HIGHLY(SH:600619)2014-03-24 16:00Financial Performance - The net profit attributable to shareholders for 2013 was CNY 104,129,188.62, with the parent company's net profit at CNY 113,604,778.61[6]. - In 2013, the company's operating revenue was approximately CNY 6.62 billion, a decrease of 2.23% compared to 2012[30]. - The net profit attributable to shareholders was CNY 104.13 million, down 29.57% from the previous year[30]. - The basic earnings per share decreased by 30.43% to CNY 0.16 in 2013[30]. - The company reported a significant drop of 47.80% in net profit after deducting non-recurring gains and losses, amounting to CNY 67.06 million[30]. - The company's operating profit decreased by 42.79% year-on-year, attributed to declining revenue and reduced gross profit[40]. - The company's gross profit margin for the main business was 12.06%, a decrease of 1.75 percentage points year-on-year[37]. - The company reported a cash dividend of 1.20 RMB per 10 shares, totaling 80,129,293.80 RMB distributed to shareholders, which represents 149.25% of the average net profit attributable to shareholders over the last three years[101]. Assets and Liabilities - The total assets of the company increased by 7.89% to CNY 8.13 billion by the end of 2013[30]. - Total current assets increased to CNY 4,493,776,190.50 from CNY 4,035,529,958.69, representing a growth of approximately 11.37%[195]. - Total liabilities increased to CNY 5,059,730,663.13 from CNY 4,464,466,158.67, reflecting a growth of about 13.33%[198]. - Total non-current assets rose to CNY 3,631,709,923.68 from CNY 3,495,459,401.51, indicating an increase of about 3.90%[195]. - The company’s total assets increased to CNY 8,125,486,114.18 from CNY 7,530,989,360.20, reflecting a growth of about 7.91%[198]. Market and Industry Challenges - The company faces industry risks due to climate change and increasing competition in the air conditioning and compressor market[13]. - Labor costs and raw material prices, particularly copper and steel, are significant production cost risks for the company[14]. - The company faced pressure on product sales due to an oversupply in the air conditioning market and a decline in gross margin[36]. - The company’s market faced challenges due to the expiration of energy-saving subsidies and the implementation of new efficiency standards[36]. - The company is facing challenges from rising industry concentration, with the top 10 manufacturers' market share increasing from 81% in 2008 to 92% in 2013[84]. Research and Development - The company is committed to enhancing research and development to meet the technological demands of the air conditioning industry, particularly in finding new environmentally friendly refrigerants[16]. - The company's R&D expenditure increased by 37.81% year-on-year, totaling 237.35 million RMB, which accounted for 3.58% of operating revenue[49]. - The company is committed to increasing R&D investment to enhance its competitive edge and address the global challenge of finding new environmentally friendly refrigerants[97]. Investment and Expansion - The company has ongoing projects in India with an investment of RMB 45.235 million, currently under construction[78]. - The company plans to achieve a revenue target of 6.7 billion yuan in 2014, with operating costs controlled at approximately 87% of revenue[93]. - The company aims to enhance its international presence and expand into new markets, particularly in emerging regions like India and Southeast Asia[86]. - The company is expanding its product offerings to include non-home air conditioning compressors and has made progress in developing heat pump products[91]. - The company invested 277.5 million RMB to establish Anhui Highly Precision Casting Co., Ltd., which will have a production capacity of 50,000 tons of castings and 6 million processed parts annually[104]. Cash Flow and Financial Management - The net cash flow from operating activities was CNY 418.55 million, reflecting a slight increase of 1.66% from 2012[30]. - Cash received from investment income increased by 264.30%, primarily from the sale of stocks of other listed companies and interest income from entrusted loans to invested companies[51]. - Cash received from borrowings increased by 34.42%, as the company reduced bank bill discounting to lower financial costs and supplemented working capital with short-term loans[52]. - The company has implemented a cash dividend policy that mandates a minimum of 30% of the average distributable profit over the last three years to be distributed as cash dividends[100]. Corporate Governance - The company has established a comprehensive internal control system, with updates made to various management policies in 2013[159]. - The internal control system has been evaluated and deemed effective as of December 31, 2013, with no significant deficiencies found[171]. - Deloitte Huayong CPA issued an unqualified audit opinion on the company's financial statements for the year ended December 31, 2013[192]. - The company has implemented a responsibility system for major errors in annual report disclosures, ensuring accountability for information accuracy[176]. Employee and Management Structure - The total number of employees in the parent company and major subsidiaries is 3,485, with 57 in the parent company and 3,380 in subsidiaries[150]. - The company has implemented a performance-based salary system, linking compensation to job evaluation, market competitiveness, and individual performance[151]. - The company’s management structure includes several vice presidents overseeing different operational areas, contributing to a well-rounded leadership approach[145].