China Merchants Port Group Co., Ltd. Interim Report 2019
CHINA MERCHANTS PORT GROUP CO., LTD.
INTERIM REPORT 2019
Date of Disclosure: 31 August 2019
China Merchants Port Group Co., Ltd. Interim Report 2019
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 5
Part III. Business Highlights ............................................................................................................. 9
PART IV Performance Discussion and Analysis ...... 17
Part V Significant Events ...... 38
Part VI Share Changes and Shareholder Information ...... 58
Part VII Preferred Shares ...... 64
Part VIII Directors, Supervisors and Senior Management ...... 65
Part IX Corporate Bonds ...... 66
Part X Financial Statements ...... 67
Part XI Documents Available for Reference ...... 68
China Merchants Port Group Co., Ltd. Interim Report 2019
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of China Merchants Port Group Co., Ltd. (hereinafter referred toas the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of thisReport and its summary, and shall be jointly and severally liable for any misrepresentations,misleading statements or material omissions therein.Bai Jingtao, the Company’s legal representative, Wen Ling, the Company’s Chief Financial Officer,and Sun Ligan, the person-in-charge of the accounting organ hereby guarantee that the financialstatements carried in this Report are factual, accurate and complete.All the directors of the Company attended in person the Board meeting for the review of this Reportand its summary.Any forward-looking statements such as future plans or development strategies mentioned hereinshall not be considered as the Company’s promises to investors. And investors are reminded toexercise caution when making investment decisions.Possible risks faced by the Company and countermeasures have been explained in “Part IVPerformance Discussion and Analysis” herein, which investors are kindly reminded to pay attentionto.Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by the Companyfor information disclosure. And all the information disclosed by the Company shall be subject towhat’s disclosed on the aforesaid media.The Company has no interim dividend plan, either in the form of cash or stock.This Report and its summary have been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese versions shall prevail.
China Merchants Port Group Co., Ltd. Interim Report 2019
Definitions
| Term | Definition |
| The “Company”, “CMPort” or “we” | China Merchants Port Group Co., Ltd., formerly known as “Shenzhen Chiwan Wharf Holdings Limited” |
| CMG | China Merchants Group Co., Limited |
| CMG Hong Kong | China Merchants Group (H.K.) Limited, a CMG wholly-owned subsidiary in Hong Kong |
| CMID | China Merchants Investment Development Company Limited |
| CMPort Holdings | China Merchants Port Holdings Company Limited (00144.HK) |
| CWH (H.K.) | Chiwan Wharf Holdings (Hong Kong) Limited |
| Zhanjiang Port | Zhanjiang Port (Group) Co., Ltd. |
| Sinotrans Guangdong | Sinotrans Guangdong Co., Ltd. |
| Zhanjiang Infrastructure Investment | Zhanjiang Infrastructure Construction Investment Group Co., Ltd. |
| Broadford Global | Broadford Global Limited, a wholly-owned subsidiary of CMG Hong Kong |
| CMGD | China Merchants Gangtong Development (Shenzhen) Co., Ltd., a Broadford Global wholly-owned subsidiary in Shenzhen |
| CND Group | China Nanshan Development (Group) Inc. |
| CMB | China Merchants Bank Co., Ltd. |
| Lac Assal | Lac Assal Investment Holding Company Limited |
| CMSK | China Merchants Shekou Industrial Zone Holdings Co., Ltd. |
| CM Qianhai Industrial | Shenzhen China Merchants Qianhai Industrial Development Co., Ltd. |
| CMI | China Merchants Investment Limited |
| Cheer Signal | Cheer Signal Investment Limited |
| SIPG | Shanghai International Port (Group) Co., Ltd. |
| TCP | TCP Participa??es S.A. at the Port of Paranagua, Brazil |
| CICT | Colombo International Container Terminals Ltd. |
| HIPG | Hambantota International Port Group in Sri Lanka |
| Haixing Harbor | Shenzhen Haixing Harbor Development Co., Ltd. |
| Dalian Port | Dalian Port (PDA) Company Limited |
| SASAC of the State Council | State-Owned Assets Supervision and Administration Commission of the State Council |
| CSRC | China Securities Regulation Commission |
| SZSE | Shenzhen Stock Exchange |
China Merchants Port Group Co., Ltd. Interim Report 2019
| CMG Finance | China Merchants Group Finance Co., Ltd. |
| The “Articles of Association” | The Articles of Association of China Merchants Port Group Co., Ltd. |
| The “Stock Listing Rules” | The Stock Listing Rules of the Shenzhen Stock Exchange |
| The cninfo website | www.cninfo.com.cn |
| RTG | Rubber Tyre Gantry |
| TEU | Twenty Foot Equivalent Unit |
| RMB RMB’0,000 RMB’00,000,000 | Expressed in the Chinese currency of Renminbi Expressed in tens of thousands of Renminbi Expressed in hundreds of millions of Renminbi (unless otherwise specified) |
China Merchants Port Group Co., Ltd. Interim Report 2019
Part II Corporate Information and Key Financial Information
I Corporate Information
| Stock name | CM Port Group, CM Port Group B | Stock code | 001872, 201872 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 招商局港口集团股份有限公司 | ||
| Abbr. (if any) | 招商港口 | ||
| Company name in English (if any) | China Merchants Port Group Co., Ltd. | ||
| Abbr. (if any) | CMPort | ||
| Legal representative | Bai Jingtao | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Huang Chuanjing | Hu Jingjing |
| Address | 23-25/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | 23-25/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC |
| Tel. | +86 755 26828888 | +86 755 26828888 |
| Fax | +86 755 26886666 | +86 755 26886666 |
| Email address | Cmpir@cmhk.com | Cmpir@cmhk.com |
III Other Information
1. Contact Information of the Company
No change occurred to the registered address, office address and their zip codes, website address andemail address of the Company in the Reporting Period, which can be found in the 2018 Annual Report.
2. Media for Information Disclosure and Place where this Report is Lodged
China Merchants Port Group Co., Ltd. Interim Report 2019
The newspapers designated by the Company for information disclosure, the website designated bythe CSRC for disclosing the Company’s periodic reports and the place for lodging such reports didnot change in the Reporting Period. The said information can be found in the 2018 Annual Report.IV Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes □ No
The retrospective restatements in the table below are caused by business combination under commoncontrol and changes of account policies. For further information, please refer to “5.Changes to theAccounting Policies, Accounting Estimates and Measurement Methods as Compared with theFinancial Reporting of Last Year” and “6. Changes to the Scope of Consolidated Financial StatementsCompared to Last Year” within “XVI YoY Changes to the Scope of the Consolidated FinancialStatements” under “Part V Significant Events” in this Report.
China Merchants Port Group Co., Ltd. Interim Report 2019
| H1 2019 | H1 2018 | Change (%) | ||
| Original | Restated | Restated | ||
| Operating revenue (RMB) | 5,834,353,421.33 | 1,246,135,516.34 | 4,672,338,040.72 | 24.87% |
| Net profit attributable to the listed company’s shareholders (RMB) | 2,299,181,330.61 | 316,060,290.67 | 620,038,405.65 | 270.81% |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 569,405,330.09 | 316,625,908.24 | 317,364,771.61 | 79.42% |
| Net cash generated from/used in operating activities (RMB) | 2,556,861,915.52 | 349,174,873.68 | 1,800,734,718.71 | 41.99% |
| Basic earnings per share (RMB/share) | 1.28 | 0.49 | 0.35 | 265.71% |
| Diluted earnings per share (RMB/share) | 1.28 | 0.49 | 0.35 | 265.71% |
| Weighted average return on equity (%) | 7.24% | 6.79% | 2.18% | 5.06% |
| 30 June 2019 | 31 December 2018 | Change (%) | ||
| Total assets (RMB) | 151,736,666,169.08 | 128,018,084,415.68 | 18.53% | |
| Equity attributable to the listed company’s shareholders (RMB) | 32,618,869,690.71 | 30,760,475,412.93 | 6.04% | |
The total share capital at the end of the last trading session before the disclosure of this Report:
| Total share capital at the end of the last trading session before the disclosure of this Report (share) | 1,793,412,378 |
| Fully diluted earnings per share based on the latest total share capital above (RMB/share) | 1.28 |
V Accounting Data Differences under China’s Accounting Standards for Business Enterprises(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards
1. Net Profit and Equity under CAS and IFRS
No difference for the Reporting Period.
China Merchants Port Group Co., Ltd. Interim Report 2019
2. Net Profit and Equity under CAS and Foreign Accounting StandardsNo difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
VI Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | H1 2019 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 4,169,857,166.53 | - |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 73,405,505.76 | - |
| Capital occupation charges on non-financial enterprises that are charged to current profit or loss | 25,804,391.08 | - |
| Gain or loss on fair-value changes in trading and derivative financial assets and liabilities & income from disposal of trading and derivative financial assets and liabilities and other investments in debt obligations (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 643,627,313.01 | - |
| Reversed portions of impairment allowances for accounts receivable and contract assets which are tested individually for impairment | 876,952.77 | - |
| Non-operating income and expense other than the above | 6,560,244.05 | - |
| Other gains and losses that meet the definition of exceptional gain/loss (note) | 722,688,249.35 | - |
| Less: Income tax effects | 1,208,157,505.65 | - |
| Non-controlling interests effects (net of tax) | 2,704,886,316.38 | - |
| Total | 1,729,776,000.52 | -- |
Note: Primarily the adjustment to the fair value of the investment in Zhanjiang Port measured at the equity methodbefore the acquisition of Zhanjiang Port in the Current PeriodThe Company did not reclassify as recurrent an exceptional gain/loss item defined or listed in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering TheirSecurities to the Public—Exceptional Gain/Loss Items for the Reporting Period.
China Merchants Port Group Co., Ltd. Interim Report 2019
Part III. Business Highlights
I Main business of the Company during the reporting periodIs the Company subject to any disclosure requirements for special industries?No.
1. Main business scope and business models
The Company is principally engaged in the handling, warehousing and transportation of containersand bulk cargoes, as well as the provision of other ancillary services. It principally operates 24container berths and 15 bulk cargo berths in the ports in West Shenzhen, 9 container berths, 2 bulkcargo berths, 10 general cargo berths and a berth dedicated to handling coal in Shantou Port, 2container berths and 33 bulk cargo berths in Zhanjiang Port, 4 multi-purpose berths in Shunde Port,2 container berths and 6 bulk cargo berths in Zhangzhou Port, Xiamen, 4 container berths in Port ofColombo, Sri Lanka, 4 multi-purpose berths, 2 oil berths and 4 container berths in Hambantota Port,3 container berths in Port of Lomé, Togo, and 4 container berths in Paranaguá Port, Brazil. Moreover,the Company invests in container hubs in Shanghai and Ningbo and expands its layout to ports inSouth Asia, Africa, Europe, South America and Oceania.The major business segments of China Merchants Port Group Co., Ltd. are as follows:
| Business segments | Applications |
| Cargo handling and warehousing | Container handling and warehousing: the Company provides ship berthing, loading and unloading services to ship companies, offers container storage service to ship companies and cargo owners and provides overhead box services to tractor companies. The Company also engages in the businesses of division or merger of cargoes in containers, container leasing and container maintenance; Bulk cargo handling and warehousing: the Company is engaged in bulk cargo handling and transportation in port zones, as well as storage services in yards. The major types of cargoes handled include food, steel, woods and sandstones. |
| Ancillary port-related services | The ancillary port-related services of the Company mainly include tugboat berthing assistance and barge services at the arrival of ships to the ports, tallying in the course of cargo handling, and supply of shore power and freshwater for vessels. |
| Bonded logistics operations | The Company provides various services for clients (including logistics companies, trading companies or cargo owners), for example, warehouse/yard |
China Merchants Port Group Co., Ltd. Interim Report 2019
2. Development stage and cyclical characteristic of the industry in which the Company operatesand its industry position during the reporting periodThe port industry is a crucial cornerstone for national economic and social progress, and is closelylinked to global economic and trade development. During the first half of 2019, the global economymaintained its growth in general. Nonetheless, the Company faced challenges as well as opportunitiesarising from downside risks, increasing global uncertainties caused by trade frictions, restructuringof global trade pattern, the slowdown in growth of global container shipping, the downshift ofdomestic port business, severe competition for investment in emerging markets overseas, technologyadvancement in the port and shipping industry.During the first half of 2019, challenges in global trade environment has affected the foundation forglobal economic growth. According to the statistics of Clarkson Research Services Limited, it isexpected that the global container throughput would reach approximately 100.1 million TEUs duringthe first half of 2019, representing a slight year-on-year increase of 0.5%, which was down 6.7percentage points as compared with the corresponding period in 2018. According to the statisticspublished by the Ministry of Transport of the PRC, the container throughput handled by PRC portstotalled 126.99 million TEUs from January to June 2019, representing an increase of 5.1% year-on-year on a cumulative basis.During the first half of 2019, the volume of cargo export of certain global major routes has shrunk.Despite the upgrade towards large-scale vessels, the liners implemented measures such as low-speedvoyage or temporary suspension of shipping in order to reduce the impact of growth of shippingcapacity on the market. The fundamentals of most routes were still weak and market freight rate waslowered from the relatively high level at the end of 2018. It was not until early April when manyroutes increased the scale of their vessels and hence increased their shipping capacity that thedownward trend of market freight rate has ceased. Subsequently, liners successively made severalrounds of freight rate rise, but the price rise failed to sustain and only lead to slight fluctuation of spotmarket freight rate due to lack of cargoes.
China Merchants Port Group Co., Ltd. Interim Report 2019
The Company is the largest global leading port developer, investor and operator in the PRC, with acomprehensive port network at major hub locations along coastal China. It has also establishedpresence in South Asia, Africa, Europe, Mediterranean, Oceania and South America. Upholding anenterprising, steady and efficient operating style, the Company capitalises on its global port portfolio,professional management experience, the self-developed state-of-the-art terminal operation systemand integrated logistics management platform for exports and imports, thereby providing itscustomers with timely and efficient port and maritime logistics services along with comprehensiveand modern integrated logistics solutions. In addition, the Company also invests in bonded logisticsoperation and launches integrated park development business for the extension of the port value chain,which allows it to create greater value through the synergies of the existing terminal network.II Significant Changes in Major Assets
1. Significant Changes in Major Assets
| Major assets | Main reason for significant changes |
| Equity assets | 1. On 2 January 2019, the Proposal on the Signing of the Agreement on the Transfer of Shares in Zhanjiang Port (Group) Co., Ltd. between the Company and Sinotrans Guangdong was approved at the 1st Extraordinary Meeting of the 9th Board of Directors of the Company in 2019. By the signing of the Agreement on the same day, the Company was given 201,034,549 ordinary shares in Zhanjiang Port by Sinotrans Guangdong, which accounted for 5% of the total issued shares of Zhanjiang Port as at the date of signing the Agreement, for a consideration of RMB375,334,490. The announcement (No. 2019-002) on the external investment and the related-party transaction has been disclosed on Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn on 3 January 2019. 2. The Proposal on a Capital Increase by a Wholly-Owned Subsidiary to Zhanjiang Port (Group) Co., Ltd. was approved at the 2nd Extraordinary Meeting of the 9th Board of Directors held by the Company on 8 January 2019 and the 1st Extraordinary General Meeting of 2019 held on 24 January 2019 respectively. For details of the capital increase, please refer to the Announcement No. 2019-005 on an External Investment and the Related-Party Transaction by a Wholly-Owned Subsidiary disclosed by the Company on www.cninfo.com.cn dated 9 January 2019. The wholly-owned subsidiary of the Company CWH (H.K.) signed in Zhanjiang on 8 January 2019 the Agreement on a Capital Increase to Zhanjiang Port (Group) Co., Ltd. with Zhanjiang Infrastructure Investment and Zhanjiang Port (hereinafter referred to as the “Capital Increase Agreement”). According to the provisions of the Capital Increase Agreement, Zhanjiang Port issued 1,853,518,190 additional ordinary shares at the price of RMB1.867 per share or the equivalent in the foreign currency (based on the exchange rate at the time of payment) to increase its registered capital to RMB5,874,209,145. CWH (H.K.) subscribed for 1,606,855,919 such ordinary shares, accounting for 27.3544% of the issued shares of Zhanjiang Port as at the date of issuance of such shares, at a total price of RMB3,000,000,000.77 or the equivalent in the foreign currency (based on the exchange rate at the time of payment) (hereinafter referred to as "the Transaction"); and Zhanjiang Infrastructure Investment subscribed for 246,662,271 shares, accounting for 4.1991% of the issued shares of |
China Merchants Port Group Co., Ltd. Interim Report 2019
China Merchants Port Group Co., Ltd. Interim Report 2019
| Qianhai Industrial will increase investment to its wholly-owned subsidiary CM Chidi with such increased capital funds to pay for the cash consideration for the joint venture (including but not limited to advance payment and sincerity deposit, etc.), or pay the joint venture cash consideration directly to the joint venture company (including but not limited to advance payment and sincerity deposit, etc.). The cash consideration for the joint venture shall be determined by the evaluation agency entrusted by CM Qianhai Industrial and Qianhai Investment Holdings, who will evaluate the 100% equity of CM Chidi and Qianhai Hongyu in accordance with the Joint Venture Cooperation Agreement. Among the 19 land-holding companies, CMSK and its majority-owned subsidiary, Shekou Asset Management and the Company are all under the same actual controller, CMG. As per the Stock Listing Rules, the deal mentioned in the Proposal on a Wholly-Owned Subsidiary of the Company’s Majority-Owned Subsidiary Participating in a Land Readjustment in Qianhai constitutes a related-party transaction, but not a major asset restructuring as defined in the Methods for the Administration of Major Asset Restructurings by Listed Companies. The relevant announcement number is 2019-008. The Proposal was approved at the 3rd Extraordinary Meeting of the Company’s 9th Board of Directors of 2019 on 11 January 2019 (relevant announcement number: 2019-007) and then at the 2nd Extraordinary General Meeting of the Company of 2019 on 25 February 2019 (relevant announcement number: 2019-020). 4. On 22 January 2019, the Company's majority-owned subsidiary CMPort Holdings signed with CMI, Cheer Signal Investment Limited and Lac Assal the Supplementary Agreement II on Shareholder Agreement of Lac Assal (hereinafter referred to as the “Capital Increase Agreement”) to stipulate that the ports of CMPort Holdings, CMI and Cheer Signal Investment Limited shall increase the capital of Lac Assal by means of cash contribution according to the proportion of their shareholder’s equity. The total amount of capital to increase is USD30,000,000, including USD12,000,000 to be increased by CMPort Holdings, USD12,000,000 to be increased by CMI and USD6,000,000 to be increased by Cheer Signal Investment Limited (hereinafter referred to as the “capital increase”). After the capital increase, the registered capital of Lac Assal will increase to USD60,060,000. The proportion of shares of CMPort Holdings, CMI and Cheer Signal Investment Limited will remained unchanged as 40%, 40% and 20% respectively. The Company, CMI and Cheer Signal are all under the same actual controller, CMG. Therefore, as per the Stock Listing Rules and other regulations, this deal constitutes a related-party transaction (relevant announcement number: 2019-012). The Proposal on Joint Capital Increase by Majority-owned Subsidiary and Related Parties to Lac Assal was deliberated and approved by the 4th Extraordinary Meeting of the 9th Board of Directors held by the Company on 22 January 2019 (relevant announcement number: 2019-011). 5. On 29 April 2019, the Company's majority-owned subsidiary CMPort Holdings signed with CMI, Cheer Signal Investment Limited and Lac Assal the Supplementary Agreement III on Shareholder Agreement of Lac Assal (hereinafter referred to as the “Capital Increase Agreement”) to stipulate that the ports of CMPort Holdings, CMI and Cheer Signal Investment Limited shall increase the capital of Lac Assal by means of cash contribution according to the proportion of their shareholder’s equity. The total amount of capital to increase is USD84,750,000, including USD33,900,000 to be increased by CMPort Holdings, USD33,900,000 to be increased by CMI and USD16,950,000 to be increased by Cheer Signal Investment Limited (hereinafter referred to as the “capital increase”). After the capital increase, the registered capital of Lac Assal will increase to USD144,810,000. The proportion of shares of CMPort Holdings, CMI and Cheer Signal Investment Limited will remained unchanged as 40%, 40% and 20% respectively (relevant announcement number: 2019-043). The Proposal on Joint Capital Increase by Majority-owned Subsidiary and Related Parties to Lac Assal was deliberated and approved by the 6th Extraordinary Meeting of the 9th Board of Directors held by the Company on 26 April 2019 (relevant announcement number: 2019-041). | |
| Construction in progress | The net value of construction in progress of the Company was RMB7.255 billion as at 30 June 2019, up by RMB1.756 billion from the year-beginning amount of RMB5.499 billion. To be specific, the new inclusion of Zhanjiang Port in the consolidation scope of the Current Period contributed an increase of RMB1.311 billion; TCP an increase of RMB219 million; Shantou Port an increase of RMB216 million; and other consolidated subsidiaries saw minor ups and downs. |
China Merchants Port Group Co., Ltd. Interim Report 2019
2. Major Assets Overseas
Unit: RMB’0,000
| Asset | Source | Asset value | Location | Operations | Control measures to protect asset safety | Return generated | As % of the Company’s net asset value | Material impairment risk (yes/no) |
| Equity assets | Acquired via share offering | 12,762,017.51 | Hong Kong | Port investment and operations | Appointing director, supervisor and senior management | 530,966.35 | 86.95% | No |
| Other information | N/A | |||||||
III. Core competitiveness analysisIs the Company subject to any disclosure requirements for special industries?No.
1. Active implementation of the key “Belt and Road” initiative with leverage on its global portnetworkAs an important carrier for domestic and overseas port investment and operation of CMG, theCompany seized the policy opportunities of the key “Belt and Road” initiative so as to actively builda global port network and make investments in global resources. In recent years, through mergers,acquisitions and restructuring, along with the renovation of old ports and construction of new ports,the Company has become a modern port chain with global coverage and actively pushed forward theestablishment of the “Silk Road Economic Belt” and “21st-Century Maritime Silk Road”.After years of overseas development, CMPort has developed the port industries across Southeast Asia,South Asia, Africa, Europe, Oceania, etc. Among which, its port network spreads over 18 countriesor regions with most ports locating in important port areas of countries along the “Belt and Road”initiative.The Company aims at “attracting global business and connecting the five continents”. As both the
China Merchants Port Group Co., Ltd. Interim Report 2019
shipping and port sectors gradually shifted to forming alliances, the Company actively integrated itsdomestic and overseas port assets and capitalised on its relatively complete global port network toprovide customers with comprehensive port logistics service solutions, which created its uniquecompetitive strength. At the same time, the diversified investment and operation of port assets havealso effectively enhanced its capabilities to resist risks of industry fluctuations and trade fictions.
2. Sound shareholder background
CMG is a key state-owned enterprise under the direct administration of the PRC central government.Headquartered in Hong Kong, it is an integrated enterprise with diversified businesses and one of thefour major Chinese enterprises in Hong Kong. Currently, CMG is mainly engaged in three coreindustries, namely transportation, finance and real estate, while focusing on four key sectors, namelyinfrastructure and equipment manufacturing, logistics and shipping, integrated finance andcomprehensive development of cities and parks. CMG has been rated as a Grade A enterprise in theOperating Results Assessment of the State-owned Assets Supervision and AdministrationCommission of the State Council for 15 consecutive years and is a central state-owned enterprise thatowns two Fortune 500 companies.Being a crucial player and facilitator of the national “Belt and Road” initiative, CMG has acceleratedglobal development and has preliminarily formed a relatively complete network of overseas port,logistics, finance and park business. The sound shareholder background and ample domestic andoverseas resources of CMG have provided strong support to CMPort for creating a global portcooperation platform with international vision and global expansion capabilities.
3. Innovative business development model
Taking port business as the core and leveraging the synergy of different port zones as well as city-industry integration, the Company is actively exploring and facilitating the comprehensive portdevelopment model of “Port-Park-City”. The Company further expanded value-added port servicesto the ports and port cities in which it operates, which generated agglomeration effect in talents,information, funds and commodities, thereby continuously expanding its business development andregional coverage, as well as driving urban upgrade and development.
China Merchants Port Group Co., Ltd. Interim Report 2019
Currently, the Company has participated in and pushed forward integrated regional development andconstruction in various overseas regions under the port-oriented approach, where it has achievedcertain milestones. The innovative business development model helps foster new profit growthaspects for the Company.
4. Extensive experience in professional port management with sound and efficient operatingstyleThe Company always adheres to the proactive, sound and efficient operating style. Capitalising onits global portfolio for port asset and resource allocation, it is committed to providing customers withtimely and efficient port and maritime logistics services and thus becoming an important bridge andbonding for the country’s foreign trade. Meanwhile, the Company also made an extensive investmentin bonded logistics business to expand its port value chain. By taking advantage of the synergies ofits existing terminal network, the Company created values for both its customers and shareholders.The Company has earned itself good reputation across the industry by leveraging the professionalmanagement experience accumulated for years, its self-developed global leading port operatingsystem and integrated logistics management platform for import and export, its extensive maritimelogistics support system and all-rounded modern integrated logistics solutions, its high-qualityengineering management and reliable service offerings.
China Merchants Port Group Co., Ltd. Interim Report 2019
PART IV Performance Discussion and Analysis
I Summary
1. External Environment Analysis
During the first half of 2019, the global economy faced downside risks with developed economiesgrowing at a slower pace and the growth of emerging and developing economies being constrained.Currently, international multilateral trading system is confronted by challenges; trade protectionismhas cast uncertainties over the outlook of global economy; and global supply chain was disrupted bytension caused by escalating trade frictions to a certain extent, leading to weak global economicgrowth momentum. According to the statistics set out in the latest “World Economic Outlook” reportpublished by the International Monetary Fund (IMF) in July 2019, the global economic growth rateof 2019 was expected to be 3.2%, down by 0.4 percentage point as compared to that in 2018, amongwhich, developed economies and emerging markets and developing economies grew at 1.9% and 4.1%respectively, down by 0.3 and 0.4 percentage point as compared to those of 2018, respectively. Totalglobal trade volume (including goods and services) in 2019 was predicted to grow by 2.5%,representing a decrease of 1.2 percentage points as compared to that of 2018.During the first half of 2019, the Chinese economy has been progressing steadily with changes ingeneral. The Gross Domestic Product (GDP) for the first half of the year grew by 6.3% year-on-year,down by 0.5 percentage point as compared with the corresponding period last year. Among which,the first and second quarters recorded a year-on-year growth of 6.4% and 6.2%, respectively. Asaffected by the weak confidence in financial market, a slowdown in infrastructure investment andescalating Sino-US trade frictions, the economic growth in China declined in the second quarter.Nevertheless, the economic growth in the first half of the year was basically in line with marketexpectation. Facing the complicated international environment and the demanding and challengingtask to achieve stable development through reform, China firmly adhered to the keynote of steadyprogress and the new development concept to promote high quality development with a focus on thesupply-side structural reform, so as to deepen market reform, expand the scale of high-level opening
China Merchants Port Group Co., Ltd. Interim Report 2019
up and further strive to achieve stabilized employment, financial conditions, foreign trade, foreignand domestic investment and expectation. The continuous support of a series of policies and measureshas contributed to the stable growth of foreign trade in China. According to the statistics publishedby the Customs, China’s total foreign trade of import and export value amounted to RMB14.67 trillionduring the first half of the year, representing an increase of 3.9% as compared to the correspondingperiod last year, among which the total export value was RMB7.95 trillion, representing an increaseof 6.1% year-on-year; while import value totalled RMB6.72 trillion, representing an increase of 1.4%year-on-year. With the continuous implementation of the new round of high-level opening up, marketdiversification has achieved positive progress. The growth rate of China’s import and export from/tocountries along the Belt and Road Initiative reached 9.7%, which is 5.8 percentage points higher thanthe overall growth rate of foreign trade. During the same period, China’s import and export from/toemerging economies in Latin America and Africa also increased by 7.4% and 9%, respectively, whichare 3.5 and 5.1 percentage points higher than the overall growth rate.Under the influence of global economic slowdown and trade frictions, global trade growth declinedand port business in China also grew at a slightly lower pace. According to the statistics published bythe Ministry of Transport, the container throughput handled by PRC ports totalled 127 million TEUsduring the first half of 2019, representing an increase of 5.1% year-on-year while the containerthroughput handled by PRC ports of significant scale was 121 million TEUs in the first half of 2018,representing a growth of 5.4% compared with the same period last year.
2. Port Business Review
During the first half of 2019, the Company’s ports handled a total container throughput of 55.10million TEUs, up by 2.2% year-on-year, among which the ports in Mainland China contributedcontainer throughput of 41.06 million TEUs, indicating an increase of 2.4% year-on-year, TheCompany’s operations in Hong Kong and Taiwan contributed an aggregate container throughput of
3.55 million TEUs, representing a decrease of 4.7% year-on-year, mainly attributable to the impactof restructuring of terminal business. A total container throughput handled by the Company’s overseasports grew by 4.0% year-on-year to 10.49 million TEUs.
China Merchants Port Group Co., Ltd. Interim Report 2019
Bulk cargo volume handled by the Group’s ports decreased by 7.6% year-on-year to 243 milliontonnes, of which the Group’s ports in Mainland China handled a total bulk cargo volume of 240million tonnes, representing a decrease of 8.0% year-on-year, mainly due to the impact of decline inbulk cargo business in Shanghai International Port (Group) Co., Ltd; primarily benefited from thecapacity increase of Djibouti and Hambantota Port in Sri Lanka, the Group’s overseas ports handleda total bulk cargo volume of 3 million tonnes, representing an increase of 37.4% year-on-year.Pearl River Delta regionThe West Shenzhen Port Zone handled a container throughput of 5.68 million TEUs, up by 0.6%year-on-year, and handled a bulk cargo volume of 6.48 million tonnes, down by 20.9% year-on-year,which was mainly affected by the international trade environment and the change in the structure ofcargo source. Chu Kong River Trade Terminal Co., Ltd. handled a total container throughput of 0.54million TEUs and a bulk cargo volume of 1.54 million tonnes. Dongguan Machong Terminal handleda bulk cargo volume of 6.14 million tons, down by 3.9% year-on-year. Guangdong Yide Port Limitedhandled a container throughput of 0.13 million TEUs and a bulk cargo volume of 0.99 million tonnes,up by 33.7% and 60.4% year-on-year respectively, which was mainly benefitted from the furtherrelease of production capacity as a result of the development of new customers and the successfulexpansion of new shipping routes.
Yangtze River Delta region
SIPG handled a container throughput of 21.54 million TEUs, up by 5.0% year-on-year, which wasmainly benefitted from the growth in container volume of transhipment and domestic trade. Bulkcargo volume handled down by 18.5% year-on-year to 61.75 million tonnes, which was mainly dueto the proactive actions adopted to optimize the structure of cargo source. Ningbo Daxie ChinaMerchants International Terminals Co., Ltd. handled a container throughput of 1.64 million TEUs,representing a decrease of 4.3% year-on-year.Bohai Rim regionQingdao Qianwan United Container Terminal Co., Ltd. handled a container throughput of 3.79million TEUs, representing an increase of 11.6% year-on-year, which was mainly benefited from thegrowth in container volume of domestic trade. Qingdao Qianwan West Port United Terminal Co., Ltd.
China Merchants Port Group Co., Ltd. Interim Report 2019
handled bulk cargo volume of 7.64 million tonnes, representing an increase of 7.3% year-on-year,which was mainly benefited from the substantial increase in volume of pulp and the contribution ofnew types of goods. Qingdao Port Dongjiakou Ore Terminal Co., Ltd. handled bulk cargo volume of
28.16 million tonnes, indicating a decrease of 4.6% year-on-year, which was mainly affected by thedam-break in the mines of Vale S.A., the world’s largest iron ore exporter. Dalian Port handled acontainer throughput of 5.07 million TEUs, down by 7.9% year-on-year, and handled a bulk cargovolume of 63.04 million tonnes, representing an increase of 1.9% year-on-year. China OverseasHarbour Affairs (Laizhou) Company Limited handled a bulk cargo volume of 11.19 million tonnes,representing a decrease of 2.1% year-on-year. Tianjin Five Continents International ContainerTerminals Co., Ltd. handled a total container throughput of 1.38 million TEUs, representing anincrease of 4.1% year-on-year.South-East region of Mainland ChinaZhangzhou China Merchants Port Co., Ltd., located in Xiamen Bay Economic Zone, handled acontainer throughput of 0.19 million TEUs, increased by 1.1% year-on-year, while its bulk cargovolume handled decreased by 42.4% year-on-year to 4.57 million tonnes, which was mainly due tothe decrease in production volume of sandstone. Zhangzhou Xia Men Bay China MerchantsTerminals Co., Ltd. handled a bulk cargo volume of 80,000 tonnes. Shantou China Merchants PortGroup Co., Ltd. handled a container throughput of 0.59 million TEUs and bulk cargo volume of 3.92million tonnes, down by 2.9% and 12.5% year-on-year respectively, which was mainly affected bythe “dry bulk to containers” of coals and the change in demand for coal supply from power plants.
South-West region of Mainland ChinaZhanjiang Port handled a container throughput of 0.52 million TEUs, up by 13.4% year-on-year,mainly attributed to the growth in container volume and the successful expansion of new shippingroutes. It also handled a bulk cargo volume of 44.31 million tonnes, down by 3.8% year-on-year.Hong Kong and TaiwanModern Terminals Limited and China Merchants Container Services Limited delivered an aggregatecontainer throughput of 2.73 million TEUs, down by 5.8% year-on-year, which outperformed theoverall market of Hong Kong. Kao Ming Container Terminal Corporation handled a total container
China Merchants Port Group Co., Ltd. Interim Report 2019
throughput of 0.82 million TEUs, representing a decrease of 0.7% year-on-year.Overseas operationCICT in Sri Lanka handled a container throughput of 1.37 million TEUs, up by 5.7% year-on-year.The wheeled and bulk cargo business of Hambantota Port Project are progressing well with a bulkcargo volume handled of 0.46 million tonnes, indicating a significant increase as compared to 80,000tonnes for the same period last year. Container throughput handled by Lomé Container Terminal S.A.(LCT) in Togo increased by 9.3% year-on-year to 0.54 million TEUs. Container throughput handledby Tin-Can Island Container Terminal Limited (TICT) in Nigeria was 0.24 million TEUs,representing a decrease of 8.4% year-on-year, which was mainly due to the stagnation of the port.Port de Djibouti S.A. (PDSA) in Djibouti handled a container throughput of 0.45 million TEUs, upby 11.1% year-on-year, and handled a bulk cargo volume of 2.87 million tonnes, up by 23.4% year-on-year, which was mainly benefited from the growth in business volume of steel, fertilizer andlivestock etc. Terminal Link SAS (TL) handled a container throughput of 6.84 million TEUs, up by
1.7% year-on-year. The container throughput and bulk cargo volume handled by Kumport LimanHizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi (Kumport) in Turkey was 0.62 million TEUsand 56,000 tonnes, representing a decrease of 5.7% and an increase of 3.7% year-on-year, respectively.TCP in Brazil handled a container throughput of 0.44 million TEUs, up by 70.0% year-on-year, whichwas mainly benefitted from the increase in import and export container volume driven by the growthin the trade of agricultural products and meat products.
3. Implementation of business plan during the reporting period
During the reporting period, facing the pressure from slowdown of global economic growth, theCompany persistently upheld the strategic principle of “aiming at achieving the vision, while graspinginstant opportunities, leveraging on technologies and embracing changes”, and focused on the“Project of Improving Quality and Efficiency” as a pivot. By conducting scientific researches on thechanges in market conditions, the Company pushed forward the integration of domestic ports acrossvarious cities simultaneously and made great efforts in expanding overseas ports network in responseto the adjustments of the international industrial landscape, at the same time accelerated integration
China Merchants Port Group Co., Ltd. Interim Report 2019
and development internally and strengthened synergic cooperation externally, thereby enhancingprofessional capabilities and improving risk management, and various tasks have achieved positiveeffect.Regarding the development of its homebase ports, the Company proactively promoted resourcesconsolidation and accelerated the construction of the world-class leading port. By implementing the“Zhujiang Strategy” in full force, the Company penetrated into the hinterland of cargo sources anddiverted cargo sources from the Pearl River Delta to the homebase ports. The Company also activelypushed forward the integration of its barge feeder shuttle services and clearance process andfacilitated the construction of the “PRD NETWORK” platform in a bid to solidify the leading positionof the West Shenzhen homebase ports in the hub of Guangdong-Hong Kong-Macao Greater Bay Area.By accelerating the dredging and deepening project of the Western Channel, section 1 of its dredgingand widening construction has officially commenced, while sections 2 and 3 of the project will beunderway. Meanwhile, the Group has stepped up the efforts in the construction of intelligent port andpressed ahead work such as informatisation of Haixing Automatic Terminal project, operationmatching, as well as planning and design of the control centre. For instance, the Group has enhancedthe transformation of the smart safety monitoring and on-shore smart container identification systemin West Shenzhen Port Zone. In addition, the Company accelerated the promotion of the applicationsand implementation of the results of innovation projects, including “System of Safety Protection andOperation Support for Container Gantry Cranes” and “RTG Remote Control”, which has improvedoperational efficiency, reduced operating costs, strengthened trade facilitation and continuouslyoptimized the environment surrounding the homebase port, thereby improving the overallcompetitiveness of the homebase port. The Company has further strengthened the construction ofCICT, our overseas homebase port, and the cultivation of international talents. Hambantota Port hadbrought this overall development plan into practice, and actively promoted the in-depth cooperationwith international business partners. Meanwhile, the business synergy of CICT and Hambantota Portincreased continuously with extensive synergic cooperation in aspects such as human resources,business expansion, financial management as well as equipment and assets.In terms of M&A integration, through strategic restructuring, the Company has steadily established a
China Merchants Port Group Co., Ltd. Interim Report 2019
strategic layout with a focus on “developing in Guangdong-Hong Kong-Macao Greater Bay Area,connecting regions along the Belt and Road with a broad global network coverage”, pursuant to whichthe development of Guangdong Province have been pushed forward across various citiessimultaneously. On the basis of the completion of the capital injection for share subscription inZhanjiang Port, works related to assets restructuring for ports in Pearl River Delta region have beenfurther carried forward. The Company also explored in-depth cooperation opportunities with TianjinPort Group.As for overseas expansion, the Company established a guiding philosophy for overseas development,that is, to seize the opportunities arising from the Belt and Road Initiative and international industriesmigration, as well as adapt to the trend of large vessels and the alliance of shipping business with afocus on major hub locations, gateway ports and regions with huge market potential, fast economicgrowth and positive development prospects around the world, thereby grasping the investmentopportunities in ports, logistics and related infrastructure, and further improving its global portnetwork. Based on the analysis on economic development and foreign trade in Southeast Asian andSouth Asian countries, industries migration and ports operation market and ports network of shippingalliance, the Company focused on Southeast Asian and South Asian gateway ports. As such, itcontinued to seek investment opportunities for ports in mature market, and strengthened the strategiccooperation with major international shipping companies, and pushed forward the comprehensivedevelopment projects for ports in Africa and port-near regions.With respect to comprehensive development, the Company actively implemented the comprehensivedevelopment model of “Port-Park-City”. In the first half of 2019, the Company entered into a businessoutsourcing agreement for the oil tank area under the Hambantota Port and the preparation works fordelivery such as maintenance and upgrade of oil tank area are nearly completed. Djibouti InternationalFree Trade Zone was officially put into operation early this year. The Company recorded a positivegrowth in the introduction of investment with 66 enterprises stationed in the park. The Company hasparticipated in events such as The 3
rdInternational Logistics Innovation Exhibition and China-AfricaEconomic and Trade Expo, and successfully organized the “Special Promotion Conference for ChinaMerchants Port Overseas Park”, which in turn further expanded the influence of the park project.
China Merchants Port Group Co., Ltd. Interim Report 2019
During the reporting period, the Company witnessed major progress in the Qianhai LandRestructuring and Joint Venture Project.With regard to innovative development, the Company continued to push forward the establishmentof a comprehensive port ecosystem on the foundation of ports operation according to the requirementsunder the innovative strategy, thereby enhancing the synergy and cooperation with the relevant partiesin port business, at the same time proactively promoting the transformation and upgrade of theCompany towards a “comprehensive port service provider”. Regarding innovative projects, theCompany continued to put efforts in establishing the fund for innovative development of ports inChina. Furthermore, the subsidiaries conducted researches and formulated project plans for thepromotion and application of “China Merchants ePort”. For digital innovation, the Company hascompleted the informatisation planning with the assistance of its professional advisory team duringthe reporting period, aiming to create new driver for quality development and enhance theinformatisation management level for global ports operation of the Company. Through such plan, theCompany has identified the informatisation needs, and formulated the vision, blueprint andimplementation approach of the Company’s informatisation development in the next three years.Meanwhile, Haixing Intelligent Port project is progressing as planned. Pursuant to which, block chainelectronic invoices will be fully applied in West Shenzhen Port Zone, which is the first B2B blockchain electronic invoices system designed for enterprises and institutions in China. In June 2019, thefirst “5G intelligent port innovation laboratory” of port industry in Mainland China commencedoperation in Shekou, Shenzhen, which marked the commencement of construction for the first 5Gintelligent port in Guangdong-Hong Kong-Macao Greater Bay Area.Regarding operation management, the Company strived to develop a whole process operationmanagement system that is strategic-driven. Based on the strategic position of its subsidiaries, theGroup formulated targeted investment plan and performance evaluation mechanism to facilitate thecontinuous and efficient development of the subsidiaries. Meanwhile, the Company pushed forwardthe development of comprehensive port ecosystem, three major channels and human resourcesmanagement platform, at the same time strengthening both the software and hardware foundation soas to enhance the servicing capability and regional competitiveness of the terminals, thereby
China Merchants Port Group Co., Ltd. Interim Report 2019
promoting the synergic development between different segments and regional businesses andmaximizing the comprehensive efficiency. The Group worked aggressively on the enhancement ofboth quality and efficiency by forming responsible teams for quality and efficiency enhancement inthe headquarters and subsidiaries. These responsible teams adopted unified approaches and regardedleading enterprises as their benchmarks to fully explore the operational potentials. Meanwhile, theyhave formulated quality and efficiency enhancement measures and implementation plans in terms ofrevenue, cost and capability respectively, aiming to realise the potential and increase the efficiencyof subsidiaries. The Company optimized its internal control procedure and improved the cooperationmechanism among companies at different levels with a focus on enhancing the efficiency ofworkflows in headquarters and delegating authority to subsidiaries to strengthen their creativity anddecision-making capability. Apart from enhancing operational efficiency, the Company alsounleashed the companies’ potentials in decision-making through differentiated management, whichis conducive to the efficient operation and long-term development of these companies.II Core Business Analysis
1. See “I. Summary” above.
2. Year-on-Year Changes in Key Financial Data
Unit: RMB
| H1 2019 | H1 2018 | Change (%) | Main reason for change | |
| Operating revenue | 5,834,353,421.33 | 4,672,338,040.72 | 24.87% | - |
| Operating cost | 3,608,020,695.91 | 2,614,461,218.38 | 38.00% | The adding of subsidiary to the consolidation scope of the Current Period |
| Administrative expense | 647,244,718.36 | 497,420,738.23 | 30.12% | The adding of subsidiary to the consolidation scope of the Current Period |
| Financial expense | 873,109,624.88 | 724,062,144.53 | 20.58% | - |
| Income tax expense | 2,017,970,750.16 | 376,500,021.27 | 435.98% | Income tax on the compensation income from the transfer of land in Qianhai for readjustment |
| R&D expense | 60,018,835.29 | 48,063,815.62 | 24.87% | - |
| Net cash generated from/used in operating activities | 2,556,861,915.52 | 1,800,734,718.71 | 41.99% | The adding of subsidiary to the consolidation scope of the Current Period |
| Net cash generated | 73,786,701.24 | -13,411,126,400.10 | 100.55% | A decline in payments for investment |
China Merchants Port Group Co., Ltd. Interim Report 2019
| from/used in investing activities | and for the acquisition of subsidiaries and other business units | |||
| Net cash generated from/used in financing activities | -2,366,244,781.51 | 11,564,970,146.77 | -120.46% | A decline in borrowings obtained and a rise in loan repayments |
| Net increase in cash and cash equivalents | 244,903,144.44 | -67,898,366.77 | 460.69% | A rise in net cash generated from operating activities |
No significant changes to the profit structure or sources of the company in the reporting period.
3. Breakdown of core businesses
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Port operations | 5,558,945,151.95 | 3,389,560,981.29 | 39.03% | 25.16% | 40.29% | -6.58% |
| By operating segment | ||||||
| Mainland China, Hong Kong and Taiwan | 4,260,737,809.93 | 2,798,845,062.43 | 34.31% | 31.01% | 45.13% | -6.39% |
| Other countries and regions | 1,573,615,611.40 | 809,175,633.48 | 48.58% | 10.81% | 17.96% | -3.11% |
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
China Merchants Port Group Co., Ltd. Interim Report 2019
Unit: RMB
| Amount | As % of profit before tax | Source/Reason | Recurrent or not | |
| Return on investment | 2,625,049,484.56 | 32.51% | Share of profits of joint ventures and associates | Yes |
| Gain/loss on changes in fair value | 643,627,313.01 | 7.97% | Gain on changes in the fair value of trading financial assets | Not |
| Asset disposal income | 4,169,857,166.53 | 51.63% | Compensation income from the transfer of land in Qianhai for readjustment | Not |
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 30 June 2019 | 30 June 2018 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary capital | 7,055,470,795.98 | 4.65% | 7,661,562,039.24 | 6.07% | -1.42% | - |
| Accounts receivable | 1,826,407,082.63 | 1.20% | 1,366,495,546.11 | 1.08% | 0.12% | The adding of subsidiary to the consolidation scope of the Current Period |
| Other receivables | 8,060,039,732.79 | 5.31% | 3,114,690,273.65 | 2.47% | 2.84% | Creditor’s rights obtained in the Qianhai land readjustment and the adding of subsidiary to the consolidation scope of the Current Period |
| Investments in other equity instruments | 566,083,559.83 | 0.37% | 233,399,371.23 | 0.18% | 0.19% | New investment in Lac Assal Investment Holding Company Limited |
| Investment property | 5,860,454,152.44 | 3.86% | 5,975,391,800.44 | 4.73% | -0.87% | - |
| Long-term equity investments | 49,101,264,546.66 | 32.36% | 47,296,183,957.59 | 37.45% | -5.09% | - |
| Fixed assets | 25,605,443,597.36 | 16.87% | 23,910,740,027.78 | 18.93% | -2.06% | The adoption of new accounting standards governing leases in the Current Period and the adding of |
China Merchants Port Group Co., Ltd. Interim Report 2019
| subsidiary to the consolidation scope of the Current Period | ||||||
| Right of use assets | 7,707,006,935.05 | 5.08% | - | 5.08% | The adoption of new accounting standards governing leases in the Current Period | |
| Construction in progress | 7,255,432,536.56 | 4.78% | 3,566,556,149.37 | 2.82% | 1.96% | The adding of subsidiary to the consolidation scope of the Current Period and a higher expense on wharf construction |
| Other non-current assets | 2,079,773,743.04 | 1.37% | 438,561,564.28 | 0.35% | 1.02% | The Qianhai land readjustment and the adding of subsidiary to the consolidation scope of the Current Period |
| Short-term borrowings | 7,566,020,460.46 | 4.99% | 12,758,812,000.00 | 10.10% | -5.11% | A decline in short-term bank loans |
| Other payables | 3,421,776,143.11 | 2.26% | 4,039,832,685.29 | 3.20% | -0.94% | - |
| Current portion of non-current liabilities | 3,782,456,888.55 | 2.49% | 1,710,832,057.91 | 1.35% | 1.14% | The adding of subsidiary to the consolidation scope of the Current Period |
| Other current liabilities | 1,456,067,284.82 | 0.96% | 264,815,928.00 | 0.21% | 0.75% | The issuance of super and short-term commercial papers in the Current Period |
| Long-term borrowings | 7,456,687,214.19 | 4.91% | 7,560,557,153.97 | 5.99% | -1.07% | - |
| Bonds payable | 22,057,369,574.31 | 14.54% | 11,882,240,188.79 | 9.41% | 5.13% | New dollar bond offering |
| Lease liabilities | 1,740,889,561.88 | 1.15% | - | 1.15% | The adoption of new accounting standards governing leases in the Current Period | |
| Deferred income | 2,161,007,055.37 | 1.42% | 214,070,490.16 | 0.17% | 1.25% | The Qianhai land readjustment and the adding of subsidiary to the consolidation scope of the Current Period |
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the | Cumulative fair-value changes | Impairment allow | Purchased in the Reporting Period | Sold in the Repo | Ending amount |
China Merchants Port Group Co., Ltd. Interim Report 2019
| Reporting Period | charged to equity | ance for the Reporting Period | rting Period | ||||
| Financial assets | |||||||
| 1. Financial assets measured at fair value through profit or loss ("FVTPL") (exclusive of derivative financial assets) | 2,087,872,081.94 | 858,101,277.19 | - | - | 42,894,691.06 | - | 3,019,618,722.58 |
| 2. Investments in other equity instruments | 247,848,314.30 | - | 705,000.00 | - | 311,642,892.00 | - | 566,083,559.83 |
| Subtotal of financial assets | 2,335,720,396.24 | 858,101,277.19 | 705,000.00 | - | 354,537,583.06 | - | 3,585,702,282.41 |
| Total of the above | 2,335,720,396.24 | 858,101,277.19 | 705,000.00 | 354,537,583.06 | - | 3,585,702,282.41 | |
| Financial liabilities | 3,839,742,307.01 | 193,261,253.31 | - | - | - | 4,044,601,206.09 | |
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
There are structured deposits at the carrying amount of RMB1,418,706,200.00 that are kept overseaswith restricted repatriation and are not withdrawable on demand; fixed assets as bank loan mortgagesat the carrying amount of RMB303,210,500.64; construction in progress as bank loan mortgages atthe carrying amount of RMB55,898,342.90; intangible assets as bank loan mortgages at the carryingamount of RMB159,708,329.63; and equities and interests as bank loan mortgages at the carrying
China Merchants Port Group Co., Ltd. Interim Report 2019
amount of RMB2,376,104,004.85.V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
| Total investment amount in H1 2019 (RMB) | Total investment amount in H1 2018 (RMB) | Change (%) |
| 5,253,873,831.22 | 13,663,881,899.90 | -61.55% |
2. Major Equity Investments Made in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB’0,000
| Investee | Principal activity | Way of investment | Investment amount | The Company’s interest | Funding source | Joint investor | Term of investment | Type of products | Investment progress as at the balance sheet date | Expected return | Return in the Reporting Period | Any legal matter involved | Disclosure date (if any) | Index to disclosed information (if any) |
| Zhanjiang Port | Port operations | Acquisition | 37,533.44 | 58.35% | Self-funded | Sinotrans Guangdong and Zhanjiang Infrastructure Investment | Permanent | Equity | Equity has been transferred | 0.00 | 3,413.08 | No | 9 January 2019 | Announcement No. 2019- 003 |
| Zhanjiang Port | Port operations | Acquisition | 300,000.00 | Bank loan | Zhanjiang Infrastructure Investment | Permanent | Equity | Equity has been transferred | 0.00 | No | 9 January 2019 | Announcement No. 2019- 005 | ||
| CM Qianhai Industrial | Investment consultancy (exclusive of restricted projects), industrial park management and corporate management consultancy (exclusive of restricted projects) | Acquisition | 604,941.28 | 14.00% | Self-funded | 17 companies including CMSK | The business term of CM Qianhai Industrial is 30 years and extendable upon expiry | Equity | Equity transfer has been completed with the industrial and commercial administration | 0.00 | -2.96 | No | 12 January 2019 | Announcement No. 2019- 008 |
| Lac Assal | Holding an interest in the Djibouti Free Trade Zone project and a | Capital increase | 8,067.36 | 40.00% | Self-funded | CMI and Cheer Signal | Permanent | Equity | The capital increase has been completed | 0.00 | 0.00 | No | 23 January 2019 | Announcement No. 2019- 012 |
China Merchants Port Group Co., Ltd. Interim Report 2019
| 30% interest in KHOR AMBADO FZCO in the free trade zone | ||||||||||||||
| Lac Assal | Holding an interest in the Djibouti Free Trade Zone project and a 30% interest in KHOR AMBADO FZCO in the free trade zone | Capital increase | 22,790.29 | Self-funded | CMI and Cheer Signal | Permanent | Equity | The capital increase has been completed | 0.00 | No | 30 April 2019 | Announcement No. 2019- 043 | ||
| Total | -- | -- | 973,332.37 | -- | -- | -- | -- | -- | -- | 0.00 | 3,410.12 | -- | -- | -- |
3. Major Non-Equity Investments Ongoing in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB’0,000
| Item | Way of investment | Fixed assets investment or not | Industry involved | Input amount in the Reporting Period | Accumulative actual input amount as of the period-end | Funding source | Progress | Expected return | Accumulative realized return as of the period-end | Reason for failing to reach the scheduled progress and expected return | Disclosure date (if any) | Index to disclosed information (if any) |
| Transformation project of Mawan Smart Port of Haixing Harbor | Self-built | Yes | Support activities for water transportation | 7,803.00 | 79,089.00 | Self-funded and loan-funded | 44.00% | 0.00 | 0.00 | N/A | - | - |
| Shantou Port Guangdong-Macau Area Phase II project | Self-built | Yes | Support activities for water transportation | 27,269.00 | 139,690.00 | Self-funded and loan-funded | 96.77% | 0.00 | 0.00 | N/A | - | - |
| TCP expansion project | Self-built | Yes | Support activities for water transportation | 14,357.00 | 115,085.00 | Self-funded | 100.00% | 0.00 | 0.00 | N/A | - | - |
| Total | -- | -- | -- | 49,429.00 | 333,864.00 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
China Merchants Port Group Co., Ltd. Interim Report 2019
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
| Variety of securities | Code of securities | Name of securities | Initial investment cost | Accounting measurement model | Beginning carrying value | Gain/loss on fair value changes in the Reporting Period | Cumulative fair value changes recorded into equity | Purchased in the Reporting Period | Sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying value | Accounting title | Funding source |
| Stock | 601018 | Ningbo Port | 592,183,095.14 | Fair value method | 1,361,414,474.58 | 415,490,444.53 | - | - | - | 38,225,828.84 | 1,789,404,054.36 | Trading financial assets | Self-funded |
| Stock | 6198 | Qingdao Port | 124,405,138.80 | Fair value method | 190,401,046.01 | 14,980,312.20 | - | - | - | 15,516,750.05 | 206,396,498.37 | Trading financial assets | Self-funded |
| Stock | 601298 (note) | Qingdao Port | 331,404,250.30 | Fair value method | 413,280,000.00 | 338,240,000.00 | - | - | - | 42,526,400.00 | 751,520,000.00 | Trading financial assets | Self-funded |
| Stock | 600377 | Jiangsu Expressway | 1,120,000.00 | Fair value method | 9,800,000.00 | - | 705,000.00 | - | - | 460,000.00 | 10,740,000.00 | Other equity instrument investment | Self-funded |
| Stock | 400032 | Petrochemical A1 | 3,500,000.00 | Fair value method | 382,200.00 | - | - | - | - | - | 382,200.00 | Other equity instrument investment | Self-funded |
| Stock | 400009 | Guang Jian 1 | 27,500.00 | Fair value method | 17,000.00 | - | - | - | - | - | 17,000.00 | Other equity instrument investment | Self-funded |
| Total | 1,052,639,984.24 | -- | 1,975,294,720.59 | 768,710,756.73 | 705,000.00 | 0 | 0 | 96,728,978.89 | 2,758,459,752.73 | -- | -- | ||
Note: As Qingdao Port went public at the Shanghai Stock Exchange on 21 January 2019, the RMB-denominatedshares it had issued before the A-share offering have been registered as restricted public A-shares.
(2) Investments in Derivative Financial Instruments
China Merchants Port Group Co., Ltd. Interim Report 2019
√ Applicable □ Not applicable
Unit: RMB'0,000
| Counterparty | Relationship with the Company | Related-party transaction or not | Type of derivative | Initial investment amount | Start date | End date | Beginning investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment allowance (if any) | Ending investment amount | Ending investment amount as % of the Company’s ending net asset value | Actual gain/loss in the Reporting Period |
| Financial institution | Not a related party | Not | Forward foreign currency purchase | 4,961.18 | 9 March 2018 | 28 February 2019 | 4,961.18 | 0 | 4,961.18 | - | 0 | 0.00% | -332.39 |
| Financial institution | Not a related party | Not | Currency swap | 20,177.33 | 29 March 2018 | 26 March 2019 | 20,177.33 | 0 | 20,177.33 | - | 0 | 0.00% | -1,496.24 |
| Financial institution | Not a related party | Not | Forward foreign currency purchase | 173.63 | 4 April 2018 | 26 March 2019 | 173.63 | 0 | 173.63 | - | 0 | 0.00% | - |
| Financial institution | Not a related party | Not | Forward foreign currency purchase | 42.88 | 15 June 2018 | 21 March 2019 | 42.88 | 0 | 42.88 | - | 0 | 0.00% | - |
| Financial institution | Not a related party | Not | Forward foreign currency purchase | 4,885.98 | 15 June 2018 | 8 May 2019 | 4,885.98 | 0 | 4,885.98 | - | 0 | 0.00% | -292.64 |
| Total | 30,241.00 | -- | -- | 30,241.00 | 0 | 30,241.00 | - | 0 | 0.00% | -2,121.27 | |||
| Funding source | Self-funded | ||||||||||||
| Legal matters involved (if applicable) | N/A | ||||||||||||
| Disclosure date of the announcement on the | - | ||||||||||||
China Merchants Port Group Co., Ltd. Interim Report 2019
| board’s approval of the derivative investment (if any) | |
| Disclosure date of the announcement on the general meeting’s approval of the derivative investment (if any) | - |
| Analysis of risks and control measures associated with the derivative investments held in the Reporting Period (including but not limited to market, liquidity, credit, operational and legal risks, etc.) | In order to reduce the risks resulted from changes in the exchange rate of foreign currency loans, the Company’s subsidiary Zhanjiang Port locked the exchange rate of the principal and interest on US$46.65 million of foreign currency loans. Within the time limit and scope of foreign currency loans, risks of exchange rate changes can be reduced by locking the forward exchange rate. |
| Changes in market prices or fair value of derivative investments in the Reporting Period (fair value analysis should include measurement methods and related assumptions and parameters) | Gains and losses on forward financial contracts were RMB-21.2127 million in the Reporting Period. |
| Significant changes in accounting policies and specific accounting principles adopted for derivative investments in the Reporting Period compared to the last reporting period | No such significant changes |
| Opinion of independent directors on derivative investments and risk control | N/A |
VI Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Investments
□ Applicable √ Not applicable
VII Major Subsidiaries
China Merchants Port Group Co., Ltd. Interim Report 2019
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10%effect on the Company’s net profit:
Unit: RMB
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net asset value | Operating revenue | Operating profit | Net profit |
| China Merchants Port Holdings Company Limited | Subsidiary | Port operations, bonded logistics and property investment | HK$39,070,126,257.12 | 127,620,175,090.45 | 77,623,533,563.24 | 3,861,739,507.52 | 7,080,493,263.90 | 5,309,663,495.61 |
| Shanghai International Port (Group) Co., Ltd. | Joint stock company | Port and container terminal operations | RMB23,173,674,650.00 | 144,285,311,672.94 | 86,474,212,821.64 | 17,198,832,228.65 | 5,790,152,285.62 | 4,880,941,188.89 |
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
| Subsidiary | How the subsidiary was obtained or disposed in the Reporting Period | Effects on overall operations and operating performance |
| Zhanjiang Port | Business combination not under common control | As the Company took control of Zhanjiang Port in the Current Period, the long-term equity investment in Zhanjiang Port previously measured at the equity method has shifted to return on investment measured at the fair value method. |
There is no information on major holding companies and joint stock companies for the Company tobe disclosed during the Reporting Period.VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Operating Performance Forecast for January-September 2019Warning of a forecast negative net profit for January-September 2019 or a considerable YoY changetherein, as well as the reasons:
□ Applicable √ Not applicable
China Merchants Port Group Co., Ltd. Interim Report 2019
X Risks faced by the Company and counter measures
1. External risks
The external risks mainly come from uncertainties brought by the fluctuations in global economicand political situation and the slowdown of domestic economic growth in 2019. On the internationalfront, the rise of populism has led to more uneven growth among developed economies. Amid therising trend of trade protectionism, the trade frictions provoked by the US continued to escalate as itunfolded around the globe. The increasing unpredictability in the situation of the Middle East gaverise to material uncertainties regarding the trend of crude oil price and global inflation. Risksgenerated by such uncertainties may affect the container shipping market and the demand for majorbulk commodities to a certain extent and hence brought about certain challenges on the overseasoperation of the Company. Domestically, the macro-economy of the PRC delivered weakperformance in the second quarter and the domestic economic environment will continue to be underthe influence of various unstable factors in the second half of the year, including the unsustainableinvestments in real estate, the continuous pressures faced by the operation of business entities andexport business being weighed down by the international demand and trade friction. As such, theoperation and revenue of the Company’s port business may face certain uncertainties.In response to the potential external risks, in particular, the risks of uncertainties in relation to foreigntrade and the import and export caused by the Sino-US trade friction, the Company will seizeopportunities arising from a new round of high-level opening-up policy of the PRC by proactivelycarrying out the major strategies such as the “Belt and Road” Initiative and the development ofGuangdong-Hong Kong-Macau Greater Bay Area, while consistently strengthening the efforts inachieving our business objectives. We will continue to enhance the capabilities in risks identification,warning and resolution with a view to effectively preventing and mitigating relevant risks. TheCompany will timely adjust its business operation strategies with constant endeavors made to trackand study the change of trends in the trade market and cargo sources, at the same time upgrading theservice quality and strengthening its business capabilities in the global market under the principle of“improvement in both quality and efficiency” with an aim to retain clients and sustain robust growth
China Merchants Port Group Co., Ltd. Interim Report 2019
of the port business.
2. Internal risks
The internal risks of the Company mainly come from the risks of credit default of customers, labourshortage and compliance of overseas investment projects. During the reporting period, the Company’srisks in relation to defaults of customers increased significantly due to negative information in themarket such as bankruptcy, heavy indebtedness and illegal operation of shipping companies. Thelabour shortage faced by certain subsidiaries in relation to their outsourced business remainedprominent. Factors such as staff turnover, aging staff and low skill level have affected theimprovement of production efficiency of such subsidiaries and hence brought uncertain risks to theCompany's sustainable development. As the Company’s overseas projects were gradually put intooperation, the legal and policy compliance requirements of countries and regions where ourinvestments are located will pose uncertain risks and challenges to the Company's global operations.In light of the potential internal risks, the Company will attach great importance to the developmentof the internal control system of its subsidiaries in a bid to prevent and control internal risks. Withregard to the default risks of customers, on the one hand, risk identification and warning will beintensified through application of the warning system on receivables; on the other hand, preventionand control measures will be formulated and implemented to ensure the effective control of risks andprotect the interests of the Company. As for the issue of labour shortage of the subsidiaries, theCompany will not only actively study the employment policy in relation to outsourcing, formulate along-term incentive system for outsourcing and improve the remuneration package of outsourcingpersonnel, thereby enhancing labor productivity; but also press ahead the technological upgrade foradvancement of the automated operation level at the terminals, so as to reduce its reliance onoutsourcing personnel. Regarding the compliance risks of overseas investment projects, the Companywill step up its efforts in the establishment of compliance management system in accordance with theregulatory requirements of the places where its projects are located, as well as reinforce themanagement and control throughout the process of project investment, engineering construction andprocurement, thereby strictly prevent legal compliance risks.
China Merchants Port Group Co., Ltd. Interim Report 2019
Part V Significant Events
I Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 1st Extraordinary General Meeting of 2019 | Extraordinary General Meeting | 90.29% | 24 January 2019 | 25 January 2019 | See the resolution announcement (No. 2019-013) on www.cninfo.com.cn |
| The 2nd Extraordinary General Meeting of 2019 | Extraordinary General Meeting | 22.16% (with the largest shareholder abstaining from voting) | 25 February 2019 | 26 February 2019 | See the resolution announcement (No. 2019-020) on www.cninfo.com.cn |
| The 3rd Extraordinary General Meeting of 2019 | Extraordinary General Meeting | 90.05% | 15 April 2019 | 16 April 2019 | See the resolution announcement (No. 2019-038) on www.cninfo.com.cn |
| The 2018 Annual General Meeting | Annual General Meeting | 89.91% | 20 May 2019 | 21 May 2019 | See the resolution announcement (No. 2019-049) on www.cninfo.com.cn |
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders withResumed Voting Rights
□ Applicable √ Not applicable
II Interim Dividend Plan
□ Applicable √ Not applicable
The Company has no interim dividend plan, either in the form of cash or stock.
China Merchants Port Group Co., Ltd. Interim Report 2019
III Commitments of the Company’s Actual Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Periodor Overdue at the Period-End
□ Applicable √ Not applicable
No such cases in the Reporting Period.IV Engagement and Disengagement of Independent AuditorAre the interim financial statements audited?
□Yes √ No
The interim financial statements are unaudited.V Explanations Given by the Board of Directors and the Supervisory Committee Regardingthe Independent Auditor's “Modified Opinion” on the Financial Statements of the ReportingPeriod
□ Applicable √ Not applicable
VI Explanations Given by the Board of Directors Regarding the Independent Auditor's“Modified Opinion” on the Financial Statements of Last Year
□ Applicable √ Not applicable
VII Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII Legal Matters
China Merchants Port Group Co., Ltd. Interim Report 2019
Major lawsuits and arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Other legal matters:
□ Applicable √ Not applicable
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.X Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Major Related-Party Transactions
1. Continuing Related-Party Transactions
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Transaction price | Total value (RMB’0,000) | As % of the total value of all the same-type transactions | Approved transaction line (RMB’0,000) | Over the approved line or not | Way of settlement | Obtainable market price for same-type transactions | Disclosure date | Index to disclosed information |
| Qingdao Qianwan United Container | connected legal person | Services | Utilities, offices and other | Market price | 2,327.04 | 2,327.04 | 12.80% | 6,500 | Not | Settled monthly | 2,327.04 | 30 March 2019 | Announcement (No. 2019- |
China Merchants Port Group Co., Ltd. Interim Report 2019
| Terminal Co., Ltd. | 032) on www.cninfo.com.cn | ||||||||||||
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | The same ultimate controlling shareholder | Services and leases | Service charges, expense on land and building leases | Market price | 1,775.52 | 1,775.52 | 6.91% | 5,000 | Not | Settled monthly | 1,775.52 | 30 March 2019 | |
| China Nanshan Development (Group) Inc. | connected legal person | Services and leases | Offices, storage yards, staff quarter, etc. | Market price | 5,917.18 | 5,917.18 | 18.42% | 11,000 | Not | Settled monthly | 5,917.18 | 30 March 2019 | |
| Total | -- | -- | 10,019.74 | -- | 22,500 | -- | -- | -- | -- | -- | |||
| Large-amount sales return in detail | N/A | ||||||||||||
| Give the actual situation in the Reporting Period (if any) where an estimate had been made for the total value of continuing related-party transactions by type to occur in the Reporting Period | The Proposal on the Confirmation of the Continuing Related-Party Transactions in 2018 and the Estimation of Such Transactions in 2019 was approved at the Fifth Meeting of the Ninth Board of the Company on 28 March 2019. As such, the Company and its subsidiaries have been agreed to carry out continuing transactions with related parties on office leases, software procurement, labour service, etc. The total amount of such transactions is expected to be RMB575 million in 2019. And the actual such transactions during the Reporting Period did not differ materially from the estimation. | ||||||||||||
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | N/A | ||||||||||||
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Investments
√ Applicable □ Not applicable
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Carrying value of the assets transferred (RMB’0,000) | Assessed value of the assets transferred (RMB’0,000) (if any) | Transfer price (RMB’0,000) | Way of settlement | Gain/loss on the transaction (RMB’0,000) | Disclosure date | Index to disclosed information |
| Sinotrans Guangdong Co., Ltd. | The same ultimate actual controller | Purchase of assets | The Company purchased Sinotrans Guangdong’s interest in Zhanjiang Port | Fair value | 24,255.07 | 37,533.44 | 37,533.44 | One-off settlement | 0 | 5 January 2019 | Announcement (No. 2019-003) on www.cninfo.com.cn |
| Zhanjiang Infrastructure Construction Investment Group Co., Ltd. | A senior executive of the Company is a director of this related party | Purchase of assets | Chiwan Wharf Holdings (Hong Kong) Limited, a wholly-owned subsidiary of the Company, purchased 27.3544% of the issued shares of Zhanjiang Port (Group) Co., Ltd. with RMB3,000,000,000.77 on the date of issue. | Fair value | 193,868.92 | 300,001.97 | 300,000.00 | One-off settlement | 0 | 9 January 2019 | Announcement (No. 2019-005) on www.cninfo.com.cn |
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
China Merchants Port Group Co., Ltd. Interim Report 2019
√ Applicable □ Not applicable
Non-operating related credit and debt relationship:
□ Yes √ No
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
√ Applicable □ Not applicable
(1) CMPort Holdings, a majority-owned subsidiary of the Company, together with 17 companies(including CMSK), jointly invested in CM Qianhai Industrial. On 1 January 2019, CM Chidi, asubsidiary of CM Qianhai Industrial, signed the Agreement on the Confirmation of Creditors’ Rightson a Compensation with the 19 land-holding companies to determine the amounts and proportions oftheir respective rights on the land compensation of CM Chidi. Ansujie and Antongjie, wholly-ownedsubsidiaries of CMPort Holdings, would receive about RMB5.693 billion out of the landcompensation of CM Chidi for their land use rights of about 471,800 square meters, accounting for
13.1758% of the total land compensation amount. In order to keep this percentage in line with the14% interest held indirectly in CM Chidi by CMPort Holdings, Antongjie, Shekou Asset Managementand CM Chidi signed the Agreement on the Transfer of Creditor’s Rights, according to whichAntongjie would purchase the creditor’s rights on the 0.8242% of the land compensation from ShekouAsset Management (about RMB356 million).
(2) CMPort Holdings, a majority-owned subsidiary of the Company, entered into the SupplementaryAgreement II to the Shareholder Agreement of Lac Assal Investment Holding Company Limited andthe Supplementary Agreement III to the Shareholder Agreement of Lac Assal Investment HoldingCompany Limited with CMI, Cheer Signal and Lac Assal on 22 January 2019 and 29 April 2019respectively, according to which CMPort Holdings, CMI and Cheer Signal would increase the capitalof Lac Assal by means of cash contribution according to their respective interests in Lac Assal. Thetotal amounts of the two capital increases would be US$30,000,000 and US$84,750,000 respectively,including US$12,000,000 and US$33,900,000 respectively by CMPort Holdings. After the capitalincreases, the registered capital of Lac Assal would increase to US$144,810,000, and the stakes of
China Merchants Port Group Co., Ltd. Interim Report 2019
CMPort Holdings, CMI and Cheer Signal in Lac Assal would remain the same as 40%, 40% and 20%respectively.
(3) The Company and its subsidiaries have accounts in China Merchants Bank. In 2019, the Companyand its subsidiaries intend to make deposits in the bank with a total balance ceiling of RMB5 billionand obtain loans from the bank with a total balance ceiling of RMB10 billion.Disclosure of the announcements on the major related-party transactions above:
| Title of the announcement | Date of disclosure | Website of disclosure |
| Announcement 2019-008 on a Wholly-Owned Subsidiary of a Majority-Owned Subsidiary Participating in a Land Readjustment in Qianhai and the Related-Party Transaction | 12 January 2019 | www.cninfo.com.cn |
| Announcement No. 2019-012 on a Related-Party Transaction of a Majority-Owned Subsidiary | 23 January 2019 | www.cninfo.com.cn |
| Announcement No. 2019-026 on the Related-Party Transactions Regarding Making Deposits in and Obtaining Loans from China Merchants Bank in 2019 | 30 March 2019 | www.cninfo.com.cn |
| Announcement No. 2019-043 on a Related-Party Transaction of a Majority-Owned Subsidiary | 30 April 2019 | www.cninfo.com.cn |
XIII Occupation of the Company’s Capital by the Controlling Shareholder or any of ItsRelated Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
√ Applicable □ Not applicable
Details:
China Merchants Port Group Co., Ltd. Interim Report 2019
On 13 December 2018, the Proposal on the Company and China Merchants (Liaoning) PortDevelopment Co., Ltd. Signing the Custody Agreement Regarding Equity Interests in Liaoning PortGroup Co., Ltd. was approved at the 10
th Extraordinary Meeting of the 9
thBoard of Directors of 2018of the Company. As such, the Company was agreed to sign the said agreement with China Merchants(Liaoning) Port Development Co., Ltd., an indirectly wholly-owned subsidiary of CMG. Accordingto the agreement, the Company will manage, in the trust of China Merchants (Liaoning) PortDevelopment Co., Ltd., the 49.9% interest in Liaoning Port Group Co., Ltd. that China Merchants(Liaoning) Port Development Co., Ltd. is currently holding.Entrustment projects that contribute/incur a gain/loss exceeding over 10% of the Company’s profitbefore tax in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major Guarantees
(1) Guarantees
Unit: RMB'0,000
| Guarantees provided by the Company for external parties (exclusive of those for subsidiaries) | ||||||||
| Guarantee-receiving entity | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| CMA CGM SA | 11 June 2013 | 1,074.84 | 11 June 2013 | 526.67 | General guarantee | About 6 years | Not | Not |
| CMA CGM SA | 11 June 2013 | 7,873.76 | 11 June 2013 | 7,873.76 | General guarantee | About 20 years | Not | Not |
| PORT DE DJIBOUTI S.A. | N/A | 34,373.50 | 14 June 2016 | 807.78 | General guarantee | About 3 years | Not | Yes |
China Merchants Port Group Co., Ltd. Interim Report 2019
| KHOR AMBADO FZCO | 30 March 2019 | 19,799.14 | 24 May 2019 | 7,576.18 | Joint-liability | About 13 years | Not | Yes |
| Total approved line for such guarantees in the Reporting Period (A1) | 19,799.14 | Total actual amount of such guarantees in the Reporting Period (A2) | 7,576.18 | |||||
| Total approved line for such guarantees at the end of the Reporting Period (A3) | 63,121.24 | Total actual balance of such guarantees at the end of the Reporting Period (A4) | 16,784.39 | |||||
| Guarantees provided by the Company as the parent for its subsidiaries | ||||||||
| Guarantee-receiving entity | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Chiwan Wharf Holdings (Hong Kong) Limited | 30 March 2019 | 400,000.00 | - | - | - | - | - | - |
| China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. | 30 March 2019 | 12,800.00 | - | - | - | - | - | - |
| Total approved line for such guarantees in the Reporting Period (B1) | 412,800.00 | Total actual amount of such guarantees in the Reporting Period (B2) | 0 | |||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 412,800.00 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 0 | |||||
| Guarantees provided between subsidiaries | ||||||||
| Guarantee-receiving entity | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| China Merchants International Terminal (Qingdao) Co., Ltd. | N/A | 10,000.00 | N/A | - | General guarantee | N/A | Not | Not |
| China Merchants International Terminal (Qingdao) Co., Ltd. | 30 March 2019 | 70,000.00 | - | - | - | - | - | |
| China Merchants International Terminal (Qingdao) Co., Ltd. | 30 March 2019 | 10,000.00 | - | - | - | - | - | - |
| Shenzhen Jinyu Rongtai Investment Development Co., Ltd. | N/A | 80,000.00 | 12 January 2017 | 78,000.00 | Joint-liability | About 10 years | Not | Not |
| Shenzhen Jinyu Rongtai Investment Development Co., Ltd. | 30 March 2019 | 100,000.00 | - | - | - | - | - | - |
| China Merchants International (China) Investment Co., Ltd. | N/A | 2,500.00 | 30 June 2016 | 2,500.00 | Joint-liability | About 10 years | Not | Not |
| China Merchants Finance Company Limited | 4 May 2012 | 343,735.00 | 4 May 2012 | 343,735.00 | General guarantee | About 10 years | Not | Not |
| China Merchants Finance Company Limited | 3 August 2015 | 343,735.00 | 3 August 2015 | 343,735.00 | General guarantee | About 10 years | Not | Not |
| China Merchants Finance Company Limited | 3 August 2015 | 137,494.00 | 3 August 2015 | 137,494.00 | General guarantee | About 5 years | Not | Not |
| CMHI Finance (BVI) Co., Ltd | 6 August 2018 | 618,723.00 | 6 August 2018 | 618,723.00 | General guarantee | About 5 years | Not | Not |
| CMHI Finance (BVI) Co., Ltd | 6 August 2018 | 412,482.00 | 6 August 2018 | 412,482.00 | General guarantee | About 10 years | Not | Not |
China Merchants Port Group Co., Ltd. Interim Report 2019
| Colombo International Container Terminals Limited | N/A | 240,545.75 | 16 September 2012 | 15,482.51 | General guarantee | About 13 years | Not | Not | |
| Colombo International Container Terminals Limited | N/A | 10,312.05 | 16 September 2012 | 10,312.05 | General guarantee | Infinite | Not | Not | |
| Colombo International Container Terminals Limited | N/A | 17,186.75 | 16 September 2012 | 17,186.75 | General guarantee | Infinite | Not | Not | |
| Colombo International Container Terminals Limited | 30 March 2019 | 200,000.00 | - | - | - | - | - | - | |
| Lome Container Terminal Co., Ltd. | N/A | 7,817.00 | 1 June 2015 | 1,846.77 | General guarantee | About 9 years | Not | Not | |
| Lome Container Terminal Co., Ltd. | N/A | 7,817.00 | 1 June 2015 | 1,846.77 | General guarantee | About 9 years | Not | Not | |
| Lome Container Terminal Co., Ltd. | N/A | 7,817.00 | 1 June 2015 | 1,846.77 | General guarantee | About 9 years | Not | Not | |
| China Merchants Port Development (Shenzhen) Co., Ltd. | N/A | 320,000.00 | 31 July 2017 | 186,000.00 | Joint-liability | About 5 years | Not | Not | |
| China Merchants Port Development (Shenzhen) Co., Ltd. | 30 March 2019 | 100,000.00 | - | - | - | - | - | - | |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 54,020.84 | 19 April 2018 | 48,270.32 | General guarantee | About 6 years | Not | Not | |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 77,078.19 | 7 November 2016 | 77,078.19 | General guarantee | About 6 years | Not | Not | |
| Shenzhen Haixing Harbor Development Co., Ltd. | 30 March 2019 | 219,090.00 | 26 June 2019 | - | Joint-liability | About 3 years | Not | Not | |
| Zhanjiang Port (Group) Co., Ltd. | 30 March 2019 | 80,000.00 | 23 August 2017 | 7,000.00 | Joint-liability | About 3 years | Not | Not | |
| Hambantota International Port Group (Pvt) Ltd, etc. | 30 March 2019 | 419,500.00 | - | ||||||
| Total approved line for such guarantees in the Reporting Period (C1) | 1,198,590.00 | Total actual amount of such guarantees in the Reporting Period (C2) | 7,000.00 | ||||||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | 3,889,853.59 | Total actual balance of such guarantees at the end of the Reporting Period (C4) | 2,303,539.13 | ||||||
| Total guarantee amount (total of the three kinds of guarantees above) | |||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 1,631,189.14 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 14,576.18 | ||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 4,365,774.82 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 2,320,323.52 | ||||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net asset value | 71.13% | ||||||||
| Of which: | |||||||||
| Balance of guarantees provided for shareholders, the actual controller and their related parties (D) | 8,383.96 | ||||||||
| Balance of debt guarantees provided directly or indirectly for entities with an over 70% debt/asset ratio (E) | 2,183,958.25 | ||||||||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net asset value (F) | 689,380.03 | ||||||||
| Total of the three amounts above (D+E+F) | 2,881,722.24 | ||||||||
China Merchants Port Group Co., Ltd. Interim Report 2019
| Possibility of having to execute joint liability on outstanding guarantees (if any) | N/A |
| Irregularities in the provision of guarantees to external parties (if any) | N/A |
Compound guarantees:
(2) Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XV Corporate Social Responsibility (CSR)
1. Major Environmental Issues
Is the Company or any of its subsidiaries identified as a key polluter by the environment watchdog?No.As a responsible enterprise, the Company leverages its own professional strengths to participate incharitable activities such as urban renewal, targeted poverty alleviation and reconstruction assistanceto disaster-stricken areas, safeguards the rights and interests of its employees, and attaches importanceto occupational health and development, with an aim to promoting urban and rural economicdevelopment and improving people’s living standards. It also actively participates in various activitiesconducted by social and political organizations to strengthen communication with the governmentand the industries and give play to its well-earned influence.The Company embeds green elements into corporate development. During the whole life cycle ofprojects, the Company adheres to green ecological development philosophy and practices, andcontinuously pursues sustainable development in economic, environmental and social aspects as awhole by leveraging innovative green development models, strengthening development andapplication of energy conservation technologies, and promoting green culture among its staff.
China Merchants Port Group Co., Ltd. Interim Report 2019
Meanwhile, the Company strives to develop a green accountability chain and a green ecosystem withjoint efforts of the community. With the concerted efforts of various parties, the Company is able todevelop innovative solutions for sustainable environmental development and play its part in pushingforward ecocivilisation.In strict compliance with environmental protection laws and regulations, the Company has put inplace a sound environmental management system featuring top-down control from the Headquartersto the subsidiaries and graded responsibilities, so as to embed environmental responsibility into everylink of its operation and improve its overall environmental management.The Company implements the green development philosophy and practices through all the productionand operation processes. By replicating and promoting the green development model, as well ascontinual innovation in green technology, it strives to enhance its competitiveness and presence inthe low-carbon aspect. During the first half of 2019, no environmental irregularities with a materialimpact on the Company occurred.Adhering to the national, provincial and municipal energy conservation policies, as well as therelevant technical innovation principle of equipment innovation on one’s own plus assistance fromexternal professional institutions of energy conservation, the Company actively develops and adoptsadvanced, energy-saving technologies, equipment and processes, replaces fuel oil with clean, low-carbon electricity, replaces petrochemical energy with clean energy, increases energy utilizationefficiency and at the same time upgrades all the technologies and equipment.
2. Measures Taken for Targeted Poverty Alleviation
The Company did not take such measures during the first half of the year and does not have plans todo so for the time being.XVI Other Significant Events
√ Applicable □ Not applicable
1. Index to Disclosed Information
China Merchants Port Group Co., Ltd. Interim Report 2019
The significant events disclosed by the Company on Securities Times, Ta Kung Pao andwww.cninfo.com.cn during the Reporting Period are as follows:
| Announcement No. | Date of the announcement | Title of the announcement |
| 2019-001 | 3 January 2019 | Announcement on the Resolutions of the First Extraordinary Meeting of the Ninth Board of Directors of 2019 |
| 2019-002 | 3 January 2019 | Announcement on an Asset Acquisition and the Related-Party Transaction |
| 2019-003 | 5 January 2019 | Announcement on the Progress of an Asset Acquisition and the Related-Party Transaction |
| 2019-004 | 9 January 2019 | Announcement on the Resolutions of the Second Extraordinary Meeting of the Ninth Board of Directors of 2019 |
| 2019-005 | 9 January 2019 | Announcement on an External Investment by a Wholly-Owned Subsidiary and the Related-Party Transaction |
| 2019-006 | 9 January 2019 | Notice of the First Extraordinary General Meeting of 2019 |
| 2019-007 | 12 January 2019 | Announcement on the Resolutions of the Third Extraordinary Meeting of the Ninth Board of Directors of 2019 |
| 2019-008 | 12 January 2019 | Announcement on a Wholly-Owned Sub-subsidiary of a Majority-Owned Subsidiary Participating in a Land Readjustment in Qianhai and the Related-Party Transaction |
| 2019-009 | 16 January 2019 | Voluntary Announcement on the Business Volume Data of December 2018 |
| 2019-010 | 19 January 2019 | Announcement on the Redemption of the First Tranche of SCP of 2018 upon Maturity |
| 2019-011 | 23 January 2019 | Announcement on the Resolutions of the Fourth Extraordinary Meeting of the Ninth Board of Directors of 2019 |
| 2019-012 | 23 January 2019 | Announcement on a Related-Party Transaction of a Majority-Owned Subsidiary |
| 2019-013 | 25 January 2019 | Announcement on the Resolutions of the First Extraordinary General Meeting of 2019 |
| 2019-014 | 28 January 2019 | Announcement on the Extension of the Share Lock-up Period by the Controlling Shareholder |
| 2019-015 | 30 January 2019 | 2018 Annual Performance Forecast |
| 2019-016 | 2 February 2019 | Announcement on the Resolutions of the Fifth Extraordinary Meeting of the Ninth Board of Directors of 2019 |
| 2019-017 | 2 February 2019 | Notice of the Second Extraordinary General Meeting of 2019 |
| 2019-018 | 12 February 2019 | Announcement on the Progress of an External Investment by a Wholly-Owned Subsidiary and the Related-Party Transaction |
| 2019-019 | 16 February 2019 | Voluntary Announcement on the Business Volume Data of January 2019 |
| 2019-020 | 26 February 2019 | Announcement on the Resolutions of the Second Extraordinary General Meeting of 2019 |
| 2019-021 | 16 March 2019 | Voluntary Announcement on the Business Volume Data of February 2019 |
China Merchants Port Group Co., Ltd. Interim Report 2019
| 2019-022 | 19 March 2019 | Announcement on the Change of the Company’s Registered Information with the Industrial and Commercial Administration |
| 2019-023 | 30 March 2019 | Announcement on the Resolutions of the Fifth Meeting of the Ninth Board of Directors |
| 2019-024 | 30 March 2019 | Announcement on the Resolutions of the Fifth Meeting of the Ninth Supervisory Committee |
| 2019-025 | 30 March 2019 | Annual Report 2018 (Summary) |
| 2019-026 | 30 March 2019 | Announcement on the Related-Party Transaction Regarding Making Deposits in and Obtaining Loans from China Merchants Bank in 2019 |
| 2019-027 | 30 March 2019 | Announcement on the External Guarantee Progress of a Majority-Owned Subsidiary of the Company in 2018 and the Expected New External Guarantee Line in the Next 12 Months |
| 2019-028 | 30 March 2019 | Announcement on the Provision of Guarantee by a Majority-Owned Subsidiary for Its Minority-Owned Subsidiary (a Related Party) |
| 2019-029 | 30 March 2019 | Announcement on a Wholly-Owned Subsidiary of a Majority-Owned Subsidiary Entering into a Land Lease Agreement and the Related-Party Transaction |
| 2019-030 | 30 March 2019 | Announcement on the Adjusted Limits of Deposits in and Loans from and Entering into a Supplementary Agreement to the Financial Service Agreement with China Merchants Group Finance Co., Ltd. and the Related-Party Transaction |
| 2019-031 | 30 March 2019 | Announcement on Changes to the Accounting Policies |
| 2019-032 | 30 March 2019 | Announcement on the Confirmation of the Continuing Related-Party Transactions in 2018 and the Estimation of Such Transactions in 2019 |
| 2019-033 | 30 March 2019 | Notice of the Third Extraordinary General Meeting of 2019 |
| 2019-034 | 30 March 2019 | Announcement on the Disclosure of the 2018 Annual Results by a Majority-Owned Subsidiary |
| 2019-035 | 30 March 2019 | Announcement on the Online Investor Communication on the 2018 Annual Results to Be Held |
| 2019-036 | 30 March 2019 | Announcement on Changes to the Office Address, Telephone Number and Other Corporate Information |
| 2019-037 | 13 April 2019 | Announcement on an Estimated Growth in the Q1 2019 Results |
| 2019-038 | 16 April 2019 | Announcement on the Resolutions of the Third Extraordinary General Meeting of 2019 |
| 2019-039 | 16 April 2019 | Voluntary Announcement on the Business Volume Data of March 2019 |
| 2019-040 | 26 April 2019 | Announcement on the Related-Party Transactions of a Majority-Owned Subsidiary |
| 2019-041 | 30 April 2019 | Announcement on the Resolutions of the Sixth Extraordinary Meeting of the Ninth Board of Directors of 2019 |
| 2019-042 | 30 April 2019 | The Report for the First Quarter of 2019 (Summary) |
| 2019-043 | 30 April 2019 | Announcement on the Related-Party Transactions of a Majority-Owned Subsidiary |
China Merchants Port Group Co., Ltd. Interim Report 2019
| 2019-044 | 30 April 2019 | Announcement on the Provision of Financial Aid by a Majority-Owned Subsidiary to Its Majority-Owned Subsidiary |
| 2019-045 | 30 April 2019 | Notice of the 2018 Annual General Meeting |
| 2019-046 | 30 April 2019 | Announcement on the Changed Name and Business Scope of a Wholly-Owned Subsidiary |
| 2019-047 | 9 May 2019 | Announcement on Additional Proposals for the 2018 Annual General Meeting and the Updated Notice of the 2018 Annual General Meeting |
| 2019-048 | 16 May 2019 | Voluntary Announcement on the Business Volume Data of April 2019 |
| 2019-049 | 21 May 2019 | Announcement on the Resolutions of the 2018 Annual General Meeting |
| 2019-050 | 31 May 2019 | Reminder of the Issuance of the First and Second Tranches of SCP of 2019 |
| 2019-051 | 11 June 2019 | Announcement on the Issuance Results of the First and Second Tranches of SCP of 2019 |
| 2019-052 | 15 June 2019 | Voluntary Announcement on the Business Volume Data of May 2019 |
| 2019-053 | 28 June 2019 | Announcement on the Resolutions of the Seventh Extraordinary Meeting of the Ninth Board of Directors of 2019 |
2. Progress of the Internal Control Work
In accordance with its work plan for the building and evaluation of its internal control system in 2019,the Company carried out the following work during the Reporting Period:
(1) The 2019 Annual Risk Management and Internal Control Work Arrangement Meeting wasconvened.In this April, the Company convened the 2019 Annual Risk Management and Internal Control WorkArrangement Meeting for over 70 relevant persons-in-charge and specialists of the Headquarters andthe subsidiaries included in the risk control system, summarizing the work done in 2018 and makingkey work arrangements for 2019. Risk management training was also given at the meeting.
(2) Business processes were combed through.
Based on the adjustments to the Company’s structures and systems, 18 business processes werecombed through and renewed. The adjustments to the business process framework have beencompleted during the Reporting Period, and the business process brochure will be prepared in thesecond half of the year.
(3) Building and evaluation of the internal control system was carried out on a regular basis.In accordance with the work plan for the building and evaluation of the internal control system for
China Merchants Port Group Co., Ltd. Interim Report 2019
the year, all the units included in the system combed through their systems and carried out self-evaluation on internal control through sampling. The risk control workgroup of the Companyreviewed the draft reports on internal control submitted by the units and pointed out the problems, soas to promote further compliance in the building and evaluation of their internal control systems.During the Reporting Period, the Headquarters and the subsidiaries amended 101 systems andformulated 29 new systems.
(4) Major risks for 2019 were monitored.
Underscoring the top 10 risks for 2019 in its key work, the Company asked all the units to make cleartheir respective responsibilities, and formulate specific risk management strategies and solutions. Nomajor risk became reality during the Reporting Period.
3. Communications with the Investment Community such as Researches, Inquiries andInterviews
(1) During the Reporting Period
| Date | Way of communication | Type of the communication party | Main discussions, materials provided and index to the relevant information |
| 14 May 2019 | One-on-one meeting | Institution | Main discussions: the basic condition of operations, investments made and the financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ssessgs/S001872/index.html) |
| 22 May 2019 | One-on-one meeting | Institution | Ditto |
| 29 May 2019 | One-on-one meeting | Institution | Ditto |
| 5 June 2019 | One-on-one meeting | Institution | Ditto |
| 18 June 2019 | One-on-one meeting | Institution | Ditto |
| 1 January 2019-30 June 2019 | By phone or written inquiry (the EasyIR platform of SZSE or email) | Individual | Ditto |
| Times of communications | 102 |
| Number of institutions communicated with | 11 |
| Number of individuals communicated with | 91 |
| Number of other communication parties | 0 |
| Tip-offs or leakages of substantial confidential | None |
China Merchants Port Group Co., Ltd. Interim Report 2019
(2) From the End of the Reporting Period to the Disclosure Date of this Report
information during the communicationsDate
| Date | Way of communication | Type of the communication party | Main discussions, materials provided and index to the relevant information |
| 10 July 2019 | One-on-one meeting | Institution | Main discussions: the basic condition of operations, investments made and the financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR （http://irm.cninfo.com.cn/ssessgs/S001872/index.html） |
| 1 July 2019-31 August 2019 | By phone or written inquiry (the EasyIR platform of SZSE or email) | Individual | Ditto |
| Times of communications | 23 | ||
| Number of institutions communicated with | 5 |
| Number of individuals communicated with | 18 |
| Number of other communication parties | 0 |
| Tip-offs or leakages of substantial confidential information during the communications | None |
4. Deposits in and Loans Provided by Finance Companies
The Proposal on Signing Financial Service Agreement with Sinotrans & CSC Finance Co., Ltd. wasreviewed and approved on the Second Meeting of the 9th Board of Directors held by the Companyon 23 August 2017, in which, the Company was agreed to signed the Financial Service Agreementwith Sinotrans & CSC Finance Co., Ltd. (renamed China Merchants Group Finance Co., Ltd. fromAugust 2017) with the period of three years.The Proposal on Adjusting Limit of Deposits and Loans and Signing Supplementary Agreement toFinancial Service Agreement with China Merchants Group Finance Co., Ltd and the Related-partyTransactions was reviewed and approved on the 5th Meeting of the 9th Board of Directors held bythe Company on 28 March 2019, in which, the Company was agreed to signed SupplementaryAgreement to Financial Service Agreement with China Merchants Group Finance Co., Ltd.At the end of the Reporting Period, deposits in and loans provided by China Merchants Group FinanceCo., Ltd. were as follows:
China Merchants Port Group Co., Ltd. Interim Report 2019
Unit: RMB’0,000
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Deposits in China Merchants Group Finance Co., Ltd. | 49,413.12 | 482,563.84 | 492,450.59 | 39,526.37 |
| II. Loans provided by China Merchants Group Finance Co., Ltd. | 77,500.00 | 101,000.00 | 125,800.00 | 52,700.00 |
5. Changes to the Accounting Policies, Accounting Estimates and Measurement Methods asCompared with the Financial Reporting of Last YearThe Accounting Standards for Business Enterprises No. 21 – Lease (hereinafter referred to as “Newlease standard”) revised and issued by Ministry of Finance on 7 December 2018 required thatenterprises listed both domestically and overseas and enterprises listed overseas who prepare thefinancial statements by International Financial Reporting Standards or Accounting Standards forBusiness Enterprises shall implement it form 1 January 2019, and other enterprises implementing theAccounting Standards for Business Enterprises shall implement it from 1 January 2021. Accordingto the requirements of Ministry of Finance, enterprises whose subsidiaries are listed overseas andprepare the financial statements by International Financial Reporting Standards or AccountingStandards for Business Enterprises can implement the new lease standard in advance. The Company,in accordance with the requirements of Ministry of Finance, implemented the new lease standardfrom 1 January 2019. For details, see Announcement on Changes in Accounting Policies(Announcement No.: 2019-031) published by the Company on http://www.cninfo.com.cn dated 30March 2019. According to the regulations of the new standards, the Company did not adjust theinformation during comparative period, executed the accumulative influence number of the standardfor the first time, and adjusted the beginning retained earnings and the amount of other related itemsin financial statements.On 30 April 2019, the Ministry of Finance revised and issued the Format of Financial Statements forGeneral Enterprises in 2019, making amendments to the format of financial statements. The Companyhas adopted these amendments, starting with its financial statements for the half year ended 30 June2019. For further information, please refer to the Announcement No. 2019-063 on Changes to theAccounting Policies disclosed by the Company on www.cninfo.com.cn dated 31 August 2019.
China Merchants Port Group Co., Ltd. Interim Report 2019
For the impact of the said changes to the accounting policies, please refer to “III Changes to CriticalAccounting Policies and Estimates” in “Financial Statements” herein.
6. Changes to the Scope of Consolidated Financial Statements Compared to Last YearThe Company and China Merchants Investment Development Company Limited (hereinafter referredto as “CMID”) signed the Agreement on Asset Acquisition through the Issue of Shares on 19 June2018, which was approved by China Securities Regulatory Commission through the Reply on theApproval of the Issue of Shares by Shenzhen Chiwan Wharf Holdings Limited to China MerchantsInvestment Development Company Limited for Asset Acquisition and Raising of Supporting Funds(ZJXK [2018] No. 1750). The Company issued shares to CMID to acquire 1,313,541,560 ordinaryshares (hereinafter referred to as “the target assets”) of China Merchants Port Holdings CompanyLimited (hereinafter referred to as CMPort Holdings) held by CMID. According to the transactionbills affixed with the stamp duty of Hong Kong dated 15 November 2018 and the Daily SettlementBook of Chiwan Wharf’s stock account produced on 16 November 2018 by China MerchantsSecurities (HK) Co., Ltd., the stock agent in Hong Kong, the 1,313,541,560 CMPort Holdingsordinary shares have been registered under the name of the Company, marking that the proceduresfor the registration of the ownership transfer in respect of the target assets has been completed. As at25 December 2018, the procedures for the registration of the shares issued by the Company to thecounterparty CMID had been completed in CSDCC Shenzhen. Thus, the Company has controlledand consolidated CMPort Holdings. For more details, please refer to the Announcement of ShenzhenChiwan Wharf Holdings Limited on the Issue of Shares to Acquire Assets and Raise SupportingFunds and the Attainment of the Approval from CSRC for Related-party Transactions(Announcement No. 2018-094), and the Report of China Merchants Port Group Co., Ltd. on the Issueof Shares to Acquire Assets and Raise Supporting Funds and the Implementation of Related-partyTransactions and the Listing of New Shares published on CNINFO (http://www.cninfo.com.cn) on 1November 2018 and 24 December 2018 respectively.On 25 December 2018, the Company completed the issue of shares to the counterparty CMID andachieved the control over CMPort Holdings in form and nature. In accordance with the relatedprovisions in the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial
China Merchants Port Group Co., Ltd. Interim Report 2019
Statements, the Company started to consolidate the financial statements of CMPort Holdings fromDecember 2018, and adjusted in this Report the data of the same period of last year in the comparativefinancial statements according to the rules governing business combinations under common control.The wholly-owned subsidiary of the Company CWH (H.K.) signed in Zhanjiang on 8 January 2019the Agreement on a Capital Increase to Zhanjiang Port (Group) Co., Ltd. with ZhanjiangInfrastructure Investment and Zhanjiang Port (hereinafter referred to as the “Capital IncreaseAgreement”). According to the provisions of the Capital Increase Agreement, Zhanjiang Port issued1,853,518,190 additional ordinary shares at the price of RMB1.867 per share or the equivalent in theforeign currency (based on the exchange rate at the time of payment) to increase its registered capitalto RMB5,874,209,145. CWH (H.K.) subscribed for 1,606,855,919 such ordinary shares, accountingfor 27.3544% of the issued shares of Zhanjiang Port as at the date of issuance of such shares, at atotal price of RMB3,000,000,000.77 or the equivalent in the foreign currency (based on the exchangerate at the time of payment) (hereinafter referred to as "the Transaction"); and ZhanjiangInfrastructure Investment subscribed for 246,662,271 shares, accounting for 4.1991% of the issuedshares of Zhanjiang Port as at the date of issuance of such shares, at a total price ofRMB460,518,459.96.As of 3 February 2019, the registration and filing procedures of the Transaction for business changewas finished, and the capital increase to Zhanjiang Port by the Company's wholly-owned subsidiaryCWH (H.K.) was completed. Upon the completion of the Transaction, the Company’s interest inZhanjiang Port has increased to 58.3549%. Therefore, Zhanjiang Port has since been included in thescope of the Company’s consolidated financial statements.XVII Significant Events of Subsidiaries
√ Applicable □ Not applicable
1. On 25 February 2019, the Proposal on the Participation in a Land Readjustment in Qianhai by aWholly-Owned Subsidiary of the Company’s Majority-Owned Subsidiary China Merchants PortHoldings Company Limited was approved at the Second Extraordinary General Meeting of 2019 ofthe Company, with the relevant announcement disclosed on Securities Times, Ta Kung Pao and
China Merchants Port Group Co., Ltd. Interim Report 2019
www.cninfo.com.cn. The said proposal has also been approved at a special general meeting of ChinaMerchants Port Holdings Company Limited (00144.HK) in the forenoon of that day.
2. On 21 June 2019, China Merchants Port Holdings Company Limited (“CMPort Holdings”)distributed the final dividend (equivalent to HK$0.73 per ordinary share) for the year ended 31December 2018 to its shareholders. The shareholders might elect to receive the final dividend in cashfor their entire or partial scrip dividend interests. Before this distribution, the Company held1,313,541,560 ordinary shares in CMPort Holdings, representing a 39.45% stake. As the Companyelected to receive the dividend in the form of scrip dividend and therefore obtained another72,598,829 ordinary shares in CMPort Holdings, its stake in CMPort Holdings has risen to 40.55%(1,386,140,389 shares).
China Merchants Port Group Co., Ltd. Interim Report 2019
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Number | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Number | Percentage (%) | |
| 1. Restricted shares | 1,148,860,804 | 64.06% | 0 | 0 | 0 | -42,554 | -42,554 | 1,148,818,250 | 64.06% |
| 1.1 Shares held by government | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| 1.2 Shares held by state-owned legal persons | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| 1.3 Shares held by other domestic investors | 212,156 | 0.01% | 0 | 0 | 0 | -42,554 | -42,554 | 169,602 | 0.01% |
| Among which: Shares held by domestic legal persons | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| Shares held by domestic natural persons | 212,156 | 0.01% | 0 | 0 | 0 | -42,554 | -42,554 | 169,602 | 0.01% |
| 1.4 Shares held by foreign investors | 1,148,648,648 | 64.05% | 0 | 0 | 0 | 0 | 0 | 1,148,648,648 | 64.05% |
| Among which: Shares held by foreign legal persons | 1,148,648,648 | 64.05% | 0 | 0 | 0 | 0 | 0 | 1,148,648,648 | 64.05% |
| Shares held by foreign natural persons | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| 2. Unrestricted shares | 644,551,574 | 35.94% | 0 | 0 | 0 | 42,554 | 42,554 | 644,594,128 | 35.94% |
| 2.1 RMB-denominated ordinary shares | 464,855,324 | 25.92% | 0 | 0 | 0 | 3,000 | 3,000 | 464,858,324 | 25.92% |
| 2.2 Domestically listed foreign shares | 179,696,250 | 10.02% | 0 | 0 | 0 | 39,554 | 39,554 | 179,735,804 | 10.02% |
| 2.3 Oversea listed foreign shares | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
China Merchants Port Group Co., Ltd. Interim Report 2019
| 2.4 Other | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| 3. Total shares | 1,793,412,378 | 100% | 1,793,412,378 | 100% |
Reasons for the share changes:
√ Applicable □ Not applicable
The directors and senior executives changed in December 2018.Approval of the share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchase:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of the share changes on the basic and diluted earnings per share, equity per share attributableto the Company’s ordinary shareholders and other financial indicators of the prior year and the prioraccounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator tobe disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Shareholder | Beginning restricted shares | Unlocked in the Reporting Period | Increase in the Reporting Period | Ending restricted shares | Reason for restriction | Date of unlocking |
| CMID | 1,148,648,648 | 0 | 0 | 1,148,648,648 | Due to the share restriction | June 2022 |
China Merchants Port Group Co., Ltd. Interim Report 2019
| commitment made by the shareholder in the re-listing of the Company | ||||||
| Zhang Jianguo | 74,282 | 18,570 | 0 | 55,712 | According to the Articles of Association and the relevant laws and regulations | Expiry of the 9th Board |
| Yuan Yuhui | 10,530 | 0 | 0 | 10,530 | Ditto | - |
| Ni Keqin | 21,909 | 0 | 0 | 21,909 | Ditto | - |
| Zhao Chaoxiong | 64,954 | 16,238 | 0 | 48,716 | Ditto | Expiry of the 9th Board |
| Wang Yongli | 4,985 | 1,246 | 0 | 3,739 | Ditto | Expiry of the 9th Board |
| Yao Shenglan | 26,000 | 3,500 | 0 | 19,500 | Ditto | Expiry of the 9th Board |
| Zheng Shaoping | 9,496 | 0 | 0 | 9,496 | Ditto | - |
| Total | 1,148,860,804 | 39,554 | 0 | 1,148,818,250 | -- | -- |
II Issuance and Listing of Securities
□ Applicable √ Not applicable
III Shareholders and Their Holdings as at 30 June 2019
Unit: share
| Number of ordinary shareholders | 33,304 | Number of preferred shareholders with resumed voting rights (if any) (see note 8) | 0 | |||||
| 5% or greater ordinary shareholders or the top 10 ordinary shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Ordinary shares held | Increase/decrease in the Reporting Period | Restricted ordinary shares held | Unrestricted ordinary shares held | Shares in pledge or frozen | |
| Status | Shares | |||||||
| CMID | Foreign legal person | 64.06% | 1,148,648,648 | 0 | 1,148,648,648 | 0 | - | - |
| China Merchants Gangtong | State-owned legal | 20.68% | 370,878,000 | 0 | 0 | 370,878,000 | - | - |
China Merchants Port Group Co., Ltd. Interim Report 2019
| Development (Shenzhen) Co., Ltd. | person | |||||||
| Broadford Global Limited | Foreign legal person | 3.08% | 55,314,208 | 0 | 0 | 55,314,208 | - | - |
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | Foreign legal person | 1.97% | 35,386,543 | -8,095,161 | 0 | 35,386,543 | Unknown | |
| National Social Security Fund Portfolio 101 | Other | 0.17% | 3,000,001 | 3,000,001 | 0 | 3,000,001 | Unknown | |
| NORGES BANK | Foreign legal person | 0.16% | 2,802,863 | 0 | 0 | 2,802,863 | Unknown | |
| China Merchants Securities (HK) Co., Ltd. | State-owned legal person | 0.14% | 2,483,449 | -174,071 | 0 | 2,483,449 | Unknown | |
| Mai Shuqing | Domestic natural person | 0.13% | 2,376,747 | 15,700 | 0 | 2,376,747 | Unknown | |
| Vanguard Emerging Markets Stock Index Fund | Foreign legal person | 0.09% | 1,535,216 | -700,384 | 0 | 1,535,216 | Unknown | |
| Shen Huailing | Domestic natural person | 0.08% | 1,500,149 | 1,500,149 | 0 | 1,500,149 | Unknown | |
| Strategic investor or general legal person becoming a top-10 ordinary shareholder in a rights issue (if any) (see note 3) | N/A | |||||||
| Related or acting-in-concert parties among the shareholders above | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a wholly-owned subsidiary of Broadford Global Limited, and Broadford Global Limited is the controlling shareholder of CMID. The Company does not know whether the other unrestricted shareholders are related parties or not. | |||||||
| Top 10 unrestricted ordinary shareholders | ||||||||
| Name of shareholder | Unrestricted ordinary shares held | Shares by type | ||||||
| Type | Shares | |||||||
| China Merchants Gangtong Development | 370,878,000 | RMB-denominated | 370,878,000 | |||||
China Merchants Port Group Co., Ltd. Interim Report 2019
| (Shenzhen) Co., Ltd. | ordinary share | ||
| Broadford Global Limited | 55,314,208 | Domestically listed foreign share | 55,314,208 |
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | 35,386,543 | Domestically listed foreign share | 35,386,543 |
| National Social Security Fund Portfolio 101 | 3,000,001 | RMB-denominated ordinary share | 3,000,001 |
| NORGES BANK | 2,802,863 | Domestically listed foreign share | 2,802,863 |
| China Merchants Securities (HK) Co., Ltd. | 2,483,449 | Domestically listed foreign share | 2,483,449 |
| Mai Shuqing | 2,376,747 | RMB-denominated ordinary share | 2,376,747 |
| Vanguard Emerging Markets Stock Index Fund | 1,535,216 | Domestically listed foreign share | 1,535,216 |
| Shen Huailing | 1,500,149 | Domestically listed foreign share | 1,500,149 |
| Chen Zehong | 1,240,000 | RMB-denominated ordinary share | 1,240,000 |
| Related or acting-in-concert parties among top 10 unrestricted ordinary shareholders, as well as between top 10 unrestricted ordinary shareholders and top 10 ordinary shareholders | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a wholly-owned subsidiary of Broadford Global Limited. The Company does not know whether the other unrestricted shareholders are related parties or not. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | N/A | ||
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestrictedordinary shareholders of the Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
China Merchants Port Group Co., Ltd. Interim Report 2019
IV Change of the Controlling Shareholder or the Actual ControllerChange of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
China Merchants Port Group Co., Ltd. Interim Report 2019
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
China Merchants Port Group Co., Ltd. Interim Report 2019
Part VIII Directors, Supervisors and Senior Management
I Change in the Shareholdings of the Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
The shareholdings of the Company’s directors, supervisors and senior management remainedunchanged during the Reporting Period, which can be found in the 2018 Annual Report.II Change of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
The Company’s directors, supervisors and senior management remained unchanged during theReporting Period, about whom information can be found in the 2018 Annual Report.
China Merchants Port Group Co., Ltd. Interim Report 2019
Part IX Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which wereoutstanding before the date of this Report’s approval or were due but could not be redeemed in full?No.
China Merchants Port Group Co., Ltd. Interim Report 2019
Part X Financial Statements
I Independent Auditor’s ReportThe interim financial statements are unaudited by such an auditor.II Financial StatementsSee the attached.
China Merchants Port Group Co., Ltd. Interim Report 2019
Part XI Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, ChiefFinancial Officer and person-in-charge of the accounting organ;
2. The 2019 Interim Report signed by the legal representative of the Company; and
3. The originals of all the Company’s announcements and documents disclosed to the publicduring the Reporting Period on the website designated by the CSRC for the informationdisclosure of listed companies.
For and on behalf of the Board
Bai JingtaoLegal representative ofChina Merchants Port Group Co., Ltd.
Dated 31 August 2019
CHINA MERCHANTS PORT GROUP CO., LTD.
FINANCIAL STATEMENTSFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
FINANCIAL STATEMENTS AND AUDITOR'S REPORTFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
CONTENTS PAGES
THE CONSOLIDATED AND COMPANY BALANCE SHEETS 1 - 4
THE CONSOLIDATED AND COMPANY INCOME STATEMENTS 5 - 7
THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 8 - 9
NOTES TO THE FINANCIAL STATEMENTS 10 - 132
- 1 -
AT 30 JUNE 2019
Consolidated Balance Sheet
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Notes | 30/06/2019 | 31/12/2018 (restated) |
| Current assets: | |||
| Cash and bank balances | (V)1 | 7,055,470,795.98 | 7,077,396,895.72 |
| Notes receivable | (V)2 | 230,573,402.76 | 11,608,669.43 |
| Accounts receivable | (V)3 | 1,826,407,082.63 | 1,109,230,503.08 |
| Prepayments | (V)4 | 110,755,247.26 | 124,404,862.87 |
| Other receivables | (V)5 | 8,060,039,732.79 | 766,518,078.72 |
| Inventories | (V)6 | 177,691,083.71 | 108,567,270.02 |
| Assets held for sale | (V)7 | 115,356,162.94 | 115,356,162.94 |
| Non-current assets due within one year | (V)8 | 867,338,469.27 | 25,952,956.76 |
| Other current assets | (V)9 | 251,682,098.85 | 1,195,421,189.12 |
| Total current assets | 18,695,314,076.19 | 10,534,456,588.66 | |
| Non-current Assets: | |||
| Long-term receivables | (V)10 | 940,430,346.97 | 793,046,240.11 |
| Long-term equity investments | (V)11 | 49,101,264,546.66 | 50,176,577,263.40 |
| Other investments in equity instruments | (V)12 | 566,083,559.83 | 247,848,314.30 |
| Other non-current financial assets | (V)13 | 3,019,618,722.58 | 2,087,872,081.94 |
| Investment properties | (V)14 | 5,860,454,152.44 | 5,890,146,989.51 |
| Fixed assets | (V)15 | 25,605,443,597.36 | 22,994,190,880.43 |
| Construction in progress | (V)16 | 7,255,432,536.56 | 5,499,426,090.06 |
| Right-of-use assets | (V)17 | 7,707,006,935.05 | |
| Intangible assets | (V)18 | 22,350,877,669.78 | 20,761,018,044.54 |
| Development Expenditure | (V)19 | 17,221,612.02 | - |
| Goodwill | (V)20 | 8,199,724,444.77 | 8,335,895,842.35 |
| Long-term prepaid expenses | (V)21 | 221,739,319.29 | 235,706,437.21 |
| Deferred tax assets | (V)22 | 116,280,906.54 | 66,708,157.19 |
| Other non-current assets | (V)23 | 2,079,773,743.04 | 395,191,485.98 |
| Total non-current assets | 133,041,352,092.89 | 117,483,627,827.02 | |
| TOTAL ASSETS | 151,736,666,169.08 | 128,018,084,415.68 |
The financial statements and notes were signed by the following:
Legal Representative: Bai Jingtao
Chief Financial Officer: Wen Ling
Head of Accounting Department: Sun Ligan
- 2 -
AT 30 JUNE 2019
Consolidated Balance Sheet - continued
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Notes | 30/06/2019 | 31/12/2018 (restated) |
| Current liabilities: | |||
| Short-term borrowings | (V)24 | 7,566,020,460.46 | 3,427,365,512.21 |
| Notes payable | (V)25 | 69,419,891.54 | - |
| Accounts payable | (V)26 | 544,188,025.02 | 429,120,690.97 |
| Receipts in advance | (V)27 | 28,204,626.82 | 29,170,709.86 |
| Contract liabilities | (V)28 | 151,331,357.06 | 49,993,895.50 |
| Employee benefits payable | (V)29 | 531,902,124.62 | 433,489,555.40 |
| Taxes payable | (V)30 | 1,530,590,561.50 | 345,183,422.42 |
| Other payables | (V)31 | 3,421,776,143.11 | 1,690,124,901.29 |
| Non-current liabilities due within one year | (V)32 | 3,782,456,888.55 | 2,903,320,877.97 |
| Other current liabilities | (V)33 | 1,456,067,284.82 | 602,659,721.80 |
| Total current liabilities | 19,081,957,363.50 | 9,910,429,287.42 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)34 | 7,456,687,214.19 | 6,971,479,842.18 |
| Bonds payable | (V)35 | 22,057,369,574.31 | 22,097,467,096.40 |
| Lease liabilities | (V)36 | 1,740,889,561.88 | |
| Long-term payables | (V)37 | 1,269,553,048.04 | 1,294,190,118.18 |
| Projected benefits obligation | (V)38 | 726,014,472.07 | 375,325,127.65 |
| Provisions | (V)39 | 41,571,808.82 | 34,951,392.27 |
| Deferred income | (V)40 | 2,161,007,055.37 | 228,658,214.64 |
| Deferred tax liabilities | (V)22 | 3,950,034,565.54 | 2,911,074,941.27 |
| Other non-current liabilities | (V)41 | 3,978,432,377.93 | 3,777,582,522.86 |
| Total non-current liabilities | 43,381,559,678.15 | 37,690,729,255.45 | |
| TOTAL LIABILITIES | 62,463,517,041.65 | 47,601,158,542.87 | |
| SHAREHOLDERS' EQUITY: | |||
| Share capital | (V)42 | 1,793,412,378.00 | 1,793,412,378.00 |
| Capital reserve | (V)43 | 19,548,822,799.86 | 19,426,912,957.05 |
| Other comprehensive income | (V)44 | -243,686,564.51 | 88,925,978.57 |
| Special reserve | (V)45 | 20,454,196.39 | 8,231,080.43 |
| Surplus reserve | (V)46 | 527,175,908.67 | 527,175,908.67 |
| Unappropriated profit | (V)47 | 10,972,690,972.30 | 8,915,817,110.21 |
| Total shareholders' equity attributable to equity holders of the parent | 32,618,869,690.71 | 30,760,475,412.93 | |
| Total minority interests | 56,654,279,436.72 | 49,656,450,459.88 | |
| TOTAL SHAREHOLDERS' EQUITY | 89,273,149,127.43 | 80,416,925,872.81 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 151,736,666,169.08 | 128,018,084,415.68 |
The accompanying notes form part of the financial statements.
- 3 -
AT 30 JUNE 2019
Balance Sheet of the Company
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Notes | 30/06/2019 | 31/12/2018 (restated) |
| Current Assets: | |||
| Cash and bank balances | 324,274,763.05 | 389,841,854.93 | |
| Accounts receivable | (XIV)1 | 19,010,075.81 | 23,444,175.65 |
| Other receivables | (XIV)2 | 1,329,604,071.05 | 651,050,233.08 |
| Inventories | 148,852.46 | 165,553.46 | |
| Other current assets | 1,128,777.61 | 1,563,111.61 | |
| Total current assets | 1,674,166,539.98 | 1,066,064,928.73 | |
| Non-current Assets: | |||
| Long-term receivables | 11,004,284.75 | 11,004,284.75 | |
| Long-term equity investments | (XIV)3 | 28,549,327,394.77 | 28,544,261,576.96 |
| Other investments in equity instruments | 528,021,090.00 | 151,746,700.00 | |
| Investment properties | 14,044,663.33 | 12,685,959.06 | |
| Fixed assets | 180,765,459.07 | 190,804,655.63 | |
| Construction in progress | 2,516,692.93 | 2,500,843.87 | |
| Right-of-use assets | 9,015,046.28 | ||
| Intangible assets | 56,408,816.33 | 57,755,603.44 | |
| Long-term prepaid expenses | 3,706,930.48 | 3,785,801.32 | |
| Total non-current assets | 29,354,810,377.94 | 28,974,545,425.03 | |
| TOTAL ASSETS | 31,028,976,917.92 | 30,040,610,353.76 |
- 4 -
AT 30 JUNE 2019
Balance Sheet of the Company - continued
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Notes | 30/06/2019 | 31/12/2018 (restated) |
| Current Liabilities: | |||
| Short-term borrowings | - | 377,716,000.00 | |
| Accounts payable | 11,373,094.51 | 13,125,624.29 | |
| Contract liabilities | 30,503.00 | 92,003.00 | |
| Employee benefits payable | 18,440,387.81 | 26,605,190.52 | |
| Taxes payable | 148,852,424.74 | 18,826,587.50 | |
| Other payables | 684,370,662.13 | 717,536,924.18 | |
| Non-current liabilities due within one year | 306,704,226.28 | 299,531,506.81 | |
| Other current liabilities | 1,000,000,000.00 | 200,000,000.00 | |
| Total current liabilities | 2,169,771,298.47 | 1,653,433,836.30 | |
| Non-current Liabilities: | |||
| Lease liabilities | 2,987,130.94 | ||
| Long-term payables | 35,188,000.00 | 151,710,000.00 | |
| Deferred tax liabilities | 34,414,375.00 | 34,179,375.00 | |
| Total non-current liabilities | 72,589,505.94 | 185,889,375.00 | |
| TOTAL LIABILITIES | 2,242,360,804.41 | 1,839,323,211.30 | |
| SHAREHOLDERS' EQUITY | |||
| Share capital | 1,793,412,378.00 | 1,793,412,378.00 | |
| Capital reserve | 25,517,679,153.52 | 25,517,647,180.04 | |
| Other comprehensive income | 103,343,125.00 | 102,638,125.00 | |
| Special reserve | 478,474.85 | 470,465.59 | |
| Surplus reserve | 527,175,908.67 | 527,175,908.67 | |
| Unappropriated profit | 844,527,073.47 | 259,943,085.16 | |
| TOTAL SHAREHOLDERS' EQUITY | 28,786,616,113.51 | 28,201,287,142.46 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 31,028,976,917.92 | 30,040,610,353.76 |
The accompanying notes form part of the financial statements.
- 5 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
Consolidated Income Statement
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (V)48 | 5,834,353,421.33 | 4,672,338,040.72 |
| Less: Operating costs | (V)48 | 3,608,020,695.91 | 2,614,461,218.38 |
| Business taxes and levies | (V)49 | 96,475,511.42 | 83,041,239.55 |
| Sales expenses | - | - | |
| Administrative expenses | (V)50 | 647,244,718.36 | 497,420,738.23 |
| Research and development expenses | 60,018,835.29 | 48,063,815.62 | |
| Financial expenses | (V)51 | 873,109,624.88 | 724,062,144.53 |
| Including: Interest expense | 1,037,955,298.30 | 711,988,706.80 | |
| Interest income | 139,353,821.46 | 110,201,974.82 | |
| Add: Other income | (V)52 | 73,092,505.76 | 26,603,312.77 |
| Investment income | (V)53 | 2,625,049,484.56 | 1,536,300,233.07 |
| Including: Income from investments in associates and joint ventures | (V)53 | 1,795,952,978.08 | 1,497,601,956.62 |
| Gain or loss from derecognition of Financial assets measured at amortized cost | - | - | |
| Gains (losses) from changes in fair value | (V)54 | 643,627,313.01 | -471,339,392.83 |
| Impairment gain of credit | (V)55 | 7,699,134.78 | 1,789,443.78 |
| Impairment gain of assets | (V)56 | 25,051.16 | - |
| Gains (losses) on disposal of assets | (V)57 | 4,169,857,166.53 | 10,478,881.99 |
| II. Operating profit | 8,068,834,691.27 | 1,809,121,363.19 | |
| Add: Non-operating income | (V)58 | 14,379,618.34 | 45,638,666.45 |
| Less: Non-operating expenses | (V)59 | 7,506,374.29 | 22,984,336.32 |
| III. Gross profit | 8,075,707,935.32 | 1,831,775,693.32 | |
| Less: Income tax expenses | (V)60 | 2,017,970,750.16 | 376,500,021.27 |
| IV. Net profit | 6,057,737,185.16 | 1,455,275,672.05 | |
| (I) Categorization by continuity of operation | - | ||
| 1. Net profit of continued operation | 6,057,737,185.16 | 1,455,275,672.05 | |
| 2. Net profit of discontinued operation | - | - | |
| (II) Categorization by attribution of ownership | |||
| 1. Net profit attributable to shareholders of the parent | 2,299,181,330.61 | 620,038,405.65 | |
| 2. Profit or loss attributable to minority shareholder | 3,758,555,854.55 | 835,237,266.40 |
- 6 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
Consolidated Income Statement - continued
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| V. Amount of other comprehensive net income after tax | (V)62 | -916,016,194.57 | 13,454,270.70 |
| Amount of other comprehensive net income after tax attributable to equity holders of the parent | -332,612,543.08 | 8,123,952.05 | |
| (I) Other comprehensive income that will not be reclassified to profit or loss | 15,630,350.48 | -352,500.00 | |
| 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 | 14,925,350.48 | - | |
| 3. Fair value changes of other investments in equity instruments | 705,000.00 | -352,500.00 | |
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | -348,242,893.56 | 8,476,452.05 | |
| 1. Other comprehensive income under the equity method that will be reclassified to profit or loss | -25,779,604.80 | -418,926.87 | |
| 2. Fair value changes of other equity investments | - | -14,759.46 | |
| 3. Translation differences of financial statements denominated in foreign currencies | -322,463,288.76 | 8,910,138.38 | |
| Amount of other comprehensive net income after tax attributable to minority shareholders | -583,403,651.49 | 5,330,318.65 | |
| VI. Total comprehensive income attributable to: | 5,141,720,990.59 | 1,468,729,942.75 | |
| Shareholders of the parent | 1,966,568,787.53 | 628,162,357.70 | |
| Minority shareholders | 3,175,152,203.06 | 840,567,585.05 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | 1.28 | 0.35 | |
| (II) Diluted earnings per share | 1.28 | 0.35 |
The accompanying notes form part of the financial statements.
- 7 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
Income Statement of the Company
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (XIV)4 | 89,776,788.29 | 119,422,977.47 |
| Less: Operating costs | (XIV)4 | 72,138,491.00 | 66,904,086.32 |
| Business taxes and levies | 1,386,897.46 | 1,668,896.31 | |
| Administrative expenses | 37,458,257.94 | 37,663,434.34 | |
| Research and development expenses | - | - | |
| Financial expenses | 28,123,295.64 | 11,394,012.23 | |
| Including: Interest expense | 22,334,322.60 | 16,375,152.68 | |
| Interest income | 6,848,157.41 | 12,911,196.35 | |
| Add: Other income | 211,721.77 | - | |
| Investment income | (XIV)5 | 986,513,980.21 | 45,416,275.00 |
| Including: Income from investments in associates and joint ventures | (XIV)5 | 37,846,506.83 | 37,627,300.00 |
| Gain or loss from derecognition of Financial assets measured at amortized cost | - | - | |
| Impairment gain of credit | - | - | |
| Impairment gain of assets | - | - | |
| Gains (losses) on disposal of assets | - | - | |
| II. Operating profit | 937,395,548.23 | 47,208,823.27 | |
| Add: Non-operating income | 35,710.26 | 968,382.40 | |
| Less: Non-operating expenses | 68,028.29 | 1,187,353.35 | |
| III. Gross profit | 937,363,230.20 | 46,989,852.32 | |
| Less: Income tax expenses | 148,004,636.57 | 395,773.33 | |
| IV. Net profit | 789,358,593.63 | 46,594,078.99 | |
| V. Amount of other comprehensive net income after tax | 705,000.00 | -585,000.00 | |
| (I) Other comprehensive income that will not be reclassified subsequently to profit or loss | 705,000.00 | -585,000.00 | |
| 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 | 705,000.00 | -585,000.00 | |
| (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. Gains or losses on changes in fair value of available-for-sale financial assets | - | - | |
| 3. Translation differences of financial statements denominated in foreign currencies | - | - | |
| VI. Total comprehensive income | 790,063,593.63 | 46,009,078.99 |
The accompanying notes form part of the financial statements.
- 8 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
Consolidated Cash Flow Statement
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| 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 | 5,754,573,111.14 | 4,308,320,507.35 | |
| Receipts of tax refunds | 1,028,913.99 | 4,421,005.64 | |
| Other cash receipts relating to operating activities | (V)63(1) | 628,327,662.03 | 360,470,289.18 |
| Sub-total of cash inflows | 6,383,929,687.16 | 4,673,211,802.17 | |
| Cash payments for goods purchased and services received | 1,686,739,386.99 | 1,217,915,421.65 | |
| Cash payments to and on behalf of employees | 1,289,823,173.43 | 930,421,609.67 | |
| Payments of all types of taxes | 472,544,903.05 | 331,244,635.01 | |
| Other cash payments relating to operating activities | (V)63(2) | 377,960,308.17 | 392,895,417.13 |
| Sub-total of cash outflows | 3,827,067,771.64 | 2,872,477,083.46 | |
| Net Cash Flows from Operating Activities | (V)64(1) | 2,556,861,915.52 | 1,800,734,718.71 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | - | 200,000.00 | |
| Cash receipts from investments income | 255,735,654.65 | 270,788,784.87 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 28,746,274.62 | 6,230,106.16 | |
| Net cash receipts from disposal of subsidiary and other operating units | - | - | |
| Other cash receipts relating to investing activities | (V)63(3)、(4) | 2,641,747,342.20 | 1,000,000.00 |
| Sub-total of cash inflows | 2,926,229,271.47 | 278,218,891.03 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 1,557,516,143.20 | 1,043,472,074.69 | |
| Cash payments to acquire investments | 321,023,297.25 | 3,419,937,193.56 | |
| Net cash payment to acquire subsidiary and other operating units | - | 9,200,472,631.65 | |
| Other cash payments relating to investing activities | (V)63(5) | 973,903,129.78 | 25,463,391.23 |
| Sub-total of cash outflows | 2,852,442,570.23 | 13,689,345,291.13 | |
| Net Cash Flows from Investing Activities | 73,786,701.24 | -13,411,126,400.10 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 27,255,000.00 | 15,950,000.00 | |
| Including: cash receipts from capital contributions from minority owners of subsidiary | 27,255,000.00 | 15,950,000.00 | |
| Cash receipts from borrowings | 8,519,572,630.94 | 17,062,051,282.50 | |
| Cash receipts from issue of bonds | 1,000,000,000.00 | 700,000,000.00 | |
| Other cash receipts relating to financing activities | (V)63(6) | - | 4,422,370,076.87 |
| Sub-total of cash inflows | 9,546,827,630.94 | 22,200,371,359.37 | |
| Cash repayments of borrowings | 10,576,686,264.69 | 9,324,223,330.27 | |
| Cash payments for distribution of dividends or profit or interest | 1,120,395,167.09 | 1,274,561,425.91 | |
| Including: Payments for distribution of dividends or profit to minorities | 150,969,238.87 | 649,383,878.87 | |
| Other cash payments relating to financing activities | (V)63(7) | 215,990,980.67 | 36,616,456.42 |
| Sub-total of cash outflows | 11,913,072,412.45 | 10,635,401,212.60 | |
| Net Cash Flows from Financing Activities | -2,366,244,781.51 | 11,564,970,146.77 | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | -19,500,690.81 | -22,476,832.15 | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | 244,903,144.44 | -67,898,366.77 | |
| Add: Opening Balance of Cash and Cash Equivalents | (V)64(2) | 5,373,281,504.75 | 7,729,460,082.75 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)64(2) | 5,618,184,649.19 | 7,661,561,715.98 |
The accompanying notes form part of the financial statements.
- 9 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
Cash Flow Statement of the Company
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| 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 | 90,193,645.46 | 107,636,176.67 | |
| Other cash receipts relating to operating activities | 2,827,290.04 | 230,346,187.55 | |
| Sub-total of cash inflows | 93,020,935.50 | 337,982,364.22 | |
| Cash payments for goods purchased and services received | 30,749,568.38 | 35,630,528.08 | |
| Cash payments to and on behalf of employees | 64,417,358.35 | 68,710,981.15 | |
| Payments of all types of taxes | 19,019,323.75 | 3,485,828.13 | |
| Other cash payments relating to operating activities | 245,001,703.97 | 388,259,171.05 | |
| Sub-total of cash outflows | 359,187,954.45 | 496,086,508.41 | |
| Net Cash Flows from Operating Activities | -266,167,018.95 | -158,104,144.19 | |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from investments income | 273,935,026.51 | 444,277,054.92 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | - | 178,876.00 | |
| Other cash receipts relating to investing activities | 228,867,355.24 | - | |
| Sub-total of cash inflows | 502,802,381.75 | 444,455,930.92 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 1,916,637.68 | 5,461,752.50 | |
| Cash payments for investments | 375,334,390.00 | - | |
| Net cash payments for acquisition of subsidiaries and other business entities | 10,825,000.00 | 149,709,800.00 | |
| Other cash payments relating to investing activities | 185,800,000.00 | - | |
| Sub-total of cash outflows | 573,876,027.68 | 155,171,552.50 | |
| Net Cash Flows from Investing Activities | -71,073,645.93 | 289,284,378.42 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | - | - | |
| Cash receipts from borrowings | 660,000,000.00 | 571,758,000.00 | |
| Cash receipts from issue of bonds | 1,000,000,000.00 | 200,000,000.00 | |
| Other cash receipts relating to financing activities | - | - | |
| Sub-total of cash inflows | 1,660,000,000.00 | 771,758,000.00 | |
| Cash repayments of borrowings | 1,361,616,000.00 | 170,000,000.00 | |
| Cash payments for distribution of dividends or profit or interest | 19,237,193.99 | 855,728,376.23 | |
| Other cash payments relating to financing activities | 4,033,208.78 | 663,373.11 | |
| Sub-total of cash outflows | 1,384,886,402.77 | 1,026,391,749.34 | |
| Net Cash Flows from Financing Activities | 275,113,597.23 | -254,633,749.34 | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | -3,440,024.23 | -8,716,054.32 | |
| V. Net Increase in Cash and Cash Equivalents | -65,567,091.88 | -132,169,569.43 | |
| Add: Opening balance of Cash and Cash Equivalents | 389,841,854.93 | 230,039,345.73 | |
| VI. Closing Balance of Cash and Cash Equivalents | 324,274,763.05 | 97,869,776.30 |
The accompanying notes form part of the financial statements.
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I. GENERAL INFORMATION OF THE COMPANY
China Merchants Port Holdings Company Limited (formerly known as "Shenzhen Chiwan WharfHoldings Limited", hereinafter referred to as the "Company") is a stock limited companyincorporated in Shenzhen, Guangdong Province, on 16 January 1993.
On 30 October 2018, as approved by the Reply on Approving Issuance of Shares to Purchase Assetsand Collection of Funds from Shenzhen Chiwan Wharf Holdings Limited to China MerchantsInvestment Development Company Limited (Zheng Jian Xu Ke [2018] No. 1750) issued by ChinaSecurities Regulatory Commission ("CSRC"), the Company issued 1,148,648,648 shares of A-stock to China Merchants Investment Development Company Limited ("CMID") to acquire 39.45%equity of China Merchants Port Holdings Company Limited ("CMPORT"). The Company hasadopted this name since completion of the acquisition.
The headquarters of the Company is located in Shenzhen, Guangdong Province. The Company andits subsidiaries (collectively the "Group") are principally engaged in the rendering of port service,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 of Directorson 29 August 2019.
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 scope of consolidation" 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 by theMinistry of Finance ("MoF"). In addition, the Group has disclosed relevant financial information inaccordance with Information Disclosure and Presentation Rules for Companies Offering Securitiesto the Public No. 15 - General Provisions on Financial Reporting (Revised in 2014).
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 the relevantrequirements.
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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 amount ofcash or cash equivalents paid or the fair value of the consideration given to acquire them at the timeof their acquisition. Liabilities are recorded at the amount of proceeds or assets received or thecontractual 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 whether thatprice is directly observable or estimated using valuation technique. Fair value measurement and/ordisclosure 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 the inputsto the fair value measurements are observable and the significance of the inputs to the fair valuemeasurement 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.
Going Concern
The Group assessed its ability to continue as a going concern for the 12 months from 30 June 2019and did not notice any events or circumstances that may cast significant doubt upon its ability tocontinue as a going concern. Therefore, the financial statements have been prepared on a goingconcern basis.
III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
All the following significant accounting policies and accounting estimates are based on AccountingStandards for Business Enterprises ("ASBE").
1. Statement of compliance with the ASBE
The financial statements of the Group have been prepared in accordance with the ASBE, and havepresented truly and completely, the Group’s and the consolidated's financial position as of 30 June2019, and the Group’s and the consolidated's results of operations and cash flows for the periodfrom 1 January 2019 to 30 June 2019.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
2. Accounting period
The Group has adopted the calendar year as its accounting year, e.g. from 1 January to 31 December.
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 is 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 Companyoperates. Therefore, the Company chooses RMB as its functional currency. The Company'ssubsidiaries chooses their functional currency on the basis of the primary economic environment inwhich they operate. The Company adopts 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 business combinationin which all of the combining enterprises are not ultimately controlled by the same party or partiesbefore and after the combination.
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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 involvingenterprises under 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 acquisition. 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. Intermediary expenses (fees in respect of auditing,legal services, valuation and consultancy services, etc.) and other administrative expensesattributable to the business combination are recognized in profit or loss in the periods when theyare incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities acquired by the acquirer in abusiness combination that meets the recognition criteria shall be measured at fair value at theacquisition date.
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 the cost of combination is still less thanthe acquirer's interest in the fair value of the acquiree's identifiable net assets afterwards, theacquirer recognizes the remaining difference immediately in profit or loss for the current period.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses,and is presented separately in the consolidated financial statements.
6. 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; or has the ability to use its power over theinvestee to affect its returns. The Group reassesses whether or not it controls an investee if there areindications that there are changes of the above elements of the definition of control.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiaries andceases when the Group loses control of the subsidiary.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
For a subsidiary already disposed by the Group, the operating results and cash flows before the dateof disposal (the date when control is lost) are included in the consolidated income statement andconsolidated statement of cash flows, as appropriate.
For subsidiaries acquired through a business combination involving enterprises not under commoncontrol, the operating results and cash flows from the acquisition date (the date when control isobtained) are included, as appropriate, in the consolidated income statement and consolidatedstatement of cash flows.
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 included,as appropriate, in the consolidated income statement and consolidated statement of cash flows.
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.
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 minority interestsand presented as "minority interests" in the consolidated balance sheet under shareholders' equity.The portion of net profits or losses of subsidiaries for the period attributable to minority interests ispresented as "minority interests" in the consolidated income statement under the "net profit" lineitem.
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. If thecapital reserve is not sufficient to absorb the difference, the excess is adjusted against retainedearnings.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
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 fair valueof acquirees' shares held before acquisition date will be revalued, and the difference between fairvalue and book value will be recognized in profit or loss of the current period; if acquirees' sharesheld before acquisition date involve in changes of other comprehensive income and other equity ofowners under equity method, this will be transferred to income of acquisition date.
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':
? They are entered into at the same time or in contemplation of each other, or? They form a complete transaction designed to achieve an overall commercial effect, or? The occurrence of one transaction is dependent on the occurrence of at least one other
transaction, or? One transaction alone is not economically justified, but it is economically justified when
considered together with other transactions.Where the transactions of disposal of equity investments in a subsidiary until the loss of control areassessed as a package deal, these transactions are accounted for as one transaction of disposal of asubsidiary with loss of control. Before losing control, the difference of consideration received ondisposal and the share of net assets of the subsidiary continuously calculated from acquisition dateis recognized as other comprehensive income. When losing control, the cumulated othercomprehensive income is transferred to profit or loss of the period of losing control. If thetransactions of disposal of equity investments in a subsidiary are not assessed as a package deal,these transactions are accounted for as unrelated transactions.
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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
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 the jointarrangements by considering the structure, the legal form of the arrangements, the contractual termsagreed by the parties to the arrangement. A joint operation is a joint arrangement whereby the partiesthat have joint control of the arrangement have rights to the assets, and obligations for the liabilities,relating to the arrangement. A joint venture is a joint arrangement whereby the parties that havejoint control of the arrangement have rights to the net assets of the arrangement.
Investments in joint ventures are accounted for using the equity method by the Group, which isdetailed in Notes (III) 14.3.2, a long-term equity investment is subject to for using the equity method.
The Group as a joint operator recognizes the following items in relation to its interest in a jointoperation:
? Its solely-held assets, including its share of any assets held jointly;? Its solely-assumed liabilities, including its share of any liabilities incurred jointly;? Its revenue from the sale of its share of the output arising from the joint operation;? Its share of the revenue from the sale of the output by the joint operation; and? Its solely-incurred expenses, including its share of any expenses incurred jointly.The Group accounts for the recognized assets, liabilities, revenues and expenses relating to itsinterest in a joint operation in accordance with the requirements applicable 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, highly liquid investments that are readily convertible toknown amounts of cash and which are subject 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 on initialrecognition or at the previous balance sheet date are recognized in profit or loss for the period,except that (1) exchange differences related to a specific-purpose borrowing denominated in foreigncurrency that qualify for capitalization are capitalized as part of the cost of the qualifying assetduring the capitalization period; (2) exchange differences related to hedging instruments for thepurpose of hedging against foreign currency risks are accounted for using hedge accounting.
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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
When the consolidated financial statements include foreign operation(s), if there is foreign currencymonetary item constituting a net investment in a foreign operation, exchange difference arisingfrom changes in exchange rates are recognized as "exchange differences arising on translation offinancial statements denominated in foreign currencies " in other comprehensive income, and inprofit and loss for the period upon disposal of the foreign operation.
Foreign currency non-monetary items measured at historical cost are translated to the amounts infunctional currency at the spot exchange rates at the dates of the transactions, while 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. Differencebetween the re-translated functional currency amount and the original functional currency amountis treated as changes in fair value (including changes of exchange rate) and is recognized in profitand 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 a foreignoperation are translated from the foreign currency into RMB using the following method: assetsand liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balancesheet date; shareholders' equity items are translated at the spot exchange rates at the dates on whichsuch items arose; all items in the income statement as well as items reflecting the distribution ofprofits are translated at exchange rates that approximate the actual spot exchange rates on the datesof the transactions; The difference between the translated assets and the aggregate of liabilities andshareholders' equity items is recognized as other comprehensive income and included inshareholders' equity.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign subsidiaryare translated at average exchange rate during the accounting period of consolidated financialstatements. The effect of exchange rate changes on cash and cash equivalents is regarded as areconciling item and presented separately in the cash flow statement as "effect of exchange ratechanges on cash and cash equivalents".
The opening 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 loss of control overforeign 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.
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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 interest percentagein foreign operations but does not result in the Group losing control over a foreign operation, theproportionate share of accumulated exchange differences arising on translation of financialstatements are re-attributed to minority interests and are not recognized in profit and loss. For partialdisposals of equity interests in foreign operations which are associates or joint ventures, theproportionate 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 assets andfinancial 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 component includedin the contracts less than one year which are not considered by the Group, which are within thescope of Accounting Standard for Business Enterprises No.14 - Revenue (hereinafter referred to as"new standards for revenue"), transaction prices defined in the standards shall be adopted on initialrecognition.
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 interest expensein 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, theGroup estimates future cash flows by considering all the contractual terms of the financial asset orfinancial liability (for example, prepayment, extension, call option or similar options) but shall notconsider 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 and theamount at the maturity date using the effective interest method, net of cumulative credit lossallowance (only applicable to financial assets).
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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 are subsequentlymeasured at amortized cost, at fair value through other comprehensive income or at fair valuethrough 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 andlong-term receivables etc..
Financial assets that meet the following conditions are subsequently measured at fair value throughother comprehensive income ("FVTOCI"): the financial asset is held within a business model whoseobjective is achieved by both collecting contractual cash flows and selling; and the contractual termsof the financial asset give rise on specified dates to cash flows that are solely payments of principaland interest on the principal amount outstanding. Financial assets at FVTOCI are presented as otherdebt investments. Other debt investments due within one year (inclusive) since the balance sheetdate are presented as non-current assets due within one year. Other debt investments due within oneyear (inclusive) upon acquisition are presented as other current 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 financial assetsat FVTOCI are presented as other equity instrument.
Financial assets measured at fair value through profit or loss ("FVTPL") include those classified asfinancial assets at FVTPL and those designated as financial assets at FVTPL, which are presentedas held-for-trading financial assets other than derivative financial assets. Such financial assets atFVTPL which may fall due more than one year since the balance sheet date and will be held morethan one year are presented as other non-current financial assets.
? 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 mismatch andqualified hybrid financial instrument combines financial asset with embedded derivatives, theGroup will irrevocably designated it as financial liabilities at FVTPL.
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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
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.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost are subsequently measured at amortized cost using theeffective interest method. Gain or loss arising from impairment or derecognition is recognized inprofit 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 book valueof 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 the financialasset 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 financial assetis derecognized, the cumulative gains or losses previously recognized in other comprehensiveincome shall be removed from other comprehensive income and recognized in profit or loss.
Non-trading equity instrument investments are designated as financial assets at FVTOCI, thecumulative gains or losses previously recognized in other comprehensive income allocated to thepart derecognized are transferred and included in retained earnings. During the period in which theGroup holds the non-trading equity instrument, revenue from dividends is recognized in profit orloss for the current period when the Group has established the right of collecting dividends; it isprobable that the associated economic benefits will flow to the Group; and the number of dividendscan be measured reliably.
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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
10.1.3 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 for expectedcredit losses ("ECL") on financial instruments measured at amortized cost, financial instrumentsclassified as at FVTOCI, lease receivables and contract assets.
The Group makes a loss allowance against the amount of lifetime ECL of the contract assets oraccounts receivable that exclude significant financing component or do not consider the financingcomponent in the contract within one year arising from transactions adopting New Standards forRevenue, contract assets and accounts receivable that include significant financing component andlease receivables arising from transactions adopting New Standards for Lease.
For financial instruments other than purchased or originated credit-impaired financial assets, theGroup assesses changes in credit risks of the relevant financial asset since initial recognition at eachbalance sheet date. If the credit loss of the financial instrument has been significantly increasedsince initial recognition, the Group will make a loss allowance at an amount of expected credit lossduring the whole life; if not, the Group will make a loss allowance for the financial instrument atan amount in the future 12-month expected credit losses. Except for the financial assets classifiedas at FVTOCI, increase in or reversal of credit loss allowance is included in profit or loss asloss/gain on impairment. For the financial assets classified as at FVTOCI, the Group recognizescredit loss allowance in other comprehensive income and recognizes the loss/gain on impairmentin profit or loss, while the Group does not decrease the carrying amount of such financial assets inthe balance sheet.
The Group has made loss allowances against amount of expected credit losses during the previousaccounting period. However, if the credit risk of a financial instrument has not increasedsignificantly since initial recognition at the balance sheet date, the Group will measure the lossallowance of that financial instrument at the amount of the expected credit losses in the future 12months. The reversed amount of loss allowances arising from such circumstances shall be includedin profit or loss as impairment gains.
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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
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 with therisk of a default occurring on the financial instrument as at the date of initial recognition. For loancommitments, the date that the Group becomes a party to the irrevocable commitment is consideredto be the date of initial recognition in the application of criteria related to the financial instrumentfor impairment.
In particular, the following information is taken into account when assessing whether credit risk hasincreased significantly:
? Significant changes in internal price indicators of credit risk as a result of a change in credit
risk;? 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 sheet
date (such as more stringent covenants, increased amounts of collateral or guarantees, or
higher income coverage);? Significant changes in external market indicators of credit risk for a particular financial
instrument or similar financial instruments with the same expected life. These indicators
include the credit spread, the credit swap prices for the borrower, the length of time or the
extent to which the fair value of a financial asset has been less than its amortized cost and
other market information related to the borrower, such as changes in the price of a
borrower’s debt and equity instruments;? Significant changes in actual or expected external credit rating for the financial instruments;? An actual or expected internal credit rating downgrade for the borrower;? 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;? An actual or expected significant change in the operating results of the debtor;? Significant increases in credit risk on other financial instruments of the same borrower;? Significant adverse change in the regulatory, economic, or technological environment of the
debtor;? 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 the debtor’s
economic incentive to make scheduled contractual payments or to otherwise have an effect
on the probability of a default occurring;? Significant changes in circumstances expected to reduce the debtor’s economic incentive to
make scheduled contractual payments;
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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
? Expected changes in the loan documentation including an expected breach of contract that
may lead to covenant waivers or amendments, interest payment holidays, interest rate step-ups, requiring additional collateral or guarantees, or other changes to the contractualframework of the financial instrument;? Significant changes in the expected performance and behavior of the debtor;? Changes in the entity’s credit management approach in relation to the financial instrument;? Past due of contract payment.
At balance sheet date, if the Group judges that the financial instrument solely has lower credit risk,the Group will assume that the credit risk of the financial instrument has not been significantlyincreased since initial recognition.
10.2.2 Credit-impaired financial assets
When the Group expect the 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 is not limited to thefollowing observable events:
? Significant financial difficulty of the issuer or debtor;? A breach of contract by the debtor, such as a default or delinquency in interest or principal
payments;? The creditor, for economic or legal reasons relating to the debtor’s financial difficulty,
granting a concession to the debtor;? It becoming probable that the debtor will enter bankruptcy or other financial
reorganizations;? The disappearance of an active market for that financial asset because of financial
difficulties of the issuer or the debtor;? Purchase or originate a financial asset with a large scale of discount, which reflects facts
of credit loss incurred.
10.2.3 Determination of expected credit loss
The Group uses a provision matrix to determine the credit losses for accounts receivable, contractassets and debt investment based on a portfolio basis. The Group classifies financial instrumentsinto different groups based on common risk characteristics. Common credit risk characteristicsinclude credit risk rating, the date of initial recognition, remaining contractual maturity, industryof borrower and geographical location of the borrower etc.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial assets - continued
10.2.3 Determination of expected credit loss - continued
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 the contractual
cash flows that are due to the Group under the contract and the cash flows that the Groupexpects to receive;? For a lease receivable, a credit loss is the present value of the difference between the
contractual cash flows that are due to the Group under the contract and the cash flows that theGroup expects to receive;? For a financial asset with credit-impaired at the balance sheet date, but not purchased or
originated credit-impaired, credit losses is the difference between the asset’s gross carryingamount and the present value of estimated future cash flows discounted at the financial asset’soriginal effective interest rate.
The factors reflected in methods of measurement of expected credit losses include an unbiased andprobability-weighted amount that is determined by evaluating a range of possible outcomes; timevalue of money, reasonable and supportable information about past events, current conditions andforecasts on future economic status at balance sheet date without unnecessary additional costs orefforts.
10.2.4 Write-down of financial assets
When the Group no longer reasonably expects that the contractual cash flows of financial assetscan be collected in aggregate or in part, the Group will directly write down the carrying amount ofthe financial asset, which constitutes the 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:
? The contractual rights to the cash flows from the financial asset expire;? The financial asset has been transferred and substantially all the risks and rewards of
ownership of the financial asset is transferred to the transferee; or? Although the financial asset has been transferred, the Group neither transfers nor retains
substantially all the risks and rewards of ownership of the financial asset but does not have
retained control of the financial asset.
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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
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of afinancial asset, but retains control of the financial asset, the Group will recognize the financial assetto 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 relevantliabilities 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 financialliabilities is the carrying amount of financial assets transferred with continuing involvementless fair value of the Group's retained rights (if the Group retains relevant rights upon transferof financial assets) with addition of fair value of obligations assumed by the Group (if theGroup assumes relevant obligations upon transfer of financial assets). Accordingly, the fairvalue of relevant rights and obligations shall be measured on an individual basis.
For a transfer of a financial asset categorized into those measured at amortized cost and thosemeasured at FVTOCI in its entirety that satisfies the derecognition criteria, the difference betweenthe carrying amount of the financial asset transferred and the sum of the consideration receivedfrom the transfer and accumulated changes in fair value initially recorded in other comprehensiveincome is recognized in profit or loss. For the non-tradable equity instrument designated as financialassets at FVTOCI, cumulative gain or loss that has been recognized in other comprehensive incomeshould be removed from other comprehensive income but be recognized in retained earnings.
For partial transfer of financial asset that satisfies the derecognition criteria, the carrying amount ofthe transferred financial asset is allocated between the part that is derecognized and the part that iscontinuously involved, based on the respective fair values of those parts on transfer date. Thedifference between (1) the sum of the consideration received for the part derecognized and anycumulative gain or loss allocated to the part derecognized which has been previously recognized inother comprehensive income, and (2) the carrying amount allocated to the part derecognized onderecognition date, is recognized in profit or loss. For non-tradable equity instrument designated asfinancial assets at FVTOCI, cumulative gain or loss that has been recognized in othercomprehensive income should be removed from other comprehensive income but be recognized inretained 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.
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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
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 and otherfinancial 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. Financial liabilities at FVTPLare presented as held-for-trading financial liabilities, except for derivative financial liabilitiespresented separately.
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? It is part of a portfolio of identified financial instruments that the Group manages together
on initial recognition and there is objective evidence that the Group recently has an actualpattern of short-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and put into effect
as a hedging instrument.
A financial liability may be designated as at FVTPL on initial recognition when one of the followingconditions is satisfied:
? Such designation eliminates or significantly reduces accounting mismatch; or? The Group makes management and performance evaluation on a fair value basis, in
accordance with the Group's formally documented risk management or investment strategy,and reports to key management personnel on that basis.? The qualified hybrid financial instrument combines financial assets with embedded
derivatives.
Transaction financial liabilities are subsequently measured at fair value. Any gains or losses arisingfrom changes in the fair value and any dividend or interest expenses paid on the financial liabilitiesare recognized in profit or loss.
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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
The amount of change in the fair value of the financial liability that is attributable to changes in thecredit risk of that liability shall be presented in other comprehensive income; Other changes in fairvalues are included in profit or loss for the current period. Upon the derecognition of such liability,the accumulated amount of change in fair value that is attributable to changes in the credit risk ofthat liability, which is recognized in other comprehensive income, is transferred to retained earnings.Any dividend or interest income earned on the financial liabilities are recognized in profit or loss.If the impact of the change in credit risk of such financial liability dealt with in the above way wouldcreate or enlarge an accounting mismatch in profit or loss, the Group shall present all gains or losseson that liability (including the effects of changes in the credit risk of that liability) in profit or loss.
10.4.1.2 Other financial liabilities
Other financial liabilities, except for financial liabilities arising from transfer of financial assetsdoes not satisfy derecognition criteria or continue involvement of transferred financial assets, 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 in changesin contractual cash flows; The Group will recalculate the carrying amount of the financial liability,with relevant gain or loss recognized in profit or loss. The Group will determine the carrying amountof the financial liability based on the present value of renegotiated or modified contractual cashflows discounted at the financial liability's original effective interest rate. For all costs or expensesarising from modification or renegotiation of the contract, the Group will adjust the modifiedcarrying amount of the financial liability and make amortization during the remaining term of themodified financial liability.
10.4.1.3 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments toreimburse the holder of the contract for a loss occuring 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 are measured at the higher of: (1) amount of lossprovision, and (2) fluctuations in the cumulative amortization amount determined based on newstandards for revenue.
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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
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 to replacethe original financial liability with a new financial liability with substantially different terms isaccounted for as an extinguishment of the original financial liability and the recognition of a newfinancial liability.
When the Group derecognizes a financial liability or a part of it, it recognizes the difference betweenthe carrying amount of the financial liability (or part of the financial liability) derecognized and theconsideration paid (including any non-cash assets transferred or new financial 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. Issuing repurchasing, selling, canceling equity instruments ofthe Group are recognized as changes of equity. Changes of fair value of equity instruments is notrecognized by the Group. Transaction costs related to equity transactions are deducted from equity.
The Group recognizes the distribution to holders of the equity instruments as distribution of profits,dividends paid do not affect total amount of shareholders' equity.
10.5 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. Financial assets and financialliabilities shall be presented separately in the balance sheet and shall not be offset except for theabove circumstances.
11. Accounts receivable
The Group makes internal credit ratings on customers and determines expected loss rate ofaccounts receivable. Basis for determining ratings and methods for bad debt provision are asfollows:
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
11. Accounts receivable - continued
CHINA MERCHANTS PORT GROUP CO., LTD.
Internal credit rating
| 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 and the customer has significant financial difficulty. The amounts cannot be recovered in the foreseeable future. | 50.00-100.00 |
12. Inventories
12.1 Categories of inventories
Inventories include raw materials, merchandise reusable materials etc. Inventories are initiallymeasured at cost. Cost of inventories comprises all costs of purchase, conversion and otherexpenditures incurred in bringing the inventories to their present location and condition.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for decline invalue 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.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
12. Inventories - continued
12.3 Basis for determining net realizable value of inventories and provision methods for decline invalue of inventories - continued
Provision for decline in value of other inventories is made based on the excess of cost of inventoryover its net realizable value on an item-by-item basis.
After the provision for decline in value of inventories is made, if the circumstances that previouslycaused inventories to be written down below cost are eliminated exist so that the net realizable valueof inventories is higher than their cost, the original provision for decline in value is reversed andthe reversal is included in profit or loss for the period.
12.4 Inventory count system
The inventory count system adapted is the perpetual inventory system.
12.5 Amortization methods for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortized using theimmediate write-off method.
13. 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 meet following conditions:
? The current status is available for immediate distribution according to similar transactions
of this category of assets or disposal group;? The transaction is likely to occur, i.e. the Group has made its resolution over the distribution
arrangements and acquired purchase commitment, and the distribution is going to be
fulfilled within a year.
If the holding company loses control of its subsidiary for reasons such as subsidiary disposalregardless of whether the holding company still keeps part of equity investment, once the proposedinvestment disposal meets the requirements of being classified as available for sale assets in theholding company's individual statement, all assets and liabilities of the subsidiary should beclassified as held-for-sale in consolidated financial statement.
The group's non-current assets and disposal group are measured at the lower of the book value andthe net value of fair value less costs to sell. Once the book value is higher than the net value of fairvalue less costs to sell, the book value should be adjusted to the net value and the excess should berecognized as impairment losses and provision for held-for-sale assets impairment should be made.A gain and a reverse in the previous provision for held-for-sale assets impairment can be recognizedfor any increase in fair value less costs to sell at subsequent balance sheet dates, to the extent thatit is not in excess of the cumulative impairment loss that has been recognized.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
13. 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.
14. Long-term equity investments
14.1 Basis for determining joint control and significant influence over investee
Control is archived when the Group has the power over the investee has the rights to variable returnsfrom its involvement with the investee; and has the ability to use its power to affect its returns. Jointcontrol is the contractually agreed sharing of control over an economic activity, and exists onlywhen the strategic financial and operating policy decisions relating to the activity require theunanimous consent of the parties sharing control. Significant influence is the power to participatein the financial and operating policy decisions of the investee but is not control or joint control overthose policies. When determining whether an investing enterprise is able to exercise control orsignificant influence over an investee, the effect of potential voting rights of the investee (forexample, warrants and convertible debts) held by the investing enterprises or other parties that arecurrently exercisable or convertible shall be considered.
14.2 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 of capitalreserve is not sufficient, any excess shall be adjusted to retained earnings. If the consideration ofthe combination is satisfied by the issue of equity securities, the initial investment cost of the long-term equity investment shall be the share of the party being absorbed of the owners' equity in theconsolidated financial statements of the ultimate controlling party at the date of combination. Theaggregate face value of the shares issued shall be accounted for as share capital. The differencebetween the initial investment cost and the aggregate face value of the shares issued shall beadjusted to capital reserve. If the balance of capital reserve is not sufficient, any excess shall beadjusted to retained earnings.
For a long-term equity investment acquired through business combination not involving enterprisesunder common control, the investment cost of the long-term equity investment acquired is the costof acquisition.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
14. Long-term equity investments - continued
14.2 Determination of investment cost - continued
The absorbing party's or the purchaser's intermediary expenses (fees in respect of auditing, legalservices, valuation and consultancy services, etc.) and other administrative expenses attributable tothe business combination are recognized in profit or loss in the periods in which they ocurred.
The long-term equity investment acquired otherwise than through a business combination is initiallymeasured at its cost. When the entity is able to exercise significant influence or joint control (butnot control) over an investee due to additional investment, the cost of long-term equity investmentsis the sum of the fair value of previously-held equity investments determined in accordance withAccounting Standard for Business Enterprises No.22 - Financial Instruments: Recognition andMeasurement of (ASBE No. 22) and the additional investment cost.
14.3 Subsequent measurement and recognition of profit or loss
14.3.1 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 the Group.
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.
14.3.2 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,the Group accounts for investment in associates and joint ventures using the equity method. Anassociate is an entity over which the Group has significant influence and a joint venture is a jointarrangement whereby the parties that have joint control of the arrangement have rights to the netassets of the joint arrangement.
Under the equity method, where the initial investment cost of a long-term equity investment exceedsthe Group's share of the fair value of the investee's identifiable net assets at the time of acquisition,no adjustment is made to the initial investment cost. Where the initial investment cost is less thanthe Group's share of the fair value of the investee's identifiable net assets at the time of acquisition,the difference is recognized in profit or loss for the period, and the cost of the long-term equityinvestment is adjusted accordingly.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
14. Long-term equity investments - continued
14.3.2 A long-term equity investment accounted for using the equity method - continued
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 or losses,other comprehensive income and profit distribution), and include the corresponding adjustment incapital reserve. The Group recognizes its share of the investee's net profit or loss based on the fairvalue of the investee's individually identifiable assets at the acquisition date after makingappropriate adjustments. Where the accounting policies and accounting period adopted by theinvestee are different from those of the investing enterprise, the investing enterprise shall adjust thefinancial statements of the investee to conform to its own accounting policies and accounting period,and recognize other comprehensive income and investment income or losses based on the adjustedfinancial statements. Unrealized profits or losses resulting from the Group's transactions and assetsinvested or sold that are not recognized as business transactions with its associates and joint venturesare recognized as investment income or loss to the extent that those attributable to the Group's,equity interest are eliminated. However, unrealized losses resulting from the Group's transactionswith its associates and joint ventures which represent impairment losses on the transferred assetsare not eliminated.
The Group discontinues recognizing its share of net losses of the investee after the carrying amountof the long-term equity investment together with any long-term interests that in substance form partof its net investment in the investee are reduced to zero. Except that if the Group has incurredobligations to assume additional losses, a provision is recognized according to the obligationexpected, and recorded in the investment loss for the period. Where net profits are subsequentlymade by the investee, the Group resumes recognizing its share of those profits only after its shareof the profits exceeds the share of losses previously not recognized. If the assets sold by the Groupconstitute a business, the difference between the consideration acquired and the book value shall berecorded to profit or loss in full amount.
14.4 Disposal of long-term equity investments
On disposal of a long-term equity investment, the difference between the proceeds actually receivedand 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 income previouslyrecognized for using the equity method is accounted for on the same basis as would have beenrequired if the investee had directly disposed of related assets or liabilities, and transferred to profitor loss for the period on a pro rata basis; owners' equity recognized due to changes in other owners'equity of the investee (other than net profit or loss, other comprehensive income and profitdistribution) is transferred to profit or loss for the period on a pro rata basis.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
14. Long-term equity investments - continued
14.4 Disposal of long-term equity investments - continued
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 recognition andmeasurement of financial instruments before obtaining the control over the investee, is accountedfor on the same basis as would have been required if the investee had directly disposed of relatedassets or liabilities, and transferred to profit or loss for the period on a pro rata basis; changes inother owners' equity in the investee's net assets recognized under the equity method (other than netprofit or loss, other comprehensive income and profit distribution) is transferred to profit or loss forthe period on a pro rata basis.
15. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both. It includes aland use right that is leased out; a land use right held for transfer upon capital appreciation; and abuilding 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 the subsequentexpenditures can be measured reliably, other subsequent expenditures are recognized in profit orloss in the period in which they are incurred.
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.
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.
16. Fixed assets
16.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services,for rental to others, or for administrative purposes, and have useful lives of more than oneaccounting 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, the fixedassets initially contributed by the state-owned shareholders are recognized based on the valuationamounts confirmed by the state-owned assets administration department.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
16. Fixed assets - continued
16.1 Recognition criteria for fixed assets - continued
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset andif probable the economic benefits associated with the asset will flow to the Group and thesubsequent expenditures can be measured reliably. Meanwhile the carrying amount of the replacedpart is derecognized. Other subsequent expenditures are recognized in profit or loss in the period inwhich they are incurred.
16.2 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:
CHINA MERCHANTS PORT GROUP CO., LTD.
Category
| Category | Estimated useful lives | Estimated residual rate (%) | Annual depreciation rate (%) |
| Port and terminal facilities | 5-99 years | 5.00 | 0.96-19.00 |
| Buildings | 10-50 years | 5.00 | 1.90-9.50 |
| Mechanical equipment, furniture and others | 3-20 years | 5.00 | 4.75-31.67 |
| Motor vehicles, cargo ships and tugboats | 5-25 years | 5.00 | 3.80-19.00 |
Estimated net residual value of a fixed asset is the estimated amount that the Group would currentlyobtain from the disposal of the asset, after deducting the estimated costs of disposal, if the asset wasalready of age and at the end of its useful life.
16.3 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, retired ordamaged, the amount of any proceeds on disposal of the asset net of the carrying amount and relatedtaxes is recognized in profit or loss of 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 change asa change in an accounting estimate.
17. 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.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
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18. 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 is 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 when theinterruption lasts for a continuous period more than 3 months. Capitalization is suspended until theacquisition, 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 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 any investmentincome on the temporary investment of those funds. Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest to be capitalized on suchborrowings by applying a capitalization rate to the weighted average of the excess of cumulativeexpenditures on the asset over the amounts of specific-purpose borrowings. The capitalization rateis the weighted average of the interest rates applicable to the general-purpose borrowings. Duringthe capitalization period, exchange rate differences related to a specific-purpose borrowingdenominated in foreign currency are all capitalized. Exchange rate differences in connection withgeneral-purpose borrowings are recognized in profit or loss in the period in which they are incurred.
19. Intangible assets
19.1 Intangible assets
Intangible assets include land use rights and port operating right.
An intangible asset is measured initially at cost. Upon being restructured into a stock company, theintangible assets initial contributed by the state-owned shareholders are recognized based on thevaluation 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 an indefinite useful life are not amortized. Theamortization method, estimated useful lives and estimated net residual value of various intangibleassets are as follows:
CHINA MERCHANTS PORT GROUP CO., LTD.
Category
| Category | Amortization method | Estimated useful lives (years) | Residual value (%) |
| Land use rights | Straight-line method | 40-99 | - |
| Port operating rights | 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 period, and makes adjustments when necessary.
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19. Intangible assets - continued
19.2 Internal research and development expenditure
Expenditure incurred during the research phase are recorded to profit or loss for the period uponincurring.
Costs incurred during the development phase, if satisfying all of the following criteria, arerecognized as intangible assets. Costs incurred during the development phase, if not satisfying thefollowing criteria are recorded to profit or loss for the period:
? It is technically feasible to complete the intangible asset so that it will be available for use orsale;? The Group has the intention to complete the intangible asset and use or sell it;? 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 the intangibleasset;? The availability of adequate technical, financial and other resources to complete thedevelopment and the ability to use or sell the intangible asset; and? The expenditure attributable to the intangible asset during its development phase can be
reliably measured.
If the expenditures cannot be distinguished between the research phase and development phase,the Group recognizes all of them in profit or loss for the period.
20. 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, fixedassets and intangible assets with a finite useful life may be impaired. If there is any indication thatsuch assets may be impaired, recoverable amounts are estimated for such assets. Intangible assetswith indefinite useful life and intangible assets not yet available for use are tested for impairmentannually, irrespective of whether there is any indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverableamount of an individual asset, the recoverable amount of the asset group to which the asset belongswill be estimated. The recoverable amount of an asset is the higher of its fair value less costs ofdisposal and the present value of the future cash flows expected to be derived from the asset. If therecoverable amount of an asset or an asset group is less than its carrying amount, the deficit isaccounted for as an impairment loss and is recognized in profit or loss.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
20. Impairment of long-term assets - continued
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 the synergiesof the combination. In testing an assets group with goodwill for impairment, an impairment loss isrecognized if the recoverable amount of the assets group or sets of assets groups (including goodwill)is less than its carrying amount. The impairment loss is firstly allocated to reduce the carryingamount of any goodwill allocated to such assets group or sets of assets groups, and then to the otherassets of the group pro-rata basis on the basis of the carrying amount of each asset (other thangoodwill) in the group.
Once the impairment loss of above-mentioned asset is recognized, it shall not be reversed in anysubsequent period.
21. 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 are derived.
22. Employee benefits
22.1 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 measured atfair 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.
22.2 The accounting treatment of post-employment benefits
Post-employment benefits are classified in defined contribution plans and defined benefit plans.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
22. Employee benefits - continued
22.2 The accounting treatment of post-employment benefits - continued
During the accounting period of rendering service to employees of the Group, amount which shouldbe paid according to defined contribution plans is recognized as liabilities, and recognized in profitor loss or related costs of assets.
For defined benefit plans, the Group calculates defined benefit plan obligations using projected unitcredit method and the service cost resulting from employee service in the current period is recordedin the profit or loss or the cost of related assets. Defined benefit costs are categorized as follows:
? 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 are recognizedin profit or loss of current period or costs of related assets. Remeasurement of the net defined benefitliability (asset) (including actuarial gains and losses, the return on plan assets, excluding amountsincluded in net interest on the net defined benefit liability (asset), and any change in the effect ofthe asset ceiling, excluding amounts included in net interest on the net defined benefit liability(asset)) are recognized in other comprehensive income.
22.3 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 the periodat the earlier of:
? When the Group cannot unilaterally withdraw the offer of termination benefits because of thetermination plan or a curtailment proposal; and? When the Group recognizes costs or expenses related to restructuring that involves the payment
of termination benefits.
23. Provisions
Provisions are recognized when the Group has present obligation related with contingencies, it isprobable that the Group will be required to settle that obligation causing an outflow of economicbenefits, 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 settle thepresent obligation at balance sheet date, taking into account the risks, uncertainties and time valueof money surrounding the obligation. When a provision is measured using the cash flows estimatedto settle the present obligation, its carrying amount is the present value of those cash flows wherethe effect of the time value of money is material.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
23. Provisions - continued
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.
24. Revenue
The Group's revenue is mainly from the following business types:
? Port service;? Bonded logistics service；? 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 transferred bythe Group to the customer. Transaction price refers to the consideration that the Group is expectedto charge due to the transfer of goods or services to the customer, but it does not include paymentsreceived on behalf of third parties and amounts that the Group expects to return to the customer.
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:
? The customer simultaneously receives and consumes the benefits provided by the Group'sperformance as the Group performs;? The customer is able to control the goods under construction in the course of the Group'sperformance;? The goods produced by the Group during the performance of the contract are irreplaceable and
the Group has the right to charge for the accumulated part of the contract that has beenperformed so far during the whole contract period. Otherwise, the Group recognizes revenueat a certain point in time when "control" of the goods or services is transferred to the customer.
The Group adopts input 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.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
24. Revenue - continued
Contract asset refers to the Group's right to consideration in exchange for goods or services that theGroup has transferred to a customer when that right is conditioned on something other than thepassage of time. The Group's unconditional (i.e., depending on the passage of time only) right toreceive consideration from the customer is separately presented as receivables. Contract liabilitiesrefers to the Group's obligation to transfer goods or services to a customer for which the Group hasreceived consideration from the customer. Contract assets and contract liabilities under the samecontract are set out on a net basis.
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 consideration isonly related to one or more (not all) performance obligations in the contract, the Group shall allocatethe contract discount or variable consideration to relevant one or more performance obligations.The stand-alone selling price is the price at which the Group would sell a promised good or serviceseparately to a customer. If a stand-alone selling price is not directly observable, the Group shallconsider all information that is reasonably available to the Group and maximize the use ofobservable inputs and apply estimates methods consistently in similar circumstances.
If the contract includes significant financing component, the Group determines the transaction pricebased on the amount payable under the assumption that the customer pays that amount payable incash when "control" of the goods or services is obtained by the customer. The difference betweenthe transaction price and the contract consideration shall be amortized within the contract periodusing effective interest rate. If the Group expects, at contract inception, that the period betweenwhen the Group transfers a promised good or service to a customer and when the customer pays forthat good or service will be one year or less, the Group needs not to consider the significantfinancing component.
24.1 Principal and agent
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 or servicesto the customer. The Group is a principal if it controls the specified good or service before that goodor service is transferred to a customer, and the revenue shall be recognized based on the totalconsideration received or receivable. Otherwise, the Group is an agent, and the revenue shall berecognized based on the amount of commission or handling fee that is expected to be charged,whichis determined based on the net amount of the total consideration received or receivable afterdeducting the prices payable to other related parties or according to the established commissionamount or proportion.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
24. Revenue - continued
24.2 Costs to fulfill a contract
If the costs incurred in fulfilling a contract are not within the scope of other standard other than thenew standards for revenue, the Group shall recongnize an asset from the costs incurred to fulfill acontract only if those costs meet all of the following criteria:
? The costs relate directly to a contract or to an anticipated contract that the Group can
specifically identify;? The costs generate or enhance resources of the entity that will be used in satisfyingperformance obligations in the future;? The costs are expected to be recovered.
The asset mentioned above shall be amortized on the basis that is consistent with the transfer to thecustomer of the goods or services to which the asset relates and recognizes in profit or loss for theperiod.
24.3 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, recognize in profit or loss a reversal ofsome or all of an impairment loss previously recognized when the impairment conditions no longerexist or have improved. The increased carrying amount of the asset shall not exceed the carryingamount that would have been determined if no impairment loss had been recognized previously.
25. Government grants
Government grants are transfers of monetary assets or non-monetary assets from the governmentto the 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 as the amountreceived or receivable.
25.1 The accounting treatment of government grants related to assets
Government grants, such as special funds for modern logistics project and special funds for energy-saving and emission reduction of transportation, are government grants related to assets as they areall 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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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
25. Government grants - continued
25.2 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 incurred insubsequent periods, are determined as 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, it 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.
26. Deferred tax assets/ deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
26.1 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 of taxlaws.
26.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their taxbase, or between the nil carrying amount of those items that are not recognized as assets or liabilitiesand their tax base that can be determined according to tax laws, deferred tax assets and liabilitiesare recognized using the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred taxassets 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 are recognizedto the extent that it is probable that future taxable profits will be available against which thedeductible losses and tax credits can be utilized.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
26. Deferred tax assets/ deferred tax liabilities - continued
26.2 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 rates applicablein the period in which the asset is realized or the liability is settled according to tax laws.
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 in equity,and when they arise from business combinations, in which case they adjust the carrying amount ofgoodwill.
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 the benefitof deferred tax assets to be utilized. Any such reduction in amount is reversed when it becomesprobable that sufficient taxable profits will be available.
26.3 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 net basis.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
27. Leases
If one party to the contract conveys the right to control the use of one or more identified assets fora period of time in exchange for consideration, the contract is, or contains, a lease. For determiningwhether the contract has conveyed the right to control the use of the identified assets for a periodof time, the Group assesses whether customers in the contract have the right to obtain almost alleconomic benefits arising from the use of identified assets over the use period, and the right to leadthe use of identified assets over the use period.
27.1 The accounting treatment of the Group as lessee
27.1.1 Recognition and initial measurement
At the commencement date of a lease, the Group as the lessee recognizes right-of-use assets andlease liabilities for leases, but excludes the short-term leases and leases of low-value assets to whichthe Group applies a simplified approach.
Right-of-use assets are measured at cost initially. Lease liabilities are initially measured at thepresent value of the lease payments unpaid at the commencement date of a lease. In calculating thepresent value of lease payments, the Group uses the interest rate implicit in the lease as thediscounting rate, or uses the incremental borrowing rate if the interest rate implicit in the lease isnot readily determinable.
27.1.2 Subsequent measurement
After the lease commencement date, the Group as the lessee, adopts the cost model to makesubsequent measurement of the right-of-use assets, and makes depreciations for the right-of-useassets referencing to relevant provisions of depreciation from Accounting Standard for BusinessEnterprises No.4 – Fixed Assets. If the lessor can reasonably determine that the ownership of theleased assets is obtained before the expiration of the lease term, the depreciation shall be madeduring the remaining useful life of the leased assets. If it cannot be reasonably determined that theownership of the leased assets can be obtained before the expiration of the lease term, thedepreciation shall be made during the shorter term between the lease term and the remaining usefullife of the leased assets.
The Group as the lessor shall calculate the interest expenses for lease liabilities of each period withinthe lease term based on the fixed periodic rate and record them to the profit or loss for the period.In accordance with Accounting Standard for Business Enterprises No.17 – Borrowing costs andother standards, if it is specified that the expenses shall be recorded to the costs of relevant assets,provisions shall prevail. Variable lease payments not included in the measurement of lease liabilitiesshall be recorded to profit or loss for the period upon incurring. In accordance with AccountingStandard for Business Enterprises No.1 – Inventories and other standards, if it is specified that thepayments shall be recorded to the costs of relevant assets, provisions shall prevail.
- 46 -
III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
27. Leases - continued
27.1 The accounting treatment of the Group as lessee - continued
27.1.3 Short-term leases and leases of low-value assets
Short-term lease refers to leases with a lease term of not exceeding 12 months at the commencementdate. Leases with a purchase option do not belong to the short-term leases.
A lease of low value asset refers to a single lease asset, when new, is of low value. If the lesseesubleases or expects to sublease the leased assets, the original lease does not belong to the lease oflow value asset.
For short-term leases and leases of low-value assets, the lessor can choose not to recognize right-of-use assets and lease liabilities. For short-term leases, the Group as the lessor shall make thechoice about accounting treatment based on the category of the leased assets. For leases of low-value assets, the Group as the lessor can make the choice about accounting treatment according tothe specific situations of each lease.
27.2 The Group as lessor under operating leases
Lease receipts from operating leases are recognized as rental income on a straight-line basis overthe term of the relevant lease by the Group as lessee, unless other systematic and reasonablemethods can better reflect the consumption pattern under which the economic benefits are resultedby the use of the leased assets. Initial direct costs in connection with the operating lease of the lesseeare capitalized when incurred, and are amortized on the same basis as rental income recognitionover the lease term and recognized in profit or loss by stages.
For fixed assets under the operating lease, the Group as the lessee shall adopt the depreciation policyof similar assets; for other assets under operating lease, the Group adopts a systematic andreasonable approach on the amortization in accordance with applicable accounting standards forbusiness enterprise to the assets. The variable lease payments the Group as the lessee obtains, whichare not recorded to the lease receipts but relevant to operating leases shall be recorded to profit orloss for the period upon incurring.
28. Discontinued operation
Discontinued operation refers to the separately identifiable components that have been disposed ofor 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 main business
or a separate main operating area;
(3) This component is a subsidiary acquired exclusively for resale.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
29. 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.
30. 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 concern basis.Changes in accounting estimates which only affect the current period should be recognized incurrent period; changes which not only affect the current but the future periods should be recognizedin current and future periods. At the balance sheet date, key assumptions and uncertainties that arelikely to lead to significant adjustments to the book values of assets and liabilities 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 cash flowsshall be estimated. Meantime, a pre-tax rate shall be determined that should reflect the time valueof money on the current market and the specific interest risks.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
30. Critical judgments in applying accounting policies and key assumptions anduncertainties in accounting estimates - continued
Recognition of deferred tax
The Group calculates and makes provision for deferred income tax liabilities according to the profitdistribution plan of subsidiaries, associates and the joint ventures subject to the related law. Forretained earnings which are not allocated by the investment company, since the profits will be usedto invest the company's daily operation and future development, no deferred income tax liabilitiesare recognized. If the actually distributed profits in the future are more or less than those expected,corresponding deferred tax liabilities will be recognized or reversed at the earlier of profitsdistribution 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 does notcoincide with the amount currently expected, the deferred tax assets resulting will be recognized orreversed in the period when actually incurred, in profit or loss.
31. Changes in significant accounting policies and accounting estimates
(1) New Standard on Lease
New standard on lease removed the category of the lessor on financing lease and operating lease,required the lessor to recognize right-of-use assets and lease liabilities for all the leases (excludingshort-term leases and leases of low value that adopt a simplified approach) and recognizeddepreciation and interest expenses respectively. In terms of the lessee, new standard on leasebasically adopted the previous accounting treatments of leases. When implementing new standardon lease, the Group adjusted the opening balance of retained earnings of the same year when newstandard on lease was initially implemented and the amounts of other relevant items of the financialstatements, with information of the comparative period not adjusted. For operating lease prior tothe initial implementation date, the Group as the lessor measures lease liabilities at the present valuediscounted at the incremental borrowing rate of the lessor on the initial implementation date basedon the remaining lease payments and assumes that since the commencement date of the lease term,right-of-use assets are measured at the book value as specified in the new standard on lease (theincremental borrowing rate of the lessor on the initial implementation date is adopted as the discountrate). Details of the Group's accounting policies on the recognition and measurement of lease areset out in the Note (III) 27 "Lease".
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Changes in significant accounting policies and accounting estimates - continued
(1) New Standard on Lease - continued
The effects from the implementation of new standard on lease on relevant items of the consolidatedbalance sheet as at 1 January 2019 are presented as follows:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | 31 December 2018 | Reclassification | Remeasurement | 1 January 2019 |
| Assets: | ||||
| Prepayments | 124,404,862.87 | -42,559,680.57 | - | 81,845,182.30 |
| Fixed assets | 22,994,190,880.43 | -5,516,393,451.13 | - | 17,477,797,429.30 |
| Right-of-use assets | 5,558,953,131.70 | 990,610,899.85 | 6,549,564,031.55 | |
| Liabilities: | ||||
| Non-current liabilities due within one year | 2,903,320,877.97 | - | 124,039,367.88 | 3,027,360,245.85 |
| Lease liabilities | 41,329,917.95 | 978,909,906.78 | 1,020,239,824.73 | |
| Long-term payables | 1,294,190,118.18 | -41,329,917.95 | - | 1,252,860,200.23 |
| Unappropriated profits | 8,915,817,110.21 | - | -37,858,457.43 | 8,877,958,652.78 |
| Minority interests | 49,656,450,459.88 | - | -74,479,917.38 | 49,581,970,542.50 |
The reconciliation of operating lease commitments as at 31 December 2018 and leaseliabilities as at 1 January 2019 is as follows:
RMB
| Item | Amount |
| Total minimum lease payments of irrevocable operating lease as at 31 December 2018 | 1,756,853,448.93 |
| Less: The effect of present value from the calculation of lease payments by the lessee at the incremental interest rate in the lease on 1 January 2019 | 869,755,725.26 |
| Lease liabilities as at 31 December 2018 | 887,097,723.67 |
| Less: Short-term leases, leases of low-value assets and leases to be completed within 12 months after the initial implementation date | 13,130,042.63 |
| Add: Lease modification through increase or termination | 270,311,511.57 |
| Amount discounted on initial implementation date (Note) | 1,144,279,192.61 |
| Lease liabilities | 1,144,279,192.61 |
| Including: Non-current liabilities due within one year | 124,039,367.88 |
| Lease liabilities | 1,020,239,824.73 |
Note: The Group's weighted average percentage of the incremental borrowing rate adopted for leaseliabilities recorded to the balance sheet on the initial implementation date is 5.16%.
Changes of the above accounting policies have been approved in the Fifth Meeting by theCompany's Ninth Session of Board of Directors.
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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Changes in significant accounting policies and accounting estimates - continued
(2) Presentation of financial statements
The Company started adopting the Notice of the Revised Format of 2019 Financial Statements forGeneral Business Enterprise (Cai Kuai (2019) No.6 , hereinafter referred to as the "Cai Kuai No.6Document") released by the MoF on 30 April 2019 since the preparation of interim financialstatements for the year of 2019. Cai Kuai No.6 Document revised the presenting accounts in thebalance sheet and income statement, added line items of "Notes Receivable", Accounts Receivable","Receivable Financing", "Right-of-Use Assets", "Notes Payable", "Accounts Payable" and "LeaseLiabilities", removed the line items of "Notes and Accounts Receivable" and "Notes and AccountsPayable", revised the presenting contents of the line items of "Other Receivables" and "OtherPayables", i.e., interest receivables and interest payables only reflect the interest receivable orpayable of relevant financial instruments that have expired but not yet received or paid. Interests ofthe financial instruments accrued based on the effective interest method shall be included in thecarrying amount of corresponding financial instruments. In the meantime, the Cai Kuai No.6Document also revised the presentation contents of the item of "interest income" and line item of"other income" under the items of "research and development expenses", "management expenses","financial expenses", increased line item of "including: income from derecognition of financialassets measured at amortized costs" under the item of "investment income", and adjusted thepresenting location of some accounts in the income statement. The Group has accounted for theabove changes in presenting accounts retrospectively, and adjusted comparable data for the prioryear.
IV. TAXES
1. Major taxes and tax rates
CHINA MERCHANTS PORT GROUP CO., LTD.
Taxes
| 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%-17% |
| 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% |
- 51 -
IV. TAXES - continued
1. Major taxes and tax rates - continued
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 subsidiaries set up in China are subject to an enterprise income tax rate of 25%,and the other overseas subsidiaries are subject to enterprise income tax 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.
Note 3: 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.
Note 4: Pursuant to the Notice of the Ministry of Finance, the State Administration of Taxation and
the General Administration of Customs on Relevant Policies for Deepening the Value-addedTax Reform (Announcement of the Ministry of Finance, the State Taxation Administrationand the General Administration of Customs No.39 in 2019), effective from 1 April 2019,the taxable sales or imports of goods at original applicable VAT rate of 16% and 10% shallbe subject to a VAT rate of 13% and 9% respectively.
Note 5: 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 subject to tax preference of "3-year exemptionfollowed by 3-year half reduction".
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.
- 52 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Cash | 462,266.71 | 349,650.07 |
| RMB | 182,545.85 | 77,877.30 |
| USD | 68,457.58 | 29,909.14 |
| HKD | 58,215.28 | 57,342.60 |
| BRL | 8,710.11 | 11,402.34 |
| Others | 144,337.89 | 173,118.69 |
| Bank deposit (Note1) | 6,170,682,223.14 | 6,118,508,644.13 |
| RMB | 3,934,330,091.87 | 3,401,709,911.75 |
| USD | 1,307,149,748.49 | 1,326,034,833.97 |
| EUR | 432,023,862.80 | 359,682,134.06 |
| BRL | 269,889,725.25 | 539,493,644.44 |
| HKD | 192,474,745.23 | 432,603,546.37 |
| Others | 34,814,049.50 | 58,984,573.54 |
| Other cash and bank balances (Note 2) | 865,746,359.34 | 951,450,410.55 |
| RMB | 865,746,359.34 | 951,450,410.55 |
| Interest receivable of fixed deposit | 18,579,946.79 | 7,088,190.97 |
| Total | 7,055,470,795.98 | 7,077,396,895.72 |
| Including: Total amount of funds deposited overseas | 2,509,024,453.85 | 2,809,011,079.47 |
Note 1: The bank deposits of the Group deposited overseas and restricted for remittance to China
at the end of the period totaled RMB 1,003,706,200.00.
Note 2: The structured deposits that cannot be readily withdrawn on demand in the other cash and
bank balances of the Group totaled RMB 415,000,000.00, the structured deposits that canbe readily withdrawn on demand totaled RMB 432,119,238.44, the deposit totaled RMB17,752,768.76, and the balance of the margin maintenance account was RMB 874,352.14.
2. Notes receivable
(1) Classification of notes receivable
RMB
| Category | Closing balance | Opening balance |
| Bank acceptance | 187,215,998.98 | 11,608,669.43 |
| Commercial acceptance | 43,357,403.78 | - |
| Less: Provision for credit losses | - | - |
| Carrying amount | 230,573,402.76 | 11,608,669.43 |
(2) As at 30 June 2019, there are no notes receivable pledged.
- 53 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes receivable - continued
(3) As at 30 June 2019, there are no notes receivable endorsed or discounted which are not yetdue at the balance sheet date.
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Category
| Category | Closing balance for discontinued recognition | Closing balance for continued recognition |
| Bank acceptance | 150,795,657.53 | - |
| Commercial acceptance | 1,452,031.29 | - |
| Total | 152,247,688.82 | - |
(4) As at 30 June 2019, there are no notes reclassified to accounts receivable due to the drawers'inability to settle the note.
3. Accounts receivable
(1) Disclosure of accounts receivable by categories
RMB
| Credit rating | Expected credit loss rate (%) | Closing balance | ||
| Carrying amount | Provision | Book value | ||
| A | 0.00-0.10 | 747,447,560.16 | - | 747,447,560.16 |
| B | 0.10-0.30 | 512,113,432.30 | 349,686.40 | 511,763,745.90 |
| C | 0.30-50.00 | 500,097,483.79 | 2,759,736.89 | 497,337,746.90 |
| D | 50.00-100.00 | 112,089,097.88 | 42,231,068.21 | 69,858,029.67 |
| Total | 1,871,747,574.13 | 45,340,491.50 | 1,826,407,082.63 | |
(2) Changes in provision for credit loss of accounts receivable
RMB
| Item | In the current period | ||
| Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | |
| At 31 December 2018 | 3,255,846.32 | 40,262,199.28 | 43,518,045.60 |
| Provision for expected credit loss for the period | 1,294,747.94 | 624,104.33 | 1,918,852.27 |
| Reversal of expected credit loss for the period | 6,200,021.67 | 899,922.47 | 7,099,944.14 |
| Effect of changes in the scope of consolidation | 4,742,830.09 | 2,237,014.01 | 6,979,844.10 |
| Effect of changes in foreign exchange | 16,020.61 | 7,673.06 | 23,693.67 |
| At 30 June 2019 | 3,109,423.29 | 42,231,068.21 | 45,340,491.50 |
- 54 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(3) The top five balances of accounts receivable classified by debtor
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Name ofcustomer
| Name of customer | Carrying amount | Aging | Proportion of the amount to the total accounts receivable (%) |
| Client A | 91,443,882.97 | Within 1 year, more than 1 year but not exceeding 2 years, more than 2 years but not exceeding 3 years and more than 3 years | 4.89 |
| Client B | 77,945,778.60 | Within 1 year | 4.16 |
| Client C | 75,995,889.95 | Within 1 year, more than 1 year but not exceeding 2 years, more than 2 years but not exceeding 3 years | 4.06 |
| Client D | 75,021,296.44 | Within 1 year | 4.01 |
| Client E | 37,744,879.20 | Within 1 year | 2.02 |
| Total | 358,151,727.16 | 19.14 |
4. Prepayments
(1) Aging analysis of prepayment
RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 109,677,519.35 | 99.03 | 124,276,781.51 | 99.90 |
| More than 1 year but not exceeding 2 years | 918,646.55 | 0.83 | 4,000.00 | - |
| More than 2 years but not exceeding 3 years | 81.36 | - | 81.36 | - |
| More than 3 years | 159,000.00 | 0.14 | 124,000.00 | 0.10 |
| Total | 110,755,247.26 | 100.00 | 124,404,862.87 | 100.00 |
(2) The Group has no significant prepayments aged more than one year.
(3) The top five balances of prepayments classified by entities
RMB
| Entities | Relationship with the Company | Closing balance | Proportion of the closing balance to the total prepayments (%) |
| Changsha Road & Bridge Construction Corporation Lanka Limited | Non-related party | 9,867,294.37 | 8.91 |
| Judicial Insurance | Non-related party | 7,937,387.24 | 7.17 |
| Operational Insurance | Non-related party | 7,587,231.24 | 6.85 |
| Saham Assurance Togo S.A. | Non-related party | 6,498,310.32 | 5.87 |
| CCCC Fourth Harbor Engineering Co., Ltd. | Non-related party | 5,000,000.00 | 4.51 |
| Total | 36,890,223.17 | 33.31 |
- 55 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Other receivables
(1) Summary of other receivables
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Interest receivable | - | - |
| Dividend receivable | 1,414,765,846.24 | 259,804,145.16 |
| Other receivables | 6,645,273,886.55 | 506,713,933.56 |
| Total | 8,060,039,732.79 | 766,518,078.72 |
(2) Interest receivable
As at 30 June 2019, the Group has no significant overdue interest.
(3) Dividend receivable
(a) Presentation of dividend receivable
RMB
| Name of investee | Closing balance | Opening balance |
| Shanghai International Port (Group) Co., Ltd. | 910,321,459.36 | 50,118,027.14 |
| China Nanshan Development (Group) Incorporation ("Nanshan Group") | 316,246,500.00 | 175,692,500.00 |
| Tin-Can Inland Container Terminal Ltd | 66,876,446.00 | - |
| Qingdao Port International Co., Ltd. | 56,728,800.59 | - |
| Dalian Port (PDA) Company Limited | 46,490,179.50 | - |
| Qingdao Qianwan United Container Terminal Co., Ltd. | - | 25,000,000.00 |
| Zhanjiang Port (Group) Co., Ltd. | - | 9,253,682.23 |
| Others | 18,278,153.29 | - |
| Total | 1,414,941,538.74 | 260,064,209.37 |
| Less: Provision for credit loss | 175,692.50 | 260,064.21 |
| Book value | 1,414,765,846.24 | 259,804,145.16 |
(b) Significant dividend receivable aged more than 1 year
RMB
| Name of investee | Closing balance | Aging | Why unrecovered | Impaired or not |
| Nanshan Group | 70,277,000.00 | More than 1 year but not exceeding 2 years | Undergoing relevant formalities and expected to be recovered at the end of 2019 | Not |
- 56 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Other receivables - continued
(4) Other receivables
(a) Disclosure of other receivables by categories
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. Such expectedaverage loss rates are based on actual historical impairments and taking into account the current andfuture economic conditions.
As at 30 June 2019, the credit risk and expected credit loss of other receivables of each category ofcustomers are presented as below:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Credit rating
| Credit rating | Expected credit loss rate (%) | Closing balance | |||
| 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 | 6,049,438,145.00 | - | - | 6,049,438,145.00 |
| B | 0.10-0.30 | 596,070,980.16 | - | - | 596,070,980.16 |
| C | 0.30-50.00 | - | - | - | - |
| D | 50.00-100.00 | - | - | 35,685,343.90 | 35,685,343.90 |
| Carrying amount | 6,645,509,125.16 | - | 35,685,343.90 | 6,681,194,469.06 | |
| Provision for credit loss | 235,238.61 | - | 35,685,343.90 | 35,920,582.51 | |
| Book value | 6,645,273,886.55 | - | - | 6,645,273,886.55 | |
(b) Changes in provision for credit loss of other receivables
RMB
| Item | In the current period | |||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | |
| At 31 December 2018 | 5,690.10 | - | 35,596,931.73 | 35,602,621.83 |
| Provision for expected credit loss for the year | 126,603.15 | - | - | 126,603.15 |
| Reversal of expected credit loss for the year | 2,533,596.66 | - | - | 2,533,596.66 |
| Effect of changes in the scope of consolidation | 2,636,542.02 | - | 91,822.29 | 2,728,364.31 |
| Effect of changes in foreign exchange | - | - | -3,410.12 | -3,410.12 |
| At 30 June 2019 | 235,238.61 | - | 35,685,343.90 | 35,920,582.51 |
- 57 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Other receivables - continued
(4) Other receivables - continued
(c) Other receivables presented by the nature
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Items
| Items | Closing balance | Opening balance |
| Land compensation(Note 1) | 6,049,438,145.00 | - |
| Operation compensation(Note 2) | 175,946,294.80 | 176,625,857.32 |
| Temporary payments | 157,688,061.24 | 187,153,302.95 |
| Deposits | 38,275,052.02 | 39,657,003.56 |
| Others | 259,846,916.00 | 138,880,391.56 |
| Total | 6,681,194,469.06 | 542,316,555.39 |
| Less: Provision for credit loss | 35,920,582.51 | 35,602,621.83 |
| Book value | 6,645,273,886.55 | 506,713,933.56 |
Note 1: It is the land compensation recognized in accordance with the Agreement of
Acknowledgement on Claim Compensations signed jointly by the Group's subsidiary withChina Merchants Qianhai Chidi Industrial (Shenzhen) Co., Ltd. and other original landholding companies for Qianhai land readiness on 11 January 2019.
Note 2: It is the compensation paid by the holding company of the non-controlling shareholder of
the non-wholly owned subsidiary of the Group for the operation of the subsidiary.
(d) There are no other receivables that have been written off in the period from 1 January to 30
June 2019.
(e) The top five balances of other receivable classified by debtor
RMB
| Name of customer | Nature | Closing balance | Aging | Proportion of the amount to the other receivable (%) | Bad debt provision |
| China Merchants Qianhai Chidi Industrial (Shenzhen) Co., Ltd. | Land compensation | 5,240,907,829.70 | Within 1 year | 78.44 | - |
| Shenzhen Qianhai Shekou Qidi Industrial Co., Ltd. | Land compensation | 708,835,049.08 | Within 1 year | 10.61 | - |
| Global Terminal Limited | Operation compensation | 175,318,159.50 | More than 2 years but not exceeding 3 years | 2.62 | - |
| Shenzhen Qianhai Shekou Qiming Industrial Co., Ltd. | Land compensation | 99,695,266.22 | Within 1 year | 1.49 | - |
| Zhujiang Inland Water Freight Terminals Co., Ltd. | Temporary payments | 60,215,465.00 | More than 3 years | 0.90 | - |
| Total | 6,284,971,769.50 | 94.06 | - |
- 58 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Inventories
(1) Categories of inventories
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| 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 | 158,218,919.16 | 2,209,412.85 | 156,009,506.31 | 89,572,663.06 | 2,584,953.53 | 86,987,709.53 |
| Finished goods | 5,911,804.77 | - | 5,911,804.77 | 4,629,610.81 | - | 4,629,610.81 |
| Others | 15,769,772.63 | - | 15,769,772.63 | 16,949,949.68 | - | 16,949,949.68 |
| Total | 179,900,496.56 | 2,209,412.85 | 177,691,083.71 | 111,152,223.55 | 2,584,953.53 | 108,567,270.02 |
(2) Provision for decline in value of inventories
RMB
| Item | Opening balance | Provision | Decrease | Closing balance | |
| Reversal | Write-off | ||||
| Raw materials | 2,584,953.53 | - | 25,051.16 | 350,489.52 | 2,209,412.85 |
(3) As at 30 June 2019, the Group has no capitalized borrowing cost in the balance of
inventories.
7. Assets held for sale
RMB
| Item | Carrying amount at the end of the period | Fair value at the end of the period | Estimated disposal expenses | Schedule |
| Long-term assets held for sale | 115,356,162.94 | 204,909,850.97 | - | Return and demolition before 31 December 2019 |
| Less: Provision for impairment of assets held for sale | - | - | - | |
| Carrying amount | 115,356,162.94 | - | - |
Note: It is the land with an area about 133.61 mu and the attached buildings on the east side of
Zhuchi Deepwater Port on the south side of Zhongshan East Road in Shantou City held bythe Company's subsidiary Shantou CMPort Group Co., Ltd. (hereinafter referred to as"Shantou CMPort"). On 31 December 2018, Shantou Land Reserve Center signed a landacquisition agreement with Shantou CMPort, which stipulated that Shantou CMPort shouldtransfer the above-mentioned land and attached buildings to Shantou Land Reserve Center atRMB 204,909,850.97. As it had disputes with five companies such as Jieyang GuangtaifaIndustrial Co., Ltd., Shantou Highway Bureau Mechanical Material Supply Depot, ShantouNiannianfeng Grain Storage Co., Ltd., Shantou Chengji Logistics Co., Ltd. and ShantouJunfengyan Trading Co., Ltd. on the land return, it is now under settlement through legalapproaches, which is expected to be completed by the end of the year.
8. Other current assets due within 1 year
RMB
| Item | Closing balance | Opening balance |
| Long-term receivables due within 1 year | 781,746,908.19 | - |
| Interest receivable of Long-term receivables | 85,591,561.08 | 25,952,956.76 |
| Total | 867,338,469.27 | 25,952,956.76 |
- 59 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Other current assets
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Prepaid taxes | 8,061,051.00 | 7,872,157.38 |
| Loans to the associates of related parties | - | 1,029,478,047.00 |
| Others (Note 1) | 243,621,047.85 | 159,100,462.79 |
| Total | 251,682,098.85 | 1,196,450,667.17 |
| Less: Provisions for credit loss | - | 1,029,478.05 |
| Book value | 251,682,098.85 | 1,195,421,189.12 |
Note 1: It mainly consists of closing balances of allowances for value-added tax of domestic
subsidiaries.
10. Long-term receivables
(1) Long-term receivables
RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | |
| Advances to shareholders | 1,723,901,156.32 | 1,723,901.16 | 1,722,177,255.16 | 793,840,080.19 | 793,840.08 | 793,046,240.11 |
| Less: Long-term receivables due within one year | 782,529,437.63 | 782,529.44 | 781,746,908.19 | - | - | - |
| Long-term receivables due after one year | 941,371,718.69 | 941,371.72 | 940,430,346.97 | 793,840,080.19 | 793,840.08 | 793,046,240.11 |
(2) There are no long-term receivables derecognized due to the transfer of financial assets at the
end of the period.
(3) There are no assets and liabilities arising from the transfer and further involvement of long-
term receivables at the end of the period.
- 60 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Investees
| Investees | Accounting method | 1 January 2019 | Effect of changes in the scope of consolidation | Changes of this period | 30 June 2019 | Closing balance 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 | other | 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 | - | - | 43,143,162.57 | - | - | - | - | - | 5,041,702.02 | 2,717,044,898.91 | - |
| Port of Newcastle | Equity method | 2,122,353,964.75 | - | - | 13,262,597.02 | - | - | -28,604,885.04 | - | - | -4,519,316.23 | 2,102,492,360.50 | - |
| Zhanjiang Port(Group) Co., Ltd.(Note 1) | Equity method | 2,007,506,536.77 | - | - | 4,273,885.37 | - | - | - | -2,011,780,422.14 | - | - | - | - |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Equity method | 1,512,162,331.41 | - | - | 69,739,231.62 | - | 1,200,648.15 | - | - | - | - | 1,583,102,211.18 | - |
| Laizhou Laiyin Port Business Co., Ltd. | Equity method | 793,557,064.58 | - | - | 21,889,138.83 | - | - | -43,605,689.02 | - | - | - | 771,840,514.39 | - |
| Others | Equity method | 2,125,862,222.43 | 113,562,995.78 | - | 102,041,452.04 | - | 1,962,963.61 | -3,118,014.31 | - | - | -4,271,366.06 | 2,336,040,253.49 | - |
| Subtotal | 11,230,302,154.26 | 113,562,995.78 | - | 254,349,467.45 | - | 3,163,611.76 | -75,328,588.37 | -2,011,780,422.14 | - | -3,748,980.27 | 9,510,520,238.47 | - | |
| II. Associates | |||||||||||||
| Shanghai International Port (Group) Co., Ltd. (A Share) | Equity method | 22,187,560,070.95 | - | - | 1,164,668,288.63 | 23,495,401.05 | 326,138,582.34 | -955,194,576.56 | - | - | -231,106.00 | 22,746,436,660.41 | - |
| Nanshan Group | Equity method | 5,061,280,021.90 | - | - | 98,769,988.95 | -10,073,152.90 | -1,382,508.59 | -148,056,000.00 | - | - | - | 5,000,538,349.36 | - |
| Terminal Link SAS | Equity method | 3,933,259,485.26 | - | - | 152,192,824.94 | 6,523,821.50 | - | - | - | - | -12,216,935.48 | 4,079,759,196.22 | - |
| Dalian Port Co., Ltd.(A Share and H Share) | Equity method | 3,203,881,342.67 | - | - | 59,283,560.53 | 6,114,817.60 | 964,865.49 | -51,579,984.00 | - | - | 30,405,944.44 | 3,249,070,546.73 | 617,607,222.70 |
| China Merchants Hainan Development Investment Co., Ltd. | Equity method | 525,000,000.00 | - | - | - | - | - | - | - | - | - | 525,000,000.00 | - |
| Others | Equity method | 4,035,294,188.36 | 59,122,780.74 | 10,800,000.00 | 66,688,847.58 | -53,574,839.90 | 4,067,411.68 | -142,096,449.81 | - | - | 9,637,616.82 | 3,989,939,555.47 | - |
| Subtotal | 38,946,275,109.14 | 59,122,780.74 | 10,800,000.00 | 1,541,603,510.63 | -27,513,952.65 | 329,788,350.92 | -1,296,927,010.37 | - | - | 27,595,519.78 | 39,590,744,308.19 | 617,607,222.70 | |
| Total | 50,176,577,263.40 | 172,685,776.52 | 10,800,000.00 | 1,795,952,978.08 | -27,513,952.65 | 332,951,962.68 | -1,372,255,598.74 | -2,011,780,422.14 | - | 23,846,539.51 | 49,101,264,546.66 | 617,607,222.70 | |
Note 1: Details are set out in the Note VI 1.
- 61 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Other investments in equity instruments
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Investees
| Investees | Closing balance | Opening balance | Reasons for the classification | Cash dividends for the period |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd | 141,547,500.00 | 141,547,500.00 | The intention of holding is neither for sale nor profits in short-term | - |
| Lake Assal Investment Holding Co., Ltd. | 406,100,337.55 | 88,806,577.97 | The intention of holding is neither for sale nor profits in short-term | - |
| Others | 18,435,722.28 | 17,494,236.33 | The intention of holding is neither for sale nor profits in short-term | 120,000.00 |
| Total | 566,083,559.83 | 247,848,314.30 | 120,000.00 |
(1) Investment in equity instruments
RMB
| Item | Closing balance | Opening balance |
| Cost of equity instruments | 425,567,013.40 | 108,289,950.79 |
| Increase in the current year | 311,642,892.00 | 3,892,322.00 |
| Fair value | 566,083,559.83 | 247,848,314.30 |
| Changes of fair value included in OCI | 140,516,546.43 | 139,558,363.51 |
13. Other non-current financial assets
RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss for the period | 3,019,618,722.58 | 2,087,872,081.94 |
| Including: Equity instrument investment | 3,019,618,722.58 | 2,087,872,081.94 |
(1) Investment in equity instruments
RMB
| Item | Closing balance | Opening balance |
| Cost of equity instruments | 1,235,178,600.58 | 1,173,690,773.13 |
| Fair value | 3,019,618,722.58 | 2,087,872,081.94 |
| Changes of fair value included in profit or loss of the current period | 1,784,440,122.00 | 914,181,308.81 |
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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Investment properties
(1) Investment properties measured under cost method
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Land use rights | Buildings | Total |
| I. Total original carrying amount | |||
| 1.Opening balance | 28,632,130.84 | 6,292,605,806.72 | 6,321,237,937.56 |
| 2.Increase in the current period | 77,095,361.98 | 4,558,825.10 | 81,654,187.08 |
| (1) Changes in the scope of consolidation | 77,095,361.98 | - | 77,095,361.98 |
| (2) Other increase | - | 4,558,825.10 | 4,558,825.10 |
| 3.Decrease in the current period | - | - | - |
| 4.Closing balance | 105,727,492.82 | 6,297,164,631.82 | 6,402,892,124.64 |
| II. Total accumulated depreciation | |||
| 1.Opening balance | 15,495,791.85 | 415,595,156.20 | 431,090,948.05 |
| 2.Increase in the current period | 14,615,668.53 | 96,731,355.62 | 111,347,024.15 |
| (1) Provisions in the current period | 993,666.79 | 94,131,252.31 | 95,124,919.10 |
| (2) Changes in the scope of consolidation | 13,622,001.74 | - | 13,622,001.74 |
| (3) Other increase | - | 2,600,103.31 | 2,600,103.31 |
| 3.Decrease in the current period | - | - | - |
| 4.Closing balance | 30,111,460.38 | 512,326,511.82 | 542,437,972.20 |
| III. Total accumulated amount of provision for impairment losses of investment property | |||
| 1.Opening balance | - | - | - |
| 2.Increase in the current period | - | - | - |
| 3.Decrease in the current period | - | - | - |
| 4.Closing balance | - | - | - |
| IV. Total book value of investment property | |||
| 1.Closing balance | 75,616,032.44 | 5,784,838,120.00 | 5,860,454,152.44 |
| 2.Opening balance | 13,136,338.99 | 5,877,010,650.52 | 5,890,146,989.51 |
(2) Investment properties without ownership certificates
RMB
| Item | Closing balance | Opening balance |
| Buildings and land use rights | 42,309,570.65 | 43,119,291.89 |
15. Fixed assets
RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 25,605,373,214.39 | 22,994,155,151.43 |
| Disposal of fixed assets | 70,382.97 | 35,729.00 |
| Total | 25,605,443,597.36 | 22,994,190,880.43 |
- 63 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Fixed assets - continued
(1) Fixed assets
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Port and terminal facilities | Buildings | Mechanical equipment, furniture and others | Motor vehicles, cargo ships and tugboats | Total |
| I.Total original carrying amount | |||||
| 1. Closing balance of the preceding year | 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 policies | -5,318,357,246.96 | -133,330,273.37 | -360,238,863.33 | -38,350,000.00 | -5,850,276,383.66 |
| Opening balance of the year | 16,516,880,620.02 | 1,015,636,162.09 | 10,231,917,494.83 | 1,329,915,652.07 | 29,094,349,929.01 |
| 2. Increase in the current period | 7,331,519,887.52 | 1,327,716,163.74 | 3,475,622,130.66 | 590,257,228.39 | 12,725,115,410.31 |
| (1)Purchase | 12,905,118.56 | 2,367,071.75 | 51,214,190.50 | 6,184,756.09 | 72,671,136.90 |
| (2)Transfer from construction in progress | 290,269,939.53 | 2,627,264.21 | 64,759,733.69 | 32,643,815.89 | 390,300,753.32 |
| (3) Transfer from other non-current assets | - | - | 52,135,980.46 | - | 52,135,980.46 |
| (4) Effect of changes in the scope of consolidation | 7,028,344,829.43 | 1,322,721,827.78 | 3,307,512,226.01 | 551,428,656.41 | 12,210,007,539.63 |
| 3. Decrease in the current period | 10,844,054.87 | 4,977,938.88 | 58,465,608.33 | 15,957,574.05 | 90,245,176.13 |
| (1)Disposal or retire | 10,844,054.87 | 1,001,667.78 | 58,465,608.33 | 15,957,574.05 | 86,268,905.03 |
| (2) Transfer to investment properties | - | 3,976,271.10 | - | - | 3,976,271.10 |
| 4.Effect of changes in foreign exchange | -9,951,427.96 | 628,694.76 | 12,728,247.87 | 1,499,819.48 | 4,905,334.15 |
| 5.Closing balance | 23,827,605,024.71 | 2,339,003,081.71 | 13,661,802,265.03 | 1,905,715,125.89 | 41,734,125,497.34 |
| II. Total accumulated depreciation | |||||
| 1.Total original carrying amount | 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 policies | -85,260,010.27 | -6,028,470.75 | -214,493,738.80 | -28,100,712.71 | -333,882,932.53 |
| Opening balance of the year | 4,861,909,546.17 | 241,151,770.67 | 5,968,937,603.43 | 487,125,796.28 | 11,559,124,716.55 |
| 2.Increase in the current period | 1,996,476,760.49 | 318,018,127.06 | 1,955,522,870.52 | 311,686,382.26 | 4,581,704,140.33 |
| (1)Accrual of depreciation | 362,239,326.33 | 38,699,382.67 | 372,048,133.58 | 44,484,521.78 | 817,471,364.36 |
| (2)Effect of changes in the scope of consolidation | 1,634,237,434.16 | 279,318,744.39 | 1,583,474,736.94 | 267,201,860.48 | 3,764,232,775.97 |
| 3.Decrease in the current period | 6,118,563.22 | 3,285,273.24 | 53,844,417.63 | 13,798,024.90 | 77,046,278.99 |
| (1)Disposal or retire | 6,118,563.22 | 685,169.93 | 53,844,417.63 | 13,798,024.90 | 74,446,175.68 |
| (2) Transfer to investment properties | - | 2,600,103.31 | - | - | 2,600,103.31 |
| 4.Effect of changes in foreign exchange | -769,588.09 | -81,082.82 | 7,575,704.43 | 579,802.99 | 7,304,836.51 |
| 5.Closing balance | 6,851,498,155.35 | 555,803,541.67 | 7,878,191,760.75 | 785,593,956.63 | 16,071,087,414.40 |
| III. Total accumulated amount of provision for impairment losses of investment property | |||||
| 1.Opening balance | 57,419,468.96 | - | 44,043.20 | - | 57,463,512.16 |
| 2.Increase in the current period | - | - | 201,356.39 | - | 201,356.39 |
| (1) Effect of changes in the scope of consolidation | - | - | 201,356.39 | - | 201,356.39 |
| 3. Decrease in the current period | - | - | - | - | - |
| 4.Closing balance | 57,419,468.96 | - | 245,399.59 | - | 57,664,868.55 |
| IV. Total book value of investment property | |||||
| (1) Closing balance | 16,918,687,400.40 | 1,783,199,540.04 | 5,783,365,104.69 | 1,120,121,169.26 | 25,605,373,214.39 |
| (2) Opening balance | 16,830,648,841.58 | 901,786,194.04 | 4,408,680,972.73 | 853,039,143.08 | 22,994,155,151.43 |
- 64 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Fixed assets - continued
(2) Fixed assets leased out through operating leasing
(a) Category of fixed assets leased out through operating leasing
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Buildings | - | 242,804,849.53 |
| Mechanical equipment, furniture and others | 136,657.94 | 139,712.96 |
| Port and terminal facilities | - | 844,843,802.95 |
| Total | 136,657.94 | 1,087,788,365.44 |
(3) Fixed assets without ownership certificates
RMB
| Item | Closing balance | Opening balance |
| Buildings, Port and terminal facilities | 1,931,881,247.69 | 1,590,990,468.38 |
(4) Other issues
RMB
| Item | Amount | Note |
| The original amounts of fixed assets fully depreciated but still in use at 30 June 2019 | 2,669,419,489.91 | |
| Closing original amount of temporary idle fixed assets | - | |
| Fixed assets disposed or retired in the current period | - | |
| Original amount of fixed assets disposed or retired in the current period | 86,268,905.03 | |
| Net book value of fixed assets disposed or retired in the current period | 11,822,729.35 | |
| Gains or losses on disposal or retire of fixed assets | -2,328,266.93 |
16. Construction in progress
(1) Presentation by category
RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 7,237,793,710.46 | 5,499,426,090.06 |
| Materials for construction in progress | 17,638,826.10 | - |
| Total | 7,255,432,536.56 | 5,499,426,090.06 |
(2) Construction in progress
RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provisions for impairment | Book value | Carrying amount | Provisions for impairment | Book value | |
| Port and terminal facilities | 4,607,765,086.98 | - | 4,607,765,086.98 | 4,104,748,962.75 | - | 4,104,748,962.75 |
| Berths and yards | 1,218,456,474.47 | - | 1,218,456,474.47 | 1,023,331,798.30 | - | 1,023,331,798.30 |
| Infrastructure | 1,171,263,522.78 | - | 1,171,263,522.78 | 40,000,912.00 | - | 40,000,912.00 |
| Ship under construction | 77,509,483.40 | - | 77,509,483.40 | 22,985,373.73 | - | 22,985,373.73 |
| Workshops and laboratories | 403,524.03 | - | 403,524.03 | - | - | - |
| Others | 162,395,618.80 | - | 162,395,618.80 | 308,359,043.28 | - | 308,359,043.28 |
| Total | 7,237,793,710.46 | - | 7,237,793,710.46 | 5,499,426,090.06 | - | 5,499,426,090.06 |
- 65 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Construction in progress - continued
(3) The top ten balances of construction in progress
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Budget amount | Opening balance | Increase in the current period | Effect of changes in scope of consolidation | Decrease in the current period | Effect of changes in foreign exchange | Closing balance | Proportion of accumulated construction investment in budget (%) | Construction progress (%) | Amount of accumulated capitalized interest | Including: capitalized interest for the current period | Interest capitalization rate for the current period (%) | Capital source |
| Guangao project Phase II, Shantou Port | 2,875,500,000.00 | 1,250,245,755.45 | 222,810,526.79 | - | 7,155,172.40 | - | 1,465,901,109.84 | 50.98 | 50.98 | 13,447,553.66 | - | - | Self-funding and loan |
| Reconstruction Project of container, oil terminal and tank area, HIPG | 2,781,116,783.66 | 1,384,261,784.70 | - | - | - | 2,317,981.34 | 1,386,579,766.04 | 49.86 | 49.86 | - | - | - | Self-funding |
| TCP berth expansion project | 1,166,668,096.04 | 966,596,696.12 | 166,440,970.56 | - | - | 3,829,981.20 | 1,136,867,647.88 | 97.45 | 95.00 | 40,463,736.23 | 4,718,371.06 | 8.43 | Self-funding and loan |
| Berth 3 of Houshigang District, Xiamen Port | 1,000,000,000.00 | 737,758,848.51 | 25,967,296.59 | - | 18,032.79 | - | 763,708,112.31 | 76.37 | 76.37 | 64,689,677.87 | 7,932,544.98 | 4.84 | Self-funding and loan |
| Reconstruction project of Berth 1#-4#, Haixing Wharf | 1,174,090,000.00 | 417,326,228.14 | 37,170,476.33 | - | - | - | 454,496,704.47 | 38.71 | 38.71 | - | - | - | Self-funding and loan |
| General Cargo Wharf Project of the East Island Harbor of Zhanjiang Port | 1,298,948,400.00 | - | 18,975,028.92 | 339,956,626.94 | - | - | 358,931,655.86 | 27.63 | 27.63 | 3,970,703.65 | 3,970,703.65 | 4.79 | Self-funding and loan |
| CICT Shorebridge and Gantry Crane Purchase Project | 184,241,960.00 | - | 173,992,825.50 | - | - | 2,310,637.85 | 176,303,463.35 | 95.69 | 95.69 | - | - | - | Self-funding |
| First Phase Project of CFS Service Area of Baoman Port Area of Zhanjiang Port | 607,190,000.00 | - | 5,524.00 | 124,474,810.57 | - | - | 124,480,334.57 | 20.50 | 20.50 | - | - | - | Self-funding |
| Housing Placement Project of No.8 Newport Road of Zhanjiang Port | 217,390,000.00 | - | 16,525,818.36 | 71,785,535.31 | - | - | 88,311,353.67 | 40.62 | 40.62 | 1,403,032.78 | 1,403,032.78 | 4.79 | Self-funding and loan |
| Third Phase Project of Mayong Port Area 2# and Bulk Grain Warehouse of Berth 2# | 680,000,000.00 | 54,800,647.68 | 31,680,557.08 | - | - | - | 86,481,204.76 | 13.95 | 13.95 | - | - | - | Self-funding |
| Total | 11,985,145,239.70 | 4,810,989,960.60 | 693,569,024.13 | 536,216,972.82 | 7,173,205.19 | 8,458,600.39 | 6,042,061,352.75 | 123,974,704.19 | 18,024,652.47 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Right-of-use assets
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| 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. Closing balance of the preceding period | |||||
| Add: Changes in accounting policies | 5,700,962,016.69 | 181,521,736.14 | 1,258,730,412.59 | 38,350,000.00 | 7,179,564,165.42 |
| Opening balance of the period | 5,700,962,016.69 | 181,521,736.14 | 1,258,730,412.59 | 38,350,000.00 | 7,179,564,165.42 |
| 2. Increase in the period | 867,083,044.07 | 873,763.93 | 500,636,357.59 | - | 1,368,593,165.59 |
| (1) Increase | 4,126,336.15 | 873,763.93 | - | - | 5,000,100.08 |
| (2) Increase in the scope of consolidation | 862,956,707.92 | - | 500,636,357.59 | - | 1,363,593,065.51 |
| 3. Decrease in the period | 1,759,833.72 | 4,153,191.64 | - | - | 5,913,025.36 |
| (1) No longer rent | 1,759,833.72 | 4,153,191.64 | - | - | 5,913,025.36 |
| 4. Effect of changes in foreign exchange | 9,116,308.87 | 223,408.64 | 1,495,885.78 | - | 10,835,603.29 |
| 5. Closing balance of the period | 6,575,401,535.91 | 178,465,717.07 | 1,760,862,655.96 | 38,350,000.00 | 8,553,079,908.94 |
| II. Total accumulated depreciation | |||||
| 1. Closing balance of the preceding period | |||||
| Add: Changes in accounting policies | 154,527,827.83 | 17,054,980.36 | 430,316,612.97 | 28,100,712.71 | 630,000,133.87 |
| Opening balance of the period | 154,527,827.83 | 17,054,980.36 | 430,316,612.97 | 28,100,712.71 | 630,000,133.87 |
| 2. Increase in the period | 115,932,291.48 | 9,274,766.94 | 86,625,102.88 | 354,544.14 | 212,186,705.44 |
| (1) Accrual of depreciation | 105,551,670.80 | 9,274,766.94 | 37,156,366.83 | 354,544.14 | 152,337,348.71 |
| (2) Increase in the scope of consolidation | 10,380,620.68 | - | 49,468,736.05 | - | 59,849,356.73 |
| 3. Decrease in the period | 921,797.41 | 207,659.58 | - | - | 1,129,456.99 |
| (1) No longer rent | 921,797.41 | 207,659.58 | - | - | 1,129,456.99 |
| 4. Effect of changes in foreign exchange | 4,210,734.14 | 275,523.71 | 529,333.72 | - | 5,015,591.57 |
| 5. Closing balance of the period | 273,749,056.04 | 26,397,611.43 | 517,471,049.57 | 28,455,256.85 | 846,072,973.89 |
| III. Total provision for impairment losses | |||||
| 1. Opening balance of the period | - | - | - | - | - |
| 2. Increase in the period | - | - | - | - | - |
| 3. Decrease in the period | - | - | - | - | - |
| 4. Closing balance of the period | - | - | - | - | - |
| IV. Book value | |||||
| 1. Closing balance | 6,301,652,479.87 | 152,068,105.64 | 1,243,391,606.39 | 9,894,743.15 | 7,707,006,935.05 |
| 2. Opening balance | 5,546,434,188.86 | 164,466,755.78 | 828,413,799.62 | 10,249,287.29 | 6,549,564,031.55 |
(1) Charged to profit or loss
RMB
| Buildings | For the period from 1 January to 30 June 2019 |
| Depreciation cost of right-of-use assets (Note 1) | 152,337,348.71 |
| Interest expense of lease liabilities (Note 2) | 51,328,052.46 |
| Short-term lease expense | 69,047,828.93 |
| Lease expense of low value assets | 1,474,971.38 |
| Variable lease payments not included in the measurement of the lease liability (Note 3) | - |
| Income from sublease of right-of-use assets | - |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Right-of-use assets - continued
(1) Charged to profit or loss - continued
Note 1: In the period from 1 January to 30 June 2019, there is no depreciation cost of the right-of-
use assets capitalized.
Note 2: In the period from 1 January to 30 June 2019, there is no interest expense of the lease
liabilities capitalized.
Note 3: In the period from 1 January to 30 June 2019, there are no variable lease payments not
included in the measurement of the lease liability.
(2) For the period from 1 January to 30 June 2019, the cash outflow in the lease of the Group isRMB 196,929,540.74 in total.
18. Intangible assets
(1) Summary of intangible assets
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
| Land use rights | Port operating rights | Others | Total | |
| I. Total original carrying amount | ||||
| 1.Opening balance | 13,097,878,517.45 | 10,511,520,659.11 | 1,124,069,969.28 | 24,733,469,145.84 |
| 2.Increase in the current period | 4,205,210,022.35 | 3,739,450.15 | 74,148,161.32 | 4,283,097,633.82 |
| (1)Purchase | 188,314,150.13 | 3,739,450.15 | 37,842,369.22 | 229,895,969.50 |
| (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. Decrease in the current period | 1,712,988,111.05 | 5,075,443.00 | - | 1,718,063,554.05 |
| (1)Disposal | 1,712,988,111.05 | - | - | 1,712,988,111.05 |
| (2)Other decrease | - | 5,075,443.00 | - | 5,075,443.00 |
| 4.Effect of changes in foreign exchange | 6,673,024.98 | -125,819,128.26 | -60,167,965.83 | -179,314,069.11 |
| 5.Closing balance | 15,596,773,453.73 | 10,384,365,538.00 | 1,138,050,164.77 | 27,119,189,156.50 |
| II. Accumulated amortization | ||||
| 1.Opening balance | 2,433,897,714.42 | 1,268,696,311.70 | 269,857,075.18 | 3,972,451,101.30 |
| 2. Increase in the current period | 626,300,807.87 | 119,100,694.30 | 59,654,586.65 | 805,056,088.82 |
| (1)Accrual of amortization | 165,887,689.51 | 119,100,694.30 | 33,777,905.10 | 318,766,288.91 |
| (2)Effect of changes in the scope of consolidation | 460,413,118.36 | - | 25,876,681.55 | 486,289,799.91 |
| 3. Decrease in the current period | 20,706,821.06 | - | - | 20,706,821.06 |
| (1)Disposal | 20,706,821.06 | - | - | 20,706,821.06 |
| 4.Effect of changes in foreign exchange | 2,043,488.13 | 7,783,580.05 | 1,684,049.48 | 11,511,117.66 |
| 5.Closing balance | 3,041,535,189.36 | 1,395,580,586.05 | 331,195,711.31 | 4,768,311,486.72 |
| III. Total provision for impairment losses | ||||
| 1. Opening balance | - | - | - | - |
| 2. Increase in the current period | - | - | - | - |
| 3. Decrease in the current period | - | - | - | - |
| 4. Closing balance | - | - | - | - |
| IV. Total book value | ||||
| 1. Closing balance | 12,555,238,264.37 | 8,988,784,951.95 | 806,854,453.46 | 22,350,877,669.78 |
| 2. Opening balance | 10,663,980,803.03 | 9,242,824,347.41 | 854,212,894.10 | 20,761,018,044.54 |
(2) Land use rights without ownership certificates on 30 June 2019:
RMB
| Item | Closing balance | Opening balance |
| Land use rights | 1,158,038,088.11 | 1,383,494,095.83 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Development expenditure
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | 1 January 2019 | Changes in the scope of consolidation | Increase | Decrease | 30 June 2019 | ||
| Intangible assets transferred in | Fixed assets transferred in | Profit or loss for the current year transferred in | |||||
| Storage tank for crude oil transportation and temperature regulation | - | 2,672,258.37 | - | - | - | - | 2,672,258.37 |
| Development and application of automatic control system for oil transportation process in old tank area | - | 4,163,708.08 | - | - | - | - | 4,163,708.08 |
| Research and application of key equipment for petrochemical products train loading | - | 2,319,112.65 | - | - | - | - | 2,319,112.65 |
| Development and application of automatic control system for heavy oil, diesel, gasoline and methanol process | - | - | 1,311,820.14 | - | - | - | 1,311,820.14 |
| Others | - | 5,813,227.72 | 2,017,159.78 | - | - | 1,075,674.72 | 6,754,712.78 |
| Total | - | 14,968,306.82 | 3,328,979.92 | - | - | 1,075,674.72 | 17,221,612.02 |
20. Goodwill
(1) Carrying amount of goodwill
RMB
| Investee | Opening balance | Increase | Decrease | Effect of changes in foreign exchange | Closing balance |
| TCP Participa??es S.A. ((hereinafter referred to as “TCP”) | 4,284,229,939.11 | - | - | -608,574,723.71 | 3,675,655,215.40 |
| Mega Shekou Container Terminals Limited | 1,815,509,322.42 | - | - | - | 1,815,509,322.42 |
| China Merchants Port Holdings Co., Ltd. | 993,992,000.00 | - | - | - | 993,992,000.00 |
| Shantou CMPort Group Co., Ltd. | 552,317,736.65 | - | - | - | 552,317,736.65 |
| Zhanjiang Port (Group) Co., Ltd. | - | 472,403,326.13 | - | - | 472,403,326.13 |
| Shenzhen Mawan Project | 408,773,001.00 | - | - | - | 408,773,001.00 |
| Others | 281,073,843.17 | - | - | - | 281,073,843.17 |
| Total | 8,335,895,842.35 | 472,403,326.13 | - | -608,574,723.71 | 8,199,724,444.77 |
21. Long-term prepaid expenses
RMB
| Item | Opening balance | Effect of changes in the scope of consolidation | Increase in the current period | Amortization in the current period | Other decrease | Closing balance |
| Construction expenditure of Tonggu sea-route | 164,567,384.97 | - | - | 6,279,927.10 | 8,163,265.59 | 150,124,192.28 |
| Relocation project of Nanhai Rescue Bureau | 40,107,549.49 | - | - | 528,890.76 | - | 39,578,658.73 |
| Expenditures for the improvement of leased fixed assets | 21,163,538.17 | - | 736,688.07 | 1,110,387.77 | - | 20,789,838.47 |
| Others | 9,867,964.58 | 2,630,870.77 | 644,416.56 | 1,896,622.10 | - | 11,246,629.81 |
| Total | 235,706,437.21 | 2,630,870.77 | 1,381,104.63 | 9,815,827.73 | 8,163,265.59 | 221,739,319.29 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
22. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Unrealized profit | 125,834,621.88 | 31,458,655.47 | - | - |
| Deductible losses | 111,996,198.81 | 30,019,775.94 | 86,136,992.42 | 23,604,794.05 |
| Deferred income | 43,594,095.81 | 10,416,799.69 | 50,033,346.52 | 11,382,687.30 |
| Provision for credit loss | 37,760,599.60 | 9,422,605.13 | 32,805,128.88 | 8,213,219.45 |
| Depreciation of fixed assets | 36,888,128.12 | 8,213,097.76 | 22,036,522.49 | 4,514,995.56 |
| Provisions | 12,120,312.81 | 4,120,906.36 | 19,470,820.72 | 6,620,078.85 |
| Amortization of computer software | 19,764,353.64 | 4,941,088.41 | 16,453,443.95 | 4,113,360.99 |
| Organization costs | 14,386,394.26 | 3,287,938.27 | 14,386,394.26 | 3,287,938.27 |
| Provision for impairment losses of assets | 9,509,794.03 | 2,294,396.23 | 2,258,081.96 | 481,468.22 |
| Others | 49,849,699.16 | 12,105,643.28 | 17,635,286.54 | 4,489,614.50 |
| Total | 461,704,198.12 | 116,280,906.54 | 261,216,017.74 | 66,708,157.19 |
(2) Deferred tax liabilities without offsetting
RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Withholding dividend income tax | 22,578,788,764.06 | 1,548,211,477.87 | 17,819,027,902.41 | 1,138,273,886.12 |
| Fair value adjustment of assets acquired by business combination | 8,444,344,672.19 | 1,927,468,106.56 | 6,415,001,869.22 | 1,431,954,458.35 |
| Changes in fair value of other equity investments | 137,657,500.00 | 34,414,375.00 | 136,717,500.00 | 34,179,375.00 |
| Changes in fair value of other non-current financial assets | 1,783,269,566.40 | 241,344,319.10 | 930,040,371.21 | 105,285,399.58 |
| Depreciation of fixed assets | 719,586,297.86 | 170,393,142.56 | 754,359,502.42 | 174,592,634.60 |
| Others | 118,186,490.94 | 28,203,144.45 | 114,027,794.35 | 26,789,187.62 |
| Total | 33,781,833,291.45 | 3,950,034,565.54 | 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
RMB
| Item | Closing amount of deferred tax assets and liabilities that are offset | Closing amount of deferred tax assets or liabilities after offsetting | Opening amount of deferred tax assets and liabilities that are offset | Opening amount of deferred tax assets or liabilities after offsetting |
| Deferred tax assets | - | 116,280,906.54 | - | 66,708,157.19 |
| Deferred tax liabilities | - | 3,950,034,565.54 | - | 2,911,074,941.27 |
(4) Details of unrecognized deferred tax assets
RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 461,790,385.58 | 237,418,074.51 |
| Deductible losses | 1,644,407,202.74 | 1,291,865,454.88 |
| Total | 2,106,197,588.32 | 1,529,283,529.39 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
22. Deferred tax assets and deferred tax liabilities - continued
(4) Details of unrecognized deferred tax assets - continued
Note: The Group recognizes deferred income tax assets based on the future taxable income that
is probable to be used to offset the deductible temporary differences and deductible losses,deferred income tax assets that are deductible for temporary differences and deductiblelosses that exceed future taxable income.
(5) Deductible losses for unrecognized deferred tax assets will be expired in the following years
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Year
| Year | Closing balance | Opening balance | Note |
| 2019 | 34,515,987.14 | 132,642,333.11 | |
| 2020 | 194,597,711.55 | 110,359,740.81 | |
| 2021 | 200,164,162.90 | 151,793,398.29 | |
| 2022 | 586,560,958.76 | 320,679,566.41 | |
| 2023 | 583,211,786.09 | 576,351,741.67 | |
| 2024 | 45,317,767.22 | - | |
| No expiration date | 38,829.08 | 38,674.59 | |
| Total | 1,644,407,202.74 | 1,291,865,454.88 |
23. Other non-current assets
RMB
| Item | Closing balance | Opening balance |
| Dachan Bay Harbor Second Phase land compensation(Note) | 916,884,222.48 | - |
| Prepayment of waterway engineering | 884,586,447.37 | - |
| Prepayments of land use rights | 132,435,419.28 | 175,908,026.15 |
| Prepayments of fixed assets | 107,095,284.17 | 174,039,051.91 |
| Prepayments of terminal franchise | 30,291,234.89 | 30,383,609.79 |
| Others | 8,481,134.85 | 14,860,798.13 |
| Total | 2,079,773,743.04 | 395,191,485.98 |
Note: On 24 December 2018, Shenzhen City Planning and Land Resources Committee,
Shenzhen Qianhai Shenzhen Hong Kong Modern Service Industry Cooperation ZoneAdministration, China Merchants Group, and other relevant parties signed ChinaMerchants Group Qianhai Logistics Area Land Consolidation Agreement. According tothe agreement, 55% of the total land area of T102-0166, T102-0167 land plots held by thesubsidiaries of the Company and the corresponding water front (land area ofapproximately 531,300 square meters) have been transferred to DaChan Bay HarborSecond Phase, with respect to which the change of land use right has not been completedas of 30 June 2019.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Short-term borrowings
(1) Classification of short-term borrowings
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Credit loan | 7,515,282,519.50 | 3,425,291,312.62 |
| Interest payable of short term loan | 50,737,940.96 | 2,074,199.59 |
| Total | 7,566,020,460.46 | 3,427,365,512.21 |
(2) As at 30 June 2019, the Group has no short-term loans that were overdue.
25. Notes payable
| Type | Closing balance | Opening balance |
| Bank acceptance bills | 1,720,560.00 | - |
| Commercial acceptance bills | 67,699,331.54 | - |
| Total | 69,419,891.54 | - |
26. Accounts payable
(1) Details of accounts payable are as follows:
RMB
| Item | Closing balance | Opening balance |
| Service fee | 142,515,777.45 | 132,946,488.81 |
| Construction fee | 122,598,544.68 | 115,371,240.88 |
| Material purchase | 121,165,996.00 | 76,365,058.49 |
| Equipment payments | 21,060,925.01 | 659,317.15 |
| Rental fee | 2,477,299.61 | 10,564,893.93 |
| Others | 134,369,482.27 | 93,213,691.71 |
| Total | 544,188,025.02 | 429,120,690.97 |
(2) Significant accounts payable aged more than one year
RMB
| Item | Amount | Reason for outstanding |
| CCCC Third Harbor Engineering Co., Ltd. | 19,760,164.09 | According to the contract, it has not been paid for the completion. |
27. Receipts in advance
(1) Summary of receipts in advance
RMB
| Item | Closing balance | Opening balance |
| Service fee receipt in advance | 14,791,622.60 | 23,038,672.44 |
| Rental fee receipt in advance | 5,808,264.42 | 5,536,804.56 |
| Others | 7,604,739.80 | 595,232.86 |
| Total | 28,204,626.82 | 29,170,709.86 |
(2) As at 30 June 2019, there is no significant receipts in advance aged more than one year.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Contract liabilities
(1) Summary of contract liabilities
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Service fee received in advance | 77,421,427.83 | 24,353,966.50 |
| Port charges received in advance | 42,173,909.04 | 11,657,235.81 |
| Warehousing fee received in advance | - | 8,705,589.57 |
| Other | 31,736,020.19 | 5,277,103.62 |
| Total | 151,331,357.06 | 49,993,895.50 |
(2) As at 30 June 2019, there is no significant contract liabilities aged more than one year.
(3) Statement of material changes in the contract liabilities:
For the period from 1 January to 30 June 2019, the amount of revenue recognized in the bookvalue of contract liabilities at the beginning of 2019 is RMB 40,166,792.15, includingcontract liabilities arising from settled unfinished funds resulting from the advance paymentof labor contracts amounted to RMB 18,557,435.49, the contract liabilities arising fromsettled unfinished funds resulting from the advance payment of port contracts amounted toRMB 8,882,676.32, the contractual liabilities arising from the settled unfinished fundsformed by the pre-collection warehousing fee contract amounted to RMB 8,705,589.57, andthe contractual liabilities arising from the settlement of unfinished funds formed by othercontracts amounted to RMB 4,021,090.77.
(4) Qualitative and quantitative analysis of Contract liabilities
The contract liability is mainly the amount received by the Group to provide port services tocustomers. The payment is collected according to the contract payment time. The Grouprecognizes contract revenue based on the progress of the contract. The contract liabilities willbe recognized as income after the Group fulfills its performance obligations.
29. Employee benefits payable
(1) Details of employee benefits payable are as follows
RMB
| Item | Opening balance | Effect of changes in the scope of consolidation | Increase | Decrease | Closing balance |
| 1. Short-term benefits | 431,714,138.23 | 74,044,893.78 | 1,212,709,067.84 | 1,200,770,951.45 | 517,697,148.40 |
| 2. Post-employment benefits - Projected benefits obligation | 2,286,649.91 | - | 99,321,263.45 | 96,077,066.19 | 5,530,847.17 |
| 3. Termination benefits | - | 8,586,268.52 | 4,501,183.45 | 4,340,027.01 | 8,747,424.96 |
| 4. Others | -511,232.74 | - | 1,878,372.74 | 1,440,435.91 | -73,295.91 |
| Total | 433,489,555.40 | 82,631,162.30 | 1,318,409,887.48 | 1,302,628,480.56 | 531,902,124.62 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Employee benefits payable - continued
(2) Short-term benefits
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Opening balance | Effect of changes in the scope of consolidation | Increase | Decrease | Closing balance |
| I. Wages and salaries, bonuses, allowances and subsidies | 409,390,929.61 | 72,201,271.35 | 1,017,637,118.17 | 1,010,126,621.98 | 489,102,697.15 |
| II. Staff welfare | - | - | 45,333,010.49 | 43,981,094.49 | 1,351,916.00 |
| III. Social insurance charges | 5,145,526.57 | - | 63,565,967.78 | 60,044,491.36 | 8,667,002.99 |
| Including: Medical insurance | 4,418,339.26 | - | 49,050,719.18 | 46,223,681.80 | 7,245,376.64 |
| Work injury insurance | - | - | 4,411,503.62 | 4,411,474.15 | 29.47 |
| Maternity insurance | - | - | 2,744,364.47 | 2,744,344.98 | 19.49 |
| Others | 727,187.31 | - | 7,359,380.51 | 6,664,990.43 | 1,421,577.39 |
| IV. Housing funds | - | - | 65,490,371.16 | 65,490,371.16 | - |
| V. Labor union and employee education funds | 17,166,673.76 | 1,843,622.43 | 16,662,090.67 | 17,114,880.56 | 18,557,506.30 |
| VI. Others | 11,008.29 | - | 4,020,509.57 | 4,013,491.90 | 18,025.96 |
| Total | 431,714,138.23 | 74,044,893.78 | 1,212,709,067.84 | 1,200,770,951.45 | 517,697,148.40 |
(3) Projected benefits obligation
RMB
| Item | Opening balance | Effect of changes in the scope of consolidation | Increase | Decrease | Closing balance |
| I. Basic pension | 1,620,436.89 | - | 78,367,334.31 | 74,571,978.93 | 5,415,792.27 |
| II. Unemployment insurance | 551,158.12 | - | 1,610,114.25 | 2,161,272.37 | - |
| III. Enterprise annuity plan | 115,054.90 | - | 19,343,814.89 | 19,343,814.89 | 115,054.90 |
| Total | 2,286,649.91 | - | 99,321,263.45 | 96,077,066.19 | 5,530,847.17 |
Note: The Company and its subsidiaries participates in the social security contributions and the
unemployment insurance plan established by government institutions as required.According to such plans, the Group contributes in proportion to the local government.Except for the above-mentioned deposit fees, the Group have no outstandingcontributions to be paid to the social security contributions and the unemploymentinsurance plan. The corresponding expenses are included in the current profit and loss orthe cost of related assets when incurred.
30. Taxes payable
RMB
| Item | Closing balance | Opening balance |
| Enterprise income tax | 1,383,438,005.02 | 271,954,754.74 |
| VAT | 10,641,083.51 | 8,200,265.65 |
| Others | 136,511,472.97 | 65,028,402.03 |
| Total | 1,530,590,561.50 | 345,183,422.42 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Other payables
(1) Other payables
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Interest payable | - | - |
| Dividends payable | 1,574,587,304.24 | 66,052,207.09 |
| Other payables | 1,847,188,838.87 | 1,624,072,694.20 |
| Total | 3,421,776,143.11 | 1,690,124,901.29 |
(2) Interest payable
As at 30 June 2019, there is no significant other overdue interest payables.
(3) Dividends payable
RMB
| Item | Closing balance | Opening balance |
| Ordinary share dividends | 1,574,587,304.24 | 66,052,207.09 |
| Including: China Merchants Union Development Co., Ltd. ("CMU") | 484,126,088.18 | - |
| China Merchants Investment Development Co., Ltd. ("CMID") | 117,851,351.28 | - |
| China Merchants Group Gangtong Development (Shenzhen) Co., Ltd. | 42,280,092.00 | - |
| Yihai Kerry Investment Co., Ltd. ("Yihai Kerry ") | 37,402,426.09 | 37,402,426.09 |
| Sinotrans South China Co., Ltd. | 25,949,781.00 | 25,949,781.00 |
| China Merchants Zhangzhou Development Zone Co., Ltd. | 22,400,000.00 | - |
| Broadford Global Limited | 5,675,237.74 | - |
| Qingdao Port (Group) Co., Ltd. | 2,700,000.00 | 2,700,000.00 |
| Orientrue Holdings Company Limited | 1,924,529.50 | - |
As at 30 June 2019, the dividend payable for more than one year is RMB 63,352,207.09,dividends not yet received by the investor.
(4) Other payables
(a) Disclosure of other payables by nature
RMB
| Item | Closing balance | Opening balance |
| Amount payable for construction and quality warranty | 758,057,595.26 | 660,870,685.70 |
| Prepaid expenses | 156,686,958.44 | 140,305,423.54 |
| Deposits | 148,452,393.73 | 149,705,612.54 |
| Customer discount | 108,711,987.15 | 128,787,894.63 |
| Balance of land use rights transfer | 104,554,050.90 | 93,258,350.90 |
| Port construction and security fee | 67,878,286.06 | 62,255,593.38 |
| Others | 502,847,567.33 | 388,889,133.51 |
| Total | 1,847,188,838.87 | 1,624,072,694.20 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Other payables - continued
(4) Other payables - continued
(b) Significant Other payables aged more than one year
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Company name
| Company name | Closing balance | Reason for outstanding |
| China Merchants Zhangzhou Development Zone Co., Ltd. | 93,258,350.90 | The spare payment of land use rights perchase |
| Shantou Transportation Bureau | 54,763,901.68 | Payments to be paid after confirmation by both parties |
| CCCC Third Harbor Engineering Co., Ltd. | 39,476,414.00 | The contracted settlement condition has not been reached |
| CCCC Fourth Harbor Engineering Co., Ltd. | 38,306,840.00 | The contracted settlement condition has not been reached |
| Shenzhen Merchants Construction Co., Ltd. | 23,151,343.70 | The contracted settlement condition has not been reached |
| Qingdao Maritime Bureau | 20,713,982.12 | Outstanding port construction fee |
| China Merchants property Co., Ltd. | 17,863,298.54 | Outstanding property management fee |
| Guangdong Hengtai Tong Industrial Co., Ltd. | 10,000,000.00 | The contracted settlement condition has not been reached |
| Shanghai Zhenhua Heavy Industries Co., Ltd. | 6,729,157.83 | Payments to be paid after confirmation by both parties |
| Harman Technology (Shenzhen) Co., Ltd. | 5,884,632.48 | The contracted settlement condition has not been reached |
| Total | 310,147,921.25 |
32. Non-current liabilities due within one year
RMB
| Item | Closing balance | Opening balance |
| Long-term loans due within one year | 2,512,696,253.45 | 1,913,116,720.26 |
| Including：Credit loan | 1,032,888,232.66 | 375,382,058.46 |
| Guaranteed loan | 995,041,678.77 | 1,090,500,000.00 |
| Mortgage loan | 484,766,342.02 | 447,234,661.80 |
| Interest Payable of long term loan | 42,229,771.06 | 61,171,289.96 |
| Bonds payable due within one year | 299,829,041.05 | 299,531,506.81 |
| Interest Payable of Bonds payable | 476,624,412.56 | 492,300,138.05 |
| Long-term payable due within one year | 2,453,728.30 | 30,635,607.84 |
| Long-term employee benefits payable due within one year | 19,100,000.00 | 19,100,000.00 |
| Lease liabilities due within one year | 340,498,719.67 | |
| Other non-current liabilities due within one year | 89,024,962.46 | 87,465,615.05 |
| Total | 3,782,456,888.55 | 2,903,320,877.97 |
33. Other current liabilities
RMB
| Item | Closing balance | Opening balance |
| Short-term bonds payable | 1,307,395,212.33 | 200,000,000.00 |
| Accrued professional agency fee | 110,609,031.27 | 116,064,056.75 |
| Joint venture loan | - | 241,927,341.05 |
| Others | 38,063,041.22 | 44,668,324.00 |
| Total | 1,456,067,284.82 | 602,659,721.80 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Other current liabilities - continued
Changes of short-term bonds payable
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Name of bond
| Name of bond | Face value | Date of issue | Term of the bond | Amount of issue | Opening balance | Effect of changes in the scope of consolidation | Amount issued in the current period | Interest accrued at par during the period | Discount or premium amortization | Repayment in the current period | Closing balance |
| 4.73%, RMB 200 million corporate bond | 200,000,000.00 | 24/04/2018 | 267 days | 200,000,000.00 | 200,000,000.00 | - | - | 570,191.79 | - | 200,570,191.79 | - |
| 3.08%, RMB 700 million corporate bond | 700,000,000.00 | 04/06/2019 | 270 days | 700,000,000.00 | - | - | 700,000,000.00 | 1,476,712.33 | - | - | 701,476,712.33 |
| 2.98%, RMB 300 million corporate bond | 300,000,000.00 | 04/06/2019 | 180 days | 300,000,000.00 | - | - | 300,000,000.00 | 612,328.77 | - | - | 300,612,328.77 |
| 5.70%, RMB 300 million corporate bond | 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 corporate bond | 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 corporate bond | 300,000,000.00 | 18/01/2019 | 277 days | 300,000,000.00 | - | 300,437,260.27 | - | 4,868,910.96 | - | - | 305,306,171.23 |
| Total | 2,100,000,000.00 | 2,100,000,000.00 | 200,000,000.00 | 924,676,636.98 | 1,000,000,000.00 | 9,186,575.36 | - | 826,468,000.01 | 1,307,395,212.33 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Long-term borrowings
(1) Classification of long-term loans
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Credit borrowings | 3,750,706,673.68 | 2,032,494,533.83 |
| Guaranteed borrowings (Note 1) | 3,248,336,900.35 | 3,657,846,864.58 |
| Mortgage borrowings (Note 2) | 2,970,339,893.61 | 3,194,255,164.03 |
| Total | 9,969,383,467.64 | 8,884,596,562.44 |
| Less: Long-term borrowings due within one year | 2,512,696,253.45 | 1,913,116,720.26 |
| Including: Credit borrowings | 1,032,888,232.66 | 375,382,058.46 |
| Guaranteed borrowings | 995,041,678.77 | 1,090,500,000.00 |
| Mortgage borrowings | 484,766,342.02 | 447,234,661.80 |
| Long-term borrowings due after one year | 7,456,687,214.19 | 6,971,479,842.18 |
During the period, the annual interest rate of the borrowing is 1.20% to 8.29%.
Note 1: The loan was guaranteed by Shenzhen Mawan Terminals Co., Ltd., China Merchants Port
Services (Shenzhen) Co., Ltd. ("CMPS"), and China Merchants Port Holdings Co., Ltd
("CMPH").
Note 2: As at 30 June 2019, the Group obtained the long-term loan amounted to RMB
2,970,339,893.61 is firm subject to the entire share capital of Colombo InternationalContainer Terminals Limited and the entire interest of Thesar Maritime Limited, and theland use rights, fixed assets and construction in progress held by Guangdong Yide Port Co.,Ltd. (hereinafter referred to as "Yide Port") (31 December 2018: RMB 3,194,255,164.03).
Details of mortgage loan are as follows:
RMB
| Company name | Closing balance | Opening balance | collateral |
| China Development Bank Corporation | 1,439,836,324.38 | 1,543,473,787.28 | The entire equity of Colombo International Container Terminals Limited held by the Group |
| International Finance Corporation | 488,074,824.13 | 529,891,283.72 | The entire equity of Thesar Maritime Limited held by the Group |
| African Development Bank | 224,250,594.86 | 243,463,562.79 | |
| Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. | 184,676,960.49 | 200,499,404.66 | |
| The Opec Fund For International Development | 158,294,537.57 | 171,856,632.57 | |
| Societe de Promotion et de Participation pour la Cooperation Economique S.A | 158,294,537.55 | 171,856,632.55 | |
| Deutsche Investitions-und Entwicklungsgesellschaft MBH | 131,912,114.63 | 143,213,860.46 | |
| China Construction Bank Shunde Branch | 185,000,000.00 | 190,000,000.00 | Yide Port fixed assets and construction in progress (refer to the details in Notes (V) 61). |
| Total | 2,970,339,893.61 | 3,194,255,164.03 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Bonds payable
(1) Bonds payable
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| 4.375%, USD 900 million corporate bond | 6,141,707,321.75 | 6,126,655,733.91 |
| 5.000%, USD 600 million corporate bond | 4,071,538,668.40 | 4,062,553,267.60 |
| 4.750%, USD 500 million corporate bond | 3,421,385,262.73 | 3,414,652,244.84 |
| 5.000%, USD 500 million corporate bond | 3,417,266,612.50 | 3,408,446,692.17 |
| 4.890%, RMB 2,500 million corporate bond | 2,500,000,000.00 | 2,500,000,000.00 |
| 3.500% , USD 200 million corporate bond | 1,372,579,877.36 | 1,369,419,343.41 |
| IPCA + 7.8164% BRL 428 million corporate bond | 732,891,831.57 | 715,739,814.47 |
| 5.150%, RMB 500 million corporate bond | - | 500,000,000.00 |
| 2.970%, RMB 300 million corporate bond | 299,829,041.05 | 299,531,506.81 |
| 4.980%, RMB 400 million corporate bond | 400,000,000.00 | - |
| Total | 22,357,198,615.36 | 22,396,998,603.21 |
| Deduct :Bonds payable due within one year | 299,829,041.05 | 299,531,506.81 |
| Bonds payable due after one year | 22,057,369,574.31 | 22,097,467,096.40 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Bonds payable - continued
(2) Changes of bonds payable
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Name of bonds
| Name of bonds | Face value | Date of issue | Term of the bond | Amount of issue | Opening balance | Effect of changes in scope of consolidation | Amount issued in the current period | Interest accrued at par during the period | Discount or premium amortization | Repayment in the current period | Effect of changes in foreign exchange | Closing balance |
| 4.375%, USD 900 million corporate bond | USD 900,000,000.00 | 06/08/2018 | 5 | USD 900,000,000.00 | 6,126,655,733.91 | - | - | 138,112,917.80 | 4,810,791.34 | - | 10,240,796.50 | 6,141,707,321.75 |
| 5.000%, USD 600 million corporate bond | USD 600,000,000.00 | 06/08/2018 | 10 | USD 600,000,000.00 | 4,062,553,267.60 | - | - | 103,771,027.79 | 2,207,502.87 | - | 6,777,897.93 | 4,071,538,668.40 |
| 4.750%, USD 500 million corporate bond | USD 500,000,000.00 | 03/08/2015 | 10 | USD 500,000,000.00 | 3,414,652,244.84 | - | - | 81,386,744.32 | 1,046,539.93 | - | 5,686,477.96 | 3,421,385,262.73 |
| 5.000%, USD 500 million corporate bond | USD 500,000,000.00 | 04/05/2012 | 10 | USD 500,000,000.00 | 3,408,446,692.17 | - | - | 87,643,272.81 | 3,116,948.93 | - | 5,702,971.40 | 3,417,266,612.50 |
| 4.890%, RMB 2.5 billion corporate bond | RMB2,500,000,000.00 | 21/04/2017 | 5 | RMB 2,500,000,000.00 | 2,500,000,000.00 | - | - | 60,740,690.77 | - | - | - | 2,500,000,000.00 |
| 3.500%, USD 200 million corporate bond | USD 200,000,000.00 | 03/08/2015 | 5 | USD 200,000,000.00 | 1,369,419,343.41 | - | - | 24,553,352.02 | 874,133.91 | - | 2,286,400.04 | 1,372,579,877.36 |
| IPCA+7.8164%, BRL 428 million corporate bond | BRL 428,047,000.00 | 07/11/2016 | 6 | BRL 428,047,000.00 | 715,739,814.47 | - | - | 51,150,396.30 | 5,638,736.83 | - | 11,513,280.27 | 732,891,831.57 |
| 4.980% RMB 400 million corporate bond | RMB 400,000,000.00 | 10/12/2018 | 3 | RMB 400,000,000.00 | - | 400,000,000.00 | - | 9,878,136.99 | - | - | - | 400,000,000.00 |
| 2.970% RMB 300 million corporate bond | RMB 300,000,000.00 | 11/10/2016 | 3 | RMB 300,000,000.00 | 299,531,506.81 | - | - | 4,418,383.58 | 297,534.24 | - | - | 299,829,041.05 |
| 5.150% RMB 500 million corporate bond | RMB500,000,000.00 | 06/02/2018 | 3 | RMB 500,000,000.00 | 500,000,000.00 | - | - | 2,189,017.78 | - | 500,000,000.00 | - | - |
| Total | 22,396,998,603.21 | 400,000,000.00 | - | 563,843,940.16 | 17,992,188.05 | 500,000,000.00 | 42,207,824.10 | 22,357,198,615.36 | ||||
| Less: Bonds payable due within one year | 299,531,506.81 | - | - | - | 297,534.24 | - | - | 299,829,041.05 | ||||
| Bonds payable due after one year | 22,097,467,096.40 | 400,000,000.00 | - | 563,843,940.16 | 17,694,653.81 | 500,000,000.00 | 42,207,824.10 | 22,057,369,574.31 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Lease liabilities
(1) Lease liabilities
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Buildings
| Buildings | Closing balance | Opening balance |
| Lease liabilities | 2,081,388,281.55 | |
| Less: Lease liabilities due within one year | 340,498,719.67 | |
| Lease liabilities due after one year | 1,740,889,561.88 |
(2) Term of lease liabilities
RMB
| Item | Closing balance |
| Minimum lease payments under non-cancellable operating leases: | |
| 1st year subsequent to the balance sheet date | 385,004,800.17 |
| 2nd year subsequent to the balance sheet date | 407,945,838.33 |
| 3rd year subsequent to the balance sheet date | 367,581,894.41 |
| Subsequent periods | 1,892,122,322.45 |
| Total | 3,052,654,855.36 |
37. Long-term payables
(1) Summary of long-term payables
RMB
| Item | Closing balance | Opening balance |
| Long-term payables | 1,232,875,519.52 | 1,285,984,226.34 |
| Special payables | 39,131,256.82 | 38,841,499.68 |
| Total | 1,272,006,776.34 | 1,324,825,726.02 |
| Less: Long-term payables due within one year | 2,453,728.30 | 30,635,607.84 |
| Long-term payables due after one year | 1,269,553,048.04 | 1,294,190,118.18 |
(2) Details of long-term payables
RMB
| Item | Closing balance | Opening balance |
| Terminal management rights (Note1) | 824,739,290.52 | 823,360,554.03 |
| Payable to minority shareholders of subsidiaries (Note2) | 398,321,315.80 | 390,658,146.52 |
| Financing lease payable | - | 71,965,525.79 |
| Others | 9,814,913.20 | - |
| Total | 1,232,875,519.52 | 1,285,984,226.34 |
| Deduct :long-term payable due within one year | 2,453,728.30 | 30,635,607.84 |
| long-term payable due after one year | 1,230,421,791.22 | 1,255,348,618.50 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Long-term payables - continued
(2) Details of long-term payables - continued
Note 1: As at 12 August 2011, the Group reached a 35-year construction, operation and transfer agreement
through the subsidiary Colombo International Container Terminals Limited and the Sri LankaPort Authority on the construction, operation, management and development of the Colombo PortSouth Container Terminal (hereinafter referred to as for "BOT"). The above-mentioned terminaloperating rights purchase amount is determined by discounting the amount to be paid in the futureaccording to the current market interest rate according to the BOT agreement. As at 30 June 2019and 31 December 2018, the amount was RMB 824,739,290.52 and RMB 823,360,554.03respectively.
Note 2: It is an unsecured loan from minority shareholder of Thesar Maritime Limited, a
subsidiary of the Company, which has an annual interest rate of 4.65%.
(3) Special payables
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Refunds of Harbor Construction Fee(Note) | 36,140,144.57 | 36,061,435.67 |
| Employee housing fund | 2,991,112.25 | 2,780,064.01 |
| Total | 39,131,256.82 | 38,841,499.68 |
Note: According to the "Port Construction Fee Management Measures" promulgated by the
Ministry of Finance, this payment is dedicated to the construction of water transportinfrastructure. The refund of the construction fee collected by the Group from the ShenzhenMunicipal Transportation Bureau.
38. Long-term employee benefits payable
(1) Summary of long-term employee benefits payable
RMB
| Item | Closing balance | Opening balance |
| Post-employment benefits- net debt of projected benefits obligation(Note) | 702,116,337.27 | 385,323,310.21 |
| Termination benefits | 51,745,559.75 | 9,101,817.44 |
| Total | 753,861,897.02 | 394,425,127.65 |
| Less: Long-term employee benefits payable due within one year | 27,847,424.95 | 19,100,000.00 |
| Long-term employee benefits payable due after one year | 726,014,472.07 | 375,325,127.65 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Long-term employee benefits payable - continued
(2) Changes in projected benefits obligation
Present value of projected benefits obligation:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| I. Opening balance | 385,323,310.21 | 358,010,123.90 |
| II. Benefit cost included in current period income | 9,122,011.37 | 8,372,188.15 |
| 1. Current service cost | 2,448,000.00 | 2,400,000.00 |
| 2. Post service cost | -5,988.63 | -27,811.85 |
| 3. Interest adjustment | 6,680,000.00 | 6,000,000.00 |
| III. Benefit cost included in other comprehensive income | -5,940.71 | -4,251.13 |
| 1. Acturial gains (losses) | - | - |
| 2. Effect of currency rate changes | -5,940.71 | -4,251.13 |
| IV. Others changes | 307,676,956.40 | -8,173,681.12 |
| 1. Benefits paid | -9,963,043.60 | -8,173,681.12 |
| 2. Changes in the scope of consolidation | 317,640,000.00 | - |
| V. Closing balance | 702,116,337.27 | 358,204,379.80 |
Note: A subsidiary of the Company, provides supplementary post-employment benefit plans for
retirees.
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 actuarialresults. The relevant actuarial gains or losses are included in other comprehensive incomeand cannot be reclassified into profit or loss in the future. Past service costs are recognizedin profit or loss for the period in which the plan is revised. The net interest is determined bymultiplying the defined benefit plan net debt or net assets by the appropriate discount rate.
39. Provisions
RMB
| Item | Closing balance | Opening balance | Reason |
| Pending litigation (Note) | 12,120,312.81 | 19,470,820.72 | Note |
| Sales discount | 29,451,496.01 | 15,480,571.55 | |
| Total | 41,571,808.82 | 34,951,392.27 |
Note： Is the estimated amount of compensation expected by TCP, the company's subsidiary, due
to pending obligation.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Deferred income
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Opening balance | Increase | Effect of changes in the scope of consolidation | Decrease | Closing balance |
| Government grants | 228,658,214.64 | 305,552,280.00 | 962,525,700.54 | 20,048,198.10 | 1,476,687,997.08 |
| The proceeds recognized against the shareholding of Qianhai Industrial due to land preparation(note) | - | 682,632,512.39 | - | - | 682,632,512.39 |
| Unrealized sale and lease back profit | - | - | 1,902,769.80 | 216,223.90 | 1,686,545.90 |
| Total | 228,658,214.64 | 988,184,792.39 | 964,428,470.34 | 20,264,422.00 | 2,161,007,055.37 |
Note: On 24 December 2018, Shenzhen City Planning and Land Resources Committee,
Shenzhen Qianhai Shenzhen Hong Kong Modern Service Industry Cooperation ZoneAdministration, China Merchants Group, and other relevant parties signed ChinaMerchants Group Qianhai Logistics Area Land Consolidation Agreement. According tothe agreement, the land use rights of Qianhai returned by the Company's subsidiariesamount to RMB 817,354,053.93, and the creditor's rights of land compensation due fromChina Merchants Chidi amount to RMB 5,693,300,571.00.
On 11 January 2019, China Merchants Qianhai Industrial (Shenzhen) Co., Ltd.(hereinafter
referred to as " China Merchants Qianhai Industrial"), the subsidiaries of the Company andother relevant parties signed The Capital Increase Agreement of Shenzhen ChinaMerchants Qianhai Industrial Development Co., Ltd. According to the agreement, thesubsidiaries of the Company and other relevant parties shall make capital contribution toChina Merchants Qianhai Industrial, with respect to which the capital contribution has notbeen completely completed as of 30 June 2019. Therefore, the unrealized internal gainsand losses from 14% equity interest in China Merchants Qianhai Industrial are recognizedas liabilities of RMB 682,632,512.39.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Deferred income - continued
Related to government grants：
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Liability item
| Liability item | Opening balance | Increase | Effect of changes in the scope of consolidation | Recognized in other income | Closing balance | Related to assets /Related to income |
| Port construction fee refund | - | - | 510,107,118.35 | - | 510,107,118.35 | Related to assets |
| Marine reclamation land refund | - | - | 392,906,557.65 | 8,062,153.30 | 384,844,404.35 | Related to assets |
| Dredging and widening project | - | 300,000,000.00 | - | - | 300,000,000.00 | Related to assets |
| Modern logistics special funds | 115,360,000.04 | - | - | 319,999.98 | 115,040,000.06 | Related to assets |
| Ro-ro terminal subsidy | 47,775,000.00 | - | - | 612,499.98 | 47,162,500.02 | Related to assets |
| Port construction subsidy fund | - | - | 20,946,639.06 | 385,138.85 | 20,561,500.21 | Related to assets |
| Cargo port fee allocation | - | - | 22,819,438.96 | 229,110.85 | 22,590,328.11 | Related to assets |
| Qianwan Bonded Logistics Park Project | 15,304,301.08 | - | - | 528,625.92 | 14,775,675.16 | Related to assets |
| Subsidized grain transfer project subsidy | 8,142,857.12 | - | - | - | 8,142,857.12 | Related to assets |
| Central budgetary support for bulk grain transfer terminal projects | 7,472,916.67 | - | - | - | 7,472,916.67 | Related to assets |
| Land transfer payment refund | - | - | 6,680,000.00 | - | 6,680,000.00 | Related to assets |
| AMPI | 6,748,036.42 | - | - | 480,810.36 | 6,267,226.06 | Related to assets |
| Oil to electricity project | 6,017,089.67 | - | - | 392,418.96 | 5,624,670.71 | Related to assets |
| Special fund for combat readiness tug | - | - | 4,425,000.00 | 93,750.00 | 4,331,250.00 | Related to assets |
| Automated terminal operation and dispatching system special support project | 5,162,470.31 | - | - | 2,458,938.26 | 2,703,532.05 | Related to assets |
| Special fund for industrial informationization development of bonded logistics center | - | - | 2,690,000.00 | 50,000.00 | 2,640,000.00 | Related to assets |
| Research and development of fully automated intelligent terminal information investment based on cloud platform architecture | 2,737,023.07 | - | - | 622,912.43 | 2,114,110.64 | Related to assets |
| Warfare gate subsidy | 1,855,895.24 | - | - | - | 1,855,895.24 | Related to assets |
| Green low carbon port project | 1,403,900.02 | - | - | 210,585.00 | 1,193,315.02 | Related to assets |
| Shore power subsidies | - | 5,000,000.00 | - | 5,000,000.00 | - | Related to assets |
| Others | 10,678,725.00 | 552,280.00 | 1,950,946.52 | 601,254.21 | 12,580,697.31 | Related to assets |
| Total | 228,658,214.64 | 305,552,280.00 | 962,525,700.54 | 20,048,198.10 | 1,476,687,997.08 |
41. Other non-current liabilities
RMB
| Item | Closing balance | Opening balance |
| TCP Operating rights liability (Note1) | 3,415,258,427.24 | 3,260,547,002.45 |
| Obligation to minority shareholders due to acquisition (Note2) | 629,342,778.85 | 579,195,304.56 |
| Berth priority call right (Note3) | 22,856,134.30 | 25,305,830.90 |
| Total | 4,067,457,340.39 | 3,865,048,137.91 |
| Less: Other non-current liabilities due in one year | 89,024,962.46 | 87,465,615.05 |
| Including: TCP Operating rights liability | 89,024,962.46 | 87,465,615.05 |
| Other non-current liabilities due after one year | 3,978,432,377.93 | 3,777,582,522.86 |
Note 1: As at 23 February 2018, CMPH, a subsidiary of the Company, acquired a 90% stake in TCP
and incorporate it into the consolidated financial statements of the Group. TCP has right tooperate the port of paranagua. The relevant concession arrangement allows for operationsin the relevant port for up to 2048. At 30 June 2019, with the relevant authority, concessionpayment is payable on a monthly basis and is adjusted from time to time, among otherconditions, with reference to an official inflation index in Brazil.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Other non-current liabilities - continued
Note 2: In February 2018, CMPH, a subsidiary of the Company, acquired a 90% stake in TCP.
According to the agreement, TCP minority shareholders can choose to sell their 10% stakein TCP to China Merchants Port Holdings at a higher price than the market price or theBRL 320 million two years later. The Group recognizes the total amount of obligationsrelated to the purchase of minority interests as liabilities.
Note 3: According to the berth priority call right agreed in the contract signed with the customer in
2003, the total amount is USD 14 million. The Group must give priority to the berthingrequirements of the contract customers during the contract period. The Group amortizedthe berth priority right within 20 years. For the period from 1 January to 30 June 2019, theamount includes in operating income is RMB 2,449,696.60.
42. Share capital
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Opening balance | Changes for the period | Closing balance | ||||
| New issue of share | Bonus issue | Capitalization of surplus reserve | Others | Subtotal | |||
| For the period from 1 January to 30 June 2019 | |||||||
| I. Restricted tradable shares | |||||||
| 1. State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | - | - | - | - | - | - |
| 3. Other domestic shares | 212,156.00 | - | - | - | -42,554.00 | -42,554.00 | 169,602.00 |
| 4. Other foreign shares | 1,148,648,648.00 | - | - | - | - | - | 1,148,648,648.00 |
| Total restricted tradable shares | 1,148,860,804.00 | - | - | - | -42,554.00 | -42,554.00 | 1,148,818,250.00 |
| 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 | - | - | - | - | - | 1,793,412,378.00 |
| 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. Other 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 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Capital reserve
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2019 | ||||
| Capital premium | 19,429,694,090.05 | 61,436,266.04 | 16,957,921.94 | 19,474,172,434.15 |
| 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 | 13,311,099,845.41 | - | - | 13,311,099,845.41 |
| Others | 1,164,197,108.39 | 61,436,266.04 | 16,957,921.94 | 1,208,675,452.49 |
| Other capital reserve | -2,781,133.00 | 77,732,230.21 | 300,731.50 | 74,650,365.71 |
| Including: Transfer from capital reserve under the previous accounting system | -2,781,133.00 | - | - | -2,781,133.00 |
| Other changes in the owner's equity of the investee other than net profit or loss, profit distribution, and other comprehensive income changes under the equity method | - | 77,732,230.21 | 300,731.50 | 77,431,498.71 |
| Total | 19,426,912,957.05 | 139,168,496.25 | 17,258,653.44 | 19,548,822,799.86 |
RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 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(Note) | - | 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: It refers to the income generated by China Merchants Port Holdings in the disposal of the
company's equity in June 2018.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Other comprehensive income
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Opening balance | Amount incurred in current period | Closing balance | |||||
| Amount before income tax incurred in current year | Less: Amount included in other comprehensive income in the prior periods that is transferred to profit or loss for the period | Less: Income tax expense | After-tax income attributable to the parent company owner | After-tax income attributable to minority shareholders | The impact of business combination under common control | |||
| For the period from 1 January to 30 June 2019 | ||||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | 75,673,134.08 | 38,773,588.04 | - | 235,000.00 | 15,630,350.48 | 22,908,237.56 | - | 91,303,484.56 |
| Including: Change as a result of remeasurement of the net defined benefit plan liability or asset | - | - | - | - | - | - | - | - |
| Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | 37,833,588.04 | - | - | 14,925,350.48 | 22,908,237.56 | - | 14,925,350.48 |
| Changes in fair value of other equity instruments | 75,673,134.08 | 940,000.00 | - | 235,000.00 | 705,000.00 | - | - | 76,378,134.08 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 13,252,844.49 | -954,554,782.61 | - | - | -348,242,893.56 | -606,311,889.05 | - | -334,990,049.07 |
| Including: Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | 100,000.00 | -65,347,540.69 | - | - | -25,779,604.80 | -39,567,935.89 | - | -25,679,604.80 |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | -889,207,241.92 | - | - | -322,463,288.76 | -566,743,953.16 | - | -309,310,444.27 |
| Total | 88,925,978.57 | -915,781,194.57 | - | 235,000.00 | -332,612,543.08 | -583,403,651.49 | - | -243,686,564.51 |
| 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: Change as a result of remeasurement of the net defined benefit plan liability or asset | - | -20,136,880.35 | - | - | -7,943,999.30 | -12,192,881.05 | 7,943,999.30 | - |
| Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | -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: Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | 100,000.00 | -20,157,413.77 | - | - | -7,952,099.73 | -12,205,314.04 | 7,952,099.73 | 100,000.00 |
| Total | -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 |
- 88 -
V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Special reserve
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2019： | ||||
| Production safety reserve | 8,231,080.43 | 66,424,472.16 | 54,201,356.20 | 20,454,196.39 |
| 2018: | ||||
| Production safety reserve | 4,767,373.45 | 24,165,961.75 | 20,702,254.77 | 8,231,080.43 |
46. Surplus reserve
RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2019： | ||||
| Statutory surplus reserve | 527,175,908.67 | - | - | 527,175,908.67 |
| 2018: | ||||
| Statutory surplus reserve | 520,074,434.56 | 7,101,474.11 | - | 527,175,908.67 |
Note：In accordance with the Company Law of the PRC and the Company's Articles of
Association, the Company should appropriate 10% of net profit for the year to thestatutory surplus reserve, and the Company can cease appropriation when the statutorysurplus reserve accumulates to more than 50% of the registered capital. The statutorysurplus reserve can be used to make up for the loss or increase the paid-in capital afterapproval.
The appropriation to discretionary surplus reserve is proposed by the board of directorsand approved by the general meeting of shareholders. The discretionary surplus reservecan be used to make up for the loss of prior years or increase the paid-in capital afterapproval.
47. Unappropriated profit
RMB
| Item | Amount | Proportion of appropriation or allocation |
| For the period from 1 January to 30 June 2019： | ||
| Unappropriated profit at the end of prior period before adjustment | 8,915,817,110.21 | |
| Adjustment of total unappropriated profit at the beginning of period | -37,858,457.43 | Note 1 |
| Unappropriated profit at the beginning of period after adjustment | 8,877,958,652.78 | |
| Add: Net profit attributable to shareholders of the Company for the period | 2,299,181,330.61 | |
| Less: Appropriation to statutory surplus reserve | - | |
| Appropriation to discretionary surplus reserve | - | |
| Appropriation to risk preparation | - | |
| Ordinary shares' dividends payable | 204,449,011.09 | Note 2 |
| Ordinary shares' dividends converted into share capital | - | |
| Others | - | |
| Unappropriated profit at the end of the period | 10,972,690,972.30 | |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
47. Unappropriated profit - continued
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| 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 | Note 1 |
| 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 risk preparation | - | |
| 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: Details of adjustment to total unappropriated profit at the beginning of year：
As Notes (III) 31, due to the impact of changes in accounting policies, the Groupdecreased the unappropriated profit at the beginning of the year by RMB 37,858,457.43.
Due to the impact of changes in accounting policies of the prior year, the Group increasedthe unappropriated profit at the beginning of the year by RMB 816,323,338.17.
Due to the impact of business combination under common control of the prior year, theunappropriated profit at the beginning of the previous year was RMB 4,900,224,775.30.
Note 2: According to the resolution of the shareholders' meeting of 20 May 2019, the Company
distributed cash dividends of RMB1.14 (tax inclusive) per 10 shares based on the totalshares of 1,793,412,378 shares as of 31 December 2018, and the total amount of the cashdividends distributed was RMB 204,449,011.09.
48. Operating income and operating costs
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period | ||
| Income | Cost | Income | Cost | |
| Principal operating | 5,757,493,642.27 | 3,491,922,787.72 | 4,620,260,636.23 | 2,508,396,430.77 |
| Other operating | 76,859,779.06 | 116,097,908.19 | 52,077,404.49 | 106,064,787.61 |
| Total | 5,834,353,421.33 | 3,608,020,695.91 | 4,672,338,040.72 | 2,614,461,218.38 |
- 90 -
V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
49. Taxes and levies
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Property tax | 25,394,756.09 | 16,051,367.22 |
| Land holding tax | 16,894,999.35 | 5,335,484.17 |
| City construction and maintenance tax | 2,978,839.39 | 2,559,051.95 |
| Stamp duty | 2,444,903.78 | 949,691.82 |
| Education surcharges | 2,380,123.86 | 2,109,819.40 |
| Others (Note) | 46,381,888.95 | 56,035,824.99 |
| Total | 96,475,511.42 | 83,041,239.55 |
Note: Others including: 1. Program of Social Integration and Contribution for the financing of
social security refer to the taxes based on the corporation's income, and the amount is BRL11,607,842.82 (RMB 20,737,411.19); Tax on services is the one based on servicesprovided, and the amount is BRL 11,324,566.31(RMB 20,231,337.70).
50. Administrative expenses
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Employee's salary | 426,442,977.75 | 321,339,986.60 |
| Depreciation expenses | 37,107,071.34 | 18,575,612.09 |
| Amortization of intangible assets | 25,695,054.54 | 7,836,970.32 |
| Fees paid to agencies | 22,272,821.00 | 28,758,693.46 |
| Others | 135,726,793.73 | 120,909,475.76 |
| Total | 647,244,718.36 | 497,420,738.23 |
51. Financial expenses
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Interest expense | 1,007,611,049.92 | 733,423,085.06 |
| Less: Capitalized interest expenses | 20,983,804.08 | 21,434,378.26 |
| Less: Interest income | 139,353,821.46 | 110,201,974.82 |
| Exchange differences | -47,860,182.35 | 93,770,825.42 |
| Handling fee | 21,050,919.62 | 25,327,883.79 |
| Others | 1,317,410.77 | 3,176,703.34 |
| Interest expense of lease liabilities | 51,328,052.46 | |
| Total | 873,109,624.88 | 724,062,144.53 |
- 91 -
V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
52. Other income
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the previous period | Related to assets / related to income |
| Recognition of deferred income | 20,048,198.10 | 3,535,989.39 | Related to income |
| Steady growth funding project in 2018 | 13,850,262.00 | - | Related to income |
| Sri Lanka Hambantota project subsidies | 10,083,935.65 | - | Related to income |
| VAT additional deduction | 4,526,313.56 | - | N/A |
| Key logistics enterprise loan interest financial subsidies | 3,000,000.00 | 2,000,000.00 | Related to income |
| Modern logistics funding project | 2,923,380.55 | 1,500,000.00 | Related to income |
| One-time award financing for key logistics companies | 2,719,100.00 | - | Related to income |
| Enterprise research and development funding scheme | 2,349,000.00 | 2,689,000.00 | Related to income |
| Supporting fund | 2,000,000.00 | - | Related to income |
| Modern logistics fundings | 2,000,000.00 | - | Related to income |
| Enterprise research and development subsidies | 1,892,000.00 | - | Related to income |
| Port construction subsidies | 1,575,990.74 | - | Related to income |
| Electricity subsidies | 1,288,071.18 | 873,229.32 | Related to income |
| Demonstration logistics park subsidies | 1,000,000.00 | - | Related to income |
| Tax refund | 882,192.60 | - | Related to income |
| Subsidies for purchase of TCP terminal project | - | 7,264,707.34 | Related to income |
| Port container and cargo throughput business improvement subsidies | - | 5,499,631.00 | Related to income |
| Special fund for the development of port and shipping | - | 1,029,000.00 | Related to income |
| Others | 2,954,061.38 | 2,211,755.72 | Related to income |
| Total | 73,092,505.76 | 26,603,312.77 |
53. Investment income
(1) Details of investment income
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Long-term equity investments income under equity method | 1,795,952,978.08 | 1,497,601,956.62 |
| Income from remeasurement of equity at fair value upon the acquisition of control | 722,688,249.35 | - |
| Investment income on other non-current financial assets | 106,288,257.13 | 30,909,301.45 |
| Investment income on other equity instruments | 120,000.00 | 7,788,975.00 |
| Total | 2,625,049,484.56 | 1,536,300,233.07 |
There are no major restrictions on the remittance of the Group's investment income.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
53. Investment income - continued
(2) Details of long-term equity investments income under equity method
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Investee
| Investee | Amount incurred in the current period | Amount incurred in the previous period | Reason for changes |
| Shanghai International Port (Group) Co., Ltd. | 1,164,668,288.63 | 894,357,860.58 | Changes in net profit of investee |
| Terminal Link SAS | 152,192,824.94 | 130,942,956.96 | Changes in net profit of investee |
| Nanshan Group | 98,769,988.95 | 44,518,621.17 | Changes in net profit of investee |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 69,739,231.62 | 83,447,228.21 | Changes in net profit of investee |
| Dalian Port Co., Ltd. | 59,283,560.53 | 39,810,842.72 | Changes in net profit of investee |
| Euro-Asia Oceangate, S.a` r.l. | 43,143,162.57 | 57,555,304.11 | Changes in net profit of investee |
| COHA (Laizhou) | 21,889,138.83 | 26,216,000.00 | Changes in net profit of investee |
| Others | 186,266,782.01 | 220,753,142.87 | Changes in net profit of investee |
| Total | 1,795,952,978.08 | 1,497,601,956.62 |
54. Gains(losses) on changes in fair value
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Other non-current financial assets | 836,888,566.32 | -420,579,095.15 |
| Including: Financial assets measured at fair value through profit or loss | 836,888,566.32 | -420,579,095.15 |
| other non-current liabilities | -193,261,253.31 | -50,760,297.68 |
| Including: Financial liabilities measured at fair value through profit or loss | -193,261,253.31 | -50,760,297.68 |
| Total | 643,627,313.01 | -471,339,392.83 |
55. Impairment credit gain
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| I. Impairment of credit loss on notes receivable and accounts receivable | 5,181,091.87 | 1,789,443.78 |
| II. Impairment of credit loss on other receivables | 2,406,993.51 | - |
| III. Impairment of credit loss on long-term receivables | -931,598.61 | - |
| IV. Others | 1,042,648.01 | - |
| Total | 7,699,134.78 | 1,789,443.78 |
56. Impairment gain of assets
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Gain from inventory depreciation | 25,051.16 | - |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
57. Gains (losses) on disposal of assets
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the previous period | Amount recognized as non-recurring gain and loss in the current period |
| Gains (losses) on disposal of non-current assets | 4,169,857,166.53 | 10,478,881.99 | 4,169,857,166.53 |
| Including: Gains (losses) on disposal of fixed assets | -13,060.65 | 10,216,400.44 | -13,060.65 |
| Gains (losses) on disposal of intangible assets | 4,169,848,063.69 | - | 4,169,848,063.69 |
| Others | 22,163.49 | 262,481.55 | 22,163.49 |
58. Non-operating income
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period | Amount recognized as non-recurring gain and loss in the current period |
| Compensation received for contracts violation | 602,937.10 | 165,055.85 | 602,937.10 |
| Government grants | 313,000.00 | - | 313,000.00 |
| Others | 13,463,681.24 | 45,473,610.60 | 13,463,681.24 |
| Total | 14,379,618.34 | 45,638,666.45 | 14,379,618.34 |
59. Non-operating expenses
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period | Amount recognized as non-recurring gain and loss in the current period |
| Donation | 2,639,889.06 | 420,076.21 | 2,639,889.06 |
| Losses on retirement of non-current assets | 2,315,206.28 | 296,167.91 | 2,315,206.28 |
| Compensation, liquidated damages and penalties | 1,604,926.12 | 7,274,662.07 | 1,604,926.12 |
| Others | 946,352.83 | 14,993,430.13 | 946,352.83 |
| Total | 7,506,374.29 | 22,984,336.32 | 7,506,374.29 |
60. Income tax expenses
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Current tax expenses | 1,523,523,436.98 | 271,147,725.94 |
| Deferred income tax | 494,447,313.18 | 105,352,295.33 |
| Total | 2,017,970,750.16 | 376,500,021.27 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
60. Income tax expenses - continued
Reconciliation of income tax expenses to the accounting profit is as follows:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period |
| Accounting profit | 8,075,707,935.32 |
| Income tax expenses calculated at 25% | 2,018,926,983.83 |
| Effect of non-deductible expenses and losses | 117,647,473.66 |
| Accrued income tax expenses | 657,244,370.87 |
| Effect of previous deductible losses and deductible temporary differences unrecognized as deferred tax assets | 39,339,828.74 |
| Effect of tax-free income (Note) | -156,476,495.56 |
| Effect of tax preference policy | -144,760,553.89 |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | -447,524,358.37 |
| Effect of recognition of deductible losses of previously-unrecognized deferred tax assets | -40,181,883.80 |
| Effect of adjustments to previous year income tax | -29,685,778.94 |
| Tax adjustments result in changes in the opening deferred tax assets / liabilities balance | 598,149.64 |
| Effect of unrecognized taxable temporary difference for tax purposes | 1,292.26 |
| Others | 2,841,721.72 |
| Income tax expenses | 2,017,970,750.16 |
Note： Effect of tax-free income is mainly effect on income tax on gain of investments in joint
venture and associates.
61. Assets with restricted ownership or usage right
RMB
| Item | Closing balance | Opening balance |
| Cash and bank balances (Note 1) | 1,418,706,200.00 | 1,697,027,200.00 |
| Fixed assets (Note 2) | 303,210,500.64 | 5,825,207,339.57 |
| Equity of Colombo International Container Terminals Limited (Note 3) | 1,593,911,174.89 | 1,526,241,901.61 |
| Equity of Thesar Maritime Limited (Note 3) | 782,192,829.96 | 767,331,789.70 |
| Intangible assets (Note 2) | 159,708,329.63 | 161,408,030.71 |
| Construction in process (Note 2) | 55,898,342.90 | 43,352,104.93 |
| Total | 4,313,627,378.02 | 10,020,568,366.52 |
Note 1: See Notes (V) 1 for the information about restrict cash.
Note 2: Guangdong Yide Port Co. Ltd. acquired mortgage loans by pledged land with property
right, fixed assets and construction in process. Refer to notes (V) 34 for details. As at 30June 2019 and 31 December 2018, the book value of the mortgaged land use right ofGuangdong Yide Port Co. Ltd. was RMB 159,708,329.63 and RMB161,408,030.71 respectively,the book value of the mortgaged fixed assets of it was RMB302,776,668.25 andRMB307,836,672.27 respectively, and the book value of the mortgaged construction inprogress of it was RMB55,898,342.90 and RMB43,352,104.93 respectively. On 30 June 2019,TCP purchased fixed assets by way of a mortgage, and the book value of the fixed assets isRMB 433,832.39.
Note 3: See notes (V) 34 for the information about the equity and equity pledge.
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
62. Other comprehensive income
See notes (V) 44 for details.
63. Notes to items in cash flow statement
(1) Operating cash inflow
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Government grants | 342,134,131.96 | 15,634,266.76 |
| Interest income | 111,184,074.51 | 75,812,811.08 |
| Guarantees and deposits | 17,708,608.61 | 16,104,892.66 |
| Rentals | 6,130,365.04 | 5,852,430.10 |
| Insurance compensation received | 1,584,445.49 | 1,371,337.33 |
| Refunds of harbor construction fee | 21,352.76 | 46,618,144.04 |
| Others | 149,564,683.66 | 199,076,407.21 |
| Total | 628,327,662.03 | 360,470,289.18 |
(2) Operating cash outflow
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Advance payment | 128,526,655.26 | 21,608,850.17 |
| Administration expense and other operating expenses | 82,273,477.12 | 72,033,537.59 |
| Rentals | 26,768,612.20 | 8,813,209.74 |
| Berth dredging fee | 19,810,544.00 | 63,477,153.25 |
| Port expenses | 10,694,022.45 | 19,109,078.94 |
| Guarantees and deposits | 11,844,446.05 | 15,940,856.60 |
| Port construction fee | 6,612,997.74 | 48,772,952.00 |
| Cargo fee | 1,647,007.40 | 35,171.23 |
| Others | 89,782,545.95 | 143,104,607.61 |
| Total | 377,960,308.17 | 392,895,417.13 |
(3) Investment cash inflow
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Cash borrowings repayment received | 1,017,690,000.00 | 1,000,000.00 |
| Principle received from structured deposit that cannot be withdrawn on demand | 775,000,000.00 | - |
| Cash received from acquisition of subsidiaries | 841,029,533.97 | - |
| Interests received from structured deposit | 8,023,808.23 | - |
| Others | 4,000.00 | - |
| Total | 2,641,747,342.20 | 1,000,000.00 |
- 96 -
V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Notes to items in cash flow statement - continued
(4) Net cash payments for acquisition of subsidiaries and other business entities
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period |
| Cash or cash equivalents paid in current year for business combination incurred in current year | 375,334,390.00 |
| Including: Zhanjiang Port (Group) Co., Ltd. | 375,334,390.00 |
| Less: Cash and cash equivalents held by subsidiaries at the date of purchase | 1,216,363,923.97 |
| Including: Zhanjiang Port (Group) Co., Ltd. | 1,216,363,923.97 |
| Net cash payment to acquire subsidiary | -841,029,533.97 |
(5) Investment cash outflow
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Structured cash deposit that cannot be withdrawn on demand | 495,000,000.00 | - |
| Payment of creditor's rights transfer | 356,137,574.00 | - |
| Lend out | 54,390,000.00 | - |
| Supplementary payment of taxes and fees for material assets reorganization | 51,269,104.33 | - |
| Income tax expenses on disposal of equity of Ningbo Port | - | 25,463,391.23 |
| Others | 17,106,451.45 | - |
| Total | 973,903,129.78 | 25,463,391.23 |
(6) Financing cash inflow
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| China Merchants Port Holdings Co., Ltd. disposes stock equity of the Company | - | 4,422,370,076.87 |
(7) Financing cash outflow
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Payment for lease | 170,160,928.54 | 22,232,883.90 |
| Out-of-pocket for channel maintenance fee | 32,050,913.34 | - |
| Repayment to stock holders | - | 1,502,706.40 |
| Debt issue costs | - | 12,873,823.10 |
| Others | 13,779,138.79 | 7,043.02 |
| Total | 215,990,980.67 | 36,616,456.42 |
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V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Supplementary information
| Supplementary information | Amount incurred in the current period | Amount incurred in the previous period |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 6,057,737,185.16 | 1,455,275,672.05 |
| Add: Provision for impairment losses of assets | -25,051.16 | - |
| Impairment of credit loss | -7,699,134.78 | -1,789,443.78 |
| Depreciation of fixed assets | 817,471,364.36 | 687,007,055.11 |
| Depreciation of investment property | 95,124,919.10 | 86,371,256.30 |
| Depreciation of right-of-use assets | 152,337,348.71 | |
| Amortization of intangible assets | 318,766,288.91 | 225,847,011.97 |
| Amortization of long-term prepaid expenses | 9,815,827.73 | 9,221,631.83 |
| Losses (Gains) on disposal of fixed assets , intangible assets and other long-term assets | -4,169,857,166.53 | -10,478,881.99 |
| Losses on retirement of fixed assets , intangible assets and other long-term assets | 2,315,206.28 | 235,544.05 |
| Losses on changes in fair value | -643,627,313.01 | 471,339,392.83 |
| Financial expenses | 990,095,115.95 | 805,759,532.22 |
| Losses (Gains) arising from investments | -2,625,049,484.56 | -1,536,300,233.07 |
| Decrease (Increase) in deferred tax assets | -7,751,337.66 | -8,112,001.02 |
| Increase in deferred tax liabilities | 502,198,650.84 | 113,464,296.34 |
| Decrease in inventories | -25,705,795.78 | -8,572,016.07 |
| Decrease (Increase) in operating receivables | -221,499,911.06 | -515,968,675.31 |
| Increase (Decrease) in operating payables | 1,312,215,203.02 | 27,434,577.25 |
| Net cash flows from operating activities | 2,556,861,915.52 | 1,800,734,718.71 |
| 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 | 5,618,184,649.19 | 7,661,561,715.98 |
| 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 | 244,903,144.44 | -67,898,366.77 |
(2) Composition of cash and cash equivalents
RMB
| Item | Closing balance | Opening balance |
| I. Cash | 5,618,184,649.19 | 5,373,281,504.75 |
| Including: Cash on hand | 462,266.71 | 349,650.07 |
| Bank deposits | 5,166,976,023.14 | 5,116,481,444.13 |
| Other monetary funds | 450,746,359.34 | 256,450,410.55 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 5,618,184,649.19 | 5,373,281,504.75 |
- 98 -
V NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Foreign currency monetary items
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance in foreign currency | Exchange rate | Closing amount in RMB |
| Cash and bank balances | 1,901,107,398.04 | ||
| Including: HKD | 130,302,290.52 | 0.8797 | 114,626,924.97 |
| USD | 174,964,244.05 | 6.8747 | 1,202,826,688.57 |
| EUR | 54,644,095.87 | 7.8170 | 427,152,897.42 |
| RMB | 156,500,887.08 | 1.0000 | 156,500,887.08 |
| Accounts receivable | 189,996,558.75 | ||
| Including: HKD | 55,081,872.29 | 0.8797 | 48,455,523.05 |
| USD | 5,657,079.04 | 6.8747 | 38,890,721.28 |
| EUR | 13,131,676.40 | 7.8170 | 102,650,314.42 |
| Other receivables | 1,618,633,171.70 | ||
| Including: HKD | 30,216,993.64 | 0.8797 | 26,581,889.30 |
| USD | 12,650,786.86 | 6.8747 | 86,970,364.43 |
| EUR | 29,888,753.16 | 7.8170 | 233,640,383.45 |
| RMB | 1,271,440,534.52 | 1.0000 | 1,271,440,534.52 |
| Short-term borrowings | 1,353,835,000.00 | ||
| Including: HKD | 550,000,000.00 | 0.8797 | 483,835,000.00 |
| RMB | 870,000,000.00 | 1.0000 | 870,000,000.00 |
| Accounts payables | 46,851,418.24 | ||
| Including: HKD | 3,894,099.30 | 0.8797 | 3,425,639.15 |
| USD | 42,231.04 | 6.8747 | 290,325.73 |
| EUR | 5,518,159.57 | 7.8170 | 43,135,453.36 |
| Other payables | 536,615,622.71 | ||
| Including: HKD | 42,624,300.74 | 0.8797 | 37,496,597.36 |
| USD | 46,709,694.98 | 6.8747 | 321,115,140.08 |
| RMB | 27,054,927.71 | 1.0000 | 27,054,927.71 |
| EUR | 19,310,343.81 | 7.8170 | 150,948,957.56 |
| Non-current liabilities due within one year | 239,200,200.00 | ||
| EUR | 30,600,000.00 | 7.8170 | 239,200,200.00 |
| Long-term borrowings | 1,793,770,925.00 | ||
| USD | 100,000,000.00 | 6.8747 | 687,470,000.00 |
| EUR | 141,525,000.00 | 7.8170 | 1,106,300,925.00 |
| Bonds payable | 20,927,597,972.79 | ||
| USD | 2,680,494,854.00 | 6.8747 | 18,427,597,972.79 |
| RMB | 2,500,000,000.00 | 1.0000 | 2,500,000,000.00 |
| Long-term payables | 422,118,000.00 | ||
| EUR | 54,000,000.00 | 7.8170 | 422,118,000.00 |
- 99 -
VI CHANGES IN SCOPE OF CONSOLIDATION
1. Business combination involving enterprises not under common control
(1) Business combination involving enterprises not under common control
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Name ofacquiree
| Name of acquiree | Acquisition Date | Acquisition Cost | Proportion of equity acquired by business combination (%) | Acquisition Method | Purchase Date | Basis for determining the acquisition date | Revenue from the beginning of the period to the combination date | Net profit from the beginning of the period to the combination date |
| Zhanjiang Port (Group) Co., Ltd. | 3 February 2019 | 6,092,234,949.52 | 58.3549 | Cash Payment | 3 February 2019 | Transfer of control | 1,052,293,232.02 | 34,130,773.98 |
Note: On 31 December 2018, China Merchants International Terminals (Zhanjiang) Limited, a
subsidiary of the Group, obtained 1,809,310,930 shares of A common stock shares of theZhanjiang Port (Group) Co., Ltd. (hereinafter referred to as "Zhanjiang Port"),representing approximately 40.2916% of the total issued shares of the Zhanjiang Port.
On 2 January 2019, the Group signed the Share Transfer Agreement on Zhanjiang Port(Group) Co., Ltd. with Guangdong Sinotrans Co., Ltd., which stipulated to transfer theordinary shares of 201,034,548 of Zhanjiang Port held by Guangdong Sinotrans Co., Ltd.to the Group which take account 5% of the total shares issued by Zhanjiang Port at theagreement signing date at the consideration of RMB 375,334,390.00.
As at 8 January 2019, Chiwan Wharf Holdings (Hong Kong) Limited (hereinafter referredto as "Wharf Hong Kong"), a subsidiary of the Group, signed the Capital IncreaseAgreement of Zhejiang Port (Group) Co., Ltd. (hereinafter referred to as "Capital IncreaseAgreement") with Zhanjiang Infrastructure Construction Investment Group Co., Ltd.(hereinafter referred to as "Zhanjiang Infrastructure Investment") and Zhanjiang Port inZhanjiang, according to which Zhanjiang Port intended to issue 1,853,518,190 ordinaryshares at a price of RMB 1.867 per share or equivalent foreign currency (determined bythe capital exchange rate) to increase its registered capital to RMB 5,874,209,145.00.Among them, Wharf Hong Kong intended to subscribe for 1,606,855,919 ordinary shares,accounting for 27.3544% of the issued shares of Zhanjiang Port on the date of issue of thesubscription shares, and the total amount paid is RMB 3,000,000,000.77 or the equivalentforeign currency (determined by the capital contribution rate) (hereinafter referred to as"the transaction"). Zhanjiang Infrastructure Investment intended to subscribe for246,662,271 ordinary shares, accounting for 4.1991% of the issued shares of ZhanjiangPort on the date of issue of the subscription shares, and the total amount paid is RMB460,518,459.96.
The above transactions were completed on 3 February 2019, from which date the Groupheld the ordinary shares of 3,427,890,467 which were accounting for 58.3549% of theissued shares of Zhanjiang Port. The group was able to control the Zhanjiang Port andenjoy the variable rewards through participating in its relevant activities. Therefore,Zhanjiang Port is included in the consolidation scope of the financial statements by theGroup.
(2) Acquisition cost and goodwill
RMB
| Acquisition cost | Zhanjiang Port (Group) Co., Ltd. |
| Consideration | 6,092,234,949.52 |
| Less: Fair value per share of acquired net identifiable assets | 5,619,831,623.39 |
| Goodwill | 472,403,326.13 |
- 100 -
VI CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination involving enterprises not under common control - continued
(3) Carrying amount of the acquiree's assets and liabilities on the combination date
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
| Zhanjiang Port (Group) Co., Ltd. | ||
| Fair Value on Combination Date | Book Value on Combination Date | |
| Assets: | ||
| Current Assets | 5,150,281,558.06 | 5,150,281,558.06 |
| 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 investment | 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 |
| Right-of-use assets | 1,303,743,708.78 | 1,303,743,708.78 |
| Construction in progress | 1,172,652,644.17 | 1,172,652,644.17 |
| Intangible assets | 3,566,911,864.41 | 2,211,115,469.85 |
| Development expenditure | 14,968,306.82 | 14,968,306.82 |
| Goodwill | - | 9,775,569.57 |
| Long-term deferred expenses | 2,630,870.77 | 2,630,870.77 |
| Deferred tax assets | 41,821,411.69 | 41,821,411.69 |
| Other non-current assets | 876,528,510.11 | 876,528,510.11 |
| Liabilities: | ||
| Current liabilities | 6,038,356,153.82 | 6,038,356,153.82 |
| Long-term borrowings | 1,762,537,800.00 | 1,762,537,800.00 |
| Bonds payable | 400,000,000.00 | 400,000,000.00 |
| Deferred income | 964,428,470.34 | 964,428,470.34 |
| Long-term employee benefit payable | 317,640,000.00 | 317,640,000.00 |
| Deferred tax liabilities | 595,179,290.60 | - |
| Lease liabilities | 857,876,749.08 | 857,876,749.08 |
| Other non-current liabilities | 36,084,447.60 | 36,084,447.60 |
| Net assets | 10,731,620,698.53 | 8,955,858,396.29 |
| Less: Minority interests | 5,111,789,075.14 | 4,294,854,457.00 |
| Net assets acquired | 5,619,831,623.39 | 4,661,003,939.29 |
(4) Revenue and net cash flows from the beginning of the period to the combination date
RMB
| the beginning of the period to the combination date | |
| Operating income | 1,052,293,232.02 |
| Operating costs and expense | 721,311,974.59 |
| Gross profit | 812,695.40 |
| Net profit | 34,130,773.98 |
| Net Cash Flows from Operating Activities | 347,048,963.31 |
| Net Cash Flows from Investing Activities | 367,847,906.27 |
| Net Cash Flows from Financing Activities | -465,048,225.31 |
| Net Increase (Decrease) in Cash and Cash Equivalents | 249,848,644.27 |
- 101 -
VII EQUITY IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
CHINA MERCHANTS PORT GROUP CO., LTD.
Full name of the subsidiary
| Full name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered Capital (in ten thousand Yuan unless otherwise stated) | Proportion of ownership Interest (%) | Proportion of ownership Interest (%) | |
| Direct ownership interest | Direct ownership interest | ||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 550.00 | 100.00 | - | Established through investment |
| Chiwan Wharf Holdings (Hong Kong) Limited. | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD 1,000,000.00 | 100.00 | - | Established through investment |
| Dongguan Chiwan Wharf Co., Ltd. ("DGW") | Dongguan, PRC | Dongguan, PRC | Logistics support services | 45,000.00 | 85.00 | - | Established through investment |
| DGT. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 40,000.00 | 100.00 | - | Established through investment |
| Hinwin Development Limited | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD 10,000.00 | 100.00 | - | Established through investment |
| CHCC | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 28,820.00 | 100.00 | - | Combination involving enterprises under common control |
| Shenzhen Chiwan Port Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 1,500.00 | 100.00 | - | Combination involving enterprises under common control |
| CCT | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD 95,300,000.00 | 55.00 | 20.00 | Combination involving enterprises under common control |
| Shenzhen Chiwan Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 2,400.00 | 100.00 | - | Combination involving enterprises under common control |
| Chiwan Shipping (Hong Kong) Limited | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Logistics support services | HKD 800,000.00 | 100.00 | - | Combination involving enterprises under common control |
| China Merchants Port Holdings (Note 1) | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD39,070.13million | 39.45 | - | Combination involving enterprises under common control |
| CMBL. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 70,000.00 | 40.00 | 60.00 | Combination involving enterprises under common control |
| China Merchants International Information Technology Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Information Technology | 5,000.00 | 23.16 | 76.84 | Combination involving enterprises under common control |
| China Merchants International (China) Investment Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment | USD 30,000,000.00 | - | 100.00 | Combination involving enterprises under common control |
| CMT | Qingdao PRC | Qingdao PRC | Logistics support services | USD 206.30 million | - | 100.00 | Combination involving enterprises under common control |
| CMCS | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Logistics support services | HKD 500,000.00 | - | 100.00 | Combination involving enterprises under common control |
| China Merchants Port (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 55,000.00 | - | 100.00 | Combination involving enterprises under common control |
| SZHQ. | Shenzhen, PRC | Shenzhen, PRC | Engineering supervision | 300.00 | - | 100.00 | Combination involving enterprises under common control |
| ATJ | Shenzhen, PRC | Shenzhen, PRC | Storage | HKD 100.00 million | - | 100.00 | Combination involving enterprises under common control |
| ASJ | Shenzhen, PRC | Shenzhen, PRC | Storage | HKD 100.00 million | - | 100.00 | Combination involving enterprises under common control |
| China Merchants International Terminal (Qingdao) Co., Ltd. | Qingdao PRC | Qingdao PRC | Logistics support services | USD 44.00 million | - | 90.10 | Combination involving enterprises under common control |
| Colombo International Container Terminals Limited | Sri Lanka | Sri Lanka | Logistics support services | USD 150.00 million | - | 85.00 | Combination involving enterprises under common control |
| SMPS | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Combination involving enterprises under common control |
| SMTC | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 33,500.00 | - | 100.00 | Combination involving enterprises under common control |
| SMWC | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Combination involving enterprises under common control |
| Zhangzhou China Merchants Tugboat Co Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 1,500.00 | - | 70.00 | Combination involving enterprises under common control |
| Zhangzhou China Merchants Port Co Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 100,000.00 | - | 60.00 | Combination involving enterprises under common control |
| ZCMG(Note2) | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 44,450.00 | - | 31.00 | Combination involving enterprises under common control |
| China Merchants (SCT) Holdings Company Limited | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | HKD 618.20 million | - | 80.00 | Combination involving enterprises under common control |
- 102 -
VII EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
CHINA MERCHANTS PORT GROUP CO., LTD.
Full name of the subsidiary
| Full name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered Capital (in ten thousand Yuan unless otherwise stated) | Proportion of ownership Interest (%) | Proportion of ownership Interest (%) | |
| Direct ownership interest | Direct ownership interest | ||||||
| Shekou Container Terminals (Phase II) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 60,854.90 | - | 80.00 | Combination involving enterprises under common control |
| SCT3 | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 127,600.00 | - | 80.00 | Combination involving enterprises under common control |
| AYJ | Shenzhen, PRC | Shenzhen, PRC | Storage | 6,060.00 | - | 80.00 | Combination involving enterprises under common control |
| Shenzhen Haixing Port Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 53,072.92 | - | 67.00 | Combination involving enterprises under common control |
| Shenzhen Lianyongtong Dock Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD 7 million | - | 100.00 | Combination involving enterprises under common control |
| YDG | Foshan, PRC | Foshan, PRC | Logistics support services | 21,600.00 | - | 51.00 | Combination involving enterprises under common control |
| Mega Shekou Container Terminals Limited | British Virgin Islands | British Virgin Islands | Investment | USD 120.00 | - | 85.42 | Combination involving enterprises under common control |
| Thesar Maritime Limited | Cyprus | Cyprus | Investment | EUR 5,000.00 | - | 50.00 | Combination involving enterprises under common control |
| Lomé Container Terminal S. A. (Note3) | Togolese Republic | Togolese Republic | Logistics support services | FCFA 200.00 million | - | 35.00 | Combination involving enterprises under common control |
| HIPG | Sri Lanka | Sri Lanka | Logistics support services | USD 794.00 million | - | 85.00 | Combination involving enterprises under common control |
| Shantou CMPort Group Co., Ltd. | Shantou, PRC | Shantou, PRC | Logistics support services | 12,500.00 | - | 60.00 | Combination involving enterprises under common control |
| JYRT | Shenzhen, PRC | Shenzhen, PRC | Property rental services | 80,000.00 | - | 100.00 | Combination involving enterprises under common control |
| QHW | Shenzhen, PRC | Shenzhen, PRC | Property rental services | 20,000.00 | - | 100.00 | Combination involving enterprises under common control |
| JZZ | Shenzhen, PRC | Shenzhen, PRC | Investment Consulting | 4,000 | - | 75.00 | Combination involving enterprises under common control |
| Shenzhen Lianda Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 200 | - | 60.29 | Combination involving enterprises under common control |
| Zhangzhou Zhongli Outer Wheel Tally Co., Ltd | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 200 | - | 84.00 | Combination involving enterprises under common control |
| China Merchants Holdings (Djibouti) FZE | Djibouti | Djibouti | Logistics support services | USD 38.14 million | - | 100.00 | Combination involving enterprises under common control |
| TCP | Brazil | Brazil | Logistics support services | BRL 68.85 million | - | 90.00 | Combination involving enterprises not under common control |
| China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. | Zhoushan, PRC | Zhoushan, PRC | Logistics support services | 17,307.86 | 51.00 | - | Assets Acquisition |
| China Merchants Port (Zhoushan) RoRo Terminal Co., Ltd. | Zhoushan, PRC | Zhoushan, PRC | Logistics support services | 5,000.00 | - | 51.00 | Assets Acquisition |
| Shenzhen Haixing Xiaoyetian Logistics Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 7,066.79 | - | 79.57 | Assets Acquisition |
| Zhanjiang Port (Group) Co., Ltd. (Note4) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 587,420.91 | 3.42 | 54.93 | Combination involving enterprises not under common control |
| Zhanjiang Port International Container Terminal Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 60,000.00 | - | 80.00 | Combination involving enterprises not under common control |
| Zhanjiang Port Petrochemical Terminal Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 18,000.00 | - | 50.00 | Combination involving enterprises not under common control |
| Zhanjiang Zhongli Foreign Goods Shipping Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 84.00 | Combination involving enterprises not under common control |
| Zhanjiang Port East Island Bulk Cargo Terminal Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 5,000.00 | - | 100.00 | Combination involving enterprises not under common control |
| Guangdong Zhanjiang Port Bonded Service Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 100.00 | Combination involving enterprises not under common control |
| Guangdong Zhanjiang Port Logistics Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 10,000.00 | - | 100.00 | Combination involving enterprises not under common control |
| Zhanjiang Port Haichuan Trading Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 200.00 | - | 100.00 | Combination involving enterprises not under common control |
- 103 -
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 CMHK signed the Concerted Action Agreement on
China Merchants Port Holdings Co., Ltd., according to which, in respect of the votingrights of 22.64% of China Merchants Port Holdings Co., Ltd. entrusted to exercise,CMHK shall comply unconditionally with the votes of the Company and vote based onthem in terms of the issues to be voted at the meetings of shareholders of ChinaMerchants Port Holdings Co., Ltd. Therefore, the Company holds 62.09% of the votingrights of China Merchants Port Holdings Co., Ltd. and is able control it.
Note 2: The Group and China Merchants Zhangzhou Development Zone Co., Ltd. signed the
"Equity Custody Agreement". China Merchants Zhangzhou Development Zone Co., Ltd.entrusted 29% of its equity in ZCMG to the Group's operations and management.Therefore, the Group's voting rights to ZCMG is 60%, which included in theconsolidation scope of the Group.
Note 3: The Group has the right to appoint the majority of Executive Committee members of
Lomé Container Terminal S.A., so the Group has included the company in theconsolidated financial statements.
Note 4: See notes (VI).
(2) Material non-wholly-owned subsidiaries
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Name of the subsidiary
| Name of the subsidiary | Proportion of ownership interest held by the minority shareholders (%) | Profit or loss attributable to minority shareholders at the end of the period | Payments for dividends to minority shareholders in the current period | Closing balance of minority interest |
| China Merchants Port Holdings Co., Ltd. | 60.55 | 3,302,308,869.07 | 1,273,144,583.25 | 51,415,616,325.99 |
- 104 -
VII EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(3) Significant financial information of material non-wholly-owned subsidiaries
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Name of thesubsidiary
| Name of the subsidiary | Closing balance | Opening balance | ||||||||||
| 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 | |
| China Merchants Port Holdings Co., Ltd. | 16,272,404,476.40 | 111,347,770,614.05 | 127,620,175,090.45 | 11,654,526,639.23 | 38,342,114,885.68 | 49,996,641,524.91 | 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 |
RMB
| Name of the subsidiary | Amount incurred in the current period | Amount incurred in the previous period | ||||||
| Operating income | Net profit | Total comprehensive income | Operating cash flows | Operating income | Net profit | Total comprehensive income | Operating cash flows | |
| China Merchants Port Holdings Co., Ltd. | 3,861,739,507.52 | 5,309,663,495.61 | 4,363,679,239.08 | 1,910,841,306.56 | 3,677,787,796.61 | 1,248,814,883.04 | 887,912,741.88 | 1,690,631,294.24 |
- 105 -
VII. EQUITY IN OTHER ENTITIES - continued
2. Interests in joint ventures and associates
(1) Material joint ventures or associates
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Investee
| Investee | Principal place of business | Place of incorporation | Nature of business | Proportion of ownership interests held by the Group (%) | Accounting method of investments in joint ventures and associates | |
| Directly | Indirectly | |||||
| Associates | ||||||
| Shanghai International Port (Group) Co., Ltd. | Shanghai, PRC | Shanghai, PRC | Port and container terminal business | - | 26.77 | Equity method |
(2) Financial information of material joint venture
RMB
| Item | Shanghai International Port (Group) Co., Ltd. | |
| Closing balance/2019.6.30 | Opening balance/2018.6.30 | |
| Current assets | 47,539,141,288.39 | 47,842,620,837.32 |
| Including: cash and cash equivalent | 25,364,402,311.82 | 27,935,157,994.83 |
| Non-current assets | 96,746,170,384.55 | 96,524,413,178.58 |
| Total assets | 144,285,311,672.94 | 144,367,034,015.90 |
| Current liabilities | 21,448,362,445.85 | 31,676,398,710.35 |
| Non-current liabilities | 36,362,736,405.45 | 30,340,320,855.30 |
| Total liabilities | 57,811,098,851.30 | 62,016,719,565.65 |
| Minority interests | 8,859,720,874.78 | 6,802,318,747.82 |
| Total equity attributable to shareholders of the parent company | 77,614,491,946.86 | 75,547,995,702.43 |
| Net assets calculated based on the proportion of ownership interest | 20,777,399,494.17 | 20,216,643,649.97 |
| Adjustments | ||
| - Goodwill | 2,076,585,747.12 | 2,076,585,747.12 |
| - Others | -107,548,580.88 | -105,669,326.14 |
| Carrying amounts of equity investments in Joint Ventures | 22,746,436,660.41 | 22,187,560,070.95 |
| Fair value of joint venture equity investment with public quotation | 42,301,474,108.52 | 32,129,272,123.48 |
| Operating Income | 17,198,832,228.65 | 17,509,798,030.81 |
| Net profit | 4,880,941,188.89 | 3,994,224,347.76 |
| Other comprehensive income | -20,755,561.56 | -33,691,028.03 |
| Total comprehensive income | 4,860,185,627.33 | 3,960,533,319.73 |
| Dividends received from joint ventures in the current year | 955,194,576.56 | 1,059,194,508.74 |
- 106 -
VII EQUITY IN OTHER ENTITIES - continued
2. Interests in joint ventures and associates - continued
(3) Summarized financial information of immaterial associates and joint ventures
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
| Closing balance/2019.6.30 | Opening balance/2018.6.30 | |
| Joint ventures: | ||
| Total carrying amounts of investment | 9,510,520,238.47 | 11,262,385,360.13 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 254,349,467.45 | 229,342,069.59 |
| - Other comprehensive income | - | - |
| - Total comprehensive income | 254,349,467.45 | 229,342,069.59 |
| Associates: | ||
| Total carrying amounts of investment | 16,844,307,647.78 | 15,712,222,922.46 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 376,935,222.00 | 373,902,026.45 |
| - Other comprehensive income | -51,009,353.70 | -4,420,381.69 |
| - Total comprehensive income | 325,925,868.30 | 369,481,644.76 |
(4) The long-term equity investments of the Group were not subject to restriction on disposal or
remittance of return on investments.
VIII FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank balances, notes receivable,account receivables, interest receivable, other receivables, available-for-sale financial assets,account payables, interest payable, dividends payable, other payables, other current liabilities,bonds payable and long-term payables. Details of these financial instruments are disclosed inNotes (V). The risks associated with these financial instruments and the policies on how tomitigate these risks are set out below. Management manages and monitors these exposures toensure 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.
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VIII FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
1． Risk management objectives and policies - continued
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 FCFA and HKD. Several of theGroup's subsidiaries have purchases and sales denominated in HKD while the Group's otherprincipal activities are denominated and settled in RMB. As at 30 June 2019, the balance of theGroup's assets and liabilities are both denominated in functional currency, except that balance ofassets set out below is in HKD and USD. Currency risk arising from the foreign currency balanceof assets and liabilities may have impact on the Group's performance.
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance | Opening balance |
| Cash and bank balances | 1,901,107,398.04 | 2,134,538,905.15 |
| Accounts receivable | 189,996,558.75 | 159,141,161.37 |
| Other receivables | 1,618,633,171.70 | 574,646,768.14 |
| Short-term borrowings | 1,353,835,000.00 | 1,825,358,000.00 |
| Accounts payable | 46,851,418.24 | 45,071,940.89 |
| Other payables | 536,615,622.71 | 512,625,788.26 |
| Non-current liabilities due within one year | 239,200,200.00 | 220,116,765.00 |
| Long-term borrowings | 1,793,770,925.00 | 1,926,978,130.00 |
| Bonds payable | 20,927,597,972.79 | 21,384,578,670.28 |
| Long-term payables | 422,118,000.00 | 423,754,200.00 |
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 the probable heavy loss resulted from foreign exchangerate fluctuation to be fairly low.
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 period orequity:
RMB
| Item | Changes in exchange rate | Amount incurred in the current period | Amount incurred in the previous period | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| All foreign currencies | 5% increase against RMB | -13,659,249.98 | -13,659,249.98 | -11,394,591.45 | -11,394,591.45 |
| All foreign currencies | 5% decrease against RMB | 13,659,249.98 | 13,659,249.98 | 11,394,591.45 | 11,394,591.45 |
| All foreign currencies | 5% increase against USD | 62,242.42 | 62,242.42 | 17,324.20 | 17,324.20 |
| All foreign currencies | 5% decrease against USD | -62,242.42 | -62,242.42 | -17,324.20 | -17,324.20 |
| All foreign currencies | 5% increase against HKD | -1,142,869,420.70 | -1,142,869,420.70 | -1,098,658,981.68 | -1,098,658,981.68 |
| All foreign currencies | 5% decrease against HKD | 1,142,869,420.70 | 1,142,869,420.70 | 1,098,658,981.68 | 1,098,658,981.68 |
| All foreign currencies | 5% increase against FCFA | -52,662,699.84 | -52,662,699.84 | -63,413,556.92 | -63,413,556.92 |
| All foreign currencies | 5% decrease against FCFA | 52,662,699.84 | 52,662,699.84 | 63,413,556.92 | 63,413,556.92 |
- 108 -
VIII FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
1． Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.2 Interest rate risk - changes in cash flows
Risk derived from changes in cash flows of financial instruments is mainly related to bank loanswith floating interest rate. (See Notes (V) 24 and Notes (V) 34). This Group takes the measure ofmaintaining the floating interest rate of the bank loans, as a way to reduce the interest rate riskarising from changes in fair value.
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 financialinstrument 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 recognized as hedging instrument, the fluctuations of marketinterest rate affects its fair value and interest rate hedging estimation are effective and efficient.? Market interest rate at the balance sheet date is adopted to calculate fair value changes of derivativefinancial instruments and other financial assets and liabilities under discounted cash flow method.
Given that other variables unchanged on the basis of above assumptions, the pre-tax effect on theprofit or loss for the current period from possible and reasonable changes of interest rate are asfollows:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Changes in interest rate | Amount incurred in the current period | Amount incurred in the previous period | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| Short-term & Long-term borrowings | 1% increase | -118,576,065.38 | -118,576,065.38 | -119,061,442.29 | -119,061,442.29 |
| Short-term & Long-term borrowings | 1% decrease | 118,576,065.38 | 118,576,065.38 | 119,061,442.29 | 119,061,442.29 |
1.1.3 Other price risk
Available-for-sale financial assets are measured at fair value by the Group at the balance sheetdate. Hence the Group takes risk of changes in the securities market. The Group closely monitorsthe effects of changes in the foreign exchange prices on the Group's equity investment securities.The Group has not taken any measures to reduce prices risk of equity investment securities.
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VIII FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
1． Risk management objectives and policies - continued
1.2 Credit risk
As at 30 June 2019, the Group's maximum exposure to credit risk which will cause a financialloss to the Group due to failure to discharge an obligation by the counterparties and financialguarantees issued by the Group is arising from the carrying amount of the respective recognizedfinancial assets as stated in the consolidated balance sheet. For financial instruments measured atfair 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 of eachindividual trade debt at each balance sheet date to ensure that adequate impairment losses aremade for irrecoverable amounts. In this regard, the management of the Group considers that theGroup's credit risk is significantly reduced.
The credit risk on liquid funds is limited because the counterparties are banks with high creditratings.
The Group adopted necessary policies to make sure that all clients and customers are attributedwith merit credit records.
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 utilization ofbank loans and ensures compliance with loans covenants.
The following is the maturity analysis for financial assets and financial liabilities held by theGroup which is based on undiscounted remaining contractual obligations:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Carrying amount | Total amount | Within 1 year | 1-5 years | More than 5 years |
| The non-derivative financial liabilities | |||||
| Short-term borrowings | 7,566,020,460.46 | 7,680,253,280.22 | 7,680,253,280.22 | - | - |
| Notes payable | 69,419,891.54 | 69,419,891.54 | 69,419,891.54 | - | - |
| Accounts payable | 544,188,025.02 | 544,188,025.02 | 544,188,025.02 | - | - |
| Other payables | 3,421,776,143.11 | 3,421,776,143.11 | 3,421,776,143.11 | - | - |
| Non-current liabilities due within one year | 3,674,331,926.09 | 4,796,945,410.85 | 4,796,945,410.85 | - | - |
| Other current liabilities | 1,456,067,284.82 | 1,477,688,537.01 | 1,477,688,537.01 | - | - |
| Long-term borrowings | 7,456,687,214.19 | 8,240,552,415.69 | - | 6,956,939,268.10 | 1,283,613,147.59 |
| Bonds payable | 22,057,369,574.31 | 26,085,600,005.34 | - | 17,569,337,643.53 | 8,516,262,361.81 |
| Lease liabilities | 1,740,889,561.88 | 2,667,650,055.19 | - | 1,424,484,522.95 | 1,243,165,532.24 |
| Long-term payables | 405,682,500.70 | 405,682,500.70 | - | 7,361,184.90 | 398,321,315.80 |
| The derivative financial liabilities | |||||
| Other non-current liabilities | 629,342,778.85 | 629,342,778.85 | - | 629,342,778.85 | - |
- 110 -
IX FAIR VALUE
1. Closing balance of assets and liabilities measured at fair value
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing Balance | |||
| Level 1 | Level 2 | Level 3 | Total | |
| Measurements at fair value continuously | ||||
| Other investments in equity instruments | 10,740,000.00 | - | 555,343,559.83 | 566,083,559.83 |
| Other non-current financial assets | 1,995,800,552.72 | - | 1,023,818,169.86 | 3,019,618,722.58 |
| Total assets measured at fair value continuously | 2,006,540,552.72 | - | 1,579,161,729.69 | 3,585,702,282.41 |
| Other non-current liabilities | - | - | 4,044,601,206.09 | 4,044,601,206.09 |
| Total liabilities measured at fair value continuously | - | - | 4,044,601,206.09 | 4,044,601,206.09 |
2. Basis for determining the market price measured at fair value at level I continuously
The market price of assets and liabilities measured at fair value at level I continuously isdetermined by the Shanghai stock exchange and the Stock Exchange of Hong Kong Ltd. closingprice of equity instruments at 28 June 2019.
3. Level 3 continuously fair value measure instruments, using valuation method andqualitative and quantitative information on important parameters.
RMB
| Item | Closing Balance Fair Value | Opening Balance Fair Value | Valuation method | Input |
| Other investments in equity instruments | 555,343,559.83 | 238,048,314.30 | Net assets method | Net asset value |
| Other non-current financial assets | 2,000,000.00 | 2,000,000.00 | Discounted cash flow method | Discount rate |
| Other non-current financial assets | 15,933,478.80 | 689,901.07 | Net assets method | Net asset value |
| Other non-current financial assets | 1,005,884,691.06 | 533,366,660.39 | Comparative method of listed company | Stock Price |
| Other non-current liabilities | 3,415,258,427.24 | 3,260,547,002.45 | Discounted cash flow method | Discount rate |
| Other non-current liabilities | 629,342,778.85 | 579,195,304.56 | Option pricing method | Executive price, expected volatility, etc. |
The fair value of other investments in equity instruments that are measured at fair value throughprofit or loss or other comprehensive income is determined using valuation methods such asdiscounted cash flow method, net assets method, and comparative method of listed company. Atthe time of valuation, the Group needs to estimate future cash flows, credit risk, market volatilityand correlation, select an appropriate discount rate and consider the discount premium adjustment.
4. Information of financial assets and financial liabilities that are not measured at fairvalue
Financial assets and financial liabilities that are not measured at fair value include notes andaccounts receivable, other receivables, short-term borrowings, notes and accounts payable, otherreceivables, long-term borrowings, bonds payable, long-term payables.
The management considers that the carrying amount of financial assets and liabilities measured atamortized cost is approximately equal to the fair value of financial assets and liabilities.
The fair value of note payable which has active market price should be determined by the activemarket price. The fair value of long-term borrowings, long-term payable and note payable withoutactive market price, should be determined by the net present value of cash flow stated in contractand the discount rate which has the same rank of credit.
- 111 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
1. Parent of the Company
CHINA MERCHANTS PORT GROUP CO., LTD.
Name of the parent
| Name of the parent | Related party relationship | Type of the entity | Place of incorporation | Legal representative | Nature of business | Issued share capital | Proportion of the entity's ownership interests held by the parent (%) | Proportion of the entity's voting power held by the parent (%) |
| Broadford Global Limited | Parent company | Private limited company (share limited) | Hong Kong | Deng Weidong | Investment holding | HKD21,120,986,262 | 3.08 | 87.81 (Note) |
Note: Broadford directly obtained 3.08% equity of the Company, 20.68% equity via its
subsidiary China Merchants Port Development (Shenzhen) Co., Ltd., and obtained another
64.05% equity by its subsidiary CMID.
The ultimate actual controller of the Company is CMG.
2． Subsidiaries of the Company
The general background and other related information of subsidiaries are set out in Notes (VII) 1.
3. Associates and joint ventures of the Company
The general background and other related information of the significant associates and jointventures are set out in Notes (VII) 2.
Other joint ventures or joint ventures that occurred related party transactions and formed balanceswith the Group this year are as follows:
| Name of other related parties | Relationships between other related parties and the Company |
| China Overseas Harbour Affairs (Laizhou) Co., Ltd. | Joint venture |
| China Zhanjiang Foreign Shipping Agency Co., Ltd. | Joint venture |
| Guangdong Zhanjiang Port Longteng Shipping Co., Ltd. | Joint venture |
| Guizhou East Land Port Operation Co., Ltd. | Joint venture |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Joint venture |
| Port of Newcastle and its subsidiaries | Joint venture |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Joint venture |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Joint venture |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Joint venture |
| Zhanjiang COSCO Shipping Logistics Co., Ltd. | Joint venture |
| Chu Kong River Trade Terminal Co., Ltd. | Associate Company |
| China Merchants Qianhai Chidi Industrial (Shenzhen) Co., Ltd. | Associate Company |
| Dalian Port Co., Ltd. | Associate Company |
| Great Horn Development Company FZCO | Associate Company |
| Guizhou Qiandongnan Land Port Operation Co., Ltd. | Associate Company |
| International Djibouti Industrial Parks Operation FZCO | Associate Company |
| Modern Terminals Limited | Associate Company |
| Nanshan Group and its subsidiaries | Associate Company |
| Port de Djibouti S.A. | Associate Company |
| Shanghai International Port (Group) Co., Ltd. | Associate Company |
| Shenzhen Globex e-Service Inc. | Associate Company |
| Shenzhen Qianhai Shekou Qidi Industrial Co., Ltd. | Associate Company |
| Shenzhen Qianhai Shekou Qiming Industrial Co., Ltd. | Associate Company |
| Terminal Link SAS | Associate Company |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Associate Company |
| Tin-Can Island Container Terminal Ltd | Associate Company |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Associate Company |
| Zhanjiang Merchants Port City Investment Co., Ltd. | Associate Company |
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X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
CHINA MERCHANTS PORT GROUP CO., LTD.
Name of other related parties
| Name of other related parties | Relationships between other related parties and the Company |
| Qingdao Port (Group) Co., Ltd. | minority shareholders of subsidiaries |
| Yihai Kerry | minority shareholders of subsidiaries |
| China Communications Import & Export Co., Ltd. | Controlled by the same ultimate actual controller |
| China Marine Shipping Agency Shenzhen Company Limited | Controlled by the same ultimate actual controller |
| China Merchants (Shenzhen) Power Supply Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Financial Leasing (Tianjin) Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Food Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Group Finance Company Limited | Controlled by the same ultimate actual controller |
| China Merchants Group Gangtong Development (Shenzhen) Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Landmark (Shenzhen) Co ., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Life Insurance Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Ocean Shipping Agency Shenzhen Co ., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Securities Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Steam Navigation Company Limited | Controlled by the same ultimate actual controller |
| China Merchants Trading Financial Leasing Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Zhangzhou Development Zone Co., Ltd. | Controlled by the same ultimate actual controller |
| China Ocean Shipping Agency Shenzhen | Controlled by the same ultimate actual controller |
| Cm Houlder Insurance Brokers Limited | Controlled by the same ultimate actual controller |
| CMHK | Controlled by the same ultimate actual controller |
| CMID | Controlled by the same ultimate actual controller |
| CMU | Controlled by the same ultimate actual controller |
| CSC RoRo Logistics Co., Ltd. | Controlled by the same ultimate actual controller |
| Euro Asia Dockyard Enterprise and development Ltd. | Controlled by the same ultimate actual controller |
| Guangdong Sinotrans Co., Ltd. | Controlled by the same ultimate actual controller |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Controlled by the same ultimate actual controller |
| Hoi Tung (Shanghai) Co., Ltd. | Controlled by the same ultimate actual controller |
| Huanan Refrigeration Ice Making (Shenzhen) Co., Ltd. | Controlled by the same ultimate actual controller |
| Investment Promotion Bureau Zhangzhou Development Zone Power Supply Co., Ltd. | Controlled by the same ultimate actual controller |
| Orientrue Holdings Company Limited | Controlled by the same ultimate actual controller |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Controlled by the same ultimate actual controller |
| Qingdao Sino-foreign Transport Supply Chain Management Co., Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Investment Promotion Real Estate Management Co., Ltd. | Controlled by the same ultimate actual controller |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Merchants Construction Co., Ltd. | Controlled by the same ultimate actual controller |
| Shenzhen Nanyou (Holdings) Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd | Controlled by the same ultimate actual controller |
| Sinotrans Container Lines Co., Ltd. | Controlled by the same ultimate actual controller |
| Sinotrans South China Co., Ltd. | Controlled by the same ultimate actual controller |
| Sinotrans(NZ)Limited | Controlled by the same ultimate actual controller |
| South China Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate actual controller |
| Yiu Lian Dockyards (Shekou) Limited | Controlled by the same ultimate actual controller |
| Yiu Lian Dockyards Limited | Controlled by the same ultimate actual controller |
| China Merchants Bank Company Limited | Affected significantly by the ultimate actual controller |
| Khor Ambado FZCo | Affected significantly by the ultimate actual controller |
- 113 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction
(1) Provision and receipt of services
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Related party
| Related party | Content of related party transaction | Pricing and decision-making procedures of related party transactions | Amount incurred in the current period | Amount incurred in the previous period |
| Receipt of services： | ||||
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service expenditure | Negotiation | 7,820,606.36 | 6,388,961.97 |
| Yiu Lian Dockyards Limited | Service expenditure | Negotiation | 6,657,382.97 | 4,241,187.01 |
| Investment Promotion Bureau Zhangzhou Development Zone Power Supply Co., Ltd. | Service expenditure | Negotiation | 2,489,368.18 | 2,729,422.78 |
| CM Houlder Insurance Brokers Limited | Service expenditure | Negotiation | 2,368,789.29 | 1,919,388.50 |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | Service expenditure | Negotiation | 2,318,455.39 | 1,472,625.21 |
| China Marine Shipping Agency Shenzhen Company Limited | Service expenditure | Negotiation | 1,551,472.60 | 1,864,647.00 |
| China Merchants Life Insurance Co., Ltd. | Service expenditure | Negotiation | 1,260,870.00 | - |
| China Merchants (Shenzhen) Power Supply., Ltd. | Service expenditure | Negotiation | 1,221,907.07 | - |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | Service expenditure | Negotiation | 839,712.18 | 3,573,558.17 |
| Hoi Tung (Shanghai) Co., Ltd. | Service expenditure | Negotiation | 721,332.69 | 1,520,566.07 |
| Nanshan Group and its subsidiaries | Service expenditure | Negotiation | 20,811,589.38 | 154,023.94 |
| Other related parties | Service expenditure | Negotiation | 4,223,917.12 | 3,103,481.41 |
| China Merchants Group Finance Company Limited | Interest expense | Negotiation | 22,155,171.89 | 30,007,520.45 |
| China Merchants Financial Leasing (Tianjin) Co., Ltd. | Interest expense | Negotiation | 16,845,432.46 | - |
| China Merchants Trading Financial Leasing Co., Ltd. | Interest expense | Negotiation | 5,249,947.35 | - |
| Port de Djibouti S.A. | Interest expense | Negotiation | 7,232,442.29 | 11,461,371.70 |
| China Merchants Bank Company Limited | Interest expense | Negotiation | 2,052,399.21 | 104,400.00 |
| China Merchants Steam Navigation Company Limited | Interest expense | Negotiation | - | 2,930,589.05 |
| Total | 105,820,796.43 | 71,471,743.26 | ||
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X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - continued
(1) Provision and receipt of services - continued
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Related party
| Related party | Content of related party transaction | Pricing and decision-making procedures of related party transactions | Amount incurred in the current period | Amount incurred in the previous period |
| Provision of service： | ||||
| Zhanjiang COSCO Shipping Logistics Co., Ltd. | Service revenue | Negotiation | 68,740,946.61 | - |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Service revenue | Negotiation | 23,270,413.55 | 27,383,331.91 |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Service revenue | Negotiation | 14,512,429.32 | - |
| China Ocean Shipping Agency Shenzhen | Service revenue | Negotiation | 9,625,816.92 | 14,282,554.33 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service revenue | Negotiation | 7,252,854.49 | 7,578,407.01 |
| China Zhanjiang Foreign Shipping Agency Co., Ltd. | Service revenue | Negotiation | 6,555,068.00 | - |
| China Marine Shipping Agency Shenzhen Company Limited | Service revenue | Negotiation | 4,237,100.48 | 4,783,876.73 |
| Shenzhen Globex e-Service Inc. | Service revenue | Negotiation | 3,512,554.86 | 9,628,587.49 |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Service revenue | Negotiation | 3,351,153.05 | 1,330,841.62 |
| Huanan Refrigeration Ice Making (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 3,219,796.19 | 3,177,726.28 |
| International Djibouti Industrial Parks Operation FZCO | Service revenue | Negotiation | 3,024,632.49 | 4,113,881.13 |
| Sinotrans(NZ)Limited | Service revenue | Negotiation | 2,934,349.53 | 3,333,363.12 |
| Guizhou East Land Port Operation Co., Ltd. | Service revenue | Negotiation | 2,648,998.97 | - |
| China Merchants Ocean Shipping Agency Shenzhen Co., Ltd. | Service revenue | Negotiation | 2,617,701.90 | 1,685,402.28 |
| Sinotrans Container Lines Co., Ltd. | Service revenue | Negotiation | 2,142,579.09 | 1,758,999.41 |
| Qingdao Sino-foreign Transport Supply Chain Management Co., Ltd | Service revenue | Negotiation | 2,115,762.23 | 756,572.78 |
| Khor Ambado FZCo | Service revenue | Negotiation | 1,926,229.57 | - |
| Guangdong Zhanjiang Port Longteng Shipping Co., Ltd. | Service revenue | Negotiation | 1,894,585.42 | - |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Service revenue | Negotiation | 1,813,217.20 | 1,857,964.16 |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Service revenue | Negotiation | 1,697,544.92 | 2,830,809.84 |
| Sinotrans South China Co., Ltd. | Service revenue | Negotiation | 1,649,637.78 | - |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Service revenue | Negotiation | 1,542,824.76 | 1,697,109.96 |
| Guizhou Qiandongnan Land Port Operation Co., Ltd. | Service revenue | Negotiation | 1,402,503.16 | - |
| CMHK | Service revenue | Negotiation | 1,212,000.00 | 1,600,000.00 |
| South China Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 1,172,263.27 | - |
| Yiu Lian Dockyards Limited | Service revenue | Negotiation | 1,022,126.23 | 78,003.40 |
| Terminal Link SAS | Service revenue | Negotiation | 677,993.43 | 1,032,694.97 |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Service revenue | Negotiation | 236,234.38 | 1,101,990.13 |
| Yiu Lian Dockyards (Shekou) Limited | Service revenue | Negotiation | 137,886.77 | 1,428,891.30 |
| Great Horn Development Company FZCO | Service revenue | Negotiation | 17,158.00 | 2,138,290.36 |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Service revenue | Negotiation | - | 2,484,304.00 |
| Other related parties | Service revenue | Negotiation | 5,656,891.38 | 6,727,086.41 |
| Port of Newcastle and its subsidiaries | Interest income | Negotiation | 31,081,650.64 | - |
| Zhanjiang Merchants Port City Investment Co., Ltd. | Interest income | Negotiation | 21,757,232.69 | - |
| Khor Ambado FZCo | Interest income | Negotiation | 17,843,227.14 | 23,670,141.53 |
| China Merchants Bank Company Limited | Interest income | Negotiation | 9,563,846.93 | 8,980,854.61 |
| China Merchants Group Finance Company Limited | Interest income | Negotiation | 5,065,260.89 | 2,833,812.80 |
| Modern Terminals Limited | Interest income | Negotiation | - | 1,066,665.85 |
| Other related parties | Interest income | Negotiation | 707,428.30 | 727,927.96 |
| Total | 267,839,900.54 | 140,070,091.37 | ||
- 115 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - continued
(2) Transferred assets with related parties
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Related party
| Related party | Content of related party transaction | Pricing and decision-making procedures of related party transactions | Amount incurred in the current period | Amount incurred in the previous period |
| China Merchants Qianhai Chidi Industrial (Shenzhen) Co., Ltd. | Transferred land use right and attached buildings | Negotiation | 5,693,300,571.00 | - |
(3) Leases with related parties
The Group as the lessor：
RMB
| Name of lessee | Type of leased assets | Pricing and decision-making procedures of related party transactions | Lease income recognized in the current year | Lease income recognized in the previous year |
| China Merchants Food Co., Ltd. | Buildings | Negotiation | 3,168,622.24 | - |
| Shenzhen Nanyou (Holdings) Ltd | Buildings | Negotiation | 2,633,394.00 | 1,200,285.71 |
| China Communications Import & Export Co., Ltd. | Buildings | Negotiation | 1,422,211.91 | 1,349,611.80 |
| Nanshan Group and its subsidiaries | Buildings | Negotiation | 1,148,239.51 | - |
| China Merchants Securities Co., Ltd. | Buildings | Negotiation | 1,127,724.90 | - |
| Yiu Lian Dockyards (Shekou) Limited | Buildings | Negotiation | 1,052,835.10 | 1,053,794.21 |
| Other related parties | Buildings and Land use right | Negotiation | 1,497,498.50 | 1,861,506.06 |
| Total | 12,050,526.16 | 5,465,197.78 |
The Group as the lessee:
RMB
| Name of lessor | Type of leased assets | Pricing and decision-making procedures of related party transactions | Lease payment recognized in the current year | Lease payment recognized in the previous year |
| Nanshan Group and its subsidiaries | Buildings | Negotiation | 36,977,408.65 | 32,136,749.81 |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Land use right | Negotiation | 17,518,979.49 | 20,646,048.29 |
| Euro Asia Dockyard Enterprise and development Ltd. | Buildings and Land use right | Negotiation | 6,692,164.17 | 6,285,218.70 |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | Buildings | Negotiation | 5,329,819.55 | 2,463,752.92 |
| Shenzhen Investment Promotion Real Estate Management Co., Ltd. | Buildings | Negotiation | 3,931,826.86 | 2,471,966.47 |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd | Buildings | Negotiation | 1,770,702.00 | 1,770,702.00 |
| Other related parties | Buildings, Land use right and others | Negotiation | 2,838,214.50 | 4,193,656.32 |
| Total | 75,059,115.22 | 69,968,094.51 |
- 116 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - continued
(4) The Group as the guarantor
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Warrantee
| Warrantee | Credit Line | Guarantee amount | Guarantee Starting Date | Guarantee maturity date | The guarantee has been completed |
| For the period for 1 January to 30 June 2019 | |||||
| CMA CGM S.A.(Note) | 78,737,610.08 | 78,737,610.08 | June 2013 | 2033 | No |
| CMA CGM S.A.(Note) | 10,748,375.00 | 5,266,703.75 | June 2013 | 2019 | No |
| Port de Djibouti S.A. | 343,735,000.00 | 8,077,772.50 | 14 June 2016 | 14 July 2019 | No |
| Khor Ambado FZCo | 197,991,360.00 | 75,761,819.65 | 24 May 2019 | 2032 | No |
| Total | 631,212,345.08 | 167,843,905.98 | |||
| 2018 | |||||
| CMA CGM S.A.(Note) | 82,195,789.24 | 82,195,789.24 | June 2013 | 2033 | No |
| CMA CGM S.A.(Note) | 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 July 2019 | No |
| Total | 450,337,904.21 | 118,629,805.57 | |||
Note: CMA CGM S.A. is the other shareholder of Terminal Link SAS which is our group's
associate. Our group has made a commitment for CMA CGM S.A. according to theguarantee made by CMA CGM S.A to Terminal Link SAS's bank loan and other debt. Thecommitment is limited to the 49% interest that our group has in Terminal Link SAS and thecommitment amount is RMB 84,004,313.83. If any other guarantee fees occurred, our groupwould make the compensation.
(5) Relevant party funds borrowing
RMB
| Related parties | Loan Amount | Starting date | Due date | Instructions |
| For the period from 1 January to 30 June 2019 | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 270,000,000.00 | 22 April 2019 | 21 April 2020 | Fixed Annual Interest Rate 4.35% |
| China Merchants Group Finance Company Limited | 28,000,000.00 | 15 January 2019 | 14 January 2024 | Fixed Annual Interest Rate 4.75% |
| China Merchants Group Finance Company Limited | 25,000,000.00 | 10 June 2019 | 14 January 2024 | Fixed Annual Interest Rate 4.75% |
| China Merchants Group Finance Company Limited | 20,000,000.00 | 4 June 2019 | 3 June 2020 | Fixed Annual Interest Rate 4.35% |
| Total | 343,000,000.00 | |||
- 117 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - continued
(5) Relevant Party Funds Borrowing - continued
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Related parties
| Related parties | Loan Amount | Starting date | Due date | Instructions |
| 2018 | ||||
| Borrowing | ||||
| China Merchants Group Finance Company Limited | 270,000,000.00 | 23 April 2018 | 22 April 2019 | Fixed Annual Interest Rate 4.35% |
| China Merchants Group Finance Company Limited | 220,000,000.00 | 17 May 2018 | 16 May 2019 | Fixed Annual Interest Rate 4.35% |
| China Merchants Group Finance Company Limited | 80,000,000.00 | 11 December 2018 | 10 December 2028 | Fixed Annual Interest Rate 4.802% |
| China Merchants Group Finance Company Limited | 60,000,000.00 | 19 June 2018 | 20 June 2019 | Fixed Annual Interest Rate 4.35% |
| China Merchants Group Finance Company Limited | 40,000,000.00 | 20 May 2018 | 21 May 2019 | Fixed Annual Interest Rate 4.35% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 7 December 2018 | 6 December 2019 | Fixed Annual Interest Rate 4.35% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 20 December 2018 | 19 December 2021 | Fixed Annual Interest Rate 4.275% |
| China Merchants Group Finance Company Limited | 25,000,000.00 | 6 December 2018 | 5 October 2021 | Fixed Annual Interest Rate 4.75% |
| China Merchants Group Finance Company Limited | 20,000,000.00 | 17 December 2018 | 16 December 2019 | Fixed Annual Interest Rate 4.35% |
| Total | 775,000,000.00 | |||
| Lending to | ||||
| Port of Newcastle and its subsidiaries | 784,057,712.75 | 14 June 2018 | 29 May 2020 | Fixed Annual Interest Rate 8.00% |
(6) Compensation for key management personnel
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Compensation for key management personnel | 10,650,556.67 | 11,712,686.62 |
6. Amounts due from/to related parties
(1) Amounts due from related parties
RMB
| Item | Related parties | Closing balance | Opening balance |
| Cash and bank balances | China Merchants Bank Company Limited | 1,364,931,983.97 | 1,274,536,476.91 |
| China Merchants Group Finance Company Limited | 395,263,736.99 | 494,131,151.34 | |
| Total | 1,760,195,720.96 | 1,768,667,628.25 |
- 118 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(1) Amounts due from related parties - continued
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Related parties | Closing balance | Opening balance |
| Accounts receivable | Zhanjiang COSCO Shipping Logistics Co., Ltd. | 12,924,418.96 | - |
| Shenzhen Globex e-Service Inc. | 6,394,531.11 | 7,222,351.10 | |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | 4,583,528.65 | - | |
| China Ocean Shipping Agency Shenzhen | 3,978,813.25 | 4,678,761.75 | |
| Guizhou Qiandongnan Land Port Operation Co., Ltd. | 2,982,911.32 | - | |
| Guizhou East Land Port Operation Co., Ltd. | 2,750,914.50 | - | |
| Sinotrans Container Lines Co., Ltd. | 2,638,439.03 | 1,156,769.47 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 2,080,710.00 | 5,112,134.91 | |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 1,850,127.57 | 74,485.74 | |
| Port de Djibouti S.A. | 1,747,892.48 | 6,387,923.40 | |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | 1,720,723.08 | - | |
| Great Horn Development Company FZCO | 1,503,773.75 | 1,486,615.75 | |
| China Marine Shipping Agency Shenzhen Company Limited | 1,226,060.75 | 1,115,972.50 | |
| Qingdao Sino-foreign Transport Supply Chain Management Co., Ltd | 1,069,174.15 | 66,039.36 | |
| CMHK | 1,012,000.00 | - | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 914,392.86 | 1,029,573.58 | |
| China Overseas Harbour Affairs (Laizhou) Co., Ltd. | - | 1,490,941.09 | |
| Other related parties | 6,963,416.90 | 4,498,377.10 | |
| Total | 56,341,828.36 | 34,319,945.75 | |
| Other receivables | China Merchants Qianhai Chidi Industrial (Shenzhen) Co., Ltd. | 5,240,907,829.70 | - |
| Shanghai International Port (Group) Co., Ltd. | 910,321,459.36 | 50,118,027.14 | |
| Shenzhen Qianhai Shekou Qidi Industrial Co., Ltd. | 708,835,049.08 | - | |
| Nanshan Group and its subsidiaries | 316,395,169.40 | 175,976,941.31 | |
| Shenzhen Qianhai Shekou Qiming Industrial Co., Ltd. | 99,695,266.22 | - | |
| Tin-Can Island Container Terminal Ltd | 66,901,190.73 | 128,428.02 | |
| Zhanjiang Merchants Port City Investment Co., Ltd. | 65,455,833.32 | - | |
| Chu Kong River Trade Terminal Co., Ltd | 65,141,785.00 | 59,975,890.00 | |
| Dalian Port Co., Ltd. | 46,490,179.50 | - | |
| Tianjin Haitian Bonded Logistics Co., Ltd. | 34,300,000.00 | 34,300,000.00 | |
| Port de Djibouti S.A. | 24,464,031.65 | 24,411,770.72 | |
| Port of Newcastle and its subsidiaries | 15,596,590.78 | 15,858,848.40 | |
| China Merchants Financial Leasing (Tianjin) Co., Ltd. | 10,000,000.00 | - | |
| Zhanjiang COSCO Shipping Logistics Co., Ltd. | 6,805,591.72 | - | |
| China Zhanjiang Foreign Shipping Agency Co., Ltd. | 3,428,227.26 | - | |
| Guangdong Zhanjiang Port Longteng Shipping Co., Ltd. | 3,118,014.31 | - | |
| CSC RoRo Logistics Co., Ltd. | 2,899,163.95 | 2,899,163.95 | |
| China Merchants Group Finance Company Limited | 2,813,395.83 | 2,565,333.33 | |
| Guangdong Sinotrans Co., Ltd. | 2,331,993.66 | - | |
| China Merchants Bank Company Limited | 1,670,247.99 | 69,750.00 | |
| Euro Asia Dockyard Enterprise and development Ltd. | 1,487,065.99 | 1,481,149.51 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | 900,067.18 | 1,051,801.58 | |
| Khor Ambado FZCo | 4,124.82 | 7,332,144.82 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 3,000.00 | 25,000,000.00 | |
| Zhanjiang Port (Group) Co., Ltd. | - | 9,253,682.23 | |
| Other related parties | 3,387,896.87 | 3,442,223.51 | |
| Total | 7,633,353,174.32 | 413,865,154.52 | |
| Prepayments | Hoi Tung (Shanghai) Co., Ltd. | 368,224.00 | - |
| Other current assets | Khor Ambado FZCo | - | 1,029,478,047.00 |
| Non-current assets due within one year | Port of Newcastle and its subsidiaries | 782,529,437.63 | - |
| Long-term receivables | Zhanjiang Merchants Port City Investment Co., Ltd. | 931,598,613.39 | - |
| Terminal Link SAS | 9,773,105.30 | 9,782,367.44 | |
| Port of Newcastle and its subsidiaries | - | 784,057,712.75 | |
| Total | 941,371,718.69 | 793,840,080.19 | |
| Other non-current assets | China Merchants Shekou Industrial Zone Holdings Co., Ltd. | - | 43,472,687.00 |
- 119 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Related parties | Closing balance | Opening balance |
| Short-term borrowings | China Merchants Group Finance Company Limited | 340,000,000.00 | 640,000,000.00 |
| China Merchants Bank Company Limited | 70,000,000.00 | - | |
| Total | 410,000,000.00 | 640,000,000.00 | |
| Accounts payable | Nanshan Group and its subsidiaries | 9,262,842.82 | 11,631,575.13 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 5,842,096.04 | 5,196,134.76 | |
| Euro Asia Dockyard Enterprise and development Ltd. | 3,766,222.07 | 3,698,897.16 | |
| Yiu Lian Dockyards Limited | 2,846,657.74 | 2,204,328.63 | |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | 1,061,263.18 | 928,527.51 | |
| Other related parties | 2,848,061.68 | 2,323,725.85 | |
| Total | 25,627,143.53 | 25,983,189.04 | |
| Receipts in advance | Other related parties | 61,415.00 | 66,799.01 |
| Contract liabilities | Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | 1,372,160.61 | 490,063.65 |
| Zhanjiang Port (Group) Co., Ltd. | N/A | 1,287,452.83 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 1,090,350.11 | 49,000.00 | |
| Other related parties | 2,589,340.12 | 264,520.51 | |
| Total | 5,051,850.84 | 2,091,036.99 | |
| Other payables | CMU | 484,126,088.18 | - |
| CMID | 117,851,351.28 | - | |
| China Merchants Zhangzhou Development Zone Co., Ltd. | 115,658,350.90 | 93,258,350.90 | |
| Terminal Link SAS | 85,935,090.98 | 46,506,416.54 | |
| China Merchants Group Gangtong Development (Shenzhen) Co., Ltd. | 42,280,092.00 | - | |
| Yihai Kerry | 37,402,426.09 | 37,402,426.09 | |
| Sinotrans South China Co., Ltd. | 25,949,781.00 | 25,949,781.00 | |
| Shenzhen Merchants Construction Co., Ltd. | 23,307,933.70 | 28,379,667.10 | |
| Shenzhen Investment Promotion Real Estate Management Co., Ltd. | 19,636,865.78 | 18,294,814.64 | |
| China Merchants Financial Leasing (Tianjin) Co., Ltd. | 12,500,000.00 | - | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | 9,756,730.13 | 9,355,392.43 | |
| Broadford Global Limited | 5,675,237.74 | - | |
| Qingdao Port (Group) Co., Ltd. | 2,700,000.00 | 2,700,000.00 | |
| Orientrue Holdings Company Limited. | 1,924,529.50 | - | |
| China Merchants Food Co., Ltd. | 1,254,271.10 | 1,254,271.10 | |
| Modern Terminals Limited | 866,514.37 | 1,286,962.56 | |
| China Merchants Group Finance Company Limited | 630,585.56 | 1,043,521.17 | |
| China Merchants Securities Co., Ltd. | 424,557.30 | 22,641,509.43 | |
| Port de Djibouti S.A. | - | 2,951,170.40 | |
| Other related parties | 7,289,221.64 | 6,336,740.05 | |
| Total | 995,169,627.25 | 297,361,023.41 |
- 120 -
X RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties - continued
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Related parties | Closing balance | Opening balance |
| Non-current liabilities due within one year | China Merchants Financial Leasing (Tianjin) Co., Ltd. | 140,653,619.77 | - |
| Nanshan Group and its subsidiaries | 62,038,387.48 | - | |
| China Merchants Trading Financial Leasing Co., Ltd. | 55,087,516.76 | - | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | 4,939,825.88 | - | |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd | 3,189,128.95 | - | |
| China Merchants Landmark (Shenzhen) Co., Ltd | 1,275,330.45 | - | |
| Other related parties | 277,847.90 | - | |
| Total | 267,461,657.19 | - | |
| Other current liabilities | Port de Djibouti S.A. | - | 241,927,341.05 |
| Long-term borrowings | China Merchants Group Finance Company Limited | 187,000,000.00 | 135,000,000.00 |
| Lease liabilities | China Merchants Financial Leasing (Tianjin) Co., Ltd. | 558,333,616.48 | - |
| China Merchants Trading Financial Leasing Co., Ltd. | 189,462,094.28 | - | |
| Nanshan Group and its subsidiaries | 181,020,508.23 | - | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | 2,642,533.00 | - | |
| China Merchants Landmark (Shenzhen) Co., Ltd | 1,167,962.11 | - | |
| Total | 932,626,714.10 | - |
XI COMMITMENTS AND CONTINGENCIES
1. Significant commitments
RMB
| Item | Closing balance | Opening balance |
| Capital commitments that have been entered into but have not been recognized in the financial statements: | ||
| - Commitment to acquisition of long-term assets | 5,093,759,934.19 | 3,971,730,917.34 |
| - Commitment to port construction investment | 5,499,743.65 | 5,490,560.00 |
| - Capital commitments to investee | 6,059,112,802.86 | - |
| Others | 37,011,622.22 | 26,115,744.09 |
| Total | 11,195,384,102.92 | 4,003,337,221.43 |
2. Contingencies
RMB
| Item | Closing balance | Opening balance |
| Contingent liabilities (Note 1) | 245,474,295.55 | 323,559,335.68 |
| Guarantees for associates (Note 2) | 92,082,086.33 | 118,629,805.57 |
| Total | 337,556,381.88 | 442,189,141.25 |
- 121 -
XI COMMITMENTS AND CONTINGENCIES - continued
2. Contingencies - continued
Note 1: As at 30 June 2019, the TCP Group had significant contingent liabilities arising from
pending legal proceedings in Brazil in respect of disputes with local tax authorities,employees or former employees of TCP Group and other parties, amounting toRMB245,474,295.55, which, based on the professional suggestions of lawyers employedand the latest estimates of the management of the Group, is not probable that outflows ofresources embodying economic benefits will be required to settle these obligations.Accordingly, no provision for litigation claims in respect of the above cases has been madein the condensed consolidated interim financial information. A counter indemnity in favorof the Group is executed by the Selling Shareholders pursuant to which the latter indemnifyto the Group for the above contingent liabilities for and up to predetermined amounts andspecified period.
Note 2: As at 30 June 2019, the other shareholder of an associate of which the Group held as to 49%
of its issued share capital provided corporate guarantees to the full amount for certain loanfacilities granted by banks to and other obligations borne by the relevant associate. Acounter indemnity in favor of the other shareholder of the associate is executed pursuant towhich the Group undertakes to indemnify the other shareholder 49% of the liabilities in theaggregate amount of RMB 84,004,318.83 arising from the above loan facilities and otherobligations.
In addition to above, the Group also provides guarantees for banking facilities granted to
and other obligations borne by associates of the Group. As at 30 June 2019, the total amountguaranteed by the Group is RMB 343,735,000.00 and RMB 197,991,360.00 and theaggregate amount utilized by the relevant associates amounted to RMB 8,077,772.50 andRMB 75,761,819.65 specified in Notes (X) 5.
During the year ended 30 June 2019, the directors assessed the risk of default of theassociates in serving the aforesaid loan facilities and other obligations at the end of thereporting period and considered the risk to be insignificant and it is not likely that anyguaranteed amount will be claimed.
In addition to above, no material contingencies that should be disclosed by the Group as at30 June 2019.
XII SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE NOT REQUIRED TO
BE DISCLOSED BY THE GROUP
- 122 -
XIII OTHER SIGNIFICANT EVENTS
1. Segment reporting
(1) Basis for determining and accounting treatments of reporting segments
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.
From business and financial perspectives, management assesses the performance of the Group'sbusiness operations including ports operation, bonded logistics operation, port-relatedmanufacturing 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 of the ports operation are as follows:
(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 logistic park operation, ports transportation and airport cargohandling operated by the Group and its associates.
- 123 -
XIII OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(1) Basis for determining and accounting treatments of reporting segments - continued
Other operations
Other operations mainly includes property development and investment and construction ofmodular housing operated by the Group's associate, property investment operated by the Group andcorporate function.
Each of the segments under ports operation include the operations of a number of ports in variouslocations within the geographic locations, each of which is considered as a separate operatingsegment by the CODM. For the purpose of segment reporting, these individual operating segmentshave been aggregated into reportable segments on geographic basis in order to present a moresystematic and structured segment information. To give details of each of the operating segments,in the opinion of the directors of the Company, would result in particulars of excessive length.
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 30 June 2019, around 68% of the Group's non-current assets other than financial instrumentsand deferred tax assets are located in Mainland China.
- 124 -
XIII OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information
Segment financial information for the period from 1 January to 30 June 2019 as following:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Ports operation | Bonded logistics operation | Others | Unallocated | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Revenue | 2,563,053,013.02 | - | 28,168,987.53 | 1,397,395,887.11 | 1,570,327,264.29 | 5,558,945,151.95 | 198,548,490.32 | 76,859,779.06 | - | 5,834,353,421.33 |
| Cost | 1,400,422,751.75 | - | 23,271,714.87 | 1,159,081,166.62 | 806,785,348.05 | 3,389,560,981.29 | 102,361,806.43 | 116,097,908.19 | - | 3,608,020,695.91 |
| Segment operating profit (loss) | 1,162,630,261.27 | - | 4,897,272.66 | 238,314,720.49 | 763,541,916.24 | 2,169,384,170.66 | 96,186,683.89 | -39,238,129.13 | - | 2,226,332,725.42 |
| Adjustment： | ||||||||||
| Taxes and levies | 14,890,740.27 | 494,750.94 | 758,114.34 | 20,339,076.10 | 43,955,818.52 | 80,438,500.17 | 12,314,880.14 | 3,352,242.54 | 369,888.57 | 96,475,511.42 |
| Sales expenses | - | - | - | - | - | - | - | - | - | - |
| Administrative expenses | 161,958,157.61 | 5,957,946.50 | 5,186,300.20 | 185,063,592.36 | 106,930,776.84 | 465,096,773.51 | 19,513,858.09 | 521,344.15 | 162,112,742.61 | 647,244,718.36 |
| Research and development expenses | 58,943,160.57 | - | - | 1,075,674.72 | - | 60,018,835.29 | - | - | - | 60,018,835.29 |
| Financial expenses | 76,022,722.60 | 2,384,363.06 | -207,723.17 | 31,431,701.37 | 195,392,686.45 | 305,023,750.31 | 14,138,374.06 | 18,340,276.72 | 535,607,223.79 | 873,109,624.88 |
| Impairment losses of assets | 25,051.16 | - | - | - | - | 25,051.16 | - | - | - | 25,051.16 |
| Impairment of credit loss | 8,861,023.97 | - | - | -797,113.11 | -351,250.43 | 7,712,660.43 | -13,525.65 | - | - | 7,699,134.78 |
| Other income | 25,773,703.58 | 612,499.98 | 8,502.70 | 17,999,997.79 | - | 44,394,704.05 | 18,613,866.06 | - | 10,083,935.65 | 73,092,505.76 |
| Investment income | 51,868,030.27 | 1,265,955,033.43 | 228,896,210.75 | 739,047,265.17 | 237,218,340.89 | 2,522,984,880.51 | 6,075,215.17 | 95,989,388.88 | - | 2,625,049,484.56 |
| Gains (losses) from changes in fair value | - | 415,490,444.53 | 442,610,832.66 | -21,212,710.87 | -193,261,253.31 | 643,627,313.01 | - | - | - | 643,627,313.01 |
| Gains on disposal of assets | 4,169,659,522.32 | - | - | 973,603.28 | -1,539,758.22 | 4,169,093,367.38 | 30,261.24 | - | 733,537.91 | 4,169,857,166.53 |
| Operating profit | 5,107,002,811.52 | 1,673,220,917.44 | 670,676,127.40 | 736,415,718.20 | 459,328,713.36 | 8,646,644,287.92 | 74,925,388.42 | 34,537,396.34 | -687,272,381.41 | 8,068,834,691.27 |
- 125 -
XIII OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for the period from 1 January to 30 June 2019 as following:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Ports operation | Bonded logistics operation | Others | Unallocated | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Non-operating income | 7,963,541.78 | - | 2,000.00 | 2,719,861.46 | 761,782.68 | 11,447,185.92 | 288,000.00 | 593,937.26 | 2,050,495.16 | 14,379,618.34 |
| Non-operating expenses | 1,265,551.99 | - | - | 4,472,600.79 | 1,755,221.51 | 7,493,374.29 | 13,000.00 | - | - | 7,506,374.29 |
| Gross profit | 5,113,700,801.31 | 1,673,220,917.44 | 670,678,127.40 | 734,662,978.87 | 458,335,274.53 | 8,650,598,099.55 | 75,200,388.42 | 35,131,333.60 | -685,221,886.25 | 8,075,707,935.32 |
| Income tax expenses | 1,711,420,860.56 | 100,891,127.85 | 115,853,537.85 | 14,978,469.61 | 29,679,141.77 | 1,972,823,137.64 | 17,268,718.27 | 5,515,701.82 | 22,363,192.43 | 2,017,970,750.16 |
| Net profit | 3,402,279,940.75 | 1,572,329,789.59 | 554,824,589.55 | 719,684,509.26 | 428,656,132.76 | 6,677,774,961.91 | 57,931,670.15 | 29,615,631.78 | -707,585,078.68 | 6,057,737,185.16 |
| Segment assets | 33,196,909,643.12 | 26,608,126,967.66 | 7,195,285,469.79 | 25,284,919,328.03 | 42,988,283,698.06 | 135,273,525,106.66 | 3,371,658,070.86 | 11,020,096,484.76 | 2,071,386,506.80 | 151,736,666,169.08 |
| Total assets in the financial statements | 151,736,666,169.08 | |||||||||
| Segment liabilities | 10,239,072,230.76 | 669,506,616.52 | 167,677,352.95 | 8,391,441,943.87 | 12,290,667,748.90 | 31,758,365,893.00 | 836,988,250.90 | 1,080,991,027.09 | 28,787,171,870.66 | 62,463,517,041.65 |
| Total liabilities in the financial statements | 62,463,517,041.65 | |||||||||
| Supplementary information: | ||||||||||
| Depreciation and Amortization | 445,342,347.68 | - | 1,022,915.06 | 420,194,355.28 | 389,441,606.07 | 1,256,001,224.09 | 40,232,719.84 | 87,403,323.30 | 9,878,481.58 | 1,393,515,748.81 |
| Interest income | 14,165,690.17 | 128,798.24 | 429,528.28 | 43,375,879.83 | 41,816,130.28 | 99,916,026.80 | 347,467.83 | 871,700.32 | 38,218,626.51 | 139,353,821.46 |
| Interest expense | 87,432,544.23 | 1,534,287.59 | - | 93,809,754.62 | 219,801,956.40 | 402,578,542.84 | 14,424,783.67 | 18,413,158.96 | 602,538,812.83 | 1,037,955,298.30 |
| Investment income from long-term equity investment under equity method | 51,868,030.09 | 1,227,729,204.60 | 160,833,782.63 | 16,239,015.82 | 237,218,340.89 | 1,693,888,374.03 | 6,075,215.17 | 95,989,388.88 | - | 1,795,952,978.08 |
| Long-term equity investment under equity method | 2,568,638,767.30 | 23,627,207,421.38 | 5,844,260,986.81 | 690,179,027.12 | 10,947,192,719.42 | 43,677,478,922.03 | 333,730,254.55 | 5,090,055,370.08 | - | 49,101,264,546.66 |
| Non-current assets other than long-term equity investment | 20,182,701,629.65 | 293,990,172.93 | 28,036,062.49 | 21,919,860,061.35 | 28,217,823,022.70 | 70,642,410,949.12 | 2,719,940,706.98 | 5,487,649,639.57 | 447,672,714.64 | 79,297,674,010.31 |
- 126 -
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:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Revenue from external transactions
| Revenue from external transactions | Amount incurred in the current period | Amount incurred in the previous period |
| Mainland China, Hong Kong and Taiwan | 4,260,737,809.93 | 3,252,292,659.03 |
| Pearl River Delta | 2,770,970,075.39 | 2,801,848,271.82 |
| Yangtze River Delta | - | - |
| Bohai Rim | 1,144,618,922.64 | 83,692,475.07 |
| Others | 345,148,811.90 | 366,751,912.14 |
| Other locations | 1,573,615,611.40 | 1,420,045,381.69 |
| Total | 5,834,353,421.33 | 4,672,338,040.72 |
RMB
| Non-current assets | Closing balance | Opening balance |
| Mainland China, Hong Kong and Taiwan | 87,455,212,809.70 | 73,602,488,004.01 |
| Pearl River Delta | 35,375,049,007.32 | 33,618,069,629.60 |
| Yangtze River Delta | 23,921,197,594.31 | 23,299,884,544.83 |
| Bohai Rim | 6,453,927,519.65 | 6,316,574,360.92 |
| Others | 21,705,038,688.42 | 10,367,959,468.66 |
| Other locations | 40,943,725,747.27 | 40,685,665,029.47 |
| Total | 128,398,938,556.97 | 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 RMB1,623,483,231.87, occupying 27.83% of the Group's total operating income.
2. Lease
Undiscounted lease receivable subsequent to the balance sheet date:
| Undiscounted lease receivable | 30/6/2019 |
| 1st year subsequent to the balance sheet date | 176,584,535.06 |
| 2nd year subsequent to the balance sheet date | 141,398,138.24 |
| 3rd year subsequent to the balance sheet date | 112,169,964.84 |
| 4th year subsequent to the balance sheet date | 79,064,480.80 |
| 5th year subsequent to the balance sheet date | 70,999,663.62 |
| 6th year subsequent to the balance sheet date and subsequent periods | 241,225,930.51 |
| Total | 821,442,713.07 |
Note: During the period from January 1 to June 30, 2019, the rental income was RMB
76,859,779.06; there was no income related to the variable lease payments that were notincluded in the lease receivables.
- 127 -
XIV NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS
1. Accounts receivable
(1) Accounts receivable
(a) Disclosure of accounts receivable by categories
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Categories
| Categories | Expected credit loss rate (%) | Closing balance | ||
| Carrying amount | Provision | Book value | ||
| A | 0.00-0.10 | 19,010,075.81 | - | 19,010,075.81 |
| B | 0.10-0.30 | - | - | - |
| C | 0.30-50.00 | - | - | - |
| D | 50.00-100.00 | - | - | - |
| Total | 19,010,075.81 | - | 19,010,075.81 | |
(b) As at 30 June 2019, the company has no actual write-off of accounts receivable.
(c) The top five balances of accounts receivable classified by debtor
RMB
| Name of customer | Amount | Aging | Proportion of the amount to the total accounts receivable (%) |
| Client F | 8,007,807.39 | Within 1 year | 42.12 |
| Client G | 3,096,885.40 | Within 1 year | 16.29 |
| Client H | 1,926,327.49 | Within 1 year | 10.13 |
| Client I | 1,860,980.18 | Within 1 year | 9.79 |
| Client J | 1,540,313.37 | Within 1 year | 8.10 |
| Total | 16,432,313.83 | 86.43 |
2. Other receivables
(1) Summary of other receivables
RMB
| Item | Closing balance | Opening balance |
| Interest receivable | - | - |
| Dividends receivable | 1,050,790,853.94 | 329,153,465.74 |
| Other receivables | 278,813,217.11 | 321,896,767.34 |
| Total | 1,329,604,071.05 | 651,050,233.08 |
- 128 -
XIV NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
2. Other receivables - continued
(2) Interest receivable
As at 30 June 2019, the Group has no significant overdue interest.
(3) Dividend receivable
(a) Disclosure of dividend receivable by categories
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Entities
| Entities | Closing balance | Opening balance |
| Dongguan Chiwan Wharf Co., Ltd. ("DGW") | 103,355,370.74 | 103,355,370.74 |
| CHCC | - | 96,378,106.61 |
| DGT | 88,196,930.66 | 88,196,930.66 |
| Shenzhen Chiwan Tugboat Co., Ltd | - | 21,929,842.24 |
| CMBL | 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 |
| China Merchants Port Holdings Co., Ltd. | 843,531,432.54 | - |
| Total | 1,050,790,853.94 | 329,153,465.74 |
| Net: provision of credit loss | - | - |
| Book value | 1,050,790,853.94 | 329,153,465.74 |
(b) Significant dividend receivable aging more than one year
| Item | Closing balance | Outstanding Reason | Provision or not |
| Dongguan Chiwan Wharf Co., Ltd. ("DGW") | 103,355,370.74 | Working on and expected to be received by the end of 2019 | No |
| DGT | 88,196,930.66 | Working on and expected to be received by the end of 2019 | No |
(4) Other receivables
(a) Disclosure of other receivables by categories
As a part of cooperate credit risk management, the company rank the credit risk of its client, anddetermine the average expected loss rate of each internal credit rating level. These averageexpected loss rates are determined by considering the historical actual loss and the current andfuture economic situation.
- 129 -
XIV NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
2. Other receivables - continued
(4) Other receivables - continued
(a) Disclosure of other receivables by categories - continued
As at 30 June 2019, the credit risk and expected credit loss of other receivables of each categoryof customers are presented as below:
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Internal credit rating
| Internal credit rating | Expected Loss Rate (% ) | Closing balance | |||
| 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 | 278,813,217.11 | - | - | 278,813,217.11 |
| B | 0.10-0.30 | - | - | - | - |
| C | 0.30-50.00 | - | - | - | - |
| D | 50.00-100.00 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount | 278,813,217.11 | - | 383,456.60 | 279,196,673.71 | |
| Provision of credit loss | - | - | 383,456.60 | 383,456.60 | |
| Book value | 278,813,217.11 | - | - | 278,813,217.11 | |
(b) Changes in provision for credit loss of other receivables
RMB
| Aging | Amount incurred in the current period | |||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | |
| 31 December 2018 | - | - | 383,456.60 | 383,456.60 |
| Provision for expected credit loss for the period | - | - | - | - |
| Reversal of expected credit loss for the period | - | - | - | - |
| Effect of changes in the scope of consolidation | - | - | - | - |
| Effect of changes in foreign exchange | - | - | - | - |
| 30 June 2019 | - | - | 383,456.60 | 383,456.60 |
(c) Disclosure of other receivables by nature
RMB
| Item | Closing balance | Opening balance |
| Amounts due from related parties | 273,500,000.00 | 316,567,355.24 |
| Temporary payments | 2,898,097.38 | 4,785,167.82 |
| Deposits | 374,358.71 | 372,042.31 |
| Others | 2,424,217.62 | 555,658.57 |
| Total | 279,196,673.71 | 322,280,223.94 |
| Net: provision of credit loss | 383,456.60 | 383,456.60 |
| Book value | 278,813,217.11 | 321,896,767.34 |
- 130 -
XIV NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
2. Other receivables - continued
(4) Other receivables - continued
(d) There is no other receivables write-off during this year.
(e) The top five balances of other receivables classified by debtor
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Entities
| Entities | Nature of the fund | Closing balance | Aging | Proportion of the amount to the total other receivable (%) | Closing balance of provision for credit loss |
| DGT | Loan to related parties | 139,000,000.00 | Within 1 year | 49.79 | - |
| Dongguan Chiwan Wharf Co., Ltd. ("DGW") | Loan to related parties | 134,500,000.00 | Within 1 year | 48.17 | - |
| Chiwan Wharf Holdings (Hong Kong) Limited | Temporary payments | 2,993,398.32 | Within 1 year, more than 1 year but not exceeding 2 years and more than 3 years | 1.07 | - |
| CCT | Temporary payments | 736,080.69 | Within 1 year | 0.26 | - |
| CHCC | Temporary payments | 320,239.46 | Within 1 year | 0.11 | - |
| Total | 277,549,718.47 | 99.40 | - |
- 131 -
XIV NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS - continued
3. Long-term equity investments
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Investees
| Investees | Opening balance | Changes | Closing balance | Closing balance of provision for impairment | |||||||
| Increase | Decrease | Investment income under equity method | Reconciling items from other comprehensive income | Other equity movements | Cash dividends or profits announced of issuance | Provision for impairment | Others | ||||
| I. Subsidiaries | |||||||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | 5,500,000.00 | - | - | - | - | - | - | - | - | 5,500,000.00 | - |
| CHCC | 250,920,000.00 | - | - | - | - | - | - | - | - | 250,920,000.00 | - |
| Shenzhen Chiwan Port Development Co., Ltd.(Note) | 7,000,000.00 | 10,825,000.00 | - | - | - | - | - | - | - | 17,825,000.00 | - |
| Chiwan Wharf Holdings (Hong Kong) Limited | 1,070,000.00 | - | - | - | - | - | - | - | - | 1,070,000.00 | - |
| Shenzhen Chiwan Tugboat Co., Ltd | 24,000,000.00 | - | - | - | - | - | - | - | - | 24,000,000.00 | - |
| CCT | 421,023,199.85 | - | - | - | - | - | - | - | - | 421,023,199.85 | - |
| Dongguan Chiwan Wharf Co., Ltd. ("DGW") | 186,525,000.00 | - | - | - | - | - | - | - | - | 186,525,000.00 | - |
| DGT | 175,000,000.00 | - | - | - | - | - | - | - | - | 175,000,000.00 | - |
| Chiwan Shipping (Hong Kong) Limited | 1,051,789.43 | - | - | - | - | - | - | - | - | 1,051,789.43 | - |
| China Merchants Port Holdings Co., Ltd. | 26,170,129,771.99 | - | - | - | - | - | - | - | - | 26,170,129,771.99 | - |
| China Merchants Port (Zhoushan) Roller Loading Logistics Co., Ltd. | 149,709,800.00 | - | - | - | - | - | - | - | - | 149,709,800.00 | - |
| Subtotal | 27,391,929,561.27 | 10,825,000.00 | - | - | - | - | - | - | - | 27,402,754,561.27 | - |
| II. Associates | |||||||||||
| China Merchants Holdings (International) Information Technology Co., Ltd. | 18,274,568.38 | - | - | 1,153,368.00 | - | - | - | - | - | 19,427,936.38 | - |
| CMBL | 340,500,382.73 | - | - | 14,804,000.00 | - | - | - | - | - | 355,304,382.73 | - |
| Subtotal | 358,774,951.11 | - | - | 15,957,368.00 | - | - | - | - | - | 374,732,319.11 | - |
| III. Joint ventures | |||||||||||
| China Overseas Harbour Affairs (Laizhou) Co., Ltd. | 793,557,064.58 | - | - | 21,889,138.83 | - | - | 43,605,689.02 | - | - | 771,840,514.39 | - |
| Total | 28,544,261,576.96 | 10,825,000.00 | - | 37,846,506.83 | - | - | 43,605,689.02 | - | - | 28,549,327,394.77 | - |
Note: On 19 April 2019, 25% shares of Shenzhen Chiwan Port Development Co., Ltd. (formerly known as "Shenzhen Chiwan Transportation Co.,
Ltd.") held by Chiwan Wharf Holdings (Hong Kong) Limited were transferred to the Company at the consideration of RMB 10,825,000.00.
- 132 -
XIV NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
4. Operating income and operating costs
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the previous period | ||
| Income | Cost | Income | Cost | |
| Principal operating | 75,059,363.04 | 71,586,188.10 | 106,838,899.78 | 66,399,384.51 |
| Other operating | 14,717,425.25 | 552,302.90 | 12,584,077.69 | 504,701.81 |
| Total | 89,776,788.29 | 72,138,491.00 | 119,422,977.47 | 66,904,086.32 |
5. Investment income
(1) Details of investment income
RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Income from long-term equity investments under cost method | 948,667,473.38 | - |
| Income from long-term equity investments under equity method | 37,846,506.83 | 37,627,300.00 |
| Income from Other investments in equity instruments | - | 7,788,975.00 |
| Total | 986,513,980.21 | 45,416,275.00 |
(2) Income from long-term equity investments under cost method
RMB
| Investee | Amount incurred in the current period | Amount incurred in the previous period | Reasons for increases or decreases in the current compared to the prior period |
| CCT | 105,136,040.84 | - | The profits distributed by investee fluctuate |
| China Merchants Port Holdings Co., Ltd. | 843,531,432.54 | - | The profits distributed by investee fluctuate |
| Total | 948,667,473.38 | - |
SUPPLEMENTARY INFORMATIONFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2019
1. BREAKDOWN OF EXTRAORDINARY GAINS AND LOSSES
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amounts | Remarks |
| Gains or losses on disposal of non-current assets | 4,169,857,166.53 | |
| 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) | 73,405,505.76 | |
| Money lending income earned from non-financial institutions in profit or loss | 25,804,391.08 | |
| 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 or losses on changes in the fair value of financial assets and financial liabilities held for trading and investment income on disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets, other than the effective hedging activities relating to normal operating business | 643,627,313.01 | |
| Reversal of provision for accounts receivable that are tested for credit loss individually | 876,952.77 | |
| 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 | 6,560,244.05 | |
| Other profit or loss that meets the definition of non-recurring profit or loss(Note) | 722,688,249.35 | |
| Tax effects | -1,208,157,505.65 | |
| Effects of minority interest (after tax) | -2,704,886,316.38 | |
| Total | 1,729,776,000.52 |
Note: The amount is mainly due to profit or loss arising from the fair value adjustment of the original
long term investment of Zhanjiang Port (Group) Co., Ltd.
SUPPLEMENTARY INFORMATIONFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 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.
RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Weighted average return on net assets (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit for the current period attributable to ordinary shareholders | 7.2441 | 1.2820 | 1.2820 |
| Net profit attributable to ordinary shareholders after deducting extraordinary gains and losses | 1.7940 | 0.3175 | 0.3175 |