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招港B:2020年半年度报告(英文版) 下载公告
公告日期:2020-08-29

CHINA MERCHANTS PORT GROUP CO., LTD.

INTERIM REPORT 2020

Date of Disclosure: 29 August 2020

China Merchants Port Group Co., Ltd. Interim Report 2020

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, Lu Yongxin, the Company’s Acting ChiefFinancial Officer, and Sun Ligan, the person-in-charge of the accounting organ herebyguarantee that the financial statements carried in this Report are factual, accurate andcomplete.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 the Company and countermeasures have been explained in “Part IVOperating Performance Discussion and Analysis” herein, which investors are kindly remindedto pay attention to.Securities Times, Shanghai Securities News, Ta Kung Pao (HK) and www.cninfo.com.cn havebeen designated by the Company for information disclosure. And all information about theCompany shall be subject to what’s disclosed on the aforesaid media.The Company is not subject to any industry-specific disclosure requirements.The Company has no interim dividend plan, either in the form of cash or stock.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versions shallprevail.

China Merchants Port Group Co., Ltd. Interim Report 2020

Table of Contents

Part I Important Notes, Table of Contents and Definitions ...... 2

Part II Corporate Information and Key Financial Information ...... 6

Part III Business Summary ...... 9

Part IV Operating Performance Discussion and Analysis ...... 18

Part V Significant Events ...... 40

Part VI Share Changes and Shareholder Information ...... 62

Part VII Preference Shares ...... 67

Part VIII Convertible Corporate Bonds ...... 68

Part IX Directors, Supervisors and Senior Management ...... 69

Part X Corporate Bonds ...... 71

Part XI Financial Statements ...... 75

Part XII Documents Available for Reference ...... 76

China Merchants Port Group Co., Ltd. Interim Report 2020

Definitions

TermDefinition
The “Company”, “CMPort” or “we”China Merchants Port Group Co., Ltd., formerly known as “Shenzhen Chiwan Wharf Holdings Limited”
CMGChina Merchants Group Co., Limited
CMG Hong KongChina Merchants Group (H.K.) Limited, a CMG wholly-owned subsidiary in Hong Kong
CMPIDChina Merchants Port Investment Development Company Limited (CMID), renamed as “China Merchants Investment Development Company Limited” on 8 July 2020
CMPort HoldingsChina Merchants Port Holdings Company Limited (00144.HK)
CWH (H.K.)Chiwan Wharf Holdings (Hong Kong) Limited
Zhanjiang PortZhanjiang Port (Group) Co., Ltd.
Sinotrans GuangdongSinotrans Guangdong Co., Ltd.
Zhanjiang Infrastructure InvestmentZhanjiang Infrastructure Construction Investment Group Co., Ltd.
Broadford GlobalBroadford Global Limited, a wholly-owned subsidiary of CMG Hong Kong
CMGDChina Merchants Gangtong Development (Shenzhen) Co., Ltd., a Broadford Global wholly-owned subsidiary in Shenzhen
CND GroupChina Nanshan Development (Group) Inc.
CMBChina Merchants Bank Co., Ltd.
CMSKChina Merchants Shekou Industrial Zone Holdings Co., Ltd.
CM Qianhai IndustrialShenzhen China Merchants Qianhai Industrial Development Co., Ltd.
SIPGShanghai International Port (Group) Co., Ltd.
Zhangzhou Port)Zhangzhou China Merchants Port Co., Ltd.
Xiamen PortZhangzhou China Merchants Xiamen Port Affairs Co., Ltd.
Haixing HarborShenzhen Haixing Harbor Development Co., Ltd.
Shantou PortShantou CMPort Group Co., Ltd.
Dalian PortDalian Port (PDA) Company Limited
Tianjin Port Container TerminalTianjin Port Container Terminal Co., Ltd.
CCTChiwan Container Terminal Co., Ltd., a majority-owned subsidiary of the Company
TCPTCP Participa??es S.A.
CICTColombo International Container Terminals Ltd.
HIPGHambantota International Port Group
TICTTin-Can Island Container Terminal Ltd.
PDSAPort de Djibouti S.A.
TLTerminal Link S.A.S.
KumportKumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim Sirketi
Port of NewcastlePort of Newcastle
SASAC of the State CouncilState-Owned Assets Supervision and Administration Commission of the State Council

China Merchants Port Group Co., Ltd. Interim Report 2020

CSRCChina Securities Regulation Commission
SZSEShenzhen Stock Exchange
CMG FinanceChina Merchants Group Finance Co., Ltd.
The “Articles of Association”The Articles of Association of China Merchants Port Group Co., Ltd.
The “Stock Listing Rules”The Stock Listing Rules of the Shenzhen Stock Exchange
The cninfo websitewww.cninfo.com.cn
RTGRubber Tyre Gantry
CM ePortThe wharf e-commerce platform, i.e. the unified customer service platform
TEUTwenty Foot Equivalent Unit
RMB RMB’0,000 RMB’00,000,000Expressed in the Chinese currency of Renminbi Expressed in tens of thousands of Renminbi Expressed in hundreds of millions of Renminbi (unless otherwise specified)

China Merchants Port Group Co., Ltd. Interim Report 2020

Part II Corporate Information and Key Financial InformationI Corporate Information

Stock nameCM Port Group/ CM Port Group BStock code001872/201872
Stock exchange for stock listingShenzhen Stock Exchange
Company name in Chinese招商局港口集团股份有限公司
Abbr. (if any)招商港口
Company name in English (if any)China Merchants Port Group Co., Ltd.
Abbr. (if any)CMPort
Legal representativeBai Jingtao

II Contact Information

Board SecretarySecurities Representative
NameHuang ChuanjingHu Jingjing
Address24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC24/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 addressCmpir@cmhk.comCmpir@cmhk.com

III Other Information

1. Contact Information of the Company

Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes,website address and email address of the Company in the Reporting Period.

□ Applicable √ Not applicable

No change occurred to the said information in the Reporting Period, which can be found in the 2019 Annual Report.

2. Media for Information Disclosure and Place where this Report is LodgedIndicate by tick mark whether any change occurred to the information disclosure media and the place for lodgingthe Company’s periodic reports in the Reporting Period.

□ Applicable √ Not applicable

The newspapers designated by the Company for information disclosure, the website designated by the CSRC for

China Merchants Port Group Co., Ltd. Interim Report 2020

disclosing the Company’s periodic reports and the place for lodging such reports did not change in the ReportingPeriod. The said information can be found in the 2019 Annual Report.IV Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.

□ Yes √ No

H1 2020H1 2019Change (%)
Operating revenue (RMB)5,922,497,158.485,834,353,421.331.51%
Net profit attributable to the listed company’s shareholders (RMB)632,798,585.832,299,181,330.61-72.48%
Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB)544,591,914.54569,405,330.09-4.36%
Net cash generated from/used in operating activities (RMB)2,071,426,144.922,556,861,915.52-18.99%
Basic earnings per share (RMB/share)0.331.28-74.22%
Diluted earnings per share (RMB/share)0.331.28-74.22%
Weighted average return on equity (%)1.77%7.24%-5.47%
30 June 202031 December 2019Change (%)
Total assets (RMB)163,011,419,765.59156,696,917,845.874.03%
Equity attributable to the listed company’s shareholders (RMB)35,116,599,672.0735,972,804,419.42-2.38%

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)0.3292

V Accounting Data Differences under China’s Accounting Standards for Business Enterprises(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards

1. Net Profit and Equity under CAS and IFRS

□ Applicable √ Not applicable

No difference for the Reporting Period.

2. Net Profit and Equity under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable

China Merchants Port Group Co., Ltd. Interim Report 2020

No difference for the Reporting Period.VI Exceptional Gains and Losses

√ Applicable □ Not applicable

Unit: RMB

ItemAmountNote
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs)560,256,383.38-
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)62,719,385.14-
Capital occupation charges on non-financial enterprises that are charged to current profit or loss105,824,679.53-
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)-295,735,653.30-
Non-operating income and expense other than the above-11,781,919.34-
Less: Income tax effects90,479,697.15-
Non-controlling interests effects (net of tax)242,596,506.97-
Total88,206,671.29--

Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Exceptional Gain/Loss Items:

□ Applicable √ Not applicable

No such cases for the Reporting Period.

China Merchants Port Group Co., Ltd. Interim Report 2020

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 ofcontainers and bulk cargoes, as well as the provision of other ancillary services. It principally operates24 container berths and 18 bulk cargo berths in the ports in West Shenzhen and Dongguan Machong,9 container berths, 2 bulk cargo berths, 10 general cargo berths and 1 berth dedicated to handling coalin Shantou Port, 2 container berths and 33 bulk cargo berths in Zhanjiang Port, 4 multi-purpose berthsin Shunde Port, 2 container berths and 6 bulk cargo berths in Zhangzhou Port, 4 container berths inCICT, Sri Lanka, 4 multi-purpose berths, 2 oil berths and 4 container berths in HIPG, 3 containerberths in LCT, Togo, and 4 container berths in TCP, Brazil. Moreover, the Company invests incontainer hubs in Shanghai, Ningbo and Tianjin and expands its layout to ports in Asia, Africa,Europe, Oceania, South America and North America.

The major business segments of China Merchants Port Group Co., Ltd. are as follow:

Business SegmentsApplications
Cargo handling and warehousingContainer 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 servicesThe ancillary port-related services of the Company mainly include tugboat berthing assistance and barge services at the arrival of ships to the ports, tallying

China Merchants Port Group Co., Ltd. Interim Report 2020

in the course of cargo handling, and supply of shore power and freshwater for vessels.
Bonded logistics operationsThe 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 is closely linked to global economic and trade development. Since 2020, given the continuouswide spread of COVID-19 pandemic in the world, as well as the anti-globalization and risinggeopolitical risks, the risk of global economic and trade recession has increased, and the seabornefreight volume of global container throughput has shrunk that poses challenges to the developmentof our industry. In addition, consolidation of the port industry and its upstream and downstreamindustry will create opportunities, and digitization and technological innovation will also bringopportunities for industrial development.

With the long-standing imbalance between supply and demand in the shipping market, shippingcompanies has promptly reduced shipping capacity and cancelled certain routes to promote a bettersupply and demand relationship in the shipping market and raise the freight rates against the trend.According to the national port throughput data released by the Ministry of Transport of PRC in July,the national port throughput in the first half of 2020 amounted to 6.75 billion tonnes, representing ayear-on-year increase of 0.6%. The container throughput was 120.19 million TEUs, representing ayear-on-year decrease of 5.4%. The data also shows that the national port throughput has achievedpositive growth for three consecutive months since April, which shows an upward month-on-monthgrowth trend.

China Merchants Port Group Co., Ltd. Interim Report 2020

The Company is the largest global leading port developer, investor and operator in the PRC,with a comprehensive port network at major hub locations along coastal China. It has alsosuccessfully established presence in Asia, Africa, Europe, Mediterranean, Oceania, South Americaand North America. Adhering to its proactive, sound and efficient operating style, the Companyprovided its customers with timely and efficient port and maritime logistics services along withcomprehensive and modern integrated logistics solutions by leveraging 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. In addition, the Company alsoinvests in bonded logistics operation and launches integrated park development business to facilitatethe transformation and upgrade of port industry, develop port-related industries and increase industryefficiencies, which allows it to create greater value through the synergies of the existing terminalnetwork.II Significant Changes in Major Assets

1. Significant Changes in Major Assets

Major assetsMain reason for significant changes
Equity assetsNo significant change
Fixed assetsNo significant change
Intangible assetsNo significant change
Construction in progressNo significant change

2. Major Assets Overseas

√ Applicable □ Not applicable

AssetSourceAsset value (RMB’0,000)LocationOperationsControl measures to protect asset safetyReturn generated (RMB’0,000)As % of the Company’s net asset valueMaterial impairment risk (yes/no)
Equity assetsAcquired via share offering13,512,483.99Hong KongPort investment and operationsAppointing director and senior management159,292.1086.07%No
Other informationN/A

China Merchants Port Group Co., Ltd. Interim Report 2020

III Core competitiveness analysis

1. Effectively strengthening its ability to resist against industry fluctuations and trade frictionrisks as well as to balance the hedging of uneven regional development risks taking advantagesof its global port networkCurrently, CMPort’s global port network covers 50 ports in 26 countries and regions over 6continents, enabling the Company to hedge the risk of regional development imbalance, resistindustry fluctuations, ensure the Company’s sustainable development and create long-term and stablereturns for shareholders under the general environment of normalized development uncertainty.The Company aims at increasing its global presence with shipping routes across five continents.As both 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.International economic and trade frictions disturb the global industrial chain and value chainwhich intensified the risks of unbalanced development in various regions. Populism has furtherfacilitated the self-circulating development model in various regions by virtue of COVID-19pandemic, which posed greater challenges to certain port enterprises with traditional single-regionallayout or serving single hinterland. CMPort has implemented extensive port investment layout aroundthe world in advance which helps hedging the risks of uneven development among various regionsas well as plays an active role in continuously and effectively alleviating the fluctuation impact onthe industry during the several stages of the COVID-19 outbreak.

2. Providing more competitive comprehensive services for import trade and domestic North-South trade leveraging on the port network development at major hubs along coastal ChinaUltra-large-scale market edges have facilitated China in gradually establishing a new “dual

China Merchants Port Group Co., Ltd. Interim Report 2020

circulation” development pattern in which domestic and international economic cycles can promotegrowth of each other, with the domestic economic cycle as the mainstay. CMPort has achievedeffective breakthroughs in exploring domestic multi-point coordination and business modelinnovation that will demonstrate strengthened market competitiveness.Demographic advantages and increasing income level in China has vigorously promoted theupgrading of consumption and industrial structures. In the future, the structure of China’s import andexport sources will tend to be balanced which offers import consumer market potentials in supportingChina’s port industries. The business model of certain domestic ports will be shifted from “port ofdeparture” to “port of destination” which may increase the exposure to abundant consumer-endcustomers and thereby deeply exploring the comprehensive service values. Most of CMPort’s majordomestic terminals or ports are mainly located to the south of the Yangtze River Delta region. Withthe acquisition and integration of Liaoning Port, CMG also entrusted CMPort with port managementwhile CMPort increased its share capital in Zhanjiang Port which has initially established synergicconditions for the North-South passage serving domestic trade. The port synergy system of China’sNorth-South trade layout and continuous service system enhancement of the North-South passagetaking advantages of “CM ePort” platform serving the port ecology offers abundant growth potentialsand values.

3. Investing in terminals of emerging markets with growth potentials and exploring depressionswith more values by leveraging the significant strategical policy opportunities of the key “Beltand Road” initiative and building the Guangdong-Hong Kong-Macau Greater Bay Area on thepremise of effective risk control

As an important carrier for domestic and overseas port investment and operation of CMG, theCompany actively responded to the significant national policy opportunities of the key “Belt andRoad” initiative. Capitalizing on the close tracking of industries migration pattern, in-depth analysis

China Merchants Port Group Co., Ltd. Interim Report 2020

and exploring the growth potentials of port sources in emerging markets, the Company has possessedthe world’s leading competitive capabilities regarding port selection and investment and also activelyimplemented a series of major national strategies such as building the Guangdong-Hong Kong-MacauGreater Bay Area to grasp the development opportunities and growth points.In recent years, the Company has been actively seized the policy opportunities of the nationaland overseas emerging markets and made investment in the allocation of national and overseas portresources to continuously optimize the global network layout and thereby strivingly building amutually-beneficial port ecosystem. Through mergers, acquisitions and restructuring, along with therenovation of old ports and building of new ports, the Company has been actively constructingmodern port chain with global coverage, enhancing value of the port industry and pushing forwardbalanced regional development.

In realizing the global port network layout strategies, the Company has taken both riskcontrollability and commercial feasibility into account, ensuring the Company’s sustainableprofitability. At the same time, adhering to the principle of “extensive consultation, joint developmentand shared benefits”, CMPort will form a community of shared future with stakeholders fromcountries and regions along the “Belt and Road” initiative to realize mutually-beneficial achievement.

4. Cultivating the innovation and development capabilities for technology and business modelsdriven by innovative reform

“Ports are fundamental and pivotal facilities which provide important support for economicdevelopment.” Global shipping enterprises and port operators as well as domestic and overseas majorports have actively pushed forward the digital transformation, symbolizing the clear establishmenttrend of intelligent port development. Based on the abundant innovative application resourcespossessed by the ports, port enterprises may share the benefits from new business models and theiterative changes and development of the industry ecology.

China Merchants Port Group Co., Ltd. Interim Report 2020

In terms of business model, the Company has promoted the business model based on “Port+”and “Internet+” to create new profits. At the same time, taking port business as the core and leveragingthe synergy of different port zones as well as city-industry integration, the Company is also activelyexploring and facilitating the comprehensive port development model of “Port-Park-City”. Based onthe traditional loading and unloading and ancillary services for ports, the Company further expandedvarious value-added port services to the ports and port cities in which it operates. By gathering talents,information, funds and commodities, the Company provided economic support for urbandevelopment, continued to innovate industry development model and expand regional coverage andinfluence, thereby driving urban upgrade and development. Currently, the Company has participatedin promoting the regional comprehensive development and construction with the port-orientedapproach in various overseas regions, and the innovative business development model introducesCMPort elements to urban development that helps foster new profit growth points for the Company.In terms of technological innovation, driven by the innovation policies regarding newinfrastructure construction, the Company has deeply realized potential benefits from innovativepolicies and seized the opportunities of technology reform. Leveraging on the self-developedtechnology platform with “CMCore” as the core, leading products for the three major industries willbe mainly developed, including CTOS (Container Terminal Operation System), BTOS (Bulk CargoTerminal Operation System) and LPOS (Logistic Park Operation System). The “CM ePort” platformwill innovate the service models through improvement of the information service system of port zonesand the “Port+Internet” approach, with an aim to develop competitive customer services for ports andterminals. Intelligent product portfolios cover various production and operation elements of terminalsand logistics parks such as human resources, finance, resources and industries in a comprehensiveapproach. Through continuous iterative innovation, realizing the optimal operation management ofbusiness units as well as the advanced artificial intelligence and optimization of software technologies,

China Merchants Port Group Co., Ltd. Interim Report 2020

the Company has upgraded, transformed and built new and optimized intelligent terminals and parks.In addition, the comprehensive solutions for the CMPort-featured intelligent ports based on semi- orfully-automated terminals integrate advanced intelligent technologies and intelligent elements so asto transform and build new intelligent ports in the future. Such solution achieved seamless linkagewith intelligent logistics, shipping and affairs and enhanced comprehensive competitiveness throughtechnological empowerment and enhancement.

5. Sound shareholder background supported by the platform of central state-owned enterprises

CMG is a key state-owned enterprise under the direct administration of the PRC centralgovernment. Headquartered in Hong Kong, it is an integrated enterprise with diversified businessesand one of the four major Chinese enterprises in Hong Kong. Currently, CMG is mainly engaged inthree core industries namely transportation, finance and real estate, while focusing on four key sectorsincluding infrastructure 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 16 consecutive years and is a central state-owned enterprise thatowns two Fortune 500 companies. As of the end of 2019, CMG’s total assets amounted to RMB9.1trillion, representing a year-on-year increase of 14.6%. Among the central state-owned enterprises,CMG ranked first in terms of total profits, net profits and total assets.Being a crucial player and facilitator of the national “Belt and Road” initiative, CMG hasaccelerated its international development and preliminarily formed a relatively complete network ofoverseas port, logistics, finance and park business. The sound shareholder background and ampledomestic and overseas resources of CMG have provided strong support to CMPort for creating aglobal port cooperation platform with international vision and global expansion capabilities andultimately becoming a world-class comprehensive port service provider.

China Merchants Port Group Co., Ltd. Interim Report 2020

6. Extensive experience in professional port management with sound and efficient operatingstyleBy adhering to the proactive, sound and efficient operating style and capitalising on its globalport asset 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 theprofessional management experience accumulated for years, its self-developed global leadingterminal operating system and integrated logistics management platform for import and export, itsextensive maritime logistics support system with all-rounded modern integrated logistics solutionsand its high-quality engineering management and reliable service offerings.

China Merchants Port Group Co., Ltd. Interim Report 2020

Part IV Operating Performance Discussion and AnalysisI Overview

1. External Environment Analysis

(1) Macroeconomic environment

During the first half of 2020, as a result of the global public hygiene crisis due to the continuousspread of the sudden COVID-19 pandemic across the world, various economies showed significantdeclines. According to the “World Economic Outlook” report published by the International MonetaryFund (“IMF”) in June, the economic forecast for 2020 was further downgraded. The expected globaleconomic growth for the year was downgraded to -4.9%, representing a year-on-year decrease of 7.8percentage points. Among them, developed economies contracted by 8%, a year-on-year decrease of

9.7 percentage points; emerging markets and developing economies contracted by 3%, a year-on-yeardecrease of 6.7 percentage points. Besides, impacted by suspension of factories around the world andreduction in market orders, the volume of global merchandise trade in 2020 will fall by 13% in anoptimistic scenario or plummet by 32% in a worse scenario according the forecast of the World TradeOrganization (“WTO”) in April.

Facing the complex and challenging internal and external environment, the Chinese governmentcoordinated the promotion of pandemic prevention and control measures as well as economic andsocial development, and the economy has shown great resilience and potential. During the first halfof 2020, the Gross Domestic Product in China amounted to RMB 45,661.4 billion, representing ayear-on-year decrease of 1.6% based on comparable prices. On a quarter-to-quarter basis, the firstquarter recorded a year-on-year decrease of 6.8%, while the second quarter recorded an increase of

3.2%. Commodity trading experienced stagnancy as affected by the spread of pandemic overseas.

China Merchants Port Group Co., Ltd. Interim Report 2020

According to the statistics published by the General Administration of Customs of China, China’stotal value of import and export of merchandise trade amounted to RMB14.24 trillion during the firsthalf of 2020, representing a year-on-year decrease of 3.2%, among which the export value wasRMB7.71 trillion, representing a decrease of 3%; while the import value totalled RMB6.53 trillion,representing a decrease of 3.3%. Under the premise of normalized prevention and control of thepandemic, the Chinese government coordinated the promotion of economic and social development,and pragmatically and comprehensively implemented works in relation to the “Six Stabilization” and“Six Guarantee”. With the government’s all-out effort in promoting the resumption of work andproduction of enterprises, the economy is picking up gradually with many positive signs.

(2) Market environment of the port and shipping industry

In response to the spread of the COVID-19 pandemic across the world since 2020, variouscountries have implemented trade-restrictive measures. As a result, the demand for services and tradehas declined and global trade activities have slowed down. Global demand for shipping was alsoimpacted by the pandemic and the trade volume of container shipping has decreased. Meanwhile,trade tensions, geopolitical conflicts, debt crisis of emerging markets, rise of populism and other riskshave upset the global trade order. The combined effect of the aforementioned factors impacted theglobal industry and value chain, nurtured new consumption patterns and business models, andaccelerated the technological innovation of the port and shipping industry.Despite the imbalance supply and demand of the shipping market, the continuous trend offorming shipping alliances and deploying mega-vessels, and against the backdrop of greateruncertainties in relation to the pandemic and macro demand, shipping companies took advantage ofthe increased information transparency, market concentration and reliance on alliances to lowereffective market supply through reduction of number of shipping or the proportion of charteredvessels, thereby avoiding risks relating to uncertainties of the global supply chain .

China Merchants Port Group Co., Ltd. Interim Report 2020

During the first half of 2020, the port industry was affected by external environment factors to acertain extent as evidenced by the year-on-year decrease in container business volume. From thenationwide perspective, according to the statistics published by the Ministry of Transport, thecontainer throughput handled by Chinese ports during January to June 2020 totalled 120.19 millionTEUs, representing a decrease of 5.4% year-on-year. Furthermore, as shown by the results ofmonitoring of and analysis on production and operation of the port industry conducted by the ChinaPorts and Harbours Association, container throughput of hub ports in China recorded a year-on-yearincrease of 0.57% in June, returning to same level as that of the corresponding period last year, amongwhich foreign trade decreased by 0.85% year-on-year, while domestic trade grew by 4.85% year-on-year.

2. Port Business Review

(1) Overview of port business

In the first half of 2020, the Company’s ports handled a total container throughput of 55.50million TEUs, up by 0.7% year-on-year. Bulk cargo volume handled by the Company’s portsdecreased by 9.5% year-on-year to 220 million tonnes. During the Reporting Period, operatingrevenue of the Company amounted to RMB 5,922 million, representing a year-on-year increase of

1.51%.

Table 4-1 Throughput of the Company and changes in the first half of 2020

ItemFor the first half of 2020For the first half of 2019Changes
Container throughput (’0,000 TEU)5,5505,5100.7%
Among which: Mainland China3,9844,106-3.0%
Hong Kong and Taiwan341355-3.8%
Overseas1,2241,04916.6%
Bulk cargo throughput (hundred million tonnes)2.202.43-9.5%
Among which: Mainland China2.172.40-9.5%
Overseas0.030.030%

China Merchants Port Group Co., Ltd. Interim Report 2020

Note: 1. The statistics represented the total throughput of the holding subsidiaries, associates and joint venturesof the Company. 2. Discrepancies between totals and sums of sub-items listed are due to rounding.

For container business, the Company’s ports in China handled container throughput of 39.84million TEUs, representing a year-on-year decrease of 3.0%, which was mainly due to the decline ofimport and export trade as affected by the outbreak of pandemic worldwide during the first half ofthe year. Ports in Hong Kong and Taiwan regions contributed total container throughput of 3.41million TEUs, indicating a decrease of 3.8% year-on-year. The total container throughput handled bythe Company’s overseas ports grew by 16.6% year-on-year to 12.24 million TEUs, which was mainlybenefitted from the inclusion of the eight terminals newly acquired by TL and the business growth ofLCT and TCP. In terms of bulk cargo business, the Company’s ports in Mainland China handled abulk cargo volume of 217 million tonnes, down 9.5% year-on-year, which was mainly attributable tothe influence of the outbreak of pandemic worldwide during the first half of the year.

(2) Operation condition of port business by region

Table 4-2 Container throughput of the Company and changes in first half of 2020

(in ’0,000 TEU)

Region and port companyFor the first half of 2020For the first half of 2019Changes
Pearl River DeltaHolding companyWest Shenzhen Port Zone517568-9.0%
Shunde New Port181337.8%
Joint stock companyChu Kong River Trade Terminal4854-11.6%
Yangtze River DeltaJoint stock companySIPG Group2,0062,154-6.8%
Ningbo Daxie148164-10.0%
Bohai RimJoint stock companyTianjin Port Container Terminal367138166.5%
QQCTU3813790.6%
Dalian Port360507-28.9%
South-East region of Mainland ChinaHolding companyZhangzhou Port1619-16.4%
Shantou Port62594.7%

China Merchants Port Group Co., Ltd. Interim Report 2020

South-West region of Mainland ChinaHolding companyZhanjiang Port615215.6%
Hong Kong and TaiwanHolding company/ Joint stock companyCMCS/ Modern Terminals263273-3.6%
Joint stock companyTaiwan Kao Ming Container7882-4.4%
OverseasHolding companyCICT1381370.3%
TCP48447.5%
LCT615412.7%
Joint stock companyTL86068425.8%
Kumport6062-2.1%
PDSA4245-6.7%
TICT1624-33.6%
Total5,5505,5100.7%

Note: 1. Due to the restructuring of former Tianjin Five Continents Company, a subsidiary of the Company,the Company has adjusted the statistical caliber of Tianjin Port Container Terminal since September 2019; 2. SinceApril 2020, the Company has newly included the business volume of eight new ports acquired by TL, a joint stockcompany of the Company; 3. Discrepancies between totals and sums of sub-items listed are due to rounding.

Table 4-3 Bulk cargo volume handled by the Company and changes in the first half of 2020

(in ’0,000 tonnes)

Region and port companyFor the first half of 2020For the first half of 2019Changes
Pearl River DeltaHolding companyWest Shenzhen Port Zone74664815.2%
Dongguan Machong77061425.4%
Shunde New Port1549955.4%
Joint stock companyChu Kong Trade Terminal121154-21.1%
Yangtze River DeltaJoint stock companySIPG Group3,4736,175-43.8%
Bohai RimJoint stock companyQQTU7887643.1%
Qingdao Port Dongjiakou3,0382,8167.9%
Dalian Port6,7946,3047.8%
Laizhou Harbour Affairs9781,119-12.6%
South-East region of Mainland ChinaHolding companyZhangzhou Port252457-44.9%
Xia Men Bay Terminals10821.7%

China Merchants Port Group Co., Ltd. Interim Report 2020

Shantou Port160392-59.1%
South-West region of Mainland ChinaHolding companyZhanjiang Port4,4254,431-0.1%
OverseasHolding companyHIPG1846-60.2%
Joint stock companyKumport26-60.7%
PDSA285287-0.7%
Total22,01424,320-9.5%

Note: 1. HIPG has included liquid bulk cargo in the statistics of its business volume since 2020; 2. Discrepanciesbetween totals and sums of sub-items listed are due to rounding.Pearl River Delta regionThe Group’s terminals in West Shenzhen Port Zone handled a total container throughput of 5.17million TEUs, down by 9.0% year-on-year, which was mainly due to the overall downturn of theforeign trade market in the region under the influence of the pandemic. Shenzhen Port handled a totalcontainer throughput of 11.07 million TEUs, down by 10.8% year-on-year. Slightly outperformingthe overall Shenzhen market, West Shenzhen Port Zone handled a bulk cargo volume 7.46 milliontonnes, up by 15.2% year-on-year, mainly due to the growth in imported grain products and thebroadening of construction material sources. Chu Kong River Trade Terminal handled a totalcontainer throughput of 0.48 million TEUs and a bulk cargo volume of 1.21 million tonnes, down by

11.6% and 21.1% year-on-year respectively, mainly due to the suspension of certain foreign traderoutes as affected by the pandemic. Dongguan Machong Terminal handled bulk cargo volume of 7.70million tonnes, up by 25.4% year-on-year, mainly due to the significant increase in imported grainswithin the region. Guangdong Yide Port Limited handled a container throughput of 0.18 million TEUs,up by 37.8% year-on-year, mainly due to the steady increase in foreign trade volume with thecommencement of foreign trade business since July 2019. It also handled a bulk cargo volume of 1.54million tonnes, up by 55.4% year-on-year, mainly due to the increase in number of new customers.

Yangtze River Delta region

China Merchants Port Group Co., Ltd. Interim Report 2020

SIPG Group handled a container throughput of 20.06 million TEUs, down by 6.8% year-on-year.Bulk cargo volume handled declined by 43.8% year-on-year to 34.73 million tonnes, mainly due tothe impact of the pandemic and adjustment of business structure. Ningbo Daxie China MerchantsInternational Terminals Co., Ltd. handled a container throughput of 1.48 million TEUs, representinga decrease of 10.0% year-on-year.Bohai Rim regionQingdao Qianwan United Container Terminal Co., Ltd. (QQCTU) handled a containerthroughput of 3.81 million TEUs, representing an increase of 0.6% year-on-year. Qingdao QianwanWest Port United Terminal Co., Ltd. (QQTU) handled bulk cargo volume of 7.88 million tonnes,representing an increase of 3.1% year-on-year. Qingdao Port Dongjiakou Ore Terminal Co., Ltd.handled bulk cargo volume of 30.38 million tonnes, indicating an increase of 7.9% year-on-year.Dalian Port (PDA) Company Limited handled a container throughput of 3.60 million TEUs,representing a decrease of 28.9% year-on-year, mainly due to the impact of the pandemic andadjustment of business structure. Bulk cargo volume handled increased by 7.8% year-on-year to 67.94million tonnes. Laizhou Harbour Affairs handled a container throughput of 9.78 million tonnes,representing a year-on-year decrease of 12.6%. Since the Group has participated in the merger ofcontainer terminals in Tianjin which was completed in August 2019, Tianjin Port Container TerminalCo., Ltd. (“Tianjin Port Container Terminal”) contributed a container throughput of 3.67 millionTEUs, representing a year-on-year increase of 166.5% as compared to 1.38 million TEUs handed byTianjin Five Continents International Container Terminals Co., Ltd. before the merger in thecorresponding period last year.South-East region of Mainland ChinaZhangzhou China Merchants Port Co., Ltd. (“Zhangzhou Port”), located in Xiamen BayEconomic Zone, handled a container throughput of 0.16 million TEUs, decreased by 16.4% year-on-

China Merchants Port Group Co., Ltd. Interim Report 2020

year, while its bulk cargo volume handled decreased by 44.9% year-on-year to 2.52 million tonnes,which is attributable to the significant decrease in the production volume of sandstone, a major cargotype, as affected by the environmental policies in the hinterland. Since May 2019, Xia Men Bay ChinaMerchants Terminals Co., Ltd. officially commenced operation and handled a bulk cargo volume of

0.10 million tonnes, up by 21.7% year-on-year. Shantou China Merchants Port Group Co., Ltd.handled a container throughput of 0.62 million TEUs, up by 4.7% year-on-year, which was mainlydue to the growth in the volume of domestic transhipment containers, and a bulk cargo volume of

1.60 million tonnes, down by 59.1% year-on-year, dragged down by impact of the pandemic and theenvironmental policies.South-West region of Mainland ChinaZhanjiang Port (Group) Co., Ltd. handled a container throughput of 0.61 million TEUs, up by

15.6% year-on-year, mainly attributable to the expansion of new shipping routes and the domesticseaborne transhipment business. It also handled a bulk cargo volume of 44.25 million tonnes, downby 0.1% year-on-year.Hong Kong and Taiwan regionsModern Terminals Limited and China Merchants Container Services Limited in Hong Kongdelivered an aggregate container throughput of 2.63 million TEUs, down by 3.6% year-on-year. KaoMing Container Terminal Corp. in Kaohsiung, Taiwan handled a total container throughput of 0.78million TEUs, representing a decrease of 4.4% year-on-year.Overseas operationIn Sri Lanka, CICT handled a container throughput of 1.38 million TEUs, up by 0.3% year-on-year; and the bulk cargo volume handled by HIPG was 0.18 million tonnes, declined by 60.2% year-on-year, which was mainly due to the impact of the pandemic on the business needs in the hinterland.

China Merchants Port Group Co., Ltd. Interim Report 2020

Its RORO volume was 0.17 million vehicles, grew by 1.4% year-on-year. Container throughputhandled by LCT in Togo increased by 12.7% year-on-year to 0.61 million TEUs, which was mainlydue to the transfer of some transhipment routes from regions seriously impacted by the pandemic toLCT by shipping companies. Container throughput handled by TICT in Nigeria was 0.16 millionTEUs, representing a decrease of 33.6% year-on-year, mainly due to the decrease in import demandas affected by the pandemic and the drop of oil prices. PDSA in Djibouti handled a containerthroughput of 0.42 million TEUs, down by 6.7% year-on-year, and a bulk cargo volume of 2.85million tonnes, down by 0.7% year-on-year. TL handled a container throughput of 8.60 million TEUs,up by 25.8% year-on-year, which was mainly benefitted from the container throughput handled bythe new eight ports whose acquisition was completed in March this year. Container throughputhandled by Kumport in Turkey was 0.60 million TEUs, representing a decrease of 2.1% year-on-year;while bulk cargo volume handled was 20,000 tonnes, down by 60.7% year-on-year, which was mainlydue to the decline of marble exports as affected by the pandemic. Benefitted from the increase inimport and export container volume driven by the growth in the trade of agricultural and meatproducts, TCP in Brazil handled a container throughput of 0.48 million TEUs, up by 7.5% year-on-year.

3. Implementation of business plan during the reporting period

Regarding the development of homebase ports, adhering to the strategic goal of “building world-class leading ports”, the Company further advanced the building of West Shenzhen homebase portinto a world-class leading port and CICT and HIPG overseas into regional leading ports in South Asia.West Shenzhen Port Zone has closely followed the national development strategy of Guangdong-Hong Kong-Macao Greater Bay Area and continued to enhance its comprehensive competitiveness.Through strengthening infrastructure construction, the Port Zone has increased its navigation capacityand further improved the customs efficiency to create a good customs environment. Further, it

China Merchants Port Group Co., Ltd. Interim Report 2020

actively expanded the value-added services including imported fruits and strived to develop into thelargest shipping portal for fruits in Southern China. Also, it pushed forward the construction of theMawan Smart Port steadily. In terms of the overseas homebase ports such as CICT and HIPG, thelayout plan of regional development was coordinated and considered, as market-oriented, to activelyexpand the business presence, enhance service capability and develop value-added services.As for the business expansion, the Group completed the acquisition of equity interest in eightout of ten target terminals through TL, its associated company. Upon completion of this acquisition,the Group’s port operations can be expanded to cover regions such as Southeast Asia, South Asia,Europe, Middle East and the Caribbean Sea Region whereas the terminal layout of the Company hasa global coverage of 26 countries or regions, thereby further optimising its layout of global portsnetwork through this deal.With regard to innovative development, the Group proactively pushed forward the“digitalisation strategy”. As of the end of June 2020, the technological practice regarding productlaunch and product integration under the “CM ePort” project was completed at Zhangzhou port,Zhanjiang port and other ports. Besides, the Group signed the contract for CTOS project with theThessaloniki Port Authority SA of Greece in early July, thereby taking this opportunity to promoteextensive application of the “CMCore” platform in European ports and the logistics industry.Leveraging the “Guangdong-Hong Kong-Macao Greater Bay Area Port Logistics and TradeFacilitation Blockchain Platform”, the Company has promoted the innovative business model ofcomplex port in the Pearl River Delta by facilitating the saving of logistics and customs data on theblockchain, thereby enhancing the convenience of trade and logistics. In the future, the operation ofthe blockchain platform will be included in the “CM ePort” platform in general and promoted andreplicated this model in other ports gradually. Moreover, construction of the Mawan Smart PortProject, which is oriented with nine intelligent factors, namely “CMCore”, “CM ePort”, artificial

China Merchants Port Group Co., Ltd. Interim Report 2020

intelligence, the application of 5G network, Beidou high-precision positioning, automation, smartports, blockchain, as well as green and low-carbon development, has been in steady progress. TheZhanjiang Port Smart Bulk Cargo Terminal Project was also in progress as planned, which aims atestablishing a system and solution for the transformation towards automation of traditional bulk cargoterminals vigorously. Furthermore, the Group initiated the “Smart Management Platform (SMP)”overall planning and consultation project, which will provide all-rounded empowerment ofintelligence in terms of operation, management and control, monitoring and inspection, decision-making and service provision, with a view to enhancing the Group’s intelligent managementcomprehensively. The Group has entered into the strategic cooperation framework agreement withleading enterprises in the Internet sector like Alibaba and Tencent with a view to developing adigitalised ecosystem of ports and logistics in concerted efforts.With respect to comprehensive development, the Group actively implemented thecomprehensive development model of “Port-Park-City”. During the first half of 2020, HIPGcontinued to promote the efforts in soliciting business and attracting investment while DjiboutiInternational Free Trade Zone constantly enhanced its capability in provision of added-value service.As at the end of June, a total of 83 enterprises from different countries and regions was attracted andregistered in the zone.Regarding operation management, the Group continued to optimise and refine the currentmanagement mechanisms and systems by pursuing the goal of developing a world-class operationmanagement system consistently. By way of optimising the general management systems withreference to the respective strategic position of its subsidiaries, the Group has facilitated thecoordination between the operating mechanisms and project operations so as to strengthen theoperation management of each project. Adhering to the principle of differentiation and manageablerisks, the Group continued to promote sound development of its subsidiaries by further enhancing the

China Merchants Port Group Co., Ltd. Interim Report 2020

management of investment plans through efforts put in optimising the internal control andmanagement. Moreover, the Group has organized an expert team to conduct studies on those focusedtasks of more professional in nature, and to establish a multi-channel exchange platform for all sectors,with a view to enhancing the professional service of the Group. Besides, focusing on main businessesand the quality of initiatives, the Group further pushed forward the tasks on improving quality andefficiency and explored any potential. The Group strived to implement the related measures in orderto achieving in-depth integration of quality and efficiency improvement and strategic objectives.

In respect of capital operation, the Group has promoted the regularized dual-platform capitaloperation and adhered to the working concept of revitalising the existing assets and optimising assetstructure. Following the introduction of strategic investors to TCP in Brazil at the end of 2019, theGroup continued to introduce the strategic investor, Fujian Transportation Maritime Silk RoadInvestment and Management Co. Limited (福建省交通海丝投资管理有限公司), to HIPG this year,with a view to optimising asset portfolio and the Company’s governance structure while maintainingthe Group’s control over Hambantota Port. Unleashing the advantage of resources both at home andabroad of its shareholders, the synergy with HIPG was created, thereby achieving the sustainabledevelopment of HIPG in the long run.II Core Business AnalysisSee “I Overview” above.Year-on-year changes in key financial data:

Unit: RMB

H1 2020H1 2019Change (%)Main reason for change
Operating revenue5,922,497,158.485,834,353,421.331.51%-
Operating costs3,716,083,705.903,608,020,695.913.00%-
Administrative expense737,700,277.37647,244,718.3613.98%-
Finance costs841,659,933.37873,109,624.88-3.60%-
Income tax expense513,256,488.882,017,970,750.16-74.57%Income tax on the compensation income from the transfer of land in Qianhai for readjustment in 2019, with no comparable income tax in the current period
R&D expense66,130,284.8160,018,835.2910.18%-

China Merchants Port Group Co., Ltd. Interim Report 2020

Net cash generated from/used in operating activities2,071,426,144.922,556,861,915.52-18.99%-
Net cash generated from/used in investing activities-7,869,580,476.9173,786,701.24-10,765.31%Subscription for compulsory convertible bonds issued by TL and provision of shareholder loan for TL, as well as investment in Northeast Asia Development and Investment Co., Ltd.
Net cash generated from/used in financing activities5,356,254,138.54-2,366,244,781.51326.36%Exercise of put options for 10% of TCP by non-controlling interests and the share offering for raising the matching funds
Net increase in cash and cash equivalents-473,798,039.82244,903,144.44-293.46%Increase in net cash used in investing activities

Significant changes to the profit structure or sources of the Company in the Reporting Period:

□ Applicable √ Not applicable

No such changes in the Reporting Period.Breakdown of operating revenue:

Unit: RMB

H1 2020H1 2019Change (%)
Operating revenueAs % of total operating revenue (%)Operating revenueAs % of total operating revenue (%)
Total5,922,497,158.48100%5,834,353,421.33100%1.51%
By operating division
Port operations5,658,802,385.3595.55%5,558,945,151.9595.28%1.80%
Bonded logistics service191,942,345.763.24%198,548,490.323.40%-3.33%
Property development and investment71,752,427.371.21%76,859,779.061.32%-6.65%
By operating segment
Mainland China, Hong Kong and Taiwan4,215,085,950.6871.17%4,260,737,809.9373.03%-1.07%
Other countries and regions1,707,411,207.8028.83%1,573,615,611.4026.97%8.50%

Operating division, product category or operating segment contributing over 10% of operating revenue oroperating profit:

√ Applicable □ Not applicable

Unit: RMB

Operating revenueCost of salesGross profit marginYoY change in operating revenue (%)YoY change in cost of sales (%)YoY change in gross profit margin (%)
By operating division
Port operations5,658,802,385.353,489,416,067.8738.34%1.80%2.95%-0.69%

China Merchants Port Group Co., Ltd. Interim Report 2020

By operating segment
Mainland China, Hong Kong and Taiwan4,215,085,950.682,847,703,993.0232.44%-1.07%1.75%-1.87%
Other countries and regions1,707,411,207.80868,379,712.8849.14%8.50%7.32%0.56%

Core business data restated according to the changed methods of measurement that occurred in the Reporting Period:

□ Applicable √ Not applicable

Any over 30% YoY movements in the data above and why:

□ Applicable √ Not applicable

III Analysis of Non-Core Businesses

√ Applicable □ Not applicable

Unit: RMB

AmountAs % of profit before taxSource/ReasonRecurrent or not
Return on investment1,505,341,388.7865.14%Share of profits of joint ventures and associates, mainly share of the net profit of SIPGYes
Gain/loss on changes in fair value-295,735,653.30-12.80%Loss on changes in the fair value of other non-current financial assetsNo
Asset disposal income560,256,383.3824.24%Compensation from the government for transferring the land in Zhuchi District of Shantou Port to the government as its reserveNo

IV Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB

30 June 202030 June 2019Change in percentage (%)Reason for any significant change
AmountAs % of total assetsAmountAs % of total assets
Monetary assets7,262,584,582.864.46%7,055,470,795.984.65%-0.19%-
Accounts receivable1,690,223,255.751.04%1,826,407,082.631.20%-0.16%-
Inventories190,316,341.500.12%177,691,083.710.12%0.00%-
Investment property5,664,897,398.203.48%5,860,454,152.443.86%-0.38%-
Long-term equity investments62,036,426,397.2938.06%49,101,264,546.6632.36%5.70%-

China Merchants Port Group Co., Ltd. Interim Report 2020

Fixed assets26,460,710,461.5616.23%25,605,443,597.3616.87%-0.64%-
Construction in progress6,927,623,556.764.25%7,255,432,536.564.78%-0.53%-
Short-term borrowings15,663,707,514.479.61%7,566,020,460.464.99%4.62%Issuance of short-term commercial papers for raising matching funds
Long-term borrowings5,921,573,954.173.63%7,456,687,214.194.91%-1.28%-
Other receivables3,632,734,940.152.23%8,060,039,732.795.31%-3.08%Compensation from the government for transferring land to it as its reserve and dividends receivable from associate
Other current assets2,800,948,596.591.72%251,682,098.850.17%1.55%New structured deposit
Long-term receivables4,550,524,916.212.79%940,430,346.970.62%2.17%New loan financing for project
Taxes payable2,084,976,755.331.28%1,530,590,561.501.01%0.27%Change in business
Other current liabilities3,190,011,929.491.96%1,456,067,284.820.96%1.00%New issue of super short-term commercial papers
Long-term payables1,931,590,951.831.18%1,269,553,048.040.84%0.34%Increase in lease assets sold under leaseback agreements
Deferred income1,128,510,809.760.69%2,161,007,055.371.42%-0.73%Transfer to other income over time
Other non-current liabilities2,661,536,365.951.63%3,978,432,377.932.62%-0.99%Exercise of put options for an interest in TCP by non-controlling interests

2. Assets and Liabilities at Fair Value

√ Applicable □ Not applicable

Unit: RMB

ItemBeginning amountGain/loss on fair-value changes in the Reporting PeriodCumulative fair-value changes through equityImpairment allowance made in the Reporting PeriodPurchased in the Reporting PeriodSold in the Reporting PeriodOther changesEnding amount
Financial assets
Held-for-trading financial assets (exclusive of derivative financial assets)2,385,363,537.39-138,571,248.16--359,178,988.47-27,686,221.112,633,657,498.81
Investments in other equity instruments163,561,272.00--112,500.00----37,500.00163,411,272.00
Subtotal of2,548,924,809.39-138,571,248.16-112,500.00-359,178,988.47-27,648,721.112,797,068,770.81

China Merchants Port Group Co., Ltd. Interim Report 2020

financial assets
Accounts receivable financing260,760,537.45------9,447,749.96251,312,787.49
Subtotal of the above2,809,685,346.84-138,571,248.16-112,500.00-359,178,988.47-18,200,971.153,048,381,558.30
Financial liabilities4,059,686,208.87-157,164,405.14---755,393,933.51-744,697,868.172,716,758,812.33

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

Restricted monetary assets were security deposits of RMB16,456,386.94.The carrying amount of fixed assets as bank loan mortgages was RMB339,337,781.70.The carrying amount of construction in progress as bank loan mortgages was RMB37,219,474.00.The carrying amount of intangible assets as bank loan mortgages was RMB341,849,222.50.The carrying amount of equities and interests as bank loan mortgages was RMB2,617,579,657.47.V Investments Made

1. Total Investment Amount

√ Applicable □ Not applicable

Total investment amount in the Reporting Period (RMB)Total investment amount in the same period of last year (RMB)Change (%)
5,230,130,246.695,253,873,831.22-0.45%

2. Major Equity Investments Made in the Reporting Period

□ Applicable √ Not applicable

3. Major Non-Equity Investments Ongoing in the Reporting Period

√ Applicable □ Not applicable

Unit: RMB

ItemWay of investmentFixed assets investment or notIndustry involvedInput amount in the Reporting PeriodAccumulative actual input amount as of the period-endFunding sourceProgressExpected returnAccumulative realized return as of the period-endReason for failing to reach the scheduled progress and expected return

China Merchants Port Group Co., Ltd. Interim Report 2020

Transformation project of Mawan Smart PortSelf-builtYesSupport activities for water transportation139,286,182.071,198,275,941.06Self-funded and loan-funded42.74%0.000.00N/A
Shantou Port Guangdong-Macau Area Phase II projectSelf-builtYesSupport activities for water transportation176,979,681.551,549,125,340.11Self-funded and loan-funded88.00%0.000.00N/A
Zhanjiang Port Xiashan Port General WharfSelf-builtYesSupport activities of water transportation25,510,948.79259,819,857.81Self-funded and loan-funded35.22%0.000.00N/A
General Cargo project of Zhanjiang Port Donghai IslandSelf-builtYesSupport activities of water transportation-338,959,000.00Self-funded and loan-funded34.04%0.000.00N/A
Project of berth in Xiamen Port Houshi PortSelf-builtYesSupport activities of water transportation11,337,473.41982,408,653.24Self-funded and loan-funded98.00%0.000.00N/A
Total------353,114,285.824,328,588,792.22----0.000.00--

4. Financial Assets at Fair Value

√ Applicable □ Not applicable

Unit: RMB

Type of assetsInitial investment costGain/loss on fair value changes in the Reporting PeriodAccumulated fair value changes recorded in equityPurchased in the Reporting PeriodSold in the Reporting PeriodAccumulated return on investmentEnding amountFunding source
Stock1,411,818,972.71-138,571,248.16-112,500.00359,178,988.47-71,163,762.032,628,941,749.73Self-funded
Other40,770,893.95----131.33168,127,021.08Self-funded
Total1,452,589,866.66-138,571,248.16-112,500.00359,178,988.47-71,163,893.362,797,068,770.81--

5. Financial Investments

(1) Securities Investments

√ Applicable □ Not applicable

Unit: RMB

Variety of securityCode of securityName of securityInitial investment costAccounting measurement methodBeginning carrying amountGain/loss on fair value changes in the Reporting PeriodAccumulated fair value changes recorded in equityPurchased in the Reporting PeriodSold in the Reporting PeriodGain/loss in the Reporting PeriodEnding carrying amountAccounting titleFunding source
Stock601018Ningbo Port951,362,083.61Fair value method1,548,914,671.20-106,073,904.50-359,178,988.47-40,087,733.671,826,650,083.29Held-for-trading financial assetsSelf-funded
Stock6198Qingdao Port124,405,138.80Fair value method204,263,917.11-52,657,343.66---8,182,428.37154,662,466.44Held-for-trading financial assetsSelf-funded
Stock601298Qingdao Port331,404,250.30Fair value method616,000,000.0020,160,000.00---22,433,600.00636,160,000.00Held-for-trading financial assetsSelf-funded
Stock600377Jiangsu Expressway1,120,000.00Fair value method11,220,000.00--112,500.00--460,000.0011,070,000.00Investment in other equity instrumentsSelf-funded

China Merchants Port Group Co., Ltd. Interim Report 2020

Stock400032Petrochemical A13,500,000.00Fair value method382,200.00----382,200.00Investment in other equity instrumentsSelf-funded
Stock400009Guang Jian 127,500.00Fair value method17,000.00----17,000.00Investment in other equity instrumentsSelf-funded
Total1,411,818,972.71--2,380,797,788.31-138,571,248.16-112,500.00359,178,988.47-71,163,762.042,628,941,749.73----

(2) Investments in Derivative Financial Instruments

□ Applicable √ Not applicable

No such cases in the Reporting Period.

VI Sale of Major Assets and Equity Investments

1. Sale of Major Assets

□ Applicable √ Not applicable

No such cases in the Reporting Period.

2. Sale of Major Equity Investments

□ Applicable √ Not applicable

VII Principal Subsidiaries and Joint Stock Companies

√ Applicable □ Not applicable

Principal subsidiaries and joint stock companies with an over 10% effect on the Company’s net profit:

Unit: RMB

NameRelationship with the CompanyPrincipal activityRegistered capitalTotal assetsNet assetsOperating revenueOperating profitNet profit
China Merchants Port Holdings Company LimitedSubsidiaryPort operations, bonded logistics and property investmentHK$40,614,228,170.92135,124,839,887.2880,406,895,397.953,692,963,958.881,957,266,280.021,592,920,984.37
Shanghai International Port (Group) Co., Ltd.Joint stock companyPort and container terminal operations23,173,674,650.00159,502,438,035.6691,183,089,439.8812,038,672,650.455,106,991,318.274,328,854,036.44

Subsidiaries obtained or disposed of in the Reporting Period:

China Merchants Port Group Co., Ltd. Interim Report 2020

□ Applicable √ Not applicable

Other information on principal subsidiaries and joint stock companies:

There is no other information on the Company’s principal subsidiaries and joint stock companies in the ReportingPeriod that is required to be disclosed.VIII Structured Bodies Controlled by the Company

□ Applicable √ Not applicable

IX Operating Performance Forecast for January-September 2020

Warning of a forecast negative net profit for the January-September period of the current year or a considerable YoYchange therein, as well as the reasons:

□ Applicable √ Not applicable

X Risks Facing the Company and Countermeasures

1. Risk of macroeconomic fluctuations

Internationally, global economic and trade frictions, political unrest and the global COVID-19pandemic have cast uncertainties over the market environment. These frictions as well as tradeprotectionism may dampen global business sentiment and result in a slowdown in economic recovery.Geopolitical tension may undermine the confidence of exploratory commercial trade investment andthe trend of global intra-regional economic and trade recirculation was strengthened. The continuedspreading global COVID-19 pandemic has further worsened the weak global economy, with theextent of the impact depending on the duration and the scope of the pandemic. Such risks ofuncertainties will significantly shock the global trade, container shipping market and bulk cargodemand and will hugely affect export business as well as posing greater challenges to the Company’soverseas operation. Meanwhile, uncertain international environment has also resulted inuncontrollable risks in overseas investment, which impose more stringent demands on the Company’soverseas operation capability.

China Merchants Port Group Co., Ltd. Interim Report 2020

Domestically, the COVID-19 pandemic has impacted the economy of China to a certain extent.However, as the pandemic in China was brought under steady control, the ports operation in Chinafor the second half of the year will outperform that for the first half of the year. In addition, thedomestic economic environment will still be subject to unstable factors such as Sino-US economicand trade frictions, subdued investment in manufacturing industry and intensified inflation pressure.The relevant business operation and revenue of the Company will be subject to uncertainties to someextent accordingly. Industrial transfer and upgrade may lead to a decline in the generation rate of portcontainers and structural overcapacity in certain regions, thereby continuously exerting pressure onthe profitability of traditional port operations.Facing the risk of macroeconomic fluctuations, in particular the risk of uncertainties on foreigntrade, import and export caused by Sino-US trade frictions and COVID-19 pandemic, the Companywill take the initiative to respond in a proactive manner. Firstly, the Company will work in full swingto fight and overcome the pandemic and well prepare for the normalized pandemic control andprevention in the post-pandemic era, striving to minimize its negative impact. Secondly, the Companywill seize the opportunities arising from a new round of high-level opening up policies to drive theenhancement of quality and efficiency in port related business and balance the risks of unbalancedregional and structural business development. Thirdly, the Company will continue to strengthen thecapacity building of risk identification, warning and elimination, continue to follow up on theupstream and downstream industrial development and trade movements to adjust business operationstrategies when appropriate with an aim to effectively prevent, control and reduce the risk of thefluctuation of the external macroeconomic environment.

2. Policy risks

The policy risks in the port industry can be both positive and negative. On one hand, nationalstrategies such as the key “Belt and Road” initiative and the development of the Guangdong-Hong

China Merchants Port Group Co., Ltd. Interim Report 2020

Kong-Macao Greater Bay Area will introduce favorable policies to the industrial development; onthe other hand, policies and initiatives of the government on pushing forward reducing costs andimproving efficiency in logistics, anti-monopoly and environmental protection may exert pressure onthe profitability of the port industry.

In terms of policy risks, on one hand, the Company will proactively practice the key “Belt andRoad” initiative and a series of national strategies to seize the opportunities arising from the policies;on the other hand, in response to the negative risks, the Company will improve its operationmanagement capability by continuously enhancing quality and efficiency and strengthening resourceallocation, and will constantly optimize strategic initiatives to actively seek new profit growth driverand improve the sustainable profitability.

3. Operation management risks

Amidst the current favorable environment of domestic and overseas regional port integration,the Company swiftly strengthened its main port business and successfully made investment, mergersand acquisitions of a number of domestic and overseas ports. At the same time, the Company facedunfavorable conditions of ports in certain regions such as large asset volume, overcapacity, relativelylow operation efficiency and investment returns. The major risks include: (1) investment decision-making will be riskier and more difficult due to the current complicated external environment; (2) theCompany’s internationalized operation management system still needs to be improved and theCompany shall strengthen the benefits of integration through management output and other ways soas to accomodate with its own rapid development and expansion; (3) the risk control system shall beconsistently established and optimized to constantly improve management efficiency.

In terms of the Company’s internal operational management risks, the Company will: (1)commence various work regrading fighting against the pandemic and resumption of work under thecentralised deployment to ensure the realization of the work objective for the year; (2) increase

China Merchants Port Group Co., Ltd. Interim Report 2020

customer stickiness and seize market opportunities based on three improvement elements, namely“market, resources, services”; (3) improve internal control system to take further precautions in riskcontrol and reinforce the stringent restrictions on internal control with a view to ensuring effectiverisk identification and control and consolidating the foundation of risk control; and (4) optimize riskwarning system to precisely keep abreast of the new developments with an aim to seize the primeopportunities for risk control.

China Merchants Port Group Co., Ltd. Interim Report 2020

Part V Significant Events

I Annual and Extraordinary General Meetings Convened during the Reporting Period

1. General Meetings Convened during the Reporting Period

MeetingTypeInvestor participation ratioDate of the meetingDisclosure dateIndex to disclosed information
The 1st Extraordinary General Meeting of 2020Extraordinary General Meeting88.69%3 February 20204 February 2020See the resolution announcement (No. 2020-011) on www.cninfo.com.cn
The 2019 Annual General MeetingAnnual General Meeting90.18%22 May 202023 May 2020See the resolution announcement (No. 2020-050) on www.cninfo.com.cn

2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with ResumedVoting Rights

□ Applicable √ Not applicable

II Interim Dividend Plan

□ Applicable √ Not applicable

The Company has no interim dividend plan, either in the form of cash or stock.

III Commitments of the Company’s Actual Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Periodor Overdue at the Period-End

□ Applicable √ Not applicable

No such cases in the Reporting Period.IV Engagement and Disengagement of Independent AuditorAre the interim financial statements audited?

□Yes √ No

The interim financial statements are unaudited.

China Merchants Port Group Co., Ltd. Interim Report 2020

V Explanations Given by the Board of Directors and the Supervisory Committee Regarding theIndependent Auditor’s “Modified Opinion” on the Financial Statements of the ReportingPeriod

□ Applicable √ Not applicable

VI Explanations Given by the Board of Directors Regarding the Independent Auditor’s“Modified Opinion” on the Financial Statements of Last Year

□ Applicable √ Not applicable

VII Insolvency and Reorganization

□ Applicable √ Not applicable

No such cases in the Reporting Period.VIII Legal MattersMajor lawsuits and arbitrations:

□ Applicable √ Not applicable

No such cases in the Reporting Period.Other legal matters:

√Applicable □ Not applicable

Basic informationAmount involved (RMB’0,000)Whether formed expected liabilitiesProgressThe results and influence of lawsuits (arbitrations)Execution of judgmentDisclosure dateIndex to disclosed information
The summary of Brazil TCP cases (note)2,200.90YesPartially unsettledLow risk---
The summary of other matters not met disclosure standards of major lawsuits (arbitrations)5,079.06NoPartially settled, partially unsettledLow risk---

Note: refer to Notes to Financial Statements-Commitments or Contingency for details of Brazil TCP cases.

IX Media Query

□ Applicable √ Not applicable

No such cases in the Reporting Period.X Punishments and Rectifications

□ Applicable √ Not applicable

No such cases in the Reporting Period.

China Merchants Port Group Co., Ltd. Interim Report 2020

XI Credit Quality of the Company as well as Its Controlling Shareholder and Actual Controller

□ Applicable √ Not applicable

XII Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees

√Applicable □ Not applicable

The Company is implementing the stock option incentive plan, and has completed registrationfor the grant of stock option (the first grant) under the Stock Option Incentive Plan (Phase I) as at 13March 2020. Refer to the Announcement of Grant Completion (the First Grant) of Stock OptionIncentive Plan of CMPort (Phase I) (Announcement No. 2020-020) disclosed on www.cninfo.com.cnfor details. The review and approval procedures carried out in connection with the Stock OptionIncentive Plan are as follows:

(1) At the 2nd Meeting of the Nomination, Remuneration and Appraisal Committee of the 9thBoard of Directors in 2019 held on 10 October 2019, the following proposals were considered andapproved, including Stock Option Incentive Plan of CMPort (Draft) (hereinafter referred to as the“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 9th Extraordinary Meeting of the 9th Board of Directors in 2019 held on 11 October2019, the following proposals were reviewed and approved, including Stock Option Incentive Plan(Draft) and its summary, Stock Option Incentive Plan (Phase I) (Draft) and its summary, ManagementMeasures for the Stock Option Incentive Plan, Appraisal Measures for Implementing the Stock

China Merchants Port Group Co., Ltd. Interim Report 2020

Option Incentive Plan and Proposal on Requesting the General Meeting to Authorize the Board ofDirectors to Go Through Share Incentive Procedures, and independent directors expressedindependent opinions. At the 2nd Extraordinary Meeting of the 9th Supervisory Committee in 2019held on the same day, the following proposals were reviewed and approved, including Stock OptionIncentive Plan (Draft) and its summary, Stock Option Incentive Plan (Phase I) (Draft) and its summary,Management Measures for the Stock Option Incentive Plan and Appraisal Measures for Implementingthe Stock Option Incentive Plan, and List of Incentive Objects under the Stock Option Incentive Plan(Phase I) was reviewed with opinions expressed. Refer to the relevant announcements(Announcement No. 2019-069, No. 2019-070) disclosed on www.cninfo.com.cn for details.

(3) On 3 January 2020, the Company received Approval on the Implementation of StockIncentive Plan 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. Refer to the relevantannouncement (Announcement No. 2020-001) disclosed on www.cninfo.com.cn for details.

(4) At the 1st Extraordinary Meeting of the 9th Board of Directors in 2020 held on 9 January2020, Stock Option Incentive Plan (Phase I) (Revised Draft) and its summary were reviewed andapproved and independent directors expressed independent opinions. At the 1st ExtraordinaryMeeting of the 9th Supervisory Committee in 2020 held on the same day, Stock Option IncentivePlan (Phase I) (Revised Draft) and its summary were reviewed and approved and List of Incentiveobjects under the Stock Option Incentive Plan (Phase I) (After Adjustment) was reviewed withopinions expressed. Refer to the relevant announcements (Announcement No. 2020-002, No. 2020-003, No. 2020-004) disclosed on www.cninfo.com.cn for details.

(5) On 20 January 2020, the Company disclosed the List of Incentive Objects of Stock Option

China Merchants Port Group Co., Ltd. Interim Report 2020

Incentive 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) (Announcement No. 2020-009) on 20 January 2020.

(6) At the 1st Extraordinary General 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. Refer to therelevant announcement (Announcement No. 2020-011) disclosed on www.cninfo.com.cn for details.

(7) At the 2nd Extraordinary Meeting of the 9th Board of Directors in 2020 and the 2ndExtraordinary Meeting of the 9th Supervisory Committee in 2020 held on 3 February 2020, theProposal on the Grant of Stock Option (the First Grant) to Incentive Objects of the Stock OptionIncentive Plan of the Company (Announcement No. 2020-014) was considered and approvedrespectively. The Company’s Board of Supervisors reviewed the list of incentive objects under the

China Merchants Port Group Co., Ltd. Interim Report 2020

Stock Option Incentive Plan (Phase I) on the grant date and expressed opinions, and independentdirectors expressed independent opinions. Refer to the relevant announcement (Announcement No.2020-012, No. 2020-013, No. 2020-014) disclosed on www.cninfo.com.cn for details.XIII Major Related-Party Transactions

1. Continuing Related-Party Transactions

√Applicable □ Not applicable

Related partyRelationship with the CompanyType of transactionSpecific transactionPricing principleTransaction priceTotal value (RMB’0,000)As % of the total value of all the same-type transactionsApproved transaction line (RMB’0,000)Over the approved line or notWay of settlementObtainable market price for same-type transactionsDisclosure dateIndex to disclosed information
CHINA COSCO SHIPPING GROUP and its subsidiariesAffiliated legal personRender serviceLease, labor service, testing fee, etc.Market price25,775.3925,775.3956.50%37,799.33NoSettled monthly25,775.3916 April 2020www.cninfo.com.cn (Announcement No.2020-031)
China Merchants Shekou Industrial Zone Holdings Co., Ltd. and its subsidiariesUnder the control of ultimate shareholderRender service to related party and lease land to related partyLabor cost, lease expense of land and housesMarket price2,287.352,287.3513.84%16,127.05NoSettled monthly2,287.35
Antong Holdings Co., Ltd. and its subsidiariesAffiliated legal personRender service to related party and receive serviceLabor cost, freight forwarding agent, Port service chargeMarket price6,174.016,174.0113.53%9,154.3NoSettled monthly6,174.01
Total----34,236.75--63,080.68----------
Large-amount sales return in detailNone
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 PeriodThe Proposal on Recognition of 2019 Daily Related-party Transaction and the Forecast of 2020 Daily Related-party Transaction was reviewed and approved on the 7th Meeting of the 9th Board of Directors on 14 April 2020, 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 2020 is estimated to be RMB975 million. The actual amount of the above related-parties daily transactions was RMB342 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

2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests

□ Applicable √ Not applicable

China Merchants Port Group Co., Ltd. Interim Report 2020

3. Related Transactions Regarding Joint Investments in Third Parties

√Applicable □ Not applicable

Co-investorRelated relationshipName of investeesMain business of investeesRegistered capital of investees (RMB’0,000)Total assets of investees (RMB’0,000)Net assets of investees (RMB’0,000)Net profit of investees (RMB’0,000)
Liaoning Port Group Co., Ltd.Under the control of ultimate shareholderChina Merchants Northeast Asia Development Investment Co., Ltd.Investment and assets management; land development services; park management service; electricity, heat power and water supply; engineering management service; property management; plant leasing; meetings, exhibitions and relevant services; management consulting services. (for project subject to approval of laws, business activities are allowed to carry out with the approval of relevant departments450,000450,276.51450,207.39207.39
China Merchants Shekou Industrial Zone Holdings Co., Ltd.Under the control of ultimate shareholderChina Merchants Northeast Asia Development Investment Co., Ltd.Investment and assets management; land development services; park management service; electricity, heat power and water supply; engineering management service; property management; plant leasing; meetings, exhibitions and relevant services; management consulting services. (for project subject to approval of laws, business activities are allowed to carry out with the approval of relevant departments450,000450,276.51450,207.39207.39

4. Credits and Liabilities with Related Parties

√Applicable □ Not applicable

Whether there are credits and liabilities with non-operating related parties

√Yes □ No

Credits receivable with related parties

Related partyRelated relationshipForming reasonWhether there is occupation on non-operating capital or notBeginning balance (RMB’0,000)Increased in the Reporting Period (RMB’0,000)Recovered in the Reporting Period (RMB’0,000)Interest rateInterest 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 shareholderBank depositsNo89,006.52207,825.16193,202.862.02%484.06103,628.82
China Merchants BankThe ultimate controlling shareholder has major influence on itBank depositsNo298,084.801,055,354.331,204,796.131.91%1,416.18148,643.00

China Merchants Port Group Co., Ltd. Interim Report 2020

Effects of credits with related parties on the Company’s operating results and financial conditionsThe 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 partyRelated relationshipForming reasonBeginning balance (RMB’0,000)Increased in the Reporting Period (RMB’0,000)Recovered in the Reporting Period (RMB’0,000)Interest rateInterest 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 shareholderBorrowing121,756.3444,361100,171.34.25%1,705.4965,945.67
China Merchants BankThe ultimate controlling shareholder has major influence on itBorrowing9,009.303,709.33.41%151.055,300
Effects of liabilities with related parties on the Company’s operating results and financial conditionsThe 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

□ Applicable √ Not applicable

XIV Occupation of the Company’s Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes

□ Applicable √ Not applicable

No such cases in the Reporting Period.

XV Major Contracts and Execution thereof

1. Entrustment, Contracting and Leases

(1) Entrustment

√ Applicable □ Not applicable

Details:

On 13 December 2018, the Proposal on the Company and China Merchants (Liaoning) Port Development Co., Ltd.Signing the Custody Agreement Regarding Equity Interests in Liaoning Port Group Co., Ltd. was approved at the

th Extraordinary Meeting of the 9

thBoard of Directors of 2018 of the Company. As such, the Company was agreedto sign the said agreement with China Merchants (Liaoning) Port Development Co., Ltd., an indirectly wholly-owned subsidiary of CMG. According to the agreement, the Company will manage, in the trust of China Merchants(Liaoning) Port Development Co., Ltd., the 49.9% interest in Liaoning Port Group Co., Ltd. that China Merchants(Liaoning) Port Development Co., Ltd. is currently holding.

China Merchants Port Group Co., Ltd. Interim Report 2020

(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

√Applicable □ Not applicable

(1) Guarantees

Unit: RMB'0,000

Guarantees provided by the Company for external parties (exclusive of those for subsidiaries)
Guarantee-receiving entityDisclosure date of the guarantee line announcementLine of guaranteeActual occurrence date (date of agreement signing)Actual guarantee amountType of guaranteeTerm of guaranteeHaving expired or notGuarantee for a related party or not
Terminal Link SASN/A8,062.2111 June 20138,062.21General guaranteeAbout 20 yearsNotNot
KHOR AMBADO FZCO30 March 201920,319.8424 May 201912,232.46Joint-liabilityAbout 13 yearsNotYes
Total approved line for such guarantees in the Reporting Period (A1)-Total actual amount of such guarantees in the Reporting Period (A2)-
Total approved line for such guarantees at the end of the Reporting Period (A3)28,382.05Total actual balance of such guarantees at the end of the Reporting Period (A4)20,294.67
Guarantees provided by the Company as the parent for its subsidiaries
Guarantee-receiving entityDisclosure date of the guarantee line announcementLine of guaranteeActual occurrence date (date of agreement signing)Actual guarantee amountType of guaranteeTerm of guaranteeHaving expired or notGuarantee for a related party or not
Chiwan Wharf Holdings (Hong Kong) Limited30 March 2019400,00031 July 2019300,000Joint-liabilityAbout 1 yearNotNot
Chiwan Wharf Holdings (Hong Kong) Limited16 April 2020400,000------
Zhanjiang Port (Group) Co., Ltd.16 April 2020200,000------
China Merchants Port (Zhoushan)30 March 201912,800------

China Merchants Port Group Co., Ltd. Interim Report 2020

RoRo Logistics Co., Ltd.
Total approved line for such guarantees in the Reporting Period (B1)600,000Total actual amount of such guarantees in the Reporting Period (B2)-
Total approved line for such guarantees at the end of the Reporting Period (B3)1,012,800Total actual balance of such guarantees at the end of the Reporting Period (B4)300,000
Guarantees provided between subsidiaries
Guarantee-receiving entityDisclosure date of the guarantee line announcementLine of guaranteeActual occurrence date (date of agreement signing)Actual guarantee amountType of guaranteeTerm of guaranteeHaving expired or notGuarantee for a related party or not
China Merchants International Terminal (Qingdao) Co., Ltd.16 April 202059,010------
China Merchants International Terminal (Qingdao) Co., Ltd.*30 March 201970,000------
China Merchants International Terminal (Qingdao) Co., Ltd.*30 March 201910,000------
Shenzhen Jinyu Rongtai Investment Development Co., Ltd.N/A80,00012 January 201774,000Joint-liabilityAbout 10 yearsNotNot
Shenzhen Jinyu Rongtai Investment Development Co., Ltd.30 March 2019100,000------
China Merchants International (China) Investment Co., Ltd.N/A2,50030 June 20162,500Joint-liabilityAbout 10 yearsNotNot
China Merchants Finance Company Limited4 May 2012352,7754 May 2012352,775General guaranteeAbout 10 yearsNotNot
China Merchants Finance Company Limited3 August 2015352,7753 August 2015352,775General guaranteeAbout 10 yearsNotNot
China Merchants Finance Company Limited3 August 2015141,1103 August 2015141,110General guaranteeAbout 5 yearsNotNot
CMHI Finance (BVI) Co., Ltd6 August 2018634,9956 August 2018634,995General guaranteeAbout 5 yearsNotNot
CMHI Finance (BVI) Co., Ltd6 August 2018423,3306 August 2018423,330General guaranteeAbout 10 yearsNotNot

China Merchants Port Group Co., Ltd. Interim Report 2020

COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED*30 March 2019200,000------
COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITEDN/A246,871.9516 September 20127,955.05General guaranteeAbout 13 yearsNotNot
COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITEDN/A10,583.2516 September 201210,583.25General guaranteeInfiniteNotNot
COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITEDN/A17,638.7516 September 201217,638.75General guaranteeInfiniteNotNot
Lome Container Terminal Co., Ltd.N/A7,983.2June 20151,550.74General guaranteeAbout 9 yearsNotNot
Lome Container Terminal Co., Ltd.N/A7,983.2June 20151,550.74General guaranteeAbout 9 yearsNotNot
Lome Container Terminal Co., Ltd.N/A7,983.2June 20151,550.74General guaranteeAbout 9 yearsNotNot
China Merchants Port Development (Shenzhen) Co., Ltd.N/A320,00031 July 2017106,000Joint-liabilityAbout 5 yearsNotNot
China Merchants Port Development (Shenzhen) Co., Ltd.*30 March 2019100,000------
TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A.N/A41,18419 April 201837,065.6General guaranteeAbout 6 yearsNotNot
TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A.N/A58,762.297 November 201658,762.29General guaranteeAbout 6 yearsNotNot
Shenzhen Haixing Harbor Development Co., Ltd. *30 March 2019219,09026 June 201916,150.08Joint-liabilityAbout 18 yearsNotNot
HIPG, etc.*30 March 2019419,500------
Zhanjiang Port (Group) Co., Ltd.*30 March 201980,000------
Zhanjiang Port (Group) Co., Ltd.16 April 202080,000-
Hambantota International Port Group (Pvt) Ltd.16 April 2020250,000-
CMHI Finance16 April500,000-

China Merchants Port Group Co., Ltd. Interim Report 2020

(BVI) Co., Ltd2020
TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A.16 April 202090,000-
Kong Rise Development Limited16 April 2020110,000-
Total approved line for such guarantees in the Reporting Period (C1)1,089,010Total actual amount of such guarantees in the Reporting Period (C2)
Total approved line for such guarantees at the end of the Reporting Period (C3)4,994,074.84Total actual balance of such guarantees at the end of the Reporting Period (C4)2,240,292.24
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line approved in the Reporting Period (A1+B1+C1)1,689,010Total actual guarantee amount in the Reporting Period (A2+B2+C2)-
Total approved guarantee line at the end of the Reporting Period (A3+B3+C3)6,035,256.89Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4)2,560,586.91
Total actual guarantee amount (A4+B4+C4) as % of the Company’s net asset value72.92%
Of which:
Balance of guarantees provided for shareholders, actual controller and their related parties (D)12,232.46
Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E)2,121,545.35
Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F)804,756.93
Total of the three amounts above (D+E+F)2,938,534.74
Joint responsibilities possibly borne in the Reporting Period for undue guarantees (if any)N/A
Provision of external guarantees in breach of the prescribed procedures (if any)N/A

*Relevant guarantee credit was disclosed on 30 March 2019, and was approved by the General Meeting on 21 May 2019. The periodof validity is 12 months from the approval of General Meeting.

(2) Irregularities in the Provision of Guarantees

□ Applicable √ Not applicable

No such cases in the Reporting Period.

3. Cash Entrusted for Wealth Management

□ Applicable √ Not applicable

No such cases in the Reporting Period.

China Merchants Port Group Co., Ltd. Interim Report 2020

4. Other Major Contracts

□ Applicable √ Not applicable

No such cases in the Reporting Period.

XVI Corporate Social Responsibility (CSR)

1. Major Environmental Issues

Is the Company or any of its subsidiaries identified as a key polluter by the environment watchdog?

□Yes √ No

The Company and its subsidiaries are not identified as the key polluter by the environmentwatchdog.The Company attaches great importance to its corporate social responsibility and takes activesteps to perform it. While enhancing business performance and generating returns to shareholders, itmakes tangible effort to fulfill its social responsibility as an enterprise for its employees, society andenvironment to promote the sustainable development of itself and society.Aimed at building a green port company, in the first half year of 2020, the Company developedthe management measures for the performance appraisal on the management over energyconservation and environmental protection. The purpose was to further promote effectiveimplementation of the management over energy conservation and environmental protection, identifyand address risks brought by climate change, and strengthen environmental risk assessment andmanagement. In the Reporting Period, while ensuring regular epidemic prevention and control, theCompany organized its subsidiaries to carry out the activities National Energy ConservationPromotion Week themed “Lucid Waters and Lush Mountains with Energy Conservation and EfficacyEnhancement” and National Low Carbon Day themed “Green and Low Carbon Lifestyle as Part of aModerately Prosperous Society in All Respects”, mainly in the online form according to the actualsituation. Through the effort, the Company further promoted publicity and education on energyconservation and a low carbon lifestyle among all its employees, vigorously raised the environmental

China Merchants Port Group Co., Ltd. Interim Report 2020

awareness of saving resources and protecting the environment, and created a strong atmosphere forenergy conservation and emission reduction. By conducting publicity, training, lectures and otheractivities on energy saving and environmental protection, the Company has fully integrated theconcept into routine work; by stepping up effort in the recycling of waste batteries and other waste,it has continued to improve its energy conservation, emission reduction and environmentalmanagement.

Based on ensuring the effective execution of relevant national laws and regulations, theCompany has proactively developed and applied new energy conservation technologies and products,abandoned backward products and processes with high energy consumption to reduce energy loss,and replaced fuel oil with clean and low-carbon electric power to achieve the low-carbontransformation. It has continued to promote the application of new energy saving technologies andproducts such as “ship shore-based power supply” and “RTG power supply driver”, effectivelyimproved the efficiency of energy utilization, and driven the development of green shipping. It haspersisted in implementing relevant national and local policies on energy conservation, stoppedpurchasing and using low-efficiency and abandoned equipment, and introduced internationaladvanced technologies to upgrade its existing technologies and equipment as part of the effort toimprove its overall capacity in technology and equipment. It has adopted the energy saving andtechnological improvement principle that combines internal independent upgrading of equipment andassisted upgrading by external professional organizations of energy conservation. In the containerport business, the RTG power supply driver upgrading project has been advanced smoothly; in thebulk cargo business, the Company has ensured the input of facilities and reduced the emission of dust;in the petrochemical business, the Company has exercised optimal management over the oil leakingfrom the cleaning of pipelines, storage tanks and repair works.

China Merchants Port Group Co., Ltd. Interim Report 2020

2. Fulfillment of Epidemic Prevention Responsibility

Since the outbreak of COVID-19, the Company has taken effective prevention and control measures to ensurenormal port production. At the same time, it has actively coordinated with all relevant parties to assist in theprevention and battle against the epidemic. It has opened up a green channel for ships carrying anti-epidemicsupplies by giving them the priority to berth and depart, operate, and perform collection and distribution, so as toensure fast collection and transportation of anti-epidemic supplies. By wielding the network advantages as a globalport, the Company has played an active role in the transportation of anti-epidemic supplies. For regular loadedcontainers arriving at the port for domestic and foreign trade involving anti-epidemic supplies, the Company’smember enterprises have adopted preferential policies, such as exempting the warehouse and yard charges, to jointlytackle the difficulties with customers. During the intense pandemic overseas, the Company donated anti-epidemicsupplies or daily necessities to government authorities, hospitals, nursing homes, communities and impoverishedregions of Sri Lanka, Djibouti and Bangladesh to tide over the difficulties together with them and strengthenconnections with the local people. CMPort has proactively fulfilled its corporate social responsibility in the epidemicprevention and control as part of the contribution towards building a community of shared future for mankind.

3. Measures Taken for Targeted Poverty Alleviation

The Company has put in place poverty alleviation programs with Guizhou Province, Yunnan Province,Xinjiang Autonomous Region, Hubei Province, etc. According to its poverty alleviation plan for 2020, the Companywill input a total of RMB3.5 million to the relevant programs during the year. As of the End of the Reporting Period,a cumulative amount of RMB1.1 million has been input to purchase food, beverage, health products and othersupplies for the said regions, promote sales of the local products, and support the development of the local industries.By doing so, the Company aims to help achieve poverty alleviation in its true sense.XVII Other Significant Events

√Applicable □ Not applicable

China Merchants Port Group Co., Ltd. Interim Report 2020

1. Index to Disclosed Information

The significant events disclosed by the Company on Securities Times, Ta Kung Pao and www.cninfo.com.cn duringthe Reporting Period are as follows:

Announcement No.Date of the announcementTitle of the announcement
2020-0013 January 2020Announcement on Approval of Stock Option Incentive Plan by State-owned Assets Supervision and Administration Commission of the State Council
2020-00210 January 2020Announcement on Resolutions of the 1st Special Meeting of the 9th Board of Directors in 2020
2020-00310 January 2020Announcement on Resolutions of the 1st Special Meeting of the 9th Supervisory Committee in 2020
2020-00410 January 2020Announcement on Notes and Revision of Stock Options Incentive Plan of China Merchants Port Group Co., Ltd. (Phase I) (Revised Draft) and its Abstract
2020-00510 January 2020Reminder of Convening the 1st Extraordinary General Meeting of 2020
2020-00610 January 2020Report of the Public Call for Proxy Voting Rights of Independent Directors
2020-00716 January 2020Announcement on Voluntary Information Disclosure of Business Volume Data of December 2019
2020-00820 January 2020Announcement on an Estimated Growth in 2019 Annual Results
2020-00921 January 2020Announcement on Notes of the Supervisory Committee on the Review and Publicity of the List of Incentive Objects under the Stock Option Plan (Phase I)
2020-01022 January 2020Announcement on the Change of the Company’s Registered Information with the Industrial and Commercial Administration
2020-0114 February 2020Announcement on Resolutions of the 1st Extraordinary General Meeting of 2020
2020-0124 February 2020Announcement on Resolutions of the 2nd Special Meeting of the 9th Board of Directors in 2020
2020-0134 February 2020Announcement on Resolutions of the 2nd Special Meeting of the 9th Supervisory Committee in 2020
2020-0144 February 2020Announcement on the Grant of Stock Option (the First Grant) to Incentive Objects of the Stock Option Incentive Plan of the Company
2020-0154 February 2020Self-inspection Report on the Trading of the Company’s Shares by Insiders and Incentive Objects of the Stock Option Incentive Plan (Phase I)
2020-0164 February 2020Announcement on Resignation of Chairman of the Board and Election of New Chairman of the Board
2020-01714 February 2020Announcement on Voluntary Information Disclosure of Business Volume Data of January 2020
2020-01821 February 2020Reminder of the Issuance of 2020 Phase I Super-short-term Financing Bonds (Epidemic Prevention Bond)
2020-01927 February 2020Announcement on Issued Result of 2020 Phase I Super-short-term Financing Bonds (Epidemic Prevention Bond)
2020-02014 March 2020Announcement on Completion of the Grant of Stock Option (the First Grant) under the Stock Option Incentive Plan (Phase I) of the Company
2020-02114 March 2020Announcement on Voluntary Information Disclosure of Business Volume Data of February 2020
2020-02230 March 20202019 Annual Results Preview

China Merchants Port Group Co., Ltd. Interim Report 2020

2020-02330 March 2020Announcement on the Disclosure of the 2019 Annual Results by the Majority-Owned Subsidiary (Unaudited)
2020-0247 April 2020Announcement on Resolutions of the 3rd Special Meeting of the 9th Board of Directors in 2020
2020-0257 April 2020Announcement on Establishment Joint Ventures by Joint Investment with Related Party and Related-party Transactions
2020-0268 April 2020Announcement on Retirement and Application of Resignation of Employee Supervisor
2020-02711 April 20202020 First Quarter Performance Forecast
2020-02816 April 2020Announcement on Resolutions of the 7th Meeting of the 9th Board of Directors
2020-02916 April 2020Announcement on Resolutions of the 7th Special Meeting of the 9th Supervisory Committee
2020-03016 April 2020Abstract of 2019 Annual Report (Chinese Version) Abstract of 2019 Annual Report (English Version)
2020-03116 April 2020Announcement on the Confirmation of the Continuing Related-Party Transactions in 2019 and the Estimation of Such Transactions in 2020
2020-03216 April 2020Announcement on the Related-Party Transaction Regarding Making Deposits in and Obtaining Loans from China Merchants Bank in 2020
2020-03316 April 2020Announcement on the External Guarantee Progress of a Majority-Owned Subsidiary of the Company in 2019 and the Expected New External Guarantee Line in the Next 12 Months
2020-03416 April 2020Announcement on 2019 Profit Distribution Plan
2020-03516 April 2020Special Report on Deposit and Usage of Raised Fund in 2019
2020-03616 April 2020Announcement on Reappointment of Accounting Firm in 2020
2020-03716 April 2020Announcement on Changes in Accounting Estimates of Depreciation Period of Partial Fixed Assets
2020-03816 April 2020Announcement on Providing Financial Aid by Majority-owned Subsidiaries
2020-03916 April 2020Announcement on the Disclosure of the 2019 Annual Results by a Majority-Owned Subsidiary
2020-04016 April 2020Announcement on the Online Investor Communication on the 2019 Annual Results to Be Held
2020-04116 April 2020Announcement on Voluntary Information Disclosure of Business Volume Data of March 2020
2020-04224 April 2020Reminder of the Issuance of 2020 Phase II Super-short-term Financing Bonds
2020-04330 April 2020Announcement on the Resolutions of the 4th Extraordinary Meeting of the 9th Board of Directors of 2020
2020-04430 April 2020The Text of the First Quarter Report 2020 (Chinese Version) The Text of the First Quarter Report 2020 (English Version)
2020-04530 April 2020Announcement on Providing Financial Aid for Subsidiaries and Related-party Transactions
2020-04630 April 2020Reminder of Convening the 2019 Annual General Meeting
2020-04730 April 2020Announcement on Resignation of Chief Financial Officer
2020-0486 May 2020Announcement on Issue Results of 2020 Phase II Super-short-term Financing Bonds
2020-04916 May 2020Announcement on Voluntary Information Disclosure of Business Volume Data of April 2020
2020-05023 May 2020Announcement on Resolutions of the 2019 Annual General Meeting
2020-05123 May 2020Announcement on Resolutions of the 1st Meeting of the 10th Board of Directors
2020-05223 May 2020Announcement on Resolutions of the 1st Meeting of the 10th Supervisory Committee

China Merchants Port Group Co., Ltd. Interim Report 2020

2020-05323 May 2020Announcement on Completion of General Election of the Board of Directors and Supervisory Committee and Appointment of Senior Executives and Securities Affairs Representatives
2020-0542 June 2020Reminder of the Issuance of 2020 Phase III Super-short-term Financing Bonds
2020-0558 June 2020Announcement on Issue Results of 2020 Phase III Super-short-term Financing Bonds
2020-05612 June 2020Announcement on Voluntary Information Disclosure of Business Volume Data of May 2020

2. Progress of the Internal Control Work

(1) Internal audit and inspection

The Company planned to implement 13 internal audit projects in 2020, but with the impact of COVID-19epidemic, five audit projects have been launched in the Reporting Period, which involved in 5 audited entities. Threeaudit projects have been finished, including operating management and performance audit of Guangdong Yide PortCo., Ltd, economic responsibility audit during the term of original general manager Zheng Yanrong of Chiwan PortDevelopment Co., Ltd. and special audit of deposit and usage of raised funds of China Merchants Port Group Co.,Ltd. during the Reporting Period.

(2) Post project evaluation

There are two post evaluations of investment launched as planned during the Reporting Period, includingDongjiakou ore terminal project and KMCT equity acquisition project of Taiwan Gaoming Port, and now theprojects are under implementation.

(3) Self evaluation of risk management and internal control system

In the Reporting Period, the Company has finished 3 risk control tasks according to annual plan. The key taskis as follows:

In terms of construction and evaluation of internal control system, the Company has renewed the staff list ofrisk control framework, issued the risk control work plan of 2020, and launched the combing of management cycleof three core businesses (investment, sales and purchase), and normalized and promoted the construction andevaluation of internal control system among each units. In addition, the supervision and inspection of internal controlsystem has been completed regarding Shunde project and the defect list of internal control assessment has been

China Merchants Port Group Co., Ltd. Interim Report 2020

issued.

In terms of risk management, the Company continued to track the top 10 risks in 2020, and followed up therisk prevention and control of COVID-19 epidemic, and consistently improved the construction of customer creditratings and risk pre-warning system regarding accounts receivable. Meanwhile, the Company has carried out theconstruction of quantitative management system of overseas risks according to annual plan.

3. Communications with the Investment Community such as Researches, Inquiries and Interviews

(1) During the Reporting Period

DatePlaceWay of communicationType of communication partyObject of communicationIndex to basic information of researches
16 April 2020China Merchants Port BuildingTeleconferencingInstitutionIndustrial Securities, Changjiang Securities, UBS, Shanghai Life Insurance, Oriental Alpha Fund, China Securities, China COSCO, CICC, Ever Bloom, Xingyin Fund, Huaxi Securities, Huashang Fund, Hua’an Fund, Huatai Securities, Sichuan Development Fund, Guotai Junan, GTS Fund, TF Fund, CPIC, Pacific Securities, Pacific Assets, Ping’an Securities, China Merchants Securities, Zheshang Securities, Haitong Securities, Shenwan Hongyuan Securities, Green Court Capital, Juli Investment, Western Securities

Main discussions: the basiccondition of operations,investments made and thefinancial condition of theCompany;Materials provided: NoneIndex: SZSE EasyIR(http://irm.cninfo.com.cn/ircs/index)

29 May 2020

29 May 2020China Merchants Port BuildingOne-on-one meetingInstitutionGolden Eagle Fund Baoying Fund
1 January 2020 to 30 June 2020China Merchants Port BuildingBy phone, or written inquiry (the EasyIR platform of SZSEIndividual-

China Merchants Port Group Co., Ltd. Interim Report 2020

or email)
Times of communications74
Number of institutions communicated with32
Number of individuals communicated with72
Number of other communication parties0
Tip-offs or leakages of substantial confidential information during the communicationsNo

(2) From the End of the Reporting Period to the Disclosure Date of this Report

DatePlaceWay of communicationType of the communication partyCommunication partyMain discussions, materials provided and index to the relevant information
9 July 2020China Merchants Port PlazaOne-on-one meetingInstitutionHaitong Securities, Golden EagleMain discussions: the basic condition of operations, investments made and the financial condition of the Company; Materials provided: None Index: SZSE EasyIR (http://irm.cninfo.com.cn/ircs/index)
1 July 2020 to 28 August 2020China Merchants Port PlazaBy phone or written inquiry (the EasyIR platform of SZSE or email)Individual-
Times of communications18
Number of institutions communicated with2
Number of individuals communicated with17
Number of other communication parties0
Tip-offs or leakages of substantial confidential information during the communicationsNo

4. Deposits in and Loans Provided by a Finance Company

The 2nd Meeting of the 9

thBoard of Directors held on 23 August 2017 reviewed and approved the Proposal onSignature of Financial Service Agreement with Sinotrans & CSC Finance Co., Ltd., which agreed to sign theFinancial Service Agreement with Sinotrans & CSC Finance Co., Ltd. (former name, and renamed China MerchantsGroup Finance Co., Ltd. in August 2017). The Term of Agreement is three years.The 5th

Meeting of the 9

thBoard of Directors held on 28 March 2019 reviewed and approved the Proposal onAdjustment of Deposit and Loan Limits with the China Merchants Group Finance Co., Ltd. and Signature of the

China Merchants Port Group Co., Ltd. Interim Report 2020

Supplemental Agreement of Financial Service Agreement and Related-party Transaction, which agreed theCompany to sign the Supplemental Agreement of Financial Service Agreement with China Merchants GroupFinance Co., Ltd.The 4th Extraordinary General Meeting of 2019 held on 11 December 2019 reviewed and approved theProposal on Adjustment of Deposit and Loan Limits with China Merchants Group Finance Co., Ltd. and Signatureof the Supplemental Agreement (II) of Financial Service Agreement and Related-party Transaction, which allowedthe Company to sign the Supplemental Agreement (II) of Financial Service Agreement with China Merchants GroupFinance Co., Ltd.At the end of the Reporting Period, deposits in and loans provided by China Merchants Group Finance Co.,Ltd. were as follows:

Unit: RMB’0,000

ItemBeginning balanceIncreaseDecreaseEnding balance
I. Deposits in China Merchants Group Finance Co., Ltd.89,006.52207,825.16193,202.86103,628.82
II. Loans provided by China Merchants Group Finance Co., Ltd.121,756.3444,361.00100,171.3065,945.67

5. YoY Changes to Accounting Policies, Estimates and Methods

On 14 April 2020, the Company held the 7

th Meeting of the 9

th Board of Directors and the 7

th

Meeting of the

thSupervisory Committee, where the Proposal on Changes in Accounting Estimation of the Depreciable Life ofSome Fixed Assets was considered and approved. In accordance with the Accounting Standards for BusinessEnterprises No. 4 - Fixed Assets and the Company’s related regulations, the Company reviewed the expected servicelife of its fixed assets based on their performance and use conditions, and decided to make adjustment to thedepreciable life of some fixed assets to make it more reasonable, thus reflecting the Company’s financial conditionsand operating results in a more objective and fair manner. For the specific content, please refer to the Announcementon Changes in Accounting Estimates of Depreciation Period of Partial Fixed Assets (Announcement No.: 2020-037)published on www.cninfo.com.cn on 16 April 2020.

China Merchants Port Group Co., Ltd. Interim Report 2020

For further information, please refer to (III) Changes in Significant Accounting Policies and AccountingEstimates in Part XI Financial Statements for details.

XVIII Significant Events of Subsidiaries

√ Applicable □ Not applicable

1. On 15 April 2020, the Company’s holding subsidiary CMPort Holdings (00144.HK) announced that it woulddistribute in the form of scrip dividend the closing stock dividend as at 31 December 2019, equivalent to HKD0.58per ordinary share of CMPort Holdings, to the shareholders of record on 19 June 2020. The shareholders may chooseotherwise to receive the closing stock dividend in cash in lieu of all or parts of the equity in scrip dividend. TheCompany held 1,411,014,033 ordinary shares of CMPort Holdings, accounting for 40.91% of its total shares. TheCompany has chosen to collect the stock dividend in the form of scrip dividend. Thus, it has acquired 88,916,573ordinary shares of CMPort Holdings, increasing to 1,499,930,606 shares with a rise in the shareholding proportionto 41.58%.

2. On 22 December 2019, according to the announcement of CMPort Holdings, it had signed a masteragreement with CMA CGM SA and TL on 20 December 2019. According to the master agreement, TL intended toacquire 10 of the equities of CMA CGM SA in Asia, Europe, Middle East and the Caribbean region with a maximumtotal price of USD955 million. CMPort Holdings would subscribe the mandatory convertibles issued by TLevaluated in US dollar according to its 49% equity in Terminal Link, with a maximum amount of USD468 million.

On 26 March 2020, according to the announcement of China Merchants Port Holdings Co., Ltd., the first batchof acquisition had been completed, involving eight target ports respectively in Ukraine, Singapore, Jamaica, theNetherlands, China, Vietnam, Thailand and Iraq.

For further information, please login the website of The Stock Exchange of Hong Kong Ltd. or ChinaMerchants Port Group Co., Ltd..

China Merchants Port Group Co., Ltd. Interim Report 2020

Part VI Share Changes and Shareholder Information

I Share Changes

1. Share Changes

Unit: share

BeforeIncrease/decrease in the Reporting Period (+/-)After
SharesPercentage (%)New issuesShares as dividend converted from profitShares as dividend converted from capital reservesOtherSubtotalSharesPercentage (%)
I. Restricted shares1,277,770,99666.47%00010,81210,8121,277,781,80866.47%
1. Shares held by state00.00%0000000.00%
2. Shares held by state-owned legal person128,952,7466.71%00000128,952,7466.71%
3. Shares held by other domestic investors169,6020.01%00010,81210,812180,4140.01%
Including: Shares held by domestic legal person00.00%0000000.00%
Shares held by domestic natural person169,6020.01%00010,81210,812180,4140.01%
4. Shares held by foreign investors1,148,648,64859.75%000001,148,648,64859.75%
Including: Shares held by foreign legal person1,148,648,64859.75%000001,148,648,64859.75%
Shares held by foreign natural person00.00%0000000.00%
II. Unrestricted shares644,594,12833.53%000-10,812-10,812644,583,31633.53%
1. RMB ordinary shares464,858,32424.18%00000464,858,32424.18%
2. Domestically listed foreign shares179,735,8049.35%000-10,812-10,812179,724,9929.35%
3. Overseas listed foreign shares00.00%0000000.00%
4. Other00.00%0000000.00%
III. Total shares1,922,365,124100.00%000001,922,365,124100.00%

Reasons for the share changes:

√ Applicable □ Not applicable

On the 22 May 2020, the Company held the Annual General Meeting of 2019 on which the 10

th

Board of Directorsand the 10

th Supervisory Committee were constituted by election. The independent directors of the 9

thBoard ofDirectors and the employee supervisors of the 9

thSupervisory Committee holding shares of the Company left forthe expiration of their term of office. Thus, the restricted shares increased in accordance with governing laws andregulations and provisions of Articles of Association. For more details, please refer to relevant announcementsdisclosed on Cninfo by the Company (Announcement No.: 2020-050, 2020-053).

China Merchants Port Group Co., Ltd. Interim Report 2020

Approval of the share changes:

□ Applicable √ Not applicable

Transfer of share ownership:

□ Applicable √ Not applicable

Progress on any share repurchase:

□ Applicable √ Not applicable

Progress on reducing the repurchased shares by means of centralized bidding:

□ Applicable √ Not applicable

Effects of the share changes on the basic and diluted earnings per share, equity per share attributable to theCompany’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period,respectively:

□ Applicable √ Not applicable

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

√ Applicable □ Not applicable

Unit: share

Name of shareholdersNumber of restricted shares at the period-beginNumber of released restricted sharesNumber of increased restricted sharesNumber of restricted shares at the period-endReason for restrictionDate of restriction release
China Merchants Port Investment Development Company Limited1,148,648,648001,148,648,648According to relevant laws and regulations and the shareholder commitmentJune 2022
SHENZHEN INFRASTRUCTURE INVESTMENT FUND-SHENZHEN INFRASTRUCTURE INVESTMENT FUND PARTNERSHIP (LIMITED PARTNERSHIP)64,850,1820064,850,182According to relevant laws and regulations and the shareholder commitmentNovember 2020
CHINA-AFRICA DEVELOPMENT FUND64,102,5640064,102,564According to relevant laws and regulations and the shareholder commitmentNovember 2020
Zheng Shaoping9,496009,496According to the Articles of Association and the relevant laws and regulations-
Yuan Yuhui10,53003,51014,040According to the Articles of Association and the relevant lawsDecember 2020

China Merchants Port Group Co., Ltd. Interim Report 2020

and regulations
Ni Keqin21,90907,30229,211According to the Articles of Association and the relevant laws and regulationsDecember 2020
Zhang Jianguo55,7120055,712According to the Articles of Association and the relevant laws and regulationsDecember 2020
Zhao Chaoxiong48,7160048,716According to the Articles of Association and the relevant laws and regulationsDecember 2020
Wang Yongli3,739003,739According to the Articles of Association and the relevant laws and regulationsDecember 2020
Yao Shenglan19,5000019,500According to the Articles of Association and the relevant laws and regulationsDecember 2020
Total1,277,770,996010,8121,277,781,808----

Note: China Merchants Investment Development Company Limited (CMID) (Chinese name: 招商局投资发展有限公司) wasrenamed China Merchants Port Investment Development Company Limited (CMPID) (Chinese name: 招商局港口投资发展有限公司) on 8 July 2020.II Issuance and Listing of Securities

□ Applicable √ Not applicable

III Shareholders and Their Holdings as at the Period-End

Unit: share

Number of ordinary shareholders at the period-end34,601Number of preferred shareholders with resumed voting rights at the period-end (if any)0
5% or greater ordinary shareholders or top 10 ordinary shareholders
Name of shareholderNature of shareholderShareholding percentageTotal ordinary shares held at the period-endIncrease/decrease in the Reporting PeriodRestricted ordinary shares heldUnrestricted ordinary shares heldShares in pledge or frozen
China Merchants Port Investment Development Company LimitedForeign legal person59.75%1,148,648,64801,148,648,64800

China Merchants Port Group Co., Ltd. Interim Report 2020

CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD.State-owned legal person19.29%370,878,00000370,878,0000
SHENZHEN INFRASTRUCTURE INVESTMENT FUND-SHENZHEN INFRASTRUCTURE INVESTMENT FUND PARTNERSHIP (LIMITED PARTNERSHIP)Domestic non-state-owned legal person3.37%64,850,182064,850,18200
CHINA-AFRICA DEVELOPMENT FUNDState-owned legal person3.33%64,102,564064,102,56400
BROADFORD GLOBAL LIMITEDState-owned legal person2.88%55,314,2080055,314,2080
CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496Foreign legal person1.17%22,425,289-7,551,307022,425,289Unknown
NORGES BANKForeign legal person0.15%2,802,863002,802,863Unknown
CHINA MERCHANTS SECURITIES (HK) CO., LTD.State-owned legal person0.13%2,507,373-5,98202,507,373Unknown
MAI SHUQINGDomestic natural person0.12%2,376,747002,376,747Unknown
ICBC- Fullgoal China Securities Dividend Index Strengthen Securities Investment FundDomestic non-state-owned legal person0.08%1,581,401321,30001,581,401Unknown
Strategic investors or general legal person becoming top-ten ordinary shareholders due to placing of new shares (if any)N/A
Related or acting-in-concert parties among the shareholders aboveChina 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 Port Investment Development Company Limited. The Company does not know whether the other unrestricted shareholders are related parties or not.

China Merchants Port Group Co., Ltd. Interim Report 2020

Top 10 unrestricted ordinary shareholders
Name of shareholderUnrestricted ordinary shares held at the period-endShares by type
TypeShares
CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD.370,878,000RMB ordinary share370,878,000
BROADFORD GLOBAL LIMITED55,314,208Domestically listed foreign share55,314,208
CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 549622,425,289Domestically listed foreign share22,425,289
NORGES BANK2,802,863Domestically listed foreign share2,802,863
CHINA MERCHANTS SECURITIES (HK) CO., LTD.2,507,373Domestically listed foreign share2,507,373
MAI SHUQING2,376,747RMB ordinary share2,376,747
ICBC- Fullgoal China Securities Dividend Index Strengthen Securities Investment Fund1,581,401RMB ordinary share1,581,401
SHEN HUAILING1,519,849Domestically listed foreign share1,519,849
Hong Kong Securities Clearing Company Ltd.1,238,979RMB ordinary share1,238,979
LIN JIANJUAN1,212,700RMB ordinary share1,212,700
Related or acting-in-concert parties among top 10 unrestricted ordinary shareholders, as well as between top 10 unrestricted ordinary shareholders and top 10 ordinary shareholdersChina 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)N/A

Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinaryshareholders of the Company conducted any promissory repo during the Reporting Period.

□ Yes √ No

No such cases in the Reporting Period.IV Change of the Controlling Shareholder or the De Facto ControllerChange of the controlling shareholder in the Reporting Period

□ Applicable √ Not applicable

No such cases in the Reporting Period.Change of the de facto controller in the Reporting Period

□ Applicable √ Not applicable

No such cases in the Reporting Period.

China Merchants Port Group Co., Ltd. Interim Report 2020

Part VII Preference Shares

□ Applicable √ Not applicable

No preference shares in the Reporting Period.

China Merchants Port Group Co., Ltd. Interim Report 2020

Part VIII Convertible Corporate Bonds

□ Applicable √ Not applicable

No convertible corporate bonds in the Reporting Period.

China Merchants Port Group Co., Ltd. Interim Report 2020

Part IX Directors, Supervisors and Senior ManagementI Change in Shareholdings of Directors, Supervisors and Senior Management

√ Applicable □ Not applicable

NameOffice titleIncumbent/FormerBeginning shareholding (share)Increase in the Reporting Period (share)Decrease in the Reporting Period (share)Ending shareholding (share)Restricted shares granted at the period-begin (share)Restricted shares granted in the Reporting Period (share)Restricted shares granted at the period-end (share)
Deng RenjieChairman of the BoardIncumbent0000000
Bai JingtaoVice Chairman of the Board and CEOIncumbent0000000
Yan ShuaiDirectorIncumbent0000000
Su JianDirectorIncumbent0000000
Song DexingDirectorIncumbent0000000
Zhang YiDirector, COO and GMIncumbent0000000
Gao PingIndependent directorIncumbent0000000
Wang ZhenminIndependent directorIncumbent0000000
Li QiIndependent directorIncumbent0000000
Liu YingjieChairman of the Supervisory CommitteeIncumbent0000000
Hu QinSupervisorIncumbent0000000
Yang YuntaoSupervisorIncumbent0000000
Gong ManSupervisorIncumbent0000000
Xu JiaSupervisorIncumbent0000000
Zheng ShaopingVice GMIncumbent12,6610012,661000
Huang ChuanjingVice GM and Secretary of the BoardIncumbent0000000
Lu YongxinVice GM and Acting CFOIncumbent0000000
Li YubinVice GMIncumbent0000000

China Merchants Port Group Co., Ltd. Interim Report 2020

Fu GangfengChairman of the BoardFormer0000000
Yuan YuhuiIndependent directorFormer14,0400014,040000
Su QiyunIndependent directorFormer0000000
Li ChangqingIndependent directorFormer0000000
Ni KeqinSupervisorFormer29,2110029,211000
Zheng LinweiSupervisorFormer0000000
Wen LingCFOFormer0000000
Total----55,9120055,912000

II Change of Directors, Supervisors and Senior Management

√ Applicable □ Not applicable

NameOffice titleType of changeDate of changeReason for change
Deng RenjieChairman of the BoardElected3 February 2020-
Bai JingtaoVice Chairman of the BoardElected14 April 2020-
Zhang YiDirectorElected22 May 2020-
Gao PingIndependent directorElected22 May 2020-
Wang ZhenminIndependent directorElected22 May 2020-
Li QiIndependent directorElected22 May 2020-
Gong ManSupervisorElected22 May 2020-
Xu JiaSupervisorElected22 May 2020-
Fu GangfengChairman of the BoardLeft31 January 2020Job change
Yuan YuhuiIndependent directorLeft for expiration of the term22 May 2020Change of the Board
Su QiyunIndependent directorLeft for expiration of the term22 May 2020Change of the Board
Li ChangqingIndependent directorLeft for expiration of the term22 May 2020Change of the Board
Ni KeqinSupervisorLeft for expiration of the term22 May 2020Change of the Supervisory Committee
Zheng LinweiSupervisorLeft for expiration of the term22 May 2020Change of the Supervisory Committee
Wen LingCFOLeft29 April 2020Retirement

China Merchants Port Group Co., Ltd. Interim Report 2020

Part X Corporate BondsDoes the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding beforethe date of this Report’s approval or were due but could not be redeemed in full?YesI. Basic Information of the Corporate Bonds

NameAbbr.CodeRelease dateMaturity dateBonds balance (RMB’0,000)Interest rateWay of redemption
2020 Public Offering of Corporate Bonds of China Merchants Port Group Co., Ltd. (for qualified investors) (Phase I)20 CMPort 011491707 July 20208 July 2023200,0003.36%Simple interest is adopted and calculated by year. No compound interest is calculated. Interests are paid once every year and principals paid in lump sum at maturity. In the last installment, the interests are paid together with principal repayment.
Listed or transferred trading place of the Company bondsList on the SZSE.
Appropriate arrangement of the investorsThe Company’s bonds are publicly issued to eligible investors who comply with the Measures for Issuance and Trading of Corporate Bonds and have opened an eligible A-share securities account with Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. (CSDC).
Interest payment during the Reporting PeriodDuring the Reporting Period, “20 CMPort 01” did not enter the payment period.
Execution of the relevant regulations during the Reporting Period such as the affiliated option clause of the issuers or investors, special clauses such as the exchangeable regulations of the Company bonds (if applicable)Not applicable

II. List of the Bond Trustee and the Rating Organization

Bond trustee:
NameCITIC Securities Co., Ltd.Office address18F CITIC Securities Tower, No.8 Zhongxin 3rd Road, Futian District, ShenzhenContact personChen Tianya and Feng YuanContact number0755-23835062
Rating organization executed the tracking rating of the corporate bonds of the Reporting Period:
NameChina Chengxin International Credit Rating Co., Ltd.Office address60101, Building 1, No.2 Nanzhugan hutong, Dongcheng District, Beijing
Alternation reasons, execution process and influences on the investors’ interests etc. ifNot applicable

China Merchants Port Group Co., Ltd. Interim Report 2020

there was alternation of the bond trusteesand the credit rating agencies engaged bythe Company during the Reporting Period(if applicable)

III. List of the Usage of the Raised Funds of the Corporate Bonds

List of the usage of the raised funds and the execution process of the Company bondsThe Company has used the raised funds strictly in accordance with the terms in the prospectus for current bonds, related provisions and requirements in the Measures for Issuance and Trading of Corporate Bonds and the Bonds Listing Rules of the Shenzhen Stock Exchange. It has not engaged in any violations in respect of the use and management of the raised funds.
Ending balance (RMB’0,000)0
Operating situation of the raised funds special accountThe Company deposits raised funds in a dedicated account and strictly performs internal approval procedures for the use of raised funds to ensure designated use of designated money.
Whether the usage of the raised funds met with the usage, using plan and other agreements committed on the prospectusYes

IV. Rating Situation of the Corporate Bonds Information

On 24 June 2020, China Chengxin International Credit Rating Co., Ltd. (CCXI) issued a credit rating notice(XPWHZ [2019] No. G564). CCXI granted the corporate credit rating of AAA to the Company with a rating outlookof Stable, and the credit rating of AAA to the “2020 Public Offering of Corporate Bonds of China Merchants PortGroup Co., Ltd. (for qualified investors) (Phase I)”.During the Reporting Period, there was no rating difference in the corporate credit ratings of other bonds and debtfinancing instruments issued by the Company in China.V. Credit-adding Mechanism, Repayment Plan and Other Repayment Guarantee Measures ofthe Corporate Bonds

(I) Changes in the credit enhancement mechanism, debt repayment plans and other debt repayment guaranteemeasuresDuring the Reporting Period, there was no significant change in the credit mechanism, debt repayment plans andother debt repayment guarantee measures for the Company’s bonds.(II) Regarding the credit enhancement mechanismDuring the Reporting Period, the Company’s bonds had no surety bond, mortgage or pledge and no other methodof credit enhancement.(III) Debt repayment plans or other debt repayment guarantee measures takenTo fully and effectively safeguard the rights and interests of bond holders, the Company has developed a series ofwork plans for the timely and full repayment of its bonds, including designating dedicated departments andpersonnel, arranging funds for debt repayment, developing and strictly executing fund management plans, properlyorganizing and coordinating, fully exerting the role of the bond trustee, and strictly performing the informationdisclosure obligation. These plans have formed a set of guarantee measures for the safe payment of interests andrepayment for the bonds.(IV) Dedicated debt repayment accountThe Company has set up a dedicated corporate bond account for its bonds. It has signed a tripartite fund regulation

China Merchants Port Group Co., Ltd. Interim Report 2020

agreement with the trustee and the fund custodian bank to guarantee the full and timely payment of interests andrepayment of principals for its bonds.VI. Convene Situation of the Bonds Holders Meeting during the Reporting PeriodDuring the Reporting Period, no bonds holders meeting was convened.

VII. List of the Duty Execution of the Bonds Trustee during the Reporting PeriodThe bond trustee of “20 CMPort 01” is CITIC Securities. As at the issue date of this Report since the issue of “20CMPort 01”, the trustee CITIC Securities had performed continuous tracking and supervision on the Company’scredit status, the use of the funds raised under the Company’s bonds, and the implementation of the debt repaymentguarantee measures strictly in accordance with relevant laws, regulations and the provisions of the Bond TrusteeshipAgreement. It had reminded the Company to fulfill its obligations specified in the prospectus, proactively performedits duties as the bond trustee, and safeguarded the legitimate rights and interests of the bond holders.As at the issue date of this Report, there had been no conflict of interests in the trustee’s performance of duties. Thetrustee had yet issued the report on the trusteeship affairs.

VIII. The Major Accounting Data and the Financial Indicators of the Company up the Period-end of the Year and the Period-end of Last Year (or the Reporting Period and the Same Periodof Last Year)

Unit: RMB’0,000

Item30 June 202030 June 2019Increase/decrease
Current ratio0.51%0.68%-0.17%
Asset-liability ratio42.69%39.38%3.31%
Quick ratio0.51%0.68%-0.17%
H1 2020H1 2019Increase/decrease
Times interest earned of EBITDA4.7010.38-54.72%
Loan repayment rate100.00%100.00%-
Interest coverage100.00%100.00%-

Main reason of the above accounting data and the financial indicators with the YoY change exceeded 30%

√ Applicable □ Not applicable

The times interest earned of the Company declined 54.70% compared with that of the same period of last year dueto the increase of interest expense caused by the increase of borrowings of the Company.IX. Overdue Debts of the Company

□ Applicable √ Not applicable

No such cases in the Reporting Period.

China Merchants Port Group Co., Ltd. Interim Report 2020

X. List of the Interest Payment of Other Bonds and Debt Financing Instruments during theReporting PeriodDuring the Reporting Period, the Company paid interests in due course for other bonds and debt financinginstruments without any delay or failure in the payment of interests and repayment of principals.XI. List of the Acquired Bank Credit Lines, Usage and the Repayment of the Bank LoansThe Company had maintained good credit records with different banks and other financial institutions. As at theend of June 2020, the Company had been granted a credit of RMB58.00 billion by banks, of which RMB28.18billion had been used. During the Reporting Period, the Company had used the funds strictly according to the banks’loan requirements and fully repaid bank loans in due course.XII. List of the Execution of the Agreements or the Commitments Related to the CompanyBonds Raising Specification during the Reporting PeriodThe Company had strictly carried out the content specified in the prospectus of its bonds, with no incident ofharming the rights and interests of the bond investors.XIII. Significant Events Occurring during the Reporting Period

Refer to Part V Significant Events of this Report.XIV. Whether there Was Guarantor of the Corporate Bonds

□ Yes √ No

China Merchants Port Group Co., Ltd. Interim Report 2020

Part XI Financial StatementsI Independent Auditor’s ReportThese interim financial statements have not been audited by an independent auditor.II Financial Statements

See attached.

China Merchants Port Group Co., Ltd. Interim Report 2020

Part XII 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. Interim Report 2020 carrying the signature of the Company Principal;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 29 August 2020

CHINA MERCHANTS PORT GROUP CO., LTD.

FINANCIAL STATEMENTSFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

CHINA MERCHANTS PORT GROUP CO., LTD.

FINANCIAL STATEMENTSFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

CONTENTS PAGES

THE CONSOLIDATED AND COMPANY BALANCE SHEETS 1 - 4

THE CONSOLIDATED AND COMPANY INCOME STATEMENTS 5 - 6

THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 7 - 8

NOTES TO THE FINANCIAL STATEMENTS 9 - 148

CHINA MERCHANTS PORT GROUP CO., LTD.

- 1 -

AT 30 JUNE 2020

Consolidated Balance Sheet

Unit: RMB

ItemNotesClosing BalanceOpening Balance
Current assets:
Cash and bank balances(V)17,262,584,582.867,734,948,210.26
Notes receivable(V)221,961,548.9838,192,250.02
Accounts receivable(V)31,690,223,255.751,356,460,129.90
Accounts receivable financing(V)4251,312,787.49260,760,537.45
Prepayments(V)567,773,767.8255,034,019.81
Other receivables(V)63,632,734,940.152,129,378,252.50
Inventories(V)7190,316,341.50163,980,192.08
Assets held for sale-188,404,228.34
Non-current assets due within one year(V)873,093,385.73808,893,013.06
Other current assets(V)92,800,948,596.592,298,792,661.70
Total current assets15,990,949,206.8715,034,843,495.12
Non-current Assets:
Long-term receivables(V)104,550,524,916.211,098,831,799.90
Long-term equity investments(V)1162,036,426,397.2957,916,539,383.26
Other investments in equity instruments(V)12163,411,272.00163,561,272.00
Other non-current financial assets(V)132,633,657,498.812,385,363,537.39
Investment properties(V)145,664,897,398.205,760,262,674.40
Fixed assets(V)1526,460,710,461.5627,519,962,529.29
Construction in progress(V)166,927,623,556.766,334,141,441.88
Right-of-use assets(V)179,525,713,677.159,633,325,390.46
Intangible assets(V)1818,562,439,995.0619,693,715,554.10
Development Expenditure(V)1945,349,256.3837,399,092.28
Goodwill(V)207,279,415,071.728,023,659,694.81
Long-term prepaid expenses(V)21697,616,595.63711,911,011.67
Deferred tax assets(V)22316,597,018.94300,435,502.27
Other non-current assets(V)232,156,087,443.012,082,965,467.04
Total non-current assets147,020,470,558.72141,662,074,350.75
TOTAL ASSETS163,011,419,765.59156,696,917,845.87

CHINA MERCHANTS PORT GROUP CO., LTD.

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AT 30 JUNE 2020

Consolidated Balance Sheet - continued

Unit: RMB

ItemNotesClosing BalanceOpening Balance
Current liabilities:
Short-term borrowings(V)2415,663,707,514.479,439,099,793.47
Notes payable(V)2515,959,326.0976,455,949.01
Accounts payable(V)26552,729,739.72591,112,466.39
Receipts in advance(V)2737,353,091.9628,826,687.37
Contract liabilities(V)2889,261,875.7485,831,002.52
Employee benefits payable(V)29584,728,559.73634,718,784.64
Taxes payable(V)302,084,976,755.331,898,076,342.74
Other payables(V)314,373,981,275.112,223,754,677.96
Non-current liabilities due within one year(V)324,534,549,437.656,104,339,856.79
Other current liabilities(V)333,190,011,929.49885,956,581.63
Total current liabilities31,127,259,505.2921,968,172,142.52
Non-current Liabilities:
Long-term borrowings(V)345,921,573,954.176,313,735,540.33
Bonds payable(V)3520,995,346,998.4420,930,681,967.19
Including: Preferred shares--
Perpetual bonds--
Lease liabilities(V)361,538,184,794.371,647,129,968.61
Long-term payables(V)371,931,590,951.831,935,245,003.21
Projected benefits obligation(V)38466,832,544.96471,482,138.63
Provisions(V)3970,999,744.3976,242,559.95
Deferred income(V)401,128,510,809.761,147,752,857.17
Deferred tax liabilities(V)223,748,455,818.413,961,752,749.17
Other non-current liabilities(V)412,661,536,365.953,254,515,306.85
Total non-current liabilities38,463,031,982.2839,738,538,091.11
TOTAL LIABILITIES69,590,291,487.5761,706,710,233.63
SHAREHOLDERS' EQUITY:
Share capital(V)421,922,365,124.001,922,365,124.00
Capital reserve(V)4322,061,293,835.7922,296,485,467.35
Other comprehensive income(V)44(735,673,853.20)(355,944,565.91)
Special reserve(V)4522,592,277.4112,386,734.70
Surplus reserve(V)46630,345,307.43630,345,307.43
Unappropriated profit(V)4711,215,676,980.6411,467,166,351.85
Total shareholders' equity attributable to equity holders of the parent35,116,599,672.0735,972,804,419.42
Total minority interests58,304,528,605.9559,017,403,192.82
TOTAL SHAREHOLDERS' EQUITY93,421,128,278.0294,990,207,612.24
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY163,011,419,765.59156,696,917,845.87

The accompanying notes form part of the financial statements.

The financial statements on pages 1 to 148 were signed by the following:

Legal Representative: Bai Jingtao

Chief Financial Officer: Lu Yongxin

Head of Accounting Department: Sun Ligan

CHINA MERCHANTS PORT GROUP CO., LTD.

- 3 -

AT 30 JUNE 2020

Balance Sheet of the Company

Unit: RMB

ItemNotesClosing BalanceOpening Balance
Current Assets:
Cash and bank balances1,826,905,879.02690,685,211.42
Prepayments40,000.00-
Other receivables(XV)11,524,145,895.31805,534,763.27
Other current assets753,882,089.031,107,292,458.33
Total current assets4,104,973,863.362,603,512,433.02
Non-current Assets:
Long-term receivables62,622,307.8661,004,284.75
Long-term equity investments(XV)234,312,223,874.0630,266,376,582.23
Other investments in equity instruments155,538,635.00155,688,635.00
Other non-current financial assets371,485,510.62-
Fixed assets577,618.61672,842.27
Construction in progress6,369,207.095,803,169.37
Intangible assets53,481,617.9254,692,581.18
Deferred tax assets928,465.21928,465.21
Total non-current assets34,963,227,236.3730,545,166,560.01
TOTAL ASSETS39,068,201,099.7333,148,678,993.03

CHINA MERCHANTS PORT GROUP CO., LTD.

- 4 -

AT 30 JUNE 2020

Balance Sheet of the Company - continued

Unit: RMB

ItemNotesClosing BalanceOpening Balance
Current Liabilities:
Short-term borrowings-300,378,812.50
Employee benefits payable18,344,520.716,000,000.00
Taxes payable175,025,582.59209,282,889.78
Other payables4,341,552,750.94628,013,119.77
Non-current liabilities due within one year36,416,000.0035,832,000.00
Other current liabilities3,013,285,383.88715,766,708.20
Total current liabilities7,584,624,238.121,895,273,530.25
Non-current Liabilities:
Deferred tax liabilities35,127,358.7535,164,858.75
Total non-current liabilities35,127,358.7535,164,858.75
TOTAL LIABILITIES7,619,751,596.871,930,438,389.00
SHAREHOLDERS' EQUITY
Share capital1,922,365,124.001,922,365,124.00
Capital reserve27,584,975,709.5627,576,242,527.73
Other comprehensive income105,482,076.25105,594,576.25
Surplus reserve630,345,307.43630,345,307.43
Unappropriated profit1,205,281,285.62983,693,068.62
TOTAL SHAREHOLDERS' EQUITY31,448,449,502.8631,218,240,604.03
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY39,068,201,099.7333,148,678,993.03

The accompanying notes form part of the financial statements.

CHINA MERCHANTS PORT GROUP CO., LTD.

- 5 -

FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Consolidated Income Statement

Unit: RMB

ItemNotesAmount incurred in the current periodAmount incurred in the previous period
I. Operating income(V)485,922,497,158.485,834,353,421.33
Less: Operating costs(V)483,716,083,705.903,608,020,695.91
Business taxes and levies(V)4977,378,079.1596,475,511.42
Administrative expenses(V)50737,700,277.37647,244,718.36
Research and development expenses66,130,284.8160,018,835.29
Financial expenses(V)51841,659,933.37873,109,624.88
Including: Interest expenses997,950,589.711,037,955,298.30
Interest income142,415,864.44139,353,821.46
Add: Other income(V)5255,597,275.3973,092,505.76
Investment income(V)531,505,341,388.782,625,049,484.56
Including: Income from investments in associates and joint ventures(V)531,394,604,771.651,795,952,978.08
Gains (losses) from changes in fair value(V)54(295,735,653.30)643,627,313.01
Impairment gains (losses) of credit(V)55(3,636,037.50)7,699,134.78
Impairment gains of assets(V)56947,693.7725,051.16
Gains on disposal of assets(V)57560,256,383.384,169,857,166.53
II. Operating profit2,306,315,928.408,068,834,691.27
Add: Non-operating income(V)5827,745,365.3914,379,618.34
Less: Non-operating expenses(V)5923,110,322.517,506,374.29
III. Gross profit2,310,950,971.288,075,707,935.32
Less: Income tax expenses(V)60513,256,488.882,017,970,750.16
IV. Net profit1,797,694,482.406,057,737,185.16
(I) Categorization by continuity of operation
1. Net profit of continued operation1,797,694,482.406,057,737,185.16
2. Net profit of discontinued operation--
(II) Categorization by attribution of ownership
1. Net profit attributable to shareholders of the parent632,798,585.832,299,181,330.61
2. Profit or loss attributable to minority shareholder1,164,895,896.573,758,555,854.55
V. Amount of other comprehensive net income after tax(V)62(1,105,459,189.10)(916,016,194.57)
Amount of other comprehensive net income after tax attributable to equity holders of the parent(379,729,287.29)(332,612,543.08)
(I) Other comprehensive income that will not be reclassified to profit or loss(1,463,343.44)15,630,350.48
1. Changes 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(1,350,843.44)14,925,350.48
3. Fair value changes of other investments in equity instruments(112,500.00)705,000.00
(II) Other comprehensive income that will be reclassified subsequently to profit or loss(378,265,943.85)(348,242,893.56)
1. Other comprehensive income under the equity method that will be reclassified to profit or loss12,154,545.52(25,779,604.80)
2. Translation differences of financial statements denominated in foreign currencies(390,420,489.37)(322,463,288.76)
Amount of other comprehensive net income after tax attributable to minority shareholders(725,729,901.81)(583,403,651.49)
VI. Total comprehensive income attributable to:692,235,293.305,141,720,990.59
Shareholders of the parent253,069,298.541,966,568,787.53
Minority shareholders439,165,994.763,175,152,203.06
VII. Earnings per share
(I) Basic earnings per share0.331.28
(II) Diluted earnings per share0.331.28

The accompanying notes form part of the financial statements.

CHINA MERCHANTS PORT GROUP CO., LTD.

- 6 -

FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Income Statement of the Company

Unit: RMB

ItemNotesAmount incurred in the current periodAmount incurred in the previous period
I. Operating income(XV)394,339.6289,776,788.29
Less: Operating costs(XV)31,132,979.8272,138,491.00
Business taxes and levies-1,386,897.46
Administrative expenses56,541,697.3437,458,257.94
Financial expenses1,306,524.3428,123,295.64
Including: Interest expenses15,828,399.3422,334,322.60
Interest income17,871,242.916,848,157.41
Add: Other income355,292.70211,721.77
Investment income(XV)41,326,631,915.23986,513,980.21
Including: Income from investments in associates and joint ventures(XV)428,229,153.2637,846,506.83
Gains from changes in fair value12,306,522.15-
II. Operating profit1,280,406,868.20937,395,548.23
Add: Non-operating income5,000.0035,710.26
Less: Non-operating expenses-68,028.29
III. Gross profit1,280,411,868.20937,363,230.20
Less: Income tax expenses174,535,694.16148,004,636.57
IV. Net profit1,105,876,174.04789,358,593.63
V. Amount of other comprehensive net income after tax(112,500.00)705,000.00
(I) Other comprehensive income that will not be reclassified subsequently to profit or loss(112,500.00)705,000.00
1. Changes 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(112,500.00)705,000.00
(II) Other comprehensive income that will be reclassified to profit or loss--
1. Other comprehensive income under the equity method that will be reclassified to profit or loss--
2. Translation differences of financial statements denominated in foreign currencies--
VI. Total comprehensive income1,105,763,674.04790,063,593.63

The accompanying notes form part of the financial statements.

CHINA MERCHANTS PORT GROUP CO., LTD.

- 7 -

FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Consolidated Cash Flow Statement

Unit: RMB

ItemNotesAmount incurred in the current periodAmount incurred in the previous period
I. Cash Flows from Operating Activities:
Cash received from sales of goods and rendering of services5,630,074,541.825,754,573,111.14
Refunds of taxes13,596,456.121,028,913.99
Cash received relating to other operating activities(V) 63 (1)383,674,545.69628,327,662.03
Sub-total of cash inflows6,027,345,543.636,383,929,687.16
Cash paid for goods purchased or services received1,615,486,122.151,686,739,386.99
Cash paid to and on behalf of employees1,443,033,749.901,289,823,173.43
Tax payments561,104,526.78472,544,903.05
Cash paid relating to other operating activities(V) 63 (2)336,294,999.88377,960,308.17
Sub-total of cash outflows3,955,919,398.713,827,067,771.64
Net Cash Flows from Operating Activities(V) 64 (1)2,071,426,144.922,556,861,915.52
II. Cash Flows from Investing Activities:
Cash received from disposal and recovery of investments2,541,647,276.82-
Cash received from investment income243,248,600.44255,735,654.65
Net cash received from disposal of fixed assets, intangible assets and other long-term assets109,636,776.0628,746,274.62
Cash received relating to other investing activities(V) 63 (3)509,787,186.592,641,747,342.20
Sub-total of cash inflows3,404,319,839.912,926,229,271.47
Cash paid to acquire or construct fixed assets, intangible assets and other long-term assets1,082,224,237.891,557,516,143.20
Cash paid to acquire investments7,181,906,008.80321,023,297.25
Cash paid relating to other investing activities(V) 63 (4)3,009,770,070.13973,903,129.78
Sub-total of cash outflows11,273,900,316.822,852,442,570.23
Net Cash Flows from Investing Activities(7,869,580,476.91)73,786,701.24
III. Cash Flows from Financing Activities:
Cash received from capital contributions-27,255,000.00
Including: cash received from capital contributions from minority owners of subsidiary-27,255,000.00
Cash received from borrowings13,998,279,106.518,519,572,630.94
Cash received from issue of bonds-1,000,000,000.00
Sub-total of cash inflows13,998,279,106.519,546,827,630.94
Repayments of borrowings6,724,017,083.7310,576,686,264.69
Dividends paid, profit distributed or interest paid1,161,435,086.071,120,395,167.09
Including: Dividends paid, profit distributed to minority shareholders.162,311,700.49150,969,238.87
Cash paid relating to other financing activities(V) 63 (5)756,572,798.17215,990,980.67
Sub-total of cash outflows8,642,024,967.9711,913,072,412.45
Net Cash Flows from Financing Activities5,356,254,138.54(2,366,244,781.51)
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents(31,897,846.37)(19,500,690.81)
V. Net Increase (Decrease) in Cash and Cash Equivalents(473,798,039.82)244,903,144.44
Add: Opening Balance of Cash and Cash Equivalents(V) 64 (2)7,714,157,995.875,373,281,504.75
VI. Closing Balance of Cash and Cash Equivalents(V) 64 (2)7,240,359,956.055,618,184,649.19

The accompanying notes form part of the financial statements.

CHINA MERCHANTS PORT GROUP CO., LTD.

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FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Cash Flow Statement of the Company

Unit: RMB

ItemNotesAmount incurred in the current periodAmount incurred in the previous period
I. Cash Flows from Operating Activities:
Cash received from sales of goods or rendering of services-90,193,645.46
Cash received relating to other operating activities23,510,809.162,827,290.04
Sub-total of cash inflows23,510,809.1693,020,935.50
Cash paid for goods purchased and services received-30,749,568.38
Cash paid to and on behalf of employees25,483,852.3164,417,358.35
Tax payments208,942,631.9619,019,323.75
Cash paid relating to other operating activities17,929,140.00245,001,703.97
Sub-total of cash outflows252,355,624.27359,187,954.45
Net Cash Flows from Operating Activities(228,844,815.11)(266,167,018.95)
II. Cash Flows from Investing Activities:
Cash received from disposals and recovery of investments1,400,000,000.00-
Cash received from investments income184,352,981.91273,935,026.51
Cash received relating to investing activities222,500,000.00228,867,355.24
Sub-total of cash inflows1,806,852,981.91502,802,381.75
Cash paid to acquire or construct fixed assets, intangible assets and other long-term assets600,000.001,916,637.68
Cash paid for investments2,409,178,988.47375,334,390.00
Net cash paid for acquisition of subsidiaries and other business entities-10,825,000.00
Cash paid relating to other investing activities137,944,110.77185,800,000.00
Sub-total of cash outflows2,547,723,099.24573,876,027.68
Net Cash Flows from Investing Activities(740,870,117.33)(71,073,645.93)
III. Cash Flows from Financing Activities:
Cash received from borrowings2,999,433,243.33660,000,000.00
Cash received from issue of bonds-1,000,000,000.00
Cash received relating to other financing activities544,400,000.00-
Sub-total of cash inflows3,543,833,243.331,660,000,000.00
Repayments of borrowings715,904,918.031,361,616,000.00
Dividends paid, profit distributed or interest paid619,875.0019,237,193.99
Cash paid relating to other financing activities721,400,000.004,033,208.78
Sub-total of cash outflows1,437,924,793.031,384,886,402.77
Net Cash Flows from Financing Activities2,105,908,450.30275,113,597.23
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents27,149.74(3,440,024.23)
V. Net Increase in Cash and Cash Equivalents1,136,220,667.60(65,567,091.88)
Add: Opening balance of Cash and Cash Equivalents690,685,211.42389,841,854.93
VI. Closing Balance of Cash and Cash Equivalents1,826,905,879.02324,274,763.05

The accompanying notes form part of the financial statements.

CHINA MERCHANTS PORT GROUP CO., LTD.

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FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Consolidated Statement of Changes in Shareholders' Equity

Unit: RMB

ItemCurrent Period
Attributable to shareholders of the parentMinority interestsTotal shareholders' equity
Share capitalCapital reserveOther comprehensive incomeSpecial reserveSurplus reserveUnappropriated profit
I. Closing balance of the preceding year1,922,365,124.0022,296,485,467.35(355,944,565.91)12,386,734.70630,345,307.4311,467,166,351.8559,017,403,192.8294,990,207,612.24
Add: Changes in accounting policies--------
Corrections of prior period errors--------
Business combination involving enterprises under common control--------
Others--------
II. Opening balance of the period1,922,365,124.0022,296,485,467.35(355,944,565.91)12,386,734.70630,345,307.4311,467,166,351.8559,017,403,192.8294,990,207,612.24
III. Changes for the period-(235,191,631.56)(379,729,287.29)10,205,542.71-(251,489,371.21)(712,874,586.87)(1,569,079,334.22)
(I) Total comprehensive income--(379,729,287.29)--632,798,585.83439,165,994.91692,235,293.45
(II) Owners' contributions and reduction in capital-(235,191,631.56)----195,733,139.46(39,458,492.10)
1.Capital contribution from shareholders--------
2.Capital contribution from other equity investment holder--------
3.Share-based payment recognized in shareholders' equity-4,385,994.73----4,298,990.178,684,984.90
4.Business combination involving enterprises under common control--------
5.Others-(239,577,626.29)----191,434,149.29(48,143,477.00)
(III) Profit distribution-----(884,287,957.04)(1,358,489,636.85)(2,242,777,593.89)
1.Transfer to surplus reserve--------
2.Transfer to general reserve--------
3.Distributions to shareholders-----(884,287,957.04)(1,358,489,636.85)(2,242,777,593.89)
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---10,205,542.71--10,715,915.6120,921,458.32
1.Withdrawn in the period---26,720,701.58--28,574,355.0155,295,056.59
2.Utilized in the period---(16,515,158.87)--(17,858,439.40)(34,373,598.27)
(VI) Others--------
IV. Closing balance of the period1,922,365,124.0022,061,293,835.79(735,673,853.20)22,592,277.41630,345,307.4311,215,676,980.6458,304,528,605.9593,421,128,278.02

CHINA MERCHANTS PORT GROUP CO., LTD.

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FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Consolidated Statement of Changes in Shareholders' Equity - continued

Unit: RMB

ItemPrior Period
Attributable to shareholders of the parentMinority interestsTotal shareholders' equity
Share capitalCapital reserveOther comprehensive incomeSpecial reserveSurplus reserveUnappropriated profit
I. Closing balance of the preceding year1,793,412,378.0019,426,912,957.0588,925,978.578,231,080.43527,175,908.678,915,817,110.2149,656,450,459.8880,416,925,872.81
Add: Changes in accounting policies-----(37,858,457.43)(74,479,917.38)(112,338,374.81)
Corrections of prior period errors--------
Business combination involving enterprises under common control--------
Others--------
II. Opening balance of the period1,793,412,378.0019,426,912,957.0588,925,978.578,231,080.43527,175,908.678,877,958,652.7849,581,970,542.5080,304,587,498.00
III. Changes for the period-121,909,842.81(332,612,543.08)12,223,115.96-2,094,732,319.527,072,308,894.228,968,561,629.43
(I) Total comprehensive income--(332,612,543.08)--2,299,181,330.613,175,152,203.065,141,720,990.59
(II) Owners' contributions and reduction in capital-121,909,842.81----5,326,157,828.335,448,067,671.14
1.Capital contribution from shareholders------27,255,000.0027,255,000.00
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-121,909,842.81----5,298,902,828.335,420,812,671.14
(III) Profit distribution-----(204,449,011.09)(1,442,989,873.79)(1,647,438,884.88)
1.Transfer to surplus reserve--------
2.Transfer to general reserve--------
3.Distributions to shareholders-----(204,449,011.09)(1,442,989,873.79)(1,647,438,884.88)
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---12,223,115.96--13,988,736.6226,211,852.58
1.Withdrawn in the period---66,424,472.16--85,077,415.64151,501,887.80
2.Utilized in the period---(54,201,356.20)--(71,088,679.02)(125,290,035.22)
(VI) Others--------
IV. Closing balance of the period1,793,412,378.0019,548,822,799.86(243,686,564.51)20,454,196.39527,175,908.6710,972,690,972.3056,654,279,436.7289,273,149,127.43

The accompanying notes form part of the financial statements.

CHINA MERCHANTS PORT GROUP CO., LTD.

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FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Statement of Changes in Shareholders' Equity of the Company

Unit: RMB

ItemCurrent Period
Share capitalCapital reserveOther comprehensive incomeSpecial reserveSurplus reserveUnappropriated profitTotal shareholders' equity
I. Closing balance of the preceding year1,922,365,124.0027,576,242,527.73105,594,576.25-630,345,307.43983,693,068.6231,218,240,604.03
Add: Changes in accounting policies-------
Corrections of prior period errors-------
Others-------
II. Opening balance of the period1,922,365,124.0027,576,242,527.73105,594,576.25-630,345,307.43983,693,068.6231,218,240,604.03
III. Changes for the period-8,733,181.83(112,500.00)--221,588,217.00230,208,898.83
(I) Total comprehensive income--(112,500.00)--1,105,876,174.041,105,763,674.04
(II) Owners' contributions and reduction in capital-8,733,181.83----8,733,181.83
1.Capital contribution from shareholders-------
2.Share-based payment recognized in shareholders' equity-8,733,181.83----8,733,181.83
3.Others-------
(III) Profit distribution-----(884,287,957.04)(884,287,957.04)
1.Transfer to surplus reserve-------
2.Transfer to general reserve-------
3.Distributions to shareholders-----(884,287,957.04)(884,287,957.04)
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-------
1.Withdrawn in the period-------
2.Utilized in the period-------
(VI) Others-------
IV. Closing balance of the period1,922,365,124.0027,584,975,709.56105,482,076.25-630,345,307.431,205,281,285.6231,448,449,502.86

CHINA MERCHANTS PORT GROUP CO., LTD.

- 12 -

FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020

Statement of Changes in Shareholders' Equity of the Company - continued

Unit: RMB

ItemPrior Period
Share capitalCapital reserveOther comprehensive incomeSpecial reserveSurplus reserveUnappropriated profitTotal shareholders' equity
I. Closing balance of the preceding year1,793,412,378.0025,517,647,180.04102,638,125.00470,465.59527,175,908.67259,943,085.1628,201,287,142.46
Add: Changes in accounting policies-----(325,594.23)(325,594.23)
Corrections of prior period errors-------
Others-------
II. Opening balance of the period1,793,412,378.0025,517,647,180.04102,638,125.00470,465.59527,175,908.67259,617,490.9328,200,961,548.23
III. Changes for the period-31,973.48705,000.008,009.26-584,909,582.54585,654,565.28
(I) Total comprehensive income--705,000.00--789,358,593.63790,063,593.63
(II) Owners' contributions and reduction in capital-31,973.48----31,973.48
1.Capital contribution from shareholders-------
2.Share-based payment recognized in shareholders' equity-------
3.Others-31,973.48----31,973.48
(III) Profit distribution-----(204,449,011.09)(204,449,011.09)
1.Transfer to surplus reserve-------
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---8,009.26--8,009.26
1.Withdrawn in the period---1,219,496.28--1,219,496.28
2.Utilized in the period---(1,211,487.02)--(1,211,487.02)
(VI) Others-------
IV. Closing balance of the period1,793,412,378.0025,517,679,153.52103,343,125.00478,474.85527,175,908.67844,527,073.4728,786,616,113.51

The accompanying notes form part of the financial statements.

- 13 -

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 services and other businesses such as property development andinvestment.

The Company's and consolidated financial statements have been approved by the Board ofDirectors on 27/08/2020.

See Note (VII) "Equity in other entities" for details of the scope of consolidated financialstatements in the current period. See Note (VI) "Changes in scope of consolidation" for details ofchanges in the scope 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 30 June 2020, the Group had total current liabilities in excess of total current assets of RMB15,136,310,298.42. On 30 June 2020, the Group had available and unused line of creditamounting to RMB 44,991,647,898.21, 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.

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II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued

Basis of accounting and principle of measurement - continued

Where the historical cost is adopted as the measurement basis, assets are recorded at the amountof cash or cash equivalents paid or the fair value of the consideration given to acquire them at thetime of their acquisition. Liabilities are recorded at the amount of proceeds or assets received orthe contractual amounts for assuming the present obligation, or, at the amounts of cash or cashequivalents expected to be paid to settle the liabilities in the normal course of business.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date, regardless of whetherthat price is directly observable or estimated using valuation technique. Fair value measurementand/or disclosure in the financial statements are determined according to the above basis.

Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which theinputs to the fair value measurements are observable and the significance of the inputs to the fairvalue measurement in its entirety, which are described as follows:

? Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities thatthe entity can access at the measurement date;? Level 2 inputs are inputs, other than quoted prices included within Level 1, that are

observable for 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 30 June2020, and the Company's and consolidated results of operations, the Company's and consolidatedshareholders' equity and cash flows for the period from 1 January 2020 to 30 June 2020.

2. Accounting period

The Group has adopted the calendar year as its accounting year, e.g. from 1 January to 31December.

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.

- 15 -

III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

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.

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.

- 16 -

III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

5. The accounting treatment of business combinations involving or not involving enterprisesunder common control - continued

5.2 Business combinations not involving enterprises under common control and goodwill - continued

The 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.

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.

- 17 -

III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

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.

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.

- 18 -

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 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.

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.

- 19 -

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 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.

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.

- 20 -

III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

9. Foreign currency transactions - continued

9.2 Translation of financial statements denominated in foreign currencies

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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

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).

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..

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

10. Financial instruments - continued

10.1 Classification, recognition and measurement of financial assets - continued

Financial assets 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 Groupmanages together and there is objective evidence that the Group has a recent actual pattern ofshort-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and effective as a hedging

instrument.

Financial assets measured at fair value through profit or loss ("FVTPL") include those classifiedas financial assets at FVTPL and those designated as financial assets at FVTPL.

? Any financial assets that does not qualify for amortized cost measurement or measurement at

FVTOCI or designated at FVTOCI are classified into financial assets at FVTPL.? Upon initial recognition, in order to eliminate or significantly reduce accounting mismatch andqualified hybrid financial instrument combines financial asset with embedded derivatives, theGroup 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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

10. Financial instruments - continued

10.1 Classification, recognition and measurement of financial assets - continued

10.1.1 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 Groupcalculates and recognizes its interest income based on amortized cost of the financial asset and theeffective 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.

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.

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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

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.

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.

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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

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 creditrisk;

(2) Other changes in the rates or terms of an existing financial instrument that would besignificantly 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 asignificant 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 thedebtor;

(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 the debtor'seconomic incentive to make scheduled contractual payments or to otherwise have an effecton the probability of a default occurring.

(11) Significant changes in circumstances expected to reduce the debtor's economic incentive tomake scheduled contractual payments;

(12) Expected changes in the loan documentation including an expected breach of contract thatmay lead to covenant waivers or amendments, interest payment holidays, interest rate step-ups, requiring additional collateral or guarantees, or other changes to the contractualframework of the financial instrument;

(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.

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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

10.2.2 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 principalpayments;

(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 financialreorganizations;

(5) The disappearance of an active market for that financial asset because of financialdifficulties of the issuer or the debtor;

(6) Purchase or originate a financial asset with a large scale of discount, which reflects facts ofcredit loss incurred.

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;

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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 - continued

? For undrawn loan commitments (refer to Note III, 10.4.1.3 for the detail of accounting

policies), 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 expectation 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 gross carryingamount and the present value of estimated future cash flows discounted at the financialasset'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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

10. Financial instruments - continued

10.3 Transfer of financial assets - continued

If the Group neither transfers nor retains substantially all the risks and rewards of ownership of afinancial asset, 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 relevant

financial liabilities is the carrying amount of financial assets transferred with continuinginvolvement less fair value of the Group's retained rights (if the Group retains relevant rightsupon transfer of financial assets) with addition of fair value of obligations assumed by theGroup (if the Group assumes relevant obligations upon transfer of financial assets).Accordingly, the fair value of relevant rights and obligations shall be measured on anindividual basis.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

10. Financial instruments - continued

10.4 Classification of financial liabilities equity instruments

Financial instruments issued by the Group are classified into financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic naturenot only its legal form, together with the definition of financial liability and equity instruments oninitial recognition.

10.4.1 Classification, recognition and measurement of financial liabilities

On initial recognition, financial liabilities are classified into financial liabilities at FVTPL 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.

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 theGroup 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 ahedging 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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

10. Financial instruments - continued

10.4 Classification of financial liabilities equity instruments - continued

10.4.1 Classification, recognition and measurement of financial liabilities - continued

10.4.1.1 Financial liabilities at FVTPL - continued

The amount of change in the fair value of the financial liability that is attributable to changes 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.

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.

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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

10.4.1.3 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.

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.

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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

Derivatives include forward exchange contracts, currency swaps, interest rate swaps and foreignexchange options, etc. Derivatives are initially measured at fair value at the date when thederivative contracts are entered into and are subsequently re-measured at fair value.

Derivatives embedded in hybrid contracts with a financial asset host are not separated by theGroup. The hybrid contract shall apply to the relevant accounting standards regarding theclassification of financial assets as a whole.

Derivatives embedded in hybrid contracts with hosts that are not financial assets are separated andtreated as separate derivatives by the Group when they meet the following conditions:

(1) the economic characteristics and risks of the embedded derivative are not closely related tothose of the host contract;

(2) a separate instrument with the same terms as the embedded derivative would meet thedefinition of a derivative.

(3) the hybrid contracts are not measured at fair value through profit or loss.

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.

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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

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.

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.

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ESTIMATES - continued

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:

CHINA MERCHANTS PORT GROUP CO., LTD.

Internal credit rating

Internal credit ratingBasis for determining portfolioAverage expected loss rate (%)
ACustomers 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
BThe customer may have overdue payment based on historical experience but they can make repayments.0.10-0.30
CThe 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
DThe 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

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

13. Inventories - continued

13.3 Basis for determining net realizable value of inventories and provision methods fordecline in 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.

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.

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ESTIMATES - continued

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.

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.

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ESTIMATES - continued

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.

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.

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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 - continued

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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

16. Long-term equity investments - continued

16.3 Subsequent measurement and recognition of profit or loss - continued

16.3.2 A long-term equity investment accounted for using the equity method - continued

Under the equity method, the Group recognizes its share of the other comprehensive income andnet profit or loss of the investee for the period as other comprehensive income and investmentincome or loss respectively for the period, and the carrying amount of the long-term equityinvestment is adjusted accordingly. The carrying amount of the investment shall be reduced by theportion of any profit distributions or cash dividends declared by the investee that is distributed tothe investing enterprise. The investing enterprise shall adjust the carrying amount of the long-termequity investment for other changes in owners' equity of the investee (other than net profits 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.

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. Forlong-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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

16. Long-term equity investments - continued

16.4 Disposal of long-term equity investments - continued

For long-term equity investments accounted for using the cost method, if the remaining interestafter disposal is still accounted for using the cost method, other comprehensive income previouslyrecognized for using the equity method or in accordance with the standards for the 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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

18. Fixed assets - continued

18.1 Recognition criteria for fixed assets - continued

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:

CHINA MERCHANTS PORT GROUP CO., LTD.Category

CategoryEstimated useful livesEstimated residual value (%)Annual depreciation rate (%)
Port and terminal facilities5-50 years5.001.90-19.00
Buildings10-50 years5.001.90-9.50
Machinery and equipment, furniture and fixture and other equipment3-20 years5.004.75-31.67
Motor vehicles and cargo ships5-25 years5.003.80-19.00

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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

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.

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:

CHINA MERCHANTS PORT GROUP CO., LTD.Category

CategoryAmortization MethodUseful Life (year)Residual value (%)
Land use rightsStraight-line method40-50-
Port operating rightOutput method/Straight-line method30-35-
OthersStraight-line method5-50-

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

21. Intangible assets - continued

21.1 Valuation method and useful life of intangible assets - continued

For an intangible asset with a finite useful life, the Group reviews the useful life and amortizationmethod at the end of the year, and makes adjustments when necessary.

21.2 Research and development expenditure

Expenditure during the research phase is recognised as an expense in the period in which it isincurred.

Expenditure during the development phase that meets all of the following conditions at the sametime is recognised as intangible asset. Expenditure during development phase that does not meetthe following conditions is recognised in profit or loss for the period.

(1) It is technically feasible to complete the intangible asset so that it will be available for use orsale;

(2) The Group has the intention to complete the intangible asset and use or sell it;

(3) The Group can demonstrate the ways in which the intangible asset will generate 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 the

development and the ability to use or sell the intangible asset; and

(5) The expenditure attributable to the intangible asset during its development phase can be

reliably measured.

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 assetsgenerated by the internal research only include the total expenditure incurred for the period fromthe time point of capitalization to the intangible assets are ready for intended use. For the identicalintangible asset, the expenditures recorded as expenses before they qualify for capitalizationduring 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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

22. Impairment of long-term assets - continued

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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

25. Employee benefits - continued

25.1 The accounting treatment of short-term employee benefits - continued

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.

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 assetceiling); 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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

25. Employee benefits - continued

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.

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.

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27. Revenue - continued

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.

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. Thetransaction price that includes variable consideration is only to the extent that it is highly probablethat such an inclusion will not result in a significant revenue reversal in the future when theuncertainty is subsequently resolved. At the end of each reporting period, the Group reevaluatesthe variable consideration included in the 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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

27. Revenue - continued

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. Theabove 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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

28. Contract costs - continued

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.

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.

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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

ESTIMATES - continued

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.

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.

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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

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 liabilitiessimultaneously, in each future period in which significant amounts of deferred tax assets orliabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset andpresented on a net basis.

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.

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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

31.1.2 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 thecondition required 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.

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 thatoption;

(4) payments for terminating the lease, if the lease term reflects the Group exercising anoption to terminate the lease;

(5) amounts expected to be payable by the Group under residual value guarantees.

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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 - continued

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 the

underlying 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.

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.

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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

31.1.5 Lease modifications

A lease modification should be accounted for as a separate lease if both of the following apply:

? the modification increases the scope of the lease by adding the right to use one or moreunderlying assets; and? the consideration for the lease increases by an amount commensurate with the stand-aloneprice for the increase in scope and any appropriate adjustments to that stand-alone priceaccording to the circumstances of the particular contract

For a lease medication that is not accounted for as a separate lease, at the effective date of thelease modification, the Group should allocate the consideration in the modified contract,determine the lease term of the modified lease and remeasure the lease liability by discounting therevised payments using a revised discount rate.

For lease modifications that decrease the scope of the lease or narrow the term of the lease, theGroup should decrease the carrying amount of the right-of-use asset with any gain or loss relatingto the partial or full termination of the lease should be recognized in profit or loss. Forremeasurement of lease liabilities from all other lease modifications, a corresponding adjustmentis made to the carrying amount of the right-of-use asset.

31.2 The Group as Lessor

31.2.1 Separating components of a lease

For a contract that contains lease and non-lease components, the Group shall allocate theconsideration in the contract in accordance with the allocation of the transaction price under therevenue standard, on the basis of the relative stand-alone price of the lease components and theaggregate stand-alone price of the non-lease components.

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.

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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 - continued

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 the

lessee will exercise the option;? the lessee exercises the amount to be paid for the termination of the lease option, provided

that the lease term reflects the lessee's exercise of the option to terminate the lease;? the residual value of the guarantee provided by the lessee, the party concerned with the

lessee and the independent third party with the financial ability to perform the guarantee

obligation.

Variable payments receivable not included in the net investment in the lease are recognized inprofit or loss when they arise.

Interest income for each period over the lease term is recognized by the Group at the fixedperiodic rate.

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.

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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

31.2.4 Lease modifications - continued

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-alone

price for the increase in scope with any appropriate adjustment to that stand-alone price

For a modification to a finance lease that is not accounted for as a separate lease, the Groupshould account for the modification as follows:

? if the lease would have been classified as an operating lease had the modification been effectat the inception date, the Group should account for the lease modification as a new leasefrom the effective date of the modification, and measure the carrying amount of theunderlying asset as the net investment in the lease before the effective date of the leasemodification.? If the lease would have been classified as an operating lease if the modification had been ineffect at the inception date, the Group should apply the requirements of contractmodification and renegotiation under the ASBE No. 22 Financial Instruments: Recognitionand Measurement.

31.2.5 Sale and leaseback transactions

31.2.5.1 The Group as the seller-lessee

The Group applies the requirements of the revenue standard to determine whether the transfer ofan asset is accounted for as a sale of that asset. If the transfer of an asset does not constitute a sale,the Group should continue to recognize the transferred assets and should recognize a financialliability equal to the transfer proceeds applying ASBE No. 22 Financial Instruments: Recognitionand Measurement. If the transfer of an asset is a sale, the Group should measure the right-of-useasset arising from the leaseback at the proportion of the previous carrying amount of the asset thatrelates to the right of use, and recognize only the amount of any gain or loss that relates to therights transferred to the lessor.

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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.

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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 and

uncertainties 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.

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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) Contents and reasons of changes in accounting estimates

On 14

th

April 2020, the Company convened the seventh meeting of the Ninth Board of Directorsand the seventh meeting of the Ninth Board of Supervisors, at which the "Proposal on Changes inAccounting Estimates of Depreciation Life of Certain Fixed Assets" was approved. The Companyreviewed the estimated useful life of fixed assets based on the current performance and usage offixed assets. In order to reflect the financial posisiton and operating results of the Group moreobjectively and fairly, it decided to change the accounting estimates for the depreciation life ofcertain fixed assets. The specific adjustments are as follows:

1) The depreciation period of port and terminal facilities has been changed from 40 years to 40-50years while the depreciation period of railway lines has been changed from 50 years to 40 years.

2) The depreciation period of buildings has been changed from 10 years to 25 years.

3) The depreciation period of machinery and equipment, furniture and fixture and other equipmenthas been changed from 5 years to 5 years, 8 years, and 10 years.

4) The depreciation period of special workboat included in the category of motor vehicles andcargo ships has been changed from 20 years to 18 years. The depreciation period of auxiliaryvessel included in the category of motor vehicles and cargo ships has been changed from 20 yearsto 25 years.

The changes in the depreciation period of the above fixed assets are all within the allowable rangeof the Group's accounting policy on fixed assets depreciation.

(2) Financial impact of changes in accounting estimates

The adjustments in the depreciation period of the fixed assets mentioned above will beimplemented from 1 April 2020.

According to the "Accounting Standards for Business Enterprises No. 28- Changes in AccountingPolicies, Estimates and Corrections of Errors", the adjustment of the depreciation period of fixedassets is a change in accounting estimates, which shall be accounted for on a prospective basis,without retrospective adjustments. There is no impact on the Group's financial positions andoperating results for the prior years.

Due to the above changes in accounting estimates, the Group increased the depreciation expensesof fixed assets in the first half of 2020 by RMB 42.22 million, decreased net profit attributable tothe parent company by RMB 11.69 million, and decreased owner's equity attributable to theparent company by RMB 11.69 million.

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IV. TAXES

1. Major taxes and tax rates

CHINA MERCHANTS PORT GROUP CO., LTD.Taxes

TaxesTax basisTax rate
Enterprise income taxTaxable income16.5%-34% (Note 1)
Dividend income tax5%、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 industries6%
Income from sale of real estate, property management, real estate lease, etc.5%
Social contribution tax (Note 5)Income0.65%-7.6%
Deed taxLand use right and property transfer amount3%-5%
Property tax70% of cost of property or rental income1.2% or 12%
City maintenance and construction taxVAT paid1%-7%
Education surtaxVAT paid3%

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 income taxrates between 28% and 34%.

Note 2: Foreign investors who receive dividends of profits from Chinese subsidiaries in 2008 and

thereafter generally shall pay withholding income tax at a rate of 10% in accordance withthe relevant provisions of the PRC enterprise income tax. For companies incorporated incertain regions (including Hong Kong and Singapore), if the companies are actual ownersholding more than 25% interest in the subsidiaries in China, they will enjoy a preferentialtax rate of 5%.

The Company obtains dividends distributed by overseas subsidiaries and should payenterprise income tax at a rate of 25% in accordance with relevant Chinese tax laws. TheCompany obtains taxable income outside of China, and the amount of income tax that hasbeen paid abroad can be offset with the current taxable amount. The credit limit is thetaxable amount calculated in accordance with the provisions of the Enterprise Income TaxLaw.

Note 3:The VAT amount is the balance of the output tax less the deductible input tax, and the

output tax is calculated in accordance with the sales income and the corresponding tax ratestipulated in the relevant tax laws of China.

Note 4:Pursuant to 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.

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IV. TAXES - continued

1. Major taxes and tax rates - continued

Note 5:The social contribution tax is the tax paid by the overseas subsidiaries of the Group to the

local government.

2. Tax preference

Some subsidiaries of the Group in China are 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.

The company and some of its subsidiaries are exempted from the real estate tax, urban land usetax etc. in the first quarter of 2020 in accordance with the provisions of the "Notice on Printingand Distributing Several Measures to Support Enterprises in Responding to the Covid-19" andother documents issued by the local government.

V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS

1. Cash and bank balances

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Cash277,419.74331,305.65
RMB56,778.45122,990.39
USD129,084.9655,429.82
HKD30,264.4328,354.40
BRL6,764.368,872.81
Others54,527.54115,658.23
Bank deposit6,730,200,970.967,423,112,193.18
RMB5,094,867,161.204,868,888,181.56
USD629,351,129.011,597,545,919.28
EUR536,891,846.05528,103,576.51
BRL309,172,759.58310,275,686.79
HKD86,062,209.8776,041,665.91
Others73,855,865.2542,257,163.13
Other cash and bank balances (Note 1)532,106,192.16311,504,711.43
RMB532,106,192.16311,504,711.43
Total7,262,584,582.867,734,948,210.26
Including: Total amount of funds deposited overseas2,124,935,280.433,511,266,717.03

Note 1:The structured deposits that can be readily withdrawn on demand in the other cash and bank

balances of the Group totaled RMB 473,580,346.66, the deposit totaled RMB 16,456,386.94,and the balance of the margin maintenance account was RMB 42,069,458.56.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

2. Notes receivable

(1) Classification of notes receivable

RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Category

CategoryClosing balanceOpening balance
Bank acceptance13,328,347.7813,290,478.02
Commercial acceptance8,633,201.2024,901,772.00
Total21,961,548.9838,192,250.02
Less: Provision for credit losses (Note)--
Carrying amount21,961,548.9838,192,250.02

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 30 June 2020, there are no notes receivable pledged.

(3) As at 30 June 2020, notes receivable endorsed or discounted which are not yet due at thebalance sheet date are as follows:

Unit: RMB

ItemAmount derecognized at the end of the periodAmount recognized at the end of the period
Bank acceptance269,200.00-

(4) As at 30 June 2020, there are no notes reclassified to accounts receivable due to the drawers'inability to settle the note.

(5) The Group has no notes receivable written off for the period from 1 January to 30 June 2020.

3. Account receivables

(1) Account receivables disclosed by aging

Unit: RMB

AgingClosing balance
Accounts receivableProvision for credit lossProportion (%)
Within 1 year1,673,793,760.0047,179,141.122.82
More than 1 year but not exceeding 2 years70,326,394.907,929,284.4011.27
More than 2 years but not exceeding 3 years1,129,795.78516,300.9445.70
More than 3 years43,029,849.8742,431,818.3498.61
Total1,788,279,800.5598,056,544.80

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

3. Account receivables - continued

(2) Disclosure of account receivables by categories

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Creditrating

Credit ratingExpected credit loss rate (%)Closing balanceOpening balance
Carrying amountProvision for credit lossBook valueCarrying amountProvision for credit lossBook value
A0.00-0.10867,111,693.14101,223.56867,010,469.58552,947,162.60236,251.00552,710,911.60
B0.10-0.30578,029,026.671,470,835.71576,558,190.96730,397,420.982,106,455.92728,290,965.06
C0.30-50.00231,930,017.204,351,187.56227,578,829.6470,292,155.381,703,501.7968,588,653.59
D50.00-100.00111,209,063.5492,133,297.9719,075,765.57101,658,746.7694,789,147.116,869,599.65
Total1,788,279,800.5598,056,544.801,690,223,255.751,455,295,485.7298,835,355.821,356,460,129.90

(3) Changes in provision for credit loss of account receivables

Unit: RMB

ItemLifetime expected credit loss (not credit-impaired)Lifetime expected credit loss (credit-impaired)Total
At 1 January 20204,046,208.7194,789,147.1198,835,355.82
Carrying amount of accounts receivable at 1 January 2020
-- Transferred to credit-impaired accounts receivables---
-- Reversed to not credit-impaired accounts receivable---
Provision for the period3,347,210.97586,074.183,933,285.15
Reversal for the period(1,333,037.82)(2,708,034.93)(4,041,072.75)
Transfer-out from derecognition of financial assets(including direct write-down)-(289,193.50)(289,193.50)
Other changes(137,132.00)(244,697.92)(381,829.92)
At 30 June 20205,923,249.8692,133,294.9498,056,544.80

(4) Account receivables written off during the period

Unit: RMB

ItemAmount
Yantai Jinquan International Shipping Agency Co., Ltd. Shenzhen Branch289,193.50

(5) The top five balances of account receivables classified by debtor

Unit: RMB

Name of entityClosing balanceAgingProportion of the amount to the total account receivables (%)Closing balance of provision for credit loss
Client A282,210,584.12Within 1 year, more than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years, more than 3 years15.77142,050.98
Client B76,111,433.00Within 1 year, more than 1 year but not exceeding 2 years4.261,705,643.77
Client C60,901,975.35Within 1 year, more than 1 year but not exceeding 2 years3.41146,173.05
Client D57,813,455.40Within 1 year3.2339,928.09
Client E39,673,364.92Within 1 year2.22-
Total516,710,812.7928.892,033,795.89

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

4. Accounts receivable financing

(1) Accounts receivable financing classification

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Items

ItemsClosing balanceOpening balance
Bank acceptance measured at fair value251,312,787.49260,760,537.45

(2) On 30 June 2020, the Group has no pledged account receivables financing.

(3) As at 30 June 2020, account receivables financing endorsed or discounted which are not yet

due at the balance sheet date are as follows

Unit: RMB

ItemsClosing balanceOpening balance
DerecognizedRecognizedDerecognizedRecognized
Bank acceptance measured at fair value73,189,070.26-129,391,886.08-

5. Prepayments

(1) Aging analysis of prepayment

Unit: RMB

AgingClosing balanceOpening balance
AmountProportion (%)AgingProportion (%)
Within 1 year66,350,135.0697.9050,341,341.4691.47
More than 1 year but not exceeding 2 years1,264,551.401.874,533,596.998.24
More than 2 years but not exceeding 3 years----
More than 3 years159,081.360.23159,081.360.29
Total67,773,767.82100.0055,034,019.81100.00

(2) As at 30 June 2020, 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 entityRelationship with the Company30 June 2020Proportion of the closing balance to the total prepayments (%)
Saham Assurance Togo S.A.Non-related party6,916,043.8910.21
Fairfax Brasil Seguros Corporativos S.A.Non-related party6,620,743.199.77
China Life Insurance Co., LtdNon-related party3,755,669.725.54
Chubb Seguros Brasil S.A.Non-related party3,622,070.205.34
Uptime GroupNon-related party2,074,114.373.06
Total22,988,641.3733.92

6. Other receivables

6.1 Summary of other receivables

Unit: RMB

ItemClosing balanceOpening balance
Interest receivable-159,794.48
Dividend receivable1,303,565,544.25459,352,522.24
Other receivables2,329,169,395.901,669,865,935.78
Total3,632,734,940.152,129,378,252.50

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

6. Other receivables - continued

6.2 Interest receivables

(1) Classification of interest receivable

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Interest receivable from related parties-159,954.43
Total-159,954.43
Less: Provision for credit loss-159.95
Book value-159,794.48

(2) As at 30 June 2020, the Group has no significant overdue interest.

6.3 Dividend receivables

(1) Presentation of dividend receivables

Unit: RMB

Name of investeeClosing balanceOpening balance
Shanghai International Port (Group) Co., Ltd.857,120,854.56-
China Nanshan Development (Group) Incorporation ("Nanshan Group")316,246,500.00313,435,420.00
Dalian Port Co., Ltd.51,137,716.59-
Qingdao Port International Co., Ltd.29,836,000.91-
Tin-Can Island Container Terminal Ltd-82,625,546.31
Qingdao Qianwan United Container Terminal Co., Lt.-50,000,000.00
Others50,529,342.7313,751,368.26
Total1,304,870,414.79459,812,334.57
Less: Provision for credit loss1,304,870.54459,812.33
Book value1,303,565,544.25459,352,522.24

(2) Significant dividend receivable aged more than 1 year

Unit: RMB

Name of investeeClosing balanceAgingWhy unrecoveredClosing balance of provision for credit losses
Nanshan Group245,969,500.00More than 1 year but not exceeding 2 yearsUndergoing relevant formalities and expected to be recovered at the end of 2020245,969.50

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

6. Other receivables - continued

6.3 Dividend receivable - continued

(3) Changes in provision for credit loss of dividend receivables

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemStage 1Stage 2Stage 3Total
Expected credit loss in 12 monthsLifetime expected credit loss (not credit-impaired)Lifetime expected credit loss (credit-impaired)
At 1 January 2020459,812.33--459,812.33
Carrying amount of dividend receivables at 1 January 2020
-- Transfer to Stage 2----
-- Transfer to Stage 3----
-- Reverse to Stage 2----
-- Reverse to Stage 1----
Provision for the period1,304,870.54--1,304,870.54
Reversal for the period(459,812.33)--(459,812.33)
Transfer-out on derecognition of financial assets(including direct write-down)----
Other changes----
At 30 June 20201,304,870.54--1,304,870.54

6.4 Other receivables

(1) Other receivables disclosed by aging

Unit: RMB

AgingClosing balance
Other receivablesProvision for credit lossProportion (%)
Within 1 year1,992,779,541.046,451.56-
More than 1 year but not exceeding 2 years15,081,852.6050,013.270.33
More than 2 years but not exceeding 3 years3,916,417.43230,493.375.89
More than 3 years353,954,897.6936,276,354.6610.25
Total2,365,732,708.7636,563,312.86

(2) Disclosure of other receivables by nature

Unit: RMB

ItemClosing balanceOpening balance
Land compensation (Note 1)1,208,032,000.00521,246,000.00
Operation compensation(Note 2)683,479,121.36669,121,539.36
Temporary payments299,718,996.63334,617,193.32
Compensation for profit or loss on transition( Note 3)31,513,558.5935,317,035.66
Deposits23,778,389.7621,309,320.77
Others119,210,642.42124,618,962.15
Total2,365,732,708.761,706,230,051.26
Less: Provision for credit loss36,563,312.8636,364,115.48
Book value2,329,169,395.901,669,865,935.78

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

6. Other receivables - continued

6.4 Other receivables - continued

(2) Disclosure of other receivables by nature - continued

Note 1: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, the landand attached buildings of approximately 370.96 mu located in Zhuchi deepwater port on thesouth of Zhongshan East Road of Shantou will be returned to Shantou Land Reserve Centerby Shantou Port, amounting to RMB 1,558,032,000.00. 183.63 mu of land and attachedbuildings have been transferred before 31 December 2019, and remaining 187.73 mu of landand attached buildings have been transferred before 30 June 2020 with the carrying amountof RMB 188,404,228.34 and the consideration of land compensation is RMB786,786,000.00. The compensation income recognized after deducting transaction expensesis approximately RMB 557,187,829.97. As of 30 June 2020, the land compensation of RMB1,208,032,000.00 is not yet recovered.

Note 2: In August 2012, the Group acquired a 50% equity in LCT held by Mediterranean Shipping

Company S.A. (hereinafter referred to as "MSC") through its subsidiary Global TerminalLimited at EUR 150 million. According to the equity acquisition agreement, from 2014 to2028, MSC committed the LCT terminal to guarantee the minimum container volumethrough Global Terminal Limited, assessing the realization of the container volumeguarantee every three years, and agreeing on the compensation mechanism when theguaranteed container volume is not reached. In 2019, the Group confirmed that thecompensation from 2017 to 2019 amounted to RMB 488,492,798.26. As of 30 June 2020,the compensation not received that by the Group had amounted to RMB 683,479,121.36.

Note 3:The Company acquired Zhanjiang Port (Group) Co., Ltd.(" Zhanjiang Port ") in 2019.

According to relevant contracts, Zhanjiang Infrastructure, the non-controlling shareholderof Zhanjiang Port, shall pay the compensation for profit or loss during transition of RMB31,513,558.59 (calculated based on the original shareholding ratio) to the Company. As of30 June 2020, the Company had not yet recovered the money.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

6. Other receivables - continued

6.4 Other receivables - continued

(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 while taking account of the currentand future economic conditions.

As at 30 June 2020, the credit risk and expected credit loss of other receivables of each category ofcustomers are presented as below:

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Creditrating

Credit ratingExpected credit loss rate (%)Closing balanceOpening balance
Expected credit loss in 12 monthsLifetime expected credit loss (not credit-impaired)Lifetime expected credit loss (credit-impaired)TotalExpected credit loss in 12 monthsLifetime expected credit loss (not credit-impaired)Lifetime expected credit loss (credit-impaired)Total
A0.00-0.102,329,455,470.90--2,329,455,470.901,669,968,696.05--1,669,968,696.05
B0.10-0.30--------
C0.30-50.00--------
D50.00-100.00--36,277,237.8636,277,237.86--36,261,355.2136,261,355.21
Account balance2,329,455,470.90-36,277,237.862,365,732,708.761,669,968,696.05-36,261,355.211,706,230,051.26
Provision for credit loss286,075.00-36,277,237.8636,563,312.86102,760.27-36,261,355.2136,364,115.48
Book value2,329,169,395.90--2,329,169,395.901,669,865,935.78--1,669,865,935.78

(4) Changes in provision for credit loss of other receivables

Unit: RMB

ItemStage 1Stage 2Stage 3Total
Expected credit loss in 12 monthsLifetime expected credit loss (not credit-impaired)Lifetime expected credit loss (credit-impaired)
At 1 January 2020102,760.27-36,261,355.2136,364,115.48
Carrying amount of other receivables at 1 January 2020
--Transfer to Stage 2----
--Transfer to Stage 3----
-- Reverse to Stage 2----
--Reverse to Stage 1----
Provision for the period185,094.70--185,094.70
Reversal for the period(1,779.97)-(2,999.99)(4,779.96)
Transfer-out on derecognition of financial assets( including direct write-down)----
Other changes--18,882.6418,882.64
At 30 June 2020286,075.00-36,277,237.8636,563,312.86

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

6. Other receivables - continued

6.4 Other receivables - continued

(5) The Group has no other receivables written off for the period from 1 January to 30 June2020.

(6) The top five balances of other receivables classified by debtor

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Name of entity

Name of entityNatureClosing balanceAgingProportion of the amount to the other receivable (%)Provision for credit loss at the end of the year
Shantou Land Reserve CenterLand compensation1,208,032,000.00Within 1 year51.07-
Global Terminal LimitedOperation compensation683,479,121.36Within 1 year, More than 3 years28.8917,904.57
Chu Kong River Trade Terminal Co., LtdTemporary payments62,316,880.00More than 3 years2.636,231.69
Shenzhen Qianhaiwan Bonded Port Area AuthorityTemporary payments45,712,037.75Within 1 year, More than 3 years1.934,571.20
State-owned Assets Supervision and Administration Commission of Shantou Municipal People's GovernmentTemporary payments43,326,181.06Within 1 year1.83-
Total2,042,866,220.1786.3528,707.46

7. Inventories

(1) Categories of inventories

Unit: RMB

ItemClosing balanceOpening Balance
Carrying amountProvision for decline in value of inventoriesBook valueCarrying amountProvision for decline in value of inventoriesBook value
Raw materials165,249,746.72971,196.56164,278,550.16147,548,980.011,918,890.33145,630,089.68
Finished goods11,277,389.98-11,277,389.984,944,593.66-4,944,593.66
Others14,760,401.36-14,760,401.3613,405,508.74-13,405,508.74
Total191,287,538.06971,196.56190,316,341.50165,899,082.411,918,890.33163,980,192.08

(2) Provision for decline in value of inventories

Unit: RMB

Item1 January 2020ProvisionDecrease30 June 2020
ReversalWrite-off
Raw materials1,918,890.33-947,693.77-971,196.56

(3) As at 30 June 2020, the Group has no capitalized borrowing cost in the balance ofinventories.

8. Non-current assets due within one year

Unit: RMB

ItemClosing balanceOpening balance
Long-term receivables due within one year73,166,552.28809,702,715.78
Less: Provision for credit loss73,166.55809,702.72
Book value73,093,385.73808,893,013.06

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

9. Other current assets

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Structural deposits2,494,903,418.592,000,298,176.18
Including: Principal2,485,000,000.001,991,000,000.00
Interest receivable9,903,418.599,298,176.18
Prepaid taxes43,015,982.7431,612,381.68
Others (Note)263,029,195.26266,882,103.84
Total2,800,948,596.592,298,792,661.70
Less: Provision for credit loss--
Book value2,800,948,596.592,298,792,661.70

Note: Refer to the VAT credits of domestic subsidiaries.

10. Long-term receivables

(1) Details of long-term receivables

Unit: RMB

ItemClosing balanceOpening balance
Account balanceProvision for credit lossBook valueAccount balanceProvision for credit lossBook value
Advances to shareholders (Note 1)3,925,778,494.693,925,778.503,921,852,716.19869,503,011.54869,503.01868,633,508.53
Principal and interest of receivables for cooperation (Note 2)687,968,053.80687,968.05687,280,085.751,025,631,435.871,025,631.441,024,605,804.43
Financing lease deposits14,500,000.0014,500.0014,485,500.0014,500,000.0014,500.0014,485,500.00
Total4,628,246,548.494,628,246.554,623,618,301.941,909,634,447.411,909,634.451,907,724,812.96
Less: Long-term receivables due within 1 year73,166,552.2873,166.5573,093,385.73809,702,715.78809,702.72808,893,013.06
Long-term receivables due over 1 year4,555,079,996.214,555,080.004,550,524,916.211,099,931,731.631,099,931.731,098,831,799.90

Note 1: Refer to the terminal acquisition project funds advanced by the Company's subsidiary

Direct Achieve Investments Limited to its associate Terminal Link SAS. Refer to Note (V)11 for details.

Note 2: 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 HarborCity Investment Co., Ltd. ("China Merchants Harbor City"); and the interest is paid byChina Merchants Harbor City in accordance with the benchmark interest rate of thePeople's Bank of China for the same period with total principal and interest of RMB687,968,053.80,

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

10. Long-term receivables - continued

(2) Provision for credit loss on long-term receivables

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemStage 1Stage 2Stage 3Total
Expected credit loss in 12 monthsLifetime expected credit loss (not credit-impaired)Lifetime expected credit loss (credit-impaired)
At 1 January 20201,909,634.45--1,909,634.45
Carrying amount of long-term receivables at 1 January 2020
-- Transfer to Stage 2----
-- Transfer to Stage 3----
-- Reverse to Stage 2----
-- Reverse to Stage 1----
Provision for the period3,455,148.26--3,455,148.26
Reversal for the period(736,536.16)--(736,536.16)
Transfer-out on derecognition of financial assets( including direct write-down)----
Other changes----
At 30 June 20204,628,246.55--4,628,246.55

(3) As at 30 June 2020, there are no long-term receivables derecognized due to the transfer of

financial assets.

(4) There are no assets and liabilities arising from the transfer or continuing involvement oflong-term receivables at 30 June 2020.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

11. Long-term investments

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Investees

InvesteesAccounting method1 January 2020Changes for the year30 June 2020Closing value of provision for impairment
IncreaseInvestment profit or loss under equity methodReconciling items from other comprehensive incomeOther equity movementsCash dividends or profits announced of issuanceOthersProvision for impairmentEffect of translation of financial statements denominated in foreign currencies
I. Joint ventures
Euro-Asia Oceangate S.à r.l.Equity method2,635,767,875.28-32,577,150.24-----30,075,311.722,698,420,337.24-
Port of NewcastleEquity method2,199,996,246.66-6,806,114.31--(87,661,702.20)--4,800,751.432,123,941,410.20-
Qingdao Qianwan United Container Terminal Co., Ltd.Equity method1,504,764,906.58-51,573,423.78-1,688,678.17----1,558,027,008.53-
Ningbo Daxie Merchants International Terminals Co., Ltd.Equity method853,995,291.23-55,508,480.73-2,020,093.37----911,523,865.33-
Laizhou Laiyin Port Business Co., Ltd.Equity method792,062,228.58-14,928,000.00------806,990,228.58-
OthersEquity method1,405,640,017.89-16,043,706.18-533,197.02(818,258.44)--9,904,052.771,431,302,715.42-
Subtotal9,392,226,566.22-177,436,875.24-4,241,968.56(88,479,960.64)--44,780,115.929,530,205,565.30-
II. Associates
Shanghai International Port (Group) Co., Ltd.(A Share)Equity method23,918,042,867.55-1,022,649,024.5849,808,489.15(43,006,751.08)(899,371,516.97)--(567,182.64)24,047,554,930.59-
Nanshan GroupEquity method5,090,137,515.66-(67,388,586.72)6,298,721.30(11,402,905.61)(74,028,000.00)--172,880.004,943,789,624.63-
Terminal Link SAS (Note 1)Equity method4,212,404,575.412,746,841,398.03108,374,645.14-----(33,398,905.37)7,034,221,713.21-
Dalian Port Co., Ltd.Equity method3,293,260,555.78-88,081,029.71(1,403,661.37)2,988,210.45(57,009,456.00)--(10,787,253.80)3,315,129,424.77672,651,771.20
Shenzhen China Merchants Qianhai Industrial Development Co., Ltd.(Equity method6,841,066,224.12-12,188,400.29------6,853,254,624.41-
China Merchants Northeast Asia Development Investment Co., Ltd.(Note 2)Equity method-1,000,000,000.00460,810.50------1,000,460,810.50-
OthersEquity method5,169,401,078.5270,659,100.0052,802,572.91(28,295,086.39)45,964.95(15,772,759.37)--62,968,833.265,311,809,703.88-
Subtotal48,524,312,817.043,817,500,498.031,217,167,896.4126,408,462.69(51,375,481.29)(1,046,181,732.34)--18,388,371.4552,506,220,831.99672,651,771.20
Total57,916,539,383.263,817,500,498.031,394,604,771.6526,408,462.69(47,133,512.73)(1,134,661,692.98)--63,168,487.3762,036,426,397.29672,651,771.20

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

11. Long-term investments - continued

Note 1: As at 25 November 2019, CMPort Co., Ltd. (hereinafter referred to as "CMPort"), a

subsidiary of the Company, entered into a comprehensive Memorandum Of Agreement withTerminal Link and CMA CGM S.A., the controlling shareholder of Terminal Link, pursuantto which the Company proposes to subscribe for the US$468 million Mandatory ConvertibleBonds issued by, and to grant the US$500 million Loan to, Terminal Link, an associate ofCMPort acquired in 2013 to finance the proposed acquisition by Terminal Link of interestsin a portfolio of 10 terminals currently owned by CMA CGM and its affiliates. Due to thesubscription of mandatory convertible bonds, the Company made additional investment inTerminal Link SAS on 26 March 2020, equivalent to RMB 2,746,841,398.03. DirectAchieve Investments Limited, a subsidiary of the Company has offered Terminal Link SASa loan to support the proposed acquisition of the terminals. Terminal Link SAS paid interestat a coupon rate of 6%. As of 30 June 2020, the total Company's long-term principal andinterest due from Terminal Link SAS are equivalent to RMB 3,016,715,205.48 yuan.

Note 2: As at 3 April 2020, the Company signed a shareholder agreement with Liaoning Port

Group and China Merchants Shekou Industrial Zone Holdings Co., Ltd., according towhich the Company invested RMB 1 billion to incorporate China Merchants NortheastAsia Development Investment Co., Ltd., with a shareholding ratio of 22.22%. The Boardshall consist of 5 members of which 1 will be appointed by the company.

12. Other investments in equity instruments

(1) Details of other investments in equity instruments

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Investees

InvesteesClosing balanceOpening balance
China Ocean Shipping Agency (Shenzhen) Co., Ltd.144,069,435.00144,069,435.00
Others19,341,837.0019,491,837.00
Total163,411,272.00163,561,272.00

(2) Details of non-trading equity instruments

Unit: RMB

ItemDividends income recognized for the yearAccumulated gains/lossesAmounts transferred to retained earnings from other comprehensive incomeWhy designated as FVTOICWhy transferred to retained earnings from other comprehensive income
China Ocean Shipping Agency (Shenzhen) Co., Ltd.-130,559,435.00-The intention of holding is neither for sale nor profits in short-termN/A
Others460,131.339,188,500.00-The intention of holding is neither for sale nor profits in short-termN/A
Total460,131.33139,747,935.00-

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

13. Other non-current financial assets

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Financial assets at FVTPL2,633,657,498.812,385,363,537.39
Including: Investments in equity instruments2,633,657,498.812,385,363,537.39
Including: Ningbo Zhoushan Port Co., Ltd.(A shares)1,826,650,083.291,548,914,671.20
Qingdao Port International Co., Ltd.790,822,466.44820,263,917.11
Others16,184,949.0816,184,949.08

14. Investment properties

(1) Investment properties measured under cost method

Unit: RMB

ItemLand use rightsBuildingsTotal
I.Total original carrying amount
1. Balance at 1 January 2020105,727,492.826,291,738,452.026,397,465,944.84
2.Increase in the current period-206,063.00206,063.00
3.Decrease in the current period-1,071,645.351,071,645.35
4. Balance at 30 June 2020105,727,492.826,290,872,869.676,396,600,362.49
II.Accumulated depreciation and amortisation
1. Balance at 1 January 202031,252,512.29605,950,758.15637,203,270.44
2.Increase in the current period1,141,051.9793,848,487.2694,989,539.23
3. Decrease in the current period-489,845.38489,845.38
4. Balance at 30 June 202032,393,564.26699,309,400.03731,702,964.29
III. Impairment provision
1. Balance at 1 January 2020---
2. Increase in the current period---
3. Decrease in the current period---
4. Balance at 30 June 2020---
IV. Book value
At 30 June 202073,333,928.565,591,563,469.645,664,897,398.20
At 1 January 202074,474,980.535,685,787,693.875,760,262,674.40

(2) Investment properties without ownership certificates

Unit: RMB

ItemClosing balanceOpening balance
Buildings and land use rights38,462,419.3040,255,588.09

15. Fixed assets

15.1 Summary of fixed assets

Unit: RMB

ItemClosing balanceOpening balance
Fixed assets26,459,531,040.8927,519,109,906.41
Disposal of fixed assets1,179,420.67852,622.88
Total26,460,710,461.5627,519,962,529.29

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

15. Fixed assets - continued

15.2 Fixed assets

(1) Details of fixed assets

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemPort and terminal facilitiesBuildingsMachinery and equipment, furniture and fixture and other equipmentMotor vehicles and cargo shipsTotal
I. Total original carrying amount
1. Balance at 1 January 202026,835,227,578.811,619,692,941.5413,688,077,920.512,039,216,861.0444,182,215,301.90
2. Increase for the period46,311,782.701,395,117.06343,276,555.2740,521,655.10431,505,110.13
(1) Purchase18,735,215.46-29,895,501.941,582,672.8050,213,390.20
(2) Transfer from construction in progress27,576,567.241,395,117.06266,068,397.19588,982.30295,629,063.79
(3) Transfer from right-of-use assets--47,312,656.1438,350,000.0085,662,656.14
3. Decrease for the period66,021,806.6531,645,188.99196,098,293.2911,675,300.90305,440,589.83
(1) Disposal or retirement15,399,349.98-196,098,293.2911,675,300.90223,172,944.17
(2) Transfer to construction in progress50,622,456.6731,645,188.99--82,267,645.66
4. Reclassification adjustment(34,912,950.29)(11,142,324.28)40,057,476.845,997,797.73-
5. Effect of changes in foreign exchange(439,133,623.59)(25,565.49)(128,359,543.25)7,625,629.76(559,893,102.57)
6. Balance at 30 June 202026,341,470,980.981,578,274,979.8413,746,954,116.082,081,686,642.7343,748,386,719.63
II. Accumulated depreciation
1. Balance at 1 January 20207,595,730,173.47398,455,580.827,776,172,621.82835,082,151.2416,605,440,527.35
2. Increase for the period429,081,276.9932,378,051.68438,930,958.8585,271,570.08985,661,857.60
(1) Provision429,081,276.9932,378,051.68425,205,252.3556,107,224.95942,771,805.97
(2) Transfer from right-of-use assets--13,725,706.5029,164,345.1342,890,051.63
3. Decrease for the period37,354,570.6218,775,036.94172,711,304.674,860,097.30233,701,009.53
(1) Disposal or retirement12,892,828.20-172,711,304.674,860,097.30190,464,230.17
(2) Transfer to construction in progress24,461,742.4218,775,036.94--43,236,779.36
4. Reclassification adjustment(13,423,041.72)(4,488,281.70)17,911,323.42--
5. Effect of changes in foreign exchange(63,617,591.00)552,780.31(64,406,705.32)1,260,951.19(126,210,564.82)
6. Balance at 30 June 20207,910,416,247.12408,123,094.177,995,896,894.10916,754,575.2117,231,190,810.60
III. Impairment provision
1. Balance at 1 January 202057,419,468.96-245,399.18-57,664,868.14
2. Increase for the period-----
3. Decrease for the period-----
4. Balance at 30 June 202057,419,468.96-245,399.18-57,664,868.14
IV. Book value
1. Book value at 30 June 202018,373,635,264.901,170,151,885.675,750,811,822.801,164,932,067.5226,459,531,040.89
2. Book value at 1 January 202019,182,077,936.381,221,237,360.725,911,659,899.511,204,134,709.8027,519,109,906.41

(2) The Group has no fixed assets that are temporarily idle as at 30 June 2020.

(3) Fixed assets leased out under operating leases

Unit: RMB

ItemBook value at the closing dateBook value at the opening date
Buildings200,383,012.44312,602,129.37
Port and terminal facilities71,046,887.4712,233,139.52
Machinery and equipment, furniture and fixture and other equipment10,842,002.8663,964.98
Motor vehicles and cargo ships-17,754.72
Total282,271,902.77324,916,988.59

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

15. Fixed assets - continued

15.2 Fixed assets - continued

(4) Fixed assets without ownership certificates

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemBook value at the closing dateBook value at the opening date
Buildings, port and terminal facilities1,587,752,574.271,652,483,135.07

(5) Other issues

Unit: RMB

ItemAmountRemark
Cost of fixed assets fully depreciated but still in use as at 30 June 20202,757,823,365.20
Cost of fixed assets temporarily idle as at 30 June 2020-
Fixed assets disposed and retired for the period:-
Cost of fixed assets disposed and retired223,172,944.17
Net value of fixed assets disposed and retired32,708,714.00
Profit or loss on disposal or retirement of fixed assets(1,713,648.59)

15.3 Disposal of fixed assets

Unit: RMB

ItemClosing balanceOpening balance
Machinery and equipment, furniture and fixture and other equipment1,175,208.72848,410.93
Motor vehicles and cargo ships4,211.954,211.95
Total1,179,420.67852,622.88

16. Construction in progress

16.1 Summary of construction in progress

Unit: RMB

ItemClosing balanceOpening balance
Construction in progress6,913,185,555.956,318,389,715.70
Materials for construction of fixed assets14,438,000.8115,751,726.18
Total6,927,623,556.766,334,141,441.88

16.2 Construction in progress

(1) Details of construction in progress

Unit: RMB

ItemClosing balanceOpening balance
Carrying amountProvision for impairmentBook valueCarrying amountProvision for impairmentBook value
Port and terminal facilities6,172,642,257.97787,181.966,171,855,076.015,713,564,853.28787,181.965,712,777,671.32
Berths and yards326,903,986.48-326,903,986.48296,933,093.52-296,933,093.52
Infrastructure190,699,708.35-190,699,708.35175,423,610.37-175,423,610.37
Ship under construction113,676,628.82-113,676,628.8280,042,167.50-80,042,167.50
Others110,050,156.29-110,050,156.2953,213,172.99-53,213,172.99
Total6,913,972,737.91787,181.966,913,185,555.956,319,176,897.66787,181.966,318,389,715.70

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

16. Construction in progress - continued

16.2 Construction in progress - continued

(2) The top ten balances of construction in progress

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemBudget amount1 January 2020Increase for the periodTransfer to fixed assetsOther decreases for the periodEffect of changes in foreign exchange30 June 2020Proportion of accumulated construction investment in budget (%)Construction progress (%)Amount of accumulated capitalized interestIncluding: capitalized interest for the periodInterest capitalization rate for the current period (%)Capital source
Guangao project Phase II, Shantou Port2,200,000,000.001,404,239,786.63176,979,681.5532,094,128.07--1,549,125,340.1188.0088.0013,447,553.66--Self-funding and loan
Reconstruction project of container, oil terminal and tank area, HIPG2,854,258,290.121,407,055,802.30---15,994,312.821,423,050,115.1249.8649.86---Self-funding
Reconstruction project of Berth 1#-4#, Haixing Wharf2,803,329,644.561,058,989,758.99139,286,182.07---1,198,275,941.0642.7442.7420,957,093.4715,150,342.514.31Self-funding and loan
Project of Grain Dispatch Warehouse at Berth2#,3# Phase III , Machong Port620,000,000.00321,198,858.4622,489,737.47---343,688,595.9355.4355.43934,421.10917,465.544.40Self-funding and loan
Donghaidao port wharf project for bulk grains, Zhanjiang Port905,348,400.00254,545,729.2829,754,961.96---284,300,691.2431.4031.4025,834,736.455,344,955.254.79Self-funding and loan
Xiashan port general wharf project, Zhanjiang Port737,792,300.00234,308,909.0225,510,948.79---259,819,857.8135.2235.228,072,472.885,206,999.654.79Self-funding and loan
Petrifaction old tank area reconstruction, Phase I, Zhanjiang Port218,378,500.00178,983,632.922,249,413.00---181,233,045.9282.9982.995,024,262.73--Self-funding and loan
Baoman Port container wharf extension project, Phase I, Zhanjiang Port2,412,810,000.00155,695,498.79316,981.13---156,012,479.926.476.47964,740.46--Self-funding and loan
Baoman stuffing and destuffing service area, Phase I Project, Zhanjiang Port606,521,505.83134,029,761.003,045,453.56---137,075,214.5622.6022.6016,689,500.56--Self-funding and loan
Donghaidao port wharf project, Zhanjiang Port393,600,000.00134,000,073.83----134,000,073.8334.0434.041,549,296.27--Self-funding and loan
Total13,752,038,640.515,283,047,811.22399,633,359.5332,094,128.07-15,994,312.825,666,581,355.5093,474,077.5826,619,762.95

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

16. Construction in progress - continued

16.3 Materials for construction of fixed assets

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemClosing balanceOpening balance
Carrying amountProvision for impairmentBook valueCarrying amountProvision for impairmentBook value
Materials for construction of fixed assets14,438,000.81-14,438,000.8115,751,726.18-15,751,726.18

17. Right-of-use assets

(1) Details of right-of-use assets

Unit: RMB

ItemPort and terminal facilitiesBuildingsMachinery and equipment, furniture and fixture and other equipmentMotor vehicles and cargo shipsOthersTotal
I. Cost
1.Balance at 1 January 20206,689,402,526.61186,206,419.22767,725,299.9545,970,740.242,846,079,467.2010,535,384,453.22
2.Increase for the period548,369.72-1,368,406.19--1,916,775.91
(1) Purchase548,369.72-1,368,406.19--1,916,775.91
3.Decrease for the period1,176,286.45191,956.4747,282,735.7838,350,000.003,514,246.1590,515,224.85
(1) Termination of lease1,176,286.45191,956.4747,282,735.7838,350,000.003,514,246.1590,515,224.85
4.Effect of changes in foreign exchange59,072,105.921,540,301.3727,835.15-32,029,431.1292,669,673.56
5.Balance at 30 June 20206,747,846,715.80187,554,764.12721,838,805.517,620,740.242,874,594,652.1710,539,455,677.84
II. Accumulated depreciation
1.Balance at 1 January 2020378,840,364.3236,980,701.14231,571,742.6430,948,956.19223,717,298.47902,059,062.76
2.Increase for the period94,077,278.349,838,616.0626,954,785.921,156,619.3422,637,248.77154,664,548.43
(1) Provision94,077,278.349,838,616.0626,954,785.921,156,619.3422,637,248.77154,664,548.43
3.Decrease for the period--13,725,706.5029,164,345.132,965,876.4145,855,928.04
(1) Termination of lease--13,725,706.5029,164,345.132,965,876.4145,855,928.04
4.Effect of changes in foreign exchange269,067.87149,766.117,811.48-2,447,672.082,874,317.54
5.Balance at 30 June 2020473,186,710.5346,969,083.31244,808,633.542,941,230.40245,836,342.911,013,742,000.69
III. Impairment provision
1.Balance 1 January 2020------
2.Increase for the period------
3.Decrease for the period------
4.Balance at 30 June 2020------
IV. Book value
1. Book value at 30 June 20206,274,660,005.27140,585,680.81477,030,171.974,679,509.842,628,758,309.269,525,713,677.15
2. Book value at 1 January 20206,310,562,162.29149,225,718.08536,153,557.3115,021,784.052,622,362,168.739,633,325,390.46

(2) Amount recognized in profit or loss

Unit: RMB

CategoryAmount incurred in the current periodAmount incurred in the previous period
Depreciation expenses of right-of-use assets(Note 1)154,664,548.43152,337,348.71
Interest expenses on lease liabilities (Note 2)50,304,972.4551,328,052.46
Expenses for short-term leases55,517,780.2669,047,828.93
Expenses for leases of low value assets869,547.701,474,971.38
Variable lease payments not included in the measurement of lease liabilities (Note 3)--
Revenue from sublease of right-of-use assets9,246,780.38-

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

17. Right-of-use assets - continued

(2) Amount recognized in profit or loss - continued

Note 1: No depreciation expenses of right-of-use assets are capitalized in the period from 1

January to 30 June 2020.

Note 2: No interest expenses of lease liabilities are capitalized in the period from 1 January to 30

June 2020.

Note 3: No variable lease payments were included in the measurement of lease liabilities in the

period from 1 January to 30 June 2020.

(3) The total cash outflows in relation to leases for the period from 1 January to 30 June 2020amounting to RMB 211,988,699.50.

(4) Lease assets of the Group with the lease term as follows:

CHINA MERCHANTS PORT GROUP CO., LTD.Category

CategoryLease term
Port and terminal facilities1-99 years
Buildings1-5 years
Machinery and equipment, furniture and fixture and other equipment1-6 years
Motor vehicles and cargo ships5 years
Others1-35years

(5) The Group has an option to purchase port and terminal facilities, machinery and equipment

at the end of the extension period at a rate that is below market rates.

(6) As at 19 June 2020, the Ministry of Finance issued the "Regulations on the AccountingTreatment of Rental Concessions Related to the Covid-19" (Cai Kuai [2020] No. 10), whichallows lessee and lessors to adopt simplified accounting treatment in rental concessiondirectly related to the Covid-19 pandemic, which will be implemented from 19 June 2020,allowing enterprises to adjust the relevant rental concessions that occur between 1 January2020 and the effective date of such regulations. The Group adopted simplified approach forall rental concessions within the applicable scope, and the effect on the current profit andloss during the reporting period was RMB 179,431.04.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

18. Intangible assets

(1) Summary of intangible assets

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Items

ItemsLand use rightsTerminal management rightsOthersTotal
I. Total original carrying amount
1. Balance at 1 January 202013,324,673,654.6810,223,755,868.871,148,257,126.4424,696,686,649.99
2. Increase for the year-4,852,956.3420,419,972.4925,272,928.83
(1) Purchase-4,852,956.3419,389,506.7524,242,463.09
(2) Other increase--1,030,465.741,030,465.74
3. Decrease for the period-7,149,531.691,985,603.239,135,134.92
(1)Disposal--1,985,603.231,985,603.23
(2) Other decrease-7,149,531.69-7,149,531.69
4. Effect of changes in foreign exchange178,733.50(933,358,319.26)(123,578,372.20)(1,056,757,957.96)
5. Balance at 30 June 202013,324,852,388.189,288,100,974.261,043,113,123.5023,656,066,485.94
II. Accumulated depreciation
1. Balance at 1 January 20203,161,151,683.321,481,484,521.65360,334,890.925,002,971,095.89
2. Increase for the period161,377,038.66115,228,361.8134,390,352.05310,995,752.52
(1) Provision161,377,038.66115,228,361.8134,390,352.05310,995,752.52
3. Decrease for the period--1,985,603.231,985,603.23
(1) Disposal--1,985,603.231,985,603.23
4. Effect of changes in foreign exchange(1,055,263.91)(189,456,458.07)(27,843,032.32)(218,354,754.30)
5. Balance at 30 June 20203,321,473,458.071,407,256,425.39364,896,607.425,093,626,490.88
III. Impairment provision
1. Balance at 1 January 2020----
2. Increase for the period----
3. Decrease for the period----
4. Balance at 30 June 2020----
IV. Book value
1. Book value at 30 June 202010,003,378,930.117,880,844,548.87678,216,516.0818,562,439,995.06
2. Book value at 1 January 202010,163,521,971.368,742,271,347.22787,922,235.5219,693,715,554.10

(2) Land use rights without ownership certificates on 30 June 2020:

Unit: RMB

ItemBook value at the closing dateBook value at the opening date
Land use rights1,130,005,349.981,163,098,978.96

19. Development expenses

Unit: RMB

Item1/1/2020Increase in the current periodDecrease in the current period30/6/2020
Transfer to intangible assetsTransfer to construction in progressTransfer to fixed assetsTransfer to profit or loss for the period
CTOS upgrading-41,398,244.85---41,398,244.85-
China Merchants Core automation, semi-automated container terminal ICT integration research and development-6,378,920.96---6,378,920.96-
Mazut, diesel, petrol, methanol process automatic control system development and application4,834,850.033,977,826.66----8,812,676.69
China Merchants Core Cloud Smart Platform V1.0 (Bulk cargo) R&D implementation project-2,678,391.33---2,678,391.33-
Crude oil unit train loading equipment key technology research15,830,956.742,675,450.96----18,506,407.70
Automation intelligent bucket wheel stacker and reclaimer transformation technical service purchase project-2,417,256.59-2,417,256.59---
Intelligent bulk cargo terminal centralized control room-1,756,529.98-1,756,529.98---
The first phase of the global container intelligent project-1,468,500.00---1,468,500.00-
Bulk grain dust suppression device-1,384,347.72---1,384,347.72-
Safety device for loading and unloading operations-1,226,741.54---1,226,741.54-
Others16,733,285.5114,640,162.72-1,748,136.88-11,595,139.3618,030,171.99
Total37,399,092.2880,002,373.31-5,921,923.45-66,130,285.7645,349,256.38

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

20. Goodwill

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Investee

Investee1/1/2020IncreaseDecreaseEffect of changes in foreign exchange30/6/2020
TCP Participa??es S.A. ("TCP")3,546,466,476.18--(744,244,623.09)2,802,221,853.09
Mega Shekou Container Terminals Limited1,815,509,322.42---1,815,509,322.42
CMPort993,992,000.00---993,992,000.00
Shantou Port552,317,736.65---552,317,736.65
Zhanjiang Port418,345,307.68---418,345,307.68
Shenzhen Mawan Project408,773,001.00---408,773,001.00
Others288,255,850.88---288,255,850.88
Total8,023,659,694.81--(744,244,623.09)7,279,415,071.72

21. Long-term prepaid expenses

Unit: RMB

Item1/1/2020Increase in the current periodAmortization in the current periodOther changes30/6/2020
Tonggu channel widening project (Note 1)525,516,089.84-12,317,440.98(10,012,815.00)503,185,833.86
Relocation project of Nanhai Rescue Bureau39,049,767.97-528,890.76-38,520,877.21
Expenditures for the improvement of leased fixed assets17,778,884.181,255,355.00682,754.40-18,351,484.78
West port area public channel widening project (Note 2)80,470,088.60-1,145,906.9810,012,815.0089,336,996.62
Others49,096,181.085,061,937.845,936,715.76-48,221,403.16
Total711,911,011.676,317,292.8420,611,708.88-697,616,595.63

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.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

22. Deferred tax assets and deferred tax liabilities

(1) Deferred tax assets without offsetting

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemClosing balanceOpening balance
Deductible temporary differencesDeferred tax assetsDeductible temporary differencesDeferred tax assets
Unrealized profit802,582,460.43195,887,032.87805,528,482.59196,545,362.77
Depreciation of fixed assets108,244,052.4127,227,981.18108,244,052.4127,227,981.18
Deductible losses128,032,222.9836,417,871.7379,034,267.5619,758,566.89
Provision for credit loss71,379,636.3317,907,355.6271,636,378.5017,881,386.96
Provisions52,743,830.8714,731,088.8760,976,862.8816,601,394.38
Deferred income39,639,517.729,642,713.4940,272,757.159,737,699.40
Amortization of computer13,630,227.663,407,556.9113,630,227.663,407,556.91
Organization costs10,905,997.082,726,499.2710,905,997.082,726,499.27
Provision for impairment losses of assets1,918,890.31479,722.581,918,890.31479,722.58
Others37,735,867.958,169,196.4229,120,031.366,069,331.93
Total1,266,812,703.74316,597,018.941,221,267,947.50300,435,502.27

(2) Deferred tax liabilities without offsetting

Unit: RMB

ItemClosing balanceOpening balance
Taxable temporary differencesDeferred tax liabilitiesTaxable temporary differencesDeferred tax liabilities
Withholding dividend income tax24,357,504,256.521,648,491,011.9724,219,415,080.671,735,339,232.65
Fair value adjustment of assets acquired by business combination7,462,694,301.421,651,871,416.147,989,044,772.811,812,240,254.17
Changes in fair value of other non-current financial assets1,299,422,442.00175,655,606.661,434,338,833.65186,123,245.82
Depreciation of fixed assets1,110,116,081.52216,045,341.28731,584,120.16166,830,773.03
Changes in fair value of other equity investments140,509,435.0035,127,358.75140,659,435.0035,164,858.75
Others98,387,743.8821,265,083.61110,838,382.9626,054,384.75
Total34,468,634,260.343,748,455,818.4134,625,880,625.253,961,752,749.17

(3) Deferred tax assets or liabilities presented at the net amount after offsetting

Unit: RMB

ItemOffset amount of deferred tax assets and liabilities in the current periodDeferred tax assets or liabilities after offsetting in the current periodOffset amount of deferred tax assets and liabilities in the prior periodDeferred tax assets or liabilities after offsetting in the prior period
Deferred tax assets-316,597,018.94-300,435,502.27
Deferred tax liabilities-3,748,455,818.41-3,961,752,749.17

(4) Details of unrecognized deferred tax assets

Unit: RMB

ItemClosing balanceOpening balance
Deductible temporary differences473,942,471.23503,037,805.60
Deductible losses2,188,304,273.292,289,500,649.57
Total2,662,246,744.522,792,538,455.17

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.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

22. Deferred tax assets and deferred tax liabilities - continued

(5) Deductible losses for unrecognized deferred tax assets will be expired in the followingyears:

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Year

YearClosing balanceOpening balance
20205,879,004.08182,809,604.33
2021244,394,853.17244,394,853.17
2022615,440,669.35615,440,669.35
2023745,889,729.49745,889,729.49
2024500,294,154.82500,926,253.51
202576,365,678.23-
No expiration date40,184.1539,539.72
Total2,188,304,273.292,289,500,649.57

23. Other non-current assets

Unit: RMB

ItemClosing balanceOpening balance
Dachanwan port area Phase II land replacement payment (Note 1)916,884,222.49916,884,222.49
Advances of channel project (Note 2)934,573,716.27896,848,920.76
Prepayments of land use rights132,334,704.86132,334,704.86
Prepayments of fixed assets130,173,116.9890,186,071.12
Prepayments of terminal franchise30,964,981.5130,356,842.78
Others11,156,700.9016,354,705.03
Total2,156,087,443.012,082,965,467.04

Note 1: 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., inwhich Qianhai Administration replaced 55% of the total land area of T102-0166 andT102-0167 held by ATJ and ASJ and the corresponding shoreline (the land area isapproximately 531,300 square meters) to the Phase II of Dachan Bay Port Area. As of 30June 2020, the change procedures have not yet been completed for the land use right ofPhase II of Dachan Bay Port.

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. According tothe agreement, the channel belongs to Zhanjiang SASAC, therefore the Company includedthe advances of channel project that should be repaid by Zhanjiang SASAC in other non-current assets.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

24. Short-term borrowings

(1) Classification of short-term borrowings

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Credit loan12,620,640,847.819,439,099,793.47
Guaranteed loan (Note)3,043,066,666.66-
Total15,663,707,514.479,439,099,793.47

Note: The loan is guaranteed by the Company

(2) At 30 June 2020, the Group has no short-term borrowings that were overdue.

25. Notes payable

Unit: RMB

CategoryClosing balanceOpening balance
Bank acceptance2,658,732.142,529,389.61
Commercial acceptance13,300,593.9573,926,559.40
Total15,959,326.0976,455,949.01

26. Accounts payable

(1) Details of accounts payable are as follows:

Unit: RMB

ItemClosing balanceOpening balance
Service fee163,068,156.90133,134,547.67
Construction fee156,630,940.66173,811,112.97
Material purchase117,483,891.74146,969,853.48
Rental fee15,574,314.5213,897,329.66
Equipment payments12,996,882.5515,947,499.80
Others86,975,553.35107,352,122.81
Total552,729,739.72591,112,466.39

(2) Significant accounts payable aged more than one year

Unit: RMB

ItemAmountReason for outstanding
Nanshan Administration Bureau of Shenzhen Land and Resources and Planning Bureau21,642,795.50The government planning project has not been completed, and the certificates of property rights has not been processed.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

27. Receipts in advance

(1) Summary of receipts in advance

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Service fee receipt in advance27,666,629.0110,500,836.06
Rental fee receipt in advance2,621,573.4013,409,679.80
Others7,064,889.554,916,171.51
Total37,353,091.9628,826,687.37

(2) There is no significant receipts in advance aged more than one year at the end of the period.

28. Contract liabilities

(1) Summary of contract liabilities

Unit: RMB

ItemClosing balanceOpening balance
Port charges received in advance66,331,771.5463,954,147.44
Warehousing fee received in advance17,957,528.35-
Service fee received in advance828,349.4317,396,130.82
Others4,144,226.424,480,724.26
Total89,261,875.7485,831,002.52

(2) There is no significant contract liabilities aged more than one year at the end of the period.

(3) 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.

(4) Revenue recognized in the current period and included in the opening carrying amount of

contract liabilities

An amount of RMB 83,517,482.54 included in the book value of contract liabilities at thebeginning of 2020 has been recognized as revenue in the current period, including contractliabilities arising from settled but unfinished construction resulting from the contract ofreceipt of service fee in advance amounting to RMB 16,178,593.85, contract liabilitiesarising from settled but unfinished construction resulting from the contract of receipt of portcharges in advance amounting to RMB 63,490,239.45, as well as contract liabilities arisingfrom settled but unfinished construction resulting from other contracts amounting to RMB3,848,649.24.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

29. Employee benefits payable

(1) Details of employee benefits payable are as follows

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

Item1/1/2020Increase in the current periodDecrease in the current period30/6/2020
1. Short-term benefits630,356,614.441,269,381,171.021,391,931,615.22507,806,170.24
2. Post-employment benefits - defined contribution plan5,015,323.7860,675,189.6260,519,628.545,170,884.86
3. Termination benefits-11,431,756.8711,431,756.87-
4. Other benefits due within one year-1,735,965.851,735,965.85-
5. Others(653,153.58)78,759,160.026,354,501.8171,751,504.63
Total634,718,784.641,421,983,243.381,471,973,468.29584,728,559.73

(2) Short-term benefits

Unit: RMB

Item1/1/2020Increase in the current periodDecrease in the current period30/6/2020
I. Wages and salaries, bonuses, allowances and subsidies604,864,369.831,055,896,210.881,186,294,025.21474,466,555.50
II. Staff welfare-65,664,187.9063,834,128.151,830,059.75
III. Social insurance charges9,636,773.0351,122,956.9146,780,549.1613,979,180.78
Including: Medical insurance8,317,044.9538,712,985.4234,150,400.3712,879,630.00
Work injury insurance-4,513,110.234,513,139.70(29.47)
Maternity insurance-2,933,732.822,912,623.0921,109.73
Others1,319,728.084,963,128.445,204,386.001,078,470.52
IV. Housing funds-74,718,354.3674,422,486.44295,867.92
V. Labor union and employee education funds15,855,471.5618,414,294.3717,035,259.6517,234,506.28
VI. Other short-term benefits0.023,565,166.603,565,166.610.01
Total630,356,614.441,269,381,171.021,391,931,615.22507,806,170.24

(3) Defined contribution plan

Unit: RMB

Item1/1/2020Increase in the current periodDecrease in the current period30/6/2020
I. Basic pension4,900,268.8740,266,494.8840,155,204.115,011,559.64
II. Unemployment insurance0.01397,129.15396,978.85150.31
III. Enterprise annuity plan115,054.9020,011,565.5919,967,445.58159,174.91
Total5,015,323.7860,675,189.6260,519,628.545,170,884.86

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.

30. Taxes payable

Unit: RMB

ItemClosing balanceOpening balance
Enterprise income tax1,974,092,354.461,843,381,355.01
VAT16,270,770.0811,377,223.08
Others94,613,630.7943,317,764.65
Total2,084,976,755.331,898,076,342.74

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

31. Other payables

(1) Summary of other payables

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Interest payable--
Dividends payable2,200,213,637.76150,286,550.81
Other payables2,173,767,637.352,073,468,127.15
Total4,373,981,275.112,223,754,677.96

(2) Dividends payable

Unit: RMB

ItemClosing balanceOpening balance
Ordinary share dividends2,200,213,637.76150,286,550.81
Including: China Merchants Port Investment Development Co., Ltd475,540,540.27-
China Merchants Union Development Co., Ltd.398,027,221.93-
China Merchants Gangtong Development (Shenzhen) Co., Ltd.170,603,880.00-
Hong Kong International Enterprise Limited128,209,921.43-
Public B shares82,751,897.80-
Public A shares72,722,717.44-
Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd.59,200,114.4237,402,426.09
Economic and Trade Guande Development Co., Ltd.53,750,000.00-
Sri Lanka Ports Authority31,749,790.3231,392,997.47
Shenzhen Infrastructure Investment Fund Partnership (LLP)29,831,083.72-
Sinotrans Shipping Co., Ltd12,463,667.33-
Soifer Participa??es Societárias S.A.11,173,505.0614,141,088.03
Pattac Empreendimentos e Participa??es S.A.3,632,311.494,597,020.40
Tuc Participacoes Portuarias S.A.3,632,311.494,597,018.82
Orienture Holdings Co. Ltd.1,584,096.00-
Baosteel Zhanjiang Iron and Steel Co., Ltd.1,321,337.30-
Modern Terminals Limited-58,156,000.00

As at 30 June 2020, the dividend payable aging over one year amounts to RMB 37,402,426.09,representing the dividends not yet received by the investor.

(3) Other payables

(a) Disclosure of other payables by nature

Unit: RMB

ItemClosing balanceOpening balance
Amount payable for construction and quality warranty1,119,343,201.581,053,340,753.66
Deposits161,230,619.57162,460,889.01
Customer discount129,384,672.82117,736,418.62
Accrued expenses84,554,024.47110,741,377.48
Port construction and security fee54,647,055.1458,732,330.62
Withholding dividend income tax52,837,837.81-
Balance of land use rights transfer11,295,700.0014,538,738.00
Others560,474,525.96555,917,619.76
Total2,173,767,637.352,073,468,127.15

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

31. Other payables - continued

(3) Other payables - continued

(b) Significant other payables with aging over 1 year

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Company name

Company nameClosing balanceReason for being outstanding or carried forward
CCCC Fourth Harbor Engineering Co., Ltd.50,196,213.85Project not yet checked by a third party
CCCC Third Harbor Engineering Co., Ltd.42,001,830.34Project not yet checked by a third party
Shanghai Zhenhua Heavy Industries Co., Ltd.41,555,527.06Equipment failed to meet the acceptance standards
Shantou Transportation Bureau31,358,355.47To be paid after confirmation by mutual parties
CCCC-FHDI Engineering Co., Ltd.24,501,586.59Performance of contract not yet completed
Zhanjiang Transportation Bureau20,902,814.93To be paid after confirmation by mutual parties
Qingdao Maritime Bureau20,713,982.12Port construction fee not yet settled
China Merchants Real Estate (Shenzhen) Co., Ltd.18,311,444.99Quality warranty, the contracted settlement condition has not been reached
Shenzhen Municipal Special Fund for Development of Bulk Cement12,238,226.14To be paid after confirmation by mutual parties
China Merchants Finance Lease (Tianjin) Co., Ltd.11,250,000.00Performance of contract not yet completed
Shantou Finance Bureau10,000,000.00To be paid after confirmation by mutual parties
Guangdong Hengtai Tong Industrial Co., Ltd.10,000,000.00Quality warranty, the contracted settlement condition has not been reached
Shenzhen Dongpeng Construction Supervision Co., Ltd.9,906,473.62Not yet applied or processed by the counterparty
China First Metallurgical Group Co., Ltd.7,653,479.34Performance of contract not yet completed
Harman Technology (Shenzhen) Co., Ltd.5,884,632.48The contracted settlement condition has not been reached
Total316,474,566.93

32. Non-current liabilities due within one year

Unit: RMB

ItemClosing balanceOpening balance
Long-term loans due within one year2,216,715,105.842,954,701,198.90
Including: Credit loan582,840,627.881,294,054,756.85
Guaranteed loan1,055,090,118.801,119,153,332.94
Mortgage loan578,784,359.16541,493,109.11
Bonds payable due within one year1,865,612,405.641,889,505,167.46
Long-term payable due within one year35,168,270.0561,107,722.82
Long-term employee benefits payable due within one year31,950,000.0031,950,000.00
Lease liabilities due within one year311,539,529.97341,240,327.95
Other non-current liabilities due within one year73,564,126.15825,835,439.66
Total4,534,549,437.656,104,339,856.79

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

33. Other current liabilities

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Short-term bonds payable3,010,838,383.88712,345,315.07
Accrued professional agency fee152,814,329.20143,346,356.53
Others26,359,216.4130,264,910.03
Total3,190,011,929.49885,956,581.63

Changes of short-term bonds payable:

Unit: RMB

Name of bondFace valueDate of issueTerm of the bondAmount of issue1/1/2020Amount issued in the current periodInterest accrued based on par valueDiscount or premium amortizationRepayment in the current period30/6/2020
1.50%, RMB 1.3 billion, Super & Short-term Commercial Paper1,300,000,000.0029/04/2020180 days1,300,000,000.00-1,300,000,000.003,356,557.38--1,303,356,557.38
1.99%, RMB 1 billion, Super & Short-term Commercial Paper1,000,000,000.0005/06/2020270 days1,000,000,000.00-1,000,000,000.001,413,661.20--1,001,413,661.20
2.50%, RMB 700 million, Super & Short-term Commercial Paper700,000,000.0026/02/2020266 days700,000,000.00-700,000,000.006,068,165.30--706,068,165.30
3.80%, RMB 300 million, Super & Short-term Commercial Paper700,000,000.0004/06/2019270 days700,000,000.00712,345,315.07-3,559,602.96-715,904,918.03-
Total3,700,000,000.003,700,000,000.00712,345,315.073,000,000,000.0014,397,986.84-715,904,918.033,010,838,383.88

34. Long-term borrowings

(1) Classification of long-term borrowings

Unit: RMB

ItemClosing balanceOpening balance
Credit borrowings3,093,027,953.773,368,772,302.71
Guaranteed borrowings (Note 1)2,158,406,589.912,857,916,427.61
Mortgage borrowings (Note 2)2,886,854,516.333,041,748,008.91
Total8,138,289,060.019,268,436,739.23
Less: Long-term borrowings due within one year2,216,715,105.842,954,701,198.90
Including: Credit borrowings582,840,627.881,294,054,756.85
Guaranteed borrowings1,055,090,118.801,119,153,332.94
Mortgage borrowings578,784,359.16541,493,109.11
Long-term borrowings due after one year5,921,573,954.176,313,735,540.33

During the period, the annual interest rate of the borrowing ranges from 1.20% to 5.78%.

Note 1: The loan was guaranteed by Shenzhen Magang Cangma Co., Ltd, China Merchants Port

Services (Shenzhen) Co., Ltd, CMPort.

Note 2:As at 30 June 2020, the Group obtained the long-term loan of RMB 2,886,854,516.33 (31

December 2019: RMB 3,041,748,008.91) with its entire equity in Colombo InternationalContainer Terminals Limited and the entire equity in Thesar Maritime Limited, and theland with ownership, fixed assets and construction in progress held by Guangdong YidePort Co., Ltd. (hereinafter referred to as "Yide Port"), the land use rights of ShenzhenHaixing Harbor Development Co., Ltd. as well as the sea area use rights of DongguanChiwan Port Service Co., Ltd. mortgaged as collaterals.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

34. Long-term borrowings - continued

(1) Classification of long-term borrowings - continued

Details of mortgage borrowings are as follows:

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Company name

Company nameClosing balanceOpening balanceCollateral
China Development Bank Corporation1,245,653,597.741,358,129,654.07The Group's entire equity in Colombo International Container Terminals Limited
International Finance Corporation410,453,440.87449,103,214.20The Group's entire equity in Thesar Maritime Limited
African Development Bank188,586,716.06206,294,203.06
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.155,306,707.35169,887,745.22
The Opec Fund For International Development133,120,034.88145,656,886.91
Societe de Promotion et de Participation pour la Cooperation Economique S.A.133,120,034.86145,613,216.49
Deutsche Investitions-und Entwicklungsgesellschaft MBH110,933,362.39121,392,394.29
Bank of China Qianhai Shekou Branch241,357,698.45241,388,867.03Land use rights of Shenzhen Haixing Harbor Development Co., Ltd (see note (V) 61)
China Construction Bank Shunde Branch215,259,318.17184,264,872.07Land use rights, fixed assets and construction in progress of Yide Port (see note (V) 61)
China Merchants Bank Dongguan Branch53,063,605.5620,016,955.57Sea area use rights of Dongguan Chiwan Warf Co., Ltd. (see note (V) 61)
Total2,886,854,516.333,041,748,008.91

35. Bonds payable

(1) Bonds payable

Unit: RMB

ItemClosing balanceOpening balance
4.375%, USD 900 million corporate bond6,426,278,478.936,349,018,876.27
5.000%, USD 600 million corporate bond4,269,122,434.824,218,874,981.43
4.750%, USD 500 million corporate bond3,582,571,449.983,541,255,065.51
5.000%, USD 500 million corporate bond3,543,503,068.793,500,281,169.59
4.890%, USD 2,500 million corporate bond2,523,780,136.992,585,072,602.74
3.500%, USD 200 million corporate bond1,430,830,620.171,414,333,247.34
IPCA + 7.8164%, BRL 428 million corporate bond673,739,844.54810,150,534.24
4.980%, RMB 400 million corporate bond411,133,369.86401,200,657.53
Total22,860,959,404.0822,820,187,134.65
Less: Bonds payable due within one year1,865,612,405.641,889,505,167.46
Bonds payable due after one year20,995,346,998.4420,930,681,967.19

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

35. Bonds payable - continued

(2) Changes of bonds payable

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Name of bonds

Name of bondsFace valueDate of issueTerm of the bondAmount of issue1/1/2020Amount issued in the current periodInterest accrued based on par valueDiscount or premium amortizationRepayment in the current periodEffect of changes in foreign exchange30/06/2020
4.375%, USD 900 million corporate bondUSD 900,000,000.0006/08/20185 yearsUSD 900,000,000.006,349,018,876.27-138,226,053.805,219,084.00138,596,553.9072,411,018.766,426,278,478.93
5.000%, USD 600 million corporate bondUSD 600,000,000.0006/08/201810 yearsUSD 600,000,000.004,218,874,981.43-105,315,088.702,409,117.13105,597,374.4048,120,621.964,269,122,434.82
4.750%, USD 500 million corporate bondUSD 500,000,000.0003/08/201510 yearsUSD 500,000,000.003,541,255,065.51-83,389,423.311,138,246.8283,597,921.4040,386,635.743,582,571,449.98
5.000%, USD 500 million corporate bondUSD 500,000,000.0004/05/201210 yearsUSD 500,000,000.003,500,281,169.59-87,493,021.033,402,736.4087,791,765.2540,117,907.023,543,503,068.79
4.890%, RMB 2,500 million corporate bondRMB 2,500,000,000.0021/04/20175 yearsRMB 2,500,000,000.002,585,072,602.74-60,957,534.25-122,250,000.00-2,523,780,136.99
3.500%, USD 200 million corporate bondUSD 200,000,000.0003/08/20155 yearsUSD 200,000,000.001,414,333,247.34-24,467,817.42939,644.6124,639,387.3615,729,298.161,430,830,620.17
IPCA+7.8164%, BRL 428 million corporate bondBRL 428,047,000.0007/11/20166 yearsBRL 428,047,000.00810,150,534.24-33,157,455.954,908,321.88-(174,476,467.53)673,739,844.54
4.980%, RMB 400 million corporate bondRMB 400,000,000.0010/12/20183 yearsRMB 400,000,000.00401,200,657.53-9,932,712.33---411,133,369.86
Total22,820,187,134.65-542,939,106.7918,017,150.84562,473,002.3142,289,014.1122,860,959,404.08
Less: Bonds payable due within one year1,889,505,167.461,865,612,405.64
Bonds payable due after one year20,930,681,967.1920,995,346,998.44

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

36. Lease liabilities

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Category

CategoryClosing balanceOpening balance
Lease payment2,755,002,465.722,934,104,267.67
Unrecognized financing cost(905,278,141.38)(945,733,971.11)
Total1,849,724,324.341,988,370,296.56
Less: Lease liabilities due within one year311,539,529.97341,240,327.95
Lease liabilities due after one year1,538,184,794.371,647,129,968.61

37. Long-term payables

(1) Summary of long-term payables

Unit: RMB

ItemClosing balanceOpening balance
Long-term payables1,418,026,539.691,447,802,228.74
Special payables548,732,682.19548,550,497.29
Total1,966,759,221.881,996,352,726.03
Less: Long-term payables due within one year35,168,270.0561,107,722.82
Long-term payables due after one year1,931,590,951.831,935,245,003.21

(2) Long-term payables

Unit: RMB

ItemClosing balanceOpening balance
Terminal management rights (Note 1)837,915,269.32881,239,309.85
Payable to minority shareholders of subsidiaries (Note 2)425,628,641.37407,092,971.69
Borrowings from related parties (Note 3)147,000,000.00150,000,000.00
Others7,482,629.009,469,947.20
Total1,418,026,539.691,447,802,228.74
Less: Long-term payables due within one year35,168,270.0561,107,722.82
Long-term payables due after one year1,382,858,269.641,386,694,505.92

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-mentioned terminaloperating rights purchase amount is determined by discounting the amount to be paid in thefuture using the prevailing market interest rate according to the BOT agreement. As at 30 June2020, the amount is RMB 837,915,269.32.

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%.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

37. 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 agreement in respectof the sale-and-leaseback assets, with a consideration of RMB 150,000,000.00. ZCMG isthe saler and lessee of the leased assets. As China Merchants Finance Lease (Tianjin) Co.,Ltd. has no control over the leased assets, the transfer of assets in the sale-and-leasebacktransaction is not a sale and the cash receipts are accounted for as financial liabilities, i.e.borrowings from related parties. According to the agreement, the interest rate for theborrowings is 4.75% and the borrowing period is 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 30 June 2020, the carrying amount of the mortgagedland use rights is RMB 119,985,494.05.

(3) Special payables

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

Item1/1/2020Increase in the current periodDecrease in the current period30/6/2020Reason
Refunds of Harbor Construction Fee545,346,468.32146.66119,252.86545,227,362.12Note 1
Employee housing fund3,204,028.97301,291.10-3,505,320.07Note 2
Total548,550,497.29301,437.76119,252.86548,732,682.19

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 "PortConstruction Fee Management Measures" promulgated by the Ministry of Finance, thispayment 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.

38. Long-term employee benefits payable

(1) Long-term employee benefits payable

Unit: RMB

ItemClosing balanceOpening balance
Post-employment benefits - net liabilities of defined benefits plan (note)453,647,469.64454,383,940.25
Termination benefits45,135,075.3249,048,198.38
Total498,782,544.96503,432,138.63
Less: Long-term employee benefits payable due within one year31,950,000.0031,950,000.00
Long-term employee benefits payable due after one year466,832,544.96471,482,138.63

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

38. Long-term employee benefits payable - continued

(2) Changes of defined benefits plan

Present value of defined benefits plan obligation:

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmount incurred in the current periodAmount incurred in the previous period
I. Opening balance454,383,940.25385,323,310.21
II. Defined benefits cost included in profit or loss for the period12,830,961.879,122,011.37
1. Current service cost5,200,965.852,448,000.00
2. Past service cost-(5,988.63)
3. Interest adjustment7,629,996.026,680,000.00
III. Defined benefits cost included in other comprehensive income84,448.42(5,940.71)
1. Actuarial gains (losses)--
2. Effect of exchange rate changes84,448.42(5,940.71)
IV. Other changes(13,651,880.90)307,676,956.40
1. Benefits paid(13,651,880.90)(9,963,043.60)
2. Changes in the scope of consolidation-317,640,000.00
V. Closing balance453,647,469.64702,116,337.27

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.

39. Provisions

Unit: RMB

ItemClosing balanceOpening balanceReason
Sales discount48,941,620.4615,265,697.07
Pending litigation (Note)17,168,123.9315,079,762.88Note
Estimated expenses on Shangtou Port land acquisition and reservation4,890,000.0045,897,100.00
Total70,999,744.3976,242,559.95

Note: This represent the estimated compensation amount that the Company's subsidiary TCP

may need to pay due to the pending litigation.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

40. Deferred income

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

Item1/1/2020Increase in the current periodDecrease in the current period30/6/2020
Government grants1,146,325,779.95-18,982,578.731,127,343,201.22
Unrealized sale-and-leaseback income1,427,077.22-259,468.681,167,608.54
Total1,147,752,857.17-19,242,047.411,128,510,809.76

Items involving government grants are as follows:

Unit: RMB

Liabilities1/1/2020IncreaseRecognized in non-operating incomeRecognized in Other comprehensive income30/6/2020Related to assets /related to income
Refund from marine reclamation land375,169,820.39--9,674,583.96365,495,236.43Related to assets
Tonggu channel widening project276,429,856.80--3,528,891.78272,900,965.02Related to assets
West port area public channel widening project216,620,824.68--967,832.04215,652,992.64Related to assets
Modern logistics special funds114,720,000.08--319,999.98114,400,000.10Related to assets
Terminal subsidy46,550,000.04--612,499.9845,937,500.06Related to assets
Appropriation for harbor dues on cargo22,315,395.09--274,933.0222,040,462.07Related to assets
Port construction subsidy21,099,333.59--462,166.6220,637,166.97Related to assets
Qianwan Bonded Logistics Park Project14,427,049.24--653,606.2213,773,443.02Related to assets
Subsidized grain transfer project subsidy7,857,142.83---7,857,142.83Related to assets
Central budgetary support for bulk grain transfer terminal projects7,260,416.67---7,260,416.67Related to assets
Refund of land transfer charges6,680,000.00---6,680,000.00Related to assets
AMP project5,786,415.70--480,810.365,305,605.34Related to assets
Oil to electricity project5,232,251.75--392,418.964,839,832.79Related to assets
War readiness tug special fund4,218,750.00--112,500.004,106,250.00Related to assets
Bonded logistics center industry informatization development special fund2,580,000.00--60,000.002,520,000.00Related to assets
Automated terminal operation and dispatching system special support project2,246,961.57--456,572.641,790,388.93Related to assets
War readiness portal crane subsidy1,593,886.51---1,593,886.51Related to assets
Bulk cargo production business management system1,500,000.00---1,500,000.00Related to assets
Research and development of fully automated intelligent terminal information investment based on cloud platform architecture1,057,937.27--176,666.76881,270.51Related to assets
Green low carbon port project982,730.02--210,585.00772,145.02Related to assets
Others11,997,007.72--598,511.4111,398,496.31Related to assets
Total1,146,325,779.95--18,982,578.731,127,343,201.22

41. Other non-current liabilities

Unit: RMB

ItemClosing balanceOpening balance
TCP operating rights liability (Note 1)2,716,758,812.323,326,952,857.86
Berth priority call right (Note 2)18,341,679.7820,664,537.64
Obligation to minority shareholders due to acquisition (Note 3)-732,733,351.01
Total2,735,100,492.104,080,350,746.51
Less: Other non-current liabilities due within one year73,564,126.15825,835,439.66
Including: TCP operating rights liability73,564,126.1593,102,088.65
Obligation to minority shareholders due to acquisition-732,733,351.01
Other non-current liabilities due after one year2,661,536,365.953,254,515,306.85

Note 1:TCP has operation right the port of paranagua up to 2048. At 30 June 2020, the payment to

acquire the port operation rights is calculated based on local comprehensive price index.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

41. Other non-current liabilities - continued

Note 2: 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 to theberthing requirements of the contracted customers during the contract period. The Groupamortized the berth priority right within 20 years using straight-line method. In the currentperiod, the amount included in operating income is RMB 2,322,857.86.

Note 3: Details are set out in Note (VII) 2 (1).

42. Share capital

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemOpening balanceChanges for the yearClosing balance
New issue of shareBonus issueCapitalization of surplus reserveOthersSub-total
For the period from 1 January to 30 June 2020
I. Restricted tradable shares
1. State-owned shares-------
2. State-owned legal person shares128,952,746.00-----128,952,746.00
3. Other domestic shares169,602.00---10,812.0010,812.00180,414.00
4. Foreign shares1,148,648,648.00-----1,148,648,648.00
Total restricted tradable shares1,277,770,996.00---10,812.0010,812.001,277,781,808.00
II. Non-restricted tradable shares
1. Ordinary shares denominated in RMB464,858,324.00-----464,858,324.00
2. Foreign capital shares listed domestically179,735,804.00---(10,812.00)(10,812.00)179,724,992.00
3. Foreign capital shares listed overseas-------
4. Others-------
Total non-restricted tradable shares644,594,128.00---(10,812.00)(10,812.00)644,583,316.00
III. Total shares1,922,365,124.00-----1,922,365,124.00

Unit: RMB

ItemOpening balanceChanges for the yearClosing balance
New issue of shareBonus issueCapitalization of surplus reserveOthersSub-total
For the period from 1 January to 30 June 2019
I. Restricted tradable shares
1. State-owned shares-------
2. State-owned legal person shares-------
3. Other domestic shares212,156.00---(42,554.00)(42,554.00)169,602.00
4. Foreign shares1,148,648,648.00-----1,148,648,648.00
Total restricted tradable shares1,148,860,804.00---(42,554.00)(42,554.00)1,148,818,250.00
II. Non-restricted tradable shares
1. Ordinary shares denominated in RMB464,855,324.00---3,000.003,000.00464,858,324.00
2. Foreign capital shares listed domestically179,696,250.00---39,554.0039,554.00179,735,804.00
3. Foreign capital shares listed overseas-------
4. Others-------
Total non-restricted tradable shares644,551,574.00---42,554.0042,554.00644,594,128.00
III. Total shares1,793,412,378.00-----1,793,412,378.00

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

43. Capital Reserve

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemOpening balanceIncreaseDecreaseClosing balance
For the period from 1 January to 30 June 2020
Capital premium22,183,597,895.331,154,889.03218,667,827.1321,966,084,957.23
Including: Capital contributed by investors7,012,992,483.94--7,012,992,483.94
Differences arising from business combination involving enterprises under common control13,311,099,845.41--13,311,099,845.41
Differences arising from acquisition of minority interests (Note)419,130,116.03-218,667,827.13200,462,288.90
Others1,440,375,449.951,154,889.03-1,441,530,338.98
Other capital Reserve112,887,572.024,385,994.7322,064,688.1995,208,878.56
Including: Transfer from capital reserve under the previous accounting system(2,781,133.00)--(2,781,133.00)
Share based payment without exercise-4,385,994.73-4,385,994.73
Other changes of owners' equity of the investee under equity method other than changes in net profit or loss, profit distribution and other comprehensive income115,668,705.02-22,064,688.1993,604,016.83
Total22,296,485,467.355,540,883.76240,732,515.3222,061,293,835.79

Unit: RMB

ItemOpening balanceIncreaseDecreaseClosing balance
For the period from 1 January to 30 June 2019
Capital premium19,429,694,090.0561,436,266.0416,957,921.9419,474,172,434.15
Including: Capital contributed by investors4,954,397,136.25--4,954,397,136.25
Differences arising from business combination involving enterprises under common control13,311,099,845.41--13,311,099,845.41
Others1,164,197,108.3961,436,266.0416,957,921.941,208,675,452.49
Other capital Reserve(2,781,133.00)77,732,230.21300,731.5074,650,365.71
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-77,732,230.21300,731.5077,431,498.71
Total19,426,912,957.05139,168,496.2517,258,653.4419,548,822,799.86

Note: Please refer to Note (V) 41 for details.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

44. Other comprehensive income

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemOpening balanceAmount incurred in the periodClosing balance
Pre-tax amount for the periodLess: Amount included in other comprehensive income in the prior periods transferred to profit or loss this periodLess: Income tax expensePost-tax income attributable to the parent company ownerPost-tax income attributable to minority shareholders
For the period from 1 January to 30 June 2020:
I. Other comprehensive income that will not be reclassified subsequently to profit or loss82,969,758.27(3,451,988.37)-(37,500.00)(1,463,343.44)(1,951,144.93)81,506,414.83
Including: Changes arising from remeasurement of defined benefits plan1,069,722.83-----1,069,722.83
Other comprehensive income that can't be transferred to profit or loss under equity method4,830,921.62(3,301,988.37)--(1,350,843.44)(1,951,144.93)3,480,078.18
Changes in fair value of other equity instruments77,069,113.82(150,000.00)-(37,500.00)(112,500.00)-76,956,613.82
II. Other comprehensive income that will be reclassified subsequently to profit or loss(438,914,324.18)(1,102,044,700.73)--(378,265,943.85)(723,778,756.88)(817,180,268.03)
Including: Other comprehensive income that may be transferred to profit or loss under equity method(58,950,164.54)29,710,451.06--12,154,545.5217,555,905.54(46,795,619.02)
Translation differences of financial statements denominated in foreign currencies(379,964,159.64)(1,131,755,151.79)--(390,420,489.37)(741,334,662.42)(770,384,649.01)
Total other comprehensive income(355,944,565.91)(1,105,496,689.10)-(37,500.00)(379,729,287.29)(725,729,901.81)(735,673,853.20)
For the period from 1 January to 30 June 2019:
I. Other comprehensive income that will not be reclassified subsequently to profit or loss75,673,134.0838,773,588.04-235,000.0015,630,350.4822,908,237.5691,303,484.56
Including: Changes arising from remeasurement of defined benefits plan-------
Other comprehensive income that can't be transferred to profit or loss under equity method-37,833,588.04--14,925,350.4822,908,237.5614,925,350.48
Changes in fair value of other equity instruments75,673,134.08940,000.00-235,000.00705,000.00-76,378,134.08
II. Other comprehensive income that will be reclassified subsequently to profit or loss13,252,844.49(954,554,782.61)--(348,242,893.56)(606,311,889.05)(334,990,049.07)
Including: Other comprehensive income that may be transferred to profit or loss under equity method100,000.00(65,347,540.69)--(25,779,604.80)(39,567,935.89)(25,679,604.80)
Translation differences of financial statements denominated in foreign currencies13,152,844.49(889,207,241.92)--(322,463,288.76)(566,743,953.16)(309,310,444.27)
Total other comprehensive income88,925,978.57(915,781,194.57)-235,000.00(332,612,543.08)(583,403,651.49)(243,686,564.51)

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

45. Special reserve

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemOpening balanceIncreaseDecreaseClosing balance
For the period from 1 January to 30 June 2020
Production safety reserve12,386,734.7026,720,701.5816,515,158.8722,592,277.41
ItemOpening balanceIncreaseDecreaseClosing balance
For the period from 1 January to 30 June 2019
Production safety reserve8,231,080.4366,424,472.1654,201,356.2020,454,196.39

46. Surplus reserve

Unit: RMB

ItemOpening balanceIncreaseDecreaseClosing balance
For the period from 1 January to 30 June 2020
Statutory surplus reserve630,345,307.43--630,345,307.43
ItemOpening balanceIncreaseDecreaseClosing balance
For the period from 1 January to 30 June 2019
Statutory surplus reserve527,175,908.67--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.

47. Unappropriated profit

Unit: RMB

ItemAmountProportion of appropriation or allocation
For the period from 1 January to 30 June 2020
Unappropriated profit at the end of prior year before adjustment11,467,166,351.85
Adjustment of total unappropriated profit at the beginning of period-
Unappropriated profit at the beginning of period after adjustment11,467,166,351.85
Add: Net profit attributable to shareholders of the Company for the period632,798,585.83
Others-
Less: Appropriation to statutory surplus reserve-
Appropriation to discretionary surplus reserve-
Appropriation to general risk reserve-
Ordinary shares' dividends payable884,287,957.04Note
Ordinary shares' dividends converted into share capital-
Unappropriated profit at the end of the period11,215,676,980.64

Note: According to the resolution of shareholders meeting on 22 May 2020, the Company

distributes cash dividends of RMB 4.60 (inclusive of tax) for every 10 shares, totaling toRMB 884,287,957.04 on the basis of the total shares of 1,922,365,124 shares at the end of2019.

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

47. Unappropriated profit - continued

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmountProportion of appropriation or allocation
For the period from 1 January to 30 June 2019
Unappropriated profit at the end of prior year before adjustment8,915,817,110.21
Adjustment of total unappropriated profit at the beginning of the period(37,858,457.43)
Unappropriated profit at the beginning of the period after adjustment8,877,958,652.78
Add: Net profit attributable to shareholders of the Company for the period2,299,181,330.61
Less: Appropriation to statutory surplus reserve-
Appropriation to discretionary surplus reserve-
Appropriation to general risk reserve-
Ordinary shares' dividends payable204,449,011.09
Ordinary shares' dividends converted into share capital-
Unappropriated profit at the end of the period10,972,690,972.30

48. Operating income and operating costs

(1) Operating income and operating costs

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the priorperiod
IncomeCostIncomeCost
Principal operating5,850,744,731.113,606,455,926.275,757,493,642.273,491,922,787.72
Other operating71,752,427.37109,627,779.6376,859,779.06116,097,908.19
Total5,922,497,158.483,716,083,705.905,834,353,421.333,608,020,695.91

(2) Revenue from contracts

Unit: RMB

Categories of contractsPorts operationBonded logistics operationOther operationTotal
Mainland China, Hong Kong and Taiwan area3,957,372,355.89185,961,167.4271,752,427.374,215,085,950.68
- Pearl River Delta2,376,811,691.68127,771,606.0171,752,427.372,576,335,725.06
- Yangtze River Delta----
- Bohai Rim28,650,483.0158,189,561.41-86,840,044.42
- Other areas1,551,910,181.20--1,551,910,181.20
Other countries1,701,430,029.465,981,178.34-1,707,411,207.80
Total5,658,802,385.35191,942,345.7671,752,427.375,922,497,158.48

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

48. Operating income and operating costs - continued

(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) 39. The Group's revenue contract does nothave significant financing components.

(4) At the end of the period, the variable consideration of RMB 48,941,620.46 (31 December2019: RMB 15,265,697.07) arising from sales discount is not included in the transactionprice due to the restriction requirements relating to variable considerations.

49. Taxes and levies

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmount incurred in the current periodAmount incurred in the prior period
Property tax32,842,873.9925,394,756.09
Land use tax14,571,335.9216,894,999.35
Stamp duty4,361,690.392,444,903.78
City construction and maintenance tax3,019,566.752,978,839.39
Education surcharges and local education surcharges2,269,207.712,380,123.86
Others (Note)20,313,404.3946,381,888.95
Total77,378,079.1596,475,511.42

Note: Others are mainly: (1) 2 taxes, the Program of Social Integration and Contribution for the

Financing of Social Security and Tax on Services, with total amount of BRL11,260,834.48 (equivalent to RMB 17,511,629.69) assumed by Company's subsidiary TCPin the current period. The total amount is; and (2) the environmental protection tax ofRMB 2,517,751.31 assumed by Zhanjiang Port, a subsidiary of the company, in thecurrent period.

- 103 -

V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

50. Administrative expense

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmount incurred in the current periodAmount incurred in the prior period
Employee's salary501,741,930.77426,442,977.75
Depreciation expenses43,638,413.4037,107,071.34
Amortization of intangible assets32,102,518.5425,695,054.54
Fees paid to agencies32,392,185.4622,272,821.00
Others127,825,229.20135,726,793.73
Total737,700,277.37647,244,718.36

51. Financial expenses

Unit: RMB

Amount incurred in the current periodAmount incurred in the prior period
Interest expense977,499,521.991,007,611,049.92
Less: Capitalized interest expenses29,853,904.7320,983,804.08
Less: Interest income142,415,864.44139,353,821.46
Interest expenses of lease liabilities50,304,972.4551,328,052.46
Handling fee8,741,650.9021,050,919.62
Exchange differences(25,043,006.36)(47,860,182.35)
Others2,426,563.561,317,410.77
Total841,659,933.37873,109,624.88

52. Other income

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior period
Transferred from deferred income18,982,578.7320,048,198.10
Unemployment insurance reimbursement15,044,277.64-
Additional deduction of VAT7,056,318.094,526,313.56
Financial subsidy of discount loan for key logistics enterprises3,934,700.003,000,000.00
Enterprise R & D funding2,377,400.004,241,000.00
Return of tax service charge2,238,534.382,458,183.34
System operation and maintenance award of bonded company1,000,000.00-
Modern logistics project support fund600,000.004,923,380.55
Reward and support fund230,000.002,000,000.00
Electricity subsidy79,147.101,288,071.18
Funding for steady growth projects-13,850,262.00
Prophase cost subsidy for Hambantota Port project-10,083,935.65
One-off reward and subsidy for key logistics enterprises-2,719,100.00
Subsidy for demonstration Logistics Park-1,000,000.00
Others4,054,319.452,954,061.38
Total55,597,275.3973,092,505.76

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

53. Investment income

(1) Details of investment income:

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmount incurred in the current periodAmount incurred in the prior period
Long-term equity investments income under equity method1,394,604,771.651,795,952,978.08
Investment income on other non-current financial assets72,554,362.03106,288,257.13
Interest income on debt investments37,722,123.77-
Dividend income on other equity instruments460,131.33120,000.00
Gains from remeasurement of previously held equity at fair value upon obtaining the control-835,434,368.51
Others-(112,746,119.16)
Total1,505,341,388.782,625,049,484.56

There is no significant restriction on the remittance of the Group's investment income.

(2) Details of long-term equity investments income under equity method

Unit: RMB

InvesteeAmount incurred in the current periodAmount incurred in the prior periodReason for changes
Shanghai International Port (Group) Co., Ltd.1,022,649,024.581,164,668,288.63Changes in net profit of investee
Terminal Link SAS108,374,645.14152,192,824.94Changes in net profit of investee
Dalian Port Co., Ltd.88,081,029.7159,283,560.53Changes in net profit of investee
Ningbo Daxie Merchants International Wharf Co., Ltd.55,508,480.7363,060,915.99Changes in net profit of investee
Qingdao Qianwan United Container Terminal Co., Lt.51,573,423.7869,739,231.62Changes in net profit of investee
Euro-Asia Oceangate, S.a` r.l.32,577,150.2443,143,162.57Changes in net profit of investee
Others35,841,017.47243,864,993.80Changes in net profit of investee
Total1,394,604,771.651,795,952,978.08

54. Gains (losses) on changes in fair value

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior period
Other non-current financial assets(138,571,248.16)836,888,566.32
Including: Financial assets at fair value through profit or loss(138,571,248.16)836,888,566.32
Other non-current liabilities(157,164,405.14)(193,261,253.31)
Including: Financial liabilities at fair value through profit or loss(157,164,405.14)(193,261,253.31)
Total(295,735,653.30)643,627,313.01

55. Gains (losses) on impairment of credit

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior period
I. Gains (losses) on impairment of credit of accounts receivable107,787.605,181,091.87
II. Gains (losses) on impairment of credit of other receivables(1,025,213.00)2,406,993.51
III. Gains (losses) on impairment of credit of long-term receivables(2,718,612.10)(931,598.61)
IV. Others-1,042,648.01
Total(3,636,037.50)7,699,134.78

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

56. Gains from impairment of assets

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmount incurred in the current periodAmount incurred in the prior period
Gains from decline in value of inventories947,693.7725,051.16

57. Gains on disposal of assets

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior periodAmount included in non-recurring profit or loss for the current period
Gains on disposal of non-current assets (Note)560,256,383.384,169,857,166.53560,256,383.38
Including: Gains (losses) on disposal of fixed assets(17,221,138.93)(13,060.65)(17,221,138.93)
Gains on disposal of intangible assets579,800,163.814,169,848,063.69579,800,163.81
Others(2,322,641.50)22,163.49(2,322,641.50)

Note: The Company's subsidiary Shantou Port obtained gains on compensation for RMB

557,187,829.97 by returning its land parcels of 187.33 mu and accompany buildings atZhuchi deepwater port on the south of Zhongshan East Road of Shantou to government inthe current period. Details are set out in Note (V) 6.

58. Non-operating income

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior periodAmount included in non-recurring profit or loss for the current period
Government grants (Note)16,416,962.22313,000.0016,416,962.22
Insurance compensation received3,485,302.26-3,485,302.26
Gains from scrapping of non current assets2,026,187.96-2,026,187.96
Compensation received for contracts violation864,126.63602,937.10864,126.63
Gains from inventory profit541.89-541.89
Others4,952,244.4313,463,681.244,952,244.43
Total27,745,365.3914,379,618.3427,745,365.39

Note: According to the "Notice of the Guangdong Department of Commerce on the Key Work

of Special Funds for Promoting High-Quality Economic Development (Two-wayInvestment Cooperation) in 2020" (Yue Shangwu Zi Han [2019] No. 106) etc., theCompany's subsidiary Zhanjiang Port has obtained a provincial-level special fund forpromoting high-quality economic development (two-way investment direction) of RMB

16.06 million from the Zhanjiang Municipal Government. See Note (V) 66 for details.

- 106 -

V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

59. Non-operating expenses

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmount incurred in the current periodAmount incurred in the prior periodAmount included in non-recurring profit or loss for the current period
Compensation, liquidated damages and penalties9,383,479.781,604,926.129,383,479.78
Litigation losses6,107,367.67446,626.816,107,367.67
Losses on retirement of non-current assets4,646,632.042,315,206.284,646,632.04
Donations433,214.182,639,889.06433,214.18
Others2,539,628.84499,726.022,539,628.84
Total23,110,322.517,506,374.2923,110,322.51

60. Income tax expenses

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the priorperiod
Current tax expenses643,503,058.231,523,523,436.98
Deferred tax expenses(130,246,569.35)494,447,313.18
Total513,256,488.882,017,970,750.16

Reconciliation of income tax expenses to the accounting profit is as follows:

Unit: RMB

ItemAmount incurred in the current period
Accounting profit2,310,950,971.28
Income tax expenses calculated at 25%577,737,742.82
Effect of non-deductible cost, expenses and losses140,552,914.76
Accrued income tax expenses179,767,140.01
Effect of deductible temporary differences and deductible losses for which the deferred tax assets are not recognized in current period46,354,897.88
Effect of tax-free income (Note)(207,802,784.29)
Effect of tax incentives and changes of tax rate(142,498,566.97)
Effect of different tax rates of subsidiaries operating in other jurisdictions(37,717,456.49)
Effect of utilizing deductible losses for which the deferred tax assets were not recognized in prior period(7,438,269.70)
Effect of adjustments to prior-year income tax(19,193,528.46)
Changes in the opening balance of deferred tax assets/ liabilities due to tax adjustments(12,996,277.16)
Others(3,509,323.52)
Income tax expenses513,256,488.88

Note: This mainly represents the tax effect on investment income from joint venture and

associates.

- 107 -

V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

61. Assets with restricted ownership or use right

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Equity investment in Colombo International Container Terminals Limited (Note 1)1,791,333,094.591,591,452,920.23
Equity investment in Thesar Maritime Limited (Note 1)826,246,562.88799,684,707.77
Fixed assets (Note 2)339,337,781.70349,612,960.23
Intangible assets (Note 2)341,849,222.50345,131,760.52
Construction in progress (Note 2)37,219,474.0023,840,920.42
Cash and bank balances (Note 3)16,456,386.9415,648,978.15
Total3,352,442,522.613,125,372,247.32

Note 1: Details of mortgaged equity and interests are set out in Note (V) 34.

Note 2: 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; DongguanChiwan Warf Co., Ltd. mortgaged its sea area use right with property right to obtainbank borrowings; ZCMG mortgaged its land with property right to obtain relatedparty borrowings. Details of mortgage borrowings are set out in Note (V) 34 andNote (V) 37.

Note 3: Details of restricted cash and bank balances are set out in Note (V) 1.

62. Other comprehensive income

Details are set out in Note (V) 44.

63. Items in cash flow statement

(1) Other cash receipts relating to operating activities:

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior period
Interest income88,947,079.19111,184,074.51
Government grants45,030,531.57342,134,131.96
Guarantees and deposits36,793,265.2317,708,608.61
Insurance compensation6,093,294.491,584,445.49
Rentals3,840,803.196,130,365.04
Harbor construction fee and service charge refund161,267.7621,352.76
Others202,808,304.26149,564,683.66
Total383,674,545.69628,327,662.03

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

63. Items in cash flow statement - continued

(2) Other cash payments relating to operating activities

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemAmount incurred in the current periodAmount incurred in the prior period
Operating expenses such as operating costs and administration expense etc.107,025,537.4082,273,477.12
Advance payment93,495,592.53128,526,655.26
Guarantees and deposits16,294,617.9811,844,446.05
Rentals9,220,211.5626,768,612.20
Port construction fee6,631,496.506,612,997.74
Port charges2,933,172.3910,694,022.45
Berth dredging fee173,000.0019,810,544.00
Harbour dues on cargo-1,647,007.40
Others100,521,371.5289,782,545.95
Total336,294,999.88377,960,308.17

(3) Other cash receipts relating to investing activities

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior period
Recovery of project advance principal363,580,000.00-
Recovery of loans43,282,119.521,017,690,000.00
Profit and loss adjustment of Zhanjiang port in transition period3,803,477.07-
Recovery of principal of structured deposit that is not readily for withdrawal-775,000,000.00
Net cash receipts from acquisition of subsidiaries and other operating units-841,029,533.97
Others99,121,590.008,027,808.23
Total509,787,186.592,641,747,342.20

(4) Other cash payments relating to investing activities

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior period
Related party borrowings3,009,744,121.3854,390,000.00
Structured deposit that is not readily for withdrawal-495,000,000.00
Debt transfer payment-356,137,574.00
Supplementary payment of tax on significant assets restructuring-51,269,104.33
Others25,948.7517,106,451.45
Total3,009,770,070.13973,903,129.78

(5) Other cash payments relating to financing activities

Unit: RMB

ItemAmount incurred in the current periodAmount incurred in the prior period
Acquisition of minority shareholders' equity by CMPort755,986,916.38-
Lease payments-170,160,928.54
Others585,881.7945,830,052.13
Total756,572,798.17215,990,980.67

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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

64. Supplementary information to the cash flow statement

(1) Supplementary information to the cash flow statement

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Supplementary information

Supplementary informationAmount incurred in the current periodAmount incurred in the prior period
1. Reconciliation of net profit to cash flows from operating activities:
Net profit1,797,694,482.406,057,737,185.16
Add: Provision for impairment losses of assets(947,693.77)(25,051.16)
Provision for impairment losses of credit3,636,037.50(7,699,134.78)
Depreciation of fixed assets942,771,805.97817,471,364.36
Depreciation of investment property94,989,539.2395,124,919.10
Depreciation of right-of-use assets154,664,548.43152,337,348.71
Amortization of intangible assets310,995,752.52318,766,288.91
Amortization of long-term prepaid expenses20,611,708.889,815,827.73
Losses (gains) on disposal of fixed assets, intangible assets and other long-term assets(560,256,383.38)(4,169,857,166.53)
Losses on retirement of fixed assets, intangible assets and other long-term assets2,620,444.082,315,206.28
Losses (gains) on changes in fair value295,735,653.30(643,627,313.01)
Financial expenses972,907,583.35990,095,115.95
Investment loss (income)(1,505,341,388.78)(2,625,049,484.56)
Decrease (increase) in deferred tax assets(16,161,516.67)(7,751,337.66)
Increase in deferred tax liabilities(114,085,052.68)502,198,650.84
Decrease (increase) in inventories(25,388,455.65)(25,705,795.78)
Decrease (increase) in operating receivables(1,410,403,810.97)(221,499,911.06)
Increase in operating payables1,107,382,891.161,312,215,203.02
Net cash flows from operating activities2,071,426,144.922,556,861,915.52
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--
3. Net changes in cash and cash equivalents:
Closing balance of cash7,240,359,956.055,618,184,649.19
Less: Opening balance of cash7,714,157,995.875,373,281,504.75
Add: Closing balance of cash equivalents--
Less: Opening balance of cash equivalents--
Net increase (decrease) in cash and cash equivalents(473,798,039.82)244,903,144.44

(2) Cash and cash equivalents

Unit: RMB

ItemClosing balanceOpening balance
I. Cash7,240,359,956.057,714,157,995.87
Including: Cash on hand277,419.74331,305.65
Bank deposits6,729,963,748.997,422,490,058.00
Other monetary funds510,118,787.32291,336,632.22
II. Cash equivalents--
III. Closing balance of cash and cash equivalents7,240,359,956.057,714,157,995.87

- 110 -

V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

65. Foreign currency monetary items

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemClosing balance of original currencyExchange rateClosing amount in RMB
Cash and bank balances965,538,245.40
Including: HKD11,233,024.500.910410,226,545.50
USD29,902,942.137.0555210,980,208.20
EUR67,004,641.957.9832534,911,457.62
RMB209,420,034.081.0000209,420,034.08
Accounts receivable269,115,711.60
Including: HKD7,098,263.590.91046,462,259.17
USD4,280,591.867.055530,201,715.87
EUR29,117,614.067.9832232,451,736.56
Other receivables2,081,176,222.45
Including: HKD31,419,196.080.910428,604,036.11
USD21,657,514.407.0555152,804,592.85
EUR101,744,535.377.9832812,246,974.77
RMB1,087,520,618.721.00001,087,520,618.72
Long-term receivables3,000,329,210.04
Including: USD420,858,089.637.05552,969,364,251.38
EUR3,878,765.247.983230,964,958.66
Short-term borrowings8,318,239,500.00
Including: HKD605,000,000.000.9104550,792,000.00
USD945,000,000.007.05556,667,447,500.00
RMB1,100,000,000.001.00001,100,000,000.00
Accounts payable34,898,120.84
Including: HKD2,526,082.610.91042,299,745.61
USD73,748.227.0555520,330.57
EUR4,018,193.797.983232,078,044.66
Other payables802,552,378.38
Including: HKD17,899,444.610.910416,295,654.37
USD87,784,885.067.0555619,366,256.54
EUR17,626,108.227.9832140,712,747.14
RMB26,177,720.331.000026,177,720.33
Non-current liabilities due within one year2,031,848,117.45
Including: USD248,308,010.417.05551,751,937,167.45
EUR35,062,500.007.9832279,910,950.00
Long-term borrowings1,094,737,280.00
Including: USD34,700,000.007.0555244,825,850.00
EUR106,462,500.007.9832849,911,430.00
Bonds payable19,713,613,689.34
Including: USD2,439,743,985.457.055517,213,613,689.34
RMB2,500,000,000.001.00002,500,000,000.00
Long-term payables431,092,800.00
Including: EUR54,000,000.007.9832431,092,800.00

- 111 -

V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued

66. Government grants

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Type

TypeAmountItemAccountAmount included in profit or loss for the period
Related to income16,060,000.00Zhanjiang Municipal Government-Special Fund for Promoting High-quality Economic Development (Two-way Investment Direction)Non operating income16,060,000.00
Related to income15,044,277.64Unemployment insurance reimbursementOther income15,044,277.64
Related to income3,934,700.00Financial subsidy of discount loan for key logistics enterprisesOther income3,934,700.00
Related to income2,377,400.00Enterprise R & D fundingOther income2,377,400.00
Related to income1,000,000.00System operation and maintenance award of bonded companyOther income1,000,000.00
Related to income4,963,466.55OthersOther income4,963,466.55
Related to income356,962.22OthersNon operating income356,962.22
Total43,736,806.4143,736,806.41

67. Lease

Undiscounted lease receipts subsequent to the balance sheet date are as follows:

Unit: RMB

Maturity analysis of undiscounted lease receipts30/6/2020
1st year subsequent to the balance sheet date260,970,198.78
2nd year subsequent to the balance sheet date192,812,597.55
3rd year subsequent to the balance sheet date147,217,789.82
4th year subsequent to the balance sheet date118,968,080.57
5th year subsequent to the balance sheet date106,878,654.28
Subsequent years470,866,322.86
Total1,297,713,643.86

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 the period from 1 January to 30 June 2020, the revenue relating to operating lease

amounts to RMB 338,739,983.17; there is no revenue relating to variable lease paymentthat is not included in lease receipts.

- 112 -

VI. CHANGES IN SCOPE OF CONSOLIDATION

1. Business combination not involving enterprises under common control

The Group has no business combination not involving enterprises under common control inthe current period.

2. Business combination involving enterprises under common control

The Group has no business combination involving enterprises under common control in thecurrent period.

3. Reverse purchase

The Group has no reverse purchase in the current period.

4. Disposal of subsidiary

There is no loss of control over the disposal of subsidiary investment in the Group in thecurrent period.

5. Scope of consolidation change for other reasons

The Group has no scope of consolidation change for other reasons in the current period.

- 113 -

VII. EQUITY IN OTHER ENTITIES

1. Interests in subsidiaries

(1) Composition of the Group

CHINA MERCHANTS PORT GROUP CO., LTD.

Name of the subsidiary

Name of the subsidiaryPrincipal place of businessPlace of incorporationNature of businessRegistered capital (RMB'0000, unless otherwise specified)Proportion of ownership Interest(%)Acquisition method
DirectIndirect
Shenzhen Chiwan International Freight Agency Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services550.00100.00-Established through investment
Chiwan Wharf (Hong Kong) Co., Ltd.Hong Kong, PRCHong Kong, PRCInvestment holdingHKD1,000,000100.00-Established through investment
Dongguan Chiwan Warf Co., Ltd.Dongguan, PRCDongguan, PRCLogistics support services45,000.0085.00-Established through investment
Dongguan Chiwan Terminal Co., Ltd.Dongguan, PRCDongguan, PRCLogistics support services40,000.00100.00-Established through investment
Shenzhen Chiwan Harbor Container Co. Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services28,820.00100.00-Business combination involving enterprises under common control
Shenzhen Chiwan Port Development Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services1,500.00100.00-Business combination involving enterprises under common control
Chiwan Container Terminal Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support servicesUSD95,300,00055.0020.00Business combination involving enterprises under common control
Shenzhen Chiwan Tugboat Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services2,400.00100.00-Business combination involving enterprises under common control
Chiwan Shipping (Hong Kong) LimitedHong Kong, PRCHong Kong, PRCLogistics support servicesHKD800,000100.00-Business combination involving enterprises under common control
CMPort (Note 1)Hong Kong, PRCHong Kong, PRCInvestment holdingHKD40,614,228,200.0040.91-Business combination involving enterprises under common control
China Merchants Bonded Logistics Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services70,000.0040.0060.00Business combination involving enterprises under common control
China Merchants International Information Technology Co., Ltd.Shenzhen, PRCShenzhen, PRCIT service5,000.0023.1676.84Business combination involving enterprises under common control
China Merchants International (China) Investment Co., Ltd.Shenzhen, PRCShenzhen, PRCInvestment holdingUSD30,000,000-100.00Business combination involving enterprises under common control
CMTQingdao, PRCQingdao, PRCLogistics support servicesUSD206,300,000-100.00Business combination involving enterprises under common control
China Merchants Container Services LimitedHong Kong, PRCHong Kong, PRCLogistics support servicesHKD500,000-100.00Business combination involving enterprises under common control
China Merchants Port Services (Shenzhen) Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services55,000.00-100.00Business combination involving enterprises under common control
Shenzhen Haiqin Project Management Co., Ltd.Shenzhen, PRCShenzhen, PRCEngineering supervision300.00-100.00Business combination involving enterprises under common control
ATJShenzhen, PRCShenzhen, PRCPreparation for warehousing projectHKD100,000,000-100.00Business combination involving enterprises under common control
ASJShenzhen, PRCShenzhen, PRCPreparation for warehousing projectHKD100,000,000-100.00Business combination involving enterprises under common control
China Merchants International Terminal (Qingdao) Co., Ltd.Qingdao, PRCQingdao, PRCLogistics support servicesUSD44,000,000-90.10Business combination involving enterprises under common control
Colombo International Container Terminals LimitedSri LankaSri LankaLogistics support servicesUSD150,000,100-85.00Business combination involving enterprises under common control
Shenzhen Mawan Port Services Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services20,000.00-100.00Business combination involving enterprises under common control
Shenzhen Magang Cangma Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services33,500.00-100.00Business combination involving enterprises under common control
Shenzhen Mawan Port Service Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services20,000.00-100.00Business combination involving enterprises under common control
Zhangzhou China Merchants Tugboat Co., Ltd.Zhangzhou, PRCZhangzhou, PRCLogistics support services1,500.00-100.00Business combination involving enterprises under common control

- 114 -

VII. EQUITY IN OTHER ENTITIES - continued

1. Interests in subsidiaries - continued

(1) Composition of the Group - continued

CHINA MERCHANTS PORT GROUP CO., LTD.

Name of the subsidiary

Name of the subsidiaryPrincipal place of businessPlace of incorporationNature of businessRegistered capital (RMB'0000, unless otherwise specified)Proportion of ownership Interest(%)Acquisition method
DirectIndirect
Zhangzhou China Merchants Port Co., Ltd.Zhangzhou, PRCZhangzhou, PRCLogistics support services100,000.00-60.00Business combination involving enterprises under common control
ZCMG (note 2)Zhangzhou, PRCZhangzhou, PRCLogistics support services44,450.00-31.00Business combination involving enterprises under common control
Shekou Container Terminals Ltd.Shenzhen, PRCShenzhen, PRCLogistics support servicesHKD618,201,200-100.00Business combination involving enterprises under common control
Shenzhen Lianyunjie Container Terminals Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services60,854.90-100.00Business combination involving enterprises under common control
Anxunjie Container Terminals (Shenzhen) Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services127,600.00-100.00Business combination involving enterprises under common control
Anyunjie Port Warehousing Service (Shenzhen) Co., Ltd.Shenzhen, PRCShenzhen, PRCPreparation for warehousing project6,060.00-100.00Business combination involving enterprises under common control
Shenzhen Haixing Harbor Development Co., LtdShenzhen, PRCShenzhen, PRCLogistics support servicesUSD15,151,500-67.00Business combination involving enterprises under common control
Shenzhen Lianyongtong Terminal Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support servicesUSD7,000,000-100.00Business combination involving enterprises under common control
Yide PortFoshan, PRCFoshan, PRCLogistics support services21,600.00-51.00Business combination involving enterprises under common control
Mega Shekou Container Terminals LimitedBritish Virgin IslandsBritish Virgin IslandsInvestment holdingUSD120.00-80.00Business combination involving enterprises under common control
Thesar Maritime LimitedCyprusCyprusInvestment holdingEUR5,000.00-100.00Business combination involving enterprises under common control
LCTRepublic of TogoRepublic of TogoLogistics support servicesXOF200,000,000-100.00Business combination involving enterprises under common control
Gainpro Resources LimitedBritish Virgin IslandsBritish Virgin IslandsInvestment holdingUSD 1.00-100.00Business combination involving enterprises under common control
Hambantota International Port Group (Private)LimitedSri LankaSri LankaLogistics support servicesUSD794,000,000-85.00Business combination involving enterprises under common control
Shantou portShantou, PRCShantou, PRCLogistics support services12,500.00-60.00Business combination involving enterprises under common control
JYRTShenzhen, PRCShenzhen, PRCProperty lease servce etc.80,000.00-100.00Business combination involving enterprises under common control
QHWShenzhen, PRCShenzhen, PRCProperty lease servce etc.20,000.00-100.00Business combination involving enterprises under common control
Juzhongzhi Investment (Shenzhen) Co., Ltd.Shenzhen, PRCShenzhen, PRCInvestment consulting4,000.00-75.00Business combination involving enterprises under common control
Shenzhen Lianda Tugboat Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services200.00-60.29Business combination involving enterprises under common control
Zhangzhou Zhongli Outer Wheel Tally Co., LtdZhangzhou, PRCZhangzhou, PRCLogistics support services200.00-84.00Business combination involving enterprises under common control
China Merchants Holdings (Djibouti) FZEDjiboutiDjiboutiLogistics support servicesUSD38,140,000-100.00Business combination involving enterprises under common control
Xinda Resources LimitedBritish Virgin IslandsBritish Virgin IslandsInvestment holdingUSD 107,620,000-77.45Business combination involving enterprises under common control
Kong Rise Development LimitedHong Kong, PRCHong Kong, PRCInvestment holdingUSD 107,620,000-100.00Business combination involving enterprises under common control
TCPBrazilBrazilLogistics support servicesBRL 68,851,600-100.00Business combination not involving enterprises under common control

- 115 -

VII. EQUITY IN OTHER ENTITIES - continued

1. Interests in subsidiaries - continued

(1) Composition of the Group - continued

CHINA MERCHANTS PORT GROUP CO., LTD.

Name of the subsidiary

Name of the subsidiaryPrincipal place of businessPlace of incorporationNature of businessRegistered capital (RMB'0000, unless otherwise specified)Proportion of ownership Interest(%)Acquisition method
DirectIndirect
Direcet Achieve Investments LimitedHong Kong, PRCHong Kong, PRCInvestment holdingUSD 814,781,300-100.00Business combination not involving enterprises under common control
China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. ("RoRo Logistics")Zhoushan, PRCZhoushan, PRCLogistics support services17,307.8651.00-Assets acquisition
Shenzhen Haixing Logistics Development Co., Ltd.Shenzhen, PRCShenzhen, PRCLogistics support services7,066.79-100.00Assets acquisition
Zhanjiang PortZhanjiang, PRCZhanjiang, PRCLogistics support services587,420.913.4254.93Business combination not involving enterprises under common control
Zhanjiang Port International Container Terminal Co., Ltd.Zhanjiang, PRCZhanjiang, PRCLogistics support services60,000.00-80.00Business combination not involving enterprises under common control
Zhanjiang Port Petrochemical Terminal Co., Ltd.Zhanjiang, PRCZhanjiang, PRCLogistics support services18,000.00-50.00Business combination not involving enterprises under common control
China Ocean Shipping Tally Co., Ltd., Zhanjiang (Note 5)Zhanjiang, PRCZhanjiang, PRCLogistics support services300.00-84.00Business combination not involving enterprises under common control
Zhanjiang Port Donghaidao Bulk Cargo Terminal Co., Ltd.Zhanjiang, PRCZhanjiang, PRCLogistics support services5,000.00-100.00Business combination not involving enterprises under common control
Zhanjiang Port Bonded Service Co., Ltd., GuangdongZhanjiang, PRCZhanjiang, PRCLogistics support services300.00-100.00Business combination not involving enterprises under common control
Guangdong Zhanjiang Port Logistics Co., Ltd.Zhanjiang, PRCZhanjiang, PRCLogistics support services10,000.00-100.00Business combination not involving enterprises under common control
Zhanjiang Port Haichuan Trading Co., Ltd.Zhanjiang, PRCZhanjiang, PRCLogistics support services200.00-100.00Business combination not involving enterprises under common control
Guangdong Zhanjiang Port Longteng Shipping Co., Ltd.Zhanjiang, PRCZhanjiang, PRCLogistics support services9,000.00-70.00Business combination not involving enterprises under common control

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, the Companytotally 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 Company selectto receive all its share of dividends from the shareholding in CMPort in the form of scripdividends. Upon the completion of above distribution of CMPort, the Company's share inCMPort 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. The proportion ofshares held by CMHK changed from 22.64% to 21.86%. Therefore, the Company 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 for operationand management. Therefore, the Group has 60% voting power of ZCMG and includes it inthe scope of consolidated financial statements.

- 116 -

VII. EQUITY IN OTHER ENTITIES - continued

1. Interests in subsidiaries - continued

(2) Material non-wholly-owned subsidiaries

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Name of the subsidiary

Name of the subsidiaryProportion of ownership interest held by the minority shareholders (%)Profit or loss attributable to minority shareholders in the current periodDividends distributed to minority shareholders in the current periodBalance of minority interests at the end of the period
CMPort59.091,105,672,520.1991,061,700.4953,033,521,500.73

- 117 -

VII. EQUITY IN OTHER ENTITIES - continued

1. Interests in subsidiaries - continued

(3) Significant financial information of material non-wholly-owned subsidiaries

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Name of thesubsidiary

Name of the subsidiaryClosing balanceOpening balance
Current assetsNon-current assetsTotal assetsCurrent liabilitiesNon-current liabilitiesTotal liabilitiesCurrent assetsNon-current assetsTotal assetsCurrent liabilitiesNon-current liabilitiesTotal liabilities
CMPort11,091,093,281.75124,033,746,605.53135,124,839,887.2821,024,836,572.2433,693,107,917.0954,717,944,489.3311,159,452,476.24119,576,502,129.38130,735,954,605.6213,858,924,526.2335,059,524,441.9048,918,448,968.13

Unit: RMB

Name of the subsidiaryAmount incurred in the current periodAmount incurred in the prior period
Operating incomeNet profitTotal comprehensive incomeCash flows from operating activitiesOperating incomeNet profitTotal comprehensive incomeCash flows from operating activities
CMPort3,692,963,958.881,592,920,984.37515,475,406.961,499,234,240.533,861,739,507.525,309,663,495.614,363,679,239.081,910,841,306.56

- 118 -

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

In February 2018, CMPort, a subsidiary of the Company, acquired 90% stake in TCP. Accordingto the agreement, minority shareholders of TCP can choose to sell their 10% stake in TCP toKong Rise Development, a subsidiary of CMPort, at the market price or at BRL 320 million(whichever is higher) after two years. On February 23, 2020, the minority shareholders of TCPissued an exercise notice to Kong Rise Development Limited. As of June 30, 2020, Kong RiseDevelopment Limited has paid the entire equity purchase of US$107 million, which isapproximately RMB 755,398,999.97, and the relevant equity transaction has been completed.After the completion of this transaction, Kong Rise Development Limited’s shareholding in TCPwas changed from 90% to 100%, and the group’s shareholding in TCP was changed from 67.45%to 77.45%. The differences between the amounts paid for equity acquisition and net assets of thesubsidiary calculated at equity percentage are accounted as capital reserve. This matter reducedthe group’s capital reserve by a total of RMB 218,667,827.13 yuan.

3. Interests in joint ventures and associates

(1) Material joint ventures or associates

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Investee

InvesteePrincipal place of businessPlace of registrationNature of businessProportion of ownership interests held by the Group (%)Accounting method of investments in associates
DirectIndirect
Associates
Shanghai International Port (Group) Co., Ltd.Shanghai, PRCShanghai, PRCPort and container terminal business-26.77Equity method

- 119 -

VII. EQUITY IN OTHER ENTITIES - continued

4. Key financial information of material associates

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemShanghai International Port (Group) Co., Ltd.
Closing balance / Amount incurred in the current periodOpening balance/ Amount incurred in the prior period
Current assets53,021,178,713.6540,399,631,516.67
Including: Cash and cash equivalents28,832,799,623.7417,900,365,675.69
Non-current assets106,481,259,322.01101,777,664,401.29
Total assets159,502,438,035.66142,177,295,917.96
Current liabilities38,814,601,901.8819,339,272,490.14
Non-current liabilities29,504,746,693.9032,049,165,771.78
Total liabilities68,319,348,595.7851,388,438,261.92
Minority interests8,618,031,046.198,732,108,869.09
Equity attributable to shareholders of the parent company82,565,058,393.6982,056,748,786.95
Share of net assets calculated based on the proportion of ownership interests22,102,666,131.9921,966,591,650.27
Adjustments
-Goodwill2,076,585,747.122,076,585,747.12
-Others(131,696,948.52)(125,134,529.84)
Carrying amounts of equity investments in associates24,047,554,930.5923,918,042,867.55
Fair value of publicly quoted equity investments in associates26,050,761,181.2035,788,783,813.22
Operating income12,038,672,650.4517,198,832,228.65
Net profit4,328,854,036.444,880,941,188.89
Other comprehensive income195,337,471.93(20,755,561.56)
Total comprehensive income4,524,191,508.374,860,185,627.33
Dividends received from associates in the current year899,371,516.97955,194,576.56

5. Summarized financial information of immaterial associates and joint ventures

Unit: RMB

Closing balance / Amount incurred in the current periodOpening balance/ Amount incurred in the prior period
Joint ventures:
Total carrying amount of investments9,530,205,565.309,392,226,566.22
Aggregate of following items calculated based on the proportion of ownership interest
- Net profit177,436,875.24254,349,467.45
- Other comprehensive income--
- Total comprehensive income177,436,875.24254,349,467.45
Associates:
Total carrying amount of investments28,458,665,901.4024,606,269,949.49
Aggregate of following items calculated based on the proportion of ownership interest
- Net profit194,518,871.83376,935,222.00
- Other comprehensive income(23,400,026.46)(51,009,353.70)
- Total comprehensive income171,118,845.37325,925,868.30

6. The investees where the Group holds long-term equity investments are not restricted to

transfer funds to the Group.

- 120 -

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 FCFA. Exceptfor part of the purchases and sales, the Group's other principal activities are denominated andsettled in RMB. As at 30 June 2020, 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

CHINA MERCHANTS PORT GROUP CO., LTD.Item

ItemClosing balanceOpening balance
Cash and bank balances794,814,449.74829,827,620.81
Accounts receivable269,115,711.60134,801,300.52
Other receivables2,032,171,711.19558,948,223.20
Long-term receivables3,000,329,210.049,800,295.76
Short-term borrowings1,650,792,000.001,304,398,148.00
Accounts payable34,898,120.8430,431,392.31
Other payables283,742,226.21261,684,252.87
Non-current liabilities due within one year279,910,950.00261,401,461.04
Long-term borrowings849,911,430.00976,546,725.00
Bonds payable2,500,000,000.002,500,000,000.00
Long-term payables431,092,800.00431,361,402.17

- 121 -

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

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemChanges in exchange rateClosing balanceOpening balance
Effect on profitsEffect on shareholders' equityEffect on profitsEffect on shareholders' equity
All foreign currencies5% increase against RMB(21,788,739.77)(21,788,739.77)(13,659,249.98)(13,659,249.98)
All foreign currencies5% decrease against RMB21,788,739.7721,788,739.7713,659,249.9813,659,249.98
All foreign currencies5% increase against USD1,832,900.681,832,900.6862,242.4262,242.42
All foreign currencies5% decrease against USD(1,832,900.68)(1,832,900.68)(62,242.42)(62,242.42)
All foreign currencies5% increase against HKD(247,590,042.34)(247,590,042.34)(1,142,869,420.70)(1,142,869,420.70)
All foreign currencies5% decrease against HKD247,590,042.34247,590,042.341,142,869,420.701,142,869,420.70
All foreign currencies5% increase against FCFA(59,525,285.86)(59,525,285.86)(52,662,699.84)(52,662,699.84)
All foreign currencies5% decrease against FCFA59,525,285.8659,525,285.8652,662,699.8452,662,699.84

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

- 122 -

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 - continued

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

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemChanges in interest rateClosing balanceOpening balance
Effect on profitsEffect on shareholders' equityEffect on profitsEffect on shareholders' equity
Short-term borrowings and long-term borrowings1% increase(145,999,335.58)(145,999,335.58)(118,576,065.38)(118,576,065.38)
Short-term borrowings and long-term borrowings1% decrease145,999,335.58145,999,335.58118,576,065.38118,576,065.38

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.

1.2 Credit risk

As at 30 June 2020, the Group's maximum exposure to credit risk which will cause a financialloss to the Group due to failure to discharge an obligation by the counterparties and financialguarantees issued by the Group is arising from the carrying amount of the respective financialassets recognized in the consolidated balance sheet. For financial instruments measured at fairvalue, the carrying amount reflects the exposure to risks but not the maximum exposure to risks;the maximum exposure to risks would vary according to the future changes in fair value.

- 123 -

VIII. RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued

1. Risk management objectives and policies - continued

1.2 Credit risk - continued

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 30 June 2020, the balance of accountsreceivable from top five entities is RMB 516,710,812.79 (31 December 2019: RMB368,100,117.85), accounting for 28.89% (31 December 2019: 25.29%) 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.

For the period from 1 January to 30 June 2020, the Group had total current liabilities in excess oftotal current assets of RMB 15,136,310,298.42. As at 30 June 2020, the Group has availableunutilized loan facility of RMB 44,991,647,898.21 which is more than current liabilities.Therefore, the Group's management believes that the Group has no significant liquidity risk.

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

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemCarrying amountGross amountWithin 1 year1 to 5 yearsOver 5 years
Short-term borrowings15,663,707,514.4715,744,098,724.6215,744,098,724.62--
Notes payable15,959,326.0915,959,326.0915,959,326.09--
Accounts payable552,729,739.72552,729,739.72552,729,739.72--
Other payables4,373,981,275.114,373,981,275.114,373,981,275.11--
Non-current liabilities due within one year4,502,599,437.655,920,351,050.495,920,351,050.49--
Other current liabilities3,190,011,929.493,216,433,847.303,216,433,847.30--
Long-term borrowings5,921,573,954.176,706,654,539.87-5,075,256,963.021,631,397,576.85
Bonds payable20,995,346,998.4424,066,002,677.83-15,696,447,664.098,369,555,013.74
Lease liabilities1,538,184,794.372,360,879,098.91-913,128,190.991,447,750,907.92
Long-term payables1,382,858,269.641,401,314,459.71-196,065,960.271,205,248,499.44
Other non-current liabilities2,661,536,365.952,661,536,365.95-287,410,821.482,374,125,544.47

- 124 -

IX. DISCLOSURE OF FAIR VALUE

1. Closing balance of assets and liabilities measured at fair value

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Item

ItemFair value at closing balance
Level 1Level 2Level 3Total
Measurements at fair value continuously
Accounts receivable financing-251,312,787.49-251,312,787.49
Other equity instrument investments11,070,000.00-152,341,272.00163,411,272.00
Other non-current financial assets2,617,472,549.73-16,184,949.082,633,657,498.81
Total assets measured at fair value continuously2,628,542,549.73251,312,787.49168,526,221.083,048,381,558.30
Other non-current liabilities--2,716,758,812.322,716,758,812.32
Total liabilities measured at fair value continuously--2,716,758,812.322,716,758,812.32

2. Basis for determining the market price of items continuously measured at level 1 fair

value

The market prices of other equity instrument investments and other non-current financial assetsare determined at the closing price of the equity instrument at Shanghai Stock Exchange andHong Kong Stock Exchange at 30 June 2020.

3. Qualitative and quantitative information of valuation techniques and key parameters

adopted for items continuously measured at level 2 fair value

Unit: RMB

ItemFair value in the current periodFair value in the prior periodValuation techniquesInputs
Accounts receivable financing251,312,787.49260,760,537.45Cash flow discountingDiscount rate
Other non-current financial assets-616,000,000.00Listed company comparison approachShare 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

ItemFair value in the current periodFair value in the prior periodValuation techniquesInputs
Other equity instrument investments152,341,272.00152,341,272.00Net worth methodCarrying amount
Other non-current financial assets2,000,000.002,000,000.00Cash flow discountingDiscount rate
Other non-current financial assets700,834.13700,834.13Net worth methodCarrying amount
Other non-current financial assets13,484,114.9513,484,114.95Listed company comparison approachShare price
Other non-current liabilities2,706,295,317.443,326,952,857.86Cash flow discountingDiscount rate
Other non-current liabilities-732,733,351.01Option Pricing methodExercising price, expected volatility etc.

- 125 -

IX. DISCLOSURE OF FAIR VALUE - continued

4. Qualitative and quantitative information of valuation techniques and key parametersadopted for items continuously measured at level 3 fair value - continued

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.

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

CHINA MERCHANTS PORT GROUP CO., LTD.Name of the parent

Name of the parentRelated party relationshipType of the entityPlace of registrationLegal representativeNature of businessIssued share capitalProportion of the Company's ownership interests held by the parent (%)Proportion of the Company's voting power held by the parent (%)
Broadford Global LimitedParent companyPrivate limited company (share limited)Hong KongDeng WeidongInvestment holdingHKD 21,120,986,2622.8881.92 (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.

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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:

CHINA MERCHANTS PORT GROUP CO., LTD.Name of joint venture or associate

Name of joint venture or associateRelationship with the Company
Port of Newcastle and its subsidiariesJoint venture
Guizhou East Land Port Operation Co., Ltd.Joint venture
Guangdong Zhanjiang Port Longteng Shipping Co., Ltd.Former joint venture
Ningbo Daxie Merchants International Wharf Co., Ltd.Joint venture
Qingdao Qianwan United Container Terminal Co., Lt.Joint venture
Qingdao Qianwan West Port United Wharf Co., Ltd.Joint venture
Qingdao Qianwan New United Container Terminal Co., Ltd.Joint venture
COSCO Logistics (Zhanjiang) Co., Ltd.Joint venture
China Merchants Antong Logistics Management CompanyJoint venture
China Ocean Shipping Agency (Zhanjiang) Co., LtdJoint venture
China Overseas Harbour Affaris (Laizhou) Co., Ltd.Joint venture
Doraleh Multi-purpose PortAssociate
Great Horn Development Company FZCOAssociate
International Djibouti Industrial Parks Operation FZCOAssociate
Port de Djibouti S.A.Associate
Terminal Link SASAssociate
Tin-Can Island Container Terminal LtdAssociate
Dalian Port Co., Ltd.Associate
Guizhou Qiandongnan Continental Land Port Operation Co., Ltd.Associate
Nanshan Group and its subsidiariesAssociate
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 LimitedAssociate
China Merchants Harbor CityAssociate
Zhanjiang Xiagang United Development Co., Ltd.Associate
Zhangzhou COSCO Shipping Agency Co., Ltd.Associate
Chu Kong River Trade Terminal Co. Ltd.Associate

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X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

4. Other related parties of the Company

CHINA MERCHANTS PORT GROUP CO., LTD.Name of other related parties

Name of other related partiesRelationship with the Company
Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd.Minority shareholders of subsidiaries
Zhanjiang InfrastructureMinority shareholders of subsidiaries
Antong Holdings and its subsidiaries (Note)Connected person
China COSCO Shipping Group and its subsidiaries (Note)Connected person
CMHKControlled by the same ultimate controlling shareholder
Orienture Holdings Co. Ltd.Controlled by the same ultimate controlling shareholder
Sinotrans (NZ) LimitedControlled 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
Hoi Tung Innotek (Shenzhen) Company LimitedControlled by the same ultimate controlling shareholder
Hoi Tung (Shanghai) Company LimitedControlled 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 International Container Terminal Co., Ltd.Controlled by the same ultimate controlling shareholder
Shenzhen Penavico Warehousing Co., LtdControlled by the same ultimate controlling shareholder
Shenzhen Penavico International Freight Co., LtdControlled 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
Shenzhen Qianhai Shekou Free Trade Investment Development Co., LtdControlled by the same ultimate controlling shareholder
Shenzhen West Port Security Service CompanyControlled 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
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

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X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

4. Other related parties of the Company - continued

CHINA MERCHANTS PORT GROUP CO., LTD.Name of other related parties

Name of other related partiesRelationship with the Company
Csc Roro Logistics 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 Marine Shipping Agency Shenzhen Co. , Ltd.Controlled by the same ultimate controlling shareholder
Yiu Lian Dockyards (Shekou) LimitedControlled by the same ultimate controlling shareholder
Yiu Lian Dockyards LimitedControlled by the same ultimate controlling shareholder
CM Houlder Insurance Brokers LimitedControlled by the same ultimate controlling shareholder
China Merchants International Cold-Chain (Shenzhen) Co., Ltd.Controlled by the same ultimate controlling shareholder
China Merchants Investment Development Co., Ltd.Controlled by the same ultimate controlling shareholder
China Merchants Group Finance Company LimitedControlled by the same ultimate controlling shareholder
China Merchants Port Investment Development Co., LtdControlled by the same ultimate controlling shareholder
China Merchants Gangtong Development (Shenzhen) Co., Ltd.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 Zhangzhou Development Zone Power Supply 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 ShenzhenControlled by the same ultimate controlling shareholder
Sinotrans South China Co., Ltd.Controlled by the same ultimate controlling shareholder
Sinotrans Shipping Co., LtdControlled by the same ultimate controlling shareholder
Sinotrans Container Lines Co., Ltd.Controlled by the same ultimate controlling shareholder
Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd.Where the former ultimate controlling shareholder has significant influence
Khor Ambado FZCoWhere the ultimate controlling shareholder has significant influence
Djibouti International Hotel CompanyWhere the ultimate controlling shareholder has significant influence
China Merchant Bank Co., Ltd.Where the ultimate controlling shareholder has significant influence

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X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

4. Other related parties of the Company - continued

Note: From 1 January 2020 to 3 February 2020, the Company's Chairman Fu Gangfeng work as

the key management personnel of both the Company and China COSCO ShippingCorporation Limited; from 1 January 2020 to 30 June 2020, the Company's deputygeneral manager Zheng Shaoping work as the senior management personnel of both theCompany and Antong Holdings Co., Ltd. Therefore, the related party transactions andbalances for the period and within 12 months after the period in which the aforesaid twopersons were the director, senior management personnel of China COSCO ShippingCorporation Limited and Antong Holdings Co., Ltd. are disclosed.

5. Related party transactions

(1) Rendering and receipt of service

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Related party

Related partyContent of transactionPricing method and decision procedures of related transactionsAmount incurred in the current periodAmount incurred in the prior period
Receipt of service:
Nanshan Group and its subsidiariesService expenditureNegotiation21,754,790.4220,811,589.38
Qingdao Qianwan West Port United Wharf Co., Ltd.Service expenditureNegotiation7,457,789.577,820,606.36
Yiu Lian Dockyards LimitedService expenditureNegotiation4,313,298.436,657,382.97
Shenzhen China Merchants Property Management Co., Ltd.Service expenditureNegotiation3,753,910.42645,848.80
CM Houlder Insurance Brokers LimitedService expenditureNegotiation2,351,146.062,368,789.29
Shenzhen West Port Security Service CompanyService expenditureNegotiation2,140,188.70-
China Merchants Zhangzhou Development Zone Power Supply Co., Ltd.Service expenditureNegotiation1,902,146.112,489,368.18
China Merchants Life Insurance Co., Ltd.Service expenditureNegotiation1,828,081.511,260,870.00
Khor Ambado FZCoService expenditureNegotiation1,334,921.7720,353.80
China Marine Shipping Agency Shenzhen Co. , Ltd.Service expenditureNegotiation1,095,062.501,551,472.60
Hoi Tung (Shanghai) Company LimitedService expenditureNegotiation1,075,389.11721,332.69
China Merchants Bureau Logistics Group Qingdao Co., Ltd.Service expenditureNegotiation1,011,481.252,318,455.39
China Merchants (Shenzhen) Power Supply., Ltd.Service expenditureNegotiation-1,221,907.07
Other related partyService expenditureNegotiation5,070,639.394,397,426.70
China Merchants Group Finance Company LimitedInterest expenseNegotiation17,054,903.2322,155,171.89
China Merchants Finance Lease (Tianjin) Co., Ltd.Interest expenseNegotiation3,463,541.67-
China Merchant Bank Co., Ltd.Interest expenseNegotiation1,510,507.992,052,399.21
Port de Djibouti S.A.Interest expenseNegotiation-7,232,442.29
Shenzhen China Merchants Property Management Co., Ltd.Property utilitiesNegotiation4,649,769.223,931,826.86
Nanshan Group and its subsidiariesProperty utilitiesNegotiation2,579,881.823,172,865.48
Other related partyProperty utilitiesNegotiation942,608.78896,257.00
Total85,290,057.9591,726,365.96

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X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued

5. Related party transactions - continued

(1) Rendering and receipt of service - continued

Unit: RMB

CHINA MERCHANTS PORT GROUP CO., LTD.

Related party

Related partyContent of transactionPricing method and decision procedures of related transactionsAmount incurred in the current periodAmount incurred in the prior period
Rendering of service:
China COSCO Shipping Group and its subsidiariesService revenueNegotiation191,399,439.67-
COSCO Logistics (Zhanjiang) Co., Ltd.Service revenueNegotiation65,809,923.7868,740,946.61
Antong Holdings and its subsidiariesService revenueNegotiation61,740,139.88-
China Ocean Shipping Agency (Zhanjiang) Co., LtdService revenueNegotiation26,430,608.956,555,068.00
Qingdao Qianwan United Container Terminal Co., Lt.Service revenueNegotiation22,646,763.1923,270,413.55
Guangdong Sinotrans Shipping Agency Co., Ltd.Service revenueNegotiation19,894,702.6914,512,429.32
China Ocean Shipping Agency (Shenzhen) Co., LtdService revenueNegotiation10,190,194.099,625,816.92
China Merchants Investment Development Co., Ltd.Service revenueNegotiation6,875,471.73-
Shenzhen Baohong E-Commerce Integrated Services Co., Ltd.Service revenueNegotiation4,043,370.073,512,554.86
South China Sinotrans Supply Chain Management Co., Ltd.Service revenueNegotiation3,952,260.531,172,263.27
China Merchants International Cold-Chain (Shenzhen) Co., Ltd.Service revenueNegotiation3,358,865.703,219,796.19
Shenzhen Penavico Warehousing Co., LtdService revenueNegotiation3,271,684.6678,569.45
Shenzhen Penavico International Freight Co., LtdService revenueNegotiation3,093,622.85-
China Merchants International Shipping Agency (Shenzhen) Co., Ltd.Service revenueNegotiation2,941,424.712,617,701.90
Yiu Lian Dockyards (Shekou) LimitedService revenueNegotiation2,412,855.54137,886.77
Shenzhen Qianhai Sinotrans Supply Chain Management Co., Ltd.Service revenueNegotiation2,382,499.13-
China Marine Shipping Agency Shenzhen Co. , Ltd.Service revenueNegotiation2,259,799.794,237,100.48
Guizhou Qiandongnan Continental Land Port Operation Co., Ltd.Service revenueNegotiation2,170,933.761,402,503.16
Sinotrans Container Lines Co., Ltd.Service revenueNegotiation1,867,447.602,142,579.09
Guizhou East Land Port Operation Co., Ltd.Service revenueNegotiation1,643,215.082,648,998.97
Qingdao Qianwan West Port United Wharf Co., Ltd.Service revenueNegotiation1,612,607.387,252,854.49
Ningbo Daxie Merchants International Wharf Co., Ltd.Service revenueNegotiation1,467,170.051,813,217.20
Qingdao Qianwan New United Container Terminal Co., Ltd.Service revenueNegotiation1,453,413.791,542,824.76
Qingdao Sinotrans Supply Chain Management Co., Ltd.Service revenueNegotiation1,381,761.202,115,762.23
Shantou International Container Terminal Co., Ltd.Service revenueNegotiation1,263,661.19-
Doraleh Multi-purpose PortService revenueNegotiation1,007,325.33376,841.70
Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd.Service revenueNegotiation853,254.613,351,153.05
Zhangzhou COSCO Shipping Agency Co., Ltd.Service revenueNegotiation544,523.611,697,544.92
Yiu Lian Dockyards LimitedService revenueNegotiation37,363.441,022,126.23
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