ANNUAL REPORT 2019
Date of disclosure: 16 April 2020
China Merchants Port Group Co., Ltd. Annual Report 2019
Chairman’s Statement
Dear shareholders,I hereby present to you the annual report of China Merchants Port Group Co., Ltd. and its subsidiaries(the “Company”) for the year ended 31 December 2019. On behalf of the Board, I would like toexpress my sincere gratitude to all of you for your long-term support to the Company.The Company is a crucial vehicle for CMG to implement the “Belt and Road” Initiative promoted byChina and the “Guangdong-Hong Kong-Macao Greater Bay Area” strategy. The Company is also theheadquarters of CMG’s port sector and the operating and management platform for the port assetsand tier one capital of CMG which plays a key role in the consolidation and synergistic developmentof CMG’s port assets, and has become the world’s leading port investor, developer and operator.Looking ahead, the Company will take actions and strive to be a world-class comprehensive portservice provider. While expanding the port ecosystem with a focus on core port businesses andpromoting the construction of “Intelligent Port” under the guidance of technology innovation; it willproactively take part in international port investment, development and operation, so as to optimizethe port network system on a continuous basis and achieve balanced development on a regional level.By offering professional top-notch solutions, it will become customers’ partner of choice forcooperation, which will create greater value for the Company, enhance return for shareholders andcontribute to the healthy development of the port industry and the continuous growth of the globaltrade.Review for the yearIn 2019, the global economy sustained a slow growth in general with weakened momentum in themanufacturing industry and global trade, and unilateralism and trade protectionism continued to bringuncertainties to the global trade, posing challenges to the daily operation of enterprises. Confrontedwith the complex and turbulent external environment, the Company firmly adhered to the strategicprinciple of “leveraging on its long-term strategy, tapping the current edges, driving throughtechnology and embracing changes”. The Company also pursued various tasks in a steady mannerwith a focus on the governance of the listed company, the construction of homebase port, merger andacquisitions, comprehensive development, operation management and business innovation,successfully accomplishing its strategic goals and various operational objectives of the year.In terms of port operation, changes in global trade situation have affected the port industry, but theoverall operating performance of the Company was satisfactory. In 2019, the container port businessdelivered a container throughput totaled 112.93 million TEUs, up 2.9% year-on-year. Looking intothe regional performance, container throughput handled by the Company’s ports in Mainland Chinatotaled 84.88 million TEUs, up 4.3% year-on-year. Ports in Hong Kong and Taiwan handled acombined container throughput of 7.21 million TEUs, down 6.1% year-on-year, while overseasoperations handled a total bulk cargo volume of 20.84 million TEUs, up 0.9% year-on-year. Bulkcargo volume handled by the Company’s ports decreased by 8.9% year-on-year to 490 million tonnes,among which the Company’s ports in Mainland China handled a total bulk cargo volume of 480million tonnes, representing a decrease of 9.3% year-on-year, which was mainly affected by factorssuch as the international trade friction, the African Swine Fever and the adjustment of the supplystructure of certain enterprises, while that of overseas port projects increased by 26.1% to 6.29 milliontonnes, which was mainly benefited from the business growth in PDSA in Djibouti and HIPG in Sri
China Merchants Port Group Co., Ltd. Annual Report 2019
Lanka. Among the major ports, container throughput handled in West Shenzhen Port Zone in Chinawas 11.42 million TEUs, up 0.7% year-on-year. SIPG handled a container throughput of 43.30million TEUs, representing a year-on-year increase of 3.1%. For overseas projects, CICT in Sri Lankadelivered a year-on-year growth of 7.4% by handling a container throughput of 2.88 million TEUs.LCT in Togo handled a container throughput of 1.13 million TEUs, representing a growth of 7.7%year-on-year. Kumport in Turkey handled a container throughput of 1.28 million TEUs, representinga growth of 1.9% year-on-year. Terminal Link SAS (TL) handled a container throughput of 13.25million TEUs in the year, down 2.8% year-on-year. TCP in Brazil handled an annual containerthroughput of 0.92 million TEUs, up 32.0% as compared to that of March to December in 2018.In terms of key priorities, firstly, the development of the governance system of the listed companyhas been pushed forward in an orderly manner. In order to continually optimize the governancesystem of the listed company and consolidate the anchor role of standardized operation, wecapitalized on the ancillary financing opportunity to introduce two strategic investors, namely, China-Africa Development Fund and Shenzhen Infrastructure Investment Fund, and thus effectivelyimproved such system and contributing to increasingly improving corporate governance system.Secondly, the construction of domestic and overseas homebase ports has been steadily pushedforward. In order to step up the efforts in promoting the construction of a world-class domestichomebase port, we promoted the steady improvement in the competitiveness of West Shenzhen PortZone through channels dredging, the integration of operations and the optimization of the customsclearance procedures in West Shenzhen Port Zone. In addition, we worked aggressively on promotingoverseas homebase ports construction and leading regional port construction in South Asia byaccelerating the output of management experience and improving the comprehensive servicecapabilities of both CICT and HIPG. Thirdly, the consolidation of domestic ports has achievedremarkable progress. In line with the national strategy, we not only capitalized on the restructure andconsolidation of domestic and overseas ports to obtain effective control over Zhanjiang Port uponcompletion of capital injection, but also facilitated the robust progression of management tasksentrusted by Liaoning Port Group and thus built a north-south port connection system. Fourthly,substantial progress has been achieved in terms of overseas expansion. Adhering to the “Belt andRoad” initiative promoted by China, we kept abreast of new changes in international trade landscape,capitalized on opportunities presented by the restructuring of competitive landscape in global portand shipping industry and devoted great efforts to facilitate the merger and acquisition of overseasprojects with a view to optimizing our global layout. Furthermore, we entered into formal agreementswith CMA CGM for the acquisition of equity interests in up to 10 quality terminals under CMA CGMthrough TL and successfully introduced two strategic investors for TCP in Brazil. Fifthly, thecomprehensive development has been pushed forward steadily. With dedication to explore innovation,the Company deepened the development of the comprehensive development model of “Port-Park-City”, and hence realized preliminary progress in Djibouti International Free Trade Zone and HIPGand other comprehensive development projects. Sixthly, fruitful results have been achieved ininnovative development. The Company actively implemented the “digitalisation strategy” andconstantly promoted the establishment of “CM ePort” platform. Mawan Intelligent Port project andthe automatic loading and unloading project at large bulk and general cargo terminal in ZhanjiangPort were well underway. Blockchain electronic invoices have been successfully promoted andapplied. The “5G intelligent port innovation laboratory” was established with concerted efforts ofleading enterprises such as China Mobile, Huawei and others. The Company officially establishedthe “Development and Research Center of CMPort”, which marked the completion of the industrydevelopment platform empowered by technology. The industrial fund, which focuses on investmentsin innovative development of ports, will be launched in the near term.Outlook
China Merchants Port Group Co., Ltd. Annual Report 2019
Looking forward into 2020, factors such as trade friction and geopolitical disputes, coupled with thespread of COVID-19 epidemic, will cast uncertainties to global economic and trade prospects. Themomentum of global economic recovery remains weak and global economic growth will face thepressure of slowdown in general. The developed economies will continue to experience a slowdownof economic growth. Emerging economies are expected to see a rebound in economic growth in 2020,despite the increasing uncertainties arising from the global pandemic. China’s economy will facepressure in the short run due to the COVID-19 epidemic. Nonetheless, as the epidemic is beingeffectively controlled and enterprises have been successively resuming operations and production inan orderly manner, the impact on China’s economy will be limited in the mid-to-long term andChina’s economy is projected to maintain growth momentum at a reasonable pace in 2020. Drivingfactors such as the globalization of the financial market, opening-up of the service sector, and theupgrading of consumption will bring opportunities to both China and the global economy. At thesame time, industry consolidation will create opportunities, and digitization and technologicalinnovation will also bring opportunities for industrial development. The Company will firmly adhereto the overall operation philosophy of “making progress amid stability”, consistently implement thenew development concepts and insist on the strategic principle of “leveraging on its long-termstrategy, tapping the current edges, driving through technology and embracing changes” and adhereto the dual core driving force of “marketization + digitization”, while taking the initiatives to respondactively and making breakthroughs on key missions, exploring potential in the process of reform andinnovation and launching new territories in a positive and aggressive manner so as to consistentlystrengthen the organic momentum for corporate development with an aim to sustain quality growthand strive to create better return for shareholders. In 2020, the Company will focus on the followingtasks:
Firstly, we will facilitate the building of domestic and overseas homebase ports. Regarding thedomestic West Shenzhen homebase port, we will step up our efforts in marketing and commerce. TheCompany will actively expand ocean-going routes and stabilize near-ocean routes so as to maintainhealthy growth of domestic export business and strive to increase import volume. We will enhanceour marketing efforts in shipping companies and cargo owners by providing customized services andproducts. The Company will improve the standard of its feeder services, promote paperlesswaterborne customs transit and optimize the platform for the “Western Pearl River Delta Strategy”.Also, the Company will establish an innovative intelligent corridor of Mawan Intelligent Port. CTOSwill be upgraded to enable the introduction of big data mechanism and cloud storage. We will alsooptimize the channels in West Shenzhen Port Zone. To support the transformation plan of HaixingPort, the Company will complete the delivery and acceptance of section 2 and 3 of the Public Channeloutside West Shenzhen Port Zone, realise regular night services of Tonggu Channel and expedite theconstruction of phase II of the seaward channel of West Shenzhen Port Zone. With regard to theoverseas homebase ports in Sri Lanka, we will analyze customer values on an on-going basis andimprove the synergies between CICT and HIPG business, push forward work in relation to qualityand efficiency enhancement and explore potential competitiveness of production capacity of variousterminals, thereby improving the competitiveness of regional markets. It will also optimize theincentive mechanism for innovation to encourage all staff to participate in innovation and expand thechannels for innovation. The Company will provide value-added port services to facilitate work inrelation to the induction of investment for the port’s logistics park. While promoting the localizationof projects, we will facilitate the development of various businesses based on the industrial layoutalongside the ports.Secondly, we will optimize the port layout and improve the operating management and controlcapability of overseas ports. The Company will continue to capitalize on the opportunities arisingfrom the “Belt and Road” initiative promoted by China and the international industrial transfers, atthe same time adapting to the trend of deploying mega-vessels and forming shipping alliances. The
China Merchants Port Group Co., Ltd. Annual Report 2019
Company will grasp opportunities in port, logistics and related infrastructures investment for the on-going enhancement of its global port network. The Company will enhance the development ofoverseas system and cultivate teams of overseas talent with a focus on improving the operationalperformance and management capability of overseas ports.Thirdly, the Company will strengthen the technology-driven approach to create a port ecosystem fortechnological innovation. Through the Development and Research Center of CMPort and with the“empowerment of technology”, the Company will integrate the port ecosystem with technologicalinnovation to optimise, complement and improve its comprehensive port service model, therebysupporting the development of the Company in the long run. We will extend our business to theupstream and downstream of the industrial chain and value chain through innovation of businessmodel with a view to cultivating ports to support new business. We will also enhance the operatingeffectiveness and efficiency of inventory assets through technological and management innovation,improve the internal intelligent production and operation of ports and terminals via the “CM Chip”platform and provide high-caliber customer services in ports and terminals via the “CM ePort”platform, thus building a world-class information team through integrating CMPort’s informationresources and leveraging both internal and external efforts, so as to consolidate our informationcapability.Fourthly, we will promote comprehensive port development and implement the “Port-Park-City”business model at home and abroad. Regarding the HIPG, the Company will explore and carry outvalue-added port services, expand its oil and gas business, container business and maritime services,as well as facilitate the work in relation to the introduction of investment and capital for the port’slogistic park and the localization of the projects. Regarding the Djibouti comprehensive developmentproject, we will devote greater efforts in the cultivation of the market development team to enhancemarket development. The Company will establish high-quality management system to vigorouslyimprove operational efficiency, deepen strategic coordination and innovate financing model so as toestablish a first-class free trade zone in Africa. Regarding Zhanjiang Port, we will build a bulkcommodity trading center and adopt new business models such as import of frozen goods and bondedtransfer of crude oil futures.Fifthly, the Company will strive to develop an operation management system for sustainable valuecreation. Through benchmarking against the leading enterprises in the world, the Company willanalyze the major issues and weaknesses in operation management and formulate targetedbenchmarking measures to gradually enhance various operation management indictors, therebypromoting the establishment a world-class operation management system. The Company willsystematically push forward the “Project of Improving Quality and Efficiency” in full swing with afocus on enhancing operational efficiency and deepening refined corporate management, so as tofacilitate the release of potential of the companies and thus realise high-quality corporate development.The Company will also proactively promote the optimization of control measures by reinforcing theheadquarters’ strategic leadership to empower the subsidiaries in full swing and thus improveoperating efficiency, gain better understanding and strengthen collaboration, and, at the same time,provided appropriate authorization for enterprises at different levels based on the principle ofmaintaining risks under control to enhance their flexibility and hence increase their efficiency ofmanagement and control.AppreciationMr. Fu Gangfeng ceased to be the Chairman of the Board and the Executive Director of the Companysince 31 January 2020 and I was appointed by the Board of Directors of the Company as the Chairmanof the Board with effective on 3 February 2020. During his tenure, Mr. Fu Gangfeng has devotedgreat efforts and commitment to the Company’s development and made significant contributions. On
China Merchants Port Group Co., Ltd. Annual Report 2019
behalf of the Board, I would like to express the sincere gratitude to Mr. Fu Gangfeng and wish himgreat success in the new position.In 2019, facing with the complex environment and various risks and challenges, the Companyadhered to its strategic directives and took the initiatives to embrace changes, and thus recordedpositive results for various tasks and its operating results have been growing steadily. All of thosecould not be accomplished without the dedication from all of our staff and the support from ourshareholders and investors, business partners and those in the society who have taken to heart theCompany’s interest. For this, I would like to extend my most sincere appreciation and deepestgratitude.
Deng RenjieChairman
China Merchants Port Group Co., Ltd. Annual 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. (hereinafterreferred to as the “Company”) hereby guarantee the factuality, accuracy and completeness ofthe contents of this Report and its summary, and shall be jointly and severally liable for anymisrepresentations, misleading statements or material omissions therein.Bai Jingtao, the Company’s legal representative, Wen Ling, the Company’s Chief FinancialOfficer, and Sun Ligan, the person-in-charge of the accounting organ hereby guarantee that thefinancial statements carried in this Report are factual, accurate and complete.All the Company’s directors have attended the Board meeting for the review of this Report andits summary.Any forward-looking statements such as future plans or development strategies mentionedherein shall not be considered as the Company’s promises to investors. And investors arereminded to exercise caution when making investment decisions. Possible risks faced by theCompany and countermeasures have been explained in “Part IV Operating PerformanceDiscussion and Analysis” herein, which investors are kindly reminded to pay attention to.Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by theCompany for information disclosure. And all information about the Company shall be subjectto what’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention to.The Board has approved a final dividend plan as follows: based on 1,922,365,124 shares, a cashdividend of RMB4.60 (tax inclusive) per 10 shares is to be distributed to shareholders, with nobonus issue from either profit or capital reserves.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versions shallprevail.
China Merchants Port Group Co., Ltd. Annual Report 2019
Table of Contents
Chairman’s Statement ...... 2
Part I Important Notes, Table of Contents and Definitions ...... 7
Part II Corporate Information and Key Financial Information ...... 11
Part III Business Summary ...... 17
Part IV Operating Performance Discussion and Analysis ...... 24
Part V Significant Events ...... 51
Part VI Share Changes and Shareholder Information ...... 89
Part VII Preferred Shares ...... 99
Part VIII Convertible Corporate Bonds ...... 100
Part IX Directors, Supervisors, Senior Management and Staff ...... 101
Part X Corporate Governance ...... 113
Part XI Corporate Bonds ...... 128
Part XII Financial Statements (See attached) ...... 129
Part XIII Documents Available for Reference ...... 130
China Merchants Port Group Co., Ltd. Annual Report 2019
Definitions
| Term | Definition |
| The “Company”, “CMPort” or “we” | China Merchants Port Group Co., Ltd., formerly known as “Shenzhen Chiwan Wharf Holdings Limited” |
| Chiwan Wharf | Shenzhen Chiwan Wharf Holdings Limited (stock name: Chiwan Wharf, Chiwan Wharf-B; stock code: 000022, 200022) |
| 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) |
| Broadford Global | Broadford Global Limited, a wholly-owned subsidiary of CMG Hong Kong |
| CMGD | China Merchants Gangtong Development (Shenzhen) Co., Ltd., a Broadford Global majority-owned subsidiary in Shenzhen |
| CWH (H.K.) | Chiwan Wharf Holdings (Hong Kong) Limited |
| Sinotrans Guangdong | Sinotrans Guangdong Co., Ltd. |
| Zhanjiang Infrastructure Investment | Zhanjiang Infrastructure Construction Investment Group Co., Ltd. |
| 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. |
| Malai Storage | Shenzhen Malai Storage Co., Ltd. |
| KFEL | Keen Field Enterprises Limited |
| CM Qianhai Industrial | Shenzhen China Merchants Qianhai Industrial Development Co., Ltd. |
| CMI | China Merchants Investment Limited |
| SZPL | Shenzhen Urban Planning and Land Resources Committee |
| Antongjie | Antongjie Terminal Services (Shenzhen) Co., Ltd. |
| Ansujie | Ansujie Terminal Services (Shenzhen) Co., Ltd. |
| CM Chidi | Shenzhen China Merchants Qianhai Chidi Industrial Co., Ltd. |
| Qianhai Investment Holdings | Shenzhen Qianhai Development Investment Holdings Co., Ltd. |
| Qianhai Hongyu | Shenzhen Qianhai Hongyu Industrial Investment Co., Ltd. |
| Shekou Asset Management | Shenzhen China Merchants Shekou Asset Management Co., Ltd. |
| Qianhai Free Trade | Shenzhen Qianhai Free Trade Investment Development Co., Ltd. |
| Cheer Signal | Cheer Signal Investment Limited |
| SIPG | Shanghai International Port (Group) Co., Ltd. |
| Zhanjiang Port | Zhanjiang Port Group Co., Ltd. |
| Xiamen Port | Zhangzhou China Merchants Xiamen Port Affairs Co., Ltd. |
| CCT | Chiwan Container Terminal Co., Ltd., a majority-owned subsidiary of the Company |
| Kumport | Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi |
| Port of Newcastle | Port of Newcastle |
| TCP | TCP Participa??es S.A |
China Merchants Port Group Co., Ltd. Annual Report 2019
| CICT | Colombo International Container Terminals Ltd. |
| PDSA | Port de Djibouti S.A. |
| HIPG | Hambantota International Port Group |
| Haixing Harbor | Shenzhen Haixing Harbor Development Co., Ltd. |
| Dalian Port | Dalian Port (PDA) Company Limited |
| The “Assets Purchase via Share Offering” | Chiwan Wharf’s purchase of 1,313,541,560 ordinary CMPort Holdings shares from CMID via share offering |
| The “Transaction” or “Restructuring” | The transaction plan includes three parts: (1) Chiwan Wharf intends to issue A-shares to CMID for the acquisition of the 1,313,541,560 CMPort Holdings ordinary shares that CMID holds (approximately 39.51% of CMPort Holdings’ outstanding ordinary shares). (2) CMG Hong Kong and Chiwan Wharf signs an Acting in Concert Agreement. According to the agreement, upon the completion of the assets purchase via share offering, CMG Hong Kong shall vote according to Chiwan Wharf’s opinion unconditionally on matters to be voted on at CMPort Holdings’ general meetings in regard with the voting right of the 753,793,751 CMPort Holdings ordinary shares (approximately 22.67% of CMPort Holdings’ outstanding ordinary shares) that CMG Hong Kong has been entrusted to exercise. (3) Chiwan Wharf intends to raise matching funds of no more than RMB4 billion from no more than 10 certain investors via an offering of no more than 128,952,746 A-shares through enquiry. |
| SASAC of the State Council | State-Owned Assets Supervision and Administration Commission of the State Council |
| CSRC | China Securities Regulation Commission |
| Shenzhen CSRC | Shenzhen Bureau of China Securities Regulatory Commission |
| SZSE | Shenzhen Stock Exchange |
| The “Company Law” | The Company Law of the People’s Republic of China |
| The “Securities Law” | The Securities Law of the People’s Republic of China |
| 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 |
| CM ePort | The wharf e-commerce platform, i.e. the unified customer service platform |
| EDI | Electronic Data Interchange |
| 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. Annual Report 2019
Part II Corporate Information and Key Financial InformationI 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. | 招商港口 | ||
| Company name in English (if any) | China Merchants Port Group Co., Ltd. | ||
| Abbr. (if any) | CMPort | ||
| Legal representative | Bai Jingtao | ||
| Registered address | 23-25/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | ||
| Zip code | 518067 | ||
| Office address | 23-25/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | ||
| Zip code | 518067 | ||
| Company website | http://www.cmp1872.com | ||
| Email address | Cmpir@cmhk.com | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Huang Chuanjing | Hu Jingjing |
| Address | 24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | 24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC |
| Tel. | +86 755 26828888 | +86 755 26828888 |
| Fax | +86 755 26886666 | +86 755 26886666 |
| Email address | Cmpir@cmhk.com | Cmpir@cmhk.com |
III Media for Information Disclosure and Place where this Report Is Lodged
| Newspapers designated by the Company for information disclosure | Securities Times, Ta Kung Pao |
| Website designated by CSRC for publication of this Report | http://www.cninfo.com.cn |
| Place where this Report is lodged | Board Office |
China Merchants Port Group Co., Ltd. Annual Report 2019
IV Change to Company Registered Information
| Unified social credit code | 91440300618832968J |
| Change to principal activity of the Company since going public (if any) | On 14 December 2018, the Company changed its business scope registered with the industrial and commercial administration. The new business scope includes: construction, management and operation of ports and wharves; bonded warehousing of various goods for import and export; development, construction and operation of supporting parks in ports; loading, unloading, transshipment, warehousing and transportation of international and domestic goods and processing of goods; devanning and LCL operations, cleaning, repair, manufacturing and leasing of containers; international freight forwarding; vehicle and ship leasing; the provision of ship and port services including the provision of fuels, supplies and daily necessities for ships; ship towing (no operation using foreign ships); leasing and repair services of port facilities, equipment and machinery; import and export of various goods and technologies on a self-operation or agency basis, excluding the goods and technologies restricted or forbidden for import and export by the state; port logistics and port information technology consulting services; technical development and services in respect of modern logistics information systems; supply chain management and related services; design of logistics plans; engineering project management; development, research and consulting services in respect of port engineering technologies. (In respect of any operations that require approval according to law, the approval must be obtained before operation). |
| Every change of controlling shareholder since incorporation (if any) | 1. On 8 June 2018, as the ownership of 209,687,067 Chiwan Wharf shares formerly held by CND Group and 161,190,933 Chiwan Wharf shares formerly held by Malai Storage was officially transferred to CMGD, CMGD, holding 57.52% of the Company’s outstanding share capital, became the controlling shareholder of the Company. Meanwhile, CMG remains the actual controller of the Company. 2. On 26 December 2018, the Company issued RMB-denominated ordinary shares (A-shares) at RMB21.46/share to CMID for the acquisition of the 1,313,541,560 CMPort Holdings ordinary shares that it held. Upon the Acquisition, the Company’s total share capital has become 1,793,412,378 shares. Meanwhile, as Broadford Global controls an 87.81% aggregated voting right in the Company (direct interests and interests through CMID and CMGD), it is the direct controlling shareholder of the Company. Meanwhile, CMG remains the actual controller of the Company. |
V Other InformationThe independent audit firm hired by the Company:
China Merchants Port Group Co., Ltd. Annual Report 2019
| Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Office address | 30/F, 222 Yan An Road East, Huangpu District, Shanghai, P.R.C. |
| Accountants writing signatures | Li Weihua and Zhang Min |
The independent sponsor hired by the Company to exercise constant supervision over the Companyin the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over theCompany in the Reporting Period:
| Name | Office address | Participant representative | Period of supervision |
| CITIC Securities Co., Ltd. | 19/F, CITIC Securities Tower, 8 Zhongxin 3rd Road, Futian District, Shenzhen, China | Chen Jianjian, Yang Jun and Huang Zihua | From 26 December 2018 to 31 December 2019 |
VI Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2019 | 2018 | 2019-over- 2018 change | 2017 | |
| Operating revenue (RMB) | 12,123,829,423.74 | 9,703,394,622.58 | 24.94% | 7,544,635,284.96 |
| Net profit attributable to the listed company’s shareholders (RMB) | 2,898,192,168.84 | 1,090,418,910.77 | 165.79% | 2,365,214,907.45 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 1,037,766,875.23 | 516,155,803.81 | 101.06% | 498,373,377.67 |
| Net cash generated from/used in operating activities (RMB) | 5,501,873,415.94 | 4,288,575,424.84 | 28.29% | 3,475,037,036.28 |
| Basic earnings per share (RMB/share) | 1.59 | 0.61 | 160.66% | 1.32 |
| Diluted earnings per share (RMB/share) | 1.59 | 0.61 | 160.66% | 1.32 |
| Weighted average return on equity (%) | 8.71% | 3.88% | 4.83% | 10.24% |
| 31 December 2019 | 31 December 2018 | Change of 31 December 2019 over 31 December 2018 (%) | 31 December 2017 |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Total assets (RMB) | 156,696,917,845.87 | 128,018,084,415.68 | 22.40% | 109,135,164,260.01 |
| Equity attributable to the listed company’s shareholders (RMB) | 35,972,804,419.42 | 30,760,475,412.93 | 16.94% | 28,474,748,165.25 |
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) | 1,922,365,124 |
Fully diluted earnings per share based on the latest total share capital above:
| Fully diluted earnings per share based on the latest total share capital above (RMB/share) | 1.5076 |
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting StandardsNo difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above: Not applicableVIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 2,702,894,522.99 | 3,131,458,898.34 | 3,178,406,039.64 | 3,111,069,962.77 |
| Net profit attributable to the listed company’s shareholders | 814,944,249.12 | 1,484,237,081.49 | 171,091,424.23 | 427,919,414.00 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 262,409,245.18 | 306,996,084.91 | 155,647,010.17 | 312,714,534.97 |
| Net cash generated from/used in operating activities | 1,148,963,121.64 | 1,407,898,793.88 | 1,399,691,070.83 | 1,545,320,429.59 |
Indicate by tick mark whether any of the quarterly financial data in the table above or theirsummations differs materially from what have been disclosed in the Company’s quarterly or interimreports.
□ Yes √ No
China Merchants Port Group Co., Ltd. Annual Report 2019
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2019 | 2018 | 2017 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 4,794,562,782.79 | 6,512,480.64 | 324,387.87 | - |
| 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) | 162,587,042.38 | 14,050,544.16 | 1,843,431.75 | - |
| Capital occupation charges on non-financial enterprises that are charged to current profit or loss | 19,571,040.36 | - | - | - |
| Current profit or loss on subsidiaries obtained in business combinations involving enterprises under common control from the period-beginning to combination dates, net | - | 2,685,592,888.44 | 4,928,289,403.49 | - |
| Gain or loss on fair-value changes in held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-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) | 66,075,363.30 | - | - | - |
| Reversed portions of impairment allowances for accounts receivable and contract assets which are tested individually for impairment | - | - | 4,238,993.78 | - |
| Non-operating income and expense other than the above | 482,165,418.73 | -3,767,817.73 | 1,002,589.66 | |
| Other gains and losses that meet the definition of exceptional gain/loss | 732,644,357.06 | -121,311,211.59 | - | As the Company gained control of Zhanjiang Port in the year under review, the long-term equity investment in Zhanjiang Port formerly measured under the equity method was recognized in |
China Merchants Port Group Co., Ltd. Annual Report 2019
| return on investment at the fair value | ||||
| Less: Income tax effects | 1,504,203,995.96 | 3,010,149.89 | 802,116.53 | - |
| Non-controlling interests effects (net of tax) | 2,892,976,715.05 | 2,003,803,627.07 | 3,068,055,160.24 | - |
| Total | 1,860,425,293.61 | 574,263,106.96 | 1,866,841,529.78 | -- |
For the Reporting Period, the Company does not reclassify as recurrent any exceptional gain/loss itemdefined or listed in the Explanatory Announcement No. 1 on Information Disclosure for CompaniesOffering Their Securities to the Public—Exceptional Gain/Loss Items.
China Merchants Port Group Co., Ltd. Annual Report 2019
Part III Business SummaryI Principal Activity of the Company in the Reporting Period
1. Main business scope and business models
The Company is principally engaged in the handling, warehousing and transportation of containersand bulk cargoes, as well as the provision of other ancillary services. It principally operates 24container berths and 15 bulk cargo berths in the ports in West Shenzhen, 9 container berths, 2 bulkcargo berths, 10 general cargo berths and 1 berth dedicated to handling coal in Shantou Port, 2container berths and 33 bulk cargo berths in Zhanjiang Port, 4 multi-purpose berths in Shunde Port,2 container berths and 6 bulk cargo berths in Zhangzhou Port, 4 container berths in CICT, Sri Lanka,4 multi-purpose berths, 2 oil berths and 4 container berths in HIPG, 3 container berths in LCT, Togo,and 4 container berths in TCP, Brazil. Moreover, the Company invests in container hubs in Shanghaiand Ningbo and expands its layout to ports in South 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 leasing, loading and unloading in warehouses/yards, customs clearance and division or merger of cargoes at terminals. It also provides documentation services for tractors arriving or leaving the bonded logistics parks. |
2. Development stage and cyclical characteristic of the industry in which the Company operatesand its industry position during the reporting periodThe port industry is a crucial cornerstone industry for national economic and social progress, and isclosely linked to global economic and trade development. In 2019, the global economy was on agrowing trend in general, but the growth momentum was unstable. The Company faced challengesdue to many factors including the trade frictions in various countries aggravated by the protectionismand unilateralism, which impact the international trade order; the slowdown in growth of globalcontainer shipping and the downshift of domestic port business continuously intensify marketcompetition; the increasing severe competition for investment in emerging markets overseas,
China Merchants Port Group Co., Ltd. Annual Report 2019
technology advancement in the port and shipping industry and emerging of new business models. .Affected by the sluggish economic and trading conditions, the demand in the global containershipping market was volatile in 2019. As forecasted in the Clarkson Report, despite the overallweakening demand in the container shipping market in 2019, the competition further intensified. Inorder to secure better competitive advantages, various shipping companies continued to carry forwardfleet expansion, hence market capacity continued to grow steadily. At the same time, due to the impactof ship reforms brought by the International Maritime Organization's 2020 Sulphur Limitation Order,the scale of idle capacity in 2019 increased significantly year-on-year.The growth rate of global port container throughput declined in 2019. According to data fromAlphaliner, the global container port throughput amounted to 837 million TEUs in 2019, up by 2.5%year-on-year. In terms of market share by container throughput, the top 3 regions in order are China(including Hong Kong), Southeast Asia and North Europe, and the top 3 fastest growing regions inorder are South Europe, South Asia and Southeast Asia. Driven by the global economy and trade, theglobal port business declined in general in 2019. The growth rate of global port container throughputreached 2.5% in 2019, lower than that of 5.2% in 2018. According to the information published bythe Ministry of Transport of the People’s Republic of China, the accumulated port containerthroughput in China amounted to 261 million TEUs in 2019, representing a year-on-year increase of
4.4%.
The Company is the largest global leading port developer, investor and operator in the PRC, with acomprehensive port network at major hub locations along coastal China. It has also successfullyestablished presence in South Asia, Africa, Europe, Mediterranean, Oceania and South America. Byits proactive, sound and efficient operating style, the Company capitalises on its global 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 to facilitate the transformation andupgrade of port industry, develop port-related industries and increase industry efficiencies, whichallows 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 www.cninfo.com.cn on 3 |
China Merchants Port Group Co., Ltd. Annual Report 2019
China Merchants Port Group Co., Ltd. Annual Report 2019
China Merchants Port Group Co., Ltd. Annual Report 2019
| regulations, this deal constitutes a related-party transaction. 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. For details, see Announcements No. 2019-011 and 2019-012 disclosed by the Company on 23 January 2019. 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. 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. For details, see Announcements No. 2019-041 and 2019-043 disclosed by the Company on 30 April 2019. | |
| Construction in progress | The net value of construction in progress of the Company was RMB6.318 billion as at 31 December 2019, up by RMB0.819 billion from the year-beginning amount of RMB5.499 billion. The increment was primarily because the new inclusion of Zhanjiang Port in the consolidation scope of the Current Period contributed an increase of RMB1.536 billion; Haixing Harbor an increase of RMB0.642 billion, Shantou Port an increase of RMB0.15 billion, TCP a decrease of RMB0.978 billion; Xiamen Port a decrease of RMB0.727 billion; and other consolidated subsidiaries saw minor ups and downs. |
2. Major Assets Overseas
| Asset | Source | Asset value (RMB’0,000) | Location | Operations | Control measures to protect asset safety | Return generated (RMB’0,000) | As % of the Company’s net asset value | Material impairment risk (yes/no) |
| Equity assets | Acquired via share offering | 13,073,595.46 | Hong Kong | Port investment and operations | Appointing director, supervisor and senior management | 742,148.50 | 86.13% | No |
| Other information | N/A | |||||||
III. Core competitiveness analysis
1. Active implementation of the key “Belt and Road” initiative to facilitate the development ofGuangdong-Hong Kong-Macau Greater Bay Area leveraging its global port networkAs an important carrier for domestic and overseas port investment and operation of CMG, theCompany seized the significant policy opportunities of the key “Belt and Road” initiative and
China Merchants Port Group Co., Ltd. Annual Report 2019
building the Guangdong-Hong Kong-Macau Greater Bay Area to actively build a global port network,make investment in the allocation of global resources and strivingly build a mutually-beneficial portecosystem. In recent years, through mergers, acquisitions and restructuring, along with the renovationof old ports and building of new ports, the Company has been consistently improving its modern portchain with global coverage, enhancing value of the port industry and pushing forward balancedregional development. The Company actively responded to the “Belt and Road” initiative andprovided a comprehensive logistic platform for the development of Guangdong-Hong Kong-MacauGreater Bay Area.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 26 countries.Adhering to the principle of “extensive consultation, joint development and shared benefits”, CMPortwill form a community of shared future with stakeholders from countries and regions along the “Beltand Road” initiative to explore development opportunities with concerted efforts.The Company aims at increasing its global presence with shipping routes across five continents. Asboth the shipping and port sectors gradually shifted to forming alliances, the Company activelyintegrated its domestic and overseas port assets and capitalised on its relatively complete global portnetwork to provide customers with comprehensive port logistics service solutions, which created itsunique competitive strength. At the same time, the diversified investment and operation of port assetshave also 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 includinginfrastructure 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 acceleratedits international development and 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 and ultimatelybecoming a world-class comprehensive port service provider.
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”. Based on the traditional loading and unloading and ancillary
China Merchants Port Group Co., Ltd. Annual Report 2019
services for ports, the Company further expanded various value-added port services to the ports andport cities in which it operates. By gathering talents, information, funds and commodities, theCompany provided economic support for urban development, continued to innovate industrydevelopment model and expand regional coverage and influence, thereby driving urban upgrade anddevelopment.Currently, the Company has participated in promoting the regional comprehensive development andconstruction with the port-oriented approach in various overseas regions, and has achieved phasedresults. At the same time, the innovative business development model introduces CMPort elementsto urban development and helps foster new profit growth points for the Company.
4. Extensive experience in professional port management with sound and efficient operatingstyleBy adhering to the proactive, sound and efficient operating style and capitalising on its global portasset and resource portfolio, the Company is committed to provide customers with timely andefficient port and maritime logistics services as well as professional and first-class solutions, and hasbecome preferred partners for customers and an important gateway for the country’s foreign trade,thereby making due contributions to the country’s foreign trade development. At the same time, theCompany also made an extensive investment in bonded logistics business to expand its port valuechain and enhance industrial value. Taking advantages of the synergies of its existing terminalnetwork, 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 terminal operatingsystem and integrated logistics management platform for import and export, its extensive maritimelogistics support system with all-rounded modern integrated logistics solutions and its high-qualityengineering management and reliable service offerings.
China Merchants Port Group Co., Ltd. Annual Report 2019
Part IV Operating Performance Discussion and AnalysisI Overview
1. External Environment Analysis
According to the “World Economic Outlook” update report published by the International MonetaryFund (IMF) in January 2020, the global economic growth rate of 2019 was expected to be 2.9%,down by 0.7 percentage point year-on-year, among which, developed economies grew by 1.7% whileemerging markets and developing economies grew by 3.7%, down by 0.5 percentage point and 0.8percentage point as compared to those of 2018, respectively. Total global trade volume (includinggoods and services) grew by 1.0%, representing a decrease of 2.7 percentage points as compared tothat of 2018.Despite the complex and challenging internal and external environment, the Chinese economymaintained steady growth in 2019. The annual GDP growth was 6.1%, representing a decrease of 0.5percentage point over the previous year. The long-term positive trend of China’s economy remainedunchanged. Facing the new normal of the economy, China continued to deepen the supply-sidestructural reform and strengthen the countercyclical adjustments with a view to achieve high-qualityeconomic development. In 2019, the economic development witnessed a number of positive changeswith continuous enhancement and upgrade of economic structure, substantial outcomes achieved interms of optimization of industrial structure and significant benefits brought by tax cut and feereduction policies as well as steady implementation of control targets of “three stabilizations” in thereal estate market. Meanwhile, the economic growth continued to be exposed to downward pressureas affected by unfavorable factors such as ongoing US-China trade frictions, stable but slowingindustry development, insufficient investment demand and unstable consumption demand. Accordingto the statistics published by the General Administration of Customs, China’s total import and exportvalue amounted to RMB31.54 trillion in 2019, representing an increase of 3.4% as compared to thatof 2018, among which the export value was RMB17.23 trillion, representing an increase of 5%; whileimport value was RMB14.31 trillion, representing an increase of 1.6% year-on-year. Trade surplusamounted to RMB2.92 trillion, representing an increase of 25.4%.
2. Port Business Review
In 2019, the Company’s ports handled a total container throughput of 112.93 million TEUs, up by
2.9% year-on-year, among which the ports in Mainland China contributed container throughput of
84.88 million TEUs, indicating an increase of 4.3% year-on-year, which was mainly driven by steadydevelopment of the Mainland China’s economy and consistent growth momentum of import andexport trade. The Company’s operations in Hong Kong and Taiwan contributed an aggregatecontainer throughput of 7.21 million TEUs, representing a decrease of 6.1% as compared with thesame period of the previous year. Benefited from the growth of the terminal operation of CICT in SriLanka, LCT in Togo and PDSA in Djibouti, a total container throughput handled by the Company’s
China Merchants Port Group Co., Ltd. Annual Report 2019
overseas ports grew by 0.9% year-on-year to 20.84 million TEUs. Bulk cargo volume handled by theCompany’s ports decreased by 8.9% year-on-year to 409 million tonnes, of which the Company’sports in Mainland China handled a total bulk cargo volume of 480 million tonnes, representing adecrease of 9.3% year-on-year, which was affected by, among others, international trade friction,African Swine Fever and adjustment of cargo source structure of certain enterprises; the Company’soverseas ports handled a total bulk cargo volume of 6.29 million tonnes, representing an increase of
26.1% year-on-year, which was mainly attributable to the business growth in PDSA in Djibouti andHIPG in Sri Lanka.Pearl River Delta regionThe Company’s terminals in the West Shenzhen Port Zone handled a container throughput of 11.42million TEUs, up by 0.7% year-on-year; bulk cargo volume amounted to 13 million tonnes, down by
27.9% year-on-year, mainly affected by the change in international trade conditions, African SwineFever and changes in cargo source structure. Chu Kong River Trade Terminal Co., Ltd. handled atotal container throughput of 1.09 million TEUs, down by 6.6% year-on-year while bulk cargovolume amounted to 3.53 million tonnes, up by 43.1% year-on-year. Dongguan Machong Terminalhandled bulk cargo volume of 12.27 million tonnes, down by 7.2% year-on-year. Guangdong YidePort Co., Ltd. handled a total container throughput of 0.3 million tonnes, up by 33.5% year-on-yearwhile bulk cargo volume amounted to 2.26 million tonnes, up by 55.7% year-on-year, mainlybenefited from the expansion of new customers and new routes and further release of terminalproduction capacity.Yangtze River Delta regionSIPG handled a container throughput of 43.30 million TEUs, up by 3.1% year-on-year. Bulk cargovolume handled declined by 23.4% year-on-year to 120 million tonnes, which was mainly attributedto the decrease in coal unloaded amount after adjustments made against the structure of bulk cargosource by SIPG. Ningbo Daxie China Merchants International Terminals Co., Ltd. handled acontainer throughput of 3.29 million TEUs, representing an increase of 4.1% year-on-year.Bohai Rim regionQingdao Qianwan United Container Terminal Co., Ltd. handled a total container throughput of 7.92million TEUs, representing an increase of 14.3% year-on-year, driven by the growth of containers ofnew international and domestic routes; Qingdao Qianwan West Port United Terminal Co., Ltd.handled bulk cargo volume of 15.59 million tonnes, representing an increase of 0.3% year-on-year;Qingdao Port Dongjiakou Ore Terminal Co., Ltd. handled bulk cargo volume of 59.90 million tonnes,indicating an increase of 4.4% year-on-year. Dalian Port (PDA) Company Limited handled acontainer throughput of 10.22 million TEUs, down by 8.0% year-on-year. Bulk cargo volume handleddeclined by 2.5% year-on-year to 130 million tonnes. Laizhou Harbour Affairs (莱州港务) handledbulk cargo volume of 22.72 million tonnes, representing a decrease of 0.1% year-on-year. With thesuccessful completion of consolidation of Tianjin Port’s container segment, Tianjin Five ContinentsInternational Container Terminals Co., Ltd. and Tianjin Container Terminal Co., Ltd. contributed atotal container throughput of 4.47 million TEUs during the year. The Company’s business volume inrelation to Tianjin Project recorded an increase of 64.5% year-on-year.South-East region of Mainland China
China Merchants Port Group Co., Ltd. Annual Report 2019
Zhangzhou China Merchants Port Co., Ltd. (“Zhangzhou Port”), located in Xiamen Bay EconomicZone, handled a container throughput of 0.42 million TEUs, decreased by 7.7% year-on-year, whileits bulk cargo volume handled decreased by 43.2% year-on-year to 8.14 million tonnes, which wasmainly affected by African Swine Fever and the environmental policies. Xiamen Bay ChinaMerchants Terminals Co., Ltd., which officially commenced operation in May 2019, handled a bulkcargo volume of 0.27 million TEUs. Shantou China Merchants Port Group Co., Ltd. handled acontainer throughput of 1.34 million TEUs, up by 3.5% year-on-year, and a bulk cargo volume of
7.09 million tonnes, down by 23.2% year-on-year, which was mainly due to the impact of “bulkcargoes to containers” and the decrease in domestic demand on coal business as well as the fact thatexpansion of sandstone business was restricted by environmental policies.South-West region of Mainland ChinaZhanjiang Port (Group) Co., Ltd. handled a container throughput of 1.11 million TEUs, up by 12.6%year-on-year, mainly attributable to the development of premium domestic routes in the southern andnorthern regions as well as regional water-to-water transshipment and the expansion of cold chainservices business. It also handled a bulk cargo volume of 91.17 million tonnes, down by 0.8% year-on-year.Hong Kong and TaiwanModern Terminals Limited and China Merchants Container Services Limited delivered an aggregatecontainer throughput of 5.57 million TEUs, down by 6.1% year-on-year. Kao Ming ContainerTerminal Corp. in Kaohsiung, Taiwan, handled a total container throughput of 1.64 million TEUs,representing a decrease of 6.3% year-on-year.Overseas operationIn 2019, a total container throughput handled by the Company’s overseas operations increased by
0.9% year-on-year to 20.84 million TEUs, among which container throughput handled by CICT inSri Lanka rose by 7.4% year-on-year to 2.88 million TEUs. The wheeled and bulk cargo business inHIPG progressed well with a bulk cargo volume amounting to 0.50 million tonnes, indicating anincrease of 183.8% year-on-year. Container throughput handled by LCT in Togo increased by 7.7%year-on-year to 1.13 million TEUs. Container throughput handled by Tin-Can Island ContainerTerminal Limited (referred to as TICT) in Nigeria was 0.47 million TEUs, representing a decrease of
2.5% year-on-year, mainly affected by vessels stranded at the terminals. Container throughputhandled by PDSA in Djibouti amounted to 0.92 million TEUs, up by 6.8% year-on-year while bulkcargo volume amounted to 5.68 million tonnes, up by 20.2% year-on-year, mainly attributed to thecontinuous substantial GDP growth as well as increase in volume of food, steel and vehicles inEthiopia, its main hinterland. TL handled container throughput of 13.25 million TEUs, representinga decrease of 2.8% year-on year. Container throughput handled by Kumport in Turkey increased by
1.9% year-on-year to 1.28 million TEUs; while bulk cargo volume handled was 0.10 million tonnesup by 19.8% year-on-year. TCP in Brazil contributed an annual container throughput of 0.92 millionTEUs, up by 32.0% as compared to that from March to December of the previous year and up by
12.5% as compared to that of the full year of the previous year, mainly attributable to the growth intrading of domestic produce and vehicles parts and components.
China Merchants Port Group Co., Ltd. Annual Report 2019
3. Implementation of business plan during the reporting period
During the reporting period, the Company adhered to its strategic directives and the general operationphilosophy of “enhancing core capability, insisting on both quality and efficiency, capitalizing onopportunities of this era and striving to become a world’s leading enterprise” with an unwaveringaspiration to reinforce its foundation and made innovation with a pragmatic attitude. Striving toachieve breakthroughs in five key aspects, namely the building of homebase port, port consolidation,overseas expansion, comprehensive development and innovative development, the Company activelypushed forward the implementation of various key tasks and optimized and upgraded its core portsoperation over the past year, successfully accomplishing various operational objectives.Regarding the development of its homebase ports, the Company continued to promote the buildingof West Shenzhen homebase port into a world-class leading port in China and CICT and HIPGoverseas into regional leading ports in South Asia. In terms of West Shenzhen homebase port in China,the Company proactively advanced key projects such as berth upgrade, shore and bridge heighteningand channel dredging in a view to solving the bottleneck encountered in the development of WestShenzhen Port Zone and hence upgrading the hardware environment of the port. The Companyfacilitated continuous improvement in the customs environment and further reduction of operationalcosts to optimize the software environment of ports. The Company also promoted verticaldevelopment of integrated operation to enhance the overall influence and competitiveness of WestShenzhen homebase port, at the same time adhering to the technology-driven development approachto steadily advance the development of Mawan Intelligent Port. In terms of the building of overseashomebase port, leveraging the advantage of synergy between CICT and HIPG, the Company strivedto develop its South Asia port network with Sri Lanka as the center.In terms of port consolidation, the Company has established a strategic layout “with a focus onGuangdong-Hong Kong-Macao Greater Bay Area, connecting regions along Belt and Road Initiativeswith a broad global network coverage” through strategic reconstruction. It has also completed thecapital injection in Zhanjiang Port Group and steadily pushed forward work in relation to the entrustedmanagement of Liaoning Port Group and achieved preliminary results.As for overseas expansion, by seizing the opportunities arising from the major national initiative ofthe “Belt and Road” and international industries migration, the Company has proactively grasped theinvestment opportunities in ports, logistics and related infrastructure. In respect of the transactionregarding the acquisition of interests of no more than 10 quality terminals under CMA CGM throughTL, a formal agreement has been executed with the cooperating parties, which will further improvethe global port network and hence enhance the Company’s core competitiveness and influence. TheCompany has also successfully introduced two strategic investors for TCP Terminal in Brazil, whichis the Company’s new attempt to optimize the allocation of its overseas inventories.In respect of comprehensive development, the Company actively explored and promoted the “Port-Park-City” comprehensive development model and achieved preliminary progress. As the businessvolume of the comprehensive development project in Djibouti increased steadily, the Company willdevote greater efforts in the cultivation of its market development team to enhance marketdevelopment. The Company has completed the revision on the overall planning for the futuredevelopment of HIPG in Sri Lanka, confirming the business development direction of the port zone.The one-stop service center for introduction of business and investment officially commenced
China Merchants Port Group Co., Ltd. Annual Report 2019
operation.With regard to innovative development, the Company pushed forward the “digitalisation strategy”and continued to promote the establishment of “CM ePort”. Mawan Intelligent Port project and theautomatic loading and unloading project at large bulk and general cargo terminal in Zhanjiang Portwere well underway. West Shenzhen Port Zone issued the first blockchain electronic invoice inChina’s port sector, and launched the pilot program of its self-developed blockchain electronicDO/EIR and documentation function for domestic container business. The Company collaboratedwith 11 enterprises such as China Mobile and Huawei in promoting and establishing the “5Gintelligent port innovation laboratory”, and realised the first RTG Remote Control operation under5G network at Mawan Port, which optimized and enhanced the informationization level of portscomprehensively. The establishment of “Development and Research Center of CMPort” markedthe completion of the industry development platform empowered by technology. The industrial fund,which focuses on investments in innovative development of ports, will be launched and implementedin the near term. Looking forward, the Company will leverage the financial platforms to facilitate thesynergy of resources among various port groups and industries with a view to building up a portecosystem to support the projects of startup companies and grasp the opportunities arising from therapid growth of emerging industries, so as to promote the transformation and upgrade of the portindustry to expand the rooms for development and improve the development quality, which will bringnew vitality into the traditional core port operation.II Core Business Analysis
1. Overview
| Changes in key financial indicators in the Reporting Period are as follows: | ||||
| Unit: RMB | ||||
| Item | 2019 | 2018 | Change (%) | Reason for the change |
| Operating revenue | 12,123,829,423.74 | 9,703,394,622.58 | 24.94% | The adding of entities to the consolidated financial statements for the current year |
| Cost of sales | 7,648,920,919.71 | 5,739,241,395.87 | 33.27% | The adding of entities to the consolidated financial statements for the current year |
| Administrative expense | 1,509,520,581.66 | 1,251,865,675.45 | 20.58% | The adding of entities to the consolidated financial statements for the current year |
| Finance costs | 1,936,269,737.53 | 1,643,418,102.95 | 17.82% | A higher interest expense as a result of more interest-bearing debt, as well as the adding of entities to the consolidated financial statements for the current year |
| Asset disposal income | 4,794,562,782.79 | 19,258,495.33 | 24795.83% | Transfer of land to the government in the current year |
| Net cash generated from/used in | 5,501,873,415.94 | 4,288,575,424.84 | 28.29% | |
China Merchants Port Group Co., Ltd. Annual Report 2019
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
operating activities
| 2019 | 2018 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 12,123,829,423.74 | 100% | 9,703,394,622.58 | 100% | 24.94% |
| By operating division | |||||
| Port operations | 11,547,072,185.86 | 95.24% | 9,184,527,309.09 | 94.65% | 25.72% |
| Bonded logistics service | 411,410,069.19 | 3.39% | 386,269,027.02 | 3.98% | 6.51% |
| Property development and investment | 165,347,168.69 | 1.36% | 132,598,286.47 | 1.37% | 24.70% |
| By operating segment | |||||
| Mainland China, Hong Kong and Taiwan | 8,872,027,132.24 | 73.18% | 6,635,924,788.34 | 68.39% | 33.70% |
| Other countries and regions | 3,251,802,291.50 | 26.82% | 3,067,469,834.24 | 31.61% | 6.01% |
(2) Operating Division, Product Category or Operating Segment Contributing over 10% ofOperating Revenue or Operating Profit
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Port operations | 11,547,072,185.86 | 7,185,667,723.72 | 37.77% | 25.72% | 35.49% | -4.49% |
| By operating segment | ||||||
| Mainland China, Hong Kong and Taiwan | 8,872,027,132.24 | 5,968,372,275.68 | 32.73% | 33.70% | 41.53% | -3.72% |
| Other countries and regions | 3,251,802,291.50 | 1,680,548,644.03 | 48.32% | 6.01% | 10.40% | -2.05% |
Core business data of the prior year restated according to the changed statistical caliber for the
China Merchants Port Group Co., Ltd. Annual Report 2019
Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
□ Yes √ No
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
Unit: RMB
| Operating division | Item | 2019 | 2018 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Port operations | Loading and unloading services | 7,185,667,723.72 | 93.94% | 5,303,286,893.31 | 92.40% | 35.49% |
| Bonded logistics service | Logistics service | 240,230,706.61 | 3.14% | 214,495,776.55 | 3.74% | 12.00% |
| Property development and investment | Properties | 223,022,489.38 | 2.92% | 221,458,726.01 | 3.86% | 0.71% |
| Total | 7,648,920,919.71 | 100.00% | 5,739,241,395.87 | 100.00% | 33.27% | |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
Zhanjiang Port (Group) Co., Ltd. was added to the consolidated financial statements of the Companyfor the Reporting Period due to the business combination of the Company and Zhanjiang Port whichare not under common control; and Guangdong Zhanjiang Port Longteng Shipping Co., Ltd. wasadded due to the business combination of Zhanjiang Port and Zhanjiang Port Longteng which are notunder common control.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
China Merchants Port Group Co., Ltd. Annual Report 2019
| Total sales to top five customers (RMB) | 3,323,123,237.53 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 27.41% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
Top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Customer A | 1,451,102,824.60 | 11.97% |
| 2 | Customer B | 667,871,118.65 | 5.51% |
| 3 | Customer C | 524,934,804.25 | 4.33% |
| 4 | Customer D | 351,823,025.24 | 2.90% |
| 5 | Customer E | 327,391,464.79 | 2.70% |
| Total | -- | 3,323,123,237.53 | 27.41% |
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
| Total purchases from top five suppliers (RMB) | 641,738,196.19 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 20.91% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 7.19% |
Top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 205,219,353.89 | 6.69% |
| 2 | Supplier B | 127,560,658.82 | 4.16% |
| 3 | Supplier C | 123,731,164.49 | 4.03% |
| 4 | Supplier D | 93,221,039.90 | 3.04% |
| 5 | Supplier E | 92,005,979.09 | 3.00% |
| Total | -- | 641,738,196.19 | 20.91% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
| 2019 | 2018 | Change (%) | Reason for any significant change |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Administrative expense | 1,509,520,581.66 | 1,251,865,675.45 | 20.58% | The adding of entities to the consolidated financial statements in the Reporting Period |
| Finance costs | 1,936,269,737.53 | 1,643,418,102.95 | 17.82% | A higher interest expense as a result of more average interest-bearing debt and the adding of entities to the consolidated financial statements in the Reporting Period |
| R&D expense | 123,853,344.29 | 121,989,097.82 | 1.53% | Higher expenses on various R&D projects in the Reporting Period |
4. R&D Expense
In 2019, adhering to the strategic principle of “Have a Long-Term Vision and Grasp CurrentOpportunities, Lead with technology and Embrace the changes”, the Company evolves to changes byovercoming the contingency and the leading of the technology to grasp the innovative developmentopportunity, and sticks to build the intelligent ports with China Merchants’ characteristics.During the Reporting Period, major R&D projects completed by the Company include: establishingCMPort Scientific and Technological Innovation Development Research Institute in a bid to developnew driving forces for innovation-driven transformation and upgrading of the Company; setting upthe first 5G smart port innovation lab in the port industry, making the Company a pioneer that hadentered the actual implementation stage for the application of 5G technology in smart ports; takingthe lead to issue the first blockchain e-invoice in the port industry, which veritably realized the whole-process regulation of ports, credit account customers and tax regulatory authorities in invoicing, andissuing a total of more than 18,000 e-invoices with a total amount of nearly RMB500 million; buildingthe first “1+2” finance sharing center under CMG and connecting all the 55 domestic enterprises tothe center. In addition, the Company has launched and proactively promoted a number of otherinnovation and R&D projects, including “CM ePort”, Zhanjiang Port Intelligent Bulk Cargo Terminal,“Hongzhang” Supercomputing Cluster and Port AI Modeling System.Details about R&D expense:
| 2019 | 2018 | Change (%) | |
| Number of R&D personnel | 611 | 428 | 42.76% |
| R&D personnel as % of total employees | 4.29% | 4.47% | -0.18% |
| R&D expense (RMB) | 155,131,267.35 | 121,989,097.82 | 27.17% |
| R&D expense as % of operating revenue | 1.28% | 1.26% | 0.02% |
| Capitalized R&D expense (RMB) | 31,277,923.06 | 0.00 | 0.00% |
| Capitalized R&D expense as % of total R&D expense | 20.16% | 0.00% | 20.16% |
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
China Merchants Port Group Co., Ltd. Annual Report 2019
5. Cash Flows
Unit: RMB
| Item | 2019 | 2018 | Change (%) |
| Subtotal of cash generated from operating activities | 13,483,810,093.83 | 10,551,620,379.77 | 27.79% |
| Subtotal of cash used in operating activities | 7,981,936,677.89 | 6,263,044,954.93 | 27.44% |
| Net cash generated from/used in operating activities | 5,501,873,415.94 | 4,288,575,424.84 | 28.29% |
| Subtotal of cash generated from investing activities | 11,616,175,588.24 | 1,989,829,350.62 | 483.78% |
| Subtotal of cash used in investing activities | 13,553,166,249.84 | 17,138,391,838.98 | -20.92% |
| Net cash generated from/used in investing activities | -1,936,990,661.60 | -15,148,562,488.36 | 87.21% |
| Subtotal of cash generated from financing activities | 18,233,144,655.78 | 36,557,170,707.26 | -50.12% |
| Subtotal of cash used in financing activities | 19,466,847,993.77 | 27,681,971,449.91 | -29.68% |
| Net cash generated from/used in financing activities | -1,233,703,337.99 | 8,875,199,257.35 | -113.90% |
| Effect of exchange rate fluctuations on cash | 2,340,876,491.12 | -2,356,178,578.00 | 199.35% |
Explanation of why any of the data above varies significantly on a year-on-year basis:
Subtotal of cash generated from investing activities rose 483.78% year-on-year, primarily driven bythe higher proceeds from disposal of fixed assets, intangible assets or other investing activities.Net cash generated from investing activities rose 87.21% year-on-year, primarily driven by theincrease year-on-year in subtotal of cash generated from investing activities and the decrease year-on-year in subtotal of cash used in investing activities.Subtotal of cash generated from financing activities declined 50.12% year-on-year, primarily drivenby a smaller amount of borrowings obtained.Net cash generated from financing activities declined 113.90% year-on-year, primarily driven by asmaller amount of net inflow calculated by borrowings obtained minus repayments of borrowings.The net increase of cash and cash equivalents rose 199.35% year-on-year, primarily driven by thecomprehensive influence of each activity of cash flows.Explanation of why net cash generated from/used in operating activities varies significantly from netprofit of the Reporting Period:
For the Reporting Period, net cash generated from operating activities was RMB5,501,873,415.94,while net profit was RMB8,166,917,273.20. The gap was primarily caused by the influence of therecognized income of Qianhai land readjustment in 2019.
China Merchants Port Group Co., Ltd. Annual Report 2019
III. Analysis of Non-main Businesses
Unit: RMB
| Amount | As % of total profit | Main source/reason | Exceptional or recurrent | |
| Investment income | 4,619,173,755.42 | 42.74% | Share of the profit of joint ventures and associates, mainly Shanghai Port | Recurrent |
| Gain/loss on disposal of assets | 4,794,562,782.79 | 44.36% | Compensation income of land readjustment | Exceptional |
IV. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
The Company executed and adjusted the Financial Statements at the beginning year of any NewStandard Governing Financial Instruments, Revenue or Leases in 2019
Unit: RMB
| 31 December 2019 | 1 January 2019 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Other receivables | 2,129,378,252.50 | 1.36% | 766,518,078.72 | 0.59% | 0.77% | The increase of compensation receivable of containers and land |
| Current portion of non-current assets | 808,893,013.06 | 0.52% | 25,952,956.76 | 0.02% | 0.50% | The reclassification of advance from shareholders due within one year |
| Other current assets | 2,298,792,661.70 | 1.47% | 1,195,421,189.12 | 0.93% | 0.54% | The newly adding of structural deposits, the adding of new subsidiaries to the consolidated financial statements and recovery of related-party borrowings provided |
| Long-term receivables | 1,098,831,799.90 | 0.70% | 793,046,240.11 | 0.61% | 0.09% | The adding of new subsidiaries to the consolidated financial statements and the reclassification of advance from shareholders due within one year |
| Fixed assets | 27,519,962,529.29 | 17.56% | 17,575,541,665.89 | 13.62% | 3.94% | The adding of new subsidiaries to the consolidated financial statements and the transfer of construction to fixed assets |
| Long-term prepaid expense | 711,911,011.67 | 0.45% | 235,706,437.21 | 0.18% | 0.27% | The increase of prepaid expense in public channel of Western Port and Tonggu Channel |
| Deferred income tax assets | 300,435,502.27 | 0.19% | 66,708,157.19 | 0.05% | 0.14% | The deferred income tax assets generated from land readjustment |
| Other non-current assets | 2,082,965,467.04 | 1.33% | 395,191,485.98 | 0.31% | 1.02% | The compensation of Dachan Bay and the adding of new subsidiaries to the consolidated financial statements |
| Short-term borrowings | 9,439,099,793.47 | 6.02% | 3,427,365,512.21 | 2.66% | 3.36% | The adding of new subsidiaries to the consolidated financial statements and increase of short-term bank loans |
| Tax payable | 1,898,076,342.74 | 1.21% | 345,183,422.42 | 0.27% | 0.94% | The income from land readjustment |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Long-term payables | 1,935,245,003.21 | 1.24% | 1,252,860,200.23 | 0.97% | 0.27% | The adding of new subsidiaries to the consolidated financial statements |
| Deferred income | 1,147,752,857.17 | 0.73% | 228,658,214.64 | 0.18% | 0.55% | The adding of new subsidiaries to the consolidated financial statements and increase in expense of public channel of Western Port and Tonggu Channel |
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other changes | Ending balance |
| Financial assets | ||||||||
| 1. Financial assets assigned measured by fair value and the changes be included in the current gains and losses | 2,087,872,081.94 | 452,557,609.68 | - | 58,087,016.01 | - | -213,153,170.24 | 2,385,363,537.39 | |
| Other equity instrument investment | 247,848,314.30 | - | 4,891,535.00 | - | - | -89,178,577.30 | 163,561,272.00 | |
| Subtotal of financial assets | 2,335,720,396.24 | 452,557,609.68 | 4,891,535.00 | 58,087,016.01 | - | -302,331,747.54 | 2,548,924,809.39 | |
| Total of the above | 2,335,720,396.24 | 452,557,609.68 | 4,891,535.00 | 58,087,016.01 | - | -302,331,747.54 | 2,548,924,809.39 | |
| Financial liabilities | 0.00 | - | - | - | - | 0.00 | ||
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
The cash deposit of restricted monetary assets is RMB15,648,978.15. The carrying value of fixedassets as bank loan mortgages was RMB349,612,960.23. The carrying value of construction inprogress as bank loan mortgages was 23,840,920.42; and the carrying value of intangible assets asbank loan mortgages was RMB345,131,760.52. The carrying value of equities and interests as bankloan mortgages was RMB2,391,137,628.00.
China Merchants Port Group Co., Ltd. Annual Report 2019
V. Investments Made
1. Total Investment Amount
| Amount in 2019 (RMB) | Amount in 2018 (RMB) | Change (%) | |
| Equity investment | 7,898,674,384.09 | 13,015,203,804.01 | -39.31% |
| Non-equity investment | 3,515,540,735.97 | 2,437,080,643.74 | 44.25% |
2. Major Equity Investments Made in the Reporting Period
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 | Anticipated income | Return on investment 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-owned funds | Sinotrans Guangdong, Zhanjiang Infrastructure Investment | Permanent | Equity | Completed | 0.00 | 7,572.07 | No | 9 January 2019 | www.cninfo.com.cn (Announcement No . 2019-003) |
| Zhanjiang Port | Port operations | 300,000.00 | Bank loans | Zhanjiang Infrastructure Investment | Permanent | Equity | Completed | No | 9 January 2019 | www.cninfo.com.cn (Announcement No . 2019-005) | ||||
| CM Qianhai Industrial | Investment consultation (exclusive of restricted projects); industrial park management; corporation management consultant (exclusive of restricted projects) | Acquisition | 604,941.28 | 14.00% | Self-owned funds | 17 companies including CMSK | 30 years of business term, which can be renewed after the expiration | Equity | Completed | 0.00 | -551.41 | No | 12 January 2019 | www.cninfo.com.cn (Announcement No . 2019-008) |
| Lac Assal | Holding the equity in project of Djibouti Free Trade Zone and 30% equity in KHOR AMBADO FZCO | Capital increase | 8,067.36 | 40.00% | Self-owned funds | CMI, Cheer Signal | Long term | Equity | Completed | 0.00 | 726.90 | No | 23 January 2019 | www.cninfo.com.cn (Announcement No . 2019-012) |
| Lac Assal | Holding the equity in project of Djibouti Free Trade Zone and 30% equity in KHOR AMBADO FZCO | 22,790.29 | Self-owned funds | CMI, Cheer Signal | Long term | Equity | Completed | 0.00 | No | 30 April 2019 | www.cninfo.com.cn (Announcement No . 2019-043) |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Total | -- | -- | 973,332.37 | -- | -- | -- | -- | -- | -- | 0.00 | 7,747.56 | -- | -- | -- |
3. Major Non-Equity Investments Ongoing in the Reporting Period
Unit: RMB
| 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 | Capital resources | Progress | Estimated return on investment | Accumulative realized revenues as of the period-end | Reason for not reaching the schedule and anticipated income |
| Shantou Port Guangao Port Phase II project | Self-build | Yes | Support activities of water transportation | 499,044,891.68 | 1,404,239,786.63 | Self-owned funds and loans | 79.51% | 0.00 | 0.00 | N/A |
| Zhanjiang Port Xiashan Port General Wharf | Self-build | Yes | Support activities of water transportation | 234,308,909.02 | 234,308,909.02 | Self-owned funds and loans | 31.75% | 0.00 | 0.00 | N/A |
| Transformation project of Mawan Smart Port of Haixing Harbor | Self-build | Yes | Support activities of water transportation | 641,663,530.85 | 1,058,989,758.99 | Self-owned funds and loans | 37.14% | 0.00 | 0.00 | N/A |
| TCP expansion project | Self-build | Yes | Support activities of water transportation | 186,832,285.10 | 1,156,332,572.94 | Self-owned funds | 100.00% | 0.00 | 0.00 | N/A |
| Project of berth in Xiamen Port Houshi Port | Self-build | Yes | Support activities of water transportation | 25,740,216.89 | 6,296,208.38 | Self-owned funds and loans | 98.00% | 0.00 | 0.00 | N/A |
| General Cargo project of Zhanjiang Port Donghai Island | Self-build | Yes | Support activities of water transportation | 254,545,729.28 | 254,545,729.28 | Self-owned funds and loans | 28.12% | 0.00 | 0.00 | N/A |
| Total | -- | -- | -- | 1,842,135,562.82 | 4,114,712,965.24 | -- | -- | 0.00 | 0.00 | -- |
4. Financial Investments
(1) Securities Investments
Unit: RMB
China Merchants Port Group Co., Ltd. Annual Report 2019
| 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 item | Capital resources |
| Stock | 601018 | Ningbo Port | 592,183,095.14 | Fair value method | 1,361,414,474.58 | 154,574,350.85 | - | 0.00 | 0.00 | 38,963,830.39 | 1,548,914,671.20 | Trading financial assets | Self-owned |
| Stock | 06198 | Qingdao Port | 124,405,138.80 | Fair value method | 190,401,045.90 | 9,452,564.63 | - | 0.00 | 0.00 | 15,816,321.98 | 204,263,917.11 | Trading financial assets | Self-owned |
| Stock | 601298 | Qingdao Port | 331,404,250.30 | Fair value method | 413,280,000.00 | 202,720,000.00 | - | 0.00 | 0.00 | 42,526,400.00 | 616,000,000.00 | Trading financial assets | Self-owned |
| Stock | 600377 | Jiangsu Expressway | 1,120,000.00 | Fair value method | 9,800,000.00 | - | 1,065,000.00 | 0.00 | 0.00 | 460,000.00 | 11,220,000.00 | Other equity instrument investment | Self-owned |
| Stock | 400032 | Petrochemical A1 | 3,500,000.00 | Fair value method | 382,200.00 | - | 0.00 | 0.00 | - | 382,200.00 | Other equity instrument investment | Self-owned | |
| Stock | 400009 | Guang Jian 1 | 27,500.00 | Fair value method | 17,000.00 | - | 0.00 | 0.00 | - | 17,000.00 | Other equity instrument investment | Self-owned | |
| Total | 1,052,639,984.24 | -- | 1,975,294,720.48 | 366,746,915.48 | 1,065,000.00 | 0.00 | 0.00 | 97,776,552.38 | 2,380,797,788.31 | -- | -- | ||
(2) Investments in Derivative Financial Instruments
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 | Not | Currency swap | 20,177.33 | 29 March | 26 March | 20,177.33 | 0 | 20,177.33 | - | 0 | 0.00% | -1,496.24 |
China Merchants Port Group Co., Ltd. Annual Report 2019
| party | 2018 | 2019 | |||||||||||
| 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 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 | No such significant changes | ||||||||||||
China Merchants Port Group Co., Ltd. Annual Report 2019
| derivative investments in the Reporting Period compared to the last reporting period | |
| Opinion of independent directors on derivative investments and risk control | N/A |
5. Use of Funds Raised
(1) Overall Usage of Funds Raised
Unit: RMB’0,000
| Year | Way of raising | Total funds raised | Total funds used in the Current Period | Accumulative fund used | Total funds with usage changed | Accumulative funds with usage changed | Proportion of accumulative funds with usage changed | Total unused funds | The usage and destination of unused funds | Among of funds raised idle for over two years |
| 2019 | Private placement | 221,282.91 | 213,408.73 | 213,408.73 | 18,599.73 | 18,599.73 | 8.41% | 127,984.00 | Deposited in funds raising account | 0 |
| Total | -- | 221,282.91 | 213,408.73 | 213,408.73 | 18,599.73 | 18,599.73 | 8.41% | 127,984.00 | -- | 0 |
| Explanation of overall usage of funds raised | ||||||||||
| As approved in the document “ZJXK [2018] No. 1750” of CSRC, CMPort issued 128,952,746 RMB ordinary shares (A Share) at RMB 17.16 per share through private placement on Shenzhen Stock Exchange. The total fund raised was RMB2,212,829,121.36, and after deducting fees associated with the issuance of shares, the net fund raised was RMB2,186,275,171.90. As of 22 October 2019, the aforementioned fund was fully paid, which was verified by BDO China Shu Lun Pan Certified Public Accounts LLP with a capital verification report (XKSBZ [2019] No. ZI10673). As of 31December 2019, a total of RMB2,134,087,334.98 in the Company’s fund account had been used, including: (1) RMB582,722,414.48 for replacing the self-funding spent on fundraising investment projects in advance; (2) RMB324,533,139.29 as raised fund invested after the fund was paid; (3) RMB26,831,781.21 for paying issue fees; (4) RMB1,200,000,000.00 for purchasing structured deposits. The net amount of interest income generated from the fund account is RMB784,159.99 after deducting surcharges; the amount of structured deposits redeemed is RMB100,000,000.00; the amount of income from structured deposits is RMB302,465.75; as of 31 December 2019, the balance amount deposited in the fund-raising account is RMB1,279,840,027.27. | ||||||||||
(2) Commitment Projects of Fund Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
| Committed investment project and super raise fund arrangement | Changed or not (including partial changes) | Committed investment amount | Investment amount after adjustment (1) | Investment amount in the Reporting Period | Accumulative investment amount as of the period-end (2) | Investment schedule as the period-end (3)＝(2)/(1) | Date of reaching intended use of the project | Realized income in the Reporting Period | Whether reached anticipated income | Whether occurred significant changes in project feasibility |
| Committed investment project | ||||||||||
| Supporting transformation project of Han Port | Yes | 18,599.73 | - | - | - | - | - | N/A (Note 1) | No | No |
| Transformation project of Haixing Harbor (Phase II) | No | 200,000 | 218,599.73 | 90,725.55 | 90,725.55 | 41.50% | 31 December 2020 | N/A (Note 2) | No | No |
| Subtotal of committed investment project | -- | 218,599.73 | 218,599.73 | 90,725.55 | 90,725.55 | -- | -- | -- | -- | |
| Super raise fund arrangement | ||||||||||
China Merchants Port Group Co., Ltd. Annual Report 2019
| N/A | ||||||||||
| Subtotal of super raise fund arrangement | -- | - | - | - | - | -- | -- | 0 | -- | -- |
| Total | -- | 218,599.73 | 218,599.73 | 90,725.55 | 90,725.55 | -- | -- | 0 | -- | -- |
| Condition and reason for not reaching the schedule and anticipated income (by specific items) | Notes: 1. Based on the estimated construction progress of supporting transformation project of Han Port, US$ 79 million and USD281 million were planned to be used to build an oil wharf and a tank area respectively in 2019 and 2020; USD12.48 million and 179.6 million were planned to be used to acquire quay cranes, yard cranes and other operating equipment respectively in 2019 and 2020. The funds were estimated to be fully spent by 2020. So far the project has been delayed. According to its overall development planning, to further optimize its internal resource allocation, increase the utilization efficiency of funds and safeguard shareholders’ rights and interests, the Company used RMB185,997,300 of the fund raised in transformation project of Haixing Harbor (Phase II). As of 31 December 2019, a total of RMB0 had been invested in supporting transformation project of Han Port. 2. Transformation project of Haixing Harbor (Phase II) is currently under construction and thus has not generated income. | |||||||||
| Notes of condition of significant changes occurred in project feasibility | N/A | |||||||||
| Amount, usage and schedule of super raise fund | N/A | |||||||||
| Changes in implementation address of investment project | N/A | |||||||||
| Adjustment of implementation mode of investment project | N/A | |||||||||
| Upfront investment and transfer of investment project | On 22 November 2019, the 11th Extraordinary Meeting of the 9th Board of Directors in 2019 reviewed and approved the Proposal on the Replacement of Fund Raised to Self-owned Fund Invested in Advance, which all directors agreed to replace fund raised to self-owned fund invested in advance for RMB582,722,414.48. On 13 December 2019, the Company has completed the replacement. | |||||||||
| Idle fund supplementing the current capital temporarily | N/A | |||||||||
| Amount of surplus in project implementation and the reasons | N/A | |||||||||
| Usage and destination of unused funds | Unused fund was deposited in the fund-raising account. | |||||||||
| Problems incurred in fund using and disclosure or other condition | On 22 November 2019, the 11th Extraordinary Meeting of the 9th Board of Directors in 2019 reviewed and approved the Proposal on the Implementation of Cash Management by the Usage of Idle Fund, which agreed the Company to manage cash flow by using idle fund with not more than RMB1.2 billion. As of 31 December 2019, the Company has purchased structural deposits with RMB1.2 billion at CMBC Shenzhen New Times Sub-branch, among which RMB100 million has been redeemed with financing income of RMB302,465.75, and the residual RMB1.1 billion was still deposited in the structural deposits account. | |||||||||
China Merchants Port Group Co., Ltd. Annual Report 2019
(3) Changes in Items of Funds Raised
Unit: RMB’0,000
| Items after changes | Corresponding original committed items | Amount of planned funds invested after changes (1) | Actual investment amount in the Reporting Period | Accumulative investment amount as the period-end (2) | Investment schedule as the period-end (3)=(2)/(1) | Date of reaching intended use of the project | Realized income in the Reporting Period | Whether reached anticipated income | Whether occurred significant changes in project feasibility |
| Transformation project of Haixing Harbor (Phase II) | Supporting transformation project of Han Port | 218,599.73 | 90,725.55 | 90,725.55 | 41.50% | 31 December 2020 | 0 | No | No |
| Total | -- | 218,599.73 | 90,725.55 | 90,725.55 | -- | -- | 0 | -- | -- |
| Notes of reasons for changes, decision-making procedures and information disclosure (by specific items) | The usage of unused fund of RMB185.9973 million in supporting transformation project of Han Port was changed to the construction of transformation project of Haixing Harbor (Phase II). The matters of partial changes in fund raised investment has been approved by the Proposal on Partial Changes in Usage of Fund Raised, which was reviewed and approved on the 11th Extraordinary Meeting of the 9th Board of Directors in 2019 on 22 November 2019. The Announcement of Partial Changes in Usage of Fund Raised (Announcement No. 2019-85) has been disclosed on website www.cninfo.com.cn on 26 November 2019. As of 31 December 2019, the amount with usage changed was RMB185.9973 million. | ||||||||
| Condition and reason for not reaching the schedule and anticipated income (by specific items) | The transformation project of Haixing Harbor (Phase II) was under construction with not income generated. | ||||||||
| Notes of condition of significant changes occurred in project feasibility after changes | N/A | ||||||||
VI. Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII. Major SubsidiariesMajor fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10%
China Merchants Port Group Co., Ltd. Annual Report 2019
effect on the Company’s net profit
Unit: RMB
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| China Merchants Port Holdings Company Limited | Subsidiary | Port business, bonded logistics and property investment | HKD 40,614,228,170.92 | 130,735,954,605.62 | 81,817,505,637.49 | 7,845,242,646.62 | 9,077,943,319.13 | 7,421,484,985.59 |
| Shanghai International Port (Group) Co., Ltd. | Joint stock company | Business related to port, container and terminal | 23,173,674,650.00 | 142,177,295,917.96 | 90,788,857,656.04 | 36,101,631,985.21 | 11,869,077,426.37 | 9,925,845,382.34 |
Subsidiaries obtained or disposed in the Reporting Period
| Subsidiary | How subsidiary was obtained or disposed in the Reporting Period | Effects on overall operations and operating performance |
| Zhanjiang Port (Group) Co., Ltd. | Business combination not under the same control | Control realization to Zhanjiang Port and investment income recognized of long-term equity investment at fair value under the original equity method |
| Guangdong Zhanjiang Port Longteng Shipping Co., Ltd. | Business combination not under the same control | Port tug business newly added |
Notes of major holding companies and joint stock companiesThere is no information on major holding companies and joint stock companies for the Company todisclose during the Reporting Period.VIII. Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX. Outlook of the Future Development of the Company
1. Layout and trends of the industry
Looking into 2020, the growth of the global economy is expected to slow down due to the heighteningtrade barriers, rising geopolitical uncertainties, slow productivity growth, structural problems causedby aging population, as well as the impact of the spread of COVID-19 epidemic worldwide. Draggedby the prolonged sluggishness of the manufacturing industry, the economic growth of developedeconomies will narrow in 2020. Emerging markets and developing economies will face theuncertainties caused by the COVID-19 epidemic. The social and political turmoil in certain emergingeconomies, notably in regions such as the Middle East and North Africa, will drag economic growth.According to the forecast of IMF in January, the growth of global economy will be 3.3% in 2020,slightly up 0.4 percentage point as compared to that of 2019. In particular, the developed economieswill grow at 1.6%, down 0.1 percentage point as compared to that of 2019; and the emerging markets
China Merchants Port Group Co., Ltd. Annual Report 2019
and developing economies will grow at 4.4%, up 0.7 percentage point as compared to that of 2019.Global trade volume (including goods and services) will grow by 2.9%, up 1.9 percentage points ascompared to that of 2019. However, considering the impact from the global pandemic, IMF expectedto cut the above forecast.The year of 2020 marks the conclusion of the general development of a moderately prosperous societyand the “13th Five-Year” Plan. The Chinese economy will maintain reasonable growth rate and steertowards the direction of high-quality development. The Chinese government will continue toimplement active fiscal policy in 2020, and the effect of maintaining basically stable leverage ratiosof the macro-economy will be gradually revealed with domestic consumption, high-tech industriesand service industries continue to grow at a relatively fast pace.Despite the lingering uncertainties over Sino-US economic and trade frictions, the agreement reachedbetween the US and China on a first-phase trade deal will help to boost confidence in the globalmarket and hence stabilize market expectation. It should be noted that, although the outbreak of novelcoronavirus will bring impact to the Chinese economy in the short run, the epidemic will have limitedimpact on the Chinese economy in the mid-to-long term.In 2020, the global container shipping market will benefit from the restrained capacity growth whileat the same time, face the uncertainties brought by the spread of novel coronavirus. With the epidemicbeing gradually brought under effective control in China and enterprises resuming production in anorderly manner, China’s container shipping market has recovered rapidly. Benefitted from favorablefactors such as the de-escalation of US-China trade friction, the demand for seaborne freight volumeof the major East-West routes is expected to rise. It is expected that a rebound will be seen in thegrowth rate of seaborne freight volume of the non-major East-West routes and the South-North routes.Currently, with a determination to support economic globalization, China further opens up thenation’s gates for foreign trading, continues to roll out policies with equal emphasis on import andexport, loosens the restriction on market entry and further lowers import tariff. Through organizingImport Expo and other measures, China strengthens its alliance with trading partners, and henceincreases import volume of consumer goods. The new landscape of the fully open-up China that isall-rounded and multi-dimensional with diversified sectors will be conducive to both import andexport, and will in turn benefit the port industry. Furthermore, port business will welcome newdevelopment opportunities presented by the continuous advancement of policies in relation to thebuilding of world-class leading port, free trade port and marine center city. Under the newdevelopment trend of domestic and overseas economy and trade as well as the port and shippingindustry, the Company as a leading global comprehensive port service provider will be playing anincreasingly important role in the global supply chain.
2. Development strategies of the Company
The Company is striving to become a world-class comprehensive port service provider. The Companywill firmly adhere to the strategic principle of “leveraging on its long-term strategy, tapping thecurrent edges, driving through technology and embracing changes” and the goal of qualitydevelopment to accelerate the technology-powered innovation, thereby realizing a scientific globallayout with balanced development, providing first-class professional solutions and seeking morereturns for shareholders, which will in turn support the development of local economy and industries
China Merchants Port Group Co., Ltd. Annual Report 2019
and promote positive development of the port industry.Firstly, in respect of domestic strategies, the Company will, by seizing the opportunity arising fromthe supply-side reform and based on “regional consolidation and enhancement of synergy”, seek foropportunities for consolidation and cooperation on an ongoing basis across the five main coastalregions, with a view to further expanding and improving its port network layout within China. TheCompany will lead a new direction for the consolidation of regional ports with a key focus onconstantly improving the quality of port development with its best efforts.Secondly, in respect of overseas strategies, the Company will continue to capitalize on theopportunities arising from the “Belt and Road” initiative promoted by China and the internationalindustrial transfers, at the same time adapting to the trend of deploying mega-vessels and formingshipping alliances. Emphasis will be placed on the development of global major hub ports andgateway ports as well as areas with high market potential, fast-growing economy and promisingdevelopment prospect. The Company will grasp opportunities in port, logistics and relatedinfrastructures investment for the on-going enhancement of its global port network.Thirdly, in respect of innovation strategies, adhering to the principle of “driving through technologyand embracing changes”, the Company will continuously increase its investment in innovation andestablish a foothold in the technology high ground to support the future port development. By meansof technological innovation and innovative management, it will significantly enhance the efficiencyand effectiveness of port operation and become a leading enterprise in the automation transformationof traditional ports. It will also enrich the comprehensive port services through business modelinnovation.
3. Business plans for 2020
In 2020, firmly adhering to the strategic principle of “leveraging on its long-term strategy, tappingthe current edges, driving through technology and embracing changes”, the Company willconsistently develop new approaches to promote sustainable and high-quality development with afocus on stabilizing growth, improving quality and efficiency, enhancing capability, promotingreform, strengthening innovation, controlling risks and recruiting talents, striving to be “a world-classcomprehensive port service provider”.Regarding the development of homebase port, the Company will strive to establish world-classleading ports. The Company will strengthen its business-related work in the West Shenzhen Port Zoneand, in tandem with the optimization of channels and other resources, actively facilitate thedevelopment of ocean-going routes, promote paperless waterborne customs transit, improve thestandard of its feeder services and establish a platform for the Western Pearl River Delta strategy.Also, the Company will establish an innovative intelligent corridor of Mawan Intelligent Port. CTOSwill be upgraded with standardized operation systems, servers and databases to support automationand intelligence as well as enable the introduction of big data mechanism and cloud storage. Tosupport the transformation plan of Haixing Port, the Company will complete the delivery andacceptance of section 2 and 3 of the Public Channel outside West Shenzhen Port Zone, realise regularnight services of Tonggu Channel and expedite the construction of phase II of the seaward channelof West Shenzhen Port Zone. In terms of overseas homebase port, CICT will deepen its reform onmanagement of repair and maintenance service providers to enhance the efficiency and quality of
China Merchants Port Group Co., Ltd. Annual Report 2019
repair and maintenance and thus guarantee smooth operation and production. Customer values willalso be analyzed on an on-going basis to adopt appropriate business strategies. In addition, it willfollow the development strategy of HIPG to promote their synergistic business development withCICT. It will also optimize the incentive mechanism for technological innovation to encourage allstaff to participate in innovation and expand the channels for innovation. HIPG will expand its oiland gas business, container business and maritime services, and facilitate the work in relation to theintroduction of investment and capital for the port’s logistic park simultaneously.As for overseas operation, the Company will improve the management system for global operation.Based on the overseas layout of “East-West routes, South-North routes, regions along the Belt andRoad Initiative”, the Company will work diligently on the overall development plan of overseasprojects. It will also strengthen the work in relation to research on various segments of the globalmarket to proactively capture investment opportunities in emerging market overseas. Moreover, itwill devote greater efforts in the cultivation of its market development team to enhance marketdevelopment, at the same time optimizing its management mechanism to further promote theestablishment of a quantitative management system with a view to improving its operationmanagement efficiency. The Company will also establish overseas talent team and improve theperformance evaluation and incentive mechanism.In respect of comprehensive development, the Company will deepen the promotion of the “Port-Park-City” model. Capitalising on the opportunities arising from industries upgrade and migration, theCompany will achieve the value extension of its core port operation and deeply explore its potential.Regarding the Djibouti comprehensive development project, the Company will continue to makeefforts for the construction and development of the Djibouti International Free Trade Zone andpromote the implementation of projects such as the transformation of old ports. Regarding the HIPGproject, the Company will thoroughly carry out the work in relation to the introduction of investmentand capital, at the same time deepening the promotion of relevant businesses such as containers, oil,energy and gas, and maritime affairs in accordance with the overall planning for future development.With regard to innovative development, the Company will adhere to the “technology-driven”principle to enhance its competitiveness. The Company has established the Development andResearch Center of CMPort, through which it will be committed to the building of a technologyinnovation ecosystem of CMPort and exporting of port technology innovation programmes, with anaim to become the link between industry, education and research. The “CM Chip” platform willmainly develop leading products for the three major industries, including CTOS (Container TerminalOperation System), BTOS (Bulk Cargo Terminal Operation System) and LPOS (Logistic ParkOperation System), striving to realise intelligent production and operation within the terminals. The“CM ePort” platform will innovate the service models through improvement of the informationservice system of port zones and the “Port+Internet” approach, with an aim to develop competitivecustomer services for ports and terminals.Regarding operation management, the Company will strive to establish an operation management andcontrol system for sustainable value creation. The Company will carry on and enhance the “Projectof Improving Quality and Efficiency”, improve the quality of its measures and promote the integrationof its measures for improving quality and efficiency with its strategic goals, daily work and actualbusiness, which will help to realise high-quality development. The Company will streamline thegovernance structure and operation management and control system for the global operation
China Merchants Port Group Co., Ltd. Annual Report 2019
headquarters. An intelligent operation management platform will be developed to digitalise theproduction process of and gather data from various business units so as to restructure the refinedmanagement system for ports and develop a supporting system for intelligent decision-making of themanagement members of headquarters and at different levels of the Company.
With regard to marketing and commerce, the Company will strengthen its client-orientedmanagement mechanism for marketing and commerce. A sound interaction mechanism will beestablished for marketing and commerce-related matters between the headquarters and the terminalsmanaged by the Company. The Company will devote more efforts in guiding and coordinating withits subsidiaries in order to deliver efficient headquarters function in terms of marketing and commerce.It will also deepen the cooperation with shipping companies and carry out commercial planning forports by regions, and strengthen its cooperation with major cargo owners to expand its hinterland.Moreover, the Company will strengthen its relationship with customers with extending its influencein the industry as its key priority.In respective of capital expenditure plans, in 2020, the Company will formulate capital expenditureplans according to business development needs. Key investment projects include Haixing Harborupgrading and reconstruction project, Machong Port Bulk Grain Phase III Project, Zhanjiang PortXiashan Port General Terminal Project, Shantou Port Guangao Port Phase II project and theconstruction of HIPG container terminal in Sri Lanka, etc.
4. Possible risks and counter measures
(1) External risks
External risks are mainly attributable to the uncertainties brought by the spread of the novelcoronavirus worldwide, volatile global economic environment and political turmoil to the marketenvironment. On the international front, the global pandemic will cast a great impact on the globaleconomy, and the degree of impact is subject to the duration and scope of the epidemic. Globaleconomic and trade frictions have resulted in escalated trade barriers, while trade protectionism mayfurther dampen global business sentiment, leading to sluggish economic recovery in variouseconomies. The geopolitical tension maybe affect the already tentative confidence in commercialtrading and investment. All these uncertainties and risks will subdue the demand for global trading,container shipping and bulk cargo businesses, and hence pose challenges to the overseas operation ofthe Company. Domestically, Chinese economy has suffered from short-term repercussions broughtby the outbreak of novel coronavirus. The extended suspension of factories may affect China’s importof raw materials, as well as export of finished products. In addition, the economic environment inChina is still under the influence of Sino-US trade friction, weak investment sentiment in themanufacturing industry, rising inflationary pressure and other uncertain factors, which will bringuncertainties to the relevant business operations and revenue of the Company.In response to the potential external risks, in particular, the uncertainties and risks looming overforeign trading and import and export caused by the Sino-US trade friction and the outbreak of novelcoronavirus, the Company will take the initiative to adopt responsive measures. Firstly, the Companywill devote utmost effort into winning the battle against the epidemic, and simultaneously strive to
China Merchants Port Group Co., Ltd. Annual Report 2019
minimize the negative impact brought by it. Secondly, strategies pertaining to the national “Belt andRoad” initiative and the development of Guangdong-Hong Kong-Macao Greater Bay Area will becarried out proactively. Thirdly, the Company will capitalize on the opportunities presented by a newround of high-level opening-up policy to pursue “improvement in quality and efficiency” of relevantport operations. Fourthly, the Company will continue to enhance its capability in risk identification,warning and resolution, follow and study the industrial development and trading movements inupstream and downstream industries, as well as timely adjust its business operation strategies toensure effective prevention, control and mitigation of external risks.
(2) Internal risks
The internal risks of the Company are mainly attributable to credit default of customers, labourshortage and compliance risk of overseas investment projects. During the Reporting Period, negativenews in respect of bankruptcy, heavy indebtedness and illegal operation of various shippingcompanies were being circulated in the market, subjecting the Company to a considerable risk ofcustomer default. Some of the subsidiaries are still facing a significant labour shortage. Factors suchas staff turnover, aging staff and low skill level have impaired the productivity of and createdoperational hurdles for such subsidiaries, thereby bringing uncertain risks to the Company'ssustainable development. As the Company’s overseas projects were gradually put into operation, thelegal and policy compliance requirements of countries and regions where our investments are locatedwill 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 risk of customer default, on the one hand, risk identification and warning will bestrengthened 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 andsafeguard the interests of the Company. As for the issue of labour shortage of the subsidiaries, theCompany will expedite technological upgrade for advancement of the automated operation level atthe terminals, so as to facilitate the optimization of personnel structure. Regarding the compliancerisks of overseas investment projects, the Company will step up its efforts in the establishment andenforcement of compliance management system with reference to the regulatory requirements of theplaces where its projects are located, as well as reinforce the management and control throughout theprocess of overseas project investment and operations, with a view to strictly preventing legalcompliance risks.X. Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
| Date | Way of communication | Type of communication party | Index to basic information of researches |
China Merchants Port Group Co., Ltd. Annual Report 2019
| 14 May 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 22 May 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 29 May 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 5 June 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 11 June 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 18 June 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 10 July 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 4 September 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 5 September 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 25 September 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
China Merchants Port Group Co., Ltd. Annual Report 2019
| 28 November 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 5 December 2019 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| 1 January 2019 to 31 December 2019 | By phone, EasyIR platform of SZSE and e-mail | Individual | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| Times of communications | 160 | ||
| Number of institutions communicated with | 20 | ||
| Number of individuals communicated with | 140 | ||
| Number of other communication parties | 0 | ||
| Tip-offs or leakages of substantial supposedly-confidential information during communications | No | ||
2. Period-end to Disclosure Date
| Date | Way of communication | Type of communication party | Index to main information communicated |
| 1 January 2020 to 15 April 2020 | By phone or written inquiry (EasyIR platform of SZSE) | Individual | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index) |
| Times of communications | 39 | ||
| Number of institutions communicated with | 0 | ||
| Number of individuals communicated with | 39 | ||
| Number of other communication parties | 0 | ||
| Tip-offs or leakages of substantial supposedly-confidential information during communications | No | ||
China Merchants Port Group Co., Ltd. Annual Report 2019
Part V Significant EventsI. Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)Formulation, execution or adjustments of profit distribution policy for ordinary shareholders,especially cash dividend policy, in Reporting PeriodPursuant to the CSRC Guideline for Listed Companies No.3-Cash Dividends of Listed Companiesand the Notice of CSRC on Further Implement ting Matters Related to Cash Dividends of ListedCompanies, the Articles of Association clarifies the specific profit distribution policy, decision-making procedures and mechanism, adjustment of profit distribution policy, implementation of profitdistribution plan and profit distribution for foreign shares. During the Reporting Period, the Companyexecuted the profit distribution policy in strict compliance with the Articles of Association.
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | Yes |
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past threeyears (including the Reporting Period)
1. Dividend Payout Plan for 2017
As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the net profit of theCompany as the parent for 2017 stood at RMB731,510,588.25 and the cumulative distributable profitat RMB1,046,473,178.03.
(1) According to the Company Law and the Articles of Association of the Company, the Companymay stop making statutory surplus reserve when its accumulative amount reaches 50% of theregistered capital. The accumulative statutory surplus reserve of the Company as the parent stood atRMB520,074,434.56 for 2017, equal to 80.66% of the registered capital. Therefore, the Companyintends not to draw surplus reserve from retained earnings for 2017.
(2) Based on the total 644,763,730 shares as at the end of 2017, a cash dividend of RMB13.19 (taxincluded) was to be distributed for every 10 shares, with a total of RMB850,443,359.87 being
China Merchants Port Group Co., Ltd. Annual Report 2019
distributed.The Board of Directors of the Company published the implementation announcement on dividendpayout for 2017 on Securities Times and Ta Kung Pao (HK) dated 16 May 2018, and completed thedividend payout for the A-share and B-share holders on 23 May 2018 and 25 May 2018 respectively.
2. Dividend Payout Plan for 2018
As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the consolidated netprofit attributable to the Company as the parent for 2018 stood at RMB1,090,418,910.77 and the netprofit of the Company as the parent at RMB71,014,741.10.
(1) According to the Company Law and the Articles of Association of the Company, the Companywithdrew RMB7,101,474.11 of profit as statutory reserve. The accumulative distributable profit ofthe Company as the parent at the end of 2018 was RMB259,943,085.16.
(2) Base on the total 1,793,412,378 shares as at the end of 2018, a cash dividend of RMB1.14 (taxincluded) is to be distributed for every 10 shares, totaling RMB204,449,011.09.After the above-mentioned distribution, the retained earnings of the Company as the parent will beRMB55,494,074.07.The Board of Directors of the Company published the implementation announcement on dividendpayout for 2018 on Securities Times and Ta Kung Pao (HK) dated 3 July 2019, and completed thedividend payout for the A-share and B-share holders on 10 July 2019 and 12 July 2019 respectively.
3. Dividend Payout Plan for 2019
As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the consolidated netprofit attributable to the Company as the parent for 2018 stood at RMB2,898,192,168.84 and the netprofit of the Company as the parent at RMB1,031,693,987.55.
(1) According to the Company Law and the Articles of Association of the Company, the Companyshall withdraw 10% of profit as statutory reserve when the Company distributed the profit. TheCompany intended to withdraw RMB103,169,398.76 of profit as statutory reserve. The accumulativedistributable profit of the Company as the parent at the end of 2019 was RMB983,693,068.62.
(2) Base on the total 1,922,365,124 shares as at the end of 2019, a cash dividend of RMB4.60 (tax
China Merchants Port Group Co., Ltd. Annual Report 2019
included) was to be distributed for every 10 shares, totaling RMB884,287,957.04.After the above-mentioned distribution, the retained earnings of the Company as the parent will beRMB99,405,111.58.The above profit distribution plan still needs to be submitted to the 2019 Annual General Meeting forapproval.Cash dividend for ordinary shareholders in the past three years (including the Reporting Period)
Unit: RMB
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated statements for the year (B) | A as % of B (%) | Cash dividends in other forms (such as share repurchase) (C) | C as % of B (%) | Total cash dividends (including other forms) (D) | D as % of B (%) |
| 2019 | 884,287,957.04 | 2,898,192,168.84 | 30.51% | 0.00 | 0.00% | 884,287,957.04 | 30.51% |
| 2018 | 204,449,011.09 | 1,090,418,910.77 | 18.75% | 0.00 | 0.00% | 204,449,011.09 | 18.75% |
| 2017 | 850,443,359.87 | 2,365,214,907.43 | 35.96% | 0.00 | 0.00% | 850,443,359.87 | 35.96% |
The net profit attributable to the ordinary shareholders of the listed company in the 2018 and 2019consolidated statement is the data of the Company after the retrospective adjustment for businesscombination under the same control. The net profit attributable to the ordinary shareholders of thelisted company in the 2017 consolidated statements is the data of the Company before theretrospective adjustment for business combination under the same control.The Company was profitable in the Reporting period and the positive profits of the Company as theparent attributable to ordinary shareholders while the distribution plan of cash dividend for ordinaryshareholders was not proposed.
□ Applicable √Not applicable
II. Final Dividend Plan for the Reporting Period
| Bonus shares/10shares (share) | 0 |
| Cash dividend/10 shares (RMB) (tax inclusive) | 4.6 |
| Bonus issue from capital reserves (share/10 shares) | 0 |
| Share base (share) | 1,922,365,124 |
| Total cash dividends (RMB) (tax inclusive) | 884,287,957.04 |
| Cash dividends in other forms (such as share repurchase) (RMB) | 0.00 |
| Total cash dividends (including other forms) (RMB) | 884,287,957.04 |
| Distributable profits (RMB) | 1,081,244,306.00 |
| Cash dividends (including other forms) as % of total profits to be distributed (%) | 100% |
| Details of the cash dividends | |
China Merchants Port Group Co., Ltd. Annual Report 2019
| As the Company is in the mature stage of development with significant capital expenditures arrangement, when distributing profits, the proportion of cash dividends in this profit distribution shall be 40% at least. |
| Details of final dividend plan for the reporting period |
| As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the consolidated net profit attributable to the Company as the parent for 2018 stood at RMB2,898,192,168.84 and the net profit of the Company as the parent at RMB1,031,693,987.55. 1. According to the Company Law and the Articles of Association of the Company distributed the profit, 10% of the profit shall be withdrawn as statutory reserve. RMB103,169,398.76 of the profit is planned to be withdrawn as statutory reserve of the Company. The accumulative distributable profit of the Company as the parent at the end of 2019 was RMB983,693,068.62; 2. Base on the total 1,922,365,124 shares as at the end of 2019, a cash dividend of RMB4.60 (tax included) is to be distributed for every 10 shares, totaling RMB884,287,957.04. After the dividends distribution, the retained earnings of the Company as the parent will be RMB99,405,111.58. The above profit distribution plan still needs to be submitted to the 2019 Annual General Meeting for approval. |
III. Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and other Entities Fulfilled in the Reporting Period orOngoing at the Period-end
√ Applicable □ Not applicable
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in acquisition documents or shareholding alteration documents | CMGD and Broadford Global | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on safeguarding independence of CMPort made by CMGD and its person acting in concert Broadford Global: to safeguard the independence of finance, institutions, business and personnel of CMPort as well as independence and integrity of assets of CMPort. | 15 March 2018 | The commitment on safeguarding independence of CMPort is effective for a long time; the commitment on regulating related-party transactions is effective during the period when CMGD and its persons acting in concert possess control power over the Company | Ongoing |
| CMGD and Broadford Global | Commitments on horizontal competit | Commitment on regulating related-party transaction made by CMGD and corresponding persons acting in concert- Broadford Global: 1. CMGD/Broadford Global will make a great effort to reduce related-party transaction between CMGD/Broadford Global and its related parties as well as CMPort. Inevitable business dealings | 15 March 2018 | The commitment on safeguarding | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| ion, related-party transaction and capital occupation | or transactions shall be conducted as per marketization principle and fair price and the obligation of information disclosure shall be fulfilled pursuant to provisions; 2. CMGD/Broadford Global and its related parties ensure they will strictly observe related stipulations of laws, regulations, normative documents and Articles of Association of CMPort and equally execute shareholders' rights and fulfill shareholders' obligations together with other shareholders in line with legal program as well as won't seek improper interest with actual controller's status or damage legitimate interest of CMPort and other shareholders; 3. The above commitment is continuously effective during the period when CMGD/Broadford Global has the right to control CMPort. In case of losses incurred by CMGD/Broadford Global failing to fulfill the above commitment to CMPort, CMGD will bear corresponding compensation responsibility. | independence of CMPort is effective for a long time; the commitment on regulating related-party transactions is effective during the period when CMGD and its persons acting in concert possess control power over the Company | ||||
| CMG | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on regulating related-party transaction: 1. China Merchants Group will try its best to reduce related-party transaction between it and its related parties and CMPort. Inevitable business dealings or transactions shall be conducted as per marketization principle and fair price and the obligation of information disclosure shall be fulfilled pursuant to provisions; 2. China Merchants Group ensure they will strictly observe related stipulations of laws, regulations, normative documents and Articles of Association of CMPort and equally execute shareholders' rights and fulfill shareholders' obligations together with other shareholders in line with legal program as well as won't seek improper interest with actual controller's status or damage legitimate interest of CMPort and other shareholders; 3. The above commitment is continuously effective during the period when China Merchants Group has the right to control CMPort. In case of losses incurred by China Merchants Group failing to fulfill the above commitment to CMPort, China Merchants Group will bear corresponding compensation responsibility. | 15 March 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing | |
| Commitments made in time of asset restructuring | CMID | Commitment on restriction on share trading | 1. CMPort shares obtained by purchasing assets with shares issued this time are forbidden to be transferred or transacted in the market before the latter one between the date arising 36 months after the date when CMPort shares gained by CMID based on this transaction are registered under the name of CMID and the date when fulfillment of compensation obligations set forth in the Impairment Compensation Agreement for Issuing Shares To Purchase Assets signed by and between CMID and CMPort, separately and its supplementary agreement (if any) is over (except for repurchasing or presenting shares pursuant to Impairment Compensation Agreement for Issuing Shares To Purchase Assets and its supplementary agreement (if any)); 2. In case of closing price of CMPort stocks being lower than issue price for consecutive 20 transaction days within 6 months after completion of the transaction or such closing price being lower than issue price at the end of the 6th month after completion of the transaction, the lockup period of CMPort stocks held by CMID will be automatically lengthened for at least 6 months; 3. CMPort shares which derive from consideration shares obtained by CMID based on the transaction during the lockup period due to CMPort distributing stock dividend and capital reserve converted into increased capital shall be subject to the commitment regarding the above restricted | 26 December 2018 | 25 June 2022 | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| stock trade period; 4. In case that the transaction is placed on file for investigation and prosecution by judiciary authorities as well as registered and investigated by CSRC because false record, misleading statement or important omission happens to provided or disclosed information, CMID won't transfer its shares with rights and interests at CMPort before case investigation conclusion is drawn; 5. In case that lockup period set forth in the commitment is inconsistent with regulatory opinions from securities market supervision department or lockup period required by related provisions, CMID shall adjust the above lockup period pursuant to regulatory opinions from relevant securities market supervision department and related provisions. 6. After the above lockup period expires, CMID Port shall observe provisions of laws and regulations, related rules of Shenzhen Stock Exchange as well as Articles of Association of CMPort in case of reducing shares held by it. | |||||
| CMGD and Broadford Global | Commitment on restriction on share trading | 1. Before completion of the transaction, CMPort shares held by CMGD and Broadford Global (include increased shares because allotment of shares, giving bonus and capital reserve converted into increased capital occurs to CMPort) shall not be transferred within 12 months as of the date when the transaction is over (the registration date of new shares by purchasing assets with shares issued this time); 2. In case that lockup period set forth in the commitment is inconsistent with regulatory opinions from securities market supervision department or lockup period required by related provisions, CMGD shall adjust the above lockup period pursuant to regulatory opinions from relevant securities market supervision department and related provisions. 3. In case that the transaction is placed on file for investigation and prosecution by judiciary authorities as well as registered and investigated by CSRC because false record, misleading statement or important omission happens to provided or disclosed information, CMGD and Broadford Global won't transfer its shares with rights and interests at CMPort before case investigation conclusion is drawn. In case of losses incurred by CMGD and Broadford Global violate fulfill the above promise to CMPort, CMGD will bear corresponding compensation responsibility. | 26 December 2018 | 25 December 2019 | Completed |
| CMID | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on avoiding horizontal competition: 1. CMID and other enterprise controlled by CMID fail to engage in or participate in business or activity which is similar with and constitutes or likely constitutes competitive relation with main business conducted by CMPort and the enterprise controlled by it now; 2. CMID will try its best to promote CMID and other enterprise controlled by CMID not to directly or indirectly engage in or participate in or assist to engage in or participate in any business or activity which constitutes or likely constitutes competitive relation with main business conducted by CMPort and the enterprise controlled by it now and in the future independently or together with others; 3. In case of discovering any new business opportunity which constitutes or likely constitutes direct or indirect competitive relation with main business of CMPort or the enterprise controlled by it, CMID or CMID and other enterprise controlled by it will immediately notify CMPort in written as well as make a great effort to promote such business opportunity to be provided to CMPort or the enterprise controlled by it firstly according to reasonable and fair terms and conditions; 4. In case of CMPort or the enterprise controlled by it waiving such competitive new business opportunity and CMID or/and other enterprise controlled by it engaging in such competitive business, CMPort or the enterprise controlled by it will have the right to purchase any stock rights, assets or other rights and interests in the above competitive business from CMID or/and other enterprise controlled by it once or several times at any moment, or CMPort will select entrusted operation, leasing or contract operation of assets or businesses of CMID or/and other enterprise controlled by it in the above competitive business as per the mode permitted by national laws and regulations; 5. When CMID and other enterprise controlled by it plans to transfer, sell, rent out, conduct licensed use of or | 26 July 2018 | Effective until no-longer to be the largest shareholder of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| transfer or allow to use assets and businesses which constitutes or likely constitutes direct or indirect competitive relationship with main business of CMPort or the enterprise controlled by it in other way, CMID and other enterprise controlled by it will provide the right of priority assignment to CMPort or the enterprise controlled by it and promise to make a great effort to promote other enterprise controlled by CMID provide CMPort or the enterprise controlled by it with the right of priority assignment under the above situation; 6. As of the date when the commitment letter is provided, CMID promises to compensate all actual losses, damages and expenses arising from violation of any clause in the commitment letter by CMID or the enterprise controlled by it to CMPort or the enterprise controlled by it. | |||||
| CMID | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on regulating related-party transaction: 1. CMID and other enterprise controlled by it will make a great effort to avoid and reduce related-party transaction between CMPort and economic entity controlled by it; 2. CMID and other enterprise controlled by it will exercise stockholder's rights in accordance with related provisions of relevant laws and regulations as well as Articles of Association of CMPort and fulfill the obligation of vote avoidance at the moment of voting for related-party transactions involved by CMID and other enterprise controlled by it at the stockholders' meeting; 3. As for related-party transaction which is inevitable or occurs due to reasonable reason, CMID will carry out transaction pursuant to the principle of openness, fairness and justice for market transaction and based on fair and reasonable market price, perform related-party transaction decision-making process and legally fulfill information disclosure obligation to safeguard benefits of CMPort and other shareholders of CMPort in line with provisions of laws, regulations, normative documents and Articles of Association of CMPort; 4. It's ensured that no legitimate interest of CMPort and other shareholders of CMPort is damaged by related-party transaction based on status and influence of CMPort; 5. CMID will promote other enterprise controlled by it to observe the commitment of Subparagraph 1-4; 6. In case of CMID and other enterprise controlled by it violating the above commitment, causing rights and interests of CMPort and its shareholders are damaged, CMID will take corresponding compensation responsibility according to law. | 26 July 2018 | Effective until no-longer to be the largest shareholder of the Company | Ongoing |
| CMID | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment about keeping independence of CMPort: 1. After the transaction is completed, CMID will strictly observe related provisions regarding independence of listed Companies from CSRC and won't violate standard operating procedures of CMPort based on the first majority shareholder, conduct excessive intervention of operation and management activities of CMPort and its subsidiary, embezzle benefits of CMPort and its subsidiary or damage legitimate interest of CMPort and other shareholders; 2. CMID will ensure CMPort is independent from CMID and related parties in the aspects of business, asset, finance, personnel and institution; 3. CMID ensures independence of CMPort, CMID and other enterprise controlled by it fail to occupy capitals and resources of CMPort based on violation in any way and will strictly observe provisions of rules and regulations for avoiding occupation of related party funds from CMPort as well as related laws, regulations and normative documents; 4. The commitment letter takes effect as of the signature date of CMID as well as is legally binding upon CMID. CMID ensures it will strictly fulfill various commitments in the commitment letter and will take corresponding legal responsibility for losses incurred to CMPort due to violation of related commitment. | 26 July 2018 | Effective until no-longer to be the largest shareholder of the Company | Ongoing |
| CMG | Commitments on horizontal competition, related- | Commitment on avoiding horizontal competition: 1. China Merchants Group and the enterprise controlled by it (excluding CMPort Holdings and the enterprise controlled it) fail to engage in or participate in any business or activity which is similar with and constitutes or likely constitute direct or indirect competitive relationship with main business conducted by CMPort and the enterprise controlled by it now; 2. China Merchants Group will try | 26 July 2018 | Effective until no-longer to be the actual controller of the | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| party transaction and capital occupation | its best to promote enterprises controlled by it(except for CMPort and the enterprise controlled by it) not to directly or indirectly engage in or participate in or assist to engage in or participate in any business or activity which constitutes or likely constitutes competitive relation with main business conducted by CMPort and the enterprise controlled by it now and in the future independently or together with others; 3. In case of discovering any new business opportunity which constitutes and likely constitutes direct or indirect competitive relation with main business of CMPort or the enterprise controlled by it, China Merchants Group or enterprise controlled by it(except for CMPort and the enterprise controlled by it) will immediately notify CMPort in written as well as make a great effort to promote such business opportunity to be provided to CMPort or the enterprise controlled by it firstly according to reasonable and fair terms and conditions; 4. In case of CMPort or the enterprise controlled by it waives such competitive new business opportunity and China Merchants Group or the enterprise controlled by it (except for CMPort and the enterprise controlled by it) engaging in such competitive business, CMPort or the enterprise controlled by it will be entitled to purchase any equities, assets and other rights and interests in the above competitive business from China Merchants Group or the enterprise controlled by it (except for CMPort and the enterprise controlled by it) once or several times at any moment or CMPort will select entrusted operation, leasing or contract operation of assets or businesses of China Merchants Group or the enterprise controlled by it (except for CMPort and the enterprise controlled by it) in the above competitive business according to the mode permitted by national laws and regulations; 5. When China Merchants Group and the enterprise controlled by it (except for CMPort and the enterprise controlled by it) plans to transfer, sell, lease, allow to use or transfer or allow to use asset and business which constitutes or likely constitutes direct or indirect competitive relationship with main business of CMPort or the enterprise controlled by it in other way, China Merchants Group and the enterprise controlled by it (except for CMPort and the enterprise controlled by it) will provide the right of priority assignment for CMPort or the enterprise controlled by it and promise to make a great effort to promote the enterprise controlled by China Merchants Group to provide the of priority assignment for CMPort or the enterprise controlled by it under the above situation; 6. As of the date when the commitment letter is provided, China Merchants Group promises to compensate all actual losses, damages and expenses arising from violation of any clause in the commitment letter by China Merchants Group or the enterprise controlled by it to CMPort or the enterprise controlled by it. | Company | |||
| CMG | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on regulating related-party transaction: 1. China Merchants Group and other enterprise controlled by it will make a great effort to avoid and reduce related-party transaction between CMPort and economic entity controlled by it; 2. China Merchants Group and other enterprise controlled by it will exercise stockholder's rights in accordance with related provisions of relevant laws and regulations as well as Articles of Association of CMPort and fulfill the obligation of vote avoidance at the moment of voting for related-party transactions involved by CMID and other enterprise controlled by it at the stockholders' meeting; 3. As for related transaction which is inevitable or occurs due to reasonable reason, China Merchants Group will carry out transaction pursuant to the principle of openness, fairness and justice for market transaction and based on fair and reasonable market price, perform related-party transaction decision-making process and legally fulfill information disclosure obligation to safeguard benefits of CMPort and other shareholders of CMPort in line with provisions of laws, regulations, normative documents and Articles of Association of CMPort; 4. It's ensured that no legitimate interest of CMPort and other shareholders of CMPort is damaged by related-party transaction based on status and influence of CMPort; 5. China Merchants Group promotes other | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| enterprise controlled by it to observe the commitment set forth in Subparagraph 1-4 above; 6. In case of China Merchants Group and other enterprise controlled by it violating the above commitment, causing rights and interests of CMPort and its shareholders are damaged, China Merchants Group will take corresponding compensation responsibility according to law. | |||||
| CMG | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment about keeping independence of CMPort: 1. After the transaction is completed, China Merchants Group will strictly observe related provisions regarding independence of listed companies from CSRC and won't violate standard operating procedures of CMPort based on actual controller's status, conduct excessive intervention of operation and management activities of CMPort and its subsidiary, embezzle benefits of CMPort and its subsidiary or damage legitimate interest of CMPort and other shareholders; 2. China Merchants Group will ensure CMPort is independent from China Merchants Group and related parties in the aspects of business, asset, finance, personnel and institution; 3. China Merchants Group ensures independence of CMPort, China Merchants Group and other enterprise controlled by it fail to occupy capitals and resources of CMPort based on violation in any way and will strictly observe provisions of rules and regulations for avoiding occupation of related party funds from CMPort as well as related laws, regulations and normative documents; 4. The commitment letter takes effect as of the signature date of China Merchants Group as well is legally binding upon China Merchants Group. China Merchants Group ensures it will strictly fulfill various commitments in the commitment letter and will take corresponding legal responsibility for losses incurred to listed Company due to violation of related commitment. | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
| CMG | Commitments on lock-up of shares and shareholding reduction plan | 1. Before completion of the transaction, CMPort shares held by or indirectly controlled by China Merchants Group (include increased shares because allotment of shares, giving bonus and capital reserve converted into increased capital occurs to CMPort) shall not be transferred within 12 months as of the date when the transaction is over (the registration date of new shares by purchasing assets with shares issued this time); 2. In case that lockup period set forth in the commitment is inconsistent with regulatory opinions from securities market supervision department or lockup period required by related provisions, China Merchants Group shall adjust the above lockup period pursuant to regulatory opinions from relevant securities market supervision department and related provisions. 3. In case that the transaction is placed on file for investigation and prosecution by judiciary authorities as well as registered and investigated by CSRC because false record, misleading statement or important omission happens to provided or disclosed information, China Merchants Group won't transfer its shares with rights and interests at listed Company before case investigation conclusion is drawn; 4. During the period from the date of resumption of trading of the transaction to the date when the transaction is over, China Merchants Group has no share reduction plan. The above shares include original CMPort shares directly held or indirectly controlled by China Merchants Group as well as derivative shares of original shares directly held or indirectly controlled during the above period due to participation in profit and presenting shares by CMPort as well as capital reserve converted into increased capital. | 26 July 2018 | 25 December 2019 | Completed |
| CMG | Other commitment | Commitment letter about perfecting the property ownership certificate for land and house property of CMPort Holdings and the enterprise subordinate to it: 1. China Merchants Group will spare no effort to assist, promote and drive CMPort Holdings and the enterprise subordinate to it to standardize, perfect and solve ownership defects of properties such as land and house property; 2. The following situations happen to CMPort Holdings and the enterprise subordinate to it before completion of the transaction: (1) Land use right of ownership certificate which is being handled, the house property failing to be timely handled (except for results incurred by force majeure, law, policy, government administration | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| behavior and change in planned use of the land instead of CMPort Holdings and the enterprise subordinate to it); Or (2) Land use right of ownership certificate, the property ownership certificate failing to be handled (except for results incurred by force majeure, law, policy, government administration behavior and change in planned use of the land of CMPort Holdings and the enterprise subordinate to it); Or (3) In case of nonstandard other land use right and house property (except for results incurred by force majeure, law, policy, government administration behavior and change in planned use of the land instead of CMPort Holdings and the enterprise subordinate to it) and encountering actual losses (including but not limited to compensation, fine, expenditure and benefit lost), China Merchants Group will timely and fully compensate CMPort. | |||||
| CMG | Other commitment | Commitment letter about real estate leased by CMPort Holdings and the enterprise subordinate to it: In case of nonstandard situation of the leased property significantly influencing use of CMPort Holdings and the Company subordinate to it to engage in operation of normal business, China Merchants Group will actively take effective measures (including but not limited to arranging to provide the property with identical or similar conditions to be used for operation of related Company) to promote business operation of related Company to be conducted normally and alleviate or eliminate adverse effect; In case of nonstandard of the leased property causing CMPort Holdings and the enterprise subordinate to it produce actual additional expenditures or losses (such as third-party compensation), China Merchants Group will actively coordinate and negotiate with other related party to support normal operation of CMPort Holdings and the enterprise subordinate to it to the great extent and avoid or control continuous enlargement of the damage; At the same time, China Merchants Group agrees compensate CMPort Holdings and the enterprise subordinate to it in cash for actual losses incurred to CMPort Holdings and the enterprise subordinate to it for this reason to relieve or eliminate adverse effect. | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
| CMG | Other commitment | Commitment letter about allotted land of the enterprise subordinate to China Merchants Port Holdings Company Limited from China Merchants Group: In case that the above allotted land is withdrawn or needs to be translated into assignment land due to policy adjustment in the future after the transaction is completed, China Merchants Group will actively coordinate with CMPort and related companies such as China Merchants Group International Port (Qingdao) Co., Ltd. and Shantou CMPort Group Co., Ltd. to handle the transfer procedure or take other feasible countermeasures. In case of any actual loss (excluding land-transferring fees or rent, fees paid for taking rural land, ownership registration fees, taxes and dues and other related expenses to be paid by Chiwan Wharf or above-mentioned related companies according to provisions of laws and regulations) incurred to CMPort or above-mentioned related companies for this reason, China Merchants Group will timely and fully compensate actual loss incurred to CMPort or above-mentioned related companies. | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
| CMG | Other commitment | Commitment letter about undertaking the accreditation fees of property ownership certificate for the perfection of the land and house property of CMPort Holdings and the enterprise subordinate to it: In case of defective land use right and house property involved by the Company subordinate to CMPort Holdings on account of operation (namely land use right and house property of the Company subordinate to CMPort Holdings without complete ownership certificate existing before the transaction is completed), incurring registration fees such as taxes and dues, compensation and fine in the process of perfecting legal procedures of defective land use right and house property by the subordinate to CMPort Holdings, China Merchants Group will timely and fully compensate to the Company subordinate to CMPort Holdings for undertaking. | 14 September 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
| CMG | Other commit | Commitment letter about related matters of CMPort after the transaction is completed: After the transaction is completed, Chiwan | 30 September | Three to five years | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| ment | Wharf will become port business asset management headquarters and domestic capital operation platform of China Merchants Group, deeply participate in integration of domestic regional port assets and enlarge the scale of domestic listed assets to make net profit of CMPort Holdings (00144.HK) enjoyed as per the rights and interests in the consolidated statement of listed Company in recent one fiscal year fail to exceed 50% net profit of consolidated statement of the listed Company and net asset of CMPort Holdings (00144.HK) enjoyed in light of rights and interests in the consolidated statement of listed Company in recent one fiscal year fail to exceed 30% net asset in the consolidated statement of the listed Company within 3-5 years after the transaction is completed. | 2018 | and CMG is the actual controller of the Company | ||
| CMG | Other commitment | China Merchants Group and all its directors, supervisors and administrative officers ensure the transaction report, its abstract, other information provided for the transaction and application document are true, accurate and complete without false record, misleading statement or important omission as well as take individual and joint legal liability for false record, misleading statement or important omission. If the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), the directors, supervisors or senior managers of China Merchants Group do not transfer the shares that have interests in listed Company, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. In case of failing to file a locking application within two transaction days and after the Board of Directors is authorized for verification, identity information and account information on directors, supervisors or administrative officers of China Merchants Group will be directly submitted to Stock Exchange and Registration and Settlement Company with locking applied; In case of Board of Directors failing to submit identity information and account information on directors, supervisors or administrative officers of China Merchants Group to Stock Exchange and Registration and Settlement Company, Stock Exchange and Registration and Settlement Company will be authorized to directly lock related shares. In case that the situation of violating laws and rules is found upon investigation conclusion, directors, supervisors or administrative officers of China Merchants Group promise locked shares are voluntarily used for compensating related investors. | 26 July 2018 | Effective continuously | Ongoing |
| CMG Hong Kong | Other commitment | 1. CMG Hong Kong ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. CMG Hong Kong ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the documents are true. The signatory of such documents is legally authorized and effectively signs such documents without any false record, misleading statement or important omission; 3. CMG Hong Kong ensures descriptions and confirmations issued for the transaction is true, accurate and complete without false record, misleading statement or important omission; 4. CMG Hong Kong ensures that statutory disclosure and report obligation has been performed, and no contracts, agreements, arrangements or miscellaneous that should have been disclosed exists; 5. The CMG Hong Kong made the commitment that if the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), it does not transfer the shares that have interests in listed Company, and submit the written | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. In case of failing to file a locking application within two transaction days and after the Board of Directors is authorized for verification, identity information and account information on CMG Hong Kong will be directly submitted to Stock Exchange and Registration and Settlement Company with locking applied; In case of Board of Directors failing to submit identity information and account information on CMG Hong Kong to Stock Exchange and Registration and Settlement Company, Stock Exchange and Registration and Settlement Company will be authorized to directly lock related shares. If the investigation finds that there is a violation of the law, CMG Hong Kong committed to lock the shares voluntarily for the relevant investor compensation; 6. If CMG Hong Kong promises to related document, data and information provided in the reorganization process aren't true, accurate or complete or are with false record, misleading statement or important omission, CMG Hong Kong is willing to legally bear corresponding legal responsibility; 7. In case of CMG Hong Kong violating the above promise, incurring losses to CMPort, CMG Hong Kong will take corresponding compensation responsibility. | |||||
| CMID | Other commitment | 1. CMID ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. CMID ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the documents are true. The signatory of such documents is legally authorized and effectively signs such documents without any false record, misleading statement or important omission; 3. CMID ensures description and confirmation provided for the transaction are true, accurate and complete without any false record, misleading statement or important omission; 4. CMID ensures that statutory disclosure and report obligation has been performed, and no contracts, agreements, arrangements or miscellaneous that should have been disclosed exists; 5. The CMID made the commitment that if the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), it does not transfer the shares that have interests in CMPort, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. If the application for lock-up is not submitted within two transaction days, the Board of Directors is authorized to verify and submit the identity information and account information of CMID directly to the Stock Exchange and Registration and Settlement Company and apply for lock-up; If the Board of Directors fails to submit the identity information and account information of the CMID to the Stock Exchange and Registration and Settlement Company, then the Stock Exchange and Registration and Settlement Company shall be authorized to directly lock the relevant shares. If the investigation finds that there is a violation of the law, CMID committed to lock the shares voluntarily for the relevant investor compensation; 6. If CMID promises to related document, data and information provided in the reorganization process aren't true, accurate or complete or are with false record, misleading statement or important omission, CMID is willing to legally bear corresponding legal responsibility; 7. In case of CMID violating the above commitment, incurring losses to | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| CMPort, CMID will take corresponding compensation responsibility. | |||||
| CMPort Holdings | Other commitment | 1. CMPort Holdings ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. CMPort Holdings ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the documents are true. The signatory of such documents is legally authorized and effectively signs such documents without any false record, misleading statement or important omission; 3. CMID ensures description and confirmation provided for the transaction are true, accurate and complete without any false record, misleading statement or important omission; 4. CMPort Holdings ensures that statutory disclosure and report obligation has been performed, and no contracts, agreements, arrangements or miscellaneous that should have been disclosed exists; 5. CMPort Holdings made the commitment that if the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC); CMPort Holdings committed that if CMPort Holdings violated the above promise, incurring losses to CMPort, CMPort Holdings will take corresponding compensation responsibility. | 26 July 2018 | Effective continuously | Ongoing |
| CMG | Other commitment | 1. China Merchants Group ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. China Merchants Group ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the documents are true. The signatory of such documents is legally authorized and effectively signs such documents without any false record, misleading statement or important omission; 3. China Merchants Group ensures descriptions and confirmations issued for the transaction is true, accurate and complete without false record, misleading statement or important omission; 4. China Merchants Group ensures that statutory disclosure and report obligation has been performed, and no contracts, agreements, arrangements or miscellaneous that should have been disclosed exists; 5. China Merchants Group made the commitment that if the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), it does not transfer the shares that have interests in CMPort, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. In case of failing to file a locking application within two transaction days and after the Board of Directors is authorized for verification, identity information and account information of China Merchants Group will be directly submitted to Stock Exchange and Registration and Settlement Company with locking applied; In case of Board of Directors failing to submit identity information and account information of China Merchants Group to Stock Exchange and Registration and Settlement Company, Stock Exchange and Registration and Settlement Company will be authorized to directly lock related shares. If the investigation finds that there is a violation of the law, China Merchants Group committed to lock the shares voluntarily for the relevant investor compensation; 6. If China Merchants Group promises to related document, data and information provided in the reorganization process aren't true, accurate or complete or are with false record, | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| misleading statement or important omission, China Merchants Group is willing to legally bear corresponding legal responsibility; In case of China Merchants Group violating the above promise, incurring losses to CMPort, China Merchants Group will take corresponding compensation responsibility. | ||||||
| Chiwan Wharf and all directors, supervisors and senior management | Other commitment | Chiwan Wharf and all its directors, supervisors and administrative officers ensure the transaction report, its abstract, other information provided for the transaction and application document are true, accurate and complete without false record, misleading statement or important omission as well as take individual and joint legal liability for false record, misleading statement or important omission. If the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), the directors, supervisors, or senior managers of Chiwan Wharf do not transfer the shares that have interests in listed Company, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. In case of failing to file a locking application within two transaction days and after the Board of Directors is authorized for verification, identity information and account information on directors, supervisors or administrative officers of Chiwan Wharf will be directly submitted to Stock Exchange and Registration and Settlement Company with locking applied; In case of Board of Directors failing to submit identity information and account information on directors, supervisors or administrative officers of Chiwan Wharf to Stock Exchange and Registration and Settlement Company, Stock Exchange and Registration and Settlement Company will be authorized to directly lock related shares. In case that the situation of violating laws and rules is found upon investigation conclusion, directors, supervisors or administrative officers of Chiwan Wharf promise locked shares are voluntarily used for compensating related investors. | 26 July 2018 | Effective continuously | Ongoing | |
| Other commitments made to minority shareholders | China Nanshan Development (Group) Inc. | Other commitment | China Nanshan Development(group) Incorporation will irrevocably and unconditionally agrees it will ensure transferee of such land use right and its successor and assignee will be fully exempted from responsibility for the above matters in case of CMPort encountering losses, needing to bear expenses and liabilities, undergoing claim for compensation or needing to file a lawsuit due to any actual or potential illegal and unenforceable issues incurred by land use agreement and relevant documents signed and to be signed by it. | 20 March 2001 | Effective continuously | Ongoing |
| China-Africa Development Fund Co., Ltd. | Commitment of shares lock-up and share reduction plan | 1. The Company has agreed not to transfer the shares subscribed within twelve months from the end date of the issue (which refers to the listing date of the stock issued) by CMPort. It has requested the Board of CMPort to apply with the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. (CSDC) for locking the shares subscribed by the Company to make sure that the aforementioned shares held by the Company will not be transferred within twelve months from the end date of the issue. 2. Except for the sell permitted by regulatory authorities that does not constitute nonperformance or incomplete performance of the aforementioned commitment, the Company undertakes that it will authorize CSDC to transfer the fund from the sell into its account to be owned by all its shareholders if it violates the aforementioned commitment. 3. The Company declares that it will faithfully fulfill its commitment and bear corresponding legal liabilities. | 4 November 2019 | 3 November 2020 | Ongoing | |
| Shenzhen Infrastructure Investm | Commitment of shares lock-up and | The Company has agreed not to transfer the shares subscribed within twelve months from the end date of the issue (which refers to the listing date of the stock issued) by CMPort. It has requested the Board of CMPort to apply with the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. (CSDC) for locking the | 4 November 2019 | 3 November 2020 | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2019
| ent Fund Partnership (LP) | share reduction plan | shares subscribed by the Company to make sure that the aforementioned shares held by the Company will not be transferred within twelve months from the end date of the issue. 2. The Company committed that as not fulfilling nonperformance or incomplete performance of the aforementioned commitment, the Company shall compensate the direct economic loss of other shareholders. The Company undertakes that if it violates the aforementioned commitment, it will authorize CSDC to transfer the fund from the sale into its account to be owned by all shareholders. 3. 3. The Company declares that it will faithfully fulfill its commitment and bear corresponding legal liabilities. | ||
| Whether fulfilled on time | Yes | |||
| Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | N/A | |||
2. Where there Had Been an Earnings Forecast for an Asset or Project and the ReportingPeriod Was still within the Forecast Period, Explain why the Forecast Has Been Reached forthe Reporting Period.
□ Applicable √ Not applicable
IV. Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Partiesfor Non-Operating PurposesDuring the Reporting Period, the controlling shareholder or its related parties did not occupy capitalor repay for non-operating purposes. Deloitte Touche Tohmatsu Certified Public Accountants LLPissued the Special Report on Occupation of the Company’s Capital by the Controlling Shareholderand Other Related Parties, and refer to www.cninfo.com.cn for details.V. Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□ Applicable √ Not applicable
VI. YoY Changes to Accounting Policies, Estimates and MethodsThe Accounting Standards for Business Enterprises No. 21 – Lease (hereinafter referred to as “Newlease standard”) revised and issued by Ministry of Finance on 7 December 2018 required thatenterprises listed both domestically and overseas and enterprises listed overseas who prepare thefinancial statements by International Financial Reporting Standards or Accounting Standards forBusiness Enterprises shall implement it form 1 January 2019, and other enterprises implementing the
China Merchants Port Group Co., Ltd. Annual Report 2019
Accounting 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. Refer to Announcement on Changes of Accounting Policy (Announcement No.2019-031) on www.cninfo.com.cn. disclosed on 30 March 2019. In accordance with the regulationsof new standards governing financial instrument, the Company shall not adjust the informationbetween the comparable periods, and the accumulative influence in the first execution of the newstandards shall be adjusted to the retained earnings at the period-begin and the amount of otherrelevant item in the financial statements.On 30 April 2019, the Format of 2019 General Enterprises Financial Statement was revised andprinted by the Ministry of Finance, making partial amendments to the format of financial statements.The changes of format of financial statements were implemented from the interim financial reportson 30 June 2019. Refer to Announcement on Changes of Accounting Policy (Announcement No.2019-063) on www.cninfo.com.cn. disclosed on 31 August 2019.On 19 September 2019, the Format of 2019 Consolidated Financial Statement was revised and printedby the Ministry of Finance, making partial amendments to the format of financial statements on thebasis of the Format of 2019 General Enterprises Financial Statement and the Format of 2018 FinancialEnterprises Financial Statement. The changes of format of financial statements were implementedfrom the third quarter financial statements on 30 September 2019. Refer to Announcement onChanges of Accounting Policy (Announcement No. 2019-076) on www.cninfo.com.cn. disclosed on31 October 2019.For further information, please refer to (III) Changes in Main Accounting Policies and Estimates inPart XI Financial Statements for details.VII. Retrospective Restatements due to Correction of Material Accounting Errors in theReporting PeriodNo such cases in the Reporting Period.VIII. YoY Changes to the Scope of the Consolidated Financial StatementsOn 31 December 2018, the subsidiary of the Company, China Merchants International Terminal(Zhanjiang) Co., Ltd. held 1,620,000,000 ordinary shares of Zhanjiang Port, accounting for 40.2916%of the total shares issued by Zhanjiang Port. On 2 January 2019, the Company signed the Agreementof Share Transfer of Zhanjiang Port (Group) Co., Ltd. with Sinotrans Guangdong Co., Ltd., whichtransferred 201,034,548 shares of Zhanjiang Port held by Sinotrans Guangdong Co., Ltd., accountingfor 5% of total shares issued on the signing date with the consideration of transfer ofRMB375,334,390.00.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 issued
China Merchants Port Group Co., Ltd. Annual Report 2019
1,853,518,190 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.IX. Engagement and Disengagement of Independent AuditorCurrent independent auditor
| Name of the domestic independent auditor | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 586.2 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 8 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Li Weihua, Zhang Min |
| How many consecutive years the certified public accountants have provided audit service for the Company | 1 |
| Name of the overseas independent auditor (if any) | Deloitte Touche Tohmatsu |
| The Company’s payment to the overseas independent auditor (RMB’0,000) (if any) | 363.8 |
| How many consecutive years the overseas independent auditor has provided audit service for the Company (if any) | 8 |
| Names of the certified public accountants from the overseas independent auditor writing signatures on the auditor’s report (if any) | Zhong Zhiwen |
| How many consecutive years the certified public accountants have provided audit service for the Company (if any) | 3 |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
Approved by the 5
th
Meeting of the 9
th
Board of Directors in 2019 and 2018 Annual General Meetingof the Company, the Company was allowed to continuously engage Deloitte Touche TohmatsuCertified Public Accountants LLP as the 2019 independent auditor for the audit of annual financialstatements and internal control in the current year. The audit price for 2019 annual financialstatements was RMB9.22 million and the price for internal control was RMB0.28 million. The totalexpense on aforesaid two audit work was RMB9.5 million.
China Merchants Port Group Co., Ltd. Annual Report 2019
X. Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI. Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII. Major Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIII. Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIV. Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XV. Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployeesThe Company had completed registration for the grant of stock option (the first grant) under the StockOption Incentive Plan (Phase I) as at March 13, 2020. Review and approval procedures carried out inconnection with the Stock Option Incentive Plan are as follows:
At the 2
ndnon-scheduled meeting of the Nomination, Remuneration and Appraisal Committee of theninth session of the Board of 2019 held on October 10, 2019, the following proposals were consideredand approved, including Stock Option Incentive Plan of CMPort (Draft) (hereinafter referred to asthe “Stock Option Incentive Plan (Draft)”) and its summary, Stock Option Incentive Plan of CMPort(Phase I) (Draft) (hereinafter referred to as the “Stock Option Incentive Plan (Phase I) (Draft)”) andits summary, Management Measures for the Stock Option Incentive Plan of CMPort (hereinafterreferred to as the “Management Measures for the Stock Option Incentive Plan”), Appraisal Measuresfor Implementing the Stock Option Incentive Plan and Implementation Appraisal Measures of StockOption Incentive Plan by China Merchants Port Group Co., Ltd. (hereinafter referred to as“Implementation Appraisal Measures of Stock Option Incentive Plan”)
(2) At the 9
thExtraordinary Meeting of the 9
thBoard in 2019 held on 11 October 2019, the followingproposals were reviewed and approved, including Stock Option Incentive Plan (Draft) and itssummary, Stock Option Incentive Plan (Phase I) (Draft) and its summary, Management Measures forthe Stock Option Incentive Plan, Appraisal Measures for Implementing the Stock Option Incentive
China Merchants Port Group Co., Ltd. Annual Report 2019
Plan and Proposal on Requesting the General Meeting to Authorize the Board of Directors to GoThrough Share Incentive Procedures, and independent directors expressed independent opinions. Atthe 2nd Extraordinary Meeting of the 9
thSupervisory Committee in 2019 held on the same day, thefollowing proposals were reviewed and approved, including Stock Option Incentive Plan (Draft) andits summary, Stock Option Incentive Plan (Phase I) (Draft) and its summary, Management Measuresfor the Stock Option Incentive Plan and Appraisal Measures for Implementing the Stock OptionIncentive Plan, and List of Incentive Objects under the Stock Option Incentive Plan (Phase I) wasreviewed with opinions expressed.
(3) On 3 January 2020, the Company received Approval on the Implementation of Stock IncentivePlan of CMPort (GZKF [2019] No. 748) issued by the State-owned Assets Supervision andAdministration Commission of the State Council from China Merchants Group, the actual controllerof the Company. In principle, approval was given to the Company for its implementation of the StockOption Incentive Plan and performance appraisal goals under the Plan.
(4) At the 1
st
Extraordinary Meeting of the 9
th
Board of Directors in 2020 held on 9 January 2020,Stock Option Incentive Plan (Phase I) (Revised Draft) and its summary were reviewed and approvedand independent directors expressed independent opinions. At the 1
st
Extraordinary Meeting of the
th
Supervisory Committee in 2020 held on the same day, Stock Option Incentive Plan (Phase I)(Revised Draft) and its summary were reviewed and approved and List of Incentive objects under theStock Option Incentive Plan (Phase I) (After Adjustment) was reviewed with opinions expressed.
(5) On 20 January 2020, the Company disclosed the List of Incentive Objects of Stock OptionIncentive Plan (Phase I) China Merchants Port Group Co., Ltd. The Company published the namesand positions of the incentive objects for the first grant of the stock option in its internal OA systemfrom 10 January to 19 January 2020. By the end of the publicity, the Company’s SupervisoryCommittee had not received any objection against the incentive objects for the first grant. TheSupervisory Committee reviewed the list of incentive objects for the first grant, and disclosed Notesof the Supervisory Committee on the Review and Publicity of the List of Incentive Objects under theStock Option Plan (Phase I) on 20 January 2020.
(6) At the 1st non-scheduled shareholders’ meeting of 2020 held on 3 February 2020, the followingproposals were considered and approved, including Stock Option Incentive Plan (Draft) and itssummary, Stock Option Incentive Plan (Phase I) (Revised Draft) and its summary, ManagementMeasures for the Stock Option Incentive Plan, Appraisal Measures for Implementing the StockOption Incentive Plan and Proposal on Requesting the General Meeting to Authorize the Board ofDirectors to Go Through Share Incentive Procedures. The Company’s Stock Option Incentive Planwas approved and the Board of Directors was authorized to determine the grant date, grant stockoption to the incentive objects when they meet the conditions and go through all procedures requiredfor the grant. On the same day, the Company disclosed Self-inspection Report on the Trading of theCompany’s Shares by Insiders and Incentive Objects of the Stock Option Incentive Plan (Phase I)according to its verification of the trading engaged by the insiders and incentive objects.
(7) At the 2
nd
Extraordinary Meeting of the 9
th
Board of Directors in 2020 and the 2
ndExtraordinaryMeeting of the 9
th
Supervisory Committee in 2020 held on 3 February 2020, Announcement on theGrant of Stock Option (the First Grant) to Incentive Objects of the Stock Option Incentive Plan of theCompany was considered and approved respectively. The Company’s Board of Supervisors reviewed
China Merchants Port Group Co., Ltd. Annual Report 2019
the list of incentive objects under the Stock Option Incentive Plan (Phase I) on the grant date andexpressed opinions, and independent directors expressed independent opinions.The Company had completed registration for the grant of stock option (the first grant) under the StockOption Incentive Plan (Phase I) as at 13 March 2020. On the next day, it published Announcementon Completion of the Grant of Stock Option (the First Grant) under the Stock Option Incentive Plan(Phase I) of the Company (Announcement No. 2020-020).XVI. Major Related-Party Transactions
1. Continuing Related-Party Transactions
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Transaction price (RMB’0,000) | Total value | As % of total value of all same-type transactions | Approved transaction line (RMB’0,000) | Over the approved line or not | Method of settlement | Obtainable market price for same-type transactions (RMB’0,000) | Disclosure date | Index to disclosed information |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Affiliated legal person | Render service | Exchange memo fee, office, other | Market price | 5,497.69 | 5,497.69 | 9.21% | 6,500.00 | No | Settled monthly | 5,497.69 | 30 March 2019 | www.cninfo.com.cn (Announcement No. 2019-032) |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Under the control of ultimate shareholder | Render service and leasing | Labor cost, lease expense of land and houses | Market price | 4,113.85 | 4,113.85 | 6.53% | 5,000.00 | No | Settled monthly | 4,113.85 | 30 March 2019 | www.cninfo.com.cn (Announcement No. 2019-032) |
| China Nanshan Development (Group) Inc. | Affiliated legal person | Leasing | Office, container yard, staff dormitory | Market price | 14,948.42 | 14,948.42 | 15.71% | 11,000.00 | Yes | Settled monthly | 14,948.42 | 30 March 2019 | www.cninfo.com.cn (Announcement No. 2019-032) |
| Total | -- | -- | 24,559.96 | -- | 22,500.00 | -- | -- | -- | -- | -- | |||
| Large-amount sales return in detail | None | ||||||||||||
| 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 Recognition of 2018 Daily Related-party Transaction and the Forecast of 2019 Daily Related-party Transaction was reviewed and approved on the 5th Meeting of the 9th Board of Directors on 28 March 2019, which allowed the Company and subsidiaries to conduct daily business transaction including office leasing, software procurement and labor coast. The amount of daily related-party transactions in 2019 is estimated to be RMB575 million. The actual amount of the above related-parties daily transactions was RMB246 million. Due to the requirements of actual market and business development, there was difference existed which belonged to the normal management adjustment, without major influences to the daily operation and performance of the Company. Refer to Announcement on Recognition of Daily Related-party Transactions in 2019 and the Forecast of Daily Related-party Transactions in 2020 disclosed on www.cninfo.com.cn dated 16 April 2020. | ||||||||||||
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | N/A | ||||||||||||
China Merchants Port Group Co., Ltd. Annual Report 2019
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Carrying value of transferring assets (RMB’0,000) | Estimated value of transferring assets (RMB’0,000) | Transfer price (RMB’0,000) | Method of settlement | Profit or loss on transaction (RMB’0,000) | Disclosure date | Index to disclosed information |
| Sinotrans Guangdong | The same ultimate actual controller | Assets purchase | The Company purchased the equity of Zhanjiang Port held by Sinotrans Guangdong | Fair value | 24,255.07 | 37,533.44 | 37,533.44 | Settled by times | 0 | 5 January 2019 | www.cninfo.com.cn (Announcement No . 2019-003) |
| Zhanjiang Infrastructure Investment | Senior manager of the Company holds the position the director | Assets purchase | The wholly-owned subsidiary, CWH (H.K.) subscribed 27.3544% of shares on issued date issued by Zhanjiang Port by RMB3,000,000,000.77. | Fair value | 193,868.92 | 300,001.97 | 300,000.00 | Settled by times | 0 | 9 January 2019 | www.cninfo.com.cn (Announcement No .2019-005) |
| Reason for any significant difference between the transfer price and the carrying value or estimated value (if applicable) | None | ||||||||||
| Influence to the business performance and financial condition | None | ||||||||||
| The realization of the performance in the Reporting Period if relevant transaction involved in performance commitment | N/A | ||||||||||
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
Whether there are credits and liabilities with non-operating related parties
√Yes □ No
China Merchants Port Group Co., Ltd. Annual Report 2019
Credits receivable with related parties
| Related party | Related relationship | Forming reason | Whether there is occupation on non-operating capital or not | Beginning balance (RMB’0,000) | Increased in the Reporting Period (RMB’0,000) | Recovered in the Reporting Period (RMB’0,000) | Interest rate | Interest in the Reporting Period (RMB’0,000) | Ending balance (RMB’0,000) |
| China Merchants Group Finance Co., Ltd. | Other company under the same control of controlling shareholder | Bank deposits | No | 49,413.12 | 829,195.99 | 789,602.59 | 2.04% | 781.47 | 89,006.52 |
| China Merchants Bank | The ultimate controlling shareholder has major influence on it | Bank deposits and structural deposits | No | 127,453.65 | 2,081,203.62 | 1,910,572.47 | 1.90% | 2,607.43 | 298,084.80 |
| Effects of credits with related parties on the Company’s operating results and financial conditions | The above credits receivable with related parties were mainly deposits in financial institutions which has no major influence on the Company’s operating results and financial conditions. | ||||||||
Liabilities payable with related parties
| Related party | Related relationship | Forming reason | Beginning balance (RMB’0,000) | Increased in the Reporting Period (RMB’0,000) | Recovered in the Reporting Period (RMB’0,000) | Interest rate | Interest in the Reporting Period (RMB’0,000) | Ending balance (RMB’0,000) |
| China Merchants Group Finance Co., Ltd. | Other company under the same control of controlling shareholder | Borrowing | 77,500 | 196,456.34 | 152,200.00 | 4.50% | 4,041.1 | 121,756.34 |
| China Merchants Bank | The ultimate controlling shareholder has major influence on it | Borrowing | - | 9,009.30 | - | 4.00% | 361.83 | 9,009.30 |
| Effects of liabilities with related parties on the Company’s operating results and financial conditions | The above liabilities payable with related parties were mainly financial institution loans which had no major influence on the Company’s operating results and financial conditions. | |||||||
5. Other Major Related-Party Transactions
(1) 17 companies have invested in CM Qianhai Industry, including CMPort Holdings and CMSK,holding subsidiaries of the Company. On 1 January 2019, CM Chidi, a subsidiary of CM QianhaiIndustry, entered into Confirmation of Compensation for Creditors’ Rights with the 19 land-holdingcompanies to determine the amount and proportion of land compensation for creditors’ rights of the19 land-holding companies. Ansujie and Antongjie, wholly-owned subsidiaries of CMPort Holdings,will receive about RMB5.693 billion from CM Chidi as compensation for the land use rights of about
China Merchants Port Group Co., Ltd. Annual Report 2019
471,800 square meters, accounting for 13.1758% of the total amount of land compensation forcreditor’s rights. In order to keep the proportion of land compensation for creditor's rights in line withthe proportion of 14% equity held indirectly by CMPort Holdings, Antongjie, Shekou AssetManagement and CM Chidi signed on 11 January 2019 the Agreement on Transfer of Creditor'sRights, to stipulate that Antongjie will purchase 0.8242% of land compensation for creditor's rightsfrom Shekou Asset Management, with an amount of creditor’s rights up to about RMB356 million.
(2) CWH (H.K.), a wholly-owned subsidiary of the Company, signed Agreement on a Capital Increaseto Zhanjiang Port (Group) Co., Ltd. with Zhanjiang Infrastructure Investment and Zhanjiang Port.According to the Agreement, Zhanjiang Port issued 1,853,518,190 additional ordinary shares at theprice of RMB 1.867 per share or the equivalent in the foreign currency (based on the exchange rateat 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 ofZhanjiang Port as at the date of issuance of such shares, at a total price of RMB3,000,000,000.77 orthe equivalent in the foreign currency (based on the exchange rate at the time of payment); andZhanjiang Infrastructure Investment subscribed for 246,662,271 shares, accounting for 4.1991% ofthe issued shares of Zhanjiang Port as at the date of issuance of such shares, at a total price of RMB460,518,459.96.
(3) The controlling subsidiary of the Company, CMPort signed the Supplemental agreement (II) ofthe Shareholder Agreement of Lac Assal Investment Holding Company Limited and Supplementalagreement (III) of the Shareholder Agreement of Lac Assal Investment Holding Company Limitedwith CMI on 22 January 2019 and Cheer Signal on 29 April 2019 respectively. The agreements agreedthat CMPort, CMI and Cheer Signal increased capital jointly to Lac Assal by cash according to theequity ratio in Lac Assal held by CMPort, CMI and Cheer Signal, totaling USD30,000,000 andUSD84,750,000 respectively, among which CMPort increased capital of USD12,000,000 andUSD33,900,000 respectively. After two-time capital increase, the registered capital of Lac Assal wasincreased to USD144,810,000 with no changes in equity ratio held by CMPort, CMI and Cheer Signal(40%, 40% and 20% respectively)
(4) The Company and subsidiaries opened the accounts at China Merchants Bank. In 2019, themaximum outstanding of deposits at China Merchants Bank f the company and subsidiaries is plannednot to be more than RMB5 billion and the maximum loan balance not over RMB10 billion.
(5) The wholly-owned subsidiary of the controlling subsidiary CMPort, CMHD signed LANDLEASE AGREEMENT with joint-stock subsidiary of CMPort, KHOR AMBADO FZCO on 28March 2019, which appointed CMID to lease the land located in B06/B07 Parcel of Djiboutiinternational free trade zone with the coverage area of 137,801.63 square meters and the rental ofUSD27,756,004.31. The lease term is from the effective date of LAND LEASE AGREEMENT to 14August 2116.
(6) The Company or its holding subsidiaries would use self-owned funds to provide shareholder loansof no more than RMB50 million to the participating subsidiary CM Antong with a loan term of nomore than two years (inclusive).To complete the equity assets transfer between the Company’s holding subsidiary CMPort Holdingsand CMA, CMPort Holdings or its controlled companies would provide TL with a financing of nomore than USD968 million, including guaranteed long-term loans of no more than USD500 millionwith a term of eight years and mandatory convertible securities of no more than USD468 million forthe subscription of TL. At the maturity of the long-term loans, CMA would provide the cash required
China Merchants Port Group Co., Ltd. Annual Report 2019
for repaying the loans by injecting capital in TL and all the convertible securities held by CMPortHoldings would be converted into TL’s equity on a mandatory basis.CM International Investment, a wholly-owned subsidiary of CMPort Holdings, would use self-ownedfunds to provide financial aid of RMB34.3 million for Tianjin Haitian, a participating subsidiary ofCMPort Holdings, in the form of entrusted loans. Tianjin Port Holdings Co., Ltd., the controllingshareholder of Tianjin Haitian, would provide financial aid of the same conditions according to thecontribution proportion with a loan term of three years.Information on the disclosure website for current announcements on significant related-partytransactions:
| Name of provisional reports | Disclosure date | Website |
| Announcement on Outward Investment and Related-party Transaction by the Wholly-owned Subsidiary | 9 January 2019 | www.cninfo.com.cn (Announcement No. 2019-005) |
| Announcement on Qianhai Land Readjustment and Related-party Transaction by the Wholly-owned Subsidiary of the Controlling Subsidiary | 12 January 2019 | www.cninfo.com.cn (Announcement No. 2019-008) |
| Announcement on Related-party Transaction by the Controlling Subsidiary | 13 February 2019 | www.cninfo.com.cn (Announcement No. 2019-012) |
| Announcement on Related-party Transaction by the Controlling Subsidiary | 30 April 2019 | www.cninfo.com.cn (Announcement No. 2019-043) |
| Announcement on Deposit and Loan of Related-party Transaction in 2019 at China Merchants Bank | 30 March 2019 | www.cninfo.com.cn (Announcement No. 2019-026) |
| Announcement on Signing the Land Lease Agreement and Related-party Transaction by the Wholly-owned Subsidiary of the Controlling Subsidiary | 30 March 2019 | www.cninfo.com.cn (Announcement No. 2019-029) |
| Announcement on Financial Assistance and Related-party Transaction by Joint-stock Subsidiary | 7 September 2019 | www.cninfo.com.cn (Announcement No. 2019-067) |
| Announcement on Financial Assistance and Outward Investment to the Joint-stock Subsidiary by the Controlling Subsidiary | 26 November 2019 | www.cninfo.com.cn (Announcement No. 2019-090) |
| Announcement on Adjustment of Deposit and Credit Limit with China Merchants Group Finance Co., Ltd. and Signing the Supplemental Agreement (II) of Financial Service Agreement and Related-party Transaction | 26 November 2019 | www.cninfo.com.cn (Announcement No. 2019-089) |
| Announcement on Financial Assistance and Related-party Transaction by Controlling Subsidiary | 25 December 2019 | www.cninfo.com.cn (Announcement No. 2019-098) |
XVII. Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
Details of entrustmentOn 13 December 2018, the Company held the 10
th
Extraordinary Meeting of the 9
thDirectors of theBoard, on which the Proposal on Signing Custody Agreement of Equity of Liaoning Port Group Co.,Ltd. between the Company and China Merchants (Liaoning) Port Development Co., Ltd. wasreviewed and approved. The Company was allowed to sign the Custody Agreement of Equity ofLiaoning Port Group Co., Ltd. with China Merchants (Liaoning) Port Development Co, Ltd., theindirect wholly-owned subsidiary of CMG, and made an appointment that China Merchants (Liaoning)
China Merchants Port Group Co., Ltd. Annual Report 2019
Port Development entrusted all 49.9% shares of Liaoning Port Group Co., Ltd. held by it as of 13December 2018 to the Company for management.Project which generates profit or loss reaching over 10% of total profits of the Company during theReporting 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 and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| CMA CGM SA | N/A | - | 11 June 2013 | 0 | General guarantee | About 6 years | Yes | No |
| CMA CGM SA | N/A | 8,030.52 | 11 June 2013 | 8,030.52 | General guarantee | About 20 years | No | No |
| PORT DE DJIBOUTI S.A., | N/A | - | 14 June 2016 | - | General guarantee | About 3 years | Yes | Yes |
| KHOR AMBADO FZCO | 30 March 2019 | 20,091.46 | 24 May 2019 | 11,839.84 | Joint liability guarantee | About 13 years | No | Yes |
| Total approved line for such guarantees in the Reporting Period (A1) | 20,091.46 | Total actual amount of such guarantees in the Reporting Period (A2) | 20,091.46 | |||||
| Total approved line for such guarantees at the end of the Reporting Period (A3) | 28,121.98 | Total actual balance of such guarantees at the end of the Reporting Period (A4) | 19,870.36 | |||||
| Guarantee between the Company to its subsidiaries | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Chiwan Wharf Holdings (Hong Kong) Limited | 30 March 2019 | 400,000.00 | 31 July 2019 | 300,000.00 | Joint liability guarantee | About 1 year | No | No |
| 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) | 300,000.00 | |||||
| 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) | 300,000.00 | |||||
| Guarantees provided between subsidiaries | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | 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. | 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 | 76,000.00 | Joint liability guarantee | About 10 years | No | No |
| 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 guarantee | About 10 years | No | No |
| China Merchants Finance Company Limited | 4 May 2012 | 348,810.00 | 4 May 2012 | 348,810.00 | General guarantee | About 10 years | No | No |
| China Merchants Finance Company Limited | 3 August 2015 | 348,810.00 | 3 August 2015 | 348,810.00 | General guarantee | About 10 years | No | No |
| China Merchants Finance Company Limited | 3 August 2015 | 139,524.00 | 3 August 2015 | 139,524.00 | General guarantee | About 5 years | No | No |
| CMHI Finance (BVI) Co., Ltd | 6 August 2018 | 627,858.00 | 6 August 2018 | v | General guarantee | About 5 years | No | No |
| CMHI Finance (BVI) Co., Ltd | 6 August 2018 | 418,572.00 | 6 August 2018 | 418,572.00 | General guarantee | About 10 years | No | No |
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 244,097.24 | 16 September 2012 | 8,677.55 | General guarantee | About 13 years | No | No |
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 10,464.30 | 16 September 2012 | 10,464.30 | General guarantee | Infinite | No | No |
China Merchants Port Group Co., Ltd. Annual Report 2019
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 17,440.50 | 16 September 2012 | 17,440.50 | General guarantee | Infinite | No | No |
| Colombo International Container Terminals Limited | 30 March 2019 | 200,000.00 | - | - | - | - | - | - |
| Lome Container Terminal Co., Ltd. | N/A | 7,815.50 | June 2015 | 1,695.96 | General guarantee | About 9 years | No | No |
| Lome Container Terminal Co., Ltd. | N/A | 7,815.50 | June 2015 | 1,695.96 | General guarantee | About 9 years | No | No |
| Lome Container Terminal Co., Ltd. | N/A | 7,815.50 | June 2015 | 1,695.96 | General guarantee | About 9 years | No | No |
| China Merchants Port Development (Shenzhen) Co., Ltd. | N/A | 320,000.00 | 31 July 2017 | 154,000.00 | Joint liability guarantee | About 5 years | No | No |
| China Merchants Port Development (Shenzhen) Co., Ltd. | 30 March 2019 | 100,000.00 | - | - | - | - | - | - |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 52,122.00 | 19 April 2018 | 46,909.80 | General guarantee | About 6 years | No | No |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 74,368.89 | 7 November 2016 | 74,368.89 | General guarantee | About 6 years | No | No |
| Shenzhen Haixing Harbor Development Co., Ltd. | 30 March 2019 | 219,090.00 | 26 June 2019 | 16,150.08 | Joint liability guarantee | About 3 years | No | No |
| Zhanjiang Port (Group) Co., Ltd. | 30 March 2019 | 80,000.00 | 23 August 2017 | 7,000.00 | Joint liability guarantee | About 2 years | No | No |
| HIPG, 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) | 219,090.00 | |||||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | 3,906,603.43 | Total actual balance of such guarantees at the end of the Reporting Period (C4) | 2,302,173.00 | |||||
| Total guarantee amount (total of the three kinds of guarantees above) | ||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 1,631,481.46 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 539,181.46 | |||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 4,347,525.41 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 2,622,043.36 | |||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 72.89% | |||||||
| Of which: | ||||||||
| Balance of guarantees provided for shareholders, actual controller and their related parties (D) | 11,839.84 | |||||||
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 2,178,280.42 | |||||||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 975,237.08 | |||||||
China Merchants Port Group Co., Ltd. Annual Report 2019
| Total of the three amounts above (D+E+F) | 3,165,357.34 |
| Joint responsibilities possibly borne in the Reporting Period for undue guarantees (if any) | None |
| Provision of external guarantees in breach of the prescribed procedures (if any) | None |
Particulars of guarantees adopting complex methods
□ Applicable √ Not applicable
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Entrusted Loans
Overview of entrusted loans in the Reporting Period
Unit: RMB’0,000
| Amount | Capital resources | Undue balance | Overdue amount |
| 3,430 | Self-owned funds | 3,430 | - |
Particulars of cash entrusted for wealth management with single significant amount or low security,bad liquidity, and no capital preservation
□ Applicable √ Not applicable
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVIII. Corporate Social Responsibilities
1. Fulfillment of Social Responsibilities
As an advocate and practitioner fulfilling the social responsibilities proactively, the Companyleverages its own professional strengths to participate in charitable activities such as environmentalprotection, urban renewal, targeted poverty alleviation and reconstruction assistance to disaster-stricken areas, with an aim to safeguarding the rights and interests of its employees, attaching
China Merchants Port Group Co., Ltd. Annual Report 2019
importance to occupational health development, promoting urban and rural economic developmentand improving people’s living standards. We also actively participate in various social organizationsand political parties and strengthen our communication with the government and the industries tomake use of our well-earned influence in the practice of enterprise social responsibilities.The Company is always committed to take on historical missions and has a strong sense of socialresponsibilities. During our journey of growth and development, we never steer away from theoriginal goal. We take the lead to address social problems, continue to seek for the matching point formutual development with the society and explore appropriate models for conducting charitablebusiness that meets the needs of the current generation. By leveraging our core strengths to launchprofessional charitable activities, support regional development and preserve fine cultures, we willincorporate social development needs into our daily operation activities and join hands with evenmore partners to create a harmonious society and promote social progress. Refer to SocialResponsibility Report of China Merchants Port Group Co., Ltd. in 2019 for the fulfillment of socialresponsibilities in the Reporting Period for details.
2. Measures Taken for Targeted Poverty Alleviation
(1) Plan of Targeted Poverty Alleviation
In 2019, the Company undertook the poverty alleviation thinking and requirements from ChinaMerchants Group Co., Limited, cooperated and participated actively in the investment of ChinaMerchants Group Co., Limited such as educational poverty alleviation, industrial poverty alleviationand infrastructure construction, dedicating to make contributions to builda moderately prosperous society in 2020 in all respects.The subsidiary of the Company, Zhanjiang Port Co., Ltd. carried out the targeted poverty alleviationin Mingli Village, Wuchuan, Guangdong Province. The plan is as follows:
Efforts have been made in the following aspects: First, in accordance with local government’s planson poverty alleviation, carry out poverty alleviation, cooperate in the building of new socialistcountryside, work towards industrial prosperity, ecological livability, effective governance and well-off society, improve rural environments and gradually promote rural revitalization. Second,strengthen party building in Mingli Village, beef up position building and promotion under partybuilding, strive to enhance the political theory level of party cadres, and drive the implementation ofpoverty alleviation. Third, guarantee the spending in poverty alleviation, expand the size of planting
China Merchants Port Group Co., Ltd. Annual Report 2019
and farming industries, drive the increase of project returns, raise the income of villagers and ruralcollectives, and strengthen poverty alleviation effects. Fourth, help impoverished households to findjobs and get rid of poverty in multiple respects. Fifth, help impoverished households in houserenovation and repair and achieve the goal of building prosperous life. Sixth, continue charity worksfor Mingli Primary School and assist in the building of educational facilities. Seventh, guarantee thebasic living needs of impoverished households. Eighth, promote consumption-based povertyalleviation and increase the income of impoverished households by buying their products instead ofdirect donation. Ninth, carry out condolence and other poverty alleviation work.
(2) Overview of Annual Targeted Poverty Alleviation
The subsidiary of the Company, Zhanjiang Port Co., Ltd. carried out the targeted poverty alleviationin Mingli Village, Wuchuan, Guangdong Province. The overview is as follows:
As of 31 December 2019, of the 127 persons in 47 impoverished households in Mingli Village, exceptfor one person in one new household enjoying the five guarantees in the year, 126 in 46 of thehouseholds reached the “Eight Haves” goal and completed the task of casting off poverty,representing a poverty alleviation rate of 100% (The lowest annual household per capita income isRMB9,000 and the highest is RMB29,000). In 2019, the annual per capita income of the impoverishedpopulation of Mingli Village reached RMB13,292.23 (compared with RMB3,500 when the Companyentered the Village for poverty alleviation in 2016), which had basically reached the 10 indicators forbeing excluded from relative impoverished villages. A number of projects have been completed andput to use, leading to substantial improvements to the appearance of the Village, delivering theachievements of building new socialist countryside to the villagers and further enhancing their senseof well-being.
(3) Results of Targeted Poverty Alleviation
| Index | Unit of measurement | Amount/implementation |
| I. Overall situation | - | - |
| Of which: 1. Fund | RMB’0,000 | 124.56 |
| 2. Materials converted to cash | RMB’0,000 | 126 |
| II. Subitem investment | - | - |
China Merchants Port Group Co., Ltd. Annual Report 2019
| 1. Industrial development poverty alleviation | - | - |
| Of which: 1.1 Type of plan of industrial development poverty alleviation | - | Agriculture and forestry industrial poverty alleviation |
| 1.2 Number of plan of industrial development poverty alleviation | Unit | 1 |
| 1.3 Number of persons out of poverty which were helped to set up file card | Person | 126 |
| 2. Transfer employment poverty alleviation | - | - |
| 2.1 Number of persons of vocational training | Person | 49 |
| 3. Relocation poverty alleviation | - | - |
| 4. Educational poverty alleviation | - | - |
| 4.1 Number of poor students supported | Person | 2 |
| 5. Healthcare poverty alleviation | - | - |
| 6. Ecological protection poverty alleviation | - | - |
| 7. Basic living standard guarantee | - | - |
| Of which: 7.1 Investment amount for three kinds of left-behind person | RMB’0,000 | 2.65 |
| 7.2 Assistant number of three kinds of left-behind person | Person | 9 |
| 8. Social poverty alleviation | - | - |
| 8.1 Investment amount of targeted poverty alleviation | RMB’0,000 | 100 |
| 9. Other plans | - | - |
| III. Awards received (content, level) | - | - |
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protectionauthorities.No.
The Company has made efforts to build green ports, formulate rules and policies on the managementof energy conservation and environmental protection, further specify the content and mechanism forcomprehensive monitoring and management of energy conservation and environmental protection,identify and deal with climate risk and beef up environmental risk assessment and management. TheCompany has continued to develop and apply new energy-efficient and eco-friendly technologies andproducts, further expand the application of a number of such technologies and products, such as “shipshore-based power supply” and “oil-to-electricity technology for reach stackers and stackers”, andperform monitoring, regulation and legal and conforming disposal of general and hazardous waste,
China Merchants Port Group Co., Ltd. Annual Report 2019
air pollution, dust pollution, water pollution and noise pollution. While promoting the concept ofgreen office and carrying out diverse green public welfare activities, the Company has advanced thebuilding of green supply chains and continuously enhanced its level of energy conservation, emissionreduction and environmental management. Refer to 2019 Social Responsibilities Report of CMPortfor detail on the Company’s environmental protection during the Reporting Period.
XIX Other Significant Events
1. Major Equity Acquisitions
During the Reporting Period, the Company included Zhanjiang Port into its consolidation scope. Thedetailed information is as follows:
On 31 December 2018, China Merchants International Terminals (Zhanjiang) Limited, a subsidiaryof the Company, obtained 1,809,310,930 shares of A common stock shares of the Zhanjiang Portrepresenting approximately 40.2916% of the total issued shares of the Zhanjiang Port.On 2 January 2019, the Company signed the Share Transfer Agreement on Zhanjiang Port (Group)Co., Ltd. with Guangdong Sinotrans Co., Ltd., which stipulated to transfer the ordinary shares of201,034,548 of Zhanjiang Port held by Sinotrans Guangdong Co., Ltd. to the Group which takeaccount 5% of the total shares issued by Zhanjiang Port at the agreement signing date at theconsideration of RMB375,334,390.00. For more information, refer to the Announcement on theResolution of the 1
st Special Meeting of the 9
th
Board of Directors in 2019 (Announcement No.: 2019-001) disclosed on the cninfo website on 3 January 2019.The subsidiary of the Company CWH (H.K.) signed in Zhanjiang on 8 January 2019 the Agreementon a Capital Increase to Zhanjiang Port (Group) Co., Ltd. with Zhanjiang Infrastructure Investmentand Zhanjiang Port (hereinafter referred to as the “Capital Increase Agreement”). According to theprovisions of the Capital Increase Agreement, Zhanjiang Port issued 1,853,518,190 additionalordinary shares at the price of RMB1.867 per share or the equivalent in the foreign currency (basedon 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 theissued shares of Zhanjiang Port as at the date of issuance of such shares, at a total price ofRMB3,000,000,000.77 or the equivalent in the foreign currency (based on the exchange rate at thetime of payment); and Zhanjiang Infrastructure Investment subscribed for 246,662,271 shares,accounting for 4.1991% of the issued shares of Zhanjiang Port as at the date of issuance of such shares,at a total price of RMB460,518,459.96. For details, please refer to the Announcement on Resolutionsof the 2
nd
Special Meeting of the 9
thBoard of Directors in 2019 (No.: 2019-004), Announcement ofChina Merchants Port Group Co., Ltd. on External Investments by the Wholly-owned Subsidiary andRelated-party Transactions (No.: 2019-005) disclosed on Cninfo on 9 January 2019 andAnnouncement on Resolutions of the 1
stExtraordinary General Meeting of 2019 (No.: 2019-013)disclosed on Cninfo on 25 January 2019.As of 3 February 2019, the above transaction was finished. Since then, the total ordinary shares inZhanjiang Port held by the Company were 3,427,890,467 shares accounting for 58.3549% of totalissued shares of Zhanjiang Port. The Company has the control power over Zhanjiang Port and mayenjoy unfixed returns through engaging in its relevant activities. Therefore, the Company included
China Merchants Port Group Co., Ltd. Annual Report 2019
Zhanjiang Port in the scope of the Company’s consolidated financial statements.
2. Introduction of Strategic Investors and Fundraising Projects
During the Reporting Period, the Company successfully introduced two strategic investors andfundraising projects. It has effectively improved the governance structure of the Company as a listedcompany and vigorously promoted the implementation of its strategies, bearing great significance tothe long-term development of the Company.The issue price of the private placement of stocks for the fund raised this time was RMB17.16 pershare, which was no less than 90% of the average stock trading price of CMPort for the 20 tradingdays prior to the date of pricing benchmark (RMB15.99/share) and no less than the audited net assetsper share of the Company at the end of the last reporting period (RMB17.15 per share). After thefundraising through the private placement of stocks, the Company had 128,952,746 additional shareswith a total raised fund of RMB2,212,829,121.36. The initial listing date of the aforementioned newshares was 4 November 2019. (Announcement No.: 2019-078)The Company had a total share capital of 1,793,412,378 shares before the registration of the newshares. After the private placement, its total share capital increased to 1,922,365,124 shares. The newshares of the fundraising through private placement are restricted tradable shares. Related specificinvestors who have subscribed the shares are not allowed to transfer within twelve months upon thedate of listing.The issue target of the financing is Shenzhen Infrastructure Investment Fund Partnership (LimitedPartnership) and China-Africa Development Fund Co., Ltd. The details are as follows:
| No. | Name of issue target | Shares | Amount (RMB) |
| 1 | Shenzhen Infrastructure Investment Fund Partnership (Limited Partnership) | 64,850,182 | 1,112,829,123.12 |
| 2 | China-Africa Development Fund Co., Ltd. | 64,102,564 | 1,099,999,998.24 |
| Total | 128,952,746 | 2,212,829,121.36 | |
The Articles of Association has made according adjustments for above changes of registered capitalwhich has been reviewed and approved by the 11
th Special Meeting of the 9
thBoard of Directors in2019 held on 22 November 2019 and the 4
thExtraordinary General Meeting of 2019 held on 11December 2019.
3. Information Disclosure Index
In the Reporting Period, the Company disclosed the following significant events on Securities Times,Ta Kung Pao (HK) and www.cninfo.com.cn:
| Announcement No. | Date | Title |
| 2019-001 | 3 January 2019 | Announcement on Resolutions of the 1st Special Meeting of the 9th Board of Directors in 2019 |
| 2019-002 | 3 January 2019 | Announcement on the Related-party Transaction regarding Assets Acquisition |
| 2019-003 | 5 January 2019 | Announcement on the Progress of the Related-party Transaction |
China Merchants Port Group Co., Ltd. Annual Report 2019
| regarding Assets Acquisition | ||
| 2019-004 | 9 January 2019 | Announcement on Resolutions of the 2nd Special Meeting of the 9th Board of Directors in 2019 |
| 2019-005 | 9 January 2019 | Announcement on the Related-party Transaction regarding Foreign Investments by the Wholly-owned Subsidiary |
| 2019-006 | 9 January 2019 | Reminder of Convening the 1st Extraordinary General Meeting of 2019 |
| 2019-007 | 12 January 2019 | Announcement on Resolutions of the 3rd Special Meeting of the 9th Board of Directors in 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 | Announcement on Voluntary Information Disclosure of Business Volume Data of December 2018 |
| 2019-010 | 19 January 2019 | Announcement on the Due Payment of 2018 Phase I Super-short-term Financing Bonds |
| 2019-011 | 23 January 2019 | Announcement on Resolutions of the 4th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-012 | 23 January 2019 | Announcement on a Related-Party Transaction of a Majority-Owned Subsidiary |
| 2019-013 | 25 January 2019 | Announcement on Resolutions of the 1st 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 Resolutions of the 5th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-017 | 2 February 2019 | Reminder of Convening the 2nd Extraordinary General Meeting of 2019 |
| 2019-018 | 12 February 2019 | Announcement on Progress of Related-party Transaction regarding Foreign Investments by the Wholly-owned Subsidiary |
| 2019-019 | 16 February 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of January 2019 |
| 2019-020 | 26 February 2019 | Announcement on Resolutions of the 2nd Extraordinary General Meeting of 2019 |
| 2019-021 | 16 March 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of February 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 Resolutions of the 5th Meeting of the 9th Board of Directors |
| 2019-024 | 30 March 2019 | Announcement on Resolutions of the 5th Meeting of the 9th Supervisors of Committee |
| 2019-025 | 30 March 2019 | Abstract of Annual Report 2018 |
| 2019-026 | 30 March 2019 | Announcement on the Related-Party Transaction Regarding Making Deposits in and Obtaining Loans from China Merchants Bank in 2019 |
China Merchants Port Group Co., Ltd. Annual Report 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 |
| 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 | Reminder of Convening the 3rd 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 Resolutions of the 3rd Extraordinary General Meeting of 2019 |
| 2019-039 | 16 April 2019 | Announcement on Voluntary Information Disclosure of 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 Resolutions of the 6th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-042 | 30 April 2019 | The Text of the First Quarter Report 2019 |
| 2019-043 | 30 April 2019 | Announcement on the Related-Party Transactions of a Majority-Owned Subsidiary |
| 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 | Reminder of Convening 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 | Announcement on Voluntary Information Disclosure of Business Volume Data of April 2019 |
| 2019-049 | 21 May 2019 | Announcement on Resolutions of the 2018 Annual General Meeting |
| 2019-050 | 31 May 2019 | Reminder of Issuance of 2019 Phase I and Phase II Super-short-term |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Financing Bonds | ||
| 2019-051 | 11 June 2019 | Announcement on Issue Results of 2019 Phase I and Phase II Super-short-term Financing Bonds |
| 2019-052 | 15 June 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of May 2019 |
| 2019-053 | 28 June 2019 | Announcement on Resolutions of the 7th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-054 | 3 July 2019 | Announcement on 2018 Equity Distribution Implementation |
| 2019-055 | 11 July 2019 | Announcement on an Estimated Growth in the H1 2019 Results |
| 2019-056 | 16 July 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of June 2019 |
| 2019-057 | 16 August 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of July 2019 |
| 2019-058 | 16 August 2019 | Announcement on Resignation of Securities Affairs Representative |
| 2019-059 | 30 August 2019 | Voluntary Announcement on Signing Strategic Cooperative Framework Agreement |
| 2019-060 | 31 August 2019 | Announcement on the 6th Meeting of the 9th Board of Directors |
| 2019-061 | 31 August 2019 | Announcement of the 6th Meeting of the 9th Supervisory Committee |
| 2019-062 | 31 August 2019 | Abstract of Interim Report 2019 |
| 31 August 2019 | Abstract of Interim Report 2019 (English Version) |
| 2019-063 | 31 August 2019 | Announcement on Changes of Accounting Policies |
| 2019-064 | 31 August 2019 | Announcement on the Disclosure of the 2019 Interim Results by a Majority-Owned Subsidiary |
| 2019-065 | 31 August 2019 | Announcement on the Online Investor Communication on the 2019 Interim Results to Be Held and Participation of 2019 Online Collective Reception Activity for Investors of Shenzhen Listed Companies |
| 2019-066 | 7 September 2019 | Announcement on Resolutions of the 8th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-067 | 7 September 2019 | Announcement on Providing Financial Aid for Sharing Companies and Related-party Transactions |
| 2019-068 | 16 September 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of August 2019 |
| 2019-069 | 11 October 2019 | Announcement on Resolutions of the 9th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-070 | 11 October 2019 | Announcement on Resolutions of the 2nd Special Meeting of the 9th Supervisory Committee in 2019 |
| 2019-071 | 11 October 2019 | Announcement on an Estimated Growth in the Q3 2019 Results |
| 2019-072 | 15 October 2019 | Announcement on the Due Payment of 2016 Phase I Medium Term Note |
| 2019-073 | 17 October 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of September 2019 |
| 2019-074 | 31 October 2019 | Announcement on Resolutions of the 10th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-075 | 31 October 2019 | The Text of the Third Quarter Report 2019 |
China Merchants Port Group Co., Ltd. Annual Report 2019
| 31 October 2019 | The Text of the Third Quarter Report 2019 (English Version) |
| 2019-076 | 31 October 2019 | Announcement on Changes of Accounting Policies |
| 2019-077 | 1 November 2019 | Asset Acquisition and Supporting Fund Raising by Share Issuance and the Related-party Transaction Regarding the Report on Result of Private Placement of Stocks and the Abstract of the Listing Announcement |
| 2019-078 | 1 November 2019 | Asset Acquisition and Supporting Fund Raising by Share Issuance and the Related-party Transaction Regarding the Report on Result of Private Placement of Stocks for Raising Supporting Funds |
| 2019-079 | 1 November 2019 | Announcement on Changes in Shareholdings of Directors, Supervisors and Senior Executives |
| 2019-080 | 1 November 2019 | Report on Commitments of Parties Related to Raised Supporting Funds |
| 2019-081 | 16 November 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of October 2019 |
| 2019-082 | 22 November 2019 | Announcement on Signing the Three-party Supervision Agreement on Raised Funds |
| 2019-083 | 26 November 2019 | Announcement on Resolutions of the 11th Special Meeting of the 9th Board of Directors in 2019 |
| 2019-084 | 26 November 2019 | Announcement on Resolutions of the 4th Special Meeting of the 9th Supervisory Committee in 2019 |
| 2019-085 | 26 November 2019 | Announcement on Changes in Use of Some Raised Funds |
| 2019-086 | 26 November 2019 | Announcement on Providing Borrowings for the Majority-owned Subsidiary with Raised Funds for Implementing the Equity Investment Project and Related-party Transactions |
| 2019-087 | 26 November 2019 | Announcement on Replacement of Self-raised Funds Previously Input with Raised Funds |
| 2019-088 | 26 November 2019 | Announcement on Cash Management with Idle Raised Funds |
| 2019-089 | 26 November 2019 | Announcement on Adjusting Quotas of Deposits and Loans and Signing the Supplementary Agreement II of Financial Service Agreement as well as Related-party Transactions with China Merchants Group Finance Co., Ltd. |
| 2019-090 | 26 November 2019 | Announcement on Providing Financial Aid by the Majority-owned Subsidiary to its Sharing Subsidiary and Related-party Transactions regarding External Investments |
| 2019-091 | 26 November 2019 | Reminder of Convening the 4th Extraordinary General Meeting of 2019 |
| 2019-092 | 27 November 2019 | Announcement on Approval of Public Issuance of Corporate Bonds |
| 2019-093 | 27 November 2019 | Announcement on Approval of Registration of Issuing Super-short-term Financing Bonds and Medium Term Notes |
| 2019-094 | 5 December 2019 | Announcement on the Due Payment of 2019 Phase I Super-short-term Financing Bonds |
| 2019-095 | 12 December 2019 | Announcement on Resolutions of the 4th Extraordinary General Meeting of 2019 |
| 2019-096 | 14 December 2019 | Announcement on Voluntary Information Disclosure of Business Volume Data of November 2019 |
| 2019-097 | 25 December 2019 | Announcement on Resolutions of the 12th Special Meeting of the 9th Board |
China Merchants Port Group Co., Ltd. Annual Report 2019
of Directors in 2019
2019-098
| 2019-098 | 25 December 2019 | Announcement on Providing Financial Aid by Majority-owned Subsidiaries and Related-party Transactions |
| 2019-099 | 25 December 2019 | Announcement on Resignation of Vice President |
XX Significant Events of Subsidiaries
On 25 November 2019, CMPort Holdings signed a memorandum of agreement with CMA, according to which,CMA intended to transfer the equity assets of 10 ports it held to Terminal Link (TL). To complete the transfer,CMPort Holdings would provide TL with a financing of no more than US$968 million, including guaranteed long-term loans of no more than US$500 million with a term of eight years and mandatory convertible securities of nomore than US$468 million for the subscription of TL. At the maturity of the long-term loans, CMA would providethe cash required for repaying the loans by injecting capital in TL and all the convertible securities held by CMPortHoldings would be converted into TL’s equity on a mandatory basis. On 26 March 2020, CMPort Holdingscompleted the acquisition of Phase I eight target ports, with the subscription of mandatory convertible securitiesand prepayment of the loans amounting to approximately US$815 million.
China Merchants Port Group Co., Ltd. Annual 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 | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I. Restricted shares | 1,148,860,804 | 64.06% | 128,952,746 | 0 | 0 | -42,554 | 128,910,192 | 1,277,770,996 | 66.47% |
| 1. Shares held by state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shares held by state-owned legal person | 0 | 0.00% | 128,952,746 | 0 | 0 | 0 | 128,952,746 | 128,952,746 | 6.71% |
| 3. Shares held by other domestic investors | 212,156 | 0.01% | 0 | 0 | 0 | -42,554 | -42,554 | 169,602 | 0.01% |
| Including: Shares held by domestic legal person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic natural person | 212,156 | 0.01% | 0 | 0 | 0 | -42,554 | -42,554 | 169,602 | 0.01% |
| 4. Shares held by foreign investors | 1,148,648,648 | 64.05% | 0 | 0 | 0 | 0 | 0 | 1,148,648,648 | 59.75% |
| Including: Shares held by foreign legal person | 1,148,648,648 | 64.05% | 0 | 0 | 0 | 0 | 0 | 1,148,648,648 | 59.75% |
| Shares held by foreign natural person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| II. Unrestricted shares | 644,551,574 | 35.94% | 0 | 0 | 0 | 42,554 | 42,554 | 644,594,128 | 33.53% |
| 1. RMB ordinary shares | 464,855,324 | 25.92% | 0 | 0 | 0 | 3,000 | 3,000 | 464,858,324 | 24.18% |
| 2. Domestically listed foreign shares | 179,696,250 | 10.02% | 0 | 0 | 0 | 39,554 | 39,554 | 179,735,804 | 9.35% |
| 3. Overseas listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Other | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total shares | 1,793,412,378 | 100.00% | 128,952,746 | 0 | 0 | 0 | 128,952,746 | 1,922,365,124 | 100.00% |
China Merchants Port Group Co., Ltd. Annual Report 2019
Reasons for share changes:
1. Raising supporting funds through share issuance; 2. Changes in directors, supervisors, and seniorexecutives of the Company in December 2018.
Approval of share changes:
On 19 June 2018, the Company’s 5
th Special Meeting of the 9
thBoard of Directors in 2018 reviewedand approved the Proposal on Raising Supporting Funds by the Company.On 28 June 2018, SASAC issued the Reply to the Issues in Respect of the Private Placement of A-Shares by Shenzhen Chiwan Wharf Holdings Limited (GZCQ [2018] No. 360). In principle, this planof raising supporting funds was approved.On 26 July 2018, the Company held the 2
nd
Extraordinary General Meeting of 2018 and approved theProposal on Raising Supporting Funds by the Company.On 9 October 2018, the Commission for Reviewing M&A of Listed Companies under ChinaSecurities Regulatory Commission approved the Company’s issue of shares by asset acquisition andraising of supporting funds and related-party transactions.On 31 October 2018, the Company received the Reply on the Approval of the Issue of Shares byShenzhen Chiwan Wharf Holdings Limited to China Merchants Investment Development CompanyLimited for Asset Acquisition and Raising of Supporting Funds (ZJXK [2018] No. 1750) from ChinaSecurities Regulatory Commission which approved this transaction.
Transfer of share ownership:
√ Applicable □ Not applicable
The Company received the Confirmation of Acceptance of Share Registration Application issued byChina Securities Depository and Clearing Co., Ltd. on 28 October 2019 which confirmed that theincreased shares issued by the listed company for raising supporting funds was 128,952,746(restricted public shares). The first trading day of above increased shares was 4 November 2019.
Progress on any share repurchases:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable tothe Company’s ordinary shareholders and other financial indicators of the prior year and the prioraccounting period, respectively:
The total shares in this private placement were 128,952,746, and the total share capital after theissuance was 1,922,365,124. The net asset value per share and earnings per share before and after thisissuance calculated on the basis of financial data of 2018 and January to September in 2019 were asfollows:
China Merchants Port Group Co., Ltd. Annual Report 2019
| Item | Before | After | ||
| January-September 2019/30 September 2019 | 2018/31 December 2018 | 2019/31 December 2019 | 2018/31 December 2018 | |
| Net asset value per share(RMB per share) | 18.4 | 17.15 | 18.71 | 17.14 |
| EPS (RMB per share) | 1.38 | 0.61 | 1.51 | 0.57 |
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
Unit: share
| Name of shareholders | Number of restricted shares at the period-begin | Number of increased restricted shares | Number of released restricted shares | Number of restricted shares at the period-end | Reason for restriction | Date of restriction release |
| China Merchants Investment Development Company Limited | 1,148,648,648 | 0 | 0 | 1,148,648,648 | According to relevant laws and regulations and the shareholder commitment | June 2022 |
| Yuan Yuhui | 10,530 | 0 | 0 | 10,530 | According to the Articles of Association and the relevant laws and regulations | - |
| Ni Keqin | 21,909 | 0 | 0 | 21,909 | According to the Articles of Association and the relevant laws and regulations | - |
| Zheng Shaoping | 9,496 | 0 | 0 | 9,496 | According to the Articles of Association and the relevant laws and regulations | - |
| Zhang Jianguo | 74,282 | 18,570 | 0 | 55,712 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Zhao Chaoxiong | 64,954 | 16,238 | 0 | 48,716 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Wang Yongli | 4,985 | 1,246 | 0 | 3,739 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Yao Shenglan | 26,000 | 6,500 | 0 | 19,500 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Total | 1,148,860,804 | 42,554 | 0 | 1,148,818,250 | -- | -- |
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
| Name of stock and its derivative securities | Issuing date | Issuing price (or interest rate) | Numbers | Listing date | Approved numbers for trading | Expiry date of the trading |
| Stock | ||||||
| Private placement of A shares | 28 October 2019 | RMB17.16 per share | 128,952,746 | 4 November 2019 | 128,952,746 | 4 November 2019 |
| Convertible corporate bonds, separate bargaining convertible corporate bonds and corporate bonds | ||||||
| Other derivative securities | ||||||
Explanation for securities (exclusive of preferred shares) issued in the Reporting PeriodOn 28 October 2019, the 128,952,746 A shares issued by the Company was registered on ShenzhenBranch of China Securities Depository and Clearing Corporation Limited. Those shares were tradedon Shenzhen Stock Exchange on 4 November 2019.
2. Changes to Total Shares, Shareholder Structure and Asset and Liability StructuresAt the beginning of the Reporting Period, the total share capital of the Company was 1,793,412,378shares. During the Reporting Period, shares through private placement for raising supporting fundswere 128,952,746 shares. After the registration of the increased shares, the total share capital of theCompany was changed into 1,922,365,124 shares. There is no case in which other shareholdersbecame the controlling shareholders of the Company through subscribing the shares in this privateplacement which will not cause any changes in the control power over the Company. After thisissuance, the listed company still conforms to the listing conditions of stock trading.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
China Merchants Port Group Co., Ltd. Annual Report 2019
| Number of ordinary shareholders at the period-end | 34,398 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 35,454 | Number of preferred shareholders with resumed voting rights at the period-end (if any) (see note 8) | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | 0 | |||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | Shares in pledge or frozen | |||||
| CHINA MERCHANTS INVESTMENT DEVELOPMENT COMPANY LIMITED | Foreign legal person | 59.75% | 1,148,648,648 | 0 | 1,148,648,648 | 0 | 0 | |||||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | State-owned legal person | 19.29% | 370,878,000 | 0 | 0 | 370,878,000 | 0 | |||||
| SHENZHEN INFRASTRUCTURE INVESTMENT FUND-SHENZHEN INFRASTRUCTURE INVESTMENT FUND PARTNERSHIP (LIMITED PARTNERSHIP) | Fund and wealth management products | 3.37% | 64,850,182 | 64,850,182 | 64,850,182 | 0 | 0 | |||||
| CHINA-AFRICA DEVELOPMENT FUND | State-owned legal person | 3.33% | 64,102,564 | 64,102,564 | 64,102,564 | 0 | 0 | |||||
| BROADFORD GLOBAL LIMITED | State-owned legal person | 2.88% | 55,314,208 | 0 | 0 | 55,314,208 | 0 | |||||
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | Foreign legal person | 1.56% | 29,976,596 | -13,468,608 | 0 | 29,976,596 | Unknown | |||||
| NORGES BANK | Foreign legal person | 0.15% | 2,802,863 | 0 | 0 | 2,802,863 | Unknown | |||||
China Merchants Port Group Co., Ltd. Annual Report 2019
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | State-owned legal person | 0.13% | 2,513,355 | -127,665 | 0 | 2,513,355 | Unknown | |
| MAI SHUQING | Domestic natural person | 0.12% | 2,376,747 | 15,700 | 0 | 2,376,747 | Unknown | |
| SHEN HUAILING | Domestic natural person | 0.08% | 1,519,849 | 1,519,849 | 0 | 1,519,849 | Unknown | |
| Strategic investors or general legal person becoming top-ten shareholders due to placing of new shares (if any) (see note 3) | N/A | |||||||
| Related or acting-in-concert parties among the shareholders above | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a majority-owned subsidiary of Broadford Global Limited, and Broadford Global Limited is the controlling shareholder of China Merchants Investment Development Company Limited. The Company does not know whether the other unrestricted shareholders are related parties or not. | |||||||
| Top 10 unrestricted shareholders | ||||||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | ||||||
| Type | Shares | |||||||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | 370,878,000 | RMB ordinary share | 370,878,000 | |||||
| BROADFORD GLOBAL LIMITED | 55,314,208 | Domestically listed foreign share | 55,314,208 | |||||
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | 29,976,596 | Domestically listed foreign share | 29,976,596 | |||||
| NORGES BANK | 2,802,863 | Domestically listed foreign share | 2,802,863 | |||||
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | 2,513,355 | Domestically listed foreign share | 2,513,355 | |||||
| MAI SHUQING | 2,376,747 | RMB ordinary share | 2,376,747 | |||||
| SHEN HUAILING | 1,519,849 | Domestically listed foreign share | 1,519,849 | |||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 1,262,936 | Domestically listed foreign share | 1,262,936 | |||||
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA-FULLGOAL CHINA SECURITIES DIVIDEND INDEX STRENGTHEN SECURITIES INVESTMENT FUND | 1,260,101 | RMB ordinary share | 1,260,101 | |||||
China Merchants Port Group Co., Ltd. Annual Report 2019
| CHEN ZEHONG | 1,240,000 | RMB ordinary share | 1,240,000 |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a majority-owned subsidiary of Broadford Global Limited. The Company does not know whether the other unrestricted shareholders are related parties or not. | ||
| Top 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 unrestricted ordinary shareholders of the Companyconducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a central state-owned legal personType of the controlling shareholder: legal person
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| BROADFORD GLOBAL LIMITED | Deng Weidong | 27 November 2017 | 68550019-000-11-17-2 | Port services, bonded logistic and cold chain services, property development and investment |
| Shareholdings of the controlling shareholder in other listed companies at home or abroad in this Reporting Period | N/A | |||
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Central institution for state-owned assets managementType of the actual controller: legal person
| Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| China Merchants Group | Li Jianhong | 14 October 1986 | 10000522-0 | Lease and agency of water/land passenger-cargo transportation, water/land conveyance and facilities; investment and management of port and storage business; salvage, refloatation and tugboat; industrial production; construction, repairing, checking and marketing of shipping, offshore petroleum drilling equipment; |
China Merchants Port Group Co., Ltd. Annual Report 2019
| repairing and checking of drilling platform and drilling container; overall contracting of water/land construction projects and the related offshore petroleum development projects, and their construction organization and logistic services; procurement, supply and sale of water/land communication and transportation equipment; export and import business of transportation; investment and management of finance, insurance, trust, securities, futures business; investment and management of tourism, hotels, catering services and relevant service; real estate development, management and consultancy of property; investment and management of petroleum and chemical industry; investment and operation of infrastructure of communication; overseas assets management. Development and management of Shenzhen Shekou Industrial Zone and Fujian Zhangzhou Development Zone. (The company shall independently choose business items and carry out business activities according to law. For items requiring approval according to law, the company must obtain approval from related authorities before carrying out the business activities. The company shall not engage in business activities that are banned and restricted in the municipal industrial policies.) | ||
| Shareholdings of the actual controller in other listed companies at home or abroad in this Reporting Period | China Merchants Group holds: 62.77% shares of China Merchants Port Holdings Company Limited; 54.39% shares of China Merchants Energy Shipping Co., Ltd; 74.35% China Merchants Land Limited; 68.72% shares of China Merchants Expressway Network &Technology Holdings Co., Ltd; 56.34% shares of Sinotrans Limited; 64.08% shares of China Merchants Shekou Industrial Zone Holdings Co., Ltd.; 44.09% shares of China Merchants Securities Co. Ltd.; 29.94% shares of Anhui Expressway Company Limited; 29.97% shares of China Merchants Bank Co., Ltd; 27.59% shares of China Merchants China Direct Investments Limited; 26.77% shares of Shanghai International Port (Group) Co., Ltd; 24.56% shares of China International Marine Containers (Group) Ltd; 24.72% shares of Sichuan Expressway Company Limited; 75.01% shares of Dalian Port (PDA) Company Limited; 17.75% shares of Fujian Expressway Development Co., Ltd; 16.52% shares of Heilongjiang Transport Development Co., Ltd; 16.02% shares of Shandong Hi-speed Co., Ltd; 15.43% shares of Henan Zhongyuan Expressway Co., Ltd; 15.53% shares of Hubei Chutian Expressway Co., Ltd; 14.04% shares of Jilin Expressway Co., Ltd; 13.86% shares of Guangxi Wuzhou Communications Co., Ltd; 11.69% shares of Jiangsu Expressway Company Limited; 7.04% shares of Xiandai Touzi Co., Ltd; 4.02% shares of Shenzhen Expressway Co., Ltd; 3.09% shares of Ningbo Zhoushan Port Company Limited; 2.54% shares of Qingdao Port International Co., Ltd; 1.20% shares of Oriental Times Media Co., Ltd; 0.37% shares of Hunan Sunward Intelligent Machine Co., Ltd; 0.16% shares of CMMB Vision Holdings Limited; 6.03% shares of S.F. Holding Co., Ltd.; 27.02% shares of Nanjing Tanker Corporation; 1.28% shares of Sinotrans & CSC Phoenix Co., Ltd.; 0.53% shares of China Shipbuilding Industry Company Limited; 19.08% shares of Jinzhou Port Co., Ltd.; 78.29% shares of Yingkou Port Services Co., Ltd.; 51.16% shares of China Merchants Property Operation & Service Co., Ltd. | |
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. Annual Report 2019
Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
| Name of corporate shareholders | Legal representative/person in charge | Date of establishment | Registered capital | Business scope or management activities |
| China Merchants Investment Development Company Limited | Hu Jianhua | 15 November 2013 | HKD28,287,989,241 | Investment management of equities and others |
| China Merchants Gangtong Development (Shenzhen) Co., Ltd. | Deng Weidong | 16 January 2018 | RMB9,446 million | Provision of management services for ports (without involving special administrative measures on the access of foreign investment); port information inquiries, economic information consultation, economic information consultation, corporate management consultation, business information consultation, brand management consultation and logistics information consultation (excluding restricted items in each case); technical development and sales of ship machinery and equipment; technical services in respect of port loading and unloading equipment; supporting businesses in respect of the design, sales, import and export of loading and unloading tools, mechanical and electrical products and non-ferrous metal products (excluding precious metals) (Commodities that involve state trading, quota, license and special administrative regulations shall be operated through the application pursuant to related state regulations); technical |
China Merchants Port Group Co., Ltd. Annual Report 2019
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment MakersFor details, see III. Fulfillment of commitments in Part V Significant Events of this report
China Merchants Port Group Co., Ltd. Annual Report 2019
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
China Merchants Port Group Co., Ltd. Annual Report 2019
Part VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
No convertible corporate bonds in the Reporting Period.
China Merchants Port Group Co., Ltd. Annual Report 2019
Part IX Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
| Deng Renjie | Chairman of the Board | Incumbent | Male | 50 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Bai Jingtao | Vice Chairman of the Board and CEO | Incumbent | Male | 54 | September 2017 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Yan Shuai | Director | Incumbent | Male | 47 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Su Jian | Director | Incumbent | Male | 48 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Song Dexing | Director | Incumbent | Male | 57 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Yuan Yuhui | Independent director | Incumbent | Male | 69 | June 2017 | June 2020 | 14,040 | 0 | 0 | 0 | 14,040 |
| Su Qiyun | Independent director | Incumbent | Male | 56 | June 2017 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Li Changqing | Independent director | Incumbent | Male | 51 | June 2017 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Liu Yingjie | Chairman of the Supervisory Committee | Incumbent | Male | 48 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Hu Qin | Supervisor | Incumbent | Female | 53 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Yang Yuntao | Supervisor | Incumbent | Male | 53 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Ni Keqin | Supervisor | Incumbent | Female | 55 | June 2017 | June 2020 | 29,211 | 0 | 0 | 0 | 29,211 |
| Zheng Linwei | Supervisor | Incumbent | Male | 49 | June 2017 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Zhang Yi | COO and GM | Incumbent | Male | 49 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Zheng Shaoping | Vice GM | Incumbent | Male | 57 | December 2018 | June 2020 | 12,661 | 0 | 0 | 0 | 12,661 |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Huang Chuanjing | Vice GMand Secretary of the Board | Incumbent | Male | 37 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Lu Yongxin | Vice GM | Incumbent | Male | 50 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Li Yubin | Vice GM | Incumbent | Male | 48 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Wen Ling | CFO | Incumbent | Female | 54 | December 2018 | June 2020 | 0 | 0 | 0 | 0 | 0 |
| Fu Gangfeng | Former Chairman of the Board | Former | Male | 53 | December 2018 | January 2020 | 0 | 0 | 0 | 0 | 0 |
| Yan Gang | Former vice GM | Former | Male | 47 | December 2018 | December 2019 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | -- | -- | -- | -- | 55,912 | 0 | 0 | 55,912 |
II Change of Directors, Supervisors and Senior Management
| Name | Office title | Type of change | Date of change | Reason for change |
| Fu Gangfeng | Chairman of the Board | Left | 31 January 2020 | Job change |
| Yan Gang | Vice GM | Left | 23 December 2019 | Job change |
III Biographical InformationProfessional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and seniormanagement:
Deng Renjie, Chairman of the Board, graduated from Beijing Electronic Science&TechnologyInstitute, majoring in computing, and obtained a bachelor degree, later graduated from DalianMaritime University, majoring in international economic law, and obtained master’s degree. DengRenjie now holds the post of the Executive Vice President of China Merchants Group CompanyLimited, President of Liaoning Port Group Co., Ltd., the Company’s Chairman of the Board, VicePresident of the 8
th Council of China Highway and Transportation Society & Vice President of the 7
th
Council of China Transportation Association. Deng Renjie has successively held the posts ofResearcher of General Office of Ministry of Communications, Deputy Director of General Office ofHunan Provincial Party Committee, Deputy Secretary General of Hunan Provincial Party Committee,Deputy Secretary General of Party Committee of Xinjiang Autonomous Region, Assistant Presidentof China Merchants Group Company Limited, Director of General Manager’s Office, and Chairmanof the Board of China Merchants Expressway Network & Technology Holdings Co., Ltd. Deng Renjiehas been being the Vice Chairman of the Board of the Company from December 2018 to January2020, and has been being the Chairman of the Board of the Company since February 2020.Bai Jingtao, Vice Chairman of the Board and Chief Executive Officer, Professor Level SeniorEngineer, graduated from Department of Water Conservancy of Tianjin University and obtainedbachelor’s degree in port and waterway engineering. Later Bai Jingtao studied at Graduate School of
China Merchants Port Group Co., Ltd. Annual Report 2019
Wuhan University of Technology, Graduate School of Shanghai Maritime University and obtainedmaster’s degree in management science and engineering, doctor’s degree in transportation planningand management respectively. Bai Jingtao now holds the post of the Company’s Vice Chairman ofthe Board, CEO and Party Secretary, Managing Director of China Merchants Port Holdings CompanyLimited (CM Port Holdings). Bai Jingtao has successively held the posts of Assistant Engineer ofCCCC Water Transportation Consultants Co., Ltd, Principal Staff of Division of EngineeringManagement and Division of Infrastructure Management of Ministry of Communications, DeputyDirector and Director of Division of Infrastructure Management and Division of Water Transport ofMinistry of Communications, Vice President of China Merchants Zhangzhou Development Zone Co.,Ltd and Director of Zhangzhou Port Authority, Deputy Director of Xiamen Port Authority andExecutive Deputy Commander of Construction Headquarters of Xiamen Haicang Bonded Port Area,Deputy President of China Merchants International Company Limited, Secretary of the PartyCommittee of China Merchants Zhangzhou Economic and Technological Development Zone andExecutive Deputy Director of Management Committee, Secretary of the Party Committee andPresident of China Merchants Zhangzhou Economic and Technological Development Zone CompanyLimited. Bai Jingtao has been being the Director of the Company since September 2017 and theDirector and Chief Executive Officer of the Company since December 2018, and has been being theVice Chairman of the Board and Chief Executive Officer of the Company since April 2020.Yan Shuai, Director, graduated from Harbin Engineering University, majoring in industrialautomation, and obtained bachelor’s degree in engineering. Later Yan Huai obtained master’s degreein management at Beijing University of Aeronautics and Astronautics. Yan Shuai now holds the postsof Director of Human Resources Department. Yan Shuai has successively held the posts of DeputyResearcher of General Office of the State Council of the People’s Republic of China SecondSecretariat, Vice President of China Merchants Group Finance Co., Ltd., Deputy Director (principalperson) of Human Resources Department of China Merchants Group Company Limited. Yan Shuaihas been being the Director of the Company since December 2018.Su Jian, Director, Non-Practicing Member of The Chinese Institute of Certified Public Accountants,Intermediate Accountant, graduated from Department of Economics of Shanghai University ofFinance and Economics, and obtained bachelor’s degree in economics. Li Jian now holds the post ofDirector of Finance Department (Property Right Department) of China Merchants Group CompanyLimited. Li Jian has successively held the post of Financial Manager of China Merchants InternationalTravel Co., Ltd., Senior Manager of Finance Department of China Merchants Shekou Industrial Zone,Senior Manager of Finance Department, Assistant Director of Finance Department, Deputy Directorof Finance Department, Deputy Director of Human Resources Department, Deputy Director of PartyCommittee Office, Deputy Director of Organization Department of Party Committee, DeputyDirector of Finance Department (Property Right Department) (principal person) in China MerchantsGroup Company Limited, Secretary of Party Committee, Secretary of Committee for DisciplineInspection, Vice President of China Merchants Industrial Group Company Limited. Su Jian has beenbeing the Director of the Company since December 2018.Song Dexing, Director, Senior Engineer, graduated from Department of Mechanics of WuhanUniversity of Technology (former name is Wuhan Institute of Water Transportation Engineering), andobtained bachelor’s degree in engineering. Later Song Dexing obtained master’s degree, majoring intransportation planning at Wuhan University of Technology and doctor’s degree in management,
China Merchants Port Group Co., Ltd. Annual Report 2019
majoring in administrative management at Huazhong University of Science and Technology. SongDexing now holds the posts of Business Director of Transportation & Logistics, Minister ofTransportation & Logistics Business Department/Beijing Headquarters of China Merchants GroupCompany Limited, President, Secretary of Party Committee of SINOTRANS&CSC. Song Dexinghas successively held the posts of Secretary of Youth League Committee, Engineer of Water TransportPlanning & Design Institute of Ministry of Communications, Principal Staff of Division of Transportof Ministry of Communications, Deputy Director, Director of Container Office of Division of WaterTransport of Ministry of Communications, Deputy Mayor of Luoyang Municipal People’sGovernment (temporary post), Deputy Director of China Waterborne Transport Research Institute,Deputy Director, Director of Yangtze Three Gorges Navigation Administration, Deputy Director,Director of Division of Water Transport of Ministry of Communications, Director of Bureau of WaterTransport of Ministry of Transport (Director of Taiwanese Affairs Office of the ministry), ViceChairman of the Board, Member of Party Committee, Deputy Secretary of Party Committee,Secretary of Committee for Discipline Inspection of SINOTRANS&CSC, General Manager ofSINOTRANS&CSC, Director of Department of Comprehensive Logistics Business of ChinaMerchants Group Company Limited. Song Dexing has been being the Director of the Company sinceDecember 2018.Yuan Yuhui, Independent Director, MBA, now acts as the Director of Shenzhen Riland IndustrialCo., Ltd. He once acted as the Vice GM, Vice Director of China Nanshan Development (Group)Incorporation and the Director of the Company. And he has been being the Independent Director ofthe Company since August 2015.Su Qiyun, Independent Director, graduated from Xiamen University of Department of Law with amaster degree of Civil and Commercial Law and a doctor degree of Wuhan University of Law. Henow is the founding partner of Beijing Deheng Law Office. He used to serve as Manager ofInvestment Department of Ping An Insurance Company of China, as Cadres of Shenzhen Industryand Commerce Administration. And he has been an Independent Director of the Company since May2014.Li Changqing, Independent Director, graduated from Xiamen University with a doctor degree ofAccounting, and also is a CPA, an excellent talent of new century of Ministry of Department, aprominent talent of Xiamen as well as a guide tutor of Postdoctoral Center of SSE. He now is theDirector of Senior Business Administration Education Center, professor and doctoral supervisor ofXiamen University. And he has been being an Independent Director of the Company since May 2014.Liu Yingjie, Chairman of the Supervisory Committee, graduated from Capital University ofEconomics and Business, majoring in accounting, and obtained bachelor’s degree in economics. LiuYingjie now holds the post of Director of Risk Control Department/Law and Compliance Departmentof China Merchants Group. Liu Yingjie has successively held the posts of Deputy Director, Directorof Division of Comprehensive Audit of Supervision Department of COSCO, Director of Division ofComputer Audit, Assistant Director, Deputy Director of Risk Control Department/Audit Departmentof China Merchants Group. Liu Yingjie has been being the Chairman of the Supervisory Committeeof the Company since December 2018.Hu Qin, Supervisor, graduated from Peking University, majoring in international law, and obtainedmaster’s degree in law. Later Hu Qin studied at NUS Business School and obtained master’s degreein management. Hu Qin now holds the post of Deputy Director of Risk Control Department/Law
China Merchants Port Group Co., Ltd. Annual Report 2019
&Compliance of China Merchants Group. Hu Qin has successively held the posts of Deputy GeneralManager of Planning Department of China Merchants Shekou Industrial Zone Company Limited,General Manager and General Counsel of Department of Legal Affairs, General Counsel of ChinaMerchants Shekou Industrial Zone Holdings Co., Ltd., Deputy Director of Risk Control Departmentof China Merchants Group, Deputy Director of Legal Department. Hu Qin has been being theSupervisor of the Company Since December 2018.Yang Yuntao, Supervisor, graduated from Jilin University, majoring in international law, andobtained bachelor’s degree in law. Later Yang Yuntao studied at School of Law, University ofInternational Business and Economics, and obtained doctor’s degree in law. Yang Yuntao now holdsthe posts of Deputy Director of Transportation & Logistics Business Department/BeijingHeadquarters of China Merchants Group Company Limited, Deputy General Manager and GeneralCounsel of SINOTRANS&CSC, Member of Party Committee. Yang Yuntao has successively heldthe posts of Deputy General Manager of Port Business Department of Sino-Trans China NationalForeign Trade Transportation Corporation, General Manager of Law Department, Director, DeputyPresident (principal person) of SINOTRANS (Hong Kong) Group Company Limited, Non-ExecutiveDirector of SINOTRANS Limited, General Manager of Law Department of Sino-Trans ChinaForeign Trade Transportation (Group) Corporation, General Manager, Deputy General Counsel,General Counsel of Law Department of SINOTRANS & CSC. Yang Yuntao has been being theSupervisor of the Company since December 2018.Ni Keqin, Supervisor, is the Deputy GM of Chiwan Container Terminal Co., Ltd. now. She took thepositions of Manager Assistant, Deputy Manager as well as Manager of the Operation Departmentand GM Assistant of CCT successively. She has been being the Supervisor of the Company sinceMay 2008.Zheng Linwei, Supervisor, graduated from NJAU, with a bachelor degree of Agricultural ForeignTrade and graduated from Shanghai Maritime University with MBA in 2004. He now serves as ViceGM of the Harbor Division, Dongguan Shenzhen Chiwan Wharf Holdings Limited and DongguanShenzhen Chiwan Terminal Co., Ltd. He has been being worked at the Harbor Division of theCompany from August 1993. He once acted as Director of Operation Room of Department II ofCommercial Freight of the Harbor Division of the Company, Manager Assistant, Vice Manager, andManager of Department II of Commercial Freight. And he has been being the Supervisor of theCompany since May 2014.Zhang Yi, President and Chief Operational Officer, graduated from Wuhan Institute of WaterTransportation Engineering and obtained bachelor’s degree in transportation managementengineering. Later Zhang Yi obtained doctor’s degree in engineering at Wuhan University ofTechnology. Zhang Yi now holds the post of the GM & COO of the Company, Deputy GeneralManager of China Merchants Port Holdings Company Limited (CM Port Holdings). Zhang Yi hassuccessively held the posts of Planner of Planning Division of Zhanjiang Port Authority, DeputyDirector of Planning Development Division of Zhanjiang Port Authority, Assistant Director ofZhanjiang Port Authority, Director, President, Secretary of Party Committee of Zhanjiang Port GroupCompany Limited. Zhang Yi has been being the President&COO of the Company since December2018.Zheng Shaoping, Vice President, graduated from Dalian Maritime University for postgraduate,majoring in international maritime law. Later Zheng Shaoping obtained master’s degree in business
China Merchants Port Group Co., Ltd. Annual Report 2019
administration at The University of Wales. He now acts as the Vice President of the Company, theExecutive Director and Vice General Manager of China Merchants Port Holdings Company Limited.He once acted as the Vice General Manager of Shenzhen Chiwan Wharf Holdings Limited & GeneralManager of Chiwan Wharf Container Company, Vice General Manager and Director of ShenzhenChiwan Wharf Holdings Limited, General Manager and Director of Shenzhen Chiwan WharfHoldings Limited, General Manager and Vice Chairman of the Board of Shenzhen Chiwan WharfHoldings Limited, General Manager and Chairman of the Board of Shenzhen Chiwan WharfHoldings Limited, Vice General Manager of China Nanshan Development (Group) Inc., Vice GeneralManager and Executive Director of China Merchants Holdings （International） Company Limited,Vice General Manager (General Manager Level) and Executive Director of China MerchantsHoldings （International） Company Limited. He has been being the Vice President of the Companysince December 2018.Huang Chuanjing, Vice President and Board Secretary, graduated from the English Departmentof Shandong University of Science and Technology with a bachelor’s degree in arts. Later, he obtaineda master’s degree in business administration at The University of Wales. Now he holds the post of theVice President & Board Secretary of the Company. He once was the Director of Wharf OperationDepartment of China Merchants International Qingdao Wharf Company Limited, Assistant ofGeneral Manager’s Office, Director of Administration Department of China Merchants InternationalCompany Limited, Assistant Director of General Office of China Merchants Group, Senior Manager,Assistant General Manager of General Office of China Merchants Group Company Limited, AssistantDirector of General Office and secretary of the board of China Merchants Group Company Limited,Assistant Director of Board of Directors Office, Chief of Board Secretariat of General Office, DeputyDirector of General Office and Deputy Director of Board of Directors Office in China MerchantsGroup Company Limited. Huang Chuanjing has been acting as the Vice President of the Companysince December 2018.Lu Yongxin, Vice President, graduated from Dalian University of Technology, and obtainedbachelor’s degree in English for science and technology. Later Lu Yongxin graduated from CurtinUniversity and obtained master’s degree in project management. Lu Yongxin now holds the post ofDeputy GM of the Company, Deputy General Manager of China Merchants Port Holdings CompanyLimited (CM Port Holdings). Lu Yongxin has successively held the posts of Assistant GeneralManager of Zhenhua Construction Co. Ltd., Deputy Director of CHEC (Beijing) Head Office, DeputyGeneral Manager of Research & Development Department of China Merchants Port HoldingsCompany Limited (CM Port Holdings), General Manager of Overseas Business Department,Assistant General Manager. Lu Yongxin has been dispatched to Terminal Link in France to act asCFO and Senior Vice President. Lu Yongxin has been as the Vice President of the Company sinceDecember 2018.Li Yubin, Vice President, graduated from Tianjin University, majoring in Harbor and CannelEngineering with the bachelor of engineering degree, Tianjin University, majoring in engineeringmanagement, and obtained master’s degree. Later Li Yubin graduated from The University of HongKong and obtained doctor’s degree in real estate and construction. Li Yubin now holds the post ofDeputy President of the Company and Deputy General Manager of China Merchants Port HoldingsCompany Limited (CM Port Holdings). Li Yubin has successively held the posts of Deputy GeneralManager of Road and Bridge Project of China Harbor Company in Bangladeshi Office, Project
China Merchants Port Group Co., Ltd. Annual Report 2019
Director of Overseas Business Department of CHEC, Assistant General Manager of Planning andCommerce Department of China Merchants Port Holdings Company Limited (CM Port Holdings),General Manager, Deputy General Economist of Strategy and Operation Management Department,General Manager, Deputy General Economist of Strategy and Operation Department, GeneralManager of China Merchants Bonded Logistics Co., Ltd. and the Chief Representative ofRepresentative Office of China Merchants Group in Djibouti. Li Yubin has been acting the VicePresident of the Company since December 2018.Wen Ling, Chief Financial Officer, graduated from Finance Dept. in Southwestern University ofFinance and Economics with a master degree. Wen is now the CFO of the Company, the CFO ofChina Merchants Port Holdings Company Limited. Wen was once the Deputy Financial Manager ofChina Merchants Port Service (Shenzhen) Co., Ltd., the Financial Manager of Shenzhen Mawan PortServices Co., Ltd. and the Vice Financial Manager, Senior Vice Financial Manager, and GM of CapitalOperation Dept. in China Merchants Port Holdings Company Limited. And Wen has been acting asthe CFO of the Company since December 2018.
Offices held concurrently in shareholding entities:
□ Applicable √ Not applicable
Offices held concurrently in other entities:
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity |
| Deng Renjie | China Merchants Group Co., Limited | Vice President | March 2015 | Yes | |
| Deng Renjie | Liaoning Port Group | Chairman of the Board | November 2018 | No | |
| Deng Renjie | Yingkou Port Group Co., Ltd. | Chairman of the Board | April 2019 | No | |
| Deng Renjie | China Merchants Steamship Co., Ltd. | Chairman of the Supervisory Committee | June 2017 | No | |
| Deng Renjie | China Merchants Group (H.K.) Limited | Director | December 2015 | No | |
| Deng Renjie | Dalian Port Group Corporation Limited | Chairman of the Board | May 2019 | No | |
| Bai Jingtao | Liaoning Port Group | Director, GM | April 2019 | No | |
| Bai Jingtao | DaLian Port (PDA) Company Limited | Vice Chairman of the Board | June 2017 | March 2019 | No |
| Bai Jingtao | Terminal Link | Director | June 2017 | No | |
| Bai Jingtao | Shanghai International Port (Group) Co., Ltd. | Vice Chairman of the Board | June 2016 | No | |
| Yan Shuai | China Merchants Group (Beijing) Co., Limited | Director | July 2016 | No | |
| Yan Shuai | China Merchants Group (Shanghai) Co., Limited | Director | July 2016 | No | |
| Yan Shuai | Liaoning Port Group | Director | August 2019 | No | |
| Su Jian | China Merchants Chongqing Communications Technology Research & Design Institute Co., Ltd. | Director | December 2018 | No | |
| Su Jian | CHINA MERCHANTS INTERNATIONAL FINANCE COMPANY LIMITED | Director | September 2017 | No |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Su Jian | China Merchants Zhangzhou | Director | September 2017 | No | |
| Su Jian | CHINA MERCHANTS FINANCE HOLDINGS COMPANY LIMITED | Director | September 2017 | No | |
| Su Jian | China Merchants Expressway Network & Technology Holdings Co., Ltd. | Director | July 2017 | No | |
| Su Jian | China Merchants Energy Shipping Co., Ltd. | Director | August 2017 | January 2019 | No |
| Su Jian | CHINA MERCHANTS UNION (BVI) LIMITED | Director | July 2017 | No | |
| Su Jian | DIVERSE SUCCESS LIMITED | Director | August 2019 | No | |
| Su Jian | CHINA MERCHANTS INDUSTRY HOLDINGS COMPANY LIMITED | Director | September 2017 | No | |
| Su Jian | China Merchants Securities Co., Ltd | Non-executive director | July 2017 | No | |
| Su Jian | Liaoning Port Group | Director | September 2019 | No | |
| Su Jian | Sinotrans Limited | Director | March 2019 | No | |
| Song Dexing | SINOTRANS&CSC | GM | June 2016 | Yes | |
| Song Dexing | Nanjing Port (Group) Co., Ltd. | Chairman of the Board | October 2017 | No | |
| Song Dexing | China Merchants Energy Shipping Co., Ltd. | Vice Chairman of the Board | August 2018 | No | |
| Song Dexing | Liaoning Port Group | Director | September 2019 | No | |
| Song Dexing | Sinotrans Limited | Vice Chairman of the Board, Executive Director | June 2018 | No | |
| Liu Yingjie | Sinotrans Limited | Chairman of the Supervisory Committee | March 2019 | No | |
| Liu Yingjie | China Merchants Group Finance Co., Ltd. | Chairman of the Supervisory Committee | August 2019 | No | |
| Liu Yingjie | China Merchants Energy Shipping Co., Ltd. | Shareholder supervisor | August 2017 | June 2019 | No |
| Liu Yingjie | China Yangtze Shipping Group Co., Ltd. | Chairman of the Supervisory Committee | November 2017 | No | |
| Hu Qin | Shenzhen China Merchants Shekou Asset Management Co., Ltd. | Supervisor | May 2015 | No | |
| Hu Qin | China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Supervisor | May 2017 | No | |
| Hu Qin | China Merchants Hainan Development & Investment Co., Ltd. | Supervisor | December 2018 | No | |
| Yang Yuntao | SINOTRANS&CSC | Vice GM | June 2016 | Yes | |
| Yang Yuntao | China Yangtze Shipping Group Co., Ltd. | Director | December 2018 | No | |
| Zhang Yi | China Merchants Hainan Development & Investment Co., Ltd. | Director | December 2018 | No | |
| Zheng Shaoping | DaLian Port (PDA) Company Limited | Director | June 2017 | March 2019 | No |
| Zheng Shaoping | Ningbo Daxie China Merchants International Container Terminal | Director | April 2014 | No | |
| Zheng Shaoping | Ningbo Zhoushan Port Company Limited | Director | April 2015 | No | |
| Zheng Shaoping | Tianjin Five International Container Terminal Co., Ltd. | Director | April 2014 | August 2019 | No |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Zheng Shaoping | Tianjin Port Container Terminal Co., Ltd. | Director | August 2019 | No | |
| Zheng Shaoping | Qingdao Qianwan United Container Terminal Co., Ltd. | Director | March 2016 | No | |
| Zheng Shaoping | Qingdao Qianwan New United Container Terminal Co., Ltd. | Director | March 2016 | No | |
| Zheng Shaoping | Qingdao Port Dongjiakou Ore Terminal Co., Ltd. | Director | March 2017 | No | |
| Zheng Shaoping | Shanghai International Port (Group) Co., Ltd. | Director | May 2014 | No | |
| Zheng Shaoping | Shenzhen China Merchants Qianhai Industrial Development Co., Ltd. | Director | August 2016 | No | |
| Zheng Shaoping | Antong Holdings Co., Ltd. | Chairman of the Board | August 2016 | March 2020 | No |
| Zheng Shaoping | China Merchants Antong Logistics Management Co., Ltd. | Chairman of the Board | September 2019 | No | |
| Zheng Shaoping | Quanzhou Shanghangtong Logistics Management Co., Ltd. | Executive director | October 2019 | No | |
| Lu Yongxin | Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi | Chairman of the Board | December 2019 | No | |
| Lu Yongxin | Tin-can Island Container Terminal Ltd | Vice Chairman of the Board | July 2019 | No | |
| Li Yubin | MODERN TERMINALS LIMITED | Director | March 2015 | No | |
| Li Yubin | Shenzhen Lianyongtong Terminal Co., Ltd. | Director | January 2014 | No | |
| Li Yubin | Cofco China Merchants (Shenzhen) Grain Electronic Trading Center Co., Ltd. | Vice Chairman of the Board | August 2017 | May 2019 | No |
| Li Yubin | Silk Road Yishang Information Technology Co., Ltd. | Chairman of the Board | January 2019 | No | |
| Wen Ling | Shanghai International Port (Group) Co., Ltd. | Supervisor | July 2019 | No | |
| Wen Ling | China Nanshan Development (Group) Inc. | Supervisor | July 2019 | No | |
| Note | Offices of directors, supervisor, and senior management held concurrently in other entities exclude offices held in the Company and subsidiaries within the consolidation scope. | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior ManagementDecision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
Decision-making procedure for the remuneration of directors, supervisors and senior management:
Remunerations for the Company’s directors, supervisors and senior management shall be nominatedby the Board of Directors and determined upon review of the Remuneration and Appraisal Committee.Allowance for Independent Directors is RMB150,000/year (tax included), which has been approvedat the 3
rd
Extraordinary General Meeting of 2018.Determining basis for the remuneration of directors, supervisors and senior management: The modesand amounts of the remuneration for directors, supervisors and senior management are determinedaccording to the market levels with the post value, responsibilities, etc. taken into account.
China Merchants Port Group Co., Ltd. Annual Report 2019
Actual payment for the remuneration of directors, supervisors and senior management: Salaries andindependent director allowances were paid to directors, supervisors and senior executives on amonthly basis. And the other bonuses were paid all at one time according to the performance of eachof them.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Deng Renjie | Chairman of the Board | Male | 50 | Incumbent | 0 | Yes |
| Bai Jingtao | Vice Chairman of the Board, CEO | Male | 54 | Incumbent | 461 | No |
| Yan Shuai | Director | Male | 47 | Incumbent | 0 | Yes |
| Su Jian | Director | Male | 48 | Incumbent | 0 | Yes |
| Song Dexing | Director | Male | 57 | Incumbent | 0 | Yes |
| Yuan Yuhui | Independent director | Male | 69 | Incumbent | 15 | No |
| Su Qiyun | Independent director | Male | 56 | Incumbent | 15 | No |
| Li Changqing | Independent director | Male | 51 | Incumbent | 15 | No |
| Liu Yingjie | Chairman of the Supervisory Committee | Male | 48 | Incumbent | 0 | Yes |
| Hu Qin | Supervisor | Female | 53 | Incumbent | 0 | Yes |
| Yang Yuntao | Supervisor | Male | 53 | Incumbent | 0 | Yes |
| Ni Keqin | Supervisor | Female | 55 | Incumbent | 134 | No |
| Zheng Linwei | Supervisor | Male | 49 | Incumbent | 119 | No |
| Zhang Yi | COO and GM | Male | 49 | Incumbent | 276 | No |
| Zheng Shaoping | Vice GM | Male | 57 | Incumbent | 378 | No |
| Huang Chuanjing | Vice GM and Board Secretary | Male | 37 | Incumbent | 191 | No |
| Lu Yongxin | Vice GM | Male | 50 | Incumbent | 276 | No |
| Li Yubin | Vice GM | Male | 48 | Incumbent | 342 | No |
| Wen Ling | CFO | Female | 54 | Incumbent | 164 | No |
| Fu Gangfeng | Former Chairman of the Board | Male | 53 | Former | 0 | Yes |
| Yan Gang | Former vice GM | Male | 47 | Former | 298 | No |
| Total | -- | -- | -- | -- | 2,684 | -- |
Note: Total before-tax remuneration for senior management includes the deferred bonus of Three-year (from 2016 to 2018) StrategicAssessment cashed by the Company in the Reporting Period.Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company as the parent | 299 |
| Number of in-service employees of major subsidiaries | 14,761 |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Total number of in-service employees | 15,060 |
| Total number of paid employees in the Reporting Period | 15,060 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 9,470 |
| Functions | |
| Function | Employees |
| Production | 8,005 |
| Sales | 570 |
| Technical | 3,343 |
| Financial | 543 |
| Administrative | 2,599 |
| Total | 15,060 |
| Educational backgrounds | |
| Educational background | Employees |
| Master’s degree and above | 451 |
| Bachelor’s degree | 3,449 |
| Junior college | 3,509 |
| Technical secondary school and below | 7,651 |
| Total | 15,060 |
2. Employee Remuneration Policy
Through its remuneration management system that is oriented by its strategies and based on the threecore elements of internal consistency, staff contribution and external competition, the Companyperforms dynamic management of its remuneration strategy, remuneration level and remunerationcomponents. In 2019, the Company improved its remuneration and incentive system, aligned atinternational leading comprehensive port operators and domestic excellent listed port groups, andteased out the benchmark for incentive optimization to enhance market competitiveness. Based onthe concept of delicacy management of talents, the Company allocated more resources to its coretalents and high-performance personnel and enhanced the effectiveness of resource allocation throughprecise incentive.The Company innovated its incentive mechanism and combined long-term incentive and short-termincentive to guide focus on its long-term development. It has successfully introduced the stock optionincentive plan to form a mechanism for sharing of profits and risks among itself and its shareholdersand staff. The plan will help to increase shareholder values, safeguard owners’ rights and interests,assist the management to balance between short-term and long-term goals, support the Company’simplementation of strategies and long-term sustainable development, fully mobilize the enthusiasmof its middle and senior management personnel and core technical talents, and attract and retainexcellent management talents and key personnel.
3. Employee Training Plans
The Company is dedicated to creating a platform for the development and promotion of global portprofessionals, provides domestic and foreign employees with learning opportunities, opens channels
China Merchants Port Group Co., Ltd. Annual Report 2019
for global career development and helps employees to keep improving themselves with thedevelopment of the Company. Meanwhile, it provides its peers with opportunities of coming to Chinafor exchange to share knowledge and values. In 2019, the Company further optimized the trainingsystem, integrated internal and external training resources, and established a series of key trainingprojects at different levels with different categories, including the project series for senior executiveon International situation, industrial transfer and safety training, the project series on enhancement ofglobal management and financial capability of middle-level key leaders through internal trainingcourses, open class and network courses cooperating with professional institutions and the projectson the enhancement of professional and general abilities for junior employees. The Company madevigorous efforts to create the network platform Zhi-niao and develop and upload online courses. andshare training resources openly, enlarging the learning timely and effectively. Strengthening thecommunications and collaboration between various units, it shall achieve the comprehensiveintegration of talents training under the guidance of the Company. The Company actively fulfilledthe social responsibility, carrying out the “Co-creating Blue Dream-21
th
Century Maritime Silk RoadTalents Plan” of China Merchants Port, which cultivate professionals of port and shipping forcountries along the One Belt and One Road. As of the end of 2019, the project had cultivated 163young backbone talents from 21 countries on 4 continents. In September 2019, it designed the “C-Blue Elite Program” sailing class for overseas excellent undergraduates majored in port and shipping.Through the program, the Company aimed to attract excellent young people to China and developmore innovation talents with international vision, international awareness, internationalcommunication abilities and cross-cultural communication competence. Meanwhile, the Companyparticipated in “Zhangqian project” of Hongkong sea silk association and other practical projects forstudents, providing Hongkong university students with meaningful overseas internship opportunity,and actively promoting the cooperation of the university and enterprises.
4. Labor Outsourcing
□ Applicable √ Not applicable
China Merchants Port Group Co., Ltd. Annual Report 2019
Part X Corporate GovernanceI General Information of Corporate GovernanceEver since its establishment, the Company has been in strict compliance with the company lawand securities law, as well as relevant laws and regulations issued by CSRC. And it has timelyformulated and amended its relevant management rules according to the Code of CorporateGovernance for Listed Companies, which are conscientiously and carefully executed. Aneffective system of internal control has thus taken shape in the Company. Details aboutcorporate governance within the reporting period are set out as below:
1. During the Reporting Period, the Company revised the Articles of Association in accordance withthe changes of registered capital and adjustment of setting up of senior management based on demandfor operating and management. The revision has been reviewed and approved on the 1
stSpecialMeeting of the 9
th Board of Director held on 2 January 2019 and the 1
stExtraordinary GeneralMeeting of 2019 later held on 24 January 2019.
2. The Company’s shareholder structure, assets size, governance structure and strategic planning haveall changed due to its completion of material assets restructuring on 26 December 2018. Inconsideration of the Company’s actual situation, according to the Guidelines on Bylaws of ListedCompanies, Rules for General Meetings of Listed Companies, Guidelines of Shenzhen StockExchange for Standard Operations of Listed Companies, Code of Corporate Governance for ListedCompanies, Rules of Shenzhen Stock Exchange for Stock Listing, Company Law of the People’sRepublic of China and other relevant laws and regulations, and in accordance with the requirementsof state-owned assets management authorities for fully promoting the building of law-based centralgovernment-owned enterprises and the running and regulation of companies according to laws andregulations, the Company during the Reporting Period amended 24 systems including the Articles ofIncorporation, and established six new systems, including Working Instructions for Board Secretary.The detailed information is as follows:
| Name of system | Review | Disclosure |
| Revised systems | ||
| Articles of Association | Has been reviewed on the 6th Meeting of the 9th Board of Directors held on 29 August 2019 and the 11th Special Meeting of the 9th Board of Directors held on 22 November 2019 and approved on the 4th Extraordinary General Meeting of 2019 held on 11 December 2019. | Has been disclosed on Cninfo in time |
| Rules of Procedures for the Board of Directors | ||
| Rules of Procedures for the Annual General Meeting | Has been reviewed on the 6th Meeting of the 9th Board of Directors held on 29 August 2019 and approved on the 4th Extraordinary General Meeting of 2019 held on 11 December 2019. | |
| Work Policy for Independent Directors | ||
| Management Policies for Related-party Transactions | ||
China Merchants Port Group Co., Ltd. Annual Report 2019
| Management Policies for Raised Funds | |
| Specific System for Engaging Accountants | |
| Rules of Procedures for the Supervisory Committee | Has been reviewed on the 6th Meeting of the 9th Supervisory Committee held on 29 August 2019 and approved on the 4th Extraordinary General Meeting of 2019 held on 11 December 2019 |
| Working Articles of Audit Committee of the Board of Directors | Has been reviewed and approved on the 6th Meeting of the 9th Board of Directors held on 29 August 2019 |
| Working Rules of Annual Report for Audit Committee of the Board of Directors | |
| Working Articles for Nomination, Remuneration and Evaluation Committee of the Board of Directors | |
| Working Articles of Strategy Committee of the Board of Directors | |
| Working Rules of Annual Report for Independent Directors | |
| Working Articles of Chief Executive Officer | |
| Management Policies for the Shares of the Company Held by Directors, Supervisors and Senior Management and the Changes | |
| Management Rules on Information Disclosure | |
| Management System on Inside Information and Insiders | |
| Rules of Accountability for Significant Mistakes in Annual Report Information Disclosure | |
| Information Disclosure Management Rules for the Inter-bank Debt Financing Instrument | |
| Management System of Foreign Investment | |
| Management Method of Financial Tools | |
| Management System on Person in Charge of Finance and CFO | |
| Rules on the Management of Investors Relations |
China Merchants Port Group Co., Ltd. Annual Report 2019
| Internal Audit System | ||
| Established systems | ||
| Management System of External Guarantees | Has been reviewed on the 6th Meeting of the 9th Board of Directors held on 29 August 2019 and approved on the 4th Extraordinary General Meeting of 2019 held on 11 December 2019. | |
Has beendisclosedon Cninfoin time
Working Articles of Board Secretary
| Working Articles of Board Secretary | Has been reviewed and approved on the 6th Meeting of the 9th Board of Directors held on 29 August 2019 |
| Management System of Securities Investments | |
| Management system of Subsidiaries | |
| Management Method of Donations | |
| Rules of Procedures for Office Meeting |
3. Shareholders and shareholders’ general meeting: the Company ensures that all the shareholders,especially minority shareholders, are equal and could enjoy their full rights. The Company called andheld shareholders’ general meeting strictly in compliance with the Rules for Shareholders’ GeneralMeeting.
4. Relationship between the controlling shareholder and the Company: controlling shareholder of theCompany acted in line with rules during the reporting period, did not intervened the decisions,productions or operations of the Company directly or indirectly in exceeding the authority of theshareholders’ general meeting, and did not appropriate any funds of the Company.
5. Directors and the Board of Directors: the Company elected directors in strict accordance with theArticles of Association. Number and composition of members of the Board were in compliance withrelevant laws and regulations; all Directors attend Board meetings and shareholders’ general meetingin a serious and responsible manner and participated enthusiastically relevant training so as to knowbetter about laws and regulations as well as the rights, obligations and liabilities of Directors. TheCompany The Company set up the Audit Committee as approved by The 1
stExtraordinary GeneralMeeting of 2004 and the Nomination, Remuneration and Evaluation Committee and StrategyCommittee as approved by the 2005 Annual General Meeting, with a view to ensuring the efficientoperation and scientific decision-making of the Board of Directors.
6. Supervisors and the Supervisory Committee: number and composition of the members of theSupervisory Committee were in compliance with the requirements of laws and regulations. Thesupervisors diligently and seriously performed their duties and obligations, took responsible attitudesto all shareholders and supervised the financial affair as well as the performance by the Company’sDirectors, managers and other senior executives of their duties in compliance with the laws andregulations.
7. Stakeholders: the Company fully respected and safeguarded the legal rights and interests of thebanks and other creditors, staff, clients and other stakeholders so as to develop the Company in aconsistent and healthy way.
8. Information disclosure and transparency: As the department for the management of informationdisclosure, the Board of Directors of the Company is responsible for managing the information
China Merchants Port Group Co., Ltd. Annual Report 2019
disclosure matters of the Company. Chairman of the Board assumes a central role in managing theinformation disclosure matters of the Company while the Board Secretary is responsible fororganizing and coordinating such matters. The Board Secretary of the Company is responsible for themanagement of investor relationships. Unless expressly authorized and trained, other directors,supervisors, senior management members and staff members of the Company should avoid speakingon behalf of the Company in investor relationship activities. The Company disclosed relevantinformation in a true, accurate, complete and timely way in strict accordance with the requirementsof laws, regulations and the Articles of Association, formulated the Management Rules onInformation Disclosure, the Management System on Inside Information and Insiders and the Ruleson the Management of Investors Relations, and designated Securities Times, Ta Kung Pao andhttp://www.cninfo.com.cn as its newspaper and website for information disclosure, so as to ensure allshareholders have equal opportunity to obtain the information.
9. Corporate governance mechanisms and rules that the Company already established:
Articles of Association of the Company, Rules of Procedure for General Meetings, Working Articlesof Audit Committee of the Board of Directors, Working Rules of Annual Report for Audit Committeeof the Board of Directors, Working Articles for Nomination, Remuneration and EvaluationCommittee of the Board of Directors; Working Articles of Strategy Committee of the Board ofDirectors, Working System for Independent Directors, Working Rules of Annual Report forIndependent Directors, Rules of Procedure for Supervisory Board, Working Articles of ChiefExecutive Officer, Management System for Company Shares held by Directors, Supervisors andSenior Executives and Its Changes, Management System of Foreign Investment, ManagementSystem of Related Transactions, Management System of Fund-raising, Management Rules onInformation Disclosure, Rules of Accountability for Significant Mistakes in Annual ReportInformation Disclosure, Management System on Inside Information and Insiders, Internal AuditSystem, Management System of Investors’ Relations, Specific System for Engaging Accountants,Management Method of Financial Tools, Management System on Person in Charge of Finance andCFO, Information Disclosure Management Rules for the Inter-bank Debt Financing Instrument,Management System of External Guarantees, Working Articles of Board Secretary, ManagementSystem of Securities Investments, Management System of Subsidiaries, Management Method ofDonations, Rules of Procedures for Office Meeting etc. There isn’t difference between the actualcircumstances of the Company and all established systems.Since the foundation, the Company was consistently in strict accordance with Company Law andrelevant laws and regulations to make a standard operation, continued business-running in line withrelevant requirements of Corporate Governance Principle for Listed Companies and earnestly madeeffort to protect profit and interests of shareholders and stakeholders.
Indicate by tick market whether there is any material incompliance with the regulatory documentsissued by the CSRC governing the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
China Merchants Port Group Co., Ltd. Annual Report 2019
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial AffairsThe Company is absolutely independent in business, personnel, assets, finance and organization fromits controlling shareholder. Details are set out as follows.Separation in business: The Company has its own assets, personnel, qualifications and ability to carryout operating activities and is able to operate independently in the market. Separation in personnel:
The Company has basically separated its staff from its controlling shareholder. No senior managementstaff of the Company holds positions at controlling shareholder of the Company. Separation in assets:
The Company possesses its own self-governed assets and domicile. Separation in organization: TheCompany has established and improved the corporate governance structure according to law and hasan independent and complete organizational structure. Separation in finance: The Company has setup its own financial department as well as normative accounting system and the financialmanagement system on its subsidiaries. The Company has its own bank accounts and does not sharethe same bank account with its controlling shareholder. The Company has been paying tax inaccordance with the laws and regulations on its own behalf.III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting 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 | 90.28% | 24 January 2019 | 25 January 2019 | For the resolution announcement (No. 2019-013), see http://www.cninfo.com.cn |
| The 2nd Extraordinary General Meeting of 2019 | Extraordinary General Meeting | 22.16% | 25 February 2019 | 26 February 2019 | For the resolution announcement (No. 2019-020), see http://www.cninfo.com.cn |
| The 3rd Extraordinary General Meeting of 2019 | Extraordinary General Meeting | 90.05% | 15 April 2019 | 16 April 2019 | For the resolution announcement (No. 2019-038), see http://www.cninfo.com.cn |
| The 2018 Annual General Meeting | Annual General Meeting | 89.91% | 20 May 2019 | 21 May 2019 | For the resolution announcement (No. 2019-049), see http://www.cninfo.com.cn |
| The 4th Extraordinary General Meeting of 2019 | Extraordinary General Meeting | 90.52% | 11 December 2019 | 12 December 2019 | For the resolution announcement (No. 2019-095), see http://www.cninfo.com.cn |
China Merchants Port Group Co., Ltd. Annual Report 2019
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting Rights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
| Attendance of independent directors at board meetings and general meetings | |||||||
| Independent director | Total number of board meetings the independent director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the independent director failed to attend | The independent director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Yuan Yuhui | 14 | 2 | 12 | 0 | 0 | No | 5 |
| Su Qiyun | 14 | 2 | 12 | 0 | 0 | No | |
| Li Changqing | 14 | 2 | 12 | 0 | 0 | No | |
Why any independent director failed to attend two consecutive board meetings:
□ Applicable √ Not applicable
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
During the reporting period, all independent directors of the Company probity and self-discipline,fulfill their duties in line with their expertise and experience; earnestly and diligently perform theirduties. The independent directors actively known about the Company’s business and operation,protected the interests of minority shareholders, brought their roles as independent directors into fullplay by participating in discussions on reports reviewed at board sessions and other issues of theCompany, and proposed professional suggestions on standard governance and production operationwhich had been adopted by the Company. They carefully reviewed and issued independent opinionsin written form on significant events such as material related-party transactions in accordance withrelevant requirements and had play a important role in scientific decision-making of the Board. Inaccordance with the requirements of CSRC and Shenzhen Stock Exchange, the “Working Rules forIndependent Directors” and the “Working Rules for Independent Directors Concerning AnnualReports, they performed their obligations with due diligence and fully oversaw the preparation anddisclosure of the Annual Report of the Company. For details of performance by independent directorsof their duties, please refer to the work report of independent directors for 2019 as disclosed at
China Merchants Port Group Co., Ltd. Annual Report 2019
http://www.cninfo.com.cn.VI Performance of Duty by Specialized Committees under the Board in the Reporting Period(I) Performance of the Audit Committee of the Board of DirectorsThe members of Audit Committee include independent director Li Changqing (convener), directorSu Jian, and independent director Su Qiyun. During the Reporting Period, the Audit Committee ofthe Board in line with the requirements of CSRC and Shenzhen Stock Exchange, Articles ofAssociation, Working Rules for the Audit Committee of the Board and the Working Practices for theAudit Committee of the Board on Annual Report performed their duties, and give full play to theirexpertise and experience, earnestly examine the Company's annual audit, reviewing of financialstatement, internal control, and other significant financial information, providing the Board ofDirectors’ scientific and efficient decision-making with professional support.
1. Particulars about the Meetings
During the Reporting Period, the Audit Committee of the Board held a total of five meetings, withdetails as follows:
(1) The 1
st Meeting of the Audit Committee of the 9
thBoard of Directors for 2019On 27 March 2019, it was held at Conference Room 25A, China Merchants Port Plaza, ShekouIndustry 3
rd
Road, Shenzhen, at which the following proposals were reviewed and approvedunanimously:
Proposal on Work Report of Accounting Firm for 2018Proposal on Financial Report of 2018Proposal on Renewal of Appointment of Accounting Firm for 2019Proposal on Internal Auditing Report for 2018Proposal on Internal Control and Audit Office’s Auditing Report No. 3 for 2018Proposal on Anti-fraud Risk Assessment Report for 2018Proposal on Internal Auditing Plan for 2019Proposal on Working Report of the Audit Committee of the Board in 2018
(2) The 2
nd Meeting of the Audit Committee of the 9
thBoard of Directors for 2019On 26 April 2019, it was held by communication meeting at which the Proposal on Internal AuditingReport for the First Quarter of 2019 was reviewed and approved unanimously.
(3) The 3
rd Meeting of the Audit Committee of the 9
th
Board of Directors for 2019On 29 August 2019, it was held by communication meeting at which the following proposals werereviewed and approved unanimously：
Proposal on Interim Financial Report for 2019Proposal on Internal Auditing Report for the Second Quarter of 2019Proposal on Internal Control and Audit Office’s Auditing Report for 2019 No. 1 on Qingdao Project
China Merchants Port Group Co., Ltd. Annual Report 2019
Proposal on Internal Control and Audit Office’s Auditing Report for 2019 No. 2 on KUMPORTProject
(4) The 4
th Meeting of the Audit Committee of the 9
thBoard of Directors for 2019On 29 October 2019, it was held by communication meeting at which the following proposals werereviewed and approved unanimously：
Proposal on Internal Auditing Report for the Third Quarter of 2019Proposal on Internal Control and Audit Office’s Auditing Report for 2019 No. 3Proposal on Internal Control and Audit Office’s Auditing Report for 2019 No. 4Proposal on Internal Control and Audit Office’s Auditing Report for 2019 No. 5Proposal on Internal Control and Audit Office’s Auditing Report for 2019 No. 6
(5) The 5
th
Meeting of the Audit Committee of the 9
thBoard of Directors for 2019On 30 December 2019, it held at Conference Room 25A, China Merchants Port Plaza, ShekouIndustry 3
rd
Road, Shenzhen, at which the Audit Report on the Company’s Finance and InternalControl by Deloitte Touche Tohmatsu Certified Public Accountants LLP for 2019 were debriefed bythe Committee members.
2. Performance of Duties to the Audit Work of Financial Statements of the CompanyIn accordance with relevant requirements of CSRC and Shenzhen Stock Exchange, the specificworking rules and procedure for the Audit Committee, during the reporting period, the AuditCommittee of the Board of the Company oversaw the audit work of Financial Statements of theCompany for 2018 with due diligence, details of which are as follows:
(1) Before the auditors started their work, the Audit Committee discussed with the principal auditorof the accounting firm and determined, inter alia, the timing schedule for the auditing work of thefinancial statements for the year.
(2) The Audit Committee expressed its audit opinions two times on the financial statements of theCompany for 2018.During the reporting period, the Audit Committee expressed its audit opinions two times on thefinancial statements of the Company for 2018 in accordance with relevant requirements from CSRC.The Audit Committee reviewed the Financial Statements prepared by the Company and issued thefollowing opinions before the Auditors started their work: the Company was in full compliance withrelevant laws, regulations and the Articles of Association of the Company, the units and items of theCompany's financial statements to be consolidated were complete, and the consolidation basis thereofwas accurate and the information included in the Financial Statements submitted by the Companywas objective, comprehensive and true. The Company's accounting policies were properly adoptedand the accounting estimates made were reasonable. No significant mistake or omission has beenidentified so far. Due to the time-lag between this review of Financial Statements and the dates of theAuditors' Report, we suggest the Finance Department focus on and deal with subsequent eventsproperly in accordance with the New Enterprises Accounting Standards to ensure the fairness,truthfulness and completeness of the Financial Statements.
China Merchants Port Group Co., Ltd. Annual Report 2019
After the Auditors issued their preliminary audit opinions, the Audit Committee reviewed theFinancial Statements again and issued the following opinions: the Company prepared the FinancialStatement in full compliance with the New Enterprise Accounting Standards and relevant provisionsof the financial control system of the Company, the procedures for the preparation of the FinancialStatements were reasonable and proper, which gave a true and fair view of the Company's assets,liabilities, equity interests and operation results as at 31 December 2018. Information included in theFinancial Statements was objective and complete. Financial Statements for 2018 which waspreliminarily audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP may besubmitted for review at the 5
th Meeting of the 9
thBoard of Directors.
(3) Supervision over the Auditing Work of the Accounting firm
During the Reporting Period, the Audit Committee issued two letters to Deloitte Touche TohmatsuCertified Public Accountants LLP to urge them to produce their audit recommendation on thefinancial statements and the summary statement of adjusting events in a timely manner to help ourfinancial staff finish the preparation of financial statements and related notes for 2018 as soon aspossible, so as to ensure the annual audit and information disclosure proceed as scheduled.
(4) Opinions on the Auditing Work Performed by the Accountants for the previous yearDuring the auditing period, the Audit Committee of the Board focused on the problems discovered inprocess of audit, urged auditors to finish the preparation of their report within a prescribed period oftime and ensured the truthfulness, accuracy and completeness of the annual report. The CertifiedPublic Accountants issued a standard unqualified audit report on 29 March 2019. The AuditCommittee considered that the Certified Public Accountants conducted the audit work of 2018 inaccordance with China’s Independent Auditing Standards, the audit time was sufficient, thedeployment of the auditors was appropriate and their practicing capability was excellent, and that theaudit report issued sufficiently reflected the Company's financial condition as at 31 December 2018and its operation results and cash flows for the year 2018 and the audit conclusion made was in linewith the actual situation of the Company.
3. Paying attention to the Internal Control and Internal Audit Work of the CompanyDuring the reporting period, the Audit Committee made standards and requirements to the AuditOffice's report submitted, fully understood the sound establish and implementation of internal controlsystem, focused on problems and suggestions provided by the Audit Office. In addition, the AuditCommittee advised on the improvement for the work of the Audit Department and the Companyrelating to internal control for the next year.(II) Performance of the Nomination, Remuneration and Evaluation CommitteeThe members of Nomination, Remuneration and Evaluation Committee include independent directorYuan Yuhui (Convener), director Yan Shuai, and independent director Su Qiyun During theReporting Period, the Nomination, Remuneration and Evaluation Committee earnestly performedtheir duties, investigated the equity incentive plan and examined the remuneration of directors,supervisors and senior executives in term of the requirements and stipulations of CSRC, Articles ofAssociation, Working Rules of the Nomination, Remuneration and Evaluation Committee andresponsibilities and obligations empowered by the Board of Directors.During the Reporting Period, the Nomination, Remuneration and Evaluation Committee under the
China Merchants Port Group Co., Ltd. Annual Report 2019
Board of Directors held a total of two meetings, details of which are as follows:
1. On 27 March 2019, the 1
st
Meeting of the Nomination, Remuneration and Evaluation Committeeof the 9
thBoard of Directors for 2019 was held at Conference Room 25A, China Merchants Port Plaza,Shekou Industry 3
rdRoad, Shenzhen, at which the following proposals were reviewed and approvedunanimously:
Proposal on Working Report of the Nomination, Remuneration and Evaluation Committee of theBoard for 2018Proposal on Report on the Remuneration of the Directors, Supervisors and Senior Management Stafffor 2018
2. On 11 October 2019, the 2
nd
Meeting of the Nomination, Remuneration and Evaluation Committeeof the 9
thBoard of Directors for 2019 was held by communication meeting at which the followingproposals were reviewed and approved unanimously：
Proposal on Stock Options Incentive Plan of China Merchants Port Group Co., Ltd. (Draft) and itsAbstractProposal on Stock Options Incentive Plan of China Merchants Port Group Co., Ltd. (Phase I) (Draft)and its AbstractProposal on Management Method for Stock Options Incentive Plan of China Merchants Port GroupCo., Ltd.Proposal on Examination Method for Implementation of Stock Options Incentive Plan of ChinaMerchants Port Group Co., Ltd.(III) Performance of the Strategy CommitteeThe members of Strategy Committee include Chairman of the Board Deng Renjie (Convener), ViceChairman of the Board and CEO Bai Jingtao, director Song Dexing, independent director Yuan Yuhui,and independent director Li Changqing. During the Reporting Period, members of the StrategyCommittee in line with the requirements of CSRC, Article of Association, and the stipulation ofWorking Rules of the Strategy Committee earnestly performed their duties, conducted research andadvised on the investment plans and assets operation projects related to the medium to long termdevelopment strategy of the Company.During the Reporting Period, the Strategy Committee under the Board of Directors held a total ofthree meetings, details of which are as follows:
1. On 2 January 2019, the 1
st
Meeting of the Strategy Committee of the 9
thBoard of Directors for2019 was held by communication meeting at which the Proposal on Signing the Agreement onTransfer of Shares in Zhanjiang Port (Group) Co., Ltd. by the Company with Sinotrans GuangdongCo., Ltd. was reviewed and approved unanimously：
2. On 8 January 2019, the 2
nd
Meeting of the Strategy Committee of the 9
th
Board of Directors for2019 was held by communication meeting at which the Proposal on Capital Increase in ZhanjiangPort (Group) Co., Ltd. by the Wholly-owned Subsidiary was reviewed and approved unanimously.
3. On 27 March 2019, the 3
rd Meeting of the Strategy Committee of the 9
th
Board of Directors for2019 was held at Conference Room 25A, China Merchants Port Plaza, Shekou Industry 3
rdRoad,
China Merchants Port Group Co., Ltd. Annual Report 2019
Shenzhen, at which the following proposals were reviewed and approved unanimously:
Proposal on Working Report of the Strategy Committee of the Board in 2018Proposal on Five-Year Strategic Plan of the Company from 2019 to 2023VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.VIII Appraisal of and Incentive for Senior ManagementThe Company has a mature assessment mechanism and system covering all senior managementpersonnel. The annual comprehensive assessment combines qualitative and quantitative methods withthe dimensions including performance, competence, self-discipline, etc. The assessment results ofsenior management serve as an important basis for appointment and motivation. The Companyadjusts and determines the post salary of senior managers based on the factors including operationstatus, position served and assessment results, and determines the performance bonus of managersthrough the factors including annual comprehensive ability assessment, annual key performanceindicators appraisal and three-year strategic appraisal results.The Company implements a featured performance-oriented system of “outperforming the marketperformance and surpassing peers” for the appraisal of and bonus distribution to its seniormanagement. Through year-on-year comparison vertically and comparison with benchmark peerstransversely, the appraisal coefficient gives a more comprehensive and objective reflection of theactual performance level and links more closely with performance bonuses. Through the three-yearstrategic appraisal mechanism and the introduction of medium- and long-term incentive and short-term incentive combined, the Company defers a portion of the performance bonuses to seniormanagement until the end of the three-year strategic appraisal cycle. By doing so, the Company makesits senior management focus not only on short-term performance yearly but also on medium- andlong-term development of the Company. To motivate senior management personnel more effectively,the Company has successfully introduced the stock option incentive plan to form a mechanism forthe sharing of profits and risks and fully mobilize the enthusiasm of senior management personnel. Itis beneficial to the Company’s long-term sustainable development and enhancement of shareholdervalues.IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
China Merchants Port Group Co., Ltd. Annual Report 2019
2. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 16 April 2020 | ||||
| Index to the disclosed internal control self-evaluation report | For details, see www.cninfo.com.cn | ||||
| Evaluated entities’ combined assets as % of consolidated total assets | 97.6% | ||||
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 98.7% | ||||
| Identification standards for internal control weaknesses | |||||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting | |||
| Nature standard | If a defect or defect group give rise to the following events which cannot be prevented or found and made rectification, the defect or defect group are recognized as significant defects: (1) Malpractices of directors, supervisors and senior management: (2) The Company make correction to the financial report issued; (3) Certified Public Accountant find that there is a significant error in the financial report, however, the internal control did not discover it when conducting internal control; (4) The Audit Committee under the Board and Internal Audit Service's supervision to the internal control is invalid. | Great defect | Significant defect | Common defect | |
| Development direction substantially deviates from the strategic goals, investment direction, and business structure, commercial modeled. which completely unable to support the realization of strategic goals | Development direction partly deviates from the strategic goals, investment direction, and business structure, commercial modeled. which unable to support the realization of strategic goals at a larger extent | Development direction slightly deviates from the strategic goals, investment direction, and business structure, commercial modeled. which completely can't fully support the realization of strategic goals | |||
| Strategy implementation is blocked, almost all indicators of strategy implementation cannot completed as planned | Strategy implementation is blocked, most of indicators of strategy implementation cannot completed as planned | Strategy implementation is blocked, part of indicators of strategy implementation cannot completed as planned | |||
| Lead to break off of common business/service or it takes half year or above to recover the break off of common business/service | |||||
China Merchants Port Group Co., Ltd. Annual Report 2019
| Badly damage the working enthusiasm of all the employees, will give rise to large scale group events or heavy damage to enterprises culture and enterprises cohesion | In a large extent, damage the working enthusiasm of all the employees, reduce work efficiency, have greatly adverse effect to enterprises culture and enterprises cohesion | damage the working enthusiasm of all the employees, reduce work efficiency, have some adverse effect to enterprises culture and enterprises cohesion | |
| The employee's ability and professional skills universally cannot meet the enterprise development needs by a large margin | The employee's ability and professional skills in some significant fields cannot meet the enterprise development needs | The employee's ability and professional skills in some fields cannot meet the enterprise development | |
| Negative news spread in the field of the entire business (including extending to industry chain),or was paid attention by the national media or public media, the recovery of reputation will take more than six months | Negative news spread in the field of the entire business, or was paid attention or reported by the local media the recovery of reputation will take three to six months | Negative news spread in the field of the entire business, have small damage to the reputation of the enterprise, the recovery of reputation will take three months below | |
| The enterprise's internal confidential information leakage which badly affect the enterprise's competitive capacity in the market, or affect the competitive capacity in management |
| The enterprise's internal confidential information leakage which affect the enterprise's competitive capacity in the market, or affect the competitive capacity in management in a general extent | ||||
| Quantitative standard | The judging standard was the net profits attributable to the parent Company's shareholders in the consolidated financial statements audited in last year. Misstatement amount ≥ 5% above of judging standard was great defect; 5% judging standard ＞1% misstatement amount was significant defect; misstatement amount | The judging standard was the net profits attributable to the parent Company's shareholders in the consolidated financial statements audited in last year. | ||
| Great defect | Significant defect | Common defect | ||
| Have a significant adverse impact on the asset turnover ability, which lead to total asset turnover rate lowed 20% above (Including 20％） | Have a greater adverse impact on the asset turnover ability, which lead to total asset turnover rate lowed10% to 20% (Including 10%） | Have an adverse impact on the asset turnover ability, which lead to total asset turnover rate lowed10% below | ||
| Had significant adverse impact to the annual | Had larger adverse impact to the annual | Had adverse impact to the annual operation | ||
China Merchants Port Group Co., Ltd. Annual Report 2019
| ＜1% below of judging standard was general standard. | operation profits or cause decrease of annual operation profits when at 5% (including 5%) above of judging standard | operation profits or cause decrease of annual operation profits when at 1% (including 1%) to 5% judging standard | profits or cause decrease of annual operation profits when at 1% below of judging standard |
| Had significant adverse impact to decrease of inflow of total cash flow or increase of outflow total cash flow when at 10% (including 10%) above of judging standard | Had larger adverse impact to decrease of inflow of total cash flow or increase of outflow total cash flow when at 5% (including 5%) to 10% above of judging standard | Had adverse impact to decrease of inflow of total cash flow or increase of outflow total cash flow when at 5% below of judging standard | |
| Great investment mistake incurred which cause direct economy losses when at 5% (including 5%) above of judging standard or the return on investment more than 40% lower than expected | Larger investment mistake incurred which cause direct economy losses when at 1% (including 1%)to 5% of judging standard or the return on investment less than 30%(including 30% to 40%) lower than expected | Great investment mistake incurred which cause direct economy losses when at 1% below of judging standard or the return on investment less than 30% lower than expected | |
| 10 death or above , or 50 people serious injury, or direct economy losses when at 5% (including 5%) above of judging standard | 3 deaths above to 10 deaths below , or more than 10 people but less than 50 people serious injury, or direct economy losses when at 1% (including 1%) to 5% of judging standard | less than 3 deaths or above , or less than 10 people serious injury, or direct economy losses when at 1% below of judging standard | |
| Asset integrity cannot be ensured, when assets losses at 5% (including 5%) above of judging standard | Asset integrity cannot be ensured, when assets losses at 1% (including 1%)to 5% of judging standard | Asset integrity cannot be ensured, when assets losses at 1% below of judging standard | |
| A large number of great commercial disputes, civil lawsuits and negative influences can't eliminate in a short period of time, may pay compensation at 5% | Several commercial disputes, civil lawsuits, and had obviously influence in a certain area and period, may pay compensation at 1% (including 1%) to 5% of | Irreconcilable commercial disputes, civil lawsuits happened sometimes, cause a certain influences in local, may pay compensation at 1% |
China Merchants Port Group Co., Ltd. Annual Report 2019
| (including 5%) above of judging standard | judging standard | below of judging standard | ||
| A serious violation of laws and regulations, investigated by government department and legal department, cause prosecution and class action, may pay compensation at 2% (including 2%) above of judging standard | A serious violation of laws and regulations, investigated by government department and legal department, may pay compensation at 0.5% (including 0.5%) to 2% of judging standard | Violation of laws and regulations, investigated by government department and legal department, may pay compensation at 0.5% below of judging standard | ||
| Number of material weaknesses in internal control over financial reporting | 0 | |||
| Number of material weaknesses in internal control not related to financial reporting | 0 | |||
| Number of serious weaknesses in internal control over financial reporting | 0 | |||
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |||
X Independent Auditor’s Report on Internal Control
| Opinion paragraph in the independent auditor’s report on internal control | |
| We believe that China Merchants Port Group Co., Ltd. has maintained effective internal control over financial reporting in all material respects as of 31 December 2019 as per the Basic Rules for Enterprise Internal Control and relevant regulations. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 16 April 2020 |
| Index to such report disclosed | For details, see www.cninfo.com.cn |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal controlself-evaluation report issued by the Company’s Board.
√ Yes □ No
China Merchants Port Group Co., Ltd. Annual Report 2019
Part XI Corporate BondsDoes the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No
China Merchants Port Group Co., Ltd. Annual Report 2019
Part XII Financial Statements (See attached)I Independent Auditor’s Report
| Type of the independent auditor’s opinion | Standard and unqualified auditor's report |
| Date of signing this report | 15 April 2020 |
| Name of the independent auditor | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Reference number of Audit Report | De Shi Bao (Shen) Zi (20) No. P02283 |
| Name of the certified public accountants | Li Weihua, Zhang Min |
China Merchants Port Group Co., Ltd. Annual Report 2019
Part XIII Documents Available for ReferenceI. Financial Statements carrying the signatures and stamps of the Company Principal, the ChiefFinancial Officer and the person in charge of accounting firm;II. Original copy of the Auditor's Report stamped by the accounting firm and signed andstamped by registered accountants;III. Original copies of all documents and the announcements thereof disclosed in the reportingperiod on “Securities Times” and “Ta Kung Pao”;
For and on behalf of the Board
Bai JingtaoLegal representative ofChina Merchants Port Group Co., Ltd.
Dated 16 April 2020
FINANCIAL STATEMENTS AND AUDITOR'S REPORTFOR THE YEAR ENDED 31 DECEMBER 2019
FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
CONTENTS Pages
AUDITOR'S REPORT 1 - 6
THE CONSOLIDATED AND COMPANY BALANCE SHEETS 7 - 10
THE CONSOLIDATED AND COMPANY INCOME STATEMENTS 11 - 12
THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 13 - 14
THE CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES INSHAREHOLDERS' EQUITY 15 - 18
NOTES TO THE FINANCIAL STATEMENTS 19 - 177
- 1 -
AUDITOR'S REPORT
De Shi Bao (Shen) Zi(20) No. P02283
(Page 1, 6 pages)To the Shareholders of China Merchants Port Group Co., Ltd.:
I. Audit Opinion
We have audited the accompanying financial statements of China Merchants Port Group Co., Ltd.(hereinafter referred to as "the Company"), which comprise the consolidated and company balancesheets as at 31 December 2019, and the consolidated and company income statements, theconsolidated and company cash flow statements and the consolidated and company statements ofchanges in shareholders' equity for the year then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements of the Company present fairly, in all materialrespects, the consolidated and company's financial position as of 31 December 2019, the consolidatedand company's results of operations and cash flows for the year then ended in accordance withAccounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with the Auditing Standards for the Chinese Certified PublicAccountants. Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We are independent ofthe Company in accordance with the Auditing Standards for the Chinese Certified Public Accountants,and we have fulfilled our other ethical responsibilities in accordance with the standards. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of the financial statements of the current period. These matters were addressed in the contextof our audit of the financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters. We determine the followings are key audit matters thatneed to be addressed in our report.
1. Subsequent measurement of long-term equity investment in associates and joint ventures
As disclosed in Notes (V) 11 to the consolidated financial statements, the Company has made equityinvestment in several enterprises, over which the Company exercises joint control or has significantinfluence. In 2019, the Company's income from investment in associates/joint ventures under equitymethod amounts to RMB 3,727,850,763.22. As at 31 December 2019, the carrying amount of long-term equity investment of the Company in associates/joint ventures amounts to RMB57,916,539,383.26. Since the investment income from long-term equity investment in associates/jointventures is significant, with its accuracy depending on the investee's financial status and operationresults, we identified the aforesaid subsequent measurement of long-term equity investment inassociates/joint ventures as a key audit matter of the consolidated financial statements.
Principal audit procedures we performed for key audit matters are as follows:
- 2 -
AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi(20) No. P02283
(Page 2, 6 pages)III. Key Audit Matters - continued
1. Subsequent measurement of long-term equity investment in associates and joint ventures -continued
(1) Understood the major associates/joint ventures and their environment, and identified whether themajor associates/joint ventures were significant components in terms of financial importance andbusiness nature;
(2) Understood the certified public accountants of major associates/joint ventures and evaluated theirindependence and professional competence;
(3) Identified and assessed the risk of material misstatement in the financial statements of the majorassociates/joint ventures from the perspective of auditing the consolidated financial statements ofthe Company by reading the financial statements of the major associates/joint ventures anddiscussing with the management the financial performance of the major associates/joint venturesand the significant judgments and estimates made in the preparation of the financial statements;
(4) Discussed with the component certified public accountants of the major associates/joint venturestheir assessment of the component audit risk, the identification of key audit areas and theimplementation of the corresponding audit procedures to evaluate whether the audit of thecomponent certified public accountants was appropriate;
(5) Evaluated whether the audit evidence obtained by the component certified public accountants was
sufficient and appropriate by reviewing the audit documents of the component certified publicaccountants of the major associates/joint ventures when we deemed necessary.
(6) Verified whether the accounting policies and accounting periods adopted by the associates/joint
ventures were consistent with the Company's. If not, checked whether the financial statements ofthe associates/joint ventures have been adjusted according to the accounting policies andaccounting period of the Company, and recognized the amount of investment income under equitymethod on that basis.
- 3 -
AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi (20) No. P02283
(Page 3, 6 pages)III. Key Audit Matters - continued
2. Goodwill impairment
As disclosed in Notes (V) 21 to the consolidated financial statements, as at 31 December 2019, thegoodwill in the consolidated financial statements of the Company was RMB 8,023,659,694.81. Themanagement of the Company used the net amount of fair value less costs of disposal or the presentvalue of the estimated future cash flows to determine the recoverable amount of the relevant assetgroup when testing the goodwill for impairment, of which the fair value assessment is based on themarket approach, and the forecast of future cash flows and the calculation of the present valueincluded key assumptions, such as income growth rate, gross profit margin, discount rate, etc. Weidentified the goodwill impairment as a key audit matter of the consolidated financial statements due tothe significant amount of goodwill and that the management needs to make significant judgments andestimates when conducting goodwill impairment testing.
Principal audit procedures we performed for key audit matters are as follows:
(1) Assess reasonability of division of asset group and combination of asset group management made
by management;
(2) Referred to industry practice to assess whether the management's approach in cash flows forecast
is appropriate and whether the assumptions used are reasonable;
(3) Compared the data used in cash flow forecast with historical data and budget data approved by the
management, and assessed the reasonableness of the data used;
(4) Compared the growth rate of the business volume in the forecast period with the growth rate of
the historical business volume and evaluated its appropriateness.
(5) Compared the gross profit margin of the forecast period with the actual gross profit margin ofprevious years to assess its appropriateness in combination with the business plan and industrydevelopment trend;
(6) Understood the basis for management to determine the growth rate of the business in the
subsequent forecast period and assessed its appropriateness;
(7) Assessed the appropriateness of the discount rate adopted by the management in combination with
market risk-free interest rates, risk factors, etc.;
(8) Reviewed whether the calculation of the present value of future cash flows was correct.
(9) Reviewed whether the method to assess the fair value less costs of disposal was appropriate.
- 4 -
AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi (20) No. P02283
(Page 4, 6 pages)
IV. Other Information
The Company is responsible for the other information. The other information comprises theinformation included in the annual report, but does not include the consolidated financial statementsand our auditor's report.
Our opinion on the financial statements does not cover the other information and we do not expressany form of assurance conclusion.
In combination with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
If, based on the audit work performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the FinancialStatements
The Company is responsible for the preparation of the financial statements that give a true and fairview in accordance with Accounting Standards for Business Enterprises, and for the design,performance and maintenance of such internal control that is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company'sability to continue as a going concern, disclosing, as applicable, matters related to going concern andusing the going concern basis of accounting unless the management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.
These charged with governance are responsible for overseeing the Company's financial reportingprocess.
- 5 -
AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi(20) No. P02283
(Page 5, 6 pages)
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor's report that includes anaudit opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with Auditing Standards for the Chinese Certified Public Accountants willalways detect a material misstatement when it exists. Misstatements can arise from fraud or error andare considered material if, individually or in the aggregate, they could expected influence theeconomic decisions taken based on these financial statements by reasonable users.
As part of an audit in accordance with Auditing Standards for the Chinese Certified PublicAccountants, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
(1) Identified and assessed the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that was sufficient and appropriate to form our opinion. The risk of not detectinga material misstatement resulting from fraud was higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.
(2) Understood audit related internal control in order to design audit procedures that were
appropriate in the circumstances.
(3) Evaluated the appropriateness of accounting policies applied and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) Concluded on the appropriateness of the directors' application of the going concern basis of
accounting. Based on audit evidence obtained, concluded on whether the material uncertainty ofevents or conditions that may cause cast significant doubt on the Company's ability to continueas a going concern existed. If we concluded that a material uncertainty existed, we were requiredto draw attention in our auditor's report to the related disclosures in the financial statements or tomodify our opinion, if such disclosures were inadequate. Our conclusions were based on theaudit evidence obtained up to the date of our auditor's report. However, future events orconditions may cause the Company to cease to continue as a going concern.
(5) Evaluated the overall presentation (including the disclosures), structure and content of the
financial statements, and whether the financial statements represented the underlyingtransactions and events in a manner that achieved fair presentation.
(6) Obtained sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an opinion on the financial statements. Wewere responsible for the direction, supervision and performance of the group audit. We remainedsolely responsible for our audit opinion.
- 6 -
AUDITOR'S REPORT- continued
De Shi Bao (Shen) Zi(20) No. P02283
(Page 6, 6 pages)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We communicated with those charged with governance over audit scope, time arrangement andsignificant audit findings, including any significant deficiencies of internal control that we identifiedthrough audit.
We also provided the those charged with governance with a statement that we had complied withrelevant ethical requirements of independence, and communicated with those charged with governanceover all relationships and other matters that may reasonably be thought to bear on our independence,and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determined those mattersthat were of most significance in the audit of the financial statements of the current period and weretherefore the key audit matters. We described these matters in our auditor's report unless law orregulation precluded public disclosure about the matter or when, in extremely rare circumstances, wedetermined that a matter should not be addressed in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant(Engagement Partner)Shanghai, ChinaLi Wei Hua
Chinese Certified Public Accountant
Zhang Min
April 15, 2020
The auditor’s report and the accompanying financial statements are English translations of the Chinese auditor’s report and statutoryfinancial statements prepared under accounting principles and practices generally accepted in the People’s Republic of China. Thesefinancial statements are not intended to present the financial position and results of operations and cash flows in accordance withaccounting principles and practices generally accepted in other countries and jurisdictions. In case the English version does notconform to the Chinese version, the Chinese version prevails.
- 7 -
FINANCIAL STATEMENTSAT 31 DECEMBER 2019
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current assets: | |||
| Cash and bank balances | (V)1 | 7,734,948,210.26 | 7,077,396,895.72 |
| Notes receivable | (V)2 | 38,192,250.02 | 11,608,669.43 |
| Accounts receivable | (V)3 | 1,356,460,129.90 | 1,109,230,503.08 |
| Accounts receivable financing | (V)4 | 260,760,537.45 | - |
| Prepayments | (V)5 | 55,034,019.81 | 124,404,862.87 |
| Other receivables | (V)6 | 2,129,378,252.50 | 766,518,078.72 |
| Inventories | (V)7 | 163,980,192.08 | 108,567,270.02 |
| Assets held for sale | (V)8 | 188,404,228.34 | 115,356,162.94 |
| Non-current assets due within one year | (V)9 | 808,893,013.06 | 25,952,956.76 |
| Other current assets | (V)10 | 2,298,792,661.70 | 1,195,421,189.12 |
| Total current assets | 15,034,843,495.12 | 10,534,456,588.66 | |
| Non-current Assets: | |||
| Long-term receivables | (V)11 | 1,098,831,799.90 | 793,046,240.11 |
| Long-term equity investments | (V)12 | 57,916,539,383.26 | 50,176,577,263.40 |
| Other investments in equity instruments | (V)13 | 163,561,272.00 | 247,848,314.30 |
| Other non-current financial assets | (V)14 | 2,385,363,537.39 | 2,087,872,081.94 |
| Investment properties | (V)15 | 5,760,262,674.40 | 5,890,146,989.51 |
| Fixed assets | (V)16 | 27,519,962,529.29 | 22,994,190,880.43 |
| Construction in progress | (V)17 | 6,334,141,441.88 | 5,499,426,090.06 |
| Right-of-use assets | (V)18 | 9,633,325,390.46 | |
| Intangible assets | (V)19 | 19,693,715,554.10 | 20,761,018,044.54 |
| Research expenditure | (V)20 | 37,399,092.28 | - |
| Goodwill | (V)21 | 8,023,659,694.81 | 8,335,895,842.35 |
| Long-term prepaid expenses | (V)22 | 711,911,011.67 | 235,706,437.21 |
| Deferred tax assets | (V)23 | 300,435,502.27 | 66,708,157.19 |
| Other non-current assets | (V)24 | 2,082,965,467.04 | 395,191,485.98 |
| Total non-current assets | 141,662,074,350.75 | 117,483,627,827.02 | |
| TOTAL ASSETS | 156,696,917,845.87 | 128,018,084,415.68 |
- 8 -
AT 31 DECEMBER 2019
Consolidated Balance Sheet - continued
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current liabilities: | |||
| Short-term borrowings | (V)25 | 9,439,099,793.47 | 3,427,365,512.21 |
| Notes payable | (V)26 | 76,455,949.01 | - |
| Accounts payable | (V)27 | 591,112,466.39 | 429,120,690.97 |
| Receipts in advance | (V)28 | 28,826,687.37 | 29,170,709.86 |
| Contract liabilities | (V)29 | 85,831,002.52 | 49,993,895.50 |
| Employee benefits payable | (V)30 | 634,718,784.64 | 433,489,555.40 |
| Taxes payable | (V)31 | 1,898,076,342.74 | 345,183,422.42 |
| Other payables | (V)32 | 2,223,754,677.96 | 1,690,124,901.29 |
| Non-current liabilities due within one year | (V)33 | 6,104,339,856.79 | 2,896,971,014.97 |
| Other current liabilities | (V)34 | 885,956,581.63 | 609,009,584.80 |
| Total current liabilities | 21,968,172,142.52 | 9,910,429,287.42 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)35 | 6,313,735,540.33 | 6,971,479,842.18 |
| Bonds payable | (V)36 | 20,930,681,967.19 | 22,097,467,096.40 |
| Including: Preferred shares | - | - | |
| Perpetual bonds | - | - | |
| Lease liabilities | (V)37 | 1,647,129,968.61 | |
| Long-term payables | (V)38 | 1,935,245,003.21 | 1,294,190,118.18 |
| Projected benefits obligation | (V)39 | 471,482,138.63 | 375,325,127.65 |
| Provisions | (V)40 | 76,242,559.95 | 34,951,392.27 |
| Deferred income | (V)22 | 1,147,752,857.17 | 228,658,214.64 |
| Deferred tax liabilities | (V)41 | 3,961,752,749.17 | 2,911,074,941.27 |
| Other non-current liabilities | (V)42 | 3,254,515,306.85 | 3,777,582,522.86 |
| Total non-current liabilities | 39,738,538,091.11 | 37,690,729,255.45 | |
| TOTAL LIABILITIES | 61,706,710,233.63 | 47,601,158,542.87 | |
| SHAREHOLDERS' EQUITY: | |||
| Share capital | (V)43 | 1,922,365,124.00 | 1,793,412,378.00 |
| Capital reserve | (V)44 | 22,296,485,467.35 | 19,426,912,957.05 |
| Other comprehensive income | (V)45 | (355,944,565.91) | 88,925,978.57 |
| Special reserve | (V)46 | 12,386,734.70 | 8,231,080.43 |
| Surplus reserve | (V)47 | 630,345,307.43 | 527,175,908.67 |
| Unappropriated profit | (V)48 | 11,467,166,351.85 | 8,915,817,110.21 |
| Total shareholders' equity attributable to equity holders of the parent | 35,972,804,419.42 | 30,760,475,412.93 | |
| Minority interests | 59,017,403,192.82 | 49,656,450,459.88 | |
| TOTAL SHAREHOLDERS' EQUITY | 94,990,207,612.24 | 80,416,925,872.81 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 156,696,917,845.87 | 128,018,084,415.68 |
The accompanying notes form part of the financial statements.
The financial statements on pages 7 to 177 were signed by the following:
Bai Jingtao Wen Ling Sun Ligan
Legal Representative Chief Financial Officer Head of Accounting Department
- 9 -
AT 31 DECEMBER 2019
Balance Sheet of the Company
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Assets: | |||
| Cash and bank balances | 690,685,211.42 | 389,876,753.95 | |
| Accounts receivable | - | 23,444,175.65 | |
| Other receivables | (XIV)1 | 805,534,763.27 | 651,015,334.06 |
| Inventories | - | 165,553.46 | |
| Other current assets | 1,107,292,458.33 | 1,563,111.61 | |
| Total current assets | 2,603,512,433.02 | 1,066,064,928.73 | |
| Non-current Assets: | |||
| Long-term receivables | 61,004,284.75 | 11,004,284.75 | |
| Long-term equity investments | (XIV)2 | 30,266,376,582.23 | 28,544,261,576.96 |
| Other investments in equity instruments | 155,688,635.00 | 151,746,700.00 | |
| Investment properties | - | 12,685,959.06 | |
| Fixed assets | 672,842.27 | 190,804,655.63 | |
| Construction in progress | 5,803,169.37 | 2,500,843.87 | |
| Intangible assets | 54,692,581.18 | 57,755,603.44 | |
| Long-term prepaid expenses | - | 3,785,801.32 | |
| Deferred tax assets | 928,465.21 | - | |
| Total non-current assets | 30,545,166,560.01 | 28,974,545,425.03 | |
| TOTAL ASSETS | 33,148,678,993.03 | 30,040,610,353.76 |
- 10 -
AT 31 DECEMBER 2019
Balance Sheet of the Company - continued
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Liabilities: | |||
| Short-term borrowings | 300,378,812.50 | 378,615,990.56 | |
| Accounts payable | - | 13,125,624.29 | |
| Contract liabilities | - | 92,003.00 | |
| Employee benefits payable | 6,000,000.00 | 26,605,190.52 | |
| Taxes payable | 209,282,889.78 | 18,826,587.50 | |
| Other payables | 628,013,119.77 | 708,309,782.90 | |
| Non-current liabilities due within one year | 35,832,000.00 | 301,508,794.53 | |
| Other current liabilities | 715,766,708.20 | 206,349,863.00 | |
| Total current liabilities | 1,895,273,530.25 | 1,653,433,836.30 | |
| Non-current Liabilities: | |||
| Long-term payables | - | 151,710,000.00 | |
| Deferred tax liabilities | 35,164,858.75 | 34,179,375.00 | |
| Total non-current liabilities | 35,164,858.75 | 185,889,375.00 | |
| TOTAL LIABILITIES | 1,930,438,389.00 | 1,839,323,211.30 | |
| SHAREHOLDERS' EQUITY | |||
| Share capital | 1,922,365,124.00 | 1,793,412,378.00 | |
| Capital reserve | 27,576,242,527.73 | 25,517,647,180.04 | |
| Other comprehensive income | 105,594,576.25 | 102,638,125.00 | |
| Special reserve | - | 470,465.59 | |
| Surplus reserve | 630,345,307.43 | 527,175,908.67 | |
| Unappropriated profit | 983,693,068.62 | 259,943,085.16 | |
| TOTAL SHAREHOLDERS' EQUITY | 31,218,240,604.03 | 28,201,287,142.46 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 33,148,678,993.03 | 30,040,610,353.76 |
The accompanying notes form part of the financial statements.
- 11 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Income Statement
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (V)49 | 12,123,829,423.74 | 9,703,394,622.58 |
| Less: Operating costs | (V)49 | 7,648,920,919.71 | 5,739,241,395.87 |
| Business taxes and levies | (V)50 | 172,556,579.92 | 235,953,803.51 |
| Administrative expenses | (V)51 | 1,509,520,581.66 | 1,251,865,675.45 |
| Research and development expenses | 123,853,344.29 | 121,989,097.82 | |
| Financial expenses | (V)52 | 1,936,269,737.53 | 1,643,418,102.95 |
| Including: Interest expense | 2,089,837,594.54 | 1,634,101,331.80 | |
| Interest income | 252,060,018.58 | 272,453,293.86 | |
| Add: Other income | (V)53 | 162,101,113.10 | 56,180,127.64 |
| Investment income | (V)54 | 4,619,173,755.42 | 3,967,828,149.48 |
| Including: Income from investments in associates and joint ventures | (V)54 | 3,727,850,763.22 | 3,913,864,538.60 |
| Gains (losses) from changes in fair value | (V)55 | 66,483,266.48 | (1,074,406,837.68) |
| Gains (losses) from impairment of credit | (V)56 | (50,249,409.77) | (7,528,580.60) |
| Gains from impairment of assets | (V)57 | 25,051.16 | - |
| Gains on disposal of assets | (V)58 | 4,794,562,782.79 | 19,258,495.33 |
| II. Operating profit | 10,324,804,819.81 | 3,672,257,901.15 | |
| Add: Non-operating income | (V)59 | 553,103,360.41 | 67,128,689.98 |
| Less: Non-operating expenses | (V)60 | 70,452,012.40 | 125,031,298.57 |
| III. Gross profit | 10,807,456,167.82 | 3,614,355,292.56 | |
| Less: Income tax expenses | 2,640,538,894.62 | 728,440,538.60 | |
| IV. Net profit | 8,166,917,273.20 | 2,885,914,753.96 | |
| (I) Categorization by continuity of operation | |||
| 1. Net profit of continued operation | 8,166,917,273.20 | 2,885,914,753.96 | |
| 2. Net profit of discontinued operation | - | - | |
| (II) Categorization by attribution of ownership | |||
| 1. Net profit attributable to shareholders of the parent | 2,898,192,168.84 | 1,090,418,910.77 | |
| 2. Profit or loss attributable to minority shareholder | 5,268,725,104.36 | 1,795,495,843.19 | |
| V. Amount of other comprehensive net income after tax | (V)63 | (1,096,285,894.51) | 204,602,785.68 |
| Amount of other comprehensive net income after tax attributable to equity holders of the parent | (443,076,984.15) | 41,778,087.02 | |
| (I) Other comprehensive income that will not be reclassified to profit or loss | 9,090,184.52 | (48,671,312.79) | |
| 1. Change as a result of remeasurement of the net defined benefit plan | 1,069,722.83 | (7,943,999.30) | |
| 2. Other comprehensive income under the equity method that will not be reclassified to profit or loss | 4,830,921.62 | (46,138,662.23) | |
| 3. Fair value changes of other investments in equity instruments | 3,189,540.07 | 5,411,348.74 | |
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | (452,167,168.67) | 90,449,399.81 | |
| 1. Other comprehensive income under the equity method that will be reclassified to profit or loss | (59,050,164.54) | (7,952,099.73) | |
| 2. Translation differences of financial statements denominated in foreign currencies | (393,117,004.13) | 98,401,499.54 | |
| Amount of other comprehensive net income after tax attributable to minority shareholders | (653,208,910.36) | 162,824,698.66 | |
| VI. Total comprehensive income attributable to: | 7,070,631,378.69 | 3,090,517,539.64 | |
| Shareholders of the parent | 2,455,115,184.69 | 1,132,196,997.79 | |
| Minority shareholders | 4,615,516,194.00 | 1,958,320,541.85 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | 1.59 | 0.61 | |
| (II) Diluted earnings per share | 1.59 | 0.61 |
The accompanying notes form part of the financial statements.
- 12 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Income Statement of the Company
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (XIV)3 | 92,042,598.05 | 243,899,253.07 |
| Less: Operating costs | (XIV)3 | 76,084,023.73 | 160,065,451.42 |
| Taxes and levies | 1,839,217.71 | 47,542,310.81 | |
| Administrative expenses | 60,487,851.03 | 122,905,018.75 | |
| Research and development expenses | - | 742,954.48 | |
| Financial expenses | 41,936,976.49 | 34,174,062.13 | |
| Including: Interest expense | 42,810,942.02 | 36,872,089.57 | |
| Interest income | 15,909,363.66 | 20,843,903.27 | |
| Add: Other income | 955,987.32 | 271,927.46 | |
| Investment income | (XIV)4 | 1,306,222,961.66 | 193,138,161.44 |
| Including: Income from investments in associates and joint ventures | (XIV)4 | 70,092,131.84 | 63,015,142.10 |
| Gains (losses) on disposal of assets | - | (937,948.47) | |
| II. Operating profit | 1,218,873,478.07 | 70,941,595.91 | |
| Add: Non-operating income | 57,049.23 | 1,336,230.70 | |
| Less: Non-operating expenses | 81,092.18 | 867,312.18 | |
| III. Gross profit | 1,218,849,435.12 | 71,410,514.43 | |
| Less: Income tax expenses | 187,155,447.57 | 395,773.33 | |
| IV. Net profit | 1,031,693,987.55 | 71,014,741.10 | |
| V. Amount of other comprehensive net income after tax | 2,956,451.25 | 3,377,145.00 | |
| (I) Other comprehensive income that will not be reclassified subsequently to profit or loss | 2,956,451.25 | 3,377,145.00 | |
| 1. Change as a result of remeasurement of the net defined benefit plan | - | - | |
| 2. Other comprehensive income under the equity method that will not be reclassified to profit or loss | - | - | |
| 3. Fair value changes of other investments in equity instruments | 2,956,451.25 | 3,377,145.00 | |
| (II) Other comprehensive income that will be reclassified to profit or loss | - | - | |
| 1. Other comprehensive income under the equity method that will be reclassified to profit or loss | - | - | |
| 2. Translation differences of financial statements denominated in foreign currencies | - | - | |
| VI. Total comprehensive income | 1,034,650,438.80 | 74,391,886.10 |
The accompanying notes form part of the financial statements.
- 13 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Cash Flow Statement
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 12,294,529,982.73 | 9,581,481,387.06 | |
| Receipts of tax refunds | 23,569,265.92 | 6,203,721.12 | |
| Other cash receipts relating to operating activities | (V)64(1) | 1,165,710,845.18 | 963,935,271.59 |
| Sub-total of cash inflows | 13,483,810,093.83 | 10,551,620,379.77 | |
| Cash payments for goods purchased and services received | 3,593,786,248.69 | 2,647,715,026.47 | |
| Cash payments to and on behalf of employees | 2,621,068,087.09 | 1,808,824,527.76 | |
| Payments of all types of taxes | 957,382,790.97 | 762,131,488.97 | |
| Other cash payments relating to operating activities | (V)64(2) | 809,699,551.14 | 1,044,373,911.73 |
| Sub-total of cash outflows | 7,981,936,677.89 | 6,263,044,954.93 | |
| Net Cash Flows from Operating Activities | (V)65(1) | 5,501,873,415.94 | 4,288,575,424.84 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | - | 200,000.00 | |
| Cash receipts from investments income | 1,804,725,809.65 | 1,813,166,370.38 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 6,274,482,747.66 | 19,846,988.10 | |
| Net cash receipts from disposal of subsidiary and other operating units | (V)64(5) | 1,000,000.00 | - |
| Other cash receipts relating to investing activities | (V)64(3),(4) | 3,535,967,030.93 | 156,615,992.14 |
| Sub-total of cash inflows | 11,616,175,588.24 | 1,989,829,350.62 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 3,515,540,735.97 | 2,437,080,643.74 | |
| Cash payments to acquire investments | 7,898,674,384.09 | 4,084,107,008.20 | |
| Net cash payment to acquire subsidiary and other operating units | - | 8,931,096,795.81 | |
| Other cash payments relating to investing activities | (V)64(6) | 2,138,951,129.78 | 1,686,107,391.23 |
| Sub-total of cash outflows | 13,553,166,249.84 | 17,138,391,838.98 | |
| Net Cash Flows from Investing Activities | (1,936,990,661.60) | (15,148,562,488.36) | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 2,213,530,171.90 | 296,363,615.57 | |
| Including: cash receipts from capital contributions from minority owners of subsidiary | 27,255,000.00 | 40,100,000.00 | |
| Cash receipts from borrowings | 14,306,287,000.87 | 21,763,411,408.42 | |
| Cash receipts from issue of bonds | - | 10,621,000,000.00 | |
| Other cash receipts relating to financing activities | (V)64(7) | 1,713,327,483.01 | 3,876,395,683.27 |
| Sub-total of cash inflows | 18,233,144,655.78 | 36,557,170,707.26 | |
| Cash repayments of borrowings | 15,402,220,794.12 | 23,593,666,839.99 | |
| Cash payments for distribution of dividends or profit or interest | 4,022,043,402.10 | 3,942,108,074.86 | |
| Including: Payments for distribution of dividends or profit to minorities | 1,745,724,195.29 | 1,929,962,094.72 | |
| Other cash payments relating to financing activities | (V)64(8) | 42,583,797.55 | 146,196,535.06 |
| Sub-total of cash outflows | 19,466,847,993.77 | 27,681,971,449.91 | |
| Net Cash Flows from Financing Activities | (1,233,703,337.99) | 8,875,199,257.35 | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 9,697,074.77 | (371,390,771.83) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | 2,340,876,491.12 | (2,356,178,578.00) | |
| Add: Opening balance of Cash and Cash Equivalents | (V)65(2) | 5,373,281,504.75 | 7,729,460,082.75 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)65(2) | 7,714,157,995.87 | 5,373,281,504.75 |
The accompanying notes form part of the financial statements.
- 14 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Cash Flow Statement of the Company
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 104,722,961.87 | 229,302,378.14 | |
| Other cash receipts relating to operating activities | 246,055,628.30 | 29,331,866.91 | |
| Sub-total of cash inflows | 350,778,590.17 | 258,634,245.05 | |
| Cash payments for goods purchased and services received | 36,211,750.68 | 74,086,330.85 | |
| Cash payments to and on behalf of employees | 85,120,511.18 | 121,661,642.64 | |
| Payments of all types of taxes | 20,158,391.66 | 9,401,709.94 | |
| Other cash payments relating to operating activities | 53,795,218.14 | 279,797,604.56 | |
| Sub-total of cash outflows | 195,285,871.66 | 484,947,287.99 | |
| Net Cash Flows from Operating Activities | 155,492,718.51 | (226,313,042.94) | |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from investments income | 57,727,526.33 | 445,875,054.92 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | - | 766,830.38 | |
| Other cash receipts relating to investing activities | 612,722,414.48 | 635,013,754.63 | |
| Sub-total of cash inflows | 670,449,940.81 | 1,081,655,639.93 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 8,035,563.48 | 12,539,040.21 | |
| Cash payments to acquire investments | 8,000,000.00 | - | |
| Net cash payments for acquisitions of subsidiaries and other business units | 386,159,390.00 | 149,709,800.00 | |
| Other cash payments relating to investing activities | 2,060,171,330.96 | 374,513,229.40 | |
| Sub-total of cash outflows | 2,462,366,284.44 | 536,762,069.61 | |
| Net Cash Flows from Investing Activities | (1,791,916,343.63) | 544,893,570.32 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 2,186,275,171.90 | 256,263,615.57 | |
| Cash receipts from borrowings | 2,160,000,000.00 | 566,016,000.00 | |
| Cash receipts from issue of bonds | - | 200,000,000.00 | |
| Other cash receipts relating to financing activities | - | - | |
| Sub-total of cash inflows | 4,346,275,171.90 | 1,022,279,615.57 | |
| Cash repayments of borrowings | 2,167,116,843.58 | 300,000,000.00 | |
| Cash payments for distribution of dividends or profit or interest | 239,800,502.62 | 873,011,086.61 | |
| Other cash payments relating to financing activities | 1,593,549.44 | 1,497,344.37 | |
| Sub-total of cash outflows | 2,408,510,895.64 | 1,174,508,430.98 | |
| Net Cash Flows from Financing Activities | 1,937,764,276.26 | (152,228,815.41) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | (497,294.65) | (6,549,202.77) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | 300,843,356.49 | 159,802,509.20 | |
| Add: Opening balance of Cash and Cash Equivalents | 389,841,854.93 | 230,039,345.73 | |
| VI. Closing Balance of Cash and Cash Equivalents | 690,685,211.42 | 389,841,854.93 |
The accompanying notes form part of the financial statements.
- 15 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
| Item | 2019 | |||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | |||
| I. Closing balance of the preceding year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,915,817,110.21 | 49,656,450,459.88 | 80,416,925,872.81 |
| Add: Changes in accounting policies | - | - | - | - | - | (41,018,077.68) | (80,367,183.77) | (121,385,261.45) |
| Corrections of prior period errors | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,874,799,032.53 | 49,576,083,276.11 | 80,295,540,611.36 |
| III. Changes for the year | 128,952,746.00 | 2,869,572,510.30 | (444,870,544.48) | 4,155,654.27 | 103,169,398.76 | 2,592,367,319.32 | 9,441,319,916.71 | 14,694,667,000.88 |
| (I) Total comprehensive income | - | - | (443,076,984.15) | - | - | 2,898,192,168.84 | 4,615,516,194.00 | 7,070,631,378.69 |
| (II) Owners' contributions and reduction in capital | 128,952,746.00 | 2,869,572,510.30 | - | - | - | - | 6,867,048,857.78 | 9,865,574,114.08 |
| 1．Capital contribution from shareholders | 128,952,746.00 | 2,058,595,347.69 | - | - | - | - | 27,255,000.00 | 2,214,803,093.69 |
| 2．Capital contribution from other equity investment holder | - | - | - | - | - | - | - | - |
| 3．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - |
| 4．Business combination involving enterprises under common control | - | - | - | - | - | - | - | - |
| 5．Others | - | 810,977,162.61 | - | - | - | - | 6,839,793,857.78 | 7,650,771,020.39 |
| (III) Profit distribution | - | - | - | - | 103,169,398.76 | (307,618,409.85) | (2,040,721,489.06) | (2,245,170,500.15) |
| 1．Transfer to surplus reserve | - | - | - | - | 103,169,398.76 | (103,169,398.76) | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (204,449,011.09) | (2,040,721,489.06) | (2,245,170,500.15) |
| 4．Others | - | - | - | - | - | - | - | - |
| (IV) Transfers within shareholders' equity | - | - | (1,793,560.33) | - | - | 1,793,560.33 | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - | - |
| 4．Others | - | - | (1,793,560.33) | - | - | 1,793,560.33 | - | - |
| (V) Special reserve | - | - | - | 4,155,654.27 | - | - | (523,646.01) | 3,632,008.26 |
| 1．Withdrawn in the period | - | - | - | 108,062,435.41 | - | - | 115,436,394.98 | 223,498,830.39 |
| 2．Utilized in the period | - | - | - | (103,906,781.14) | - | - | (115,960,040.99) | (219,866,822.13) |
| (VI) Others | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,922,365,124.00 | 22,296,485,467.35 | (355,944,565.91) | 12,386,734.70 | 630,345,307.43 | 11,467,166,351.85 | 59,017,403,192.82 | 94,990,207,612.24 |
- 16 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Consolidated Statement of Changes in Shareholders' Equity - continued
Unit: RMB
| Item | 2018 | |||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | |||
| I. Closing balance of the preceding year | 644,763,730.00 | 167,480,381.24 | 19,800,344.49 | 4,767,373.45 | 520,074,434.56 | 3,566,083,142.17 | 1,644,073,503.71 | 6,567,042,909.62 |
| Add: Changes in accounting policies | - | - | (722,556,561.97) | - | - | 816,323,338.17 | 6,484,493.08 | 100,251,269.28 |
| Corrections of prior period errors | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | 18,678,418,974.96 | (26,864,990.92) | - | - | 4,900,224,775.30 | 43,870,482,449.58 | 67,422,261,208.92 |
| Others | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 18,845,899,356.20 | (729,621,208.40) | 4,767,373.45 | 520,074,434.56 | 9,282,631,255.64 | 45,521,040,446.37 | 74,089,555,387.82 |
| III. Changes for the year | 1,148,648,648.00 | 581,013,600.85 | 818,547,186.97 | 3,463,706.98 | 7,101,474.11 | (366,814,145.43) | 4,135,410,013.51 | 6,327,370,484.99 |
| (I) Total comprehensive income | - | - | 41,778,087.02 | - | - | 1,090,418,910.77 | 1,958,320,541.85 | 3,090,517,539.64 |
| (II) Owners' contributions and reduction in capital | 1,148,648,648.00 | 581,013,600.85 | 776,769,099.95 | - | - | - | 3,092,504,057.82 | 5,598,935,406.62 |
| 1．Capital contribution from shareholders | 1,148,648,648.00 | - | - | - | - | - | 1,594,806,295.50 | 2,743,454,943.50 |
| 2．Capital contribution from other equity investment holder | - | - | - | - | - | - | - | - |
| 3．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - |
| 4．Business combination involving enterprises under common control | - | (583,183,507.54) | 776,769,099.95 | - | - | - | - | 193,585,592.41 |
| 5．Others | - | 1,164,197,108.39 | - | - | - | - | 1,497,697,762.32 | 2,661,894,870.71 |
| (III) Profit distribution | - | - | - | - | 7,101,474.11 | (1,457,233,056.20) | (920,434,015.30) | (2,370,565,597.39) |
| 1．Transfer to surplus reserve | - | - | - | - | 7,101,474.11 | (7,101,474.11) | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.86) | - | (850,443,359.86) |
| 4．Others | - | - | - | - | - | (599,688,222.23) | (920,434,015.30) | (1,520,122,237.53) |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | 3,463,706.98 | - | - | 5,019,429.14 | 8,483,136.12 |
| 1．Withdrawn in the period | - | - | - | 24,165,961.75 | - | - | 49,870,501.76 | 74,036,463.51 |
| 2．Utilized in the period | - | - | - | (20,702,254.77) | - | - | (44,851,072.62) | (65,553,327.39) |
| (VI) Others | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,915,817,110.21 | 49,656,450,459.88 | 80,416,925,872.81 |
The accompanying notes form part of the financial statements.
- 17 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
| Item | 2019 | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,943,085.16 | 28,201,287,142.46 |
| Add: Changes in accounting policies | - | - | - | - | - | (325,594.24) | (325,594.24) |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,617,490.92 | 28,200,961,548.22 |
| III. Changes for the year | 128,952,746.00 | 2,058,595,347.69 | 2,956,451.25 | (470,465.59) | 103,169,398.76 | 724,075,577.70 | 3,017,279,055.81 |
| (I) Total comprehensive income | - | - | 2,956,451.25 | - | - | 1,031,693,987.55 | 1,034,650,438.80 |
| (II) Owners' contributions and reduction in capital | 128,952,746.00 | 2,058,595,347.69 | - | - | - | - | 2,187,548,093.69 |
| 1．Capital contribution from shareholders | 128,952,746.00 | 2,058,595,347.69 | - | - | - | - | 2,187,548,093.69 |
| 2．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - |
| 3．Others | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | 103,169,398.76 | (307,618,409.85) | (204,449,011.09) |
| 1．Transfer to surplus reserve | - | - | - | - | 103,169,398.76 | (103,169,398.76) | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (204,449,011.09) | (204,449,011.09) |
| 4．Others | - | - | - | - | - | - | - |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | (470,465.59) | - | - | (470,465.59) |
| 1．Withdrawn in the period | - | - | - | 919,167.67 | - | - | 919,167.67 |
| 2．Utilized in the period | - | - | - | (1,389,633.26) | - | - | (1,389,633.26) |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,922,365,124.00 | 27,576,242,527.73 | 105,594,576.25 | - | 630,345,307.43 | 983,693,068.62 | 31,218,240,604.03 |
- 18 -
FOR THE YEAR ENDED 31 DECEMBER 2019
Statement of Changes in Shareholders' Equity of the Company - continued
Unit: RMB
| Item | 2018 | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 644,763,730.00 | 240,001,254.59 | 6,647,500.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,457,960,097.18 |
| Add: Changes in accounting policies | - | - | 92,613,480.00 | - | - | - | 92,613,480.00 |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 240,001,254.59 | 99,260,980.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,550,573,577.18 |
| III. Changes for the year | 1,148,648,648.00 | 25,277,645,925.45 | 3,377,145.00 | 470,465.59 | 7,101,474.11 | (786,530,092.87) | 25,650,713,565.28 |
| (I) Total comprehensive income | - | - | 3,377,145.00 | - | - | 71,014,741.10 | 74,391,886.10 |
| (II) Owners' contributions and reduction in capital | 1,148,648,648.00 | 25,277,645,925.45 | - | - | - | - | 26,426,294,573.45 |
| 1．Capital contribution from shareholders | 1,148,648,648.00 | 25,276,764,780.38 | - | - | - | - | 26,425,413,428.38 |
| 2．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - |
| 3．Others | - | 881,145.07 | - | - | - | - | 881,145.07 |
| (III) Profit distribution | - | - | - | - | 7,101,474.11 | (857,544,833.97) | (850,443,359.86) |
| 1．Transfer to surplus reserve | - | - | - | - | 7,101,474.11 | (7,101,474.11) | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.86) | (850,443,359.86) |
| 4．Others | - | - | - | - | - | - | - |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | 470,465.59 | - | - | 470,465.59 |
| 1．Withdrawn in the period | - | - | - | 2,621,280.84 | - | - | 2,621,280.84 |
| 2．Utilized in the period | - | - | - | (2,150,815.25) | - | - | (2,150,815.25) |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,943,085.16 | 28,201,287,142.46 |
The accompanying notes form part of the financial statements.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 19 -
(I) GENERAL INFORMATION OF THE COMPANY
China Merchants Port Group Company Limited was a stock limited company incorporated inShenzhen, Guangdong Province, on 16 January 1993.
The headquarters of the Company is located in Shenzhen, Guangdong Province. The Companyand its subsidiaries (collectively the "Group") are principally engaged in the rendering of portservice, bonded logistics service and other business such as property development and investment.
The Company's and consolidated financial statements have been approved by the Board ofDirectors on 14 April 2020.
See Notes (VII) "Equity in other entities" for details of the scope of consolidated financialstatements in the current period are subsidiaries acquired through business combination undercommon control. See Note (VI) "Changes in the consolidated scope" for details of changes in thescope of consolidated financial statements in the current period.
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of preparation of financial statements
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued bythe Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financialinformation in accordance with Information Disclosure and Presentation Rules for CompaniesOffering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in2014).
Going concern
As at 31 December 2019, the Group had total current liabilities in excess of total current assets ofRMB 6,933,328,647.40. On 31 December 2019, the Group had available and unused line ofcredit amounting to RMB 46,602,858,550.04, which is greater than the balance of the net currentliabilities. The Group can obtain financial support from the available line of credit when needed.Therefore, the financial statements have been prepared on a going concern basis.
Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. Except for certain financial instrumentswhich are measured at fair value, the Group adopts the historical cost as the principle ofmeasurement of the financial statements. Upon being restructured into a stock company, the fixedassets and intangible assets initially contributed by the state-owned shareholders are recognizedbased on the valuation amounts confirmed by the state-owned assets administration department.Where assets are impaired, provisions for asset impairment are made in accordance with therelevant requirements.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 20 -
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
Basis of accounting and principle of measurement - continued
Where the historical cost is adopted as the measurement basis, assets are recorded at the amountof cash or cash equivalents paid or the fair value of the consideration given to acquire them at thetime of their acquisition. Liabilities are recorded at the amount of proceeds or assets received orthe contractual amounts for assuming the present obligation, or, at the amounts of cash or cashequivalents expected to be paid to settle the liabilities in the normal course of business.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date, regardless of whetherthat price is directly observable or estimated using valuation technique. Fair value measurementand/or disclosure in the financial statements are determined according to the above basis.
Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which theinputs to the fair value measurements are observable and the significance of the inputs to the fairvalue measurement in its entirety, which are described as follows:
? Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that theentity can access at the measurement date;? Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observablefor the asset or liability, either directly or indirectly; and? Level 3 inputs are unobservable inputs for the asset or liability.
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
All the following significant accounting policies and accounting estimates are based onAccounting Standards for Business Enterprises ("ASBE").
1. Statement of compliance with the ASBE
The financial statements of the Company have been prepared in accordance with the ASBE, andpresent truly and completely, the Company’s and consolidated financial position as of 31December 2019, and the Company’s and consolidated results of operations, the Company’s andconsolidated shareholders' equity and cash flows for the year then ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, e.g. from 1 January to 31December.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 21 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
3. Operating cycle
An operating cycle refers to the period since when an enterprise purchases assets for processingpurpose till the realization of those assets in cash or cash equivalents. The Group are principallyengaged in the rendering of port service, bonded logistics service and other business such asproperty development and investment with an operating cycle of one year.
4. Functional currency
Renminbi ("RMB") is the currency of the primary economic environment in which the Companyand its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiarieschoose RMB as their functional currency. The Company's subsidiaries choose their functionalcurrency on the basis of the primary economic environment in which they operate. The Companyadopts RMB to prepare its financial statements.
5. The accounting treatment of business combinations involving or not involvingenterprises under common control
Business combinations are classified into business combinations involving enterprises undercommon control and business combinations not involving enterprises under common control.
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination inwhich all of the combining enterprises are ultimately controlled by the same party or parties bothbefore and after the combination, and that control is not transitory.
Assets and liabilities obtained shall be measured at their respective carrying amounts as recordedby the combining entities at the date of the combination. The difference between the carryingamount of the net assets obtained and the carrying amount of the consideration paid for thecombination is adjusted to the share premium in capital reserve. If the share premium is notsufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period inwhich they are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a businesscombination in which all of the combining enterprises are not ultimately controlled by the sameparty or parties before and after the combination.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 22 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
5. The accounting treatment of business combinations involving or not involving enterprises
under common control - continued
5.2 Business combinations not involving enterprises under common control and goodwill - continued
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assetsgiven, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange forcontrol of the acquire. Where a business combination not involving enterprises under commoncontrol is achieved in stages that involve multiple transactions, the cost of combination is the sumof the consideration paid at the acquisition date and the fair value at the acquisition date of theacquirer's previously held interest in the acquiree. The intermediary expenses (fees in respect ofauditing, legal services, valuation and consultancy services, etc.) and other administrativeexpenses attributable to the business combination are recognized in profit or loss in the periodswhen they are incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities acquired by the acquirer in abusiness combination that meet the recognition criteria shall be measured at fair value at theacquisition date.
When a business combination contract provides for the acquirer's recovery of considerationpreviously paid contingent on one or multiple future event(s), the Group recognises the contingentconsideration provided in the contract as an asset, as part of the consideration transferred in thebusiness combination, and includes it in the cost of business combination at the fair value at theacquisition date. Within 12 months after the acquisition, where the contingent consideration needsto be adjusted as new or further evidences are obtained in respect of the circumstances existed atthe acquisition date, the adjustment shall be recognised and the amount originally recognised ingoodwill or non-operating income shall be adjusted. A change in or adjustment to the contingentconsideration under other circumstances shall be accounted for in accordance with AccountingStandard for Business Enterprise No. 22 – Financial Instruments: Recognition and Measurementand Accounting Standard for Business Enterprises No. 13 – Contingencies. Any change oradjustment is included in profit or loss for the current period.
Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree'sidentifiable net assets, the difference is treated as an asset and recognized as goodwill, which ismeasured at cost on initial recognition. Where the cost of combination is less than the acquirer'sinterest in the fair value of the acquiree's identifiable net assets, the acquirer reassesses themeasurement of the fair values of the acquiree's identifiable assets, liabilities and contingentliabilities and measurement of the cost of combination. If after that reassessment, the cost ofcombination is still less than the acquirer's interest in the fair value of the acquiree's identifiablenet assets, the acquirer recognizes the remaining difference immediately in profit or loss for thecurrent period.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 23 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
5. The accounting treatment of business combinations involving or not involving enterprisesunder common control - continued
5.2 Business combinations not involving enterprises under common control and goodwill - continued
If either the fair values of identifiable assets, liabilities and contingent liabilities acquired in acombination or the cost of business combination can be determined only provisionally by the endof the period in which the business combination was effected, the acquirer recognises andmeasures the combination using those provisional values. Any adjustments to those provisionalvalues within twelve months after the acquisition date are treated as if they had been recognisedand measured on the acquisition date.
Goodwill arising on a business combination is measured at cost less accumulated impairmentlosses, and is presented separately in the consolidated financial statements.
6. Preparation of consolidated financial statements
6.1 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis ofcontrol. Control exists when the investor has power over the investee; is exposed, or has rights, tovariable returns from its involvement with the investee; and has the ability to use its power overthe investee to affect its returns. The Group reassesses whether or not it controls an investee iffacts and circumstances indicate that there are changes of the above elements of the definition ofcontrol.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiaries andceases when the Group loses control of the subsidiary.
For a subsidiary already disposed of by the Group, the operating results and cash flows before thedate of disposal (the date when control is lost) are included in the consolidated income statementand consolidated statement of cash flows, as appropriate.
For subsidiaries acquired through a business combination involving enterprises not undercommon control, the operating results and cash flows from the acquisition date (the date whencontrol is obtained) are included in the consolidated income statement and consolidated statementof cash flows, as appropriate.
No matter when the business combination occurs in the reporting period, subsidiaries acquiredthrough a business combination involving enterprises under common control or the party beingabsorbed under merger by absorption are included in the Group's scope of consolidation as if theyhad been included in the scope of consolidation from the date when they first came under thecommon control of the ultimate controlling party. Their operating results and cash flows from thedate when they first came under the common control of the ultimate controlling party are includedin the consolidated income statement and consolidated statement of cash flows, as appropriate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 24 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
The significant accounting policies and accounting periods adopted by the subsidiaries aredetermined based on the uniform accounting policies and accounting periods set out by theCompany.
Where the accounting policies / accounting periods adopted by subsidiaries are inconsistent withthose of the Company, appropriate adjustments are made to the subsidiaries' financial statementsin accordance with the accounting policies of the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the parent is treated as minorityinterests and presented as "minority interests" in the consolidated balance sheet undershareholders' equity. The portion of net profits or losses of subsidiaries for the period attributableto minority interests is presented as "minority interests" in the consolidated income statementunder the "net profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiaryexceeds the minority shareholders' portion of the opening balance of shareholders' equity of thesubsidiary, the excess amount is still allocated against minority interests.
Acquisition of minority interests or disposals of interests in a subsidiary that do not result in theloss of control over the subsidiary are accounted for as equity transactions. The carrying amountsof the parent's interests and minority interests are adjusted to reflect the changes in their relativeinterests in the subsidiary. The difference between the amount by which the minority interests areadjusted and the fair value of the consideration paid or received is adjusted to capital reserve. Ifthe capital reserve is not sufficient to absorb the difference, the excess are adjusted againstretained earnings.
For the stepwise acquisition of equity interest till acquiring control after a few transactions andleading to business combination not involving enterprises under common control, this should bedealt with based on whether this belongs to 'package deal': if it belongs to 'package deal',transactions will be dealt as transactions to acquire control. If it does not belong to 'package deal',transactions to acquire control on acquisition date will be under accounting treatment, the fairvalue of acquirees' shares held before acquisition date will be revalued, and the differencebetween fair value and book value will be recognized in profit or loss of the current period; ifacquirees' shares held before acquisition date involve in changes of other comprehensive incomeand other equity of owners under equity method, this will be transferred to income of acquisitiondate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 25 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
When the Group loses control over a subsidiary due to disposal of equity investment or otherreasons, any retained interest is re-measured at its fair value at the date when control is lost. Thedifference between (i) the aggregate of the consideration received on disposal and the fair value ofany retained interest and (ii) the share of the former subsidiary's net assets cumulatively calculatedfrom the acquisition date according to the original proportion of ownership interests is recognizedas investment income in the period in which control is lost, and the goodwill is offset accordingly.Other comprehensive income associated with investment in the former subsidiary is reclassified toinvestment income in the period in which control is lost.
When the Group loses control of a subsidiary in two or more arrangements (transactions), termsand conditions of the arrangements (transactions) and their economic effects are considered. Oneor more of the following indicate that the Group shall account for the multiple arrangements as a'package deal': (i) they are entered into at the same time or in contemplation of each other; (ii)they form a complete transaction designed to achieve an overall commercial effect; (iii) theoccurrence of one transaction is dependent on the occurrence of at least one other transaction; (iv)one transaction alone is not economically justified, but it is economically justified whenconsidered together with other transactions. Where the transactions of disposal of equityinvestments in a subsidiary until the loss of control are assessed as a package deal, thesetransactions are accounted for as one transaction of disposal of a subsidiary with loss of control.Before losing control, the difference of consideration received on disposal and the share of netassets of the subsidiary continuously calculated from acquisition date is recognized as othercomprehensive income. When losing control, the cumulated other comprehensive income istransferred to profit or loss of the period of losing control. If the transactions of disposal of equityinvestments in a subsidiary are not assessed as a package deal, these transactions are accountedfor as unrelated transactions.
7. Types of joint arrangements and the accounting treatment of joint operation
There are two types of joint arrangements - joint operations and joint ventures. The classificationof joint arrangements under is determined based on the rights and obligations of parties to thejoint arrangements by considering the structure, the legal form of the arrangements, thecontractual terms agreed by the parties to the arrangement. A joint operation is a jointarrangement whereby the parties that have joint control of the arrangement have rights to theassets, and obligations for the liabilities, relating to the arrangement. A joint venture is a jointarrangement whereby the parties that have joint control of the arrangement have rights to the netassets of the arrangement.
Investments in joint ventures are accounted for using the equity method by the Group, which isdetailed in Notes (III) 16.3.2, a long-term equity investment is subject to for using the equitymethod.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 26 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
7. Types of joint arrangements and the accounting treatment of joint operation -continued
The Group as a joint operator recognizes the following items in relation to its interest in a jointoperation: (1) its solely-held assets, including its share of any assets held jointly; (2) its solely-assumed liabilities, including its share of any liabilities incurred jointly; (3) its revenue from thesale of its share of the output arising from the joint operation; (4) its share of the revenue from thesale of the output by the joint operation; and (5) its solely-incurred expenses, including its share ofany expenses incurred jointly. The Group accounts for the recognized assets, liabilities, revenuesand expenses relating to its interest in a joint operation in accordance with the requirementsapplicable to the particular assets, liabilities, revenues and expenses.
8. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cashequivalents are the Group's short-term(generally due within 3 months since the acquisition date),highly liquid investments that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value.
9. Foreign currency transactions
9.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchangerate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currencyusing the spot exchange rates at the balance sheet date. Exchange differences arising from thedifferences between the spot exchange rates prevailing at the balance sheet date and those oninitial recognition or at the previous balance sheet date are recognized in profit or loss for theperiod, except that (1) exchange differences related to a specific-purpose borrowing denominatedin foreign currency that qualify for capitalization are capitalized as part of the cost of thequalifying asset during the capitalization period; (2) exchange differences related to hedginginstruments for the purpose of hedging against foreign currency risks are accounted for usinghedge accounting; (3) exchange differences arising from changes in the carrying amounts (otherthan the amortised cost) of monetary items at fair value through other comprehensive income arerecognised as other comprehensive income.
When the consolidated financial statements include foreign operation(s), if there is foreigncurrency monetary item constituting a net investment in a foreign operation, exchange differencearising from changes in exchange rates are recognized as "exchange differences arising ontranslation of financial statements denominated in foreign currencies " in other comprehensiveincome, and in profit and loss for the period upon disposal of the foreign operation.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 27 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Foreign currency transactions - continued
9.1 Transactions denominated in foreign currencies - continued
Foreign currency non-monetary items measured at historical cost are translated to the amounts infunctional currency at the spot exchange rates on the dates of the transactions; the amounts infunctional currency remain unchanged. Foreign currency non-monetary items measured at fairvalue are re-translated at the spot exchange rate on the date the fair value is determined.Difference between the re-translated functional currency amount and the original functionalcurrency amount is treated as changes in fair value (including changes of exchange rate) and isrecognized in profit and loss or as other comprehensive income.
9.2 Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of aforeign operation are translated from the foreign currency into RMB using the following method:
assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at thebalance sheet date; shareholders' equity items except for unappropriated profit are translated at thespot exchange rates at the dates on which such items arose; all items in the income statement aswell as items reflecting the distribution of profits are translated at the average exchange rates ofthe accounting period of the consolidated financial statements; the opening balance ofunappropriated profit is the translated closing balance of the previous year's unappropriated profit;the closing balance of unappropriated profit is calculated and presented on the basis of eachtranslated income statement and profit distribution item. The difference between the translatedassets and the aggregate of liabilities and shareholders' equity items is recognized as othercomprehensive income and included in shareholders' equity.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreignsubsidiary are translated at average exchange rate during the accounting period of consolidatedfinancial statements. The effect of exchange rate changes on cash and cash equivalents is regardedas a reconciling item and presented separately in the cash flow statement as "effect of exchangerate changes on cash and cash equivalents".
The closing balances and the comparative figures of previous year are presented at the translatedamounts in the previous year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over aforeign operation due to disposal of certain interest in it or other reasons, the Group transfers theaccumulated exchange differences arising on translation of financial statements of this foreignoperation attributable to the owners' equity of the Company and presented under owners' equity,to profit or loss in the period in which the disposal occurs.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 28 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Foreign currency transactions - continued
9.2 Translation of financial statements denominated in foreign currencies - continued
In case of a disposal of part equity investments or other reason leading to lower interestpercentage in foreign operations but does not result in the Group losing control over a foreignoperation, the proportionate share of accumulated exchange differences arising on translation offinancial statements are re-attributed to minority interests and are not recognized in profit andloss. For partial disposals of equity interests in foreign operations which are associates or jointventures, the proportionate share of the accumulated exchange differences arising on translationof financial statements of foreign operations is reclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to thecontractual provisions of a financial instrument.
All regular way purchases or sales of financial assets are recognized and derecognized on a tradedate basis.
Financial assets and financial liabilities are initially measured at fair value. For financial assetsand financial liabilities at fair value through profit or loss, relevant transaction costs are directlyrecognized in profit or loss; transaction costs relating to other categories of financial assets andfinancial liabilities are included in the value initially recognized. For accounts receivablerecognized that do not contain a significant financing component or a financing componentincluded in the contracts less than one year which are not considered by the Group, which arewithin the scope of Accounting Standard for Business Enterprises No.14 - Revenue (hereinafterreferred to as "revenue standards"), transaction prices defined in the standards shall be adopted oninitial recognition.
The effective interest method is a method that is used in the calculation of the amortized cost of afinancial asset or a financial liability and in the allocation of the interest income or interestexpense in profit or loss over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash flows through theexpected life of the financial asset or financial liability to the gross carrying amount of a financialasset or to the amortized cost of a financial liability. When calculating the effective interest rate,the Group estimates future cash flows by considering all the contractual terms of the financialasset or financial liability (for example, prepayment, extension, call option or similar options) butshall not consider the expected credit losses.
The amortized cost of a financial asset or a financial liability is the amount of a financial asset or afinancial liability initially recognized net of principal repaid, plus or less the cumulative amortizedamount arising from amortization of the difference between the amount initially recognized andthe amount at the maturity date using the effective interest method, net of cumulative credit lossallowance (only applicable to financial assets).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 29 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets
Subsequent to initial recognition, the Group's financial assets of various categories aresubsequently measured at amortized cost, at fair value through other comprehensive income or atfair value through profit or loss.
If contractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding, and the financial asset isheld within a business model whose objective is to hold financial assets in order to collectcontractual cash flows, such asset is classified into financial assets measured at amortized cost,which include cash and bank balances, notes receivable, accounts receivable, other receivables,debt investments, and long-term receivables and etc..
Financial assets that meet the following conditions are subsequently measured at fair valuethrough other comprehensive income ("FVTOCI"): the financial asset is held within a businessmodel whose objective is achieved by both collecting contractual cash flows and selling; and thecontractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding. Financial assets atFVTOCI are presented as other debt investments. Other debt investments due within one year(inclusive) since the balance sheet date are presented as non-current assets due within one year.Other debt investments due within one year (inclusive) upon acquisition are presented as othercurrent assets.
On initial recognition, the Group may irrevocably designate non-trading equity instruments, otherthan contingent consideration recognized through business combination not involving enterprisesunder common control, as financial assets at FVTOCI on an individual basis. Such financialassets at FVTOCI are presented as other equity instrument.
A financial asset is classified as held for trading if one of the following conditions is satisfied:
? It has been acquired principally for the purpose of selling in the near term; or? On initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and there is objective evidence that the Group has a recent actualpattern of short-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and effective as a
hedging instrument.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 30 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
Financial assets measured at fair value through profit or loss ("FVTPL") include those classifiedas financial assets at FVTPL and those designated as financial assets at FVTPL.
? Any financial assets that does not qualify for amortized cost measurement or measurement atFVTOCI or designated at FVTOCI are classified into financial assets at FVTPL.? Upon initial recognition, in order to eliminate or significantly reduce accounting mismatchand qualified hybrid financial instrument combines financial asset with embeddedderivatives, the Group will irrevocably designated it as financial liabilities at FVTPL.
Financial assets at FVTPL assets other than derivative financial assets are presented as "held-for-trading financial assets". Such financial assets at FVTPL which may fall due more than one year(or without fixed term) since the balance sheet date and will be held more than one year arepresented as other non-current financial assets.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost are subsequently measured at amortized cost usingthe effective interest method. Gain or loss arising from impairment or derecognition is recognizedin profit or loss.
For financial assets measured at amortized cost, the Group recognizes interest income usingeffective interest method. The Group calculates and recognizes interest income through bookvalue of financial assets multiplying effective interest, except for the following circumstances:
? For purchased or originated credit-impaired financial assets with credit impairment, the
Group calculates and recognizes its interest income based on amortized cost of thefinancial asset and the effective interest through credit adjustment since initial recognition.
10.1.2 Financial assets at FVTOCI
Impairment losses or gains related to financial assets at FVTOCI, interest income measured usingeffective interest method and exchange gains or losses are recognized into profit or loss for thecurrent period, except for the above circumstances, changes in fair value of the financial assets areincluded in other comprehensive income. Amounts charged to profit or loss for every period equalto the amount charged to profit or loss as it is measured at amortized costs. When the financialasset is derecognized, the cumulative gains or losses previously recognized in othercomprehensive income shall be removed from other comprehensive income and recognized inprofit or loss.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 31 -
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
10.1.2 Financial assets at FVTOC I - continued
Changes in fair value of non-trading equity instrument investments designated as financial assetsat FVTOCI are recognized in other comprehensive income, and the cumulative gains or lossespreviously recognized in other comprehensive income allocated to the part derecognized aretransferred and included in retained earnings. During the period in which the Group holds thenon-trading equity instrument, revenue from dividends is recognized in profit or loss for thecurrent period when (1) the Group has established the right of collecting dividends; (2) it isprobable that the associated economic benefits will flow to the Group; and (3) the amount ofdividends can be measured reliably.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are subsequently measured at fair value. Gain or loss arising fromchanges in fair values and dividends and interests related to the financial assets are recognized inprofit or loss.
10.2 Impairment of financial instruments
The Group makes accounting treatment on impairment and recognizes loss allowance forexpected credit losses ("ECL") on financial assets measured at amortized cost, financial assetsclassified as at FVTOCI, lease receivables, contract assets, loan commitments that are notfinancial liabilities at FVTPL, financial liabilities not measured at FVTPL, financial guaranteecontracts arising from transfer of financial assets which does not satisfy derecognition criteria orcontinuing involvement of transferred financial assets.
The Group makes a loss allowance against amount of lifetime ECL of the contract assets, notesreceivable and accounts receivable arising from transactions adopting the Revenue Standard aswell as lease receivables arising from transactions adopting ASBE No. 21- Leases.
For other financial instrument, other than purchased or originated credit-impaired financial assets,the Group assesses changes in credit risks of the relevant financial asset since initial recognition ateach balance sheet date. If the credit loss of the financial instrument has been significantlyincreased since initial recognition, the Group will make a loss allowance at an amount of expectedcredit loss during the whole life; if not, the Group will make a loss allowance for the financialinstrument at an amount in the future 12-month expected credit losses. Except for the financialassets classified as at FVTOCI, increase in or reversal of credit loss allowance is included in profitor loss as loss/gain on impairment. For the financial assets classified as at FVTOCI, the Grouprecognizes credit loss allowance in other comprehensive income and recognizes the loss/gain onimpairment in profit or loss, while the Group does not decrease the carrying amount of suchfinancial assets in the balance sheet.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
The Group has makes a loss allowance against amount of expected credit losses during the wholelife in the prior accounting period. However, at the balance sheet date, the credit risk on afinancial instrument has not increased significantly since initial recognition; the Group willmeasure the loss allowance for that financial instrument at an amount in the future 12-monthexpected credit losses. Reversed amount of loss allowance arising from such circumstances shallbe included in profit or loss as impairment gains.
10.2.1 Significant increase of credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Groupcompares the risk of a default occurring on the financial instrument as at the reporting date withthe risk of a default occurring on the financial instrument as at the date of initial recognition. Forloan commitments, the date that the Group becomes a party to the irrevocable commitment isconsidered to be the date of initial recognition in the application of criteria related to the financialinstrument for impairment.
In particular, the following information is taken into account when assessing whether credit riskhas increased significantly:
(1) Significant changes in internal price indicators of credit risk as a result of a change in
credit risk;
(2) Other changes in the rates or terms of an existing financial instrument that would be
significantly different if the instrument was newly originated or issued at the balance sheetdate (such as more stringent covenants, increased amounts of collateral or guarantees, orhigher income coverage).
(3) Significant changes in external market indicators of credit risk for a particular financial
instrument or similar financial instruments with the same expected life. These indicatorsinclude the credit spread, the credit swap prices for the borrower, the length of time or theextent to which the fair value of a financial asset has been less than its amortized cost andother market information related to the borrower, such as changes in the price of aborrower’s debt and equity instruments.
(4) Significant changes in actual or expected external credit rating for the financial
instruments;
(5) An actual or expected internal credit rating downgrade for the borrower
(6) Adverse changes in business, financial or economic conditions that are expected to cause a
significant change in the debtor’s ability to meet its debt obligations;
(7) An actual or expected significant change in the operating results of the debtor;
(8) Significant increases in credit risk on other financial instruments of the same borrower;
(9) Significant adverse change in the regulatory, economic, or technological environment of
the debtor;
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.1 Significant increase of credit risk - continued
(10) Significant changes in the value of the collateral supporting the obligation or in the quality
of third-party guarantees or credit enhancements, which are expected to reduce thedebtor’s economic incentive to make scheduled contractual payments or to otherwise havean effect on the probability of a default occurring.
(11) Significant changes in circumstances expected to reduce the debtor’s economic incentive
to make scheduled contractual payments;
(12) Expected changes in the loan documentation including an expected breach of contract that
may lead to covenant waivers or amendments, interest payment holidays, interest ratestep-ups, requiring additional collateral or guarantees, or other changes to the contractualframework of the financial instrument;
(13) Significant changes in the expected performance and behavior of the debtor;
(14) Changes in the entity’s credit management approach in relation to the financial instrument;
(15) Past due of contract payment.
The Group assumes that the credit risk on a financial instrument has not increased significantlysince initial recognition if the financial instrument is determined to have lower credit risk at thebalance sheet date. A financial instrument is determined to have lower credit risk if: i) it has alower risk of default, ii) the borrower has a strong capacity to meet its contractual cash flowobligations in the near term and iii) adverse changes in economic and business conditions in thelonger term may, but will not necessarily, reduce the ability of the borrower to fulfil itscontractual cash flow obligations.
10.2.2 Credit-impaired financial assets
When the Group expected occurrence of one or more events which may cause adverse impact onfuture cash flows of a financial asset, the financial asset will become a credit-impaired financialassets. Objective evidence that a financial asset is impaired includes but not limited to thefollowing observable events:
(1) Significant financial difficulty of the issuer or debtor;
(2) A breach of contract by the debtor, such as a default or delinquency in interest or principal
payments;
(3) The creditor, for economic or legal reasons relating to the debtor’s financial difficulty,
granting a concession to the debtor;
(4) It becoming probable that the debtor will enter bankruptcy or other financial
reorganizations;
(5) The disappearance of an active market for that financial asset because of financial
difficulties of the issuer or the debtor;
(6) Purchase or originate a financial asset with a large scale of discount, which reflects facts
of credit loss incurred.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.3 Determination of expected credit loss
Lease receivables are assessed for ECL individually by the Group. In addition, the Group usesprovision matrix to calculate ECL for notes receivable, accounts receivable, other receivables,contract assets, debt investments and other debt investments based on a portfolio basis. The Groupclassifies financial instruments into different groups based on common risk characteristics.Common credit risk characteristics include credit risk rating, the date of initial recognition,remaining contractual maturity, industry of borrower and geographical location of the borroweretc.
The Group determines expected credit losses of relevant financial instruments using the followingmethods:
? For a financial asset, a credit loss is the present value of the difference between thecontractual cash flows that are due to the Group under the contract and the cash flows thatthe Group expects to receive;? For a lease receivable, a credit loss is the present value of the difference between thecontractual cash flows that are due to the Group under the contract and the cash flows thatthe Group expects to receive;? For undrawn loan commitments (refer to Note III, 10.4.1.3 for the detail of accountingpolicies), the ECL is the present value of the difference between the contractual cash flowsthat are due to the Group if the holder of the loan commitments draws down the loan, andthe cash flows that the Group expects to receive if the loan is drawn down. The Group'sestimation of the ECL for loan commitments is consistent with its expection of the loancommitments drawn down.? For a financial guarantee contract (refer to Note III, 10.4.1.3 for the detail of accountingpolicies ), the expected losses is the present value of the expected payments to reimburse theholder for a credit loss that it incurs less any amounts that the Group expects to receive fromthe holder, the debtor or any other party..? For a financial asset with credit-impaired at the balance sheet date, but not purchased ororiginated credit-impaired, a credit losses is the difference between the asset’s grosscarrying amount and the present value of estimated future cash flows discounted at thefinancial asset’s original effective interest rate.
The factors reflected in methods of measurement of expected credit losses include an unbiasedand probability-weighted amount that is determined by evaluating a range of possible outcomes;time value of money; reasonable and supportable information about past events, currentconditions and forecasts on future economic status at balance sheet date without unnecessaryadditional costs or efforts.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.4 Write-down of financial assets
When the Group will no longer reasonably expect that the contractual cash flows of financialassets can be collected in aggregate or in part, the Group will directly write down the carryingamount of the financial asset, which constitutes derecognition of relevant financial assets.
10.3 Transfer of financial assets
The Group will derecognize a financial asset if one of the following conditions is satisfied: (i) thecontractual rights to the cash flows from the financial asset expire; (ii) the financial asset has beentransferred and substantially all the risks and rewards of ownership of the financial asset istransferred to the transferee; or (iii) although the financial asset has been transferred, the Groupneither transfers nor retains substantially all the risks and rewards of ownership of the financialasset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of afinancial asset, and it retains control of the financial asset, the Group will recognize the financialasset to the extent of its continuing involvement in the transferred financial asset and recognize anassociated liability. The Group will measure relevant liabilities as follows:
? For transferred financial assets carried at amortized cost, the carrying amount of 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 relevantfinancial liabilities is the carrying amount of financial assets transferred with continuinginvolvement less fair value of the Group's retained rights (if the Group retains relevant rightsupon transfer of financial assets) with addition of fair value of obligations assumed by theGroup (if the Group assumes relevant obligations upon transfer of financial assets).Accordingly, the fair value of relevant rights and obligations shall be measured on anindividual basis.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.3 Transfer of financial assets - continued
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, thedifference between (1) the carrying amount of the financial asset transferred and (2) the sum ofthe consideration received from the transfer and accumulated changes in fair value initiallyrecorded in other comprehensive income is recognized in profit or loss. For the non-tradableequity instrument designated as financial assets at FVTOCI, cumulative gain or loss that has beenrecognized in other comprehensive income should be removed from other comprehensive incomebut be recognized in retained earnings.
For a part of transfer of a financial asset that satisfies the derecognition criteria, the carryingamount of the transferred financial asset is allocated between the part that is derecognized and thepart that is continuously involved, based on the respective fair values of those parts on transferdate. The difference between (1) the sum of the consideration received for the part derecognizedand any cumulative gain or loss allocated to the part derecognized which has been previouslyrecognized in other comprehensive income; and (2) the carrying amount allocated to the partderecognized on derecognition date; is recognized in profit or loss. For the non-tradable equityinstrument designated as financial assets at FVTOCI, cumulative gain or loss that has beenrecognized in other comprehensive income should be removed from other comprehensive incomebut be recognized in retained earnings.
For a transfer of a financial asset in its entirety that does not satisfy the derecognition criteria, theGroup will continuously recognize the transferred financial asset in its entirety. Considerationsreceived due to transfer of assets should be recognized as a liability upon receipts.
10.4 Classification of financial liabilities equity instruments
Financial instruments issued by the Group are classified into financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic naturenot only its legal form, together with the definition of financial liability and equity instruments oninitial recognition.
10.4.1 Classification, recognition and measurement of financial liabilities
On initial recognition, financial liabilities are classified into financial liabilities at FVTPL andother financial liabilities.
10.4.1.1 Financial liabilities at FVTPL
Financial liabilities at FVTPL consist of financial liabilities held for trading (including derivativesclassified as financial liabilities) and those designated as at FVTPL. Except for derivativefinancial liabilities presented separately, the financial liabilities at FVTPL are presented as held-for-trading financial liabilities.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.1 Classification, recognition and measurement of financial liabilities- continued
10.4.1.1 Financial liabilities at FVTPL- continued
A financial liability is classified as held for trading if one of the following conditions is satisfied:
? It has been acquired principally for the purpose of repurchasing in the near term; or? On initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and there is objective evidence that the Group has a recent actualpattern of short-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and effective as a
hedging instrument.
A financial liability may be designated as at FVTPL on initial recognition when one of thefollowing conditions is satisfied: (i) Such designation eliminates or significantly reducesaccounting mismatch; or (ii) The Group makes management and performance evaluation on a fairvalue basis, in accordance with the Group's formally documented risk management or investmentstrategy, and reports to key management personnel on that basis. (iii) The qualified hybridfinancial instrument combines financial asset with embedded derivatives.
Transaction financial liabilities are subsequently measured at fair value. Any gains or lossesarising from changes in the fair value and any dividend or interest expenses paid on the financialliabilities are recognized in profit or loss.
The amount of change in the fair value of the financial liability that is attributable to changes inthe credit risk of that liability shall be presented in other comprehensive income, other changes infair values are included in profit or loss for the current period. Upon the derecognition of suchliability, the accumulated amount of change in fair value that is attributable to changes in thecredit risk of that liability, which is recognized in other comprehensive income, is transferred toretained earnings. Any dividend or interest income earned on the financial liabilities arerecognized in profit or loss. If the impact of the change in credit risk of such financial liabilitydealt with in the above way would create or enlarge an accounting mismatch in profit or loss, theGroup shall present all gains or losses on that liability (including the effects of changes in thecredit risk of that liability) in profit or loss.
Financial liabilities are measured at FVTPL when the financial liabilities is arising fromcontingent consideration recognized by the Group as an acquirer in a business combination notinvolving enterprises under common control.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.1 Classification, recognition and measurement of financial liabilities- continued
10.4.1.2 Other financial liabilities
Except for financial liabilities, financial guarantee contracts and loan commitments arising fromtransfer of financial assets that do not meet the derecognition criteria or those arising fromcontinuing involvement in the transferred financial assets, other financial liabilities aresubsequently measured at amortized cost, with gain or loss arising from derecognition oramortization recognized in profit or loss.
That the Group and its counterparty modify or renegotiate the contract does not result inderecognition of a financial liability subsequently measured at amortized cost but result inchanges in contractual cash flows, the Group will recalculate the carrying amount of the financialliability, with relevant gain or loss recognized in profit or loss. The Group will determine carryingamount of the financial liability based on the present value of renegotiated or modified contractualcash flows discounted at the financial liability's original effective interest rate. For all costs orexpenses arising from modification or renegotiation of the contract, the Group will adjust themodified carrying amount of the financial liability and make amortization during the remainingterm of the modified financial liability.
10.4.1.3 Financial guarantee contracts and loan commitments
A financial guarantee contract is a contract that requires the issuer to make specified payments toreimburse the holder of the contract for a loss it incurs because a specified debtor fails to makepayment when due in accordance with the original or modified terms of a debt instrument.Subsequent to initial recognition, financial guarantee contracts that are not designated as financialliabilities at fair value through profit or loss or financial liabilities arising from transfer offinancial assets that do not meet the derecognition criteria or those arising from continuinginvolvement in the transferred financial assets, and loan commitments to provide a loan at abelow-market interest rate, which are not designated at fair value through profit or loss, aremeasured at the higher of: (1) amount of loss provision; and (2) the amount initially recognizedless cumulative amortization amount determined based on the revenue standard.
10.4.2 Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation(or part of it) is discharged. An agreement between the Group (the debtor) and the creditor toreplace the original financial liability with a new financial liability with substantially differentterms is accounted for as an extinguishment of the original financial liability and the recognitionof a new financial liability.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.2 Derecognition of financial liabilities - continued
When the Group derecognizes a financial liability or a part of it, it recognizes the differencebetween the carrying amount of the financial liability (or part of the financial liability)derecognized and the consideration paid (including any non-cash assets transferred or newfinancial liabilities assumed) in profit or loss.
10.4.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Groupafter deducting all of its liabilities. Equity instruments issued (including refinanced), repurchased,sold and cancelled by the Group are recognized as changes of equity. Changes of fair value ofequity instruments is not recognized by the Group. Transaction costs related to equity transactionsare deducted from equity.
The Group recognizes the distribution to holders of the equity instruments as distribution ofprofits, dividends paid do not affect total amount of shareholders' equity.
10.5 Derivatives and embedded derivatives
Derivatives include forward exchange contracts, currency swaps, interest rate swaps and foreignexchange options, etc. Derivatives are initially measured at fair value at the date when thederivative contracts are entered into and are subsequently re-measured at fair value.
Derivatives embedded in hybrid contracts with a financial asset host are not separated by theGroup. The hybrid contract shall apply to the relevant accounting standards regarding theclassification of financial assets as a whole.
Derivatives embedded in hybrid contracts with hosts that are not financial assets are separated andtreated as separate derivatives by the Group when they meet the following conditions:
(1) the economic characteristics and risks of the embedded derivative are not closely related to
those of the host contract;
(2) a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative.
(3) the hybrid contracts are not measured at fair value through profit or loss.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.5 Derivatives and embedded derivatives - continued
For the embedded derivative separated from the host contracts, the Group accounts for the hostcontracts in the hybrid contracts with applicable accounting standards. When the embeddedderivatives whose fair value cannot be measured reliably by the Group according to the terms andconditions of the embedded derivatives, the fair value of such derivatives are measured at thedifference between the fair value of the hybrid contracts and the fair value of the host contracts.By adopting the above method, if the embedded derivative cannot be measured on a stand-alonebasis at the time when acquired or at subsequent balance sheet dates, the hybrid instrument isdesignated as financial instruments at fair value through profit or loss as a whole.
10.6 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized financialassets and financial liabilities, and intends either to settle on a net basis, or to realize the financialasset and settle the financial liability simultaneously, a financial asset and a financial liability shallbe offset and the net amount is presented in the balance sheet. Except for the abovecircumstances, financial assets and financial liabilities shall be presented separately in the balancesheet and shall not be offset.
10.7 Reclassification of financial instruments
When the Group changes the business model to manage the financial assets, the financial assetsaffected will be reclassified and no financial liabilities will be reclassified.
The financial assets are reclassified by the Group and are accounted for prospectively since thedate of reclassification (i.e. the first date of the initial reporting period after the business model ofwhich the financial assets are reclassified by the enterprise is changed).
Where a financial asset at amortised cost is reclassified as a financial assets at fair value throughprofit or loss ("FVTPL") by the Group, such financial asset is measured at fair value at the date ofreclassification and the difference between the original carrying amount and the fair value isrecognized in profit or loss for the period.
Where a financial asset at amortised cost is reclassified as a financial asset at fair value throughother comprehensive income("FVTOCI") by the Group, such financial asset is measured at thefair value at the date of reclassification, and the difference between the original amount and thefair value is recognized in other comprehensive income.
Where a financial asset at FVTOCI is reclassified as a financial asset at amortised cost by theGroup, the accumulated gains or losses previously recognized in other comprehensive income aretransferred out and the fair value is adjusted as the fair value at the date of reclassification. Theadjusted fair value is recognized as the new carrying amount, as if the financial asset had beenmeasured at amortised cost.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.7 Reclassification of financial instruments- continued
Where a financial asset at FVTOCI is reclassified as a financial asset at FVTPL by the Group,such financial asset continues to be accounted for at fair value. At the same time, the accumulatedgains or losses previously recognized in other comprehensive income are transferred to profit orloss for the period.
Where a financial asset at FVTPL is reclassified as a financial asset at amortised cost by theGroup, the fair value at the date of reclassification is recognized as the new account balance.
Where a financial asset at FVTPL is reclassified as a financial asset at FVTOCI by the Group,such financial asset continues to be measured at fair value.
Where a financial asset at FVTPL is reclassified, the effective interest rate is determined on thebasis of the fair value of the financial asset at the date of reclassification.
11. Accounts receivable
The Group makes internal credit ratings on customers and determines expected losses rate ofnotes receivable, accounts receivable and other receivables. Basis for determining ratings and theexpected losses rates are as follows:
| Internal credit rating | Basis for determining portfolio | Average expected loss rate (%) |
| A | Customers can make repayments within credit term and have good credit records based on historical experience. The probability of unpayment of due amount are extremely low in the foreseeable future. | 0.00-0.10 |
| B | The customer may have overdue payment based on historical experience but they can make repayments. | 0.10-0.30 |
| C | The evidences indicate that the overdue credit risks of the customer are significantly increased and there is probability of unpayment and default. | 0.30-50.00 |
| D | The evidences indicate that the accounts receivable are impaired or the customer has significant financial difficulty. The amounts cannot be recovered in the foreseeable future. | 50.00-100.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
12. Accounts receivable financing
Notes receivable classified to hedging instruments for the purpose of hedging, should be listed asaccounts receivable financing within one year (including one year). If the term above one year, itshould be listed as other investment on bonds. Related accounting policies refer to Note 10.
13. Inventories
13.1 Categories of inventories
Inventories include raw materials, merchandise and others. Inventories are initially measured atcost. Cost of inventories comprises all costs of purchase, costs of conversion and otherexpenditures incurred in bringing the inventories to their present location and condition.
13.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
13.3 Basis for determining net realizable value of inventories and provision methods for declinein value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. Ifthe cost of inventories is higher than the net realizable value, a provision for decline in value ofinventories is made. Net realizable value is the estimated selling price in the ordinary course ofbusiness less the estimated costs of completion, the estimated costs necessary to make the sale andrelevant taxes. Net realizable value is determined on the basis of clear evidence obtained, aftertaking into consideration the purposes of inventories being held and effect of post balance sheetevents.
Provision for decline in value of other inventories is made based on the excess of cost ofinventory over its net realizable value on an item-by-item basis.
After the provision for decline in value of inventories is made, if the circumstances thatpreviously caused inventories to be written down below cost no longer exist so that the netrealizable value of inventories is higher than their cost, the original provision for decline in valueis reversed and the reversal is included in profit or loss for the period.
13.4 Inventory count system
The perpetual inventory system is maintained for stock system.
13.5 Amortization methods for low cost and short-lived consumable items and packagingmaterials
Packaging materials and low cost and short-lived consumable items are amortized using theimmediate write-off method.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
14. Contract assets
14.1 Recognition and criteria of contract assets
A contract asset represents the Group's right to consideration in exchange for goods or servicesthat the Group has transferred to a customer, and such right depends on factors other than thepassage of time. The Group's unconditional right (only the passage of time is required) toconsideration from the customer is separately presented as " accounts receivable".
14.2 Determination and accounting treatments of expected credit losses ("ECL") for contractassets
Refer to Note 3, 10.2 " Impairment of financial instruments" for determination and accountingtreatments of expected credit losses for contract assets.
15. Assets held for sale
When the Group withdraw the book value of certain assets or disposal group mainly throughdisposal instead of continual application, the assets should be classified as held-for-sale assets.
Assets or disposal group classified as held-for-sale assets should meat following conditions: (1)The current status is available for immediate distribution according to similar transactions of thiscategory of assets or disposal group; (2) The transaction is likely to occur, i.e. the Group has madeits resolution over the distribution arrangements and acquired purchase commitment. Also thedistribution is going to be fulfilled within a year.
If the holding company loses control of its subsidiary for reasons like subsidiary disposal, inregardless of whether the holding company still keeps part of equity investment, once theproposed investment disposal meets the requirements of being classified as available for saleassets in the holding company's individual statement, all assets and liabilities of the subsidiaryshould be classified as held-for-sale in consolidated financial statement.
The group's non-current assets and disposal group are measured at the lower of book value andthe net value of fair value less costs to sell. Once the book value is higher than the net value offair value less costs to sell, the book value should be adjusted to the net value and the excessshould be recognized as impairment losses and provision for held-for-sale assets impairmentshould be made. A gain and a reverse in the previous provision for held-for-sale assets impairmentcan be recognized for any increase in fair value less costs to sell at subsequent balance sheetdates, to the extent that it is not in excess of the cumulative impairment loss that has beenrecognized. Asset impairment losses recognized before such assets are classified as held for salewill not be reversed.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
15. Assets held for sale - continued
Non-current held-for-sale assets is not subject to depreciation and amortization. The creditorinterest and other expenses of disposal group classified as held-for-sale asset should still berecognized.
Once the associate or joint venture equity investment is completely or partly classified as held-for-sale assets, the classified part of the investment is not subject to equity method measurement.
If an asset or a disposal group has been classified as held for sale but the recognition criteria fornon-current assets held for sale are no longer met, the Group shall cease to classify the asset ordisposal group as held for sale. It shall be measured at the lower of (1) the carrying amount beforethe asset or disposal group was classified as held for sale, adjusted for any depreciation,amortisation or impairment that would have been recognised had the asset or disposal group notbeen classified as held for sale; and (2) the recoverable amount at the date of the decision not tosell.
For equity investments in associates or joint ventures that are classified as held for sale but therecognition for non-current assets held for sale are no longer met, such investments are accountedfor retrospectively using the equity method from the date when they classified as held for sale.The financial statements for the held-for-sale period are adjusted accordingly.
16. Long-term equity investments
16.1 Basis for determining joint control and significant influence over investee
Control is archived when the Group has the power over the investee and has rights to variablereturns from its involvement with the investee; and has the ability to use its power to affect itsreturns. Joint control is the contractually agreed sharing of control over an economic activity, andexists only when the strategic financial and operating policy decisions relating to the activityrequire the unanimous consent of the parties sharing control. Significant influence is the power toparticipate in the financial and operating policy decisions of the investee but is not control or jointcontrol over those policies. When determining whether an investing enterprise is able to exercisecontrol or significant influence over an investee, the effect of potential voting rights of theinvestee (for example, warrants and convertible debts) held by the investing enterprises or otherparties that are currently exercisable or convertible shall be considered.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
16. Long-term equity investments - continued
16.2 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprisesunder common control, the investment cost of the long-term equity investment is the attributableshare of the carrying amount of the shareholders' equity of the acquiree at the date of combination.The difference between the initial investment cost and the carrying amount of cash paid, non-cashassets transferred and liabilities assumed shall be adjusted to capital reserve. If the balance ofcapital reserve is not sufficient, any excess shall be adjusted to retained earnings. If theconsideration of the combination is satisfied by the issue of equity securities, the initialinvestment cost of the long-term equity investment shall be the share of party being absorbed ofthe owners' equity in the consolidated financial statements of the ultimate controlling party at thedate of combination. The aggregate face value of the shares issued shall be accounted for as sharecapital. The difference between the initial investment cost and the aggregate face value of theshares issued shall be adjusted to capital reserve. If the balance of capital reserve is not sufficient,any excess shall be adjusted to retained earnings. Where equity interests in an acquiree areacquired in stages through multiple transactions ultimately constituting a business combinationinvolving entities under common control, the acquirer shall determine if these transactions areconsidered to be a "package deal". If yes, these transactions are accounted for as a singletransaction where control is obtained. If no, the initial investment cost of the long-term equityinvestment is the share of book value of owners' equity of the acquired entity in the ultimatecontrolling party's consolidated financial statements at the date of combination. The differencebetween the initial investment cost and the sum of carrying amount of equity investmentspreviously held in the acquiree and the new investment cost is adjusted to capital reserve. If thebalance of capital reserve is not sufficient to absorb the difference, any excess is adjusted toretained earnings. Other comprehensive income recognized for the previously held equityinvestments by accounting treatment of equity method or available-for-sale financial assets is notsubject to accounting treatment temporarily.
For a long-term equity investment acquired through business combination not involvingenterprises under common control, the investment cost of the long-term equity investmentacquired is the cost of acquisition.
The absorbing party's or purchaser's intermediary expenses (fees in respect of auditing, legalservices, valuation and consultancy services, etc.) and other administrative expenses attributableto the business combination are recognized in profit or loss in the periods when they are incurred.
The long-term equity investment acquired otherwise than through a business combination isinitially measured at its cost. When the entity is able to exercise significant influence or jointcontrol (but not control) over an investee due to additional investment, the cost of long-termequity investments is the sum of the fair value of previously-held equity investments determinedin accordance with Accounting Standard for Business Enterprises No.22 - Financial Instruments:
Recognition and Measurement (ASBE No. 22) and the additional investment cost.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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ESTIMATES – continued
16. Long-term equity investments - continued
16.3 Subsequent measurement and recognition of profit or loss
16.3.1 A long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in theCompany's separate financial statements. A subsidiary is an investee that is controlled by theGroup.
Under the cost method, a long-term equity investment is measured at initial investment cost.Additional or withdrawing investment would affect the cost of long-term equity investment.Investment income is recognized in the period in accordance with the attributable share of cashdividends or profit distributions declared by the investee.
16.3.2 A long-term equity investment accounted for using the equity method
Except associate and joint venture investment completely or partly classified as available for sale,and The Group accounts for investment in associates and joint ventures using the equity method.An associate is an entity over which the Group has significant influence and a joint venture is ajoint arrangement whereby the parties that have joint control of the arrangement have rights to thenet assets of the joint arrangement.
Under the equity method, where the initial investment cost of a long-term equity investmentexceeds the Group's share of the fair value of the investee's identifiable net assets at the time ofacquisition, no adjustment is made to the initial investment cost. Where the initial investment costis less than the Group's share of the fair value of the investee's identifiable net assets at the time ofacquisition, the difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the other comprehensive income andnet profit or loss of the investee for the period as other comprehensive income and investmentincome or loss respectively for the period, and the carrying amount of the long-term equityinvestment is adjusted accordingly. The carrying amount of the investment shall be reduced by theportion of any profit distributions or cash dividends declared by the investee that is distributed tothe investing enterprise. The investing enterprise shall adjust the carrying amount of the long-termequity investment for other changes in owners' equity of the investee (other than net profits orlosses, other comprehensive income and profit distribution), and include the correspondingadjustment in capital reserve. The Group recognizes its share of the investee's net profit or lossbased on the fair value of the investee's individually identifiable assets at the acquisition date aftermaking appropriate adjustments. Where the accounting policies and accounting period adopted bythe investee are different from those of the investing enterprise, the investing enterprise shalladjust the financial statements of the investee to conform to its own accounting policies andaccounting period, and recognize other comprehensive income and investment income or lossesbased on the adjusted financial statements. Unrealized profits or losses resulting from the Group'stransactions and assets invested or sold that are not recognized as business transactions with itsassociates and joint ventures are recognized as investment income or loss to the extent that thoseattributable to the Group's, equity interest are eliminated. However, unrealized losses resultingfrom the Group's transactions with its associates and joint ventures which represent impairmentlosses on the transferred assets are not eliminated.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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ESTIMATES – continued
16. Long-term equity investments - continued
16.3 Subsequent measurement and recognition of profit or loss - continued
16.3.2 A long-term equity investment accounted for using the equity method - continued
The Group discontinues recognizing its share of net losses of the investee after the carryingamount of the long-term equity investment together with any long-term interests that in substanceform part of its net investment in the investee are reduced to zero. Except that if the Group hasincurred obligations to assume additional losses, a provision is recognized according to theobligation expected, and recorded in the investment loss for the period. Where net profits aresubsequently made by the investee, the Group resumes recognizing its share of those profits onlyafter its share of the profits exceeds the share of losses previously not recognized.
16.4 Disposal of long-term equity investments
On disposal of a long-term equity investment, the difference between the proceeds actuallyreceived and receivable and the carrying amount is recognized in profit or loss for the period.For long-term equity investments accounted for using the equity method, if the remaining interestafter disposal is still accounted for using the equity method, other comprehensive incomepreviously recognized for using the equity method is accounted for on the same basis as wouldhave been required if the investee had directly disposed of related assets or liabilities, andtransferred to profit or loss for the period on a pro rata basis; owners' equity recognized due tochanges in other owners' equity of the investee (other than net profit or loss, other comprehensiveincome and profit distribution) is transferred to profit or loss for the period on a pro rata basis.
For long-term equity investments accounted for using the cost method, if the remaining interestafter disposal is still accounted for using the cost method, other comprehensive income previouslyrecognized for using the equity method or in accordance with the standards for the recognitionand measurement of financial instruments before obtaining the control over the investee, isaccounted for on the same basis as would have been required if the investee had directly disposedof related assets or liabilities, and transferred to profit or loss for the period on a pro rata basis;changes in other owners' equity in the investee's net assets recognized under the equity method(other than net profit or loss, other comprehensive income and profit distribution) is transferred toprofit or loss for the period on a pro rata basis.
17. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both. It includesa land use right that is leased out; a land use right held for transfer upon capital appreciation; anda building that is leased out.
An investment property is measured initially at cost. Subsequent expenditures incurred for suchinvestment property are included in the cost of the investment property if it is probable thateconomic benefits associated with an investment property will flow to the Group and thesubsequent expenditures can be measured reliably, other subsequent expenditures are recognizedin profit or loss in the period in which they are incurred.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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17. Investment properties - continued
The Group uses the cost model for subsequent measurement of investment property, and adopts adepreciation or amortization policy for the investment property which is consistent with that forbuildings or land use rights.
An investment property is derecognized upon disposal or when the investment property ispermanently withdraw from use and no future economic benefits are expected from the disposal.
When an investment property is sold, transferred, retired or damaged, the Group recognizes theamount of any proceeds on disposal net of the carrying amount and related taxes in profit or lossfor the period.
18. Fixed assets
18.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods orservices, for rental to others, or for administrative purposes, and have useful lives of more thanone accounting year. A fixed asset is recognized only when it is probable that economic benefitsassociated with the asset will flow to the Group and the cost of the asset can be measured reliably.Fixed assets are initially measured at cost. Upon being restructured into a stock company, thefixed assets initially contributed by the state-owned shareholders are recognized based on thevaluation amounts confirmed by the state-owned assets administration department.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset andif it is probable that economic benefits associated with the asset will flow to the Group and thesubsequent expenditures can be measured reliably. Meanwhile the carrying amount of thereplaced part is derecognized. Other subsequent expenditures are recognized in profit or loss inthe period in which they are incurred.
18.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method starting from themonth subsequent to the one in which it is ready for intended use. The useful life, estimated netresidual value rate and annual depreciation rate of each category of fixed assets are as follows:
| Category | Estimated useful lives | Estimated residual value (%) | Annual depreciation rate (%) |
| Port and terminal facilities | 5-50 years | 5.00 | 1.90-19.00 |
| Buildings | 10-50 years | 5.00 | 1.90-9.50 |
| Machinery and equipment, furniture and fixture and other equipment | 3-20 years | 5.00 | 4.75-31.67 |
| Motor vehicles and cargo ships | 5-25 years | 5.00 | 3.80-19.00 |
Estimated net residual value of a fixed asset is the estimated amount that the Group wouldcurrently obtain from disposal of the asset, after deducting the estimated costs of disposal, if theasset were already of the age and in the condition expected at the end of its useful life.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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18. Fixed assets - continued
18.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated fromits use or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retiredor damaged, the amount of any proceeds on disposal of the asset net of the carrying amount andrelated taxes is recognized in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and thedepreciation method applied at least once at each financial year-end, and account for any changeas a change in an accounting estimate.
19. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include variousconstruction expenditures during the construction period, borrowing costs capitalized before it isready for intended use and other relevant costs. Construction in progress is not depreciated.Construction in progress is transferred to a fixed asset when it is ready for intended use.
20. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifyingasset are capitalized when expenditures for such asset and borrowing costs are incurred andactivities relating to the acquisition, construction or production of the asset that are necessary toprepare the asset for its intended use or sale have commenced. Capitalization of borrowing costsceases when the qualifying asset being acquired, constructed or produced becomes ready for itsintended use or sale. Capitalization of borrowing costs is suspended during periods in which theacquisition, construction or production of a qualifying asset is interrupted abnormally and whenthe interruption is for a continuous period of more than 3 months. Capitalization is suspendeduntil the acquisition, construction or production of the asset is resumed. Other borrowing costs arerecognized as an expense in the period in which they are incurred.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to becapitalized is the actual interest expense incurred on that borrowing for the period less any bankinterest earned from depositing the borrowed funds before being used on the asset or anyinvestment income on the temporary investment of those funds. Where funds are borrowed undergeneral-purpose borrowings, the Group determines the amount of interest to be capitalized onsuch borrowings by applying a capitalization rate to the weighted average of the excess ofcumulative expenditures on the asset over the amounts of specific-purpose borrowings. Thecapitalization rate is the weighted average of the interest rates applicable to the general-purposeborrowings. During the capitalization period, exchange differences related to a specific-purposeborrowing denominated in foreign currency are all capitalized. Exchange differences inconnection with general-purpose borrowings are recognized in profit or loss in the period inwhich they are incurred.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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21. Intangible assets
21.1 Valuation method and useful life of intangible assets
An intangible asset is measured initially at cost. Upon being restructured into a stock company,the intangible assets initially contributed by the state-owned shareholders are recognized based onthe valuation amounts confirmed by the state-owned assets administration department. When anintangible asset with a finite useful life is available for use, its original cost is amortized over itsestimated useful life. Intangible assets with uncertain service life will not be amortize. Theterminal operating rights are amortized using the output method, that is, amortized throughperiods according to the ratio of the estimated minimum guaranteed throughput to the estimatedminimum guaranteed total throughput during the operation period. When the estimated minimumguaranteed throughput cannot be measured reliably,the straight-line method will be used foramortization. An intangible asset with uncertain useful life will not be amortized. Theamortization method, useful life and estimated net residual value of various intangible assets areas follows:
| Category | Amortization Method | Useful Life (year) | Residual value (%) |
| Land use rights | Straight-line method | 40-50 | - |
| Port operating right | Units-of-production/Straight-line method | 30-35 | - |
| Others | Straight-line method | 5-50 | - |
For an intangible asset with a finite useful life, the Group reviews the useful life and amortizationmethod at the end of the year, and makes adjustments when necessary.
21.2 Research and development expenditure
Expenditure during the research phase is recognised as an expense in the period in which it isincurred.
Expenditure during the development phase that meets all of the following conditions at the sametime is recognised as intangible asset. Expenditure during development phase that does not meetthe following conditions is recognised in profit or loss for the period.
(1) it is technically feasible to complete the intangible asset so that it will be available for use or
sale;
(2) the Group has the intention to complete the intangible asset and use or sell it;
(3) the Group can demonstrate the ways in which the intangible asset will generate economic
benefits, including the evidence of the existence of a market for the output of the intangibleasset or the intangible asset itself or, if it is to be used internally, the usefulness of theintangible asset;
(4) the availability of adequate technical, financial and other resources to complete thedevelopment and the ability to use or sell the intangible asset; and
(5) the expenditure attributable to the intangible asset during its development phase can be
reliably measured.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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ESTIMATES - continued
21. Intangible assets - continued
21.2 Research and development expenditure - continued
If the expenditures cannot be distinguished between the research phase and development phase,the Group recognises all of them in profit or loss for the period.
The costs of intangible assets generated by the internal research only include the total expenditureincurred for the period from the time point of capitalization to the intangible assets are ready forintended use. For the identical intangible asset, the expenditures recorded as expenses before theyqualify for capitalization during the development process are not adjusted.
22. Impairment of long-term assets
The Group assesses at the balance sheet date whether there is any indication that the long-termequity investments, investment properties measured at cost method, construction in progress,fixed assets, right-of-use assets and intangible assets with a finite useful life may be impaired. Ifthere is any indication that such assets may be impaired, recoverable amounts are estimated forsuch assets. Intangible assets with indefinite useful life and intangible assets not yet available foruse are tested for impairment annually, irrespective of whether there is any indication that theassets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate therecoverable amount of an individual asset, the recoverable amount of the asset group to which theasset belongs will be estimated. The recoverable amount of an asset is the higher of its fair valueless costs of disposal and the present value of the future cash flows expected to be derived fromthe asset.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficitis accounted for as an impairment loss and is recognized in profit or loss.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairmenttesting, goodwill is considered together with the related assets groups, i.e., goodwill is reasonablyallocated to the related assets groups or each of assets groups expected to benefit from thesynergies of the combination. In testing an assets group with goodwill for impairment, animpairment loss is recognized if the recoverable amount of the assets group or sets of assetsgroups (including goodwill) is less than its carrying amount. The impairment loss is firstlyallocated to reduce the carrying amount of any goodwill allocated to such assets group or sets ofassets groups, and then to the other assets of the group pro-rata basis on the basis of the carryingamount of each asset (other than goodwill) in the group.
Once the impairment loss of above-mentioned asset is recognized, it shall not be reversed in anysubsequent period.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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23. Long-term prepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortized overthe current and subsequent periods (together of more than one year). Long-term prepaid expensesare amortized using the straight-line method over the expected periods in which benefits arederived.
24. Contract liabilities
A contract liability represents the Group’s obligation to transfer goods or services to a customerfor which the Group has received consideration (or an amount of consideration is due) from thecustomer. A contract asset and a contract liability relating to the same contract are accounted forand presented on a net basis.
25. Employee benefits
25.1 The accounting treatment of short-term employee benefits
Actually occurred short-term employee benefits are recognized as liabilities, with a correspondingcharge to the profit or loss for the period or in the costs of relevant assets in the accounting periodin which employees provide services to the Group. Staff welfare expenses incurred by the Groupare recognized in profit or loss for the period or the costs of relevant assets based on the actuallyoccurred amounts when it actually occurred. Non-monetary staff welfare expenses are measuredat fair value.
Payment made by the Group of social security contributions for employees such as premiums orcontributions on medical insurance, work injury insurance and maternity insurance, etc. andpayments of housing funds, as well as union running costs and employee education costs providedin accordance with relevant requirements, are calculated according to prescribed bases andpercentages in determining the amount of employee benefits and recognized as relevant liabilities,with a corresponding charge to the profit or loss for the period or the costs of relevant assets in theaccounting period in which employees provide services.
25.2 The accounting treatment of post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
During the accounting period of rendering service to employees of the Group, amount whichshould be paid according to defined contribution plans is recognized as liabilities, and recognizedin profit or loss or related costs of assets.
During the accounting period of rendering service to employees of the Group, amount whichshould be paid according to defined contribution plans is recognized as liabilities, and recognizedin profit or loss or related costs of assets.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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25. Employee benefits - continued
25.2 The accounting treatment of post-employment benefits - continued
For defined benefit plans, the Group calculates defined benefit plan obligations using projectedunit credit method and the service cost resulting from employee service in the current period isrecorded in profit or loss or the cost of related assets. Defined benefit costs are categorized asfollows:
? Service cost (including current service cost, past service cost, as well as gains and losses onsettlements);? Net interest of net liabilities or assets of defined benefit plan (including interest income ofplanned assets, interest expenses of defined benefit plan liabilities and effect of asset ceiling);and? Changes arising from remeasurement of net liabilities or net assets of defined benefit plans.
Service costs and net interest of net liabilities and net assets of defined benefit plans arerecognized in profit or loss of current period or costs of related assets. Remeasurement of the netdefined benefit liability (asset) (including actuarial gains and losses, the return on plan assets,excluding amounts included in net interest on the net defined benefit liability (asset), and anychange in the effect of the asset ceiling, excluding amounts included in net interest on the netdefined benefit liability (asset)) are recognized in other comprehensive income.
25.3 The accounting treatment of termination benefits
When the Group provides termination benefits to employees, employee benefit liabilities arerecognized for termination benefits, with a corresponding charge to the profit or loss for theperiod at the earlier of: (1) when the Group cannot unilaterally withdraw the offer of terminationbenefits because of the termination plan or a curtailment proposal; and (2) when the Grouprecognizes costs or expenses related to restructuring that involves the payment of terminationbenefits.
26. Provisions
Provisions are recognized when the Group has a present obligation related with contingencies, itis probable that the Group will be required to settle that obligation causing an outflow ofeconomic benefits, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settlethe present obligation at balance sheet date, taking into account the risks, uncertainties and timevalue of money surrounding the obligation. When a provision is measured using the cash flowsestimated to settle the present obligation, its carrying amount is the present value of those cashflows where the effect of the time value of money is material.
When some or all of the economic benefits required to settle a provision are expected to berecovered from a third party, a receivable is recognized as an asset if it is virtually certain thatreimbursement will be received and the amount of the receivable should not exceed the carryingamount of provisions.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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27. Revenue
The Group's revenue is mainly from the following business types:
(1) Port service;
(2) Bonded logistics service
(3) Other business such as property development and investment.
The Group recognizes revenue based on the transaction price allocated to such performanceobligation when a performance obligation is satisfied, i.e. when "control" of the goods or servicesunderlying the particular performance obligation is transferred to the customer. A performanceobligation represents the commitment that a good and service that is distinct shall be transferredby the Group to the customer. Transaction price refers to the consideration that the Group isexpected to charge due to the transfer of goods or services to the customer, but it does not includepayments received on behalf of third parties and amounts that the Group expects to return to thecustomer.
If one of the following criteria is met and it is a performance obligation performed over time, theGroup recognizes the revenue within a certain period of time according to the progress of theperformance: (1) the customer simultaneously receives and consumes the benefits provided by theGroup's performance as the Group performs; (2) the customer is able to control the goods underconstruction in the course of the Group's performance; (3) the goods produced by the Groupduring the performance of the contract are irreplaceable and the Group has the right to charge forthe accumulated part of the contract that has been performed so far during the whole contractperiod. Otherwise, the Group recognizes revenue at a certain point in time when "control" of thegoods or services is transferred to the customer.
The Group adopts output method, i.e. the value of goods or services transferred to customers todetermine the appropriate progress of performance. Where the progress cannot be determinedreasonably, the revenue is recognized based on the amount of cost that is expected to becompensated based on the cost already incurred, until the progress of performance is reasonablydetermined.
If the contract includes two or more performance obligations, at contract inception, the Groupallocates the transaction price to single performance obligation according to relative proportion ofthe stand-alone selling prices of the goods or services promised by single performance obligation.However, where there is conclusive evidence that the contract discount or variable considerationis only related to one or more (not all) performance obligations in the contract, the Group shallallocate the contract discount or variable consideration to relevant one or more performanceobligations. The stand-alone selling price is the price at which the Group would sell a promisedgood or service separately to a customer. If a stand-alone selling price is not directly observable,the Group shall consider all information that is reasonably available to the Group and maximizethe use of observable inputs and apply estimates methods consistently in similar circumstances.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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27. Revenue - continued
For contracts that contain variable consideration(e.g. sales discount), the Group estimates theamount of consideration using either the expected value or the most likely amount.
The transaction price that includes variable consideration is only to the extent that it is highlyprobable that such an inclusion will not result in a significant revenue reversal in the future whenthe uncertainty is subsequently resolved.
At the end of each reporting period, the Group reevaluates the variable consideration included inthe transaction price.
For non-cash consideration from customer, the Group recognizes the transaction price based onthe fair value of the non-cash consideration. Where the fair value of the non-cash considerationcannot be reasonably estimated, the Group recognizes the transaction price indirectly by referenceto the stand-alone price of the promised goods or services promised transferred to the customer.
If the contract includes significant financing component, the Group determines the transactionprice based on the amount payable under the assumption that the customer pays that amountpayable in cash when "control" of the goods or services is obtained by the customer. Thedifference between the transaction price and the contract consideration shall be amortized withinthe contract period using effective interest rate. If the Group expects, at contract inception, that theperiod between when the Group transfers a promised good or service to a customer and when thecustomer pays for that good or service will be one year or less, the Group needs not to considerthe significant financing component.
The Group determines whether it is a principal or an agent at the time of the transaction based onwhether it owns the "control" of the goods or services before the transfer of such goods orservices to the customer. The Group is a principal if it controls the specified good or servicebefore that good or service is transferred to a customer, and the revenue shall be recognized basedon the total consideration received or receivable; otherwise, the Group is an agent, and therevenue shall be recognized based on the amount of commission or handling fee that is expectedto be charged, and such amount is determined based on the net amount of the total considerationreceived or receivable after deducting the prices payable to other related parties or according tothe established commission amount or proportion.
Where payment is received in advance, the advance payment received shall be recorded as aliability and recognized as revenue when the relevant performance obligation is satisfied.
The above amount will be recognized as revenue proportionately in accordance with the model ofcontractual rights exercised by the customer if (1) the Group's advance payment does not need tobe returned, (2) the customer may waive all or part of its contractual rights, and (3) the Groupexpects to be entitled to the amount related to the contractual rights waived by the customer.Otherwise, the balance of the liabilities is recognized as revenue by the Group only when thepossibility of the customer requesting the satisfaction of the remaining performance obligations isextremely remote.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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28. Contract costs
28.1 Costs to fulfill a contract
If the costs incurred in fulfilling a contract are not within the scope of other standard other thanthe revenue standard, the Group shall recognized an asset from the costs incurred to fulfill acontract only if those costs meet all of the following criteria: (1) the costs relate directly to acontract or to an anticipated contract that the Group can specifically identify; (2) the costsgenerate or enhance resources of the entity that will be used in satisfying performance obligationsin the future; and (3) the costs are expected to be recovered. The asset mentioned above shall beamortized on a basis that is consistent with the transfer to the customer of the goods or services towhich the asset relates and recognized in profit or loss for the period.
28.2 Impairment of contract costs
In determination of impairment losses of assets related to contract costs, firstly impairment lossesof other assets related to the contract recognized based on other relevant accounting standards;secondly, the Group shall recognized an impairment loss to the extent that the carrying amount ofan asset exceeds: (1) the remaining amount of consideration that the Group expects to receive inexchange for the goods or services to which the asset relates; (2) the estimated costs that relate toproviding those goods or services.
The Group shall, after the impairment has been provided, recognized in profit or loss a reversal ofsome or all of an impairment loss previously recognized when the impairment conditions nolonger exist or have improved. The increased carrying amount of the asset shall not exceed thecarrying amount that would have been determined if no impairment loss had been recognizedpreviously.
29. Types and accounting methods of government grants
Government grants are transfer of monetary assets or non-monetary assets from the government tothe Group at no consideration. A government grant is recognized only when the Group cancomply with the conditions attached to the grant and the Group will receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amountreceived or receivable.
29.1 The accounting treatment of government grants related to assets
Government grants, such as special funds for modern logistics project and special funds forenergy-saving and emission reduction of transportation, are government grants related to assets asthey are all related to the construction and use of assets.
A government grant related to an asset is recognized as deferred income, and evenly amortized toprofit or loss over the useful life of the related asset.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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29. Types and accounting methods of government grants - continued
29.2 The accounting treatment of government grants related to income
The Group's government grant, such as financial support funds of business tax converted to VATand reward for energy saving, if used to compensate the related expenses or losses to be incurredin subsequent periods, is determined to be government grant relating to income.
A government grant relating to income, if used to compensate the related cost, expenses or lossesto be incurred in subsequent periods, is determined as deferred income and recognized in profit orloss over the periods in which the related costs are recognized; if used to compensate the relatedcost, expenses or losses already incurred, is recognized immediately in profit or loss for theperiod.
A government grant relating to the Group's daily activities, is recognized in other income in linewith the nature of economic transaction. A government grant not relating to the Group's dailyactivities, is recognized in non-operating income.
30. Deferred tax assets/ deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
30.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periodsare measured at the amount expected to be paid (or recovered) according to the requirements oftax laws.
30.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and theirtax base, or between the nil carrying amount of those items that are not recognized as assets orliabilities and their tax base that can be determined according to tax laws, deferred tax assets andliabilities are recognized using the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferredtax assets for deductible temporary differences are recognized to the extent that it is probable thattaxable profits will be available against which the deductible temporary differences can beutilized. However, for temporary differences associated with the initial recognition of goodwilland the initial recognition of an asset or liability arising from a transaction (not a businesscombination) that affects neither the accounting profit nor taxable profits (or deductible losses) atthe time of transaction, no deferred tax asset or liability is recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets arerecognized to the extent that it is probable that future taxable profits will be available againstwhich the deductible losses and tax credits can be utilized.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
30. Deferred tax assets/ deferred tax liabilities - continued
30.2 Deferred tax assets and deferred tax liabilities- continued
Deferred tax liabilities are recognized for taxable temporary differences associated withinvestments in subsidiaries and associates, and interests in joint ventures, except where the Groupis able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising fromdeductible temporary differences associated with such investments and interests are onlyrecognized to the extent that it is probable that there will be taxable profits against which to utilizethe benefits of the temporary differences and they are expected to reverse in the foreseeablefuture.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax ratesapplicable in the period in which the asset is realized or the liability is settled according to taxlaws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, exceptwhen they arise from transactions or events that are directly recognized in other comprehensiveincome or in equity, in which case they are recognized in other comprehensive income or inequity, and when they arise from business combinations, in which case they adjust the carryingamount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if itis no longer probable that sufficient taxable profits will be available in the future to allow thebenefit of deferred tax assets to be utilized. Any such reduction in amount is reversed when itbecomes probable that sufficient taxable profits will be available.
30.3 Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basisor to realize the assets and settle the liabilities simultaneously, current tax assets and current taxliabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, anddeferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxationauthority on either the same taxable entity or different taxable entities which intend either to settlecurrent tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously,in each future period in which significant amounts of deferred tax assets or liabilities are expectedto be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases
Lease is a contract that conveys the right to use an asset for a period of time in exchange forconsideration.
For contracts that are signed or modified after the date of initial application, atinception/modification of the contracts, the Group assesses whether the contract is, or contains, alease. Unless the terms and conditions of the contract are changed, the Group does not reassesswhether a contract is, or contains, a lease.
31.1 The Group as Lessee
31.1.1 Separating components of a lease
If a contract contains a lease component and one or more non-lease components, the Groupallocates the consideration in the contract to each lease component on the basis of the relativestand-alone price of the lease components and the aggregate stand-alone price of the non-leasecomponents.
31.1.2 Right-of-use assets
Except for short-term leases and leases for which the underlying asset is of low value, at thecommencement date of the lease, the Group recognises a right-of-use assets. The commencementdate of the lease is the date on which a lessor makes an underlying asset available for use by theGroup. The Group measures the right-of-use assets at cost. The cost of the right-of-use assetscomprises:
? the amount of the initial measurement of the lease liabilities;? any lease payments made at or before the commencement date, less any lease incentives;? any initial direct costs incurred by the Group;? an estimate of costs to be incurred by the lessee in dismantling and removing the underlying
asset, restoring the site on which it is located or restoring the underlying asset to the conditionrequired by the terms and conditions of the lease.
Right-of-use assets are depreciated by the Group in accordance with the ASBE No.4 FixedAssets. If the Group is reasonably certain, that the lease will transfer ownership of the underlyingasset to the Group by the end of the lease term, the right-of-use assets is depreciated from thecommencement date to the end of the useful life of the underlying asset. Otherwise, the right-of-use assets is depreciated from the commencement date to the earlier of the end of the useful life ofthe right-of-use assets or the end of the lease term.
The Group applies ASBE No. 8 Impairment of Assets, to determine whether the right-of-useassets are impaired and to account for any impairment loss identified.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.1 The Group as Lessee - continued
31.1.3 Lease liabilities
Except for short-term leases and leases for which the underlying asset is of low value, at thecommencement date of the lease, the Group measures the lease liabilities at the present value ofthe lease payments that are not paid at that date. If the interest rate implicit in the lease cannot bereadily determined, the lessee shall use the lessee's incremental borrowing rate.
The lease payments comprise the following payments by the Group for the right to use theunderlying asset during the lease term:
(1) fixed payments (including in-substance fixed payments), less any lease incentives;
(2) variable lease payments that depend on an index or a rate;
(3) the exercise price of a purchase option if the Group is reasonably certain to exercise that
option;
(4) payments for terminating the lease, if the lease term reflects the Group exercising an
option to terminate the lease;
(5) amounts expected to be payable by the Group under residual value guarantees.
Variable lease payments that depend on an index or a rate, are initially measured using the indexor rate as at the commencement date. Variable lease payments not included in the measurement ofthe lease liabilities, are recognised in profit or loss, or in the cost of relevant assets, in the periodof those payments.
Interest on the lease liabilities in each period during the lease term is calculated by a constantperiodic rate of interest on the remaining balance of the lease liabilities.
After the commencement date, if one of the following occurs, the lease liability is remeasured bythe Group with the adjustment to the right-of-use asset. If the carrying amount of the right-of-useasset is reduced to zero and there is further reduction in the measurement of the lease liability, theremaining remeasurement should be recognized in profit or loss.
? there is a change in the lease term, or in the assessment of an option to purchase theunderlying asset, the Group remeasures the lease liabilities, on the basis of the revised leaseterm and the revised discount rate;? there is a change in the amounts expected to be payable under a residual value guarantee, orin future lease payments resulting from a change in an index or a rate used to determinethose payments, the Group remeasures the lease liabilities, on the basis of the revised leasepayments and the unchanged discount rate, unless the change in the lease payments resultsfrom a change in floating interest rates, in which case a revised discount is applied to thepresent value.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.1 The Group as Lessee - continued
31.1.4 Short-term leases and leases for which the underlying asset is of low value
The Group elects not to recognise right-of-use assets or lease liabilities for short-term leases andleases for which the underlying asset is of low value, i.e. port and terminal facilities, buildings,machinery and equipment, furniture and fixture and other equipment, motor vehicles and cargoships, other short-term leases and leases for which the underlying asset is of low value. A shorts-term lease is a lease that, at the commencement date, has a lease term of 12 months or less. Alease for which the underlying asset is of low value is that, the value of the underlying asset is lowwhen it is new. For short-term leases and leases for which the underlying asset is of low value, theGroup recognises the lease payments associated with those leases as an expense or cost ofrelevant asset on a straight-line basis over the lease term.
31.1.5 Lease modifications
A lease modification should be accounted for as a separate lease if both of the following apply:
? the modification increases the scope of the lease by adding the right to use one or more
underlying assets; and? the consideration for the lease increases by an amount commensurate with the stand-aloneprice for the increase in scope and any appropriate adjustments to that stand-alone priceaccording to the circumstances of the particular contract
For a lease medication that is not accounted for as a separate lease, at the effective date of thelease modification, the Group should allocate the consideration in the modified contract,determine the lease term of the modified lease and remeasure the lease liability by discounting therevised payments using a revised discount rate.
For lease modifications that decrease the scope of the lease or narrow the term of the lease, theGroup should decrease the carrying amount of the right-of-use asset with any gain or loss relatingto the partial or full termination of the lease should be recognized in profit or loss. Forremeasurement of lease liabilities from all other lease modifications, a corresponding adjustmentis made to the carrying amount of the right-of-use asset.
31.2 The Group as Lessor
31.2.1 Separating components of a lease
For a contract that contains lease and non-lease components, the Group shall allocate theconsideration in the contract in accordance with the allocation of the transaction price under therevenue standard, on the basis of the relative stand-alone price of the lease components and theaggregate stand-alone price of the non-lease components.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.2 The Group as Lessor - continued
31.2.2 Classification of leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all therisks and rewards of ownership. All other leases are classified as operating leases.
31.2.2.1 The Group as lessor under operating leases
The Group recognises lease payments from operating leases as income on a straight-line basis.The Group capitalises initial direct costs incurred in obtaining an operating lease and recognisesthose costs as an expense over the lease term on the same basis as the lease income.
Variable lease receipts relating to an operating lease not included in the lease receipts arerecognized in profit or loss by the Group when incurred.
31.2.2.2 The Group as lessor under finance leases
At the commencement date, the Group recognizes a finance lease receivable at the amount equalto the net investment in the lease with finance lease assets derecognized. The net investment in thelease is the sum of any unguaranteed residual value and lease payments receivable from thecommencement date, discounted at the interest rate implicit in the lease.
The amount of the lease payments receivable refers to the amount that the Group should collectfrom the lessee for the purpose of transferring the leased assets during the lease term, including:
? fixed payments (including in-substance fixed payments) paid by the lessee, less any leaseincentives;? variable lease payments that depend on an index or a rate;? the exercise price of a purchase option, provided that it is reasonably determined that thelessee will exercise the option;? the lessee exercises the amount to be paid for the termination of the lease option, providedthat the lease term reflects the lessee's exercise of the option to terminate the lease;? the residual value of the guarantee provided by the lessee, the party concerned with thelessee and the independent third party with the financial ability to perform the guaranteeobligation.
Variable payments receivable not included in the net investment in the lease are recognized inprofit or loss when they arise.
Interest income for each period over the lease term is recognized by the Group at the fixedperiodic rate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
31. Leases - continued
31.2 The Group as Lessor - continued
31.2.3 Subleases
As a lessor of the sublease, the Group accounts for the original lease contract and the subleasecontract as two separate contracts. The Group classifies the subleases based on the right-of-useassets generating from the original lease rather than the underlying assets of the original lease.
31.2.4 Lease modifications
The Group accounts for a modification to an operating lease as a new lease from the effective dateof the modification, considering any lease advances or receivables relating to the original lease asthe lease receipts for the new lease.
The Group should account for a modification to a finance lease as a separate lease if both:
? the modification increases the scope of the lease by adding the right to use one or moreunderlying assets; and? The consideration for the lease increases by an amount commensurate with the stand-aloneprice for the increase in scope with any appropriate adjustment to that stand-alone price
For a modification to a finance lease that is not accounted for as a separate lease, the Groupshould account for the modification as follows:
? if the lease would have been classified as an operating lease had the modification been effect
at the inception date, the Group should account for the lease modification as a new leasefrom the effective date of the modification, and measure the carrying amount of theunderlying asset as the net investment in the lease before the effective date of the leasemodification.? If the lease would have been classified as an operating lease if the modification had been in
effect at the inception date, the Group should apply the requirements of contractmodification and renegotiation under the ASBE No. 22 Financial Instruments: Recognitionand Measurement.
31.2.5 Sale and leaseback transactions
31.2.5.1 The Group as the seller-lessee
The Group applies the requirements of the revenue standard to determine whether the transfer ofan asset is accounted for as a sale of that asset. If the transfer of an asset does not constitute a sale,the Group should continue to recognize the transferred assets and should recognize a financialliability equal to the transfer proceeds applying ASBE No. 22 Financial Instruments: Recognitionand Measurement. If the transfer of an asset is a sale, the Group should measure the right-of-useasset arising from the leaseback at the proportion of the previous carrying amount of the asset thatrelates to the right of use, and recognize only the amount of any gain or loss that relates to therights transferred to the lessor.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
32. Exchange of Non-Monetary Assets
Where a non-monetary assets transaction satisfies the following conditions at the same time, itshould calculated based on fair value. The transaction is commercial in nature and the fair valueof the assets received or surrendered can be measured reliably. The fair value of the assetssurrendered and relevant payable taxes shall be regarded as the transaction cost of the assetsreceived. For assets surrendered, the difference between the fair value and the carrying value ofthe asset surrendered shall be recorded into the profit or loss of the current period. If any exactevidence showing that the fair value of the assets received is more reliable, the cost of assetsreceived and surrendered shall be calculated as different way. For assets received, its cost shall becalculated based on fair value of assets received and relevant payable taxes. For the assetssurrendered, the difference between the fair value of the assets received and the carrying value ofthe asset surrendered shall be recorded into the profit or loss of the current period.
Where a non-monetary assets transaction does not meet the conditions as prescribed, the carryingvalue and relevant payable taxes of the assets surrendered shall be the cost of the assets receivedand no profit or loss is recognized.
33. Discontinued Operation
Discontinued operation refers to the separately identifiable components that have been disposedof or classified as held for sale and meet one of the following conditions:
(1) The component represents an independent main business or a major business area;
(2) This component is a part of a related plan that intends to dispose an independent mainbusiness or a separate main operating area;
(3) This component is a subsidiary acquired exclusively for resale.
Profits or losses from discontinued operations are presented separately in the income statementfrom continuing operations. Profits and losses from operations or disposals (e.g. impairmentlosses and reversals of discontinued operations) are presented under discontinued operations. Fordiscontinued operations presented in the current period, the information previously undercontinuing operations is presented under discontinued operations by the Group in the financialstatements for the comparable accounting period.
34. Safety Production Cost
According to the Administrative Rules on Provision and Use of Enterprise Safety Production Costjointly issued by the Ministry of Finance and the State Administration of Work Safety on 14February 2012 (filed as Cai Qi [2012] No. 16), safety production cost set aside by the Group isdirectly included in the cost of relevant products or recognized in profit or loss for the period, aswell as the special reserve. When safety production cost set aside is utilized, if the costs incurredcan be categorized as expenditure, the costs incurred should be charged against the specialreserve. If the costs set aside are used to build up fixed assets, the costs should be charged toconstruction in progress, and reclassified to fixed assets when the safety projects are ready forintended use. Meantime, expenditures in building up fixed assets are directly charged against thespecial reserve with the accumulated depreciation recognized at the same amount. Depreciationwill not be made in the future period on such fixed assets.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
35. Critical judgments in applying accounting policies and key assumptions anduncertainties in accounting estimates
In the application of accounting policies as set out in Note (III), the Company is required to makejudgments, estimates and assumptions about the carrying amounts of items in the financialstatements that cannot be measured accurately, due to the internal uncertainty of the operatingactivities. These judgments, estimates and assumptions are based on historical experiences of theCompany's management as well as other factors that are considered to be relevant. Actual resultsmay differ from these estimates.
The Company regularly reviews the judgments, estimates and assumptions on a going concernbasis. Changes in accounting estimates which only affect the current period should be recognizedin current period; changes which not only affect the current but the future periods should berecognized in current and future periods. At the balance sheet date, key assumptions anduncertainties that are likely to lead to significant adjustments to the book values of assets andliabilities in the future are:
Goodwill impairment
For the purpose of impairment testing, the present value of the expected future cash flows of theassets group or portfolio including goodwill shall be calculated, and such expected future cashflows shall be estimated. Meantime, a pre-tax rate shall be determined that should reflect the timevalue of money on the current market and the specific interest risks.
Recognition of deferred tax
The Group calculates and makes provision for deferred income tax liabilities according to theprofit distribution plan of subsidiaries, associates and the joint ventures subject to the related law.For retained earnings which are not allocated by the investment company, since the profits will beused to invest the company's daily operation and future development, no deferred income taxliabilities are recognized. If the actually distributed profits in the future are more or less than thoseexpected, corresponding deferred tax liabilities will be recognized or reversed at the earlier ofprofits distribution date and the declaration date, in the profit and loss of the current period.
Deferred tax assets are recognized based on the deductible temporary difference and thecorresponding tax rate, to the extent that it has become probable that future taxable profit will beavailable for the deductible temporary difference. If in the future the actual taxable income doesnot coincide with the amount currently expected, the deferred tax assets resulting will berecognized or reversed in the period when actually incurred, in profit or loss.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates
(1) New lease standard
Since 1 January 2019 (the date of initial application), the Group has adopted the AccountingStandards for Business Enterprises No 21 – Leases (hereinafter referred to as "New LeaseStandards") revised by MoF in 2018. The New Leases Standard improves the definition of leases;adds contents including identifying a lease, separating components of a lease and combination ofleases; no longer adopts the original classification of operating leases and finance leases forlessees, requiring that in cases of all leases (except short-term leases and leases of low-valueassets), a right-of-use asset and a lease liability shall be recognised at the commencement date ofthe lease; improves subsequent measurement of leases for lessors, adding accounting treatmentsfor changes in the lease term or the assessment of an option to purchase the underlying asset; andsets out relevant principles for disclosure. Moreover, additional disclosure as lessor is presented.The revised accounting policies of the Group as lessee and lessor for the recognition andmeasurement of leases are set out in Note III. 30.
For the lease contracts that already existed before the application of the standard, the Groupchooses not to reassess whether the contract was, or contained, a lease on the date of initialapplication.
The Group As lessee
In accordance with the New Leases Standard, during the initial application of the standard, theaccumulative amounts affected shall be adjusted in the opening balance (i.e. balance as at 1January 2019) of relevant items in the financial statements, with no impacts on comparativeinformation.
Except for the leases of low-value assets, for all the leases classified as operating leases before theinitial application of the standard, the Group chooses one or more of the following practicalexpedients:
? Leases for which the lease term ends within 12 months of the date of initial application areaccounted for in the same way as short-term leases;? application of a single discount rate to a portfolio of leases with similar characteristics on
measuring lease liabilities;? The measurement of right-of-use assets excludes any initial direct costs incurred;? If the contract contains options to extend or terminate the lease, the Group determines thelease term based on the actual usage of the options before the date of initial application andhindsight.? As an alternative to impairment tests for right-of-use assets, assessed whether a contactcontaining a lease was an onerous contract before the date of initial application inaccordance with the Accounting Standard for Business Enterprises No.13- Contingencies,and adjusted right-of-use assets based on the provision for impairment of loss recorded inthe balance sheet before the date of initial application;? Performance of accounting treatments subject to final arrangements of lease modification, if
any, before the date of initial application.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates - continued
(1) New lease standard - continued
On the date of initial application, the Group made the following adjustments in accordance withthe New Leases Standard:
? For leases that were classified as finance leases previously, the carrying amount of the right-of-use asset and the lease liability at the date of initial application shall be the carryingamount of the lease asset and lease liability immediately before that date;? For a lease previously classified as an operating lease, the Group recognised a lease liability
at the date of initial application, by measuring that lease liability at the present value of theremaining lease payments and discounted using the lessee’s incremental borrowing rate atthe date of initial application, and a right-of-use asset at the date of initial application, bymeasuring that right-of-use asset using the following method: -- Measured at carryingamounts as if the New Leases Standard were adopted since the commencement date of thelease term (the incremental borrowing rate of the lessor on the date of initial application isadopted as the discount rate).
As at 1 January 2019, the Group has recognized lease liabilities of RMB 1,231,425,355.87 andright-of-use assets of RMB 8,280,694,060.88. For the leases classified as operating leases beforethe initial application, the Group recognised the lease liabilities at the date of initial application,by measuring that lease liability at the present value of the remaining lease payments, discountedby the lessee’s incremental borrowing rate at the date of initial application. The weighted averageof these incremental borrowing rates is 5.12%.
Effects of applying the new lease standard on items in the consolidated balance sheet of the Groupat 1 January 2019 are as follows:
Unit: RMB
| Item | 31 December 2018 | Reclassification | 1 January 2019 |
| Assets: | |||
| Prepayments | 124,404,862.87 | (42,559,680.57) | 81,845,182.30 |
| Fixed assets | 22,994,190,880.43 | (5,418,649,214.54) | 17,575,541,665.89 |
| Right-of-use assets | 8,280,694,060.88 | 8,280,694,060.88 | |
| Intangible assets | 20,761,018,044.54 | (1,798,568,602.15) | 18,962,449,442.39 |
| Liabilities: | |||
| Other payables | 1,690,124,901.29 | (17,158,000.00) | 1,672,966,901.29 |
| Non-current liabilities due within one year | 2,896,971,014.97 | 138,227,164.89 | 3,035,198,179.86 |
| Lease liabilities | 1,062,562,578.13 | 1,062,562,578.13 | |
| Long-term payables | 1,294,190,118.18 | (41,329,917.95) | 1,252,860,200.23 |
| Shareholders' Equity | |||
| Unappropriated profit | 8,915,817,110.21 | (41,018,077.68) | 8,874,799,032.53 |
| Minority interests | 49,656,450,459.88 | (80,367,183.77) | 49,576,083,276.11 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates - continued
(1) New lease standard - continued
The Group as the lessee - continued
Differences between the lease liabilities recognized by the Group at 1 January 2019 and thesignificant operating lease commitments disclosed in the 2018 financial statements are as follows:
Unit: RMB
| Item | Amount |
| Non-cancellable operating leases at 31 December 2018: | 1,756,853,448.93 |
| Lease liabilities discounted using the incremental borrowing rate at the date of initial application | 879,791,487.61 |
| Add: Lease liabilities arising from lease modifications to existing leases(Note 1) | 18,799,241.72 |
| Renewal option that is reasonably certain to be exercised | 270,731,536.32 |
| Less: Recognition exemption – short-term leases | 9,862,435.57 |
| Lease liabilities relating to original leases recognised under the new lease standard | 1,159,459,830.08 |
| Add: Finance lease payable at 31 December 2018 | 71,965,525.79 |
| Lease liabilities | 1,231,425,355.87 |
| Including: Non-current liabilities due within one year | 168,862,777.74 |
| Lease liabilities | 1,062,562,578.13 |
Note1: The Group entered into new lease contracts for port and terminal facilities, machinery and
equipment, furniture and fixture and other equipment, etc. As the commencement date ofthe leases is after the initial application date, the above renewal contracts are accounted foras modifications to the original contracts under the new lease standard.
The carrying amount of the right-of-use asset at 1 January 2019 is detailed as follows:
Unit: RMB
| Item | 1/1/2019 |
| Right-of-use assets recognised under operating leases before the date of initial application | 1,063,476,244.19 |
| Assets held under finance leases that are recognised as fixed assets under the former lease standard (Note 2) | 5,418,649,214.54 |
| Land use right recognised as intangible assets under the former lease standard | 1,798,568,602.15 |
| Total | 8,280,694,060.88 |
The right-of-use asset disclosed by categories at 1 January 2019:
Unit: RMB
| Item | 1/1/2019 |
| Port and terminal facilities | 5,542,541,139.16 |
| Buildings | 164,239,617.13 |
| Machinery and equipment, furniture and fixture and other equipment | 133,936,083.43 |
| Motor vehicles and cargo ships | 10,249,287.29 |
| Others | 2,429,727,933.87 |
| Total | 8,280,694,060.88 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
36. Changes in significant accounting policies and accounting estimates - continued
(1) New lease standard - continued
The Group as the lessee - continued
Note 2: The Group recognizes the fixed assets of RMB 5,418,649,214.54 still in lease as at 1
January 2019 and classified as finance leases under the former lease standard as right-of-use assets.
(2) Exchange of Non-monetary Assets
On 9 May 2020, the Ministry of Finance ("MoF") published the Cai Kuai (2019) No. 8.( hereinafter referred to as the " New standards for Exchange of Non-monetary Assets ") whichrevised the accounting Standards for business enterprises No.7 , Exchange of Non-monetaryAssets , and should be effective on 10 June 2019. New standards for Exchange of Non-monetaryAssets firstly revised the definition of Non-monetary Assets and clarified the application scope. Itsecondly specified when to confirm a non-monetary assets transaction meets the conditions.Thirdly, It specified the different principles for non-monetary assets input and output transaction.Fourthly, It refined the accounting treatment and added disclosure requirements.
The Company has adjusted the non-monetary assets transaction during 1 January 2019 and 10June 2019 and performed retroactive modulation for the transaction before 1 January 2019.
(3) Presentation of financial statements
The Company has prepared the financial statements for the year 2019 in accordance with theNotice of the Revised Format of 2019 Financial Statements for General Business Enterprises (CaiKuai (2019) No. 6, hereinafter referred to as the "Cai Kuai No.6 Document") released by theMinistry of Finance on 30 April 2019. Cai Kuai No.6 Document revised the presenting accountsin the balance sheet and income statement and split "Notes and accounts receivable" to be "Notesreceivable" and "Accounts receivable", and "Notes and accounts payable" to be "Notes payable"and "Accounts payable". It also specified or revised the presentation of line items of "Non-currentassets due within one year", "Deferred income", "Other equity instruments", "Research anddevelopment expenses", "Interest income" under "Financial expenses", "Other income", "Gains ondisposal of assets", "Non-operating income" and "Non-operating expenses", and adjusted thepresenting location of "Impairment losses of assets", and specified the presentation of "Capitalcontribution of holders of other equity instruments". For the above changes in presentingaccounts, the Company has adjusted retrospectively the comparable data for the prior year.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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IV. TAXES
1. Major taxes and tax rates
| Taxes | Tax basis | Tax rate |
| Enterprise income tax | Taxable income | 16.5%-34%(Note 1) |
| Dividend income tax | 5%、10%、25%(Note 2) | |
| Value-added Tax ("VAT") (Note 3) | Income from sale of goods (Note 4) | 9%-16% |
| Income from transportation, loading and unloading business and part of modern service industries | 6% | |
| Income from sale of real estate, property management, real estate lease, etc. | 5% | |
| Social contribution tax (Note 5) | Income | 0.65%-7.6% |
| Deed tax | Land use right and property transfer amount | 3%-5% |
| Property tax | 70% of cost of property or rental income | 1.2% or 12% |
| City maintenance and construction tax | VAT paid | 1%-7% |
| Education surtax | VAT paid | 3% |
Note 1: The Group's enterprise income tax is calculated based on the current tax rate stipulated by
local tax laws. Among them, the Company are subject to an enterprise income tax rate of25%, the subsidiaries set up in Hong Kong are subject to an enterprise income tax rate of
16.5%, the majority of subsidiaries set up in China are subject to an enterprise income taxrate of 25% and certain others are subject to the preferential tax rate for small and microenterprises of 20%, and the other overseas subsidiaries are subject to enterprise incometax rates between 28% and 34%.
Note 2: Foreign investors who receive dividends of profits from Chinese subsidiaries in 2008 and
thereafter generally shall pay withholding income tax at a rate of 10% in accordance withthe relevant provisions of the PRC enterprise income tax. For companies incorporated incertain regions (including Hong Kong and Singapore), if the companies are actual ownersholding more than 25% interest in the subsidiaries in China, they will enjoy a preferentialtax rate of 5%.
The Company obtains dividends distributed by overseas subsidiaries and should payenterprise income tax at a rate of 25% in accordance with relevant Chinese tax laws. TheCompany obtains taxable income outside of China, and the amount of income tax that hasbeen paid abroad can be offset with the current taxable amount. The credit limit is thetaxable amount calculated in accordance with the provisions of the Enterprise Income TaxLaw.
Note3: The VAT amount is the balance of the output tax less the deductible input tax, and the
output tax is calculated in accordance with the sales income and the corresponding tax ratestipulated in the relevant tax laws of China.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 71 -
(IV) TAXES - continued
1. Major taxes and tax rates - continued
Note4: Pursuant to Announcement of Customs on Relevant Policies for Deepening the Value-
Added Tax Reform issued by the Ministry of Finance, the State Taxation Administrationand the General Administration (Announcement No. 39 [2019] of the Ministry of Finance,the State Taxation Administration and the General Administration of Customs), from 1April 2019, the tax rate of 16% and 10% applicable to the VAT taxable sale or import ofgoods are adjusted to 13% and 9%, respectively.
Note5: The social contribution tax is the tax paid by the overseas subsidiaries of the Group to the
local government.
2. Tax preference
Some subsidiaries of the Group in China are recognized as high-tech enterprises or encouragedindustrial enterprises in the region and are subject to an enterprise income tax rate of 15%. TheGroup's subsidiaries outside China may be subject to enterprise income tax preference inaccordance with relevant local tax policies.
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Cash | 331,305.65 | 349,650.07 |
| RMB | 122,990.39 | 77,877.30 |
| USD | 55,429.82 | 29,909.14 |
| HKD | 28,354.40 | 57,342.60 |
| BRL | 8,872.81 | 11,402.34 |
| Others | 115,658.23 | 173,118.69 |
| Bank deposit (Note1) | 7,423,112,193.18 | 6,118,508,644.13 |
| RMB | 4,868,888,181.56 | 3,401,709,911.75 |
| USD | 1,597,545,919.28 | 1,326,034,833.97 |
| EUR | 528,103,576.51 | 359,682,134.06 |
| BRL | 310,275,686.79 | 539,493,644.44 |
| HKD | 76,041,665.91 | 432,603,546.37 |
| Others | 42,257,163.13 | 58,984,573.54 |
| Other cash and bank balances (Note 2) | 311,504,711.43 | 958,538,601.52 |
| RMB | 311,504,711.43 | 958,538,601.52 |
| Total | 7,734,948,210.26 | 7,077,396,895.72 |
| Including: The total amount of funds deposited overseas | 3,511,266,717.03 | 2,809,011,079.47 |
Note1: The bank deposits of the Group deposited overseas and restricted for remittance to China
at the end of the year totaled RMB nil (at the end of the previous year: RMB1,002,027,200.00).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 72 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Cash and bank balances - continued
Note2: The structured deposits that can be readily withdrawn on demand totaled RMB
294,519,101.06, the deposit totaled RMB 15,648,978.15, and the balance of the marginmaintenance account was RMB 1,336,632.22.
2. Notes receivable
(1) Category of notes receivable
Unit: RMB
| Category | Closing balance | Opening balance |
| Bank acceptance | 13,290,478.02 | 11,608,669.43 |
| Commercial acceptance | 24,901,772.00 | - |
| Total | 38,192,250.02 | 11,608,669.43 |
| Less: Provision for credit losses (Note) | - | - |
| Carrying amount | 38,192,250.02 | 11,608,669.43 |
Note: The Group believes that the acceptor of its bank acceptance and commercial acceptance
have high credit ratings with no significant credit risks; therefore, no provision for creditloss is made.
(2) As at 31 December 2019, there are no notes receivable pledged.
(3) As at 31 December 2019, there are no notes receivable endorsed or discounted which are notyet due at the balance sheet date.
Unit: RMB
| Item | Amount derecognized at the end of the year | Amount recognized at the end of the year |
| Bank acceptance | 300,000.00 | - |
| Commercial acceptance | 4,541,403.43 | - |
| Total | 4,841,403.43 | - |
(4) As at 31 December 2019, there are no notes reclassified to accounts receivable due to thedrawers' inability to settle the note.
(5) The Group has no notes receivable written off in 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 73 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable
(1) Accounts receivable disclosed by aging
Unit: RMB
| Aging | Closing balance | ||
| Accounts receivable | Provision for credit loss | Proportion (%) | |
| Within 1 year | 1,397,114,366.29 | 53,712,152.09 | 3.84 |
| More than 1 year but not exceeding 2 years | 12,924,655.94 | 1,233,944.62 | 9.55 |
| More than 2 years but not exceeding 3 years | 1,304,475.96 | 499,044.67 | 38.26 |
| More than 3 years | 43,951,987.53 | 43,390,214.44 | 98.72 |
| Total | 1,455,295,485.72 | 98,835,355.82 | |
(2) Disclosure of accounts receivable by categories
Unit: RMB
| Credit rating | Expected credit loss rate (%) | Closing balance | Opening balance | ||||
| Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | ||
| A | 0.00-0.10 | 552,947,162.60 | 236,251.00 | 552,710,911.60 | 323,319,258.26 | 32,331.93 | 323,286,926.33 |
| B | 0.10-0.30 | 730,397,420.98 | 2,106,455.92 | 728,290,965.06 | 614,037,476.13 | 1,144,038.38 | 612,893,437.75 |
| C | 0.30-50.00 | 70,292,155.38 | 1,703,501.79 | 68,588,653.59 | 155,462,941.77 | 2,079,476.01 | 153,383,465.76 |
| D | 50.00-100.00 | 101,658,746.76 | 94,789,147.11 | 6,869,599.65 | 59,928,872.52 | 40,262,199.28 | 19,666,673.24 |
| Total | 1,455,295,485.72 | 98,835,355.82 | 1,356,460,129.90 | 1,152,748,548.68 | 43,518,045.60 | 1,109,230,503.08 | |
(3) Changes in provision for credit loss of accounts receivable
Unit: RMB
| Item | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total |
| At 1 January 2019 | 3,255,846.32 | 40,262,199.28 | 43,518,045.60 |
| Carrying amount of accounts receivable at 1 January 2019 | |||
| -- Transferred to credit-impaired accounts receivables | - | - | - |
| -- Reversed to not credit-impaired accounts receivable | - | - | - |
| Provision for the year | 1,667,805.36 | 52,556,214.94 | 54,224,020.30 |
| Reversal for the year | (2,049,083.92) | (296,692.00) | (2,345,775.92) |
| Transfer-out from derecognition of financial assets(including direct write-down) | - | - | - |
| Other changes | 1,171,640.95 | 2,267,424.89 | 3,439,065.84 |
| At 31 December 2019 | 4,046,208.71 | 94,789,147.11 | 98,835,355.82 |
(4) The Group has no accounts receivable written off in 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 74 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(5) The top five balances of accounts receivable classified by debtor
Unit: RMB
| Name of entity | Closing balance | Aging | Proportion of the amount to the total accounts receivable (%) | Closing balance of provision for credit loss |
| Client A | 149,146,106.27 | Within 1 year | 10.24 | 149,146.11 |
| Client B | 88,998,923.34 | Within 1 year, more than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years, more than 3 years | 6.12 | 158,176.01 |
| Client C | 65,719,439.09 | Within 1 year, more than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years | 4.52 | 65,719.44 |
| Client D | 61,650,252.50 | Within 1 year | 4.24 | 61,650.25 |
| Client E | 48,948,830.76 | Within 1 year | 3.36 | 48,948.83 |
| Total | 414,463,551.96 | 28.48 | 483,640.64 |
4. Accounts receivable financing
(1) Accounts receivable financing classification
Unit: RMB
| Items | Closing balance | Opening balance |
| Bank acceptance measured by fair value | 260,760,537.45 | - |
(2) On 31 December 2019，The Group has no pledged accounts receivable financing.
(3) On 31 December 2019，The Group has no pledged accounts receivable financing.
Unit: RMB
| Items | Closing balance | Opening balance | ||
| Derecognized | Recognized | Derecognized | Recognized | |
| Bank acceptance measured by fair value | 129,391,886.08 | - | - | - |
5. Prepayments
(1) Aging analysis of prepayment
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 50,341,341.46 | 91.47 | 124,276,781.51 | 99.90 |
| More than 1 year but not exceeding 2 years | 4,533,596.99 | 8.24 | 4,000.00 | - |
| More than 2 years but not exceeding 3 years | - | - | 81.36 | - |
| More than 3 years | 159,081.36 | 0.29 | 124,000.00 | 0.10 |
| Total | 55,034,019.81 | 100.00 | 124,404,862.87 | 100.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 75 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Prepayments - continued
(2) As at 31 December 2019, the Group has no significant prepayments aged more than one
year.
(3) The top five balances of prepayments classified by entities
Unit: RMB
| Name of entity | Relationship with the Company | 31 December 2019 | Proportion of the closing balance to the total prepayments (%) |
| Saham Assurance Togo S.A. | Non-related party | 6,039,892.02 | 10.98 |
| Chubb Seguros Brasil S.A. | Non-related party | 5,471,286.32 | 9.94 |
| Fairfax Brasil Seguros Corporativos S.A. | Non-related party | 3,038,626.22 | 5.52 |
| N-Able (Pvt) Ltd. | Non-related party | 1,824,252.09 | 3.31 |
| Allianz | Non-related party | 1,502,286.34 | 2.73 |
| Total | 17,876,342.99 | 32.48 |
6. Other receivables
6.1 Summary of other receivables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest receivable | 159,794.48 | - |
| Dividend receivable | 459,352,522.24 | 259,804,145.16 |
| Other receivables | 1,669,865,935.78 | 506,713,933.56 |
| Total | 2,129,378,252.50 | 766,518,078.72 |
6.2 Interest receivable
(1) Classification of interest receivable
Unit: RMB
| Item | Closing balance | Opening balance |
| Interest receivable from related parties | 159,954.43 | - |
| Others | - | - |
| Total | 159,954.43 | - |
| Less: Provision for credit loss | 159.95 | - |
| Book value | 159,794.48 | - |
(2) As at 31 December 2019, the Group has no significant overdue interest.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 76 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.3 Dividend receivable
(1) Presentation of dividend receivable
Unit: RMB
| Name of investee | Closing balance | Opening balance |
| China Nanshan Development (Group) Incorporation ("Nanshan Group") | 313,435,420.00 | 175,692,500.00 |
| Tin-Can Island Container Terminal Ltd | 82,625,546.31 | - |
| Qingdao Qianwan United Container Terminal Co., Lt. | 50,000,000.00 | 25,000,000.00 |
| Zhanjiang Port (Group) Co., Ltd.(" Zhanjiang Port ") | - | 9,253,682.23 |
| Shanghai International Port (Group) Co., Ltd. | - | 50,118,027.14 |
| Others | 13,751,368.26 | - |
| Total | 459,812,334.57 | 260,064,209.37 |
| Less: Provision for credit loss | 459,812.33 | 260,064.21 |
| Book value | 459,352,522.24 | 259,804,145.16 |
(2) Significant dividend receivable aged more than 1 year
Unit: RMB
| Name of investee | Closing balance | Aging | Why unrecovered | Closing balance of provision for credit losses |
| Nanshan Group | 105,415,500.00 | More than 1 year but not exceeding 2 years | Undergoing relevant formalities and expected to be recovered at the end of 2020 | 105,415.50 |
(3) Changes in provision for credit loss of dividends receivable
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 260,064.21 | - | - | 260,064.21 |
| Carrying amount of dividends receivable at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | 199,748.12 | - | - | 199,748.12 |
| Reversal for the year | - | - | - | - |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| At 31 December 2019 | 459,812.33 | - | - | 459,812.33 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.4 Other receivables
(1) Other receivables disclosed by aging
Unit: RMB
| Aging | Closing balance | ||
| Other receivables | Provision for credit loss | Proportion (%) | |
| Within 1 year | 1,300,755,524.31 | 1,978.18 | 0.00 |
| More than 1 year but not exceeding 2 years | 14,474,718.17 | 46,121.93 | 0.32 |
| More than 2 years but not exceeding 3 years | 3,556,322.62 | 56,383.37 | 1.59 |
| More than 3 years | 387,443,486.16 | 36,259,632.00 | 9.36 |
| Total | 1,706,230,051.26 | 36,364,115.48 | |
(2) Disclosure of other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Operation compensation(Note 1) | 669,121,539.36 | 176,625,857.32 |
| Land compensation (Note 2) | 521,246,000.00 | - |
| Temporary payments | 334,617,193.32 | 187,153,302.95 |
| Compensation for profit or loss on transition( Note 3) | 35,317,035.66 | - |
| Deposits | 21,309,320.77 | 39,657,003.56 |
| Others | 124,618,962.15 | 138,880,391.56 |
| Total | 1,706,230,051.26 | 542,316,555.39 |
| Less: Provision for credit loss | 36,364,115.48 | 35,602,621.83 |
| Book value | 1,669,865,935.78 | 506,713,933.56 |
Note 1: It is the compensation paid by Global Terminal Limited, the holding company of the non-
controlling shareholder of Lomé Container Terminal S.A.(hereinafter referred to as"LCT"), the non-wholly owned subsidiary of the Group for the operation of the subsidiary,refer to Note V, 59 for details.
Note 2: On 5 November 2019, Shantou China Merchants Port Group Co., Ltd.(hereinafter referred
to as " Shantou Port") entered into the Contract for the Acquisition of State-Owned LandUse Rights in Shantou with Shantou Land Reserve Center. Pursuant to the contract, theland and attached buildings of approximately 370.96 mu located in Zhuchi deepwater porton the south of Zhongshan East Road of Shantou will be returned to Shantou LandReserve Center by Shantou Port, which is amounting to RMB 1,558,032,000.00.
As at 31 December 2019, there are land and attached buildings of approximately 183.63mu pending for transfer with the carrying amount of RMB 207,904,868.22 and thecompensation of RMB 771,246,000.00. The compensation is approximatelyRMB537,635,141.78. After netting transaction expenses, the land compensation ofRMB521,246,000.00 is not yet recovered.
As at 31 December 2019, there are land and attached buildings of 187.33 mu pending fortransfer, which are presented as held for sale assets by the Group.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 78 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.4 Other receivables - continued
(2) Disclosure of other receivables by nature - continued
Note 3:As stated in Note VI.1, the Company acquired Zhanjiang Port this year. According to
relevant contract terms, Zhanjiang Infrastructure, the non-controlling shareholder ofZhanjiang Port, shall have the compensation for profit or loss on transition of RMB31,513,558.59 (calculated based on the original shareholding ratio) paid to the Companyin the form of dividends deduction; Sinotrans Guangdong Co., Ltd., the formershareholder of Zhangjiang Port, shall have the compensation for profit or loss on transitionof RMB 3,803,477.07 (calculated based on the original shareholding ratio) paid to theCompany in the form of dividends deduction.
(3) Provision for credit loss on other receivables
As part of the Group's credit risk management, the Group conducts internal credit ratings for itscustomers and determines the expected loss rate for other receivables for each rating. Such expectedaverage loss rates are based on actual historical impairments and taking into account the current andfuture economic conditions.
As at 31 December 2019, the credit risk and expected credit loss of other receivables of eachcategory of customers are presented as below:
Unit: RMB
| Credit rating | Expected credit loss rate (%) | Closing balance | Opening balance | ||||||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | ||
| A | 0.00-0.10 | 1,669,968,696.05 | - | - | 1,669,968,696.05 | - | - | - | |
| B | 0.10-0.30 | - | - | - | - | 506,719,623.66 | - | - | 506,719,623.66 |
| C | 0.30-50.00 | - | - | - | - | - | |||
| D | 50.00-100.00 | - | - | 36,261,355.21 | 36,261,355.21 | - | 35,596,931.73 | 35,596,931.73 | |
| Account balance | 1,669,968,696.05 | - | 36,261,355.21 | 1,706,230,051.26 | 506,719,623.66 | - | 35,596,931.73 | 542,316,555.39 | |
| Provision for credit loss | 102,760.27 | - | 36,261,355.21 | 36,364,115.48 | 5,690.10 | - | 35,596,931.73 | 35,602,621.83 | |
| Book value | 1,669,865,935.78 | - | - | 1,669,865,935.78 | 506,713,933.56 | - | - | 506,713,933.56 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
6.4 Other receivables - continued
(4) Changes in provision for credit loss of other receivables
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 5,690.10 | - | 35,596,931.73 | 35,602,621.83 |
| Carrying amount of other receivables at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | 39,665.00 | - | 576,181.80 | 615,846.80 |
| Reversal for the year | (2,497,831.58) | - | - | (2,497,831.58) |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | 2,555,236.75 | - | 88,241.68 | 2,643,478.43 |
| At 31 December 2019 | 102,760.27 | - | 36,261,355.21 | 36,364,115.48 |
(5) The Group has no other receivables written off in 2019.
(6) The top five balances of other receivables classified by debtor
Unit: RMB
| Name of entity | Nature | Closing balance | Aging | Proportion of the amount to the other receivable (%) | Provision for credit loss at the end of the year |
| Global Terminal Limited | Operation compensation | 669,121,539.36 | Within 1 year, More than 3 years | 39.22 | 17,528.45 |
| Shantou Land Reserve Center | Land compensation | 521,246,000.00 | Within 1 year | 30.55 | - |
| Shenzhen Qianhaiwan Bonded Port Authority | Temporary payments | 61,317,510.00 | More than 3 years | 3.59 | 6,131.75 |
| State-owned Assets Supervision and Administration Commission of Shantou Municipal People's Government | Temporary payments | 43,674,019.13 | More than 3 years | 2.56 | 4,367.40 |
| Shenzhen Qianhaiwan Bonded Port Area Authority | Temporary payments | 43,326,181.06 | Within 1 year | 2.54 | - |
| Total | 1,338,685,249.55 | 78.46 | 28,067.60 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories
(1) Categories of inventories
Unit: RMB
| Item | Closing balance | Opening Balance | ||||
| Carrying amount | Provision for decline in value of inventories | Book value | Carrying amount | Provision for decline in value of inventories | Book value | |
| Raw materials | 147,548,980.01 | 1,918,890.33 | 145,630,089.68 | 89,572,663.06 | 2,584,953.53 | 86,987,709.53 |
| Finished goods | 4,944,593.66 | - | 4,944,593.66 | 4,629,610.81 | - | 4,629,610.81 |
| Others | 13,405,508.74 | - | 13,405,508.74 | 16,949,949.68 | - | 16,949,949.68 |
| Total | 165,899,082.41 | 1,918,890.33 | 163,980,192.08 | 111,152,223.55 | 2,584,953.53 | 108,567,270.02 |
(2) Provision for decline in value of inventories
Unit: RMB
| Item | 1 January 2019 | Provision | Decrease | 31 December 2019 | |
| Reversal | Write-off | ||||
| Raw materials | 2,584,953.53 | - | 25,051.16 | 641,012.04 | 1,918,890.33 |
(3) As at 31 December 2019, the Group has no capitalized borrowing cost in the balance of
inventories.
8. Assets held for sale
Unit: RMB
| Item | Carrying amount at closing balance | Fair value at closing balance | Estimated disposal expenses | Schedule |
| Long-term assets held for sale | 188,404,228.34 | 786,786,000.00 | 20,815,400.00 | Removal before 30 June 2020 |
| Less: Provision for impairment of assets held for sale | - | |||
| Carrying amount | 188,404,228.34 |
Note: Refer to Note (V) 6.4(2) for details.
9. Non-current assets due within one year
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Long-term receivables due within one year | 809,702,715.78 | 25,986,030.98 |
| Less: Provision for credit loss | 809,702.72 | 33,074.22 |
| Book value | 808,893,013.06 | 25,952,956.76 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Other current assets
(1) Categories of other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Structural deposits | 2,000,298,176.18 | - |
| Including: Principal | 1,991,000,000.00 | - |
| Interest receivable | 9,298,176.18 | - |
| Prepaid taxes | 31,612,381.68 | 7,872,157.38 |
| Loans to associates of related parties | - | 1,029,478,047.00 |
| Others(Note) | 266,882,103.84 | 159,100,462.79 |
| Total | 2,298,792,661.70 | 1,196,450,667.17 |
| Less: Provision for credit loss – loans to associates of related parties | - | 1,029,478.05 |
| Book value | 2,298,792,661.70 | 1,195,421,189.12 |
Note: Refer to the VAT credits of domestic subsidiaries.
(2) Changes in provision for credit loss on other current assets
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 1,029,478.05 | - | - | 1,029,478.05 |
| Carrying amount of other current assets at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | - | - | - | - |
| Reversal for the year | (1,029,478.05) | - | - | (1,029,478.05) |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| At 31 December 2019 | - | - | - | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term receivables
(1) Details of long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance (restated) | ||||
| Account balance | Provision for credit loss | Book value | Account balance | Provision for credit loss | Book value | |
| Principal and interest of receivables for cooperation(Note ) | 1,025,631,435.87 | 1,025,631.44 | 1,024,605,804.43 | - | - | - |
| Advances to shareholders | 869,503,011.54 | 869,503.01 | 868,633,508.53 | 819,826,111.17 | 826,914.30 | 818,999,196.87 |
| Financing lease deposits | 14,500,000.00 | 14,500.00 | 14,485,500.00 | - | - | - |
| Total | 1,909,634,447.41 | 1,909,634.45 | 1,907,724,812.96 | 819,826,111.17 | 826,914.30 | 818,999,196.87 |
| Less: Long-term receivables due within 1 year | 809,702,715.78 | 809,702.72 | 808,893,013.06 | 25,986,030.98 | 33,074.22 | 25,952,956.76 |
| Long-term receivables due over 1 year | 1,099,931,731.63 | 1,099,931.73 | 1,098,831,799.90 | 793,840,080.19 | 793,840.08 | 793,046,240.11 |
Note: Refer to the land-transferring fees of cruise port project paid by Zhangjiang Port, subsidiary
of the Company on behalf of its associate Zhanjiang China Merchants Harbor CityInvestment Co., Ltd. ("China Merchants Harbor City"); and the interest is paid by ChinaMerchants Harbor City in accordance with the benchmark interest rate of the People's Bankof China for the same period.
(2) Provision for credit loss on long-term receivables
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2019 | 826,914.30 | - | - | 826,914.30 |
| Carrying amount of long-term receivables at 1 January 2019 | ||||
| --Transfer to Stage 2 | - | - | - | - |
| --Transfer to Stage 3 | - | - | - | - |
| -- Reverse to Stage 2 | - | - | - | - |
| --Reverse to Stage 1 | - | - | - | - |
| Provision for the year | 1,082,720.15 | - | - | 1,082,720.15 |
| Reversal for the year | - | - | - | - |
| Transfer-out on derecognition of financial assets( including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| At 31 December 2019 | 1,909,634.45 | - | - | 1,909,634.45 |
(3) As at 31 December 2019, there are no long-term receivables derecognized due to the
transfer of financial assets at the end of the year.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term receivables - continued
(4) There are no assets and liabilities arising from the transfer or continuing involvement of long-term receivables at 31 December 2019.
12. Long-term investments
Unit: RMB
| Investees | Accounting method | 1 January 2019 | Effect of changes in the scope of consolidation(Note 2) | Changes for the year | 31 December 2019 | Closing value of provision for impairment | |||||||
| Increase | Investment profit or loss under equity method | Reconciling items from other comprehensive income | Other equity movements | Cash dividends or profits announced of issuance | Others | Provision for impairment | Effect of translation of financial statements denominated in foreign currencies | ||||||
| I. Joint ventures | |||||||||||||
| Euro-Asia Oceangate S.à r.l. | Equity method | 2,668,860,034.32 | - | - | 71,820,758.28 | (280,527.66) | - | (147,837,530.98) | - | - | 43,205,141.32 | 2,635,767,875.28 | - |
| Port of Newcastle(Note 1) | Equity method | 2,122,353,964.75 | - | 68,471,438.86 | 31,855,255.55 | (22,634,759.93) | - | (28,606,943.76) | - | - | 28,557,291.19 | 2,199,996,246.66 | - |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Equity method | 1,512,162,331.41 | - | - | 142,602,575.17 | - | - | (150,000,000.00) | - | - | - | 1,504,764,906.58 | - |
| Ningbo Daxie Merchants International Terminals Co., Ltd. | Equity method | 815,846,742.40 | - | - | 120,498,548.83 | - | - | (82,350,000.00) | - | - | - | 853,995,291.23 | - |
| Laizhou Laiyin Port Business Co., Ltd. | Equity method | 793,557,064.58 | - | - | 42,110,853.02 | - | - | (43,605,689.02) | - | - | - | 792,062,228.58 | - |
| Zhangjiang Port(Note 2) | Equity method | 2,007,506,536.77 | - | - | 4,273,885.37 | - | - | - | (2,011,780,422.14) | - | - | - | - |
| Others | Equity method | 1,310,015,480.03 | 113,562,995.78 | 8,000,000.00 | 55,537,145.35 | 4,196,807.83 | - | (23,106,144.67) | (67,529,762.21) | - | 4,963,495.78 | 1,405,640,017.89 | - |
| Subtotal | 11,230,302,154.26 | 113,562,995.78 | 76,471,438.86 | 468,699,021.57 | (18,718,479.76) | - | (475,506,308.43) | (2,079,310,184.35) | - | 76,725,928.29 | 9,392,226,566.22 | - | |
| II. Associates | |||||||||||||
| Shanghai International Port (Group) Co., Ltd. (A Share) | Equity method | 22,187,560,070.95 | - | - | 2,425,921,985.71 | (44,041,520.45) | 305,487,960.90 | (955,194,576.56) | - | - | (1,691,053.00) | 23,918,042,867.55 | - |
| Nanshan Group | Equity method | 5,061,280,021.90 | - | - | 242,285,185.34 | (9,766,075.98) | 15,461,264.40 | (219,122,880.00) | - | - | - | 5,090,137,515.66 | - |
| Terminal Link SAS | Equity method | 3,933,259,485.26 | - | - | 280,560,341.83 | 12,048,067.43 | - | - | - | - | (13,463,319.11) | 4,212,404,575.41 | - |
| Dalian Port Co., Ltd. | Equity method | 3,203,881,342.67 | - | - | 148,347,321.32 | 5,010,696.01 | 2,082,698.58 | (51,579,984.00) | - | - | (14,481,518.80) | 3,293,260,555.78 | 661,864,517.40 |
| Shenzhen China Merchants Qianhai Industrial Development Co., Ltd.(hereinafter referred to as" China Merchants Qianhai Industrial ")(Note 3) | Equity method | 72,800,000.00 | - | 7,456,412,803.00 | (5,514,066.49) | - | - | - | (682,632,512.39) | - | - | 6,841,066,224.12 | - |
| Others | Equity method | 4,487,494,188.36 | 59,122,780.74 | 678,573,224.36 | 167,550,973.94 | (78,353,158.16) | 34,520,308.86 | (257,058,128.22) | - | - | 77,550,888.64 | 5,169,401,078.52 | - |
| Subtotal | 38,946,275,109.14 | 59,122,780.74 | 8,134,986,027.36 | 3,259,151,741.65 | (115,101,991.15) | 357,552,232.74 | (1,482,955,568.78) | (682,632,512.39) | - | 47,914,997.73 | 48,524,312,817.04 | 661,864,517.40 | |
| Total | 50,176,577,263.40 | 172,685,776.52 | 8,211,457,466.22 | 3,727,850,763.22 | (133,820,470.91) | 357,552,232.74 | (1,958,461,877.21) | (2,761,942,696.74) | - | 124,640,926.02 | 57,916,539,383.26 | 661,864,517.40 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
12. Long-term investments - continued
Note 1:The increase for the year is the stamp tax paid of AUD 14 million (equivalent to RMB
68,471,438.86) due to acquisition of Port of Newcastle Investments (Holdings) Pty Limited,Port of Newcastle Investments (Property Holdings) Pty Limited, Port of NewcastleInvestments (Holdings) Trust, Port of Newcastle Investments (Property Holdings) Trust(collectively referred to as" Port of Newcastle").
Note 2: Refer to Note VI, 1 for details.
Note 3: Refer to Note X,5(6) for details.
13. Other investments in equity instruments
(1) Details of Other investments in equity instruments
Unit: RMB
| Investees | Closing balance | Opening balance |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd. | 144,069,435.00 | 141,547,500.00 |
| Lac Assal Investment Holding Company Limited | - | 88,806,577.97 |
| Others | 19,491,837.00 | 17,494,236.33 |
| Total | 163,561,272.00 | 247,848,314.30 |
(2) Details of non-trading equity instruments
Unit: RMB
| Item | Dividends income recognized for the year | Accumulated gains/losses | Amounts transferred to retained earnings from other comprehensive income | Why designated as FVTOIC | Why transferred to retained earnings from other comprehensive income |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd. | 10,362,585.00 | 130,559,435.00 | - | The intention of holding is neither for sale nor profits in short-term | N/A |
| Lac Assal Investment Holding Company Limited | - | 6,127,068.35 | 6,127,068.35 | The intention of holding is neither for sale nor profits in short-term | Transformed to an associate |
| Others | 580,175.11 | 6,648,872.81 | (1,742,907.19) | The intention of holding is neither for sale nor profits in short-term | East Aden Holding Company Limited transformed to an associate |
| Total | 10,942,760.11 | 143,335,376.16 | 4,384,161.16 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
14. Other non-current financial assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets at FVTPL | 2,385,363,537.39 | 2,087,872,081.94 |
| Including: Investments in equity instruments | 2,385,363,537.39 | 2,087,872,081.94 |
| Including：Ningbo Zhoushan Port Co., Ltd.(A shares) | 1,548,914,671.20 | 1,361,414,474.58 |
| Qingdao Port International Co., Ltd. | 820,263,917.11 | 603,681,045.90 |
| Others | 16,184,949.08 | 122,776,561.46 |
15. Investment properties
(1) Investment properties measured under cost method
Unit: RMB
| Item | Land use rights | Buildings | Total |
| I.Total original carrying amount | |||
| 1. Balance at 1 January 2019 | 28,632,130.84 | 6,292,605,806.72 | 6,321,237,937.56 |
| 2.Increase in the current year | 77,095,361.98 | 5,744,045.30 | 82,839,407.28 |
| (1) Changes in consolidation scope | 77,095,361.98 | - | 77,095,361.98 |
| (2) Other increase | - | 5,744,045.30 | 5,744,045.30 |
| 3.Decrease in the current year | - | 6,611,400.00 | 6,611,400.00 |
| 4. Balance at 31 December 2019 | 105,727,492.82 | 6,291,738,452.02 | 6,397,465,944.84 |
| II.Accumulated depreciation and amortisation | |||
| 1. Balance at 1 January 2019 | 15,495,791.85 | 415,595,156.20 | 431,090,948.05 |
| 2.Increase in the current year | 15,756,720.44 | 190,883,555.47 | 206,640,275.91 |
| (1) Provision for the year | 2,134,718.70 | 188,283,452.16 | 190,418,170.86 |
| (2)Changes in consolidation scope | 13,622,001.74 | - | 13,622,001.74 |
| (3) Other increase | 2,600,103.31 | 2,600,103.31 | |
| 3. Decrease in the current year | - | 527,953.52 | 527,953.52 |
| 4. Balance at 31 December 2019 | 31,252,512.29 | 605,950,758.15 | 637,203,270.44 |
| III.Impairment provision | |||
| 1. Balance at 1 January 2019 | - | - | - |
| 2. Increase in the current year | - | - | - |
| 3. Decrease in the current year | - | - | - |
| 4. Balance at 31 December 2019 | - | - | - |
| IV. Book value | |||
| 1. At 31 December 2019 | 74,474,980.53 | 5,685,787,693.87 | 5,760,262,674.40 |
| 2. At 1 January 2019 | 13,136,338.99 | 5,877,010,650.52 | 5,890,146,989.51 |
(2) Investment properties without ownership certificates
Unit: RMB
| Item | Closing balance | Opening balance |
| Buildings and land use rights | 40,255,588.09 | 43,119,291.89 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
16. Fixed assets
16.1 Summary of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 27,519,109,906.41 | 22,994,155,151.43 |
| Disposal of fixed assets | 852,622.88 | 35,729.00 |
| Total | 27,519,962,529.29 | 22,994,190,880.43 |
16.2 Fixed assets
(1) Details of fixed assets
Unit: RMB
| Item | Port and terminal facilities | Buildings | Machinery and equipment, furniture and fixture and other equipment | Motor vehicles and cargo ships | Total |
| I. Total original carrying amount | |||||
| 1. Balance at 31 December 2018 | 21,835,237,866.98 | 1,148,966,435.46 | 10,592,156,358.16 | 1,368,265,652.07 | 34,944,626,312.67 |
| Add: Changes in accounting policy | (5,228,720,859.19) | (133,330,274.56) | (262,585,213.34) | (38,350,000.00) | (5,662,986,347.09) |
| 2. Balance at 1 January 2019 | 16,606,517,007.79 | 1,015,636,160.90 | 10,329,571,144.82 | 1,329,915,652.07 | 29,281,639,965.58 |
| 3. Increase for the year | 10,705,981,160.20 | 610,385,510.98 | 3,540,091,808.12 | 744,710,073.31 | 15,601,168,552.61 |
| (1)Purchase | 57,330,774.88 | 4,509,444.69 | 133,011,962.46 | 20,136,360.22 | 214,988,542.25 |
| (2)Transfer from development expenditure | - | - | 203,539.84 | - | 203,539.84 |
| (3)Transfer from construction in progress | 2,178,289,357.84 | 31,634,640.06 | 754,826,891.92 | 84,474,509.55 | 3,049,225,399.37 |
| (4)Transfer from other non-current asserts | - | - | 52,470,573.84 | - | 52,470,573.84 |
| (5) Effect of changes in the scope of consolidation | 8,470,361,027.48 | 574,241,426.23 | 2,599,578,840.06 | 640,099,203.54 | 12,284,280,497.31 |
| 4. Decrease for the year | 454,021,361.06 | 8,842,438.62 | 197,980,656.97 | 46,814,646.40 | 707,659,103.05 |
| (1) Disposal or retirement | 290,094,629.69 | 4,866,167.52 | 194,751,763.03 | 46,814,646.40 | 536,527,206.64 |
| (2) Transfer to investment properties | - | 3,976,271.10 | - | - | 3,976,271.10 |
| (3)Transfer to held for sale assets | 163,926,731.37 | - | 3,228,893.94 | - | 167,155,625.31 |
| 5. Effect of changes in foreign exchange | (23,249,228.12) | 2,513,708.28 | 16,395,624.54 | 11,405,782.06 | 7,065,886.76 |
| 6. Balance at 31 December 2019 | 26,835,227,578.81 | 1,619,692,941.54 | 13,688,077,920.51 | 2,039,216,861.04 | 44,182,215,301.90 |
| II. Accumulated depreciation | |||||
| 1. Balance at 31 December 2018 | 4,947,169,556.44 | 247,180,241.42 | 6,183,431,342.23 | 515,226,508.99 | 11,893,007,649.08 |
| Add: Changes in accounting policy | (79,532,929.29) | (6,255,609.41) | (130,447,881.14) | (28,100,712.71) | (244,337,132.55) |
| 2. Balance at 1 January 2019 | 4,867,636,627.15 | 240,924,632.01 | 6,052,983,461.09 | 487,125,796.28 | 11,648,670,516.53 |
| 3. Increase for the year | 3,000,601,209.37 | 162,942,162.21 | 1,905,806,501.71 | 382,573,252.12 | 5,451,923,125.41 |
| (1) Provision | 779,035,162.75 | 55,401,978.88 | 749,519,583.33 | 97,050,501.54 | 1,681,007,226.50 |
| (2) Effect of changes in the scope of consolidation | 2,221,566,046.62 | 107,540,183.33 | 1,156,286,918.38 | 285,522,750.58 | 3,770,915,898.91 |
| 4. Decrease for the year | 270,361,688.78 | 6,129,923.93 | 187,507,185.22 | 36,724,765.35 | 500,723,563.28 |
| (1) Disposal or retirement | 171,504,010.93 | 3,529,820.62 | 184,704,078.66 | 36,724,765.35 | 396,462,675.56 |
| (2) Transfer to investment properties | - | 2,600,103.31 | - | - | 2,600,103.31 |
| (3)Transfer to held for sale assets | 98,857,677.85 | - | 2,803,106.56 | - | 101,660,784.41 |
| 5. Effect of changes in foreign exchange | (2,145,974.27) | 718,710.53 | 4,889,844.24 | 2,107,868.19 | 5,570,448.69 |
| 6. Balance at 31 December 2019 | 7,595,730,173.47 | 398,455,580.82 | 7,776,172,621.82 | 835,082,151.24 | 16,605,440,527.35 |
| III. Impairment provision | |||||
| 1. Balance at 31 December 2018 | 57,419,468.96 | - | 44,043.20 | - | 57,463,512.16 |
| Add: Changes in accounting policy | - | - | - | - | - |
| 2. Balance at 1 January 2019 | 57,419,468.96 | - | 44,043.20 | - | 57,463,512.16 |
| 3. Increase for the year | - | - | 201,355.98 | - | 201,355.98 |
| (1) Effect of changes in the scope of consolidation | - | - | 201,355.98 | - | 201,355.98 |
| 4. Decrease for the year | - | - | - | - | - |
| 5. Balance at 31 December 2019 | 57,419,468.96 | - | 245,399.18 | - | 57,664,868.14 |
| IV. Book value | |||||
| 1. Book value at 31 December 2019 | 19,182,077,936.38 | 1,221,237,360.72 | 5,911,659,899.51 | 1,204,134,709.80 | 27,519,109,906.41 |
| 2. Book value at 31 December 2018 | 16,830,648,841.58 | 901,786,194.04 | 4,408,680,972.73 | 853,039,143.08 | 22,994,155,151.43 |
(2) The Group has no fixed assets that are temporarily idle as at 31 December 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Fixed assets - continued
16.2 Fixed assets - continued
(3) Fixed assets leased out under operating leases
Unit: RMB
| Item | Book value at 31 December 2019 | Book value at 31 December 2018 |
| Buildings | 312,602,129.37 | 242,804,849.53 |
| Port and terminal facilities | 12,233,139.52 | 844,843,802.95 |
| Machinery and equipment, furniture and fixture and other equipment | 63,964.98 | 139,712.96 |
| Motor vehicles and cargo ships | 17,754.72 | - |
| Total | 324,916,988.59 | 1,087,788,365.44 |
(4) Fixed assets without ownership certificates
Unit: RMB
| Item | Book value at 31 December 2019 | Book value at 31 December 2018 |
| Buildings, port and terminal facilities | 1,652,483,135.07 | 1,590,990,468.38 |
(5) Other issues
Unit: RMB
| Item | Amount | Remark |
| Cost of fixed assets fully depreciated but still in use as at 31 December 2019 | 2,791,308,996.03 | |
| Cost of fixed assets temporarily idle as at 31 December 2019 | - | |
| Fixed assets disposed and retired for the year: | ||
| Cost of fixed assets disposed and retired | 536,527,206.64 | |
| Net value of fixed assets disposed and retired | 140,064,531.08 | |
| Profit or loss on disposal or retirement of fixed assets | (17,700,058.28) |
15.3 Disposal of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Machinery and equipment, furniture and fixture and other equipment | 848,410.93 | 23,079.00 |
| Motor vehicles and cargo ships | 4,211.95 | 12,650.00 |
| Total | 852,622.88 | 35,729.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Construction in progress
17.1 Summary of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 6,318,389,715.70 | 5,499,426,090.06 |
| Materials for construction of fixed assets | 15,751,726.18 | - |
| Total | 6,334,141,441.88 | 5,499,426,090.06 |
17.2 Construction in progress
(1) Details of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Port and terminal facilities | 5,713,564,853.28 | 787,181.96 | 5,712,777,671.32 | 4,104,748,962.75 | - | 4,104,748,962.75 |
| Berths and yards | 296,933,093.52 | - | 296,933,093.52 | 1,023,331,798.30 | - | 1,023,331,798.30 |
| Infrastructure | 175,423,610.37 | - | 175,423,610.37 | 40,000,912.00 | - | 40,000,912.00 |
| Ship under construction | 80,042,167.50 | - | 80,042,167.50 | 22,985,373.73 | - | 22,985,373.73 |
| Others | 53,213,172.99 | - | 53,213,172.99 | 308,359,043.28 | - | 308,359,043.28 |
| Total | 6,319,176,897.66 | 787,181.96 | 6,318,389,715.70 | 5,499,426,090.06 | - | 5,499,426,090.06 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Construction in progress - continued
17.2 Construction in progress - continued
(2) The top ten balances of construction in progress
Unit: RMB
| Item | Budget amount | 1 January 2019 | Increase for the year | Effect of changes in scope of consolidation | Transfer to fixed assets | Other decreases for the year | Effect of changes in foreign exchange | 31 December 2019 | Proportion of accumulated construction investment in budget (%) | Construction progress (%) | Amount of accumulated capitalized interest | Including: capitalized interest for the year | Interest capitalization rate for the current year (%) | Capital source |
| Reconstruction project of container, oil terminal and tank area, HIPG | 2,822,177,972.30 | 1,384,261,784.70 | - | - | - | - | 22,794,017.60 | 1,407,055,802.30 | 49.86 | 49.86 | - | - | - | Self-funding |
| Guangao project Phase II, Shantou Port | 2,200,000,000.00 | 1,250,245,755.45 | 499,044,891.68 | - | 342,477,489.06 | 2,573,371.44 | - | 1,404,239,786.63 | 79.51 | 79.51 | 13,447,553.66 | - | - | Self-funding and loan |
| Reconstruction project of Berth 1#-4#, Haixing Wharf | 2,851,020,136.97 | 417,326,228.14 | 641,663,530.85 | - | - | - | - | 1,058,989,758.99 | 37.14 | 37.14 | 5,806,750.96 | 5,806,750.96 | 3.92 | Self-funding and loan |
| Project of Grain Dispatch Warehouse at Berth2#,3# Phase III , Machong Port | 620,000,000.00 | 54,800,647.68 | 266,398,210.78 | - | - | - | - | 321,198,858.46 | 51.81 | 51.81 | 16,955.56 | 16,955.56 | 4.36 | Self-funding and loan |
| Donghaidao port wharf project, Zhanjiang Port | 905,348,400.00 | - | 48,487,590.17 | 206,058,139.11 | - | - | - | 254,545,729.28 | 28.12 | 28.12 | 20,489,781.20 | 9,105,325.34 | 4.79 | Self-funding and loan |
| Xiashan port general wharf project, Zhanjiang Port | 737,975,100.00 | - | 169,495,671.06 | 64,813,237.96 | - | - | - | 234,308,909.02 | 31.75 | 31.75 | 2,865,473.23 | 2,865,473.23 | 4.79 | Self-funding and loan |
| CICT Machinery equipment procurement project | 209,216,238.00 | - | 204,067,723.49 | - | - | - | 2,006,393.85 | 206,074,117.34 | 98.50 | 98.50 | - | - | - | Self-funding |
| Petrifaction old tank area reconstruction, Phase I, Zhanjiang Port | 218,378,500.00 | - | 1,994,027.62 | 176,989,605.30 | - | - | - | 178,983,632.92 | 81.96 | 81.96 | 5,024,262.73 | - | - | Self-funding and loan |
| Baoman Port container wharf extension project, Phase I, Zhanjiang Port | 2,412,810,000.00 | - | 49,802,533.11 | 105,892,965.68 | - | - | - | 155,695,498.79 | 6.45 | 6.45 | 964,740.46 | 964,740.46 | 4.79 | Self-funding and loan |
| Baoman stuffing and destuffing service area, Phase I Project, Zhanjiang Port | 606,521,505.83 | - | 9,554,950.43 | 124,474,810.57 | - | - | - | 134,029,761.00 | 22.10 | 22.10 | 16,689,500.56 | - | - | Self-funding and loan |
| Total | 13,583,447,853.10 | 3,106,634,415.97 | 1,890,509,129.19 | 678,228,758.62 | 342,477,489.06 | 2,573,371.44 | 24,800,411.45 | 5,355,121,854.73 | 65,305,018.36 | 18,759,245.55 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Construction in progress - continued
17.3 Materials for construction of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Materials for construction of fixed assets | 15,751,726.18 | - | 15,751,726.18 | - | - | - |
18. Right-of-use assets
(1) Details of right-of-use assets
Unit: RMB
| Item | Port and terminal facilities | Buildings | Machinery and equipment, furniture and fixture and other equipment | Motor vehicles and cargo ships | Others | Total |
| I. Cost | ||||||
| 1.Balance at 31 December 2018 | ||||||
| Add: Changes in accounting policy | 5,696,887,745.03 | 181,521,736.13 | 264,518,199.73 | 38,350,000.00 | 2,603,500,288.84 | 8,784,777,969.73 |
| 2.Balance 1 January 2019 | 5,696,887,745.03 | 181,521,736.13 | 264,518,199.73 | 38,350,000.00 | 2,603,500,288.84 | 8,784,777,969.73 |
| 3.Increase for the year | 906,090,446.15 | 7,691,430.56 | 503,167,422.04 | 7,620,740.24 | 198,170,427.78 | 1,622,740,466.77 |
| (1) Purchase | 43,133,738.23 | 7,691,430.56 | 6,340,687.53 | - | 191,746,689.11 | 248,912,545.43 |
| (2) Effect of changes in the scope of consolidation | 862,956,707.92 | - | 496,826,734.51 | 7,620,740.24 | 6,423,738.67 | 1,373,827,921.34 |
| 4.Decrease for the year | 1,707,585.07 | 5,202,400.95 | - | - | - | 6,909,986.02 |
| (1) Termination of lease | 1,707,585.07 | 5,202,400.95 | - | - | - | 6,909,986.02 |
| 5.Effect of changes in foreign exchange | 88,131,920.50 | 2,195,653.48 | 39,678.18 | - | 44,408,750.58 | 134,776,002.74 |
| 6.Balance at 31 December 2019 | 6,689,402,526.61 | 186,206,419.22 | 767,725,299.95 | 45,970,740.24 | 2,846,079,467.20 | 10,535,384,453.22 |
| II. Accumulated depreciation | ||||||
| 1.Balance at 31 December 2018 | ||||||
| Add: Changes in accounting policy | 154,346,605.87 | 17,282,119.00 | 130,582,116.30 | 28,100,712.71 | 173,772,354.97 | 504,083,908.85 |
| 2.Balance at 1 January 2019 | 154,346,605.87 | 17,282,119.00 | 130,582,116.30 | 28,100,712.71 | 173,772,354.97 | 504,083,908.85 |
| 3.Increase for the year | 222,180,410.17 | 19,985,432.77 | 100,981,272.43 | 2,848,243.48 | 46,784,440.48 | 392,779,799.33 |
| (1) Provision | 211,794,077.31 | 19,985,432.77 | 51,419,032.74 | 709,088.28 | 44,978,579.62 | 328,886,210.72 |
| (2) Increase for changes in the scope of consolidation | 10,386,332.86 | - | 49,562,239.69 | 2,139,155.20 | 1,805,860.86 | 63,893,588.61 |
| 4.Decrease for the year | 356,556.12 | 447,016.56 | - | - | - | 803,572.68 |
| (1) Termination of lease | 356,556.12 | 447,016.56 | - | - | - | 803,572.68 |
| 5.Effect of changes in foreign exchange | 2,669,904.40 | 160,165.93 | 8,353.91 | - | 3,160,503.02 | 5,998,927.26 |
| 6.Balance at 31 December 2019 | 378,840,364.32 | 36,980,701.14 | 231,571,742.64 | 30,948,956.19 | 223,717,298.47 | 902,059,062.76 |
| III. Impairment provision | ||||||
| 1.Balance at 31 December 2018 | ||||||
| Add: Changes in accounting policy | ||||||
| 2.Balance 1 January 2019 | ||||||
| 3.Increase for the year | - | - | - | - | - | - |
| 4.Decrease for the year | - | - | - | - | - | - |
| 5.Balance at 31 December 2019 | - | - | - | - | - | - |
| IV. Book value | ||||||
| 1.Book value at 31 December 2019 | 6,310,562,162.29 | 149,225,718.08 | 536,153,557.31 | 15,021,784.05 | 2,622,362,168.73 | 9,633,325,390.46 |
| 2.Book value at 31 December 2018 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Right-of-use assets - continued
(2) Amount recognized in profit or loss
Unit: RMB
| Category | Amount incurred in the current period |
| Depreciation expenses of right-of-use assets(Note 1) | 328,886,210.72 |
| Interest expenses on lease liabilities (Note 2) | 106,836,843.78 |
| Expenses for short-term leases | 58,919,264.88 |
| Expenses for leases of low value assets | - |
| Variable lease payments not included in the measurement of lease liabilities(Note 3) | - |
| Revenue from sublease of right-of-use assets | 19,572,976.50 |
Note 1: No depreciation expenses of right-of-use assets is capitalized in 2019.
Note 2: No interest expenses of lease liabilities are capitalized in 2019.
Note 3: No variable lease payments were included in the measurement of lease liabilities in 2019.
(3) The total cash outflows in relation to leases for the current year amounting to RMB526,621,689.64.
(4) Lease assets of the Group with the lease term as follows:
| Category | Lease term |
| Port and terminal facilities | 1-99 years |
| Buildings | 1-5 years |
| Machinery and equipment, furniture and fixture and other equipment | 1-6 years |
| Motor vehicles and cargo ships | 5-9 years |
| Others | 2-99 years |
(5) The Group has an option to purchase port and terminal facilities, machinery and equipmentand cargo ships at the end of the extension period at a rate that is below market rates.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Intangible assets
(1) Summary of intangible assets
Unit: RMB
| Items | Land use rights | Terminal management rights | Others | Total |
| I. Total original carrying amount | ||||
| 1. Balance at 31 December 2018 | 13,097,878,517.45 | 10,511,520,659.11 | 1,124,069,969.28 | 24,733,469,145.84 |
| Add: Changes of accounting policies | (1,813,694,115.71) | - | - | (1,813,694,115.71) |
| 2. Balance at 1 January 2019 | 11,284,184,401.74 | 10,511,520,659.11 | 1,124,069,969.28 | 22,919,775,030.13 |
| 3.Increase in the current year | 4,019,959,533.26 | 11,544,709.16 | 108,916,766.14 | 4,140,421,008.56 |
| (1) Purchase | - | 11,544,709.16 | 70,770,763.15 | 82,315,472.31 |
| (2) Effect of changes in the scope of consolidation | 4,016,895,872.22 | - | 36,305,792.10 | 4,053,201,664.32 |
| (3) Other increase | 3,063,661.04 | - | 1,840,210.89 | 4,903,871.93 |
| 4. Decrease in the current year | 1,985,834,473.13 | 7,943,452.72 | 3,937,120.86 | 1,997,715,046.71 |
| (1) Disposal | 931,377,542.00 | - | - | 931,377,542.00 |
| (2) Transfer to held-for-sale assets (Note 1) | 137,535,397.65 | - | - | 137,535,397.65 |
| (3) Other decrease (Note 2) | 916,921,533.48 | 7,943,452.72 | 3,937,120.86 | 928,802,107.06 |
| 5. Effect of changes in foreign exchange | 6,364,192.81 | (291,366,046.68) | (80,792,488.12) | (365,794,341.99) |
| 6. Balance at 31 December 2019 | 13,324,673,654.68 | 10,223,755,868.87 | 1,148,257,126.44 | 24,696,686,649.99 |
| II. Accumulated amortization | ||||
| 1. Balance at 31 December 2018 | 2,433,897,714.42 | 1,268,696,311.70 | 269,857,075.18 | 3,972,451,101.30 |
| Add: Changes of accounting policies | (15,125,513.56) | - | - | (15,125,513.56) |
| 2. Balance at 1 January 2019 | 2,418,772,200.86 | 1,268,696,311.70 | 269,857,075.18 | 3,957,325,587.74 |
| 3.Increase in the current year | 786,821,200.60 | 238,624,029.70 | 93,471,339.77 | 1,118,916,570.07 |
| (1) Accrual of amortization | 326,408,082.24 | 238,624,029.70 | 67,594,658.22 | 632,626,770.16 |
| (2) Effect of changes in the scope of consolidation | 460,413,118.36 | - | 25,876,681.55 | 486,289,799.91 |
| 4. Decrease in the current year | 49,669,959.62 | - | 891,025.77 | 50,560,985.39 |
| (1) Disposal | 35,043,949.41 | - | - | 35,043,949.41 |
| (2) Transfer to held-for-sale assets | 14,626,010.21 | - | - | 14,626,010.21 |
| (3) Other increase | - | - | 891,025.77 | 891,025.77 |
| 5. Effect of changes in foreign exchange | 5,228,241.48 | (25,835,819.75) | (2,102,498.26) | (22,710,076.53) |
| 6. Balance at 31 December 2019 | 3,161,151,683.32 | 1,481,484,521.65 | 360,334,890.92 | 5,002,971,095.89 |
| III. Total provision for impairment losses | ||||
| 1. Balance at 31 December 2018 | - | - | - | - |
| Add: Changes of accounting policies | - | - | - | - |
| 2. Balance at 1 January 2019 | - | - | - | - |
| 3.Increase in the current year | - | - | - | - |
| 4. Decrease in the current year | - | - | - | - |
| 5. Balance at 31 December 2019 | - | - | - | - |
| IV. Total book value | ||||
| 1. Book value at 31 December 2019 | 10,163,521,971.36 | 8,742,271,347.22 | 787,922,235.52 | 19,693,715,554.10 |
| 2. Book value at 31 December 2018 | 10,663,980,803.03 | 9,242,824,347.41 | 854,212,894.10 | 20,761,018,044.54 |
Note 1: Details are set out in Note (V) 6.4 (2).Note 2: Primarily the lands located in Shenzhen Qianhaiwan Logistics Park has been returned to
government in 2019 by the Company’s subsidiaries Antongjie Terminal Services(Shenzhen) Co., Ltd. (“ATJ”) and Ansujie Terminal Services (Shenzhen) Co., Ltd.(“ASJ”). Details are set out in Note (X) 5 (6).
(2) Land use rights without ownership certificates on 31 December 2019:
Unit: RMB
| Item | Book value at this year end | Book value at last year end |
| Land use rights | 1,163,098,978.96 | 1,383,494,095.83 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
20. Development expenses
Unit: RMB
| Item | 1/1/2019 | Changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 | ||
| Transfer to intangible assets | Transfer to fixed assets | Transfer to profit or loss for the year | |||||
| Crude oil unit train loading equipment key technology research | - | 1,826,780.56 | 14,004,176.18 | - | - | - | 15,830,956.74 |
| CMPort terminals information sharing platform | - | - | 8,606,646.27 | - | - | 8,606,646.27 | - |
| Intelligent monitoring system at Shekou Custom | - | - | 8,601,073.24 | - | - | 8,601,073.24 | - |
| R&D of automation-based and intelligence-based overall IT solution for container terminal | - | - | 6,583,130.94 | - | - | 6,583,130.94 | - |
| Electronic bill of lading (loaded container from other terminals) | - | - | 5,076,107.10 | - | - | 5,076,107.10 | - |
| Mazut, diesel, petrol, methanol process automatic control system development and application | - | - | 4,834,850.03 | - | - | - | 4,834,850.03 |
| SCT OOG self-service access gate | - | - | 4,624,600.00 | - | - | 4,624,600.00 | - |
| Knoe hanger supporting wheel modification | - | - | 4,224,000.00 | - | - | 4,224,000.00 | - |
| Automatic distribution and identification of seals | - | - | 4,416,000.00 | - | - | 4,416,000.00 | - |
| Onshore bridge equipment repairing auxiliary system based on mobile application technology | - | - | 4,080,000.00 | - | - | 4,080,000.00 | - |
| Others | - | 13,141,526.26 | 82,871,568.99 | 1,434,483.16 | 203,539.84 | 77,641,786.74 | 16,733,285.51 |
| Total | - | 14,968,306.82 | 147,922,152.75 | 1,434,483.16 | 203,539.84 | 123,853,344.29 | 37,399,092.28 |
21. Goodwill
(1) Carrying amount of goodwill
Unit: RMB
| Investee | 1/1/2019 | Increase | Decrease | Effect of changes in foreign exchange | 31/12/2019 |
| TCP Participa??es S.A. ("TCP") | 4,284,229,939.11 | - | - | (737,763,462.93) | 3,546,466,476.18 |
| Mega Shekou Container Terminals Limited | 1,815,509,322.42 | - | - | - | 1,815,509,322.42 |
| China Merchants Port Holdings Company Limited("CMPort") | 993,992,000.00 | - | - | - | 993,992,000.00 |
| Shantou Port | 552,317,736.65 | - | - | - | 552,317,736.65 |
| Zhanjiang Port (Note) | - | 418,345,307.68 | - | - | 418,345,307.68 |
| Shenzhen Mawan Project | 408,773,001.00 | - | - | - | 408,773,001.00 |
| Others (Note) | 281,073,843.17 | 7,182,007.71 | - | - | 288,255,850.88 |
| Total | 8,335,895,842.35 | 425,527,315.39 | - | (737,763,462.93) | 8,023,659,694.81 |
Note: The increase in the current year mainly represent the goodwill arising from the Group's
acquisitions of Zhanjiang Port and Guangdong Zhanjiang Port Longteng Shipping Co.,Ltd. ("Longteng Shipping") respectively in February 2019 and December 2019. Details areset out in Note (VI) 1.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Goodwill - continued
(2) Information of assets group or portfolio of assets group to which the goodwill belongs
The Group takes the ability to independently generate cash inflows, manage the way ofproduction and operation activities (mainly by geographic areas) and unified decision on theuse and disposal of the assets as the criteria to determine assets group or portfolio of assetsgroup, and performs impairment test of goodwill for the assets group or portfolio of assetsgroup as determined. As at 31 December 2019, the assets group or portfolio of assets groupdetermined by the Group include: TCP; Mega Shekou Container Terminals Limited,including Shekou Container Terminals Ltd., Shenzhen Lianyunjie Container Terminals Co.,Ltd., Anxunjie Container Terminals (Shenzhen) Co., Ltd.; CMPort; Shantou Port; Zhanjiangport; Shenzhen Mawan Project, including Shenzhen Mawan Port Waterway Co., Ltd.,Shenzhen Mawan Port Services Co., Ltd. and Shenzhen Magang Cangma Co., Ltd.
(3) Impairment test of goodwill and key parameters
When testing the goodwill for impairment, the Group compares the carrying amount ofrelated assets group and portfolio of assets group (including goodwill) with the recoverableamount. If the recoverable amount is less than the carrying amount, the difference isincluded in profit or loss for the period. The Group determines the recoverable amount ofthe assets group and portfolio of assets group that generate goodwill at fair value less cost ofdisposal or at present value of expected future cash flows. The fair value is determinedusing market approach. The present value of cash flows is estimated based on the forecast ofcash flows for five-to-ten-year detailed forecast period and subsequent forecast period. Theestimated future cash flows for the detailed forecast period are based on the business planestablished by the management; the expected future cash flows for the subsequent forecastperiod are determined in conjunction with the level of the final year of the detailed forecastperiod, combined with the Group's business plans, industry trends and inflation rates. Thegrowth rate adopted will not exceed the long-term average growth rate of the country wherethe assets group and portfolio of assets group are located. The key assumptions used by theGroup in estimating the present value of future cash flows include growth in businessvolume, gross profit margin and discount rate etc. The discount rate and the growth rate forsubsequent forecasted period adopted in 2019 are around 9.40%-12.3% and 3% respectively.The parameters of key assumptions determined by the Group's management are in line withthe Group's historical experience or external source of information.
(4) Effect of impairment test of goodwill
After the test, the Group's management considers that any reasonable change in aboveassumptions will not result in the circumstance that the carrying amount of the assets groupand portfolio of assets group is higher than the recoverable amount, therefore it is notnecessary to make provision for impairment of goodwill.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
22. Long-term prepaid expenses
Unit: RMB
| Item | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current period | Amortization in the current period | Other decrease | 31/12/2019 |
| Tonggu channel widening project (Note 1) | 164,567,384.97 | - | 390,445,093.47 | 21,333,123.01 | 8,163,265.59 | 525,516,089.84 |
| Relocation project of Nanhai Rescue Bureau | 40,107,549.49 | - | - | 1,057,781.52 | - | 39,049,767.97 |
| Expenditures for the improvement of leased fixed assets | 21,163,538.17 | - | 153,528.33 | 1,447,327.28 | 2,090,855.04 | 17,778,884.18 |
| West port area public channel widening project (Note 2) | - | - | 81,488,690.28 | 1,018,601.68 | - | 80,470,088.60 |
| Others | 9,867,964.58 | 2,630,870.77 | 43,327,480.45 | 6,730,134.72 | - | 49,096,181.08 |
| Total | 235,706,437.21 | 2,630,870.77 | 515,414,792.53 | 31,586,968.21 | 10,254,120.63 | 711,911,011.67 |
Note 1: This represent the Group's actual expenses on the Shenzhen West Port Area Tonggu
Channel 240-270 Meters Widening Project. According to relevant resolutions of Shenzhenmunicipal government, the expenses incurred for the project are born by the enterprise andgovernment on 50% to 50% principle. The Company's subsidiary has included theexpenses on deepening the channel in the item of "long-term prepaid expenses", andamortized such expenses over the expected useful life of 40 years using straight-linemethod since the completion of the channel widening project on 27 February 2019.
Note 2: This represent the Group's actual expenses on the first section of Shenzhen West Port Area
Public Channel 240-270 Meters Widening Project. According to relevant resolutions ofShenzhen municipal government, the expenses incurred for the project are born by theenterprise and government on 50% to 50% principle. The Company's subsidiary hasincluded the expenses on deepening the channel in the item of "long-term prepaidexpenses", and amortized such expenses over the expected useful life of 40 years usingstraight-line method since the completion of the channel widening project on 1 June 2019.
23. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Unrealized profit | 805,528,482.59 | 196,545,362.77 | - | - |
| Depreciation of fixed assets | 108,244,052.41 | 27,227,981.18 | 22,036,522.49 | 4,514,995.56 |
| Deductible losses | 79,034,267.56 | 19,758,566.89 | 86,136,992.42 | 23,604,794.05 |
| Provision for credit loss | 71,636,378.50 | 17,881,386.96 | 32,805,128.88 | 8,213,219.45 |
| Provisions | 60,976,862.88 | 16,601,394.38 | 19,470,820.00 | 6,620,078.85 |
| Deferred income | 40,272,757.15 | 9,737,699.40 | 50,033,346.52 | 11,382,687.30 |
| Amortization of computer software | 13,630,227.66 | 3,407,556.91 | 16,453,443.95 | 4,113,360.99 |
| Organization costs | 10,905,997.08 | 2,726,499.27 | 14,386,394.26 | 3,287,938.27 |
| Provision for impairment losses of assets | 1,918,890.31 | 479,722.58 | 2,258,081.96 | 481,468.22 |
| Others | 29,120,031.36 | 6,069,331.93 | 17,635,287.26 | 4,489,614.50 |
| Total | 1,221,267,947.50 | 300,435,502.27 | 261,216,017.74 | 66,708,157.19 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Deferred tax assets and deferred tax liabilities - continued
(2) Deferred tax liabilities without offsetting
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Withholding dividend income tax | 24,219,415,080.67 | 1,735,339,232.65 | 17,819,027,902.41 | 1,138,273,886.12 |
| Fair value adjustment of assets acquired by business combination | 7,989,044,772.81 | 1,812,240,254.17 | 6,415,001,869.22 | 1,431,954,458.35 |
| Changes in fair value of other equity investments | 1,434,338,833.65 | 186,123,245.82 | 930,040,371.21 | 105,285,399.58 |
| Changes in fair value of other non-current financial assets | 731,584,120.16 | 166,830,773.03 | 754,359,502.42 | 174,592,634.60 |
| Depreciation of fixed assets | 140,659,435.00 | 35,164,858.75 | 136,717,500.00 | 34,179,375.00 |
| Others | 110,838,382.96 | 26,054,384.75 | 114,027,794.35 | 26,789,187.62 |
| Total | 34,625,880,625.25 | 3,961,752,749.17 | 26,169,174,939.61 | 2,911,074,941.27 |
(3) Deferred tax assets or liabilities that are presented at the net amount after offsetting
Unit: RMB
| Item | Offset amount of deferred tax assets and liabilities in the current period | Deferred tax assets or liabilities after offsetting in the current period | Offset amount of deferred tax assets and liabilities in the prior period | Deferred tax assets or liabilities after offsetting in the prior period |
| Deferred tax assets | - | 300,435,502.27 | - | 66,708,157.19 |
| Deferred tax liabilities | - | 3,961,752,749.17 | - | 2,911,074,941.27 |
(4) Details of unrecognized deferred tax assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 503,037,805.60 | 237,418,074.51 |
| Deductible losses | 2,289,500,649.57 | 1,291,865,454.88 |
| Total | 2,792,538,455.17 | 1,529,283,529.39 |
The Group recognizes deferred income tax assets to the extent of future taxable income that islikely to be obtained to offset the deductible temporary differences and deductible losses. For theexcess of deductible temporary differences and deductible losses over future taxable income, nodeferred tax assets is recognized.
(5) Deductible losses for unrecognized deferred tax assets will be expired in the following
years:
Unit: RMB
| Year | Closing balance | Opening balance |
| 2019 | - | 132,642,333.11 |
| 2020 | 182,809,604.33 | 110,359,740.81 |
| 2021 | 244,394,853.17 | 151,793,398.29 |
| 2022 | 615,440,669.35 | 320,679,566.41 |
| 2023 | 745,889,729.49 | 576,351,741.67 |
| 2024 | 500,926,253.51 | - |
| No expiration date | 39,539.72 | 38,674.59 |
| Total | 2,289,500,649.57 | 1,291,865,454.88 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Dachanwan port area Phase II land replacement payment (Note 1) | 916,884,222.49 | - |
| Advances of channel project (Note 2) | 896,848,920.76 | - |
| Prepayments of land use rights | 132,334,704.86 | 175,908,026.15 |
| Prepayments of fixed assets | 90,186,071.12 | 174,039,051.91 |
| Prepayments of terminal franchise | 30,356,842.78 | 30,383,609.79 |
| Others | 16,354,705.03 | 14,860,798.13 |
| Total | 2,082,965,467.04 | 395,191,485.98 |
Note 1: Details are set out in Note (X) 5(6).
Note 2: This represent that the Company's subsidiary Zhanjiang Port, upon its reorganization into
a joint stock company in 2007, signed the Channel Arrangement Agreement with State-owned Assets Supervision and Administration Commission of Zhanjiang ("ZhanjiangSASAC") and China Merchants International Terminal (Zhanjiang) Co., Ltd. Accordingto the agreement, the channel belongs to Zhanjiang SASAC, therefore the Companyincluded the advances of channel project that should be repaid by Zhanjiang SASAC inother non-current assets.
25. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance (restarted) |
| Credit loan | 9,439,099,793.47 | 3,427,365,512.21 |
(2) At 31 December 2019, the Group has no short-term borrowings that were overdue.
26. Notes payable
Unit: RMB
| Category | Closing balance | Opening balance |
| Bank acceptance | 2,529,389.61 | - |
| Commercial acceptance | 73,926,559.40 | - |
| Total | 76,455,949.01 | - |
27. Accounts payable
(1) Details of accounts payable are as follows:
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction fee | 173,811,112.97 | 115,371,240.88 |
| Material purchase | 146,969,853.48 | 76,365,058.49 |
| Service fee | 133,134,547.67 | 132,946,488.81 |
| Equipment payments | 15,947,499.80 | 659,317.15 |
| Rental fee | 13,897,329.66 | 10,564,893.93 |
| Others | 107,352,122.81 | 93,213,691.71 |
| Total | 591,112,466.39 | 429,120,690.97 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Accounts payable - continued
(2) Significant accounts payable aged more than one year
Unit: RMB
| Item | Amount | Reason for outstanding |
| Shenzhen Land and Resources Bureau | 21,642,795.50 | The government planning project has not been completed, and the certificates of property rights has not been processed. |
28. Receipts in advance
(1) Summary of receipts in advance
Unit: RMB
| Item | Closing balance | Opening balance |
| Rental fee receipt in advance | 13,409,679.80 | 5,536,804.56 |
| Service fee receipt in advance | 10,500,836.06 | 23,038,672.44 |
| Others | 4,916,171.51 | 595,232.86 |
| Total | 28,826,687.37 | 29,170,709.86 |
(2) There is no significant receipts in advance aged more than one year at the end of the year
29. Contract liabilities
(1) Summary of contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Port charges received in advance | 63,954,147.44 | 11,657,235.81 |
| Service fee received in advance | 17,396,130.82 | 24,353,966.50 |
| Warehousing fee received in advance | - | 8,705,589.57 |
| Others | 4,480,724.26 | 5,277,103.62 |
| Total | 85,831,002.52 | 49,993,895.50 |
(2) Items with significant change in carrying amount and reason for the change
Unit: RMB
| Item | Amount of change | Reason for the change |
| Port charges received in advance | 52,296,911.63 | Fulfilling the performance obligations and inclusion of Zhanjiang Port in the scope of consolidation |
(3) There is no significant contract liabilities aged more than one year at the end of the year.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Contract liabilities - continued
(4) Qualitative and quantitative analysis of contract liabilities
The contract liability mainly represents the amount received by the Group to provide portservices to customers. The payment is collected according to the contractual payment time.The Group recognizes contract revenue based on the progress of the contract. The contractliabilities will be recognized as income after the Group fulfills its performance obligations.
(5) Revenue recognized in the current period and included in the opening carrying amount ofcontract liabilities
An amount of RMB 39,037,511.27 included in the book value of contract liabilities at thebeginning of 2019 has been recognized as revenue in the current year, including contractliabilities arising from settled but unfinished construction resulting from the contract ofreceipt of service fee in advance amounting to RMB 14,405,439.86, contract liabilitiesarising from settled but unfinished construction resulting from the contract of receipt of portcharges in advance amounting to RMB 11,385,355.28, and contract liabilities arising fromsettled but unfinished construction resulting from the contract of receipt of warehousing feein advance amounting to RMB 8,449,390.82 as well as contract liabilities arising fromsettled but unfinished construction resulting from other contracts amounting to RMB4,797,325.31.
30. Employee benefits payable
(1) Details of employee benefits payable are as follows
Unit: RMB
| Item | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 |
| 1. Short-term benefits | 431,714,138.23 | 74,046,373.76 | 2,505,176,428.76 | 2,380,580,326.31 | 630,356,614.44 |
| 2. Post-employment benefits – defined contribution plan | 2,286,649.91 | - | 224,339,253.53 | 221,610,579.66 | 5,015,323.78 |
| 3. Termination benefits | - | - | 14,610,713.62 | 14,610,713.62 | - |
| 4. Others | (511,232.74) | - | 6,662,872.93 | 6,804,793.77 | (653,153.58) |
| Total | 433,489,555.40 | 74,046,373.76 | 2,750,789,268.84 | 2,623,606,413.36 | 634,718,784.64 |
(2) Short-term benefits
Unit: RMB
| Item | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 |
| I. Wages and salaries, bonuses, allowances and subsidies | 409,390,929.61 | 72,201,271.35 | 2,077,766,550.89 | 1,954,494,382.02 | 604,864,369.83 |
| II. Staff welfare | - | - | 120,257,663.25 | 120,257,663.25 | - |
| III. Social insurance charges | 5,145,526.57 | - | 115,987,499.06 | 111,496,252.60 | 9,636,773.03 |
| Including: Medical insurance | 4,418,339.26 | - | 91,570,250.51 | 87,671,544.82 | 8,317,044.95 |
| Work injury insurance | - | - | 8,645,779.35 | 8,645,779.35 | - |
| Maternity insurance | - | - | 5,831,448.10 | 5,831,448.10 | - |
| Others | 727,187.31 | - | 9,940,021.10 | 9,347,480.33 | 1,319,728.08 |
| IV. Housing funds | - | - | 141,006,740.13 | 141,006,740.13 | - |
| V. Labor union and employee education funds | 17,166,673.76 | 1,845,102.41 | 38,809,767.71 | 41,966,072.32 | 15,855,471.56 |
| VI. Other short-term benefits | 11,008.29 | - | 11,348,207.72 | 11,359,215.99 | 0.02 |
| Total | 431,714,138.23 | 74,046,373.76 | 2,505,176,428.76 | 2,380,580,326.31 | 630,356,614.44 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Employee benefits payable - continued
(3) Defined contribution plan
Unit: RMB
| items | 1/1/2019 | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | 31/12/2019 |
| I. Basic pension | 1,620,436.89 | - | 181,593,596.57 | 178,313,764.59 | 4,900,268.87 |
| II. Unemployment insurance | 551,158.12 | - | 3,229,973.30 | 3,781,131.41 | 0.01 |
| III. Enterprise annuity plan | 115,054.90 | - | 39,515,683.66 | 39,515,683.66 | 115,054.90 |
| Total | 2,286,649.91 | - | 224,342,871.98 | 221,614,198.11 | 5,015,323.78 |
The Company and its subsidiaries participates in the social security contributions and theunemployment insurance plan established by government institutions as required. According tosuch plans, the Group contributes in proportion to the local government. Except for the above-mentioned deposit fees, the Group have no outstanding contributions to be paid to the socialsecurity contributions and the unemployment insurance plan. The corresponding expenses areincluded in the current profit and loss or the cost of related assets when incurred.
31. Taxes payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Enterprise income tax | 1,843,381,355.01 | 271,954,754.74 |
| VAT | 11,377,223.08 | 8,200,265.65 |
| Others | 43,317,764.65 | 65,028,402.03 |
| Total | 1,898,076,342.74 | 345,183,422.42 |
32. Other payables
(1) Summary of other payables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest payable | - | - |
| Dividends payable | 150,286,550.81 | 66,052,207.09 |
| Other payables | 2,073,468,127.15 | 1,624,072,694.20 |
| Total | 2,223,754,677.96 | 1,690,124,901.29 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 101 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Other payables - continued
(2) Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Ordinary share dividends | 150,286,550.81 | 66,052,207.09 |
| Including: Modern Terminals Limited | 58,156,000.00 | - |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | 37,402,426.09 | 37,402,426.09 |
| Sri Lanka Ports Authority | 31,392,997.47 | - |
| Soifer Participa??es Societárias S.A. | 14,141,088.03 | - |
| Pattac Empreendimentos e Participa??es S.A. | 4,597,020.40 | - |
| Tuc Participacoes Portuarias S.A. | 4,597,018.82 | - |
| Sinotrans South China Co., Ltd. | - | 25,949,781.00 |
| Qingdao Port (Group) Co., Ltd. | - | 2,700,000.00 |
As at 31 December 2019, the dividend payable with aging over one year amounts to RMB37,402,426.09 which represents the dividends not yet received by the investor.
(3) Other payables
(a) Disclosure of other payables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Amount payable for construction and quality warranty | 1,053,340,753.66 | 660,870,685.70 |
| Deposits | 162,460,889.01 | 149,705,612.54 |
| Customer discount | 117,736,418.62 | 128,787,894.63 |
| Prepaid expenses | 110,741,377.48 | 140,305,423.54 |
| Port construction and security fee | 58,732,330.62 | 62,255,593.38 |
| Balance of land use rights transfer | 14,538,738.00 | 93,258,350.90 |
| Others | 555,917,619.76 | 388,889,133.51 |
| Total | 2,073,468,127.15 | 1,624,072,694.20 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Other payables - continued
(3) Other payables - continued
(b) Significant other payables with aging over 1 year
Unit: RMB
| Company name | Closing balance | Reason for being outstanding or carried forward |
| Shanghai Zhenhua Heavy Industries Co., Ltd. | 60,656,174.48 | Equipment failed to meet the acceptance standards |
| CCCC Fourth Harbor Engineering Co., Ltd. | 41,820,223.83 | Project not yet approved by a third party |
| CCCC Third Harbor Engineering Co., Ltd. | 37,314,702.00 | Project not yet approved by a third party |
| Shantou Transportation Bureau | 31,358,355.47 | To be paid after confirmation by mutual parties |
| Zhanjiang Transportation Bureau | 23,247,472.05 | Balance of advances |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | 20,762,053.30 | Quality warranty, the contracted settlement condition has not been reached |
| Qingdao Maritime Bureau | 20,713,982.12 | Port construction fee not yet settled |
| CCCC-FHDI Engineering Co., Ltd. | 16,985,103.50 | Performance of contract not yet completed |
| Shenzhen Municipal Special Fund for Development of Bulk Cement | 12,238,226.14 | Collection of dividends payments etc. |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 11,250,000.00 | Performance of contract not yet completed |
| Shantou Finance Bureau | 10,000,000.00 | To be paid after confirmation by mutual parties |
| Guangdong Hengtai Tong Industrial Co., Ltd. | 10,000,000.00 | Quality warranty, the contracted settlement condition has not been reached |
| Shenzhen Dongpeng Construction Supervision Co., Ltd. | 9,906,473.62 | Not yet applied or processed by the counterparty |
| China First Metallurgical Group Co., Ltd. | 8,175,706.55 | Performance of contract not yet completed |
| Harman Technology (Shenzhen) Co., Ltd. | 5,884,632.48 | The contracted settlement condition has not been reached |
| Total | 320,313,105.54 |
33. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Long-term loans due within one year | 2,954,701,198.90 | 1,974,288,010.22 |
| Including: Credit loan | 1,294,054,756.85 | 389,974,981.60 |
| Guaranteed loan | 1,119,153,332.94 | 1,109,331,175.51 |
| Mortgage loan | 541,493,109.11 | 474,981,853.11 |
| Bonds payable due within one year | 1,889,505,167.46 | 785,481,781.86 |
| Long-term payable due within one year | 61,107,722.82 | 30,635,607.84 |
| Long-term employee benefits payable due within one year | 31,950,000.00 | 19,100,000.00 |
| Lease liabilities due within one year | 341,240,327.95 | |
| Other non-current liabilities due within one year | 825,835,439.66 | 87,465,615.05 |
| Total | 6,104,339,856.79 | 2,896,971,014.97 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Short-term bonds payable | 712,345,315.07 | 206,349,863.00 |
| Accrued professional agency fee | 143,346,356.53 | 116,064,056.75 |
| Joint venture loan | - | 241,927,341.05 |
| Others | 30,264,910.03 | 44,668,324.00 |
| Total | 885,956,581.63 | 609,009,584.80 |
Changes of short-term bonds payable:
Unit: RMB
| Name of bond | Face value | Date of issue | Term of the bond | Amount of issue | 1/1/2019 | Effect of changes in the scope of consolidation | Amount issued in the current year | Interest accrued based on par value | Discount or premium amortization | Repayment in the current year | 31/12/2019 |
| 4.73%, RMB 200 million, Super & Short-term Commercial Paper | 200,000,000.00 | 24/04/2018 | 267 days | 200,000,000.00 | 206,349,863.00 | - | - | 570,191.79 | - | 206,920,054.79 | - |
| 3.08%, RMB 700 million, Super & Short-term Commercial Paper | 700,000,000.00 | 04/06/2019 | 270 days | 700,000,000.00 | - | - | 700,000,000.00 | 12,345,315.07 | - | - | 712,345,315.07 |
| 2.98%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 04/06/2019 | 180 days | 300,000,000.00 | - | - | 300,000,000.00 | 4,396,721.31 | - | 304,396,721.31 | - |
| 5.70%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 16/05/2018 | 272 days | 300,000,000.00 | - | 312,325,273.97 | - | 324,041.10 | - | 312,649,315.07 | - |
| 5.97%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 04/06/2018 | 272 days | 300,000,000.00 | - | 311,914,102.74 | - | 1,334,390.41 | - | 313,248,493.15 | - |
| 3.80%, RMB 300 million, Super & Short-term Commercial Paper | 300,000,000.00 | 18/01/2019 | 277 days | 300,000,000.00 | - | 300,437,260.27 | - | 7,995,616.45 | - | 308,432,876.72 | - |
| Total | 2,100,000,000.00 | 2,100,000,000.00 | 206,349,863.00 | 924,676,636.98 | 1,000,000,000.00 | 26,966,276.13 | - | 1,445,647,461.04 | 712,345,315.07 |
35. Long-term borrowings
(1) Classification of long-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Credit borrowings | 3,368,772,302.71 | 2,047,087,456.97 |
| Guaranteed borrowings (Note 1) | 2,857,916,427.61 | 3,676,678,040.09 |
| Mortgage borrowings (Note 2) | 3,041,748,008.91 | 3,222,002,355.34 |
| Total | 9,268,436,739.23 | 8,945,767,852.40 |
| Less: Long-term borrowings due within one year | 2,954,701,198.90 | 1,974,288,010.22 |
| Including: Credit borrowings | 1,294,054,756.85 | 389,974,981.60 |
| Guaranteed borrowings | 1,119,153,332.94 | 1,109,331,175.51 |
| Mortgage borrowings | 541,493,109.11 | 474,981,853.11 |
| Long-term borrowings due after one year | 6,313,735,540.33 | 6,971,479,842.18 |
During the year, the annual interest rate of the borrowing ranges from 1.20% to 5.89%.
Note1: The loan was guaranteed by China Merchants International (China) Investment Co., Ltd.,
JYRT and China Merchants Port Development (Shenzhen) Co., Ltd. ("CMPD").
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Long-term borrowings - continued
(1) Classification of long-term borrowings - continued
Note 2: As at 31 December 2019, the Group obtained the long-term loan of RMB
3,028,877,614.16 (31 December 2018: RMB 3,194,255,164.03) with its entire equity inColombo International Container Terminals Limited and the entire equity in ThesarMaritime Limited, and the land with ownership, fixed assets and construction in progressheld by Guangdong Yide Port Co., Ltd. (hereinafter referred to as "Yide Port"), the landuse rights of Shenzhen Haixing Harbor Development Co., Ltd. as well as the sea area userights of Dongguan Chiwan Port Service Co., Ltd. mortgaged as collaterals.
Details of mortgage borrowings are as follows:
Unit: RMB
| Company name | Closing balance | Opening balance (restated) | Collateral |
| China Development Bank Corporation | 1,358,129,654.07 | 1,568,189,186.18 | The Group's entire equity in Colombo International Container Terminals Limited |
| International Finance Corporation | 449,103,214.20 | 530,954,660.44 | The Group's entire equity in Thesar Maritime Limited |
| African Development Bank | 206,294,203.06 | 243,879,424.87 | |
| Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. | 169,887,745.22 | 200,892,936.34 | |
| The Opec Fund For International Development | 145,656,886.91 | 172,142,912.47 | |
| Societe de Promotion et de Participation pour la Cooperation Economique S.A. | 145,613,216.49 | 172,210,289.61 | |
| Deutsche Investitions-und Entwicklungsgesellschaft MBH | 121,392,394.29 | 143,457,150.91 | |
| China Construction Bank Shunde Branch | 184,264,872.07 | 190,275,794.52 | Land use rights, fixed assets and construction in progress of Yide Port (see note (V) 62) |
| Bank of China Qianhai Shekou Branch | 241,388,867.03 | - | Land use rights of Shenzhen Haixing Harbor Development Co., Ltd (see note (V) 62) |
| China Merchants Bank Dongguan Branch | 20,016,955.57 | - | Sea area use rights of Dongguan Chiwan Warf Co., Ltd. (see note (V) 62) |
| Total | 3,041,748,008.91 | 3,222,002,355.34 |
36. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| 4.375%, USD 900 million corporate bond | 6,349,018,876.27 | 6,235,321,752.65 |
| 5.000%, USD 600 million corporate bond | 4,218,874,981.43 | 4,145,346,424.65 |
| 4.750%, USD 500 million corporate bond | 3,541,255,065.51 | 3,481,200,658.82 |
| 5.000%, USD 500 million corporate bond | 3,500,281,169.59 | 3,437,038,919.01 |
| 4.890%, USD 2,500 million corporate bond | 2,585,072,602.74 | 2,585,072,602.74 |
| 3.500%, USD 200 million corporate bond | 1,414,333,247.34 | 1,389,033,618.74 |
| IPCA + 7.8164%, BRL 428 million corporate bond | 810,150,534.24 | 783,774,548.64 |
| 4.980%, RMB 400 million corporate bond | 401,200,657.53 | - |
| 5.150%, RMB 500 million corporate bond | - | 524,651,558.48 |
| 2.970%, RMB 300 million corporate bond | - | 301,508,794.53 |
| Total | 22,820,187,134.65 | 22,882,948,878.26 |
| Less: Bonds payable due within one year | 1,889,505,167.46 | 785,481,781.86 |
| Bonds payable due after one year | 20,930,681,967.19 | 22,097,467,096.40 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Bonds payable - continued
(2) Changes of bonds payable
Unit: RMB
| Name of bonds | Face value | Date of issue | Term of the bond | Amount of issue | 1/1/2019 | Effect of changes in scope of consolidation | Amount issued in the current year | Interest accrued based on par value | Discount or premium amortization | Repayment in the current year | Effect of changes in foreign exchange | 31/12/2019 |
| 4.375%, USD 900 million corporate bond | USD 900,000,000.00 | 06/08/2018 | 5 years | USD 900,000,000.00 | 6,235,321,752.65 | - | - | 272,014,148.70 | 9,090,007.51 | 272,014,148.70 | 104,607,116.11 | 6,349,018,876.27 |
| 5.000%, USD 600 million corporate bond | USD 600,000,000.00 | 06/08/2018 | 10 years | USD 600,000,000.00 | 4,145,346,424.65 | - | - | 207,248,875.20 | 4,177,721.93 | 207,248,875.20 | 69,350,834.85 | 4,218,874,981.43 |
| 4.750%, USD 500 million corporate bond | USD 500,000,000.00 | 03/08/2015 | 10 years | USD 500,000,000.00 | 3,481,200,658.82 | - | - | 164,072,026.13 | 2,156,660.73 | 164,072,026.20 | 57,897,746.03 | 3,541,255,065.51 |
| 5.000%, USD 500 million corporate bond | USD 500,000,000.00 | 04/05/2012 | 10 years | USD 500,000,000.00 | 3,437,038,919.01 | - | - | 172,707,396.00 | 6,040,527.71 | 172,707,396.00 | 57,201,722.87 | 3,500,281,169.59 |
| 4.890%, RMB 2,500 million corporate bond | RMB 2,500,000,000.00 | 21/04/2017 | 5 years | RMB 2,500,000,000.00 | 2,585,072,602.74 | - | - | 122,250,000.00 | - | 122,250,000.00 | - | 2,585,072,602.74 |
| 3.500%, USD 200 million corporate bond | USD 200,000,000.00 | 03/08/2015 | 5 years | USD 200,000,000.00 | 1,389,033,618.74 | - | - | 48,358,070.88 | 2,184,832.77 | 48,358,070.88 | 23,114,795.83 | 1,414,333,247.34 |
| IPCA+7.8164%, BRL 428 million corporate bond | BRL 428,047,000.00 | 07/11/2016 | 6 years | BRL 428,047,000.00 | 783,774,548.64 | - | - | 95,782,430.65 | 11,483,036.38 | 64,633,265.91 | (16,256,215.52) | 810,150,534.24 |
| 4.980%, RMB 400 million corporate bond | RMB 400,000,000.00 | 10/12/2018 | 3 years | RMB 400,000,000.00 | - | 402,892,493.15 | - | 18,228,164.38 | - | 19,920,000.00 | - | 401,200,657.53 |
| 5.150%, RMB 500 million corporate bond | RMB 500,000,000.00 | 06/02/2018 | 3 years | RMB 500,000,000.00 | 524,651,558.48 | - | - | 1,070,098.17 | - | 525,721,656.65 | - | - |
| 2.970%, RMB 300 million corporate bond | RMB 300,000,000.00 | 11/10/2016 | 3 years | RMB 300,000,000.00 | 301,508,794.53 | - | - | 6,932,712.28 | 468,493.19 | 308,910,000.00 | - | - |
| Total | 22,882,948,878.26 | 402,892,493.15 | - | 1,108,663,922.39 | 35,601,280.22 | 1,905,835,439.54 | 295,916,000.17 | 22,820,187,134.65 | ||||
| Less: Bonds payable due within one year | 785,481,781.86 | 1,889,505,167.46 | ||||||||||
| Bonds payable due after one year | 22,097,467,096.40 | 20,930,681,967.19 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Lease liabilities
Unit: RMB
| Category | Closing balance | Opening balance |
| Lease payment | 2,934,104,267.67 | |
| Unrecognized financing cost | (945,733,971.11) | |
| Total | 1,988,370,296.56 | |
| Less: Lease liabilities due within one year | 341,240,327.95 | |
| Lease liabilities due after one year | 1,647,129,968.61 |
38. Long-term payables
(1) Summary of long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term payables | 1,447,802,228.74 | 1,285,984,226.34 |
| Special payables | 548,550,497.29 | 38,841,499.68 |
| Total | 1,996,352,726.03 | 1,324,825,726.02 |
| Less: Long-term payables due within one year | 61,107,722.82 | 30,635,607.84 |
| Long-term payables due after one year | 1,935,245,003.21 | 1,294,190,118.18 |
(2) Long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Terminal management rights (Note 1) | 881,239,309.85 | 823,360,554.03 |
| Payable to minority shareholders of subsidiaries (Note 2) | 407,092,971.69 | 390,658,146.52 |
| Borrowings from related parties (Note 3) | 150,000,000.00 | - |
| Financing lease payments | - | 71,965,525.79 |
| Others | 9,469,947.20 | - |
| Total | 1,447,802,228.74 | 1,285,984,226.34 |
| Less: Long-term payables due within one year | 61,107,722.82 | 30,635,607.84 |
| Long-term payables due after one year | 1,386,694,505.92 | 1,255,348,618.50 |
Note 1: As at 12 August 2011, the Group reached a 35-year building, operation and transfer agreement
through the subsidiary Colombo International Container Terminals Limited and the Sri LankaPort Authority on the building, operation, management and development of the Colombo PortSouth Container Terminal (hereinafter referred to as for "BOT"). The above-mentionedterminal operating rights purchase amount is determined by discounting the amount to be paidin the future using the prevailing market interest rate according to the BOT agreement. As at31 December 2019, the amount is RMB 881,239,309.85.
Note 2: It is an unsecured loan from minority shareholder of Thesar Maritime Limited, a
subsidiary of the Company, with an annual interest rate of 4.65%.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Long-term payables - continued
(2) Long-term payables - continued
Note 3: At 9 December 2019, ZCMG, a subsidiary of the Company, and China Merchants
Finance Lease (Tianjin) Co., Ltd. entered into a 72-month sale-and-leaseback agreementin respect of the sale-and-leaseback assets, with a consideration of RMB 150,000,000.00.The leased assets represent the front 80 meters hydraulic project main body assets ofsection A and section B under the Xiamen Port Houshi port area No. 3 general berthproject. According to the agreement, after the lessee has settled all the liabilities under thecontract, it is entitled to purchase the leased assets at the nominal price of RMB 100(inclusive of VAT). ZCMG is the saler and lessee of the leased assets. As ChinaMerchants Finance Lease (Tianjin) Co., Ltd. has no control over the leased assets, thetransfer of assets in the sale-and-leaseback transaction is not a sale and the cash receiptsare accounted for as financial liabilities, i.e. borrowings from related parties. Accordingto the agreement, the interest rate for the borrowings is 4.75% and the borrowing periodis 72 months.
At 9 December 2019, ZCMG and China Merchants Finance Lease (Tianjin) Co., Ltd. asthe beneficiary entered into a mortgage agreement with the land use rights of two plots ofland for harbor and wharf with areas of 126,400 square meters and 172,700 square metersrespectively as the collaterals. As of 31 December 2019, the carrying amount of themortgaged land use rights is RMB 121,585,300.20.
(3) Special payables
Unit: RMB
| Item | 1/1/2019 | Increase in the current year | Effect of changes in the scope of consolidation | Decrease in the current year | 31/12/2019 | Reason |
| Refunds of Harbor Construction Fee | 36,061,435.67 | 78,708.90 | 510,107,118.35 | 900,794.60 | 545,346,468.32 | Note 1 |
| Employee housing fund | 2,780,064.01 | 423,964.96 | - | - | 3,204,028.97 | Note 2 |
| Total | 38,841,499.68 | 502,673.86 | 510,107,118.35 | 900,794.60 | 548,550,497.29 |
Note 1: This represents the refund of the construction fee received by the Group from the
Ministry of Transport, Shenzhen Municipal Transportation Bureau. According to the"Port Construction Fee Management Measures" promulgated by the Ministry of Finance,this payment is dedicated to the construction of water transport infrastructure.
Note 2: This represent the repairing fund for public areas and public facilities and equipment
established after the Group's selling the public-owned house on the collectively allocatedland to employees. The fund is contributed by all the employees having ownership of thehouse according to the rules, and is specially managed and used for specific purpose.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
39. Long-term employee benefits payable
(1) Long-term employee benefits payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Post-employment benefits - net liabilities of defined benefits plan (note) | 454,383,940.25 | 385,323,310.21 |
| Termination benefits | 49,048,198.38 | 9,101,817.44 |
| Total | 503,432,138.63 | 394,425,127.65 |
| Less: Long-term employee benefits payable due within one year | 31,950,000.00 | 19,100,000.00 |
| Long-term employee benefits payable due after one year | 471,482,138.63 | 375,325,127.65 |
(2) Changes of defined benefits plan
Present value of defined benefits plan obligation:
Unit: RMB
| Item | 2019 | 2018 |
| I. Opening balance | 385,323,310.21 | 358,010,123.90 |
| II. Defined benefits cost included in profit or loss for the period | 25,714,051.83 | 10,313,678.43 |
| 1. Current service cost | 10,244,780.50 | 2,163,678.43 |
| 2. Past service cost | (180,000.00) | (7,460,000.00) |
| 3. Interest adjustment | 15,649,271.33 | 15,610,000.00 |
| III. Defined benefits cost included in other comprehensive income | (1,513,131.31) | 34,693,502.67 |
| 1. Actuarial gains (losses) | (1,552,580.61) | 34,562,392.88 |
| 2. Effect of exchange rate changes | 39,449.30 | 131,109.79 |
| IV. Other changes | 44,859,709.52 | (17,693,994.79) |
| 1. Benefits paid | (31,910,290.48) | (17,693,994.79) |
| 2. Changes in the scope of consolidation | 76,770,000.00 | - |
| V. Closing balance | 454,383,940.25 | 385,323,310.21 |
The Company's subsidiaries provide the registered retirees and in-service staff withsupplementary post-employment benefit plans.
The Group hired a third-party actuary to estimate the present value of its above-mentionedretirement benefit plan obligations in an actuarial manner based on the expected cumulativewelfare unit method. The Group recognizes the Group's liabilities based on the actuarial results.The relevant actuarial gains or losses are included in other comprehensive income and cannot bereclassified into profit or loss in the future. Past service costs are recognized in profit or loss forthe period in which the plan is revised. The net interest is determined by multiplying the definedbenefit plan net debt or net assets by the appropriate discount rate.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Provisions
Unit: RMB
| Item | Closing balance | Opening balance | Reason |
| Estimated expenses on Shangtou Port land acquisition and reservation | 45,897,100.00 | - | |
| Sales discount | 15,265,697.07 | 15,480,571.55 | |
| Pending litigation (Note) | 15,079,762.88 | 19,470,820.72 | Note |
| Total | 76,242,559.95 | 34,951,392.27 |
Note: This represent the estimated compensation amount that the Company's subsidiary TCP
may need to pay due to the pending litigation.
41. Deferred income
Unit: RMB
| Item | 1/1/2019 | Increase in the current year | Effect of changes in the scope of consolidation | Decrease in the current year | 31/12/2019 |
| Government grants | 228,658,214.64 | 503,152,280.00 | 452,418,582.19 | 37,903,296.88 | 1,146,325,779.95 |
| Unrealized sale-and-leaseback income | - | - | 1,902,769.80 | 475,692.58 | 1,427,077.22 |
| Total | 228,658,214.64 | 503,152,280.00 | 454,321,351.99 | 38,378,989.46 | 1,147,752,857.17 |
Items involving government grants are as follows:
Unit: RMB
| Liabilities | 1/1/2019 | Increase | Effect of changes in the scope of consolidation | Recognized in Other comprehensive income | 31/12/2019 | Related to assets /related to income |
| Refund from marine reclamation land | - | - | 392,906,557.65 | 17,736,737.26 | 375,169,820.39 | Related to assets |
| Tonggu channel widening project (Note) | - | 282,311,343.28 | - | 5,881,486.48 | 276,429,856.80 | Related to assets |
| West port area public channel widening project (Note) | - | 217,588,656.72 | - | 967,832.04 | 216,620,824.68 | Related to assets |
| Modern logistics special funds | 115,360,000.04 | - | - | 639,999.96 | 114,720,000.08 | Related to assets |
| Terminal subsidy | 47,775,000.00 | - | - | 1,224,999.96 | 46,550,000.04 | Related to assets |
| Appropriation for harbor dues on cargo | - | - | 22,819,438.96 | 504,043.87 | 22,315,395.09 | Related to assets |
| Port construction subsidy | - | 1,000,000.00 | 20,946,639.06 | 847,305.47 | 21,099,333.59 | Related to assets |
| Qianwan Bonded Logistics Park Project | 15,304,301.08 | 200,000.00 | - | 1,077,251.84 | 14,427,049.24 | Related to assets |
| Subsidized grain transfer project subsidy | 8,142,857.12 | - | - | 285,714.29 | 7,857,142.83 | Related to assets |
| Central budgetary support for bulk grain transfer terminal projects | 7,472,916.67 | - | - | 212,500.00 | 7,260,416.67 | Related to assets |
| Refund of land transfer charges | - | - | 6,680,000.00 | - | 6,680,000.00 | Related to assets |
| AMP project | 6,748,036.42 | - | - | 961,620.72 | 5,786,415.70 | Related to assets |
| Oil to electricity project | 6,017,089.67 | - | - | 784,837.92 | 5,232,251.75 | Related to assets |
| War readiness tug special fund | - | - | 4,425,000.00 | 206,250.00 | 4,218,750.00 | Related to assets |
| Bonded logistics center industry informatization development special fund | - | - | 2,690,000.00 | 110,000.00 | 2,580,000.00 | Related to assets |
| Automated terminal operation and dispatching system special support project | 5,162,470.31 | - | - | 2,915,508.74 | 2,246,961.57 | Related to assets |
| War readiness portal crane subsidy | 1,855,895.24 | - | - | 262,008.73 | 1,593,886.51 | Related to assets |
| Bulk cargo production business management system | - | 1,500,000.00 | - | - | 1,500,000.00 | Related to assets |
| Research and development of fully automated intelligent terminal information investment based on cloud platform architecture | 2,737,023.07 | - | - | 1,679,085.80 | 1,057,937.27 | Related to assets |
| Green low carbon port project | 1,403,900.02 | - | - | 421,170.00 | 982,730.02 | Related to assets |
| Others | 10,678,725.00 | 552,280.00 | 1,818,226.52 | 1,184,943.80 | 11,997,007.72 | |
| Total | 228,658,214.64 | 503,152,280.00 | 452,418,582.19 | 37,903,296.88 | 1,146,325,779.95 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Deferred income - continued
Note: According to the reply from Ministry of Transportation, Shenzhen West Port Area Tonggu
Channel 240-270 Meters Widening project, Shenzhen West Port Area West PublicChannel Section I 240-270 Meters Widening Project and Shenzhen West Port Area WestPublic Channel Section II and III 240-270 Meters Widening Project have been included inthe National "13th Five-year Plan for Water Transport". As of 31 December 2019, theMinistry of Transportation has appropriated relevant subsidies of RMB 499,900,000 to theCompany's subsidiaries.
42. Other non-current liabilities
Unit: RMB
| c | Closing balance | Opening balance |
| TCP operating rights liability (Note 1) | 3,326,952,857.86 | 3,260,547,002.45 |
| Obligation to minority shareholders due to acquisition (Note 2) | 732,733,351.01 | 579,195,304.56 |
| Berth priority call right (Note 3) | 20,664,537.64 | 25,305,830.90 |
| Total | 4,080,350,746.51 | 3,865,048,137.91 |
| Less: Other non-current liabilities due within one year | 825,835,439.66 | 87,465,615.05 |
| Including: TCP operating rights liability | 93,102,088.65 | 87,465,615.05 |
| Obligation to minority shareholders due to acquisition | 732,733,351.01 | - |
| Other non-current liabilities due after one year | 3,254,515,306.85 | 3,777,582,522.86 |
Note 1: As at 23 February 2018, CMPort, a subsidiary of the Company, acquired a 90% stake in
TCP and incorporate it into the consolidated financial statements of the Group. TCP hasoperation right the port of paranagua up to 2048. At 31 December 2019, the payment toacquire the port operation rights is calculated based on local comprehensive price index.
Note 2: In February 2018, CMPort, a subsidiary of the Company, acquired a 90% stake in TCP.
According to the agreement, minority shareholders of TCP can choose to sell their 10%stake in TCP to Kong Rise Development, a subsidiary of CMPort, at the market price orthe BRL 320 million (whichever is higher) after two years. Therefore, the Grouprecognizes the total amount of obligations related to the purchase of minority interests asliabilities.
Note 3: This represents the berth priority call right as agreed in the contract entered into with the
clients in 2003, with total amount of USD 14 million. The Group must give priority tothe berthing requirements of the contracted customers during the contract period. TheGroup amortized the berth priority right within 20 years using straight-line method. In2019, the amount included in operating income is RMB 4,641,293.26.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Share capital
Unit: RMB
| Item | Opening balance | Changes for the year | Closing balance | ||||
| New issue of share (note) | Bonus issue | Capitalization of surplus reserve | Others | Sub-total | |||
| 2019 | |||||||
| I. Restricted tradable shares | |||||||
| 1. State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | 128,952,746.00 | - | - | 128,952,746.00 | 128,952,746.00 | |
| 3. Other domestic shares (Note) | 212,156.00 | - | - | - | (42,554.00) | (42,554.00) | 169,602.00 |
| 4. Foreign shares | 1,148,648,648.00 | - | - | - | - | - | 1,148,648,648.00 |
| Total restricted tradable shares | 1,148,860,804.00 | 128,952,746.00 | - | - | (42,554.00) | 128,910,192.00 | 1,277,770,996.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,855,324.00 | - | - | - | 3,000.00 | 3,000.00 | 464,858,324.00 |
| 2. Foreign capital shares listed domestically | 179,696,250.00 | - | - | - | 39,554.00 | 39,554.00 | 179,735,804.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,551,574.00 | - | - | - | 42,554.00 | 42,554.00 | 644,594,128.00 |
| III. Total shares | 1,793,412,378.00 | 128,952,746.00 | - | - | - | 128,952,746.00 | 1,922,365,124.00 |
| 2018 | |||||||
| I. Restricted tradable shares | |||||||
| 1. State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | - | - | - | - | - | - |
| 3. Other domestic shares | 160,106.00 | - | - | - | 52,050.00 | 52,050.00 | 212,156.00 |
| 4. Foreign shares | - | 1,148,648,648.00 | - | - | - | 1,148,648,648.00 | 1,148,648,648.00 |
| Total restricted tradable shares | 160,106.00 | 1,148,648,648.00 | - | - | 52,050.00 | 1,148,700,698.00 | 1,148,860,804.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,859,300.00 | - | - | - | (3,976.00) | (3,976.00) | 464,855,324.00 |
| 2. Foreign capital shares listed domestically | 179,744,324.00 | - | - | - | (48,074.00) | (48,074.00) | 179,696,250.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,603,624.00 | - | - | - | (52,050.00) | (52,050.00) | 644,551,574.00 |
| III. Total shares | 644,763,730.00 | 1,148,648,648.00 | - | - | - | 1,148,648,648.00 | 1,793,412,378.00 |
Note: In October 2019, the Company issued 128,952,746 shares of ordinary shares tailed for
Shenzhen Infrastructure Investment Fund Partnership (LLP) and Sino-Africa DevelopmentFund Co., Ltd. at the price of RMB17.16 per share.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Capital Reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 2019 | ||||
| Capital premium | 19,429,694,090.05 | 2,770,861,727.22 | 16,957,921.94 | 22,183,597,895.33 |
| Including: Capital contributed by investors (note 1) | 4,954,397,136.25 | 2,058,595,347.69 | - | 7,012,992,483.94 |
| Differences arising from business combination involving enterprises under common control | 13,311,099,845.41 | - | - | 13,311,099,845.41 |
| Differences arising from acquisition of minority interests (Note 2) | - | 419,130,116.03 | - | 419,130,116.03 |
| Others (Note 3) | 1,164,197,108.39 | 293,136,263.50 | 16,957,921.94 | 1,440,375,449.95 |
| Other capital Reserve | (2,781,133.00) | 129,059,971.90 | 13,391,266.88 | 112,887,572.02 |
| Including: Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Other changes of owners' equity of the investee under equity method other than changes in net profit or loss, profit distribution and other comprehensive income | - | 129,059,971.90 | 13,391,266.88 | 115,668,705.02 |
| Others (Note 3) | - | - | - | - |
| Total | 19,426,912,957.05 | 2,899,921,699.12 | 30,349,188.82 | 22,296,485,467.35 |
| 2018 | ||||
| Capital premium | 18,848,680,489.20 | 1,164,197,108.39 | 583,183,507.54 | 19,429,694,090.05 |
| Including: Capital contributed by investors | 4,954,397,136.25 | - | - | 4,954,397,136.25 |
| Differences arising from business combination involving enterprises under common control | 13,894,283,352.95 | - | 583,183,507.54 | 13,311,099,845.41 |
| Others | - | 1,164,197,108.39 | - | 1,164,197,108.39 |
| Other capital Reserve | (2,781,133.00) | - | - | (2,781,133.00) |
| Including: Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Total | 18,845,899,356.20 | 1,164,197,108.39 | 583,183,507.54 | 19,426,912,957.05 |
Note 1: The increase in the year mainly represents the premium of the shares issued by the
Company.
Note 2: The increase in the year mainly represents the dividends from the Company's share in
CMPort which is obtained in the form of scrip dividends, i.e. the portion of change inminority interests. Details are set out in Note (VII)1(2).
Note 3: The increase in the year primarily represents the difference between the disposal price of
equity of Xinda Resources Limited held by the Company's subsidiary CMPort and theshare of net assets of the subsidiary corresponding to the disposal of the long-term equityinvestments continuously calculated since the date of acquisition, which is CNY221,549,814.91. The company Details are set out in Note (VII)2(1).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Other comprehensive income
Unit: RMB
| Item | Opening balance | 2019 | Less: Other comprehensive income carried forward to retained earnings | Closing balance | |||||
| Pre-tax amount for the year | Less: Amount included in other comprehensive income in the prior periods transferred to profit or loss this year | Less: Income tax expense | Post-tax income attributable to the parent company owner | Post-tax income attributable to minority shareholders | Impact of business combination involving enterprises under common control | ||||
| 2019: | |||||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | 75,673,134.08 | 19,605,662.56 | - | 985,483.75 | 9,090,184.52 | 9,529,994.29 | - | 1,793,560.33 | 82,969,758.27 |
| Including: Changes arising from remeasurement of defined benefits plan | - | 1,552,580.61 | - | - | 1,069,722.83 | 482,857.78 | - | - | 1,069,722.83 |
| Other comprehensive income that can't be transferred to profit or loss under equity method | - | 13,161,546.95 | - | - | 4,830,921.62 | 8,330,625.33 | - | - | 4,830,921.62 |
| Changes in fair value of other equity instruments | 75,673,134.08 | 4,891,535.00 | - | 985,483.75 | 3,189,540.07 | 716,511.18 | - | 1,793,560.33 | 77,069,113.82 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 13,252,844.49 | (1,114,906,073.32) | - | - | (452,167,168.67) | (662,738,904.65) | - | - | (438,914,324.18) |
| Including: Other comprehensive income that may be transferred to profit or loss under equity method | 100,000.00 | (146,982,017.86) | - | - | (59,050,164.54) | (87,931,853.32) | - | - | (58,950,164.54) |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | (967,924,055.46) | - | - | (393,117,004.13) | (574,807,051.33) | - | - | (379,964,159.64) |
| Total other comprehensive income | 88,925,978.57 | (1,095,300,410.76) | - | 985,483.75 | (443,076,984.15) | (653,208,910.36) | - | 1,793,560.33 | (355,944,565.91) |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Other comprehensive income - continued
Unit: RMB
| Item | Opening balance | 2019 | Less: Other comprehensive income carried forward to retained earnings | Closing balance | |||||
| Pre-tax amount for the year | Less: Amount included in other comprehensive income in the prior periods transferred to profit or loss this year | Less: Income tax expense | Post-tax income attributable to the parent company owner | Post-tax income attributable to minority shareholders | Impact of business combination involving enterprises under common control | ||||
| 2018: | |||||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | (742,874,052.89) | (127,586,823.04) | - | 1,125,715.00 | (48,671,312.79) | (80,041,225.25) | 867,218,499.76 | - | 75,673,134.08 |
| Including: Changes arising from remeasurement of defined benefits plan | - | (20,136,880.35) | - | - | (7,943,999.30) | (12,192,881.05) | 7,943,999.30 | - | - |
| Other comprehensive income that can't be transferred to profit or loss under equity method | - | (116,954,783.85) | - | - | (46,138,662.23) | (70,816,121.62) | 46,138,662.23 | - | - |
| Changes in fair value of other equity instruments | (742,874,052.89) | 9,504,841.16 | - | 1,125,715.00 | 5,411,348.74 | 2,967,777.42 | 813,135,838.23 | - | 75,673,134.08 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 13,252,844.49 | 333,315,323.72 | - | - | 90,449,399.81 | 242,865,923.91 | (90,449,399.81) | - | 13,252,844.49 |
| Including: Other comprehensive income that may be transferred to profit or loss under equity method | 100,000.00 | (20,157,413.77) | - | - | (7,952,099.73) | (12,205,314.04) | 7,952,099.73 | - | 100,000.00 |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | 353,472,737.49 | - | - | 98,401,499.54 | 255,071,237.95 | (98,401,499.54) | - | 13,152,844.49 |
| Total other comprehensive income | (729,621,208.40) | 205,728,500.68 | - | 1,125,715.00 | 41,778,087.02 | 162,824,698.66 | 776,769,099.95 | - | 88,925,978.57 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Special reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 2019: | ||||
| Production safety reserve | 8,231,080.43 | 108,062,435.41 | 103,906,781.14 | 12,386,734.70 |
| 2018: | ||||
| Production safety reserve | 4,767,373.45 | 24,165,961.75 | 20,702,254.77 | 8,231,080.43 |
47. Surplus reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 2019: | ||||
| Statutory surplus reserve | 527,175,908.67 | 103,169,398.76 | - | 630,345,307.43 |
| 2018: | ||||
| Statutory surplus reserve | 520,074,434.56 | 7,101,474.11 | - | 527,175,908.67 |
In accordance with the Company Law of the PRC and the Company's Articles of Association, theCompany should appropriate 10% of net profit for the year to the statutory surplus reserve, andmay cease appropriation when the statutory surplus reserve accumulates to more than 50% of theregistered capital. The statutory surplus reserve can be used to make up for the loss or increase theshare capital after approval.
The appropriation of discretionary surplus reserve is proposed by the board of directors andapproved at the shareholders meeting. The discretionary surplus reserve can be used to make upfor the loss or increase the share capital after approval.
48. Unappropriated profit
Unit: RMB
| Item | Amount | Proportion of appropriation or allocation |
| 2019: | ||
| Unappropriated profit at the end of prior year before adjustment | 8,915,817,110.21 | |
| Adjustment of total unappropriated profit at the beginning of year | (41,018,077.68) | Note 1 |
| Unappropriated profit at the beginning of year after adjustment | 8,874,799,032.53 | |
| Add: Net profit attributable to shareholders of the Company for the year | 2,898,192,168.84 | |
| Less: Appropriation to statutory surplus reserve | 1,793,560.33 | |
| Appropriation to discretionary surplus reserve | 103,169,398.76 | |
| Appropriation to general risk reserve | - | |
| Ordinary shares' dividends payable | 204,449,011.09 | Note 2 |
| Ordinary shares' dividends converted into share capital | - | |
| Unappropriated profit at the end of the year | 11,467,166,351.85 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Unappropriated profit - continued
Unit: RMB
| Item | Amount | Proportion of appropriation or allocation |
| 2018: | ||
| Unappropriated profit at the end of prior year before adjustment | 3,566,083,142.17 | |
| Adjustment of total unappropriated profit at the beginning of year | 5,716,548,113.47 | |
| Unappropriated profit at the beginning of year after adjustment | 9,282,631,255.64 | |
| Add: Net profit attributable to shareholders of the Company for the year | 1,090,418,910.77 | |
| Less: Appropriation to statutory surplus reserve | 7,101,474.11 | |
| Appropriation to discretionary surplus reserve | - | |
| Appropriation to general risk reserve | - | |
| Ordinary shares' dividends payable | 850,443,359.86 | |
| Ordinary shares' dividends converted into share capital | - | |
| Others | 599,688,222.23 | |
| Unappropriated profit at the end of the year | 8,915,817,110.21 | |
Note 1: As set out in Note (III)34, the Group reduced the unappropriated profit at the beginning of
the year by RMB41,018,077.68 due to the impact of changes of accounting policies.
Note 2: According to the resolution of shareholders meeting on 20 May 2019, the Company
distributes cash dividends of RMB 1.14 (inclusive of tax) for every 10 shares, totaling toRMB204,449,011.09 on the basis of the total shares of 1,793,412,378 shares at the end of2018.
Note 3: Profit distribution after the balance sheet date
According to the profit distribution plan for 2019, approved by the 9th board of directorsat the 7th meeting on 14 April 2020, the Company, based on the total shares of1,922,365,124 on the 31 December 2019, would distribute cash dividends at a amount ofRMB884,287,957.04. The above profit distribution plan has yet been approved byshareholders meeting.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
49. Operating income and operating costs
(1) Operating income and operating costs
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | ||
| Income | Cost | Income | Cost | |
| Principal operating | 11,958,482,255.05 | 7,425,898,430.33 | 9,570,796,336.11 | 5,517,782,669.86 |
| Other operating | 165,347,168.69 | 223,022,489.38 | 132,598,286.47 | 221,458,726.01 |
| Total | 12,123,829,423.74 | 7,648,920,919.71 | 9,703,394,622.58 | 5,739,241,395.87 |
(2) Revenue from contracts
Unit: RMB
| Categories of contracts | Ports operation | Bonded logistics operation | Other operation | Total |
| Mainland China, Hong Kong and Taiwan area | 8,310,009,620.17 | 396,670,343.38 | 165,347,168.69 | 8,872,027,132.24 |
| - Pearl River Delta | 5,196,613,368.06 | 267,511,586.97 | 165,347,168.69 | 5,629,472,123.72 |
| - Yangtze River Delta | - | - | - | - |
| - Bohai Rim | 65,287,182.79 | 129,158,756.41 | - | 194,445,939.20 |
| - Other areas | 3,048,109,069.32 | - | - | 3,048,109,069.32 |
| Other countries | 3,237,062,565.69 | 14,739,725.81 | - | 3,251,802,291.50 |
| Total | 11,547,072,185.86 | 411,410,069.19 | 165,347,168.69 | 12,123,829,423.74 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 118 -
(3) Description of performance obligations
The Group provides wharf service, bonded logistics service and other services. These services areobligations performed over a period of time. For wharf services, as the handling time forcontainers and bulk cargos is short, the management believes that it is not necessary to recognizerevenue according to the progress towards the completion of contract and it is an appropriatemethod to recognize the fulfillment of performance obligation and revenue upon the completionof the service. For bonded logistics service and other services, the customers evenly obtains andconsumes the economic benefits from the Group's performance of contract, meanwhile thecharging rules as agreed in the contract terms usually adopt daily/month/yearly basis. During theprocess of rendering services, the Group recognizes revenue using straight-line method. Part ofthe Group's handling contracts are established with discount terms, i.e. the customers whosebusiness volume reaches agreed level, are granted with preferential charge rate or discount. At theend of the year, as the business quantity finally realized within the contract period is uncertain, thecontract consideration is subject to variable factors. The management included this part ofdiscount in provisions. Details are set out in Note (V) 40. The Group's revenue contract does nothave significant financing components.
(4) At the end of the year, the variable consideration of RMB15,265,697.07 (31 December 2018:
RMB15,480,571.55) arising from sales discount is not included in the transaction price due to therestriction requirements relating to variable considerations.
50. Taxes and levies
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Property tax | 45,998,786.01 | 50,993,199.89 |
| Land use tax | 32,116,936.18 | 15,095,001.85 |
| City construction and maintenance tax | 6,188,074.98 | 5,258,434.33 |
| Stamp duty | 4,948,743.36 | 45,775,414.65 |
| Education surcharges and local education surcharges | 4,866,915.60 | 4,059,161.54 |
| Others (Note) | 78,437,123.79 | 114,772,591.25 |
| Total | 172,556,579.92 | 235,953,803.51 |
Note: Others mainly represent (1) the tax levied by Program of Social Integration and
Contribution for the Financing of Social Security against enterprises, amounting toBRL14,988,643.16 (equivalent to RMB 26,302,820.45); (2) Tax for services calculatedbased on the services rendered, amounting to BRL24,028,392.69 (equivalent toRMB42,166,224.91).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
51. Administrative expense
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Employee's salary | 980,074,507.53 | 702,986,443.49 |
| Depreciation expenses | 74,954,306.82 | 42,634,581.68 |
| Amortization of intangible assets | 58,414,351.33 | 14,013,965.69 |
| Fees paid to agencies | 55,258,915.07 | 233,972,825.17 |
| Others | 340,818,500.91 | 258,257,859.42 |
| Total | 1,509,520,581.66 | 1,251,865,675.45 |
52. Financial expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Interest expense | 2,018,175,947.65 | 1,672,764,416.74 |
| Less: Capitalized interest expenses | 35,175,196.89 | 38,663,084.94 |
| Less: Interest income | 252,060,018.58 | 272,453,293.86 |
| Exchange differences | 37,236,030.34 | 235,825,068.78 |
| Handling fee | 56,876,221.78 | 37,531,206.16 |
| Others | 4,379,909.45 | 8,413,790.07 |
| Interest expenses of lease liabilities | 106,836,843.78 | |
| Total | 1,936,269,737.53 | 1,643,418,102.95 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
53. Other income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Allocation of deferred income | 37,903,296.88 | 9,551,510.74 |
| Department of Commerce of Guangdong Province - Special funds for promoting economic development of Guangdong | 20,970,000.00 | - |
| Shenzhen Municipal Finance Committee – Foreign trade growth incentive fund | 13,850,262.00 | - |
| Additional deduction of VAT | 13,268,318.27 | - |
| Sri Lanka Hambantota Port project subsidies | 10,278,619.72 | - |
| Nanshan district modern logistics project support fund | 8,094,400.00 | 3,000,000.00 |
| Transport Bureau of Zhangzhou Development Zone port operation support subsidy | 7,415,800.50 | 5,602,326.79 |
| Refund of withholding taxes | 6,903,526.71 | 2,334,770.36 |
| Shenzhen Transportation Committee – key logistics enterprises finance subsidiary | 6,019,100.00 | - |
| Nanshan district independent innovation enterprise development special fund | 5,561,600.00 | - |
| Shenzhen Municipal Finance Committee 2019 equipment construction fee | 5,448,613.20 | - |
| Shenzhen Science and Technology Innovation Committee – R&D subsidy | 4,241,000.00 | 5,411,000.00 |
| Electricity subsidy | 3,307,715.28 | 4,040,714.30 |
| Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – the first batch of headquarter enterprise contribution support fund for 2019 | 2,375,100.00 | - |
| Xiamen Port Holding Group Co., Ltd. – 2018 incentive support fund | 2,000,000.00 | - |
| Steady post subsidies | 1,985,363.23 | 476,958.57 |
| Fujian Provincial Port and Shipping Development Special Fund | 1,864,088.00 | 1,029,000.00 |
| Special fund for foreign trade and economic development from central government (cross-border business management system based on big data service) | 1,720,000.00 | - |
| Fujian Development and Reform Commission – 3rd batch provincial demonstration logistics park subsidy | 1,000,000.00 | - |
| Special fund for promoting high-quality development of economy | 1,000,000.00 | - |
| Market Supervision Bureau Of Shenzhen – China quality awards nomination prize | 1,000,000.00 | - |
| Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – Qianhai cooperation zone new trade development special fund | 1,000,000.00 | - |
| Shenzhen Municipal Finance Committee policy subsidy | - | 5,767,400.00 |
| Infrastructure construction investment of Central government – TCP port project (early stage work) subsidy | - | 5,161,467.89 |
| Subsidy for increasing the port's capacity of handling containers for 2017 | - | 3,500,000.00 |
| Domestic trade containers handling capacity finance subsidy from Transportation Committee | - | 1,999,631.00 |
| Economy, Trade and Information Commission of Shenzhen Municipality – Subsidy of central government for 2017 foreign economic and trade development special fund (cross-border e-commerce type) (Trade clearance facilitation platform) | - | 1,904,900.00 |
| Others | 4,894,309.31 | 6,400,447.99 |
| Total | 162,101,113.10 | 56,180,127.64 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
54. Investment income
(1) Details of investment income:
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Long-term equity investments income under equity method | 3,727,850,763.22 | 3,913,864,538.60 |
| Gains from remeasurement of previously held equity at fair value upon obtaining the control (Note) | 845,432,476.22 | - |
| Investment income on other non-current financial assets | 127,790,790.54 | 45,661,915.63 |
| Investment income on disposal of other non-current financial assets | (407,903.18) | |
| Dividend income on other equity instruments | 10,942,760.11 | 8,228,975.00 |
| Interest income on debt investments | 20,352,987.67 | - |
| Others | (112,788,119.16) | 72,720.25 |
| Total | 4,619,173,755.42 | 3,967,828,149.48 |
There is no significant restriction on the remittance of the Group's investment income.
Note: The income is mainly generated by the acquisition of Zhanjiang Port whose original equity
was remeasured at fair value.
(2) Details of long-term equity investments income under equity method
Unit: RMB
| Investee | Amount incurred in the current period | Amount incurred in the prior period | Reason for changes |
| Shanghai International Port (Group) Co., Ltd. | 2,425,921,985.71 | 2,571,370,986.64 | Changes in net profit of investee |
| Terminal Link SAS | 280,560,341.83 | 357,885,181.99 | Changes in net profit of investee |
| Nanshan Group | 242,285,185.34 | 220,478,175.60 | Changes in net profit of investee |
| Dalian Port Co., Ltd. | 148,347,321.32 | 112,882,708.11 | Changes in net profit of investee |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 142,602,575.17 | 141,704,248.41 | Changes in net profit of investee |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | 120,498,548.83 | 102,956,377.59 | Changes in net profit of investee |
| Euro-Asia Oceangate, S.a` r.l. | 71,820,758.28 | 108,552,693.45 | Changes in net profit of investee |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | 42,110,853.02 | 48,450,765.57 | Changes in net profit of investee |
| Port of Newcastle | 31,855,255.55 | 8,870,390.98 | Changes in net profit of investee |
| Others | 221,847,938.17 | 240,713,010.26 | Changes in net profit of investee |
| Total | 3,727,850,763.22 | 3,913,864,538.60 |
55. Gains (losses) on changes in fair value
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Other non-current financial assets | 431,344,898.81 | (948,440,538.45) |
| Including: Financial assets at fair value through profit or loss | 431,344,898.81 | (948,440,538.45) |
| Other non-current liabilities | (364,861,632.33) | (125,966,299.23) |
| Including: Financial liabilities at fair value through profit or loss | (364,861,632.33) | (125,966,299.23) |
| Total | 66,483,266.48 | (1,074,406,837.68) |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
56. Gains (losses) on impairment of credit
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| I. Gains (losses) on impairment of credit of accounts receivable | (51,878,244.38) | 3,102,192.00 |
| II. Gains (losses) on impairment of credit of other receivables | 1,682,076.71 | (9,760,870.10) |
| III. Gains (losses) on impairment of credit of long-term receivables | (1,082,720.15) | (784,171.05) |
| IV. Others | 1,029,478.05 | (85,731.45) |
| Total | (50,249,409.77) | (7,528,580.60) |
57. Gains from impairment of assets
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Gains from decline in value of inventories | 25,051.16 | - |
58. Gains on disposal of assets
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current year |
| Gains on disposal of non-current assets | 4,794,562,782.79 | 19,258,495.33 | 4,794,562,782.79 |
| Including: Gains on disposal of fixed assets | 6,759,787.47 | 18,151,195.97 | 6,759,787.47 |
| Gains on disposal of intangible assets | 1,108,671,001.98 | - | 1,108,671,001.98 |
| Gains on disposal of construction in progress | 47,902,373.19 | - | 47,902,373.19 |
| Others | 3,631,229,620.15 | 1,107,299.36 | 3,631,229,620.15 |
Note: The gains on disposal of assets mainly include:
1) On 30 October 2019, the Company's subsidiary Shantou Port signed the "Transfer Letter"
with Shantou Land Reserve Center, returning the land around 133.61 mu and accompanybuildings on the east of Zhuchi deepwater port and on the south of Zhongshan East Roadof Shantou to the municipal government. According to the legal opinion, Shantou Portconfirmed the completion of transfer of the land of 133.61 mu and accompany buildings,and recognized gains on compensation of assets amounting to RMB69,324,588.03.
2) The Company's subsidiary Shantou Port obtained received a compensation of
RMB537,635,141.78 by returning its land parcels of 183.63 mu and accompany buildingsat Zhuchi deepwater port on the south of Zhongshan East Road of Shantou to government.Details are set out in Note (V)6.4(2).
3) The Company's subsidiaries Antongjie Terminal Services (Shenzhen) Co., Ltd. ("ATJ")
and Ansujie Terminal Services (Shenzhen) Co., Ltd. ("ASJ") obtained compensation ofRMB4,193,314,004.68 by returning land parcels and its accompany buildings. Details areset out in Note (X)5(6).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
59. Non-operating income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current year |
| Compensation obtained by minority shareholders (Note) | 488,492,798.26 | - | 488,492,798.26 |
| Compensation received for contracts violation | 14,444,165.81 | 945,809.03 | 14,444,165.81 |
| Exempted account currents | 2,026,044.81 | - | 2,026,044.81 |
| Insurance compensation received | - | 540,000.00 | - |
| Others | 48,140,351.53 | 65,642,880.95 | 48,140,351.53 |
| Total | 553,103,360.41 | 67,128,689.98 | 553,103,360.41 |
Note: In August 2012, the Group acquired 50% equity of LCT held by Mediterranean Shipping
Company S.A ("MSC") through its subsidiary Global Terminal Limited at the considerationof EUR150 million. According to the "Equity Acquisition Agreement", from 2014 to 2028,MSC provides LCT port with commitment of minimum quantity of containers throughGlobal Terminal Limited, of which the performance is assessed every three years, andagrees on the compensation mechanism whenever the guaranteed quantity of containers isnot satisfied. In 2019, the Group recognized compensation of RMB488,492,798.26 for theperiod from 2017 to 2019. As at 31 December 2019, the Group accumulatively recognizedcompensation of RMB866,629,494.55 of which RMB669,121,539.36 is not yet received.
60. Non-operating expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current period |
| Donations | 31,344,046.81 | 12,070,408.91 | 31,344,046.81 |
| Losses on retirement of non-current assets | 24,459,845.75 | 32,095,701.53 | 24,459,845.75 |
| Compensation, liquidated damages and penalties | 5,574,036.67 | 49,204,874.59 | 5,574,036.67 |
| Others | 9,074,083.17 | 31,660,313.54 | 9,074,083.17 |
| Total | 70,452,012.40 | 125,031,298.57 | 70,452,012.40 |
61. Income tax expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Current tax expenses | 2,308,373,316.21 | 510,367,919.37 |
| Deferred tax expenses | 332,165,578.41 | 218,072,619.23 |
| Total | 2,640,538,894.62 | 728,440,538.60 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
61. Income tax expenses - continued
Reconciliation of income tax expenses to the accounting profit is as follows:
Unit: RMB
| Item | Amount incurred in the current period |
| Accounting profit | 10,807,456,167.82 |
| Income tax expenses calculated at 25% | 2,701,864,041.96 |
| Effect of non-deductible cost, expenses and losses | 261,705,254.04 |
| Accrued income tax expenses | 973,358,960.93 |
| Effect of deductible temporary differences and deductible losses for which the deferred tax assets are not recognized in current period | 136,262,425.91 |
| Effect of tax-free income (Note) | (565,271,919.77) |
| Effect of tax incentives and changes of tax rate | (289,666,792.29) |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | (475,302,953.37) |
| Effect of utilizing deductible losses for which the deferred tax assets were not recognized in prior period | (76,090,943.14) |
| Effect of adjustments to prior-year income tax | (31,763,879.70) |
| Changes in the opening balance of deferred tax assets/ liabilities due to tax adjustments | 5,366,646.17 |
| Others | 78,053.88 |
| Income tax expenses | 2,640,538,894.62 |
Note: This mainly represents the tax effect on investment income from joint venture and
associates.
62. Assets with restricted ownership or use right
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash and bank balances (Note 1) | 15,648,978.15 | 1,697,027,200.00 |
| Equity investment in Colombo International Container Terminals Limited (Note 2) | 1,591,452,920.23 | 1,526,241,901.61 |
| Equity investment in Thesar Maritime Limited (Note 2) | 799,684,707.77 | 767,331,789.70 |
| Fixed assets (Note 3) | 349,612,960.23 | 5,825,207,339.57 |
| Intangible assets (Note 3) | 345,131,760.52 | 161,408,030.71 |
| Construction in progress (Note 3) | 23,840,920.42 | 43,352,104.93 |
| Total | 3,125,372,247.32 | 10,020,568,366.52 |
Note 1: Details of restricted cash and bank balances are set out in Note (V) 1.
Note 2: Details of mortgaged equity and interests are set out in Note (V) 35.
Note 3: Yide Port mortgaged its land with property right, fixed assets and construction in
progress to obtain bank borrowings; Shenzhen Haixing Harbor Development Co., Ltd.mortgaged its land with property right to obtain bank borrowings; Dongguan ChiwanWarf Co., Ltd. mortgaged its sea area use right with property right to obtain bankborrowings; ZCMG mortgaged its land with property right to obtain related partyborrowings. Details of mortgage borrowings are set out in Note (V) 35 and Note (V)38.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Other comprehensive income
Details are set out in Note (V) 45.
64. Items in cash flow statement
(1) Other cash receipts relating to operating activities:
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Government grants | 614,567,707.23 | 50,797,838.32 |
| Interest income | 212,679,224.25 | 214,787,250.36 |
| Guarantees and deposits | 30,791,091.36 | 27,953,110.71 |
| Rentals | 16,310,934.86 | 13,313,831.31 |
| Compensation from contracts | 13,860,280.30 | 218,843,719.69 |
| Insurance compensation | 4,565,218.67 | 16,320,537.80 |
| Harbor construction fee | 2,803,216.00 | 96,876,815.04 |
| Others | 270,133,172.51 | 325,042,168.36 |
| Total | 1,165,710,845.18 | 963,935,271.59 |
(2) Other cash payments relating to operating activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Operating expenses such as operating costs and administration expense etc. | 201,645,233.00 | 255,069,427.76 |
| Advance payment | 177,076,380.78 | 155,172,493.64 |
| Rentals | 31,228,253.07 | 70,806,355.26 |
| Port construction fee | 26,478,534.06 | 83,269,723.00 |
| Guarantees and deposits | 20,638,334.19 | 16,514,731.00 |
| Port charges | 8,187,025.59 | 53,236,125.23 |
| Harbour dues on cargo | 3,138,152.55 | 2,668,097.85 |
| Others | 341,307,637.90 | 407,636,957.99 |
| Total | 809,699,551.14 | 1,044,373,911.73 |
(3) Other cash receipts relating to investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Recovery of loans | 1,018,695,828.48 | 120,500,000.00 |
| Recovery of deposits restricted due to acquisition of Hambantota Port project | 1,001,472,400.00 | - |
| Net cash receipts from acquisition of subsidiaries and other operating units | 845,457,228.45 | - |
| Cash receipts for debt transfer | 356,137,574.00 | - |
| Recovery of principal of structured deposit that is not readily for withdrawal | 314,000,000.00 | - |
| Interest of structured deposits | - | 36,115,992.14 |
| Others | 204,000.00 | - |
| Total | 3,535,967,030.93 | 156,615,992.14 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Items in cash flow statement - continued
(4) Net cash payments for acquiring subsidiaries and other operating units
Unit: RMB
| Item | Amount incurred in the current period |
| Cash and cash equivalents paid for business combination in the current year | 375,334,390.00 |
| Including: Zhanjiang port | 375,334,390.00 |
| Longteng Shipping | - |
| Less: Cash and cash equivalents held by subsidiaries at the acquisition date | 1,220,791,618.45 |
| Including: Zhanjiang port | 1,216,363,923.97 |
| Longteng Shipping | 4,427,694.48 |
| Net cash payments for acquisition of subsidiaries | (845,457,228.45) |
| Including: Zhanjiang port | (841,029,533.97) |
| Longteng Shipping | (4,427,694.48) |
(5) Net cash receipts from disposal of subsidiaries and other operating units
Unit: RMB
| Item | Amount incurred in the current period |
| Cash and cash equivalent received in current period for disposal of subsidiaries in prior period | 1,000,000.00 |
| Including: China Merchants Warehousing (Shenzhen) Service Co., Ltd. | 1,000,000.00 |
(6) Other cash payments relating to investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Structured deposit that is not readily for withdrawal | 1,610,000,000.00 | 695,000,000.00 |
| Debt transfer payment | 356,137,574.00 | - |
| Related party borrowings | 104,390,000.00 | - |
| Supplementary payment of tax on significant assets restructuring | 68,423,555.78 | - |
| Deposits restricted due to acquisition of Hambantota Port project | - | 965,644,000.00 |
| Payment of income tax on disposal of other equity instruments | - | 25,463,391.23 |
| Total | 2,138,951,129.78 | 1,686,107,391.23 |
(7) Other cash receipts relating to financing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Proceeds from disposal of equity of subsidiaries by CMPort | 1,713,327,483.01 | - |
| Proceeds from disposal of equity of the Company by CMPort | - | 3,876,395,683.27 |
| Total | 1,713,327,483.01 | 3,876,395,683.27 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Items in cash flow statement - continued
(8) Other cash payments relating to financing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Bonds issuance cost | 6,600,000.00 | 104,284,657.11 |
| Repayment of advances of shareholders | 1,592,783.29 | 1,833,400.80 |
| Lease payments | - | 39,828,477.15 |
| Others | 34,391,014.26 | 250,000.00 |
| Total | 42,583,797.55 | 146,196,535.06 |
65. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
| Supplementary information | Amount incurred in the current period | Amount incurred in the prior period |
| 1．Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 8,166,917,273.20 | 2,885,914,753.96 |
| Add: Provision for impairment losses of assets | (25,051.16) | - |
| Provision for impairment losses of credit | 50,249,409.77 | 7,528,580.60 |
| Depreciation of fixed assets | 1,681,007,226.50 | 1,298,671,209.43 |
| Depreciation of investment property | 190,418,170.86 | 183,248,437.37 |
| Depreciation of right-of-use assets | 328,886,210.72 | |
| Amortization of intangible assets | 632,626,770.16 | 526,994,590.78 |
| Amortization of long-term prepaid expenses | 31,586,968.21 | 19,045,474.75 |
| Losses (gains) on disposal of fixed assets, intangible assets and other long-term assets | (4,794,562,782.79) | (19,258,495.33) |
| Losses on retirement of fixed assets, intangible assets and other long-term assets | 24,459,845.75 | 32,095,701.53 |
| Losses (gains) on changes in fair value | (66,483,266.48) | 1,074,406,837.68 |
| Financial expenses | 2,127,073,624.88 | 1,869,926,400.58 |
| Investment loss (income) | (4,619,173,755.42) | (3,967,828,149.48) |
| Decrease (increase) in deferred tax assets | (191,905,933.39) | (24,282,252.12) |
| Increase in deferred tax liabilities | 524,071,511.80 | 242,354,871.34 |
| Decrease (increase) in inventories | (11,704,381.63) | (25,110,483.47) |
| Decrease (increase) in operating receivables | (2,391,266,937.99) | (261,424,216.35) |
| Increase in operating payables | 3,819,698,512.95 | 446,292,163.57 |
| Net cash flows from operating activities | 5,501,873,415.94 | 4,288,575,424.84 |
| 2．Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Conversion of debt into capital | - | - |
| Convertible bonds due within one year | - | - |
| Fixed assets acquired under finance leases | - | - |
| 3．Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 7,714,157,995.87 | 5,373,281,504.75 |
| Less: Opening balance of cash | 5,373,281,504.75 | 7,729,460,082.75 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase (decrease) in cash and cash equivalents | 2,340,876,491.12 | (2,356,178,578.00) |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Supplementary information to the cash flow statement - continued
(2) Cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 7,714,157,995.87 | 5,373,281,504.75 |
| Including: Cash on hand | 331,305.65 | 349,650.07 |
| Bank deposits | 7,422,490,058.00 | 5,116,481,444.13 |
| Other monetary funds | 291,336,632.22 | 256,450,410.55 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 7,714,157,995.87 | 5,373,281,504.75 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
66. Foreign currency monetary items
| Item | Closing balance of original currency | Exchange rate | Closing amount in RMB |
| Cash and bank balances | 2,254,117,370.52 | ||
| Including: HKD | 24,556,034.06 | 0.8958 | 21,997,295.31 |
| USD | 210,842,987.16 | 6.9762 | 1,470,882,847.03 |
| EUR | 66,928,010.67 | 7.8155 | 523,075,867.39 |
| RMB | 238,161,360.79 | 1.0000 | 238,161,360.79 |
| Accounts receivable | 134,801,300.52 | ||
| Including: HKD | 6,121,974.82 | 0.8958 | 5,484,065.04 |
| USD | 4,590,551.69 | 6.9762 | 32,024,606.70 |
| EUR | 12,448,676.19 | 7.8155 | 97,292,628.78 |
| Other receivables | 561,195,430.79 | ||
| Including: HKD | 35,529,633.52 | 0.8958 | 31,827,445.71 |
| USD | 3,538,045.40 | 6.9762 | 24,682,112.32 |
| EUR | 32,766,909.72 | 7.8155 | 256,089,782.91 |
| RMB | 248,596,089.85 | 1.0000 | 248,596,089.85 |
| Long-term receivables | 9,800,295.76 | ||
| Including: EUR | 1,253,956.87 | 7.8155 | 9,800,295.76 |
| Short-term borrowings | 1,304,398,148.00 | ||
| Including: HKD | 540,743,634.74 | 0.8958 | 484,398,148.00 |
| RMB | 820,000,000.00 | 1.0000 | 820,000,000.00 |
| Accounts payable | 30,431,392.31 | ||
| Including: HKD | 3,086,706.06 | 0.8958 | 2,765,071.29 |
| USD | 50,041.20 | 6.9762 | 349,097.42 |
| EUR | 3,489,504.65 | 7.8155 | 27,272,223.60 |
| RMB | 45,000.00 | 1.0000 | 45,000.00 |
| Other payables | 574,112,167.24 | ||
| Including: HKD | 13,979,385.79 | 0.8958 | 12,522,733.79 |
| USD | 47,361,608.63 | 6.9762 | 330,404,054.12 |
| EUR | 18,525,508.27 | 7.8155 | 144,786,109.92 |
| RMB | 86,399,269.41 | 1.0000 | 86,399,269.41 |
| Non-current liabilities due within one year | 261,401,461.04 | ||
| Including: EUR | 33,446,543.54 | 7.8155 | 261,401,461.04 |
| Long-term borrowings | 1,254,199,485.00 | ||
| Including: EUR | 124,950,000.00 | 7.8155 | 976,546,725.00 |
| USD | 39,800,000.00 | 6.9762 | 277,652,760.00 |
| Bonds payable | 21,212,400,200.93 | ||
| Including: RMB | 2,500,000,000.00 | 1.0000 | 2,500,000,000.00 |
| USD | 2,682,319,916.42 | 6.9762 | 18,712,400,200.93 |
| Long-term payables | 1,940,107,556.84 | ||
| Including: HKD | 2,366,680.83 | 0.8958 | 2,120,072.69 |
| USD | 217,303,185.71 | 6.9762 | 1,515,950,484.15 |
| EUR | 54,000,000.00 | 7.8155 | 422,037,000.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
67. Government grants
Unit: RMB
| Type | Amount | Item | Account | Amount included in profit or loss for the period |
| Related to assets | 282,311,343.28 | Tonggu channel widening project | Deferred income | - |
| Related to assets | 217,588,656.72 | West port area public channel widening project | Deferred income | - |
| Related to income | 20,970,000.00 | Department of Commerce of Guangdong Province - Special funds for promoting economic development of Guangdong | Other income | 20,970,000.00 |
| Related to income | 13,850,262.00 | Shenzhen Municipal Finance Committee – Foreign trade growth incentive fund | Other income | 13,850,262.00 |
| Related to income | 13,268,318.27 | Additional deduction of VAT | Other income | 13,268,318.27 |
| Related to income | 10,278,619.72 | Sri Lanka Hambantota Port project subsidies | Other income | 10,278,619.72 |
| Related to income | 8,094,400.00 | Nanshan district modern logistics project support fund | Other income | 8,094,400.00 |
| Related to income | 7,415,800.50 | Transport Bureau of Zhangzhou Development Zone port operation support subsidy | Other income | 7,415,800.50 |
| Related to income | 6,903,526.71 | Refund of withholding taxes | Other income | 6,903,526.71 |
| Related to income | 6,019,100.00 | Shenzhen Transportation Committee – Finance subsidiary for key logistics enterprises | Other income | 6,019,100.00 |
| Related to income | 5,561,600.00 | Nanshan district independent innovation enterprise development special fund | Other income | 5,561,600.00 |
| Related to income | 5,448,613.20 | Shenzhen Municipal Finance Committee 2019 equipment construction fee | Other income | 5,448,613.20 |
| Related to income | 4,241,000.00 | Shenzhen Science and Technology Innovation Committee – R&D subsidy | Other income | 4,241,000.00 |
| Related to income | 3,307,715.28 | Electricity subsidy | Other income | 3,307,715.28 |
| Related to income | 2,375,100.00 | Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – the first batch of headquarter enterprise contribution support fund for 2019 | Other income | 2,375,100.00 |
| Related to income | 2,000,000.00 | Xiamen Port Holding Group Co., Ltd. – 2018 incentive support fund | Other income | 2,000,000.00 |
| Related to income | 1,985,363.23 | Steady post subsidies | Other income | 1,985,363.23 |
| Related to income | 1,864,088.00 | Fujian Provincial Port and Shipping Development Special Fund | Other income | 1,864,088.00 |
| Related to income | 1,720,000.00 | Special fund for foreign trade and economic development from central government (cross-border business management system based on big data service) | Other income | 1,720,000.00 |
| Related to assets | 1,500,000.00 | Zhanjiang port bulk cargo production business management system | Deferred income | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
67. Government grants - continued
Unit: RMB
| Type | Amount | Item | Account | Amount included in profit or loss for the period |
| Related to income | 1,000,000.00 | Fujian Development and Reform Commission – 3rd batch provincial demonstration logistics park subsidy | Other income | 1,000,000.00 |
| Related to income | 1,000,000.00 | Special fund for promoting high-quality development of economy | Other income | 1,000,000.00 |
| Related to income | 1,000,000.00 | Market Supervision Bureau Of Shenzhen – China quality awards nomination prize | Other income | 1,000,000.00 |
| Related to income | 1,000,000.00 | Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration – Qianhai cooperation zone new trade development special fund | Other income | 1,000,000.00 |
| Related to assets | 1,000,000.00 | Port construction subsidy | Deferred income | - |
| Related to income | 4,894,309.31 | Others | Other income | 4,894,309.31 |
| Related to income | 485,929.28 | Others | Deferred income | 485,929.28 |
| Related to assets | 752,280.00 | Others | Deferred income | - |
| Total | 627,836,025.50 | 124,683,745.50 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
68. Lease
Undiscounted lease receipts subsequent to the balance sheet date are as follows:
Unit: RMB
| Maturity analysis of undiscounted lease receipts | 31/12/2019 |
| c | 262,471,675.69 |
| 2nd year subsequent to the balance sheet date | 170,415,614.49 |
| 3rd year subsequent to the balance sheet date | 126,553,858.93 |
| 4th year subsequent to the balance sheet date | 94,901,695.84 |
| 5th year subsequent to the balance sheet date | 86,772,978.95 |
| Subsequent years | 415,842,560.49 |
| Total | 1,156,958,384.39 |
Note 1: The operating leases where the Group as the lessor are related to port and terminal
facilities, machinery equipment, vehicles, land and buildings, with lease terms rangingfrom 1 month to 50 years and option to renew the lease of port and terminal facilities,machinery equipment, land and buildings. The Group considers that as the leased assetsare properly used, the unguaranteed balance of such assets does not constitutes materialrisk of the Group.
Note 2: For 2019, the revenue relating to operating lease amounts to RMB260,445,597.84; there
is no revenue relating to variable lease payment that is not included in lease receipts.
(VI) CHANGES IN SCOPE OF CONSOLIDATION
1. Business combination not involving enterprises under common control
(1) Business combination not involving enterprises under common control for the year
Unit: RMB
| Name of acquiree | Date on which the investment is acquired | Acquisition cost | Proportion of equity acquired (%) | Acquisition method | Acquisition date | Basis for determining the acquisition date | Acquiree's income from acquisition date to the end of the year | Acquiree's net profit from acquisition date to the end of the year |
| Zhanjiang port (Note 1) | 3 February 2019 | 6,188,148,907.97 | 58.3549 | Cash payment | 3 February 2019 | Transfer of control | 2,306,530,651.61 | 75,720,720.11 |
| Longteng Shipping (Note 2) | 31 December 2019 | 77,485,870.00 | 70.00 | Change of articles of association | 31 December 2019 | Transfer of control | - | - |
Note 1: At 31 December 2018, China Merchants International Terminal (Zhanjiang) Co., Ltd., a
subsidiary of the Company, holds 1,620,000,000 shares of ordinary shares of ZhanjiangPort, accounting for 40.2916% of the issued shares of Zhanjiang Port.
On 2 January 2019, the Company and Guangdong Sinotrans Co., Ltd. entered into the
"Share Transfer Agreement on Zhanjiang Port (Group) Co., Ltd.", according to which theCompany receives 201,034,548 shares of ordinary shares of Zhanjiang Port held byGuangdong Sinotrans Co., Ltd., accounting for 5% of the total issued shares of ZhanjiangPort at the date of the agreement. The consideration for the conversion isRMB375,334,390.00.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination not involving enterprises under common control - continued
(1) Business combination not involving enterprises under common control for the year -
continued
On 8 January 2019, Chiwan Wharf (Hong Kong) Co., Ltd. ("CWHK"), a subsidiary of the
Company, and Zhanjiang Infrastructure and Zhanjiang Port signed the "Capital IncreaseAgreement of Zhanjiang Port (Group) Co., Ltd". According to the agreement, ZhanjiangPort proposes to issue additional 1,853,518,190 shares of ordinary share at the price ofRMB 1.867 per share or equivalent foreign currency price (determined based onexchange rate of the capital contribution) so as to increase its registered capital to RMB5,874,209,145.00. CWHK proposes to subscribe for 1,606,855,919 shares ordinaryshares, accounting for 27.3544% of the issued shares of Zhanjiang Port at the issuingdate. The total subscription payment is RMB 3,000,000,000.77 or the equivalent amountin foreign currency (determined based on the exchange rate of capital contribution).
The above transaction has been completed on 3 February 2019. Since then, the Group
holds total 3,427,890,467 shares of ordinary share of Zhanjiang Port, accounting for
58.3549% of the total issued shares of Zhanjiang Port. The Group is able to controlZhanjiang Port, therefore includes Zhanjiang Port in the scope of consolidation financialstatements.
Note 2: According to the previous articles of association of Longteng Shipping, the top authority
of the company is the General Shareholders Meeting, and the resolution of ShareholdersMeeting requires unanimous consent of all the shareholders. Therefore, the Company'ssubsidiary Zhanjiang Port accounts for Longteng Shipping as a joint venture.
At 31 December 2019, Longteng Shipping held the 2019 second extraordinary
shareholders meeting where the resolution of changing the articles of association wasapproved. According to the revised articles of association, the Company's top authority isthe Shareholders Meeting, and the resolution of Shareholders Meeting requires consent ofno less one half of the shareholders having voting power. Therefore, the Company'ssubsidiary Zhanjiang Port has control over Lengteng Shipping. So that the Groupincluded it in the scope of consolidated financial statements.
(2) Acquisition cost and goodwill
Unit: RMB
| Acquisition cost | Zhanjiang Port | Longteng Shipping |
| --Cash | 3,375,334,390.77 | - |
| -- Fair value of previously held equity at acquisition date | 2,816,617,994.27 | 77,485,870.00 |
| -- Others | (3,803,477.07) | - |
| Total acquisition cost | 6,188,148,907.97 | 77,485,870.00 |
| Less: Share of fair value of net identifiable assets | 5,769,803,600.29 | 70,303,862.29 |
| Goodwill | 418,345,307.68 | 7,182,007.71 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination not involving enterprises under common control - continued
(3) Identifiable assets, liabilities of the acquiree at acquisition date
Unit: RMB
| Item | Zhanjiang Port | Longteng Shipping | ||
| Fair value at acquisition date | Carrying amount at acquisition date | Fair value at acquisition date | Carrying amount at acquisition date | |
| Assets: | ||||
| Current assets | 5,165,579,759.10 | 5,165,579,759.10 | 16,465,094.05 | 16,465,094.05 |
| Other non-current financial assets | 15,243,577.73 | 15,243,577.73 | - | - |
| Long-term receivables | 877,208,613.40 | 877,208,613.40 | - | - |
| Long-term equity investments | 172,685,776.52 | 165,494,758.03 | - | - |
| Investment property | 63,473,360.24 | 39,760,964.41 | - | - |
| Fixed assets | 8,445,573,407.27 | 7,451,556,053.74 | 67,589,835.15 | 62,305,835.15 |
| Right-of-use assets | 1,304,452,747.69 | 1,304,452,747.69 | 5,481,585.04 | 5,481,585.04 |
| Construction in progress | 1,158,968,327.74 | 1,158,968,327.74 | 19,804,885.23 | 19,804,885.23 |
| Materials for construction of fixed assets | 13,684,316.43 | 13,684,316.43 | - | - |
| Intangible assets | 3,566,911,864.41 | 2,211,115,469.85 | - | - |
| Development expenses | 14,968,306.82 | 14,968,306.82 | - | - |
| Goodwill | - | 9,775,569.57 | - | - |
| Long-term prepaid expenses | 2,630,870.77 | 2,630,870.77 | - | - |
| Deferred tax assets | 41,991,411.69 | 41,991,411.69 | 7,500.00 | 7,500.00 |
| Other non-current assets | 875,819,471.20 | 875,819,471.20 | - | - |
| Liabilities: | ||||
| Current liabilities | 6,048,006,153.82 | 6,048,006,153.82 | 3,456,823.04 | 3,456,823.04 |
| Long-term borrowings | 1,762,537,800.00 | 1,762,537,800.00 | - | - |
| Bonds payable | 400,000,000.00 | 400,000,000.00 | - | - |
| Long-term payables | 510,107,118.35 | 510,107,118.35 | - | - |
| Deferred income | 454,321,351.99 | 454,321,351.99 | - | - |
| Long-term employee benefits payable | 103,174,447.59 | 103,174,447.59 | 30,000.00 | 30,000.00 |
| Deferred tax liabilities | 595,179,290.60 | - | 1,321,000.00 | - |
| Lease liabilities | 857,876,749.08 | 857,876,749.08 | 4,106,987.44 | 4,106,987.44 |
| Net assets | 10,987,988,899.58 | 9,212,226,597.34 | 100,434,088.99 | 96,471,088.99 |
| Less: Minority interests | 5,218,185,299.29 | 4,401,619,250.71 | 30,130,226.70 | 28,941,326.70 |
| Net assets acquired | 5,769,803,600.29 | 4,810,607,346.63 | 70,303,862.29 | 67,529,762.29 |
(4) Operating results and net cash flows of the acquiree from the acquisition date to the end of
the period of business combination
Unit: RMB
| Item | Acquisition date to the end of the period of business combination | |
| Zhanjiang port | Longteng Shipping | |
| Operating income | 2,306,530,651.61 | - |
| Operating cost and expenses | 2,266,290,301.90 | - |
| Gross profit | 70,722,673.91 | - |
| Net profit | 75,720,720.11 | - |
| Net cash flows from operating activities | 735,126,563.91 | - |
| Net cash flows from investing activities | (616,817,351.55) | - |
| Net cash flows from financing activities | (3,934,477,407.34) | - |
| Net increase in cash and cash equivalents | (3,816,168,194.98) | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination not involving enterprises under common control - continued
(5) Gains or losses from remeasurement of equity held prior to acquisition date at fair value
Unit: RMB
| Name of the acquiree | Carrying amount of previously held equity at the acquisition date | Fair value of previously held equity at the acquisition date | Gains or losses from remeasurement of previously held equity at fair value | Method of determining the fair value of previously held equity at acquisition date and key assumptions | Amount transferred from other comprehensive income to investment income in respect of the equity held prior to the acquisition date |
| Zhanjiang Port | 1,981,183,625.76 | 2,816,617,994.27 | 835,434,368.51 | Asset-based valuation | - |
| Longteng Shipping | 67,487,762.29 | 77,485,870.00 | 9,998,107.71 | Asset-based valuation | - |
(VII) EQUITY IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
| Name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 550.00 | 100.00 | - | Established through investment |
| CWHK | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD1,000,000 | 100.00 | - | Established through investment |
| Dongguan Chiwan Warf Co., Ltd. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 45,000.00 | 85.00 | - | Established through investment |
| Dongguan Chiwan Terminal Co., Ltd. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 40,000.00 | 100.00 | - | Established through investment |
| Shenzhen Chiwan Harbor Container Co. Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 28,820.00 | 100.00 | - | Business combination involving enterprises under common control |
| Shenzhen Chiwan Port Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 1,500.00 | 100.00 | - | Business combination involving enterprises under common control |
| Chiwan Container Terminal Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD95,300,000 | 55.00 | 20.00 | Business combination involving enterprises under common control |
| Shenzhen Chiwan Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 2,400.00 | 100.00 | - | Business combination involving enterprises under common control |
| Chiwan Shipping (Hong Kong) Limited | Hong Kong, PRC | Hong Kong, PRC | Logistics support services | HKD800,000 | 100.00 | - | Business combination involving enterprises under common control |
| CMPort (Note 1) | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD40,614,228,200.00 | 40.91 | - | Business combination involving enterprises under common control |
| China Merchants Bonded Logistics Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 70,000.00 | 40.00 | 60.00 | Business combination involving enterprises under common control |
| China Merchants International Information Technology Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | IT service | 5,000.00 | 23.16 | 76.84 | Business combination involving enterprises under common control |
| China Merchants International (China) Investment Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment holding | USD30,000,000 | - | 100.00 | Business combination involving enterprises under common control |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 136 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
| Name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| CMT | Qingdao, PRC | Qingdao, PRC | Logistics support services | USD206,300,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants Container Services Limited | Hong Kong, PRC | Hong Kong, PRC | Logistics support services | HKD500,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants Port (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 55,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Haiqin Project Management Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Engineering supervision | 300.00 | - | 100.00 | Business combination involving enterprises under common control |
| ATJ | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | HKD100,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| ASJ | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | HKD100,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants International Terminal (Qingdao) Co., Ltd. | Qingdao, PRC | Qingdao, PRC | Logistics support services | USD44,000,000 | - | 90.10 | Business combination involving enterprises under common control |
| Colombo International Container Terminals Limited | Sri Lanka | Sri Lanka | Logistics support services | USD150,000,100 | - | 85.00 | Business combination involving enterprises under common control |
| Shenzhen Mawan Port Services Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Magang Cangma Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 33,500.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Mawan Port Service Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Zhangzhou China Merchants Tugboat Co., Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 1,500.00 | - | 100.00 | Business combination involving enterprises under common control |
| Zhangzhou China Merchants Port Co., Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 100,000.00 | - | 60.00 | Business combination involving enterprises under common control |
| ZCMG (note 2) | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 44,450.00 | - | 31.00 | Business combination involving enterprises under common control |
| Shekou Container Terminals Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | HKD618,201,200 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Lianyunjie Container Terminals Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 60,854.90 | - | 100.00 | Business combination involving enterprises under common control |
| Anxunjie Container Terminals (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 127,600.00 | - | 100.00 | Business combination involving enterprises under common control |
| Anyunjie Port Warehousing Service (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | 6,060.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Haixing Harbor Development Co., Ltd | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD15,151,500 | - | 67.00 | Business combination involving enterprises under common control |
| Shenzhen Lianyongtong Terminal Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD7,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| Yide Port | Foshan, PRC | Foshan, PRC | Logistics support services | 21,600.00 | - | 51.00 | Business combination involving enterprises under common control |
| Mega Shekou Container Terminals Limited | British Virgin Islands | British Virgin Islands | Investment holding | USD120.00 | - | 80.00 | Business combination involving enterprises under common control |
| Thesar Maritime Limited | Cyprus | Cyprus | Investment holding | EUR5,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| LCT | Republic of Togo | Republic of Togo | Logistics support services | XOF200,000,000 | - | 100.00 | Business combination involving enterprises under common control |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 137 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
| Name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| Hambantota International Port Group (Private)Limited | Sri Lanka | Sri Lanka | Logistics support services | USD794,000,000 | - | 85.00 | Business combination involving enterprises under common control |
| Shantou port | Shantou, PRC | Shantou, PRC | Logistics support services | 12,500.00 | - | 60.00 | Business combination involving enterprises under common control |
| JYRT | Shenzhen, PRC | Shenzhen, PRC | Property lease servce etc. | 80,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| QHW | Shenzhen, PRC | Shenzhen, PRC | Property lease servce etc. | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Juzhongzhi Investment (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment consulting | 4,000.00 | - | 75.00 | Business combination involving enterprises under common control |
| Shenzhen Lianda Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 200.00 | - | 60.29 | Business combination involving enterprises under common control |
| Zhangzhou Zhongli Outer Wheel Tally Co., Ltd | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 200.00 | - | 84.00 | Business combination involving enterprises under common control |
| China Merchants Holdings (Djibouti) FZE | Djibouti | Djibouti | Logistics support services | USD38,140,000 | - | 100.00 | Business combination involving enterprises under common control |
| Xinda Resources Limited | British Virgin Islands | British Virgin Islands | Investment holding | USD 1.00 | - | 74.95 | Business combination involving enterprises under common control |
| Kong Rise Development Limited | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD 1.00 | - | 100.00 | Business combination involving enterprises under common control |
| TCP | Brazil | Brazil | Logistics support services | BRL 68,851,600 | - | 90.00 | Business combination not involving enterprises under common control |
| China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. ("RoRo Logistics" Note 3) | Zhoushan, PRC | Zhoushan, PRC | Logistics support services | 17,307.86 | 51.00 | - | Assets acquisition |
| Shenzhen Haixing Logistics Development Co., Ltd. (Note 4) | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 7,066.79 | - | 100.00 | Assets acquisition |
| Zhanjiang Port (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 587,420.91 | 3.42 | 54.93 | Business combination not involving enterprises under common control |
| Zhanjiang Port International Container Terminal Co., Ltd. (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 60,000.00 | - | 80.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Petrochemical Terminal Co., Ltd. (note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 18,000.00 | - | 50.00 | Business combination not involving enterprises under common control |
| China Ocean Shipping Tally Co., Ltd., Zhanjiang (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 84.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Donghaidao Bulk Cargo Terminal Co., Ltd. (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 5,000.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Bonded Service Co., Ltd., Guangdong (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Guangdong Zhanjiang Port Logistics Co., Ltd. (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 10,000.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Haichuan Trading Co., Ltd. (Note 6) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 200.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Longteng Shipping (Note 6) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 9,000.00 | - | 70.00 | Business combination not involving enterprises under common control |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 138 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
Note 1: On 19 June 2018, the Company and China Merchants Group (Hong Kong) Co., Ltd.
("CMHK") entered into "Agreement of Concerted Action on China Merchants PortHoldings Company Limited". According to the agreement, CMHK unconditionally keepsconsistent with the Company when voting for the matters discussed at the generalshareholders meeting of CMPort in respect of its 22.64% voting power of CMPort asentrusted, and performs the voting as per the Company's opinion. Therefore, theCompany totally has 62.09% voting power of CMPort, and has control over CMPort.
For July and November 2019, CMPort respectively distributed 2018 dividends and 2019interim dividends to shareholders. The shareholders may select to receive the interimdividends in cash as an alternative of entire or partial scrip dividends. The Companyselect to receive all its share of dividends from the shareholding in CMPort in the form ofscrip dividends. Upon the completion of above distribution of CMPort, the Company'sshare in CMPort increased from 1,313,541,560 shares to 1,411,014,033 shares,accounting for 40.91% (previously 39.45%) of the total issued shares of CMPort. Theproportion of shares held by CMHK changed from 22.64% to 21.86%. Therefore, theCompany has total 62.77% voting power of CMPort and has control over CMPort.
Note 2: The Group and China Merchants Zhangzhou Development Zone Co., Ltd. entered into
"Equity Custody Agreement", according to which China Merchants ZhangzhouDevelopment Zone Co., Ltd. entrusted its 29% equity of ZCMG to the Group foroperation and management. Therefore, the Group has 60% voting power of ZCMG andincludes it in the scope of consolidated financial statements.
Note 3: RoRo Logistics, a subsidiary of the Group, held a shareholders meeting on 17 September
2019, and approved the merger agreement entered into with China Merchants Port(Zhoushan) RoRo Terminal Co., Ltd. ("RoRo Terminal"), another subsidiary of theGroup, on 16 September 2019. According to the agreement, RoRo Logistics mergedRoRo Terminal and continued to survive, while RoRo Terminal was cancelled. Themerger was completed on 5 November 2019.
On 18 September 2019, RoRo Logistics and RoRo Terminal, which are subsidiaries ofthe Group, respectively published announcement on "Zhoushan Daily", explaining thesettlement of liabilities or debt guarantees of RoRo Logistics and RoRo Terminal. Thedebts of both parties before the merger will be borne by RoRo Logistics that continues tosurvive.
On 28 November 2019, the Group's subsidiary RoRo Logistics completed the industrialand commercial registration of changes while RoRo Terminal completed the industrialand commercial registration of cancellation.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 139 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
Note 4: On 13 May 2019, the Company's subsidiary Shenzhen Haixing Xiaoyetian Logistics
Development Co., Ltd. renamed to Shenzhen Haixing Logistics Development Co., Ltd.
Note 5: Details are set out in Note (VI) 1.
(2) Material non-wholly-owned subsidiaries
Unit: RMB
| Name of the subsidiary | Proportion of ownership interest held by the minority shareholders (%) | Profit or loss attributable to minority shareholders in the current year | Dividends distributed to minority shareholders in the current year | Balance of minority interests at the end of the year |
| CMPort | 59.09 | 4,698,967,872.72 | 1,632,905,377.51 | 53,597,183,498.95 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 140 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(3) Significant financial information of material non-wholly-owned subsidiaries
Unit: RMB
| Name of the subsidiary | 31/12/2019 | 31/12/2018 | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| CMPort | 11,159,452,476.24 | 119,576,502,129.38 | 130,735,954,605.62 | 13,858,924,526.23 | 35,059,524,441.90 | 48,918,448,968.13 | 9,453,546,575.26 | 110,694,125,429.95 | 120,147,672,005.21 | 8,017,825,679.49 | 37,213,240,669.92 | 45,231,066,349.41 |
Unit: RMB
| Name of the subsidiary | 2019 | 2018 | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
| CMPort | 7,845,242,646.62 | 7,421,484,985.59 | 6,327,276,475.35 | 3,944,044,766.09 | 7,729,738,537.45 | 2,685,592,888.44 | 2,886,818,529.12 | 3,595,234,888.15 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 141 -
(VII) EQUITY IN OTHER ENTITIES - continued
2. Transactions resulting in changes in ownership interests in subsidiaries without losingcontrol over the subsidiaries
(1) Description of changes in ownership interests in subsidiaries
During the year, the Group's ownership interests in CMPort changed from 39.45% to
40.91%. Details are set out in Note (VII) 1 (1).
In December 2019, the Company sold 25.05% equity of Xinda Resources Limited, a wholly-owned subsidiary of the Company, and related 25.05% of the shareholders' loans to anexternal third party at the consideration of USD 248,010,000.00 (equivalent toRMB1,713,327,483.01). After the disposal, the Company's ownership interests in XindaResources Limited decreased from 100% to 74.95%.
(2) Effect of the transaction on minority interests and equity attributable to owners of the
Company
Unit: RMB
| CMPort | Xinda Resources Limited | |
| Acquisition cost | ||
| - Cash | - | 1,713,327,483.01 |
| - Fair value of non-cash assets | 1,116,813,838.52 | - |
| Total acquisition cost/disposal consideration | 1,116,813,838.52 | 1,713,327,483.01 |
| Less: Share of net assets of subsidiaries calculated based on the proportion of equity acquired/disposed | 1,535,943,954.55 | 1,171,773,303.33 |
| Difference | (419,130,116.03) | 541,554,179.68 |
| Including: Adjustment to capital Reserve | 419,130,116.03 | 541,554,179.68 |
| Adjustment to surplus reserve | - | - |
| Adjustment to unappropriated profit | - | - |
3. Interests in joint ventures and associates
(1) Material joint ventures or associates
Unit: RMB
| Investee | Principal place of business | Place of registration | Nature of business | Proportion of ownership interests held by the Group (%) | Accounting method of investments in associates | |
| Direct | Indirect | |||||
| Associates | ||||||
| Shanghai International Port (Group) Co., Ltd. | Shanghai, PRC | Shanghai, PRC | Port and container terminal business | - | 26.77 | Equity method |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 142 -
(VII) EQUITY IN OTHER ENTITIES - continued
4. Key financial information of material associates
Unit: RMB
| Item | Shanghai International Port (Group) Co., Ltd. | |
| Closing balance / Amount incurred in the current period | Opening balance/ Amount incurred in the prior period | |
| Current assets | 40,399,631,516.67 | 47,842,620,837.32 |
| Including: Cash and cash equivalents | 17,900,365,675.69 | 27,935,157,994.83 |
| Non-current assets | 101,777,664,401.29 | 96,524,413,178.58 |
| Total assets | 142,177,295,917.96 | 144,367,034,015.90 |
| Current liabilities | 19,339,272,490.14 | 31,676,398,710.35 |
| Non-current liabilities | 32,049,165,771.78 | 30,340,320,855.30 |
| Total liabilities | 51,388,438,261.92 | 62,016,719,565.65 |
| Minority interests | 8,732,108,869.09 | 6,802,318,747.82 |
| Equity attributable to shareholders of the parent company | 82,056,748,786.95 | 75,547,995,702.43 |
| Share of net assets calculated based on the proportion of ownership interests | 21,966,591,650.27 | 20,216,643,649.97 |
| Adjustments | ||
| -Goodwill | 2,076,585,747.12 | 2,076,585,747.12 |
| -Others | (125,134,529.84) | (105,669,326.14) |
| Carrying amounts of equity investments in associates | 23,918,042,867.55 | 22,187,560,070.95 |
| Fair value of publicly quoted equity investments in associates | 35,788,783,813.22 | 32,129,272,123.48 |
| Operating income | 36,101,631,985.21 | 38,042,544,621.37 |
| Net profit | 9,925,845,382.34 | 11,472,021,103.16 |
| Other comprehensive income | (197,209,230.86) | (954,348,960.96) |
| Total comprehensive income | 9,728,636,151.48 | 10,517,672,142.20 |
| Dividends received from associates in the current year | 955,194,576.56 | 1,059,194,508.74 |
5. Summarized financial information of immaterial associates and joint ventures
Unit: RMB
| Closing balance / Amount incurred in the current period | Opening balance/ Amount incurred in the prior period | |
| Joint ventures: | ||
| Total carrying amount of investments | 9,392,226,566.22 | 11,230,302,154.26 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 468,699,021.57 | 429,904,250.47 |
| - Other comprehensive income | (18,718,479.76) | (5,608,904.12) |
| - Total comprehensive income | 449,980,541.81 | 424,295,346.35 |
| Associates: | ||
| Total carrying amount of investments | 24,606,269,949.49 | 16,758,715,038.19 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 833,229,755.94 | 912,589,301.49 |
| - Other comprehensive income | (71,060,470.70) | (31,643,724.68) |
| - Total comprehensive income | 762,169,285.24 | 880,945,576.81 |
6. The investees where the Group holds long-term equity investments are not restricted to
transfer funds to the Group.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 143 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS
The Group's major financial instruments include cash and bank balances, notes receivable,account receivables, other receivables, long-term receivables, other equity instrumentinvestments, other non-current financial assets, short-term borrowings, notes payable, accountspayable, other payables, long-term borrowings, bonds payable, long-term payables etc. Details ofthese financial instruments are disclosed in Notes (V). The risks associated with these financialinstruments and the policies on how to mitigate these risks are set out below. Managementmanages and monitors these exposures to ensure the risks are monitored at a certain level.
The Group adopts sensitivity analysis techniques to analyze how the entity's profit or loss and forthe period and shareholders' equity would have been affected by changes in the relevant riskvariables that were reasonably possible. As it is unlikely that risk variables will change in anisolated manner, and the interdependence between risk variables will have significant effect onthe amount ultimately influenced by the changes in a single risk variable, the following items arebased on the assumption that each risk variable has changes on a stand-alone basis.
1. Risk management objectives and policies
The Group's risk management objectives are to achieve proper balance between risks and yield,minimize the adverse impacts of risks on the Group's operation performance, and maximize thebenefits of the shareholders and other equity investors. Based on these risk managementobjectives, the Group's basic risk management strategy is to identify and analyze the industry'sexposure to various risks, establish appropriate bottom line for risk tolerance, implement riskmanagement, and monitors these exposures to ensure the risks are monitored at a certain level.
1.1 Market risk
1.1.1 Currency risk
Currency risk is the risk that losses will occur because of changes in foreign exchange rates. TheGroup's exposure to the currency risk is primarily associated with HKD, USD and EUR. Exceptfor part of the purchases and sales, the Group's other principal activities are denominated andsettled in RMB. As at 31 December 2019, the balance of the Group's assets and liabilities are bothdenominated in functional currency, except that the assets and liabilities set out below arerecorded using foreign currency. Currency risk arising from the foreign currency balance of assetsand liabilities may have impact on the Group's performance.
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash and bank balances | 829,827,620.81 | 2,134,538,905.15 |
| Accounts receivable | 134,801,300.52 | 159,141,161.37 |
| Other receivables | 558,948,223.20 | 574,646,768.14 |
| Long-term receivables | 9,800,295.76 | - |
| Short-term borrowings | 1,304,398,148.00 | 1,825,358,000.00 |
| Accounts payable | 30,431,392.31 | 45,071,940.89 |
| Other payables | 261,684,252.87 | 512,625,788.26 |
| Non-current liabilities due within one year | 261,401,461.04 | 220,116,765.00 |
| Long-term borrowings | 976,546,725.00 | 1,926,978,130.00 |
| Bonds payable | 2,500,000,000.00 | 21,384,578,670.28 |
| Long-term payables | 431,361,402.17 | 423,754,200.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 144 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.1 Currency risk - continued
The Group closely monitors the effects of changes in the foreign exchange rates on the Group'scurrency risk exposures. According to the current risk exposure and judgment of the exchangerate movements, management considers it is unlikely that the exchange rate changes in the futureone year will result in significant loss to the Group.
Sensitivity analysis on currency risk
The assumption for the sensitivity analysis on currency risk is that all the cash flow hedges andhedges of a net investment in a foreign operation are highly effective. On the basis of the aboveassumption, where all other variables are held constant, the reasonably possible changes in theforeign exchange rate may have the following pre-tax effect on the profit or loss for the periodand shareholders' equity:
Unit: RMB
| Item | Changes in exchange rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| All foreign currencies | 5% increase against RMB | (17,661,467.60) | (17,661,467.60) | (11,394,591.45) | (11,394,591.45) |
| All foreign currencies | 5% decrease against RMB | 17,661,467.60 | 17,661,467.60 | 11,394,591.45 | 11,394,591.45 |
| All foreign currencies | 5% increase against USD | (7,574,539.96) | (7,574,539.96) | 17,324.20 | 17,324.20 |
| All foreign currencies | 5% decrease against USD | 7,574,539.96 | 7,574,539.96 | (17,324.20) | (17,324.20) |
| All foreign currencies | 5% increase against HKD | (97,677,880.50) | (97,677,880.50) | (1,098,658,981.68) | (1,098,658,981.68) |
| All foreign currencies | 5% decrease against HKD | 97,677,880.50 | 97,677,880.50 | 1,098,658,981.68 | 1,098,658,981.68 |
| All foreign currencies | 5% increase against FCFA | (41,707,232.31) | (41,707,232.31) | (63,413,556.92) | (63,413,556.92) |
| All foreign currencies | 5% decrease against FCFA | 41,707,232.31 | 41,707,232.31 | 63,413,556.92 | 63,413,556.92 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 145 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.2 Interest rate risk - changes in cash flows
Risk of changes in cash flows of financial instruments arising from interest rate changes is mainlyrelated to bank loans with floating interest rate. (See Note (V) 24 and Note (V) 34). The Groupcontinuously and closely monitors the impact of interest rate changes on the Group's interest raterisk. The Group's policy is to maintain these borrowings at floating rates. Presently, the Group hasno arrangement such as interest rate swaps etc.
Sensitivity analysis of interest rate risk
Sensitivity analysis of interest rate risk is based on the following assumptions:
? Fluctuations of market interest rate can affect the interest income or expense of a 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 designated as hedging instrument, the fluctuations of marketinterest rate affects its fair value, and all interest rate hedging are expected to be highly effective;? The changes in fair value of derivative financial instruments and other financial assets andliabilities are calculated using cash flow discounting method by applying the market interest rate atbalance sheet date.
On the basis of above assumptions, where the other variables held constant, the pre-tax effect ofpossible and reasonable changes in interest rate on the profit or loss for the period andshareholders' equity are as follows:
Unit: RMB
| Item | Changes in interest rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| Short-term borrowings and long-term borrowings | 1% increase | (126,905,885.92) | (126,905,885.92) | (119,061,442.29) | (119,061,442.29) |
| Short-term borrowings and long-term borrowings | 1% decrease | 126,905,885.92 | 126,905,885.92 | 119,061,442.29 | 119,061,442.29 |
1.1.3 Other price risk
The Group's price risk is mainly arising from held-for-trading equity instrument investments andother equity instrument investments. The Group reduces the price risk of equity instrumentinvestments by holding portfolio of multiple equity securities.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 146 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.2 Credit risk
As at 31 December 2019, the Group's maximum exposure to credit risk which will cause afinancial loss to the Group due to failure to discharge an obligation by the counterparties andfinancial guarantees issued by the Group is arising from the carrying amount of the respectivefinancial assets recognized in the consolidated balance sheet. For financial instruments measuredat fair value, the carrying amount reflects the exposure to risks but not the maximum exposure torisks; the maximum exposure to risks would vary according to the future changes in fair value.
In order to minimize the credit risk, the Group has delegated a team responsible for determinationof credit limits, credit approvals and other monitoring procedures to ensure that follow-up actionis taken to recover overdue debts. In addition, the Group reviews the recoverable amount offinancial assets at each balance sheet date to ensure that adequate impairment losses are made forirrecoverable amounts. In this regard, the management of the Group considers that the Group'scredit risk is significantly reduced.
The credit risk on liquid funds is limited because they are deposited with banks with high creditratings.
The Group has adopted a policy to ensure that all sales customers have good credit records.
The Group's risk exposure spreads over a number of counterparties and customers, therefore theGroup has no significant concentration of credit risk. At 31 December 2019, the balance ofaccounts receivable from top five entities is RMB 368,100,117.85 (31 December 2018: RMB278,398,497.79), accounting for 25.29% (31 December 2018: 24.16%) of the Group's accountsreceivable. In addition, the Group has no other significant credit risk exposure concentrated onsingle financial asset or portfolio of financial assets with similar characteristics.
1.3 Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash andcash equivalents deemed adequate by the management to finance the Group's operations andmitigate the effects of fluctuations in cash flows. The management monitors the utilisation ofbank borrowings and ensures compliance with loan covenants.
As of 31 December 2019, the Group had total current liabilities in excess of total current assets ofRMB6,933,328,647.40. As at 31 December 2019, the Group has available unutilized loan facilityof RMB46,602,858,550.04 which is more than current liabilities. Therefore, the Group'smanagement believes that the Group has no significant liquidity risk.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 147 -
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.3 Liquidity risk - continued
The following is the maturity analysis for financial assets and financial liabilities held by theGroup which is based on undiscounted remaining contractual obligations:
Unit: RMB
| Item | Carrying amount | Gross amount | Within 1 year | 1 to 5 years | Over 5 years |
| Non-derivative financial liabilities | |||||
| Short-term borrowings | 9,439,099,793.47 | 10,355,601,387.26 | 10,355,601,387.26 | - | - |
| Notes payable | 76,455,949.01 | 76,455,949.01 | 76,455,949.01 | - | - |
| Accounts payable | 591,112,466.39 | 591,112,466.39 | 591,112,466.39 | - | - |
| Other payables | 2,223,754,677.96 | 2,223,754,677.96 | 2,223,754,677.96 | - | - |
| Non-current liabilities due within one year | 5,339,656,505.78 | 6,891,154,734.34 | 6,891,154,734.34 | - | - |
| Other current liabilities | 885,956,581.63 | 889,618,828.21 | 889,618,828.21 | - | - |
| Long-term borrowings | 6,313,735,540.33 | 7,053,819,598.75 | - | 5,772,853,260.76 | 1,280,966,337.99 |
| Bonds payable | 20,930,681,967.19 | 24,531,511,141.22 | - | 16,073,205,487.93 | 8,458,305,653.29 |
| Lease liabilities | 1,647,129,968.61 | 2,503,787,833.87 | - | 1,119,187,835.33 | 1,384,599,998.54 |
| Long-term payables | 1,386,694,505.92 | 1,405,262,255.92 | - | 216,675,454.18 | 1,188,586,801.74 |
| Derivative financial liabilities | |||||
| Non-current liabilities due within one year | 732,733,351.01 | 732,733,351.01 | 732,733,351.01 | - | - |
(IX) DISCLOSURE OF FAIR VALUE
1. Closing balance of assets and liabilities measured at fair value
Unit: RMB
| Item | Fair value at closing balance | |||
| Level 1 | Level 2 | Level 3 | Total | |
| Measurements at fair value continuously | ||||
| Accounts receivable financing | - | 260,760,537.45 | - | 260,760,537.45 |
| Other equity instrument investments | 11,220,000.00 | - | 152,341,272.00 | 163,561,272.00 |
| Other non-current financial assets | 1,753,178,588.31 | 616,000,000.00 | 16,184,949.08 | 2,385,363,537.39 |
| Total assets measured at fair value continuously | 1,764,398,588.31 | 876,760,537.45 | 168,526,221.08 | 2,809,685,346.84 |
| Other non-current liabilities | - | - | 4,059,686,208.87 | 4,059,686,208.87 |
| Total liabilities measured at fair value continuously | - | - | 4,059,686,208.87 | 4,059,686,208.87 |
2. Basis for determining the market price of items continuously measured at level 1 fairvalue
The market prices of other equity instrument investments and other non-current financial assetsare determined at the closing price of the equity instrument at Shanghai Stock Exchange andHong Kong Stock Exchange at 31 December 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 148 -
(IX) DISCLOSURE OF FAIR VALUE - continued
3. Qualitative and quantitative information of valuation techniques and key parametersadopted for items continuously measured at level 2 fair value
| Item | Fair value in the current year | Fair value in the prior year | Valuation techniques | Inputs |
| Accounts receivable financing | 260,760,537.45 | - | Cash flow discounting | Discount rate |
| Other non-current financial assets | 616,000,000.00 | - | Listed company comparison approach | Share price |
The fair value of non-listed equity instruments included in equity instruments at fair value throughprofit or loss is determined using the valuation techniques such as listed company comparisonapproach etc. During the valuation, the Group needs to make estimates in respect of marketvolatility and relevance etc., select appropriate discount rate and take into consideration ofadjustment of discount and premium.
4. Qualitative and quantitative information of valuation techniques and key parameters
adopted for items continuously measured at level 3 fair value
Unit: RMB
| Item | Fair value in the current year | Fair value in the prior year | Valuation techniques | Inputs |
| Other equity instrument investments | 152,341,272.00 | 238,048,314.30 | Net worth method | Carrying amount |
| Other non-current financial assets | 2,000,000.00 | 2,000,000.00 | Cash flow discounting | Discount rate |
| Other non-current financial assets | 700,834.13 | 689,901.07 | Net worth method | Carrying amount |
| Other non-current financial assets | 13,484,114.95 | 533,366,660.39 | Listed company comparison approach | Share price |
| Other non-current liabilities | 3,326,952,857.86 | 3,260,547,002.45 | Cash flow discounting | Discount rate |
| Other non-current liabilities | 732,733,351.01 | 579,195,304.56 | Option Pricing method | Exercising price, expected volatility etc. |
The fair value of non-listed equity instruments included in equity instruments at fair value throughprofit or loss or other comprehensive income is determined using the valuation techniques such ascash flow discounting method, net worth method, listed company comparison approach etc.During the valuation, the Group needs to make estimates in respect of the future cash flows, creditrisk, market volatility and relevance etc., select appropriate discount rate and take intoconsideration of adjustment of discount and premium.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 149 -
(IX) DISCLOSURE OF FAIR VALUE - continued
5. Fair value of financial assets and financial liabilities not measured at fair value
The financial assets and liabilities not measured at fair value mainly include: notes receivable,accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable,other payables, long-term borrowings, bonds payable and long-term payables etc.
The Group's management believes that the carrying amounts of financial assets and financialliabilities at amortized cost in the financial statements approximate their fair values.
The fair value of bonds payable traded in active market is determined at the quoted price in theactive market. The fair values of long-term borrowings, long-term payables and bonds payablenot traded in active market are determined at the present value of contractual future cash flowsdiscounted using the interest rate for providing nearly the same cash flows to entity withcomparable credit rating under the same conditions.
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
1． Parent of the Company
| Name of the parent | Related party relationship | Type of the entity | Place of registration | Legal representative | Nature of business | Issued share capital | Proportion of the Company's ownership interests held by the parent (%) | Proportion of the Company's voting power held by the parent(%) |
| Broadford Global Limited | Parent company | Private limited company (share limited) | Hong Kong | Deng Weidong | Investment holding | HKD 21,120,986,262 | 2.88 | 81.92 (Note) |
Note: Broadford Global Limited directly holds 2.88% equity of the Company, and indirectly
holds 19.29% and 59.75% equity of the Company through the subsidiaries ChinaMerchants Gangtong Development (Shenzhen) Co., Ltd. and China Merchants InvestmentDevelopment Co., Ltd. respectively.
The ultimate controlling shareholder of the Company is China Merchants Group.
2. Subsidiaries of the Company
Details of the subsidiaries of the Company are set out in Note (VII) 1.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 150 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
3. Associates and joint ventures of the Company
Details of the Company's significant joint ventures and associates are set out in Note (VII) 3.
Other joint ventures or joint ventures that occurred related party transactions and formed balanceswith the Group this year are as follows:
| Name of joint venture or associate | Relationship with the Company |
| Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi | Joint venture |
| Port of Newcastle and its subsidiaries | Joint venture |
| Guizhou East Land Port Operation Co., Ltd. | Joint venture |
| Longteng Shipping (Note) | Joint venture |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Joint venture |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Joint venture |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Joint venture |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Joint venture |
| Qingdao Wutong Century Supply Chain Co., Ltd. | Joint venture |
| COSCO Logistics (Zhanjiang) Co., Ltd. | Joint venture |
| China Merchants Antong Logistics Management Company | Joint venture |
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | Joint venture |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | Joint venture |
| Doraleh Multi-purpose Port | Associate |
| Great Horn Development Company FZCO | Associate |
| International Djibouti Industrial Parks Operation FZCO | Associate |
| Port de Djibouti S.A. | Associate |
| Terminal Link SAS | Associate |
| Tin-Can Island Container Terminal Ltd | Associate |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | Associate |
| Nanshan Group and its subsidiaries | Associate |
| Shanghai International Port (Group) Co., Ltd. | Associate |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | Associate |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Associate |
| Modern Terminals Limited | Associate |
| China Merchants Harbor City | Associate |
| Zhanjiang Xiagang United Development Co., Ltd. | Associate |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Associate |
| Chu Kong River Trade Terminal Co. Ltd. | Associate |
Note: See Note (VI) 1, it is no longer a related party of the Group since 31 December 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 151 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
| Name of other related parties | Relationship with the Company |
| Qingdao Port (Group) Co., Ltd. | Minority shareholders of subsidiaries |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | Minority shareholders of subsidiaries |
| Zhanjiang Infrastructure | Minority shareholders of subsidiaries |
| Antong Holdings and its subsidiaries (Note 1) | Connected person |
| China COSCO Shipping Group and its subsidiaries (Note 1) | Connected person |
| CMHK | Controlled by the same ultimate controlling shareholder |
| Sinotrans (NZ) Limited | Controlled by the same ultimate controlling shareholder |
| Guangdong Sinotrans Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Guangzhou International Ocean Shipping Agency Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Hoi Tung (Shanghai) Company Limited | Controlled by the same ultimate controlling shareholder |
| South China Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| EuroAsia Dockyard Enterprise and development Ltd. | Controlled by the same ultimate controlling shareholder |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shantou COSCO Shipping Agency Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Nanyou (Holdings) Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Qianhai Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Landmark (Shenzhen) Co ., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants International Shipping Agency (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen China Merchants Shekou Assets Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants (Shenzhen) Power Supply., Ltd. | Controlled by the same ultimate controlling shareholder |
| Csc Roro Logistics Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Merchants Construction Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen China Merchants Property Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Ocean Shipping Tally Shenzhen CO., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Controlled by the same ultimate controlling shareholder |
| Yiu Lian Dockyards (Shekou) Limited | Controlled by the same ultimate controlling shareholder |
| Yiu Lian Dockyards Limited | Controlled by the same ultimate controlling shareholder |
| Zhanjiang port (note 2) | Controlled by the same ultimate controlling shareholder |
| CM Houlder Insurance Brokers Limited | Controlled by the same ultimate controlling shareholder |
| China Merchants Godown, Wharf & Transportation Company Limited | Controlled by the same ultimate controlling shareholder |
| Huanan Refrigeration Ice Making (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Hanghua Science & Technology & Trade Center Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Group Finance Company Limited | Controlled by the same ultimate controlling shareholder |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company - continued
| Name of other related party | Relationship with the Company |
| China Merchants Steam Navigation Company Limited | Controlled by the same ultimate controlling shareholder |
| China Merchants Life Insurance Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Food (China) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Tongshang Finance Lease Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Logistics Shenzhen Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Property Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Zhangzhou Development Zone Power Supply Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Zhangzhou Development Zone Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Your Cellar (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants Securities Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Communications Import & Export Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Ocean Shipping Agency Shenzhen | Controlled by the same ultimate controlling shareholder |
| Sinotrans South China Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Outbound Air Transport Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Sinotrans Container Lines Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Sinotrans Container Lines (Hong Kong) Company Limited | Controlled by the same ultimate controlling shareholder |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | Where the ultimate controlling shareholder has significant influence |
| Shenzhen Zhaogang Seaway Goods Trading Center | Where the ultimate controlling shareholder has significant influence |
| Khor Ambado FZCo | Where the ultimate controlling shareholder has significant influence |
| China Merchant Bank Co., Ltd. | Where the ultimate controlling shareholder has significant influence |
Note 1: From 9 September 2019 to 31 December 2019, the Company's Chairman Fu Gangfeng
work as the key management personnel of both the Company and China COSCOShipping Corporation Limited; from 25 September 2019 to 31 December 2019, theCompany's deputy general manager Zheng Shaoping work as the senior managementpersonnel of both the Company and Antong Holdings Co., Ltd. Therefore, the relatedparty transactions and balances for the period in which the aforesaid two persons were thedirector, senior management personnel of China COSCO Shipping Corporation Limitedand Antong Holdings Co., Ltd. are disclosed.
Note 2: See Note (VI) 1, it is no longer a related party of the Group since 3 February 2019.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 153 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions
(1) Rendering and receipt of service
Unit: RMB
| Related party | Content of transaction | Pricing method and decision procedures of related transactions | Closing balance | Opening balance |
| Receipt of service: | ||||
| Nanshan Group and its subsidiaries | Service expenditure | Negotiation | 59,399,028.43 | 1,080,269.25 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service expenditure | Negotiation | 18,116,312.14 | 15,358,571.88 |
| Yiu Lian Dockyards Limited | Service expenditure | Negotiation | 11,822,773.93 | 10,019,922.18 |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Service expenditure | Negotiation | 8,063,768.58 | 10,707,148.03 |
| COSCO Logistics (Zhanjiang) Co., Ltd. | Service expenditure | Negotiation | 5,302,779.67 | |
| China Merchants Zhangzhou Development Zone Power Supply Co., Ltd. | Service expenditure | Negotiation | 5,050,730.12 | 5,681,278.30 |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | Service expenditure | Negotiation | 4,291,294.93 | 3,751,785.75 |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Service expenditure | Negotiation | 2,998,142.60 | 3,539,104.80 |
| China Merchants (Shenzhen) Power Supply., Ltd. | Service expenditure | Negotiation | 2,611,504.71 | 2,908,847.34 |
| Shenzhen China Merchants Property Management Co., Ltd. | Service expenditure | Negotiation | 2,496,785.30 | - |
| CM Houlder Insurance Brokers Limited | Service expenditure | Negotiation | 2,475,979.40 | 2,102,764.12 |
| China Merchants Your Cellar (Shenzhen) Co., Ltd. | Service expenditure | Negotiation | 1,887,287.74 | - |
| China Merchants Life Insurance Co., Ltd. | Service expenditure | Negotiation | 1,674,762.08 | - |
| Hoi Tung (Shanghai) Company Limited | Service expenditure | Negotiation | 1,472,835.51 | 3,461,147.79 |
| China Outbound Air Transport Co., Ltd. | Service expenditure | Negotiation | 1,178,932.56 | 2,199,064.60 |
| China Ocean Shipping Tally Shenzhen CO., Ltd. | Service expenditure | Negotiation | 1,168,331.49 | 1,240,537.34 |
| China Communications Import & Export Co., Ltd. | Service expenditure | Negotiation | 1,076,783.22 | - |
| China Merchants Property Management Co., Ltd. | Service expenditure | Negotiation | 569,772.90 | 1,764,315.36 |
| China Merchants Securities Co., Ltd. | Service expenditure | Negotiation | - | 22,641,509.43 |
| Other related party | Service expenditure | Negotiation | 5,255,018.65 | 4,917,018.18 |
| Shenzhen China Merchants Property Management Co., Ltd. | Property utilities | Negotiation | 19,706,450.63 | 13,814,358.72 |
| Nanshan Group and its subsidiaries | Property utilities | Negotiation | 5,923,767.12 | 2,052,879.52 |
| Other related party | Property utilities | Negotiation | 2,114,730.66 | 1,920,545.44 |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Lease service fee | Negotiation | 6,447,169.81 | - |
| China Merchants Group Finance Company Limited | Interest expense | Negotiation | 42,581,045.29 | 51,574,070.78 |
| Port de Djibouti S.A. | Interest expense | Negotiation | 7,364,273.28 | 24,719,148.38 |
| China Merchant Bank Co., Ltd. | Interest expense | Negotiation | 3,618,321.05 | 104,400.00 |
| China Merchants Steam Navigation Company Limited | Interest expense | Negotiation | - | 3,961,479.45 |
| Total | 224,668,581.80 | 189,520,166.64 | ||
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 154 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(1) Rendering and receipt of service - continued
Unit: RMB
| Related party | Content of transaction | Pricing method and decision procedures of related transactions | Closing balance | Opening balance |
| Rendering of service: | ||||
| COSCO Logistics (Zhanjiang) Co., Ltd. | Service revenue | Negotiation | 142,786,686.45 | |
| China COSCO Shipping Group and its subsidiaries | Service revenue | Negotiation | 128,551,617.88 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Service revenue | Negotiation | 54,976,948.20 | 59,871,312.19 |
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | Service revenue | Negotiation | 48,467,968.01 | |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Service revenue | Negotiation | 33,230,929.57 | - |
| Antong Holdings and its subsidiaries | Service revenue | Negotiation | 30,031,214.77 | |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd | Service revenue | Negotiation | 22,026,784.26 | 26,678,580.24 |
| Khor Ambado FZCo | Service revenue | Negotiation | 13,593,100.08 | 22,976,552.15 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service revenue | Negotiation | 9,297,044.19 | 14,667,866.59 |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Service revenue | Negotiation | 7,924,860.20 | 11,339,084.02 |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | Service revenue | Negotiation | 7,624,557.93 | 13,954,183.68 |
| Huanan Refrigeration Ice Making (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 6,487,127.00 | 6,422,615.01 |
| Sinotrans (NZ) Limited | Service revenue | Negotiation | 6,191,950.42 | - |
| Yiu Lian Dockyards (Shekou) Limited | Service revenue | Negotiation | 5,818,220.17 | 3,319,608.63 |
| Guizhou East Land Port Operation Co., Ltd. | Service revenue | Negotiation | 5,538,484.09 | |
| China Merchants International Shipping Agency (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 5,516,336.45 | 3,013,980.25 |
| International Djibouti Industrial Parks Operation FZCO | Service revenue | Negotiation | 5,109,432.57 | 3,054,612.36 |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | Service revenue | Negotiation | 4,995,026.14 | |
| Longteng Shipping | Service revenue | Negotiation | 4,250,943.39 | |
| Sinotrans Container Lines Co., Ltd. | Service revenue | Negotiation | 4,173,590.92 | 10,699,341.99 |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Service revenue | Negotiation | 3,973,305.23 | 3,929,015.11 |
| South China Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 3,574,103.34 | - |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Service revenue | Negotiation | 3,165,271.40 | 3,411,057.43 |
| Great Horn Development Company FZCO | Service revenue | Negotiation | 2,492,673.00 | 3,985,900.36 |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Service revenue | Negotiation | 2,465,482.40 | 5,804,690.70 |
| Shenzhen China Merchants Shekou Assets Management Co., Ltd. | Service revenue | Negotiation | 2,297,545.50 | - |
| Sinotrans Container Lines (Hong Kong) Company Limited | Service revenue | Negotiation | 2,211,004.97 | 2,182,888.92 |
| Qingdao Wutong Century Supply Chain Co., Ltd. | Service revenue | Negotiation | 2,061,301.86 | - |
| Shenzhen Zhaogang Seaway Goods Trading Center | Service revenue | Negotiation | 2,026,044.81 | - |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Service revenue | Negotiation | 1,855,239.95 | 5,085,762.32 |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | Service revenue | Negotiation | 1,775,122.48 | 1,574,244.92 |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 1,643,202.86 | 1,071,100.78 |
| Shanghai International Port (Group) Co., Ltd. | Service revenue | Negotiation | 1,588,035.85 | 1,588,035.85 |
| CMHK | Service revenue | Negotiation | 1,412,000.00 | 1,600,000.00 |
| Terminal Link SAS | Service revenue | Negotiation | 1,362,717.34 | 1,378,437.57 |
| China Merchants Logistics Shenzhen Co., Ltd. | Service revenue | Negotiation | 1,267,111.56 | 927,269.16 |
| Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi | Service revenue | Negotiation | 1,200,615.17 | 1,119,436.15 |
| Sinotrans Shantou Company Limited | Service revenue | Negotiation | 1,142,737.27 | 607,506.45 |
| Shenzhen Qianhai Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 1,073,773.97 | - |
| Doraleh Multi-purpose Port | Service revenue | Negotiation | 1,062,268.33 | 337,140.73 |
| Nanshan Group and its subsidiaries | Service revenue | Negotiation | 1,000,829.05 | 359,379.51 |
| Guangzhou International Ocean Shipping Agency Co., Ltd. | Service revenue | Negotiation | 935,982.67 | 1,312,017.95 |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Service revenue | Negotiation | 283,404.19 | 2,496,490.06 |
| China Outbound Air Transport Co., Ltd. | Service revenue | Negotiation | 386.55 | 1,993,291.26 |
| Zhanjiang port | Service revenue | Negotiation | - | 5,568,651.21 |
| Port de Djibouti S.A. | Service revenue | Negotiation | - | 4,640,763.43 |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Service revenue | Negotiation | - | 2,484,304.00 |
| Other related party | Service revenue | Negotiation | 8,688,006.09 | 6,874,767.79 |
| Port of Newcastle and its subsidiaries | Interest income | Negotiation | 62,584,543.33 | 34,416,578.56 |
| China Merchants Harbor City | Interest income | Negotiation | 48,716,656.41 | |
| China Merchant Bank Co., Ltd. | Interest income | Negotiation | 26,074,287.83 | 34,629,531.08 |
| Khor Ambado FZCo | Interest income | Negotiation | 18,187,714.88 | 51,599,386.03 |
| China Merchants Group Finance Company Limited | Interest income | Negotiation | 7,814,725.11 | 14,042,476.82 |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Interest income | Negotiation | 1,394,695.28 | 1,383,325.48 |
| Modern Terminals Limited | Interest income | Negotiation | - | 1,193,424.67 |
| Other related party | Interest income | Negotiation | 60,804.82 | 60,669.23 |
| Total | 761,984,416.19 | 373,655,280.64 | ||
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 155 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(2) Leases with related parties
The Group as the lessor:
Unit: RMB
| Name of the lessee | Type of leased assets | Pricing method and decision procedures of related transactions | Lease income recognized in the current year | Lease income recognized in the prior year |
| China Merchants Food (China) Co., Ltd. | Buildings | Negotiation | 5,675,752.58 | 3,393,457.47 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Port and terminal facilities | Negotiation | 4,571,984.36 | - |
| China Communications Import & Export Co., Ltd. | Buildings | Negotiation | 3,943,926.21 | 2,699,223.60 |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Buildings | Negotiation | 3,816,263.45 | - |
| Nanshan Group and its subsidiaries | Buildings | Negotiation | 2,698,718.83 | 3,506,398.00 |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Buildings | Negotiation | 2,678,324.75 | - |
| Yiu Lian Dockyards (Shekou) Limited | Buildings | Negotiation | 2,441,075.14 | 2,025,218.14 |
| Qingdao Wutong Century Supply Chain Co., Ltd. | Buildings | Negotiation | 1,082,330.31 | - |
| China Merchants Securities Co., Ltd. | Buildings | Negotiation | 2,330,741.02 | - |
| Shenzhen Nanyou (Holdings) Ltd. | Buildings | Negotiation | 426,100.95 | 2,400,571.43 |
| Other related party | Buildings, land use rights | Negotiation | 3,015,488.40 | 1,573,182.07 |
| Total | 32,680,706.00 | 15,598,050.71 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 156 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(2) Leases with related parties - continued
The Group as the lessee:
Unit: RMB
| Name of the lessor | Type of leased assets | Retail (Year) | Lease term (disclose the period covered by contract) | Other significant terms and conditions of the lease |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Port and terminal facilities | 108,319,079.87 | 9 March 2018 - 26 March 2024 | N/A |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Machinery equipment, port and terminal facilities | 65,715,388.88 | 30 November 2018 - 30 November 2024 | N/A |
| Nanshan Group and its subsidiaries | Buildings, port and terminal facilities | 56,968,753.40 | 1 January 2016 - 31 December 2018 | N/A |
| China Merchants Tongshang Finance Lease Co., Ltd. | Machinery equipment | 46,381,918.54 | 30 October 2017 - 27 October 2023 | N/A |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Port and terminal facilities | 20,621,444.76 | 1 July 2017 - 31 December 2019 | N/A |
| China Merchants Tongshang Finance Lease Co., Ltd. | Machinery equipment | 17,717,147.04 | 26 December 2016 - 15 November 2022 | N/A |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Port and terminal facilities | 14,409,799.89 | 1 January 2018 - 31 December 2019 | N/A |
| EuroAsia Dockyard Enterprise and development Ltd. | Port and terminal facilities | 13,642,731.02 | 1 January 2018 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 6,397,693.72 | 1 January 2016 - 31 December 2018 | Attached with renewal option |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Others | 5,823,873.60 | 1 January 2019 - 31 December 2019 | Attached with renewal option |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Buildings | 5,363,598.90 | 1 January 2018 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Others | 4,858,285.68 | 1 June 1998 - 31 May 2018 | Attached with renewal option |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | Buildings | 3,541,404.00 | 1 March 2017 - 28 February 2020 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 3,101,220.22 | 1 January 2019 - 31 December 2019 | Attached with renewal option |
| Nanshan Group and its subsidiaries | Buildings | 2,936,922.24 | 1 July 2019 - 31 December 2019 | N/A |
| Shenzhen Nanyou (Holdings) Ltd. | Buildings | 1,995,553.14 | 1 January 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 1,817,704.08 | 1 January 2016 - 31 December 2018 | Attached with renewal option |
| China Merchants Godown, Wharf & Transportation Co., LTD. | Vehicles and vessels | 1,457,985.47 | 1 January 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 1,428,571.43 | 1 May 2015 - 30 April 2020 | N/A |
| China Merchants Hanghua Science & Technology & Trade Center Co., Ltd. | Port and terminal facilities | 990,257.55 | 1 May 2018 - 30 April 2021 | N/A |
| China Merchants Hanghua Science & Technology & Trade Center Co., Ltd. | Buildings | 750,288.73 | 1 January 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 693,151.72 | 1 January 2017 - 25 August 2021 | N/A |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | Buildings | 687,796.80 | 1 September 2018 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 658,661.84 | 25 August 2018 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Port and terminal facilities | 639,738.84 | 1 January 2019 - 31 December 2020 | N/A |
| Nanshan Group and its subsidiaries | Buildings | 500,146.74 | 1 May 2019 - 31 December 2019 | N/A |
| Nanshan Group and its subsidiaries | Others | 461,005.72 | 1 January 2017 - 31 December 2020 | N/A |
| Other related party | Buildings | 1,107,721.69 | 1 January 2015 - 31 December 2023 | N/A |
| Total | 388,987,845.51 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 157 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(3) Related party guarantees
The Group as the guarantor
Unit: RMB
| Secured party | Credit Line | Guaranteed amount | Commencement date | Maturity | The guarantee has been completed or not | |
| 2019 | ||||||
| Terminal Link SAS (note 1) | 24,982,114.97 | 12,241,236.33 | June 2013 | 2019 | Yes | |
| Terminal Link SAS (note 1) | 80,305,197.15 | 80,305,197.15 | June 2013 | 2033 | No | |
| Khor Ambado FZCo (note 2) | 200,914,560.00 | 118,398,397.00 | 24 May 2019 | 2032 | No | |
| Port de Djibouti S.A. | 343,160,000.00 | 24,192,780.00 | 14 June 2016 | 14 June 2019 | Yes | |
| Total | 649,361,872.12 | 235,137,610.48 | ||||
| 2018 | ||||||
| Terminal Link SAS (note 1) | 82,195,789.24 | 82,195,789.24 | June 2013 | 2033 | No | |
| Terminal Link SAS (note 1) | 24,982,114.97 | 12,241,236.33 | June 2013 | 2019 | No | |
| Port de Djibouti S.A. | 343,160,000.00 | 24,192,780.00 | 14 June 2016 | 14 June 2019 | No | |
| Total | 450,337,904.21 | 118,629,805.57 | ||||
Note 1: CMA CGM S.A. is another shareholder of Terminal Link SAS, an associate of the
Group. The Group has made a commitment to CMA CGM S.A. that the Group willprovides guarantee for its bank loan financing to the associate Terminal Link SAS andother liabilities to the extent of the Group's 49% ownership interest in the company. Theactual guaranteed amount is RMB80,305,197.15 on 31
December 2019. If any guaranteeliability occurs, the Group will compensate CMA CGM S.A.
Note 2: Khor Ambado FZCo is a related company of the Group's common ultimate controlling
shareholder. The Group provides guarantee for its bank loans and other liabilities, withactual guaranteed amount of RMB118,398,397.00.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 158 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(4) Borrowings and loans with related parties
Unit: RMB
| Related party | Amount | Commencement date | Maturity date | Description |
| 2019 | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 300,378,812.51 | 2 December 2019 | 1 December 2020 | Fixed interest rate of 4.1325% |
| China Merchants Group Finance Company Limited | 270,548,281.28 | 22 April 2019 | 21 April 2020 | Fixed interest rate of 4.3500% |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 150,000,000.00 | 23 December 2019 | 23 December 2025 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 150,000,000.00 | 27 August 2019 | 26 August 2020 | Fixed interest rate of 4.1325% |
| China Merchants Group Finance Company Limited | 56,483,984.71 | 1 July 2019 | 1 July 2034 | Fixed interest rate of 4.6550% |
| China Merchants Group Finance Company Limited | 50,061,625.00 | 4 June 2019 | 3 June 2020 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 50,000,000.00 | 29 July 2019 | 28 July 2022 | Fixed interest rate of 4.5125% |
| China Merchants Group Finance Company Limited | 47,000,000.00 | 14 October 2019 | 13 October 2024 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 33,052,804.00 | 22 July 2019 | 21 July 2020 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 29,000,000.00 | 18 October 2019 | 17 October 2023 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 28,000,000.00 | 15 January 2019 | 14 January 2024 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 23,000,000.00 | 10 June 2019 | 14 January 2024 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 10,000,000.00 | 28 December 2019 | 31 October 2023 | Fixed interest rate of 1.2000% |
| China Merchants Group Finance Company Limited | 6,000,000.00 | 22 July 2019 | 21 July 2020 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 1,000,000.00 | 24 December 2019 | 23 December 2020 | Fixed interest rate of 4.3500% |
| Total | 1,204,525,507.50 | |||
| Lendings | ||||
| China Merchants Antong Logistics Management Company | 50,000,000.00 | 24 September 2019 | 24 September 2021 | Fixed interest rate of 8.5000% |
| 2018 | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 270,000,000.00 | 23 April 2018 | 22 April 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 220,000,000.00 | 17 May 2018 | 16 May 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 80,000,000.00 | 11 December 2018 | 10 December 2028 | Fixed interest rate of 4.8020% |
| China Merchants Group Finance Company Limited | 60,000,000.00 | 19 June 2018 | 20 June 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 40,000,000.00 | 20 May 2018 | 21 May 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 7 December 2018 | 6 December 2019 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 20 December 2018 | 19 December 2021 | Fixed interest rate of 4.2750% |
| China Merchants Group Finance Company Limited | 25,000,000.00 | 6 December 2018 | 5 October 2021 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 20,000,000.00 | 17 December 2018 | 16 December 2019 | Fixed interest rate of 4.3500% |
| Total | 775,000,000.00 | |||
| Lendings | ||||
| Port of Newcastle and its subsidiaries | 784,057,712.75 | 14 June 2018 | 29 May 2020 | Fixed interest rate of 8.0000% |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 159 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(5) Compensation for key management personnel
Unit: RMB
| Item | Closing balance | Opening balance |
| Compensation for key management personnel | 26,856,013.14 | 19,243,010.16 |
(6) Other related party transactions
At 24 December 2018, Shenzhen Urban Planning, Land and Resources Commission, ShenzhenQianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration("Qianhai Administration"), China Merchants Group, Shenzhen China Merchants Qianhai ChidiIndustrial Co., Ltd.("China Merchants Chidi"), the Company's subsidiaries ATJ and ASJ as wellas China Merchants Shekou Industrial Zone Holdings Co., Ltd. and its 16 subsidiaries ("previous19 land-holding companies") etc., totally 23 organizations, jointly signed the "China MerchantsGroup Qianhai Logistics Park Land Restructuring Agreement" (the "Land RestructuringAgreement").
According to the agreement, the previous 19 land-holding companies return the land use rights ofthe lands within the scope of restructuring to Qianhai Administration. Qianhai Administrationreplaces 55% land and corresponding shoreline (land area about 531,300 square meters) includedin the total areas of T102-0166 and T102-0167 held by ATJ and ASJ to Dachanwan port areaPhase II. In addition, other land use rights held by the previous 19 land-holding companiestotaling to RMB43.21 billion (valuation benchmark date is 1 January 2015) is recovered byQianhai Administration. After changing the nature of land use rights, Qianhai Administrationreturn equivalent land use rights as the consideration to recover all the land use rights other thanthe Dachanwan port area Phase II that need to be replaced according to the original plan.
As at 31 December 2019, the procedures of changing the Dachanwan port area Phase II land userights are not yet completed. The corresponding original carrying amount of land use rights ofRMB916,884,222,49 is transferred to other non-current assets.
ATJ and China Merchants Shekou Industrial Zone Holdings Co., Ltd.with its subsidiary ShenzhenChina Merchants Shekou Assets Management Co., Ltd. jointly setup China Merchants QianhaiIndustry in 2016, which setup China Merchants Chidi in 2017. The previous 19 land-holdingcompanies jointly holds the equity of China Merchants Qianhai Industry according to the share ofpreviously held land use rights, and completed the capital increase of China Merchants QianhaiIndustry in 2019. Among the 19 companies, ATJ and ASJ totally contributedRMB7,456,412,803.00 and hold 14% equity of China Merchants Qianhai Industry.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(6) Other related party transactions - continued
According to the joint venture and cooperation arrangement relating to land restructuring, theprevious 19 land-holding companies designate the China Merchants Chidi as the holder of thelands other than Dachanwan port area Phase II obtained in the above land restructuring. QianhaiAdministration designate its wholly-owned sub-subsidiary Shenzhen Qianhai Hongyu IndustrialInvestment Co., Ltd. (the "Qianhai Hongyu") as the land holder in respect of the land use rights(with reimbursements deducted) obtained in above land restructuring.
In 2016, Shenzhen Qianhai Shekou Free Trade Investment Development Co., Ltd. (hereinafterreferred to as "Qianhai Free Trade") was jointly established by Shenzhen Merchants QianhaiIndustrial Development Co., Ltd. and Shenzhen Qianhai Development Investment Holding Co.,Ltd. (hereinafter referred to as "Qianhai Investment Holding") which is a wholly-ownedsubsidiary of Qianhai Administration Bureau, with each accounting for 50% of the equity andbeing controlled by Shenzhen Merchants Qianhai Industrial Development Co., Ltd. through theArticles of Association and relevant agreements.
In December 2019, Shenzhen Merchants Qianhai Industrial Development Co., Ltd., QianhaiInvestment Holding and Qianhai Free Trade jointly signed a capital increase agreement.According the agreement, Qianhai Free Trade, as a leading role, purchased 100% shares of ChinaMerchants Chidi and 100% shares of China Merchants Chidi legally held by Shenzhen MerchantsQianhai Industrial Development Co., Ltd. and Shenzhen Qianhai Development InvestmentHolding Co., Ltd. respectively in the form of capital increase and share expansion. Meanwhile,Shenzhen Merchants Qianhai Industrial Development Co., Ltd. increased capital into QianhaiFree Trade with cash of RMB 8.5 billion. The above transaction was completed on December 30,2019. After the completion of the transaction, Shenzhen Merchants Qianhai IndustrialDevelopment Co., Ltd. and Shenzhen Qianhai Development Investment Holding Co., Ltd. stillhold 50% equity of Qianhai Free Trade respectively, with Shenzhen Merchants Qianhai IndustrialDevelopment Co., Ltd. controlling Qianhai Free Trade through the Articles of Association andrelevant agreements.
Except for the land use rights for replacement of Dachanwan port area Phase II, ATJ and ASJreturned land and its accompany buildings with a compensation of RMB4,193,314,004.68.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties
(1) Amounts due from related parties
Unit: RMB
| Item | Related party | Closing balance | Opening balance |
| Cash and bank balances | China Merchant Bank Co., Ltd. | 1,451,996,464.50 | 1,274,536,476.91 |
| China Merchants Group Finance Company Limited | 890,065,186.36 | 494,131,151.34 | |
| Total | 2,342,061,650.86 | 1,768,667,628.25 | |
| Accounts receivable | China COSCO Shipping Group and its subsidiaries | 60,545,437.55 | |
| Antong Holdings and its subsidiaries | 60,112,564.13 | ||
| COSCO Logistics (Zhanjiang) Co., Ltd. | 7,728,194.66 | ||
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | 5,609,630.60 | 4,678,761.75 | |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | 4,643,545.31 | 7,222,351.10 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 4,424,422.68 | 5,112,134.91 | |
| Guizhou East Land Port Operation Co., Ltd. | 4,043,600.57 | ||
| Guangdong Sinotrans Shipping Agency Co., Ltd. | 3,583,505.77 | - | |
| Khor Ambado FZCo | 3,113,788.09 | 458,050.86 | |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 2,986,271.27 | 74,485.74 | |
| Great Horn Development Company FZCo | 2,771,510.50 | 1,486,615.75 | |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | 2,010,137.38 | ||
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | 1,853,183.12 | 1,490,941.09 | |
| South China Sinotrans Supply Chain Management Co., Ltd. | 1,808,219.75 | - | |
| Sinotrans Container Lines Co., Ltd. | 1,746,120.89 | 1,156,769.47 | |
| Port de Djibouti S.A. | 1,689,447.85 | 6,387,923.40 | |
| China Merchants Harbor City | 1,536,503.45 | ||
| China Marine Shipping Agency Shenzhen Co. , Ltd. | 1,058,089.50 | 1,115,972.50 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 914,392.86 | 1,029,573.58 | |
| Other related party | 4,216,087.14 | 4,106,365.60 | |
| Total | 176,394,653.07 | 34,319,945.75 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 162 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
| Item | Related party | Closing balance | Opening balance (restated) |
| Other receivables | Nanshan Group and its subsidiaries | 313,724,861.31 | 175,976,941.31 |
| Tin-Can Island Container Terminal Ltd | 82,625,546.31 | 128,428.02 | |
| Chu Kong River Trade Terminal Co. Ltd. | 61,317,510.00 | 59,975,890.00 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 50,000,000.00 | 25,000,000.00 | |
| Tianjin Haitian Bonded Logistics Co., Ltd. | 33,282,119.52 | 34,300,000.00 | |
| Zhanjiang Infrastructure | 31,513,558.59 | ||
| Port de Djibouti S.A. | 24,832,398.83 | 24,411,770.72 | |
| COSCO Logistics (Zhanjiang) Co., Ltd. | 13,751,368.26 | ||
| Guangdong Sinotrans Co., Ltd. | 3,803,477.07 | - | |
| Csc Roro Logistics Co., Ltd. | 2,899,163.95 | 2,899,163.95 | |
| EuroAsia Dockyard Enterprise and development Ltd. | 1,514,281.82 | 1,481,149.51 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 1,068,658.39 | 1,051,801.58 | |
| Shanghai International Port (Group) Co., Ltd. | - | 50,118,027.14 | |
| Zhanjiang port | 9,253,682.23 | ||
| Other related party | 4,199,662.93 | 3,282,269.08 | |
| Total | 624,532,606.98 | 387,879,123.54 | |
| Prepayments | Other related party | 1,414,261.04 | - |
| Other current assets | China Merchant Bank Co., Ltd. | 1,528,851,492.46 | - |
| Khor Ambado FZCo | - | 1,029,478,047.00 | |
| Total | 1,528,851,492.46 | 1,029,478,047.00 | |
| Non-current assets due within one year | Port of Newcastle and its subsidiaries | 809,702,715.78 | 15,858,848.40 |
| Khor Ambado FZCo | - | 7,332,144.82 | |
| China Merchants Group Finance Company Limited | - | 2,565,333.33 | |
| Other related party | - | 229,704.43 | |
| Total | 809,702,715.78 | 25,986,030.98 | |
| Long-term receivables | China Merchants Harbor City | 1,025,631,435.87 | |
| China Merchants Antong Logistics Management Company | 50,000,000.00 | ||
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 14,500,000.00 | - | |
| Terminal Link SAS | 9,800,295.76 | 9,782,367.44 | |
| Port of Newcastle and its subsidiaries | - | 784,057,712.75 | |
| Total | 1,099,931,731.63 | 793,840,080.19 | |
| Other non-current assets | China Merchants Shekou Industrial Zone Holdings Co., Ltd. | - | 43,472,687.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 163 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties
Unit: RMB
| Item | Related party | Closing balance | Opening balance |
| Short-term borrowings | China Merchants Group Finance Company Limited | 841,079,404.24 | 640,000,000.00 |
| China Merchant Bank Co., Ltd. | 70,093,041.67 | - | |
| Total | 911,172,445.91 | 640,000,000.00 | |
| Accounts payable | Nanshan Group and its subsidiaries | 10,747,794.44 | 11,631,575.13 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 7,641,839.79 | 5,196,134.76 | |
| EuroAsia Dockyard Enterprise and development Ltd. | 2,974,168.52 | 3,698,897.16 | |
| Yiu Lian Dockyards Limited | 1,676,082.11 | 2,204,328.63 | |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | 1,006,844.56 | 928,527.51 | |
| Other related party | 3,614,167.59 | 2,323,725.85 | |
| Total | 27,660,897.01 | 25,983,189.04 | |
| Receipts in advance | Other related party | 600,535.85 | 66,799.01 |
| Contract liabilities | Guangdong Sinotrans Shipping Agency Co., Ltd. | 3,577,148.00 | - |
| Zhanjiang port | 1,287,452.83 | ||
| Other related party | 2,454,025.09 | 803,584.16 | |
| Total | 6,031,173.09 | 2,091,036.99 | |
| Other payables | Terminal Link SAS | 88,978,919.98 | 46,506,416.54 |
| Modern Terminals Limited | 59,038,373.05 | 1,286,962.56 | |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | 37,402,426.09 | 37,402,426.09 | |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | 20,762,053.30 | 951,301.52 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 11,305,700.00 | 10,000.00 | |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 11,250,000.00 | - | |
| Shenzhen China Merchants Property Management Co., Ltd. | 9,264,823.90 | 18,294,814.64 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 8,947,256.82 | 9,355,392.43 | |
| Zhanjiang Xiagang United Development Co., Ltd. | 1,433,990.57 | ||
| China Merchants Food (China) Co., Ltd. | 1,264,171.10 | 1,254,271.10 | |
| COSCO Logistics (Zhanjiang) Co., Ltd. | 1,258,811.65 | ||
| China Merchants Securities Co., Ltd. | 424,557.30 | 22,641,509.43 | |
| Shenzhen Merchants Construction Co., Ltd. | 156,590.00 | 28,379,667.10 | |
| China Merchants Zhangzhou Development Zone Co., Ltd. | - | 93,258,350.90 | |
| Sinotrans South China Co., Ltd. | - | 25,949,781.00 | |
| Port de Djibouti S.A. | - | 2,951,170.40 | |
| Qingdao Port (Group) Co., Ltd. | - | 2,700,000.00 | |
| China Merchants Group Finance Company Limited | - | 1,043,521.17 | |
| Other related party | 6,257,011.91 | 5,375,438.53 | |
| Total | 257,744,685.67 | 297,361,023.41 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 164 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties - continued
Unit: RMB
| Item | Related party | Closing balance | Opening balance |
| Non-current liabilities due within one year | China Merchants Finance Lease (Tianjin) Co., Ltd. | 145,861,850.10 | |
| China Merchants Tongshang Finance Lease Co., Ltd. | 56,146,040.22 | ||
| Nanshan Group and its subsidiaries | 52,656,827.70 | ||
| EuroAsia Dockyard Enterprise and development Ltd. | 14,269,498.38 | ||
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 5,579,040.25 | ||
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 5,454,253.54 | ||
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | 3,263,992.11 | ||
| China Merchants Landmark (Shenzhen) Co ., Ltd. | 1,242,022.25 | ||
| Other related party | 1,770,041.27 | ||
| Total | 286,243,565.82 | ||
| Other current liabilities | Port de Djibouti S.A. | - | 241,927,341.05 |
| Other non-current liabilities | Nanshan Group and its subsidiaries | 1,564,380.59 | - |
| Long-term borrowings | China Merchants Group Finance Company Limited | 376,483,984.71 | 135,000,000.00 |
| China Merchant Bank Co., Ltd. | 20,000,000.00 | - | |
| Total | 396,483,984.71 | 135,000,000.00 | |
| Long-term payables | China Merchants Finance Lease (Tianjin) Co., Ltd. | 144,000,000.00 | - |
| Lease liabilities | China Merchants Finance Lease (Tianjin) Co., Ltd. | 491,666,949.79 | |
| China Merchants Tongshang Finance Lease Co., Ltd. | 161,829,816.02 | ||
| Nanshan Group and its subsidiaries | 167,685,128.23 | ||
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 5,691,513.57 | ||
| Other related party | 1,880,637.25 | ||
| Total | 828,754,044.86 |
(XI) COMMITMENTS AND CONTINGENCIES
1. Significant commitments
Unit: RMB
| Item | 31/12/2019 | 31/12/2018 |
| Commitments that have been entered into but have not been recognized in the financial statements | ||
| - Commitment to acquire long-term assets | 3,767,236,258.74 | 3,971,730,917.34 |
| - Commitment to invest port construction | 6,758,563,544.21 | 5,490,560.00 |
| Others | 354,959,845.19 | 26,115,744.09 |
| Total | 10,880,759,648.14 | 4,003,337,221.43 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 165 -
(XI) COMMITMENTS AND CONTINGENCIES - continued
2. Contingencies
Unit: RMB
| Item | 31/12/2019 | 31/12/2018 |
| Contingent liabilities arising from litigations (Note 1) | 274,299,826.26 | 323,559,335.68 |
| Guarantees for borrowings of associates (Note 2) | 198,703,594.15 | 118,629,805.57 |
| Total | 473,003,420.41 | 442,189,141.25 |
Note 1: This represents the significant contingent liabilities arising from the litigations between
TCP and local tax authority, employee or former employee in Brazil at as the year end.According to the professional advice of external lawyers and the latest estimates of theGroup's management, the possible compensation is RMB274,299,826.26 but it is notlikely to cause outflow of economic benefits from the Group. Therefore, the contingentliabilities arising from the above pending litigations are not recognized as provisions.The counter-bonification where the Group as the beneficiary will be executed by theformer TCP shareholder that disposed the shares of TCP. According to the counter-bonification agreement, the former TCP shareholder need to make counter-bonificationto the Group in respect of the above contingent liabilities, with the compensation amountnot exceeding pre-determined amount and specified period.
Note 2: As at 31 December 2019, the Group made commitments to another shareholder of
Terminal Link SAS (an associate of the Group) to provide guarantee for the borrowingsand other liabilities of Terminal Link SAS to the extent of the Group's 49% equity in thecompany. The actual guaranteed amount is RMB80,305,197.15. If any guarantee liabilityoccurs, the Group will make compensations.
Except for the above guarantee, as at 31 December 2019, the Group also providesguarantee for the bank loans and other liabilities of the related party Khor AmbadoFZCo. The guaranteed amount is 200,914,560.00. The loan amount used by KhorAmbado FZCo is RMB118,398,397.00. Details are set out in Note(X) 5 (3).
At 31 December 2019, the Group's directors assessed the risk of default of above loansand other liabilities and considered that the risk is immaterial and the possibility to makecompensation for the guarantees is rare.
Except for the above contingent events, at 31 December 2019, the Group has no othersignificant guarantee or other contingencies that need to be explained.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 166 -
(XII) EVENTS AFTER THE BALANCE SHEET
1. Profit distribution
| Items | Amount |
| Profits and dividends to be distributed (Note) | 884,287,957.04 |
| Profits and dividends to be declared by shareholder meeting | To be approved by shareholder meeting |
Note：Refer to Note V, 48 for details.
2. New coronavirus epidemic
Since the outbreak of new coronavirus epidemic in China at the beginning of 2020, the therapyprophylactic has been carried out throughout the country. The Group actively responded andexecuted the regulations and requirements of the new coronavirus epidemic issued by thegovernment.
New coronavirus epidemic has temporarily affected the Groups’ production and management,however, the impact of the novel coronavirus outbreak on the economy depends on the progressand effectiveness as well as duration of our epidemic prevention and control work
The Group has keep following the development of new coronavirus epidemic as well asevaluating the impact on financial status and operating results, etc. The Group will strengthen theprevention and control of the epidemic along with resuming production in an orderly way.
3. Share option incentive plan
The Company held the extraordinary general meeting on 3 February 2020, where the Company'sshare option incentive plan was reviewed and discussed item-to-item, and approved. The totalshare options granted to the incentive objects under the incentive plan involves underlying sharesof 17,728,000 shares, accounting for about 0.922% of the Company's total share capital which is1,922,365,124 shares upon the announcement of the incentive plan. The first batch (total amount17,198,000 shares) of incentive objects totals to 238 persons, accounting for 2.5% of totalemployee in service at the end of 2018. The registration procedures for the first batch grantedwere completed on 13 March 2020.
Except for the above events, the Group has no other significant events after the balance sheet date.
4. Purchase of minority interests of TCP
As Note V(41), the minority shareholder (hereinafter referred to as “ the seller”) acquired 10%stake from Kong Rise Development Limited , shareholder of the TCP, with a higher price amongthe market price and BRL320 million. On 23 February 2020, the seller asked Kong RiseDevelopment Limited to exercise the option. Until approval date of financial statement, KongRise Development Limited has prepaid USD64 million to the seller on 24 February 2020.Theabove transaction has not been completed until the consolidated financial statements haveauthorized.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 167 -
(XII) EVENTS AFTER THE BALANCE SHEET - continued
5. Purchase of mandatory convertible securities and loans from company Terminal Link SAS,
an associate company
On November 25
th
, 2020, the subsidiary of the Group, China merchants port holdings companyhas signed the shareholder’s agreements with CMA CGM S.A. , shareholder of the Terminal LinkSAS. According to this agreement, China merchants port holdings company might pay USD 468million for mandatory convertible securities and has authorized loans with USD500 million limitsto Terminal Link SAS in order to support Terminal Link SAS acquire ten target ports. TerminalLink SAS has completed acquisition of 8 ports before March 26
th, 2020. China merchants portholdings company has paid for mandatory convertible securities and issued loans , which totalamounts are USD815 million.The remaining mandatory convertible securities have not been paidand loans have not been issued.
(XIII) OTHER SIGNIFICANT EVENTS
1. Segment reporting
(1) Basis for determining reporting segments and accounting policies
The key management team of the Company is regarded as the CODM, who reviews the Group'sinternal reports in order to assess performance, allocate resources and determine the operatingsegments.
The CODM manages the Group's operations by divisions from both business and geographicperspectives.
In respect of business segments, management assesses the performance of the Group's businessoperations including ports operation, bonded logistics operation and other operations.
Ports operation
Ports operation includes container terminal operation, bulk and general cargo terminal operationoperated by the Group and its associates and joint ventures. The Group's reportable segments ofthe ports operation are as follows:
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 168 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(1) Basis for determining reporting segments and accounting policies - continued
(a) Mainland China, Hong Kong and Taiwan
? Pearl River Delta? Yangtze River Delta? Bohai Rim? Others
(b) Other locations outside of Mainland China, Hong Kong and Taiwan
Bonded logistics operation
Bonded logistics operation includes logistics park operation, ports transportation and airport cargohandling operated by the Group and its associates and joint ventures.
Other operations
Other operations mainly includes property development and investment and construction ofmodular housing operated by the Group's associates, property investment operated by the Groupand corporate function.
Each of the segments under ports operation include the operations of a number of ports in variouslocations within one geographic location, each of which is considered as a separate operatingsegment by the CODM. For the purpose of segment reporting, these individual operatingsegments have been aggregated into reportable segments on geographic basis in order to present amore systematic and structured segment information. To give details of each of the operatingsegments, in the opinion of the directors of the Company, would result in particulars of excessivelength.
Bonded logistics operation and other operations include a number of different operations, each ofwhich is considered as a separate but insignificant operating segment by the CODM. For segmentreporting, these individual operating segments have been aggregated according to the natures oftheir operations to give rise to more meaningful presentation.
There are no material sales or other transactions between the segments.
As at 31 December 2019, around 70% of The Group's non-current assets other than financialinstruments and deferred tax assets are located in Mainland China.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 169 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information
Segment financial information for 2019 is as follows:
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Operating income | 5,196,613,368.06 | - | 65,287,182.79 | 3,048,109,069.32 | 3,237,062,565.69 | 11,547,072,185.86 | 411,410,069.19 | 165,347,168.69 | - | 12,123,829,423.74 |
| Operating cost | 3,008,092,503.04 | - | 54,620,318.87 | 2,442,406,257.78 | 1,680,548,644.03 | 7,185,667,723.72 | 240,230,706.61 | 223,022,489.38 | - | 7,648,920,919.71 |
| Segment operating profit (loss) | 2,188,520,865.02 | - | 10,666,863.92 | 605,702,811.54 | 1,556,513,921.66 | 4,361,404,462.14 | 171,179,362.58 | (57,675,320.69) | - | 4,474,908,504.03 |
| Adjustments: | ||||||||||
| Taxes and levies | 28,208,048.74 | 902,080.83 | 1,226,820.81 | 41,913,977.40 | 74,183,581.47 | 146,434,509.25 | 10,405,578.38 | 15,266,911.26 | 449,581.03 | 172,556,579.92 |
| Administrative expense | 367,421,172.07 | 14,629,856.34 | 11,286,215.13 | 427,071,045.26 | 240,768,795.97 | 1,061,177,084.77 | 40,794,239.92 | 1,086,063.41 | 406,463,193.56 | 1,509,520,581.66 |
| R&D expenses | 119,506,939.75 | - | - | 4,346,404.54 | - | 123,853,344.29 | - | - | - | 123,853,344.29 |
| Financial expenses | 186,473,966.41 | 3,557,959.06 | (1,031,714.93) | 140,511,147.67 | 343,853,815.52 | 673,365,173.73 | 27,521,546.75 | 43,602,750.59 | 1,191,780,266.46 | 1,936,269,737.53 |
| Impairment gains of assets | 25,051.16 | - | - | - | - | 25,051.16 | - | - | - | 25,051.16 |
| Impairment gains (losses) of credit | (2,704,122.79) | 96,054.01 | (47,117,070.21) | (510,363.77) | (50,235,502.76) | (13,907.01) | - | - | (50,249,409.77) | |
| Other income | 74,072,845.73 | 1,224,999.96 | 136,812.67 | 53,835,650.36 | - | 129,270,308.72 | 22,545,823.25 | 6,361.40 | 10,278,619.73 | 162,101,113.10 |
| Investment income | 160,825,470.54 | 2,569,882,989.42 | 415,798,097.77 | 772,742,553.30 | 439,240,848.69 | 4,358,489,959.72 | 23,454,651.74 | 237,229,143.96 | - | 4,619,173,755.42 |
| Gains from changes in fair value | 10,933.07 | 154,574,350.85 | 297,972,325.74 | (21,212,710.87) | (364,861,632.31) | 66,483,266.48 | - | - | - | 66,483,266.48 |
| Gains from disposal of assets | 4,172,962,308.96 | - | 13,069.99 | 620,155,605.55 | 764,083.94 | 4,793,895,068.44 | (3,047.02) | - | 670,761.37 | 4,794,562,782.79 |
| Operating profit | 5,892,103,224.72 | 2,706,592,444.00 | 713,201,903.09 | 1,370,264,264.80 | 972,340,665.25 | 11,654,502,501.86 | 138,441,518.49 | 119,604,459.41 | (1,587,743,659.95) | 10,324,804,819.81 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 170 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for 2019 is as follows: - continued
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Non-operating income | 15,167,367.31 | - | 920,329.94 | 19,125,548.43 | 512,078,201.39 | 547,291,447.07 | 458,318.63 | 1,086,658.83 | 4,266,935.88 | 553,103,360.41 |
| Non-operating expenses | 13,328,509.27 | 4,069.14 | 8,922.44 | 25,023,662.84 | 14,345,696.95 | 52,710,860.64 | 57,151.76 | 50,000.00 | 17,634,000.00 | 70,452,012.40 |
| Gross profit | 5,893,942,082.76 | 2,706,588,374.86 | 714,113,310.59 | 1,364,366,150.39 | 1,470,073,169.69 | 12,149,083,088.29 | 138,842,685.36 | 120,641,118.24 | (1,601,110,724.07) | 10,807,456,167.82 |
| Income tax expenses | 1,922,260,744.88 | 134,247,591.99 | 91,985,992.66 | 224,620,829.53 | 92,650,917.92 | 2,465,766,076.98 | 31,835,647.68 | 13,078,333.18 | 129,858,836.78 | 2,640,538,894.62 |
| Net profit | 3,971,681,337.88 | 2,572,340,782.87 | 622,127,317.93 | 1,139,745,320.86 | 1,377,422,251.77 | 9,683,317,011.31 | 107,007,037.68 | 107,562,785.06 | (1,730,969,560.85) | 8,166,917,273.20 |
| Segment assets | 29,586,087,542.86 | 26,729,937,567.14 | 7,140,466,913.27 | 26,167,362,772.28 | 43,499,664,358.95 | 133,123,519,154.50 | 3,343,718,019.81 | 17,831,744,436.63 | 2,397,936,234.93 | 156,696,917,845.87 |
| Total assets in the financial statements | 156,696,917,845.87 | |||||||||
| Segment liabilities | 10,648,908,871.15 | 700,175,249.44 | 140,580,616.21 | 9,017,491,838.33 | 11,995,283,584.80 | 32,502,440,159.93 | 757,665,748.51 | 1,010,340,736.41 | 27,436,263,588.78 | 61,706,710,233.63 |
| Total liabilities in the financial statements | 61,706,710,233.63 | |||||||||
| Supplementary information: | ||||||||||
| Depreciation and Amortization | 900,796,294.39 | - | 2,052,884.92 | 878,442,775.96 | 796,377,578.73 | 2,577,669,534.00 | 92,199,834.15 | 174,521,673.45 | 20,134,304.85 | 2,864,525,346.45 |
| Interest income | 42,470,222.92 | 257,234.76 | 1,203,144.96 | 70,701,815.50 | 83,372,904.82 | 198,005,322.96 | 1,266,345.18 | 1,469,124.45 | 51,319,225.99 | 252,060,018.58 |
| Interest expense | 183,085,034.75 | 2,926,671.54 | - | 203,657,696.95 | 392,724,564.47 | 782,393,967.71 | 28,245,233.91 | 38,016,163.44 | 1,241,182,229.48 | 2,089,837,594.54 |
| Investment income from long-term equity investment under equity method | 129,628,862.78 | 2,530,919,159.03 | 347,650,565.12 | 19,727,531.90 | 439,240,848.69 | 3,467,166,967.52 | 23,454,651.74 | 237,229,143.96 | - | 3,727,850,763.22 |
| Long-term equity investment under equity method | 2,592,565,388.68 | 24,772,038,158.14 | 6,078,963,750.12 | 640,212,907.12 | 11,061,215,279.18 | 45,144,995,483.24 | 768,727,807.74 | 12,002,816,092.28 | - | 57,916,539,383.26 |
| Non-current assets other than long-term equity investment | 21,153,911,773.00 | 294,462,264.01 | 27,181,862.66 | 21,955,658,532.67 | 28,203,528,560.52 | 71,634,742,992.86 | 2,302,277,585.20 | 5,405,248,897.19 | 455,073,380.68 | 79,797,342,855.93 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 171 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for 2018 is as follows:
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Operating income | 5,303,465,225.60 | - | 69,907,311.12 | 747,571,785.87 | 3,063,582,986.50 | 9,184,527,309.09 | 386,269,027.02 | 132,598,286.47 | - | 9,703,394,622.58 |
| Operating cost | 3,093,917,475.00 | - | 55,661,268.67 | 631,405,970.58 | 1,522,302,179.06 | 5,303,286,893.31 | 214,495,776.55 | 221,458,726.01 | - | 5,739,241,395.87 |
| Segment operating profit (loss) | 2,209,547,750.60 | - | 14,246,042.45 | 116,165,815.29 | 1,541,280,807.44 | 3,881,240,415.78 | 171,773,250.47 | (88,860,439.54) | - | 3,964,153,226.71 |
| Adjustments:： | ||||||||||
| Taxes and levies | 71,372,197.96 | 284,627.70 | 1,160,781.85 | 10,778,344.95 | 112,983,856.21 | 196,579,808.67 | 32,621,484.27 | 6,211,213.84 | 541,296.73 | 235,953,803.51 |
| Administrative expense | 390,753,695.03 | 3,749,372.10 | 9,930,005.82 | 97,317,524.40 | 193,183,913.13 | 694,934,510.48 | 36,924,775.16 | 28,852.77 | 519,977,537.04 | 1,251,865,675.45 |
| R&D expenses | 118,865,768.66 | - | - | - | - | 118,865,768.66 | - | - | 3,123,329.16 | 121,989,097.82 |
| Financial expenses | 33,812,457.43 | 82,614,789.19 | (406,546.82) | 19,344.58 | 419,088,994.19 | 535,129,038.57 | 38,623,819.16 | 51,653,121.27 | 1,018,012,123.95 | 1,643,418,102.95 |
| Impairment gains of assets | - | - | - | - | - | - | - | - | - | - |
| Impairment gains (losses) of credit | (10,760,473.33) | - | - | (10,616.21) | 3,410,788.03 | (7,360,301.51) | (168,279.09) | - | - | (7,528,580.60) |
| Other income | 32,901,021.72 | 408,333.33 | 113,998.17 | 12,684,291.81 | - | 46,107,645.03 | 1,411,014.72 | - | 8,661,467.89 | 56,180,127.64 |
| Investment income | 143,206,331.48 | 2,706,435,143.32 | 322,968,785.89 | (21,733,692.03) | 592,367,561.64 | 3,743,244,130.30 | 17,758,667.43 | 207,255,360.07 | (430,008.32) | 3,967,828,149.48 |
| Gains from changes in fair value | 45,351.40 | (873,891,271.63) | (74,594,618.22) | - | (125,966,299.23) | (1,074,406,837.68) | - | - | - | (1,074,406,837.68) |
| Gains from disposal of assets | 9,216,008.49 | - | - | (418,481.28) | 10,450,227.43 | 19,247,754.64 | 26,746.03 | - | (16,005.34) | 19,258,495.33 |
| Operating profit | 1,769,351,871.28 | 1,746,303,416.03 | 252,049,967.44 | (1,427,896.35) | 1,296,286,321.78 | 5,062,563,680.18 | 82,631,320.97 | 60,501,732.65 | (1,533,438,832.65) | 3,672,257,901.15 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 172 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for 2018 is as follows: - continued
Unit: RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Non-operating income | 34,351,337.85 | - | 424,231.58 | 1,931,244.58 | 24,074,268.10 | 60,781,082.11 | 1,216,591.28 | 943,208.69 | 4,187,807.90 | 67,128,689.98 |
| Non-operating expenses | 40,405,962.28 | 4,010.31 | 400,000.00 | 1,057,097.28 | 65,315,693.08 | 107,182,762.95 | 6,240,627.54 | 200,000.00 | 11,407,908.08 | 125,031,298.57 |
| Gross profit | 1,763,297,246.85 | 1,746,299,405.72 | 252,074,199.02 | (553,749.05) | 1,255,044,896.80 | 5,016,161,999.34 | 77,607,284.71 | 61,244,941.34 | (1,540,658,932.83) | 3,614,355,292.56 |
| Income tax expenses | 294,544,209.66 | 43,364,189.75 | 12,909,324.23 | 16,064,881.66 | 94,332,207.91 | 461,214,813.21 | 14,785,763.43 | 49,933,513.49 | 202,506,448.47 | 728,440,538.60 |
| Net profit | 1,468,753,037.19 | 1,702,935,215.97 | 239,164,874.79 | (16,618,630.71) | 1,160,712,688.89 | 4,554,947,186.13 | 62,821,521.28 | 11,311,427.85 | (1,743,165,381.30) | 2,885,914,753.96 |
| Segment assets | 24,361,542,350.83 | 24,738,700,129.24 | 6,498,939,975.26 | 11,975,384,175.20 | 43,137,915,507.68 | 110,712,482,138.21 | 2,768,799,649.68 | 10,986,223,834.86 | 3,550,578,792.93 | 128,018,084,415.68 |
| Total assets in the financial statements | 128,018,084,415.68 | |||||||||
| Segment liabilities | 3,716,328,520.15 | 620,013,763.67 | 108,999,946.50 | 2,399,865,586.89 | 11,874,203,103.78 | 18,719,410,920.99 | 809,775,291.61 | 1,161,920,752.31 | 26,910,051,577.96 | 47,601,158,542.87 |
| Total liabilities in the financial statements | 47,601,158,542.87 | |||||||||
| Supplementary information： | ||||||||||
| Depreciation and Amortization | 777,378,984.84 | - | 2,030,173.13 | 287,332,851.66 | 698,620,897.88 | 1,765,362,907.51 | 80,463,924.42 | 165,229,175.14 | 16,903,705.26 | 2,027,959,712.33 |
| Interest income | 21,954,329.37 | 508,539.88 | 438,043.11 | 40,225,269.81 | 84,159,789.64 | 147,285,971.81 | 1,052,104.99 | 828,268.56 | 123,286,948.50 | 272,453,293.86 |
| Interest expense | 44,507,286.38 | 1,009,944.96 | - | 39,664,933.55 | 398,730,346.09 | 483,912,510.98 | 32,382,213.72 | 39,755,069.06 | 1,078,051,538.04 | 1,634,101,331.80 |
| Investment income from long-term equity investment under equity method | 134,907,307.68 | 2,674,327,364.23 | 309,435,330.98 | (21,882,199.10) | 592,062,707.31 | 3,688,850,511.10 | 17,758,667.43 | 207,255,360.07 | - | 3,913,864,538.60 |
| Long-term equity investment under equity method | 2,629,326,400.75 | 23,003,406,812.98 | 5,696,221,052.02 | 2,540,719,065.34 | 10,818,356,531.61 | 44,688,029,862.70 | 340,969,759.95 | 5,147,577,640.75 | - | 50,176,577,263.40 |
| Non-current assets other than long-term equity investment | 18,136,739,566.92 | 296,477,731.85 | 29,099,361.17 | 7,816,817,366.31 | 29,571,968,313.58 | 55,851,102,339.83 | 2,206,436,654.13 | 5,573,444,649.09 | 480,592,127.03 | 64,111,575,770.08 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 173 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
The Group's revenue by geographical areas of operations and information about its non-currentassets other than financial instruments and deferred tax assets presented based on the geographicalareas in which the assets are located as follows:
Unit: RMB
| Revenue from external transactions | Amount incurred in the current period | Amount incurred in the prior period |
| Mainland China, Hong Kong and Taiwan | 8,872,027,132.24 | 6,635,924,788.34 |
| Pearl River Delta | 5,629,472,123.72 | 5,705,075,363.71 |
| Yangtze River Delta | - | - |
| Bohai Rim | 194,445,939.20 | 183,277,638.76 |
| Others | 3,048,109,069.32 | 747,571,785.87 |
| Other locations | 3,251,802,291.50 | 3,067,469,834.24 |
| Total | 12,123,829,423.74 | 9,703,394,622.58 |
Unit: RMB
| Total non-current assets | Amount incurred in the current period | Amount incurred in the prior period |
| Mainland China, Hong Kong and Taiwan | 96,489,027,270.44 | 73,602,488,004.01 |
| Pearl River Delta | 43,196,515,110.55 | 33,618,069,629.60 |
| Yangtze River Delta | 25,066,500,422.16 | 23,299,884,544.83 |
| Bohai Rim | 6,686,470,964.43 | 6,316,574,360.92 |
| Others | 21,539,540,773.30 | 10,367,959,468.66 |
| Other locations | 41,224,854,968.75 | 40,685,665,029.47 |
| Total | 137,713,882,239.19 | 114,288,153,033.48 |
(3) Degree of reliance on major customers
The total operating income derived from the top five clients of the Group is RMB 3,234,035,638.42,accounting for 26.68% of the Group's total operating income.
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS
1. Other receivables
(1) Summary of other receivables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest receivable | - | - |
| Dividends receivable | 207,259,421.40 | 329,153,465.74 |
| Other receivables | 598,275,341.87 | 321,861,868.32 |
| Total | 805,534,763.27 | 651,015,334.06 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(2) Dividends receivable
(a) Disclosure of dividends receivable
Unit: RMB
| Company name | Closing balance | Opening balance |
| Dongguan Chiwan Warf Co., Ltd. | 103,355,370.74 | 103,355,370.74 |
| Shenzhen Chiwan Harbor Container Co. Ltd. | - | 96,378,106.61 |
| Dongguan Chiwan Terminal Co., Ltd. | 88,196,930.66 | 88,196,930.66 |
| Shenzhen Chiwan Tugboat Co., Ltd. | - | 21,929,842.24 |
| China Merchants Bonded Logistics Co., Ltd. | 15,707,120.00 | 15,707,120.00 |
| Shenzhen Chiwan Port Development Co., Ltd. | - | 3,299,252.31 |
| Shenzhen Chiwan International Freight Agency Co., Ltd. | - | 286,843.18 |
| CMPort | - | - |
| Total | 207,259,421.40 | 329,153,465.74 |
| Less: Provision for credit loss | - | - |
| Carrying amount | 207,259,421.40 | 329,153,465.74 |
(b) Significant dividends receivable with aging over 1 year
Unit: RMB
| Item | Closing balance | Reason for outstanding | Impaired or not |
| Dongguan Chiwan Warf Co., Ltd. | 103,355,370.74 | In processing and expected to be received in 2020 | No |
| Dongguan Chiwan Terminal Co., Ltd. | 88,196,930.66 | In processing and expected to be received in 2020 | No |
| Total | 191,552,301.40 |
(3) Other receivables
(a) Disclosure of other receivables by aging
Unit: RMB
| Aging | Closing balance | ||
| Other receivables | Provision for credit loss | Proportion of provision (%) | |
| Within 1 year | 598,275,341.87 | - | - |
| 1 to 2 years | - | - | - |
| 2 to 3 years | - | - | - |
| Over 3 years | 383,456.60 | 383,456.60 | 100.00 |
| Total | 598,658,798.47 | 383,456.60 | |
(b) Provision for credit loss of other receivables
As part of the Company's credit risk management, the Company performs internal credit rating oncustomers, and determines the expected loss ratio of other receivables under each credit rating.Such expected average loss ratio is based on historical actual impairment and taking intoconsideration of current and expected future economic conditions.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(3) Other receivables - continued
(b) Provision for credit loss of other receivables - continued
At 31 December 2019, the credit risk and expected credit loss of other receivables by categories ofcustomers are as follows:
Unit: RMB
| Credit rating | Expected credit loss ratio (%) | Closing balance | Opening balance | ||||||
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | Total | 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | Total | ||
| A | 0.00-0.10 | 598,275,341.87 | - | - | 598,275,341.87 | 321,861,868.32 | - | - | 321,861,868.32 |
| B | 0.10-0.30 | - | - | - | - | - | - | - | - |
| C | 0.30-50.00 | - | - | - | - | - | - | - | - |
| D | 50.00-100.00 | - | - | 383,456.60 | 383,456.60 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount | 598,275,341.87 | - | 383,456.60 | 598,658,798.47 | 321,861,868.32 | - | 383,456.60 | 322,245,324.92 | |
| Provision for credit loss | - | - | 383,456.60 | 383,456.60 | - | - | 383,456.60 | 383,456.60 | |
| Book value | 598,275,341.87 | - | - | 598,275,341.87 | 321,861,868.32 | - | - | 321,861,868.32 | |
(c) Changes in provision for credit loss of other receivables
Unit: RMB
| Item | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance at 1 January 2019 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount of other receivables at 1 January 2019 | ||||
| -- transfer to stage II | - | - | - | - |
| -- transfer to stage III | - | - | - | - |
| -- transfer back to stage II | - | - | - | - |
| -- transfer back to stage I | - | - | - | - |
| Provision for the year | - | - | - | - |
| Reversal | - | - | - | - |
| Transfer out due to derecognition of financial assets (including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| Balance at 31 December 2019 | - | - | 383,456.60 | 383,456.60 |
(d) Other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Amounts due from related parties | 571,663,096.21 | 316,567,355.24 |
| Advances | 26,283,930.19 | 4,785,167.82 |
| Deposits | - | 372,042.31 |
| Others | 711,772.07 | 520,759.55 |
| Total | 598,658,798.47 | 322,245,324.92 |
| Less: Provision for credit loss | 383,456.60 | 383,456.60 |
| Book value | 598,275,341.87 | 321,861,868.32 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(3) Other receivables - continued
(e) There is no other receivables write-off during this year。
(f) The top five balances of other receivables classified by debtor
Unit: RMB
| Company name | Nature | Closing balance | Aging | Proportion of the amount to the total other receivable (%) | Closing balance of provision for credit loss |
| Shenzhen Haixing Harbor Development Co., Ltd | Loan to related parties | 328,163,096.21 | Within 1 year | 54.81 | - |
| Dongguan Chiwan Terminal Co., Ltd. | Loan to related parties | 134,500,000.00 | Within 1 year | 22.47 | - |
| Dongguan Chiwan Warf Co., Ltd. | Loan to related parties | 109,000,000.00 | Within 1 year | 18.21 | - |
| Shenzhen Chiwan Port Development Co., Ltd. | Advance payments for account current | 21,072,976.83 | Within 1 year | 3.52 | - |
| Guangdong Sinotrans Co., Ltd. | Compensation for profit and loss over the transition period | 3,803,477.07 | Within 1 year | 0.64 | - |
| Total | 596,539,550.11 | 99.65 | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS - continued
2. Long-term equity investments
Unit: RMB
| Investee | 1/1/2019 | Changes for the year | 31/12/2019 | Closing balance of impairment provision | |||||||
| Increase | Decrease | Investment income under equity method | Reconciling items from other comprehensive income | Other equity movements | Announced distribution of cash dividends or profit | Impairment provision | Others | ||||
| I. Subsidiary | |||||||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | 5,500,000.00 | - | - | - | - | - | - | - | - | 5,500,000.00 | - |
| Shenzhen Chiwan Harbor Container Co. Ltd. | 250,920,000.00 | - | - | - | - | - | - | - | - | 250,920,000.00 | - |
| Shenzhen Chiwan Port Development Co., Ltd. (Note 1) | 7,000,000.00 | 199,283,811.09 | - | - | - | - | - | - | - | 206,283,811.09 | - |
| CWHK | 1,070,000.00 | - | - | - | - | - | - | - | - | 1,070,000.00 | - |
| Shenzhen Chiwan Tugboat Co., Ltd. | 24,000,000.00 | - | - | - | - | - | - | - | - | 24,000,000.00 | - |
| Chiwan Container Terminal Co., Ltd. | 421,023,199.85 | - | - | - | - | - | - | - | - | 421,023,199.85 | - |
| Dongguan Chiwan Warf Co., Ltd. | 186,525,000.00 | - | - | - | - | - | - | - | - | 186,525,000.00 | - |
| Dongguan Chiwan Terminal Co., Ltd. | 175,000,000.00 | - | - | - | - | - | - | - | - | 175,000,000.00 | - |
| Chiwan Shipping (Hong Kong) Limited | 1,051,789.43 | - | - | - | - | - | - | - | - | 1,051,789.43 | - |
| CMPort (Note 2) | 26,170,129,771.99 | 1,116,813,838.43 | - | - | - | - | - | - | - | 27,286,943,610.42 | - |
| RoRo Logistics | 149,709,800.00 | - | - | - | - | - | - | - | - | 149,709,800.00 | - |
| Zhanjiang port (Note 3) | - | 371,530,912.93 | - | - | - | - | - | - | - | 371,530,912.93 | - |
| Sub-total | 27,391,929,561.27 | 1,687,628,562.45 | - | - | - | - | - | - | - | 29,079,558,123.72 | - |
| II. Associate | |||||||||||
| China Merchants International Information Technology Co., Ltd. | 18,274,568.38 | - | - | 2,369,042.80 | - | - | - | - | - | 20,643,611.18 | - |
| China Merchants Bonded Logistics Co., Ltd. | 340,500,382.73 | - | - | 25,355,342.22 | - | - | - | - | - | 365,855,724.95 | - |
| Sub-total | 358,774,951.11 | - | - | 27,724,385.02 | - | - | - | - | - | 386,499,336.13 | - |
| III. Joint venture | |||||||||||
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | 793,557,064.58 | - | - | 42,110,853.02 | - | - | (43,605,689.02) | - | - | 792,062,228.58 | - |
| China Merchants Antong Logistics Management Company | - | 8,000,000.00 | - | 256,893.80 | - | - | - | - | - | 8,256,893.80 | - |
| Sub-total | 793,557,064.58 | 8,000,000.00 | - | 42,367,746.82 | - | - | (43,605,689.02) | - | - | 800,319,122.38 | - |
| Total | 28,544,261,576.96 | 1,695,628,562.45 | - | 70,092,131.84 | - | - | (43,605,689.02) | - | - | 30,266,376,582.23 | - |
Note 1: The Company receives 25% equity of Shenzhen Chiwan Port Development Co., Ltd. from CWHK at the consideration of
RMB10,825,000.00 on 19 April 2019. Since then, Shenzhen Chiwan Port Development Co., Ltd. became the Company's wholly-ownedsubsidiary. In July 2019, the Company transferred the major operating assets, debts and employees of Chiwan port area 1-7# berth toShenzhen Chiwan Port Development Co., Ltd. The net book value of the transferred assets and liabilities at the benchmark date of thetransfer amounting to RMB188,458,811.09 is considered as investment cost and included in the Company's long-term equity investments inShenzhen Chiwan Port Development Co., Ltd.
Note 2: Details are set out in Note (VII) 1.
Note 3: Details are set out in Note (VI) 1.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- 178 -
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
3. Operating income and operating costs
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal operating | 75,207,466.30 | 75,438,994.71 | 211,782,804.61 | 158,561,191.30 |
| Other operating | 16,835,131.75 | 645,029.02 | 32,116,448.46 | 1,504,260.12 |
| Total | 92,042,598.05 | 76,084,023.73 | 243,899,253.07 | 160,065,451.42 |
4. Investment income
(1) Details of investment income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Income from long-term equity investments under cost method | 1,221,470,436.60 | 121,894,044.34 |
| Long-term equity investments income under equity method | 70,092,131.84 | 63,015,142.10 |
| Income from other equity instruments investments | 10,822,585.00 | 8,228,975.00 |
| Income from debt investments | 3,837,808.22 | - |
| Total | 1,306,222,961.66 | 193,138,161.44 |
(2) Income from long-term equity investments under cost method
Unit: RMB
| Investee | Amount incurred in the current period | Amount incurred in the prior period | Reason for changes comparing with prior year |
| CMPort | 1,116,334,395.76 | - | Changes in profit distribution of investee |
| Chiwan Container Terminal Co., Ltd. | 105,136,040.84 | - | Changes in profit distribution of investee |
| Shenzhen Chiwan Harbor Container Co. Ltd. | - | 96,378,106.61 | Changes in profit distribution of investee |
| Shenzhen Chiwan Tugboat Co., Ltd. | - | 21,929,842.24 | Changes in profit distribution of investee |
| Shenzhen Chiwan Port Development Co., Ltd. | - | 3,299,252.31 | Changes in profit distribution of investee |
| Shenzhen Chiwan International Freight Agency Co., Ltd. | - | 286,843.18 | Changes in profit distribution of investee |
| Total | 1,221,470,436.60 | 121,894,044.34 |
SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2019
1. BREAKDOWN OF NON-RECURRING PROFIT OR LOSS
Unit: RMB
| Item | Amount | Remarks |
| Losses on disposal of non-current assets | 4,794,562,782.79 | |
| Tax refunds or reductions with ultra vires approval or without official approval documents | - | |
| Government grants recognized in profit or loss (except for grants that are closely related to the Company's business and are in amounts and quantities fixed in accordance with the national standard) | 162,587,042.38 | |
| Money lending income earned from non-financial institutions in profit or loss | 19,571,040.36 | |
| The excess of attributable fair value of identifiable net assets over the consideration paid for subsidiaries, associates and joint ventures | - | |
| Gains or losses on exchange of non-monetary assets | - | |
| Gains or losses on entrusted investments or assets management | - | |
| Provision of impairment losses for each asset due to force majeure, e.g. natural disasters | - | |
| Gains or losses on debt restructuring | - | |
| Business restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc. | - | |
| Gains or losses relating to the unfair portion in transactions with unfair transaction price | - | |
| Net profit or loss of subsidiaries recognized as a result of business combination of enterprises under common control from the beginning of the period up to the business combination date | - | |
| Gains or losses arising from contingencies other than those related to normal operating business | - | |
| Gains from changes of fair value of held-for-trading financial assets, derivative financial assets, other non-current financial assets, held-for-trading financial liabilities, derivative financial liabilities other than effective hedging operation relating to the Company's normal operations, and the investment income from disposal of the above held-for-trading financial assets/financial liabilities and other debt investments | 66,075,363.30 | |
| Reversal of provision for accounts receivable that are tested for credit loss individually | - | |
| Gains or losses on entrusted loans | - | |
| Gains or losses on changes in the fair value of investment properties that are subsequently measured using the fair value model | - | |
| Effects on profit or loss of one-off adjustment to profit or loss for the period according to the requirements by tax laws and accounting laws and regulations | - | |
| Custodian fees earned from entrusted operation | - | |
| Other non-operating income or expenses other than above | 482,165,418.73 | |
| Other profit or loss that meets the definition of non-recurring profit or loss (note) | 732,644,357.06 | |
| Tax effects | (1,504,203,995.96) | |
| Effects of minority interest (after tax) | (2,892,976,715.05) | |
| Total | 1,860,425,293.61 |
Note: This mainly represents the gains from remeasurement of previously held equity at fair value upon
the Company's acquisition of Zhanjiang Port (Group) Co., Ltd.
SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2019
2. RETURN ON NET ASSETS AND EARNINGS PER SHARE ("EPS")
The return on net assets and EPS have been prepared by Shenzhen Chiwan Wharf Co., Ltd. in accordancewith Information Disclosure and Presentation Rules for Companies Making Public Offering No. 9 -Calculation and Disclosure of Return on Net Assets and Earnings per Share (revised in 2010) issued byChina Securities Regulatory Commission.
Unit: RMB
| Item | Weighted average return on net assets (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to ordinary shareholders | 8.7125 | 1.5943 | 1.5943 |
| Net profit attributable to ordinary shareholders after deducting non-recurring profit or loss | 3.1197 | 0.5709 | 0.5709 |