Stock Code: 001872/201872 Stock Name: CM Port Group/CM Port Group B Announcement No. 2020-030
CHINA MERCHANTS PORT GROUP CO., LTD.
ANNUAL REPORT 2019 (SUMMARY)
Part I Important NotesThis Summary is based on the full text of the 2019 Annual Report of China Merchants Port GroupCo., Ltd. (hereinafter referred to as the “Company”). In order for a full understanding of theCompany’s operating results, financial position and future development plans, investors shouldcarefully read the aforesaid full text on the media designated by the China Securities RegulatoryCommission (the “CSRC”).All the Company’s directors have attended the Board meeting for the review of this Report and itssummary.Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved final cash and/or stock dividend plan for ordinary shareholders for the ReportingPeriod:
√ Applicable □ Not applicable
Bonus issue from capital reserves:
□ Yes √ No
The Board has approved a final dividend plan as follows: based on 1,922,365,124 shares, a cashdividend of RMB4.60 (tax inclusive) per 10 shares is to be distributed to shareholders, with nobonus issue from either profit or capital reserves.Board-approved final cash and/or stock dividend plan for preferred shareholders for the ReportingPeriod :
□ Applicable √ Not applicable
This Report and its summary have been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese versions shall prevail.
Part II Key Corporate Information
1. Stock Profile
| Stock name | CM Port Group/CM Port Group B | Stock code | 001872/201872 | |
| Stock exchange for stock listing | Shenzhen Stock Exchange | |||
| Contact information | Board Secretary | Securities Representative | ||
| Name | Huang Chuanjing | Hu Jingjing | ||
| Address | 24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | 24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | ||
| Fax | +86 755 26886666 | +86 755 26886666 | ||
| Tel. | +86 755 26828888 | +86 755 26828888 | ||
| Email address | Cmpir@cmhk.com | Cmpir@cmhk.com | ||
2. Main business of the Company during the reporting period
(1) Main business scope and business models
The Company is principally engaged in the handling, warehousing and transportation of containersand bulk cargoes, as well as the provision of other ancillary services. It principally operates 24container berths and 15 bulk cargo berths in the ports in West Shenzhen, 9 container berths, 2 bulkcargo berths, 10 general cargo berths and 1 berth dedicated to handling coal in Shantou Port, 2container berths and 33 bulk cargo berths in Zhanjiang Port, 4 multi-purpose berths in Shunde Port,2 container berths and 6 bulk cargo berths in Zhangzhou Port, 4 container berths in CICT, Sri Lanka,4 multi-purpose berths, 2 oil berths and 4 container berths in HIPG, 3 container berths in LCT,Togo, and 4 container berths in TCP, Brazil. Moreover, the Company invests in container hubs inShanghai and Ningbo and expands its layout to ports in South Asia, Africa, Europe, South Americaand Oceania.The major business segments of China Merchants Port Group Co., Ltd. are as follows:
| Business Segments | Applications |
| Cargo handling and warehousing | Container handling and warehousing: the Company provides ship berthing, loading and unloading services to ship companies, offers container storage service to ship companies and cargo owners and provides overhead box services to tractor companies. The Company also engages in the businesses of division or merger of cargoes in containers, container leasing and container maintenance; Bulk cargo handling and warehousing: the Company is engaged in bulk cargo handling and transportation in port zones, as well as storage services in yards. The major types of cargoes handled include food, steel, woods and sandstones. |
| Ancillary port-related services | The ancillary port-related services of the Company mainly include tugboat berthing assistance and barge services at the arrival of ships to the ports, tallying in the course of cargo handling, and supply of shore power and freshwater for vessels. |
| Bonded logistics operations | The Company provides various services for clients (including logistics companies, trading companies or cargo owners), for example, warehouse/yard leasing, loading and unloading in warehouses/yards, customs clearance and division or merger of cargoes at terminals. It also provides documentation services for tractors arriving or leaving the bonded logistics parks. |
（2）Development stage and cyclical characteristic of the industry in which the Companyoperates and its industry position during the reporting periodThe port industry is a crucial cornerstone industry for national economic and social progress, and isclosely linked to global economic and trade development. In 2019, the global economy was on agrowing trend in general, but the growth momentum was unstable. The Company faced challengesdue to many factors including the trade frictions in various countries aggravated by theprotectionism and unilateralism, which impact the international trade order; the slowdown ingrowth of global container shipping and the downshift of domestic port business continuouslyintensify market competition; the increasing severe competition for investment in emerging marketsoverseas, technology advancement in the port and shipping industry and emerging of new businessmodels. .Affected by the sluggish economic and trading conditions, the demand in the global containershipping market was volatile in 2019. As forecasted in the Clarkson Report, despite the overallweakening demand in the container shipping market in 2019, the competition further intensified. Inorder to secure better competitive advantages, various shipping companies continued to carryforward fleet expansion, hence market capacity continued to grow steadily. At the same time, due tothe impact of ship reforms brought by the International Maritime Organization's 2020 SulphurLimitation Order, the scale of idle capacity in 2019 increased significantly year-on-year.The growth rate of global port container throughput declined in 2019. According to data fromAlphaliner, the global container port throughput amounted to 837 million TEUs in 2019, up by 2.5%year-on-year. In terms of market share by container throughput, the top 3 regions in order are China(including Hong Kong), Southeast Asia and North Europe, and the top 3 fastest growing regions inorder are South Europe, South Asia and Southeast Asia. Driven by the global economy and trade,the global port business declined in general in 2019. The growth rate of global port containerthroughput reached 2.5% in 2019, lower than that of 5.2% in 2018. According to the informationpublished by the Ministry of Transport of the People’s Republic of China, the accumulated portcontainer throughput in China amounted to 261 million TEUs in 2019, representing a year-on-yearincrease of 4.4%.The Company is the largest global leading port developer, investor and operator in the PRC, with acomprehensive port network at major hub locations along coastal China. It has also successfullyestablished presence in South Asia, Africa, Europe, Mediterranean, Oceania and South America. Byits proactive, sound and efficient operating style, the Company capitalises on its global portportfolio, professional management experience, the self-developed state-of-the-art terminaloperation system and integrated logistics management platform for exports and imports, therebyproviding its customers with timely and efficient port and maritime logistics services along withcomprehensive and modern integrated logistics solutions. In addition, the Company also invests inbonded logistics operation and launches integrated park development business to facilitate thetransformation and upgrade of port industry, develop port-related industries and increase industryefficiencies, which allows it to create greater value through the synergies of the existing terminalnetwork.
3. Key Financial Information
(1) Key Financial Information of the Past Three Years
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
Unit: RMB
| 2019 | 2018 | 2019-over-2018 change | 2017 | |
| Operating revenue (RMB) | 12,123,829,423.74 | 9,703,394,622.58 | 24.94% | 7,544,635,284.96 |
| Net profit attributable to the listed company’s shareholders (RMB) | 2,898,192,168.84 | 1,090,418,910.77 | 165.79% | 2,365,214,907.45 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 1,037,766,875.23 | 516,155,803.81 | 101.06% | 498,373,377.67 |
| Net cash generated from/used in operating activities (RMB) | 5,501,873,415.94 | 4,288,575,424.84 | 28.29% | 3,475,037,036.28 |
| Basic earnings per share (RMB/share) | 1.59 | 0.61 | 160.66% | 1.32 |
| Diluted earnings per share (RMB/share) | 1.59 | 0.61 | 160.66% | 1.32 |
| Weighted average return on equity (%) | 8.71% | 3.88% | 4.83% | 10.24% |
| 31 December 2019 | 31 December 2018 | Change of 31 December 2019 over 31 December 2018 (%) | 31 December 2017 | |
| Total assets (RMB) | 156,696,917,845.87 | 128,018,084,415.68 | 22.40% | 109,135,164,260.01 |
| Equity attributable to the listed company’s shareholders (RMB) | 35,972,804,419.42 | 30,760,475,412.93 | 16.94% | 28,474,748,165.25 |
(2) Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 2,702,894,522.99 | 3,131,458,898.34 | 3,178,406,039.64 | 3,111,069,962.77 |
| Net profit attributable to the listed company’s shareholders | 814,944,249.12 | 1,484,237,081.49 | 171,091,424.23 | 427,919,414.00 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 262,409,245.18 | 306,996,084.91 | 155,647,010.17 | 312,714,534.97 |
| Net cash generated from/used in operating activities | 1,148,963,121.64 | 1,407,898,793.88 | 1,399,691,070.83 | 1,545,320,429.59 |
Indicate by tick mark whether any of the quarterly financial data in the table above or theirsummations differs materially from what have been disclosed in the Company’s quarterly or interimreports.
□ Yes √ No
4. Share Capital and Shareholder Information at the Period-End
(1) Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed VotingRights as well as Holdings of Top 10 Shareholders
Unit: share
| Number of ordinary shareholders at the period-end | 34,398 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 35,454 | Number of preferred shareholders with resumed voting rights at the period-end | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | 0 | |||
| 5% or greater shareholders or top 10 shareholders | ||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | Pledged or frozen shares | |||
| CHINA MERCHANTS INVESTMENT DEVELOPMENT COMPANY LIMITED | Foreign legal person | 59.75% | 1,148,648,648 | 0 | 1,148,648,648 | 0 | 0 | |||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | State-owned legal person | 19.29% | 370,878,000 | 0 | 0 | 370,878,000 | 0 | |||
| SHENZHEN INFRASTRUCTURE INVESTMENT FUND-SHENZHEN INFRASTRUCTURE INVESTMENT FUND PARTNERSHIP (LIMITED PARTNERSHIP) | Fund and wealth management products | 3.37% | 64,850,182 | 64,850,182 | 64,850,182 | 0 | 0 | |||
| CHINA-AFRICA DEVELOPMENT FUND | State-owned legal person | 3.33% | 64,102,564 | 64,102,564 | 64,102,564 | 0 | 0 | |||
| BROADFORD GLOBAL LIMITED | State-owned legal person | 2.88% | 55,314,208 | 0 | 0 | 55,314,208 | 0 | |||
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | Foreign legal person | 1.56% | 29,976,596 | -13,468,608 | 0 | 29,976,596 | Unknown | |||
| NORGES BANK | Foreign legal person | 0.15% | 2,802,863 | 0 | 0 | 2,802,863 | Unknown | |||
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | State-owned legal person | 0.13% | 2,513,355 | -127,665 | 0 | 2,513,355 | Unknown | |
| MAI SHUQING | Domestic natural person | 0.12% | 2,376,747 | 15,700 | 0 | 2,376,747 | Unknown | |
| SHEN HUAILING | Domestic natural person | 0.08% | 1,519,849 | 1,519,849 | 0 | 1,519,849 | Unknown | |
| Strategic investors or general legal person becoming top-ten shareholders due to placing of new shares (if any) | N/A | |||||||
| Related or acting-in-concert parties among the shareholders above | China Merchants Gangtong Development (Shenzhen) Co., Ltd. (CMGD) is a majority-owned subsidiary of Broadford Global Limited (Broadford Global), and Broadford Global Limited is the controlling shareholder of China Merchants Investment Development Company Limited (CMID). The Company does not know whether the other unrestricted shareholders are related parties or not. | |||||||
| Top 10 unrestricted shareholders | ||||||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | ||||||
| Type | Shares | |||||||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | 370,878,000 | RMB ordinary share | 370,878,000 | |||||
| BROADFORD GLOBAL LIMITED | 55,314,208 | Domestically listed foreign share | 55,314,208 | |||||
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | 29,976,596 | Domestically listed foreign share | 29,976,596 | |||||
| NORGES BANK | 2,802,863 | Domestically listed foreign share | 2,802,863 | |||||
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | 2,513,355 | Domestically listed foreign share | 2,513,355 | |||||
| MAI SHUQING | 2,376,747 | RMB ordinary share | 2,376,747 | |||||
| SHEN HUAILING | 1,519,849 | Domestically listed foreign share | 1,519,849 | |||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 1,262,936 | Domestically listed foreign share | 1,262,936 | |||||
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA-FULLGOAL CHINA SECURITIES DIVIDEND INDEX STRENGTHEN SECURITIES INVESTMENT FUND | 1,260,101 | RMB ordinary share | 1,260,101 | |||||
| CHEN ZEHONG | 1,240,000 | RMB ordinary share | 1,240,000 | |||||
| Related or acting-in-concert parties among the top ten unrestricted public shareholders and between the top ten unrestricted public shareholders and the top ten shareholders | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a majority-owned subsidiary of Broadford Global Limited. The Company does not know whether the other unrestricted shareholders are related parties or not. | |||||||
| Top ten ordinary shareholders conducting securities margin trading (if any) | N/A | |||||||
(2) Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
No preferred shareholders in the Reporting Period.
(3) Ownership and Control Relations between the Actual Controller and the Company
5. Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which wereoutstanding before the date of this Report’s approval or were due but could not be redeemed in full?No.Part III Operating Performance Discussion and Analysis
1. Performance during the reporting period
(1) External Environment Analysis
According to the “World Economic Outlook” update report published by the International MonetaryFund (IMF) in January 2020, the global economic growth rate of 2019 was expected to be 2.9%,down by 0.7 percentage point year-on-year, among which, developed economies grew by 1.7%while emerging markets and developing economies grew by 3.7%, down by 0.5 percentage pointand 0.8 percentage point as compared to those of 2018, respectively. Total global trade volume(including goods and services) grew by 1.0%, representing a decrease of 2.7 percentage points as
compared to that of 2018.Despite the complex and challenging internal and external environment, the Chinese economymaintained steady growth in 2019. The annual GDP growth was 6.1%, representing a decrease of
0.5 percentage point over the previous year. The long-term positive trend of China’s economyremained unchanged. Facing the new normal of the economy, China continued to deepen thesupply-side structural reform and strengthen the countercyclical adjustments with a view to achievehigh-quality economic development. In 2019, the economic development witnessed a number ofpositive changes with continuous enhancement and upgrade of economic structure, substantialoutcomes achieved in terms of optimization of industrial structure and significant benefits broughtby tax cut and fee reduction policies as well as steady implementation of control targets of “threestabilizations” in the real estate market. Meanwhile, the economic growth continued to be exposedto downward pressure as affected by unfavorable factors such as ongoing US-China trade frictions,stable but slowing industry development, insufficient investment demand and unstable consumptiondemand. According to the statistics published by the General Administration of Customs, China’stotal import and export value amounted to RMB31.54 trillion in 2019, representing an increase of
3.4% as compared to that of 2018, among which the export value was RMB17.23 trillion,representing an increase of 5%; while import value was RMB14.31 trillion, representing an increaseof 1.6% year-on-year. Trade surplus amounted to RMB2.92 trillion, representing an increase of
25.4%.
2. Port Business Review
In 2019, the Company’s ports handled a total container throughput of 112.93 million TEUs, up by
2.9% year-on-year, among which the ports in Mainland China contributed container throughput of
84.88 million TEUs, indicating an increase of 4.3% year-on-year, which was mainly driven bysteady development of the Mainland China’s economy and consistent growth momentum of importand export trade. The Company’s operations in Hong Kong and Taiwan contributed an aggregatecontainer throughput of 7.21 million TEUs, representing a decrease of 6.1% as compared with thesame period of the previous year. Benefited from the growth of the terminal operation of CICT inSri Lanka, LCT in Togo and PDSA in Djibouti, a total container throughput handled by theCompany’s overseas ports grew by 0.9% year-on-year to 20.84 million TEUs. Bulk cargo volumehandled by the Company’s ports decreased by 8.9% year-on-year to 409 million tonnes, of whichthe Company’s ports in Mainland China handled a total bulk cargo volume of 480 million tonnes,representing a decrease of 9.3% year-on-year, which was affected by, among others, internationaltrade friction, African Swine Fever and adjustment of cargo source structure of certain enterprises;the Company’s overseas ports handled a total bulk cargo volume of 6.29 million tonnes,representing an increase of 26.1% year-on-year, which was mainly attributable to the businessgrowth in PDSA in Djibouti and HIPG in Sri Lanka.Pearl River Delta regionThe Company’s terminals in the West Shenzhen Port Zone handled a container throughput of 11.42million TEUs, up by 0.7% year-on-year; bulk cargo volume amounted to 13 million tonnes, downby 27.9% year-on-year, mainly affected by the change in international trade conditions, AfricanSwine Fever and changes in cargo source structure. Chu Kong River Trade Terminal Co., Ltd.handled a total container throughput of 1.09 million TEUs, down by 6.6% year-on-year while bulkcargo volume amounted to 3.53 million tonnes, up by 43.1% year-on-year. Dongguan MachongTerminal handled bulk cargo volume of 12.27 million tonnes, down by 7.2% year-on-year.Guangdong Yide Port Co., Ltd. handled a total container throughput of 0.3 million tonnes, up by
33.5% year-on-year while bulk cargo volume amounted to 2.26 million tonnes, up by 55.7%year-on-year, mainly benefited from the expansion of new customers and new routes and further
release of terminal production capacity.Yangtze River Delta regionSIPG handled a container throughput of 43.30 million TEUs, up by 3.1% year-on-year. Bulk cargovolume handled declined by 23.4% year-on-year to 120 million tonnes, which was mainly attributedto the decrease in coal unloaded amount after adjustments made against the structure of bulk cargosource by SIPG. Ningbo Daxie China Merchants International Terminals Co., Ltd. handled acontainer throughput of 3.29 million TEUs, representing an increase of 4.1% year-on-year.Bohai Rim regionQingdao Qianwan United Container Terminal Co., Ltd. handled a total container throughput of 7.92million TEUs, representing an increase of 14.3% year-on-year, driven by the growth of containersof new international and domestic routes; Qingdao Qianwan West Port United Terminal Co., Ltd.handled bulk cargo volume of 15.59 million tonnes, representing an increase of 0.3% year-on-year;Qingdao Port Dongjiakou Ore Terminal Co., Ltd. handled bulk cargo volume of 59.90 milliontonnes, indicating an increase of 4.4% year-on-year. Dalian Port (PDA) Company Limited handleda container throughput of 10.22 million TEUs, down by 8.0% year-on-year. Bulk cargo volumehandled declined by 2.5% year-on-year to 130 million tonnes. Laizhou Harbour Affairs (莱州港务)handled bulk cargo volume of 22.72 million tonnes, representing a decrease of 0.1% year-on-year.With the successful completion of consolidation of Tianjin Port’s container segment, Tianjin FiveContinents International Container Terminals Co., Ltd. and Tianjin Container Terminal Co., Ltd.contributed a total container throughput of 4.47 million TEUs during the year. The Company’sbusiness volume in relation to Tianjin Project recorded an increase of 64.5% year-on-year.South-East region of Mainland ChinaZhangzhou China Merchants Port Co., Ltd. (“Zhangzhou Port”), located in Xiamen Bay EconomicZone, handled a container throughput of 0.42 million TEUs, decreased by 7.7% year-on-year, whileits bulk cargo volume handled decreased by 43.2% year-on-year to 8.14 million tonnes, which wasmainly affected by African Swine Fever and the environmental policies. Xiamen Bay ChinaMerchants Terminals Co., Ltd., which officially commenced operation in May 2019, handled a bulkcargo volume of 0.27 million TEUs. Shantou China Merchants Port Group Co., Ltd. handled acontainer throughput of 1.34 million TEUs, up by 3.5% year-on-year, and a bulk cargo volume of
7.09 million tonnes, down by 23.2% year-on-year, which was mainly due to the impact of “bulkcargoes to containers” and the decrease in domestic demand on coal business as well as the fact thatexpansion of sandstone business was restricted by environmental policies.South-West region of Mainland ChinaZhanjiang Port (Group) Co., Ltd. handled a container throughput of 1.11 million TEUs, up by 12.6%year-on-year, mainly attributable to the development of premium domestic routes in the southernand northern regions as well as regional water-to-water transshipment and the expansion of coldchain services business. It also handled a bulk cargo volume of 91.17 million tonnes, down by 0.8%year-on-year.Hong Kong and TaiwanModern Terminals Limited and China Merchants Container Services Limited delivered anaggregate container throughput of 5.57 million TEUs, down by 6.1% year-on-year. Kao MingContainer Terminal Corp. in Kaohsiung, Taiwan, handled a total container throughput of 1.64million TEUs, representing a decrease of 6.3% year-on-year.Overseas operationIn 2019, a total container throughput handled by the Company’s overseas operations increased by
0.9% year-on-year to 20.84 million TEUs, among which container throughput handled by CICT inSri Lanka rose by 7.4% year-on-year to 2.88 million TEUs. The wheeled and bulk cargo business inHIPG progressed well with a bulk cargo volume amounting to 0.50 million tonnes, indicating anincrease of 183.8% year-on-year. Container throughput handled by LCT in Togo increased by 7.7%year-on-year to 1.13 million TEUs. Container throughput handled by Tin-Can Island ContainerTerminal Limited (referred to as TICT) in Nigeria was 0.47 million TEUs, representing a decreaseof 2.5% year-on-year, mainly affected by vessels stranded at the terminals. Container throughputhandled by PDSA in Djibouti amounted to 0.92 million TEUs, up by 6.8% year-on-year while bulkcargo volume amounted to 5.68 million tonnes, up by 20.2% year-on-year, mainly attributed to thecontinuous substantial GDP growth as well as increase in volume of food, steel and vehicles inEthiopia, its main hinterland. TL handled container throughput of 13.25 million TEUs, representinga decrease of 2.8% year-on year. Container throughput handled by Kumport in Turkey increased by
1.9% year-on-year to 1.28 million TEUs; while bulk cargo volume handled was 0.10 million tonnesup by 19.8% year-on-year. TCP in Brazil contributed an annual container throughput of 0.92million TEUs, up by 32.0% as compared to that from March to December of the previous year andup by 12.5% as compared to that of the full year of the previous year, mainly attributable to thegrowth in trading of domestic produce and vehicles parts and components.
(3)Implementation of business plan during the reporting period
During the reporting period, the Company adhered to its strategic directives and the generaloperation philosophy of “enhancing core capability, insisting on both quality and efficiency,capitalizing on opportunities of this era and striving to become a world’s leading enterprise” with anunwavering aspiration to reinforce its foundation and made innovation with a pragmatic attitude.Striving to achieve breakthroughs in five key aspects, namely the building of homebase port, portconsolidation, overseas expansion, comprehensive development and innovative development, theCompany actively pushed forward the implementation of various key tasks and optimized andupgraded its core ports operation over the past year, successfully accomplishing various operationalobjectives.Regarding the development of its homebase ports, the Company continued to promote the buildingof West Shenzhen homebase port into a world-class leading port in China and CICT and HIPGoverseas into regional leading ports in South Asia. In terms of West Shenzhen homebase port inChina, the Company proactively advanced key projects such as berth upgrade, shore and bridgeheightening and channel dredging in a view to solving the bottleneck encountered in thedevelopment of West Shenzhen Port Zone and hence upgrading the hardware environment of theport. The Company facilitated continuous improvement in the customs environment and furtherreduction of operational costs to optimize the software environment of ports. The Company alsopromoted vertical development of integrated operation to enhance the overall influence andcompetitiveness of West Shenzhen homebase port, at the same time adhering to thetechnology-driven development approach to steadily advance the development of Mawan IntelligentPort. In terms of the building of overseas homebase port, leveraging the advantage of synergybetween CICT and HIPG, the Company strived to develop its South Asia port network with SriLanka as the center.In terms of port consolidation, the Company has established a strategic layout “with a focus onGuangdong-Hong Kong-Macao Greater Bay Area, connecting regions along Belt and RoadInitiatives with a broad global network coverage” through strategic reconstruction. It has alsocompleted the capital injection in Zhanjiang Port Group and steadily pushed forward work inrelation to the entrusted management of Liaoning Port Group and achieved preliminary results.As for overseas expansion, by seizing the opportunities arising from the major national initiative of
the “Belt and Road” and international industries migration, the Company has proactively graspedthe investment opportunities in ports, logistics and related infrastructure. In respect of thetransaction regarding the acquisition of interests of no more than 10 quality terminals under CMACGM through TL, a formal agreement has been executed with the cooperating parties, which willfurther improve the global port network and hence enhance the Company’s core competitivenessand influence. The Company has also successfully introduced two strategic investors for TCPTerminal in Brazil, which is the Company’s new attempt to optimize the allocation of its overseasinventories.In respect of comprehensive development, the Company actively explored and promoted the“Port-Park-City” comprehensive development model and achieved preliminary progress. As thebusiness volume of the comprehensive development project in Djibouti increased steadily, theCompany will devote greater efforts in the cultivation of its market development team to enhancemarket development. The Company has completed the revision on the overall planning for thefuture development of HIPG in Sri Lanka, confirming the business development direction of theport zone. The one-stop service center for introduction of business and investment officiallycommenced operation.With regard to innovative development, the Company pushed forward the “digitalisation strategy”and continued to promote the establishment of “CM ePort”. Mawan Intelligent Port project and theautomatic loading and unloading project at large bulk and general cargo terminal in Zhanjiang Portwere well underway. West Shenzhen Port Zone issued the first blockchain electronic invoice inChina’s port sector, and launched the pilot program of its self-developed blockchain electronicDO/EIR and documentation function for domestic container business. The Company collaboratedwith 11 enterprises such as China Mobile and Huawei in promoting and establishing the “5Gintelligent port innovation laboratory”, and realised the first RTG Remote Control operation under5G network at Mawan Port, which optimized and enhanced the informationization level of portscomprehensively. The establishment of “Development and Research Center of CMPort” marked thecompletion of the industry development platform empowered by technology. The industrial fund,which focuses on investments in innovative development of ports, will be launched andimplemented in the near term. Looking forward, the Company will leverage the financial platformsto facilitate the synergy of resources among various port groups and industries with a view tobuilding up a port ecosystem to support the projects of startup companies and grasp theopportunities arising from the rapid growth of emerging industries, so as to promote thetransformation and upgrade of the port industry to expand the rooms for development and improvethe development quality, which will bring new vitality into the traditional core port operation.
2. Significant Change to Principal Activities in the Reporting Period
□ Yes √ No
3. Product Category Contributing over 10% of Principal Business Revenue or Profit
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Port operations | 11,547,072,185.86 | 7,185,667,723.72 | 37.77% | 25.72% | 35.49% | -4.49% |
| By operating segment | ||||||
| Mainland China, Hong Kong and Taiwan | 8,872,027,132.24 | 5,968,372,275.68 | 32.73% | 33.70% | 41.53% | -3.72% |
| Other countries and regions | 3,251,802,291.50 | 1,680,548,644.03 | 48.32% | 6.01% | 10.40% | -2.05% |
4. Business Seasonality that Calls for Special Attention
□ Yes √ No
5. Significant YoY Changes in Operating Revenue, Cost of Sales and Net Profit Attributableto the Listed Company’s Ordinary Shareholders or Their Compositions
□ Applicable √ Not applicable
6. Possibility of Listing Suspension or Termination
□ Applicable √ Not applicable
7. Matters Related to Financial Reporting
(1) YoY Changes to Accounting Policies, Accounting Estimates or Measurement MethodsThe Accounting Standards for Business Enterprises No. 21 – Lease (hereinafter referred to as “Newlease standard”) revised and issued by Ministry of Finance on 7 December 2018 required thatenterprises listed both domestically and overseas and enterprises listed overseas who prepare thefinancial statements by International Financial Reporting Standards or Accounting Standards forBusiness Enterprises shall implement it form 1 January 2019, and other enterprises implementingthe Accounting Standards for Business Enterprises shall implement it from 1 January 2021.According to the requirements of Ministry of Finance, enterprises whose subsidiaries are listedoverseas and prepare the financial statements by International Financial Reporting Standards orAccounting Standards for Business Enterprises can implement the new lease standard in advance.The Company, in accordance with the requirements of Ministry of Finance, implemented the newlease standard from 1 January 2019. Refer to Announcement on Changes of Accounting Policy(Announcement No. 2019-031) on www.cninfo.com.cn. disclosed on 30 March 2019. In accordancewith the regulations of new standards governing financial instrument, the Company shall not adjustthe information between the comparable periods, and the accumulative influence in the first
execution of the new standards shall be adjusted to the retained earnings at the period-begin and theamount of other relevant item in the financial statements.On 30 April 2019, the Format of 2019 General Enterprises Financial Statement was revised andprinted by the Ministry of Finance, making partial amendments to the format of financial statements.The changes of format of financial statements were implemented from the interim financial reportson 30 June 2019. Refer to Announcement on Changes of Accounting Policy (Announcement No.2019-063) on www.cninfo.com.cn. disclosed on 31 August 2019.On 19 September 2019, the Format of 2019 Consolidated Financial Statement was revised andprinted by the Ministry of Finance, making partial amendments to the format of financial statementson the basis of the Format of 2019 General Enterprises Financial Statement and the Format of 2018Financial Enterprises Financial Statement. The changes of format of financial statements wereimplemented from the third quarter financial statements on 30 September 2019. Refer toAnnouncement on Changes of Accounting Policy (Announcement No. 2019-076) onwww.cninfo.com.cn. disclosed on 31 October 2019.For further information, please refer to (III) Changes in Main Accounting Policies and Estimates inPart XI Financial Statements for details.
(2) Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
□ Applicable √ Not applicable
No such cases.
(3) YoY Changes to the Scope of Consolidated Financial StatementsOn 31 December 2018, the subsidiary of the Company, China Merchants International Terminal(Zhanjiang) Co., Ltd. held 1,620,000,000 ordinary shares of Zhanjiang Port, accounting for 40.2916%of the total shares issued by Zhanjiang Port. On 2 January 2019, the Company signed theAgreement of Share Transfer of Zhanjiang Port (Group) Co., Ltd. with Sinotrans Guangdong Co.,Ltd., which transferred 201,034,548 shares of Zhanjiang Port held by Sinotrans Guangdong Co.,Ltd., accounting for 5% of total shares issued on the signing date with the consideration of transferof RMB375,334,390.00.The wholly-owned subsidiary of the Company Chiwan Wharf Holdings (Hong Kong) Limited(hereinafter referred to as “CWH (H.K.)”) signed in Zhanjiang on 8 January 2019 the Agreement ona Capital Increase to Zhanjiang Port (Group) Co., Ltd. with Zhanjiang Infrastructure ConstructionInvestment Group Co., Ltd. (hereinafter referred to as “Zhanjiang Infrastructure Investment”) and
Zhanjiang Port (Group) Co., Ltd. (hereinafter referred to as “Zhanjiang Port”) (hereinafter referredto as the “Capital Increase Agreement”). According to the provisions of the Capital IncreaseAgreement, Zhanjiang Port issued 1,853,518,190 additional ordinary shares at the price ofRMB1.867 per share or the equivalent in the foreign currency (based on the exchange rate at thetime of payment) to increase its registered capital to RMB5,874,209,145. CWH (H.K.) subscribedfor 1,606,855,919 such ordinary shares, accounting for 27.3544% of the issued shares of ZhanjiangPort as at the date of issuance of such shares, at a total price of RMB3,000,000,000.77 or theequivalent in the foreign currency (based on the exchange rate at the time of payment) (hereinafterreferred to as "the Transaction"); and Zhanjiang Infrastructure Investment subscribed for246,662,271 shares, accounting for 4.1991% of the issued shares of Zhanjiang Port as at the date ofissuance of such shares, at a total price of RMB460,518,459.96.As of 3 February 2019, the registration and filing procedures of the Transaction for business changewas finished, and the capital increase to Zhanjiang Port by the Company’s wholly-owned subsidiaryCWH (H.K.) was completed. Upon the completion of the Transaction, the Company’s interest inZhanjiang Port has increased to 58.3549%. Therefore, Zhanjiang Port has since been included in thescope of the Company’s consolidated financial statements.
For and on behalf of the BoardBai JingtaoLegal representative ofChina Merchants Port Group Co., Ltd.Dated 16 April 2020