Zoomlion Annual Report
Zoomlion Annual Report
Zoomlion Annual Report
2014
Annual
Report
Important notice
The Board of Directors and the Supervisory Board of the Company and its directors, supervisors and
senior management warrant that there are no misrepresentation, misleading statements or material
omissions in this report and they shall, individually and jointly, accept full responsibility for the truthfulness,
accuracy and completeness of the contents of this report.
All directors attended the Board meeting at which this report was reviewed.
Dr. Zhan Chunxin, Chairman of the Board, Ms. Hong Xiaoming, Vice-president and the person in charge
of financial affairs, and Ms. Du Yigang, head of accounting department, warrant the truthfulness, accuracy
and completeness of the financial report contained in this annual report.
This report has been prepared in English and Chinese respectively. In case of discrepency, the Chinese
version shall prevail, except for the financial statements prepared in accordance with International
Financial Reporting Standards, of which the English version shall prevail.
Definition
Unless the context otherwise requires, the following terms shall have the meanings set out below:
The Company or Zoomlion refers to Zoomlion Heavy Industry Science and Technology Co., Ltd.
Listing Rules or Listing Rules of Hong Kong refers to the Rules Governing the Listing of Securities on
the Stock Exchange of Hong Kong Limited.
Contents
Company Profile
Chairmans Statement
13
25
Significant Events
40
43
47
64
85
87
Company Profile
I. Company Information
Company name (in Chinese):
Chinese abbreviation:
Company name (in English): Zoomlion Heavy Industry Science And Technology Co., Ltd.*
English abbreviation: Zoomlion
Legal representative of the Company: Zhan Chunxin
Secretary of the Board of Directors/Company Secretary: Shen Ke
Representative of securities affairs: Guo Tao
Contact address: No. 361 Yinpen South Road, Changsha, Hunan Province
Telephone: (86 731) 88923908
Fax: (86 731) 85651157
E-mail: [email protected]
Registered address and place of business of the Company: No. 361 Yinpen South Road, Changsha,
Hunan Province, the PRC
Postal code: 410013
Company website: http://www.zoomlion.com/
E-mail: [email protected]
Authorised representatives: Zhan Chunxin, Shen Ke
Address: No. 361 Yinpen South Road, Changsha, Hunan Province, the PRC
Newspapers for disclosure of the Companys information: China Securities Journal,
Shanghai Securities News,
Securities Times, Securities Daily
Website publishing the A share announcement: http://www.cninfo.com.cn
Website publishing the H share announcement: http://www.hkexnews.hk
Listing information: A Shares
Shenzhen Stock Exchange of China (SZSE)
Name: ZOOMLION
Stock Code: 000157
Corporate Bonds Name: 2008 Zoomlion Bonds (08)
Corporate Bonds Code: 112002
H Shares
The Stock Exchange of Hong Kong Limited (SEHK)
Stock Name: ZOOMLION
Stock Code: 1157
Company Profile
II. Other relevant information
H Share Registrar: Computershare Hong Kong Investor Services Limited
Shops 171216, 17th Floor, Hopewell Centre, 183 Queens Road East,
Wan Chai, Hong Kong
Legal Advisors
As to PRC law: Beijing Hairun Law Firm
15/F, No. 1 Building, No. 59 Gaoliangqiao Xie Road, Haidian District, Beijing, the PRC
As to Hong Kong law: Norton Rose Fulbright Hong Kong
38/F, Jardine House, 1 Connaught Place, Central, Hong Kong
Auditors
Domestic auditors: Baker Tilly China Certified Public Accountants (Baker Tilly China)
Room 208, Block B, Huatong Building, B 19 Chegongzhuang West Road,
Haidian District, Beijing, PRC
International auditors: KPMG
8/F, Princes Building, 10 Chater Road, Central, Hong Kong
Company Profile
Significant events of Zoomlion in 2014
10 January, the ceremony of the 2013 State Science and Technology Awards was formally held at the
Great Hall of the People, at which Zoomlions project in relation to key technology and application of
super tower crane was awarded second Prize of the National Science and Technology Advancement
Award.
19 January, the National Brand Evaluation and 2013 Chinese Five Star Brand Forum was held, at which
Zoomlion was awarded the Five Star Enterprise Brand of China.
March, Zoomlion formally established the only national concrete machine engineering technology
research center, and the project was approved on 22 October.
2 April, Zoomlion completed the transfer of equity interest in the merger and acquisition project of m-tec,
a world top German brand of dry-mixed mortar equipment.
15 May, the consecutive release of the brand new truck cranes 25T and 55T marked the formal
commencement of production of the first continuous assembly automatic production line in the
construction machinery industry worldwide.
1 July, the National Machinery Industry 33rd Reliable Quality Team and Quality Management Group
Representative Conference () (also
known as Double Representative Conference) was held in Hefei City, Anhui. Zoomlion won the award
of Outstanding Business for the National Construction Machinery Industry Quality Control Activities, and
was granted 9 first prizes and 6 second prizes in the National Machinery Industry Reliable Quality Team
and Quality Management Group Representative Conference.
7 July, the inauguration of the branch of the National Emergency Transportation Equipment Engineering
Technology Centre and Industrialisation Base ()
was held in Zoomlion.
14 July, Fortune announced the 2013 China 500 Enterprises list. Leveraging its outstanding performance,
Zoomlion took up the top position in machinery equipment manufacturing industry.
19 July, the 2014 Summit Forum on Risk Management of China Listed Companies and the 5th Gold
Shield Award Presentation Ceremony was held in Beijing, at which Zoomlion was awarded the Gold
Shield Award, the top prize in Chinese Enterprises Legal Risk Management.
26 July, the delivery ceremony of the worlds largest made-to-order T3000 flat-top tower crane was held
in Zoomlions Changde Industrial Park.
8 August, Zoomlion acquired 35% interest in Holland Raxtar, a company with leading edge in the global
elevator market, and a signing ceremony was held. This represented the initial step of Zoomlions
endeavor in becoming a global leader in the construction elevator industry.
19 August, Zoomlion proposed to acquire 60% equity interest of Chery Heavy Industry Co., Ltd. with
a cash consideration of RMB2,088 million, which represents the implementation of the Companys
agricultural machinery strategies.
11 September, The Boston Consulting Group of America announced in the Summer Davos Forum the
list of top 100 Global Challengers in 2014, in which Zoomlion was ranked the 28th and was the only
selected enterprise in the construction machinery industry.
24 September, Zoomlion ranked 128th among Asias 500 Most Influential Brands in 2014 at the World
Brand Laboratory Award and we are the only Chinese construction machinery enterprise receiving this
honor.
Zoomlion Heavy Industry Science and Technology Co., Ltd.
2014 Annual Report
Company Profile
26 September, the Italy Milan World Expo 2015 Roadshow Press Conference in China and the
Cooperation Agreement Signing Ceremony was held in the Italy Centre in Beijing. Zoomlion, as the only
global partner in construction machinery and agricultural machinery in 2015 Milan World Expo China
Pavilion, took part in the construction of Milan World Expo site.
28 October, the China International Agricultural Machinery Exhibition (CIAME) officially commenced
at Wuhan International Expo Center. Zoomlions two major brands King of Crops () and King
of Agriculture () were first introduced with a strong portfolio of 41 comprehensively upgraded
machinery models and 6 major innovative products, leaving a strong impression to and drawing much
attention from the industry.
29 October, the Construction Machinery Leasing Division of China Construction Machinery Industry
Association 2014 Annual Conference and China Construction Machinery Leasing Industry Prize
Presentation Ceremony (2014
) was held in Chengdu, in which Zoomlion Finance and Leasing (Beijing) Co., Ltd. of our financial
services branch was granted two major awards in the 2014 China Construction Machinery Leasing
Industry Most Competitive Brand Top Ten Finance Leasing Enterprises (
) and 2014 China Construction Machinery Leasing Industry Top 50 Enterprises (2014
50).
3 November, Li Keqiang, the Premier of the State Council held a forum to listen to the opinions and
advice of experts and scholars as well as the management of corporations in respect of the current
economy and the future economic plans. Chairman Zhan Chunxin, was the first entrepreneur delivering a
speech, reported on three aspects, namely, current industry condition, the operation of the Company and
suggestions.
6 November, in the Gold Round Table Forum () and Prize Presentation Ceremony for board
of directors among listed companies initiated and held by the Board of Directors Magazine, Zoomlion was
granted the 7th time the Excellent Board of Directors Award Gold Round Table Award for the Board
of Directors among PRC Listed Companies ( ).
November, Zoomlions revolutionary new energy product CIFA ENERGYA series hybrid fuels green mixer
was granted the Red Dot Design Award () in the global design field, which is the first time
the construction machinery industry being given this honor.
9 December, the preparation work of the Agricultural Machinery Industry 13th Five-Year Development
Plan () commenced and Zoomlion took part in the preparation.
Chairmans Statement
Dear Shareholders:
2014 is a year of commencement for the comprehensive deepening of reforms and a year of transition
with historical meaning for China. For the Chinese construction machinery industry, it is a year of continued
toughness and a year for calm and rational reflection. For Zoomlion, it is a year of reforms, self-empowerment
and reinforcements as well as a year of readiness, enhancements and improvements.
In the past year, we overcame some of the toughest challenges. We, however, did not lose our spirit in face
of obstacles, which is Zoomlions inborn deposition. The endeavor Zoomlion made at hard times is a painting
showcasing Zoomlions dedication to triumph over adversities. Zoomlions strategic direction has never been
so definite. Our pace of transformation and upgrading has never been so firm. Our operational management
has never been so exhaustive. The recession in the market not only enlightened us with profound insight, but
also, through polishing our structure and raising our spirit, enabled us to develop our survival ability against
hardships.
Is this not another summit? After adjusting its pace and accumulating energy, Zoomlion will be able to go
further and higher!
Chairman
Zhan Chunxin
In 2015, the steady growing trend of the macro economy will continue and the transformation and
upgrading of the equipment manufacturing industry will become the new normal stage. To enhance our
competitiveness under the new economic normal stage, Zoomlions path to excellence inevitably involves
continued improvement and adaptation so we can eventually lead the new normal stage. After going through
comprehensive restructuring of concepts, techniques, products, markets and management, Zoomlion returns
to the origin where we set off and to retrieve the courage we had when we started from scratch. We keep
our enthusiasm and eagerness towards the market while rebuilding ourselves through eternal passion and
tremendous courage.
Strategic improvement, management reform, product upgrade and business transformation will be
Zoomlions main development direction in 2015. We will resume our sensitivity and control of the market.
We will develop a borderless platform which vertically and horizontally integrates research, development and
manufacturing so the success will be shared by all parties. We will utilise the strong synergistic effect of the
hard power and soft power of the industry and the financial market. More importantly, we will treasure and
nurture the craftsmanship with care while endeavor to strengthen technology, quality, costs and services with
our best thinking and action.
Chairmans Statement
We will get through the winter no matter how long it is. We will achieve the destination no matter how far it is.
We will overcome the difficulty no matter how insurmountable it is. Self-transcendence makes our improvement
more meaningful. In the 23rd anniversary of the establishment of Zoomlion, we are standing at a new starting
point where we are ready to set off and improve. We firmly believe in a bright future where we will bring
an upgraded Zoomlion to society amid a trend of reforms that are packed with numerous challenges and
unbounded possibilities.
At last, I would like to extend my gratitude to all shareholders, the community, customers and all the
hardworking employees for their contribution and support for the development of the Company during the
year.
Chairman
Zhan Chunxin
28 March 2015
Operating income
2014
2013
Change
2012
25,851,195,135.57
38,541,775,254.36
-32.93%
48,071,173,508.14
594,068,242.20
3,838,972,797.15
-84.53%
7,330,048,993.92
318,289,572.95
3,715,833,541.57
-91.43%
7,139,793,408.29
-7,690,132,991.82
736,769,778.08
0.08
0.50
-84.00%
Total assets
2,960,289,862.91
0.95
0.08
0.50
-84.00%
0.95
1.45%
9.22%
-7.77%
17.96%
End of 2014
End of 2013
Change
End of 2012
93,757,955,793.25
89,537,157,719.77
4.71%
88,974,464,566.71
40,830,793,317.80
41,619,087,301.05
-1.89%
40,802,141,704.02
2013
2012
-7,810,779.43
-21,579,314.51
-19,224,024.44
306,889,004.92
110,668,309.33
212,062,991.73
2,180,689.36
3,283,352.83
-8,857,820.57
-5,606,189.78
-11,194,074.61
3,423,993.72
-17,782,644.09
Item
Loss on disposal of non-current assets
(including written off of provision for
impairment of assets)
Government grants recorded in current profit and
loss, except government grants of
fixed amount or quantity closely related to
business operations of the Company and
entitled pursuant to government unified policy
Excess of interest in the fair value of investees
identifiable net assets over investment costs
of subsidiaries, associates and
36,679,912.51
59,229,910.54
60,368,147.14
53,297,678.82
19,128,092.71
39,093,317.70
951,757.51
617,730.22
469,377.23
275,778,669.25
123,139,255.58
190,255,585.63
Total
10
2014
2013
2012
2011
2010
25,851
38,542
48,071
46,323
32,193
863
4,527
8,858
9,602
5,416
(235)
(570)
(1,329)
(1,429)
(828)
628
3,957
7,529
8,173
4,588
594
3,844
7,330
8,066
4,666
34
113
199
107
(78)
0.08
0.50
0.95
1.05
0.74
56.03
53.06
53.73
50.25
56.49
Note: Gearing ratio is calculated based on the total liabilities divided by total assets at the end of the respective reporting period.
2014
2013
2012
2011
2010
Non-current assets
23,847
24,549
25,691
23,701
19,372
Current assets
69,871
64,948
63,243
47,842
43,670
Current liabilities
25,211
32,725
34,109
26,652
26,067
44,660
32,223
29,134
21,190
17,603
68,507
56,772
54,825
44,891
36,975
Non-current liabilities
27,299
14,760
13,676
9,296
9,540
Net assets
41,208
42,012
41,149
35,595
27,435
40,791
41,579
40,762
35,407
27,376
417
433
387
188
59
11
Current year
Last year
Carried forward
Brought forward
594
3,839
40,831
41,619
-40
-40
(2)
594
3,844
40,791
41,579
(1) Since acquisition-related cost of RMB40 million incurred in 2008 was recognised in the cost
of business combination in accordance with PRC GAAP while recognised in profit or loss in
accordance with IFRSs, this results in the difference between the net assets attributable to equity
shareholders of the Company under those two accounting standards;
(2) Under PRC GAAP, safety production fund should be accrued and recognised in profit or loss with
a corresponding credit in reserve according to relevant PRC regulations. Such reserve is reduced
for expenses incurred for safety production purposes or, when safety production related equipment
are purchased, is reduced by the purchased cost with a corresponding increase in the accumulated
depreciation. Such fixed assets are not depreciated thereafter. Under IFRSs, expense is recognised
in profit or loss when incurred, and fixed assets are capitalised and depreciated in accordance with
applicable accounting policies.
12
I. Overview
Economic development varied more widely among advanced economies in 2014, with the growth in
developing economies slowing down, indicating a still bumpy road ahead to global economic recovery.
The growth of fixed assets investment and real estate investment in the PRC hit decade low and Chinas
economic growth entered into a new normal stage. The construction machinery industry continued to
face challenges such as overcapacity, sluggish market demand, assimilation of inventory risks and the
throes of plummeting operation results. Meanwhile, driven by the increase in the states investment in the
construction of environmental protection infrastructure, the contribution of environmental industry to the
GDP continued to rise, providing an unprecedented opportunity for the development of the environmental
industry. The market capacity is enormous with extensive development prospects.
Confronting the complicated and severe external environment, the Company has tackled the challenge
with deliberation and adjusted its operation strategies in a timely manner. Adhering to the operation
philosophy of achieving quality growth that centers around improving efficiency, streamlining
operation, increasing revenue, lowering costs and enhancing effectiveness, the Company has strived
for consolidating its operation quality and laying a sound foundation for further growth in the unfavorable
environment so as to fuel the future development and develop the philosophy and way of operation that
would provide the Company an opportunity to fit in and be the pioneer amidst the new normal stage of
marco-economy. The Company secured a strong position in the markets of major products and ranked
among the top in terms of the market share of concrete machinery and crane machinery, and was the
first in terms of the market share of environmental and sanitation machinery.
1.
(2) We relocated our environmental industry sector to a new industrial zone to alleviate the
constraints on production capacity, resulting in a relatively significant improvement in results of
operation. At the same time, we made a breakthrough in the treatment of kitchen waste and
construction waste as well as the industrialisation of waste classification equipment.
13
2.
3.
14
5.
15
16
6.
The Management showing confidence on the prospect of the Company through reducing
salaries and increasing shareholdings
During the reporting period, the management team of the Company offered to reduce salaries
by 50% from 1 July 2014 as a whole until results of operation of the Company improved while
certain Directors, Supervisors, Senior Management and core management personnel of our
Company proposed to hold an additional 169,000,000 shares of the Company by purchasing the
shareholdings of Good Excel Group Limited, which showed the Managements confidence in the
continuous and stable development of the Company in the future, enhanced the interests of the
Management and shareholders as a whole and promoted the continuous and stable development of
the Company.
17
2. Successful implementation of corporate culture made the Company a pioneer and leader in
the industry for integrating domestic and overseas resources
The Company has merged and acquired dozens of domestic and foreign enterprises since 2001,
which represents a new practice in the PRC construction machinery industry to integrate overseas
resources. The Company acquired CIFA, an enterprise based in Italy, in 2008, which represented
the acquisition of the worlds most advanced technology by Zoomlion and making the Company
a pioneer in the internationalisation of the industry and maintained a leading position in the
industry. The management team acquired extensive experience through numerous mergers and
acquisitions. With the success of the merger and acquisition, the Company has developed the five
basic principles of merger and acquisition, namely leniency, sharing, accountability, regulation and
synergy from its experience. In 2014, the Company completed the acquisition of m-tec Group of
Germany, and the acquisition of 35% equity interest in Raxtar, a Holland Company, and proposed
to acquire 67.51% equity interest in Chery Heavy Industry Co., Ltd., respectively. These enterprises
were integrated into the Company successfully with thanks to its corporate culture. In addition, the
Company employed talents with extensive experiences through acquisitions, and the management
problems raised after merger and acquisition were solved.
18
The Company formulated standards for the industry with products and technologies leading
the development of the industry
The predecessor of Zoomlion was Changsha Construction Machinery Research Institute under the
former Ministry of Construction. With more than 50 years of experiences in machinery technology,
it can be regarded as the origin of construction machinery technologies in the PRC. Zoomlion
participated in the formulation of standards of the construction machinery industry in the PRC and
formulated and revised over 300 national and industrial standards. It is also the only enterprise
participated in the formulation and revision of International Organisation for Standardisation (ISO)
standards as a representative from the construction machinery industry in PRC. As the first ISO
secretariat established in the PRC, the Company enhanced the influence of PRC construction
machinery in entering international market for the benefit of the whole industry.
The Company has a national technology research center, the only National Key Laboratory on
Key Technologies for Construction Machinery and the only National Engineering Technology
Research Center for Concrete Machinery in the PRC. The Company possessed core technologies
for construction machinery and obtained various National Science and Technology Advancement
Awards, leading the technology development of the industry. The Company focused on solving
potential and basic technological R&D difficulties for the industry, launching around 200 new
products during the year, accounting for approximately 60% of the turnover of the Company. The
Company maintained its leading industrial position in terms of number of patents applied. In 2014,
the Company were granted over 340 invention patents, ranking the top in the industry.
4.
19
Excellent resource allocation and high operation efficiency promoted steady development
of the Company
Zoomlion has excellent resource allocation and high operation efficiency. For personnel allocation,
the efficiency per capita is higher than the average level in the industry due to the reasonable scale
and structure of its human resources. For asset allocation, the Company has adopted a prudent
approach in investments in fixed assets, resulting in higher economic benefits from fixed assets per
unit as compared with the average level in the industry. As the development of the industry slowed
down, higher operation efficiency and lower fixed costs will promote steady growth of the Company.
20
3.
21
22
Place of reception
Activity
target group
Particulars and
Target group
information provided
I.
3 November 2014
Hong Kong
Strategic meeting
Institution
Macquarie Securities
5 November 2014
Beijing
Strategic meeting
Institution
Main content:
1. The development of the industry
12 November 2014
Singapore
Strategic meeting
Institution
Morgan Stanley
17 November 2014
Hong Kong
Strategic meeting
Institution
Goldman Sachs
18 November 2014
Hong Kong
Strategic meeting
Institution
Daiwa Securities
1 December 2014
Japan
Strategic meeting
Institution
BNP
industry;
2. The development history,
9 December 2014
Hong Kong
Strategic meeting
Institution
J.P. Morgan
10 December 2014
Shenzhen
Strategic meeting
Institution
China Merchants
11 December 2014
Hong Kong
Strategic meeting
Institution
Citibank
Securities
16 December 2014
Shenzhen
Strategic meeting
Institution
Essence Securities
comparison of advantages of
18 December 2014
Xiamen
Strategic meeting
Institution
Huachuang Securities
23
X. Donations
During the reporting period, the charity donations and other donations of the Company amounted to
approximately RMB13.34 million in aggregate.
24
The following management discussion and analysis is based on IFRSs financial statements data.
Overview
We are a leading China-based construction machinery manufacturer providing comprehensive and diversified
products and value-added services and have experienced significant growth in the last decade benefiting from
Chinas ongoing urbanisation and significant growth in the infrastructure sector. Our product lines include: (i)
concrete machinery, (ii) crane machinery, (iii) environmental and sanitation machinery, (iv) road construction and
pile foundation machinery, (v) earth working machinery, and (vi) finance lease services.
25
Turnover
2013
RMB
RMB
millions
millions
25,851
38,542
(18,642)
(27,300)
7,209
11,242
164
(49)
(3,036)
(3,631)
(2,347)
(2,701)
(443)
(570)
1,547
4,291
(692)
195
41
863
4,527
(235)
(570)
628
3,957
594
3,844
34
113
26
2013
RMB
RMB
millions
millions
10,555
17,191
Crane machinery
7,423
12,479
4,024
3,282
1,026
1,731
Concrete machinery
698
772
930
1,461
24,656
36,916
1,195
1,626
25,851
38,542
Total
27
22,956
2,895
35,755
2,787
Total
25,851
38,542
The following table sets forth the breakdown of our turnover by the end-customers geographic location for
2014:
Year Ended 31 December
2014
2013
RMB
RMB
millions
millions
28
Mainland PRC
Outside PRC
22,110
3,741
34,806
3,736
Total
25,851
38,542
29
2013
RMB
RMB
millions
millions
17,139
25,614
Staff costs
886
1,021
326
305
289
355
18,642
27,300
Raw materials
Costs of raw materials, parts and components account for the majority of our cost of sales and services.
Due to the decrease in the volume of the Companys sales, our cost of sales and services reduced by 31.71%
from RMB27,300 million for the year ended 31 December 2013 to RMB18,642 million for the year ended 31
December 2014, which was in line with the decrease in our sales and production volume.
30
2013
RMB
RMB
millions
millions
Concrete machinery
2,368
4,568
Crane machinery
2,063
3,361
1,200
947
325
562
43
14
928
1,456
6,927
10,908
282
334
7,209
11,242
Our gross profit decreased by 35.87% from RMB11,242 million for the year ended 31 December 2013 to
RMB7,209 million for the year ended 31 December 2014. Our gross profit margin decreased from 29.17% for
the year ended 31 December 2013 to 27.89% for the year ended 31 December 2014, which was attributable
to the change of product mix and slight decrease in selling price.
31
32
2013
RMB
RMB
millions
millions
(8,411)
43
(1,891)
(692)
8,230
(2,754)
(2,072)
(3,403)
(102)
(24)
16,657
20,084
14,483
16,657
Operating activities
In 2014, net cash used in operating activities was RMB8,411 million derived primarily from the profit before
taxation of RMB863 million, adjusted to reflect the interest expenses of RMB1,260 million and depreciation
and amortisation of RMB646 million, and deducting the following items: (i) the increase in trade and other
receivables of RMB4,058 million; (ii) the decrease in trade and other payables of RMB5,166 million; (iii) the
income tax payment of RMB632 million; (iv) the decrease in receivables under finance lease of RMB2,471
million; and (v) the payment for repurchase of equipment at fair market value from banks to which the Group
previously factored its receivables under finance lease without recourse of RMB2,509 million, and the increase
in inventories of RMB581 million.
33
Financing activities
In 2014, net cash generated from financing activities was RMB8,230 million, consisting primarily of the
proceeds from loans and borrowings of RMB14,296 million, offset by repayments of loans and borrowings
of RMB12,707 million, net cash from issuance of medium-term notes of RMB8,991 million, dividends paid to
equity shareholders of RMB1,156 million in cash and interest payments of RMB1,134 million, and payment on
the acquisition of minority interest of RMB44 million.
Capital Expenditures
For the year ended 31 December 2014, our capital expenditures for the purchases of property, plant and
equipment, intangible assets and lease prepayments amounted to RMB975 million.
34
2013
RMB
RMB
millions
millions
10,376
8,747
280
306
30,639
26,569
12,202
10,228
Current assets
Inventories
Other current assets
1,891
2,441
14,483
16,657
69,871
64,948
5,687
8,397
19,494
23,891
30
437
25,211
32,725
Current liabilities
Loans and borrowings
Trade and other payables
Income tax payable
Total current liabilities
Our net current asset increased from RMB32,223 million as at 31 December 2013 to RMB44,660 million as
at 31 December 2014, mainly attributable to the increase of trade and other receivables, and the decrease of
trade and other payables.
35
2013
RMB
RMB
millions
millions
Current
832
3,864
5,208
1,823
2,357
Total
5,687
8,397
Non-current
11,610
7,998
Unsecured bond
1,098
1,096
8,991
6,049
6,013
(1,823)
(2,357)
Total
25,925
12,750
As at 31 December 2014, the aggregate outstanding principal amounts of our unsecured short-term and
long-term bank loans were RMB3,864 million and RMB11,610 million respectively, RMB5,126 million of
which require us to comply with certain restrictive financial covenants. As of 31 December 2014, we have not
violated any of these restrictive financial covenants. If we were unable to comply with such restrictive financial
covenants and were not exempted by the lending banks, we might be ordered to repay the bank loans
immediately, and our liquidity will be adversely affected.
As at 31 December 2014, our facilities from 31 domestic and overseas financial institutions amounted to
approximately RMB75,300 million have not been utilised. In addition, 11 domestic financial institutions
have granted facilities in an aggregate amount of RMB23,900 million to us under non-recourse factoring
arrangements.
36
More than
More than
Within
1 year but
2 years but
Carrying
undiscounted
1 year or
less than
less than
More than
amount
cash flow
on demand
2 years
5 years
5 years
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
31,612
36,672
6,795
7,283
18,076
4,518
19,494
19,494
19,494
899
903
343
386
174
52,005
57,069
26,289
7,626
18,462
4,692
242
17,266
17,266
37
As at 31 December 2013
Total
Carrying
More than
More than
contractual
Within
1 year but
2 years but
undiscounted
1 year or
less than
less than
More than
amount
cash flow
on demand
2 years
5 years
5 years
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
21,147
24,464
6,668
919
12,162
4,715
23,891
23,891
23,891
1,542
1,563
858
633
72
46,580
49,918
30,559
1,777
12,795
4,787
248
17,712
17,712
The Companys management believes that the Companys current cash on hand, expected cash flows
from operations and available standby credit facilities from financial institutions will be sufficient to meet the
Companys working capital requirements and repay its borrowings and obligations when they become due.
Credit Risk
Credit risk is primarily attributable to bank deposits, trade and other receivables, receivables under finance
lease, financial guarantees and endorsed bills with full recourse which were derecognised by the Group. The
maximum exposure to credit risk is represented by the carrying amount of these financial assets and guarantee
obligations.
In respect of trade and other receivables, individual credit evaluations are performed on all customers requiring
credit over a certain amount. Collaterals, such as properties, machinery or third party guarantees, are generally
required from customers with lower credit ratings. In addition, credit insurance coverage is required for
overseas sales. Certain customers are required to pay by letters of credit. Debtors overdue by three months
or more are handled by risk management department which is responsible for recovering debts through legal
and other actions. In respect of receivables under finance lease, a risk control committee is responsible for
the establishment of credit risk management policies, the supervision on the implementation of such policies
and determination of the key terms of the lease contracts. Credit review department, legal department, finance
department and information technology department are collectively responsible for credit risk management and
monitoring of settlement of receivables under finance lease. Bank deposits are placed with financial institutions
that have high credit ratings. Given their credit ratings, management does not expect any counterparty to fail to
meet its obligations.
38
Currency Risk
The Company is exposed to currency risk primarily through deposits, sales, purchases and borrowings which
give rise to receivables, payables, loans and borrowings and cash balances that are denominated in a foreign
currency, that is, a currency other than the functional currency of the operations to which the transactions
relate. The currencies giving rise to this risk are primarily US dollars, HK dollars, Japanese Yen and Euro.
Please refer to note 28 of the financial statements prepared under IFRSs for more quantitative information
about the Companys currency risk.
39
Significant Events
I. Significant Guarantees during the Reporting Period
Unit: RMB ten thousand
Guarantee provided to subsidiaries by the Company
Disclosure date
of the
Actual date of
announcement
Type of
Period of
Guarantee limit
agreement)
of guarantee
Guarantee
guarantee
29 March 2012
244,760
5 April 2012
244,760
General guarantee
5 years
14 December 2012
367,140
20 December 2012
367,140
General guarantee
10 years
29 March 2014
400,000
19 April 2013
30,595
General guarantee
2 years
29 March 2014
400,000
23 July 2013
30,595
General guarantee
2 years
29 March 2014
400,000
13 August 2013
61,190
General guarantee
2 years
29 March 2014
400,000
26 February 2014
12,238
General guarantee
1 year
29 March 2014
400,000
11 July 2014
39,161.6
General guarantee
1 year
Name of
regarding the
guarantee party
guarantee
The Company had no significant connected transactions according to the relevant domestic
regulations.
(II) Under the Listing Rules of Hong Kong, the continuing connected transactions of the
Company during 2014 were as follows:
Framework sales agreement with Dongfeng Motor Corporation
Dongfeng Motor Corporation holds 11.14% of the equity interest in Hunan Zoomlion Axle Co.,
Ltd., a subsidiary of the Company, and is therefore a substantial shareholder of Hunan Zoomlion
Axle Co., Ltd. and a connected person of the Company. Dongfeng Motor Corporation was
40
Significant Events
established in 1969 and is currently one of the top three automakers in China. Its main businesses
include production and sale of passenger vehicles, commercial vehicles, engine, auto parts
and components, and equipment in the PRC. To regulate the sales and purchase arrangement
between the Company and Dongfeng Group after the Listing, the Company has entered into a
framework sales agreement (the Dongfeng Framework Sales Agreement) dated 6 December 2010
with Dongfeng Motor Corporation and such agreement was expired on 23 December 2013. The
Company entered into the Dongfeng Sales Renewal Agreement dated 13 August 2013 to renew
the terms and conditions set out in the Dongfeng Framework Sales Agreement. Such agreement
has taken effect from 1 January 2013 and has a term of three years. Pursuant to the Dongfeng
Framework Sales Agreement, Dongfeng Group will purchase axles and other auto components
produced by the Company from time to time. In 2014, total sales of the Group to Dongfeng Group
amounted to approximately RMB447 million (excluding value-added tax).
Dongfeng Purchase Renewal Agreement with Dongfeng Motor Corporation
The Company entered into a framework purchase agreement (the Dongfeng Framework Purchase
Agreement) dated 6 December 2010 with Dongfeng Motor and such agreement was expired on 23
December 2012. On 13 August 2013, the Company entered into the Dongfeng Purchase Renewal
Agreement to renew the terms and conditions set out in the Dongfeng Framework Purchase
Agreement. The Dongfeng Purchase Renewal Agreement has taken effect from 1 January 2013 and
has a term of three years. Pursuant to the Dongfeng Purchase Renewal Agreement, the Company
will purchase steel springs, chassis, engines and other auto components from the Dongfeng
Group from time to time. In 2014, the total purchases from the Dongfeng Group amounted to
approximately RMB1,264 million (excluding VAT).
The Independent Non-executive Directors of the Company unanimously confirmed that the
continuing connected transactions of the Company for the year 2014 were:
(1)
(2) entered into on normal commercial terms or, if there are no sufficient comparable transactions
to judge whether they are on normal commercial terms, on terms no less favorable to the
Company than terms available to or from (as appropriate) independent third parties;
(3) conducted according to the terms of the relevant agreements governing the transactions, and
the terms of the transactions were fair and reasonable and in the interests of the shareholders
of the Company as a whole; and
Each of the annual value for the continuing connected transactions did not exceed the annual caps
approved by the Board dated 13 August 2013.
41
Significant Events
In respect of the significant connected transactions disclosed above (the Transactions), KPMG
has carried out procedures on the Transactions entered into by the Group for the year ended 31
December 2014 and issued a letter to the Board of the Company, stating that: (1) they were not
aware that the Transactions have not been approved by the Board; (2) they were not aware of
any matter which would make them believe that the Transactions were not in accordance with the
pricing policies of the Group in any material aspect in connection with the Transactions involving
the provision of goods or services by the Group; (3) they were not aware of any matter which would
make them believe that the Transactions were not in accordance with the relevant agreements
governing the Transactions in any material aspect; (4) they were not aware of any matter which
would make them believe that the annual aggregate amount of each of the Transactions, would
exceed the annual value disclosed in the previous announcement dated 13 August 2013 made by
the Company in respect of each of the disclosed continuing connected transactions.
The Directors confirm that the Company has complied with the disclosure requirements in
accordance with Chapter 14A of the Listing Rules of Hong Kong.
42
1.
The Company proposed to participate in the bid for 1.8 billion shares in Chery Heavy Industry Co.,
Ltd. (renamed as Zoomlion Heavy Machinery Company Limited ) , which accounted for 60% of
the share capital of Zoomlion Heavy Machinery, at the listed price of RMB2,088,000,000 on 15
August 2014. On 30 December 2014, the Company proposed to acquire an additional 225,300,000
shares in Zoomlion Heavy Machinery, which accounted for 7.51% of its share capital, at the
consideration of RMB261,348,000. The transaction in respect of the transfer of shares of Zoomlion
Heavy Machinery was completed on 4 January 2015, pursuant to which the Company holds
2,025,300,000 shares in Zoomlion Heavy Machinery in aggregate, which represents 67.51% of its
share capital.
2.
Certain directors, supervisors, senior management and key management personnel of the Company
proposed to jointly acquire 100% shares in Good Excel Group Limited, one of the Companys
shareholders which hold 2.19% interests of the Company, at a consideration of RMB843,178,400
(equivalent to approximately US$136,068,940). A framework agreement has been entered between
the parties on 19 December 2014 and the transfer has not been completed as of the date of this
report.
Bonus shares
from capital
Percentage
Number
I.
(%)
New shares
Bonus issue
Percentage
reserve
Others
Sub-total
Number
(%)
14,436,046
0.19%
494,125
494,125
14,930,171
0.19%
0.00%
0.00%
0.00%
0.00%
14,436,046
0.19%
494,125
494,125
14,930,171
0.19%
0.00%
0.00%
shares held by
domestic natural
persons
14,436,046
0.19%
494,125
494,125
14,930,171
0.19%
0.00%
0.00%
0.00%
0.00%
shares held by
overseas natural
persons
II. Shares not subject to sales restriction
0.00%
0.00%
7,691,518,004
99.81%
-494,125
-494,125
7,691,023,879
99.81%
6,261,489,118
81.25%
-494,125
-494,125
6,260,994,993
81.25%
0.00%
0.00%
1,430,028,886
18.56%
1,430,028,886
18.56%
0.00%
0.00%
7,705,954,050
100.00%
7,705,954,050
100.00%
43
Name of shareholder
HKSCC NOMINEES LIMITED
State-owned Assets Supervision and
Administration Commission of
Hunan Province Peoples Government
Changsha Hesheng Science and
Technology Investment Co., Ltd.
GOOD EXCEL GROUP LIMITED
Real Smart International Limited
Changsha Yifang Science and
Technology Investment Co., Ltd.
Hony Capital Fund I (Tianjin), L.P.
Nature of
shareholder
Overseas legal
person
State-owned legal
person
Domestic non
state-owned
legal person
Overseas legal
person
Overseas legal
person
Domestic non
state-owned
legal person
Domestic non
state-owned
legal person
State-owned
legal person
Total
number
of share
held as
at the end
of the
reporting
period
Changes
during the
reporting
period
18.53% 1,427,656,763
-129,560
0 1,427,656,763
16.26% 1,253,314,876
0 1,253,314,876
Percentage
of
shareholding
(%)
Number of
shares
subject
to sales
restriction
Number of
shares not
subject
to sales
restriction
5.02%
386,517,443
386,517,443
2.19%
168,635,680
-195,301,176
168,635,680
2.19%
168,635,602
168,635,602
2.12%
163,364,942
163,364,942
2.07%
159,428,548
159,428,548
0.69%
51,955,855
51,955,855
Others
0.33%
25,119,826
-11,191,119
25,119,826
State-owned
legal person
0.32%
24,340,809
-114,473,745
24,340,809
The Company has complied with the minimum public float requirement under Rule 8.08 of the Listing Rules of
Hong Kong.
44
Substantial Shareholders interests in the shares and underlying shares of the Company
As at 31 December 2014, the following persons (other than the directors and supervisors of the
Company) had an interest or short position in the shares or underlying shares of the Company
which is required to be disclosed to the Company pursuant to Section 2 and 3 of Part XV of the
Securities and Futures Ordinance (SFO), or required to be recorded in the register to be kept by
the Company pursuant to Section 336 of SFO:
Name
Nature of interest
Beneficial
Class
of shares
Percentage of
Percentage
class of
of total
Number shares issued shares issued
of shares
(%)
(%)
A share
1,253,314,876
19.97
16.26
Interests of controlled
corporation
Interests of controlled
corporation
Interests of controlled
corporation
Interests of controlled
corporation
Beneficial
A shares
337,271,282
5.37
4.38
A shares
337,271,282
5.37
4.38
A shares
337,271,282
5.37
4.38
A shares
337,271,282
5.37
4.38
A share
386,517,443
6.16
5.02
Interests of controlled
corporation
Interests of controlled
corporation
Interests of controlled
corporation
Interests of controlled
corporation and
custodian corporation/
approved lending agent
Interests of controlled
corporation
A shares
496,699,830
7.91
6.45
A shares
496,699,830
7.91
6.45
A shares
496,699,830
7.91
6.45
H share
104,430,718(L)
17,044,311(S)
85,002,252(P)
7.30
1.19
5.94
1.36
0.22
1.10
H share
100,809,800(L)
7.04
1.31
45
The disclosure is based on the information available on the website of SEHK (www.hkexnews.com.hk).
(2)
Good Excel Group Limited and Real Smart International Limited are beneficially interested in 168,635,680 and 168,635,602
A shares respectively. Good Excel Group Limited and Real Smart International Limited are interested in an aggregate of
337,271,282 A shares. Each of Good Excel Group Limited and Real Smart International Limited is a 100% and 67.71% owned
subsidiary of Rise Honour Investments Limited, respectively. Rise Honour Investments Limited is controlled by Hony Capital II
L.P., which is controlled by Hony Capital II GP Ltd..Hony Capital II GP Ltd. is wholly-owned by Right Lane Limited, which is a
wholly-owned company of Legend Holdings Limited.
(3)
Changsha Hesheng Science and Technology Investment Co., Ltd. is an investment entity controlled and owned by the
management of the Group.
(4)
Legend Holdings Limited is deemed to be interested in 159,428,548 A shares held by Hony Capital Fund I (Tianjin), L.P. Legend
Holdings Limited is deemed to be interested in 496,699,830 A shares.
(5)
Chinese Academy of Sciences Holdings Co., Ltd. holds 36% interests of Legend Holdings Limited, while Chinese Academy of
Sciences Holdings Co., Ltd. is a wholly stated-owned limited liability company incorporated in accordance with the PRC law.
(6)
As stated in the form of disclosure of shareholders interests submitted by Citigroup Inc. on 29 December 2014 (the date of the
relevant event set out in the form was 23 December 2014), these shares were held via Citigroup Inc. and its affiliates.
(7)
As stated in the form of disclosure of shareholders interests submitted by Unique Element Corp. on 23 December 2014 (the
date of the relevant event set out in the form was 22 December 2014), these shares were held via Unique Element Corp. and its
affiliates.
III. Purchase, sale or redemption of shares by the Company and its subsidiaries
For the year ended 31 December 2014, there was no purchase, sale or redemption of any securities of
the Company by the Company or any of its subsidiaries under the Listing Rules of Hong Kong.
46
Name
Position
Zhan Chunxin
Liu Quan
Qiu Zhongwei
Liu Changkun
Qian Shizheng
Wang Zhile
Lian Weizeng
Cao Yongang
Liu Chi
Luo Anping
Zhang Jianguo
Yin Zhengfu
He Jianming
Du Youqi
Fang Minghua
Wang Chunyang
Xu Wuquan
Xiong Yanming
Su Yongzhuan
Guo Xuehong
Sun Changjun
Li Jiangtao
Hong Xiaoming
He Wenjin
Number of
Shares held
at the
beginning
of the
Reporting
Period
(share)
Number of
Shares
increased
during the
Reporting
Period
(share)
Number of
Shares
decreased
during the
Reporting
Period
(share)
Number of
Shares
held at the
end of the
Reporting
Period
(share)
Employment
Status
Gender Age
Date of term
of office
commenced
Incumbent
male
59
22 July 2010
5,152,036
5,152,036
Incumbent
Incumbent
Resigned
Incumbent
Incumbent
Resigned
Incumbent
male
male
male
male
male
male
male
51
46
71
62
66
68
42
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
1,068,052
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,068,052
0
0
0
0
0
0
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
male
male
male
male
male
female
male
male
male
male
male
male
male
male
female
57
53
55
58
51
56
57
59
57
50
42
52
52
51
51
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
22 July 2010
379,211
450,055
1,203,943
842,750
123,338
576,511
670,776
610,814
790,426
896,525
778,900
737,650
754,076
761,710
495,300
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-30,835
0
0
0
0
-224,132
0
0
0
0
0
379,211
450,055
1,203,943
842,750
92,503
576,511
670,776
610,814
790,426
672,393
778,900
737,650
754,076
761,710
495,300
Resigned
male
44
22 July 2010
706,900
706,900
594,400
495,200
423,200
709,500
450,000
0
0
0
0
0
0
0
0
0
0
594,400
495,200
423,200
709,500
450,000
-254,967
19,416,306
Chen Xiaofei
Chen Peiliang
Huang Qun
Wang Yukun
Shen Ke
Vice President
Vice President
Vice President
Chief Information Officer
Secretary to the Board
of Directors
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
male
male
female
male
male
51
42
48
48
43
22 July 2010
22 July 2010
11 June 2014
22 July 2010
22 July 2010
Total
Date of term
of office
ended
4 July 2014
4 July 2014
31 October
2014
19,671,273
47
48
49
50
51
Senior Management
Dr. Zhang Jianguo (), male, born in 1959, is a senior president of our Company. He is also
the general manager of the overseas branch of the Company, the general manager of the head
office of marketing and the head of the supervisory board of Hunan Teli Hydraulic Co., Ltd.. He
became a senior engineer as recognised by Research Institute in December 1997, and has been
an expert entitled to government special subsidy granted by the State Council since July 2001. Dr.
Zhang was the deputy head of Research Institute from November 1998 to December 2008. Dr.
Zhang was the deputy general manager of our Company from August 1999 to July 2000, secretary
to the Board of Directors of our Company from August 1999 to March 2001 and a member of the
1st and 2nd sessions of the board of directors of our Company from August 1999 to July 2006.
He was appointed as an executive president of our Company in August 2006, and has become a
senior president of our Company since August 2007. Dr. Zhang was also a director of Zoomlion
Fire Control Machinery Co., Ltd. from April 2004 to December 2007. Dr. Zhang has received
various titles and awards, including the Science and Technology Advancement (Grade I) Award of
Hunan Province in October 1997, the National Science and Technology Advancement (Grade III)
Award in December 1998, and the Young and Middle-Aged Experts in Science, Technology and
Management with Outstanding Contribution awarded by the Ministry of Construction in December
1999. Dr. Zhang obtained a masters degree in engineering from Shanghai University of Technology
in Shanghai, the PRC in 1991, and a doctorate degree in systems engineering from Northwestern
Polytechnical University in Xian City, the PRC in 2005.
Mr. Yin Zhengfu (), male, born in 1956, is a senior president of our Company. Currently, Mr.
Yin is also a chairman of the technical reform committee, a chairman of the operation management
committee, the head of the human resources departments, and a director of Hunan Teli Hydraulic
Co., Ltd. and the chairman of the board of directors of Hunan Zoomlion Axle Co., Ltd. Mr. Yin
obtained the qualification certificate of senior professional manager of machinery enterprises issued
by CMEMA in May 2006. Mr. Yin was previously the head of factory office and deputy factory
manager of Hunan Puyuan Machinery Factory from April 1988 to May 1995, factory manager of
Changsha Heavy Equipment Factory from June 1995 to August 2001, vice chairman of the board
of directors and general manager of Puyuan Group from September 2001 to September 2003,
and general manager of Hunan Puyuan Construction Machinery Co., Ltd. from September 2003
to September 2004. Mr. Yin was the general manager of our Company and a member of the
2nd session of Board of Directors from September 2004 to July 2006. He was appointed as an
executive president of our Company in August 2006, and has become a senior president of our
Company since August 2007. Currently, Mr. Yin is a senior chairman of Changsha Entrepreneurs
Association and vice chairman of Hunan Association of Machinery Industry. Mr. Yin has received
various titles and awards, including the Outstanding Entrepreneur of Hunan Province awarded in
2003, the National Outstanding Entrepreneur in Machinery Systems awarded in 2005, the Star
Entrepreneur of the China Machinery Industry awarded in 2007 and the National Machinery Industry
Model Worker awarded in 2014. Mr. Yin obtained a bachelors degree in business administration
from the College of Management (secondary bachelors degree class) of China University of
Geosciences in Wuhan City, the PRC in 2004.
52
53
54
55
56
57
58
59
60
Total
remuneration
received from
the shareholders
companies
Remuneration
paid at the
end of
the reporting
period
Name
Position
Gender
Age
Employment
Status
Zhan Chunxin
Male
59
Incumbent
202
202
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Female
Male
Male
Male
Male
Male
Male
Male
Male
Female
51
46
71
62
66
68
42
57
53
55
58
51
56
57
59
57
50
42
52
52
51
51
Incumbent
Incumbent
Resigned
Incumbent
Incumbent
Resigned
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
120
0
0
12
12
9
0
97.5
75
135
120
112.5
112.5
112.5
112.5
97.5
117
120
120
120
112.5
148
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
120
0
0
12
12
9
0
97.5
75
135
120
112.5
112.5
112.5
112.5
97.5
117
120
120
120
112.5
148
Male
Male
Male
Female
Male
Male
44
51
42
48
48
43
Resigned
Incumbent
Incumbent
Incumbent
Incumbent
Incumbent
123
110
97.5
60
90
80
0
0
0
0
0
0
123
110
97.5
60
90
80
2,628
2,628
Liu Quan
Qiu Zhongwei
Liu Changkun
Qian Shizheng
Wang Zhile
Lian Weizeng
Cao Yongang
Liu Chi
Luo Anping
Zhang Jianguo
Yin Zhengfu
He Jianming
Du Youqi
Fang Minghua
Wang Chunyang
Xu Wuquan
Xiong Yanming
Su Yongzhuan
Guo Xuehong
Sun Changjun
Li Jiangtao
Hong Xiaoming
He Wenjin
Chen Xiaofei
Chen Peiliang
Huang Qun
Wang Yukun
Shen Ke
Total
Note: The resignation of Mr. Lian Weizeng will only become effective upon the appointment of new independent non-executive director at the
shareholders general meeting. Please refer to the announcement issued by the Company dated 4 July 2014 for further details.
61
Position held
Changes
Date
Reason
Huang Qun
Vice president
Employed
11 June 2014
Appointed
by
the
Board
of
Directors.
Liu Changkun
Independent Director
Resigned
4 July 2014
Lian Weizeng
Independent Director
Resigned
4 July 2014
Part-time
(Holding
Vice President
Resigned
Note: The resignation of Mr. Lian Weizeng will only become effective upon the appointment of new independent non-executive director at the
shareholders general meeting. Please refer to the announcement issued by the Company dated 4 July 2014 for further details.
62
By function
20,314
employees
Postgraduate or above
1,311
6.45%
Bachelors Degree
6,916
34.05%
Tertiary Education
5,938
29.23%
Others
6,149
30.27%
Production
8,053
39.63%
Sales
2,624
12.92%
Technical
5,533
27.24%
Financial
Management
682
3.36%
3,422
16.85%
The Company determines the compensation of the employees based on their respective function,
position and performance. The performance and work efficiency of the employees are assessed to
determine if they shall be awarded. The appraisal criteria and award mechanism are fair and open. The
appointment of employees is conducted in an open and transparent manner and is in compliance with
the relevant laws and regulations. In addition, the Company has a well-established training system for
employees which offers various forms of training including mentorship program, lecture training and
self-learning in order to promote the improvement and development of employees.
63
64
(I)
65
66
According to the Articles of Association, the Board shall hold at least four meetings a year.
In the year of 2014, the Board had held seven meetings. The Independent Directors has duly
performed their duties strictly in accordance with the Code on Corporate Governance for
Listed Companies, Guidelines for Establishment of Independent Directors System of Listed
Companies and the Articles of Association so as to understand the production, operation and
management of the Company. During the reporting period, the Independent Directors attended
the board meetings and shareholders general meetings and used their respective professional
knowledge in performing their duties. They have made useful advice in respect of the operation
procedures of the Board and made significant contribution to decisions of the Board. Their
independent and objective advices have enabled the Board to make rational decisions for the
best interest of the Company and its shareholders as a whole. During the reporting period,
the Independent Directors have made no objection to the resolutions and proposals raised at
boarding meetings and other meetings of the Company in the year.
Number of
Board
general
meetings
Name of Directors
meetings
held
Attendance
held
Attendance
Chairman
Executive Director
Non-executive
Independent
Non-executive
Director
Director
2.
The Company convened its board meetings by giving 14 days notice in advance for regular
meetings and 5 days notice in advance for ad-hoc meetings in accordance with the code
provisions of the Corporate Governance Code contained in Appendix 14 to the Listing Rules
of Hong Kong. The secretary to the Board shall deliver all relevant materials of regular board
meetings (including reports from all committees of the Board) to all Directors no less than three
days before the date of the meetings to ensure all Directors can acquire understanding of the
resolutions to be tabled at the meetings in advance.
For ad-hoc board meetings convened upon requests of management of the Company through
means of communication, the relevant meeting materials shall be delivered to all Directors
through email or fax and allow the Directors to have adequate time to consider the matters
concerned before the meetings. The secretary to the Board shall promptly reply any questions
raised by the Directors and take necessary action to assist Directors to ensure that the board
meeting is conducted in accordance with the relevant provisions of the Company Law, the
Articles of Association and the Listing Rules of Hong Kong.
3.
Minutes of each board meeting shall be endorsed by all attending Directors and recorder and
shall be kept for at least 10 years. The minutes shall be available for inspection upon request
by any Director.
4.
When considering connected transactions, Directors who are considered of having significant
interest in the relevant transactions should be absent from the meeting and abstained from
voting in respect of the matters concerned.
67
(VI) Measures to ensure that Directors can perform their duties properly
1.
Upon appointment of a Director, the Company will provide all necessary materials to the
Director to allow him/her to understand the requirement of the Listing Rules of Shenzhen and
Hong Kong and other relevant laws and regulations. The Director shall also be provided with
the updates of the relevant laws and regulation and internal publications and other information
concerning the duties of Directors. Ongoing training will also be provided to allow the Directors
to fully understand their duties under the Listing Rules of Shenzhen and Hong Kong and other
relevant laws and regulations and the operation of the Company in a timely manner. On-site
inspections and communications with accounting staff and auditors will also be organised for
the Independent Non-executive Directors to facilitate full performance of their duties.
2. In formulating their opinion on guarantee for third parties, appropriation of funds and
connected transactions, Directors may seek independent advice from independent auditor and
solicitor engaged by the Company to facilitate the performance of their duties.
68
Type of training
ABCD
BD
BD
ABD
A
B
C
D
BD
ABCD
69
2.
70
2.
3.
71
72
Number of
of the same
shares
class (%)
0.0821
Supervisors
Nature of interest
Class of shares
Zhan Chunxin
Beneficial owner
A Share
5,152,036 (L)
Liu Quan
Beneficial owner
A Share
1,068,052 (L)
0.0170
Liu Chi
Beneficial owner
A Share
379,211 (L)
0.0060
Luo Anping
Beneficial owner
A Share
450,055 (L)
0.0072
73
VI. Auditors
Baker Tilly China Certified Public Accountants and KPMG, respectively, were the domestic and
international auditors of the Company for 2014.
These two audit firms provide audit services for the Company on its financial statements, including the
audit of the Companys annual financial statements of 2014, the review of interim financial report, internal
control audit and the audits of subsidiaries statutory financial statements. The aggregate audit fees paid
to these two audit firms were RMB13.77 million (inclusive of taxes and outlays).
The responsibility statements of Baker Tilly China Certified Public Accountants and KPMG on the financial
statements of the Company were set out in the Domestic Auditors Report and International Auditors
Report respectively.
74
75
(IV) Formulation and Implementation of Accountability System for Material Errors of Annual
Report
The Company has formulated the Accountability System for Material Errors of Annual Report (
). Through establishing an accountability system for material errors in
regard to information disclosure of annual report, the accountability for the responsible persons of
information disclosure of annual report was strengthened, which has further improved the quality
and transparency of information disclosure in the annual report. There was no material error in the
annual report of the Company for 2013.
76
Article 228
Before amendment
After amendment
(1)
(1)
(2)
(2)
77
Before amendment
After amendment
(3)
(3)
Association:
1.
2.
78
Before amendment
(4)
After amendment
provisions.
(4)
(5)
meeting.
79
Before amendment
After amendment
(6)
(5)
shareholders.
(7)
(6)
80
Before amendment
After amendment
(7)
(8)
The above amendments to the Articles of Association were passed and approved by the Shareholders at
the annual general meeting held on 27 June 2014.
81
82
(II) Investors
The Company is dedicated to the development of investor relationship. It maintains close
relationship with its investors through telephone hotline, email and direct contact.
Details of the investor relationship activities of the Company in 2014 are set out in Reception of
Research Investigations, Communications and Interviews during the Reporting Period in Report of
the Board of Directors of this report.
Looking forward, the Company will enhance the communication with investors so as to increase
their understanding about the Company and to seek their continuous support and concern.
83
84
To the shareholders of Zoomlion Heavy Industry Science and Technology Co., Ltd.
(Incorporated in The Peoples Republic of China with limited liability)
We have audited the consolidated financial statements of Zoomlion Heavy Industry Science and Technology
Co., Ltd. (the Company) and its subsidiaries (together the Group) set out on pages 87 to 188, which
comprise the consolidated and company balance sheets as at 31 December 2014, the consolidated statement
of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow
statement for the year then ended and a summary of significant accounting policies and other explanatory
information.
Auditors responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. This
report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or
accept liability to any other person for the contents of this report.
We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong
Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
85
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the
Company and of the Group as at 31 December 2014, and of the Groups profit and cash flows for the year
then ended in accordance with International Financial Reporting Standards and have been properly prepared in
accordance with the disclosure requirements of the Hong Kong Companies Ordinance.
KPMG
Certified Public Accountants
8/F, Princes Building
10 Chater Road
Hong Kong, China
27 March 2015
86
Consolidated Statement of
Comprehensive Income
For the year ended 31 December 2014
(Expressed in RMB)
2014
2013
RMB
RMB
millions
millions
25,851
38,542
(18,642)
(27,300)
7,209
11,242
164
(49)
(3,036)
(3,631)
(2,347)
(2,701)
(443)
(570)
1,547
4,291
Note
Turnover
(692)
195
41
5(a)
863
4,527
Income tax
(235)
(570)
628
3,957
(210)
(51)
(1)
(207)
(52)
421
3,905
87
Note
2014
2013
RMB
RMB
millions
millions
594
3,844
34
113
628
3,957
387
3,792
34
113
421
3,905
0.08
0.50
Non-controlling interests
Profit for the year
Total comprehensive income attributable to:
Equity shareholders of the Company
Non-controlling interests
Total comprehensive income for the year
Basic and diluted earnings per share (RMB)
88
10
(Expressed in RMB)
2014
2013
RMB
RMB
millions
millions
6,781
1,960
1,347
1,661
228
471
3,697
4,476
520
2,088
618
6,847
1,610
1,320
1,796
195
146
3,610
7,407
974
644
23,847
24,549
10,376
280
30,639
12,202
1,891
14,483
8,747
306
26,569
10,228
2,441
16,657
69,871
64,948
Total assets
93,718
89,497
5,687
19,494
30
8,397
23,891
437
25,211
32,725
44,660
32,223
68,507
56,772
Note
Non-current assets
Property, plant and equipment
Lease prepayments
Intangible assets
Goodwill
Interests in associates
Other financial assets
Trade and other receivables
Receivables under finance lease
Pledged bank deposits
Other non-current assets
Deferred tax assets
12
13
14
15
17
18
19
36
23(b)
16
17
18
19
20
Current liabilities
Loans and borrowings
Trade and other payables
Income tax payable
21(a)
22
23(a)
89
2014
2013
RMB
RMB
Note
millions
millions
21(b)
Non-current liabilities
25,925
12,750
25
899
1,542
23(b)
475
468
27,299
14,760
NET ASSETS
41,208
42,012
26(a)
7,706
7,706
Reserves
26(b)
33,085
33,873
40,791
41,579
417
433
41,208
42,012
Approved and authorised for issue by the board of directors on 27 March 2015.
Zhan Chunxin
Chairman and Chief Executive Officer
Hong Xiaoming
Vice president and
the person in-charge of financial affairs
90
(Expressed in RMB)
Note
2014
2013
RMB
RMB
millions
millions
4,594
4,731
1,342
994
Non-current assets
Property, plant and equipment
12
Lease prepayments
Intangible assets
13
245
250
Investments in subsidiaries
33
12,172
11,771
Interests in associates
15
235
132
468
143
17
3,574
3,584
19
335
353
36
2,088
253
237
25,306
22,195
8,188
6,271
280
306
32,895
23(b)
16
17
33,771
19
1,554
1,531
20
11,234
11,822
55,027
52,825
Total assets
80,333
75,020
Current liabilities
21(a)
2,636
4,371
22
21,435
24,431
404
24,071
29,206
30,956
23,619
56,262
45,814
23(a)
91
2014
2013
RMB
RMB
Note
millions
millions
21(b)
16,601
5,050
220
221
16,821
5,271
NET ASSETS
39,441
40,543
Non-current liabilities
Loans and borrowings
Other non-current liabilities
25
26(a)
7,706
7,706
Reserves
26(b)
31,735
32,837
39,441
40,543
TOTAL EQUITY
Approved and authorised for issue by the board of directors on 27 March 2015.
Zhan Chunxin
Chairman and Chief Executive Officer
Hong Xiaoming
Vice president and
the person in-charge of financial affairs
92
Consolidated Statement of
Changes in Equity
For the year ended 31 December 2014
(Expressed in RMB)
Share
capital
(Note
26(a))
RMB
millions
Balance at 1 January 2013
Appropriation (Note 26(b)(ii))
Cash dividends (Note 26(c))
Safety production fund (Note 35(b))
Contribution from
non-controlling interests
Acquisition of
non-controlling interests
Dividends declared by subsidiaries
to non-controlling interests
Total comprehensive income
for the year
Balance at 31 December 2013
and 1 January 2014
Appropriation (Note 26(b)(ii))
Cash dividends (Note 26(c))
Contribution from
non-controlling interests
Acquisition of
non-controlling interests
Dividends declared by subsidiaries
to non-controlling interests
Total comprehensive income
for the year
Balance at 31 December 2013
and 1 January 2014
Noncontrolling
Total interests
RMB
RMB
millions
millions
Total
equity
RMB
millions
7,706
14,606
2,613
(59)
(2)
15,898
40,762
387
41,149
289
(289)
(1,541)
(5)
(1,541)
(1,541)
(1,434)
(1,434)
(43)
(1,477)
(27)
(27)
(51)
(1)
3,844
3,792
113
3,905
7,706
13,172
2,902
(110)
17,907
41,579
433
42,012
(4)
(1,156)
(1,156)
(1,156)
(19)
(19)
(38)
(57)
(14)
(14)
(210)
594
387
34
421
7,706
13,153
2,906
(320)
17,341
40,791
417
41,208
93
2014
Note
2013
RMB
RMB
millions
millions
863
4,527
Operating activities
Profit before taxation
Adjustments for:
512
459
38
29
96
74
(1)
(41)
(720)
(694)
1,260
970
11
22
(7)
12
(3)
Interest income
Interest expense
Loss on disposal of property, plant and equipment,
12
25
2,064
5,381
(Increase)/decrease in inventories
Increase in trade and other receivables
Decrease in receivables under finance lease
(581)
3,041
(4,058)
(8,086)
2,471
2,543
(2,509)
(673)
18
(64)
(5,166)
(720)
(7,779)
1,422
(632)
(1,379)
(8,411)
43
30(a)
94
(Expressed in RMB)
2014
2013
RMB
RMB
millions
millions
(8,411)
43
(534)
(388)
(53)
16
(2,088)
(853)
(196)
(89)
13
(350)
38
(239)
(46)
(22)
29
720
1,004
51
2
694
(292)
(1,891)
(692)
Financing activities
Proceeds from loans and borrowings
Proceeds from issuance of RMB medium-term notes
Repayments of loans and borrowings
Interest paid
Dividends paid to equity shareholders
Dividends paid by subsidiaries to non-controlling interests
Contribution from non-controlling interests
Payment for acquisition of non-controlling interests
14,296
8,991
(12,707)
(1,134)
(1,156)
(18)
2
(44)
12,175
(10,924)
(956)
(1,540)
(42)
2
(1,469)
8,230
(2,754)
(2,072)
(3,403)
16,657
20,084
(102)
(24)
14,483
16,657
Note
Net cash (used in)/generated from
operating activities brought forward
Investing activities
Payment for purchase of property, plant and equipment
Lease prepayments
Payment for purchase of intangible assets
Dividends received from associates
Prepayment for acquisition of Chery Heavy Industry Co., Ltd.
Payment for acquisition of investments in
available-for-sale financial assets
Proceeds from disposal of other investments
Payment for acquisition of m-tec mathis technik GmbH,
net of cash acquired
Payment for investments in associates and equity investments
Proceeds from disposal of property, plant
and equipment and intangible assets
Proceeds from disposal of a subsidiary
Interest received
Decrease/(increase) in pledged bank deposits
36(a)
14
20
95
(b) Organisation
The Company was incorporated in the PRC on 31 August 1999 by six founding shareholders with
registered and issued share capital of 100 million ordinary shares with a par value of RMB1 per
share. Upon the Companys incorporation, Construction Machinery Research Institute of Changsha,
the Ministry of Construction (Research Institute), a state-owned entity, held 74.7% equity
interest in the Company and the other five founding shareholders held 25.3% equity interest in the
Company in aggregate. These founding shareholders are hereinafter referred to as the non-public
shareholders.
On 12 October 2000, the Company completed an initial public offering of 50 million newly issued A
Shares with a par value of RMB1 per share to public shareholders in the Shenzhen Stock Exchange
of China (SZSE). Upon the initial public offering, the public shareholders owned 33.3% of the
equity interest in the Company. The equity interest of Research Institute and the other five nonpublic shareholders in the Company was then reduced to 49.8% and 16.9%, respectively.
During the years from 2001 to 2009, the Company completed several stock splits in the form of
bonus shares to achieve wider distribution and improve marketability of the ordinary shares. As a
result, the Companys share capital increased from RMB150 million to RMB1,673 million.
In July 2006, the public shareholders accepted the share reform proposal offered by the non-public
shareholders whereby the non-public shareholders transferred a total of 54 million A Shares to the
public shareholders, in exchange for the approval for the listing of all shares held by the non-public
shareholders. After the share transfer, the equity interest in the Company held by Research Institute
and the other five non-public shareholders was reduced from 49.8% and 16.9% to 41.9% and
14.1%, respectively, while the public shareholders equity interest in the Company was increased
from 33.3% to 44.0%.
96
97
Statement of compliance
These financial statements have been prepared in accordance with all applicable International
Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards
Board (IASB). IFRSs include all individual International Financial Reporting Standards,
International Accounting Standards (IASs) and related interpretations. These financial
statements also comply with the disclosure requirements of the Hong Kong Companies
Ordinance which for this financial year and the comparative period continue to be those of
the predecessor Hong Kong Companies Ordinance (Cap. 32), in accordance with transitional
and saving arrangements for Part 9 of the new Hong Kong Companies Ordinance (Cap. 622),
Accounts and Audit, which are set out in sections 76 to 87 of Schedule 11 to that Ordinance,
and the applicable disclosure provisions of the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited. A summary of the significant accounting policies
adopted by the Group are set out in Note 2.
The IASB has issued the following amendments to IFRSs and one new Interpretation that are
first effective for the current accounting period of the Group and the Company:
The Group has not applied any new standard, amendment or interpretation that is not yet
effective for the current accounting period. Impacts of the adoption of the new or amended
IFRSs are discussed below:
Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities
The amendments provide consolidation relief to those parents which qualify to be an
investment entity as defined in the amended IFRS 10. Investment entities are required to
measure their subsidiaries at fair value through profit or loss. These amendments do not have
an impact on these financial statements, as the Company does not qualify to be an investment
entity.
98
99
100
101
(c) Associates
An associate is an entity in which the Group or Company has significant influence, but not control
or joint control over its management, including participation in the financial and operating policy
decisions.
102
103
the aggregate of the fair value of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of the Groups previously held equity
interest in the acquiree; over
(ii) the net fair value of the acquirees identifiable assets and liabilities measured as at the
acquisition date.
When (ii) is greater than (i), then this excess is recognised immediately in profit or loss as a gain on a
bargain purchase.
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business
combination is allocated to each cash-generating unit, or groups of cash generating units, that is
expected to benefit from the synergies of the combination and is tested annually for impairment
(Note 2(i)).
On disposal of a cash generating unit during the year, any attributable amount of purchased
goodwill is included in the calculation of the profit or loss on disposal.
104
14 to 15 years
4 to 10 years
12 to 15 years
5 years
(f)
105
buildings
machinery, plant and equipment
motor vehicles
office equipment
25 to 35
6 to 10
10
5
years
years
years
years
Where parts of an item of property, plant and equipment have different useful lives, the cost of the
item is allocated on a reasonable basis between the parts and each part is depreciated separately.
Both the useful life of an asset and its residual value, if any, are reassessed annually.
106
107
108
(continued)
Impairment of assets
(i)
it becoming probable that the debtor will enter bankruptcy or other financial
reorganisation;
significant changes in the technological, market, economic or legal environment that have
an adverse effect on the debtor; and
For investments in associates accounted for under the equity method in the consolidated
financial statements (Note 2(c)), the impairment loss is measured by comparing the
recoverable amount of the investment with its carrying amount in accordance with Note
2(i)(ii). The impairment loss is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount in accordance with Note 2(i)(ii).
For unquoted equity securities carried at cost, the impairment loss is measured as the
difference between the carrying amount of the financial asset and the estimated future
cash flows, discounted at the current market rate of return for a similar financial asset
where the effect of discounting is material. Impairment losses for equity securities carried
at cost are not reversed.
109
110
lease prepayments;
intangible assets;
goodwill; and
111
112
(l)
Income tax
Income tax for the period comprises current tax and movements in deferred tax assets and
liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit
or loss except to the extent that they relate to business combinations, or items recognised in
other comprehensive income or directly in equity, in which case the relevant amounts of tax are
recognised in other comprehensive income or directly in equity, respectively.
Current tax is the expected tax payable on the taxable income for the period, using tax rates
enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in
respect of previous years.
113
114
different taxable entities, which, in each future period in which significant amounts of
deferred tax liabilities or assets are expected to be settled or recovered, intend to realise
the current tax assets and settle the current tax liabilities on a net basis or realise and
settle simultaneously.
115
116
Sale of goods
Revenue is recognised when goods are delivered at the customers premises which is taken
to be the point in time when the customer has accepted the goods and the related risks and
rewards of ownership. Revenue excludes value added tax and is after deduction of any trade
discounts.
117
118
(q) Leases
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the
Group determines that the arrangement conveys a right to use a specific asset or assets for an
agreed period of time in return for a payment or a series of payments. Such a determination is
made based on an evaluation of the substance of the arrangement and is regardless of whether the
arrangement takes the legal form of a lease.
(i) Classification
Leases that transfer substantially all the risks and rewards of ownership to the lessee are
classified as finance leases. Leases that do not transfer substantially all the risks and rewards
of ownership to the lessee are classified as operating leases.
(ii) Finance lease (as lessor)
Where the Group provides finance leasing of its machinery products to customers, an
amount representing the net investment in the lease is included in the balance sheet as
receivables under finance lease. Finance income earned under finance lease is accounted for
in accordance with accounting policy as set out in Note 2(n). Impairment losses of receivables
under finance lease are accounted for in accordance with the accounting policy as set out in
Note 2(i).
(iii) Operating lease (as lessee)
Where the Group has the use of assets held under operating lease, payments made under the
lease are charged to profit or loss in equal instalments over the accounting periods covered by
the lease term.
(r) Dividends
Dividends are recognised as a liability in the period in which they are declared.
119
A person or a close member of that persons family is related to the Group if that person:
(i)
(ii)
(iii) is a member of the key management personnel of the Group or the Groups parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i)
the entity and the Group are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others).
(ii)
one entity is an associate or joint venture of the other entity (or an associate or joint
venture of a member of a group of which the other entity is a member).
(iii) both entities are joint ventures of the same third party.
(iv) one entity is a joint venture of a third party and the other entity is an associate of the third
party.
(v)
the entity is a post-employment benefit plan for the benefit of employees of the Group or
an entity related to the Group.
120
Segment reporting
Operating segments, and the amounts of each segment item reported in the financial statements,
are identified from the financial information provided regularly to the Groups most senior executive
management for the purposes of allocating resources to, and assessing the performance of, the
Groups various lines of business and geographical locations.
Individually material operating segments are not aggregated for financial reporting purposes unless
the segments have similar economic characteristics and are similar in respect of the nature of
products and services, the nature of production processes, the type or class of customers, the
methods used to distribute the products or provide the services, and the nature of the regulatory
environment. Operating segments which are not individually material may be aggregated if they
share a majority of these criteria.
3 Turnover
The principal activities of the Group are research, development, manufacturing and sale and leasing of
concrete machinery, crane machinery, environmental and sanitation machinery, road construction and
pile foundation machinery and other related heavy machinery and capital equipment.
Turnover represents revenue from sales and lease of the Groups machinery products, net of value-added
tax and is after deduction of any trade discounts.
The amounts of each significant category of revenue recognised in turnover are as follows:
2014
2013
RMB
RMB
millions
millions
10,555
17,191
Crane machinery
7,423
12,479
4,024
3,282
1,026
1,731
698
772
Sales of:
Concrete machinery
1,195
1,626
930
1,461
25,851
38,542
121
2013
RMB
RMB
millions
millions
307
111
(11)
(22)
(138)
(125)
(13)
164
(49)
Notes:
(a)
Government grants mainly represent operating subsidies and other grants. There were no unfulfilled conditions and other contingencies
attached to these grants.
(b)
The Group factored trade receivables without recourse to banks and other financial institutions. Cost of factoring trade receivables
without recourse represents the difference between the carrying amount of the receivables and the factoring proceeds.
122
2013
RMB
RMB
millions
millions
(720)
(694)
12
(3)
(708)
(697)
Finance income:
Interest income
Loss/(gain) on remeasurement of derivative financial instruments
at fair value
Finance costs:
Interest on loans and borrowings
Net exchange loss/(gain)
1,260
970
140
(468)
1,400
502
692
(195)
2014
2013
RMB
RMB
millions
millions
2,706
3,029
263
265
2,969
3,294
123
(continued)
2013
RMB
RMB
millions
millions
18,640
27,295
512
459
38
29
96
74
202
230
audit services
12
14
non-audit services
95
156
450
591
(62)
432
inventories
172
(49)
12
25
Impairment losses/(reversal):
6 Income tax
Income tax in the consolidated statements of comprehensive income represents:
2014
2013
RMB
RMB
millions
millions
221
729
(78)
(193)
88
30
235
570
124
Zoomlion
Heavy Industry Science and Technology Co., Ltd.
2014 Annual Report
2013
RMB
RMB
millions
millions
863
4,527
216
1,132
133
117
88
30
Current year loss for which no deferred tax assets was recognised
51
10
(30)
(26)
(112)
(524)
(111)
(169)
235
570
Notes:
(a)
(b)
According to the income tax law and its relevant regulations, entities that qualified as high-technology enterprises under the tax law are
entitled to a preferential income tax rate of 15%. The Company and certain of its subsidiaries obtained or renewed its status as hightechnology enterprises in 2014 and accordingly are subject to income tax at 15% for the years from 2014 to 2016. Besides, a subsidiary
of the Company was qualified as software developer and is entitled to income tax exemption for the years from 2013 to 2014 and a
12.5% preferential tax rate for the years from 2015 to 2017.
(c)
Under the income tax law and its relevant regulations, a 50% additional tax deduction is allowed for qualified research and development
expenses.
125
Salaries,
Retirement
Discretionary
scheme
fee
other benefits
bonuses
contributions
Total
RMB
RMB
RMB
RMB
RMB
thousands
thousands
thousands
thousands
thousands
ZHAN Chunxin
1,002
1,002
16
2,020
LIU Quan
592
592
16
1,200
Non-executive director
QIU Zhongwei
Independent non-executive directors
QIAN Shizheng
120
120
LIAN Weizeng*
90
90
WANG Zhile
LIU Changkun*
120
120
Supervisors
CAO Yonggang
LUO Anping
367
367
16
750
LIU Chi
480
479
16
975
330
2,441
2,440
64
5,275
Total
126
Salaries,
Retirement
supervisors
allowances and
Discretionary
scheme
fee
other benefits
bonuses
contributions
Total
RMB
RMB
RMB
RMB
RMB
thousands
thousands
thousands
thousands
thousands
ZHAN Chunxin
1,342
1,342
16
2,700
LIU Quan
792
792
16
1,600
120
120
Non-executive director
QIU Zhongwei
Independent non-executive directors
QIAN Shizheng
LIAN Weizeng
120
120
WANG Zhile
120
120
LIU Changkun
Supervisors
CAO Yonggang
LUO Anping
542
542
16
1,100
LIU Chi
642
642
16
1,300
360
3,318
3,318
64
7,060
Total
Mr. LIAN Weizeng and Mr. LIU Changkun retired as independent non-executive directors of the Company on 4 July 2014.
None of these directors and supervisors received any inducements or compensation for loss of office, or
waived any emoluments during the year (2013: Nil).
127
2013
RMB
RMB
thousands
thousands
4,012
5,152
48
48
4,060
5,200
The emoluments of the non-director/supervisor employees among the five highest paid individuals are
within the following bands:
2014
2013
Number
Number
RMB1,000,001RMB1,500,000
RMB1,500,001RMB2,000,000
None of these employees received any inducements or compensation for loss of office, or waived any
emoluments during the year (2013: Nil).
128
11 Segment reporting
The Group manages its businesses by divisions, which are organised by business lines. In a manner
consistent with the way in which information is reported internally to the Groups most senior executive
management for the purposes of resource allocation and performance assessment, the Group has
presented the following reportable segments. No operating segments have been aggregated to form the
following reportable segments.
(i)
Concrete machinery segment: this segment primarily researches, develops, manufactures and sells
various concrete machineries, including truck-mounted concrete pumps, trailer-mounted concrete
pumps, dry mortar products, concrete placing booms, concrete mixing plants, truck-mounted
concrete mixers, truck-mounted line concrete pumps and self-propelled boom concrete pumps.
(ii)
Crane machinery segment: this segment primarily researches, develops, manufactures and sells a
variety of cranes, including truck cranes, all-terrain truck cranes, crawler cranes and various types of
tower cranes.
(iii) Environmental and sanitation machinery segment: this segment primarily researches, develops,
manufactures and sells a wide range of environmental and sanitation machineries, including road
sweepers, washing vehicles and waste treatment equipment.
(iv) Road construction and pile foundation machinery segment: this segment primarily researches,
develops, manufactures and sells different types of road construction and pile foundation
machineries, including road surface heaters, motor graders, road rollers, pavers, road surface cold
planners, asphalt mixing equipment and rotary drilling rigs.
(v)
Earth working machinery segment: this segment primarily researches, develops, manufactures and
sells a variety of earth working machineries, including loaders, bulldozers and excavators.
(vi) Finance lease segment: this segment primarily provides finance lease services to customers for
purchasing machinery products of the Group and from other vendors.
Other operating segments of the Group include research, development, manufacturing and sale of other
machinery products, including material handling machinery and systems segment, specialised vehicles
and vehicle axles. None of these segments met any of the quantitative thresholds for determining
reportable segments for the years ended 31 December 2014 and 2013.
129
2013
RMB
RMB
millions
millions
10,555
17,191
7,423
12,479
4,024
3,282
1,026
1,731
698
772
930
1,461
24,656
36,916
1,195
1,626
25,851
38,542
Total
Reportable segment profit:
Concrete machinery
2,368
4,568
Crane machinery
2,063
3,361
1,200
947
325
562
130
43
14
928
1,456
6,927
10,908
282
334
7,209
11,242
2014
2013
RMB
RMB
millions
millions
7,209
11,242
164
(49)
(3,036)
(3,631)
(2,347)
(2,701)
(443)
(570)
(692)
195
41
863
4,527
2013
RMB
RMB
millions
millions
Mainland PRC
22,956
35,755
Outside PRC
2,895
2,787
25,851
38,542
Total
131
2013
RMB
RMB
millions
millions
8,470
8,255
271
202
8,741
8,457
vehicles and
plant and
office
Construction
Buildings
equipment
equipment
in progress
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
3,058
2,210
777
1,542
7,587
Additions
115
164
91
927
1,297
625
332
42
(999)
Disposals
(33)
(61)
(107)
(201)
3,765
2,649
804
1,470
8,688
3,765
2,649
804
1,470
8,688
75
106
35
215
431
675
258
38
(971)
Disposals
(23)
(44)
(60)
(127)
Total
Cost:
Balance at 1 January 2013
Additions
67
78
(21)
(41)
(8)
(70)
4,538
2,934
814
714
9,000
132
vehicles and
plant and
office
Construction
equipment
equipment
in progress
Total
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
(469)
(722)
(284)
(1,475)
(118)
(236)
(105)
(459)
Accumulated depreciation
and impairment:
(3)
(8)
(1)
(12)
42
62
110
(4)
(1)
(5)
(584)
(928)
(329)
(1,841)
(584)
(928)
(329)
(1,841)
(143)
(260)
(109)
(512)
14
34
40
88
32
46
(705)
(1,122)
(392)
(2,219)
3,833
1,812
422
714
6,781
3,181
1,721
475
1,470
6,847
133
vehicles and
plant and
office
Construction
equipment
equipment
in progress
Total
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
2,267
1,476
606
1,192
5,541
54
65
72
638
829
558
174
38
(770)
Cost:
Balance at 1 January 2013
Additions
Transferred from construction in progress
Transferred from subsidiaries
36
14
191
245
(28)
(16)
(60)
(104)
(166)
(108)
(35)
(202)
(511)
2,689
1,627
635
1,049
6,000
2,689
1,627
635
1,049
6,000
48
47
18
217
330
543
163
33
(739)
Disposals
Transferred to subsidiaries
Additions
Transferred from construction in progress
Transferred from subsidiaries
61
41
47
93
242
Disposals
(10)
(12)
(39)
(61)
(221)
(66)
(57)
(45)
(389)
3,110
1,800
637
575
6,122
Transferred to subsidiaries
Balance at 31 December 2014
134
vehicles and
plant and
office
Construction
equipment
equipment
in progress
Total
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
(317)
(495)
(220)
(1,032)
(80)
(149)
(79)
(308)
Accumulated depreciation
and impairment:
Balance at 1 January 2013
Depreciation charge for the year
(12)
(6)
(18)
34
47
Transferred to subsidiaries
25
11
42
(386)
(623)
(260)
(1,269)
(386)
(623)
(260)
(1,269)
(95)
(147)
(85)
(327)
(24)
(21)
(22)
(67)
29
41
Transferred to subsidiaries
45
24
25
94
(457)
(758)
(313)
(1,528)
2,653
1,042
324
575
4,594
2,303
1,004
375
1,049
4,731
135
13 Intangible assets
The Group
Technical
Software,
Capitalised
patents and
Customer development
costs
Total
RMB
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
millions
776
132
247
357
71
1,583
68
17
94
16
785
142
316
361
89
1,693
785
142
316
361
89
1,693
38
16
54
62
62
62
188
(85)
(11)
(6)
(41)
(12)
(155)
762
193
350
382
93
1,780
(37)
(26)
(61)
(127)
(44)
(295)
Trademarks
Note
Cost:
Balance at 1 January 2013
Additions
Effect of exchange rate difference
Additions
Acquisition from
business combination
14
Accumulated amortisation
and impairment:
Balance at 1 January 2013
Amortisation for the year
(8)
(23)
(29)
(14)
(74)
(1)
(2)
(1)
(4)
(37)
(35)
(84)
(158)
(59)
(373)
(37)
(35)
(84)
(158)
(59)
(373)
(11)
(37)
(32)
(16)
(96)
20
36
(37)
(42)
(117)
(170)
(67)
(433)
725
151
233
212
26
1,347
748
107
232
203
30
1,320
136
patents and
Trademarks
know how
similar rights
Total
RMB millions
RMB millions
RMB millions
RMB millions
36
51
198
285
Additions
51
60
36
60
249
345
36
60
249
345
Additions
24
24
36
60
273
369
Cost:
Accumulated amortisation
and impairment:
Balance at 1 January 2013
(36)
(1)
(39)
(76)
(3)
(16)
(19)
(36)
(4)
(55)
(95)
(36)
(4)
(55)
(95)
(6)
(23)
(29)
(36)
(10)
(78)
(124)
50
195
245
56
194
250
137
Balance at 1 January
2014
2013
RMB
RMB
millions
millions
1,796
1,803
Additions
36
Impairment loss
(25)
(171)
18
1,661
1,796
2013
Date of
RMB
RMB
acquisition
millions
millions
September 2008
1,455
1,625
June 2008
135
135
June 2008
12
12
July 2008
24
24
April 2014
35
1,661
1,796
Name of entity
Compagnia Italiana Forme Acciaio S.p.A (CIFA)
Shaanxi Zoomlion Earth Working Machinery Co., Ltd.
Note:
In April 2014, the Company completed the acquisitions of m-tec mathis technik GmbH and its subsidiaries (collectively m-tec Group) with a
cash consideration of EUR35 million (equivalent to RMB296 million). m-tec Group is engaged in the manufacturing of concrete machinery with
its sales primarily in Europe and China. The purpose of the business combination was to broaden the Groups product line.
The acquisition was accounted for under the acquisition method. The Company allocated the purchase price to identifiable assets acquired and
liabilities assumed based on their estimated fair values. Management determined the fair values of the identifiable assets acquired and liabilities
assumed based on valuation performed by an independent appraiser.
The following table summarises the purchase price allocation of the fair value of the identifiable assets acquired and liabilities assumed in
respect of the above acquisition to m-tec Group at the acquisition date.
138
(continued)
76
188
Inventories
64
89
57
2
476
Short-term loans
(61)
(57)
(98)
(216)
260
Cash consideration
296
Cash acquired
Net cash outflow
Goodwill
57
239
36
From the acquisition date of m-tec Group to 31 December 2014, m-tec Group contributed a total of
RMB219 million to the consolidated turnover and a loss of RMB1 million to the consolidated profit of the
Group of the year ended 31 December 2014.
Had the acquisition of m-tec Group occurred on 1 January 2014, management estimates that, on a pro
forma basis, consolidated turnover of the Group for the year ended 31 December 2014 would have been
RMB26,118 million and consolidated profit for the year ended 31 December 2014 would have been
RMB627 million. In determining these figures it has been assumed that the fair value adjustments as at 1
January 2014 would have been the same as the fair value that arose at the date of acquisition of m-tec
Group. The pro forma financial information has been prepared taking into account the impact of fair value
adjustments on deferred taxes, depreciation and amortisation. The pro forma financial information does
not purport to represent the actual results of the Group that would have been had the acquisition taken
place on 1 January 2014 and should not be taken to be representative of future results.
139
(continued)
15 Interests in associates
The Group
140
The Company
2014
2013
2014
2013
RMB millions
RMB millions
RMB millions
RMB millions
235
132
228
195
228
195
235
132
15 Interests in associates
(continued)
The following list contains particulars of the principal associates of the Group as at 31 December 2014:
The Groups
Particulars of
Name of company
effective
issued and
interest in
paid up capital
the company
Principal activities
Manufacture of metallic
(millions)
Bichamp Cutting Technology (Hunan) Co., Ltd.
RMB105
30%
RMB100
40%
Investment
RMB10
35%
RMB20
48%
RMB20
49%
RMB20
49%
RMB30
44%
RMB15
47%
RMB15
49%
RMB18
40%
RMB20
30%
Sales of construction
RMB30
25%
RMB4
49%
machinery coating
Manufacture of
trenchless machiney
Raxtar B.V.
EUR1
35%
EUR4
49%
141
2013
RMB
RMB
millions
millions
1,303
Non-current assets
507
549
Current liabilities
945
1,111
Non-current liabilities
106
104
Equity
593
637
Current assets
1,141
2,171
Profit
33
99
33
99
16
13
Revenue
637
25%49%
25%49%
228
195
228
195
142
16 Inventories
The Group
The Company
2014
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
Raw materials
2,435
3,590
1,648
2,850
Work in progress
1,125
1,516
634
722
6,816
3,641
5,906
2,699
10,376
8,747
8,188
6,271
Finished goods
(Including second-hand machinery)
The Company
2014
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
31,574
28,671
25,401
22,896
(1,780)
(1,451)
(1,443)
(1,199)
29,794
27,220
23,958
21,697
(3,697)
(3,610)
(3,574)
(3,584)
26,097
23,610
20,384
18,113
1,816
848
1,579
580
27,913
24,458
21,963
18,693
657
604
651
570
10,094
12,861
204
251
106
116
Prepaid expenses
413
398
317
334
VAT recoverable
580
371
200
99
Deposits
310
125
52
117
Others
562
362
388
105
30,639
26,569
33,771
32,895
143
144
Within 1 month
The Company
2014
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
4,475
5,091
2,647
3,804
5,431
5,599
3,785
4,591
11,104
11,392
9,870
8,757
6,758
4,648
5,789
4,180
1,775
379
1,658
303
251
111
209
62
29,794
27,220
23,958
21,697
Trade receivables under credit sales arrangement are generally due within 1 to 3 months from the
date of billing, and customers are normally required to make an upfront payment ranging from 20%
to 30% of the product price (2013: 15% to 30%). For sales under instalment payment method that
has instalment payment periods generally ranging from 6 to 42 months (2013: 6 to 48 months),
customers are normally required to make an upfront payment ranging from 15% to 30% of the
product price (2013: 10% to 30%).
As part of the Groups ongoing control procedures, management monitors the creditworthiness
of customers to which it grants credit in the normal course of business. Credit exposure limits are
established to avoid concentration risk with respect to any single customer.
145
Note
Balance at 1 January
Impairment losses recognised
The Company
2014
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
1,451
871
1,199
680
450
591
328
528
15
14
(136)
(11)
(98)
(9)
1,780
1,451
1,443
1,199
Reclassification from
impairment of receivable
under finance lease
18(c)
Uncollectible amounts
written off
Balance at 31 December
146
147
2013
RMB
RMB
millions
millions
17,876
19,515
(544)
(1,149)
17,332
18,366
(654)
(731)
16,678
17,635
(4,476)
(7,407)
12,202
10,228
Gross investment
Unearned finance income
The Group provides equipment finance lease services to customers purchasing machinery products of
the Group or other vendors through its leasing subsidiaries. Under the finance lease arrangement, the
collectability of the minimum lease payments is reasonably predictable, there is no significant uncertainty
surrounding the amount of un-reimbursable cost yet to be incurred by the Group under the lease
arrangement. The finance lease contracts entered into by the Group typically are for a period ranging from
2 to 5 years (2013: 2 to 5 years). Customers are normally required to make an upfront payment ranging
from 5% to 25% of the product price (2013: 5% to 25%) and pay a security deposit ranging from 1%
to 10% of the product price (2013: 1% to 10%). At the end of the lease term, the lessee has an option
to purchase the leased machinery at nominal value and the ownership of the leased machinery is then
transferred to the lessee. The leases do not provide any guarantee of residual values.
During the year ended 31 December 2014, no receivables under finance lease were factored to banks
(2013: RMB6,759 million without recourse and were derecognised). Under the non-recourse factoring
agreements, the Group has agreed to repurchase equipment at fair market value from banks to which the
Group previously factored its receivables, upon repossession of the equipment under the relevant finance
lease contracts by such banks. During the year ended 31 December 2014, the Group made payments
of RMB2,509 million (2013: RMB673 million) to banks to repurchase the repossessed equipment and/
or related beneficial rights to the outstanding debt balance due from customers. As a result, the Group
recorded RMB995 million as inventories for the repossessed equipment and recorded the remaining
RMB1,514 million as receivables. During the year ended 31 December 2014, the Group renegotiated the
terms of settlement with certain customers and changed the collateral requirements on these customers.
The relevant finance lease arrangements were terminated, taking into consideration of the manner of
repayment and collateral pledged with the Group. Accordingly, RMB2,077 million were reclassified from
receivables under finance lease to trade receivables during the year ended 31 December 2014.
148
(continued)
2013
RMB
RMB
millions
millions
12,670
10,643
2,775
3,726
1,313
2,504
574
1,493
17,332
18,366
Over 3 years
751
84
230
34
109
Over 3 years
21
59
544
1,149
13,075
11,394
Within 1 year
Gross investment
Within 1 year
Over 1 year but less than 2 years
2,859
3,956
1,347
2,613
595
1,552
17,876
19,515
Over 3 years
149
(continued)
2013
RMB
RMB
millions
millions
12,214
13,741
415
461
747
749
2,443
2,126
1,310
1,186
203
103
5,118
4,625
17,332
18,366
(654)
(731)
16,678
17,635
Past due receivables refer to the amount remains unpaid after the relevant payment due date,
including those receivables that are overdue for only one day.
150
(continued)
2013
RMB
RMB
millions
millions
Balance at 1 January
731
299
(62)
432
(15)
654
731
Note
17(c)
(d) The Group monitors the credit risk arising from finance lease arrangement through various control
measures as set out in Note 28(b)(ii). Provided it is probable that the economic benefits will flow to
the Group and the revenue and costs, if applicable, can be measured reliably, finance income under
finance lease is recognised in accordance with the accounting policies as set out in Note 2(n)(ii).
151
The Company
2014
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
RMB denominated
12,784
15,310
10,862
11,523
USD denominated
726
617
360
297
EUR denominated
875
587
12
HKD denominated
23
27
Other currencies
75
116
14,483
16,657
11,234
11,822
The Company
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
832
832
800
10
800
10
134
96
USD denominated
2,930
5,097
2,094
1,823
2,357
1,823
1,422
5,687
8,397
2,636
4,371
Add: c
urrent portion of long-term
loans and borrowings
152
21(b)
(continued)
The Company
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
(i)
2,835
1,282
2,834
1,282
EUR denominated
(ii)
1,737
1,687
244
USD denominated
(iii)
7,038
5,029
5,257
4,094
Unsecured bond
(iv)
1,098
1,096
1,098
1,096
(v)
8,991
8,991
(vi)
6,049
6,013
27,748
15,107
18,424
6,472
(1,823)
(2,357)
(1,823)
(1,422)
25,925
12,750
16,601
5,050
Note
Unsecured long-term bank loans
RMB denominated
Less: c
urrent portion of long-term
loans and borrowings
21(a)
Notes:
(i)
As at 31 December 2014, RMB denominated unsecured long-term bank loan of RMB457 million (31 December 2013: Nil)
bore interest at 6.15% per annum and will be repayable by half-yearly instalments through 2016. Such loan was subject to the
fulfilment of certain annual financial covenants of the Group. As at 31 December 2014, the Group was in compliance with these
financial covenants.
As at 31 December 2014, RMB denominated unsecured long-term bank loan of RMB524 million (31 December 2013: RMB1,182
million) bore interest at 4.20% to 4.93% per annum and will be repayable by half-yearly instalments through 2015.
As at 31 December 2014, RMB denominated unsecured long-term bank loan of RMB700 million (31 December 2013: Nil) bore
interest at 6.15% per annum and will be repayable by half-yearly instalments through 2016.
As at 31 December 2014, RMB denominated unsecured long-term bank loan of RMB498 million (31 December 2013: RMB100
million) bore interest at 4.93% per annum and will be repayable by half-yearly instalments through 2016.
As at 31 December 2014, RMB denominated unsecured long-term bank loan of RMB156 million (31 December 2013: Nil) bore
interest at 6.15% per annum and will be repayable by half-yearly instalments through 2017.
As at 31 December 2014, RMB denominated unsecured long-term bank loan of RMB500 million (31 December 2013: Nil) bore
interest at 6.15% per annum and will be repayable in full in 2017.
153
(continued)
As at 31 December 2014, EUR denominated unsecured long-term bank loans of RMB1,491 million (31 December 2013:
RMB1,684 million) bore interest ranging from 1.68% to 1.98% per annum and will be repayable in full in June 2016.
As at 31 December 2014, EUR denominated unsecured long-term bank loans of RMB244 million (31 December 2013: Nil) bore
interest at 4.27% per annum and will be repayable by half-yearly instalments through 2022.
The remaining EUR denominated unsecured long-term bank loans of RMB2 million (31 December 2013: RMB3 million) will be
repayable by quarterly instalments through 2017.
(iii)
As at 31 December 2014, USD denominated unsecured long-term bank loan of RMB1,652 million (31 December 2013:
RMB1,707 million) bore interest at 2.33% per annum and will be repayable by half-yearly instalments through 2016. Such loan
was subject to the fulfilment of certain annual financial covenants of the Group. As at 31 December 2014, the Group was in
compliance with these financial covenants.
As at 31 December 2014, USD denominated unsecured long-term bank loan of RMB263 million (31 December 2013: RMB274
million) bore interest at 3.00% per annum and will be repayable by half-yearly instalments through 2015. Such loan was subject
to the fulfilment of certain annual financial covenants of the Group. As at 31 December 2014, the Group was in compliance with
these financial covenants.
As at 31 December 2014, USD denominated unsecured long-term bank loan of RMB184 million (31 December 2013: RMB183
million) bore interest at 2.90% per annum and will be fully repayable in 2015. Such loan was subject to the fulfilment of certain
annual financial covenants of the Group. As at 31 December 2014, the Group was in compliance with these financial covenants.
As at 31 December 2014, USD denominated unsecured long-term bank loan of RMB2,203 million (31 December 2013: Nil) bore
interest at 3.23% per annum and will be fully repayable in 2017. Such loan was subject to the fulfilment of certain annual financial
covenants of the Group. As at 31 December 2014, the Group was in compliance with these financial covenants.
As at 31 December 2014, USD denominated unsecured long-term bank loan of RMB367 million (31 December 2013: Nil) bore
interest at 2.80% per annum and will be fully repayable in 2017. Such loan was subject to the fulfilment of certain annual financial
covenants of the Group. As at 31 December 2014, the Group was in compliance with these financial covenants.
The remaining USD denominated unsecured long-term bank loans of RMB2,369 million (31 December 2013: RMB1,932 million)
bore interest ranging from 1.47% to 3.23% per annum and had maturities ranging from 1 month to 32 months from the balance
sheet date.
154
(continued)
In April 2008, the Company issued bonds with principal amount of RMB1,100 million to public and institutional investors. The
bonds bore interest at a fixed rate of 6.5% per annum and will mature in April 2016.
(v)
In October 2014, the Company issued 5-year RMB medium-term notes with principal amount of RMB9,000 million. The notes
bore interest at a fixed rate of 5.8% per annum and will mature in October 2019. Interest on the notes will be payable yearly in
arrears in October of each year, beginning from October 2015.
(vi)
In April 2012, Zoomlion H.K. SPV Co., Limited, a wholly-owned subsidiary of the Company issued 5-year senior notes with
principal amount of USD400 million (RMB equivalent 2,521 million). The senior notes were guaranteed by the Company, bear
interest at a fixed rate of 6.875% per annum and will mature in April 2017. Interest on the notes will be payable half-yearly in
arrears in April and October of each year, beginning from October 2012.
In December 2012, Zoomlion H.K. SPV Co., Limited issued 10-year senior notes with principal amount of USD600 million (RMB
equivalent 3,773 million). The senior notes were guaranteed by the Company, bear interest at a fixed rate of 6.125% per annum
and will mature in December 2022. Interest on the notes will be payable half-yearly in arrears in June and December of each
year, beginning from June 2013.
(c) Except as disclosed in Notes 21(b)(i) and 21(b)(iii) above, none of the Groups loans and borrowings
contains any financial covenants.
155
The Company
2014
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
Trade creditors
7,319
8,629
4,549
5,764
Bills payable
6,141
7,027
5,892
6,818
13,460
15,656
10,441
12,582
32
27
14
7,189
6,478
983
1,066
698
829
536
750
487
626
515
676
322
433
VAT payable
143
616
48
503
880
1,091
186
150
93
116
55
86
263
303
238
250
78
478
703
1,550
701
1,434
1,808
1,562
1,062
1,046
19,494
23,891
21,435
24,431
156
(continued)
Notes:
(a)
Ageing analysis of trade creditors and bills payable as at the balance sheet date is as follows:
The Group
The Company
2014
2013
2014
RMB
RMB
RMB
RMB
millions
millions
millions
millions
5,490
6,091
3,671
4,242
3,404
4,760
2,965
4,254
3,915
4,020
3,582
3,578
651
785
223
508
13,460
15,656
10,441
12,582
The Group
The Company
2013
(b)
RMB
RMB
millions
millions
93
66
156
130
(133)
(110)
116
86
116
86
95
92
(118)
(123)
93
55
A provision for warranties is recognised when the underlying products are sold. Under the terms of the Groups sales agreements, the
Group will rectify any product defects arising within predominantly 3 to 24 months from the date of sale. Provision is therefore made
for the best estimate of the expected settlement under these agreements in respect of products sold which are still within the warranty
period. The amount of provision takes into account the Groups recent claim experience, historical warranty data and a weighting of all
possible outcomes against their associated probabilities.
(c)
According to the arrangement with banks, the discount on factoring of the Groups trade receivables without recourse (Note 17) will be
paid to the banks within 1 year, and the discount on factoring of the Groups receivables under finance lease without recourse (Note 18)
will be paid by instalments over periods ranging from 1 to 5 years. The amounts expected to be paid after one year are recorded under
the caption Other non-current liabilities.
(d)
Under the non-recourse factoring arrangements, the Group collects payments from customers on behalf of the banks to which the
Group factored its receivables. The amounts are expected to be paid to the banks within one year.
157
The Company
2014
2013
2013
RMB
millions
RMB
millions
RMB
millions
RMB
millions
26
433
404
30
437
404
158
Balance at
1 January
2014
RMB
millions
Acquisition
from
business
combination
RMB
millions
Credited/
(charged)
to profit
or loss
RMB
millions
Effect of
exchange
rate
RMB
millions
Balance at
31 December
2014
RMB
millions
405
32
64
109
34
32
2
(22)
(14)
(9)
(2)
(2)
(11)
(2)
436
34
40
84
24
Total
644
(11)
(17)
618
(5)
(327)
(33)
(103)
(9)
(48)
14
4
(17)
37
12
(14)
(324)
(29)
(108)
Total
(468)
(57)
49
(475)
(continued)
Credited/
Balance at
from
(charged)
Effect of
Balance at
1 January
business
to profit
exchange
31 December
2013
combination
or loss
rate
2013
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
405
213
192
Inventories
43
(11)
32
Accrued expenses
54
10
64
Tax losses
74
34
109
Others
72
(39)
34
456
186
644
Total
Deferred tax liabilities arising from:
Property, plant and equipment
Intangible assets
(8)
(5)
(338)
15
(4)
(327)
Lease prepayments
(33)
(33)
Others
(61)
(41)
(1)
(103)
(440)
(23)
(5)
(468)
Total
As at 31 December 2014, RMB231 million (31 December 2013: RMB124 million) of deferred
tax assets in respect of asset impairment losses and tax losses were not recognised by certain
subsidiaries of the Company, as it is not probable that sufficient future taxable profits will be
available to utilise such tax benefits.
159
(continued)
(charged)
Balance at
1 January
to profit
31 December
2014
or loss
2014
RMB
RMB
RMB
millions
millions
millions
185
37
222
Accrued expenses
40
(30)
10
Others
12
21
237
16
253
Balance at
Credited
Balance at
1 January
to profit
31 December
2013
or loss
2013
RMB
RMB
RMB
millions
millions
millions
Total
79
185
Accrued expenses
Receivables
31
40
Others
16
(4)
12
153
84
237
Total
160
161
2013
RMB
RMB
millions
millions
7,706
7,706
7,706
7,706
Registered capital
6,275,925,164 A Shares of RMB1.00 each
1,430,028,886 H Shares of RMB1.00 each
(2013: 6,275,925,164 A Shares of RMB1.00 each
1,430,028,886 H Shares of RMB1.00 each)
Ordinary shares issued and fully paid:
At 1 January and 31 December
The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with
regard to the Companys residual assets.
162
(continued)
(b) Reserves
The reconciliation between the opening and closing balances of each component of the Groups
consolidated reserves is set out in the consolidated statement of change in equity. Details of the
changes in the Companys individual component of reserves between the beginning and the end of
the year are as follows:
The Company
2014
RMB
2013
RMB
millions
millions
14,648
14,648
Statutory reserve
Balance at 1 January
Appropriation (Note 26(b)(ii))
2,901
4
2,612
289
Balance at 31 December
2,905
2,901
(2)
3
(2)
(1)
1
(2)
Retained earnings
Balance at 1 January
Appropriation (Note 26(b)(ii))
Cash dividends (Note 26(c))
Safety production fund
Profit for the year
15,290
(4)
(1,156)
51
14,213
(289)
(1,541)
(1)
2,908
Balance at 31 December
14,181
15,290
Total
Balance at 1 January
32,837
31,471
Balance at 31 December
31,735
32,837
Capital reserve
Balance at 1 January and 31 December
Other reserve
Balance at 1 January
Other comprehensive income
Safety production fund
Balance at 31 December
163
(continued)
Capital reserve
Under PRC rules and regulations, capital reserve is non-distributable other than in liquidation
and may be utilised for business expansion or converted into ordinary shares by the issuance
of new shares to shareholders in proportion to their existing shareholdings or by increasing the
par value of the shares currently held by the shareholders.
164
(continued)
27 Capital management
The Groups primary objectives when managing capital are to safeguard the Groups ability to continue as
a going concern, so that it can continue to provide investment returns for shareholders and benefits for
other stakeholders, by pricing products and services commensurate with the level of risk and by securing
access to finance at a reasonable cost.
Management regularly reviews and manages its capital structure to maintain a balance between the
higher shareholder returns that might be possible with higher levels of borrowings and the advantages
and security afforded by a sound capital position, and makes adjustments to the capital structure in light
of changes in economic conditions.
Management monitors its capital structure on the basis of adjusted debt-to-equity ratio. For this purpose,
the Group defines debt as total loans and borrowings excluding loans arising from factoring of receivables
with recourse. Management considers that although factoring of receivables with recourse does not
satisfy the derecognition criteria as set out in Note 2(h)(i), the residual risk on these receivables are
low. As such, loans arising from factoring of receivables with recourse are excluded for the purpose of
calculating the debt-to-equity ratio. The Group defines equity as all components of equity attributable to
equity shareholders of the Company.
During 2014, the Groups strategy, which was unchanged from 2013, was to maintain the adjusted
debt-to-equity ratio at less than 100%. In order to maintain or adjust the ratio, the Group may adjust the
amount of dividends paid to shareholders, issue new shares, return capital to shareholders, raise new
debt financing or sell assets to reduce debt.
165
27 Capital management
(continued)
2013
RMB
RMB
millions
millions
5,687
8,397
25,925
12,750
31,612
21,147
(832)
Adjusted debt
31,612
20,315
40,791
41,579
77%
49%
Less:
Loans arising from factoring of receivables with recourse
166
Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted
prices in active markets for identical assets or liabilities at the measurement date.
Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which
fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs
are inputs for which market data are not available.
(continued)
(ii) Fair values of financial instruments carried at other than fair value
The carrying amounts of the Groups and the Companys financial instruments carried at cost
or amortised cost are not materially different from their fair values as at 31 December 2014 and
2013 except for the following financial instruments, for which their carrying amounts and fair
value and the level of fair value hierarchy are disclosed below:
The Group
Fair value at
Carrying
31 December
Carrying
Fair value at
amount at
2014
amount at
31 December
31 December
categorised into
31 December
2013 categorised
2014
Level 1
2013
into Level 1
senior notes
6,049
5,831
6,013
5,898
8,991
9,078
Guaranteed USD
The Groups investments in unlisted equity securities have no quoted market prices and
accordingly, a reasonable estimate of their fair values could not be made without incurring
excessive costs. Such securities are stated at cost less impairment losses.
167
(continued)
(i)
168
(continued)
169
(continued)
170
(continued)
More than
Within
1 year but
2 years but
Carrying undiscounted
1 year or
less than
less than
More than
cash flow
on demand
2 years
5 years
5 years
Total
contractual
amount
RMB
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
millions
4,518
31,612
36,672
6,795
7,283
18,076
19,494
19,494
19,494
899
903
343
386
174
52,005
57,069
26,289
7,626
18,462
4,692
242
17,266
17,266
As at 31 December 2013
Total
contractual
More than
More than
Within
1 year but
2 years but
Carrying
undiscounted
1 year or
less than
less than
More than
amount
cash flow
on demand
2 years
5 years
5 years
RMB
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
millions
21,147
24,464
6,668
919
12,162
4,715
23,891
23,891
23,891
1,542
1,563
858
633
72
46,580
49,918
30,559
1,777
12,795
4,787
248
17,712
17,712
171
(continued)
More than
Within
1 year but
2 years but
Carrying undiscounted
1 year or
less than
less than
More than
amount
cash flow
on demand
2 years
5 years
5 years
RMB
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
millions
Total
contractual
19,237
22,023
3,323
5,394
13,134
172
21,435
21,435
21,435
220
220
18
47
155
40,892
43,678
24,758
5,412
13,181
327
242
17,266
17,266
As at 31 December 2013
More than
More than
contractual
Within
1 year but
2 years but
Carrying
undiscounted
1 year or
less than
less than
More than
amount
cash flow
on demand
2 years
5 years
5 years
RMB
RMB
RMB
RMB
RMB
RMB
millions
millions
millions
millions
millions
millions
Total
9,421
9,749
3,115
532
6,102
24,431
24,431
24,431
221
221
25
40
156
34,073
34,401
27,546
557
6,142
156
248
17,712
17,712
172
(continued)
2013
Weighted
Weighted
average
Amount
average
interest rate
RMB
interest rate
RMB
millions
millions
4.7%
(1,271)
3.4%
(154)
6.2%
(17,340)
6.6%
(7,554)
Amount
(18,611)
(7,708)
0.5%
2,411
0.5%
3,415
Bank deposits
1.3%
14,481
1.3%
16,657
4.9%
16,678
5.2%
17,635
2.3%
(4,416)
2.4%
(8,243)
2.4%
(8,585)
2.7%
(5,196)
Net amount
20,569
24,268
1,958
16,560
173
(continued)
2013
Weighted
average
Weighted
Amount
average
interest rate
RMB
interest rate
RMB
millions
millions
Amount
4.7%
(1,259)
3.0%
(56)
5.9%
(11,291)
5.6%
(1,541)
(12,550)
(1,597)
0.5%
1,889
0.5%
1,884
Bank deposits
1.6%
11,233
1.6%
11,822
3.9%
(1,377)
3.1%
(4,315)
2.7%
(5,310)
3.1%
(3,509)
Net amount
6,435
5,882
(6,115)
4,285
174
(continued)
HKD
Trade debtors
Cash and cash
equivalents
Trade creditors
Loans and borrowings
1,467
45
40
379
65
44
548
(658)
(5,262)
102
(42)
(264)
(2)
13
(1)
344
(192)
(6,188)
8
(558)
(17)
(3)
(5)
21
(26)
(3,905)
(159)
38
21
(5,657)
(502)
36
(5)
The Company
Exposure to foreign currencies risk (expressed in equivalent RMB millions)
2014
2013
USD
EUR
Yen
HKD
USD
EUR
Yen
HKD
Trade debtors
Cash and cash
equivalents
Trade creditors
Loans and borrowings
1,446
20
15
316
40
16
360
(516)
(5,262)
12
(2)
(252)
297
(191)
(6,188)
2
(54)
(8)
(5)
(3,972)
(222)
15
(5,766)
(20)
11
175
(continued)
2013
Effect on
USD
EUR
Yen
HKD
Effect on
Increase/
profit after
Increase/
profit after
decrease
taxation
decrease
taxation
in foreign
and
in foreign
and
exchange
retained
exchange
retained
rates
profits
rates
profits
RMB
RMB
millions
millions
5%
(166)
5%
(240)
-5%
166
-5%
240
5%
(7)
5%
(21)
-5%
-5%
21
5%
5%
-5%
(2)
-5%
(2)
5%
5%
-5%
(1)
-5%
Other than the amounts as disclosed above, the amounts of other financial assets and liabilities
of the Group are substantially denominated in the functional currency of the respective entity
within the Group.
176
29 Commitments
(a) Capital commitments
As at 31 December 2014, the Group and the Company had capital commitments as follows:
The Group
2014
The Company
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
623
210
391
intangible assets
22
22
22
22
lease prepayments
66
66
261
261
596
711
493
479
94
94
equipment
equity investment
(Note 36(a))
equipment
177
29 Commitments
(continued)
Within 1 year
After 1 but within 2 years
The Company
2013
2014
2013
RMB
RMB
RMB
RMB
millions
millions
millions
millions
113
133
77
92
86
76
50
36
57
67
27
27
44
47
20
19
15
40
15
16
Thereafter
26
37
26
37
341
400
215
227
30 Contingent liabilities
(a) Financial guarantee issued
Certain customers of the Group from time to time may finance their purchase of the Groups
machinery products through bank loans, and the Group provides guarantees to the banks for the
amount drawn by customers. Under the guarantee arrangement, in the event of customer default,
the Group is required to repossess the machinery collateralising the bank loans, and is entitled
to sell the machinery and retain any net proceeds in excess of the guarantee payments made to
the banks. As at 31 December 2014, the Groups maximum exposure to such guarantees was
RMB14,525 million (31 December 2013: RMB15,044 million). The terms of these guarantees
coincide with the tenure of bank loans which generally range from 1 to 5 years. The Group, when
called upon by the banks to fulfil its guarantee obligations, has historically been able to sell the
repossessed machinery for proceeds that are not significantly different from the amount of the
guarantee payments. For the year ended 31 December 2014, the Group made payments of
RMB497 million (2013: RMB447 million) to the banks for repossession of machinery under the
guarantee arrangement as a result of customer default.
178
30 Contingent liabilities
(continued)
179
2013
RMB
RMB
millions
millions
628
1,617
36
34
The directors of the Company are of the opinion that the above transactions with related parties
were conducted in the ordinary course of business and in accordance with the agreements
governing such transactions which are comparable to normal commercial terms.
RMB
thousands
thousands
25,917
34,897
363
363
26,280
35,260
180
2013
RMB
181
(continued)
182
33 Investments in subsidiaries
The Company
2014
2013
RMB
RMB
millions
millions
12,172
11,771
The following list contains particulars of subsidiaries as at 31 December 2014 which principally affected
the results, assets or liabilities of the Group. The class of shares held is ordinary unless otherwise stated.
Proportion of ownership interest
Particulars
Name of company
of issued
Groups
and paid up
effective
held by the
held by
capital
interest
Company
subsidiary
Principal activities
100%
100%
Manufacture of
(millions)
Compagnia Italiana
EUR 15
concrete machinery
RMB474
100%
100%
Working Machinery
Manufacture of earth
working machinery
Co., Ltd.
Hunan Zoomlion Axle
RMB466
88.86%
88.86%
Co., Ltd.
Zoomlion Material Handling
Manufacture of motor
vehicle components
RMB100
100%
100%
Manufacture of
material handling
machinery
RMB1,502
100%
100%
Leasing of construction
equipment and
machinery
183
33 Investments in subsidiaries
(continued)
Proportion of ownership interest
Particulars
Name of company
of issued
Groups
and paid up
effective
held by the
held by
capital
interest
Company
subsidiary
Principal activities
100%
100%
Trading of equipment
(millions)
Hunan Zoomlion
RMB50
International Trade
and machinery
Co., Ltd.
Hunan Teli Hydraulic
RMB180
77.61%
77.61%
Co., Ltd.
Hunan Zoomlion Special
hydraulic products
RMB69
100%
100%
USD280
100%
100%
RMB360
100%
100%
Manufacture of
crawling cranes
RMB100
100%
100%
Co., Ltd.
Shanghai Zoomlion Pile
Leasing of equipment
and machinery
Crane Ltd.
Hunan Zoomlion Hardware
Manufacture of
specialised vehicles
Manufacture of
Manufacture of
components
RMB50
100%
100%
Foundation Machinery
Manufacture of pile
foundation machinery
Co., Ltd.
Hunan Zoomlion Intelligent
RMB50
100%
100%
Research and
manufacture of
machine software
184
33 Investments in subsidiaries
(continued)
Proportion of ownership interest
Particulars
Name of company
of issued
Groups
and paid up
effective
held by the
held by
capital
interest
Company
subsidiary
Principal activities
100%
100%
Manufacture of
(millions)
Hunan Zoomlion Concrete
RMB451
concrete machinery
Co., Ltd.
Zoomlion H.K. SPV
USD25
100%
100%
EUR 3
100%
100%
Investment holding
Co., Limited
m-tec mathis technik
GmbH (Note 14)
Zoomlion Commercial
Manufacture of
concrete machinery
USD100
100%
100%
Investment holding
All of the above subsidiaries are incorporated and operate in the PRC, except for CIFA and m-tec which
is incorporated and operates in Italy and Germany, respectively. All of the above subsidiaries are limited
liability companies.
185
1 July 2014
1 July 2014
1 July 2014
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2017
1 January 2018
The Group has not early adopted the above amendments, new standards and interpretations. Company
management is still in the process of assessing what the impact of these amendments, new standards
and interpretations is expected to be in the period of initial application and is not yet in a position to
determine whether or not the adoption of these amendments, new standards and interpretations will have
a significant impact on the Groups results of operations and financial position.
In addition, the requirements of Part 9, Accounts and Audit, of the new Hong Kong Companies
Ordinance (Cap. 622) come into operation from the Companys first financial year commencing after
3 March 2014 (i.e. the Companys financial year which began on 1 January 2015) in accordance with
section 358 of that Ordinance. The Group is in the process of making an assessment of the expected
impact of the changes in the Companies Ordinance on the consolidated financial statements in the
period of initial application of Part 9. So far it has concluded that the impact is unlikely to be significant
and will primarily only affect the presentation and disclosure of information in the consolidated financial
statements.
186
2014
2013
RMB
RMB
millions
millions
41,248
42,052
(40)
(40)
41,208
42,012
(b) Reconciliation of total comprehensive income for the year of the Group
2014
Total comprehensive income for the year reported under PRC GAAP
Safety production fund (Note)
Total comprehensive income for the year reported under IFRSs
2013
RMB
RMB
millions
millions
421
3,900
421
3,905
Note: Under PRC GAAP, safety production fund should be accrued and recognised in profit or loss with a corresponding credit in
reserve according to relevant PRC regulations. Such reserve is reduced for expenses incurred for safety production purposes or,
when safety production related equipment are purchased, is reduced by the purchase cost with a corresponding increase in the
accumulated depreciation. Such fixed assets are not depreciated thereafter. Under IFRSs, expense is recognised in profit or loss
when incurred, and fixed assets are capitalised and depreciated in accordance with applicable accounting policies.
(c) There is no material difference between the consolidated cash flow of the Group reported under
PRC GAAP and IFRSs.
187
188
ZOOMLION HEAVY INDUSTRY
SCIENCE AND TECHNOLOGY CO., LTD.
2014
Annual
Report