combined with assessment
remuneration of utilizing quantizing index of production and operation.
Directors, Supervisors
50
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
and senior executives
Total pay received by all Chairman Zhou Jichang, Director Chen Qi, Director Liu Wensheng are
directors, supervisors not paid by the Company, whereas all other director, supervisor and
and senior executives senior executives are paid by the Company.
Total remuneration
received by all directors,
11,020,000 yuan
supervisors and senior
executives at period end
IV. Particulars about changes of directors, supervisors and senior executives
Name Former position The Change Reason
Zhou Jichang Chairman Leaving post Resignation
Song Hailiang Chairman appointment New appointment
Kang Xuezeng Director, president Leaving post Job changes
V. Core technician team or key technicians
No changes of core technician team or key technicians during report period.
VI. Employee status of the Parent Company and its key subsidiaries
(I) Particulars about employees
Number of employees of Parent Company in
2,883
service
Number of employees of key subsidiaries in
2,681
service
Total headcount in employment 5,564
Particulars about staff condition of the
0
Company
In specialties
Classification Number
Production staff 1,835
Selling staff 137
Technical staff 2,858
Financial staff 84
Administrative staff 650
In educational level
Educational Level Number
Technical secondary school 860
Junior College 2,087
Undergraduate 2,367
Master 231
Doctor 19
Total 5,564
51
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
(II) Remuneration policies
In line with the Company’s development strategy, continuously perfect distribution incentive
system, perfect performance assessment system, establish a system linking performance
distribution and unit or office performance, staff performance and post value; establish a
distribution mode integrating with the market.
(III) Training programs
At each year start, the Company sets up all-staff annual educational and training plan and
implements according to the plan to improve the competence level and professional quality of
staff at various levels. In line with the Company’s development strategy, gradually establish a
rigid staff training system with systematic, directional and continuous features.
(IV) Specialty composition chart:
11.68%
1.51%
32.98%
production staff
selling staff
technical staff
financial staff
administrative staff
2.46%
51.37%
(V) Educational level statistics chart:
52
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
0.34%
4.15%
15.46%
technical secondary school
junior college
42.54% undergraduate
master
doctor
37.51%
(VI) Labor outsourcing
The total number of man-hours of labor
13,102,848 hours
outsourcing
The total remuneration payment of labor
376,470,000 yuan
outsourcing
53
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter VIII Corporate Governance
I. Corporate governance and information insider registration management
During the report period, the Company has focused on standardizing routine operation, enforcing
information disclosure and the establishment and development of the legal representative
management system according to the Company Law, Securities Law, Rules for Listed Securities,
Article of Associations and other regulations promulgated by CSRC. The actual management status
primarily complies with Regulation Codes of Listing Company as follows:
① Shareholders and the Shareholder’ Meeting: The Company treats all shareholders equally, protects
the legal benefit for the shareholders, and ensures the sufficient enforcement of their rights. The
company established standing orders of shareholders’ meeting. The company convenes the
shareholders’ meeting strictly according to the standing orders of shareholders’ meeting. The number
of shareholders attended and shares represented conform to the regulation of Company Law and
Article of Association.
② Ultimate shareholders and listing: Ultimate shareholder acts in a normal way and strictly respects all
rights of the Board of Directors and Shareholder’s General Meeting .It doesn’t perform any illegal or
executive function which goes beyond the authorizations granted by the Board of Directors and
Shareholder’s General Meeting or intervenes with the significant decision made by the Company and
its lawful operations. The Board of Directors, the Supervisory Board and internal institutions can
operate independently. In this reporting period, the Company established Related Party Transaction
Regulation to ensure the validity of the decision procedure of related party transactions.
③ The Directors and the Board of Directors: The Board of Directors acts independently. The Company
has established Standing Orders of the Board of Directors and Regulations on Performance of
Independent Director. Every director is able to present the meetings of the Board of Directors and
Shareholders’ General Meeting in a critical and responsible manner, and performs obligations and
responsibilities as a director. Independent directors fully and independently perform their duties and
concern the legal welfare of minority shareholders.
④ Supervisors and the Supervisory Board: The number of the supervisors and member comply with
laws and regulations; the Supervisors are able to perform their duties according to Standing Orders of
the Supervisory Board. Being responsible to shareholders, the supervisors are able to perform their
responsibility with due diligence and supervise the finance, performance of the Directors, managers
and other senior executives to ensure the compliance with the laws.
⑤ Performance and incentive system: The Company is positively working on the institution of a fair and
open incentive system for the evaluation and motivation of directors, supervisors and managers.
Employment of management staff is fair and open according to laws and regulations.
⑥ Other stakeholders: The Company fully respects and protects the rights and interests of banks,
creditors, employees, customers and other relative beneficial parties, positively cooperates and
effectively communicates with these parties to promote continual and healthy development of the
Company.
⑦ Information disclosure and openness: The Company is able to duly perform its obligation on
information disclosure according to related regulations. During the report period, the Company
attached much importance to the management of investor relationship and established a system which
helps investors to keep abreast of the Company, and periodically invites investors to visit and
54
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
investigate the production bases of the Company. As a result, the Company has built up a smooth
communication channel between investors and the Company to improve the management, corporate
governance structure of the Company and its core competitiveness.
During the report period, the Company completed the replacement of board chairman and the
president, having achieved a smooth transition of leadership, and the corporate governance is more
perfect. The Company started from strengthening basic management work and carried out a series of
institutional reform, further improved the internal control system and system construction, improved the
internal control management, continuously improved the level of corporate governance. On March 22,
2012, the 7th meeting of the Fifth Board of Directors of the Company examined and adopted the
"Motion for Company Internal Control Standards Implementation Work Program, which specified the
work content of the internal control system construction and related work key points, with specific
implementation, timing and responsibility of each unit; through the preparation stage, start-up stage
and continuous promoting stage and other multiple stages of development, through the development of
risk identification and assessment, diagnosis of current situation of internal control, test of internal
control of the Company, constantly improved the internal control system of the Company and to
strengthen the internal control system with the implementation of self-examination, so that the
Company's internal control system has been executed and implemented effectively, ensured the
Company’s standardized operation.
To regulate the Company’s inside information management, strengthen the work of company insider
information confidentiality maintenance, ensure the information disclosure follow the principles of
openness, fairness, impartiality, the 30th meeting of the fourth session of the Board reviewed and
approved the Shanghai Zhenhua Heavy Industries Co., Ltd. Insider Information Informant Management
System. Before the Company discloses its annual report, written reminders for inside informants are
issued; as a result of self-examination, inside information informants have not been found to have
traded the Company’s shares taking the advantage of insider information before sensitive information’s
disclosure.
Corporate governance is a long-lasting activity. The Company will continuously follow requirements of
Company Law, Securities Law and other laws and regulations to further raise the level of standard
operation, strengthen governance work and ensure the healthy and stable development of the
Company.
55
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
II. Summary of shareholders general meeting
Index of the
Date of
Session time of Date of resolution
Motions of meeting Resolutions resolutions
meeting meeting published
published
website
I. 2011 Board of Directors’ Work Report;
II. 2011 Work Report of the Supervisory
Board;
III. 2011 Independent Directors’ Work
Report; SSE web:
IV. 2011 Work Report of the President;
www.sse.co
V. 2011 Annual Report and Abstract;
All motions m.cn
2011 Annual VI. 2011 Financial Accounts Report;
passed
Shareholder’s 2012-05-08 VII. 2011 Profit Distribution Pre-plan; 2012-05-09
through Input the
General Meeting VIII. Motion on Applying for 2012 Bank
consideration stock code
Comprehensive Line of Credit Quota;
IX. Motion on Continuing to Employ and then
Domestic CPAs in 2012; retrieve
X. Motion on Co-opting Directors to the
Fifth Session of the Board of Directors.
XI. Motion on Amendment to Articles of
Association
I. Motion on Change of the Company’s
Directors—co-opted Mr. Song Hailiang as All motions
2012 First Interim
the director of the Company’s Fifth Session passed Based on
Shareholder’s 2012-09-18 2012-09-19
of the Board of Directors; through market price
General Meeting
II. Motion on Amendment to Articles of consideration
Association
56
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
III. Duty fulfillment of directors
(I) Attendance of directors at meetings of the Board of Directors:
General
meeting of
Board of directors in attendance shareholder
s in
attendance
Inde
pen
dent
Name Dire Number of
ctor Two attendance
Actual
or Expected Number of attendances Entrusted absences in s of general
attendanc Absences
not attendances by correspondence attendances succession meeting of
es
or not shareholder
s
Zhou No
No 5 3 2 0 0 2
Jichang
Song No
No 2 1 1 0 0 1
Hailiang
Liu No
No 7 2 4 1 0 0
Wensheng
Chen Qi No 7 3 4 0 0 No 2
Kang No
No 3 1 2 0 0 1
Xuezeng
Lu No
No 5 2 3 0 0 2
Jianzhong
Yan Yunfu No 7 3 4 0 0 No 2
Liu Qizhong No 7 3 4 0 0 No 2
Dai Wenkai No 5 2 3 0 0 No 1
Bao Qifan Yes 7 3 4 0 0 No 1
Li Liguang Yes 7 2 4 1 0 No 1
Mi Weijian Yes 7 3 4 0 0 No 2
Liu Yes No
7 2 4 1 0 2
Ningyuan
Tang Fuxin Yes 7 2 4 1 0 No 1
Number of board meetings in report year 7
Including: number of field meeting 3
Number of meeting by correspondence 4
Number of meeting field & by correspondence 0
57
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
(II) Dissent expressed by Independent Directors on related issues of the Company
During the report period, Independent Directors of the Company did not express dissent on
resolutions approved by the Board of Directors and any other issues.
IV. Description of the Supervisory Board of the found risks with the Company
In report period, the Supervisory Board holds no objections to supervisory matters.
V. In report period, the establishment and implementation of evaluation and motivation
of senior executives
The Company appointed and removed Directors, Supervisors and senior executives in
accordance with Company Law and Article of Associations. It has preliminarily established a
practical system for cultivation, selection, supervision, evaluation, rewards and disciplinary
sanctions, and control of senior executives, and promulgated relevant management method
of senior executives. Focusing on both political integrity and professional competence, the
Company evaluates, appoints and removes senior executives based on actual requirements
of its operation and development and the senior executives shall take a lower as well as a
higher post. The Company will continuously improve the existing performance assessment
and remuneration system and carry out the middle and long range incentive system based on
diligence and performance among all the senior executives and core technicians in order to
motivate senior executives to create new accomplishments and ensure maximum benefit and
standard operation of the Company.
58
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter IX Internal Control
I. Internal control responsibility statement and internal control system construction
According to the CSRC requirements on the listed company's internal control standard,
combined with the actual situation of the company, the company developed the company's
internal control standard implementation of the work program, and the established the internal
control regulations leading group and project work group which are in charge of the
Company’s internal control system construction and the daily operation under the leadership
of the Board of Directors of the Company.
The company has made a self-assessment about the effectiveness of the design and
operation of internal control the Company has done until December 31 2012 based on the
requirements of the basic specification, evaluation guidelines and other relevant laws and
regulations.
During the reporting period, the company has set up the internal control about the business
and item included in the scope of the evaluation, and the controls has been effective
implemented. The Company has achieved the goals of the company's internal control, and
there are no major defects.
From the baseline day of the internal control evaluation report to the evaluation report delivery
day, no significant changes of internal control having serious impact on the evaluation findings
have ever been found. For the Internal Control Self Assessment Report, see the attachment.
II. Explanation about the internal control auditor’s report
The employed PricewaterhouseCoopers Zhong Tian CPAs Co. Ltd. Has conducted audit on
the effectiveness of internal control in the financial report as of Dec. 31, 2012 and produced
unqualified standard auditor’s report (see attachment).
III. Explanation about annual report significant error accountability system and the
implementation
In order to improve the level of corporate governance, strengthen the truthfulness, accuracy,
completeness and timeliness of information disclosure, and improve the quality and
transparency of annual information disclosure, according to CSRC and Shanghai Stock
Exchange documentation requirements, combined with the Company’s realities, the 28th
meeting of the fourth session of the Board, held on Mar. 18, 2012, reviewed and approved
the Shanghai Zhenhua Heavy Industry Co., Ltd. Annual Information Disclosure Significant
Error Accountability System. The Company does not have significant errors of annual
information disclosure during the report period.
59
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter X Financial Report
（See attachment）
60
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2012
Chapter XI Reference Available
I. Financial statements sealed and signed by the legal representative, CFO and person
in charge of accounting organ.
II. Originals of Audit Report with seal and signatures of CPAs’ and CPA’s Firm
III. The originals of all the company’s documents and public bulletins released in the
newspapers defined by China Securities Regulation Committee within the report
period.
Chairman: Song Hailiang
Shanghai Zhenhua Heavy Industries Co., Ltd.
Mar. 27, 2013
61
