Shenzhen Zhongheng Huafa Co., Ltd.Text of First Quarterly Report 2021
Stock Code: 000020 200020 Public Notice No.:2021-10Short Form of the Stock: SHEN HUAFA-A, SHEN HUAFA- B
Shenzhen Zhongheng Huafa Co., Ltd.Text of First Quarterly Report 2021
Shenzhen Zhongheng Huafa Co., Ltd.Text of First Quarterly Report 2021
Section I. Important Notes
Board of Directors and the Supervisory Committee of Shenzhen ZhonghengHuafa Co., Ltd (hereinafter referred to as the Company) and its directors,supervisors and senior executives should guarantee the reality, accuracy andcompletion of the quarterly report, there are no any fictitious statements,misleading statements or important omissions carried in this report, and shalltake legal responsibilities, individual and/or joint.All Directors are attended the Board Meeting for Quarterly Report deliberation.Li Zhongqiu, person in charge of the Company, Yang Bin, person in charger ofaccounting works and Wu Ai’jie, person in charger of accounting organ(accounting officer) hereby confirm that the Financial Statement of thisQuarterly Report is authentic, accurate and complete.
Shenzhen Zhongheng Huafa Co., Ltd.Text of First Quarterly Report 2021
Section II. Basic situation of the Company
I. Main accounting data and financial indexesWhether it has retroactive adjustment or re-statement on previous accounting data
□Yes √ No
| Current period | At the same period of last year | Changes of this period over same period of last year | |
| Operating income (RMB) | 190,936,203.57 | 87,800,584.55 | 117.47% |
| Net profit attributable to shareholders of the listed company (RMB) | 5,557,677.31 | -400,741.17 | 1,489.06% |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) | 5,476,703.89 | -208,179.52 | 2,735.02% |
| Net cash flow arising from operating activities (RMB) | -5,125,776.38 | 7,931,308.59 | -164.63% |
| Basic earnings per share (RMB/Share) | 0.0197 | -0.0014 | 1,507.14% |
| Diluted earnings per share (RMB/Share) | 0.0197 | -0.0014 | 1,507.14% |
| Weighted average ROE | 1.64% | -0.12% | 1.76% |
| At the end of the reporting period | At the end of last year | Changes of this period-end over same period-end of last year | |
| Total assets (RMB) | 637,523,241.97 | 627,779,621.06 | 1.55% |
| Net assets attributable to shareholder of listed company (RMB) | 341,806,414.60 | 336,248,737.29 | 1.65% |
Items and amount of non-recurring gains and losses
√ Applicable □ Not applicable
In RMB
| Item | Amount from year-begin to period-end | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | -6,163.53 | |
| Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 6,000.00 | |
| Gain or loss on the investment or management of assets | 71,186.44 |
Shenzhen Zhongheng Huafa Co., Ltd.
Text of First Quarterly Report 2021
| Other non-operating income and expenditure except for the aforementioned items | 10,677.58 | |
| Less: impact on income tax | 727.07 | |
| Total | 80,973.42 | -- |
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according tothe lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists ofextraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities tothe Public --- Extraordinary Profit/loss
II. Total number of shareholders at the end of this report period and top ten shareholders
1. Total number of common shareholders at the end of this report period and top ten common shareholders
In shares
| Total common stock shareholders in reporting period-end | 22,456 | Total preference shareholders with voting rights recovered at end of reporting period (if applicable) | 0 | |||||
| Top ten shareholders | ||||||||
| Shareholder’s name | Nature of shareholder | Proportion of shares held | Amount of shares held | Amount of restricted shares held | Number of share pledged/frozen | |||
| State of share | Amount | |||||||
| Wuhan Zhongheng Group | Domestic non-state-owned legal person | 42.13% | 119,289,894 | 0 | Pledged | 116,100,000 | ||
| Frozen | 119,289,894 | |||||||
| SEG (HONG KONG) CO., LTD. | Overseas legal person | 5.85% | 16,569,560 | 0 | Pledged | 0 | ||
| Frozen | 0 | |||||||
| GOOD HOPE CORNER INVESTMENTS LTD. | Overseas legal person | 2.50% | 7,072,000 | 0 | Pledged | 0 | ||
| Frozen | 0 | |||||||
| Changjiang Securities Brokerage (Hongkong) Co., Ltd. | Overseas legal person | 1.89% | 5,355,249 | 0 | Pledged | 0 | ||
| Frozen | 0 | |||||||
Shenzhen Zhongheng Huafa Co., Ltd.
Text of First Quarterly Report 2021
| Guoyuan Securities Brokerage (Hong Kong) Limited | Overseas legal person | 1.37% | 3,870,117 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| Li Zhongqiu | Overseas nature person | 1.00% | 2,830,000 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| China Merchants Securities Hong Kong Co., Ltd. | State-owned legal person | 0.79% | 2,230,608 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| LI SHERYN ZHAN MING | Overseas nature person | 0.51% | 1,446,100 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| Shengyin Investment Co., Ltd. | Overseas legal person | 0.50% | 1,408,600 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| # Xu Xinfen | Domestic nature person | 0.45% | 1,288,000 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| Top ten shareholders with unrestricted shares held | ||||||
| Shareholder’s name | Amount of unrestricted shares held | Type of shares | ||||
| Type | Amount | |||||
| Wuhan Zhongheng Group | 119,289,894 | RMB common share | 119,289,894 | |||
| SEG (HONG KONG) CO., LTD. | 16,569,560 | Domestically listed foreign shares | 16,569,560 | |||
| GOOD HOPE CORNER INVESTMENTS LTD. | 7,072,000 | Domestically listed foreign shares | 7,072,000 | |||
| Changjiang Securities Brokerage (Hongkong) Co., Ltd. | 5,355,249 | Domestically listed foreign shares | 5,355,249 | |||
| Guoyuan Securities Brokerage (Hong Kong) Limited | 3,870,117 | Domestically listed foreign shares | 3,870,117 | |||
| Li Zhongqiu | 2,830,000 | Domestically listed foreign shares | 2,830,000 | |||
| China Merchants Securities Hong Kong Co., Ltd. | 2,230,608 | Domestically listed foreign shares | 2,230,608 | |||
Shenzhen Zhongheng Huafa Co., Ltd.
Text of First Quarterly Report 2021
| LI SHERYN ZHAN MING | 1,446,100 | Domestically listed foreign shares | 1,446,100 |
| Shengyin Investment Co., Ltd. | 1,408,600 | Domestically listed foreign shares | 1,408,600 |
| # Xu Xinfen | 1,288,000 | RMB common share | 1,288,000 |
| Explanation on associated relationship among the aforesaid shareholders | Among the top ten shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. and is a party acting in concert.Shengyin Investment Co., Ltd. is an overseas wholly-owned subsidiary of Wuhan Zhongheng group. The Company neither knew whether there exists associated relationship among the other shareholders, nor they belong to consistent actors that are prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies. | ||
| Explanation on top 10 common shareholders involving margin business (if applicable) | N/A | ||
Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreementdealing in reporting period
□ Yes √ No
The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy-backagreement dealing in reporting period.
2. Total shareholders with preferred stock held and shares held by top ten shareholders with preferredstock held
□ Applicable √ Not applicable
Section III. Significant Events
I. Particulars about material changes in items of main accounting statement and financialindex and explanations of reasons
√Applicable □Not applicable
| Item | March 31, 2021 | January 1, 2021 | Y-o-y changes | Reasons of changes |
Other receivables
| Other receivables | 2,060,681.11 | 4,466,949.96 | -53.87% | Decrease in current accounts |
| Inventory | 103,732,453.57 | 70,502,773.52 | 47.13% | Stocking in this period |
| Other current assets | 1,129,263.49 | 4,255,643.19 | -73.46% | The tax to be deducted is deducted for the current period. |
| Long-term prepaid expenses | 19,361.35 | 77,445.31 | -75.00% | Cloud service fee amortization |
| Short-term loans | 20,921,296.00 | 12,527,808.00 | 67.00% | Short-term bank loans were increased in the current period. |
| Contract liabilities | 171,293.92 | 287,140.66 | -40.34% | The deposit received in advance has decreased during the period. |
| Employee compensation payable | 3,106,406.38 | 5,737,366.59 | -45.86% | The prepaid wages and expenses are paid in the current period |
| Other payables | 18,556,536.88 | 27,608,281.01 | -32.79% | Decrease in current accounts |
| Interest payable | 63,086.88 | 26,335.66 | 139.55% | Short-term loans increased in the current period. |
| Item | January to March 2021 | January to March 2020 | Y-o-y changes | Reasons of changes |
Operating income
| Operating income | 190,936,203.57 | 87,800,584.55 | 117.47% | Increase in orders this period |
| Operating cost | 160,692,426.33 | 73,672,446.25 | 118.12% | Increase in orders this period |
| Sales expense | 9,604,962.16 | 3,448,537.85 | 178.52% | Increase in orders this period |
| R&D expenses | 1,990,208.94 | 908,285.77 | 119.12% | Increased in R&D investment in this period |
| Other income | 119,520.00 | 64,770.00 | 84.53% | Amortization of deferred income for the current period |
| Investment income | 71,186.44 | 37,415.02 | 90.26% | Increase in financial income during the current period |
| Non-operating income | 19,464.75 | 5,492.44 | 254.39% | Government subsidy income from the previous period |
| Non-operating expenses | 8,950.00 | 263,835.56 | -96.61% | Liquidated damages occurred in the previous period |
Income tax expense
| Income tax expense | 1,360,875.84 | -85,032.71 | -1700.41% | Increase in profit for the period |
| Item | January to March | January to March | Y-o-y changes | Reasons of changes |
| 2021 | 2020 |
Cash received fromthe sale of goods andthe provision of laborservices
| Cash received from the sale of goods and the provision of labor services | 118,847,638.92 | 86,584,529.58 | 37.26% | Increase in sales collection in this period |
| Cash paid for purchasing goods and receiving labor services | 90,764,568.41 | 56,760,923.41 | 59.91% | Increase in orders this period |
| Cash paid to and for employees | 18,034,045.23 | 8,467,600.61 | 112.98% | Increase in orders this period |
| Taxes paid | 8,114,109.92 | 2,351,100.26 | 245.12% | Increase in orders this period |
| Cash received from investment income | 71,186.44 | 37,415.02 | 90.26% | Margin interest increased in this period |
| Net cash received from the disposal of fixed assets, intangible assets and other long-term assets | 13,000.00 | 91,000.00 | -85.71% | Disposal of old equipment in the previous period |
| Cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets | 1,624,675.50 | 467,211.58 | 247.74% | Purchase production equipment in this period |
Other cash paidrelating to investingactivities
| Other cash paid relating to investing activities | - | 25,000,000.00 | -100.00% | Bank wealth management decreased in this period |
| Cash received from loans | 20,710,525.00 | 6,725,056.80 | 207.96% | Increase in short-term loans |
| Other cash paid relating to financing activities | 6,408,886.53 | - | Increase acceptance margin in this period | |
| Influence on cash and cash equivalents due to fluctuation in exchange rate | -124,286.41 | 32,336.78 | 484.35% | The impact of exchange rate fluctuations in the current period |
II. Analysis and explanation of significant events and their influence and solutions
√ Applicable □Not applicable
(i) The Company signed Asset Exchange Contract with Wuhan Zhongheng New Science & Technology Industrial
Group Co., Ltd (hereinafter referred to as Wuhan Zhongheng Group) on 29 April 2009 (details were referred to inthe announcement dated 30 April 2009), and pursuant to the contract, since part of the assets of the Company(namely two parcel of industrial lands located at Huafa road, Gongming town, Guangming new district, Shenzhen(the property certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were A627-005andA627-007, and the aggregate area was 48,200 sq.m) were the lands listed in the first batch of plan for 2010Shenzhen urbanization unit planning preparation plan. For promotion of such urbanization project and jointcooperation, the Company has not completed the transfer procedures in respect of the aforesaid land.
The Company convoked the first extraordinary meeting of the Board in 2015 on February 16, 2015 and the firstextraordinary general meeting of the Board in 2015 on March 4, 2015, which considered and approved the“Motion on promoting and implementing the urban renewal project for the renewal units of Huafa area atGongming street, Guangming new district, Shenzhen”, specified that the Company and Wuhan Zhongheng Groupshall obtain the corresponding compensatory consideration for removal from the respectively owned project plotsand the respectively contributed and constructed above-ground buildings before the land development, it isestimated that the compensatory consideration obtained by the Company accounts for 50.5% of the totalconsideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.
The sixth extraordinary meeting of the board of directors in 2015 and the third extraordinary general meeting of2015 have considered and adopted the “Proposal on the project promotion and implementation of urban renewaland the progress of related transactions of ‘the updated units at Huafa Area, Gong Ming Street, Guangming NewDistrict, Shenzhen’”, the company has signed the “Agreement on the cooperation of urban renewal project of theupdated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”, “Contract for thecooperative venture of reconstruction project for Huafa Industrial Park, Gong Ming Street, Guangming NewDistrict” and “Agreement on housing acquisition and removal compensation and resettlement” with WuhanWuhan Zhongheng Group, Shenzhen Vanke Real Estate Co., Ltd. (hereinafter referred to as “Shenzhen Vanke”),and Shenzhen Vanke Guangming Real Estate Development Co., Ltd. (hereinafter referred to as “VankeGuangming”).
On 12 September 2016, Shenzhen Vanke applied for arbitration in respect of “Agreement on the cooperation ofurban renewal project of the updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”against the Company and Wuhan Zhongheng Group. Shenzhen Court of International Arbitration (SCIA) hasgiven a ruling in August 2017. On August 29, 2018, the court accepted the compulsory execution application ofShenzhen Vanke. In October 2019, as a number of outsiders filed an “execution objection” and applied for “noexecution” to Shenzhen Intermediate People’s Court, the Shenzhen Intermediate People’s Court ruled to terminatethe enforcement procedure on March 20, 2020. If the “execution objection” and “no execution” proposed byoutsiders are rejected according to law, Shenzhen Vanke may continue to apply to the Shenzhen IntermediatePeople’s Court to resume execution. Progress of the case found more in the Notices released on Juchao websitedated 14 Sept. 2016, 1 Nov. 2016, 16 Nov. 2016, on 18 Feb. 2017, 24 March 2017, 25 April 2017, 1 July 2017, 18
August 2017, 9 Feb. 2018, 25 Aug. 2018 and 7 Sept. 2018 respectively.
(ii) On 31 December 2015, the 88,750,047 shares held by Wuhan Zhongheng Group, are pledge to ChinaMerchants Securities Assets Co., Ltd. with due date of 31 December 2016. On 1 Feb. 2016, Wuhan ZhonghengGroup pledge the 27,349,953 shares held to China Merchants Securities Assets Co., Ltd. with due date of 31December 2016. The above-mentioned pledged shares are deferred by Wuhan Zhongheng Group; pledge expiredon 31 December 2017. The trading day for repurchase put off to the date when pledge actually removed. Till endof this period released, controlling shareholder still not removed the pledge and the Company has apply by letter,relevant Notice of Presentment on Stock Pledge from Controlling Shareholder was released. Found more in noticereleased on Juchao website date 2 Feb. 2018.
Wuhan Zhongheng Group received the first-instance judgment of Guangdong Higher People’s Court to the“pledged securities repurchase dispute” case sued by China Merchants Securities Asset Management Co., Ltd. inMarch 2021. Wuhan Zhongheng Group refused to accept the judgment and has appealed to the Supreme People'sCourt, the judgment of first instance has not yet taken effect. For details, please refer to the companyannouncement issued by the company on www.cninfo.com.cn on March 19, 2021.
(iii) The controlling shareholder Wuhan Zhongheng Group holds 119,289,894 shares of the Company’ stock,accounting for 42.13% of the total share capital of the Company, of which 116,489,894 shares were judicially frozenby Shenzhen Intermediate People's Court (hereinafter referred to as "Shenzhen Intermediate Court") on September27, 2016, which were frozen again by the Shenzhen Intermediate People's Court on December 14, 2018, with afrozen period of 36 months; the remaining 2,800,000 shares were frozen by the Shenzhen Intermediate People'sCourt on May 29, 2019, and were frozen again by the Higher People’s Court of Guangdong Province on July 5,2019. For details, please refer to the company’s announcements published on Juchao Website dated October 27,2016, January 11, 2019, May 31, 2019 and August 7, 2019.
(iv) On September 29, 2016, the company and its controlling shareholder, Wuhan Zhongheng Group, signed the“Agency Contract” with V&T Law Firm. On October 8, 2016, the three parties also signed the “SupplementalAgreement for Agency Contract”, it was agreed that V&T acted as an agent for the company and WuhanZhongheng Group to deal with the arbitration case with Shenzhen Vanke. After losing the lawsuit, due todifferences in the payment of attorney fees, V&T sued our company and Wuhan Zhongheng Group to theShenzhen Court of International Arbitration, and applied to the court to seize a bank account under our company’sname and part of our company dormitories, please refer to “Other Announcements on the Progress InvolvingLitigation and Arbitration” (Announcement Numbers: 2018-43, 2019-02) released by our company on JuchaoWebsite dated November 14, 2018 and March 6, 2019. 02. In November 2019, the Shenzhen Court ofInternational Arbitration ruled that the company and Wuhan Zhongheng Group paid the corresponding fees.According to the “Agency Contract” and “Supplemental Agreement for Agency Contract” signed by the threeparties, the loss of the arbitrament in this case was borne by Wuhan Zhongheng Group, so it had no impact on the
company’s profit. For details, see the company’s “Other Announcements on the Progress Involving Litigation andArbitration” (Announcement No.: 2019-34) released on Juchao Website dated November 25, 2019.
| Summary of important issues | Disclosure date | Interim report disclosure index |
Implementation progress of shares buy-back
□ Applicable √ Not applicable
Implementation progress of the reduction of repurchases shares by centralized bidding
□ Applicable √ Not applicable
III. Commitments completed in Period and those without completed till end of the Periodfrom actual controller, shareholders, related parties, purchaser and companies
□ Applicable √ Not applicable
The Company has no commitments completed in Period and those without completed till end of the Period from actual controller,shareholders, related parties, purchaser and companies.IV. Financial asset investment
1. Securities investment
□ Applicable √ Not applicable
No security investment in the Period.
2. Derivative investment
□ Applicable √ Not applicable
No derivative investment in the Period.V. Progress of investment projects with raised funds
□ Applicable √ Not applicable
VI. Prediction of business performance from January – June 2021Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or thewarning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
VII. Major contracts for daily operations
□ Applicable √ Not applicable
VIII. Trust financing
□ Applicable √ Not applicable
No trust financing in the Period.IX. Guarantee outside against the regulation
□Applicable √Not applicable
The Company had no guarantee outside against the regulation in the period.X. Non-operational fund occupation from controlling shareholders and its related party
□ Applicable √ Not applicable
The Company had no non-operational fund occupation form controlling shareholders and its related party in the period.
XI. Registration form for receiving research, communication and interview in the reportperiod
√ Applicable □ Not applicable
| Date | Reception location | Method | Type of investors | Object | Main content and information provided | Index for the interview and research |
| January 5, 2021 | Office of the BOD locates in 6/F, Huafa Building | Telephone communication | Individual | Individual | Understand the company's production and operation situation, litigation progress and the progress of urban renewal projects | N/A |