China Merchants Port Group Co., Ltd. Annual Report 2018
CHINA MERCHANTS PORT GROUP CO., LTD.
ANNUAL REPORT 2018
Date of Disclosure: 30 March 2019
China Merchants Port Group Co., Ltd. Annual Report 2018
Chairman’s Statement
Dear shareholders,
I hereby present to you the annual report of China Merchants Port Group Co., Ltd. and itssubsidiaries (the “Company”) for the year ended 31 December 2018. On behalf of the Board, Iwould like to express my sincere gratitude to all of you for your long-term support to the Company.
On 26 December 2018, the Company completed the assets restructuring, the change ofcompany name and its listing on the SZSE. Following the change of name to “China MerchantsPort Group Co., Ltd.”, its strategic positioning underwent remarkable transformation andenhancement, and it evolved from a port operator in Chiwan Wharf, West Shenzhen Port Zone, to aglobally leading port developer, investor and operator. As a result of the restructuring, the Companybecame a crucial vehicle for CMG to implement the “Belt and Road” Initiative promoted by Chinaand the “Guangdong-Hong Kong-Macao Greater Bay Area” strategy. Serving not only as theheadquarters of CMG’s port sector, the Company is also the operating and management platformfor the port assets and tier one capital of CMG, hence playing a key role in the consolidation andsynergistic development of CMG’s port assets.
Looking ahead, the Company aims to become a world-class integrated port service provider.With a focus on core port businesses, it will take part in international port investment, developmentand operation under the development model for the port ecosystem. Meanwhile, it will continue toexpand along the value chain and establish an integrated port network service system that connectsthe world, so as to achieve scientific planning and balanced development on a global level. Byoffering top-notch and professional solutions, it will become customers’ partner of choice forcooperation, which will create greater value for the Company, enhance return for shareholders,support local economies and global trade, and contribute to the healthy development of the portindustry.Review for the year
Since 2018, the global economy has in general maintained its growth momentum but on ashaky ground. The economic and political conditions have been increasingly complicated. Tradefrictions provoked by the United States against numerous countries and regions worldwide haveimpacted corporate operating environment and financial market confidence, threatening thedevelopment of global economy and trade. In view of the macroeconomic condition with growinguncertainties over the development of global economy and trade, the Company has adhered to its
China Merchants Port Group Co., Ltd. Annual Report 2018
strategic directives, acted under the overall operation philosophy of “enhancing core capability,insisting on both quality and efficiency, capitalising on opportunities of this era and striving tobecome a global leading enterprise”, focused on the “five key priorities”, namely, homebase portdevelopment, ports consolidation, overseas expansion, integration of industry and finance andbusiness innovation, pursued various designated tasks in a comprehensive and pragmatic manner,and basically achieved its operating indicators formulated at the beginning of last year.
In 2018, the overall operating performance of the Company was satisfactory with steadygrowth of business. In terms of port operation, the port projects of the Company delivered acontainer throughput totalled 109.73 million TEUs, up 6.6% over last year. Looking into theregional performance, container throughput handled by the Group’s ports in Mainland China totaled81.39 million TEUs, up 5.5% year-on-year. Ports in Hong Kong and Taiwan handled a combinedcontainer throughput of 7.67 million TEUs, up 2.5% year-on-year, while overseas operationsdelivered a container throughput of 20.66 million TEUs, up 12.9% year-on-year. Bulk cargo volumehandled by the Group’s ports increased by 1.5% year-on-year to 540 million tonnes, among whichthe Group’s ports in Mainland China handled a total bulk cargo volume of 530 million tonnes,representing an increase of 1.6% year-on-year, while that of overseas ports decreased by 7.7% from2017 to 4.99 million tonnes. Among the major ports, SIPG handled a container throughput of 42.01million TEUs, representing a year-on-year increase of 4.4%, making it the largest port in the worldfor the ninth consecutive year. Container throughput handled in West Shenzhen Port Zone was11.35 million TEUs, up 1.5% year-on-year. In the overseas arena, Colombo International ContainerTerminals Limited (“CICT”) in Sri Lanka delivered a year-on-year growth of 12.0% by handling acontainer throughput of 2.68 million TEUs. Lomé Container Terminal S.A. (“LCT”) in Togohandled a container throughput of 1.05 million TEUs, representing a growth of 18.3% year-on-year.Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi (“Kumport”) in Turkeyhandled a container throughput of 1.26 million TEUs, representing a growth of 18.3% year-on-year.Terminal Link SAS acquired the port of Thessaloniki in Greece at the beginning of this year and ithandled a container throughput of 13.64 million TEUs in the year, up 8.6% year-on-year. FromMarch to December 2018, TCP Participa??es S.A. (“TCP”) in Brazil, the transaction of which wascompleted in February 2018, handled a container throughput of 0.69 million TEUs.
In terms of key priorities, significant progress has been made in overseas expansion. Thedelivery of overseas port projects, including TCP in Paranaguá, Brazil and Port of Newcastle inAustralia (the “Newcastle Port”), has been completed. The Djibouti International Free Trade Zonehas successfully opened and garnered positive feedbacks. The consolidation of domestic ports hasachieved remarkable breakthroughs. The Company has completed restructuring and is listed under a
China Merchants Port Group Co., Ltd. Annual Report 2018
new name. It has also been entrusted for the management of Liaoning Port Group Limited *(辽宁港口集团有限公司), which opened up for further in-depth cooperation in various aspects. TheCompany has been pursuing innovation development on multiple fronts as well. With regard tobusiness innovation, the establishment of phase II of “E-port” has been completed and thecommencement of various platforms integration and service building, such as the Electronic DataInterchange (“EDI”) platform system, call center , the big data platform and visualization platform,has enabled the full coverage of shipping companies, ship agents, customs brokers and tractordrivers. For technology innovation, the Company has been actively pushing forward projects,including RTG remote control, digitalized port construction and big data analysis for globalcontainers. These projects have further improved the technological edges of the port industry. Withrespect to the cooperation between the industrial and financial sectors, the Company planned theestablishment of the China Port Innovation Investment Fund (中国港口创新投资基金) whichaimed to coordinate with the domestic influential port groups, innovate cooperation model for theindustrial and financial sectors, and explore new technologies, models and mechanisms for the portecosystem, thereby achieving collaboration and financial resource matching between various portgroups and industries.Outlook
In 2019, CMPort will commence the journey to become a world-class enterprise from a newstarting point. The Company will firmly maintain a steady growth and at the same time achieveimprovement with the focus on the strategic principle of “leveraging on its long-term strategy,tapping the current edges, driving through technology and embracing changes”. It will strengthensynergic cooperation externally and accelerate integrated development internally, make efforts toenhance various capabilities, improve risk prevention and control, establish quality developmentmodels and stay committed to becoming a globally leading enterprise. In 2019, the Company willfocus on the following tasks:
Firstly, for the construction of homebase port, the Company will continue to strengthen itsefforts in the construction of domestic and overseas homebase ports, striving to build the WestShenzhen homebase port into a world-class leading port. Furthermore, the Company will acceleratethe enhancement of the hardware and software environment of its homebase port, plus the CMG’sinternal and external resources, to establish a comprehensive service platform for the Pearl RiverDelta, thus strengthening the construction of fully automated and intelligent port. In addition, theCompany will further promote the integration of operations with a view to improving quality andefficiency effectively and enhancing cost management. In terms of overseas homebase port, the
China Merchants Port Group Co., Ltd. Annual Report 2018
Company will leverage the synergic advantages of CICT and Hambantota port to create a leadingregional port and international shipping centre in South Asia.
Secondly, for the consolidation of domestic ports, the Company will actively incorporatenational strategies in its operation, with emphasis on opportunities brought about by the “Belt andRoad” initiative, the coordinated development of Beijing, Tianjin and Hebei Province, theYangtze River Economic Belt, the Guangdong-Hong Kong-Macao Greater Bay Area, the openingup of Hainan, the revitalization of Northeast China and the integrated development of the YangtzeRiver Delta Zone.
Thirdly, for overseas business layout, the Company will strictly comply with assessmentdimensions and principles for overseas ports projects. The Company will set out clear projectpriorities and conduct studies on its overseas network along the “East-West route, South-Northroute, regions along the Belt and Road Initiative”. It will continue to put more efforts in the study ofglobal regional market and to establish and improve the regional market development and researchdatabase for East Africa, West Africa, South Asia, Europe, Latin America and Southeast Asia. It willalso tap into the growth of the “China+” industry after shifting to the “Port-Park-City” model.
Fourthly, for comprehensive port development, the Company will actively push ahead with thetransformation from a terminal operator to a comprehensive port service provider. It will step up itsefforts in promoting the “Port-Park-City” business model, and actively push forward theconstruction and development of the Djibouti International Free Trade Zone. The Company willcontinue to proactively explore the relevant comprehensive development cooperation projects inTogo; while for the Hambantota industrial port project, the Company will facilitate the preliminarywork in relation to the introduction of investment and capital based on the improvement of the parkdevelopment plan. Capitalizing development opportunities arising from of the Guangdong-HongKong-Macao Greater Bay Area, the Company will actively make progress on its land preparatoryworks in the Qianhai-Shekou Free Trade Zone by participating in the overall development thereof.
Fifthly, for technology innovation, the Company will attach further importance to the uniquerole and fundamental position of technology-driven and innovation-oriented development. Also, theCompany will create a top-tier port innovation ecosystem. Smart upgrade of terminals of which theCompany is a controlling shareholder will be gradually achieved through technological innovation,enabling the Company to formulate a proposal for implementation of “RTG Remote Control” withits own features so as to support the transformation of Shenzhen Haixing Harbor Development Co.,Ltd. ("Haixing")and smart upgrade of various terminals in the future.
Sixthly, for active quality and efficiency enhancement, the Company will continuouslyoptimize its internal procedures and mechanisms to promote management reform and process
China Merchants Port Group Co., Ltd. Annual Report 2018
reengineering. The Company will focus its efforts on enhancing the level of refined operation andmanagement of terminals of which it is a controlling shareholder, increasingly benchmarking itsterminal management, reducing cost and improving efficiency, and generating income by savingcosts, thereby creating values for shareholders.
In 2019, the risk of declining cyclical recovery momentum of the global economy will increase.Due to trade investment policies on “reverse globalization” and macroeconomic policyadjustments such as interest rate hike and tax reduction in developed countries, the growth of globaltrade will be under the intensifying pressure of an overall slowdown in the future. The Companywill respond positively to challenges like the downshift of growth in global container seabornefreight volume, the subdued profitability of domestic ports, the increased competition forinvestment between the ports in emerging countries. Moreover, it will seize the opportunitiespresented by the Chinese government’s support for import, accelerating consumption upgrade, thecontinuous promotion of policies regarding the development of the Guangdong-Hong Kong-MacaoGreater Bay Area and the free trade port, the growth in regional trade, the relocation of the“China+” industry and port consolidation. By the above means, the Company will spare no effort toenhance operating results and reward shareholders with better investment return.
Fu Gangfeng
Chairman
China Merchants Port Group Co., Ltd. Annual Report 2018
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of China Merchants Port Group Co., Ltd. (hereinafterreferred to as the “Company”) hereby guarantee the factuality, accuracy and completeness ofthe contents of this Report and its summary, and shall be jointly and severally liable for anymisrepresentations, misleading statements or material omissions therein.Bai Jingtao, the Company’s legal representative, Wen Ling, the Company’s Chief FinancialOfficer, and Sun Ligan, the person-in-charge of the accounting organ hereby guarantee thatthe financial statements carried in this Report are factual, accurate and complete.This Report has been approved at the 5th Meeting of the 9th Board of Directors of theCompany. Due to other company affairs, Vice Chairman of the Board Deng Renjie andDirector Song Dexing did not attend the meeting in person. But they have expressed theirconsent to this Report and authorized Director Bai Jingtao to attend the meeting on behalf ofthem, as well as to express opinion and sign the relevant documents.Possible risks faced by the Company and countermeasures have been explained in “Part IVOperating Performance Discussion and Analysis” herein, which investors are kindly remindedto pay attention to. Any forward-looking statements such as future plans or developmentstrategies mentioned herein shall not be considered as the Company’s promises to investors.And investors are reminded to exercise caution when making investment decisions.Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by theCompany for information disclosure. And all information about the Company shall be subjectto what’s disclosed on the aforesaid media. Investors are reminded to exercise caution whenmaking investment decisions.The Board has approved a final dividend plan as follows: based on the Company’s totalshares of 1,793,412,378, a cash dividend of RMB1.14 (tax inclusive) per 10 shares is to bedistributed to shareholders, with no bonus issue from either profit or capital reserves.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versionsshall prevail.
China Merchants Port Group Co., Ltd. Annual Report 2018
Table of Contents
Chairman’s Statement ...... 1
Part I Important Notes, Table of Contents and Definitions ...... 6
Part II Corporate Information and Key Financial Information ...... 4
Part III. Business Highlights .................................................................................... 10
PART IV Performance Discussion and Analysis ...... 19
Part V Significant Events ...... 45
Part VI Share Changes and Shareholder Information ...... 103
Part VII Preferred Shares ...... 114
Part VIII Directors, Supervisors, Senior Management and Staff ...... 114
Part IX Corporate Governance ...... 128
Part X Corporate Bonds ...... 144
Section XI. Auditor’s Report (See attached) ......................................................... 145
Section XII. Documents Available for Reference ................................................. 146
China Merchants Port Group Co., Ltd. Annual Report 2018
Definitions
| Term | Definition |
| The “Company”, “CMPort” or “we” | China Merchants Port Group Co., Ltd., formerly known as “Shenzhen Chiwan Wharf Holdings Limited” |
| Chiwan Wharf | Shenzhen Chiwan Wharf Holdings Limited (stock name: Chiwan Wharf, Chiwan Wharf-B; stock code: 000022, 200022) |
| CMG | China Merchants Group Co., Limited |
| CMG Hong Kong | China Merchants Group (H.K.) Limited, a CMG wholly-owned subsidiary in Hong Kong |
| CMID | China Merchants Investment Development Company Limited |
| CMPort Holdings | China Merchants Port Holdings Company Limited (00144.HK) |
| CMU | China Merchants Union(BVI) Limited |
| Broadford Global | Broadford Global Limited, a wholly-owned subsidiary of CMG Hong Kong |
| CMGD | China Merchants Gangtong Development (Shenzhen) Co., Ltd., a Broadford Global wholly-owned subsidiary in Shenzhen |
| CND Group | China Nanshan Development (Group) Inc. |
| CMSK | China Merchants Shekou Industrial Zone Holdings Co., Ltd. |
| Malai Storage | Shenzhen Malai Storage Co., Ltd. |
| KFEL | Keen Field Enterprises Limited |
| Zhoushan RoRo | China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd., with the name changed from “Zhoushan Archipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd.” on 29 August 2018 |
| Xinghai Terminal | Zhoushan Archipelago New Area Xinghai RoRo Terminal Co., Ltd. |
| SIPG | Shanghai International Port (Group) Co., Ltd. |
| CCT | Chiwan Container Terminal Co., Ltd., a majority-owned subsidiary of the Company |
| Kumport | Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi |
| TCP | TCP Participa??es S.A. |
| CICT | Colombo International Container Terminals Ltd. |
| HIPG | Hambantota International Port Group |
| Haixing Harbor | Shenzhen Haixing Harbor Development Co., Ltd. |
| The “Assets Purchase via Share Offering” or the “Acquisition” | Chiwan Wharf’s purchase of 1,313,541,560 ordinary CMPort Holdings shares from CMID via share offering |
| The “Transaction” or “Restructuring” | The transaction plan includes three parts: (1) Chiwan Wharf intends to issue A-shares to CMID for the acquisition of the 1,313,541,560 CMPort Holdings ordinary shares that CMID holds (approximately 39.51% of CMPort Holdings’ outstanding ordinary shares). (2) CMG Hong Kong and Chiwan Wharf signs an Acting in Concert Agreement. According to the agreement, upon the completion of the assets purchase via share offering, CMG Hong Kong shall vote according to Chiwan Wharf’s opinion unconditionally on matters to |
China Merchants Port Group Co., Ltd. Annual Report 2018
be voted on at CMPort Holdings’ general meetings in regard with thevoting right of the 753,793,751 CMPort Holdings ordinary shares(approximately 22.67% of CMPort Holdings’ outstanding ordinaryshares) that CMG Hong Kong has been entrusted to exercise. (3)Chiwan Wharf intends to raise matching funds of no more thanRMB4 billion from no more than 10 certain investors via an offeringof no more than 128,952,746 A-shares through enquiry.
| be voted on at CMPort Holdings’ general meetings in regard with the voting right of the 753,793,751 CMPort Holdings ordinary shares (approximately 22.67% of CMPort Holdings’ outstanding ordinary shares) that CMG Hong Kong has been entrusted to exercise. (3) Chiwan Wharf intends to raise matching funds of no more than RMB4 billion from no more than 10 certain investors via an offering of no more than 128,952,746 A-shares through enquiry. | |
| SASAC of the State Council | State-Owned Assets Supervision and Administration Commission of the State Council |
| CSRC | China Securities Regulation Commission |
| Shenzhen CSRC | Shenzhen Bureau of China Securities Regulatory Commission |
| SZSE | Shenzhen Stock Exchange |
| The “Company Law” | The Company Law of the People’s Republic of China |
| The “Securities Law” | The Securities Law of the People’s Republic of China |
| The “Articles of Association” | The Articles of Association of China Merchants Port Group Co., Ltd. |
| The “Stock Listing Rules” | The Stock Listing Rules of the Shenzhen Stock Exchange |
| The cninfo website | www.cninfo.com.cn |
| RTG | Rubber Tyre Gantry |
| E-Port | The unified electronic customer service platform |
| EDI | Electronic Data Interchange |
| The “Reporting Period” or “Current Period” | The period from 1 January 2018 to 31 December 2018 |
| TEU | Twenty Foot Equivalent Unit |
China Merchants Port Group Co., Ltd. Annual Report 2018
Part II Corporate Information and Key Financial Information
I Corporate Information
| Stock name | CM Port Group, CM Port Group B | Stock code | 001872, 201872 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 招商局港口集团股份有限公司 | ||
| Abbr. | 招商港口 | ||
| Company name in English (if any) | China Merchants Port Group Co., Ltd. | ||
| Abbr. (if any) | CMPort | ||
| Legal representative | Bai Jingtao | ||
| Registered address | 23-25/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | ||
| Zip code | 518067 | ||
| Office address | 23-25/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | ||
| Zip code | 518067 | ||
| Company website | http://www.cmp1872.com | ||
| Email address | Cmpir@cmhk.com | ||
| Board Secretary | Securities Representative | |
| Name | Huang Chuanjing | Hu Jingjing and Chen Dan |
| Address | 24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan, Shenzhen, PRC | |
| Tel. | +86 755 26828888 | +86 755 26828888 |
| Fax | +86 755 26886666 | +86 755 26886666 |
| Email address | Cmpir@cmhk.com | Cmpir@cmhk.com |
| Newspapers designated by the Company for information disclosure | Securities Times, Ta Kung Pao |
| Website designated by CSRC for publication of this Report | http://www.cninfo.com.cn |
| Place where this Report is lodged | Board Office |
China Merchants Port Group Co., Ltd. Annual Report 2018
IV Change to Company Registered Information
| Unified social credit code | 91440300618832968J |
| Change to principal activity of the Company since going public (if any) | On 14 December 2018, the Company changed its business scope registered with the industrial and commercial administration. The new business scope includes: construction, management and operation of ports and wharves; bonded warehousing of various goods for import and export; development, construction and operation of supporting parks in ports; loading, unloading, transshipment, warehousing and transportation of international and domestic goods and processing of goods; devanning and LCL operations, cleaning, repair, manufacturing and leasing of containers; international freight forwarding; vehicle and ship leasing; the provision of ship and port services including the provision of fuels, supplies and daily necessities for ships; ship towing (no operation using foreign ships); leasing and repair services of port facilities, equipment and machinery; import and export of various goods and technologies on a self-operation or agency basis, excluding the goods and technologies restricted or forbidden for import and export by the state; port logistics and port information technology consulting services; technical development and services in respect of modern logistics information systems; supply chain management and related services; design of logistics plans; engineering project management; development, research and consulting services in respect of port engineering technologies. (In respect of any operations that require approval according to law, the approval must be obtained before operation). |
| Every change of controlling shareholder since incorporation (if any) | 1. On 8 June 2018, as the ownership of 209,687,067 Chiwan Wharf shares formerly held by CND Group and 161,190,933 Chiwan Wharf shares formerly held by Malai Storage was officially transferred to CMGD, CMGD, holding 57.52% of the Company’s outstanding share capital, became the controlling shareholder of the Company. Meanwhile, CMG remains the actual controller of the Company. 2. On 26 December 2018, the Company issued RMB-denominated ordinary shares (A-shares) at RMB21.46/share to CMID for the acquisition of the 1,313,541,560 CMPort Holdings ordinary shares that it held. Upon the Acquisition, the Company’s total share capital has become 1,793,412,378 shares. Meanwhile, as Broadford Global controls an 87.81% aggregated voting right in the Company (direct interests and interests through CMID and CMGD), it is the direct controlling shareholder of the Company. Meanwhile, CMG remains the actual controller of the Company. |
China Merchants Port Group Co., Ltd. Annual Report 2018
V Other InformationThe independent audit firm hired by the Company:
| Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Office address | 30/F, 222 Yan An Road East, Huangpu District, Shanghai, P.R.C. |
| Accountants writing signatures | Huang Yue and Jiang Qishen |
| Name | CITIC Securities Co., Ltd. |
| Office address | 19/F, CITIC Securities Tower, 8 Zhongxin 3rd Road, Futian District, Shenzhen, China |
| Participant representative | Chen Jianjian, Yang Jun and Huang Zihua |
| Period of supervision | From 26 December 2018 to 31 December 2019 |
| 2018 | 2017 | 2018-over-2017 change | 2016 | ||||
| Original | Restated | Original | Restated | Restated | Original | Restated | |
| Operating revenue (RMB) | 2,274,934,530.82 | 9,703,394,622.58 | 2,456,218,834.63 | 7,544,635,284.96 | 28.61% | 2,381,483,399.94 | 6,828,528,929.02 |
| Net profit attributable to the listed company’s shareholders (RMB) | 403,711,043.83 | 1,090,418,910.77 | 504,495,064.39 | 2,365,214,907.45 | -53.90% | 532,376,492.97 | 2,041,683,125.35 |
China Merchants Port Group Co., Ltd. Annual Report 2018
Net profit attributableto the listedcompany’sshareholders beforeexceptional items(RMB)
| Net profit attributable to the listed company’s shareholders before exceptional items (RMB) | 510,911,565.95 | 516,155,803.81 | 497,361,340.01 | 498,373,377.67 | 3.57% | 529,198,593.98 | 526,660,998.71 |
| Net cash generated from/used in operating activities (RMB) | 737,784,730.57 | 4,288,575,424.84 | 1,162,281,754.31 | 3,475,037,036.28 | 23.41% | 1,121,032,625.07 | 3,049,363,117.24 |
| Basic earnings per share (RMB/share) | 0.63 | 0.61 | 0.782 | 1.32 | -53.79% | 0.826 | 1.14 |
| Diluted earnings per share (RMB/share) | 0.63 | 0.61 | 0.782 | 1.32 | -53.79% | 0.826 | 1.14 |
| Weighted average return on equity (%) | 8.82% | 3.88% | 10.45% | 10.24% | -6.36% | 11.57% | 9.21% |
| 31 December 2018 | 31 December 2017 | Change of 31 December 2018 over 31 December 2017 | 31 December 2016 | ||||
| Original | Restated | Original | Restated | Restated | Original | Restated | |
| Total assets (RMB) | 8,036,053,848.17 | 128,018,084,415.68 | 7,975,470,563.32 | 109,135,164,260.01 | 17.30% | 7,792,570,272.01 | 91,437,459,066.10 |
| Equity attributable to the listed company’s shareholders (RMB) | 4,831,911,547.56 | 30,760,475,412.93 | 4,922,969,405.92 | 28,474,748,165.25 | 8.03% | 4,736,680,543.81 | 22,680,840,458.42 |
| Total share capital at the end of the last trading session before the disclosure of this Report (share) | 1,793,412,378 |
| Fully diluted earnings per share based on the latest total share capital above (RMB/share) | 0.608 |
China Merchants Port Group Co., Ltd. Annual Report 2018
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards1. Net Profit and Equity under CAS and IFRSNo difference for the Reporting Period.2. Net Profit and Equity under CAS and Foreign Accounting StandardsNo difference for the Reporting Period.3. Reasons for Accounting Data Differences Above□ Applicable √ Not applicableVIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 2,172,750,441.44 | 2,499,587,599.28 | 2,589,330,353.39 | 2,441,726,228.47 |
| Net profit attributable to the listed company’s shareholders | 381,903,088.64 | 238,135,317.01 | 276,846,536.50 | 193,533,968.62 |
| Net profit attributable to the listed company’s shareholders before exceptional items | 129,600,674.09 | 187,764,097.52 | 135,978,133.47 | 62,812,898.73 |
| Net cash generated from/used in operating activities | 488,161,711.35 | 1,312,573,007.36 | 1,315,345,336.41 | 1,172,495,369.72 |
| Item | 2018 | 2017 | 2016 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 6,512,480.64 | 324,387.87 | -123,667.77 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 14,050,544.16 | 1,843,431.75 | 1,046,444.12 |
China Merchants Port Group Co., Ltd. Annual Report 2018
Current profit or loss on subsidiaries obtained inbusiness combinations involving enterprisesunder common control from theperiod-beginning to combination dates, net
| Current profit or loss on subsidiaries obtained in business combinations involving enterprises under common control from the period-beginning to combination dates, net | 2,685,592,888.44 | 4,928,289,403.49 | 4,127,265,578.70 | Effect of a business combination under common control |
| Reversed portion of impairment allowance for accounts receivable which are tested individually for impairment | 4,238,993.78 | |||
| Non-operating income and expense other than the above | -3,767,817.73 | 1,002,589.66 | 1,487,253.84 | |
| Other gains and losses that meet the definition of exceptional gain/loss | -121,311,211.59 | Restructuring costs in the Current Period | ||
| Less: Income tax effects | 3,010,149.89 | 802,116.53 | 595,892.67 | -- |
| Non-controlling interests effects (net of tax) | 2,003,803,627.07 | 3,068,055,160.24 | 2,614,057,589.58 | |
| Total | 574,263,106.96 | 1,866,841,529.78 | 1,515,022,126.64 | -- |
China Merchants Port Group Co., Ltd. Annual Report 2018
Part III. Business Highlights
I. Main business of the Company during the reporting period
1. Main business scope and business modelsThe Company is principally engaged in the handling, warehousing and transportation ofcontainers and bulk cargoes, as well as the provision of other ancillary services. It principallyoperates 24 container berths and 15 bulk cargo berths in the ports in West Shenzhen, 9multi-purpose berths, 2 container berths, 2 bulk cargo berths and a berth for roll-on-roll-off vesselsin Shantou Port, 4 multi-purpose berths in Shunde Port, 2 container berths and 6 bulk cargo berthsin Zhangzhou Port, Xiamen, 3 container berths in Port of Colombo, Sri Lanka, 4 multi-purposeberths, 2 oil berths and 4 container berths in Hambantota Port, 3 container berths in Port of Lomé,Togo, and 3 container berths in Paranaguá Port, Brazil. Moreover, the Company invests in containerhubs in Shanghai and Ningbo and expands its layout to ports in South Asia, Africa, Europe, SouthAmerica and Oceania.
The major business segments of China Merchants Port Group Co., Ltd. are as follows:
| Business segments | Applications |
| Cargo handling and warehousing | Container handling and warehousing: the Company provides ship berthing, loading and unloading services to ship companies, offers container storage service to ship companies and cargo owners and provides overhead box services to tractor companies. The Company also engages in the businesses of division or merger of cargoes in containers, container leasing and container maintenance; Bulk cargo handling and warehousing: the Company is engaged in bulk cargo handling and transportation in port zones, as well as storage services in yards. The major types of cargoes handled include food, steel, woods and sandstones. |
| Ancillary port-related services | The ancillary port-related services of the Company mainly include tugboat berthing assistance and barge services at the arrival of ships to the ports, tallying in the course of cargo handling, and supply of shore power and freshwater for vessels. |
China Merchants Port Group Co., Ltd. Annual Report 2018
Bondedlogisticsoperations
| Bonded logistics operations | The Company provides various services for clients (including logistics companies, trading companies or cargo owners), for example, warehouse/yard leasing, loading and unloading in warehouses/yards, customs clearance and division or merger of cargoes at terminals. It also provides documentation services for tractors arriving or leaving the bonded logistics parks. |
China Merchants Port Group Co., Ltd. Annual Report 2018
statistics of Drewry Shipping Consultants Ltd., a maritime consulting firm, the global container portthroughput amounted to 7.86 billion TEUs in 2018, up 5.3% year-on-year, while the growth ratedecreased by 1.2percentage points as compared with 2017. In terms of market share by containerthroughput, the top 3 regions in order are China (including Hong Kong), Europe and Southeast Asia,and the top 3 fastest growing regions in order are South Asia, Southeast Asia and Oceania. Thegrowth rate of PRC container port throughput decreased and the development of different portsvaried. According to the statistics from National Bureau of Statistics of China, the containerthroughput handled by PRC ports of significant scale was 249.55 million TEUs in 2018,representing a growth of 5.2% compared with the same period last year , growing slower than thesame period in 2017.
The Company is the largest global leading port developer, investor and operator in the PRC,with a comprehensive port network at major hub locations along coastal China. It has alsoestablished presence in South Asia, Africa, Europe, Mediterranean, Oceania and South America. Byits proactive, sound and efficient operating style, the Company capitalises on its global portportfolio, professional management experience, the self-developed state-of-the-art terminaloperation system and integrated logistics management platform for exports and imports, therebyproviding its customers with timely and efficient port and maritime logistics services along withcomprehensive and modern integrated logistics solutions. In addition, the Company also invests inbonded logistics operation and launches integrated park development business for the extension ofthe port value chain, which allows it to create greater value through the synergies of the existingterminal network.
China Merchants Port Group Co., Ltd. Annual Report 2018
II Significant Changes in Major Assets1. Significant Changes in Major Assets
| Major assets | Main reason for significant changes |
| Equity assets | 1. On 26 January 2018, the Second Extraordinary Meeting of the Ninth Board of Directors of the Company approved the Proposal on Capital Increase to Zhoushan Archipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd. On the 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”), China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. (hereafter referred to as “Zhoushan RoRo”) and Zhoushan Archipelago New Area Xinghai RoRo Terminal Co., Ltd. ( hereafter referred to as “Xinghai Terminal”) signed the Agreement on Capital Increase to 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, and the registered capital of Zhoushan RoRo increased from RMB60 million to RMB173.0786 million, and Zhoushan RoRo owned 100% stake of Xinghai Terminal, which made Xinghai Terminal a wholly owned subsidiary of Zhoushan RoRo. In May 2018, the Company paid all the increased capital to Zhoushan RoRo. On 29 August 2018, Zhoushan RoRo completed the formalities for the change of its directors, supervisors and senior management with the industrial and commercial administration. As such, Zhoushan RoRo has officially become a majority-owned subsidiary of the Company. For further information, see the Announcement on an External Investment & Related-Party Transaction (Announcement No.: 2018-007) published on the Securities Times, Ta Kun Pao (HK) and www.cninfo.com.cn on 27 January 2018. 2. On 5 February 2018, 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 the same day, the Supplementary Agreement II was signed by Chiwan Wharf, CMPort Holdings, 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 Chiwan Wharf 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-party transactions arising from the signed Supplementary Agreement II has been disclosed on Securities Times, Ta Kung Pao |
China Merchants Port Group Co., Ltd. Annual Report 2018
and www.cninfo.com.cn on 7 February 2018.3. On 6 February 2018, CMPort Holdings, China Merchants Union (BVI) Limited (“CMU”,a major shareholder of CMPort Holdings and the liaison of CMG) and Gold NewcastleProperty Pty Holding Limited (“Gold Newcastle”, a wholly-owned subsidiary of CMU)entered into an acquisition agreement. According to the agreement, CMU and GoldNewcastle agreed to sell, for the total consideration of AUD607.5 million (approximatelyHK$3.809 billion), their aggregate interests of 50% in the Port of Newcastle (includingshareholder loans of AUD162.5 million) to CMPort Holdings or its wholly-owned subsidiary.And the remaining 50% interest in the Port of Newcastle would be held by a third-party, TIFInvestment Trust.4. On 13 December 2018, the Proposal on the Incorporation of China Merchants HainanDevelopment & Investment Co., Ltd. together with Related Parties was approved at theSecond Extraordinary General Meeting of 2018. Chiwan Wharf Holdings (Hong Kong)Limited (a wholly-owned subsidiary of the Company), together with related parties of ChinaMerchants Holdings (Hong Kong) Company Limited, Jumbo Pacific Holdings Limited,China Merchants Expressway Network Technology Holdings Co., Ltd., China MerchantsIndustry Investment Limited and SinoTrans (HK) Logistics Limited, incorporated ChinaMerchants Hainan Development & Investment Co., Ltd. as an important investment platformin the Hainan Province for all the parties. The new joint venture has a registered capital ofRMB3.5 billion, of which Chiwan Wharf Holdings (Hong Kong) Limited subscribes forRMB525 million, representing a stake of 15%.5. On 24 December 2018, the Company disclosed the Report on the Implementation Progressof the Assets Purchase via Share Offering and the Matching Fund Raising & theRelated-Party Transaction & the Listing of the New Shares. The Company issued A-shares toCMID for the acquisition of the 1,313,541,560 ordinary CMPort Holdings shares that it held(accounting for approximately 39.45% of CMPort Holdings’ outstanding ordinary shares),with the transaction price being RMB24.65 billion. According to the offering price ofRMB21.46/share, the Company issued a total of 1,148,648,648 A-shares to CMID. On 26December, the Company held the Restructuring & Name Change Ceremony at the ShenzhenStock Exchange, changing its stock name from “Chiwan Wharf, Chiwan Wharf-B” to “CM Port
Group, CM Port Group B”, its stock code from “000022, 200022” to “001872, 201872”.
| and www.cninfo.com.cn on 7 February 2018. 3. On 6 February 2018, CMPort Holdings, China Merchants Union (BVI) Limited (“CMU”, a major shareholder of CMPort Holdings and the liaison of CMG) and Gold Newcastle Property Pty Holding Limited (“Gold Newcastle”, a wholly-owned subsidiary of CMU) entered into an acquisition agreement. According to the agreement, CMU and Gold Newcastle agreed to sell, for the total consideration of AUD607.5 million (approximately HK$3.809 billion), their aggregate interests of 50% in the Port of Newcastle (including shareholder loans of AUD162.5 million) to CMPort Holdings or its wholly-owned subsidiary. And the remaining 50% interest in the Port of Newcastle would be held by a third-party, TIF Investment Trust. 4. On 13 December 2018, the Proposal on the Incorporation of China Merchants Hainan Development & Investment Co., Ltd. together with Related Parties was approved at the Second Extraordinary General Meeting of 2018. Chiwan Wharf Holdings (Hong Kong) Limited (a wholly-owned subsidiary of the Company), together with related parties of China Merchants Holdings (Hong Kong) Company Limited, Jumbo Pacific Holdings Limited, China Merchants Expressway Network Technology Holdings Co., Ltd., China Merchants Industry Investment Limited and SinoTrans (HK) Logistics Limited, incorporated China Merchants Hainan Development & Investment Co., Ltd. as an important investment platform in the Hainan Province for all the parties. The new joint venture has a registered capital of RMB3.5 billion, of which Chiwan Wharf Holdings (Hong Kong) Limited subscribes for RMB525 million, representing a stake of 15%. 5. On 24 December 2018, the Company disclosed the Report on the Implementation Progress of the Assets Purchase via Share Offering and the Matching Fund Raising & the Related-Party Transaction & the Listing of the New Shares. The Company issued A-shares to CMID for the acquisition of the 1,313,541,560 ordinary CMPort Holdings shares that it held (accounting for approximately 39.45% of CMPort Holdings’ outstanding ordinary shares), with the transaction price being RMB24.65 billion. According to the offering price of RMB21.46/share, the Company issued a total of 1,148,648,648 A-shares to CMID. On 26 December, the Company held the Restructuring & Name Change Ceremony at the Shenzhen Stock Exchange, changing its stock name from “Chiwan Wharf, Chiwan Wharf-B” to “CM Port Group, CM Port Group B”, its stock code from “000022, 200022” to “001872, 201872”. | |
| Construction in progress | Construction in progress amounted to RMB5.499 billion as at 31 December 2018, up by RMB3.191 billion from the beginning amount of RMB2.308 billion, primarily driven by the adding of new subsidiaries to the consolidated financial statements and a higher expense on wharf projects. To be specific, the HIPG wharf construction project contributed an increase of RMB1.334 billion, the TCP berth expansion project contributed RMB0.59 billion and the Shantou Port Guangdong-Macau Phase II project RMB0.524 billion. |
| Entrusted | 1. On 23 August 2017, the Proposal on Signing The Agreement on Equity Management |
China Merchants Port Group Co., Ltd. Annual Report 2018
assets
| assets | Entrustment with China Merchants Port Holdings Company Limited (CMPort Holdings) was approved at the 2nd Meeting of the 9th Board of Chiwan Wharf. On the same day, the agreement was signed to let Chiwan Wharf manage, in CMPort Holdings’ trust, part of the shareholder and other rights in relation to the 80% stake in Mega Shekou Container Terminals Limited, which is held directly by CMPort Holdings. As CMPort Holdings has ceased its control over Chiwan Wharf from 8 June 2018, as per the aforesaid entrustment agreement, Chiwan Wharf’s custodianship of the shareholder and other rights in relation to the 80% stake in Mega Shekou Container Terminals Limited has automatically ended. The announcement (No. 2017-035) on the related transaction arising from the signed entrustment contract has been disclosed on Securities Times, Ta Kung Pao and www.cninfo.com.cn on 25 August 2017. 2. On 13 December 2018, the Proposal on the Company and China Merchants (Liaoning) Port Development Co., Ltd. Signing the Custody Agreement Regarding Equity Interests in Liaoning Port Group Co., Ltd. was approved at the 10th Extraordinary Meeting of the 9th Board of Directors of 2018 of the Company. As such, the Company was agreed to sign the said agreement with China Merchants (Liaoning) Port Development Co., Ltd., an indirectly wholly-owned subsidiary of CMG. According to the agreement, the Company will manage, in the trust of China Merchants (Liaoning) Port Development Co., Ltd., the 49.9% interest in Liaoning Port Group Co., Ltd. that China Merchants (Liaoning) Port Development Co., Ltd. is currently holding. |
| Asset | Source | Asset value (RMB’0,000) | Location | Management model | Control measures to protect asset safety | Return generated (RMB’0,000) | As % of the Company’s equity | Material impairment risk (yes/no) |
| Equity assets | Acquired via share offering | 12,236,421.18 | Hong Kong | Majority-owned by the Company | Appointing directors, supervisors and senior management | 650,649.71 | 93.16% | No |
| Other information | N/A | |||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
III. Core competitiveness analysis1.Active implementation of the key “Belt and Road” initiative with leverage on its global portnetwork
As an important carrier for domestic and overseas port investment and operation of CMG, theCompany seized the policy opportunities of the key elopment Co., Ltd., an indirectly o activelybuild a global port network and make investments in global resources. In recent years, throughmergers, acquisitions and restructuring, along with the renovation of old ports and construction ofnew ports, the Company has become a modern port chain with global coverage and actively pushedforward the establishment of the “Silk Road Economic Belt” and “21st-Century Maritime SilkRoad”.
After years of overseas development, CMPort has developed the port industries across SoutheastAsia, South Asia, Africa, Europe, Oceania, etc. Among which, its port network spreads over 18countries with most ports locating in important port areas of countries along the “Belt and Road”initiative.
The Company aims at eas development, CMPort has developed the port iive continents”. As boththe shipping and port sectors gradually shifted to forming alliances, the Company activelyintegrated its domestic and overseas port assets and capitalised on its relatively complete global portnetwork to provide customers with comprehensive port logistics service solutions, which created itsunique competitive strength. At the same time, the diversified investment and operation of portassets have also effectively enhanced its capabilities to resist risks of industry fluctuations and tradefictions.
2. Sound shareholder background
CMG is a key state-owned enterprise under the direct administration of the PRC central government.Headquartered in Hong Kong, it is an integrated enterprise with diversified businesses and one ofthe four major Chinese enterprises in Hong Kong. Currently, CMG is mainly engaged in three coreindustries namely transportation, finance and real estate, while focusing on four key sectorsincluding infrastructure and equipment manufacturing, logistics and shipping, integrated financeand comprehensive development of cities and parks. CMG has been rated as a Grade A enterprise in
China Merchants Port Group Co., Ltd. Annual Report 2018
the Operating Results Assessment of the State-owned Assets Supervision and AdministrationCommission of the State Council for 14 consecutive years and is a central state-owned enterprisethat owns two Fortune 500 companies.
Being a crucial player and facilitator of the national State-owned Assets Supervision andAdministration Commission of the State Council for 14 consecutive years atively complete networkof overseas port, logistics, finance and park business. The sound shareholder background and ampledomestic and overseas resources of CMG have provided strong support to CMPort for creating aglobal port cooperation platform with international vision and global expansion capabilities.
3. Innovative business development model
Taking port business as the core and leveraging the synergy of different port zones as well ascity-industry integration, the Company is actively exploring and facilitating the comprehensive portdevelopment model of “Port-Park-City”. Based on the traditional loading and unloading andancillary services for ports, the Company further expanded various value-added port services to theports and port cities in which it operates. By gathering talents, information, funds and commodities,the Company continued to expand its business development and regional coverage, thereby drivingurban upgrade and development.
Currently, the Company has participated in and pushed forwarded integrated regional developmentand construction in various overseas regions under the port-oriented approach, where it has madesome progress with initial achievements. The innovative business development model helps fosternew profit growth points for the Company.
4. Extensive experience in professional port management with sound and efficient operating style
The Company always adheres to the proactive, sound and efficient operating style. Capitalising onits global portfolio for port asset and resource allocation, it is committed to providing customerswith timely and efficient port and maritime logistics services and thus becoming an importantgateway for the country’s foreign trade. At the same time, the Company also made an extensiveinvestment in bonded logistics business to expand its port value chain. Taking advantages of thesynergies of its existing terminal network, the Company created values for both its customers and
China Merchants Port Group Co., Ltd. Annual Report 2018
shareholders.
The Company has earned itself good reputation across the industry by leveraging the professionalmanagement experience accumulated for years, its self-developed global leading port operatingsystem and integrated logistics management platform for import and export, its extensive maritimelogistics support system and all-rounded modern integrated logistics solutions, its high-qualityengineering management and reliable service offerings.
China Merchants Port Group Co., Ltd. Annual Report 2018
PART IV Performance Discussion and Analysis
I. Summary
1. External Environment AnalysisIn 2018, the global economy continued to grow at a moderate pace. However, the growth ratesof major economies have almost peaked while certain emerging markets and countries were facingfinancial instability, demonstrating intensified uneven growth trend among different economies.Currently, with the setback in multilateral trading system, the landscape of international trade isrestructuring, which has facilitated rapid development of regional trade agreements. According tothe latest “atest , the global economy continued to grow at a mornational Monetary Fund (“IMF”MFest , the global economy continued to grow at a mornational Monetary Fund (“growth rates ofmajor economies have almost peaked while certain emerging markets and countries were facing f,down by 0.1 percentage point as compared to that of 2017, while emerging markets and developingeconomies grew at 4.6%, respectively, down by 0.1 percentage point as compared to that of 2017.Total global trade volume (including goods and services) grew by 4.0%, representing a decrease of1.3 percentage points as compared to that of 2017.
In 2018, China’s economic growth was 6.6%, representing a decrease of 0.2 percentage pointover 2017. Despite the complicated international environment, China insisted on pursuing progresswhile maintaining stability and the overall economic development remained stable within areasonable range. While strenuously promoting the supply-side structural reform, the PRCgovernment continued to innovate and improve its macroeconomic control policies, striving tocultivate and develop innovative industries. The Chinese economy has shifted from the rapidgrowth phase to quality development phase with the driving force of innovation further increasedand the upgrade and development of consumption and industry structures progressed at a faster pace.Amid the overall global trade growth, according to the statistics of the General Administration ofCustoms, China’s total foreign trade import and export value amounted to RMB30.51 trillion in2018, representing a year-on-year increase of 9.7%, among which the total export value wasRMB16.42 trillion, indicating a 7.1% year-on-year increase, while total import value wasRMB14.09 trillion, reflecting a year-on-year increase of 12.9%. In particular, the potential of tradecooperation between China and those countries along the “Belt and Road” initiative is unleashing,leading to an increase in import and export value of 13.3%, which is higher than the overall growthrate.
China Merchants Port Group Co., Ltd. Annual Report 2018
Driven by the growth in global economy and trade, the global port business generally showedmoderate growth in 2018; and the growth rate of port business in China remained steady since thefirst quarter. According to the data published by National Bureau of Statistics of China, thecontainer throughput handled by Chinese ports of significant scale totalled 250 million TEUs in2018, representing an increase of 5.2% year-on-year.
2. Port Business Review
In 2018, the Company’s ports handled a total container throughput of 109.73 million TEUs, upby 6.6% year-on-year, among which the ports in Mainland China contributed container throughputof 81.39 million TEUs, indicating an increase of 5.5% year-on-year, which was mainly driven bysteady recovery of the Mainland China’s economy and improvement of import and export trade.The Company’s operations in Hong Kong and Taiwan contributed an aggregate containerthroughput of 7.67 million TEUs, representing a growth of 2.5% as compared with the same periodlast year. Benefited from the rapid growth of the ports operation of CICT in Sri Lanka, LCT inTogo and Kumport in Turkey, a total container throughput handled by the Company’s overseasports grew by 12.9% year-on-year to 20.66 million TEUs. Bulk cargo volume handled by theGroup’s ports increased by 1.5% year-on-year to 504 million tonnes, of which the Group’s ports inMainland China handled a total bulk cargo volume of 530 million tonnes, representing an increaseof 1.6% year-on-year.
Pearl River Delta region
In the Pearl River Delta region, the Group’s terminals in West Shenzhen Port Zone handled acontainer throughput of 11.35 million TEUs, up by 1.5% year-on-year. Chu Kong River TradeTerminal Co., Ltd. handled a total container throughput of 1.17 million TEUs, down by 13.3%year-on-year. Bulk cargo volume handled by the West Shenzhen Port Zone amounted to 18.03million tonnes, down by 17.3% year-on-year, mainly due to the decrease in business volume as aresult of the upgrade and renovation project of Haixing Port. With further release of productioncapacity, Dongguan Machong Terminal handled bulk cargo volume of 13.23 million tonnes duringthe period, representing an increase of 3.4% year-on-year.
Yangtze River Delta region
Shanghai International Port (Group) Co., Ltd. (eSIPG”IPGghai International Port (Group) Co.,Ltd. (eon TEUs, up by 4.4% year-on-year, which was mainly driven by the increase in number ofshipping routes due to reorganisation of shipping companies’ alliances, and the release ofproduction capacity from the commencement of operation of phase IV of SIPG’s fully automatedport in Yangshan since December 2017. Bulk cargo volume handled during the year decreased by
China Merchants Port Group Co., Ltd. Annual Report 2018
8.3% year-on-year to 150 million tonnes, mainly attributed to the decrease in coal unloaded amountafter adjustments made against the structure of bulk cargo source by SIPG. Ningbo Daxie ChinaMerchants International Terminals Co., Ltd. handled a container throughput of 3.16 million TEUs,representing an increase of 5.1% year-on-year, which was mainly benefited from the adjustment ofcertain shipping routes.
Bohai Rim regionDalian Port (PDA) Company Limited handled a container throughput of 11.11 million TEUsand bulk cargo volume of 135 million tonnes, representing an increase of 3.3% and 4.3%year-on-year respectively. Qingdao Qianwan United Container Terminal Co., Ltd. handled acontainer throughput of 6.93 million TEUs, representing an increase of 11.1% year-on-year.Qingdao Qianwan West Port United Terminal Co., Ltd. handled bulk cargo volume of 15.54 milliontonnes, representing an increase of 18.4% year-on-year. Qingdao Port Dongjiakou Ore TerminalCo., Ltd. handled bulk cargo volume of 57.36 million tonnes, indicating an increase of 3.6%year-on-year. Laizhou Harbour Affairs (莱州港务) handled bulk cargo volume of 22.75 millionTEUs, representing an increase of 4.7% year-on-year. Tianjin Five Continents InternationalContainer Terminals Co., Ltd. handled a total container throughput of 2.72 million TEUs,representing an increase of 3.4% year-on-year.
South-East region of Mainland ChinaZhangzhou China Merchants Port Co., Ltd. (“ZCMP”), located in Xiamen Bay Economic Zone,handled a container throughput of 0.457 million TEUs, increased by 13.9% year-on-year, whichwas mainly benefited from the increase in domestic shipping routes. With the recovery of theproduction capacity of wood processing and iron ore fines industries in the hinterland of ZCMP,bulk cargo volume handled by ZCMP amounted to 14.32 million tonnes, up by 37.4% year-on-year.Shantou China Merchants Port Group Co., Ltd., which was acquired in August 2017, handled acontainer throughput of 1.29 million TEUs and bulk cargo volume of 9.23 million tonnes.
South-West region of Mainland ChinaZhanjiang Port (Group) Co., Ltd. handled a container throughput of 0.98 million TEUs, up by9.7% year-on-year; and a bulk cargo volume of 91.87 million tonnes, up by 1.8% year-on-year.
Hong Kong and TaiwanThe total container throughput handled by ports in Hong Kong dropped by 5.7% year-on-year,of which the container throughput handled by the ports in Kwai Tsing area decreased by 4.7%year-on-year. Modern Terminals Limited and China Merchants Container Services Limiteddelivered an aggregate container throughput of 5.93 million TEUs, up by 2.5% year-on-year, which
China Merchants Port Group Co., Ltd. Annual Report 2018
outperformed the overall market of Hong Kong. Kao Ming Container Terminal Corporation inKaohsiung handled a total container throughput of 1.75 million TEUs, representing an increase of2.8% year-on-year.
Overseas operationIn 2018, a total container throughput handled by the Company’s overseas operations increasedby 12.9% year-on-year to 20.66 million TEUs, among which container throughput handled by CICTin Sri Lanka rose by 12.0% year-on-year to 2.68 million TEUs. Container throughput handled byLCT in Togo increased by 18.3% year-on-year to 1.05 million TEUs. Container throughput handledby Tin-Can Island Container Terminal Limited (referred to as TICT) in Nigeria was 0.48 millionTEUs, representing an increase of 2.4% year-on-year. Container throughput handled by Port deDjibouti S.A. (referred to as PDSA) in Djibouti amounted to 0.86 million TEUs, down by 7.5%year-on-year, mainly attributed to the decrease in transshipment volume to Ethiopia. Terminal LinkSAS, which acquired the port of Thessaloniki in Greece at the beginning of the year, handledcontainer throughput of 13.64 million TEUs, representing an increase of 8.6% year-on year.Container throughput handled by Kumport in Turkey increased by 18.3% year-on-year to 1.26million TEUs. In February 2018, the acquisition of TCP in Brazil was officially completed. TCPhandled a container throughput of 0.69 million TEUs from March to December.
3. Implementation of business plan during the reporting periodDuring the reporting period, adhering to the working principles of “farsighted anddown-to-earth” and “establishing integrated systems and building core competitiveness”, theCompany continued to maintain its strategic strength and remained committed to the strategic focusof domestic and overseas development and innovation and achieved major breakthroughs in fiveaspects, namely the development of homebase port, port consolidation, overseas expansion,comprehensive development and business innovation. Over the past year, the Company activelyimplemented its key tasks and maintained a steady growth in the core business and operating resultsof the Company’s ports.
Regarding the development of its homebase ports, Tonggu Channel project in West ShenzhenPort Zone was completed which enabled 200,000-tonnes mega vessels to call. Moreover, therenovation project of Haixing Port progressed as scheduled while the construction proposal of“Smart Port” has been proved and already entered into the implementation stage. In accordancewith the concept of “strong synergy for high throughput”, the Group has facilitated the cooperationbetween West Shenzhen Port Zone and river terminals in the Pearl River Delta and achieved
China Merchants Port Group Co., Ltd. Annual Report 2018
preliminary results.
In terms of port consolidation, the Company has established a strategic layout with a focus onone was completed which enang Kong-Macao Bay Area, connecting regions along Belt and RoadInitiatives with a broad global network coverage” through strategic reconstruction, which hasbecome the platform for managing the CMG’s port business and capital operation. In Bohai Rim,the entrusted management arrangement of Liaoning Port Group was completed.
As for overseas expansion, by seizing the opportunities arising from the major initiative of“Belt and Road” and the transfer of international production, the Company actively grasped theinvestment opportunities in ports, logistics and related infrastructure. The Company completed theacquisitions of TCP Terminal in Brazil, South America and Port of Newcastle in Australia, Oceaniain 2018, realising its full coverage in six continents and further optimising its global port network.
In terms of comprehensive development, the Company actively explored and promoted the“Port-Park-City” comprehensive development model and achieved milestone progress. DjiboutiInternational Free Trade Zone was officially opened in July 2018 and received good response. Thecomprehensive development project of Hambantota Port in Sri Lanka has completed the initialoverall conceptual planning and has been actively developing the wheeled and bulk cargo business,demonstrating a sound business development trend.
With regard to innovative development, the Group actively pushed forward the “digitalisedstrategy” through the philosophy of “bringing influence through technology innovation, facilitatingexpansion by business innovation, enhancing quality and efficiency by integration innovation, andplanning future by mechanism innovation” in exploring the construction of the port ecosystem. In2018, the Company completed the E-Port project, RTG Remote Control project and Pearl RiverDelta (“PRD”) NETWORK project in West Shenzhen Port Zone with the utilisation of digital porttechnology, automated terminal technology, artificial intelligence application and big data analysisapplication. In terms of integrated cooperation model of industry with elements of finance, theCompany planned for the establishment of the China Port Innovation Investment Fund (中国港口创新投资基金) which aimed to coordinate with the domestic influential port groups, innovateintegrated cooperation model of industry with elements of finance, and explore new technologies,models and mechanisms for the port ecosystem, thereby achieving collaboration and resourcematching between various port groups and the invested industries.
China Merchants Port Group Co., Ltd. Annual Report 2018
II Core Business Analysis1. OverviewChanges in key financial indicators in the Reporting Period are as follows:
Unit: RMB
| Item | 2018 | 2017 | Change (%) | Reason for the change |
| Operating revenue | 9,703,394,622.58 | 7,544,635,284.96 | 28.61% | The adding of CMPort Holdings to the consolidated financial statements for the current year |
| Cost of sales | 5,739,241,395.87 | 4,710,312,660.51 | 21.84% | The adding of CMPort Holdings to the consolidated financial statements for the current year |
| Administrative expense | 1,251,865,675.45 | 853,900,889.90 | 46.61% | The restructuring costs and the adding of CMPort Holdings to the consolidated financial statements for the current year |
| Finance costs | 1,643,418,102.95 | 955,406,648.46 | 72.01% | A higher interest expense as a result of more interest-bearing debt, as well as a greater exchange loss, net caused by exchange rate fluctuations |
| Net cash generated from/used in operating activities | 4,288,575,424.84 | 3,475,037,036.28 | 23.41% | - |
| 2018 | 2017 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 9,703,394,622.58 | 100% | 7,544,635,284.96 | 100% | 28.61% |
| By operating division | |||||
| Port operations | 9,184,527,309.09 | 94.65% | 7,105,017,045.51 | 94.17% | 29.27% |
| Bonded logistics service | 386,269,027.02 | 3.98% | 355,133,637.25 | 4.71% | 8.77% |
| Other | 132,598,286.47 | 1.37% | 84,484,602.20 | 1.12% | 56.95% |
| By operating segment | |||||
| Mainland China, Hong Kong and Taiwan | 6,635,924,788.34 | 68.39% | 6,036,330,920.53 | 80.01% | 9.93% |
| Other countries and regions | 3,067,469,834.24 | 31.61% | 1,508,304,364.43 | 19.99% | 103.37% |
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
Port operations
| Port operations | 9,184,527,309.09 | 5,303,286,893.31 | 42.26% | 29.27% | 23.38% | 5.81% |
| By operating segment | ||||||
| Mainland China, Hong Kong and Taiwan | 6,635,924,788.34 | 4,216,939,216.81 | 36.45% | 9.93% | 6.56% | 2.90% |
| Other countries and regions | 3,067,469,834.24 | 1,522,302,179.06 | 50.37% | 103.37% | 102.15% | 0.30% |
| Operating division | Item | 2018 | 2017 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Port operations | Loading and unloading services | 5,303,286,893.31 | 92.40% | 4,298,197,269.65 | 91.25% | 23.38% |
| Bonded logistics service | Logistics service | 214,495,776.55 | 3.74% | 201,919,562.78 | 4.29% | 6.23% |
| Other | Properties | 221,458,726.01 | 3.86% | 210,195,828.08 | 4.46% | 5.36% |
| Total | 5,739,241,395.87 | 100.00% | 4,710,312,660.51 | 100.00% | 21.84% | |
| Total sales to top five customers (RMB) | 2,771,538,285.20 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 28.56% |
| Total sales to related parties among top five customers as % of total sales | 0% |
China Merchants Port Group Co., Ltd. Annual Report 2018
of the Reporting Period (%)
of the Reporting Period (%)
Top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Customer A | 1,185,119,294.05 | 12.21% |
| 2 | Customer B | 468,009,461.45 | 4.82% |
| 3 | Customer C | 454,654,929.72 | 4.69% |
| 4 | Customer D | 362,165,543.53 | 3.73% |
| 5 | Customer E | 301,589,056.45 | 3.11% |
| Total | -- | 2,771,538,285.20 | 28.56% |
| Total purchases from top five suppliers (RMB) | 969,354,243.89 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 21.47% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 0% |
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 345,775,896.27 | 7.66% |
| 2 | Supplier B | 338,102,927.61 | 7.49% |
| 3 | Supplier C | 113,117,715.82 | 2.51% |
| 4 | Supplier D | 88,859,558.97 | 1.97% |
| 5 | Supplier E | 83,498,145.22 | 1.85% |
| Total | -- | 969,354,243.89 | 21.47% |
China Merchants Port Group Co., Ltd. Annual Report 2018
3. Expense
Unit: RMB
| 2018 | 2017 | Change (%) | Reason for any significant change | |
| Administrative expense | 1,251,865,675.45 | 853,900,889.90 | 46.61% | The restructuring costs and the adding of CMPort Holdings to the consolidated financial statements for the current year |
| Finance costs | 1,643,418,102.95 | 955,406,648.46 | 72.01% | A higher interest expense as a result of more interest-bearing debt, as well as a greater exchange loss, net caused by exchange rate fluctuations |
| R&D expense | 121,989,097.82 | 95,247,274.67 | 28.08% | Higher expenses on various R&D projects |
| 2018 | 2017 | Change (%) | |
| Number of R&D personnel | 428 | 425 | 0.71% |
| R&D personnel as % of total employees | 4.47% | 5.29% | -0.82% |
| R&D expense (RMB) | 121,989,097.82 | 95,247,274.67 | 28.08% |
| R&D expense as % of operating revenue | 1.26% | 1.26% | 0.00% |
| Capitalized R&D expense (RMB) | - | - | |
| Capitalized R&D expense as % of total R&D expense | 0.00% | 0.00% |
China Merchants Port Group Co., Ltd. Annual Report 2018
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicableReason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable5. Cash Flows
Unit: RMB
| Item | 2018 | 2017 | Change (%) |
| Subtotal of cash generated from operating activities | 10,551,620,379.77 | 8,121,339,982.14 | 29.92% |
| Subtotal of cash used in operating activities | 6,263,044,954.93 | 4,646,302,945.86 | 34.80% |
| Net cash generated from/used in operating activities | 4,288,575,424.84 | 3,475,037,036.28 | 23.41% |
| Subtotal of cash generated from investing activities | 1,989,829,350.62 | 9,831,224,130.57 | -79.76% |
| Subtotal of cash used in investing activities | 17,138,391,838.98 | 7,747,352,982.62 | 121.22% |
| Net cash generated from/used in investing activities | -15,148,562,488.36 | 2,083,871,147.95 | -826.94% |
| Subtotal of cash generated from financing activities | 36,557,170,707.26 | 10,486,329,575.00 | 248.62% |
| Subtotal of cash used in financing activities | 27,681,971,449.91 | 11,274,819,013.90 | 145.52% |
| Net cash generated from/used in financing activities | 8,875,199,257.35 | -788,489,438.90 | 1225.60% |
| Effect of exchange rate fluctuations on cash | -371,390,771.83 | -294,425,747.23 | 26.14% |
| Net increase in cash and cash equivalents | -2,356,178,578.00 | 4,475,992,998.10 | -152.64% |
China Merchants Port Group Co., Ltd. Annual Report 2018
less cash generated from and more cash used in investing activities.Subtotal of cash generated from financing activities rose 248.62% year-on-year, primarily driven bya higher amount of borrowings obtained.Subtotal of cash used in financing activities rose 145.52% year-on-year, primarily driven by ahigher amount of repayments of borrowings.Net cash generated from financing activities rose 1225.60% year-on-year, primarily driven by ahigher amount of net inflow calculated by borrowings obtained minus repayments of borrowings.Explanation of why net cash generated from/used in operating activities varies significantly fromnet profit of the Reporting Period:
√ Applicable □ Not applicableFor the Reporting Period, net cash generated from operating activities was RMB4,288,575,424.84,while net profit was RMB2,885,914,753.96. The gap was primarily caused by the changes in thefair value of financial assets as a result of the adoption of the new accounting standards governingfinancial instruments for the current year.
III Analysis of Non-Core BusinessesThe non-core business operations with a significant impact on the Company’s profit are as follows:
Unit: RMB
| Amount | As % of total profit | Main source/reason | Exceptional or recurrent | |
| Investment income | 3,967,828,149.48 | 109.78% | Share of the profit of joint ventures and associates, mainly Shanghai Port | Recurrent |
| Gain/loss on changes in fair value | -1,074,406,837.68 | -29.73% | Loss on changes in the fair value of trading financial assets | Exceptional |
| 31 December 2018 | 1 January 2018 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary capital | 7,070,308,704.75 | 5.52% | 7,729,460,082.75 | 7.08% | -1.56% | - |
| Accounts | 1,109,230,503.08 | 0.87% | 892,415,771.49 | 0.82% | 0.05% | - |
China Merchants Port Group Co., Ltd. Annual Report 2018
receivable
| receivable | ||||||
| Inventory | 108,567,270.02 | 0.08% | 82,789,282.22 | 0.08% | 0.00% | The adding of new subsidiaries to the consolidated financial statements |
| Investment property | 5,890,146,989.51 | 4.60% | 6,060,625,982.13 | 5.55% | -0.95% | - |
| Long-term equity investments | 50,176,577,263.40 | 39.19% | 43,160,849,807.48 | 39.55% | -0.36% | - |
| Fixed assets | 22,994,190,880.43 | 17.96% | 23,167,393,454.86 | 21.23% | -3.27% | - |
| Construction in progress | 5,499,426,090.06 | 4.30% | 2,308,007,330.50 | 2.11% | 2.19% | The adding of new subsidiaries to the consolidated financial statements and a higher wharf construction expense |
| Short-term borrowings | 3,425,291,312.62 | 2.68% | 2,580,000,000.00 | 2.36% | 0.32% | - |
| Long-term borrowings | 6,971,479,842.18 | 5.45% | 7,670,516,491.15 | 7.03% | -1.58% | - |
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Ending amount |
| Financial assets | |||||||
| Financial assets at fair value through profit or loss (exclusive of derivative financial assets) (note) | 2,982,466,950.23 | -948,440,538.45 | - | - | - | - | 2,087,872,081.94 |
| Investments in other equity instruments (note) | 233,483,968.79 | - | 10,304,221.16 | - | - | - | 247,848,314.30 |
China Merchants Port Group Co., Ltd. Annual Report 2018
Subtotal of financial assets
| Subtotal of financial assets | 3,215,950,919.02 | -948,440,538.45 | 10,304,221.16 | - | - | - | 2,335,720,396.24 |
| Total of the above | 3,215,950,919.02 | -948,440,538.45 | 10,304,221.16 | - | - | - | 2,335,720,396.24 |
| Financial liabilities | - | - | - | - | - | - | - |
| Amount in 2018 (RMB) | Amount in 2017 (RMB) | Change (%) | |
| Equity investments | 13,015,203,804.01 | 4,177,797,893.03 | 211.53% |
| Non-equity investments | 2,437,080,643.74 | 2,511,160,012.03 | -2.95% |
| Investee | Principal activity | Way of investment | Investment amount | The Company’s interest | Funding source | Joint investor | Term of investment | Type of products | Investment progress as at the balance sheet date | Return on investment in the Reporting Period | Any legal matter involved | Disclosure date | Index to disclosed information |
| CMPort (Zhoushan) RoRo | Operation of freight station | Capital increase | 14,970.98 | 51% | Self-owned funds | Zhoushan Lanhai Investme | Permanent | Equity | Equity has been | -212.42 | Not | 27 January 2018 | Refer to http://www.cninfo.com.cn for details |
China Merchants Port Group Co., Ltd. Annual Report 2018
LogisticsCo., Ltd.
| Logistics Co., Ltd. | (yard) (freight forwarding and storage and tallying) | nt Co., Ltd., CSC RoRo Logistics Company Limited, Zhoushan Archipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd. and Zhoushan Archipelago New Area Xinghai RoRo Terminal Co., Ltd. | transferred | of relevant announcement on resolutions (announcement No. 2018-007) | |||||||||
| China Merchants Port Holdings Company Limited | Port operations | Acquisition | 2,465,000.00 | 39.45% | Additional shares | China Merchants Investment Development Company Limited | Permanent | Equity | Equity has been transferred | 256,681.31 | Not | 21 June 2018 | Refer to http://www.cninfo.com.cn for details of relevant announcement on resolutions (announcement No. 2018-062) |
| China Merchants Hainan Development & Investment Co., Ltd. | Land development, operation of parks and properties, construction and | New set up | 52,500.00 | 15% | Self-owned funds | China Merchants Group (H.K.) Limited, Jumbo Pacific Holdings Limited, China | Permanent | Equity | Established | - | Not | 1 December 2018 | Refer to http://www.cninfo.com.cn for details of relevant announcement on resolutions (announcement No. 2018-108) |
China Merchants Port Group Co., Ltd. Annual Report 2018
investment ofmunicipalinfrastructure, waterandpowersupply forparks,urbanrenewal,investment andmanagement ofprojects,etc.
| investment of municipal infrastructure, water and power supply for parks, urban renewal, investment and management of projects, etc. | Merchants Expressway Network & Technology Holdings Co., Ltd., China Merchants Industrial Investment Co., Ltd. and Sinotrans (HK) Logistics Limited | ||||||||||||
| Total | -- | -- | 2,532,470.98 | -- | -- | -- | -- | -- | -- | 233,071.89 | -- | -- | -- |
| Item | Way of investment | Fixed assets investment or not | Industry involved | Input amount in the Reporting Period | Accumulative actual input amount as of the period-end | Capital resources | Progress | Estimated return on investment | Accumulative realized revenues as of the period-end |
| Machong III silo | Self-build | Yes | Support activities of water transportation | 4,200 | 4,231 | Self-owned funds and loans | The civil work completed 30%, the purchase and installment of equipment completed the bid. | 10.5% | Not carry over |
| Building of Shantou Port’s headquarters | Self-build | Yes | Support activities of water transpo | 5 | 5 | Self-owned funds | Not yet start and is working out the construction plan with China Merchants Shekou | 10.0% | Not carry over |
China Merchants Port Group Co., Ltd. Annual Report 2018
rtation
| rtation | Industrial Zone Holdings Co., Ltd. | ||||||||
| Bulk grain vertical silo in Machong Terminal | Self-build | Yes | Support activities of water transportation | 3,163 | 24,096 | Self-owned funds and loans | Has been completed and put into operation in June 2018 | 8.0% | Not carry over |
| Project of berth in Xiamen Port Houshi Port | Self-build | Yes | Support activities of water transportation | 11,459 | 99,083 | Self-owned funds and loans | The physical construction of the project has been basically completed | 8.0% | Not carry over |
| Building project of Legeshan terminal in shunde, Foshan | Self-build | Yes | Support activities of water transportation | 4,743 | 51,889 | Self-owned funds and loans | The physical construction of the project has been basically completed and currently in the settlement process of each item of the project | 8.1% | Not carry over |
| Transformation project of Mawan Smart Port of Haixing Harbor | Self-build | Yes | Support activities of water transportation | 18,642 | 71,286 | Self-owned funds and loans | Construction of the hydraulic channel reactor completed 41.1%. The supporting equipment will be landed in late 2019 and early 2020. It is expected to be completed by June 2020 | 8.4% | Not carry over |
| Shantou Port Guangao Port Phase II project | Self-build | Yes | Support activities of water transportation | 71,904 | 150,228 | Self-owned funds and loans | Expected to be completed and put into operation on 30 June 2019 | 8.8% | Not carry over |
| Djibouti international Free Trade Zone Phase I Warehouse | Self-build | Yes | Support activities of water transportation | 33,714 | 34,514 | Self-owned funds | Has been completed and currently in the process of handling the certificate of land | 14.2% | Not carry over |
| Machong Project II | Self-build | Yes | Support activities of water transportation | 378 | 90,901 | Self-owned funds | At the present stage, the main construction content of the project is 50.86 meters of shoreline and rear construction, and 85% of the wharf has been backfilled. | 22.8% | Not carry over |
| TCP | Self-b | Yes | Suppor | 91,993 | 91,993 | Self-owne | The overall project was | 10.0% | Not carry |
China Merchants Port Group Co., Ltd. Annual Report 2018
expansionproject
| expansion project | uild | t activities of water transportation | d funds | completed 66% ahead of schedule, with equipment 36% completed | over | ||||
| Total | -- | -- | -- | 240,201 | 618,226 | -- | -- | -- | -- |
| Variety of securities | Code of securities | Name of securities | Initial investment cost | Accounting measurement model | Beginning carrying value | Gain/loss on fair value changes in the Reporting Period | Cumulative fair value changes recorded into equity | Purchased in the Reporting Period | Sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying value | Accounting item | Capital resources |
| Stock | 601018 | Ningbo Port | 592,183,095.14 | Fair value method | 2,164,404,449.06 | -873,891,271.63 | 0 | 0 | 0 | 32,107,779.07 | 1,361,414,474.58 | Trading financial assets | Self-owned |
| Stock | 06198 | Qingdao Port | 124,405,138.80 | Fair value method | 180,609,703.14 | 1,043,921.18 | 0 | 0 | 0 | 0 | 190,401,046.01 | Trading financial assets | Self-owned |
| Stock | 600377 | Jiangsu Expressway | 1,120,000.00 | Fair value method | 9,850,000.00 | 0 | -50,000.00 | 0 | 0 | 440,000.00 | 9,800,000.00 | Other equity instrument investment | Self-owned |
| Stock | 400032 | Petrochemical A1 | 3,500,000.00 | Fair value method | 382,200.00 | 0 | 0 | 0 | 0 | 0 | 382,200.00 | Other equity instrument investment | Self-owned |
| Stock | 400009 | Guang Jian 1 | 27,500.00 | Fair value method | 17,000.00 | 0 | 0 | 0 | 0 | 0 | 17,000.00 | Other equity instrument investment | Self-owned |
China Merchants Port Group Co., Ltd. Annual Report 2018
Total
| Total | 721,235,733.94 | -- | 2,355,263,352.20 | -872,847,350.45 | -50,000.00 | 0 | 0 | 32,547,779.07 | 1,562,014,720.59 | -- | -- |
China Merchants Port Group Co., Ltd. Annual Report 2018
Unit: RMB
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| China Merchants Port Holdings Company Limited | Subsidiary | Port business, bonded logistics and property investment | HKD39,070,126,258.00 | 122,364,211,826.33 | 76,860,856,823.59 | 8,573,857,384.94 | 7,652,557,348.82 | 6,506,497,086.15 |
| Shanghai International Port (Group) Co., Ltd. | Joint stock company | Business related to port, container and terminal | RMB23,173,674,650.00 | 144,367,034,015.90 | 82,350,314,450.25 | 38,042,544,621.37 | 14,261,140,583.93 | 11,472,021,103.16 |
| China Nanshan Development (Group) Inc. | Joint stock company | Holding via investment | RMB900,000,000.00 | 45,189,124,267.24 | 15,431,558,364.91 | 13,783,861,995.28 | 4,441,542,814.51 | 2,853,690,744.34 |
| Dalian Port (PDA) Company Limited | Joint stock company | port and logistics | RMB12,894,535,999.00 | 35,315,583,172.89 | 20,860,237,206.45 | 6,754,444,902.38 | 859,395,678.83 | 681,981,351.02 |
| Subsidiary | How subsidiary was obtained or disposed in the Reporting Period | Effects on overall operations and operating performance |
| China Merchants Port Holdings Company Limited | Business combination under the same control | Business integration |
| Shenzhen Haixing Onoda Logistics Development Co., Ltd. | Obtained by other method | Cooperate with berth transformation of the wharf |
| TCP Participa??es S.A. | Business combination not under the same control | Container terminal newly added |
| CMPort (Zhoushan) RoRo Logistics Co., Ltd. | Obtained by other method | Newly added services of loading and unloading at ro-ro terminal and warehousing |
China Merchants Port Group Co., Ltd. Annual Report 2018
IX. Outlook of the Companyblelled by the Compan1. Outlook and trends of the industryLooking forward to 2019, after the strong recovery in the last two years, the global economy willface the risk of slower growth. Trade protectionism will lead to more friction in the circulation ofkey elements and geopolitical issues will continue to dampen global recovery. With the weakeningmarginal utility of the stimulation policies, coupled with the effect of continuous interest rate hike,the United States will be facing increased debt and financial pressure; while the Europeaneconomies will continue to recover at a slow pace with the prevailing uncertainties associated withpolitical risks. Meanwhile, as affected by capital outflow, currency depreciation and geopoliticalissues, the emerging and developing economies demonstrated diverging growth trends. Accordingto IMF, it is expected that the global economy will grow at a lower rate of 3.5% in 2019, down 0.2percentage point as compared to that of 2018, among which, developed economies are expected togrow by 2.0%, down 0.3 percentage point as compared to that of 2018; emerging and developingeconomies will grow by 4.5%, down 0.1 percentage point as compared to that of 2018, and the totalglobal trade volume (including goods and services) will grow by 4.0%, flat with 2018.Chinang forward to 2019, after the strong recovery in the last two years, the global economy willface the risk of slower growth. Trade protectionism will lead to gradually stabilise under morevigorous fiscal expansion whilst income tax reform will help to stabilise consumption. The constantpromulgation of supportive policies for private enterprises will restore the confidence of theenterprises. Fiscal and monetary policies aiming to stabilise overall demand will be more relaxed,and a more moderate and flexible approach will be adopted in addressing complicated internationalissues such as Sino-US trade friction. All of the above will be conducive to economic and tradegrowth. According to the IMF, China’s economy is projected to grow by 6.2% in 2019, down 0.4percentage point over 2018.Affected by the trade investment policy of 019, down 0.4 percentage point over 2018. economy willface the risk of slower growtt rate hike and tax reduction of developed countries, the risk ofdeclining cyclical recovery momentum of the global economy will increase. In 2019, the globalcontainer transportation market will be under recovery and adjustment with the pressure ofovercapacity. Under the influence of the Sino-US trade friction, the centralized export in 2018 bycertain cargo owners of Trans-Pacific shipping routes will have a certain impact on their seabornevolume in 2019; while the shipping price of Asia-Europe shipping routes is under pressure asaffected by the economic slowdown in Europe. However, the industrial transfer will bring more
China Merchants Port Group Co., Ltd. Annual Report 2018
rooms for the development of shipping routes in Southeast Asia. Meanwhile, under the influence oftrade friction and industrial transfer, the port investment of emerging economies will be facingintensified competition. The port price of developed countries continued to rise, creating greatpressure for the acquisition and expansion strategy of port operators.The current policies in China encouraging imports and acceleration of consumption upgrade willdrive the growth of domestic import. Through measures such as organizing Import Expo, theChinese government has been vigorously driving consumption. In the future, the government willfocus on both export and import in China and the consumption import market will certainly providegreat support for the port operation in China. The continued implementation of Guangdong-HongKong-Macao Greater Bay Area and free-trade port policy is expected to promote port development.With enhancing trading activities in the region, there will be opportunities for the development ofregional shipping hubs. The integration of domestic regional ports has also brought opportunities totap into major coastal cities and realise comprehensive development. Under the new developmenttrend of domestic and overseas economy and trade as well as ports and the shipping industry, theCompany will be playing an increasingly important role as a major player among globalcomprehensive port service providers.2. Development strategy of the CompanyThe Company is striving to become a world imports and acceleration of consumption upgrade willdrive the growth of domestic import. Through measures such as organizing ImportExpo,ology-driven and flexible” and the goal of quality development to accelerate thetechnology-powered innovation, thereby realizing a scientific global layout with balanceddevelopment, providing first-class professional solutions and seeking more returns for shareholders,which will in turn support the development of local economy and industries and promote positivedevelopment of the port industry.Firstly, in respect of domestic strategies, the Company will, by seizing the opportunity arising fromthe supply-side reform and based on “regional consolidation and enhancement of synergy”, seek foropportunities for consolidation and cooperation on an ongoing basis across the five main coastalregions with a view to further expanding and improving the ports network layout within China. TheGroup will lead a new direction for the consolidation of regional ports with a key focus onconstantly improving the quality of port development with its best efforts. Secondly, in respect ofoverseas strategies, the Company will continue to capitalize on the opportunities arising from the“Belt and Road” initiative promoted by China and the international industrial transfers, at the sametime adapting to the trend of deploying mega-vessels and forming shipping alliances. Emphasis willbe placed on the development of global major hub ports and gateway ports as well as areas with
China Merchants Port Group Co., Ltd. Annual Report 2018
high market potential, fast-growing economy and promising development prospect. The Companywill grasp opportunities in port, logistics and related infrastructures investment for the on-goingenhancement of its global port network.Thirdly, in respect of innovation strategies, the Company will adhere to dhere tony will ct ofinnovation strategies, ogistics and related infrastructuresze on the opportunitiesnnovation andholding the technology high ground. By means of technological innovation and innovativemanagement, it will significantly enhance the efficiency and effectiveness of port operation andbecome a leading enterprise in the automation transformation of traditional ports. It will also enrichthe comprehensive port services through business model innovation.3. Business plans for 2019In 2019, under the strategic principle of being del innovation.ted infrastructuresze on theopportunitiesnnovatioCompany will strengthen synergic cooperation externally and accelerateintegrated development internally, make efforts to enhance various capabilities, improve riskprevention and control, establish quality development models and be committed to the vision ofbeing a “will strengthen synergic cooperation externally and.Regarding the development of homebase port, the Company will promote the West Shenzhen PortZone as a world-class leading port by pushing forward the dredging project of West Shenzhen PortZone and the completion and acceptance of the Tonggu Channel project as soon as possible andthus offering protection to the mega vessels to call at West Shenzhen Port Zone. Meanwhile, theCompany will strengthen the construction of smart ports, facilitate the construction of “PRDNETWORK” platform, expand the network scope and resource docking depth of the Pearl RiverDelta, enhance the transformation of the smart safety monitoring and on-shore smart containeridentification system of CCT Port Zone by the use of various technologies such as LBS system,Internet of Things, big data, etc. and therefore contributing to the construction of smart ports. Inaddition, accelerating the promotion of innovative applications, implementation of innovativeprojects including ngystem for safety protection and operation support in RTGs” and “RTG RemoteControl” will improve operational efficiency, reduce operating costs, strengthen trade facilitationand improve the overall competitiveness of the homebase port. In terms of overseas homebase port,the Company will leverage the synergic advantages of CICT and Hambantota port to create aleading regional port and international shipping centre in South Asia.Regarding overseas expansion, the Company will further improve its global ports network, focus ongateway ports and conduct in-depth research regarding its overseas layout. Also, the Company willidentify priorities in strict compliance with assessment dimensions and principles for overseas portsprojects. The Group will conduct studies on its overseas network along the “East-West route,
China Merchants Port Group Co., Ltd. Annual Report 2018
South-North route, regions along the Belt and Road Initiatives”. Furthermore, the Company willcontinue to put more efforts in the study of global regional market to establish and improve theregional market development and research database for the East Africa, West Africa, South Asia,Europe, Latin America and Southeast Asia.In terms of comprehensive development, leveraging the opportunities brought by the shift towardsve the regional market devel will step up its efforts in promoting the “Port-Park-City” businessmodel, and actively push forward the construction and development of the Djibouti Free TradeZone for the comprehensive development project in Djibouti. For the comprehensive developmentproject in Togo, the Group will continue to proactively promote the relevant comprehensivedevelopment cooperation projects; while for the Hambantota Port project, the Group will facilitatethe preliminary work in relation to introduction of investment and capital based on the improvementof the park development plan. Capitalizing development opportunities arising from of theGuangdong-Hong Kong-Macao Greater Bay Area, the Company will actively make progress on itsland preparatory works in the Qianhai-Shekou Free Trade Zone by participating in the overalldevelopment thereof.Regarding operation management, the Company will continuously optimise internal procedures andmechanisms to promote management reform and process reengineering. The Company will focusits efforts on enhancing the level of refined operation and management of terminals for which it is acontrolling shareholder, benchmarking its terminal management, reducing cost and improvingefficiency, and generating income by saving costs so as to establish a governance structure ofglobalised operation and management headquarter, optimise overall management system and enableoperating mechanism to be in line with project operation. The Company will also enhance itsinvestment management and amend and improve relevant systems and procedures.In terms of M&A integration, the Company will actively incorporate national strategies in itsoperation, with a focus on the policy opportunities arising from the Belt and Road Initiativei,coordinated development of Beijing, Tianjin and Hebei Province, the Yangtze River Economic Belt,the Guangdong-Hong Kong-Macao Greater Bay Area, the opening-up of Hainan trade zone, therevitalisation of Northeast China and the integrated development of the Yangtze River Delta Zone.The Company will also form a set of effective operational procedures to develop world-class M&Aintegration capability. Moreover, when the Company manages the assets of Liaoning Port, it willexplore the potential for integration, focus on its core business and implement the integration ofoperational models through optimising the port zone layout, thereby creating business synergies.Regarding innovative development, the Company will continue to enhance informatisation, upgradeand promote its core IT products, i.e. “TOS” series. Taking “E-Port” as a pivot, the Company will
China Merchants Port Group Co., Ltd. Annual Report 2018
set up the establishment of top-tier port platform for providing excellent customer services. On theone hand, the Company will attach further importance to the unique role and fundamental positionof technology-driven and innovation-oriented development. Also, the Company will create atop-tier port innovation ecosystem. Smart upgrade of controlling terminals of the Company will begradually achieved through technological innovation. The Company will learn from the experienceof implementing to enhance informatisation, upgrade and promote its core IT products, i.e. “TOS”series. Taking “E-Port” as a pivot, the Company will set up the establishment of top-tier portplatform for providif various terminals in the future.Capital needs and use plan
In 2019, the Company will formulate capital expenditure plans according to business development needs.Key investment projects include Haixing Harbor upgrading and reconstruction project, Machong Port bulkgrain project, Zhanjiang Port Xiashan Port General Terminal Project, Shantou Port Guangao Port Phase IIproject and TCP terminal expansion project, etc.
4. Possible risks and counter measures
(1)External risks
The external risks mainly come from the combined impact of international political environmentand consolidation of domestic port groups. As for international political risks, the rise of populismaround the globe has led to challenges in the globalization trend. The change in geopolitical andeconomy trade landscape, as highlighted by Sino-US trade friction, has caused changes in globaltrade structure and resulted in certain impacts on global economy trade and port shipping sector.Shipping routes in various regions across the globe may be affected and changed accordingly,causing adverse impacts on containers and bulk cargo businesses of the Company. As forconsolidation of domestic port groups, with an ever-deepening consolidation of various regions inChina, the port competition landscape will change correspondingly, causing uncertainty to thebusiness and operation earnings of the Company.By enhancing the build-up of risk identification, warning and mitigation ability, the Company hasprevented, controlled and reduced external risks. The Company has continued to pay attention tochanges in external policies and market environment specific to international political environmentrisk, especially Sino-US trade friction. On one hand, the Company can improve risk warning andmonitoring measures and ensure proper work on customer credit status so as to reduce the risk ofaccounts receivable. On the other hand, the Company can notice the changes in the trade marketstructure and flow of resources, formulate and adjust strategies for business development in time soas to enhance collaboration and close connection between ports at home and abroad, improveservice quality and related services, and stabilize import and export business and customer base.
China Merchants Port Group Co., Ltd. Annual Report 2018
(2) Internal risks
The internal risks mainly come from the risks of shortage of outsourced labour, increased cost andlegal compliance of overseas investment projects. In the context of economic transformation andupgrade in Shenzhen, wharf operation as a traditional industry faced significant labour shortage forthe outsourced business due to the current working conditions and remuneration packages.Remarkable trends such as staff turnover and aging staff will affect production efficiency and posedsafety risks. When the Company expands its overseas business, the requirement on compliance withlegal policies in invested countries will pose the risk of uncertainty on the investment and operationof the Company.The Company has proactively studied the outsourced staffing policy and formulated correspondingresponsive strategies to diminish the impacts of outsourced staffing risk on the business of theCompany, including enhancing the working environment of outsourced staff and improving theirremuneration packages by increasing labor productivity, accelerating technological upgrade andinnovation of techniques to raise the level of mechanization, reduce manual labor input and lowerthe use of manpower. Regarding the legal compliance risk of overseas investment projects, theCompany will step up its efforts in establishing and enforcing compliance management system andensure proper work on management and control throughout the process, i.e. before, during, andafter overseas investment project investment and operation, so as to strictly prevent legalcompliance risks.X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
| Date | Way of communication | Type of communication party | Index to main information communicated |
| 4 January 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/S001872/index.html) |
| 6 February 2018 | One-on-one meeting | Institution | |
| 12 March 2018 | One-on-one meeting | Institution | |
| 10 May 2018 | One-on-one meeting | Institution | |
| 25 May 2018 | One-on-one meeting | Institution | |
| 13 November 2018 | One-on-one meeting | Institution | |
| 1 January 2018-31 December 2018 | By phone or written inquiry (EasyIR platform of SZSE) | Individual | |
| Times of communications | 195 | ||
| Number of institutions communicated with | 7 | ||
China Merchants Port Group Co., Ltd. Annual Report 2018
Number of individuals communicated with
| Number of individuals communicated with | 188 |
| Number of other communication parties | 0 |
| Tip-offs or leakages of substantial supposedly-confidential information during communications | No |
| Date | Way of communication | Type of communication party | Index to main information communicated |
| 1 January 2019-30 March 2019 | By phone or written inquiry (EasyIR platform of SZSE) | Individual | Main discussion: basic business condition, investments and financial condition of the Company; Materials provided: brochure of the Company; Index: SZSE EasyIR (http://irm.cninfo.com.cn/ssessgs/S001872/index.html) |
| Times of communications | 55 | ||
| Number of institutions communicated with | 0 | ||
| Number of individuals communicated with | 55 | ||
| Number of other communication parties | 0 | ||
| Tip-offs or leakages of substantial supposedly-confidential information during communications | No | ||
China Merchants Port Group Co., Ltd. Annual Report 2018
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)Formulation, execution or adjustments of profit distribution policy for ordinary shareholders,especially cash dividend policy, in Reporting PeriodPursuant to the CSRC Guideline for Listed Companies No.3-Cash Dividends of Listed Companiesand the Notice of CSRC on Further Implement ting Matters Related to Cash Dividends of ListedCompanies, the Articles of Association clarifies the specific profit distribution policy,decision-making procedures and mechanism, adjustment of profit distribution policy,implementation of profit distribution plan and profit distribution for foreign shares. During theReporting Period, the Company executed the profit distribution policy in strict compliance with theArticles of Association.
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | Yes |
China Merchants Port Group Co., Ltd. Annual Report 2018
(2) Based on the total 644,763,730 shares as at the end of 2016, a cash dividend of RMB4.96 (taxincluded) was to be distributed for every 10 shares, with a total of RMB319,802,810.08 beingdistributed.The Board of Directors of the Company published the implementation announcement on dividendpayout for 2016 on Securities Times and Ta Kung Pao (HK) dated 25 July 2017, and completed thedividend payout for the A-share and B-share holders on 1 August 2017 and 3 August 2017respectively.2. Dividend Payout Plan for 2017As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the net profit of theCompany as the parent for 2017 stood at RMB731,510,588.25 and the cumulative distributableprofit at RMB1,046,473,178.03.(1) According to the Company Law and the Articles of Association of the Company, the Companymay stop making statutory surplus reserve when its accumulative amount reaches 50% of theregistered capital. The accumulative statutory surplus reserve of the Company as the parent stood atRMB520,074,434.56 for 2017, equal to 80.66% of the registered capital. Therefore, the Companyintends not to draw surplus reserve from retained earnings for 2017.(2) Based on the total 644,763,730 shares as at the end of 2017, a cash dividend of RMB13.19 (taxincluded) was to be distributed for every 10 shares, with a total of RMB850,443,359.87 beingdistributed.The Board of Directors of the Company published the implementation announcement on dividendpayout for 2017 on Securities Times and Ta Kung Pao (HK) dated 16 May 2018, and completed thedividend payout for the A-share and B-share holders on 23 May 2018 and 25 May 2018respectively.3. Dividend Payout Plan for 2018As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the consolidated netprofit attributable to the Company as the parent for 2018 stood at RMB1,090,418,910.77 and the netprofit of the Company as the parent at RMB71,014,741.10.(1) According to the Company Law and the Articles of Association of the Company, the Companywithdrew RMB7,101,474.11 of profit as statutory reserve. The accumulative distributable profit of
China Merchants Port Group Co., Ltd. Annual Report 2018
the Company as the parent at the end of 2018 was RMB259,943,085.16.(2) Base on the total 1,793,412,378 shares as at the end of 2018, a cash dividend of RMB1.14 (taxincluded) is to be distributed for every 10 shares, totaling RMB204,449,011.09.After the above-mentioned distribution, the retained earnings of the Company as the parent will beRMB55,494,074.07.The above profit distribution plan still needs to be submitted to the 2018 Annual General Meetingfor approval.Cash dividend for ordinary shareholders in the past three years (including the ReportingPeriod)
Unit: RMB
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated statements for the year (B) | A as % of B (%) | Cash dividends in other forms (such as share repurchase) (C) | C as % of B (%) |
| 2018 | 204,449,011.09 | 1,090,418,910.77 | 18.75% | 0 | 0% |
| 2017 | 850,443,359.87 | 504,495,064.39 | 168.57% | 0 | 0% |
| 2016 | 319,802,810.08 | 532,376,492.97 | 60.07% | 0 | 0% |
| Cash dividend/10 shares (RMB) (tax inclusive) | 1.14 |
| Bonus issue from capital reserves (share/10 shares) | 0 |
| Share base (share) | 1,793,412,378 |
| Total cash dividends (RMB) (tax inclusive) | 204,449,011.09 |
| Distributable profits (RMB) | 259,943,085.16 |
| Cash dividends as % of total profits to be distributed (%) | 100% |
| Details about the final dividend plan | |
China Merchants Port Group Co., Ltd. Annual Report 2018
As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the consolidated net profit attributableto the Company as the parent for 2018 stood at RMB1,090,418,910.77 and the net profit of the Company as theparent at RMB71,014,741.10.1. According to the Company Law and the Articles of Association of the Company, the Company withdrewRMB7,101,474.11 of profit as statutory reserve. The accumulative distributable profit at the end of 2018 wasRMB259,943,085.16.2. Base on the total 1,793,412,378 shares as at the end of 2018, a cash dividend of RMB1.14 (tax included) is to bedistributed for every 10 shares, totaling RMB204,449,011.09.After the above-mentioned distribution, the retained earnings of the Company as the parent will beRMB55,494,074.07.The above profit distribution plan still needs to be submitted to the 2018 Annual General Meeting for approval.
China Merchants Port Group Co., Ltd. Annual Report 2018
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and other EntitiesFulfilled in the Reporting Period or Ongoing at the Period-end
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in share reform | China Nanshan Development (Group) Inc. | Other commitment | In order to enhance the shareholding confidence of tradable shareholders, and encourage the core management and key personnel so that the interests of the management and all the shareholders can coincide, CND Group 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 April 2006 | Effective until no-longer to be the shareholder of the Company | Fulfilled On 8 June 2018, China Nanshan Development (Group) Inc. transferred 209,687,067 shares of Chiwan Wharf held by it to CMGD. For relevant details, please refer to the Announcement on Completion of Share Transfer of Shareholders and Changes in Controlling Shareholders (announcement No.: 2018-060) disclosed on cninfo.com.cn on 12 June 2018. The above commitment is effective until China Nanshan Development (Group) Inc. no longer holds shares of the Company. |
| Commitments made in acquisition | CMPort Holdings | Commitments on horizontal | 1. Commitment on share custody 2. Commitment on safeguarding independence of CMPort 3. Commitment on horizontal competition | 17 September 2012 | Effective until 16 September 2020 for | Fulfilled On 5 February 2018, China Nanshan Development (Group) |
China Merchants Port Group Co., Ltd. Annual Report 2018
documentsorshareholdingalterationdocuments
| documents or shareholding alteration documents | competition, related-party transaction and capital occupation | 4. Commitment on regulating related-party transactions | commitment on horizontal competition and CMPort is the controlling shareholder of the Company; effective in the share custody term for other three commitments | Inc. signed the Termination Agreement on the Share Custody Agreement of Shenzhen Chiwan Wharf Holdings Limited with CMPort Holdings; the aforesaid termination agreement of share custody agreement was approved on the general meeting of CMPort Holdings on 19 March 2018. So far, CMPort Holdings would no longer be entrusted to manage shares of Chiwan Wharf held by China Nanshan Development (Group) Inc. For more details, please refer to the relevant announcement disclosed by the Company on 3 May 2018. On 8 June 2018, Malai Storage and KFEL transferred their shares of Chiwan Wharf respectively to CMGD and Broadford Global. For more details, please refer to the Announcement on Completion of Share Transfer of Shareholders and Changes in Controlling Shareholders (announcement No.:2018-060) disclosed on cninfo.com.cn by the Company on 12 June 2018. |
China Merchants Port Group Co., Ltd. Annual Report 2018
So far, CMPort Holdings was nolonger the controllingshareholder of the Company andthe terms of above commitmentswere ended.
| So far, CMPort Holdings was no longer the controlling shareholder of the Company and the terms of above commitments were ended. | ||||||
| Commitments made in acquisition documents or shareholding alteration documents | Malai Storage | Commitments on horizontal competition, related-party transaction and capital occupation | 1. Commitment on safeguarding independence of CMPort 2. Commitment on horizontal competition 3. Commitment on regulating related-party transactions | 27 December 2012 | Effective until no-longer to be the shareholder of the Company | Fulfilled On 8 June 2018, Malai Storage transferred 161,190,933 shares of Chiwan Wharf held by it to CMGD. For relevant details, please refer to the Announcement on Completion of Share Transfer of Shareholders and Changes in Controlling Shareholders (announcement No.: 2018-060) disclosed on cninfo.com.cn on 12 June 2018. The above commitment is effective until Malai Storage no longer holds shares of the Company. |
| Commitments made in acquisition documents or shareholding alteration documents | CMGD and Broadford Global | Commitments on horizontal competition, related-party transaction and capital | Commitment on safeguarding independence of CMPort made by CMGD and its person acting in concert Broadford Global: to safeguard the independence of finance, institutions, business and personnel of CMPort as well as independence and integrity of assets of CMPort | 15 March 2018 | The commitment on safeguarding independence of CMPort is effective for a long time; the commitment | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
occupation
| occupation | on regulating related-party transactions is effective during the period when CMGD and its persons acting in concert possess control power over the Company | |||||
| Commitments made in acquisition documents or shareholding alteration documents | CMGD and Broadford Global | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on regulating related-party transaction made by CMGD and corresponding persons acting in concert- Broadford Global: 1. CMGD/Broadford Global will make a great effort to reduce related-party transaction between CMGD/Broadford Global and its related parties as well as CMPort. Inevitable business dealings or transactions shall be conducted as per marketization principle and fair price and the obligation of information disclosure shall be fulfilled pursuant to provisions; 2. CMGD/Broadford Global and its related parties ensure they will strictly observe related stipulations of laws, regulations, normative documents and Articles of Association of CMPort and equally execute shareholders' rights and fulfill shareholders' obligations together with other shareholders in line with legal program as well as won't seek improper interest with actual controller's status or damage legitimate interest of CMPort and other shareholders; 3. The above commitment is continuously effective during the period | 15 March 2018 | The commitment on safeguarding independence of CMPort is effective for a long time; the commitment on regulating related-party transactions is effective during the period when CMGD and | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
when CMGD/Broadford Global has the right to control CMPort. Incase of losses incurred by CMGD/Broadford Global failing to fulfillthe above commitment to CMPort, CMGD will bear correspondingcompensation responsibility.
| when CMGD/Broadford Global has the right to control CMPort. In case of losses incurred by CMGD/Broadford Global failing to fulfill the above commitment to CMPort, CMGD will bear corresponding compensation responsibility. | its persons acting in concert possess control power over the Company | |||||
| Commitments made in acquisition documents or shareholding alteration documents | CMG | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on regulating related-party transaction: 1. China Merchants Group will try its best to reduce related-party transaction between it and its related parties and CMPort. Inevitable business dealings or transactions shall be conducted as per marketization principle and fair price and the obligation of information disclosure shall be fulfilled pursuant to provisions; 2. China Merchants Group ensure they will strictly observe related stipulations of laws, regulations, normative documents and Articles of Association of CMPort and equally execute shareholders' rights and fulfill shareholders' obligations together with other shareholders in line with legal program as well as won't seek improper interest with actual controller's status or damage legitimate interest of CMPort and other shareholders; 3. The above commitment is continuously effective during the period when China Merchants Group has the right to control CMPort. In case of losses incurred by China Merchants Group failing to fulfill the above commitment to CMPort, China Merchants Group will bear corresponding compensation responsibility. | 15 March 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
| Commitments made in acquisition documents or | CMG | Commitments on horizontal competition, | Commitment on horizontal competition: 1. On account of horizontal competition in the aspect of port business between China Merchants Group and CMPort, China Merchants Group promises to completely solve horizontal competition problem by asset restructuring before 16 September 2020; | 15 March 2018 | 16 September 2020 | Fulfilled On 26 December 2018, the Company purchased 1,313,541,560 ordinary shares of CMPort Holdings held by CMID |
China Merchants Port Group Co., Ltd. Annual Report 2018
shareholdingalterationdocuments
| shareholding alteration documents | related-party transaction and capital occupation | 2. China Merchants Group confirms the commitment letter is aimed at guaranteeing rights and interests of all the shareholders of CMPort as well as such clauses and commitments are reasonable. China Merchants Group won't carry out operation activities damaging benefits of CMPort and all the shareholders from China Merchants Group based on its control against CMPort. 3. Each commitment carried in his commitment letter shall be independently executed by China Merchants Group confirmed. It shall not influence the effectiveness of the other commitments in case any commitment is deemed invalid or terminated; 4. Provision, explanation, fulfillment and execution of the commitment letter apply to provisions of related laws and regulations of the People's Republic of China (excluding Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan for the purpose of the commitment letter); 5. The commitment letter takes effect as of the date of official signature by China Merchants Group; 6. Above-mentioned various promises are continuously effective during the period when China Merchants Group controls CMPort. | and CMPort Holdings starts to be involved into the combination financial statements of the Company. The commitment was fulfilled. | |||
| Commitments made in time of asset restructuring | CMID | Commitment on restriction on share trading | 1. CMPort shares obtained by purchasing assets with shares issued this time are forbidden to be transferred or transacted in the market before the latter one between the date arising 36 months after the date when CMPort shares gained by CMID based on this transaction are registered under the name of CMID and the date when fulfillment of compensation obligations set forth in the Impairment Compensation Agreement for Issuing Shares To Purchase Assets signed by and between CMID and CMPort, separately and its supplementary agreement (if any) is over (except for repurchasing or presenting shares pursuant to Impairment Compensation Agreement for Issuing Shares To Purchase Assets and its supplementary agreement (if any)); | 26 December 2018 | 25 June 2022 | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
2. In case of closing price of CMPort stocks being lower than issueprice for consecutive 20 transaction days within 6 months aftercompletion of the transaction or such closing price being lower thanissue price at the end of the 6th month after completion of thetransaction, the lockup period of CMPort stocks held by CMID willbe automatically lengthened for at least 6 months;3. CMPort shares which derive from consideration shares obtained byCMID based on the transaction during the lockup period due toCMPort distributing stock dividend and capital reserve converted intoincreased capital shall be subject to the commitment regarding theabove restricted stock trade period;4. In case that the transaction is placed on file for investigation andprosecution by judiciary authorities as well as registered andinvestigated by CSRC because false record, misleading statement orimportant omission happens to provided or disclosed information,CMID won't transfer its shares with rights and interests at CMPortbefore case investigation conclusion is drawn;5. In case that lockup period set forth in the commitment isinconsistent with regulatory opinions from securities marketsupervision department or lockup period required by relatedprovisions, CMID shall adjust the above lockup period pursuant toregulatory opinions from relevant securities market supervisiondepartment and related provisions.6. After the above lockup period expires, CMID Port shall observeprovisions of laws and regulations, related rules of Shenzhen StockExchange as well as Articles of Association of CMPort in case ofreducing shares held by it.
| 2. In case of closing price of CMPort stocks being lower than issue price for consecutive 20 transaction days within 6 months after completion of the transaction or such closing price being lower than issue price at the end of the 6th month after completion of the transaction, the lockup period of CMPort stocks held by CMID will be automatically lengthened for at least 6 months; 3. CMPort shares which derive from consideration shares obtained by CMID based on the transaction during the lockup period due to CMPort distributing stock dividend and capital reserve converted into increased capital shall be subject to the commitment regarding the above restricted stock trade period; 4. In case that the transaction is placed on file for investigation and prosecution by judiciary authorities as well as registered and investigated by CSRC because false record, misleading statement or important omission happens to provided or disclosed information, CMID won't transfer its shares with rights and interests at CMPort before case investigation conclusion is drawn; 5. In case that lockup period set forth in the commitment is inconsistent with regulatory opinions from securities market supervision department or lockup period required by related provisions, CMID shall adjust the above lockup period pursuant to regulatory opinions from relevant securities market supervision department and related provisions. 6. After the above lockup period expires, CMID Port shall observe provisions of laws and regulations, related rules of Shenzhen Stock Exchange as well as Articles of Association of CMPort in case of reducing shares held by it. | ||||||
| Commitments made in time of asset | CMGD and Broadfo | Commitment on restriction | 1. Before completion of the transaction, CMPort shares held by CMGD and Broadford Global (include increased shares because allotment of shares, giving bonus and capital reserve converted into | 26 December 2018 | 25 December 2019 | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
restructuring
| restructuring | rd Global | on share trading | increased capital occurs to CMPort) shall not be transferred within 12 months as of the date when the transaction is over (the registration date of new shares by purchasing assets with shares issued this time); 2. In case that lockup period set forth in the commitment is inconsistent with regulatory opinions from securities market supervision department or lockup period required by related provisions, CMGD shall adjust the above lockup period pursuant to regulatory opinions from relevant securities market supervision department and related provisions. 3. In case that the transaction is placed on file for investigation and prosecution by judiciary authorities as well as registered and investigated by CSRC because false record, misleading statement or important omission happens to provided or disclosed information, CMGD and Broadford Global won't transfer its shares with rights and interests at CMPort before case investigation conclusion is drawn. In case of losses incurred by CMGD and Broadford Global violate fulfill the above promise to CMPort, CMGD will bear corresponding compensation responsibility. | |||
| Commitments made in time of asset restructuring | CMGD and Broadford Global | Commitment on shareholding reduction | Share reduction plan during the period from the date of resumption of trading of CMPort to the date of completing reorganization; 1. CMGD and Broadford Global have no share reduction plan during the period from the date of resumption of trading of the transaction to the date of completing the transaction; 2. Above-mentioned shares include original CMPort shares held by CMGD and Broadford Global as well as shares deriving from original shares held during the above period due to participation in profit and presenting shares by CMPort as well as capital reserve converted into increased capital. | 26 July 2018 | Effective until completion of the asset restructuring | Fulfilled |
| Commitments made in | CMID | Commitments on | Commitment on avoiding horizontal competition: 1. CMID and other enterprise controlled by CMID fail to engage in or | 26 July 2018 | Effective until no-longer to | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
time of assetrestructuring
| time of asset restructuring | horizontal competition, related-party transaction and capital occupation | participate in business or activity which is similar with and constitutes or likely constitutes competitive relation with main business conducted by CMPort and the enterprise controlled by it now; 2. CMID will try its best to promote CMID and other enterprise controlled by CMID not to directly or indirectly engage in or participate in or assist to engage in or participate in any business or activity which constitutes or likely constitutes competitive relation with main business conducted by CMPort and the enterprise controlled by it now and in the future independently or together with others; 3. In case of discovering any new business opportunity which constitutes or likely constitutes direct or indirect competitive relation with main business of CMPort or the enterprise controlled by it, CMID or CMID and other enterprise controlled by it will immediately notify CMPort in written as well as make a great effort to promote such business opportunity to be provided to CMPort or the enterprise controlled by it firstly according to reasonable and fair terms and conditions; 4. In case of CMPort or the enterprise controlled by it waiving such competitive new business opportunity and CMID or/and other enterprise controlled by it engaging in such competitive business, CMPort or the enterprise controlled by it will have the right to purchase any stock rights, assets or other rights and interests in the above competitive business from CMID or/and other enterprise controlled by it once or several times at any moment, or CMPort will select entrusted operation, leasing or contract operation of assets or businesses of CMID or/and other enterprise controlled by it in the above competitive business as per the mode permitted by national laws and regulations; | be the largest shareholder of the Company |
China Merchants Port Group Co., Ltd. Annual Report 2018
5. When CMID and other enterprise controlled by it plans to transfer,sell, rent out, conduct licensed use of or transfer or allow to use assetsand businesses which constitutes or likely constitutes direct orindirect competitive relationship with main business of CMPort or theenterprise controlled by it in other way, CMID and other enterprisecontrolled by it will provide the right of priority assignment toCMPort or the enterprise controlled by it and promise to make a greateffort to promote other enterprise controlled by CMID provideCMPort or the enterprise controlled by it with the right of priorityassignment under the above situation;6. As of the date when the commitment letter is provided, CMIDpromises to compensate all actual losses, damages and expensesarising from violation of any clause in the commitment letter byCMID or the enterprise controlled by it to CMPort or the enterprisecontrolled by it.
| 5. When CMID and other enterprise controlled by it plans to transfer, sell, rent out, conduct licensed use of or transfer or allow to use assets and businesses which constitutes or likely constitutes direct or indirect competitive relationship with main business of CMPort or the enterprise controlled by it in other way, CMID and other enterprise controlled by it will provide the right of priority assignment to CMPort or the enterprise controlled by it and promise to make a great effort to promote other enterprise controlled by CMID provide CMPort or the enterprise controlled by it with the right of priority assignment under the above situation; 6. As of the date when the commitment letter is provided, CMID promises to compensate all actual losses, damages and expenses arising from violation of any clause in the commitment letter by CMID or the enterprise controlled by it to CMPort or the enterprise controlled by it. | ||||||
| Commitments made in time of asset restructuring | CMID | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on regulating related-party transaction: 1. CMID and other enterprise controlled by it will make a great effort to avoid and reduce related-party transaction between CMPort and economic entity controlled by it; 2. CMID and other enterprise controlled by it will exercise stockholder's rights in accordance with related provisions of relevant laws and regulations as well as Articles of Association of CMPort and fulfill the obligation of vote avoidance at the moment of voting for related-party transactions involved by CMID and other enterprise controlled by it at the stockholders' meeting; 3. As for related-party transaction which is inevitable or occurs due to reasonable reason, CMID will carry out transaction pursuant to the principle of openness, fairness and justice for market transaction and based on fair and reasonable market price, perform related-party transaction decision-making process and legally fulfill information | 26 July 2018 | Effective until no-longer to be the largest shareholder of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
disclosure obligation to safeguard benefits of CMPort and othershareholders of CMPort in line with provisions of laws, regulations,normative documents and Articles of Association of CMPort;4. It's ensured that no legitimate interest of CMPort and othershareholders of CMPort is damaged by related-party transactionbased on status and influence of CMPort;5. CMID will promote other enterprise controlled by it to observe thecommitment of Subparagraph 1-4;6. In case of CMID and other enterprise controlled by it violating theabove commitment, causing rights and interests of CMPort and itsshareholders are damaged, CMID will take correspondingcompensation responsibility according to law.
| disclosure obligation to safeguard benefits of CMPort and other shareholders of CMPort in line with provisions of laws, regulations, normative documents and Articles of Association of CMPort; 4. It's ensured that no legitimate interest of CMPort and other shareholders of CMPort is damaged by related-party transaction based on status and influence of CMPort; 5. CMID will promote other enterprise controlled by it to observe the commitment of Subparagraph 1-4; 6. In case of CMID and other enterprise controlled by it violating the above commitment, causing rights and interests of CMPort and its shareholders are damaged, CMID will take corresponding compensation responsibility according to law. | ||||||
| Commitments made in time of asset restructuring | CMID | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment about keeping independence of CMPort: 1. After the transaction is completed, CMID will strictly observe related provisions regarding independence of listed Companies from CSRC and won't violate standard operating procedures of CMPort based on the first majority shareholder, conduct excessive intervention of operation and management activities of CMPort and its subsidiary, embezzle benefits of CMPort and its subsidiary or damage legitimate interest of CMPort and other shareholders; 2. CMID will ensure CMPort is independent from CMID and related parties in the aspects of business, asset, finance, personnel and institution; 3. CMID ensures independence of CMPort, CMID and other enterprise controlled by it fail to occupy capitals and resources of CMPort based on violation in any way and will strictly observe provisions of rules and regulations for avoiding occupation of related party funds from CMPort as well as related laws, regulations and normative documents; 4. The commitment letter takes effect as of the signature date of | 26 July 2018 | Effective until no-longer to be the largest shareholder of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
CMID as well as is legally binding upon CMID. CMID ensures it willstrictly fulfill various commitments in the commitment letter and willtake corresponding legal responsibility for losses incurred to CMPortdue to violation of related commitment.
| CMID as well as is legally binding upon CMID. CMID ensures it will strictly fulfill various commitments in the commitment letter and will take corresponding legal responsibility for losses incurred to CMPort due to violation of related commitment. | ||||||
| Commitments made in time of asset restructuring | CMG | Commitments on horizontal competition, related-party transaction and capital occupation | Commitment on avoiding horizontal competition: 1. China Merchants Group and the enterprise controlled by it (excluding CMPort Holdings and the enterprise controlled it) fail to engage in or participate in any business or activity which is similar with and constitutes or likely constitute direct or indirect competitive relationship with main business conducted by CMPort and the enterprise controlled by it now; 2. China Merchants Group will try its best to promote enterprises controlled by it(except for CMPort and the enterprise controlled by it) not to directly or indirectly engage in or participate in or assist to engage in or participate in any business or activity which constitutes or likely constitutes competitive relation with main business conducted by CMPort and the enterprise controlled by it now and in the future independently or together with others; 3. In case of discovering any new business opportunity which constitutes and likely constitutes direct or indirect competitive relation with main business of CMPort or the enterprise controlled by it, China Merchants Group or enterprise controlled by it(except for CMPort and the enterprise controlled by it) will immediately notify CMPort in written as well as make a great effort to promote such business opportunity to be provided to CMPort or the enterprise controlled by it firstly according to reasonable and fair terms and conditions; 4. In case of CMPort or the enterprise controlled by it waives such competitive new business opportunity and China Merchants Group or the enterprise controlled by it (except for CMPort and the enterprise | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
controlled by it) engaging in such competitive business, CMPort orthe enterprise controlled by it will be entitled to purchase anyequities, assets and other rights and interests in the above competitivebusiness from China Merchants Group or the enterprise controlled byit (except for CMPort and the enterprise controlled by it) once orseveral times at any moment or CMPort will select entrustedoperation, leasing or contract operation of assets or businesses ofChina Merchants Group or the enterprise controlled by it (except forCMPort and the enterprise controlled by it) in the above competitivebusiness according to the mode permitted by national laws andregulations;5. When China Merchants Group and the enterprise controlled by it(except for CMPort and the enterprise controlled by it) plans totransfer, sell, lease, allow to use or transfer or allow to use asset andbusiness which constitutes or likely constitutes direct or indirectcompetitive relationship with main business of CMPort or theenterprise controlled by it in other way, China Merchants Group andthe enterprise controlled by it (except for CMPort and the enterprisecontrolled by it) will provide the right of priority assignment forCMPort or the enterprise controlled by it and promise to make a greateffort to promote the enterprise controlled by China Merchants Groupto provide the of priority assignment for CMPort or the enterprisecontrolled by it under the above situation;6. As of the date when the commitment letter is provided, ChinaMerchants Group promises to compensate all actual losses, damagesand expenses arising from violation of any clause in the commitmentletter by China Merchants Group or the enterprise controlled by it toCMPort or the enterprise controlled by it.
| controlled by it) engaging in such competitive business, CMPort or the enterprise controlled by it will be entitled to purchase any equities, assets and other rights and interests in the above competitive business from China Merchants Group or the enterprise controlled by it (except for CMPort and the enterprise controlled by it) once or several times at any moment or CMPort will select entrusted operation, leasing or contract operation of assets or businesses of China Merchants Group or the enterprise controlled by it (except for CMPort and the enterprise controlled by it) in the above competitive business according to the mode permitted by national laws and regulations; 5. When China Merchants Group and the enterprise controlled by it (except for CMPort and the enterprise controlled by it) plans to transfer, sell, lease, allow to use or transfer or allow to use asset and business which constitutes or likely constitutes direct or indirect competitive relationship with main business of CMPort or the enterprise controlled by it in other way, China Merchants Group and the enterprise controlled by it (except for CMPort and the enterprise controlled by it) will provide the right of priority assignment for CMPort or the enterprise controlled by it and promise to make a great effort to promote the enterprise controlled by China Merchants Group to provide the of priority assignment for CMPort or the enterprise controlled by it under the above situation; 6. As of the date when the commitment letter is provided, China Merchants Group promises to compensate all actual losses, damages and expenses arising from violation of any clause in the commitment letter by China Merchants Group or the enterprise controlled by it to CMPort or the enterprise controlled by it. | ||||||
| Commitments made in | CMG | Commitments on | Commitment on regulating related-party transaction: 1. China Merchants Group and other enterprise controlled by it will | 26 July 2018 | Effective until no-longer to | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
time of assetrestructuring
| time of asset restructuring | horizontal competition, related-party transaction and capital occupation | make a great effort to avoid and reduce related-party transaction between CMPort and economic entity controlled by it; 2. China Merchants Group and other enterprise controlled by it will exercise stockholder's rights in accordance with related provisions of relevant laws and regulations as well as Articles of Association of CMPort and fulfill the obligation of vote avoidance at the moment of voting for related-party transactions involved by CMID and other enterprise controlled by it at the stockholders' meeting; 3. As for related transaction which is inevitable or occurs due to reasonable reason, China Merchants Group will carry out transaction pursuant to the principle of openness, fairness and justice for market transaction and based on fair and reasonable market price, perform related-party transaction decision-making process and legally fulfill information disclosure obligation to safeguard benefits of CMPort and other shareholders of CMPort in line with provisions of laws, regulations, normative documents and Articles of Association of CMPort; 4. It's ensured that no legitimate interest of CMPort and other shareholders of CMPort is damaged by related-party transaction based on status and influence of CMPort; 5. China Merchants Group promotes other enterprise controlled by it to observe the commitment set forth in Subparagraph 1-4 above; 6. In case of China Merchants Group and other enterprise controlled by it violating the above commitment, causing rights and interests of CMPort and its shareholders are damaged, China Merchants Group will take corresponding compensation responsibility according to law. | be the actual controller of the Company | |||
| Commitments made in time of asset | CMG | Commitments on horizontal | Commitment about keeping independence of CMPort: 1. After the transaction is completed, China Merchants Group will strictly observe related provisions regarding independence of listed | 26 July 2018 | Effective until no-longer to be the actual | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
restructuring
| restructuring | competition, related-party transaction and capital occupation | companies from CSRC and won't violate standard operating procedures of CMPort based on actual controller's status, conduct excessive intervention of operation and management activities of CMPort and its subsidiary, embezzle benefits of CMPort and its subsidiary or damage legitimate interest of CMPort and other shareholders; 2. China Merchants Group will ensure CMPort is independent from China Merchants Group and related parties in the aspects of business, asset, finance, personnel and institution; 3. China Merchants Group ensures independence of CMPort, China Merchants Group and other enterprise controlled by it fail to occupy capitals and resources of CMPort based on violation in any way and will strictly observe provisions of rules and regulations for avoiding occupation of related party funds from CMPort as well as related laws, regulations and normative documents; 4. The commitment letter takes effect as of the signature date of China Merchants Group as well is legally binding upon China Merchants Group. China Merchants Group ensures it will strictly fulfill various commitments in the commitment letter and will take corresponding legal responsibility for losses incurred to listed Company due to violation of related commitment. | controller of the Company | |||
| Commitments made in time of asset restructuring | CMG | Commitments on lock-up of shares and shareholding reduction plan | 1. Before completion of the transaction, CMPort shares held by or indirectly controlled by China Merchants Group (include increased shares because allotment of shares, giving bonus and capital reserve converted into increased capital occurs to CMPort) shall not be transferred within 12 months as of the date when the transaction is over (the registration date of new shares by purchasing assets with shares issued this time); 2. In case that lockup period set forth in the commitment is inconsistent with regulatory opinions from securities market | 26 July 2018 | 25 December 2019 | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
supervision department or lockup period required by relatedprovisions, China Merchants Group shall adjust the above lockupperiod pursuant to regulatory opinions from relevant securitiesmarket supervision department and related provisions.3. In case that the transaction is placed on file for investigation andprosecution by judiciary authorities as well as registered andinvestigated by CSRC because false record, misleading statement orimportant omission happens to provided or disclosed information,China Merchants Group won't transfer its shares with rights andinterests at listed Company before case investigation conclusion isdrawn;4. During the period from the date of resumption of trading of thetransaction to the date when the transaction is over, China MerchantsGroup has no share reduction plan. The above shares include originalCMPort shares directly held or indirectly controlled by ChinaMerchants Group as well as derivative shares of original sharesdirectly held or indirectly controlled during the above period due toparticipation in profit and presenting shares by CMPort as well ascapital reserve converted into increased capital.
| supervision department or lockup period required by related provisions, China Merchants Group shall adjust the above lockup period pursuant to regulatory opinions from relevant securities market supervision department and related provisions. 3. In case that the transaction is placed on file for investigation and prosecution by judiciary authorities as well as registered and investigated by CSRC because false record, misleading statement or important omission happens to provided or disclosed information, China Merchants Group won't transfer its shares with rights and interests at listed Company before case investigation conclusion is drawn; 4. During the period from the date of resumption of trading of the transaction to the date when the transaction is over, China Merchants Group has no share reduction plan. The above shares include original CMPort shares directly held or indirectly controlled by China Merchants Group as well as derivative shares of original shares directly held or indirectly controlled during the above period due to participation in profit and presenting shares by CMPort as well as capital reserve converted into increased capital. | ||||||
| Commitments made in time of asset restructuring | CMG | Other commitment | Commitment letter about perfecting the property ownership certificate for land and house property of CMPort Holdings and the enterprise subordinate to it: 1. China Merchants Group will spare no effort to assist, promote and drive CMPort Holdings and the enterprise subordinate to it to standardize, perfect and solve ownership defects of properties such as land and house property; 2. The following situations happen to CMPort Holdings and the enterprise subordinate to it before completion of the transaction: (1) Land use right of ownership certificate which is being handled, the house property failing to be timely handled (except for results | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
incurred by force majeure, law, policy, government administrationbehavior and change in planned use of the land instead of CMPortHoldings and the enterprise subordinate to it); Or (2) Land use rightof ownership certificate, the property ownership certificate failing tobe handled (except for results incurred by force majeure, law, policy,government administration behavior and change in planned use of theland of CMPort Holdings and the enterprise subordinate to it); Or (3)In case of nonstandard other land use right and house property(except for results incurred by force majeure, law, policy, governmentadministration behavior and change in planned use of the land insteadof CMPort Holdings and the enterprise subordinate to it) andencountering actual losses (including but not limited tocompensation, fine, expenditure and benefit lost), China MerchantsGroup will timely and fully compensate CMPort.
| incurred by force majeure, law, policy, government administration behavior and change in planned use of the land instead of CMPort Holdings and the enterprise subordinate to it); Or (2) Land use right of ownership certificate, the property ownership certificate failing to be handled (except for results incurred by force majeure, law, policy, government administration behavior and change in planned use of the land of CMPort Holdings and the enterprise subordinate to it); Or (3) In case of nonstandard other land use right and house property (except for results incurred by force majeure, law, policy, government administration behavior and change in planned use of the land instead of CMPort Holdings and the enterprise subordinate to it) and encountering actual losses (including but not limited to compensation, fine, expenditure and benefit lost), China Merchants Group will timely and fully compensate CMPort. | ||||||
| Commitments made in time of asset restructuring | CMG | Other commitment | Commitment letter about real estate leased by CMPort Holdings and the enterprise subordinate to it: In case of nonstandard situation of the leased property significantly influencing use of CMPort Holdings and the Company subordinate to it to engage in operation of normal business, China Merchants Group will actively take effective measures (including but not limited to arranging to provide the property with identical or similar conditions to be used for operation of related Company) to promote business operation of related Company to be conducted normally and alleviate or eliminate adverse effect; In case of nonstandard of the leased property causing CMPort Holdings and the enterprise subordinate to it produce actual additional expenditures or losses (such as third-party compensation), China Merchants Group will actively coordinate and negotiate with other related party to support normal operation of CMPort Holdings and the enterprise subordinate to it to the great extent and avoid or control continuous enlargement of the damage; At | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
the same time, China Merchants Group agrees compensate CMPortHoldings and the enterprise subordinate to it in cash for actual lossesincurred to CMPort Holdings and the enterprise subordinate to it forthis reason to relieve or eliminate adverse effect.
| the same time, China Merchants Group agrees compensate CMPort Holdings and the enterprise subordinate to it in cash for actual losses incurred to CMPort Holdings and the enterprise subordinate to it for this reason to relieve or eliminate adverse effect. | ||||||
| Commitments made in time of asset restructuring | CMG | Other commitment | Commitment letter about allotted land of the enterprise subordinate to China Merchants Port Holdings Company Limited from China Merchants Group: In case that the above allotted land is withdrawn or needs to be translated into assignment land due to policy adjustment in the future after the transaction is completed, China Merchants Group will actively coordinate with CMPort and related companies such as China Merchants Group International Port (Qingdao) Co., Ltd. and Shantou CMPort Group Co., Ltd. to handle the transfer procedure or take other feasible countermeasures. In case of any actual loss (excluding land-transferring fees or rent, fees paid for taking rural land, ownership registration fees, taxes and dues and other related expenses to be paid by Chiwan Wharf or above-mentioned related companies according to provisions of laws and regulations) incurred to CMPort or above-mentioned related companies for this reason, China Merchants Group will timely and fully compensate actual loss incurred to CMPort or above-mentioned related companies. | 26 July 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
| Commitments made in time of asset restructuring | CMG | Other commitment | Commitment letter about undertaking the accreditation fees of property ownership certificate for the perfection of the land and house property of CMPort Holdings and the enterprise subordinate to it: In case of defective land use right and house property involved by the Company subordinate to CMPort Holdings on account of operation (namely land use right and house property of the Company subordinate to CMPort Holdings without complete ownership certificate existing before the transaction is completed), incurring | 14 September 2018 | Effective until no-longer to be the actual controller of the Company | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
registration fees such as taxes and dues, compensation and fine in theprocess of perfecting legal procedures of defective land use right andhouse property by the subordinate to CMPort Holdings, ChinaMerchants Group will timely and fully compensate to the Companysubordinate to CMPort Holdings for undertaking.
| registration fees such as taxes and dues, compensation and fine in the process of perfecting legal procedures of defective land use right and house property by the subordinate to CMPort Holdings, China Merchants Group will timely and fully compensate to the Company subordinate to CMPort Holdings for undertaking. | ||||||
| Commitments made in time of asset restructuring | CMG | Other commitment | Commitment letter about related matters of CMPort after the transaction is completed: After the transaction is completed, Chiwan Wharf will become port business asset management headquarters and domestic capital operation platform of China Merchants Group, deeply participate in integration of domestic regional port assets and enlarge the scale of domestic listed assets to make net profit of CMPort Holdings (00144.HK) enjoyed as per the rights and interests in the consolidated statement of listed Company in recent one fiscal year fail to exceed 50% net profit of consolidated statement of the listed Company and net asset of CMPort Holdings (00144.HK) enjoyed in light of rights and interests in the consolidated statement of listed Company in recent one fiscal year fail to exceed 30% net asset in the consolidated statement of the listed Company within 3-5 years after the transaction is completed. | 30 September 2018 | Three to five years and CMG is the actual controller of the Company | Ongoing |
| Commitments made in time of asset restructuring | CMG | Other commitment | China Merchants Group and all its directors, supervisors and administrative officers ensure the transaction report, its abstract, other information provided for the transaction and application document are true, accurate and complete without false record, misleading statement or important omission as well as take individual and joint legal liability for false record, misleading statement or important omission. If the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
China Securities Regulatory Commission (CSRC), the directors,supervisors or senior managers of China Merchants Group do nottransfer the shares that have interests in listed Company, and submitthe written application and stock account of the suspension of thetransfer to the Board of Directors of the CMPort within two tradingdays after receiving the filing inspection notice, and the Board ofDirectors shall apply for lock-up on behalf of the CMG Hong Kongto the Stock Exchange and Registration and Settlement Company.In case of failing to file a locking application within two transactiondays and after the Board of Directors is authorized for verification,identity information and account information on directors,supervisors or administrative officers of China Merchants Group willbe directly submitted to Stock Exchange and Registration andSettlement Company with locking applied; In case of Board ofDirectors failing to submit identity information and accountinformation on directors, supervisors or administrative officers ofChina Merchants Group to Stock Exchange and Registration andSettlement Company, Stock Exchange and Registration andSettlement Company will be authorized to directly lock relatedshares. In case that the situation of violating laws and rules is foundupon investigation conclusion, directors, supervisors oradministrative officers of China Merchants Group promise lockedshares are voluntarily used for compensating related investors.
| China Securities Regulatory Commission (CSRC), the directors, supervisors or senior managers of China Merchants Group do not transfer the shares that have interests in listed Company, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. In case of failing to file a locking application within two transaction days and after the Board of Directors is authorized for verification, identity information and account information on directors, supervisors or administrative officers of China Merchants Group will be directly submitted to Stock Exchange and Registration and Settlement Company with locking applied; In case of Board of Directors failing to submit identity information and account information on directors, supervisors or administrative officers of China Merchants Group to Stock Exchange and Registration and Settlement Company, Stock Exchange and Registration and Settlement Company will be authorized to directly lock related shares. In case that the situation of violating laws and rules is found upon investigation conclusion, directors, supervisors or administrative officers of China Merchants Group promise locked shares are voluntarily used for compensating related investors. | ||||||
| Commitments made in time of asset restructuring | CMG Hong Kong | Commitment on shareholding reduction | Share reduction plan during the period from the date of resumption of trading of CMPort to the date of completing reorganization; 1. CMG Hong Kong and Broadford Global have no share reduction plan during the period from the date of resumption of trading of the transaction to the date of completing the transaction; 2. Above-mentioned shares include original CMPort shares held by CMG Hong Kong as well as shares deriving from original shares held | 26 July 2018 | Effective until completion of the asset restructuring | Fulfilled |
China Merchants Port Group Co., Ltd. Annual Report 2018
during the above period due to participation in profit and presentingshares by CMPort as well as capital reserve converted into increasedcapital.
| during the above period due to participation in profit and presenting shares by CMPort as well as capital reserve converted into increased capital. | ||||||
| Commitments made in time of asset restructuring | CMG Hong Kong | Other commitment | 1. CMG Hong Kong ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. CMG Hong Kong ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the documents are true. The signatory of such documents is legally authorized and effectively signs such documents without any false record, misleading statement or important omission; 3. CMG Hong Kong ensures descriptions and confirmations issued for the transaction is true, accurate and complete without false record, misleading statement or important omission; 4. CMG Hong Kong ensures that statutory disclosure and report obligation has been performed, and no contracts, agreements, arrangements or miscellaneous that should have been disclosed exists; 5. The CMG Hong Kong made the commitment that if the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), it does not transfer the shares that have interests in listed Company, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
Exchange and Registration and Settlement Company. In case offailing to file a locking application within two transaction days andafter the Board of Directors is authorized for verification, identityinformation and account information on CMG Hong Kong will bedirectly submitted to Stock Exchange and Registration andSettlement Company with locking applied; In case of Board ofDirectors failing to submit identity information and accountinformation on CMG Hong Kong to Stock Exchange and Registrationand Settlement Company, Stock Exchange and Registration andSettlement Company will be authorized to directly lock relatedshares. If the investigation finds that there is a violation of the law,CMG Hong Kong committed to lock the shares voluntarily for therelevant investor compensation;6. If CMG Hong Kong promises to related document, data andinformation provided in the reorganization process aren't true,accurate or complete or are with false record, misleading statement orimportant omission, CMG Hong Kong is willing to legally bearcorresponding legal responsibility;7. In case of CMG Hong Kong violating the above promise, incurringlosses to CMPort, CMG Hong Kong will take correspondingcompensation responsibility.
| Exchange and Registration and Settlement Company. In case of failing to file a locking application within two transaction days and after the Board of Directors is authorized for verification, identity information and account information on CMG Hong Kong will be directly submitted to Stock Exchange and Registration and Settlement Company with locking applied; In case of Board of Directors failing to submit identity information and account information on CMG Hong Kong to Stock Exchange and Registration and Settlement Company, Stock Exchange and Registration and Settlement Company will be authorized to directly lock related shares. If the investigation finds that there is a violation of the law, CMG Hong Kong committed to lock the shares voluntarily for the relevant investor compensation; 6. If CMG Hong Kong promises to related document, data and information provided in the reorganization process aren't true, accurate or complete or are with false record, misleading statement or important omission, CMG Hong Kong is willing to legally bear corresponding legal responsibility; 7. In case of CMG Hong Kong violating the above promise, incurring losses to CMPort, CMG Hong Kong will take corresponding compensation responsibility. | ||||||
| Commitments made in time of asset restructuring | CMID | Other commitment | 1.CMID ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. CMID ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the documents are true. The signatory of such documents is legally authorized and effectively signs such documents without any false record, misleading statement | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
or important omission;3. CMID ensures description and confirmation provided for thetransaction are true, accurate and complete without any false record,misleading statement or important omission;4. CMID ensures that statutory disclosure and report obligation hasbeen performed, and no contracts, agreements, arrangements ormiscellaneous that should have been disclosed exists;5. The CMID made the commitment that if the information providedor disclosed by this transaction is suspected of false records,misleading statements or major omissions, and is investigated by thejudicial authorities or investigated by the China Securities RegulatoryCommission (CSRC), it does not transfer the shares that haveinterests in CMPort, and submit the written application and stockaccount of the suspension of the transfer to the Board of Directors ofthe CMPort within two trading days after receiving the filinginspection notice, and the Board of Directors shall apply for lock-upon behalf of the CMG Hong Kong to the Stock Exchange andRegistration and Settlement Company. If the application for lock-upis not submitted within two transaction days, the Board of Directorsis authorized to verify and submit the identity information andaccount information of CMID directly to the Stock Exchange andRegistration and Settlement Company and apply for lock-up; If theBoard of Directors fails to submit the identity information andaccount information of the CMID to the Stock Exchange andRegistration and Settlement Company, then the Stock Exchange andRegistration and Settlement Company shall be authorized to directlylock the relevant shares. If the investigation finds that there is aviolation of the law, CMID committed to lock the shares voluntarilyfor the relevant investor compensation;6. If CMID promises to related document, data and information
China Merchants Port Group Co., Ltd. Annual Report 2018
provided in the reorganization process aren't true, accurate orcomplete or are with false record, misleading statement or importantomission, CMID is willing to legally bear corresponding legalresponsibility;7. In case of CMID violating the above commitment, incurring lossesto CMPort, CMID will take corresponding compensationresponsibility.
| provided in the reorganization process aren't true, accurate or complete or are with false record, misleading statement or important omission, CMID is willing to legally bear corresponding legal responsibility; 7. In case of CMID violating the above commitment, incurring losses to CMPort, CMID will take corresponding compensation responsibility. | ||||||
| Commitments made in time of asset restructuring | CMPort Holdings | Other commitment | 1.CMID ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. CMID ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the documents are true. The signatory of such documents is legally authorized and effectively signs such documents without any false record, misleading statement or important omission; 3. CMID ensures description and confirmation provided for the transaction are true, accurate and complete without any false record, misleading statement or important omission; 4. CMID ensures that statutory disclosure and report obligation has been performed, and no contracts, agreements, arrangements or miscellaneous that should have been disclosed exists; 5. The CMID made the commitment that if the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), it does not transfer the shares that have interests in CMPort, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
the CMPort within two trading days after receiving the filinginspection notice, and the Board of Directors shall apply for lock-upon behalf of the CMG Hong Kong to the Stock Exchange andRegistration and Settlement Company. If the application for lock-upis not submitted within two transaction days, the Board of Directorsis authorized to verify and submit the identity information andaccount information of CMID directly to the Stock Exchange andRegistration and Settlement Company and apply for lock-up; If theBoard of Directors fails to submit the identity information andaccount information of the CMID to the Stock Exchange andRegistration and Settlement Company, then the Stock Exchange andRegistration and Settlement Company shall be authorized to directlylock the relevant shares. If the investigation finds that there is aviolation of the law, CMID committed to lock the shares voluntarilyfor the relevant investor compensation;6. If CMID promises to related document, data and informationprovided in the reorganization process aren't true, accurate orcomplete or are with false record, misleading statement or importantomission, CMID is willing to legally bear corresponding legalresponsibility;7. In case of CMID violating the above commitment, incurring lossesto CMPort, CMID will take corresponding compensationresponsibility.
| the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. If the application for lock-up is not submitted within two transaction days, the Board of Directors is authorized to verify and submit the identity information and account information of CMID directly to the Stock Exchange and Registration and Settlement Company and apply for lock-up; If the Board of Directors fails to submit the identity information and account information of the CMID to the Stock Exchange and Registration and Settlement Company, then the Stock Exchange and Registration and Settlement Company shall be authorized to directly lock the relevant shares. If the investigation finds that there is a violation of the law, CMID committed to lock the shares voluntarily for the relevant investor compensation; 6. If CMID promises to related document, data and information provided in the reorganization process aren't true, accurate or complete or are with false record, misleading statement or important omission, CMID is willing to legally bear corresponding legal responsibility; 7. In case of CMID violating the above commitment, incurring losses to CMPort, CMID will take corresponding compensation responsibility. | ||||||
| Commitments made in time of asset restructuring | CMG | Other commitment | 1. China Merchants Group ensures related information provided for the transaction is true, accurate and complete without false record, misleading statement or important omission; 2. China Merchants Group ensures the data provided to CMPort and all intermediary organs participating in the transaction is true, accurate and complete original written data or data copy. Data copy is consistent with original data and signature and seal of all the | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
documents are true. The signatory of such documents is legallyauthorized and effectively signs such documents without any falserecord, misleading statement or important omission;3. China Merchants Group ensures descriptions and confirmationsissued for the transaction is true, accurate and complete without falserecord, misleading statement or important omission;4. China Merchants Group ensures that statutory disclosure andreport obligation has been performed, and no contracts, agreements,arrangements or miscellaneous that should have been disclosedexists;5. China Merchants Group made the commitment that if theinformation provided or disclosed by this transaction is suspected offalse records, misleading statements or major omissions, and isinvestigated by the judicial authorities or investigated by the ChinaSecurities Regulatory Commission (CSRC), it does not transfer theshares that have interests in CMPort, and submit the writtenapplication and stock account of the suspension of the transfer to theBoard of Directors of the CMPort within two trading days afterreceiving the filing inspection notice, and the Board of Directors shallapply for lock-up on behalf of the CMG Hong Kong to the StockExchange and Registration and Settlement Company. In case offailing to file a locking application within two transaction days andafter the Board of Directors is authorized for verification, identityinformation and account information of China Merchants Group willbe directly submitted to Stock Exchange and Registration andSettlement Company with locking applied; In case of Board ofDirectors failing to submit identity information and accountinformation of China Merchants Group to Stock Exchange andRegistration and Settlement Company, Stock Exchange andRegistration and Settlement Company will be authorized to directly
China Merchants Port Group Co., Ltd. Annual Report 2018
lock related shares. If the investigation finds that there is a violationof the law, China Merchants Group committed to lock the sharesvoluntarily for the relevant investor compensation;6. If China Merchants Group promises to related document, data andinformation provided in the reorganization process aren't true,accurate or complete or are with false record, misleading statement orimportant omission, China Merchants Group is willing to legally bearcorresponding legal responsibility;In case of China Merchants Group violating the above promise,incurring losses to CMPort, China Merchants Group will takecorresponding compensation responsibility.
| lock related shares. If the investigation finds that there is a violation of the law, China Merchants Group committed to lock the shares voluntarily for the relevant investor compensation; 6. If China Merchants Group promises to related document, data and information provided in the reorganization process aren't true, accurate or complete or are with false record, misleading statement or important omission, China Merchants Group is willing to legally bear corresponding legal responsibility; In case of China Merchants Group violating the above promise, incurring losses to CMPort, China Merchants Group will take corresponding compensation responsibility. | ||||||
| Commitments made in time of asset restructuring | Chiwan Wharf and all directors, supervisors and senior management | Other commitment | Chiwan Wharf and all its directors, supervisors and administrative officers ensure the transaction report, its abstract, other information provided for the transaction and application document are true, accurate and complete without false record, misleading statement or important omission as well as take individual and joint legal liability for false record, misleading statement or important omission. If the information provided or disclosed by this transaction is suspected of false records, misleading statements or major omissions, and is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission (CSRC), the directors, supervisors, or senior managers of Chiwan Wharf do not transfer the shares that have interests in listed Company, and submit the written application and stock account of the suspension of the transfer to the Board of Directors of the CMPort within two trading days after receiving the filing inspection notice, and the Board of Directors shall apply for lock-up on behalf of the CMG Hong Kong to the Stock Exchange and Registration and Settlement Company. In case of failing to file a locking application within two transaction days and after the Board of Directors is authorized for verification, identity | 26 July 2018 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
information and account information on directors, supervisors oradministrative officers of Chiwan Wharf will be directly submitted toStock Exchange and Registration and Settlement Company withlocking applied; In case of Board of Directors failing to submitidentity information and account information on directors,supervisors or administrative officers of Chiwan Wharf to StockExchange and Registration and Settlement Company, StockExchange and Registration and Settlement Company will beauthorized to directly lock related shares. In case that the situation ofviolating laws and rules is found upon investigation conclusion,directors, supervisors or administrative officers of Chiwan Wharfpromise locked shares are voluntarily used for compensating relatedinvestors
| information and account information on directors, supervisors or administrative officers of Chiwan Wharf will be directly submitted to Stock Exchange and Registration and Settlement Company with locking applied; In case of Board of Directors failing to submit identity information and account information on directors, supervisors or administrative officers of Chiwan Wharf to Stock Exchange and Registration and Settlement Company, Stock Exchange and Registration and Settlement Company will be authorized to directly lock related shares. In case that the situation of violating laws and rules is found upon investigation conclusion, directors, supervisors or administrative officers of Chiwan Wharf promise locked shares are voluntarily used for compensating related investors | ||||||
| Commitments made in time of asset restructuring | Chiwan Wharf and all directors, supervisors and senior management | Commitment on shareholding reduction | Share reduction plan during the period from the date of resumption of trading of CMPort to the date of completing reorganization; 1. I have no share reduction plan during the period from the date of resumption of trading of the transaction to the date when the transaction is over. 2. Above-mentioned shares include original shares of listed Company held by me as well as derivative shares of original shares caused by participation in profit and presenting shares by listed Company as well as capital reserve converted into increased capital during the above period. | 26 July 2018 | Effective until completion of the asset restructuring | Fulfilled |
| Other commitments made to minority shareholders | China Nanshan Development (Group) Inc. | Other commitment | China Nanshan Development(group) Incorporation will irrevocably and unconditionally agrees it will ensure transferee of such land use right and its successor and assignee will be fully exempted from responsibility for the above matters in case of CMPort encountering losses, needing to bear expenses and liabilities, undergoing claim for compensation or needing to file a lawsuit due to any actual or potential illegal and unenforceable issues incurred by land use | 20 March 2001, 18 June 2003, 29 September 2004 | Effective continuously | Ongoing |
China Merchants Port Group Co., Ltd. Annual Report 2018
agreement and relevant documents signed and to be signed by it.
| agreement and relevant documents signed and to be signed by it. | |||
| Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | N/A | ||
China Merchants Port Group Co., Ltd. Annual Report 2018
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating PurposesDuring the Reporting Period, the controlling shareholder or its related parties did not occupy capitalfor non-operating purposes or repay such capital. Deloitte Touche Tohmatsu Certified PublicAccountants LLP issued the “Special Report on Capital Occupation by the Controlling Shareholderand Other Related Parties of China Merchants Port Group Co., Ltd. For the detailed report, see thewebsite www.cninfo.com.cn.V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period□ Applicable √ Not applicableVI YoY Changes to Accounting Policies, Estimates and MethodsThe changes in accounting policies of the Company are as follows: on 31 March 2017, the Ministryof Finance issued Accounting Standards for Business Enterprises No.22-Recognition andMeasurement of Financial Instruments (hereinafter referred to as “Revised Standards No.22”),Accounting Standards for Business Enterprises No.23-Transfer of Financial Assets (hereinafterreferred to as “Revised Standards No.23”), Accounting Standards for Business EnterprisesNo.24-Hedge Accounting (hereinafter referred to as “Revised Standards No.24”); on 2 May 2017,the Ministry of Finance issued Accounting Standards for Business Enterprises No.37-Presentationof Financial Instruments (hereinafter referred to as “Revised Standards No.37”); on 5 July 2017, theMinistry of Finance issued Accounting Standards for Business Enterprises No.14-Income(hereinafter referred to as “Revised Standards No.14”). The Company starts to implement theRevised Standards No.22, No.23, No.24, No.37 and No.14 in accordance with requirementsstipulated in documents of the Ministry of Finance since 1 January 2018. For more details, pleaserefer to the Announcement on Changes in Accounting Policies (announcement No.: 2018-025)disclosed on cninfo.com.cn by the Company on 7 March 2018.On 27 November 2018, the Company held the 8
th
Extraordinary Meeting of the 9
th
Directors of the
China Merchants Port Group Co., Ltd. Annual Report 2018
Board in 2018 and the 5
th
Extraordinary Meeting of the 9
th
Supervisory Committee in 2018, onwhich the Proposal on Changes in Accounting Estimate of Fixed Assets was reviewed and approved.In line with the Accounting Standards for Business Enterprises No.4-Fixed Assets and relevantregulations of the Company, the Company rechecked the estimated useful life and expected netresidual value of fixed assets based on the current performance and service condition of fixed assetsand decided to adjust the depreciation life of partial fixed assets and net residual value of total fixedassets so as to make it more reasonable and reflect the Company’s financial condition and operatingresults more objectively and fairly. For more details, please refer to the Announcement on Changesin Accounting Estimate of Fixed Assets (announcement No.: 2018-104) disclosed on cninfo.com.cnby the Company on 28 November 2018.For further information, please refer to (III) Changes in Main Accounting Policies and Estimates inPart XI Financial Statements for details.VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting PeriodNo such cases in the Reporting Period.VIII YoY Changes to the Scope of the Consolidated Financial StatementsDuring the year under review, the Company acquired a 51% interest in China Merchants Port(Zhoushan) RoRo Logistics Co., Ltd. (“Zhoushan RoRo”). Zhoushan RoRo changed its directors,supervisors and senior management with the industrial and commercial administration on 29 August2018 and officially became a majority-owned subsidiary of the Company. From that day on, theCompany includes Zhoushan RoRo into the consolidated financial statements. Theabove-mentioned acquisition fits the definition of an assets acquisition, and does not constitutebusiness or a business combination. Thus, it is recognized as a change to the consolidation scopecaused by other reasons.The Company and China Merchants Investment Development Company Limited (hereinafterreferred to as “CMID”) signed the Agreement on Asset Acquisition through the Issue of Shares on19 June 2018, which was approved by China Securities Regulatory Commission through the Replyon the Approval of the Issue of Shares by Shenzhen Chiwan Wharf Holdings Limited to China
China Merchants Port Group Co., Ltd. Annual Report 2018
Merchants Investment Development Company Limited for Asset Acquisition and Raising ofSupporting Funds (ZJXK [2018] No. 1750). The Company issued shares to CMID to acquire1,313,541,560 ordinary shares (hereinafter referred to as “the target assets”) of China MerchantsPort Holdings Company Limited (hereinafter referred to as CMPort Holdings) held by CMID.According to the transaction bills affixed with the stamp duty of Hong Kong dated 15 November2018 and the Daily Settlement Book of Chiwan Wharf’s stock account produced on 16 November2018 by China Merchants Securities (HK) Co., Ltd., the stock agent in Hong Kong, the1,313,541,560 CMPort Holdings ordinary shares have been registered under the name of theCompany, marking that the procedures for the registration of the ownership transfer in respect ofthe target assets has been completed. As at 25 December 2018, the procedures for the registration ofthe shares issued by the Company to the counterparty CMID had been completed in CSDCCShenzhen. Thus, the Company has controlled and consolidated CMPort Holdings. For more details,please refer to the Announcement of Shenzhen Chiwan Wharf Holdings Limited on the Issue ofShares to Acquire Assets and Raise Supporting Funds and the Attainment of the Approval fromCSRC for Related-party Transactions (Announcement No. 2018-094), and the Report of ChinaMerchants Port Group Co., Ltd. on the Issue of Shares to Acquire Assets and Raise SupportingFunds and the Implementation of Related-party Transactions and the Listing of New Sharespublished on CNINFO (http://www.cninfo.com.cn) on 1 November 2018 and 24 December 2018respectively.On 25 December 2018, the Company completed the issue of shares to the counterparty CMID andachieved the control over CMPort Holdings in form and nature. In accordance with the relatedprovisions in the Accounting Standards for Business Enterprises No. 33 - Consolidated FinancialStatements, the Company started to consolidate the financial statements of CMPort Holdings fromDecember 2018, and adjusted the beginning and last year data in the comparative financialstatements according to the rules governing business combinations under common control.IX Engagement and Disengagement of Independent AuditorCurrent independent auditor
| Name of the domestic independent auditor | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
China Merchants Port Group Co., Ltd. Annual Report 2018
The Company’s payment to the domestic independentauditor (RMB’0,000)
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 1,236.25 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 7 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Huang Yue and Jiang Qishen |
| How many consecutive years the certified public accountants have provided audit service for the Company | 2 |
| Name of the overseas independent auditor (if any) | Deloitte Touche Tohmatsu |
| The Company’s payment to the overseas independent auditor (RMB’0,000) (if any) | 945.63 |
| How many consecutive years the overseas independent auditor has provided audit service for the Company (if any) | 7 |
| Names of the certified public accountants from the overseas independent auditor writing signatures on the auditor’s report (if any) | Zhong Zhiwen |
| How many consecutive years the certified public accountants have provided audit service for the Company (if any) | 2 |
China Merchants Port Group Co., Ltd. Annual Report 2018
Tohmatsu, and RMB2,745,500 for Deloitte Touche Tohmatsu Certified Public Accountants LLP.Considering the asset restructuring occurring in 2018, the Company needs to engage the agency toaudit the financial statements for the Company with 31 March 2018 as the base date for companiesinvolved in the restructuring. As for the audit expenses on engagement of independent auditors,RMB7.677 million was paid to Deloitte Touche Tohmatsu Certified Public Accountants LLP,RMB1.46 million to Ernst & Young Global Limited, RMB3.7 million to BDO China Shu Lun PanCertified Public Accountants LLP, RMB163,300 to Klynveld Peat Marwick Goerdeler (KPMG)and Price waterhouse Coopers (PWC).The expenses on financial advisors was RMB49 million for engagement of CITIC Securities Co.,Ltd. and China Merchants Securities Co. Ltd.X Possibility of Listing Suspension or Termination after Disclosure of this Report□ Applicable √ Not applicableXI Insolvency and Reorganization□ Applicable √ Not applicableXII Major Legal Matters□ Applicable √ Not applicableXIII Punishments and Rectifications□ Applicable √ Not applicableXIV Credit Quality of the Company as well as Its Controlling Shareholder and ActualController□ Applicable √ Not applicableXV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees□ Applicable √ Not applicable
China Merchants Port Group Co., Ltd. Annual Report 2018
XVI Major Related-Party Transactions1. Continuing Related-Party Transactions
UUnit: RMB’0,000
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Transaction price | Total value | As % of total value of all same-type transactions | Approved transaction line | Over the approved line or not | Method of settlement | Obtainable market price for same-type transactions | Disclosure date | Index to disclosed information |
| China Merchants Port Holdings Company Limited and its affiliated companies | Original shareholder of Chiwan Wharf | Services | Services related to terminal | Bilateral negotiation | 6,887.75 | 6,887.75 | 17.37% | 10,000.00 | No | Settled according to times | 6,887.75 | 7 February 2018 | Refer to Announcement on Forecast of Related-party Transactions for 2018 (Announcement No. 2018-012) published on http://www.cninfo.com.cn for details. |
| China Nanshan Development (Group) Incorporation | Affiliated legal person | Lease | Land lease | Bilateral negotiation | 6,523.02 | 6,523.02 | 40.02% | 7,500.00 | No | Settled monthly | 6,523.02 | 7 February 2018 | |
| Total | -- | -- | 13,410.77 | -- | 17,500.00 | -- | -- | -- | -- | -- | |||
| Large-amount sales return in detail | N/A | ||||||||||||
| Give the actual situation in the | N/A | ||||||||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
Reporting Period (if any) where anestimate had been made for thetotal value of continuingrelated-party transactions by typeto occur in the Reporting Period
| Reporting Period (if any) where an estimate had been made for the total value of continuing related-party transactions by type to occur in the Reporting Period | |
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | N/A |
China Merchants Port Group Co., Ltd. Annual Report 2018
conducted here due to small amount and large quantity. )2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity InterestsIn 2018, CMPort Holdings (00144.HK) made the related-party transaction on equity investmentwith CMGD with actual amount of RMB3.346 billion.For details about the related-party transaction on the Company’s capital increase in CMPort(Zhoushan) RoRo Logistics Co., Ltd., please refer to 2. Major Equity Investments Made in theReporting Period in V Investment Made in Part IV Operating Performance Discussion and Analysis.3. Related Transactions Regarding Joint Investments in Third Parties
Unit: RMB’0,000
| Joint investors | Related relationship | investee | Principal activities of investee | Registered capital of investee | Total assets of investee | Net assets of investee | Net profit of investee |
| China Merchants Group (H.K.) Limited, Jumbo Pacific Holdings Limited, China Merchants Expressway Network & Technology Holdings Co., Ltd., China Merchants Industrial Investment Co., Ltd. and Sinotrans (HK) Logistics Limited | The same ultimate actual controller | China Merchants Hainan Development & Investment Co., Ltd. | Land development, operation of parks and properties, construction and investment of municipal infrastructure, water and power supply for parks, urban renewal, investment and management of projects, etc. | 350,000 | 350,000 | 350,000 | -191 |
| Progress of major programs in progress of investee (if any) | N/A | ||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
Credits receivable with related parties
| Related party | Related relationship | Forming reason | Whether there is occupation on non-operating capital or not | Beginning balance (RMB’0,000) | Increased in the Reporting Period (RMB’0,000) | Recovered in the Reporting Period (RMB’0,000) | Interest rate | Interest in the Reporting Period (RMB’0,000) | Ending balance (RMB’0,000) |
| China Merchants Group Finance Co., Ltd. | Under common control of ultimate controlling shareholder | Bank deposits | Not | 60,540.28 | 975,653.97 | 986,781.13 | 2.37% | 1,404.25 | 49,413.12 |
| China Merchants Bank | The ultimate controlling shareholder has major influence on it | Bank deposits | Not | 92,893.47 | 1,615,797.32 | 1,581,237.14 | 1.84% | 3,462.95 | 127,453.65 |
| Effects of credits with related parties on the Company’s operating results and financial conditions | The above credits receivable with related parties were mainly deposits in financial institutions which has no major influence on the Company’s operating results and financial conditions. | ||||||||
| Related party | Related relationship | Forming reason | Beginning balance (RMB’0,000) | Increased in the Reporting Period (RMB’0,000) | Recovered in the Reporting Period (RMB’0,000) | Interest rate | Interest in the Reporting Period (RMB’0,000) | Ending balance (RMB’0,000) |
| China Merchants Group Finance Co., Ltd. | Under common control of ultimate controlling shareholder | Borrowing | 189,000.00 | 104,500.00 | 216,000.00 | 4.54% | 5,157.41 | 77,500.00 |
| China Merchants Bank | The ultimate controlling shareholder has major | Borrowing | 4,000.00 | - | 4,000.00 | 4.35% | 10.44 | - |
China Merchants Port Group Co., Ltd. Annual Report 2018
influence onit
| influence on it | ||
| Effects of liabilities with related parties on the Company’s operating results and financial conditions | The above liabilities payable with related parties were mainly financial institution loans which had no major influence on the Company’s operating results and financial conditions. | |
China Merchants Port Group Co., Ltd. Annual Report 2018
2. Major guarantees
(1) Guarantees
Unit: RMB’0,000
| Guarantees provided by the Company and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not | ||||||||
| CMA CGM SA | N/A | 2,498.21 | 11 June 2013 | 1,224.12 | General guarantee | About 6 years | No | Not | ||||||||
| CMA CGM SA | N/A | 8,219.58 | 11 June 2013 | 8,219.58 | General guarantee | About 20 years | No | Not | ||||||||
| PORT DE DJIBOUTI S.A., | N/A | 34,316.00 | 14 June 2016 | 2,419.28 | General guarantee | About 3 years | No | Yes | ||||||||
| Total approved line for such guarantees in the Reporting Period (A1) | - | Total actual amount of such guarantees in the Reporting Period (A2) | - | |||||||||||||
| Total approved line for such guarantees at the end of the Reporting Period (A3) | 45,033.79 | Total actual balance of such guarantees at the end of the Reporting Period (A4) | 11,862.98 | |||||||||||||
| Guarantee between the company to its subsidiaries | ||||||||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not | ||||||||
| Total approved line for such guarantees in the Reporting Period (B1) | 0 | Total actual amount of such guarantees in the Reporting Period (B2) | 0 | |||||||||||||
| Total approved line for such guarantees at the end of the Reporting Period (3) | 0 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 0 | |||||||||||||
| Guarantees provided between subsidiaries | ||||||||||||||||
| Obligor | Disclosure date of the | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a | ||||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
guarantee
lineannounce
ment
| guarantee line announcement | related party or not | |||||||
| China Merchants International Terminal (Qingdao) Co., Ltd. | N/A | 10,000.00 | N/A | - | General guarantee | N/A | No | No |
| Shenzhen Jinyu Rongtai Investment Development Co., Ltd. | N/A | 80,000.00 | 12 January 2017 | 50,000.00 | Joint-liability | About 10 years | No | No |
| Shenzhen Jinyu Rongtai Investment Development Co., Ltd. | N/A | 50,000.00 | 25 June 2014 | 37,800.00 | Joint-liability | About 5 years | No | No |
| China Merchants International (China) Investment Co., Ltd. | N/A | 2,500.00 | 30 June 2016 | 2,500.00 | Joint-liability | About 10 years | No | No |
| China Merchants Finance Company Limited | N/A | 343,160.00 | 4 May 2012 | 343,160.00 | General guarantee | About 10 years | No | No |
| China Merchants Finance Company Limited | N/A | 343,160.00 | 3 August 2015 | 343,160.00 | General guarantee | About 10 years | No | Not |
| China Merchants Finance Company Limited | N/A | 137,264.00 | 3 August 2015 | 137,264.00 | General guarantee | About 5 years | No | No |
| CMHI Finance (BVI) Co., Ltd | N/A | 617,688.00 | 6 August 2018 | 617,688.00 | General guarantee | About 5 years | No | No |
| CMHI Finance (BVI) Co., Ltd | N/A | 411,792.00 | 6 August 2018 | 411,792.00 | General guarantee | About 10 years | No | No |
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 240,143.37 | 16 September 2012 | 15,456.61 | General guarantee | About 13 years | No | No |
| COLOMBO INTERNATIONAL CONTAINER TERMINALS LIMITED | N/A | 10,294.80 | 16 September 2012 | 10,294.80 | General guarantee | Infinite | No | No |
| COLOMBO | N/A | 17,158.0 | 16 September | 17,158.00 | General | Infinite | No | No |
China Merchants Port Group Co., Ltd. Annual Report 2018
INTERNATIONALCONTAINERTERMINALSLIMITED
| INTERNATIONAL CONTAINER TERMINALS LIMITED | 0 | 2012 | guarantee | |||||
| Lome Container Terminal Co., Ltd. | N/A | 7,847.30 | 1 June 2015 | 2,004.99 | General guarantee | About 9 years | No | No |
| Lome Container Terminal Co., Ltd. | N/A | 7,847.30 | 1 June 2015 | 2,004.99 | General guarantee | About 9 years | No | No |
| Lome Container Terminal Co., Ltd. | N/A | 7,847.30 | 1 June 2015 | 2,004.99 | General guarantee | About 9 years | No | No |
| China Merchants Port Development (Shenzhen) Co., Ltd. | N/A | 320,000.00 | 31 July 2017 | 218,000.00 | Joint-liability | About 5 years | No | No |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 53,169.00 | 19 April 2018 | 47,437.38 | General guarantee | About 6 years | No | No |
| TCP - TERMINAL DE CONTElNERES DE PARANAGUA S/A. | N/A | 75,862.77 | 19 Nov7 2016 | 75,862.77 | General guarantee | About 6 years | No | No |
| Total approved line for such guarantees in the Reporting Period (C1) | 1,082,649.00 | Total actual amount of such guarantees in the Reporting Period (C2) | 1,076,917.38 | |||||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | 2,735,733.84 | Total actual balance of such guarantees at the end of the Reporting Period (C4) | 2,333,588.52 | |||||
| Total guarantee amount (total of the three kinds of guarantees above) | ||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 1,082,649.00 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 1,076,917.38 | |||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 2,704,904.86 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 2,345,451.50 | |||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 76.25% | |||||||
| Of which: | ||||||||
| Balance of guarantees provided for shareholders, actual controller and their related parties (D) | ||||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
Balance of debt guarantees provided directly or indirectly forobligors with an over 70% debt/asset ratio (E)
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 2,202,879.11 |
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 807,427.73 |
| Total of the three amounts above (D+E+F) | 3,010,306.84 |
| Joint responsibilities possibly borne in the Reporting Period for undue guarantees (if any) | None |
| Provision of external guarantees in breach of the prescribed procedures (if any) | None |
| Amount | Capital resources | Undue balance | Overdue amount |
| 3,430.00 | Self-owned funds | 3,430.00 |
China Merchants Port Group Co., Ltd. Annual Report 2018
employees, attaching importance to occupational health development, promoting urban and ruraleconomic development and improving people’s living standards. We also actively participate invarious social organisations and political parties and strengthen our communication with thegovernment and the industries to make use of our well-earned influence.1. Fulfillment of social responsibilitiesThe Company is always committed to take on historical missions and has a strong sense of socialresponsibilities. During our journey of growth and development, we never steer away from theoriginal goal. We take the lead to address social problems, continue to seek for the matching pointfor mutual development with the society and explore appropriate models for conducting charitablebusiness that meets the needs of the current generation. By leveraging our core strengths to launchprofessional charitable activities, support regional development and preserve fine cultures, we willincorporate social development needs into our daily operation activities and join hands with evenmore partners to create a harmonious society and promote social progress.In 2018, the Company adhered to the theme of “Shaping Blue Dreams Together (共铸蓝色梦想)”for its charitable activities, striving to fulfil its corporate social responsibilities through engagementin social charitable activities, at the same time building the charity brand of its own. Large-scaledpublic welfare activities included “C Blue Summer Camp for Children(C Blue 儿童夏令营)” and“Shaping Blue Dreams Together – C Blue Training Programme in the 21st Century (共铸蓝色梦想－21世纪海上丝绸之路优才计划)” (C Blue Training Programme).The “C Blue Summer Camp for Children” charitable event invited the left-behind children of theport’s frontline staff to reunite with their parents in Shenzhen and participate in a summer camp. Atotal of 50 families of the constructors stationed in Shenzhen had joined the event. The event notonly obtained positive feedback from the society, but also created a sound corporate image of theCompany to contribute to the society on a continuous basis. This project represented ChinaMerchants Group in the o theedeams Together (arrvice Project Competition of State-ownedEnterprises” and was awarded the Gold Winner.Sponsored by China Merchants Charitable Foundation and hosted by China Merchants Port, “CBlue Training Programme (C Blue优才计划)” is a corporate social responsibility project to practicethe mission of “promoting social progress through commercial success” extensively in countriesalong the “21st Century Maritime Silk Road” by adhering to the concept of promoting value sharingworldwide under the theme of “Shaping Blue Dreams Together (C Blue)”. The purpose of thisproject is to train more leading talents in port and shipping industry for countries along the SilkRoad and to offer high-end port and shipping industry-related training courses to various countries.
China Merchants Port Group Co., Ltd. Annual Report 2018
The success of this programme further enhanced China Merchants’ influence on countries along the“Belt and Road” initiative and better explicated China Merchants Port’s corporate goal of “WeConnect the World (天涯若比邻)”, at the same time deepening the school-enterprise cooperationwith Shenzhen Polytechnic. Through systematic study of theories and diversified visits andpractices, trainees will be able to utilize the extensive knowledge and experience gained to promotethe development of port and shipping industry and to strengthen the implementation of the “Beltand Road” initiative and thus promote the economic development of their respective countries.
Environmental protectionThe Company embeds environmental elements into corporate development. During the whole lifecycle of projects, the Company adheres to green ecological development philosophy and practice,and continuously pursues sustainable development in economic, environmental and social aspectsas a whole by leveraging innovative green development models, strengthening development andapplication of energy conservation technologies, optimizing green industry network and promotinggreen culture among its staff. Meanwhile, the Company strives to develop a green accountabilitychain and a green ecosystem with joint efforts of the community. With the concerted efforts ofvarious parties, the Company is able to develop innovative solutions for sustainable environmentaldevelopment and play its part in pushing forward ecocivilisation.XIX Other Significant Events1. Significant Events of Asset RestructuringOn 19 June 2018, the Proposal on the Company’s Plan to Issue Shares to Specific Targets toAcquire Assets was reviewed and approved at the 5
th
Special Meeting of the Company’s 9
th
Boardof Directors of 2018.On 28 June 2018, SASAC issued the Reply to the Issues in Respect of the Private Placement ofA-Shares by Shenzhen Chiwan Wharf Holdings Limited (GZCQ [2018] No. 360). In principle, theapproval was granted for the Company’s plan to acquire the share considerations of ChinaMerchants Port Holdings Co., Ltd. through a private placement of no more than 1,148,648,648A-shares and to issue no more than 128,952,746 A-shares to raise supporting funds. On 26 July2018, the Proposal on the Company’s Plan to Issue Shares to Specific Targets to Acquire Assets wasreviewed and approved at the 2
nd
Extraordinary General Meeting of 2018 of the Company.The Company obtained the Notice on the Filing of Overseas Investment Projects (FGBWZB [2018]No. 690) issued by NDRC and the Certificate of Corporate Overseas Investment (JWTZZ No.N1000201800487) issued by the Ministry of Commerce respectively on 20 September 2018 and 28September 2018.On 30 October 2018, the transaction was approved by China Securities Regulatory Commissionthrough the document of ZJXK [2018] No. 1750.
China Merchants Port Group Co., Ltd. Annual Report 2018
On 5 November 2018, the Company received the Reply to the Filing of Changes in Foreign-FundedEnterprises (YSWZB 201800004) issued by the Bureau of Industry and Information Technology ofShenzhen on November 2.On 15 November 2018, 1,313,541,560 ordinary shares of China Merchants Port Holdings CompanyLimited were registered in the name of the Company and the procedures for the registration ofownership transfer of the underlying assets were completed.On 25 December 2018, the procedures for the registration of the shares issued by the Company tothe counterparty CMID were completed in CSDCC Shenzhen.2. Changes in the Company’s Stock Name and Stock CodeOn 27 November 2018, the Company held the 8
th
Special Meeting of the 9
th
Board of Directors of2018. The Proposal on Changing the Company’s Name, Stock Name and Stock Code was reviewedand approved at the Meeting. According to the Proposal, the Company’s stock name would changefrom “CHIWAN WHARF/CHIWAN WHARF-B” to “CM PORT GROUP/CM PORT GROUP B”,and its stock code would change from “000022/200022” to “001872/201872”. On 13 December2018, the Company held the 3
rd
Extraordinary General Meeting of 2018, and the Proposal onChanging the Company’s Name, Stock Name and Stock Code was reviewed and approved. Inaccordance with the provisions of the Rules of Shenzhen Stock Exchange for Stock Listing andrelevant business processing requirements, the Company applied with Shenzhen Stock Exchangeand the revised stock name and code were officially applied from 26 December 2018.3. Description of the Events of Share Trading Suspension and ResumptionDue to the planning and demonstration of the actual controller China Merchants Group onsignificant events in respect of the Company, the Company’s stock was suspended from the openingon 20 November 2017. Through the negotiation and demonstration of related parties thereafter, theCompany recognized the aforementioned significant events as significant asset reorganization, withits stock transferred into significant asset reorganization and continuing to be suspended from 4December 2017. During the stock suspension, the Company duly performed its obligations ofinformation disclosure in accordance with relevant laws and regulations and released anannouncement on the progress at least every five working days. On 9 July 2018, in accordance withregulations, the Company disclosed the Report of Shenzhen Chiwan Wharf Holdings Limited onthe Issue of Shares to Acquire Assets and Raise Supporting Funds and Connected Transactions(Draft) (Revision) and related announcements. On 10 July 2018, the Company’s stock was resumedthrough its application.Due to the Company’s application for changes in its stock name and stock code, the Company’sstock was suspended consecutively for three trading days in total from 21 December 2018 to 25December 2018 during the implementation of the changes. From 26 December 2018, trading in theCompany’s shares was resumed and traded in the revised stock name and code.4. Information Disclosure IndexIn the Reporting Period, the Company disclosed the following significant events on SecuritiesTimes, Ta Kung Pao (HK) and www.cninfo.com.cn:
| Announcement No. | Date | Title |
| 2018-001 | 4 January 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
China Merchants Port Group Co., Ltd. Annual Report 2018
2018-002
| 2018-002 | 6 January 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of December 2017 |
| 2018-003 | 11 January 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-004 | 20 January 2018 | Announcement on Resolutions of the 1st Special Meeting of the 9th Board of Directors in 2018 |
| 2018-005 | 20 January 2018 | Announcement on Application for Continuing the Suspension due to the Expiration of Significant Assets Restructuring Delisting |
| 2018-006 | 27 January 2018 | Announcement on Resolutions of the 2nd Special Meeting of the 9th Board of Directors in 2018 |
| 2018-007 | 27 January 2018 | Announcement on the Related-party Transaction regarding Foreign Investments |
| 2018-008 | 27 January 2018 | Announcement on Convening Shareholders Meeting for Approval of Matters Related to Continuous Suspension |
| 2018-009 | 27 January 2018 | Notice on Convening the 1st Extraordinary General Meeting of 2018 |
| 2018-010 | 3 February 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-011 | 7 February 2018 | Announcement on Resolutions of the 3rd Special Meeting of the 9th Board of Directors in 2018 |
| 2018-012 | 7 February 2018 | Announcement on Expected Routine Related-Party Transactions for 2018 |
| 2018-013 | 7 February 2018 | Announcement on Related-party Transaction regarding Signing Supplementary Agreement to the MEDIA PORT INVESTMENTS LIMITED Shareholder Agreement II |
| 2018-014 | 7 February 2018 | Reminder of Changes in Controlling Shareholders |
| 2018-015 | 7 February 2018 | Reminder of Convening the 1st Extraordinary General Meeting of 2018 |
| 2018-016 | 8 February 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of January 2018 |
| 2018-017 | 10 February 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-018 | 14 February 2018 | Announcement on Resolutions of the 1st Extraordinary General Meeting of 2018 |
| 2018-019 | 14 February 2018 | Announcement on Application for Continuing the Suspension due to the Expiration of Significant Assets Restructuring Delisting |
| 2018-020 | 28 February 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-021 | 7 March 2018 | Announcement on Resolutions of the 3rd Meeting of the 9th Board of Directors |
| 2018-022 | 7 March 2018 | Announcement on Resolutions of the 3rd Meeting of the 9th Supervisory Committee |
| 2018-023 | 7 March 2018 | Abstract of Annual Report 2017 of Shenzhen Chiwan Wharf Holdings Limited |
| 2018-024 | 7 March 2018 | Announcement on Plan of Profit Distribution and Dividend Payout in 2017 |
China Merchants Port Group Co., Ltd. Annual Report 2018
2018-025
| 2018-025 | 7 March 2018 | Announcement on Changes in Accounting Policy |
| 2018-026 | 7 March 2018 | Announcement on Termination of Joint Investment in Haixing Onoda Project with Related Parties |
| 2018-027 | 7 March 2018 | Notice of Convening the 2017 Annual General Meeting |
| 2018-028 | 7 March 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-029 | 8 March 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of February 2018 |
| 2018-030 | 8 March 2018 | Correction Notice |
| 2018-031 | 14 March 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-032 | 20 March 2018 | Reminder of the Progress of Changes in Controlling Shareholders |
| 2018-033 | 21 March 2018 | Reminder of Convening the 2017 Annual General Meeting |
| 2018-034 | 21 March 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-035 | 27 March 2018 | Reminder of the Progress of Changes in Controlling Shareholders |
| 2018-036 | 28 March 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-037 | 29 March 2018 | Announcement on Resolutions of the 2017 Annual General Meeting |
| 2018-038 | 4 April 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-039 | 10 April 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of March 2018 |
| 2018-040 | 13 April 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-041 | 20 April 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-042 | 24 April 2018 | Reminder of Issuance of 2018 Phase I Super-short-term Financing Bonds |
| 2018-043 | 27 April 2018 | Announcement on Resolutions of the 4th Special Meeting of the 9th Board of Directors in 2018 |
| 2018-044 | 27 April 2018 | The Text of the First Quarter Report 2018 |
| 2018-045 | 27 April 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-046 | 28 April 2018 | Announcement on Issue Results of 2018 Phase I Super-short-term Financing Bonds |
| 2018-047 | 3 May 2018 | Announcement on China Securities Regulatory Commission’s Consent for the Exemption of China Merchants Gangtong Development (Shenzhen) Co., Ltd. and its Acting-in-concert |
China Merchants Port Group Co., Ltd. Annual Report 2018
Parties from the Tender Offer Obligation
| Parties from the Tender Offer Obligation | ||
| 2018-048 | 8 May 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-049 | 9 May 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of April 2018 |
| 2018-050 | 15 May 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-051 | 15 May 2018 | Announcement on Convening Investor Conference regarding Significant Assets Restructuring |
| 2018-052 | 17 May 2018 | Announcement on the Execution of the 2017 Dividend Plan |
| 2018-053 | 18 May 2018 | Announcement on Application for Continuing the Suspension due to the Expiration of Significant Assets Restructuring Delisting |
| 2018-054 | 19 May 2018 | Announcement on Particulars of Investors Conference Convened regarding Significant Assets Restructuring |
| 2018-055 | 22 May 2018 | Announcement on the Due Payment of 2017 Phase I Super-short-term Financing Bonds |
| 2018-056 | 25 May 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-057 | 1 June 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-058 | 8 June 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-059 | 9 June 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of May 2018 |
| 2018-060 | 12 June 2018 | Announcement on Completion of Share Transfer and Changes in Controlling Shareholders |
| 2018-061 | 15 June 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
| 2018-062 | 21 June 2018 | Announcement on Resolutions of the 5th Special Meeting of the 9th Board of Directors in 2018 |
| 2018-063 | 21 June 2018 | Announcement on Resolutions of the 2nd Special Meeting of the 9th Supervisory Committee in 2018 |
| 2018-064 | 21 June 2018 | Announcement on Related-party Transaction regarding Signing Supplementary Agreement to the Financial Service Agreement with China Merchants Group Finance Co., Ltd. |
| 2018-065 | 21 June 2018 | 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 | 21 June 2018 | Reminder of General Risk of Significant Assets Restructuring |
| 2018-067 | 28 June 2018 | Announcement on the Progress of Share Trading Suspension of Significant Assets Restructuring |
China Merchants Port Group Co., Ltd. Annual Report 2018
2018-068
| 2018-068 | 4 July 2018 | Announcement on Approval of Relevant Issues of Significant Assets Restructuring by State-owned Assets Supervision and Administration Commission |
| 2018-069 | 5 July 2018 | Announcement on the Delay in Reply to the Enquiry Letter of Restructuring of Shenzhen Stock Exchange and Continuous Share Trading Suspension |
| 2018-070 | 7 July 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of June 2018 |
| 2018-071 | 10 July 2018 | Announcement on Resolutions of the 6th Special Meeting of the 9th Board of Directors in 2018 |
| 2018-072 | 10 July 2018 | Announcement on Resolutions of the 3rd Special Meeting of the 9th Supervisory Committee in 2018 |
| 2018-073 | 10 July 2018 | Announcement on Signing Termination of Agreement to the Financial Service Agreement with China Development Finance Company Ltd. |
| 2018-074 | 10 July 2018 | Notice on Convening the 2nd Extraordinary General Meeting of 2018 |
| 2018-075 | 10 July 2018 | Announcement on the Share Trading Resumption of Significant Assets Restructuring |
| 2018-076 | 19 July 2018 | Reminder of Convening the 2nd Extraordinary General Meeting of 2018 |
| 2018-077 | 24 July 2018 | Announcement on Execution of 2017 Equities Distribution from the Company’s Significant Assets Restructuring of Intending to Purchase the Target Company China Merchants Port Holdings Company Limited |
| 2018-078 | 27 July 2018 | Announcement on Resolutions of the 2nd Extraordinary General Meeting of 2018 |
| 2018-079 | 9 August 2018 | Announcement on the Assets Purchase Offering and Matching Fund Raising of Shenzhen Chiwan Wharf Holdings Limited and the Revision of Relevant Documents of Related-Party Transactions |
| 2018-080 | 10 August 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of July 2018 |
| 2018-081 | 11 August 2018 | Announcement on Receiving the Acceptance Form of Application for Administrative license of China Securities Regulatory Commission |
| 2018-082 | 31 August 2018 | Announcement on Resolutions of the 4th Meeting of the 9th Board of Directors |
| 2018-083 | 31 August 2018 | Abstract of Interim Report 2018 |
| 2018-084 | 31 August 2018 | Announcement on the Progress of Foreign Investment and Related-party Transactions |
| 2018-085 | 6 September 2018 | Announcement on Receiving a Feedback Notification of Project Review for Administrative license of China Securities Regulatory |
China Merchants Port Group Co., Ltd. Annual Report 2018
Commission
| Commission | ||
| 2018-086 | 11 September 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of August 2018 |
| 2018-087 | 14 September 2018 | Announcement on the Reply to the Feedback Notification of Project Review for Administrative license of China Securities Regulatory Commission |
| 2018-088 | 28 September 2018 | Announcement on Share Trading Suspension about the Examination of the Company’s Assets Purchase via Share Offering and Matching Fund Raising and the Related-party Transactions by Audit Committee of China Securities Regulatory Commission for Listed Companies’ acquisition and Reorganization |
| 2018-089 | 10 October 2018 | Announcement on Conditional Approval of the Assets Purchase via Share Offering and Matching Fund Raising the Related-party Transactions by Audit Committee of China Securities Regulatory Commission for Listed Companies’ acquisition and Reorganization and the Share Trading Resumption of the Company |
| 2018-090 | 16 October 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of September 2018 |
| 2018-091 | 18 October 2018 | Announcement on Receiving the Notification of Foreign Investment Project Filing from National Development and Reform Commission and Certificate for Foreign Investment of Enterprises from Ministry of Commerce regarding the Assets Purchase via Share Offering and Matching Fund Raising and Related-party Transactions |
| 2018-092 | 31 October 2018 | Announcement on Resolutions of the 7th Special Meeting of the 9th Board of Directors in 2018 |
| 2018-093 | 31 October 2018 | The Text of the Third Quarter Report 2018 |
| 2018-094 | 1 November 2018 | Announcement on Receiving the Approval of China Securities Regulatory Commission regarding the Assets Purchase via Share Offering and Matching Fund Raising and Related-party Transactions |
| 2018-095 | 1 November 2018 | Announcement on Notice for the Revision of the Report of Assets Purchase via Share Offering and Matching Fund Raising and Related-party Transactions |
| 2018-096 | 6 November 2018 | Announcement on Receiving the Reply to the Filing of Changes in Foreign-invested Enterprises from Shenzhen Commission of Economy and Information Technology regarding the Assets Purchase via Share Offering and Matching Fund Raising and Related-party Transactions |
China Merchants Port Group Co., Ltd. Annual Report 2018
2018-097
| 2018-097 | 9 November 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of October 2018 |
| 2018-098 | 20 November 2018 | Announcement on Execution of 2018 Interim Equities Distribution from the Company’s Significant Assets Restructuring of Intending to Purchase the Target Company China Merchants Port Holdings Company Limited |
| 2018-099 | 21 November 2018 | Announcement on Resignation of Directors |
| 2018-100 | 21 November 2018 | Announcement on Resignation of Supervisors |
| 2018-101 | 22 November 2018 | Announcement on Completion of the Transfer of Underlying Assets regarding the Assets Purchase via Share Offering and Matching Fund Raising and Related-party Transactions |
| 2018-102 | 28 November 2018 | Announcement on Resolutions of the 8th Special Meeting of the 9th Board of Directors in 2018 |
| 2018-103 | 28 November 2018 | Announcement on Resolutions of the 5th Special Meeting of the 9th Supervisory Committee in 2018 |
| 2018-104 | 28 November 2018 | Announcement on Accounting Estimate Change of Fixed Assets |
| 2018-105 | 28 November 2018 | Announcement on Related-party Transaction regarding Signing Supplementary Agreement to the Financial Service Agreement with China Merchants Group Finance Co., Ltd. |
| 2018-106 | 28 November 2018 | Notice on Convening the 3rd Extraordinary General Meeting of 2018 |
| 2018-107 | 1 December 2018 | Announcement on Resolutions of the 9th Special Meeting of the 9th Board of Directors in 2018 |
| 2018-108 | 1 December 2018 | Announcement on Related-party Transaction regarding Jointly Investing and Establishing China Merchants Hainan Development and Investment Co., Ltd with Related Parties |
| 2018-109 | 3 December 2018 | Announcement on Adding Temporary Proposal in the 3rd Extraordinary General Meeting of 2018 and Supplementary Notice on Convening the 3rd Extraordinary General Meeting of 2018 |
| 2018-110 | 6 December 2018 | Reminder of Convening the 3rd Extraordinary General Meeting of 2018 |
| 2018-111 | 8 December 2018 | Announcement on Resignation of Chairman of the Board |
| 2018-112 | 8 December 2018 | Announcement on Resignation of Senior Executives |
| 2018-113 | 8 December 2018 | Announcement on Voluntary Information Disclosure of Business Volume Data of November 2018 |
| 2018-114 | 14 December 2018 | Announcement on Resolutions of the 3rd Extraordinary General Meeting of 2018 |
| 2018-115 | 14 December 2018 | Announcement on Resolutions of the 10th Special Meeting of the 9th Board of Directors in 2018 |
China Merchants Port Group Co., Ltd. Annual Report 2018
2018-116
| 2018-116 | 14 December 2018 | Announcement on Resolutions of the 6th Special Meeting of the 9th Supervisory Committee in 2018 |
| 2018-117 | 14 December 2018 | Announcement on Signing Trusteeship of the Stock Right Agreement with China Merchants (Liaoning) Port Development Co., Ltd and Related-party Transactions |
| 2018-118 | 14 December 2018 | Reminder of Intending to Change the Company’s Name, Stock Name and Stock Code and Share Trading Suspension of the Company |
| 2018-119 | 15 December 2018 | Announcement on Completion of Changes in Industrial and Commercial Registration |
| 2018-120 | 21 December 2018 | Reminder of Share Trading Suspension of the Company and Intending to Change Stock Name and Stock Code |
| 2018-121 | 24 December 2018 | Announcement on Changes in Shareholdings of Directors, Supervisors and Senior Executives of the China Merchants Port Group Co., Ltd. |
| 2018-122 | 24 December 2018 | Announcement on Commitment Made by Related Parties of the Assets Purchase via Share Offering |
| 2018-123 | 25 December 2018 | Announcement on Signing the Qianhai Land Service Agreement by the Wholly-owned Subordinate Company of Majority-owned Subsidiary Namely China Merchants Port Holdings Company Limited |
| 2018-124 | 26 December 2018 | Announcement on Share Trading Suspension of the Company and Changes in Stock Name and Stock Code |
China Merchants Port Group Co., Ltd. Annual Report 2018
Shengang Modern Service Industry Cooperation Zone Authority, CMG, Shenzhen Qianhai SquarePark Development Co., Ltd, China Merchants Shekou Industrial Zone Holdings Co., Ltd, CMSK,several subsidiary companies of China Merchants Shekou, and Shenzhen China Merchants QianhaiChidi Industry Co., Ltd to further manage the various land equities held by CMG in Qianhai,Shenzhen, China at present.
China Merchants Port Group Co., Ltd. Annual Report 2018
Part VI Share Changes and Shareholder Information
I. Share Changes1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I. Restricted shares | 160,106 | 0.02% | 1,148,648,648 | 0 | 0 | 1,148,700,698 | 1,148,700,698 | 1,148,860,804 | 64.06% |
| 1. Shares held by state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shares held by state-owned legal person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Shares held by other domestic investors | 160,106 | 0.02% | 0 | 0 | 0 | 52,050 | 52,050 | 212,156 | 0.01% |
| Including: Shares held by domestic legal person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic natural person | 160,106 | 0.02% | 0 | 0 | 0 | 52,050 | 52,050 | 212,156 | 0.01% |
| 4. Shares held by foreign investors | 0 | 0.00% | 1,148,648,648 | 0 | 0 | 0 | 1,148,648,648 | 1,148,648,648 | 64.05% |
| Including: Shares held by foreign legal person | 0 | 0.00% | 1,148,648,648 | 0 | 0 | 0 | 1,148,648,648 | 1,148,648,648 | 64.05% |
| Shares held by foreign natural person | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| II. Unrestricted shares | 644,603,624 | 99.98% | 0 | 0 | 0 | -52,050 | -52,050 | 644,551,574 | 35.94% |
| 1. RMB ordinary shares | 464,859,300 | 72.10% | 0 | 0 | -3,976 | -3,976 | 464,855,324 | 25.92% | |
| 2. Domestically listed foreign shares | 179,744,324 | 27.88% | 0 | 0 | 0 | -48,074 | -48,074 | 179,696,250 | 10.02% |
| 3. Overseas listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Other | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total shares | 644,763,730 | 100.00% | 1,148,648,648 | 0 | 0 | 0 | 1,148,648,648 | 1,793,412,378 | 100.00% |
China Merchants Port Group Co., Ltd. Annual Report 2018
approved at the meetings, including the Proposal on the Company’s Eligibility for the Issue ofShares to Acquire Assets and Raise Supporting Funds, the Proposal on the Company’s Plan to IssueShares to Specific Targets to Acquire Assets, the Proposal on the Company’s Entering into theAgreement on the Concerted Action of China Merchants Port Holdings Co., Ltd. with ChinaMerchants Group (HK) Co., Ltd., the Proposal on the Company’s Raising of Supporting Funds, theProposal on the Report of Shenzhen Chiwan Wharf Holdings Limited on the Issue of Shares toAcquire Assets and Raise Supporting Funds and Connected Transactions (Draft) and the Abstract,the Proposal on the Entering with Specific Targets into the Agreement on the Issue of Shares toAcquire Assets and the Agreement on the Impairment Compensation Effective with Conditions, theProposal on the Entering with Specific Targets into the Supplementary Agreement to theAgreement on the Impairment Compensation of the Agreement on the Issue of Shares to AcquireAssets Effective with Conditions, and the Proposal on the Application for the Approval of theCompany’s Annual General Meeting for the Exemption of Increased Shareholding of ChinaMerchants Investment Development Company Limited by Offer.On 28 June 2018, SASAC issued the Reply to the Issues in Respect of the Private Placement ofA-Shares by Shenzhen Chiwan Wharf Holdings Limited (GZCQ [2018] No. 360). In principle, theapproval was granted for the private placement of no more than 1,148,648,648 A-shares by ChinaMerchants Port to acquire the share considerations of China Merchants Port Holdings Co., Ltd. andthe issue of no more than 128,952,746 A-shares to raise supporting funds.On 26 July 2018, the issues in respect of the transaction were reviewed and approved at the 2
nd
Extraordinary General Meeting of 2018, and non-related shareholders reviewed and approved theProposal on the Application for the Approval of the Company’s Annual General Meeting for theExemption of Increased Shareholding of China Merchants Investment Development CompanyLimited by Offer and agreed to the exemption of increasing the holding of shares of ChinaMerchants Port by CMID through offer.On 20 September 2018, pursuant to the Filing of Overseas Investment Projects (FGBWZB [2018]No. 690) issued by NDRC, NDRC agreed to file the project of acquisition of partial equity of ChinaMerchants Port Holdings by China Merchants Port.On 28 September 2018, pursuant to the Certificate of Corporate Overseas Investment (JWTZZNo.N1000201800487) issued by the Ministry of Commerce, the filing with the Ministry ofCommerce in respect of the overseas investment involved in the acquisition was completed.On 30 October 2018, CSRC issued the Reply on the Approval of the Issue of Shares by ShenzhenChiwan Wharf Holdings Limited to China Merchants Investment Development Company Limitedfor Asset Acquisition and Raising of Supporting Funds (ZJXK [2018] No. 1750) to approval the
China Merchants Port Group Co., Ltd. Annual Report 2018
transaction.On 2 November 2018, pursuant to the Reply to the Filing of Changes in Foreign-FundedEnterprises (Number: YSWZB 201800004) issued by the Bureau of Industry and InformationTechnology of Shenzhen, China Merchants Port completed the procedures for the filing of changesin foreign-funded enterprises in respect of the strategic investment in listed companies by foreigninvestors involved in the acquisition.Transfer of share ownership:
On 25 December 2018, the registration of the 1,148,648,648 A-shares issued by China MerchantsPort Holdings Company Limited to CMID with China Securities Depository and Clearing Co., Ltd.Shenzhen Branch. On 26 December 2018, some of the shares were listed for trading on ShenzhenStock Exchange.Progress on any share repurchases:
□ Applicable √ Not applicableProgress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicableEffects of share changes on the basic and diluted earnings per share, equity per share attributable tothe Company’s ordinary shareholders and other financial indicators of the prior year and the prioraccounting period, respectively:
At the beginning of the Reporting Period, the Company had 645 million capital shares, whichincreased to 1,793 million upon the additional issue. Pursuant to the Information Disclosure andPresentation Rules for Companies Making Public Offering No. 9 - Calculation and Disclosure ofReturn on Net Assets and Earnings per Share, the Company used the 1,793 capital shares as thebase in the calculation of the earnings per share and net asset value per share for 2016 and 2017.Therefore, the changes in the capital shares from the Company’s reorganization do not have anyeffect on the financial indicators including earnings per share and net asset value per sharepresented in the comparative financial statements.The Company completed the asset acquisition through issue of shares on 26 December 2018, fromwhen the Company included China Merchants Port Holdings Company Limited into theconsolidated financial statements. Based on the net profits attributable to the listed company in thelatest restated consolidated financial statements for 2017 and the latest total capital shares, theearnings per share was RMB1.32. The diluted earnings per share was RMB1.32, and the net assetvalue per share attributable to ordinary shareholders of the Company was RMB15.88.To provide investors with comparable financial information, the Company disclosed the financial
China Merchants Port Group Co., Ltd. Annual Report 2018
indicators before and after the restatement for the recent two years, including basic earnings pershare, diluted earnings per share and net assets attributable to the common shareholders of theCompany. The details can be found in “VI. Key Financial Information” under “Section II CorporateInformation and Key Financial Information”.Other information that the Company considers necessary or is required by the securities regulator tobe disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
Unit: share
| Name of shareholders | Number of restricted shares at the period-begin | Number of released restricted shares | Number of increased restricted shares | Number of restricted shares at the period-end | Reason for restriction | Date of restriction release |
| China Merchants Investment Development Company Limited | 0 | 0 | 1,148,648,648 | 1,148,648,648 | During the Reporting Period, the Company issued 1,148,648,648 A shares to CMID who made the commitment to restrict the shares when the new shares went public. For details, see III. Fulfillment of commitments in Part V Significant Events of this report | 25 June 2022 |
| Zhang Jianguo | 55,712 | 0 | 18,570 | 74,282 | According to the Articles of Association and the relevant laws and regulations | 12 May 2019 |
| Yuan Yuhui | 10,530 | 0 | 0 | 10,530 | - | |
| Ni Keqin | 21,909 | 0 | 0 | 21,909 | - | |
| Zhao Chaoxiong | 48,716 | 0 | 16,238 | 64,954 | 5 May 2019 | |
| Wang Yongli | 3,739 | 0 | 1,246 | 4,985 | 12 May 2019 | |
| Yao Shenglan | 0 | 0 | 6,500 | 26,000 | 5 May 2019 |
China Merchants Port Group Co., Ltd. Annual Report 2018
ZhengShaoping
| Zheng Shaoping | 0 | 0 | 9,496 | 9,496 | - | |
| Total | 160,106 | 0 | 1,148,700,698 | 1,148,860,804 | -- |
| Name of stock and its derivative securities | Issuing date | Issuing price (or interest rate) | Numbers | Listing date | Approved numbers for trading | Expiry date of the trading |
| Stock | ||||||
| Issuing A shares | 25 December 2018 | RMB21.46 per share | 1,148,648,648 | 26 December 2018 | 1,148,648,648 | - |
China Merchants Port Group Co., Ltd. Annual Report 2018
III Shareholders and Actual Controller1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary shareholders at the period-end | 35,642 (including 24,924 A-shareholders, and 10,718 B-shareholders) | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 35,972 (including 25,184 A-shareholders, and 10,788 B-shareholders) | Number of preferred shareholders with resumed voting rights at the period-end (if any) | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) | 0 | |||||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | Pledged or frozen shares | |||||||
| CHINA MERCHANTS INVESTMENT DEVELOPMENT COMPANY LIMITED | Foreign legal person | 64.05% | 1,148,648,648 | 1,148,648,648 | 1,148,648,648 | 0 | 0 | |||||||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | Domestic general legal person | 20.68% | 370,878,000 | 370,878,000 | 0 | 370,878,000 | 0 | |||||||
| BROADFORD GLOBAL LIMITED | Foreign legal person | 3.08% | 55,314,208 | 55,314,208 | 0 | 55,314,208 | 0 | |||||||
| CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI 5496 | Foreign legal person | 2.42% | 43,445,204 | -4,469,750 | 0 | 43,445,204 | Unknown | |||||||
| NORGES BANK | Foreign legal person | 0.16% | 2,802,863 | 0 | 0 | 2,802,863 | Unknown | |||||||
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | State-owned legal person | 0.15% | 2,641,020 | 514,998 | 0 | 2,641,020 | Unknown | |||||||
| MAI SHUQING | Domestic natural person | 0.13% | 2,361,047 | 122,700 | 0 | 2,361,047 | Unknown | |||||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | Foreign legal person | 0.12% | 2,229,700 | -387,818 | 0 | 2,229,700 | Unknown | |||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
CHINACONSTRUCTIONBANK—INVESCOGREAT WALLQUANTITATIVEAND SELECTEDSTOCKSECURITIESINVESTMENTFUNDS
| CHINA CONSTRUCTION BANK—INVESCO GREAT WALL QUANTITATIVE AND SELECTED STOCK SECURITIES INVESTMENT FUNDS | Fund, wealth management instrument, etc. | 0.08% | 1,495,654 | 735,993 | 0 | 1,495,654 | Unknown | ||
| CANADA POST CORPORATION REGISTERED PENSION PLAN | Foreign legal person | 0.08% | 1,446,906 | -132,190 | 0 | 1,446,906 | Unknown | ||
| Strategic investors or general legal person becoming top-ten shareholders due to placing of new shares (if any) | N/A | ||||||||
| Related or acting-in-concert parties among the shareholders above | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a wholly-owned subsidiary of Broadford Global Limited, and Broadford Global Limited is the controlling shareholder of China Merchants Investment Development Company Limited. The Company does not know whether the other unrestricted shareholders are related parties or not. | ||||||||
| Top 10 unrestricted shareholders | |||||||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | |||||||
| Type | Shares | ||||||||
| CHINA MERCHANTS GANGTONG DEVELOPMENT (SHENZHEN) CO., LTD. | 370,878,000 | 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 | 43,445,204 | B share | 43,445,204 | ||||||
| NORGES BANK | 2,802,863 | B share | 2,802,863 | ||||||
| CHINA MERCHANTS SECURITIES (HK) CO., LTD. | 2,641,020 | B share | 2,641,020 | ||||||
| MAI SHUQING | 2,361,047 | A share | 2,361,047 | ||||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 2,229,700 | B share | 2,229,700 | ||||||
| CHINA CONSTRUCTION BANK—INVESCO GREAT WALL QUANTITATIVE AND SELECTED STOCK SECURITIES INVESTMENT FUNDS | 1,495,654 | A share | 1,495,654 | ||||||
| CANADA POST CORPORATION REGISTERED PENSION PLAN | 1,446,906 | B share | 1,446,906 | ||||||
| CHEN ZEHONG | 1,240,000 | A share | 1,240,000 | ||||||
| Related or acting-in-concert parties among the top ten unrestricted public shareholders and between the top ten unrestricted public shareholders and the top ten shareholders | China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a wholly-owned subsidiary of Broadford Global Limited. The Company does not know whether the other unrestricted shareholders are related parties or | ||||||||
China Merchants Port Group Co., Ltd. Annual Report 2018
not.
| not. | |
| Top ten ordinary shareholders conducting securities margin trading (if any) | N/A |
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| BROADFORD GLOBAL LIMITED | Deng Weidong | 27 November 2017 | 68550019-000-11-17-2 | Port services, bonded logistic and cold chain services, property development and investment |
| Equities held by the controlling shareholder in other listed companies at home or overseas by holding shares or participating in shares during the Reporting Period | N/A | |||
| Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| China Merchants Group | Li Jianhong | 14 October 1986 | 10000522-0 | Lease and agency of water/land passenger-cargo transportation, water/land conveyance and facilities; investment and management of port and storage business; salvage, refloatation and tugboat; industrial production; construction, repairing, checking and marketing of shipping, offshore petroleum drilling equipment; |
China Merchants Port Group Co., Ltd. Annual Report 2018
repairing and checking of drilling platformand drilling container; overall contracting ofwater/land construction projects and therelated offshore petroleum developmentprojects, and their construction organizationand logistic services; procurement, supplyand sale of water/land communication andtransportation equipment; export and importbusiness of transportation; investment andmanagement of finance, insurance, trust,securities, futures business; investment andmanagement of tourism, hotels, cateringservices and relevant service; real estatedevelopment, management and consultancyof property; investment and management ofpetroleum and chemical industry;investment and operation of infrastructure ofcommunication; overseas assetsmanagement. Development andmanagement of Shenzhen Shekou IndustrialZone and Fujian Zhangzhou DevelopmentZone.
| repairing and checking of drilling platform and drilling container; overall contracting of water/land construction projects and the related offshore petroleum development projects, and their construction organization and logistic services; procurement, supply and sale of water/land communication and transportation equipment; export and import business of transportation; investment and management of finance, insurance, trust, securities, futures business; investment and management of tourism, hotels, catering services and relevant service; real estate development, management and consultancy of property; investment and management of petroleum and chemical industry; investment and operation of infrastructure of communication; overseas assets management. Development and management of Shenzhen Shekou Industrial Zone and Fujian Zhangzhou Development Zone. | ||
| Equities of the other listed companies at home or overseas controlled by the actual controller during the Reporting Period | China Merchants Group holds: 62.09% shares of China Merchants Port Holdings Company Limited; 27.86% shares of China Merchants Bank Co., Ltd; 54.28% shares of China Merchants Energy Shipping Co., Ltd; 72.36% shares of China Merchants Shekou Industrial Zone Holdings Co., Ltd.; 74.35% shares of China Merchants Land Limited; 26.77% shares of Shanghai International Port (Group) Co., Ltd; 24.58% shares of China International Marine Containers (Group) Ltd; 87.81% shares of China Merchants Port Group Co., Ltd; 3.09% shares of Ningbo Zhoushan Port Company Limited; 2.54% shares of Qingdao Port International Co., Ltd; 44.09% shares of China Merchants Securities Co. Ltd.; 27.59% shares of China Merchants China Direct Investments Limited; 68.72% shares of China Merchants Expressway Network&Technology Holdings Co., Ltd; 16.52% shares of Heilongjiang Transport Development Co., Ltd; 14.04% shares of Jilin Expressway Co., Ltd; 16.02% shares of Shangdong Hi-speed Co., Ltd; 17.75% shares of Fujian Expressway Development Co., Ltd; 24.05% shares of Sichuan Expressway Company Limited; 29.94% shares of Anhui Expressway Company Limited; 13.86% shares of Guangxi Wuzhou Communications Co., Ltd; 4.02% shares of Shenzhen Expressway Co., Ltd; 11.69% shares of Jiangsu Expressway Company Limited; 15.21% shares of Hubei Chutian Expressway Co., Ltd; 15.43% shares of Henan Zhongyuan Expressway Co., Ltd; 66.31% shares of Sinotrans Limited; 60.95% shares of Sinotrans Air Transportation Development Co., Ltd.; 68.70% shares of Sinotrans Shipping Ltd.; 7.04% shares of Xiandai Touzi Co., Ltd; 21.05% shares of Dalian Port (PDA) Company Limited; 0.37% shares of Hunan Sunward Intelligent Machine Co., Ltd; 0.16% shares of CMMB Vision Holdings Limited; 1.20% shares of Oriental Times Media Co., Ltd; | |
China Merchants Port Group Co., Ltd. Annual Report 2018
Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways ofasset management.□ Applicable √ Not applicable4. Other 10% or Greater Corporate Shareholders
| Name of corporate shareholders | Legal representative/person in charge | Date of establishment | Registered capital | Business scope or management activities |
| China Merchants Investment and Development Co., Ltd | Fu Gangfeng | 15 November 2013 | HKD28,287,989,241 | Investment management of equities and others |
| China Merchants Gangtong Development (Shenzhen) Co., Ltd. | Deng Weidong | 16 January 2018 | RMB9,446 million | Provision of management services for ports (without involving special administrative measures on the access of foreign investment); port information inquiries, economic information consultation, economic information consultation, corporate management consultation, business information consultation, brand management consultation and logistics information consultation (excluding restricted items in each case); technical development and sales of ship machinery and |
State-Owned Assets Supervision and Administration Commission of the State Council100%
100%
China Merchants Group
China Merchants Group
Broadford Global Limited
Broadford Global Limited
China Merchants Port Group Co., Ltd.
China Merchants Port Group Co., Ltd.
China Merchants GangtongDevelopment (Shenzhen) Co., Ltd.
China Merchants GangtongDevelopment (Shenzhen) Co., Ltd.Public A-shareholders
Public A-shareholders
Public B-shareholders
Public B-shareholders
5.24%
5.24%6.95%
6.95%
100%
100%64.05%
| 20.68% | 64.05% |
100%
CMID
74.66%3.08%
China Merchants Port Group Co., Ltd. Annual Report 2018
equipment; technical services inrespect of port loading and unloadingequipment; supporting businesses inrespect of the design, sales, importand export of loading and unloadingtools, mechanical and electricalproducts and non-ferrous metalproducts (excluding precious metals)(Commodities that involve statetrading, quota, license and specialadministrative regulations shall beoperated through the applicationpursuant to related state regulations);technical development and technicalservices in respect of modernlogistics information systems; supplychain management and relatedsupporting services; design oflogistics plans; planning of corporateimage; planning of cultural exchangeactivities (without involving specialadministrative measures on the accessof foreign investment); marketingplanning; and planning of brandimage. (In each case, any itemforbidden by laws, administrativeregulations and the State Councilshall be excluded and restricted itemsshall be operated upon the attainmentof the permission)
equipment; technical services inrespect of port loading and unloadingequipment; supporting businesses inrespect of the design, sales, importand export of loading and unloadingtools, mechanical and electricalproducts and non-ferrous metalproducts (excluding precious metals)(Commodities that involve statetrading, quota, license and specialadministrative regulations shall beoperated through the applicationpursuant to related state regulations);technical development and technicalservices in respect of modernlogistics information systems; supplychain management and relatedsupporting services; design oflogistics plans; planning of corporateimage; planning of cultural exchangeactivities (without involving specialadministrative measures on the accessof foreign investment); marketingplanning; and planning of brandimage. (In each case, any itemforbidden by laws, administrativeregulations and the State Councilshall be excluded and restricted itemsshall be operated upon the attainmentof the permission)
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, ActualController, Reorganizer and Other Commitment Makers√ Applicable □ Not applicableFor details, see III. Fulfillment of commitments in Part V Significant Events of this report
China Merchants Port Group Co., Ltd. Annual Report 2018
Part VII Preferred Shares
□ Applicable √ Not applicableNo preferred shares in the Reporting Period.
Part VIII Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Current/ former | Sex | Age | Starting and ending dates of office term | Shares held at the period-begin (share) | Increased shares of the period (share) | Decreased shares of the period (share) | Other increase/decrease (share) | Shares held at the period-end (share) |
| Fu Gangfeng | Chairman of the Board | Incumbent | Male | 52 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Deng Renjie | Vice Chairman of the Board | Incumbent | Male | 48 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Bai Jingtao | Director | Incumbent | Male | 53 | September 2017 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Yan Shuai | Director | Incumbent | Male | 46 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Su Jian | Director | Incumbent | Male | 46 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Song Dexing | Director | Incumbent | Male | 55 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Yuan Yuhui | Independent director | Incumbent | Male | 68 | June 2017 to June 2020 | 14,040 | 0 | 0 | 0 | 14,040 |
| Su Qiyun | Independent director | Incumbent | Male | 55 | June 2017 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Li Changqing | Independent director | Incumbent | Male | 51 | June 2017 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Liu Yingjie | Chairman of the Supervisory Committee | Incumbent | Male | 46 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Hu Qin | Supervisor | Incumbent | Female | 52 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Yang Yuntao | Supervisor | Incumbent | Male | 52 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Ni Keqin | Supervisor | Incumbent | Female | 54 | June 2017 to June 2020 | 29,211 | 0 | 0 | 0 | 29,211 |
China Merchants Port Group Co., Ltd. Annual Report 2018
ZhengLinwei
| Zheng Linwei | Supervisor | Incumbent | Male | 48 | June 2017 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Bai Jingtao | CEO | Incumbent | Male | 53 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Zhang Yi | GM and COO | Incumbent | Male | 48 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Zheng Shaoping | Vice GM | Incumbent | Male | 56 | December 2018 to June 2020 | 0 | 12,661 | 0 | 0 | 12,661 |
| Yan Gang | Vice GM | Incumbent | Male | 47 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Huang Chuanjing | Vice GM and Board Secretary | Incumbent | Male | 36 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Lu Yongxin | Vice GM | Incumbent | Male | 50 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Li Yubin | Vice GM | Incumbent | Male | 47 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Wen Ling | CFO | Incumbent | Female | 53 | December 2018 to June 2020 | 0 | 0 | 0 | 0 | 0 |
| Bai Jingtao | Chairman of the Board | Former | Male | 53 | September 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Zhou Qinghong | Vice Chairman of the Board | Former | Male | 55 | September 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Lv Shengzhou | Director | Former | Male | 54 | June 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Li Yubin | Director | Former | Male | 47 | June 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Liu Bin | Managing Director | Former | Male | 49 | June 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Zhang Jianguo | Director | Former | Male | 54 | June 2017 to December 2018 | 74,282 | 0 | 0 | 0 | 74,282 |
| Zhao Jianli | Chairman of the Supervisory Committee | Former | Female | 55 | June 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Sun Ligan | Supervisor | Former | Male | 51 | June 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Wen Ling | Supervisor | Former | Female | 54 | June 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 |
| Zhao Chaoxiong | Vice GM | Former | Male | 53 | June 2017 to December 2018 | 64,954 | 0 | 0 | 0 | 64,954 |
| Wang Yongli | Vice GM and Secretary of the Board | Former | Male | 51 | June 2017 to December 2018 | 4,985 | 0 | 0 | 0 | 4,985 |
China Merchants Port Group Co., Ltd. Annual Report 2018
Lin Cong
| Lin Cong | Vice GM | Former | Male | 60 | June 2017 to December 2018 | 0 | 0 | 0 | 0 | 0 | |
| Yao Shenglan | CFO | Former | Female | 52 | September 2017 to December 2018 | 26,000 | 0 | 0 | 0 | 26,000 | |
| Total | -- | -- | -- | -- | -- | -- | 432,045 | 0 | 0 | 0 | 432,045 |
| Name | Office title | Type of change | Date of change | Reason for change |
| Bai Jingtao | Chairman of the Board | Left | 6 December 2018 | Job change |
| Zhou Qinghong | Vice Chairman of the Board | Left | 13 December 2018 | Job change |
| Lv Shengzhou | Director | Left | 13 December 2018 | Job change |
| Li Yubin | Director | Left | 13 December 2018 | Job change |
| Liu Bin | Managing Director | Left | 13 December 2018 | Job change |
| Zhang Jianguo | Director | Left | 13 December 2018 | Job change |
| Zhao Jianli | Chairman of the Supervisory Committee | Left | 13 December 2018 | Job change |
| Sun Ligan | Supervisor | Left | 13 December 2018 | Job change |
| Wen Ling | Supervisor | Left | 13 December 2018 | Job change |
| Zhao Chaoxiong | Vice GM | Left | 6 December 2018 | Job change |
| Wang Yongli | Vice GM and Secretary of the Board | Left | 13 December 2018 | Job change |
| Lin Cong | Vice GM | Left | 6 December 2018 | Job change |
| Yao Shenglan | CFO | Left | 6 December 2018 | Job change |
China Merchants Port Group Co., Ltd. Annual Report 2018
Zone, Deputy Chief Accountant of Shekou Industrial Zone, Financial Controller of ShekouHoldings, Financial Controller of Shekou Industrial Zone, General Manager of Finance Departmentof China Merchants Group, Deputy Financial Controller of China Merchants Group and ChiefAccountant of China Merchants Group. Fu Gangfeng has been being the President of the Companysince December 2018.Deng Renjie, Vice Chairman of the Board, graduated from Dalian Maritime University, majoringin international economic law, and obtained master’s degree. Deng Renjie now holds the post ofDeputy General Manager of China Merchants Group Company Limited, President of Liaoning PortGroup Co., Ltd. Deng Renjie has successively held the posts of Researcher of General Office ofMinistry of Communications, Deputy Director of General Office of Hunan Provincial PartyCommittee, Deputy Secretary General of Hunan Provincial Party Committee, Deputy SecretaryGeneral of Party Committee of Xinjiang Autonomous Region, Assistant General Manager of ChinaMerchants Group Company Limited and Director of General Manager. Deng Renjie holdsconcurrent posts of Executive Director, Vice Chairman of the 8
th
Council of China Highway andTransportation Society. Deng Renjie has been being the Vice Chairman of the Board of theCompany since December 2018.Bai Jingtao, Director and Chief Executive Officer, Professor Level Senior Engineer, graduatedfrom Department of Water Conservancy of Tianjin University and obtained bachelor’s degree inport and waterway engineering. Later Bai Jingtao studied at Graduate School of Wuhan Universityof Technology, Graduate School of Shanghai Maritime University and obtained master’s degree inmanagement science and engineering, doctor’s degree in transportation planning and managementrespectively. Bai Jingtao now holds the post of Managing Director of China Merchants PortHoldings Company Limited (CM Port Holdings). Bai Jingtao has successively held the posts ofAssistant Engineer of CCCC Water Transportation Consultants Co., Ltd, Principal Staff of Divisionof Engineering Management and Division of Infrastructure Management of Ministry ofCommunications, Deputy Director and Director of Division of Infrastructure Management andDivision of Water Transport of Ministry of Communications, Deputy General Manager of ChinaMerchants Zhangzhou Development Zone Co., Ltd and Director of Zhangzhou Port Authority,Deputy Director of Xiamen Port Authority and Executive Deputy Commander of ConstructionHeadquarters of Xiamen Haicang Bonded Port Area, Deputy General Manager of China MerchantsInternational Company Limited, Secretary of the Party Committee of China Merchants ZhangzhouEconomic and Technological Development Zone and Executive Deputy Director of ManagementCommittee, Secretary of the Party Committee and General Manager of China MerchantsZhangzhou Economic and Technological Development Zone Company Limited. Bai Jingtao hasbeen being the Director of the Company since September 2017 and Chief Executive Officer of theCompany since December 2018.Yan Shuai, Director, graduated from Harbin Engineering University, majoring in industrialautomation, and obtained bachelor’s degree in engineering. Later Yan Huai obtained master’sdegree in management at Beijing University of Aeronautics and Astronautics. Yan Shuai now holdsthe posts of Director of Human Resources Department, Director of Party Committee Office,Director of Organization Department of Party Committee and Director of Department ofParty-Mass Work of China Merchants Group. Yan Shuai has successively held the posts of DeputyResearcher of General Office of the State Council of the People’s Republic of China SecondSecretariat, Member of Party Committee, Deputy General Manager and Secretary of Committee ofDiscipline Inspection of China Merchants Group Finance Co., Ltd., Deputy Director (principalperson) of Human Resources Department of China Merchants Group Company Limited. Yan Shuaihas been being the Director of the Company since December 2018.Su Jian, Director, Non-Practicing Member of The Chinese Institute of Certified Public
China Merchants Port Group Co., Ltd. Annual Report 2018
Accountants, Intermediate Accountant, graduated from Department of Economics of ShanghaiUniversity of Finance and Economics, and obtained bachelor’s degree in economics. Li Jian nowholds the post of Director of Finance Department (Property Right Department) of China MerchantsGroup Company Limited. Li Jian has successively held the post of Financial Manager of ChinaMerchants International Travel Co., Ltd., Senior Manager of Finance Department of ChinaMerchants Shekou Industrial Zone, Senior Manager of Finance Department of China MerchantsGroup Company Limited, Assistant Director of Finance Department, Deputy Director of FinanceDepartment, Deputy Director of Human Resources Department, Deputy Director of PartyCommittee Office, Deputy Director of Organization Department of Party Committee, DeputyDirector of Property Right Department (principal person), Secretary of Party Committee, Secretaryof Committee for Discipline Inspection, Deputy General Manager of China Merchants IndustrialGroup Company Limited. Li Jian has been being the Director of the Company since December2018.Song Dexing, Director, Senior Engineer, graduated from Department of Mechanics of WuhanUniversity of Technology (former name is Wuhan Institute of Water Transportation Engineering),and obtained bachelor’s degree in engineering. Later Song Dexing obtained master’s degree,majoring in transportation planning at Wuhan University of Technology and doctor’s degree inmanagement, majoring in administrative management at Huazhong University of Science andTechnology. Song Dexing now holds the posts of Director of Transportation & Logistics BusinessDepartment/Beijing Headquarters of China Merchants Group Company Limited, Executive Director,General Manager, Secretary of Party Committee of SINOTRANS&CSC. Song Dexing hassuccessively held the posts of Secretary of Youth League Committee, Engineer of Water TransportPlanning & Design Institute of Ministry of Communications, Principal Staff of Division ofTransport of Ministry of Communications, Deputy Director, Director of Container Office ofDivision of Water Transport of Ministry of Communications, Deputy Mayor of Luoyang MunicipalPeople’s Government (temporary post), Deputy Director of China Waterborne Transport ResearchInstitute, Deputy Director, Director of Yangtze Three Gorges Navigation Administration, DeputyDirector, Director of Division of Water Transport of Ministry of Communications, Director ofBureau of Water Transport of Ministry of Transport (Director of Taiwanese Affairs Office of theministry), Vice President, Member of Party Committee, Deputy Secretary of Party Committee,Secretary of Committee for Discipline Inspection of SINOTRANS&CSC, General Manager ofSINOTRANS&CSC, Director of Department of Comprehensive Logistics Business of ChinaMerchants Group Company Limited. Song Dexing has been being the Director of the Companysince December 2018.Yuan Yuhui, Independent Director, MBA, now acts as the Director of Shenzhen Riland IndustrialCo., Ltd. He once acted as the Vice GM, Vice Director of China Nanshan Development (Group)Incorporation and the Director of the Company. And he has been being the Independent Director ofthe Company since August 2015.Su Qiyun, Independent Director, graduated from Xiamen University of Department of Law with amaster degree of Civil and Commercial Law and a doctor degree of Wuhan University of Law. Henow is the founding partner of Beijing Deheng Law Office. He used to serve as Manager ofInvestment Department of Ping An Insurance Company of China, as Cadres of Shenzhen Industryand Commerce Administration. And he has been an Independent Director of the Company sinceMay 2014.Li Changqing, Independent Director, graduated from Xiamen University with a doctor degree ofAccounting, and also is a CPA, an excellent talent of new century of Ministry of Department, aprominent talent of Xiamen as well as a guide tutor of Postdoctoral Center of SSE. He now is theDirector of Senior Business Administration Education Center, professor and doctoral supervisor of
China Merchants Port Group Co., Ltd. Annual Report 2018
Xiamen University. And he has been being an Independent Director of the Company since May2014.Liu Yingjie, Chairman of the Supervisory Committee, graduated from Capital University ofEconomics and Business, majoring in accounting, and obtained bachelor’s degree in economics. LiuYingjie now holds the post of Director of Risk Control Department/Law and ComplianceDepartment of China Merchants Group. Liu Yingjie has successively held the posts of DeputyDirector, Director of Division of Comprehensive Audit of Supervision Department of COSCO,Director of Division of Computer Audit, Assistant Director, Deputy Director of Risk ControlDepartment/Audit Department of China Merchants Group. Liu Yingjie has been being the Chairmanof the Supervisory Committee of the Company since December 2018.Hu Qin, Supervisor, graduated from Peking University, majoring in international law, and obtainedmaster’s degree in law. Later Hu Qin studied at NUS Business School and obtained master’s degreein management. Hu Qin now holds the post of Deputy Director of Risk Control Department/Law&Compliance of China Merchants Group. Hu Qin has successively held the posts of DeputyGeneral Manager of Planning Department of China Merchants Shekou Industrial Zone CompanyLimited, General Manager and General Counsel of Department of Legal Affairs, General Counselof China Merchants Shekou Industrial Zone Holdings Co., Ltd., Deputy Director of Risk ControlDepartment of China Merchants Group, Deputy Director of Legal Department. Hu Qin has beenbeing the Supervisor of the Company Since December 2018.Yang Yuntao, Supervisor, graduated from Jilin University, majoring in international law, andobtained bachelor’s degree in law. Later Yang Yuntao studied at School of Law, University ofInternational Business and Economics, and obtained doctor’s degree in law. Yang Yuntao now holdsthe posts of Deputy Director of Transportation & Logistics Business Department/BeijingHeadquarters of China Merchants Group Company Limited, Deputy General Manager and GeneralCounsel of SINOTRANS&CSC, Member of Party Committee. Yang Yuntao has successively heldthe posts of Deputy General Manager of Port Business Department of Sino-Trans China NationalForeign Trade Transportation Corporation, General Manager of Law Department, Director, DeputyGeneral Manager (principal person) of SINOTRANS (Hong Kong) Group Company Limited,Non-Executive Director of SINOTRANS Limited, General Manager of Law Department ofSino-Trans China Foreign Trade Transportation (Group) Corporation, General Manager, DeputyGeneral Counsel, General Counsel of Law Department of SINOTRANS & CSC. Yang Yuntao hasbeen being the Supervisor of the Company since December 2018.Ni Keqin, Supervisor, is the Deputy GM of Chiwan Container Terminal Co., Ltd. now. She tookthe positions of Manager Assistant, Deputy Manager as well as Manager of the OperationDepartment and GM Assistant of CCT successively. She has been being the Supervisor of theCompany since May 2008.Zheng Linwei, Supervisor, graduated from NJAU, with a bachelor degree of Agricultural ForeignTrade and graduated from Shanghai Maritime University with MBA in 2004. He now serves as ViceGM of the Harbor Division, Dongguan Shenzhen Chiwan Wharf Holdings Limited and DongguanShenzhen Chiwan Terminal Co., Ltd. He has been being worked at the Harbor Division of theCompany from August 1993. He once acted as Director of Operation Room of Department II ofCommercial Freight of the Harbor Division of the Company, Manager Assistant, Vice Manager, andManager of Department II of Commercial Freight. And he has been being the Supervisor of theCompany since May 2014.Zhang Yi, General Manager and Chief Operational Officer, graduated from Wuhan Institute ofWater Transportation Engineering and obtained bachelor’s degree in transportation managementengineering. Later Zhang Yi obtained doctor’s degree in engineering at Wuhan University of
China Merchants Port Group Co., Ltd. Annual Report 2018
Technology. Zhang Yi now holds the post of Deputy General Manager of China Merchants PortHoldings Company Limited (CM Port Holdings). Zhang Yi has successively held the posts ofPlanner of Planning Division of Zhanjiang Port Authority, Deputy Director of PlanningDevelopment Division of Zhanjiang Port Authority, Assistant Director of Zhanjiang Port Authority,Director, President, Secretary of Party Committee of Zhanjiang Port Group Company Limited.Zhang Yi has been being the General Manager&COO of the Company since December 2018.Zheng Shaoping, Vice General Manager, graduated from Dalian Maritime University forpostgraduate, majoring in international maritime law. Later Zheng Shaoping obtained master’sdegree in business administration at The University of Wales. Zheng Shaoping now holds the postsof Executive Director and Deputy General Manager of China Merchants Port Holdings CompanyLimited (CM Port Holdings). Zheng Shaoping has successively held the posts of Vice President ofChina Merchants Bonded Logistics Co., Ltd., President of Shekou Container Terminals Ltd.,General Manager and President of Chiwan Container Terminal Co., Ltd. (CCT), General Managerand President of Shenzhen Chiwan Container Co., Ltd., Managing Director and President ofShenzhen Chiwan Wharf Holdings Limited (CWH). Zheng Shaoping has been being the DeputyGeneral Manager of the Company since December 2018.Yan Gang, Vice General Manager, graduated from Xiamen University, and obtained bachelor’sdegree in international trade. Later Yan Gang obtained master’s degree in business administrationjointly run by MSM and Shanghai Maritime University. Yan Gang now holds the post of DeputyGeneral Manager of China Merchants Port Holdings Company Limited (CM Port Holdings). YanGang has successively held the posts of Logistics General Manager in Pearl River Delta of HongKong Air Cargo Terminals Limited (HACTL) dispatched by Swire Group, Deputy General Manager,Executive Deputy General Manager, General Manager of Shekou Container Terminals Ltd., ChiefBusiness Officer of China Merchants Port Holdings Company Limited (CM Port Holdings). YanGang has been being the Deputy General Manager of the Company since December 2018.Huang Chuanjing, Vice General Manager and Board Secretary, graduated from the EnglishDepartment of Shandong University of Science and Technology with a bachelor’s degree in arts.Later, he obtained a master’s degree in business administration at The University of Wales. He oncewas the Director of Wharf Operation Department of China Merchants International Qingdao WharfCompany Limited, Assistant of General Manager’s Office, Director of Administration Departmentof China Merchants International Company Limited, Assistant Director of General Office of ChinaMerchants Group, Senior Manager, Assistant General Manager of General Office of ChinaMerchants Group Company Limited, Assistant Director of General Office and secretary of theboard of China Merchants Group Company Limited, Assistant Director of Board of Directors Office,Chief of Board Secretariat of General Office, Deputy Director of Board of Directors Office ofChina Merchants Group Company Limited. Huang Chuanjing has been acting as the Vice GeneralManager of the Company since December 2018.Lu Yongxin, Vice General Manager, graduated from Dalian University of Technology, andobtained bachelor’s degree in English for science and technology. Later Lu Yongxin graduated fromCurtin University and obtained master’s degree in project management. Lu Yongxin now holds thepost of Deputy General Manager of China Merchants Port Holdings Company Limited (CM PortHoldings). Lu Yongxin has successively held the posts of Assistant General Manager of ZhenhuaConstruction Co. Ltd., Deputy Director of CHEC (Beijing) Head Office, Deputy General Managerof Research & Development Department of China Merchants Port Holdings Company Limited (CMPort Holdings), General Manager of Overseas Business Department, Assistant General Manager. LuYongxin has been dispatched to Terminal Link in France to act as CFO and Senior Vice President.Lu Yongxin has been as the Vice General Manager of the Company since December 2018.
China Merchants Port Group Co., Ltd. Annual Report 2018
Li Yubin, Vice General Manager, graduated from Tianjin University, majoring in engineeringmanagement, and obtained master’s degree. Later Li Yubin graduated from The University of HongKong and obtained doctor’s degree in real estate and construction. Li Yubin now holds the post ofDeputy General Manager of China Merchants Port Holdings Company Limited (CM Port Holdings)and General Manager of China Merchants Bonded Logistics Co., Ltd. Li Yubin has successivelyheld the posts of Deputy General Manager of Road and Bridge Project of China Harbor Company inBangladeshi Office, Project Director of Overseas Business Department of CHEC, Assistant GeneralManager of Planning and Commerce Department of China Merchants Port Holdings CompanyLimited (CM Port Holdings), General Manager, Deputy General Economist of Strategy andOperation Management Department, General Manager, Deputy General Economist of Strategy andOperation Department, General Manager of China Merchants Bonded Logistics Co., Ltd. Li Yubinhas been acting the Vice General Manager of the Company since December 2018.Wen Ling, Chief Financial Officer, graduated from Finance Dept. in Southwestern University ofFinance and Economics with a master degree. Wen is now the CFO of China Merchants PortHoldings Company Limited. Wen was once the Deputy Financial Manager of China Merchants PortService (Shenzhen) Co., Ltd., the Financial Manager of Shenzhen Mawan Port Services Co., Ltd.and the Vice Financial Manager, Senior Vice Financial Manager, and GM of Capital Operation Dept.in China Merchants Port Holdings Company Limited. And Wen has been acting as the CFO of theCompany since December 2018.Offices held concurrently in shareholding entities:
| Name | Shareholding entity | Office held in the shareholding entity | Term of office | Remuneration or allowance from the shareholding entity |
| Fu Gangfeng | China Merchants Investment and Development Co., Ltd | Director | August 2014 to now | No |
| Name | Other entity | Office held in the entity | Term of office | Remuneration or allowance from the entity |
| Fu Gangfeng | China Merchants Shipping Co., Ltd | Director | August 2014 to now | No |
| China Merchants Group (H.K.) Limited | Director | August 2003 to now | No | |
| China Merchants Port Holdings Company Limited | Chairman of the Board | March 2018 to now | No | |
| China Merchants Bank Co.,Ltd | Vice Chairman of the Board | August 2010 to now | No | |
| China Merchants Life Insurance Co., Ltd | Chairman of the Supervisory Committee | July 2017 to now | No |
China Merchants Port Group Co., Ltd. Annual Report 2018
□ Applicable √ Not applicableIV Remuneration of Directors, Supervisors and Senior ManagementDecision-making procedure, determination basis and actual payments of remuneration for directors,supervisors and senior management:
Decision-making procedure for the remuneration of directors, supervisors and senior management:
Remunerations for the Company’s directors, supervisors and senior management shall be nominatedby the Board of Directors and determined upon review of the Remuneration and AppraisalCommittee. Allowance for Independent Directors is RMB100,000/year (tax included), which hasbeen approved at the 2016 Annual General MeetingDetermining basis for the remuneration of directors, supervisors and senior management: Themodes and amounts of the remuneration for directors, supervisors and senior management aredetermined according to the market levels with the post value, responsibilities, etc. taken intoaccount.Actual payment for the remuneration of directors, supervisors and senior management: Salaries andindependent director allowances were paid to directors, supervisors and senior executives on amonthly basis. And the other bonuses were paid all at one time according to the performance ofeach of them.
Unit: RMB’0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Fu Gangfeng | Chairman of the Board | Male | 52 | Incumbent | 0 | Get paid from China Merchants Group |
| Deng Renjie | Vice Chairman of the Board | Male | 48 | Incumbent | 0 | Get paid from China Merchants Group |
| Bai Jingtao | Director and CEO | Male | 53 | Incumbent | 247 | |
| Yan Shuai | Director | Male | 46 | Incumbent | 0 | Get paid from China Merchants Group |
| Su Jian | Director | Male | 46 | Incumbent | 0 | Get paid from China Merchants Group |
China Merchants Port Group Co., Ltd. Annual Report 2018
Song Dexing
| Song Dexing | Director | Male | 55 | Incumbent | 0 | Get paid from China Merchants Group |
| Yuan Yuhui | Independent director | Male | 68 | Incumbent | 10 | |
| Su Qiyun | Independent director | Male | 55 | Incumbent | 10 | |
| Li Changqing | Independent director | Male | 51 | Incumbent | 10 | |
| Liu Yingjie | Chairman of the Supervisory Committee | Male | 46 | Incumbent | 0 | Get paid from China Merchants Group |
| Hu Qin | Supervisor | Female | 52 | Incumbent | 0 | Get paid from China Merchants Group |
| Yang Yuntao | Supervisor | Male | 52 | Incumbent | 0 | Get paid from China Merchants Group |
| Ni Keqin | Supervisor | 54 | Incumbent | 124 | ||
| Zheng Linwei | Supervisor | Male | 48 | Incumbent | 108 | |
| Zhang Yi | GM and COO | Male | 48 | Incumbent | 16 |
China Merchants Port Group Co., Ltd. Annual Report 2018
ZhengShaoping
| Zheng Shaoping | Vice GM | Male | 56 | Incumbent | 18 | |
| Yan Gang | Vice GM | Male | 47 | Incumbent | 14 | |
| Huang Chuanjing | Vice GM and Board Secretary | Male | 36 | Incumbent | 9 | |
| Lu Yongxin | Vice GM | Male | 50 | Incumbent | 14 | |
| Li Yubin | Vice GM | Male | 47 | Incumbent | 144 | |
| Wen Ling | CFO | Female | 53 | Incumbent | 129 | |
| Zhou Qinghong | Vice Chairman of the Board | Male | 53 | Former | 162 | |
| Lv Shengzhou | Director | Male | 55 | Former | 140 | |
| Liu Bin | Managing Director | Male | 47 | Former | 127 | |
| Zhang Jianguo | Director | Male | 49 | Former | 0 | Get paid from China Nanshan Development |
China Merchants Port Group Co., Ltd. Annual Report 2018
(Group)Incorporation
| (Group) Incorporation | ||||||
| Zhao Jianli | Chairman of the Supervisory Committee | Female | 54 | Former | 112 | |
| Sun Ligan | Supervisor | Male | 55 | Former | 92 | |
| Zhao Chaoxiong | Vice GM | Male | 53 | Former | 111 | |
| Wang Yongli | Vice GM and Secretary of the Board | Male | 51 | Former | 110 | |
| Lin Cong | Vice GM | Male | 60 | Former | 108 | |
| Yao Shenglan | CFO | Female | 52 | Former | 79 | |
| Total | -- | -- | -- | -- | 1,894 | -- |
| Number of in-service employees of the Company as the parent | 284 |
| Number of in-service employees of major subsidiaries | 9284 |
| Total number of in-service employees | 9568 |
| Total number of paid employees in the Reporting Period | 9568 |
China Merchants Port Group Co., Ltd. Annual Report 2018
2. Employee Remuneration PolicyThe Company observes the principle of efficiency first with the consideration given to fairness andsustainable development for its remuneration system, determines the general remuneration levelaccording to its strategic goals and market competitiveness, defines the remuneration gradeaccording to the principles of internal fairness and performances with the priority given toemployees with excellent performance, and establishes a structured broadband remuneration system.Based on its medium- and long-term development planning and key performance goals, theCompany dynamically adjusts its remuneration strategies and implementation policies and exertscontrol over the total remuneration.The Company keeps exploring diverse remuneration incentive mechanisms, promotes medium- andlong-term incentive schemes, enhances the motivation of remuneration, attracts and retainsexcellent employees and builds a talent team matching the development of the Company.3. Employee Training PlansThe Company is dedicated to creating a platform for the development and promotion of global portprofessionals, provides domestic and foreign employees with learning opportunities, opens channelsfor global career development and helps employees to keep improving themselves with thedevelopment of the Company. Meanwhile, it provides its peers with opportunities of coming toChina for exchange to share knowledge and values. In 2018, the Company further optimized thetraining system, integrated internal and external training resources, and established a series of keytraining projects at different levels with different categories, including the project series on strategicleadership of senior executive project series, the project series on enhancement of globalmanagement and implementation of middle-level key leaders and the projects on the enhancementof professional and general abilities for junior employees. The Company shall, based on thenetwork platform, develop terminal learning APP, and share training resources openly, enlargingthe learning timely and effectively at a low cost. Strengthening the communications and
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 2231 |
| Functions | |
| Function | Employees |
| Production and operation | 5635 |
| Business | 536 |
| Technical | 1983 |
| Financial | 455 |
| Administrative | 959 |
| Total | 9568 |
| Educational backgrounds | |
| Educational background | Employees |
| Master’s degree and above | 311 |
| Bachelor’s degree | 1923 |
| Junior college | 2405 |
| Technical secondary school and below | 4929 |
| Total | 9568 |
China Merchants Port Group Co., Ltd. Annual Report 2018
collaboration between various units, it shall achieve the comprehensive integration of talentstraining under the guidance of the Company. The Company actively fulfilled the socialresponsibility, carrying out the “Co-creating Blue Dream-21
th
Century Maritime Silk Road TalentsPlan” of China Merchants Port, which cultivate professionals of port and shipping for countriesalong the One Belt and One Road. As of the end of 2018, the project had cultivated 110 youngbackbone talents from 19 countries on 4 continents. Meanwhile, the Company participated in“Zhangqian project” of Hongkong sea silk association and other practical projects for students,providing Hongkong university students with meaningful overseas internship opportunity, andactively promoting the cooperation of the university and enterprises.4. Labor Outsourcing□ Applicable √ Not applicable
China Merchants Port Group Co., Ltd. Annual Report 2018
Part IX Corporate Governance
I General Information of Corporate BondsEver since its establishment, the Company has been in strict compliance with the companylaw and securities law, as well as relevant laws and regulations issued by CSRC. And it hastimely formulated and amended its relevant management rules according to the Code ofCorporate Governance for Listed Companies, which are conscientiously and carefullyexecuted. An effective system of internal control has thus taken shape in the Company.Details about corporate governance within the reporting period are set out as below:
1. During the Reporting Period, the Company included Party building work in its Articles ofIncorporation pursuant to the requirements of the Notice on the Inclusion of Party Building Workinto the Articles of Incorporation issued by the superior Party committee. The revision wasreviewed and approved at the 3
rd
Meeting of the 9
th
Board of Directors held on 3 March 2018.Subsequently, it was reviewed and approved at the Company’s 2017 Annual General Meeting heldon 28 March 2018.2. During the Reporting Period, to further refine the Company’s governance structure and promotestandard operations within the Company, pursuant to the Stock Listing Rules of Shenzhen StockExchange, the Rules of Shenzhen Stock Exchange for Stock Listing on ChiNext, the CSRCReleases No. 3 Guideline for the Supervision of Listed Companies - Cash Dividend Distribution ofListed Companies, the Notice on Further Implementing Matters in Respect of the Cash DividendDistribution of Listed Companies, the Opinions of the General Office of the State Council onFurther Strengthening the Protection of the Legitimate Rights and Interests of Minority Investors inthe Capital Market, the Rules of Annual General Meeting of Listed Companies, the GuidanceOpinions on the Establishment of the Director System in Listed Companies, the Rules on the Reportof the Use of Previously Raised Fund, the CSRC Releases No. 2 Guideline for the Supervision ofListed Companies - Administration of Funds Raised by Listed Companies and ApplicableSupervision Requirements, the Management Rules on the Shares of the Company Held by Directors,Supervisors and Senior Management of Listed Companies and the Changes, the Rules on DecreasedShareholding of Shareholders, Directors, Supervisors and Senior Management of Listed Companiesand the Implementation Rules of Shenzhen Stock Exchange for Decreased Shareholding ofShareholders, Directors, Supervisors and Senior Management of Listed Companies, the Companyrevised the Articles of Incorporation, the Rules of Procedures for the Annual General Meeting, theRules of Procedures for the Board of Directors, the Work Policy for Independent Directors, theManagement Policies for Raised Funds, and the Management Policies for the Shares of theCompany Held by Directors, Supervisors and Senior Management and the Changes. The revisionswere reviewed and approved at the 5
th
Special Meeting of the 9
th
Board of Directors of 2018 held on19 June 2018. The Articles of Incorporation, the Rules of Procedures for the Annual GeneralMeeting, the Rules of Procedures for the Board of Directors, the Work Policy for IndependentDirectors and the Management Policies for Raised Funds were reviewed and approved subsequentlyat the 2
nd
Extraordinary General Meeting of 2018 held on 26 July 2018.3. During the Reporting Period, based on the change in the Company’s name as well as theCompany’s plan to change its address and increase the number of deputy general managersaccording to the operational management requirements and pursuant to the Decision of NPSCS onthe Amendment to the Company Law of the People’s Republic of China published and
China Merchants Port Group Co., Ltd. Annual Report 2018
implemented on 26 October 2018, considering its actual status of development, the Companyrevised the Articles of Incorporation, which was reviewed and approved at the 8
th
Special Meetingof the 9
th
Board of Directors of 2018 held on 27 November 2018, and subsequently reviewed andapproved at the 3
rd
Extraordinary General Meeting of 2018 held on 13 December 2018.4. Shareholders and shareholders’ general meeting: the Company ensures that all the shareholders,especially minority shareholders, are equal and could enjoy their full rights. The Company calledand held shareholders’ general meeting strictly in compliance with the Rules for Shareholders’General Meeting.5. Relationship between the controlling shareholder and the Company: controlling shareholder ofthe Company acted in line with rules during the reporting period, did not intervened the decisions,productions or operations of the Company directly or indirectly in exceeding the authority of theshareholders’ general meeting, and did not appropriate any funds of the Company.6. Directors and the Board of Directors: the Company elected directors in strict accordance with theArticles of Association. Number and composition of members of the Board were in compliancewith relevant laws and regulations; all Directors attend Board meetings and shareholders’ generalmeeting in a serious and responsible manner and participated enthusiastically relevant training so asto know better about laws and regulations as well as the rights, obligations and liabilities ofDirectors. The Company The Company set up the Audit Committee as approved by The 1
st
Extraordinary General Meeting of 2004 and the Nomination, Remuneration and EvaluationCommittee and Strategy Committee as approved by the 2005 Annual General Meeting, with a viewto ensuring the efficient operation and scientific decision-making of the Board of Directors.7. Supervisors and the Supervisory Committee: number and composition of the members of theSupervisory Committee were in compliance with the requirements of laws and regulations. Thesupervisors diligently and seriously performed their duties and obligations, took responsibleattitudes to all shareholders and supervised the financial affair as well as the performance by theCompany’s Directors, managers and other senior executives of their duties in compliance with thelaws and regulations.8. Stakeholders: the Company fully respected and safeguarded the legal rights and interests of thebanks and other creditors, staff, clients and other stakeholders so as to develop the Company in aconsistent and healthy way.9. Information disclosure and transparency: the Company authorized the Board Secretary to takecharge of information disclosure, and the Chairman as well as related Directors to meet withshareholders. The Company disclosed relevant information in a true, accurate, complete and timelyway in strict accordance with the requirements of laws, regulations and the Articles of Association,formulated the Management Rules on Information Disclosure, the Management System on InsideInformation and Insiders and the Rules on the Management of Investors Relations, and designatedSecurities Times, Ta Kung Pao and http://www.cninfo.com.cn as its newspaper and website forinformation disclosure, so as to ensure all shareholders have equal opportunity to obtain theinformation.10. Corporate governance mechanisms and rules that the Company already established:
Articles of Association of the Company, Rules of Procedure for General Meetings, Working Articles
China Merchants Port Group Co., Ltd. Annual Report 2018
of Audit Committee of the Board of Directors, Working Rules of Annual Report for AuditCommittee of the Board of Directors, Working Articles for Nomination, Remuneration andEvaluation Committee of the Board of Directors; Working Articles of Strategy Committee of theBoard of Directors, Working System for Independent Directors, Working Rules of Annual Reportfor Independent Directors, Rules of Procedure for Supervisory Board, Working Articles of GeneralManager, Management System for Company Shares held by Directors, Supervisors and SeniorExecutives and Its Changes, Management System of Foreign Investment, Decision-makingMechanism of Related Transactions, Management System of Fund-raising, Management Rules onInformation Disclosure, Rules of Accountability for Significant Mistakes in Annual ReportInformation Disclosure, Management System on Inside Information and Insiders, Internal AuditSystem, Management System of Investors’ Relations, Specific System for Engaging Accountants,Management Method of Financial Tools, Management System on Person in Charge of Finance andCFO, Information Disclosure Management Rules for the Inter-bank Debt Financing Instrument, etc.There isn’t difference between the actual circumstances of the Company and all establishedsystems.Since the foundation, the Company was consistently in strict accordance with Company Law andrelevant laws and regulations to make a standard operation, continued business-running in line withrelevant requirements of Corporate Governance Principle for Listed Companies and earnestly madeeffort to protect profit and interests of shareholders and stakeholders.Indicate by tick market whether there is any material incompliance with the regulatory documentsissued by the CSRC governing the governance of listed companies.□ Yes √ NoII The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial AffairsThe Company is absolutely independent in business, personnel, assets, finance and organizationfrom its controlling shareholder. Details are set out as follows.Separation in business: The Company has its own assets, personnel, qualifications and ability tocarry out operating activities and is able to operate independently in the market. Separation inpersonnel: The Company has basically separated its staff from its controlling shareholder. No seniormanagement staff of the Company holds positions at controlling shareholder of the Company.Separation in assets: The Company possesses its own self-governed assets and domicile. Separationin organization: The Company has established and improved the corporate governance structureaccording to law and has an independent and complete organizational structure. Separation infinance: The Company has set up its own financial department as well as normative accountingsystem and the financial management system on its subsidiaries. The Company has its own bankaccounts and does not share the same bank account with its controlling shareholder. The Companyhas been paying tax in accordance with the laws and regulations on its own behalf.III Horizontal Competition□ Applicable √ Not applicable
China Merchants Port Group Co., Ltd. Annual Report 2018
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 1st Extraordinary General Meeting of 2018 | Extraordinary General Meeting | 75.04% | 13 February 2018 | 14 February 2018 | For the resolution announcement (No. 2018-018), see http://www.cninfo.com.cn |
| The 2017 Annual General Meeting | Annual General Meeting | 75.49% | 28 March 2018 | 29 March 2018 | For the resolution announcement (No. 2018-037), see http://www.cninfo.com.cn |
| The 2nd Extraordinary General Meeting of 2018 | Extraordinary General Meeting | 75.50% | 26 July 2018 | 27 July 2018 | For the resolution announcement (No. 2018-078), see http://www.cninfo.com.cn |
| The 3rd Extraordinary General Meeting of 2018 | Extraordinary General Meeting | 75.22% | 13 December 2018 | 14 December 2018 | For the resolution announcement (No. 2018-114), see http://www.cninfo.com.cn |
| Attendance of independent directors at board meetings and general meetings | |||||||
| Independent director | Total number of board meetings the independent director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the independent director failed to attend | The independent director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Yuan Yuhui | 12 | 4 | 8 | 0 | 0 | No | 1 |
China Merchants Port Group Co., Ltd. Annual Report 2018
Su Qiyun
| Su Qiyun | 12 | 4 | 8 | 0 | 0 | No | 4 |
| Li Changqing | 12 | 4 | 8 | 0 | 0 | No | 2 |
China Merchants Port Group Co., Ltd. Annual Report 2018
During the Reporting Period, the Audit Committee of the Board held a total of five meetings, withdetails as follows:
(1) The 1
st
Meeting of the Audit Committee of the 9
th
Board of Directors for 2018On 5 March 2018, it held at Conference Room 2, 11/F., Chiwan Haiyun Building, Shenzhen, atwhich the following proposals were reviewed and approved unanimously:
1) “Internal Auditing Report of the Company for 2017”;2) Internal Control and Audit Office's Auditing Report of the Company for 2017 No. 01-04”;3) “Anti-fraud Risk Assessment Report for 2017”;4) “Internal Auditing Plan of the Company for 2018”;5) “Working Report of the Audit Committee of the Board in 2017”;6) “The Financial Statements of 2017 of the Company” was reviewed and approved and wassubmitted to the Board of Directors of the Company for approval;7) “The Work Report of Accounting Firm for 2017” was reviewed and approved and was submittedto the Board of Directors of the Company for approval;8) “Proposal on the Employment of the Accounting Firm for 2018” was reviewed and approved.The Audit Committee continue employ Deloitte Touche Tohmatsu Certified Public AccountantsLLP to shoulder the audit of the annual financial statements and the internal audit for 2018. Thisproposal was submitted to the Board of Directors of the Company for approval.
(2) The 2
nd
Meeting of the Audit Committee of the 9
th
Board of Directors for 2018On 25 April 2018, it was held by communication voting at which the Internal Auditing Report ofthe Company for the First Quarter of 2018 was reviewed and approved unanimously.
(3) The 3
rd
Meeting of the Audit Committee of the 9
th
Board of Directors for 2018On 29 August 2018, it was held at Conference Room 2, 11/F., Chiwan Haiyun Building, Shenzhen,at which the following Proposals were reviewed and approved unanimously:
1) “The Interim Financial Statements for 2018 of the Company” was reviewed and approved andwas submitted to the Board of Directors of the Company for approval;2) “Internal Auditing Report of the Company for the Second Quarter of 2018”3) Internal Control and Audit Office's Auditing Report of the Company for 2018 No. 1
(4) The 4
th
Meeting of the Audit Committee of the 9
th
Board of Directors for 2018On 29 October 2018, it was held by communication voting at which the following proposals werereviewed and approved unanimously:
1) “Internal Auditing Report of the Company for the Third Quarter of 2018”2) Internal Control and Audit Office's Auditing Report of the Company for 2018 No. 2
(5) The 5
th
Meeting of the Audit Committee of the 9
th
Board of Directors for 2018On 26 December 2018, it was held at Conference Room 25B, China Merchants Port Plaza, ShekouIndustry Third Road, Shenzhen, at which the Audit Report on the Company’s Finance and InternalControl by Deloitte Touche Tohmatsu Certified Public Accountants LLP for 2018 were debriefed
China Merchants Port Group Co., Ltd. Annual Report 2018
by the Committee members.2. Performance of Duties to the Audit Work of Financial Statements of the CompanyIn accordance with relevant requirements of CSRC and Shenzhen Stock Exchange, the specificworking rules and procedure for the Audit Committee, during the reporting period, the AuditCommittee of the Board of the Company oversaw the audit work of Financial Statements of theCompany for 2017 with due diligence, details of which are as follows:
(1) Before the auditors started their work, the Audit Committee discussed with the principal auditorof the accounting firm and determined, inter alia, the timing schedule for the auditing work of thefinancial statements for the year.(2) The Audit Committee expressed its audit opinions two times on the financial statements of theCompany for 2017.During the reporting period, the Audit Committee expressed its audit opinions two times on thefinancial statements of the Company for 2017 in accordance with relevant requirements fromCSRC.The Audit Committee reviewed the Financial Statements prepared by the Company and issued thefollowing opinions before the Auditors started their work: the Company was in full compliance withrelevant laws, regulations and the Articles of Association of the Company, the units and items of theCompany's financial statements to be consolidated were complete, and the consolidation basisthereof was accurate and the information included in the Financial Statements submitted by theCompany was objective, comprehensive and true. The Company's accounting policies wereproperly adopted and the accounting estimates made were reasonable. No significant mistake oromission has been identified so far. Due to the time-lag between this review of Financial Statementsand the dates of the Auditors' Report, we suggest the Finance Department focus on and deal withsubsequent events properly in accordance with the New Enterprises Accounting Standards to ensurethe fairness, truthfulness and completeness of the Financial Statements.After the Auditors issued their preliminary audit opinions, the Audit Committee reviewed theFinancial Statements again and issued the following opinions: the Company prepared the FinancialStatement in full compliance with the New Enterprise Accounting Standards and relevant provisionsof the financial control system of the Company, the procedures for the preparation of the FinancialStatements were reasonable and proper, which gave a true and fair view of the Company's assets,liabilities, equity interests and operation results as at 31 December 2017. Information included inthe Financial Statements was objective and complete. Financial Statements for 2017 which waspreliminarily audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP may besubmitted for review at the 3
rd
Meeting of the 9
th
Board of Directors.(3) Supervision over the Auditing Work of the Accounting firmDuring the Reporting Period, the Audit Committee issued letters to Deloitte Touche TohmatsuCertified Public Accountants LLP to urge them to produce their audit recommendation on thefinancial statements and the summary statement of adjusting events in a timely manner to help ourfinancial staff finish the preparation of financial statements and related notes for 2017 as soon aspossible, so as to ensure the annual audit and information disclosure proceed as scheduled.(4) Opinions on the Auditing Work Performed by the Accountants for the previous yearDuring the auditing period, the Audit Committee of the Board focused on the problems discoveredin process of audit, urged auditors to finish the preparation of their report within a prescribed period
China Merchants Port Group Co., Ltd. Annual Report 2018
of time and ensured the truthfulness, accuracy and completeness of the annual report. The CertifiedPublic Accountants issued a standard unqualified audit report on 5 March 2018. The AuditCommittee considered that the Certified Public Accountants conducted the audit work of 2017 inaccordance with China’s Independent Auditing Standards, the audit time was sufficient, thedeployment of the auditors was appropriate and their practicing capability was excellent, and thatthe audit report issued sufficiently reflected the Company's financial condition as at 31 December2017 and its operation results and cash flows for the year 2017 and the audit conclusion made wasin line with the actual situation of the Company.3. Paying attention to the Internal Control and Internal Audit Work of the CompanyDuring the reporting period, the Audit Committee made standards and requirements to the AuditOffice's report submitted, fully understood the sound establish and implementation of internalcontrol system, focused on problems and suggestions provided by the Audit Office. In addition, theAudit Committee advised on the improvement for the work of the Audit Department and theCompany relating to internal control for the next year.(II) Performance of the Nomination, Remuneration and Evaluation CommitteeThe members of Nomination, Remuneration and Evaluation Committee include independentdirector Yuan Yuhui (Convener), director Yan Shuai, and independent director Su Qiyun During theReporting Period, the Nomination, Remuneration and Evaluation Committee earnestly performedtheir duties, investigated the candidate of the manager and the directors, and examined theremuneration of directors, supervisors and senior executives in term of the requirements andstipulations of CSRC, Articles of Association, Working Rules of the Nomination, Remunerationand Evaluation Committee and responsibilities and obligations empowered by the Board ofDirectors.During the Reporting Period, the Nomination, Remuneration and Evaluation Committee under theBoard of Directors held a total of three meetings, details of which are as follows:
1. On 5 March 2018, the 1
st
Meeting of the Nomination, Remuneration and Evaluation Committeeof the 9
th
Board of Directors for 2018 was held at Conference Room 2, 11/F., Chiwan HaiyunBuilding, Shenzhen, at which the following proposals were reviewed and approved unanimously:
(1) “The Working Report of the Nomination, Remuneration and Evaluation Committee of the Boardfor 2017”;(2) “The Report on the Remuneration of the Directors, Supervisors and Senior Management Stafffor 2017”.2. On 27 November 2018, the 2
nd
Meeting of the Nomination, Remuneration and EvaluationCommittee of the 9
th
Board of Directors for 2018 was held by communication voting at which theProposal on Examining Director Candidates was reviewed and approved unanimously. Upon reviewby the Board, these director candidates would be elected at a meeting of shareholders.3. On 13 December 2018, the 3
rd
Meeting of the Nomination, Remuneration and EvaluationCommittee of the 9
th
Board of Directors for 2018 was held at Conference Room 24D, ChinaMerchants Port Plaza, Shekou Industry Third Road, Shenzhen, at which the following Proposalswere reviewed and approved unanimously and was submitted to the Board for review.(1) “The Proposal on Hiring CEO, COO, and General Manager of the Company”;(2) “The Proposal on Hiring Deputy General Manager of the Company”;(3) “The Proposal on Hiring CFO of the Company”;
China Merchants Port Group Co., Ltd. Annual Report 2018
(4) “The Proposal on Hiring Board Secretary”.(III) Performance of the Strategy CommitteeThe members of Strategy Committee include vice Chairman of the Board Deng Renjie (Convener),director and CEO Bai Jingtao, director Song Dexing, independent director Yuan Yuhui, andindependent director Li Changqing. During the Reporting Period, members of the StrategyCommittee in line with the requirements of CSRC, Article of Association, and the stipulation ofWorking Rules of the Strategy Committee earnestly performed their duties, conducted research andadvised on the investment plans and assets operation projects related to the medium to long termdevelopment strategy of the Company.During the Reporting Period, the Strategy Committee under the Board of Directors held a total offour meetings, details of which are as follows:
1. On 26 January 2018, the 1
st
Meeting of the Strategy Committee of the 9
th
Board of Directors for2018 was held by communication voting at which the Proposal on Capital Increase to ZhoushanArchipelago New Area SinoTrans & CSC RoRo Logistics Co., Ltd. was reviewed and approvedunanimously and was submitted to the Board for review.2. On 5 March 2018, the 2
nd
Meeting of the Strategy Committee of the 9
th
Board of Directors for2018 was held at Conference Room 1, 11/F, Chiwan Haiyun Building, Shenzhen, at which theProposal on 2017 Performance Report of Strategy Committee of the Board of Directors andFive-year Business Development Planning from 2018-2022 were reviewed and approvedunanimously.1. On 30 November 2018, the 3
rd
Meeting of the Strategy Committee of the 9
th
Board of Directorsfor 2018 was held by communication voting at which the Proposal on Joint Investment andEstablishment of China Merchants Hainan Development Investment Co., Ltd was reviewed andapproved unanimously and was submitted to the Board for review.4. On 13 December 2018, the 4
th
Meeting of the Strategy Committee of the 9
th
Board of Directorsfor 2018 was held at Conference Room 24D, China Merchants Port Plaza, Shekou Industry ThirdRoad, Shenzhen, at which the Proposal on Election of Convener for the Strategy Committee underthe 9
th
Board of Directors was reviewed and approved unanimously and was submitted to the Boardfor review.VII Performance of Duty by the Supervisory CommitteeIndicate by tick mark whether the Supervisory Committee found any risk to the Company during itssupervision in the Reporting Period.□ Yes √ NoThe Supervisory Committee raised no objections in the Reporting Period.VIII Appraisal of and Incentive for Senior ManagementThe Company has a mature assessment mechanism and system covering all senior managementpersonnel. The annual comprehensive assessment combines qualitative and quantitative methodswith the dimensions including performance, competence, self-discipline, etc. The assessment resultsof senior management serve as an important basis for appointment and motivation. The Companyadjusts and determines the post salary of senior managers based on the factors including operationstatus, position served and assessment results, and determines the performance bonus of managers
China Merchants Port Group Co., Ltd. Annual Report 2018
through the factors including annual comprehensive ability assessment, annual key performanceindicators appraisal and three-year strategic appraisal results.IX Internal Control1. Material Internal Control Weaknesses Identified for the Reporting Period□ Yes √ No2. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 30 March 2019 | |||
| Index to the disclosed internal control self-evaluation report | For details, see www.cninfo.com.cn | |||
| Evaluated entities’ combined assets as % of consolidated total assets | 98% | |||
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 94% | |||
| Identification standards for internal control weaknesses | ||||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting | ||
| Nature standard | If a defect or defect group give rise to the following events which cannot be prevented or found and made rectification, the defect or defect group are recognized as significant defects: (1) Malpractices of directors, supervisors and senior management: (2) The Company make correction to the financial report issued; (3) Certified Public Accountant find that there is a significant error in the financial report, however, the internal control did not discover it when conducting internal control; (4) The Audit Committee under the Board and | Great defect | Significant defect | Common defect |
| Development direction substantially deviates from the strategic goals, investment direction, and business structure, commercial modeled. which completely unable to support the realization of strategic goals | Development direction partly deviates from the strategic goals, investment direction, and business structure, commercial modeled. which unable to support the realization of strategic goals at a larger extent | Development direction slightly deviates from the strategic goals, investment direction, and business structure, commercial modeled. which completely can't fully support the realization of strategic goals | ||
| Strategy implementation is blocked, almost all indicators of strategy implementation cannot | Strategy implementation is blocked, most of indicators of strategy implementation cannot completed as | Strategy implementation is blocked, part of indicators of strategy implementation cannot completed as | ||
China Merchants Port Group Co., Ltd. Annual Report 2018
Internal Audit Service'ssupervision to the internalcontrol is invalid.
| Internal Audit Service's supervision to the internal control is invalid. | completed as planned | planned | planned |
| Lead to break off of common business/service or it takes half year or above to recover the break off of common business/service | Lead to break off of common business/service or it takes three months or half year below to recover the break off of common business/service | Some daily business is influenced, lead to break off of common business/service or it takes three months below to recover the break off of common business/service | |
| Badly damage the working enthusiasm of all the employees, will give rise to large scale group events or heavy damage to enterprises culture and enterprises cohesion | In a large extent, damage the working enthusiasm of all the employees, reduce work efficiency, have greatly adverse effect to enterprises culture and enterprises cohesion | damage the working enthusiasm of all the employees, reduce work efficiency, have some adverse effect to enterprises culture and enterprises cohesion | |
| The employee's ability and professional skills universally cannot meet the enterprise development needs by a large margin | The employee's ability and professional skills in some significant fields cannot meet the enterprise development needs | The employee's ability and professional skills in some fields cannot meet the enterprise development | |
| Negative news spread in the field of the entire business (including extending to industry | Negative news spread in the field of the entire business, or was paid attention or reported by the | Negative news spread in the field of the entire business, have small damage to the reputation of |
China Merchants Port Group Co., Ltd. Annual Report 2018
chain),or waspaid attentionby the nationalmedia or publicmedia, therecovery ofreputation willtake more thansix months
| chain),or was paid attention by the national media or public media, the recovery of reputation will take more than six months | local media the recovery of reputation will take three to six months | the enterprise, the recovery of reputation will take three months below | ||
| The enterprise's internal confidential information leakage which badly affect the enterprise's competitive capacity in the market, or affect the competitive capacity in management | The enterprise's internal confidential information leakage which affect the enterprise's competitive capacity in the market, or affect the competitive capacity in management in a large extent | The enterprise's internal confidential information leakage which affect the enterprise's competitive capacity in the market, or affect the competitive capacity in management in a general extent | ||
| Quantitative standard | The judging standard was the net profits attributable to the parent Company's shareholders in the consolidated financial statements audited in last year. Misstatement amount ≥ 5% above of judging standard was great defect; 5% judging standard ＞1% misstatement amount was significant defect; misstatement amount ＜1% below of judging standard was general standard. | The judging standard was the net profits attributable to the parent Company's shareholders in the consolidated financial statements audited in last year. | ||
| Great defect | Significant defect | Common defect | ||
| Have a significant adverse impact on the asset turnover ability, which lead to total asset turnover rate lowed 20% above (Including 20％） | Have a greater adverse impact on the asset turnover ability, which lead to total asset turnover rate lowed10% to 20% (Including 10%） | Have an adverse impact on the asset turnover ability, which lead to total asset turnover rate lowed10% below | ||
| Had significant | Had larger | Had adverse | ||
China Merchants Port Group Co., Ltd. Annual Report 2018
adverse impactto the annualoperationprofits or causedecrease ofannualoperationprofits when at5% (including5%) above ofjudgingstandard
| adverse impact to the annual operation profits or cause decrease of annual operation profits when at 5% (including 5%) above of judging standard | adverse impact to the annual operation profits or cause decrease of annual operation profits when at 1% (including 1%) to 5% judging standard | impact to the annual operation profits or cause decrease of annual operation profits when at 1% below of judging standard |
| Had significant adverse impact to decrease of inflow of total cash flow or increase of outflow total cash flow when at 10% (including 10%) above of judging standard | Had larger adverse impact to decrease of inflow of total cash flow or increase of outflow total cash flow when at 5% (including 5%) to 10% above of judging standard | Had adverse impact to decrease of inflow of total cash flow or increase of outflow total cash flow when at 5% below of judging standard |
| Great investment mistake incurred which cause direct economy losses when at 5% (including 5%) above of judging standard or the return on investment more than 40% lower than expected | Larger investment mistake incurred which cause direct economy losses when at 1% (including 1%)to 5% of judging standard or the return on investment less than 30%(including 30% to 40%) lower than expected | Great investment mistake incurred which cause direct economy losses when at 1% below of judging standard or the return on investment less than 30% lower than expected |
| 10 death or above , or 50 people serious | 3 deaths above to 10 deaths below , or more | less than 3 deaths or above , or less |
China Merchants Port Group Co., Ltd. Annual Report 2018
injury, or directeconomy losseswhen at 5%(including 5%)above ofjudgingstandard
| injury, or direct economy losses when at 5% (including 5%) above of judging standard | than 10 people but less than 50 people serious injury, or direct economy losses when at 1% (including 1%) to 5% of judging standard | than 10 people serious injury, or direct economy losses when at 1% below of judging standard |
| Asset integrity cannot be ensured, when assets losses at 5% (including 5%) above of judging standard | Asset integrity cannot be ensured, when assets losses at 1% (including 1%)to 5% of judging standard | Asset integrity cannot be ensured, when assets losses at 1% below of judging standard |
| A large number of great commercial disputes, civil lawsuits and negative influences can't eliminate in a short period of time, may pay compensation at 5% (including 5%) above of judging standard | Several commercial disputes, civil lawsuits, and had obviously influence in a certain area and period, may pay compensation at 1% (including 1%) to 5% of judging standard | Irreconcilable commercial disputes, civil lawsuits happened sometimes, cause a certain influences in local, may pay compensation at 1% below of judging standard |
| A serious violation of laws and regulations, investigated by government department and legal department, cause prosecution and class action, may pay | A serious violation of laws and regulations, investigated by government department and legal department, may pay compensation at 0.5% (including | Violation of laws and regulations, investigated by government department and legal department, may pay compensation at 0.5% below of judging standard |
China Merchants Port Group Co., Ltd. Annual Report 2018
compensationat 2%(including 2%)above ofjudgingstandard
| compensation at 2% (including 2%) above of judging standard | 0.5%) to 2% of judging standard | |||
| Number of material weaknesses in internal control over financial reporting | 0 | |||
| Number of material weaknesses in internal control not related to financial reporting | 0 | |||
| Number of serious weaknesses in internal control over financial reporting | 0 | |||
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |||
| Opinion paragraph in the independent auditor’s report on internal control | |
| We believe that China Merchants Port Group Co., Ltd. has maintained effective internal control over financial reporting in all material respects as of 31 December 2018 as per the Basic Rules for Enterprise Internal Control and relevant regulations. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 30 March 2019 |
| Index to such report disclosed | For details, see www.cninfo.com.cn |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
China Merchants Port Group Co., Ltd. Annual Report 2018
on the Company’s internal control.□ Yes √ NoIndicate by tick mark whether the independent auditor’s report on the Company’s internal control isconsistent with the internal control self-evaluation report issued by the Company’s Board.√ Yes □ No
China Merchants Port Group Co., Ltd. Annual Report 2018
Part X Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which wereoutstanding before the date of this Report’s approval or were due but could not be redeemed in full?No.
China Merchants Port Group Co., Ltd. Annual Report 2018
Section XI. Auditor’s Report (See attached)
| Type of audit opinion | Standard and unqualified auditor's report |
| Date of signing audit report | 29 March 2019 |
| Audit agency | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| No. of audit report | De Shi Bao (Shen) Zi (19) No. P01937 |
| Name of CPA | Huang Yue, Jiang Qishen |
China Merchants Port Group Co., Ltd. Annual Report 2018
Section XII. Documents Available for Reference
I. Financial Statements carrying the signatures and stamps of the Company Principal, theChief Financial Officer and the person in charge of accounting firm;II. Original copy of the Auditor's Report stamped by the accounting firm and signed andstamped by registered accountants;III. Original copies of all documents and the announcements thereof disclosed in the reportingperiod on “Securities Times” and “Ta Kung Pao”;
For and on behalf of the Board
Bai JingtaoLegal representative ofChina Merchants Port Group Co., Ltd.Dated 30 March 2019
CHINA MERCHANTS PORT GROUP CO., LTD.(FORMERLY KNOWN AS "SHENZHEN CHIWANWHARF HOLDINGS LIMITED")
FINANCIAL STATEMENTS AND AUDITOR'S REPORTFOR THE YEAR ENDED 31 DECEMBER 2018
FINANCIAL STATEMENTS AND AUDITOR'S REPORTFOR THE YEAR ENDED 31 DECEMBER 2018
CONTENTS Pages
AUDITOR'S REPORT 1 - 6
THE CONSOLIDATED AND COMPANY BALANCE SHEETS 7 - 10
THE CONSOLIDATED AND COMPANY INCOME STATEMENTS 11 - 13
THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 14 - 15
THE CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES INSHAREHOLDERS' EQUITY 16 - 19
NOTES TO THE FINANCIAL STATEMENTS 20 - 153
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (19) No. P01937
(Page 1, 6 pages)
To the Shareholders of China Merchants Port Group Co., Ltd.:
I. Audit Opinion
We have audited the accompanying financial statements of China Merchants Port Group Co., Ltd.(formerly known as "Shenzhen Chiwan Wharf Holdings Limited", hereinafter referred to as "theCompany"), which comprise the consolidated and company balance sheets as at 31 December 2018,and the consolidated and company income statements, the consolidated and company cash flowstatements and the consolidated and company statements of changes in shareholders' equity for theyear then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements of the Company present fairly, in all materialrespects, the consolidated and company's financial position as of 31 December 2018, the consolidatedand company's results of operations and cash flows for the year then ended in accordance withAccounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with the Auditing Standards for the Chinese Certified PublicAccountants. Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We are independent ofthe Company in accordance with the Auditing Standards for the Chinese Certified Public Accountants,and we have fulfilled our other ethical responsibilities in accordance with the standards. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of the financial statements of the current period. These matters were addressed in the contextof our audit of the financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters. We determine the followings are key audit matters thatneed to be addressed in our report.
1. Subsequent measurement of long-term equity investment in associates and joint ventures
As disclosed in Notes (V) 9 to the consolidated financial statements, the Company has made equityinvestment in several enterprises, over which the Company exercises joint control or has significantinfluence. In 2018, the Company's income from investment in associates/joint ventures under equitymethod amounts to RMB 3,913,864,538.60. As at 31 December 2018, the carrying amount oflong-term equity investment of the Company in associates/joint ventures amounts to RMB50,176,577,263.40. Since the investment income from long-term equity investment in associates/jointventures is significant, with its accuracy depending on the investee's financial status and operationresults, we identified the aforesaid subsequent measurement of long-term equity investment inassociates/joint ventures as a key audit matter of the consolidated financial statements.
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (19) No. P01937
(Page 2, 6 pages)
III. Key Audit Matters - continued
1. Subsequent measurement of long-term equity investment in associates and joint ventures -
continued
Principal audit procedures we performed for key audit matters are as follows:
(1) Understood the major associates/joint ventures and their environment, and identified whether the
major associates/joint ventures were significant components in terms of financial importance andbusiness nature;
(2) Understood the certified public accountants of major associates/joint ventures and evaluated their
independence and professional competence;
(3) Identified and assessed the risk of material misstatement in the financial statements of the major
associates/joint ventures from the perspective of auditing the consolidated financial statements ofthe Company by reading the financial statements of the major associates/joint ventures anddiscussing with the management the financial performance of the major associates/joint venturesand the significant judgments and estimates made in the preparation of the financial statements;
(4) Discussed with the component certified public accountants of the major associates/joint ventures
their assessment of the component audit risk, the identification of key audit areas and theimplementation of the corresponding audit procedures to evaluate whether the audit of thecomponent certified public accountants was appropriate;
(5) Evaluated whether the audit evidence obtained by the component certified public accountants was
sufficient and appropriate by reviewing the audit documents of the component certified publicaccountants of the major associates/joint ventures when we deemed necessary.
(6) Verified whether the accounting policies and accounting periods adopted by the associates/joint
ventures were consistent with the Company's. If not, checked whether the financial statements ofthe associates/joint ventures have been adjusted according to the accounting policies andaccounting period of the Company, and recognized the amount of investment income under equitymethod on that basis.
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (19) No. P01937
(Page 3, 6 pages)
III. Key Audit Matters - continued
2. Accounting treatment of business combinations involving enterprises not under common
control
As disclosed in Notes (VI) 1 to the consolidated financial statements, on 23 February 2018, theCompany acquired 90% of the shares of TCP Participa??es SA (hereinafter referred to as "TCP")at a price of BRL 2,811,941,923.95 (equivalent to RMB 5,468,066,151.65), and the considerationpaid in excess of the fair value of identifiable net assets of TCP on the acquisition date equivalentto RMB 3,969,374,954.86 was recognized as goodwill. Since the business combinations notinvolving enterprises under common control involves significant judgments and estimates indetermining the fair value of identifiable net assets on the acquisition date, the calculation ofgoodwill, etc., we identified the accounting treatment of the business combinations involvingenterprises not under common control as a key audit matter of the consolidated financialstatements.
Principal audit procedures we performed for key audit matters are as follows:
(1) Evaluated the independence, objectiveness and professional competence of the third-party
evaluation organization hired by the management through interviews and quriers;
(2) Based on our understanding of the industry and business, judged whether the management's
methods and assumptions used in assessing the fair value of the identifiable net assets at theacquisition date were reasonable; compared the gross profit margin of forecast period and thehistorical gross profit margin, the income growth rate of forecast period and the historical incomegrowth rate, and the development planning of TCP, etc. to evaluate the reasonableness offorecasted financial data and its evaluation results.
(3) Utilized the work of internal evaluation experts to assess the rationality of evaluation methods and
key assumptions used by third-party evaluation organization in the assessment of the fair value ofidentifiable net assets at the acquisition date, the rationality of the discount rate used, and theaccuracy of calculation of the net present value of expected future cash flows.
3. Goodwill impairment
As disclosed in Notes (V) 16 to the consolidated financial statements, as at 31 December 2018,the goodwill in the consolidated financial statements of the Company was RMB 8,335,895,842.35.The management of the Company used the present value of the estimated future cash flows todetermine the recoverable amount of the relevant asset group when testing the goodwill forimpairment, and the forecast of future cash flows included key assumptions, such as incomegrowth rate, gross profit margin, discount rate, etc. We identified the goodwill impairment as akey audit matter of the consolidated financial statements due to the significant amount of goodwilland that the management needs to make significant judgments and estimates when conductinggoodwill impairment testing.
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (19) No. P01937
(Page 4, 6 pages)
III. Key Audit Matters - continued
3. Goodwill impairment - continued
Principal audit procedures we performed for key audit matters are as follows:
(1) Tested the operation effectiveness of internal controls related to goodwill impairment;
(2) Referred to industry practice to assess whether the management's approach in cash flows forecast
is appropriate and whether the assumptions used are reasonable;
(3) Compared the data used in cash flow forecast with historical data and budget data approved by the
management, and assessed the reasonableness of the data used;
(4) Compared the growth rate of the business volume in the forecast period with the growth rate of
the historical business volume and evaluated its appropriateness.
(5) Compared the gross profit margin of the forecast period with the actual gross profit margin of
previous years to assess its appropriateness in combination with the business plan and industrydevelopment trend;
(6) Understood the basis for management to determine the growth rate of the business in the
subsequent forecast period and assessed its appropriateness;
(7) Assessed the appropriateness of the discount rate adopted by the management in combination with
market risk-free interest rates, risk factors, etc.;
(8) Reviewed whether the calculation of the present value of future cash flows was correct.
IV. Other Information
The Company is responsible for the other information. The other information comprises theinformation included in the annual report, but does not include the consolidated financial statementsand our auditor's report.
Our opinion on the financial statements does not cover the other information and we do not expressany form of assurance conclusion.
In combination with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
If, based on the audit work performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (19) No. P01937
(Page 5, 6 pages)
V. Responsibilities of the Management and Those Charged with Governance for the Financial
Statements
The Company is responsible for the preparation of the financial statements that give a true and fairview in accordance with Accounting Standards for Business Enterprises, and for the design,performance and maintenance of such internal control that is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company'sability to continue as a going concern, disclosing, as applicable, matters related to going concern andusing the going concern basis of accounting unless the management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.
These charged with governance are responsible for overseeing the Company's financial reportingprocess.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor's report that includes anaudit opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with Auditing Standards for the Chinese Certified Public Accountants willalways detect a material misstatement when it exists. Misstatements can arise from fraud or error andare considered material if, individually or in the aggregate, they could expected influence theeconomic decisions taken based on these financial statements by reasonable users.
As part of an audit in accordance with Auditing Standards for the Chinese Certified PublicAccountants, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
(1) Identified and assessed the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that was sufficient and appropriate to form our opinion. The risk of not detectinga material misstatement resulting from fraud was higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.
(2) Understood audit related internal control in order to design audit procedures that were
appropriate in the circumstances.
(3) Evaluated the appropriateness of accounting policies applied and the reasonableness of
accounting estimates and related disclosures made by the management.
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (19) No. P01937
(Page 6, 6 pages)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
(4) Concluded on the appropriateness of the directors' application of the going concern basis of
accounting. Based on audit evidence obtained, concluded on whether the material uncertainty ofevents or conditions that may cause cast significant doubt on the Company's ability to continueas a going concern existed. If we concluded that a material uncertainty existed, we were requiredto draw attention in our auditor's report to the related disclosures in the financial statements or tomodify our opinion, if such disclosures were inadequate. Our conclusions were based on theaudit evidence obtained up to the date of our auditor's report. However, future events orconditions may cause the Company to cease to continue as a going concern.
(5) Evaluated the overall presentation, structure and content of the financial statements (including
the disclosures), and whether the financial statements represented the underlying transactionsand events in a manner that achieved fair presentation.
(6) Obtained sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an opinion on the financial statements. Wewere responsible for the direction, supervision and performance of the group audit. We remainedsolely responsible for our audit opinion.
We communicated with those charged with governance over audit scope, time arrangement andsignificant audit findings, including any significant deficiencies of internal control that we identifiedthrough audit.
We also provided the those charged with governance with a statement that we had complied withrelevant ethical requirements of independence, and communicated with those charged with governanceover all relationships and other matters that may reasonably be thought to bear on our independence,and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determined those mattersthat were of most significance in the audit of the financial statements of the current period and weretherefore the key audit matters. We described these matters in our auditor's report unless law orregulation precluded public disclosure about the matter or when, in extremely rare circumstances, wedetermined that a matter should not be addressed in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant(Engagement Partner)Shanghai, ChinaHuang Yue
Chinese Certified Public Accountant
Jiang Qishen
29 March 2019
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | 31/12/2018 | 01/01/2018 (restated) | 31/12/2017 (restated) |
| Current assets: | ||||
| Cash and bank balances | (V)1 | 7,070,308,704.75 | 7,729,460,082.75 | 7,729,460,082.75 |
| Notes and accounts receivable | (V)2 | 1,120,839,172.51 | 909,326,662.63 | 871,370,660.21 |
| Prepayments | (V)3 | 124,404,862.87 | 71,668,202.51 | 71,668,202.51 |
| Other receivables | (V)4 | 799,559,226.45 | 938,579,424.96 | 938,786,831.94 |
| Inventories | (V)5 | 108,567,270.02 | 82,789,282.22 | 82,789,282.22 |
| Assets held for sale | (V)6 | 115,356,162.94 | - | - |
| Other current assets | (V)7 | 1,195,421,189.12 | 1,199,446,613.69 | 1,200,476,091.74 |
| Total current assets | 10,534,456,588.66 | 10,931,270,268.76 | 10,894,551,151.37 | |
| Non-current Assets: | ||||
| Available-for-sale financial assets | 3,083,581,935.68 | |||
| Long-term receivables | (V)8 | 793,046,240.11 | 9,659,365.32 | 9,669,034.35 |
| Long-term equity investments | (V)9 | 50,176,577,263.40 | 43,160,849,807.48 | 43,160,849,807.48 |
| Other investments in equity instruments | (V)10 | 247,848,314.30 | 233,483,968.79 | |
| Other non-current financial assets | (V)11 | 2,087,872,081.94 | 2,982,466,950.23 | |
| Investment properties | (V)12 | 5,890,146,989.51 | 6,060,625,982.13 | 6,060,625,982.13 |
| Fixed assets | (V)13 | 22,994,190,880.43 | 23,167,393,454.86 | 23,167,393,454.86 |
| Construction in progress | (V)14 | 5,499,426,090.06 | 2,308,007,330.50 | 2,308,007,330.50 |
| Intangible assets | (V)15 | 20,761,018,044.54 | 15,873,713,338.91 | 15,873,713,338.91 |
| Goodwill | (V)16 | 8,335,895,842.35 | 4,051,665,903.24 | 4,051,665,903.24 |
| Long-term prepaid expenses | (V)17 | 235,706,437.21 | 254,930,584.77 | 254,930,584.77 |
| Deferred tax assets | (V)18 | 66,708,157.19 | 42,425,905.07 | 42,425,905.07 |
| Other non-current assets | (V)19 | 395,191,485.98 | 227,749,831.65 | 227,749,831.65 |
| Total non-current assets | 117,483,627,827.02 | 98,372,972,422.95 | 98,240,613,108.64 | |
| TOTAL ASSETS | 128,018,084,415.68 | 109,304,242,691.71 | 109,135,164,260.01 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Balance Sheet - continued
Unit: RMB
| Item | Notes | 31/12/2018 | 01/01/2018 (restated) | 31/12/2017 (restated) |
| Current liabilities: | ||||
| Short-term borrowings | (V)20 | 3,425,291,312.62 | 2,580,000,000.00 | 2,580,000,000.00 |
| Notes and accounts payable | (V)21 | 429,120,690.97 | 331,606,335.81 | 331,606,335.81 |
| Receipts in advance | (V)22 | 29,170,709.86 | 31,959,751.17 | 106,944,420.75 |
| Contract liabilities | (V)23 | 49,993,895.50 | 43,926,190.25 | |
| Employee benefits payable | (V)24 | 433,489,555.40 | 379,770,098.40 | 379,770,098.40 |
| Taxes payable | (V)25 | 345,183,422.42 | 258,555,167.79 | 258,555,167.79 |
| Other payables | (V)26 | 2,245,670,528.89 | 6,570,561,586.96 | 6,544,589,530.18 |
| Non-current liabilities due within one year | (V)27 | 2,349,849,449.96 | 2,393,237,748.47 | 2,393,237,748.47 |
| Other current liabilities | (V)28 | 602,659,721.80 | 385,472,328.45 | 385,472,328.45 |
| Total current liabilities | 9,910,429,287.42 | 12,975,089,207.30 | 12,980,175,629.85 | |
| Non-current Liabilities: | ||||
| Long-term borrowings | (V)29 | 6,971,479,842.18 | 7,670,516,491.15 | 7,670,516,491.15 |
| Bonds payable | (V)30 | 22,097,467,096.40 | 10,591,709,808.16 | 10,591,709,808.16 |
| Long-term payables | (V)31 | 1,294,190,118.18 | 1,290,782,441.94 | 1,290,782,441.94 |
| Projected benefits obligation | (V)32 | 375,325,127.65 | 350,750,123.90 | 350,750,123.90 |
| Provisions | (V)33 | 34,951,392.27 | 50,577,924.97 | - |
| Deferred income | (V)34 | 228,658,214.64 | 186,491,676.05 | 222,857,800.33 |
| Deferred tax liabilities | (V)18 | 2,911,074,941.27 | 2,015,175,104.46 | 1,984,303,944.46 |
| Other non-current liabilities | (V)35 | 3,777,582,522.86 | 83,594,525.96 | 54,763,901.68 |
| Total non-current liabilities | 37,690,729,255.45 | 22,239,598,096.59 | 22,165,684,511.62 | |
| TOTAL LIABILITIES | 47,601,158,542.87 | 35,214,687,303.89 | 35,145,860,141.47 | |
| SHAREHOLDERS' EQUITY: | ||||
| Share capital | (V)36 | 1,793,412,378.00 | 644,763,730.00 | 644,763,730.00 |
| Capital reserve | (V)37 | 19,426,912,957.05 | 18,845,899,356.20 | 18,845,899,356.20 |
| Other comprehensive income | (V)38 | 88,925,978.57 | (729,621,208.40) | (7,064,646.43) |
| Special reserve | (V)39 | 8,231,080.43 | 4,767,373.45 | 4,767,373.45 |
| Surplus reserve | (V)40 | 527,175,908.67 | 520,074,434.56 | 520,074,434.56 |
| Unappropriated profit | (V)41 | 8,915,817,110.21 | 9,282,631,255.64 | 8,466,307,917.47 |
| Total shareholders' equity attributable to equity holders of the parent | 30,760,475,412.93 | 28,568,514,941.45 | 28,474,748,165.25 | |
| Minority interests | 49,656,450,459.88 | 45,521,040,446.37 | 45,514,555,953.29 | |
| TOTAL SHAREHOLDERS' EQUITY | 80,416,925,872.81 | 74,089,555,387.82 | 73,989,304,118.54 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 128,018,084,415.68 | 109,304,242,691.71 | 109,135,164,260.01 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Balance Sheet of the Company
Unit: RMB
| Item | Notes | 31/12/2018 | 01/01/2018 (restated) | 31/12/2017 |
| Current Assets: | ||||
| Cash and bank balances | 389,841,854.93 | 230,039,345.73 | 230,039,345.73 | |
| Notes and accounts receivable | (XIV)1 | 23,444,175.65 | 12,987,394.84 | 12,987,394.84 |
| Other receivables | (XIV)2 | 651,050,233.08 | 1,172,569,336.18 | 1,172,569,336.18 |
| Inventories | 165,553.46 | 415,163.18 | 415,163.18 | |
| Other current assets | 1,563,111.61 | 2,210,653.66 | 2,210,653.66 | |
| Total current assets | 1,066,064,928.73 | 1,418,221,893.59 | 1,418,221,893.59 | |
| Non-current Assets: | ||||
| Available-for-sale financial assets | 23,759,200.00 | |||
| Long-term receivables | 11,004,284.75 | 11,004,284.75 | 11,004,284.75 | |
| Long-term equity investments | (XIV)3 | 28,544,261,576.96 | 2,215,952,842.62 | 2,215,952,842.62 |
| Other investments in equity instruments | 151,746,700.00 | 147,243,840.00 | ||
| Investment properties | 12,685,959.06 | 13,116,783.72 | 13,116,783.72 | |
| Fixed assets | 190,804,655.63 | 204,839,343.34 | 204,839,343.34 | |
| Construction in progress | 2,500,843.87 | 10,631,762.77 | 10,631,762.77 | |
| Intangible assets | 57,755,603.44 | 59,954,618.20 | 59,954,618.20 | |
| Long-term prepaid expenses | 3,785,801.32 | 3,976,969.45 | 3,976,969.45 | |
| Total non-current assets | 28,974,545,425.03 | 2,666,720,444.85 | 2,543,235,804.85 | |
| TOTAL ASSETS | 30,040,610,353.76 | 4,084,942,338.44 | 3,961,457,698.44 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Balance Sheet of the Company - continued
Unit: RMB
| Item | Notes | 31/12/2018 | 01/01/2018 (restated) | 31/12/2017 |
| Current Liabilities: | ||||
| Short-term borrowings | 377,716,000.00 | - | - | |
| Notes and accounts payable | 13,125,624.29 | 18,376,556.53 | 18,376,556.53 | |
| Receipts in advance | - | - | 98,400.00 | |
| Contract liabilities | 92,003.00 | 98,400.00 | ||
| Employee benefits payable | 26,605,190.52 | 51,689,614.60 | 51,689,614.60 | |
| Taxes payable | 18,826,587.50 | 1,578,674.01 | 1,578,674.01 | |
| Other payables | 717,536,924.18 | 880,542,349.29 | 880,542,349.29 | |
| Non-current liabilities due within one year | 299,531,506.81 | - | - | |
| Other current liabilities | 200,000,000.00 | 100,000,000.00 | 100,000,000.00 | |
| Total current liabilities | 1,653,433,836.30 | 1,052,285,594.43 | 1,052,285,594.43 | |
| Non-current Liabilities: | ||||
| Bonds payable | - | 298,931,506.83 | 298,931,506.83 | |
| Long-term payables | 151,710,000.00 | 150,098,000.00 | 150,098,000.00 | |
| Deferred tax liabilities | 34,179,375.00 | 33,053,660.00 | 2,182,500.00 | |
| Total non-current liabilities | 185,889,375.00 | 482,083,166.83 | 451,212,006.83 | |
| TOTAL LIABILITIES | 1,839,323,211.30 | 1,534,368,761.26 | 1,503,497,601.26 | |
| SHAREHOLDERS' EQUITY | ||||
| Share capital | 1,793,412,378.00 | 644,763,730.00 | 644,763,730.00 | |
| Capital reserve | 25,517,647,180.04 | 240,001,254.59 | 240,001,254.59 | |
| Other comprehensive income | 102,638,125.00 | 99,260,980.00 | 6,647,500.00 | |
| Special reserve | 470,465.59 | - | - | |
| Surplus reserve | 527,175,908.67 | 520,074,434.56 | 520,074,434.56 | |
| Unappropriated profit | 259,943,085.16 | 1,046,473,178.03 | 1,046,473,178.03 | |
| TOTAL SHAREHOLDERS' EQUITY | 28,201,287,142.46 | 2,550,573,577.18 | 2,457,960,097.18 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 30,040,610,353.76 | 4,084,942,338.44 | 3,961,457,698.44 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Income Statement
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period (restated) |
| I. Operating income | (V)42 | 9,703,394,622.58 | 7,544,635,284.96 |
| Less: Operating costs | (V)42 | 5,739,241,395.87 | 4,710,312,660.51 |
| Business taxes and levies | (V)43 | 235,953,803.51 | 71,984,283.55 |
| Administrative expenses | (V)44 | 1,251,865,675.45 | 853,900,889.90 |
| Research and development expenses | 121,989,097.82 | 95,247,274.67 | |
| Financial expenses | (V)45 | 1,643,418,102.95 | 955,406,648.46 |
| Including: Interest expense | 1,634,101,331.80 | 1,129,672,527.80 | |
| Investment income | 272,453,293.86 | 116,797,403.30 | |
| Impairment losses of assets | (V)46 | - | 632,741,768.60 |
| Impairment losses of credit | (V)47 | 7,528,580.60 | |
| Add: Other income | (V)48 | 56,180,127.64 | 44,158,463.01 |
| Investment income | (V)49 | 3,967,828,149.48 | 5,771,294,706.67 |
| Including: Income from investments in associates and joint ventures | (V)49 | 3,913,864,538.60 | 4,681,582,632.76 |
| Gains (losses) from changes in fair value | (V)50 | (1,074,406,837.68) | - |
| Gains (losses) on disposal of assets | (V)51 | 19,258,495.33 | (391,053.09) |
| II. Operating profit | 3,672,257,901.15 | 6,040,103,875.86 | |
| Add: Non-operating income | (V)52 | 67,128,689.98 | 23,505,578.15 |
| Less: Non-operating expenses | (V)53 | 125,031,298.57 | 45,601,286.22 |
| III. Gross profit | 3,614,355,292.56 | 6,018,008,167.79 | |
| Less: Income tax expenses | (V)54 | 728,440,538.60 | 580,458,478.80 |
| IV. Net profit | 2,885,914,753.96 | 5,437,549,688.99 | |
| (I) Categorization by continuity of operation | |||
| 1. Net profit of continued operation | 2,885,914,753.96 | 5,437,549,688.99 | |
| 2. Net profit of discontinued operation | - | - | |
| (II) Categorization by attribution of ownership | |||
| 1. Net profit attributable to shareholders of the parent | 1,090,418,910.77 | 2,365,214,907.45 | |
| 2. Profit or loss attributable to minority shareholder | 1,795,495,843.19 | 3,072,334,781.54 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Income Statement - continued
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period (restated) |
| V. Amount of other comprehensive net income after tax | (V)56 | 204,602,785.68 | 642,605,602.46 |
| Amount of other comprehensive net income after tax attributable to equity holders of the parent | 41,778,087.02 | 242,204,762.79 | |
| (I) Other comprehensive income that will not be reclassified to profit or loss | (48,671,312.79) | 65,863,882.85 | |
| 1. Change as a result of remeasurement of the net defined benefit plan | (7,943,999.30) | 5,313,793.20 | |
| 2. Other comprehensive income under the equity method that will not be reclassified to profit or loss | (46,138,662.23) | 60,550,089.65 | |
| 3. Fair value changes of other investments in equity instruments | 5,411,348.74 | ||
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | 90,449,399.81 | 176,340,879.94 | |
| 1. Other comprehensive income under the equity method that will be reclassified to profit or loss | (7,952,099.73) | 175,630,117.53 | |
| 2. Gains or losses on changes in fair value of available-for-sale financial assets | 87,348,744.15 | ||
| 3. Translation differences of financial statements denominated in foreign currencies | 98,401,499.54 | (86,637,981.74) | |
| Amount of other comprehensive net income after tax attributable to minority shareholders | 162,824,698.66 | 400,400,839.67 | |
| VI. Total comprehensive income attributable to: | 3,090,517,539.64 | 6,080,155,291.45 | |
| Shareholders of the parent | 1,132,196,997.79 | 2,607,419,670.24 | |
| Minority shareholders | 1,958,320,541.85 | 3,472,735,621.21 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | 0.61 | 1.32 | |
| (II) Diluted earnings per share | 0.61 | 1.32 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Income Statement of the Company
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Operating income | (XIV)4 | 243,899,253.07 | 262,128,083.88 |
| Less: Operating costs | (XIV)4 | 160,065,451.42 | 147,940,894.54 |
| Business taxes and levies | 47,542,310.81 | 2,028,572.84 | |
| Administrative expenses | 122,905,018.75 | 70,514,131.56 | |
| Research and development expenses | 742,954.48 | 264,150.94 | |
| Financial expenses | 34,174,062.13 | (8,048,217.56) | |
| Including: Interest expense | 36,872,089.57 | 23,359,008.38 | |
| Interest income | 20,843,903.27 | 25,260,320.71 | |
| Impairment losses of assets | - | (7,730.22) | |
| Impairment losses of credit | - | ||
| Add: Other income | 271,927.46 | - | |
| Investment income | (XIV)5 | 193,138,161.44 | 648,579,235.35 |
| Including: Income from investments in associates and joint ventures | (XIV)5 | 63,015,142.10 | 49,683,858.86 |
| Gains (losses) on disposal of assets | (937,948.47) | 304,464.57 | |
| II. Operating profit | 70,941,595.91 | 698,319,981.70 | |
| Add: Non-operating income | 1,336,230.70 | 33,035,528.92 | |
| Less: Non-operating expenses | 867,312.18 | 241,366.11 | |
| III. Gross profit | 71,410,514.43 | 731,114,144.51 | |
| Less: Income tax expenses | 395,773.33 | (396,443.74) | |
| IV. Net profit | 71,014,741.10 | 731,510,588.25 | |
| V. Amount of other comprehensive net income after tax | 3,377,145.00 | 975,000.00 | |
| (I) Other comprehensive income that will not be reclassified subsequently to profit or loss | 3,377,145.00 | - | |
| 1. Change as a result of remeasurement of the net defined benefit plan | - | - | |
| 2. Other comprehensive income under the equity method that will not be reclassified to profit or loss | - | - | |
| 3. Fair value changes of other investments in equity instruments | 3,377,145.00 | ||
| (II) Other comprehensive income that will be reclassified to profit or loss | - | 975,000.00 | |
| 1. Other comprehensive income under the equity method that will be reclassified to profit or loss | - | - | |
| 2. Gains or losses on changes in fair value of available-for-sale financial assets | 975,000.00 | ||
| 3. Translation differences of financial statements denominated in foreign currencies | - | - | |
| VI. Total comprehensive income | 74,391,886.10 | 732,485,588.25 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Cash Flow Statement
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period (restated) |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 9,581,481,387.06 | 7,491,616,295.63 | |
| Receipts of tax refunds | 6,203,721.12 | 2,026,413.44 | |
| Other cash receipts relating to operating activities | (V)57(1) | 963,935,271.59 | 627,697,273.07 |
| Sub-total of cash inflows | 10,551,620,379.77 | 8,121,339,982.14 | |
| Cash payments for goods purchased and services received | 2,647,715,026.47 | 2,127,952,256.75 | |
| Cash payments to and on behalf of employees | 1,808,824,527.76 | 1,415,998,152.93 | |
| Payments of all types of taxes | 762,131,488.97 | 514,231,751.73 | |
| Other cash payments relating to operating activities | (V)57(2) | 1,044,373,911.73 | 588,120,784.45 |
| Sub-total of cash outflows | 6,263,044,954.93 | 4,646,302,945.86 | |
| Net Cash Flows from Operating Activities | (V)58(1) | 4,288,575,424.84 | 3,475,037,036.28 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | 200,000.00 | 342,998,439.88 | |
| Cash receipts from investments income | 1,813,166,370.38 | 1,632,392,218.45 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 19,846,988.10 | 19,718,639.98 | |
| Net cash receipts from disposal of subsidiary and other operating units | - | 7,617,940,434.09 | |
| Other cash receipts relating to investing activities | (V)57(3) | 156,615,992.14 | 218,174,398.17 |
| Sub-total of cash inflows | 1,989,829,350.62 | 9,831,224,130.57 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 2,437,080,643.74 | 2,511,160,012.03 | |
| Cash payments to acquire investments | 4,084,107,008.20 | 2,290,174,234.90 | |
| Net cash payment to acquire subsidiary and other operating units | (V)57(5) | 8,931,096,795.81 | 1,887,623,658.13 |
| Other cash payments relating to investing activities | (V)57(4) | 1,686,107,391.23 | 1,058,395,077.56 |
| Sub-total of cash outflows | 17,138,391,838.98 | 7,747,352,982.62 | |
| Net Cash Flows from Investing Activities | (15,148,562,488.36) | 2,083,871,147.95 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 296,363,615.57 | 166,540,000.00 | |
| Including: cash receipts from capital contributions from minority owners of subsidiary | 40,100,000.00 | 166,540,000.00 | |
| Cash receipts from borrowings | 21,763,411,408.42 | 7,719,939,575.00 | |
| Cash receipts from issue of bonds | 10,621,000,000.00 | 2,599,850,000.00 | |
| Other cash receipts relating to financing activities | (V)57(6) | 3,876,395,683.27 | - |
| Sub-total of cash inflows | 36,557,170,707.26 | 10,486,329,575.00 | |
| Cash repayments of borrowings | 23,593,666,839.99 | 6,729,078,966.70 | |
| Cash payments for distribution of dividends or profit or interest | 3,942,108,074.86 | 4,462,491,329.19 | |
| Including: Payments for distribution of dividends or profit to minorities | 1,929,962,094.72 | 349,393,736.16 | |
| Other cash payments relating to financing activities | (V)57(7) | 146,196,535.06 | 83,248,718.01 |
| Sub-total of cash outflows | 27,681,971,449.91 | 11,274,819,013.90 | |
| Net Cash Flows from Financing Activities | 8,875,199,257.35 | (788,489,438.90) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | (371,390,771.83) | (294,425,747.23) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | (2,356,178,578.00) | 4,475,992,998.10 | |
| Add: Opening balance of Cash and Cash Equivalents | (V)58(2) | 7,729,460,082.75 | 3,253,467,084.65 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)58(2) | 5,373,281,504.75 | 7,729,460,082.75 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Cash Flow Statement of the Company
Unit: RMB
| Item | Notes | Amount incurred in the current period | Amount incurred in the previous period |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from sales of goods and rendering of services | 229,302,378.14 | 269,045,995.41 | |
| Other cash receipts relating to operating activities | 29,331,866.91 | 716,765,626.94 | |
| Sub-total of cash inflows | 258,634,245.05 | 985,811,622.35 | |
| Cash payments for goods purchased and services received | 74,086,330.85 | 78,023,594.34 | |
| Cash payments to and on behalf of employees | 121,661,642.64 | 111,426,044.20 | |
| Payments of all types of taxes | 9,401,709.94 | 10,127,012.26 | |
| Other cash payments relating to operating activities | 279,797,604.56 | 247,511,704.35 | |
| Sub-total of cash outflows | 484,947,287.99 | 447,088,355.15 | |
| Net Cash Flows from Operating Activities | (226,313,042.94) | 538,723,267.20 | |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from investments income | 445,875,054.92 | 63,576,674.42 | |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | 766,830.38 | 2,693,776.59 | |
| Other cash receipts relating to investing activities | 635,013,754.63 | 683,875,000.00 | |
| Sub-total of cash inflows | 1,081,655,639.93 | 750,145,451.01 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 162,248,840.21 | 19,183,612.16 | |
| Other cash payments relating to investing activities | 374,513,229.40 | 685,067,880.47 | |
| Sub-total of cash outflows | 536,762,069.61 | 704,251,492.63 | |
| Net Cash Flows from Investing Activities | 544,893,570.32 | 45,893,958.38 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 256,263,615.57 | - | |
| Cash receipts from borrowings | 566,016,000.00 | 163,436,000.00 | |
| Cash receipts from issue of bonds | 200,000,000.00 | 99,850,000.00 | |
| Sub-total of cash inflows | 1,022,279,615.57 | 263,286,000.00 | |
| Cash repayments of borrowings | 300,000,000.00 | 380,000,000.00 | |
| Cash payments for distribution of dividends or profit or interest | 873,011,086.61 | 333,589,040.71 | |
| Other cash payments relating to financing activities | 1,497,344.37 | 402,325.25 | |
| Sub-total of cash outflows | 1,174,508,430.98 | 713,991,365.96 | |
| Net Cash Flows from Financing Activities | (152,228,815.41) | (450,705,365.96) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | (6,549,202.77) | (1,274,170.98) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | 159,802,509.20 | 132,637,688.64 | |
| Add: Opening balance of Cash and Cash Equivalents | 230,039,345.73 | 97,401,657.09 | |
| VI. Closing Balance of Cash and Cash Equivalents | 389,841,854.93 | 230,039,345.73 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
| Item | 2018 | ||||||||
| Attributable to shareholders of the parent | Minority interests | Total shareholders' equity | |||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Others | |||
| I. Closing balance of the preceding year | 644,763,730.00 | 167,480,381.24 | 19,800,344.49 | 4,767,373.45 | 520,074,434.56 | 3,566,083,142.17 | - | 1,644,073,503.71 | 6,567,042,909.62 |
| Add: Changes in accounting policies | - | - | (722,556,561.97) | - | - | 816,323,338.17 | - | 6,484,493.08 | 100,251,269.28 |
| Corrections of prior period errors | - | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | 18,678,418,974.96 | (26,864,990.92) | - | 4,900,224,775.30 | - | 43,870,482,449.58 | 67,422,261,208.92 | |
| Others | - | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 18,845,899,356.20 | (729,621,208.40) | 4,767,373.45 | 520,074,434.56 | 9,282,631,255.64 | - | 45,521,040,446.37 | 74,089,555,387.82 |
| III. Changes for the year | 1,148,648,648.00 | 581,013,600.85 | 818,547,186.97 | 3,463,706.98 | 7,101,474.11 | (366,814,145.43) | - | 4,135,410,013.51 | 6,327,370,484.99 |
| (I) Total comprehensive income | - | - | 41,778,087.02 | - | - | 1,090,418,910.77 | - | 1,958,320,541.85 | 3,090,517,539.64 |
| (II) Owners' contributions and reduction in capital | 1,148,648,648.00 | 581,013,600.85 | 776,769,099.95 | - | - | - | - | 3,092,504,057.82 | 5,598,935,406.62 |
| 1．Capital contribution from shareholders | 1,148,648,648.00 | - | - | - | - | - | - | 1,594,806,295.50 | 2,743,454,943.50 |
| 2．Capital contribution from other equity investment holder | - | - | - | - | - | - | - | - | - |
| 3．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - | - |
| 4．Business combination involving enterprises under common control | - | (583,183,507.54) | 776,769,099.95 | - | - | - | - | - | 193,585,592.41 |
| 5．Others | - | 1,164,197,108.39 | - | - | - | - | - | 1,497,697,762.32 | 2,661,894,870.71 |
| (III) Profit distribution | - | - | - | - | 7,101,474.11 | (1,457,233,056.20) | - | (920,434,015.30) | (2,370,565,597.39) |
| 1．Transfer to surplus reserve | - | - | - | - | 7,101,474.11 | (7,101,474.11) | - | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.86) | - | - | (850,443,359.86) |
| 4．Others | - | - | - | - | - | (599,688,222.23) | - | (920,434,015.30) | (1,520,122,237.53) |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | 3,463,706.98 | - | - | - | 5,019,429.14 | 8,483,136.12 |
| 1．Withdrawn in the period | - | - | - | 24,165,961.75 | - | - | - | 49,870,501.76 | 74,036,463.51 |
| 2．Utilized in the period | - | - | - | (20,702,254.77) | - | - | - | (44,851,072.62) | (65,553,327.39) |
| (VI) Others | - | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,793,412,378.00 | 19,426,912,957.05 | 88,925,978.57 | 8,231,080.43 | 527,175,908.67 | 8,915,817,110.21 | - | 49,656,450,459.88 | 80,416,925,872.81 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Statement of Changes in Shareholders' Equity - continued
Unit: RMB
| Item | 2017 | ||||||||
| 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 | |||
| I. Closing balance of the preceding year | 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 | - | - | - | - | - | - | - | - | - |
| Corrections of prior period errors | - | - | - | - | - | - | - | - | - |
| Business combination involving enterprises under common control | - | 13,716,765,033.15 | - | - | - | 4,254,259,872.38 | - | 41,705,041,719.67 | 59,676,066,625.20 |
| Others | - | - | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 13,884,245,414.40 | (8,039,646.43) | 4,145,765.65 | 520,074,434.56 | 7,635,650,760.24 | - | 42,632,219,903.20 | 65,313,060,361.62 |
| III. Changes for the year | - | 4,961,653,941.80 | 975,000.00 | 621,607.80 | - | 830,657,157.23 | - | 2,882,336,050.09 | 8,676,243,756.92 |
| (I) Total comprehensive income | - | - | 242,204,762.79 | - | - | 2,365,214,907.45 | - | 3,472,735,621.21 | 6,080,155,291.45 |
| (II) Owners' contributions and reduction in capital | - | 4,961,653,941.80 | (241,229,762.79) | - | - | - | - | 1,551,760,081.00 | 6,272,184,260.01 |
| 1．Capital contribution from shareholders | - | - | - | - | - | - | 131,153,105.53 | 131,153,105.53 | |
| 2．Capital contribution from other equity investment holder | - | 4,790,837,053.25 | - | - | - | - | - | (4,790,837,053.25) | - |
| 3．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - | - | - |
| 4．Business combination involving enterprises under common control | - | 170,816,888.55 | (241,229,762.79) | - | - | - | - | - | (70,412,874.24) |
| 5．Others | - | - | - | - | - | - | - | 6,211,444,028.72 | 6,211,444,028.72 |
| (III) Profit distribution | - | - | - | - | - | (1,534,557,750.22) | - | (2,145,447,695.86) | (3,680,005,446.08) |
| 1．Transfer to surplus reserve | - | - | - | - | - | - | - | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (319,802,810.08) | - | (280,975,918.30) | (600,778,728.38) |
| 4．Others | - | - | - | - | - | (1,214,754,940.14) | - | (1,864,471,777.56) | (3,079,226,717.70) |
| (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 | - | - | - | 621,607.80 | - | - | - | 3,288,043.74 | 3,909,651.54 |
| 1．Withdrawn in the period | - | - | - | 17,456,696.76 | - | - | - | 33,537,670.52 | 50,994,367.28 |
| 2．Utilized in the period | - | - | - | (16,835,088.96) | - | - | - | (30,249,626.78) | (47,084,715.74) |
| (VI) Others | - | - | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 644,763,730.00 | 18,845,899,356.20 | (7,064,646.43) | 4,767,373.45 | 520,074,434.56 | 8,466,307,917.47 | - | 45,514,555,953.29 | 73,989,304,118.54 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
| Item | 2018 | ||||||
| Share capital | Capital reserve | Other comprehensive income | Special reserve | Surplus reserve | Unappropriated profit | Total shareholders' equity | |
| I. Closing balance of the preceding year | 644,763,730.00 | 240,001,254.59 | 6,647,500.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,457,960,097.18 |
| Add: Changes in accounting policies | - | - | 92,613,480.00 | - | - | - | 92,613,480.00 |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the year | 644,763,730.00 | 240,001,254.59 | 99,260,980.00 | - | 520,074,434.56 | 1,046,473,178.03 | 2,550,573,577.18 |
| III. Changes for the year | 1,148,648,648.00 | 25,277,645,925.45 | 3,377,145.00 | 470,465.59 | 7,101,474.11 | (786,530,092.87) | 25,650,713,565.28 |
| (I) Total comprehensive income | - | - | 3,377,145.00 | - | - | 71,014,741.10 | 74,391,886.10 |
| (II) Owners' contributions and reduction in capital | 1,148,648,648.00 | 25,277,645,925.45 | - | - | - | - | 26,426,294,573.45 |
| 1．Capital contribution from shareholders | 1,148,648,648.00 | 25,276,764,780.38 | - | - | - | - | 26,425,413,428.38 |
| 2．Share-based payment recognized in shareholders' equity | - | - | - | - | - | - | - |
| 3．Others | - | 881,145.07 | - | - | - | - | 881,145.07 |
| (III) Profit distribution | - | - | - | - | 7,101,474.11 | (857,544,833.97) | (850,443,359.86) |
| 1．Transfer to surplus reserve | - | - | - | - | 7,101,474.11 | (7,101,474.11) | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (850,443,359.86) | (850,443,359.86) |
| 4．Others | - | - | - | - | - | - | - |
| (IV) Transfers within shareholders' equity | - | - | - | - | - | - | - |
| 1．Capitalization of capital reserve | - | - | - | - | - | - | - |
| 2．Capitalization of surplus reserve | - | - | - | - | - | - | - |
| 3．Loss made up by surplus reserve | - | - | - | - | - | - | - |
| 4．Others | - | - | - | - | - | - | - |
| (V) Special reserve | - | - | - | 470,465.59 | - | - | 470,465.59 |
| 1．Withdrawn in the period | - | - | - | 2,621,280.84 | - | - | 2,621,280.84 |
| 2．Utilized in the period | - | - | - | (2,150,815.25) | - | - | (2,150,815.25) |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Closing balance of the year | 1,793,412,378.00 | 25,517,647,180.04 | 102,638,125.00 | 470,465.59 | 527,175,908.67 | 259,943,085.16 | 28,201,287,142.46 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
Statement of Changes in Shareholders' Equity of the Company - continued
Unit: RMB
| Item | 2017 | ||||||
| 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 | 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 | - | - | - | - | - | - | - |
| Corrections of prior period errors | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Opening balance of the year | 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 | - | - | 975,000.00 | (1,027,543.25) | - | 411,707,778.17 | 411,655,234.92 |
| (I) Total comprehensive income | - | - | 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 | - | - | - | - | - | (319,802,810.08) | (319,802,810.08) |
| 1．Transfer to surplus reserve | - | - | - | - | - | - | - |
| 2．Transfer to general reserve | - | - | - | - | - | - | - |
| 3．Distributions to shareholders | - | - | - | - | - | (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 | - | - | - | (1,027,543.25) | - | - | (1,027,543.25) |
| 1．Withdrawn in the period | - | - | - | 2,239,851.36 | - | - | 2,239,851.36 |
| 2．Utilized in the period | - | - | - | (3,267,394.61) | - | - | (3,267,394.61) |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Closing balance of the 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 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(I) GENERAL INFORMATION OF THE COMPANY
China Merchants Port Holdings Company Limited (formerly known as "Shenzhen Chiwan WharfHoldings Limited", hereinafter referred to as the "Company") was a stock limited companyincorporated in Shenzhen, Guangdong Province, on 16 January 1993.
On 30 October 2018, as approved by the Reply on Approving Issuance of Shares to PurchaseAssets and Collection of Funds from Shenzhen Chiwan Wharf Holdings Limited to ChinaMerchants Investment Development Company Limited (Zheng Jian Xu Ke [2018] No. 1750)issued by China Securities Regulatory Commission ("CSRC"), the Company issued1,148,648,648 shares of A-stock to China Merchants Investment Development Company Limited("CMID") to acquire 39.45% equity of China Merchants Port Holdings Company Limited("CMPORT"). The Company has adopted this name since completion of the acquisition.
The headquarters of the Company is located in Shenzhen, Guangdong Province. The Companyand its subsidiaries (collectively the "Group") are principally engaged in the rendering of portservice, bonded logistics service and other business such as property development and investment.
The Company's and consolidated financial statements have been approved by the Board ofDirectors on 28 March 2019.
See Notes (VII) "Equity in other entities" for details of the scope of consolidated financialstatements in the current period are subsidiaries acquired through business combination undercommon control. See Note (VI) "Changes in the consolidated scope" for details of changes in thescope of consolidated financial statements in the current period.
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of preparation of financial statements
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued bythe Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financialinformation in accordance with Information Disclosure and Presentation Rules for CompaniesOffering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in2014).
Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. Except for certain financial instrumentswhich are measured at fair value, the Group adopts the historical cost as the principle ofmeasurement of the financial statements. Upon being restructured into a stock company, the fixedassets and intangible assets initially contributed by the state-owned shareholders are recognizedbased on the valuation amounts confirmed by the state-owned assets administration department.Where assets are impaired, provisions for asset impairment are made in accordance with therelevant requirements.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
Basis of accounting and principle of measurement - continued
Where the historical cost is adopted as the measurement basis, assets are recorded at the amountof cash or cash equivalents paid or the fair value of the consideration given to acquire them at thetime of their acquisition. Liabilities are recorded at the amount of proceeds or assets received orthe contractual amounts for assuming the present obligation, or, at the amounts of cash or cashequivalents expected to be paid to settle the liabilities in the normal course of business.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date, regardless of whetherthat price is directly observable or estimated using valuation technique. Fair value measurementand/or disclosure in the financial statements are determined according to the above basis.
Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which theinputs to the fair value measurements are observable and the significance of the inputs to the fairvalue measurement in its entirety, which are described as follows:
? Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the
entity can access at the measurement date;? Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable
for the asset or liability, either directly or indirectly; and? Level 3 inputs are unobservable inputs for the asset or liability.
Going Concern
The Group assessed its ability to continue as a going concern for the 12 months from 31December 2018 and did not notice any events or circumstances that may cast significant doubtupon its ability to continue as a going concern. Therefore, the financial statements have beenprepared on a going concern basis.
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
All the following significant accounting policies and accounting estimates are based onAccounting Standards for Business Enterprises ("ASBE").
1. Statement of compliance with the ASBE
The financial statements of the Company have been prepared in accordance with the ASBE, andpresent truly and completely, the Company’s and consolidated financial position as of 31December 2018, and the Company’s and consolidated results of operations and cash flows for theyear then ended.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
2. Accounting period
The Group has adopted the calendar year as its accounting year, e.g. from 1 January to 31December.
3. Operating cycle
An operating cycle refers to the period since when an enterprise purchases assets for processingpurpose till the realization of those assets in cash or cash equivalents. The Group are principallyengaged in the rendering of port service, bonded logistics service and other business such asproperty development and investment with an operating cycle of one year.
4. Functional currency
Renminbi ("RMB") is the currency of the primary economic environment in which the Companyoperates. Therefore, the Company chooses RMB as their functional currency. The Company'ssubsidiaries chooses their functional currency on the basis of the primary economic environmentin which they operate. The Company adopts RMB to prepare its financial statements.
5. The accounting treatment of business combinations involving or not involving
enterprises under common control
Business combinations are classified into business combinations involving enterprises undercommon control and business combinations not involving enterprises under common control.
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination inwhich all of the combining enterprises are ultimately controlled by the same party or parties bothbefore and after the combination, and that control is not transitory.
Assets and liabilities obtained shall be measured at their respective carrying amounts as recordedby the combining entities at the date of the combination. The difference between the carryingamount of the net assets obtained and the carrying amount of the consideration paid for thecombination is adjusted to the share premium in capital reserve. If the share premium is notsufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period inwhich they are incurred.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
5. The accounting treatment of business combinations involving or not involving enterprises
under common control - continued
5.2 Business combinations not involving enterprises under common control and goodwill
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.
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.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
Consolidation of a subsidiary begins when the Group obtains control over the subsidiaries andceases when the Group loses control of the subsidiary.
For a subsidiary already disposed of by the Group, the operating results and cash flows before thedate of disposal (the date when control is lost) are included in the consolidated income statementand consolidated statement of cash flows, as appropriate.
For subsidiaries acquired through a business combination involving enterprises not undercommon control, the operating results and cash flows from the acquisition date (the date whencontrol is obtained) are included in the consolidated income statement and consolidated statementof cash flows, as appropriate.
No matter when the business combination occurs in the reporting period, subsidiaries acquiredthrough a business combination involving enterprises under common control or the party beingabsorbed under merger by absorption are included in the Group's scope of consolidation as if theyhad been included in the scope of consolidation from the date when they first came under thecommon control of the ultimate controlling party. Their operating results and cash flows from thedate when they first came under the common control of the ultimate controlling party are includedin the consolidated income statement and consolidated statement of cash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries aredetermined based on the uniform accounting policies and accounting periods set out by theCompany.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the parent is treated as minorityinterests and presented as "minority interests" in the consolidated balance sheet undershareholders' equity. The portion of net profits or losses of subsidiaries for the period attributableto minority interests is presented as "minority interests" in the consolidated income statementunder the "net profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiaryexceeds the minority shareholders' portion of the opening balance of shareholders' equity of thesubsidiary, the excess amount is still allocated against minority interests.
Acquisition of minority interests or disposals of interests in a subsidiary that do not result in theloss of control over the subsidiary are accounted for as equity transactions. The carrying amountsof the parent's interests and minority interests are adjusted to reflect the changes in their relativeinterests in the subsidiary. The difference between the amount by which the minority interests areadjusted and the fair value of the consideration paid or received is adjusted to capital reserve. Ifthe capital reserve is not sufficient to absorb the difference, the excess are adjusted againstretained earnings.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
6. Preparation of consolidated financial statements - continued
For the stepwise acquisition of equity interest till acquiring control after a few transactions andleading to business combination not involving enterprises under common control, this should bedealt with based on whether this belongs to 'package deal': if it belongs to 'package deal',transactions will be dealt as transactions to acquire control. If it does not belong to 'package deal',transactions to acquire control on acquisition date will be under accounting treatment, the fairvalue of acquirees' shares held before acquisition date will be revalued, and the differencebetween fair value and book value will be recognized in profit or loss of the current period; ifacquirees' shares held before acquisition date involve in changes of other comprehensive incomeand other equity of owners under equity method, this will be transferred to income of acquisitiondate.
When the Group loses control over a subsidiary due to disposal of equity investment or otherreasons, any retained interest is re-measured at its fair value at the date when control is lost. Thedifference between (i) the aggregate of the consideration received on disposal and the fair value ofany retained interest and (ii) the share of the former subsidiary's net assets cumulatively calculatedfrom the acquisition date according to the original proportion of ownership interests is recognizedas investment income in the period in which control is lost, and the goodwill is offset accordingly.Other comprehensive income associated with investment in the former subsidiary is reclassified toinvestment income in the period in which control is lost.
When the Group loses control of a subsidiary in two or more arrangements (transactions), termsand conditions of the arrangements (transactions) and their economic effects are considered.One or more of the following indicate that the Group shall account for the multiple arrangementsas a 'package deal': (i) they are entered into at the same time or in contemplation of each other; (ii)they form a complete transaction designed to achieve an overall commercial effect; (iii) theoccurrence of one transaction is dependent on the occurrence of at least one other transaction; (iv)one transaction alone is not economically justified, but it is economically justified whenconsidered together with other transactions. Where the transactions of disposal of equityinvestments in a subsidiary until the loss of control are assessed as a package deal, thesetransactions are accounted for as one transaction of disposal of a subsidiary with loss of control.Before losing control, the difference of consideration received on disposal and the share of netassets of the subsidiary continuously calculated from acquisition date is recognized as othercomprehensive income. When losing control, the cumulated other comprehensive income istransferred to profit or loss of the period of losing control. If the transactions of disposal of equityinvestments in a subsidiary are not assessed as a package deal, these transactions are accountedfor as unrelated transactions.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
7. Types of joint arrangements and the accounting treatment of joint operation
There are two types of joint arrangements - joint operations and joint ventures. The classificationof joint arrangements under is determined based on the rights and obligations of parties to thejoint arrangements by considering the structure, the legal form of the arrangements, thecontractual terms agreed by the parties to the arrangement. A joint operation is a jointarrangement whereby the parties that have joint control of the arrangement have rights to theassets, and obligations for the liabilities, relating to the arrangement. A joint venture is a jointarrangement whereby the parties that have joint control of the arrangement have rights to the netassets of the arrangement.
Investments in joint ventures are accounted for using the equity method by the Group, which isdetailed in Notes (III) 14.3.2, a long-term equity investment is subject to for using the equitymethod.
The Group as a joint operator recognizes the following items in relation to its interest in a jointoperation: (1) its solely-held assets, including its share of any assets held jointly; (2) itssolely-assumed liabilities, including its share of any liabilities incurred jointly; (3) its revenuefrom the sale of its share of the output arising from the joint operation; (4) its share of the revenuefrom the sale of the output by the joint operation; and (5) its solely-incurred expenses, includingits share of any expenses incurred jointly. The Group accounts for the recognized assets, liabilities,revenues and expenses relating to its interest in a joint operation in accordance with therequirements applicable to the particular assets, liabilities, revenues and expenses.
8. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cashequivalents are the Group's short-term, highly liquid investments that are readily convertible toknown amounts of cash and which are subject to an insignificant risk of changes in value.
9. Foreign currency transactions
9.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchangerate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currencyusing the spot exchange rates at the balance sheet date. Exchange differences arising from thedifferences between the spot exchange rates prevailing at the balance sheet date and those oninitial recognition or at the previous balance sheet date are recognized in profit or loss for theperiod, except that (1) exchange differences related to a specific-purpose borrowing denominatedin foreign currency that qualify for capitalization are capitalized as part of the cost of thequalifying asset during the capitalization period; (2) exchange differences related to hedginginstruments for the purpose of hedging against foreign currency risks are accounted for usinghedge accounting.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Foreign currency transactions - continued
9.1 Transactions denominated in foreign currencies - continued
When the consolidated financial statements include foreign operation(s), if there is foreigncurrency monetary item constituting a net investment in a foreign operation, exchange differencearising from changes in exchange rates are recognized as "exchange differences arising ontranslation of financial statements denominated in foreign currencies " in other comprehensiveincome, and in profit and loss for the period upon disposal of the foreign operation.
Foreign currency non-monetary items measured at historical cost are translated to the amounts infunctional currency at the spot exchange rates on the dates of the transactions; the amounts infunctional currency remain unchanged. Foreign currency non-monetary items measured at fairvalue are re-translated at the spot exchange rate on the date the fair value is determined.Difference between the re-translated functional currency amount and the original functionalcurrency amount is treated as changes in fair value (including changes of exchange rate) and isrecognized in profit and loss or as other comprehensive income.
9.2 Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of aforeign operation are translated from the foreign currency into RMB using the following method:
assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at thebalance sheet date; shareholders' equity items are translated at the spot exchange rates at the dateson which such items arose; all items in the income statement as well as items reflecting thedistribution of profits are translated at exchange rates that approximate the actual spot exchangerates on the dates of the transactions; The difference between the translated assets and theaggregate of liabilities and shareholders' equity items is recognized as other comprehensiveincome and included in shareholders' equity.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreignsubsidiary are translated at average exchange rate during the accounting period of consolidatedfinancial statements. The effect of exchange rate changes on cash and cash equivalents is regardedas a reconciling item and presented separately in the cash flow statement as "effect of exchangerate changes on cash and cash equivalents".
The opening balances and the comparative figures of previous year are presented at the translatedamounts in the previous year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over aforeign operation due to disposal of certain interest in it or other reasons, the Group transfers theaccumulated exchange differences arising on translation of financial statements of this foreignoperation attributable to the owners' equity of the Company and presented under owners' equity,to profit or loss in the period in which the disposal occurs.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Foreign currency transactions - continued
9.2 Translation of financial statements denominated in foreign currencies - continued
In case of a disposal of part equity investments or other reason leading to lower interestpercentage in foreign operations but does not result in the Group losing control over a foreignoperation, the proportionate share of accumulated exchange differences arising on translation offinancial statements are re-attributed to minority interests and are not recognized in profit and loss.For partial disposals of equity interests in foreign operations which are associates or joint ventures,the proportionate share of the accumulated exchange differences arising on translation of financialstatements of foreign operations is reclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to thecontractual provisions of a financial instrument.
All regular way purchases or sales of financial assets are recognized and derecognized on a tradedate basis.
Financial assets and financial liabilities are initially measured at fair value. For financial assetsand financial liabilities at fair value through profit or loss, relevant transaction costs are directlyrecognized in profit or loss; transaction costs relating to other categories of financial assets andfinancial liabilities are included in the value initially recognized. For accounts receivablerecognized that do not contain a significant financing component or a financing componentincluded in the contracts less than one year which are not considered by the Group, which arewithin the scope of Accounting Standard for Business Enterprises No.14 - Revenue (hereinafterreferred to as "new standards for revenue"), transaction prices defined in the standards shall beadopted on initial recognition.
The effective interest method is a method that is used in the calculation of the amortized cost of afinancial asset or a financial liability and in the allocation of the interest income or interestexpense in profit or loss over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash flows through theexpected life of the financial asset or financial liability to the gross carrying amount of a financialasset or to the amortized cost of a financial liability. When calculating the effective interest rate,the Group estimates future cash flows by considering all the contractual terms of the financialasset or financial liability (for example, prepayment, extension, call option or similar options) butshall not consider the expected credit losses.
The amortized cost of a financial asset or a financial liability is the amount of a financial asset or afinancial liability initially recognized net of principal repaid, plus or less the cumulative amortizedamount arising from amortization of the difference between the amount initially recognized andthe amount at the maturity date using the effective interest method, net of cumulative credit lossallowance (only applicable to financial assets).
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets
Subsequent to initial recognition, the Group's financial assets of various categories aresubsequently measured at amortized cost, at fair value through other comprehensive income or atfair value through profit or loss.
If contractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding, and the financial asset isheld within a business model whose objective is to hold financial assets in order to collectcontractual cash flows, such asset is classified into financial assets measured at amortized cost,which include cash and bank balances, notes receivable and accounts receivable and otherreceivables and etc..
Financial assets that meet the following conditions are subsequently measured at fair valuethrough other comprehensive income ("FVTOCI"): the financial asset is held within a businessmodel whose objective is achieved by both collecting contractual cash flows and selling; and thecontractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding. Financial assets atFVTOCI are presented as other debt investments. Other debt investments due within one year(inclusive) since the balance sheet date are presented as non-current assets due within one year.Other debt investments due within one year (inclusive) upon acquisition are presented as othercurrent assets.
On initial recognition, the Group may irrevocably designate non-trading equity instruments, otherthan contingent consideration recognized through business combination not involving enterprisesunder common control, as financial assets at FVTOCI on an individual basis. Such financialassets at FVTOCI are presented as other equity instrument.
Financial assets measured at fair value through profit or loss ("FVTPL") include those classifiedas financial assets at FVTPL and those designated as financial assets at FVTPL, which arepresented as held-for-trading financial assets other than derivative financial assets. Such financialassets at FVTPL which may fall due more than one year since the balance sheet date and will beheld more than one year are presented as other non-current financial assets.
? Any financial assets that does not qualify for amortized cost measurement or measurement at
FVTOCI or designated at FVTOCI are classified into financial assets at FVTPL.? Upon initial recognition, in order to eliminate or significantly reduce accounting mismatch
and qualified hybrid financial instrument combines financial asset with embedded derivatives,
the Group will irrevocably designated it as financial liabilities at FVTPL.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets -continued
A financial asset is classified as held for trading if one of the following conditions is satisfied:
? It has been acquired principally for the purpose of selling in the near term; or? On initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and there is objective evidence that the Group has a recent actualpattern of short-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and effective as a
hedging instrument.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost are subsequently measured at amortized cost usingthe effective interest method. Gain or loss arising from impairment or derecognition is recognizedin profit or loss.
For financial assets measured at amortized cost, the Group recognizes interest income usingeffective interest method. The Group calculates and recognizes interest income through bookvalue of financial assets multiplying effective interest, except for the following circumstances:
? For purchased or originated credit-impaired financial assets with credit impairment, the
Group calculates and recognizes its interest income based on amortized cost of thefinancial asset and the effective interest through credit adjustment since initial recognition.
10.1.2 Financial assets at FVTOCI
Impairment losses or gains related to financial assets at FVTOCI, interest income measured usingeffective interest method and exchange gains or losses are recognized into profit or loss for thecurrent period, except for the above circumstances, changes in fair value of the financial assets areincluded in other comprehensive income. Amounts charged to profit or loss for every period equalto the amount charged to profit or loss as it is measured at amortized costs. When the financialasset is derecognized, the cumulative gains or losses previously recognized in othercomprehensive income shall be removed from other comprehensive income and recognized inprofit or loss.
Non-trading equity instrument investments are designated as financial assets at FVTOCI, thecumulative gains or losses previously recognized in other comprehensive income allocated to thepart derecognized are transferred and included in retained earnings. During the period in whichthe Group holds the non-trading equity instrument, revenue from dividends is recognized in profitor loss for the current period when (1) the Group has established the right of collecting dividends;(2) it is probable that the associated economic benefits will flow to the Group; and (3) the amountof dividends can be measured reliably.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets -continued
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are subsequently measured at fair value. Gain or loss arising fromchanges in fair values and dividends and interests related to the financial assets are recognized inprofit or loss.
10.2 Impairment of financial instruments
The Group makes accounting treatment on impairment and recognizes loss allowance forexpected credit losses ("ECL") on financial instruments measured at amortized cost, financialinstruments classified as at FVTOCI, lease receivables and contract assets.
The Group makes a loss allowance against amount of lifetime ECL of the contract assets andaccounts receivable that exclude significant financing component or do not consider the financingcomponent in the contract within one year arising from transactions adopting New Standards forRevenue, contract assets and accounts receivable that include significant financing componentand lease receivables arising from transactions adopting New Standards for Lease.
For other financial instrument, other than purchased or originated credit-impaired financial assets,the Group assesses changes in credit risks of the relevant financial asset since initial recognition ateach balance sheet date. If the credit loss of the financial instrument has been significantlyincreased since initial recognition, the Group will make a loss allowance at an amount of expectedcredit loss during the whole life; if not, the Group will make a loss allowance for the financialinstrument at an amount in the future 12-month expected credit losses. Except for the financialassets classified as at FVTOCI, increase in or reversal of credit loss allowance is included in profitor loss as loss/gain on impairment. For the financial assets classified as at FVTOCI, the Grouprecognizes credit loss allowance in other comprehensive income and recognizes the loss/gain onimpairment in profit or loss, while the Group does not decrease the carrying amount of suchfinancial assets in the balance sheet.
The Group has makes a loss allowance against amount of expected credit losses during the wholelife in the prior accounting period. However, at the balance sheet date, the credit risk on afinancial instrument has not increased significantly since initial recognition; the Group willmeasure the loss allowance for that financial instrument at an amount in the future 12-monthexpected credit losses. Reversed amount of loss allowance arising from such circumstances shallbe included in profit or loss as impairment gains.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.1 Significant increase of credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Groupcompares the risk of a default occurring on the financial instrument as at the reporting date withthe risk of a default occurring on the financial instrument as at the date of initial recognition. Forloan commitments, the date that the Group becomes a party to the irrevocable commitment isconsidered to be the date of initial recognition in the application of criteria related to the financialinstrument for impairment.
In particular, the following information is taken into account when assessing whether credit riskhas increased significantly:
(1) Significant changes in internal price indicators of credit risk as a result of a change in credit
risk;(2) Other changes in the rates or terms of an existing financial instrument that would be
significantly different if the instrument was newly originated or issued at the balance sheet
date (such as more stringent covenants, increased amounts of collateral or guarantees, or
higher income coverage).(3) Significant changes in external market indicators of credit risk for a particular financial
instrument or similar financial instruments with the same expected life. These indicators
include the credit spread, the credit swap prices for the borrower, the length of time or the
extent to which the fair value of a financial asset has been less than its amortized cost and
other market information related to the borrower, such as changes in the price of a
borrower’s debt and equity instruments.(4) Significant changes in actual or expected external credit rating for the financial instruments;(5) An actual or expected internal credit rating downgrade for the borrower(6) Adverse changes in business, financial or economic conditions that are expected to cause a
significant change in the debtor’s ability to meet its debt obligations;(7) An actual or expected significant change in the operating results of the debtor;(8) Significant increases in credit risk on other financial instruments of the same borrower;(9) Significant adverse change in the regulatory, economic, or technological environment of the
debtor;(10) Significant changes in the value of the collateral supporting the obligation or in the quality
of third-party guarantees or credit enhancements, which are expected to reduce the
debtor’s economic incentive to make scheduled contractual payments or to otherwise have
an effect on the probability of a default occurring.(11) Significant changes in circumstances expected to reduce the debtor’s economic incentive to
make scheduled contractual payments;
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2.1 Significant increase of credit risk - continued
(12) Expected changes in the loan documentation including an expected breach of contract that
may lead to covenant waivers or amendments, interest payment holidays, interest ratestep-ups, requiring additional collateral or guarantees, or other changes to the contractualframework of the financial instrument;(13) Significant changes in the expected performance and behavior of the debtor;(14) Changes in the entity’s credit management approach in relation to the financial instrument;(15) Past due of contract payment.
At balance sheet date, if the Group judges that the financial instrument solely has lower credit risk,the Group will assume that the credit risk of the financial instrument has not been significantlyincreased since initial recognition.
10.2.2 Credit-impaired financial assets
When the Group expected occurrence of one or more events which may cause adverse impact onfuture cash flows of a financial asset, the financial asset will become a credit-impaired financialassets. Objective evidence that a financial asset is impaired includes but not limited to thefollowing observable events:
(1) Significant financial difficulty of the issuer or debtor;(2) A breach of contract by the debtor, such as a default or delinquency in interest or principal
payments;(3) The creditor, for economic or legal reasons relating to the debtor’s financial difficulty,
granting a concession to the debtor;(4) It becoming probable that the debtor will enter bankruptcy or other financial
reorganizations;(5) The disappearance of an active market for that financial asset because of financial
difficulties of the issuer or the debtor;(6) Purchase or originate a financial asset with a large scale of discount, which reflects facts
of credit loss incurred.
10.2.3 Determination of expected credit loss
The Group uses a provision matrix to determine the credit losses for accounts receivable, contractassets and debt investment based on a portfolio basis. The Group classifies financial instrumentsinto different groups based on common risk characteristics. Common credit risk characteristicsinclude credit risk rating, the date of initial recognition, remaining contractual maturity, industryof borrower and geographical location of the borrower etc.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial assets - continued
10.2.3 Determination of expected credit loss - continued
The Group determines expected credit losses of relevant financial instruments using the followingmethods:
? For a financial asset, a credit loss is the present value of the difference between the contractual
cash flows that are due to the Group under the contract and the cash flows that the Groupexpects to receive;? For a lease receivable, a credit loss is the present value of the difference between the contractual
cash flows that are due to the Group under the contract and the cash flows that the Groupexpects to receive;? For a financial asset with credit-impaired at the balance sheet date, but not purchased or
originated credit-impaired, a credit losses is the difference between the asset’s grosscarrying amount and the present value of estimated future cash flows discounted at thefinancial asset’s original effective interest rate.
The factors reflected in methods of measurement of expected credit losses include an unbiasedand probability-weighted amount that is determined by evaluating a range of possible outcomes;time value of money; reasonable and supportable information about past events, currentconditions and forecasts on future economic status at balance sheet date without unnecessaryadditional costs or efforts.
10.2.4 Write-down of financial assets
When the Group will no longer reasonably expect that the contractual cash flows of financialassets can be collected in aggregate or in part, the Group will directly write down the carryingamount of the financial asset, which constitutes derecognition of relevant financial assets.
10.3 Transfer of financial assets
The Group will derecognize a financial asset if one of the following conditions is satisfied: (i) thecontractual rights to the cash flows from the financial asset expire; (ii) the financial asset has beentransferred and substantially all the risks and rewards of ownership of the financial asset istransferred to the transferee; or (iii) although the financial asset has been transferred, the Groupneither transfers nor retains substantially all the risks and rewards of ownership of the financialasset but has not retained control of the financial asset.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.3 Transfer of financial assets - continued
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of afinancial asset, and it retains control of the financial asset, the Group will recognize the financialasset to the extent of its continuing involvement in the transferred financial asset and recognize anassociated liability. The Group will measure relevant liabilities as follows:
? For transferred financial assets carried at amortized cost, the carrying amount of relevant
liabilities is the carrying amount of financial assets transferred with continuing involvementless amortized cost of the Group's retained rights (if the Group retains relevant rights upontransfer of financial assets) with addition of amortized cost of obligations assumed by theGroup (if the Group assumes relevant obligations upon transfer of financial assets). Relevantliabilities are not designated as financial liabilities at fair value through profit or loss.
? For transferred financial assets carried at fair value, the carrying amount of relevant financial
liabilities is the carrying amount of financial assets transferred with continuing involvementless fair value of the Group's retained rights (if the Group retains relevant rights upontransfer of financial assets) with addition of fair value of obligations assumed by the Group(if the Group assumes relevant obligations upon transfer of financial assets). Accordingly,the fair value of relevant rights and obligations shall be measured on an individual basis.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, forfinancial asset categorized into those measured at amortized cost and financial asset categorizedinto those measured at FVTOCI, the difference between (1) the carrying amount of the financialasset transferred and (2) the sum of the consideration received from the transfer and accumulatedchanges in fair value initially recorded in other comprehensive income is recognized in profit orloss. For the non-tradable equity instrument designated as financial assets at FVTOCI, cumulativegain or loss that has been recognized in other comprehensive income should be removed fromother comprehensive income but be recognized in retained earnings.
For a part of transfer of a financial asset that satisfies the derecognition criteria, the carryingamount of the transferred financial asset is allocated between the part that is derecognized and thepart that is continuously involved, based on the respective fair values of those parts on transferdate. The difference between (1) the sum of the consideration received for the part derecognizedand any cumulative gain or loss allocated to the part derecognized which has been previouslyrecognized in other comprehensive income; and (2) the carrying amount allocated to the partderecognized on derecognition date; is recognized in profit or loss. For the non-tradable equityinstrument designated as financial assets at FVTOCI, cumulative gain or loss that has beenrecognized in other comprehensive income should be removed from other comprehensive incomebut be recognized in retained earnings.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.3 Transfer of financial assets - continued
For a transfer of a financial asset in its entirety that does not satisfy the derecognition criteria, theGroup will continuously recognize the transferred financial asset in its entirety. Considerationsreceived due to transfer of assets should be recognized as a liability upon receipts.
10.4 Classification of financial liabilities equity instruments
Financial instruments issued by the Group are classified into financial liabilities or equityinstruments on the basis of the substance of the contractual arrangements and the economic naturenot only its legal form, together with the definition of financial liability and equity instruments oninitial recognition.
10.4.1 Classification, recognition and measurement of financial liabilities
On initial recognition, financial liabilities are classified into financial liabilities at FVTPL andother financial liabilities.
10.4.1.1 Financial liabilities at FVTPL
Financial liabilities at FVTPL consist of financial liabilities held for trading (including derivativesclassified as financial liabilities) and those designated as at FVTPL. Except for derivativefinancial liabilities presented separately, the financial liabilities at FVTPL are presented asheld-for-trading financial liabilities.
A financial liability is classified as held for trading if one of the following conditions is satisfied:
? It has been acquired principally for the purpose of repurchasing in the near term; or? On initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and there is objective evidence that the Group has a recent actualpattern of short-term profit-taking; or? It is a derivative that is not a financial guarantee contract or designated and effective as a
hedging instrument.
A financial liability may be designated as at FVTPL on initial recognition when one of thefollowing conditions is satisfied: (i) Such designation eliminates or significantly reducesaccounting mismatch; or (ii) The Group makes management and performance evaluation on a fairvalue basis, in accordance with the Group's formally documented risk management or investmentstrategy, and reports to key management personnel on that basis. (iii) The qualified hybridfinancial instrument combines financial asset with embedded derivatives.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.1 Classification, recognition and measurement of financial liabilities - continued
10.4.1.1 Financial liabilities at FVTPL - continued
Transaction financial liabilities are subsequently measured at fair value. Any gains or lossesarising from changes in the fair value and any dividend or interest expenses paid on the financialliabilities are recognized in profit or loss.
The amount of change in the fair value of the financial liability that is attributable to changes inthe credit risk of that liability shall be presented in other comprehensive income, other changes infair values are included in profit or loss for the current period. Upon the derecognition of suchliability, the accumulated amount of change in fair value that is attributable to changes in thecredit risk of that liability, which is recognized in other comprehensive income, is transferred toretained earnings. Any dividend or interest income earned on the financial liabilities arerecognized in profit or loss. If the impact of the change in credit risk of such financial liabilitydealt with in the above way would create or enlarge an accounting mismatch in profit or loss, theGroup shall present all gains or losses on that liability (including the effects of changes in thecredit risk of that liability) in profit or loss.
10.4.1.2 Other financial liabilities
Other financial liabilities, except for financial liabilities arising from transfer of financial assetsdoes not satisfy derecognition criteria or continue involvement of transferred financial assets, aresubsequently measured at amortized cost, with gain or loss arising from derecognition oramortization recognized in profit or loss.
That the Group and its counterparty modify or renegotiate the contract does not result inderecognition of a financial liability subsequently measured at amortized cost but result inchanges in contractual cash flows, the Group will recalculate the carrying amount of the financialliability, with relevant gain or loss recognized in profit or loss. The Group will determine carryingamount of the financial liability based on the present value of renegotiated or modified contractualcash flows discounted at the financial liability's original effective interest rate. For all costs orexpenses arising from modification or renegotiation of the contract, the Group will adjust themodified carrying amount of the financial liability and make amortization during the remainingterm of the modified financial liability.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.4 Classification of financial liabilities equity instruments - continued
10.4.1 Classification, recognition and measurement of financial liabilities - continued
10.4.1.3 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified paymentsto reimburse the holder of the contract for a loss it incurs because a specified debtor fails to makepayment when due in accordance with the original or modified terms of a debt instrument.Subsequent to initial recognition, financial guarantee contracts that are not designated as financialliabilities at fair value through profit or loss are measured at the higher of: (1) amount of lossprovision; and (2) the amount initially recognized less cumulative amortization amountdetermined based on new standards for revenue.
10.4.2 Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation(or part of it) is discharged. An agreement between the Group (the debtor) and the creditor toreplace the original financial liability with a new financial liability with substantially differentterms is accounted for as an extinguishment of the original financial liability and the recognitionof a new financial liability.
When the Group derecognizes a financial liability or a part of it, it recognizes the differencebetween the carrying amount of the financial liability (or part of the financial liability)derecognized and the consideration paid (including any non-cash assets transferred or newfinancial liabilities assumed) in profit or loss.
10.4.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Groupafter deducting all of its liabilities. Equity instruments issued (including refinanced), repurchased,sold and cancelled by the Group are recognized as changes of equity. Changes of fair value ofequity instruments is not recognized by the Group. Transaction costs related to equity transactionsare deducted from equity.
The Group recognizes the distribution to holders of the equity instruments as distribution ofprofits, dividends paid do not affect total amount of shareholders' equity.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
10. Financial instruments - continued
10.5 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized financialassets and financial liabilities, and intends either to settle on a net basis, or to realize the financialasset and settle the financial liability simultaneously, a financial asset and a financial liability shallbe offset and the net amount is presented in the balance sheet. Except for the above circumstances,financial assets and financial liabilities shall be presented separately in the balance sheet and shallnot be offset.
11. Accounts receivable
The Group makes internal credit ratings on customers and determines expected losses rate ofaccounts receivable. Basis for determining ratings and methods for bad debt provision are asfollows:
| Internal credit rating | Basis for determining portfolio | Average expected loss rate (%) |
| A | Customers can make repayments within credit term and have good credit records based on historical experience. The probability of unpayment of due amount are extremely low in the foreseeable future. | 0.00-0.10 |
| B | The customer may have overdue payment based on historical experience but they can make repayments. | 0.10-0.30 |
| C | The evidences indicate that the overdue credit risks of the customer are significantly increased and there is probability of unpayment and default. | 0.30-50.00 |
| D | The evidences indicate that the accounts receivable are impaired and the customer has significant financial difficulty. The amounts cannot be recovered in the foreseeable future. | 50.00-100.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
12. Inventories - continued
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.
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. Assets held for sale
When the Group withdraw the book value of certain assets or disposal group mainly throughdisposal instead of continual application, the assets should be classified as held-for-sale assets.
Assets or disposal group classified as held-for-sale assets should meat following conditions: (1)The current status is available for immediate distribution according to similar transactions of thiscategory of assets or disposal group; (2) The transaction is likely to occur, i.e. the Group has madeits resolution over the distribution arrangements and acquired purchase commitment. Also thedistribution is going to be fulfilled within a year.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
13. Assets held for sale - continued
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.
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 asheld-for-sale assets, the classified part of the investment is not subject to equity methodmeasurement.
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.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
14. Long-term equity investments - continued
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.
The long-term equity investment acquired otherwise than through a business combination isinitially measured at its cost. When the entity is able to exercise significant influence or jointcontrol (but not control) over an investee due to additional investment, the cost of long-termequity investments is the sum of the fair value of previously-held equity investments determinedin accordance with Accounting Standard for Business Enterprises No.22 - Financial Instruments:
Recognition and Measurement of (ASBE No. 22) and the additional investment cost.
14.3 Subsequent measurement and recognition of profit or loss
14.3.1 A long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in theCompany's separate financial statements. A subsidiary is an investee that is controlled by 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.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - 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
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 investmentcost is less than the Group's share of the fair value of the investee's identifiable net assets at thetime of acquisition, the difference is recognized in profit or loss for the period, and the cost of thelong-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the other comprehensive income andnet profit or loss of the investee for the period as other comprehensive income and investmentincome or loss respectively for the period, and the carrying amount of the long-term equityinvestment is adjusted accordingly. The carrying amount of the investment shall be reduced by theportion of any profit distributions or cash dividends declared by the investee that is distributed tothe investing enterprise. The investing enterprise shall adjust the carrying amount of the long-termequity investment for other changes in owners' equity of the investee (other than net profits orlosses, other comprehensive income and profit distribution), and include the correspondingadjustment in capital reserve. The Group recognizes its share of the investee's net profit or lossbased on the fair value of the investee's individually identifiable assets at the acquisition date aftermaking appropriate adjustments. Where the accounting policies and accounting period adopted bythe investee are different from those of the investing enterprise, the investing enterprise shalladjust the financial statements of the investee to conform to its own accounting policies andaccounting period, and recognize other comprehensive income and investment income or lossesbased on the adjusted financial statements. Unrealized profits or losses resulting from the Group'stransactions and assets invested or sold that are not recognized as business transactions with itsassociates and joint ventures are recognized as investment income or loss to the extent that thoseattributable to the Group's, equity interest are eliminated. However, unrealized losses resultingfrom the Group's transactions with its associates and joint ventures which represent impairmentlosses on the transferred assets are not eliminated.
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.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
14. Long-term equity investments - continued
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.For long-term equity investments accounted for using the equity method, if the remaining interestafter disposal is still accounted for using the equity method, other comprehensive incomepreviously recognized for using the equity method is accounted for on the same basis as wouldhave been required if the investee had directly disposed of related assets or liabilities, andtransferred to profit or loss for the period on a pro rata basis; owners' equity recognized due tochanges in other owners' equity of the investee (other than net profit or loss, other comprehensiveincome and profit distribution) is transferred to profit or loss for the period on a pro rata basis.
For long-term equity investments accounted for using the cost method, if the remaining interestafter disposal is still accounted for using the cost method, other comprehensive income previouslyrecognized for using the equity method or in accordance with the standards for the recognitionand measurement of financial instruments before obtaining the control over the investee, isaccounted for on the same basis as would have been required if the investee had directly disposedof related assets or liabilities, and transferred to profit or loss for the period on a pro rata basis;changes in other owners' equity in the investee's net assets recognized under the equity method(other than net profit or loss, other comprehensive income and profit distribution) is transferred toprofit or loss for the period on a pro rata basis.
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.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
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.
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 | 8 - 99 years | 5.00 | 0.96 - 11.88 |
| Buildings | 10 - 50 years | 5.00 | 1.90 - 9.50 |
| Machinery and equipment, furniture and fixture and other equipment | 3 - 20 years | 5.00 | 4.75 - 31.67 |
| Motor vehicles and cargo ships | 5 - 25 years | 5.00 | 3.80 - 19.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
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.
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 and port operating right.
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.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
19. Intangible assets - continued
| Category | Amortization method | Estimated useful lives (years) | Residual value (%) |
| Land use rights | Straight-line method | 40 - 99 | - |
| Port operating right | Straight-line method | 30 - 35 | - |
| Others | Straight-line method | 5 - 50 | - |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
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 theGroup are recognized in profit or loss for the period or the costs of relevant assets based on theactually occurred amounts when it actually occurred. Non-monetary staff welfare expenses aremeasured at fair value.
Payment made by the Group of social security contributions for employees such as premiums orcontributions on medical insurance, work injury insurance and maternity insurance, etc. andpayments of housing funds, as well as union running costs and employee education costs providedin accordance with relevant requirements, are calculated according to prescribed bases andpercentages in determining the amount of employee benefits and recognized as relevant liabilities,with a corresponding charge to the profit or loss for the period or the costs of relevant assets in theaccounting period in which employees provide services.
22.2 The accounting treatment of post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
During the accounting period of rendering service to employees of the Group, amount whichshould be paid according to defined contribution plans is recognized as liabilities, and recognizedin profit or loss or related costs of assets.
For defined benefit plans, the Group calculates defined benefit plan obligations using projectedunit credit method and the service cost resulting from employee service in the current period isrecorded in profit or loss or the cost of related assets. Defined benefit costs are categorized asfollows:
? Service cost (including current service cost, past service cost, as well as gains and losses on
settlements);? Net interest of net liabilities or assets of defined benefit plan (including interest income of
planned assets, interest expenses of defined benefit plan liabilities and effect of asset ceiling);
and? Changes arising from remeasurement of net liabilities or net assets of defined benefit plans
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
22.2 The accounting treatment of post-employment benefits - continued
Service costs and net interest of net liabilities and net assets of defined benefit plans arerecognized in profit or loss of current period or costs of related assets. Remeasurement of the netdefined benefit liability (asset) (including actuarial gains and losses, the return on plan assets,excluding amounts included in net interest on the net defined benefit liability (asset), and anychange in the effect of the asset ceiling, excluding amounts included in net interest on the netdefined benefit liability (asset)) are recognized in other comprehensive income.
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.
24. Revenue
The Group's revenue is mainly from the following business types:
(1) Port service;
(2) Bonded logistics service(3) Other business such as property development and investment.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
24. Revenue - continued
The Group recognizes revenue based on the transaction price allocated to such performanceobligation when a performance obligation is satisfied, i.e. when "control" of the goods or servicesunderlying the particular performance obligation is transferred to the customer. A performanceobligation represents the commitment that a good and service that is distinct shall be transferredby the Group to the customer. Transaction price refers to the consideration that the Group isexpected to charge due to the transfer of goods or services to the customer, but it does not includepayments received on behalf of third parties and amounts that the Group expects to return to thecustomer.
If one of the following criteria is met and it is a performance obligation performed over time, theGroup recognizes the revenue within a certain period of time according to the progress of theperformance: (1) the customer simultaneously receives and consumes the benefits provided by theGroup's performance as the Group performs; (2) the customer is able to control the goods underconstruction in the course of the Group's performance; (3) the goods produced by the Groupduring the performance of the contract are irreplaceable and the Group has the right to charge forthe accumulated part of the contract that has been performed so far during the whole contractperiod. Otherwise, the Group recognizes revenue at a certain point in time when "control" of thegoods or services is transferred to the customer.
The Group adopts input method, i.e. the value of goods or services transferred to customers todetermine the appropriate progress of performance. Where the progress cannot be determinedreasonably, the revenue is recognized based on the amount of cost that is expected to becompensated based on the cost already incurred, until the progress of performance is reasonablydetermined.
Contract asset refers to the Group's right to consideration in exchange for goods or services thatthe Group has transferred to a customer when that right is conditioned on something other thanthe passage of time. The Group's unconditional (i.e., depending on the passage of time only) rightto receive consideration from the customer is separately presented as receivables. Contractliabilities refers to the Group's obligation to transfer goods or services to a customer for which theGroup has received consideration from the customer. Contract assets and contract liabilities underthe same contract are set out on a net basis.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
24. Revenue - continued
If the contract includes two or more performance obligations, at contract inception, the Groupallocates the transaction price to single performance obligation according to relative proportion ofthe stand-alone selling prices of the goods or services promised by single performance obligation.However, where there is conclusive evidence that the contract discount or variable considerationis only related to one or more (not all) performance obligations in the contract, the Group shallallocate the contract discount or variable consideration to relevant one or more performanceobligations. The stand-alone selling price is the price at which the Group would sell a promisedgood or service separately to a customer. If a stand-alone selling price is not directly observable,the Group shall consider all information that is reasonably available to the Group and maximizethe use of observable inputs and apply estimates methods consistently in similar circumstances.
If the contract includes significant financing component, the Group determines the transactionprice based on the amount payable under the assumption that the customer pays that amountpayable in cash when "control" of the goods or services is obtained by the customer. Thedifference between the transaction price and the contract consideration shall be amortized withinthe contract period using effective interest rate. If the Group expects, at contract inception, that theperiod between when the Group transfers a promised good or service to a customer and when thecustomer pays for that good or service will be one year or less, the Group needs not to considerthe significant financing component.
Principal and agent
The Group determines whether it is a principal or an agent at the time of the transaction based onwhether it owns the "control" of the goods or services before the transfer of such goods orservices to the customer. The Group is a principal if it controls the specified good or servicebefore that good or service is transferred to a customer, and the revenue shall be recognized basedon the total consideration received or receivable; otherwise, the Group is an agent, and therevenue shall be recognized based on the amount of commission or handling fee that is expectedto be charged, and such amount is determined based on the net amount of the total considerationreceived or receivable after deducting the prices payable to other related parties or according tothe established commission amount or proportion.
Costs to fulfill a contract
If the costs incurred in fulfilling a contract are not within the scope of other standard other thannew standards for revenue, the Group shall recognized an asset from the costs incurred to fulfill acontract only if those costs meet all of the following criteria: (1) the costs relate directly to acontract or to an anticipated contract that the Group can specifically identify; (2) the costsgenerate or enhance resources of the entity that will be used in satisfying performanceobligations in the future; and (3) the costs are expected to be recovered. The asset mentionedabove shall be amortized on a basis that is consistent with the transfer to the customer of thegoods or services to which the asset relates and recognized in profit or loss for the period.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
24. Revenue - continued
Impairment of contract costs
In determination of impairment losses of assets related to contract costs, firstly impairment lossesof other assets related to the contract recognized based on other relevant accounting standards;secondly, the Group shall recognized an impairment loss to the extent that the carrying amount ofan asset exceeds: (1) the remaining amount of consideration that the Group expects to receive inexchange for the goods or services to which the asset relates; less; the estimated costs that relateto providing those goods or services.
The Group shall, after the impairment has been provided, recognized in profit or loss a reversal ofsome or all of an impairment loss previously recognized when the impairment conditions nolonger exist or have improved. The increased carrying amount of the asset shall not exceed thecarrying amount that would have been determined if no impairment loss had been recognizedpreviously.
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 a government grant is in the form of a transfer of a monetary asset, it is measured at the amountreceived or receivable.
25.1 The accounting treatment of government grants related to assets
Government grants, such as special funds for modern logistics project and special funds forenergy-saving and emission reduction of transportation, are government grants related to assets asthey are all related to the construction and use of assets.
A government grant related to an asset is recognized as deferred income, and evenly amortized toprofit or loss over the useful life of the related asset.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
25. Government grants - continued
25.2 The accounting treatment of government grants related to income
The Group's government grant, such as financial support funds of business tax converted to VATand reward for energy saving, if used to compensate the related expenses or losses to be incurredin subsequent periods, is determined to be government grant relating to income.
A government grant relating to income, if used to compensate the related cost, expenses or lossesto be incurred in subsequent periods, is determined as deferred income and recognized in profit orloss over the periods in which the related costs are recognized; if used to compensate the relatedcost, expenses or losses already incurred, is recognized immediately in profit or loss for theperiod.
A government grant relating to the Group's daily activities, is recognized in other income in linewith the nature of economic transaction. A government grant not relating to the Group's dailyactivities, is recognized in non-operating income.
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.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
26. Deferred tax assets/ deferred tax liabilities - continued
26.2 Deferred tax assets and deferred tax liabilities - continued
For deductible losses and tax credits that can be carried forward, deferred tax assets arerecognized to the extent that it is probable that future taxable profits will be available againstwhich the deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated withinvestments in subsidiaries and associates, and interests in joint ventures, except where the Groupis able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising fromdeductible temporary differences associated with such investments and interests are onlyrecognized to the extent that it is probable that there will be taxable profits against which to utilizethe benefits of the temporary differences and they are expected to reverse in the foreseeablefuture.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax ratesapplicable in the period in which the asset is realized or the liability is settled according to taxlaws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, exceptwhen they arise from transactions or events that are directly recognized in other comprehensiveincome or in equity, in which case they are recognized in other comprehensive income or inequity, and when they arise from business combinations, in which case they adjust the carryingamount of goodwill.
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 FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - 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. Discontinued operation
Discontinued operation refers to the separately identifiable components that have been disposedof or classified as held for sale and meet one of the following conditions:
(1) The component represents an independent main business or a major business area;(2) This component is a part of a related plan that intends to dispose an independent main
business or a separate main operating area;(3) This component is a subsidiary acquired exclusively for resale.
29. Safety Production Cost
According to the Administrative Rules on Provision and Use of Enterprise Safety Production Costjointly issued by the Ministry of Finance and the State Administration of Work Safety on 14February 2012 (filed as Cai Qi [2012] No. 16), safety production cost set aside by the Group isdirectly included in the cost of relevant products or recognized in profit or loss for the period, aswell as the special reserve. When safety production cost set aside is utilized, if the costs incurredcan be categorized as expenditure, the costs incurred should be charged against the special reserve.If the costs set aside are used to build up fixed assets, the costs should be charged to constructionin progress, and reclassified to fixed assets when the safety projects are ready for intended use.Meantime, expenditures in building up fixed assets are directly charged against the special reservewith the accumulated depreciation recognized at the same amount. Depreciation will not be madein the future period on such fixed assets.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTINGESTIMATES - continued
30. Critical judgments in applying accounting policies and key assumptions and
uncertainties in accounting estimates
In the application of accounting policies as set out in Note (III), the Company is required to makejudgments, estimates and assumptions about the carrying amounts of items in the financialstatements that cannot be measured accurately, due to the internal uncertainty of the operatingactivities. These judgments, estimates and assumptions are based on historical experiences of theCompany's management as well as other factors that are considered to be relevant. Actual resultsmay differ from these estimates.
The Company regularly reviews the judgments, estimates and assumptions on a going concernbasis. Changes in accounting estimates which only affect the current period should be recognizedin current period; changes which not only affect the current but the future periods should berecognized in current and future periods. At the balance sheet date, key assumptions anduncertainties that are likely to lead to significant adjustments to the book values of assets andliabilities in the future are:
Goodwill impairment
For the purpose of impairment testing, the present value of the expected future cash flows of theassets group or portfolio including goodwill shall be calculated, and such expected future cashflows shall be estimated. Meantime, a pre-tax rate shall be determined that should reflect the timevalue of money on the current market and the specific interest risks.
Recognition of deferred tax
The Group calculates and makes provision for deferred income tax liabilities according to theprofit distribution plan of subsidiaries, associates and the joint ventures subject to the related law.For retained earnings which are not allocated by the investment company, since the profits will beused to invest the company's daily operation and future development, no deferred income taxliabilities are recognized. If the actually distributed profits in the future are more or less than thoseexpected, corresponding deferred tax liabilities will be recognized or reversed at the earlier ofprofits distribution date and the declaration date, in the profit and loss of the current period.
Deferred tax assets are recognized based on the deductible temporary difference and thecorresponding tax rate, to the extent that it has become probable that future taxable profit will beavailable for the deductible temporary difference. If in the future the actual taxable income doesnot coincide with the amount currently expected, the deferred tax assets resulting will berecognized or reversed in the period when actually incurred, in profit or loss.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in significant accounting policies and accounting estimates
The Group has adopted the Accounting Standards for Business Enterprises No.22 – Recognitionand Measurement of Financial Instruments (Cai Kuai [2017] No. 7), the Accounting Standardsfor Business Enterprises No.23—Transfer of Financial Assets (Cai Kuai [2017] No. 8), theAccounting Standards for Business Enterprises No.24 – Hedging Accounting (Cai Kuai [2017] No.9) and the Accounting Standards for Business Enterprises No.37 – Presentation of FinancialInstruments (Cai Kuai [2017] No. 14) (the four standards mentioned above are collectivelyreferred to as "New Standards of Financial Instruments" while the "Original Revenue Standard"refers to the standards of financial instruments prior to amendment.) since 1 January 2018. At thesame time, the Group has adopted the New Revenue Standards revised by MoF in 2017 since 1January 2018.
(1) New Standards for Revenue
The New Standards for Revenue have introduced the 5-step method for recognition andmeasurement of revenue and added more instructions on specific transactions (or events). Theaccounting policies for recognition and measurement of revenue is referred to Note III 24. TheNew Standards for Revenue require the entity to adjust the retained earnings at the beginning ofinitial adoption (i.e. 1 January 2018) of the new standards for the cumulative affected figures andamounts of other relative items in the financial statements, and not to adjust information incomparable period. At the adoption of New Standards Revenue, the Group solely adjusts thecumulative affected figures in contract not yet been completed at the initial adoption date.
Compared to Original Standards for Revenue, effects of implementation of New Standards forRevenue on relevant items of the consolidated financial statements for the year are as follows:
Unit: RMB
| Item | 31 December 2017 | Reclassification | 1 January 2018 |
| Current assets: | |||
| Notes and accounts receivable | 871,370,660.21 | 37,956,002.42 | 909,326,662.63 |
| Current liabilities: | |||
| Receipts in advance | 106,944,420.75 | (74,984,669.58) | 31,959,751.17 |
| Contract liabilities | 43,926,190.25 | 43,926,190.25 | |
| Other payables | 6,544,589,530.18 | 25,972,056.78 | 6,570,561,586.96 |
| Non-current liabilities: | |||
| Provisions | - | 50,577,924.97 | 50,577,924.97 |
| Deferred income | 222,857,800.33 | (36,366,124.28) | 186,491,676.05 |
| Other non-current liabilities | 54,763,901.68 | 28,830,624.28 | 83,594,525.96 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in significant accounting policies and accounting estimates - continued
(1) New Standards for Revenue - continued
Compared to Original Standards for Revenue, effects of implementation of New Standards forRevenue on relevant items of the Company's financial statements for the year are as follows:
RMB
| Item | 31 December 2017 | Reclassification | 1 January 2018 |
| Current liabilities: | |||
| Receipts in advance | 98,400.00 | (98,400.00) | - |
| Contract liabilities | 98,400.00 | 98,400.00 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in significant accounting policies and accounting estimates - continued
(2) New Standards of Financial Instruments - continued
The Group made retrospective adjustment according to the New Standards of FinancialInstruments for the recognition and measurement of financial instruments prior to 1 January 2018.The Group has not adjusted the comparative financial information. For the differences betweenthe original carrying amount of financial instruments and the carrying amount of financialinstruments measured by the New Standards of Financial Instruments, the Group adjusted theretained earnings or other comprehensive income at 1 January 2018. As at 1 January 2018, impacts
of the New Standards of Financial Instruments to the consolidated financial statements are set out asfollows.
Summary of effects on the Group's initial implementation of New Standards of FinancialInstruments since 1 January 2018
Unit: RMB
| Item | Carrying amount impact based on the original standards of financial instruments (31 December 2017) | Effects of implementation of New Standards for Financial Instruments on consolidated balance sheet | Carrying amount impact on the New Standards of Financial Instruments (1 January 2018) | ||
| Reclassification | Remeasurement | ||||
| Transferred from available-for-sale financial assets | Expected credit losses | From measured at cost to measured at fair value | |||
| Other receivables | 938,786,831.94 | - | (207,406.98) | - | 938,579,424.96 |
| Other current assets | 1,200,476,091.74 | - | (1,029,478.05) | - | 1,199,446,613.69 |
| Available-for-sale financial assets (Note) | 3,083,581,935.68 | (3,083,581,935.68) | - | - | - |
| Long-term receivables | 9,669,034.35 | - | (9,669.03) | - | 9,659,365.32 |
| Investments in other equity instruments (Note) | - | 109,999,328.79 | - | 123,484,640.00 | 233,483,968.79 |
| Other non-current financial assets (Note) | - | 2,973,582,606.89 | - | 8,884,343.34 | 2,982,466,950.23 |
| Deferred tax liabilities | 1,984,303,944.46 | - | - | 30,871,160.00 | 2,015,175,104.46 |
| Other comprehensive income | (7,064,646.43) | (815,170,041.97) | - | 92,613,480.00 | (729,621,208.40) |
| Retained profits | 8,466,307,917.47 | 815,170,041.97 | (1,246,554.06) | 2,399,850.26 | 9,282,631,255.64 |
| Minority interest | 45,514,555,953.29 | - | - | 6,484,493.08 | 45,521,040,446.37 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in significant accounting policies and accounting estimates - continued
(2) New Standards of Financial Instruments - continued
Summary of effects on the Company's initial implementation of New Standards of FinancialInstruments since 1 January 2018
Unit: RMB
| Item | Carrying amount impact based on the original standards of financial instruments (31 December 2017) | Effects of implementation of New Standards for Financial Instruments on consolidated balance sheet | Carrying amount impact on the New Standards of Financial Instruments (1 January 2018) | ||
| Reclassification | Remeasurement | ||||
| Transferred from available-for-sale financial assets | Expected credit losses | Transferred from available-for-sale financial assets | |||
| Available-for-sale financial assets | 23,759,200.00 | (23,759,200.00) | - | - | - |
| Investments in other equity instruments (Note) | - | 23,759,200.00 | - | 123,484,640.00 | 147,243,840.00 |
| Deferred tax liabilities | 2,182,500.00 | - | - | 30,871,160.00 | 33,053,660.00 |
| Other comprehensive income | 6,647,500.00 | - | - | 92,613,480.00 | 99,260,980.00 |
| Item | Provision for credit loss recognized based on Original Standards of Financial Instruments | Remeasurement of expected loss provision | Impairment provision recognized based on New Standards of Financial Instruments |
| Provision for credit loss for financial assets: | |||
| Provision for credit loss for other receivables | 24,816,684.83 | 207,406.98 | 25,024,091.81 |
| Including: Provision for credit loss for interest receivable | - | 14,145.23 | 14,145.23 |
| Provision for credit loss for dividend receivable | - | 193,261.75 | 193,261.75 |
| Provision for credit loss for other receivable | 24,816,684.83 | - | 24,816,684.83 |
| Provision for credit loss for other current assets | - | 1,029,478.05 | 1,029,478.05 |
| Provision for credit loss for long-term receivables | - | 9,669.03 | 9,669.03 |
| Total | 24,816,684.83 | 1,246,554.06 | 26,063,238.89 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in significant accounting policies and accounting estimates - continued
(3) Presentation of financial statements
The Group started adopting the Notice of the Revised Format of 2018 Financial Statements forGeneral Business Enterprise (Cai Kuai (2018) No. 15, hereinafter referred to as the "Cai KuaiNo.15 Document") released by the MoF on 15 June 2018 since the preparation of financialstatements for the year of 2018. Cai Kuai No.15 Document revised the presenting accounts in thebalance sheet and income statement, added line items of "Notes and Accounts Receivable","Notes and Accounts Payable" and "Research and Development Expenses", revised the presentingcontents of the line items of "Other Receivables", "Fixed Assets", "Construction in Progress","Other Payables", "Long-term Payables" and "Administrative Expenses", removed the line itemsof "Notes Receivable", "Accounts Receivable", "Dividends Receivable", "Interest Receivable","Disposal of Fixed Assets", "Engineering Materials", "Notes Payable", "Accounts Payable","Interest Payable", "Dividends Payable" and "Special Payables", added line items of "Including:
Interest Expenses" and "Interest Income" under "Financial Expenses", and adjusted the presentinglocation of some accounts in the income statement. The Company has accounted for the abovechanges in presenting accounts retrospectively, and adjusted comparable data for prior year.
Above changes in accounting policies are approved in the 3
rd
session of the 9
th
board of directorsmeeting of the Company.
32． Changes in significant accounting estimates
(1) Changes in accounting estimates and reasons
As at 27 November 2018, the Company held the 8th temporary session of the 9th board ofdirectors meeting in 2018 and the 5th temporary session of the 9th board of supervisors meetingin 2018, and reviewed and approved the Proposal on Changes in Accounting Estimates of FixedAssets. The Company reviewed the estimated useful life and estimated net residual value of fixedassets based on the current performance and use status of fixed assets. In order to moreobjectively and fairly reflect the financial position and operating results of the Group, it is decidedto adjust the depreciation years of the Group's fixed assets and the net residual value rate of allfixed assets within the scope of the Group's consolidation(expected new subsidiaries whichchanges in the scope of consolidation). The details of adjustments are as follows:
(a) Adjustments of fixed assets in depreciation years
| Category | Useful life before adjustment | Useful life after adjustment |
| Port and wharf equipment | 5 – 50 years | 5 - 40 years |
| Buildings | 5 - 40 years | 10 - 30 years |
| Machinery equipment, furniture and other equipment | 5 - 15 years | 3 - 20 years |
| Vehicles and vessels | 5 - 20 years | 5 - 25 years |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
32． Changes in significant accounting estimates - continued
(2) Financial effect of changes in accounting estimates
The above adjustments of fixed assets in depreciation years and net residual rate have beenimplemented since December 1, 2018.
According to the "Accounting Standards for Business Enterprises No. 28 - Changes in AccountingPolicies and Accounting Estimates, and Corrections of Errors", the adjustments of fixed assets inthe depreciation years and the net residual value rate are changes in accounting estimates, andshall be treated using the prospective approach, which is not required to make retrospectiveadjustments. Financial positions and operating results of the Group in prior years will not beaffected.
The Group increased the depreciation expense of fixed assets in 2018 by RMB 41,405,189.48,reduced the consolidated net profit in 2018 by RMB 38,076,037.04, and reduced theunconsolidated net assets by RMB 20,076,037.04 in the end of 2018, due to the above changes inaccounting estimates.
IV. TAXES
1. Major taxes and tax rates
| Taxes | Tax basis | Tax rate |
| Enterprise income tax | Taxable income | 16.5%-34% (Note1) |
| Dividend income tax | 5%, 10%, 25% (Note2) | |
| Value-added Tax ("VAT") (Note 3) | Income from sale of goods (Note 4) | 10%-17% |
| Income from transportation, loading and unloading business and part of modern service industries | 6% | |
| Income from sale of real estate, property management, real estate lease, etc. | 5% | |
| Social contribution tax (Note 5) | Income | 0.65%-7.6% |
| Deed tax | Land use right and property transfer amount | 3%-5% |
| Property tax | 70% of cost of property or rental income | 1.2% or 12% |
| City maintenance and construction tax | VAT paid | 1%-7% |
| Education surtax | VAT paid | 3% |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
IV. TAXES - continued
1. Major taxes and tax rates - continued
Note 2: Foreign investors who receive dividends of profits from Chinese subsidiaries in 2008 and
thereafter generally shall pay withholding income tax at a rate of 10% in accordance withthe relevant provisions of the PRC enterprise income tax. For companies incorporated incertain regions (including Hong Kong and Singapore), if the companies are actual ownersholding more than 25% interest in the subsidiaries in China, they will enjoy a preferentialtax rate of 5%.
The Company obtains dividends distributed by overseas subsidiaries and should payenterprise income tax at a rate of 25% in accordance with relevant Chinese tax laws. TheCompany obtains taxable income outside of China, and the amount of income tax that hasbeen paid abroad can be offset with the current taxable amount. The credit limit is thetaxable amount calculated in accordance with the provisions of the Enterprise Income TaxLaw.
Note 3: The VAT amount is the balance of the output tax less the deductible input tax, and the
output tax is calculated in accordance with the sales income and the corresponding tax ratestipulated in the relevant tax laws of China.
Note 4: Pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation
on the Adjustment of VAT issued by the Ministry of Finance and the State Administrationof Taxation (Cai Shui [2018] No. 32 Document), effective from 1 May 2018, the taxablesales or imports of goods at original applicable VAT rate of 17% and 11% shall be subjectto a VAT rate of 16% and 10% respectively.
Note 5: The social contribution tax is the tax paid by the overseas subsidiaries of the Group to the
local government.
2. Tax preference
Some subsidiaries of the Group in China are subject to tax preference of "3-year exemptionfollowed by 3-year half reduction".
Some subsidiaries of the Group in China are recognized as high-tech enterprises or encouragedindustrial enterprises in the region and are subject to an enterprise income tax rate of 15%. TheGroup's subsidiaries outside China may be subject to enterprise income tax preference inaccordance with relevant local tax policies.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Cash | 349,650.07 | 598,357.70 |
| RMB | 77,877.30 | 124,499.32 |
| USD | 29,909.14 | 35,736.85 |
| HKD | 57,342.60 | 45,542.09 |
| BRL | 11,402.34 | - |
| Others | 173,118.69 | 392,579.44 |
| Bank deposit (Note1) | 6,118,508,644.13 | 7,716,378,695.65 |
| RMB | 3,401,709,911.75 | 4,349,905,231.94 |
| USD | 1,326,034,833.97 | 795,546,066.36 |
| HKD | 432,603,546.37 | 2,330,366,650.86 |
| EUR | 359,682,134.06 | 218,799,953.75 |
| BRL | 539,493,644.44 | - |
| Others | 58,984,573.54 | 21,760,792.74 |
| Other cash and bank balances (Note 2) | 951,450,410.55 | 12,483,029.40 |
| RMB | 951,450,410.55 | 12,483,029.40 |
| Total | 7,070,308,704.75 | 7,729,460,082.75 |
| Including: The total amount of funds deposited overseas | 2,809,011,079.47 | 3,108,783,498.70 |
| Item | Closing balance | Opening balance (restated) |
| Notes receivable | 11,608,669.43 | 16,910,891.14 |
| Accounts receivable | 1,109,230,503.08 | 892,415,771.49 |
| Total | 1,120,839,172.51 | 909,326,662.63 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable - continued
(2) Notes receivable
(a) Classification of notes receivable
Unit: RMB
| Category | Closing balance | Opening balance (restated) |
| Bank acceptance | 11,608,669.43 | 16,910,891.14 |
| Less: Provision for credit losses | - | - |
| Carrying amount | 11,608,669.43 | 16,910,891.14 |
| Credit rating | Expected credit loss rate (%) | Closing balance | ||
| Carrying amount | Provision | Book value | ||
| A | 0.00-0.10 | 323,319,258.26 | 32,331.93 | 323,286,926.33 |
| B | 0.10-0.30 | 614,037,476.13 | 1,144,038.38 | 612,893,437.75 |
| C | 0.30-50.00 | 155,462,941.77 | 2,079,476.01 | 153,383,465.76 |
| D | 50.00-100.00 | 59,928,872.52 | 40,262,199.28 | 19,666,673.24 |
| Total | 1,152,748,548.68 | 43,518,045.60 | 1,109,230,503.08 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable - continued
(3) Accounts receivable - continued
(b) Changes in provision for credit loss of accounts receivable
Unit: RMB
| Item | 2018 | ||
| Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | |
| At 31 December 2017 | - | 43,295,671.74 | 43,295,671.74 |
| Remeasurement of provision for expected credit loss | - | - | - |
| At 1 January 2018 | - | 43,295,671.74 | 43,295,671.74 |
| Provision for expected credit loss for the year | 3,895,740.28 | 289,954.60 | 4,185,694.88 |
| Reversal of expected credit loss for the year | (3,780,327.65) | (3,507,559.23) | (7,287,886.88) |
| Effect of changes in the scope of consolidation | 3,572,789.46 | - | 3,572,789.46 |
| Effect of changes in foreign exchange | (432,355.77) | 184,132.17 | (248,223.60) |
| At 31 December 2018 | 3,255,846.32 | 40,262,199.28 | 43,518,045.60 |
| Name of customer | Carrying amount | Aging | Proportion of the amount to the total accounts receivable (%) |
| Client A | 90,579,511.81 | More than 1 year but not exceeding 2 years and more than 3 years | 7.86 |
| Client B | 69,081,097.25 | More than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years | 5.99 |
| Client C | 45,161,278.00 | More than 1 year but not exceeding 2 years, more than 2 year but not exceeding 3 years, more than 3 years | 3.92 |
| Client D | 38,820,531.88 | More than 1 year but not exceeding 2 years | 3.37 |
| Client E | 34,756,078.85 | More than 1 year but not exceeding 2 years | 3.02 |
| Total | 278,398,497.79 | 24.16 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Prepayments
(1) Aging analysis of prepayment
Unit: RMB
| Aging | Closing balance | Opening balance (restated) | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 124,276,781.51 | 99.90 | 71,176,428.52 | 99.32 |
| More than 1 year but not exceeding 2 years | 4,000.00 | - | 367,773.99 | 0.51 |
| More than 2 years but not exceeding 3 years | 81.36 | - | - | - |
| More than 3 years | 124,000.00 | 0.10 | 124,000.00 | 0.17 |
| Total | 124,404,862.87 | 100.00 | 71,668,202.51 | 100.00 |
| Entities | Relationship with the Company | Closing balance | Proportion of the closing balance to the total prepayments (%) |
| Sri Lanka Ports Authority | Non-related party | 35,488,756.51 | 28.53 |
| Judicial Insurance | Non-related party | 8,694,880.32 | 6.99 |
| Shenzhen Administration of Transportation and Public Services | Non-related party | 6,030,000.00 | 4.85 |
| Saham Assurance Togo S.A. | Non-related party | 4,571,510.40 | 3.67 |
| Shenzhen Jet Technology Co., Ltd. | Non-related party | 3,829,746.60 | 3.08 |
| Total | 58,614,893.83 | 47.12 |
| Item | Closing balance | Opening balance (restated) |
| Interest receivable | 33,041,147.73 | 14,131,083.11 |
| Dividend receivable | 259,804,145.16 | 193,068,488.25 |
| Other receivables | 506,713,933.56 | 731,379,853.60 |
| Total | 799,559,226.45 | 938,579,424.96 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Other receivables - continued
(2) Interest receivable
(a) Classification of interest receivable
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest receivable from related parties | 25,986,030.98 | 7,002,104.12 |
| Others | 7,088,190.97 | 7,143,124.22 |
| Total | 33,074,221.95 | 14,145,228.34 |
| Less: Provision for credit loss | 33,074.22 | 14,145.23 |
| Book value | 33,041,147.73 | 14,131,083.11 |
| Name of investee | Closing balance | Opening balance (restated) |
| China Nanshan Development (Group) Incorporation ("Nanshan Group") | 175,692,500.00 | 193,261,750.00 |
| Shanghai International Port (Group) Co., Ltd. | 50,118,027.14 | - |
| Qingdao Qianwan United Container Terminal Co., Lt. | 25,000,000.00 | - |
| Zhanjiang Port (Group) Co., Ltd. | 9,253,682.23 | - |
| Total | 260,064,209.37 | 193,261,750.00 |
| Less: Provision for credit loss | 260,064.21 | 193,261.75 |
| Book value | 259,804,145.16 | 193,068,488.25 |
| Name of investee | Closing balance | Aging | Why unrecovered | Impaired or not |
| Nanshan Group | 70,277,000.00 | More than 1 year but not exceeding 2 years | Undergoing relevant formalities and expected to be recovered at the end of 2019 | Not |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Other receivables - continued
(4) Other receivables
(a) Disclosure of other receivables by categories
As part of the Group's credit risk management, the Group conducts internal credit ratings for itscustomers and determines the expected loss rate for other receivables for each rating. Suchexpected average loss rates are based on actual historical impairments and taking into account thecurrent and future economic conditions.
As at 31 December 2018, the credit risk and expected credit loss of other receivables of eachcategory of customers are presented as below:
Unit: RMB
| Credit rating | Expected credit loss rate (%) | Closing balance | |||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | ||
| A | 0.00-0.10 | - | - | - | - |
| B | 0.10-0.30 | 506,719,623.66 | - | - | 506,719,623.66 |
| C | 0.30-50.00 | - | - | - | - |
| D | 50.00-100.00 | - | - | 35,596,931.73 | 35,596,931.73 |
| Carrying amount | 506,719,623.66 | - | 35,596,931.73 | 542,316,555.39 | |
| Provision for credit loss | 5,690.10 | - | 35,596,931.73 | 35,602,621.83 | |
| Book value | 506,713,933.56 | - | - | 506,713,933.56 | |
| Item | 2018 | |||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | |
| At 31 December 2017 | - | - | 24,816,684.83 | 24,816,684.83 |
| Remeasurement of provision for expected credit loss | - | - | - | - |
| At 1 January 2018 | - | - | 24,816,684.83 | 24,816,684.83 |
| Provision for expected credit loss for the year | 5,690.10 | - | 9,955,180.00 | 9,960,870.10 |
| Reversal of expected credit loss for the year | - | - | (200,000.00) | (200,000.00) |
| Effect of changes in the scope of consolidation | - | - | 1,020,000.00 | 1,020,000.00 |
| Effect of changes in foreign exchange | - | - | 5,066.90 | 5,066.90 |
| At 31 December 2018 | 5,690.10 | - | 35,596,931.73 | 35,602,621.83 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Other receivables - continued
(4) Other receivables – continued
(c) Other payables presented by the nature
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Operation compensation(Note) | 176,625,857.32 | 400,848,897.19 |
| Temporary payments | 187,153,302.95 | 130,219,643.59 |
| Deposits | 39,657,003.56 | 14,149,471.86 |
| Others | 138,880,391.56 | 210,978,525.79 |
| Total | 542,316,555.39 | 756,196,538.43 |
| Less: Provision for credit loss | 35,602,621.83 | 24,816,684.83 |
| Book value | 506,713,933.56 | 731,379,853.60 |
| Name of customer | Nature | Closing balance | Aging | Proportion of the amount to the other receivable (%) | Bad debt provision |
| Global Terminal Limited | Operation compensation | 175,997,722.02 | More than 2 years but not exceeding 3 years (inclusive) | 32.45 | - |
| Chu Kong River Trade Terminal Co., Ltd. | Temporary payments | 59,975,890.00 | More than 3 years | 11.06 | - |
| Shenzhen Qianhaiwan Bonded Port Area | Temporary payments | 43,796,162.41 | More than 3 years | 8.08 | - |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Temporary payments | 34,300,000.00 | More than 3 years | 6.32 | - |
| Port de Djibouti S.A. | Temporary payments | 24,411,770.72 | More than 3 years | 4.50 | - |
| Total | 338,481,545.15 | 62.41 | - |
| Item | Closing balance | Opening balance (restated) | ||||
| Carrying amount | Provision for decline in value of inventories | Book value | Carrying amount | Provision for decline in value of inventories | Book value | |
| Raw materials | 89,572,663.06 | 2,584,953.53 | 86,987,709.53 | 68,729,097.33 | 2,793,815.04 | 65,935,282.29 |
| Finished goods | 4,629,610.81 | - | 4,629,610.81 | 100,509.49 | - | 100,509.49 |
| Others | 16,949,949.68 | - | 16,949,949.68 | 16,753,490.44 | - | 16,753,490.44 |
| Total | 111,152,223.55 | 2,584,953.53 | 108,567,270.02 | 85,583,097.26 | 2,793,815.04 | 82,789,282.22 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Inventories - continued
(2) Provision for decline in value of inventories
Unit: RMB
| Item | Opening balance (restated) | Provision | Decrease | Closing balance | |
| Reversal | Write-off | ||||
| Raw materials | 2,793,815.04 | - | - | 208,861.51 | 2,584,953.53 |
| Item | Carrying amount at the end of the year | Fair value at the end of the year | Estimated disposal expenses | Schedule |
| Long-term assets held for sale | 115,356,162.94 | 216,379,774.36 | - | Removal before 29 June 2019 |
| Less: Provision for impairment of assets held for sale | - | |||
| Carrying amount | 115,356,162.94 |
| Item | Closing balance | Opening balance(restated) |
| Loan to the associates of related parties (Note 1) | 1,029,478,047.00 | 980,134,545.00 |
| Prepaid taxes | 7,872,157.38 | 978,566.31 |
| Entrusted loans | - | 120,000,000.00 |
| Others (Note 2) | 159,100,462.79 | 99,362,980.43 |
| Total | 1,196,450,667.17 | 1,200,476,091.74 |
| Less: Provision for credit loss | 1,029,478.05 | 1,029,478.05 |
| Book value | 1,195,421,189.12 | 1,199,446,613.69 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
8. Long-term receivables
(1) Long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance (restated) | ||||
| Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | |
| Advances to shareholders | 793,840,080.19 | 793,840.08 | 793,046,240.11 | 9,669,034.35 | 9,669.03 | 9,659,365.32 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Long-term equity investments
Unit: RMB
| Investees | Accounting method | 1 January 2018 (restated) | Effect of changes in the scope of consolidation | Changes of this year | 31 December 2018 | 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 | Effect of translation of financial statements denominated in foreign currencies | ||||||
| I. Joint ventures | |||||||||||||
| Euro-Asia Oceangate S.à r.l. | Equity method | 2,543,905,022.59 | - | - | - | 108,552,693.45 | 31,873.27 | - | 111,712,525.45 | - | 128,082,970.46 | 2,668,860,034.32 | - |
| Port of Newcastle (Note1) | Equity method | - | - | 2,160,442,453.52 | - | 8,870,390.98 | (5,640,777.39) | - | 44,549,625.54 | - | 3,231,523.18 | 2,122,353,964.75 | - |
| Zhanjiang Port（Group) Co., Ltd. | Equity method | 2,053,843,683.66 | - | - | - | (36,596,428.75) | - | - | 9,740,718.14 | - | - | 2,007,506,536.77 | - |
| Qingdao Qianwan United Container Terminal Co., Lt. | Equity method | 1,523,008,583.00 | - | - | - | 141,704,248.41 | - | (2,550,500.00) | 150,000,000.00 | - | - | 1,512,162,331.41 | - |
| Laizhou Laiyin Port Business Co., Ltd. | Equity method | 783,668,303.84 | - | - | - | 48,450,765.57 | - | - | 38,562,004.83 | - | - | 793,557,064.58 | - |
| Others | Equity method | 2,029,488,434.19 | - | 6,964,120.00 | - | 158,922,580.81 | - | - | 76,500,000.00 | - | 6,987,087.43 | 2,125,862,222.43 | - |
| Subtotal | 8,933,914,027.28 | - | 2,167,406,573.52 | - | 429,904,250.47 | (5,608,904.12) | (2,550,500.00) | 431,064,873.96 | - | 138,301,581.07 | 11,230,302,154.26 | - | |
| II. Associates | |||||||||||||
| Shanghai International Port (Group) Co., Ltd. (A Share) (Note 2) | Equity method | 20,140,460,412.59 | - | 453,700,695.53 | - | 2,571,370,986.64 | (99,859,568.82) | 180,954,063.75 | 1,059,194,508.74 | - | 127,990.00 | 22,187,560,070.95 | - |
| Nanshan Group | Equity method | 3,437,393,142.72 | - | - | - | 220,478,175.60 | (16,230,971.37) | 1,530,681,674.94 | 111,041,999.99 | - | - | 5,061,280,021.90 | - |
| Terminal Link SAS | Equity method | 3,563,936,186.34 | - | - | - | 357,885,181.99 | 2,954,661.32 | 1,505,998.13 | 15,671,554.15 | - | 22,649,011.63 | 3,933,259,485.26 | - |
| Dalian Port Co., Ltd.(A Share and H Share) | Equity method | 3,188,107,183.18 | - | - | - | 112,882,708.11 | (4,941,315.60) | 47,470.88 | 62,438,928.00 | - | (29,775,775.90) | 3,203,881,342.67 | 647,382,998.60 |
| China Merchants Hainan Development Investment Co., Ltd. (Note 3) | Equity method | - | - | 525,000,000.00 | - | - | - | - | - | - | - | 525,000,000.00 | - |
| Others | Equity method | 3,897,038,855.37 | - | 1,000,000.00 | - | 221,343,235.79 | (13,426,099.03) | 26,900,981.70 | 290,453,065.22 | - | 192,890,279.75 | 4,035,294,188.36 | - |
| Subtotal | 34,226,935,780.20 | - | 979,700,695.53 | - | 3,483,960,288.13 | (131,503,293.50) | 1,740,090,189.40 | 1,538,800,056.10 | - | 185,891,505.48 | 38,946,275,109.14 | 647,382,998.60 | |
| Total | 43,160,849,807.48 | - | 3,147,107,269.05 | - | 3,913,864,538.60 | (137,112,197.62) | 1,737,539,689.40 | 1,969,864,930.06 | - | 324,193,086.55 | 50,176,577,263.40 | 647,382,998.60 | |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
V. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Long-term equity investments - continued
Note 1: As at 6 February 2018, China Merchants Union (BVI) Limited (hereinafter referred to as
"CMU"), a joint venture between the Group and China Merchants Group (Hong Kong)Co., Ltd. (hereinafter referred to as "CMHK"), and its wholly-owned subsidiary GoldNewcastle Property Holding Pty Limited (hereinafter referred to as "Gold Newcastle")signed an acquisition agreement. The agreement stipulates that the Group will purchasefrom CMU its wholly-owned subsidiaries Gold Newcastle and Gold Newcastle's jointventures Port of Newcastle Investments (Holdings) Pty Limited, Port of NewcastleInvestments (Property Holdings) Pty Limited, Port of Newcastle Investments ( Holdings)Trust, Port of Newcastle Investments (Property Holdings) Trust (hereinafter collectivelyreferred to as "Port of Newcastle") is a 50% interest, and thus Port of Newcastlebecomes a joint venture of the Group.
Port of Newcastle is made up of several entities and trusts, and has acquired all the rightsand interests of the largest port on the east coast of Australia for about 98 years since 30May 2014 via lease and sublease. Gold Newcastle is an entity established in Australia byCMU in order to hold a number of assets, including Port of Newcastle. The remaining50% equity of Port of Newcastle is held by independent third parties.
The transaction was completed this year with a final consideration of AUD 605 million(RMB 2,944,265,945.15), including an interest-bearing shareholder loan of AUD 162.5million (RMB 783,823,491.63) from CMU to Port of Newcastle.
The Group believes that the Group and other joint venture parties jointly control Port ofNewcastle. Therefore, the Group accounts for Port of Newcastle as a joint venture.
Note 2: In 2018, the Group purchased 72,199,132 shares of Shanghai International Port (Group)
Co., Ltd. directly from the open market. As of 31 December 2018, the equity held by theGroup in Shanghai International Port (Group) Co., Ltd. has increased from 26.45% to26.77%.
Note 3: It was jointly established on 18 December 2018 by the Company’s subsidiary Chiwan
Wharf Holdings (Hong Kong) Limited and related parties CMHK, Jumbo PacificHoldings Limited, China Merchants Expressway Network & Technology Holdings Co.,Ltd., China Merchants Industrial Investment Co., Ltd., and Sinotrans(HK)Logistics Co.,Ltd. The registered capital is RMB 3,500 million, among which Chiwan Wharf Holdings(Hong Kong) Limited subscribed and contributed RMB 525 million with shareholdingproportion of 15%.
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Other investments in equity instruments
Unit: RMB
| Investees | Closing balance | Opening balance (restated) | Nature | Cash dividends for this year |
| China Ocean Shipping Agency (Shenzhen) Co., Ltd | 141,547,500.00 | 136,994,640.00 | The intention of holding is neither for sale nor profits in short-term | 7,788,975.00 |
| Others | 106,300,814.30 | 96,489,328.79 | The intention of holding is neither for sale nor profits in short-term | 440,000.00 |
| Total | 247,848,314.30 | 233,483,968.79 | 8,228,975.00 |
| Item | Closing balance | Opening balance (restated) |
| Cost of equity instruments | 108,289,950.79 | 104,397,628.79 |
| Increase in the current year | 3,892,322.00 | |
| Fair value | 247,848,314.30 | 233,483,968.79 |
| Changes of fair value included in OCI | 139,558,363.51 | 129,086,340.00 |
| Item | Closing balance | Opening balance (restated) |
| Financial assets measured at fair values and changes of which are recorded into current period profit or loss | 2,087,872,081.94 | 2,982,466,950.23 |
| Including: Equity instrument investment | 2,087,872,081.94 | 2,982,466,950.23 |
| Item | Closing balance | Opening balance (restated) |
| Cost of equity instruments | 1,173,690,773.13 | 1,158,810,992.06 |
| Fair value | 2,087,872,081.94 | 2,982,466,950.23 |
| Changes of fair value included in profit or loss of the current period | 914,181,308.81 | 1,823,655,958.17 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Investment properties
(1) Investment properties measured under cost method
Unit: RMB
| Item | Land use rights | Buildings | Total |
| I. Total original carrying amount | |||
| 1.Opening balance (restated) | 28,632,130.84 | 6,278,583,514.39 | 6,307,215,645.23 |
| 2.Increase in the current year | - | 14,022,292.33 | 14,022,292.33 |
| (1)Purchase | - | 12,229,350.87 | 12,229,350.87 |
| (2)Other increase | - | 1,792,941.46 | 1,792,941.46 |
| 3.Decrease in the current year | - | - | - |
| 4.Closing balance | 28,632,130.84 | 6,292,605,806.72 | 6,321,237,937.56 |
| II. Total accumulated depreciation | |||
| 1.Opening balance (restated) | 14,982,319.41 | 231,607,343.69 | 246,589,663.10 |
| 2.Increase in the current year | 513,472.44 | 183,987,812.51 | 184,501,284.95 |
| (1)Accrual of depreciation | 513,472.44 | 182,734,964.93 | 183,248,437.37 |
| (2)Other increase | - | 1,252,847.58 | 1,252,847.58 |
| 3.Decrease in the current year | - | - | - |
| 4.Closing balance | 15,495,791.85 | 415,595,156.20 | 431,090,948.05 |
| III. Total accumulated amount of provision for impairment losses of investment property | |||
| 1.Opening balance (restated) | - | - | - |
| 2.Increase in the current year | - | - | - |
| 3.Decrease in the current year | - | - | - |
| 4.Closing balance | - | - | - |
| IV. Total book value of investment property | |||
| 1.Closing balance | 13,136,338.99 | 5,877,010,650.52 | 5,890,146,989.51 |
| 2.Opening balance (restated) | 13,649,811.43 | 6,046,976,170.70 | 6,060,625,982.13 |
| Item | Closing balance | Opening balance(restated) |
| Buildings and land use rights | 43,119,291.89 | 37,101,489.68 |
| Item | Closing balance | Opening balance (restated) |
| Fixed assets | 22,994,155,151.43 | 23,167,379,576.44 |
| Disposal of fixed assets | 35,729.00 | 13,878.42 |
| Total | 22,994,190,880.43 | 23,167,393,454.86 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Fixed assets - continued
(1) Fixed assets
Unit: RMB
| Item | Port and terminal facilities | Buildings | Mechanical equipment, furniture and others | Motor vehicles, cargo ships and tugboats | Total |
| I. Total original carrying amount | |||||
| 1.Opening balance (restated) | 21,717,431,562.53 | 1,109,711,967.12 | 9,556,587,164.50 | 1,202,757,027.75 | 33,586,487,721.90 |
| 2. Increase in the current year | 1,444,412,678.73 | 49,885,407.01 | 1,268,003,739.58 | 186,161,101.23 | 2,948,462,926.55 |
| (1)Purchase | 17,188,457.11 | 1,525,213.89 | 92,428,334.50 | 26,960,609.63 | 138,102,615.13 |
| (2)Transfer from construction in progress | 71,825,427.47 | 42,131,895.04 | 358,429,373.77 | 148,125,344.43 | 620,512,040.71 |
| (3)Effect of changes in the scope of consolidation | 1,355,398,794.15 | 6,228,298.08 | 817,146,031.31 | 11,075,147.17 | 2,189,848,270.71 |
| 3.Decrease in the current year | 1,619,698,235.98 | 22,009,112.14 | 234,172,039.22 | 49,119,866.78 | 1,924,999,254.12 |
| (1)Disposal or retire | 143,249,072.49 | 634,179.50 | 234,172,039.22 | 49,119,866.78 | 427,175,157.99 |
| (2)Transfer to construction in progress | 1,476,449,163.49 | 19,581,991.18 | - | - | 1,496,031,154.67 |
| (3)Transfer to investment properties | - | 1,792,941.46 | - | - | 1,792,941.46 |
| 4.Effect of changes in foreign exchange | 293,091,861.70 | 11,378,173.47 | 1,737,493.30 | 28,467,389.87 | 334,674,918.34 |
| 5.Closing balance | 21,835,237,866.98 | 1,148,966,435.46 | 10,592,156,358.16 | 1,368,265,652.07 | 34,944,626,312.67 |
| II. Total accumulated depreciation | |||||
| 1.Opening balance (restated) | 4,286,051,154.44 | 208,977,381.63 | 5,392,312,327.64 | 474,303,769.96 | 10,361,644,633.67 |
| 2.Increase in the current year | 854,950,356.83 | 39,456,897.49 | 977,003,813.94 | 73,149,393.38 | 1,944,560,461.64 |
| (1)Accrual of depreciation | 585,606,826.05 | 39,456,897.49 | 606,453,094.44 | 67,154,391.45 | 1,298,671,209.43 |
| (2)Effect of changes in the scope of consolidation | 269,343,530.78 | - | 370,550,719.50 | 5,995,001.93 | 645,889,252.21 |
| 3.Decrease in the current year | 182,416,870.31 | 2,837,281.84 | 169,430,690.69 | 35,400,272.26 | 390,085,115.10 |
| (1)Disposal or retire | 95,233,231.01 | 566,086.84 | 169,430,690.69 | 35,400,272.26 | 300,630,280.80 |
| (2)Transfer to construction in progress | 87,183,639.30 | 1,018,347.42 | - | - | 88,201,986.72 |
| (3)Transfer to investment properties | - | 1,252,847.58 | - | - | 1,252,847.58 |
| 4.Effect of changes in foreign exchange | (11,415,084.52) | 1,583,244.14 | (16,454,108.66) | 3,173,617.91 | (23,112,331.13) |
| 5.Closing balance | 4,947,169,556.44 | 247,180,241.42 | 6,183,431,342.23 | 515,226,508.99 | 11,893,007,649.08 |
| III. Total accumulated amount of provision for impairment losses of investment property | |||||
| 1.Opening balance (restated) | 57,419,468.96 | - | 44,042.83 | - | 57,463,511.79 |
| 2.Increase in the current year | - | - | 0.37 | - | 0.37 |
| 3.Decrease in the current year | - | - | - | - | - |
| 4.Closing balance | 57,419,468.96 | - | 44,043.20 | - | 57,463,512.16 |
| IV. Total book value of investment property | |||||
| (1) Closing balance | 16,830,648,841.58 | 901,786,194.04 | 4,408,680,972.73 | 853,039,143.08 | 22,994,155,151.43 |
| (2) Opening balance (restated) | 17,373,960,939.13 | 900,734,585.49 | 4,164,230,794.03 | 728,453,257.79 | 23,167,379,576.44 |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Fixed assets - continued
(2) Fixed assets leased in through financial leasing
Unit: RMB
| Item | Carrying amount | Accumulated depreciation | Book value |
| Port and terminal facilities | 5,318,357,246.96 | 85,260,010.27 | 5,233,097,236.69 |
| Buildings | 133,330,273.37 | 6,028,470.75 | 127,301,802.62 |
| Mechanical equipment, furniture and others | 360,238,863.33 | 214,493,738.80 | 145,745,124.53 |
| Motor vehicles, cargo ships and tugboats | 38,350,000.00 | 28,100,712.71 | 10,249,287.29 |
| Total | 5,850,276,383.66 | 333,882,932.53 | 5,516,393,451.13 |
| Item | Closing balance | Opening balance (restated) |
| Port and terminal facilities | 844,843,802.95 | 971,151,561.19 |
| Buildings | 242,804,849.53 | 289,588,337.69 |
| Mechanical equipment, furniture and others | 139,712.96 | 255,687.15 |
| Total | 1,087,788,365.44 | 1,260,995,586.03 |
| Item | Closing balance | Opening balance (restated) |
| Buildings, Port and terminal facilities | 1,590,990,468.38 | 1,746,684,998.44 |
| Item | Amount | Note |
| The original amounts of fixed assets fully depreciated but still in use at 31 December 2018 | 1,680,807,123.39 | |
| 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 | 427,175,157.99 | |
| Net book value of fixed assets disposed or retired in the current period | 126,544,877.19 | |
| Gains or losses on disposal or retire of fixed assets | (13,944,505.56) |
NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Construction in progress
(1) Summary of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance(restated) | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Port and terminal facilities | 4,104,748,962.75 | - | 4,104,748,962.75 | 1,772,774,735.44 | - | 1,772,774,735.44 |
| Berths and yards | 1,023,331,798.30 | - | 1,023,331,798.30 | 12,388,194.50 | - | 12,388,194.50 |
| Infrastructure | 40,000,912.00 | - | 40,000,912.00 | 35,095,018.11 | - | 35,095,018.11 |
| Ship under construction | 22,985,373.73 | - | 22,985,373.73 | 142,411,112.12 | - | 142,411,112.12 |
| Equipment | - | - | - | 213,801,119.70 | - | 213,801,119.70 |
| Others | 308,359,043.28 | - | 308,359,043.28 | 131,537,150.63 | - | 131,537,150.63 |
| Total | 5,499,426,090.06 | - | 5,499,426,090.06 | 2,308,007,330.50 | - | 2,308,007,330.50 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Construction in progress - continued
(2) The top ten balances of construction in progress
Unit: RMB
| Item | Budget amount | Opening balance(restated) | Increase in the current period | Effect of changes in scope of consolidation | Decrease in the current period | Effect of changes in foreign exchange | Closing balance | Proportion of accumulated construction investment in budget (%) | Construction progress (%) | Amount of accumulated capitalized interest | Including: capitalized interest for the current period | Interest capitalization rate for the current period (%) | Capital source |
| Reconstruction Project of container, oil terminal and tank area, HIPG | 2,776,464,530.76 | - | 1,334,002,333.13 | - | - | 50,259,451.57 | 1,384,261,784.70 | 49.86 | 49.86 | - | - | - | Self-funding |
| Guangao project Phase II, Shantou Port | 2,875,500,000.00 | 726,456,652.38 | 523,789,103.07 | - | - | - | 1,250,245,755.45 | 43.48 | 43.48 | - | - | - | Self-funding |
| TCP berth expansion project | 1,071,009,228.80 | - | 590,710,536.81 | 456,392,978.15 | - | (80,506,818.84) | 966,596,696.12 | 90.25 | 90.25 | 8,473,403.78 | 8,473,403.78 | 7.44 | Self-funding and loan |
| Berth 3 of Houshigang District, Xiamen Port | 1,000,000,000.00 | 679,113,997.53 | 58,742,500.98 | - | 97,650.00 | - | 737,758,848.51 | 73.78 | 98.78 | 56,757,132.89 | 17,491,904.90 | 4.77 | Self-funding and loan |
| Reconstruction project of Berth 1#-4#, Haixing Wharf | 1,174,090,000.00 | 210,348,590.96 | 206,977,637.18 | - | - | - | 417,326,228.14 | 35.54 | 35.54 | - | - | - | Self-funding |
| Logistics park project Phase I, Djibouti international free trade zone | 255,311,040.00 | 33,958,350.80 | 165,744,909.11 | - | - | 5,684,437.02 | 205,387,696.93 | 80.45 | 85.00 | - | - | - | Self-funding |
| Reclamation project, Zhangzhou Wharf | 57,855,731.00 | - | 56,809,343.00 | - | - | - | 56,809,343.00 | 98.19 | 98.00 | - | - | - | Self-funding |
| Project of Grain Dispatch Warehouse at Berth2#,3# Phase III , Machong Port | 680,000,000.00 | 1,760,873.59 | 53,039,774.09 | - | - | - | 54,800,647.68 | 8.06 | 8.06 | - | - | - | Self-funding |
| Liaogeshou project, Guangdong Yide Port | 105,357,118.22 | 4,499,011.90 | 39,495,974.81 | - | 642,881.78 | - | 43,352,104.93 | 41.15 | 41.15 | 880,381.52 | 880,381.52 | 4.66 | Bank loan |
| RTG remote control system Phase III, Mawan Wharf | 34,726,400.00 | 24,057,992.68 | 6,544,920.51 | - | - | - | 30,602,913.19 | 88.13 | 88.13 | - | - | - | Self-funding |
| Total | 10,030,314,048.78 | 1,680,195,469.84 | 3,035,857,032.69 | 456,392,978.15 | 740,531.78 | (24,562,930.26) | 5,147,142,018.65 | 66,110,918.19 | 26,845,690.20 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Intangible assets
(1) Summary of intangible assets
Unit: RMB
| Land use rights | Terminal management rights | Others | Total | |
| I. Total original carrying amount | ||||
| 1.Opening balance (restated) | 13,012,429,380.15 | 5,171,928,708.25 | 356,221,955.06 | 18,540,580,043.46 |
| 2.Increase in the current year | 198,446,998.71 | 5,682,157,733.65 | 761,163,308.23 | 6,641,768,040.59 |
| (1)Purchase | - | 20,653,099.07 | 38,786,280.95 | 59,439,380.02 |
| (2)Effect of changes in the scope of consolidation | 198,446,998.71 | 5,661,504,634.58 | 649,313,168.73 | 6,509,264,802.02 |
| (3)Other increase | - | - | 73,063,858.55 | 73,063,858.55 |
| 3.Decrease in the current year | 213,014,868.97 | - | 4,347,166.59 | 217,362,035.56 |
| (1)Disposal | 711,000.00 | - | 3,961,765.86 | 4,672,765.86 |
| (2)Other decrease | 212,303,868.97 | - | 385,400.73 | 212,689,269.70 |
| 4.Effect of changes in foreign exchange | 100,017,007.56 | (342,565,782.79) | 11,031,872.58 | (231,516,902.65) |
| 5.Closing balance | 13,097,878,517.45 | 10,511,520,659.11 | 1,124,069,969.28 | 24,733,469,145.84 |
| II. Accumulated amortization | ||||
| 1.Opening balance (restated) | 2,180,627,622.16 | 336,212,844.34 | 150,026,238.05 | 2,666,866,704.55 |
| 2.Increase in the current year | 276,118,161.35 | 1,023,071,295.99 | 133,128,803.32 | 1,432,318,260.66 |
| (1)Accrual of amortization | 256,213,827.21 | 217,063,102.49 | 53,717,661.08 | 526,994,590.78 |
| (2)Effect of changes in the scope of consolidation | 19,895,447.17 | 806,008,193.50 | 73,484,560.81 | 899,388,201.48 |
| (3)Other increase | 8,886.97 | - | 5,926,581.43 | 5,935,468.40 |
| 3.Decrease in the current year | 31,916,438.47 | - | 3,959,215.55 | 35,875,654.02 |
| (1)Disposal | 228,249.74 | - | 3,959,215.55 | 4,187,465.29 |
| (2)Other decrease | 31,688,188.73 | - | - | 31,688,188.73 |
| 4.Effect of changes in foreign exchange | 9,068,369.38 | (90,587,828.63) | (9,338,750.64) | (90,858,209.89) |
| 5.Closing balance | 2,433,897,714.42 | 1,268,696,311.70 | 269,857,075.18 | 3,972,451,101.30 |
| III. Total provision for impairment losses | ||||
| 1.Opening balance | - | - | - | - |
| 2.Increase in the current year | - | - | - | - |
| 3.Decrease in the current year | - | - | - | - |
| 4.Closing balance | - | - | - | - |
| IV. Total book value | ||||
| 1.Closing balance | 10,663,980,803.03 | 9,242,824,347.41 | 854,212,894.10 | 20,761,018,044.54 |
| 2.Opening balance (restated) | 10,831,801,757.99 | 4,835,715,863.91 | 206,195,717.01 | 15,873,713,338.91 |
| Item | Closing balance | Opening balance (restated) |
| Land use rights | 1,383,494,095.83 | 2,202,883,733.38 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Goodwill
(1) Carrying amount of goodwill
Unit: RMB
| Investee | Opening balance (restated) | Increase | Decrease | Effect of changes in foreign exchange | Closing balance |
| TCP Participa??es S.A.(hereinafter referred as "TCP")(Note1) | - | 3,969,374,954.86 | - | 314,854,984.25 | 4,284,229,939.11 |
| Mega Shekou Container Terminals Limited (Note2) | 1,815,509,322.42 | - | - | - | 1,815,509,322.42 |
| China Merchants Port Holdings Co., Ltd(Note3) | 993,992,000.00 | - | - | - | 993,992,000.00 |
| Shantou CMPort Group Co., Ltd. (Note4) | 552,317,736.65 | - | - | - | 552,317,736.65 |
| Shenzhen Mawan Project(Note5) | 408,773,001.00 | - | - | - | 408,773,001.00 |
| Others | 281,073,843.17 | - | - | - | 281,073,843.17 |
| Total | 4,051,665,903.24 | 3,969,374,954.86 | - | 314,854,984.25 | 8,335,895,842.35 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Goodwill - continued
(2) Details of goodwill impairment
The Group conducts impairment testing on the entire group of subsidiaries that generate goodwillas an asset group. The recoverable amount of each subsidiary that generates goodwill isdetermined by the present value of the estimated future cash flows of each subsidiary. Themanagement of the Group estimates the future cash flows based on the 5-year detailed forecastperiod and the subsequent forecast period. The estimated future cash flows for the detailedforecast period are based on the business plan established by the management; the expected futurecash flows for the subsequent forecast period are determined in conjunction with the level of thefinal year of the detailed forecast period, combined with the Group's business plans, industrytrends and inflation rates. The key assumptions used by the Group in estimating future cash flowsinclude growth in business volume, gross profit margin and discount rate. After the impairmenttest, the management of the Group believes that any reasonable change in the above assumptionswill not result in the book value of the net assets of the subsidiaries generating the goodwill beinglower than the recoverable amount.
17. Long-term prepaid expenses
Unit: RMB
| Item | Opening balance (restated) | Effect of changes in the scope of consolidation | Increase in the current period | Amortization in the curren period | Other decrease | Closing balance |
| Construction expenditure of Tonggu sea-route | 177,084,607.57 | - | - | 12,517,222.60 | - | 164,567,384.97 |
| Relocation project of Nanhai Rescue Bureau | 41,165,331.01 | - | - | 1,057,781.52 | - | 40,107,549.49 |
| Expenditures for the improvement of leased fixed assets | 21,819,104.34 | - | 1,812,481.57 | 2,468,047.74 | - | 21,163,538.17 |
| Others | 14,861,541.85 | - | 4,193,305.83 | 3,002,422.89 | 6,184,460.21 | 9,867,964.58 |
| Total | 254,930,584.77 | - | 6,005,787.40 | 19,045,474.75 | 6,184,460.21 | 235,706,437.21 |
| Item | Closing balance | Opening balance(restated) | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Deductible losses | 86,136,992.42 | 23,604,794.05 | 23,413,934.04 | 5,853,483.51 |
| Deferred income | 50,033,346.52 | 11,382,687.30 | 53,396,038.93 | 12,048,346.61 |
| Provision for credit loss | 32,805,128.88 | 8,213,219.45 | 31,601,788.61 | 7,859,088.01 |
| Depreciation of fixed assets | 22,036,522.49 | 4,514,995.56 | 8,969,515.16 | 2,236,628.81 |
| Provisions | 19,470,820.00 | 6,620,078.85 | - | - |
| Amortization of computer software | 16,453,443.95 | 4,113,360.99 | 16,552,962.31 | 4,138,240.58 |
| Organization costs | 14,386,394.26 | 3,287,938.27 | 17,866,660.19 | 3,849,377.27 |
| Provision for impairment losses of assets | 2,258,081.96 | 481,468.22 | 4,319,993.78 | 811,641.14 |
| Others | 17,635,287.26 | 4,489,614.50 | 26,630,589.20 | 5,629,099.14 |
| Total | 261,216,017.74 | 66,708,157.19 | 182,751,482.22 | 42,425,905.07 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Deferred tax assets and deferred tax liabilities - continued
(2) Deferred tax liabilities without offsetting
Unit: RMB
| Item | Closing balance | Opening balance(restated) | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Withholding dividend income tax | 17,819,027,902.41 | 1,138,273,886.12 | 13,476,065,349.28 | 730,874,825.97 |
| Fair value adjustment of assets acquired by business combination | 6,415,001,869.22 | 1,431,954,458.35 | 4,836,948,279.07 | 874,093,308.95 |
| Changes in fair value of other equity investments | 136,717,500.00 | 34,179,375.00 | 132,214,640.00 | 33,053,660.00 |
| Changes in fair value of other non-current financial assets | 930,040,371.21 | 105,285,399.58 | 1,814,771,615.06 | 190,566,523.96 |
| Depreciation of fixed assets | 754,359,502.42 | 174,592,634.60 | 749,768,170.23 | 183,301,560.91 |
| Others | 114,027,794.35 | 26,789,187.62 | 13,140,901.85 | 3,285,224.67 |
| Total | 26,169,174,939.61 | 2,911,074,941.27 | 21,022,908,955.49 | 2,015,175,104.46 |
| 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 (restated) |
| Deferred tax assets | - | 66,708,157.19 | - | 42,425,905.07 |
| Deferred tax liabilities | - | 2,911,074,941.27 | - | 2,015,175,104.46 |
| Item | Closing balance | Opening balance (restated) |
| Deductible temporary differences | 237,418,074.51 | 264,023,276.51 |
| Deductible losses | 1,291,865,454.88 | 674,971,756.09 |
| Total | 1,529,283,529.39 | 938,995,032.60 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Deferred tax assets and deferred tax liabilities - continued
(5) Deductible losses for unrecognized deferred tax assets will be expired in the following years
Unit: RMB
| Year | Closing balance | Opening balance (restated) | Note |
| 2018 | - | 145,446,400.54 | |
| 2019 | 132,642,333.11 | 168,593,695.34 | |
| 2020 | 110,359,740.81 | 136,937,771.64 | |
| 2021 | 151,793,398.29 | 97,773,769.06 | |
| 2022 | 320,679,566.41 | 126,192,766.36 | |
| 2023 | 576,351,741.67 | - | |
| No expiration date | 38,674.59 | 27,353.15 | |
| Total | 1,291,865,454.88 | 674,971,756.09 |
| Item | Closing balance | Opening balance (restated) |
| Prepayments of land use rights | 175,908,026.15 | 175,807,391.86 |
| Prepayments of fixed assets | 174,039,051.91 | 14,666,643.64 |
| Prepayments of terminal franchise | 30,383,609.79 | 29,974,884.20 |
| Others | 14,860,798.13 | 7,300,911.95 |
| Total | 395,191,485.98 | 227,749,831.65 |
| Item | Closing balance | Opening balance (restated) |
| Credit loan | 3,425,291,312.62 | 2,540,000,000.00 |
| Credit guaranteed loan (Note) | - | 40,000,000.00 |
| Total | 3,425,291,312.62 | 2,580,000,000.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Notes and accounts payable
(1) Summary of notes and accounts payable
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Notes payable | - | - |
| Accounts payable | 429,120,690.97 | 331,606,335.81 |
| Total | 429,120,690.97 | 331,606,335.81 |
| Item | Closing balance | Opening balance (restated) |
| Service fee | 132,946,488.81 | 63,471,208.22 |
| Construction fee | 115,371,240.88 | 120,248,846.99 |
| Material purchase | 76,365,058.49 | 81,737,391.88 |
| Rental fee | 10,564,893.93 | 18,658,503.66 |
| Equipment payments | 659,317.15 | 11,756,211.33 |
| Others | 93,213,691.71 | 35,734,173.73 |
| Total | 429,120,690.97 | 331,606,335.81 |
| Item | Amount | Reason for outstanding |
| CCCC Third Harbor Engineering Co., Ltd. | 36,262,727.66 | According to the contract, it has not been paid for the completion. |
| Shenzhen Land and Resources Bureau | 21,642,795.50 | The government planning project has not been completed, and the certificates of property rights has not been processed. |
| Item | Closing balance | Opening balance (restated) |
| Service fee receipt in advance | 23,038,672.44 | 29,458,721.86 |
| Rental fee receipt in advance | 5,536,804.56 | 1,669,309.14 |
| Other | 595,232.86 | 831,720.17 |
| Total | 29,170,709.86 | 31,959,751.17 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Contract liabilities
(1) Summary of contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Service fee received in advance | 24,353,966.50 | 17,336,038.22 |
| Port charges received in advance | 11,657,235.81 | 13,053,987.04 |
| Warehousing fee received in advance | 8,705,589.57 | 9,628,695.56 |
| Other | 5,277,103.62 | 3,907,469.43 |
| Total | 49,993,895.50 | 43,926,190.25 |
| Item | Opening balance (restated) | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | Closing balance |
| 1.Short-term benefits | 379,876,734.70 | 30,144,586.64 | 1,758,280,674.14 | 1,736,587,857.25 | 431,714,138.23 |
| 2.Post-employment benefits - Projected benefits obligation | 299,320.00 | 2,131,376.20 | 146,194,303.52 | 146,338,349.81 | 2,286,649.91 |
| 3.Termination benefits | - | - | 15,538,374.32 | 15,538,374.32 | - |
| 4.Others | (405,956.30) | - | 4,113,746.06 | 4,219,022.50 | (511,232.74) |
| Total | 379,770,098.40 | 32,275,962.84 | 1,924,127,098.04 | 1,902,683,603.88 | 433,489,555.40 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Employee benefits payable - continued
(2) Short-term benefits
Unit: RMB
| Item | Opening balance (restated) | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | Closing balance |
| I. Wages and salaries, bonuses, allowances and subsidies | 356,127,716.69 | 29,532,679.53 | 1,519,476,886.86 | 1,495,746,353.47 | 409,390,929.61 |
| II. Staff welfare | - | - | 50,293,470.22 | 50,293,470.22 | - |
| III. Social insurance charges | 2,284,921.87 | 558,496.86 | 76,887,740.31 | 74,585,632.47 | 5,145,526.57 |
| Including: Medical insurance | 2,256,946.66 | - | 57,578,876.98 | 55,417,484.38 | 4,418,339.26 |
| Work injury insurance | - | - | 6,929,715.22 | 6,929,715.22 | - |
| Maternity insurance | - | - | 3,430,651.30 | 3,430,651.30 | - |
| Others | 27,975.21 | 558,496.86 | 8,948,496.81 | 8,807,781.57 | 727,187.31 |
| IV. Housing funds | - | - | 82,135,287.67 | 82,135,287.67 | - |
| V. Labor union and employee education funds | 21,464,096.14 | 43,396.64 | 23,379,295.45 | 27,720,114.47 | 17,166,673.76 |
| VI. Others | - | 10,013.61 | 6,107,993.63 | 6,106,998.95 | 11,008.29 |
| Total | 379,876,734.70 | 30,144,586.64 | 1,758,280,674.14 | 1,736,587,857.25 | 431,714,138.23 |
| Item | Opening balance | Effect of changes in the scope of consolidation | Increase in the current year | Decrease in the current year | Closing balance |
| I. Basic pension | - | 1,614,246.59 | 106,347,884.56 | 106,341,694.26 | 1,620,436.89 |
| II. Unemployment insurance | - | 517,129.61 | 2,197,297.41 | 2,163,268.90 | 551,158.12 |
| III. Enterprise annuity plan | 299,320.00 | - | 37,649,121.55 | 37,833,386.65 | 115,054.90 |
| Total | 299,320.00 | 2,131,376.20 | 146,194,303.52 | 146,338,349.81 | 2,286,649.91 |
| Item | Closing balance | Opening balance (restated) |
| Enterprise income tax | 271,954,754.74 | 218,660,609.24 |
| VAT | 8,200,265.65 | 9,363,588.24 |
| Others | 65,028,402.03 | 30,530,970.31 |
| Total | 345,183,422.42 | 258,555,167.79 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
26. Other payables
(1) Other payables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Interest payable | 555,545,627.60 | 248,861,288.63 |
| Dividends payable | 66,052,207.09 | 207,240,883.54 |
| Other payables | 1,624,072,694.20 | 6,114,459,414.79 |
| Total | 2,245,670,528.89 | 6,570,561,586.96 |
| Item | Closing balance | Opening balance (restated) |
| Corporate bond interest | 492,300,138.05 | 213,605,656.91 |
| Long-term loan interest | 57,176,593.29 | 29,371,285.14 |
| Short-term loan interest | 2,074,199.59 | 3,400,732.73 |
| Others | 3,994,696.67 | 2,483,613.85 |
| Total | 555,545,627.60 | 248,861,288.63 |
| Item | Closing balance | Opening balance (restated) |
| Ordinary share dividends | 66,052,207.09 | 207,240,883.54 |
| Including：Yihai Kerry Investment Co., Ltd. ("Yihai Kerry") | 37,402,426.09 | 37,402,426.09 |
| Sinotrans South China Co., Ltd | 25,949,781.00 | 25,949,781.00 |
| Qingdao Port (Group) Co., Ltd | 2,700,000.00 | 15,336,000.00 |
| Payable to Hongkong International Enterprise Co., Ltd. ("HK International") | - | 128,552,676.45 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
26. Other payables - continued
(4) Other payables
(a) Disclosure of other payables by nature
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Amount payable for construction and quality warranty | 660,870,685.70 | 737,770,664.40 |
| Deposits | 149,705,612.54 | 111,475,378.58 |
| Prepaid expenses | 140,305,423.54 | 63,222,555.07 |
| Customer discount | 128,787,894.63 | 130,349,250.94 |
| Balance of land use rights transfer | 93,258,350.90 | 93,258,350.90 |
| Port construction and security fee | 62,255,593.38 | 62,730,234.66 |
| Equity acquisition(Note) | - | 4,473,272,642.90 |
| Others | 388,889,133.51 | 442,380,337.34 |
| Total | 1,624,072,694.20 | 6,114,459,414.79 |
| Company name | Closing balance | Nature |
| China Merchants Zhangzhou Co., Ltd. | 93,258,350.90 | Payments to be paid after confirmation by both parties |
| Shanghai Zhenhua Heavy Industries Co., Ltd. (ZPMC) | 75,414,386.66 | Payments to be paid after confirmation by both parties |
| CCCC Third Harbor Engineering Co., Ltd. | 37,743,418.00 | The contracted settlement condition has not been reached |
| CCCC Fourth Harbor Engineering Co., Ltd. | 32,307,249.00 | The contracted settlement condition has not been reached |
| Shantou Transportation Bureau | 31,358,355.47 | Payments to be paid after confirmation by both parties |
| Shenzhen Merchants Construction Co., Ltd. | 28,223,077.10 | The contracted settlement condition has not been reached |
| Qingdao Maritime Bureau | 20,713,982.12 | Outstanding port construction fee |
| China Merchants property Co., Ltd. | 12,090,083.93 | Outstanding property management fee |
| Shantou Finance Bureau | 10,000,000.00 | Payments to be paid after confirmation by both parties |
| Guangdong Hengtai Tong Industrial Co., Ltd. | 10,000,000.00 | The contracted settlement condition has not been reached |
| China First Metallurgical Group Co., Ltd | 8,175,706.55 | The contracted settlement condition has not been reached |
| Harman Technology (Shenzhen) Co., Ltd. | 5,884,632.48 | The contracted settlement condition has not been reached |
| Ningbo Communications Engineering Construction Group Co., Ltd. | 5,633,275.00 | The contracted settlement condition has not been reached |
| Total | 370,802,517.21 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Long-term loans due within one year | 1,913,116,720.26 | 773,035,147.51 |
| Including：Credit loan | 375,382,058.46 | 127,230,000.00 |
| Guaranteed loan | 1,090,500,000.00 | 338,000,000.00 |
| Mortgage loan | 447,234,661.80 | 307,805,147.51 |
| Bonds payable due within one year | 299,531,506.81 | 1,555,654,132.52 |
| Long-term payable due within one year | 30,635,607.84 | 45,068,468.44 |
| Long-term employee benefits payable due within one year | 19,100,000.00 | 19,480,000.00 |
| Other non-current liabilities due within one year | 87,465,615.05 | - |
| Total | 2,349,849,449.96 | 2,393,237,748.47 |
| Item | Closing balance | Opening balance (restated) |
| Joint venture loan | 241,927,341.05 | 230,331,618.08 |
| Short-term bonds payable | 200,000,000.00 | 100,000,000.00 |
| Accrued professional agency fee | 116,064,056.75 | 38,342,089.20 |
| Others | 44,668,324.00 | 16,798,621.17 |
| Total | 602,659,721.80 | 385,472,328.45 |
| 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 |
| 4.740%, RMB 100 million, Super & Short-term Commercial Paper | 100,000,000.00 | 21/08/2017 | 270days | 100,000,000.00 | 100,000,000.00 | - | 1,805,095.90 | - | 100,000,000.00 | - |
| 4.730%, RMB 200 million, Super & Short-term Commercial Paper | 200,000,000.00 | 24/04/2018 | 267days | 200,000,000.00 | - | 200,000,000.00 | 6,349,863.00 | - | - | 200,000,000.00 |
| total | 300,000,000.00 | 300,000,000.00 | 100,000,000.00 | 200,000,000.00 | 8,154,958.90 | - | 100,000,000.00 | 200,000,000.00 |
| Item | Closing balance | Opening balance (restated) |
| Credit borrowings | 2,032,494,533.83 | 741,493,000.00 |
| Guaranteed borrowings (Note1) | 3,657,846,864.58 | 4,121,000,000.00 |
| Mortgage borrowings (Note2) | 3,194,255,164.03 | 3,581,058,638.66 |
| Total | 8,884,596,562.44 | 8,443,551,638.66 |
| Less: Long-term borrowings due within one year | 1,913,116,720.26 | 773,035,147.51 |
| Including: Credit borrowings | 375,382,058.46 | 127,230,000.00 |
| Guaranteed borrowings | 1,090,500,000.00 | 338,000,000.00 |
| Mortgage borrowings | 447,234,661.80 | 307,805,147.51 |
| Long-term borrowings due after one year | 6,971,479,842.18 | 7,670,516,491.15 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Long-term borrowings - continued
(1) Classification of long-term loans - continued
Note1: The loan was guaranteed by Shenzhen Mawan Terminals Co., Ltd., China Merchants Port
Services (Shenzhen) Co., Ltd. ("CMPS"), and China Merchants Port Holdings Co., Ltd
("CMPH").
Note2: As at 31 December 2018, the Group obtained the long-term loan amounted to RMB
3,194,255,164.03 is firm subject to the entire share capital of Colombo InternationalContainer Terminals Limited and the entire interest of Thesar Maritime Limited, and theland use rights, fixed assests and construction in progress held by Guangdong Yide PortCo., Ltd. (hereinafter referred to as "Yide Port")(31 December 2017:RMB3,581,058,638.66).
Details of mortgage loan are as follows:
Unit: RMB
| Company name | Closing balance | Opening balance (restated) | collateral |
| China Development Bank Corporation | 1,543,473,787.28 | 1,839,649,776.16 | The entire equity of Colombo International Container Terminals Limited held by the Group |
| International Finance Corporation | 529,891,283.72 | 595,413,018.76 | The entire equity of Thesar Maritime Limited held by the Group |
| African Development Bank | 243,463,562.79 | 273,568,143.76 | |
| Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. | 200,499,404.66 | 225,291,412.50 | |
| The Opec Fund For International Development | 171,856,632.57 | 193,106,925.00 | |
| Societe de Promotion et de Participation pour la Cooperation Economique S.A | 171,856,632.55 | 193,106,925.00 | |
| Deutsche Investitions-und Entwicklungsgesellschaft MBH | 143,213,860.46 | 160,922,437.48 | |
| China Construction Bank Shunde Branch | 190,000,000.00 | 100,000,000.00 | Yide Port fixed assets and construction in progress (refer to the details in Notes (V) 55). |
| Total | 3,194,255,164.03 | 3,581,058,638.66 |
| Program | Closing balance | Opening balance (restated) |
| 4.375%, USD 900 million corporate bond | 6,126,655,733.91 | - |
| 5.000%, USD 600 million corporate bond | 4,062,553,267.60 | - |
| 4.750%, USD 500 million corporate bond | 3,414,652,244.84 | 3,249,996,583.73 |
| 5.000%, USD 500 million corporate bond | 3,408,446,692.17 | 3,240,255,080.35 |
| 4.890%, RMB 2.5 billion corporate bond | 2,500,000,000.00 | 2,500,000,000.00 |
| 3.500%, USD 200 million corporate bond | 1,369,419,343.41 | 1,302,526,637.25 |
| IPCA + 7.8164%,BRL 428 million corporate bond | 715,739,814.47 | - |
| 5.150%, RMB 500 million corporate bond | 500,000,000.00 | - |
| 2.970%, RMB 300 million corporate bond | 299,531,506.81 | 298,931,506.83 |
| 7.125%, USD 200 million corporate bond | - | 1,305,654,132.52 |
| 6.380%, RMB 250 million corporate bond | - | 250,000,000.00 |
| Total | 22,396,998,603.21 | 12,147,363,940.68 |
| Deduct :Bonds payable due within one year | 299,531,506.81 | 1,555,654,132.52 |
| Bonds payable due after one year | 22,097,467,096.40 | 10,591,709,808.16 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Bonds payable - continued
(2) Changes of bonds payable
Unit: RMB
| Name of bonds | Face value | Date of issue | Term of the bond | Amount of issue | Opening balance (restated) | Effect of changes in scope of consolidation | Amount issued in the current period | Interest accrued at par during the period | Discount or premium amortization | Discount or premium amortization | Effect of changes in foreign exchange | Closing balance |
| 4.375%, USD 900 million corporate bond | USD 900,000,000.00 | 06/08/2018 | 5 | USD 900,000,000.00 | - | - | 5,901,408,380.77 | 104,784,513.81 | 3,708,529.28 | - | 221,538,823.86 | 6,126,655,733.91 |
| 5.000%, USD 600 million corporate bond | USD 600,000,000.00 | 06/08/2018 | 10 | USD 600,000,000.00 | - | - | 3,913,954,048.05 | 79,835,819.95 | 1,697,641.11 | - | 146,901,578.44 | 4,062,553,267.60 |
| 4.750%, USD 500 million corporate bond | USD 500,000,000.00 | 03/08/2015 | 10 | USD 500,000,000.00 | 3,249,996,583.73 | - | - | 157,143,889.47 | 1,969,224.45 | - | 162,686,436.66 | 3,414,652,244.84 |
| 5.000%, USD 500 million corporate bond | USD 500,000,000.00 | 04/05/2012 | 10 | USD 500,000,000.00 | 3,240,255,080.35 | - | - | 165,413,763.15 | 5,848,608.07 | - | 162,343,003.75 | 3,408,446,692.17 |
| 4.890%, RMB 2.5 billion corporate bond | RMB 2,500,000,000.00 | 21/04/2017 | 5 | RMB 2,500,000,000.00 | 2,500,000,000.00 | - | - | 122,743,557.86 | - | - | - | 2,500,000,000.00 |
| 3.500%, USD 200 million corporate bond | USD 200,000,000.00 | 03/08/2015 | 5 | USD 200,000,000.00 | 1,302,526,637.25 | - | - | 46,316,093.76 | 1,659,288.43 | - | 65,233,417.73 | 1,369,419,343.41 |
| IPCA + 7.8164%,BRL 428 million corporate bond | BRL 428,047,000.00 | 07/11/2016 | 6 | BRL 428,047,000.00 | - | 794,778,392.21 | - | 76,470,918.04 | 10,826,025.73 | - | (89,864,603.47) | 715,739,814.47 |
| 5.150%, RMB 500 million corporate bond | RMB 500,000,000.00 | 06/02/2018 | 3 | RMB 500,000,000.00 | - | - | 500,000,000.00 | 23,561,925.18 | - | - | - | 500,000,000.00 |
| 2.970%, RMB 300 million corporate bond | RMB 300,000,000.00 | 11/10/2016 | 3 | RMB 300,000,000.00 | 298,931,506.83 | - | - | 8,910,000.04 | 599,999.98 | - | - | 299,531,506.81 |
| 7.125%, USD 200 million corporate bond | USD 200,000,000.00 | 18/06/2008 | 10 | USD 200,000,000.00 | 1,305,654,132.52 | - | - | 43,833,617.64 | 1,392,506.05 | 1,322,800,000.00 | 15,753,361.43 | - |
| 6.380%, RMB 250 million corporate bond | RMB 250,000,000.00 | 24/03/2015 | 3 | RMB 250,000,000.00 | 250,000,000.00 | - | - | 3,636,600.00 | - | 250,000,000.00 | - | - |
| CDI + 3.40%, BRL 100 million corporate bond | BRL 100,000,000.00 | 07/11/2016 | 3 | BRL 100,000,000.00 | - | 196,567,218.72 | - | 8,854,671.29 | 2,899,768.68 | 187,090,000.00 | (12,376,987.40) | - |
| CDI + 3.90%, BRL 60 million corporate bond | BRL 60,095,000.00 | 07/11/2016 | 5 | BRL 60,095,000.00 | - | 117,291,020.45 | - | 7,124,061.79 | 2,526,023.19 | 112,431,735.50 | (7,385,308.14) | - |
| Total | 12,147,363,940.68 | 1,108,636,631.38 | 10,315,362,428.82 | 848,629,431.98 | 33,127,614.97 | 1,872,321,735.50 | 664,829,722.86 | 22,396,998,603.21 | ||||
| Less: Bonds payable due within one year | 1,555,654,132.52 | 299,531,506.81 | ||||||||||
| Bonds payable due after one year | 10,591,709,808.16 | 22,097,467,096.40 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Long-term payables
(1) Summary of long-term payables
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Long-term payables | 1,285,984,226.34 | 1,292,874,742.87 |
| Special payables | 38,841,499.68 | 42,976,167.51 |
| Total | 1,324,825,726.02 | 1,335,850,910.38 |
| Less: Long-term payables due within one year | 30,635,607.84 | 45,068,468.44 |
| Long-term payables due after one year | 1,294,190,118.18 | 1,290,782,441.94 |
| Item | Closing balance | Opening balance (restated) |
| Terminal management rights (Note1) | 823,360,554.03 | 788,587,599.72 |
| Payable to minority shareholders of subsidiaries (Note2) | 390,658,146.52 | 371,899,413.63 |
| Financing lease payments | 71,965,525.79 | 116,052,229.49 |
| Rental of port land | - | 16,335,500.03 |
| Total | 1,285,984,226.34 | 1,292,874,742.87 |
| Deduct :long-term payable due within one year | 30,635,607.84 | 45,068,468.44 |
| long-term payable due after one year | 1,255,348,618.50 | 1,247,806,274.43 |
| Item | Closing balance | Opening balance (restated) |
| Refunds of Harbor Construction Fee(Note) | 36,061,435.67 | 40,491,828.56 |
| Employee housing fund | 2,780,064.01 | 2,484,338.95 |
| Total | 38,841,499.68 | 42,976,167.51 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Long-term employee benefits payable
(1) Summary of long-term employee benefits payable
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Post-employment benefits- net debt of projected benefits obligation(Note) | 385,323,310.21 | 358,010,123.90 |
| Termination benefits | 9,101,817.44 | 12,220,000.00 |
| Total | 394,425,127.65 | 370,230,123.90 |
| Less: Long-term employee benefits payable due within one year | 19,100,000.00 | 19,480,000.00 |
| Long-term employee benefits payable due after one year | 375,325,127.65 | 350,750,123.90 |
| Item | 2018 | 2017 |
| I. Opening balance(restated) | 358,010,123.90 | 835,963.38 |
| II. Benefit cost included in current period income | 10,313,678.43 | 10,084,051.60 |
| 1.Current service cost | 2,163,678.43 | 3,934,051.60 |
| 2.Post service cost | (7,460,000.00) | - |
| 3.Interest adjustment | 15,610,000.00 | 6,150,000.00 |
| III. Benefit cost included in other comprehensive income | 34,693,502.67 | (23,529,891.08) |
| 1.Acturial gains (losses) | 34,562,392.88 | (23,510,000.00) |
| 2.Effect of currency rate changes | 131,109.79 | (19,891.08) |
| IV. Others changes | (17,693,994.79) | 370,620,000.00 |
| 1.Benefits paid | (17,693,994.79) | (6,560,000.00) |
| 2.Changes in the scope of consolidation | - | 377,180,000.00 |
| V. Closing balance | 385,323,310.21 | 358,010,123.90 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Provisions
Unit: RMB
| Item | Closing balance | Opening balance (restated) | Reason |
| Pending litigation (Note) | 19,470,820.72 | - | Note |
| Sales discount | 15,480,571.55 | 50,577,924.97 | |
| Total | 34,951,392.27 | 50,577,924.97 |
| Item | Opening balance (restated) | Increase | Effect of changes in the scope of consolidation | Decrease | Closing balance |
| Government grants | 186,491,676.05 | 3,534,716.00 | 48,183,333.33 | 9,551,510.74 | 228,658,214.64 |
| Liabilities | Opening balance (restated) | Increase | Effect of changes in the scope of consolidation | Recognized in Other comprehensive income | Closing balance | Related to assets /Related to income |
| Modern logistics special funds | 116,000,000.00 | - | - | 639,999.96 | 115,360,000.04 | Related to assets |
| Ro-ro terminal subsidy | - | - | 48,183,333.33 | 408,333.33 | 47,775,000.00 | Related to assets |
| Qianwan Bonded Logistics Park Project | 16,057,853.92 | 202,466.00 | - | 956,018.84 | 15,304,301.08 | Related to assets |
| Subsidized grain transfer project subsidy | 8,428,571.41 | - | - | 285,714.29 | 8,142,857.12 | Related to assets |
| Central budgetary support for bulk grain transfer terminal projects | 7,685,416.67 | - | - | 212,500.00 | 7,472,916.67 | Related to assets |
| AMPI | 7,709,657.14 | - | - | 961,620.72 | 6,748,036.42 | Related to assets |
| Oil to electricity project | 6,801,927.59 | - | - | 784,837.92 | 6,017,089.67 | Related to assets |
| Automated terminal operation and dispatching system special support project | 3,802,263.98 | 3,300,000.00 | - | 1,939,793.67 | 5,162,470.31 | Related to assets |
| Research and development of fully automated intelligent terminal information investment based on cloud platform architecture | 3,984,700.64 | - | - | 1,247,677.57 | 2,737,023.07 | Related to assets |
| Warfare gate subsidy | 2,117,903.97 | - | - | 262,008.73 | 1,855,895.24 | Related to assets |
| Green low carbon port project | 1,825,070.02 | - | - | 421,170.00 | 1,403,900.02 | Related to assets |
| Others | 12,078,310.71 | 32,250.00 | - | 1,431,835.71 | 10,678,725.00 | Related to assets |
| Total | 186,491,676.05 | 3,534,716.00 | 48,183,333.33 | 9,551,510.74 | 228,658,214.64 | Related to assets |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Other non-current liabilities
Unit: RMB
| Item | Closing balances | Opening balance(restated) |
| TCP Operating rights liability (Note1) | 3,260,547,002.45 | - |
| Obligation to minority shareholders due to acquisition (Note2) | 579,195,304.56 | - |
| Berth priority call right (Note3) | 25,305,830.90 | 28,830,624.28 |
| Others | - | 54,763,901.68 |
| Total | 3,865,048,137.91 | 83,594,525.96 |
| Less: Other non-current liabilities due in one year | 87,465,615.05 | - |
| Including: TCP Operating rights liability | 87,465,615.05 | - |
| Other non-current liabilities due after one year | 3,777,582,522.86 | 83,594,525.96 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Share capital
Unit: RMB
| Item | Opening balance | Changes for the period | Closing balance | ||||
| New issue of share | Bonus issue | Capitalization of surplus reserve | Others | Subtotal | |||
| 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 | - | 1,148,648,648.00 | - | - | 52,050.00 | 1,148,700,698.00 | 1,148,700,698.00 |
| Total restricted tradable shares | 160,106.00 | 1,148,648,648.00 | - | - | 52,050.00 | 1,148,700,698.00 | 1,148,860,804.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,859,300.00 | - | - | - | (3,976.00) | (3,976.00) | 464,855,324.00 |
| 2. Foreign capital shares listed domestically | 179,744,324.00 | - | - | - | (48,074.00) | (48,074.00) | 179,696,250.00 |
| 3. Foreign capital shares listed overseas | - | - | - | - | - | - | - |
| 4. Others | - | - | - | - | - | - | - |
| Total non-restricted tradable shares | 644,603,624.00 | - | - | - | (52,050.00) | (52,050.00) | 644,551,574.00 |
| III. Total shares | 644,763,730.00 | 1,148,648,648.00 | - | - | - | 1,148,648,648.00 | 1,793,412,378.00 |
| 2017 | |||||||
| I. Restricted tradable shares | |||||||
| 1 State-owned shares | - | - | - | - | - | - | - |
| 2. State-owned legal person shares | - | - | - | - | - | - | - |
| 3. Other domestic shares | 305,100.00 | - | - | - | (144,994.00) | (144,994.00) | 160,106.00 |
| 4. Other foreign shares | - | - | - | - | - | - | - |
| Total restricted tradable shares | 305,100.00 | - | - | - | (144,994.00) | (144,994.00) | 160,106.00 |
| II. Non-restricted tradable shares | |||||||
| 1. Ordinary shares denominated in RMB | 464,866,050.00 | - | - | - | (6,750.00) | (6,750.00) | 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 | 644,458,630.00 | - | - | - | 144,994.00 | 144,994.00 | 644,603,624.00 |
| III. Total shares | 644,763,730.00 | - | - | - | - | - | 644,763,730.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS – continued
37. Capital Reserve
Unit: RMB
| Item | Opening balance (restated) | Increase | Decrease | Closing balance |
| 2018 | ||||
| Capital premium | 18,848,680,489.20 | 1,164,197,108.39 | 583,183,507.54 | 19,429,694,090.05 |
| Including：Capital contributed by investors | 4,954,397,136.25 | - | - | 4,954,397,136.25 |
| Differences arising from business combination involving enterprises under common control | 13,894,283,352.95 | - | 583,183,507.54 | 13,311,099,845.41 |
| Others(Note) | - | 1,164,197,108.39 | - | 1,164,197,108.39 |
| Other capital reserve | (2,781,133.00) | - | - | (2,781,133.00) |
| Including: Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Total | 18,845,899,356.20 | 1,164,197,108.39 | 583,183,507.54 | 19,426,912,957.05 |
| Item | Opening balance (restated) | Increase | Decrease | Closing balance |
| 2017 | ||||
| Capital premium | 13,887,026,547.40 | 4,961,653,941.80 | - | 18,848,680,489.20 |
| Including: Capital contributed by investors | 163,560,083.00 | 4,790,837,053.25 | - | 4,954,397,136.25 |
| Differences arising from business combination involving enterprises under common control | 13,723,466,464.40 | 170,816,888.55 | - | 13,894,283,352.95 |
| Other capital reserve | (2,781,133.00) | - | - | (2,781,133.00) |
| Including: Transfer from capital reserve under the previous accounting system | (2,781,133.00) | - | - | (2,781,133.00) |
| Total | 13,884,245,414.40 | 4,961,653,941.80 | - | 18,845,899,356.20 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Other comprehensive income
Unit: RMB
| Item | Opening balance (restated) | Amount incurred in current year | Closing balance | |||||
| Amount before income tax incurred in current year | Less: Amount included in other comprehensive income in the prior periods that is transferred to profit or loss for the period | Less: Income tax expense | After-tax income attributable to the parent company owner | After-tax income attributable to minority shareholders | The impact of business combination under common control | |||
| 2018: | ||||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | (742,874,052.89) | (127,586,823.04) | - | 1,125,715.00 | (48,671,312.79) | (80,041,225.25) | 867,218,499.76 | 75,673,134.08 |
| Including: Change as a result of remeasurement of the net defined benefit plan liability or asset | - | (20,136,880.35) | - | - | (7,943,999.30) | (12,192,881.05) | 7,943,999.30 | - |
| Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | (116,954,783.85) | - | - | (46,138,662.23) | (70,816,121.62) | 46,138,662.23 | - |
| Changes in fair value of other equity instruments | (742,874,052.89) | 9,504,841.16 | - | 1,125,715.00 | 5,411,348.74 | 2,967,777.42 | 813,135,838.23 | 75,673,134.08 |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | 13,252,844.49 | 333,315,323.72 | - | - | 90,449,399.81 | 242,865,923.91 | (90,449,399.81) | 13,252,844.49 |
| Including: Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | 100,000.00 | (20,157,413.77) | - | - | (7,952,099.73) | (12,205,314.04) | 7,952,099.73 | 100,000.00 |
| Translation differences of financial statements denominated in foreign currencies | 13,152,844.49 | 353,472,737.49 | - | - | 98,401,499.54 | 255,071,237.95 | (98,401,499.54) | 13,152,844.49 |
| Total | (729,621,208.40) | 205,728,500.68 | - | 1,125,715.00 | 41,778,087.02 | 162,824,698.66 | 776,769,099.95 | 88,925,978.57 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
39. Other comprehensive income – continued
Unit: RMB
| Item | Opening balance (restated) | Amount incurred in current year | Closing balance | |||||
| Amount before income tax incurred in current year | Less: Amount included in other comprehensive income in the prior periods that is transferred to profit or loss for the period | Less: Income tax expense | After-tax income attributable to the parent company owner | After-tax income attributable to minority shareholders | The impact of business combination under common control | |||
| 2017: | ||||||||
| I. Other comprehensive income that will not be reclassified subsequently to profit or loss | - | 176,570,902.51 | - | - | 65,863,882.85 | 110,707,019.66 | (65,863,882.85) | - |
| Including: Change as a result of remeasurement of the net defined benefit plan liability or asset | - | 23,085,250.68 | - | - | 5,313,793.20 | 17,771,457.48 | (5,313,793.20) | - |
| Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or loss | - | 153,485,651.83 | - | - | 60,550,089.65 | 92,935,562.18 | (60,550,089.65) | - |
| II. Other comprehensive income that will be reclassified subsequently to profit or loss | (8,039,646.43) | 759,286,170.35 | 265,589,702.16 | 27,661,768.24 | 176,340,879.94 | 289,693,820.01 | (175,365,879.94) | (7,064,646.43) |
| Including: Share of other comprehensive income of the investee under the equity method that will be reclassified to profit or loss | 100,000.00 | 445,196,749.12 | - | - | 175,630,117.53 | 269,566,631.59 | (175,630,117.53) | 100,000.00 |
| Gains or losses on change in fair value of available-for-sale financial assets | 5,572,500.00 | 514,409,289.75 | 265,589,702.16 | 27,661,768.24 | 87,348,744.15 | 133,809,075.20 | (86,373,744.15) | 6,547,500.00 |
| Translation differences of financial statements denominated in foreign currencies | (13,712,146.43) | (200,319,868.52) | - | - | (86,637,981.74) | (113,681,886.78) | 86,637,981.74 | (13,712,146.43) |
| Total | (8,039,646.43) | 935,857,072.86 | 265,589,702.16 | 27,661,768.24 | 242,204,762.79 | 400,400,839.67 | (241,229,762.79) | (7,064,646.43) |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Special reserve
Unit: RMB
| Item | Opening balance (restated) | Increase | Decrease | Closing balance |
| 2018： | ||||
| Production safety reserve | 4,767,373.45 | 24,165,961.75 | 20,702,254.77 | 8,231,080.43 |
| 2017： | ||||
| Production safety reserve | 4,145,765.65 | 17,456,696.76 | 16,835,088.96 | 4,767,373.45 |
| Item | Opening balance | Increase | Decrease | Closing balance |
| 2018： | ||||
| Statutory surplus reserve | 520,074,434.56 | 7,101,474.11 | - | 527,175,908.67 |
| 2017： | ||||
| Statutory surplus reserve | 520,074,434.56 | - | - | 520,074,434.56 |
| Item | Amount | Proportion of appropriation or allocation |
| 2018: | ||
| Unappropriated profit at the end of prior year before adjustment | 3,566,083,142.17 | |
| Adjustment of total unappropriated profit at the beginning of year | 5,716,548,113.47 | Note1 |
| Unappropriated profit at the beginning of year after adjustment | 9,282,631,255.64 | |
| Add: Net profit attributable to shareholders of the Company for the year | 1,090,418,910.77 | |
| Less: Appropriation to statutory surplus reserve | 7,101,474.11 | Note2 |
| Appropriation to discretionary surplus reserve | - | |
| Appropriation to risk preparation | - | |
| Ordinary shares' dividends payable | 850,443,359.86 | Note3 |
| Ordinary shares' dividends converted into share capital | - | |
| Others | 599,688,222.23 | Note4 |
| Unappropriated profit at the end of the year | 8,915,817,110.21 | |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Unappropriated profit - continued
Unit: RMB
| Item | Amount | Proportion of appropriation or allocation |
| 2017: | ||
| Unappropriated profit at the end of prior year before adjustment | 3,381,390,887.86 | |
| Adjustment of total unappropriated profit at the beginning of year | 4,254,259,872.38 | Note1 |
| Unappropriated profit at the beginning of year after adjustment | 7,635,650,760.24 | |
| Add: Net profit attributable to shareholders of the Company for the year | 2,365,214,907.45 | |
| Less: Appropriation to statutory surplus reserve | - | |
| Appropriation to discretionary surplus reserve | - | |
| Appropriation to risk preparation | - | |
| Ordinary shares' dividends payable | 319,802,810.08 | |
| Ordinary shares' dividends converted into share capital | - | |
| Others | 1,214,754,940.14 | Note4 |
| Unappropriated profit at the end of the year | 8,466,307,917.47 | |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Unappropriated profit - continued
Note4: As Notes (VI) 2, on 25 December 2018, the Company acquired 39.45% equity of China
Merchants Port Holdings and included it as a subsidiary of the business combination underthe same control. The Group included the corresponding financial statements in thepreparation of the consolidated financial statements. The proportion of its shareholding of39.45% is calculated and the amount of the profit distribution of the China Merchants PortHoldings is calculated and reported.
Note5: Resolution of profit distribution after the balance sheet date
According to the 2018 annual profit distribution plan adopted by the Company at the 5thmeeting of the 9th Board of Directors held on March 28, 2019, the company distributedcash dividends based on the total shares of 1,793,412,378 shares as of December 31, 2018.RMB 204,449,011.09. The above dividend distribution plan has yet to be reviewed andapproved by the shareholders meeting.
43. Operating income and operating costs
Unit: RMB
| Item | 2018 | 2017(restated) | ||
| Income | Cost | Income | Cost | |
| Principal operating | 9,570,796,336.11 | 5,517,782,669.86 | 7,460,150,682.76 | 4,481,568,589.16 |
| Other operating | 132,598,286.47 | 221,458,726.01 | 84,484,602.20 | 228,744,071.35 |
| Total | 9,703,394,622.58 | 5,739,241,395.87 | 7,544,635,284.96 | 4,710,312,660.51 |
| Item | 2018 | 2017(restated) |
| Property tax | 50,993,199.89 | 28,897,407.11 |
| Stamp duty | 45,775,414.65 | 350,759.93 |
| Land holding tax | 15,095,001.85 | 13,874,451.73 |
| City construction and maintenance tax | 5,258,434.33 | 6,155,605.48 |
| Education surcharges | 4,059,161.54 | 4,014,776.21 |
| Others(Note) | 114,772,591.25 | 18,691,283.09 |
| Total | 235,953,803.51 | 71,984,283.55 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Administrative expenses
Unit: RMB
| Item | 2018 | 2017(restated) |
| Employee's salary | 702,986,443.49 | 534,635,252.36 |
| Fees paid to agencies | 233,972,825.17 | 38,630,088.41 |
| Depreciation expenses | 42,634,581.68 | 28,699,209.39 |
| Amortization of intangible assets | 14,013,965.69 | 14,109,534.56 |
| Others | 258,257,859.42 | 237,826,805.18 |
| Total | 1,251,865,675.45 | 853,900,889.90 |
| Item | 2018 | 2017(restated) |
| Interest expense | 1,672,764,416.74 | 1,159,304,941.02 |
| Less: Capitalized interest expenses | 38,663,084.94 | 29,632,413.22 |
| Less: Interest income | 272,453,293.86 | 116,797,403.30 |
| Exchange differences | 235,825,068.78 | (74,223,354.90) |
| Handling fee | 37,531,206.16 | 9,788,095.70 |
| Others | 8,413,790.07 | 6,966,783.16 |
| Total | 1,643,418,102.95 | 955,406,648.46 |
| Item | 2018 | 2017(restated) |
| I. Bad debt losses | (7,843,782.40) | |
| II. Impairment on long-term equity investments | - | 640,585,551.00 |
| Total | - | 632,741,768.60 |
| Item | 2018 | 2017 |
| I. Impairment of credit loss on notes receivable and accounts receivable | (3,102,192.00) | |
| II. Impairment of credit loss on other receivables | 9,760,870.10 | |
| III. Impairment of credit loss on long-term receivables | 784,171.05 | |
| IV. Others | 85,731.45 | |
| Total | 7,528,580.60 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
49. Other income
Unit: RMB
| Item | 2018 | 2017 (restated) | Related to assets / related to income |
| Recognition of deferred income | 9,551,510.74 | 13,023,645.38 | Related to assets |
| Shenzhen Municipal Finance Committee policy subsidy | 5,767,400.00 | - | Related to income |
| 2017 annual port business support subsidy | 5,602,326.79 | - | Related to income |
| Central Infrastructure Investment--Brazil TCP Terminal Item (Previous Work Part) Grant Fund | 5,161,467.89 | - | Related to income |
| Electricity subsidy | 4,040,714.30 | - | Related to income |
| 2017 Port Container Throughput Business Increase Subsidy | 3,500,000.00 | - | Related to income |
| Special fund for the development of modern logistics industry in Shenzhen | 3,000,000.00 | - | Related to income |
| Refund of withholding tax payment | 2,334,770.36 | Related to income | |
| Financial subsidy of Container Throughput Trade | 1,999,631.00 | - | Related to income |
| Shenzhen Economic, Trade and Information Technology Committee 2017 Foreign Economic and Trade Development Special funds (cross-border e-commerce) subsidies (trade clearance facilitation platform) | 1,904,900.00 | - | Related to income |
| Enterprise subsidy of Shenzhen Science and Technology Innovation Committee (the first batch of the fourth batch) | 1,685,000.00 | - | Related to income |
| Shenzhen Science and Technology Innovation Committee 2017 Corporate Research and Development Funding Fund | 1,450,000.00 | - | Related to income |
| Research and development funding | 1,239,000.00 | 881,000.00 | Related to income |
| Shenzhen Science and Technology Innovation Committee - the third batch of enterprise funding in the high-tech zone | 1,037,000.00 | - | Related to income |
| Fujian Provincial Port and Shipping Development Special Fund | 1,029,000.00 | - | Related to income |
| 2017 International Capacity Cooperation Grant Fund | - | 15,000,000.00 | Related to income |
| 2016 port business subsidy funds | - | 5,058,295.00 | Related to income |
| Qianhai cross-border e-commerce support funds | - | 4,920,000.00 | Related to income |
| Funding for cross-border e-commerce projects for special funds for central foreign trade and economic development | - | 2,040,000.00 | Related to income |
| Others | 6,877,406.56 | 3,235,522.63 | Related to income |
| Total | 56,180,127.64 | 44,158,463.01 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
50. Investment income
(1) Details of investment income
Unit: RMB
| Item | 2018 | 2017(restated) |
| Long-term equity investments income under equity method | 3,913,864,538.60 | 4,681,582,632.76 |
| Investment income on sale of long-term equity investments | - | 750,788,928.68 |
| Investment income on sale of available-for-sale financial assets | 265,589,701.73 | |
| Investment income on available-for-sale financial assets | 73,333,443.50 | |
| Investment income on other equity instruments | 8,228,975.00 | |
| Investment income on other non-current financial assets | 45,661,915.63 | |
| Others | 72,720.25 | - |
| Total | 3,967,828,149.48 | 5,771,294,706.67 |
| Investee | 2018 | 2017 (restated) | Reason for changes |
| Shanghai International Port (Group) Co., Ltd. | 2,571,370,986.64 | 2,986,681,299.47 | Changes in net profit of investee |
| Terminal Link SAS | 357,885,181.99 | 304,871,290.69 | Changes in net profit of investee |
| Nanshan Group | 220,478,175.60 | 380,486,882.72 | Changes in net profit of investee |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 141,704,248.41 | 163,655,930.56 | Changes in net profit of investee |
| Dalian Port Co., Ltd. | 112,882,708.11 | 105,414,178.27 | Changes in net profit of investee |
| Euro-Asia Oceangate, S.a` r.l. | 108,552,693.45 | 74,107,255.10 | Changes in net profit of investee |
| COHA (Laizhou) | 48,450,765.57 | 42,846,672.03 | Changes in net profit of investee |
| Port of Newcastle | 8,870,390.98 | - | Changes in net profit of investee |
| China International Marine Containers (Group) Shares Limited | - | 165,369,876.99 | Sales of long-term equity investment |
| Zhanjiang Port (Group) Co., Ltd. | (36,596,428.75) | (32,515,588.04) | Changes in net profit of investee |
| Others | 380,265,816.60 | 490,664,834.97 | Changes in net profit of investee |
| Total | 3,913,864,538.60 | 4,681,582,632.76 |
| Item | 2018 | 2017(restated) |
| Other non-current financial assets | (948,440,538.45) | - |
| Including: Financial assets measured at fair value through profit or loss | (948,440,538.45) | - |
| other non-current liabilities | (125,966,299.23) | - |
| Including: Financial liabilities measured at fair value through profit or loss | (125,966,299.23) | - |
| Total | (1,074,406,837.68) | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
52. Gains (losses) on disposal of assets
Unit: RMB
| Item | 2018 | 2017 (restated) | Amount recognized as non-recurring gain and loss in the current period |
| Gains (losses) on disposal of non-current assets | 19,258,495.33 | (391,053.09) | 19,258,495.33 |
| Including: Gains (losses) on disposal of fixed assets | 18,151,195.97 | (3,719,537.83) | 18,151,195.97 |
| Others | 1,107,299.36 | 3,328,484.74 | 1,107,299.36 |
| Item | 2018 | 2017 (restated) | Amount recognized as non-recurring gain and loss in the current period |
| Compensation received for contracts violation | 945,809.03 | 633,155.24 | 945,809.03 |
| Insurance compensation received | 540,000.00 | - | 540,000.00 |
| Government grants | 634,505.42 | 482,082.82 | 634,505.42 |
| Others | 65,008,375.53 | 22,390,340.09 | 65,008,375.53 |
| Total | 67,128,689.98 | 23,505,578.15 | 67,128,689.98 |
| Item | 2018 | 2017 (restated) | Amount recognized as non-recurring gain and loss in the current period |
| Penalties | 49,204,874.59 | 276,000.00 | 49,204,874.59 |
| Losses on retirement of non-current assets | 32,095,701.53 | 44,424.51 | 32,095,701.53 |
| Donation | 12,070,408.91 | 42,165,120.27 | 12,070,408.91 |
| Others | 31,660,313.54 | 3,115,741.44 | 31,660,313.54 |
| Total | 125,031,298.57 | 45,601,286.22 | 125,031,298.57 |
| Item | 2018 | 2017(restated) |
| Current tax expenses | 510,367,919.37 | 488,899,010.45 |
| Deferred income tax | 218,072,619.23 | 91,559,468.35 |
| Total | 728,440,538.60 | 580,458,478.80 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
54. Income tax expenses - continued
Reconciliation of income tax expenses to the accounting profit is as follows:
Unit: RMB
| Item | 2018 | 2017 (restated) |
| Accounting profit | 3,614,355,292.56 | 6,018,008,167.79 |
| Income tax expenses calculated at 25% | 903,588,823.14 | 1,504,502,041.95 |
| Effect of non-deductible expenses and losses | 317,900,855.16 | 252,110,058.94 |
| Accrued income tax expenses | 509,742,164.89 | 337,151,647.63 |
| Effect of previous deductible losses and deductible temporary differences unrecognized as deferred tax assets | 118,205,066.38 | 78,120,672.31 |
| Effect of tax-free income (Note) | (682,015,134.39) | (898,437,828.02) |
| Effect of tax preference policy | (309,855,093.00) | (325,608,548.39) |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | (137,300,892.53) | (325,633,891.21) |
| Effect of recognition of deductible losses of previously-unrecognized deferred tax assets | (44,825,432.51) | (26,783,743.21) |
| Effect of adjustments to previous year income tax | (3,138,487.61) | 95,154.17 |
| Tax adjustments result in changes in the opening deferred tax assets / liabilities balance | - | 395,301.67 |
| Others | 56,138,669.07 | (15,452,387.04) |
| Income tax expenses | 728,440,538.60 | 580,458,478.80 |
| Item | Closing balance | Opening balance(restated) |
| Cash and bank balances (Note 1) | 1,697,027,200.00 | - |
| Fixed assets (Note 2.Note 3) | 5,825,207,339.57 | 6,990,903,829.37 |
| Equity investment in Colombo International Container Terminals Limited (Note 4) | 1,526,241,901.61 | 1,436,892,458.07 |
| Equity investment in Thesar Maritime Limited (Note 4) | 767,331,789.70 | 729,773,420.12 |
| Intangible assets (Note 3) | 161,408,030.71 | 164,783,981.14 |
| Construction in process (Note 3) | 43,352,104.93 | 4,499,011.90 |
| Total | 10,020,568,366.52 | 9,326,852,700.60 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
55. Assets with restricted ownership or usage right - continued
Note3: Guangdong Yide Port Co. Ltd. acquired mortgage loans by pledged land with use right and
property right, fixed assets and construction in process, details referred to notes (V) 29.
As at December 31, 2018, the book value of the mortgage land use right in the Port of Suidewas RMB 161,408,030.71, the book value of the mortgaged fixed assets was RMB307,836,672.27, and the book value of the mortgaged construction in progress was RMB43,352,104.93. TCP purchases fixed assets by way of a mortgage, and the book value of thefixed assets is RMB 977,216.17.
Note4: See notes (V) 29 pledged equity and equity investment.
56. Other comprehensive income
See notes (V) 38.
57. Notes to items in cash flow statement
(1) Operating cash inflow
Unit: RMB
| Item | 2018 | 2017(restated) |
| Contract compensation received | 218,843,719.69 | - |
| Interest income | 214,787,250.36 | 114,433,142.20 |
| Government grants | 50,797,838.32 | 126,835,841.58 |
| Guarantees and deposits | 27,953,110.71 | 20,857,890.37 |
| Insurance compensation received | 16,320,537.80 | 7,700,961.48 |
| Rentals | 13,313,831.31 | 15,735,989.64 |
| Refunds of harbor construction fee | 96,876,815.04 | 91,598,931.94 |
| Refunds of river channel occupation fee | - | 14,469,500.00 |
| Others | 325,042,168.36 | 236,065,015.86 |
| Total | 963,935,271.59 | 627,697,273.07 |
| Item | 2018 | 2017(restated) |
| Administration expense and other operating expenses | 255,069,427.76 | 110,684,200.65 |
| Advance payment | 155,172,493.64 | 40,679,722.24 |
| Port construction fee | 83,269,723.00 | 96,836,232.93 |
| Berth dredging fee | 73,263,986.30 | 15,853,578.00 |
| Rentals | 70,806,355.26 | 28,980,691.46 |
| Port expenses | 53,236,125.23 | 37,680,224.61 |
| Guarantees and deposits | 16,514,731.00 | 9,835,356.07 |
| Cargo fee | 2,668,097.85 | 3,006,275.75 |
| Others | 334,372,971.69 | 244,564,502.74 |
| Total | 1,044,373,911.73 | 588,120,784.45 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
57. Notes to items in cash flow statement - continued
(3) Investment cash inflow
Unit: RMB
| Item | 2018 | 2017(restated) |
| Cash borrowings repayment received | 120,500,000.00 | 96,868,451.25 |
| Interests received from structured deposit | 36,115,992.14 | - |
| Cash received from acquisition of subsidiaries | - | 121,305,946.92 |
| Total | 156,615,992.14 | 218,174,398.17 |
| Item | 2018 | 2017(restated) |
| Restricted cash due to acquisition of HIPG | 965,644,000.00 | - |
| Structured cash deposit | 695,000,000.00 | - |
| Income tax expenses on disposal of other equity instruments | 25,463,391.23 | 44,950,077.56 |
| Cash borrowings | - | 1,013,445,000.00 |
| Total | 1,686,107,391.23 | 1,058,395,077.56 |
| Item | 2018 |
| Cash and cash equivalents paid for merge and acquisition in current period | 5,468,066,151.65 |
| Including: TCP | 5,468,066,151.65 |
| Less: Cash and cash equivalents of subsidiaries on acquisition date | 896,117,055.37 |
| Including: TCP | 896,117,055.37 |
| Add: Cash and cash equivalents paid this year for previous merge and acquisition | 4,359,147,699.53 |
| Including: HIPG | 4,359,147,699.53 |
| Net cash payment for acquisition of subsidiaries | 8,931,096,795.81 |
| Item | 2018 | 2017(restated) |
| CMPH disposes stock equity of the company | 3,876,395,683.27 | - |
| Item | 2018 | 2017(restated) |
| Debt issue costs | 104,284,657.11 | 3,788,342.21 |
| Payment for financial lease | 39,828,477.15 | 28,196,148.11 |
| Repayment to stock holders | 1,833,400.80 | 51,264,227.69 |
| Others | 250,000.00 | - |
| Total | 146,196,535.06 | 83,248,718.01 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
58. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
| Supplementary information | Closing balance | Opening balance (restated) |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 2,885,914,753.96 | 5,437,549,688.99 |
| Add: Provision for impairment losses of assets | - | 632,741,768.60 |
| Impairment of credit loss | 7,528,580.60 | |
| Depreciation of fixed assets | 1,298,671,209.43 | 997,765,905.13 |
| Depreciation of investment property | 183,248,437.37 | 196,198,784.24 |
| Amortization of intangible assets | 526,994,590.78 | 334,246,119.42 |
| Amortization of long-term prepaid expenses | 19,045,474.75 | 19,088,228.38 |
| Losses (Gains) on disposal of fixed assets , intangible assets and other long-term assets | (19,258,495.33) | 391,053.09 |
| Losses on retirement of fixed assets , intangible assets and other long-term assets | 32,095,701.53 | 44,424.51 |
| Losses on changes in fair value | 1,074,406,837.68 | - |
| Financial expenses | 1,869,926,400.58 | 1,080,537,549.18 |
| Losses (Gains) arising from investments | (3,967,828,149.48) | (5,771,294,706.67) |
| Decrease (Increase) in deferred tax assets | (24,282,252.12) | 1,398,127.04 |
| Increase in deferred tax liabilities | 242,354,871.34 | 378,486,734.05 |
| Decrease in inventories | (25,110,483.47) | 2,771,127.20 |
| Decrease(Increase) in operating receivables | (261,424,216.35) | (19,560,328.96) |
| Increase in operating payables | 446,292,163.57 | 184,672,562.08 |
| Net cash flows from operating activities | 4,288,575,424.84 | 3,475,037,036.28 |
| 2．Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Conversion of debt into capital | - | - |
| Convertible bonds due within one year | - | - |
| Fixed assets acquired under finance leases | - | - |
| 3．Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 5,373,281,504.75 | 7,729,460,082.75 |
| Less: Opening balance of cash | 7,729,460,082.75 | 3,253,467,084.65 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase (Decrease) in cash and cash equivalents | (2,356,178,578.00) | 4,475,992,998.10 |
| Item | Closing balance | Opening balance(restated) |
| I. Cash | 5,373,281,504.75 | 7,729,460,082.75 |
| Including: Cash on hand | 349,650.07 | 598,357.70 |
| Bank deposits | 5,116,481,444.13 | 7,716,378,695.65 |
| Other monetary funds | 256,450,410.55 | 12,483,029.40 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 5,373,281,504.75 | 7,729,460,082.75 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
59. Foreign currency monetary items
| Item | Closing balance of foreign currency | Exchange rate | Closing amount in RMB |
| Cash and bank balances | 2,134,538,905.15 | ||
| Including: HKD | 388,017,311.40 | 0.8762 | 339,980,768.25 |
| USD | 181,063,964.19 | 6.8632 | 1,242,678,199.03 |
| EUR | 45,380,138.82 | 7.8473 | 356,111,563.36 |
| RMB | 195,768,374.51 | 1.0000 | 195,768,374.51 |
| Accounts receivable | 159,141,161.37 | ||
| Including: HKD | 10,874,226.31 | 0.8762 | 9,527,997.09 |
| USD | 7,793,262.71 | 6.8632 | 53,486,720.63 |
| EUR | 12,249,620.08 | 7.8473 | 96,126,443.65 |
| Other receivables | 574,646,768.14 | ||
| Including: HKD | 1,980,078.38 | 0.8762 | 1,734,944.68 |
| USD | 2,868,796.66 | 6.8632 | 19,689,125.24 |
| EUR | 27,528,800.67 | 7.8473 | 216,026,757.50 |
| RMB | 337,195,940.72 | 1.0000 | 337,195,940.72 |
| Short-term borrowings | 1,825,358,000.00 | ||
| Including: HKD | 830,000,000.00 | 0.8762 | 727,246,000.00 |
| USD | 160,000,000.00 | 6.8632 | 1,098,112,000.00 |
| Notes and accounts payables | 45,071,940.89 | ||
| Including: HKD | 1,614,214.78 | 0.8762 | 1,414,374.99 |
| USD | 98,070.00 | 6.8632 | 673,074.02 |
| EUR | 5,477,615.47 | 7.8473 | 42,984,491.88 |
| Other payables | 512,625,788.26 | ||
| Including: HKD | 20,347,108.99 | 0.8762 | 17,828,136.90 |
| USD | 44,990,560.79 | 6.8632 | 308,779,216.81 |
| EUR | 9,864,946.28 | 7.8473 | 77,413,192.94 |
| RMB | 108,605,241.61 | 1.0000 | 108,605,241.61 |
| Non-current liabilities due within one year | 220,116,765.00 | ||
| EUR | 28,050,000.00 | 7.8473 | 220,116,765.00 |
| Long-term borrowings | 1,926,978,130.00 | ||
| USD | 100,000,000.00 | 6.8632 | 686,320,000.00 |
| EUR | 158,100,000.00 | 7.8473 | 1,240,658,130.00 |
| Bonds payable | 21,384,578,670.28 | ||
| RMB | 3,000,000,000.00 | 1.0000 | 3,000,000,000.00 |
| USD | 2,678,718,188.35 | 6.8632 | 18,384,578,670.28 |
| Long-term payables | 423,754,200.00 | ||
| EUR | 54,000,000.00 | 7.8473 | 423,754,200.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VI) CHANGES IN SCOPE OF CONSOLIDATION
1. Business combination involving enterprises not under common control
(1) Business combination involving enterprises not under common control
Unit: RMB
| Name of acquiree | Acquisition Date | Acquisition Cost | Proportion of equity acquired by business combination (%) | Acquisition Method | Purchase Date | Basis for determining the acquisition date | Revenue from the beginning of the period to the combination date | Net profit from the beginning of the period to the combination date |
| TCP | 23 February 2018 | 5,622,128,181.38 | 90.00 | Cash Payment | 23 February 2018 | Transfer of control | 1,256,737,392.95 | 69,660,138.47 |
| Acquisition cost | TCP |
| Consideration | 5,622,128,181.38 |
| Less: Fair value per share of acquired net identifiable assets | 1,652,753,226.52 |
| Goodwill | 3,969,374,954.86 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combination involving enterprises not under common control - continued
(3) Carrying amount of the acquiree's assets and liabilities on the combination date
Unit: RMB
| TCP | ||
| Fair Value on Combination Date | Book Value on Combination Date | |
| Assets: | ||
| Current Assets | 1,136,212,899.49 | 1,136,212,899.49 |
| Fixed Assets | 1,405,437,560.59 | 1,195,347,281.14 |
| Construction in progress | 468,950,467.03 | 468,950,467.03 |
| Intangible assets | 5,386,643,891.15 | 3,830,786,653.38 |
| Deferred tax assets | 31,600,449.30 | 31,600,449.30 |
| Liabilities: | ||
| Current liabilities | 686,328,006.23 | 686,328,006.23 |
| Long-term borrowings | 763,828,636.10 | 763,828,636.10 |
| Bonds payable | 1,108,636,631.38 | 1,108,636,631.38 |
| Long-term payables | 3,425,767,336.76 | 3,425,767,336.76 |
| Provisions | 20,880,330.98 | 20,880,330.98 |
| Deferred tax liabilities | 587,011,852.20 | 126,850,494.80 |
| Net assets | 1,836,392,473.91 | 530,606,314.09 |
| Less: Minority interests | 183,639,247.39 | 53,060,631.41 |
| Net assets acquired | 1,652,753,226.52 | 477,545,682.68 |
| Name of merged party | Acquired Equity in proportion | Basis for formation of combination under the same control | Combination date | Basis for determining the combination date | Revenue from the beginning of the period to the combination date | Net profit from the beginning of the period to the combination date | Revenue in the comparative period | Net profit in the comparative period |
| CMPH | 39.45 | Note 1 | 25 December 2018 | Note 1 | 7,729,738,537.45 | 2,685,592,888.44 | 5,668,455,620.87 | 4,928,289,403.49 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
2. Business combination involving enterprises under common control - continued
(1) Business combination involving enterprises under common control - continued
As at 5 February 2018, CMPH and its wholly-owned subsidiary Malai warehousing(Shenzhen) Co., Ltd. (hereinafter referred to as "Malai warehousing") and ChinaMerchants Port Development (Shenzhen) Co., Ltd. signed a share transfer agreement, saleof 161,190,933 shares of A common stock shares of the Company held by ChinaMerchants Holdings Limited (Shenzhen) Co., Ltd., representing approximately 25% of thetotal issued shares of the Company on the date of the agreement; CMPH has awholly-owned subsidiary Feng Enterprise Co., Ltd. and Broadford International Co., Ltd.signed a share transfer agreement to sell 55,314,208 shares of B common stock shares ofthe Company to Broadford International Co., Ltd., accounting for 8.58% of the total issuedshares of the company on the date of the agreement; Nanshan Group, a joint venture of thePort Holdings, signed a share transfer agreement with China Merchants KongtongDevelopment (Shenzhen) Co., Ltd., and sold 209,687,067 A common stock shares of itsshares to China Merchants Gangtong Development (Shenzhen) Co., Ltd. 32.52% of allissued shares of the company on the date of signing the agreement. On the same day,CMPH and Nanshan Group signed an agreement to terminate the agreement to host the Acommon stock shares of the Company held by Nanshan Group. As at June 8, 2018, theabove equity transaction was completed, and CMPH was no longer the parent company ofthe company.
As at 19 June 2018, the company and CMID signed the "issuing shares to purchase assetsagreement", according to the agreement. The company purchased 1,313,541,560 ordinaryshares of CMPH held by CMID, representing approximately 39.45% of the issued sharesof CMPH (hereinafter referred to as "Target assets"), the transaction amount is RMB246.50 million. On 16 November 2018, the company's shares issued to CMID werecompleted in China Securities Depository and Clearing Co., Ltd. Shenzhen Branch, andCMID officially became a shareholder of the Company. On the same day, the "ConsensusAction Agreement on China Merchants Port Holdings Limited" signed by the Companyand CMHK came into effect. According to the agreement, CMHK has voting rights on22.64% of CMPH, which it is entrusted to exercise. China Merchants Port ControllingShareholders' Meeting held unanimous agreement with the Company when voting on thedeliberation matters, and voted based on the opinions of the Company. After thecompletion of the above transaction, CMID acquired 64.05% of the shares of the Company;the Company holds a total of 62.09% of the voting rights of CMPH, which can control it.Therefore, starting from December 25, 2018, the Company refers to the accountingtreatment method of business combination under the common control, and incorporatesCMPH into the consolidated scope of the Company's consolidated financial statementsfrom the beginning of the comparative financial statements.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
2. Business combination involving enterprises under common control - continued
(2) Acquisition cost
Unit: RMB
| Acquisition cost | CMPH |
| Face value of issued equity securities | 1,148,648,648.00 |
| Contingent consideration | - |
| Total | 1,148,648,648.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
2. Business combination involving enterprises under common control - continued
(4) Carrying amount of the acquiree's assets and liabilities on the combination date
Unit: RMB
| Combining date | At the end of last year | |
| Assets: | ||
| Cash and bank balances | 6,286,625,388.23 | 7,010,046,720.27 |
| Notes and accounts receivable | 886,192,452.65 | 687,058,097.67 |
| Prepayments | 120,136,139.67 | 68,274,723.92 |
| Other receivables | 784,384,329.86 | 1,102,454,504.60 |
| Inventories | 94,885,983.62 | 67,967,109.18 |
| Assets held for sale | 115,356,162.94 | - |
| Other current assets | 1,165,966,118.29 | 1,169,773,192.59 |
| Available-for-sale financial assets | 3,059,822,735.68 | |
| Long-term receivables | 793,840,080.19 | 9,669,034.35 |
| Long-term equity investments | 49,203,721,619.70 | 42,671,121,909.29 |
| Other equity investments | 96,101,614.30 | |
| Other non-current financial assets | 2,087,872,081.94 | |
| Investment properties | 5,868,106,799.88 | 6,037,804,900.44 |
| Fixed assets | 19,873,743,830.72 | 19,999,622,807.44 |
| Construction in progress | 5,323,807,106.87 | 2,256,101,893.73 |
| Intangible assets | 19,631,243,508.67 | 14,899,396,341.07 |
| Goodwill | 7,331,044,944.18 | 3,046,815,005.07 |
| Long-term prepaid expenses | 184,721,499.76 | 202,064,891.53 |
| Deferred tax assets | 52,289,927.47 | 31,672,836.18 |
| Other non-current assets | 247,632,416.27 | 95,415,126.79 |
| Liabilities: | ||
| Short-term borrowings | 2,478,045,312.62 | 2,580,000,000.00 |
| Notes and accounts payable | 347,093,777.13 | 236,483,248.53 |
| Receipts in advance | 28,185,109.50 | 61,659,604.71 |
| Contract liabilities | 47,581,489.59 | |
| Employee benefits payable | 379,272,707.40 | 295,466,425.37 |
| Taxes payable | 256,463,960.76 | 168,341,559.91 |
| Other payables | 2,075,705,657.54 | 6,357,346,447.29 |
| Non-current liabilities due within one year | 2,002,817,943.15 | 2,393,237,748.47 |
| Other current liabilities | 402,659,721.80 | 285,472,328.45 |
| Long-term borrowings | 6,971,479,842.18 | 7,670,516,491.15 |
| Bonds payable | 22,097,467,096.40 | 10,292,778,301.33 |
| Long-term payable | 1,266,057,088.66 | 1,247,806,274.43 |
| Long-term employee benefits payable | 375,325,127.65 | 350,750,123.90 |
| Provisions | 28,276,275.75 | - |
| Deferred income | 55,520,260.40 | 66,808,802.84 |
| Special payables | - | 10,412,745.10 |
| Deferred tax liabilities | 2,666,838,286.93 | 1,982,121,444.46 |
| Other non-current liabilities | 3,752,276,691.95 | 54,763,901.68 |
| Net assets | 74,916,605,655.80 | 68,361,116,382.18 |
| Less: Minority interests | 49,740,467,883.87 | 45,770,803,019.72 |
| Net assets acquired | 25,176,137,771.93 | 22,590,313,362.46 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
3. Changes in scope of consolidation due to other reasons
(1) New subsidiaries due to assets acquisition in this period
Unit: RMB
| Name of subsidiaries | Closing balance of net assets |
| Shenzhen Haixing Xiaoyetian Logistics Development Co., Ltd. | 10,378,526.33 |
| China Merchants Port (Zhoushan) RoRo Terminal Co., Ltd. | 49,755,188.46 |
| China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. | 24,178,813.68 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VII) EQUITY IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
| Full name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered Capital (in ten thousand Yuan unless otherwise stated) | Proportion of ownership Interest (%) | Proportion of ownership Interest (%) | |
| Direct ownership interest | Direct ownership interest | ||||||
| Shenzhen Chiwan International Freight Agency Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 550.00 | 100.00 | - | Established through investment |
| Chiwan Wharf Holdings (Hong Kong) Limited. | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD 1,000,000.00 | 100.00 | - | Established through investment |
| Dongguan Chiwan Warf Co., Ltd. ("DGW") | Dongguan, PRC | Dongguan, PRC | Logistics support services | 45,000.00 | 85.00 | - | Established through investment |
| DGT. | Dongguan, PRC | Dongguan, PRC | Logistics support services | 40,000.00 | 100.00 | - | Established through investment |
| Hinwin Development Limited | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD 10,000.00 | 100.00 | - | Established through investment |
| CHCC | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 28,820.00 | 100.00 | - | Combination involving enterprises under common control |
| Shenzhen Chiwan Transportation Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 1,500.00 | 100.00 | - | Combination involving enterprises under common control |
| CCT | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | USD 95,300,000.00 | 55.00 | 20.00 | Combination involving enterprises under common control |
| Shenzhen Chiwan Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 2,400.00 | 100.00 | - | Combination involving enterprises under common control |
| Chiwan Shipping (Hong Kong) Limited | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Logistics support services | HKD 800,000.00 | 100.00 | - | Combination involving enterprises under common control |
| China Merchants Port Holdings (Note 1) | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Investment | HKD39,070.13million | 39.45 | - | Combination involving enterprises under common control |
| CMBL. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 70,000.00 | 40.00 | 60.00 | Combination involving enterprises under common control |
| China Merchants International Information Technology Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Information Technology | 5,000.00 | 23.16 | 76.84 | Combination involving enterprises under common control |
| China Merchants International (China) Investment Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment | USD 30,000,000.00 | - | 100.00 | Combination involving enterprises under common control |
| CMT | Qingdao PRC | Qingdao PRC | Logistics support services | USD 206.30 million | - | 100.00 | Combination involving enterprises under common control |
| CMHIT | Hong Kong SAR, PRC | Hong Kong SAR, PRC | Logistics support services | HKD 500,000.00 | - | 100.00 | Combination involving enterprises under common control |
| China Merchants Port (Shenzhen) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 55,000.00 | - | 100.00 | Combination involving enterprises under common control |
| SZHQ. | Shenzhen, PRC | Shenzhen, PRC | Engineering supervision | 300.00 | - | 100.00 | Combination involving enterprises under common control |
| ATJ | Shenzhen, PRC | Shenzhen, PRC | Storage | HKD 100.00 million | - | 100.00 | Combination involving enterprises under common control |
| ASJ | Shenzhen, PRC | Shenzhen, PRC | Storage | HKD 100.00 million | - | 100.00 | Combination involving enterprises under common control |
| China Merchants International Terminal (Qingdao) Co., Ltd. | Qingdao PRC | Qingdao PRC | Logistics support services | USD 44.00 million | - | 90.10 | Combination involving enterprises under common control |
| Colombo International Container Terminals Limited | Sri Lanka | Sri Lanka | Logistics support services | USD 150.00 million | - | 85.00 | Combination involving enterprises under common control |
| SMPS | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Combination involving enterprises under common control |
| SMTC | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 33,500.00 | - | 100.00 | Combination involving enterprises under common control |
| SMWC | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 20,000.00 | - | 100.00 | Combination involving enterprises under common control |
| Zhangzhou China Merchants Tugboat Co Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 1,500.00 | - | 70.00 | Combination involving enterprises under common control |
| Zhangzhou China Merchants Port Co Ltd. | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 100,000.00 | - | 60.00 | Combination involving enterprises under common control |
| ZCMG(Note2) | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 44,450.00 | - | 31.00 | Combination involving enterprises under common control |
| China Merchants (SCT) Holdings Company Limited | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | HKD 618.20 million | - | 80.00 | Combination involving enterprises under common control |
| Shekou Container Terminals (Phase II) Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 60,854.90 | - | 80.00 | Combination involving enterprises under common control |
| SCT3 | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 127,600.00 | - | 80.00 | Combination involving enterprises under common control |
| AYJ | Shenzhen, PRC | Shenzhen, PRC | Storage | 6,060.00 | - | 80.00 | Combination involving enterprises under common control |
| Shenzhen Haixing Port Development Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 53,072.92 | - | 67.00 | Combination involving enterprises under common control |
| YDG | Foshan, PRC | Foshan, PRC | Logistics support services | 21,600.00 | - | 51.00 | Combination involving enterprises under common control |
| Mega Shekou Container Terminals Limited | British Virgin Islands | British Virgin Islands | Investment | USD 120.00 | - | 85.42 | Combination involving enterprises under common control |
| Thesar Maritime Limited | Cyprus | Cyprus | Investment | EUR 5,000.00 | - | 50.00 | Combination involving enterprises under common control |
| Lomé Container Terminal S. A. (Note3) | Togolese Republic | Togolese Republic | Logistics support services | FCFA 200.00 million | - | 35.00 | Combination involving enterprises under common control |
| HIPG | Sri Lanka | Sri Lanka | Logistics support services | USD 794.00 million | - | 85.00 | Combination involving enterprises under common control |
| Shantou China Merchants Port Co., Ltd. | Shantou, PRC | Shantou, PRC | Logistics support services | 12,500.00 | - | 60.00 | Combination involving enterprises under common control |
| JYRT | Shenzhen, PRC | Shenzhen, PRC | Property rental services | 80,000.00 | - | 100.00 | Combination involving enterprises under common control |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VII) EQUITY IN OTHER ENTITIES - continued
1. Interests in subsidiaries - continued
(1) Composition of the Group - continued
| Full name of the subsidiary | Principal place of business | Place of incorporation | Nature of business | Registered Capital (in ten thousand Yuan unless otherwise stated) | Proportion of ownership Interest (%) | Proportion of ownership Interest (%) | |
| Direct ownership interest | Direct ownership interest | ||||||
| QHW | Shenzhen, PRC | Shenzhen, PRC | Property rental services | 20,000.00 | - | 100.00 | Combination involving enterprises under common control |
| JZZ | Shenzhen, PRC | Shenzhen, PRC | Investment Consulting | 4,000 | - | 75.00 | Combination involving enterprises under common control |
| Shenzhen Lianda Tugboat Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 200 | - | 60.29 | Combination involving enterprises under common control |
| Zhangzhou Zhongli Outer Wheel Tally Co., Ltd | Zhangzhou, PRC | Zhangzhou, PRC | Logistics support services | 200 | - | 84.00 | Combination involving enterprises under common control |
| China Merchants Holdings (Djibouti) FZE | Djibouti | Djibouti | Logistics support services | USD 38.14 million | - | 100.00 | Combination involving enterprises under common control |
| TCP(Note1) | Brazil | Brazil | Logistics support services | BRL 68.85 million | - | 90.00 | Combination involving enterprises not under common control |
| China Merchants Port (Zhoushan) RoRo Logistics Co., Ltd. (Note1) | Shantou, PRC | Shantou, PRC | Logistics support services | 17,307.86 | 51.00 | - | Assets Acquisition |
| China Merchants Port (Zhoushan) RoRo Terminal Co., Ltd. (Note1) | Shantou, PRC | Shantou, PRC | Logistics support services | 5,000.00 | - | 51.00 | Assets Acquisition |
| Shenzhen Haixing Xiaoyetian Logistics Development Co., Ltd. (Note1) | Shenzhen, PRC | Shenzhen, PRC | Logistics support services | 7,066.79 | - | 79.57 | Assets Acquisition |
| 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 |
| CMPH | 60.55 | 1,795,466,614.72 | 1,801,409,418.27 | 49,740,467,883.83 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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 | |
| CMPH | 9,453,546,575.26 | 110,694,125,429.95 | 120,147,672,005.21 | 8,017,825,679.49 | 37,213,240,669.92 | 45,231,066,349.41 | 10,105,574,348.23 | 92,309,507,481.57 | 102,415,081,829.80 | 12,378,007,362.73 | 21,675,958,084.89 | 34,053,965,447.62 |
| Name of the subsidiary | 2018 | 2017 | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Operating cash flows | |
| CMPH | 7,729,738,537.45 | 2,685,592,888.44 | 2,886,818,529.12 | 3,595,234,888.15 | 5,668,455,620.87 | 4,928,289,403.49 | 5,569,920,005.94 | 2,495,218,955.91 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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 (%) | Accounting method of investments in joint ventures and associates | |
| Directly | Indirectly | |||||
| Joint ventures | ||||||
| Shanghai International Port (Group) Co., Ltd. | Shanghai, PRC | Shanghai, PRC | Port and container terminal business | - | 26.77 | Equity method |
| Item | Shanghai International Port (Group) Co., Ltd. | |
| Closing balance/2018 | Opening balance/2017 | |
| Current assets | 47,842,620,837.32 | 50,265,638,309.88 |
| Including: cash and cash equivalent | 27,935,157,994.83 | 20,246,034,398.90 |
| Non-current assets | 96,524,413,178.58 | 90,969,266,684.14 |
| Total assets | 144,367,034,015.90 | 141,234,904,994.02 |
| Current liabilities | 31,676,398,710.35 | 38,083,862,202.13 |
| Non-current liabilities | 30,340,320,855.30 | 26,094,575,871.54 |
| Total liabilities | 62,016,719,565.65 | 64,178,438,073.67 |
| Minority interests | 6,802,318,747.82 | 7,572,086,010.64 |
| Total equity attributable to shareholders of the parent company | 75,547,995,702.43 | 69,484,380,909.71 |
| Net assets calculated based on the proportion of ownership interest | 20,216,643,649.97 | 18,378,618,750.62 |
| Adjustments | ||
| - Goodwill | 2,076,585,747.12 | 1,834,571,145.21 |
| - Others | (105,669,326.14) | (72,729,483.24) |
| Carrying amounts of equity investments in Joint Ventures | 22,187,560,070.95 | 20,140,460,412.59 |
| Fair value of joint venture equity investment with public quotation | 32,129,272,123.48 | 40,766,914,309.10 |
| Income tax expenses | 38,042,544,621.37 | 37,423,946,226.91 |
| Net profit | 11,472,021,103.16 | 12,846,413,455.93 |
| Other comprehensive income | (954,348,960.96) | 1,525,862,566.50 |
| Total comprehensive income | 10,517,672,142.20 | 14,372,276,022.43 |
| Dividends received from joint ventures in the current year | 1,059,194,508.74 | 913,488,707.16 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(VII) EQUITY IN OTHER ENTITIES - continued
2. Interests in joint ventures and associates - continued
(3) Summarized financial information of immaterial associates and joint ventures
Unit: RMB
| Closing balance/2018 | Opening balance/2017 | |
| Joint ventures: | ||
| Total carrying amounts of investment | 11,230,302,154.26 | 8,933,914,027.28 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 429,904,250.47 | 376,916,082.57 |
| - Other comprehensive income | (5,608,904.12) | 22,002,683.51 |
| - Total comprehensive income | 424,295,346.35 | 398,918,766.08 |
| Associates: | ||
| Total carrying amounts of investment | 16,758,715,038.19 | 14,086,475,367.61 |
| Aggregate of following items calculated based on the proportion of ownership interest | ||
| - Net profit | 912,589,301.49 | 1,317,985,250.72 |
| - Other comprehensive income | (31,643,724.68) | 77,536,453.90 |
| - Total comprehensive income | 880,945,576.81 | 1,395,521,704.62 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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 FCFA and HKD. Several of theGroup's subsidiaries have purchases and sales denominated in HKD while the Group's otherprincipal activities are denominated and settled in RMB. As at 31 December 2018, the balance ofthe Group's assets and liabilities are both denominated in functional currency, except that balanceof assets set out below is in HKD and USD. Currency risk arising from the foreign currencybalance of assets and liabilities may have impact on the Group's performance.
Unit: RMB
| Item | Closing balance | Opening balance(restated) |
| Cash and bank balances | 2,134,538,905.15 | 900,731,401.82 |
| Notes and accounts receivable | 159,141,161.37 | 24,592,272.50 |
| Other receivables | 574,646,768.14 | 3,446,717,477.66 |
| Short-term borrowings | 1,825,358,000.00 | - |
| Notes and accounts payable | 45,071,940.89 | 6,767,235.27 |
| Other payables | 512,625,788.26 | 53,024,698.55 |
| Non-current liabilities due within one year | 220,116,765.00 | - |
| Long-term borrowings | 1,926,978,130.00 | - |
| Bonds payable | 21,384,578,670.28 | 2,500,000,000.00 |
| Long-term payables | 423,754,200.00 | 423,754,200.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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
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 (restated) | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| All foreign currencies | 5% increase against RMB | (11,394,591.45) | (11,394,591.45) | 23,982,328.89 | 23,982,328.89 |
| All foreign currencies | 5% decrease against RMB | 11,394,591.45 | 11,394,591.45 | (23,982,328.89) | (23,982,328.89) |
| All foreign currencies | 5% increase against USD | 17,324.20 | 17,324.20 | 322,074.56 | 322,074.56 |
| All foreign currencies | 5% decrease against USD | (17,324.20) | (17,324.20) | (322,074.56) | (322,074.56) |
| All foreign currencies | 5% increase against HKD | (1,098,658,981.68) | (1,098,658,981.68) | (67,627,776.68) | (67,627,776.68) |
| All foreign currencies | 5% decrease against HKD | 1,098,658,981.68 | 1,098,658,981.68 | 67,627,776.68 | 67,627,776.68 |
| All foreign currencies | 5% increase against FCFA | (63,413,556.92) | (63,413,556.92) | 1,410,777.82 | 1,410,777.82 |
| All foreign currencies | 5% decrease against FCFA | 63,413,556.92 | 63,413,556.92 | (1,410,777.82) | (1,410,777.82) |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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 (restated) | ||
| Effect on profits | Effect on shareholders' equity | Effect on profits | Effect on shareholders' equity | ||
| Short-term & Long-term borrowings | 1% increase | (119,061,442.29 ) | (119,061,442.29 ) | (102,505,164.91) | (102,505,164.91) |
| Short-term & Long-term borrowings | 1% decrease | 119,061,442.29 | 119,061,442.29 | 102,505,164.91 | 102,505,164.91 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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 loans and ensures compliance with loans covenants.
The following is the maturity analysis for financial assets and financial liabilities held by theGroup which is based on undiscounted remaining contractual obligations:
Unit: RMB
| Item | Carrying amount | Total amount | Within 1 year | 1-5 years | More than 5 years |
| The non-derivative financial liabilities | |||||
| Short-term borrowings | 3,425,291,312.62 | 3,478,169,207.83 | 3,478,169,207.83 | - | - |
| Notes and accounts payable | 429,120,690.97 | 429,120,690.97 | 429,120,690.97 | - | - |
| Other payables | 2,245,670,528.89 | 2,245,670,528.89 | 2,245,670,528.89 | - | - |
| Non-current liabilities due within one year | 2,243,283,834.91 | 2,660,121,708.86 | 2,660,121,708.86 | - | - |
| Other current liabilities | 602,659,721.80 | 608,495,040.88 | 608,495,040.88 | - | - |
| Long-term borrowings | 6,971,479,842.18 | 7,796,930,369.38 | - | 6,538,562,313.75 | 1,258,368,055.63 |
| Bonds payable | 22,097,467,096.40 | 27,296,882,971.12 | 605,139,169.55 | 18,009,414,364.38 | 8,682,329,437.19 |
| Long-term payables | 431,988,064.47 | 433,111,346.10 | - | 42,453,199.58 | 390,658,146.52 |
| The derivative financial liabilities | |||||
| Other non-current liabilities | 579,195,304.56 | 579,195,304.56 | - | 579,195,304.56 | - |
| Item | Closing Balance | |||
| Level 1 | Level 2 | Level 3 | Total | |
| Measurements at fair value continuously | ||||
| Other investments in equity instruments | 9,800,000.00 | - | 238,048,314.30 | 247,848,314.30 |
| Other non-current financial assets | 1,551,815,520.48 | - | 536,056,561.46 | 2,087,872,081.94 |
| Total assets measured at fair value continuously | 1,561,615,520.48 | - | 774,104,875.76 | 2,335,720,396.24 |
| Other non-current liabilities | - | 3,839,742,307.01 | 3,839,742,307.01 | |
| Total liabilities measured at fair value continuously | - | 3,839,742,307.01 | 3,839,742,307.01 | |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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 and the Stock Exchange of Hong Kong Ltd. closingprice of equity instruments at 29 December 2018.
3. Level 3 continuously fair value measure instruments, using valuation method and
qualitative and quantitative information on important parameters.
Unit: RMB
| Item | Closing Balance Fair Value | Opening Balance Fair Value | Valuation method | Input |
| Other investments in equity instruments | 238,048,314.30 | 223,633,968.79 | Net assets method | Net asset value |
| Other non-current financial assets | 2,000,000.00 | - | Discounted cash flow method | Discount rate |
| Other non-current financial assets | 689,901.07 | 644,549.67 | Net assets method | Net asset value |
| Other non-current financial assets | 533,366,660.39 | 602,632,149.19 | Comparative method of listed company | Stock Price |
| Other non-current liabilities | 3,260,547,002.45 | - | Discounted cash flow method | Discount rate |
| Other non-current liabilities | 579,195,304.56 | - | Option pricing method | Executive price, expected volatility, etc. |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(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 (%) |
| Broadford Global Limited | Parent company | Private limited company (share limited) | Hong Kong | Deng Weidong | Investment holding | HKD21,120,986,262 | 3.08%- | 87.81 (Note) |
| Name of other related parties | Relationships between other related parties and the Company |
| Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi | Joint venture |
| Port of Newcastle and its subsidiaries | Joint venture |
| Ningbo Daxie Merchants International Wharf Co., Ltd. | Joint venture |
| Qingdao Qianwan United Container Terminal Co., Ltd. | Joint venture |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Joint venture |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Joint venture |
| Zhanjiang Port (Group) Co., Ltd. | Joint venture |
| China Overseas Harbour Affaris (Laizhou) Co., Ltd. | Joint venture |
| Great Horn Development Company FZCO | Associate Company |
| International Djibouti Industrial Parks Operation FZCO | Associate Company |
| Port de Djibouti S.A. | Associate Company |
| Terminal Link SAS | Associate Company |
| Nanshan Group and its subsidiaries | Associate Company |
| Shanghai International Port (Group) Co., Ltd. | Associate Company |
| Shenzhen Globex e-Service Inc | Associate Company |
| Shenzhen Baohong Trade Service Co., Ltd. | Associate Company |
| Tianjin Haitian Bonded Logistics Co., Ltd. | Associate Company |
| Modern Terminals Limited | Associate Company |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
Unit: RMB
| Name of other related parties | Relationships between other related parties and the Company |
| Zhangzhou COSCO Shipping Agency Co., Ltd | Associate Company |
| COFCO Merchants Bureau (Shenzhen) Grain Electronic Trading Center Co., Ltd. | Associate Company |
| CHU KONG RIVER TRADE TERMINAL CO. LTD. | Associate Company |
| Qingdao Port International Co., Ltd | minority shareholders of subsidiaries |
| Hong Kong International Enterprises Limited | minority shareholders of subsidiaries |
| YiHai Kerry Investment Company Limited | minority shareholders of subsidiaries |
| CMHK | Controlled by the same ultimate actual controller |
| Sinotrans(NZ)Limited | Controlled by the same ultimate actual controller |
| Sinoway Shipping Limited | Controlled by the same ultimate actual controller |
| Guangzhou International Ocean Shipping Agency Co., Ltd. | Controlled by the same ultimate actual controller |
| Hoi Tung (Shanghai) Co., Ltd. | Controlled by the same ultimate actual controller |
| EuroAsia Dockyard Enterprise and development Ltd | Controlled by the same ultimate actual controller |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Controlled by the same ultimate actual controller |
| Qingdao Sino-foreign Transport Supply Chain Management Co., Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Nanyou (Holdings) Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Waidai Warehousing Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Landmark (Shenzhen) Co ., Ltd | Controlled by the same ultimate actual controller |
| China Merchants Ocean Shipping Agency Shenzhen | Controlled by the same ultimate actual controller |
| Shenzhen Merchants Qianhai Industrial Development Co., Ltd. | Controlled by the same ultimate actual controller |
| CSC RoRo Logistics Co., Ltd | Controlled by the same ultimate actual controller |
| China Merchants (Shenzhen) Power Supply., Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Merchants Construction Co., Ltd. | Controlled by the same ultimate actual controller |
| Shenzhen Merchants Commercial Property Investment Co., Ltd | Controlled by the same ultimate actual controller |
| Shenzhen Merchants Culture Industry Co., Ltd. | Controlled by the same ultimate actual controller |
| Shenzhen Investment Promotion Real Estate Management Co., Ltd.. | Controlled by the same ultimate actual controller |
| China Ocean Shipping Tally Shenzhen CO., Ltd | Controlled by the same ultimate actual controller |
| China Marine Shipping Agency,Shenzhen Company Limited | Controlled by the same ultimate actual controller |
| Yiu Lian Dockyards (Shekou) Limited | Controlled by the same ultimate actual controller |
| Yiu Lian Dockyards Limited | Controlled by the same ultimate actual controller |
| Cm Houlder Insurance Brokers Limited | Controlled by the same ultimate actual controller |
| Investment Promotion Bureau Zhangzhou Development Zone Power Supply Co., Ltd.. | Controlled by the same ultimate actual controller |
| China Merchants Godown, Wharf Transportation Company Limited | Controlled by the same ultimate actual controller |
| Huanan Refrigeration Ice Making(Shenzhen)Co., Ltd.. | Controlled by the same ultimate actual controller |
| China Merchants Group Finance Company Limited | Controlled by the same ultimate actual controller |
| China Merchants Steam Navigation Company Limited | Controlled by the same ultimate actual controller |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Bureau Logistics Group Fujian Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd | Controlled by the same ultimate actual controller |
| China Merchants Property Management Co., Ltd.. | Controlled by the same ultimate actual controller |
| China Merchants Bureau Zhangzhou Development Zone Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Controlled by the same ultimate actual controller |
| China Merchants Securities Co., Ltd. | Controlled by the same ultimate actual controller |
| China Communications Import & Export Co., Ltd | Controlled by the same ultimate actual controller |
| China Ocean Shipping Agency Shenzhen | Controlled by the same ultimate actual controller |
| Sinotrans Co., Ltd.. | Controlled by the same ultimate actual controller |
| China Outbound Air Transport Co., Ltd. | Controlled by the same ultimate actual controller |
| Sinotrans Container Lines (Hong Kong) Company Limited | Controlled by the same ultimate actual controller |
| Sinotrans Container Lines Co., Ltd.. | Controlled by the same ultimate actual controller |
| China Merchants Bureau Food (Shenzhen) Co., Ltd | Controlled by the same ultimate actual controller |
| China Merchants Union (BVI) Limited | Controlled by the same ultimate actual controller |
| Khor Ambado FZCo | Controlled by the same ultimate actual controller |
| China Merchants Bank Company Limited | Controlled by the same ultimate actual controller |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction
(1) Provision and receipt of services
Unit: RMB
| Related party | Content of related party transaction | Pricing and decision-making procedures of related party transactions | Closing balance | Opening balance (restated) |
| Receipt of services： | ||||
| China Merchants Securities Co., Ltd | Service expenditure | Negotiation | 22,641,509.43 | - |
| Qingdao Qianwan West Port United Terminal Co., Ltd | Service expenditure | Negotiation | 15,358,571.88 | 16,832,662.07 |
| Shenzhen China Merchants Shangzhi Investment Co., Ltd | Service expenditure | Negotiation | 10,707,148.03 | 15,012,063.63 |
| Yiu Lian Dockyards Limited | Service expenditure | Negotiation | 10,019,922.18 | 9,182,821.83 |
| China Merchants Bureau Zhangzhou Development Zone Co., Ltd. | Service expenditure | Negotiation | 5,681,278.30 | 5,395,042.75 |
| China Merchants Bureau Logistics Group Qingdao Co., Ltd | Service expenditure | Negotiation | 3,751,785.75 | 2,015,655.27 |
| China Ocean Shipping Agency Shenzhen | Service expenditure | Negotiation | 3,539,104.80 | 4,072,313.14 |
| Hoi Tung (Shanghai) Co., Ltd. | Service expenditure | Negotiation | 3,461,147.79 | 1,432,378.81 |
| China Merchants (Shenzhen) Power Supply Co., Ltd. | Service expenditure | Negotiation | 2,908,847.34 | - |
| China Outbound Air Transport Co., Ltd. | Service expenditure | Negotiation | 2,199,064.60 | - |
| Cm Houlder Insurance Brokers Limited | Service expenditure | Negotiation | 2,102,764.12 | 1,903,741.43 |
| China Merchants Property Management Co., Ltd. | Service expenditure | Negotiation | 1,764,315.36 | 2,015,655.27 |
| China Ocean Shipping Tally Shenzhen CO., Ltd | Service expenditure | Negotiation | 1,240,537.34 | 1,126,870.35 |
| Nanshan Group and Its Subsidiary | Service expenditure | Negotiation | 1,080,269.25 | 2,288,324.92 |
| Sinoway Shipping Limited | Service expenditure | Negotiation | 760,244.19 | 7,861,796.11 |
| Shenzhen Merchants Culture Industry Co., Ltd. | Service expenditure | Negotiation | 461,390.46 | 1,824,228.26 |
| Other related parties | Service expenditure | Negotiation | 3,695,383.53 | 3,818,846.42 |
| China Merchants Group Finance Company Limited | Interest expense | Negotiation | 51,574,070.78 | 43,521,750.00 |
| Port de Djibouti S.A. | Interest expense | Negotiation | 24,719,148.38 | 2,364,694.82 |
| China Merchants Steam Navigation Company Limited | Interest expense | Negotiation | 3,961,479.45 | 8,246,884.93 |
| China Merchant Bank Co., Ltd | Interest expense | Negotiation | 104,400.00 | 5,762,005.73 |
| China Merchants Group | Interest expense | Negotiation | - | 4,318,767.12 |
| Total | 171,732,382.96 | 138,996,502.86 | ||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - continued
(1) Provision and receipt of services - continued
Unit: RMB
| Related party | Content of related party transaction | Pricing and decision-making procedures of related party transactions | Closing balance | Opening balance (restated) |
| Provision of service： | ||||
| Qingdao Qianwan United Container Terminal Co., Ltd | Service revenue | Negotiation | 59,871,312.19 | 52,831,836.74 |
| China Ocean Shipping Agency Shenzhen | Service revenue | Negotiation | 26,678,580.24 | 25,783,328.94 |
| Khor Ambado FZCo | Service revenue | Negotiation | 22,976,552.15 | - |
| Qingdao Qianwan West Port United Terminal Co., Ltd. | Service revenue | Negotiation | 14,667,866.59 | 15,378,330.78 |
| Globex e-Services Co., Ltd. | Service revenue | Negotiation | 13,954,183.68 | 8,174,128.49 |
| China Marine Shipping Agency,Shenzhen Company Limited | Service revenue | Negotiation | 11,339,084.02 | 8,393,115.04 |
| Sinotrans Container Lines Co., Ltd. | Service revenue | Negotiation | 10,699,341.99 | 3,489,366.88 |
| Huanan Refrigeration Ice Making (Shenzhen) Co., Ltd. | Service revenue | Negotiation | 6,422,615.01 | 6,226,134.87 |
| Zhangzhou COSCO Shipping Agency Co., Ltd | Service revenue | Negotiation | 5,804,690.70 | 5,417,274.27 |
| Zhanjiang Port (Group) Co., Ltd | Service revenue | Negotiation | 5,568,651.21 | 1,356,499.96 |
| Qingdao Bonded Logistics Park Sino-foreign Transport Warehousing Logistics Co., Ltd. | Service revenue | Negotiation | 5,085,762.32 | 3,154,879.91 |
| Port de Djibouti S.A. | Service revenue | Negotiation | 4,640,763.43 | 5,686,674.06 |
| Great Horn Development Company FZCO | Service revenue | Negotiation | 3,985,900.36 | 9,947,871.61 |
| Ningbo Daxie Merchants International Wharf Co., Ltd | Service revenue | Negotiation | 3,929,015.11 | 4,537,052.85 |
| Qingdao Qianwan New United Container Terminal Co., Ltd. | Service revenue | Negotiation | 3,411,057.43 | 3,179,265.03 |
| Yiu Lian Dockyards (Shekou) Limited | Service revenue | Negotiation | 3,319,608.63 | 1,274,969.05 |
| International Djibouti Industrial Parks Operation FZCO | Service revenue | Negotiation | 3,054,612.36 | 5,725,098.14 |
| China Merchants Ocean Shipping Agency Shenzhen | Service revenue | Negotiation | 3,013,980.25 | 4,402,744.18 |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd | Service revenue | Negotiation | 2,496,490.06 | 3,140,643.98 |
| China Merchants Bureau Zhongbai Commercial Logistics Co., Ltd. | Service revenue | Negotiation | 2,484,304.00 | 1,764,574.00 |
| Sinotrans Container Lines (Hong Kong) Company Limited | Service revenue | Negotiation | 2,182,888.92 | 1,809,539.25 |
| China Outbound Air Transport Co., Ltd. | Service revenue | Negotiation | 1,993,291.26 | - |
| CMHK | Service revenue | Negotiation | 1,600,000.00 | 20,274.29 |
| Shanghai International Port (Group) Co., Ltd. | Service revenue | Negotiation | 1,588,035.85 | 1,331,677.32 |
| Laizhou Laiyin Port Business Co., Ltd. | Service revenue | Negotiation | 1,574,244.92 | 1,776,636.76 |
| Terminal Link SAS | Service revenue | Negotiation | 1,378,437.57 | 1,315,926.11 |
| Guangzhou International Ocean Shipping Agency Co., Ltd | Service revenue | Negotiation | 1,312,017.95 | 1,049,904.69 |
| Kumport Liman Hizmetleri ve Lojistik Sanayi ve Ticaret Anonim ?irketi | Service revenue | Negotiation | 1,119,436.15 | 1,693,185.98 |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | Service revenue | Negotiation | 1,071,100.78 | - |
| Shenzhen Waidai Warehousing Co., Ltd. | Service revenue | Negotiation | 690,687.40 | 2,581,013.80 |
| China Merchants Group | Service revenue | Negotiation | 407,655.62 | 1,173,935.66 |
| COFCO Merchants Bureau (Shenzhen) Grain Electronic Trading Center Co., Ltd. | Service revenue | Negotiation | 17,134.90 | 1,529,032.53 |
| Shenzhen Baohong Trade Service Co., Ltd | Service revenue | Negotiation | - | 11,018,134.42 |
| Sinotrans(NZ)Limited | Service revenue | Negotiation | - | 8,994,813.95 |
| Other related parties | Service revenue | Negotiation | 7,990,585.72 | 15,969,731.66 |
| Khor Ambado FZCo | Interest income | Negotiation | 51,599,386.03 | 7,097,464.46 |
| Port of Newcastle and its Subsidiaries | Interest income | Negotiation | 34,416,578.56 | - |
| China Merchant Bank Co., Ltd | Interest income | Negotiation | 34,629,531.08 | 31,155,058.39 |
| China Merchants Group Finance Company Limited | Interest income | Negotiation | 14,042,476.82 | 3,299,729.55 |
| Morden Terminals Limited | Interest income | Negotiation | 1,193,424.67 | 736,667.48 |
| Other related parties | Interest income | Negotiation | 1,443,994.71 | 7,181,287.74 |
| Total | 373,655,280.64 | 269,597,802.82 | ||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - 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 year | Lease income recognized in the previous year (restated) |
| Nanshan Group and its Subsidiaries | Buildings | Negotiation | 3,506,398.00 | - |
| China Merchants Bureau Food (Shenzhen) Co., Ltd | Buildings | Negotiation | 3,393,457.47 | 143,124.29 |
| China Communications Import and Export Co., Ltd. | Buildings | Negotiation | 2,699,223.60 | 1,965,231.30 |
| Shenzhen Nanyou (Holdings) Ltd | Buildings | Negotiation | 2,400,571.43 | 2,400,571.43 |
| Yiu Lian Dockyards (Shekou) Limited | Buildings | Negotiation | 2,025,218.14 | 2,439,540.40 |
| Other related parties | Buildings and Land use right | Negotiation | 1,573,182.07 | 3,355,566.56 |
| Total | 15,598,050.71 | 10,304,033.98 |
| Name of lessor | Type of leased assets | Pricing and decision-making procedures of related party transactions | Lease payment recognized in the current year | Lease payment recognized in the previous year (restated) |
| Nanshan Group and its Subsidiaries | Buildings | Negotiation | 70,044,701.50 | 71,986,357.12 |
| China Merchants Bureau Shekou Industrial Zone Holding Co., Ltd. | Buildings | Negotiation | 40,961,038.60 | 41,973,260.20 |
| China Merchants Property Management Co., Ltd. | Buildings | Negotiation | 13,814,358.72 | 20,284,937.94 |
| Euro Asia Dockyard Enterprise and development Ltd | Buildings and Land use right | Negotiation | 13,057,843.61 | 12,938,008.64 |
| Shenzhen China Merchants Shangzhi Investment Co., Ltd | Buildings | Negotiation | 8,342,789.84 | 9,905,500.99 |
| Shenzhen Nanyou (Holdings) Ltd | Buildings | Negotiation | 3,558,233.30 | 1,978,376.12 |
| Shenzhen Science and Technology University Phase II Real Estate Management Co., Ltd. | Buildings | Negotiation | 3,541,404.00 | 3,305,310.00 |
| China Merchants Property Management Co., Ltd | Buildings | Negotiation | 3,250,687.11 | - |
| China Merchants Godown, Wharf & Transportation Company Limited | Other equipment | Negotiation | 1,395,479.12 | 1,433,677.44 |
| China Merchants Landmark (Shenzhen) Co., Ltd | Buildings | Negotiation | 1,147,441.22 | 1,038,371.81 |
| China Merchants Bureau Logistics Group Fujian Co., Ltd | Buildings | Negotiation | 731,132.08 | 4,386,792.48 |
| Other related parties | Buildings, Land use right and others | Negotiation | 3,142,604.46 | 2,100,185.74 |
| Total | 162,987,713.56 | 171,330,778.48 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - continued
(3) The Group as the guarantor
Unit: RMB
| Warrantee | Credit Line | Guarantee amount | Guarantee Starting Date | Guarantee maturity date | The guarantee has been completed |
| 2018 year | |||||
| CMA CGM S.A.(Note) | 82,195,789.24 | 82,195,789.24 | June 2013 | 2033 | No |
| CMA CGM S.A.(Note) | 24,982,114.97 | 12,241,236.33 | June 2013 | 2033 | No |
| Port de Djibouti S.A. | 343,160,000.00 | 24,192,780.00 | 14 June 2016 | 14 June 2019 | No |
| Total | 450,337,904.21 | 118,629,805.57 | |||
| 2017 year | |||||
| CMA CGM S.A. | 81,962,196.99 | 81,962,196.99 | June 2013 | 2033 | No |
| CMA CGM S.A. | 27,941,438.37 | 27,941,438.37 | June 2013 | 2033 | No |
| Port de Djibouti S.A. | 76,776,850.00 | 53,743,795.00 | 14 June 2016 | 14 June 2019 | No |
| Total | 186,680,485.36 | 163,647,430.36 | |||
| Related parties | Loan Amount | Starting date | Due date | Instructions |
| 2018 Year | ||||
| Borrowings | ||||
| China Merchants Group Finance Company Limited | 270,000,000.00 | 23 April 2018 | 22 April 2019 | Fixed Annual Interest Rate4.35% |
| China Merchants Group Finance Company Limited | 220,000,000.00 | 17 May 2018 | 16 May 2019 | Fixed Annual Interest Rate4.35% |
| China Merchants Group Finance Company Limited | 80,000,000.00 | 11 December 2018 | 10 December 2028 | Fixed Annual Interest Rate4.802% |
| China Merchants Group Finance Company Limited | 60,000,000.00 | 19 June 2018 | 20 June 2019 | Fixed Annual Interest Rate4.35% |
| China Merchants Group Finance Company Limited | 40,000,000.00 | 20 May 2018 | 21 May 2019 | Fixed Annual Interest Rate4.35% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 7 December 2018 | 6 December 2019 | Fixed Annual Interest Rate4.35% |
| China Merchants Group Finance Company Limited | 30,000,000.00 | 20 December 2018 | 19 December 2021 | Fixed Annual Interest Rate4.275% |
| China Merchants Group Finance Company Limited | 25,000,000.00 | 6 December 2018 | 5 October 2021 | Fixed Annual Interest Rate4.75% |
| China Merchants Group Finance Company Limited | 20,000,000.00 | 17 December 2018 | 16 December 2019 | Fixed Annual Interest Rate4.35% |
| Total | 775,000,000.00 | |||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transaction - continued
(4) Relevant Party Funds Borrowing - continued
Unit: RMB
| Related Parties | Amount | From | To | Remarks |
| Lending money to | ||||
| Port of Newcastle and subsidiaries | 784,057,712.75 | 14 June 2018 | 29 May 2020 | Fixed rate at 8.00% |
| Year 2017 | ||||
| Borrowing money from | ||||
| CMFC | 1,000,000,000.00 | 24 March 2017 | 23 March 2018 | Fixed rate at 3.83% |
| CMFC | 300,000,000.00 | 21 April 2017 | 20 April 2018 | Fixed rate at 4.35% |
| Port de Djibouti S.A. | 230,331,618.08 | 12 November 2017 | 11 June 2019 | Floating rate |
| CMFC | 200,000,000.00 | 29 September 2017 | 28 September 2018 | Fixed rate at 4.35% |
| CMFC | 150,000,000.00 | 16 November 2017 | 15 November 2018 | Fixed rate at 4.35% |
| CMFC | 100,000,000.00 | 14 September 2017 | 13 September 2018 | Fixed rate at 4.35% |
| CMFC | 80,000,000.00 | 18 December 2017 | 18 December 2018 | Fixed rate at 4.35% |
| CMFC | 30,000,000.00 | 18 December 2017 | 18 December 2018 | Fixed rate at 4.35% |
| CMFC | 30,000,000.00 | 22 June 2017 | 21 June 2018 | Fixed rate at 4.35% |
| Total | 2,120,331,618.08 | |||
| Lending money to | ||||
| Khor Ambado FZCo | 980,134,545.00 | 10 November 2017 | 9 November 2018 | Floating rate |
| Item | Closing balance | Opening balance (restated) |
| Compensation for key management personnel | 19,243,010.16 | 19,437,529.56 |
| Item | Related parties | Closing balance | Opening balance (restated) |
| Cash and bank balances | CMB | 1,274,536,476.91 | 928,934,746.51 |
| CMFC | 494,131,151.34 | 605,402,768.43 | |
| Nanshan Group and Its Subsidiary | - | 1,192,728.52 | |
| Total | 1,768,667,628.25 | 1,535,530,243.46 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
| Item | Related parties | Closing balance | Opening balance (restated) |
| Notes and accounts receivable | Shenzhen Globex e-service Inc. | 7,222,351.10 | 3,508,011.61 |
| Port de Djibouti S.A. | 6,387,923.40 | 1,423,786.05 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 5,112,134.91 | 4,929,217.77 | |
| Ocean Shipping Agency | 4,678,761.75 | 4,983,931.70 | |
| China Overseas Harbor Affaris(LAIZHOU) Co., Ltd | 1,490,941.09 | - | |
| Sinotrans Container Lines Co., Ltd. | 1,156,769.47 | 817,413.49 | |
| Great Horn Development Company FZCO | 1,486,615.75 | 2,315,470.86 | |
| China Marine Shipping Agency,Shenzhen Company Limited | 1,115,972.50 | 1,350,887.20 | |
| China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 1,029,573.58 | 115,180.72 | |
| Qingdao Qianwan West Port United Wharf Co., Ltd. | 74,485.74 | 4,371,957.66 | |
| Nanshan Group and its subsidiaries | - | 279,645.50 | |
| Other related parties | 4,564,416.46 | 6,137,476.38 | |
| Total | 34,319,945.75 | 30,232,978.94 | |
| Other receivables | Nanshan Group and its subsidiaries | 175,976,941.31 | 194,710,379.10 |
| CHU KONG RIVER TRADE TERMINAL CO., LTD. | 59,975,890.00 | 57,217,355.00 | |
| Shanghai International Port (Group) Co., Ltd | 50,118,027.14 | - | |
| Tianjin Haitian Bonded Logistics Co., Ltd. | 34,300,000.00 | 34,300,000.00 | |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 25,000,000.00 | - | |
| Port de Djibouti S.A | 24,411,770.72 | 23,197,515.92 | |
| Port of Newcastle and its subsidiaries | 15,858,848.40 | - | |
| Zhanjiang Port (Group) Co., Ltd. | 9,253,682.23 | - | |
| Khor Ambado FZCo | 7,332,144.82 | 6,848,478.86 | |
| CSC RoRo Logistics Co., Ltd. | 2,899,163.95 | - | |
| CMFC | 2,565,333.33 | - | |
| Euro Asia Dockyard Enterprise and development Ltd. | 1,481,149.51 | 1,413,025.42 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 1,051,801.58 | 1,206,519.60 | |
| Terminal Link SAS | 346,490.00 | 1,210,417.79 | |
| Other related parties | 3,293,911.53 | 4,131,562.24 | |
| Total | 413,865,154.52 | 324,235,253.93 | |
| Other current assets | Khor Ambado FZCo | 1,029,478,047.00 | 980,134,545.00 |
| Modern Terminals Limited | - | 120,000,000.00 | |
| Total | 1,029,478,047.00 | 1,100,134,545.00 | |
| Long-term receivables | Port of Newcastle and its subsidiaries | 784,057,712.75 | - |
| Terminal Link SAS | 9,782,367.44 | 9,669,034.35 | |
| Total | 793,840,080.19 | 9,669,034.35 | |
| Other non-current assets | China Merchants Shekou Industrial Zone Holdings Co., Ltd. | 43,472,687.00 | 43,472,687.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from/to related parties - continued
(2) Amounts due to related parties
Unit: RMB
| Item | Related parties | Closing balance | Opening balance (restated) |
| Short-term borrowings | CMFC | 640,000,000.00 | 1,890,000,000.00 |
| Notes and accounts payable | Nanshan Group and Its Subsidiary | 11,631,575.13 | 16,968,830.09 |
| Qingdao Qianwan United Container Terminal Co., Ltd. | 5,196,134.76 | 4,069,171.94 | |
| Euro Asia Dockyard Enterprise and development Ltd. | 3,698,897.16 | 3,265,979.26 | |
| Yiu Lian Dockyards Limited | 2,204,328.63 | 1,619,449.67 | |
| Other related parties | 3,252,253.36 | 2,521,076.36 | |
| Total | 25,983,189.04 | 28,444,507.32 | |
| Contract liabilities | Zhanjiang Port (Group) Co., Ltd. | 1,287,452.83 | |
| Other related parties | 803,584.16 | ||
| Total | 2,091,036.99 | ||
| Receipts in advance | Other related parties | 66,799.01 | 917,915.58 |
| Other payables | China Merchants Zhangzhou | 93,258,350.90 | 93,258,350.90 |
| Terminal Link SAS | 46,506,416.54 | 57,593,466.16 | |
| Yihai Kerry investment Co., Ltd. | 37,402,426.09 | 37,402,426.09 | |
| Shenzhen Merchants Construction Co., Ltd. | 28,379,667.10 | 36,991,325.43 | |
| Sinotrans Co., Ltd. | 25,949,781.00 | 25,949,781.00 | |
| Sinotrans Co., Ltd. | 22,641,509.43 | - | |
| Shenzhen Investment Promotion Real Estate Management Co., Ltd. | 18,294,814.64 | 12,999,683.93 | |
| Shenzhen Merchants Commercial Property Investment Co., Ltd. | 9,355,392.43 | 9,786,880.69 | |
| Port de Djibouti S.A. | 2,951,170.40 | 2,286,980.61 | |
| Qingdao Port International Co., Ltd. | 2,700,000.00 | 15,336,000.00 | |
| Modern Terminals Limited | 1,286,962.56 | 409,256.64 | |
| China Merchants Bureau Food (Shenzhen) Co., Ltd. | 1,254,271.10 | - | |
| CMFC | 1,043,521.17 | 2,304,775.02 | |
| China Communications Import & Export Co., Ltd. | 495,944.18 | 1,246,375.78 | |
| Hong Kong International Enterprises Limited | - | 128,552,676.45 | |
| Shenzhen Merchants Qianhai Industrial Development Co., Ltd. | - | 1,255,800.00 | |
| Other related parties | 5,840,795.87 | 5,708,791.51 | |
| Total | 297,361,023.41 | 431,082,570.21 | |
| Non-current liabilities within one year | China Merchants Steam Navigation Company Limited | - | 100,000,000.00 |
| Other current liabilities | Port de Djibouti S.A. | 241,927,341.05 | 230,331,618.08 |
| Long-term borrowings | China Merchants Steam Navigation Company Limited | - | 50,000,000.00 |
| CMFC | 135,000,000.00 | - | |
| Total | 135,000,000.00 | 50,000,000.00 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
7. Other related parties transactions
As Notes (V) 9 stated, the Group signed acquisition agreement with CMU and Gold Newcastle,the associated company and wholly-owned subsidiary of CMHK respectively. The agreementstipulates that the Group will purchase from CMU a 50% interest in Gold Newcastle and GoldNewcastle's joint venture Port of Newcastle, with a final consideration of 605 million Australiandollars (equivalent to RMB 2,944,265,945.15), including CMU providing the principal to Port ofNewcastle. Interest-bearing shareholder loans of 162.5 million Australian dollars (equivalent toRMB 788,823,491.63).
(XI) COMMITMENTS AND CONTINGENCIES
1. Significant commitments
(1) Capital commitments
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Capital commitments that have been entered into but have not been recognized in the financial statements: | ||
| -Commitment to acquisition of long-term assets | 3,971,730,917.34 | 2,635,299,294.22 |
| -Commitment to port construction investment | 5,490,560.00 | 6,047,217,548.20 |
| -Other | 26,115,744.09 | 50,882,109.61 |
| Total | 4,003,337,221.43 | 8,733,398,952.03 |
| Item | Closing balance | Opening balance (restated) |
| Minimum lease payments under non-cancellable operating leases: | 1,756,853,448.93 | 1,851,844,563.15 |
| 1st year subsequent to the balance sheet date | 125,780,272.12 | 185,070,168.27 |
| 2nd year subsequent to the balance sheet date | 51,145,934.81 | 118,949,570.41 |
| 3rd year subsequent to the balance sheet date | 43,017,965.02 | 43,589,813.97 |
| More than 3 years | 1,536,909,276.98 | 1,504,235,010.50 |
| Total | 1,756,853,448.93 | 1,851,844,563.15 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
（XI) COMMITMENTS AND CONTINGENCIES – continued
2. Contingencies
Unit: RMB
| Item | Closing balance | Opening balance (restated) |
| Contingent liabilities (Note 1) | 323,559,335.68 | - |
| Guarantees for associates (Note 2) | 118,629,805.57 | 163,647,430.36 |
| Total | 442,189,141.25 | 163,647,430.36 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XII) EVENTS AFTER THE BALANCE SHEET
1. Profit appropriation
Unit: RMB
| Item | Amount |
| Proposed distribution of profits or dividends (Note) | 204,449,011.09 |
| Profits or dividends declared to be distributed | Subject to approval by shareholders' general meeting |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XII) EVENTS AFTER THE BALANCE SHEET - continued
3. Merge under non-identical control issues
As at 2 January 2019, the Company and Guangdong Sinotrans Co., Ltd. signed the "ShareTransfer Agreement on Zhanjiang Port (Group) Co., Ltd." and transferred the shares of ZhanjiangPort (Group) held by Guangdong Sinotrans Co., Ltd. 201,034,548 common shares of the company,accounting for 5% of the total number of issued shares of Zhanjiang Port (Group) Co., Ltd. on thedate of signing the agreement, the consideration for the conversion is RMB 375,334,390.00.
As at 8 January2019, Chiwan Port (Hong Kong) Co., Ltd., a subsidiary of the Company, andZhanjiang Infrastructure Construction Investment Group Co., Ltd. and Zhanjiang Port (Group)Co., Ltd. signed the "Zhejiang Port (Group) Co., Ltd. Limited The Capital Increase Agreement ofthe Company (Group) Co., Ltd., the agreement stipulates that Zhanjiang Port (Group) Co., Ltd.intends to issue 1,853,518,190 common shares at a price of RMB 1.867 per share or equivalentforeign currency (determined according to the capital exchange rate). Its registered capitalincreased to RMB 5,874,209,145.00. Among them, Chiwan Port (Hong Kong) Co., Ltd. intends tosubscribe for 1,606,855,919 ordinary shares, accounting for 27.73544% of the issued shares ofZhanjiang Port (Group) Co., Ltd. on the date of issue of the subscription shares. The total is RMB3,000,000,000.77 or the equivalent foreign currency (determined according to the capitalcontribution rate).
The above transaction was completed on February 3, 2019. After the transaction, the companydirectly holds 3.4223% of the shares of Zhanjiang Port (Group) Co., Ltd., and indirectly holdsZhanjiang Port through the subsidiary China Merchants International Terminal (Zhanjiang) Co.,Ltd. 27.5782% of the shares of the Group Co., Ltd., indirectly through the subsidiary Chiwan Port(Hong Kong) Co., Ltd., holding 27.3544% of Zhanjiang Port (Group) Co., Ltd., and enjoying atotal of 58.3549% of Zhanjiang Port (Group) Co., Ltd. Voting rights.
Except for the subsequent events that need to be disclosed above, the Group has no othersignificant issues after the balance sheet date.
(XIII) OTHER SIGNIFICANT EVENTS
1．Significant equity entrusted management matters
As at 13 December 2018, the 10th Extraordinary Meeting of the 9th Board of Directors of theCompany reviewed and approved the signing of the "Equity Custody Agreement of Liaoning PortGroup Co., Ltd." with the China Merchants (Liaoning) Port Development Co., Ltd. The "Proposal"agrees that the China Merchants Group (Liaoning) Port Development Co., Ltd., a wholly-ownedsubsidiary of China Merchants Group, entrusts its 49.9% stake in Liaoning Port Group Co., Ltd. tothe company for management. The China Merchants (Liaoning) Port Development Co., Ltd. Thecompany pays the company a fixed custodian fee of RMB 1,000,000.00 per year.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIII) OTHER SIGNIFICANT EVENTS - continued
2． Segment reporting
(1) Basis for determining and accounting treatments of reporting segments
The key management team of the Company is regarded as the CODM, who reviews the Group'sinternal reports in order to assess performance, allocate resources and determine the operatingsegments.
The CODM manages the Group's operations by divisions from both business and geographicperspectives.
From business and financial perspectives, management assesses the performance of the Group'sbusiness operations including ports operation, bonded logistics operation, port-relatedmanufacturing operation and other operations.
Ports operation
Ports operation includes container terminal operation, bulk and general cargo terminal operationoperated by the Group and its associates and joint ventures.The Group's reportable segments of the ports operation are as follows:
(a) Mainland China, Hong Kong and Taiwan
? Pearl River Delta? Yangtze River Delta? Bohai Rim? Others
(b) Other locations outside of Mainland China, Hong Kong and Taiwan
Bonded logistics operation
Bonded logistics operation includes logistic park operation, ports transportation and airport cargohandling operated by the Group and its associates.
Other operations
Other operations mainly includes property development and investment and construction ofmodular housing operated by the Group's associate, property investment operated by the Groupand corporate function.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIII) OTHER SIGNIFICANT EVENTS - continued
2. Segment reporting - continued
(1) Basis for determining and accounting treatments of reporting segments - continued
Each of the segments under ports operation include the operations of a number of ports in variouslocations within the geographic locations, each of which is considered as a separate operatingsegment by the CODM. For the purpose of segment reporting, these individual operatingsegments have been aggregated into reportable segments on geographic basis in order to present amore systematic and structured segment information. To give details of each of the operatingsegments, in the opinion of the directors of the Company, would result in particulars of excessivelength.
Bonded logistics operation and other operations include a number of different operations, each ofwhich is considered as a separate but insignificant operating segment by the CODM. Forsegment reporting, these individual operating segments have been aggregated according to thenatures of their operations to give rise to more meaningful presentation.
There are no material sales or other transactions between the segments.
As at 31 December 2018, around 64% of The Group's non-current assets other than financialinstruments and deferred tax assets are located in Mainland China.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIII) OTHER SIGNIFICANT EVENTS - continued
2 Segment reporting - continued
(2) Segment financial information
Segment financial information in 2018 as following:
Unit：RMB
| Item | Ports operation | Unallocated | Total | |||||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | Bonded logistics operation | Others | ||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Revenue | 5,303,465,225.60 | - | 69,907,311.12 | 747,571,785.87 | 3,063,582,986.50 | 9,184,527,309.09 | 386,269,027.02 | 132,598,286.47 | - | 9,703,394,622.58 |
| Cost | 3,093,917,475.00 | - | 55,661,268.67 | 631,405,970.58 | 1,522,302,179.06 | 5,303,286,893.31 | 214,495,776.55 | 221,458,726.01 | - | 5,739,241,395.87 |
| Segment operating profit (loss) | 2,209,547,750.60 | - | 14,246,042.45 | 116,165,815.29 | 1,541,280,807.44 | 3,881,240,415.78 | 171,773,250.47 | (88,860,439.54) | - | 3,964,153,226.71 |
| Adjustment： | ||||||||||
| Taxes and levies | 71,372,197.96 | 284,627.70 | 1,160,781.85 | 10,778,344.95 | 112,983,856.21 | 196,579,808.67 | 32,621,484.27 | 6,211,213.84 | 541,296.73 | 235,953,803.51 |
| Administrative expenses | 390,753,695.03 | 3,749,372.10 | 9,930,005.82 | 97,317,524.40 | 193,183,913.13 | 694,934,510.48 | 36,924,775.16 | 28,852.77 | 519,977,537.04 | 1,251,865,675.45 |
| Research and development expenses | 118,865,768.66 | - | - | - | - | 118,865,768.66 | - | - | 3,123,329.16 | 121,989,097.82 |
| Financial expenses | 33,812,457.43 | 82,614,789.19 | (406,546.82) | 19,344.58 | 419,088,994.19 | 535,129,038.57 | 38,623,819.16 | 51,653,121.27 | 1,018,012,123.95 | 1,643,418,102.95 |
| Impairment losses of assets | - | - | - | - | - | - | - | - | - | - |
| Impairment of credit loss | 10,760,473.33 | - | - | 10,616.21 | (3,410,788.03) | 7,360,301.51 | 168,279.09 | - | - | 7,528,580.60 |
| Other income | 32,901,021.72 | 408,333.33 | 113,998.17 | 12,684,291.81 | - | 46,107,645.03 | 1,411,014.72 | - | 8,661,467.89 | 56,180,127.64 |
| Investment income | 143,206,331.48 | 2,706,435,143.32 | 322,968,785.89 | (21,733,692.03) | 592,367,561.64 | 3,743,244,130.30 | 17,758,667.43 | 207,255,360.07 | (430,008.32) | 3,967,828,149.48 |
| Gains (losses) from changes in fair value | 45,351.40 | (873,891,271.63) | (74,594,618.22) | - | (125,966,299.23) | (1,074,406,837.68) | - | - | - | (1,074,406,837.68) |
| Gains on disposal of assets | 9,216,008.49 | - | - | (418,481.28) | 10,450,227.43 | 19,247,754.64 | 26,746.03 | - | (16,005.34) | 19,258,495.33 |
| Operating profit | 1,769,351,871.28 | 1,746,303,416.03 | 252,049,967.44 | (1,427,896.35) | 1,296,286,321.78 | 5,062,563,680.18 | 82,631,320.97 | 60,501,732.65 | (1,533,438,832.65) | 3,672,257,901.15 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIII) OTHER SIGNIFICANT EVENTS - continued
2. Segment reporting - continued
(2) Segment financial information - continued
Segment financial information in 2018 as following:
Unit：RMB
| Item | Ports operation | Bonded logistics operation | Others | Unallocated | Total | |||||
| Mainland China, Hong Kong and Taiwan | Other locations | Sub-total | ||||||||
| Pearl River Delta | Yangtze River Delta | Bohai Rim | Others | |||||||
| Non-operating income | 34,351,337.85 | - | 424,231.58 | 1,931,244.58 | 24,074,268.10 | 60,781,082.11 | 1,216,591.28 | 943,208.69 | 4,187,807.90 | 67,128,689.98 |
| Non-operating expenses | 40,405,962.28 | 4,010.31 | 400,000.00 | 1,057,097.28 | 65,315,693.08 | 107,182,762.95 | 6,240,627.54 | 200,000.00 | 11,407,908.08 | 125,031,298.57 |
| Gross profit | 1,763,297,246.85 | 1,746,299,405.72 | 252,074,199.02 | (553,749.05) | 1,255,044,896.80 | 5,016,161,999.34 | 77,607,284.71 | 61,244,941.34 | (1,540,658,932.83) | 3,614,355,292.56 |
| Income tax expenses | 294,544,209.66 | 43,364,189.75 | 12,909,324.23 | 16,064,881.66 | 94,332,207.91 | 461,214,813.21 | 14,785,763.43 | 49,933,513.49 | 202,506,448.47 | 728,440,538.60 |
| Net profit | 1,468,753,037.19 | 1,702,935,215.97 | 239,164,874.79 | (16,618,630.71) | 1,160,712,688.89 | 4,554,947,186.13 | 62,821,521.28 | 11,311,427.85 | (1,743,165,381.30) | 2,885,914,753.96 |
| Segment assets | 24,361,542,350.83 | 24,738,700,129.24 | 6,498,939,975.26 | 11,975,384,175.20 | 43,137,915,507.68 | 110,712,482,138.21 | 2,768,799,649.68 | 10,986,223,834.86 | 3,550,578,792.93 | 128,018,084,415.68 |
| Total assets in the financial statements | 128,018,084,415.68 | |||||||||
| Segment liabilities | 3,716,328,520.15 | 620,013,763.67 | 108,999,946.50 | 2,399,865,586.89 | 11,874,203,103.78 | 18,719,410,920.99 | 809,775,291.61 | 1,161,920,752.31 | 26,910,051,577.96 | 47,601,158,542.87 |
| Total liabilities in the financial statements | 47,601,158,542.87 | |||||||||
| Supplementary information: | ||||||||||
| Depreciation and Amortization | 777,378,984.84 | - | 2,030,173.13 | 287,332,851.66 | 698,620,897.88 | 1,765,362,907.51 | 80,463,924.42 | 165,229,175.14 | 16,903,705.26 | 2,027,959,712.33 |
| Interest income | 21,954,329.37 | 508,539.88 | 438,043.11 | 40,225,269.81 | 84,159,789.64 | 147,285,971.81 | 1,052,104.99 | 828,268.56 | 123,286,948.50 | 272,453,293.86 |
| Interest expense | 44,507,286.38 | 1,009,944.96 | - | 39,664,933.55 | 398,730,346.09 | 483,912,510.98 | 32,382,213.72 | 39,755,069.06 | 1,078,051,538.04 | 1,634,101,331.80 |
| Investment income from long-term equity investment under equity method | 134,907,307.68 | 2,674,327,364.23 | 309,435,330.98 | (21,882,199.10) | 592,062,707.31 | 3,688,850,511.10 | 17,758,667.43 | 207,255,360.07 | - | 3,913,864,538.60 |
| Long-term equity investment under equity method | 2,629,326,400.75 | 23,003,406,812.98 | 5,696,221,052.02 | 2,540,719,065.34 | 10,818,356,531.61 | 44,688,029,862.70 | 340,969,759.95 | 5,147,577,640.75 | - | 50,176,577,263.40 |
| Non-current assets other than long-term equity investment | 18,136,739,566.92 | 296,477,731.85 | 29,099,361.17 | 7,816,817,366.31 | 29,571,968,313.58 | 55,851,102,339.83 | 2,206,436,654.13 | 5,573,444,649.09 | 480,592,127.03 | 64,111,575,770.08 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIII) OTHER SIGNIFICANT EVENTS - continued
2. Segment reporting - continued
(2) Segment financial information - continued
The Group's revenue by geographical areas of operations and information about its non-currentassets other than financial instruments and deferred tax assets presented based on the geographicalareas in which the assets are located as follows:
Unit：RMB
| Revenue from external transactions | Closing balance | Opening balance (restated) |
| Mainland China, Hong Kong and Taiwan | 6,635,924,788.34 | 6,036,330,920.53 |
| Pearl River Delta | 5,705,075,363.71 | 5,408,964,837.46 |
| Yangtze River Delta | - | - |
| Bohai Rim | 183,277,638.76 | 172,188,112.13 |
| Others | 747,571,785.87 | 455,177,970.94 |
| Other locations | 3,067,469,834.24 | 1,508,304,364.43 |
| Total | 9,703,394,622.58 | 7,544,635,284.96 |
| Non-current assets | Closing balance | Opening balance (restated) |
| Mainland China, Hong Kong and Taiwan | 73,602,488,004.01 | 69,066,842,626.11 |
| Pearl River Delta | 33,618,069,629.60 | 31,673,369,539.45 |
| Yangtze River Delta | 23,299,884,544.83 | 21,204,548,605.13 |
| Bohai Rim | 6,316,574,360.92 | 6,271,516,876.96 |
| Others | 10,367,959,468.66 | 9,917,407,604.57 |
| Other locations | 40,685,665,029.47 | 26,038,093,607.43 |
| Total | 114,288,153,033.48 | 95,104,936,233.54 |
| Item | Closing balance | Opening balance (restated) |
| Notes receivable | - | - |
| Accounts receivable | 23,444,175.65 | 12,987,394.84 |
| Total | 23,444,175.65 | 12,987,394.84 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIV). NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
1. Notes and Accounts receivable - continued
(2) Accounts receivable
(a) Disclosure of accounts receivable by categories - continued
Unit: RMB
| Categories | Expected credit loss rate (%) | Closing balance | ||
| Carrying amount | Provision | Book value | ||
| A | 0.00-0.10 | 23,444,175.65 | - | 23,444,175.65 |
| B | 0.10-0.30 | - | - | - |
| C | 0.30-50.00 | - | - | - |
| D | 50.00-100.00 | - | - | - |
| Total | 23,444,175.65 | - | 23,444,175.65 | |
| Name of customer | Amount | Aging | Proportion of the amount to the total accounts receivable (%) |
| Client F | 5,566,248.78 | Within 1 year | 23.74 |
| Client G | 3,872,340.00 | Within 1 year | 16.52 |
| Client H | 3,056,777.34 | Within 1 year | 13.04 |
| Client I | 2,910,036.03 | Within 1 year | 12.41 |
| Client J | 1,502,541.05 | Within 1 year | 6.41 |
| Total | 16,907,943.20 | 72.12 |
| Item | Closing balance | Opening balance(restated) |
| Interest receivable | 34,899.02 | - |
| Dividends receivable | 329,153,465.74 | 589,478,376.49 |
| Other receivables | 321,861,868.32 | 583,090,959.69 |
| Total | 651,050,233.08 | 1,172,569,336.18 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS –
continued
2. Other receivables – continued
(2) Interest receivable
(a) Disclosure of interest receivable by categories
Unit: RMB
| Category | Closing balance | Opening balance (restated) |
| Fixed term deposit | 34,899.02 | - |
| Entities | Closing balance | Opening balance (restated) |
| Dongguan Chiwan Warf Co., Ltd. ("DGW") | 103,355,370.74 | 103,355,370.74 |
| CHCC | 96,378,106.61 | 97,455,574.40 |
| DGT | 88,196,930.66 | 88,196,930.66 |
| Shenzhen Chiwan Tugboat Co., Ltd | 21,929,842.24 | 21,606,823.62 |
| CMBL | 15,707,120.00 | - |
| Shenzhen Chiwan Transportation Co., Ltd | 3,299,252.31 | 2,619,884.81 |
| Shenzhen Chiwan International Freight Agency Co., Ltd | 286,843.18 | 193,834.42 |
| CCT | - | 276,049,957.84 |
| Total | 329,153,465.74 | 589,478,376.49 |
| Net: provision of credit loss | - | - |
| Book value | 329,153,465.74 | 589,478,376.49 |
| Category | Closing balance | Outstanding Reason | Provision or not |
| Dongguan Chiwan Warf Co., Ltd. ("DGW") | 103,355,370.74 | Working on and expected to be received by the end of 2019 | No |
| DGT | 88,196,930.66 | Working on and expected to be received by the end of 2019 | No |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS –
continued
2. Other receivables - continued
(4) Other receivables
(a) Disclosure of other receivables by categories
As a part of cooperate credit risk management, the company rank the credit risk of its client, anddetermine the average expected loss rate of each internal credit rating level. These averageexpected loss rates are determined by considering the historical actual loss and the current andfuture economic situation.
As at 31 December 2018, the credit risk and expected credit loss of other receivables of eachcategory of customers are presented as below:
Unit: RMB
| Internal credit rating | Expected Loss Rate (% ) | Closing balance | |||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | ||
| A | 0.00-0.10 | 321,861,868.32 | - | - | 321,861,868.32 |
| B | 0.10-0.30 | - | - | - | - |
| C | 0.30-50.00 | - | - | - | - |
| D | 50.00-100.00 | - | - | 383,456.60 | 383,456.60 |
| Carrying amount | 321,861,868.32 | - | 383,456.60 | 322,245,324.92 | |
| Provision of credit loss | - | - | 383,456.60 | 383,456.60 | |
| Book value | 321,861,868.32 | - | - | 321,861,868.32 | |
| Category | 2018 | |||
| Expected credit loss in 12 months | Lifetime expected credit loss (not credit-impaired) | Lifetime expected credit loss (credit-impaired) | Total | |
| 31 Dec 2017 | - | - | 383,456.60 | 383,456.60 |
| Remeasurement of provision for expected credit loss | - | - | - | - |
| 1 Jan 2018 | - | - | 383,456.60 | 383,456.60 |
| Provision for expected credit loss for the year | - | - | - | - |
| Reversal of expected credit loss for the year | - | - | - | - |
| Effect of changes in the scope of consolidation | - | - | - | - |
| Effect of changes in foreign exchange | - | - | - | - |
| 31 Dec 2018 | - | - | 383,456.60 | 383,456.60 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS –
continued
2. Other receivables - continued
(3) Other receivables - continued
(b) Disclosure of other receivables by nature
Unit: RMB
| Nature | Closing balance | Opening balance (restated) |
| Amounts due from related parties | 316,567,355.24 | 482,067,880.47 |
| Temporary payments | 4,785,167.82 | 4,360,323.59 |
| Deposits | 372,042.31 | 1,571,309.30 |
| Others | 520,759.55 | 95,474,902.93 |
| Total | 322,245,324.92 | 583,474,416.29 |
| Net: provision of credit loss | 383,456.60 | 383,456.60 |
| Book value | 321,861,868.32 | 583,090,959.69 |
| Entities | Nature of the fund | Closing balance | Aging | Proportion of the amount to the total other receivable (%) | Closing balance of provision for credit loss |
| DGT | Loan to related parties | 165,500,000.00 | Within 1 year | 51.36 | - |
| Dongguan Chiwan Warf Co., Ltd. ("DGW") | Loan to related parties | 151,067,355.24 | Within 1 year | 46.88 | - |
| Chiwan Wharf Holdings (Hong Kong) Limited | Temporary payments | 2,955,962.35 | Within 1 year to 2 year and over 3 year | 0.92 | - |
| CCT | Temporary payments | 736,080.69 | Within 1 year | 0.23 | - |
| CHCC | Temporary payments | 320,239.46 | Within 1 year | 0.10 | - |
| Total | 320,579,637.74 | 99.49 | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS – continued
3. Long-term equity 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 | - | - | - | - | - | - | - | - | 5,500,000.00 | - |
| CHCC | 250,920,000.00 | - | - | - | - | - | - | - | - | 250,920,000.00 | - |
| Shenzhen Chiwan Transportation Co., Ltd | 7,000,000.00 | - | - | - | - | - | - | - | - | 7,000,000.00 | - |
| Chiwan Wharf Holdings (Hong Kong) Limited | 1,070,000.00 | - | - | - | - | - | - | - | - | 1,070,000.00 | - |
| Shenzhen Chiwan Tugboat Co., Ltd | 24,000,000.00 | - | - | - | - | - | - | - | - | 24,000,000.00 | - |
| CCT | 421,023,199.85 | - | - | - | - | - | - | - | - | 421,023,199.85 | - |
| Dongguan Chiwan Warf Co., Ltd. ("DGW") | 186,525,000.00 | - | - | - | - | - | - | - | - | 186,525,000.00 | - |
| DGT | 175,000,000.00 | - | - | - | - | - | - | - | - | 175,000,000.00 | - |
| Chiwan Shipping (Hong Kong) Limited | 1,051,789.43 | - | - | - | - | - | - | - | - | 1,051,789.43 | - |
| CMPORT (note) | - | 26,170,129,771.99 | - | - | - | - | - | - | - | 26,170,129,771.99 | - |
| China merchants port (zhoushan) roller loading logistics co. LTD | - | 149,709,800.00 | - | - | - | - | - | - | - | 149,709,800.00 | - |
| Subtotal | 1,072,089,989.28 | 26,319,839,571.99 | - | - | - | - | - | - | - | 27,391,929,561.27 | - |
| II. Associates | |||||||||||
| China Merchants Holdings (International) Information Technology Co., Ltd | 16,875,997.65 | - | - | 2,556,570.73 | - | - | 1,158,000.00 | - | - | 18,274,568.38 | - |
| CMBL | 343,318,551.85 | - | - | 12,007,805.81 | - | 881,145.07 | 15,707,120.00 | - | - | 340,500,382.73 | - |
| Subtotal | 360,194,549.50 | - | - | 14,564,376.54 | - | 881,145.07 | 16,865,120.00 | - | - | 358,774,951.11 | - |
| III. Joint ventures | |||||||||||
| COHA (Laizhou) | 783,668,303.84 | - | - | 48,450,765.57 | - | - | 38,562,004.83 | - | - | 793,557,064.58 | - |
| Total | 2,215,952,842.62 | 26,319,839,571.99 | - | 63,015,142.11 | - | 881,145.07 | 55,427,124.83 | - | - | 28,544,261,576.96 | - |
SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2018
(XIV) NOTES TO THE KEY ITEMS IN THE COMPANY'S FINANCIAL STATEMENTS -
continued
4. Operating income and operating costs
Unit: RMB
| Item | 2018 | 2017 | ||
| Income | Cost | Income | Cost | |
| Principal operating | 211,782,804.61 | 158,561,191.30 | 230,376,600.39 | 147,184,443.19 |
| Other operating | 32,116,448.46 | 1,504,260.12 | 31,751,483.49 | 756,451.35 |
| Total | 243,899,253.07 | 160,065,451.42 | 262,128,083.88 | 147,940,894.54 |
| Item | 2018 | 2017 |
| Income from long-term equity investments under cost method | 121,894,044.34 | 589,478,376.49 |
| Income from long-term equity investments under equity method | 63,015,142.10 | 49,683,858.86 |
| Income from Other investments in equity instruments | 8,228,975.00 | |
| Investment income on available-for-sale financial assets, etc. | 9,417,000.00 | |
| Total | 193,138,161.44 | 648,579,235.35 |
| Investment | 2018 | 2017 | Reasons for increases or decreases in the current compared to the prior period |
| CHCC | 96,378,106.61 | 97,455,574.40 | The profits distributed by investee fluctuate |
| Shenzhen Chiwan Tugboat Co., Ltd | 21,929,842.24 | 21,606,823.62 | The profits distributed by investee fluctuate |
| Shenzhen Chiwan Transportation Co., Ltd | 3,299,252.31 | 2,619,884.81 | The profits distributed by investee fluctuate |
| Shenzhen Chiwan International Freight Agency Co., Ltd | 286,843.18 | 193,834.42 | The profits distributed by investee fluctuate |
| CCT | - | 276,049,957.84 | The profits distributed by investee fluctuate |
| Dongguan Chiwan Warf Co., Ltd. ("DGW") | - | 103,355,370.74 | The profits distributed by investee fluctuate |
| DGT | - | 88,196,930.66 | The profits distributed by investee fluctuate |
| Total | 121,894,044.34 | 589,478,376.49 |
CHINA MERCHANTS PORT GROUP CO., LTD.(FOMERLY KNOWN AS "SHENZHEN CHIWAN WHARF HOLDINGS LIMITED")
SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2018
1. BREAKDOWN OF EXTRAORDINARY GAINS AND LOSSES
Unit: RMB
| Item | Amounts | Remarks |
| Gains or losses on disposal of non-current assets | 6,512,480.64 | |
| 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) | 14,050,544.16 | |
| 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) | 2,685,592,888.44 | |
| 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 credit loss individually | - | |
| Gains or losses on entrusted loans | - | |
| Gains or losses on changes in the fair value of investment properties that are subsequently measured using the fair value model | - | |
| Effects on profit or loss of one-off adjustment to profit or loss for the period according to the requirements by tax laws and accounting laws and regulations | - | |
| Custodian fees earned from entrusted operation | - | |
| Other non-operating income or expenses other than above | (3,767,817.73) | |
| Other profit or loss that meets the definition of non-recurring profit or loss(note) | (121,311,211.59) | |
| Tax effects | (3,010,149.89) | |
| Effects of minority interest (after tax) | (2,003,803,627.07) | |
| Total | 574,263,106.96 |
CHINA MERCHANTS PORT GROUP CO., LTD.(FOMERLY KNOWN AS "SHENZHEN CHIWAN WHARF HOLDINGS LIMITED")
SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2018
2. RETURN ON NET ASSETS AND EARNINGS PER SHARE ("EPS")
The return on net assets and EPS have been prepared by Shenzhen Chiwan Wharf Co., Ltd. in accordancewith Information Disclosure and Presentation Rules for Companies Making Public Offering No. 9 -Calculation and Disclosure of Return on Net Assets and Earnings per Share (revised in 2010) issued byChina Securities Regulatory Commission.
Unit: RMB
| Category | Weighted average return on net assets (%) | ESP | |
| Basic ESP | Diluted EPS | ||
| Net profit for the current period attributable to ordinary shareholders | 3.8830 | 0.6080 | 0.6080 |
| Net profit attributable to ordinary shareholders after deducting extraordinary gains and losses | 1.8380 | 0.2878 | 0.2878 |