Summary of 2016 Semi-Annual Report of Shenzhen SEG Co., Ltd.
Stock code: 000058, 200058 Stock abbreviation: SHEN SEG, SHEN SEG B Notice No.:2016-073
Summary of 2016 Semi-Annual Report of Shenzhen SEG Co., Ltd.
I. Important Notice
This summary is excerpted from the semi-annual report 2016 of Shenzhen SEG Co., Ltd. For more details,
investors shall read carefully the semi-annual report published on the websites specified by China Securities
Regulatory Commission (CSRC), such as, the Cninfo Website (http://www.cninfo.com.cn ) and the website of
Shenzhen Stock Exchange (www.szse.cn ).
Company Profile:
Stock abbreviation Shenzhen SEG, Shenzhen SEG B Stock code 000058, 200058
Changed stock abbreviation (if any) None
Listed on Shenzhen Stock Exchange
Contact information Secretary of the Board of Directors Securities affairs representative
Name Zheng Dan Zhang Xin
Phone 0755-83747939 0755-83747939
Fax 0755-83975237 0755-83975237
E-mail segcl@segcl.com.cn segcl@segcl.com.cn
II. Major Financial Data and Shareholder Changes
(1) Major Financial Data
Are retrospective adjustments made to previous financial statements due to accounting policy changes or
accounting errors?
□ Yes √ No
Amount of the same period Year-on-year
Amount of the report period
of the previous year increase/decrease
Operating revenue (Yuan) 362,673,236.85 374,555,135.61 -3.17%
Net profit attributable to shareholders of
26,856,270.42 34,906,133.61 -23.06%
the listed company (Yuan)
Net profit attributable to shareholders of
the listed company after deduction of 28,696,459.47 36,738,936.70 -21.89%
non-recurring gains and losses (Yuan)
Net cash flow arising from operating
-99,314,028.40 -98,587,833.62 -1.08%
activities (Yuan)
Basic EPS (Yuan/Share) 0.0342 0.0445 -23.15%
Diluted EPS (Yuan/Share) 0.0342 0.0445 -23.15%
Weighted average ROE 1.82% 2.55% -0.73%
Amount at end of the Amount at end of the Year-on-year
reporting period previous year increase/decrease
Total assets (Yuan) 2,479,696,060.50 2,614,660,524.37 -5.16%
Net assets attributable to shareholders of
1,478,243,069.23 1,475,126,229.16 0.21%
the listed company (Yuan)
(2) List of top 10 ordinary shareholders
Unit: Share
Total number of ordinary shareholders
81,615
at the end of the report period
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Summary of 2016 Semi-Annual Report of Shenzhen SEG Co., Ltd.
Shareholding information of the top 10 ordinary shareholders
Quantity of Information on pledged or
Name of Shareholding Quantity of restricted frozen shares
Nature of shareholder ordinary shares
shareholder percentage ordinary shares held
held Share status Quantity
Shenzhen SEG State-owned legal
30.24% 237,359,666 0
Group Co., Ltd. person
Liu Guocheng Domestic natural person 0.85% 6,739,002 0
Liu Guohong Domestic natural person 0.42% 3,326,858 0
Gong Qianhua Overseas natural person 0.37% 2,940,000 0
Zeng Ying Domestic natural person 0.35% 2,800,000 0
Tan Shujian Domestic natural person 0.31% 2,419,073 0
China Securities
Domestic
Finance
non-state-owned legal 0.29% 2,271,900 0
Corporation
person
Limited
NORGES BANK Overseas legal person 0.24% 1,890,226 0
Hu Chunwan Domestic natural person 0.18% 1,385,200 0
China Merchants
State-owned legal
Securities (Hong 0.17% 1,324,469 0
person
Kong) Co., Ltd.
Shenzhen SEG Group Co., Ltd has no associated relationship with other shareholders,
Explanations on the association relationship and is not a concerted action unit as specified in the Management Methods for
or concerted action among the Disclosure of Information on Changes of Shareholding Status of Shareholders of
above-mentioned shareholders Listed Companies. It is unknown whether other shareholders have an associated
relationship or are concerted action units or not.
Information about the shareholders
None
participating in financing business (if any)
(3) List of top 10 preferential shareholders
□ Applicable √ Not applicable
No shareholders hold preferred shares in the report period.
(4) Changes of the Controlling Shareholders or Actual Controllers
Changes of the controlling shareholders in the report period
□ Applicable √ Not applicable
In the report period, the controlling shareholders of the Company are not changed.
Changes of the actual controllers in the report period
□ Applicable √ Not applicable
In the report period, the actual controllers of the Company are not changed.
III. Management Discussion and Analysis
1. In the first half of 2016, under the pressure of slowdown of domestic macro-economic development and
intensified market competition, the Company actively expanded various businesses via inner innovation, external
expansion and alliance with other giants. During the report period, the Company carries out various businesses
following the policy of "transformation, innovation and development". In the report period, the total operating
income of the Company amounted to RMB 412,250,000, decreased by 3.05% over the same period of last year.
The total profit of the Company amounted to RMB 66,260,000, decreased by 8.22% over the same period of last
year. Main reasons for decrease of gross revenue and total profit from corresponding period of last year: (1)
Substantial decrease of operating revenue from the trade business of SEG Industrial. (2) Decrease of operating
revenue from Shenzhen SEG Electronics Market, Nanjing SEG and Longgang SEG Electronics Market due to a
drop in both of occupancy rate and rent price. (3) Revenue decrease due to business shrinkage of SEG
E-commerce which is about to be restructured. (4) The transformation & upgrade business in electronics market is
in incubation period and has not generated any income.
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Summary of 2016 Semi-Annual Report of Shenzhen SEG Co., Ltd.
2. The main business of the Company includes development and operation of the specialized electronics market
and supporting projects, property lease service, trade and channel service, e-commerce, and value-added
microcredit service, and hotel service and so on.
(1) Operation of the electronics market (including other relevant business such as the marker platform and
Internet+ service and so on)
With the rapid development of the Internet and mobile Internet, growing popularity of the terminal service, the
formation of oligopoly in the e-commerce platform, and vertical segments of the e-commerce market, the physical
electronics market industry is impacted.
Facing fierce market competition and the impact of new business models, the Company is dedicated to user value,
integrates resources, further expands the industrial chain, enriches the industry, builds a multi-channel profit
model, promotes transformation and upgrading of the existing services, explores new business development
models, and continuously improves the operating capacity and creativity of the electronics market.
In the report period, the Company has established strategic cooperation with Taobao and Tmall to build online and
offline service platforms. The Company has also established strategic cooperation with Wangyu Technology and
Fujian Babycat, aiming to break through simple commercial platform operation, gets involved in content
production and operation, and build an integrated platform service operator.
During the report period, the Company signed strategic cooperation agreement with Tencent whereby both parties
will utilize their respective platform and resources advantages for strategic cooperation with an aim to jointly
build comprehensive entrepreneur service platform, hardware exhibition & sales platform of key area of
cooperation and hardware laboratory platform of practical innovation services, setting up entrepreneur incubator
service benchmark in China integrating both of hardware and software. The Company has signed strategic
cooperation agreement with Tmall Company whereby both parties will carry out strategic cooperation on
directional recommendation of maker products or mature products, activities, marketing, media promotion, and
resources complementarity and so on. SEG Maker Product Collection Company has attracted multiple
international and domestic famous brands, makers, and innovative products to settle, aggregated over 500 brands,
held over 30 road shows, academic exchanges, and product releases, and served government leaders, industrial
and enterprise representatives for over 50 times, gaining high recognition and creating widespread influences and
good social demonstration effects.
In the report period, the total operating income from the electronics market amounted to RMB 148,030,000,
decreased by 6.60% over the same period of last year. The total profit from the electronics market amounted to
RMB 40,860,000, decreased by 8.77% over the same period of last year. Main reason for decrease: under the
effect of continuous deterioration of macro economy and intensified industry competition, the electronics market
places in certain regions experienced decrease in operating revenue and total profit due to rent decrease and
vacancy rate increase.
(2) Property leasing service
The property leasing service of the headquarters and the subsidiary SEG Baohua (holding 66.58% of shares)
continues to increase steadily.
The Company managed to maintain the leasing rate above 98% through effective management measures including
improving property management and service quality, controlling costs and expenses, and adjusting
investment-attraction strategy.
In the report period, the total operating income from the property leasing service amounted to RMB 36,400,000,
decreasing by 2.62% over the same period of last year. The profit from the property leasing service amounted to
RMB 8,640,000, decreasing by 1.37% over the same period of last year.
(3) IT product channel retail terminal business
In the report period, the overall operating result of Shenzhen SEG Industrial Investment Co., Ltd. witnesses
obvious decline. Main reason for that is domestic IT retail market remained sluggish. And under the influence of
the Chinese New Year holidays in Q1, the upstream and downstream partners encountered business stagnation. As
a result, SEG partners lagged capital returns, and cash flow was slow, which directly influenced the operating
income of the Company. In the report period, the Company invested in and founded SEG Intelligent Technology
Co., Ltd., mainly developing and expanding intelligent and engineering projects and acting as an agent for
communication retail brands.
In the report period, the total operating income from the channel business amounted to RMB 161,700,000,
increased by 7.88% over the same period of last year, mainly due to the newly-added channel business of SEG
Intelligent Technology Co., Ltd.
(4) Microcredit business
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Summary of 2016 Semi-Annual Report of Shenzhen SEG Co., Ltd.
SEG Credit, a subsidiary of the Company (holding 53.02% of shares) ran well in the report period, its economic
indicators rose sharply on the year-on-year basis. The Company has achieved success in the warehouse receipt
collateral loan. Adapted to market changes and customer demands, the Company continuously explored new
credit models, and tried the goods collateral loan model on the basis of risk control.
In the report period, the total operating income from the microcredit business amounted to RMB 49,580,000,
increasing by 3.16% over the same period of last year. The total profit from the microcredit business amounted to
RMB 20,250,000, increasing by 23.6% over the same period of last year. The main cause for increase is that new
loans increased on a year-on-year basis.
(5) E-Commerce business
On July 21, 2015, the 24th interim meeting of the 6th Board of Directors approved the Proposal on Transfer of 51%
of Equities of Shenzhen SEG E-Commerce Co., Ltd. The audit and assessment reference date for equity transfer
was March 31, 2015. Due to outstanding debts between SEG E-Commerce and the Company, the equity transfer
was not implemented as scheduled. Now that SEG E-Commerce paid off the loan of RMB 60 million and fund
possession cost to the Company in April 2016, and State-owned Assets Supervision and Administration
Commission of Shenzhen Municipality approved the equity transfer, the 1st interim meeting of the 7th Board of
Directors approved that the audit and assessment reference data for transfer of 51% of equities of Shenzhen SEG
E-Commerce Co., Ltd. held by the Company was changed to April 30, 2016. The Company will continue to push
forward the equity transfer. Audit and assessment work is in progress, and the Company will perform the
information disclosure obligation based on progress.
3. The Company launched a major assets restructuring program in November 2015. The Company's stocks (SHEN
SEG, 000058, SHEN SEG B, 200058) were suspended from the early trading on November 4, 2015. During the
stock suspension, the Company and related parties actively pushed forward major assets restructuring, and
regularly disclosed progress notices. As of the date of the report, the Company has disclosed the major assets
restructuring plan. See Plan of Shenzhen SEG Co., Ltd. on Issue of Shares, Cash Purchase of Assets, and
Supporting Fund Raising & Related Transaction (Revised Draft) released on the Cninfo Website on February 25,
2016. The Company's stocks resumed from the early trading on February 25, 2016. After trading resumption, the
Company and related parties actively pushed forward the relevant works of this major assets restructuring.
According to the major assets restructuring plan, after the implementation of that, based on integration of the
existing resource platform, the Company will promote mutual development with commercial real estate and the
maker platform, improve property value, establish an O2O e-commerce platform, create a diversified SEG
industry ecosystem, and build an industry-leading new SEG with clearly-defined strategic positioning.
After restructuring, the Company intends to expand the maker ecology, cultural education, intelligent technology,
sports & entertainment, virtual experience, gaming, and financial services. Based on advantages in the specialized
electronics market and commercial real estate business and Huaqiangbei industrial cluster, the Company will give
full play to the resource allocation function. The Company will build the SEG maker center, SEG international
maker product display and promotion center, SEG maker apartment, and maker funds, get deeply involved in the
maker ecology industrial chain, facilitating the maker group in basic hardware technologies, R&D and production
support, and funding. The Company will also interact with upstream and downstream manufacturers, promote
capitalization and industrialization of innovations, and marketization of new technologies and products, and
invigorate innovative vitality of the market to support and build a new maker business ecology integrating
"experimental development + incubator + marketing+ supporting services", and promote business development. In
addition, the Company will vitalize the existing specialized electronics market, combine service advantages of the
specialized electronics market and customer resources, make more efforts to expand the electronic financial
services, Internet e-commerce, supply chain financial service, intelligent hardware, virtual interactive experience
industries, optimize and integrate the business chain system, take consumer experience as the carrier, utilize online
and offline channels and resources, and carry out industrial upgrading.
IV. Issues related to financial report
(1) Information on changes in accounting policies, accounting estimates and accounting methods compared
with the financial reports of 2015
□ Applicable √ Not applicable
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Summary of 2016 Semi-Annual Report of Shenzhen SEG Co., Ltd.
There is no change in the Company's accounting policies, accounting estimates and accounting methods in the
report period.
(2) Information on retroactive restatements in corrections of major accounting errors in the report period
□ Applicable √ Not applicable
There is no retrospective restatement due to corrections on significant accounting errors in the report period.
(3) Information on changes in the scope of consolidation compared with the financial report of 2015
√ Applicable □ Not applicable
22 entities are included in the current consolidated financial statements, namely:
Subsidiary name Type of subsidiary Level Proportion of Proportion of
shareholding (%) voting right (%)
Shenzhen SEG Baohua Enterprise Development Holding subsidiary I 66.58 66.58
Co., Ltd.
Shenzhen Mellow Orange Business Hotel Holding grandson company II 66.58 66.58
Management Co., Ltd
Shenzhen SEG Industrial Investment Co., Ltd. Wholly-owned subsidiary I 100.00 100.00
Changsha SEG Development Co., Ltd. Holding subsidiary I 46.00 51.00
Shenzhen SEG Electronics Market Management Holding subsidiary I 70.00 70.00
Co., Ltd.
Suzhou SEG Electronics Market Management Holding subsidiary I 45.00 45.00
Co., Ltd.
Xi’an SEG Electronics Market Co., Ltd. Holding subsidiary I 65.00 65.00
Shenzhen SEG Credit Co., Ltd. Holding subsidiary I 53.02 53.02
Shenzhen SEG E-Commerce Co., Ltd. Holding subsidiary I 51.00 51.00
Shenzhen SEG Nanjing Electronics Market Wholly-owned subsidiary I 100.00 100.00
Management Co., Ltd.
Xi’an Hairong SEG Electronics Market Co., Ltd. Holding subsidiary I 51.00 51.00
Wujiang SEG Electronics Market Co., Ltd. Holding subsidiary I 51.00 51.00
Wuxi SEG Electronics Market Co., Ltd Holding subsidiary I 51.00 51.00
Foshan Shunde SEG Electronics Market Wholly-owned subsidiary I 100.00 100.00
Management Co., Ltd
Nanning SEG Electronics Market Management Wholly-owned subsidiary I 100.00 100.00
Co., Ltd.
Nantong SEG Times Square Development Co., Wholly-owned subsidiary I 100.00 100.00
Ltd.
Yantai SEG Times Square Development Co., Ltd. Holding subsidiary I 90.00 90.00
Nantong SEG Commercial Operation Wholly-owned subsidiary I 100.00 100.00
Management Co., Ltd.
Suzhou SEG Digital Plaza Management Co., Ltd. Wholly-owned subsidiary I 100.00 100.00
Xi'an Fengdong New Town SEG Times Square Wholly-owned subsidiary I 100.00 100.00
Properties Co., Ltd.
Suzhou SEG Intelligent Technology Co., Ltd. Wholly-owned subsidiary I 100.00 100.00
Shenzhen SEG Longyan New Energy Application Holding subsidiary I 50.00 50.00
and Development Co., Ltd.
Compared with the previous period, two subsidiaries are added to entities included in the consolidated financial
statements of the current period.
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Summary of 2016 Semi-Annual Report of Shenzhen SEG Co., Ltd.
(4) Explanations of the Board of Directors and Board of Supervisors to the "non-standard audit report"
made by the accounting firm in the report period
□ Applicable √ Not applicable
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