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Public company info - Anxin-China Holdings Ltd. , 01149.HK

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Anxin-China Holdings Ltd., 01149.HK - Company Profile
Chairman -
Share Issued (share) 3,061,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Software
Corporate Profile Business Summary: The Group's product portfolio is comprised of specialized intelligent monitoring systems which play a major role in industrial and public safety surveillance. Anxin-China is an integrated solutions provider, services operator and equipment manufacturer of ISD systems (“Intelligent Surveillance, Disaster Alert and Rescue Coordination Systems”) and ISS systems (“Intelligent Safety Systems”). Performance for the year: For the year ended 31 December 2013, the Group’s consolidated turnover was approximately HK$671,702,000 (2012: HK$849,730,000), a decrease of approximately 21%. The gross profit within the year was HK$527,488,000. (2012: HK$716,955,000), a decrease of approximately 26%. Total comprehensive income attributable to owners of the Company for the current financial year was approximately HK$482,227,000 (2012: HK$585,228,000). Business Review: ISD Business The first half of 2013 (“1H2013”) saw favorable market conditions fueled by tremendous government support. The Group achieved remarkable results by shifting its market focus to explore new provinces/cities so as to expand its business network. Accordingly, the segment revenue rose 35% year-on-year to HK$513.7 million in 1H2013, constituting 79% of the fullyear 2013 results contributed by the ISD segment. In the second half of 2013 (“2H2013”), the PRC government took the initiative to strengthen internal management and undertake personnel adjustments in an effort to improve work efficiency and transparency. Along with transitional growing pains, operational conditions in the PRC market remained uncertain and ambiguous. Enterprises whose revenues are substantially derived from government-related projects were inevitably facing downside risks. As a result, some ongoing ISD projects were postponed in 2H2013. Nevertheless, being attuned to the market trend, Anxin-China continued to refine its market strategies in order to diversify revenue streams and enhance anti-risk capabilities. During the year under review, the Group slowed down the pace of geographical market expansion, and instead devoted more efforts to strengthening ties with government authorities and developing into new safety sectors. These flexible and progressive business strategies are expected to provide sustainable momentum to propel the Group’s healthy development. During the year under review, the Group added 9 new monitoring centers in 4 provinces including Hunan, Jilin, Jiangsu and Chongqing. In addition, there was an increase of 6,521 surveillance points in existing and newly tapped provinces/cities. As of 31 December 2013, Anxin-China had established 45 monitoring centers and 29,909 surveillance points in total, and successfully expanded its ISD business across 11 provinces and 40 cities/counties. During the year of 2013, the Group’ s revenue contribution from the ISD system business segment was primarily derived from (1) one-off installation fees for sales of surveillance points and (2) continuing management fees for ongoing systems operations and maintenance. 81% of the segment’s revenue, amounting to HK$525,845,000, was generated from oneoff sales of surveillance points, while HK$125,916,000 (19% of the segment’s revenue) was generated from systems operations and maintenance. R&D strength has always been a high priority for the Group. During the year under review, via redefining and redesigning operational schemes of main function modules, the Group completed various modifications for ISD systems in an effort to provide The Group's clients with more convenient and user-friendly interfaces. Meanwhile, so as to better cater to the myriad needs of clients, the Group redesigned the operational module of database interfaces, enabling the system to access different databases. In addition, the Group launched an R&D and design project for the next generation of ISD systems. Technical upgrades have been undertaken targeting the framework of the transmission network and the possibility of touch interfaces has been pursued for the new-generation ISD systems, with a view to creating more efficient ISD systems capable of eliminating non-vital information and de-connectivity issues. They also feature better modularity and greater integration of various subsystems, which eases the difficulties associated with subsequent redevelopment and attaining closer user interaction. ISS Business Segment The Group is always optimistic about the prospect of intelligent surveillance in the public safety sector, in particular – video monitoring – which plays a key role in the industrial chain. During the year under review, the Group worked hard to materialize the synergistic benefits of the acquisitions completed in the previous financial year and strived to further develop one of its business pillars – the ISS segment. On the one hand, the Group successfully embedded the intelligent video analysis algorithms acquired from the acquisition of Anxin Mate Holdings Ltd into existing systems. The integration helped broaden application coverage for the Group’s cutting edge technologies including scenario analysis. On the other hand, since the Group completed the acquisition of Yu Hong Investments Ltd and its wholly-owned subsidiary Shenzhen Hawell Advanced Technology Co Ltd in 2012, Anxin-China has sped up efforts on independent R&D activities for safety surveillance products like Closed Circuit Television. In August 2013, HD gun-type network cameras (Series: HW-Q2010HPCDW and HW-Q1307HPCDW) and HD ball-type network cameras (Series: HW-C1307HIDD18, HW-S2010HSDD20), which were independently developed and manufactured by the Group, were qualified by the 1st Institution of the Ministry of Public Security, and conferred statuses of Model Identification Report and 28181 Evaluation Report jointly by the National Testing Center For Quality of Security & Safety Alarm System Products (Beijing) and the Testing Center for Quality of Security & Police Electronic Products under the Ministry of Public Security. The qualifications were proof positive of the industry-leading technologies that Anxin-China possesses for ISS systems and at the same time served as a way of promoting the brand value of Anxin-China. In addition, the integration of advanced intelligent video analysis technologies with highquality surveillance hardware allowed the Group to efficiently improve its products’ resolution ratios, coding and decoding capacities and overall reliability, and to update existing video surveillance product offerings. Hence, the Group has established a solid foundation to penetrate the public safety market. During the year under review, the Group made impressive progress in the construction of “Safe City Projects” in China. Upon successful test trials with city-level governments, Anxin- China has proceeded to the stage of contract signings or has been notified of the acceptances of its bids with respect to the construction of “Safe City Projects” in five cities/counties in China, including Dawu County, Honghu City in Hubei Province, Fuquan City in Guizhou Province, Suining County in Jiangsu Province and Dunhua City in Jilin Province. The Group will provide integrated ISS systems solutions for these cities/counties. With experiences gained, Anxin-China will hasten efforts to improve the operational performance of ISS systems and bring its business model to a more mature phase. The outcomes are expected to help attract the attention of the potential market. Even though the ISS segment will not be materialized until 2014, it managed to deliver a performance that was above expectations during the year. The Group believes that the ISS business enjoys long-term development Potential. Prospects: China is currently undergoing a critical economic transformation. The growth trajectory is evolving towards a more balanced, high-quality and sustainable model. Therefore, there are higher expectations and requirements for safety issues in both industrial production and public sectors. The government considers the construction of “Smart Cities” a strategic move highly conducive to social progress. Riding these industry waves, Anxin-China sees unprecedented opportunities given the wide utilization of Internet-of-Things and other advanced information technologies. “The China Public Safety 12-5 Development Plan” predicts that in 2015, China’s security industry will double in size, with an annual growth rate of around 20%. The total output value of the safety industry is expected to reach RMB500 billion in 2015, an increase of RMB160 billion as compared to the current value. Worthy of note is that the growth driver of the industry will shift to second or third-tier cities along with the further development of high-end security technologies. The customer base will be generalized from the domination of government agencies to commercial premises. Commercial buildings, warehouses, etc. are playing an increasing role other than industrial production, urban transportation and logistics. Anxin-China therefore entered into an acquisition agreement in February 2014 with Bloom Zone Limited for the entire issued share capital of its subsidiary Altus Technologies, for an aggregate consideration of HK$1,300,000,000. Anxin-China is guaranteed at least HK$120 million in profit after tax from Altus Technologies for the years 2014 and 2015. Altus Technologies is mainly engaged in the development, production and distribution of safety monitoring and security systems for elevators. It will also generate income by installing screens in elevators as distribution channels for advertising companies. The acquisition has allowed the Group to tap into the new elevator safety monitoring market sector with improved research capacities and solution services. The proposed business model of providing advertising distribution channels in elevators diversifies the Group’s customer base as well as its revenue streams to avoid risks associated with potential overreliance on a single customer structure. Due to the rapid development of China’s economy in recent years, the number of registered elevators reached 2.40 million in China by the end of 2012 and is expected to exceed three million by the end of 2013. Moreover, official statistics show China’s total number of elevators is expected to grow at a remarkable rate of approximately 20%. Foreseeing the market with great potential, Anxin-China will make persistent efforts to optimize its business model to achieve a more vigorous performance in 2014. Anxin-China has been committed to establishing solid bonds with academia so as to provide strong backup for the Group’s sustainable growth. In early 2013, Shenzhen Anxin Digital Development Co Ltd (Shenzhen Anxin), one of Anxin-China’s subsidiaries, was designated as a Guangdong Academician & Expert Enterprise Workstation. The Group, is therefore provided with a sound platform to convert the experts’ scientific experiences into its own technological strengths. In early 2014, Anxin Digital passed a review assessment for CMMI ML3 Capability (“Capability Maturity Model Integration Maturity Level 3”), demonstrating that the Group’s software products have reached international standards in terms of quality management. In early 2014, for the very first time, Anxin-China made it onto the top five for Forbes’ List of “Top 100 Strongest Potential Listed Companies in China 2014.” Anxin-China outperformed its peers in the competitive selection, owing to its devotion to enhance the overall strength of the Group with value-added R&D capabilities. The ranking shows the Group’s efforts have been fully recognized by influential institutions and is surely to bring the Group more positive attention and further boost confidence within Anxin-China. The Group, well positioned for an upward campaign, will continuously upgrade its integrated solutions for ISD and ISS systems and strive to maintain a leading position in the safety industry with high-caliber products and services.

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