Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Shanghai Zhenhua Heavy
Industries Co., Ltd.
（Stock code：600320 900947）
Annual Report 2013
Mar. 26, 2014
1
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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 Name of director Name of
Reasons of failure
who failed to attend who failed to attend entrustee
director Liu Wensheng on business trip Song Hailiang
director Chen qi on business trip Song Hailiang
III. PricewaterhouseCoopers Zhong Tian LLP. issued standard unqualified audit
report for the Company.
IV. The Company’s responsible person Song Hailiang, Finance Department chief
Wang Jue and responsible person for finance(Chief Financial Controller) Sun Guangbo
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 2013
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 ......... 错误！未定义书签。1
Chapter V Substantial Events ......................................................... 39
Chapter VI Equity Movement and Shareholder's Profile ........................ 51
Chapter VII Directors, Supervisors, Senior Executives and Employees ..... 56
Chapter VIII Corporate Governance ................................................. 67
Chapter IX Internal Control ............................................................ 72
Chapter X Financial Report ............................................................ 73
Chapter XI Reference Available ....................................................... 74
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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
the Company Refers to Shanghai Zhenhua Heavy Industries Co., Ltd.
CCCC, controlling
Refers to China Communications Construction Co., Ltd.
shareholder
effective controller Refers to China Communications Construction 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 2013
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
振华重工
the Company
SHANGHAI ZHENHUA HEAVY INDUSTRIES
English name of the Company
CO.,LTD.
English abbreviation of the
ZPMC
Company
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
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
IV Information disclosure and reference
Designated media for information
Shanghai Securities News, Hong Kong Wen Wei Po
disclosure
Website designated by China Security
Regulatory Commission for disclosure of http://www.sse.com.cn
annual report:
Annual report available at Securities and Law Affairs Office of the Company
V. Stock Profiles of the Company
Stock Profiles of the Company
Short form of
Stock type Stock exchange listed at Short form of stock Share code stock before
change
Zhenhua Heavy
A-share Shanghai Stock Exchange 600320 ZPMC
Industries
B-share Shanghai Stock Exchange Zhenhua B-share 900947 -
VI. Business registration alterations in report period
(I) Basic information
Registered situation did not change during the reporting period.
(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
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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
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.
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(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
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 11th Floor, No. 202 Hubin Road,
by the Company Office address
Shanghai
(Domestic)
Zhao Bo
CPAs to sign
Jin Wen
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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 same
Major accounting data 2013 2012 2011
period prior
year (%)
23,201,555,8
Operating income 18,255,152,096 27.10 19,129,251,012
00
Net profit attributable to
139,836,320 -1,043,665,841 n.a. 30,294,335
shareholders of the listed company
Net profit after deducting
non-recurring gains/losses -1,009,219,21
-1,259,289,200 n.a. -377,879,951
attributable to shareholders of the 7
listed company
Net cash flow from operating
939,176,336 3,065,603,998 -69.36 1,541,917,739
activities
Growth
over same
End of 2013 End of 2012 End of 2011
period end
prior year (%)
Net asset attributable to 14,510,604,8
14,210,952,596 2.11 15,241,378,606
shareholders of the listed company 31
49,154,736,6
Total assets 46,779,696,343 5.08 44,059,465,622
87
(II) Major financial data
Growth over
Major financial index 2013 2012 same period prior 2011
year (%)
Basic EPS (yuan/share) 0.03 -0.24 n.a. 0.01
Diluted EPS (yuan/share) 0.03 -0.24 n.a. 0.01
Basic EPS after deducting n.a.
non-recurring gains/losses -0.23 -0.29 -0.09
(yuan/share)
Weighted average net n.a.
0.97 -7.09 0.20
assets earnings ratio (%)
Weighted average net n.a.
assets earnings ratio after
-7.03 -8.56 -2.48
deducting non-recurring
gains/losses (%)
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
II. Items and amount of non-recurring gains/losses
Unit: RMB yuan
Items of non-recurring gains/losses 2013 Amount 2012 Amount 2011 Amount
Gains and losses from disposal of
241,193,949 97,051,399 309,460,277
non-current assets
Government subsidy into current profit
and loss statement except for those closely
related to the Company’s operation, 47,878,876 28,730,126 64,641,129
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
326,109,601 143,917,526 101,066,137
normal operation, and investment income
acquired from disposal of tradable financial
assets, tradable financial liabilities and
financial assets available for sale
Non-operating income/expense apart
3,993,654 -13,639,165 7,112,466
from above
Investment income acquired from
749,942,782 0
disposal of subsidiaries 0
Minor shareholders’ equity impact -70,237 -622,804 -2,141,455
Income tax impact -219,993,088 -39,813,723 -71,964,268
Total 1,149,055,537 215,623,359 408,174,286
III. Items calculated by fair value
Unit: RMB yuan
Starting Closing Current Impact on
Item name
balance balance movement current profit
Forward foreign exchange
26,009,477 121,169,489 95,160,012 95,160,012
contract-Fair value appraisal income
Forward foreign exchange
contract-Fair value appraisal income 0 -644,404 -644,404 -644,404
loss
Equity tool available for
124,222,545 172,770,000 48,547,455 1,000,000
sale-Jiangxi Huawu
Total 150,232,022 293,295,085 143,063,063 95,515,608
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Chapter IV Report of the Board of Directors
I. Discussion and analysis of business operation in report period by the Board
In 2013, the global economic recovery was slow, the global shipping market remained still in
trough wandering, the trend of re-industrialization among developed countries was obvious,
international and domestic market needs remained still insufficient, veteran port machinery
manufacturers reappeared on stage, and the marine engineering equipment industry saw
increasing competition. Facing above adverse factors, the Board took active initiatives, through
research on market prospects and analysis of self pros and cons, challenges and opportunities,
and developed the 2013-2015 development strategy, target planning, and overall work ideas in a
scientific and systematic way, led the management team and all staff to focus around the "1, 5,
2, 1" marketing strategy, setting hearts meet, adhered to reform and innovate, did its best to
increase revenue and control cost, as a result having achieved the goals for a turn from loss to
profit, making significant progress in its various work. The Company completed in 2013 an
operating income of 23.202 billion yuan, an year-on-year increase of 27.1%, of which exports
accounting for 71.99%, achieved a net profit attributed to the parent company owners of 139.8
million yuan, annual net operating cash inflows of 939 million yuan.
(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 23,201,555,800 18,255,152,096 27.10
Operating cost 21,437,017,127 17,362,670,351 23.47
Selling expenses 68,647,704 49,290,059 39.27
General expenses 1,352,925,539 1,126,863,747 20.06
Financial expenses 627,184,455 680,506,612 -7.84
Net cash flow from operating activities 939,176,336 3,065,603,998 -69.36
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Net cash flow from investment activities -2,688,012,249 -390,855,294 587.73
Net cash flow from financing activities 2,543,699,676 -2,309,758,070 -210.13
R&D expenses, cost of expenses 696,452,611 662,070,789 5.19
Asset impairment losses 785,673,951 394,362,789 99.23
Changes in the fair value gain or
94,515,608 -33,379,693 -383.15
loss-NET
Investment income 898,036,468 141,093,032 536.49
Non-operating income 314,889,951 132,357,962 137.91
Net profit attributable to parent
139,836,320 -1,043,665,841 -113.40
company owners/(loss)
Minority interest gains/losses -5,759,698 -55,392,041 -89.60
Analysis:
1. Revenues increased mainly because the company started in report year the Nanjing
Ninggao BT project whose revenue has been confirmed and business volume in maritime
container cranes and heavy marine equipment increased. Average gross profit rate rises mainly
because revenues from the sale of products of the company increased, standardized
management processes engaged and costs are reduced.
2. The increase in selling expenses is mainly because this year product sales increased
leading to increase of salespersons ' salary scale.
3. General expenses increased because the Company's spending on research and
development, staff salaries and depreciation of fixed assets this year increased.
4. Decrease of financial expenses is mainly caused by renminbi appreciation against the
dollar this year resulting in an increased exchange gains.
5. Asset impairment losses increased this year's provision for impairment of stock and
provision for bad debt of accounts receivable increased.
6. Fair value change gains/losses decreased mainly due to the increase of fair value of
tradable financial assets.
7. Investment income increased mainly because of the sale of subsidiaries of the Company in
report year.
8. Non-operating income increased mainly because of the disposal of fixed assets in report
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
year and the increase of governmental subsidy received in report year.
9. Net gains/losses attributable to owners of the parent company turned from loss to profit
primarily due to the company's earnings in report year.
10. Minority shareholders' loss decreased primarily because the affiliated non-wholly-owned
subsidiaries saw decrease in losses for report year.
11. Net cash flow from operating activities reduced mainly because orders increased over
report year, and payment to buy raw materials increased; however, through efforts to increase
payment collection, rational use of program funds, reduced inventory, the Company turned the
cash flows from operating activities to net inflows.
12. Changes in net cash flow from investing activities was mainly due to the increase of net
expenditures in bank short-term financial products investment in report year.
13. Net amount of cash flow from financing activities changed mainly attributable to increased
borrowing in report year.
2. Revenue
(1) Analysis of the factors affecting revenue from products mainly sold in kind
In 2013, the Company completed an operating income of 23.202 billion yuan, up 27.1%
against the 18.255 billion yuan in 2012. The income increased main because in report period the
Company adjusted structure, changed mode, expanded market, and promoted incremental
volume, made full advance and achieved major breakthroughs, with port machinery products
continuing to keep absolute leading status for global market share, focusing around the
company's completion, integration of industry, pioneering at automatic terminal market and huge
progress has been made; leaps and progress has been made for offshore business, successful
sales of "Zhenhai No. 1", "Zhenhai No. 2" drilling platforms, winning bid of the 5000 tons of
Yantai salvage lifting vessels, export of platform lifting equipment, having consolidated medium
and high-end market for offshore equipment and supporting equipment; winning bid of Nanjing
Ninggao BT project, which opened the prelude to entering the investment and financing market
for the Company.
(2) Orders analysis
During report period, "ZPMC" brand influence was further consolidated in the traditional
areas of port machinery, achieved a new leap in marine engineering and other key markets,
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
new business market has been initially developed; in 2013, our full-year new contract amount
reached 5.069 billion U.S. dollars, a record high, among which the new contract amount of
traditional port machinery market $2.59 billion, down 9.95%, port machinery products
continued to maintain global leadership; the company's products marched into 84 countries
and regions (newly entered country: Qatar); marine and steel new contracts amounted to
$1.53 billion, an increase of 69.06%; new contract amount of Nanjing Ninggao BT project
reaching 5.92 billion yuan.
(3) New products and new service impact
The company made new progress in marine business, and in the sales of multiple drilling
platforms; opened up new investment markets, won the bid for Nanjing Ninggao BT project,
investment and financing market began to show increment, driving the transformation and
upgrading has presented as an inevitable direction.
(4) Top buyer analysis
Operating income from top 5 clients is 5.24928 billion yuan, taking up 22% of the
Company’s total operating income.
3. Cost
(1) Cost analysis statements
Unit: yuan
In product category
Report
Same period amount
Report Same period
Cost Report period prior same period
Product period rate in total prior year
composition period amount year rate in prior year
cost (%) amount
total cost (%) movement
ratio (%)
raw
10,797,268,17
container cranes material, labor 4
51.15 9,802,797,463 57.49 10.14
production cost
raw
marine heavy
material, labor 4,111,296,503 19.48 3,333,677,227 19.55 23.33
equipment
production cost
raw
bulk-cargo
material, labor 2,952,903,243 13.99 2,889,954,429 16.95 2.18
machinery parts
production cost
Contractin
Nanjing Ninggao
g expenses, 2,117,812,203 10.03 - - -
BT project
raw materials
raw
steel structures material, labor 846,489,536 4.01 749,503,259 4.40 12.94
production cost
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
labor, fuel
vessel shipping consumption, 283,937,929 1.35 274,886,981 1.61 3.29
and others depreciation
etc.
21,109,707,58
Total \ 8
100.00 17,050,819,359 100 23.80
(2) Key suppliers
Purchase from top 5 suppliers is 2.37549 billion yuan, covering 23% of total purchase of the year.
4. R&D expenses
(1) R&D expenses breakdown
Unit: yuan
R&D into cost expenses 696,452,611
R&D into capital expenses 0
R&D expenses total 696,452,611
Total R&D expenses ratio in net assets (%) 4.73
Total R&D expenses ratio in Operating
3.00
income (%)
(2) Deliberation
During the reporting period, the company focused on the development and market
demand, keenly grasped the issues in the field of industry and product innovation in
respective of direction, long term and fundament; focusing on the main direction of advances,
investment and integration of advantage resources; keen on innovation, and keen on
continuous innovation.
(1) in 2013 there were 21 R&D projects filed and approved on state, local, and China
Communications Construction levels.
(2) A number of new products, new technologies were honored as National Key New
Products, Shanghai Science and Technology Progress Award First Prize and China
Communications Construction Technology Progress Award First Prize, and the Industry Fair
Gold Medal.
(3) During the whole year, 103 national level patent items were submitted for approval, an
increase of 25%, three patent items winning Shanghai Outstanding Invention Auditions.
(4) After three years' construction, the National Maritime Crane Pipe Laying Core
Equipment Engineering Technology Research Center passed a comprehensive site
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Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
assessment and acceptance by the Ministry of Science, got formal approval for operation,
which is currently the only national Engineering Technology Research Center in the field of
marine engineering.
In innovation and development, the Company successfully followed the trend of global
containerized freight, large-scale shipping vessels and port machinery and equipment tending
to be intelligent, systematic and eco-friendly, always leading the world in the development of
port machinery, always keeping the top in the world market share. From the double forty feet
container gantry cranes and double-trolley quayside gantry cranes to today's 3E ultra-large
quayside gantry cranes, low posture quayside gantry cranes, wharf automated handling
systems, each of the above innovations of the company has influenced the innovation of
global port machinery industry.
The Company was able to follow the trend of global development of marine resources,
give full play to the advantages of technology owned by the Company, and march into the
high-end of the marine engineering equipment market. Crane vessels continued to break
world record, and pipe-laying vessels were the first of the country to be exported; drilling
platform broke Chinese "shell" made history, completed on its own over 75% of the design of
the platforms; broke the foreign monopoly in marine equipment core technology, successfully
developed self-elevating platform lift systems, offshore platforms drilling package and other
key accessories, having contributed its part for its way marching from the "Made in China" to
the core, high-end "Created in China".
5. Cash flow
Net cash flows from operating activities is 939 million yuan, down 69.36% over last year,
mainly due to increase of orders, leading to increase in payment for the purchase of raw
materials, but the Company took measures to increase collection efforts, planned rational use
of funds, reduced inventory, so that cash flow from operating activities was a net inflow.
6. Miscellaneous
(1) Detailed description of significant change in the Company's profit composition or
source
In 2013 the Company achieved profitability mainly due to: against the unfavorable
situation featuring demand in the external market environment in the process of slow
recovery, the Company made in-depth judgments over the environment, resources,
16
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
capabilities and value facing development, conducted clearer top-level design and strategic
layout, focused around the "4, 3, 2, 1" strategic positioning and the "1, 5, 2, 1" business
development and layout; the main traditional industry market continued to strengthen, the five
key markets achieved a new leap forward; newly developed markets and service markets are
emerging; the Company's orders, sales revenue increased dramatically; infrastructure
management continued to strengthen; and continuously improved the organization of
production capacity through the establishment of centers of production control, disposal of
inefficient assets, optimized the efficiency of asset allocation, through multi-strategy
simultaneously lowering the cost and increasing the efficiency.
(II) Analysis of operation by industry, product or region
1. Major business by industry and product
Unit: RMB yuan
Major business by products
Oper
Oper
ating
ating cost Gross margin
Operating Operating Gross income
By product increase increase over prior year
income cost margin (%) increase
over prior （%）
over prior
year (%)
year (%)
container cranes 12,264,473,442 10,797,268,174 11.96 14.99 10.14 Up 3.87 percentage points
Offshore heavy
4,234,165,039 4,111,296,503 2.90 22.45 23.33 Down 0.7 percentage points
equipment
bulk-cargo
3,063,018,182 2,952,903,243 3.59 5.36 2.18 Up 3 percentage points
machinery parts
Nanjing Ninggao BT
2,191,444,746 2,117,812,203 3.36 - - -
project
steel structures 872,320,624 846,489,536 2.96 36.23 12.94 Up 20.01 percentage points
vessel shipping and
296,806,928 283,937,929 4.34 23.69 3.29 Up 18.9 percentage points
others
Total 22,922,228,961 21,109,707,588 7.91 27.98 23.80 Up 3.11 percentage points
17
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
2. Major business by region
Unit: RMB yuan
Operating income increase over prior
Region Operating income
year (%)
Asia (Excluding
7,846,459,461 106.01
Mainland, China)
Mainland, China 6,421,156,627 16.44
America 4,092,730,033 25.89
Europe 2,578,325,273 -6.28
Mainland, China
872,958,359 -6.32
(export) Note 1
Africa 746,562,797 -21.41
Oceania 364,036,411 -48.28
Total 22,922,228,961 27.98
Note 1: In this part, amounts listed in the Mainland China (export) for the years 2013 and 2012 items
refer to the major operating income and cost the Company firstly exports to its overseas subsidiaries or
related parties, who then sell to domestic customers.
18
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(III) Assets and liabilities analysis
1. Assets/liabilities statements
Unit: yuan
Report
period end
Report Prior amount
Closing Closing
period end period end over prior
Item balance at report balance at prior
over total over total period end
period end period end
assets（%） assets（%） amount
change
ratio（%）
Monetary capital 3,515,643,963 7.15 5,380,769,224 11.50 -35
Tradable financial
121,169,489 0.25 26,009,477 0.06 366
assets
Notes receivable 334,519,241 0.68 115,069,863 0.25 191
Interest receivable 5,088,988 0.01 33,231,552 0.07 -85
Accounts receivable 3,548,903,103 7.22 3,710,721,111 7.93 -4
Advances paid 1,285,291,251 2.61 995,684,680 2.13 29
Other receivables 1,084,341,531 2.21 413,305,303 0.88 162
Inventory 6,015,690,177 12.24 7,581,683,025 16.21 -21
Work completed
6,766,208,145 13.77 6,620,155,339 14.15 2
payment not cleared
Other current assets 4,202,678,325 8.55 1,000,000,000 2.14 320
Available-for-sale
172,770,000 0.35 124,222,545 0.27 39
financial assets
Long-term receivables 2,217,619,293 4.51 0 0 100
Long-term equity
380,678,930 0.77 203,719,472 0.44 87
investment
Fixed assets 14,079,867,109 28.64 14,075,197,757 30.09 0
Construction in
1,478,006,436 3.01 3,692,553,744 7.89 -60
progress
Intangible assets 3,159,277,976 6.43 2,021,511,880 4.32 56
Short-term loans 14,663,865,004 29.83 11,936,687,998 25.52 23
Accounts payable 3,592,110,836 7.31 2,603,418,685 5.57 38
Prepayment received 232,328,686 0.47 1,035,763,588 2.21 -78
Work not completed,
3,143,218,938 6.39 2,389,804,893 5.11 32
payment cleared
Staff salary payable 206,241,298 0.42 37,550,139 0.08 449
Taxes and charges
-6,519,912 -0.01 -46,966,814 -0.10 -86
payable
Interest payable 418,390,614 0.85 315,058,291 0.67 33
Other payables 403,130,541 0.82 292,150,492 0.62 38
Non-current liabilities
4,370,297,863 8.89 3,667,922,000 7.84 19
due within one year
Long-term loans 2,113,256,000 4.30 873,684,500 1.87 142
Bonds payable 3,797,777,911 7.73 7,984,665,674 17.07 -52
Analysis:
1. Monetary capital decreased mainly because in report period increase of newly opened projects
leading to production investment growth.
19
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
2. Tradable financial assets increased mainly because the fair value of the newly purchased
forward foreign exchange contract increased.
3. Notes receivable increased mainly because the amount of notes receivable from payment of
clients in report period increased.
4. Interest receivable decreased mainly because in report period the Company's fixed deposits
were due.
5. Accounts receivable decreased mainly because in report year accounts receivable saw more
risks of collection thus increased provision for bad debts.
6. Advances paid increased mainly because in report period more advances were made for
project processing and purchase of imported parts.
7. Other receivables increased mainly because in report period partial payment from sale of
subsidiary was not received.
8. Inventory decreased mainly because in report period consumption of raw materials increased
as a result of sales of unsigned orders for marine products and the increase of newly opened projects.
9. Payment not cleared though work completed increased mainly because in report year more
projects started and thus more investment made.
10. Other current assets increased mainly because in report period the Company purchased
more financing products.
11. Available-for-sale financial assets increased mainly because in report period the fair value of
the available-for-sale equity tools the Company held increased.
12. Long-term receivables increased mainly because in report period receivables from the
Nanjing Ninggao BT project has been confirmed.
13. 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.
14. Fixed assets increased mainly because in report year partial construction in progress was
transferred into fixed assets as a result of completion.
15. Construction in progress decreased mainly because in report year partial construction in
progress was carried forward to fixed assets and intangible assets upon completion.
16. Increase of the Company's intangible assets is mainly because partial construction in
20
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
progress was completed and thus transferred into intangible assets.
17. increase of short-term loans is mainly because in order to meet capital requirements, the
Company increased bank borrowings during the year.
18. Increase in accounts payable of the Company is mainly because newly opened projects
increased leading to corresponding increase in material procurement.
19. Decrease of advances mainly because advanced received from customers reached the
project node and corresponding settlement was made.
20. Payment settled with work uncompleted increased mainly because of the increase in project
construction settlement.
21. Salary of staff payable increased mainly because in report period year-end bonus is accrued.
22. Taxes and charges payable decreased mainly because input tax amount increased as a
result of increased in domestic purchase of materials.
23. Interest payable increased mainly because in report year the Company had more bank
borrowings.
24. Other payables increased mainly because of increase of government subsidy received which
did not satisfy the requirements for recognition of income.
25. Non-current liabilities due within one year increased mainly because part of the long-term
loans and bonds payable that would be due within one year are reclassified into non-current liabilities
due within one year.
26. Long-term loans increased mainly because of more borrowings from the bank to meet the
capital demand for business development.
27. Bonds payable decreased mainly because part of the bonds payable that would be due within
one year are reclassified into non-current liabilities due within one year.
(IV) Core competitiveness analysis
Since the company was founded 22 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, customers scattered in 84 countries and regions; enjoying high market shares and a
solid customer base.
(2) Talents advantages: in the field of design of port machinery the Company owns a
21
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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.
(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.
22
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(V) Investment analysis
1. External equity investment overall analysis
Unit: yuan
Investment amount as of period end 380,678,930
Investment amount movement 176,959,458
investment amount same period prior year 203,719,472
investment amount movement ratio (%) 87%
Invested companies
equity ratio in
Name of invested company Operational activities
invested company
Turkish Mediterranean
Engaged in port equipment technical service 50%
Company
CCCC Properties Yixing Co.,
Engaged in real estate development 20%
Ltd.
(1) Equity holding in other listed companies
Unit: yuan
Proportion Owner’s
Stock Initial Closing book Gains/ loss in Origin of
Short form in total equity equity movement Accounting entry
Code investment value report period equity
（%） in report period
Huawu Available-for-sale
300095 19,400,000 12.71 172,770,000 1,000,000 48,547,455 funding
Share financial assets
Total 19,400,000 / 172,770,000 1,000,000 48,547,455 / /
(2) Shares held of non-listed financial enterprises
initial amount held closing equity
Name of Equity ratio gains/losses accounting share
investment book value movement report
shares held （%） report year (yuan) entry origin
(yuan) (share) (yuan) year (yuan)
Shenyin &
Long-term subscri
Wanguo legal 200,000 161,942 0.002978 200,000 0 0
equity investment ption
person shares
Total 200,000 161,942 / 200,000 0 0 / /
23
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
2. Non-financial companies entrusted investment financing and derivatives
(1) Entrusted financing
Entrusted financial products breakdown
Unit: RMB yuan
related trade or
suit involved or
procedure
via legal
not
not
Starting expected Principal actually Income actually
Partner Pro. type Amount Ending day reward
day proceeds covered gained
Bank Financial interest upon 是
A Bank 1,000,000,000 2012-12-18 2013-12-3 47,601,370 1,000,000,000 47,601,370 No No
Product maturity
Bank Financial interest upon 是
A Bank 1,000,000,000 2013-1-5 2013-6-26 22,987,671 1,000,000,000 22,987,671 No No
Product maturity
Bank Financial interest upon 是
A Bank 500,000,000 2013-3-11 2013-9-6 11,153,425 500,000,000 11,153,425 No No
Product maturity
Bank Financial interest upon 是
B Bank 497,034,695 2013-3-18 2014-3-14 20,892,479 No No
Product maturity
Bank Financial interest upon 是
B Bank 497,202,541 2013-3-21 2014-3-14 20,725,854 No No
Product maturity
Bank Financial interest upon 是
C Bank 500,000,000 2013-2-6 2013-12-27 20,638,356 500,000,000 20,638,356 No No
Product maturity
Bank Financial interest upon 是
C Bank 500,000,000 2013-2-7 2013-12-27 20,574,658 500,000,000 20,574,658 No No
Product maturity
Bank Financial interest upon 是
C Bank 490,000,000 2013-5-15 2013-11-14 11,053,863 490,000,000 11,053,863 No No
Product maturity
Bank Financial interest upon 是
D Bank 250,000,000 2013-5-27 2013-11-12 4,745,890 250,000,000 4,745,890 No No
Product maturity
Bank Financial interest upon 是
D Bank 249,990,000 2013-6-3 2013-11-12 5,266,916 249,990,000 5,266,916 No No
Product maturity
24
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Bank Financial interest upon 是
E Bank 310,000,000 2013-3-20 2014-3-18 16,956,575 No No
Product maturity
Bank Financial interest upon 是
E Bank 310,000,000 2013-3-28 2014-3-26 16,648,274 No No
Product maturity
Bank Financial interest upon 是
E Bank 740,000,000 2013-4-17 2014-4-14 36,328,932 No No
Product maturity
Bank Financial interest upon 是
E Bank 610,000,000 2013-5-7 2014-4-23 31,559,227 No No
Product maturity
Bank Financial interest upon 是
E Bank 290,000,000 2013-5-20 2014-5-19 13,737,260 No No
Product maturity
Bank Financial interest upon 是
E Bank 720,000,000 2013-5-22 2014-5-21 34,106,301 No No
Product maturity
Bank Financial interest upon 是
F Bank 194,000,000 2013-1-21 2013-7-19 4,281,287 194,000,000 4,281,287 No No
Product maturity
Bank Financial interest upon 是
F Bank 89,000,000 2013-3-18 2014-3-18 4,361,000 No No
Product maturity
Bank Financial interest upon 是
F Bank 80,000,000 2013-3-14 2013-9-13 1,885,151 80,000,000 1,885,151 No No
Product maturity
Total / 8,827,227,236 / / / 345,504,490 4,763,990,000 150,188,587 / / /
Cumulative amount of principal or proceeds unrecovered upon maturity (yuan) 0
Note: As of the reporting date, the entrusted financing items the table covered had been
approved by the ninth meeting, the fifteenth meeting of the fifth session of the Board and the
2013 First Interim General Meeting, all relevant amount approved.
(2) Entrusted loans
25
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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. Key subsidiaries and share-participating companies
Unit: RMB yuan
Registered
Company Major product or service Asset scale Net profit
capital
Shanghai Zhenhua large container cranes and the gear box 5,500,000 334,579,066 298,474
Port Machinery Heavy gear processing and marketing; ship
Industries Co., Ltd manufacturing, processing, marketin
Shanghai Zhenhua Production of precision foundry, metal 5,000,000 365,411,121 272,957
Heavy Industries cutting and cooling process.
Machinery Co., Ltd.
Shanghai Zhenhua Design, manufacturing and sales of port HKD 50,000,000 3,498,846,887 21,461,470
Port Machinery (Hong machinery, engineering vessel, steel structure
Kong) Co., Ltd. and other parts
Shanghai Zhenhua Operation of sea transportation in coastal 120,000,000 1,608,402,380 -13,207,775
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 1,108,836,315 -10,113,716
Heavy Equipment engineering vessels, heavy metal structure and
Manufacturing Co. its parts; Gear box, container yard crane, super
Ltd. heavy-duty bridge steel structure, heavy marine
machinery equipment, weaving, installation;
lease of cranes; contracting of steel structures
etc.
Shanghai Construction and installation of large-scale 300,000,000 2,058,498,634 13,340,773
Zhenhua Heavy port equipment, engineering vessels, offshore
Industries Group heavy equipment, machinery and equipment,
26
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(Nantong) Transmitter wind power generation equipment to use the
Co., Ltd. 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 100,000,000 100,101,282 -219
Heavy Industries forwarding business, domestic freight forwarding,
Vessel Transport Co., undertaking large-scale port equipment, marine
Ltd. 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 7,086,806 187,644
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
Shanghai Zhenhua Design, construction, installation and 300,000,000 337,213,813 -27,228,583
Heavy Industries contracting large port handling systems and
Group (Nantong) Co. equipment, engineering vessels and large metal
Ltd. 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 47,655,124 27,425
Heavy Industries equipment research and development, design,
27
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Electric Co., Ltd. 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, USD 100,000 79,156,641 143,868
Heavy Industries steel structure processing, hardware processing,
Steel Structure de-rusting and painting, machinery engineering
Processing Co. Ltd. contracting etc.
Jiangyin Zhenhua Port machinery spare parts production; steel USD 4,596,150 28,432
Steel Structure structure production engineering, mechanical 100,000
Manufacturing Co. equipment, electrical equipment installation; and
Ltd. to provide relevant technology and post-sales
service
Shanghai Zhenhua Manufacturing and sales of steel structures USD 5,541,358 150,660
Heavy Industries and port machinery parts; installation of electric & 150,000
Steel Structure Co. port machinery equipment; providing related
Ltd. technology & service
ZPMC Netherlands Port equipment technical service, sales, EURO 18,000 9,224,777 -590,668
B.V. spare parts, offshore installation and steel
structure
ZPMC GmbH Sales, transport, maintenance of port EURO 25,000 20,118,209 3,155,428
Hamburg equipment, ship steel structure parts and other
parts
CCCC Shanghai Port Sale of port bulk & container cranes & 2,184,730,00 2,277,133,051 170,446,386
Machinery Plant Co., machinery, port engineering vessel (incl. barge 0
Ltd. 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 Port Manufacturing of port cranes and parts; USD 778,554,094 -7,413,884
Machinery Heavy making of cargo carrying machinery & parts, 18,120,000
Industry Co., Ltd. tunnel digging machinery, express railway
special equipment, steel structure; repair, design
& making of large engineering vessel ( incl.
barge crane) & ocean engineering equipment,
sales of own products and provides related
28
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
installation and maintenance service and
technical advice.
Shanghai Making, processing, repair and rebuilding of 15,000,000 82,304,804 17,679,559
Zhenhua Heavy port crane, bulk & container machinery
Industries (Group)
Zhangjiagang
Assembly Co., Ltd.
Nanjing Ninggao Engaged in construction, investment and 100,000,000 2,219,560,830 6,801,114
New Channel consulting of Ninggao New Channel project
Construction Co., Ltd.
ZPMC LANKA Engaged in port equipment technological Rupee 9,484,976 784,295
COMPANY(PRIVATE) service 184,594,480
LIMITED
ZPMC Engaged in port equipment technological LT 50,000 4,419,459 23,569
Mediterranean Liman service
Makinalari Ticaret
Anonim Sirketi
CCCC Properties Engaged in real estate development 900,000,000 893,019,143 -10,603,170
Yixing Co., Ltd.
Jiangsu Steel structure fabrication and installation, 260,000,000 460,203,954 -3,706,067
Longyuan Foundation construction of offshore wind power
Zhenhua facilities, equipment installation and
Marine maintenance, submarine cable system
Engineering construction, maintenance, marine construction,
Co., Ltd. equipment installation and maintenance, and
installation of equipment leasing
CCCC Marine Mainly engaged in steel ships and relevant 60,000,000 60,000,000 111,971
Engineering equipment design, development, marketing and
Vessel supply of technology transfer, technology
Technology consultation and technology services.
Research Centre
Co., Ltd.
Shanghai Zhenhua Epoxy, polyurethane resin coating 49,800,000 193,469,744 4,249,622
Heavy Industries manufacturing and processing.
(Group) Changzhou
Paint Co., Ltd.
29
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
5. Non-raised funds
During report period the Company’s major non-raised fund investment projects include Nantong,
Changxing, Jiangyin base infrastructure construction etc. As of Dec. 30, 2013, project investment,
progress are as follows:
Nantong base infrastructure construction, 204.56 million yuan invested in report year, progress
98%;
Changxing base infrastructure construction, 34.88 million yuan invested in report year, progress
80%;
Base large machinery and engineering equipment construction under progress, 169.51 million
yuan invested in report year, progress 95%;
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.
II. Board of Director’s discussion and analysis of the Company’s future
development
(I) Sector competition pattern and development trend
The year 2014 is crucial for the Company's reform; it is also a crutial year to achieve
sustained and healthy development and enhance the quality of key development; the overall
situation is still facing both challenges and opportunities.
In 2014 the world economy is expected to remain moderate growth; in emerging market
development faces various challenges, facing greater downward pressure on the domestic
economy, cost of production factors continuously rising; macroeconomic debt continues to
increase; suffering more resource and environmental constraints; the direction of change in
the RMB exchange rate remains uncertainty, which increase the challenges and difficulties of
the manufacturing enterprises.
1 A slight recovery in the shipping industry is seen, but the foundation is not strong, and
investors remain more cautious; growth in global container throughput is weak, while
container machinery overall market remains stable. Coal, ore and other dry bulk machinery
demand will remain increments of a certain size.
2. The strategy of becoming a maritime power and marine economic development has
30
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
been fulfilled, providing a huge market space for development of vast ocean engineering, as
estimated, marine engineering equipment enjoying a global market between 50 - 60 billion
dollars. By 2015, China's marine equipment is expected to reach 200 billion yuan or more.
Will The government will focus on supporting market nurturing, financial support, technology
research and development, personnel training, and create a good opportunity for the
Company to develop marine engineering equipment.
3 The large, heavy and special type steel markets enjoy incremental space, while large
building and bridge steel structures and modular structures lead a low-carbon green trend,
which is to a nationally encouraged industry for development.
4 Urbanization and urban agglomeration will be the "engine" of China's economic
development; for the next 5-6 years it will bring more than 25 trillion yuan of investment, and
provide a huge development space for urban rail transport, railway, underground engineering,
real estate, infrastructure services, etc..
5 New international market opportunities: for the period of 2013-2030 global
infrastructure investment will reach $55 trillion. Roads, bridges, railways, ports and other
businesses continue to grow. South Asia, Southeast Asia, Africa, Latin America constitute the
key areas of investment. The state will increase the practice of "going out", strengthen
political and economic cooperation in the energy, infrastructure, high-end manufacturing and
other areas, and pursue the implementation of more government framework programs and
business loan programs, which created a rare opportunity for development of international
operations for the company.
6 As of the market of matching pieces and paid services, with the increasing tendency of
large container ships and the "five types" of port construction, upgrading of the old terminals
will be further enhanced, which will bring up increment to the markets of spare parts, paid
service and electrics.
7. Strong momentum of development in the new energy market is featured by the U.S.
shale gas, shale oil scaled development, and sustainable development of onshore and
offshore wind power in Europe. The success of East China Sea, South China Sea
experimental shale gas exploration, the success of exploration of mineral resources in some
areas has laid a foundation for future large-scale development of energy markets.
31
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(II) The Company’s development strategy
The Board systematically and scientifically studied the basic situation, including internal
and external environment, domestic reform status, analyzed major competitors, internal
self-owned advantages and disadvantage, clearly set the overall development thought, key
tasks and ensuring measures, with strength lying in strategic leading, fundament fortifying
and base strengthening, deepening reform, improving quality and profitability, to build the
Company into an excellent international company.
1. Strategic positioning: focusing on "4, 3, 2, 1" to build the Company into an excellent
international company
1) 4 -types -- Stick to "learning-type, innovation-type, high-effectiveness-type, core value
point of view-type" to shape Zhenhua Heavy Industries;
2) 3 -ations - Stick to "vertical integration, horizontal correlation limited diversification and
internationalization" approach to business and industry layout;
3) 2 -mega's - Stick to "mega-machinery, mega-civil engineering" road of development;
4) 1 -excellent - Stick to building a sustainable and healthy international excellent
company, including being the world's leading supplier of equipment, first-class mechanical
and electrical systems integrator, engineering contractor and investor.
2. The overall work idea for 2014: to study and implement the spirit of the Party's 18th
National Congress, the 18th Congress' Third Plenary Session and the Company's "4321" and
"1521" strategies, serving as a precondition and the total requirements; fully implement the
total policy of reform, management, stability and development featuring "solid foundation,
constant innovation, structural adjustment, mode transmission, resource integration, strong
management, nurturing culture, improving quality"; throughout the year to enhance the
company's operations quality and core competitiveness, and focus their efforts on the four
main management lines to deepen reform and innovation, overall cost efficiency and
continuous consolidation of its foundation, strengthen the construction of personnel; aiming at
comprehensive, high standard of excellence, to promote the construction of an international
company of excellence, to achieve sustainable and healthy development of the company.
(III) Business planning
For the year 2014, the Company plans to achieve steady growth in revenue, and in new
contracted orders, to grow around the reform in difficult areas and solid foundation, to seize
32
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
the market, accelerate the adjustment of the market and the business structure, strengthen
the global market leader position in port machinery, vigorously develop the marine and key
spare parts markets, make special efforts to develop steel structure market, actively explore
shipping and installation market, make comprehensive planning for electronics markets,
steadily march into the investment and services market, accelerate the pace of integration of
resources, strengthen internal control, improve gross margins, enhance the Company's
overall performance capabilities and development quality.
(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
Market risk: it mainly is seen as slow international economic recovery and many
uncertainties, greater downward pressure on the domestic economy, the rising cost of
production factors, continuously increasing macroeconomic debt, more resource and
environmental constraints, the global market still in the stable phase for weak demand
for container cranes, fierce marine equipment market competition, which constitue
greater and harder challenges for manufacturing enterprises.
Solution: facing the tough market challenges at home and abroad, the Company will
focus on "1.5.2.1" for optimal adjustment of the market and business structure, "doing fine,
and stronger, laying solid foundation, maintaining steady" on port machinery market, while
maintaining global port machinery ZPMC's leading position in the market, to consolidate
future new growth, maintaining its position for offshore engineering, making good planning,
posing great courage to act boldly, continuing to strengthen the steel structure, investment
market, the shipping market, the electrical market, to explore a variety of business models,
innovate profit model, to promote structural adjustment and resource integration, and promote
sustainable development of the enterprise.
Operational risk: it is mainly seen as heavy asset management, profit model
depending mainly on the size, weak control system integration capability, too high
follow-up risk and service and too low product comprehensive gross margin, the
high-quality development task remaining arduous.
33
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Solution: deepening the masterstroke of reform and innovation, activating initiatives,
transferring mode, accelerating the reform on the modes of corporation system, shareholding
system, business division system, and projects system; to innovate marketing, business
operations and production organization mode, widen income revenue streams, pursue
comprehensive growth in revenue; promote comprehensive cost management,
comprehensive budget management, comprehensive performance management; optimize
asset structure, improve asset quality, strengthen process management, strengthen
production control, optimize process procedures, and refer to management for efficiency.
Financial risks: it is mainly seen as exchange rate risk and credit risk, increased
volatility of the RMB bidirectional fluctuation of exchange rate, credit crunch, and
rising cost of funds.
Solution: make rational planning for forward rate lock, control exchange rate risk,
emphasis on research on policies and strategies of foreign exchange risk management, pay
close attention to changes in exchange rates, regularly compile analysis of exchange rate
movements, conduct strict implementation of financial derivatives related to the approval
process, produce good statistics on product currency exchange rate, further reinforce the
basic work of foreign exchange management, and reduce the company's exchange rate risk.
By arranging favorable settlement terms in the contract ( such as the signing of a contract with
the RMB exchange rate pegged, increase the prepayments proportion plus early settlement,
etc.), or within the range permitted by the country's financial foreign exchange policy, make
use of hedging, foreign exchange factoring and other appropriate financial instruments or
means to control and lock the exchange rate risk. As for credit risk, by reducing raw material
reserves, compression of infrastructure spending, adjusting the company's debt structure
through a variety of ways ( such as medium-term notes, short-term bonds), reducing financing
costs, strengthening the collection of accounts receivable, gradually reducing the amount of
bank debt, reduce business risks .
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
34
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
√ 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.
(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
Reasons for no cash dividend distribution pre-plan
purpose and use plans of
although profitable in report period and retained profit of parent
undistributed profit
company positive
The Company became profitable from loss for 2013, but
the company is in an important period of business restructuring,
has a large amount of bank interest-bearing liabilities, and
Retained profit will be used
accounts for a quite high proportion of the company's total
for the Company's routine
liabilities. In order to reduce liquidity and operational risks, the
business operations.
Company thus proposes for the year 2013 as its profit
distribution plan: no dividend distribution or capital reserve into
capital stock.
35
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(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
Shares net profit
Bonus Dividend Cash
converted for attributable to listed
share for every for every 10 dividend
Year every 10 company
10 shares shares (yuan) amount
shares shareholders in
(share) （before tax） (before tax)
s(share) profit-sharing year
2013 0 0 0 0 139,836,320
2012 0 0 0 0 -1,043,665,841
2011 0 0 0 0 30,294,335
V. Active fulfillment of social responsibilities
(I) Social responsibility work
The Company actively fulfills its social responsibilities, continuously improves sustainable
profitability, optimizes development strategy, strengthens the main industry, conducts rational
allocation of resources; promote independent innovation and technological progress, and
constantly establishes and improves the mechanism of technological innovation, increases
investment in research and development, enhances the independent innovation capacity;
actively provides customers with high quality services, implements great customer service,
and actively carries out customer satisfaction surveys, conducts worldwide layout for service
network, business network and manufacturing bases comprehensive network.
The Company actively protects the legitimate rights and interests of its employees,
creates equitable development platform for employees, conducts the implementation of open
competition system for management positions; builds workers' sports and leisure center to
enrich leisure life of workers; conducts full implementation of "safety first, prevention first,
comprehensive management" approach, and strives to create a culture of safety production,
working and living environment; in the hot season, send cooling gifts to the front-line workers
to ease the high temperature, sets up high temperature-easing lounge establishment,
showing care for the health of the employees.
36
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Chapter V Substantial Events
I. Substantial lawsuits, arbitrations and media generally questioned events:
(I) Lawsuits, arbitrations not disclosed in the provisional announcement or with
subsequent progress
Unit: RMB yuan
In the report period：
Suit
(arbitration) Suit Suit
Suit Suit
Prosecutor Party with joint Type of suing constitutes (arbitration) (arbitration)
Defendant Suit (arbitration) profiles (arbitration) amount (arbitration)
(applicant) liabilities or arbitration projected ruling and ruling
involved progress
liabilities or impact implementation
not
Suzhong Construction Group Co., Ltd.
(Hereinafter referred to as "Suzhong
Construction") contracted the project construction
of the Industrial R&D Building in 2008, but the two
sides entered into dispute at settlement upon
completion. In September 2013 the Company filed
Jiangsu
Shanghai a request to Shanghai Arbitration Commission for Court
Suzhong Not Not yet
Zhenhua Heavy no arbitration Suzhong Construction to pay an overdue fine of 7,444,000 No to be open
Construction Group yet ruled ruled
Industries Co., Ltd. 7.444 million yuan due to delays of construction soon
Co., Ltd.
and so on, while in February 2014 Suzhong
Construction filed a counterclaim to Shanghai
Arbitration Commission requesting the Company
to pay about 162 million yuan for the project
settlement and related interest costs; the
arbitration case will be heard shortly.
37
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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
（ I ） Events disclosed in the provisional announcement and without changes or
progresses of follow-up implementation
Events overview Index
The twenty-first meeting of the fifth session
of the Board of Directors, on October 30, 2013,
considered and approved " Motion on the Sale Shanghai Stock Exchange website:
of "Zhenfu 7" 4000-tons Floating Crane ", www.sse.com.cn and Shanghai Securities
"Motion on Transfer of Stake of Shanghai News and Hong Kong Wen Wei Po on Oct. 31,
Jiangtian Industrial Co., Ltd." which were both 2013
approved by the 2013 Second Interim General
Meeting.
V. Company's equity incentive in report period
√ n.a.
VI. Magnificent related transactions
(I) Related transactions in connection with routine operations
1. Events disclosed in the provisional announcement and without changes or progresses
of follow-up implementation.
Events overview Index
The 17th meeting of the fifth session of the
Board of Directors, on May 29, 2013, approved
Shanghai Stock Exchange website:
the "Proposal on Taking BT Mode to Invest in
www.sse.com.cn and Shanghai Securities
Constructing the New Channel Project from
News and Hong Kong Wen Wei Po on May. 30,
Nanjing to Gaochun and Nanjing to Gaochun
2013
Intercity Rail Transportation Phase II (Cross
Lake Section) Project"
38
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
2. Events not disclosed in provisional announcements
Unit: RMB yuan
Pricing
Types of Related
Related party Incidence Content of principle of Price of
related transaction
transaction relation related transaction related related transaction
transaction amount
transaction
Parent
Friede & Goldman, company’s Purchase port
205,152,024 0.89
Llc. wholly-owned Sell machinery from the Based on
subsidiary goods Company market price
Parent
company’s Purchase port
114,440,145 0.5
CCCC First Harbor wholly-owned Sell machinery from the Based on
Engineering Co., Ltd. subsidiary goods Company market price
Parent
company’s Purchase port
82,764,097 0.36
CCCC Third Harbor wholly-owned Sell machinery from the Based on
Engineering Co., Ltd. subsidiary goods Company market price
Parent
The CCCC First company’s Purchase port
80,146,121 0.35
Engineering Co., Ltd. wholly-owned Sell machinery from the Based on
subsidiary goods Company market price
Parent
CCCC Fourth Harbor
company’s Purchase port
Engineering Co., Ltd. 71,007,524 0.31
wholly-owned Sell machinery from the Based on
Second Board
subsidiary goods Company market price
Parent
China Harbour company’s Purchase port
48,007,343 0.21
Engineering Co., wholly-owned Sell machinery from the Based on
Ltd. subsidiary goods Company market price
CCCC Third Harbor
Parent
Engineering
company’s
Investigation and Purchase port 47,061,169 0.21
wholly-owned
Design Institute Sell machinery from the Based on
subsidiary
Limited goods Company market price
Parent
CCCC Second
company’s Purchase port
Navigation Second 41,143,743 0.18
wholly-owned Sell machinery from the Based on
Engineering Co., Ltd.
subsidiary goods Company market price
CCCC First Naviation Parent Sell Purchase port Based on
8,821,784 0.04
Second Engineering company’s goods machinery from the market price
39
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Co., Ltd. wholly-owned Company
subsidiary
Jiangsu Longyuan Purchase port
Zhenhua Marine Joint venture Sell machinery from the Based on 8,362,205 0.04
Engineering Co., Ltd. goods Company market price
Parent
company’s Purchase port
6,676,126 0.03
CCCC Fourth Harbor wholly-owned Sell machinery from the Based on
Engineering Co., Ltd. subsidiary goods Company market price
Parent
CCCC Second
company’s Entrusted
Highway Engineering 799,509,310 3.79
wholly-owned Receiving processing for the Based on
Co., Ltd.
subsidiary services Company market price
Parent
CCCC Second
company’s Entrusted
Navigation Third 752,787,495 3.57
wholly-owned Receiving processing for the Based on
Engineering Co., Ltd.
subsidiary services Company market price
Parent
CCCC Tunnel company’s Entrusted
166,222,974 0.79
Engineering Co., Ltd. wholly-owned Receiving processing for the Based on
subsidiary services Company market price
Parent
company’s Entrusted
99,935,530 0.47
CCCC Third Harbor wholly-owned Receiving processing for the Based on
Engineering Co., Ltd. subsidiary services Company market price
Entrusted
Parent
Receiving processing for the Based on 68,366,760 0.32
Company
CCCC services Company market price
Parent
The CCCC First
company’s Entrusted
Navigation Installation 9,029,456 0.04
wholly-owned Receiving processing for the Based on
Engineering Co.
subsidiary services Company market price
CCCC Third
Parent
Navigation Xin'an
company’s
Infrastructure Entrusted 854,701 0
wholly-owned
Construction Receiving processing for the Based on
subsidiary
Engineering Co., Ltd. services Company market price
Parent
China Transportation company’s
168,908,244 1.16
Materials Co., Ltd. wholly-owned Purchase Supply material Based on
subsidiary s for the Company market price
CCCC Shanghai Parent Purchase Supply material Based on
125,955,250 0.87
Equipment Company’s s for the Company market price
40
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Engineering Co., Ltd. controlled
subsidiary
Shanghai Zhenhua
Heavy Industries Affiliated
74,818,457 0.51
(Group) Changzhou company Purchase Supply material Based on
Paint Co., Ltd. s for the Company market price
CCCC Water Parent
Transportation company’s
136,752 0
Planning and Design wholly-owned Purchase Supply material Based on
Institute Co., Ltd. subsidiary s for the Company market price
Parent
The CCCC First company’s Asset
Asset Transfer 440,000,000 99
Engineering Co., Ltd. wholly-owned Transfer Based on
subsidiary market price
Parent Equity Based on
Equity Transfer 840,241,472 100
CCCC Company Transfer market price
Note: May 8, 2013, the Company 2012 Annual General Meeting approved "Motion on the
Company Signing Framework Agreement with CHINA COMMUNICATIONS
CONSTRUCTION CO., LTD. on Routine Related Transactions." From 2013 to 2015, 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 8 billion yuan. The Annual General Meeting has
authorized the Company’s management to handle relevant specific matters.
41
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(II) Related transactions involving asset acquisition and disposal
1. Events disclosed in the provisional announcement and without changes or progresses
of follow-up implementation.
Events overview Index
The twenty-first meeting of the fifth session
of the Board of Directors, on October 30, 2013,
considered and approved " Motion on the Sale Shanghai Stock Exchange website:
of "Zhenfu 7" 4000-tons Floating Crane ", www.sse.com.cn and Shanghai Securities
"Motion on Transfer of Stake of Shanghai News and Hong Kong Wen Wei Po on Oct. 31,
Jiangtian Industrial Co., Ltd." which were both 2013
approved by the 2013 Second Interim General
Meeting.
(III) 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 Sixteenth Meeting of the Fifth Board, Shanghai Stock Exchange website:
on April 26, 2013, approved the "Proposal on www.sse.com.cn and Shanghai Securities
Holding Equity in CCCC Real Estate Yixing Co., News and Hong Kong Wen Wei Po on Apr. 27,
Ltd." 2013
The Twenty-second Meeting of the Fifth Shanghai Stock Exchange website:
Session of the Board, on November 15, 2013, www.sse.com.cn and Shanghai Securities
approved the "Proposal on the Company News and Hong Kong Wen Wei Po on Sep. 19,
Investing in Overseas Joint Venture Company". 2013
42
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(IV) Current accounts of credits and liabilities with related parties
1. Events not disclosed in the provisional announcement.
Unit: RMB yuan
The Company providing
Related party providing fund to the Company
Related Incidence fund to related party
party relation
Beginning Current Ending
Beginning balances Current amount Ending balance
balances amount balance
Parent
CCCC 0 0 0 75,536,745 -16,092,898 59,443,847
Company
Shanghai Parent
Jiang Tian company’s
0 0 0 0 17,586,085 17,586,085
Industrial Co., wholly-owned
Ltd. subsidiary
Hong Parent
Kong Zhenhua company’s
0 0 0 346,005 0 346,005
Engineering wholly-owned
Co. Ltd. subsidiary
Macau
Zhenhua Parent
Harbor company’s 0 0 0 6,593 0 6,593
Engineering wholly-owned
Co., Ltd. subsidiary
Total 0 0 0 75,889,343 1,493,187 77,382,530
Reasons for the related credits and
Dividends payable by the Company to related parties
liabilities
VII. Major contracts and their implementation
(I) Entrusting, contracting and leasing
1. Entrusting
This year the Company had no custody
2. Contracting
This year the Company had no contractual matters
43
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
3. Leasing
Unit: RMB yuan
Amount Rental Rental Whether
Leased Lease start Lease Rental
Lessor Lessee involving leased income revenue impact related party
assets date termination date income
assets determined by on the company transactions
Shanghai
Zhenlong Asset Housing Protocol
Company 183,024,841 2012-08-10 2025-07-09 43,340,809 43,340,809 No
Management Co., Ltd. rental agreed
and other companies
(II) Guaranty
External guaranty (excluding those for held subsidiaries)
Total guaranties for subsidiaries incurred in report
0
period
Total guarantee balance at the end of report period（A）
0
(excluding those for held subsidiaries)
Guaranties for subsidiaries
Total guaranties for subsidiaries incurred in report
1,975,395,600
period
Total guaranties for subsidiary balance in report period
2,341,209,600
(B)
Total guaranties of the Company（including those for subsidiaries）
Total guarantee amount（A+B） 2,341,209,600
Proportion of net assets of the Company (%) 15.91
Including:
Amount guaranties to shareholders, effective controller
0
and its related parties （C）
Direct or indirect guarantees for the guaranteed parties
2,341,209,600
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） 2,341,209,600
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
44
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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
(1) On February 19, 2013, the Company published announcement signed the 128 iron
ore barges sales contract with Brazil Girocantex Sociedad Anonima, and signed contracts
concerning 5000 ton salvage lifting vessels including design, procurement, construction
general contracting with the Ministry of Transportation Yantai Salvage Bureau. For details,
please refer to Shanghai Securities News and Hong Kong Wen Wei Po.
(2) On March 22, 2013, the Company published announcement concerning the signing of
sales contract for automation quay crane equipment, with Mexico APM Terminals Lazaro
Cardenas. For details, please refer to Shanghai Securities News and Hong Kong Wen Wei
Po.
(3) On May 24, 2013, the Company announced a contract of sale for one JU-2000E 400
feet jack-up rig. For details, please refer to Shanghai Securities News and Hong Kong Wen
Wei Po.
(4) On May 30, 2013, the Company announced winning of a bid to Nanjing Gaochun New
Channel investment and construction. For details, please refer to Shanghai Securities News
and Hong Kong Wen Wei Po.
(5) On August 26, 2013, the Company announced the contract of sale for a Super M2
Type 300 feet jack-up rig with Singapore KS DRILLING PTE LTD. For details, please refer to
Shanghai Securities News and Hong Kong Wen Wei Po.
(6) On August 28, 2013, the Company announced an agreement with Sichuan Honghua
Petroleum Equipment Co., Ltd. agreeing between the parties to conduct a comprehensive
deductible calculation and liquidation for projects in pending state, which was approved by the
Nineteenth Meeting of the Fifth Board of Directors. For details, please refer to Shanghai
Securities News and Hong Kong Wen Wei Po.
(7) On October 10, 2013, the Company announced sales contracts for port machinery
with Doha New Port Project Management Committee, Guangzhou Port Group, PSA
Singapore Port Group. For details, please refer to Shanghai Securities News and Hong Kong
Wen Wei Po.
(8) On December 30, 2013, the Company announced a sales contract with Hilong Marine
Engineering (Hong Kong) Limited for a 3,000 t crane pipe-laying vessel. For details, please
refer to Shanghai Securities News and Hong Kong Wen Wei Po.
45
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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
stock issued publicly. CCCC plans to continue increasing its
and term is 12 months
holding of the Company’s shares in the future 12 months
starting from Oct. 18,
(starting from Oct. 18, 2012) in its own name via the trading
Other 2012; Up to now, China
platform of Shanghai Stock Exchange. Cumulative holding
commitments 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).
46
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
IX. Appointment and dismissal of accounting firm
Unit: RMB yuan
Whether to hire other
No
accounting firms
Former appointment Current appointment
PricewaterhouseCoopers
PricewaterhouseCoopers Zhong Tian CPAs Co.
Domestic accounting firm
Zhong Tian CPAs Co. Ltd. Ltd.( Special general
partnership)
Domestic accounting firm
3,150,000 3,400,000
payment
Domestic accounting firm
19 20
audit period
Name Payment
PricewaterhouseCoopers
Internal control audit
Zhong Tian CPAs (Special 800,000
accounting firm
general partnership)
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.
47
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
XI. Other significant events
1. On March 24, 2014, the Company approved the "Proposal on Changes of Accounting
Estimates", the said changes is subject to future-appropriate way for accounting treatment,
and has no effect on the 2013 annual financial statements.
2. In 2008 the Company and Flour Limited (hereinafter referred to as "Fluor") British wind
power project signed an agreement of sales and installation for wind power steel pipe pile
products for the British Wind Power Project. In the project construction process, the Company
and Fluor, by way of friendly consultations and in the spirit of good cooperation, maintain
dispute handling normal communication mechanism. In June 2010, for the implementation of
the contract, after review by the board of directors of the Company, the Company and Fluor
signed a mutual exemption letter, and in 2011 settled the remaining payment. Afterwards,
Flour produced claim to the Company for quality compensation, and requested the Company
to cash the pay-on-claim quality guarantee bond, while the Company rejected the claim. On
March 20, 2014 Flour cashed the amount of 23,409,750 euro bond. The Company has
consulted professional lawyers, and is planning to claim under the guarantee bond a
compensation for principal and interest loss through corresponding legal procedures.
48
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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
Transferred
Proportion New Proportion
Qty Bonus from surplus Others Subtotal Qty
(%) Issues (%)
reserve
I. Shares
subject to 0 0 0 0
conditional sales
II. Total of
shares not subject
4,390,294,584 100 4,390,294,584 100
to conditional
sales
1. A share 2,768,331,384 63.06 2,768,331,384 63.06
2. B share 1,621,963,200 36.94 1,621,963,200 36.94
3. Shares
issued in
overseas market
4. Others
III. Total
4,390,294,584 100 4,390,294,584 100
shares
(II) Movement of shares with sales limitations
In report period, the Company has no movement of shares with sales limitations.
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 caused by bonus shares or allocated shares.
(III) Existing internal staff shares
By end of report period, there exist no internal employee shares.
49
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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 trading day prior to
Number of shareholders at period end 345,139 339,934
release day of current annual
report
Shareholding profile of top 10 shareholders
shares Shares
Shareholder’s Ratio Total shares Movement
Shareholder’s Name held subject pledged or
Nature (%) held During the Year to frozen
conditional
sales
China Communications State legal None
28.83 1,265,637,849 0 0
Construction Co., Ltd. person shareholder
ZHEN HUA ENGINEERING Overseas None
17.08 749,677,500 0 0
COMPANY LIMITED institution
GIC PRIVATE LIMITED Unknown 0.45 19,541,734 19,541,734 Unknown
SCBHK A/C BBH S/A Unknown
VANGUARD EMERGING MARKETS Unknown 0.41 18,121,057 13,029,356
STOCK INDEX FUND
TOYO SECURITIES ASIA LTD. Unknown
Unknown 0.35 15,479,369 -6,633,109
A/C CLIENT
ZHEN HWA HARBOUR
Overseas
CONSTRUCTION COMPANY 0.33 14,285,700 0 0 None
institution
LIMITED
NAITO SECURITIES CO., LTD. Unknown 0.27 11,702,762 -3,390,791 Unknown
BOCHK INVESTMENT Unknown Unknown
FUNDS-BOCHK CHINA GOLDEN 0.17 7,425,081 4,069,773
DRAGON FUND
SCBHK A/C GSIC S/A Unknown Unknown
MONETARY AUTHORITY OF 0.16 6,857,891 894,201
SINGAPORE
THE LIBRA GREATER CHINA Unknown Unknown
0.14 6,296,920 6,296,920
FUND LTD
Particulars about top 10 shareholders of shares not subject to conditional sales
Shares not subject to conditional sales held
Shareholder’s Name Type and quantity of shares
at period end
50
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
China Communications Construction Co., Ltd. 1,265,637,849 RMB common shares
Shares with foreign investment
ZHEN HUA ENGINEERING COMPANY LIMITED 749,677,500
listed on domestic market
Shares with foreign investment
GIC PRIVATE LIMITED 19,541,734
listed on domestic market
SCBHK A/C BBH S/A VANGUARD EMERGING Shares with foreign investment
18,121,057
MARKETS STOCK INDEX FUND listed on domestic market
Shares with foreign investment
TOYO SECURITIES ASIA LTD. A/C CLIENT 15,479,369
listed on domestic market
ZHEN HWA HARBOUR CONSTRUCTION COMPANY Shares with foreign investment
14,285,700
LIMITED listed on domestic market
Shares with foreign investment
NAITO SECURITIES CO., LTD. 11,702,762
listed on domestic market
BOCHK INVESTMENT FUNDS-BOCHK CHINA Shares with foreign investment
7,425,081
GOLDEN DRAGON FUND listed on domestic market
SCBHK A/C GSIC S/A MONETARY AUTHORITY OF Shares with foreign investment
6,857,891
SINGAPORE listed on domestic market
Shares with foreign investment
THE LIBRA GREATER CHINA FUND LTD 6,296,920
listed on domestic market
1. 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 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
Explanation on the above related relationship or on Disclosure of Information on Stock Change of Listed Company’s Shareholders.
consistent action
On January 8, 2014, the Company disclosed the "Announcement on Changes in
Shareholders' Equity", according to which Hongkong ZHEN HUA ENGINEERING
COMPANY LIMITED was to transfer all the shares it held to CCCC International
(Hongkong) Holdings Limited. After the transfer of shares, the controlling shareholder
of the Company and the actual controller remain unchanged. The share transfer is
required to obtain the SAC of the State Council and other departments for approval.
51
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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 unit /legal Liu Qitao
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.
52
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(II) Particulars about the actual corporate controller
1. Legal person
Unit: RMB yuan
Name China Communications Construction Group
The person in charge
of the unit /legal Liu Qitao
representative
Date of incorporation 2005-12-08
Registered capital 710933809
Name 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
Principal business bridge construction Item, the general contractor (including the technical and economic
activities consulting, feasibility studies, survey, design, construction, 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.
V. Other corporate shareholders holding over 10% of the Company’s shares
Unit: HKD yuan
The person
Corporate in charge or Date of Organization Registered Main business and
shareholders Legal establishment code Capital management activities
representative
Marine works,
roads and bridges,
ZHEN HUA
Wang dredging and site
ENGINEERING 1982-05-14 - 35,000,000
Yan formation, port
COMPANY LIMITED
machinery, survey
and design.
China Communications Construction Co. Ltd. holds 100% stake of ZHEN HUA
ENGINEERING COMPANY LIMITED, the ultimate shareholder is China Communications
Construction Group Co. Ltd.
53
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Chapter VII Directors, Supervisors, Senior
Executives and Employees
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 Paid by
Chan
Shares held at Rea the Company the shareholders
Start of End of Shares ge in
Name Title Sex Age the beginning of son for during report units
Tenure Tenure at end of year report
year change period(RMB 10,000) during report
period
(before tax) period(RMB 10,000)
Chairman of the
Song 2012-0 2014-0
board, secretary of M 49 0 0 0 0 90.5
Hailiang 9-18 5-20
the party committee
Liu 2011-0 2014-0 0
Director M 54 0 0 0 95.62
Wensheng 5-20 5-20
2011-0 2014-0 0
Chen Qi Director F 52 0 0 0 70.61
5-20 5-20
Former Director, -
Lu 2011-1 2014-0
President, vice Party M 51 0 0 0 90
Jianzhong 0-20 3-21
Secretary
Executive -
2011-0 2014-0
Yan Yunfu director, Vice M 55 0 0 0 81
5-20 5-20
president
Executive -
Liu 2011-0 2014-0
director, Vice M 50 0 0 0 81
Qizhong 5-20 5-20
president
Executive -
Dai 2011-0 2014-0
director, Vice M 47 0 0 0 81
Wenkai 5-20 5-20
president
Independent 2011-0 2014-0 -
Bao Qifan M 63 0 0 0 12
director 5-20 5-20
Independent 2011-0 2014-0 -
Li Liguang M 52 0 0 0 5
director 5-20 5-20
Independent 2011-0 2014-0 -
Mi Weijian M 58 0 0 0 5
director 5-20 5-20
Liu Independent 2011-0 2014-0 -
M 56 0 0 0 12
Ningyuan director 5-20 5-20
Independent 2011-0 2014-0 -
Tang Fuxin F 58 0 0 0 12
director 5-20 1-28
Independent 2013-0 2014-0
She Lian M 55 0 0 0 8
director 5-08 5-20
Independent 2013-0 2014-0
Gu Wei M 57 0 0 0 8
director 5-08 5-20
Zhang Chairman of 2011-0 2014-0 -
M 52 20,259 20,259 0 48.97
Minghai board of supervisors 5-20 5-20
2011-0 2014-0 -
Chen Bin Supervisor M 40 89,440 89,440 0 39.88
5-20 5-20
Zhao 2011-0 2014-0 -
Supervisor M 53 0 0 0 36.9
Guangjing 5-20 5-20
Cao 2011-0 2014-0 -
Vice president M 58 0 0 0 72
Weizhong 5-20 5-20
Huang 2011-0 2014-0 -
Vice president M 60 0 0 0 72
Hongyu 5-20 5-20
2011-0 2014-0 -
Sun Li Vice president M 42 0 0 0 72
5-20 5-20
Huang 2011-0 2014-0 -
Vice president M 39 0 0 0 72
Qingfeng 5-20 5-20
2011-0 2014-0 -
Zhou Qi Vice president M 42 0 0 0 72
5-20 5-20
2011-0 2014-0 -
Fei Guo Vice president M 52 0 0 0 72
5-20 5-20
Chen 2011-0 2014-0 -
Vice president M 47 0 0 0 72
Gang 5-20 5-20
2011-0 2014-0 -
Liu Jianbo Vice president M 51 0 0 0 72
5-20 5-20
-
CFO, Secretary
2011-0 2014-0
Wang Jue of the Board of M 50 0 0 0 72
5-20 5-20
Directors,
1168.75
Total / / / / / 109,699 109,699 0 / 256.73
54
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
1. Song Hailiang, born in1965, 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 vice President of China Communications Construction Co., Ltd. and
simultaneously Chairman of the Board, President and Party Secretary of Zhenhua Heavy
Industries.
2. 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.,
Chairman of the Board with CCCC International(Hong Kong) Co. Ltd., has been board
director of the Company since 2006.
3. 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; has been board director of the
Company since 2011
4. 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;
was director, president and vice chairman of Party committee of the Company. Resigned
on Mar. 21, 2014.
5. Yan Yunfu, born in 1959, male, master of engineering management and EMBA
master, professor-level senior engineer，was Vice Chief of Technical Department, Manager
of Mechanical Design Department, Vice General Engineer, General Engineer and VP of
55
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
the Company. Is now the company’s standing VP; is director of board of the Company
since 2004.
6. Liu Qizhong, born in 1964, male, Doctor, senior economist, doctor; was Vice
Manager, Manager of Operating Department and VP of the Company; is now the
Company’s standing VP; is board director of the Company since 1997.
7. 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 executive VP of the Company; is board
director of the Company and director of F&G since 2012.
8. 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 board director of the Company since 2011.
9. 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 board director of the Company
since 2011.
10. 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. Resigned on Jan. 28, 2014.
11. She Lian: born in 1959, male, professor, doctoral tutor; from 1995 on, enjoys
56
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
special government allowances from the State Council; deputy director and Party
Secretary of the Department of Business Administration, Wuhan University of
Communications Science; chief editor of "Transportation Enterprise Management"
magazine run by Ministry of Transportation; director of Early Warning Management
Research Center, Wuhan University of Technology, Professor of Management, doctoral
tutor; director of Early Warning Management Research Center, Huazhong University of
Science and Technology, Professor of Management, doctoral tutor; Professor of CEIBS
Emergency Management Institute incumbent National School of Administration, doctoral
tutor. has been independent board director of the Company since 2013 onwards.
12. Gu Wei: 1957, male, Ph.D., professor and doctoral tutor; since 1982, has been
teaching at Shanghai Maritime University; since the year 2000 enjoys special government
allowances from the State Council, and the IEEE Society member, MTS Society member
and the British Royal Physical Society member, senior member of China Electrotechnical
Society, senior member of Chinese Society of Naval Architects, senior member of Chinese
Mechanical Engineering Society; is currently director of the Key Laboratory of the Ministry
of Transportation's Shipping Technology and Control Engineering; member of China
Electrotechnical Society's Vessel Electrical Committee; member of the Committee of
Experts of Shanghai Jiaotong Electronics Industry Association; procurement consulting
expert of Shanghai Municipal Government; member of the Committee of Experts of
Ministry of Transport East China Sea Rescue Bureau and other duties; has been
independent board director of the Company since 2013.
13. Zhang Minghai, born in1962, male, master，professor-level 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.
14. Chen Bin, born in 1974 , male, MBA, senior engineer; deputy manager of tire
crane office of 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.
15. Zhao Guangjing, born in 1961, male, college diploma, served as Shanghai Port
57
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Machinery Plant discipline officer; audit department Senior Staff Member; inspection and
supervision audit office deputy director(in charge), 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 employee supervisor of the Company.
16. 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.
17. 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.
18. 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 Vice President of the Company since 2001.
19. 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.
20. 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.
21. Fei Guo, born in 1962, male, master’s degree in engineering administration,
professor-level 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.
22. Chen Gang, born in 1967, male, doctor, professor-level senior engineer; was
deputy manager of Technological Office of the Company; Mechanical Design manager,
58
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Mechanical Office director, vice chief engineer, chief engineer, is now VP of the Company
and director of Jiangxi HuaWu Detent Group Ltd., and director of F&G.
23. 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.
24. 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.
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
Starting date
Name shareholding Title
of service term
companies
China
Song Hailiang Communications Vice President 2014-01-27
Construction Co., Ltd.
China Secretary with
Liu Wensheng Communications the Board, Economist 2009-12-29
Construction Co., Ltd. General
China General manager
Chen Qi Communications of Industry and Trade 2009-12-29
Construction Co., Ltd. Department
59
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(II) Particulars about office-holding with other companies:
Name Name of companies Title
Shanghai Municipal Government,
Chinese Mechanical Engineering Society, Counselor, Vice
Bao Qifan China Water Transportation Association, Director-General, Vice
Shanghai Association for Science & Chairman
Technology
International Law Faculty of the East
China University of Politics and Law, China Dean and Secretary of
Association of Private International Law, China the Party committee,
Liu Ningyuan Academy of Arbitration Law, International Law Standing Director,
Research Association of Shanghai Law Vice-chairman, arbiter,
Society, Shanghai Arbitration Commission, Lawyer
Shanghai Trust Justice Law Office
CEIBS Emergency Management Institute
She Lian professor, doctoral tutor
incumbent National School of Administration
Key Laboratory of the Ministry of
Transportation's Shipping Technology and
Control Engineering; China Electrotechnical
Society's Vessel Electrical Committee;
director, professor,
Committee of Experts of Shanghai Jiaotong
Gu Wei doctoral tutor, council
Electronics Industry Association; procurement
member, committee member
consulting expert of Shanghai Municipal
Government; Committee of Experts of Ministry
of Transport East China Sea Rescue Bureau
and other duties
60
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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
and senior executives
Total pay received
Chairman Song Hailiang, Director Chen Qi, Director Liu
by all directors,
Wensheng are not paid by the Company, whereas all other director,
supervisors and senior
supervisor and senior executives are paid by the Company.
executives
Total remuneration
received by all directors,
11,687,500 yuan
supervisors and senior
executives at period end
IV. Particulars about changes of directors, supervisors and senior executives
Name Former position The Change Reason
Independent
Li Liguang Leaving post Expired resigns
director
Independent
Mi Weijian Leaving post Expired resigns
director
Independent
She Lian appointment New appointment
director
Independent
Gu Wei appointment New appointment
director
Lu Jianzhong Director, President Leaving post Resignation
Independent
Tang Fuxin Leaving post Resignation
director
61
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
V. Employee status of the Parent Company and its key subsidiaries
(I) Particulars about employees
Number of employees of Parent Company
2,924
in service
Number of employees of key subsidiaries
3,334
in service
Total headcount in employment 6,258
Particulars about staff condition of the
0
Company
In specialties
Classification Number
Production staff 1,909
Selling staff 121
Technical staff 3,494
Financial staff 83
Administrative staff 651
Total 6,258
In educational level
Educational Level Number
Technical secondary school 1,481
Junior College 1,984
Undergraduate 2,511
Master 262
Doctor 20
Total 6,258
(II) Remuneration policies
62
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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.
63
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
(IV) Specialty composition chart:
1.33% 10.40%
30.50% production staff
selling staff
technical staff
financial staff
55.83% 1.93% administrative staff
(V) Educational level statistics chart:
4.19% 0.32%
23.67% technical secondary school
junior college
40.12%
undergraduate
master
31.70% doctor
(VI) Labor outsourcing
The total number of man-hours
14,586,000 hours
of labor outsourcing
The total remuneration payment
415,723,000 yuan
of labor outsourcing
64
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Chapter VIII Corporate Governance
I. Corporate governance and information insider registration management
During the report period, the Company has focused on standardizing routine operation,
further establish a sound internal control system, improve the management of internal
controls and corporate governance structure, established and strengthen the insider
information management, enforcing information disclosure, continue to improve the corporate
governance standards 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.
In order to regulate the behavior of insider information management, strengthen the
confidentiality of inside information, the company developed the "Shanghai Zhenhua Heavy
Industry (Group) Co., Ltd. Insider Information Management System", by self-examination,
trading in the Company’s shares with inside informations before the disclosure of significant
sensitive information of the Company’s share prize does not exist with the insiders.
There is no difference between the corporate governance status and the requirements of
the Commission on corporate governance 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
65
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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 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.
66
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
II. Summary of shareholders general meeting
Index of the
Session time resolution Date of resolutions
Date of meeting Motions of meeting Resolutions
of meeting published published
website
11 bills including 2012
Board of Directors’ Work Shanghai
Report; 2012 Work Report of
Stock Exchange
2012 Annual the Supervisory Board; Bill on
all approved web:
Shareholder’s 2013-5-8 Signing of Daily Related www.sse.com.cn 2013-5-9
after review
General Meeting Transactions Framework
，input securities
Agreement with China
code and search
Communications
Construction Co., Ltd.
3 bills including Proposal
on Taking BT Mode to Invest
in Constructing the New
Channel Project from Nanjing
2013 First to Gaochun and Nanjing to
Interim Gaochun Intercity Rail all approved
2013-8-22 Ditto 2013-8-23
Shareholder’s Transportation Phase II after review
General Meeting (Cross Lake Section) Project,
Proposal on Buying Low-risk
Financial Products and the
Proposal on Amendment of
the Articles of Associations
2 bills including Motion
2013 Second on the Sale of "Zhenfu 7"
Interim 4000-tons Floating Crane, all approved
2013-11-15 Ditto 2013-11-16
Shareholder’s and Motion on Transfer of after review
General Meeting Stake of Shanghai Jiangtian
Industrial Co., Ltd.
67
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
III. Duty fulfillment of directors
(I) Attendance of directors at meetings of the Board of Directors:
General
meeting of
Board of directors in attendance
shareholders in
Independent attendance
Name
Director or not Two Number of
Number of
Expected Actual Entrusted absences in attendances of
attendances by Absences
attendances attendances attendances succession or general meeting
correspondence
not of shareholders
Song
No 9 9 7 0 0 No 3
Hailiang
Liu
No 9 7 7 2 0 No 0
Wensheng
Chen Qi No 9 9 7 0 0 No 2
Lu
No 9 8 7 1 0 No 3
Jianzhong
Yan Yunfu No 9 9 7 0 0 No 2
Liu
No 9 8 7 1 0 No 3
Qizhong
Dai
No 9 9 7 0 0 No 2
Wenkai
Bao Qifan Yes 9 8 7 1 0 No 2
Liu
Yes 9 8 7 1 0 No 2
Ningyuan
She Lian Yes 7 6 6 1 0 No 2
Gu Wei Yes 7 7 6 0 0 No 2
Tang
Yes 9 9 7 0 0 No 2
FuXin
Li Liguang Yes 2 2 1 0 0 No 0
Mi Weijian Yes 2 2 1 0 0 No 0
Number of board meetings in report year 9
Including: number of field meetings 2
Number of meetings by correspondence 7
(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
68
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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.
69
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Chapter IX Internal Control
I. Internal control responsibility statement and internal control system
construction
According to the Basic Standards for Corporate Internal Control and its supporting
guidelines and other regulatory requirements of internal control, combined with the actual
situation of the company, the company developed a "Shanghai Zhenhua Heavy Industry
(Group) Co., Ltd. 2013 Internal Control Standards Implementation Plan" and established the
internal control regulations leading group and project work group, has evaluated the
2013-12-31 (the internal control evaluation report reference date) Company’s effectiveness of
internal control on the basis of the daily supervision and special supervision of internal control
and under the leadership of the board of directors of the Company.
According to the identification of the company's financial reporting internal control
significant deficiencies, there is no significant financial reporting internal control deficiencies
on the reference date of internal control evaluation report, the company has maintained the
effective financial reporting internal control in all material respects in accordance with the
system of internal control standards and related requirements.
According to the identification of the company's non-financial reporting internal control
significant deficiencies, there is no significant non-financial reporting internal control
deficiencies on the reference date of internal control evaluation report.
The factors that influence the effectiveness of the internal control evaluation results did
not occur since the reference date of the internal control evaluation report till the day that
internal control evaluation report issued.
The Company's 2013 annual internal control evaluation report detailed in the
attachments.
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, 2013 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, 2010, 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.
70
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
Chapter X Financial Report
（See attachment）
71
Shanghai Zhenhua Heavy Industries Co., Ltd. Annual Report 2013
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. 26, 2014
72
