FINANCIAL STATEMENTS AND AUDITOR'S REPORTFOR THE YEAR ENDED 31 DECEMBER 2019
FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
CONTENTS Pages
AUDITOR'S REPORT 1 - 6
THE CONSOLIDATED AND COMPANY BALANCE SHEETS 7 - 10
THE CONSOLIDATED AND COMPANY INCOME STATEMENTS 11 - 12
THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 13 - 14
THE CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES INSHAREHOLDERS' EQUITY 15 - 18
NOTES TO THE FINANCIAL STATEMENTS 19 - 177
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AUDITOR'S REPORT
De Shi Bao (Shen) Zi(20) No. P02283
(Page 1, 6 pages)To the Shareholders of China Merchants Port Group Co., Ltd.:
I. Audit Opinion
We have audited the accompanying financial statements of China Merchants Port Group Co., Ltd.(hereinafter referred to as "the Company"), which comprise the consolidated and company balancesheets as at 31 December 2019, and the consolidated and company income statements, theconsolidated and company cash flow statements and the consolidated and company statements ofchanges in shareholders' equity for the year then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements of the Company present fairly, in all materialrespects, the consolidated and company's financial position as of 31 December 2019, the consolidatedand company's results of operations and cash flows for the year then ended in accordance withAccounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with the Auditing Standards for the Chinese Certified PublicAccountants. Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We are independent ofthe Company in accordance with the Auditing Standards for the Chinese Certified Public Accountants,and we have fulfilled our other ethical responsibilities in accordance with the standards. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of the financial statements of the current period. These matters were addressed in the contextof our audit of the financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters. We determine the followings are key audit matters thatneed to be addressed in our report.
1. Subsequent measurement of long-term equity investment in associates and joint ventures
As disclosed in Notes (V) 11 to the consolidated financial statements, the Company has made equityinvestment in several enterprises, over which the Company exercises joint control or has significantinfluence. In 2019, the Company's income from investment in associates/joint ventures under equitymethod amounts to RMB 3,727,850,763.22. As at 31 December 2019, the carrying amount of long-term equity investment of the Company in associates/joint ventures amounts to RMB57,916,539,383.26. Since the investment income from long-term equity investment in associates/jointventures is significant, with its accuracy depending on the investee's financial status and operationresults, we identified the aforesaid subsequent measurement of long-term equity investment inassociates/joint ventures as a key audit matter of the consolidated financial statements.
Principal audit procedures we performed for key audit matters are as follows:
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AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi(20) No. P02283
(Page 2, 6 pages)III. Key Audit Matters - continued
1. Subsequent measurement of long-term equity investment in associates and joint ventures -
continued
(1) Understood the major associates/joint ventures and their environment, and identified whether themajor associates/joint ventures were significant components in terms of financial importance andbusiness nature;
(2) Understood the certified public accountants of major associates/joint ventures and evaluated their
independence and professional competence;
(3) Identified and assessed the risk of material misstatement in the financial statements of the majorassociates/joint ventures from the perspective of auditing the consolidated financial statements ofthe Company by reading the financial statements of the major associates/joint ventures anddiscussing with the management the financial performance of the major associates/joint venturesand the significant judgments and estimates made in the preparation of the financial statements;
(4) Discussed with the component certified public accountants of the major associates/joint venturestheir assessment of the component audit risk, the identification of key audit areas and theimplementation of the corresponding audit procedures to evaluate whether the audit of thecomponent certified public accountants was appropriate;
(5) Evaluated whether the audit evidence obtained by the component certified public accountants was
sufficient and appropriate by reviewing the audit documents of the component certified publicaccountants of the major associates/joint ventures when we deemed necessary.
(6) Verified whether the accounting policies and accounting periods adopted by the associates/jointventures were consistent with the Company's. If not, checked whether the financial statements ofthe associates/joint ventures have been adjusted according to the accounting policies andaccounting period of the Company, and recognized the amount of investment income under equitymethod on that basis.
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AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi (20) No. P02283
(Page 3, 6 pages)III. Key Audit Matters - continued
2. Goodwill impairment
As disclosed in Notes (V) 21 to the consolidated financial statements, as at 31 December 2019, thegoodwill in the consolidated financial statements of the Company was RMB 8,023,659,694.81. Themanagement of the Company used the net amount of fair value less costs of disposal or the presentvalue of the estimated future cash flows to determine the recoverable amount of the relevant assetgroup when testing the goodwill for impairment, of which the fair value assessment is based on themarket approach, and the forecast of future cash flows and the calculation of the present valueincluded key assumptions, such as income growth rate, gross profit margin, discount rate, etc. Weidentified the goodwill impairment as a key audit matter of the consolidated financial statements due tothe significant amount of goodwill and that the management needs to make significant judgments andestimates when conducting goodwill impairment testing.
Principal audit procedures we performed for key audit matters are as follows:
(1) Assess reasonability of division of asset group and combination of asset group management made
by management;
(2) Referred to industry practice to assess whether the management's approach in cash flows forecastis appropriate and whether the assumptions used are reasonable;
(3) Compared the data used in cash flow forecast with historical data and budget data approved by the
management, and assessed the reasonableness of the data used;
(4) Compared the growth rate of the business volume in the forecast period with the growth rate of
the historical business volume and evaluated its appropriateness.
(5) Compared the gross profit margin of the forecast period with the actual gross profit margin ofprevious years to assess its appropriateness in combination with the business plan and industrydevelopment trend;
(6) Understood the basis for management to determine the growth rate of the business in thesubsequent forecast period and assessed its appropriateness;
(7) Assessed the appropriateness of the discount rate adopted by the management in combination withmarket risk-free interest rates, risk factors, etc.;
(8) Reviewed whether the calculation of the present value of future cash flows was correct.
(9) Reviewed whether the method to assess the fair value less costs of disposal was appropriate.
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AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi (20) No. P02283
(Page 4, 6 pages)
IV. Other Information
The Company is responsible for the other information. The other information comprises theinformation included in the annual report, but does not include the consolidated financial statementsand our auditor's report.
Our opinion on the financial statements does not cover the other information and we do not expressany form of assurance conclusion.
In combination with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
If, based on the audit work performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the FinancialStatements
The Company is responsible for the preparation of the financial statements that give a true and fairview in accordance with Accounting Standards for Business Enterprises, and for the design,performance and maintenance of such internal control that is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company'sability to continue as a going concern, disclosing, as applicable, matters related to going concern andusing the going concern basis of accounting unless the management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.
These charged with governance are responsible for overseeing the Company's financial reportingprocess.
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AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi(20) No. P02283
(Page 5, 6 pages)
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor's report that includes anaudit opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with Auditing Standards for the Chinese Certified Public Accountants willalways detect a material misstatement when it exists. Misstatements can arise from fraud or error andare considered material if, individually or in the aggregate, they could expected influence theeconomic decisions taken based on these financial statements by reasonable users.
As part of an audit in accordance with Auditing Standards for the Chinese Certified PublicAccountants, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
(1) Identified and assessed the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that was sufficient and appropriate to form our opinion. The risk of not detectinga material misstatement resulting from fraud was higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.
(2) Understood audit related internal control in order to design audit procedures that were
appropriate in the circumstances.
(3) Evaluated the appropriateness of accounting policies applied and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) Concluded on the appropriateness of the directors' application of the going concern basis of
accounting. Based on audit evidence obtained, concluded on whether the material uncertainty ofevents or conditions that may cause cast significant doubt on the Company's ability to continueas a going concern existed. If we concluded that a material uncertainty existed, we were requiredto draw attention in our auditor's report to the related disclosures in the financial statements or tomodify our opinion, if such disclosures were inadequate. Our conclusions were based on theaudit evidence obtained up to the date of our auditor's report. However, future events orconditions may cause the Company to cease to continue as a going concern.
(5) Evaluated the overall presentation (including the disclosures), structure and content of the
financial statements, and whether the financial statements represented the underlyingtransactions and events in a manner that achieved fair presentation.
(6) Obtained sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an opinion on the financial statements. Wewere responsible for the direction, supervision and performance of the group audit. We remainedsolely responsible for our audit opinion.
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AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi(20) No. P02283
(Page 6, 6 pages)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We communicated with those charged with governance over audit scope, time arrangement andsignificant audit findings, including any significant deficiencies of internal control that we identifiedthrough audit.
We also provided the those charged with governance with a statement that we had complied withrelevant ethical requirements of independence, and communicated with those charged with governanceover all relationships and other matters that may reasonably be thought to bear on our independence,and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determined those mattersthat were of most significance in the audit of the financial statements of the current period and weretherefore the key audit matters. We described these matters in our auditor's report unless law orregulation precluded public disclosure about the matter or when, in extremely rare circumstances, wedetermined that a matter should not be addressed in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant(Engagement Partner)Shanghai, ChinaLi Wei Hua
Chinese Certified Public Accountant
Zhang Min
April 15, 2020
The auditor’s report and the accompanying financial statements are English translations of the Chinese auditor’s report and statutoryfinancial statements prepared under accounting principles and practices generally accepted in the People’s Republic of China. Thesefinancial statements are not intended to present the financial position and results of operations and cash flows in accordance withaccounting principles and practices generally accepted in other countries and jurisdictions. In case the English version does notconform to the Chinese version, the Chinese version prevails.
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FINANCIAL STATEMENTSAT 31 DECEMBER 2019
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current assets: | |||
| Cash and bank balances | (V)1 | 7,734,948,210.26 | 7,077,396,895.72 |
| Notes receivable | (V)2 | 38,192,250.02 | 11,608,669.43 |
| Accounts receivable | (V)3 | 1,356,460,129.90 | 1,109,230,503.08 |
| Accounts receivable financing | (V)4 | 260,760,537.45 | - |
| Prepayments | (V)5 | 55,034,019.81 | 124,404,862.87 |
| Other receivables | (V)6 | 2,129,378,252.50 | 766,518,078.72 |
| Inventories | (V)7 | 163,980,192.08 | 108,567,270.02 |
| Assets held for sale | (V)8 | 188,404,228.34 | 115,356,162.94 |
| Non-current assets due within one year | (V)9 | 808,893,013.06 | 25,952,956.76 |
| Other current assets | (V)10 | 2,298,792,661.70 | 1,195,421,189.12 |
| Total current assets | 15,034,843,495.12 | 10,534,456,588.66 | |
| Non-current Assets: | |||
| Long-term receivables | (V)11 | 1,098,831,799.90 | 793,046,240.11 |
| Long-term equity investments | (V)12 | 57,916,539,383.26 | 50,176,577,263.40 |
| Other investments in equity instruments | (V)13 | 163,561,272.00 | 247,848,314.30 |
| Other non-current financial assets | (V)14 | 2,385,363,537.39 | 2,087,872,081.94 |
| Investment properties | (V)15 | 5,760,262,674.40 | 5,890,146,989.51 |
| Fixed assets | (V)16 | 27,519,962,529.29 | 22,994,190,880.43 |
| Construction in progress | (V)17 | 6,334,141,441.88 | 5,499,426,090.06 |
| Right-of-use assets | (V)18 | 9,633,325,390.46 | |
| Intangible assets | (V)19 | 19,693,715,554.10 | 20,761,018,044.54 |
| Research expenditure | (V)20 | 37,399,092.28 | - |
| Goodwill | (V)21 | 8,023,659,694.81 | 8,335,895,842.35 |
| Long-term prepaid expenses | (V)22 | 711,911,011.67 | 235,706,437.21 |
| Deferred tax assets | (V)23 | 300,435,502.27 | 66,708,157.19 |
| Other non-current assets | (V)24 | 2,082,965,467.04 | 395,191,485.98 |
| Total non-current assets | 141,662,074,350.75 | 117,483,627,827.02 | |
| TOTAL ASSETS | 156,696,917,845.87 | 128,018,084,415.68 |
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AT 31 DECEMBER 2019
Consolidated Balance Sheet - continued
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current liabilities: | |||
| Short-term borrowings | (V)25 | 9,439,099,793.47 | 3,427,365,512.21 |
| Notes payable | (V)26 | 76,455,949.01 | - |
| Accounts payable | (V)27 | 591,112,466.39 | 429,120,690.97 |
| Receipts in advance | (V)28 | 28,826,687.37 | 29,170,709.86 |
| Contract liabilities | (V)29 | 85,831,002.52 | 49,993,895.50 |
| Employee benefits payable | (V)30 | 634,718,784.64 | 433,489,555.40 |
| Taxes payable | (V)31 | 1,898,076,342.74 | 345,183,422.42 |
| Other payables | (V)32 | 2,223,754,677.96 | 1,690,124,901.29 |
| Non-current liabilities due within one year | (V)33 | 6,104,339,856.79 | 2,896,971,014.97 |
| Other current liabilities | (V)34 | 885,956,581.63 | 609,009,584.80 |
| Total current liabilities | 21,968,172,142.52 | 9,910,429,287.42 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)35 | 6,313,735,540.33 | 6,971,479,842.18 |
| Bonds payable | (V)36 | 20,930,681,967.19 | 22,097,467,096.40 |
| Including: Preferred shares | - | - | |
| Perpetual bonds | - | - | |
| Lease liabilities | (V)37 | 1,647,129,968.61 | |
| Long-term payables | (V)38 | 1,935,245,003.21 | 1,294,190,118.18 |
| Projected benefits obligation | (V)39 | 471,482,138.63 | 375,325,127.65 |
| Provisions | (V)40 | 76,242,559.95 | 34,951,392.27 |
| Deferred income | (V)22 | 1,147,752,857.17 | 228,658,214.64 |
| Deferred tax liabilities | (V)41 | 3,961,752,749.17 | 2,911,074,941.27 |
| Other non-current liabilities | (V)42 | 3,254,515,306.85 | 3,777,582,522.86 |
| Total non-current liabilities | 39,738,538,091.11 | 37,690,729,255.45 | |
| TOTAL LIABILITIES | 61,706,710,233.63 | 47,601,158,542.87 | |
| SHAREHOLDERS' EQUITY: | |||
| Share capital | (V)43 | 1,922,365,124.00 | 1,793,412,378.00 |
| Capital reserve | (V)44 | 22,296,485,467.35 | 19,426,912,957.05 |
| Other comprehensive income | (V)45 | (355,944,565.91) | 88,925,978.57 |
| Special reserve | (V)46 | 12,386,734.70 | 8,231,080.43 |
| Surplus reserve | (V)47 | 630,345,307.43 | 527,175,908.67 |
| Unappropriated profit | (V)48 | 11,467,166,351.85 | 8,915,817,110.21 |
| Total shareholders' equity attributable to equity holders of the parent | 35,972,804,419.42 | 30,760,475,412.93 | |
| Minority interests | 59,017,403,192.82 | 49,656,450,459.88 | |
| TOTAL SHAREHOLDERS' EQUITY | 94,990,207,612.24 | 80,416,925,872.81 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 156,696,917,845.87 | 128,018,084,415.68 |
The accompanying notes form part of the financial statements.
The financial statements on pages 7 to 177 were signed by the following:
Bai Jingtao Wen Ling Sun Ligan
Legal Representative Chief Financial Officer Head of Accounting Department
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AT 31 DECEMBER 2019
Balance Sheet of the Company
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Assets: | |||
| Cash and bank balances | 690,685,211.42 | 389,876,753.95 | |
| Accounts receivable | - | 23,444,175.65 | |
| Other receivables | (XIV)1 | 805,534,763.27 | 651,015,334.06 |
| Inventories | - | 165,553.46 | |
| Other current assets | 1,107,292,458.33 | 1,563,111.61 | |
| Total current assets | 2,603,512,433.02 | 1,066,064,928.73 | |
| Non-current Assets: | |||
| Long-term receivables | 61,004,284.75 | 11,004,284.75 | |
| Long-term equity investments | (XIV)2 | 30,266,376,582.23 | 28,544,261,576.96 |
| Other investments in equity instruments | 155,688,635.00 | 151,746,700.00 | |
| Investment properties | - | 12,685,959.06 | |
| Fixed assets | 672,842.27 | 190,804,655.63 | |
| Construction in progress | 5,803,169.37 | 2,500,843.87 | |
| Intangible assets | 54,692,581.18 | 57,755,603.44 | |
| Long-term prepaid expenses | - | 3,785,801.32 | |
| Deferred tax assets | 928,465.21 | - | |
| Total non-current assets | 30,545,166,560.01 | 28,974,545,425.03 | |
| TOTAL ASSETS | 33,148,678,993.03 | 30,040,610,353.76 |
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AT 31 DECEMBER 2019
Balance Sheet of the Company - continued
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Liabilities: | |||
| Short-term borrowings | 300,378,812.50 | 378,615,990.56 | |
| Accounts payable | - | 13,125,624.29 | |
| Contract liabilities | - | 92,003.00 | |
| Employee benefits payable | 6,000,000.00 | 26,605,190.52 | |
| Taxes payable | 209,282,889.78 | 18,826,587.50 | |
| Other payables | 628,013,119.77 | 708,309,782.90 | |
| Non-current liabilities due within one year | 35,832,000.00 | 301,508,794.53 | |
| Other current liabilities | 715,766,708.20 | 206,349,863.00 | |
| Total current liabilities | 1,895,273,530.25 | 1,653,433,836.30 | |
| Non-current Liabilities: | |||
| Long-term payables | - | 151,710,000.00 | |
| Deferred tax liabilities | 35,164,858.75 | 34,179,375.00 | |
| Total non-current liabilities | 35,164,858.75 | 185,889,375.00 | |
| TOTAL LIABILITIES | 1,930,438,389.00 | 1,839,323,211.30 | |
| SHAREHOLDERS' EQUITY | |||
| Share capital | 1,922,365,124.00 | 1,793,412,378.00 | |
| Capital reserve | 27,576,242,527.73 | 25,517,647,180.04 | |
| Other comprehensive income | 105,594,576.25 | 102,638,125.00 | |
| Special reserve | - | 470,465.59 | |
| Surplus reserve | 630,345,307.43 | 527,175,908.67 | |
| Unappropriated profit | 983,693,068.62 | 259,943,085.16 | |
| TOTAL SHAREHOLDERS' EQUITY | 31,218,240,604.03 | 28,201,287,142.46 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 33,148,678,993.03 | 30,040,610,353.76 |
The accompanying notes form part of the financial statements.
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FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Income Statement
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (V)49 | 12,123,829,423.74 | 9,703,394,622.58 |
| Less: Operating costs | (V)49 | 7,648,920,919.71 | 5,739,241,395.87 |
| Business taxes and levies | (V)50 | 172,556,579.92 | 235,953,803.51 |
| Administrative expenses | (V)51 | 1,509,520,581.66 | 1,251,865,675.45 |
| Research and development expenses | 123,853,344.29 | 121,989,097.82 | |
| Financial expenses | (V)52 | 1,936,269,737.53 | 1,643,418,102.95 |
| Including: Interest expense | 2,089,837,594.54 | 1,634,101,331.80 | |
| Interest income | 252,060,018.58 | 272,453,293.86 | |
| Add: Other income | (V)53 | 162,101,113.10 | 56,180,127.64 |
| Investment income | (V)54 | 4,619,173,755.42 | 3,967,828,149.48 |
| Including: Income from investments in associates and joint ventures | (V)54 | 3,727,850,763.22 | 3,913,864,538.60 |
| Gains (losses) from changes in fair value | (V)55 | 66,483,266.48 | (1,074,406,837.68) |
| Gains (losses) from impairment of credit | (V)56 | (50,249,409.77) | (7,528,580.60) |
| Gains from impairment of assets | (V)57 | 25,051.16 | - |
| Gains on disposal of assets | (V)58 | 4,794,562,782.79 | 19,258,495.33 |
| II. Operating profit | 10,324,804,819.81 | 3,672,257,901.15 | |
| Add: Non-operating income | (V)59 | 553,103,360.41 | 67,128,689.98 |
| Less: Non-operating expenses | (V)60 | 70,452,012.40 | 125,031,298.57 |
| III. Gross profit | 10,807,456,167.82 | 3,614,355,292.56 | |
| Less: Income tax expenses | 2,640,538,894.62 | 728,440,538.60 | |
| IV. Net profit | 8,166,917,273.20 | 2,885,914,753.96 | |
| (I) Categorization by continuity of operation | |||
| 1. Net profit of continued operation | 8,166,917,273.20 | 2,885,914,753.96 | |
| 2. Net profit of discontinued operation | - | - | |
| (II) Categorization by attribution of ownership | |||
| 1. Net profit attributable to shareholders of the parent | 2,898,192,168.84 | 1,090,418,910.77 | |
| 2. Profit or loss attributable to minority shareholder | 5,268,725,104.36 | 1,795,495,843.19 | |
| V. Amount of other comprehensive net income after tax | (V)63 | (1,096,285,894.51) | 204,602,785.68 |
| Amount of other comprehensive net income after tax attributable to equity holders of the parent | (443,076,984.15) | 41,778,087.02 | |
| (I) Other comprehensive income that will not be reclassified to profit or loss | 9,090,184.52 | (48,671,312.79) | |
| 1. Change as a result of remeasurement of the net defined benefit plan | 1,069,722.83 | (7,943,999.30) | |
| 2. Other comprehensive income under the equity method that will not be reclassified to profit or loss | 4,830,921.62 | (46,138,662.23) | |
| 3. Fair value changes of other investments in equity instruments | 3,189,540.07 | 5,411,348.74 | |
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | (452,167,168.67) | 90,449,399.81 | |
| 1. Other comprehensive income under the equity method that will be reclassified to profit or loss | (59,050,164.54) | (7,952,099.73) | |
| 2. Translation differences of financial statements denominated in foreign currencies | (393,117,004.13) | 98,401,499.54 | |
| Amount of other comprehensive net income after tax attributable to minority shareholders | (653,208,910.36) | 162,824,698.66 | |
| VI. Total comprehensive income attributable to: | 7,070,631,378.69 | 3,090,517,539.64 | |
| Shareholders of the parent | 2,455,115,184.69 | 1,132,196,997.79 | |
| Minority shareholders | 4,615,516,194.00 | 1,958,320,541.85 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | 1.59 | 0.61 | |
| (II) Diluted earnings per share | 1.59 | 0.61 |
The accompanying notes form part of the financial statements.
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FOR THE YEAR ENDED 31 DECEMBER 2019
Income Statement of the Company
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (XIV)3 | 92,042,598.05 | 243,899,253.07 |
| Less: Operating costs | (XIV)3 | 76,084,023.73 | 160,065,451.42 |
| Taxes and levies | 1,839,217.71 | 47,542,310.81 | |
| Administrative expenses | 60,487,851.03 | 122,905,018.75 | |
| Research and development expenses | - | 742,954.48 | |
| Financial expenses | 41,936,976.49 | 34,174,062.13 | |
| Including: Interest expense | 42,810,942.02 | 36,872,089.57 | |
| Interest income | 15,909,363.66 | 20,843,903.27 | |
| Add: Other income | 955,987.32 | 271,927.46 | |
| Investment income | (XIV)4 | 1,306,222,961.66 | 193,138,161.44 |
| Including: Income from investments in associates and joint ventures | (XIV)4 | 70,092,131.84 | 63,015,142.10 |
| Gains (losses) on disposal of assets | - | (937,948.47) | |
| II. Operating profit | 1,218,873,478.07 | 70,941,595.91 | |
| Add: Non-operating income | 57,049.23 | 1,336,230.70 | |
| Less: Non-operating expenses | 81,092.18 | 867,312.18 | |
| III. Gross profit | 1,218,849,435.12 | 71,410,514.43 | |
| Less: Income tax expenses | 187,155,447.57 | 395,773.33 | |
| IV. Net profit | 1,031,693,987.55 | 71,014,741.10 | |
| V. Amount of other comprehensive net income after tax | 2,956,451.25 | 3,377,145.00 | |
| (I) Other comprehensive income that will not be reclassified subsequently to profit or loss | 2,956,451.25 | 3,377,145.00 | |
| 1. Change as a result of remeasurement of the net defined benefit plan | - | - | |
| 2. Other comprehensive income under the equity method that will not be reclassified to profit or loss | - | - | |
| 3. Fair value changes of other investments in equity instruments | 2,956,451.25 | 3,377,145.00 | |
| (II) Other comprehensive income that will be reclassified to profit or loss | - | - | |
| 1. Other comprehensive income under the equity method that will be reclassified to profit or loss | - | - | |
| 2. Translation differences of financial statements denominated in foreign currencies | - | - | |
| VI. Total comprehensive income | 1,034,650,438.80 | 74,391,886.10 |
The accompanying notes form part of the financial statements.
- 13 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Cash Flow Statement
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 12,294,529,982.73 | 9,581,481,387.06 | |
| Receipts of tax refunds | 23,569,265.92 | 6,203,721.12 | |
| Other cash receipts relating to operating activities | (V)64(1) | 1,165,710,845.18 | 963,935,271.59 |
| Sub-total of cash inflows | 13,483,810,093.83 | 10,551,620,379.77 | |
| Cash payments for goods purchased and services received | 3,593,786,248.69 | 2,647,715,026.47 | |
| Cash payments to and on behalf of employees | 2,621,068,087.09 | 1,808,824,527.76 | |
| Payments of all types of taxes | 957,382,790.97 | 762,131,488.97 | |
| Other cash payments relating to operating activities | (V)64(2) | 809,699,551.14 | 1,044,373,911.73 |
| Sub-total of cash outflows | 7,981,936,677.89 | 6,263,044,954.93 | |
| Net Cash Flows from Operating Activities | (V)65(1) | 5,501,873,415.94 | 4,288,575,424.84 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | - | 200,000.00 | |
| Cash receipts from investments income | 1,804,725,809.65 | 1,813,166,370.38 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 6,274,482,747.66 | 19,846,988.10 | |
| Net cash receipts from disposal of subsidiary and other operating units | (V)64(5) | 1,000,000.00 | - |
| Other cash receipts relating to investing activities | (V)64(3),(4) | 3,535,967,030.93 | 156,615,992.14 |
| Sub-total of cash inflows | 11,616,175,588.24 | 1,989,829,350.62 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 3,515,540,735.97 | 2,437,080,643.74 | |
| Cash payments to acquire investments | 7,898,674,384.09 | 4,084,107,008.20 | |
| Net cash payment to acquire subsidiary and other operating units | - | 8,931,096,795.81 | |
| Other cash payments relating to investing activities | (V)64(6) | 2,138,951,129.78 | 1,686,107,391.23 |
| Sub-total of cash outflows | 13,553,166,249.84 | 17,138,391,838.98 | |
| Net Cash Flows from Investing Activities | (1,936,990,661.60) | (15,148,562,488.36) | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 2,213,530,171.90 | 296,363,615.57 | |
| Including: cash receipts from capital contributions from minority owners of subsidiary | 27,255,000.00 | 40,100,000.00 | |
| Cash receipts from borrowings | 14,306,287,000.87 | 21,763,411,408.42 | |
| Cash receipts from issue of bonds | - | 10,621,000,000.00 | |
| Other cash receipts relating to financing activities | (V)64(7) | 1,713,327,483.01 | 3,876,395,683.27 |
| Sub-total of cash inflows | 18,233,144,655.78 | 36,557,170,707.26 | |
| Cash repayments of borrowings | 15,402,220,794.12 | 23,593,666,839.99 | |
| Cash payments for distribution of dividends or profit or interest | 4,022,043,402.10 | 3,942,108,074.86 | |
| Including: Payments for distribution of dividends or profit to minorities | 1,745,724,195.29 | 1,929,962,094.72 | |
| Other cash payments relating to financing activities | (V)64(8) | 42,583,797.55 | 146,196,535.06 |
| Sub-total of cash outflows | 19,466,847,993.77 | 27,681,971,449.91 | |
| Net Cash Flows from Financing Activities | (1,233,703,337.99) | 8,875,199,257.35 | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 9,697,074.77 | (371,390,771.83) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | 2,340,876,491.12 | (2,356,178,578.00) | |
| Add: Opening balance of Cash and Cash Equivalents | (V)65(2) | 5,373,281,504.75 | 7,729,460,082.75 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)65(2) | 7,714,157,995.87 | 5,373,281,504.75 |
The accompanying notes form part of the financial statements.
- 14 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Cash Flow Statement of the Company
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 104,722,961.87 | 229,302,378.14 | |
| Other cash receipts relating to operating activities | 246,055,628.30 | 29,331,866.91 | |
| Sub-total of cash inflows | 350,778,590.17 | 258,634,245.05 | |
| Cash payments for goods purchased and services received | 36,211,750.68 | 74,086,330.85 | |
| Cash payments to and on behalf of employees | 85,120,511.18 | 121,661,642.64 | |
| Payments of all types of taxes | 20,158,391.66 | 9,401,709.94 | |
| Other cash payments relating to operating activities | 53,795,218.14 | 279,797,604.56 | |
| Sub-total of cash outflows | 195,285,871.66 | 484,947,287.99 | |
| Net Cash Flows from Operating Activities | 155,492,718.51 | (226,313,042.94) | |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from investments income | 57,727,526.33 | 445,875,054.92 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | - | 766,830.38 | |
| Other cash receipts relating to investing activities | 612,722,414.48 | 635,013,754.63 | |
| Sub-total of cash inflows | 670,449,940.81 | 1,081,655,639.93 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 8,035,563.48 | 12,539,040.21 | |
| Cash payments to acquire investments | 8,000,000.00 | - | |
| Net cash payments for acquisitions of subsidiaries and other business units | 386,159,390.00 | 149,709,800.00 | |
| Other cash payments relating to investing activities | 2,060,171,330.96 | 374,513,229.40 | |
| Sub-total of cash outflows | 2,462,366,284.44 | 536,762,069.61 | |
| Net Cash Flows from Investing Activities | (1,791,916,343.63) | 544,893,570.32 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 2,186,275,171.90 | 256,263,615.57 | |
| Cash receipts from borrowings | 2,160,000,000.00 | 566,016,000.00 | |
| Cash receipts from issue of bonds | - | 200,000,000.00 | |
| Other cash receipts relating to financing activities | - | - | |
| Sub-total of cash inflows | 4,346,275,171.90 | 1,022,279,615.57 | |
| Cash repayments of borrowings | 2,167,116,843.58 | 300,000,000.00 | |
| Cash payments for distribution of dividends or profit or interest | 239,800,502.62 | 873,011,086.61 | |
| Other cash payments relating to financing activities | 1,593,549.44 | 1,497,344.37 | |
| Sub-total of cash outflows | 2,408,510,895.64 | 1,174,508,430.98 | |
| Net Cash Flows from Financing Activities | 1,937,764,276.26 | (152,228,815.41) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | (497,294.65) | (6,549,202.77) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | 300,843,356.49 | 159,802,509.20 | |
| Add: Opening balance of Cash and Cash Equivalents | 389,841,854.93 | 230,039,345.73 | |
| VI. Closing Balance of Cash and Cash Equivalents | 690,685,211.42 | 389,841,854.93 |
The accompanying notes form part of the financial statements.
- 15 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
| Item | 2019 | |||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | |||
| I. Closing balance of the preceding year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,915,817,110.21 | 49,656,450,459.88 | 80,416,925,872.81 |
| Add: Changes in accounting policies | - | - | - | - | - | (41,018,077.68) | (80,367,183.77) | (121,385,261.45) |
| Corrections of prior period errors | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,874,799,032.53 | 49,576,083,276.11 | 80,295,540,611.36 |
| III. Changes for the year | 128,952,746.00 | 2,869,572,510.30 | (444,870,544.48) | 4,155,654.27 | 103,169,398.76 | 2,592,367,319.32 | 9,441,319,916.71 | 14,694,667,000.88 |
| (I) Total comprehensive income | - | - | (443,076,984.15) | - | - | 2,898,192,168.84 | 4,615,516,194.00 | 7,070,631,378.69 |
| (II) Owners' contributions and reduction in capital | 128,952,746.00 | 2,869,572,510.30 | - | - | - | - | 6,867,048,857.78 | 9,865,574,114.08 |
| 1．Capital contribution from shareholders | 128,952,746.00 | 2,058,595,347.69 | - | - | - | - | 27,255,000.00 | 2,214,803,093.69 |
| 2．Capital contribution from other equity investment holder | - | - | - | - | - | - | - | - |
| 3．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - |
| 4．Business combination involving enterprises under common control | - | - | - | - | - | - | - | - |
| 5．Others | - | 810,977,162.61 | - | - | - | - | 6,839,793,857.78 | 7,650,771,020.39 |
| (III) Profit distribution | - | - | - | - | 103,169,398.76 | (307,618,409.85) | (2,040,721,489.06) | (2,245,170,500.15) |
| 1．Transfer to surplus reserve | - | - | - | - | 103,169,398.76 | (103,169,398.76) | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (204,449,011.09) | (2,040,721,489.06) | (2,245,170,500.15) |
| 4．Others | - | - | - | - | - | - | - | - |
| (IV) Transfers within shareholders' equity | - | - | (1,793,560.33) | - | - | 1,793,560.33 | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - | - |
| 4．Others | - | - | (1,793,560.33) | - | - | 1,793,560.33 | - | - |
| (V) Special reserve | - | - | - | 4,155,654.27 | - | - | (523,646.01) | 3,632,008.26 |
| 1．Withdrawn in the period | - | - | - | 108,062,435.41 | - | - | 115,436,394.98 | 223,498,830.39 |
| 2．Utilized in the period | - | - | - | (103,906,781.14) | - | - | (115,960,040.99) | (219,866,822.13) |
| (VI) Others | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,922,365,124.00 | 22,296,485,467.35 | (355,944,565.91) | 12,386,734.70 | 630,345,307.43 | 11,467,166,351.85 | 59,017,403,192.82 | 94,990,207,612.24 |
- 16 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Statement of Changes in Shareholders' Equity - continued
Unit: RMB
| Item | 2018 | |||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | |||
| I. Closing balance of the preceding year | 644,763,730.00 | 167,480,381.24 | 19,800,344.49 | 4,767,373.45 | 520,074,434.56 | 3,566,083,142.17 | 1,644,073,503.71 | 6,567,042,909.62 |
| Add: Changes in accounting policies | - | - | (722,556,561.97) | - | - | 816,323,338.17 | 6,484,493.08 | 100,251,269.28 |
| Corrections of prior period errors | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | 18,678,418,974.96 | (26,864,990.92) | - | - | 4,900,224,775.30 | 43,870,482,449.58 | 67,422,261,208.92 |
| Others | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 18,845,899,356.20 | (729,621,208.40) | 4,767,373.45 | 520,074,434.56 | 9,282,631,255.64 | 45,521,040,446.37 | 74,089,555,387.82 |
| III. Changes for the year | 1,148,648,648.00 | 581,013,600.85 | 818,547,186.97 | 3,463,706.98 | 7,101,474.11 | (366,814,145.43) | 4,135,410,013.51 | 6,327,370,484.99 |
| (I) Total comprehensive income | - | - | 41,778,087.02 | - | - | 1,090,418,910.77 | 1,958,320,541.85 | 3,090,517,539.64 |
| (II) Owners' contributions and reduction in capital | 1,148,648,648.00 | 581,013,600.85 | 776,769,099.95 | - | - | - | 3,092,504,057.82 | 5,598,935,406.62 |
| 1．Capital contribution from shareholders | 1,148,648,648.00 | - | - | - | - | - | 1,594,806,295.50 | 2,743,454,943.50 |
| 2．Capital contribution from other equity investment holder | - | - | - | - | - | - | - | - |
| 3．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - |
| 4．Business combination involving enterprises under common control | - | (583,183,507.54) | 776,769,099.95 | - | - | - | - | 193,585,592.41 |
| 5．Others | - | 1,164,197,108.39 | - | - | - | - | 1,497,697,762.32 | 2,661,894,870.71 |
| (III) Profit distribution | - | - | - | - | 7,101,474.11 | (1,457,233,056.20) | (920,434,015.30) | (2,370,565,597.39) |
| 1．Transfer to surplus reserve | - | - | - | - | 7,101,474.11 | (7,101,474.11) | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.86) | - | (850,443,359.86) |
| 4．Others | - | - | - | - | - | (599,688,222.23) | (920,434,015.30) | (1,520,122,237.53) |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | 3,463,706.98 | - | - | 5,019,429.14 | 8,483,136.12 |
| 1．Withdrawn in the period | - | - | - | 24,165,961.75 | - | - | 49,870,501.76 | 74,036,463.51 |
| 2．Utilized in the period | - | - | - | (20,702,254.77) | - | - | (44,851,072.62) | (65,553,327.39) |
| (VI) Others | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,915,817,110.21 | 49,656,450,459.88 | 80,416,925,872.81 |
The accompanying notes form part of the financial statements.
- 17 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
| Item | 2019 | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,943,085.16 | 28,201,287,142.46 |
| Add: Changes in accounting policies | - | - | - | - | - | (325,594.24) | (325,594.24) |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,617,490.92 | 28,200,961,548.22 |
| III. Changes for the year | 128,952,746.00 | 2,058,595,347.69 | 2,956,451.25 | (470,465.59) | 103,169,398.76 | 724,075,577.70 | 3,017,279,055.81 |
| (I) Total comprehensive income | - | - | 2,956,451.25 | - | - | 1,031,693,987.55 | 1,034,650,438.80 |
| (II) Owners' contributions and reduction in capital | 128,952,746.00 | 2,058,595,347.69 | - | - | - | - | 2,187,548,093.69 |
| 1．Capital contribution from shareholders | 128,952,746.00 | 2,058,595,347.69 | - | - | - | - | 2,187,548,093.69 |
| 2．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - |
| 3．Others | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | 103,169,398.76 | (307,618,409.85) | (204,449,011.09) |
| 1．Transfer to surplus reserve | - | - | - | - | 103,169,398.76 | (103,169,398.76) | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (204,449,011.09) | (204,449,011.09) |
| 4．Others | - | - | - | - | - | - | - |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | (470,465.59) | - | - | (470,465.59) |
| 1．Withdrawn in the period | - | - | - | 919,167.67 | - | - | 919,167.67 |
| 2．Utilized in the period | - | - | - | (1,389,633.26) | - | - | (1,389,633.26) |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,922,365,124.00 | 27,576,242,527.73 | 105,594,576.25 | - | 630,345,307.43 | 983,693,068.62 | 31,218,240,604.03 |
- 18 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Statement of Changes in Shareholders' Equity of the Company - continued
Unit: RMB
| Item | 2018 | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 644,763,730.00 | 240,001,254.59 | 6,647,500.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,457,960,097.18 |
| Add: Changes in accounting policies | - | - | 92,613,480.00 | - | - | - | 92,613,480.00 |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 240,001,254.59 | 99,260,980.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,550,573,577.18 |
| III. Changes for the year | 1,148,648,648.00 | 25,277,645,925.45 | 3,377,145.00 | 470,465.59 | 7,101,474.11 | (786,530,092.87) | 25,650,713,565.28 |
| (I) Total comprehensive income | - | - | 3,377,145.00 | - | - | 71,014,741.10 | 74,391,886.10 |
| (II) Owners' contributions and reduction in capital | 1,148,648,648.00 | 25,277,645,925.45 | - | - | - | - | 26,426,294,573.45 |
| 1．Capital contribution from shareholders | 1,148,648,648.00 | 25,276,764,780.38 | - | - | - | - | 26,425,413,428.38 |
| 2．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - |
| 3．Others | - | 881,145.07 | - | - | - | - | 881,145.07 |
| (III) Profit distribution | - | - | - | - | 7,101,474.11 | (857,544,833.97) | (850,443,359.86) |
| 1．Transfer to surplus reserve | - | - | - | - | 7,101,474.11 | (7,101,474.11) | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.86) | (850,443,359.86) |
| 4．Others | - | - | - | - | - | - | - |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | 470,465.59 | - | - | 470,465.59 |
| 1．Withdrawn in the period | - | - | - | 2,621,280.84 | - | - | 2,621,280.84 |
| 2．Utilized in the period | - | - | - | (2,150,815.25) | - | - | (2,150,815.25) |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,943,085.16 | 28,201,287,142.46 |
The accompanying notes form part of the financial statements.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(I) GENERAL INFORMATION OF THE COMPANY
China Merchants Port Group Company Limited was a stock limited company incorporated inShenzhen, Guangdong Province, on 16 January 1993.
The headquarters of the Company is located in Shenzhen, Guangdong Province. The Companyand its subsidiaries (collectively the "Group") are principally engaged in the rendering of portservice, bonded logistics service and other business such as property development and investment.
The Company's and consolidated financial statements have been approved by the Board ofDirectors on 14 April 2020.
See Notes (VII) "Equity in other entities" for details of the scope of consolidated financialstatements in the current period are subsidiaries acquired through business combination undercommon control. See Note (VI) "Changes in the consolidated scope" for details of changes in thescope of consolidated financial statements in the current period.
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of preparation of financial statements
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued bythe Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financialinformation in accordance with Information Disclosure and Presentation Rules for CompaniesOffering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in2014).
Going concern
As at 31 December 2019, the Group had total current liabilities in excess of total current assets ofRMB 6,933,328,647.40. On 31 December 2019, the Group had available and unused line ofcredit amounting to RMB 46,602,858,550.04, which is greater than the balance of the net currentliabilities. The Group can obtain financial support from the available line of credit when needed.Therefore, the financial statements have been prepared on a going concern basis.
Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. Except for certain financial instrumentswhich are measured at fair value, the Group adopts the historical cost as the principle ofmeasurement of the financial statements. Upon being restructured into a stock company, the fixedassets and intangible assets initially contributed by the state-owned shareholders are recognizedbased on the valuation amounts confirmed by the state-owned assets administration department.Where assets are impaired, provisions for asset impairment are made in accordance with therelevant requirements.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
Basis of accounting and principle of measurement - continued
Where the historical cost is adopted as the measurement basis, assets are recorded at the amountof cash or cash equivalents paid or the fair value of the consideration given to acquire them at thetime of their acquisition. Liabilities are recorded at the amount of proceeds or assets received orthe contractual amounts for assuming the present obligation, or, at the amounts of cash or cashequivalents expected to be paid to settle the liabilities in the normal course of business.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date, regardless of whetherthat price is directly observable or estimated using valuation technique. Fair value measurementand/or disclosure in the financial statements are determined according to the above basis.
Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which theinputs to the fair value measurements are observable and the significance of the inputs to the fairvalue measurement in its entirety, which are described as follows:
? Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that theentity can access at the measurement date;? Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observablefor the asset or liability, either directly or indirectly; and? Level 3 inputs are unobservable inputs for the asset or liability.
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
All the following significant accounting policies and accounting estimates are based onAccounting Standards for Business Enterprises ("ASBE").
1. Statement of compliance with the ASBE
The financial statements of the Company have been prepared in accordance with the ASBE, andpresent truly and completely, the Company’s and consolidated financial position as of 31December 2019, and the Company’s and consolidated results of operations, the Company’s andconsolidated shareholders' equity and cash flows for the year then ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, e.g. from 1 January to 31December.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
3. Operating cycle
An operating cycle refers to the period since when an enterprise purchases assets for processingpurpose till the realization of those assets in cash or cash equivalents. The Group are principallyengaged in the rendering of port service, bonded logistics service and other business such asproperty development and investment with an operating cycle of one year.
4. Functional currency
Renminbi ("RMB") is the currency of the primary economic environment in which the Companyand its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiarieschoose RMB as their functional currency. The Company's subsidiaries choose their functionalcurrency on the basis of the primary economic environment in which they operate. The Companyadopts RMB to prepare its financial statements.
5. The accounting treatment of business combinations involving or not involvingenterprises under common control
Business combinations are classified into business combinations involving enterprises undercommon control and business combinations not involving enterprises under common control.
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination inwhich all of the combining enterprises are ultimately controlled by the same party or parties bothbefore and after the combination, and that control is not transitory.
Assets and liabilities obtained shall be measured at their respective carrying amounts as recordedby the combining entities at the date of the combination. The difference between the carryingamount of the net assets obtained and the carrying amount of the consideration paid for thecombination is adjusted to the share premium in capital reserve. If the share premium is notsufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period inwhich they are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a businesscombination in which all of the combining enterprises are not ultimately controlled by the sameparty or parties before and after the combination.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
5. The accounting treatment of business combinations involving or not involving enterprisesunder common control - continued
5.2 Business combinations not involving enterprises under common control and goodwill - continued
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assetsgiven, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange forcontrol of the acquire. Where a business combination not involving enterprises under commoncontrol is achieved in stages that involve multiple transactions, the cost of combination is the sumof the consideration paid at the acquisition date and the fair value at the acquisition date of theacquirer's previously held interest in the acquiree. The intermediary expenses (fees in respect ofauditing, legal services, valuation and consultancy services, etc.) and other administrativeexpenses attributable to the business combination are recognized in profit or loss in the periodswhen they are incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities acquired by the acquirer in abusiness combination that meet the recognition criteria shall be measured at fair value at theacquisition date.
When a business combination contract provides for the acquirer's recovery of considerationpreviously paid contingent on one or multiple future event(s), the Group recognises the contingentconsideration provided in the contract as an asset, as part of the consideration transferred in thebusiness combination, and includes it in the cost of business combination at the fair value at theacquisition date. Within 12 months after the acquisition, where the contingent consideration needsto be adjusted as new or further evidences are obtained in respect of the circumstances existed atthe acquisition date, the adjustment shall be recognised and the amount originally recognised ingoodwill or non-operating income shall be adjusted. A change in or adjustment to the contingentconsideration under other circumstances shall be accounted for in accordance with AccountingStandard for Business Enterprise No. 22 – Financial Instruments: Recognition and Measurementand Accounting Standard for Business Enterprises No. 13 – Contingencies. Any change oradjustment is included in profit or loss for the current period.
Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree'sidentifiable net assets, the difference is treated as an asset and recognized as goodwill, which ismeasured at cost on initial recognition. Where the cost of combination is less than the acquirer'sinterest in the fair value of the acquiree's identifiable net assets, the acquirer reassesses themeasurement of the fair values of the acquiree's identifiable assets, liabilities and contingentliabilities and measurement of the cost of combination. If after that reassessment, the cost ofcombination is still less than the acquirer's interest in the fair value of the acquiree's identifiablenet assets, the acquirer recognizes the remaining difference immediately in profit or loss for thecurrent period.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
5. The accounting treatment of business combinations involving or not involving enterprises
under common control - continued
5.2 Business combinations not involving enterprises under common control and goodwill - continued
If either the fair values of identifiable assets, liabilities and contingent liabilities acquired in acombination or the cost of business combination can be determined only provisionally by the endof the period in which the business combination was effected, the acquirer recognises andmeasures the combination using those provisional values. Any adjustments to those provisionalvalues within twelve months after the acquisition date are treated as if they had been recognisedand measured on the acquisition date.
Goodwill arising on a business combination is measured at cost less accumulated impairmentlosses, and is presented separately in the consolidated financial statements.
6. Preparation of consolidated financial statements
6.1 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis ofcontrol. Control exists when the investor has power over the investee; is exposed, or has rights, tovariable returns from its involvement with the investee; and has the ability to use its power overthe investee to affect its returns. The Group reassesses whether or not it controls an investee iffacts and circumstances indicate that there are changes of the above elements of the definition ofcontrol.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiaries andceases when the Group loses control of the subsidiary.
For a subsidiary already disposed of by the Group, the operating results and cash flows before thedate of disposal (the date when control is lost) are included in the consolidated income statementand consolidated statement of cash flows, as appropriate.
For subsidiaries acquired through a business combination involving enterprises not undercommon control, the operating results and cash flows from the acquisition date (the date whencontrol is obtained) are included in the consolidated income statement and consolidated statementof cash flows, as appropriate.
No matter when the business combination occurs in the reporting period, subsidiaries acquiredthrough a business combination involving enterprises under common control or the party beingabsorbed under merger by absorption are included in the Group's scope of consolidation as if theyhad been included in the scope of consolidation from the date when they first came under thecommon control of the ultimate controlling party. Their operating results and cash flows from thedate when they first came under the common control of the ultimate controlling party are includedin the consolidated income statement and consolidated statement of cash flows, as appropriate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
The significant accounting policies and accounting periods adopted by the subsidiaries aredetermined based on the uniform accounting policies and accounting periods set out by theCompany.
Where the accounting policies / accounting periods adopted by subsidiaries are inconsistent withthose of the Company, appropriate adjustments are made to the subsidiaries' financial statementsin accordance with the accounting policies of the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the parent is treated as minorityinterests and presented as "minority interests" in the consolidated balance sheet undershareholders' equity. The portion of net profits or losses of subsidiaries for the period attributableto minority interests is presented as "minority interests" in the consolidated income statementunder the "net profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiaryexceeds the minority shareholders' portion of the opening balance of shareholders' equity of thesubsidiary, the excess amount is still allocated against minority interests.
Acquisition of minority interests or disposals of interests in a subsidiary that do not result in theloss of control over the subsidiary are accounted for as equity transactions. The carrying amountsof the parent's interests and minority interests are adjusted to reflect the changes in their relativeinterests in the subsidiary. The difference between the amount by which the minority interests areadjusted and the fair value of the consideration paid or received is adjusted to capital reserve. Ifthe capital reserve is not sufficient to absorb the difference, the excess are adjusted againstretained earnings.
For the stepwise acquisition of equity interest till acquiring control after a few transactions andleading to business combination not involving enterprises under common control, this should bedealt with based on whether this belongs to 'package deal': if it belongs to 'package deal',transactions will be dealt as transactions to acquire control. If it does not belong to 'package deal',transactions to acquire control on acquisition date will be under accounting treatment, the fairvalue of acquirees' shares held before acquisition date will be revalued, and the differencebetween fair value and book value will be recognized in profit or loss of the current period; ifacquirees' shares held before acquisition date involve in changes of other comprehensive incomeand other equity of owners under equity method, this will be transferred to income of acquisitiondate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
When the Group loses control over a subsidiary due to disposal of equity investment or otherreasons, any retained interest is re-measured at its fair value at the date when control is lost. Thedifference between (i) the aggregate of the consideration received on disposal and the fair value ofany retained interest and (ii) the share of the former subsidiary's net assets cumulatively calculatedfrom the acquisition date according to the original proportion of ownership interests is recognizedas investment income in the period in which control is lost, and the goodwill is offset accordingly.Other comprehensive income associated with investment in the former subsidiary is reclassified toinvestment income in the period in which control is lost.
When the Group loses control of a subsidiary in two or more arrangements (transactions), termsand conditions of the arrangements (transactions) and their economic effects are considered. Oneor more of the following indicate that the Group shall account for the multiple arrangements as a'package deal': (i) they are entered into at the same time or in contemplation of each other; (ii)they form a complete transaction designed to achieve an overall commercial effect; (iii) theoccurrence of one transaction is dependent on the occurrence of at least one other transaction; (iv)one transaction alone is not economically justified, but it is economically justified whenconsidered together with other transactions. Where the transactions of disposal of equityinvestments in a subsidiary until the loss of control are assessed as a package deal, thesetransactions are accounted for as one transaction of disposal of a subsidiary with loss of control.Before losing control, the difference of consideration received on disposal and the share of netassets of the subsidiary continuously calculated from acquisition date is recognized as othercomprehensive income. When losing control, the cumulated other comprehensive income istransferred to profit or loss of the period of losing control. If the transactions of disposal of equityinvestments in a subsidiary are not assessed as a package deal, these transactions are accountedfor as unrelated transactions.
7. Types of joint arrangements and the accounting treatment of joint operation
There are two types of joint arrangements - joint operations and joint ventures. The classificationof joint arrangements under is determined based on the rights and obligations of parties to thejoint arrangements by considering the structure, the legal form of the arrangements, thecontractual terms agreed by the parties to the arrangement. A joint operation is a jointarrangement whereby the parties that have joint control of the arrangement have rights to theassets, and obligations for the liabilities, relating to the arrangement. A joint venture is a jointarrangement whereby the parties that have joint control of the arrangement have rights to the netassets of the arrangement.
Investments in joint ventures are accounted for using the equity method by the Group, which isdetailed in Notes (III) 16.3.2, a long-term equity investment is subject to for using the equitymethod.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
7. Types of joint arrangements and the accounting treatment of joint operation -continued
The Group as a joint operator recognizes the following items in relation to its interest in a jointoperation: (1) its solely-held assets, including its share of any assets held jointly; (2) its solely-assumed liabilities, including its share of any liabilities incurred jointly; (3) its revenue from thesale of its share of the output arising from the joint operation; (4) its share of the revenue from thesale of the output by the joint operation; and (5) its solely-incurred expenses, including its share ofany expenses incurred jointly. The Group accounts for the recognized assets, liabilities, revenuesand expenses relating to its interest in a joint operation in accordance with the requirementsapplicable to the particular assets, liabilities, revenues and expenses.
8. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cashequivalents are the Group's short-term(generally due within 3 months since the acquisition date),highly liquid investments that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value.
9. Foreign currency transactions
9.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchangerate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currencyusing the spot exchange rates at the balance sheet date. Exchange differences arising from thedifferences between the spot exchange rates prevailing at the balance sheet date and those oninitial recognition or at the previous balance sheet date are recognized in profit or loss for theperiod, except that (1) exchange differences related to a specific-purpose borrowing denominatedin foreign currency that qualify for capitalization are capitalized as part of the cost of thequalifying asset during the capitalization period; (2) exchange differences related to hedginginstruments for the purpose of hedging against foreign currency risks are accounted for usinghedge accounting; (3) exchange differences arising from changes in the carrying amounts (otherthan the amortised cost) of monetary items at fair value through other comprehensive income arerecognised as other comprehensive income.
When the consolidated financial statements include foreign operation(s), if there is foreigncurrency monetary item constituting a net investment in a foreign operation, exchange differencearising from changes in exchange rates are recognized as "exchange differences arising ontranslation of financial statements denominated in foreign currencies " in other comprehensiveincome, and in profit and loss for the period upon disposal of the foreign operation.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Foreign currency transactions - continued
9.1 Transactions denominated in foreign currencies - continued
Foreign currency non-monetary items measured at historical cost are translated to the amounts infunctional currency at the spot exchange rates on the dates of the transactions; the amounts infunctional currency remain unchanged. Foreign currency non-monetary items measured at fairvalue are re-translated at the spot exchange rate on the date the fair value is determined.Difference between the re-translated functional currency amount and the original functionalcurrency amount is treated as changes in fair value (including changes of exchange rate) and isrecognized in profit and loss or as other comprehensive income.
9.2 Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of aforeign operation are translated from the foreign currency into RMB using the following method:
assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at thebalance sheet date; shareholders' equity items except for unappropriated profit are translated at thespot exchange rates at the dates on which such items arose; all items in the income statement aswell as items reflecting the distribution of profits are translated at the average exchange rates ofthe accounting period of the consolidated financial statements; the opening balance ofunappropriated profit is the translated closing balance of the previous year's unappropriated profit;the closing balance of unappropriated profit is calculated and presented on the basis of eachtranslated income statement and profit distribution item. The difference between the translatedassets and the aggregate of liabilities and shareholders' equity items is recognized as othercomprehensive income and included in shareholders' equity.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreignsubsidiary are translated at average exchange rate during the accounting period of consolidatedfinancial statements. The effect of exchange rate changes on cash and cash equivalents is regardedas a reconciling item and presented separately in the cash flow statement as "effect of exchangerate changes on cash and cash equivalents".
The closing balances and the comparative figures of previous year are presented at the translatedamounts in the previous year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over aforeign operation due to disposal of certain interest in it or other reasons, the Group transfers theaccumulated exchange differences arising on translation of financial statements of this foreignoperation attributable to the owners' equity of the Company and presented under owners' equity,to profit or loss in the period in which the disposal occurs.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Foreign currency transactions - continued
9.2 Translation of financial statements denominated in foreign currencies - continued
In case of a disposal of part equity investments or other reason leading to lower interestpercentage in foreign operations but does not result in the Group losing control over a foreignoperation, the proportionate share of accumulated exchange differences arising on translation offinancial statements are re-attributed to minority interests and are not recognized in profit and loss.For partial disposals of equity interests in foreign operations which are associates or joint ventures,the proportionate share of the accumulated exchange differences arising on translation of financialstatements of foreign operations is reclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to thecontractual provisions of a financial instrument.
All regular way purchases or sales of financial assets are recognized and derecognized on a tradedate basis.
Financial assets and financial liabilities are initially measured at fair value. For financial assetsand financial liabilities at fair value through profit or loss, relevant transaction costs are directlyrecognized in profit or loss; transaction costs relating to other categories of financial assets andfinancial liabilities are included in the value initially recognized. For accounts receivablerecognized that do not contain a significant financing component or a financing componentincluded in the contracts less than one year which are not considered by the Group, which arewithin the scope of Accounting Standard for Business Enterprises No.14 - Revenue (hereinafterreferred to as "revenue standards"), transaction prices defined in the standards shall be adopted oninitial recognition.
The effective interest method is a method that is used in the calculation of the amortized cost of afinancial asset or a financial liability and in the allocation of the interest income or interestexpense in profit or loss over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash flows through theexpected life of the financial asset or financial liability to the gross carrying amount of a financialasset or to the amortized cost of a financial liability. When calculating the effective interest rate,the Group estimates future cash flows by considering all the contractual terms of the financialasset or financial liability (for example, prepayment, extension, call option or similar options) butshall not consider the expected credit losses.
The amortized cost of a financial asset or a financial liability is the amount of a financial asset or afinancial liability initially recognized net of principal repaid, plus or less the cumulative amortizedamount arising from amortization of the difference between the amount initially recognized andthe amount at the maturity date using the effective interest method, net of cumulative credit lossallowance (only applicable to financial assets).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets
Subsequent to initial recognition, the Group's financial assets of various categories aresubsequently measured at amortized cost, at fair value through other comprehensive income or atfair value through profit or loss.
If contractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding, and the financial asset isheld within a business model whose objective is to hold financial assets in order to collectcontractual cash flows, such asset is classified into financial assets measured at amortized cost,which include cash and bank balances, notes receivable, accounts receivable, other receivables,debt investments, and long-term receivables and etc..
Financial assets that meet the following conditions are subsequently measured at fair valuethrough other comprehensive income ("FVTOCI"): the financial asset is held within a businessmodel whose objective is achieved by both collecting contractual cash flows and selling; and thecontractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding. Financial assets atFVTOCI are presented as other debt investments. Other debt investments due within one year(inclusive) since the balance sheet date are presented as non-current assets due within one year.Other debt investments due within one year (inclusive) upon acquisition are presented as othercurrent assets.
On initial recognition, the Group may irrevocably designate non-trading equity instruments, otherthan contingent consideration recognized through business combination not involving enterprisesunder common control, as financial assets at FVTOCI on an individual basis. Such financialassets at FVTOCI are presented as other equity instrument.
A financial asset is classified as held for trading if one of the following conditions is satisfied:
? It has been acquired principally for the purpose of selling in the near term; or? On initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and there is objective evidence that the Group has a recent actualpattern of short-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and effective as a
hedging instrument.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
Financial assets measured at fair value through profit or loss ("FVTPL") include those classifiedas financial assets at FVTPL and those designated as financial assets at FVTPL.
? Any financial assets that does not qualify for amortized cost measurement or measurement at
FVTOCI or designated at FVTOCI are classified into financial assets at FVTPL.? Upon initial recognition, in order to eliminate or significantly reduce accounting mismatchand qualified hybrid financial instrument combines financial asset with embedded derivatives,the Group will irrevocably designated it as financial liabilities at FVTPL.
Financial assets at FVTPL assets other than derivative financial assets are presented as "held-for-trading financial assets". Such financial assets at FVTPL which may fall due more than one year(or without fixed term) since the balance sheet date and will be held more than one year arepresented as other non-current financial assets.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost are subsequently measured at amortized cost usingthe effective interest method. Gain or loss arising from impairment or derecognition is recognizedin profit or loss.
For financial assets measured at amortized cost, the Group recognizes interest income usingeffective interest method. The Group calculates and recognizes interest income through bookvalue of financial assets multiplying effective interest, except for the following circumstances:
? For purchased or originated credit-impaired financial assets with credit impairment, the
Group calculates and recognizes its interest income based on amortized cost of thefinancial asset and the effective interest through credit adjustment since initial recognition.
10.1.2 Financial assets at FVTOCI
Impairment losses or gains related to financial assets at FVTOCI, interest income measured usingeffective interest method and exchange gains or losses are recognized into profit or loss for thecurrent period, except for the above circumstances, changes in fair value of the financial assets areincluded in other comprehensive income. Amounts charged to profit or loss for every period equalto the amount charged to profit or loss as it is measured at amortized costs. When the financialasset is derecognized, the cumulative gains or losses previously recognized in othercomprehensive income shall be removed from other comprehensive income and recognized inprofit or loss.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
10.1.2 Financial assets at FVTOC I - continued
Changes in fair value of non-trading equity instrument investments designated as financial assetsat FVTOCI are recognized in other comprehensive income, and the cumulative gains or lossespreviously recognized in other comprehensive income allocated to the part derecognized aretransferred and included in retained earnings. During the period in which the Group holds thenon-trading equity instrument, revenue from dividends is recognized in profit or loss for thecurrent period when (1) the Group has established the right of collecting dividends; (2) it isprobable that the associated economic benefits will flow to the Group; and (3) the amount ofdividends can be measured reliably.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are subsequently measured at fair value. Gain or loss arising fromchanges in fair values and dividends and interests related to the financial assets are recognized inprofit or loss.
10.2 Impairment of financial instruments
The Group makes accounting treatment on impairment and recognizes loss allowance forexpected credit losses ("ECL") on financial assets measured at amortized cost, financial assetsclassified as at FVTOCI, lease receivables, contract assets, loan commitments that are notfinancial liabilities at FVTPL, financial liabilities not measured at FVTPL, financial guaranteecontracts arising from transfer of financial assets which does not satisfy derecognition criteria orcontinuing involvement of transferred financial assets.
The Group makes a loss allowance against amount of lifetime ECL of the contract assets, notesreceivable and accounts receivable arising from transactions adopting the Revenue Standard aswell as lease receivables arising from transactions adopting ASBE No. 21- Leases.
For other financial instrument, other than purchased or originated credit-impaired financial assets,the Group assesses changes in credit risks of the relevant financial asset since initial recognition ateach balance sheet date. If the credit loss of the financial instrument has been significantlyincreased since initial recognition, the Group will make a loss allowance at an amount of expectedcredit loss during the whole life; if not, the Group will make a loss allowance for the financialinstrument at an amount in the future 12-month expected credit losses. Except for the financialassets classified as at FVTOCI, increase in or reversal of credit loss allowance is included in profitor loss as loss/gain on impairment. For the financial assets classified as at FVTOCI, the Grouprecognizes credit loss allowance in other comprehensive income and recognizes the loss/gain onimpairment in profit or loss, while the Group does not decrease the carrying amount of suchfinancial assets in the balance sheet.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
The Group has makes a loss allowance against amount of expected credit losses during the wholelife in the prior accounting period. However, at the balance sheet date, the credit risk on afinancial instrument has not increased significantly since initial recognition; the Group willmeasure the loss allowance for that financial instrument at an amount in the future 12-monthexpected credit losses. Reversed amount of loss allowance arising from such circumstances shallbe included in profit or loss as impairment gains.
10.2.1 Significant increase of credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Groupcompares the risk of a default occurring on the financial instrument as at the reporting date withthe risk of a default occurring on the financial instrument as at the date of initial recognition. Forloan commitments, the date that the Group becomes a party to the irrevocable commitment isconsidered to be the date of initial recognition in the application of criteria related to the financialinstrument for impairment.
In particular, the following information is taken into account when assessing whether credit riskhas increased significantly:
(1) Significant changes in internal price indicators of credit risk as a result of a change in
credit risk;
(2) Other changes in the rates or terms of an existing financial instrument that would be
significantly different if the instrument was newly originated or issued at the balance sheetdate (such as more stringent covenants, increased amounts of collateral or guarantees, orhigher income coverage).
(3) Significant changes in external market indicators of credit risk for a particular financial
instrument or similar financial instruments with the same expected life. These indicatorsinclude the credit spread, the credit swap prices for the borrower, the length of time or theextent to which the fair value of a financial asset has been less than its amortized cost andother market information related to the borrower, such as changes in the price of aborrower’s debt and equity instruments.
(4) Significant changes in actual or expected external credit rating for the financial
instruments;
(5) An actual or expected internal credit rating downgrade for the borrower
(6) Adverse changes in business, financial or economic conditions that are expected to cause a
significant change in the debtor’s ability to meet its debt obligations;
(7) An actual or expected significant change in the operating results of the debtor;
(8) Significant increases in credit risk on other financial instruments of the same borrower;
(9) Significant adverse change in the regulatory, economic, or technological environment of
the debtor;
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.1 Significant increase of credit risk - continued
(10) Significant changes in the value of the collateral supporting the obligation or in the quality
of third-party guarantees or credit enhancements, which are expected to reduce thedebtor’s economic incentive to make scheduled contractual payments or to otherwise havean effect on the probability of a default occurring.
(11) Significant changes in circumstances expected to reduce the debtor’s economic incentive
to make scheduled contractual payments;
(12) Expected changes in the loan documentation including an expected breach of contract that
may lead to covenant waivers or amendments, interest payment holidays, interest ratestep-ups, requiring additional collateral or guarantees, or other changes to the contractualframework of the financial instrument;
(13) Significant changes in the expected performance and behavior of the debtor;
(14) Changes in the entity’s credit management approach in relation to the financial instrument;
(15) Past due of contract payment.
The Group assumes that the credit risk on a financial instrument has not increased significantlysince initial recognition if the financial instrument is determined to have lower credit risk at thebalance sheet date. A financial instrument is determined to have lower credit risk if: i) it has alower risk of default, ii) the borrower has a strong capacity to meet its contractual cash flowobligations in the near term and iii) adverse changes in economic and business conditions in thelonger term may, but will not necessarily, reduce the ability of the borrower to fulfil itscontractual cash flow obligations.
10.2.2 Credit-impaired financial assets
When the Group expected occurrence of one or more events which may cause adverse impact onfuture cash flows of a financial asset, the financial asset will become a credit-impaired financialassets. Objective evidence that a financial asset is impaired includes but not limited to thefollowing observable events:
(1) Significant financial difficulty of the issuer or debtor;
(2) A breach of contract by the debtor, such as a default or delinquency in interest or principal
payments;
(3) The creditor, for economic or legal reasons relating to the debtor’s financial difficulty,
granting a concession to the debtor;
(4) It becoming probable that the debtor will enter bankruptcy or other financial
reorganizations;
(5) The disappearance of an active market for that financial asset because of financial
difficulties of the issuer or the debtor;
(6) Purchase or originate a financial asset with a large scale of discount, which reflects facts
of credit loss incurred.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.3 Determination of expected credit loss
Lease receivables are assessed for ECL individually by the Group. In addition, the Group usesprovision matrix to calculate ECL for notes receivable, accounts receivable, other receivables,contract assets, debt investments and other debt investments based on a portfolio basis. The Groupclassifies financial instruments into different groups based on common risk characteristics.Common credit risk characteristics include credit risk rating, the date of initial recognition,remaining contractual maturity, industry of borrower and geographical location of the borroweretc.
The Group determines expected credit losses of relevant financial instruments using the followingmethods:
? For a financial asset, a credit loss is the present value of the difference between thecontractual cash flows that are due to the Group under the contract and the cash flows thatthe Group expects to receive;? For a lease receivable, a credit loss is the present value of the difference between thecontractual cash flows that are due to the Group under the contract and the cash flows thatthe Group expects to receive;? For undrawn loan commitments (refer to Note III, 10.4.1.3 for the detail of accountingpolicies), the ECL is the present value of the difference between the contractual cash flowsthat are due to the Group if the holder of the loan commitments draws down the loan, andthe cash flows that the Group expects to receive if the loan is drawn down. The Group'sestimation of the ECL for loan commitments is consistent with its expection of the loancommitments drawn down.? For a financial guarantee contract (refer to Note III, 10.4.1.3 for the detail of accounting
policies ), the expected losses is the present value of the expected payments to reimburse theholder for a credit loss that it incurs less any amounts that the Group expects to receive fromthe holder, the debtor or any other party..? For a financial asset with credit-impaired at the balance sheet date, but not purchased or
originated credit-impaired, a credit losses is the difference between the asset’s grosscarrying amount and the present value of estimated future cash flows discounted at thefinancial asset’s original effective interest rate.
The factors reflected in methods of measurement of expected credit losses include an unbiasedand probability-weighted amount that is determined by evaluating a range of possible outcomes;time value of money; reasonable and supportable information about past events, currentconditions and forecasts on future economic status at balance sheet date without unnecessaryadditional costs or efforts.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.4 Write-down of financial assets
When the Group will no longer reasonably expect that the contractual cash flows of financialassets can be collected in aggregate or in part, the Group will directly write down the carryingamount of the financial asset, which constitutes derecognition of relevant financial assets.
10.3 Transfer of financial assets
The Group will derecognize a financial asset if one of the following conditions is satisfied: (i) thecontractual rights to the cash flows from the financial asset expire; (ii) the financial asset has beentransferred and substantially all the risks and rewards of ownership of the financial asset istransferred to the transferee; or (iii) although the financial asset has been transferred, the Groupneither transfers nor retains substantially all the risks and rewards of ownership of the financialasset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of afinancial asset, and it retains control of the financial asset, the Group will recognize the financialasset to the extent of its continuing involvement in the transferred financial asset and recognize anassociated liability. The Group will measure relevant liabilities as follows:
? For transferred financial assets carried at amortized cost, the carrying amount of relevant
liabilities is the carrying amount of financial assets transferred with continuing involvementless amortized cost of the Group's retained rights (if the Group retains relevant rights upontransfer of financial assets) with addition of amortized cost of obligations assumed by theGroup (if the Group assumes relevant obligations upon transfer of financial assets). Relevantliabilities are not designated as financial liabilities at fair value through profit or loss.
? For transferred financial assets carried at fair value, the carrying amount of relevant
financial liabilities is the carrying amount of financial assets transferred with continuinginvolvement less fair value of the Group's retained rights (if the Group retains relevant rightsupon transfer of financial assets) with addition of fair value of obligations assumed by theGroup (if the Group assumes relevant obligations upon transfer of financial assets).Accordingly, the fair value of relevant rights and obligations shall be measured on anindividual basis.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.3 Transfer of financial assets - continued
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, thedifference between (1) the carrying amount of the financial asset transferred and (2) the sum ofthe consideration received from the transfer and accumulated changes in fair value initiallyrecorded in other comprehensive income is recognized in profit or loss. For the non-tradableequity instrument designated as financial assets at FVTOCI, cumulative gain or loss that has beenrecognized in other comprehensive income should be removed from other comprehensive incomebut be recognized in retained earnings.
For a part of transfer of a financial asset that satisfies the derecognition criteria, the carryingamount of the transferred financial asset is allocated between the part that is derecognized and thepart that is continuously involved, based on the respective fair values of those parts on transferdate. The difference between (1) the sum of the consideration received for the part derecognizedand any cumulative gain or loss allocated to the part derecognized which has been previouslyrecognized in other comprehensive income; and (2) the carrying amount allocated to the partderecognized on derecognition date; is recognized in profit or loss. For the non-tradable equityinstrument designated as financial assets at FVTOCI, cumulative gain or loss that has beenrecognized in other comprehensive income should be removed from other comprehensive incomebut be recognized in retained earnings.
For a transfer of a financial asset in its entirety that does not satisfy the derecognition criteria, theGroup will continuously recognize the transferred financial asset in its entirety. Considerationsreceived due to transfer of assets should be recognized as a liability upon receipts.
10.4 Classification of financial liabilities equity instruments
Financial instruments issued by the Group are classified into financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic naturenot only its legal form, together with the definition of financial liability and equity instruments oninitial recognition.
10.4.1 Classification, recognition and measurement of financial liabilities
On initial recognition, financial liabilities are classified into financial liabilities at FVTPL andother financial liabilities.
10.4.1.1 Financial liabilities at FVTPL
Financial liabilities at FVTPL consist of financial liabilities held for trading (including derivativesclassified as financial liabilities) and those designated as at FVTPL. Except for derivativefinancial liabilities presented separately, the financial liabilities at FVTPL are presented as held-for-trading financial liabilities.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.1 Classification, recognition and measurement of financial liabilities- continued
10.4.1.1 Financial liabilities at FVTPL- continued
A financial liability is classified as held for trading if one of the following conditions is satisfied:
? It has been acquired principally for the purpose of repurchasing in the near term; or? On initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and there is objective evidence that the Group has a recent actualpattern of short-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and effective as a
hedging instrument.
A financial liability may be designated as at FVTPL on initial recognition when one of thefollowing conditions is satisfied: (i) Such designation eliminates or significantly reducesaccounting mismatch; or (ii) The Group makes management and performance evaluation on a fairvalue basis, in accordance with the Group's formally documented risk management or investmentstrategy, and reports to key management personnel on that basis. (iii) The qualified hybridfinancial instrument combines financial asset with embedded derivatives.
Transaction financial liabilities are subsequently measured at fair value. Any gains or lossesarising from changes in the fair value and any dividend or interest expenses paid on the financialliabilities are recognized in profit or loss.
The amount of change in the fair value of the financial liability that is attributable to changes inthe credit risk of that liability shall be presented in other comprehensive income, other changes infair values are included in profit or loss for the current period. Upon the derecognition of suchliability, the accumulated amount of change in fair value that is attributable to changes in thecredit risk of that liability, which is recognized in other comprehensive income, is transferred toretained earnings. Any dividend or interest income earned on the financial liabilities arerecognized in profit or loss. If the impact of the change in credit risk of such financial liabilitydealt with in the above way would create or enlarge an accounting mismatch in profit or loss, theGroup shall present all gains or losses on that liability (including the effects of changes in thecredit risk of that liability) in profit or loss.
Financial liabilities are measured at FVTPL when the financial liabilities is arising fromcontingent consideration recognized by the Group as an acquirer in a business combination notinvolving enterprises under common control.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.1 Classification, recognition and measurement of financial liabilities- continued
10.4.1.2 Other financial liabilities
Except for financial liabilities, financial guarantee contracts and loan commitments arising fromtransfer of financial assets that do not meet the derecognition criteria or those arising fromcontinuing involvement in the transferred financial assets, other financial liabilities aresubsequently measured at amortized cost, with gain or loss arising from derecognition oramortization recognized in profit or loss.
That the Group and its counterparty modify or renegotiate the contract does not result inderecognition of a financial liability subsequently measured at amortized cost but result inchanges in contractual cash flows, the Group will recalculate the carrying amount of the financialliability, with relevant gain or loss recognized in profit or loss. The Group will determine carryingamount of the financial liability based on the present value of renegotiated or modified contractualcash flows discounted at the financial liability's original effective interest rate. For all costs orexpenses arising from modification or renegotiation of the contract, the Group will adjust themodified carrying amount of the financial liability and make amortization during the remainingterm of the modified financial liability.
10.4.1.3 Financial guarantee contracts and loan commitments
A financial guarantee contract is a contract that requires the issuer to make specified payments toreimburse the holder of the contract for a loss it incurs because a specified debtor fails to makepayment when due in accordance with the original or modified terms of a debt instrument.Subsequent to initial recognition, financial guarantee contracts that are not designated as financialliabilities at fair value through profit or loss or financial liabilities arising from transfer offinancial assets that do not meet the derecognition criteria or those arising from continuinginvolvement in the transferred financial assets, and loan commitments to provide a loan at abelow-market interest rate, which are not designated at fair value through profit or loss, aremeasured at the higher of: (1) amount of loss provision; and (2) the amount initially recognizedless cumulative amortization amount determined based on the revenue standard.
10.4.2 Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation(or part of it) is discharged. An agreement between the Group (the debtor) and the creditor toreplace the original financial liability with a new financial liability with substantially differentterms is accounted for as an extinguishment of the original financial liability and the recognitionof a new financial liability.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.2 Derecognition of financial liabilities - continued
When the Group derecognizes a financial liability or a part of it, it recognizes the differencebetween the carrying amount of the financial liability (or part of the financial liability)derecognized and the consideration paid (including any non-cash assets transferred or newfinancial liabilities assumed) in profit or loss.
10.4.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Groupafter deducting all of its liabilities. Equity instruments issued (including refinanced), repurchased,sold and cancelled by the Group are recognized as changes of equity. Changes of fair value ofequity instruments is not recognized by the Group. Transaction costs related to equity transactionsare deducted from equity.
The Group recognizes the distribution to holders of the equity instruments as distribution ofprofits, dividends paid do not affect total amount of shareholders' equity.
10.5 Derivatives and embedded derivatives
Derivatives include forward exchange contracts, currency swaps, interest rate swaps and foreignexchange options, etc. Derivatives are initially measured at fair value at the date when thederivative contracts are entered into and are subsequently re-measured at fair value.
Derivatives embedded in hybrid contracts with a financial asset host are not separated by theGroup. The hybrid contract shall apply to the relevant accounting standards regarding theclassification of financial assets as a whole.
Derivatives embedded in hybrid contracts with hosts that are not financial assets are separated andtreated as separate derivatives by the Group when they meet the following conditions:
(1) the economic characteristics and risks of the embedded derivative are not closely related tothose of the host contract;
(2) a separate instrument with the same terms as the embedded derivative would meet thedefinition of a derivative.
(3) the hybrid contracts are not measured at fair value through profit or loss.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.5 Derivatives and embedded derivatives - continued
For the embedded derivative separated from the host contracts, the Group accounts for the hostcontracts in the hybrid contracts with applicable accounting standards. When the embeddedderivatives whose fair value cannot be measured reliably by the Group according to the terms andconditions of the embedded derivatives, the fair value of such derivatives are measured at thedifference between the fair value of the hybrid contracts and the fair value of the host contracts.By adopting the above method, if the embedded derivative cannot be measured on a stand-alonebasis at the time when acquired or at subsequent balance sheet dates, the hybrid instrument isdesignated as financial instruments at fair value through profit or loss as a whole.
10.6 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized financialassets and financial liabilities, and intends either to settle on a net basis, or to realize the financialasset and settle the financial liability simultaneously, a financial asset and a financial liability shallbe offset and the net amount is presented in the balance sheet. Except for the above circumstances,financial assets and financial liabilities shall be presented separately in the balance sheet and shallnot be offset.
10.7 Reclassification of financial instruments
When the Group changes the business model to manage the financial assets, the financial assetsaffected will be reclassified and no financial liabilities will be reclassified.
The financial assets are reclassified by the Group and are accounted for prospectively since thedate of reclassification (i.e. the first date of the initial reporting period after the business model ofwhich the financial assets are reclassified by the enterprise is changed).
Where a financial asset at amortised cost is reclassified as a financial assets at fair value throughprofit or loss ("FVTPL") by the Group, such financial asset is measured at fair value at the date ofreclassification and the difference between the original carrying amount and the fair value isrecognized in profit or loss for the period.
Where a financial asset at amortised cost is reclassified as a financial asset at fair value throughother comprehensive income("FVTOCI") by the Group, such financial asset is measured at thefair value at the date of reclassification, and the difference between the original amount and thefair value is recognized in other comprehensive income.
Where a financial asset at FVTOCI is reclassified as a financial asset at amortised cost by theGroup, the accumulated gains or losses previously recognized in other comprehensive income aretransferred out and the fair value is adjusted as the fair value at the date of reclassification. Theadjusted fair value is recognized as the new carrying amount, as if the financial asset had beenmeasured at amortised cost.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.7 Reclassification of financial instruments- continued
Where a financial asset at FVTOCI is reclassified as a financial asset at FVTPL by the Group,such financial asset continues to be accounted for at fair value. At the same time, the accumulatedgains or losses previously recognized in other comprehensive income are transferred to profit orloss for the period.
Where a financial asset at FVTPL is reclassified as a financial asset at amortised cost by theGroup, the fair value at the date of reclassification is recognized as the new account balance.
Where a financial asset at FVTPL is reclassified as a financial asset at FVTOCI by the Group,such financial asset continues to be measured at fair value.
Where a financial asset at FVTPL is reclassified, the effective interest rate is determined on thebasis of the fair value of the financial asset at the date of reclassification.
11. Accounts receivable
The Group makes internal credit ratings on customers and determines expected losses rate ofnotes receivable, accounts receivable and other receivables. Basis for determining ratings and theexpected losses rates are as follows:
| Internal credit rating | Basis for determining portfolio | Average expected loss rate (%) |
| A | Customers can make repayments within credit term and have good credit records based on historical experience. The probability of unpayment of due amount are extremely low in the foreseeable future. | 0.00-0.10 |
| B | The customer may have overdue payment based on historical experience but they can make repayments. | 0.10-0.30 |
| C | The evidences indicate that the overdue credit risks of the customer are significantly increased and there is probability of unpayment and default. | 0.30-50.00 |
| D | The evidences indicate that the accounts receivable are impaired or the customer has significant financial difficulty. The amounts cannot be recovered in the foreseeable future. | 50.00-100.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
12. Accounts receivable financing
Notes receivable classified to hedging instruments for the purpose of hedging, should be listed asaccounts receivable financing within one year (including one year). If the term above one year, itshould be listed as other investment on bonds. Related accounting policies refer to Note 10.
13. Inventories
13.1 Categories of inventories
Inventories include raw materials, merchandise and others. Inventories are initially measured atcost. Cost of inventories comprises all costs of purchase, costs of conversion and otherexpenditures incurred in bringing the inventories to their present location and condition.
13.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
13.3 Basis for determining net realizable value of inventories and provision methods for declinein value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. Ifthe cost of inventories is higher than the net realizable value, a provision for decline in value ofinventories is made. Net realizable value is the estimated selling price in the ordinary course ofbusiness less the estimated costs of completion, the estimated costs necessary to make the sale andrelevant taxes. Net realizable value is determined on the basis of clear evidence obtained, aftertaking into consideration the purposes of inventories being held and effect of post balance sheetevents.
Provision for decline in value of other inventories is made based on the excess of cost ofinventory over its net realizable value on an item-by-item basis.
After the provision for decline in value of inventories is made, if the circumstances thatpreviously caused inventories to be written down below cost no longer exist so that the netrealizable value of inventories is higher than their cost, the original provision for decline in valueis reversed and the reversal is included in profit or loss for the period.
13.4 Inventory count system
The perpetual inventory system is maintained for stock system.
13.5 Amortization methods for low cost and short-lived consumable items and packagingmaterials
Packaging materials and low cost and short-lived consumable items are amortized using theimmediate write-off method.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
14. Contract assets
14.1 Recognition and criteria of contract assets
A contract asset represents the Group's right to consideration in exchange for goods or servicesthat the Group has transferred to a customer, and such right depends on factors other than thepassage of time. The Group's unconditional right (only the passage of time is required) toconsideration from the customer is separately presented as " accounts receivable".
14.2 Determination and accounting treatments of expected credit losses ("ECL") for contractassets
Refer to Note 3, 10.2 " Impairment of financial instruments" for determination and accountingtreatments of expected credit losses for contract assets.
15. Assets held for sale
When the Group withdraw the book value of certain assets or disposal group mainly throughdisposal instead of continual application, the assets should be classified as held-for-sale assets.
Assets or disposal group classified as held-for-sale assets should meat following conditions: (1)The current status is available for immediate distribution according to similar transactions of thiscategory of assets or disposal group; (2) The transaction is likely to occur, i.e. the Group has madeits resolution over the distribution arrangements and acquired purchase commitment. Also thedistribution is going to be fulfilled within a year.
If the holding company loses control of its subsidiary for reasons like subsidiary disposal, inregardless of whether the holding company still keeps part of equity investment, once theproposed investment disposal meets the requirements of being classified as available for saleassets in the holding company's individual statement, all assets and liabilities of the subsidiaryshould be classified as held-for-sale in consolidated financial statement.
The group's non-current assets and disposal group are measured at the lower of book value andthe net value of fair value less costs to sell. Once the book value is higher than the net value offair value less costs to sell, the book value should be adjusted to the net value and the excessshould be recognized as impairment losses and provision for held-for-sale assets impairmentshould be made. A gain and a reverse in the previous provision for held-for-sale assets impairmentcan be recognized for any increase in fair value less costs to sell at subsequent balance sheet dates,to the extent that it is not in excess of the cumulative impairment loss that has been recognized.Asset impairment losses recognized before such assets are classified as held for sale will not bereversed.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
15. Assets held for sale - continued
Non-current held-for-sale assets is not subject to depreciation and amortization. The creditorinterest and other expenses of disposal group classified as held-for-sale asset should still berecognized.
Once the associate or joint venture equity investment is completely or partly classified as held-for-sale assets, the classified part of the investment is not subject to equity method measurement.
If an asset or a disposal group has been classified as held for sale but the recognition criteria fornon-current assets held for sale are no longer met, the Group shall cease to classify the asset ordisposal group as held for sale. It shall be measured at the lower of (1) the carrying amount beforethe asset or disposal group was classified as held for sale, adjusted for any depreciation,amortisation or impairment that would have been recognised had the asset or disposal group notbeen classified as held for sale; and (2) the recoverable amount at the date of the decision not tosell.
For equity investments in associates or joint ventures that are classified as held for sale but therecognition for non-current assets held for sale are no longer met, such investments are accountedfor retrospectively using the equity method from the date when they classified as held for sale.The financial statements for the held-for-sale period are adjusted accordingly.
16. Long-term equity investments
16.1 Basis for determining joint control and significant influence over investee
Control is archived when the Group has the power over the investee and has rights to variablereturns from its involvement with the investee; and has the ability to use its power to affect itsreturns. Joint control is the contractually agreed sharing of control over an economic activity, andexists only when the strategic financial and operating policy decisions relating to the activityrequire the unanimous consent of the parties sharing control. Significant influence is the power toparticipate in the financial and operating policy decisions of the investee but is not control or jointcontrol over those policies. When determining whether an investing enterprise is able to exercisecontrol or significant influence over an investee, the effect of potential voting rights of theinvestee (for example, warrants and convertible debts) held by the investing enterprises or otherparties that are currently exercisable or convertible shall be considered.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
16. Long-term equity investments - continued
16.2 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprisesunder common control, the investment cost of the long-term equity investment is the attributableshare of the carrying amount of the shareholders' equity of the acquiree at the date of combination.The difference between the initial investment cost and the carrying amount of cash paid, non-cashassets transferred and liabilities assumed shall be adjusted to capital reserve. If the balance ofcapital reserve is not sufficient, any excess shall be adjusted to retained earnings. If theconsideration of the combination is satisfied by the issue of equity securities, the initialinvestment cost of the long-term equity investment shall be the share of party being absorbed ofthe owners' equity in the consolidated financial statements of the ultimate controlling party at thedate of combination. The aggregate face value of the shares issued shall be accounted for as sharecapital. The difference between the initial investment cost and the aggregate face value of theshares issued shall be adjusted to capital reserve. If the balance of capital reserve is not sufficient,any excess shall be adjusted to retained earnings. Where equity interests in an acquiree areacquired in stages through multiple transactions ultimately constituting a business combinationinvolving entities under common control, the acquirer shall determine if these transactions areconsidered to be a "package deal". If yes, these transactions are accounted for as a singletransaction where control is obtained. If no, the initial investment cost of the long-term equityinvestment is the share of book value of owners' equity of the acquired entity in the ultimatecontrolling party's consolidated financial statements at the date of combination. The differencebetween the initial investment cost and the sum of carrying amount of equity investmentspreviously held in the acquiree and the new investment cost is adjusted to capital reserve. If thebalance of capital reserve is not sufficient to absorb the difference, any excess is adjusted toretained earnings. Other comprehensive income recognized for the previously held equityinvestments by accounting treatment of equity method or available-for-sale financial assets is notsubject to accounting treatment temporarily.
For a long-term equity investment acquired through business combination not involvingenterprises under common control, the investment cost of the long-term equity investmentacquired is the cost of acquisition.
The absorbing party's or purchaser's intermediary expenses (fees in respect of auditing, legalservices, valuation and consultancy services, etc.) and other administrative expenses attributableto the business combination are recognized in profit or loss in the periods when they are incurred.
The long-term equity investment acquired otherwise than through a business combination isinitially measured at its cost. When the entity is able to exercise significant influence or jointcontrol (but not control) over an investee due to additional investment, the cost of long-termequity investments is the sum of the fair value of previously-held equity investments determinedin accordance with Accounting Standard for Business Enterprises No.22 - Financial Instruments:
Recognition and Measurement (ASBE No. 22) and the additional investment cost.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES – continued
16. Long-term equity investments - continued
16.3 Subsequent measurement and recognition of profit or loss
16.3.1 A long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in theCompany's separate financial statements. A subsidiary is an investee that is controlled by theGroup.
Under the cost method, a long-term equity investment is measured at initial investment cost.Additional or withdrawing investment would affect the cost of long-term equity investment.Investment income is recognized in the period in accordance with the attributable share of cashdividends or profit distributions declared by the investee.
16.3.2 A long-term equity investment accounted for using the equity method
Except associate and joint venture investment completely or partly classified as available for sale,and The Group accounts for investment in associates and joint ventures using the equity method.An associate is an entity over which the Group has significant influence and a joint venture is ajoint arrangement whereby the parties that have joint control of the arrangement have rights to thenet assets of the joint arrangement.
Under the equity method, where the initial investment cost of a long-term equity investmentexceeds the Group's share of the fair value of the investee's identifiable net assets at the time ofacquisition, no adjustment is made to the initial investment cost. Where the initial investment costis less than the Group's share of the fair value of the investee's identifiable net assets at the time ofacquisition, the difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the other comprehensive income andnet profit or loss of the investee for the period as other comprehensive income and investmentincome or loss respectively for the period, and the carrying amount of the long-term equityinvestment is adjusted accordingly. The carrying amount of the investment shall be reduced by theportion of any profit distributions or cash dividends declared by the investee that is distributed tothe investing enterprise. The investing enterprise shall adjust the carrying amount of the long-termequity investment for other changes in owners' equity of the investee (other than net profits orlosses, other comprehensive income and profit distribution), and include the correspondingadjustment in capital reserve. The Group recognizes its share of the investee's net profit or lossbased on the fair value of the investee's individually identifiable assets at the acquisition date aftermaking appropriate adjustments. Where the accounting policies and accounting period adopted bythe investee are different from those of the investing enterprise, the investing enterprise shalladjust the financial statements of the investee to conform to its own accounting policies andaccounting period, and recognize other comprehensive income and investment income or lossesbased on the adjusted financial statements. Unrealized profits or losses resulting from the Group'stransactions and assets invested or sold that are not recognized as business transactions with itsassociates and joint ventures are recognized as investment income or loss to the extent that thoseattributable to the Group's, equity interest are eliminated. However, unrealized losses resultingfrom the Group's transactions with its associates and joint ventures which represent impairmentlosses on the transferred assets are not eliminated.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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16. Long-term equity investments - continued
16.3 Subsequent measurement and recognition of profit or loss - continued
16.3.2 A long-term equity investment accounted for using the equity method - continued
The Group discontinues recognizing its share of net losses of the investee after the carryingamount of the long-term equity investment together with any long-term interests that in substanceform part of its net investment in the investee are reduced to zero. Except that if the Group hasincurred obligations to assume additional losses, a provision is recognized according to theobligation expected, and recorded in the investment loss for the period. Where net profits aresubsequently made by the investee, the Group resumes recognizing its share of those profits onlyafter its share of the profits exceeds the share of losses previously not recognized.
16.4 Disposal of long-term equity investments
On disposal of a long-term equity investment, the difference between the proceeds actuallyreceived and receivable and the carrying amount is recognized in profit or loss for the period.For long-term equity investments accounted for using the equity method, if the remaining interestafter disposal is still accounted for using the equity method, other comprehensive incomepreviously recognized for using the equity method is accounted for on the same basis as wouldhave been required if the investee had directly disposed of related assets or liabilities, andtransferred to profit or loss for the period on a pro rata basis; owners' equity recognized due tochanges in other owners' equity of the investee (other than net profit or loss, other comprehensiveincome and profit distribution) is transferred to profit or loss for the period on a pro rata basis.
For long-term equity investments accounted for using the cost method, if the remaining interestafter disposal is still accounted for using the cost method, other comprehensive income previouslyrecognized for using the equity method or in accordance with the standards for the recognitionand measurement of financial instruments before obtaining the control over the investee, isaccounted for on the same basis as would have been required if the investee had directly disposedof related assets or liabilities, and transferred to profit or loss for the period on a pro rata basis;changes in other owners' equity in the investee's net assets recognized under the equity method(other than net profit or loss, other comprehensive income and profit distribution) is transferred toprofit or loss for the period on a pro rata basis.
17. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both. It includesa land use right that is leased out; a land use right held for transfer upon capital appreciation; anda building that is leased out.
An investment property is measured initially at cost. Subsequent expenditures incurred for suchinvestment property are included in the cost of the investment property if it is probable thateconomic benefits associated with an investment property will flow to the Group and thesubsequent expenditures can be measured reliably, other subsequent expenditures are recognizedin profit or loss in the period in which they are incurred.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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17. Investment properties - continued
The Group uses the cost model for subsequent measurement of investment property, and adopts adepreciation or amortization policy for the investment property which is consistent with that forbuildings or land use rights.
An investment property is derecognized upon disposal or when the investment property ispermanently withdraw from use and no future economic benefits are expected from the disposal.
When an investment property is sold, transferred, retired or damaged, the Group recognizes theamount of any proceeds on disposal net of the carrying amount and related taxes in profit or lossfor the period.
18. Fixed assets
18.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods orservices, for rental to others, or for administrative purposes, and have useful lives of more thanone accounting year. A fixed asset is recognized only when it is probable that economic benefitsassociated with the asset will flow to the Group and the cost of the asset can be measured reliably.Fixed assets are initially measured at cost. Upon being restructured into a stock company, thefixed assets initially contributed by the state-owned shareholders are recognized based on thevaluation amounts confirmed by the state-owned assets administration department.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset andif it is probable that economic benefits associated with the asset will flow to the Group and thesubsequent expenditures can be measured reliably. Meanwhile the carrying amount of thereplaced part is derecognized. Other subsequent expenditures are recognized in profit or loss inthe period in which they are incurred.
18.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method starting from themonth subsequent to the one in which it is ready for intended use. The useful life, estimated netresidual value rate and annual depreciation rate of each category of fixed assets are as follows:
| Category | Estimated useful lives | Estimated residual value (%) | Annual depreciation rate (%) |
| Port and terminal facilities | 5-50 years | 5.00 | 1.90-19.00 |
| Buildings | 10-50 years | 5.00 | 1.90-9.50 |
| Machinery and equipment, furniture and fixture and other equipment | 3-20 years | 5.00 | 4.75-31.67 |
| Motor vehicles and cargo ships | 5-25 years | 5.00 | 3.80-19.00 |
Estimated net residual value of a fixed asset is the estimated amount that the Group wouldcurrently obtain from disposal of the asset, after deducting the estimated costs of disposal, if theasset were already of the age and in the condition expected at the end of its useful life.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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18. Fixed assets - continued
18.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated fromits use or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retiredor damaged, the amount of any proceeds on disposal of the asset net of the carrying amount andrelated taxes is recognized in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and thedepreciation method applied at least once at each financial year-end, and account for any changeas a change in an accounting estimate.
19. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include variousconstruction expenditures during the construction period, borrowing costs capitalized before it isready for intended use and other relevant costs. Construction in progress is not depreciated.Construction in progress is transferred to a fixed asset when it is ready for intended use.
20. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifyingasset are capitalized when expenditures for such asset and borrowing costs are incurred andactivities relating to the acquisition, construction or production of the asset that are necessary toprepare the asset for its intended use or sale have commenced. Capitalization of borrowing costsceases when the qualifying asset being acquired, constructed or produced becomes ready for itsintended use or sale. Capitalization of borrowing costs is suspended during periods in which theacquisition, construction or production of a qualifying asset is interrupted abnormally and whenthe interruption is for a continuous period of more than 3 months. Capitalization is suspendeduntil the acquisition, construction or production of the asset is resumed. Other borrowing costs arerecognized as an expense in the period in which they are incurred.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to becapitalized is the actual interest expense incurred on that borrowing for the period less any bankinterest earned from depositing the borrowed funds before being used on the asset or anyinvestment income on the temporary investment of those funds. Where funds are borrowed undergeneral-purpose borrowings, the Group determines the amount of interest to be capitalized onsuch borrowings by applying a capitalization rate to the weighted average of the excess ofcumulative expenditures on the asset over the amounts of specific-purpose borrowings. Thecapitalization rate is the weighted average of the interest rates applicable to the general-purposeborrowings. During the capitalization period, exchange differences related to a specific-purposeborrowing denominated in foreign currency are all capitalized. Exchange differences inconnection with general-purpose borrowings are recognized in profit or loss in the period inwhich they are incurred.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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21. Intangible assets
21.1 Valuation method and useful life of intangible assets
An intangible asset is measured initially at cost. Upon being restructured into a stock company,the intangible assets initially contributed by the state-owned shareholders are recognized based onthe valuation amounts confirmed by the state-owned assets administration department. When anintangible asset with a finite useful life is available for use, its original cost is amortized over itsestimated useful life. Intangible assets with uncertain service life will not be amortize. Theterminal operating rights are amortized using the output method, that is, amortized throughperiods according to the ratio of the estimated minimum guaranteed throughput to the estimatedminimum guaranteed total throughput during the operation period. When the estimated minimumguaranteed throughput cannot be measured reliably,the straight-line method will be used foramortization. An intangible asset with uncertain useful life will not be amortized. Theamortization method, useful life and estimated net residual value of various intangible assets areas follows:
| Category | Amortization Method | Useful Life (year) | Residual value (%) |
| Land use rights | Straight-line method | 40-50 | - |
| Port operating right | Units-of-production/Straight-line method | 30-35 | - |
| Others | Straight-line method | 5-50 | - |
For an intangible asset with a finite useful life, the Group reviews the useful life and amortizationmethod at the end of the year, and makes adjustments when necessary.
21.2 Research and development expenditure
Expenditure during the research phase is recognised as an expense in the period in which it isincurred.
Expenditure during the development phase that meets all of the following conditions at the sametime is recognised as intangible asset. Expenditure during development phase that does not meetthe following conditions is recognised in profit or loss for the period.
(1) it is technically feasible to complete the intangible asset so that it will be available for use orsale;
(2) the Group has the intention to complete the intangible asset and use or sell it;
(3) the Group can demonstrate the ways in which the intangible asset will generate economicbenefits, including the evidence of the existence of a market for the output of the intangibleasset or the intangible asset itself or, if it is to be used internally, the usefulness of theintangible asset;
(4) the availability of adequate technical, financial and other resources to complete the
development and the ability to use or sell the intangible asset; and
(5) the expenditure attributable to the intangible asset during its development phase can bereliably measured.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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21. Intangible assets - continued
21.2 Research and development expenditure - continued
If the expenditures cannot be distinguished between the research phase and development phase,the Group recognises all of them in profit or loss for the period.
The costs of intangible assets generated by the internal research only include the total expenditureincurred for the period from the time point of capitalization to the intangible assets are ready forintended use. For the identical intangible asset, the expenditures recorded as expenses before theyqualify for capitalization during the development process are not adjusted.
22. Impairment of long-term assets
The Group assesses at the balance sheet date whether there is any indication that the long-termequity investments, investment properties measured at cost method, construction in progress,fixed assets, right-of-use assets and intangible assets with a finite useful life may be impaired. Ifthere is any indication that such assets may be impaired, recoverable amounts are estimated forsuch assets. Intangible assets with indefinite useful life and intangible assets not yet available foruse are tested for impairment annually, irrespective of whether there is any indication that theassets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate therecoverable amount of an individual asset, the recoverable amount of the asset group to which theasset belongs will be estimated. The recoverable amount of an asset is the higher of its fair valueless costs of disposal and the present value of the future cash flows expected to be derived fromthe asset.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficitis accounted for as an impairment loss and is recognized in profit or loss.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairmenttesting, goodwill is considered together with the related assets groups, i.e., goodwill is reasonablyallocated to the related assets groups or each of assets groups expected to benefit from thesynergies of the combination. In testing an assets group with goodwill for impairment, animpairment loss is recognized if the recoverable amount of the assets group or sets of assetsgroups (including goodwill) is less than its carrying amount. The impairment loss is firstlyallocated to reduce the carrying amount of any goodwill allocated to such assets group or sets ofassets groups, and then to the other assets of the group pro-rata basis on the basis of the carryingamount of each asset (other than goodwill) in the group.
Once the impairment loss of above-mentioned asset is recognized, it shall not be reversed in anysubsequent period.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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23. Long-term prepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortized overthe current and subsequent periods (together of more than one year). Long-term prepaid expensesare amortized using the straight-line method over the expected periods in which benefits arederived.
24. Contract liabilities
A contract liability represents the Group’s obligation to transfer goods or services to a customerfor which the Group has received consideration (or an amount of consideration is due) from thecustomer. A contract asset and a contract liability relating to the same contract are accounted forand presented on a net basis.
25. Employee benefits
25.1 The accounting treatment of short-term employee benefits
Actually occurred short-term employee benefits are recognized as liabilities, with a correspondingcharge to the profit or loss for the period or in the costs of relevant assets in the accounting periodin which employees provide services to the Group. Staff welfare expenses incurred by the Groupare recognized in profit or loss for the period or the costs of relevant assets based on the actuallyoccurred amounts when it actually occurred. Non-monetary staff welfare expenses are measuredat fair value.
Payment made by the Group of social security contributions for employees such as premiums orcontributions on medical insurance, work injury insurance and maternity insurance, etc. andpayments of housing funds, as well as union running costs and employee education costs providedin accordance with relevant requirements, are calculated according to prescribed bases andpercentages in determining the amount of employee benefits and recognized as relevant liabilities,with a corresponding charge to the profit or loss for the period or the costs of relevant assets in theaccounting period in which employees provide services.
25.2 The accounting treatment of post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
During the accounting period of rendering service to employees of the Group, amount whichshould be paid according to defined contribution plans is recognized as liabilities, and recognizedin profit or loss or related costs of assets.
During the accounting period of rendering service to employees of the Group, amount whichshould be paid according to defined contribution plans is recognized as liabilities, and recognizedin profit or loss or related costs of assets.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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25. Employee benefits - continued
25.2 The accounting treatment of post-employment benefits - continued
For defined benefit plans, the Group calculates defined benefit plan obligations using projectedunit credit method and the service cost resulting from employee service in the current period isrecorded in profit or loss or the cost of related assets. Defined benefit costs are categorized asfollows:
? Service cost (including current service cost, past service cost, as well as gains and losses onsettlements);? Net interest of net liabilities or assets of defined benefit plan (including interest income ofplanned assets, interest expenses of defined benefit plan liabilities and effect of asset ceiling);and? Changes arising from remeasurement of net liabilities or net assets of defined benefit plans.
Service costs and net interest of net liabilities and net assets of defined benefit plans arerecognized in profit or loss of current period or costs of related assets. Remeasurement of the netdefined benefit liability (asset) (including actuarial gains and losses, the return on plan assets,excluding amounts included in net interest on the net defined benefit liability (asset), and anychange in the effect of the asset ceiling, excluding amounts included in net interest on the netdefined benefit liability (asset)) are recognized in other comprehensive income.
25.3 The accounting treatment of termination benefits
When the Group provides termination benefits to employees, employee benefit liabilities arerecognized for termination benefits, with a corresponding charge to the profit or loss for theperiod at the earlier of: (1) when the Group cannot unilaterally withdraw the offer of terminationbenefits because of the termination plan or a curtailment proposal; and (2) when the Grouprecognizes costs or expenses related to restructuring that involves the payment of terminationbenefits.
26. Provisions
Provisions are recognized when the Group has a present obligation related with contingencies, itis probable that the Group will be required to settle that obligation causing an outflow ofeconomic benefits, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settlethe present obligation at balance sheet date, taking into account the risks, uncertainties and timevalue of money surrounding the obligation. When a provision is measured using the cash flowsestimated to settle the present obligation, its carrying amount is the present value of those cashflows where the effect of the time value of money is material.
When some or all of the economic benefits required to settle a provision are expected to berecovered from a third party, a receivable is recognized as an asset if it is virtually certain thatreimbursement will be received and the amount of the receivable should not exceed the carryingamount of provisions.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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27. Revenue
The Group's revenue is mainly from the following business types:
(1) Port service;
(2) Bonded logistics service
(3) Other business such as property development and investment.
The Group recognizes revenue based on the transaction price allocated to such performanceobligation when a performance obligation is satisfied, i.e. when "control" of the goods or servicesunderlying the particular performance obligation is transferred to the customer. A performanceobligation represents the commitment that a good and service that is distinct shall be transferredby the Group to the customer. Transaction price refers to the consideration that the Group isexpected to charge due to the transfer of goods or services to the customer, but it does not includepayments received on behalf of third parties and amounts that the Group expects to return to thecustomer.
If one of the following criteria is met and it is a performance obligation performed over time, theGroup recognizes the revenue within a certain period of time according to the progress of theperformance: (1) the customer simultaneously receives and consumes the benefits provided by theGroup's performance as the Group performs; (2) the customer is able to control the goods underconstruction in the course of the Group's performance; (3) the goods produced by the Groupduring the performance of the contract are irreplaceable and the Group has the right to charge forthe accumulated part of the contract that has been performed so far during the whole contractperiod. Otherwise, the Group recognizes revenue at a certain point in time when "control" of thegoods or services is transferred to the customer.
The Group adopts output method, i.e. the value of goods or services transferred to customers todetermine the appropriate progress of performance. Where the progress cannot be determinedreasonably, the revenue is recognized based on the amount of cost that is expected to becompensated based on the cost already incurred, until the progress of performance is reasonablydetermined.
If the contract includes two or more performance obligations, at contract inception, the Groupallocates the transaction price to single performance obligation according to relative proportion ofthe stand-alone selling prices of the goods or services promised by single performance obligation.However, where there is conclusive evidence that the contract discount or variable considerationis only related to one or more (not all) performance obligations in the contract, the Group shallallocate the contract discount or variable consideration to relevant one or more performanceobligations. The stand-alone selling price is the price at which the Group would sell a promisedgood or service separately to a customer. If a stand-alone selling price is not directly observable,the Group shall consider all information that is reasonably available to the Group and maximizethe use of observable inputs and apply estimates methods consistently in similar circumstances.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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27. Revenue - continued
For contracts that contain variable consideration(e.g. sales discount), the Group estimates theamount of consideration using either the expected value or the most likely amount.
The transaction price that includes variable consideration is only to the extent that it is highlyprobable that such an inclusion will not result in a significant revenue reversal in the future whenthe uncertainty is subsequently resolved.
At the end of each reporting period, the Group reevaluates the variable consideration included inthe transaction price.
For non-cash consideration from customer, the Group recognizes the transaction price based onthe fair value of the non-cash consideration. Where the fair value of the non-cash considerationcannot be reasonably estimated, the Group recognizes the transaction price indirectly by referenceto the stand-alone price of the promised goods or services promised transferred to the customer.
If the contract includes significant financing component, the Group determines the transactionprice based on the amount payable under the assumption that the customer pays that amountpayable in cash when "control" of the goods or services is obtained by the customer. Thedifference between the transaction price and the contract consideration shall be amortized withinthe contract period using effective interest rate. If the Group expects, at contract inception, that theperiod between when the Group transfers a promised good or service to a customer and when thecustomer pays for that good or service will be one year or less, the Group needs not to considerthe significant financing component.
The Group determines whether it is a principal or an agent at the time of the transaction based onwhether it owns the "control" of the goods or services before the transfer of such goods orservices to the customer. The Group is a principal if it controls the specified good or servicebefore that good or service is transferred to a customer, and the revenue shall be recognized basedon the total consideration received or receivable; otherwise, the Group is an agent, and therevenue shall be recognized based on the amount of commission or handling fee that is expectedto be charged, and such amount is determined based on the net amount of the total considerationreceived or receivable after deducting the prices payable to other related parties or according tothe established commission amount or proportion.
Where payment is received in advance, the advance payment received shall be recorded as aliability and recognized as revenue when the relevant performance obligation is satisfied.
The above amount will be recognized as revenue proportionately in accordance with the model ofcontractual rights exercised by the customer if (1) the Group's advance payment does not need tobe returned, (2) the customer may waive all or part of its contractual rights, and (3) the Groupexpects to be entitled to the amount related to the contractual rights waived by the customer.Otherwise, the balance of the liabilities is recognized as revenue by the Group only when thepossibility of the customer requesting the satisfaction of the remaining performance obligations isextremely remote.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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28. Contract costs
28.1 Costs to fulfill a contract
If the costs incurred in fulfilling a contract are not within the scope of other standard other thanthe revenue standard, the Group shall recognized an asset from the costs incurred to fulfill acontract only if those costs meet all of the following criteria: (1) the costs relate directly to acontract or to an anticipated contract that the Group can specifically identify; (2) the costsgenerate or enhance resources of the entity that will be used in satisfying performance obligationsin the future; and (3) the costs are expected to be recovered. The asset mentioned above shall beamortized on a basis that is consistent with the transfer to the customer of the goods or services towhich the asset relates and recognized in profit or loss for the period.
28.2 Impairment of contract costs
In determination of impairment losses of assets related to contract costs, firstly impairment lossesof other assets related to the contract recognized based on other relevant accounting standards;secondly, the Group shall recognized an impairment loss to the extent that the carrying amount ofan asset exceeds: (1) the remaining amount of consideration that the Group expects to receive inexchange for the goods or services to which the asset relates; (2) the estimated costs that relate toproviding those goods or services.
The Group shall, after the impairment has been provided, recognized in profit or loss a reversal ofsome or all of an impairment loss previously recognized when the impairment conditions nolonger exist or have improved. The increased carrying amount of the asset shall not exceed thecarrying amount that would have been determined if no impairment loss had been recognizedpreviously.
29. Types and accounting methods of government grants
Government grants are transfer of monetary assets or non-monetary assets from the government tothe Group at no consideration. A government grant is recognized only when the Group cancomply with the conditions attached to the grant and the Group will receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amountreceived or receivable.
29.1 The accounting treatment of government grants related to assets
Government grants, such as special funds for modern logistics project and special funds forenergy-saving and emission reduction of transportation, are government grants related to assets asthey are all related to the construction and use of assets.
A government grant related to an asset is recognized as deferred income, and evenly amortized toprofit or loss over the useful life of the related asset.
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29. Types and accounting methods of government grants - continued
29.2 The accounting treatment of government grants related to income
The Group's government grant, such as financial support funds of business tax converted to VATand reward for energy saving, if used to compensate the related expenses or losses to be incurredin subsequent periods, is determined to be government grant relating to income.
A government grant relating to income, if used to compensate the related cost, expenses or lossesto be incurred in subsequent periods, is determined as deferred income and recognized in profit orloss over the periods in which the related costs are recognized; if used to compensate the relatedcost, expenses or losses already incurred, is recognized immediately in profit or loss for the period.
A government grant relating to the Group's daily activities, is recognized in other income in linewith the nature of economic transaction. A government grant not relating to the Group's dailyactivities, is recognized in non-operating income.
30. Deferred tax assets/ deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
30.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periodsare measured at the amount expected to be paid (or recovered) according to the requirements oftax laws.
30.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and theirtax base, or between the nil carrying amount of those items that are not recognized as assets orliabilities and their tax base that can be determined according to tax laws, deferred tax assets andliabilities are recognized using the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferredtax assets for deductible temporary differences are recognized to the extent that it is probable thattaxable profits will be available against which the deductible temporary differences can be utilized.However, for temporary differences associated with the initial recognition of goodwill and theinitial recognition of an asset or liability arising from a transaction (not a business combination)that affects neither the accounting profit nor taxable profits (or deductible losses) at the time oftransaction, no deferred tax asset or liability is recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets arerecognized to the extent that it is probable that future taxable profits will be available againstwhich the deductible losses and tax credits can be utilized.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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30. Deferred tax assets/ deferred tax liabilities - continued
30.2 Deferred tax assets and deferred tax liabilities- continued
Deferred tax liabilities are recognized for taxable temporary differences associated withinvestments in subsidiaries and associates, and interests in joint ventures, except where the Groupis able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising fromdeductible temporary differences associated with such investments and interests are onlyrecognized to the extent that it is probable that there will be taxable profits against which to utilizethe benefits of the temporary differences and they are expected to reverse in the foreseeable future.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax ratesapplicable in the period in which the asset is realized or the liability is settled according to taxlaws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, exceptwhen they arise from transactions or events that are directly recognized in other comprehensiveincome or in equity, in which case they are recognized in other comprehensive income or inequity, and when they arise from business combinations, in which case they adjust the carryingamount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if itis no longer probable that sufficient taxable profits will be available in the future to allow thebenefit of deferred tax assets to be utilized. Any such reduction in amount is reversed when itbecomes probable that sufficient taxable profits will be available.
30.3 Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basisor to realize the assets and settle the liabilities simultaneously, current tax assets and current taxliabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, anddeferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxationauthority on either the same taxable entity or different taxable entities which intend either to settlecurrent tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously,in each future period in which significant amounts of deferred tax assets or liabilities are expectedto be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a netbasis.
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31. Leases
Lease is a contract that conveys the right to use an asset for a period of time in exchange forconsideration.
For contracts that are signed or modified after the date of initial application, atinception/modification of the contracts, the Group assesses whether the contract is, or contains, alease. Unless the terms and conditions of the contract are changed, the Group does not reassesswhether a contract is, or contains, a lease.
31.1 The Group as Lessee
31.1.1 Separating components of a lease
If a contract contains a lease component and one or more non-lease components, the Groupallocates the consideration in the contract to each lease component on the basis of the relativestand-alone price of the lease components and the aggregate stand-alone price of the non-leasecomponents.
31.1.2 Right-of-use assets
Except for short-term leases and leases for which the underlying asset is of low value, at thecommencement date of the lease, the Group recognises a right-of-use assets. The commencementdate of the lease is the date on which a lessor makes an underlying asset available for use by theGroup. The Group measures the right-of-use assets at cost. The cost of the right-of-use assetscomprises:
? the amount of the initial measurement of the lease liabilities;? any lease payments made at or before the commencement date, less any lease incentives;? any initial direct costs incurred by the Group;? an estimate of costs to be incurred by the lessee in dismantling and removing the underlying
asset, restoring the site on which it is located or restoring the underlying asset to the conditionrequired by the terms and conditions of the lease.
Right-of-use assets are depreciated by the Group in accordance with the ASBE No.4 Fixed Assets.If the Group is reasonably certain, that the lease will transfer ownership of the underlying asset tothe Group by the end of the lease term, the right-of-use assets is depreciated from thecommencement date to the end of the useful life of the underlying asset. Otherwise, the right-of-use assets is depreciated from the commencement date to the earlier of the end of the useful life ofthe right-of-use assets or the end of the lease term.
The Group applies ASBE No. 8 Impairment of Assets, to determine whether the right-of-useassets are impaired and to account for any impairment loss identified.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.1 The Group as Lessee - continued
31.1.3 Lease liabilities
Except for short-term leases and leases for which the underlying asset is of low value, at thecommencement date of the lease, the Group measures the lease liabilities at the present value ofthe lease payments that are not paid at that date. If the interest rate implicit in the lease cannot bereadily determined, the lessee shall use the lessee's incremental borrowing rate.
The lease payments comprise the following payments by the Group for the right to use theunderlying asset during the lease term:
(1) fixed payments (including in-substance fixed payments), less any lease incentives;
(2) variable lease payments that depend on an index or a rate;
(3) the exercise price of a purchase option if the Group is reasonably certain to exercise that
option;
(4) payments for terminating the lease, if the lease term reflects the Group exercising an
option to terminate the lease;
(5) amounts expected to be payable by the Group under residual value guarantees.
Variable lease payments that depend on an index or a rate, are initially measured using the indexor rate as at the commencement date. Variable lease payments not included in the measurement ofthe lease liabilities, are recognised in profit or loss, or in the cost of relevant assets, in the periodof those payments.
Interest on the lease liabilities in each period during the lease term is calculated by a constantperiodic rate of interest on the remaining balance of the lease liabilities.
After the commencement date, if one of the following occurs, the lease liability is remeasured bythe Group with the adjustment to the right-of-use asset. If the carrying amount of the right-of-useasset is reduced to zero and there is further reduction in the measurement of the lease liability, theremaining remeasurement should be recognized in profit or loss.
? there is a change in the lease term, or in the assessment of an option to purchase theunderlying asset, the Group remeasures the lease liabilities, on the basis of the revised leaseterm and the revised discount rate;? there is a change in the amounts expected to be payable under a residual value guarantee, orin future lease payments resulting from a change in an index or a rate used to determinethose payments, the Group remeasures the lease liabilities, on the basis of the revised leasepayments and the unchanged discount rate, unless the change in the lease payments resultsfrom a change in floating interest rates, in which case a revised discount is applied to thepresent value.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 61 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.1 The Group as Lessee - continued
31.1.4 Short-term leases and leases for which the underlying asset is of low value
The Group elects not to recognise right-of-use assets or lease liabilities for short-term leases andleases for which the underlying asset is of low value, i.e. port and terminal facilities, buildings,machinery and equipment, furniture and fixture and other equipment, motor vehicles and cargoships, other short-term leases and leases for which the underlying asset is of low value. A shorts-term lease is a lease that, at the commencement date, has a lease term of 12 months or less. Alease for which the underlying asset is of low value is that, the value of the underlying asset is lowwhen it is new. For short-term leases and leases for which the underlying asset is of low value, theGroup recognises the lease payments associated with those leases as an expense or cost ofrelevant asset on a straight-line basis over the lease term.
31.1.5 Lease modifications
A lease modification should be accounted for as a separate lease if both of the following apply:
? the modification increases the scope of the lease by adding the right to use one or moreunderlying assets; and? the consideration for the lease increases by an amount commensurate with the stand-aloneprice for the increase in scope and any appropriate adjustments to that stand-alone priceaccording to the circumstances of the particular contract
For a lease medication that is not accounted for as a separate lease, at the effective date of thelease modification, the Group should allocate the consideration in the modified contract,determine the lease term of the modified lease and remeasure the lease liability by discounting therevised payments using a revised discount rate.
For lease modifications that decrease the scope of the lease or narrow the term of the lease, theGroup should decrease the carrying amount of the right-of-use asset with any gain or loss relatingto the partial or full termination of the lease should be recognized in profit or loss. Forremeasurement of lease liabilities from all other lease modifications, a corresponding adjustmentis made to the carrying amount of the right-of-use asset.
31.2 The Group as Lessor
31.2.1 Separating components of a lease
For a contract that contains lease and non-lease components, the Group shall allocate theconsideration in the contract in accordance with the allocation of the transaction price under therevenue standard, on the basis of the relative stand-alone price of the lease components and theaggregate stand-alone price of the non-lease components.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.2 The Group as Lessor - continued
31.2.2 Classification of leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all therisks and rewards of ownership. All other leases are classified as operating leases.
31.2.2.1 The Group as lessor under operating leases
The Group recognises lease payments from operating leases as income on a straight-line basis.The Group capitalises initial direct costs incurred in obtaining an operating lease and recognisesthose costs as an expense over the lease term on the same basis as the lease income.
Variable lease receipts relating to an operating lease not included in the lease receipts arerecognized in profit or loss by the Group when incurred.
31.2.2.2 The Group as lessor under finance leases
At the commencement date, the Group recognizes a finance lease receivable at the amount equalto the net investment in the lease with finance lease assets derecognized. The net investment in thelease is the sum of any unguaranteed residual value and lease payments receivable from thecommencement date, discounted at the interest rate implicit in the lease.
The amount of the lease payments receivable refers to the amount that the Group should collectfrom the lessee for the purpose of transferring the leased assets during the lease term, including:
? fixed payments (including in-substance fixed payments) paid by the lessee, less any lease
incentives;? variable lease payments that depend on an index or a rate;? the exercise price of a purchase option, provided that it is reasonably determined that the
lessee will exercise the option;? the lessee exercises the amount to be paid for the termination of the lease option, provided
that the lease term reflects the lessee's exercise of the option to terminate the lease;? the residual value of the guarantee provided by the lessee, the party concerned with the
lessee and the independent third party with the financial ability to perform the guarantee
obligation.
Variable payments receivable not included in the net investment in the lease are recognized inprofit or loss when they arise.
Interest income for each period over the lease term is recognized by the Group at the fixedperiodic rate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 63 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.2 The Group as Lessor - continued
31.2.3 Subleases
As a lessor of the sublease, the Group accounts for the original lease contract and the subleasecontract as two separate contracts. The Group classifies the subleases based on the right-of-useassets generating from the original lease rather than the underlying assets of the original lease.
31.2.4 Lease modifications
The Group accounts for a modification to an operating lease as a new lease from the effective dateof the modification, considering any lease advances or receivables relating to the original lease asthe lease receipts for the new lease.
The Group should account for a modification to a finance lease as a separate lease if both:
? the modification increases the scope of the lease by adding the right to use one or moreunderlying assets; and? The consideration for the lease increases by an amount commensurate with the stand-aloneprice for the increase in scope with any appropriate adjustment to that stand-alone price
For a modification to a finance lease that is not accounted for as a separate lease, the Groupshould account for the modification as follows:
? if the lease would have been classified as an operating lease had the modification been effectat the inception date, the Group should account for the lease modification as a new leasefrom the effective date of the modification, and measure the carrying amount of theunderlying asset as the net investment in the lease before the effective date of the leasemodification.? If the lease would have been classified as an operating lease if the modification had been ineffect at the inception date, the Group should apply the requirements of contractmodification and renegotiation under the ASBE No. 22 Financial Instruments: Recognitionand Measurement.
31.2.5 Sale and leaseback transactions
31.2.5.1 The Group as the seller-lessee
The Group applies the requirements of the revenue standard to determine whether the transfer ofan asset is accounted for as a sale of that asset. If the transfer of an asset does not constitute a sale,the Group should continue to recognize the transferred assets and should recognize a financialliability equal to the transfer proceeds applying ASBE No. 22 Financial Instruments: Recognitionand Measurement. If the transfer of an asset is a sale, the Group should measure the right-of-useasset arising from the leaseback at the proportion of the previous carrying amount of the asset thatrelates to the right of use, and recognize only the amount of any gain or loss that relates to therights transferred to the lessor.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 64 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
32. Exchange of Non-Monetary Assets
Where a non-monetary assets transaction satisfies the following conditions at the same time, itshould calculated based on fair value. The transaction is commercial in nature and the fair valueof the assets received or surrendered can be measured reliably. The fair value of the assetssurrendered and relevant payable taxes shall be regarded as the transaction cost of the assetsreceived. For assets surrendered, the difference between the fair value and the carrying value ofthe asset surrendered shall be recorded into the profit or loss of the current period. If any exactevidence showing that the fair value of the assets received is more reliable, the cost of assetsreceived and surrendered shall be calculated as different way. For assets received, its cost shall becalculated based on fair value of assets received and relevant payable taxes. For the assetssurrendered, the difference between the fair value of the assets received and the carrying value ofthe asset surrendered shall be recorded into the profit or loss of the current period.
Where a non-monetary assets transaction does not meet the conditions as prescribed, the carryingvalue and relevant payable taxes of the assets surrendered shall be the cost of the assets receivedand no profit or loss is recognized.
33. Discontinued Operation
Discontinued operation refers to the separately identifiable components that have been disposedof or classified as held for sale and meet one of the following conditions:
(1) The component represents an independent main business or a major business area;
(2) This component is a part of a related plan that intends to dispose an independent mainbusiness or a separate main operating area;
(3) This component is a subsidiary acquired exclusively for resale.
Profits or losses from discontinued operations are presented separately in the income statementfrom continuing operations. Profits and losses from operations or disposals (e.g. impairmentlosses and reversals of discontinued operations) are presented under discontinued operations. Fordiscontinued operations presented in the current period, the information previously undercontinuing operations is presented under discontinued operations by the Group in the financialstatements for the comparable accounting period.
34. Safety Production Cost
According to the Administrative Rules on Provision and Use of Enterprise Safety Production Costjointly issued by the Ministry of Finance and the State Administration of Work Safety on 14February 2012 (filed as Cai Qi [2012] No. 16), safety production cost set aside by the Group isdirectly included in the cost of relevant products or recognized in profit or loss for the period, aswell as the special reserve. When safety production cost set aside is utilized, if the costs incurredcan be categorized as expenditure, the costs incurred should be charged against the special reserve.If the costs set aside are used to build up fixed assets, the costs should be charged to constructionin progress, and reclassified to fixed assets when the safety projects are ready for intended use.Meantime, expenditures in building up fixed assets are directly charged against the special reservewith the accumulated depreciation recognized at the same amount. Depreciation will not be madein the future period on such fixed assets.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 65 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
35. Critical judgments in applying accounting policies and key assumptions anduncertainties in accounting estimates
In the application of accounting policies as set out in Note (III), the Company is required to makejudgments, estimates and assumptions about the carrying amounts of items in the financialstatements that cannot be measured accurately, due to the internal uncertainty of the operatingactivities. These judgments, estimates and assumptions are based on historical experiences of theCompany's management as well as other factors that are considered to be relevant. Actual resultsmay differ from these estimates.
The Company regularly reviews the judgments, estimates and assumptions on a going concernbasis. Changes in accounting estimates which only affect the current period should be recognizedin current period; changes which not only affect the current but the future periods should berecognized in current and future periods. At the balance sheet date, key assumptions anduncertainties that are likely to lead to significant adjustments to the book values of assets andliabilities in the future are:
Goodwill impairment
For the purpose of impairment testing, the present value of the expected future cash flows of theassets group or portfolio including goodwill shall be calculated, and such expected future cashflows shall be estimated. Meantime, a pre-tax rate shall be determined that should reflect the timevalue of money on the current market and the specific interest risks.
Recognition of deferred tax
The Group calculates and makes provision for deferred income tax liabilities according to theprofit distribution plan of subsidiaries, associates and the joint ventures subject to the related law.For retained earnings which are not allocated by the investment company, since the profits will beused to invest the company's daily operation and future development, no deferred income taxliabilities are recognized. If the actually distributed profits in the future are more or less than thoseexpected, corresponding deferred tax liabilities will be recognized or reversed at the earlier ofprofits distribution date and the declaration date, in the profit and loss of the current period.
Deferred tax assets are recognized based on the deductible temporary difference and thecorresponding tax rate, to the extent that it has become probable that future taxable profit will beavailable for the deductible temporary difference. If in the future the actual taxable income doesnot coincide with the amount currently expected, the deferred tax assets resulting will berecognized or reversed in the period when actually incurred, in profit or loss.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 66 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates
(1) New lease standard
Since 1 January 2019 (the date of initial application), the Group has adopted the AccountingStandards for Business Enterprises No 21 – Leases (hereinafter referred to as "New LeaseStandards") revised by MoF in 2018. The New Leases Standard improves the definition of leases;adds contents including identifying a lease, separating components of a lease and combination ofleases; no longer adopts the original classification of operating leases and finance leases forlessees, requiring that in cases of all leases (except short-term leases and leases of low-valueassets), a right-of-use asset and a lease liability shall be recognised at the commencement date ofthe lease; improves subsequent measurement of leases for lessors, adding accounting treatmentsfor changes in the lease term or the assessment of an option to purchase the underlying asset; andsets out relevant principles for disclosure. Moreover, additional disclosure as lessor is presented.The revised accounting policies of the Group as lessee and lessor for the recognition andmeasurement of leases are set out in Note III. 30.
For the lease contracts that already existed before the application of the standard, the Groupchooses not to reassess whether the contract was, or contained, a lease on the date of initialapplication.
The Group As lessee
In accordance with the New Leases Standard, during the initial application of the standard, theaccumulative amounts affected shall be adjusted in the opening balance (i.e. balance as at 1January 2019) of relevant items in the financial statements, with no impacts on comparativeinformation.
Except for the leases of low-value assets, for all the leases classified as operating leases before theinitial application of the standard, the Group chooses one or more of the following practicalexpedients:
? Leases for which the lease term ends within 12 months of the date of initial application areaccounted for in the same way as short-term leases;? application of a single discount rate to a portfolio of leases with similar characteristics onmeasuring lease liabilities;? The measurement of right-of-use assets excludes any initial direct costs incurred;? If the contract contains options to extend or terminate the lease, the Group determines the
lease term based on the actual usage of the options before the date of initial application andhindsight.? As an alternative to impairment tests for right-of-use assets, assessed whether a contactcontaining a lease was an onerous contract before the date of initial application inaccordance with the Accounting Standard for Business Enterprises No.13- Contingencies,and adjusted right-of-use assets based on the provision for impairment of loss recorded inthe balance sheet before the date of initial application;? Performance of accounting treatments subject to final arrangements of lease modification, if
any, before the date of initial application.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 67 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates - continued
(1) New lease standard - continued
On the date of initial application, the Group made the following adjustments in accordance withthe New Leases Standard:
? For leases that were classified as finance leases previously, the carrying amount of the right-of-use asset and the lease liability at the date of initial application shall be the carryingamount of the lease asset and lease liability immediately before that date;? For a lease previously classified as an operating lease, the Group recognised a lease liability
at the date of initial application, by measuring that lease liability at the present value of theremaining lease payments and discounted using the lessee’s incremental borrowing rate atthe date of initial application, and a right-of-use asset at the date of initial application, bymeasuring that right-of-use asset using the following method: -- Measured at carryingamounts as if the New Leases Standard were adopted since the commencement date of thelease term (the incremental borrowing rate of the lessor on the date of initial application isadopted as the discount rate).
As at 1 January 2019, the Group has recognized lease liabilities of RMB 1,231,425,355.87 andright-of-use assets of RMB 8,280,694,060.88. For the leases classified as operating leases beforethe initial application, the Group recognised the lease liabilities at the date of initial application,by measuring that lease liability at the present value of the remaining lease payments, discountedby the lessee’s incremental borrowing rate at the date of initial application. The weighted averageof these incremental borrowing rates is 5.12%.
Effects of applying the new lease standard on items in the consolidated balance sheet of the Groupat 1 January 2019 are as follows:
Unit: RMB
| Item | 31 December 2018 | Reclassification | 1 January 2019 |
| Assets: | |||
| Prepayments | 124,404,862.87 | (42,559,680.57) | 81,845,182.30 |
| Fixed assets | 22,994,190,880.43 | (5,418,649,214.54) | 17,575,541,665.89 |
| Right-of-use assets | 8,280,694,060.88 | 8,280,694,060.88 | |
| Intangible assets | 20,761,018,044.54 | (1,798,568,602.15) | 18,962,449,442.39 |
| Liabilities: | |||
| Other payables | 1,690,124,901.29 | (17,158,000.00) | 1,672,966,901.29 |
| Non-current liabilities due within one year | 2,896,971,014.97 | 138,227,164.89 | 3,035,198,179.86 |
| Lease liabilities | 1,062,562,578.13 | 1,062,562,578.13 | |
| Long-term payables | 1,294,190,118.18 | (41,329,917.95) | 1,252,860,200.23 |
| Shareholders' Equity | |||
| Unappropriated profit | 8,915,817,110.21 | (41,018,077.68) | 8,874,799,032.53 |
| Minority interests | 49,656,450,459.88 | (80,367,183.77) | 49,576,083,276.11 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 68 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates - continued
(1) New lease standard - continued
The Group as the lessee - continued
Differences between the lease liabilities recognized by the Group at 1 January 2019 and thesignificant operating lease commitments disclosed in the 2018 financial statements are as follows:
Unit: RMB
| Item | Amount |
| Non-cancellable operating leases at 31 December 2018: | 1,756,853,448.93 |
| Lease liabilities discounted using the incremental borrowing rate at the date of initial application | 879,791,487.61 |
| Add: Lease liabilities arising from lease modifications to existing leases(Note 1) | 18,799,241.72 |
| Renewal option that is reasonably certain to be exercised | 270,731,536.32 |
| Less: Recognition exemption – short-term leases | 9,862,435.57 |
| Lease liabilities relating to original leases recognised under the new lease standard | 1,159,459,830.08 |
| Add: Finance lease payable at 31 December 2018 | 71,965,525.79 |
| Lease liabilities | 1,231,425,355.87 |
| Including: Non-current liabilities due within one year | 168,862,777.74 |
| Lease liabilities | 1,062,562,578.13 |
Note1: The Group entered into new lease contracts for port and terminal facilities, machinery and
equipment, furniture and fixture and other equipment, etc. As the commencement date ofthe leases is after the initial application date, the above renewal contracts are accounted foras modifications to the original contracts under the new lease standard.
The carrying amount of the right-of-use asset at 1 January 2019 is detailed as follows:
Unit: RMB
| Item | 1/1/2019 |
| Right-of-use assets recognised under operating leases before the date of initial application | 1,063,476,244.19 |
| Assets held under finance leases that are recognised as fixed assets under the former lease standard (Note 2) | 5,418,649,214.54 |
| Land use right recognised as intangible assets under the former lease standard | 1,798,568,602.15 |
| Total | 8,280,694,060.88 |
The right-of-use asset disclosed by categories at 1 January 2019:
Unit: RMB
| Item | 1/1/2019 |
| Port and terminal facilities | 5,542,541,139.16 |
| Buildings | 164,239,617.13 |
| Machinery and equipment, furniture and fixture and other equipment | 133,936,083.43 |
| Motor vehicles and cargo ships | 10,249,287.29 |
| Others | 2,429,727,933.87 |
| Total | 8,280,694,060.88 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 69 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates - continued
(1) New lease standard - continued
The Group as the lessee - continued
Note 2: The Group recognizes the fixed assets of RMB 5,418,649,214.54 still in lease as at 1
January 2019 and classified as finance leases under the former lease standard as right-of-use assets.
(2) Exchange of Non-monetary Assets
On 9 May 2020, the Ministry of Finance ("MoF") published the Cai Kuai (2019) No. 8.( hereinafter referred to as the " New standards for Exchange of Non-monetary Assets ") whichrevised the accounting Standards for business enterprises No.7 , Exchange of Non-monetaryAssets , and should be effective on 10 June 2019. New standards for Exchange of Non-monetaryAssets firstly revised the definition of Non-monetary Assets and clarified the application scope. Itsecondly specified when to confirm a non-monetary assets transaction meets the conditions.Thirdly, It specified the different principles for non-monetary assets input and output transaction.Fourthly, It refined the accounting treatment and added disclosure requirements.
The Company has adjusted the non-monetary assets transaction during 1 January 2019 and 10June 2019 and performed retroactive modulation for the transaction before 1 January 2019.
(3) Presentation of financial statements
The Company has prepared the financial statements for the year 2019 in accordance with theNotice of the Revised Format of 2019 Financial Statements for General Business Enterprises (CaiKuai (2019) No. 6, hereinafter referred to as the "Cai Kuai No.6 Document") released by theMinistry of Finance on 30 April 2019. Cai Kuai No.6 Document revised the presenting accountsin the balance sheet and income statement and split "Notes and accounts receivable" to be "Notesreceivable" and "Accounts receivable", and "Notes and accounts payable" to be "Notes payable"and "Accounts payable". It also specified or revised the presentation of line items of "Non-currentassets due within one year", "Deferred income", "Other equity instruments", "Research anddevelopment expenses", "Interest income" under "Financial expenses", "Other income", "Gains ondisposal of assets", "Non-operating income" and "Non-operating expenses", and adjusted thepresenting location of "Impairment losses of assets", and specified the presentation of "Capitalcontribution of holders of other equity instruments". For the above changes in presenting accounts,the Company has adjusted retrospectively the comparable data for the prior year.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 70 -
IV. TAXES
1. Major taxes and tax rates
| Taxes | Tax basis | Tax rate |
| Enterprise income tax | Taxable income | 16.5%-34%(Note 1) |
| Dividend income tax | 5%、10%、25%(Note 2) | |
| Value-added Tax ("VAT") (Note 3) | Income from sale of goods (Note 4) | 9%-16% |
| Income from transportation, loading and unloading business and part of modern service industries | 6% | |
| Income from sale of real estate, property management, real estate lease, etc. | 5% | |
| Social contribution tax (Note 5) | Income | 0.65%-7.6% |
| Deed tax | Land use right and property transfer amount | 3%-5% |
| Property tax | 70% of cost of property or rental income | 1.2% or 12% |
| City maintenance and construction tax | VAT paid | 1%-7% |
| Education surtax | VAT paid | 3% |
Note 1: The Group's enterprise income tax is calculated based on the current tax rate stipulated by
local tax laws. Among them, the Company are subject to an enterprise income tax rate of25%, the subsidiaries set up in Hong Kong are subject to an enterprise income tax rate of
16.5%, the majority of subsidiaries set up in China are subject to an enterprise income taxrate of 25% and certain others are subject to the preferential tax rate for small and microenterprises of 20%, and the other overseas subsidiaries are subject to enterprise incometax rates between 28% and 34%.
Note 2: Foreign investors who receive dividends of profits from Chinese subsidiaries in 2008 and
thereafter generally shall pay withholding income tax at a rate of 10% in accordance withthe relevant provisions of the PRC enterprise income tax. For companies incorporated incertain regions (including Hong Kong and Singapore), if the companies are actual ownersholding more than 25% interest in the subsidiaries in China, they will enjoy a preferentialtax rate of 5%.
The Company obtains dividends distributed by overseas subsidiaries and should payenterprise income tax at a rate of 25% in accordance with relevant Chinese tax laws. TheCompany obtains taxable income outside of China, and the amount of income tax that hasbeen paid abroad can be offset with the current taxable amount. The credit limit is thetaxable amount calculated in accordance with the provisions of the Enterprise Income TaxLaw.
Note3: The VAT amount is the balance of the output tax less the deductible input tax, and the
output tax is calculated in accordance with the sales income and the corresponding tax ratestipulated in the relevant tax laws of China.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 71 -
(IV) TAXES - continued
1. Major taxes and tax rates - continued
Note4: Pursuant to Announcement of Customs on Relevant Policies for Deepening the Value-
Added Tax Reform issued by the Ministry of Finance, the State Taxation Administrationand the General Administration (Announcement No. 39 [2019] of the Ministry of Finance,the State Taxation Administration and the General Administration of Customs), from 1April 2019, the tax rate of 16% and 10% applicable to the VAT taxable sale or import ofgoods are adjusted to 13% and 9%, respectively.
Note5: The social contribution tax is the tax paid by the overseas subsidiaries of the Group to the
local government.
2. Tax preference
Some subsidiaries of the Group in China are recognized as high-tech enterprises or encouragedindustrial enterprises in the region and are subject to an enterprise income tax rate of 15%. TheGroup's subsidiaries outside China may be subject to enterprise income tax preference inaccordance with relevant local tax policies.
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Cash | 331,305.65 | 349,650.07 |
| RMB | 122,990.39 | 77,877.30 |
| USD | 55,429.82 | 29,909.14 |
| HKD | 28,354.40 | 57,342.60 |
| BRL | 8,872.81 | 11,402.34 |
| Others | 115,658.23 | 173,118.69 |
| Bank deposit (Note1) | 7,423,112,193.18 | 6,118,508,644.13 |
| RMB | 4,868,888,181.56 | 3,401,709,911.75 |
| USD | 1,597,545,919.28 | 1,326,034,833.97 |
| EUR | 528,103,576.51 | 359,682,134.06 |
| BRL | 310,275,686.79 | 539,493,644.44 |
| HKD | 76,041,665.91 | 432,603,546.37 |
| Others | 42,257,163.13 | 58,984,573.54 |
| Other cash and bank balances (Note 2) | 311,504,711.43 | 958,538,601.52 |
| RMB | 311,504,711.43 | 958,538,601.52 |
| Total | 7,734,948,210.26 | 7,077,396,895.72 |
| Including: The total amount of funds deposited overseas | 3,511,266,717.03 | 2,809,011,079.47 |
Note1: The bank deposits of the Group deposited overseas and restricted for remittance to China
at the end of the year totaled RMB nil (at the end of the previous year: RMB1,002,027,200.00).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 72 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Cash and bank balances - continued
Note2: The structured deposits that can be readily withdrawn on demand totaled RMB
294,519,101.06, the deposit totaled RMB 15,648,978.15, and the balance of the marginmaintenance account was RMB 1,336,632.22.
2. Notes receivable
(1) Category of notes receivable
Unit: RMB
| Category | Closing balance | Opening balance |
| Bank acceptance | 13,290,478.02 | 11,608,669.43 |
| Commercial acceptance | 24,901,772.00 | - |
| Total | 38,192,250.02 | 11,608,669.43 |
| Less: Provision for credit losses (Note) | - | - |
| Carrying amount | 38,192,250.02 | 11,608,669.43 |
Note: The Group believes that the acceptor of its bank acceptance and commercial acceptance
have high credit ratings with no significant credit risks; therefore, no provision for creditloss is made.
(2) As at 31 December 2019, there are no notes receivable pledged.
(3) As at 31 December 2019, there are no notes receivable endorsed or discounted which are not
yet due at the balance sheet date.
Unit: RMB
| Item | Amount derecognized at the end of the year | Amount recognized at the end of the year |
| Bank acceptance | 300,000.00 | - |
| Commercial acceptance | 4,541,403.43 | - |
| Total | 4,841,403.43 | - |
(4) As at 31 December 2019, there are no notes reclassified to accounts receivable due to the
drawers' inability to settle the note.
(5) The Group has no notes receivable written off in 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable
(1) Accounts receivable disclosed by aging
Unit: RMB
| Aging | Closing balance | ||
| Accounts receivable | Provision for credit loss | Proportion (%) | |
| Within 1 year | 1,397,114,366.29 | 53,712,152.09 | 3.84 |
| More than 1 year but not exceeding 2 years | 12,924,655.94 | 1,233,944.62 | 9.55 |
| More than 2 years but not exceeding 3 years | 1,304,475.96 | 499,044.67 | 38.26 |
| More than 3 years | 43,951,987.53 | 43,390,214.44 | 98.72 |
| Total | 1,455,295,485.72 | 98,835,355.82 | |
(2) Disclosure of accounts receivable by categories
Unit: RMB
| Credit rating | Expected credit loss rate (%) | Closing balance | Opening balance | ||||
| Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | ||
| A | 0.00-0.10 | 552,947,162.60 | 236,251.00 | 552,710,911.60 | 323,319,258.26 | 32,331.93 | 323,286,926.33 |
| B | 0.10-0.30 | 730,397,420.98 | 2,106,455.92 | 728,290,965.06 | 614,037,476.13 | 1,144,038.38 | 612,893,437.75 |
| C | 0.30-50.00 | 70,292,155.38 | 1,703,501.79 | 68,588,653.59 | 155,462,941.77 | 2,079,476.01 | 153,383,465.76 |
| D | 50.00-100.00 | 101,658,746.76 | 94,789,147.11 | 6,869,599.65 | 59,928,872.52 | 40,262,199.28 | 19,666,673.24 |
| Total | 1,455,295,485.72 | 98,835,355.82 | 1,356,460,129.90 | 1,152,748,548.68 | 43,518,045.60 | 1,109,230,503.08 | |
(3) Changes in provision for credit loss of accounts receivable
Unit: RMB
| Item | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total |
| At 1 January 2019 | 3,255,846.32 | 40,262,199.28 | 43,518,045.60 |
| Carrying amount of accounts receivable at 1 January 2019 | |||
| -- Transferred to credit-impaired accounts receivables | - | - | - |
| -- Reversed to not credit-impaired accounts receivable | - | - | - |
| Provision for the year | 1,667,805.36 | 52,556,214.94 | 54,224,020.30 |
| Reversal for the year | (2,049,083.92) | (296,692.00) | (2,345,775.92) |
| Transfer-out from derecognition of financial assets(including direct write-down) | - | - | - |
| Other changes | 1,171,640.95 | 2,267,424.89 | 3,439,065.84 |
| At 31 December 2019 | 4,046,208.71 | 94,789,147.11 | 98,835,355.82 |
(4) The Group has no accounts receivable written off in 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(5) The top five balances of accounts receivable classified by debtor
Unit: RMB
| Name of entity | Closing balance | Aging | Proportion of the amount to the total accounts receivable (%) | Closing balance of provision for credit loss |
| Client A | 149,146,106.27 | Within 1 year | 10.24 | 149,146.11 |
| Client B | 88,998,923.34 | Within 1 year, more than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years, more than 3 years | 6.12 | 158,176.01 |
| Client C | 65,719,439.09 | Within 1 year, more than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years | 4.52 | 65,719.44 |
| Client D | 61,650,252.50 | Within 1 year | 4.24 | 61,650.25 |
| Client E | 48,948,830.76 | Within 1 year | 3.36 | 48,948.83 |
| Total | 414,463,551.96 | 28.48 | 483,640.64 |
4. Accounts receivable financing
(1) Accounts receivable financing classification
Unit: RMB
| Items | Closing balance | Opening balance |
| Bank acceptance measured by fair value | 260,760,537.45 | - |
(2) On 31 December 2019，The Group has no pledged accounts receivable financing.
(3) On 31 December 2019，The Group has no pledged accounts receivable financing.
Unit: RMB
| Items | Closing balance | Opening balance | ||
| Derecognized | Recognized | Derecognized | Recognized | |
| Bank acceptance measured by fair value | 129,391,886.08 | - | - | - |
5. Prepayments
(1) Aging analysis of prepayment
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 50,341,341.46 | 91.47 | 124,276,781.51 | 99.90 |
| More than 1 year but not exceeding 2 years | 4,533,596.99 | 8.24 | 4,000.00 | - |
| More than 2 years but not exceeding 3 years | - | - | 81.36 | - |
| More than 3 years | 159,081.36 | 0.29 | 124,000.00 | 0.10 |
| Total | 55,034,019.81 | 100.00 | 124,404,862.87 | 100.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Prepayments - continued
(2) As at 31 December 2019, the Group has no significant prepayments aged more than one
year.
(3) The top five balances of prepayments classified by entities
Unit: RMB
| Name of entity | Relationship with the Company | 31 December 2019 | Proportion of the closing balance to the total prepayments (%) |
| Saham Assurance Togo S.A. | Non-related party | 6,039,892.02 | 10.98 |
| Chubb Seguros Brasil S.A. | Non-related party | 5,471,286.32 | 9.94 |
| Fairfax Brasil Seguros Corporativos S.A. | Non-related party | 3,038,626.22 | 5.52 |
| N-Able (Pvt) Ltd. | Non-related party | 1,824,252.09 | 3.31 |
| Allianz | Non-related party | 1,502,286.34 | 2.73 |
| Total | 17,876,342.99 | 32.48 |
6. Other receivables
6.1 Summary of other receivables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest receivable | 159,794.48 | - |
| Dividend receivable | 459,352,522.24 | 259,804,145.16 |
| Other receivables | 1,669,865,935.78 | 506,713,933.56 |
| Total | 2,129,378,252.50 | 766,518,078.72 |
6.2 Interest receivable
(1) Classification of interest receivable
Unit: RMB
| Item | Closing balance | Opening balance |
| Interest receivable from related parties | 159,954.43 | - |
| Others | - | - |
| Total | 159,954.43 | - |
| Less: Provision for credit loss | 159.95 | - |
| Book value | 159,794.48 | - |
(2) As at 31 December 2019, the Group has no significant overdue interest.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.3 Dividend receivable
(1) Presentation of dividend receivable
Unit: RMB
| Name of investee | Closing balance | Opening balance |
| China Nanshan Development (Group) Incorporation ("Nanshan Group") | 313,435,420.00 | 175,692,500.00 |
| Tin-Can Island Container Terminal Ltd | 82,625,546.31 | - |
| Qingdao Qianwan United Container Terminal Co., Lt. | 50,000,000.00 | 25,000,000.00 |
| Zhanjiang Port (Group) Co., Ltd.(" Zhanjiang Port ") | - | 9,253,682.23 |
| Shanghai International Port (Group) Co., Ltd. | - | 50,118,027.14 |
| Others | 13,751,368.26 | - |
| Total | 459,812,334.57 | 260,064,209.37 |
| Less: Provision for credit loss | 459,812.33 | 260,064.21 |
| Book value | 459,352,522.24 | 259,804,145.16 |
(2) Significant dividend receivable aged more than 1 year
Unit: RMB
| Name of investee | Closing balance | Aging | Why unrecovered | Closing balance of provision for credit losses |
| Nanshan Group | 105,415,500.00 | More than 1 year but not exceeding 2 years | Undergoing relevant formalities and expected to be recovered at the end of 2020 | 105,415.50 |
(3) Changes in provision for credit loss of dividends receivable
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 260,064.21 | - | - | 260,064.21 |
| Carrying amount of dividends receivable at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | 199,748.12 | - | - | 199,748.12 |
| Reversal for the year | - | - | - | - |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| At 31 December 2019 | 459,812.33 | - | - | 459,812.33 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.4 Other receivables
(1) Other receivables disclosed by aging
Unit: RMB
| Aging | Closing balance | ||
| Other receivables | Provision for credit loss | Proportion (%) | |
| Within 1 year | 1,300,755,524.31 | 1,978.18 | 0.00 |
| More than 1 year but not exceeding 2 years | 14,474,718.17 | 46,121.93 | 0.32 |
| More than 2 years but not exceeding 3 years | 3,556,322.62 | 56,383.37 | 1.59 |
| More than 3 years | 387,443,486.16 | 36,259,632.00 | 9.36 |
| Total | 1,706,230,051.26 | 36,364,115.48 | |
(2) Disclosure of other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Operation compensation(Note 1) | 669,121,539.36 | 176,625,857.32 |
| Land compensation (Note 2) | 521,246,000.00 | - |
| Temporary payments | 334,617,193.32 | 187,153,302.95 |
| Compensation for profit or loss on transition( Note 3) | 35,317,035.66 | - |
| Deposits | 21,309,320.77 | 39,657,003.56 |
| Others | 124,618,962.15 | 138,880,391.56 |
| Total | 1,706,230,051.26 | 542,316,555.39 |
| Less: Provision for credit loss | 36,364,115.48 | 35,602,621.83 |
| Book value | 1,669,865,935.78 | 506,713,933.56 |
Note 1: It is the compensation paid by Global Terminal Limited, the holding company of the non-
controlling shareholder of Lomé Container Terminal S.A.(hereinafter referred to as"LCT"), the non-wholly owned subsidiary of the Group for the operation of the subsidiary,refer to Note V, 59 for details.
Note 2: On 5 November 2019, Shantou China Merchants Port Group Co., Ltd.(hereinafter referred
to as " Shantou Port") entered into the Contract for the Acquisition of State-Owned LandUse Rights in Shantou with Shantou Land Reserve Center. Pursuant to the contract, theland and attached buildings of approximately 370.96 mu located in Zhuchi deepwater porton the south of Zhongshan East Road of Shantou will be returned to Shantou LandReserve Center by Shantou Port, which is amounting to RMB 1,558,032,000.00.
As at 31 December 2019, there are land and attached buildings of approximately 183.63mu pending for transfer with the carrying amount of RMB 207,904,868.22 and thecompensation of RMB 771,246,000.00. The compensation is approximatelyRMB537,635,141.78. After netting transaction expenses, the land compensation ofRMB521,246,000.00 is not yet recovered.
As at 31 December 2019, there are land and attached buildings of 187.33 mu pending fortransfer, which are presented as held for sale assets by the Group.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.4 Other receivables - continued
(2) Disclosure of other receivables by nature - continued
Note 3:As stated in Note VI.1, the Company acquired Zhanjiang Port this year. According to
relevant contract terms, Zhanjiang Infrastructure, the non-controlling shareholder ofZhanjiang Port, shall have the compensation for profit or loss on transition of RMB31,513,558.59 (calculated based on the original shareholding ratio) paid to the Companyin the form of dividends deduction; Sinotrans Guangdong Co., Ltd., the formershareholder of Zhangjiang Port, shall have the compensation for profit or loss on transitionof RMB 3,803,477.07 (calculated based on the original shareholding ratio) paid to theCompany in the form of dividends deduction.
(3) Provision for credit loss on other receivables
As part of the Group's credit risk management, the Group conducts internal credit ratings for itscustomers and determines the expected loss rate for other receivables for each rating. Suchexpected average loss rates are based on actual historical impairments and taking into account thecurrent and future economic conditions.
As at 31 December 2019, the credit risk and expected credit loss of other receivables of eachcategory of customers are presented as below:
Unit: RMB
| Credit rating | Expected credit loss rate (%) | Closing balance | Opening balance | ||||||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | ||
| A | 0.00-0.10 | 1,669,968,696.05 | - | - | 1,669,968,696.05 | - | - | - | |
| B | 0.10-0.30 | - | - | - | - | 506,719,623.66 | - | - | 506,719,623.66 |
| C | 0.30-50.00 | - | - | - | - | - | |||
| D | 50.00-100.00 | - | - | 36,261,355.21 | 36,261,355.21 | - | 35,596,931.73 | 35,596,931.73 | |
| Account balance | 1,669,968,696.05 | - | 36,261,355.21 | 1,706,230,051.26 | 506,719,623.66 | - | 35,596,931.73 | 542,316,555.39 | |
| Provision for credit loss | 102,760.27 | - | 36,261,355.21 | 36,364,115.48 | 5,690.10 | - | 35,596,931.73 | 35,602,621.83 | |
| Book value | 1,669,865,935.78 | - | - | 1,669,865,935.78 | 506,713,933.56 | - | - | 506,713,933.56 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.4 Other receivables - continued
(4) Changes in provision for credit loss of other receivables
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 5,690.10 | - | 35,596,931.73 | 35,602,621.83 |
| Carrying amount of other receivables at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | 39,665.00 | - | 576,181.80 | 615,846.80 |
| Reversal for the year | (2,497,831.58) | - | - | (2,497,831.58) |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | 2,555,236.75 | - | 88,241.68 | 2,643,478.43 |
| At 31 December 2019 | 102,760.27 | - | 36,261,355.21 | 36,364,115.48 |
(5) The Group has no other receivables written off in 2019.
(6) The top five balances of other receivables classified by debtor
Unit: RMB
| Name of entity | Nature | Closing balance | Aging | Proportion of the amount to the other receivable (%) | Provision for credit loss at the end of the year |
| Global Terminal Limited | Operation compensation | 669,121,539.36 | Within 1 year, More than 3 years | 39.22 | 17,528.45 |
| Shantou Land Reserve Center | Land compensation | 521,246,000.00 | Within 1 year | 30.55 | - |
| Shenzhen Qianhaiwan Bonded Port Authority | Temporary payments | 61,317,510.00 | More than 3 years | 3.59 | 6,131.75 |
| State-owned Assets Supervision and Administration Commission of Shantou Municipal People's Government | Temporary payments | 43,674,019.13 | More than 3 years | 2.56 | 4,367.40 |
| Shenzhen Qianhaiwan Bonded Port Area Authority | Temporary payments | 43,326,181.06 | Within 1 year | 2.54 | - |
| Total | 1,338,685,249.55 | 78.46 | 28,067.60 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories
(1) Categories of inventories
Unit: RMB
| Item | Closing balance | Opening Balance | ||||
| Carrying amount | Provision for decline in value of inventories | Book value | Carrying amount | Provision for decline in value of inventories | Book value | |
| Raw materials | 147,548,980.01 | 1,918,890.33 | 145,630,089.68 | 89,572,663.06 | 2,584,953.53 | 86,987,709.53 |
| Finished goods | 4,944,593.66 | - | 4,944,593.66 | 4,629,610.81 | - | 4,629,610.81 |
| Others | 13,405,508.74 | - | 13,405,508.74 | 16,949,949.68 | - | 16,949,949.68 |
| Total | 165,899,082.41 | 1,918,890.33 | 163,980,192.08 | 111,152,223.55 | 2,584,953.53 | 108,567,270.02 |
(2) Provision for decline in value of inventories
Unit: RMB
| Item | 1 January 2019 | Provision | Decrease | 31 December 2019 | |
| Reversal | Write-off | ||||
| Raw materials | 2,584,953.53 | - | 25,051.16 | 641,012.04 | 1,918,890.33 |
(3) As at 31 December 2019, the Group has no capitalized borrowing cost in the balance ofinventories.
8. Assets held for sale
Unit: RMB
| Item | Carrying amount at closing balance | Fair value at closing balance | Estimated disposal expenses | Schedule |
| Long-term assets held for sale | 188,404,228.34 | 786,786,000.00 | 20,815,400.00 | Removal before 30 June 2020 |
| Less: Provision for impairment of assets held for sale | - | |||
| Carrying amount | 188,404,228.34 |
Note: Refer to Note (V) 6.4(2) for details.
9. Non-current assets due within one year
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Long-term receivables due within one year | 809,702,715.78 | 25,986,030.98 |
| Less: Provision for credit loss | 809,702.72 | 33,074.22 |
| Book value | 808,893,013.06 | 25,952,956.76 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Other current assets
(1) Categories of other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Structural deposits | 2,000,298,176.18 | - |
| Including: Principal | 1,991,000,000.00 | - |
| Interest receivable | 9,298,176.18 | - |
| Prepaid taxes | 31,612,381.68 | 7,872,157.38 |
| Loans to associates of related parties | - | 1,029,478,047.00 |
| Others(Note) | 266,882,103.84 | 159,100,462.79 |
| Total | 2,298,792,661.70 | 1,196,450,667.17 |
| Less: Provision for credit loss – loans to associates of related parties | - | 1,029,478.05 |
| Book value | 2,298,792,661.70 | 1,195,421,189.12 |
Note: Refer to the VAT credits of domestic subsidiaries.
(2) Changes in provision for credit loss on other current assets
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 1,029,478.05 | - | - | 1,029,478.05 |
| Carrying amount of other current assets at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | - | - | - | - |
| Reversal for the year | (1,029,478.05) | - | - | (1,029,478.05) |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| At 31 December 2019 | - | - | - | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term receivables
(1) Details of long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance (restated) | ||||
| Account balance | Provision for credit loss | Book value | Account balance | Provision for credit loss | Book value | |
| Principal and interest of receivables for cooperation(Note ) | 1,025,631,435.87 | 1,025,631.44 | 1,024,605,804.43 | - | - | - |
| Advances to shareholders | 869,503,011.54 | 869,503.01 | 868,633,508.53 | 819,826,111.17 | 826,914.30 | 818,999,196.87 |
| Financing lease deposits | 14,500,000.00 | 14,500.00 | 14,485,500.00 | - | - | - |
| Total | 1,909,634,447.41 | 1,909,634.45 | 1,907,724,812.96 | 819,826,111.17 | 826,914.30 | 818,999,196.87 |
| Less: Long-term receivables due within 1 year | 809,702,715.78 | 809,702.72 | 808,893,013.06 | 25,986,030.98 | 33,074.22 | 25,952,956.76 |
| Long-term receivables due over 1 year | 1,099,931,731.63 | 1,099,931.73 | 1,098,831,799.90 | 793,840,080.19 | 793,840.08 | 793,046,240.11 |
Note: Refer to the land-transferring fees of cruise port project paid by Zhangjiang Port, subsidiary
of the Company on behalf of its associate Zhanjiang China Merchants Harbor CityInvestment Co., Ltd. ("China Merchants Harbor City"); and the interest is paid by ChinaMerchants Harbor City in accordance with the benchmark interest rate of the People's Bankof China for the same period.
(2) Provision for credit loss on long-term receivables
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 826,914.30 | - | - | 826,914.30 |
| Carrying amount of long-term receivables at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | 1,082,720.15 | - | - | 1,082,720.15 |
| Reversal for the year | - | - | - | - |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| At 31 December 2019 | 1,909,634.45 | - | - | 1,909,634.45 |
(3) As at 31 December 2019, there are no long-term receivables derecognized due to thetransfer of financial assets at the end of the year.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term receivables - continued
(4) There are no assets and liabilities arising from the transfer or continuing involvement of long-term receivables at 31 December 2019.
12. Long-term investments
Unit: RMB
| Investees | Accounting method | 1 January 2019 | Effect of changes in the scope of consolidation(Note 2) | Changes for the year | 31 December 2019 | Closing value of provision for impairment | |||||||
| Increase | Investment profit or loss under equity method | Reconciling items from other comprehensive income | Other equity movements | Cash dividends or profits announced of issuance | Others | Provision for impairment | Effect of translation of financial statements denominated in foreign currencies | ||||||
| I. Joint ventures | |||||||||||||
| Euro-Asia Oceangate S.à r.l. | Equity method | 2,668,860,034.32 | - | - | 71,820,758.28 | (280,527.66) | - | (147,837,530.98) | - | - | 43,205,141.32 | 2,635,767,875.28 | - |
| Port of Newcastle(Note 1) | Equity method | 2,122,353,964.75 | - | 68,471,438.86 | 31,855,255.55 | (22,634,759.93) | - | (28,606,943.76) | - | - | 28,557,291.19 | 2,199,996,246.66 | - |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Equity method | 1,512,162,331.41 | - | - | 142,602,575.17 | - | - | (150,000,000.00) | - | - | - | 1,504,764,906.58 | - |
| Ningbo Daxie Merchants International Terminals Co., Ltd. | Equity method | 815,846,742.40 | - | - | 120,498,548.83 | - | - | (82,350,000.00) | - | - | - | 853,995,291.23 | - |
| Laizhou Laiyin Port Business Co., Ltd. | Equity method | 793,557,064.58 | - | - | 42,110,853.02 | - | - | (43,605,689.02) | - | - | - | 792,062,228.58 | - |
| Zhangjiang Port(Note 2) | Equity method | 2,007,506,536.77 | - | - | 4,273,885.37 | - | - | - | (2,011,780,422.14) | - | - | - | - |
| Others | Equity method | 1,310,015,480.03 | 113,562,995.78 | 8,000,000.00 | 55,537,145.35 | 4,196,807.83 | - | (23,106,144.67) | (67,529,762.21) | - | 4,963,495.78 | 1,405,640,017.89 | - |
| Subtotal | 11,230,302,154.26 | 113,562,995.78 | 76,471,438.86 | 468,699,021.57 | (18,718,479.76) | - | (475,506,308.43) | (2,079,310,184.35) | - | 76,725,928.29 | 9,392,226,566.22 | - | |
| II. Associates | |||||||||||||
| Shanghai International Port (Group) Co., Ltd. (A Share) | Equity method | 22,187,560,070.95 | - | - | 2,425,921,985.71 | (44,041,520.45) | 305,487,960.90 | (955,194,576.56) | - | - | (1,691,053.00) | 23,918,042,867.55 | - |
| Nanshan Group | Equity method | 5,061,280,021.90 | - | - | 242,285,185.34 | (9,766,075.98) | 15,461,264.40 | (219,122,880.00) | - | - | - | 5,090,137,515.66 | - |
| Terminal Link SAS | Equity method | 3,933,259,485.26 | - | - | 280,560,341.83 | 12,048,067.43 | - | - | - | - | (13,463,319.11) | 4,212,404,575.41 | - |
| Dalian Port Co., Ltd. | Equity method | 3,203,881,342.67 | - | - | 148,347,321.32 | 5,010,696.01 | 2,082,698.58 | (51,579,984.00) | - | - | (14,481,518.80) | 3,293,260,555.78 | 661,864,517.40 |
| Shenzhen China Merchants Qianhai Industrial Development Co., Ltd.(hereinafter referred to as" China Merchants Qianhai Industrial ")(Note 3) | Equity method | 72,800,000.00 | - | 7,456,412,803.00 | (5,514,066.49) | - | - | - | (682,632,512.39) | - | - | 6,841,066,224.12 | - |
| Others | Equity method | 4,487,494,188.36 | 59,122,780.74 | 678,573,224.36 | 167,550,973.94 | (78,353,158.16) | 34,520,308.86 | (257,058,128.22) | - | - | 77,550,888.64 | 5,169,401,078.52 | - |
| Subtotal | 38,946,275,109.14 | 59,122,780.74 | 8,134,986,027.36 | 3,259,151,741.65 | (115,101,991.15) | 357,552,232.74 | (1,482,955,568.78) | (682,632,512.39) | - | 47,914,997.73 | 48,524,312,817.04 | 661,864,517.40 | |
| Total | 50,176,577,263.40 | 172,685,776.52 | 8,211,457,466.22 | 3,727,850,763.22 | (133,820,470.91) | 357,552,232.74 | (1,958,461,877.21) | (2,761,942,696.74) | - | 124,640,926.02 | 57,916,539,383.26 | 661,864,517.40 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
12. Long-term investments - continued
Note 1:The increase for the year is the stamp tax paid of AUD 14 million (equivalent to RMB
68,471,438.86) due to acquisition of Port of Newcastle Investments (Holdings) PtyLimited, Port of Newcastle Investments (Property Holdings) Pty Limited, Port ofNewcastle Investments (Holdings) Trust, Port of Newcastle Investments (PropertyHoldings) Trust (collectively referred to as" Port of Newcastle").
Note 2: Refer to Note VI, 1 for details.
Note 3: Refer to Note X,5(6) for details.
13. Other investments in equity instruments
(1) Details of Other investments in equity instruments
Unit: RMB
| Investees | Closing balance | Opening balance |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd. | 144,069,435.00 | 141,547,500.00 |
| Lac Assal Investment Holding Company Limited | - | 88,806,577.97 |
| Others | 19,491,837.00 | 17,494,236.33 |
| Total | 163,561,272.00 | 247,848,314.30 |
(2) Details of non-trading equity instruments
Unit: RMB
| Item | Dividends income recognized for the year | Accumulated gains/losses | Amounts transferred to retained earnings from other comprehensive income | Why designated as FVTOIC | Why transferred to retained earnings from other comprehensive income |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd. | 10,362,585.00 | 130,559,435.00 | - | The intention of holding is neither for sale nor profits in short-term | N/A |
| Lac Assal Investment Holding Company Limited | - | 6,127,068.35 | 6,127,068.35 | The intention of holding is neither for sale nor profits in short-term | Transformed to an associate |
| Others | 580,175.11 | 6,648,872.81 | (1,742,907.19) | The intention of holding is neither for sale nor profits in short-term | East Aden Holding Company Limited transformed to an associate |
| Total | 10,942,760.11 | 143,335,376.16 | 4,384,161.16 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
14. Other non-current financial assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets at FVTPL | 2,385,363,537.39 | 2,087,872,081.94 |
| Including: Investments in equity instruments | 2,385,363,537.39 | 2,087,872,081.94 |
| Including：Ningbo Zhoushan Port Co., Ltd.(A shares) | 1,548,914,671.20 | 1,361,414,474.58 |
| Qingdao Port International Co., Ltd. | 820,263,917.11 | 603,681,045.90 |
| Others | 16,184,949.08 | 122,776,561.46 |
15. Investment properties
(1) Investment properties measured under cost method
Unit: RMB
| Item | Land use rights | Buildings | Total |
| I.Total original carrying amount | |||
| 1. Balance at 1 January 2019 | 28,632,130.84 | 6,292,605,806.72 | 6,321,237,937.56 |
| 2.Increase in the current year | 77,095,361.98 | 5,744,045.30 | 82,839,407.28 |
| (1) Changes in consolidation scope | 77,095,361.98 | - | 77,095,361.98 |
| (2) Other increase | - | 5,744,045.30 | 5,744,045.30 |
| 3.Decrease in the current year | - | 6,611,400.00 | 6,611,400.00 |
| 4. Balance at 31 December 2019 | 105,727,492.82 | 6,291,738,452.02 | 6,397,465,944.84 |
| II.Accumulated depreciation and amortisation | |||
| 1. Balance at 1 January 2019 | 15,495,791.85 | 415,595,156.20 | 431,090,948.05 |
| 2.Increase in the current year | 15,756,720.44 | 190,883,555.47 | 206,640,275.91 |
| (1) Provision for the year | 2,134,718.70 | 188,283,452.16 | 190,418,170.86 |
| (2)Changes in consolidation scope | 13,622,001.74 | - | 13,622,001.74 |
| (3) Other increase | 2,600,103.31 | 2,600,103.31 | |
| 3. Decrease in the current year | - | 527,953.52 | 527,953.52 |
| 4. Balance at 31 December 2019 | 31,252,512.29 | 605,950,758.15 | 637,203,270.44 |
| III.Impairment provision | |||
| 1. Balance at 1 January 2019 | - | - | - |
| 2. Increase in the current year | - | - | - |
| 3. Decrease in the current year | - | - | - |
| 4. Balance at 31 December 2019 | - | - | - |
| IV. Book value | |||
| 1. At 31 December 2019 | 74,474,980.53 | 5,685,787,693.87 | 5,760,262,674.40 |
| 2. At 1 January 2019 | 13,136,338.99 | 5,877,010,650.52 | 5,890,146,989.51 |
(2) Investment properties without ownership certificates
Unit: RMB
| Item | Closing balance | Opening balance |
| Buildings and land use rights | 40,255,588.09 | 43,119,291.89 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
16. Fixed assets
16.1 Summary of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 27,519,109,906.41 | 22,994,155,151.43 |
| Disposal of fixed assets | 852,622.88 | 35,729.00 |
| Total | 27,519,962,529.29 | 22,994,190,880.43 |
16.2 Fixed assets
(1) Details of fixed assets
Unit: RMB
| Item | Port and terminal facilities | Buildings | Machinery and equipment, furniture and fixture and other equipment | Motor vehicles and cargo ships | Total |
| I. Total original carrying amount | |||||
| 1. Balance at 31 December 2018 | 21,835,237,866.98 | 1,148,966,435.46 | 10,592,156,358.16 | 1,368,265,652.07 | 34,944,626,312.67 |
| Add: Changes in accounting policy | (5,228,720,859.19) | (133,330,274.56) | (262,585,213.34) | (38,350,000.00) | (5,662,986,347.09) |
| 2. Balance at 1 January 2019 | 16,606,517,007.79 | 1,015,636,160.90 | 10,329,571,144.82 | 1,329,915,652.07 | 29,281,639,965.58 |
| 3. Increase for the year | 10,705,981,160.20 | 610,385,510.98 | 3,540,091,808.12 | 744,710,073.31 | 15,601,168,552.61 |
| (1)Purchase | 57,330,774.88 | 4,509,444.69 | 133,011,962.46 | 20,136,360.22 | 214,988,542.25 |
| (2)Transfer from development expenditure | - | - | 203,539.84 | - | 203,539.84 |
| (3)Transfer from construction in progress | 2,178,289,357.84 | 31,634,640.06 | 754,826,891.92 | 84,474,509.55 | 3,049,225,399.37 |
| (4)Transfer from other non-current asserts | - | - | 52,470,573.84 | - | 52,470,573.84 |
| (5) Effect of changes in the scope of consolidation | 8,470,361,027.48 | 574,241,426.23 | 2,599,578,840.06 | 640,099,203.54 | 12,284,280,497.31 |
| 4. Decrease for the year | 454,021,361.06 | 8,842,438.62 | 197,980,656.97 | 46,814,646.40 | 707,659,103.05 |
| (1) Disposal or retirement | 290,094,629.69 | 4,866,167.52 | 194,751,763.03 | 46,814,646.40 | 536,527,206.64 |
| (2) Transfer to investment properties | - | 3,976,271.10 | - | - | 3,976,271.10 |
| (3)Transfer to held for sale assets | 163,926,731.37 | - | 3,228,893.94 | - | 167,155,625.31 |
| 5. Effect of changes in foreign exchange | (23,249,228.12) | 2,513,708.28 | 16,395,624.54 | 11,405,782.06 | 7,065,886.76 |
| 6. Balance at 31 December 2019 | 26,835,227,578.81 | 1,619,692,941.54 | 13,688,077,920.51 | 2,039,216,861.04 | 44,182,215,301.90 |
| II. Accumulated depreciation | |||||
| 1. Balance at 31 December 2018 | 4,947,169,556.44 | 247,180,241.42 | 6,183,431,342.23 | 515,226,508.99 | 11,893,007,649.08 |
| Add: Changes in accounting policy | (79,532,929.29) | (6,255,609.41) | (130,447,881.14) | (28,100,712.71) | (244,337,132.55) |
| 2. Balance at 1 January 2019 | 4,867,636,627.15 | 240,924,632.01 | 6,052,983,461.09 | 487,125,796.28 | 11,648,670,516.53 |
| 3. Increase for the year | 3,000,601,209.37 | 162,942,162.21 | 1,905,806,501.71 | 382,573,252.12 | 5,451,923,125.41 |
| (1) Provision | 779,035,162.75 | 55,401,978.88 | 749,519,583.33 | 97,050,501.54 | 1,681,007,226.50 |
| (2) Effect of changes in the scope of consolidation | 2,221,566,046.62 | 107,540,183.33 | 1,156,286,918.38 | 285,522,750.58 | 3,770,915,898.91 |
| 4. Decrease for the year | 270,361,688.78 | 6,129,923.93 | 187,507,185.22 | 36,724,765.35 | 500,723,563.28 |
| (1) Disposal or retirement | 171,504,010.93 | 3,529,820.62 | 184,704,078.66 | 36,724,765.35 | 396,462,675.56 |
| (2) Transfer to investment properties | - | 2,600,103.31 | - | - | 2,600,103.31 |
| (3)Transfer to held for sale assets | 98,857,677.85 | - | 2,803,106.56 | - | 101,660,784.41 |
| 5. Effect of changes in foreign exchange | (2,145,974.27) | 718,710.53 | 4,889,844.24 | 2,107,868.19 | 5,570,448.69 |
| 6. Balance at 31 December 2019 | 7,595,730,173.47 | 398,455,580.82 | 7,776,172,621.82 | 835,082,151.24 | 16,605,440,527.35 |
| III. Impairment provision | |||||
| 1. Balance at 31 December 2018 | 57,419,468.96 | - | 44,043.20 | - | 57,463,512.16 |
| Add: Changes in accounting policy | - | - | - | - | - |
| 2. Balance at 1 January 2019 | 57,419,468.96 | - | 44,043.20 | - | 57,463,512.16 |
| 3. Increase for the year | - | - | 201,355.98 | - | 201,355.98 |
| (1) Effect of changes in the scope of consolidation | - | - | 201,355.98 | - | 201,355.98 |
| 4. Decrease for the year | - | - | - | - | - |
| 5. Balance at 31 December 2019 | 57,419,468.96 | - | 245,399.18 | - | 57,664,868.14 |
| IV. Book value | |||||
| 1. Book value at 31 December 2019 | 19,182,077,936.38 | 1,221,237,360.72 | 5,911,659,899.51 | 1,204,134,709.80 | 27,519,109,906.41 |
| 2. Book value at 31 December 2018 | 16,830,648,841.58 | 901,786,194.04 | 4,408,680,972.73 | 853,039,143.08 | 22,994,155,151.43 |
(2) The Group has no fixed assets that are temporarily idle as at 31 December 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Fixed assets - continued
16.2 Fixed assets - continued
(3) Fixed assets leased out under operating leases
Unit: RMB
| Item | Book value at 31 December 2019 | Book value at 31 December 2018 |
| Buildings | 312,602,129.37 | 242,804,849.53 |
| Port and terminal facilities | 12,233,139.52 | 844,843,802.95 |
| Machinery and equipment, furniture and fixture and other equipment | 63,964.98 | 139,712.96 |
| Motor vehicles and cargo ships | 17,754.72 | - |
| Total | 324,916,988.59 | 1,087,788,365.44 |
(4) Fixed assets without ownership certificates
Unit: RMB
| Item | Book value at 31 December 2019 | Book value at 31 December 2018 |
| Buildings, port and terminal facilities | 1,652,483,135.07 | 1,590,990,468.38 |
(5) Other issues
Unit: RMB
| Item | Amount | Remark |
| Cost of fixed assets fully depreciated but still in use as at 31 December 2019 | 2,791,308,996.03 | |
| Cost of fixed assets temporarily idle as at 31 December 2019 | - | |
| Fixed assets disposed and retired for the year: | ||
| Cost of fixed assets disposed and retired | 536,527,206.64 | |
| Net value of fixed assets disposed and retired | 140,064,531.08 | |
| Profit or loss on disposal or retirement of fixed assets | (17,700,058.28) |
15.3 Disposal of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Machinery and equipment, furniture and fixture and other equipment | 848,410.93 | 23,079.00 |
| Motor vehicles and cargo ships | 4,211.95 | 12,650.00 |
| Total | 852,622.88 | 35,729.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Construction in progress
17.1 Summary of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 6,318,389,715.70 | 5,499,426,090.06 |
| Materials for construction of fixed assets | 15,751,726.18 | - |
| Total | 6,334,141,441.88 | 5,499,426,090.06 |
17.2 Construction in progress
(1) Details of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Port and terminal facilities | 5,713,564,853.28 | 787,181.96 | 5,712,777,671.32 | 4,104,748,962.75 | - | 4,104,748,962.75 |
| Berths and yards | 296,933,093.52 | - | 296,933,093.52 | 1,023,331,798.30 | - | 1,023,331,798.30 |
| Infrastructure | 175,423,610.37 | - | 175,423,610.37 | 40,000,912.00 | - | 40,000,912.00 |
| Ship under construction | 80,042,167.50 | - | 80,042,167.50 | 22,985,373.73 | - | 22,985,373.73 |
| Others | 53,213,172.99 | - | 53,213,172.99 | 308,359,043.28 | - | 308,359,043.28 |
| Total | 6,319,176,897.66 | 787,181.96 | 6,318,389,715.70 | 5,499,426,090.06 | - | 5,499,426,090.06 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Construction in progress - continued
17.2 Construction in progress - continued
(2) The top ten balances of construction in progress
Unit: RMB
| Item | Budget amount | 1 January 2019 | Increase for the year | Effect of changes in scope of consolidation | Transfer to fixed assets | Other decreases for the year | Effect of changes in foreign exchange | 31 December 2019 | Proportion of accumulated construction investment in budget (%) | Construction progress (%) | Amount of accumulated capitalized interest | Including: capitalized interest for the year | Interest capitalization rate for the current year (%) | Capital source |
| Reconstruction project of container, oil terminal and tank area, HIPG | 2,822,177,972.30 | 1,384,261,784.70 | - | - | - | - | 22,794,017.60 | 1,407,055,802.30 | 49.86 | 49.86 | - | - | - | Self-funding |
| Guangao project Phase II, Shantou Port | 2,200,000,000.00 | 1,250,245,755.45 | 499,044,891.68 | - | 342,477,489.06 | 2,573,371.44 | - | 1,404,239,786.63 | 79.51 | 79.51 | 13,447,553.66 | - | - | Self-funding and loan |
| Reconstruction project of Berth 1#-4#, Haixing Wharf | 2,851,020,136.97 | 417,326,228.14 | 641,663,530.85 | - | - | - | - | 1,058,989,758.99 | 37.14 | 37.14 | 5,806,750.96 | 5,806,750.96 | 3.92 | Self-funding and loan |
| Project of Grain Dispatch Warehouse at Berth2#,3# Phase III , Machong Port | 620,000,000.00 | 54,800,647.68 | 266,398,210.78 | - | - | - | - | 321,198,858.46 | 51.81 | 51.81 | 16,955.56 | 16,955.56 | 4.36 | Self-funding and loan |
| Donghaidao port wharf project, Zhanjiang Port | 905,348,400.00 | - | 48,487,590.17 | 206,058,139.11 | - | - | - | 254,545,729.28 | 28.12 | 28.12 | 20,489,781.20 | 9,105,325.34 | 4.79 | Self-funding and loan |
| Xiashan port general wharf project, Zhanjiang Port | 737,975,100.00 | - | 169,495,671.06 | 64,813,237.96 | - | - | - | 234,308,909.02 | 31.75 | 31.75 | 2,865,473.23 | 2,865,473.23 | 4.79 | Self-funding and loan |
| CICT Machinery equipment procurement project | 209,216,238.00 | - | 204,067,723.49 | - | - | - | 2,006,393.85 | 206,074,117.34 | 98.50 | 98.50 | - | - | - | Self-funding |
| Petrifaction old tank area reconstruction, Phase I, Zhanjiang Port | 218,378,500.00 | - | 1,994,027.62 | 176,989,605.30 | - | - | - | 178,983,632.92 | 81.96 | 81.96 | 5,024,262.73 | - | - | Self-funding and loan |
| Baoman Port container wharf extension project, Phase I, Zhanjiang Port | 2,412,810,000.00 | - | 49,802,533.11 | 105,892,965.68 | - | - | - | 155,695,498.79 | 6.45 | 6.45 | 964,740.46 | 964,740.46 | 4.79 | Self-funding and loan |
| Baoman stuffing and destuffing service area, Phase I Project, Zhanjiang Port | 606,521,505.83 | - | 9,554,950.43 | 124,474,810.57 | - | - | - | 134,029,761.00 | 22.10 | 22.10 | 16,689,500.56 | - | - | Self-funding and loan |
| Total | 13,583,447,853.10 | 3,106,634,415.97 | 1,890,509,129.19 | 678,228,758.62 | 342,477,489.06 | 2,573,371.44 | 24,800,411.45 | 5,355,121,854.73 | 65,305,018.36 | 18,759,245.55 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Construction in progress - continued
17.3 Materials for construction of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Materials for construction of fixed assets | 15,751,726.18 | - | 15,751,726.18 | - | - | - |
18. Right-of-use assets
(1) Details of right-of-use assets
Unit: RMB
| Item | Port and terminal facilities | Buildings | Machinery and equipment, furniture and fixture and other equipment | Motor vehicles and cargo ships | Others | Total |
| I. Cost | ||||||
| 1.Balance at 31 December 2018 | ||||||
| Add: Changes in accounting policy | 5,696,887,745.03 | 181,521,736.13 | 264,518,199.73 | 38,350,000.00 | 2,603,500,288.84 | 8,784,777,969.73 |
| 2.Balance 1 January 2019 | 5,696,887,745.03 | 181,521,736.13 | 264,518,199.73 | 38,350,000.00 | 2,603,500,288.84 | 8,784,777,969.73 |
| 3.Increase for the year | 906,090,446.15 | 7,691,430.56 | 503,167,422.04 | 7,620,740.24 | 198,170,427.78 | 1,622,740,466.77 |
| (1) Purchase | 43,133,738.23 | 7,691,430.56 | 6,340,687.53 | - | 191,746,689.11 | 248,912,545.43 |
| (2) Effect of changes in the scope of consolidation | 862,956,707.92 | - | 496,826,734.51 | 7,620,740.24 | 6,423,738.67 | 1,373,827,921.34 |
| 4.Decrease for the year | 1,707,585.07 | 5,202,400.95 | - | - | - | 6,909,986.02 |
| (1) Termination of lease | 1,707,585.07 | 5,202,400.95 | - | - | - | 6,909,986.02 |
| 5.Effect of changes in foreign exchange | 88,131,920.50 | 2,195,653.48 | 39,678.18 | - | 44,408,750.58 | 134,776,002.74 |
| 6.Balance at 31 December 2019 | 6,689,402,526.61 | 186,206,419.22 | 767,725,299.95 | 45,970,740.24 | 2,846,079,467.20 | 10,535,384,453.22 |
| II. Accumulated depreciation | ||||||
| 1.Balance at 31 December 2018 | ||||||
| Add: Changes in accounting policy | 154,346,605.87 | 17,282,119.00 | 130,582,116.30 | 28,100,712.71 | 173,772,354.97 | 504,083,908.85 |
| 2.Balance at 1 January 2019 | 154,346,605.87 | 17,282,119.00 | 130,582,116.30 | 28,100,712.71 | 173,772,354.97 | 504,083,908.85 |
| 3.Increase for the year | 222,180,410.17 | 19,985,432.77 | 100,981,272.43 | 2,848,243.48 | 46,784,440.48 | 392,779,799.33 |
| (1) Provision | 211,794,077.31 | 19,985,432.77 | 51,419,032.74 | 709,088.28 | 44,978,579.62 | 328,886,210.72 |
| (2) Increase for changes in the scope of consolidation | 10,386,332.86 | - | 49,562,239.69 | 2,139,155.20 | 1,805,860.86 | 63,893,588.61 |
| 4.Decrease for the year | 356,556.12 | 447,016.56 | - | - | - | 803,572.68 |
| (1) Termination of lease | 356,556.12 | 447,016.56 | - | - | - | 803,572.68 |
| 5.Effect of changes in foreign exchange | 2,669,904.40 | 160,165.93 | 8,353.91 | - | 3,160,503.02 | 5,998,927.26 |
| 6.Balance at 31 December 2019 | 378,840,364.32 | 36,980,701.14 | 231,571,742.64 | 30,948,956.19 | 223,717,298.47 | 902,059,062.76 |
| III. Impairment provision | ||||||
| 1.Balance at 31 December 2018 | ||||||
| Add: Changes in accounting policy | ||||||
| 2.Balance 1 January 2019 | ||||||
| 3.Increase for the year | - | - | - | - | - | - |
| 4.Decrease for the year | - | - | - | - | - | - |
| 5.Balance at 31 December 2019 | - | - | - | - | - | - |
| IV. Book value | ||||||
| 1.Book value at 31 December 2019 | 6,310,562,162.29 | 149,225,718.08 | 536,153,557.31 | 15,021,784.05 | 2,622,362,168.73 | 9,633,325,390.46 |
| 2.Book value at 31 December 2018 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Right-of-use assets - continued
(2) Amount recognized in profit or loss
Unit: RMB
| Category | Amount incurred in the current period |
| Depreciation expenses of right-of-use assets(Note 1) | 328,886,210.72 |
| Interest expenses on lease liabilities (Note 2) | 106,836,843.78 |
| Expenses for short-term leases | 58,919,264.88 |
| Expenses for leases of low value assets | - |
| Variable lease payments not included in the measurement of lease liabilities(Note 3) | - |
| Revenue from sublease of right-of-use assets | 19,572,976.50 |
Note 1: No depreciation expenses of right-of-use assets is capitalized in 2019.
Note 2: No interest expenses of lease liabilities are capitalized in 2019.
Note 3: No variable lease payments were included in the measurement of lease liabilities in 2019.
(3) The total cash outflows in relation to leases for the current year amounting to RMB526,621,689.64.
(4) Lease assets of the Group with the lease term as follows:
| Category | Lease term |
| Port and terminal facilities | 1-99 years |
| Buildings | 1-5 years |
| Machinery and equipment, furniture and fixture and other equipment | 1-6 years |
| Motor vehicles and cargo ships | 5-9 years |
| Others | 2-99 years |
(5) The Group has an option to purchase port and terminal facilities, machinery and equipmentand cargo ships at the end of the extension period at a rate that is below market rates.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Intangible assets
(1) Summary of intangible assets
Unit: RMB
| Items | Land use rights | Terminal management rights | Others | Total |
| I. Total original carrying amount | ||||
| 1. Balance at 31 December 2018 | 13,097,878,517.45 | 10,511,520,659.11 | 1,124,069,969.28 | 24,733,469,145.84 |
| Add: Changes of accounting policies | (1,813,694,115.71) | - | - | (1,813,694,115.71) |
| 2. Balance at 1 January 2019 | 11,284,184,401.74 | 10,511,520,659.11 | 1,124,069,969.28 | 22,919,775,030.13 |
| 3.Increase in the current year | 4,019,959,533.26 | 11,544,709.16 | 108,916,766.14 | 4,140,421,008.56 |
| (1) Purchase | - | 11,544,709.16 | 70,770,763.15 | 82,315,472.31 |
| (2) Effect of changes in the scope of consolidation | 4,016,895,872.22 | - | 36,305,792.10 | 4,053,201,664.32 |
| (3) Other increase | 3,063,661.04 | - | 1,840,210.89 | 4,903,871.93 |
| 4. Decrease in the current year | 1,985,834,473.13 | 7,943,452.72 | 3,937,120.86 | 1,997,715,046.71 |
| (1) Disposal | 931,377,542.00 | - | - | 931,377,542.00 |
| (2) Transfer to held-for-sale assets (Note 1) | 137,535,397.65 | - | - | 137,535,397.65 |
| (3) Other decrease (Note 2) | 916,921,533.48 | 7,943,452.72 | 3,937,120.86 | 928,802,107.06 |
| 5. Effect of changes in foreign exchange | 6,364,192.81 | (291,366,046.68) | (80,792,488.12) | (365,794,341.99) |
| 6. Balance at 31 December 2019 | 13,324,673,654.68 | 10,223,755,868.87 | 1,148,257,126.44 | 24,696,686,649.99 |
| II. Accumulated amortization | ||||
| 1. Balance at 31 December 2018 | 2,433,897,714.42 | 1,268,696,311.70 | 269,857,075.18 | 3,972,451,101.30 |
| Add: Changes of accounting policies | (15,125,513.56) | - | - | (15,125,513.56) |
| 2. Balance at 1 January 2019 | 2,418,772,200.86 | 1,268,696,311.70 | 269,857,075.18 | 3,957,325,587.74 |
| 3.Increase in the current year | 786,821,200.60 | 238,624,029.70 | 93,471,339.77 | 1,118,916,570.07 |
| (1) Accrual of amortization | 326,408,082.24 | 238,624,029.70 | 67,594,658.22 | 632,626,770.16 |
| (2) Effect of changes in the scope of consolidation | 460,413,118.36 | - | 25,876,681.55 | 486,289,799.91 |
| 4. Decrease in the current year | 49,669,959.62 | - | 891,025.77 | 50,560,985.39 |
| (1) Disposal | 35,043,949.41 | - | - | 35,043,949.41 |
| (2) Transfer to held-for-sale assets | 14,626,010.21 | - | - | 14,626,010.21 |
| (3) Other increase | - | - | 891,025.77 | 891,025.77 |
| 5. Effect of changes in foreign exchange | 5,228,241.48 | (25,835,819.75) | (2,102,498.26) | (22,710,076.53) |
| 6. Balance at 31 December 2019 | 3,161,151,683.32 | 1,481,484,521.65 | 360,334,890.92 | 5,002,971,095.89 |
| III. Total provision for impairment losses | ||||
| 1. Balance at 31 December 2018 | - | - | - | - |
| Add: Changes of accounting policies | - | - | - | - |
| 2. Balance at 1 January 2019 | - | - | - | - |
| 3.Increase in the current year | - | - | - | - |
| 4. Decrease in the current year | - | - | - | - |
| 5. Balance at 31 December 2019 | - | - | - | - |
| IV. Total book value | ||||
| 1. Book value at 31 December 2019 | 10,163,521,971.36 | 8,742,271,347.22 | 787,922,235.52 | 19,693,715,554.10 |
| 2. Book value at 31 December 2018 | 10,663,980,803.03 | 9,242,824,347.41 | 854,212,894.10 | 20,761,018,044.54 |
Note 1: Details are set out in Note (V) 6.4 (2).Note 2: Primarily the lands located in Shenzhen Qianhaiwan Logistics Park has been returned to
government in 2019 by the Company’s subsidiaries Antongjie Terminal Services(Shenzhen) Co., Ltd. (“ATJ”) and Ansujie Terminal Services (Shenzhen) Co., Ltd.(“ASJ”). Details are set out in Note (X) 5 (6).
(2) Land use rights without ownership certificates on 31 December 2019:
Unit: RMB
| Item | Book value at this year end | Book value at last year end |
| Land use rights | 1,163,098,978.96 | 1,383,494,095.83 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
20. Development expenses
Unit: RMB
| Item | 1/1/2019 | Changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 | ||
| Transfer to intangible assets | Transfer to fixed assets | Transfer to profit or loss for the year | |||||
| Crude oil unit train loading equipment key technology research | - | 1,826,780.56 | 14,004,176.18 | - | - | - | 15,830,956.74 |
| CMPort terminals information sharing platform | - | - | 8,606,646.27 | - | - | 8,606,646.27 | - |
| Intelligent monitoring system at Shekou Custom | - | - | 8,601,073.24 | - | - | 8,601,073.24 | - |
| R&D of automation-based and intelligence-based overall IT solution for container terminal | - | - | 6,583,130.94 | - | - | 6,583,130.94 | - |
| Electronic bill of lading (loaded container from other terminals) | - | - | 5,076,107.10 | - | - | 5,076,107.10 | - |
| Mazut, diesel, petrol, methanol process automatic control system development and application | - | - | 4,834,850.03 | - | - | - | 4,834,850.03 |
| SCT OOG self-service access gate | - | - | 4,624,600.00 | - | - | 4,624,600.00 | - |
| Knoe hanger supporting wheel modification | - | - | 4,224,000.00 | - | - | 4,224,000.00 | - |
| Automatic distribution and identification of seals | - | - | 4,416,000.00 | - | - | 4,416,000.00 | - |
| Onshore bridge equipment repairing auxiliary system based on mobile application technology | - | - | 4,080,000.00 | - | - | 4,080,000.00 | - |
| Others | - | 13,141,526.26 | 82,871,568.99 | 1,434,483.16 | 203,539.84 | 77,641,786.74 | 16,733,285.51 |
| Total | - | 14,968,306.82 | 147,922,152.75 | 1,434,483.16 | 203,539.84 | 123,853,344.29 | 37,399,092.28 |
21. Goodwill
(1) Carrying amount of goodwill
Unit: RMB
| Investee | 1/1/2019 | Increase | Decrease | Effect of changes in foreign exchange | 31/12/2019 |
| TCP Participa??es S.A. ("TCP") | 4,284,229,939.11 | - | - | (737,763,462.93) | 3,546,466,476.18 |
| Mega Shekou Container Terminals Limited | 1,815,509,322.42 | - | - | - | 1,815,509,322.42 |
| China Merchants Port Holdings Company Limited("CMPort") | 993,992,000.00 | - | - | - | 993,992,000.00 |
| Shantou Port | 552,317,736.65 | - | - | - | 552,317,736.65 |
| Zhanjiang Port (Note) | - | 418,345,307.68 | - | - | 418,345,307.68 |
| Shenzhen Mawan Project | 408,773,001.00 | - | - | - | 408,773,001.00 |
| Others (Note) | 281,073,843.17 | 7,182,007.71 | - | - | 288,255,850.88 |
| Total | 8,335,895,842.35 | 425,527,315.39 | - | (737,763,462.93) | 8,023,659,694.81 |
Note: The increase in the current year mainly represent the goodwill arising from the Group's
acquisitions of Zhanjiang Port and Guangdong Zhanjiang Port Longteng Shipping Co., Ltd.("Longteng Shipping") respectively in February 2019 and December 2019. Details are setout in Note (VI) 1.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Goodwill - continued
(2) Information of assets group or portfolio of assets group to which the goodwill belongs
The Group takes the ability to independently generate cash inflows, manage the way ofproduction and operation activities (mainly by geographic areas) and unified decision on theuse and disposal of the assets as the criteria to determine assets group or portfolio of assetsgroup, and performs impairment test of goodwill for the assets group or portfolio of assetsgroup as determined. As at 31 December 2019, the assets group or portfolio of assets groupdetermined by the Group include: TCP; Mega Shekou Container Terminals Limited,including Shekou Container Terminals Ltd., Shenzhen Lianyunjie Container Terminals Co.,Ltd., Anxunjie Container Terminals (Shenzhen) Co., Ltd.; CMPort; Shantou Port; Zhanjiangport; Shenzhen Mawan Project, including Shenzhen Mawan Port Waterway Co., Ltd.,Shenzhen Mawan Port Services Co., Ltd. and Shenzhen Magang Cangma Co., Ltd.
(3) Impairment test of goodwill and key parameters
When testing the goodwill for impairment, the Group compares the carrying amount ofrelated assets group and portfolio of assets group (including goodwill) with the recoverableamount. If the recoverable amount is less than the carrying amount, the difference isincluded in profit or loss for the period. The Group determines the recoverable amount ofthe assets group and portfolio of assets group that generate goodwill at fair value less cost ofdisposal or at present value of expected future cash flows. The fair value is determinedusing market approach. The present value of cash flows is estimated based on the forecast ofcash flows for five-to-ten-year detailed forecast period and subsequent forecast period. Theestimated future cash flows for the detailed forecast period are based on the business planestablished by the management; the expected future cash flows for the subsequent forecastperiod are determined in conjunction with the level of the final year of the detailed forecastperiod, combined with the Group's business plans, industry trends and inflation rates. Thegrowth rate adopted will not exceed the long-term average growth rate of the country wherethe assets group and portfolio of assets group are located. The key assumptions used by theGroup in estimating the present value of future cash flows include growth in businessvolume, gross profit margin and discount rate etc. The discount rate and the growth rate forsubsequent forecasted period adopted in 2019 are around 9.40%-12.3% and 3% respectively.The parameters of key assumptions determined by the Group's management are in line withthe Group's historical experience or external source of information.
(4) Effect of impairment test of goodwill
After the test, the Group's management considers that any reasonable change in aboveassumptions will not result in the circumstance that the carrying amount of the assets groupand portfolio of assets group is higher than the recoverable amount, therefore it is notnecessary to make provision for impairment of goodwill.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
22. Long-term prepaid expenses
Unit: RMB
| Item | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current period | Amortization in the current period | Other decrease | 31/12/2019 |
| Tonggu channel widening project (Note 1) | 164,567,384.97 | - | 390,445,093.47 | 21,333,123.01 | 8,163,265.59 | 525,516,089.84 |
| Relocation project of Nanhai Rescue Bureau | 40,107,549.49 | - | - | 1,057,781.52 | - | 39,049,767.97 |
| Expenditures for the improvement of leased fixed assets | 21,163,538.17 | - | 153,528.33 | 1,447,327.28 | 2,090,855.04 | 17,778,884.18 |
| West port area public channel widening project (Note 2) | - | - | 81,488,690.28 | 1,018,601.68 | - | 80,470,088.60 |
| Others | 9,867,964.58 | 2,630,870.77 | 43,327,480.45 | 6,730,134.72 | - | 49,096,181.08 |
| Total | 235,706,437.21 | 2,630,870.77 | 515,414,792.53 | 31,586,968.21 | 10,254,120.63 | 711,911,011.67 |
Note 1: This represent the Group's actual expenses on the Shenzhen West Port Area Tonggu
Channel 240-270 Meters Widening Project. According to relevant resolutions ofShenzhen municipal government, the expenses incurred for the project are born by theenterprise and government on 50% to 50% principle. The Company's subsidiary hasincluded the expenses on deepening the channel in the item of "long-term prepaidexpenses", and amortized such expenses over the expected useful life of 40 years usingstraight-line method since the completion of the channel widening project on 27 February2019.
Note 2: This represent the Group's actual expenses on the first section of Shenzhen West Port
Area Public Channel 240-270 Meters Widening Project. According to relevantresolutions of Shenzhen municipal government, the expenses incurred for the project areborn by the enterprise and government on 50% to 50% principle. The Company'ssubsidiary has included the expenses on deepening the channel in the item of "long-termprepaid expenses", and amortized such expenses over the expected useful life of 40 yearsusing straight-line method since the completion of the channel widening project on 1June 2019.
23. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Unrealized profit | 805,528,482.59 | 196,545,362.77 | - | - |
| Depreciation of fixed assets | 108,244,052.41 | 27,227,981.18 | 22,036,522.49 | 4,514,995.56 |
| Deductible losses | 79,034,267.56 | 19,758,566.89 | 86,136,992.42 | 23,604,794.05 |
| Provision for credit loss | 71,636,378.50 | 17,881,386.96 | 32,805,128.88 | 8,213,219.45 |
| Provisions | 60,976,862.88 | 16,601,394.38 | 19,470,820.00 | 6,620,078.85 |
| Deferred income | 40,272,757.15 | 9,737,699.40 | 50,033,346.52 | 11,382,687.30 |
| Amortization of computer software | 13,630,227.66 | 3,407,556.91 | 16,453,443.95 | 4,113,360.99 |
| Organization costs | 10,905,997.08 | 2,726,499.27 | 14,386,394.26 | 3,287,938.27 |
| Provision for impairment losses of assets | 1,918,890.31 | 479,722.58 | 2,258,081.96 | 481,468.22 |
| Others | 29,120,031.36 | 6,069,331.93 | 17,635,287.26 | 4,489,614.50 |
| Total | 1,221,267,947.50 | 300,435,502.27 | 261,216,017.74 | 66,708,157.19 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 96 -
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Deferred tax assets and deferred tax liabilities - continued
(2) Deferred tax liabilities without offsetting
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Withholding dividend income tax | 24,219,415,080.67 | 1,735,339,232.65 | 17,819,027,902.41 | 1,138,273,886.12 |
| Fair value adjustment of assets acquired by business combination | 7,989,044,772.81 | 1,812,240,254.17 | 6,415,001,869.22 | 1,431,954,458.35 |
| Changes in fair value of other equity investments | 1,434,338,833.65 | 186,123,245.82 | 930,040,371.21 | 105,285,399.58 |
| Changes in fair value of other non-current financial assets | 731,584,120.16 | 166,830,773.03 | 754,359,502.42 | 174,592,634.60 |
| Depreciation of fixed assets | 140,659,435.00 | 35,164,858.75 | 136,717,500.00 | 34,179,375.00 |
| Others | 110,838,382.96 | 26,054,384.75 | 114,027,794.35 | 26,789,187.62 |
| Total | 34,625,880,625.25 | 3,961,752,749.17 | 26,169,174,939.61 | 2,911,074,941.27 |
(3) Deferred tax assets or liabilities that are presented at the net amount after offsetting
Unit: RMB
| Item | Offset amount of deferred tax assets and liabilities in the current period | Deferred tax assets or liabilities after offsetting in the current period | Offset amount of deferred tax assets and liabilities in the prior period | Deferred tax assets or liabilities after offsetting in the prior period |
| Deferred tax assets | - | 300,435,502.27 | - | 66,708,157.19 |
| Deferred tax liabilities | - | 3,961,752,749.17 | - | 2,911,074,941.27 |
(4) Details of unrecognized deferred tax assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 503,037,805.60 | 237,418,074.51 |
| Deductible losses | 2,289,500,649.57 | 1,291,865,454.88 |
| Total | 2,792,538,455.17 | 1,529,283,529.39 |
The Group recognizes deferred income tax assets to the extent of future taxable income that islikely to be obtained to offset the deductible temporary differences and deductible losses. For theexcess of deductible temporary differences and deductible losses over future taxable income, nodeferred tax assets is recognized.
(5) Deductible losses for unrecognized deferred tax assets will be expired in the following years:
Unit: RMB
| Year | Closing balance | Opening balance |
| 2019 | - | 132,642,333.11 |
| 2020 | 182,809,604.33 | 110,359,740.81 |
| 2021 | 244,394,853.17 | 151,793,398.29 |
| 2022 | 615,440,669.35 | 320,679,566.41 |
| 2023 | 745,889,729.49 | 576,351,741.67 |
| 2024 | 500,926,253.51 | - |
| No expiration date | 39,539.72 | 38,674.59 |
| Total | 2,289,500,649.57 | 1,291,865,454.88 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Dachanwan port area Phase II land replacement payment (Note 1) | 916,884,222.49 | - |
| Advances of channel project (Note 2) | 896,848,920.76 | - |
| Prepayments of land use rights | 132,334,704.86 | 175,908,026.15 |
| Prepayments of fixed assets | 90,186,071.12 | 174,039,051.91 |
| Prepayments of terminal franchise | 30,356,842.78 | 30,383,609.79 |
| Others | 16,354,705.03 | 14,860,798.13 |
| Total | 2,082,965,467.04 | 395,191,485.98 |
Note 1: Details are set out in Note (X) 5(6).
Note 2: This represent that the Company's subsidiary Zhanjiang Port, upon its reorganization into
a joint stock company in 2007, signed the Channel Arrangement Agreement with State-owned Assets Supervision and Administration Commission of Zhanjiang ("ZhanjiangSASAC") and China Merchants International Terminal (Zhanjiang) Co., Ltd. Accordingto the agreement, the channel belongs to Zhanjiang SASAC, therefore the Companyincluded the advances of channel project that should be repaid by Zhanjiang SASAC inother non-current assets.
25. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance (restarted) |
| Credit loan | 9,439,099,793.47 | 3,427,365,512.21 |
(2) At 31 December 2019, the Group has no short-term borrowings that were overdue.
26. Notes payable
Unit: RMB
| Category | Closing balance | Opening balance |
| Bank acceptance | 2,529,389.61 | - |
| Commercial acceptance | 73,926,559.40 | - |
| Total | 76,455,949.01 | - |
27. Accounts payable
(1) Details of accounts payable are as follows:
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction fee | 173,811,112.97 | 115,371,240.88 |
| Material purchase | 146,969,853.48 | 76,365,058.49 |
| Service fee | 133,134,547.67 | 132,946,488.81 |
| Equipment payments | 15,947,499.80 | 659,317.15 |
| Rental fee | 13,897,329.66 | 10,564,893.93 |
| Others | 107,352,122.81 | 93,213,691.71 |
| Total | 591,112,466.39 | 429,120,690.97 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Accounts payable - continued
(2) Significant accounts payable aged more than one year
Unit: RMB
| Item | Amount | Reason for outstanding |
| Shenzhen Land and Resources Bureau | 21,642,795.50 | The government planning project has not been completed, and the certificates of property rights has not been processed. |
28. Receipts in advance
(1) Summary of receipts in advance
Unit: RMB
| Item | Closing balance | Opening balance |
| Rental fee receipt in advance | 13,409,679.80 | 5,536,804.56 |
| Service fee receipt in advance | 10,500,836.06 | 23,038,672.44 |
| Others | 4,916,171.51 | 595,232.86 |
| Total | 28,826,687.37 | 29,170,709.86 |
(2) There is no significant receipts in advance aged more than one year at the end of the year
29. Contract liabilities
(1) Summary of contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Port charges received in advance | 63,954,147.44 | 11,657,235.81 |
| Service fee received in advance | 17,396,130.82 | 24,353,966.50 |
| Warehousing fee received in advance | - | 8,705,589.57 |
| Others | 4,480,724.26 | 5,277,103.62 |
| Total | 85,831,002.52 | 49,993,895.50 |
(2) Items with significant change in carrying amount and reason for the change
Unit: RMB
| Item | Amount of change | Reason for the change |
| Port charges received in advance | 52,296,911.63 | Fulfilling the performance obligations and inclusion of Zhanjiang Port in the scope of consolidation |
(3) There is no significant contract liabilities aged more than one year at the end of the year.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Contract liabilities - continued
(4) Qualitative and quantitative analysis of contract liabilities
The contract liability mainly represents the amount received by the Group to provide portservices to customers. The payment is collected according to the contractual payment time.The Group recognizes contract revenue based on the progress of the contract. The contractliabilities will be recognized as income after the Group fulfills its performance obligations.
(5) Revenue recognized in the current period and included in the opening carrying amount ofcontract liabilities
An amount of RMB 39,037,511.27 included in the book value of contract liabilities at thebeginning of 2019 has been recognized as revenue in the current year, including contractliabilities arising from settled but unfinished construction resulting from the contract ofreceipt of service fee in advance amounting to RMB 14,405,439.86, contract liabilitiesarising from settled but unfinished construction resulting from the contract of receipt of portcharges in advance amounting to RMB 11,385,355.28, and contract liabilities arising fromsettled but unfinished construction resulting from the contract of receipt of warehousing feein advance amounting to RMB 8,449,390.82 as well as contract liabilities arising fromsettled but unfinished construction resulting from other contracts amounting to RMB4,797,325.31.
30. Employee benefits payable
(1) Details of employee benefits payable are as follows
Unit: RMB
| Item | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 |
| 1. Short-term benefits | 431,714,138.23 | 74,046,373.76 | 2,505,176,428.76 | 2,380,580,326.31 | 630,356,614.44 |
| 2. Post-employment benefits – defined contribution plan | 2,286,649.91 | - | 224,339,253.53 | 221,610,579.66 | 5,015,323.78 |
| 3. Termination benefits | - | - | 14,610,713.62 | 14,610,713.62 | - |
| 4. Others | (511,232.74) | - | 6,662,872.93 | 6,804,793.77 | (653,153.58) |
| Total | 433,489,555.40 | 74,046,373.76 | 2,750,789,268.84 | 2,623,606,413.36 | 634,718,784.64 |
(2) Short-term benefits
Unit: RMB
| Item | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 |
| I. Wages and salaries, bonuses, allowances and subsidies | 409,390,929.61 | 72,201,271.35 | 2,077,766,550.89 | 1,954,494,382.02 | 604,864,369.83 |
| II. Staff welfare | - | - | 120,257,663.25 | 120,257,663.25 | - |
| III. Social insurance charges | 5,145,526.57 | - | 115,987,499.06 | 111,496,252.60 | 9,636,773.03 |
| Including: Medical insurance | 4,418,339.26 | - | 91,570,250.51 | 87,671,544.82 | 8,317,044.95 |
| Work injury insurance | - | - | 8,645,779.35 | 8,645,779.35 | - |
| Maternity insurance | - | - | 5,831,448.10 | 5,831,448.10 | - |
| Others | 727,187.31 | - | 9,940,021.10 | 9,347,480.33 | 1,319,728.08 |
| IV. Housing funds | - | - | 141,006,740.13 | 141,006,740.13 | - |
| V. Labor union and employee education funds | 17,166,673.76 | 1,845,102.41 | 38,809,767.71 | 41,966,072.32 | 15,855,471.56 |
| VI. Other short-term benefits | 11,008.29 | - | 11,348,207.72 | 11,359,215.99 | 0.02 |
| Total | 431,714,138.23 | 74,046,373.76 | 2,505,176,428.76 | 2,380,580,326.31 | 630,356,614.44 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Employee benefits payable - continued
(3) Defined contribution plan
Unit: RMB
| items | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 |
| I. Basic pension | 1,620,436.89 | - | 181,593,596.57 | 178,313,764.59 | 4,900,268.87 |
| II. Unemployment insurance | 551,158.12 | - | 3,229,973.30 | 3,781,131.41 | 0.01 |
| III. Enterprise annuity plan | 115,054.90 | - | 39,515,683.66 | 39,515,683.66 | 115,054.90 |
| Total | 2,286,649.91 | - | 224,342,871.98 | 221,614,198.11 | 5,015,323.78 |
The Company and its subsidiaries participates in the social security contributions and theunemployment insurance plan established by government institutions as required. According tosuch plans, the Group contributes in proportion to the local government. Except for the above-mentioned deposit fees, the Group have no outstanding contributions to be paid to the socialsecurity contributions and the unemployment insurance plan. The corresponding expenses areincluded in the current profit and loss or the cost of related assets when incurred.
31. Taxes payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Enterprise income tax | 1,843,381,355.01 | 271,954,754.74 |
| VAT | 11,377,223.08 | 8,200,265.65 |
| Others | 43,317,764.65 | 65,028,402.03 |
| Total | 1,898,076,342.74 | 345,183,422.42 |
32. Other payables
(1) Summary of other payables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest payable | - | - |
| Dividends payable | 150,286,550.81 | 66,052,207.09 |
| Other payables | 2,073,468,127.15 | 1,624,072,694.20 |
| Total | 2,223,754,677.96 | 1,690,124,901.29 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Other payables - continued
(2) Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Ordinary share dividends | 150,286,550.81 | 66,052,207.09 |
| Including: Modern Terminals Limited | 58,156,000.00 | - |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | 37,402,426.09 | 37,402,426.09 |
| Sri Lanka Ports Authority | 31,392,997.47 | - |
| Soifer Participa??es Societárias S.A. | 14,141,088.03 | - |
| Pattac Empreendimentos e Participa??es S.A. | 4,597,020.40 | - |
| Tuc Participacoes Portuarias S.A. | 4,597,018.82 | - |
| Sinotrans South China Co., Ltd. | - | 25,949,781.00 |
| Qingdao Port (Group) Co., Ltd. | - | 2,700,000.00 |
As at 31 December 2019, the dividend payable with aging over one year amounts to RMB37,402,426.09 which represents the dividends not yet received by the investor.
(3) Other payables
(a) Disclosure of other payables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Amount payable for construction and quality warranty | 1,053,340,753.66 | 660,870,685.70 |
| Deposits | 162,460,889.01 | 149,705,612.54 |
| Customer discount | 117,736,418.62 | 128,787,894.63 |
| Prepaid expenses | 110,741,377.48 | 140,305,423.54 |
| Port construction and security fee | 58,732,330.62 | 62,255,593.38 |
| Balance of land use rights transfer | 14,538,738.00 | 93,258,350.90 |
| Others | 555,917,619.76 | 388,889,133.51 |
| Total | 2,073,468,127.15 | 1,624,072,694.20 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Other payables - continued
(3) Other payables - continued
(b) Significant other payables with aging over 1 year
Unit: RMB
| Company name | Closing balance | Reason for being outstanding or carried forward |
| Shanghai Zhenhua Heavy Industries Co., Ltd. | 60,656,174.48 | Equipment failed to meet the acceptance standards |
| CCCC Fourth Harbor Engineering Co., Ltd. | 41,820,223.83 | Project not yet approved by a third party |
| CCCC Third Harbor Engineering Co., Ltd. | 37,314,702.00 | Project not yet approved by a third party |
| Shantou Transportation Bureau | 31,358,355.47 | To be paid after confirmation by mutual parties |
| Zhanjiang Transportation Bureau | 23,247,472.05 | Balance of advances |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | 20,762,053.30 | Quality warranty, the contracted settlement condition has not been reached |
| Qingdao Maritime Bureau | 20,713,982.12 | Port construction fee not yet settled |
| CCCC-FHDI Engineering Co., Ltd. | 16,985,103.50 | Performance of contract not yet completed |
| Shenzhen Municipal Special Fund for Development of Bulk Cement | 12,238,226.14 | Collection of dividends payments etc. |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 11,250,000.00 | Performance of contract not yet completed |
| Shantou Finance Bureau | 10,000,000.00 | To be paid after confirmation by mutual parties |
| Guangdong Hengtai Tong Industrial Co., Ltd. | 10,000,000.00 | Quality warranty, the contracted settlement condition has not been reached |
| Shenzhen Dongpeng Construction Supervision Co., Ltd. | 9,906,473.62 | Not yet applied or processed by the counterparty |
| China First Metallurgical Group Co., Ltd. | 8,175,706.55 | Performance of contract not yet completed |
| Harman Technology (Shenzhen) Co., Ltd. | 5,884,632.48 | The contracted settlement condition has not been reached |
| Total | 320,313,105.54 |
33. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Long-term loans due within one year | 2,954,701,198.90 | 1,974,288,010.22 |
| Including: Credit loan | 1,294,054,756.85 | 389,974,981.60 |
| Guaranteed loan | 1,119,153,332.94 | 1,109,331,175.51 |
| Mortgage loan | 541,493,109.11 | 474,981,853.11 |
| Bonds payable due within one year | 1,889,505,167.46 | 785,481,781.86 |
| Long-term payable due within one year | 61,107,722.82 | 30,635,607.84 |
| Long-term employee benefits payable due within one year | 31,950,000.00 | 19,100,000.00 |
| Lease liabilities due within one year | 341,240,327.95 | |
| Other non-current liabilities due within one year | 825,835,439.66 | 87,465,615.05 |
| Total | 6,104,339,856.79 | 2,896,971,014.97 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Short-term bonds payable | 712,345,315.07 | 206,349,863.00 |
| Accrued professional agency fee | 143,346,356.53 | 116,064,056.75 |
| Joint venture loan | - | 241,927,341.05 |
| Others | 30,264,910.03 | 44,668,324.00 |
| Total | 885,956,581.63 | 609,009,584.80 |
Changes of short-term bonds payable:
Unit: RMB
| Name of bond | Face value | Date of issue | Term of the bond | Amount of issue | 1/1/2019 | Effect of changes in the scope of consolidation | Amount issued in the current year | Interest accrued based on par value | Discount or premium amortization | Repayment in the current year | 31/12/2019 |
| 4.73%, RMB 200 million, Super & Short-term Commercial Paper | 200,000,000.00 | 24/04/2018 | 267 days | 200,000,000.00 | 206,349,863.00 | - | - | 570,191.79 | - | 206,920,054.79 | - |
| 3.08%, RMB 700 million, Super & Short-term Commercial Paper | 700,000,000.00 | 04/06/2019 | 270 days | 700,000,000.00 | - | - | 700,000,000.00 | 12,345,315.07 | - | - | 712,345,315.07 |
| 2.98%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 04/06/2019 | 180 days | 300,000,000.00 | - | - | 300,000,000.00 | 4,396,721.31 | - | 304,396,721.31 | - |
| 5.70%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 16/05/2018 | 272 days | 300,000,000.00 | - | 312,325,273.97 | - | 324,041.10 | - | 312,649,315.07 | - |
| 5.97%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 04/06/2018 | 272 days | 300,000,000.00 | - | 311,914,102.74 | - | 1,334,390.41 | - | 313,248,493.15 | - |
| 3.80%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 18/01/2019 | 277 days | 300,000,000.00 | - | 300,437,260.27 | - | 7,995,616.45 | - | 308,432,876.72 | - |
| Total | 2,100,000,000.00 | 2,100,000,000.00 | 206,349,863.00 | 924,676,636.98 | 1,000,000,000.00 | 26,966,276.13 | - | 1,445,647,461.04 | 712,345,315.07 |
35. Long-term borrowings
(1) Classification of long-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Credit borrowings | 3,368,772,302.71 | 2,047,087,456.97 |
| Guaranteed borrowings (Note 1) | 2,857,916,427.61 | 3,676,678,040.09 |
| Mortgage borrowings (Note 2) | 3,041,748,008.91 | 3,222,002,355.34 |
| Total | 9,268,436,739.23 | 8,945,767,852.40 |
| Less: Long-term borrowings due within one year | 2,954,701,198.90 | 1,974,288,010.22 |
| Including: Credit borrowings | 1,294,054,756.85 | 389,974,981.60 |
| Guaranteed borrowings | 1,119,153,332.94 | 1,109,331,175.51 |
| Mortgage borrowings | 541,493,109.11 | 474,981,853.11 |
| Long-term borrowings due after one year | 6,313,735,540.33 | 6,971,479,842.18 |
During the year, the annual interest rate of the borrowing ranges from 1.20% to 5.89%.
Note1: The loan was guaranteed by China Merchants International (China) Investment Co., Ltd.,
JYRT and China Merchants Port Development (Shenzhen) Co., Ltd. ("CMPD").
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Long-term borrowings - continued
(1) Classification of long-term borrowings - continued
Note 2: As at 31 December 2019, the Group obtained the long-term loan of RMB
3,028,877,614.16 (31 December 2018: RMB 3,194,255,164.03) with its entire equity inColombo International Container Terminals Limited and the entire equity in ThesarMaritime Limited, and the land with ownership, fixed assets and construction in progressheld by Guangdong Yide Port Co., Ltd. (hereinafter referred to as "Yide Port"), the landuse rights of Shenzhen Haixing Harbor Development Co., Ltd. as well as the sea area userights of Dongguan Chiwan Port Service Co., Ltd. mortgaged as collaterals.
Details of mortgage borrowings are as follows:
Unit: RMB
| Company name | Closing balance | Opening balance (restated) | Collateral |
| China Development Bank Corporation | 1,358,129,654.07 | 1,568,189,186.18 | The Group's entire equity in Colombo International Container Terminals Limited |
| International Finance Corporation | 449,103,214.20 | 530,954,660.44 | The Group's entire equity in Thesar Maritime Limited |
| African Development Bank | 206,294,203.06 | 243,879,424.87 | |
| Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. | 169,887,745.22 | 200,892,936.34 | |
| The Opec Fund For International Development | 145,656,886.91 | 172,142,912.47 | |
| Societe de Promotion et de Participation pour la Cooperation Economique S.A. | 145,613,216.49 | 172,210,289.61 | |
| Deutsche Investitions-und Entwicklungsgesellschaft MBH | 121,392,394.29 | 143,457,150.91 | |
| China Construction Bank Shunde Branch | 184,264,872.07 | 190,275,794.52 | Land use rights, fixed assets and construction in progress of Yide Port (see note (V) 62) |
| Bank of China Qianhai Shekou Branch | 241,388,867.03 | - | Land use rights of Shenzhen Haixing Harbor Development Co., Ltd (see note (V) 62) |
| China Merchants Bank Dongguan Branch | 20,016,955.57 | - | Sea area use rights of Dongguan Chiwan Warf Co., Ltd. (see note (V) 62) |
| Total | 3,041,748,008.91 | 3,222,002,355.34 |
36. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| 4.375%, USD 900 million corporate bond | 6,349,018,876.27 | 6,235,321,752.65 |
| 5.000%, USD 600 million corporate bond | 4,218,874,981.43 | 4,145,346,424.65 |
| 4.750%, USD 500 million corporate bond | 3,541,255,065.51 | 3,481,200,658.82 |
| 5.000%, USD 500 million corporate bond | 3,500,281,169.59 | 3,437,038,919.01 |
| 4.890%, USD 2,500 million corporate bond | 2,585,072,602.74 | 2,585,072,602.74 |
| 3.500%, USD 200 million corporate bond | 1,414,333,247.34 | 1,389,033,618.74 |
| IPCA + 7.8164%, BRL 428 million corporate bond | 810,150,534.24 | 783,774,548.64 |
| 4.980%, RMB 400 million corporate bond | 401,200,657.53 | - |
| 5.150%, RMB 500 million corporate bond | - | 524,651,558.48 |
| 2.970%, RMB 300 million corporate bond | - | 301,508,794.53 |
| Total | 22,820,187,134.65 | 22,882,948,878.26 |
| Less: Bonds payable due within one year | 1,889,505,167.46 | 785,481,781.86 |
| Bonds payable due after one year | 20,930,681,967.19 | 22,097,467,096.40 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Bonds payable - continued
(2) Changes of bonds payable
Unit: RMB
| Name of bonds | Face value | Date of issue | Term of the bond | Amount of issue | 1/1/2019 | Effect of changes in scope of consolidation | Amount issued in the current year | Interest accrued based on par value | Discount or premium amortization | Repayment in the current year | Effect of changes in foreign exchange | 31/12/2019 |
| 4.375%, USD 900 million corporate bond | USD 900,000,000.00 | 06/08/2018 | 5 years | USD 900,000,000.00 | 6,235,321,752.65 | - | - | 272,014,148.70 | 9,090,007.51 | 272,014,148.70 | 104,607,116.11 | 6,349,018,876.27 |
| 5.000%, USD 600 million corporate bond | USD 600,000,000.00 | 06/08/2018 | 10 years | USD 600,000,000.00 | 4,145,346,424.65 | - | - | 207,248,875.20 | 4,177,721.93 | 207,248,875.20 | 69,350,834.85 | 4,218,874,981.43 |
| 4.750%, USD 500 million corporate bond | USD 500,000,000.00 | 03/08/2015 | 10 years | USD 500,000,000.00 | 3,481,200,658.82 | - | - | 164,072,026.13 | 2,156,660.73 | 164,072,026.20 | 57,897,746.03 | 3,541,255,065.51 |
| 5.000%, USD 500 million corporate bond | USD 500,000,000.00 | 04/05/2012 | 10 years | USD 500,000,000.00 | 3,437,038,919.01 | - | - | 172,707,396.00 | 6,040,527.71 | 172,707,396.00 | 57,201,722.87 | 3,500,281,169.59 |
| 4.890%, RMB 2,500 million corporate bond | RMB 2,500,000,000.00 | 21/04/2017 | 5 years | RMB 2,500,000,000.00 | 2,585,072,602.74 | - | - | 122,250,000.00 | - | 122,250,000.00 | - | 2,585,072,602.74 |
| 3.500%, USD 200 million corporate bond | USD 200,000,000.00 | 03/08/2015 | 5 years | USD 200,000,000.00 | 1,389,033,618.74 | - | - | 48,358,070.88 | 2,184,832.77 | 48,358,070.88 | 23,114,795.83 | 1,414,333,247.34 |
| IPCA+7.8164%, BRL 428 million corporate bond | BRL 428,047,000.00 | 07/11/2016 | 6 years | BRL 428,047,000.00 | 783,774,548.64 | - | - | 95,782,430.65 | 11,483,036.38 | 64,633,265.91 | (16,256,215.52) | 810,150,534.24 |
| 4.980%, RMB 400 million corporate bond | RMB 400,000,000.00 | 10/12/2018 | 3 years | RMB 400,000,000.00 | - | 402,892,493.15 | - | 18,228,164.38 | - | 19,920,000.00 | - | 401,200,657.53 |
| 5.150%, RMB 500 million corporate bond | RMB 500,000,000.00 | 06/02/2018 | 3 years | RMB 500,000,000.00 | 524,651,558.48 | - | - | 1,070,098.17 | - | 525,721,656.65 | - | - |
| 2.970%, RMB 300 million corporate bond | RMB 300,000,000.00 | 11/10/2016 | 3 years | RMB 300,000,000.00 | 301,508,794.53 | - | - | 6,932,712.28 | 468,493.19 | 308,910,000.00 | - | - |
| Total | 22,882,948,878.26 | 402,892,493.15 | - | 1,108,663,922.39 | 35,601,280.22 | 1,905,835,439.54 | 295,916,000.17 | 22,820,187,134.65 | ||||
| Less: Bonds payable due within one year | 785,481,781.86 | 1,889,505,167.46 | ||||||||||
| Bonds payable due after one year | 22,097,467,096.40 | 20,930,681,967.19 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Lease liabilities
Unit: RMB
| Category | Closing balance | Opening balance |
| Lease payment | 2,934,104,267.67 | |
| Unrecognized financing cost | (945,733,971.11) | |
| Total | 1,988,370,296.56 | |
| Less: Lease liabilities due within one year | 341,240,327.95 | |
| Lease liabilities due after one year | 1,647,129,968.61 |
38. Long-term payables
(1) Summary of long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term payables | 1,447,802,228.74 | 1,285,984,226.34 |
| Special payables | 548,550,497.29 | 38,841,499.68 |
| Total | 1,996,352,726.03 | 1,324,825,726.02 |
| Less: Long-term payables due within one year | 61,107,722.82 | 30,635,607.84 |
| Long-term payables due after one year | 1,935,245,003.21 | 1,294,190,118.18 |
(2) Long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Terminal management rights (Note 1) | 881,239,309.85 | 823,360,554.03 |
| Payable to minority shareholders of subsidiaries (Note 2) | 407,092,971.69 | 390,658,146.52 |
| Borrowings from related parties (Note 3) | 150,000,000.00 | - |
| Financing lease payments | - | 71,965,525.79 |
| Others | 9,469,947.20 | - |
| Total | 1,447,802,228.74 | 1,285,984,226.34 |
| Less: Long-term payables due within one year | 61,107,722.82 | 30,635,607.84 |
| Long-term payables due after one year | 1,386,694,505.92 | 1,255,348,618.50 |
Note 1: As at 12 August 2011, the Group reached a 35-year building, operation and transfer agreement
through the subsidiary Colombo International Container Terminals Limited and the Sri LankaPort Authority on the building, operation, management and development of the Colombo PortSouth Container Terminal (hereinafter referred to as for "BOT"). The above-mentionedterminal operating rights purchase amount is determined by discounting the amount to be paidin the future using the prevailing market interest rate according to the BOT agreement. As at31 December 2019, the amount is RMB 881,239,309.85.
Note 2: It is an unsecured loan from minority shareholder of Thesar Maritime Limited, a
subsidiary of the Company, with an annual interest rate of 4.65%.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Long-term payables - continued
(2) Long-term payables - continued
Note 3: At 9 December 2019, ZCMG, a subsidiary of the Company, and China Merchants
Finance Lease (Tianjin) Co., Ltd. entered into a 72-month sale-and-leaseback agreementin respect of the sale-and-leaseback assets, with a consideration of RMB 150,000,000.00.The leased assets represent the front 80 meters hydraulic project main body assets ofsection A and section B under the Xiamen Port Houshi port area No. 3 general berthproject. According to the agreement, after the lessee has settled all the liabilities under thecontract, it is entitled to purchase the leased assets at the nominal price of RMB 100(inclusive of VAT). ZCMG is the saler and lessee of the leased assets. As ChinaMerchants Finance Lease (Tianjin) Co., Ltd. has no control over the leased assets, thetransfer of assets in the sale-and-leaseback transaction is not a sale and the cash receiptsare accounted for as financial liabilities, i.e. borrowings from related parties. Accordingto the agreement, the interest rate for the borrowings is 4.75% and the borrowing periodis 72 months.
At 9 December 2019, ZCMG and China Merchants Finance Lease (Tianjin) Co., Ltd. asthe beneficiary entered into a mortgage agreement with the land use rights of two plots ofland for harbor and wharf with areas of 126,400 square meters and 172,700 square metersrespectively as the collaterals. As of 31 December 2019, the carrying amount of themortgaged land use rights is RMB 121,585,300.20.
(3) Special payables
Unit: RMB
| Item | 1/1/2019 | Increase in the current year | Effect of changes in the scope of consolidation | Decrease in the current year | 31/12/2019 | Reason |
| Refunds of Harbor Construction Fee | 36,061,435.67 | 78,708.90 | 510,107,118.35 | 900,794.60 | 545,346,468.32 | Note 1 |
| Employee housing fund | 2,780,064.01 | 423,964.96 | - | - | 3,204,028.97 | Note 2 |
| Total | 38,841,499.68 | 502,673.86 | 510,107,118.35 | 900,794.60 | 548,550,497.29 |
Note 1: This represents the refund of the construction fee received by the Group from the
Ministry of Transport, Shenzhen Municipal Transportation Bureau. According to the"Port Construction Fee Management Measures" promulgated by the Ministry of Finance,this payment is dedicated to the construction of water transport infrastructure.
Note 2: This represent the repairing fund for public areas and public facilities and equipment
established after the Group's selling the public-owned house on the collectively allocatedland to employees. The fund is contributed by all the employees having ownership of thehouse according to the rules, and is specially managed and used for specific purpose.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
39. Long-term employee benefits payable
(1) Long-term employee benefits payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Post-employment benefits - net liabilities of defined benefits plan (note) | 454,383,940.25 | 385,323,310.21 |
| Termination benefits | 49,048,198.38 | 9,101,817.44 |
| Total | 503,432,138.63 | 394,425,127.65 |
| Less: Long-term employee benefits payable due within one year | 31,950,000.00 | 19,100,000.00 |
| Long-term employee benefits payable due after one year | 471,482,138.63 | 375,325,127.65 |
(2) Changes of defined benefits plan
Present value of defined benefits plan obligation:
Unit: RMB
| Item | 2019 | 2018 |
| I. Opening balance | 385,323,310.21 | 358,010,123.90 |
| II. Defined benefits cost included in profit or loss for the period | 25,714,051.83 | 10,313,678.43 |
| 1. Current service cost | 10,244,780.50 | 2,163,678.43 |
| 2. Past service cost | (180,000.00) | (7,460,000.00) |
| 3. Interest adjustment | 15,649,271.33 | 15,610,000.00 |
| III. Defined benefits cost included in other comprehensive income | (1,513,131.31) | 34,693,502.67 |
| 1. Actuarial gains (losses) | (1,552,580.61) | 34,562,392.88 |
| 2. Effect of exchange rate changes | 39,449.30 | 131,109.79 |
| IV. Other changes | 44,859,709.52 | (17,693,994.79) |
| 1. Benefits paid | (31,910,290.48) | (17,693,994.79) |
| 2. Changes in the scope of consolidation | 76,770,000.00 | - |
| V. Closing balance | 454,383,940.25 | 385,323,310.21 |
The Company's subsidiaries provide the registered retirees and in-service staff withsupplementary post-employment benefit plans.
The Group hired a third-party actuary to estimate the present value of its above-mentionedretirement benefit plan obligations in an actuarial manner based on the expected cumulativewelfare unit method. The Group recognizes the Group's liabilities based on the actuarial results.The relevant actuarial gains or losses are included in other comprehensive income and cannot bereclassified into profit or loss in the future. Past service costs are recognized in profit or loss forthe period in which the plan is revised. The net interest is determined by multiplying the definedbenefit plan net debt or net assets by the appropriate discount rate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Provisions
Unit: RMB
| Item | Closing balance | Opening balance | Reason |
| Estimated expenses on Shangtou Port land acquisition and reservation | 45,897,100.00 | - | |
| Sales discount | 15,265,697.07 | 15,480,571.55 | |
| Pending litigation (Note) | 15,079,762.88 | 19,470,820.72 | Note |
| Total | 76,242,559.95 | 34,951,392.27 |
Note: This represent the estimated compensation amount that the Company's subsidiary TCP
may need to pay due to the pending litigation.
41. Deferred income
Unit: RMB
| Item | 1/1/2019 | Increase in the current year | Effect of changes in the scope of consolidation | Decrease in the current year | 31/12/2019 |
| Government grants | 228,658,214.64 | 503,152,280.00 | 452,418,582.19 | 37,903,296.88 | 1,146,325,779.95 |
| Unrealized sale-and-leaseback income | - | - | 1,902,769.80 | 475,692.58 | 1,427,077.22 |
| Total | 228,658,214.64 | 503,152,280.00 | 454,321,351.99 | 38,378,989.46 | 1,147,752,857.17 |
Items involving government grants are as follows:
Unit: RMB
| Liabilities | 1/1/2019 | Increase | Effect of changes in the scope of consolidation | Recognized in Other comprehensive income | 31/12/2019 | Related to assets /related to income |
| Refund from marine reclamation land | - | - | 392,906,557.65 | 17,736,737.26 | 375,169,820.39 | Related to assets |
| Tonggu channel widening project (Note) | - | 282,311,343.28 | - | 5,881,486.48 | 276,429,856.80 | Related to assets |
| West port area public channel widening project (Note) | - | 217,588,656.72 | - | 967,832.04 | 216,620,824.68 | Related to assets |
| Modern logistics special funds | 115,360,000.04 | - | - | 639,999.96 | 114,720,000.08 | Related to assets |
| Terminal subsidy | 47,775,000.00 | - | - | 1,224,999.96 | 46,550,000.04 | Related to assets |
| Appropriation for harbor dues on cargo | - | - | 22,819,438.96 | 504,043.87 | 22,315,395.09 | Related to assets |
| Port construction subsidy | - | 1,000,000.00 | 20,946,639.06 | 847,305.47 | 21,099,333.59 | Related to assets |
| Qianwan Bonded Logistics Park Project | 15,304,301.08 | 200,000.00 | - | 1,077,251.84 | 14,427,049.24 | Related to assets |
| Subsidized grain transfer project subsidy | 8,142,857.12 | - | - | 285,714.29 | 7,857,142.83 | Related to assets |
| Central budgetary support for bulk grain transfer terminal projects | 7,472,916.67 | - | - | 212,500.00 | 7,260,416.67 | Related to assets |
| Refund of land transfer charges | - | - | 6,680,000.00 | - | 6,680,000.00 | Related to assets |
| AMP project | 6,748,036.42 | - | - | 961,620.72 | 5,786,415.70 | Related to assets |
| Oil to electricity project | 6,017,089.67 | - | - | 784,837.92 | 5,232,251.75 | Related to assets |
| War readiness tug special fund | - | - | 4,425,000.00 | 206,250.00 | 4,218,750.00 | Related to assets |
| Bonded logistics center industry informatization development special fund | - | - | 2,690,000.00 | 110,000.00 | 2,580,000.00 | Related to assets |
| Automated terminal operation and dispatching system special support project | 5,162,470.31 | - | - | 2,915,508.74 | 2,246,961.57 | Related to assets |
| War readiness portal crane subsidy | 1,855,895.24 | - | - | 262,008.73 | 1,593,886.51 | Related to assets |
| Bulk cargo production business management system | - | 1,500,000.00 | - | - | 1,500,000.00 | Related to assets |
| Research and development of fully automated intelligent terminal information investment based on cloud platform architecture | 2,737,023.07 | - | - | 1,679,085.80 | 1,057,937.27 | Related to assets |
| Green low carbon port project | 1,403,900.02 | - | - | 421,170.00 | 982,730.02 | Related to assets |
| Others | 10,678,725.00 | 552,280.00 | 1,818,226.52 | 1,184,943.80 | 11,997,007.72 | |
| Total | 228,658,214.64 | 503,152,280.00 | 452,418,582.19 | 37,903,296.88 | 1,146,325,779.95 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Deferred income - continued
Note: According to the reply from Ministry of Transportation, Shenzhen West Port Area Tonggu
Channel 240-270 Meters Widening project, Shenzhen West Port Area West PublicChannel Section I 240-270 Meters Widening Project and Shenzhen West Port Area WestPublic Channel Section II and III 240-270 Meters Widening Project have been included inthe National "13th Five-year Plan for Water Transport". As of 31 December 2019, theMinistry of Transportation has appropriated relevant subsidies of RMB 499,900,000 to theCompany's subsidiaries.
42. Other non-current liabilities
Unit: RMB
| c | Closing balance | Opening balance |
| TCP operating rights liability (Note 1) | 3,326,952,857.86 | 3,260,547,002.45 |
| Obligation to minority shareholders due to acquisition (Note 2) | 732,733,351.01 | 579,195,304.56 |
| Berth priority call right (Note 3) | 20,664,537.64 | 25,305,830.90 |
| Total | 4,080,350,746.51 | 3,865,048,137.91 |
| Less: Other non-current liabilities due within one year | 825,835,439.66 | 87,465,615.05 |
| Including: TCP operating rights liability | 93,102,088.65 | 87,465,615.05 |
| Obligation to minority shareholders due to acquisition | 732,733,351.01 | - |
| Other non-current liabilities due after one year | 3,254,515,306.85 | 3,777,582,522.86 |
Note 1: As at 23 February 2018, CMPort, a subsidiary of the Company, acquired a 90% stake in
TCP and incorporate it into the consolidated financial statements of the Group. TCP hasoperation right the port of paranagua up to 2048. At 31 December 2019, the payment toacquire the port operation rights is calculated based on local comprehensive price index.
Note 2: In February 2018, CMPort, a subsidiary of the Company, acquired a 90% stake in TCP.
According to the agreement, minority shareholders of TCP can choose to sell their 10%stake in TCP to Kong Rise Development, a subsidiary of CMPort, at the market price orthe BRL 320 million (whichever is higher) after two years. Therefore, the Grouprecognizes the total amount of obligations related to the purchase of minority interests asliabilities.
Note 3: This represents the berth priority call right as agreed in the contract entered into with the
clients in 2003, with total amount of USD 14 million. The Group must give priority tothe berthing requirements of the contracted customers during the contract period. TheGroup amortized the berth priority right within 20 years using straight-line method. In2019, the amount included in operating income is RMB 4,641,293.26.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Share capital
Unit: RMB
| Item | Opening balance | Changes for the year | Closing balance | ||||
| New issue of share (note) | Bonus issue | Capitalization of surplus reserve | Others | Sub-total | |||
| 2019 | |||||||
| I. Restricted tradable shares | |||||||
| 1. State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | 128,952,746.00 | - | - | 128,952,746.00 | 128,952,746.00 | |
| 3. Other domestic shares (Note) | 212,156.00 | - | - | - | (42,554.00) | (42,554.00) | 169,602.00 |
| 4. Foreign shares | 1,148,648,648.00 | - | - | - | - | - | 1,148,648,648.00 |
| Total restricted tradable shares | 1,148,860,804.00 | 128,952,746.00 | - | - | (42,554.00) | 128,910,192.00 | 1,277,770,996.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,855,324.00 | - | - | - | 3,000.00 | 3,000.00 | 464,858,324.00 |
| 2. Foreign capital shares listed domestically | 179,696,250.00 | - | - | - | 39,554.00 | 39,554.00 | 179,735,804.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,551,574.00 | - | - | - | 42,554.00 | 42,554.00 | 644,594,128.00 |
| III. Total shares | 1,793,412,378.00 | 128,952,746.00 | - | - | - | 128,952,746.00 | 1,922,365,124.00 |
| 2018 | |||||||
| I. Restricted tradable shares | |||||||
| 1. State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | - | - | - | - | - | - |
| 3. Other domestic shares | 160,106.00 | - | - | - | 52,050.00 | 52,050.00 | 212,156.00 |
| 4. Foreign shares | - | 1,148,648,648.00 | - | - | - | 1,148,648,648.00 | 1,148,648,648.00 |
| Total restricted tradable shares | 160,106.00 | 1,148,648,648.00 | - | - | 52,050.00 | 1,148,700,698.00 | 1,148,860,804.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,859,300.00 | - | - | - | (3,976.00) | (3,976.00) | 464,855,324.00 |
| 2. Foreign capital shares listed domestically | 179,744,324.00 | - | - | - | (48,074.00) | (48,074.00) | 179,696,250.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,603,624.00 | - | - | - | (52,050.00) | (52,050.00) | 644,551,574.00 |
| III. Total shares | 644,763,730.00 | 1,148,648,648.00 | - | - | - | 1,148,648,648.00 | 1,793,412,378.00 |
Note: In October 2019, the Company issued 128,952,746 shares of ordinary shares tailed for
Shenzhen Infrastructure Investment Fund Partnership (LLP) and Sino-Africa DevelopmentFund Co., Ltd. at the price of RMB17.16 per share.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Capital Reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 2019 | ||||
| Capital premium | 19,429,694,090.05 | 2,770,861,727.22 | 16,957,921.94 | 22,183,597,895.33 |
| Including: Capital contributed by investors (note 1) | 4,954,397,136.25 | 2,058,595,347.69 | - | 7,012,992,483.94 |
| Differences arising from business combination involving enterprises under common control | 13,311,099,845.41 | - | - | 13,311,099,845.41 |
| Differences arising from acquisition of minority interests (Note 2) | - | 419,130,116.03 | - | 419,130,116.03 |
| Others (Note 3) | 1,164,197,108.39 | 293,136,263.50 | 16,957,921.94 | 1,440,375,449.95 |
| Other capital Reserve | (2,781,133.00) | 129,059,971.90 | 13,391,266.88 | 112,887,572.02 |
| Including: Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Other changes of owners' equity of the investee under equity method other than changes in net profit or loss, profit distribution and other comprehensive income | - | 129,059,971.90 | 13,391,266.88 | 115,668,705.02 |
| Others (Note 3) | - | - | - | - |
| Total | 19,426,912,957.05 | 2,899,921,699.12 | 30,349,188.82 | 22,296,485,467.35 |
| 2018 | ||||
| Capital premium | 18,848,680,489.20 | 1,164,197,108.39 | 583,183,507.54 | 19,429,694,090.05 |
| Including: Capital contributed by investors | 4,954,397,136.25 | - | - | 4,954,397,136.25 |
| Differences arising from business combination involving enterprises under common control | 13,894,283,352.95 | - | 583,183,507.54 | 13,311,099,845.41 |
| Others | - | 1,164,197,108.39 | - | 1,164,197,108.39 |
| Other capital Reserve | (2,781,133.00) | - | - | (2,781,133.00) |
| Including: Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Total | 18,845,899,356.20 | 1,164,197,108.39 | 583,183,507.54 | 19,426,912,957.05 |
Note 1: The increase in the year mainly represents the premium of the shares issued by the
Company.
Note 2: The increase in the year mainly represents the dividends from the Company's share in
CMPort which is obtained in the form of scrip dividends, i.e. the portion of change inminority interests. Details are set out in Note (VII)1(2).
Note 3: The increase in the year primarily represents the difference between the disposal price of
equity of Xinda Resources Limited held by the Company's subsidiary CMPort and theshare of net assets of the subsidiary corresponding to the disposal of the long-term equityinvestments continuously calculated since the date of acquisition, which is CNY221,549,814.91. The company Details are set out in Note (VII)2(1).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Other comprehensive income
Unit: RMB
| Item | Opening balance | 2019 | Less: Other comprehensive income carried forward to retained earnings | Closing balance | |||||
| Pre-tax amount for the year | Less: Amount included in other comprehensive income in the prior periods transferred to profit or loss this year | Less: Income tax expense | Post-tax income attributable to the parent company owner | Post-tax income attributable to minority shareholders | Impact of business combination involving enterprises under common control | ||||
| 2019: | |||||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | 75,673,134.08 | 19,605,662.56 | - | 985,483.75 | 9,090,184.52 | 9,529,994.29 | - | 1,793,560.33 | 82,969,758.27 |
| Including: Changes arising from remeasurement of defined benefits plan | - | 1,552,580.61 | - | - | 1,069,722.83 | 482,857.78 | - | - | 1,069,722.83 |
| Other comprehensive income that can't be transferred to profit or loss under equity method | - | 13,161,546.95 | - | - | 4,830,921.62 | 8,330,625.33 | - | - | 4,830,921.62 |
| Changes in fair value of other equity instruments | 75,673,134.08 | 4,891,535.00 | - | 985,483.75 | 3,189,540.07 | 716,511.18 | - | 1,793,560.33 | 77,069,113.82 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 13,252,844.49 | (1,114,906,073.32) | - | - | (452,167,168.67) | (662,738,904.65) | - | - | (438,914,324.18) |
| Including: Other comprehensive income that may be transferred to profit or loss under equity method | 100,000.00 | (146,982,017.86) | - | - | (59,050,164.54) | (87,931,853.32) | - | - | (58,950,164.54) |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | (967,924,055.46) | - | - | (393,117,004.13) | (574,807,051.33) | - | - | (379,964,159.64) |
| Total other comprehensive income | 88,925,978.57 | (1,095,300,410.76) | - | 985,483.75 | (443,076,984.15) | (653,208,910.36) | - | 1,793,560.33 | (355,944,565.91) |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Other comprehensive income - continued
Unit: RMB
| Item | Opening balance | 2019 | Less: Other comprehensive income carried forward to retained earnings | Closing balance | |||||
| Pre-tax amount for the year | Less: Amount included in other comprehensive income in the prior periods transferred to profit or loss this year | Less: Income tax expense | Post-tax income attributable to the parent company owner | Post-tax income attributable to minority shareholders | Impact of business combination involving enterprises under common control | ||||
| 2018: | |||||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | (742,874,052.89) | (127,586,823.04) | - | 1,125,715.00 | (48,671,312.79) | (80,041,225.25) | 867,218,499.76 | - | 75,673,134.08 |
| Including: Changes arising from remeasurement of defined benefits plan | - | (20,136,880.35) | - | - | (7,943,999.30) | (12,192,881.05) | 7,943,999.30 | - | - |
| Other comprehensive income that can't be transferred to profit or loss under equity method | - | (116,954,783.85) | - | - | (46,138,662.23) | (70,816,121.62) | 46,138,662.23 | - | - |
| Changes in fair value of other equity instruments | (742,874,052.89) | 9,504,841.16 | - | 1,125,715.00 | 5,411,348.74 | 2,967,777.42 | 813,135,838.23 | - | 75,673,134.08 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 13,252,844.49 | 333,315,323.72 | - | - | 90,449,399.81 | 242,865,923.91 | (90,449,399.81) | - | 13,252,844.49 |
| Including: Other comprehensive income that may be transferred to profit or loss under equity method | 100,000.00 | (20,157,413.77) | - | - | (7,952,099.73) | (12,205,314.04) | 7,952,099.73 | - | 100,000.00 |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | 353,472,737.49 | - | - | 98,401,499.54 | 255,071,237.95 | (98,401,499.54) | - | 13,152,844.49 |
| Total other comprehensive income | (729,621,208.40) | 205,728,500.68 | - | 1,125,715.00 | 41,778,087.02 | 162,824,698.66 | 776,769,099.95 | - | 88,925,978.57 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Special reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 2019: | ||||
| Production safety reserve | 8,231,080.43 | 108,062,435.41 | 103,906,781.14 | 12,386,734.70 |
| 2018: | ||||
| Production safety reserve | 4,767,373.45 | 24,165,961.75 | 20,702,254.77 | 8,231,080.43 |
47. Surplus reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 2019: | ||||
| Statutory surplus reserve | 527,175,908.67 | 103,169,398.76 | - | 630,345,307.43 |
| 2018: | ||||
| Statutory surplus reserve | 520,074,434.56 | 7,101,474.11 | - | 527,175,908.67 |
In accordance with the Company Law of the PRC and the Company's Articles of Association, theCompany should appropriate 10% of net profit for the year to the statutory surplus reserve, andmay cease appropriation when the statutory surplus reserve accumulates to more than 50% of theregistered capital. The statutory surplus reserve can be used to make up for the loss or increase theshare capital after approval.
The appropriation of discretionary surplus reserve is proposed by the board of directors andapproved at the shareholders meeting. The discretionary surplus reserve can be used to make upfor the loss or increase the share capital after approval.
48. Unappropriated profit
Unit: RMB
| Item | Amount | Proportion of appropriation or allocation |
| 2019: | ||
| Unappropriated profit at the end of prior year before adjustment | 8,915,817,110.21 | |
| Adjustment of total unappropriated profit at the beginning of year | (41,018,077.68) | Note 1 |
| Unappropriated profit at the beginning of year after adjustment | 8,874,799,032.53 | |
| Add: Net profit attributable to shareholders of the Company for the year | 2,898,192,168.84 | |
| Less: Appropriation to statutory surplus reserve | 1,793,560.33 | |
| Appropriation to discretionary surplus reserve | 103,169,398.76 | |
| Appropriation to general risk reserve | - | |
| Ordinary shares' dividends payable | 204,449,011.09 | Note 2 |
| Ordinary shares' dividends converted into share capital | - | |
| Unappropriated profit at the end of the year | 11,467,166,351.85 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Unappropriated profit - continued
Unit: RMB
| Item | Amount | Proportion of appropriation or allocation |
| 2018: | ||
| Unappropriated profit at the end of prior year before adjustment | 3,566,083,142.17 | |
| Adjustment of total unappropriated profit at the beginning of year | 5,716,548,113.47 | |
| Unappropriated profit at the beginning of year after adjustment | 9,282,631,255.64 | |
| Add: Net profit attributable to shareholders of the Company for the year | 1,090,418,910.77 | |
| Less: Appropriation to statutory surplus reserve | 7,101,474.11 | |
| Appropriation to discretionary surplus reserve | - | |
| Appropriation to general risk reserve | - | |
| Ordinary shares' dividends payable | 850,443,359.86 | |
| Ordinary shares' dividends converted into share capital | - | |
| Others | 599,688,222.23 | |
| Unappropriated profit at the end of the year | 8,915,817,110.21 | |
Note 1: As set out in Note (III)34, the Group reduced the unappropriated profit at the beginning
of the year by RMB41,018,077.68 due to the impact of changes of accounting policies.
Note 2: According to the resolution of shareholders meeting on 20 May 2019, the Company
distributes cash dividends of RMB 1.14 (inclusive of tax) for every 10 shares, totaling toRMB204,449,011.09 on the basis of the total shares of 1,793,412,378 shares at the end of2018.
Note 3: Profit distribution after the balance sheet date
According to the profit distribution plan for 2019, approved by the 9th board of directorsat the 7th meeting on 14 April 2020, the Company, based on the total shares of1,922,365,124 on the 31 December 2019, would distribute cash dividends at a amount ofRMB884,287,957.04. The above profit distribution plan has yet been approved byshareholders meeting.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
49. Operating income and operating costs
(1) Operating income and operating costs
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | ||
| Income | Cost | Income | Cost | |
| Principal operating | 11,958,482,255.05 | 7,425,898,430.33 | 9,570,796,336.11 | 5,517,782,669.86 |
| Other operating | 165,347,168.69 | 223,022,489.38 | 132,598,286.47 | 221,458,726.01 |
| Total | 12,123,829,423.74 | 7,648,920,919.71 | 9,703,394,622.58 | 5,739,241,395.87 |
(2) Revenue from contracts
Unit: RMB
| Categories of contracts | Ports operation | Bonded logistics operation | Other operation | Total |
| Mainland China, Hong Kong and Taiwan area | 8,310,009,620.17 | 396,670,343.38 | 165,347,168.69 | 8,872,027,132.24 |
| - Pearl River Delta | 5,196,613,368.06 | 267,511,586.97 | 165,347,168.69 | 5,629,472,123.72 |
| - Yangtze River Delta | - | - | - | - |
| - Bohai Rim | 65,287,182.79 | 129,158,756.41 | - | 194,445,939.20 |
| - Other areas | 3,048,109,069.32 | - | - | 3,048,109,069.32 |
| Other countries | 3,237,062,565.69 | 14,739,725.81 | - | 3,251,802,291.50 |
| Total | 11,547,072,185.86 | 411,410,069.19 | 165,347,168.69 | 12,123,829,423.74 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 119 -
(3) Description of performance obligations
The Group provides wharf service, bonded logistics service and other services. These services areobligations performed over a period of time. For wharf services, as the handling time forcontainers and bulk cargos is short, the management believes that it is not necessary to recognizerevenue according to the progress towards the completion of contract and it is an appropriatemethod to recognize the fulfillment of performance obligation and revenue upon the completionof the service. For bonded logistics service and other services, the customers evenly obtains andconsumes the economic benefits from the Group's performance of contract, meanwhile thecharging rules as agreed in the contract terms usually adopt daily/month/yearly basis. During theprocess of rendering services, the Group recognizes revenue using straight-line method. Part ofthe Group's handling contracts are established with discount terms, i.e. the customers whosebusiness volume reaches agreed level, are granted with preferential charge rate or discount. At theend of the year, as the business quantity finally realized within the contract period is uncertain, thecontract consideration is subject to variable factors. The management included this part ofdiscount in provisions. Details are set out in Note (V) 40. The Group's revenue contract does nothave significant financing components.
(4) At the end of the year, the variable consideration of RMB15,265,697.07 (31 December 2018:
RMB15,480,571.55) arising from sales discount is not included in the transaction price due to therestriction requirements relating to variable considerations.
50. Taxes and levies
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Property tax | 45,998,786.01 | 50,993,199.89 |
| Land use tax | 32,116,936.18 | 15,095,001.85 |
| City construction and maintenance tax | 6,188,074.98 | 5,258,434.33 |
| Stamp duty | 4,948,743.36 | 45,775,414.65 |
| Education surcharges and local education surcharges | 4,866,915.60 | 4,059,161.54 |
| Others (Note) | 78,437,123.79 | 114,772,591.25 |
| Total | 172,556,579.92 | 235,953,803.51 |
Note: Others mainly represent (1) the tax levied by Program of Social Integration and
Contribution for the Financing of Social Security against enterprises, amounting toBRL14,988,643.16 (equivalent to RMB 26,302,820.45); (2) Tax for services calculatedbased on the services rendered, amounting to BRL24,028,392.69 (equivalent toRMB42,166,224.91).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
51. Administrative expense
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Employee's salary | 980,074,507.53 | 702,986,443.49 |
| Depreciation expenses | 74,954,306.82 | 42,634,581.68 |
| Amortization of intangible assets | 58,414,351.33 | 14,013,965.69 |
| Fees paid to agencies | 55,258,915.07 | 233,972,825.17 |
| Others | 340,818,500.91 | 258,257,859.42 |
| Total | 1,509,520,581.66 | 1,251,865,675.45 |
52. Financial expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Interest expense | 2,018,175,947.65 | 1,672,764,416.74 |
| Less: Capitalized interest expenses | 35,175,196.89 | 38,663,084.94 |
| Less: Interest income | 252,060,018.58 | 272,453,293.86 |
| Exchange differences | 37,236,030.34 | 235,825,068.78 |
| Handling fee | 56,876,221.78 | 37,531,206.16 |
| Others | 4,379,909.45 | 8,413,790.07 |
| Interest expenses of lease liabilities | 106,836,843.78 | |
| Total | 1,936,269,737.53 | 1,643,418,102.95 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
53. Other income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Allocation of deferred income | 37,903,296.88 | 9,551,510.74 |
| Department of Commerce of Guangdong Province - Special funds for promoting economic development of Guangdong | 20,970,000.00 | - |
| Shenzhen Municipal Finance Committee – Foreign trade growth incentive fund | 13,850,262.00 | - |
| Additional deduction of VAT | 13,268,318.27 | - |
| Sri Lanka Hambantota Port project subsidies | 10,278,619.72 | - |
| Nanshan district modern logistics project support fund | 8,094,400.00 | 3,000,000.00 |
| Transport Bureau of Zhangzhou Development Zone port operation support subsidy | 7,415,800.50 | 5,602,326.79 |
| Refund of withholding taxes | 6,903,526.71 | 2,334,770.36 |
| Shenzhen Transportation Committee – key logistics enterprises finance subsidiary | 6,019,100.00 | - |
| Nanshan district independent innovation enterprise development special fund | 5,561,600.00 | - |
| Shenzhen Municipal Finance Committee 2019 equipment construction fee | 5,448,613.20 | - |
| Shenzhen Science and Technology Innovation Committee – R&D subsidy | 4,241,000.00 | 5,411,000.00 |
| Electricity subsidy | 3,307,715.28 | 4,040,714.30 |
| Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – the first batch of headquarter enterprise contribution support fund for 2019 | 2,375,100.00 | - |
| Xiamen Port Holding Group Co., Ltd. – 2018 incentive support fund | 2,000,000.00 | - |
| Steady post subsidies | 1,985,363.23 | 476,958.57 |
| Fujian Provincial Port and Shipping Development Special Fund | 1,864,088.00 | 1,029,000.00 |
| Special fund for foreign trade and economic development from central government (cross-border business management system based on big data service) | 1,720,000.00 | - |
| Fujian Development and Reform Commission – 3rd batch provincial demonstration logistics park subsidy | 1,000,000.00 | - |
| Special fund for promoting high-quality development of economy | 1,000,000.00 | - |
| Market Supervision Bureau Of Shenzhen – China quality awards nomination prize | 1,000,000.00 | - |
| Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – Qianhai cooperation zone new trade development special fund | 1,000,000.00 | - |
| Shenzhen Municipal Finance Committee policy subsidy | - | 5,767,400.00 |
| Infrastructure construction investment of Central government – TCP port project (early stage work) subsidy | - | 5,161,467.89 |
| Subsidy for increasing the port's capacity of handling containers for 2017 | - | 3,500,000.00 |
| Domestic trade containers handling capacity finance subsidy from Transportation Committee | - | 1,999,631.00 |
| Economy, Trade and Information Commission of Shenzhen Municipality – Subsidy of central government for 2017 foreign economic and trade development special fund (cross-border e-commerce type) (Trade clearance facilitation platform) | - | 1,904,900.00 |
| Others | 4,894,309.31 | 6,400,447.99 |
| Total | 162,101,113.10 | 56,180,127.64 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
54. Investment income
(1) Details of investment income:
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Long-term equity investments income under equity method | 3,727,850,763.22 | 3,913,864,538.60 |
| Gains from remeasurement of previously held equity at fair value upon obtaining the control (Note) | 845,432,476.22 | - |
| Investment income on other non-current financial assets | 127,790,790.54 | 45,661,915.63 |
| Investment income on disposal of other non-current financial assets | (407,903.18) | |
| Dividend income on other equity instruments | 10,942,760.11 | 8,228,975.00 |
| Interest income on debt investments | 20,352,987.67 | - |
| Others | (112,788,119.16) | 72,720.25 |
| Total | 4,619,173,755.42 | 3,967,828,149.48 |
There is no significant restriction on the remittance of the Group's investment income.
Note: The income is mainly generated by the acquisition of Zhanjiang Port whose original equity
was remeasured at fair value.
(2) Details of long-term equity investments income under equity method
Unit: RMB
| Investee | Amount incurred in the current period | Amount incurred in the prior period | Reason for changes |
| Shanghai International Port (Group) Co., Ltd. | 2,425,921,985.71 | 2,571,370,986.64 | Changes in net profit of investee |
| Terminal Link SAS | 280,560,341.83 | 357,885,181.99 | Changes in net profit of investee |
| Nanshan Group | 242,285,185.34 | 220,478,175.60 | Changes in net profit of investee |
| Dalian Port Co., Ltd. | 148,347,321.32 | 112,882,708.11 | Changes in net profit of investee |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 142,602,575.17 | 141,704,248.41 | Changes in net profit of investee |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | 120,498,548.83 | 102,956,377.59 | Changes in net profit of investee |
| Euro-Asia Oceangate, S.a` r.l. | 71,820,758.28 | 108,552,693.45 | Changes in net profit of investee |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | 42,110,853.02 | 48,450,765.57 | Changes in net profit of investee |
| Port of Newcastle | 31,855,255.55 | 8,870,390.98 | Changes in net profit of investee |
| Others | 221,847,938.17 | 240,713,010.26 | Changes in net profit of investee |
| Total | 3,727,850,763.22 | 3,913,864,538.60 |
55. Gains (losses) on changes in fair value
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Other non-current financial assets | 431,344,898.81 | (948,440,538.45) |
| Including: Financial assets at fair value through profit or loss | 431,344,898.81 | (948,440,538.45) |
| Other non-current liabilities | (364,861,632.33) | (125,966,299.23) |
| Including: Financial liabilities at fair value through profit or loss | (364,861,632.33) | (125,966,299.23) |
| Total | 66,483,266.48 | (1,074,406,837.68) |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
56. Gains (losses) on impairment of credit
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| I. Gains (losses) on impairment of credit of accounts receivable | (51,878,244.38) | 3,102,192.00 |
| II. Gains (losses) on impairment of credit of other receivables | 1,682,076.71 | (9,760,870.10) |
| III. Gains (losses) on impairment of credit of long-term receivables | (1,082,720.15) | (784,171.05) |
| IV. Others | 1,029,478.05 | (85,731.45) |
| Total | (50,249,409.77) | (7,528,580.60) |
57. Gains from impairment of assets
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Gains from decline in value of inventories | 25,051.16 | - |
58. Gains on disposal of assets
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current year |
| Gains on disposal of non-current assets | 4,794,562,782.79 | 19,258,495.33 | 4,794,562,782.79 |
| Including: Gains on disposal of fixed assets | 6,759,787.47 | 18,151,195.97 | 6,759,787.47 |
| Gains on disposal of intangible assets | 1,108,671,001.98 | - | 1,108,671,001.98 |
| Gains on disposal of construction in progress | 47,902,373.19 | - | 47,902,373.19 |
| Others | 3,631,229,620.15 | 1,107,299.36 | 3,631,229,620.15 |
Note: The gains on disposal of assets mainly include:
1) On 30 October 2019, the Company's subsidiary Shantou Port signed the "Transfer Letter"
with Shantou Land Reserve Center, returning the land around 133.61 mu and accompanybuildings on the east of Zhuchi deepwater port and on the south of Zhongshan East Roadof Shantou to the municipal government. According to the legal opinion, Shantou Portconfirmed the completion of transfer of the land of 133.61 mu and accompany buildings,and recognized gains on compensation of assets amounting to RMB69,324,588.03.
2) The Company's subsidiary Shantou Port obtained received a compensation of
RMB537,635,141.78 by returning its land parcels of 183.63 mu and accompany buildingsat Zhuchi deepwater port on the south of Zhongshan East Road of Shantou to government.Details are set out in Note (V)6.4(2).
3) The Company's subsidiaries Antongjie Terminal Services (Shenzhen) Co., Ltd. ("ATJ")
and Ansujie Terminal Services (Shenzhen) Co., Ltd. ("ASJ") obtained compensation ofRMB4,193,314,004.68 by returning land parcels and its accompany buildings. Details areset out in Note (X)5(6).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
59. Non-operating income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current year |
| Compensation obtained by minority shareholders (Note) | 488,492,798.26 | - | 488,492,798.26 |
| Compensation received for contracts violation | 14,444,165.81 | 945,809.03 | 14,444,165.81 |
| Exempted account currents | 2,026,044.81 | - | 2,026,044.81 |
| Insurance compensation received | - | 540,000.00 | - |
| Others | 48,140,351.53 | 65,642,880.95 | 48,140,351.53 |
| Total | 553,103,360.41 | 67,128,689.98 | 553,103,360.41 |
Note: In August 2012, the Group acquired 50% equity of LCT held by Mediterranean Shipping
Company S.A ("MSC") through its subsidiary Global Terminal Limited at the considerationof EUR150 million. According to the "Equity Acquisition Agreement", from 2014 to 2028,MSC provides LCT port with commitment of minimum quantity of containers throughGlobal Terminal Limited, of which the performance is assessed every three years, andagrees on the compensation mechanism whenever the guaranteed quantity of containers isnot satisfied. In 2019, the Group recognized compensation of RMB488,492,798.26 for theperiod from 2017 to 2019. As at 31 December 2019, the Group accumulatively recognizedcompensation of RMB866,629,494.55 of which RMB669,121,539.36 is not yet received.
60. Non-operating expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current period |
| Donations | 31,344,046.81 | 12,070,408.91 | 31,344,046.81 |
| Losses on retirement of non-current assets | 24,459,845.75 | 32,095,701.53 | 24,459,845.75 |
| Compensation, liquidated damages and penalties | 5,574,036.67 | 49,204,874.59 | 5,574,036.67 |
| Others | 9,074,083.17 | 31,660,313.54 | 9,074,083.17 |
| Total | 70,452,012.40 | 125,031,298.57 | 70,452,012.40 |
61. Income tax expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Current tax expenses | 2,308,373,316.21 | 510,367,919.37 |
| Deferred tax expenses | 332,165,578.41 | 218,072,619.23 |
| Total | 2,640,538,894.62 | 728,440,538.60 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
61. Income tax expenses - continued
Reconciliation of income tax expenses to the accounting profit is as follows:
Unit: RMB
| Item | Amount incurred in the current period |
| Accounting profit | 10,807,456,167.82 |
| Income tax expenses calculated at 25% | 2,701,864,041.96 |
| Effect of non-deductible cost, expenses and losses | 261,705,254.04 |
| Accrued income tax expenses | 973,358,960.93 |
| Effect of deductible temporary differences and deductible losses for which the deferred tax assets are not recognized in current period | 136,262,425.91 |
| Effect of tax-free income (Note) | (565,271,919.77) |
| Effect of tax incentives and changes of tax rate | (289,666,792.29) |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | (475,302,953.37) |
| Effect of utilizing deductible losses for which the deferred tax assets were not recognized in prior period | (76,090,943.14) |
| Effect of adjustments to prior-year income tax | (31,763,879.70) |
| Changes in the opening balance of deferred tax assets/ liabilities due to tax adjustments | 5,366,646.17 |
| Others | 78,053.88 |
| Income tax expenses | 2,640,538,894.62 |
Note: This mainly represents the tax effect on investment income from joint venture and
associates.
62. Assets with restricted ownership or use right
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash and bank balances (Note 1) | 15,648,978.15 | 1,697,027,200.00 |
| Equity investment in Colombo International Container Terminals Limited (Note 2) | 1,591,452,920.23 | 1,526,241,901.61 |
| Equity investment in Thesar Maritime Limited (Note 2) | 799,684,707.77 | 767,331,789.70 |
| Fixed assets (Note 3) | 349,612,960.23 | 5,825,207,339.57 |
| Intangible assets (Note 3) | 345,131,760.52 | 161,408,030.71 |
| Construction in progress (Note 3) | 23,840,920.42 | 43,352,104.93 |
| Total | 3,125,372,247.32 | 10,020,568,366.52 |
Note 1: Details of restricted cash and bank balances are set out in Note (V) 1.
Note 2: Details of mortgaged equity and interests are set out in Note (V) 35.
Note 3: Yide Port mortgaged its land with property right, fixed assets and construction in
progress to obtain bank borrowings; Shenzhen Haixing Harbor Development Co., Ltd.mortgaged its land with property right to obtain bank borrowings; Dongguan ChiwanWarf Co., Ltd. mortgaged its sea area use right with property right to obtain bankborrowings; ZCMG mortgaged its land with property right to obtain related partyborrowings. Details of mortgage borrowings are set out in Note (V) 35 and Note (V)38.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 126 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Other comprehensive income
Details are set out in Note (V) 45.
64. Items in cash flow statement
(1) Other cash receipts relating to operating activities:
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Government grants | 614,567,707.23 | 50,797,838.32 |
| Interest income | 212,679,224.25 | 214,787,250.36 |
| Guarantees and deposits | 30,791,091.36 | 27,953,110.71 |
| Rentals | 16,310,934.86 | 13,313,831.31 |
| Compensation from contracts | 13,860,280.30 | 218,843,719.69 |
| Insurance compensation | 4,565,218.67 | 16,320,537.80 |
| Harbor construction fee | 2,803,216.00 | 96,876,815.04 |
| Others | 270,133,172.51 | 325,042,168.36 |
| Total | 1,165,710,845.18 | 963,935,271.59 |
(2) Other cash payments relating to operating activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Operating expenses such as operating costs and administration expense etc. | 201,645,233.00 | 255,069,427.76 |
| Advance payment | 177,076,380.78 | 155,172,493.64 |
| Rentals | 31,228,253.07 | 70,806,355.26 |
| Port construction fee | 26,478,534.06 | 83,269,723.00 |
| Guarantees and deposits | 20,638,334.19 | 16,514,731.00 |
| Port charges | 8,187,025.59 | 53,236,125.23 |
| Harbour dues on cargo | 3,138,152.55 | 2,668,097.85 |
| Others | 341,307,637.90 | 407,636,957.99 |
| Total | 809,699,551.14 | 1,044,373,911.73 |
(3) Other cash receipts relating to investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Recovery of loans | 1,018,695,828.48 | 120,500,000.00 |
| Recovery of deposits restricted due to acquisition of Hambantota Port project | 1,001,472,400.00 | - |
| Net cash receipts from acquisition of subsidiaries and other operating units | 845,457,228.45 | - |
| Cash receipts for debt transfer | 356,137,574.00 | - |
| Recovery of principal of structured deposit that is not readily for withdrawal | 314,000,000.00 | - |
| Interest of structured deposits | - | 36,115,992.14 |
| Others | 204,000.00 | - |
| Total | 3,535,967,030.93 | 156,615,992.14 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 127 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Items in cash flow statement - continued
(4) Net cash payments for acquiring subsidiaries and other operating units
Unit: RMB
| Item | Amount incurred in the current period |
| Cash and cash equivalents paid for business combination in the current year | 375,334,390.00 |
| Including: Zhanjiang port | 375,334,390.00 |
| Longteng Shipping | - |
| Less: Cash and cash equivalents held by subsidiaries at the acquisition date | 1,220,791,618.45 |
| Including: Zhanjiang port | 1,216,363,923.97 |
| Longteng Shipping | 4,427,694.48 |
| Net cash payments for acquisition of subsidiaries | (845,457,228.45) |
| Including: Zhanjiang port | (841,029,533.97) |
| Longteng Shipping | (4,427,694.48) |
(5) Net cash receipts from disposal of subsidiaries and other operating units
Unit: RMB
| Item | Amount incurred in the current period |
| Cash and cash equivalent received in current period for disposal of subsidiaries in prior period | 1,000,000.00 |
| Including: China Merchants Warehousing (Shenzhen) Service Co., Ltd. | 1,000,000.00 |
(6) Other cash payments relating to investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Structured deposit that is not readily for withdrawal | 1,610,000,000.00 | 695,000,000.00 |
| Debt transfer payment | 356,137,574.00 | - |
| Related party borrowings | 104,390,000.00 | - |
| Supplementary payment of tax on significant assets restructuring | 68,423,555.78 | - |
| Deposits restricted due to acquisition of Hambantota Port project | - | 965,644,000.00 |
| Payment of income tax on disposal of other equity instruments | - | 25,463,391.23 |
| Total | 2,138,951,129.78 | 1,686,107,391.23 |
(7) Other cash receipts relating to financing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Proceeds from disposal of equity of subsidiaries by CMPort | 1,713,327,483.01 | - |
| Proceeds from disposal of equity of the Company by CMPort | - | 3,876,395,683.27 |
| Total | 1,713,327,483.01 | 3,876,395,683.27 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Items in cash flow statement - continued
(8) Other cash payments relating to financing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Bonds issuance cost | 6,600,000.00 | 104,284,657.11 |
| Repayment of advances of shareholders | 1,592,783.29 | 1,833,400.80 |
| Lease payments | - | 39,828,477.15 |
| Others | 34,391,014.26 | 250,000.00 |
| Total | 42,583,797.55 | 146,196,535.06 |
65. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
| Supplementary information | Amount incurred in the current period | Amount incurred in the prior period |
| 1．Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 8,166,917,273.20 | 2,885,914,753.96 |
| Add: Provision for impairment losses of assets | (25,051.16) | - |
| Provision for impairment losses of credit | 50,249,409.77 | 7,528,580.60 |
| Depreciation of fixed assets | 1,681,007,226.50 | 1,298,671,209.43 |
| Depreciation of investment property | 190,418,170.86 | 183,248,437.37 |
| Depreciation of right-of-use assets | 328,886,210.72 | |
| Amortization of intangible assets | 632,626,770.16 | 526,994,590.78 |
| Amortization of long-term prepaid expenses | 31,586,968.21 | 19,045,474.75 |
| Losses (gains) on disposal of fixed assets, intangible assets and other long-term assets | (4,794,562,782.79) | (19,258,495.33) |
| Losses on retirement of fixed assets, intangible assets and other long-term assets | 24,459,845.75 | 32,095,701.53 |
| Losses (gains) on changes in fair value | (66,483,266.48) | 1,074,406,837.68 |
| Financial expenses | 2,127,073,624.88 | 1,869,926,400.58 |
| Investment loss (income) | (4,619,173,755.42) | (3,967,828,149.48) |
| Decrease (increase) in deferred tax assets | (191,905,933.39) | (24,282,252.12) |
| Increase in deferred tax liabilities | 524,071,511.80 | 242,354,871.34 |
| Decrease (increase) in inventories | (11,704,381.63) | (25,110,483.47) |
| Decrease (increase) in operating receivables | (2,391,266,937.99) | (261,424,216.35) |
| Increase in operating payables | 3,819,698,512.95 | 446,292,163.57 |
| Net cash flows from operating activities | 5,501,873,415.94 | 4,288,575,424.84 |
| 2．Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Conversion of debt into capital | - | - |
| Convertible bonds due within one year | - | - |
| Fixed assets acquired under finance leases | - | - |
| 3．Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 7,714,157,995.87 | 5,373,281,504.75 |
| Less: Opening balance of cash | 5,373,281,504.75 | 7,729,460,082.75 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase (decrease) in cash and cash equivalents | 2,340,876,491.12 | (2,356,178,578.00) |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Supplementary information to the cash flow statement - continued
(2) Cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 7,714,157,995.87 | 5,373,281,504.75 |
| Including: Cash on hand | 331,305.65 | 349,650.07 |
| Bank deposits | 7,422,490,058.00 | 5,116,481,444.13 |
| Other monetary funds | 291,336,632.22 | 256,450,410.55 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 7,714,157,995.87 | 5,373,281,504.75 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
66. Foreign currency monetary items
| Item | Closing balance of original currency | Exchange rate | Closing amount in RMB |
| Cash and bank balances | 2,254,117,370.52 | ||
| Including: HKD | 24,556,034.06 | 0.8958 | 21,997,295.31 |
| USD | 210,842,987.16 | 6.9762 | 1,470,882,847.03 |
| EUR | 66,928,010.67 | 7.8155 | 523,075,867.39 |
| RMB | 238,161,360.79 | 1.0000 | 238,161,360.79 |
| Accounts receivable | 134,801,300.52 | ||
| Including: HKD | 6,121,974.82 | 0.8958 | 5,484,065.04 |
| USD | 4,590,551.69 | 6.9762 | 32,024,606.70 |
| EUR | 12,448,676.19 | 7.8155 | 97,292,628.78 |
| Other receivables | 561,195,430.79 | ||
| Including: HKD | 35,529,633.52 | 0.8958 | 31,827,445.71 |
| USD | 3,538,045.40 | 6.9762 | 24,682,112.32 |
| EUR | 32,766,909.72 | 7.8155 | 256,089,782.91 |
| RMB | 248,596,089.85 | 1.0000 | 248,596,089.85 |
| Long-term receivables | 9,800,295.76 | ||
| Including: EUR | 1,253,956.87 | 7.8155 | 9,800,295.76 |
| Short-term borrowings | 1,304,398,148.00 | ||
| Including: HKD | 540,743,634.74 | 0.8958 | 484,398,148.00 |
| RMB | 820,000,000.00 | 1.0000 | 820,000,000.00 |
| Accounts payable | 30,431,392.31 | ||
| Including: HKD | 3,086,706.06 | 0.8958 | 2,765,071.29 |
| USD | 50,041.20 | 6.9762 | 349,097.42 |
| EUR | 3,489,504.65 | 7.8155 | 27,272,223.60 |
| RMB | 45,000.00 | 1.0000 | 45,000.00 |
| Other payables | 574,112,167.24 | ||
| Including: HKD | 13,979,385.79 | 0.8958 | 12,522,733.79 |
| USD | 47,361,608.63 | 6.9762 | 330,404,054.12 |
| EUR | 18,525,508.27 | 7.8155 | 144,786,109.92 |
| RMB | 86,399,269.41 | 1.0000 | 86,399,269.41 |
| Non-current liabilities due within one year | 261,401,461.04 | ||
| Including: EUR | 33,446,543.54 | 7.8155 | 261,401,461.04 |
| Long-term borrowings | 1,254,199,485.00 | ||
| Including: EUR | 124,950,000.00 | 7.8155 | 976,546,725.00 |
| USD | 39,800,000.00 | 6.9762 | 277,652,760.00 |
| Bonds payable | 21,212,400,200.93 | ||
| Including: RMB | 2,500,000,000.00 | 1.0000 | 2,500,000,000.00 |
| USD | 2,682,319,916.42 | 6.9762 | 18,712,400,200.93 |
| Long-term payables | 1,940,107,556.84 | ||
| Including: HKD | 2,366,680.83 | 0.8958 | 2,120,072.69 |
| USD | 217,303,185.71 | 6.9762 | 1,515,950,484.15 |
| EUR | 54,000,000.00 | 7.8155 | 422,037,000.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
67. Government grants
Unit: RMB
| Type | Amount | Item | Account | Amount included in profit or loss for the period |
| Related to assets | 282,311,343.28 | Tonggu channel widening project | Deferred income | - |
| Related to assets | 217,588,656.72 | West port area public channel widening project | Deferred income | - |
| Related to income | 20,970,000.00 | Department of Commerce of Guangdong Province - Special funds for promoting economic development of Guangdong | Other income | 20,970,000.00 |
| Related to income | 13,850,262.00 | Shenzhen Municipal Finance Committee – Foreign trade growth incentive fund | Other income | 13,850,262.00 |
| Related to income | 13,268,318.27 | Additional deduction of VAT | Other income | 13,268,318.27 |
| Related to income | 10,278,619.72 | Sri Lanka Hambantota Port project subsidies | Other income | 10,278,619.72 |
| Related to income | 8,094,400.00 | Nanshan district modern logistics project support fund | Other income | 8,094,400.00 |
| Related to income | 7,415,800.50 | Transport Bureau of Zhangzhou Development Zone port operation support subsidy | Other income | 7,415,800.50 |
| Related to income | 6,903,526.71 | Refund of withholding taxes | Other income | 6,903,526.71 |
| Related to income | 6,019,100.00 | Shenzhen Transportation Committee – Finance subsidiary for key logistics enterprises | Other income | 6,019,100.00 |
| Related to income | 5,561,600.00 | Nanshan district independent innovation enterprise development special fund | Other income | 5,561,600.00 |
| Related to income | 5,448,613.20 | Shenzhen Municipal Finance Committee 2019 equipment construction fee | Other income | 5,448,613.20 |
| Related to income | 4,241,000.00 | Shenzhen Science and Technology Innovation Committee – R&D subsidy | Other income | 4,241,000.00 |
| Related to income | 3,307,715.28 | Electricity subsidy | Other income | 3,307,715.28 |
| Related to income | 2,375,100.00 | Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – the first batch of headquarter enterprise contribution support fund for 2019 | Other income | 2,375,100.00 |
| Related to income | 2,000,000.00 | Xiamen Port Holding Group Co., Ltd. – 2018 incentive support fund | Other income | 2,000,000.00 |
| Related to income | 1,985,363.23 | Steady post subsidies | Other income | 1,985,363.23 |
| Related to income | 1,864,088.00 | Fujian Provincial Port and Shipping Development Special Fund | Other income | 1,864,088.00 |
| Related to income | 1,720,000.00 | Special fund for foreign trade and economic development from central government (cross-border business management system based on big data service) | Other income | 1,720,000.00 |
| Related to assets | 1,500,000.00 | Zhanjiang port bulk cargo production business management system | Deferred income | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
67. Government grants - continued
Unit: RMB
| Type | Amount | Item | Account | Amount included in profit or loss for the period |
| Related to income | 1,000,000.00 | Fujian Development and Reform Commission – 3rd batch provincial demonstration logistics park subsidy | Other income | 1,000,000.00 |
| Related to income | 1,000,000.00 | Special fund for promoting high-quality development of economy | Other income | 1,000,000.00 |
| Related to income | 1,000,000.00 | Market Supervision Bureau Of Shenzhen – China quality awards nomination prize | Other income | 1,000,000.00 |
| Related to income | 1,000,000.00 | Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – Qianhai cooperation zone new trade development special fund | Other income | 1,000,000.00 |
| Related to assets | 1,000,000.00 | Port construction subsidy | Deferred income | - |
| Related to income | 4,894,309.31 | Others | Other income | 4,894,309.31 |
| Related to income | 485,929.28 | Others | Deferred income | 485,929.28 |
| Related to assets | 752,280.00 | Others | Deferred income | - |
| Total | 627,836,025.50 | 124,683,745.50 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
68. Lease
Undiscounted lease receipts subsequent to the balance sheet date are as follows:
Unit: RMB
| Maturity analysis of undiscounted lease receipts | 31/12/2019 |
| c | 262,471,675.69 |
| 2nd year subsequent to the balance sheet date | 170,415,614.49 |
| 3rd year subsequent to the balance sheet date | 126,553,858.93 |
| 4th year subsequent to the balance sheet date | 94,901,695.84 |
| 5th year subsequent to the balance sheet date | 86,772,978.95 |
| Subsequent years | 415,842,560.49 |
| Total | 1,156,958,384.39 |
Note 1: The operating leases where the Group as the lessor are related to port and terminal
facilities, machinery equipment, vehicles, land and buildings, with lease terms rangingfrom 1 month to 50 years and option to renew the lease of port and terminal facilities,machinery equipment, land and buildings. The Group considers that as the leased assetsare properly used, the unguaranteed balance of such assets does not constitutes materialrisk of the Group.
Note 2: For 2019, the revenue relating to operating lease amounts to RMB260,445,597.84; there
is no revenue relating to variable lease payment that is not included in lease receipts.
(VI) CHANGES IN SCOPE OF CONSOLIDATION
1. Business combination not involving enterprises under common control
(1) Business combination not involving enterprises under common control for the year
Unit: RMB
| Name of acquiree | Date on which the investment is acquired | Acquisition cost | Proportion of equity acquired (%) | Acquisition method | Acquisition date | Basis for determining the acquisition date | Acquiree's income from acquisition date to the end of the year | Acquiree's net profit from acquisition date to the end of the year |
| Zhanjiang port (Note 1) | 3 February 2019 | 6,188,148,907.97 | 58.3549 | Cash payment | 3 February 2019 | Transfer of control | 2,306,530,651.61 | 75,720,720.11 |
| Longteng Shipping (Note 2) | 31 December 2019 | 77,485,870.00 | 70.00 | Change of articles of association | 31 December 2019 | Transfer of control | - | - |
Note 1: At 31 December 2018, China Merchants International Terminal (Zhanjiang) Co., Ltd., a
subsidiary of the Company, holds 1,620,000,000 shares of ordinary shares of ZhanjiangPort, accounting for 40.2916% of the issued shares of Zhanjiang Port.
On 2 January 2019, the Company and Guangdong Sinotrans Co., Ltd. entered into the
"Share Transfer Agreement on Zhanjiang Port (Group) Co., Ltd.", according to which theCompany receives 201,034,548 shares of ordinary shares of Zhanjiang Port held byGuangdong Sinotrans Co., Ltd., accounting for 5% of the total issued shares of ZhanjiangPort at the date of the agreement. The consideration for the conversion isRMB375,334,390.00.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination not involving enterprises under common control - continued
(1) Business combination not involving enterprises under common control for the year -continued
On 8 January 2019, Chiwan Wharf (Hong Kong) Co., Ltd. ("CWHK"), a subsidiary of the
Company, and Zhanjiang Infrastructure and Zhanjiang Port signed the "Capital IncreaseAgreement of Zhanjiang Port (Group) Co., Ltd". According to the agreement, ZhanjiangPort proposes to issue additional 1,853,518,190 shares of ordinary share at the price ofRMB 1.867 per share or equivalent foreign currency price (determined based onexchange rate of the capital contribution) so as to increase its registered capital to RMB5,874,209,145.00. CWHK proposes to subscribe for 1,606,855,919 shares ordinary shares,accounting for 27.3544% of the issued shares of Zhanjiang Port at the issuing date. Thetotal subscription payment is RMB 3,000,000,000.77 or the equivalent amount in foreigncurrency (determined based on the exchange rate of capital contribution).
The above transaction has been completed on 3 February 2019. Since then, the Group
holds total 3,427,890,467 shares of ordinary share of Zhanjiang Port, accounting for
58.3549% of the total issued shares of Zhanjiang Port. The Group is able to controlZhanjiang Port, therefore includes Zhanjiang Port in the scope of consolidation financialstatements.
Note 2: According to the previous articles of association of Longteng Shipping, the top authority
of the company is the General Shareholders Meeting, and the resolution of ShareholdersMeeting requires unanimous consent of all the shareholders. Therefore, the Company'ssubsidiary Zhanjiang Port accounts for Longteng Shipping as a joint venture.
At 31 December 2019, Longteng Shipping held the 2019 second extraordinary
shareholders meeting where the resolution of changing the articles of association wasapproved. According to the revised articles of association, the Company's top authority isthe Shareholders Meeting, and the resolution of Shareholders Meeting requires consent ofno less one half of the shareholders having voting power. Therefore, the Company'ssubsidiary Zhanjiang Port has control over Lengteng Shipping. So that the Groupincluded it in the scope of consolidated financial statements.
(2) Acquisition cost and goodwill
Unit: RMB
| Acquisition cost | Zhanjiang Port | Longteng Shipping |
| --Cash | 3,375,334,390.77 | - |
| -- Fair value of previously held equity at acquisition date | 2,816,617,994.27 | 77,485,870.00 |
| -- Others | (3,803,477.07) | - |
| Total acquisition cost | 6,188,148,907.97 | 77,485,870.00 |
| Less: Share of fair value of net identifiable assets | 5,769,803,600.29 | 70,303,862.29 |
| Goodwill | 418,345,307.68 | 7,182,007.71 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination not involving enterprises under common control - continued
(3) Identifiable assets, liabilities of the acquiree at acquisition date
Unit: RMB
| Item | Zhanjiang Port | Longteng Shipping | ||
| Fair value at acquisition date | Carrying amount at acquisition date | Fair value at acquisition date | Carrying amount at acquisition date | |
| Assets: | ||||
| Current assets | 5,165,579,759.10 | 5,165,579,759.10 | 16,465,094.05 | 16,465,094.05 |
| Other non-current financial assets | 15,243,577.73 | 15,243,577.73 | - | - |
| Long-term receivables | 877,208,613.40 | 877,208,613.40 | - | - |
| Long-term equity investments | 172,685,776.52 | 165,494,758.03 | - | - |
| Investment property | 63,473,360.24 | 39,760,964.41 | - | - |
| Fixed assets | 8,445,573,407.27 | 7,451,556,053.74 | 67,589,835.15 | 62,305,835.15 |
| Right-of-use assets | 1,304,452,747.69 | 1,304,452,747.69 | 5,481,585.04 | 5,481,585.04 |
| Construction in progress | 1,158,968,327.74 | 1,158,968,327.74 | 19,804,885.23 | 19,804,885.23 |
| Materials for construction of fixed assets | 13,684,316.43 | 13,684,316.43 | - | - |
| Intangible assets | 3,566,911,864.41 | 2,211,115,469.85 | - | - |
| Development expenses | 14,968,306.82 | 14,968,306.82 | - | - |
| Goodwill | - | 9,775,569.57 | - | - |
| Long-term prepaid expenses | 2,630,870.77 | 2,630,870.77 | - | - |
| Deferred tax assets | 41,991,411.69 | 41,991,411.69 | 7,500.00 | 7,500.00 |
| Other non-current assets | 875,819,471.20 | 875,819,471.20 | - | - |
| Liabilities: | ||||
| Current liabilities | 6,048,006,153.82 | 6,048,006,153.82 | 3,456,823.04 | 3,456,823.04 |
| Long-term borrowings | 1,762,537,800.00 | 1,762,537,800.00 | - | - |
| Bonds payable | 400,000,000.00 | 400,000,000.00 | - | - |
| Long-term payables | 510,107,118.35 | 510,107,118.35 | - | - |
| Deferred income | 454,321,351.99 | 454,321,351.99 | - | - |
| Long-term employee benefits payable | 103,174,447.59 | 103,174,447.59 | 30,000.00 | 30,000.00 |
| Deferred tax liabilities | 595,179,290.60 | - | 1,321,000.00 | - |
| Lease liabilities | 857,876,749.08 | 857,876,749.08 | 4,106,987.44 | 4,106,987.44 |
| Net assets | 10,987,988,899.58 | 9,212,226,597.34 | 100,434,088.99 | 96,471,088.99 |
| Less: Minority interests | 5,218,185,299.29 | 4,401,619,250.71 | 30,130,226.70 | 28,941,326.70 |
| Net assets acquired | 5,769,803,600.29 | 4,810,607,346.63 | 70,303,862.29 | 67,529,762.29 |
(4) Operating results and net cash flows of the acquiree from the acquisition date to the end of
the period of business combination
Unit: RMB
| Item | Acquisition date to the end of the period of business combination | |
| Zhanjiang port | Longteng Shipping | |
| Operating income | 2,306,530,651.61 | - |
| Operating cost and expenses | 2,266,290,301.90 | - |
| Gross profit | 70,722,673.91 | - |
| Net profit | 75,720,720.11 | - |
| Net cash flows from operating activities | 735,126,563.91 | - |
| Net cash flows from investing activities | (616,817,351.55) | - |
| Net cash flows from financing activities | (3,934,477,407.34) | - |
| Net increase in cash and cash equivalents | (3,816,168,194.98) | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination not involving enterprises under common control - continued
(5) Gains or losses from remeasurement of equity held prior to acquisition date at fair value
Unit: RMB
| Name of the acquiree | Carrying amount of previously held equity at the acquisition date | Fair value of previously held equity at the acquisition date | Gains or losses from remeasurement of previously held equity at fair value | Method of determining the fair value of previously held equity at acquisition date and key assumptions | Amount transferred from other comprehensive income to investment income in respect of the equity held prior to the acquisition date |
| Zhanjiang Port | 1,981,183,625.76 | 2,816,617,994.27 | 835,434,368.51 | Asset-based valuation | - |
| Longteng Shipping | 67,487,762.29 | 77,485,870.00 | 9,998,107.71 | Asset-based valuation | - |
(VII) EQUITY IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
| Name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 550.00 | 100.00 | - | Established through investment |
| CWHK | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD1,000,000 | 100.00 | - | Established through investment |
| Dongguan Chiwan Warf Co., Ltd. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 45,000.00 | 85.00 | - | Established through investment |
| Dongguan Chiwan Terminal Co., Ltd. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 40,000.00 | 100.00 | - | Established through investment |
| Shenzhen Chiwan Harbor Container Co. Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 28,820.00 | 100.00 | - | Business combination involving enterprises under common control |
| Shenzhen Chiwan Port Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 1,500.00 | 100.00 | - | Business combination involving enterprises under common control |
| Chiwan Container Terminal Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD95,300,000 | 55.00 | 20.00 | Business combination involving enterprises under common control |
| Shenzhen Chiwan Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 2,400.00 | 100.00 | - | Business combination involving enterprises under common control |
| Chiwan Shipping (Hong Kong) Limited | Hong Kong, PRC | Hong Kong, PRC | Logistics support services | HKD800,000 | 100.00 | - | Business combination involving enterprises under common control |
| CMPort (Note 1) | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD40,614,228,200.00 | 40.91 | - | Business combination involving enterprises under common control |
| China Merchants Bonded Logistics Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 70,000.00 | 40.00 | 60.00 | Business combination involving enterprises under common control |
| China Merchants International Information Technology Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | IT service | 5,000.00 | 23.16 | 76.84 | Business combination involving enterprises under common control |
| China Merchants International (China) Investment Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment holding | USD30,000,000 | - | 100.00 | Business combination involving enterprises under common control |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 137 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
| Name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| CMT | Qingdao, PRC | Qingdao, PRC | Logistics support services | USD206,300,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants Container Services Limited | Hong Kong, PRC | Hong Kong, PRC | Logistics support services | HKD500,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants Port (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 55,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Haiqin Project Management Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Engineering supervision | 300.00 | - | 100.00 | Business combination involving enterprises under common control |
| ATJ | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | HKD100,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| ASJ | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | HKD100,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants International Terminal (Qingdao) Co., Ltd. | Qingdao, PRC | Qingdao, PRC | Logistics support services | USD44,000,000 | - | 90.10 | Business combination involving enterprises under common control |
| Colombo International Container Terminals Limited | Sri Lanka | Sri Lanka | Logistics support services | USD150,000,100 | - | 85.00 | Business combination involving enterprises under common control |
| Shenzhen Mawan Port Services Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Magang Cangma Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 33,500.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Mawan Port Service Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Zhangzhou China Merchants Tugboat Co., Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 1,500.00 | - | 100.00 | Business combination involving enterprises under common control |
| Zhangzhou China Merchants Port Co., Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 100,000.00 | - | 60.00 | Business combination involving enterprises under common control |
| ZCMG (note 2) | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 44,450.00 | - | 31.00 | Business combination involving enterprises under common control |
| Shekou Container Terminals Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | HKD618,201,200 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Lianyunjie Container Terminals Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 60,854.90 | - | 100.00 | Business combination involving enterprises under common control |
| Anxunjie Container Terminals (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 127,600.00 | - | 100.00 | Business combination involving enterprises under common control |
| Anyunjie Port Warehousing Service (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | 6,060.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Haixing Harbor Development Co., Ltd | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD15,151,500 | - | 67.00 | Business combination involving enterprises under common control |
| Shenzhen Lianyongtong Terminal Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD7,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| Yide Port | Foshan, PRC | Foshan, PRC | Logistics support services | 21,600.00 | - | 51.00 | Business combination involving enterprises under common control |
| Mega Shekou Container Terminals Limited | British Virgin Islands | British Virgin Islands | Investment holding | USD120.00 | - | 80.00 | Business combination involving enterprises under common control |
| Thesar Maritime Limited | Cyprus | Cyprus | Investment holding | EUR5,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| LCT | Republic of Togo | Republic of Togo | Logistics support services | XOF200,000,000 | - | 100.00 | Business combination involving enterprises under common control |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 138 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
| Name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| Hambantota International Port Group (Private)Limited | Sri Lanka | Sri Lanka | Logistics support services | USD794,000,000 | - | 85.00 | Business combination involving enterprises under common control |
| Shantou port | Shantou, PRC | Shantou, PRC | Logistics support services | 12,500.00 | - | 60.00 | Business combination involving enterprises under common control |
| JYRT | Shenzhen, PRC | Shenzhen, PRC | Property lease servce etc. | 80,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| QHW | Shenzhen, PRC | Shenzhen, PRC | Property lease servce etc. | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Juzhongzhi Investment (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment consulting | 4,000.00 | - | 75.00 | Business combination involving enterprises under common control |
| Shenzhen Lianda Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 200.00 | - | 60.29 | Business combination involving enterprises under common control |
| Zhangzhou Zhongli Outer Wheel Tally Co., Ltd | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 200.00 | - | 84.00 | Business combination involving enterprises under common control |
| China Merchants Holdings (Djibouti) FZE | Djibouti | Djibouti | Logistics support services | USD38,140,000 | - | 100.00 | Business combination involving enterprises under common control |
| Xinda Resources Limited | British Virgin Islands | British Virgin Islands | Investment holding | USD 1.00 | - | 74.95 | Business combination involving enterprises under common control |
| Kong Rise Development Limited | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD 1.00 | - | 100.00 | Business combination involving enterprises under common control |
| TCP | Brazil | Brazil | Logistics support services | BRL 68,851,600 | - | 90.00 | Business combination not involving enterprises under common control |
| China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. ("RoRo Logistics" Note 3) | Zhoushan, PRC | Zhoushan, PRC | Logistics support services | 17,307.86 | 51.00 | - | Assets acquisition |
| Shenzhen Haixing Logistics Development Co., Ltd. (Note 4) | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 7,066.79 | - | 100.00 | Assets acquisition |
| Zhanjiang Port (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 587,420.91 | 3.42 | 54.93 | Business combination not involving enterprises under common control |
| Zhanjiang Port International Container Terminal Co., Ltd. (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 60,000.00 | - | 80.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Petrochemical Terminal Co., Ltd. (note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 18,000.00 | - | 50.00 | Business combination not involving enterprises under common control |
| China Ocean Shipping Tally Co., Ltd., Zhanjiang (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 84.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Donghaidao Bulk Cargo Terminal Co., Ltd. (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 5,000.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Bonded Service Co., Ltd., Guangdong (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Guangdong Zhanjiang Port Logistics Co., Ltd. (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 10,000.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Haichuan Trading Co., Ltd. (Note 6) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 200.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Longteng Shipping (Note 6) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 9,000.00 | - | 70.00 | Business combination not involving enterprises under common control |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 139 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
Note 1: On 19 June 2018, the Company and China Merchants Group (Hong Kong) Co., Ltd.
("CMHK") entered into "Agreement of Concerted Action on China Merchants PortHoldings Company Limited". According to the agreement, CMHK unconditionally keepsconsistent with the Company when voting for the matters discussed at the generalshareholders meeting of CMPort in respect of its 22.64% voting power of CMPort asentrusted, and performs the voting as per the Company's opinion. Therefore, theCompany totally has 62.09% voting power of CMPort, and has control over CMPort.
For July and November 2019, CMPort respectively distributed 2018 dividends and 2019interim dividends to shareholders. The shareholders may select to receive the interimdividends in cash as an alternative of entire or partial scrip dividends. The Companyselect to receive all its share of dividends from the shareholding in CMPort in the form ofscrip dividends. Upon the completion of above distribution of CMPort, the Company'sshare in CMPort increased from 1,313,541,560 shares to 1,411,014,033 shares,accounting for 40.91% (previously 39.45%) of the total issued shares of CMPort. Theproportion of shares held by CMHK changed from 22.64% to 21.86%. Therefore, theCompany has total 62.77% voting power of CMPort and has control over CMPort.
Note 2: The Group and China Merchants Zhangzhou Development Zone Co., Ltd. entered into
"Equity Custody Agreement", according to which China Merchants ZhangzhouDevelopment Zone Co., Ltd. entrusted its 29% equity of ZCMG to the Group foroperation and management. Therefore, the Group has 60% voting power of ZCMG andincludes it in the scope of consolidated financial statements.
Note 3: RoRo Logistics, a subsidiary of the Group, held a shareholders meeting on 17 September
2019, and approved the merger agreement entered into with China Merchants Port(Zhoushan) RoRo Terminal Co., Ltd. ("RoRo Terminal"), another subsidiary of theGroup, on 16 September 2019. According to the agreement, RoRo Logistics mergedRoRo Terminal and continued to survive, while RoRo Terminal was cancelled. Themerger was completed on 5 November 2019.
On 18 September 2019, RoRo Logistics and RoRo Terminal, which are subsidiaries ofthe Group, respectively published announcement on "Zhoushan Daily", explaining thesettlement of liabilities or debt guarantees of RoRo Logistics and RoRo Terminal. Thedebts of both parties before the merger will be borne by RoRo Logistics that continues tosurvive.
On 28 November 2019, the Group's subsidiary RoRo Logistics completed the industrialand commercial registration of changes while RoRo Terminal completed the industrialand commercial registration of cancellation.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 140 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
Note 4: On 13 May 2019, the Company's subsidiary Shenzhen Haixing Xiaoyetian Logistics
Development Co., Ltd. renamed to Shenzhen Haixing Logistics Development Co., Ltd.
Note 5: Details are set out in Note (VI) 1.
(2) Material non-wholly-owned subsidiaries
Unit: RMB
| Name of the subsidiary | Proportion of ownership interest held by the minority shareholders (%) | Profit or loss attributable to minority shareholders in the current year | Dividends distributed to minority shareholders in the current year | Balance of minority interests at the end of the year |
| CMPort | 59.09 | 4,698,967,872.72 | 1,632,905,377.51 | 53,597,183,498.95 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 141 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(3) Significant financial information of material non-wholly-owned subsidiaries
Unit: RMB
| Name of the subsidiary | 31/12/2019 | 31/12/2018 | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| CMPort | 11,159,452,476.24 | 119,576,502,129.38 | 130,735,954,605.62 | 13,858,924,526.23 | 35,059,524,441.90 | 48,918,448,968.13 | 9,453,546,575.26 | 110,694,125,429.95 | 120,147,672,005.21 | 8,017,825,679.49 | 37,213,240,669.92 | 45,231,066,349.41 |
Unit: RMB
| Name of the subsidiary | 2019 | 2018 | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
| CMPort | 7,845,242,646.62 | 7,421,484,985.59 | 6,327,276,475.35 | 3,944,044,766.09 | 7,729,738,537.45 | 2,685,592,888.44 | 2,886,818,529.12 | 3,595,234,888.15 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 142 -
(VII) EQUITY IN OTHER ENTITIES - continued
2. Transactions resulting in changes in ownership interests in subsidiaries without losingcontrol over the subsidiaries
(1) Description of changes in ownership interests in subsidiaries
During the year, the Group's ownership interests in CMPort changed from 39.45% to
40.91%. Details are set out in Note (VII) 1 (1).
In December 2019, the Company sold 25.05% equity of Xinda Resources Limited, a wholly-owned subsidiary of the Company, and related 25.05% of the shareholders' loans to anexternal third party at the consideration of USD 248,010,000.00 (equivalent toRMB1,713,327,483.01). After the disposal, the Company's ownership interests in XindaResources Limited decreased from 100% to 74.95%.
(2) Effect of the transaction on minority interests and equity attributable to owners of theCompany
Unit: RMB
| CMPort | Xinda Resources Limited | |
| Acquisition cost | ||
| - Cash | - | 1,713,327,483.01 |
| - Fair value of non-cash assets | 1,116,813,838.52 | - |
| Total acquisition cost/disposal consideration | 1,116,813,838.52 | 1,713,327,483.01 |
| Less: Share of net assets of subsidiaries calculated based on the proportion of equity acquired/disposed | 1,535,943,954.55 | 1,171,773,303.33 |
| Difference | (419,130,116.03) | 541,554,179.68 |
| Including: Adjustment to capital Reserve | 419,130,116.03 | 541,554,179.68 |
| Adjustment to surplus reserve | - | - |
| Adjustment to unappropriated profit | - | - |
3. Interests in joint ventures and associates
(1) Material joint ventures or associates
Unit: RMB
| Investee | Principal place of business | Place of registration | Nature of business | Proportion of ownership interests held by the Group (%) | Accounting method of investments in associates | |
| Direct | Indirect | |||||
| Associates | ||||||
| Shanghai International Port (Group) Co., Ltd. | Shanghai, PRC | Shanghai, PRC | Port and container terminal business | - | 26.77 | Equity method |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 143 -
(VII) EQUITY IN OTHER ENTITIES - continued
4. Key financial information of material associates
Unit: RMB
| Item | Shanghai International Port (Group) Co., Ltd. | |
| Closing balance / Amount incurred in the current period | Opening balance/ Amount incurred in the prior period | |
| Current assets | 40,399,631,516.67 | 47,842,620,837.32 |
| Including: Cash and cash equivalents | 17,900,365,675.69 | 27,935,157,994.83 |
| Non-current assets | 101,777,664,401.29 | 96,524,413,178.58 |
| Total assets | 142,177,295,917.96 | 144,367,034,015.90 |
| Current liabilities | 19,339,272,490.14 | 31,676,398,710.35 |
| Non-current liabilities | 32,049,165,771.78 | 30,340,320,855.30 |
| Total liabilities | 51,388,438,261.92 | 62,016,719,565.65 |
| Minority interests | 8,732,108,869.09 | 6,802,318,747.82 |
| Equity attributable to shareholders of the parent company | 82,056,748,786.95 | 75,547,995,702.43 |
| Share of net assets calculated based on the proportion of ownership interests | 21,966,591,650.27 | 20,216,643,649.97 |
| Adjustments | ||
| -Goodwill | 2,076,585,747.12 | 2,076,585,747.12 |
| -Others | (125,134,529.84) | (105,669,326.14) |
| Carrying amounts of equity investments in associates | 23,918,042,867.55 | 22,187,560,070.95 |
| Fair value of publicly quoted equity investments in associates | 35,788,783,813.22 | 32,129,272,123.48 |
| Operating income | 36,101,631,985.21 | 38,042,544,621.37 |
| Net profit | 9,925,845,382.34 | 11,472,021,103.16 |
| Other comprehensive income | (197,209,230.86) | (954,348,960.96) |
| Total comprehensive income | 9,728,636,151.48 | 10,517,672,142.20 |
| Dividends received from associates in the current year | 955,194,576.56 | 1,059,194,508.74 |
5. Summarized financial information of immaterial associates and joint ventures
Unit: RMB
| Closing balance / Amount incurred in the current period | Opening balance/ Amount incurred in the prior period | |
| Joint ventures: | ||
| Total carrying amount of investments | 9,392,226,566.22 | 11,230,302,154.26 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 468,699,021.57 | 429,904,250.47 |
| - Other comprehensive income | (18,718,479.76) | (5,608,904.12) |
| - Total comprehensive income | 449,980,541.81 | 424,295,346.35 |
| Associates: | ||
| Total carrying amount of investments | 24,606,269,949.49 | 16,758,715,038.19 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 833,229,755.94 | 912,589,301.49 |
| - Other comprehensive income | (71,060,470.70) | (31,643,724.68) |
| - Total comprehensive income | 762,169,285.24 | 880,945,576.81 |
6. The investees where the Group holds long-term equity investments are not restricted to
transfer funds to the Group.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 144 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS
The Group's major financial instruments include cash and bank balances, notes receivable,account receivables, other receivables, long-term receivables, other equity instrument investments,other non-current financial assets, short-term borrowings, notes payable, accounts payable, otherpayables, long-term borrowings, bonds payable, long-term payables etc. Details of these financialinstruments are disclosed in Notes (V). The risks associated with these financial instruments andthe policies on how to mitigate these risks are set out below. Management manages and monitorsthese exposures to ensure the risks are monitored at a certain level.
The Group adopts sensitivity analysis techniques to analyze how the entity's profit or loss and forthe period and shareholders' equity would have been affected by changes in the relevant riskvariables that were reasonably possible. As it is unlikely that risk variables will change in anisolated manner, and the interdependence between risk variables will have significant effect onthe amount ultimately influenced by the changes in a single risk variable, the following items arebased on the assumption that each risk variable has changes on a stand-alone basis.
1. Risk management objectives and policies
The Group's risk management objectives are to achieve proper balance between risks and yield,minimize the adverse impacts of risks on the Group's operation performance, and maximize thebenefits of the shareholders and other equity investors. Based on these risk managementobjectives, the Group's basic risk management strategy is to identify and analyze the industry'sexposure to various risks, establish appropriate bottom line for risk tolerance, implement riskmanagement, and monitors these exposures to ensure the risks are monitored at a certain level.
1.1 Market risk
1.1.1 Currency risk
Currency risk is the risk that losses will occur because of changes in foreign exchange rates. TheGroup's exposure to the currency risk is primarily associated with HKD, USD and EUR. Exceptfor part of the purchases and sales, the Group's other principal activities are denominated andsettled in RMB. As at 31 December 2019, the balance of the Group's assets and liabilities are bothdenominated in functional currency, except that the assets and liabilities set out below arerecorded using foreign currency. Currency risk arising from the foreign currency balance of assetsand liabilities may have impact on the Group's performance.
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash and bank balances | 829,827,620.81 | 2,134,538,905.15 |
| Accounts receivable | 134,801,300.52 | 159,141,161.37 |
| Other receivables | 558,948,223.20 | 574,646,768.14 |
| Long-term receivables | 9,800,295.76 | - |
| Short-term borrowings | 1,304,398,148.00 | 1,825,358,000.00 |
| Accounts payable | 30,431,392.31 | 45,071,940.89 |
| Other payables | 261,684,252.87 | 512,625,788.26 |
| Non-current liabilities due within one year | 261,401,461.04 | 220,116,765.00 |
| Long-term borrowings | 976,546,725.00 | 1,926,978,130.00 |
| Bonds payable | 2,500,000,000.00 | 21,384,578,670.28 |
| Long-term payables | 431,361,402.17 | 423,754,200.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 145 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.1 Currency risk - continued
The Group closely monitors the effects of changes in the foreign exchange rates on the Group'scurrency risk exposures. According to the current risk exposure and judgment of the exchangerate movements, management considers it is unlikely that the exchange rate changes in the futureone year will result in significant loss to the Group.
Sensitivity analysis on currency risk
The assumption for the sensitivity analysis on currency risk is that all the cash flow hedges andhedges of a net investment in a foreign operation are highly effective. On the basis of the aboveassumption, where all other variables are held constant, the reasonably possible changes in theforeign exchange rate may have the following pre-tax effect on the profit or loss for the periodand shareholders' equity:
Unit: RMB
| Item | Changes in exchange rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| All foreign currencies | 5% increase against RMB | (17,661,467.60) | (17,661,467.60) | (11,394,591.45) | (11,394,591.45) |
| All foreign currencies | 5% decrease against RMB | 17,661,467.60 | 17,661,467.60 | 11,394,591.45 | 11,394,591.45 |
| All foreign currencies | 5% increase against USD | (7,574,539.96) | (7,574,539.96) | 17,324.20 | 17,324.20 |
| All foreign currencies | 5% decrease against USD | 7,574,539.96 | 7,574,539.96 | (17,324.20) | (17,324.20) |
| All foreign currencies | 5% increase against HKD | (97,677,880.50) | (97,677,880.50) | (1,098,658,981.68) | (1,098,658,981.68) |
| All foreign currencies | 5% decrease against HKD | 97,677,880.50 | 97,677,880.50 | 1,098,658,981.68 | 1,098,658,981.68 |
| All foreign currencies | 5% increase against FCFA | (41,707,232.31) | (41,707,232.31) | (63,413,556.92) | (63,413,556.92) |
| All foreign currencies | 5% decrease against FCFA | 41,707,232.31 | 41,707,232.31 | 63,413,556.92 | 63,413,556.92 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 146 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.2 Interest rate risk - changes in cash flows
Risk of changes in cash flows of financial instruments arising from interest rate changes is mainlyrelated to bank loans with floating interest rate. (See Note (V) 24 and Note (V) 34). The Groupcontinuously and closely monitors the impact of interest rate changes on the Group's interest raterisk. The Group's policy is to maintain these borrowings at floating rates. Presently, the Group hasno arrangement such as interest rate swaps etc.
Sensitivity analysis of interest rate risk
Sensitivity analysis of interest rate risk is based on the following assumptions:
? Fluctuations of market interest rate can affect the interest income or expense of a financial
instrument with floating interest rate;? For a financial instrument at fair value with fixed interest rate, the fluctuations of market interestrate can only affect its interest income or expense;? For a derivative financial instrument designated as hedging instrument, the fluctuations of marketinterest rate affects its fair value, and all interest rate hedging are expected to be highly effective;? The changes in fair value of derivative financial instruments and other financial assets and
liabilities are calculated using cash flow discounting method by applying the market interest rate at
balance sheet date.
On the basis of above assumptions, where the other variables held constant, the pre-tax effect ofpossible and reasonable changes in interest rate on the profit or loss for the period andshareholders' equity are as follows:
Unit: RMB
| Item | Changes in interest rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| Short-term borrowings and long-term borrowings | 1% increase | (126,905,885.92) | (126,905,885.92) | (119,061,442.29) | (119,061,442.29) |
| Short-term borrowings and long-term borrowings | 1% decrease | 126,905,885.92 | 126,905,885.92 | 119,061,442.29 | 119,061,442.29 |
1.1.3 Other price risk
The Group's price risk is mainly arising from held-for-trading equity instrument investments andother equity instrument investments. The Group reduces the price risk of equity instrumentinvestments by holding portfolio of multiple equity securities.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 147 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.2 Credit risk
As at 31 December 2019, the Group's maximum exposure to credit risk which will cause afinancial loss to the Group due to failure to discharge an obligation by the counterparties andfinancial guarantees issued by the Group is arising from the carrying amount of the respectivefinancial assets recognized in the consolidated balance sheet. For financial instruments measuredat fair value, the carrying amount reflects the exposure to risks but not the maximum exposure torisks; the maximum exposure to risks would vary according to the future changes in fair value.
In order to minimize the credit risk, the Group has delegated a team responsible for determinationof credit limits, credit approvals and other monitoring procedures to ensure that follow-up actionis taken to recover overdue debts. In addition, the Group reviews the recoverable amount offinancial assets at each balance sheet date to ensure that adequate impairment losses are made forirrecoverable amounts. In this regard, the management of the Group considers that the Group'scredit risk is significantly reduced.
The credit risk on liquid funds is limited because they are deposited with banks with high creditratings.
The Group has adopted a policy to ensure that all sales customers have good credit records.
The Group's risk exposure spreads over a number of counterparties and customers, therefore theGroup has no significant concentration of credit risk. At 31 December 2019, the balance ofaccounts receivable from top five entities is RMB 368,100,117.85 (31 December 2018: RMB278,398,497.79), accounting for 25.29% (31 December 2018: 24.16%) of the Group's accountsreceivable. In addition, the Group has no other significant credit risk exposure concentrated onsingle financial asset or portfolio of financial assets with similar characteristics.
1.3 Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash andcash equivalents deemed adequate by the management to finance the Group's operations andmitigate the effects of fluctuations in cash flows. The management monitors the utilisation ofbank borrowings and ensures compliance with loan covenants.
As of 31 December 2019, the Group had total current liabilities in excess of total current assets ofRMB6,933,328,647.40. As at 31 December 2019, the Group has available unutilized loan facilityof RMB46,602,858,550.04 which is more than current liabilities. Therefore, the Group'smanagement believes that the Group has no significant liquidity risk.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 148 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.3 Liquidity risk - continued
The following is the maturity analysis for financial assets and financial liabilities held by theGroup which is based on undiscounted remaining contractual obligations:
Unit: RMB
| Item | Carrying amount | Gross amount | Within 1 year | 1 to 5 years | Over 5 years |
| Non-derivative financial liabilities | |||||
| Short-term borrowings | 9,439,099,793.47 | 10,355,601,387.26 | 10,355,601,387.26 | - | - |
| Notes payable | 76,455,949.01 | 76,455,949.01 | 76,455,949.01 | - | - |
| Accounts payable | 591,112,466.39 | 591,112,466.39 | 591,112,466.39 | - | - |
| Other payables | 2,223,754,677.96 | 2,223,754,677.96 | 2,223,754,677.96 | - | - |
| Non-current liabilities due within one year | 5,339,656,505.78 | 6,891,154,734.34 | 6,891,154,734.34 | - | - |
| Other current liabilities | 885,956,581.63 | 889,618,828.21 | 889,618,828.21 | - | - |
| Long-term borrowings | 6,313,735,540.33 | 7,053,819,598.75 | - | 5,772,853,260.76 | 1,280,966,337.99 |
| Bonds payable | 20,930,681,967.19 | 24,531,511,141.22 | - | 16,073,205,487.93 | 8,458,305,653.29 |
| Lease liabilities | 1,647,129,968.61 | 2,503,787,833.87 | - | 1,119,187,835.33 | 1,384,599,998.54 |
| Long-term payables | 1,386,694,505.92 | 1,405,262,255.92 | - | 216,675,454.18 | 1,188,586,801.74 |
| Derivative financial liabilities | |||||
| Non-current liabilities due within one year | 732,733,351.01 | 732,733,351.01 | 732,733,351.01 | - | - |
(IX) DISCLOSURE OF FAIR VALUE
1. Closing balance of assets and liabilities measured at fair value
Unit: RMB
| Item | Fair value at closing balance | |||
| Level 1 | Level 2 | Level 3 | Total | |
| Measurements at fair value continuously | ||||
| Accounts receivable financing | - | 260,760,537.45 | - | 260,760,537.45 |
| Other equity instrument investments | 11,220,000.00 | - | 152,341,272.00 | 163,561,272.00 |
| Other non-current financial assets | 1,753,178,588.31 | 616,000,000.00 | 16,184,949.08 | 2,385,363,537.39 |
| Total assets measured at fair value continuously | 1,764,398,588.31 | 876,760,537.45 | 168,526,221.08 | 2,809,685,346.84 |
| Other non-current liabilities | - | - | 4,059,686,208.87 | 4,059,686,208.87 |
| Total liabilities measured at fair value continuously | - | - | 4,059,686,208.87 | 4,059,686,208.87 |
2. Basis for determining the market price of items continuously measured at level 1 fair
value
The market prices of other equity instrument investments and other non-current financial assetsare determined at the closing price of the equity instrument at Shanghai Stock Exchange andHong Kong Stock Exchange at 31 December 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 149 -
(IX) DISCLOSURE OF FAIR VALUE - continued
3. Qualitative and quantitative information of valuation techniques and key parameters
adopted for items continuously measured at level 2 fair value
| Item | Fair value in the current year | Fair value in the prior year | Valuation techniques | Inputs |
| Accounts receivable financing | 260,760,537.45 | - | Cash flow discounting | Discount rate |
| Other non-current financial assets | 616,000,000.00 | - | Listed company comparison approach | Share price |
The fair value of non-listed equity instruments included in equity instruments at fair value throughprofit or loss is determined using the valuation techniques such as listed company comparisonapproach etc. During the valuation, the Group needs to make estimates in respect of marketvolatility and relevance etc., select appropriate discount rate and take into consideration ofadjustment of discount and premium.
4. Qualitative and quantitative information of valuation techniques and key parameters
adopted for items continuously measured at level 3 fair value
Unit: RMB
| Item | Fair value in the current year | Fair value in the prior year | Valuation techniques | Inputs |
| Other equity instrument investments | 152,341,272.00 | 238,048,314.30 | Net worth method | Carrying amount |
| Other non-current financial assets | 2,000,000.00 | 2,000,000.00 | Cash flow discounting | Discount rate |
| Other non-current financial assets | 700,834.13 | 689,901.07 | Net worth method | Carrying amount |
| Other non-current financial assets | 13,484,114.95 | 533,366,660.39 | Listed company comparison approach | Share price |
| Other non-current liabilities | 3,326,952,857.86 | 3,260,547,002.45 | Cash flow discounting | Discount rate |
| Other non-current liabilities | 732,733,351.01 | 579,195,304.56 | Option Pricing method | Exercising price, expected volatility etc. |
The fair value of non-listed equity instruments included in equity instruments at fair value throughprofit or loss or other comprehensive income is determined using the valuation techniques such ascash flow discounting method, net worth method, listed company comparison approach etc.During the valuation, the Group needs to make estimates in respect of the future cash flows, creditrisk, market volatility and relevance etc., select appropriate discount rate and take intoconsideration of adjustment of discount and premium.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 150 -
(IX) DISCLOSURE OF FAIR VALUE - continued
5. Fair value of financial assets and financial liabilities not measured at fair value
The financial assets and liabilities not measured at fair value mainly include: notes receivable,accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable,other payables, long-term borrowings, bonds payable and long-term payables etc.
The Group's management believes that the carrying amounts of financial assets and financialliabilities at amortized cost in the financial statements approximate their fair values.
The fair value of bonds payable traded in active market is determined at the quoted price in theactive market. The fair values of long-term borrowings, long-term payables and bonds payablenot traded in active market are determined at the present value of contractual future cash flowsdiscounted using the interest rate for providing nearly the same cash flows to entity withcomparable credit rating under the same conditions.
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
1． Parent of the Company
| Name of the parent | Related party relationship | Type of the entity | Place of registration | Legal representative | Nature of business | Issued share capital | Proportion of the Company's ownership interests held by the parent (%) | Proportion of the Company's voting power held by the parent(%) |
| Broadford Global Limited | Parent company | Private limited company (share limited) | Hong Kong | Deng Weidong | Investment holding | HKD 21,120,986,262 | 2.88 | 81.92 (Note) |
Note: Broadford Global Limited directly holds 2.88% equity of the Company, and indirectly
holds 19.29% and 59.75% equity of the Company through the subsidiaries ChinaMerchants Gangtong Development (Shenzhen) Co., Ltd. and China Merchants InvestmentDevelopment Co., Ltd. respectively.
The ultimate controlling shareholder of the Company is China Merchants Group.
2. Subsidiaries of the Company
Details of the subsidiaries of the Company are set out in Note (VII) 1.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 151 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
3. Associates and joint ventures of the Company
Details of the Company's significant joint ventures and associates are set out in Note (VII) 3.
Other joint ventures or joint ventures that occurred related party transactions and formed balanceswith the Group this year are as follows:
| Name of joint venture or associate | Relationship with the Company |
| Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi | Joint venture |
| Port of Newcastle and its subsidiaries | Joint venture |
| Guizhou East Land Port Operation Co., Ltd. | Joint venture |
| Longteng Shipping (Note) | Joint venture |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Joint venture |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Joint venture |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Joint venture |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Joint venture |
| Qingdao Wutong Century Supply Chain Co., Ltd. | Joint venture |
| COSCO Logistics (Zhanjiang) Co., Ltd. | Joint venture |
| China Merchants Antong Logistics Management Company | Joint venture |
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | Joint venture |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | Joint venture |
| Doraleh Multi-purpose Port | Associate |
| Great Horn Development Company FZCO | Associate |
| International Djibouti Industrial Parks Operation FZCO | Associate |
| Port de Djibouti S.A. | Associate |
| Terminal Link SAS | Associate |
| Tin-Can Island Container Terminal Ltd | Associate |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | Associate |
| Nanshan Group and its subsidiaries | Associate |
| Shanghai International Port (Group) Co., Ltd. | Associate |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | Associate |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Associate |
| Modern Terminals Limited | Associate |
| China Merchants Harbor City | Associate |
| Zhanjiang Xiagang United Development Co., Ltd. | Associate |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Associate |
| Chu Kong River Trade Terminal Co. Ltd. | Associate |
Note: See Note (VI) 1, it is no longer a related party of the Group since 31 December 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
| Name of other related parties | Relationship with the Company |
| Qingdao Port (Group) Co., Ltd. | Minority shareholders of subsidiaries |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | Minority shareholders of subsidiaries |
| Zhanjiang Infrastructure | Minority shareholders of subsidiaries |
| Antong Holdings and its subsidiaries (Note 1) | Connected person |
| China COSCO Shipping Group and its subsidiaries (Note 1) | Connected person |
| CMHK | Controlled by the same ultimate controlling shareholder |
| Sinotrans (NZ) Limited | Controlled by the same ultimate controlling shareholder |
| Guangdong Sinotrans Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Guangzhou International Ocean Shipping Agency Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Hoi Tung (Shanghai) Company Limited | Controlled by the same ultimate controlling shareholder |
| South China Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| EuroAsia Dockyard Enterprise and development Ltd. | Controlled by the same ultimate controlling shareholder |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shantou COSCO Shipping Agency Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Nanyou (Holdings) Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Qianhai Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Landmark (Shenzhen) Co ., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants International Shipping Agency (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen China Merchants Shekou Assets Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants (Shenzhen) Power Supply., Ltd. | Controlled by the same ultimate controlling shareholder |
| Csc Roro Logistics Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Merchants Construction Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen China Merchants Property Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Ocean Shipping Tally Shenzhen CO., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Controlled by the same ultimate controlling shareholder |
| Yiu Lian Dockyards (Shekou) Limited | Controlled by the same ultimate controlling shareholder |
| Yiu Lian Dockyards Limited | Controlled by the same ultimate controlling shareholder |
| Zhanjiang port (note 2) | Controlled by the same ultimate controlling shareholder |
| CM Houlder Insurance Brokers Limited | Controlled by the same ultimate controlling shareholder |
| China Merchants Godown, Wharf & Transportation Company Limited | Controlled by the same ultimate controlling shareholder |
| Huanan Refrigeration Ice Making (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Hanghua Science & Technology & Trade Center Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Group Finance Company Limited | Controlled by the same ultimate controlling shareholder |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company - continued
| Name of other related party | Relationship with the Company |
| China Merchants Steam Navigation Company Limited | Controlled by the same ultimate controlling shareholder |
| China Merchants Life Insurance Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Food (China) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Tongshang Finance Lease Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Logistics Shenzhen Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Property Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Zhangzhou Development Zone Power Supply Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Zhangzhou Development Zone Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Your Cellar (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Securities Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Communications Import & Export Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Ocean Shipping Agency Shenzhen | Controlled by the same ultimate controlling shareholder |
| Sinotrans South China Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Outbound Air Transport Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Sinotrans Container Lines Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Sinotrans Container Lines (Hong Kong) Company Limited | Controlled by the same ultimate controlling shareholder |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | Where the ultimate controlling shareholder has significant influence |
| Shenzhen Zhaogang Seaway Goods Trading Center | Where the ultimate controlling shareholder has significant influence |
| Khor Ambado FZCo | Where the ultimate controlling shareholder has significant influence |
| China Merchant Bank Co., Ltd. | Where the ultimate controlling shareholder has significant influence |
Note 1: From 9 September 2019 to 31 December 2019, the Company's Chairman Fu Gangfeng
work as the key management personnel of both the Company and China COSCOShipping Corporation Limited; from 25 September 2019 to 31 December 2019, theCompany's deputy general manager Zheng Shaoping work as the senior managementpersonnel of both the Company and Antong Holdings Co., Ltd. Therefore, the relatedparty transactions and balances for the period in which the aforesaid two persons were thedirector, senior management personnel of China COSCO Shipping Corporation Limitedand Antong Holdings Co., Ltd. are disclosed.
Note 2: See Note (VI) 1, it is no longer a related party of the Group since 3 February 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions
(1) Rendering and receipt of service
Unit: RMB
| Related party | Content of transaction | Pricing method and decision procedures of related transactions | Closing balance | Opening balance |
| Receipt of service: | ||||
| Nanshan Group and its subsidiaries | Service expenditure | Negotiation | 59,399,028.43 | 1,080,269.25 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service expenditure | Negotiation | 18,116,312.14 | 15,358,571.88 |
| Yiu Lian Dockyards Limited | Service expenditure | Negotiation | 11,822,773.93 | 10,019,922.18 |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Service expenditure | Negotiation | 8,063,768.58 | 10,707,148.03 |
| COSCO Logistics (Zhanjiang) Co., Ltd. | Service expenditure | Negotiation | 5,302,779.67 | |
| China Merchants Zhangzhou Development Zone Power Supply Co., Ltd. | Service expenditure | Negotiation | 5,050,730.12 | 5,681,278.30 |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | Service expenditure | Negotiation | 4,291,294.93 | 3,751,785.75 |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Service expenditure | Negotiation | 2,998,142.60 | 3,539,104.80 |
| China Merchants (Shenzhen) Power Supply., Ltd. | Service expenditure | Negotiation | 2,611,504.71 | 2,908,847.34 |
| Shenzhen China Merchants Property Management Co., Ltd. | Service expenditure | Negotiation | 2,496,785.30 | - |
| CM Houlder Insurance Brokers Limited | Service expenditure | Negotiation | 2,475,979.40 | 2,102,764.12 |
| China Merchants Your Cellar (Shenzhen) Co., Ltd. | Service expenditure | Negotiation | 1,887,287.74 | - |
| China Merchants Life Insurance Co., Ltd. | Service expenditure | Negotiation | 1,674,762.08 | - |
| Hoi Tung (Shanghai) Company Limited | Service expenditure | Negotiation | 1,472,835.51 | 3,461,147.79 |
| China Outbound Air Transport Co., Ltd. | Service expenditure | Negotiation | 1,178,932.56 | 2,199,064.60 |
| China Ocean Shipping Tally Shenzhen CO., Ltd. | Service expenditure | Negotiation | 1,168,331.49 | 1,240,537.34 |
| China Communications Import & Export Co., Ltd. | Service expenditure | Negotiation | 1,076,783.22 | - |
| China Merchants Property Management Co., Ltd. | Service expenditure | Negotiation | 569,772.90 | 1,764,315.36 |
| China Merchants Securities Co., Ltd. | Service expenditure | Negotiation | - | 22,641,509.43 |
| Other related party | Service expenditure | Negotiation | 5,255,018.65 | 4,917,018.18 |
| Shenzhen China Merchants Property Management Co., Ltd. | Property utilities | Negotiation | 19,706,450.63 | 13,814,358.72 |
| Nanshan Group and its subsidiaries | Property utilities | Negotiation | 5,923,767.12 | 2,052,879.52 |
| Other related party | Property utilities | Negotiation | 2,114,730.66 | 1,920,545.44 |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Lease service fee | Negotiation | 6,447,169.81 | - |
| China Merchants Group Finance Company Limited | Interest expense | Negotiation | 42,581,045.29 | 51,574,070.78 |
| Port de Djibouti S.A. | Interest expense | Negotiation | 7,364,273.28 | 24,719,148.38 |
| China Merchant Bank Co., Ltd. | Interest expense | Negotiation | 3,618,321.05 | 104,400.00 |
| China Merchants Steam Navigation Company Limited | Interest expense | Negotiation | - | 3,961,479.45 |
| Total | 224,668,581.80 | 189,520,166.64 | ||
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 155 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(1) Rendering and receipt of service - continued
Unit: RMB
| Related party | Content of transaction | Pricing method and decision procedures of related transactions | Closing balance | Opening balance |
| Rendering of service: | ||||
| COSCO Logistics (Zhanjiang) Co., Ltd. | Service revenue | Negotiation | 142,786,686.45 | |
| China COSCO Shipping Group and its subsidiaries | Service revenue | Negotiation | 128,551,617.88 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Service revenue | Negotiation | 54,976,948.20 | 59,871,312.19 |
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | Service revenue | Negotiation | 48,467,968.01 | |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Service revenue | Negotiation | 33,230,929.57 | - |
| Antong Holdings and its subsidiaries | Service revenue | Negotiation | 30,031,214.77 | |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd | Service revenue | Negotiation | 22,026,784.26 | 26,678,580.24 |
| Khor Ambado FZCo | Service revenue | Negotiation | 13,593,100.08 | 22,976,552.15 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service revenue | Negotiation | 9,297,044.19 | 14,667,866.59 |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Service revenue | Negotiation | 7,924,860.20 | 11,339,084.02 |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | Service revenue | Negotiation | 7,624,557.93 | 13,954,183.68 |
| Huanan Refrigeration Ice Making (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 6,487,127.00 | 6,422,615.01 |
| Sinotrans (NZ) Limited | Service revenue | Negotiation | 6,191,950.42 | - |
| Yiu Lian Dockyards (Shekou) Limited | Service revenue | Negotiation | 5,818,220.17 | 3,319,608.63 |
| Guizhou East Land Port Operation Co., Ltd. | Service revenue | Negotiation | 5,538,484.09 | |
| China Merchants International Shipping Agency (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 5,516,336.45 | 3,013,980.25 |
| International Djibouti Industrial Parks Operation FZCO | Service revenue | Negotiation | 5,109,432.57 | 3,054,612.36 |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | Service revenue | Negotiation | 4,995,026.14 | |
| Longteng Shipping | Service revenue | Negotiation | 4,250,943.39 | |
| Sinotrans Container Lines Co., Ltd. | Service revenue | Negotiation | 4,173,590.92 | 10,699,341.99 |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Service revenue | Negotiation | 3,973,305.23 | 3,929,015.11 |
| South China Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 3,574,103.34 | - |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Service revenue | Negotiation | 3,165,271.40 | 3,411,057.43 |
| Great Horn Development Company FZCO | Service revenue | Negotiation | 2,492,673.00 | 3,985,900.36 |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Service revenue | Negotiation | 2,465,482.40 | 5,804,690.70 |
| Shenzhen China Merchants Shekou Assets Management Co., Ltd. | Service revenue | Negotiation | 2,297,545.50 | - |
| Sinotrans Container Lines (Hong Kong) Company Limited | Service revenue | Negotiation | 2,211,004.97 | 2,182,888.92 |
| Qingdao Wutong Century Supply Chain Co., Ltd. | Service revenue | Negotiation | 2,061,301.86 | - |
| Shenzhen Zhaogang Seaway Goods Trading Center | Service revenue | Negotiation | 2,026,044.81 | - |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Service revenue | Negotiation | 1,855,239.95 | 5,085,762.32 |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | Service revenue | Negotiation | 1,775,122.48 | 1,574,244.92 |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 1,643,202.86 | 1,071,100.78 |
| Shanghai International Port (Group) Co., Ltd. | Service revenue | Negotiation | 1,588,035.85 | 1,588,035.85 |
| CMHK | Service revenue | Negotiation | 1,412,000.00 | 1,600,000.00 |
| Terminal Link SAS | Service revenue | Negotiation | 1,362,717.34 | 1,378,437.57 |
| China Merchants Logistics Shenzhen Co., Ltd. | Service revenue | Negotiation | 1,267,111.56 | 927,269.16 |
| Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi | Service revenue | Negotiation | 1,200,615.17 | 1,119,436.15 |
| Sinotrans Shantou Company Limited | Service revenue | Negotiation | 1,142,737.27 | 607,506.45 |
| Shenzhen Qianhai Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 1,073,773.97 | - |
| Doraleh Multi-purpose Port | Service revenue | Negotiation | 1,062,268.33 | 337,140.73 |
| Nanshan Group and its subsidiaries | Service revenue | Negotiation | 1,000,829.05 | 359,379.51 |
| Guangzhou International Ocean Shipping Agency Co., Ltd. | Service revenue | Negotiation | 935,982.67 | 1,312,017.95 |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Service revenue | Negotiation | 283,404.19 | 2,496,490.06 |
| China Outbound Air Transport Co., Ltd. | Service revenue | Negotiation | 386.55 | 1,993,291.26 |
| Zhanjiang port | Service revenue | Negotiation | - | 5,568,651.21 |
| Port de Djibouti S.A. | Service revenue | Negotiation | - | 4,640,763.43 |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Service revenue | Negotiation | - | 2,484,304.00 |
| Other related party | Service revenue | Negotiation | 8,688,006.09 | 6,874,767.79 |
| Port of Newcastle and its subsidiaries | Interest income | Negotiation | 62,584,543.33 | 34,416,578.56 |
| China Merchants Harbor City | Interest income | Negotiation | 48,716,656.41 | |
| China Merchant Bank Co., Ltd. | Interest income | Negotiation | 26,074,287.83 | 34,629,531.08 |
| Khor Ambado FZCo | Interest income | Negotiation | 18,187,714.88 | 51,599,386.03 |
| China Merchants Group Finance Company Limited | Interest income | Negotiation | 7,814,725.11 | 14,042,476.82 |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Interest income | Negotiation | 1,394,695.28 | 1,383,325.48 |
| Modern Terminals Limited | Interest income | Negotiation | - | 1,193,424.67 |
| Other related party | Interest income | Negotiation | 60,804.82 | 60,669.23 |
| Total | 761,984,416.19 | 373,655,280.64 | ||
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 156 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(2) Leases with related parties
The Group as the lessor:
Unit: RMB
| Name of the lessee | Type of leased assets | Pricing method and decision procedures of related transactions | Lease income recognized in the current year | Lease income recognized in the prior year |
| China Merchants Food (China) Co., Ltd. | Buildings | Negotiation | 5,675,752.58 | 3,393,457.47 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Port and terminal facilities | Negotiation | 4,571,984.36 | - |
| China Communications Import & Export Co., Ltd. | Buildings | Negotiation | 3,943,926.21 | 2,699,223.60 |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Buildings | Negotiation | 3,816,263.45 | - |
| Nanshan Group and its subsidiaries | Buildings | Negotiation | 2,698,718.83 | 3,506,398.00 |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Buildings | Negotiation | 2,678,324.75 | - |
| Yiu Lian Dockyards (Shekou) Limited | Buildings | Negotiation | 2,441,075.14 | 2,025,218.14 |
| Qingdao Wutong Century Supply Chain Co., Ltd. | Buildings | Negotiation | 1,082,330.31 | - |
| China Merchants Securities Co., Ltd. | Buildings | Negotiation | 2,330,741.02 | - |
| Shenzhen Nanyou (Holdings) Ltd. | Buildings | Negotiation | 426,100.95 | 2,400,571.43 |
| Other related party | Buildings, land use rights | Negotiation | 3,015,488.40 | 1,573,182.07 |
| Total | 32,680,706.00 | 15,598,050.71 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 157 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(2) Leases with related parties - continued
The Group as the lessee:
Unit: RMB
| Name of the lessor | Type of leased assets | Retail (Year) | Lease term (disclose the period covered by contract) | Other significant terms and conditions of the lease |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Port and terminal facilities | 108,319,079.87 | 9 March 2018 - 26 March 2024 | N/A |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Machinery equipment, port and terminal facilities | 65,715,388.88 | 30 November 2018 - 30 November 2024 | N/A |
| Nanshan Group and its subsidiaries | Buildings, port and terminal facilities | 56,968,753.40 | 1 January 2016 - 31 December 2018 | N/A |
| China Merchants Tongshang Finance Lease Co., Ltd. | Machinery equipment | 46,381,918.54 | 30 October 2017 - 27 October 2023 | N/A |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Port and terminal facilities | 20,621,444.76 | 1 July 2017 - 31 December 2019 | N/A |
| China Merchants Tongshang Finance Lease Co., Ltd. | Machinery equipment | 17,717,147.04 | 26 December 2016 - 15 November 2022 | N/A |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Port and terminal facilities | 14,409,799.89 | 1 January 2018 - 31 December 2019 | N/A |
| EuroAsia Dockyard Enterprise and development Ltd. | Port and terminal facilities | 13,642,731.02 | 1 January 2018 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 6,397,693.72 | 1 January 2016 - 31 December 2018 | Attached with renewal option |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Others | 5,823,873.60 | 1 January 2019 - 31 December 2019 | Attached with renewal option |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Buildings | 5,363,598.90 | 1 January 2018 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Others | 4,858,285.68 | 1 June 1998 - 31 May 2018 | Attached with renewal option |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | Buildings | 3,541,404.00 | 1 March 2017 - 28 February 2020 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 3,101,220.22 | 1 January 2019 - 31 December 2019 | Attached with renewal option |
| Nanshan Group and its subsidiaries | Buildings | 2,936,922.24 | 1 July 2019 - 31 December 2019 | N/A |
| Shenzhen Nanyou (Holdings) Ltd. | Buildings | 1,995,553.14 | 1 January 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 1,817,704.08 | 1 January 2016 - 31 December 2018 | Attached with renewal option |
| China Merchants Godown, Wharf & Transportation Co., LTD. | Vehicles and vessels | 1,457,985.47 | 1 January 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 1,428,571.43 | 1 May 2015 - 30 April 2020 | N/A |
| China Merchants Hanghua Science & Technology & Trade Center Co., Ltd. | Port and terminal facilities | 990,257.55 | 1 May 2018 - 30 April 2021 | N/A |
| China Merchants Hanghua Science & Technology & Trade Center Co., Ltd. | Buildings | 750,288.73 | 1 January 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 693,151.72 | 1 January 2017 - 25 August 2021 | N/A |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Buildings | 687,796.80 | 1 September 2018 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 658,661.84 | 25 August 2018 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Port and terminal facilities | 639,738.84 | 1 January 2019 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 500,146.74 | 1 May 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 461,005.72 | 1 January 2017 - 31 December 2020 | N/A |
| Other related party | Buildings | 1,107,721.69 | 1 January 2015 - 31 December 2023 | N/A |
| Total | 388,987,845.51 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(3) Related party guarantees
The Group as the guarantor
Unit: RMB
| Secured party | Credit Line | Guaranteed amount | Commencement date | Maturity | The guarantee has been completed or not | |
| 2019 | ||||||
| Terminal Link SAS (note 1) | 24,982,114.97 | 12,241,236.33 | June 2013 | 2019 | Yes | |
| Terminal Link SAS (note 1) | 80,305,197.15 | 80,305,197.15 | June 2013 | 2033 | No | |
| Khor Ambado FZCo (note 2) | 200,914,560.00 | 118,398,397.00 | 24 May 2019 | 2032 | No | |
| Port de Djibouti S.A. | 343,160,000.00 | 24,192,780.00 | 14 June 2016 | 14 June 2019 | Yes | |
| Total | 649,361,872.12 | 235,137,610.48 | ||||
| 2018 | ||||||
| Terminal Link SAS (note 1) | 82,195,789.24 | 82,195,789.24 | June 2013 | 2033 | No | |
| Terminal Link SAS (note 1) | 24,982,114.97 | 12,241,236.33 | June 2013 | 2019 | No | |
| Port de Djibouti S.A. | 343,160,000.00 | 24,192,780.00 | 14 June 2016 | 14 June 2019 | No | |
| Total | 450,337,904.21 | 118,629,805.57 | ||||
Note 1: CMA CGM S.A. is another shareholder of Terminal Link SAS, an associate of the Group.
The Group has made a commitment to CMA CGM S.A. that the Group will providesguarantee for its bank loan financing to the associate Terminal Link SAS and otherliabilities to the extent of the Group's 49% ownership interest in the company. The actualguaranteed amount is RMB80,305,197.15 on 31
December 2019. If any guaranteeliability occurs, the Group will compensate CMA CGM S.A.
Note 2: Khor Ambado FZCo is a related company of the Group's common ultimate controlling
shareholder. The Group provides guarantee for its bank loans and other liabilities, withactual guaranteed amount of RMB118,398,397.00.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(4) Borrowings and loans with related parties
Unit: RMB
| Related party | Amount | Commencement date | Maturity date | Description |
| 2019 | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 300,378,812.51 | 2 December 2019 | 1 December 2020 | Fixed interest rate of 4.1325% |
| China Merchants Group Finance Company Limited | 270,548,281.28 | 22 April 2019 | 21 April 2020 | Fixed interest rate of 4.3500% |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 150,000,000.00 | 23 December 2019 | 23 December 2025 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 150,000,000.00 | 27 August 2019 | 26 August 2020 | Fixed interest rate of 4.1325% |
| China Merchants Group Finance Company Limited | 56,483,984.71 | 1 July 2019 | 1 July 2034 | Fixed interest rate of 4.6550% |
| China Merchants Group Finance Company Limited | 50,061,625.00 | 4 June 2019 | 3 June 2020 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 50,000,000.00 | 29 July 2019 | 28 July 2022 | Fixed interest rate of 4.5125% |
| China Merchants Group Finance Company Limited | 47,000,000.00 | 14 October 2019 | 13 October 2024 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 33,052,804.00 | 22 July 2019 | 21 July 2020 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 29,000,000.00 | 18 October 2019 | 17 October 2023 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 28,000,000.00 | 15 January 2019 | 14 January 2024 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 23,000,000.00 | 10 June 2019 | 14 January 2024 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 10,000,000.00 | 28 December 2019 | 31 October 2023 | Fixed interest rate of 1.2000% |
| China Merchants Group Finance Company Limited | 6,000,000.00 | 22 July 2019 | 21 July 2020 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 1,000,000.00 | 24 December 2019 | 23 December 2020 | Fixed interest rate of 4.3500% |
| Total | 1,204,525,507.50 | |||
| Lendings | ||||
| China Merchants Antong Logistics Management Company | 50,000,000.00 | 24 September 2019 | 24 September 2021 | Fixed interest rate of 8.5000% |
| 2018 | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 270,000,000.00 | 23 April 2018 | 22 April 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 220,000,000.00 | 17 May 2018 | 16 May 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 80,000,000.00 | 11 December 2018 | 10 December 2028 | Fixed interest rate of 4.8020% |
| China Merchants Group Finance Company Limited | 60,000,000.00 | 19 June 2018 | 20 June 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 40,000,000.00 | 20 May 2018 | 21 May 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 7 December 2018 | 6 December 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 20 December 2018 | 19 December 2021 | Fixed interest rate of 4.2750% |
| China Merchants Group Finance Company Limited | 25,000,000.00 | 6 December 2018 | 5 October 2021 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 20,000,000.00 | 17 December 2018 | 16 December 2019 | Fixed interest rate of 4.3500% |
| Total | 775,000,000.00 | |||
| Lendings | ||||
| Port of Newcastle and its subsidiaries | 784,057,712.75 | 14 June 2018 | 29 May 2020 | Fixed interest rate of 8.0000% |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(5) Compensation for key management personnel
Unit: RMB
| Item | Closing balance | Opening balance |
| Compensation for key management personnel | 26,856,013.14 | 19,243,010.16 |
(6) Other related party transactions
At 24 December 2018, Shenzhen Urban Planning, Land and Resources Commission, ShenzhenQianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration("Qianhai Administration"), China Merchants Group, Shenzhen China Merchants Qianhai ChidiIndustrial Co., Ltd.("China Merchants Chidi"), the Company's subsidiaries ATJ and ASJ as wellas China Merchants Shekou Industrial Zone Holdings Co., Ltd. and its 16 subsidiaries ("previous19 land-holding companies") etc., totally 23 organizations, jointly signed the "China MerchantsGroup Qianhai Logistics Park Land Restructuring Agreement" (the "Land RestructuringAgreement").
According to the agreement, the previous 19 land-holding companies return the land use rights ofthe lands within the scope of restructuring to Qianhai Administration. Qianhai Administrationreplaces 55% land and corresponding shoreline (land area about 531,300 square meters) includedin the total areas of T102-0166 and T102-0167 held by ATJ and ASJ to Dachanwan port areaPhase II. In addition, other land use rights held by the previous 19 land-holding companiestotaling to RMB43.21 billion (valuation benchmark date is 1 January 2015) is recovered byQianhai Administration. After changing the nature of land use rights, Qianhai Administrationreturn equivalent land use rights as the consideration to recover all the land use rights other thanthe Dachanwan port area Phase II that need to be replaced according to the original plan.
As at 31 December 2019, the procedures of changing the Dachanwan port area Phase II land userights are not yet completed. The corresponding original carrying amount of land use rights ofRMB916,884,222,49 is transferred to other non-current assets.
ATJ and China Merchants Shekou Industrial Zone Holdings Co., Ltd.with its subsidiary ShenzhenChina Merchants Shekou Assets Management Co., Ltd. jointly setup China Merchants QianhaiIndustry in 2016, which setup China Merchants Chidi in 2017. The previous 19 land-holdingcompanies jointly holds the equity of China Merchants Qianhai Industry according to the share ofpreviously held land use rights, and completed the capital increase of China Merchants QianhaiIndustry in 2019. Among the 19 companies, ATJ and ASJ totally contributedRMB7,456,412,803.00 and hold 14% equity of China Merchants Qianhai Industry.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(6) Other related party transactions - continued
According to the joint venture and cooperation arrangement relating to land restructuring, theprevious 19 land-holding companies designate the China Merchants Chidi as the holder of thelands other than Dachanwan port area Phase II obtained in the above land restructuring. QianhaiAdministration designate its wholly-owned sub-subsidiary Shenzhen Qianhai Hongyu IndustrialInvestment Co., Ltd. (the "Qianhai Hongyu") as the land holder in respect of the land use rights(with reimbursements deducted) obtained in above land restructuring.
In 2016, Shenzhen Qianhai Shekou Free Trade Investment Development Co., Ltd. (hereinafterreferred to as "Qianhai Free Trade") was jointly established by Shenzhen Merchants QianhaiIndustrial Development Co., Ltd. and Shenzhen Qianhai Development Investment Holding Co.,Ltd. (hereinafter referred to as "Qianhai Investment Holding") which is a wholly-ownedsubsidiary of Qianhai Administration Bureau, with each accounting for 50% of the equity andbeing controlled by Shenzhen Merchants Qianhai Industrial Development Co., Ltd. through theArticles of Association and relevant agreements.
In December 2019, Shenzhen Merchants Qianhai Industrial Development Co., Ltd., QianhaiInvestment Holding and Qianhai Free Trade jointly signed a capital increase agreement.According the agreement, Qianhai Free Trade, as a leading role, purchased 100% shares of ChinaMerchants Chidi and 100% shares of China Merchants Chidi legally held by Shenzhen MerchantsQianhai Industrial Development Co., Ltd. and Shenzhen Qianhai Development InvestmentHolding Co., Ltd. respectively in the form of capital increase and share expansion. Meanwhile,Shenzhen Merchants Qianhai Industrial Development Co., Ltd. increased capital into QianhaiFree Trade with cash of RMB 8.5 billion. The above transaction was completed on December 30,2019. After the completion of the transaction, Shenzhen Merchants Qianhai IndustrialDevelopment Co., Ltd. and Shenzhen Qianhai Development Investment Holding Co., Ltd. stillhold 50% equity of Qianhai Free Trade respectively, with Shenzhen Merchants Qianhai IndustrialDevelopment Co., Ltd. controlling Qianhai Free Trade through the Articles of Association andrelevant agreements.
Except for the land use rights for replacement of Dachanwan port area Phase II, ATJ and ASJreturned land and its accompany buildings with a compensation of RMB4,193,314,004.68.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties
(1) Amounts due from related parties
Unit: RMB
| Item | Related party | Closing balance | Opening balance |
| Cash and bank balances | China Merchant Bank Co., Ltd. | 1,451,996,464.50 | 1,274,536,476.91 |
| China Merchants Group Finance Company Limited | 890,065,186.36 | 494,131,151.34 | |
| Total | 2,342,061,650.86 | 1,768,667,628.25 | |
| Accounts receivable | China COSCO Shipping Group and its subsidiaries | 60,545,437.55 | |
| Antong Holdings and its subsidiaries | 60,112,564.13 | ||
| COSCO Logistics (Zhanjiang) Co., Ltd. | 7,728,194.66 | ||
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | 5,609,630.60 | 4,678,761.75 | |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | 4,643,545.31 | 7,222,351.10 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 4,424,422.68 | 5,112,134.91 | |
| Guizhou East Land Port Operation Co., Ltd. | 4,043,600.57 | ||
| Guangdong Sinotrans Shipping Agency Co., Ltd. | 3,583,505.77 | - | |
| Khor Ambado FZCo | 3,113,788.09 | 458,050.86 | |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 2,986,271.27 | 74,485.74 | |
| Great Horn Development Company FZCo | 2,771,510.50 | 1,486,615.75 | |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | 2,010,137.38 | ||
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | 1,853,183.12 | 1,490,941.09 | |
| South China Sinotrans Supply Chain Management Co., Ltd. | 1,808,219.75 | - | |
| Sinotrans Container Lines Co., Ltd. | 1,746,120.89 | 1,156,769.47 | |
| Port de Djibouti S.A. | 1,689,447.85 | 6,387,923.40 | |
| China Merchants Harbor City | 1,536,503.45 | ||
| China Marine Shipping Agency Shenzhen Co. , Ltd. | 1,058,089.50 | 1,115,972.50 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 914,392.86 | 1,029,573.58 | |
| Other related party | 4,216,087.14 | 4,106,365.60 | |
| Total | 176,394,653.07 | 34,319,945.75 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 163 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
| Item | Related party | Closing balance | Opening balance (restated) |
| Other receivables | Nanshan Group and its subsidiaries | 313,724,861.31 | 175,976,941.31 |
| Tin-Can Island Container Terminal Ltd | 82,625,546.31 | 128,428.02 | |
| Chu Kong River Trade Terminal Co. Ltd. | 61,317,510.00 | 59,975,890.00 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 50,000,000.00 | 25,000,000.00 | |
| Tianjin Haitian Bonded Logistics Co., Ltd. | 33,282,119.52 | 34,300,000.00 | |
| Zhanjiang Infrastructure | 31,513,558.59 | ||
| Port de Djibouti S.A. | 24,832,398.83 | 24,411,770.72 | |
| COSCO Logistics (Zhanjiang) Co., Ltd. | 13,751,368.26 | ||
| Guangdong Sinotrans Co., Ltd. | 3,803,477.07 | - | |
| Csc Roro Logistics Co., Ltd. | 2,899,163.95 | 2,899,163.95 | |
| EuroAsia Dockyard Enterprise and development Ltd. | 1,514,281.82 | 1,481,149.51 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 1,068,658.39 | 1,051,801.58 | |
| Shanghai International Port (Group) Co., Ltd. | - | 50,118,027.14 | |
| Zhanjiang port | 9,253,682.23 | ||
| Other related party | 4,199,662.93 | 3,282,269.08 | |
| Total | 624,532,606.98 | 387,879,123.54 | |
| Prepayments | Other related party | 1,414,261.04 | - |
| Other current assets | China Merchant Bank Co., Ltd. | 1,528,851,492.46 | - |
| Khor Ambado FZCo | - | 1,029,478,047.00 | |
| Total | 1,528,851,492.46 | 1,029,478,047.00 | |
| Non-current assets due within one year | Port of Newcastle and its subsidiaries | 809,702,715.78 | 15,858,848.40 |
| Khor Ambado FZCo | - | 7,332,144.82 | |
| China Merchants Group Finance Company Limited | - | 2,565,333.33 | |
| Other related party | - | 229,704.43 | |
| Total | 809,702,715.78 | 25,986,030.98 | |
| Long-term receivables | China Merchants Harbor City | 1,025,631,435.87 | |
| China Merchants Antong Logistics Management Company | 50,000,000.00 | ||
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 14,500,000.00 | - | |
| Terminal Link SAS | 9,800,295.76 | 9,782,367.44 | |
| Port of Newcastle and its subsidiaries | - | 784,057,712.75 | |
| Total | 1,099,931,731.63 | 793,840,080.19 | |
| Other non-current assets | China Merchants Shekou Industrial Zone Holdings Co., Ltd. | - | 43,472,687.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 164 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties
Unit: RMB
| Item | Related party | Closing balance | Opening balance |
| Short-term borrowings | China Merchants Group Finance Company Limited | 841,079,404.24 | 640,000,000.00 |
| China Merchant Bank Co., Ltd. | 70,093,041.67 | - | |
| Total | 911,172,445.91 | 640,000,000.00 | |
| Accounts payable | Nanshan Group and its subsidiaries | 10,747,794.44 | 11,631,575.13 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 7,641,839.79 | 5,196,134.76 | |
| EuroAsia Dockyard Enterprise and development Ltd. | 2,974,168.52 | 3,698,897.16 | |
| Yiu Lian Dockyards Limited | 1,676,082.11 | 2,204,328.63 | |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | 1,006,844.56 | 928,527.51 | |
| Other related party | 3,614,167.59 | 2,323,725.85 | |
| Total | 27,660,897.01 | 25,983,189.04 | |
| Receipts in advance | Other related party | 600,535.85 | 66,799.01 |
| Contract liabilities | Guangdong Sinotrans Shipping Agency Co., Ltd. | 3,577,148.00 | - |
| Zhanjiang port | 1,287,452.83 | ||
| Other related party | 2,454,025.09 | 803,584.16 | |
| Total | 6,031,173.09 | 2,091,036.99 | |
| Other payables | Terminal Link SAS | 88,978,919.98 | 46,506,416.54 |
| Modern Terminals Limited | 59,038,373.05 | 1,286,962.56 | |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | 37,402,426.09 | 37,402,426.09 | |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | 20,762,053.30 | 951,301.52 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 11,305,700.00 | 10,000.00 | |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 11,250,000.00 | - | |
| Shenzhen China Merchants Property Management Co., Ltd. | 9,264,823.90 | 18,294,814.64 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 8,947,256.82 | 9,355,392.43 | |
| Zhanjiang Xiagang United Development Co., Ltd. | 1,433,990.57 | ||
| China Merchants Food (China) Co., Ltd. | 1,264,171.10 | 1,254,271.10 | |
| COSCO Logistics (Zhanjiang) Co., Ltd. | 1,258,811.65 | ||
| China Merchants Securities Co., Ltd. | 424,557.30 | 22,641,509.43 | |
| Shenzhen Merchants Construction Co., Ltd. | 156,590.00 | 28,379,667.10 | |
| China Merchants Zhangzhou Development Zone Co., Ltd. | - | 93,258,350.90 | |
| Sinotrans South China Co., Ltd. | - | 25,949,781.00 | |
| Port de Djibouti S.A. | - | 2,951,170.40 | |
| Qingdao Port (Group) Co., Ltd. | - | 2,700,000.00 | |
| China Merchants Group Finance Company Limited | - | 1,043,521.17 | |
| Other related party | 6,257,011.91 | 5,375,438.53 | |
| Total | 257,744,685.67 | 297,361,023.41 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 165 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties - continued
Unit: RMB
| Item | Related party | Closing balance | Opening balance |
| Non-current liabilities due within one year | China Merchants Finance Lease (Tianjin) Co., Ltd. | 145,861,850.10 | |
| China Merchants Tongshang Finance Lease Co., Ltd. | 56,146,040.22 | ||
| Nanshan Group and its subsidiaries | 52,656,827.70 | ||
| EuroAsia Dockyard Enterprise and development Ltd. | 14,269,498.38 | ||
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 5,579,040.25 | ||
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 5,454,253.54 | ||
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | 3,263,992.11 | ||
| China Merchants Landmark (Shenzhen) Co ., Ltd. | 1,242,022.25 | ||
| Other related party | 1,770,041.27 | ||
| Total | 286,243,565.82 | ||
| Other current liabilities | Port de Djibouti S.A. | - | 241,927,341.05 |
| Other non-current liabilities | Nanshan Group and its subsidiaries | 1,564,380.59 | - |
| Long-term borrowings | China Merchants Group Finance Company Limited | 376,483,984.71 | 135,000,000.00 |
| China Merchant Bank Co., Ltd. | 20,000,000.00 | - | |
| Total | 396,483,984.71 | 135,000,000.00 | |
| Long-term payables | China Merchants Finance Lease (Tianjin) Co., Ltd. | 144,000,000.00 | - |
| Lease liabilities | China Merchants Finance Lease (Tianjin) Co., Ltd. | 491,666,949.79 | |
| China Merchants Tongshang Finance Lease Co., Ltd. | 161,829,816.02 | ||
| Nanshan Group and its subsidiaries | 167,685,128.23 | ||
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 5,691,513.57 | ||
| Other related party | 1,880,637.25 | ||
| Total | 828,754,044.86 |
(XI) COMMITMENTS AND CONTINGENCIES
1. Significant commitments
Unit: RMB
| Item | 31/12/2019 | 31/12/2018 |
| Commitments that have been entered into but have not been recognized in the financial statements | ||
| - Commitment to acquire long-term assets | 3,767,236,258.74 | 3,971,730,917.34 |
| - Commitment to invest port construction | 6,758,563,544.21 | 5,490,560.00 |
| Others | 354,959,845.19 | 26,115,744.09 |
| Total | 10,880,759,648.14 | 4,003,337,221.43 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 166 -
(XI) COMMITMENTS AND CONTINGENCIES - continued
2. Contingencies
Unit: RMB
| Item | 31/12/2019 | 31/12/2018 |
| Contingent liabilities arising from litigations (Note 1) | 274,299,826.26 | 323,559,335.68 |
| Guarantees for borrowings of associates (Note 2) | 198,703,594.15 | 118,629,805.57 |
| Total | 473,003,420.41 | 442,189,141.25 |
Note 1: This represents the significant contingent liabilities arising from the litigations between
TCP and local tax authority, employee or former employee in Brazil at as the year end.According to the professional advice of external lawyers and the latest estimates of theGroup's management, the possible compensation is RMB274,299,826.26 but it is notlikely to cause outflow of economic benefits from the Group. Therefore, the contingentliabilities arising from the above pending litigations are not recognized as provisions.The counter-bonification where the Group as the beneficiary will be executed by theformer TCP shareholder that disposed the shares of TCP. According to the counter-bonification agreement, the former TCP shareholder need to make counter-bonificationto the Group in respect of the above contingent liabilities, with the compensation amountnot exceeding pre-determined amount and specified period.
Note 2: As at 31 December 2019, the Group made commitments to another shareholder of
Terminal Link SAS (an associate of the Group) to provide guarantee for the borrowingsand other liabilities of Terminal Link SAS to the extent of the Group's 49% equity in thecompany. The actual guaranteed amount is RMB80,305,197.15. If any guarantee liabilityoccurs, the Group will make compensations.
Except for the above guarantee, as at 31 December 2019, the Group also providesguarantee for the bank loans and other liabilities of the related party Khor Ambado FZCo.The guaranteed amount is 200,914,560.00. The loan amount used by Khor AmbadoFZCo is RMB118,398,397.00. Details are set out in Note(X) 5 (3).
At 31 December 2019, the Group's directors assessed the risk of default of above loansand other liabilities and considered that the risk is immaterial and the possibility to makecompensation for the guarantees is rare.
Except for the above contingent events, at 31 December 2019, the Group has no othersignificant guarantee or other contingencies that need to be explained.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 167 -
(XII) EVENTS AFTER THE BALANCE SHEET
1. Profit distribution
| Items | Amount |
| Profits and dividends to be distributed (Note) | 884,287,957.04 |
| Profits and dividends to be declared by shareholder meeting | To be approved by shareholder meeting |
Note：Refer to Note V, 48 for details.
2. New coronavirus epidemic
Since the outbreak of new coronavirus epidemic in China at the beginning of 2020, the therapyprophylactic has been carried out throughout the country. The Group actively responded andexecuted the regulations and requirements of the new coronavirus epidemic issued by thegovernment.
New coronavirus epidemic has temporarily affected the Groups’ production and management,however, the impact of the novel coronavirus outbreak on the economy depends on the progressand effectiveness as well as duration of our epidemic prevention and control work
The Group has keep following the development of new coronavirus epidemic as well asevaluating the impact on financial status and operating results, etc. The Group will strengthen theprevention and control of the epidemic along with resuming production in an orderly way.
3. Share option incentive plan
The Company held the extraordinary general meeting on 3 February 2020, where the Company'sshare option incentive plan was reviewed and discussed item-to-item, and approved. The totalshare options granted to the incentive objects under the incentive plan involves underlying sharesof 17,728,000 shares, accounting for about 0.922% of the Company's total share capital which is1,922,365,124 shares upon the announcement of the incentive plan. The first batch (total amount17,198,000 shares) of incentive objects totals to 238 persons, accounting for 2.5% of totalemployee in service at the end of 2018. The registration procedures for the first batch grantedwere completed on 13 March 2020.
Except for the above events, the Group has no other significant events after the balance sheet date.
4. Purchase of minority interests of TCP
As Note V(41), the minority shareholder (hereinafter referred to as “ the seller”) acquired 10%stake from Kong Rise Development Limited , shareholder of the TCP, with a higher price amongthe market price and BRL320 million. On 23 February 2020, the seller asked Kong RiseDevelopment Limited to exercise the option. Until approval date of financial statement, KongRise Development Limited has prepaid USD64 million to the seller on 24 February 2020.Theabove transaction has not been completed until the consolidated financial statements haveauthorized.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 168 -
(XII) EVENTS AFTER THE BALANCE SHEET - continued
5. Purchase of mandatory convertible securities and loans from company Terminal Link SAS,an associate company
On November 25
th, 2020, the subsidiary of the Group, China merchants port holdings companyhas signed the shareholder’s agreements with CMA CGM S.A. , shareholder of the Terminal LinkSAS. According to this agreement, China merchants port holdings company might pay USD 468million for mandatory convertible securities and has authorized loans with USD500 million limitsto Terminal Link SAS in order to support Terminal Link SAS acquire ten target ports. TerminalLink SAS has completed acquisition of 8 ports before March 26
th
, 2020. China merchants portholdings company has paid for mandatory convertible securities and issued loans , which totalamounts are USD815 million.The remaining mandatory convertible securities have not been paidand loans have not been issued.
(XIII) OTHER SIGNIFICANT EVENTS
1. Segment reporting
(1) Basis for determining reporting segments and accounting policies
The key management team of the Company is regarded as the CODM, who reviews the Group'sinternal reports in order to assess performance, allocate resources and determine the operatingsegments.
The CODM manages the Group's operations by divisions from both business and geographicperspectives.
In respect of business segments, management assesses the performance of the Group's businessoperations including ports operation, bonded logistics operation and other operations.
Ports operation
Ports operation includes container terminal operation, bulk and general cargo terminal operationoperated by the Group and its associates and joint ventures. The Group's reportable segments ofthe ports operation are as follows:
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 169 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(1) Basis for determining reporting segments and accounting policies - continued
(a) Mainland China, Hong Kong and Taiwan
? Pearl River Delta? Yangtze River Delta? Bohai Rim? Others
(b) Other locations outside of Mainland China, Hong Kong and Taiwan
Bonded logistics operation
Bonded logistics operation includes logistics park operation, ports transportation and airport cargohandling operated by the Group and its associates and joint ventures.
Other operations
Other operations mainly includes property development and investment and construction ofmodular housing operated by the Group's associates, property investment operated by the Groupand corporate function.
Each of the segments under ports operation include the operations of a number of ports in variouslocations within one geographic location, each of which is considered as a separate operatingsegment by the CODM. For the purpose of segment reporting, these individual operatingsegments have been aggregated into reportable segments on geographic basis in order to present amore systematic and structured segment information. To give details of each of the operatingsegments, in the opinion of the directors of the Company, would result in particulars of excessivelength.
Bonded logistics operation and other operations include a number of different operations, each ofwhich is considered as a separate but insignificant operating segment by the CODM. For segmentreporting, these individual operating segments have been aggregated according to the natures oftheir operations to give rise to more meaningful presentation.
There are no material sales or other transactions between the segments.
As at 31 December 2019, around 70% of The Group's non-current assets other than financialinstruments and deferred tax assets are located in Mainland China.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 170 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information
Segment financial information for 2019 is as follows:
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Operating income | 5,196,613,368.06 | - | 65,287,182.79 | 3,048,109,069.32 | 3,237,062,565.69 | 11,547,072,185.86 | 411,410,069.19 | 165,347,168.69 | - | 12,123,829,423.74 |
| Operating cost | 3,008,092,503.04 | - | 54,620,318.87 | 2,442,406,257.78 | 1,680,548,644.03 | 7,185,667,723.72 | 240,230,706.61 | 223,022,489.38 | - | 7,648,920,919.71 |
| Segment operating profit (loss) | 2,188,520,865.02 | - | 10,666,863.92 | 605,702,811.54 | 1,556,513,921.66 | 4,361,404,462.14 | 171,179,362.58 | (57,675,320.69) | - | 4,474,908,504.03 |
| Adjustments: | ||||||||||
| Taxes and levies | 28,208,048.74 | 902,080.83 | 1,226,820.81 | 41,913,977.40 | 74,183,581.47 | 146,434,509.25 | 10,405,578.38 | 15,266,911.26 | 449,581.03 | 172,556,579.92 |
| Administrative expense | 367,421,172.07 | 14,629,856.34 | 11,286,215.13 | 427,071,045.26 | 240,768,795.97 | 1,061,177,084.77 | 40,794,239.92 | 1,086,063.41 | 406,463,193.56 | 1,509,520,581.66 |
| R&D expenses | 119,506,939.75 | - | - | 4,346,404.54 | - | 123,853,344.29 | - | - | - | 123,853,344.29 |
| Financial expenses | 186,473,966.41 | 3,557,959.06 | (1,031,714.93) | 140,511,147.67 | 343,853,815.52 | 673,365,173.73 | 27,521,546.75 | 43,602,750.59 | 1,191,780,266.46 | 1,936,269,737.53 |
| Impairment gains of assets | 25,051.16 | - | - | - | - | 25,051.16 | - | - | - | 25,051.16 |
| Impairment gains (losses) of credit | (2,704,122.79) | 96,054.01 | (47,117,070.21) | (510,363.77) | (50,235,502.76) | (13,907.01) | - | - | (50,249,409.77) | |
| Other income | 74,072,845.73 | 1,224,999.96 | 136,812.67 | 53,835,650.36 | - | 129,270,308.72 | 22,545,823.25 | 6,361.40 | 10,278,619.73 | 162,101,113.10 |
| Investment income | 160,825,470.54 | 2,569,882,989.42 | 415,798,097.77 | 772,742,553.30 | 439,240,848.69 | 4,358,489,959.72 | 23,454,651.74 | 237,229,143.96 | - | 4,619,173,755.42 |
| Gains from changes in fair value | 10,933.07 | 154,574,350.85 | 297,972,325.74 | (21,212,710.87) | (364,861,632.31) | 66,483,266.48 | - | - | - | 66,483,266.48 |
| Gains from disposal of assets | 4,172,962,308.96 | - | 13,069.99 | 620,155,605.55 | 764,083.94 | 4,793,895,068.44 | (3,047.02) | - | 670,761.37 | 4,794,562,782.79 |
| Operating profit | 5,892,103,224.72 | 2,706,592,444.00 | 713,201,903.09 | 1,370,264,264.80 | 972,340,665.25 | 11,654,502,501.86 | 138,441,518.49 | 119,604,459.41 | (1,587,743,659.95) | 10,324,804,819.81 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 171 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for 2019 is as follows: - continued
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Non-operating income | 15,167,367.31 | - | 920,329.94 | 19,125,548.43 | 512,078,201.39 | 547,291,447.07 | 458,318.63 | 1,086,658.83 | 4,266,935.88 | 553,103,360.41 |
| Non-operating expenses | 13,328,509.27 | 4,069.14 | 8,922.44 | 25,023,662.84 | 14,345,696.95 | 52,710,860.64 | 57,151.76 | 50,000.00 | 17,634,000.00 | 70,452,012.40 |
| Gross profit | 5,893,942,082.76 | 2,706,588,374.86 | 714,113,310.59 | 1,364,366,150.39 | 1,470,073,169.69 | 12,149,083,088.29 | 138,842,685.36 | 120,641,118.24 | (1,601,110,724.07) | 10,807,456,167.82 |
| Income tax expenses | 1,922,260,744.88 | 134,247,591.99 | 91,985,992.66 | 224,620,829.53 | 92,650,917.92 | 2,465,766,076.98 | 31,835,647.68 | 13,078,333.18 | 129,858,836.78 | 2,640,538,894.62 |
| Net profit | 3,971,681,337.88 | 2,572,340,782.87 | 622,127,317.93 | 1,139,745,320.86 | 1,377,422,251.77 | 9,683,317,011.31 | 107,007,037.68 | 107,562,785.06 | (1,730,969,560.85) | 8,166,917,273.20 |
| Segment assets | 29,586,087,542.86 | 26,729,937,567.14 | 7,140,466,913.27 | 26,167,362,772.28 | 43,499,664,358.95 | 133,123,519,154.50 | 3,343,718,019.81 | 17,831,744,436.63 | 2,397,936,234.93 | 156,696,917,845.87 |
| Total assets in the financial statements | 156,696,917,845.87 | |||||||||
| Segment liabilities | 10,648,908,871.15 | 700,175,249.44 | 140,580,616.21 | 9,017,491,838.33 | 11,995,283,584.80 | 32,502,440,159.93 | 757,665,748.51 | 1,010,340,736.41 | 27,436,263,588.78 | 61,706,710,233.63 |
| Total liabilities in the financial statements | 61,706,710,233.63 | |||||||||
| Supplementary information: | ||||||||||
| Depreciation and Amortization | 900,796,294.39 | - | 2,052,884.92 | 878,442,775.96 | 796,377,578.73 | 2,577,669,534.00 | 92,199,834.15 | 174,521,673.45 | 20,134,304.85 | 2,864,525,346.45 |
| Interest income | 42,470,222.92 | 257,234.76 | 1,203,144.96 | 70,701,815.50 | 83,372,904.82 | 198,005,322.96 | 1,266,345.18 | 1,469,124.45 | 51,319,225.99 | 252,060,018.58 |
| Interest expense | 183,085,034.75 | 2,926,671.54 | - | 203,657,696.95 | 392,724,564.47 | 782,393,967.71 | 28,245,233.91 | 38,016,163.44 | 1,241,182,229.48 | 2,089,837,594.54 |
| Investment income from long-term equity investment under equity method | 129,628,862.78 | 2,530,919,159.03 | 347,650,565.12 | 19,727,531.90 | 439,240,848.69 | 3,467,166,967.52 | 23,454,651.74 | 237,229,143.96 | - | 3,727,850,763.22 |
| Long-term equity investment under equity method | 2,592,565,388.68 | 24,772,038,158.14 | 6,078,963,750.12 | 640,212,907.12 | 11,061,215,279.18 | 45,144,995,483.24 | 768,727,807.74 | 12,002,816,092.28 | - | 57,916,539,383.26 |
| Non-current assets other than long-term equity investment | 21,153,911,773.00 | 294,462,264.01 | 27,181,862.66 | 21,955,658,532.67 | 28,203,528,560.52 | 71,634,742,992.86 | 2,302,277,585.20 | 5,405,248,897.19 | 455,073,380.68 | 79,797,342,855.93 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 172 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for 2018 is as follows:
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Operating income | 5,303,465,225.60 | - | 69,907,311.12 | 747,571,785.87 | 3,063,582,986.50 | 9,184,527,309.09 | 386,269,027.02 | 132,598,286.47 | - | 9,703,394,622.58 |
| Operating cost | 3,093,917,475.00 | - | 55,661,268.67 | 631,405,970.58 | 1,522,302,179.06 | 5,303,286,893.31 | 214,495,776.55 | 221,458,726.01 | - | 5,739,241,395.87 |
| Segment operating profit (loss) | 2,209,547,750.60 | - | 14,246,042.45 | 116,165,815.29 | 1,541,280,807.44 | 3,881,240,415.78 | 171,773,250.47 | (88,860,439.54) | - | 3,964,153,226.71 |
| Adjustments:： | ||||||||||
| Taxes and levies | 71,372,197.96 | 284,627.70 | 1,160,781.85 | 10,778,344.95 | 112,983,856.21 | 196,579,808.67 | 32,621,484.27 | 6,211,213.84 | 541,296.73 | 235,953,803.51 |
| Administrative expense | 390,753,695.03 | 3,749,372.10 | 9,930,005.82 | 97,317,524.40 | 193,183,913.13 | 694,934,510.48 | 36,924,775.16 | 28,852.77 | 519,977,537.04 | 1,251,865,675.45 |
| R&D expenses | 118,865,768.66 | - | - | - | - | 118,865,768.66 | - | - | 3,123,329.16 | 121,989,097.82 |
| Financial expenses | 33,812,457.43 | 82,614,789.19 | (406,546.82) | 19,344.58 | 419,088,994.19 | 535,129,038.57 | 38,623,819.16 | 51,653,121.27 | 1,018,012,123.95 | 1,643,418,102.95 |
| Impairment gains of assets | - | - | - | - | - | - | - | - | - | - |
| Impairment gains (losses) of credit | (10,760,473.33) | - | - | (10,616.21) | 3,410,788.03 | (7,360,301.51) | (168,279.09) | - | - | (7,528,580.60) |
| Other income | 32,901,021.72 | 408,333.33 | 113,998.17 | 12,684,291.81 | - | 46,107,645.03 | 1,411,014.72 | - | 8,661,467.89 | 56,180,127.64 |
| Investment income | 143,206,331.48 | 2,706,435,143.32 | 322,968,785.89 | (21,733,692.03) | 592,367,561.64 | 3,743,244,130.30 | 17,758,667.43 | 207,255,360.07 | (430,008.32) | 3,967,828,149.48 |
| Gains from changes in fair value | 45,351.40 | (873,891,271.63) | (74,594,618.22) | - | (125,966,299.23) | (1,074,406,837.68) | - | - | - | (1,074,406,837.68) |
| Gains from disposal of assets | 9,216,008.49 | - | - | (418,481.28) | 10,450,227.43 | 19,247,754.64 | 26,746.03 | - | (16,005.34) | 19,258,495.33 |
| Operating profit | 1,769,351,871.28 | 1,746,303,416.03 | 252,049,967.44 | (1,427,896.35) | 1,296,286,321.78 | 5,062,563,680.18 | 82,631,320.97 | 60,501,732.65 | (1,533,438,832.65) | 3,672,257,901.15 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 173 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for 2018 is as follows: - continued
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Non-operating income | 34,351,337.85 | - | 424,231.58 | 1,931,244.58 | 24,074,268.10 | 60,781,082.11 | 1,216,591.28 | 943,208.69 | 4,187,807.90 | 67,128,689.98 |
| Non-operating expenses | 40,405,962.28 | 4,010.31 | 400,000.00 | 1,057,097.28 | 65,315,693.08 | 107,182,762.95 | 6,240,627.54 | 200,000.00 | 11,407,908.08 | 125,031,298.57 |
| Gross profit | 1,763,297,246.85 | 1,746,299,405.72 | 252,074,199.02 | (553,749.05) | 1,255,044,896.80 | 5,016,161,999.34 | 77,607,284.71 | 61,244,941.34 | (1,540,658,932.83) | 3,614,355,292.56 |
| Income tax expenses | 294,544,209.66 | 43,364,189.75 | 12,909,324.23 | 16,064,881.66 | 94,332,207.91 | 461,214,813.21 | 14,785,763.43 | 49,933,513.49 | 202,506,448.47 | 728,440,538.60 |
| Net profit | 1,468,753,037.19 | 1,702,935,215.97 | 239,164,874.79 | (16,618,630.71) | 1,160,712,688.89 | 4,554,947,186.13 | 62,821,521.28 | 11,311,427.85 | (1,743,165,381.30) | 2,885,914,753.96 |
| Segment assets | 24,361,542,350.83 | 24,738,700,129.24 | 6,498,939,975.26 | 11,975,384,175.20 | 43,137,915,507.68 | 110,712,482,138.21 | 2,768,799,649.68 | 10,986,223,834.86 | 3,550,578,792.93 | 128,018,084,415.68 |
| Total assets in the financial statements | 128,018,084,415.68 | |||||||||
| Segment liabilities | 3,716,328,520.15 | 620,013,763.67 | 108,999,946.50 | 2,399,865,586.89 | 11,874,203,103.78 | 18,719,410,920.99 | 809,775,291.61 | 1,161,920,752.31 | 26,910,051,577.96 | 47,601,158,542.87 |
| Total liabilities in the financial statements | 47,601,158,542.87 | |||||||||
| Supplementary information： | ||||||||||
| Depreciation and Amortization | 777,378,984.84 | - | 2,030,173.13 | 287,332,851.66 | 698,620,897.88 | 1,765,362,907.51 | 80,463,924.42 | 165,229,175.14 | 16,903,705.26 | 2,027,959,712.33 |
| Interest income | 21,954,329.37 | 508,539.88 | 438,043.11 | 40,225,269.81 | 84,159,789.64 | 147,285,971.81 | 1,052,104.99 | 828,268.56 | 123,286,948.50 | 272,453,293.86 |
| Interest expense | 44,507,286.38 | 1,009,944.96 | - | 39,664,933.55 | 398,730,346.09 | 483,912,510.98 | 32,382,213.72 | 39,755,069.06 | 1,078,051,538.04 | 1,634,101,331.80 |
| Investment income from long-term equity investment under equity method | 134,907,307.68 | 2,674,327,364.23 | 309,435,330.98 | (21,882,199.10) | 592,062,707.31 | 3,688,850,511.10 | 17,758,667.43 | 207,255,360.07 | - | 3,913,864,538.60 |
| Long-term equity investment under equity method | 2,629,326,400.75 | 23,003,406,812.98 | 5,696,221,052.02 | 2,540,719,065.34 | 10,818,356,531.61 | 44,688,029,862.70 | 340,969,759.95 | 5,147,577,640.75 | - | 50,176,577,263.40 |
| Non-current assets other than long-term equity investment | 18,136,739,566.92 | 296,477,731.85 | 29,099,361.17 | 7,816,817,366.31 | 29,571,968,313.58 | 55,851,102,339.83 | 2,206,436,654.13 | 5,573,444,649.09 | 480,592,127.03 | 64,111,575,770.08 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 174 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
The Group's revenue by geographical areas of operations and information about its non-currentassets other than financial instruments and deferred tax assets presented based on the geographicalareas in which the assets are located as follows:
Unit: RMB
| Revenue from external transactions | Amount incurred in the current period | Amount incurred in the prior period |
| Mainland China, Hong Kong and Taiwan | 8,872,027,132.24 | 6,635,924,788.34 |
| Pearl River Delta | 5,629,472,123.72 | 5,705,075,363.71 |
| Yangtze River Delta | - | - |
| Bohai Rim | 194,445,939.20 | 183,277,638.76 |
| Others | 3,048,109,069.32 | 747,571,785.87 |
| Other locations | 3,251,802,291.50 | 3,067,469,834.24 |
| Total | 12,123,829,423.74 | 9,703,394,622.58 |
Unit: RMB
| Total non-current assets | Amount incurred in the current period | Amount incurred in the prior period |
| Mainland China, Hong Kong and Taiwan | 96,489,027,270.44 | 73,602,488,004.01 |
| Pearl River Delta | 43,196,515,110.55 | 33,618,069,629.60 |
| Yangtze River Delta | 25,066,500,422.16 | 23,299,884,544.83 |
| Bohai Rim | 6,686,470,964.43 | 6,316,574,360.92 |
| Others | 21,539,540,773.30 | 10,367,959,468.66 |
| Other locations | 41,224,854,968.75 | 40,685,665,029.47 |
| Total | 137,713,882,239.19 | 114,288,153,033.48 |
(3) Degree of reliance on major customers
The total operating income derived from the top five clients of the Group is RMB3,234,035,638.42, accounting for 26.68% of the Group's total operating income.
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS
1. Other receivables
(1) Summary of other receivables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest receivable | - | - |
| Dividends receivable | 207,259,421.40 | 329,153,465.74 |
| Other receivables | 598,275,341.87 | 321,861,868.32 |
| Total | 805,534,763.27 | 651,015,334.06 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 175 -
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(2) Dividends receivable
(a) Disclosure of dividends receivable
Unit: RMB
| Company name | Closing balance | Opening balance |
| Dongguan Chiwan Warf Co., Ltd. | 103,355,370.74 | 103,355,370.74 |
| Shenzhen Chiwan Harbor Container Co. Ltd. | - | 96,378,106.61 |
| Dongguan Chiwan Terminal Co., Ltd. | 88,196,930.66 | 88,196,930.66 |
| Shenzhen Chiwan Tugboat Co., Ltd. | - | 21,929,842.24 |
| China Merchants Bonded Logistics Co., Ltd. | 15,707,120.00 | 15,707,120.00 |
| Shenzhen Chiwan Port Development Co., Ltd. | - | 3,299,252.31 |
| Shenzhen Chiwan International Freight Agency Co., Ltd. | - | 286,843.18 |
| CMPort | - | - |
| Total | 207,259,421.40 | 329,153,465.74 |
| Less: Provision for credit loss | - | - |
| Carrying amount | 207,259,421.40 | 329,153,465.74 |
(b) Significant dividends receivable with aging over 1 year
Unit: RMB
| Item | Closing balance | Reason for outstanding | Impaired or not |
| Dongguan Chiwan Warf Co., Ltd. | 103,355,370.74 | In processing and expected to be received in 2020 | No |
| Dongguan Chiwan Terminal Co., Ltd. | 88,196,930.66 | In processing and expected to be received in 2020 | No |
| Total | 191,552,301.40 |
(3) Other receivables
(a) Disclosure of other receivables by aging
Unit: RMB
| Aging | Closing balance | ||
| Other receivables | Provision for credit loss | Proportion of provision (%) | |
| Within 1 year | 598,275,341.87 | - | - |
| 1 to 2 years | - | - | - |
| 2 to 3 years | - | - | - |
| Over 3 years | 383,456.60 | 383,456.60 | 100.00 |
| Total | 598,658,798.47 | 383,456.60 | |
(b) Provision for credit loss of other receivables
As part of the Company's credit risk management, the Company performs internal credit rating oncustomers, and determines the expected loss ratio of other receivables under each credit rating.Such expected average loss ratio is based on historical actual impairment and taking intoconsideration of current and expected future economic conditions.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 176 -
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(3) Other receivables - continued
(b) Provision for credit loss of other receivables - continued
At 31 December 2019, the credit risk and expected credit loss of other receivables by categories ofcustomers are as follows:
Unit: RMB
| Credit rating | Expected credit loss ratio (%) | Closing balance | Opening balance | ||||||
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | Total | 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | Total | ||
| A | 0.00-0.10 | 598,275,341.87 | - | - | 598,275,341.87 | 321,861,868.32 | - | - | 321,861,868.32 |
| B | 0.10-0.30 | - | - | - | - | - | - | - | - |
| C | 0.30-50.00 | - | - | - | - | - | - | - | - |
| D | 50.00-100.00 | - | - | 383,456.60 | 383,456.60 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount | 598,275,341.87 | - | 383,456.60 | 598,658,798.47 | 321,861,868.32 | - | 383,456.60 | 322,245,324.92 | |
| Provision for credit loss | - | - | 383,456.60 | 383,456.60 | - | - | 383,456.60 | 383,456.60 | |
| Book value | 598,275,341.87 | - | - | 598,275,341.87 | 321,861,868.32 | - | - | 321,861,868.32 | |
(c) Changes in provision for credit loss of other receivables
Unit: RMB
| Item | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance at 1 January 2019 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount of other receivables at 1 January 2019 | ||||
| -- transfer to stage II | - | - | - | - |
| -- transfer to stage III | - | - | - | - |
| -- transfer back to stage II | - | - | - | - |
| -- transfer back to stage I | - | - | - | - |
| Provision for the year | - | - | - | - |
| Reversal | - | - | - | - |
| Transfer out due to derecognition of financial assets (including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| Balance at 31 December 2019 | - | - | 383,456.60 | 383,456.60 |
(d) Other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Amounts due from related parties | 571,663,096.21 | 316,567,355.24 |
| Advances | 26,283,930.19 | 4,785,167.82 |
| Deposits | - | 372,042.31 |
| Others | 711,772.07 | 520,759.55 |
| Total | 598,658,798.47 | 322,245,324.92 |
| Less: Provision for credit loss | 383,456.60 | 383,456.60 |
| Book value | 598,275,341.87 | 321,861,868.32 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(3) Other receivables - continued
(e) There is no other receivables write-off during this year。
(f) The top five balances of other receivables classified by debtor
Unit: RMB
| Company name | Nature | Closing balance | Aging | Proportion of the amount to the total other receivable (%) | Closing balance of provision for credit loss |
| Shenzhen Haixing Harbor Development Co., Ltd | Loan to related parties | 328,163,096.21 | Within 1 year | 54.81 | - |
| Dongguan Chiwan Terminal Co., Ltd. | Loan to related parties | 134,500,000.00 | Within 1 year | 22.47 | - |
| Dongguan Chiwan Warf Co., Ltd. | Loan to related parties | 109,000,000.00 | Within 1 year | 18.21 | - |
| Shenzhen Chiwan Port Development Co., Ltd. | Advance payments for account current | 21,072,976.83 | Within 1 year | 3.52 | - |
| Guangdong Sinotrans Co., Ltd. | Compensation for profit and loss over the transition period | 3,803,477.07 | Within 1 year | 0.64 | - |
| Total | 596,539,550.11 | 99.65 | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS - continued
2. Long-term equity investments
Unit: RMB
| Investee | 1/1/2019 | Changes for the year | 31/12/2019 | Closing balance of impairment provision | |||||||
| Increase | Decrease | Investment income under equity method | Reconciling items from other comprehensive income | Other equity movements | Announced distribution of cash dividends or profit | Impairment provision | Others | ||||
| I. Subsidiary | |||||||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | 5,500,000.00 | - | - | - | - | - | - | - | - | 5,500,000.00 | - |
| Shenzhen Chiwan Harbor Container Co. Ltd. | 250,920,000.00 | - | - | - | - | - | - | - | - | 250,920,000.00 | - |
| Shenzhen Chiwan Port Development Co., Ltd. (Note 1) | 7,000,000.00 | 199,283,811.09 | - | - | - | - | - | - | - | 206,283,811.09 | - |
| CWHK | 1,070,000.00 | - | - | - | - | - | - | - | - | 1,070,000.00 | - |
| Shenzhen Chiwan Tugboat Co., Ltd. | 24,000,000.00 | - | - | - | - | - | - | - | - | 24,000,000.00 | - |
| Chiwan Container Terminal Co., Ltd. | 421,023,199.85 | - | - | - | - | - | - | - | - | 421,023,199.85 | - |
| Dongguan Chiwan Warf Co., Ltd. | 186,525,000.00 | - | - | - | - | - | - | - | - | 186,525,000.00 | - |
| Dongguan Chiwan Terminal Co., Ltd. | 175,000,000.00 | - | - | - | - | - | - | - | - | 175,000,000.00 | - |
| Chiwan Shipping (Hong Kong) Limited | 1,051,789.43 | - | - | - | - | - | - | - | - | 1,051,789.43 | - |
| CMPort (Note 2) | 26,170,129,771.99 | 1,116,813,838.43 | - | - | - | - | - | - | - | 27,286,943,610.42 | - |
| RoRo Logistics | 149,709,800.00 | - | - | - | - | - | - | - | - | 149,709,800.00 | - |
| Zhanjiang port (Note 3) | - | 371,530,912.93 | - | - | - | - | - | - | - | 371,530,912.93 | - |
| Sub-total | 27,391,929,561.27 | 1,687,628,562.45 | - | - | - | - | - | - | - | 29,079,558,123.72 | - |
| II. Associate | |||||||||||
| China Merchants International Information Technology Co., Ltd. | 18,274,568.38 | - | - | 2,369,042.80 | - | - | - | - | - | 20,643,611.18 | - |
| China Merchants Bonded Logistics Co., Ltd. | 340,500,382.73 | - | - | 25,355,342.22 | - | - | - | - | - | 365,855,724.95 | - |
| Sub-total | 358,774,951.11 | - | - | 27,724,385.02 | - | - | - | - | - | 386,499,336.13 | - |
| III. Joint venture | |||||||||||
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | 793,557,064.58 | - | - | 42,110,853.02 | - | - | (43,605,689.02) | - | - | 792,062,228.58 | - |
| China Merchants Antong Logistics Management Company | - | 8,000,000.00 | - | 256,893.80 | - | - | - | - | - | 8,256,893.80 | - |
| Sub-total | 793,557,064.58 | 8,000,000.00 | - | 42,367,746.82 | - | - | (43,605,689.02) | - | - | 800,319,122.38 | - |
| Total | 28,544,261,576.96 | 1,695,628,562.45 | - | 70,092,131.84 | - | - | (43,605,689.02) | - | - | 30,266,376,582.23 | - |
Note 1: The Company receives 25% equity of Shenzhen Chiwan Port Development Co., Ltd. from CWHK at the consideration of
RMB10,825,000.00 on 19 April 2019. Since then, Shenzhen Chiwan Port Development Co., Ltd. became the Company's wholly-ownedsubsidiary. In July 2019, the Company transferred the major operating assets, debts and employees of Chiwan port area 1-7# berth toShenzhen Chiwan Port Development Co., Ltd. The net book value of the transferred assets and liabilities at the benchmark date of thetransfer amounting to RMB188,458,811.09 is considered as investment cost and included in the Company's long-term equity investments inShenzhen Chiwan Port Development Co., Ltd.
Note 2: Details are set out in Note (VII) 1.
Note 3: Details are set out in Note (VI) 1.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 179 -
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
3. Operating income and operating costs
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal operating | 75,207,466.30 | 75,438,994.71 | 211,782,804.61 | 158,561,191.30 |
| Other operating | 16,835,131.75 | 645,029.02 | 32,116,448.46 | 1,504,260.12 |
| Total | 92,042,598.05 | 76,084,023.73 | 243,899,253.07 | 160,065,451.42 |
4. Investment income
(1) Details of investment income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Income from long-term equity investments under cost method | 1,221,470,436.60 | 121,894,044.34 |
| Long-term equity investments income under equity method | 70,092,131.84 | 63,015,142.10 |
| Income from other equity instruments investments | 10,822,585.00 | 8,228,975.00 |
| Income from debt investments | 3,837,808.22 | - |
| Total | 1,306,222,961.66 | 193,138,161.44 |
(2) Income from long-term equity investments under cost method
Unit: RMB
| Investee | Amount incurred in the current period | Amount incurred in the prior period | Reason for changes comparing with prior year |
| CMPort | 1,116,334,395.76 | - | Changes in profit distribution of investee |
| Chiwan Container Terminal Co., Ltd. | 105,136,040.84 | - | Changes in profit distribution of investee |
| Shenzhen Chiwan Harbor Container Co. Ltd. | - | 96,378,106.61 | Changes in profit distribution of investee |
| Shenzhen Chiwan Tugboat Co., Ltd. | - | 21,929,842.24 | Changes in profit distribution of investee |
| Shenzhen Chiwan Port Development Co., Ltd. | - | 3,299,252.31 | Changes in profit distribution of investee |
| Shenzhen Chiwan International Freight Agency Co., Ltd. | - | 286,843.18 | Changes in profit distribution of investee |
| Total | 1,221,470,436.60 | 121,894,044.34 |
SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2019
1. BREAKDOWN OF NON-RECURRING PROFIT OR LOSS
Unit: RMB
| Item | Amount | Remarks |
| Losses on disposal of non-current assets | 4,794,562,782.79 | |
| Tax refunds or reductions with ultra vires approval or without official approval documents | - | |
| Government grants recognized in profit or loss (except for grants that are closely related to the Company's business and are in amounts and quantities fixed in accordance with the national standard) | 162,587,042.38 | |
| Money lending income earned from non-financial institutions in profit or loss | 19,571,040.36 | |
| The excess of attributable fair value of identifiable net assets over the consideration paid for subsidiaries, associates and joint ventures | - | |
| Gains or losses on exchange of non-monetary assets | - | |
| Gains or losses on entrusted investments or assets management | - | |
| Provision of impairment losses for each asset due to force majeure, e.g. natural disasters | - | |
| Gains or losses on debt restructuring | - | |
| Business restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc. | - | |
| Gains or losses relating to the unfair portion in transactions with unfair transaction price | - | |
| Net profit or loss of subsidiaries recognized as a result of business combination of enterprises under common control from the beginning of the period up to the business combination date | - | |
| Gains or losses arising from contingencies other than those related to normal operating business | - | |
| Gains from changes of fair value of held-for-trading financial assets, derivative financial assets, other non-current financial assets, held-for-trading financial liabilities, derivative financial liabilities other than effective hedging operation relating to the Company's normal operations, and the investment income from disposal of the above held-for-trading financial assets/financial liabilities and other debt investments | 66,075,363.30 | |
| Reversal of provision for accounts receivable that are tested for credit loss individually | - | |
| Gains or losses on entrusted loans | - | |
| Gains or losses on changes in the fair value of investment properties that are subsequently measured using the fair value model | - | |
| Effects on profit or loss of one-off adjustment to profit or loss for the period according to the requirements by tax laws and accounting laws and regulations | - | |
| Custodian fees earned from entrusted operation | - | |
| Other non-operating income or expenses other than above | 482,165,418.73 | |
| Other profit or loss that meets the definition of non-recurring profit or loss (note) | 732,644,357.06 | |
| Tax effects | (1,504,203,995.96) | |
| Effects of minority interest (after tax) | (2,892,976,715.05) | |
| Total | 1,860,425,293.61 |
Note: This mainly represents the gains from remeasurement of previously held equity at fair value upon
the Company's acquisition of Zhanjiang Port (Group) Co., Ltd.
SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2019
2. RETURN ON NET ASSETS AND EARNINGS PER SHARE ("EPS")
The return on net assets and EPS have been prepared by Shenzhen Chiwan Wharf Co., Ltd. in accordancewith Information Disclosure and Presentation Rules for Companies Making Public Offering No. 9 -Calculation and Disclosure of Return on Net Assets and Earnings per Share (revised in 2010) issued byChina Securities Regulatory Commission.
Unit: RMB
| Item | Weighted average return on net assets (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to ordinary shareholders | 8.7125 | 1.5943 | 1.5943 |
| Net profit attributable to ordinary shareholders after deducting non-recurring profit or loss | 3.1197 | 0.5709 | 0.5709 |