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
| Term | Definition |
| The “Company”, “CMPort” or “we” | China Merchants Port Group Co., Ltd., formerly known as “Shenzhen Chiwan Wharf Holdings Limited” |
| CMG | China Merchants Group Co., Limited |
| CMG Hong Kong | China Merchants Group (H.K.) Limited, a CMG wholly-owned subsidiary in Hong Kong |
| CMPID | China Merchants Port Investment Development Company Limited (CMID), renamed as “China Merchants Investment Development Company Limited” on 8 July 2020 |
| CMPort Holdings | China Merchants Port Holdings Company Limited (00144.HK) |
| CWH (H.K.) | Chiwan Wharf Holdings (Hong Kong) Limited |
| Zhanjiang Port | Zhanjiang Port (Group) Co., Ltd. |
| Sinotrans Guangdong | Sinotrans Guangdong Co., Ltd. |
| Zhanjiang Infrastructure Investment | Zhanjiang Infrastructure Construction Investment Group Co., Ltd. |
| Broadford Global | Broadford Global Limited, a wholly-owned subsidiary of CMG Hong Kong |
| CMGD | China Merchants Gangtong Development (Shenzhen) Co., Ltd., a Broadford Global wholly-owned subsidiary in Shenzhen |
| CND Group | China Nanshan Development (Group) Inc. |
| CMB | China Merchants Bank Co., Ltd. |
| CMSK | China Merchants Shekou Industrial Zone Holdings Co., Ltd. |
| CM Qianhai Industrial | Shenzhen China Merchants Qianhai Industrial Development Co., Ltd. |
| SIPG | Shanghai International Port (Group) Co., Ltd. |
| Zhangzhou Port) | Zhangzhou China Merchants Port Co., Ltd. |
| Xiamen Port | Zhangzhou China Merchants Xiamen Port Affairs Co., Ltd. |
| Haixing Harbor | Shenzhen Haixing Harbor Development Co., Ltd. |
| Shantou Port | Shantou CMPort Group Co., Ltd. |
| Dalian Port | Dalian Port (PDA) Company Limited |
| Tianjin Port Container Terminal | Tianjin Port Container Terminal Co., Ltd. |
| CCT | Chiwan Container Terminal Co., Ltd., a majority-owned subsidiary of the Company |
| TCP | TCP Participa??es S.A. |
| CICT | Colombo International Container Terminals Ltd. |
| HIPG | Hambantota International Port Group |
| TICT | Tin-Can Island Container Terminal Ltd. |
| PDSA | Port de Djibouti S.A. |
| TL | Terminal Link S.A.S. |
| Kumport | Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim Sirketi |
| Port of Newcastle | Port of Newcastle |
| SASAC of the State Council | State-Owned Assets Supervision and Administration Commission of the State Council |
China Merchants Port Group Co., Ltd. Interim Report 2020
| CSRC | China Securities Regulation Commission |
| SZSE | Shenzhen Stock Exchange |
| CMG Finance | China Merchants Group Finance Co., Ltd. |
| The “Articles of Association” | The Articles of Association of China Merchants Port Group Co., Ltd. |
| The “Stock Listing Rules” | The Stock Listing Rules of the Shenzhen Stock Exchange |
| The cninfo website | www.cninfo.com.cn |
| RTG | Rubber Tyre Gantry |
| CM ePort | The wharf e-commerce platform, i.e. the unified customer service platform |
| TEU | Twenty Foot Equivalent Unit |
| RMB RMB’0,000 RMB’00,000,000 | Expressed in the Chinese currency of Renminbi Expressed in tens of thousands of Renminbi Expressed in hundreds of millions of Renminbi (unless otherwise specified) |
China Merchants Port Group Co., Ltd. Interim Report 2020
Part II Corporate Information and Key Financial InformationI Corporate Information
| Stock name | CM Port Group/ CM Port Group B | Stock code | 001872/201872 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 招商局港口集团股份有限公司 | ||
| Abbr. (if any) | 招商港口 | ||
| Company name in English (if any) | China Merchants Port Group Co., Ltd. | ||
| Abbr. (if any) | CMPort | ||
| Legal representative | Bai Jingtao | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Huang Chuanjing | Hu Jingjing |
| Address | 24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | 24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC |
| Tel. | +86 755 26828888 | +86 755 26828888 |
| Fax | +86 755 26886666 | +86 755 26886666 |
| Email address | Cmpir@cmhk.com | Cmpir@cmhk.com |
III 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 2020 | H1 2019 | Change (%) | |
| Operating revenue (RMB) | 5,922,497,158.48 | 5,834,353,421.33 | 1.51% |
| Net profit attributable to the listed company’s shareholders (RMB) | 632,798,585.83 | 2,299,181,330.61 | -72.48% |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 544,591,914.54 | 569,405,330.09 | -4.36% |
| Net cash generated from/used in operating activities (RMB) | 2,071,426,144.92 | 2,556,861,915.52 | -18.99% |
| Basic earnings per share (RMB/share) | 0.33 | 1.28 | -74.22% |
| Diluted earnings per share (RMB/share) | 0.33 | 1.28 | -74.22% |
| Weighted average return on equity (%) | 1.77% | 7.24% | -5.47% |
| 30 June 2020 | 31 December 2019 | Change (%) | |
| Total assets (RMB) | 163,011,419,765.59 | 156,696,917,845.87 | 4.03% |
| Equity attributable to the listed company’s shareholders (RMB) | 35,116,599,672.07 | 35,972,804,419.42 | -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
| Item | Amount | Note |
| 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 loss | 105,824,679.53 | - |
| 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 effects | 90,479,697.15 | - |
| Non-controlling interests effects (net of tax) | 242,596,506.97 | - |
| Total | 88,206,671.29 | -- |
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 Segments | Applications |
| Cargo handling and warehousing | Container handling and warehousing: the Company provides ship berthing, loading and unloading services to ship companies, offers container storage service to ship companies and cargo owners and provides overhead box services to tractor companies. The Company also engages in the businesses of division or merger of cargoes in containers, container leasing and container maintenance; Bulk cargo handling and warehousing: the Company is engaged in bulk cargo handling and transportation in port zones, as well as storage services in yards. The major types of cargoes handled include food, steel, woods and sandstones. |
| Ancillary port-related services | The ancillary port-related services of the Company mainly include tugboat berthing assistance and barge services at the arrival of ships to the ports, tallying |
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 operations | The Company provides various services for clients (including logistics companies, trading companies or cargo owners), for example, warehouse/yard leasing, loading and unloading in warehouses/yards, customs clearance and division or merger of cargoes at terminals. It also provides documentation services for tractors arriving or leaving the bonded logistics parks. |
2. Development stage and cyclical characteristic of the industry in which the Company operatesand its industry position during the reporting periodThe port industry is a crucial cornerstone industry for national economic and social progress,and 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 assets | Main reason for significant changes |
| Equity assets | No significant change |
| Fixed assets | No significant change |
| Intangible assets | No significant change |
| Construction in progress | No significant change |
2. Major Assets Overseas
√ Applicable □ Not applicable
| Asset | Source | Asset value (RMB’0,000) | Location | Operations | Control measures to protect asset safety | Return generated (RMB’0,000) | As % of the Company’s net asset value | Material impairment risk (yes/no) |
| Equity assets | Acquired via share offering | 13,512,483.99 | Hong Kong | Port investment and operations | Appointing director and senior management | 159,292.10 | 86.07% | No |
| Other information | N/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
| Item | For the first half of 2020 | For the first half of 2019 | Changes |
| Container throughput (’0,000 TEU) | 5,550 | 5,510 | 0.7% |
| Among which: Mainland China | 3,984 | 4,106 | -3.0% |
| Hong Kong and Taiwan | 341 | 355 | -3.8% |
| Overseas | 1,224 | 1,049 | 16.6% |
| Bulk cargo throughput (hundred million tonnes) | 2.20 | 2.43 | -9.5% |
| Among which: Mainland China | 2.17 | 2.40 | -9.5% |
| Overseas | 0.03 | 0.03 | 0% |
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 company | For the first half of 2020 | For the first half of 2019 | Changes | ||
| Pearl River Delta | Holding company | West Shenzhen Port Zone | 517 | 568 | -9.0% |
| Shunde New Port | 18 | 13 | 37.8% | ||
| Joint stock company | Chu Kong River Trade Terminal | 48 | 54 | -11.6% | |
| Yangtze River Delta | Joint stock company | SIPG Group | 2,006 | 2,154 | -6.8% |
| Ningbo Daxie | 148 | 164 | -10.0% | ||
| Bohai Rim | Joint stock company | Tianjin Port Container Terminal | 367 | 138 | 166.5% |
| QQCTU | 381 | 379 | 0.6% | ||
| Dalian Port | 360 | 507 | -28.9% | ||
| South-East region of Mainland China | Holding company | Zhangzhou Port | 16 | 19 | -16.4% |
| Shantou Port | 62 | 59 | 4.7% | ||
China Merchants Port Group Co., Ltd. Interim Report 2020
| South-West region of Mainland China | Holding company | Zhanjiang Port | 61 | 52 | 15.6% |
| Hong Kong and Taiwan | Holding company/ Joint stock company | CMCS/ Modern Terminals | 263 | 273 | -3.6% |
| Joint stock company | Taiwan Kao Ming Container | 78 | 82 | -4.4% | |
| Overseas | Holding company | CICT | 138 | 137 | 0.3% |
| TCP | 48 | 44 | 7.5% | ||
| LCT | 61 | 54 | 12.7% | ||
| Joint stock company | TL | 860 | 684 | 25.8% | |
| Kumport | 60 | 62 | -2.1% | ||
| PDSA | 42 | 45 | -6.7% | ||
| TICT | 16 | 24 | -33.6% | ||
| Total | 5,550 | 5,510 | 0.7% | ||
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 company | For the first half of 2020 | For the first half of 2019 | Changes | ||
| Pearl River Delta | Holding company | West Shenzhen Port Zone | 746 | 648 | 15.2% |
| Dongguan Machong | 770 | 614 | 25.4% | ||
| Shunde New Port | 154 | 99 | 55.4% | ||
| Joint stock company | Chu Kong Trade Terminal | 121 | 154 | -21.1% | |
| Yangtze River Delta | Joint stock company | SIPG Group | 3,473 | 6,175 | -43.8% |
| Bohai Rim | Joint stock company | QQTU | 788 | 764 | 3.1% |
| Qingdao Port Dongjiakou | 3,038 | 2,816 | 7.9% | ||
| Dalian Port | 6,794 | 6,304 | 7.8% | ||
| Laizhou Harbour Affairs | 978 | 1,119 | -12.6% | ||
| South-East region of Mainland China | Holding company | Zhangzhou Port | 252 | 457 | -44.9% |
| Xia Men Bay Terminals | 10 | 8 | 21.7% | ||
China Merchants Port Group Co., Ltd. Interim Report 2020
| Shantou Port | 160 | 392 | -59.1% | ||
| South-West region of Mainland China | Holding company | Zhanjiang Port | 4,425 | 4,431 | -0.1% |
| Overseas | Holding company | HIPG | 18 | 46 | -60.2% |
| Joint stock company | Kumport | 2 | 6 | -60.7% | |
| PDSA | 285 | 287 | -0.7% | ||
| Total | 22,014 | 24,320 | -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 2020 | H1 2019 | Change (%) | Main reason for change | |
| Operating revenue | 5,922,497,158.48 | 5,834,353,421.33 | 1.51% | - |
| Operating costs | 3,716,083,705.90 | 3,608,020,695.91 | 3.00% | - |
| Administrative expense | 737,700,277.37 | 647,244,718.36 | 13.98% | - |
| Finance costs | 841,659,933.37 | 873,109,624.88 | -3.60% | - |
| Income tax expense | 513,256,488.88 | 2,017,970,750.16 | -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 expense | 66,130,284.81 | 60,018,835.29 | 10.18% | - |
China Merchants Port Group Co., Ltd. Interim Report 2020
| Net cash generated from/used in operating activities | 2,071,426,144.92 | 2,556,861,915.52 | -18.99% | - |
| Net cash generated from/used in investing activities | -7,869,580,476.91 | 73,786,701.24 | -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 activities | 5,356,254,138.54 | -2,366,244,781.51 | 326.36% | 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 | -473,798,039.82 | 244,903,144.44 | -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 2020 | H1 2019 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 5,922,497,158.48 | 100% | 5,834,353,421.33 | 100% | 1.51% |
| By operating division | |||||
| Port operations | 5,658,802,385.35 | 95.55% | 5,558,945,151.95 | 95.28% | 1.80% |
| Bonded logistics service | 191,942,345.76 | 3.24% | 198,548,490.32 | 3.40% | -3.33% |
| Property development and investment | 71,752,427.37 | 1.21% | 76,859,779.06 | 1.32% | -6.65% |
| By operating segment | |||||
| Mainland China, Hong Kong and Taiwan | 4,215,085,950.68 | 71.17% | 4,260,737,809.93 | 73.03% | -1.07% |
| Other countries and regions | 1,707,411,207.80 | 28.83% | 1,573,615,611.40 | 26.97% | 8.50% |
Operating division, product category or operating segment contributing over 10% of operating revenue oroperating profit:
√ Applicable □ Not applicable
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Port operations | 5,658,802,385.35 | 3,489,416,067.87 | 38.34% | 1.80% | 2.95% | -0.69% |
China Merchants Port Group Co., Ltd. Interim Report 2020
| By operating segment | ||||||
| Mainland China, Hong Kong and Taiwan | 4,215,085,950.68 | 2,847,703,993.02 | 32.44% | -1.07% | 1.75% | -1.87% |
| Other countries and regions | 1,707,411,207.80 | 868,379,712.88 | 49.14% | 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
| Amount | As % of profit before tax | Source/Reason | Recurrent or not | |
| Return on investment | 1,505,341,388.78 | 65.14% | Share of profits of joint ventures and associates, mainly share of the net profit of SIPG | Yes |
| 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 assets | No |
| Asset disposal income | 560,256,383.38 | 24.24% | Compensation from the government for transferring the land in Zhuchi District of Shantou Port to the government as its reserve | No |
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 30 June 2020 | 30 June 2019 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 7,262,584,582.86 | 4.46% | 7,055,470,795.98 | 4.65% | -0.19% | - |
| Accounts receivable | 1,690,223,255.75 | 1.04% | 1,826,407,082.63 | 1.20% | -0.16% | - |
| Inventories | 190,316,341.50 | 0.12% | 177,691,083.71 | 0.12% | 0.00% | - |
| Investment property | 5,664,897,398.20 | 3.48% | 5,860,454,152.44 | 3.86% | -0.38% | - |
| Long-term equity investments | 62,036,426,397.29 | 38.06% | 49,101,264,546.66 | 32.36% | 5.70% | - |
China Merchants Port Group Co., Ltd. Interim Report 2020
| Fixed assets | 26,460,710,461.56 | 16.23% | 25,605,443,597.36 | 16.87% | -0.64% | - |
| Construction in progress | 6,927,623,556.76 | 4.25% | 7,255,432,536.56 | 4.78% | -0.53% | - |
| Short-term borrowings | 15,663,707,514.47 | 9.61% | 7,566,020,460.46 | 4.99% | 4.62% | Issuance of short-term commercial papers for raising matching funds |
| Long-term borrowings | 5,921,573,954.17 | 3.63% | 7,456,687,214.19 | 4.91% | -1.28% | - |
| Other receivables | 3,632,734,940.15 | 2.23% | 8,060,039,732.79 | 5.31% | -3.08% | Compensation from the government for transferring land to it as its reserve and dividends receivable from associate |
| Other current assets | 2,800,948,596.59 | 1.72% | 251,682,098.85 | 0.17% | 1.55% | New structured deposit |
| Long-term receivables | 4,550,524,916.21 | 2.79% | 940,430,346.97 | 0.62% | 2.17% | New loan financing for project |
| Taxes payable | 2,084,976,755.33 | 1.28% | 1,530,590,561.50 | 1.01% | 0.27% | Change in business |
| Other current liabilities | 3,190,011,929.49 | 1.96% | 1,456,067,284.82 | 0.96% | 1.00% | New issue of super short-term commercial papers |
| Long-term payables | 1,931,590,951.83 | 1.18% | 1,269,553,048.04 | 0.84% | 0.34% | Increase in lease assets sold under leaseback agreements |
| Deferred income | 1,128,510,809.76 | 0.69% | 2,161,007,055.37 | 1.42% | -0.73% | Transfer to other income over time |
| Other non-current liabilities | 2,661,536,365.95 | 1.63% | 3,978,432,377.93 | 2.62% | -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
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes through equity | Impairment allowance made in the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other changes | Ending 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 | - | 27,686,221.11 | 2,633,657,498.81 |
| Investments in other equity instruments | 163,561,272.00 | - | -112,500.00 | - | - | - | -37,500.00 | 163,411,272.00 |
| Subtotal of | 2,548,924,809.39 | -138,571,248.16 | -112,500.00 | - | 359,178,988.47 | - | 27,648,721.11 | 2,797,068,770.81 |
China Merchants Port Group Co., Ltd. Interim Report 2020
| financial assets | ||||||||
| Accounts receivable financing | 260,760,537.45 | - | - | - | - | - | -9,447,749.96 | 251,312,787.49 |
| Subtotal of the above | 2,809,685,346.84 | -138,571,248.16 | -112,500.00 | - | 359,178,988.47 | - | 18,200,971.15 | 3,048,381,558.30 |
| Financial liabilities | 4,059,686,208.87 | -157,164,405.14 | - | - | - | 755,393,933.51 | -744,697,868.17 | 2,716,758,812.33 |
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 (%) |
| 5,230,130,246.69 | 5,253,873,831.22 | -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
| Item | Way of investment | Fixed assets investment or not | Industry involved | Input amount in the Reporting Period | Accumulative actual input amount as of the period-end | Funding source | Progress | Expected return | Accumulative realized return as of the period-end | Reason for failing to reach the scheduled progress and expected return |
China Merchants Port Group Co., Ltd. Interim Report 2020
| Transformation project of Mawan Smart Port | Self-built | Yes | Support activities for water transportation | 139,286,182.07 | 1,198,275,941.06 | Self-funded and loan-funded | 42.74% | 0.00 | 0.00 | N/A |
| Shantou Port Guangdong-Macau Area Phase II project | Self-built | Yes | Support activities for water transportation | 176,979,681.55 | 1,549,125,340.11 | Self-funded and loan-funded | 88.00% | 0.00 | 0.00 | N/A |
| Zhanjiang Port Xiashan Port General Wharf | Self-built | Yes | Support activities of water transportation | 25,510,948.79 | 259,819,857.81 | Self-funded and loan-funded | 35.22% | 0.00 | 0.00 | N/A |
| General Cargo project of Zhanjiang Port Donghai Island | Self-built | Yes | Support activities of water transportation | - | 338,959,000.00 | Self-funded and loan-funded | 34.04% | 0.00 | 0.00 | N/A |
| Project of berth in Xiamen Port Houshi Port | Self-built | Yes | Support activities of water transportation | 11,337,473.41 | 982,408,653.24 | Self-funded and loan-funded | 98.00% | 0.00 | 0.00 | N/A |
| Total | -- | -- | -- | 353,114,285.82 | 4,328,588,792.22 | -- | -- | 0.00 | 0.00 | -- |
4. Financial Assets at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Type of assets | Initial investment cost | Gain/loss on fair value changes in the Reporting Period | Accumulated fair value changes recorded in equity | Purchased in the Reporting Period | Sold in the Reporting Period | Accumulated return on investment | Ending amount | Funding source |
| Stock | 1,411,818,972.71 | -138,571,248.16 | -112,500.00 | 359,178,988.47 | - | 71,163,762.03 | 2,628,941,749.73 | Self-funded |
| Other | 40,770,893.95 | - | - | - | - | 131.33 | 168,127,021.08 | Self-funded |
| Total | 1,452,589,866.66 | -138,571,248.16 | -112,500.00 | 359,178,988.47 | - | 71,163,893.36 | 2,797,068,770.81 | -- |
5. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
| Variety of security | Code of security | Name of security | Initial investment cost | Accounting measurement method | Beginning carrying amount | Gain/loss on fair value changes in the Reporting Period | Accumulated fair value changes recorded in equity | Purchased in the Reporting Period | Sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying amount | Accounting title | Funding source |
| Stock | 601018 | Ningbo Port | 951,362,083.61 | Fair value method | 1,548,914,671.20 | -106,073,904.50 | - | 359,178,988.47 | - | 40,087,733.67 | 1,826,650,083.29 | Held-for-trading financial assets | Self-funded |
| Stock | 6198 | Qingdao Port | 124,405,138.80 | Fair value method | 204,263,917.11 | -52,657,343.66 | - | - | - | 8,182,428.37 | 154,662,466.44 | Held-for-trading financial assets | Self-funded |
| Stock | 601298 | Qingdao Port | 331,404,250.30 | Fair value method | 616,000,000.00 | 20,160,000.00 | - | - | - | 22,433,600.00 | 636,160,000.00 | Held-for-trading financial assets | Self-funded |
| Stock | 600377 | Jiangsu Expressway | 1,120,000.00 | Fair value method | 11,220,000.00 | - | -112,500.00 | - | - | 460,000.00 | 11,070,000.00 | Investment in other equity instruments | Self-funded |
China Merchants Port Group Co., Ltd. Interim Report 2020
| Stock | 400032 | Petrochemical A1 | 3,500,000.00 | Fair value method | 382,200.00 | - | - | - | - | 382,200.00 | Investment in other equity instruments | Self-funded | |
| Stock | 400009 | Guang Jian 1 | 27,500.00 | Fair value method | 17,000.00 | - | - | - | - | 17,000.00 | Investment in other equity instruments | Self-funded | |
| Total | 1,411,818,972.71 | -- | 2,380,797,788.31 | -138,571,248.16 | -112,500.00 | 359,178,988.47 | - | 71,163,762.04 | 2,628,941,749.73 | -- | -- | ||
(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
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| China Merchants Port Holdings Company Limited | Subsidiary | Port operations, bonded logistics and property investment | HK$40,614,228,170.92 | 135,124,839,887.28 | 80,406,895,397.95 | 3,692,963,958.88 | 1,957,266,280.02 | 1,592,920,984.37 |
| Shanghai International Port (Group) Co., Ltd. | Joint stock company | Port and container terminal operations | 23,173,674,650.00 | 159,502,438,035.66 | 91,183,089,439.88 | 12,038,672,650.45 | 5,106,991,318.27 | 4,328,854,036.44 |
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
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 1st Extraordinary General Meeting of 2020 | Extraordinary General Meeting | 88.69% | 3 February 2020 | 4 February 2020 | See the resolution announcement (No. 2020-011) on www.cninfo.com.cn |
| The 2019 Annual General Meeting | Annual General Meeting | 90.18% | 22 May 2020 | 23 May 2020 | See 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 information | Amount involved (RMB’0,000) | Whether formed expected liabilities | Progress | The results and influence of lawsuits (arbitrations) | Execution of judgment | Disclosure date | Index to disclosed information |
| The summary of Brazil TCP cases (note) | 2,200.90 | Yes | Partially unsettled | Low risk | - | - | - |
| The summary of other matters not met disclosure standards of major lawsuits (arbitrations) | 5,079.06 | No | Partially settled, partially unsettled | Low 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 party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Transaction price | Total value (RMB’0,000) | As % of the total value of all the same-type transactions | Approved transaction line (RMB’0,000) | Over the approved line or not | Way of settlement | Obtainable market price for same-type transactions | Disclosure date | Index to disclosed information |
| CHINA COSCO SHIPPING GROUP and its subsidiaries | Affiliated legal person | Render service | Lease, labor service, testing fee, etc. | Market price | 25,775.39 | 25,775.39 | 56.50% | 37,799.33 | No | Settled monthly | 25,775.39 | 16 April 2020 | www.cninfo.com.cn (Announcement No.2020-031) |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. and its subsidiaries | Under the control of ultimate shareholder | Render service to related party and lease land to related party | Labor cost, lease expense of land and houses | Market price | 2,287.35 | 2,287.35 | 13.84% | 16,127.05 | No | Settled monthly | 2,287.35 | ||
| Antong Holdings Co., Ltd. and its subsidiaries | Affiliated legal person | Render service to related party and receive service | Labor cost, freight forwarding agent, Port service charge | Market price | 6,174.01 | 6,174.01 | 13.53% | 9,154.3 | No | Settled monthly | 6,174.01 | ||
| Total | -- | -- | 34,236.75 | -- | 63,080.68 | -- | -- | -- | -- | -- | |||
| Large-amount sales return in detail | None | ||||||||||||
| Give the actual situation in the Reporting Period (if any) where an estimate had been made for the total value of continuing related-party transactions by type to occur in the Reporting Period | The Proposal on Recognition of 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-investor | Related relationship | Name of investees | Main business of investees | Registered 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 shareholder | China 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 departments | 450,000 | 450,276.51 | 450,207.39 | 207.39 |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Under the control of ultimate shareholder | China 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 departments | 450,000 | 450,276.51 | 450,207.39 | 207.39 |
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 party | Related relationship | Forming reason | Whether there is occupation on non-operating capital or not | Beginning balance (RMB’0,000) | Increased in the Reporting Period (RMB’0,000) | Recovered in the Reporting Period (RMB’0,000) | Interest rate | Interest in the Reporting Period (RMB’0,000) | Ending balance (RMB’0,000) |
| China Merchants Group Finance Co., Ltd. | Other company under the same control of controlling shareholder | Bank deposits | No | 89,006.52 | 207,825.16 | 193,202.86 | 2.02% | 484.06 | 103,628.82 |
| China Merchants Bank | The ultimate controlling shareholder has major influence on it | Bank deposits | No | 298,084.80 | 1,055,354.33 | 1,204,796.13 | 1.91% | 1,416.18 | 148,643.00 |
China Merchants Port Group Co., Ltd. Interim Report 2020
| Effects of credits with related parties on the Company’s operating results and financial conditions | The above credits receivable with related parties were mainly deposits in financial institutions which has no major influence on the Company’s operating results and financial conditions. |
Liabilities payable with related parties:
| Related party | Related relationship | Forming reason | Beginning balance (RMB’0,000) | Increased in the Reporting Period (RMB’0,000) | Recovered in the Reporting Period (RMB’0,000) | Interest rate | Interest in the Reporting Period (RMB’0,000) | Ending balance (RMB’0,000) |
| China Merchants Group Finance Co., Ltd. | Other company under the same control of controlling shareholder | Borrowing | 121,756.34 | 44,361 | 100,171.3 | 4.25% | 1,705.49 | 65,945.67 |
| China Merchants Bank | The ultimate controlling shareholder has major influence on it | Borrowing | 9,009.3 | 0 | 3,709.3 | 3.41% | 151.05 | 5,300 |
| Effects of liabilities with related parties on the Company’s operating results and financial conditions | The above liabilities payable with related parties were mainly financial institution loans which had no major influence on the Company’s operating results and financial conditions. | |||||||
5. Other Major Related-Party Transactions
□ 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 entity | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Terminal Link SAS | N/A | 8,062.21 | 11 June 2013 | 8,062.21 | General guarantee | About 20 years | Not | Not |
| KHOR AMBADO FZCO | 30 March 2019 | 20,319.84 | 24 May 2019 | 12,232.46 | Joint-liability | About 13 years | Not | Yes |
| 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) | 28,382.05 | Total 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 entity | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Chiwan Wharf Holdings (Hong Kong) Limited | 30 March 2019 | 400,000 | 31 July 2019 | 300,000 | Joint-liability | About 1 year | Not | Not |
| Chiwan Wharf Holdings (Hong Kong) Limited | 16 April 2020 | 400,000 | - | - | - | - | - | - |
| Zhanjiang Port (Group) Co., Ltd. | 16 April 2020 | 200,000 | - | - | - | - | - | - |
| China Merchants Port (Zhoushan) | 30 March 2019 | 12,800 | - | - | - | - | - | - |
China Merchants Port Group Co., Ltd. Interim Report 2020
| RoRo Logistics Co., Ltd. | ||||||||
| Total approved line for such guarantees in the Reporting Period (B1) | 600,000 | Total actual amount of such guarantees in the Reporting Period (B2) | - | |||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 1,012,800 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 300,000 | |||||
| Guarantees provided between subsidiaries | ||||||||
| Guarantee-receiving entity | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| China Merchants International Terminal (Qingdao) Co., Ltd. | 16 April 2020 | 59,010 | - | - | - | - | - | - |
| China Merchants International Terminal (Qingdao) Co., Ltd.* | 30 March 2019 | 70,000 | - | - | - | - | - | - |
| China Merchants International Terminal (Qingdao) Co., Ltd.* | 30 March 2019 | 10,000 | - | - | - | - | - | - |
| Shenzhen Jinyu Rongtai Investment Development Co., Ltd. | N/A | 80,000 | 12 January 2017 | 74,000 | Joint-liability | About 10 years | Not | Not |
| Shenzhen Jinyu Rongtai Investment Development Co., Ltd. | 30 March 2019 | 100,000 | - | - | - | - | - | - |
| China Merchants International (China) Investment Co., Ltd. | N/A | 2,500 | 30 June 2016 | 2,500 | Joint-liability | About 10 years | Not | Not |
| China Merchants Finance Company Limited | 4 May 2012 | 352,775 | 4 May 2012 | 352,775 | General guarantee | About 10 years | Not | Not |
| China Merchants Finance Company Limited | 3 August 2015 | 352,775 | 3 August 2015 | 352,775 | General guarantee | About 10 years | Not | Not |
| China Merchants Finance Company Limited | 3 August 2015 | 141,110 | 3 August 2015 | 141,110 | General guarantee | About 5 years | Not | Not |
| CMHI Finance (BVI) Co., Ltd | 6 August 2018 | 634,995 | 6 August 2018 | 634,995 | General guarantee | About 5 years | Not | Not |
| CMHI Finance (BVI) Co., Ltd | 6 August 2018 | 423,330 | 6 August 2018 | 423,330 | General guarantee | About 10 years | Not | Not |
China Merchants Port Group Co., Ltd. Interim Report 2020
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED* | 30 March 2019 | 200,000 | - | - | - | - | - | - |
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 246,871.95 | 16 September 2012 | 7,955.05 | General guarantee | About 13 years | Not | Not |
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 10,583.25 | 16 September 2012 | 10,583.25 | General guarantee | Infinite | Not | Not |
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 17,638.75 | 16 September 2012 | 17,638.75 | General guarantee | Infinite | Not | Not |
| Lome Container Terminal Co., Ltd. | N/A | 7,983.2 | June 2015 | 1,550.74 | General guarantee | About 9 years | Not | Not |
| Lome Container Terminal Co., Ltd. | N/A | 7,983.2 | June 2015 | 1,550.74 | General guarantee | About 9 years | Not | Not |
| Lome Container Terminal Co., Ltd. | N/A | 7,983.2 | June 2015 | 1,550.74 | General guarantee | About 9 years | Not | Not |
| China Merchants Port Development (Shenzhen) Co., Ltd. | N/A | 320,000 | 31 July 2017 | 106,000 | Joint-liability | About 5 years | Not | Not |
| China Merchants Port Development (Shenzhen) Co., Ltd.* | 30 March 2019 | 100,000 | - | - | - | - | - | - |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 41,184 | 19 April 2018 | 37,065.6 | General guarantee | About 6 years | Not | Not |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 58,762.29 | 7 November 2016 | 58,762.29 | General guarantee | About 6 years | Not | Not |
| Shenzhen Haixing Harbor Development Co., Ltd. * | 30 March 2019 | 219,090 | 26 June 2019 | 16,150.08 | Joint-liability | About 18 years | Not | Not |
| HIPG, etc.* | 30 March 2019 | 419,500 | - | - | - | - | - | - |
| Zhanjiang Port (Group) Co., Ltd.* | 30 March 2019 | 80,000 | - | - | - | - | - | - |
| Zhanjiang Port (Group) Co., Ltd. | 16 April 2020 | 80,000 | - | |||||
| Hambantota International Port Group (Pvt) Ltd. | 16 April 2020 | 250,000 | - | |||||
| CMHI Finance | 16 April | 500,000 | - |
China Merchants Port Group Co., Ltd. Interim Report 2020
| (BVI) Co., Ltd | 2020 | ||||||||
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | 16 April 2020 | 90,000 | - | ||||||
| Kong Rise Development Limited | 16 April 2020 | 110,000 | - | ||||||
| Total approved line for such guarantees in the Reporting Period (C1) | 1,089,010 | Total actual amount of such guarantees in the Reporting Period (C2) | |||||||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | 4,994,074.84 | Total 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) | 1,689,010 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | - | ||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 6,035,256.89 | Total 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 value | 72.92% | ||||||||
| 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 announcement | Title of the announcement |
| 2020-001 | 3 January 2020 | Announcement on Approval of Stock Option Incentive Plan by State-owned Assets Supervision and Administration Commission of the State Council |
| 2020-002 | 10 January 2020 | Announcement on Resolutions of the 1st Special Meeting of the 9th Board of Directors in 2020 |
| 2020-003 | 10 January 2020 | Announcement on Resolutions of the 1st Special Meeting of the 9th Supervisory Committee in 2020 |
| 2020-004 | 10 January 2020 | Announcement on Notes and Revision of Stock Options Incentive Plan of China Merchants Port Group Co., Ltd. (Phase I) (Revised Draft) and its Abstract |
| 2020-005 | 10 January 2020 | Reminder of Convening the 1st Extraordinary General Meeting of 2020 |
| 2020-006 | 10 January 2020 | Report of the Public Call for Proxy Voting Rights of Independent Directors |
| 2020-007 | 16 January 2020 | Announcement on Voluntary Information Disclosure of Business Volume Data of December 2019 |
| 2020-008 | 20 January 2020 | Announcement on an Estimated Growth in 2019 Annual Results |
| 2020-009 | 21 January 2020 | Announcement on Notes of the Supervisory Committee on the Review and Publicity of the List of Incentive Objects under the Stock Option Plan (Phase I) |
| 2020-010 | 22 January 2020 | Announcement on the Change of the Company’s Registered Information with the Industrial and Commercial Administration |
| 2020-011 | 4 February 2020 | Announcement on Resolutions of the 1st Extraordinary General Meeting of 2020 |
| 2020-012 | 4 February 2020 | Announcement on Resolutions of the 2nd Special Meeting of the 9th Board of Directors in 2020 |
| 2020-013 | 4 February 2020 | Announcement on Resolutions of the 2nd Special Meeting of the 9th Supervisory Committee in 2020 |
| 2020-014 | 4 February 2020 | Announcement on the Grant of Stock Option (the First Grant) to Incentive Objects of the Stock Option Incentive Plan of the Company |
| 2020-015 | 4 February 2020 | Self-inspection Report on the Trading of the Company’s Shares by Insiders and Incentive Objects of the Stock Option Incentive Plan (Phase I) |
| 2020-016 | 4 February 2020 | Announcement on Resignation of Chairman of the Board and Election of New Chairman of the Board |
| 2020-017 | 14 February 2020 | Announcement on Voluntary Information Disclosure of Business Volume Data of January 2020 |
| 2020-018 | 21 February 2020 | Reminder of the Issuance of 2020 Phase I Super-short-term Financing Bonds (Epidemic Prevention Bond) |
| 2020-019 | 27 February 2020 | Announcement on Issued Result of 2020 Phase I Super-short-term Financing Bonds (Epidemic Prevention Bond) |
| 2020-020 | 14 March 2020 | Announcement on Completion of the Grant of Stock Option (the First Grant) under the Stock Option Incentive Plan (Phase I) of the Company |
| 2020-021 | 14 March 2020 | Announcement on Voluntary Information Disclosure of Business Volume Data of February 2020 |
| 2020-022 | 30 March 2020 | 2019 Annual Results Preview |
China Merchants Port Group Co., Ltd. Interim Report 2020
| 2020-023 | 30 March 2020 | Announcement on the Disclosure of the 2019 Annual Results by the Majority-Owned Subsidiary (Unaudited) |
| 2020-024 | 7 April 2020 | Announcement on Resolutions of the 3rd Special Meeting of the 9th Board of Directors in 2020 |
| 2020-025 | 7 April 2020 | Announcement on Establishment Joint Ventures by Joint Investment with Related Party and Related-party Transactions |
| 2020-026 | 8 April 2020 | Announcement on Retirement and Application of Resignation of Employee Supervisor |
| 2020-027 | 11 April 2020 | 2020 First Quarter Performance Forecast |
| 2020-028 | 16 April 2020 | Announcement on Resolutions of the 7th Meeting of the 9th Board of Directors |
| 2020-029 | 16 April 2020 | Announcement on Resolutions of the 7th Special Meeting of the 9th Supervisory Committee |
| 2020-030 | 16 April 2020 | Abstract of 2019 Annual Report (Chinese Version) Abstract of 2019 Annual Report (English Version) |
| 2020-031 | 16 April 2020 | Announcement on the Confirmation of the Continuing Related-Party Transactions in 2019 and the Estimation of Such Transactions in 2020 |
| 2020-032 | 16 April 2020 | Announcement on the Related-Party Transaction Regarding Making Deposits in and Obtaining Loans from China Merchants Bank in 2020 |
| 2020-033 | 16 April 2020 | Announcement 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 |
| 2020-034 | 16 April 2020 | Announcement on 2019 Profit Distribution Plan |
| 2020-035 | 16 April 2020 | Special Report on Deposit and Usage of Raised Fund in 2019 |
| 2020-036 | 16 April 2020 | Announcement on Reappointment of Accounting Firm in 2020 |
| 2020-037 | 16 April 2020 | Announcement on Changes in Accounting Estimates of Depreciation Period of Partial Fixed Assets |
| 2020-038 | 16 April 2020 | Announcement on Providing Financial Aid by Majority-owned Subsidiaries |
| 2020-039 | 16 April 2020 | Announcement on the Disclosure of the 2019 Annual Results by a Majority-Owned Subsidiary |
| 2020-040 | 16 April 2020 | Announcement on the Online Investor Communication on the 2019 Annual Results to Be Held |
| 2020-041 | 16 April 2020 | Announcement on Voluntary Information Disclosure of Business Volume Data of March 2020 |
| 2020-042 | 24 April 2020 | Reminder of the Issuance of 2020 Phase II Super-short-term Financing Bonds |
| 2020-043 | 30 April 2020 | Announcement on the Resolutions of the 4th Extraordinary Meeting of the 9th Board of Directors of 2020 |
| 2020-044 | 30 April 2020 | The Text of the First Quarter Report 2020 (Chinese Version) The Text of the First Quarter Report 2020 (English Version) |
| 2020-045 | 30 April 2020 | Announcement on Providing Financial Aid for Subsidiaries and Related-party Transactions |
| 2020-046 | 30 April 2020 | Reminder of Convening the 2019 Annual General Meeting |
| 2020-047 | 30 April 2020 | Announcement on Resignation of Chief Financial Officer |
| 2020-048 | 6 May 2020 | Announcement on Issue Results of 2020 Phase II Super-short-term Financing Bonds |
| 2020-049 | 16 May 2020 | Announcement on Voluntary Information Disclosure of Business Volume Data of April 2020 |
| 2020-050 | 23 May 2020 | Announcement on Resolutions of the 2019 Annual General Meeting |
| 2020-051 | 23 May 2020 | Announcement on Resolutions of the 1st Meeting of the 10th Board of Directors |
| 2020-052 | 23 May 2020 | Announcement on Resolutions of the 1st Meeting of the 10th Supervisory Committee |
China Merchants Port Group Co., Ltd. Interim Report 2020
| 2020-053 | 23 May 2020 | Announcement on Completion of General Election of the Board of Directors and Supervisory Committee and Appointment of Senior Executives and Securities Affairs Representatives |
| 2020-054 | 2 June 2020 | Reminder of the Issuance of 2020 Phase III Super-short-term Financing Bonds |
| 2020-055 | 8 June 2020 | Announcement on Issue Results of 2020 Phase III Super-short-term Financing Bonds |
| 2020-056 | 12 June 2020 | Announcement 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
| Date | Place | Way of communication | Type of communication party | Object of communication | Index to basic information of researches |
| 16 April 2020 | China Merchants Port Building | Teleconferencing | Institution | Industrial 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 2020 | China Merchants Port Building | One-on-one meeting | Institution | Golden Eagle Fund Baoying Fund |
| 1 January 2020 to 30 June 2020 | China Merchants Port Building | By phone, or written inquiry (the EasyIR platform of SZSE | Individual | - |
China Merchants Port Group Co., Ltd. Interim Report 2020
| or email) | |||
| Times of communications | 74 | ||
| Number of institutions communicated with | 32 |
| Number of individuals communicated with | 72 |
| Number of other communication parties | 0 |
| Tip-offs or leakages of substantial confidential information during the communications | No |
(2) From the End of the Reporting Period to the Disclosure Date of this Report
| Date | Place | Way of communication | Type of the communication party | Communication party | Main discussions, materials provided and index to the relevant information |
| 9 July 2020 | China Merchants Port Plaza | One-on-one meeting | Institution | Haitong Securities, Golden Eagle | Main 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 2020 | China Merchants Port Plaza | By phone or written inquiry (the EasyIR platform of SZSE or email) | Individual | - | |
| Times of communications | 18 | ||||
| Number of institutions communicated with | 2 | ||||
| Number of individuals communicated with | 17 | ||||
| Number of other communication parties | 0 | ||||
| Tip-offs or leakages of substantial confidential information during the communications | No | ||||
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
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Deposits in China Merchants Group Finance Co., Ltd. | 89,006.52 | 207,825.16 | 193,202.86 | 103,628.82 |
| II. Loans provided by China Merchants Group Finance Co., Ltd. | 121,756.34 | 44,361.00 | 100,171.30 | 65,945.67 |
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
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I. Restricted shares | 1,277,770,996 | 66.47% | 0 | 0 | 0 | 10,812 | 10,812 | 1,277,781,808 | 66.47% |
| 1. Shares held by state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shares held by state-owned legal person | 128,952,746 | 6.71% | 0 | 0 | 0 | 0 | 0 | 128,952,746 | 6.71% |
| 3. Shares held by other domestic investors | 169,602 | 0.01% | 0 | 0 | 0 | 10,812 | 10,812 | 180,414 | 0.01% |
| Including: Shares held by domestic legal person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic natural person | 169,602 | 0.01% | 0 | 0 | 0 | 10,812 | 10,812 | 180,414 | 0.01% |
| 4. Shares held by foreign investors | 1,148,648,648 | 59.75% | 0 | 0 | 0 | 0 | 0 | 1,148,648,648 | 59.75% |
| Including: Shares held by foreign legal person | 1,148,648,648 | 59.75% | 0 | 0 | 0 | 0 | 0 | 1,148,648,648 | 59.75% |
| Shares held by foreign natural person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| II. Unrestricted shares | 644,594,128 | 33.53% | 0 | 0 | 0 | -10,812 | -10,812 | 644,583,316 | 33.53% |
| 1. RMB ordinary shares | 464,858,324 | 24.18% | 0 | 0 | 0 | 0 | 0 | 464,858,324 | 24.18% |
| 2. Domestically listed foreign shares | 179,735,804 | 9.35% | 0 | 0 | 0 | -10,812 | -10,812 | 179,724,992 | 9.35% |
| 3. Overseas listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Other | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total shares | 1,922,365,124 | 100.00% | 0 | 0 | 0 | 0 | 0 | 1,922,365,124 | 100.00% |
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 shareholders | Number of restricted shares at the period-begin | Number of released restricted shares | Number of increased restricted shares | Number of restricted shares at the period-end | Reason for restriction | Date of restriction release |
| China Merchants Port Investment Development Company Limited | 1,148,648,648 | 0 | 0 | 1,148,648,648 | According to relevant laws and regulations and the shareholder commitment | June 2022 |
| SHENZHEN INFRASTRUCTURE INVESTMENT FUND-SHENZHEN INFRASTRUCTURE INVESTMENT FUND PARTNERSHIP (LIMITED PARTNERSHIP) | 64,850,182 | 0 | 0 | 64,850,182 | According to relevant laws and regulations and the shareholder commitment | November 2020 |
| CHINA-AFRICA DEVELOPMENT FUND | 64,102,564 | 0 | 0 | 64,102,564 | According to relevant laws and regulations and the shareholder commitment | November 2020 |
| Zheng Shaoping | 9,496 | 0 | 0 | 9,496 | According to the Articles of Association and the relevant laws and regulations | - |
| Yuan Yuhui | 10,530 | 0 | 3,510 | 14,040 | According to the Articles of Association and the relevant laws | December 2020 |
China Merchants Port Group Co., Ltd. Interim Report 2020
| and regulations | ||||||
| Ni Keqin | 21,909 | 0 | 7,302 | 29,211 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Zhang Jianguo | 55,712 | 0 | 0 | 55,712 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Zhao Chaoxiong | 48,716 | 0 | 0 | 48,716 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Wang Yongli | 3,739 | 0 | 0 | 3,739 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Yao Shenglan | 19,500 | 0 | 0 | 19,500 | According to the Articles of Association and the relevant laws and regulations | December 2020 |
| Total | 1,277,770,996 | 0 | 10,812 | 1,277,781,808 | -- | -- |
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-end | 34,601 | Number 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 shareholder | Nature of shareholder | Shareholding percentage | Total ordinary shares held at the period-end | Increase/decrease in the Reporting Period | Restricted ordinary shares held | Unrestricted ordinary shares held | Shares in pledge or frozen | ||
| China Merchants Port Investment Development Company Limited | Foreign legal person | 59.75% | 1,148,648,648 | 0 | 1,148,648,648 | 0 | 0 | ||
China Merchants Port Group Co., Ltd. Interim Report 2020
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | State-owned legal person | 19.29% | 370,878,000 | 0 | 0 | 370,878,000 | 0 |
| SHENZHEN INFRASTRUCTURE INVESTMENT FUND-SHENZHEN INFRASTRUCTURE INVESTMENT FUND PARTNERSHIP (LIMITED PARTNERSHIP) | Domestic non-state-owned legal person | 3.37% | 64,850,182 | 0 | 64,850,182 | 0 | 0 |
| CHINA-AFRICA DEVELOPMENT FUND | State-owned legal person | 3.33% | 64,102,564 | 0 | 64,102,564 | 0 | 0 |
| BROADFORD GLOBAL LIMITED | State-owned legal person | 2.88% | 55,314,208 | 0 | 0 | 55,314,208 | 0 |
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | Foreign legal person | 1.17% | 22,425,289 | -7,551,307 | 0 | 22,425,289 | Unknown |
| NORGES BANK | Foreign legal person | 0.15% | 2,802,863 | 0 | 0 | 2,802,863 | Unknown |
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | State-owned legal person | 0.13% | 2,507,373 | -5,982 | 0 | 2,507,373 | Unknown |
| MAI SHUQING | Domestic natural person | 0.12% | 2,376,747 | 0 | 0 | 2,376,747 | Unknown |
| ICBC- Fullgoal China Securities Dividend Index Strengthen Securities Investment Fund | Domestic non-state-owned legal person | 0.08% | 1,581,401 | 321,300 | 0 | 1,581,401 | Unknown |
| 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 above | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a majority-owned subsidiary of Broadford Global Limited, and Broadford Global Limited is the controlling shareholder of China Merchants 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 shareholder | Unrestricted ordinary shares held at the period-end | Shares by type | |
| Type | Shares | ||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | 370,878,000 | RMB ordinary share | 370,878,000 |
| BROADFORD GLOBAL LIMITED | 55,314,208 | Domestically listed foreign share | 55,314,208 |
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | 22,425,289 | Domestically listed foreign share | 22,425,289 |
| NORGES BANK | 2,802,863 | Domestically listed foreign share | 2,802,863 |
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | 2,507,373 | Domestically listed foreign share | 2,507,373 |
| MAI SHUQING | 2,376,747 | RMB ordinary share | 2,376,747 |
| ICBC- Fullgoal China Securities Dividend Index Strengthen Securities Investment Fund | 1,581,401 | RMB ordinary share | 1,581,401 |
| SHEN HUAILING | 1,519,849 | Domestically listed foreign share | 1,519,849 |
| Hong Kong Securities Clearing Company Ltd. | 1,238,979 | RMB ordinary share | 1,238,979 |
| LIN JIANJUAN | 1,212,700 | RMB ordinary share | 1,212,700 |
| 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 shareholders | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a majority-owned subsidiary of Broadford Global Limited. The Company does not know whether the other unrestricted shareholders are related parties or not. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) | 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
| Name | Office title | Incumbent/Former | Beginning 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 Renjie | Chairman of the Board | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Bai Jingtao | Vice Chairman of the Board and CEO | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Yan Shuai | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Su Jian | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Song Dexing | Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zhang Yi | Director, COO and GM | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Gao Ping | Independent director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wang Zhenmin | Independent director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Li Qi | Independent director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Liu Yingjie | Chairman of the Supervisory Committee | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Hu Qin | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Yang Yuntao | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Gong Man | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Xu Jia | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zheng Shaoping | Vice GM | Incumbent | 12,661 | 0 | 0 | 12,661 | 0 | 0 | 0 |
| Huang Chuanjing | Vice GM and Secretary of the Board | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Lu Yongxin | Vice GM and Acting CFO | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Li Yubin | Vice GM | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
China Merchants Port Group Co., Ltd. Interim Report 2020
| Fu Gangfeng | Chairman of the Board | Former | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Yuan Yuhui | Independent director | Former | 14,040 | 0 | 0 | 14,040 | 0 | 0 | 0 |
| Su Qiyun | Independent director | Former | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Li Changqing | Independent director | Former | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Ni Keqin | Supervisor | Former | 29,211 | 0 | 0 | 29,211 | 0 | 0 | 0 |
| Zheng Linwei | Supervisor | Former | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wen Ling | CFO | Former | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | 55,912 | 0 | 0 | 55,912 | 0 | 0 | 0 |
II Change of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Deng Renjie | Chairman of the Board | Elected | 3 February 2020 | - |
| Bai Jingtao | Vice Chairman of the Board | Elected | 14 April 2020 | - |
| Zhang Yi | Director | Elected | 22 May 2020 | - |
| Gao Ping | Independent director | Elected | 22 May 2020 | - |
| Wang Zhenmin | Independent director | Elected | 22 May 2020 | - |
| Li Qi | Independent director | Elected | 22 May 2020 | - |
| Gong Man | Supervisor | Elected | 22 May 2020 | - |
| Xu Jia | Supervisor | Elected | 22 May 2020 | - |
| Fu Gangfeng | Chairman of the Board | Left | 31 January 2020 | Job change |
| Yuan Yuhui | Independent director | Left for expiration of the term | 22 May 2020 | Change of the Board |
| Su Qiyun | Independent director | Left for expiration of the term | 22 May 2020 | Change of the Board |
| Li Changqing | Independent director | Left for expiration of the term | 22 May 2020 | Change of the Board |
| Ni Keqin | Supervisor | Left for expiration of the term | 22 May 2020 | Change of the Supervisory Committee |
| Zheng Linwei | Supervisor | Left for expiration of the term | 22 May 2020 | Change of the Supervisory Committee |
| Wen Ling | CFO | Left | 29 April 2020 | Retirement |
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
| Name | Abbr. | Code | Release date | Maturity date | Bonds balance (RMB’0,000) | Interest rate | Way of redemption |
| 2020 Public Offering of Corporate Bonds of China Merchants Port Group Co., Ltd. (for qualified investors) (Phase I) | 20 CMPort 01 | 149170 | 7 July 2020 | 8 July 2023 | 200,000 | 3.36% | 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 bonds | List on the SZSE. | ||||||
| Appropriate arrangement of the investors | The 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 Period | During 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: | ||||||||
| Name | CITIC Securities Co., Ltd. | Office address | 18F CITIC Securities Tower, No.8 Zhongxin 3rd Road, Futian District, Shenzhen | Contact person | Chen Tianya and Feng Yuan | Contact number | 0755-23835062 | |
| Rating organization executed the tracking rating of the corporate bonds of the Reporting Period: | ||||||||
| Name | China Chengxin International Credit Rating Co., Ltd. | Office address | 60101, Building 1, No.2 Nanzhugan hutong, Dongcheng District, Beijing | |||||
| Alternation reasons, execution process and influences on the investors’ interests etc. if | Not 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 bonds | The 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 account | The 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 prospectus | Yes |
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
| Item | 30 June 2020 | 30 June 2019 | Increase/decrease |
| Current ratio | 0.51% | 0.68% | -0.17% |
| Asset-liability ratio | 42.69% | 39.38% | 3.31% |
| Quick ratio | 0.51% | 0.68% | -0.17% |
| H1 2020 | H1 2019 | Increase/decrease | |
| Times interest earned of EBITDA | 4.70 | 10.38 | -54.72% |
| Loan repayment rate | 100.00% | 100.00% | - |
| Interest coverage | 100.00% | 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
| Item | Notes | Closing Balance | Opening Balance |
| Current assets: | |||
| Cash and bank balances | (V)1 | 7,262,584,582.86 | 7,734,948,210.26 |
| Notes receivable | (V)2 | 21,961,548.98 | 38,192,250.02 |
| Accounts receivable | (V)3 | 1,690,223,255.75 | 1,356,460,129.90 |
| Accounts receivable financing | (V)4 | 251,312,787.49 | 260,760,537.45 |
| Prepayments | (V)5 | 67,773,767.82 | 55,034,019.81 |
| Other receivables | (V)6 | 3,632,734,940.15 | 2,129,378,252.50 |
| Inventories | (V)7 | 190,316,341.50 | 163,980,192.08 |
| Assets held for sale | - | 188,404,228.34 | |
| Non-current assets due within one year | (V)8 | 73,093,385.73 | 808,893,013.06 |
| Other current assets | (V)9 | 2,800,948,596.59 | 2,298,792,661.70 |
| Total current assets | 15,990,949,206.87 | 15,034,843,495.12 | |
| Non-current Assets: | |||
| Long-term receivables | (V)10 | 4,550,524,916.21 | 1,098,831,799.90 |
| Long-term equity investments | (V)11 | 62,036,426,397.29 | 57,916,539,383.26 |
| Other investments in equity instruments | (V)12 | 163,411,272.00 | 163,561,272.00 |
| Other non-current financial assets | (V)13 | 2,633,657,498.81 | 2,385,363,537.39 |
| Investment properties | (V)14 | 5,664,897,398.20 | 5,760,262,674.40 |
| Fixed assets | (V)15 | 26,460,710,461.56 | 27,519,962,529.29 |
| Construction in progress | (V)16 | 6,927,623,556.76 | 6,334,141,441.88 |
| Right-of-use assets | (V)17 | 9,525,713,677.15 | 9,633,325,390.46 |
| Intangible assets | (V)18 | 18,562,439,995.06 | 19,693,715,554.10 |
| Development Expenditure | (V)19 | 45,349,256.38 | 37,399,092.28 |
| Goodwill | (V)20 | 7,279,415,071.72 | 8,023,659,694.81 |
| Long-term prepaid expenses | (V)21 | 697,616,595.63 | 711,911,011.67 |
| Deferred tax assets | (V)22 | 316,597,018.94 | 300,435,502.27 |
| Other non-current assets | (V)23 | 2,156,087,443.01 | 2,082,965,467.04 |
| Total non-current assets | 147,020,470,558.72 | 141,662,074,350.75 | |
| TOTAL ASSETS | 163,011,419,765.59 | 156,696,917,845.87 |
CHINA MERCHANTS PORT GROUP CO., LTD.
- 2 -
AT 30 JUNE 2020
Consolidated Balance Sheet - continued
Unit: RMB
| Item | Notes | Closing Balance | Opening Balance |
| Current liabilities: | |||
| Short-term borrowings | (V)24 | 15,663,707,514.47 | 9,439,099,793.47 |
| Notes payable | (V)25 | 15,959,326.09 | 76,455,949.01 |
| Accounts payable | (V)26 | 552,729,739.72 | 591,112,466.39 |
| Receipts in advance | (V)27 | 37,353,091.96 | 28,826,687.37 |
| Contract liabilities | (V)28 | 89,261,875.74 | 85,831,002.52 |
| Employee benefits payable | (V)29 | 584,728,559.73 | 634,718,784.64 |
| Taxes payable | (V)30 | 2,084,976,755.33 | 1,898,076,342.74 |
| Other payables | (V)31 | 4,373,981,275.11 | 2,223,754,677.96 |
| Non-current liabilities due within one year | (V)32 | 4,534,549,437.65 | 6,104,339,856.79 |
| Other current liabilities | (V)33 | 3,190,011,929.49 | 885,956,581.63 |
| Total current liabilities | 31,127,259,505.29 | 21,968,172,142.52 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)34 | 5,921,573,954.17 | 6,313,735,540.33 |
| Bonds payable | (V)35 | 20,995,346,998.44 | 20,930,681,967.19 |
| Including: Preferred shares | - | - | |
| Perpetual bonds | - | - | |
| Lease liabilities | (V)36 | 1,538,184,794.37 | 1,647,129,968.61 |
| Long-term payables | (V)37 | 1,931,590,951.83 | 1,935,245,003.21 |
| Projected benefits obligation | (V)38 | 466,832,544.96 | 471,482,138.63 |
| Provisions | (V)39 | 70,999,744.39 | 76,242,559.95 |
| Deferred income | (V)40 | 1,128,510,809.76 | 1,147,752,857.17 |
| Deferred tax liabilities | (V)22 | 3,748,455,818.41 | 3,961,752,749.17 |
| Other non-current liabilities | (V)41 | 2,661,536,365.95 | 3,254,515,306.85 |
| Total non-current liabilities | 38,463,031,982.28 | 39,738,538,091.11 | |
| TOTAL LIABILITIES | 69,590,291,487.57 | 61,706,710,233.63 | |
| SHAREHOLDERS' EQUITY: | |||
| Share capital | (V)42 | 1,922,365,124.00 | 1,922,365,124.00 |
| Capital reserve | (V)43 | 22,061,293,835.79 | 22,296,485,467.35 |
| Other comprehensive income | (V)44 | (735,673,853.20) | (355,944,565.91) |
| Special reserve | (V)45 | 22,592,277.41 | 12,386,734.70 |
| Surplus reserve | (V)46 | 630,345,307.43 | 630,345,307.43 |
| Unappropriated profit | (V)47 | 11,215,676,980.64 | 11,467,166,351.85 |
| Total shareholders' equity attributable to equity holders of the parent | 35,116,599,672.07 | 35,972,804,419.42 | |
| Total minority interests | 58,304,528,605.95 | 59,017,403,192.82 | |
| TOTAL SHAREHOLDERS' EQUITY | 93,421,128,278.02 | 94,990,207,612.24 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 163,011,419,765.59 | 156,696,917,845.87 |
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
| Item | Notes | Closing Balance | Opening Balance |
| Current Assets: | |||
| Cash and bank balances | 1,826,905,879.02 | 690,685,211.42 | |
| Prepayments | 40,000.00 | - | |
| Other receivables | (XV)1 | 1,524,145,895.31 | 805,534,763.27 |
| Other current assets | 753,882,089.03 | 1,107,292,458.33 | |
| Total current assets | 4,104,973,863.36 | 2,603,512,433.02 | |
| Non-current Assets: | |||
| Long-term receivables | 62,622,307.86 | 61,004,284.75 | |
| Long-term equity investments | (XV)2 | 34,312,223,874.06 | 30,266,376,582.23 |
| Other investments in equity instruments | 155,538,635.00 | 155,688,635.00 | |
| Other non-current financial assets | 371,485,510.62 | - | |
| Fixed assets | 577,618.61 | 672,842.27 | |
| Construction in progress | 6,369,207.09 | 5,803,169.37 | |
| Intangible assets | 53,481,617.92 | 54,692,581.18 | |
| Deferred tax assets | 928,465.21 | 928,465.21 | |
| Total non-current assets | 34,963,227,236.37 | 30,545,166,560.01 | |
| TOTAL ASSETS | 39,068,201,099.73 | 33,148,678,993.03 |
CHINA MERCHANTS PORT GROUP CO., LTD.
- 4 -
AT 30 JUNE 2020
Balance Sheet of the Company - continued
Unit: RMB
| Item | Notes | Closing Balance | Opening Balance |
| Current Liabilities: | |||
| Short-term borrowings | - | 300,378,812.50 | |
| Employee benefits payable | 18,344,520.71 | 6,000,000.00 | |
| Taxes payable | 175,025,582.59 | 209,282,889.78 | |
| Other payables | 4,341,552,750.94 | 628,013,119.77 | |
| Non-current liabilities due within one year | 36,416,000.00 | 35,832,000.00 | |
| Other current liabilities | 3,013,285,383.88 | 715,766,708.20 | |
| Total current liabilities | 7,584,624,238.12 | 1,895,273,530.25 | |
| Non-current Liabilities: | |||
| Deferred tax liabilities | 35,127,358.75 | 35,164,858.75 | |
| Total non-current liabilities | 35,127,358.75 | 35,164,858.75 | |
| TOTAL LIABILITIES | 7,619,751,596.87 | 1,930,438,389.00 | |
| SHAREHOLDERS' EQUITY | |||
| Share capital | 1,922,365,124.00 | 1,922,365,124.00 | |
| Capital reserve | 27,584,975,709.56 | 27,576,242,527.73 | |
| Other comprehensive income | 105,482,076.25 | 105,594,576.25 | |
| Surplus reserve | 630,345,307.43 | 630,345,307.43 | |
| Unappropriated profit | 1,205,281,285.62 | 983,693,068.62 | |
| TOTAL SHAREHOLDERS' EQUITY | 31,448,449,502.86 | 31,218,240,604.03 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 39,068,201,099.73 | 33,148,678,993.03 |
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
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (V)48 | 5,922,497,158.48 | 5,834,353,421.33 |
| Less: Operating costs | (V)48 | 3,716,083,705.90 | 3,608,020,695.91 |
| Business taxes and levies | (V)49 | 77,378,079.15 | 96,475,511.42 |
| Administrative expenses | (V)50 | 737,700,277.37 | 647,244,718.36 |
| Research and development expenses | 66,130,284.81 | 60,018,835.29 | |
| Financial expenses | (V)51 | 841,659,933.37 | 873,109,624.88 |
| Including: Interest expenses | 997,950,589.71 | 1,037,955,298.30 | |
| Interest income | 142,415,864.44 | 139,353,821.46 | |
| Add: Other income | (V)52 | 55,597,275.39 | 73,092,505.76 |
| Investment income | (V)53 | 1,505,341,388.78 | 2,625,049,484.56 |
| Including: Income from investments in associates and joint ventures | (V)53 | 1,394,604,771.65 | 1,795,952,978.08 |
| 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)56 | 947,693.77 | 25,051.16 |
| Gains on disposal of assets | (V)57 | 560,256,383.38 | 4,169,857,166.53 |
| II. Operating profit | 2,306,315,928.40 | 8,068,834,691.27 | |
| Add: Non-operating income | (V)58 | 27,745,365.39 | 14,379,618.34 |
| Less: Non-operating expenses | (V)59 | 23,110,322.51 | 7,506,374.29 |
| III. Gross profit | 2,310,950,971.28 | 8,075,707,935.32 | |
| Less: Income tax expenses | (V)60 | 513,256,488.88 | 2,017,970,750.16 |
| IV. Net profit | 1,797,694,482.40 | 6,057,737,185.16 | |
| (I) Categorization by continuity of operation | |||
| 1. Net profit of continued operation | 1,797,694,482.40 | 6,057,737,185.16 | |
| 2. Net profit of discontinued operation | - | - | |
| (II) Categorization by attribution of ownership | |||
| 1. Net profit attributable to shareholders of the parent | 632,798,585.83 | 2,299,181,330.61 | |
| 2. Profit or loss attributable to minority shareholder | 1,164,895,896.57 | 3,758,555,854.55 | |
| 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 loss | 12,154,545.52 | (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: | 692,235,293.30 | 5,141,720,990.59 | |
| Shareholders of the parent | 253,069,298.54 | 1,966,568,787.53 | |
| Minority shareholders | 439,165,994.76 | 3,175,152,203.06 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | 0.33 | 1.28 | |
| (II) Diluted earnings per share | 0.33 | 1.28 |
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
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (XV)3 | 94,339.62 | 89,776,788.29 |
| Less: Operating costs | (XV)3 | 1,132,979.82 | 72,138,491.00 |
| Business taxes and levies | - | 1,386,897.46 | |
| Administrative expenses | 56,541,697.34 | 37,458,257.94 | |
| Financial expenses | 1,306,524.34 | 28,123,295.64 | |
| Including: Interest expenses | 15,828,399.34 | 22,334,322.60 | |
| Interest income | 17,871,242.91 | 6,848,157.41 | |
| Add: Other income | 355,292.70 | 211,721.77 | |
| Investment income | (XV)4 | 1,326,631,915.23 | 986,513,980.21 |
| Including: Income from investments in associates and joint ventures | (XV)4 | 28,229,153.26 | 37,846,506.83 |
| Gains from changes in fair value | 12,306,522.15 | - | |
| II. Operating profit | 1,280,406,868.20 | 937,395,548.23 | |
| Add: Non-operating income | 5,000.00 | 35,710.26 | |
| Less: Non-operating expenses | - | 68,028.29 | |
| III. Gross profit | 1,280,411,868.20 | 937,363,230.20 | |
| Less: Income tax expenses | 174,535,694.16 | 148,004,636.57 | |
| IV. Net profit | 1,105,876,174.04 | 789,358,593.63 | |
| 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 income | 1,105,763,674.04 | 790,063,593.63 |
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
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Cash Flows from Operating Activities: | |||
| Cash received from sales of goods and rendering of services | 5,630,074,541.82 | 5,754,573,111.14 | |
| Refunds of taxes | 13,596,456.12 | 1,028,913.99 | |
| Cash received relating to other operating activities | (V) 63 (1) | 383,674,545.69 | 628,327,662.03 |
| Sub-total of cash inflows | 6,027,345,543.63 | 6,383,929,687.16 | |
| Cash paid for goods purchased or services received | 1,615,486,122.15 | 1,686,739,386.99 | |
| Cash paid to and on behalf of employees | 1,443,033,749.90 | 1,289,823,173.43 | |
| Tax payments | 561,104,526.78 | 472,544,903.05 | |
| Cash paid relating to other operating activities | (V) 63 (2) | 336,294,999.88 | 377,960,308.17 |
| Sub-total of cash outflows | 3,955,919,398.71 | 3,827,067,771.64 | |
| Net Cash Flows from Operating Activities | (V) 64 (1) | 2,071,426,144.92 | 2,556,861,915.52 |
| II. Cash Flows from Investing Activities: | |||
| Cash received from disposal and recovery of investments | 2,541,647,276.82 | - | |
| Cash received from investment income | 243,248,600.44 | 255,735,654.65 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 109,636,776.06 | 28,746,274.62 | |
| Cash received relating to other investing activities | (V) 63 (3) | 509,787,186.59 | 2,641,747,342.20 |
| Sub-total of cash inflows | 3,404,319,839.91 | 2,926,229,271.47 | |
| Cash paid to acquire or construct fixed assets, intangible assets and other long-term assets | 1,082,224,237.89 | 1,557,516,143.20 | |
| Cash paid to acquire investments | 7,181,906,008.80 | 321,023,297.25 | |
| Cash paid relating to other investing activities | (V) 63 (4) | 3,009,770,070.13 | 973,903,129.78 |
| Sub-total of cash outflows | 11,273,900,316.82 | 2,852,442,570.23 | |
| 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 borrowings | 13,998,279,106.51 | 8,519,572,630.94 | |
| Cash received from issue of bonds | - | 1,000,000,000.00 | |
| Sub-total of cash inflows | 13,998,279,106.51 | 9,546,827,630.94 | |
| Repayments of borrowings | 6,724,017,083.73 | 10,576,686,264.69 | |
| Dividends paid, profit distributed or interest paid | 1,161,435,086.07 | 1,120,395,167.09 | |
| Including: Dividends paid, profit distributed to minority shareholders. | 162,311,700.49 | 150,969,238.87 | |
| Cash paid relating to other financing activities | (V) 63 (5) | 756,572,798.17 | 215,990,980.67 |
| Sub-total of cash outflows | 8,642,024,967.97 | 11,913,072,412.45 | |
| Net Cash Flows from Financing Activities | 5,356,254,138.54 | (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) | 7,714,157,995.87 | 5,373,281,504.75 |
| VI. Closing Balance of Cash and Cash Equivalents | (V) 64 (2) | 7,240,359,956.05 | 5,618,184,649.19 |
The accompanying notes form part of the financial statements.
CHINA MERCHANTS PORT GROUP CO., LTD.
- 8 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020
Cash Flow Statement of the Company
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Cash Flows from Operating Activities: | |||
| Cash received from sales of goods or rendering of services | - | 90,193,645.46 | |
| Cash received relating to other operating activities | 23,510,809.16 | 2,827,290.04 | |
| Sub-total of cash inflows | 23,510,809.16 | 93,020,935.50 | |
| Cash paid for goods purchased and services received | - | 30,749,568.38 | |
| Cash paid to and on behalf of employees | 25,483,852.31 | 64,417,358.35 | |
| Tax payments | 208,942,631.96 | 19,019,323.75 | |
| Cash paid relating to other operating activities | 17,929,140.00 | 245,001,703.97 | |
| Sub-total of cash outflows | 252,355,624.27 | 359,187,954.45 | |
| 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 investments | 1,400,000,000.00 | - | |
| Cash received from investments income | 184,352,981.91 | 273,935,026.51 | |
| Cash received relating to investing activities | 222,500,000.00 | 228,867,355.24 | |
| Sub-total of cash inflows | 1,806,852,981.91 | 502,802,381.75 | |
| Cash paid to acquire or construct fixed assets, intangible assets and other long-term assets | 600,000.00 | 1,916,637.68 | |
| Cash paid for investments | 2,409,178,988.47 | 375,334,390.00 | |
| Net cash paid for acquisition of subsidiaries and other business entities | - | 10,825,000.00 | |
| Cash paid relating to other investing activities | 137,944,110.77 | 185,800,000.00 | |
| Sub-total of cash outflows | 2,547,723,099.24 | 573,876,027.68 | |
| Net Cash Flows from Investing Activities | (740,870,117.33) | (71,073,645.93) | |
| III. Cash Flows from Financing Activities: | |||
| Cash received from borrowings | 2,999,433,243.33 | 660,000,000.00 | |
| Cash received from issue of bonds | - | 1,000,000,000.00 | |
| Cash received relating to other financing activities | 544,400,000.00 | - | |
| Sub-total of cash inflows | 3,543,833,243.33 | 1,660,000,000.00 | |
| Repayments of borrowings | 715,904,918.03 | 1,361,616,000.00 | |
| Dividends paid, profit distributed or interest paid | 619,875.00 | 19,237,193.99 | |
| Cash paid relating to other financing activities | 721,400,000.00 | 4,033,208.78 | |
| Sub-total of cash outflows | 1,437,924,793.03 | 1,384,886,402.77 | |
| Net Cash Flows from Financing Activities | 2,105,908,450.30 | 275,113,597.23 | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 27,149.74 | (3,440,024.23) | |
| V. Net Increase in Cash and Cash Equivalents | 1,136,220,667.60 | (65,567,091.88) | |
| Add: Opening balance of Cash and Cash Equivalents | 690,685,211.42 | 389,841,854.93 | |
| VI. Closing Balance of Cash and Cash Equivalents | 1,826,905,879.02 | 324,274,763.05 |
The accompanying notes form part of the financial statements.
CHINA MERCHANTS PORT GROUP CO., LTD.
- 9 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
| Item | Current Period | |||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | |||
| I. Closing balance of the preceding year | 1,922,365,124.00 | 22,296,485,467.35 | (355,944,565.91) | 12,386,734.70 | 630,345,307.43 | 11,467,166,351.85 | 59,017,403,192.82 | 94,990,207,612.24 |
| Add: Changes in accounting policies | - | - | - | - | - | - | - | - |
| Corrections of prior period errors | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - |
| II. Opening balance of the period | 1,922,365,124.00 | 22,296,485,467.35 | (355,944,565.91) | 12,386,734.70 | 630,345,307.43 | 11,467,166,351.85 | 59,017,403,192.82 | 94,990,207,612.24 |
| 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) | - | - | 632,798,585.83 | 439,165,994.91 | 692,235,293.45 |
| (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 | - | - | - | - | 4,298,990.17 | 8,684,984.90 |
| 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 | - | - | 10,715,915.61 | 20,921,458.32 |
| 1．Withdrawn in the period | - | - | - | 26,720,701.58 | - | - | 28,574,355.01 | 55,295,056.59 |
| 2．Utilized in the period | - | - | - | (16,515,158.87) | - | - | (17,858,439.40) | (34,373,598.27) |
| (VI) Others | - | - | - | - | - | - | - | - |
| IV. Closing balance of the period | 1,922,365,124.00 | 22,061,293,835.79 | (735,673,853.20) | 22,592,277.41 | 630,345,307.43 | 11,215,676,980.64 | 58,304,528,605.95 | 93,421,128,278.02 |
CHINA MERCHANTS PORT GROUP CO., LTD.
- 10 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020
Consolidated Statement of Changes in Shareholders' Equity - continued
Unit: RMB
| Item | Prior Period | |||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | |||
| I. Closing balance of the preceding year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,915,817,110.21 | 49,656,450,459.88 | 80,416,925,872.81 |
| Add: Changes in accounting policies | - | - | - | - | - | (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 period | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,877,958,652.78 | 49,581,970,542.50 | 80,304,587,498.00 |
| III. Changes for the period | - | 121,909,842.81 | (332,612,543.08) | 12,223,115.96 | - | 2,094,732,319.52 | 7,072,308,894.22 | 8,968,561,629.43 |
| (I) Total comprehensive income | - | - | (332,612,543.08) | - | - | 2,299,181,330.61 | 3,175,152,203.06 | 5,141,720,990.59 |
| (II) Owners' contributions and reduction in capital | - | 121,909,842.81 | - | - | - | - | 5,326,157,828.33 | 5,448,067,671.14 |
| 1．Capital contribution from shareholders | - | - | - | - | - | - | 27,255,000.00 | 27,255,000.00 |
| 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 | - | - | - | - | 5,298,902,828.33 | 5,420,812,671.14 |
| (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 | - | - | 13,988,736.62 | 26,211,852.58 |
| 1．Withdrawn in the period | - | - | - | 66,424,472.16 | - | - | 85,077,415.64 | 151,501,887.80 |
| 2．Utilized in the period | - | - | - | (54,201,356.20) | - | - | (71,088,679.02) | (125,290,035.22) |
| (VI) Others | - | - | - | - | - | - | - | - |
| IV. Closing balance of the period | 1,793,412,378.00 | 19,548,822,799.86 | (243,686,564.51) | 20,454,196.39 | 527,175,908.67 | 10,972,690,972.30 | 56,654,279,436.72 | 89,273,149,127.43 |
The accompanying notes form part of the financial statements.
CHINA MERCHANTS PORT GROUP CO., LTD.
- 11 -
FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
| Item | Current Period | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 1,922,365,124.00 | 27,576,242,527.73 | 105,594,576.25 | - | 630,345,307.43 | 983,693,068.62 | 31,218,240,604.03 |
| Add: Changes in accounting policies | - | - | - | - | - | - | - |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the period | 1,922,365,124.00 | 27,576,242,527.73 | 105,594,576.25 | - | 630,345,307.43 | 983,693,068.62 | 31,218,240,604.03 |
| III. Changes for the period | - | 8,733,181.83 | (112,500.00) | - | - | 221,588,217.00 | 230,208,898.83 |
| (I) Total comprehensive income | - | - | (112,500.00) | - | - | 1,105,876,174.04 | 1,105,763,674.04 |
| (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 period | 1,922,365,124.00 | 27,584,975,709.56 | 105,482,076.25 | - | 630,345,307.43 | 1,205,281,285.62 | 31,448,449,502.86 |
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
| Item | Prior Period | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,943,085.16 | 28,201,287,142.46 |
| Add: Changes in accounting policies | - | - | - | - | - | (325,594.23) | (325,594.23) |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the period | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,617,490.93 | 28,200,961,548.23 |
| III. Changes for the period | - | 31,973.48 | 705,000.00 | 8,009.26 | - | 584,909,582.54 | 585,654,565.28 |
| (I) Total comprehensive income | - | - | 705,000.00 | - | - | 789,358,593.63 | 790,063,593.63 |
| (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 period | 1,793,412,378.00 | 25,517,679,153.52 | 103,343,125.00 | 478,474.85 | 527,175,908.67 | 844,527,073.47 | 28,786,616,113.51 |
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.
- 14 -
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.
- 21 -
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.
- 22 -
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..
- 23 -
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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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
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 rating | Basis for determining portfolio | Average expected loss rate (%) |
| A | Customers can make repayments within credit term and have good credit records based on historical experience. The probability of unpayment of due amount are extremely low in the foreseeable future. | 0.00-0.10 |
| B | The customer may have overdue payment based on historical experience but they can make repayments. | 0.10-0.30 |
| C | The evidences indicate that the overdue credit risks of the customer are significantly increased and there is probability of unpayment and default. | 0.30-50.00 |
| D | The evidences indicate that the accounts receivable are impaired or the customer has significant financial difficulty. The amounts cannot be recovered in the foreseeable future. | 50.00-100.00 |
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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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
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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III. THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
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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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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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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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
| Category | Estimated useful lives | Estimated residual value (%) | Annual depreciation rate (%) |
| Port and terminal facilities | 5-50 years | 5.00 | 1.90-19.00 |
| Buildings | 10-50 years | 5.00 | 1.90-9.50 |
| Machinery and equipment, furniture and fixture and other equipment | 3-20 years | 5.00 | 4.75-31.67 |
| Motor vehicles and cargo ships | 5-25 years | 5.00 | 3.80-19.00 |
Estimated net residual value of a fixed asset is the estimated amount that the Group wouldcurrently obtain from disposal of the asset, after deducting the estimated costs of disposal, if theasset were already of the age and in the condition expected at the end of its useful life.
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
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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
| Category | Amortization Method | Useful Life (year) | Residual value (%) |
| Land use rights | Straight-line method | 40-50 | - |
| Port operating right | Output method/Straight-line method | 30-35 | - |
| Others | Straight-line method | 5-50 | - |
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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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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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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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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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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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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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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
| Taxes | Tax basis | Tax rate |
| Enterprise income tax | Taxable income | 16.5%-34% (Note 1) |
| Dividend income tax | 5%、10%、25% (Note 2) | |
| Value-added Tax ("VAT") (Note 3) | Income from sale of goods (Note 4) | 9%-16% |
| Income from transportation, loading and unloading business and part of modern service industries | 6% | |
| Income from sale of real estate, property management, real estate lease, etc. | 5% | |
| Social contribution tax (Note 5) | Income | 0.65%-7.6% |
| Deed tax | Land use right and property transfer amount | 3%-5% |
| Property tax | 70% of cost of property or rental income | 1.2% or 12% |
| City maintenance and construction tax | VAT paid | 1%-7% |
| Education surtax | VAT paid | 3% |
Note 1:The Group's enterprise income tax is calculated based on the current tax rate stipulated by
local tax laws. Among them, the Company are subject to an enterprise income tax rate of25%, the subsidiaries set up in Hong Kong are subject to an enterprise income tax rate of
16.5%, the majority of subsidiaries set up in China are subject to an enterprise income taxrate of 25% and certain others are subject to the preferential tax rate for small and microenterprises of 20%, and the other overseas subsidiaries are subject to enterprise 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
| Item | Closing balance | Opening balance |
| Cash | 277,419.74 | 331,305.65 |
| RMB | 56,778.45 | 122,990.39 |
| USD | 129,084.96 | 55,429.82 |
| HKD | 30,264.43 | 28,354.40 |
| BRL | 6,764.36 | 8,872.81 |
| Others | 54,527.54 | 115,658.23 |
| Bank deposit | 6,730,200,970.96 | 7,423,112,193.18 |
| RMB | 5,094,867,161.20 | 4,868,888,181.56 |
| USD | 629,351,129.01 | 1,597,545,919.28 |
| EUR | 536,891,846.05 | 528,103,576.51 |
| BRL | 309,172,759.58 | 310,275,686.79 |
| HKD | 86,062,209.87 | 76,041,665.91 |
| Others | 73,855,865.25 | 42,257,163.13 |
| Other cash and bank balances (Note 1) | 532,106,192.16 | 311,504,711.43 |
| RMB | 532,106,192.16 | 311,504,711.43 |
| Total | 7,262,584,582.86 | 7,734,948,210.26 |
| Including: Total amount of funds deposited overseas | 2,124,935,280.43 | 3,511,266,717.03 |
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
| Category | Closing balance | Opening balance |
| Bank acceptance | 13,328,347.78 | 13,290,478.02 |
| Commercial acceptance | 8,633,201.20 | 24,901,772.00 |
| Total | 21,961,548.98 | 38,192,250.02 |
| Less: Provision for credit losses (Note) | - | - |
| Carrying amount | 21,961,548.98 | 38,192,250.02 |
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
| Item | Amount derecognized at the end of the period | Amount recognized at the end of the period |
| Bank acceptance | 269,200.00 | - |
(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
| Aging | Closing balance | ||
| Accounts receivable | Provision for credit loss | Proportion (%) | |
| Within 1 year | 1,673,793,760.00 | 47,179,141.12 | 2.82 |
| More than 1 year but not exceeding 2 years | 70,326,394.90 | 7,929,284.40 | 11.27 |
| More than 2 years but not exceeding 3 years | 1,129,795.78 | 516,300.94 | 45.70 |
| More than 3 years | 43,029,849.87 | 42,431,818.34 | 98.61 |
| Total | 1,788,279,800.55 | 98,056,544.80 | |
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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 rating | Expected credit loss rate (%) | Closing balance | Opening balance | ||||
| Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | ||
| A | 0.00-0.10 | 867,111,693.14 | 101,223.56 | 867,010,469.58 | 552,947,162.60 | 236,251.00 | 552,710,911.60 |
| B | 0.10-0.30 | 578,029,026.67 | 1,470,835.71 | 576,558,190.96 | 730,397,420.98 | 2,106,455.92 | 728,290,965.06 |
| C | 0.30-50.00 | 231,930,017.20 | 4,351,187.56 | 227,578,829.64 | 70,292,155.38 | 1,703,501.79 | 68,588,653.59 |
| D | 50.00-100.00 | 111,209,063.54 | 92,133,297.97 | 19,075,765.57 | 101,658,746.76 | 94,789,147.11 | 6,869,599.65 |
| Total | 1,788,279,800.55 | 98,056,544.80 | 1,690,223,255.75 | 1,455,295,485.72 | 98,835,355.82 | 1,356,460,129.90 | |
(3) Changes in provision for credit loss of account receivables
Unit: RMB
| Item | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total |
| At 1 January 2020 | 4,046,208.71 | 94,789,147.11 | 98,835,355.82 |
| 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 period | 3,347,210.97 | 586,074.18 | 3,933,285.15 |
| 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 2020 | 5,923,249.86 | 92,133,294.94 | 98,056,544.80 |
(4) Account receivables written off during the period
Unit: RMB
| Item | Amount |
| Yantai Jinquan International Shipping Agency Co., Ltd. Shenzhen Branch | 289,193.50 |
(5) The top five balances of account receivables classified by debtor
Unit: RMB
| Name of entity | Closing balance | Aging | Proportion of the amount to the total account receivables (%) | Closing balance of provision for credit loss |
| Client A | 282,210,584.12 | Within 1 year, more than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years, more than 3 years | 15.77 | 142,050.98 |
| Client B | 76,111,433.00 | Within 1 year, more than 1 year but not exceeding 2 years | 4.26 | 1,705,643.77 |
| Client C | 60,901,975.35 | Within 1 year, more than 1 year but not exceeding 2 years | 3.41 | 146,173.05 |
| Client D | 57,813,455.40 | Within 1 year | 3.23 | 39,928.09 |
| Client E | 39,673,364.92 | Within 1 year | 2.22 | - |
| Total | 516,710,812.79 | 28.89 | 2,033,795.89 |
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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
| Items | Closing balance | Opening balance |
| Bank acceptance measured at fair value | 251,312,787.49 | 260,760,537.45 |
(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
| Items | Closing balance | Opening balance | ||
| Derecognized | Recognized | Derecognized | Recognized | |
| Bank acceptance measured at fair value | 73,189,070.26 | - | 129,391,886.08 | - |
5. Prepayments
(1) Aging analysis of prepayment
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion (%) | Aging | Proportion (%) | |
| Within 1 year | 66,350,135.06 | 97.90 | 50,341,341.46 | 91.47 |
| More than 1 year but not exceeding 2 years | 1,264,551.40 | 1.87 | 4,533,596.99 | 8.24 |
| More than 2 years but not exceeding 3 years | - | - | - | - |
| More than 3 years | 159,081.36 | 0.23 | 159,081.36 | 0.29 |
| Total | 67,773,767.82 | 100.00 | 55,034,019.81 | 100.00 |
(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 entity | Relationship with the Company | 30 June 2020 | Proportion of the closing balance to the total prepayments (%) |
| Saham Assurance Togo S.A. | Non-related party | 6,916,043.89 | 10.21 |
| Fairfax Brasil Seguros Corporativos S.A. | Non-related party | 6,620,743.19 | 9.77 |
| China Life Insurance Co., Ltd | Non-related party | 3,755,669.72 | 5.54 |
| Chubb Seguros Brasil S.A. | Non-related party | 3,622,070.20 | 5.34 |
| Uptime Group | Non-related party | 2,074,114.37 | 3.06 |
| Total | 22,988,641.37 | 33.92 |
6. Other receivables
6.1 Summary of other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Interest receivable | - | 159,794.48 |
| Dividend receivable | 1,303,565,544.25 | 459,352,522.24 |
| Other receivables | 2,329,169,395.90 | 1,669,865,935.78 |
| Total | 3,632,734,940.15 | 2,129,378,252.50 |
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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
| Item | Closing balance | Opening 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 investee | Closing balance | Opening balance |
| Shanghai International Port (Group) Co., Ltd. | 857,120,854.56 | - |
| China Nanshan Development (Group) Incorporation ("Nanshan Group") | 316,246,500.00 | 313,435,420.00 |
| 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 |
| Others | 50,529,342.73 | 13,751,368.26 |
| Total | 1,304,870,414.79 | 459,812,334.57 |
| Less: Provision for credit loss | 1,304,870.54 | 459,812.33 |
| Book value | 1,303,565,544.25 | 459,352,522.24 |
(2) Significant dividend receivable aged more than 1 year
Unit: RMB
| Name of investee | Closing balance | Aging | Why unrecovered | Closing balance of provision for credit losses |
| Nanshan Group | 245,969,500.00 | More than 1 year but not exceeding 2 years | Undergoing relevant formalities and expected to be recovered at the end of 2020 | 245,969.50 |
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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
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2020 | 459,812.33 | - | - | 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 period | 1,304,870.54 | - | - | 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 2020 | 1,304,870.54 | - | - | 1,304,870.54 |
6.4 Other receivables
(1) Other receivables disclosed by aging
Unit: RMB
| Aging | Closing balance | ||
| Other receivables | Provision for credit loss | Proportion (%) | |
| Within 1 year | 1,992,779,541.04 | 6,451.56 | - |
| More than 1 year but not exceeding 2 years | 15,081,852.60 | 50,013.27 | 0.33 |
| More than 2 years but not exceeding 3 years | 3,916,417.43 | 230,493.37 | 5.89 |
| More than 3 years | 353,954,897.69 | 36,276,354.66 | 10.25 |
| Total | 2,365,732,708.76 | 36,563,312.86 | |
(2) Disclosure of other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Land compensation (Note 1) | 1,208,032,000.00 | 521,246,000.00 |
| Operation compensation(Note 2) | 683,479,121.36 | 669,121,539.36 |
| Temporary payments | 299,718,996.63 | 334,617,193.32 |
| Compensation for profit or loss on transition( Note 3) | 31,513,558.59 | 35,317,035.66 |
| Deposits | 23,778,389.76 | 21,309,320.77 |
| Others | 119,210,642.42 | 124,618,962.15 |
| Total | 2,365,732,708.76 | 1,706,230,051.26 |
| Less: Provision for credit loss | 36,563,312.86 | 36,364,115.48 |
| Book value | 2,329,169,395.90 | 1,669,865,935.78 |
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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 rating | Expected credit loss rate (%) | Closing balance | Opening balance | ||||||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | ||
| A | 0.00-0.10 | 2,329,455,470.90 | - | - | 2,329,455,470.90 | 1,669,968,696.05 | - | - | 1,669,968,696.05 |
| B | 0.10-0.30 | - | - | - | - | - | - | - | - |
| C | 0.30-50.00 | - | - | - | - | - | - | - | - |
| D | 50.00-100.00 | - | - | 36,277,237.86 | 36,277,237.86 | - | - | 36,261,355.21 | 36,261,355.21 |
| Account balance | 2,329,455,470.90 | - | 36,277,237.86 | 2,365,732,708.76 | 1,669,968,696.05 | - | 36,261,355.21 | 1,706,230,051.26 | |
| Provision for credit loss | 286,075.00 | - | 36,277,237.86 | 36,563,312.86 | 102,760.27 | - | 36,261,355.21 | 36,364,115.48 | |
| Book value | 2,329,169,395.90 | - | - | 2,329,169,395.90 | 1,669,865,935.78 | - | - | 1,669,865,935.78 | |
(4) Changes in provision for credit loss of other receivables
Unit: RMB
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2020 | 102,760.27 | - | 36,261,355.21 | 36,364,115.48 |
| 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 period | 185,094.70 | - | - | 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 | - | - | 18,882.64 | 18,882.64 |
| At 30 June 2020 | 286,075.00 | - | 36,277,237.86 | 36,563,312.86 |
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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 entity | Nature | Closing balance | Aging | Proportion of the amount to the other receivable (%) | Provision for credit loss at the end of the year |
| Shantou Land Reserve Center | Land compensation | 1,208,032,000.00 | Within 1 year | 51.07 | - |
| Global Terminal Limited | Operation compensation | 683,479,121.36 | Within 1 year, More than 3 years | 28.89 | 17,904.57 |
| Chu Kong River Trade Terminal Co., Ltd | Temporary payments | 62,316,880.00 | More than 3 years | 2.63 | 6,231.69 |
| Shenzhen Qianhaiwan Bonded Port Area Authority | Temporary payments | 45,712,037.75 | Within 1 year, More than 3 years | 1.93 | 4,571.20 |
| State-owned Assets Supervision and Administration Commission of Shantou Municipal People's Government | Temporary payments | 43,326,181.06 | Within 1 year | 1.83 | - |
| Total | 2,042,866,220.17 | 86.35 | 28,707.46 |
7. Inventories
(1) Categories of inventories
Unit: RMB
| Item | Closing balance | Opening Balance | ||||
| Carrying amount | Provision for decline in value of inventories | Book value | Carrying amount | Provision for decline in value of inventories | Book value | |
| Raw materials | 165,249,746.72 | 971,196.56 | 164,278,550.16 | 147,548,980.01 | 1,918,890.33 | 145,630,089.68 |
| Finished goods | 11,277,389.98 | - | 11,277,389.98 | 4,944,593.66 | - | 4,944,593.66 |
| Others | 14,760,401.36 | - | 14,760,401.36 | 13,405,508.74 | - | 13,405,508.74 |
| Total | 191,287,538.06 | 971,196.56 | 190,316,341.50 | 165,899,082.41 | 1,918,890.33 | 163,980,192.08 |
(2) Provision for decline in value of inventories
Unit: RMB
| Item | 1 January 2020 | Provision | Decrease | 30 June 2020 | |
| Reversal | Write-off | ||||
| Raw materials | 1,918,890.33 | - | 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
| Item | Closing balance | Opening balance |
| Long-term receivables due within one year | 73,166,552.28 | 809,702,715.78 |
| Less: Provision for credit loss | 73,166.55 | 809,702.72 |
| Book value | 73,093,385.73 | 808,893,013.06 |
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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
| Item | Closing balance | Opening balance |
| Structural deposits | 2,494,903,418.59 | 2,000,298,176.18 |
| Including: Principal | 2,485,000,000.00 | 1,991,000,000.00 |
| Interest receivable | 9,903,418.59 | 9,298,176.18 |
| Prepaid taxes | 43,015,982.74 | 31,612,381.68 |
| Others (Note) | 263,029,195.26 | 266,882,103.84 |
| Total | 2,800,948,596.59 | 2,298,792,661.70 |
| Less: Provision for credit loss | - | - |
| Book value | 2,800,948,596.59 | 2,298,792,661.70 |
Note: Refer to the VAT credits of domestic subsidiaries.
10. Long-term receivables
(1) Details of long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Account balance | Provision for credit loss | Book value | Account balance | Provision for credit loss | Book value | |
| Advances to shareholders (Note 1) | 3,925,778,494.69 | 3,925,778.50 | 3,921,852,716.19 | 869,503,011.54 | 869,503.01 | 868,633,508.53 |
| Principal and interest of receivables for cooperation (Note 2) | 687,968,053.80 | 687,968.05 | 687,280,085.75 | 1,025,631,435.87 | 1,025,631.44 | 1,024,605,804.43 |
| Financing lease deposits | 14,500,000.00 | 14,500.00 | 14,485,500.00 | 14,500,000.00 | 14,500.00 | 14,485,500.00 |
| Total | 4,628,246,548.49 | 4,628,246.55 | 4,623,618,301.94 | 1,909,634,447.41 | 1,909,634.45 | 1,907,724,812.96 |
| Less: Long-term receivables due within 1 year | 73,166,552.28 | 73,166.55 | 73,093,385.73 | 809,702,715.78 | 809,702.72 | 808,893,013.06 |
| Long-term receivables due over 1 year | 4,555,079,996.21 | 4,555,080.00 | 4,550,524,916.21 | 1,099,931,731.63 | 1,099,931.73 | 1,098,831,799.90 |
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
| Item | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | ||
| At 1 January 2020 | 1,909,634.45 | - | - | 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 period | 3,455,148.26 | - | - | 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 2020 | 4,628,246.55 | - | - | 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
| Investees | Accounting method | 1 January 2020 | Changes for the year | 30 June 2020 | Closing value of provision for impairment | |||||||
| Increase | Investment profit or loss under equity method | Reconciling items from other comprehensive income | Other equity movements | Cash dividends or profits announced of issuance | Others | Provision for impairment | Effect of translation of financial statements denominated in foreign currencies | |||||
| I. Joint ventures | ||||||||||||
| Euro-Asia Oceangate S.à r.l. | Equity method | 2,635,767,875.28 | - | 32,577,150.24 | - | - | - | - | - | 30,075,311.72 | 2,698,420,337.24 | - |
| Port of Newcastle | Equity method | 2,199,996,246.66 | - | 6,806,114.31 | - | - | (87,661,702.20) | - | - | 4,800,751.43 | 2,123,941,410.20 | - |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Equity method | 1,504,764,906.58 | - | 51,573,423.78 | - | 1,688,678.17 | - | - | - | - | 1,558,027,008.53 | - |
| Ningbo Daxie Merchants International Terminals Co., Ltd. | Equity method | 853,995,291.23 | - | 55,508,480.73 | - | 2,020,093.37 | - | - | - | - | 911,523,865.33 | - |
| Laizhou Laiyin Port Business Co., Ltd. | Equity method | 792,062,228.58 | - | 14,928,000.00 | - | - | - | - | - | - | 806,990,228.58 | - |
| Others | Equity method | 1,405,640,017.89 | - | 16,043,706.18 | - | 533,197.02 | (818,258.44) | - | - | 9,904,052.77 | 1,431,302,715.42 | - |
| Subtotal | 9,392,226,566.22 | - | 177,436,875.24 | - | 4,241,968.56 | (88,479,960.64) | - | - | 44,780,115.92 | 9,530,205,565.30 | - | |
| II. Associates | ||||||||||||
| Shanghai International Port (Group) Co., Ltd.(A Share) | Equity method | 23,918,042,867.55 | - | 1,022,649,024.58 | 49,808,489.15 | (43,006,751.08) | (899,371,516.97) | - | - | (567,182.64) | 24,047,554,930.59 | - |
| Nanshan Group | Equity method | 5,090,137,515.66 | - | (67,388,586.72) | 6,298,721.30 | (11,402,905.61) | (74,028,000.00) | - | - | 172,880.00 | 4,943,789,624.63 | - |
| Terminal Link SAS (Note 1) | Equity method | 4,212,404,575.41 | 2,746,841,398.03 | 108,374,645.14 | - | - | - | - | - | (33,398,905.37) | 7,034,221,713.21 | - |
| Dalian Port Co., Ltd. | Equity method | 3,293,260,555.78 | - | 88,081,029.71 | (1,403,661.37) | 2,988,210.45 | (57,009,456.00) | - | - | (10,787,253.80) | 3,315,129,424.77 | 672,651,771.20 |
| Shenzhen China Merchants Qianhai Industrial Development Co., Ltd.( | Equity method | 6,841,066,224.12 | - | 12,188,400.29 | - | - | - | - | - | - | 6,853,254,624.41 | - |
| China Merchants Northeast Asia Development Investment Co., Ltd.(Note 2) | Equity method | - | 1,000,000,000.00 | 460,810.50 | - | - | - | - | - | - | 1,000,460,810.50 | - |
| Others | Equity method | 5,169,401,078.52 | 70,659,100.00 | 52,802,572.91 | (28,295,086.39) | 45,964.95 | (15,772,759.37) | - | - | 62,968,833.26 | 5,311,809,703.88 | - |
| Subtotal | 48,524,312,817.04 | 3,817,500,498.03 | 1,217,167,896.41 | 26,408,462.69 | (51,375,481.29) | (1,046,181,732.34) | - | - | 18,388,371.45 | 52,506,220,831.99 | 672,651,771.20 | |
| Total | 57,916,539,383.26 | 3,817,500,498.03 | 1,394,604,771.65 | 26,408,462.69 | (47,133,512.73) | (1,134,661,692.98) | - | - | 63,168,487.37 | 62,036,426,397.29 | 672,651,771.20 | |
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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
| Investees | Closing balance | Opening balance |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd. | 144,069,435.00 | 144,069,435.00 |
| Others | 19,341,837.00 | 19,491,837.00 |
| Total | 163,411,272.00 | 163,561,272.00 |
(2) Details of non-trading equity instruments
Unit: RMB
| Item | Dividends income recognized for the year | Accumulated gains/losses | Amounts transferred to retained earnings from other comprehensive income | Why designated as FVTOIC | Why transferred to retained earnings from other comprehensive income |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd. | - | 130,559,435.00 | - | The intention of holding is neither for sale nor profits in short-term | N/A |
| Others | 460,131.33 | 9,188,500.00 | - | The intention of holding is neither for sale nor profits in short-term | N/A |
| Total | 460,131.33 | 139,747,935.00 | - |
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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
| Item | Closing balance | Opening balance |
| Financial assets at FVTPL | 2,633,657,498.81 | 2,385,363,537.39 |
| Including: Investments in equity instruments | 2,633,657,498.81 | 2,385,363,537.39 |
| Including: Ningbo Zhoushan Port Co., Ltd.(A shares) | 1,826,650,083.29 | 1,548,914,671.20 |
| Qingdao Port International Co., Ltd. | 790,822,466.44 | 820,263,917.11 |
| Others | 16,184,949.08 | 16,184,949.08 |
14. Investment properties
(1) Investment properties measured under cost method
Unit: RMB
| Item | Land use rights | Buildings | Total |
| I.Total original carrying amount | |||
| 1. Balance at 1 January 2020 | 105,727,492.82 | 6,291,738,452.02 | 6,397,465,944.84 |
| 2.Increase in the current period | - | 206,063.00 | 206,063.00 |
| 3.Decrease in the current period | - | 1,071,645.35 | 1,071,645.35 |
| 4. Balance at 30 June 2020 | 105,727,492.82 | 6,290,872,869.67 | 6,396,600,362.49 |
| II.Accumulated depreciation and amortisation | |||
| 1. Balance at 1 January 2020 | 31,252,512.29 | 605,950,758.15 | 637,203,270.44 |
| 2.Increase in the current period | 1,141,051.97 | 93,848,487.26 | 94,989,539.23 |
| 3. Decrease in the current period | - | 489,845.38 | 489,845.38 |
| 4. Balance at 30 June 2020 | 32,393,564.26 | 699,309,400.03 | 731,702,964.29 |
| 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 2020 | 73,333,928.56 | 5,591,563,469.64 | 5,664,897,398.20 |
| At 1 January 2020 | 74,474,980.53 | 5,685,787,693.87 | 5,760,262,674.40 |
(2) Investment properties without ownership certificates
Unit: RMB
| Item | Closing balance | Opening balance |
| Buildings and land use rights | 38,462,419.30 | 40,255,588.09 |
15. Fixed assets
15.1 Summary of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 26,459,531,040.89 | 27,519,109,906.41 |
| Disposal of fixed assets | 1,179,420.67 | 852,622.88 |
| Total | 26,460,710,461.56 | 27,519,962,529.29 |
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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
| Item | Port and terminal facilities | Buildings | Machinery and equipment, furniture and fixture and other equipment | Motor vehicles and cargo ships | Total |
| I. Total original carrying amount | |||||
| 1. Balance at 1 January 2020 | 26,835,227,578.81 | 1,619,692,941.54 | 13,688,077,920.51 | 2,039,216,861.04 | 44,182,215,301.90 |
| 2. Increase for the period | 46,311,782.70 | 1,395,117.06 | 343,276,555.27 | 40,521,655.10 | 431,505,110.13 |
| (1) Purchase | 18,735,215.46 | - | 29,895,501.94 | 1,582,672.80 | 50,213,390.20 |
| (2) Transfer from construction in progress | 27,576,567.24 | 1,395,117.06 | 266,068,397.19 | 588,982.30 | 295,629,063.79 |
| (3) Transfer from right-of-use assets | - | - | 47,312,656.14 | 38,350,000.00 | 85,662,656.14 |
| 3. Decrease for the period | 66,021,806.65 | 31,645,188.99 | 196,098,293.29 | 11,675,300.90 | 305,440,589.83 |
| (1) Disposal or retirement | 15,399,349.98 | - | 196,098,293.29 | 11,675,300.90 | 223,172,944.17 |
| (2) Transfer to construction in progress | 50,622,456.67 | 31,645,188.99 | - | - | 82,267,645.66 |
| 4. Reclassification adjustment | (34,912,950.29) | (11,142,324.28) | 40,057,476.84 | 5,997,797.73 | - |
| 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 2020 | 26,341,470,980.98 | 1,578,274,979.84 | 13,746,954,116.08 | 2,081,686,642.73 | 43,748,386,719.63 |
| II. Accumulated depreciation | |||||
| 1. Balance at 1 January 2020 | 7,595,730,173.47 | 398,455,580.82 | 7,776,172,621.82 | 835,082,151.24 | 16,605,440,527.35 |
| 2. Increase for the period | 429,081,276.99 | 32,378,051.68 | 438,930,958.85 | 85,271,570.08 | 985,661,857.60 |
| (1) Provision | 429,081,276.99 | 32,378,051.68 | 425,205,252.35 | 56,107,224.95 | 942,771,805.97 |
| (2) Transfer from right-of-use assets | - | - | 13,725,706.50 | 29,164,345.13 | 42,890,051.63 |
| 3. Decrease for the period | 37,354,570.62 | 18,775,036.94 | 172,711,304.67 | 4,860,097.30 | 233,701,009.53 |
| (1) Disposal or retirement | 12,892,828.20 | - | 172,711,304.67 | 4,860,097.30 | 190,464,230.17 |
| (2) Transfer to construction in progress | 24,461,742.42 | 18,775,036.94 | - | - | 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 2020 | 7,910,416,247.12 | 408,123,094.17 | 7,995,896,894.10 | 916,754,575.21 | 17,231,190,810.60 |
| III. Impairment provision | |||||
| 1. Balance at 1 January 2020 | 57,419,468.96 | - | 245,399.18 | - | 57,664,868.14 |
| 2. Increase for the period | - | - | - | - | - |
| 3. Decrease for the period | - | - | - | - | - |
| 4. Balance at 30 June 2020 | 57,419,468.96 | - | 245,399.18 | - | 57,664,868.14 |
| IV. Book value | |||||
| 1. Book value at 30 June 2020 | 18,373,635,264.90 | 1,170,151,885.67 | 5,750,811,822.80 | 1,164,932,067.52 | 26,459,531,040.89 |
| 2. Book value at 1 January 2020 | 19,182,077,936.38 | 1,221,237,360.72 | 5,911,659,899.51 | 1,204,134,709.80 | 27,519,109,906.41 |
(2) 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
| Item | Book value at the closing date | Book value at the opening date |
| Buildings | 200,383,012.44 | 312,602,129.37 |
| Port and terminal facilities | 71,046,887.47 | 12,233,139.52 |
| Machinery and equipment, furniture and fixture and other equipment | 10,842,002.86 | 63,964.98 |
| Motor vehicles and cargo ships | - | 17,754.72 |
| Total | 282,271,902.77 | 324,916,988.59 |
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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
| Item | Book value at the closing date | Book value at the opening date |
| Buildings, port and terminal facilities | 1,587,752,574.27 | 1,652,483,135.07 |
(5) Other issues
Unit: RMB
| Item | Amount | Remark |
| Cost of fixed assets fully depreciated but still in use as at 30 June 2020 | 2,757,823,365.20 | |
| 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 retired | 223,172,944.17 | |
| Net value of fixed assets disposed and retired | 32,708,714.00 | |
| Profit or loss on disposal or retirement of fixed assets | (1,713,648.59) |
15.3 Disposal of fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Machinery and equipment, furniture and fixture and other equipment | 1,175,208.72 | 848,410.93 |
| Motor vehicles and cargo ships | 4,211.95 | 4,211.95 |
| Total | 1,179,420.67 | 852,622.88 |
16. Construction in progress
16.1 Summary of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 6,913,185,555.95 | 6,318,389,715.70 |
| Materials for construction of fixed assets | 14,438,000.81 | 15,751,726.18 |
| Total | 6,927,623,556.76 | 6,334,141,441.88 |
16.2 Construction in progress
(1) Details of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Port and terminal facilities | 6,172,642,257.97 | 787,181.96 | 6,171,855,076.01 | 5,713,564,853.28 | 787,181.96 | 5,712,777,671.32 |
| Berths and yards | 326,903,986.48 | - | 326,903,986.48 | 296,933,093.52 | - | 296,933,093.52 |
| Infrastructure | 190,699,708.35 | - | 190,699,708.35 | 175,423,610.37 | - | 175,423,610.37 |
| Ship under construction | 113,676,628.82 | - | 113,676,628.82 | 80,042,167.50 | - | 80,042,167.50 |
| Others | 110,050,156.29 | - | 110,050,156.29 | 53,213,172.99 | - | 53,213,172.99 |
| Total | 6,913,972,737.91 | 787,181.96 | 6,913,185,555.95 | 6,319,176,897.66 | 787,181.96 | 6,318,389,715.70 |
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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
| Item | Budget amount | 1 January 2020 | Increase for the period | Transfer to fixed assets | Other decreases for the period | Effect of changes in foreign exchange | 30 June 2020 | Proportion of accumulated construction investment in budget (%) | Construction progress (%) | Amount of accumulated capitalized interest | Including: capitalized interest for the period | Interest capitalization rate for the current period (%) | Capital source |
| Guangao project Phase II, Shantou Port | 2,200,000,000.00 | 1,404,239,786.63 | 176,979,681.55 | 32,094,128.07 | - | - | 1,549,125,340.11 | 88.00 | 88.00 | 13,447,553.66 | - | - | Self-funding and loan |
| Reconstruction project of container, oil terminal and tank area, HIPG | 2,854,258,290.12 | 1,407,055,802.30 | - | - | - | 15,994,312.82 | 1,423,050,115.12 | 49.86 | 49.86 | - | - | - | Self-funding |
| Reconstruction project of Berth 1#-4#, Haixing Wharf | 2,803,329,644.56 | 1,058,989,758.99 | 139,286,182.07 | - | - | - | 1,198,275,941.06 | 42.74 | 42.74 | 20,957,093.47 | 15,150,342.51 | 4.31 | Self-funding and loan |
| Project of Grain Dispatch Warehouse at Berth2#,3# Phase III , Machong Port | 620,000,000.00 | 321,198,858.46 | 22,489,737.47 | - | - | - | 343,688,595.93 | 55.43 | 55.43 | 934,421.10 | 917,465.54 | 4.40 | Self-funding and loan |
| Donghaidao port wharf project for bulk grains, Zhanjiang Port | 905,348,400.00 | 254,545,729.28 | 29,754,961.96 | - | - | - | 284,300,691.24 | 31.40 | 31.40 | 25,834,736.45 | 5,344,955.25 | 4.79 | Self-funding and loan |
| Xiashan port general wharf project, Zhanjiang Port | 737,792,300.00 | 234,308,909.02 | 25,510,948.79 | - | - | - | 259,819,857.81 | 35.22 | 35.22 | 8,072,472.88 | 5,206,999.65 | 4.79 | Self-funding and loan |
| Petrifaction old tank area reconstruction, Phase I, Zhanjiang Port | 218,378,500.00 | 178,983,632.92 | 2,249,413.00 | - | - | - | 181,233,045.92 | 82.99 | 82.99 | 5,024,262.73 | - | - | Self-funding and loan |
| Baoman Port container wharf extension project, Phase I, Zhanjiang Port | 2,412,810,000.00 | 155,695,498.79 | 316,981.13 | - | - | - | 156,012,479.92 | 6.47 | 6.47 | 964,740.46 | - | - | Self-funding and loan |
| Baoman stuffing and destuffing service area, Phase I Project, Zhanjiang Port | 606,521,505.83 | 134,029,761.00 | 3,045,453.56 | - | - | - | 137,075,214.56 | 22.60 | 22.60 | 16,689,500.56 | - | - | Self-funding and loan |
| Donghaidao port wharf project, Zhanjiang Port | 393,600,000.00 | 134,000,073.83 | - | - | - | - | 134,000,073.83 | 34.04 | 34.04 | 1,549,296.27 | - | - | Self-funding and loan |
| Total | 13,752,038,640.51 | 5,283,047,811.22 | 399,633,359.53 | 32,094,128.07 | - | 15,994,312.82 | 5,666,581,355.50 | 93,474,077.58 | 26,619,762.95 |
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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
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Materials for construction of fixed assets | 14,438,000.81 | - | 14,438,000.81 | 15,751,726.18 | - | 15,751,726.18 |
17. Right-of-use assets
(1) Details of right-of-use assets
Unit: RMB
| Item | Port and terminal facilities | Buildings | Machinery and equipment, furniture and fixture and other equipment | Motor vehicles and cargo ships | Others | Total |
| I. Cost | ||||||
| 1.Balance at 1 January 2020 | 6,689,402,526.61 | 186,206,419.22 | 767,725,299.95 | 45,970,740.24 | 2,846,079,467.20 | 10,535,384,453.22 |
| 2.Increase for the period | 548,369.72 | - | 1,368,406.19 | - | - | 1,916,775.91 |
| (1) Purchase | 548,369.72 | - | 1,368,406.19 | - | - | 1,916,775.91 |
| 3.Decrease for the period | 1,176,286.45 | 191,956.47 | 47,282,735.78 | 38,350,000.00 | 3,514,246.15 | 90,515,224.85 |
| (1) Termination of lease | 1,176,286.45 | 191,956.47 | 47,282,735.78 | 38,350,000.00 | 3,514,246.15 | 90,515,224.85 |
| 4.Effect of changes in foreign exchange | 59,072,105.92 | 1,540,301.37 | 27,835.15 | - | 32,029,431.12 | 92,669,673.56 |
| 5.Balance at 30 June 2020 | 6,747,846,715.80 | 187,554,764.12 | 721,838,805.51 | 7,620,740.24 | 2,874,594,652.17 | 10,539,455,677.84 |
| II. Accumulated depreciation | ||||||
| 1.Balance at 1 January 2020 | 378,840,364.32 | 36,980,701.14 | 231,571,742.64 | 30,948,956.19 | 223,717,298.47 | 902,059,062.76 |
| 2.Increase for the period | 94,077,278.34 | 9,838,616.06 | 26,954,785.92 | 1,156,619.34 | 22,637,248.77 | 154,664,548.43 |
| (1) Provision | 94,077,278.34 | 9,838,616.06 | 26,954,785.92 | 1,156,619.34 | 22,637,248.77 | 154,664,548.43 |
| 3.Decrease for the period | - | - | 13,725,706.50 | 29,164,345.13 | 2,965,876.41 | 45,855,928.04 |
| (1) Termination of lease | - | - | 13,725,706.50 | 29,164,345.13 | 2,965,876.41 | 45,855,928.04 |
| 4.Effect of changes in foreign exchange | 269,067.87 | 149,766.11 | 7,811.48 | - | 2,447,672.08 | 2,874,317.54 |
| 5.Balance at 30 June 2020 | 473,186,710.53 | 46,969,083.31 | 244,808,633.54 | 2,941,230.40 | 245,836,342.91 | 1,013,742,000.69 |
| 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 2020 | 6,274,660,005.27 | 140,585,680.81 | 477,030,171.97 | 4,679,509.84 | 2,628,758,309.26 | 9,525,713,677.15 |
| 2. Book value at 1 January 2020 | 6,310,562,162.29 | 149,225,718.08 | 536,153,557.31 | 15,021,784.05 | 2,622,362,168.73 | 9,633,325,390.46 |
(2) Amount recognized in profit or loss
Unit: RMB
| Category | Amount incurred in the current period | Amount incurred in the previous period |
| Depreciation expenses of right-of-use assets(Note 1) | 154,664,548.43 | 152,337,348.71 |
| Interest expenses on lease liabilities (Note 2) | 50,304,972.45 | 51,328,052.46 |
| Expenses for short-term leases | 55,517,780.26 | 69,047,828.93 |
| Expenses for leases of low value assets | 869,547.70 | 1,474,971.38 |
| Variable lease payments not included in the measurement of lease liabilities (Note 3) | - | - |
| Revenue from sublease of right-of-use assets | 9,246,780.38 | - |
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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
| Category | Lease term |
| Port and terminal facilities | 1-99 years |
| Buildings | 1-5 years |
| Machinery and equipment, furniture and fixture and other equipment | 1-6 years |
| Motor vehicles and cargo ships | 5 years |
| Others | 1-35years |
(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
| Items | Land use rights | Terminal management rights | Others | Total |
| I. Total original carrying amount | ||||
| 1. Balance at 1 January 2020 | 13,324,673,654.68 | 10,223,755,868.87 | 1,148,257,126.44 | 24,696,686,649.99 |
| 2. Increase for the year | - | 4,852,956.34 | 20,419,972.49 | 25,272,928.83 |
| (1) Purchase | - | 4,852,956.34 | 19,389,506.75 | 24,242,463.09 |
| (2) Other increase | - | - | 1,030,465.74 | 1,030,465.74 |
| 3. Decrease for the period | - | 7,149,531.69 | 1,985,603.23 | 9,135,134.92 |
| (1)Disposal | - | - | 1,985,603.23 | 1,985,603.23 |
| (2) Other decrease | - | 7,149,531.69 | - | 7,149,531.69 |
| 4. Effect of changes in foreign exchange | 178,733.50 | (933,358,319.26) | (123,578,372.20) | (1,056,757,957.96) |
| 5. Balance at 30 June 2020 | 13,324,852,388.18 | 9,288,100,974.26 | 1,043,113,123.50 | 23,656,066,485.94 |
| II. Accumulated depreciation | ||||
| 1. Balance at 1 January 2020 | 3,161,151,683.32 | 1,481,484,521.65 | 360,334,890.92 | 5,002,971,095.89 |
| 2. Increase for the period | 161,377,038.66 | 115,228,361.81 | 34,390,352.05 | 310,995,752.52 |
| (1) Provision | 161,377,038.66 | 115,228,361.81 | 34,390,352.05 | 310,995,752.52 |
| 3. Decrease for the period | - | - | 1,985,603.23 | 1,985,603.23 |
| (1) Disposal | - | - | 1,985,603.23 | 1,985,603.23 |
| 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 2020 | 3,321,473,458.07 | 1,407,256,425.39 | 364,896,607.42 | 5,093,626,490.88 |
| 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 2020 | 10,003,378,930.11 | 7,880,844,548.87 | 678,216,516.08 | 18,562,439,995.06 |
| 2. Book value at 1 January 2020 | 10,163,521,971.36 | 8,742,271,347.22 | 787,922,235.52 | 19,693,715,554.10 |
(2) Land use rights without ownership certificates on 30 June 2020:
Unit: RMB
| Item | Book value at the closing date | Book value at the opening date |
| Land use rights | 1,130,005,349.98 | 1,163,098,978.96 |
19. Development expenses
Unit: RMB
| Item | 1/1/2020 | Increase in the current period | Decrease in the current period | 30/6/2020 | |||
| Transfer to intangible assets | Transfer to construction in progress | Transfer to fixed assets | Transfer 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 application | 4,834,850.03 | 3,977,826.66 | - | - | - | - | 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 research | 15,830,956.74 | 2,675,450.96 | - | - | - | - | 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 | - |
| Others | 16,733,285.51 | 14,640,162.72 | - | 1,748,136.88 | - | 11,595,139.36 | 18,030,171.99 |
| Total | 37,399,092.28 | 80,002,373.31 | - | 5,921,923.45 | - | 66,130,285.76 | 45,349,256.38 |
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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
| Investee | 1/1/2020 | Increase | Decrease | Effect of changes in foreign exchange | 30/6/2020 |
| TCP Participa??es S.A. ("TCP") | 3,546,466,476.18 | - | - | (744,244,623.09) | 2,802,221,853.09 |
| Mega Shekou Container Terminals Limited | 1,815,509,322.42 | - | - | - | 1,815,509,322.42 |
| CMPort | 993,992,000.00 | - | - | - | 993,992,000.00 |
| Shantou Port | 552,317,736.65 | - | - | - | 552,317,736.65 |
| Zhanjiang Port | 418,345,307.68 | - | - | - | 418,345,307.68 |
| Shenzhen Mawan Project | 408,773,001.00 | - | - | - | 408,773,001.00 |
| Others | 288,255,850.88 | - | - | - | 288,255,850.88 |
| Total | 8,023,659,694.81 | - | - | (744,244,623.09) | 7,279,415,071.72 |
21. Long-term prepaid expenses
Unit: RMB
| Item | 1/1/2020 | Increase in the current period | Amortization in the current period | Other changes | 30/6/2020 |
| 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 Bureau | 39,049,767.97 | - | 528,890.76 | - | 38,520,877.21 |
| Expenditures for the improvement of leased fixed assets | 17,778,884.18 | 1,255,355.00 | 682,754.40 | - | 18,351,484.78 |
| West port area public channel widening project (Note 2) | 80,470,088.60 | - | 1,145,906.98 | 10,012,815.00 | 89,336,996.62 |
| Others | 49,096,181.08 | 5,061,937.84 | 5,936,715.76 | - | 48,221,403.16 |
| Total | 711,911,011.67 | 6,317,292.84 | 20,611,708.88 | - | 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
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Unrealized profit | 802,582,460.43 | 195,887,032.87 | 805,528,482.59 | 196,545,362.77 |
| Depreciation of fixed assets | 108,244,052.41 | 27,227,981.18 | 108,244,052.41 | 27,227,981.18 |
| Deductible losses | 128,032,222.98 | 36,417,871.73 | 79,034,267.56 | 19,758,566.89 |
| Provision for credit loss | 71,379,636.33 | 17,907,355.62 | 71,636,378.50 | 17,881,386.96 |
| Provisions | 52,743,830.87 | 14,731,088.87 | 60,976,862.88 | 16,601,394.38 |
| Deferred income | 39,639,517.72 | 9,642,713.49 | 40,272,757.15 | 9,737,699.40 |
| Amortization of computer | 13,630,227.66 | 3,407,556.91 | 13,630,227.66 | 3,407,556.91 |
| Organization costs | 10,905,997.08 | 2,726,499.27 | 10,905,997.08 | 2,726,499.27 |
| Provision for impairment losses of assets | 1,918,890.31 | 479,722.58 | 1,918,890.31 | 479,722.58 |
| Others | 37,735,867.95 | 8,169,196.42 | 29,120,031.36 | 6,069,331.93 |
| Total | 1,266,812,703.74 | 316,597,018.94 | 1,221,267,947.50 | 300,435,502.27 |
(2) Deferred tax liabilities without offsetting
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Withholding dividend income tax | 24,357,504,256.52 | 1,648,491,011.97 | 24,219,415,080.67 | 1,735,339,232.65 |
| Fair value adjustment of assets acquired by business combination | 7,462,694,301.42 | 1,651,871,416.14 | 7,989,044,772.81 | 1,812,240,254.17 |
| Changes in fair value of other non-current financial assets | 1,299,422,442.00 | 175,655,606.66 | 1,434,338,833.65 | 186,123,245.82 |
| Depreciation of fixed assets | 1,110,116,081.52 | 216,045,341.28 | 731,584,120.16 | 166,830,773.03 |
| Changes in fair value of other equity investments | 140,509,435.00 | 35,127,358.75 | 140,659,435.00 | 35,164,858.75 |
| Others | 98,387,743.88 | 21,265,083.61 | 110,838,382.96 | 26,054,384.75 |
| Total | 34,468,634,260.34 | 3,748,455,818.41 | 34,625,880,625.25 | 3,961,752,749.17 |
(3) Deferred tax assets or liabilities presented at the net amount after offsetting
Unit: RMB
| Item | Offset amount of deferred tax assets and liabilities in the current period | Deferred tax assets or liabilities after offsetting in the current period | Offset amount of deferred tax assets and liabilities in the prior period | Deferred tax assets or liabilities after offsetting in the prior period |
| Deferred tax assets | - | 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
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 473,942,471.23 | 503,037,805.60 |
| Deductible losses | 2,188,304,273.29 | 2,289,500,649.57 |
| Total | 2,662,246,744.52 | 2,792,538,455.17 |
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
| Year | Closing balance | Opening balance |
| 2020 | 5,879,004.08 | 182,809,604.33 |
| 2021 | 244,394,853.17 | 244,394,853.17 |
| 2022 | 615,440,669.35 | 615,440,669.35 |
| 2023 | 745,889,729.49 | 745,889,729.49 |
| 2024 | 500,294,154.82 | 500,926,253.51 |
| 2025 | 76,365,678.23 | - |
| No expiration date | 40,184.15 | 39,539.72 |
| Total | 2,188,304,273.29 | 2,289,500,649.57 |
23. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Dachanwan port area Phase II land replacement payment (Note 1) | 916,884,222.49 | 916,884,222.49 |
| Advances of channel project (Note 2) | 934,573,716.27 | 896,848,920.76 |
| Prepayments of land use rights | 132,334,704.86 | 132,334,704.86 |
| Prepayments of fixed assets | 130,173,116.98 | 90,186,071.12 |
| Prepayments of terminal franchise | 30,964,981.51 | 30,356,842.78 |
| Others | 11,156,700.90 | 16,354,705.03 |
| Total | 2,156,087,443.01 | 2,082,965,467.04 |
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
| Item | Closing balance | Opening balance |
| Credit loan | 12,620,640,847.81 | 9,439,099,793.47 |
| Guaranteed loan (Note) | 3,043,066,666.66 | - |
| Total | 15,663,707,514.47 | 9,439,099,793.47 |
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
| Category | Closing balance | Opening balance |
| Bank acceptance | 2,658,732.14 | 2,529,389.61 |
| Commercial acceptance | 13,300,593.95 | 73,926,559.40 |
| Total | 15,959,326.09 | 76,455,949.01 |
26. Accounts payable
(1) Details of accounts payable are as follows:
Unit: RMB
| Item | Closing balance | Opening balance |
| Service fee | 163,068,156.90 | 133,134,547.67 |
| Construction fee | 156,630,940.66 | 173,811,112.97 |
| Material purchase | 117,483,891.74 | 146,969,853.48 |
| Rental fee | 15,574,314.52 | 13,897,329.66 |
| Equipment payments | 12,996,882.55 | 15,947,499.80 |
| Others | 86,975,553.35 | 107,352,122.81 |
| Total | 552,729,739.72 | 591,112,466.39 |
(2) Significant accounts payable aged more than one year
Unit: RMB
| Item | Amount | Reason for outstanding |
| Nanshan Administration Bureau of Shenzhen Land and Resources and Planning Bureau | 21,642,795.50 | The 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
| Item | Closing balance | Opening balance |
| Service fee receipt in advance | 27,666,629.01 | 10,500,836.06 |
| Rental fee receipt in advance | 2,621,573.40 | 13,409,679.80 |
| Others | 7,064,889.55 | 4,916,171.51 |
| Total | 37,353,091.96 | 28,826,687.37 |
(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
| Item | Closing balance | Opening balance |
| Port charges received in advance | 66,331,771.54 | 63,954,147.44 |
| Warehousing fee received in advance | 17,957,528.35 | - |
| Service fee received in advance | 828,349.43 | 17,396,130.82 |
| Others | 4,144,226.42 | 4,480,724.26 |
| Total | 89,261,875.74 | 85,831,002.52 |
(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
| Item | 1/1/2020 | Increase in the current period | Decrease in the current period | 30/6/2020 |
| 1. Short-term benefits | 630,356,614.44 | 1,269,381,171.02 | 1,391,931,615.22 | 507,806,170.24 |
| 2. Post-employment benefits - defined contribution plan | 5,015,323.78 | 60,675,189.62 | 60,519,628.54 | 5,170,884.86 |
| 3. Termination benefits | - | 11,431,756.87 | 11,431,756.87 | - |
| 4. Other benefits due within one year | - | 1,735,965.85 | 1,735,965.85 | - |
| 5. Others | (653,153.58) | 78,759,160.02 | 6,354,501.81 | 71,751,504.63 |
| Total | 634,718,784.64 | 1,421,983,243.38 | 1,471,973,468.29 | 584,728,559.73 |
(2) Short-term benefits
Unit: RMB
| Item | 1/1/2020 | Increase in the current period | Decrease in the current period | 30/6/2020 |
| I. Wages and salaries, bonuses, allowances and subsidies | 604,864,369.83 | 1,055,896,210.88 | 1,186,294,025.21 | 474,466,555.50 |
| II. Staff welfare | - | 65,664,187.90 | 63,834,128.15 | 1,830,059.75 |
| III. Social insurance charges | 9,636,773.03 | 51,122,956.91 | 46,780,549.16 | 13,979,180.78 |
| Including: Medical insurance | 8,317,044.95 | 38,712,985.42 | 34,150,400.37 | 12,879,630.00 |
| Work injury insurance | - | 4,513,110.23 | 4,513,139.70 | (29.47) |
| Maternity insurance | - | 2,933,732.82 | 2,912,623.09 | 21,109.73 |
| Others | 1,319,728.08 | 4,963,128.44 | 5,204,386.00 | 1,078,470.52 |
| IV. Housing funds | - | 74,718,354.36 | 74,422,486.44 | 295,867.92 |
| V. Labor union and employee education funds | 15,855,471.56 | 18,414,294.37 | 17,035,259.65 | 17,234,506.28 |
| VI. Other short-term benefits | 0.02 | 3,565,166.60 | 3,565,166.61 | 0.01 |
| Total | 630,356,614.44 | 1,269,381,171.02 | 1,391,931,615.22 | 507,806,170.24 |
(3) Defined contribution plan
Unit: RMB
| Item | 1/1/2020 | Increase in the current period | Decrease in the current period | 30/6/2020 |
| I. Basic pension | 4,900,268.87 | 40,266,494.88 | 40,155,204.11 | 5,011,559.64 |
| II. Unemployment insurance | 0.01 | 397,129.15 | 396,978.85 | 150.31 |
| III. Enterprise annuity plan | 115,054.90 | 20,011,565.59 | 19,967,445.58 | 159,174.91 |
| Total | 5,015,323.78 | 60,675,189.62 | 60,519,628.54 | 5,170,884.86 |
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
| Item | Closing balance | Opening balance |
| Enterprise income tax | 1,974,092,354.46 | 1,843,381,355.01 |
| VAT | 16,270,770.08 | 11,377,223.08 |
| Others | 94,613,630.79 | 43,317,764.65 |
| Total | 2,084,976,755.33 | 1,898,076,342.74 |
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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
| Item | Closing balance | Opening balance |
| Interest payable | - | - |
| Dividends payable | 2,200,213,637.76 | 150,286,550.81 |
| Other payables | 2,173,767,637.35 | 2,073,468,127.15 |
| Total | 4,373,981,275.11 | 2,223,754,677.96 |
(2) Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Ordinary share dividends | 2,200,213,637.76 | 150,286,550.81 |
| Including: China Merchants Port Investment Development Co., Ltd | 475,540,540.27 | - |
| 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 Limited | 128,209,921.43 | - |
| Public B shares | 82,751,897.80 | - |
| Public A shares | 72,722,717.44 | - |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | 59,200,114.42 | 37,402,426.09 |
| Economic and Trade Guande Development Co., Ltd. | 53,750,000.00 | - |
| Sri Lanka Ports Authority | 31,749,790.32 | 31,392,997.47 |
| Shenzhen Infrastructure Investment Fund Partnership (LLP) | 29,831,083.72 | - |
| Sinotrans Shipping Co., Ltd | 12,463,667.33 | - |
| Soifer Participa??es Societárias S.A. | 11,173,505.06 | 14,141,088.03 |
| Pattac Empreendimentos e Participa??es S.A. | 3,632,311.49 | 4,597,020.40 |
| Tuc Participacoes Portuarias S.A. | 3,632,311.49 | 4,597,018.82 |
| 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
| Item | Closing balance | Opening balance |
| Amount payable for construction and quality warranty | 1,119,343,201.58 | 1,053,340,753.66 |
| Deposits | 161,230,619.57 | 162,460,889.01 |
| Customer discount | 129,384,672.82 | 117,736,418.62 |
| Accrued expenses | 84,554,024.47 | 110,741,377.48 |
| Port construction and security fee | 54,647,055.14 | 58,732,330.62 |
| Withholding dividend income tax | 52,837,837.81 | - |
| Balance of land use rights transfer | 11,295,700.00 | 14,538,738.00 |
| Others | 560,474,525.96 | 555,917,619.76 |
| Total | 2,173,767,637.35 | 2,073,468,127.15 |
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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 name | Closing balance | Reason for being outstanding or carried forward |
| CCCC Fourth Harbor Engineering Co., Ltd. | 50,196,213.85 | Project not yet checked by a third party |
| CCCC Third Harbor Engineering Co., Ltd. | 42,001,830.34 | Project not yet checked by a third party |
| Shanghai Zhenhua Heavy Industries Co., Ltd. | 41,555,527.06 | Equipment failed to meet the acceptance standards |
| Shantou Transportation Bureau | 31,358,355.47 | To be paid after confirmation by mutual parties |
| CCCC-FHDI Engineering Co., Ltd. | 24,501,586.59 | Performance of contract not yet completed |
| Zhanjiang Transportation Bureau | 20,902,814.93 | To be paid after confirmation by mutual parties |
| Qingdao Maritime Bureau | 20,713,982.12 | Port construction fee not yet settled |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | 18,311,444.99 | Quality warranty, the contracted settlement condition has not been reached |
| Shenzhen Municipal Special Fund for Development of Bulk Cement | 12,238,226.14 | To be paid after confirmation by mutual parties |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 11,250,000.00 | Performance of contract not yet completed |
| Shantou Finance Bureau | 10,000,000.00 | To be paid after confirmation by mutual parties |
| Guangdong Hengtai Tong Industrial Co., Ltd. | 10,000,000.00 | Quality warranty, the contracted settlement condition has not been reached |
| Shenzhen Dongpeng Construction Supervision Co., Ltd. | 9,906,473.62 | Not yet applied or processed by the counterparty |
| China First Metallurgical Group Co., Ltd. | 7,653,479.34 | Performance of contract not yet completed |
| Harman Technology (Shenzhen) Co., Ltd. | 5,884,632.48 | The contracted settlement condition has not been reached |
| Total | 316,474,566.93 |
32. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term loans due within one year | 2,216,715,105.84 | 2,954,701,198.90 |
| Including: Credit loan | 582,840,627.88 | 1,294,054,756.85 |
| Guaranteed loan | 1,055,090,118.80 | 1,119,153,332.94 |
| Mortgage loan | 578,784,359.16 | 541,493,109.11 |
| Bonds payable due within one year | 1,865,612,405.64 | 1,889,505,167.46 |
| Long-term payable due within one year | 35,168,270.05 | 61,107,722.82 |
| Long-term employee benefits payable due within one year | 31,950,000.00 | 31,950,000.00 |
| Lease liabilities due within one year | 311,539,529.97 | 341,240,327.95 |
| Other non-current liabilities due within one year | 73,564,126.15 | 825,835,439.66 |
| Total | 4,534,549,437.65 | 6,104,339,856.79 |
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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
| Item | Closing balance | Opening balance |
| Short-term bonds payable | 3,010,838,383.88 | 712,345,315.07 |
| Accrued professional agency fee | 152,814,329.20 | 143,346,356.53 |
| Others | 26,359,216.41 | 30,264,910.03 |
| Total | 3,190,011,929.49 | 885,956,581.63 |
Changes of short-term bonds payable:
Unit: RMB
| Name of bond | Face value | Date of issue | Term of the bond | Amount of issue | 1/1/2020 | Amount issued in the current period | Interest accrued based on par value | Discount or premium amortization | Repayment in the current period | 30/6/2020 |
| 1.50%, RMB 1.3 billion, Super & Short-term Commercial Paper | 1,300,000,000.00 | 29/04/2020 | 180 days | 1,300,000,000.00 | - | 1,300,000,000.00 | 3,356,557.38 | - | - | 1,303,356,557.38 |
| 1.99%, RMB 1 billion, Super & Short-term Commercial Paper | 1,000,000,000.00 | 05/06/2020 | 270 days | 1,000,000,000.00 | - | 1,000,000,000.00 | 1,413,661.20 | - | - | 1,001,413,661.20 |
| 2.50%, RMB 700 million, Super & Short-term Commercial Paper | 700,000,000.00 | 26/02/2020 | 266 days | 700,000,000.00 | - | 700,000,000.00 | 6,068,165.30 | - | - | 706,068,165.30 |
| 3.80%, RMB 300 million, Super & Short-term Commercial Paper | 700,000,000.00 | 04/06/2019 | 270 days | 700,000,000.00 | 712,345,315.07 | - | 3,559,602.96 | - | 715,904,918.03 | - |
| Total | 3,700,000,000.00 | 3,700,000,000.00 | 712,345,315.07 | 3,000,000,000.00 | 14,397,986.84 | - | 715,904,918.03 | 3,010,838,383.88 |
34. Long-term borrowings
(1) Classification of long-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Credit borrowings | 3,093,027,953.77 | 3,368,772,302.71 |
| Guaranteed borrowings (Note 1) | 2,158,406,589.91 | 2,857,916,427.61 |
| Mortgage borrowings (Note 2) | 2,886,854,516.33 | 3,041,748,008.91 |
| Total | 8,138,289,060.01 | 9,268,436,739.23 |
| Less: Long-term borrowings due within one year | 2,216,715,105.84 | 2,954,701,198.90 |
| Including: Credit borrowings | 582,840,627.88 | 1,294,054,756.85 |
| Guaranteed borrowings | 1,055,090,118.80 | 1,119,153,332.94 |
| Mortgage borrowings | 578,784,359.16 | 541,493,109.11 |
| Long-term borrowings due after one year | 5,921,573,954.17 | 6,313,735,540.33 |
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 name | Closing balance | Opening balance | Collateral |
| China Development Bank Corporation | 1,245,653,597.74 | 1,358,129,654.07 | The Group's entire equity in Colombo International Container Terminals Limited |
| International Finance Corporation | 410,453,440.87 | 449,103,214.20 | The Group's entire equity in Thesar Maritime Limited |
| African Development Bank | 188,586,716.06 | 206,294,203.06 | |
| Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. | 155,306,707.35 | 169,887,745.22 | |
| The Opec Fund For International Development | 133,120,034.88 | 145,656,886.91 | |
| Societe de Promotion et de Participation pour la Cooperation Economique S.A. | 133,120,034.86 | 145,613,216.49 | |
| Deutsche Investitions-und Entwicklungsgesellschaft MBH | 110,933,362.39 | 121,392,394.29 | |
| Bank of China Qianhai Shekou Branch | 241,357,698.45 | 241,388,867.03 | Land use rights of Shenzhen Haixing Harbor Development Co., Ltd (see note (V) 61) |
| China Construction Bank Shunde Branch | 215,259,318.17 | 184,264,872.07 | Land use rights, fixed assets and construction in progress of Yide Port (see note (V) 61) |
| China Merchants Bank Dongguan Branch | 53,063,605.56 | 20,016,955.57 | Sea area use rights of Dongguan Chiwan Warf Co., Ltd. (see note (V) 61) |
| Total | 2,886,854,516.33 | 3,041,748,008.91 |
35. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Closing balance | Opening balance |
| 4.375%, USD 900 million corporate bond | 6,426,278,478.93 | 6,349,018,876.27 |
| 5.000%, USD 600 million corporate bond | 4,269,122,434.82 | 4,218,874,981.43 |
| 4.750%, USD 500 million corporate bond | 3,582,571,449.98 | 3,541,255,065.51 |
| 5.000%, USD 500 million corporate bond | 3,543,503,068.79 | 3,500,281,169.59 |
| 4.890%, USD 2,500 million corporate bond | 2,523,780,136.99 | 2,585,072,602.74 |
| 3.500%, USD 200 million corporate bond | 1,430,830,620.17 | 1,414,333,247.34 |
| IPCA + 7.8164%, BRL 428 million corporate bond | 673,739,844.54 | 810,150,534.24 |
| 4.980%, RMB 400 million corporate bond | 411,133,369.86 | 401,200,657.53 |
| Total | 22,860,959,404.08 | 22,820,187,134.65 |
| Less: Bonds payable due within one year | 1,865,612,405.64 | 1,889,505,167.46 |
| Bonds payable due after one year | 20,995,346,998.44 | 20,930,681,967.19 |
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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 bonds | Face value | Date of issue | Term of the bond | Amount of issue | 1/1/2020 | Amount issued in the current period | Interest accrued based on par value | Discount or premium amortization | Repayment in the current period | Effect of changes in foreign exchange | 30/06/2020 |
| 4.375%, USD 900 million corporate bond | USD 900,000,000.00 | 06/08/2018 | 5 years | USD 900,000,000.00 | 6,349,018,876.27 | - | 138,226,053.80 | 5,219,084.00 | 138,596,553.90 | 72,411,018.76 | 6,426,278,478.93 |
| 5.000%, USD 600 million corporate bond | USD 600,000,000.00 | 06/08/2018 | 10 years | USD 600,000,000.00 | 4,218,874,981.43 | - | 105,315,088.70 | 2,409,117.13 | 105,597,374.40 | 48,120,621.96 | 4,269,122,434.82 |
| 4.750%, USD 500 million corporate bond | USD 500,000,000.00 | 03/08/2015 | 10 years | USD 500,000,000.00 | 3,541,255,065.51 | - | 83,389,423.31 | 1,138,246.82 | 83,597,921.40 | 40,386,635.74 | 3,582,571,449.98 |
| 5.000%, USD 500 million corporate bond | USD 500,000,000.00 | 04/05/2012 | 10 years | USD 500,000,000.00 | 3,500,281,169.59 | - | 87,493,021.03 | 3,402,736.40 | 87,791,765.25 | 40,117,907.02 | 3,543,503,068.79 |
| 4.890%, RMB 2,500 million corporate bond | RMB 2,500,000,000.00 | 21/04/2017 | 5 years | RMB 2,500,000,000.00 | 2,585,072,602.74 | - | 60,957,534.25 | - | 122,250,000.00 | - | 2,523,780,136.99 |
| 3.500%, USD 200 million corporate bond | USD 200,000,000.00 | 03/08/2015 | 5 years | USD 200,000,000.00 | 1,414,333,247.34 | - | 24,467,817.42 | 939,644.61 | 24,639,387.36 | 15,729,298.16 | 1,430,830,620.17 |
| IPCA+7.8164%, BRL 428 million corporate bond | BRL 428,047,000.00 | 07/11/2016 | 6 years | BRL 428,047,000.00 | 810,150,534.24 | - | 33,157,455.95 | 4,908,321.88 | - | (174,476,467.53) | 673,739,844.54 |
| 4.980%, RMB 400 million corporate bond | RMB 400,000,000.00 | 10/12/2018 | 3 years | RMB 400,000,000.00 | 401,200,657.53 | - | 9,932,712.33 | - | - | - | 411,133,369.86 |
| Total | 22,820,187,134.65 | - | 542,939,106.79 | 18,017,150.84 | 562,473,002.31 | 42,289,014.11 | 22,860,959,404.08 | ||||
| Less: Bonds payable due within one year | 1,889,505,167.46 | 1,865,612,405.64 | |||||||||
| Bonds payable due after one year | 20,930,681,967.19 | 20,995,346,998.44 |
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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
| Category | Closing balance | Opening balance |
| Lease payment | 2,755,002,465.72 | 2,934,104,267.67 |
| Unrecognized financing cost | (905,278,141.38) | (945,733,971.11) |
| Total | 1,849,724,324.34 | 1,988,370,296.56 |
| Less: Lease liabilities due within one year | 311,539,529.97 | 341,240,327.95 |
| Lease liabilities due after one year | 1,538,184,794.37 | 1,647,129,968.61 |
37. Long-term payables
(1) Summary of long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term payables | 1,418,026,539.69 | 1,447,802,228.74 |
| Special payables | 548,732,682.19 | 548,550,497.29 |
| Total | 1,966,759,221.88 | 1,996,352,726.03 |
| Less: Long-term payables due within one year | 35,168,270.05 | 61,107,722.82 |
| Long-term payables due after one year | 1,931,590,951.83 | 1,935,245,003.21 |
(2) Long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Terminal management rights (Note 1) | 837,915,269.32 | 881,239,309.85 |
| Payable to minority shareholders of subsidiaries (Note 2) | 425,628,641.37 | 407,092,971.69 |
| Borrowings from related parties (Note 3) | 147,000,000.00 | 150,000,000.00 |
| Others | 7,482,629.00 | 9,469,947.20 |
| Total | 1,418,026,539.69 | 1,447,802,228.74 |
| Less: Long-term payables due within one year | 35,168,270.05 | 61,107,722.82 |
| Long-term payables due after one year | 1,382,858,269.64 | 1,386,694,505.92 |
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
| Item | 1/1/2020 | Increase in the current period | Decrease in the current period | 30/6/2020 | Reason |
| Refunds of Harbor Construction Fee | 545,346,468.32 | 146.66 | 119,252.86 | 545,227,362.12 | Note 1 |
| Employee housing fund | 3,204,028.97 | 301,291.10 | - | 3,505,320.07 | Note 2 |
| Total | 548,550,497.29 | 301,437.76 | 119,252.86 | 548,732,682.19 |
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
| Item | Closing balance | Opening balance |
| Post-employment benefits - net liabilities of defined benefits plan (note) | 453,647,469.64 | 454,383,940.25 |
| Termination benefits | 45,135,075.32 | 49,048,198.38 |
| Total | 498,782,544.96 | 503,432,138.63 |
| Less: Long-term employee benefits payable due within one year | 31,950,000.00 | 31,950,000.00 |
| Long-term employee benefits payable due after one year | 466,832,544.96 | 471,482,138.63 |
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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
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| I. Opening balance | 454,383,940.25 | 385,323,310.21 |
| II. Defined benefits cost included in profit or loss for the period | 12,830,961.87 | 9,122,011.37 |
| 1. Current service cost | 5,200,965.85 | 2,448,000.00 |
| 2. Past service cost | - | (5,988.63) |
| 3. Interest adjustment | 7,629,996.02 | 6,680,000.00 |
| III. Defined benefits cost included in other comprehensive income | 84,448.42 | (5,940.71) |
| 1. Actuarial gains (losses) | - | - |
| 2. Effect of exchange rate changes | 84,448.42 | (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 balance | 453,647,469.64 | 702,116,337.27 |
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
| Item | Closing balance | Opening balance | Reason |
| Sales discount | 48,941,620.46 | 15,265,697.07 | |
| Pending litigation (Note) | 17,168,123.93 | 15,079,762.88 | Note |
| Estimated expenses on Shangtou Port land acquisition and reservation | 4,890,000.00 | 45,897,100.00 | |
| Total | 70,999,744.39 | 76,242,559.95 |
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
| Item | 1/1/2020 | Increase in the current period | Decrease in the current period | 30/6/2020 |
| Government grants | 1,146,325,779.95 | - | 18,982,578.73 | 1,127,343,201.22 |
| Unrealized sale-and-leaseback income | 1,427,077.22 | - | 259,468.68 | 1,167,608.54 |
| Total | 1,147,752,857.17 | - | 19,242,047.41 | 1,128,510,809.76 |
Items involving government grants are as follows:
Unit: RMB
| Liabilities | 1/1/2020 | Increase | Recognized in non-operating income | Recognized in Other comprehensive income | 30/6/2020 | Related to assets /related to income |
| Refund from marine reclamation land | 375,169,820.39 | - | - | 9,674,583.96 | 365,495,236.43 | Related to assets |
| Tonggu channel widening project | 276,429,856.80 | - | - | 3,528,891.78 | 272,900,965.02 | Related to assets |
| West port area public channel widening project | 216,620,824.68 | - | - | 967,832.04 | 215,652,992.64 | Related to assets |
| Modern logistics special funds | 114,720,000.08 | - | - | 319,999.98 | 114,400,000.10 | Related to assets |
| Terminal subsidy | 46,550,000.04 | - | - | 612,499.98 | 45,937,500.06 | Related to assets |
| Appropriation for harbor dues on cargo | 22,315,395.09 | - | - | 274,933.02 | 22,040,462.07 | Related to assets |
| Port construction subsidy | 21,099,333.59 | - | - | 462,166.62 | 20,637,166.97 | Related to assets |
| Qianwan Bonded Logistics Park Project | 14,427,049.24 | - | - | 653,606.22 | 13,773,443.02 | Related to assets |
| Subsidized grain transfer project subsidy | 7,857,142.83 | - | - | - | 7,857,142.83 | Related to assets |
| Central budgetary support for bulk grain transfer terminal projects | 7,260,416.67 | - | - | - | 7,260,416.67 | Related to assets |
| Refund of land transfer charges | 6,680,000.00 | - | - | - | 6,680,000.00 | Related to assets |
| AMP project | 5,786,415.70 | - | - | 480,810.36 | 5,305,605.34 | Related to assets |
| Oil to electricity project | 5,232,251.75 | - | - | 392,418.96 | 4,839,832.79 | Related to assets |
| War readiness tug special fund | 4,218,750.00 | - | - | 112,500.00 | 4,106,250.00 | Related to assets |
| Bonded logistics center industry informatization development special fund | 2,580,000.00 | - | - | 60,000.00 | 2,520,000.00 | Related to assets |
| Automated terminal operation and dispatching system special support project | 2,246,961.57 | - | - | 456,572.64 | 1,790,388.93 | Related to assets |
| War readiness portal crane subsidy | 1,593,886.51 | - | - | - | 1,593,886.51 | Related to assets |
| Bulk cargo production business management system | 1,500,000.00 | - | - | - | 1,500,000.00 | Related to assets |
| Research and development of fully automated intelligent terminal information investment based on cloud platform architecture | 1,057,937.27 | - | - | 176,666.76 | 881,270.51 | Related to assets |
| Green low carbon port project | 982,730.02 | - | - | 210,585.00 | 772,145.02 | Related to assets |
| Others | 11,997,007.72 | - | - | 598,511.41 | 11,398,496.31 | Related to assets |
| Total | 1,146,325,779.95 | - | - | 18,982,578.73 | 1,127,343,201.22 |
41. Other non-current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| TCP operating rights liability (Note 1) | 2,716,758,812.32 | 3,326,952,857.86 |
| Berth priority call right (Note 2) | 18,341,679.78 | 20,664,537.64 |
| Obligation to minority shareholders due to acquisition (Note 3) | - | 732,733,351.01 |
| Total | 2,735,100,492.10 | 4,080,350,746.51 |
| Less: Other non-current liabilities due within one year | 73,564,126.15 | 825,835,439.66 |
| Including: TCP operating rights liability | 73,564,126.15 | 93,102,088.65 |
| Obligation to minority shareholders due to acquisition | - | 732,733,351.01 |
| Other non-current liabilities due after one year | 2,661,536,365.95 | 3,254,515,306.85 |
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
| Item | Opening balance | Changes for the year | Closing balance | ||||
| New issue of share | Bonus issue | Capitalization of surplus reserve | Others | Sub-total | |||
| For the period from 1 January to 30 June 2020 | |||||||
| I. Restricted tradable shares | |||||||
| 1. State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | 128,952,746.00 | - | - | - | - | - | 128,952,746.00 |
| 3. Other domestic shares | 169,602.00 | - | - | - | 10,812.00 | 10,812.00 | 180,414.00 |
| 4. Foreign shares | 1,148,648,648.00 | - | - | - | - | - | 1,148,648,648.00 |
| Total restricted tradable shares | 1,277,770,996.00 | - | - | - | 10,812.00 | 10,812.00 | 1,277,781,808.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,858,324.00 | - | - | - | - | - | 464,858,324.00 |
| 2. Foreign capital shares listed domestically | 179,735,804.00 | - | - | - | (10,812.00) | (10,812.00) | 179,724,992.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,594,128.00 | - | - | - | (10,812.00) | (10,812.00) | 644,583,316.00 |
| III. Total shares | 1,922,365,124.00 | - | - | - | - | - | 1,922,365,124.00 |
Unit: RMB
| Item | Opening balance | Changes for the year | Closing balance | ||||
| New issue of share | Bonus issue | Capitalization of surplus reserve | Others | Sub-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 shares | 212,156.00 | - | - | - | (42,554.00) | (42,554.00) | 169,602.00 |
| 4. Foreign shares | 1,148,648,648.00 | - | - | - | - | - | 1,148,648,648.00 |
| Total restricted tradable shares | 1,148,860,804.00 | - | - | - | (42,554.00) | (42,554.00) | 1,148,818,250.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,855,324.00 | - | - | - | 3,000.00 | 3,000.00 | 464,858,324.00 |
| 2. Foreign capital shares listed domestically | 179,696,250.00 | - | - | - | 39,554.00 | 39,554.00 | 179,735,804.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,551,574.00 | - | - | - | 42,554.00 | 42,554.00 | 644,594,128.00 |
| III. Total shares | 1,793,412,378.00 | - | - | - | - | - | 1,793,412,378.00 |
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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
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2020 | ||||
| Capital premium | 22,183,597,895.33 | 1,154,889.03 | 218,667,827.13 | 21,966,084,957.23 |
| Including: Capital contributed by investors | 7,012,992,483.94 | - | - | 7,012,992,483.94 |
| Differences arising from business combination involving enterprises under common control | 13,311,099,845.41 | - | - | 13,311,099,845.41 |
| Differences arising from acquisition of minority interests (Note) | 419,130,116.03 | - | 218,667,827.13 | 200,462,288.90 |
| Others | 1,440,375,449.95 | 1,154,889.03 | - | 1,441,530,338.98 |
| Other capital Reserve | 112,887,572.02 | 4,385,994.73 | 22,064,688.19 | 95,208,878.56 |
| 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 income | 115,668,705.02 | - | 22,064,688.19 | 93,604,016.83 |
| Total | 22,296,485,467.35 | 5,540,883.76 | 240,732,515.32 | 22,061,293,835.79 |
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2019 | ||||
| Capital premium | 19,429,694,090.05 | 61,436,266.04 | 16,957,921.94 | 19,474,172,434.15 |
| Including: Capital contributed by investors | 4,954,397,136.25 | - | - | 4,954,397,136.25 |
| Differences arising from business combination involving enterprises under common control | 13,311,099,845.41 | - | - | 13,311,099,845.41 |
| Others | 1,164,197,108.39 | 61,436,266.04 | 16,957,921.94 | 1,208,675,452.49 |
| Other capital Reserve | (2,781,133.00) | 77,732,230.21 | 300,731.50 | 74,650,365.71 |
| Including: Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Other changes of owners' equity of the investee under equity method other than changes in net profit or loss, profit distribution and other comprehensive income | - | 77,732,230.21 | 300,731.50 | 77,431,498.71 |
| Total | 19,426,912,957.05 | 139,168,496.25 | 17,258,653.44 | 19,548,822,799.86 |
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
| Item | Opening balance | Amount incurred in the period | Closing balance | ||||
| Pre-tax amount for the period | Less: Amount included in other comprehensive income in the prior periods transferred to profit or loss this period | Less: Income tax expense | Post-tax income attributable to the parent company owner | Post-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 loss | 82,969,758.27 | (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 plan | 1,069,722.83 | - | - | - | - | - | 1,069,722.83 |
| Other comprehensive income that can't be transferred to profit or loss under equity method | 4,830,921.62 | (3,301,988.37) | - | - | (1,350,843.44) | (1,951,144.93) | 3,480,078.18 |
| Changes in fair value of other equity instruments | 77,069,113.82 | (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 | - | - | 12,154,545.52 | 17,555,905.54 | (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 loss | 75,673,134.08 | 38,773,588.04 | - | 235,000.00 | 15,630,350.48 | 22,908,237.56 | 91,303,484.56 |
| Including: 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 | - | - | 14,925,350.48 | 22,908,237.56 | 14,925,350.48 |
| Changes in fair value of other equity instruments | 75,673,134.08 | 940,000.00 | - | 235,000.00 | 705,000.00 | - | 76,378,134.08 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 13,252,844.49 | (954,554,782.61) | - | - | (348,242,893.56) | (606,311,889.05) | (334,990,049.07) |
| Including: Other comprehensive income that may be transferred to profit or loss under equity method | 100,000.00 | (65,347,540.69) | - | - | (25,779,604.80) | (39,567,935.89) | (25,679,604.80) |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | (889,207,241.92) | - | - | (322,463,288.76) | (566,743,953.16) | (309,310,444.27) |
| Total other comprehensive income | 88,925,978.57 | (915,781,194.57) | - | 235,000.00 | (332,612,543.08) | (583,403,651.49) | (243,686,564.51) |
- 100 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Special reserve
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Item
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2020 | ||||
| Production safety reserve | 12,386,734.70 | 26,720,701.58 | 16,515,158.87 | 22,592,277.41 |
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2019 | ||||
| Production safety reserve | 8,231,080.43 | 66,424,472.16 | 54,201,356.20 | 20,454,196.39 |
46. Surplus reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2020 | ||||
| Statutory surplus reserve | 630,345,307.43 | - | - | 630,345,307.43 |
| Item | Opening balance | Increase | Decrease | Closing balance |
| For the period from 1 January to 30 June 2019 | ||||
| Statutory surplus reserve | 527,175,908.67 | - | - | 527,175,908.67 |
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
| Item | Amount | Proportion of appropriation or allocation |
| For the period from 1 January to 30 June 2020 | ||
| Unappropriated profit at the end of prior year before adjustment | 11,467,166,351.85 | |
| Adjustment of total unappropriated profit at the beginning of period | - | |
| Unappropriated profit at the beginning of period after adjustment | 11,467,166,351.85 | |
| Add: Net profit attributable to shareholders of the Company for the period | 632,798,585.83 | |
| Others | - | |
| Less: Appropriation to statutory surplus reserve | - | |
| Appropriation to discretionary surplus reserve | - | |
| Appropriation to general risk reserve | - | |
| Ordinary shares' dividends payable | 884,287,957.04 | Note |
| Ordinary shares' dividends converted into share capital | - | |
| Unappropriated profit at the end of the period | 11,215,676,980.64 | |
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
| Item | Amount | Proportion of appropriation or allocation |
| For the period from 1 January to 30 June 2019 | ||
| Unappropriated profit at the end of prior year before adjustment | 8,915,817,110.21 | |
| Adjustment of total unappropriated profit at the beginning of the period | (37,858,457.43) | |
| Unappropriated profit at the beginning of the period after adjustment | 8,877,958,652.78 | |
| Add: Net profit attributable to shareholders of the Company for the period | 2,299,181,330.61 | |
| Less: Appropriation to statutory surplus reserve | - | |
| Appropriation to discretionary surplus reserve | - | |
| Appropriation to general risk reserve | - | |
| Ordinary shares' dividends payable | 204,449,011.09 | |
| Ordinary shares' dividends converted into share capital | - | |
| Unappropriated profit at the end of the period | 10,972,690,972.30 | |
48. Operating income and operating costs
(1) Operating income and operating costs
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the priorperiod | ||
| Income | Cost | Income | Cost | |
| Principal operating | 5,850,744,731.11 | 3,606,455,926.27 | 5,757,493,642.27 | 3,491,922,787.72 |
| Other operating | 71,752,427.37 | 109,627,779.63 | 76,859,779.06 | 116,097,908.19 |
| Total | 5,922,497,158.48 | 3,716,083,705.90 | 5,834,353,421.33 | 3,608,020,695.91 |
(2) Revenue from contracts
Unit: RMB
| Categories of contracts | Ports operation | Bonded logistics operation | Other operation | Total |
| Mainland China, Hong Kong and Taiwan area | 3,957,372,355.89 | 185,961,167.42 | 71,752,427.37 | 4,215,085,950.68 |
| - Pearl River Delta | 2,376,811,691.68 | 127,771,606.01 | 71,752,427.37 | 2,576,335,725.06 |
| - Yangtze River Delta | - | - | - | - |
| - Bohai Rim | 28,650,483.01 | 58,189,561.41 | - | 86,840,044.42 |
| - Other areas | 1,551,910,181.20 | - | - | 1,551,910,181.20 |
| Other countries | 1,701,430,029.46 | 5,981,178.34 | - | 1,707,411,207.80 |
| Total | 5,658,802,385.35 | 191,942,345.76 | 71,752,427.37 | 5,922,497,158.48 |
- 102 -
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
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Property tax | 32,842,873.99 | 25,394,756.09 |
| Land use tax | 14,571,335.92 | 16,894,999.35 |
| Stamp duty | 4,361,690.39 | 2,444,903.78 |
| City construction and maintenance tax | 3,019,566.75 | 2,978,839.39 |
| Education surcharges and local education surcharges | 2,269,207.71 | 2,380,123.86 |
| Others (Note) | 20,313,404.39 | 46,381,888.95 |
| Total | 77,378,079.15 | 96,475,511.42 |
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.
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V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
50. Administrative expense
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Employee's salary | 501,741,930.77 | 426,442,977.75 |
| Depreciation expenses | 43,638,413.40 | 37,107,071.34 |
| Amortization of intangible assets | 32,102,518.54 | 25,695,054.54 |
| Fees paid to agencies | 32,392,185.46 | 22,272,821.00 |
| Others | 127,825,229.20 | 135,726,793.73 |
| Total | 737,700,277.37 | 647,244,718.36 |
51. Financial expenses
Unit: RMB
| Amount incurred in the current period | Amount incurred in the prior period | |
| Interest expense | 977,499,521.99 | 1,007,611,049.92 |
| Less: Capitalized interest expenses | 29,853,904.73 | 20,983,804.08 |
| Less: Interest income | 142,415,864.44 | 139,353,821.46 |
| Interest expenses of lease liabilities | 50,304,972.45 | 51,328,052.46 |
| Handling fee | 8,741,650.90 | 21,050,919.62 |
| Exchange differences | (25,043,006.36) | (47,860,182.35) |
| Others | 2,426,563.56 | 1,317,410.77 |
| Total | 841,659,933.37 | 873,109,624.88 |
52. Other income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Transferred from deferred income | 18,982,578.73 | 20,048,198.10 |
| Unemployment insurance reimbursement | 15,044,277.64 | - |
| Additional deduction of VAT | 7,056,318.09 | 4,526,313.56 |
| Financial subsidy of discount loan for key logistics enterprises | 3,934,700.00 | 3,000,000.00 |
| Enterprise R & D funding | 2,377,400.00 | 4,241,000.00 |
| Return of tax service charge | 2,238,534.38 | 2,458,183.34 |
| System operation and maintenance award of bonded company | 1,000,000.00 | - |
| Modern logistics project support fund | 600,000.00 | 4,923,380.55 |
| Reward and support fund | 230,000.00 | 2,000,000.00 |
| Electricity subsidy | 79,147.10 | 1,288,071.18 |
| 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 |
| Others | 4,054,319.45 | 2,954,061.38 |
| Total | 55,597,275.39 | 73,092,505.76 |
- 104 -
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
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Long-term equity investments income under equity method | 1,394,604,771.65 | 1,795,952,978.08 |
| Investment income on other non-current financial assets | 72,554,362.03 | 106,288,257.13 |
| Interest income on debt investments | 37,722,123.77 | - |
| Dividend income on other equity instruments | 460,131.33 | 120,000.00 |
| Gains from remeasurement of previously held equity at fair value upon obtaining the control | - | 835,434,368.51 |
| Others | - | (112,746,119.16) |
| Total | 1,505,341,388.78 | 2,625,049,484.56 |
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
| Investee | Amount incurred in the current period | Amount incurred in the prior period | Reason for changes |
| Shanghai International Port (Group) Co., Ltd. | 1,022,649,024.58 | 1,164,668,288.63 | Changes in net profit of investee |
| Terminal Link SAS | 108,374,645.14 | 152,192,824.94 | Changes in net profit of investee |
| Dalian Port Co., Ltd. | 88,081,029.71 | 59,283,560.53 | Changes in net profit of investee |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | 55,508,480.73 | 63,060,915.99 | Changes in net profit of investee |
| Qingdao Qianwan United Container Terminal Co., Lt. | 51,573,423.78 | 69,739,231.62 | Changes in net profit of investee |
| Euro-Asia Oceangate, S.a` r.l. | 32,577,150.24 | 43,143,162.57 | Changes in net profit of investee |
| Others | 35,841,017.47 | 243,864,993.80 | Changes in net profit of investee |
| Total | 1,394,604,771.65 | 1,795,952,978.08 |
54. Gains (losses) on changes in fair value
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Other non-current financial assets | (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
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| I. Gains (losses) on impairment of credit of accounts receivable | 107,787.60 | 5,181,091.87 |
| 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 |
- 105 -
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
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Gains from decline in value of inventories | 947,693.77 | 25,051.16 |
57. Gains on disposal of assets
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current period |
| Gains on disposal of non-current assets (Note) | 560,256,383.38 | 4,169,857,166.53 | 560,256,383.38 |
| Including: Gains (losses) on disposal of fixed assets | (17,221,138.93) | (13,060.65) | (17,221,138.93) |
| Gains on disposal of intangible assets | 579,800,163.81 | 4,169,848,063.69 | 579,800,163.81 |
| 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
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current period |
| Government grants (Note) | 16,416,962.22 | 313,000.00 | 16,416,962.22 |
| Insurance compensation received | 3,485,302.26 | - | 3,485,302.26 |
| Gains from scrapping of non current assets | 2,026,187.96 | - | 2,026,187.96 |
| Compensation received for contracts violation | 864,126.63 | 602,937.10 | 864,126.63 |
| Gains from inventory profit | 541.89 | - | 541.89 |
| Others | 4,952,244.43 | 13,463,681.24 | 4,952,244.43 |
| Total | 27,745,365.39 | 14,379,618.34 | 27,745,365.39 |
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
| Item | Amount incurred in the current period | Amount incurred in the prior period | Amount included in non-recurring profit or loss for the current period |
| Compensation, liquidated damages and penalties | 9,383,479.78 | 1,604,926.12 | 9,383,479.78 |
| Litigation losses | 6,107,367.67 | 446,626.81 | 6,107,367.67 |
| Losses on retirement of non-current assets | 4,646,632.04 | 2,315,206.28 | 4,646,632.04 |
| Donations | 433,214.18 | 2,639,889.06 | 433,214.18 |
| Others | 2,539,628.84 | 499,726.02 | 2,539,628.84 |
| Total | 23,110,322.51 | 7,506,374.29 | 23,110,322.51 |
60. Income tax expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the priorperiod |
| Current tax expenses | 643,503,058.23 | 1,523,523,436.98 |
| Deferred tax expenses | (130,246,569.35) | 494,447,313.18 |
| Total | 513,256,488.88 | 2,017,970,750.16 |
Reconciliation of income tax expenses to the accounting profit is as follows:
Unit: RMB
| Item | Amount incurred in the current period |
| Accounting profit | 2,310,950,971.28 |
| Income tax expenses calculated at 25% | 577,737,742.82 |
| Effect of non-deductible cost, expenses and losses | 140,552,914.76 |
| Accrued income tax expenses | 179,767,140.01 |
| Effect of deductible temporary differences and deductible losses for which the deferred tax assets are not recognized in current period | 46,354,897.88 |
| 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 expenses | 513,256,488.88 |
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
| Item | Closing balance | Opening balance |
| Equity investment in Colombo International Container Terminals Limited (Note 1) | 1,791,333,094.59 | 1,591,452,920.23 |
| Equity investment in Thesar Maritime Limited (Note 1) | 826,246,562.88 | 799,684,707.77 |
| Fixed assets (Note 2) | 339,337,781.70 | 349,612,960.23 |
| Intangible assets (Note 2) | 341,849,222.50 | 345,131,760.52 |
| Construction in progress (Note 2) | 37,219,474.00 | 23,840,920.42 |
| Cash and bank balances (Note 3) | 16,456,386.94 | 15,648,978.15 |
| Total | 3,352,442,522.61 | 3,125,372,247.32 |
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
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Interest income | 88,947,079.19 | 111,184,074.51 |
| Government grants | 45,030,531.57 | 342,134,131.96 |
| Guarantees and deposits | 36,793,265.23 | 17,708,608.61 |
| Insurance compensation | 6,093,294.49 | 1,584,445.49 |
| Rentals | 3,840,803.19 | 6,130,365.04 |
| Harbor construction fee and service charge refund | 161,267.76 | 21,352.76 |
| Others | 202,808,304.26 | 149,564,683.66 |
| Total | 383,674,545.69 | 628,327,662.03 |
- 108 -
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
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Operating expenses such as operating costs and administration expense etc. | 107,025,537.40 | 82,273,477.12 |
| Advance payment | 93,495,592.53 | 128,526,655.26 |
| Guarantees and deposits | 16,294,617.98 | 11,844,446.05 |
| Rentals | 9,220,211.56 | 26,768,612.20 |
| Port construction fee | 6,631,496.50 | 6,612,997.74 |
| Port charges | 2,933,172.39 | 10,694,022.45 |
| Berth dredging fee | 173,000.00 | 19,810,544.00 |
| Harbour dues on cargo | - | 1,647,007.40 |
| Others | 100,521,371.52 | 89,782,545.95 |
| Total | 336,294,999.88 | 377,960,308.17 |
(3) Other cash receipts relating to investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Recovery of project advance principal | 363,580,000.00 | - |
| Recovery of loans | 43,282,119.52 | 1,017,690,000.00 |
| Profit and loss adjustment of Zhanjiang port in transition period | 3,803,477.07 | - |
| 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 |
| Others | 99,121,590.00 | 8,027,808.23 |
| Total | 509,787,186.59 | 2,641,747,342.20 |
(4) Other cash payments relating to investing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Related party borrowings | 3,009,744,121.38 | 54,390,000.00 |
| 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 |
| Others | 25,948.75 | 17,106,451.45 |
| Total | 3,009,770,070.13 | 973,903,129.78 |
(5) Other cash payments relating to financing activities
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Acquisition of minority shareholders' equity by CMPort | 755,986,916.38 | - |
| Lease payments | - | 170,160,928.54 |
| Others | 585,881.79 | 45,830,052.13 |
| Total | 756,572,798.17 | 215,990,980.67 |
- 109 -
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 information | Amount incurred in the current period | Amount incurred in the prior period |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 1,797,694,482.40 | 6,057,737,185.16 |
| Add: Provision for impairment losses of assets | (947,693.77) | (25,051.16) |
| Provision for impairment losses of credit | 3,636,037.50 | (7,699,134.78) |
| Depreciation of fixed assets | 942,771,805.97 | 817,471,364.36 |
| Depreciation of investment property | 94,989,539.23 | 95,124,919.10 |
| Depreciation of right-of-use assets | 154,664,548.43 | 152,337,348.71 |
| Amortization of intangible assets | 310,995,752.52 | 318,766,288.91 |
| Amortization of long-term prepaid expenses | 20,611,708.88 | 9,815,827.73 |
| 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 assets | 2,620,444.08 | 2,315,206.28 |
| Losses (gains) on changes in fair value | 295,735,653.30 | (643,627,313.01) |
| Financial expenses | 972,907,583.35 | 990,095,115.95 |
| 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 payables | 1,107,382,891.16 | 1,312,215,203.02 |
| Net cash flows from operating activities | 2,071,426,144.92 | 2,556,861,915.52 |
| 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 cash | 7,240,359,956.05 | 5,618,184,649.19 |
| Less: Opening balance of cash | 7,714,157,995.87 | 5,373,281,504.75 |
| 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
| Item | Closing balance | Opening balance |
| I. Cash | 7,240,359,956.05 | 7,714,157,995.87 |
| Including: Cash on hand | 277,419.74 | 331,305.65 |
| Bank deposits | 6,729,963,748.99 | 7,422,490,058.00 |
| Other monetary funds | 510,118,787.32 | 291,336,632.22 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 7,240,359,956.05 | 7,714,157,995.87 |
- 110 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Foreign currency monetary items
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Closing balance of original currency | Exchange rate | Closing amount in RMB |
| Cash and bank balances | 965,538,245.40 | ||
| Including: HKD | 11,233,024.50 | 0.9104 | 10,226,545.50 |
| USD | 29,902,942.13 | 7.0555 | 210,980,208.20 |
| EUR | 67,004,641.95 | 7.9832 | 534,911,457.62 |
| RMB | 209,420,034.08 | 1.0000 | 209,420,034.08 |
| Accounts receivable | 269,115,711.60 | ||
| Including: HKD | 7,098,263.59 | 0.9104 | 6,462,259.17 |
| USD | 4,280,591.86 | 7.0555 | 30,201,715.87 |
| EUR | 29,117,614.06 | 7.9832 | 232,451,736.56 |
| Other receivables | 2,081,176,222.45 | ||
| Including: HKD | 31,419,196.08 | 0.9104 | 28,604,036.11 |
| USD | 21,657,514.40 | 7.0555 | 152,804,592.85 |
| EUR | 101,744,535.37 | 7.9832 | 812,246,974.77 |
| RMB | 1,087,520,618.72 | 1.0000 | 1,087,520,618.72 |
| Long-term receivables | 3,000,329,210.04 | ||
| Including: USD | 420,858,089.63 | 7.0555 | 2,969,364,251.38 |
| EUR | 3,878,765.24 | 7.9832 | 30,964,958.66 |
| Short-term borrowings | 8,318,239,500.00 | ||
| Including: HKD | 605,000,000.00 | 0.9104 | 550,792,000.00 |
| USD | 945,000,000.00 | 7.0555 | 6,667,447,500.00 |
| RMB | 1,100,000,000.00 | 1.0000 | 1,100,000,000.00 |
| Accounts payable | 34,898,120.84 | ||
| Including: HKD | 2,526,082.61 | 0.9104 | 2,299,745.61 |
| USD | 73,748.22 | 7.0555 | 520,330.57 |
| EUR | 4,018,193.79 | 7.9832 | 32,078,044.66 |
| Other payables | 802,552,378.38 | ||
| Including: HKD | 17,899,444.61 | 0.9104 | 16,295,654.37 |
| USD | 87,784,885.06 | 7.0555 | 619,366,256.54 |
| EUR | 17,626,108.22 | 7.9832 | 140,712,747.14 |
| RMB | 26,177,720.33 | 1.0000 | 26,177,720.33 |
| Non-current liabilities due within one year | 2,031,848,117.45 | ||
| Including: USD | 248,308,010.41 | 7.0555 | 1,751,937,167.45 |
| EUR | 35,062,500.00 | 7.9832 | 279,910,950.00 |
| Long-term borrowings | 1,094,737,280.00 | ||
| Including: USD | 34,700,000.00 | 7.0555 | 244,825,850.00 |
| EUR | 106,462,500.00 | 7.9832 | 849,911,430.00 |
| Bonds payable | 19,713,613,689.34 | ||
| Including: USD | 2,439,743,985.45 | 7.0555 | 17,213,613,689.34 |
| RMB | 2,500,000,000.00 | 1.0000 | 2,500,000,000.00 |
| Long-term payables | 431,092,800.00 | ||
| Including: EUR | 54,000,000.00 | 7.9832 | 431,092,800.00 |
- 111 -
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
66. Government grants
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Type
| Type | Amount | Item | Account | Amount included in profit or loss for the period |
| Related to income | 16,060,000.00 | Zhanjiang Municipal Government-Special Fund for Promoting High-quality Economic Development (Two-way Investment Direction) | Non operating income | 16,060,000.00 |
| Related to income | 15,044,277.64 | Unemployment insurance reimbursement | Other income | 15,044,277.64 |
| Related to income | 3,934,700.00 | Financial subsidy of discount loan for key logistics enterprises | Other income | 3,934,700.00 |
| Related to income | 2,377,400.00 | Enterprise R & D funding | Other income | 2,377,400.00 |
| Related to income | 1,000,000.00 | System operation and maintenance award of bonded company | Other income | 1,000,000.00 |
| Related to income | 4,963,466.55 | Others | Other income | 4,963,466.55 |
| Related to income | 356,962.22 | Others | Non operating income | 356,962.22 |
| Total | 43,736,806.41 | 43,736,806.41 |
67. Lease
Undiscounted lease receipts subsequent to the balance sheet date are as follows:
Unit: RMB
| Maturity analysis of undiscounted lease receipts | 30/6/2020 |
| 1st year subsequent to the balance sheet date | 260,970,198.78 |
| 2nd year subsequent to the balance sheet date | 192,812,597.55 |
| 3rd year subsequent to the balance sheet date | 147,217,789.82 |
| 4th year subsequent to the balance sheet date | 118,968,080.57 |
| 5th year subsequent to the balance sheet date | 106,878,654.28 |
| Subsequent years | 470,866,322.86 |
| Total | 1,297,713,643.86 |
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 subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 550.00 | 100.00 | - | Established through investment |
| Chiwan Wharf (Hong Kong) Co., Ltd. | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD1,000,000 | 100.00 | - | Established through investment |
| Dongguan Chiwan Warf Co., Ltd. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 45,000.00 | 85.00 | - | Established through investment |
| Dongguan Chiwan Terminal Co., Ltd. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 40,000.00 | 100.00 | - | Established through investment |
| Shenzhen Chiwan Harbor Container Co. Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 28,820.00 | 100.00 | - | Business combination involving enterprises under common control |
| Shenzhen Chiwan Port Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 1,500.00 | 100.00 | - | Business combination involving enterprises under common control |
| Chiwan Container Terminal Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD95,300,000 | 55.00 | 20.00 | Business combination involving enterprises under common control |
| Shenzhen Chiwan Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 2,400.00 | 100.00 | - | Business combination involving enterprises under common control |
| Chiwan Shipping (Hong Kong) Limited | Hong Kong, PRC | Hong Kong, PRC | Logistics support services | HKD800,000 | 100.00 | - | Business combination involving enterprises under common control |
| CMPort (Note 1) | Hong Kong, PRC | Hong Kong, PRC | Investment holding | HKD40,614,228,200.00 | 40.91 | - | Business combination involving enterprises under common control |
| China Merchants Bonded Logistics Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 70,000.00 | 40.00 | 60.00 | Business combination involving enterprises under common control |
| China Merchants International Information Technology Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | IT service | 5,000.00 | 23.16 | 76.84 | Business combination involving enterprises under common control |
| China Merchants International (China) Investment Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment holding | USD30,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| CMT | Qingdao, PRC | Qingdao, PRC | Logistics support services | USD206,300,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants Container Services Limited | Hong Kong, PRC | Hong Kong, PRC | Logistics support services | HKD500,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants Port Services (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 55,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Haiqin Project Management Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Engineering supervision | 300.00 | - | 100.00 | Business combination involving enterprises under common control |
| ATJ | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | HKD100,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| ASJ | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | HKD100,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| China Merchants International Terminal (Qingdao) Co., Ltd. | Qingdao, PRC | Qingdao, PRC | Logistics support services | USD44,000,000 | - | 90.10 | Business combination involving enterprises under common control |
| Colombo International Container Terminals Limited | Sri Lanka | Sri Lanka | Logistics support services | USD150,000,100 | - | 85.00 | Business combination involving enterprises under common control |
| Shenzhen Mawan Port Services Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Magang Cangma Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 33,500.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Mawan Port Service Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Zhangzhou China Merchants Tugboat Co., Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 1,500.00 | - | 100.00 | Business combination involving enterprises under common control |
- 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 subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| Zhangzhou China Merchants Port Co., Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 100,000.00 | - | 60.00 | Business combination involving enterprises under common control |
| ZCMG (note 2) | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 44,450.00 | - | 31.00 | Business combination involving enterprises under common control |
| Shekou Container Terminals Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | HKD618,201,200 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Lianyunjie Container Terminals Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 60,854.90 | - | 100.00 | Business combination involving enterprises under common control |
| Anxunjie Container Terminals (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 127,600.00 | - | 100.00 | Business combination involving enterprises under common control |
| Anyunjie Port Warehousing Service (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Preparation for warehousing project | 6,060.00 | - | 100.00 | Business combination involving enterprises under common control |
| Shenzhen Haixing Harbor Development Co., Ltd | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD15,151,500 | - | 67.00 | Business combination involving enterprises under common control |
| Shenzhen Lianyongtong Terminal Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD7,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| Yide Port | Foshan, PRC | Foshan, PRC | Logistics support services | 21,600.00 | - | 51.00 | Business combination involving enterprises under common control |
| Mega Shekou Container Terminals Limited | British Virgin Islands | British Virgin Islands | Investment holding | USD120.00 | - | 80.00 | Business combination involving enterprises under common control |
| Thesar Maritime Limited | Cyprus | Cyprus | Investment holding | EUR5,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| LCT | Republic of Togo | Republic of Togo | Logistics support services | XOF200,000,000 | - | 100.00 | Business combination involving enterprises under common control |
| Gainpro Resources Limited | British Virgin Islands | British Virgin Islands | Investment holding | USD 1.00 | - | 100.00 | Business combination involving enterprises under common control |
| Hambantota International Port Group (Private)Limited | Sri Lanka | Sri Lanka | Logistics support services | USD794,000,000 | - | 85.00 | Business combination involving enterprises under common control |
| Shantou port | Shantou, PRC | Shantou, PRC | Logistics support services | 12,500.00 | - | 60.00 | Business combination involving enterprises under common control |
| JYRT | Shenzhen, PRC | Shenzhen, PRC | Property lease servce etc. | 80,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| QHW | Shenzhen, PRC | Shenzhen, PRC | Property lease servce etc. | 20,000.00 | - | 100.00 | Business combination involving enterprises under common control |
| Juzhongzhi Investment (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment consulting | 4,000.00 | - | 75.00 | Business combination involving enterprises under common control |
| Shenzhen Lianda Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 200.00 | - | 60.29 | Business combination involving enterprises under common control |
| Zhangzhou Zhongli Outer Wheel Tally Co., Ltd | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 200.00 | - | 84.00 | Business combination involving enterprises under common control |
| China Merchants Holdings (Djibouti) FZE | Djibouti | Djibouti | Logistics support services | USD38,140,000 | - | 100.00 | Business combination involving enterprises under common control |
| Xinda Resources Limited | British Virgin Islands | British Virgin Islands | Investment holding | USD 107,620,000 | - | 77.45 | Business combination involving enterprises under common control |
| Kong Rise Development Limited | Hong Kong, PRC | Hong Kong, PRC | Investment holding | USD 107,620,000 | - | 100.00 | Business combination involving enterprises under common control |
| TCP | Brazil | Brazil | Logistics support services | BRL 68,851,600 | - | 100.00 | Business 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 subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered capital (RMB'0000, unless otherwise specified) | Proportion of ownership Interest(%) | Acquisition method | |
| Direct | Indirect | ||||||
| Direcet Achieve Investments Limited | Hong Kong, PRC | Hong Kong, PRC | Investment holding | USD 814,781,300 | - | 100.00 | Business combination not involving enterprises under common control |
| China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. ("RoRo Logistics") | Zhoushan, PRC | Zhoushan, PRC | Logistics support services | 17,307.86 | 51.00 | - | Assets acquisition |
| Shenzhen Haixing Logistics Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 7,066.79 | - | 100.00 | Assets acquisition |
| Zhanjiang Port | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 587,420.91 | 3.42 | 54.93 | Business combination not involving enterprises under common control |
| Zhanjiang Port International Container Terminal Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 60,000.00 | - | 80.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Petrochemical Terminal Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 18,000.00 | - | 50.00 | Business combination not involving enterprises under common control |
| China Ocean Shipping Tally Co., Ltd., Zhanjiang (Note 5) | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 84.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Donghaidao Bulk Cargo Terminal Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 5,000.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Bonded Service Co., Ltd., Guangdong | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 300.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Guangdong Zhanjiang Port Logistics Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 10,000.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Zhanjiang Port Haichuan Trading Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 200.00 | - | 100.00 | Business combination not involving enterprises under common control |
| Guangdong Zhanjiang Port Longteng Shipping Co., Ltd. | Zhanjiang, PRC | Zhanjiang, PRC | Logistics support services | 9,000.00 | - | 70.00 | Business 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 subsidiary | Proportion of ownership interest held by the minority shareholders (%) | Profit or loss attributable to minority shareholders in the current period | Dividends distributed to minority shareholders in the current period | Balance of minority interests at the end of the period |
| CMPort | 59.09 | 1,105,672,520.19 | 91,061,700.49 | 53,033,521,500.73 |
- 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 subsidiary | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| CMPort | 11,091,093,281.75 | 124,033,746,605.53 | 135,124,839,887.28 | 21,024,836,572.24 | 33,693,107,917.09 | 54,717,944,489.33 | 11,159,452,476.24 | 119,576,502,129.38 | 130,735,954,605.62 | 13,858,924,526.23 | 35,059,524,441.90 | 48,918,448,968.13 |
Unit: RMB
| Name of the subsidiary | Amount incurred in the current period | Amount incurred in the prior period | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
| CMPort | 3,692,963,958.88 | 1,592,920,984.37 | 515,475,406.96 | 1,499,234,240.53 | 3,861,739,507.52 | 5,309,663,495.61 | 4,363,679,239.08 | 1,910,841,306.56 |
- 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
| Investee | Principal place of business | Place of registration | Nature of business | Proportion of ownership interests held by the Group (%) | Accounting method of investments in associates | |
| Direct | Indirect | |||||
| Associates | ||||||
| Shanghai International Port (Group) Co., Ltd. | Shanghai, PRC | Shanghai, PRC | Port and container terminal business | - | 26.77 | Equity method |
- 119 -
VII. EQUITY IN OTHER ENTITIES - continued
4. Key financial information of material associates
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Shanghai International Port (Group) Co., Ltd. | |
| Closing balance / Amount incurred in the current period | Opening balance/ Amount incurred in the prior period | |
| Current assets | 53,021,178,713.65 | 40,399,631,516.67 |
| Including: Cash and cash equivalents | 28,832,799,623.74 | 17,900,365,675.69 |
| Non-current assets | 106,481,259,322.01 | 101,777,664,401.29 |
| Total assets | 159,502,438,035.66 | 142,177,295,917.96 |
| Current liabilities | 38,814,601,901.88 | 19,339,272,490.14 |
| Non-current liabilities | 29,504,746,693.90 | 32,049,165,771.78 |
| Total liabilities | 68,319,348,595.78 | 51,388,438,261.92 |
| Minority interests | 8,618,031,046.19 | 8,732,108,869.09 |
| Equity attributable to shareholders of the parent company | 82,565,058,393.69 | 82,056,748,786.95 |
| Share of net assets calculated based on the proportion of ownership interests | 22,102,666,131.99 | 21,966,591,650.27 |
| Adjustments | ||
| -Goodwill | 2,076,585,747.12 | 2,076,585,747.12 |
| -Others | (131,696,948.52) | (125,134,529.84) |
| Carrying amounts of equity investments in associates | 24,047,554,930.59 | 23,918,042,867.55 |
| Fair value of publicly quoted equity investments in associates | 26,050,761,181.20 | 35,788,783,813.22 |
| Operating income | 12,038,672,650.45 | 17,198,832,228.65 |
| Net profit | 4,328,854,036.44 | 4,880,941,188.89 |
| Other comprehensive income | 195,337,471.93 | (20,755,561.56) |
| Total comprehensive income | 4,524,191,508.37 | 4,860,185,627.33 |
| Dividends received from associates in the current year | 899,371,516.97 | 955,194,576.56 |
5. Summarized financial information of immaterial associates and joint ventures
Unit: RMB
| Closing balance / Amount incurred in the current period | Opening balance/ Amount incurred in the prior period | |
| Joint ventures: | ||
| Total carrying amount of investments | 9,530,205,565.30 | 9,392,226,566.22 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 177,436,875.24 | 254,349,467.45 |
| - Other comprehensive income | - | - |
| - Total comprehensive income | 177,436,875.24 | 254,349,467.45 |
| Associates: | ||
| Total carrying amount of investments | 28,458,665,901.40 | 24,606,269,949.49 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 194,518,871.83 | 376,935,222.00 |
| - Other comprehensive income | (23,400,026.46) | (51,009,353.70) |
| - Total comprehensive income | 171,118,845.37 | 325,925,868.30 |
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
| Item | Closing balance | Opening balance |
| Cash and bank balances | 794,814,449.74 | 829,827,620.81 |
| Accounts receivable | 269,115,711.60 | 134,801,300.52 |
| Other receivables | 2,032,171,711.19 | 558,948,223.20 |
| Long-term receivables | 3,000,329,210.04 | 9,800,295.76 |
| Short-term borrowings | 1,650,792,000.00 | 1,304,398,148.00 |
| Accounts payable | 34,898,120.84 | 30,431,392.31 |
| Other payables | 283,742,226.21 | 261,684,252.87 |
| Non-current liabilities due within one year | 279,910,950.00 | 261,401,461.04 |
| Long-term borrowings | 849,911,430.00 | 976,546,725.00 |
| Bonds payable | 2,500,000,000.00 | 2,500,000,000.00 |
| Long-term payables | 431,092,800.00 | 431,361,402.17 |
- 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
| Item | Changes in exchange rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| All foreign currencies | 5% increase against RMB | (21,788,739.77) | (21,788,739.77) | (13,659,249.98) | (13,659,249.98) |
| All foreign currencies | 5% decrease against RMB | 21,788,739.77 | 21,788,739.77 | 13,659,249.98 | 13,659,249.98 |
| All foreign currencies | 5% increase against USD | 1,832,900.68 | 1,832,900.68 | 62,242.42 | 62,242.42 |
| All foreign currencies | 5% decrease against USD | (1,832,900.68) | (1,832,900.68) | (62,242.42) | (62,242.42) |
| All foreign currencies | 5% increase against HKD | (247,590,042.34) | (247,590,042.34) | (1,142,869,420.70) | (1,142,869,420.70) |
| All foreign currencies | 5% decrease against HKD | 247,590,042.34 | 247,590,042.34 | 1,142,869,420.70 | 1,142,869,420.70 |
| All foreign currencies | 5% increase against FCFA | (59,525,285.86) | (59,525,285.86) | (52,662,699.84) | (52,662,699.84) |
| All foreign currencies | 5% decrease against FCFA | 59,525,285.86 | 59,525,285.86 | 52,662,699.84 | 52,662,699.84 |
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
| Item | Changes in interest rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| Short-term borrowings and long-term borrowings | 1% increase | (145,999,335.58) | (145,999,335.58) | (118,576,065.38) | (118,576,065.38) |
| Short-term borrowings and long-term borrowings | 1% decrease | 145,999,335.58 | 145,999,335.58 | 118,576,065.38 | 118,576,065.38 |
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
| Item | Carrying amount | Gross amount | Within 1 year | 1 to 5 years | Over 5 years |
| Short-term borrowings | 15,663,707,514.47 | 15,744,098,724.62 | 15,744,098,724.62 | - | - |
| Notes payable | 15,959,326.09 | 15,959,326.09 | 15,959,326.09 | - | - |
| Accounts payable | 552,729,739.72 | 552,729,739.72 | 552,729,739.72 | - | - |
| Other payables | 4,373,981,275.11 | 4,373,981,275.11 | 4,373,981,275.11 | - | - |
| Non-current liabilities due within one year | 4,502,599,437.65 | 5,920,351,050.49 | 5,920,351,050.49 | - | - |
| Other current liabilities | 3,190,011,929.49 | 3,216,433,847.30 | 3,216,433,847.30 | - | - |
| Long-term borrowings | 5,921,573,954.17 | 6,706,654,539.87 | - | 5,075,256,963.02 | 1,631,397,576.85 |
| Bonds payable | 20,995,346,998.44 | 24,066,002,677.83 | - | 15,696,447,664.09 | 8,369,555,013.74 |
| Lease liabilities | 1,538,184,794.37 | 2,360,879,098.91 | - | 913,128,190.99 | 1,447,750,907.92 |
| Long-term payables | 1,382,858,269.64 | 1,401,314,459.71 | - | 196,065,960.27 | 1,205,248,499.44 |
| Other non-current liabilities | 2,661,536,365.95 | 2,661,536,365.95 | - | 287,410,821.48 | 2,374,125,544.47 |
- 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
| Item | Fair value at closing balance | |||
| Level 1 | Level 2 | Level 3 | Total | |
| Measurements at fair value continuously | ||||
| Accounts receivable financing | - | 251,312,787.49 | - | 251,312,787.49 |
| Other equity instrument investments | 11,070,000.00 | - | 152,341,272.00 | 163,411,272.00 |
| Other non-current financial assets | 2,617,472,549.73 | - | 16,184,949.08 | 2,633,657,498.81 |
| Total assets measured at fair value continuously | 2,628,542,549.73 | 251,312,787.49 | 168,526,221.08 | 3,048,381,558.30 |
| Other non-current liabilities | - | - | 2,716,758,812.32 | 2,716,758,812.32 |
| Total liabilities measured at fair value continuously | - | - | 2,716,758,812.32 | 2,716,758,812.32 |
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
| Item | Fair value in the current period | Fair value in the prior period | Valuation techniques | Inputs |
| Accounts receivable financing | 251,312,787.49 | 260,760,537.45 | Cash flow discounting | Discount rate |
| Other non-current financial assets | - | 616,000,000.00 | Listed company comparison approach | Share price |
The fair value of non-listed equity instruments included in equity instruments at fair value throughprofit or loss is determined using the valuation techniques such as listed company comparisonapproach etc. During the valuation, the Group needs to make estimates in respect of marketvolatility and relevance etc., select appropriate discount rate and take into consideration ofadjustment of discount and premium.
4. Qualitative and quantitative information of valuation techniques and key parameters
adopted for items continuously measured at level 3 fair value
Unit: RMB
| Item | Fair value in the current period | Fair value in the prior period | Valuation techniques | Inputs |
| Other equity instrument investments | 152,341,272.00 | 152,341,272.00 | Net worth method | Carrying amount |
| Other non-current financial assets | 2,000,000.00 | 2,000,000.00 | Cash flow discounting | Discount rate |
| Other non-current financial assets | 700,834.13 | 700,834.13 | Net worth method | Carrying amount |
| Other non-current financial assets | 13,484,114.95 | 13,484,114.95 | Listed company comparison approach | Share price |
| Other non-current liabilities | 2,706,295,317.44 | 3,326,952,857.86 | Cash flow discounting | Discount rate |
| Other non-current liabilities | - | 732,733,351.01 | Option Pricing method | Exercising 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 parent | Related party relationship | Type of the entity | Place of registration | Legal representative | Nature of business | Issued share capital | Proportion of the Company's ownership interests held by the parent (%) | Proportion of the Company's voting power held by the parent (%) |
| Broadford Global Limited | Parent company | Private limited company (share limited) | Hong Kong | Deng Weidong | Investment holding | HKD 21,120,986,262 | 2.88 | 81.92 (Note) |
Note: Broadford Global Limited directly holds 2.88% equity of the Company, and indirectly
holds 19.29% and 59.75% equity of the Company through the subsidiaries ChinaMerchants Gangtong Development (Shenzhen) Co., Ltd. and China Merchants InvestmentDevelopment Co., Ltd. respectively.
The ultimate controlling shareholder of the Company is China Merchants Group.
2. Subsidiaries of the Company
Details of the subsidiaries of the Company are set out in Note (VII) 1.
- 126 -
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 associate | Relationship with the Company |
| Port of Newcastle and its subsidiaries | Joint 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 Company | Joint venture |
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | Joint venture |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | Joint venture |
| Doraleh Multi-purpose Port | Associate |
| Great Horn Development Company FZCO | Associate |
| International Djibouti Industrial Parks Operation FZCO | Associate |
| Port de Djibouti S.A. | Associate |
| Terminal Link SAS | Associate |
| Tin-Can Island Container Terminal Ltd | Associate |
| Dalian Port Co., Ltd. | Associate |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | Associate |
| Nanshan Group and its subsidiaries | Associate |
| Shanghai International Port (Group) Co., Ltd. | Associate |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | Associate |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Associate |
| Modern Terminals Limited | Associate |
| China Merchants Harbor City | Associate |
| Zhanjiang Xiagang United Development Co., Ltd. | Associate |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Associate |
| Chu Kong River Trade Terminal Co. Ltd. | Associate |
- 127 -
X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
CHINA MERCHANTS PORT GROUP CO., LTD.Name of other related parties
| Name of other related parties | Relationship with the Company |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | Minority shareholders of subsidiaries |
| Zhanjiang Infrastructure | Minority shareholders of subsidiaries |
| Antong Holdings and its subsidiaries (Note) | Connected person |
| China COSCO Shipping Group and its subsidiaries (Note) | Connected person |
| CMHK | Controlled by the same ultimate controlling shareholder |
| Orienture Holdings Co. Ltd. | Controlled by the same ultimate controlling shareholder |
| Sinotrans (NZ) Limited | Controlled by the same ultimate controlling shareholder |
| Guangdong Sinotrans Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Hoi Tung Innotek (Shenzhen) Company Limited | Controlled by the same ultimate controlling shareholder |
| Hoi Tung (Shanghai) Company Limited | Controlled by the same ultimate controlling shareholder |
| South China Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| EuroAsia Dockyard Enterprise and development Ltd. | Controlled by the same ultimate controlling shareholder |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shantou International Container Terminal Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Penavico Warehousing Co., Ltd | Controlled by the same ultimate controlling shareholder |
| Shenzhen Penavico International Freight Co., Ltd | Controlled by the same ultimate controlling shareholder |
| Shenzhen Nanyou (Holdings) Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Qianhai Sinotrans Supply Chain Management Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Shenzhen Qianhai Shekou Free Trade Investment Development Co., Ltd | Controlled by the same ultimate controlling shareholder |
| Shenzhen West Port Security Service Company | Controlled by the same ultimate controlling shareholder |
| China Merchants Landmark (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| China Merchants International Shipping Agency (Shenzhen) Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| 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 |
- 128 -
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 parties | Relationship 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) Limited | Controlled by the same ultimate controlling shareholder |
| Yiu Lian Dockyards Limited | Controlled by the same ultimate controlling shareholder |
| CM Houlder Insurance Brokers Limited | Controlled 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 Limited | Controlled by the same ultimate controlling shareholder |
| China Merchants Port Investment Development Co., Ltd | Controlled 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 Shenzhen | Controlled by the same ultimate controlling shareholder |
| Sinotrans South China Co., Ltd. | Controlled by the same ultimate controlling shareholder |
| Sinotrans Shipping Co., Ltd | Controlled 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 FZCo | Where the ultimate controlling shareholder has significant influence |
| Djibouti International Hotel Company | Where the ultimate controlling shareholder has significant influence |
| China Merchant Bank Co., Ltd. | Where the ultimate controlling shareholder has significant influence |
- 129 -
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 party | Content of transaction | Pricing method and decision procedures of related transactions | Amount incurred in the current period | Amount incurred in the prior period |
| Receipt of service: | ||||
| Nanshan Group and its subsidiaries | Service expenditure | Negotiation | 21,754,790.42 | 20,811,589.38 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service expenditure | Negotiation | 7,457,789.57 | 7,820,606.36 |
| Yiu Lian Dockyards Limited | Service expenditure | Negotiation | 4,313,298.43 | 6,657,382.97 |
| Shenzhen China Merchants Property Management Co., Ltd. | Service expenditure | Negotiation | 3,753,910.42 | 645,848.80 |
| CM Houlder Insurance Brokers Limited | Service expenditure | Negotiation | 2,351,146.06 | 2,368,789.29 |
| Shenzhen West Port Security Service Company | Service expenditure | Negotiation | 2,140,188.70 | - |
| China Merchants Zhangzhou Development Zone Power Supply Co., Ltd. | Service expenditure | Negotiation | 1,902,146.11 | 2,489,368.18 |
| China Merchants Life Insurance Co., Ltd. | Service expenditure | Negotiation | 1,828,081.51 | 1,260,870.00 |
| Khor Ambado FZCo | Service expenditure | Negotiation | 1,334,921.77 | 20,353.80 |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Service expenditure | Negotiation | 1,095,062.50 | 1,551,472.60 |
| Hoi Tung (Shanghai) Company Limited | Service expenditure | Negotiation | 1,075,389.11 | 721,332.69 |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | Service expenditure | Negotiation | 1,011,481.25 | 2,318,455.39 |
| China Merchants (Shenzhen) Power Supply., Ltd. | Service expenditure | Negotiation | - | 1,221,907.07 |
| Other related party | Service expenditure | Negotiation | 5,070,639.39 | 4,397,426.70 |
| China Merchants Group Finance Company Limited | Interest expense | Negotiation | 17,054,903.23 | 22,155,171.89 |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | Interest expense | Negotiation | 3,463,541.67 | - |
| China Merchant Bank Co., Ltd. | Interest expense | Negotiation | 1,510,507.99 | 2,052,399.21 |
| Port de Djibouti S.A. | Interest expense | Negotiation | - | 7,232,442.29 |
| Shenzhen China Merchants Property Management Co., Ltd. | Property utilities | Negotiation | 4,649,769.22 | 3,931,826.86 |
| Nanshan Group and its subsidiaries | Property utilities | Negotiation | 2,579,881.82 | 3,172,865.48 |
| Other related party | Property utilities | Negotiation | 942,608.78 | 896,257.00 |
| Total | 85,290,057.95 | 91,726,365.96 | ||
- 130 -
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 party | Content of transaction | Pricing method and decision procedures of related transactions | Amount incurred in the current period | Amount incurred in the prior period |
| Rendering of service: | ||||
| China COSCO Shipping Group and its subsidiaries | Service revenue | Negotiation | 191,399,439.67 | - |
| COSCO Logistics (Zhanjiang) Co., Ltd. | Service revenue | Negotiation | 65,809,923.78 | 68,740,946.61 |
| Antong Holdings and its subsidiaries | Service revenue | Negotiation | 61,740,139.88 | - |
| China Ocean Shipping Agency (Zhanjiang) Co., Ltd | Service revenue | Negotiation | 26,430,608.95 | 6,555,068.00 |
| Qingdao Qianwan United Container Terminal Co., Lt. | Service revenue | Negotiation | 22,646,763.19 | 23,270,413.55 |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | Service revenue | Negotiation | 19,894,702.69 | 14,512,429.32 |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd | Service revenue | Negotiation | 10,190,194.09 | 9,625,816.92 |
| China Merchants Investment Development Co., Ltd. | Service revenue | Negotiation | 6,875,471.73 | - |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | Service revenue | Negotiation | 4,043,370.07 | 3,512,554.86 |
| South China Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 3,952,260.53 | 1,172,263.27 |
| China Merchants International Cold-Chain (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 3,358,865.70 | 3,219,796.19 |
| Shenzhen Penavico Warehousing Co., Ltd | Service revenue | Negotiation | 3,271,684.66 | 78,569.45 |
| Shenzhen Penavico International Freight Co., Ltd | Service revenue | Negotiation | 3,093,622.85 | - |
| China Merchants International Shipping Agency (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 2,941,424.71 | 2,617,701.90 |
| Yiu Lian Dockyards (Shekou) Limited | Service revenue | Negotiation | 2,412,855.54 | 137,886.77 |
| Shenzhen Qianhai Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 2,382,499.13 | - |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | Service revenue | Negotiation | 2,259,799.79 | 4,237,100.48 |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | Service revenue | Negotiation | 2,170,933.76 | 1,402,503.16 |
| Sinotrans Container Lines Co., Ltd. | Service revenue | Negotiation | 1,867,447.60 | 2,142,579.09 |
| Guizhou East Land Port Operation Co., Ltd. | Service revenue | Negotiation | 1,643,215.08 | 2,648,998.97 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service revenue | Negotiation | 1,612,607.38 | 7,252,854.49 |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Service revenue | Negotiation | 1,467,170.05 | 1,813,217.20 |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Service revenue | Negotiation | 1,453,413.79 | 1,542,824.76 |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Service revenue | Negotiation | 1,381,761.20 | 2,115,762.23 |
| Shantou International Container Terminal Co., Ltd. | Service revenue | Negotiation | 1,263,661.19 | - |
| Doraleh Multi-purpose Port | Service revenue | Negotiation | 1,007,325.33 | 376,841.70 |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Service revenue | Negotiation | 853,254.61 | 3,351,153.05 |
| Zhangzhou COSCO Shipping Agency Co., Ltd. | Service revenue | Negotiation | 544,523.61 | 1,697,544.92 |
| Yiu Lian Dockyards Limited | Service revenue | Negotiation | 37,363.44 | 1,022,126.23 |
| ??????????????????????????????????????? Operation FZCO | Service revenue | Negotiation | - | 3,024,632.49 |
| Sinotrans (NZ) Limited | Service revenue | Negotiation | - | 2,934,349.53 |
| Khor Ambado FZCo | Service revenue | Negotiation | - | 1,926,229.57 |
| Guangdong Zhanjiang Port Longteng Shipping Co., Ltd. | Service revenue | Negotiation | - | 1,894,585.42 |
| Sinotrans South China Co., Ltd. | Service revenue | Negotiation | - | 1,649,637.78 |
| CMHK | Service revenue | Negotiation | - | 1,212,000.00 |
| Other related party | Service revenue | Negotiation | 8,163,554.49 | 6,132,866.04 |
| Terminal Link SAS | Interest income | Negotiation | 47,175,076.70 | 14,073.61 |
| Port of Newcastle and its subsidiaries | Interest income | Negotiation | 29,765,975.26 | 31,081,650.64 |
| China Merchants Harbor City | Interest income | Negotiation | 24,449,639.56 | 21,757,232.69 |
| China Merchant Bank Co., Ltd. | Interest income | Negotiation | 14,161,811.40 | 9,563,846.93 |
| China Merchants Group Finance Company Limited | Interest income | Negotiation | 4,840,581.56 | 5,065,260.89 |
| China Merchants Antong Logistics Management Company | Interest income | Negotiation | 3,248,630.14 | - |
| Khor Ambado FZCo | Interest income | Negotiation | - | 17,843,227.14 |
| Other related party | Interest income | Negotiation | 735,917.68 | 693,354.69 |
| Total | 580,547,490.79 | 267,839,900.54 | ||
- 131 -
X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(2) Leases with related parties
The Group as the lessor:
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Name of the lessee
| Name of the lessee | Type of leased assets | Pricing method and decision procedures of related transactions | Lease income recognized in the current period | Lease income recognized in the prior period |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Buildings | Negotiation | 4,663,926.38 | - |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Buildings | Negotiation | 2,616,103.75 | - |
| China Merchants Food (China) Co., Ltd. | Buildings | Negotiation | 2,338,264.98 | 3,168,622.24 |
| China Communications Import & Export Co., Ltd. | Buildings | Negotiation | 2,304,217.40 | 1,422,211.91 |
| Yiu Lian Dockyards (Shekou) Limited | Buildings | Negotiation | 1,363,141.03 | 1,052,835.10 |
| Nanshan Group and its subsidiaries | Buildings | Negotiation | 1,221,353.05 | 1,148,239.51 |
| China Merchants Securities Co., Ltd. | Buildings | Negotiation | 1,126,349.15 | 1,127,724.90 |
| Qingdao Sinotrans Supply Chain Management Co., Ltd. | Buildings | Negotiation | 1,030,172.01 | - |
| Shenzhen Nanyou (Holdings) Ltd. | Buildings | Negotiation | - | 2,633,394.00 |
| Other related party | Buildings, land use rights | Negotiation | 2,533,033.88 | 1,497,498.50 |
| Total | 19,196,561.63 | 12,050,526.16 |
(3) Related party guarantees
The Group as the guarantor
Unit: RMB
| Secured party | Credit Line | Guaranteed amount | Commencement date | Maturity | The guarantee has been completed or not |
| For the period from 1 January to 30 June 2020 | |||||
| Terminal Link SAS (Note 1) | 80,622,102.91 | 80,622,102.91 | June 2013 | 2033 | No |
| Khor Ambado FZCo(note 2) | 203,198,400.00 | 122,324,592.81 | 24 May 2019 | 2032 | No |
| Total | 283,820,502.91 | 202,946,695.72 | |||
| For the period from 1 January to 30 June 2019 | |||||
| Terminal Link SAS (Note 1) | 78,737,610.08 | 78,737,610.08 | June 2013 | 2033 | No |
| Terminal Link SAS (Note 1) | 10,748,375.00 | 5,266,703.75 | June 2013 | 2019 | No |
| Port de Djibouti S.A. | 343,735,000.00 | 8,077,772.50 | 14 June 2016 | 14 July 2019 | No |
| Khor Ambado FZCo (Note 2) | 197,991,360.00 | 75,761,819.65 | 24 May 2019 | 2032 | No |
| Total | 631,212,345.08 | 167,843,905.98 | |||
Note 1: CMA CGM S.A. is another shareholder of Terminal Link SAS, an associate of the Group.
The Group has made a commitment to CMA CGM S.A. that the Group will providesguarantee for its bank loan financing to the associate Terminal Link SAS and otherliabilities to the extent of the Group's 49% ownership interest in the company. The actualguaranteed amount is RMB 80,622,102.91 on 30 June 2020. If any guarantee liabilityoccurs, the Group will compensate CMA CGM S.A.
Note 2: Khor Ambado FZCo is a related company of the Group's common ultimate controlling
shareholder. The Group provides guarantee for its bank loans and other liabilities, withactual guaranteed amount of RMB 122,324,592.81.
- 132 -
X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(4) Borrowings and loans with related parties
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Related party
| Related party | Amount | Commencement date | Maturity date | Description |
| For the period from 1 January to 30 June 2020 | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 200,225,000.00 | 14 April 2020 | 13 April 2021 | Fixed interest rate of 4.0500% |
| China Merchants Group Finance Company Limited | 50,051,527.78 | 21 May 2020 | 20 May 2021 | Fixed interest rate of 3.7100% |
| China Merchants Group Finance Company Limited | 47,000,000.00 | 6 January 2020 | 7 October 2024 | Fixed interest rate of 4.5125% |
| China Merchants Group Finance Company Limited | 29,032,625.00 | 10 April 2020 | 24 December 2020 | Fixed interest rate of 4.0500% |
| China Merchants Group Finance Company Limited | 20,022,500.00 | 7 April 2020 | 6 April 2021 | Fixed interest rate of 4.0500% |
| China Merchants Group Finance Company Limited | 14,033,425.02 | 13 March 2020 | 12 March 2029 | Fixed interest rate of 4.5050% |
| China Merchants Group Finance Company Limited | 10,000,000.00 | 19 June 2020 | 31 October 2023 | Fixed interest rate of 1.2000% |
| China Merchants Group Finance Company Limited | 6,109,400.45 | 22 June 2020 | 21 June 2024 | Fixed interest rate of 1.2000% |
| China Merchants Group Finance Company Limited | 5,045,500.00 | 25 March 2020 | 12 March 2029 | Fixed interest rate of 4.5050% |
| China Merchants Group Finance Company Limited | 3,758,844.48 | 22 April 2020 | 12 March 2029 | Fixed interest rate of 4.5050% |
| China Merchants Group Finance Company Limited | 2,659,474.10 | 5 June 2020 | 12 March 2029 | Fixed interest rate of 4.5050% |
| Total | 387,938,296.83 | |||
| Lendings | ||||
| Terminal Link SAS | 3,016,715,205.48 | 26 March 2020 | 26 March 2028 | Fixed interest rate of 6.0000% |
| Port of Newcastle and its subsidiaries | 811,518,975.10 | 30 May 2020 | 23 July 2023 | Fixed interest rate of 8.0000% |
| Tianjin Haitian Baoshui Logistics Company Limited | 34,300,000.00 | 3 January 2020 | 2 January 2023 | Fixed interest rate of 4.7500% |
| Total | 3,862,534,180.58 | |||
| For the period from 1 January to 30 June 2019 | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 270,000,000.00 | 22 April 2019 | 21 April 2020 | Fixed interest rate of 4.3500% |
| China Merchants Group Finance Company Limited | 28,000,000.00 | 15 January 2019 | 14 January 2024 | Fixed interest rate of 4.7500% |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 25,000,000.00 | 10 June 2019 | 14 January 2024 | Fixed interest rate of 4.7500% |
| China Merchants Group Finance Company Limited | 20,000,000.00 | 4 June 2019 | 3 June 2020 | Fixed interest rate of 4.3500% |
| Total | 343,000,000.00 | |||
(5) Asset transfer with related parties
| Related Party | Content of transaction | Pricing method and decision procedures of related transactions | Amount incurred in the current period | Amount incurred in the prior period |
| Hoi Tung (Shanghai) Company Limited | Machinery and equipment | Negotiation | 8,202,477.87 | - |
| Hoi Tung Innotek (Shenzhen) Company Limited | Machinery and equipment | Negotiation | 1,946,000.00 | - |
| Other related party | Other Assets | Negotiation | 83,584.00 | 35,422.74 |
| Total | 10,232,061.87 | 35,422.74 |
(6) Compensation for key management personnel
Unit: RMB
| Item | Closing balance | Opening balance |
| Compensation for key management personnel | 12,350,017.98 | 10,650,556.67 |
- 133 -
X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties
(1) Amounts due from related parties
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Item
| Item | Related party | Closing balance | Opening balance |
| Cash and bank balances | China Merchant Bank Co., Ltd. | 1,115,667,135.51 | 1,451,996,464.50 |
| China Merchants Group Finance Company Limited | 1,036,288,190.51 | 890,065,186.36 | |
| Total | 2,151,955,326.02 | 2,342,061,650.86 | |
| Accounts receivable | China COSCO Shipping Group and its subsidiaries | 77,026,055.33 | 60,545,437.55 |
| Antong Holdings and its subsidiaries | 31,304,446.43 | 60,112,564.13 | |
| COSCO Logistics (Zhanjiang) Co., Ltd. | 12,059,883.40 | 7,728,194.66 | |
| Qingdao Qianwan United Container Terminal Co., Lt. | 6,473,409.75 | 4,424,422.68 | |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 4,699,973.04 | 2,986,271.27 | |
| Shenzhen Baohong E-Commerce Integrated Services Co., Ltd. | 4,643,545.31 | 4,643,545.31 | |
| Guizhou Qiandongnan Continental Land Port Operation Co., Ltd. | 3,750,580.90 | 2,010,137.38 | |
| Guizhou East Land Port Operation Co., Ltd. | 3,311,144.39 | 4,043,600.57 | |
| Khor Ambado FZCo | 3,149,183.20 | 3,113,788.09 | |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | 2,653,021.23 | 3,583,505.77 | |
| South China Sinotrans Supply Chain Management Co., Ltd. | 2,099,614.82 | 1,808,219.75 | |
| Sinotrans Container Lines Co., Ltd. | 2,025,087.48 | 1,746,120.89 | |
| Port de Djibouti S.A. | 1,708,652.88 | 1,689,447.85 | |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd | 1,600,216.00 | 5,609,630.60 | |
| Great Horn Development Company FZCo | 1,356,930.50 | 2,771,510.50 | |
| Shenzhen Penavico International Freight Co., Ltd | 1,046,765.62 | - | |
| China Marine Shipping Agency Shenzhen Co. , Ltd. | 433,927.00 | 1,058,089.50 | |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | - | 1,853,183.12 | |
| China Merchants Harbor City | - | 1,536,503.45 | |
| Other related party | 6,470,427.53 | 5,130,480.00 | |
| Total | 165,812,864.81 | 176,394,653.07 |
- 134 -
X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Item
| Item | Related party | Closing balance | Opening balance |
| Other receivables | Shanghai International Port (Group) Co., Ltd. | 857,120,854.56 | - |
| Nanshan Group and its subsidiaries | 317,144,869.88 | 313,724,861.31 | |
| Chu Kong River Trade Terminal Co. Ltd. | 62,316,880.00 | 61,317,510.00 | |
| Dalian Port Co., Ltd. | 51,137,716.59 | - | |
| Tianjin Haitian Bonded Logistics Co., Ltd. | 34,300,000.00 | 33,282,119.52 | |
| Zhanjiang Infrastructure | 31,513,558.59 | 31,513,558.59 | |
| Port de Djibouti S.A. | 25,127,297.77 | 24,832,398.83 | |
| COSCO Logistics (Zhanjiang) Co., Ltd. | 13,751,368.26 | 13,751,368.26 | |
| Shenzhen Qianhai Shekou Free Trade Investment Development Co., Ltd | 4,000,000.00 | - | |
| Csc Roro Logistics Co., Ltd. | 2,899,163.95 | 2,899,163.95 | |
| EuroAsia Dockyard Enterprise and development Ltd. | 1,538,962.01 | 1,514,281.82 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 1,068,658.39 | 1,068,658.39 | |
| Tin-Can Island Container Terminal Ltd | 28,575.55 | 82,625,546.31 | |
| Qingdao Qianwan United Container Terminal Co., Lt. | - | 50,000,000.00 | |
| Guangdong Sinotrans Co., Ltd. | - | 3,803,477.07 | |
| Other related party | 4,329,822.88 | 4,199,662.93 | |
| Total | 1,406,277,728.43 | 624,532,606.98 | |
| Prepayments | Other related party | 696,693.25 | 1,414,261.04 |
| Other current assets | China Merchant Bank Co., Ltd. | 370,762,910.20 | 1,528,851,492.46 |
| Non-current assets due within one year | Terminal Link SAS | 47,347,183.21 | - |
| Port of Newcastle and its subsidiaries | 15,823,685.10 | 809,702,715.78 | |
| Total | 63,170,868.31 | 809,702,715.78 | |
| Long-term receivables | Terminal Link SAS | 2,969,368,022.27 | 9,800,295.76 |
| Port of Newcastle and its subsidiaries | 795,695,290.00 | - | |
| China Merchants Harbor City | 687,968,053.80 | 1,025,631,435.87 | |
| China Merchants Antong Logistics Management Company | 53,248,630.14 | 50,000,000.00 | |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 14,500,000.00 | 14,500,000.00 | |
| Total | 4,520,779,996.21 | 1,099,931,731.63 |
- 135 -
X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Item
| Item | Related party | Closing balance | Opening balance |
| Short-term borrowings | China Merchants Group Finance Company Limited | 329,366,090.35 | 841,079,404.24 |
| China Merchant Bank Co., Ltd. | - | 70,093,041.67 | |
| Total | 329,366,090.35 | 911,172,445.91 | |
| Accounts payable | Nanshan Group and its subsidiaries | 14,904,661.94 | 10,747,794.44 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 7,663,963.52 | 7,641,839.79 | |
| EuroAsia Dockyard Enterprise and development Ltd. | 3,960,096.52 | 2,974,168.52 | |
| Djibouti International Hotel Company | 2,217,007.43 | 867,364.90 | |
| Yiu Lian Dockyards Limited | 2,020,036.49 | 1,676,082.11 | |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd. | 86,151.43 | 1,006,844.56 | |
| Other related party | 2,710,029.91 | 2,746,802.69 | |
| Total | 33,561,947.24 | 27,660,897.01 | |
| Receipts in advance | Other related party | 92,196.10 | 600,535.85 |
| Contract liabilities | COSCO Logistics (Zhanjiang) Co., Ltd. | 6,498,068.60 | 452,421.35 |
| Guangdong Sinotrans Shipping Agency Co., Ltd. | 2,592,997.36 | 3,577,148.00 | |
| Qingdao Qianwan United Container Terminal Co., Lt. | 1,201,242.31 | - | |
| Other related party | 2,520,453.53 | 2,001,603.74 | |
| Total | 12,812,761.80 | 6,031,173.09 | |
| Other payables | China Merchants Port Investment Development Co., Ltd | 528,378,378.08 | - |
| China Merchants Gangtong Development (Shenzhen) Co., Ltd. | 170,603,880.00 | - | |
| Port de Djibouti S.A. | 99,482,550.00 | - | |
| Terminal Link SAS | 90,460,896.91 | 88,978,919.98 | |
| Yihai Kerry Arawana Cereals, Oils and Foodstuffs Co. Ltd. | 59,200,114.42 | 37,402,426.09 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 29,629,721.66 | 11,305,700.00 | |
| China Merchants Real Estate (Shenzhen) Co., Ltd. | 18,311,444.99 | 20,762,053.30 | |
| Sinotrans Shipping Co., Ltd | 12,463,667.33 | - | |
| China Merchants Finance Lease (Tianjin) Co., Ltd. | 11,250,000.00 | 11,250,000.00 | |
| Shenzhen China Merchants Property Management Co., Ltd. | 9,136,773.19 | 9,264,823.90 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 7,137,519.03 | 8,947,256.82 | |
| Orienture Holdings Co. Ltd. | 1,584,096.00 | - | |
| Zhanjiang Xiagang United Development Co., Ltd. | 1,432,424.55 | 1,433,990.57 | |
| China Merchants Food (China) Co., Ltd. | 1,314,847.10 | 1,264,171.10 | |
| Shenzhen Penavico Warehousing Co., Ltd | 1,127,339.68 | 554,335.48 | |
| COSCO Logistics (Zhanjiang) Co., Ltd. | 103,702.65 | 1,258,811.65 | |
| Modern Terminals Limited | 5,290.53 | 59,038,373.05 | |
| Other related party | 7,580,739.73 | 6,283,823.73 | |
| Total | 1,049,203,385.85 | 257,744,685.67 |
- 136 -
X. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties - continued
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Item
| Item | Related party | Closing balance | Opening balance |
| Non-current liabilities due within one year | China Merchants Finance Lease (Tianjin) Co., Ltd. | 145,213,564.20 | 145,861,850.10 |
| China Merchants Tongshang Finance Lease Co., Ltd. | 57,245,808.51 | 56,146,040.22 | |
| Nanshan Group and its subsidiaries | 52,578,050.14 | 52,656,827.70 | |
| EuroAsia Dockyard Enterprise and development Ltd. | 7,359,519.73 | 14,269,498.38 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 5,571,620.77 | 5,454,253.54 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 3,551,685.22 | 5,579,040.25 | |
| China Merchants Landmark (Shenzhen) Co ., Ltd. | 1,254,134.70 | 1,242,022.25 | |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | - | 3,263,992.11 | |
| Other related party | 1,623,949.29 | 1,770,041.27 | |
| Total | 274,398,332.56 | 286,243,565.82 | |
| Other non-current liabilities | Nanshan Group and its subsidiaries | 1,388,915.25 | 1,564,380.59 |
| Long-term borrowings | China Merchants Group Finance Company Limited | 330,090,628.76 | 376,483,984.71 |
| China Merchant Bank Co., Ltd. | 53,000,000.00 | 20,000,000.00 | |
| Total | 383,090,628.76 | 396,483,984.71 | |
| Long-term payables | China Merchants Finance Lease (Tianjin) Co., Ltd. | 141,000,000.00 | 144,000,000.00 |
| Lease liabilities | China Merchants Finance Lease (Tianjin) Co., Ltd. | 425,000,283.14 | 491,666,949.79 |
| Nanshan Group and its subsidiaries | 141,413,302.20 | 167,685,128.23 | |
| China Merchants Tongshang Finance Lease Co., Ltd. | 133,541,736.54 | 161,829,816.02 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 2,876,049.04 | 5,691,513.57 | |
| Other related party | 227,321.31 | 1,880,637.25 | |
| Total | 703,058,692.23 | 828,754,044.86 |
- 137 -
XI. SHARE-BASED PAYMENTS
1. Summary of share-based payments
CHINA MERCHANTS PORT GROUP CO., LTD.Total number of the Company's equity instrumentsgranted during the period
| Total number of the Company's equity instruments granted during the period | 17.198 million |
| Total number of the Company's equity instruments vested during the period | N/A |
| Total number of the Company's equity instruments lapsed during the period | N/A |
| Range of exercise prices and remaining contractual life of the Company's share options outstanding at the end of the period | Exercise price is RMB 17.80; remaining contractual life is 79 months |
| Range of exercise prices and remaining contractual life of the Company's other equity instruments outstanding at the end of the period | N/A |
2. Equity-settled share-based payments
Unit: RMB
| The method of determining the fair value of equity instruments at the grant date | The Black-Scholes model is adopted to estimate the cost of granted stock options |
| The method of determining the best estimate of the number of equity instruments expected to be vested | On each asset and liability date in the waiting period, the best estimate is made and the number of equity instruments expected to be vested is revised based on the latest obtained follow-up information such as changes in the number of vested employees. |
| Reasons for the significant difference between the estimate in the current period and that in the prior period | N/A |
| Amounts of equity-settled share-based payments accumulated in capital reserve | 4,385,994.73 |
| Total expenses recognised arising from equity-settled share-based payments | 8,733,181.82 |
According to the State-owned Assets Supervision and Administration Commission of the StateCouncil Guo Zi Kao Fen [2019] No. 748 "Approval on the Implementation of the Stock OptionIncentive Plan of China Merchants Port Group Co., Ltd.", approved by the Company's firstextraordinary general meeting of shareholders on 3 February 2020, the Company will implementa stock option plan on 3 February 2020, granting 17.198 million stock options to 238 incentiveobjects at an exercise price of RMB 17.80 per share; on the precondition that the exerciseconditions are met, 40% of the stock options will be exercisable after two years from the grantdate, 30% will be exercisable three years from the grant date, and 30% will be exercisable fouryears from the grant date, and the right to subscribe for shares of the Company can be exercisedwithin one, two or three years from the vesting date respectively; each stock option gives theholder the right to subscribe for one common share of the Company.
- 138 -
XII. COMMITMENTS AND CONTINGENCIES
1. Significant commitments
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Item
| Item | Closing balance | Opening balance |
| Commitments that have been entered into but have not been recognized in the financial statements | ||
| - Commitment to acquire long-term assets | 3,560,237,493.51 | 3,767,236,258.74 |
| - Commitment to invest port construction | 1,086,680,595.63 | 6,758,563,544.21 |
| - Commitment to inject capital in investees | 9,700,000.00 | - |
| Others | 214,701,811.26 | 354,959,845.19 |
| Total | 4,871,319,900.40 | 10,880,759,648.14 |
2. Contingencies
Unit: RMB
| Item | Closing balance | Opening balance |
| Contingent liabilities arising from litigations (Note 1) | 298,173,911.46 | 274,299,826.26 |
| Guarantees for borrowings of associates (Note 2) | 202,946,695.72 | 198,703,594.15 |
| Total | 501,120,607.18 | 473,003,420.41 |
Note 1: This represents the significant contingent liabilities arising from the litigations between
TCP and local tax authority, employee or TCP former employee in Brazil at as the periodend. According to the latest estimates of the Group's management, the possiblecompensation is RMB 298,173,911.46 but it is not likely to cause outflow of economicbenefits from the Group. Therefore, the contingent liabilities arising from the abovepending litigations are not recognized as provisions. The counter-bonification where theGroup as the beneficiary will be executed by the former TCP shareholder that disposed theshares. According to the counter-bonification agreement, the former TCP shareholder needto make counter-bonification to the Group in respect of the above contingent liabilities,with the compensation amount not exceeding pre-determined amount and specified period.
Note 2: As at 30 June 2020, the Group made commitments to another shareholder of Terminal
Link SAS (an associate of the Group) to provide guarantee for the borrowings and otherliabilities of Terminal Link SAS to the extent of the Group's 49% equity in the company.The actual guaranteed amount is RMB 80,622,102.91. If any guarantee liability occurs, theGroup will make compensations.
Except for the above guarantee, as at 30 June 2020, the Group also provides guarantee forthe bank loans and other liabilities of the related party Khor Ambado FZCo. Theguaranteed amount is RMB 203,198,400.00. The loan amount used by Khor AmbadoFZCo is RMB 122,324,592.81. Details are set out in Note(X) 5 (3).
At 30 June 2020, the Group's directors assessed the risk of default of above loans andother liabilities and considered that the risk is immaterial and the possibility to makecompensation for the guarantees is rare.
Except for the above contingent events, at 30 June 2020, the Group has no othersignificant guarantee or other contingencies that need to be explained.
- 139 -
XIII. EVENTS AFTER THE BALANCE SHEET
On 29 June 2020, CMPort, a subsidiary of the Group, entered into a Share Transfer Deed withFujian Transportation Maritime Silk Road Investment and Management Co., Limited and FujianProvincial Communication Transportation Group Co., Ltd, pursuant to which CMPort is intendedto dispose of its 23.53% interest in Gainpro Resources Limited and 23.53% of the shareholder'sloan advanced by CMPort to Gainpro Resources Limited at the consideration of USD 268 millionto Fujian Transportation Maritime Silk Road Investment and Management Co., Limited. Thetransaction is guaranteed by Fujian Provincial Communication Transportation Group Co., Ltd.
Gainpro Resources Limited is a wholly-owned subsidiary of CMPort and holds 85% interest inHambantota International Port Group (Private) Limited ("HIPG"). Upon completion of thetransaction, the Group's effective interest in HIPG will be decreased from 85% to 65%. Suchtransanction has been completed on 21August 2020.
XIV. OTHER SIGNIFICANT EVENTS
1. Segment reporting
(1) Basis for determining reporting segments and accounting policies
The key management team of the Company is regarded as the CODM, who reviews the Group'sinternal reports in order to assess performance, allocate resources and determine the operatingsegments.
The CODM manages the Group's operations by divisions from both business and geographicperspectives.
In respect of business segments, management assesses the performance of the Group's businessoperations including ports operation, bonded logistics operation and other operations.
Ports operation
Ports operation includes container terminal operation, bulk and general cargo terminal operationoperated by the Group and its associates and joint ventures. The Group's reportable segments ofthe ports operation are as follows:
(a) Mainland China, Hong Kong and Taiwan
? Pearl River Delta? Yangtze River Delta? Bohai Rim? Others
- 140 -
XIV. OTHER SIGNIFICANT EVENTS- continued
1. Segment reporting - continued
(1) Basis for determining reporting segments and accounting policies - continued
(b) Other locations outside of Mainland China, Hong Kong and Taiwan
Bonded logistics operation
Bonded logistics operation includes logistics park operation, ports transportation and airport cargohandling operated by the Group and its associates and joint ventures.
Other operations
Other operations mainly includes property development and investment and construction ofmodular housing operated by the Group's associates, property investment operated by the Groupand corporate function.
Each of the segments under ports operation include the operations of a number of ports in variouslocations within one geographic location, each of which is considered as a separate operatingsegment by the CODM. For the purpose of segment reporting, these individual operatingsegments have been aggregated into reportable segments on geographic basis in order to present amore systematic and structured segment information. To give details of each of the operatingsegments, in the opinion of the directors of the Company, would result in particulars of excessivelength.
Bonded logistics operation and other operations include a number of different operations, each ofwhich is considered as a separate but insignificant operating segment by the CODM. For segmentreporting, these individual operating segments have been aggregated according to the natures oftheir operations to give rise to more meaningful presentation.
There are no material sales or other transactions between the segments.
As at 30 June, around 69.95% of The Group's non-current assets other than financial instrumentsand deferred tax assets are located in Mainland China, Hong Kong and Taiwan.
- 141 -
XIV. OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information
Segment financial information for the period from 1 January to 30 June 2020 is as follows:
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Operating income | 2,376,811,691.68 | - | 28,650,483.01 | 1,551,910,181.20 | 1,701,430,029.46 | 5,658,802,385.35 | 191,942,345.76 | 71,752,427.37 | - | 5,922,497,158.48 |
| Operating cost | 1,344,347,215.80 | - | 22,219,047.72 | 1,267,907,692.30 | 854,942,112.05 | 3,489,416,067.87 | 117,039,858.40 | 109,627,779.63 | - | 3,716,083,705.90 |
| Segment operating profit (loss) | 1,032,464,475.88 | - | 6,431,435.29 | 284,002,488.90 | 846,487,917.41 | 2,169,386,317.48 | 74,902,487.36 | (37,875,352.26) | - | 2,206,413,452.58 |
| Adjustments: | ||||||||||
| Taxes and levies | 13,633,867.66 | 500,221.94 | 694,656.98 | 20,655,098.14 | 17,511,779.08 | 52,995,623.80 | 12,444,275.07 | 11,867,601.61 | 70,578.67 | 77,378,079.15 |
| Administrative expense | 205,214,261.47 | 13,560,247.71 | 4,480,991.15 | 215,164,525.53 | 118,910,009.93 | 557,330,035.79 | 22,963,915.83 | 544,063.05 | 156,862,262.70 | 737,700,277.37 |
| R&D expenses | 58,571,831.16 | - | - | 6,089,953.65 | - | 64,661,784.81 | - | - | 1,468,500.00 | 66,130,284.81 |
| Financial expenses | 71,983,749.04 | 2,491,539.42 | 27,435.36 | 67,579,404.39 | 94,615,045.41 | 236,697,173.62 | 10,734,621.90 | 24,624,834.90 | 569,603,302.95 | 841,659,933.37 |
| Impairment gains of assets | 947,693.77 | - | - | - | - | 947,693.77 | - | - | - | 947,693.77 |
| Impairment gains (losses) of credit | (3,355,739.42) | - | - | 263,333.50 | (543,631.58) | (3,636,037.50) | - | - | - | (3,636,037.50) |
| Other income | 27,683,924.33 | 1,224,999.96 | 33,397.31 | 21,678,368.61 | - | 50,620,690.21 | 4,914,167.47 | 62,417.71 | - | 55,597,275.39 |
| Investment income (losses) | 82,827,424.88 | 1,115,193,533.94 | 190,247,292.06 | 5,128,290.87 | 162,439,917.27 | 1,555,836,459.02 | 2,099,736.50 | (52,594,806.74) | - | 1,505,341,388.78 |
| Gains (losses) from changes in fair value | 12,306,522.15 | (118,380,426.66) | (32,497,343.66) | (157,164,405.13) | (295,735,653.30) | - | - | - | (295,735,653.30) | |
| Gains from disposal of assets | 195,961.95 | 559,448,696.90 | 275,821.59 | 559,920,480.44 | 335,902.94 | - | - | 560,256,383.38 | ||
| Operating profit (loss) | 803,666,554.21 | 981,486,098.17 | 159,011,697.51 | 561,032,197.07 | 620,458,785.14 | 3,125,655,332.10 | 36,109,481.47 | (127,444,240.85) | (728,004,644.32) | 2,306,315,928.40 |
- 142 -
XIV. OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information for the period from 1 January to 30 June 2020 is as follows: - continued
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Ports operation | Bonded logistics operation | Others | Unallocated amount | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Non-operating income | 2,521,090.78 | - | - | 20,927,090.25 | 1,275,882.48 | 24,724,063.51 | 47,151.66 | 1,015,182.21 | 1,958,968.01 | 27,745,365.39 |
| Non-operating expenses | 1,119,495.47 | 4,069.14 | 25,948.75 | 2,905,167.98 | 19,013,641.17 | 23,068,322.51 | 42,000.00 | - | - | 23,110,322.51 |
| Gross profit (loss) | 805,068,149.52 | 981,482,029.03 | 158,985,748.76 | 579,054,119.34 | 602,721,026.45 | 3,127,311,073.10 | 36,114,633.13 | (126,429,058.64) | (726,045,676.31) | 2,310,950,971.28 |
| Income tax expenses | 382,023,712.35 | 42,823,301.50 | 11,571,190.19 | 153,516,683.95 | 35,682,736.53 | 625,617,624.52 | 13,232,358.70 | (3,718,886.93) | (121,874,607.41) | 513,256,488.88 |
| Net profit (loss) | 423,044,437.17 | 938,658,727.53 | 147,414,558.57 | 425,537,435.39 | 567,038,289.92 | 2,501,693,448.58 | 22,882,274.43 | (122,710,171.71) | (604,171,068.90) | 1,797,694,482.40 |
| Segment assets | 28,761,421,375.77 | 27,941,804,364.13 | 7,180,031,140.74 | 28,976,248,692.54 | 47,608,964,019.60 | 140,468,469,592.78 | 3,317,929,129.57 | 18,111,698,237.83 | 1,113,322,805.41 | 163,011,419,765.59 |
| Total assets in the financial statements | 163,011,419,765.59 | |||||||||
| Segment liabilities | 12,894,255,782.92 | 721,109,268.45 | 144,516,912.55 | 9,092,817,617.12 | 9,869,703,456.34 | 32,722,403,037.38 | 909,323,344.91 | 969,000,004.64 | 34,989,565,100.64 | 69,590,291,487.57 |
| Total liabilities in the financial statements | 69,590,291,487.57 | |||||||||
| Supplementary information: | ||||||||||
| Depreciation and Amortization | 438,761,549.68 | - | 1,028,232.78 | 518,717,791.13 | 417,655,098.32 | 1,376,162,671.91 | 48,683,690.22 | 87,563,734.88 | 11,623,258.02 | 1,524,033,355.03 |
| Interest income | 16,360,346.94 | 969,393.02 | 285,905.62 | 36,745,526.35 | 82,946,362.67 | 137,307,534.60 | 242,984.80 | 505,121.18 | 4,360,223.86 | 142,415,864.44 |
| Interest expense | 80,269,355.87 | 2,926,671.54 | - | 104,320,361.54 | 156,043,859.57 | 343,560,248.52 | 10,937,580.01 | 19,987,175.39 | 623,465,585.79 | 997,950,589.71 |
| Investment income from long -term equity investment under equity method | 56,637,855.63 | 1,075,105,800.28 | 159,631,263.69 | (8,714,994.99) | 162,439,917.27 | 1,445,099,841.88 | 2,099,736.50 | (52,594,806.73) | - | 1,394,604,771.65 |
| Long-term equity investment under equity method | 592,009,706.75 | 25,245,368,327.73 | 6,174,604,728.65 | 2,982,312,950.78 | 13,908,306,898.99 | 48,902,602,612.90 | 780,492,037.36 | 12,353,331,747.03 | - | 62,036,426,397.29 |
| Non-current assets other than long-term equity investment | 21,403,245,461.84 | 1,610,430,814.92 | (1,647,971,123.72) | 21,582,590,312.76 | 26,307,673,991.55 | 69,255,969,457.35 | 2,293,538,845.06 | 5,318,772,518.32 | 451,572,634.76 | 77,319,853,455.49 |
- 143 -
XIV. OTHER SIGNIFICANT EVENTS- continued
1. Segment reporting - continued
(2) Segment financial information - continued
The Group's revenue by geographical areas of operations and information about its non-currentassets other than financial instruments and deferred tax assets presented based on the geographicalareas in which the assets are located as follows:
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Revenue from external transactions
| Revenue from external transactions | Amount incurred in the current period | Amount incurred in the prior period |
| Mainland China, Hong Kong and Taiwan | 4,215,085,950.68 | 4,260,737,809.93 |
| Pearl River Delta | 2,576,335,725.06 | 2,770,970,075.39 |
| Yangtze River Delta | - | - |
| Bohai Rim | 86,840,044.42 | 92,371,847.43 |
| Others | 1,551,910,181.20 | 1,397,395,887.11 |
| Other locations | 1,707,411,207.80 | 1,573,615,611.40 |
| Total | 5,922,497,158.48 | 5,834,353,421.33 |
Unit: RMB
| Total non-current assets | Closing balance | Opening balance |
| Mainland China, Hong Kong and Taiwan | 97,473,600,834.69 | 96,489,027,270.44 |
| Pearl River Delta | 41,272,574,527.09 | 43,196,515,110.55 |
| Yangtze River Delta | 25,555,297,036.41 | 25,066,500,422.16 |
| Bohai Rim | 6,803,915,224.80 | 6,686,470,964.43 |
| Others | 23,841,814,046.39 | 21,539,540,773.30 |
| Other locations | 41,882,679,018.07 | 41,224,854,968.75 |
| Total | 139,356,279,852.76 | 137,713,882,239.19 |
(3) Degree of reliance on major customers
The total operating income derived from the top five clients of the Group is RMB1,576,847,765.24, accounting for 26.62% of the Group's total operating income.
XV. NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS
1. Other receivables
(1) Summary of other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Interest receivable | - | - |
| Dividends receivable | 1,006,551,241.38 | 207,259,421.40 |
| Other receivables | 517,594,653.93 | 598,275,341.87 |
| Total | 1,524,145,895.31 | 805,534,763.27 |
- 144 -
XV. NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(2) Dividends receivable
(a) Disclosure of dividends receivable
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Company name
| Company name | Closing balance | Opening balance |
| CMPort | 745,060,561.87 | - |
| Dongguan Chiwan Terminal Co., Ltd. | 147,233,909.98 | 88,196,930.66 |
| Dongguan Chiwan Warf Co., Ltd. | 98,089,649.53 | 103,355,370.74 |
| China Merchants Bonded Logistics Co., Ltd. | 15,707,120.00 | 15,707,120.00 |
| Jiangsu Nanjing Shanghai Expressway Co., Ltd. | 460,000.00 | - |
| Total | 1,006,551,241.38 | 207,259,421.40 |
| Less: Provision for credit loss | - | - |
| Carrying amount | 1,006,551,241.38 | 207,259,421.40 |
(b) Significant dividends receivable aging over 1 year
Unit: RMB
| Item | Closing balance | Reason for outstanding | Impaired or not |
| Dongguan Chiwan Terminal Co., Ltd. | 88,196,930.66 | In processing and expected to be received in 2020 | No |
| Dongguan Chiwan Warf Co., Ltd. | 37,855,370.74 | In processing and expected to be received in 2020 | No |
| Total | 126,052,301.40 |
(3) Other receivables
(a) Disclosure of other receivables by aging
Unit: RMB
| Aging | Closing balance | ||
| Other receivables | Provision for credit loss | Proportion of provision (%) | |
| Within 1 year | 517,594,653.93 | - | - |
| 1 to 2 years | - | - | - |
| 2 to 3 years | - | - | - |
| Over 3 years | 383,456.60 | 383,456.60 | 100.00 |
| Total | 517,978,110.53 | 383,456.60 | |
(b) Provision for credit loss of other receivables
As part of the Company's credit risk management, the Company performs internal credit rating oncustomers, and determines the expected loss ratio of other receivables under each credit rating.Such expected average loss ratio is based on historical actual impairment and taking intoconsideration of current and expected future economic conditions.
- 145 -
XV. NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(3) Other receivables - continued
(b) Provision for credit loss of other receivables - continued
At 30 June 2020, the credit risk and expected credit loss of other receivables by categories ofcustomers are as follows:
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.Credit rating
| Credit rating | Expected credit loss ratio (%) | Closing balance | Opening balance | ||||||
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | Total | 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | Total | ||
| A | 0.00-0.10 | 517,594,653.93 | - | - | 517,594,653.93 | 598,275,341.87 | - | - | 598,275,341.87 |
| B | 0.10-0.30 | - | - | - | - | - | - | - | - |
| C | 0.30-50.00 | - | - | - | - | - | - | - | - |
| D | 50.00-100.00 | - | - | 383,456.60 | 383,456.60 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount | 517,594,653.93 | - | 383,456.60 | 517,978,110.53 | 598,275,341.87 | - | 383,456.60 | 598,658,798.47 | |
| Provision for credit loss | - | - | 383,456.60 | 383,456.60 | - | - | 383,456.60 | 383,456.60 | |
| Book value | 517,594,653.93 | - | - | 517,594,653.93 | 598,275,341.87 | - | - | 598,275,341.87 | |
(c) Changes in provision for credit loss of other receivables
Unit: RMB
| Item | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance at 1 January 2020 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount of other receivables at 1 January 2020 | ||||
| -- transfer to stage II | - | - | - | - |
| -- transfer to stage III | - | - | - | - |
| -- transfer back to stage II | - | - | - | - |
| -- transfer back to stage I | - | - | - | - |
| Provision for the period | - | - | - | - |
| Reversal | - | - | - | - |
| Transfer out due to derecognition of financial assets (including direct write-down) | - | - | - | - |
| Other changes | - | - | - | - |
| Balance at 30 June 2020 | - | - | 383,456.60 | 383,456.60 |
(d) Other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Amounts due from related parties | 495,255,901.31 | 571,663,096.21 |
| Advances | 22,015,180.61 | 26,283,930.19 |
| Others | 707,028.61 | 711,772.07 |
| Total | 517,978,110.53 | 598,658,798.47 |
| Less: Provision for credit loss | 383,456.60 | 383,456.60 |
| Book value | 517,594,653.93 | 598,275,341.87 |
- 146 -
XV. NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Other receivables - continued
(3) Other receivables - continued
(e) There is no other receivables write-off during this period.
(f) The top five balances of other receivables classified by debtor
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Company name
| Company name | Nature | Closing balance | Aging | Proportion of the amount to the total other receivable (%) | Closing balance of provision for credit loss |
| Shenzhen Haixing Harbor Development Co., Ltd | Loan to related parties | 474,255,901.31 | Within 1 year | 91.56 | - |
| Shenzhen Chiwan Port Development Co., Ltd. | Advance payments for account current | 21,072,976.83 | Within 1 year | 4.07 | - |
| Dongguan Chiwan Terminal Co., Ltd. | Loan to related parties | 21,000,000.00 | Within 1 year | 4.05 | - |
| Total | 516,328,878.14 | 99.68 | - |
- 147 -
XV. NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS - continued
2. Long-term equity investments
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Investee
| Investee | 1/1/2020 | Changes for the period | 30/6/2020 | Closing balance of impairment provision | |||||||
| Increase | Decrease | Investment income under equity method | Reconciling items from other comprehensive income | Other equity movements | Announced distribution of cash dividends or profit | Impairment provision | Others | ||||
| I. Subsidiary | |||||||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | 5,500,000.00 | - | - | - | - | - | - | - | - | 5,500,000.00 | - |
| Shenzhen Chiwan Harbor Container Co. Ltd. | 250,920,000.00 | - | - | - | - | - | - | - | - | 250,920,000.00 | - |
| Shenzhen Chiwan Port Development Co., Ltd. | 206,283,811.09 | - | - | - | - | - | - | - | - | 206,283,811.09 | - |
| Chiwan Wharf (Hong Kong) Co., Ltd. | 1,070,000.00 | - | - | - | - | - | - | - | - | 1,070,000.00 | - |
| Shenzhen Chiwan Tugboat Co., Ltd. | 24,000,000.00 | - | - | - | - | - | - | - | - | 24,000,000.00 | - |
| Chiwan Container Terminal Co., Ltd. | 421,023,199.85 | - | - | - | - | - | - | - | - | 421,023,199.85 | - |
| Dongguan Chiwan Warf Co., Ltd. | 186,525,000.00 | - | - | - | - | - | - | - | - | 186,525,000.00 | - |
| Dongguan Chiwan Terminal Co., Ltd. | 175,000,000.00 | - | - | - | - | - | - | - | - | 175,000,000.00 | - |
| Chiwan Shipping (Hong Kong) Limited | 1,051,789.43 | - | - | - | - | - | - | - | - | 1,051,789.43 | - |
| CMPort | 27,286,943,610.42 | - | - | - | - | - | - | - | 7,323,522.98 | 27,294,267,133.40 | - |
| RoRo Logistics | 149,709,800.00 | - | - | - | - | - | - | - | - | 149,709,800.00 | - |
| Zhanjiang port | 371,530,912.93 | 3,010,294,615.59 | - | - | - | - | - | - | - | 3,381,825,528.52 | - |
| Sub-total | 29,079,558,123.72 | 3,010,294,615.59 | - | - | - | - | - | - | 7,323,522.98 | 32,097,176,262.29 | - |
| II. Associate | |||||||||||
| China Merchants International Information Technology Co., Ltd. | 20,643,611.18 | - | - | 1,222,848.00 | - | - | - | - | - | 21,866,459.18 | - |
| China Merchants Bonded Logistics Co., Ltd. | 365,855,724.95 | - | - | 12,040,000.00 | - | - | - | - | - | 377,895,724.95 | - |
| China Merchants Northeast Asia Development Investment Co., Ltd. | - | 1,000,000,000.00 | - | 460,810.50 | - | - | - | - | - | 1,000,460,810.50 | - |
| Sub-total | 386,499,336.13 | 1,000,000,000.00 | - | 13,723,658.50 | - | - | - | - | - | 1,400,222,994.63 | - |
| III. Joint venture | |||||||||||
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | 792,062,228.58 | - | - | 14,928,000.00 | - | - | - | - | - | 806,990,228.58 | - |
| China Merchants Antong Logistics Management Company | 8,256,893.80 | - | - | (422,505.24) | - | - | - | - | - | 7,834,388.56 | - |
| Sub-total | 800,319,122.38 | - | - | 14,505,494.76 | - | - | - | - | - | 814,824,617.14 | - |
| Total | 30,266,376,582.23 | 4,010,294,615.59 | - | 28,229,153.26 | - | - | - | - | 7,323,522.98 | 34,312,223,874.06 | - |
- 148 -
XV. NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
3. Operating income and operating costs
Unit: RMB
CHINA MERCHANTS PORT GROUP CO., LTD.
Item
| Item | Amount incurred in the current period | Amount incurred in the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal operating | - | 1,132,979.82 | 75,059,363.04 | 71,586,188.10 |
| Other operating | 94,339.62 | - | 14,717,425.25 | 552,302.90 |
| Total | 94,339.62 | 1,132,979.82 | 89,776,788.29 | 72,138,491.00 |
4. Investment income
(1) Details of investment income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the prior period |
| Income from long-term equity investments under cost method | 1,286,567,145.53 | 948,667,473.38 |
| Long-term equity investments income under equity method | 28,229,153.26 | 37,846,506.83 |
| Income from other equity instruments investments | 460,000.00 | - |
| Income from debt investments | 11,375,616.44 | - |
| Total | 1,326,631,915.23 | 986,513,980.21 |
(2) Income from long-term equity investments under cost method
Unit: RMB
| Investee | Amount incurred in the current period | Amount incurred in the prior period | Reason for changes comparing with prior period |
| CMPort | 745,060,561.87 | 843,531,432.54 | Changes in profit distribution of investee |
| Chiwan Container Terminal Co., Ltd. | 275,313,936.56 | 105,136,040.84 | Changes in profit distribution of investee |
| Shenzhen Chiwan Harbor Container Co. Ltd. | 121,071,884.15 | - | Changes in profit distribution of investee |
| Dongguan Chiwan Warf Co., Ltd. | 60,234,278.79 | - | Changes in profit distribution of investee |
| Dongguan Chiwan Terminal Co., Ltd. | 59,036,979.32 | - | Changes in profit distribution of investee |
| Shenzhen Chiwan Tugboat Co., Ltd. | 25,604,356.23 | - | Changes in profit distribution of investee |
| Shenzhen Chiwan International Freight Agency Co., Ltd. | 245,148.61 | - | Changes in profit distribution of investee |
| Total | 1,286,567,145.53 | 948,667,473.38 |
CHINA MERCHANTS PORT GROUP CO., LTD.
SUPPLEMENTARY INFORMATIONFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020
1. BREAKDOWN OF NON-RECURRING PROFIT OR LOSS
Unit: RMB
| Item | Amount | Remarks |
| Losses on disposal of non-current assets | 560,256,383.38 | |
| Tax refunds or reductions with ultra vires approval or without official approval documents | - | |
| Government grants recognized in profit or loss (except for grants that are closely related to the Company's business and are in amounts and quantities fixed in accordance with the national standard) | 62,719,385.14 | |
| Money lending income earned from non-financial institutions in profit or loss | 105,824,679.53 | |
| The excess of attributable fair value of identifiable net assets over the consideration paid for subsidiaries, associates and joint ventures | - | |
| Gains or losses on exchange of non-monetary assets | - | |
| Gains or losses on entrusted investments or assets management | - | |
| Provision of impairment losses for each asset due to force majeure, e.g. natural disasters | - | |
| Gains or losses on debt restructuring | - | |
| Business restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc. | - | |
| Gains or losses relating to the unfair portion in transactions with unfair transaction price | - | |
| Net profit or loss of subsidiaries recognized as a result of business combination of enterprises under common control from the beginning of the period up to the business combination date | - | |
| Gains or losses arising from contingencies other than those related to normal operating business | - | |
| Gains from changes of fair value of held-for-trading financial assets, derivative financial assets, other non-current financial assets, held-for-trading financial liabilities, derivative financial liabilities other than effective hedging operation relating to the Company's normal operations, and the investment income from disposal of the above held-for-trading financial assets/financial liabilities and other debt investments | (295,735,653.30) | |
| Reversal of provision for accounts receivable that are tested for credit loss individually | - | |
| Gains or losses on entrusted loans | - | |
| Gains or losses on changes in the fair value of investment properties that are subsequently measured using the fair value model | - | |
| Effects on profit or loss of one-off adjustment to profit or loss for the period according to the requirements by tax laws and accounting laws and regulations | - | |
| Custodian fees earned from entrusted operation | - | |
| Other non-operating income or expenses other than above | (11,781,919.34) | |
| Other profit or loss that meets the definition of non-recurring profit or loss (note) | - | |
| Tax effects | (90,479,697.15) | |
| Effects of minority interest (after tax) | (242,596,506.97) | |
| Total | 88,206,671.29 |
CHINA MERCHANTS PORT GROUP CO., LTD.
SUPPLEMENTARY INFORMATIONFOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2020
2. RETURN ON NET ASSETS AND EARNINGS PER SHARE ("EPS")
The return on net assets and EPS have been prepared by Shenzhen Chiwan Wharf Co., Ltd. in accordancewith Information Disclosure and Presentation Rules for Companies Making Public Offering No. 9 -Calculation and Disclosure of Return on Net Assets and Earnings per Share (revised in 2010) issued byChina Securities Regulatory Commission.
Unit: RMB
| Item | Weighted average return on net assets (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to ordinary shareholders | 1.7656 | 0.3292 | 0.3292 |
| Net profit attributable to ordinary shareholders after deducting non-recurring profit or loss | 1.5195 | 0.2833 | 0.2833 |