Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
SHENZHEN CHIWAN WHARF HOLDINGS LIMITED
SEMI-ANNUAL REPORT 2018
Date of disclosure: 31 August 2018
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section I Important Reminders, Contents & Definitions
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Shenzhen Chiwan Wharf Holdings Limited (hereinafter referred to as ―theCompany‖) warrant that this Report is factual, accurate and complete without any false record,
misleading statement or material omission. And they shall be jointly and severally liable for that.Chairman of the Board Bai Jingtao, Chief Financial Officer Yao Shenglan and Financial Manager
Li Xiaopeng hereby guarantee the factuality, accuracy and completeness of the Financial Report inthis Report.
This Report has been approved at the 4
th
Meeting of the 9
th
Board of Directors of the Company.Chairman of the Board Bai Jingtao was not present at the meeting in person for the reason of work,but he had expressed his consent to all the proposals to be reviewed at the meeting and authorizedVice Chairman of the Board Zhou Qinghong to attend the meeting and perform duties includinghosting the meeting, expressing opinions and signing meeting documents on behalf of him.
The future plans, development strategies and some other forward-looking statements mentioned inthis report shall not be considered as virtual promises of the Company to investors. And investorsare kindly reminded to pay attention to possible risks.
Possible risks faced by the Company have been explained in ―Section IV. Performance Discussionand Analysis‖ in this Report, which investors are kindly reminded to pay attention to.
Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by theCompany for information disclosure. And all information about the Company shall be subject to
what’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention to possible
risks.The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into
share capital.This report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Contents
Section I Important Reminders, Contents & Definitions ...... 1
Section II Company Profile & Financial Highlights ...... 4
Section III Business Highlights ...... 7
Section IV Performance Discussion and Analysis ...... 9
Section V Significant Events ...... 19
Section VI Share Changes & Particulars about Shareholders ...... 34
Section VII Preference Shares ...... 38
Section VIII Directors, Supervisors and Senior Management Staff ...... 39
Section IX Corporate Bonds ...... 40
Section X Financial Report ...... 41
Section XI Documents Available for Reference ...... 41
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Definitions
| Term | Refers to | Definition |
| Company, the Company or Chiwan Wharf | Refers to | Shenzhen Chiwan Wharf Holdings Limited |
| CMG | Refers to | China Merchants Group |
| CMPort | Refers to | China Merchants Port Holdings Company Limited |
| CND Group | Refers to | China Nanshan Development (Group) Inc. |
| Malai Storage | Refers to | Shenzhen Malai Storage Co., Ltd. |
| KFEL | Refers to | Keen Field Enterprises Limited, a wholly-funded subsidiary of China Merchants Holdings (International) |
| CMG Hong Kong | Refers to | China Merchants Group (H.K.) Limited, a CMG wholly-owned subsidiary in Hong Kong |
| Broadford Global | Refers to | Broadford Global Limited, a wholly-owned subsidiary of CMG Hong Kong |
| CMGD | Refers to | China Merchants Gangtong Development (Shenzhen) Co., Ltd., a Broadford Global wholly-owned subsidiary in Shenzhen |
| MPIL | Refers to | Media Port Investments Limited |
| The CSRC | Refers to | China Securities Regulation Commission |
| SZSE | Refers to | Shenzhen Stock Exchange |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section II Company Profile & Financial Highlights
I Basic information about the Company
| Stock name | Chiwan Wharf A, Chiwan Wharf B | Stock code | 000022, 200022 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Company name in Chinese | 深圳赤湾港航股份有限公司 | ||
| Abbreviation (if any) | 深赤湾 | ||
| Company name in English (if any) | Shenzhen Chiwan Wharf Holdings Limited | ||
| Abbreviation (if any) | Chiwan Wharf | ||
II Contact information
| Board Secretary | Securities Representative | |
| Name | Mr. Wang Yongli | Ms. Hu Jingjing and Ms. Chen Dan |
| Address | 8/F, Chiwan Petroleum Building, Zhaoshang Street, Nanshan District, Shenzhen, PRC | 8/F, Chiwan Petroleum Building, Zhaoshang Street, Nanshan District, Shenzhen, PRC |
| Tel. | +86 755 26694222 | +86 755 26694222 |
| Fax | +86 755 26684117 | +86 755 26684117 |
| cwh@szcwh.com | cwh@szcwh.com |
III Other information1. Ways to contact the Company
The registered address, office address and their zip codes, website address and email address of the Company didnot change during the reporting period. The said information can be found in the 2017 Annual Report.
2. About information disclosure and the place where this report is kept
The newspapers designated by the Company for information disclosure, the website designated by the CSRC fordisclosing this report and the place where this report is kept did not change during the reporting period. The saidinformation can be found in the 2017 Annual Report.
IV Major accounting data and financial indicators
Does the Company need to adjust retrospectively or restate accounting data?
√ Yes □ No
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Unit: RMB
| Reporting period | Same period of last year | YoY +/-（％） | |
| Operating revenues | 1,246,135,516.34 | 1,176,651,017.99 | 5.91% |
| Net profit attributable to shareholders of the Company | 316,060,290.67 | 276,061,357.50 | 14.49% |
| Net profit attributable to shareholders of the Company before extraordinary gains and losses | 316,625,908.24 | 275,611,120.89 | 14.88% |
| Net cash flows from operating activities | 349,174,873.68 | 574,555,532.03 | -39.23% |
| Basic EPS (RMB/share) | 0.490 | 0.428 | 14.49% |
| Diluted EPS (RMB/share) | 0.490 | 0.428 | 14.49% |
| Weighted average ROE (%) | 6.79% | 5.72% | 1.07% |
| As at the end of the reporting period | As at the end of last year | +/-（％） | |
| Total assets | 7,028,586,133.86 | 7,975,470,563.32 | -11.87% |
| Net assets attributable to shareholders of the Company | 4,484,162,198.15 | 4,922,969,405.92 | -8.91% |
Business combination under common control have caused retrospective adjustments or restatements, which are
shown in the table below. For further information, see ―XVI. Explain change of the consolidation scope ascompared with the financial reporting of last year‖ under ―Section V. Significant Events‖ in this Report.
Unit: RMB
| Reporting period | Same period of last year | YoY +/-（％） | ||
| Before adjustment | After adjustment | After adjustment | ||
| Operating revenues | 1,246,135,516.34 | 929,608,498.91 | 1,176,651,017.99 | 5.91% |
| Net profit attributable to shareholders of the Company | 316,060,290.67 | 276,407,832.70 | 276,061,357.50 | 14.49% |
| Net profit attributable to shareholders of the Company before extraordinary gains and losses | 316,625,908.24 | 275,545,048.09 | 275,611,120.89 | 14.88% |
| Net cash flows from operating activities | 349,174,873.68 | 419,531,779.91 | 574,555,532.03 | -39.23% |
| Basic EPS (RMB/share) | 0.490 | 0.429 | 0.428 | 14.49% |
| Diluted EPS (RMB/share) | 0.490 | 0.429 | 0.428 | 14.49% |
| Weighted average ROE (%) | 6.79% | 5.76% | 5.72% | 1.07% |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| As at the end of the reporting period | As at the end of last year | +/-（％） | ||
| Before adjustment | After adjustment | After adjustment | ||
| Total assets | 7,028,586,133.86 | 6,784,421,548.53 | 7,975,470,563.32 | -11.87% |
| Net assets attributable to shareholders of the Company | 4,484,162,198.15 | 4,671,374,937.86 | 4,922,969,405.92 | -8.91% |
V Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international andChinese accounting standards
No such differences2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standardsNo such differences3. Reasons for accounting data differences under Chinese and overseas accounting standards
□ Applicable √ Not applicable
VI Items and amounts of extraordinary gains and losses
Unit: RMB
| Item | Amount | Note |
| Gains/losses on the disposal of non-current assets (including the offset part of the asset impairment provisions) | 19,702.38 | |
| Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the government’s unified standards | 969,240.75 | |
| Non-operating income and expense other than the above | -547,274.44 | |
| Less: Income tax effects | -21,177.58 | |
| Minority interests effects (after tax) | 1,028,463.84 | |
| Total | -565,617.57 | -- |
The Company did not shift in the reporting period any extraordinary gain/loss item as defined and listed in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses to a recurrent gain/loss item.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section III Business Highlights
I Main business during the reporting period
Is the Company subject to any disclosure requirements for special industries?No.We are principally engaged in the handling, warehousing and transportation of containers and bulk cargoes, aswell as the provision of related services. We have 6 container berths and 7 bulk cargo berths in Chiwan Port(Shenzhen), 3 container berths in Mawan Port (Shenzhen) and 5 bulk cargo berths in Machong Port (Dongguan).We also have an investment in Laizhou Wharf in Shandong Province.
In the reporting period, the global economy continued to grow modestly while China’s economy saw progress
amid stability, with slower growth in the domestic port industry. As a regional hub for container and bulk cargocarriers, the Company maintained a relatively stable market position and achieved growth in operating results inthe period.
II. Significant changes in primary assets
1. Significant changes in primary assets
| Primary asset | Significant change |
| Equity assets | The Proposal on Signing the Supplementary Agreement II to the Media Port Investments Limited Shareholder Agreement was approved at the 3rd Extraordinary Meeting of the Company’s 9th Board of Directors of 2018 on 5 February 2018. On the same day, the Supplementary Agreement II was signed by the Company, CMPort, Fatten Investments Limited and Media Port Investments Limited as a further supplement to the Media Port Investments Limited Shareholder Agreement signed on 30 September 2002. According to the Supplementary Agreement II, upon the completion of the transfer of a combined stake of 66.10% in the Company from CND Group, Malai Storage and KFEL to CMGD and Broadford Global, the Company’s control over Media Port Investments Limited will cease. On 8 June 2018, when the relevant equity transfer formalities were completed, the Company excluded Shenzhen Mawan Port Services Co., Ltd., Shenzhen Mawan Wharf Co., Ltd. and Shenzhen Mawan Warehouse & Terminals Co., Ltd. from its consolidated financial statements. The announcement (No. 2018-013) on the related transactions arising from the signed Supplementary Agreement II has been disclosed on Securities Times, Ta Kung Pao and www.cninfo.com.cn on 7 February 2018. |
| Entrusted assets | The Proposal on Signing The Agreement on Equity Management Entrustment with China Merchants Port Holdings Company Limited (CMPort) was approved at the 2nd Meeting of the 9th Board of the Company dated 23 August 2017. On the same day, the agreement was |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
2. Main assets overseas
□ Applicable √ Not applicable
III Core competitiveness analysis
Is the Company subject to any disclosure requirements for special industries?No.Upon more than 3 decades of development, the Company has gathered a pool of experienced professionals and anexcellent managerial team, with its business management highly recognized by shareholders and clients. Withstable client sources and efficient business process flows, the Company is considered a leader in the sector interms of operating efficiency. As a mature listed port company in China, the Company owns an excellent brandand reputation in the market.
Material changes as below in the Company’s core competitiveness during the reporting period:
1. Resource allocation: The upgrade of Chiwan Wharf’s Berth 7# for bulk cargos was completed and accepted in
April 2018 and it is ready for ships at the 70,000 metric ton level on a regular basis. In the same month, the
capacity of Chiwan Wharf’s Berth 13# Extension for container carriers has been upgraded from the 150,000metric ton level to 200,000 metric tons of deloaded ships. Meanwhile, the trial operation of Machong Wharf’s225,000-metric-ton grain silo phase II proceeded smoothly. In May, construction bidding for Machong Wharf’s
grain silo phase III was completed and construction is underway.2. External investment: The Company increased its investment in Zhoushan Archipelago New Area SinoTrans &CSC RoRo Logistics Co., Ltd. in May 2018 and has thus become its controlling shareholder. The Company willbeef up construction of the RORO terminal in Zhoushan in order for early operation.
These changes will further increase the Company’s competitiveness and anti-risk capability, providing assurance
for its sustained healthy development.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section IV Performance Discussion and Analysis
I Summary
In the first half of 2018, the world economy continued to recover, but with polarized slowdowns in growth ofmajor economies due to challenges including rising inflation across the globe, tightening monetary policies andrising trade protectionism. Amid increasing trade frictions with the U.S and the deepened supply-side reform,
China’s economic growth was maintained at a steady and positive rate of 6.8%, with driving forces shifting in anorderly manner. As the ―Belt and Road Initiative‖ effectively promoted multilateral trade, China’s imports and
exports registered a 7.9% expansion in value. Performance was stable across the port industry in spite of slowerthroughput growth from a year ago. To be specific, large coastal ports recorded a total throughput of 4.58 billionmetric tons, representing a year-on-year rise of 4.3% (3.0 percentage points lower than the same period of lastyear), including 0.11 billion TEU, a 5.5% year-on-year expansion (2.3 percentage points lower than a year ago).
During the reporting period, the Company was in face of tough challenges including external factors such as thetrade war between China and the U.S. and local competition, as well as internal ones including limited resourcesand rigid cost increases. Despite all these difficulties, the Company kept forging ahead. For the reporting period, itrecorded a total throughput of 33.534 million metric tons, down 4.9% year-on-year. Operating revenue wasRMB1.25 billion (a 5.9% growth from a year earlier), gross profit was RMB0.52 billion (a 16.2% expansion overthe same period of last year) and net profit attributable to the Company as the parent was RMB0.32 billion (up14.5% year-on-year).
1. Container handling businessThe first half of 2018 saw stable and positive demand for container shipping, but freight rates of most routes
showed fluctuations with immediate falling back driven by new shipping capacity after year-beginning highs. Thethree new alliances of the OCEAN Alliance, the THE Alliance and the 2M+HMM alliance have firmly dominated
the global container shipping market, with their combined capacity accounting for 81% of the world’s total,
indicating more control on the market.During the reporting period, the combined container throughput of the ports of the three major cities in South
China was 32.47 million TEU, up 2.3% from the same period of last year, lower than the national average, ofwhich Shenzhen ports handled 12.13 million TEU, a 2.3% year-on-year growth. In the fierce local competition,the Company realized a container throughput of 2.686 million TEU, increasing 3.5% compared to the same periodof last year, which accounted for 22.1% of the Shenzhen market.
Keeping a close eye on shipping company dynamics, the Company adjusted its business strategy in a timelymanner and managed to maintain stable core clients, with the top 10 clients contributing over 80% of the
Company’s total revenue. Meanwhile, great effort was spent on exploring new clients and new routes. The end of
the reporting period saw seven new Asian routes from a year ago, increasing the throughput of the Asian routes by37%. Also, the Company has greatly improved the customs clearance efficiency by introducing a new modelfeaturing immediate access to cargos through advanced declaration. It also piloted a hinterland operational modelto attract local container handling demand. As a result, local container throughput went up 8.6% year-on-year,offsetting the impact of declining international transit demand. Additionally, closely following the trend of
―Internet + Smart Port‖, the Company put in great effort to improve and extend the functions of its unified
customer service platform, ePort. The launch of the visible operation monitoring system and the call center systemhas laid a solid foundation for a new container handling process. In the meanwhile, in order for safe, orderly andefficient wharf operations, as well as for better customer service efficiency, the Company continued to promoteautomatic and smart logistics facilities featuring the smart quayside loading and unloading system, the smartstorage yard operation system and the smart tallying system.
2. Bulk cargo handling businessThe Company primarily handles imported grain and feedstuff and fertilizers in its bulk cargo handling business. In
the first half of 2018, the rising trade frictions between China and the U.S. exerted a big impact on China’s
agricultural product supply mix. For this period, China imported 58.62 million metric tons of grain and soybean, a
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
slight rise of 1.1% year-on-year (9.8 percentage points lower from a year ago). Meanwhile, due to a decliningdomestic fertilizer output as a result of strict environment-related regulations, high production costs, etc., Chinaimported 5.56 million metric tons of fertilizers in the first half of 2018, a considerable increase of 19.1% year-on-year (6.9 percentage points higher compared to the same period of last year). Under such circumstances, theCompany proactively dealt with market changes such as declining local grain and feedstuff imports, changedproduction schedules of core clients and insufficient storage space, and at the same time captured opportunities
arising from the grain and feedstuff flows from North China to the south, clients’ exploration of alternative supply
sources, and the rising fertilizer imports, among others. As a result, the Company recorded a bulk cargothroughput of 10.16 million metric tons in the first half of 2018, down 9.6% year-on-year.
With respect to grain and feedstuff handling, the Company helped its clients look for alternative supply sources to
offset the fluctuations in their business caused by the Sino-U.S. trade frictions, and strengthened clients’ loyalty
through pre-sales. As a result, core clients maintained stable, with the top five clients contributing about 70% of
the Company’s total grain and feedstuff throughput. In addition, the Company successfully attracted new clientsin relation to rice export and sunflower seed meal import. In the reporting period, the Company’s grain and
feedstuff throughput was down 9.6% compared to the same period of last year, of which the internationalthroughput went down 12.9% while the domestic throughput increased 14.8%, securing its leading position in thefield of grain and feedstuff handling, as well as its position as a preferred discharge port for international grain andfeedstuff, in the Pearl River Delta.
As for fertilizer handling, by paying close attention to changes in the market and staying in close contact withclients, the Company handled significantly more cargos from its core clients, with the top five clients contributingover 80% of the total fertilizer throughput, indicating higher client concentration. Meanwhile, the Company seizedopportunities and successfully extended its business to handling of imported urea, kaolin, etc. Currently, the
country’s imported urea all goes through Machong Wharf. In the reporting period, the Company’s fertilizer
throughput increased 14.8% compared to the same period of last year, of which the imported compound fertilizerthroughput went up 20.8%, accounting for 48% of the national total, keeping the Company in a leading position inthis respect; while the throughput of imported potash rose 5.9%, accounting for 6% of the national total.
3. Support services and investment management
The Company’s tow truck, tugboat, customs clearance and barge services operated smoothly. These services notonly supported the core business of cargo handling, but also recorded a rise in income generated. The Company’s
main joint ventures in this respect, including China Overseas Harbour Affairs (Laizhou) Co., Ltd., ChinaMerchants Bonded Logistics Co., Ltd. and China Merchants Holdings (International) Information Technology Co.,Ltd., contributed flat returns to the Company compared to the same period of last year.
The Company’s primary business results are set out as follows:
| Main business indicator | Reporting period (January-June 2018) | Same period of last year ( January-June 2017) | Change (%) |
| Total throughput (thousand tons) | 33,534 | 35,244 | -4.9% |
| Among which: Container throughput (thousand TEU) | 2,686 | 2,596 | 3.5% |
| Bulk cargo throughput (thousand tons) | 10,160 | 11,233 | -9.6% |
| Hours charged for tow trucks (thousand hours) | 558 | 588 | -5.1% |
| Hours charged for tugboats (hour) | 22,135 | 17,152 | 29.1% |
During the reporting period, the Company carried out all tasks according to the annual plan, and focused on
promoting the ―Project of Improving 1% Quality‖, to achieve the Company’s balanced development of quality,
benefit and scale. The platform of the headquarters coordinated the capital management by multi-channelinnovative financing to significantly reduce the cost of capital. It made full use of existing resources and exploredassets benefit deeply. It established a benchmark-control system to improve the efficiency of corporatemanagement and control. It deepened the application of Internet technology and used intelligent system on line to
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
improve the efficiency of production links. It strengthened the innovation of technology and process to replace
labor, which reduced the reliance on traditional labor, and reduced production costs.
In the second half of the year, the global economy is expected to continue to recover. According to the latestforecast of the International Monetary Fund in July 2018, the global economic growth of 2018 is expected toincrease by 3.9%, but it will face the potential risks such as the raising of U.S. trade protectionism, global inflation
and so on. China’s economy is generally stable, but there are increasing difficulties and challenges. In the second
half of the year, economic growth may slow down, and be affected by the trade friction between China and theUnited States. Pressure on imports and exports will increase, which will cause greater fluctuations in the portindustry. The Company is located in the Guangdong-Hong Kong-Macao Greater Bay Area and a free trade zone,
which provides it a superior external development environment, and ―Development Planning Outline ofGuangdong-Hong Kong-Macao Greater Bay Area‖ is expected to be introduced in the second half of the year, and
then, the regional synergy will be further highlighted, market-oriented regional port resource integration will beaccelerated, and the operations of the Company will face both challenges and opportunities. The growth rate ofregional container transportation demand is expected to slow down, and the Company will closely follow the
customer’s developments and strive for new routes and further improve the PRD network layout. At the same time,
it will speed up the upgrading and reconstruction of berths and cooperate with the construction of sea channel inthe western port area so as to improve the hardware resource conditions of the terminal and strive to maintain thestability of container service. The demand for regional grain and feedstuff and fertilizer supply is expected toremain stable generally, but it is greatly affected by policy volatility, so the Company will focus on the changes ofmarket and industry policy, consolidate the advantages of sources, and accelerate the cultivation of new sourcesand new forms. At the same time, the Company will speed up the storage resources upgrading of Chiwan Wharf
and the supporting storage facilities’ construction of Machong Wharf to enhance the overall resource capacity,
and the market position with respect to bulk cargo handling. In terms of internal management, the Company willcontinue to follow and carry out the work plan to improve quality and efficiency, and at the same time, theCompany will work on innovation management and risk control, so as to achieve its annual business objectives.
II Main business analysis
See ―I Summary‖ above.
YoY movements in financial highlights:
Unit: RMB
| Reporting period | Same period of last year | Change (%) | Main reasons for movements | |
| Operating revenues | 1,246,135,516.34 | 1,176,651,017.99 | 5.91% | |
| Operating costs | 669,139,867.98 | 682,744,597.73 | -1.99% | |
| Administrative expenses | 87,636,508.75 | 77,908,036.28 | 12.49% | |
| Finance costs | 17,869,102.88 | 13,274,775.13 | 34.61% | greater exchange loss caused by a fluctuating exchange rate against the U.S. dollar |
| Corporate income tax expenses | 75,484,671.73 | 72,860,139.44 | 3.60% | |
| R&D expenses | 16,906,043.65 | 17,130,145.36 | -1.31% | |
| Net cash flows from operating activities | 349,174,873.68 | 574,555,532.03 | -39.23% | Slower collection of container clients’ payments, and accrued income tax on dividend from subsidiary |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| Net cash flows from investing activities | -394,893,240.49 | -78,300,304.51 | -404.33% | Decline in monetary assets resulted from the payment for the Zhoushan RORO wharf investment and the exclusion of MPIL from the consolidated financial statements |
| Net cash flows from financing activities | -287,326,646.23 | -382,463,833.98 | 24.87% | Lower debt repayments |
| Net increase in cash and cash equivalents | -349,906,153.32 | 108,855,629.56 | -421.44% | All the factors above |
No major changes occurred to the profit structure or sources of the Company during the reporting period.
Breakdown of main business
Unit: RMB
| Operating revenues | Operating costs | Gross profit margin (%) | Increase/decrease of operating revenues over the same period of last year (%) | Increase/decrease of operating costs over the same period of last year (%) | Increase/decrease of gross profit margin over the same period of last year (%) | |
| Classified by industry: | ||||||
| Cargo handling | 1,177,364,851.74 | 632,9.10,552.39 | 46.24% | 5.84% | -1.72% | 4.13% |
| Classified by region: | ||||||
| Mainland China | 1,234,732,332.50 | 659,560,690.80 | 46.58% | 6.03% | -1.94% | 4.34% |
III Non-core business analysis
Unit: RMB
| Amount | In total profit (%) | Source/reason | Recurring or not | |
| Investment income | 53,469,837.14 | 10.31% | Attributable profits from joint ventures and associates | Yes |
| Asset impairments | 360,407.86 | 0.07% | Allowance for doubtful accounts receivable established on a proportion basis | No |
| Non-operating income | 2,902,652.25 | 0.56% | Return of withheld personal income tax and accrued income tax handling fee, and write-off of over-3-year payables where the payees are unreachable | No |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| Non-operating expenses | 3,449,926.69 | 0.66% | Administrative fines | No |
IV Assets and liabilities
1. Major changes in asset composition
Unit: RMB
| End of Reporting Period | End of same period of last year | Proportion change（%） | Reason for major change | |||
| Amount | In total assets (%) | Amount | In total assets (%) | |||
| Monetary assets | 468,287,526.00 | 6.66% | 650,935,428.96 | 8.19% | -1.53% | |
| Accounts receivable | 307,047,142.75 | 4.37% | 312,395,974.34 | 3.93% | 0.44% | |
| Inventories | 16,490,966.83 | 0.23% | 26,307,548.18 | 0.33% | -0.10% | |
| Available-for-sale financial assets | - | - | 23,709,200.00 | 0.30% | -0.30% | Available-for-sale financial assets have been reclassified as “financial assets at fair value through other comprehensive income” according to the new accounting standards governing financial instruments |
| Other equity instrument investments | 146,463,840.00 | 2.08% | - | - | 2.08% | The cost method measurement of available-for-sale financial assets has been shifted to the fair value method according to the new accounting standards governing financial instruments |
| Investment property | 22,408,165.65 | 0.32% | 23,233,997.73 | 0.29% | 0.03% | |
| Long-term equity investments | 1,561,072,828.11 | 22.21% | 1,134,591,093.41 | 14.28% | 7.93% | MPIL has been excluded from the consolidated financial statements since this June and the investment in it is included in “long-term equity investments” as an associate |
| Fixed assets | 3,078,827,210.28 | 43.80% | 3,786,229,439.54 | 47.65% | -3.85% | |
| Construction in progress | 67,674,438.64 | 0.96% | 187,052,659.89 | 2.35% | -1.39% | |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| Other non-current assets | 285,561,664.28 | 4.06% | 133,682,985.68 | 1.68% | 2.38% | Since the formalities for change of the Zhoushan RORO wharf project company’s directors and senior management were still underway, the investment payment was temporarily put into “other non-current assets” |
| Short-term borrowings | 501,758,000.00 | 7.14% | 155,000,000.00 | 1.95% | 5.19% | New loan was arranged in the current period to supplement the working capital |
| Deferred income tax liabilities | 32,858,660.00 | 0.47% | 7,845,874.75 | 0.10% | 0.37% | The measurement of available-for-sale financial assets has been changed to the fair value method, and deferred income tax liability was recognized on the assessed corresponding value increase |
| Other comprehensive income | 111,828,824.49 | 1.59% | 13,597,653.00 | 0.17% | 1.42% | The measurement of available-for-sale financial assets has been changed to the fair value method, and the assessed corresponding value increase was charged to other comprehensive income |
2. Assets and liabilities at fair value
Unit: RMB
| Item | Opening amount | Effect of reclassification under new accounting standards governing financial instruments | Cumulative fair value change recorded into equity | Impairment provisions in the reporting period | Purchased amount in the reporting period | Sold amount in the reporting period | Closing amount |
| Financial assets | |||||||
| Available-for-sale financial assets | 23,759,200 | -23,759,200 | |||||
| Other equity instrument investments | 23,759,200 | 92,028,480 | 146,463,840 | ||||
| Subtotal of financial assets | 23,759,200 | 92,028,480 | 146,463,840 | ||||
| Total of the above | 23,759,200 | 92,028,480 | 146,463,840 | ||||
| Financial liabilities | 0 | 0 | |||||
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Major changes in measurement attributes of main assets in reporting period
□ Yes √ No
3. Restricted asset rights as of the end of this reporting periodNo such cases.
V Investments
1. General situation
□ Applicable √ Not applicable
2. Major equity investments made in reporting period
□ Applicable √ Not applicable
3. Major non-equity investments ongoing in reporting period
□ Applicable √ Not applicable
4. Investments in financial assets(1) Securities investment
Unit: RMB
| Variety of securities | Code of securities | Name of securities | Initial investment cost | Accounting measurement model | Opening book value | Gain/loss on fair value changes in current period | Cumulative fair value changes recorded into equity | Purchased in current period | Sold in current period | Gain/loss in current period | Closing book value | Accounting title | Source of funds |
| Stock | 600377 | Jiangsu Expressway | 1,120,000 | Fair value method | 9,850,000 | 0 | -585,000 | 0 | 0 | 0 | 9,070,000 | Other equity instrument investment | Self-owned funds |
| Stock | 400032 | Petrochemical A1 | 3,500,000 | Fair value method | 382,200 | 0 | 0 | 0 | 0 | 0 | 382,200 | Other equity instrument investment | Self-owned funds |
| Stock | 400009 | Guang Jian 1 | 27,500 | Fair value method | 17,000 | 0 | 0 | 0 | 0 | 0 | 17,000 | Other equity instrument investment | Self-owned funds |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| Total | 4,647,500 | -- | 10,249,200 | 0 | -585,000 | 0 | 0 | 0 | 9,469,200 | -- | -- |
(2) Investments in financial derivativesNo such cases in reporting period
VI Sale of major assets and equity interests
1. Sale of major assetsNo such cases in reporting period.
2. Sale of major equity interestsNo such cases in reporting period.
VII Main controlled and joint stock companies
Main subsidiaries and joint stock companies with over 10% effect on the Company’s net profit
Unit: RMB
| Company name | Company variety | Main business | Registered capital | Total assets | Net assets | Operating revenues | Operating profit | Net profit |
| Chiwan Container Terminal Co., Ltd. | Subsidiary | Container handling | USD95.3 million | 1,866,237,686.79 | 1,597,006,233.41 | 381,347,218.87 | 144,518,142.45 | 125,365,774.63 |
| Shenzhen Chiwan Harbor Container Co. Ltd. | Subsidiary | Container handling | RMB288.2 million | 809,658,024.67 | 554,366,074.77 | 170,508,483.84 | 78,836,985.98 | 59,174,331.15 |
| Dongguan Chiwan Terminal Co., Ltd. | Subsidiary | Handling and storage of bulk cargos | RMB400 million | 916,424,067.00 | 464,047,091.86 | 122,257,342.94 | 45,743,964.51 | 39,774,913.58 |
| Dongguan Chiwan Wharf Harbour Affairs Co., Ltd. | Subsidiary | Handling and storage of bulk cargos | RMB450 million | 1,245,999,790.18 | 613,965,034.40 | 160,907,339.98 | 62,193,947.11 | 46,871,555.05 |
| Chiwan Wharf Holdings (HK) Limited | Subsidiary | Investment holding | HKD1 million | 1,782,569,454.12 | 1,765,158,947.22 | 0 | 34,608,728.61 | 45,751,781.56 |
Subsidiaries obtained or disposed in the reporting period:
□ Applicable √ Not applicable
VIII Structured bodies controlled by the Company
□ Applicable √Not applicable
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
IX Performance forecast for January-September 2018
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end of the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks facing the Company and countermeasures
1. The Risk of Major Assets Restructuring
The Company’s major asset restructuring should be filed or approved by the business sector of the National
Development and Reform Commission and the business sector on the foreign investment involved in thistransaction, by the commerce department regarding the new shares of the Company subscribed by overseasstrategic investors and other related matters involved in this transaction, and approved by the China SecuritiesRegulatory Commission. There is still uncertainty as to whether this major asset restructuring will achieve theabove-mentioned approval and when it will eventually pass the approval.
The major assets restructuring being planned by the Company remains uncertain. Investors are kindly reminded topay attention to relevant announcements and investment risks. The Company will make every effort to carry outthis major asset restructuring, actively coordinate the work of all relevant parties, and strive to successfullycomplete this major asset restructuring.
2. Macroeconomic Risk
The Company’s main businesses are highly extroverted, so business fluctuations are highly related to changes in
macroeconomic trade. At present, the world economy is confronted with multiple challenges such as insufficientgrowth momentum, intensified trade protectionism and spillover effects of developed economies, all thesepotential risks will adversely affect the container shipping market and bulk demand, and bring greater challengesto the stable growth of port service.
The Company actively attaches to the research and estimation of the external operating environment, intensify thebusiness operation risk warning ability, plan in advance effective measures to actively respond to market changesand seek opportunities among challenges to strive for the stability of the core business. Meanwhile, the Companywill balance the return risk fluctuation by expanding the business layout, innovating business models andoptimizing the profiting structure.3. The Risk of Adjustment of Regional Function PlanningWith the adjustment of industrial structure and deep development of urbanization, the early built dock coming intourban development area, so the regional development function orientation should be adjusted gradually, and thereare risks of resources constriction.The Company actively adapts to the adjustment of regional function planning, promotes the transformation ofmanagement by innovative strategy, and focuses on the innovation of technology and management to build aintelligent modern port service, and intensively utilizes the stock resources to promote the resources outputbenefits. Meanwhile, the Company will seek resources which are suitable for its development based on thelocation advantages and external environment, so as to achieve sustainable development.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
4. The Risk of Regional CompetitionThe wharf handling capacity is excessive in the Pearl River Delta, leading to fiercer homogeneous competition
among wharfs, as well as increasing risk of customer distraction.The Company is a leading local competitor and hub seaport handling containers and bulk cargos. The Company
will promote the communication and cooperation among ports in the region to avoid low price viciouscompetition and maintain good market order, at the same time, the Company will optimize the allocation of portresources and actively participate in the integration of regional ports to strengthen the dominant position in theregion.5. The Risk of Costs RiseThe prices of production factors such as land, capital and labor are continue to rise, and the environmentprotection investments are increasing gradually, and terminal operation cost is rigid increasing. All these havecaused a narrowed profit space for businesses.The Company continues to promote the quality improvement plan, deeply make use of stock resources, and putmore to the scientific research to attach great importance to innovation of technology and reduce the scale ofemployment. The Company will carry out the development strategy of building regional first-class port integratedservice provider, that needs to combine with the existing advantages of the Company, base on the main businessof wharf services, expand the comprehensive service of ports and cultivate new profit growth points.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section 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 | Convened date | Disclosure date | Index to disclosed information |
| The 1st Extraordinary General Meeting of 2018 | Extraordinary General Meeting | 75.04% | 13 Feb. 2018 | 14 Feb. 2018 | For details of relevant resolution announcement(announcement No: 2018-018) , see www.cninfo.com.cn |
| 2017 Annual General Meeting | Annual General Meeting | 75.49% | 28 Mar. 2018 | 29 Mar. 2018 | For details of relevant resolution announcement(announcement No: 2018-037) , see www.cninfo.com.cn |
| The 2nd Extraordinary General Meeting of 2018 | Extraordinary General Meeting | 75.50% | 26 Jul. 2018 | 27 Jul. 2018 | For details of relevant resolution announcement(announcement No: 2018-078) , see www.cninfo.com.cn |
2. Extraordinary general meetings convened at request of preference shareholders with resumed votingrights
□ Applicable √ Not applicable
II Proposal for profit distribution and converting capital reserve into share capital for theReporting period
For the reporting period, the Company plans not to distribute cash dividends or bonus shares or convert capitalreserve into share capital.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
III Commitments of the Company’s actual controller, shareholders, related parties and
acquirer, as well as the company and other commitment makers, fulfilled in the reportingperiod or still ongoing at period-end
| Commitment | Commitment maker | Type of commitment | Contents | Date of commitment making | Period of commitment | Fulfillment |
| Share reform commitment | CND Group | Other | In order to enhance the shareholding confidence of tradable share holders, and encourage the core management and key personnel so that the interests of the management and all the shareholders can coincide, CND made a commitment to entrust, through the general meeting of the Company, the Board of Directors of the Company to formulate and carry out an equity incentive plan at a proper timing after the completion of the share division reform according to applicable laws and regulations. | 5 Apr. 2006 | The period when CND Group held shares of the Company. On 8 Jun. 2018, the CND Group completed the transfer of equity which transferred the Company’s 209,687,067 shares it held to CMGD. So far, the commitment has ended. | Completed |
| Commitment in the acquisition report or the report on equity changes | CMPort | Commitment on horizontal competition, related-party transactions and capital occupation | 1. Commitments about share custody; 2. Commitment about guaranteeing the independency of the Company; 3. Commitment about horizontal competition; and 4. Commitment about regulating related-party transactions | 17 Sept. 2012 | The period when CMPort was entrusted to manage shares of the Company. The shareholders meeting of CMPort held on 19 Mar. 2018 approved the Termination agreement on Trusteeship Agreement on Shares of Shenzhen Chiwan Wharf Holdings Limited signed with CND. As such, CMPort no longer manages shares of the Company as a custodian and the four commitments have thus expired. | Completed |
| Malai Storage | Commitment on horizontal competition, related-party transactions and capital occupation | 1. Commitment about guaranteeing the independency of the Company; 2. Commitment about horizontal competition; and 3. Commitment about regulating related-party transactions | 27 Dec. 2012 | The period when Malai Storage held shares of the Company. On 8 Jun. 2018, the Malai Storage completed the transfer of equity which transferred the Company’s 161,190,933 shares it held to CMGD. So far, the three commitments have ended. | Completed | |
| CMGD and its acting-in-concert party Broadford Global | Commitment on horizontal competition, related-party transactions and capital occupation | 1. Commitment about guaranteeing the independency of the Company; and 2. Commitment about regulating related-party transactions | 15 Mar. 2018 | The commitment about guaranteeing the independency of the Company has long-term effectiveness; and the commitment about regulating related-party transactions is effective during the period when CMGD and its person acting in concert have control power over the Company. | In the process of execution |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| China Merchants Group | Commitment on horizontal competition, related-party transactions and capital occupation | 1. Commitment about regulating related-party transactions; and 2. Commitment about horizontal competition. | 15 Mar. 2018 | The commitment about regulating related-party transactions is effective during the period when China Merchants Group has control power over the Company; and the valid period of the commitment about horizontal competition was extended to 16 Sep. 2020 on the shareholders meeting held on 11 Sep. 2017. | In the process of execution | |
| Commitment in asset reorganization | ||||||
| Commitment in IPO or refinancing | ||||||
| Equity incentive commitment | ||||||
| Other commitments made to minority shareholders | CND Group | Other | CND Group irrevocably and unconditionally agrees that if Chiwan Wharf suffers from any loss, expense, liability, demanded compensation or law suit due to any actual or potential illegality or unenforceability in any land use agreement or relevant documents signed or to be signed by CND Group or other related problems, CND Group promises to give full immunity to the recipient party of the land use right and its inheritor and the recipient person regarding the aforesaid matters. | 20 Mar. 2001; 18 Jun. 2003; 29 Sep. 2004 | Standing | In the process of execution |
| Executed on time or not | Yes | |||||
| Explain in detail specific reasons for failing to fulfill commitment and plan for next step in case of commitment unfulfilled on time | N/A | |||||
IV Engagement and disengagement of CPAs firm
Has the semi-annual financial report been audited?
□Yes √ No
This Semi-Annual Report is unaudited.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
V Explanation given by the Board of Directors, Supervisory Board regarding the “non-standard auditor’s report” issued by the CPAs firm for the reporting period
□ Applicable √ Not applicable
VI Explanations given by Board of Directors regarding “modified auditor’s report” issued for
last year
□ Applicable √ Not applicable
VII Bankruptcy and restructuring
No such cases in the reporting period.
VIII Legal matters
No such cases in the reporting periodOther legal matters:
□ Applicable √ Not applicable
IX Punishments and rectifications
No such cases in the reporting period
X Credit conditions of the Company as well as its controlling shareholder and actualcontroller
□ Applicable √ Not applicable
XI Equity incentive plans, employee stock ownership plans or other incentive measures foremployees
No such cases in the reporting period
XII Significant related-party transactions
1. Related-party transactions relevant to routine operation
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Unit: RMB
| Related party | Relationship | Type of the related-party transaction | Content of the related-party transaction | Pricing principle of the related-party transaction | Transaction price | Transaction amount (RMB’0,000) | Proportion in same kind of transactions | Approved transaction amount (RMB’0,000) | Whether exceeded the approved amount | Settlement method of the related-party transaction | Similar market price | Disclosure date | Disclosure index |
| CND Group | Affiliated legal person | Lease | Land use fee | Mutual negotiation | 29,407,300.56 | 2,940.73 | 68.09% | 7,500 | No | Payment by month | 29,407,300.56 | 7 Feb. 2018 | See Announcement No. 2018-012 on www.cninfo.com.cn for details. |
| Total | -- | -- | 2,940.73 | -- | 7,500 | -- | -- | -- | -- | -- | |||
| Details about return of large-amount sales | No | ||||||||||||
| Where the Company classifies and estimates the total amount of routine related-party transactions for the reporting period, explain the actual implementation during the reporting period (if any) | No | ||||||||||||
| Explain why the transaction price is greatly different from the market price (if applicable) | N/A | ||||||||||||
* The director of the Company-Zhang Jianguo also serves as a senior executive in CND Group. In accordance with
regulations stipulated in Listing Rules of Shenzhen Stock Exchange, CND Group is an affiliated legal person of theCompany.
2. Related-party transactions arising from assets or equities acquisition and sale of assets
□ Applicable √ Not applicable
3. Related-party transactions arising from joint investment in external parties
□ Applicable √ Not applicable
4. Credits and liabilities with related parties
□ Applicable √ Not applicable
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
5. Other significant related-party transactions
□ Applicable √ Not applicable
XIII Particulars about the non-operating occupation of funds by the controlling shareholderand other related parties of the Company
No such cases in the reporting period
XIV Deposits and loans in finance companies
1. Deposits and loans in CDFThe Proposal on Renewing the Financial Service Agreement Signed with China Development Finance Company
Ltd. was approved on the 2016 Annual Meeting of Shareholders held on 5 Jun. 2017, in which, the Company wasagreed to sign the Financial Service Agreement with period of three years with China Development Finance
Company Ltd. (hereinafter referred to as ―CDF‖).
CND Group will no longer be the shareholder of the Company from 8 Jun. 2018 when it completed the transferregistration of A-Share of the Company. CDF cannot continue to provide financial service for the Company sinceit is a non-bank financial institution specially providing financial service for member enterprises of CND Group.The Company held the 6
th
Special Meeting of the 9
th
Board of Directors on 9 Jul. 2018, on which the Proposal onTermination Agreement on Financial Service Agreement Signed with China Development Finance Company Ltd.in which the Company was agreed to sign the Termination Agreement on Financial Service Agreement with CDF.As of the end of the reporting period, the deposits and loans of the Company in CDF were listed as follows:
Unit: RMB’0,000
| Item | Opening balance | Increase | Decrease | Clsoing balance |
| I. Deposits in CDF | 119.27 | 0.36 | 119.63 | - |
| II. Loans from CDF | - | - | - | - |
2. Deposits and loans in CMG FinanceThe Proposal on Signing Financial Service Agreement with SinoTrans & CSC Finance Co., Ltd. was approved on
the Second Meeting of the Ninth Board of Directors held on 23 August 2017, in which the Company was agreedto sign the Financial Service Agreement with period of three years with Sinotrnas & CSC Finance Co., Ltd.(renamed CMG Finance in August 2017).As of the end of the reporting period, the deposits and loans of the Company in CMG Finance were listed asfollows:
Unit: RMB’0,000
| Item | Opening balance | Increase | Decrease | Clsoing balance |
| I. Deposits in CMG Finance | 15,035.93 | 299.33 | 15,277.87 | 57.39 |
| II. Loans from CMG Finance | - | 42,000.00 | 7,000.00 | 35,000.00 |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
XV Explain change of the accounting policy, accounting estimate and measurement methodsas compared with the financial reporting of last year
The major changes in the Company’s accounting policy are: on 31 March 2017, the Ministry of Finance published
the Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial
Instruments (hereinafter referred to as the ―Standards No. 22‖), the Accounting Standards for Business EnterprisesNo. 23-Transfer of Financial Assets (hereinafter referred to as the ―Standards No. 23‖) and the AccountingStandards for Business Enterprises No. 24-Hedge Accounting (hereinafter referred to as the ―Standards No. 24‖);
on 28 April 2017, the Ministry of Finance published the Accounting Standards for Business Enterprises No. 42-Non-current Assets and Disposal Groups Held for Sale and Discontinued Operations (hereinafter referred to as
the ―Standards No. 42‖); on 2 May 2017, the Ministry of Finance published the Accounting Standards forBusiness Enterprises No. 37-Presentation of Financial Instruments (hereinafter referred to as the ―Standards No.37‖); on 10 May 2017, the Ministry of Finance published the Accounting Standards for Business Enterprises No.16-Government Subsidies (hereinafter referred to as the ―Standards No. 16‖); on 5 July 2017, the Ministry of
Finance published the Accounting Standards for Business Enterprises No. 14-Income (hereinafter referred to as
the ―Standards No. 14‖); in accordance with requirements stipulated in documents issued by the Ministry of
Finance, the Company begins to implement the Standards No. 22, No. 23, No. 24, No. 37 and No. 14 from 1 Jan.2018; begins to implement the Standards No. 42 from 28 May 2017; begins to implement the Standards No. 16from 12 June 2017. For related details, please refer to the Announcement on Changes in Accounting Policy(Announcement No. 2018-025) disclosed on www.cninfo.com.cn.
XVI Explain change of the consolidation scope as compared with the financial reporting oflast year
The Company signed the Supplementary Agreement to the Media Port Investments Limited Shareholder
Agreement with China Merchants Port Holdings Company Limited (hereinafter referred to as ―CMPort‖), FattenInvestments Limited (hereinafter referred to as ―FIL‖) and Media Port Investments Limited (hereinafter referredto as ―MPIL‖) on 23 August 2017 in Shenzhen. Under the arrangements of the agreement, the Company
completed the director appointment for MPIL at the end of September 2017 and has realized control over MPILand its subsidiary FIL, Shenzhen Mawan Wharf Co., Ltd., Shenzhen Mawan Port Services Co., Ltd. and Shenzhen
Mawan Warehouse & Terminals Co., Ltd. (hereinafter referred to as the ―Mawan Companies‖) in form and nature.
According to the Accounting Standards for Business Enterprises No. 33-Consolidated Financial Statements, theCompany began to consolidate MPIL and its subsidiary FIL and the Mawan Companies from September 2017.And in accordance with the requirements on company consolidation under common control, the Company hasrestated the amounts of the same period of last year in the financial statements.The Company signed the Supplementary Agreement II to the Media Port Investments Limited ShareholderAgreement with CMPort, FIL and MPIL on 5 February 2018 which became effective after being signed by all theparties. After the transfer of a combined stake of 66.10% in the Company held by Shenzhen Malai Storage Co.,Ltd., Keen Field Enterprises Limited and China Nanshan Development (Group) Inc. to the subsidiary of ChinaMerchants Group-CMGD and its acting-in-concert party Broadford Global, the Company will no longer controlMPIL and its subsidiary FIL and the Mawan Companies. Therefore, it has excluded the said companies from itsconsolidated financial statements from the date when its control ceased.The Company received from CMGD and Broadford Global the Securities Transfer Registration Confirmationissued by the Shenzhen branch of China Securities Depository and Clearing Corporation Limited on 11 June 2018.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
The registration formalities for the said share transfer have been completed on 8 June 2018. From this day on, theCompany will exclude MPIL and its subsidiary FIL and the Mawan Companies from its consolidated financialstatements. For further information, please refer to the Announcement on the Completion of Share transfer andChange of the Controlling Shareholder (Announcement No.: 2018-060) disclosed on www.cninfo.com.cn dated12 June 2018.
XVII Significant contracts and fulfillment thereof
1. Trusteeship, contracting and leasing(1) Trusteeship
□Applicable√Not applicable
(2) Contracting
□Applicable√Not applicable
(3) Leasing
□Applicable√Not applicable
2. Significant guarantees
□Applicable√Not applicable
3. Other significant contracts
□Applicable√Not applicable
XVIII. Social responsibilities
1. Material environment issuesDoes the listed company or its subsidiaries belong to the heavily polluting industries stipulated by the
environmental protection authorities of the country?No
The Company made great efforts to build the green port of ―resources-saving‖ as well as ―environmentallyfriendly‖ type, and paid attention to the environment protection in the port planning, construction and operation to
achieve the healthy and harmonious development of the Company and environment.The Company strictly implements environmental protection requirements at all stages of planning, design andconstruction of port engineering projects, and implements environmental monitoring measures and the use ofenvironmental protection facilities in its daily operations. Container service continues to promote projects such asthe construction and use of ship shore power facilities, the conversion of RTG powered from oil to electricity, andthe renovation of exhaust treatment device for port mobile machinery, to promote the use of clean energy and
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
ensure that existing equipment meets emission standards. Bulk cargo service advances technical synchronously,aimed at technical links, such as loading hopper, loading platform, silo loading, loading, door operation, yardoperation and so on, which has a good effect. At the same time, the Company encourages the use of wastematerials and expands the scope of recycling lubricants to reduce energy consumption and pollutant emissions.
2. Targeted measures taken to help people lift themselves out of poverty
The Company did not take such measures in the reporting year and has no such plans for now.
XIX. Other significant events
1. Particulars about suspension and resumption of the stock tradingThe stock of the Company had been suspended since the market opened on 20 Nov. 2017 because the actual
controller-China Merchants Group-planed and demonstrated some significant events related to the Company.After the negotiation and demonstration by related parties, the Company confirmed that the above significantevents were significant assets restructuring, so the stock of the Company continued to be suspended as significantassets restructuring events since the market opened on 4 December 2017. The Proposal on Related TransactionReport (draft) on Assets Purchase via Share Offering and Matching Fund Raising and its Abstract as well asrelative proposals were approved on the Fifth Special Meeting of the Ninth Board of Directors held on 19 June2018 and submitted to the shareholders meeting for approval. The Company replied the Inquiry Letter regardingRestructuring of Shenzhen Chiwan Wharf Holdings Limited (Permission Inquiry Letter regarding Restructuring[2018] No. 19) issued by the Management Department of Shenzhen Stock Exchange and disclosed the Related-party Transaction Report (draft) (revised) on Assets Purchase via Share Offering and Matching Fund Raising andrelated announcements in accordance with regulations. The stock of the Company had been resumed since themarket opened on 10 July 2018. The Company has fulfilled the information disclosure obligation in line withgoverning rules and regulations. For more details, please refer to related announcements disclosed by the
Company on Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn.
2. Particulars about the connected transaction of assets purchase via share offering and matching fundraising
On 26 July 2018, the 2
nd
Extraordinary General Meeting of 2018 of the Company passed the Proposal on theRelated-party Transaction Report (Draft) on Assets Purchase via Share Offering and Matching Fund Raising ofShenzhen Chiwan Wharf Holdings Limited. and its Abstract and related proposals to the related-party transaction.The main contents of assets of issuing shares purchase and matching fund raising and related-party transactionsare as follows:
(1) The Company intends to purchase 1,313,541,560 common stocks of CMPort from China Merchants
Investment Development Co., Ltd. (hereinafter referred to as ―CMID‖), which accounts for about 39.51% of the
total number of shares issued by CMPort. (2) CMG Hong Kong signed Concerted Action Agreement with theCompany, it is agreed that after finishing purchasing the issued assets, the voting rights of 753,793,751 ordinaryshares of CM Port (about 22.67 % of the total number of ordinary shares issued by CMPort) entrusted to CMPortby CMG Hong Kong shall be unconditionally consistent with that of the Company on matters considered at thegeneral meeting of shareholders of CMPort, and should be voted basing on the opinions of Shenzhen Chiwan
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Wharf Holdings Limited. (3) The Company intends to adopt the inquiry method to issue A shares matching fundto no more than 10 specific investors, and the total amount of matching funds should not exceed RMB400,000.00,and the number of issued shares should be no more than 128,952,746.Coming into force of the Concerted Action Agreement and the implementation of matching fund raising areconditional on the effectiveness and implementation of issuing shares of purchasing assets; however, theeffectiveness and implementation of the issuing shares of purchasing assets and Concerted Action Agreement arenot on the premise of the implementation of matching fund raising, whether the matching funds finally success ornot, it will not affect the purchase of the shares and the implementation of the Concerted Action Agreement.
The Company’s major asset restructuring should be filed or approved by the business sector of the National
Development and Reform Commission and the business sector on the foreign investment involved in thistransaction, by the commerce department regarding the new shares of the Company subscribed by overseasstrategic investors and other related matters involved in this transaction, and approved by the China SecuritiesRegulatory Commission. There is still uncertainty as to whether this major asset reorganization will achieve theabove-mentioned approval and when it will eventually pass the approval. Detailed progress of the transaction andprogram contents showed in related announcements which published on the Securities Times, Ta Kun Pao (HK)and www.cninfo.com.cn.
3. Particulars about additional investment in Zhoushan Archipelago New Area SinoTrans & CSC RoRoLogistics Co., Ltd.
On 26 January 2018, the Second Special Meeting of the Ninth Board of Directors of the Company approved theProposal on Capital Increase to Zhoushan Archipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd. Onthe same day, the Company together with Zhoushan Blue Ocean Investment Co., Ltd. (hereafter referred to as
―Blue Ocean Investment‖), CSC RoRo Logistics Company Limited (hereafter referred to as ―CSC‖), ZhoushanArchipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd. (hereafter referred to as ―Zhoushan RoRo‖)and Zhoushan Archipelago New Area Xinghai RoRo Terminal Co., Ltd.( hereafter referred to as ―XinghaiTerminal‖) signed Zhoushan Archipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd.. According to the
agreement, the Company contributed RMB149.7098 million in cash to hold 51% equity in Zhoushan RoRo, andthe capital of Zhoushan RoRo increased from RMB60 million to RMB173.0786 million, and Zhoushan RoRoowned 100% stake of Xinghai RoRo, which made Xinghai RoRo a wholly owned subsidiary of Zhoushan RoRo.More information is showed on the Announcement on the Related-party Transaction regarding ForeignInvestments (Announcement No.: 2018-007) published on the Securities Times, Ta Kun Pao (HK) andwww.cninfo.com.cn on 27 January 2018.In May 2018, the Company paid all the increased capital to Zhoushan RoRo. On 29 August 2018, Zhoushan RoRo
changed its name to ―CMPort (Zhoushan) RoRo Logistcis Co., Ltd.‖ and completed the formalities for the change
of its directors, supervisors and senior executives with the industrial and commercial administration. As such,Zhoushan RoRo has officially become a controlled subsidiary of the Company. At present, the main constructionof Xinghai RoRo has been completed and accepted, and the yard construction of Zhoushan RoRo is wellunderway.
4. Information disclosure index
In the reporting period, the Company disclosed the following significant events on Securities Times, Ta Kung Pao(HK) and www.cninfo.com.cn:
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| Announcement No. | Date | Title |
| 2018-001 | 2018-01-04 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-002 | 2018-01-06 | Announcement on Voluntary Information Disclosure of Business Volume Data of December 2017 |
| 2018-003 | 2018-01-11 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-004 | 2018-01-20 | Announcement on Resolutions of the First Special Meeting of the ninth Board of Directors in 2018 |
| 2018-005 | 2018-01-20 | Announcement on Application for Continuing the Suspension due to the Expiration of Significant Assets Restructuring Delisting |
| 2018-006 | 2018-01-27 | Announcement on Resolutions of the Second Special Meeting of the ninth Board of Directors in 2018 |
| 2018-007 | 2018-01-27 | Announcement on the Related-party Transaction regarding Foreign Investments |
| 2018-008 | 2018-01-27 | Announcement on Convening Shareholders Meeting for Approval of Matters Related to Continuous Suspension |
| 2018-009 | 2018-01-27 | Notice on the First Special General Meeting in 2018 |
| 2018-010 | 2018-02-03 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-011 | 2018-02-07 | Announcement on Resolutions of the Third Special Meeting of the ninth Board of Directors in 2018 |
| 2018-012 | 2018-02-07 | Announcement on Expected Routine Related-Party Transactions for 2018 |
| 2018-013 | 2018-02-07 | Announcement on Related-party Transaction regarding Signing Supplementary Agreement to the MEDIA PORT INVESTMENTS LIMITED Shareholder Agreement II |
| 2018-014 | 2018-02-07 | Indicative Announcement on Changes in Controlling Shareholders |
| 2018-015 | 2018-02-07 | Indicative Announcement on Convening the First Special General Meeting in 2018 |
| 2018-016 | 2018-02-08 | Announcement on Voluntary Information Disclosure of Business Volume Data of January 2018 |
| 2018-017 | 2018-02-10 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-018 | 2018-02-14 | Announcement on Resolutions of the First Special General Meeting in 2018 |
| 2018-019 | 2018-02-14 | Announcement on Application for Continuing the Suspension due to the Expiration of Significant Assets Restructuring Delisting |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| 2018-020 | 2018-02-28 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-021 | 2018-03-07 | Announcement on Resolutions of the Third Meeting of the Ninth Board of Directors |
| 2018-022 | 2018-03-07 | Announcement on Resolutions of the Third Meeting of the Ninth Supervisory Committee |
| 2018-023 | 2018-03-07 | Abstract of Annual Report 2017 |
| 2018-024 | 2018-03-07 | Announcement on Plan of Profit Distribution and Dividend Payout in 2017 |
| 2018-025 | 2018-03-07 | Announcement on Changes in Accounting Policy |
| 2018-026 | 2018-03-07 | Announcement on Termination of Joint Investment in Haixing Onoda Project with Related Parties |
| 2018-027 | 2018-03-07 | Notice of Annual General Meeting 2017 |
| 2018-028 | 2018-03-07 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-029 | 2018-03-08 | Announcement on Voluntary Information Disclosure of Business Volume Data of February 2018 |
| 2018-030 | 2018-03-08 | Correction Notice |
| 2018-031 | 2018-03-14 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-032 | 2018-03-20 | Indicative Announcement on the Progress of Changes in Controlling Shareholders |
| 2018-033 | 2018-03-21 | Indicative Announcement on Convening Annual General Meeting 2017 |
| 2018-034 | 2018-03-21 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-035 | 2018-03-27 | Indicative Announcement on the Progress of Changes in Controlling Shareholders |
| 2018-036 | 2018-03-28 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-037 | 2018-03-29 | Announcement on Resolutions of the Annual General Meeting 2017 |
| 2018-038 | 2018-04-04 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-039 | 2018-04-10 | Announcement on Voluntary Information Disclosure of Business Volume Data of March 2018 |
| 2018-040 | 2018-04-13 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| 2018-041 | 2018-04-20 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-042 | 2018-04-24 | Indicative Announcement on Issuance of 2018 Phase I Super-short-term Financing Bonds |
| 2018-043 | 2018-04-27 | Announcement on Resolutions of the fourth Special Meeting of the ninth Board of Directors in 2018 |
| 2018-044 | 2018-04-27 | The Text of Quarter One Report 2018 |
| 2018-045 | 2018-04-27 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-046 | 2018-04-28 | Announcement on Issue Results of 2018 Phase I Super-short-term Financing Bonds |
| 2018-047 | 2018-05-03 | Announcement on China Securities Regulatory Commission’s Consent for the Exemption of China Merchants Gangtong Development (Shenzhen) Co., Ltd. and its Persons Acting in Concert from the Tender Offer Obligation |
| 2018-048 | 2018-05-08 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-049 | 2018-05-09 | Announcement on Voluntary Information Disclosure of Business Volume Data of April 2018 |
| 2018-050 | 2018-05-15 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-051 | 2018-05-15 | Announcement on Convening Investor Conference regarding Significant Assets Restructuring |
| 2018-052 | 2018-05-17 | Announcement on the Execution of the 2017 Dividend Payout |
| 2018-053 | 2018-05-18 | Announcement on Application for Continuing the Suspension due to the Expiration of Significant Assets Restructuring Delisting |
| 2018-054 | 2018-05-19 | Announcement on Particulars of Investors Conference Convened regarding Significant Assets Restructuring |
| 2018-055 | 2018-05-22 | Announcement on the Due Payment of 2017 Phase I Short-term Financing Bonds |
| 2018-056 | 2018-05-25 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-057 | 2018-06-01 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-058 | 2018-06-08 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
| 2018-059 | 2018-06-09 | Announcement on Voluntary Information Disclosure of Business Volume Data of May 2018 |
| 2018-060 | 2018-06-12 | Announcement on Completion of Share Transfer and Changes in Controlling Shareholders |
| 2018-061 | 2018-06-15 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| 2018-062 | 2018-06-21 | Announcement on Resolutions of the Fifth Special Meeting of the ninth Board of Directors in 2018 |
| 2018-063 | 2018-06-21 | Announcement on Resolutions of the Second Special Meeting of the Nine Supervisory Committee in 2018 |
| 2018-064 | 2018-06-21 | Announcement on Related-party Transaction regarding Signing Supplementary Agreement to the Financial Service Agreement with CMG Finance |
| 2018-065 | 2018-06-21 | Announcement on Disclosure of Related-party Transaction Report on Assets Purchase via Share Offering and Matching Fund Raising and on Temporary not Resumption |
| 2018-066 | 2018-06-21 | Indicative Announcement on General Risk of Significant Assets Restructuring |
| 2018-067 | 2018-06-28 | Announcement on the Progress of Delisting of Significant Assets Restructuring |
XX Internal control progress
Pursuant to the ―Internal Control Rules for Enterprises‖ and the mating guidelines, the Company officially
implemented internal control, with details as follows:
1. Preparation phase(1) The Company updated the name list of the members of internal control task groups. The chairman of the boardwas the head of the internal control project, with general managers, divisional leaders and departmental leaders asthe members for the internal control steering committee. At the Company level, important professionals of allfunctional departments were the members for the task group. At the level of a subsidiary, the task group washeaded by the general manager of the subsidiary, with important professionals in the subsidiary as the membersfor the task group.(2) The work plan for internal control of 2018 was worked out.(3) The subjects and internal control processes included in the internal control improvement task for 2018 weredetermined. According to its own business characteristics and importance and based on the internal controlprocess improvement results of the previous years, subjects included in the internal control improvement task for2018 were: the Company, Chiwan Container Terminal Co., Ltd., Shenzhen Chiwan Wharf Container Co. Ltd.,Dongguan Chiwan Wharf Company Limited, Dongguan Chiwan Terminal Company Limited and ShenzhenChiwan Tugboat Transportation Co., Ltd. Internal control processes included in the internal control improvementand self-evaluation task for 2018 were: the organizational structure, development strategy, human resources,social responsibilities, corporate culture, capital operation, procurement, asset management, marketing, R&D,engineering projects, guarantees, outsourcing, financial reporting, overall budget, contract management, internalinformation transmission and the information system.(4) Work flow charts were sent down to confirm the specific work and schedules for the members of the internalcontrol task groups.(5) Professional trainings were organized for members of the internal control task groups.2. Implementation phase(1) The internal control task groups of the Headquarters and the subsidiaries have reviewed the flow chart riskmatrix assessment of last year, and have re-described work flows within the internal control improvement scopeaccording to business changes this year so as to formulate an internal control risk matrix and a core flow chart forthe Company for 2018.(2) The internal control task groups of the Headquarters and the subsidiaries have carried out a walk-through teston the effectiveness of the internal control design to look for defects.3. Internal control audit
The resolution of hiring Deloitte Touche Tohmatsu (special general partnership) as the Company’s internal audit
firm of 2018 was approved by the Third Meeting of the Ninth Board of Directors held on 5 March 2018 andAnnual General Meeting 2017 held on 28 March 2018.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
The Company carried out internal control work according to the time schedule of the 2018 internal controlprogram of work. The progress of the project was in accordance with the plan of the work plan. There was nodifference or delay.
XXI Significant evens of subsidiaries
□Applicable√Not applicable
XXII The registration form of activities such as researches, communication and interviewsreceived in the reporting period
| Time | Way | Type of object | Main contents discussed and materials and index provided |
| 4 Jan. 2018 | One-on-one meeting | Institution | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR（http://irm.cninfo.com.cn/ssessgs/S000022/index.html） |
| 6 Feb. 2018 | One-on-one meeting | Institution | |
| 12 Mar. 2018 | One-on-one meeting | Institution | |
| 10 May 2018 | One-on-one meeting | Institution | |
| 25 May 2018 | One-on-one meeting | Institution | |
| Jan.-Jun. 2018 | By phone or written inquiry (EasyIR platform of SZSE) | Individual |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section VI Share Changes & Particulars about Shareholders
I Changes in shares
1. Changes in shares
Unit: share
| Before | Increase/decrease (+, -) | After | |||||||
| Number | Percentage | New shares | Bonus shares | Capitalization of capital reserve | Other | Subtotal | Number | Percentage | |
| I Restricted shares | 160,106 | 0.03% | 0 | 0 | 0 | 0 | 0 | 160,106 | 0.03% |
| 1. Shares held by the State | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| 2.Share held by state-owned corporations | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| 3.Shares held by other domestic investors | 160,106 | 0.03% | 0 | 0 | 0 | 0 | 0 | 160,106 | 0.03% |
| Among which: Shares held by domestic corporations | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| Shares held by domestic individuals | 160,106 | 0.03% | 0 | 0 | 0 | 0 | 0 | 160,106 | 0.03% |
| 4.Shares held by foreign investors | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| Among which: Shares held by foreign corporations | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| Shares held by foreign individuals | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| II Non-restricted shares | 644,603,624 | 99.97% | 0 | 0 | 0 | 0 | 0 | 644,603,624 | 99.97% |
| 1.Renminbi common shares | 464,859,300 | 72.10% | 0 | 0 | 0 | 0 | 0 | 464,859,300 | 72.10% |
| 2.Domestically listed foreign shares | 179,744,324 | 27.88% | 0 | 0 | 0 | 0 | 0 | 179,744,324 | 27.88% |
| 3.Overseas listed foreign shares | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| 4. Others | 0 | 0% | 0 | 0 | 0 | 0 | 0 | 0 | 0% |
| III Total shares | 644,763,730 | 100% | 0 | 0 | 0 | 0 | 0 | 644,763,730 | 100% |
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Reasons for share changes:
□ Applicable √ Not applicable
Approval of the change in shares
□ Applicable √ Not applicable
Transfer of share changes:
□ Applicable √ Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to commonshareholders of the Company and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities todisclose
□ Applicable √ Not applicable
2. Changes in restricted shares
□ Applicable √ Not applicable
II Issuance and listing of securities
□ Applicable √ Not applicable
III Total number of shareholders and their shareholding
Unit: share
| Total number of common shareholders at period-end | 35,589（25,131 A-shareholders and 10,458 B-shareholders） | Total number of preference shareholders with resumed voting rights at period-end (if any) | 0 | ||||||
| Shareholding of common shareholders holding more than 5% shares or the top 10 of common shareholders | |||||||||
| Name of shareholder | Nature of shareholder | Holding percentage (%) | Number of shareholding at the end of the reporting period | Increase and decrease of shares during reporting period | Number of shares held subject to trading moratorium | Number of shares held subject to trading moratorium | Pledged or frozen shares | ||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | Common domestic corporation | 57.52% | 370,878,000 | 370,878,000 | 0 | 370,878,000 | 0 | ||
| BROADFORD GLOBAL LIMITED | Foreign corporation | 8.58% | 55,314,208 | 55,314,208 | 0 | 55,314,208 | 0 | ||
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | Foreign corporation | 7.43% | 47,914,954 | 0 | 0 | 47,914,954 | Unknown | ||
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| CITIC SECURITIES CO., LTD | Common domestic corporation | 1.47% | 9,467,951 | 0 | 0 | 9,467,951 | 0 | ||||
| NORGES BANK | Foreign corporation | 0.43% | 2,802,863 | 0 | 0 | 2,802,863 | Unknown | ||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | Foreign corporation | 0.41% | 2,617,518 | 0 | 0 | 2,617,518 | Unknown | ||||
| MAI SHUQING | Domestic individual | 0.35% | 2,238,347 | 0 | 0 | 2,238,347 | 0 | ||||
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | State-owned corporation | 0.33% | 2,126,022 | 0 | 0 | 2,126,022 | Unknown | ||||
| CANADA POST CORPORATION REGISTERED PENSION PLAN | Foreign corporation | 0.24% | 1,579,096 | 0 | 0 | 1,579,096 | Unknown | ||||
| VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND | Foreign corporation | 0.24% | 1,530,596 | 0 | 0 | 1,530,596 | Unknown | ||||
| Strategic investors or general corporations becoming top-ten shareholders due to placing of new shares (if any) | N/A | ||||||||||
| Related or acting-in-concert parties among the shareholders above | CMGD is a wholly-owned subsidiary set up in Shenzhen by Broadford Global. The two companies are acting-in-concert parties. The Company does not know whether the other shareholders are related parties or persons acting in concert. | ||||||||||
| Top 10 non-restricted shareholders | |||||||||||
| Name of shareholder | Number of non-restricted shares held at period-end | Type of shares | |||||||||
| Type | Number | ||||||||||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | 370,878,000 | A-share | 370,878,000 | ||||||||
| BROADFORD GLOBAL LIMITED | 55,314,208 | B-share | 55,314,208 | ||||||||
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | 47,914,954 | B-share | 47,914,954 | ||||||||
| CITIC SECURITIES CO., LTD | 9,467,951 | A-share | 9,467,951 | ||||||||
| NORGES BANK | 2,802,863 | B-share | 2,802,863 | ||||||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 2,617,518 | B-share | 2,617,518 | ||||||||
| MAI SHUQING | 2,238,347 | A-share | 2,238,347 | ||||||||
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | 2,126,022 | B-share | 2,126,022 |
| CANADA POST CORPORATION REGISTERED PENSION PLAN | 1,579,096 | B-share | 1,579,096 |
| VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND | 1,530,596 | B-share | 1,530,596 |
| Explanation on associated relationship among the top ten shareholders of tradable share not subject to trading moratorium, as well as among the top ten shareholders of tradable share not subject to trading moratorium and top ten shareholders, or explanation on acting-in-concert | CMGD is a wholly-owned subsidiary set up in Shenzhen by Broadford Global. The two companies are acting-in-concert parties. The Company does not know whether the other shareholders are related parties or persons acting in concert. | ||
| Particular about shareholder participate in the securities lending and borrowing business (if any) | N/A | ||
None of the top ten common shareholders and the top ten common shareholders not subject to trading moratoriumof the Company carried out any agreed buy-back in the reporting period.
IV Change of the controlling shareholder or the actual controller
| New controlling shareholder | China Merchants Gangtong Development (Shenzhen) Co., Ltd. |
| Date of change | 8 June 2018 |
| Index to the relevant announcement disclosed on the designated website | For further information, see the Announcement No. 2018-060 on the Completion of Share Transfer and Change of the Controlling Shareholder on www.cninfo.com.cn |
| Date of disclosure | 12 June 2018 |
The actual controller of the Company did not change in the reporting period.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section VII Preference Shares
□ Applicable √ Not applicable
The Company had no preference shares in the reporting period.
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section VIII Directors, Supervisors and Senior Management Staff
I Changes in the shareholdings of directors, supervisors and senior management staff
There was no change in shareholding of Directors, Supervisors, Senior Management Staffs and Employees, fordetails, please refer to 2017 Annual Report
II Particulars about Changes of Directors, Supervisors and Senior Executives
There was no change in Directors, Supervisors, Senior Management Staffs and Employees, for details, pleaserefer to 2017 Annual Report
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before theapproval date of this Report or were due but could not be redeemed in full?
No
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2018
Section X Financial Report
I Auditor’s report
The semi-annual financial report has not been audited by a CPAs firm.II Financial statements (see the attached)
Section XI Documents Available for Reference
I The 2018 Semi-Annual Report carrying the signature of the Company’s Chairman of the Board;II The 2018 Semi-Annual Financial Report carrying the signatures of the Company’s Legal
Representative, Chief Financial Officer and Financial Manager; andIII Original copies of all documents and announcements disclosed by the Company during the
reporting period on Securities Times, Ta Kung Pao and www.cninfo.com.cn.
For and on behalf of the Board
Bai JingtaoChairman of the Board
Shenzhen Chiwan Wharf Holdings Limited
Dated 31 August 2018
FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 1 -
FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
CONTENTS Pages
THE CONSOLIDATED AND COMPANY BALANCE SHEETS 2 - 3
THE CONSOLIDATED AND COMPANY INCOME STATEMENTS 4 - 5
THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 6 - 7
THE CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES INSHAREHOLDERS' EQUITY 8 - 9
NOTES TO THE FINANCIAL STATEMENTS 10 - 119
- 2 -
AT 30 JUNE 2018
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | Closing balance | Opening balance | Item | Notes | Closing balance | Opening balance |
| ASSETS | LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current assets: | Current liabilities: | ||||||
| Cash and bank balances | (V)1 | 468,287,526.00 | 818,193,679.32 | Short-term borrowings | (V)21 | 501,758,000.00 | - |
| Notes receivable | (V)2 | - | 500,000.00 | Accounts payable | (V)22 | 105,261,259.62 | 131,837,865.23 |
| Accounts receivable | (V)3 | 307,047,142.75 | 257,081,961.83 | Receipts in advance | (V)23 | 16,147,389.17 | 56,571,454.49 |
| Prepayments | (V)4 | 2,374,910.59 | 4,354,830.16 | Employee benefits payable | (V)24 | 60,684,157.98 | 95,361,472.09 |
| Interest receivable | (V)5 | 95,277.78 | 1,175,305.39 | Taxes payable | (V)25 | 86,884,187.10 | 96,453,101.66 |
| Dividends receivable | (V)6 | - | - | Interest payable | (V)26 | 8,998,745.37 | 3,678,493.15 |
| Other receivables | (V)7 | 17,220,164.87 | 21,209,538.29 | Dividends payable | (V)27 | 165,955,102.54 | 263,384,499.42 |
| Inventories | (V)8 | 16,490,966.83 | 21,862,480.10 | Other payables | (V)28 | 72,503,833.26 | 138,012,498.12 |
| Other current assets | (V)9 | 24,561,374.56 | 33,491,432.18 | Other current liabilities | (V)29 | 200,000,000.00 | 100,000,000.00 |
| Total current assets | 836,077,363.38 | 1,157,869,227.27 | Total current liabilities | 1,218,192,675.04 | 885,299,384.16 | ||
| Non-current Assets: | Non-current Liabilities: | ||||||
| Available-for-sale financial assets | (V)10 | - | 23,759,200.00 | Bonds payable | (V)30 | 299,229,041.07 | 298,931,506.83 |
| Other investments in equity instruments | (V)11 | 146,463,840.00 | - | Long-term payables | (V)31 | - | 25,000,000.00 |
| Long-term equity investments | (V)12 | 1,561,072,828.11 | 1,152,620,039.97 | Special payables | (V)32 | 28,209,108.38 | 32,563,422.41 |
| Investment properties | (V)13 | 22,408,165.65 | 22,821,081.69 | Deferred income | (V)33 | 153,051,500.28 | 156,048,997.49 |
| Fixed assets | (V)14 | 3,078,827,210.28 | 3,929,355,718.60 | Deferred tax liabilities | (V)19 | 32,858,660.00 | 10,584,342.80 |
| Construction in progress | (V)15 | 67,674,438.64 | 86,317,666.70 | Total non-current liabilities | 513,348,309.73 | 523,128,269.53 | |
| Intangible assets | (V)16 | 957,084,841.87 | 1,350,224,998.54 | TOTAL LIABILITIES | 1,731,540,984.77 | 1,408,427,653.69 | |
| Goodwill | (V)17 | 10,858,898.17 | 10,858,898.17 | SHAREHOLDERS' EQUITY: | |||
| Long-term prepaid expenses | (V)18 | 51,803,814.59 | 98,278,001.09 | Share capital | (V)34 | 644,763,730.00 | 644,763,730.00 |
| Deferred tax assets | (V)19 | 10,753,068.89 | 11,031,026.43 | Capital reserve | (V)35 | 167,480,381.25 | 167,480,381.25 |
| Other non-current assets | (V)20 | 285,561,664.28 | 132,334,704.86 | Other comprehensive income | (V)36 | 111,828,824.49 | 19,800,344.49 |
| Total non-current assets | 6,192,508,770.48 | 6,817,601,336.05 | Special reserve | (V)37 | 8,314,754.88 | 4,767,373.45 | |
| Surplus reserve | (V)38 | 520,074,434.56 | 520,074,434.56 | ||||
| Unappropriated profit | (V)39 | 3,031,700,072.97 | 3,566,083,142.17 | ||||
| Total shareholders' equity attributable to equity holders of the parent | 4,484,162,198.15 | 4,922,969,405.92 | |||||
| Minority interests | 812,882,950.94 | 1,644,073,503.71 | |||||
| TOTAL SHAREHOLDERS' EQUITY | 5,297,045,149.09 | 6,567,042,909.63 | |||||
| TOTAL ASSETS | 7,028,586,133.86 | 7,975,470,563.32 | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 7,028,586,133.86 | 7,975,470,563.32 |
The accompanying notes form part of the financial statements.
The financial statements on pages 2 to 119 were signed by the following:
Legal Representative：Bai JingtaoChief Financial Officer：Yao ShenglanHead of Accounting Department：Li Xiaopeng
- 3 -
AT 30 JUNE 2018
Balance Sheet of the Company
Unit: RMB
| Item | Note | Closing balance | Opening balance | Item | Note | Closing balance | Opening balance |
| ASSETS | LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current Assets: | Current Liabilities: | ||||||
| Cash and bank balances | 97,869,776.30 | 230,039,345.73 | Short-term borrowings | 501,758,000.00 | - | ||
| Accounts receivable | (XIV)1 | 23,418,326.13 | 12,987,394.84 | Accounts payable | 13,576,628.07 | 18,376,556.53 | |
| Prepayments | - | - | Receipts in advance | 85,650.00 | 98,400.00 | ||
| Dividends receivable | 191,552,301.40 | 589,478,376.49 | Employee benefits payable | 40,618,586.08 | 51,689,614.60 | ||
| Other receivables | (XIV)2 | 413,351,630.81 | 583,090,959.69 | Taxes payable | 861,248.10 | 1,578,674.01 | |
| Inventories | 389,771.06 | 415,163.18 | Interest payable | 13,256,065.95 | 8,010,008.11 | ||
| Other current assets | 1,185,221.69 | 2,210,653.66 | Dividends payable | 37,608,540.65 | 37,608,540.65 | ||
| Total current assets | 727,767,027.39 | 1,418,221,893.59 | Other payables | 500,180,624.02 | 834,923,800.53 | ||
| Non-current Assets: | Other current liabilities | 200,000,000.00 | 100,000,000.00 | ||||
| Available-for-sale financial assets | - | 23,759,200.00 | Total current liabilities | 1,307,945,342.87 | 1,052,285,594.43 | ||
| Other investments in equity instruments | 146,463,840.00 | - | Non-current Liabilities: | ||||
| Long-term receivables | 11,004,284.75 | 11,004,284.75 | Bonds payable | 299,229,041.07 | 298,931,506.83 | ||
| Long-term equity investments | (XIV)3 | 2,215,018,137.80 | 2,215,952,842.62 | Long-term payables | 150,386,000.00 | 150,098,000.00 | |
| Investment property | 12,875,095.62 | 13,116,783.72 | Deferred tax liabilities | 32,858,660.00 | 2,182,500.00 | ||
| Fixed assets | 201,727,344.65 | 204,839,343.34 | Total non-current liabilities | 482,473,701.07 | 451,212,006.83 | ||
| Construction in progress | 9,823,376.20 | 10,631,762.77 | TOTAL LIABILITIES | 1,790,419,043.94 | 1,503,497,601.26 | ||
| Intangible assets | 58,516,469.53 | 59,954,618.20 | SHAREHOLDERS' EQUITY | ||||
| Long-term prepaid expenses | 3,864,672.16 | 3,976,969.45 | Share capital | 644,763,730.00 | 644,763,730.00 | ||
| Other non-current assets | 149,709,800.00 | - | Capital reserve | 240,001,254.59 | 240,001,254.59 | ||
| Total non-current assets | 2,809,003,020.71 | 2,543,235,804.85 | Other comprehensive income | 98,675,980.00 | 6,647,500.00 | ||
| Special reserve | 211,707.86 | - | |||||
| Surplus reserve | 520,074,434.56 | 520,074,434.56 | |||||
| Unappropriated profit | 242,623,897.15 | 1,046,473,178.03 | |||||
| TOTAL SHAREHOLDERS' EQUITY | 1,746,351,004.16 | 2,457,960,097.18 | |||||
| TOTAL ASSETS | 3,536,770,048.10 | 3,961,457,698.44 | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 3,536,770,048.10 | 3,961,457,698.44 |
The accompanying notes form part of the financial statements.
- 4 -
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Consolidated Income Statement
Unit: RMB
| Item | Note | Amount incurred in the current period | Amount incurred in the prior period (restated) |
| I. Operating income | (V)40 | 1,246,135,516.34 | 1,176,651,017.99 |
| Less: Operating costs | (V)40 | 669,139,867.98 | 682,744,597.73 |
| Business taxes and levies | (V)41 | 6,180,992.33 | 6,376,744.50 |
| Administrative expenses | (V)42 | 87,636,508.75 | 77,908,036.28 |
| Financial expenses | (V)43 | 17,869,102.88 | 13,274,775.13 |
| Impairment losses of assets | (V)44 | 360,407.86 | (2,075,271.78) |
| Add: Investment income | (V)44 | 53,469,837.14 | 46,292,845.60 |
| Including: Income from investments in associates and joint ventures | (V)45 | 45,680,862.14 | 36,875,845.60 |
| Gains (losses) on disposal of assets | (V)46 | 19,702.38 | 293,053.57 |
| Other income | (V)47 | 969,240.75 | - |
| II. Operating profit | 519,407,416.81 | 445,008,035.30 | |
| Add: Non-operating income | (V)48 | 2,902,652.25 | 2,326,565.47 |
| Less: Non-operating expenses | (V)49 | 3,449,926.69 | 803,640.73 |
| III. Gross profit | 518,860,142.37 | 446,530,960.04 | |
| Less: Income tax expenses | (V)50 | 75,484,671.73 | 72,860,139.44 |
| IV. Net profit | 443,375,470.64 | 373,670,820.60 | |
| (I) Categorization by continuity of operation | |||
| 1.Net profit of continued operation | 443,375,470.64 | 373,670,820.60 | |
| 2.Net profit of discontinued operation | - | - | |
| (II) Categorization by attribution of ownership | |||
| 1.Net profit attributable to shareholders of the parent | 316,060,290.67 | 276,061,357.50 | |
| 2.Profit or loss attributable to minority shareholder | 127,315,179.97 | 97,609,463.10 | |
| V. Amount of Other Comprehensive Net Income After Tax: | (V)51 | (585,000.00) | 937,500.00 |
| Amount of other comprehensive net income after tax attributable to equity holders of the parent | (585,000.00) | 937,500.00 | |
| (I) Other comprehensive income that will not be reclassified subsequently to profit or loss | (585,000.00) | - | |
| 1.Change as a result of remeasurement of the net defined benefit plan liability or asset | - | - | |
| 2.Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | - | |
| 3. Fair value changes of other investments in equity instruments that can't be reclassified to profit or loss | (585,000.00) | - | |
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | - | 937,500.00 | |
| 1.Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | - | - | |
| 2.Gains or losses on changes in fair value of available-for-sale financial assets | - | 937,500.00 | |
| 3.Translation differences of financial statements denominated in foreign currencies | - | - | |
| Amount of other comprehensive net income after tax attributable to minority shareholders | - | - | |
| VI. Total comprehensive income attributable to: | 442,790,470.64 | 374,608,320.60 | |
| Shareholders of the parent | 315,475,290.67 | 276,998,857.50 | |
| Minority shareholders | 127,315,179.97 | 97,609,463.10 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share | 0.490 | 0.428 | |
| (II) Diluted earnings per share | 0.490 | 0.428 |
The accompanying notes form part of the financial statements.
- 5 -
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Income Statement of the Company
Unit: RMB
| Item | Note | Amount incurred in the current period | Amount incurred in the prior period |
| I. Operating income | (XIV)4 | 119,422,977.47 | 120,036,337.34 |
| Less: Operating costs | (XIV)4 | 66,904,086.32 | 61,993,764.64 |
| Business taxes and levies | 1,668,896.31 | 1,295,149.90 | |
| Administrative expenses | 37,663,434.34 | 30,763,723.53 | |
| Financial expenses | 11,394,012.23 | (3,567,095.64) | |
| Impairment losses of assets | - | (7,730.22) | |
| Add: Investment income | (XIV)5 | 45,416,275.00 | 43,578,170.47 |
| Including: Income from investments in associates and joint ventures | (XIV)5 | 37,627,300.00 | 34,161,170.47 |
| Gains on disposal of assets | (934,006.99) | 304,464.57 | |
| II. Operating profit | 46,274,816.28 | 73,441,160.17 | |
| Add: Non-operating income | 834,286.15 | 246,731.78 | |
| Less: Non-operating expenses | 119,250.11 | 224,356.40 | |
| III. Gross profit | 46,989,852.32 | 73,463,535.55 | |
| Less: Income tax expenses | 395,773.33 | (396,443.74) | |
| IV. Net profit | 46,594,078.99 | 73,859,979.29 | |
| V. Amount of Other Comprehensive Net Income After Tax: | (585,000.00) | 937,500.00 | |
| (I) Other comprehensive income that will not be reclassified subsequently to profit or loss | (585,000.00) | - | |
| (i) Change as a result of remeasurement of the net defined benefit plan liability or asset | - | - | |
| (ii) Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | - | |
| (iii) Fair value changes of other equity instruments that can't be reclassified to profit or loss | (585,000.00) | - | |
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | - | 937,500.00 | |
| (i) Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | - | - | |
| (ii) Gains or losses on changes in fair value of available-for-sale financial assets | - | 937,500.00 | |
| (iii) Translation differences of financial statements denominated in foreign currencies | - | - | |
| VI. Total comprehensive income attributable to: | 46,009,078.99 | 74,797,479.29 |
The accompanying notes form part of the financial statements.
- 6 -
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Consolidated Cash Flow Statement
Unit: RMB
| Item | Note | Amount incurred in the current period | Amount incurred in the prior period (restated) |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 1,079,981,614.42 | 1,252,629,719.76 | |
| Other cash receipts relating to operating activities | (V)53(1) | 35,355,262.02 | 43,509,092.43 |
| Sub-total of cash inflows | 1,115,336,876.44 | 1,296,138,812.19 | |
| Cash payments for goods purchased and services received | 371,777,653.02 | 367,373,420.77 | |
| Cash payments to and on behalf of employees | 246,499,962.13 | 230,356,972.62 | |
| Payments of all types of taxes | 87,459,003.05 | 82,664,952.95 | |
| Other cash payments relating to operating activities | (V)53(2) | 60,425,384.56 | 41,187,933.82 |
| Sub-total of cash outflows | 766,162,002.76 | 721,583,280.16 | |
| Net Cash Flows from Operating Activities | (V)54(1) | 349,174,873.68 | 574,555,532.03 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from investments income | 46,350,979.83 | 63,156,674.42 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 1,471,757.92 | 2,650,703.87 | |
| Other cash receipts relating to investing activities | (V)53(3) | 500,000.00 | 128,500,000.00 |
| Sub-total of cash inflows | 48,322,737.75 | 194,307,378.29 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 89,747,611.32 | 92,607,682.80 | |
| Net cash payment to acquire subsidiary and other operating units | (V)53(4) | 149,709,800.00 | - |
| Other cash payments relating to investing activities | (V)53(5) | 203,758,566.92 | 180,000,000.00 |
| Sub-total of cash outflows | 443,215,978.24 | 272,607,682.80 | |
| Net Cash Flows from Investing Activities | (394,893,240.49) | (78,300,304.51) | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from borrowings | 636,758,000.00 | 30,000,000.00 | |
| Cash receipts from issue of bonds | 200,000,000.00 | - | |
| Sub-total of cash inflows | 836,758,000.00 | 30,000,000.00 | |
| Cash repayments of borrowings | 170,000,000.00 | 366,270,000.00 | |
| Cash payments for distribution of dividends or profit or interest | 953,421,273.12 | 46,178,041.65 | |
| Including: Payments for distribution of dividends or profit to minorities | 97,429,396.88 | 35,966,600.94 | |
| Other cash payments relating to financing activities | (V)53(6) | 663,373.11 | 15,792.33 |
| Sub-total of cash outflows | 1,124,084,646.23 | 412,463,833.98 | |
| Net Cash Flows from Financing Activities | (287,326,646.23) | (382,463,833.98) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash | (16,861,140.28) | (4,935,763.98) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | (349,906,153.32) | 108,855,629.56 | |
| Add: Opening balance of Cash and Cash Equivalents | (V)54(2) | 818,193,679.32 | 542,079,799.39 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)54(2) | 468,287,526.00 | 650,935,428.95 |
The accompanying notes form part of the financial statements.
- 7 -
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Cash Flow Statement of the Company
Unit: RMB
| Item | Note | Amount incurred in the current period | Amount incurred in the prior period |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 107,636,176.67 | 114,863,518.00 | |
| Other cash receipts relating to operating activities | 230,346,187.55 | 424,203,588.78 | |
| Sub-total of cash inflows | 337,982,364.22 | 539,067,106.78 | |
| Cash payments for goods purchased and services received | 35,630,528.08 | 31,930,629.72 | |
| Cash payments to and on behalf of employees | 68,710,981.15 | 61,467,607.51 | |
| Payments of all types of taxes | 3,485,828.13 | 4,414,781.60 | |
| Other cash payments relating to operating activities | 388,259,171.05 | 457,615,731.81 | |
| Sub-total of cash outflows | 496,086,508.41 | 555,428,750.64 | |
| Net Cash Flows from Operating Activities | (158,104,144.19) | (16,361,643.86) | |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from investments income | 444,277,054.92 | 197,859,462.18 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 178,876.00 | 2,693,776.59 | |
| Sub-total of cash inflows | 444,455,930.92 | 200,553,238.77 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 5,461,752.50 | 3,621,231.58 | |
| Net cash payment to acquire subsidiary and other operating units | 149,709,800.00 | - | |
| Sub-total of cash outflows | 155,171,552.50 | 3,621,231.58 | |
| Net Cash Flows from Investing Activities | 289,284,378.42 | 196,932,007.19 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from borrowings | 571,758,000.00 | 64,715,999.99 | |
| Cash receipts from issue of bonds | 200,000,000.00 | - | |
| Sub-total of cash inflows | 771,758,000.00 | 64,715,999.99 | |
| Cash repayments of borrowings | 170,000,000.00 | 280,000,000.00 | |
| Cash payments for distribution of dividends or profit or interest | 855,728,376.23 | 4,933,219.18 | |
| Other cash payments relating to financing activities | 663,373.11 | 15,792.33 | |
| Sub-total of cash outflows | 1,026,391,749.34 | 284,949,011.51 | |
| Net Cash Flows from Financing Activities | (254,633,749.34) | (220,233,011.52) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash | (8,716,054.32) | 650,899.12 | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | (132,169,569.43) | (39,011,749.07) | |
| Add: Opening balance of Cash and Cash Equivalents | 230,039,345.73 | 97,401,657.09 | |
| VI. Closing Balance of Cash and Cash Equivalents | 97,869,776.30 | 58,389,908.02 |
The accompanying notes form part of the financial statements.
- 8 -
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
| Item | 2018 | 2017 (restated) | ||||||||||||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | |||||||||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Others | Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Others | |||||
| I. Closing balance of the preceding year | 644,763,730.00 | 167,480,381.25 | 19,800,344.49 | 4,767,373.45 | 520,074,434.56 | 3,566,083,142.17 | - | 1,644,073,503.71 | 6,567,042,909.63 | 644,763,730.00 | 167,480,381.25 | (8,039,646.43) | 4,145,765.65 | 520,074,434.56 | 3,381,390,887.86 | - | 927,178,183.53 | 5,636,993,736.42 |
| Add: Changes in accounting policies | - | - | 92,613,480.00 | - | - | - | - | - | 92,613,480.00 | - | - | - | - | - | - | - | - | - |
| Corrections of prior period errors | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | - | - | - | - | - | - | - | - | - | - | 26,864,990.92 | - | - | - | - | 819,886,841.52 | 846,751,832.44 |
| Others | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 167,480,381.25 | 112,413,824.49 | 4,767,373.45 | 520,074,434.56 | 3,566,083,142.17 | - | 1,644,073,503.71 | 6,659,656,389.63 | 644,763,730.00 | 167,480,381.25 | 18,825,344.49 | 4,145,765.65 | 520,074,434.56 | 3,381,390,887.86 | - | 1,747,065,025.05 | 6,483,745,568.86 |
| III. Changes for the year | - | - | (585,000.00) | 3,547,381.43 | - | (534,383,069.20) | - | (831,190,552.77) | (1,362,611,240.54) | - | - | 975,000.00 | 621,607.80 | - | 184,692,254.31 | - | (102,991,521.34) | 83,297,340.77 |
| (I) Total comprehensive income | - | - | (585,000.00) | - | - | 316,060,290.67 | - | 127,315,179.97 | 442,790,470.64 | - | - | 975,000.00 | - | - | 504,495,064.39 | - | 209,363,710.68 | 714,833,775.07 |
| (II) Owners' contributions and reduction in capital | - | - | - | (575,472.95) | - | - | - | (906,835,138.81) | (907,410,611.76) | - | - | - | - | - | - | - | - | - |
| 1．Capital contribution from shareholders | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 2．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 3．Others | - | - | - | (575,472.95) | - | - | - | (906,835,138.81) | (907,410,611.76) | - | - | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | - | (850,443,359.87) | - | (53,593,466.00) | (904,036,825.87) | - | - | - | - | - | (319,802,810.08) | - | (312,431,865.50) | (632,234,675.58) |
| 1．Transfer to surplus reserve | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.87) | - | (53,593,466.00) | (904,036,825.87) | - | - | - | - | - | (319,802,810.08) | - | (312,431,865.50) | (632,234,675.58) |
| 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 | - | - | - | 4,122,854.38 | - | - | - | 1,922,872.07 | 6,045,726.45 | - | - | - | 621,607.80 | - | - | - | 76,633.48 | 698,241.28 |
| 1．Withdrawn in the period | - | - | - | 10,442,630.90 | - | - | - | 4,899,308.78 | 15,341,939.68 | - | - | - | 17,456,696.76 | - | - | - | 7,404,742.09 | 24,861,438.85 |
| 2．Utilized in the period | - | - | - | (6,319,776.52) | - | - | - | (2,976,436.71) | (9,296,213.23) | - | - | - | (16,835,088.96) | - | - | - | (7,328,108.61) | (24,163,197.57) |
| (VI) Others | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 644,763,730.00 | 167,480,381.25 | 111,828,824.49 | 8,314,754.88 | 520,074,434.56 | 3,031,700,072.97 | - | 812,882,950.94 | 5,297,045,149.09 | 644,763,730.00 | 167,480,381.25 | 19,800,344.49 | 4,767,373.45 | 520,074,434.56 | 3,566,083,142.17 | - | 1,644,073,503.71 | 6,567,042,909.63 |
The accompanying notes form part of the financial statements.
- 9 -
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
| Item | 2018 | 2017 | ||||||||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 644,763,730.00 | 240,001,254.59 | 6,647,500.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,457,960,097.18 | 644,763,730.00 | 240,001,254.59 | 5,672,500.00 | 1,027,543.25 | 520,074,434.56 | 634,765,399.86 | 2,046,304,862.26 |
| Add: Changes in accounting policies | - | - | 92,613,480.00 | - | - | - | 92,613,480.00 | - | - | - | - | - | - | - |
| Corrections of prior period errors | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 240,001,254.59 | 99,260,980.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,550,573,577.18 | 644,763,730.00 | 240,001,254.59 | 5,672,500.00 | 1,027,543.25 | 520,074,434.56 | 634,765,399.86 | 2,046,304,862.26 |
| III. Changes for the year | - | - | (585,000.00) | 211,707.86 | - | (803,849,280.88) | (804,222,573.02) | - | - | 975,000.00 | (1,027,543.25) | - | 411,707,778.17 | 411,655,234.92 |
| (I) Total comprehensive income | - | - | (585,000.00) | - | - | 46,594,078.99 | 46,009,078.99 | - | - | 975,000.00 | - | - | 731,510,588.25 | 732,485,588.25 |
| (II) Owners' contributions and reduction in capital | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1．Capital contribution from shareholders | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 2．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 3．Others | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | - | (850,443,359.87) | (850,443,359.87) | - | - | - | - | - | (319,802,810.08) | (319,802,810.08) |
| 1．Transfer to surplus reserve | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.87) | (850,443,359.87) | - | - | - | - | - | (319,802,810.08) | (319,802,810.08) |
| 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 | - | - | - | 211,707.86 | - | - | 211,707.86 | - | - | - | (1,027,543.25) | - | - | (1,027,543.25) |
| 1．Withdrawn in the period | - | - | - | 1,310,640.42 | - | - | 1,310,640.42 | - | - | - | 2,239,851.36 | - | - | 2,239,851.36 |
| 2．Utilized in the period | - | - | - | (1,098,932.56) | - | - | (1,098,932.56) | - | - | - | (3,267,394.61) | - | - | (3,267,394.61) |
| (VI) Others | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 644,763,730.00 | 240,001,254.59 | 98,675,980.00 | 211,707.86 | 520,074,434.56 | 242,623,897.15 | 1,746,351,004.16 | 644,763,730.00 | 240,001,254.59 | 6,647,500.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,457,960,097.18 |
The accompanying notes form part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 10 -
(I) GENERAL INFORMATION OF THE COMPANY
Shenzhen Chiwan Wharf Holdings Limited (hereinafter referred to as the "Company") was astock limited company incorporated in Shenzhen City Guangdong Province on 16 January 1993.
The headquarters of the Company is located in Shenzhen, Guangdong Province. The Companyand its subsidiaries (collectively the "Group") is principally engaged in the provision of cargohandling, warehousing, land and sea transportation services, cargo packing, agency business andother services.
The scope of consolidated financial statements in the current period involves 10 subsidiaries. SeeNote (VII) "Equity in other entities" for details. Changes in the scope of consolidated financialstatements in the current period represent the decrease in scope of consolidation due to otherreasons. See Note (VI) "Changes in the scope of consolidation" for details.
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of preparation of financial statements
The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministryof Finance (MoF). In addition, the Group has disclosed relevant financial information inaccordance with Information Disclosure and Presentation Rules for Companies OfferingSecurities to the Public No. 15 - General Provisions on Financial Reporting (Revised in 2014).
Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. Except for certain financial instrumentswhich are measured at fair value, the Group adopts the historical cost as the principle ofmeasurement of the financial statements. Upon being restructured into a stock company, the fixedassets and intangible assets initially contributed by the state-owned shareholders are recognizedbased on the valuation amounts confirmed by the state-owned assets administration department.Where assets are impaired, provisions for asset impairment are made in accordance with therelevant requirements.
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
Basis of accounting and principle of measurement - continued
Fair value measurements are categorised 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 forthe asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
Going Concern
The Group evaluated its going concern ability within 12 months since 30 June 2018. No events orcircumstances are noted, which could cause significant doubt upon the entity's ability to continueas going concern. Hence, the financial statements have been prepared on a going concern basis.
(III) 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 ASBE, andpresent truly and completely, the Company's and consolidated financial position as of 30 June2018, and the Company's and consolidated results of operations and cash flows for the six monthsthen ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, e.g. from 1 January to 31December.
3. Operating cycle
Buginese cycle is referred to the period from which an enterprise buys assets to manufacture tothe date it achieves cash or cash equivalents.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) 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 subsidiaries operate. Therefore, the Company and its subsidiaries choose RMB as theirfunctional currency. The Group adopts RMB to prepare its financial statements.
5. The accounting treatment of business combinations involving or not involving enterprisesunder 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.
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) 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
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.
Goodwill arising on a business combination is measured at cost less accumulated impairmentlosses, and is presented separately in the consolidated financial statements.
6. Preparation of consolidated financial statements
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 are included in theGroup's scope of consolidation as if they had been included in the scope of consolidation from thedate when they first came under the common control of the ultimate controlling party. Theiroperating results and cash flows from the date when they first came under the common control ofthe ultimate controlling party are included in the consolidated income statement and consolidatedstatement of cash flows, as appropriate.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
The significant accounting policies and accounting periods adopted by the subsidiaries aredetermined based on the uniform accounting policies and accounting periods set out by theCompany.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the parent is treated as minorityinterests and presented as "minority interests" in the consolidated balance sheet undershareholders' equity. The portion of net profits or losses of subsidiaries for the period attributableto minority interests is presented as "minority interests" in the consolidated income statementunder the "net profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiaryexceeds the minority shareholders' portion of the opening balance of shareholders' equity of thesubsidiary, the excess amount is still allocated against minority interests.
Acquisition of minority interests or disposals of interests in a subsidiary that do not result in theloss of control over the subsidiary are accounted for as equity transactions. The carrying amountsof the parent's interests and minority interests are adjusted to reflect the changes in their relativeinterests in the subsidiary. The difference between the amount by which the minority interests areadjusted and the fair value of the consideration paid or received is adjusted to shareholders' equity(capital reserve). If the capital reserve is not sufficient to absorb the difference, the excess areadjusted against retained earnings.
When the Group loses control over a subsidiary due to disposal of equity investment or otherreason, 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.
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 Note (III) 13.3.2, a long-term equity investment is subject to for using the equitymethod.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
7. Types of joint arrangements and the accounting treatment of joint operation - continued
The Group as a joint operator recognizes the following items in relation to its interest in a jointoperation: (1) its solely-held assets, including its share of any assets held jointly; (2) its solely-assumed liabilities, including its share of any liabilities incurred jointly; (3) its revenue from thesale of its share of the output arising from the joint operation; (4) its share of the revenue from thesale of the output by the joint operation; and (5) its solely-incurred expenses, including its share ofany expenses incurred jointly. The Group accounts for the recognized assets, liabilities, revenuesand expenses relating to its interest in a joint operation in accordance with the requirementsapplicable to the particular assets, liabilities, revenues and expenses.
8. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cashequivalents are the Group's short-term, highly liquid investments that are readily convertible toknown amounts of cash and which are subject to an insignificant risk of changes in value.
9. Foreign currency transactions
9.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchangerate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into RMB using the spotexchange rates at the balance sheet date. Exchange differences arising from the differencesbetween the spot exchange rates prevailing at the balance sheet date and those on initialrecognition or at the previous balance sheet date are recognized in profit or loss for the period,except that (1) exchange differences related to a specific-purpose borrowing denominated inforeign currency that qualify for capitalization are capitalized as part of the cost of the qualifyingasset during the capitalization period; (2) exchange differences related to hedging instruments forthe purpose of hedging against foreign currency risks are accounted for using hedge accounting;(3) exchange differences arising from change in the carrying amounts other than the amortizedcost of available-for-sale monetary items are included in other comprehensive income.
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 included in other comprehensive income.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to thecontractual provisions of the instrument. Financial assets and financial liabilities are initiallymeasured at fair value. For financial assets and financial liabilities at fair value through profit orloss, transaction costs are immediately recognized in profit or loss. For other financial assets andfinancial liabilities, transaction costs are included in their initial recognized amounts. However,where the Group's initially recognized accounts receivable does not include significant financingcomponent as defined in Accounting Standards for Business Enterprises No.14 - Revenue (2017revised) or the financing component of the contract not exceeding one year is not consideredaccording the Accounting Standards for Business Enterprises No.14 - Revenue (2017 revised), itis initially measured at the transaction price as defined in the standards.
10.1 Effective interest method
The effective interest method is a method of calculating the amortized cost of a financial asset or afinancial liability (or a group of financial assets or financial liabilities) and of allocating theinterest income or interest expense over the relevant period, using the effective interest rate. Theeffective interest rate is the rate that exactly discounts estimated future cash flows through theexpected life of the financial asset or financial liability or, where appropriate, a shorter period tothe net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering allcontractual terms of the financial asset or financial liability (without considering future creditlosses), and also considers all fees paid or received between the parties to the contract giving riseto the financial asset and financial liability that are an integral part of the effective interest rate,transaction costs, and premiums or discounts etc.
10.2 Classification, recognition and measurement of financial assets
According the Group's business model to manage the financial assets and the characteristics of thecontractual cash flows of the financial assets, the financial assets are classified into one of thefollowing three categories:
(1) Financial assets at amortized cost.
(2) Financial assets at fair value through other comprehensive income ("FVOCI").
(3) Financial assets at fair value through profit or loss ("FVTPL").
Where the financial assets are purchased or sold in regular way, the Group recognizes the assetsreceived and corresponding liabilities, or derecognizes the assets disposed on a trade date basis,and meanwhile, recognizes the gains or losses from the disposal and the receivables from thebuyer.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.2 Classification, recognition and measurement of financial assets - continued
- Financial assets at amortized cost
A financial asset shall be measured at amortised cost if both of the following conditions are met:
(1) the financial asset is held within a business model whose objective is to hold financial assets
in order to collect contractual cash flows and
(2) the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
The Group's financial assets classified at amortized cost include accounts receivable, notesreceivable, interest receivable, dividends receivable, other receivables and entrusted loans.
Financial assets at amortized cost are subsequently measured at amortized cost using effectiveinterest method, with gains or losses from derecognition, impairment or amortization charged toprofit or loss for the period.
- Financial assets at fair value through other comprehensive income
A financial asset shall be measured classified as FVOCI if both of the following conditions aremet:
(a) the financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
The gains or losses arising from financial assets at FVOCI, other than impairment losses or gainsand exchange gains or losses, are included in other comprehensive income, until the financialasset is derecognized or reclassified. However, the interest on the financial assets calculated usingeffective interest method is included in profit or loss. The amount of the financial assets includedin profit or loss for each period is deemed as equal to the amount included in profit or loss foreach period due to amortized cost measurement. Upon derecognition, the accumulated gains orlosses previously included in other comprehensive income are transferred from othercomprehensive income to in profit or loss.
Upon initial recognition, the Group may designate the non-trading equity instrument as financialassets at FVOCI. Once such designation is made, it shall not be cancelled.
The non-trading equity instrument investment designated as financial assets at FVOCI issubsequently measured at fair value. Upon derecognition of such financial assets, the accumulatedgains or losses previously included in other comprehensive income is transferred from othercomprehensive income to retained earnings. However, the dividends income satisfying therecognition criteria is included in profit or loss for the period.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.2 Classification, recognition and measurement of financial assets - continued
- Financial assets at FVTPL
Financial assets, other than those classified as financial assets at amortized cost and financialassets at FVOCI, are classified as financial assets at FVTPL. Where the contingent considerationrecognized in business combination not involving enterprises under common control formsfinancial assets, such financial assets are classified as financial assets at FVTPL.
Where one of the following condition is satisfied, the Group considers that such financial asset isheld for trading:
(1) the purpose for obtaining related financial assets is to sell the assets in recent period;
(2) related financial assets are part of the financial instruments portfolio under concentration
management upon initial recognition, and there is objective evidence indicating the existenceof short-term profit model in recent period;
(3) related financial assets are derivatives, but except for the derivatives satisfying the definition
of financial guarantee contract and those designated as effective hedging instruments.
Upon initial recognition, the Group may designate the financial assets as financial assets atFVTPL if this may eliminate or significantly reduce the accounting mismatch. Once suchdesignation is made, it shall not be cancelled.
The financial assets at FVTPL are subsequently measured at fair value, with related gains orlosses included in profit or loss for the period.
10.3 Transfer of financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied:
(1) the contractual rights to the cash flows from the financial asset expire; or
(2) the financial asset has been transferred and substantially all the risks and rewards of ownershipof the financial asset is transferred to the transferee; or
(3) although the financial asset has been transferred, the Group neither transfers nor retainssubstantially all the risks and rewards of ownership of the financial asset but has not retainedcontrol of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of afinancial asset, and it retains control of the financial asset, it recognises the financial asset to theextent of its continuing involvement in the transferred financial asset and recognises an associated
liability. The extent of the Group’s continuing involvement in the transferred asset is the extent to
which it is exposed to changes in the value of the transferred asset.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.3 Transfer of financial assets - continued
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, thedifference between (1) the carrying amount of the financial asset transferred; and (2) the sum ofthe consideration received from the transfer and any cumulative gain or loss that has beenrecognised in other comprehensive income, is recognised in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of thetransferred financial asset is allocated between the part that continues to be recognised and thepart that is derecognised, based on the respective fair values of those parts. The differencebetween (1) the carrying amount allocated to the part derecognised; and (2) the sum of theconsideration received for the part derecognised and any cumulative gain or loss allocated to thepart derecognised which has been previously recognised in other comprehensive income, isrecognised in profit or loss.
10.4 Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equityupon initial recognition on the basis of the substance of the contractual arrangements anddefinitions of financial liability and equity instrument.
Upon initial recognition, financial liabilities are classified into financial liabilities at FVTPL andfinancial liabilities at amortized cost. Except for the following items, the Group classifies thefinancial liabilities into financial liabilities at amortized cost:
(1) Financial liabilities at FVTPL.
(2) Financial liabilities arising from the transfer of financial assets that does not satisfy the
criteria of derecognition or the continuing involvement in the transferred assets.
(3) Financial guarantee contract which is not the aforesaid circumstance (1) or (2), as well as the
loan commitment to issue a loan at a rate lower than the market interest rate which is not theaforesaid circumstance (1).
- Financial liabilities at FVTPL
Financial liabilities at fair value through profit or loss, including held-for-trading financialliabilities (including derivatives which are financial liabilities) and the financial liabilitiesdesignated as FVTPL. In the business combination not involving enterprises under commoncontrol, the financial liabilities arising from contingent consideration recognized by the Group asthe buyer are accounted for as financial liabilities at FVTPL.
Where one of the following conditions is met, the Group considers that the financial liability isheld for trading:
(1) the purpose to undertake relevant financial liabilities is mainly to repurchase in recent period;
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification, recognition and measurement of financial liabilities - continued
- Financial liabilities at FVTPL - continued
(2) the purpose to undertake relevant financial liabilities is mainly to repurchase in recent period;
(3) the related financial liabilities upon initial recognition are part of the portfolio of the
identifiable financial instruments under concentration management, and there is objectiveevidence of short-term profit model in recent period;
(4) the related financial liabilities are derivatives, except for the derivatives satisfying the
definition of financial guarantee contract and the derivatives designated as effective hedginginstruments.
Upon initial recognition, financial liabilities may be designated as financial liabilities at FVTPL ifone of the following conditions is satisfied: (1) accounting mismatch can be eliminated orsignificantly reduced; (2) according to the written document of the Group's risk management andinvestment strategies, the Group manages the portfolio of financial liabilities or portfolio of bothfinancial assets and financial liabilities and conducts performance assessment on fair value basis,and internally report to key management on such basis. Once such designation is made, it shallnot be cancelled.
Financial liabilities at FVTPL are subsequently measured at fair value, with gains or losses fromchanges in fair value as well as the dividends and interest expenses on such financial liabilitiescharged to profit or loss for the period.
Gains or losses arising from financial liabilities designated as financial liabilities at FVTPL areaccounted for as follows:
(1) the changes in fair value of financial liabilities arising from the credit risk of the Group are
included in other comprehensive income;
(2) the other fair value changes of the financial liabilities are included in profit or loss. Where theaccounting of the effect of the changes in credit risk of the financial liability according to theaforesaid provisions will result in or enlarge accounting mismatch in profit or loss, the Grouprecords all the gains or losses on such financial liability (including the effect of changes in creditrisk of the Group) in profit or loss. Upon derecognition of such financial liability, the accumulatedgains or losses previously included in other comprehensive income is transferred from othercomprehensive income to retained earnings.
- Financial liabilities at amortized cost
Financial liabilities at amortized cost are subsequently measured at amortized cost, with gains orlosses from derecognition or amortization included in profit or loss.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.5 Derecognition of financial liabilities
The Group derecognises a financial liability (or part of it) only when the underlying presentobligation (or part of it) is discharged. An agreement between the Group (an existing borrower)and an existing lender to replace the original financial liability with a new financial liability withsubstantially different terms is accounted for as an extinguishment of the original financialliability and the recognition of a new financial liability. Where the Group makes substantialmodification to the contract terms of the existing financial liability (or part of it), the existingfinancial liability is derecognized and a new financial liability is recognized according to therevised terms.
Where a financial liability (or part of it) is derecognized, the difference between its carryingamount and the consideration paid (including non-cash assets transferred out or liabilitiesundertaken) is included in profit or loss.
Where the Group repurchases part of the financial liability, the carrying amount of the overallfinancial liability is allocated between the part continuing to be recognized and the partderecognized according to the proportion of their respective fair value to the fair value of theoverall financial liability at repurchase date.
10.6 Impairment of financial instruments
The Group accounts for the following items for the impairment and makes provision based on theexpected credit loss:
(1) The financial assets classified as amortized cost measurement and financial assets formed by
debt instruments investment classified as FVOCI.
(2) Lease receivables.
(3) Contract assets.
(4) Loan commitment other than the financial liabilities at FVTPL issued by the Group and the
financial guarantee contract applicable to related provisions.
Expected credit loss is the weighted average credit loss of financial instruments with the defaultrisk as the weight.
Credit loss represent the difference between the contractual cash flow discounted at originaleffective interest rate and receivable according to the contract and the cash flow expected to bereceived, i.e. the present value of the total cash shortfall. For the Group's purchased or originatedcredit-impaired financial assets, such financial assets shall be discounted at the credit-adjustedeffective interest rate.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.6 Impairment of financial instruments - continued
- General impairment provision
Except for the purchased or originated credit-impaired financial assets and the financial assetsapplicable to simple method, the Group assesses at each balance sheet date whether the credit riskof related financial instruments has increased significantly since the initial recognition, andmeasures the loss allowance, recognizes expected credit loss and its changes according to thefollowing circumstance separately:
(1) The Group measures the loss allowance for a financial instrument at an amount equal to the
lifetime expected credit losses if the credit risk on that financial instrument has increasedsignificantly since initial recognition. Regardless whether the Group assesses the credit loss byindividual financial instrument or portfolio of financial instruments, the increase in or reversalof loss allowance arising from this is accounted for as gains or losses and included in profit orloss.
(2) If the credit risk on a financial instrument has not increased significantly since initial
recognition, the Group shall measure the loss allowance for that financial instrument at anamount equal to 12-month expected credit losses. Regardless whether the Group assesses thecredit loss by individual financial instrument or portfolio of financial instruments, the increasein or reversal of loss allowance arising from this is accounted for as gains or losses andincluded in profit or loss.
When making related assessment, the Group considers all reasonable and supportable information,including foreseeable information. To ensure the credit risk has increased significantly sinceinitial recognition, i.e. recognize the lifetime expected credit loss, in some circumstances, theGroup assesses whether the credit risk has increased significantly by considering on a portfoliobasis.
- Simplified method for receivables, contract assets and lease receivables
For the following items, the Group always measures the loss allowance at an amount equal to thelifetime expected credit losses:
(1) the receivables or contract assets arising from the transactions under the Accounting
Standards for Business Enterprises No. 14 – Revenue (2017 revised), which meet one of the
following conditions:
- The item does not include the significant financing component as defined in Accounting
Standards for Business Enterprises No. 14 – Revenue (2017 revised), or the Group does not
consider the financing component in the contract not exceeding one year according to
Accounting Standards for Business Enterprises No. 14 – Revenue (2017 revised).
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.6 Impairment of financial instruments - continued
- Simplified method for receivables, contract assets and lease receivables - continued
- The item include the significant financing component as defined in Accounting Standards
for Business Enterprises No. 14 – Revenue (2017 revised), and meanwhile the Group
chooses the accounting policies to measure the loss allowance at an amount equal to thelifetime expected credit losses.
(2) Lease receivables formed in the transactions under the Accounting Standards for Business
Enterprises No.21 – Lease, meanwhile the Group chooses the accounting policies to measure
the loss allowance at an amount equal to the lifetime expected credit losses.
- Purchased or originated credit-impaired financial assets
For purchased or originated credit-impaired financial assets, at the balance sheet date, the Grouponly recognizes the accumulated changes in lifetime expected credit loss since initial recognitionas loss allowance. At each balance sheet date, the Group recognises in profit or loss, as animpairment gain or loss, the amount of changes in credit loss for the lifetime. Even though thelifetime expected credit loss determined at the balance sheet date is less than the expected creditloss reflected by the estimated cash flow at initial recognition, the Group recognizes the favorablechange in expected credit loss as impairment gains.
10.7 Derivative instruments and embedded derivatives
Derivative financial instruments include put options etc. Derivatives are initially measured at fairvalue at the date when the derivative contracts are entered into and are subsequently re-measuredat fair value.
The embedded derivative instrument represent the derivatives embedded in the non-derivativeinstruments (i.e. main contract). The embedded derivative and the main contract form the hybridcontract.
Where the main contract included in hybrid contract is an asset under financial instrumentsstandards, the Group does not separate the embedded derivatives from the hybrid contract, butapply such hybrid contract as a whole to the provisions on classification of financial assets.
Where the main contract included in the hybrid contract is not an asset under the financialinstruments standards, and all the following conditions are met, the Group separate the embeddedderivative from the hybrid contract and account for it as a separate derivative:
(1) The economic characteristics and risks of embedded derivative are not closely related with
that of the main contract.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.7 Derivative instruments and embedded derivatives - continued
(2) The separate instrument with the same terms of embedded derivatives satisfies the definition
of the derivative instruments.
(3) The hybrid contract is not accounted for as FVTPL.
Where the embedded derivatives are separated from the hybrid contract, the Group accountsfor the main contract of hybrid contract according to applicable accounting standards. Wherethe Group can't measure the fair value of embedded derivative reliably according to the termsand conditions of embedded derivative, the fair value of such derivative is determined basedon the difference between the fair value of the hybrid contract and that of the main contract.Where the fair value of the embedded derivative still can't be measured separately at theacquisition date or subsequent balance sheet date using the aforesaid method, the Group willdesignate the hybrid contract in its entirety as financial instrument at FVTPL.
10.8 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized amounts,and intends either to settle on a net basis, or to realize the financial asset and settle the financialliability simultaneously, a financial asset and a financial liability shall be offset with the netamount presented in the balance sheet. Except for the circumstances above, financial assets andfinancial liabilities shall be presented separately in the balance sheet and shall not be offset.
10.9 Dividends income
The Group recognizes the dividends income with a charge to profit or loss only when thefollowing conditions are met:
(1) the Group's right to receive the dividends has been established;
(2) it is probable that the economic benefit associated with the dividends will flow into the Group;
(3) the amount of dividends can be measured reliably.
10.10 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Groupafter deducting all of its liabilities. The issuance including refinancing, repurchase, sale orcancellation of equity instrument of the Group is recognized as movement of shareholders' equity.The Group does not recognize any changes in the fair value of equity instruments. Transactioncosts associated with equity transactions are deducted from shareholders' equity.
The distributions made by the Group to holders of the equity instruments are recognized as profitdistribution. Any issuance of stock dividends do not affect the shareholders' equity.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.10 Equity instruments - continued
The following accounting policies on financial instruments are applicable to 2017.
Financial assets and financial liabilities are recognised when the Group becomes a party to thecontractual provisions of the instrument. Financial assets and financial liabilities are initiallymeasured at fair value. For financial assets and financial liabilities at fair value through profit orloss, transaction costs are immediately recognised in profit or loss. For other financial assets andfinancial liabilities, transaction costs are included in their initial recognised amounts.
10.11 Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or afinancial liability (or a group of financial assets or financial liabilities) and of allocating theinterest income or interest expense over the relevant period, using the effective interest rate. Theeffective interest rate is the rate that exactly discounts estimated future cash flows through theexpected life of the financial asset or financial liability or, where appropriate, a shorter period tothe net carrying amount of the financial asset or financial liability
When calculating the effective interest rate, the Group estimates future cash flows considering allcontractual terms of the financial asset or financial liability (without considering future creditlosses), and also considers all fees paid or received between the parties to the contract giving riseto the financial asset and financial liability that are an integral part of the effective interest rate,transaction costs, and premiums or discounts, etc.
10.12 Classification, recognition and measurement of financial assets
On initial recognition, the Group's financial assets are classified into one of the four categories,including financial assets at fair value through profit or loss ("FVTPL"), held-to-maturityinvestments, loans and receivables, and available-for-sale financial assets. All regular waypurchases or sales of financial assets are recognized and derecognized on a trade date basis
10.12.1 Financial Assets at Fair Value through Profit or Loss ("FVTPL")
Financial assets at fair value through profit or loss ("FVTPL") include financial assets held fortrading and those designated as at fair value through profit or loss.
A financial asset is classified as held for trading if one of the following conditions is satisfied: (1)it has been acquired principally for the purpose of selling in the near term; or (2) on initialrecognition it is part of a portfolio of identified financial instruments that the Group managestogether and there is objective evidence that the Group has a recent actual pattern of short-termprofit-taking; or (3) it is a derivative that is not designated and effective as a hedging instrument,or a financial guarantee contract, or a derivative that is linked to and must be settled by deliveryof an unquoted equity instrument (without a quoted price in an active market) whose fair valuecannot be reliably measured.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.12.1 Financial Assets at Fair Value through Profit or Loss ("FVTPL") - continued
A financial asset may be designated as at FVTPL upon initial recognition only when one of thefollowing conditions is satisfied: (1) such designation eliminates or significantly reduces ameasurement or recognition inconsistency that would otherwise result from measuring assets orrecognizing the gains or losses on them on different bases; or (2) the financial asset forms part ofa group of financial assets or a group of financial assets and financial liabilities, which is managedand its performance is evaluated on a fair value basis, in accordance with the Group's documentedrisk management or investment strategy, and information about the grouping is reported to keymanagement personnel on that basis; or (3) eligible hybrid instruments that contain embeddedderivatives.
Financial assets at FVTPL are subsequently measured at fair value. Any gains or losses arisingfrom changes in the fair value and any dividend or interest income earned on the financial assetsare recognized in profit or loss.
10.12.2 Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinablepayments and fixed maturity dates that the Group's management has the positive intention andability to hold to maturity.
Held-to-maturity investments are subsequently measured at amortized cost using the effectiveinterest method. Gain or loss arising from derecognition, impairment or amortization isrecognized in profit or loss.
10.12.3 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market. Financial assets classified as loans and receivables by theGroup include notes receivable, accounts receivable, interest receivable, dividends receivable, andother receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interestmethod. Gain or loss arising from derecognition, impairment or amortization is recognized inprofit or loss.
10.12.4 Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are designated oninitial recognition as available for sale, and financial assets that are not classified as financialassets at fair value through profit or loss, loans and receivables or held-to-maturity investments.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.12 Classification, recognition and measurement of financial assets - continued
10.12.4 Available-for-sale financial assets - continued
Available-for-sale financial assets are subsequently measured at fair value, and gains or lossesarising from changes in the fair value are recognized as other comprehensive income and includedin the capital reserve, except that impairment losses and exchange differences related to amortizedcost of financial assets are recognized in profit or loss, until the financial assets are derecognized,at which time the gains or losses are released and recognized in profit or loss.
Interests obtained and the dividends declared by the investee during the period in which theavailable-for-sale financial assets are held, are recognized in investment gains.
Investments in equity instruments that do not have a quoted market price in an active market andwhose fair value cannot be reliably measured, and derivative financial assets that are linked to andmust be settled by delivery of such unquoted equity instruments are measured at cost.
10.13 Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other thanthose at fair value through profit or loss. If there is objective evidence that a financial asset isimpaired, the Group determines the amount of any impairment loss. Objective evidence that afinancial asset is impaired is evidence that, arising from one or more events that occurred after theinitial recognition of the asset, the estimated future cash flows of the financial asset, which can bereliably measured, have been affected.
Objective evidence that a financial asset is impaired includes the following observable events:
(1) Significant financial difficulty of the issuer or obligor;(2) A breach of contract by the borrower, such as a default or delinquency in interest or principal
payments;(3) The Group, for economic or legal reasons relating to the borrower's financial difficulty,
granting a concession to the borrower;(4) It becoming probable that the borrower will enter bankruptcy or other financial
reorganizations;(5) The disappearance of an active market for that financial asset because of financial difficulties
of the issuer;(6) Upon an overall assessment of a group of financial assets, observable data indicates that there
is a measurable decrease in the estimated future cash flows from the group of financial assetssince the initial recognition of those assets, although the decrease cannot yet be identifiedwith the individual financial assets in the group. Such observable data includes:
- Adverse changes in the payment status of borrower in the group of assets;- Economic conditions in the country or region of the borrower which may lead to a failure topay the group of assets;
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.13 Impairment of financial assets - continued
(7) Significant adverse changes in the technological, market, economic or legal environment in
which the issuer of equity instruments operates, indicating that the cost of the investment inthe equity instrument may not be recovered by the investor;(8) A significant or prolonged decline in the fair value of an investment in an equity instrument,
i.e. at the balance sheet date, if the fair value of an equity instrument investment is in belowits initial investment cost exceeding 50% (inclusive), or for a period exceeding 12 months(inclusive);(9) Other objective evidence indicating there is an impairment of a financial asset.
- Impairment of financial assets measured at amortized cost
If financial assets carried at cost or amortized cost are impaired, the carrying amounts of thefinancial assets are reduced to the present value of estimated future cash flows (excluding futurecredit losses that have not been incurred) discounted at the financial asset's original effectiveinterest rate. The amount of reduction is recognized as an impairment loss in profit or loss. If,subsequent to the recognition of an impairment loss on financial assets carried at amortized cost,there is objective evidence of a recovery in value of the financial assets which can be relatedobjectively to an event occurring after the impairment is recognized, the previously recognizedimpairment loss is reversed. However, the reversal does not result in a carrying amount of thefinancial asset that exceeds what the amortized cost would have been had the impairment not beenrecognized at the date the impairment is reversed.
For a financial asset that is individually significant, the Group assesses the asset individually forimpairment. For a financial asset that is not individually significant, the Group assesses the assetindividually for impairment or includes the asset in a group of financial assets with similar creditrisk characteristics and collectively assesses them for impairment. If the Group determines that noobjective evidence of impairment exists for an individually assessed financial asset (whethersignificant or not), it includes the asset in a group of financial assets with similar credit riskcharacteristics and collectively assesses them for impairment. Assets for which an impairmentloss is individually recognized are not included in a collective assessment of impairment.
- Impairment of available-for-sale financial assets
When an available-for-sale financial asset is impaired, the cumulative loss arising from decline infair value previously recognized directly in other comprehensive income is reclassified from thecapital reserve to profit or loss. The amount of the cumulative loss that is reclassified from capitalreserve to profit or loss is the difference between the acquisition cost (net of any principalrepayment and amortization) and the current fair value, less any impairment loss on that financialasset previously recognized in profit or loss.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.13 Impairment of financial assets - continued
- Impairment of available-for-sale financial assets - continued
If, subsequent to the recognition of an impairment loss on available-for-sale financial assets, thereis objective evidence of a recovery in value of the financial assets which can be relatedobjectively to an event occurring after the impairment is recognized, the previously recognizedimpairment loss is reversed. The amount of reversal of impairment loss on available-for-saleequity instruments is recognized as other comprehensive income and included in the capitalreserve, while the amount of reversal of impairment loss on available-for-sale debt instruments isrecognized in profit or loss.
- Impairment of financial assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (withouta quoted price in an active market) whose fair value cannot be reliably measured, or on aderivative financial asset that is linked to and must be settled by delivery of such an unquotedequity instrument, the carrying amount of the financial asset is reduced to the present value ofestimated future cash flows discounted at the current market rate of return for a similar financialasset. The amount of reduction is recognized as an impairment loss in profit or loss. Theimpairment loss on such financial asset is not reversed once it is recognized.
10.14 Transfer of financial assets
The Group derecognizes a financial asset if one of the following conditions is satisfied: (1) thecontractual rights to the cash flows from the financial asset expire; or (2) the financial asset hasbeen transferred and substantially all the risks and rewards of ownership of the financial asset istransferred to the transferee; or (3) although the financial asset has been transferred, the Groupneither transfers nor retains substantially all the risks and rewards of ownership of the financialasset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of afinancial asset, and it retains control of the financial asset, it recognizes the financial asset to theextent of its continuing involvement in the transferred financial asset and recognizes an associatedliability. The extent of the Group's continuing involvement in the transferred asset is the extent towhich it is exposed to changes in the value of the transferred asset.
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 any cumulative gain or loss that has beenrecognized in other comprehensive income, is recognized in profit or loss.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.14 Transfer of financial assets
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of thetransferred financial asset is allocated between the part that continues to be recognized and thepart that is derecognized, based on the respective fair values of those parts. The differencebetween (1) the carrying amount allocated to the part derecognized; and (2) the sum of theconsideration received for the part derecognized and any cumulative gain or loss allocated to thepart derecognized which has been previously recognized in other comprehensive income, isrecognized in profit or loss
10.15 Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equityon the basis of the substance of the contractual arrangements and definitions of financial liabilityand equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair valuethrough profit or loss and other financial liabilities.
10.15.1 Financial liabilities at fair value through profit or loss
Financial liabilities at FVTPL consist of financial liabilities held for trading and those designatedas at FVTPL on initial recognition.
A financial liability is classified as held for trading if one of the following conditions is satisfied:
(1) It has been acquired principally for the purpose of repurchasing in the near term; or (2) Oninitial 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 (3) It is a derivative, except for a derivative that is a designated andeffective hedging instrument, or a financial guarantee contract, or a derivative that is linked to andmust be settled by delivery of an unquoted equity instrument (without a quoted price in an activemarket) whose fair value cannot be reliably measured.
A financial liability may be designated as at FVTPL upon initial recognition only when one of thefollowing conditions is satisfied: (1) such designation eliminates or significantly reduces ameasurement or recognition inconsistency that would otherwise result from measuring liabilitiesor recognizing the gains or losses on them on different bases; or (2) the financial liability formspart of a group of financial liabilities or a group of financial assets and financial liabilities, whichis managed and its performance is evaluated on a fair value basis, in accordance with the Group'sdocumented risk management or investment strategy, and information about the grouping isreported to key management personnel on that basis; or (3) eligible hybrid instruments thatcontain embedded derivatives.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.15 Classification and recognition of financial liabilities - continued
10.15.1 Financial liabilities at fair value through profit or loss - continued
Financial liabilities at FVTPL are subsequently measured at fair value, and any gains or lossesarising from changes in the fair value or any dividend or interest expense related with thefinancial liabilities are recognized in profit or loss.
10.15.2 Other financial liabilities
For a derivative liability that is linked to and must be settled by delivery of an unquoted equityinstrument (without a quoted price in an active market) whose fair value cannot be reliablymeasured, it is subsequently measured at cost. Other financial liabilities are subsequentlymeasured at amortized cost using the effective interest method, with gains or losses arising fromderecognition or amortization recognized in profit or loss.
10.15.3 Financial guarantee contracts
A financial guarantee contract is a contract by which the guarantor and the lender agree that theguarantor would settle the debts or bear obligations in accordance with terms of the contract incase the borrower fails to settle the debts. Financial guarantee contracts that are not designated asfinancial liabilities at fair value through profit or loss, are initially measured at their fair valuesless the directly attributable transaction costs. Subsequent to initial recognition, they are measuredat the higher of: (i) the amount determined in accordance with Accounting Standard for BusinessEnterprises No. 13 - Contingencies; and (ii) the amount initially recognized less cumulativeamortization recognized in accordance with the principles set out in Accounting Standard forBusiness Enterprises No. 14 - Revenue.
10.16 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 (an existing borrower) and anexisting lender to replace the original financial liability with a new financial liability withsubstantially different terms is accounted for as an extinguishment of the original financialliability and the recognition of 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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.17 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized amounts,and intends either to settle on a net basis, or to realize the financial asset and settle the financialliability simultaneously, a financial asset and a financial liability shall be offset with the netamount presented in the balance sheet. Except for the circumstances above, financial assets andfinancial liabilities shall be presented separately in the balance sheet and shall not be offset.
10.18 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Groupafter deducting all of its liabilities. The issuance including refinancing, repurchase, sale orcancellation of equity instrument of the Group is recognized as movement of shareholders' equity.The Group does not recognize any changes in the fair value of equity instruments. Transactioncosts associated with equity transactions are deducted from shareholders' equity.
The distributions made by the Group to holders of the equity instruments are recognized as profitdistribution. Any issuance of stock dividends do not affect the shareholders' equity.
11. Receivables
11.1 Receivables that are individually significant and for which bad debt provision is individuallyassessed
| Basis or monetary criteria for determining individually significant receivables | The accounts receivables amount over RMB 5,000,000.00 are recognized as individually significant receivables by the Group. |
| Provision methods for receivables that are individually significant and for which bad debt provision is individually assessed | For receivables that are individually significant, the Group assesses the receivables individually for impairment; for a financial asset that is not impaired individually, the Group includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Receivables for which an impairment loss is individually recognized are not included in a collective assessment of impairment. |
11.2 Receivables for which bad debt provision is collectively assessed on a credit risk portfoliobasis
| Basis for determining a portfolio | |
| Portfolio 1 | The portfolio primarily includes amounts due from related parties of the Group, deposits and petty cash etc. |
| Portfolio 2 | This portfolio excludes amounts due from related parties of the Group, deposits and petty cash etc. |
| Bad debt provision methods for a portfolio | |
| Portfolio 1 | Specific Identification Method |
| Portfolio 2 | Aging Analysis Method |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Receivables - continued
11.2 Receivables for which bad debt provision is collectively assessed on a credit risk portfoliobasis - continued
Portfolios that use aging analysis for bad debt provision:
| Aging | Provision proportion for accounts receivable (%) | Provision proportion for other receivables (%) |
| Within 180 days (inclusive) | 0-3 | 0-3 |
| More than 181 days but not exceeding year | 5 | 5 |
| More than 1 year but not exceeding 2 years | 20 | 20 |
| More than 2 years but not exceeding 3 years | 50 | 50 |
| More than 3 years | 100 | 100 |
11.3 Accounts receivable that are not individually significant but for which individual bad debtprovision is individually assessed:
| Reasons for making individual bad debt provision | As objective evidence indicates the Group is unable to collect the receivables under original terms, the company makes individual bad debt provision. |
| Bad debt provision methods | Under bad debt provision method, the provision is recognized by the differences between the expected present value of future cash flows and carrying value. |
12. Inventories
12.1 Categories of inventories
Inventories include spare parts, fuel, and low value consumables. Inventories are initiallymeasured at cost. Cost of inventories comprises all costs of purchase, costs of conversion andother expenditures incurred in bringing the inventories to their present location and condition.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for declinein value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. Ifthe cost of inventories is higher than the net realizable value, a provision for decline in value ofinventories is made. Net realizable value is the estimated selling price in the ordinary course ofbusiness less the estimated costs of completion, the estimated costs necessary to make the sale andrelevant taxes. Net realizable value is determined on the basis of clear evidence obtained, aftertaking into consideration the purposes of inventories being held and effect of post balance sheetevents.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
12. Inventories - continued
12.3 Basis for determining net realizable value of inventories and provision methods for declinein value of inventories - continued
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.
12.4 Inventory count system
The perpetual inventory system is maintained for stock system.
12.5 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.
13. Non-current assets held for sale and disposal group
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 assetsimpairment can be recognized for any increase in fair value less costs to sell at subsequentbalance sheet dates, to the extent that it is not in excess of the cumulative impairment loss that hasbeen recognized.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
13. Non-current assets held for sale and disposal group - continued
Non-current held-for-sale assets is not subject to depreciation and amortization. The creditorinterest and other expenses of disposal group classified as held-for-sale asset should still berecognized.
Once the associate or joint venture equity investment is completely or partly classified as held-for-sale assets, the classified part of the investment is not subject to equity method measurement.
14. Long-term equity investments
14.1 Basis for determining joint control and significant influence over investee
Control is archived when the Group has the power over the investee 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.
14.2 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprisesunder common control, the investment cost of the long-term equity investment is the attributableshare of the carrying amount of the shareholders' equity of the acquiree at the date of combination.The difference between the initial investment cost and the carrying amount of cash paid, non-cashassets transferred and liabilities assumed shall be adjusted to capital reserve. If the balance 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.
For a long-term equity investment acquired through business combination not involvingenterprises under common control, the investment cost of the long-term equity investmentacquired is the cost of acquisition.
The absorbing party's or purchaser's intermediary expenses (fees in respect of auditing, legalservices, valuation and consultancy services, etc.) and other administrative expenses attributableto the business combination are recognized in profit or loss in the periods when they are incurred.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
14. Long-term equity investments - continued
14.2 Determination of investment cost - continued
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 determined
in accordance with Accounting Standard for Business Enterprises No.22–Financial Instruments:
Recognition and Measurement of (CAS 22) and the additional investment cost.
14.3 Subsequent measurement and recognition of profit or loss
14.3.1 A long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in theCompany's separate financial statements. A subsidiary is an investee that is controlled by 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.
14.3.2 A long-term equity investment accounted for using the equity method
Except associate and joint venture investment completely or partly classified as available for sale,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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
14. Long-term equity investments - continued
14.3 Subsequent measurement and recognition of profit or loss - continued
14.3.2 A long-term equity investment accounted for using the equity method - continued
Under the equity method, the Group recognizes its share of the other comprehensive income andnet profit or loss of the investee for the period as other comprehensive income and investmentincome or loss respectively for the period, and the carrying amount of the long-term equityinvestment is adjusted accordingly. The carrying amount of the investment shall be reduced by theportion of any profit distributions or cash dividends declared by the investee that is distributed tothe investing enterprise. The investing enterprise shall adjust the carrying amount of the long-termequity investment for other changes in owners' equity of the investee (other than net profits 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.
14.4 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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
14. Long-term equity investments - continued
14.4 Disposal of long-term equity investments - continued
For long-term equity investments accounted for using the cost method, if the remaining interestafter disposal is still accounted for using the cost method, other comprehensive income previouslyrecognized for using the equity method or in accordance with the standards for the 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.
15. 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.
When an investment property is sold, transferred, retired or damaged, the Group recognizes theamount of any proceeds on disposal net of the carrying amount and related taxes in profit or lossfor the period.
16. Fixed assets
16.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods 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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
16. Fixed assets - continued
16.1 Recognition criteria for fixed assets - continued
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset andif 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.
16.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method starting from themonth subsequent to the one in which it is ready for intended use. The useful life, estimated netresidual value rate and annual depreciation rate of each category of fixed assets are as follows:
| Category | Estimated useful lives | Estimated residual value | Annual depreciation rate |
| Port and terminal facilities | 5-50year | 10% | 1.8%-18% |
| Container yards and buildings | 5-40year | 10% | 2.25%-18% |
| Mechanical equipment | 5-15year | 10% | 6%-18% |
| Motor vehicles, cargo ships and tugboats | 5-20year | 10% | 4.5%-18% |
| Other equipment | 5year | 10% | 18% |
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.
16.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated fromits use or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, 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.
17. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include variousconstruction expenditures during the construction period, borrowing costs capitalized before it isready for intended use and other relevant costs. Construction in progress is not depreciated.Construction in progress is transferred to a fixed asset when it is ready for intended use.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
18. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifyingasset are capitalized when expenditures for such asset and borrowing costs are incurred andactivities relating to the acquisition, construction or production of the asset that 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.
19. Intangible assets
Intangible assets include land use rights, sea area use rights and computer software.
An intangible asset is measured initially at cost. Upon being restructured into a stock company,the intangible assets initial 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.
| Category | Amortization method | Estimated useful lives (years) | Residual value (%) |
| Land use rights | Straight-line method | 20-50 | - |
| Computer software | Straight-line method | 5 | - |
| Sea area use rights | Straight-line method | 5-50 | - |
| Coastal line use rights | Straight-line method | 41.9-44.3 | - |
For an intangible asset with a finite useful life, the Group reviews the useful life and amortizationmethod at the end of the period, and makes adjustments when necessary.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
20. Impairment of long-term assets
The Group assesses at the balance sheet date whether there is any indication that the long-termequity investments, investment properties measured at cost method, construction in progress,fixed assets and intangible assets with a finite useful life may be impaired. If there is anyindication that such assets may be impaired, recoverable amounts are estimated for such assets.Intangible assets with indefinite useful life and intangible assets not yet available for use aretested for impairment annually, irrespective of whether there is any indication that the assets maybe impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate therecoverable amount of an individual asset, the recoverable amount of the asset group to which theasset belongs will be estimated. The recoverable amount of an asset is the higher of its fair valueless costs of disposal and the present value of the future cash flows expected to be derived fromthe asset.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficitis accounted for as an impairment loss and is recognized in profit or loss.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairmenttesting, goodwill is considered together with the related assets groups, i.e., goodwill is reasonablyallocated to the related assets groups or each of assets groups expected to benefit from thesynergies of the combination. In testing an assets group with goodwill for impairment, animpairment loss is recognized if the recoverable amount of the assets group or sets of assetsgroups (including goodwill) is less than its carrying amount. The impairment loss is firstlyallocated to reduce the carrying amount of any goodwill allocated to such assets group or sets ofassets groups, and then to the other assets of the group pro-rata basis on the basis of the carryingamount of each asset (other than goodwill) in the group.
Once the impairment loss of above-mentioned asset is recognized, it shall not be reversed in anysubsequent period.21. Long-term prepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortized overthe current and subsequent periods (together of more than one year). Long-term prepaid expensesare amortized using the straight-line method over the expected periods in which benefits arederived.
22. Employee benefits
22.1 The accounting treatment of short-term employee benefits
Actually occurred short-term employee benefits are recognized as liabilities, with a correspondingcharge to the profit or loss for the period or in the costs of relevant assets in the accounting periodin which employees provide services to the Group. Staff welfare expenses incurred by the Groupare recognized in profit or loss for the period or the costs of relevant assets based on the actuallyoccurred amounts when it actually occurred. Non-monetary staff welfare expenses are measuredat fair value.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
22. Employee benefits - continued
22.1 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.
22.2 The accounting treatment of post-employment benefits
All the post-employment benefits are defined contribution plans.
The contribution payable to the defined contribution plan is recognized as liabilities, with acorresponding charge to the profit or loss for the period or in the costs of relevant assets in theaccounting period in which employees provide services to the Group.
22.3 The accounting treatment of termination benefits
When the Group provides termination benefits to employees, employee benefit liabilities arerecognized for termination benefits, with a corresponding charge to the profit or loss for 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.
23. Provisions
Provisions are recognized when the Group has a present obligation related with contingencies, itis probable that the Group will be required to settle that obligation causing an outflow ofeconomic benefits, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settlethe present obligation at balance sheet date, taking into account the risks, uncertainties and timevalue of money surrounding the obligation. When a provision is measured using the cash flowsestimated to settle the present obligation, its carrying amount is the present value of those cashflows where the effect of the time value of money is material.
When some or all of the economic benefits required to settle a provision are expected to berecovered from a third party, a receivable is recognized as an asset if it is virtually certain thatreimbursement will be received and the amount of the receivable should not exceed the carryingamount of provisions.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
24. Revenue
The Group evaluates the contract on the contract commencement date, identifies each individualperformance obligation included in the contract, and determines whether each individualperformance obligation is performed over time or at a certain point in time. If one of the followingconditions is met, the performance obligation is fulfilled over time; otherwise, it is fulfilled at atime point:
(1) the customer simultaneously receives and consumes the benefits provided by the Group's
performance as the Group performs;
(2) the customer is able to control the goods under construction in the course of the Group's
performance;
(3) the goods produced by the Group during the performance of the contract are irreplaceable and
the Group has the right to charge for the accumulated part of the contract that has beenperformed so far during the whole contract period.
24.1 Performance obligation performed over time
For performance obligation performed over time, the Group recognises the revenue within acertain period of time according to the progress of the performance, except for those of which theprogress of the performance cannot be reasonably determined. When determining the progress ofperformance of the aforesaid business, according to the nature of the business, the Grouprespectively adopts output and input methods to properly determine the progress of performanceuntil the progress of performance can be reasonably determined.
24.2 Performance obligation performed at certain point of time
For performance obligation performance at certain point of time, the Group recognises revenue ata certain point in time when the customer obtains the "control" of the goods or services. Indetermining whether the customer has obtained the control over the goods, the Group considersthe following indications:
(1) The Group has the right to receive the payment for the goods, i.e the client undertakes present
payment obligation for such good.
(2) The Group has transferred the ownership of the goods to customer, i.e. the customer has
obtained the ownership of the goods.
(3) The Group has physically transferred the goods to customer, i.e. the customer has physically
owned the goods.
(4) The Group has transferred the major risks and rewards of the ownership of the goods to
customer, i.e. the customer has obtained the major risks and rewards of the ownership of thegoods.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
24. Revenue - continued
24.2 Performance obligation performed at certain point of time - continued
(5) The customer has accepted the goods.
(6) Other indications showing the customer has obtained the control of the goods.
The following accounting policies are applicable to 2017:
24.3 Revenue from sale of goods
Revenue from sale of goods is recognised when (1) the Group has transferred to the buyer thesignificant risks and rewards of ownership of the goods; (2) the Group retains neither continuingmanagerial involvement to the degree usually associated with ownership nor effective controlover the goods sold; (3) the amount of revenue can be measured reliably; (4) it is probable that theassociated economic benefits will flow to the Group; and (5) the associated costs incurred or to beincurred can be measured reliably
24.4 Revenue from rendering of services
The Group provides port services, bonded logistics service and other related harbor services tocustomers. Revenue from rendering of services is recognized when (1) the amount of revenue canbe measured reliably; (2) it is probable that the associated economic benefits will flow to theenterprise; and (3) the associated costs incurred or to be incurred can be measured reliably.
25. 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 agovernment grant is in the form of a transfer of a monetary asset, it is measured at the amountreceived or receivable. If a government grant is in the form of a non-monetary asset, it ismeasured at fair value. If the fair value cannot be reliably determined, it is measured at a nominalamount. A government grant measured at a nominal amount is recognised immediately in profit orloss for the period.
25.1 Basis for determining and method of accounting of government grants related to assets
Included in the Group's government grants, the modern logistic projects, traffic transportationenergy-saving emission reduction special funds etc. are all related to the construction and use ofassets, such government grants are assets-related government grants.
A government grant related to an asset is recognized as deferred income, and evenly amortized toprofit or loss over the useful life of the related asset.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
25. Government grants - continued
25.2 Basis for determing and method of accounting of government grants related to income
Included in the Group's government grant, as the 2017 enterprise R&D support funds etc. are usedto compensate the related expenses or losses to be incurred in subsequent periods or incurred, theyare determined as government grant relating to income.
A government grant relating to income, if used to compensate the related cost, expenses or lossesto be incurred in subsequent periods, is determined as deferred income and recognized in profit orloss over the periods in which the related costs are recognized; if used to compensate the relatedcost, expenses or losses already incurred, is recognized immediately in profit or loss for the period.
A government grant relating to the Group's daily activities, is recognized in other income in linewith the nature of economic transaction. A government grant not relating to the Group's dailyactivities, is recognized in non-operating income.
26. Deferred tax assets/ deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
26.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periodsare measured at the amount expected to be paid (or recovered) according to the requirements oftax laws.
26.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and theirtax base, or between the nil carrying amount of those items that are not recognized as assets orliabilities and their tax base that can be determined according to tax laws, deferred tax assets andliabilities are recognized using the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferredtax assets for deductible temporary differences are recognized to the extent that it is probable thattaxable profits will be available against which the deductible temporary differences can be utilized.However, for temporary differences associated with the initial recognition of goodwill and theinitial recognition of an asset or liability arising from a transaction (not a business combination)that affects neither the accounting profit nor taxable profits (or deductible losses) at the time oftransaction, no deferred tax asset or liability is recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets arerecognized to the extent that it is probable that future taxable profits will be available againstwhich the deductible losses and tax credits can be utilized.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
26. Deferred tax assets/ deferred tax liabilities - continued
26.2 Deferred tax assets and deferred tax liabilities - continued
Deferred tax liabilities are recognized for taxable temporary differences associated withinvestments in subsidiaries and associates, and interests in joint ventures, except where the Groupis able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising fromdeductible temporary differences associated with such investments and interests are onlyrecognized to the extent that it is probable that there will be taxable profits against which to utilizethe benefits of the temporary differences and they are expected to reverse in the foreseeable future.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax ratesapplicable in the period in which the asset is realized or the liability is settled according to taxlaws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, exceptwhen they arise from transactions or events that are directly recognized in other comprehensiveincome or in equity, in which case they are recognized in other comprehensive income or inequity, and when they arise from business combinations, in which case they adjust the carryingamount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if itis no longer probable that sufficient taxable profits will be available in the future to allow thebenefit of deferred tax assets to be utilized. Any such reduction in amount is reversed when itbecomes probable that sufficient taxable profits will be available.
26.3 Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basisor to realize the assets and settle the liabilities simultaneously, current tax assets and current taxliabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, anddeferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxationauthority on either the same taxable entity or different taxable entities which intend either to settlecurrent tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously,in each future period in which significant amounts of deferred tax assets or liabilities are expectedto be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a netbasis.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
27. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all therisks and rewards of ownership to the lessee. All other leases are classified as operating leases.
27.1 The accounting treatment of operating leases
27.1.1 The Group as lessee under operating leases
Operating lease payments are recognized on a straight-line basis over the term of the relevantlease, and are either included in the cost of related asset or charged to profit or loss for the period.Initial direct costs incurred are charged to profit or loss for the period. Contingent rents arecharged to profit or loss in the period in which they are actually incurred.
27.1.2 The Group as lessor under operating leases
Rental income from operating leases is recognized in profit or loss on a straight-line basis over theterm of the relevant lease. Initial direct costs with more than an insignificant amount arecapitalized when incurred, and are recognized in profit or loss on the same basis as rental incomeover the lease term. Other initial direct costs with an insignificant amount are charged in profit orloss in the period in which they are incurred. Contingent rents are charged to profit or loss in theperiod in which they actually arise.
28. Safety Production Cost
According to the Administrative Rules on Provision and Use of Enterprise Safety Production Costjointly issued by the Ministry of Finance and the State Administration of Work Safety on 14February 2012 (filed as Cai Qi [2012] No. 16), safety production cost set aside by the Group isdirectly included in the cost of relevant products or recognized in profit or loss for the period, aswell as the special reserve. When safety production cost set aside is utilized, if the costs incurredcan be categorized as expenditure, the costs incurred should be charged against the special reserve.If the costs set aside are used to build up fixed assets, the costs should be charged to constructionin progress, and reclassified to fixed assets when the safety projects are ready for intended use.Meantime, expenditures in building up fixed assets are directly charged against the special reservewith the accumulated depreciation recognized at the same amount. Depreciation will not be madein the future period on such fixed assets.
29. Critical judgments in applying accounting policies and key assumptions anduncertainties in accounting estimates
In the application of accounting policies as set out in Note (III), the Company is required to makejudgments, estimates and assumptions about the carrying amounts of items in the financialstatements that cannot be measured accurately, due to the internal uncertainty of the operatingactivities. These judgments, estimates and assumptions are based on historical experiences of theCompany's management as well as other factors that are considered to be relevant. Actual resultsmay differ from these estimates.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
29. Critical judgments in applying accounting policies and key assumptions anduncertainties in accounting estimates - continued
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 asset 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.
30. Changes in Significant Accounting Policies
The Group adopts the new financial instrument standards and new revenue standards since 1January 2018.
New financial instrument standards
Before the adoption of new financial instrument standards, the Group's financial assets areclassified into financial assets at FVTPL, held-to-maturity investment, loans and receivable aswell as available-for-sale financial assets; the accounting of impairment of financial assets ismainly based on the incurred loss method.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
30. Changes in Significant Accounting Policies - continued
New financial instrument standards - continued
After the adoption of new financial instrument standards, according to the business model of thefinancial assets and the characteristics of the contractual cash flows of the financial assets, theGroup classifies the financial assets into at amoritized cost, financial assets at FVOCI andfinancial assets at FVTPL. The impairment of financial assets is accounted for using expected lossmethod. Meanwhile, the Group simplified the accounting of embedded derivatives and adjustedthe accounting of non-trading equity instrument investment accordingly.
New revenue standards
Before adopting the new revenue standards, the Group considers the time when the major risksand rewards of the ownership of goods are transferred to the buyer as the standards fordetermining the point of time for revenue recognition; the Group provides port service, bondedlogistics service and other labor service, and recognizes revenue from rendering of services when(1) the amount of revenue can be measured reliably; (2) it is probable that the associatedeconomic benefits will flow to the enterprise; and (3) the associated costs incurred or to beincurred can be measured reliably
After adopting the new revenue standards, the Group distinguishes the performance obligationsperformed at certain point of time and over time. For performance obligation performed at certainpoint of time, the revenue is recognized at the point of time when the customer obtains the controlof related goods (or service). For performance obligation performed over time, the Grouprecognizes the revenue within certain period of time according to the progress of performance,except when the progress of performance can't be reasonably determined.
(IV) TAXES
1. Major taxes and tax rates
| Taxes | Tax basis | Tax rate |
| Enterprise income tax | Taxable income | 25% |
| Value-added Tax ("VAT") | Load and unload income, tugboat income, trailer income, warehousing income and agency income | 6% |
| Taxable income from vehicle maintenance and utilities supplies on ships in shore | 10%, 11%, 13%, 16% and 17% (Note 3) | |
| Sales revenue of waste materials and lease income from tangible movable property | 3%, 16% and 17% | |
| Taxable income from leases of immovable property and labor dispatching | 5% and 6% (Note 2) | |
| City maintenance and construction tax | VAT paid | 5% and 7% (Note 1) |
| Education surtax | VAT paid | 3% |
| Regional education surcharges | VAT paid | 2% |
Entities using different enterprise income tax rate:
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(IV) TAXES - continued
1. Major taxes and tax rates - continued
| Name of entity | Enterprise income tax rate |
| Chiwan Wharf Holdings (Hong Kong) Limited | 16.50% |
| Chiwan Shipping (Hong Kong) Limited | 16.50% |
| Hinwin Development Limited | 16.50% |
| Media Port Investments Limited | 0% |
| Shiny Fame Limited | 16.50% |
Note 1: The subsidiaries set up in Shenzhen are subject to a city maintenance and construction tax
rate of 7%, and those set up in Dongguan are subject to a city maintenance andconstruction tax rate of 5%.
Note 2: Pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation
("SAT")on Full Launch of the Pilot Scheme on Levying Value-added Tax in Place ofBusiness Tax (filed as Cai Shui [2016] No. 36), a full implementation of replacingbusiness tax with VAT has been launched. Therefore, the Group is subject to VAT at 11%and 6% respectively for rental income from immovable property and income from labordispatching since 1 May 2016.
Pursuant to the Interim Measures on Management of VAT Collection on Immovable
Property Leases Provided by Taxpayers released by SAT(filed as the notice of SAT 2016No.16), the Group, are entitled to VAT tax rate at 5% based on simple tax method forimmovable property leasing since 1 May 2016.
Note 3: Pursuant to the Notice of Adjustments to Value Added Tax Rates issued by the Ministry of
Finance and the State Administration of Taxation ("SAT") (filed as Cai Shui [2018] No.32), tax rates for taxpayers' transactions of taxable sales or imports of good applicable tothe value added taxes, which are originally subject to a tax rate of 17% and 11%respectively, shall be adjusted to 16% and 10% respectively since 1 May 2018.
Pursuant to the Notice of Policies on the Reduction and Combination of Value Added Tax
Rates issued by the Ministry of Finance and the State Administration of Taxation ("SAT")(filed as Cai Shui [2017] No. 37), the applicable rate for taxpayers' sales of tap water hasbeen adjusted to 11% from 13% since 1 May 2017.
2. Tax preference
On 8 July 2014, Machong Branch of National Taxation Bureau in Dongguan City approved thatDongguan Chiwan Terminal Co., Ltd ("DGT"), a subsidiary of the Group, was subject to taxpreference of "3-year exemption followed by 3-year half reduction" commencing from 2014.2018 is the second year that the income tax can be reduced by half for DGT (2017: half reductionof enterprise income tax).
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 51 -
(IV) TAXES - continued
2. Tax preference - continued
According to Doc. [2013] No.3 issued by Shekou Local Taxation Bureau in Shenzhen, the profitsderived from berth 13A# of Shenzhen Chiwan Harbour Container Co., Ltd ("CHCC"), wassubject to tax preference of "3-year exemption followed by 3-year half reduction" commencingfrom 2012. The tax preference is expired in 2018, hence, the income tax for 2018 shall be fullypaid. (2017: reduced by half).
According to the joint verification by Science and Technology Innovation Commission ofShenzhen Municipality, Finance Commission of Shenzhen Municipality, Shenzhen ProvincialOffice, SAT and Shenzhen Local Taxation Bureau, Chiwan Container Terminal Co., Ltd ("CCT"),a subsidiary of the Group, is a high-tech enterprise, and was subject to tax preference of 3-yearenterprise income tax rate of 15% commencing from 2017. Hence, CCT has calculated its incometax at a rate of 15% in 2018 (2017: 15%).
According to the Notice on Taxable Services Subject to "VAT" Tax Rate of Zero and Exemptionissued by the Ministry of Finance and State Administration of Taxation (filed as Cai Shui [2011]No.131), and approvals released by Shekou National Taxation Bureau in Shenzhen (filed as ShenGuo Shui She Jian Mian Bei [2015] No.0153 and [2015] rNo.0154 respectively), ShenzhenMawan Port Co., Ltd., Shenzhen Mawan Terminals Co., Ltd., CCT, CHCC and Shenzhen ChiwanInternational Freight Agency Co., Ltd, the subsidiaries of the Group, are exempted from VATwhen providing logistics support service to overseas enterprises except for warehousing service.
According to the Notice on Preferential Policies and Preferential Catalogues of Enterprises'Income Tax in Shenzhen, Qianhai, Hong Kong - Shenzhen Modern Service Industry CooperationZone issued by the Ministry of Finance and State Administration of Taxation, to facilitate thedevelopment of Hong Kong - Shenzhen modern service industry in Qianhai, the subsidiaries ofthe Group, Shenzhen Mawan Wharf Co., Ltd., Shenzhen Mawan Port Co, Ltd. and ShenzhenMawan Terminals Co., Ltd., are qualified companies for the conditions of preferential tax policiesand are subject to a 15% income tax rate from 1 January 2014 to 31 December 2020. The incometax rate applied for above-mentioned companies in 2018 is 15% (2017: 15%).
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 52 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
| Closing balance | Opening balance | |
| Cash | ||
| RMB | 101.22 | 4,571.01 |
| USD | 469.78 | 472.68 |
| HKD | 7,339.77 | 8,463.74 |
| Subtotal | 7,910.77 | 13,507.43 |
| Bank deposit | ||
| RMB | 379,899,264.20 | 511,080,264.02 |
| USD | 22,780,238.81 | 207,753,058.97 |
| HKD | 65,168,759.78 | 98,916,257.63 |
| Subtotal | 467,848,262.79 | 817,749,580.62 |
| Other cash and bank balances (Note) | ||
| RMB | 431,352.44 | 430,591.27 |
| USD | - | - |
| HKD | - | - |
| Subtotal | 431,352.44 | 430,591.27 |
| Total | 468,287,526.00 | 818,193,679.32 |
| Including: The total amount of funds deposited overseas | 29,015,046.82 | 9,138,298.28 |
Note: Other cash and bank balances is mainly the amount deposited in the securities settlement
account of China Merchants Securities Co., Ltd.
2. Notes receivable
Unit: RMB
| Category | Closing balance | Opening balance |
| Bank acceptance bills | - | 500,000.00 |
Note: There is no notes receivable pledged, endorsed or discounted at the year end.
3. Accounts receivable
(1) Disclosure of accounts receivable by categories
Unit: RMB
| Item | Closing balance | Opening balance | ||||||||
| Carrying amount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | |||||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | |||
| Individually significant and independently bad debt provision assessed accounts | - | - | - | - | - | - | - | - | - | - |
| Accounts receivable for which bad debt provision has been assessed by credit risk portfolios | ||||||||||
| Portfolio 1 | 8,569,429.96 | 2.78 | - | - | 8,569,429.96 | 6,426,396.40 | 2.48 | - | - | 6,426,396.40 |
| Portfolio 2 | 299,028,365.01 | 97.01 | 550,652.22 | 0.18 | 298,477,712.79 | 247,603,038.77 | 95.84 | 307,965.73 | 0.12 | 247,295,073.04 |
| Subtotal of portfolios | 307,597,794.97 | 99.79 | 550,652.22 | 0.18 | 307,047,142.75 | 254,029,435.17 | 98.32 | 307,965.73 | 0.12 | 253,721,469.44 |
| Individually significant and independently bad debt provision assessed accounts | 638,203.00 | 0.21 | 638,203.00 | 100.00 | - | 4,332,576.39 | 1.68 | 972,084.00 | 22.44 | 3,360,492.39 |
| Total | 308,235,997.97 | 100.00 | 1,188,855.22 | 0.39 | 307,047,142.75 | 258,362,011.56 | 100.00 | 1,280,049.73 | 0.50 | 257,081,961.83 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 53 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(1) Disclosure of accounts receivable by categories - continued
Accounts receivable portfolios for which bad debt provision has been assessed using the aginganalysis approach:
Unit: RMB
| Aging | Closing balance | Opening balance | ||||||
| Carrying amount | Bad debt provision | Proportion (%) | Book value | Carrying amount | Bad debt provision | Proportion (%) | Book value | |
| Within 1 year | 298,116,644.13 | 354,188.33 | 0.12 | 297,762,455.80 | 247,012,608.73 | 175,921.39 | 0.07 | 246,836,687.34 |
| More than 1 year but not exceeding 2 years | 893,734.00 | 178,746.80 | 20.00 | 714,987.20 | 572,447.76 | 114,489.55 | 20.00 | 457,958.21 |
| More than 2 years but not exceeding 3 years | 539.58 | 269.79 | 50.00 | 269.79 | 854.98 | 427.49 | 50.00 | 427.49 |
| More than 3 years | 17,447.30 | 17,447.30 | 100.00 | - | 17,127.30 | 17,127.30 | 100.00 | - |
| Total | 299,028,365.01 | 550,652.22 | 0.18 | 298,477,712.79 | 247,603,038.77 | 307,965.73 | 0.12 | 247,295,073.04 |
(2) Bad debt provision increase, reversal and written-off
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | |
| Reversal | Write-off | ||||
| Accounts receivable | 1,280,049.73 | - | 91,194.51 | - | 1,188,855.22 |
(3) There are no accounts receivables that have been written off during the year.
(4) Top five balances of accounts receivable classified by debtor
Unit: RMB
| Name of customer | Relationship with the Company | Amount | Proportion of the amount to the total accounts receivable (%) | Bad debt provision |
| Customer A | Customer | 70,694,182.62 | 22.94 | 15,151.45 |
| Customer B | Customer | 18,845,603.78 | 6.11 | 295,085.00 |
| Customer C | Customer | 18,247,753.11 | 5.92 | 76,820.42 |
| Customer D | Customer | 15,855,178.00 | 5.14 | - |
| Customer E | Customer | 13,930,886.08 | 4.52 | 21,920.59 |
| Total | 137,573,603.59 | 44.63 | 408,977.46 |
4. Prepayments
(1) Prepayments presented by aging
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 2,340,151.37 | 98.54 | 4,320,070.94 | 99.20 |
| More than 1 year but not exceeding 2 years | 34,759.22 | 1.46 | 34,759.22 | 0.80 |
| More than 2 years but not exceeding 3 years | - | - | - | - |
| Total | 2,374,910.59 | 100.00 | 4,354,830.16 | 100.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 54 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Prepayments - continued
(2) Top five balances of prepayments classified by entities
Unit: RMB
| Entities | Relationship with the Company | Closing balance | Proportion of the closing balance to the total prepayments (%) |
| China Pacific Property Insurance Co., Ltd Dongguan Branch | Supplier | 634,708.37 | 26.73 |
| The People's Insurance Company (Group) of China Limited. Shenzhen Branch | Supplier | 563,647.54 | 23.73 |
| China Pacific Property Insurance Co., Ltd Dongguan Shenzhen Branch | Supplier | 465,170.71 | 19.59 |
| Beijing Heng Xin Qi Hua Information Technology Co., Ltd. | Supplier | 185,534.16 | 7.81 |
| China Life Insurance Co., Ltd Shenzhen Branch | Supplier | 129,434.70 | 5.45 |
| Total | 1,978,495.48 | 83.31 |
(3) The Group has no significant prepayment aging over one year.
5. Interest receivable
(1) Interest receivable
Unit: RMB
| Category | Closing balance | Opening balance |
| Fixed term deposit | 95,277.78 | 1,175,305.39 |
(2) The Group has no significant overdue interest.
6. Dividends receivable
(1) Dividends receivable
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | Impairment appeared or not |
| COHA (Laizhou) | - | 38,562,004.83 | 38,562,004.83 | - | No |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd ("Ocean Shipping Agency") | - | 7,788,975.00 | 7,788,975.00 | - | No |
| Total | - | 46,350,979.83 | 46,350,979.83 | - |
(2) The Group has no dividends receivable aging more than one year.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 55 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Other receivables
(1) Disclosure of other receivables by categories:
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying amount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | |||||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | |||
| Other receivables that are individually significant and for which bad debt provision has been assessed individually | - | - | - | - | - | - | - | - | - | - |
| Other receivables for which bad debt provision has been assessed by credit risk portfolios | ||||||||||
| Portfolio 1 | 12,098,722.65 | 68.03 | 100,000.00 | 0.83 | 11,998,722.65 | 14,909,269.24 | 68.48 | 100,000.00 | 0.67 | 14,809,269.24 |
| Portfolio 2 | 5,684,866.70 | 31.97 | 463,424.48 | 8.15 | 5,221,442.22 | 6,863,693.53 | 31.52 | 463,424.48 | 6.75 | 6,400,269.05 |
| Subtotal of portfolios | 17,783,589.35 | 100.00 | 563,424.48 | 3.17 | 17,220,164.87 | 21,772,962.77 | 100.00 | 563,424.48 | 2.59 | 21,209,538.29 |
| Other receivables that are not individually significant but for which bad debt provision has been assessed individually | - | - | - | - | - | - | - | - | - | - |
| Total | 17,783,589.35 | 100.00 | 563,424.48 | 3.17 | 17,220,164.87 | 21,772,962.77 | 100.00 | 563,424.48 | 2.59 | 21,209,538.29 |
Other receivables portfolios for which bad debt provision has been assessed using the aging analysis
Unit: RMB
| Aging | Closing balance | Opening balance | ||||||
| Carrying amount | Bad debt provision | Proportion (%) | Book value | Carrying amount | Bad debt provision | Proportion (%) | Book value | |
| Within 1 year | 5,221,442.22 | - | - | 5,221,442.22 | 6,400,269.05 | - | - | 6,400,269.05 |
| More than 1 year but not exceeding 2 years | - | - | - | - | - | - | - | - |
| More than 3 years | 463,424.48 | 463,424.48 | 100.00 | - | 463,424.48 | 463,424.48 | 100.00 | - |
| Total | 5,684,866.70 | 463,424.48 | 8.15 | 5,221,442.22 | 6,863,693.53 | 463,424.48 | 6.75 | 6,400,269.05 |
(2) Increase, reverse and write-off of bad debt provision
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | |
| Reversal | Write-off | ||||
| Other receivable | 563,424.48 | - | - | - | 563,424.48 |
(3) Other receivable has not been written off during the year.
(4) Disclosure of other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Temporary payments | 9,740,107.39 | 10,351,198.79 |
| Deposits | 4,072,364.41 | 5,523,098.82 |
| Others | 3,971,117.55 | 5,898,665.16 |
| Total | 17,783,589.35 | 21,772,962.77 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 56 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Other receivables - continued
(5) Top five balances of other receivables classified by creditors
Unit: RMB
| Name of company | Nature of the fund | Amount | Aging | Proportion of the amount to the total accounts receivable (%) | Bad debt provision |
| CMBL | Temporary payments from related parties | 4,747,624.49 | Within 1 year and 1 to 2 years | 26.70 | - |
| Finance Department of Ministry of Transport | Deposits and guarantee | 1,600,000.00 | Within 1 year | 9.00 | - |
| Shenzhen Nanhai Grains Industry Co., Ltd | Temporary payments from non-related parties | 1,508,116.52 | More than 1 years | 8.48 | - |
| China Nanshan Development (Group) Incorporation ("Nanshan Group") | Temporary payments from related parties | 1,115,590.39 | Within 1 year | 6.27 | - |
| Shenzhen China Merchants Qianhaiwan Property Co., Ltd. | Temporary payments from related parties | 1,088,414.30 | 2 to 3 years and more than 3 years | 6.12 | - |
| Total | 10,059,745.70 | 56.57 | - |
8. 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 | |
| Spare parts | 16,844,532.26 | 972,744.93 | 15,871,787.33 | 22,247,160.09 | 972,744.93 | 21,274,415.16 |
| Fuel | 619,179.50 | - | 619,179.50 | 588,064.94 | - | 588,064.94 |
| Total | 17,463,711.76 | 972,744.93 | 16,490,966.83 | 22,835,225.03 | 972,744.93 | 21,862,480.10 |
(2) Provision for decline in value of inventories
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | |
| Reversal | Write-off | ||||
| Spare parts | 972,744.93 | - | - | - | 972,744.93 |
9. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Added-value tax to be certified and deducted | 24,561,374.56 | 33,491,432.18 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 57 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Available-for-sale financial assets
(1) Available-for-sale financial assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Available-for-sale equity instruments | - | - | - | 26,887,500.00 | 3,128,300.00 | 23,759,200.00 |
| Measured at fair value | - | - | - | 9,850,000.00 | - | 9,850,000.00 |
| Measured at cost | - | - | - | 17,037,500.00 | 3,128,300.00 | 13,909,200.00 |
| Total | - | - | - | 26,887,500.00 | 3,128,300.00 | 23,759,200.00 |
(2) Available-for-sale financial assets measured at fair value at the end of the year
Unit: RMB
| Classification of available-for-sale financial assets | Opening balance | Increase | Transfer to other investments in equity instruments | Closing balance |
| Cost of equity instruments | 1,120,000.00 | - | 1,120,000.00 | - |
| Fair value | 9,850,000.00 | - | 9,850,000.00 | - |
| Accumulated amount of changes in fair value included in the other comprehensive income | 8,730,000.00 | - | 8,730,000.00 | - |
| Provision amount for impairment | - | - | - | - |
Note: The available-for-sale financial assets held by the Company represent the circulating shares
of Jiang Su Ninghu Expressway Co., Ltd. at the end of the year.
(3) Available-for-sale financial assets measured at cost at the end of the year
Unit: RMB
| Investees | Carrying amount | Provision for impairment | Proportion of ownership interests in the investee (%) | ||||||
| Opening balance | Increase | Transfer to other investments in equity instruments | Closing balance | Opening balance | Increase | Transfer to other investments in equity instruments | Closing balance | ||
| Shenzhen Petro-chemical Industry (Group) Co., Ltd | 3,500,000.00 | - | 3,500,000.00 | - | 3,117,800.00 | - | 3,117,800.00 | - | 0.26 |
| Guangdong Guang Jian Group Co., Ltd | 27,500.00 | - | 27,500.00 | - | 10,500.00 | - | 10,500.00 | - | 0.02 |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd("Ocean Shipping Agency") | 13,510,000.00 | - | 13,510,000.00 | - | - | - | - | - | 15.00 |
| Total | 17,037,500.00 | - | 17,037,500.00 | - | 3,128,300.00 | - | 3,128,300.00 | - | |
Note: The available-for-sale financial assets measured at cost are equity investments of Shenzhen
Petro-chemical Industry (Group) Co., Ltd, Guangdong Guang Jian Group Co., Ltd andOcean Shipping Agency. None of the stocks of above-mentioned companies are traded inmarket or fair value could be measured reliably, hence, the Group measures these equityinvestments under cost method.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 58 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Available-for-sale financial assets - continued
(4) Movements of available-for-sale financial assets in the reporting period
Unit: RMB
| Classification of available-for-sale financial assets | Available-for-sale equity instruments |
| Provision amount for impairment at the beginning of the year | 3,128,300.00 |
| Increase in the current period | - |
| Decrease in the current period | - |
| Transfer to other investments in equity instruments in the current period | 3,128,300.00 |
| Provision amount for impairment at the end of the year | - |
11. Other investments in equity instruments
(1) Other investments in equity instruments
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Investments in equity instruments at FVTOCI | 149,592,140.00 | 3,128,300.00 | 146,463,840.00 | - | - | - |
Note: The fair value of investments in equity instruments at FVTOCI is determined based on themethod as set out in Note IX to the consolidated financial statements.
(2) Other investments in equity instruments measured at fair value at the end of the year
Unit: RMB
| Investees | Cost | Changes in fair value cumulatively included in other comprehensive income | Fair value at the end of the year | Cash dividends for the period |
| Jiang Su Ninghu Expressway Co., Ltd. | 1,120,000.00 | 7,950,000.00 | 9,070,000.00 | - |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd("Ocean Shipping Agency") | 13,510,000.00 | 123,484,640.00 | 136,994,640.00 | 7,788,975.00 |
| Shenzhen Petro-chemical Industry (Group) Co., Ltd | 3,500,000.00 | - | 382,200.00 | - |
| Guangdong Guang Jian Group Co., Ltd | 27,500.00 | - | 17,000.00 | - |
| Total | 18,157,500.00 | 131,434,640.00 | 146,463,840.00 | 7,788,975.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 59 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Other investments in equity instruments - continued
(3) Impairments of other equity instruments measured at fair value at the end of the year
Unit: RMB
| Investees | Carrying amount | Provision for impairment | Proportion of ownership interests in the investee (%) | ||||||
| Opening balance | Increase | Transfer from available-for-sale financial assets in the current period | Closing balance | Opening balance | Increase | Transfer from available-for-sale financial assets in the current period | Closing balance | ||
| Shenzhen Petro-chemical Industry (Group) Co., Ltd | - | - | 3,500,000.00 | 3,500,000.00 | - | - | 3,117,800.00 | 3,117,800.00 | 0.26 |
| Guangdong Guang Jian Group Co., Ltd | - | - | 27,500.00 | 27,500.00 | - | - | 10,500.00 | 10,500.00 | 0.02 |
| Total | - | - | 3,527,500.00 | 3,527,500.00 | - | - | 3,128,300.00 | 3,128,300.00 | |
Note: As shares of Shenzhen Petro-chemical Industry (Group) Co., Ltd. and Guangdong GuangJian Group Co., Ltd have been delisted and the Company has accordingly made provision forimpairment, the Group considers the carrying amounts of such equity investments approximatetheir fair values.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 60 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Long-term equity investments
Unit: RMB
| Investees | Accounting method | Investment cost | Opening balance | Changes | Closing balance | Closing value of provision for impairment | |||||||
| Increase | Decrease | Investment profit or loss under equity method | Reconciling items from other comprehensive income | Other equity movements | Cash dividends or profits announced of issuance | Provision for impairment | Change in scope of consolidation | ||||||
| I. Joint ventures | |||||||||||||
| COHA (Laizhou) (Note 1) | Equity method | 749,655,300.00 | 783,668,303.84 | - | - | 26,216,000.00 | - | - | (38,562,004.83) | - | - | 771,322,299.01 | - |
| Hunan Changsha Xianing Inland Port Co., Ltd. | Equity method | 2,500,000.00 | 2,487,441.63 | - | - | (245,876.96) | - | - | - | - | (2,241,564.67) | - | - |
| Subtotal | 752,155,300.00 | 786,155,745.47 | - | - | 25,970,123.04 | - | - | (38,562,004.83) | - | (2,241,564.67) | 771,322,299.01 | - | |
| II. Associates | |||||||||||||
| China Merchants Holdings (International) Information Technology Co., Ltd | Equity method | 1,875,000.00 | 16,875,997.65 | - | - | 1,563,300.00 | - | - | - | - | - | 18,439,297.65 | - |
| CMBL | Equity method | 280,000,000.00 | 349,588,296.85 | - | - | 9,848,000.00 | - | - | - | - | - | 359,436,296.85 | - |
| Media Port Investments Limited ("MPIL") (Note 2) | Cost method/equity method | 139,932.00 | - | - | - | 8,299,439.10 | - | - | - | - | 403,575,495.50 | 411,874,934.60 | - |
| Subtotal | 282,014,932.00 | 366,464,294.50 | - | - | 19,710,739.10 | - | - | - | - | 403,575,495.50 | 789,750,529.10 | - | |
| Total | 1,034,030,300.00 | 1,152,620,039.97 | - | - | 45,680,862.14 | - | - | (38,562,004.83) | - | 401,333,930.83 | 1,561,072,828.11 | - | |
Note 1: The Company holds 40% equity interests in COHA (Laizhou). According to its articles of incorporation, significant matters such as
operating decisions can be passed only when jointly approved by directors of the Company and the other ventures. Therefore, COHA(Laizhou) is deemed to be under common control of Chiwan Wharf and the other shareholders; accordingly COHA (Laizhou) is accountedfor as a joint venture.
Note 2: On 30 September 2002, China Merchants Port Holdings Co., Ltd (the "CMPH", formerly known as China Merchants Holdings
(International)Co., Ltd.) and Shenzhen South Oil (Group) Co., Ltd (the "SSOG") entered into an agreement called "Agreement onCooperation and Development of Mawan Port" (the "Development Agreement") to incorporate three joint ventures, namely Shenzhen MawanWharf Co., Ltd. ("SMW"), SMP and Shenzhen Mawan Terminals Co., Ltd.("SMT") (together referred to as "Mawan Companies"), toconstruct and operate the berth 0#, 5#, 6#, 7# and 8# in Mawan Port. According to the Development Agreement, CMPH and the Group willjointly set up MPIL with equal percentage of equity held respectively. MPIL then incorporates the abovementioned three joint venturestogether with SSOG, and MPIL has 60% equity in each of the three joint ventures.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 61 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Investment properties
(1) Investment properties measured under cost method
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| I. Total original carrying amount | 43,579,258.14 | - | - | 43,579,258.14 |
| 1. Buildings | 14,947,127.30 | - | - | 14,947,127.30 |
| 2. Land use right | 28,632,130.84 | - | - | 28,632,130.84 |
| II. Total accumulated depreciation and amortization | 20,758,176.45 | 412,916.04 | - | 21,171,092.49 |
| 1. Buildings | 5,775,857.04 | 156,179.82 | - | 5,932,036.86 |
| 2. Land use right | 14,982,319.41 | 256,736.22 | - | 15,239,055.63 |
| III. Total net book value of investment property | 22,821,081.69 | 22,408,165.65 | ||
| 1. Buildings | 9,171,270.26 | 9,015,090.44 | ||
| 2. Land use right | 13,649,811.43 | 13,393,075.21 | ||
| IV. Total accumulated amount of provision for impairment losses of investment property | - | - | - | - |
| 1. Buildings | - | - | - | - |
| 2. Land use right | - | - | - | - |
| V. Total carrying value of investment property | 22,821,081.69 | 22,408,165.65 | ||
| 1. Buildings | 9,171,270.26 | 9,015,090.44 | ||
| 2. Land use right | 13,649,811.43 | 13,393,075.21 |
(2) Investment properties without ownership certificates
As of 30 June 2018, the Group has not obtained any ownership certificates of investmentproperties. For buildings located within the scope of Chiwan watershed with net book value ofRMB 19,340,913.38 (original carrying amount: RMB40,030,725.05 ), the underlying reasons andmanagement's resolutions for obtaining certificates of title are set out in Note (V) 16, and the restcertificates of title are under the process of application.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Fixed assets
(1) Fixed assets
Unit: RMB
| Item | Opening balance | Increase | Decrease | Decrease due to changes in scope of consolidation | Closing balance |
| I. Total original carrying amount | 7,683,045,484.80 | 15,863,384.60 | 5,770,083.42 | 1,881,071,780.36 | 5,812,067,005.62 |
| Including: Port and terminal facilities | 2,843,011,382.40 | 3,432,770.00 | 701,707.15 | 818,117,880.43 | 2,027,624,564.82 |
| Container yards and buildings | 1,311,615,254.63 | 2,290,504.44 | 3,496,694.48 | 39,815,468.14 | 1,270,593,596.45 |
| Mechanical equipment | 3,047,316,001.12 | 6,342,822.48 | - | 946,609,428.49 | 2,107,049,395.11 |
| Motor vehicles, cargo ships and tugboats | 277,984,786.78 | 1,349,497.11 | 1,050,261.00 | 2,944,661.32 | 275,339,361.57 |
| Other equipment | 203,118,059.87 | 2,447,790.57 | 521,420.79 | 73,584,341.98 | 131,460,087.67 |
| II. Total accumulated depreciation | 3,696,270,297.24 | 136,543,922.18 | 4,393,106.49 | 1,152,600,786.55 | 2,675,820,326.38 |
| Including: Port and terminal facilities | 842,819,234.19 | 31,072,008.61 | 643,530.54 | 331,650,682.44 | 541,597,029.82 |
| Container yards and buildings | 322,930,111.48 | 17,922,571.13 | 2,358,079.86 | 15,867,122.47 | 322,627,480.28 |
| Mechanical equipment | 2,214,579,586.28 | 75,636,388.66 | - | 741,442,797.48 | 1,548,773,177.46 |
| Motor vehicles, cargo ships and tugboats | 161,559,015.73 | 7,142,399.89 | 1,168,530.02 | 2,027,110.74 | 165,505,774.86 |
| Other equipment | 154,382,349.56 | 4,770,553.89 | 222,966.07 | 61,613,073.42 | 97,316,863.96 |
| III. Total net book value of fixed assets | 3,986,775,187.56 | 3,136,246,679.24 | |||
| Including: Port and terminal facilities | 2,000,192,148.21 | 1,486,027,535.00 | |||
| Container yards and buildings | 988,685,143.15 | 947,966,116.17 | |||
| Mechanical equipment | 832,736,414.84 | 558,276,217.65 | |||
| Motor vehicles, cargo ships and tugboats | 116,425,771.05 | 109,833,586.71 | |||
| Other equipment | 48,735,710.31 | 34,143,223.71 | |||
| IV. Total provision for impairment losses | 57,419,468.96 | - | - | - | 57,419,468.96 |
| Including: Port and terminal facilities | 4,261,599.48 | - | - | - | 4,261,599.48 |
| Container yards and buildings | 53,157,869.48 | - | - | - | 53,157,869.48 |
| Mechanical equipment | - | - | - | - | - |
| Motor vehicles, cargo ships and tugboats | - | - | - | - | - |
| Other equipment | - | - | - | - | - |
| V. Total carrying value of fixed assets | 3,929,355,718.60 | 3,078,827,210.28 | |||
| Including: Port and terminal facilities | 1,995,930,548.73 | 1,481,765,935.52 | |||
| Container yards and buildings | 935,527,273.67 | 894,808,246.69 | |||
| Mechanical equipment | 832,736,414.84 | 558,276,217.65 | |||
| Motor vehicles, cargo ships and tugboats | 116,425,771.05 | 109,833,586.71 | |||
| Other equipment | 48,735,710.31 | 34,143,223.71 |
Note 1: The increase of total original carrying amount for current period consists of new
acquisition of RMB 2,550,223.60, and an increase of RMB 13,313,161.00 transferredfrom construction in progress. The decrease of total original carrying amount for currentperiod consists of a decrease of RMB 4,455,203.42 resulting from disposal of fixed assets,and a decrease of RMB 1,314,880.00 resulting from renovation and expansion transferredinto construction in progress.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Fixed assets - continued
(1) Fixed assets - continued
Note 2: The increase in accumulated depreciation for current period consists of charge for the
current period of RMB 136,543,922.18. The decrease in accumulated depreciation forcurrent period consists of a decrease of RMB 3,209,714.49 resulting from disposal offixed assets, and a decrease of RMB 1,183,392.00 resulting from renovation andexpansion transferred into construction in progress.
Note 3: As of 30 June 2018, the Group has no fixed assets that used as collateral.
Note 4: As of 30 June 2018, the certificates of title for the Group's buildings with a net book value
of RMB 491,708,872.10(total original carrying amount: RMB 631,180,877.86) have notyet been obtained. For buildings located within the scope of Chiwan watershed with netbook value of RMB 27,736,980.47(original carrying amount: RMB 118,960,638.21), theunderlying reasons and management's solutions for obtaining certificates of title are setout in Note (V) 16, and the rest certificates of title are under the process of application.
(2) Other issues
Unit: RMB
| Item | Amount | Note |
| The original amounts of fixed assets fully depreciated but still in use at 30 June 2018 | 903,366,475.81 | |
| Closing original amount of temporary idle fixed assets | - | |
| Fixed assets disposed or retired in the current period | ||
| Original amount of fixed assets disposed or retired in the current period | 4,019,471.44 | |
| Net book value of fixed assets disposed or retired in the current period | 955,603.10 | |
| Gains or losses on disposal or retire of fixed assets | 19,702.38 |
15. Construction in progress
(1) Details of construction in progress are as follows:
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Ship-to-shore electricity project, Chiwan Port | 15,629,277.18 | - | 15,629,277.18 | 13,924,096.37 | - | 13,924,096.37 |
| Sea channel dredging and expansion work at the western area of Shenzhen Port | 11,666,174.28 | - | 11,666,174.28 | - | - | |
| Relavant construction work of 50.86 meters coastline, Machong Port | 5,604,597.87 | - | 5,604,597.87 | 5,397,252.58 | - | 5,397,252.58 |
| Phase III Project of Grain Dispatch Warehouse at 2#,3# Berth at Machong Port | 3,395,412.94 | - | 3,395,412.94 | 1,760,873.59 | 1,760,873.59 | |
| CCTV Digital Upgrade at Customs | 1,629,355.20 | - | 1,629,355.20 | - | - | |
| RTG remote control system, Mawan Port | - | - | 28,862,136.68 | - | 28,862,136.68 | |
| Others | 29,749,621.17 | - | 29,749,621.17 | 36,373,307.48 | - | 36,373,307.48 |
| Total | 67,674,438.64 | - | 67,674,438.64 | 86,317,666.70 | - | 86,317,666.70 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Construction in progress - continued
(2) Changes in significant construction in progress
Unit: RMB
| Item | Budget amount | Opening balance | Increase in the current period | Transfer to fixed assets/intangible assets in the current period | Decrease due to changes in scope of consolidation | Decrease in the current period | Closing balance | Proportion of accumulated construction investment in budget (%) | Construction progress (%) | Amount of accumulated capitalized interest | Including: capitalized interest for the current period | Interest capitalization rate for the current period (%) | Capital source |
| RTG remote control system, Mawan Port | 46,562,033.00 | 28,862,136.68 | 436,194.01 | - | 29,298,330.69 | - | - | 62.92 | 62.92 | - | - | - | Self-funding and loan |
| Ship-to-shore electricity project, Chiwan Port | 18,860,000.00 | 13,924,096.37 | 1,705,180.81 | - | - | - | 15,629,277.18 | 82.87 | 82.87 | - | - | - | Self-funding |
| Relavant construction work of 50.86 meters coastline, Machong Port | 36,000,000.00 | 5,397,252.58 | 207,345.29 | - | - | - | 5,604,597.87 | 15.57 | 15.57 | - | - | - | Self-funding |
| Phase III Project of Grain Dispatch Warehouse at 2#,3# Berth at Machong Port | 680,000,000.00 | 1,760,873.59 | 1,634,539.35 | - | - | - | 3,395,412.94 | 0.50 | 0.50 | - | - | - | Self-funding |
| Sea channel dredging and expansion work at the western area of Shenzhen Port | 65,000,000.00 | - | 11,666,174.28 | - | - | - | 11,666,174.28 | 17.95 | 17.95 | - | - | - | Self-funding |
| CCTV Digital Upgrade at Customs | 5,149,100.00 | - | 1,629,355.20 | - | - | - | 1,629,355.20 | 31.64 | 31.64 | - | - | - | Self-funding |
| Others | 369,696,816.24 | 36,373,307.48 | 21,778,784.57 | 13,679,277.45 | 13,015,240.71 | 1,707,952.72 | 29,749,621.17 | 15.73 | 15.73 | - | - | - | Self-funding |
| Total | 1,221,267,949.24 | 86,317,666.70 | 39,057,573.51 | 13,679,277.45 | 42,313,571.40 | 1,707,952.72 | 67,674,438.64 | - | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Intangible assets
Unit: RMB
| Item | Opening carrying amount | Increase | Decrease | Decrease due to changes in scope of consolidation | Closing carrying amount |
| I. Total original carrying amount | 2,106,291,774.55 | 1,550,129.23 (Note1) | - | 511,372,756.42 | 1,596,469,147.36 |
| Land use rights - prepaid under lease (Note 3) | 1,187,877,493.00 | - | - | 501,662,555.00 | 686,214,938.00 |
| Land use rights - prepaid under investment (Note 3) | 624,286,031.00 | - | - | - | 624,286,031.00 |
| Land use rights - purchased | 116,702,512.59 | - | - | - | 116,702,512.59 |
| Computer software | 45,485,587.96 | 1,550,129.23 | - | 9,710,201.42 | 37,325,515.77 |
| Sea area use rights | 71,940,150.00 | - | - | - | 71,940,150.00 |
| Coast line use rights | 60,000,000.00 | - | - | - | 60,000,000.00 |
| II. Total accumulated amortization | 756,066,776.01 | 23,478,101.11 (Note2) | - | 140,160,571.63 | 639,384,305.49 |
| Land use rights - prepaid under lease (Note 3) | 504,266,252.86 | 13,854,960.28 | - | - | 518,121,213.14 |
| Land use rights - prepaid under investment(Note 3) | 191,493,463.36 | 5,649,639.91 | - | 131,887,768.65 | 65,255,334.62 |
| Land use rights - purchased | 11,248,071.16 | 1,193,113.08 | - | - | 12,441,184.24 |
| Computer software | 33,840,409.66 | 1,367,225.96 | - | 8,272,802.98 | 26,934,832.64 |
| Sea area use rights | 11,287,270.15 | 719,401.50 | - | - | 12,006,671.65 |
| Coast line use rights | 3,931,308.82 | 693,760.38 | - | - | 4,625,069.20 |
| III. Total net carrying amount of intangible assets | 1,350,224,998.54 | 957,084,841.87 | |||
| Land use rights - prepaid under lease (Note 3) | 683,611,240.14 | 168,093,724.86 | |||
| Land use rights - prepaid under investment(Note 3) | 432,792,567.64 | 559,030,696.38 | |||
| Land use rights - purchased | 105,454,441.43 | 104,261,328.35 | |||
| Computer software | 11,645,178.30 | 10,390,683.13 | |||
| Sea area use rights | 60,652,879.85 | 59,933,478.35 | |||
| Coast line use rights | 56,068,691.18 | 55,374,930.80 | |||
| IV. Total provision for impairment losses | - | - | - | - | - |
| Land use rights - prepaid under lease (Note 3) | - | - | - | - | - |
| Land use rights - prepaid under investment(Note 3) | - | - | - | - | - |
| Land use rights - purchased | - | - | - | - | - |
| Computer software | - | - | - | - | - |
| Sea area use rights | - | - | - | - | - |
| Coast line use rights | - | - | - | - | - |
| V. Total carrying value of intangible assets | 1,350,224,998.54 | 957,084,841.87 | |||
| Land use rights - prepaid under lease (Note 3) | 683,611,240.14 | 168,093,724.86 | |||
| Land use rights - prepaid under investment (Note 3) | 432,792,567.64 | 559,030,696.38 | |||
| Land use rights - purchased | 105,454,441.43 | 104,261,328.35 | |||
| Computer software | 11,645,178.30 | 10,390,683.13 | |||
| Sea area use rights | 60,652,879.85 | 59,933,478.35 | |||
| Coast line use rights | 56,068,691.18 | 55,374,930.80 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(VI) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Intangible assets - continued
Note 1: Purchased in the current period.
Note 2: Amortization for the current period is RMB 23,478,101.11 in amortization increased in
the current period.
Note 3: The Group has obtained the land use right for berth and container yard located in Chiwan
watershed area with original amount of RMB 1,400,288,984.00 from Nanshan Group. Thetenure ranges between 20 - 50 years. The land with a total area of 1,049,946.00 squaremeters consists of an area of 2.2 square kilometers invested by Shenzhen InvestmentHolding Corporation, a stockholder of Nanshan Group, and a land arising from marinereclamation by Nanshan Group.
The land use rights for the plot of 270,692.00 sq. meters (original amount: RMB122,623,476.00) was contributed by Nanshan Group as capital injection at corporaterestructuring of the Company. The rest land use rights were obtained from Nanshan Groupby long-term leasing.
Since Nanshan Group has not yet obtained official certificates of land use rights for theabove lands so far, the Group has no certificates of title for relevant land and buildingseither.
On 20 March 2001, 18 June 2003 and 29 September 2004, Nanshan Group madecommitments on all the land use rights obtained by the Group from it as of the commitmentdate respectively: Nanshan Group has no right to withdraw the commitment and willunconditionally consent that, if the Group suffers loss, bears expense and liability, isclaimed for compensation or runs into lawsuit, for any actually or potentially illegal andnon-executable issues arising from land use right agreements and their relevant documentswhich signed or will be signed by the Group, Nanshan Group guarantees that the acquiringparty and its inheritor of those land use right will be fully exempted from above issues.Hence, management of the Company believe there is no significant impairment risk inrespect of the absence of land use right certificate and no significant contingent liability.
The management notes that Nanshan Group is positively approaching relevant governmentauthorities to solve the above historical land problem, however, it cannot predict the exacttime to obtain legal certificates of title for above land and relevant building propertyownership certificates.
As of 30 June 2018, long-term lease agreements for land use rights of 162,103.00 squaremeters with total original carrying amount of RMB 111,997,264.16 mentioned above haveexpired.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Goodwill
Unit: RMB
| Investee | Opening balance | Increase | Decrease | Closing balance |
| CCT | 10,858,898.17 | - | - | 10,858,898.17 |
Note: The goodwill arose from the acquisition of the minority interests in CCT in prior years,
being the difference of the additional cost of investment and the Group's share of the fairvalue of the identifiable net assets in CCT. Based on past years' operation performance anddevelopment forecast of the Company, the management holds the opinion that these is noneed to allocate impairment to goodwill arising from the investment of CCT.
18. Long-term prepaid expenses
Unit: RMB
| Item | Opening balance | Increase | Amortization | Other decrease | Decrease due to changes in scope of consolidation | Closing balance | Original Cost | Residual useful life |
| Construction expenditure of Tonggu sea-route (Note ) | 97,895,095.31 | - | 1,770,610.40 | - | 44,320,670.32 | 51,803,814.59 | 71,991,655.56 | 25 years |
| Golf membership | 382,905.78 | - | 13,631.69 | 369,274.09 | - | - | 1,374,700.00 | |
| Total | 98,278,001.09 | - | 1,784,242.09 | 369,274.09 | 44,320,670.32 | 51,803,814.59 | 73,366,355.56 |
Note: In 2007, Shenzhen municipal government launched the construction work of the public
sea route connecting Tonggu sea-route, Shekou port area, Chiwan port area, Mawan portarea, Qianhaiwan port area and Dachanwan port area ("Connecting Sea Route"). Incompliance with the government resolution, 60% of dredging expenditure would beborne by the investee companies while the remaining 40% borne by the government. 35%of the expenditure borne by the investee companies was assumed by the port operators inWestern Shenzhen port, and the allocation portion to each operator was determined onthe basis of function, waterfront length, and berthing ship of each port operator. TheTonggu sea-route construction expenses allocated to the Group is amortized on a straight-line basis over 35 years of the expected useful lives of Connecting Sea Route startingfrom 2008 when the Tonggu sea-route is put into use.
19. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets that are presented at the net amount without offsetting
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Deferred income | 24,331,553.72 | 6,082,888.43 | 24,331,553.72 | 6,082,888.43 |
| Organization costs | 17,866,660.19 | 3,849,377.27 | 17,866,660.19 | 3,849,377.27 |
| Provision for impairment losses of assets | 1,916,678.98 | 367,094.08 | 3,769,729.29 | 645,051.62 |
| Depreciation of fixed assets and amortization of intangible assets | 655,737.43 | 158,184.38 | 655,737.43 | 158,184.38 |
| Others | 1,567,295.02 | 295,524.73 | 1,567,295.02 | 295,524.73 |
| Total | 46,337,925.34 | 10,753,068.89 | 48,190,975.65 | 11,031,026.43 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19、Deferred tax assets and deferred tax liabilities - continued
(2) Deferred tax liabilities that are presented at the net amount without offsetting
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Distributable profits of subsidiaries | - | - | 168,036,856.00 | 8,401,842.80 |
| Change in fair value of available-for- sale financial assets | - | - | 8,730,000.00 | 2,182,500.00 |
| Change in fair value of other equity investments | 131,434,640.00 | 32,858,660.00 | - | - |
| Total | 131,434,640.00 | 32,858,660.00 | 176,766,856.00 | 10,584,342.80 |
(3) Deferred tax assets or liabilities that are presented at the net amount after offsetting
Unit: RMB
| Item | Closing amount of deferred tax assets and liabilities that are offset | Closing amount of deferred tax assets or liabilities after offsetting | Opening amount of deferred tax assets and liabilities that are offset | Opening amount of deferred tax assets or liabilities after offsetting |
| Deferred tax assets | - | 10,753,068.89 | - | 11,031,026.43 |
| Deferred tax liabilities | - | 32,858,660.00 | - | 10,584,342.80 |
(4) Details of unrecognized deferred tax assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 100,527,084.72 | 100,527,084.72 |
| Deductible losses | 97,692,947.25 | 97,692,947.25 |
| Total | 198,220,031.97 | 198,220,031.97 |
Note: Deferred tax assets are not recognized for the above-mentioned deductible temporary
differences and deductible losses due to uncertainty whether sufficient taxable profits willbe available in the future.
(5) Deductible losses for unrecognized deferred tax assets will be expired in the following years
Unit: RMB
| Year | Closing balance | Opening balance | Note |
| 2017 | - | - | |
| 2018 | 26,336,715.12 | 26,336,715.12 | |
| 2019 | 49,621,628.48 | 49,621,628.48 | |
| 2020 | 3,145,611.79 | 3,145,611.79 | |
| 2021 | 18,588,991.86 | 18,588,991.86 | |
| 2022 | - | - | |
| Total | 97,692,947.25 | 97,692,947.25 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
20. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Equity investment in Zhoushan Archipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd. (Note 1) | 149,709,800.00 | - |
| Land Use Right (Note 2) | 132,334,704.86 | 132,334,704.86 |
| Prepayments for construction | 3,517,159.42 | - |
| Total | 285,561,664.28 | 132,334,704.86 |
Note 1: According to the resolutions of the second extraodinary session of the ninth board of
directors on 26 January 2018, it was agreed that the Company increased capital injection ofRMB 149,709,800 to Zhoushan Archipelago New Area SinoTrans & CSC RoRo Logistics Co.,Ltd. ("Zhoushan RoRo "). The Company held 51% equity of the aforesaid company after theincrease in capital contribution. As at 30 June 2018, the capital increase has been paid up,while procedures related to change in personnel including directors, supervisors and seniorexecutives were still in the process. Therefore, the Company has not had control overZhoushan RoRo in substance temporarily and included relevant payment for investment in theline item of "other non-current assets".
Note 2: In March and October 2006, November 2007 and September 2014, the Group entered into
Cooperation Framework Agreement on Usage of Coastline and Land for 2# - 5# Berth atMachong Port in Dongguan and its supplementary agreements with Dongguan Humen PortAdministration Commission. The Group purchased use rights of coastline and land with a totalarea of 800,000 square meters, including waters with depth of 700 meters from the front ofterminal, and coastline from berth 2# to berth 5# with a total length of 1,200 meters atDongguan Machong Port at a consideration of RMB 260,000,000. As the Group has notobtained the use right certificates for the above land, the relevant prepayments were thereforerecognized as other non-current assets.
21. Short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Credit loan | 501,758,000.00 | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
22. Accounts payable
(1) Details of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Service | 49,672,047.63 | 44,304,587.96 |
| Material purchase | 37,886,573.64 | 30,935,681.72 |
| Rental | 12,003,969.29 | 11,740,186.97 |
| Construction | 5,559,805.94 | 43,202,625.18 |
| Equipment | 138,863.12 | 1,654,783.40 |
| Total | 105,261,259.62 | 131,837,865.23 |
(2) There is no significant accounts payable aged more than one year at the end of the year.
23. Receipts in advance
Unit: RMB
| Item | Closing balance | Opening balance |
| Service fee receipt in advance | 16,147,389.17 | 56,571,454.49 |
24. Employee benefits payable
(1) Employee benefits payable
Unit: RMB
| Item | Opening balance | Increase for the current period | Decrease for the current period | Decrease due to changes in scope of consolidation | Closing balance |
| I. Short-term benefits | 95,361,472.09 | 194,362,263.35 | 222,052,480.75 | 6,987,096.71 | 60,684,157.98 |
| II. Post-employment benefits - defined contribution plans | - | 23,063,359.29 | 23,063,359.29 | - | - |
| III. Termination benefits | - | 1,590,240.70 | 1,590,240.70 | - | - |
| Total | 95,361,472.09 | 219,015,863.34 | 246,706,080.74 | 6,987,096.71 | 60,684,157.98 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Employee benefits payable - continued
(2) Short-term benefits
Unit: RMB
| Item | Opening balance | Increase for the current period | Decrease for the current period | Decrease due to changes in scope of consolidation | Closing balance |
| I. Wages and salaries, bonuses, allowances and subsidies | 81,201,057.95 | 168,477,769.50 | 195,899,675.14 | 4,780,267.00 | 48,998,885.31 |
| II. Staff welfare | - | 2,426,555.68 | 2,426,555.68 | - | - |
| III. Social insurance charges | - | 6,013,858.39 | 6,013,858.39 | - | - |
| Including: Medical insurance | - | 4,970,219.24 | 4,970,219.24 | - | - |
| Work injury insurance | - | 497,684.86 | 497,684.86 | - | - |
| Maternity insurance | - | 545,954.29 | 545,954.29 | - | - |
| IV. Housing funds | - | 12,052,031.80 | 12,052,031.80 | - | - |
| V. Labor union and employee education funds | 14,160,414.14 | 3,735,493.27 | 4,003,805.03 | 2,206,829.71 | 11,685,272.67 |
| VI. Others | - | 1,656,554.71 | 1,656,554.71 | - | - |
| Total | 95,361,472.09 | 194,362,263.35 | 222,052,480.75 | 6,987,096.71 | 60,684,157.98 |
Note: There are no amounts in arrears under the employee benefits payable.
(3) Post-employment benefits - defined contribution plans
Unit: RMB
| Item | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| I. Basic pension (Note 1) | - | 16,285,947.42 | 16,285,947.42 | - |
| II. Unemployment insurance (Note 1) | - | 239,717.88 | 239,717.88 | - |
| III. Enterprise annuity plan (Note 2) | - | 6,537,693.99 | 6,537,693.99 | - |
| Total | - | 23,063,359.29 | 23,063,359.29 | - |
Note 1: The Group participates in the social security contributions and the unemployment
insurance plan established by government institutions as required. According to suchplans, the Group contributes 14% (13% for staff without Shenzhen householder register)of monthly basic salary, 0.8% (0.5% for staffs in Dongguan City) respectively to suchplans based on the minimum salary benchmark.
During the year, the Group is obliged to contribute RMB 16,285,947.42 and RMB239,717.88 respectively to the social security contributions and the unemploymentinsurance plan (Six months ended 30 June 2017: RMB 15,943,928.92 and RMB252,013.04). As at 30 June 2018, the Group have no outstanding contributions to be paidto the social security contributions and the unemployment insurance plan.
Note 2: On 3 June 2008, the Group participated in a group defined enterprise annuity plan of
Nanshan Group approved by Shenzhen municipal government. This supplementarypension contributions were paid into a managed account through Nanshan Group.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
25. Taxes payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Enterprise income tax | 39,759,910.51 | 25,424,119.87 |
| Withholding tax (Note) | 39,680,061.48 | 65,293,498.27 |
| VAT | 2,685,582.97 | 1,069,482.94 |
| Others | 4,758,632.14 | 4,666,000.58 |
| Total | 86,884,187.10 | 96,453,101.66 |
Note: The amount represents the withholding tax provided by the Group at the rate of 5% or 10%
when paying out dividends to foreign shareholders and Chiwan Wharf Holdings (HongKong) Limited located in Hong Kong.
26. Interest payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Mid-term bill interest | 6,395,671.26 | 1,977,287.68 |
| Short-term bonds interest | 1,580,986.30 | 1,701,205.47 |
| Short-term borrowings interest | 1,022,087.81 | - |
| Total | 8,998,745.37 | 3,678,493.15 |
27. Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Ordinary share dividends | 165,955,102.54 | 263,384,499.42 |
| Including: Payable to Hongkong International Enterprise Co., Ltd. ("HK International") | 128,552,676.45 | 128,552,676.45 |
| Yihai Kerry Investment Co., Ltd. ("Yihai Kerry") | 37,402,426.09 | 37,402,426.09 |
| Payable to Hidoney Developments Co., Ltd. ("Hidoney") | - | 97,429,396.88 |
28. Other payables
(1) Other payables presented by the nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Amount payable for construction and quality warranty | 32,854,743.14 | 86,447,160.37 |
| Temporary receipts | 11,159,903.56 | 21,982,817.14 |
| Deposits received | 8,105,797.64 | 6,979,760.22 |
| Security expense payable | 3,446,749.92 | 3,573,384.96 |
| Others | 16,936,639.00 | 19,029,375.43 |
| Total | 72,503,833.26 | 138,012,498.12 |
(2) There is no significant other payables aging more than one year.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Other current liabilities
(1) Short-term bonds payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Short-term bonds payable | 200,000,000.00 | 100,000,000.00 |
(2) Changes of short-term bonds payable:
Unit: RMB
| Name of bond | Face value | Date of issue | Term of the bond | Amount of issue | Opening balance | Amount issued in the current period | Interest accrued at par | Discount or premium amortization | Repayment in the current period | Closing balance |
| 17 Chiwan port SCP003 | 100,000,000.00 | 21/8/2017 | 270 days | 100,000,000.00 | 100,000,000.00 | - | 1,805,095.90 | - | 100,000,000.00 | - |
| 18 Chiwan port SCP001 | 200,000,000.00 | 24/4/2018 | 267 days | 200,000,000.00 | - | 200,000,000.00 | 1,762,410.96 | - | - | 200,000,000.00 |
| Total | 300,000,000.00 | 300,000,000.00 | 100,000,000.00 | 200,000,000.00 | 3,567,506.86 | - | 100,000,000.00 | 200,000,000.00 |
Note: According to the Notice of Registration Acceptance (filed as Zhong Shi Xie Zhu [2017] No.
SCP235) issued by China's Interbank Market Dealers Association, the Dealers Associationagreed the Company's registration of short-term commercial paper amounting to RMB 1.3billion. The registered amount is valid in two years since the date of the Notice ofRegistration Acceptance. The Company issued the second tranche of short-term commercialpaper amounting to RMB 0.2 billion as at 24 April 2018.
30. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Mid-term bills | 299,229,041.07 | 298,931,506.83 |
(2) Changes of bonds payable
Unit: RMB
| Name of bond | Face value | Date of issue | Term of the bond | Amount of issue | Opening balance | Amount issued in the current period | Interest accrued at par during the period | Discount or premium amortization | Repayment in the current period | Closing balance |
| Chiwan Wharf MTN001(Note) | 100.00 | 11/10/2016 | 3 years | 300,000,000.00 | 298,931,506.83 | - | 4,418,383.58 | 297,534.24 | - | 299,229,041.07 |
Note: According to the Notice of Registration Acceptance (filed as Zhong Shi Xie Zhu [2016]
MTN No. 325) issued by the China's Interbank Market Dealers Association. The Companyis entitled to issue mid-term bills no more than RMB 800,000,000 with an effective periodof 2 years.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Long-term payables
Unit: RMB
| Name of entity | Closing balance | Opening balance |
| China Merchants International (China) Investment Limited ("CMCI") | - | 25,000,000.00 |
Note: In accordance with the agreement on the management of key construction fund for
agricultural development of China (Yue [2016] 062802(Jian Guan) No. 1) entered intoamong Shenzhen Branch of Agricultural Development Bank of China, CMCI and theCompany's subsidiary, Shenzhen Mawan Terminals Co., Ltd., Agricultural Development ofChina Key Construction Fund Co., Ltd. as issuer of the loan, Shenzhen Branch ofAgricultural Development Bank of China as manager of the loan, released loan to CMCIamounting to RMB 25,000,000.00. The interest rate of the loan is 1.2% per annum, and theterm of the loan is from 30 June 2016 to 29 June 2026. Such special borrowing is used forthe smart port construction project based on the "Internet Plus". According to themanagement agreement, the Company's subsidiary, Shenzhen Mawan Terminals Co., Ltd. isthe executor of the project, which accordingly bears interest expenses relevant to suchborrowing. The Mawan Companies have not been included in the scope of the consolidatedfinancial statements since June 2018.
32. Special payables
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | Reason |
| Refunds of Harbor Construction Fee | 32,563,422.41 | - | 4,354,314.03 | 28,209,108.38 | Note |
Note: The item is refunds of harbor construction fee from Shenzhen Traffic Bureau. According to
Measures of Harbor Construction Fee Management released by Ministry of Finance, thefunds should be managed in separate account and can be only used on fundamentalfacilities' construction of marine transportation.
33. Deferred income
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | Reason |
| Deferred income | 156,048,997.49 | - | 2,997,497.21 | 153,051,500.28 | |
| Including: Berth priority right | 28,830,623.80 | - | 2,028,256.46 | 26,802,367.34 | Note 1 |
| Government grants related to assets | 127,218,373.69 | - | 969,240.75 | 126,249,132.94 | Note 2 |
| Total | 156,048,997.49 | - | 2,997,497.21 | 153,051,500.28 |
Note 1: This item represents berth priority right with total amounts to USD 14,000,000 that
agreed in the contract signed in 2003. The Group should satisfy the berthing requirementof contracted customers in priority during the contract period. According to the contract,the berth priority right should be amortized over twenty years on the straight-line basis.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
33. Deferred income - continued
Note 2：The item represents the government grants received by the Group which is based on the
Announcement Released by National Development and Reform Commission about 2010Investment Plans within Budget of Grains and Modern Logistics Program (NDRC[2010]No.1263), the Announcement Released by Guangdong Provincial Department ofFinance about 2012 Provincial Special Funds to Guide the Development of ModernService Project (Yue Jing Xin [2012] No. 883) and Transportation of energy savingspecial funds Interim Measures (Cai Jian [2011] No. 374), Nanshan District, Shenzhen,energy saving projects funded sub contract, Announcement Released by Reform andDevelopment Commission of Guangdong Province and the Grain Bureau of GuangdongProvince about 2015 Investment Plans within Budget of Grains and Modern LogisticsProgram (GDRC[2015] No.521), Measures Released by Dongguan Government aboutGrants Management to Special Fund Program for the Development of National andProvincial Industries (DGM[2013]No.162), Interim Measures Released by ShenzhenGovernment about the Management to Special Fund used in Recycling Economy andEnergy Savings, and the Reply of Ministry of Transport to Implementation Program ofBuilding 19 Regional Projects such as the Construction of a Green Recycling Low-carbon Transportation City by Beijing Government (Transportation LawLetter[2014]No.499),The Ministry of Finance, Ministry of Technology and Science,Ministry of Industry and Information, National Development and Reform Commission'sNotice on Financial Support to Application of New Energy Vehicles from 2016 to 2020(Cai Jian [2015]No.134), and Announcement Released by Reform and DevelopmentCommission of Guangdong Province and the Grain Bureau of Guangdong Provinceabout 2017 Investment & Division Plans within Budget of Grains and ModernWarehousing & Logistics Program (GDRC[2017] No.420).The government grants shallbe amortized on the straight-line basis over the useful life of the related assets.
Programs related with government grants:
Unit: RMB
| Liability Program | Opening balance | New subsidy of the year | The amount included in other income of the year | Other changes | Closing balance | Related to assets/Related to income |
| Special funds for modern logistics project | 123,026,087.58 | - | 403,478.22 | - | 122,622,609.36 | Related to assets |
| Reward for energy saving | 845,787.43 | - | 26,022.60 | - | 819,764.83 | Related to assets |
| Special funds for energy-saving and emission reduction of transportation | 1,410,000.00 | - | 180,000.00 | - | 1,230,000.00 | Related to assets |
| Special funds for development of modern service guide | 1,305,466.60 | - | 250,439.61 | - | 1,055,026.99 | Related to assets |
| Subsidy for electric buses | 583,333.28 | - | 100,000.02 | - | 483,333.26 | Related to assets |
| Green carbon harbor thematic projects subsidy granted by central government | 47,698.80 | - | 9,300.30 | - | 38,398.50 | Related to assets |
| Total | 127,218,373.69 | - | 969,240.75 | - | 126,249,132.94 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Share capital
Unit: RMB
| Opening balance | Changes for the period | Closing balance | |||||
| New issue of share | Bonus issue | Capitalization of surplus reserve | Others | Subtotal | |||
| Six months ended 30 June 2018 | |||||||
| I. Restricted tradable shares | |||||||
| 1 State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | - | - | - | - | - | - |
| 3. Other domestic shares | 160,106.00 | - | - | - | - | - | 160,106.00 |
| 4. Other foreign shares | - | - | - | - | - | - | - |
| Total restricted tradable shares | 160,106.00 | - | - | - | - | - | 160,106.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,859,300.00 | - | - | - | - | - | 464,859,300.00 |
| 2. Foreign capital shares listed domestically | 179,744,324.00 | - | - | - | - | - | 179,744,324.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,603,624.00 | - | - | - | - | - | 644,603,624.00 |
| III. Total shares | 644,763,730.00 | - | - | - | - | - | 644,763,730.00 |
| 2017: | |||||||
| I. Restricted tradable shares | |||||||
| 1 State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | - | - | - | - | - | - |
| 3. Other domestic shares | 304,538.00 | - | - | - | (144,432.00) | (144,432.00) | 160,106.00 |
| 4. Other foreign shares | - | - | - | - | - | - | - |
| Total restricted tradable shares | 304,538.00 | - | - | - | (144,432.00) | (144,432.00) | 160,106.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,866,612.00 | - | - | - | (7,312.00) | (7,312.00) | 464,859,300.00 |
| 2. Foreign capital shares listed domestically | 179,592,580.00 | - | - | - | 151,744.00 | 151,744.00 | 179,744,324.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,459,192.00 | - | - | - | 144,432.00 | 144,432.00 | 644,603,624.00 |
| III. Total shares | 644,763,730.00 | - | - | - | - | - | 644,763,730.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Capital reserve
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance |
| Six months ended 30 June 2018 | ||||
| Capital premium | 163,560,083.00 | - | - | 163,560,083.00 |
| Including: Capital contributed by investors | 163,560,083.00 | - | - | 163,560,083.00 |
| Exercised conversion option of convertible corporate bonds | - | - | - | - |
| Debt converted into capital | - | - | - | - |
| Differences arising from business combination involving enterprises under common control | - | - | - | - |
| Equity acquisition from minority shareholders of subsidiaries | - | - | - | - |
| Capitalization of capital reserve | - | - | - | - |
| Other capital reserve | 3,920,298.25 | - | - | 3,920,298.25 |
| Including: Equity split from convertible corporate bonds | - | - | - | - |
| Fair value of equity-settled share-based equity instrument | - | - | - | - |
| Surplus of compensation granted by government for relocation in the public interests | - | - | - | - |
| Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Others | 6,701,431.25 | - | - | 6,701,431.25 |
| Total | 167,480,381.25 | - | - | 167,480,381.25 |
| 2017: | ||||
| Capital premium | 163,560,083.00 | - | - | 163,560,083.00 |
| Including: Capital contributed by investors | 163,560,083.00 | - | - | 163,560,083.00 |
| Exercised conversion option of convertible corporate bonds | - | - | - | - |
| Debt converted into capital | - | - | - | - |
| Differences arising from business combination involving enterprises under common control | - | - | - | - |
| Equity acquisition from minority shareholders of subsidiaries | - | - | - | - |
| Capitalization of capital reserve | - | - | - | - |
| Other capital reserve | 3,920,298.25 | - | - | 3,920,298.25 |
| Including: Equity split from convertible corporate bonds | - | - | - | - |
| Fair value of equity-settled share-based equity instrument | - | - | - | - |
| Surplus of compensation granted by government for relocation in the public interests | - | - | - | - |
| Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Others | 6,701,431.25 | - | - | 6,701,431.25 |
| Total | 167,480,381.25 | - | - | 167,480,381.25 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Other comprehensive income
Unit: RMB
| tem | Opening balance | Amount incurred in current period | Closing balance | ||||
| Impact of New Financial Instrument Standards | Amount before income tax incurred in current period | Less: Income tax expenses | Post-tax amount attributable to shareholders of the Company | Post-tax amount attributable to minority holders | |||
| Six months ended 30 June 2018： | |||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | - | 99,160,980.00 | (780,000.00) | (195,000.00) | (585,000.00) | - | 98,575,980.00 |
| Including: Change as a result of remeasurement of the net defined benefit plan liability or asset | - | - | - | - | - | - | - |
| Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | 99,160,980.00 | (780,000.00) | (195,000.00) | (585,000.00) | - | 98,575,980.00 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 19,800,344.49 | (6,547,500.00) | - | - | - | - | 13,252,844.49 |
| Including: Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | 100,000.00 | - | - | - | - | - | 100,000.00 |
| Gains or losses on change in fair value of available-for- sale financial assets | 6,547,500.00 | (6,547,500.00) | - | - | - | - | - |
| Gains or losses on reclassification of held-to-maturity investments to available-for-sale | - | - | - | - | - | - | - |
| Effective portion of gains or losses on cash flow hedges | - | - | - | - | - | - | - |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | - | - | - | - | - | 13,152,844.49 |
| Total | 19,800,344.49 | 92,613,480.00 | (780,000.00) | (195,000.00) | (585,000.00) | - | 111,828,824.49 |
| 2017: | |||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | - | - | - | - | - | - | - |
| Including: Change as a result of remeasurement of the net defined benefit plan liability or asset | - | - | - | - | - | - | - |
| Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | - | - | - | - | - | - |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 18,825,344.49 | - | 1,300,000.00 | 325,000.00 | 975,000.00 | - | 19,800,344.49 |
| Including: Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | 100,000.00 | - | - | - | - | - | 100,000.00 |
| Gains or losses on change in fair value of available-for- sale financial assets | 5,572,500.00 | - | 1,300,000.00 | 325,000.00 | 975,000.00 | - | 6,547,500.00 |
| Gains or losses on reclassification of held-to-maturity investments to available-for-sale | - | - | - | - | - | - | - |
| Effective portion of gains or losses on cash flow hedges | - | - | - | - | - | - | - |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | - | - | - | - | - | 13,152,844.49 |
| Total | 18,825,344.49 | - | 1,300,000.00 | 325,000.00 | 975,000.00 | - | 19,800,344.49 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Special reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Decrease due to change in scope of consolidation | Closing balance |
| Six months ended 30 June 2018 : | |||||
| Production safety fee | 4,767,373.45 | 10,442,630.90 | 6,319,776.52 | 575,472.95 | 8,314,754.88 |
| 2017: | |||||
| Production safety fee | 4,145,765.65 | 17,456,696.76 | 16,835,088.96 | - | 4,767,373.45 |
38. Surplus reserve
Unit: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Six months ended 30 June 2018: | ||||
| Statutory surplus reserve | 520,074,434.56 | - | - | 520,074,434.56 |
| 2017: | ||||
| Statutory surplus reserve | 520,074,434.56 | - | - | 520,074,434.56 |
Note: In accordance with the Company Law of the PRC and the Company's Articles of
Association, the Company should appropriate 10% of net profit for the year to thestatutory surplus reserve, and the Company can cease appropriation when the statutorysurplus reserve accumulates to more than 50% of the registered capital. The statutorysurplus reserve can be used to make up for the loss or increase the paid-in capital afterapproval.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
39. Unappropriated profit
Unit: RMB
| Item | Amount | Proportion of appropriation or allocation |
| Six months ended 30 June 2018: | ||
| Before adjustment: Unappropriated profit at the end of prior year | 3,566,083,142.17 | |
| Adjustment: Total unappropriated profit at the beginning of year | - | |
| After adjustment: Unappropriated profit at the beginning of year | 3,566,083,142.17 | |
| Add: Net profit attributable to shareholders of the Company for the year | 316,060,290.67 | |
| Less: Appropriation to statutory surplus reserve | - | |
| Appropriation to disclretionary surplus reserve | - | Note 1 |
| Transfer to general reserve | - | |
| Ordinary shares' dividends payable | 850,443,359.87 | Note 2 |
| Ordinary shares' dividends converted into share capital | - | |
| Unappropriated profit at the end of the year | 3,031,700,072.97 | |
| 2017: | ||
| Before adjustment: Unappropriated profit at the end of prior year | 3,381,390,887.86 | |
| Adjustment: Total unappropriated profit at the beginning of year | - | |
| After adjustment: Unappropriated profit at the beginning of year | 3,381,390,887.86 | |
| Add: Net profit attributable to shareholders of the Company for the year | 504,495,064.39 | |
| Less: Appropriation to statutory surplus reserve | - | |
| Appropriation to discretionary surplus reserve | - | |
| Transfer to general reserve | - | |
| Ordinary shares' dividends payable | 319,802,810.08 | |
| Ordinary shares' dividends converted into share capital | - | |
| Unappropriated profit at the end of the year | 3,566,083,142.17 | |
Note 1: Appropriation to statutory surplus reserve
According to the Articles of Association, the Company is required to transfer 10% of itsnet profit to the statutory surplus reserve. The Company can cease appropriation whenthe statutory surplus reserve accumulated to more than 50% of the register capital.
Note 2: Cash dividends approved by shareholders' meeting during the year
Pursuant to the resolution of shareholders' meeting on 28 March 2018, on the basis of644,763,730 issued shares for the year ended 31 December 2017, dividends of RMB13.19(tax included) for every 10 shares were distributed to all shareholders, whichamounted to RMB 850,443,359.87.
Note 3: Appropriation to surplus reserve made by subsidiaries
As at 30 June 2018, the balance of the Group's unappropriated profit includedappropriation to surplus reserve made by subsidiaries amounting to RMB 613,003,934.55(31 December 2017: RMB 613,003,934.55).
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Operating income and operating costs
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) | ||
| Income | Cost | Income | Cost | |
| Principal operating | 1,240,293,171.35 | 668,121,155.35 | 1,159,050,546.56 | 682,035,789.51 |
| Other operating | 5,842,344.99 | 1,018,712.63 | 17,600,471.43 | 708,808.22 |
| Total | 1,246,135,516.34 | 669,139,867.98 | 1,176,651,017.99 | 682,744,597.73 |
41. Taxes and levies
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Property tax | 3,063,002.93 | 2,232,193.29 |
| City construction and maintenance tax | 720,820.04 | 838,052.23 |
| Education surcharges | 604,130.05 | 698,228.58 |
| Others | 1,793,039.31 | 2,608,270.40 |
| Total | 6,180,992.33 | 6,376,744.50 |
42. Administrative expenses
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Employee benefits | 66,626,296.50 | 57,377,117.91 |
| Depreciation expenses | 1,969,563.36 | 1,627,889.49 |
| Amortization of intangible assets | 814,382.89 | 681,528.65 |
| Others | 18,226,266.00 | 18,221,500.23 |
| Total | 87,636,508.75 | 77,908,036.28 |
43. Financial expenses
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Interest expense | 10,849,222.96 | 12,916,993.55 |
| Less: Capitalized interest expenses | - | 1,107,689.13 |
| Less: Interest income | 5,549,905.15 | 4,890,767.58 |
| Exchange differences | 11,473,011.85 | 6,013,506.13 |
| Others | 1,096,773.22 | 342,732.16 |
| Total | 17,869,102.88 | 13,274,775.13 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 82 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Impairment losses of assets
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| I. Bad debt losses | 360,407.86 | (2,075,271.78) |
| II. Write-down of inventories | - | - |
| III. Impairment on available-for-sale financial assets | - | - |
| IV. Impairment on held-to-maturity investments | - | - |
| V. Impairment on long-term equity investments | - | - |
| VI. Impairment on investment properties | - | - |
| VII. Impairment on fixed assets | - | - |
| VIII. Impairment on construction materials | - | - |
| IX. Impairment on construction in progress | - | - |
| X. Impairment on bearer biological assets | - | - |
| XI. Impairment on oil and gas assets | - | - |
| XII. Impairment on intangible assets | - | - |
| XIII. Impairment on goodwill | - | - |
| XIV. Others | - | - |
| Total | 360,407.86 | (2,075,271.78) |
45. Investment Income
(1) Details of investment income
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Long-term equity investments income under equity method | 45,680,862.14 | 36,875,845.60 |
| Dividend received from investments in other equity instruments | 7,788,975.00 | - |
| Investment income on available-for-sale financial assets | - | 9,417,000.00 |
| Total | 53,469,837.14 | 46,292,845.60 |
(2) Details of long-term equity investments income under equity method
Unit: RMB
| Investees | Accumulated amount for the period | Accumulated amounts for the prior period (restated) | Reasons for increases or decreases in the current compared to the prior period |
| COHA (Laizhou) | 26,216,000.00 | 29,155,806.47 | Changes in net profit of investee |
| CMBL | 9,848,000.00 | 5,476,000.01 | Changes in net profit of investee |
| MPIL | 8,299,439.10 | - | Changes in accounting method for investee |
| China Merchants Holdings (International) Information Technology Co., Ltd | 1,563,300.00 | 2,267,364.00 | Changes in net profit of investee |
| Hunan Xianing Inland Port Co., Ltd. | (245,876.96) | (23,324.88) | Changes in net profit of investee |
| Total | 45,680,862.14 | 36,875,845.60 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 83 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Gains or losses on disposal of assets
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amounts for the prior period (restated) | Amount recognized as non-recurring gain and loss in the current period |
| Gains (losses) on disposal of non-current assets | 19,702.38 | 293,053.57 | 19,702.38 |
| Including: Gains (losses) on disposal of fixed assets | 19,702.38 | 293,053.57 | 19,702.38 |
47. Other income
Unit: RMB
| Item | Amount incurred during the period | Amount incurred during the prior period | Related to assets / related to income |
| Special funds for modern logistics project | 403,478.22 | - | Related to assets |
| Reward for energy saving | 250,439.61 | Related to assets | |
| Special funds for energy-saving and emission reduction of transportation | 180,000.00 | - | Related to assets |
| Subsidy for electric buses | 100,000.02 | - | Related to assets |
| Special funds for development of modern service guide | 26,022.60 | - | Related to assets |
| Green carbon harbor thematic projects subsidy granted by central government | 9,300.30 | - | Related to assets |
| Total | 969,240.75 | - |
48. Non-operating income
(1) Non-operating income
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) | Amount recognized as non-recurring gain and loss in the current period |
| Government grants | - | 498,801.18 | - |
| Others | 2,902,652.25 | 1,827,764.29 | 2,902,652.25 |
| Total | 2,902,652.25 | 2,326,565.47 | 2,902,652.25 |
(2) Government grants
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) | Related to assets/ Related to income |
| Special funds for energy-saving and emission reduction of transportation | - | 180,000.00 | Related to assets |
| Reward for energy saving | 100,000.02 | Related to assets | |
| Subsidy for electric buses | - | 100,000.02 | Related to assets |
| Special funds for modern logistics project | - | 83,478.24 | Related to assets |
| Special funds for development of modern service guide | - | 26,022.60 | Related to assets |
| Green carbon harbor thematic projects subsidy granted by central government | - | 9,300.30 | Related to assets |
| Total | - | 498,801.18 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 84 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
49. Non-operating expenses
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) | Amount recognized as non-recurring gain and loss in the current period |
| Gains on retirement of non-current assets | - | 741,487.52 | - |
| Including: Gains on retirement of fixed assets | - | 741,487.52 | - |
| Amercement outlay | 3,278,008.57 | - | 3,278,008.57 |
| Others | 171,918.12 | 62,153.21 | 171,918.12 |
| Total | 3,449,926.69 | 803,640.73 | 3,449,926.69 |
50. Income tax expenses
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Current tax expenses | 72,972,772.66 | 72,810,714.44 |
| Deferred income tax | 2,511,899.07 | 49,425.00 |
| Total | 75,484,671.73 | 72,860,139.44 |
Reconciliation of income tax expenses to the accounting profit is as follows:
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Accounting profit | 518,860,142.37 | 446,530,960.04 |
| Income tax expenses calculated at 25% (the prior year: 25%) | 129,715,035.59 | 111,632,740.01 |
| Effect of expenses that are not deductible for tax purposes | 661,593.56 | 13,943.60 |
| Effect of tax-free income | (13,367,459.29) | (11,573,211.40) |
| Effect of current period deductible losses and deductible temporary differences unrecognized as deferred tax assets | (17,635.23) | (2,173,730.24) |
| Effect of previous deductible losses and deductible temporary differences unrecognized as deferred tax assets | - | (5,744,052.41) |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | (83,760.27) | (253,656.69) |
| Effect of tax preference policy | (29,438,865.97) | (20,998,208.60) |
| Withholding tax | (11,984,236.66) | 1,956,315.17 |
| Income tax expenses | 75,484,671.73 | 72,860,139.44 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 85 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
51. Other comprehensive income
Please refer to Note (V) 36.
52. Borrowing cost
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) | ||
| Amount of borrowing costs capitalized during the year | Capitalization rate | Amount of borrowing costs capitalized during the year | Capitalization rate | |
| Construction in progress | - | - | 1,107,689.13 | 4.35% |
| Borrowing costs capitalized during the year | - | 1,107,689.13 | ||
| Borrowing costs recognized in profit or loss during the year | 10,849,222.96 | 11,809,304.42 | ||
| Total of borrowing costs during the year | 10,849,222.96 | 12,916,993.55 | ||
53. Notes to items in the cash flow statement
(1) Other cash receipts relating to operating activities
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Interest income | 6,595,671.06 | 4,190,266.11 |
| Insurance indemnity | 842,178.78 | 145,964.36 |
| Refunds of harbor construction fee | 689,371.60 | 361,547.93 |
| Government grants | - | 20,000.00 |
| Refunds of river channel occupation fee | - | 14,469,500.00 |
| Others | 27,228,040.58 | 24,321,814.03 |
| Total | 35,355,262.02 | 43,509,092.43 |
(2) Other cash payments relating to operating activities
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Port expenses | 14,290,841.64 | 4,219,993.64 |
| Property insurance | 3,851,201.02 | 1,683,669.16 |
| Port administration fee | 2,862,983.25 | 5,336,195.70 |
| Office expenses & utilities | 2,856,786.15 | 2,263,884.38 |
| Consulting & auditing | 1,861,565.43 | 1,536,333.24 |
| Entertainment | 1,213,925.43 | 1,175,602.09 |
| Vehicles | 945,192.43 | 1,295,699.65 |
| Travel & accommodation | 454,783.51 | 604,205.21 |
| Others | 32,088,105.70 | 23,072,350.75 |
| Total | 60,425,384.56 | 41,187,933.82 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 86 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
53. Notes to items in the cash flow statement - continued
(3) Other cash receipts relating to investing activities
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Repayment from Hunan Xianing (Hunan Changsha Xianing Inland Port Co., Ltd.) | 500,000.00 | - |
| Restream from CMCI cash pooling | - | 128,500,000.00 |
| Total | 500,000.00 | 128,500,000.00 |
(4) Net cash payments for the acquisition of subsidiaries and other business units
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Capital increase in Zhoushan RoRo | 149,709,800.00 | - |
(5) Other cash payments relating to investing activities
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amount for the prior period (restated) |
| Cash outflow due to changes in scope of consolidation | 203,758,566.92 | - |
| Payments for CMCI cash pooling | - | 180,000,000.00 |
| Total | 203,758,566.92 | 180,000,000.00 |
(5) Other cash payments relating to financing activities
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amounts for the prior period (restated) |
| Debt issue costs | 663,373.11 | 15,792.33 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 87 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
54. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
| Supplementary information | Closing balance | Opening balance |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 443,375,470.64 | 373,670,820.60 |
| Add: Provision for impairment losses of assets | 360,407.86 | (2,075,271.78) |
| Depreciation of fixed assets | 136,537,426.45 | 135,136,560.67 |
| Depreciation of investment property | 412,916.04 | 412,916.04 |
| Amortization of intangible assets | 23,478,101.11 | 26,609,829.02 |
| Amortization of long-term prepaid expenses | 1,784,242.09 | 1,989,892.44 |
| Losses (Gains) on disposal of fixed assets , intangible assets and other long-term assets | (19,702.38) | (293,053.57) |
| Losses on retirement of fixed assets , intangible assets and other long-term assets | - | 741,487.52 |
| Financial expenses | 22,322,234.81 | 17,822,810.55 |
| Losses (gains) arising from investments | (53,469,837.14) | (46,292,845.60) |
| Decrease (Increase) in deferred tax assets | 277,957.54 | 49,425.00 |
| Increase in deferred tax liabilities | (8,596,842.80) | 1,800,894.96 |
| Decrease in inventories | 5,371,513.27 | (4,296,500.65) |
| Decrease(Increase) in operating receivables | (42,415,860.32) | (78,776,214.82) |
| Increase in operating payables | (180,243,153.49) | 148,054,781.65 |
| Net Cash Flows from Operating Activities | 349,174,873.68 | 574,555,532.03 |
| 2．Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Conversion of debt into capital | - | - |
| Convertible bonds due within one year | - | - |
| Fixed assets acquired under finance leases | - | - |
| 3．Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 468,287,526.00 | 650,935,428.95 |
| Less: Opening balance of cash | 818,193,679.32 | 542,079,799.39 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase (Decrease) in cash and cash equivalents | (349,906,153.32) | 108,855,629.56 |
(2) Composition of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 468,287,562.00 | 818,193,679.32 |
| Including: Cash on hand | 7,910.77 | 13,507.43 |
| Bank deposits | 467,848,262.79 | 817,749,580.62 |
| Other monetary funds | 431,352.44 | 430,591.27 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 468,287,526.00 | 818,193,679.32 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 88 -
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
55. Asset with restricted ownership or use right
The Group has no assets with restricted ownership or use right.
56. Foreign currency monetary items
| Item | Closing balance of foreign currency | Exchange rate | Closing amount in RMB |
| Cash and bank balances | 87,956,808.14 | ||
| Including: HKD | 77,305,301.33 | 0.8431 | 65,176,099.55 |
| USD | 3,442,962.94 | 6.6166 | 22,780,708.59 |
| Accounts receivable | 29,815,576.40 | ||
| Including: HKD | 29,289,494.83 | 0.8431 | 24,693,973.09 |
| USD | 774,053.64 | 6.6166 | 5,121,603.31 |
| Other receivables | 140,037.88 | ||
| Including: HKD | 165,988.91 | 0.8431 | 139,945.25 |
| USD | 14.00 | 6.6166 | 92.63 |
| Short-term borrowings | 151,758,000.00 | ||
| Including: HKD | 180,000,000.00 | 0.8431 | 151,758,000.00 |
| Accounts payable | 3,389,950.83 | ||
| Including: HKD | 4,020,817.02 | 0.8431 | 3,389,950.83 |
| Other payables | (219,874.59) | ||
| Including: HKD | 38,006.71 | 0.8431 | 32,043.46 |
| USD | (38,073.64) | 6.6166 | (251,918.05) |
(VI) CHANGES IN SCOPE OF CONSOLIDATION
Changes in scope of consolidation due to other reasons:
Unit: RMB
| Name of the company | Equity proportion of investor | Basis for composition of business combination under common control | No longer included in scope of consolidation | Basis for determination of exclusion fom scope of consolidation |
| Media Port Investments Limited | 50% | Note 1 | 8 June 2018 | Note 2 |
Note1: The Company and CMPH, Fatten Investments Limited ("FIL") and Media Port
Investments Limited ("MPIL") enter into Supplementary Agreement of ShareholderAgreement of Media Port Investments Limited on 23 August 2018. Pursuan to the aboveagreement arrangement, the Company completed appointment of directors to MPIL at theend of September 2017, and achieved control of MPIL and its subsidiary FIL, ShenzhenMawan Wharf Co., Ltd., Shenzhen Mawan Port Co, Ltd. and Shenzhen Mawan TerminalsCo., Ltd. (hereinafter collectively as "Mawan Companies") in the form and in the substance.In accordance with relevant criteria in the Accounting Standard for Business Enterprises
No.33—Consolidated Financial Statements, the Company has included MPIL and its
subsidiary FIL, and Mawan Companies in the scope of the consolidated financialstatements since September 2017. Based on requirements of business combinationinvolving enterprises under common control, the amount for the same period of last year inthe comparative financial statements have been adjusted in the current period.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 89 -
(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
Changes in scope of consolidation due to other reasons: - continued
Note2：The Company and CMPH, FIL and MPIL enter into Supplementary Agreement II of
Shareholder Agreement of Media Port Investments Limited on 5 February 2018. TheAgreement was concluded and went into effect once signed by each party. The Companywill not be capable of exerting control over MPIL and its subsidiary FIL and MawanCompanies since Shenzhen Malai Warehouse Co., Ltd. ("Malai Warehouse "), KEENField Enterprises Limited and Nanshan Group transferred their equity in the Company,which accounted for 66.10% in total, to CM Gangtong Development (Shenzhen) Co., Ltd.("CM Gangtong"), subsidiary of CMG, and Broadford International Inc, its persons actingin concert. Upon date of losing control over the companies, the Company ceased to includesuch companies in the scope of the Group's consolidated financial statements.
The Company received Registration Confirmation for Transfer of Securities issued byCSDC Shenzhen Branch provided by CMPH and Broadford International Inc. on 11 June2018. The registration procedure of the transfer has been completed as at 8 June 2018.Since that date, the Company no longer includes MPIL and its subsidiary FIL and MawanCompanise in the scope of the consolidated financial statements but considers them asinvestment in associates, which is recognised in long-term equity investment and accountedfor using equity method.
Note3：From January to May 2018, income of RMB 244,882,839.36, and net profit of RMB
90,526,376.71 of MPIL were included in the scope of consolidation; in June 2018,investment income of RMB 8,299,439.10 was recognised using equity method.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 90 -
(VII) EQUITY IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
Unit: RMB
| Full name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered Capital (in ten thousand Yuan unless otherwise stated) | Actual capital contribution at the end of the period | Balance of other items substantively constituting net investments in the subsidiary | Proportion of ownership Interest (%) | Proportion of voting power (%) | Consolidated or not | Approach of acquiring | |
| Direct ownership interest | Indirect ownership interest | ||||||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 550.00 | 5,500,000.00 | - | 100.00 | - | 100.00 | Y | Established through investment |
| Chiwan Wharf Holdings (Hong Kong) Limited | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD 1,000,000.00 | 1,070,000.00 | 11,004,285.00 | 100.00 | - | 100.00 | Y | Established through investment |
| Dongguan Chiwan Warf Co., Ltd. ("DGW") | Dongguan, PRC | Dongguan, PRC | Logistics support services | 45,000.00 | 382,500,000.00 | - | 85.00 | - | 85.00 | Y | Established through investment |
| DGT | Dongguan, PRC | Dongguan, PRC | Logistics support services | 40,000.00 | 400,000,000.00 | - | 100.00 | - | 100.00 | Y | Established through investment |
| Hinwin Development Limited | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD 10,000.00 | 6,278,500.00 | 94,014,181.00 | 100.00 | - | 100.00 | Y | Established through investment |
| CHCC | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 28,820.00 | 250,920,000.00 | - | 100.00 | - | 100.00 | Y | Combination involving enterprises under common control |
| Shenzhen Chiwan Transportation Co., Ltd | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 1,500.00 | 7,000,000.00 | - | 100.00 | - | 100.00 | Y | Combination involving enterprises under common control |
| CCT | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD 95,300,000.00 | 485,990,004.00 | - | 55.00 | - | 55.00 | Y | Combination involving enterprises under common control |
| Shenzhen Chiwan Tugboat Co., Ltd | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 2,400.00 | 24,000,000.00 | - | 100.00 | - | 100.00 | Y | Combination involving enterprises under common control |
| Chiwan Shipping (Hong Kong) Limited | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Logistics support services | HKD 800,000.00 | 856,000.00 | - | 100.00 | - | 100.00 | Y | Combination involving enterprises under common control |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 91 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(2) Material non-wholly-owned subsidiaries
Unit: RMB
| Name of the subsidiary | Proportion of ownership interest held by the minority shareholders | Profit or loss attributable to minority shareholders at the end of the period | Payments for dividends to minority shareholders in the current period | Closing balance of minority interest |
| Six months ended 30 June 2018 | ||||
| DGW | 15% | 7,030,733.26 | - | 94,230,145.91 |
| CCT | 45% | 56,414,598.58 | 97,429,396.88 | 718,652,805.03 |
| Media Port Investments Limited(note) | 50% | 63,869,848.13 | - | - |
| Total | 127,315,179.97 | 97,429,396.88 | 812,882,950.94 | |
| 2017 | ||||
| DGW | 15% | 9,569,883.39 | - | 87,165,123.43 |
| CCT | 45% | 92,767,094.87 | - | 661,365,910.74 |
| Media Port Investments Limited | 50% | 107,026,732.42 | 39,636,273.27 | 895,542,469.54 |
| Total | 209,363,710.68 | 39,636,273.27 | 1,644,073,503.71 |
Note: Since 8 June 2018, MPIL and its subsidiary FIL and Mawan Companise are excluded from
the scope of the consolidated financial statements. Reasons for the change is set out in VIChanges in scope of consolidation in detail.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 92 -
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(3) Significant financial information of material non-wholly-owned subsidiaries
Unit: RMB
| Name of the subsidiary | 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 | |
| DGW | 158,548,547.87 | 1,087,451,242.31 | 1,245,999,790.18 | 508,132,702.90 | 123,902,052.88 | 632,034,755.78 | 137,772,942.26 | 1,112,570,229.43 | 1,250,343,171.69 | 559,146,733.45 | 124,331,553.70 | 683,478,287.15 |
| CCT | 370,062,864.14 | 1,496,174,822.65 | 1,866,237,686.79 | 212,468,245.42 | 56,763,207.96 | 269,231,453.38 | 678,711,591.05 | 1,522,110,310.61 | 2,200,821,901.66 | 667,684,799.02 | 63,435,078.77 | 731,119,877.79 |
Unit: RMB
| Name of the subsidiary | Accumulated amount for the period | Accumulated amounts for 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 | |
| DGW | 160,907,339.98 | 46,871,555.05 | 46,871,555.05 | 68,688,984.23 | 159,643,720.20 | 43,662,466.15 | 43,662,466.15 | 35,258,020.10 |
| CCT | 381,347,218.87 | 125,365,774.63 | 125,365,774.63 | 82,350,172.20 | 326,262,590.52 | 82,862,059.33 | 82,862,059.33 | 190,279,725.34 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 93 -
(VII) EQUITY IN OTHER ENTITIES - continued
2. Interests in joint ventures and associates
(1) Material joint ventures or associates
Unit: RMB
| Investee | Principal place of business | Place of incorporation | Nature of business | Proportion of ownership interests held by the Group (%) | Proportion of voting power in the investee held by the Group (%) | Accounting method of investments in joint ventures and associates | ||
| 30 June 2018 | 31 December 2017 | 30 June 2018 | 31 December 2017 | |||||
| COHA (Laizhou) | Laizhou | Laizhou | Warehousing and logistics | 40.00 | 40.00 | 40.00 | 40.00 | Equity method |
| Media Port Investments Limited | Shenzhen | The British Virgin Islands (B.V.I.) | Investment holding | 50.00 | 50.00 | 50.00 | 50.00 | Cost method/equity method |
Note: MPIL was accounted for using cost method for January to May 2018, and has beenaccounted for using equity method since June 2018. Reasons for the change in accounthingmethod is set out in VI Changes in scope of consolidation in detail.
(2) Financial information of material joint venture
Unit: RMB
| COHA (Laizhou) | ||
| Closing balance/Accumulated amount for the period | Opening balance/ Accumulated amounts for the prior period | |
| Current assets | 417,950,192.92 | 427,943,558.13 |
| Including: cash and cash equivalent | 338,632,208.81 | 352,242,258.50 |
| Non-current assets | 1,538,211,801.78 | 1,750,656,867.73 |
| Total assets | 1,956,161,994.70 | 2,178,600,425.86 |
| Current liabilities | 220,407,763.74 | 52,930,096.22 |
| Non-current liabilities | - | 168,728,000.00 |
| Total liabilities | 220,407,763.74 | 221,658,096.22 |
| Minority interests | 785,847.02 | 845,811.39 |
| Total equity attributable to shareholders of the parent company | 1,734,968,383.94 | 1,956,096,518.25 |
| Net assets calculated based on the proportion of ownership interest | 693,987,353.58 | 782,438,607.30 |
| Adjustments | ||
| - Goodwill | - | - |
| - Unrealized Profits Resulting from Intragroup Transactions | - | - |
| - Others | 154,458,955.09 | 1,229,696.54 |
| Carrying amounts of equity investments in Joint | 848,446,308.67 | 783,668,303.84 |
| Operating income | 179,242,296.36 | 198,791,298.68 |
| Financial expenses | (2,188,829.59) | (2,636,003.23) |
| Income tax expenses | 23,489,626.81 | 25,348,143.97 |
| Net profit | 65,538,780.96 | 72,846,811.50 |
| Other comprehensive income | - | - |
| Total comprehensive income | 65,538,780.96 | 72,846,811.50 |
| Dividends received from joint ventures in the current period | 38,562,004.83 | 54,159,674.42 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 94 -
(VII) EQUITY IN OTHER ENTITIES - continued
2. Interests in joint ventures and associates - continued
(3) Financial information of material associate
Unit: RMB
| MPIL | |
| Closing balance/Accumulated amount for the period | |
| Current assets | 278,726,537.14 |
| Including: Cash and cash equivelant | 142,865,288.69 |
| Non-current assets | 1,182,646,768.36 |
| Total assets | 1,461,373,305.50 |
| Current liabilities | 120,142,468.21 |
| Non-current liabilities | 7,173,682.40 |
| Total liabilities | 127,316,150.61 |
| Minority interest | 506,406,198.71 |
| Attributable to shareholders of the Company | 827,650,956.18 |
| Share of net assets calculated by shareholding ratio | 413,825,478.09 |
| Adjusting events | |
| -Goodwill | - |
| - Unrealizes profit of internal trasaction | - |
| -Others | (1,950,543.50) |
| Carrying amount of equity investments in joint venture | 411,874,934.59 |
| Operating income | 315,088,074.30 |
| Financial expenses | 1,753,214.33 |
| Income tax expenses | 25,792,606.10 |
| Net profit | 118,541,180.92 |
| Other comprehensive income | - |
| Total comprehensive income | 118,541,180.92 |
| Dividend received from joint venture for the current peiord | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 95 -
(VII) EQUITY IN OTHER ENTITIES - continued
2. Interests in joint ventures and associates - continued
(4) A summary of financial information of non-material joint ventures and associates
Unit: RMB
| Closing balance/Accumulated amount for the period | Opening balance/ Accumulated amounts for the prior period | |
| Joint venture: | ||
| Total carrying amount of investments | - | 2,487,441.63 |
| Aggregate amounts of the following items based on shareholding ratio | ||
| - Net profit | (245,876.96) | 120,932.91 |
| - Other comprehensive income | ||
| - Total comprehensive income | (245,876.96) | 120,932.91 |
| Associate: | ||
| Total carrying amount of investments | 377,875,594.50 | 366,464,294.50 |
| Aggregate amounts of the following items based on shareholding ratio | ||
| - Net profit | 11,411,300.00 | 11,937,186.82 |
| - Other comprehensive income | - | - |
| - Total comprehensive income | 11,411,300.00 | 11,937,186.82 |
(5) As at 30 June 2018, the long-term equity investments of the Group were not subject to
restriction on disposal or remittance of return on investments.
(VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank balances, notes receivable,account receivables, interest receivable, other receivables, other investments in equity instruments,account payables, interest payable, dividends payable, other payables, other current liabilities,bonds payable and long-term payables. Details of these financial instruments are disclosed inNote (V). The risks associated with these financial instruments and the policies on how tomitigate these risks are set out below. Management manages and monitors these exposures toensure the risks are monitored at a certain level.
The Group adopts sensitivity analysis techniques to analyze how the entity's profit or loss and forthe period and shareholders' equity would have been affected by changes in the relevant riskvariables that were reasonably possible. As it is unlikely that risk variables will change in anisolated manner, and the interdependence between risk variables will have significant effect onthe amount ultimately influenced by the changes in a single risk variable, the following items arebased on the assumption that each risk variable has changes on a stand-alone basis.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 96 -
(VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
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 USD and HKD. Several of theGroup's subsidiaries have purchases and sales denominated in HKD while the Group's otherprincipal activities are denominated and settled in RMB. As at 30 June 2018, the balance of theGroup's assets and liabilities are both denominated in functional currency, except that balance ofassets set out below is in HKD and USD. Currency risk arising from the foreign currency balanceof assets and liabilities may have impact on the Group's performance.
Unit: RMB
| Item | Closing amount in RMB | Opening amount in RMB |
| Cash and bank balances | 87,956,808.14 | 306,678,253.02 |
| Including: HKD | 65,176,099.55 | 98,924,721.37 |
| USD | 22,780,708.59 | 207,753,531.65 |
| Accounts receivable | 29,815,576.40 | 12,973,639.48 |
| Including: HKD | 24,693,973.09 | 13,657,705.66 |
| USD | 5,121,603.31 | (684,066.18) |
| Interest receivable | - | 417,580.12 |
| Including: HKD | - | 112,066.15 |
| USD | - | 305,513.97 |
| Other receivables | 140,037.88 | 183,405.92 |
| Including: HKD | 139,945.25 | 183,314.44 |
| USD | 92.63 | 91.48 |
| Short-term borrowings | 151,758,000.00 | - |
| Including: HKD | 151,758,000.00 | - |
| Accounts payable | 3,389,950.83 | 2,858,955.26 |
| Including: HKD | 3,389,950.83 | 2,858,955.26 |
| Other payables | (219,874.59) | 529,668.20 |
| Including: HKD | 32,043.46 | 778,448.98 |
| USD | (251,918.05) | (248,780.78) |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 97 -
(VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - 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 the probable heavy loss resulted from foreign exchangerate fluctuation to be fairly low.
Sensitivity analysis on currency risk
The assumption for the sensitivity analysis on currency risk is that all the cash flow hedges andhedges of a net investment in a foreign operation are highly effective. On the basis of the aboveassumption, where all other variables are held constant, the reasonably possible changes in theforeign exchange rate may have the following pre-tax effect on the profit or loss for the period orequity:
Unit: RMB
| Item | Changes in exchange rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| All foreign currencies | 5% increase against RMB | (1,850,782.69) | (1,850,782.69) | 13,043,890.14 | 13,043,890.14 |
| All foreign currencies | 5% decrease against RMB | 1,850,782.69 | 1,850,782.69 | (13,043,890.14) | (13,043,890.14) |
1.1.2 Interest rate risk - changes in cash flows
Risk derived from changes in cash flows of financial instruments is mainly related to bank loanwith floating interest rate. Details are disclosed in Note (V) 21. This Group takes the measure ofmaintaining the floating interest rate of the bank loan, as a way to reduce the interest rate riskarising from changes in fair value.
Sensitivity analysis of interest rate risk
Sensitivity analysis of interest rate risk is based on the following assumptions:
? Fluctuations of market interest rate can affect the interest income or expense of a financial
instrument with floating interest rate.
? For a financial instrument at fair value with fixed interest rate, the fluctuations of market interest
rate can only affect its interest income or expense.
? For a derivative financial instrument recognized as hedging instrument, the fluctuations of market
interest rate affects its fair value and interest rate hedging estimation are effective and efficient.
? Market interest rate at the balance sheet date is adopted to calculate fair value changes of derivative
financial instruments and other financial assets and liabilities under discounted cash flow method.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 98 -
(VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
1．Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.2 Interest rate risk - changes in cash flows - continued
Given that other variables unchanged on the basis of above assumptions, the pre-tax effect on theprofit or loss for the current period from possible and reasonable changes of interest rate are asfollows:
Unit: RMB
| Item | Changes in interest rate | Closing balance | Opening balance | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| Short-term borrowings | 1% increase | 5,017,580.00 | 5,017,580.00 | 1,550,000.00 | 1,550,000.00 |
| Short-term borrowings | 1% decrease | (5,017,580.00) | (5,017,580.00) | (1,550,000.00) | (1,550,000.00) |
1.1.3 Other price risk
Other equity instruments are measured at fair value by the Group at the balance sheet date. Hencethe Group takes risk of changes in the securities market. The Group closely monitors the effects ofchanges in the foreign exchange prices on the Group's equity investment securities. The Grouphas not taken any measures to reduce prices risk of equity investment securities.
1.2 Credit risk
As at 30 June 2018, the Group's maximum exposure to credit risk which will cause a financialloss to the Group due to failure to discharge an obligation by the counterparties and financialguarantees issued by the Group is arising from the carrying amount of the respective recognizedfinancial assets as stated in the consolidated balance sheet. For financial instruments measured atfair value, the carrying amount reflects the exposure to risks but not the maximum exposure torisks; the maximum exposure to risks would vary according to the future changes in fair value.
In order to minimize the credit risk, the Group has delegated a team responsible for determinationof credit limits, credit approvals and other monitoring procedures to ensure that follow-up actionis taken to recover overdue debts. In addition, the Group reviews the recoverable amount of eachindividual trade debt at each balance sheet date to ensure that adequate impairment losses aremade for irrecoverable amounts. In this regard, the management of the Group considers that theGroup's credit risk is significantly reduced.
The credit risk on liquid funds is limited because the counterparties are banks with high creditratings.
The Group adopted necessary policies to make sure that all clients and customers are attributedwith merit credit records.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 99 -
(VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.3 Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash andcash equivalents deemed adequate by the management to finance the Group's operations andmitigate the effects of fluctuations in cash flows. The management monitors the utilization ofbank borrowings and ensures compliance with loan covenants.
The following is the maturity analysis for financial assets and financial liabilities held by theGroup which is based on undiscounted remaining contractual obligations:
Unit: RMB
| Item | Carrying amount | Total amount | Within 1 year | 1-5 years | More than 5 years |
| The non-derivative financial assets | |||||
| Cash and bank balances | 468,287,526.00 | 468,287,526.00 | 468,287,526.00 | - | - |
| Accounts receivable | 307,047,142.75 | 307,047,142.75 | 307,047,142.75 | - | - |
| Interest receivable | 95,277.78 | 95,277.78 | 95,277.78 | - | - |
| Other receivables | 17,220,164.87 | 17,220,164.87 | 17,220,164.87 | - | - |
| The non-derivative financial liabilities | |||||
| Short-term borrowings | 501,758,000.00 | 501,758,000.00 | 501,758,000.00 | - | - |
| Accounts payable | 105,261,259.62 | 105,261,259.62 | 105,261,259.62 | - | - |
| Interest payable | 8,998,745.37 | 8,998,745.37 | 8,998,745.37 | - | - |
| Dividends payable | 165,955,102.54 | 165,955,102.54 | 165,955,102.54 | - | - |
| Other payables | 72,503,833.26 | 72,503,833.26 | 72,503,833.26 | - | - |
| Other current liabilities | 200,000,000.00 | 206,920,054.79 | 206,920,054.79 | - | - |
| Bonds payable | 299,229,041.07 | 311,424,328.77 | 8,910,000.00 | 302,514,328.77 | - |
(IX) FAIR VALUE
1. Closing balance of assets and liabilities measured at fair value
Unit: RMB
| Item | Closing Balance | |||
| Level 1 | Level 2 | Level 3 | Total | |
| Measurements at fair value continuously | ||||
| Other investments in equity instruments | 9,070,000.00 | - | 137,393,840.00 | 146,463,840.00 |
| Total assets measured at fair value continuously | 9,070,000.00 | - | 137,393,840.00 | 146,463,840.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 100 -
(IX) FAIR VALUE - continued
2. Basis for determining the market price measured at fair value at level I continuously
The market price of assets and liabilities measured at fair value at level I continuously isdetermined by the Shanghai stock exchange closing price of equity instruments at 29 June 2018.
3. Basis for determining the market price measured at fair value at level III continuously
The fair value of unquoted equity instruments included in other equity instruments is determinedby the cost method. The cost method is a valuation technique that reflects the amount needed forthe replacement of relevant asset service capability.
4. Information of financial assets and financial liabilities that are not measured at fair value
The management considers that the carrying amount of financial assets and liabilities measured atamortized cost is approximately equal to the fair value of financial assets and liabilities.
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
1. Parent of the Company
| Name of the parent | Related party relationship | Type of the entity | Place of incorporation | Legal representative | Nature of business | Issued share capital | Proportion of the entity's ownership interests held by the parent (%) | Proportion of the entity's voting power held by the parent (%) |
| CM Gangtong | Parent company | Company with limited liability | Shenzhen | Deng Weidong | Equity investment | RMB 0.5 billion | 57.52% | 57.52% |
Note: CM Gangtong Development holds 370,878,000 shares of A Share of Shenzhen Chiwan,
accounting for 57.52% of Shenzhen Chiwan's issued share capital, and is entitled to 57.52%of the Company's voting power. Therefore, CM Gangtong Development becomes the parentof the Company. The Company's ultimate actual controller is China Merchant Group.
2. Subsidiaries of the Company
The general background and other related information of subsidiaries are set out in Note (VII) 1.
3. Associates and joint ventures of the Company
The general background and other related information of the significant associates and jointventures are set out in Note (VII) 2.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 101 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
| Name of other related parties | Relationships between other related parties and the Company |
| Shenzhen Haiqin Engineering Management Co., Ltd. ("Haiqin Engineering") | Controlled by the same ultimate actual controller |
| China Merchants Port Services (Shenzhen) Co., Ltd. ("CMPS") | Controlled by the same ultimate actual controller |
| Shekou Container Terminals Limited ("SCT") | Controlled by the same ultimate actual controller |
| Shenzhen Haixing Harbor Development Co., Ltd. ("Haixing") | Controlled by the same ultimate actual controller |
| Shenzhen Huxing Tug Service Co., Ltd. ("Huxing Tug") | Controlled by the same ultimate actual controller |
| Shenzhen Lianda Tug Service Co., Ltd. ("Lianda Tug") | Controlled by the same ultimate actual controller |
| China Merchants Container Services Ltd. ("China Merchants Container") | Controlled by the same ultimate actual controller |
| CMCI | Controlled by the same ultimate actual controller |
| Malai Warehouse | Controlled by the same ultimate actual controller |
| Shantou CMPort Group Co., Ltd. ("Shantou Port") | Controlled by the same ultimate actual controller |
| Colombo International Container Terminals Limited ("CICT") | Controlled by the same ultimate actual controller |
| Guangdong Yide Port Co., Ltd. ("Yide Port") | Controlled by the same ultimate actual controller |
| Shenzhen China Merchants Qianhaiwan Property Co., Ltd. ("Qianhai Property") | Controlled by the same ultimate actual controller |
| China Merchants International Cold Chain (Shenzhen) Co., Ltd. ("CMCCL") | Controlled by the same ultimate actual controller |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd. ("Ocean Shipping Agency") | Controlled by the same ultimate actual controller |
| Shenzhen China Merchants Shangzhi Investment Co., Ltd. ("China Merchants Shangzhi") | Controlled by the same ultimate actual controller |
| Shenzhen China Merchants International Shipping Agency Co., Ltd. ("Shipping Agency") | Controlled by the same ultimate actual controller |
| Youlian Shipyard (Shekou) Co. Ltd. ("Youlian Shipyard") | Controlled by the same ultimate actual controller |
| Shenzhen China Merchants Property Management Co., Ltd. ("China Merchants Property") | Controlled by the same ultimate actual controller |
| Guangzhou International Ocean Shipping Agency Co., Ltd. ("International Ocean Shipping") | Controlled by the same ultimate actual controller |
| China Ocean Shipping Tally Shenzhen Co., Ltd. ("Ocean Shipping Tally") | Controlled by the same ultimate actual controller |
| China Merchants Houlder Insurance Co., Ltd. ("Houlder Insurance") | Controlled by the same ultimate actual controller |
| Hoi Tung (Shanghai) Co., Ltd. ("Hoi Tung Shanghai") | Controlled by the same ultimate actual controller |
| Hoi Tung (Shenzhen) Co., Ltd. ("Hoi Tung Shenzhen") | Controlled by the same ultimate actual controller |
| Shenzhen South China Liquefied Gas Marine Co., Ltd. (South China Liquefied Gas) | Controlled by the same ultimate actual controller |
| China Marine Shipping Agency, Shenzhen Co., Ltd. ("CMSA") | Controlled by the same ultimate actual controller |
| Sinoway Shipping Ltd. ("Sinoway") | Controlled by the same ultimate actual controller |
| China Merchants Heavy Industry Shenzhen Co., Ltd. ("CMHI") | Controlled by the same ultimate actual controller |
| Sinotrans Shenzhen Customs Broker Co., Ltd. ("Sinotrans Customs Broker") | Controlled by the same ultimate actual controller |
| Sinotrans Shenzhen Logistics Co., Ltd. ("Sinotrans Logistics") | Controlled by the same ultimate actual controller |
| China Merchants Group Finance Company Limited ("CMFC") | Controlled by the same ultimate actual controller |
| Changjiang Shipping Science Research Institute Co., Ltd. ("Changjiang Shipping") | Controlled by the same ultimate actual controller |
| Shenzhen Chiwan Petroleum Supply Base Co., Ltd. ("Chiwan Base ") (note) | Shared common key management personnel with its parent company |
| Zengcheng Xinkang Property Co., Ltd. ("Zengcheng Xinkang")(note) | Shared common key management personnel with its parent company |
| Shenzhen Baowan International logistics Co., Ltd. ("Baowan Logistics")(note) | Shared common key management personnel with its parent company |
| Shenzhen Chiwan Property Management Co., Ltd. ("Chiwan Property")(note) | Shared common key management personnel with its parent company |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 102 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company - continued
| Name of other related parties | Relationships between other related parties and the Company |
| Shenzhen Xuqin Industrial Development Co., Ltd. ("Xuqin")(note) | Shared common key management personnel with its parent company |
| China Development Financial Co., Ltd. ("CDFC")(note) | Shared common key management personnel with its parent company |
| Shenzhen Chiwan Oriental Logistics Co., Ltd. ("Chiwan Oriental Logistics")(note) | Shared common key management personnel with its parent company |
| COFCO-CMG (Shenzhen) Grains E-Trading Center Co., Ltd. ("COFCO-CMG")(note) | Influenced significantly by the ultimate actual controller |
| Nanshan Group(note) | Shared common key management personnel |
| Shenzhen Mawan Terminals Co., Ltd.("Shenzhen Mawan Terminals") (Note) | Controlled by the same ultimate actual controller |
| Shenzhen Mawan Port Co, Ltd. ("Shenzhen Mawan Port") (Note) | Controlled by the same ultimate actual controller |
| Shenzhen Mawan Wharf Co., Ltd. ("Shenzhen Mawan Wharf")(Note) | Controlled by the same ultimate actual controller |
| China Merchant Bank Co., Ltd. ("CMB") | Influenced significantly by the ultimate actual controller |
| HK International | Minority shareholder of the subsidiary |
| Hidoney | Minority shareholder of the subsidiary |
| Yihai Kerry | Minority shareholder of the subsidiary |
| Shenzhen Qianhai Bay Warehousing Service Co., Ltd. ("Qianhai Bay Warehousing") | Subsidiary of the associate |
Note: As at 8 June 2018, Nanshan Group completed the registration procedure for its transfer of
the Company's shares, but shared the common key management personnel who isZhangjianguo, thus Nanshan Group and its subsidiary companies are still recognized asrelated parties of the Company. In addition, MPIL and its subsidiary companies areincluded in the scope of the consolidated financial statements as subsidiaries of theCompany prior to 8 June 2018, and are considered as related parties of the Company since 8June 2018.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 103 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions
(1) Provision and receipt of services
Unit: RMB
| Related parties | Content of related party transaction | Pricing and decision-making procedures of related party transactions | Closing balance | Opening balance |
| Purchase of goods and Receipt of services： | ||||
| SCT | Load and unload service | Negotiation | 2,635,056.60 | 3,626,418.05 |
| CMSA | Platform use fee | Negotiation | 1,864,647.00 | 1,976,679.00 |
| China Merchants Holdings (International) Information Technology Co., Ltd | Technical service fee | Negotiation | 1,354,548.46 | 1,576,792.47 |
| CMBL | Load and unload service | Negotiation | 1,250,128.87 | 1,109,581.53 |
| Hoi Tung (Shanghai) Co., Ltd. | Logistics service | Negotiation | 1,102,097.01 | - |
| Chiwan Property | Property management service | Negotiation | 892,090.65 | 1,022,057.59 |
| Haiqin Engineering | Engineering management | Negotiation | 649,847.89 | 1,843,555.46 |
| China Merchants Property | Property management service | Negotiation | 226,977.15 | 1,437,456.47 |
| Lianda Tug | Tugging service | Negotiation | 202,182.97 | 203,305.19 |
| Haixing | Load and unload service | Negotiation | 437,751.86 | 3,196,426.77 |
| Ocean Shipping Agency | Agency service | Negotiation | 168,390.00 | 250,650.00 |
| Xuqin | Landscape Engineering | Negotiation | 116,416.99 | 422,920.75 |
| Shenzhen Mawan Port | Load and unload service | Negotiation | 4,800.00 | - |
| Shenzhen Mawan Wharf | Load and unload service | Negotiation | 2,971.70 | - |
| Shipping Agency | Customs broker service | Negotiation | 2,250.00 | - |
| Zengcheng Xinkang | Property management service | Negotiation | - | 159,666.73 |
| Total | 10,910,157.15 | 16,825,510.01 | ||
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 104 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(1) Provision and receipt of services - continued
Unit: RMB
| Related parties | Content of related party transaction | Pricing and decision-making procedures of related party transactions | Closing balance | Opening balance |
| Rendering of services： | ||||
| Ocean Shipping Agency | Tugboat service etc. | Negotiation | 10,798,733.35 | 7,224,052.83 |
| SCT | Load and unload service etc. | Negotiation | 6,485,623.04 | 12,657,355.91 |
| Shenzhen Mawan Terminals | Trailer service etc. | Negotiation | 2,106,107.26 | - |
| CMSA | Tugboat service etc. | Negotiation | 1,651,640.10 | 1,697,221.51 |
| Shipping Agency | Tugboat service etc. | Negotiation | 1,242,808.91 | 1,540,547.29 |
| Youlian Shipyard | Tugboat service | Negotiation | 842,098.87 | 228,868.87 |
| International Ocean Shipping | Berthing services etc. | Negotiation | 614,411.35 | 455,734.78 |
| Shenzhen Mawan Port | Tugboat service etc. | Negotiation | 543,220.69 | - |
| Haixing | Load and unload service | Negotiation | 405,618.87 | 523,627.15 |
| Lianda Tug | Tugboat service | Negotiation | 398,656.67 | 280,898.54 |
| COHA (Laizhou) | Labor dispatch | Negotiation | 167,696.72 | - |
| Sinoway | Load and unload service | Negotiation | 94,449.53 | 35,252.88 |
| China Marine Shipping Agency, Guangdong Co., Ltd. | Load and unload service | Negotiation | 66,983.02 | 3,354.48 |
| Sinotrans Container Liners Co., Ltd. | Others | Negotiation | 61,141.51 | - |
| CMHI | Tugboat service | Negotiation | 41,037.74 | 16,796.23 |
| Shenzhen South China Liquefied Gas Marine Co., Ltd. | Tugboat service | Negotiation | 38,207.55 | - |
| Sinotrans Shenzhen Logistics Co., Ltd. | Others | Negotiation | 34,773.59 | 10,787.74 |
| Hunan Xianing Inland Port Co., Ltd. | Interest income | Negotiation | 10,208.34 | 12,250.00 |
| Sinotrans Modern Logistics Co., Ltd. | Others | Negotiation | 6,603.77 | - |
| Qianhai Bay Warehousing | Port administration | Negotiation | 1,028.29 | - |
| COFCO-CMG (Shenzhen) Grains E-Trading Center Co., Ltd. | Load and unload service | Negotiation | - | 627,197.62 |
| Sinotrans Shenzhen Customs Broker Co., Ltd. | Others | Negotiation | - | 7,287.74 |
| Zengcheng Xinkang | Others | Negotiation | - | 1,820.31 |
| Total | 25,611,049.17 | 25,323,053.88 | ||
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 105 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(2) Leases with related parties
The Group as the lessor:
Unit: RMB
| Name of lessee | Type of leased assets | Pricing and decision-making procedures of related party transactions | Lease income recognized in the current period | Lease income recognized in the prior period (restated) |
| CMBL | Crane | Negotiation | 1,028,180.43 | 932,038.83 |
| International Ocean Shipping | Office | Negotiation | 30,285.72 | - |
| Total | 1,058,466.15 | 932,038.83 |
The Group as the lessee:
Unit: RMB
| Name of lessor | Type of leased assets | Pricing and decision-making procedures of related party transactions | Lease payment recognized in the current period | Lease payment recognized in the prior period (restated) |
| Nanshan Group | Land, Office and packing yard | Negotiation | 29,407,300.56 | 35,087,942.41 |
| Malai Warehouse | Office | Negotiation | 6,556,000.55 | 6,363,045.53 |
| CMPS | Former Bay port lands | Negotiation | 4,107,365.30 | 2,142,561.21 |
| Chiwan Base | Office | Negotiation | 1,584,610.03 | 772,310.94 |
| CMBL | Packing yard | Negotiation | 1,105,291.53 | - |
| China Merchants Shangzhi | Building | Negotiation | 475,398.88 | 725,718.42 |
| Haixing | Warehouse | Negotiation | 238,095.25 | - |
| Qianhai Property | Staff dormitory | Negotiation | 140,142.26 | - |
| SCT | Crane | Negotiation | 41,616.00 | - |
| Baowan Logistics | Building | Negotiation | 36,042.34 | 54,182.99 |
| Total | 43,691,862.70 | 45,145,761.50 |
(4) Compensation for key management personnel
Unit: RMB
| Item | Closing balance | Opening balance |
| Compensation for key management personnel | 9,424,126.88 | 7,687,958.70 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 106 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties
Unit: RMB
| Item | Related parties | Closing balance | Opening balance |
| Cash and bank balances | CMB | 343,822,560.05 | 167,483,337.47 |
| CMFC | 573,885.94 | 150,359,313.40 | |
| CDFC | - | 1,192,728.52 | |
| Total | 344,396,445.99 | 319,035,379.39 | |
| Accounts receivable | Ocean Shipping Agency | 4,479,840.00 | 3,361,117.20 |
| Shenzhen Mawan Terminals | 2,212,479.29 | - | |
| Shenzhen Mawan Port | 586,166.42 | - | |
| SCT | 545,615.00 | 1,062,978.75 | |
| CMSA | 426,034.00 | 437,479.20 | |
| Shipping agency | 253,025.00 | 474,274.00 | |
| Sinoway | 42,727.75 | 90,067.75 | |
| CMBL | 16,262.50 | 8,242.50 | |
| Sinotrans Modern Logistics Co., Ltd. | 7,000.00 | - | |
| Qianhai Bay Warehousing | 280.00 | 445.00 | |
| International Ocean Shipping | - | 13,642.00 | |
| Haixing | - | 978,150.00 | |
| Total | 8,569,429.96 | 6,426,396.40 | |
| Interest receivable | Hunan Xianing Inland Port Co., Ltd. | - | 153,625.26 |
| Other receivables | CMBL | 4,747,624.49 | 7,171,552.07 |
| Qianhai Property | 1,088,414.30 | 707,092.00 | |
| China Merchants Shangzhi | 375,346.11 | 459,776.40 | |
| Shantou Port | 69,594.33 | 17,333.33 | |
| Malai Warehouse | 20,052.00 | 74,331.70 | |
| Nanshan Group | 1,096,590.39 | 1,124,300.09 | |
| SCT | - | 780,160.16 | |
| Xuqin | 3,000.00 | 638,268.65 | |
| Hunan Xianing Inland Port Co., Ltd. | - | 500,000.00 | |
| Chiwan Base | 135,624.91 | 280,049.31 | |
| CICT | - | 266,888.68 | |
| Qianhai Bay Warehousing | - | 2,848.00 | |
| Total | 7,536,243.53 | 12,022,600.39 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 107 -
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
Unit: RMB
| Item | Related parties | Closing balance | Opening balance |
| Accounts payable | CMPS | 1,311,295.40 | - |
| SCT | 862,445.00 | 291,710.00 | |
| CMSA | 751,036.71 | 727,528.71 | |
| Hoi Tung Shanghai | 445,633.00 | - | |
| Haixing | 267,332.00 | 406,723.76 | |
| CMBL | 195,883.17 | - | |
| Shenzhen Mawan Port | 11,702.40 | - | |
| Nanshan Group | 15,398,431.16 | 16,968,830.09 | |
| Xuqin | 414,404.35 | 513,673.35 | |
| Chiwan Base | 836,400.00 | 139,400.00 | |
| Hoi Tung Shanghai | - | 111,383.00 | |
| CMPH | - | 99,675.65 | |
| Haiqin Engineering | - | 9,589.08 | |
| China Merchants Holdings (International) Information Technology Co., Ltd. | - | 9,000.00 | |
| Total | 20,494,563.19 | 19,277,513.64 | |
| Interest payable | CMFC | 477,630.00 | - |
| Receipts in advance | Sinotrans Customs Broker | 139,174.00 | - |
| Sinotrans Logistics | 149.00 | 224.00 | |
| CMBL | - | 60,000.00 | |
| Total | 139,323.00 | 60,224.00 | |
| Dividends payable | Yihai Kerry | 37,402,426.09 | 37,402,426.09 |
| International Enterprise Co., Ltd. | 128,552,676.45 | 128,552,676.45 | |
| Hidoney | - | 97,429,396.88 | |
| Total | 165,955,102.54 | 263,384,499.42 | |
| Other payables | CMBL | 1,325,136.61 | 3,072,676.67 |
| China Merchants Holdings (International) Information Technology Co., Ltd | 760,400.03 | 426,850.00 | |
| China Merchants Property | 707,112.00 | 909,600.00 | |
| China Merchants Shangzhi | 565,090.53 | 1,410,393.60 | |
| Haiqin Engineering | 177,725.92 | 69,182.10 | |
| China Marine Shipping Agency, Guangdong Co., Ltd. | 10,000.00 | - | |
| International Ocean Shipping | 10,000.00 | 10,000.00 | |
| CMG | 8,570.12 | 8,570.12 | |
| SCT | 6,936.00 | 252,753.69 | |
| Qianhai Property | 4,242.18 | - | |
| Xuqin | 54,298.55 | 735,859.33 | |
| CMPH | - | 545,675.52 | |
| Changjiang Shipping | - | 250,000.00 | |
| Nanshan Group | 435,488.63 | 91,932.50 | |
| Chiwan Property | 209,792.42 | 28,848.52 | |
| Chiwan Base | 139,354.40 | ||
| Total | 4,414,147.39 | 7,812,342.05 | |
| Long-term payables | CMCI | - | 25,000,000.00 |
Note: Details are set out in Note (X) 4.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 108 -
(XI) COMMITMENTS AND CONTINGENCIES
1. Significant commitments
(1) Capital commitments
Unit: RMB
| Item | Closing balance | Opening balance |
| Capital commitments that have been entered into but have not been recognized in the financial statements: | ||
| -Commitment to acquisition of long-term assets | 24,007,014.03 | 30,484,737.52 |
| Total | 24,007,014.03 | 30,484,737.52 |
(2) Operating lease commitments
As of the balance sheet date, the Group had the following commitments in respect of non-cancellable operating leases:
Unit: RMB
| Item | Closing balance | Opening balance |
| Minimum lease payments under non-cancellable operating leases: | ||
| 1st year subsequent to the balance sheet date | 69,474,611.73 | 65,794,063.84 |
| 2nd year subsequent to the balance sheet date | 5,408,669.85 | 20,203,938.24 |
| 3rd year subsequent to the balance sheet date | 2,951,656.65 | 4,971,789.36 |
| More than 3 years | 175,795.35 | 186,894.24 |
| Total | 78,010,733.58 | 91,156,685.68 |
2. Contingencies
No material contingencies that should be disclosed by the Group.
(XII) EVENTS AFTER THE BALANCE SHEET
1. Events related to purchasing assets and raising matching funds by issuance of shares
26 July 2018, the proposals related to purchasing assets and raising matching funds by issuance ofshares and related parties transactions were discussed and passed in the second extraodinarygeneral meeting of shareholders for 2018. The main content is as follows: (1) the Companyproposed to acquire 1,313,541,560 shares of ordinary share of CMPH (accounting for 39.61% ofits issued ordinary share) held by China Merchants Investment Development Company Limited("CMID") by issuing A Share; (2) China Merchants Holdings (Hong Kong) Company Limited("CMHK") and the Company enter into an Agreement on Concerted Action, agreeing thatsubsequent to the completion of purchase of assets by issuance of shares, CMHK's exercise ofvoting power via entrustment of 753,793,751 shares of ordinary share of CMPH (accounting foraround 22.67% of CM Port's issued ordinary shares) shall be in agreement with the Company'svoting on events for review and discussion in the general meeting of shareholders of CMPHunconditionally, and the voting is subject to the opinion of Shenzhen Chiwan; (3) the Companyproposed to issue A Share to no more than 10 specific investors to raise matching funds byinquiring prices. The aggregate amount of matching funds shall not exceed RMB 400,000.00,with no more than 128,952,746 to be issued.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 109 -
(XII) EVENTS AFTER THE BALANCE SHEET - continued
The Agreement on Concerted Action would not go into effect and raising matching funds wouldnot be performed without purchasing assets by issuance of shares. But success of raising matchingfunds is not precondition of purchasing assets by issuance of shares nor the effectiveness of TheAgreement on Concerted Action. The success or failure of raising matching funds has no impacton purchasing assets by issuance of shares and effectiveness or performance of The Agreement onConcerted Action.
2. Capital increase to Zhoushan RoRo
On 29 August 2018, Zhoushan RoRo changed its name to ―CMPort (Zhoushan) RoRo LogistcisCo., Ltd.‖ and completed the formalities for the change of its directors, supervisors and senior
executives with the industrial and commercial administration. As such, Zhoushan RoRo hasofficially become a controlled subsidiary of the Company. From that day on, CMPort (Zhoushan)
RoRo Logistcis Co., Ltd. is included in the Company’s consolidated financial statements.
(XIII) OTHER SIGNIFICANT EVENTS
1. Annuity plan
On 3 June 2008, the Group participated in the enterprise annuity plan of Nanshan Group approvedby Shenzhen government. Funds involved were deposited in the managed account coordinated byNanshan Group. Staffs would be qualified to participant the annuity plan if the followingrequirements are met:
(i) Staff with labor contracts signed. (ii) Staff with basic pension participated in. (iii) On-the-joband in-service staff with probation expired. (iv)Voluntarily participated in the plan and performthe obligation of payment. The Group and staffs share the payment of the supplementary pension.Excess payment would not be allowed so as to keep the payment made by the Group and totalpayment made by the Group and the individual under the limit of one-twelfth and the one-sixth ofthe prior year's gross payroll respectively.
2. Significant acquisition
The first extraodinary session of the ninth Board of Directors on 11 September 2017 approvedThe acquisition proposal of 51% shares of Zhongshan Ganghang Enterprise Group Co., Ltd. TheCompany agreed to acquire 51% shares of Zhongshan Ganghang Enterprise Group Co., Ltd withRMB 484,500,000.00. The investment agreement has not been signed up to 30 June 2018.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 110 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
3. Segment reporting
(1) Basis for determining and accounting treatments of reporting segments
Subject to the Group's in-house infrastructure, management requirements and internal reportingsystem, the operation businesses of the Group are classified into four business segments. TheGroup's management periodically evaluates the operating results of these segments to makedecisions about resources to be allocated to the segments and assess their performance. On thebasis of such business segments, the Group determined three reporting segments including loadand unload services, trailer and tugboat business, agency services and other segments, which areclassified based on the nature of business. Major products and services delivered or provided byeach of the reporting segments are load and unload services, trailer and tugboat business, agencyservices and other segments.
Segment information is disclosed in accordance with the accounting policies and measurementstandards adopted by each segment when reporting to management. The measurement basis isconsistent with the accounting and measurement basis in the preparation of the financialstatements.
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 111 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
3. Segment reporting - continued
(2) Segment financial information
Unit: RMB
| Load and unload services | Trailer and tugboat business | Agency and other services | Unappropriated items | Inter-segment deduction | Total | |||||||
| Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | |
| Operating income | - | - | - | - | - | - | - | - | - | - | - | - |
| Revenue arising from external transactions | 1,177,348,851.72 | 1,112,426,893.42 | 55,275,519.87 | 49,878,666.71 | 13,511,144.75 | 14,345,457.86 | - | - | - | - | 1,246,135,516.34 | 1,176,651,017.99 |
| Revenue arising from inter-segment transactions | 16,000.02 | - | 46,168,511.73 | 33,158,187.84 | 56,700.00 | - | - | - | (46,241,211.75) | (33,158,187.84) | - | - |
| Total segment operating income | 1,177,364,851.74 | 1,112,426,893.42 | 101,444,031.60 | 83,036,854.55 | 13,567,844.75 | 14,345,457.86 | - | - | (46,241,211.75) | (33,158,187.84) | 1,246,135,516.34 | 1,176,651,017.99 |
| Reconciling items: | ||||||||||||
| Operating Income in the financial statements | 1,246,135,516.34 | 1,176,651,017.99 | ||||||||||
| Operating cost | 632,910,552.39 | 643,982,482.12 | 72,581,612.26 | 61,369,223.59 | 9,872,915.06 | 10,551,079.86 | - | - | (46,225,211.73) | (33,158,187.84) | 669,139,867.98 | 682,744,597.73 |
| Segment operating profits | 544,454,299.35 | 468,444,411.30 | 28,862,419.34 | 21,667,630.96 | 3,694,929.69 | 3,794,378.00 | - | - | (16,000.02) | - | 576,995,648.36 | 493,906,420.26 |
| Reconciling items: | ||||||||||||
| Business taxes and levies | 6,099,891.64 | 5,538,555.52 | 76,166.38 | 108,304.02 | 4,934.31 | 9,377.58 | - | - | - | 720,507.38 | 6,180,992.33 | 6,376,744.50 |
| Administrative expenses | 76,940,865.83 | 57,716,135.62 | 6,707,646.04 | 5,921,650.84 | 2,628,805.64 | 2,375,212.07 | 1,375,191.26 | 11,895,037.75 | (16,000.02) | - | 87,636,508.75 | 77,908,036.28 |
| Financial expenses | 19,767,606.32 | 15,926,515.86 | (771,164.41) | (762,020.47) | (106,478.82) | 198,656.84 | (1,020,860.21) | (2,088,377.10) | - | - | 17,869,102.88 | 13,274,775.13 |
| Impairment losses of assets | 360,407.86 | (1,877,571.78) | - | (197,700.00) | - | - | - | - | - | - | 360,407.86 | (2,075,271.78) |
| Investment Income | (245,876.96) | (23,324.88) | - | - | - | - | 80,372,242.68 | 69,509,957.45 | (26,656,528.58) | (23,193,786.97) | 53,469,837.14 | 46,292,845.60 |
| Gains on disposal of assets | 19,445.08 | 293,053.57 | - | - | 257.30 | - | - | - | - | - | 19,702.38 | 293,053.57 |
| Other income | 718,801.14 | - | 250,439.61 | - | - | - | - | - | - | - | 969,240.75 | - |
| Operating profit | 441,777,896.96 | 391,410,504.77 | 23,100,210.94 | 16,597,396.57 | 1,167,925.86 | 1,211,131.51 | 80,017,911.63 | 59,703,296.80 | (26,656,528.58) | (23,914,294.35) | 519,407,416.81 | 445,008,035.30 |
| Non-operating income | 2,902,652.25 | 2,215,207.16 | - | 111,358.31 | - | - | - | - | - | - | 2,902,652.25 | 2,326,565.47 |
| Non-operating expenses | 996,956.81 | 285,372.77 | 2,452,969.88 | 518,267.96 | - | - | - | - | - | - | 3,449,926.69 | 803,640.73 |
| Gross profit | 443,683,592.40 | 393,340,339.16 | 20,647,241.06 | 16,190,486.92 | 1,167,925.86 | 1,211,131.51 | 80,017,911.63 | 59,703,296.80 | (26,656,528.58) | (23,914,294.35) | 518,860,142.37 | 446,530,960.04 |
| Income tax expenses | 80,411,213.08 | 67,512,961.06 | 5,775,110.53 | 4,047,621.74 | 45,627.74 | 63,069.75 | (10,747,279.62) | 1,236,486.89 | - | - | 75,484,671.73 | 72,860,139.44 |
| Net profit | 363,272,379.32 | 325,827,378.10 | 14,872,130.53 | 12,142,865.18 | 1,122,298.12 | 1,148,061.76 | 90,765,191.25 | 58,466,809.91 | (26,656,528.58) | (23,914,294.35) | 443,375,470.64 | 373,670,820.60 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 112 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
3. Segment reporting - continued
(2) Segment financial information - continued
Unit: RMB
| Load and unload services | Trailer and tugboat business | Agency and other services | Unappropriated items | Inter-segment deduction | Total | |||||||
| Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | Closing balance | Opening balance | |
| Total segment assets | 8,375,089,616.74 | 9,456,922,743.07 | 224,644,743.98 | 214,437,576.01 | 25,811,105.67 | 23,106,697.18 | 1,782,061,717.39 | 1,902,062,576.76 | (3,379,021,049.92) | (3,650,854,683.15) | 7,028,586,133.86 | 7,945,674,909.87 |
| Total assets in the financial statements | 8,375,089,616.74 | 9,456,922,743.07 | 224,644,743.98 | 214,437,576.01 | 25,811,105.67 | 23,106,697.18 | 1,782,061,717.39 | 1,902,062,576.76 | (3,379,021,049.92) | (3,650,854,683.15) | 7,028,586,133.86 | 7,945,674,909.87 |
| Total segment liabilities | 3,399,354,178.13 | 2,629,864,780.38 | 124,778,401.72 | 117,431,814.55 | 13,504,438.44 | 12,669,458.57 | 17,525,559.98 | 13,157,616.00 | (1,823,621,593.50) | (1,337,347,193.03) | 1,731,540,984.77 | 1,435,776,476.47 |
| Total liabilities in the financial statements | 3,399,354,178.13 | 2,629,864,780.38 | 124,778,401.72 | 117,431,814.55 | 13,504,438.44 | 12,669,458.57 | 17,525,559.98 | 13,157,616.00 | (1,823,621,593.50) | (1,337,347,193.03) | 1,731,540,984.77 | 1,435,776,476.47 |
| Supplementary information | ||||||||||||
| Depreciation | 130,917,951.86 | 130,141,238.43 | 6,032,217.54 | 5,709,761.90 | 6,668.82 | 14,868.76 | - | - | ? | ? | 136,956,838.22 | 135,865,869.09 |
| Amortization | 25,262,343.20 | 26,354,570.06 | - | - | ? | ? | - | - | ? | ? | 25,262,343.20 | 26,354,570.06 |
| Interest income | (21,439,281.37) | (18,935,134.52) | (772,040.01) | (762,901.07) | (9,393.39) | (6,467.63) | - | (110,320.50) | 16,670,809.62 | 14,924,056.14 | (5,549,905.15) | (4,890,767.58) |
| Interest expense | 27,520,032.58 | 26,733,360.56 | - | - | ? | ? | - | - | (16,670,809.62) | (14,924,056.14) | 10,849,222.96 | 11,809,304.42 |
| Investment income from long-term equity investment under equity method | - | - | - | - | - | - | 45,680,862.14 | 36,875,845.60 | ? | ? | 45,680,862.14 | 36,875,845.60 |
| Long-term equity investment under equity method | - | - | - | - | ? | - | 1,561,072,828.11 | 1,134,591,093.41 | ? | ? | ???????????????? | ???????????????? |
| Non-current assets other than long-term equity investment | 4,530,269,329.00 | 5,538,482,819.28 | 106,308,261.99 | 117,493,640.22 | 37,396.16 | 84,470.81 | 153,386,000.40 | 154,378,000.40 | (158,565,045.18) | (159,384,011.80) | 4,631,435,942.37 | 5,651,054,918.91 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 113 -
(XIII) OTHER SIGNIFICANT EVENTS - continued
3. Segment reporting - continued
(3) Segment revenue from external transactions by source and non-current assets by geographical
location
Unit: RMB
| Item | Closing balance | Opening balance |
| Revenue from external transactions with domestic customers | 1,234,732,332.50 | 1,164,523,661.41 |
| Revenue from external transactions with Hong Kong | 11,403,183.84 | 12,127,356.58 |
| Total | 1,246,135,516.34 | 1,176,651,017.99 |
Unit: RMB
| Item | Closing balance | Opening balance |
| Non-current assets sourced from Mainland of PRC | 4,387,973,511.00 | 5,630,189,733.15 |
| Non-current assets sourced from Hong Kong | 75.48 | 1,336.50 |
| Total | 4,474,219,033.48 | 5,630,191,069.65 |
(4) Degree of reliance on major customers
The total operating income derived from the top five clients of the Group is RMB449,200,611.10,occupying 36.05% of the Group's totalo perating income.
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS
1.Accounts receivable
(1) Disclosure of accounts receivable by categories
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carryingamount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | |||||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | |||
| Accounts receivable that are individually significant and for which bad debt provision has been assessed individually | - | - | - | - | - | - | - | - | - | - |
| Accounts receivable for which bad debt provision has been assessed by credit risk port folios | ||||||||||
| Portfolio1 | 3,493,060.71 | 14.92 | - | - | 3,493,060.71 | 3,172,906.66 | 24.43 | - | - | 3,172,906.66 |
| Portfolio2 | 19,925,265.42 | 85.08 | - | - | 19,925,265.42 | 9,814,488.18 | 75.57 | - | - | 9,814,488.18 |
| Subtotal of portfolios | 23,418,326.13 | 100.00 | - | - | 23,418,326.13 | 12,987,394.84 | 100.00 | - | - | 12,987,394.84 |
| Accounts receivable that are not individually significant but for which bad debt provision has been assessed individually | - | - | - | - | - | - | - | - | - | - |
| Total | 23,418,326.13 | 100.00 | - | - | 23,418,326.13 | 12,987,394.84 | 100.00 | - | - | 12,987,394.84 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 114 -
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Accounts receivable - continued
(1) Disclosure of accounts receivable by categories - continued
Accounts receivable portfolios for which bad debt provision has been assessed using the aginganalysis approach:
Unit: RMB
| Aging | Closing balance | Opening balance | ||||||
| Carrying amount | Bad debt provision | Proportion (%) | Book value | Carrying amount | Bad debt provision | Proportion (%) | Book value | |
| Within1year | 19,925,265.42 | - | - | 19,925,265.42 | 9,814,488.18 | - | - | 9,814,488.18 |
(2) Top five balances of accounts receivable classified by debtor
Unit: RMB
| Name of customer | Relationship with the Company | Closing balance | Proportion of the amount to the total accountsreceivable (%) | Closing balance of provision |
| Customer F | Third party with transactions | 8,434,034.37 | 36.01 | - |
| Customer G | Third party with transactions | 3,125,616.85 | 13.35 | - |
| Customer H | Third party with transactions | 2,850,327.01 | 12.17 | - |
| Customer I | Third party with transactions | 1,437,753.68 | 6.14 | - |
| Customer J | Third party with transactions | 1,290,839.25 | 5.51 | - |
| Total | 17,138,571.16 | 73.18 | - |
2. Other receivables
(1) Disclosure of other receivables by categories
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying amount | Baddebtprovision | Book value | Carrying amount | Bad debt provision | Book value | |||||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | |||
| Other receivables that are individually significant and for which bad debt provision has been assessed individually | - | - | - | - | - | - | - | - | - | - |
| Other receivables for which bad debt provision has been assessed by credit risk portfolios | ||||||||||
| Portfolio 1 | 412,025,217.06 | 99.59 | - | - | 412,025,217.06 | 582,640,769.47 | 99.86 | - | - | 582,640,769.47 |
| Portfolio 2 | 1,709,870.35 | 0.41 | 383,456.60 | 22.43 | 1,326,413.75 | 833,646.82 | 0.14 | 383,456.60 | 46.00 | 450,190.22 |
| Subtotal of portfolios | 413,735,087.41 | 100.00 | 383,456.60 | 0.09 | 413,351,630.81 | 583,474,416.29 | 100.00 | 383,456.60 | 0.07 | 583,090,959.69 |
| Other receivables that are not individually significant but for which bad debt provision has been assessed individually | - | - | - | - | - | - | - | - | - | - |
| Total | 413,735,087.41 | 100.00 | 383,456.60 | 0.09 | 413,351,630.81 | 583,474,416.29 | 100.00 | 383,456.60 | 0.07 | 583,090,959.69 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
2. Other receivables - continued
(1) Disclosure of other receivables by categories: - continued
Other receivables portfolios for which bad debt provision has been assessed using the aginganalysis
Unit: RMB
| Aging | Closingbalance | Opening balance | ||||||
| Carrying amount | Bad debt provision | Proportion (%) | Book value | Carrying amount | Bad debt provision | Proportion (%) | Book value | |
| Within 1 year | 1,326,413.75 | - | - | 1,326,413.75 | 450,190.22 | - | - | 450,190.22 |
| More than 1 year but not exceeding 2 years | - | - | - | - | - | - | - | - |
| More than 2 years but not exceeding 3 years | - | - | - | - | - | - | - | - |
| More than 3 years | 383,456.60 | 383,456.60 | 100.00 | - | 383,456.60 | 383,456.60 | 100.00 | - |
| Total | 1,709,870.35 | 383,456.60 | 22.43 | 1,326,413.75 | 833,646.82 | 383,456.60 | 46.00 | 450,190.22 |
(2) Disclosure of other receivables by nature
Unit: RMB
| Item | Closing balance | Opening balance |
| Temporarypayments | 668,146.66 | 4,360,323.59 |
| Deposits | 68,570.00 | 1,590,884.41 |
| Others | 412,998,370.75 | 577,523,208.29 |
| Including: amounts due from subsidiaries | 410,546,889.69 | 577,067,880.47 |
| Total | 413,735,087.41 | 583,474,416.29 |
(3) Top five balances of other receivables classified by debtor
Unit: RMB
| Name of entity | Nature of the fund | Amount | Aging | Proportion of the amount to the total accounts receivable(%) | Closing balance of bad debt provision |
| DGT | Loan to subsidiaries | 215,500,000.00 | Within 1 year | 52.08 | - |
| DGW | Loan to subsidiaries | 191,013,229.40 | Within 1 year | 46.17 | - |
| Chiwan Wharf Holdings (Hong Kong) Limited | Temporary payment due from subsidiaries | 2,922,707.07 | More than 3 years | 0.71 | - |
| Nanshan Group | Deposits | 1,022,760.39 | More than 3 years | 0.25 | - |
| CCT | Temporary payment due from subsidiaries | 656,104.70 | Within 1 year | 0.16 | - |
| Total | 411,114,801.56 | 99.37 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS - continued
3. Long-terme quity investments
Unit: RMB
| Investees | Opening balance | Changes | Closing balance | Closing balance of provision for impairment | |||||||
| Increase | Decrease | Investment income under equity method | Reconciling items from other comprehensive income | Other equity movements | Cash dividends or profits announced of issuance | Provision for impairment | Others | ||||
| I. Subsidiaries | |||||||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd | 5,500,000.00 | - | - | N/A | N/A | N/A | N/A | - | - | 5,500,000.00 | - |
| CHCC | 250,920,000.00 | - | - | N/A | N/A | N/A | N/A | - | - | 250,920,000.00 | - |
| Shenzhen Chiwan Transportation Co.,Ltd | 7,000,000.00 | - | - | N/A | N/A | N/A | N/A | - | - | 7,000,000.00 | - |
| Chiwan Wharf Holdings (Hong Kong) Limited | 1,070,000.00 | - | - | N/A | N/A | N/A | N/A | - | - | 1,070,000.00 | - |
| Shenzhen Chiwan Tugboat Co.,Ltd | 24,000,000.00 | - | - | N/A | N/A | N/A | N/A | - | - | 24,000,000.00 | - |
| CCT | 421,023,199.85 | - | - | N/A | N/A | N/A | N/A | - | - | 421,023,199.85 | - |
| DGW | 186,525,000.00 | - | - | N/A | N/A | N/A | N/A | - | - | 186,525,000.00 | - |
| DGT | 175,000,000.00 | - | - | N/A | N/A | N/A | N/A | - | - | 175,000,000.00 | - |
| Chiwan Shipping (Hong Kong) Limited | 1,051,789.43 | - | - | N/A | N/A | N/A | N/A | - | - | 1,051,789.43 | - |
| Subtotal | 1,072,089,989.28 | - | - | - | - | 1,072,089,989.28 | - | ||||
| II. Associates | - | ||||||||||
| China Merchants Holdings (International) Information Technology Co., Ltd | 16,875,997.65 | - | - | 1,563,300.00 | - | - | - | - | - | 18,439,297.65 | - |
| CMBL | 343,318,551.85 | - | - | 9,848,000.00 | - | - | - | - | - | 353,166,551.85 | - |
| Subtotal | 360,194,549.50 | - | - | 11,411,300.00 | - | - | - | - | - | 371,605,849.50 | - |
| III. Jointventures | - | ||||||||||
| COHA (Laizhou) | 783,668,303.84 | - | - | 26,216,000.00 | - | - | 38,562,004.82 | - | - | 771,322,299.02 | - |
| Total | 2,215,952,842.62 | - | - | 37,627,300.00 | - | - | 38,562,004.82 | - | - | 2,215,018,137.80 | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
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(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
4. Operating income and operating costs
Unit: RMB
| Item | Accumulated amount for the period | Accumulated amounts for the prior period | ||
| Income | Cost | Income | Cost | |
| Principal operating | 106,838,899.78 | 66,399,384.51 | 103,342,484.62 | 61,542,231.02 |
| Other operating | 12,584,077.69 | 504,701.81 | 16,693,852.72 | 451,533.62 |
| Total | 119,422,977.47 | 66,904,086.32 | 120,036,337.34 | 61,993,764.64 |
5. Investment income
Details of investment income
Unit:RMB
| Item | Accumulated amount for the period | Accumulated amounts for the prior period |
| Income from long-term equity investments under cost method | 37,627,300.00 | 34,161,170.47 |
| Income from long-term equity investments under equity method | 7,788,975.00 | - |
| Investment income on available-for-sale financial assets, etc. | - | 9,417,000.00 |
| Total | 45,416,275.00 | 43,578,170.47 |
6. Related party transactions
(1) Provision and receipt of services
Unit:RMB
| Content of related party transaction | Pricing and decision-making procedures of related party transactions | Accumulated amount for the period | Accumulated amounts for the prior period | |
| Receipt of services: | ||||
| Chiwan Property | Property management service | Negotiation | 134,295.36 | 175,675.19 |
| Chiwan Property | Property management service | Negotiation | 116,416.99 | 416,694.34 |
| Haiqin Engineering | Construction management service | Negotiation | 92,371.53 | 145,848.28 |
| China Merchants Holdings (International) Information Technology Co., Ltd | Technical service fee | Negotiation | 30,188.70 | 63,584.93 |
| Chiwan Shipping (Hong Kong) Limited | Agency service | Negotiation | - | 461,799.81 |
| Haixing | Load and unload service | Negotiation | - | 47,518.00 |
| Shenzhen Chiwan International Freight Agency Co., Ltd | Agency service | Negotiation | - | 13,007.98 |
| Shenzhen Chiwan Tugboat Co., Ltd | Transportation services | Negotiation | - | 12,166.04 |
| Total | 373,272.58 | 1,336,294.57 | ||
| Rendering of services: | ||||
| DGW | Labor dispatch | Negotiation | 4,659,859.61 | 5,189,549.19 |
| DGT | Labor dispatch | Negotiation | 3,792,108.97 | 3,953,940.28 |
| COHA (Laizhou) | Labor dispatch | Negotiation | 167,696.72 | - |
| COFCO-CMG | Load and unload service | Negotiation | - | 627,197.62 |
| CMSA | Port administration | Negotiation | - | 24,659.43 |
| Total | 8,619,665.30 | 9,795,346.52 | ||
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 118 -
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
6. Related party transactions - continued
(2) Leases with related parties
The Company as the lessee:
Unit: RMB
| Name of lessor | Type of leased assets | Pricing and decision-making procedures of related party transactions | Lease payment recognized in the current period | Lease payment recognized in the previous year |
| Nanshan Group | Land,Officeandpackingyard | Negotiation | 3,339,797.62 | 4,165,980.04 |
| Malai Warehouse | Office | Negotiation | 2,234,022.78 | 2,104,514.22 |
| Chiwan Base | Office | Negotiation | 803,444.01 | 772,310.94 |
| China Merchants Shangzhi | Office | Negotiation | 475,398.88 | - |
| Haixing | Warehouse | Negotiation | 238,095.25 | - |
| Total | ?,???,?????? | ????????????? |
7. Amounts due from/to related parties
Unit: RMB
| Item | Related parties | Closing balance | Opening balance |
| Cash and bank balances | CMFC | 155,538,598.60 | 43,322,030.86 |
| CMB | 573,885.94 | 150,359,313.40 | |
| CDFC | - | 1,192,728.52 | |
| Total | 156,112,484.54 | 194,874,072.78 | |
| Accounts receivable | DGW | 2,074,183.33 | 1,937,469.76 |
| DGT | 1,418,877.38 | 1,235,436.90 | |
| Total | 3,493,060.71 | 3,172,906.66 | |
| Other receivables | DGT | 215,500,000.00 | 259,375,000.00 |
| DGW | 191,013,229.40 | 222,692,880.47 | |
| Chiwan Wharf Holdings (Hong Kong) Limited | 2,922,707.07 | 2,886,525.88 | |
| CCT | 656,104.70 | 656,104.70 | |
| CHCC | 310,750.14 | 386,103.56 | |
| China Merchants Shangzhi | 167,700.40 | 199,779.60 | |
| Shenzhen Chiwan Tugboat Co., Ltd | 105,827.93 | - | |
| Hinwin Development Limited | 38,270.45 | 38,270.45 | |
| Shenzhen Mawan Terminals Co., Ltd. | - | 95,000,000.00 | |
| Nanshan Group | 1,022,760.39 | 1,022,760.39 | |
| Chiwan Base | 135,621.91 | 280,049.31 | |
| Chiwan Property | 150.00 | 150.00 | |
| Total | 411,873,122.39 | 582,537,624.36 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2018
- 119 -
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
7. Amounts due from/to related parties - continued
Unit: RMB
| Item | Related parties | Closing balance | Opening balance |
| Long-term receivables | Chiwan Wharf Holdings (Hong Kong) Limited | 11,004,284.75 | 11,004,284.75 |
| Accounts payable | Nanshan Group | 3,302,785.56 | 3,784,069.48 |
| Xuqin | 414,404.35 | 513,673.35 | |
| Haixing | - | 250,000.00 | |
| Total | 3,717,189.91 | 4,547,742.83 | |
| Interests payable | CHCC | 3,268,376.71 | 1,542,500.00 |
| CMFC | 2,256,345.00 | - | |
| Shenzhen Chiwan Transportation Co., Ltd | 670,853.45 | 445,086.19 | |
| Shenzhen Chiwan Tugboat Co., Ltd | 318,090.42 | 165,131.27 | |
| CCT | - | 1,855,000.00 | |
| Shenzhen Mawan Wharf Co., Ltd. | - | 323,797.50 | |
| Total | 6,513,665.58 | 4,331,514.96 | |
| Dividends payable | Chiwan Wharf Holdings (Hong Kong) Limited | 37,608,540.65 | 37,608,540.65 |
| Other payables | CHCC | 230,829,408.03 | 268,600,179.30 |
| Hinwin Development Limited | 154,000,000.00 | 154,000,000.00 | |
| Shenzhen Chiwan Transportation Co., Ltd | 39,783,255.42 | 47,236,691.69 | |
| Shenzhen Chiwan TugboatCo., Ltd | 31,565,218.79 | 37,644,370.44 | |
| DGW | 14,686,061.65 | 14,073,224.80 | |
| DGT | 8,784,893.57 | 9,951,537.15 | |
| CCT | 5,191,748.85 | 212,442,335.07 | |
| Shenzhen Chiwan International Freight AgencyCo., Ltd | 1,321,499.05 | 1,740,733.05 | |
| Chiwan Wharf Holdings (Hong Kong) Limited | 1,030,885.81 | 1,022,082.14 | |
| Haiqin Engineering | 97,913.82 | - | |
| Chiwan Shipping (Hong Kong) Limited | 82,851.10 | 538,047.40 | |
| China Merchants Holdings (International) Information TechnologyCo., Ltd | 6,400.00 | 6,400.00 | |
| ShenzhenMawanWharfCo.,Ltd. | - | 73,800,000.00 | |
| Shenzhen Mawan Terminals Co., Ltd. | - | 672,562.50 | |
| Xuqin | 44,497.40 | 210,869.00 | |
| Nanshan Group | 325,275.11 | 77,863.00 | |
| Chiwan Property | 41,702.70 | 6.40 | |
| Chiwan Base | 139,354.40 | - | |
| Total | 487,930,965.70 | 822,016,901.94 | |
| Long-term payables | Chiwan Wharf Holdings (Hong Kong) Limited | 150,386,000.00 | 150,098,000.00 |
Note: The Company collectively manages and coordinates the use of the capital within the Group.
The subsidiaries deposit their funds with the Company, and apply for fund when needed.The Company collects fund usage expenses based on the actual financing costs incurred.
SUPPLEMENTARY INFORMATIONFOR THE SIX MONTHS ENDED 30 JUNE 2018
1. BREAKDOWN OF EXTRAORDINARY GAINS AND LOSSES
Unit: RMB
| Item | Amounts | Remarks |
| Gains or losses on disposal of non-current assets | 19,702.38 | |
| 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) | 969,240.75 | |
| Money lending income earned from non-financial institutions in profit or loss | - | |
| 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 (Note) | - | |
| Gains or losses arising from contingencies other than those related to normal operating business | - | |
| Gains or losses on changes in the fair value of financial assets and financial liabilities held for trading and investment income on disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets, other than the effective hedging activities relating to normal operating business | - | |
| Reversal of provision for accounts receivable that are tested for impairment losses 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 | (547,274.44) | |
| Other profit or loss that meets the definition of non-recurring profit or loss | - | |
| Tax effects | 21,177.58 | |
| Effects of minority interest (after tax) | (1,028,463.84) | |
| Total | (565,617.57) |
SUPPLEMENTARY INFORMATIONFOR THE SIX MONTHS ENDED 30 JUNE 2018
2. RETURN ON NET ASSETS AND EARNINGS PERSHARE ("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
| Profits incurred in the current period | Weighted average return on net assets (%) | EPS | |
| Basic ESP | Diluted EPS | ||
| Net profit for the current period attributable to ordinary shareholders | 6.786 | 0.490 | 0.490 |
| Net profit attributable to ordinary shareholders after deducting extraordinary gains and losses | 6.799 | 0.491 | 0.491 |