Shanghai Zhenhua Heavy Industries Co., Ltd.
Stock code: 600320 900947 The company referred to:
ShanghaiZhenhua Heavy,Zhenhua B share
Shanghai Zhenhua Heavy Industries Co., Ltd.
Annual Report 2014
Important Notice
I.Hereunder, the Board of Directors, the Supervisory Board, directors, supervisors
and senior executives of the Company guarantee that the Annual Report is of
authenticity, accuracy and integrity; it contains no major omission, false record or
serious misleading statement; they will be responsible both individually and jointly
for any of above guaranty.
II.Directors who failed to attend the Board meeting
Post of director who Name of director who Reasons of failure Name entrustee
failed to attend failed to attend
Director Liu Wensheng On business trip Song Hailiang
Independent director Liu NingYuan On business trip Gu Wei
Independent director She Lian On business trip Gu Wei
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Shanghai Zhenhua Heavy Industries Co., Ltd.
III.PrincewaterhouseCoopers Zhong Tian LLP.(Special general partnership)issued
standard unqualified audit report for the Company.
IV.The Company′s responsible person Song Hailiang, Finance Department chief
Wang Jue and responsible person for finance (Chief Financial Controller) Sun
Guangbo hereby declare that the financial reports in this Annual Report are true,
accurate and complete.
V.Report period profit distribution preplan or preplan for capital reserve transfer to
increase capital stock as audited by the board: not to distribute profit; not to convert
reserve into capital stock.
VI.Whether non-operational fund occupied by the controller and its related parties
exist with the Company:
No.
VII.Whether there is external guaranty provision violating regulation or procedural
decision-making within the Company:
No.
Contents
Chapter Ⅰ Definition and Substantial Risk Reminding .............................................................. 3
Chapter II Company Profiles ...................................................................................................... 3
Chapter III Summary of Accounting Data and Operational Indicators ........................................ 6
Chapter IV Report of the Board of Directors .............................................................................. 9
Chapter Ⅴ Substantial Events ................................................................................................. 30
Chpater Ⅵ Equity Movement and Shareholder′s Profile .......................................................... 39
Chapter Ⅶ Directors, Supervisors, Senior Executives and Employees ................................... 43
Chapter VIII Corporate Governance......................................................................................... 43
Chapter IX Internal Control ...................................................................................................... 53
Chapter X Chapter X Financial Statements.............................................................................. 55
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Chapter Ⅰ Definition and Substantial Risk Reminding
I. Definition
Terms used in this report means the following except for otherwise specified:
Definition of frequently used terms
The Company Refers to Shanghai Zhenhua Heavy Industries Co., Ltd.
CCCC, controlling shareholder Refers to China Communications Co., Ltd.
Effective controller Refers to China Communications Construction Group
II. Substantional Risk Reminding
The Company has detailed in this report risks the Company may face. Please
consult related description in the chapter of Report of the Board.
Chapter II Company Profiles
1. Company information
Statuory company name in Chinese 上海振华重工(集团)股份有限公司
Statuory Chinese Abbreviation of the 振华重工
Company
English name of the Company SHANGHAI ZHENHUA HEAVY INDUSTRIES CO.,LTD.
English Abbreviation of the Company ZPMC
Legal representiative Song Hailiang
2. Contact information
Board secretary Securities Affair Agent
Name Wang Jue Li Min
Address 3261 Dongfang Road Shanghai 3261 Dongfang Road Shanghai
Tel. 021-50390727 021-50390727
Fax 021-31193316 021-31193316
Email IR@zpmc.com IR@zpmc.com
3. Basic information of the Company
Registered address 3470, Pudong Road South, Shanghai
Post code 200125
Office address 3261 Dongfang Road, Shanghai
Post code 200125
Website http://www.zpmc.com
Email zpmc@public.sta.net.cn
4. Information disclosure and reference
Designated media for information Shanghai Securities News, Hong Kong Wen Wei
Po disclosure
Website designated by China Security www.sse.com.cn
Regulatory Commission for disclosure of
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Shanghai Zhenhua Heavy Industries Co., Ltd.
annual report
Annual report available of the Company Securities and Law Affairs Office
5. Stock Profiles of the Company
Stock Profiles of the Company
Short form of Stock Stock exchange Short form of stock Share code Stock before
type listed at change
A-share Shanghai Stock Zhenhua Heavy 600320 ZPMC Industries
Exchange
B-share Shanghai Stock Zhenhua B-share 900947 -
Exchange
6. Business registration alterations in report period
(I) Basic information
Registration date Feb.14,1992
Registered address 3470, Pudong Road South, Shanghai
Registered code for business license of 310000400519752
corporation
Registered code of tax 310115607206953
Organizational code 60720695-3
(2) Main business change since its going public
The Company went public in 1997, and has since 1998 been ranked as first global
winner of container crane orders. In search of better development, while searching
consolidation of port machinery market, the Company is actively exploring the large
steel and heavy marine equipment market; current operating range: design,
construction, installation and contracting of large port handling systems and
equipment, heavy marine equipment, construction machinery, engineering ships,
and large metal structures, their parts and accessories; ship repair; self-produced
crane rental business, selling self-made products; engaged in international
maritime shipping using special transport ships for shipping whole-machinery; steel
structure engineering professional contracting (subject to licensing in case of such
requirement).
(3) Successive changes of the controlling shareholders since listing
1、Promoter shareholder at incorporation
In July 1997, as approved by the Securities Commission of the State Council
coded Zengwei Fa Zi [1997] No. 42, Shanghai Port Machiery, Hong Kong Zhenhua
and former Zhonggang Group together with Macau Zhenhua and Rongjin
Investment as promoters, incorporated Shanghai Zhenhua Port Machinery Co., Ltd.
by way of stock floatation, and issued 100 million b-shares to overseas investors.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
2、Successive changes of promoters and controlling shareholders
(1) On November 26, 2001, Shanghai Port Machinery signed Equity Transfer
Agreement with the former Zhonggang Group, agreed that Shanghai Port
Machinery transfer all the founder shares of 96,112,500 shares it held of the
Company to the former Zhonggang Group. On February 10, 2002, Ministry of
Finance issued Ministry of Finance’s Reply to Issues
Concerning Shanghai Zhenhua Port Machinery Co., Ltd. Transfer of State-owned
Shares (Cai Qi [2002] No. 41), which stated the approval of the mentioned share
transfer. In 2002, former Zhonggang Group signed Equity Transfer Agreement with
Rongjin Investment, agreeing that Rongjin Investment transfer all its founder’s
shares of 368,500 shares to the former Zhonggang Group. In July 2002, CSRC
issued Letter of Exemption of Obligation of China Harbor Engineering Corporation
(CHEC) Tender Offer to Purchase "Zhenhua Port Machinery" Stock (Zhengjian
Han [2002]123), agreeing on the exemption of obligation of former Zhonggang
Group concerning above shares transfer. After the completion of the share transfer,
former Zhonggang Group became the Company's largest shareholder, holding
35.17% of the Company's total share capital.
(2) As approved by State-owned Asset Commission of State Council via
Notification on Reorganization of China Harbor Engineering Corporation (CHEC)
and China Road and Bridge Corporation (Guozi Gaige [2005] No. 703), former
Zhonggang Group merged with former Road and Bridge Group on December 18,
2005 into China Communications Construction. As approved by State-owned Asset
Commission of State Council with Reply to Matters Concerning Changes of
Corporate Holders and Equity Transfer of State-owned Shares of 6 Companies
including Shanghai Zhenhua Port Machinery Co., Ltd. (Guozi Chanquan [2006] 37),
equity of the Company held by former Zhonggang Company is changed to that
held by China Communications Construction.
In March 2006, CSRC issued the Reply to Agreement on China Communications
Construction Group Announcing on Shanghai Zhenhua Port Machinery Co., Ltd.
Purchase Report and Exemption of Its Tender Offer Obligation, agreeing to exempt
China Communications Construction from its tender offer obligations.
(3) On August 16, 2006, State-owned Asset Commission of State Council issued
Reply to Issue on China Communications Construction Co., Ltd. Overall
Restructuring and Listing Home and Abroad (Guozi Gaige [2006] 1063), approved
the overall reorganization of China Communications Construction, the exclusive
incorporation of CCCC program. On September 30, 2006, State-owned Asset
Commission of State Council issued Reply to Matters Regarding State-owned
Share Management of China Communications Construction Co., Ltd. (Guozi
Chanquan [2006] 1072), approved that assets including equity held by China
Communications Construction transferred to CCCC. After the CCCC was
established on October 8, 2006, China Communications Construction put the
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Shanghai Zhenhua Heavy Industries Co., Ltd.
equity of the Company it held into CCCC as investment. On October 30, 2006,
CSRC issued Reply to Agreement on China Communications Construction Co., Ltd.
Announcing Roads and Bridges Group International Construction Company
Limited, Shanghai Zhenhua Port Machinery Co., Ltd. Purchase Report and
Exemption of Tender Offer Obligations (Zhengjian Gongsi Zi [2006] 227), granting
the exemption of CCCC from purchase offer obligations. On Oct. 25, 2006, equity
of the Company held by China Communications Construction was transferred to
CCCC and thus CCCC became controlling shareholder of the Company.
7. Miscellaneous
Title PrincewaterhouseCoopers Zhong Tian (Special
General Partnership)CPAs Co., Ltd
CPA′s employed by the
Office address 11th Floor, No.202 Hubin Road, Shanghai
Company (Domestic)
CPAs to sign Zhao Bo
Jin Wen
Chapter III Summary of Accounting Data and Operational
Indicators
1. Major accounting data and financial indicators of last three years as of
report period end
(1) Major accounting data
Unit: RMB
Growth
2012
2013 over
same
Major accounting period
2014 Change
data Change after prior Change after
Change before before
year
(%)
25,069,421,487 23,201,555,800 23,201,555,800 8.05 18,255,152,096 18,255,152,096
Operation revenue
199,386,986 139,836,320 139,836,320 42.59 -1,043,665,841 -1,043,665,841
Net profit
attributable to
shareholders of the
listed company
Net profit after -79,581,135 -1,009,219,217 -1,009,219,217 92.11 -1,259,289,200 -1,259,289,200
deducting non-
recurring
gains/losses
Net cash flow from -873,383,052 965,483,749 965,483,749 -190.46 3,065,603,998 3,065,603,998
operating activities
End of 2014 End of 2013 End of 2012
Growth
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Shanghai Zhenhua Heavy Industries Co., Ltd.
over
same
period
Change after Change after Change before
Change before prior
year
(%)
Net asset 14,780,603,810 14,510,604,831 14,510,604,831 1.86 14,210,952,596 14,210,952,596
attributable to
shareholders of the
listed company
Total assets 56,145,227,254 49,265,093,850 49,154,736,687 13.97 46,862,044,376 46,779,696,343
(2) Major financial data
2013 2012
Growth over same
Major financial index 2014 period end prior
Change Change Change
Change year (%)
before after before
after
Basic EPS (Yuan/share) 0.045 0.032 0.032 42.59 -0.24 -0.24
Diluted EPS (Yuan/share) 0.045 0.032 0.032 42.59 -0.24 -0.24
Basic EPS after -0.02 -0.23 -0.23 91.30 -0.29 -0.29
deducting non-recurring
gains/losses (Yuan/share)
Weighted average net 1.36 0.97 0.97 Increase 0.39% -7.09 -7.09
assets earnings ratio (%
)
Weighted average net -0.54 -7.03 -7.03 Increase 6.49% -8.56 -8.56
assets earnings ratio after
deducting non-recurring
gains/losses(%)
2 Items and amount of non-recurring gains/losses
√Applicable □ Not applicable
Unit: RMB
Explanat
ory note
Items of non-recurring 2014 (for 2013 2012
gains/losses Amount example Amount Amount
applicabl
e)
Gains and losses from disposal 13,948,136 241,193,949 97,051,399
of non-current assets
Government subsidy into 20,316,889 47,878,876 28,730,126
current profit and loss statement
except for those closely related
to the Company′s operation,
enjoyed by certain state
standard or certain quota.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Gains/losses from fair value 286,253,779 326,109,601 143,917,526
movement of tradable financial
assets, tradable financial
liabilities held except for valid
hedging business related with
company′s normal operation,
and investment income
acquired from disposal of
tradable financial assets,
tradable financial liabilities and
financial assets available for
sale.
Investment income acquired 0 749,942,782 0
from disposal of subsidiaries
Non-operation revenue/expense 15,164,034 3,993,654 -13,639,165
apart from above
Minor shareholder′s equity -4,221,354 -70,237 -622,804
impact
Income tax impact -52,493,363 -219,993,088 -39,813,723
Total 278,968,121 1,149,055,537 215,623,359
3. Items calculated by fair value
Unit: RMB
Starting Current Impact on current
Item name Closing balance
balance movement profit
Forward foreign 121,169,489 25,735,001 -95,434,488 -95,434,488
exchange contract-
Fair value appraisal
income
Forward foreign -644,404 -28,752,000 -28,107,596 -28,107,596
exchange contract-
Fair value appraisal
income loss
Equity tool available 172,770,000 159,932,631 -12,837,369 76,238,833
for sale-Jiangxi
Huawu
Equity tool available 0 273,247,822 273,247,822 0
for sale-Qingdao
port
Equity tool available 4,202,678,325 5,686,257,756 1,483,579,431 278,843,280
for sale-Bank short-
term financial
products
Total 4,495,973,410 6,116,421,210 1,620,447,800 231,540,029
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Chapter IV Report of the Board of Directors
1. Discussion and analysis of business operation in report period by the
Board
In 2014, Company Board of director and business leaders leaded all employees to
overcome all problems and deeply carried out “4321”and “1521”strategy. Total 24
letters principle of “firm basis, always innovate, adjust structure, change type,
integrate resources, reinforce management, develop culture and increase quality”
was carried out completely. In the whole year, the company deepened the reform,
reduced costs and increased effect, firmed the basis and strengthen team
construction, which increased company′s operation quality and core competition
advantage totally. It also speeded up the construction of world leading company
with international competition and realized company′s stable and healthy
continuous development. In period of report, Company realized operation revenue
25.069 billion RMB, increased 8.05%; realized net profits 199 million RMB which
belongs to parent company, increased by 42.59%.
(1) Major business analysis
1 P&L and Cash Flow Statement related item movement analysis
Unit: RMB
Growth
Item Report Year Prior Year
(%)
Operation revenue 25,069,421,487 23,201,555,800 8.05
Operating cost 21,700,680,925 21,437,017,127 1.23
Selling expenses 64,745,357 68,647,704 -5.68
Management 1,460,145,132 1,352,925,539 7.93
expenses
Financial expenses 1,301,686,454 627,184,455 107.54
Net cash flow from -873,383,052 965,483,749 -190.46
operating activities
Net cash flow from -1,682,791,329 -2,690,576,061 37.46
investment activities
Net cash flow from 1,274,498,968 2,546,263,488 -49.95
financing activities
R&D expenses, cost 759,691,386 696,452,611 9.08
of expenses
Analysis:
1、The operation revenues and costs are increased because the company signed
more new contracts and more new projects started. The average gross profit rate
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Shanghai Zhenhua Heavy Industries Co., Ltd.
rises because the operation revenues from the sales of products of the company
increased, standardized management processes engaged and costs are reduced.
2、The sales expense is decreased because standardized management process
is specified and expenses control is strengthened.
3、The management expenses are increased because the R&D expenses and
amorization of intangible assets are increased this year.
4、The financial expenses are increased because the investment and finance
planning business are increased. The loan scale raises, and the interest increases
and exchange loss caused by depreciation of the RMB against the USD
5、The cash flow net amount in operation is decreased compared with the same
period of last year, because the company order, raw materials purchasing
expenses and payments of engineering expense are increased.
6、The cash flow net amount in investment changes because the investment
abroad business increases.
7、The cash flow net amount in financing changes because the fixed deposit net
disbursement investing increase this year..
2 Revenue
(1) Analysis of the factors affecting revenue from products mainly sold in kind
In 2014, the company operation revenue is 25.069 billion Yuan, increased by
8.05% against the 23.202 billion in 2013. The income increased because the
company adjusted the market structure, changed the operation mode, and
deepened the reform. All the business sectors obtained great achievement. It has
great strength in port machinery products, keeping absolute leading position in
global market. The products are sold in 88 countries. The marine equipment
market increases and mass production is realized in drilling platform, which
consolidated the marine equipment medium-& high-end market and supporting
market. Large steel structure market operated very well, system integration and
contracting market was full of highlights. The investment market influence raised,
shipment market operating ability was improved. The electric equipment market
consolidated the basis and integral service market layout had been finished
basically.
(2) Orders analysis
During the report period, company signed new contracts with amount of $ 5.1
billion, among which the new contract amount of traditional port machinery market
is $ 2.754 billion, increased by 6.36%. The port machinery products kept the global
leadership. The company’s products are sold in 88 countries and regions. The new
contracts are signed for marine and steel with amount of $ 1.848 billion, increased
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Shanghai Zhenhua Heavy Industries Co., Ltd.
by 20.86% comparing with the same period last year; other self-operating and
shipment transport contracts are amounted to $ 500 million.
(3) Top customer analysis
Operation revenue from top 5 customers is 5.58251 billion Yuan, taking up 22% of the
company’s total operation revenue.
3 Cost
(1) Cost analysis statement
Unit: Yuan
Product category
Report
period
Report
Total amount
period
cost in compare
Cost Report period rate in Amount in the
Product the same d with
composition amount total same period last
period same
cost year
last year period
(%)
(%) last r
year
ratio (%)
Raw material,
Container
labor, 10,271,871,264 47.69 10,797,268,174 51.15 -4.87
cranes
production cost
Raw material,
Offshore heavy
labor production 4,387,726,757 20.37 4,111,296,503 19.48 6.72
equipment
cost
Raw material,
Bulk-cargo
labor production 3,415,989,051 15.86 2,952,903,243 13.99 15.68
machinery parts
cost
Subcontracting
Nanjing Ninggao
expenses, raw 2,441,043,673 11.33 2,117,812,203 10.03 15.26
BT project
materials
Raw material,
Steel structures labor, 834,669,679 3.88 846,489,536 4.01 -1.40
production cost
Labor, fuel
Vessel shipping
consumption, 185,793,610 0.86 283,937,929 1.35 -34.57
and others
depreciation etc.
Total - 21,537,094,034 100.00 21,109,707,588 100.00 2.02
(2) Key suppliers
Purchase amount from top 5 suppliers is 2.5288 billion Yuan, covering 20% of total
purchase of the year.
4 R&D expenses
(1) R&D expenses breakdown
Unit: RMB
R&D into cost expenses 759,691,386
R&D into capital expenses 0
R&D expenses total 759,691,386
Total R&D expenses ratio in net assets 5.07
(%)
Total R&D expenses ratio in Operating 3.03
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Shanghai Zhenhua Heavy Industries Co., Ltd.
(2) Deliberation
During the reporting period, the company focused on the improvement on
technology level. Lots of creative technologies were adopted in port machinery
products; Xiamen Yuanhai automation port that is designed, developed,
manufactured and commissioned independently started to operate successfully.
The marine high-end technology realizes key breakthrough. The independently-
developped dynamic positioning system finished the first prototype testing. The
company mastered key technology of dynamic positioning system, breaking the
overseas monopolization. “National Maritime Crane Pipe Laying Core Equipment
Engineering Technology Research Center” passed a comprehensive site
assessment and acceptance by Ministry of Science and Technology with official
name. 91 national patent items were applied for approval, thereinto 33 patents of
inventions; 67 national authorized patents, among them 10 patents of inventions; 2
international authorized patents; 29 company’s establishment of scientific research
project.
5 Cash flow
The net cash flows from operating activities is -0.873 billion Yuan, reduced by
190.46% over last year, mainly due to increasing order and increasing payment for
the purchase of raw materials and engineering costs. The equipment
manufacturing business operating cash flow is net flow R analysis of operation by
industry and product
1、 Major business by industry and product
Unit: Yuan Currency: RMB
Major business by products
Operatio Operatio
n n cost
revenue increase Gross margin
Operation Gross
By product Operation cost increase over increase over prior
revenue margin
over prior year (%)
(%) prior year
year (%)
(%)
Container cranes 12,295,041,201 10,271,871,264 16.46 0.25 -4.87 Increased by 4.5
percentage points
Offshore heavy 4,984,474,241 4,387,726,757 11.97 17.72 6.72 Increased by 9.07
equipment percentage points
Bulk-cargo 3,597,166,505 3,415,989,051 5.04 17.44 15.68 Increased by 1.45
machinery parts percentage points
Nanjing Ninggao 2,885,494,223 2,441,043,673 15.40 31.67 15.26 Increased by 12,04
BT project percentage points
Steel structure 852,128,970 834,669,679 2.05 -2.31 -1.40 Decreased by 0.91
percentage points
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Vessel shipping 267,698,353 185,793,610 30.60 -9.81 -34.57 Increased by 26.26
and others percentage points
Total 24,882,003,493 21,537,094,034 13.44 8.55 2.02 Increased by 5.53
percentage points
2、 Major business by region
Unit: Yuan Currency: RMB
Region Operation revenue Operation revenue increased
over prior year (%)
Mainland, China (export)(Note 1,425,635,703 63.31
1)
Asia (Excluding Mainland, 7,397,396,682 -5.72
China)
Europe 2,399,223,127 -6.95
America 3,413,469,666 -16.60
Mainland, China 9,259,693,339 44.21
Africa 784,582,016 5.09
Oceania 202,002,960 -44.51
Total 24,882,003,493 8.55
Explanation of major business by region
Note 1: In this part, amounts listed in the Mainland China (export) for the years
2014 and 2013 items refer to the major operation revenue and cost the Company
firstly exports to its overseas subsidiaries or related parties, who then sell to
domestic customers.
(III) Assets and liabilities analysis
1 Assets/liabilities statements
Unit: Yuan
Report
Report Prior
period end
period period
Closing balance Closing balance amount over
end over end over
Item at report period at prior period prior period
total total
end end end amount
assets assets
change ratio
(%) (%)
(%)
At fair value through 25,735,001 0.05% 121,169,489 0.25% -78.76%
profit or loss of
financial assets
Interest receivable 45,655,159 0.08% 5,088,988 0.01% 797.14%
Other receivables 719,907,041 1.28% 1,084,341,531 2.20% -33.61%
Inventory 4,292,389,192 7.65% 6,015,690,177 12.21% -28.65%
Other current assets 5,960,761,626 10.62% 4,313,035,488 8.75% 38.20%
Available-for-sale 455,820,453 0.81% 200,410,000 0.41% 127.44%
financial assets
Long-term 5,339,170,148 9.51% 2,217,619,293 4.50% 140.76%
receivables
Long-term equity 925,350,083 1.65% 353,038,930 0.72% 162.11%
investment
Construction in 2,805,490,499 5.00% 1,478,006,436 3.00% 89.82%
progress
Short-term loans 20,658,839,765 36.80% 14,663,865,004 29.77% 40.88%
At fair value through 28,752,000 0.05% 644,404 0.00% 4361.80%
profit or loss of
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Shanghai Zhenhua Heavy Industries Co., Ltd.
financial liabilities
Notes payable 1,934,231,179 3.45% 1,218,223,112 2.47% 58.77%
Accounts payable 4,670,346,661 8.32% 3,592,110,836 7.29% 30.02%
Taxes and charges 221,167,212 0.39% 103,837,251 0.21% 112.99%
payable
Interest payable 595,551,629 1.06% 418,390,614 0.85% 42.34%
Dividend payable 854,881 0.00% 33,825,412 0.07% -97.47%
Other payables 371,606,304 0.66% 247,875,237 0.50% 49.92%
Non-current liabilities 2,606,660,000 4.64% 4,370,297,863 8.87% -40.36%
due within one year
Deferred income tax 62,796,958 0.11% 24,984,658 0.05% 151.34%
liabilities
Deferred profit 292,776,131 0.52% 198,171,971 0.40% 47.74%
Analysis:
1. The financial assets counting at fair value and its change contained in current
financial loss decreased mainly because the long-term foreign exchange contract
at fair value is reduced this year.
2. The interest payable is increased mainly because the time deposit is increased
this year.
3. Other receivables decreased mainly because the company retook the stock
ownership of subsidiaries.
4. The inventory decreased mainly because consumption of raw materials
increased since the marine products not sold were used by the company and more
new projects started.
5. Other current assets are increased mainly because the Company purchased
more financing products this year.
6. The financial assets for sale are increased mainly because the Company has
purchased equity tools for sale this year.
7. Long-term receivables are increased mainly because the receivables from the
Nanjing “construct-transfer” project are increased.
8. Long-term receivables are increased mainly because the Company had more
investment in overseas corporates and gains from associates and joint ventures
adjusted on equity basis.
9. Construction in progress is increased mainly because some construction
projects in progress are increased this year.
10. The short-term loans are increased mainly becausethe Company increased
bank borrowings to meet capital requirements this year.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
11. The notes receivable is increased mainly because the materials purchasing is
increased due to increasing new projects.
12. The accounts payable is increased mainly because the materials purchasing is
increased due to increasing new projects.
13. The taxes and charges payable are increased because the Company’s
domestic sales are increased this year.
14. The interest payable is increased because the Company has more bank
borrowings this year.
15. The dividend payable decreases because the bonus last year is paid this year.
16. The other payables are increased because the Company receives the capital
from affiliated party this year.
17. Non-current liabilities due within one year decreased because the long-term
loans that would be due within one year are reclassified into reduced non-current
liabilities due within one year.
18. The deferred income tax liabilities are increased because the assets
assessment value is increased in enterprise combination not controlled by one
group.
19. The deferred profit is increased because the government subsidy is received
which is not confirmed to satisfy the requirements.
(4)Core Competitiveness analysis
During reporting period, company core competitiveness does not change a lot.
(5) Investment analysis
1、 External equity investment overall analysis
Unit: Yuan
Investment amount as of period end 1,381,170,536
Investment amount movement 827,721,606
Investment amount same period prior year 553,448,930
Investment amount movement ratio (%) 150%
Invested companies
Equity ratio in
Name of invested company Operational activities invested
company (%)
ZHENHUA OCEAN ENGINEERING
RESOURCE (HONG KONG)CO, Engaged in maritime transportation 51%
LTD.
CCCC Financial Leasing Co., Ltd. Engaged in financial leasing operation 30%
15
Shanghai Zhenhua Heavy Industries Co., Ltd.
QINGDAO PORT INTERNATIONAL Engaged in port service such as load and 2.16%
CO., LTD. unload and storage
(1) Equity holding in other listed companies
Unit: Yuan
Proporti Owner′s
on in Gains/loss equity Origin
Stock Short Initial Closing book Accounti
total in report movement of
code form investment value ng entry
equity period in report equity
(%) period
300095 Huawu 12,102,578 7.93 159,932,631 76,238,833 69,538,842 Financial Fundin
share assets g
for sale
HK6198 Qingdao 308,515,588 2.16 273,247,822 0 - Financial Market
port 35,267,766 assets purcha
for sale se
Total 320,618,166 / 433,180,453 76,238,833 34,271,076 / /
(2) Shares held of non-listed financial enterprises
Gains/los
Closing Equity
Name of Initial Amount Equit ses
book movement Accounti Share
shares investme held y ratio report
value report year ng entry origin
held nt (Yuan) (share) (%) year
(Yuan) (Yuan)
(Yuan)
Shenyin & 200,000 161,942 0.002 200,000 0 0 Financial Subscript
wanguo 978 assets ion
legal for sale
person
shares
Total 200,000 161,942 / 200,000 0 0 / /
16
Shanghai Zhenhua Heavy Industries Co., Ltd.
(3) Share sales of other listed corporation
Buying shares Selling shares
Initial share Money amount in Closing share Cause investment
Share name number in number in
numbers (share) usage (Yuan) number (share) profit (Yuan)
reporting period reporting period
Huawu share 26,000,000 0 0 9,779,652 16,220,348 76,238,833
The investment profit of new shares sold subscriptions in reporting period is 0 Yuan.
2、 Non-financial companies entrusted investment financing and derivatives
(1) Entrusted financing
Unit: Yuan Currency: RMB
S Sour
The
ui ce of
amo
t fund
unt Rel
in s
Proc of pr ate
Financin Endi Income v and
Partne Startin Expected Principal edur ovisi d
g product Amount ng Reward actually ol whet
r g day profit actually covered e via on trad
type day gained v her it
legal for e or
e is
impai not
d fund-
rmen
or raisin
t
n g
ot
A Bank 497,034,695 2013-3- 2014- Interest 20,776,731 497,034,695 20,776,732 Yes 0
Bank Financial 19 3-13 upon No N No
Product maturity o
A Bank 497,202,541 2013-3- 2014- Interest 20,610,067 497,202,541 20,610,067 Yes 0
Bank Financial 22 3-13 upon No N No
Product maturity o
A 8,000,000 2014-2- 2014- Interest 35,770 8,000,000 35,770 Yes 0
Bank Bank 28 4-1 upon No N No
Financial maturity o
Product
17
Shanghai Zhenhua Heavy Industries Co., Ltd.
A Bank 991,040,000 2014-3- 2015- Interest 53,222,921 Yes 0
Bank Financial 28 3-26 upon No N No
Product maturity o
B Bank 475,000,000 2014-1- 2014- Interest 26,157,534 475,000,000 26,157,534 Yes 0
Bank Financial 28 12-29 upon No N No
Product maturity o
C Bank 110,000,000 2014-3- 2014- Interest 2,971,808 110,000,000 2,971,808 Yes 0
Bank Financial 12 9-1 upon No N No
Product maturity o
C Bank 120,000,000 2014-4- 2014- Interest 3,260,712 120,000,000 3,260,712 Yes 0
Bank Financial 18 10-9 upon No N No
Product maturity o
D Bank 310,000,000 2013-3- 2014- Interest 16,909,863 310,000,000 16,909,863 Yes 0
Bank Financial 21 3-18 upon No N No
Product maturity o
D Bank 310,000,000 2013-3- 2014- Interest 14,870,233 310,000,000 14,870,233 Yes 0
Bank Financial 29 3-25 upon No N No
Product maturity o
D Bank 740,000,000 2013-4- 2014- Interest 35,595,014 740,000,000 35,595,014 Yes 0
Bank Financial 17 4-14 upon No N No
Product maturity o
D Bank 610,000,000 2013-5- 2014- Interest 31,575,575 610,000,000 31,575,575 Yes 0
Bank Financial 7 4-23 upon No N No
Product maturity o
D 290,000,000 2013-5- 2014- Interest 13,548,562 290,000,000 13,548,562 Yes 0
Bank Bank 22 5-16 upon No N No
Financial maturity o
Product
D Bank 720,000,000 2013-5- 2014- Interest 33,825,205 720,000,000 33,825,205 Yes 0
Bank Financial 23 5-19 upon No N No
Product maturity o
D Bank 500,000,000 2014-2- 2015- Interest 32,638,356 Yes 0 No
Bank Financial 14 2-10 upon No N
Product maturity o
D 750,000,000 2014-2- 2015- Interest 45,537,329 Yes 0
Bank Bank 28 2-12 upon No N No
Financial maturity o
Product
18
Shanghai Zhenhua Heavy Industries Co., Ltd.
D Bank 620,000,00 2014-3- 2015 Interest 38,675,770 Yes 0 No
Bank Financial 0 20 -3-13 upon No N
Product maturity o
D Bank 1,000,000,000 2014- 2015 Interest 65,971,644 Yes 0
Bank Financial 4-10 -4-2 upon No N No
Product maturity o
E Bank 89,000,000 2013- 2014 Interest 4,361,000 89,000,000 4,361,000 Yes 0
Bank Financial 3-18 -3-18 upon No N No
Product maturity o
E Bank 1,000,000,000 2014- 2014 Interest 54,345,205 1,000,000,000 54,345,205 Yes 0
Bank Financial 1-14 -12- upon No N No
Product 28 maturity o
E Bank 770,000,000 2014- 2015 Interest 42,233,973 Yes 0
Bank Financial 2-13 -2-12 upon No N No
Product maturity o
E Bank 790,000,000 2014- 2015 Interest 45,030,000 Yes 0 No
Bank Financial 2-25 -2-25 upon N No
Product maturity o
Total / 11,197,277,236 / / / 602,153,272 5,776,237,236 278,843,280 / 0 / / /
Cumulative amount of principal or proceeds unrecovered upon 0
maturity (Yuan)
Explanation trust management of finances Note: As of the reporting date, the entrusted financing items the table covered had been
approved by ninth meeting, the fifteenth meeting, the twenty-third meeting, and the
twenty-sixth session of the fifth session of the Board and the 2013 First Interim General
Meeting and 2013 session of Board, all relevant amount approved.
(2) Entrusted loans
There is no entrusted loan in report period.
(3) Other investment financing and derivative product investment
There is no such status in report period
.
19
Shanghai Zhenhua Heavy Industries Co., Ltd.
3、 Key subsidiaries and share-participating companies
Unit: Yuan Currency: RMB
Company Major product or service Registered capital Asset scale Net
profit/(loss)
Shanghai
Large container cranes and the gear
Zhenhua Port
box gear processing and marketing;
Machinery Heavy 5,500,000 8,108,171 -407,836
ship manufacturing, processing and
Industries Co.,
marketing
Ltd
Shanghai
Zhenhua Port
Production of precision foundry,
Machinery Heavy 5,000,000 438,237,949 -50,495
metal cutting and cooling process
Industries Co.,
Ltd
Shanghai
Design, manufacturing and sales of
Zhenhua Port
port machinery, engineering vessel, HKD 50,000,000 4,089,911,590 77,903,615
Machinery (Hong
steel structure and other parts
Kong) Co., Ltd
Operation of sea transportation in
Shanghai coastal waters; ordinary
Zhenhua transportation in the middle and 120,000,000 1,587,721,194 8,718,861
Shipping Co., Ltd lower reaches of Yangtze River;
transportation of port machinery.
Installation of heavy port equipment,
engineering vessels, heavy metal
Nantong structure and its parts; Gear box,
Zhenghua Heavy container yard crane, super heavy-
Equipment duty bridge steel structure, heavy 854,936,900 1,314,025,988 -24,156,935
Manufacturing marine machinery equipment,
Co., Ltd weaving, installation; lease of
cranes; contracting of steel
structures etc.
Construction and installation of
large-scale port equipment,
engineering vessels, offshore heavy
Shanghai
equipment, machinery and
Zhenhua Heavy
equipment, wind power generation
Industries Group
equipment to use gear box; large 300,000,000 2,295,411,749 17,877,456
(Nantong)
slewing bearings, transmission,
Transmitter Co.,
dynamic positioning, large anchor
Ltd
cutter, offshore oil platform lifting
device and components,
accessories related weaving.
International land, air, maritime
freight forwarding, business,
domestic freight forwarding,
undertaking large-scale port
equipment, marine equipment,
Shanghai
marine engineering materials sales,
Zhenhua Heavy
marine construction and 100,000,000 106,734,728 -12,109,727
Industries Vessel
engineering and ship leasing,
Transport Co., Ltd
engaged in import and export of
goods and technologies, transit
trade, trade between enterprises
and trade agents within the free
trade zone
Shanghai Technical development, technical
Zhenhua Testing consultancy, technical services,
Technology transfer of technology in the field of 7,000,000 7,801,583 528,671
Consulting Co., testing; construction engineering
Ltd testing, construction project
20
Shanghai Zhenhua Heavy Industries Co., Ltd.
management services, physical and
chemical testing of metallic
materials and consulting, except
metal, mechanical equipment, ships
and steel structure equipment
(subject to special approval) non-
destructive testing services, test
equipment rental (except financial
lesases), engaged in the import and
export of goods and technology
business.
Design, construction, installation
and contracting large port handling
systems and equipment,
engineering vessels and large metal
structure parts, accessories; special
Shanghai
heavy-duty Steel, Bridge structure,
Zhenhua Heavy
the waving of heavy machinery and
Industries Group 300,000,000 291,454,070 -72,850,701
equipment by sea, the installation;
(Nantong) Co.,
engineering ship, lifting machinery
Ltd
leasing; engineering consulting
service, Steel structure engineering
contractor; cargo storage and
handling, loading and unloading
containers.
Industrial automation equipment,
electrical equipment research and
development, design, testing,
Shanghai electrical and electrical equipment,
Zhenhua Heavy computer hardware and software
50,000,000 61,929,910 76,020
Industries development, manufacturing, sales,
Electric Co., Ltd technical services, systems
integration, engaged in the import
and export of goods and technology
business
Nantong Zhenhua Machinery manufacturing and
Heavy Industries installing, steel structure processing,
Steel Structure hardware processing, de-resting UDS 100,000 79,336,740 111,297
Processing Co., and painting, machinery engineering
Ltd contracting etc.
Port machinery spare parts
Jiangyin Zhenhua production; steel structure
Steel Structure production, engineering, mechanical
UDS 100,000 5,717,480 9,495
Manufacturing equipment, electrical equipment
Co., ltd installation; and to provide relevant
technology and post-sales service
Manufacturing and sales of steel
Shanghai
structures and port machinery ports;
Zhenhua Heavy
installation of electric & port UDS 150,000 3,826,843 212,779
Industries Steel
machinery equipment; providing
Structure Co., Ltd
related technology & service
Port equipment technical service,
ZPMC
sales, spare parts, offshore EURO 18,000 22,028,190 -3,116,144
Netherlands B.V.
installation and steel structure
Sales, transport, maintenance of
ZPMC GmbH
port equipment, ship steel structure EURO 25,000 142,348,870 6,439,962
Hamburg
parts and other parts
Sale of port bulk & container cranes
& machinery, port engineering
vessel (incl.barge engineering
CCCC Shanghai
vessel) cargo carrying machinery
Port Machinery
and parts; sale, technical service, 2,184,730,000 2,227,034,807 -48,608,618
Plant Co., Ltd
maintenance, installation and
technical consulting of key parts &
original and associate instruments
of machinery
21
Shanghai Zhenhua Heavy Industries Co., Ltd.
Manufacturing of port cranes and
parts; making of cargo carrying
machinery & parts, tunnel digging
machinery, express railway special
equipment, steel structure; repair,
Shanghai Port
design & making of large
Machinery Heavy USD 18,120,000 783,782,635 19,465,862
engineering vessel (incl. barge
Industry Co., Ltd
crane) & ocean engineering
equipment, sales of own products
and provides related installation and
maintenance service and technical
advice.
Shanghai
Zhenhua Heavy
Making, processing, repair and
Industries (Group)
rebuilding of port crane, bulk & 15,000,000 149,340,784 9,897,269
Zhangjiagang
container machinery
Assembly Co.,
Ltd.
Nanjing Ninggao Engaged in construction, investment
New Channel and consulting of Ninggao New 100,000,000 5,530,269,652 31,322,910
Construction Co., Channel project
Ltd
ZPMC LANKA
Engaged in port equipment Rupee 184,594,48
COMPANY(PRIV 11,837,559 1,605,834
technological service 0
ATE) LIMITED
ZPMC North
Trade selling USD 400,000 1,233,912 -604,001
America Inc
ZPMC KOREA
Trade selling Won 490,000,000 3,604,335 -238,665
CO., LTD.
ZPMC
ENGINEERING
Trade selling USD 500,000 6,228,946 1,867,059
AFRICA (PTY)
LTD.
ZPMC
Engineering
Trade selling USD 480,000 2,885,101 -22,442
(India) Private
Limited
ZPMC
SOUTHEAST
Trade selling USD 630,000 14,381,828 3,486,252
ASIA HOLDING
PTE. LTD.
ZPMC
AUSTRALIA Austrialian dollars
Trade selling 3,097,120 34,699
COMPANY PTY 500,000
LIMITED
ZPMC Heavy
Industries Qidong Machinery manufacturing 303,000,000 2,185,295,776 -190,402,381
Marine Co., Ltd
CCCC Financial Financing lease 1,800,000,000 2,991,163,705 37,841,701
Leasing Co., Lt
d.
Shanghai Maritime transportation USD 5,969,998 146,858,111 -23,744,126
Zhenhua Marine
Engineering
(Hong Kong) Co.,
Ltd
ZPMC Engaged in port equipment LT 50,000 8,647,000 -69,463
Mediterranean technological service
Liman Makinalari
Ticaret Anonim
Sirketi
22
Shanghai Zhenhua Heavy Industries Co., Ltd.
CCCC Properties Engaged in real estate development 900,000,000 1,019,785,679 -16,310,097
Yixing Co., Ltd
Jiangsu Steel structure fabrication and 260,000,000 578,138,084 35,438,514
LongYuan installation, Foundation construction
Zhenhua Marine of offshore wind power facilities,
Engineering Co., equipment installation and
Ltd maintenance, submarine cable
system construction, maintenance,
marine construction, equipment
installation and maintenance, and
installation of equipment leasing
CCCC Marine Mainly engaged in steel ships and 60,000,000 82,208,987 316,974
Engineering relevant equipment design,
Vessel development, marketing and supply
Technology of technology transfer, technology
Research Centre consultation and technology
Co., Ltd services.
Shanghai Epoxy, polyurethane resin coating 49,800,000 193,632,112 4,799,812
Zhenhua Heavy manufacturing and processing.
Industries (Group)
Changzhou Paint
Co., Ltd
4、 Non-raised funds
√Applicable □ Not applicable
During report period the Company′s major non-raised fund investment projects
include Nantong, Changxing, Jiangyin base infrastructure construction etc. As of
Dec.31, 2014, project investment, progress are as follows 54,15 million Yuan was
invested to Nantong base infrastructure construction,99% completed;
411.17 million Yuan was invested to Base large machinery and engineering
equipment construction in progress, 95% completed;4.81 million Yuan was
invested to office building and affiliated facility, 100% completed; Amount involved
in her projects is small, within the range of technical reform and sporadic vacancy
II.Board of Director′s discussion and analysis of the Company′s future
development
(Ⅰ)Sector competition pattern and development trend
In 2015 the slow development of world economy will become the “new
ordinary state”. The risk of global deflation is high while RMB exchange rate
change direction uncertainty increases. The nation faces unprecedented economy
and society adjustment, reform, transition and upgrade. The task to stabilize reform
and development becomes more and more difficult.
Sector and market analysis
1. The global equipment manufacturing industry appears three obvious
characters: R&D and manufacturing division are arranged once again, high end
manufacturing and re industrialization. Based on technological innovation, Euro-
23
Shanghai Zhenhua Heavy Industries Co., Ltd.
America countries carry out “re industrialization” and create new high end
manufacturing. In this case, labor intensive manufacturing with higher technology
will return to Euro-America countries, which brings larger pressure of competition
to new emerging market that is engaging in industrial structure upgrade and new
growth pattern.
2. Industry 4.0 age is coming. Information revolution brings new digital
chance and challenge, intelligent manufacturing, lean manufacturing, digital
manufacturing and integrative manufacturing is the necessary direction.
3. International shipping industry market recovers slowly; port machinery
market develops steadily with average market capacity between USD 2.5 billion to
USD 3.5 billion. Domestic automated terminal is predicted to enter high speed
development period, which will bring new development chances and growth.
4. Influenced by continuous fluctuation of oil price, marine machinery market
in energy sector fluctuates. The volume decreases while risk and uncertainty
increases greatly.
5. Thanks to national strategy “One Belt and One Road”, great opportunity is
available in the market, including new market and space in port, shipping,
investment and steel structure field.
6. With more automated terminals construction, electrics and service and
spare parts market will have high potential to grow.
(Ⅱ) The Company’s development strategy
The Board systematically and scientifically studied the basic situation both at
home and abroad, analyzed domestic reform status, analyzed major competitions
and self-owned advantages and disadvantages. The Board clearly set the overall
development concept, key tasks and guarantee measures in 2015, focusing on
efficiency, emphasizing value, innovating drive and improving quality, which
ensures balance and continuous development on Company’s scale,
efficiency and equality and starts Zhenhua Heavy Industry “4.0”Age.
1、Strategic positioning: focusing on “4,3,2,1”to build the Company into an
excellent international company
(1) 4-types-Stick to “learning-type, innovation-type, high-effectiveness-type,
core value point of view-type” to shape Zhenhua Heavy Industries;
24
Shanghai Zhenhua Heavy Industries Co., Ltd.
(2) 3-ations-Stick to “vertical integration, horizontal correlation limited
diversification and internationalization” approach to business and industry layout;
(3) 2-mega′s-Stick to “mega-machinery, mega-civil engineering” road of
development;
(4)1-excellent-Stick to building a sustainable and healthy international
excellent company, including being the world′s leading supplier of equipment, first-
class mechanical and electrical systems integrator, engineering contractor and
investor.
2、 The overall working concept for 2015: to study and implement the spirit
of the Party’s 18th National Congress, the 18th Congress′Third Plenary Session and
Fourth Plenary Session and CCCC′s working conference and Company’s “4321”
and “1521”strategies; increase Company development quality and benefit; focus
the efforts on the four main management lines to “deepen reform and innovation,
overall cost efficiency and continuous consolidation of its foundation,
strengthen the personal construction”; insist on “24 word′s principle” of
“solid foundation, constant innovation, structural adjustment, mode
transmission, resource integration, strong management, nurturing culture,
improving quality ”; further clear strategy, deepen reform, consolidate the
foundation and drive internationalization operation; improve products chain, cost
chain, responsibility chain, value chain and management; put foundation of
building international company of excellence and starting new development of “13th
Five-year Plan”.
3、2015 major tasks:
(1)Continuously center on reform and innovation principle and focus on
organization construction and structure adjustment.
(2) Continuously center on overall cost efficiency and focus on basis
management and benefit increasing.
(3) Continuously center on solid foundation and focus on “three bases” and
risk control.
(4) Continuously strengthen team building and focus on personnel
construction.
25
Shanghai Zhenhua Heavy Industries Co., Ltd.
(Ⅲ) Business planning
In 2015, the Company plans to achieve steady growth in revenue, and sign
more new orders, to grow around 6 sub groups planning and the reform in difficult
areas and solid foundation to seize the market, accelerate the adjustment of the
market and the business structure, strengthen the global market leader position in
port machinery, vigorously develop the marine and key spare parts markets, make
comprehensive planning for electronics markets, steadily march into the
investment and services market, accelerate the pace of integration of resources,
strengthen internal control, improve gross margins, enhance the Company’s overall
performance capabilities and development quality.
( Ⅳ ) The Company’s fund demand for maintaining current business and
completing investment in progress
Daily operating expenses and capital expenditure are mainly the Company’s own
funds, as well as through a variety of means of financing; capital expenditure is
mainly used for items such as capital construction of the production base of the
Company.
(Ⅴ)Possible risks and counter measures
Market risk: international economy enters into deep structure adjustment
period, slow economic development may become the normal state in the
world, port machinery market is still in main position in scale and profit
contribution, but the competition raises further and other markets are still
being cultivated.
Solution: facing the market challenges at home and abroad, the Company will
focus on “1.5.2.1”for optimal adjustment of market and business structure; change
operating mode to independent management, high end management, integrative
management, self-management and dependence management; speed up eight
industries′ market layout, quest for diversified business model and innovative profit
mode, drive structure adjustment and resource integration; drive enterprise
sustainable development.
Operation risk: the profit mode depends on the size. The basic
management, system management, project management are to be improved.
The control system integration capability is weak with high follow-up risk,
26
Shanghai Zhenhua Heavy Industries Co., Ltd.
high service cost and low product comprehensive gross margin. It is difficult
to realize the high quality development task.
Solution: deepen the main direction of reform and innovation, focus on 8 core
business sectors, further adjust structure, change mode, innovate commercial
simulation, widen revenue streams, pursue comprehensive growth in revenue;
reduced costs and increased effect; focus on basic management and benefit
increase, optimize assets structure, improve asset quality, strengthen process
management, strengthen production control, optimize process procedures, and
obtain profit from management.
Financial risks: exchange rate risk and credit risk, increased volatility of
the RMB bidirectional fluctuation of exchange rate and large load capacity.
Solution: develop rational planning for forward rate look, control exchange rate risk,
emphasis on research on policies and strategies of foreign exchange risk
management, pay close attention to change in exchange rates, regularly complete
analysis of exchange rate movements, conduct strict implementation of financial
derivatives related to the approval process, produce good statistics on product
current exchange rate, further reinforce the basic work of foreign exchange
management, and reduce the company’s exchange rate risk. By arranging
favorable settlement terms in the contract (such as the signing of a contract with
the RMB exchange rate pegged, increase the prepayments proportion plus early
settlement, etc.), or within the range permitted by the country’s financial foreign
exchange policy, make use of hedging, foreign exchange factoring and other
appropriate financial instruments or means to control and lock the exchange rate
risk. As for credit risk, by reducing raw material reserves, compression of
infrastructure spending, adjusting the company’s debt structure through a variety of
ways (such as medium-term notes, short-term bonds), reducing financing costs,
strengthening the collection of accounts receivable, gradually reducing the amount
of bank debt, reduce business risks.
Ⅲ. Explanation of the Board about the “Non-Standard Auditor′s Report” from
the CPAs Firm
(Ⅰ) Remarks from the Directors and Supervisory Board of the Company on
the “Non-standard Audit Report” provided by the CPA firm.
□Applicable √Not applicable
27
Shanghai Zhenhua Heavy Industries Co., Ltd.
(Ⅱ)Specification by the Board of Directors and the Supervisory Board of
the Company on the “Non-standard Audit Report” provided by the CPA firm.
√Applicable □Not applicable
1. With continuous development of Company business, in order to segment and
improve management of Company receivable and permanent assets, to
demonstrate Company’s financial status and operation achievement in a more
objective and accurate way and provide more reliable and accurate accounting
information, the accounting may be changed for the doubtful debts of account
receivable, partial permanent assets classification, predicated service-life and
predicted net salvage since Jan. 1st, 2014 based on practical experience of
account receivable and permanent assets in previous years. Based on related
regulations of Enterprise Accounting Standards No.28—Accounting Policies,
Accounting Estimate Alteration and Error Corrections, the accounting estimate
alteration will adopt the applicable method in the future for related accounting
treatment. The accounting estimation alternation will influence the financial
statement in 2014 and will not influence the financial statements in previous years.
This alternation has been approved on the 25th meeting, 5th board of directors
conference on 24th, Mar. 2015. The general meeting of shareholders in 2013 held
on 30th, April, 2014 approved Proposal About Accounting Estimate Alteration
The accounting estimation alternation of account receivable bad debt
preparation and partial permanent classification, predicated service-life and
predicated net salvage brings 199, 189,374 Yuan of profit from amalgamation in
2014.
2. In 2014, Ministry of Finance issued Accounting Standard for Enterprises No.
39-- Fair Value Measurement, Accounting Standard for Enterprises No. 40-- Joint
Venture Arrangement, Accounting Standard for Enterprises No. 41---Disclosure of
Interests in Other Entities, revised Accounting Standard for Enterprises No. 2--
Long Term Equity Investment, Accounting Standard for Enterprises No. 9—
Employee Salary, Accounting Standard for Enterprises No. 30- Presentation of
Financial Statements and Accounting Standard for Enterprises No. 33 --
Consolidated Financial Statements and Accounting Standard for
Enterprises No.37-- presentation of financial instruments. Except for Accounting
Standard for Enterprises No. 37-- Presentation of Financial Too List and
28
Shanghai Zhenhua Heavy Industries Co., Ltd.
Accounting Standards for Enterprises - Basic Standards were implemented in
Finance Statement of 2014, other standards were implemented from July, 1st, 2014.
Based on Accounting Standard for Enterprise No. 2 –Long Term Equity
Investment revised by Ministry of Finance in 2014, the Company adjusts the
accounting policy of long-term equity investment under enterprise accounting
standard: do not control, jointly control or influence the investment company, no
quotation in activate market and equity investment that fair value can not be
measured reliably; treat as Accounting Standard for Enterprise No. 22–-
recognition and Measurement of Financial Instruments, account in sale available
financial assets, retroactively adjust number in financial statement year and
adjusting amount is 27,640,000 Yuan.
Based on Accounting Standard for Enterprises No. 30--the Presentation of
Financial Statements revised by Ministry of Finance in 2014, the Company adjusts
partial items and listed type in financial statement and retroactively adjust
beginning number at financial statement year, including: independent list of
deferred income, other composite benefits, the translation difference of foreign
currency statements and Capital re-classification (Financial Statement Note 2 (29))
Other 7 new accounting standards started from 1st, July, 2014 or at the
beginning of 2014 do not materially influence Company’s Financial Statement in
2013 and 2014.
(Ⅲ) Specification by the Board of Directors on cause and effect of important
corrections of prior period errors
□Applicable√Not applicable
Ⅳ. Pre-plan for profit distribution or capital reserve transfer to increase
capital stock
(Ⅰ)Cash dividend policy formulation, implementation and adjustment
According to CSRC Notification on further implementation of issues concerning
listed company cash dividends sharing (Zhengjian Fa [2012]37), as proposed by
the 10th meeting of the Company’s fifth session of Board, amendment would be
made to the Articles of Association of the Company concerning profit distribution
and cash dividends policy, and as a result, the dividends sharing standard and
proportion are clear, related decision making program and mechanism compete,
with full maintenance of small shareholders’ legitimate rights and interests, giving
them full access to expressing their views and demands.
29
Shanghai Zhenhua Heavy Industries Co., Ltd.
(Ⅱ) Profit distribution pre-plan or plan, capital reserve converted into share
capital plan or preplan of the Company for last three years (including report
period)
Unit: Yuan Currency: RMB
Shares Net profit
Bonus share Dividend for
converted for Cash dividend attributable to
for every 10 every 10 shares
Year every 10 amount listed company
shares (Yuan)(before
shares (before tax) shareholders in
(share) tax)
(share) profit-sharing year
2014 0 0 0 0 199,386,986
2013 0 0 0 0 139,836,320
2012 0 0 0 0 -1,043,665,841
Ⅴ. Active fulfillment of social responsibilities
(Ⅰ) Social responsibility work
The Company actively fulfills its social responsibilities, effectively adjusts
industrial structure and business arrangement, optimizes development strategy,
forms 8 business sectors arrangements; increases investment in R&D; enhances
the innovation capacity; promote technological progress; actively promote the
overseas center construction, improve the service response speed to the global
customers and provide customers with high quality and rapid services.
The Company actively creates development platform for employees,
encourages employees to innovate, build innovation pattern and forms good
enterprise atmosphere; strengthens employee’s humanistic care, builds workers′
sports and leisure center to enrich leisure life for workers and strives to create a
culture of safety production, working and living environment; in hot season,
sending cooling gifts to workers to ease the high temperature, showing care for the
health of the employees.
Chapter Ⅴ Substantial Events
Ⅰ. Substantial lawsuits, arbitrations and media generally questioned events:
√Applicable □Not applicable
(Ⅰ) Events disclosed in the provisional announcement and without changes
or progresses of following-up implementation
Events overview Index
Substantial lawsuits about Flour Company Shanghai Stock Exchange website:
offshore wind power project www.sse.com.cn and Shanghai Securities News
and Hong Kong Wen Wei Po on Sep. 30, 2014.
30
Shanghai Zhenhua Heavy Industries Co., Ltd.
(Ⅱ) Lawsuits, arbitrations not disclosed in the provisional announcement of
with subsequent progress
Unit: Yuan Currency: RMB
In the report period
Suit
(arbitr
Suit ation) Suit
Party Type Suit Suit
(arbitrati consti (arbltrati
with of suit (arbitrati (arbitration
Prosecutor on) tutes on)
Defendant joint or Suit (arbitration) profiles on) ) rulling
(applicant) amount proje rulling
liabilit arbitr progres and
involove ct impleme
ies ation s impact
d liabilit ntation
ies or
not
Shanghai Jiangsu No Arbitr Suzhong Construction Group Co., Ltd. 0 Court to Not yet Not yet
Zhenhua Suzhong ation (Hereinafter referred to as “Suzhong 7.444 m be open ruled ruled
Heavy Constructi Construction”) contracted the project illion Yu soon
Indusries(Gr on Group construction of the industrial R& D an +162
oup) Co.,Ltd Co., Ltd Building in 2008, but the two sides million
entered into dispute ate settlement upon and rela
completion. In September 2013 the ted inter
Company filed a request Shanghai ests
Arbitration Commission for Suzhong
Construction to pay an overdure fine of
7,444 million Yuan due to delays of
construction and so on, while in
February 2014 Suzhong Construction
filed a counterclaim to Shanghai
Arbitration Commission requesting the
Company to pay about 162 million Yuan
for the project settlement and related
interest costs; the arbitration case will
be heard shortly
Ⅱ. Assets trading and business combination events
√Applicable □Not applicable
(Ⅰ)Company acquisition, income for sale and enterprise combination events
without changes or progresses of following-up implementation
Events overview Index
The twenty-third meeting fo the fifth session of Board of Shanghai Stock Exchange website:
January 29th, 2014 considered and approved 《Motion www.sse.com.cn and Shanghai
on increasing investion to Jiangsu Daoda Marine Heavy Securities News and Hong Kong Wen
Industry Co., Ltd 》 Wei Po on January 30th, 2014
Ⅲ. Company′s equity incentive in report period
√Applicable □Not applicable
Ⅳ. Magnificent related transactions
√Applicable □Not applicable
(Ⅰ)Related transactions in connection with routine operations
1、 . Events not disclosed in the provisional announcement
Unit: Yuan Currency: RMB
Pricing
Type of Content of Related
Related party Incidence principle of Price of related
related related transaction
transaction relation related transaction
transaction transaction amount (%)
transaction
Friede & Sell goods Purchase Based on 336,411,733 1.35
Goldman, Llc. Parent port market price
company′s machinery
wholly-owned from the
subsidiary Company
China Harbour Parent Sell goods Purchase Based on 246,448,541 0.99
Engineering company′s port market price
31
Shanghai Zhenhua Heavy Industries Co., Ltd.
Co., Ltd wholly-owned machinery
subsidiary from the
Company
CCCC Third Parent 69,723,632 0.28
Harbor company′s Sell goods Purchase Based on
Engineering wholly-owned port market price
Co., Ltd subsidiary machinery
from the
Company
CCCC Water Purchase 59,823,097 0.24
Transportation Parent Sell goods port Based on
Planning and company′s machinery market price
Desgin Institute wholly-owned from the
Co., Ltd subsidiary Company
CCCC Fourth 59,751,329 0.24
Harbor Parent Sell goods Purchase Based on
Engineering company′s port market price
Co., Ltd wholly-owned machinery
subsidiary from the
Company
CCCC Stock Parent 40,062,236 0.16
company Sell goods Purchase Based on
port market price
machinery
from the
Company
CCCC First 34,362,246 0.14
Harbor Parent Sell goods Purchase Based on
Engineering company′s port market price
Co., Ltd wholly-owned machinery
subsidiary from the
Company
Jiangsu Joint venture Purchase Based on 20,528,920 0.08
LongYuan Sell goods port market price
Zhenhua Marine machinery
Engineering from the
Co., Ltd Company
CCCC Tunnel Parent Providing 19,658,120 0.08
Engineering company′s service Purchase Based on
Co., Ltd share port market price
controlled machinery
branch from the
company Company
CCCC Third 17,676,832 0.07
Harbor Parent Sell goods Purchase Based on
Engineering company′s port market price
Co., Ltd wholly-owned machinery
subsidiary from the
Company
Hainan CCCC 16,347,733 0.07
Fourth Parent Sell goods Purchase Based on
Construction company′s port market price
Co., Ltd wholly-owned machinery
subsidiary from the
Company
CCCC Fouth 12,868,943 0.05
Navigation Parent Sell goods Purchase Based on
Second company′s port market price
Engineering wholly-owned machinery
32
Shanghai Zhenhua Heavy Industries Co., Ltd.
Co., Ltd subsidiary from the
Company
CCCC Second 5,383,422 0.02
Navigation Parent Sell goods Purchase Based on
Second company′s port market price
Engineering wholly-owned machinery
Co., Ltd subsidiary from the
Company
CCCC Marine Joint venture 4,880,342 0.02
Engineering Sell goods Purchase Based on
Ship port market price
Technology machinery
Search Center from the
Co., Ltd Company
CCCC Tianjin 2,649,573 0.01
Dredging_Binhai Parent Sell goods Purchase Based on
Environmental company′s port market price
Channel wholly-owned machinery
Derdging Co., subsidiary from the
Ltd Company
CCCC Second 1,775,726 0.01
Harbor Parent Sell goods Purchase Based on
Engineering company′s port market price
Investigation wholly-owned machinery
and Design subsidiary from the
Institute Limited Company
The CCCC First Parent Providing Purchase Based on 1,745,283 0.01
Navigation company′s service port market price
Installation wholly-owned machinery
Engineering subsidiary from the
CO., Ltd Company
CCCC Second Parent Reciving Entrusted Based on 1,212,974,461 4.87
Highway company′s services processing market price
Engineering wholly-owned for the
Co., Ltd subsidiary Company
CCCC Second Parent Reciving Entrusted Based on 885,245,579 3.56
Navigation Third company′s services processing market price
Engineering wholly-owned for the
CO., Ltd subsidiary Company
CCCC Third Parent Reciving Entrusted Based on 190,385,882 0.77
Harbor company′s services processing market price
Engineering share for the
Co., Ltd controlled Company
branch
company
CCCC Tunnel Parent Reciving Entrusted Based on 79,835,548 0.32
Engineering company′s services processing market price
Co., Ltd wholly-owned for the
subsidiary Company
CCCC Stock Parent Reciving Entrusted Based on 62,727,622 0.25
company services processing market price
for the
Company
CCCC Third Parent Reciving Entrusted Based on 4,892,308 0.02
Navigation company′s services processing market price
Xin′an wholly-owned for the
Infrastructure subsidiary Company
Construction
Engineering
33
Shanghai Zhenhua Heavy Industries Co., Ltd.
Co., Ltd
CCCC Shanghai Parent Purchase Supply 94,917,511 0.65
Equipment company′s products material for Based on
Engineering wholly-owned the market price
Co., Ltd subsidiary Company
Shanghai affiliated Purchase Supply Based on 94,210,385 0.65
Zhenhua Heavy company products material for market price
Industries the
(Group) Company
Changzhou
Paint Co., Ltd
China Parent Purchase Supply Based on 33,858,763 0.23
Transportation company′s products material for market price
Materials Co., wholly-owned the
Ltd subsidiary Company
Explaination of Note: May 8, 2013, the Company 2012 Annual General Meeting approved “Motin on
related trade the Company Signing Framework Agreement with CHINA COMMUNICATIONS
CONSTRUCTION CO., LTD on Routine Related Transactions.”From 2013 to 2015,
our company and its subordinate units and the China Communications Corporation
and its subsidiary bodies could undertake related party transactiosn in the daily
operation on annual basis with transaction amount not exceeding 8 billion Yuan. The
Annual General Meeting has authorized the Company′s management to handle
relevant specific matters.
(Ⅱ) Significant related transaction involving joint external investment
1、 Events disclosed in the provisional announcement and without changes
or progresses of follow-up implementation.
Events overview Index
The twenty-fifth meeting of fifth Board of Shanghai Stock Exchnge website:
Directors on Mar. 24th, 2014, approved the www.sse.com.cn and Shanghai Securities News
“Proposal on Holding Equity in CCCC Real and Hong Kong Wen Wei Po on Mar. 26th, 2014.
Estate financial leasing Co., Ltd”
The Twenty-third Meeting of the Fifth Session of Shanghai Stock Exchnge website:
the Board on Directors, on Dec. 19, 2014, www.sse.com.cn and Shanghai Securities News
approved the “Proposal on the CCCC America and Hong Kong Wen Wei Po on Dec. 23rd,
Company Increasing Capital ” 2014.
(Ⅲ)Current accounts of credits and liabilities with related parties
1、 Events disclosed in the provisional announcement and without changes
or progresses of follow-up implementation
Events overview Index
The twenty-fifth meeting of fifth Board of Shanghai Stock Exchange website:
Directors on Mar. 24th, 2014, approved the www.sse.com.cn and Shanghai Securities News
“Proposal on Company signing Deposit Services and Hong Kong Wen Wei Po on Mar. 26, 2014
Framework Agreement and Loan Services
Framework Agreement with CCCC Financial
Co., Ltd”and discussed and passed by 2013
general meeting of sharehoulders.
2、 Events not disclosed in the provisional announcement
Unit: Yuan Currency: RMB
The Company
Indidence providing fund to Related party providing fund to the
Related party
relation related party Company
34
Shanghai Zhenhua Heavy Industries Co., Ltd.
Begi Curre Endi
nning nt ng Beginning Current Ending
balan amou balan balances amount balance
ces nt ce
CCCC Financial Associate 0 0 0 0 100,000,000 100,000,000
leasing Co., Ltd companies
CCCC Shares Parent 0 0 0 59,443,847 -27,844,484 31,599,363
Company
Shanghai Jiang Parent 0 0 0 17,586,085 0 17,586,085
Tian Industrial Co., company′s
Ltd wholly-owned
subsidiary
Hong Kong Parent 0 0 0 346,005 0 346,005
Zhenhua company′s
Engineering Co., wholly-owned
Ltd subsidiary
Macau Zhenhua Parent 0 0 0 6,593 0 6,593
Harbor Engineering company′s
Co., Ltd wholly-owned
subsidiary
Total 0 0 0 77,382,530 72,155,516 149,538,046
Current amount of Company provides 0
funds to majority stockholder and its
subsidiaries in report period (Yuan)
Balance amount of Commpany 0
provides funds to majority stockholder
and its subsidiaries (Yuan)
Reasons of related credits and Dividends payable by the Company to related parties,investment of
liabilities the cancellation of s subsidiary and current amount loan.
Ⅴ. Major contracts and their implementation
1 Entrusting, contracting and leasing
√Applicable □Not applicable
(1) Entrusting
The Company had no entrusting this year.
(2) Contracting
The Company had no contracting this year.
(3) Leasing
Unit: Yuan Currency: RMB
Whether
Lease Rental Rental
Amount Lease related
Leased termin Rental income revenue
Lessor Lessee involving start party
assets ation income determined impace on
leased assets date transaction
date by Protocol the company
s
Compan Shanghai Housin 183,024,841 2012.0 2025.0 43,340,809 Protocol 43,340,809
y Zhenlong Asset g 8.10 7.09 agreed No
Management rental
Co., Ltd. And
other
companies
35
Shanghai Zhenhua Heavy Industries Co., Ltd.
2 Guaranty
√Applicable □Not applicable
Unit: Yuan Currency: RMB
External guaranty (excluding those for held subsidiaries)
Relationshi Wheth Wheth
Guaranty GuaranWheth Wheter Relat
p between Guaran er er
Guar current Guaranty ty er guarant ed
guaranty Guarante Guarnty Guaranty ty guaran guaran
anty date classificatio there is
overdu ee to relati
party and ed party amount start date termina ty is ty
party (agreement n e counter related onshi
listed l date finishe overdu
sign date) amountguaran party p
corporation d e
tee
Com Home office Jiangsu 19,184,000 11, Nov. 11, Nov. 11, With joint No No 0 No No
pany Yanwei 2014 2014 Nov. responsibili
Port Co., 2017 ty
Ltd
Com Home office Zhenhua 122,380,000 26, May. 26, May. 26, General 0 Yes Joint
pany Marine 2014 2014 May. guaranty No No No corp
Energy 2015 orati
(Hong on
Kong)
Co., Ltd
Total guaranties for subsidiaries incurred in report period (excluding 141,564,000
those for held subsidiaries)
Total Guarantee balance at the end of report period (A) 141,564,000
Guaranties for Sbusidiaries
Total guaranties for subsidiaries incurred in report period 654,000,000
Total guaranties for subsidiary balance at the end of report period (B) 2,894,456,000
Total guaranties of the Company (including those for subsidiaries)
Total guarantee amount (A+B) 3,036,020,000
Proportion of net assets of the Company (%) 20.29
Including:
Amount guaranties to shareholders, effective controller and its related 0
parties (C)
Direct or indirect guarantees for the guaranteed parties with an assets- 3,016,836,000
libilities rate over 70% (D)
Amount of guaranties exceeding 50% of net assets (E) 0
Total of the above 3 kinds of guarantee (C+D+E) 3,016,836,000
Undue guarantee may take implicative liability for satisfaction
explanation
Guarantee status explanation
3. Other substantial contracts
(1) On 26, June, 2014, the Company published announcement signed one
JU2000E Jack up drilling platform sales contract with KS Ring Invest Five Ltd,
details see Shanghai Securities News and Hong Kong Wen Wei Po.
(2) On 2, July, 2014, the Company published announcement signed one
saturation diving support vessel sales contract with TOISA LIMITED, details see
Shanghai Securities News and Hong Kong Wen Wei Po.
(3) On 28, August 2014, the Company published announcement signed one diving
support engineering vessel sales contract with Singapore Company Ultra Deep
Solution Ltd; details see Shanghai Securities News and Hong Kong Wen Wei Po.
36
Shanghai Zhenhua Heavy Industries Co., Ltd.
(4) On 5, December 2014, the Compay published announcement signed automatic
track crane and bridge crane sales contract with Singapore Port Group, details see
Shanghai Securities News and Hong Kong Wen Wei Po.
Ⅵ. Commitments performance
□Applicable √Not applicable
Ⅶ. Appointment and dismissal of accounting firm
Unit: Yuan Currency: RMB
Whether to hire other No
accounting firms
Former appointment Current appointment
Domestic accounting firm PricewaterhouseCoopers PricewaterhouseCoopers
Zhong Tian CPAs Co. Ltd. Zhong Tian CPAs Co. Ltd.
(Special general partnership ) (Special general partnership )
Domestic accounting firm 3,900,000
payment
Domestic accounting firm audit 21
period
Name Payment
Internal control audit accounting PricewaterhouseCoopers 500,000
firm Zhong Tian CPAs Co. Ltd.
(Special general partnership )
Ⅷ. Punishement and rectification of the Listing Corporation and its directors,
supervisors, senior management personal, shareholders holding over 5% of
the shares, the actual controller, acquirers
No
Ⅸ. The switching company bond status
□Applicable √Not applicable
X. Influence or performing new accounting rules to the combined financial
statement
1 The influence of consolidated financial report from long term
equity investment standard change
Unit: Yuan Currency: RMB
Shareh 31, Decemeber, 2013
older
benefit
beongs Shoreh
to older
Financial benefit
Basic trading parent Long term
assets belongs
Invested company information compa equity
investment to
ny from available for
(+/-) parent
1st, sale(+/-) compan
Januar y
y, 2013 (+/-)
(+/-)
Twenty-first Century Shareholding ratio -30,000,000 30,000,000
37
Shanghai Zhenhua Heavy Industries Co., Ltd.
Science and 8.96%
Technology Invstment
Company Limited
Nantong Zhenhua Shareholding ratio -10,000,000 10,000,000
Hongsheng Heavy 5%
Forging Co., Ltd
Shanghai Zhenhua Port Shareholding ratio -800,000 800,000
Machinery Longchang 10%
Lifting Equipment Co.,
Ltd
Shanghai Zhenhua Port Shareholding ratio -1,500,000 1,500,000
Machinery (Group) 10%
Shenyang Elevator Co.,
Ltd
Shanghai Zhenhua Port Shareholding ratio -740,000 740,000
Machinery (Group) 7.4%
Ningbo Transmission
Machinery Co., Ltd.
Shenyin Wanguo Shareholding ratio -200,000 200,000
corporate stock <0.01%
CCCC Highway Shareholding ratio -8,000,000 8,000,000
Changda Bridge 10%
construction of National
Engineering Research
Center CO., Ltd
CCCC Dredging Shareholding ratio -6,400,000 6,400,000
Technology National 8%
Engineering Research
Center Co., Ltd
The provision for Other long term 30,000,000 -30,000,000
impairment of assets equity investment
on book has been
accounted for
provision of
impairment of
assets
Total / -27,640,000 27,640,000
2 Influence of standard and other changes
Particular 1, January,
Item
standard Reporting item 2013 31, Decemberm, 2013
Increase (+) Increase (+)
/Reduce (-) /Reduce (-)
Accounting Accounting Financial assets held
-26,009,477 -121,169,489
Standards Standard for trading
for Financial assets
Enterprises accounted by fair
No. 30- value and change is 26,009,477 121,169,489
Presentation counted into present
of Financial loss
Statement Other current assets 82,348,033 110,357,163
Tax payable 82,348,033 110,357,163
Long term equity
-27,640,000 -27,640,000
investment
Financial assets
27,640,000 27,640,000
available for sale
Trading financial debt - -644,404
Financial debt - 644,404
accounted by 38fair
Shanghai Zhenhua Heavy Industries Co., Ltd.
value and the change
is accounted in
present loss
Other accounts
-41,333,726 -155,255,304
payable
Other non-current debt -43,916,667 -42,916,667
Deferred income 85250393 198,171,971
Capital surplus -89,099,161 -248,889,422
Other integrated
89,112,134 248,928,049
income
The difference of
translation of foreign -12,973 -38,627
currency statements
Chpater Ⅵ Equity Movement and Shareholder′s Profile
Ⅰ. Particular about equity movement:
(Ⅰ) Particular about capital stock change
1. Particular about capital
In report period, Company share numbers and equity structure do not change.
Ⅱ. Particulars about shareholder and effective controller of the Company
(Ⅰ) Number of shareholders
Number of shareholders at period end 342,808
Total shareholders end of 5th trading day prior to 328,113
release day of current annual report
(Ⅱ) End to report period, shareholding profile of top 10 shareholders and top
10 current shareholders (or Tradable shareholders)
Unit: share
Shareholding profile of top 10 shareholders
Share Share
s held pledged or
frozen
Movement subjec
Total shares Shareholdr′
Shareholder′s Name During the
held
Ratio( t to s Nature
Year %) conditi Share Am
onal status ount
sales
China Communications
0 1,265,637,849 28.83 0 None 0 State legal
Construction Co., Ltd.
ZHEN HUA
Overseas
ENGINEERING 0 749,677,500 17.08 0 None 0
institution
COMPANY LIMITED
Unko
GIC PRIVATE LIMITED -74,000 19,467,734 0.44 Unkonwn
wn
SCBHK A/C BBH S/A
VANGUARD EMERGING Unko
0 18,121,057 0.41 Unkonwn
MARKETS STOCK INDEX nwn
FUND
ZHEN HWA HARBOUR
Overseas
CONSTRUCTION 0 14,285,700 0.33 0 None 0
institution
COMPANY LIMITED
TOYO SECURITIES ASIA Unkn
-2,692,395 12,786,974 0.29 Unknown
LTD. A/C CLIENT own
39
Shanghai Zhenhua Heavy Industries Co., Ltd.
KUWAIT GOVERNMENT
Unkn
INVESTMENT 12,497,874 12,497,874 0.28 Unknown
own
AUTHORITY-own funds
NAITO SECURITIES Unkn
-1,120,670 10,582,092 0.24 Unknown
CO., LTD. own
Unkn
Gu Xiaonong 7,397,244 9,997,244 0.23 Unknown
own
THE LIBRA GREATER Unkn
1,617,615 7,914,535 0.18 Unknown
CHINA FUND LTD own
Particulars about top 10 shareholders of shares not subject to conditional sales
Shares not subject to Type and quantity of shares
Sharehodler′s Name condtional sales held Qua
Type
at period end ntity
China Communications Construction Co., Ltd 1,265,637,849
RMB common shares
ZHEN HUA ENGINEERING COMPANY 749,677,500
LIMITED Shares with foreign investment
listed on domestic market
GIC PRIVATE LIMITED 19,467,734
Shares with foreign investment
listed on domestic market
SCBHK A/C BBH S/A VANGUARD 18,121,057
EMERGING MARKETS STOCK INDEX Shares with foreign investment
FUND listed on domestic market
ZHEN HWA HARBOUR CONSTRUCTION 14,285,700
COMPANY LIMITED Shares with foreign investment
listed on domestic market
TOYO SECURITIES ASIA LTD. A/C CLIENT 12,786,974
Shares with foreign investment
listed on domestic market
KUWAIT GOVERNMENT INVESTMENT 12,497,874
AUTHORITY-own funds RMB common shares
NAITO SECURITIES CO., LTD. 10,582,092
Shares with foreign investment
listed on domestic market
Gu Xiaonong 9,997,244
RMB common shares
THE LIBRA GREATER CHINA FUND LTD 7,914,535
Shares with foreign investment
listed on domestic market
Explanation on the above 1、.Among above top 10 shareholders, CHINA COMMUNICATIONS CONSTRUCTION CO.,LTD.
related relationship or Constitutes related party relationship with ZHEN HUA ENGINEERING COMPANY LIMITED、ZHEN
consistent action HWA HARBOUR CONSTRUCTION COMPANY LIMITED, with ultimate controller being China
Communications Group Corporation. The Company is not aware of whether they have associated
relationship amount them or belong to the consistent actionists as defined in Administrative Rules on
Disclosure of Information on Stock Change of Listed Company′s Shareholders.
2、. On January 8, 2014, the Company disclosed the “Announcement on Changes in Shareholdrs′
Equity”, according to which HongKong (ZHEN HUA ENGINEERING COMPANY LIMITED) was to
transfer all the shares it held to CCCC International (Hongkong) Holdings Limited. After the transfer of
shares, the controlling shareholder of the Company and the actual controller remain unchanged. The
share transfer is required to obtain the SAC of the State Council and other department for approval.
Ⅲ. Controlling shareholders and actual controllers
(Ⅰ) Particulars about the corporate controlling shareholder
1 Legal Person
Unit: Yuan Currency: RMB
Name China Communications Construction Co., Ltd
The person in charge of Liu Qitao
the unit/legal
representative
Date of incorporation 2006-10-8
Organizational Code 71093436-9
40
Shanghai Zhenhua Heavy Industries Co., Ltd.
Registered capital 16,174,735,425
Principal business Engaging in the general contracting of construction projects for ports, channels,
highways and bridges both home and abroad, including technical and economic
consultation of engineering, feasibility study, survey, construction, supervision,
procurement and supply for related complete set of equipment or materials, and
equipment installation: undertaking the general contracting of the construction of
industrial and civil works, railway, metallurgy, petrochemical, power and water
conservancy facilities, channel, mine and municipal works; import and export
business; real estate development and property management, investment and
management of logistics, transportation, hotel and tourist industries.
(Ⅱ)Particulars about the actual corporate controller
1 Legal person
Unit: Yuan Currency: RMB
Name China Communications Construction Co., Ltd
The person in charge of Liu Qitao
the unit/legal
representative
Date of incorporation December, 8, 2005
Organizational code 710933809
Registered capital 4,754,016,800
Principal business Engaging in the general contracting of construction projects for ports, channels,
highways and bridges both home and abroad, including technical and economic
consultation of engineering, feasibility study, survey, construction, supervision,
procurement and supply for related complete set of equipment or materials, and
equipment installation: undertaking the general contracting of the construction of
industrial and civil works, railway, metallurgy, petrochemical, power and water
conservancy facilities, channel, mine and municipal works; import and export
business; real estate development and property management, investment and
management of logistics, transportation, hotel and tourist industries.
2 Block diagram of property right and control relationship between
Company and actual controllers.
SASAC of the State
Council
CCCC Group
CCCC
Shareholding 100% Shareholding 100%
Hong Kong Zhenhua Engineering Co.,Ltd Macao Zhenhua Harbor Engineering Co.,Ltd
Shareholding Shareholding
17.08% 28.83% Shareholding 0.33%
Shanghai Zhenhua Heavy Industry (Group)Co., Ltd
Ⅳ. Other corporate shareholders holding over 10% of the Company′s shares
Unit: Yuan Currency: RMB
Person in Mian business and
Corporate Date of Organization Registered
charge or management
shareholders establishment code Capital
legal activities
41
Shanghai Zhenhua Heavy Industries Co., Ltd.
representative
ZHEN HUA Wangyan 1982-05-14 - 35,000,000 Marine works, roads
ENGINEERING and bridges,
COMPANY LIMITED dredging and site
formation, port
machiney, survey
and design.
Explanation China Communications Construction Co., Ltd. Holds 100% stake of ZHEN HUA
ENGINEERING COMPANY LIMITED, the ultimate shareholder is China
Communications Construction Group Co., Ltd
42
Shanghai Zhenhua Heavy Industries Co., Ltd.
Chapter Ⅶ Directors, Supervisors, Senior Executives and Employees
Ⅰ. Change of holdings and remuneration
(Ⅰ) Share holding changes and remuneration of directors, supervisors and senior executives under employment or
retired during report period.
Unit: share
Total paid by Total paid by
Shares the Company the
held at Shares at Change in Reason during report shareholders
Start of End of
Name Title (note) Sex Age the end of report for period (RMB units during
Tenure Tenure
beginning year period change 10,000)(before report period
of year tax) (RMB
10,000)
Song Chairman of M 50 2012-09- 2014-05- 0 0 0 0 89.32
Hailiang the board, 18 20
president
Liu Director M 55 2011-05- 2014-05- 0 0 0 0 89.96
Wensheng 20 20
Chen Qi Director F 53 2011-05- 2014-05- 0 0 0 0 70.37
20 20
Yan Yunfu Executive M 56 2011-05- 2014-05- 0 0 0 73.89 0
director, 20 20
Vice
president
Liu Executive M 51 2011-05- 2014-05- 0 0 0 76.35 0
Qizhong director, 20 20
Vice
president
Dai Executive M 48 2011-05- 2014-05- 0 0 0 76.35 0
Wenkai director, 20 20
Vice
president
Bao Qifan Independent M 64 2011-05- 2014-05- 0 0 0 11 0
director 20 20
43
Shanghai Zhenhua Heavy Industries Co., Ltd.
Liu Independent M 57 2011-05- 2014-05- 0 0 0 12 0
NingYuan director 20 20
She Lian Independent M 56 2013-05- 2014-05- 0 0 0 12 0
director 08 20
Gu Wei Independent M 58 2013-05- 2014-05- 0 0 0 12 0
director 08 20
Zhang Board of M 53 2011-05- 2014-05- 20,259 20,259 0 66.85 0
Minghai supervisors 20 20
Chen Bin Supervisor M 41 2011-05- 2014-05- 89,440 89,440 0 64.26 0
20 20
Zhao Supervisor M 54 2011-05- 2014-05- 0 0 0 40.64 0
Guangjing 20 20
Huang Vice M 40 2011-05- 2014-05- 0 0 0 75.27 0
Qingfeng president 20 20
Liu Jianbo Vice M 52 2011-05- 2014-05- 0 0 0 75.27 0
president 20 20
Zhou Qi Vice M 43 2011-05- 2014-05- 0 0 0 73.89 0
president 20 20
Fei Guo Vice M 53 2011-05- 2014-05- 0 0 0 73.89 0
president 20 20
Wang Jue CFO, M 51 2011-05- 2014-05- 0 0 0 73.89 0
Secretary of 20 20
the Board of
Directors
Sun Li Vice M 43 2011-05- 2014-05- 0 0 0 73.89 0
president 20 20
Cao Vice M 59 2011-05- 2014-05- 0 0 0 73.89 0
Weizhong president 20 20
Kang Independent F 59 2011-05- 2014-01- 0 0 0 1 0
Fuxin director 20 28
Lu Former M 52 2011-10- 2014-03- 0 0 0 20.53 0
Jianzhong Director, 20 21
President,
Deputy
Secretary of
party
44
Shanghai Zhenhua Heavy Industries Co., Ltd.
Committee
Huang Vice M 61 2011-05- 2014-09- 0 0 0 73.89 0
Hongyu president 20 29
Chen Vice M 48 2011-05- 2015-03- 0 0 0 73.89 0
Gang president 20 30
Total / / / / / 109,699 109,699 0 / 1,134.64 /
Note: The term of office of the Company′s Fifth Board and Directors and the Fifth Board of supervisors is from 20, May, 2011 to 20,
May, 2014. On 30, March, 2015, the Company′s board of directors and supervisors is in new term selectrion. Related proposals
needed be to approved by 2014 general meeting of share holders and present company′s directors, supervisors and higher
management should perform the duty continuously.
Name Working experience
Song Born in1965, male, professor-level senior engineer, held degree of B.E. in port machinery design and manufacture at Wuhan Institute of Water
Hailiang Transport Engineering,Doctor of management at Tianjin University, started to .work from July 1987, served as engineer, Design Office director,
Vice President, member of Party Committee, Vice Secretary of the Party Committee, Chairman of the Board and simultaneously General
Manager with CCCC Water Transportation Planning and Design Institute Co., Ltd.; currently vice President of China Communications
Construction Co., Ltd. And simultaneously Chairman of the Board, President and Party Secretary of Zhenhua Heavy Industries.
Liu born in 1960, male, MBA, senior engineer; was assistant and deputy director with Tianjin Shipping Channel Bureau, vice chief economist and
Wensheng general manager of planning office with China Harbor Construction (Group) Company, is now secretary of
board of directors and chief economist with China Communications Construction Co. Ltd., Chairman of the Board with CCCC
International(Hong Kong) Co. Ltd., has been board director of the Company since 2006.
Chen Qi Born in 1962, female, master, senior engineer, was project manager of China Harbour Engineering Co., Ltd. Import and Export Port Machinery
Division, China Harbour (Group) Co., Ltd. Industry and Trade Business Unit deputy general manager, General manager; is now CHINA
COMMUNICATIONS CONSTRUCTION CO., LTD. Industry and Trade Business Unit general manager; has been board director of the
Company since 2011.
Yan Yunfu born in 1959, male, master of engineering management and EMBA master, professor-level senior engineer,was Vice Chief of Technical
Department, Manager of Mechanical Design Department, Vice General Engineer, General Engineer and VP of the Company. Is now the
company’s standing VP; is director of board of the Company since 2004.
Liu Born in 1964, male, Doctor, senior economist, doctor; was Vice Manager, Manager of Operating Department and VP of the Company; is now
Qizhong the Company’s standing VP; is board director of the Company since 1997.
Dai Born in 1967, male, master of physics, MBA, EMBA, senior engineer. Started to work in 1993, was Manger of Operating Department, Vice
45
Shanghai Zhenhua Heavy Industries Co., Ltd.
Wenkai Chief Economist, Chief Economist, VP of the Company; is now the executive VP of the Company; is board director of the Company and director
of F&G since 2012.
Bao Qifan Born in 1951, male, master, professor-level senior engineer; former Shanghai Port fourth loading and unloading zone machine repair shop
deputy director, Shanghai Port Timber Handling Technology Co., Ltd. technology section chief, deputy manager in technology of Shanghai Port
Nanpu Port Co, Ltd., Shanghai Port Longwu Port Co., Ltd. manager, vice director of Shanghai Port Bureau, Shanghai International Port (Group)
Co., Ltd. VP; now Shanghai municipal government counselor, part-time vice chairman of Chinese Mechanical Engineering Society, China
Water Transport Engineering Association vice chairman, Vice-Chairman of Shanghai Science and Technology Association etc.; independent
board director of the Company since 2011.
Liu Liu NingYuan, born in 1958, male, master, professor, instructor of doctorate students; currently East China University of Politics and
NingYuan International Law School Dean and Secretary of the Party committee, part-time Chinese Private International Law Society executive director,
Chinese Arbitration Law executive director, Shanghai Law Society International Law Studies vice president, Shanghai Arbitration Commission
arbitrator, Shanghai Zhongxin Zhengyi Law Firm lawyer; independent board director of the Company since 2011.
She Lian born in 1959, male, professor, doctoral tutor; from 1995 on, enjoys special government allowances from the State Council; deputy director and
Party Secretary of the Department of Business Administration, Wuhan University of Communications Science; chief editor of "Transportation
Enterprise Management" magazine run by Ministry of Transportation; director of Early Warning Management
Research Center, Wuhan University of Technology, Professor of Management, doctoral tutor; director of Early Warning Management Research
Center, Huazhong University of Science and Technology, Professor of Management, doctoral tutor; Professor of CEIBS
Emergency Management Institute incumbent National School of Administration, doctoral tutor. has been independent board director of the
Company since 2013.
Gu Wei Born in 1957, male, Ph.D., professor and doctoral tutor; since 1982, has been teaching at Shanghai Maritime University; since the year 2000
enjoys special government allowances from the State Council, and the IEEE Society member, MTS Society member
and the British Royal Physical Society member, senior member of China Electrotechnical Society, senior member of Chinese Society of Naval
Architects, senior member of Chinese Mechanical Engineering Society; is currently director of the Key Laboratory of the Ministry of
Transportation's Shipping Technology and Control Engineering; member of China Electrotechnical Society's Vessel Electrical Committee;
member of the Committee of Experts of Shanghai Jiaotong Electronics Industry Association; procurement consulting expert of Shanghai
Municipal Government; member of the Committee of Experts of Ministry of Transport East China Sea Rescue Bureau and other duties; has
been independent board director of the Company since 2013.
Zhang Born in1962, male, master,professor-level senior engineer; formerly Shanghai Port Machinery Plant Technology Division engineer;
Minghai mechanical office deputy manager, deputy chief engineer, general manager of Mechanical Office Shore Bridge First Company, of the
machinery to do the shore bridge, general manager of Land-base Heavy Industry Co., Ltd. with Shanghai Zhenhua Heavy Industries (Group)
Co., Ltd.; currently Land-based Heavy Industry Research Design vice president and also Shore Bridge Design Institute director; chief
supervisor of the Company since 2011.
Chen Bin Born in 1974 , male, MBA, senior engineer; deputy manager of tire crane office of quality control office, manager of quality control office, deputy
general manager and general manager of quality control company, vice director of quality and safety office, manager of Quality Safety Office;
46
Shanghai Zhenhua Heavy Industries Co., Ltd.
supervisor of the Company since 2008
Zhao Born in 1961, male, college diploma, served as Shanghai Port Machinery Plant discipline officer; audit department Senior Staff Member;
Guangjing inspection and supervision audit office deputy director(in charge), vice secretary and chief director of the discipline inspection and supervision
audit office, the organs of the Party branch secretary, asset management vice general manager; Shanghai Zhenhua Heavy Industries (Group)
Co., Ltd. Quality Security Comprehensive Office deputy manager, comprehensive room of the executive office deputy manager; currently Audit
and Supervision manager of the company; from 2011 employee supervisor of the Company.
Huang Born in 1975, male, master, senior engineer; used to be quality project chief, director of field bridge office of quality management department;
Qingfeng deputy manager of after-sales department, general manager of Quality Inspection Company; vice director of off-shore office, assistant president
of the Group; from Jan. 2005 on is VP of the Company.
Liu Jianbo Born in 1963, male, master’s degree in engineering administration ,senior engineer; was engineer at technological office of Shanghai Port
Machinery Plant; assistant director in engineering with Technology Office of Shanghai Container Dock Co. Ltd., deputy general manager and
general manager of ZPMC Changxing Base; is now VP of the Company.
Zhou Qi Born in 1972, male, master’s degree in engineering administration, senior engineer; was manager and deputy general engineer, general
manager and chief engineer of the Electric Appliance Office of the Company; is now VP of the Company.
Fei Guo Born in 1962, male, master’s degree in engineering administration, professor-level senior engineer; was engineer with Shanghai Port
Machinery Plant; director of Electric Appliance Office 5 and vice general engineer with Shanghai Zhenhua Port Machinery Co., Ltd.; is now VP
of the Company and simultaneously executive director of Shanghai Zhenhua Heavy Electric Co. Ltd.
Sun Li Born in 1972, male, doctor, senior engineer; was Project Supervisor of Operating Department, Vice Manager and Assistant of General Manager
of the Company. He has acted as Vice President of the Company since 2001.
Wang Jue Born in 1964, male, MBA, CPA and senior accountant, successively held the posts of director of the Financial Office of No.3 Engineering Co.,
Ltd. Of CCCC Third Harbor Engineering Co., Ltd., General Accountant of CCCC 5th and 7th Harbor Engineering Co., Ltd., Director of the Audit
Section, Director of the Financial Section and Vice General Accountant of Third Harbor Engineering Co., Ltd.; is the Chief Controller and
Secretary of the Board of Directors of the Company since November of 2005.
Cap Born in 1956, male, worked as Vice Manager of Installation Section, Managing General Manager of Jiangyin Base, Vice Manager of Production
Weozhong Department of the Company, General Manager of QC Company, Assistant to General Manager and VP; now standing VP,has been chairman
of the Trade Union since 2006.
Ⅱ. Office holding profile of directors, supervisors and senior executives in office or retired during report period
(Ⅰ) Particulars about office-hoding with shareholding companies
√Applicable □Not applicable
Name Name of shareholder Starting date of service term
Title in the shareholding company
47
Shanghai Zhenhua Heavy Industries Co., Ltd.
Song Hailiang China Communication Construction Co., Ltd Vice president 2014-01-27
Liu Wensheng China Communications Construction Co., Secretary with the Board, 2009-12-29
Ltd. Economist General
Chen Qi China Communications Construction Co., ltd. General manager of Industry and 2009-12-29
Trade Department
(Ⅱ) Particulars about office-holding with other companies
√Applicable □Not applicable
Name Name of compnies Title
Bao Qifan Shanghai Municipal Government, Chinese Mechanical Counselor, Vice Director-General, Vice Chiarman
Engineering Society, China Water Transportation
Association Shanghai Association for Science &
Technology
Liu NingYuan International Law Faculty of the East China University of President, secretary of the Party committee,
Politics and Law, China Association of PRIVATE professor, doctor mentor, executive member, vice
International Law, China of Arbitration Law, China chief, arbitrator and lawyer
Academy of Arbitration Law, International Law Research
Association of Shanghai Law Society, Shanghai
Arbitration Commission, Shanghai Trust Justic Law Office
She Lian CEIBS Emergency Management Institute incumbent Professor, doctoral tutor
National School of Administratio
Gu Wei Shipping Technology and Enginneering key Lab of Director, professor, doctoral tutor, council member,
Ministry of Transportation, Vessel Electrical Committee of committee member
China Electrotechnical Society, Control Committee of
Experts of Shanghai Jiaotong Electronics Industry
Association; procurement consulting expert of Shanghai
Municipal Government; Committee of Experts of Ministry
of Transport East China Sea Rescue Bureau and other
duties
Ⅲ. Remuneration of Directors, Supervisors and senior executives
Decision-making procedures for remuneration of Directors, In accordance with the Articles of Association, the remuneration of Diresctors and
48
Shanghai Zhenhua Heavy Industries Co., Ltd.
Supervisors and senior exectives Supervisors are subject to the Annual Shareholder′s General Meeting and the
remuneration of the management are assessed and approved by the President.
Calculation basis for remuneration of Directors, Supervisors and Basic salary plus performance bonus, combined with assessment utilizing quantizing
senior executives index of production and operation.
Total remuneration received by all directors, supervisors and senior Chairman Song Hailiang, Director Chen Qi, Director Liu Wenshen are not paid by the
executives Company, whereas all other director, supervisor and senior executives are paid by
the Company
Total remuneration received by all directors, supervisors and senior
executives at period end 11,346,400 Yuan
III. Particulars about changes of directors, supervisors and senior executives
Name Title Change Reason
Song Hailiang Chairman Appointment New appointment
Lu Jianzhong Director, President Leaving post Resignation
Tang Fuxin Independent director Leaving post Resignation
Huang Hongyu Vice president Leaving post Retirement
Ⅴ. Particulars about Company key technical team and key technician
No change in report period
49
Shanghai Zhenhua Heavy Industries Co., Ltd.
Ⅵ. Employee status of the Parent Company and its key subsidiaries
(1) Particulars about empoloyees
Number of employees of Parent Company in 3,116
service
Number of employees of key subsidiaries ain 3,711
service
Total headcount in employment 6,827
Partivulars about staff condition of the 0
Company
In specialties
Classification Number
Production staff 2,192
Sales staff 127
Technical staff 3,757
Financial staff 101
Administrative staff 650
Total 6,827
In educational level
Education Number (person)
Technical secondary school 1,344
Junior College 2,021
Undergraduate 2,999
Master 443
Doctor 20
Total 6,827
(Ⅱ) Remueration pplicies
In line with the Company′s development stratergy, continuously perfect
distribution incentive system, perfect performance assessment system,
establish a system linking performance distribution and unit or office
performance, staff performance, industrial characters and post value;
establish a salary incentive system linking staff achievement, position duty
and value contribution and establish a distribution mode integrating with
market.
(Ⅲ) Training program
At the beginning of each year, the Company sets up all-staff annual
educational and training plan and implements according to the plan to
improve the competence level and professional quality of staff at various
levels. In line with the Company′s development strategy, gradually establish
50
Shanghai Zhenhua Heavy Industries Co., Ltd.
a rigid staff training system with systematic, directional and continuous
features.
(Ⅳ) Specialty composition chart:
Financial staff
1.48%
Administrative
staff 9.52%
Production staff
32.11%
Technical staff 50.03%
Sales staff 1.86%
(Ⅴ) Educational level statistics chart:
Master 6.49% Doctor 0.29%
Technical secondary
school 19.69%
Undergraduate
Junior college
43.93%
29.60%
(I) Labor outsourcing
The total number of man-hours of labor
outsourcing 14,901,792 hours
The total remuneration payment of labor 416,495,000 Yuan
outsourcing
51
Shanghai Zhenhua Heavy Industries Co., Ltd.
Chapter VIII Corporate Governance
I. Corporate governance and information insider registration
management
During the report period, the Company has focused on standardizing routine operation,
enforcing information disclosure and establishment and development of the legal
representative management system according to the Company Law, Securities Law, Rules
for Listed Securities, Articles of Associations and other regulations promulgated by CSRC.
The inside information management is enhanced, the information disclosure is strengthened,
the corporate governance level is improved. The company continuously makes efforts to
improve the legal representative governance structure, gradually establish the modern
enterprise system, maintain the legal rights of the Company and all the shareholders and
ensure the stable and continuous development.
To regulate the Company’s inside information management, strengthen the work of
company insider confidentiality maintenance, the Company developed Shanghai Zhenhua
Heavy Industry (Group) Co., Ltd Insider Management System. The insiders don’t purchase
and buy the shares using internal information before the significant information about the
stock price of the Company is disclosed via self-assessment.
There is no difference between the corporate governance and governance requirements of
CSRC
Summary of shareholders general meeting
Index of the Date of
Session time Date of Motions of
Resolutions resolution resolutions
of meeting meeting meeting
published website published
2013 Annual April, 2013 Board of All motions www.sse.com.cn, May 5,
Shareholder’s 30, Directors’ passed input the stock 2014
General 2014 Work Report through code and then
Meeting and other 14 consideration retrieve
motions
III. Duty fulfillment of directors
(1) Attendance of directors at meeting of the Board of Directors
General
meeting
of
Board of directors in attendance sharehol
ders in
attendan
Indepen ce
dent Num Two Number
Name
Director ber abse of
s or not of nces attendan
Expecte Entrust
Actual atten in ces of
d ed Abse
attend danc succ general
attenda attend nces
ances es by essi meeting
nces ances
corre on of
spon or sharehol
denc not ders
52
Shanghai Zhenhua Heavy Industries Co., Ltd.
e
Song Hailiang No 11 11 10 0 0 No 1
Liu Wensheng No 11 10 10 1 0 No 0
Chen Qi No 11 10 10 1 0 No 1
Yan Yunfu No 11 11 10 0 0 No 1
Liu QIzhong No 11 11 10 1 0 No 1
Dai Wenkai No 11 11 10 0 0 No 1
Bao Qifan Yes 11 11 10 1 0 No 1
Liu Ningyuan Yes 11 11 10 1 0 No 0
She Lian Yes 11 11 10 1 0 No 1
Gu Wei Yes 11 11 10 0 0 No 1
Lu Jianzhong No 1 1 1 0 0 No 0
Number of board meeting in report year 11
Including: number of field meeting 1
Number of meeting field & by correspondence 10
(2) Dissent expressed by Independent Directors on related issues of
Company
During the report period, Independent Directors of the Company did not express the
dissent on resolutions approved by the Board of Directors and any other issues.
IV. In report period, the establishment and implementation of
evaluation and motivation of senior executives
The Company appointed and removed Directors, Supervisors and senior executives in
accordance with Company Law and Article of Associations. It has preliminarily established a
practical system for cultivation, selection, supervision, evaluation, rewards and disciplinary
sanctions, and control of senior executives, and promulgated relevant management method
of senior executives. Focusing on both political integrity and professional competence, the
Company evaluates, appoints and removes senior executives based on actual requirements
of its operation and development and the senior executive shall take a lower as well as a
higher post. The Company will continuously improve the existing performance assessment
and remuneration system and carry out the middle and long range incentive system based
on diligence and performance among all the senior executives and core technicians in order
to motivate senior executives to create new accomplishments and ensure maximum benefit
and standard operation of the Company.
Chapter IX Internal Control
I. Internal control responsibility statement and internal control
system construction
According to the Enterprise Internal Control Basic Specifications and supporting guide
regulations and other internal control monitor requirement, combined with the actual
situation of the company, the company develop the Internal Control Specification
Implementation Working Plan and established the internal control regulation implementation
work leading group and project work group which are in charge of the Company’s internal
53
Shanghai Zhenhua Heavy Industries Co., Ltd.
control system construction and daily operation under the leadership of the Board of Director
of the Company. It effectively evaluates the internal control effectiveness as of Dec 31, 2014
(internal control assessment report basic day) based on the daily monitoring and special
monitoring of internal control.
Based on the approval standard of internal control defect of financial statements of the
Company, there is no significant or major defect about internal control of financial
statements as of the internal control assessment report basic day. The Company has kept
the financial statements internal control in all major aspects according to the internal control
specification system and regulations.
Based on the approval standard of internal control defect of non-financial statements of
the Company, there is no significant or major defect about internal control of non-financial
statements as of the internal control assessment report basic day.
There are no factors that will influence the effective evaluation conclusion of internal
control between the internal control assessment control evaluation basic day to internal
control assessment report issuing day.
Internal Control Seessment Report for details.
Internal control self assessment report disclosed or not: Yes
II. Explanation about the internal control auditor’s report
The employed PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd (Special general
partnership) has conducted audit on the effectiveness of internal control in the financial
report as of Dec 31, 2014 and produced unqualified standard auditor’s report (see
attachment).
Internal control audit report disclosed or not: Yes
III. Explanation about annual report significant error accountability
system and the implementation
In order to improve the level of corporate governance, strengthen the truthfulness,
accuracy, completeness and timeliness of information disclosure, and improve the quality
and transparency of annual information disclosure, according to CSRC and Shanghai Stock
Exchange documentation requirements, combined with the Company’s realities, the 28th
meeting of the fourth session of the Board, held on Mar. 18, 2010, reviewed and approved
the Shanghai Zhenhua Heavy Industry Co., Ltd Annual Information Disclosure Significant
Error Accountability System. The Company does not have significant errors of annual
information disclosure during the report period.
54
Shanghai Zhenhua Heavy Industries Co., Ltd.
Audit Report
PricewaterhouseCoopers Zhongtian Shenzi (2015) No. 10027
(Page 1 of 2)
To the shareholders of Shanghai Zhenhua Heavy Industries Co., Ltd
We have audited the accompanying consolidated as well as company’s
financial statement of Shanghai Zhenhua Heavy Industries Co., Ltd ,
including the company’s and the consolidated balance sheets as of 31.
December 2014, 2014′s P&L and company’s income statement,
shareholders′ equity movement statements, cash flow statements and notes
to the financial statements.
Ⅰ. The Management responsibilities on the statements
Preparing and fairly stating financial statements are the responsibilities of the
management of Shanghai Zhenhua Heavy Industries Co., Ltd. These
responsibilities include:
(1) The preparation of financial statements in accordance with the provisions
of the corporate accounting standards, and to achieve a fair reflection.
(2) Design, implement and maintain the necessary internal controls, to
material misstatement due to fraud or error in the financial statements.
Ⅱ. The CPA′s Responsibilities
Our responsibilities are to provide audit opinions based on our auditing. We
conducted the audit on the basis of China CPA Norms, which requires us to
abide by professional virtues and norms to plan and conduct audit to ensure
there exist no serious reporting errors in the financial statements.
The audit includes implementing the audit procedures to acquire financial
statements figures and audit evidence. Audit procedures are chose based on
CPA′s judgment, including the estimate of risks for possible misreports due
to cheating or errors. When estimating risks, certified public accountants
consider internal control related to the financial statements preparation and
fair presentation, in order to design audit procedures that are appropriate, but
not to provide opinions on effectiveness of the interior controls. The audit
also Includes the evaluating of the appropriateness of utilization of
accounting policies and accounting estimates by the management, and the
evaluating of the total reporting of the financial statements.
We believe that we have acquired sufficient and appropriate audit evidences,
which provide the basis for the auditor’s opinions.
55
Shanghai Zhenhua Heavy Industries Co., Ltd.
Audit Report (continued)
PricewaterhouseCoopers Zhongtian Shenzi (2015) No. 10027
(Page 1 of 2)
Ⅲ. Auditor′s Opinions
In our opinion, the accompanying financial statements of Zhenhua Heavy
Industries has been prepared according to stipulations of the enterprise
accounting norms and present fairly, in all material respects, the financial
position of the Consolidation and Zhenhua Heavy Industries as of 31,
December 2014 and of the results of its operations and its cash flows for the
year then ended.
PrincewaterhouseCoopers China Limited CPA________________
The accounting firm (special general partnership) Zhao Bo
Shanghai, China
CPA________________
30, Mar, 2015 Jin Wen
Shanghai Zhenhua Heavy Industries Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Dec 31, 2014 consolidated assets
balance sheet
((Unless otherwise specified, the amount
units is RMB.) )
Dec 31, 2013 Jan 1, 2013
Assets Note Dec 31, 2014 consolidated consolidated
consolidated (iterated) (iterated)
Current assets
Monetary capital IV (1) 3,213,863,458 3,515,643,963 5,380,769,224
Financial assets measured at fair
value with the change accounted in
current profit and loss IV (2) 25,735,001 121,169,489 26,009,477
Notes receivable IV (3) 289,299,440 334,519,241 115,069,863
Receivables IV (5) 3,617,250,552 3,548,903,103 3,710,721,111
Prepayment IV (7) 1,251,617,828 1,285,291,251 995,684,680
Interest receivable IV (4) 45,655,159 5,088,988 33,231,552
Other receivables IV (6) 719,907,041 1,084,341,531 413,305,303
Stock IV (8) 4,292,389,192 6,015,690,177 7,581,683,025
Construction completed
account not closed IV (9) 7,915,107,868 6,766,208,145 6,620,155,339
Other current assets IV (10) 5,960,761,626 4,313,035,488 1,082,348,033
Total current assets 27,331,587,165 26,989,891,376 25,958,977,607
Non-current assets
Financial assets available-
for -sale IV (11) 455,820,453 200,410,000 151,862,545
Long-term receivables IV (12) 5,339,170,148 2,217,619,293 -
Long-term stock ownership
investment IV (13) 925,350,083 353,038,930 176,079,472
Real estate as investment IV (14) 374,881,869 388,992,266 402,411,440
Fixed assets IV (15) 14,981,803,507 14,079,867,109 14,075,197,757
Projects in process IV (16) 2,805,490,499 1,478,006,436 3,692,553,744
Intangible assets IV (17) 3,382,763,696 3,159,277,976 2,021,511,880
Deferred corporate tax
assets IV (19) 399,146,878 397,990,464 383,449,931
Goodwill IV (18) 149,212,956 - -
Total non-current assets 28,813,640,089 22,275,202,474 20,903,066,769
Total assets 56,145,227,254 49,265,093,850 46,862,044,376
Shanghai Zhenhua Heavy Industries Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd.
Dec 31, 2014 consolidated assets balance sheet
(continued)
((Unless otherwise specified, the amount units is
RMB.) )
Dec 31, 2013 Jan 1, 2013
Liabilities and stockholders’ equity Note Dec 31, 2014 consolidated consolidated
consolidated (iterated) (iterated)
Current liabilities
Short term loans IV (21) 20,658,839,765 14,663,865,004 11,936,687,998
Financial liabilities measured at fair
value with its change accounted in
current profit and loss IV (2) 28,752,000 644,404 -
Notes payable IV (22) 1,934,231,179 1,218,223,112 980,906,529
Payables IV (23) 4,670,346,661 3,592,110,836 2,603,418,685
Pre-received payment IV (24) 273,533,666 232,328,686 1,035,763,588
Construction not completed
account closed IV (9) 2,719,392,340 3,143,218,938 2,389,804,893
Employee remuneration
payable IV (25) 245,562,935 206,241,298 37,550,139
Tax payables IV (26) 221,167,212 103,837,251 35,381,219
Interest payable IV (27) 595,551,629 418,390,614 315,058,291
Dividend payable IV (28) 854,881 33,825,412 33,825,412
Other payables IV (29) 371,606,304 247,875,237 250,816,766
Non-current liabilities due within
one year IV (30) 2,606,660,000 4,370,297,863 3,667,922,000
Total current liabilities 34,326,498,572 28,230,858,655 23,287,135,520
Non-current liabilities
Long-term loans IV (31) 2,490,090,000 2,113,256,000 873,684,500
Bond payables IV (32) 3,799,615,401 3,797,777,911 7,984,665,674
Predicted liabilities IV (33) 212,244,416 186,334,750 193,307,685
Deferred corporate tax
liabilities IV (19) 62,796,958 24,984,658 20,747,048
Deferred profit IV (34) 292,776,131 198,171,971 85,250,393
Total non-current liabilities 6,857,522,906 6,320,525,290 9,157,655,300
Total liabilities 41,184,021,478 34,551,383,945 32,444,790,820
Shareholders' equity
Share capital IV (35) 4,390,294,584 4,390,294,584
Shanghai Zhenhua Heavy Industries Co., Ltd.
4,390,294,584
Contributed surplus IV (36) 5,543,176,483 5,543,176,483 5,543,176,483
Other comprehensive profits IV (37) 319,540,042 248,928,049 89,112,134
surplus reserves IV (38) 1,554,606,025 1,520,147,861 1,520,147,861
Profit not distributed IV (39) 2,972,986,676 2,808,057,854 2,668,221,534
Total shareholders' equity
attributed to parent company 14,780,603,810 14,510,604,831 14,210,952,596
Minority equity VI (1) 180,601,966 203,105,074 206,300,960
Total shareholders' equity 14,961,205,776 14,713,709,905 14,417,253,556
Total liabilities and
shareholders' equity 56,145,227,254 49,265,093,850 46,862,044,376
The notes of the financial statements are part of
the financial statements.
Enterprise principal: Song Hailiang Chief financial officer: Wang Jue Financial manager: Sunguangbo
Shanghai Zhenhua Heavy Industries
Co., Ltd.
Dec 31, 2014 company B/S
((Unless otherwise specified, the
amount units is RMB.) )
Dec 31, 2013 Jan 1, 2013
Assets Note Dec 31, 2014 company company
company (iterated) (iterated)
Current assets
Monetary capital 2,597,001,684 3,098,787,795 5,140,007,496
Financial assets measured at fair
value with its change accounted in
current profit and loss 25,735,001 107,398,445 19,196,699
Notes receivable 283,662,738 331,519,241 115,069,863
Receivables XIV (1) 6,005,595,333 5,118,743,309 4,470,459,959
Prepayment 1,881,878,541 1,810,482,001 1,469,746,463
Interest receivable 45,655,159 5,088,988 33,231,552
Other receivables XIV (2) 8,721,426,218 8,166,740,918 7,492,431,701
Stock 4,768,572,615 4,940,313,059 6,343,052,035
Construction completed
account not closed 6,846,110,101 5,620,521,199 5,740,676,634
Other current assets 5,847,224,344 4,225,449,521 1,000,000,000
Total current assets 37,022,861,734 33,425,044,476 31,823,872,402
Shanghai Zhenhua Heavy Industries Co., Ltd.
Non-current assets
Financial assets available-for
-sale 182,372,631 200,210,000 151,862,545
Long-term stock ownership
investment XIV (3) 6,205,231,635 4,829,205,862 4,216,229,183
Real estate as investment 374,881,869 388,992,266 402,411,440
Fixed assets 6,532,874,684 7,076,923,256 7,339,176,130
Projects in process 921,306,519 724,832,092 1,145,271,492
Intangible assets 1,264,092,505 1,301,763,322 1,339,935,316
Deferred corporate tax
assets 399,100,325 397,990,464 383,449,931
Total non-current assets 15,879,860,168 14,919,917,262 14,978,336,037
Total assets 52,902,721,902 48,344,961,738 46,802,208,439
Shanghai Zhenhua Heavy Industries
Co., Ltd.
Dec 31, 2014 company B/S (continued)
((Unless otherwise specified, the
amount units is RMB.) )
Dec 31, 2013 Jan 1, 2013
Liabilities and stockholders’ equity Note Dec 31, 2014 company company
company (iterated) (iterated)
Current liabilities
Short term loans 17,265,833,765 11,944,593,404 9,966,183,748
Financial liabilities measured at
fair value with its change accounted
in current profit and loss 28,752,000 644,404 -
Notes payable 1,925,331,179 918,223,112 980,906,529
Payables 5,915,107,284 4,914,219,485 4,272,986,149
Pre-received payment 174,334,030 269,282,825 1,211,974,729
Construction not completed
account closed 3,288,089,572 4,061,856,201 3,053,896,148
Employee remuneration
payable 236,198,026 199,934,578 34,284,485
Tax payables 6,577,373 4,537,731 22,985,239
Interest payable 578,367,210 412,168,548 306,693,557
Dividend payable 352,598 33,323,129 33,323,129
Other payables 1,360,934,528 810,028,050 485,481,837
Non-current liabilities due
within one year 1,139,520,000 4,370,297,863 3,234,222,500
Total current liabilities 31,919,397,565 27,939,109,330 23,602,938,050
Shanghai Zhenhua Heavy Industries Co., Ltd.
Non-current liabilities
Long-term loans 1,773,090,000 1,747,442,000 496,554,500
Bond payables 3,799,615,401 3,797,777,911 7,984,665,674
Predicted liabilities 191,656,260 175,426,592 188,568,114
Deferred profit 233,929,227 146,955,304 41,333,726
Total non-current liabilities 5,998,290,888 5,867,601,807 8,711,122,014
Total liabilities 37,917,688,453 33,806,711,137 32,314,060,064
Shareholders' equity
Share capital 4,390,294,584 4,390,294,584 4,390,294,584
Contributed surplus 5,789,984,601 5,789,984,601 5,789,984,601
Other comprehensive profits 351,090,634 248,889,422 89,099,161
Surplus reserves 1,554,097,752 1,519,639,588 1,519,639,588
Profit not distributed 2,899,565,878 2,589,442,406 2,699,130,441
Total shareholders' equity 14,985,033,449 14,538,250,601 14,488,148,375
Total liabilities and
shareholders' equity 52,902,721,902 48,344,961,738 46,802,208,439
The notes of the financial statements are part of
the financial statements.
Enterprise principal: Song Hailiang Chief financial officer: Wang Jue Financial manager: Sun Guangbo
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Shanghai Zhenhua Heavy
Industries Co., Ltd.
Dec 31, 2014 consolidated and
company profit sheet
((Unless otherwise specified,
the amount units is RMB.) )
2014 2013 2014 2013
Item Note
consolidated consolidated company company
IV (40) 、
1. Operating revenue
XIV (4) 25,069,421,487 23,201,555,800 22,795,548,087 21,252,999,320
Less IV (40) 、 (21,700,680,92 (21,437,017,12 (19,845,306,99 (19,781,670,97
: Operating cost XIV (4) 5) 7) 1) 4)
Business tax and
charges IV (41) (128,028,777) (95,296,484) (10,482,359) (7,065,816)
Selling expenses IV (42) (64,745,357) (68,647,704) (61,207,168) (60,390,117)
General expenses IV (43) (1,460,145,132) (1,352,925,539) (1,036,025,654) (1,059,203,931)
Financial expenses
- Net IV (44) (1,301,686,454) (627,184,455) (1,263,434,946) (650,420,469)
Assets impairment IV (48) 、IV
loss (20) (548,441,842) (785,673,951) (548,851,542) (793,738,223)
Add Fair value change
: loss -Net IV (46) (123,542,084) 94,515,608 (109,771,041) 87,557,341
IV (47) 、
Investment gains XIV (5) 370,922,986 898,036,468 383,101,264 581,854,755
In which: net
investment
gains/(loss) to
affiliated
companies and
joint ventures 14,737,413 (3,111,958) 26,846,917 (3,111,958)
2. Operating profit/(loss) 113,073,902 (172,637,384) 303,569,650 (430,078,114)
Add Non-operating
: income IV (49) 52,418,714 314,889,951 22,347,516 296,870,540
Less Non-operating
: expense IV (50) (2,989,655) (21,823,472) (237,801) (19,078,648)
In which: non-current assets
disposal loss (293,220) (19,598,889) - (17,292,087)
3. Profit/(loss) amount 162,502,961 120,429,095 325,679,365 (152,286,222)
Less Corporate income
: tax expenses IV (51) (14,454,560) 13,647,527 18,902,271 42,598,187
4. Net profit/(loss) 148,048,401 134,076,622 344,581,636 (109,688,035)
Net profit/(loss)
attributed to
parent company IV (39) 199,386,986 139,836,320 344,581,636 (109,688,035)
62
Shanghai Zhenhua Heavy Industries Co., Ltd.
shareholders
Minority profit and
loss VI (1) (51,338,585) (5,759,698) - -
5. Net amount of other
integrated profit after tax IV (37) 70,602,113 159,729,451 102,201,212 159,790,261
Net amount of
other integrated
profit after tax
attributed to parent
company
shareholders
Other integrated
profits after re
classification in the
profit and loss
Fair value change
profit or loss of
financial assets
available for sale 72,752,627 159,790,261 102,201,212 159,790,261
Conversion difference of foreign
currency statements (2,140,634) 25,654 - -
Net amount of
other integrated
profit after tax
attributed to
minority
shareholders (9,880) (86,464) - -
6. Total integrated profit 218,650,514 293,806,073 446,782,848 50,102,226
Total integrated
profit attributed to
parent company
shareholders 269,998,979 299,652,235 446,782,848 50,102,226
Total integrated
profit attributed to
minority
shareholders (51,348,465) (5,846,162) - -
7. Total profit per share
Basic earning per
share IV (52) 0.05 0.03 —— ——
Diluted earnings
per share IV (52) 0.05 0.03 —— ——
The notes of the financial statements
are part of the financial statements.
Enterprise principal: Song Hailiang Chief financial officer: Wang Jue Financial
manager: Sun Guangbo
Shanghai Zhenhua Heavy
Industries Co., Ltd.
Dec 31, 2014 consolidated
and company cash flow
63
Shanghai Zhenhua Heavy Industries Co., Ltd.
((Unless otherwise
specified, the amount units
is RMB.) )
Item Note 2014 2013 2014 2013
consolidated consolidated company company
1. Cash flow from the
operating activities
Cash receipt from products
sales and labour provision 18,500,251,727 19,399,598,391 17,831,248,876 18,478,654,094
Tax return received 583,212,505 629,736,552 553,762,828 629,736,552
Cash receipt related with
other operational activities IV (53)(a) 301,169,823 243,552,945 259,416,523 231,479,730
Subtotal of cash receipt
from operation activities 19,384,634,055 20,272,887,888 18,644,428,227 19,339,870,376
Cash payment of
purchase commodity and
receiving labour (18,081,033,665) (17,520,919,606) (16,805,992,872) (16,938,312,849)
Cash payment to and for
the employee (1,538,471,738) (1,336,945,044) (812,328,705) (812,025,989)
Tax payment (287,262,053) (217,867,205) (42,716,867) (43,373,625)
Cash payment related with
other operational activities IV (53)(b) (351,249,651) (231,672,284) (266,403,800) (182,527,728)
Subtotal cash disburse of
operating activities (20,258,017,107) (19,307,404,139) (17,927,442,244) (17,976,240,191)
IV
Net cash flow of operating (54)(a)、
activities XIV (6)(a) (873,383,052) 965,483,749 716,985,983 1,363,630,185
2. Cash flow of investment
Cash receipt of investment
return 5,783,534,659 4,763,990,000 5,783,534,659 4,763,990,000
Net cash receipt of
disposal of fixed assets and
intangible assets
43,341,800 452,808,255 12,452,238 452,270,384
Net cash receipt of
disposal of subsidiaries 672,193,178 159,394,016 403,315,906 100,828,977
Cash receipt of obtaining
investment gains 357,668,907 151,205,644 357,737,681 151,188,587
Net cash received by
subsidiaries acquisition IV (54)(c) 57,873,562 - - -
Cash receipt related with
other investment activities IV (53)(c) 63,650,660 135,189,201 61,174,796 108,069,251
Subtotal of investment
cash receipt 6,978,262,766 5,662,587,116 6,618,215,280 5,576,347,199
Cash payment of purchase
and construction of fixed
assets, project in process and
intangible assets (654,441,433) (345,935,942) (241,274,254) (61,937,688)
Cash payment of
investment (8,006,612,662) (8,007,227,235) (8,489,702,190) (8,513,411,213)
Subtotal of cash disburse
of investment (8,661,054,095) (8,353,163,177) (8,730,976,444) (8,575,348,901)
Net cash flow of
investment (1,682,791,329) (2,690,576,061) (2,112,761,164) (2,999,001,702)
3. Cash flow of financing
activities
Cash receipt of loans 34,477,992,392 23,726,574,867 29,379,507,992 21,312,148,267
Receipt of other cash
related to financing activities IV (53)(d) 3,792,951,073 6,160,056,453 3,690,587,843 6,157,492,641
Subtotal of cash receipt of
financing activities 38,270,943,465 29,886,631,320 33,070,095,835 27,469,640,908
Cash to pay the debts (30,863,669,778) (22,876,376,591) (27,289,929,378) (20,849,157,341)
Cash payment of dividend
distribution or interest (1,417,237,644) (967,541,716) (1,167,219,204) (868,202,063)
64
Shanghai Zhenhua Heavy Industries Co., Ltd.
Payment of other cash
related to financing activities IV (53)(e) (4,715,537,075) (3,496,449,525) (4,680,480,148) (3,496,449,525)
Subtotal of cash disburse
of financing activities (36,996,444,497) (27,340,367,832) (33,137,628,730) (25,213,808,929)
Net cash flow of financing
activities 1,274,498,968 2,546,263,488 (67,532,895) 2,255,831,979
4. Influence of exchange rate
change to cash (3,341,587) (26,307,413) (941,298) (21,274,189)
IV
5. Cash net (54)(b) 、
(decrease)/increase XIV (6)(b) (1,285,017,000) 794,863,763 (1,464,249,374) 599,186,273
Add: starting cash balance 3,152,471,807 2,357,608,044 2,736,478,139 2,137,291,866
IV
(54)(d) 、
6. Closing cash balance XIV (6)(b) 1,867,454,807 3,152,471,807 1,272,228,765 2,736,478,139
The notes of the financial statements are part
of the financial statements.
Enterprise principal: Song Hailiang Chief financial officer: Wang Jue Financial manager: Sun Guangbo
Shanghai Zhenhua
Heavy Industries
Co., Ltd.
Dec 31, 2014
consolidated
shareholders’ equity
sheet
((Unless otherwise
specified, the
amount units is
RMB.) )
Shareholders' equity attributed to parent company Total
Minority
Item Note Other shareholders'
equity
Contributed integrated Surplus Undistributed equity
Capital stock surplus profits reserves profit
Jan 1, 2013 starting
balance 4,390,294,584 5,543,176,483 89,112,134 1,520,147,861 2,668,221,534 206,300,960 14,417,253,556
2013 movement
Total integrated profits
IV
Net profit (39) - - - - 139,836,320 (5,759,698) 134,076,622
Other integrated profits
- Fair value change profit or
loss of financial assets available IV
for sale (37) - - 159,790,261 - - - 159,790,261
- Conversion difference
of foreign currency
statements - - 25,654 - - (86,464) (60,810)
Total integrated profits - - 159,815,915 - 139,836,320 (5,846,162) 293,806,073
Capital increased and
reduced by shareholders
Capital increased by VI
shareholders (1) - - - - - 2,650,276 2,650,276
Dec 31, 2013 closing
balance 4,390,294,584 5,543,176,483 248,928,049 1,520,147,861 2,808,057,854 203,105,074 14,713,709,905
Jan 1, 2014 starting
balance 4,390,294,584 5,543,176,483 248,928,049 1,520,147,861 2,808,057,854 203,105,074 14,713,709,905
65
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 movement
Total integrated profits
IV
Net profit (39) - - - - 199,386,986 (51,338,585) 148,048,401
Other integrated profits
- Fair value change profit or
loss of financial assets available IV
for sale (37) - - 72,752,627 - - - 72,752,627
- Conversion difference
of foreign currency
statements - - (2,140,634) - - (9,880) (2,150,514)
Total integrated profits - - 70,611,993 - 199,386,986 (51,348,465) 218,650,514
Capital increased and
reduced by shareholders
Capital increased by VI
shareholders (1) - - - - - 28,845,357 28,845,357
Profit distributed
IV
Picking surplus reserves (39) - - - 34,458,164 (34,458,164) - -
Dec 31, 2014 closing
balance 4,390,294,584 5,543,176,483 319,540,042 1,554,606,025 2,972,986,676 180,601,966 14,961,205,776
The notes of the financial
statements are part of the
financial statements.
Enterprise principal: Song Hailiang Chief financial officer: Wang Jue Financial manager: Sun Guangbo
Shanghai Zhenhua Heavy Industries Co., Ltd.
Dec 31, 2014 company shareholders' equity change list
((Unless otherwise specified, the amount units is
RMB.) )
Other Total
Not
Item Contributed integrated Surplus Undistributed shareholders'
e
Capital stock surplus profits reserves profit equity
Jan 1, 2013 starting balance 4,390,294,584 5,789,984,601 89,099,161 1,519,639,588 2,699,130,441 14,488,148,375
2013 movement
Total integrated profits
Net loss - - - - (109,688,035) (109,688,035)
Other integrated profits
- Fair value change profit or loss of
financial assets available for sale - - 159,790,261 - - 159,790,261
Total integrated profits - - 159,790,261 - (109,688,035) 50,102,226
Dec 31, 2013 closing balance 4,390,294,584 5,789,984,601 248,889,422 1,519,639,588 2,589,442,406 14,538,250,601
Jan 1, 2014, starting balance 4,390,294,584 5,789,984,601 248,889,422 1,519,639,588 2,589,442,406 14,538,250,601
2014 movement
Total integrated profits
66
Shanghai Zhenhua Heavy Industries Co., Ltd.
Net profit - - - - 344,581,636 344,581,636
Other integrated profits
-Fair value change profit or loss of financial
assets available for sale - - 102,201,212 - - 102,201,212
Total integrated profits - - 102,201,212 - 344,581,636 446,782,848
Profit distribution
Picking surplus reserves - - - 34,458,164 (34,458,164) -
Dec 31, 2014 closing balance 4,390,294,584 5,789,984,601 351,090,634 1,554,097,752 2,899,565,878 14,985,033,449
The notes of the financial statements are part of
the financial statements.
Enterprise principal: Song Hailiang Chief financial officer: Wang Jue Financial manager: Sun Guangbo
67
Shanghai Zhenhua Heavy Industries Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd.
FINANCIAL STATEMENTS & AUDITORS REPORT 2014
68
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Shanghai Zhenhua Heavy Industries Co., Ltd.
FINANCIAL STATEMENTS & AUDITORS REPORT 2014
Auditor′s Report
Financial Statements 2014
Consolidated and Company's B/S
Company's B/S
Consolidated and Company's P/L
Consolidated and Company's Cash Flow Statements
Consolidated Shareholder's Equity Movement Statements
Company Shareholder's Equity Movement
Financial Statements Notes
Supplementary Information
69
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
The Company′s basic situation
Ⅰ
Shanghai Zhenhua Heavy Industries (Group) Co., Ltd. (hereinafter “the
Company”) was established in Shanghai, on 8 September 1997 as part of an
exercise to reorganize its predecessor, Shanghai Zhenhua Port Machinery
Company Limited. The Company is registered in P. R. China’s Shanghai.
As approved by ZhengWeiFaZi (1997) No. 42 document issued by the Securities
Commission under the State Council, the Company issued 100 million listed
foreign investment shares (B-shares) to overseas investors from July 15, 1997 till
July 17, 1997. The B-shares were listed for trading at Shanghai Stock Exchange
on Aug. 5, 1997.
As approved by GongSiZi (2000) No. 200 of China Securities Regulatory
Commission, the Company added issuing of 88 million RMB common shares (A-
shares) to domestic investors in Dec. 2000. The A-shares were listed for trading
at Shanghai Stock Exchange on Dec. 21, 2000.
In accordance with ZhenJianFaXingZi (2004) No. 165 by China Securities
Regulatory Commission, the Company issued 114,280,000 A-shares to domestic
investors on Dec. 23, 2004. The said issuances were listed at Shanghai Stock
Exchange respectively on Dec. 31, 2004 and Jan. 31, 2005 for trading.
In accordance with ZhenJianFaXingZi (2007) No. 346 by China Securities
Regulatory Commission, the Company issued 125,515,000 A-shares to domestic
investors on Oct. 15, 2007. The said issuances were listed at Shanghai Stock
Exchange respectively on Oct. 23, 2007 and Jan. 23, 2008 for trading.
As approved by CSRC Zheng Jian Xuke (2009) No. 71 document, the Company
issued non-publicly 169,794,680 A-shares on Sep. 22, 2008, to its controller
China Communications Construction Co., Ltd. (“China Communications
Corporation”). From Mar. 20, 2012 on, limitation term expires for above-mentioned
A-shares which are listed at Shanghai Stock Exchange for trading (Note V(34)).
As of Dec. 31, 2014, after all issues of shares and bonus shares distribution,
capital stock of the Company is increased to 4,390,294,584 shares, par value per
share 1 Yuan, totally 4,390,294,584 Yuan.
70
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅰ The Company′s basic situation (continued)
On Dec. 18, 2005, China Road and Bridge Construction Group General Company
combined with the company’s controlling holder China Harbor Construction
(Group) General Company after reorganization into China Transportation
Construction (Group) Co. Ltd. (hereafter called Communications Group). In
accordance with the Reply to Issue Concerning Listing of China Communications
Construction Co. Ltd. Entirely after Reorganization on Both Domestic and
Overseas Market (Guozi Gaige [2006] No. 1063) by State Assets Commission on
Aug. 16, 2006, Reply to Issue Concerning Management of State Stock of China
Communications Construction Co. Ltd. (Guozi Chanquan [2006] No. 1072) on
Sep. 30, 2006, which granted the reorganization proposal of Communications
Group, and in addition to the Reply to Approve China Communications
Construction Co. Ltd.’s Announcement of Purchase Report of Road and Bridge
Construction Co. Ltd. and Shanghai Zhenhua Port Machinery (Group) Co. Ltd.
and the Exemption of Purchase Offer Obligations (Zhengjian Gongsi Zi [2006] No.
227), on Oct. 8, 2006 Communications Group solely initiated the establishment of
China Communications Construction Co. Ltd. (hereafter Communications
Company), and invested the stock rights of the Company it held into the newly
established Communications Company. With completion of reorganization,
Communications Company thus becomes the controlling shareholder of the
Company.
The Company and its subsidiaries (jointly called “the Group”) are engaged in
design, building, installation of heavy port handling system and machinery, heavy
ocean equipment, engineering machinery, engineering vessels, large metal
structures & components, parts; leasing of self-manufactured cranes; sales of
self-produced products; professional contracting of international ocean shipping
and steel structure engineering with special vessels for whole-machine
transportation.
Refer to Note Ⅵ for main subsidiaries in scope of consolidation this year. The
company covered in scope of consolidation is Shanghai Zhenhua Heavy Qidong
Marine Engineering limited Company (Qidong Marine Company). Refer to Note Ⅴ
(1) and (2) for details.
This financial report is disclosed on Mar. 30, 2015 through approval by the
Company’s board of directors.
Ⅱ Major accounting policies and accounting estimates
The Group determines concrete accounting policies and accounting estimates
71
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
based on production and operating characters. It mainly shows in provision for
bad debts of accounts receivable (Note Ⅱ(10)), inventory valuation method (Note
Ⅱ(11)), judgment standard of impairment of available for sale equity instruments
impairment (Note Ⅱ (9)), depreciation of fixed assets and amortization of
intangible assets (Note Ⅱ (15)and (18)), judgment standard of development
expenditure capitalized (Note Ⅱ(18)), measurement of investment real estate
(Note Ⅱ(14)) and Recognition of income (Note Ⅱ(23)), etc.
Refer to Note Ⅱ (30) for key assumptions used in important accounting estimates
by Group
72
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(1) Basis of preparation for financial statements
(a) Standards and rules for financial statements establishment
The financial statements are prepared on the basis of Enterprise Accounting
Standards – Basic Standards and 38 concrete accounting standards issued on
Feb. 15, 2006, guidelines and explanation of the accounting standards, and other
related stipulations (hereafter totally called “Enterprise Accounting Standards”)
and CSSRC’s Listed Company with Public Securities Information Disclosure
Coding Rules No. 15 – General Rules on Financial Report (Revised in 2010).
(b) Concern basis
As of December 31, 2014, the Group's current liabilities exceed current assets by
about 7,000,000,000 Yuan and net cash flow caused in operating is about
870,000,000 Yuan. In the preparation of the financial statements for the year,
given the amount of bank credit, financing record the Group has achieved to
obtain, good cooperation relationship with banks and financial institutions and the
operating performance, the board of directors of the Company consider that the
Group is able to continue to acquire sufficient operating cash flow and sources of
financing, to ensure funds required for repayment of debt maturity and capital
expenditure. Therefore, the board of directors of the Company ensures that the
Group will continue to operate, and thus to base the preparation of the financial
statements for the year on sustainable operation. The annual financial statements
do not include any adjustment of the Group and the Company which fails to meet
the conditions included in continuous operation.
(2) Declaration on abiding by the Enterprise Accounting Standards
The Company follows the requirements of enterprise accounting standards in
preparing 2014 financial statements, which authentically and completely reflect
the consolidated and the Company’s financial status on Dec. 31 of 2014 and the
consolidated and the Company’s operating result and cash flow during 2014.
(3) Accounting period
Calendar year, from January 1 till December 31
(4) Recording currency
RMB is the monetary currency of the Group
73
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(5) Enterprise merger
(a) Merger of enterprises under the same controller
Merger consideration paid and the net assets acquired by the merger party are
valued by book value. The difference between the book value of the net assets
acquired by the merger party and the merger consideration paid is adjusted to the
capital reserve. When capital reserve is not sufficient to compensate, retained
interest is thus adjusted. Direct expenses related to enterprise merger are booked
into current P&L at the time of incurrence. Transaction expenses from issuing
equity securities or liability securities for the purpose of enterprise merger are
booked into initially recognized amount of equity securities or liability securities.
(b) Merger of enterprises not under the same controller
Merger cost of the merger party and recognizable net assets acquired in the
merger are valued by fair value. The difference of the merger cost larger than fair
value of the recognizable assets of the purchased on purchase day is confirmed
as goodwill. The difference of the merger cost smaller than fair value of the
recognizable assets of the purchased on purchase day is booked into current
P&L. Direct expenses related to enterprise merger are booked into enterprise
merger cost. Transaction expenses from issuing equity securities or liability
securities for the purpose of enterprise merger are booked into initially recognized
amount of equity securities or liability securities.
(6) Preparation of consolidated statements
The consolidated statements consist of those of the Company and the
consolidated subsidiaries.
Subsidiary is consolidated from the date on which effective control over the
subsidiary is exercised by the Company; subsidiary is no longer consolidated from
the date when that control ceases. All material intercompany transactions,
balance and unrealized profit on transactions between group companies are
compensated. In the consolidated statements, minority interests not owned by the
Company are listed under shareholder’s equity as individual entry.
When there exists discrepancy between accounting policies adopted by
subsidiaries and the Company, statements of subsidiaries are adjusted according
to the Company’s policies upon consolidation. When subsidiary acquired through
merger of enterprise not under the same controller, its financial statements are
adjusted on the basis of fair value of the recognizable net assets as of purchase
day.
74
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(6) Preparation of consolidated statements (continued)
All significant accounts’ balance, transaction and unrealized profit within the
Group are deviated in preparation of the consolidated statements. Owners’ equity
of subsidiaries and that part of the current net profit and loss not attributable to the
Company is shown under shareholders’ equity and net profit in consolidated
financial and current net profit and loss statements as minority interest and
minority gains and losses. As for the unrealized profit and loss of internal
transaction that the subsidiaries sell assets to the Company, it is distributed and
deviated in the net profit attributed to the shareholders of the Company and the
profit and loss of minority shareholders according to the proportion attributed to
the subsidiaries. As for the unrealized profit and loss of internal transaction that
the subsidiaries sell assets to each other, it is distributed and deviated in the net
profit attributed to the shareholders of the parent Company and the profit and loss
of minority shareholders according to the proportion of the subsidiaries.
The transaction shall be adjusted from the point of the Group if the Group or
Company or subsidiaries has different reorganization for the same transaction as
the accounting main body.
(7) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits readily available for
the payment of and investment holdings of short-term, highly liquid and readily
convertible to known amounts of cash, with an insignificant risk of changes in
value.
(8) Foreign currency translation
(a) Foreign currency translation
Transactions denominated in foreign currencies are translated into RMB by the
sight rate on the transaction day.
Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated into RMB at the exchange rates at sight. Exchange
differences from special borrowing of foreign currency for the purpose of
purchasing or manufacturing assets meeting qualifications for loan expenses
capitalization are capitalized during the period of capitalization; other exchange
differences are directly booked into current P&L. Non-currency items of foreign
currency calculated on historical cost basis are translated at the rate at sight on
the date of transaction. Amount of impact of exchange rate fluctuation on cash
amount is separated in the cash flow statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(b) Foreign currency financial statements transaction
For Assets/liabilities items in the Assets/liabilities statements for business
operating abroad, exchange rate at sight on the Assets/liabilities statements date
is used for transaction. In the shareholders ' equity, except retained earnings
items, other items are translated using the spot exchange rate at the time of
incurrence. Overseas operating revenues and expenses items in the income
statements are translated using spot exchange rate on the day of incurrence.
Difference of foreign currency statement transaction mentioned above is shown
as a separate item in the shareholders ' equity. Overseas operation cash flow
items are translated by the spot exchange rate on the day of cash flows
incurrence. Effect of exchange rate changes on cash amount is shown separately
in the cash flow statements.
76
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(9) Financial instruments
(a) Financial assets
(i) Classification on financial instruments
The Group′s financial assets are classified at the beginning of recognition into:
Financial assets calculated by fair value whose movement booked into current
income statement, Receivables, Available-for-sale financial assets and the held to
maturity investment. Classification of financial assets is determined by the
intention and capability of the group in holding the financial assets. The Group do
not hold maturity investment.
Financial assets calculated by fair value, changes of which booked into current
income statement
Financial assets calculated by fair value, whose movement booked into current
income statement, refer to the financial assets originated from derivative financial
instruments, which are shown in B/S as marketable financial assets.
Receivables
Receivables are non-derivative financial assets which have no quotation on active
market, whose collectable amount is fixed or can be determined.
Available-for-sale financial assets
Available-for-sale financial assets are marketable non-derivative financial assets
fixed at the beginning of recognition and financial assets not classified into Others.
Available-for-sale financial assets to be sold within 12 months from B/S day are
booked in B/S as Other current assets.
(ii) Recognition and Measurement
Financial assets at the time when the Group becomes a party to the contract of
financial instruments are recognized in the balance sheet at fair value. Of the
financial assets whose amount initially recognized fair value and changes into
current profit or loss statement, related transaction costs incurred at acquisition
are included directly in current profit or loss; other financial assets transaction
costs are included in the initially recognized amount.
Financial assets measured at fair value and whose changes booked into current
profit or loss and financial assets available-for-sale are subsequently measured at
fair value, but equity instrument investments which are not quoted in an active
market and whose fair value cannot be reliably measured are measured at cost;
receivables are measured by cost after amortization, using the effective interest
rate method.
77
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and account estimates (continued)
(9) Financial instruments (continued)
(a) Financial assets (continued)
(ii) Recognition and Measurement (continued)
Changes in fair value of financial assets measured by fair value and whose
changes include in the current profit or loss are included in current profit or loss as
gains/losses of fair value change; interest or cash dividends in the asset holding
period, as well as disposal gains and losses at disposal are included in the current
profit and loss.
In addition to impairment losses and the exchange gains and losses from foreign
currency monetary financial assets, fair value changes of financial assets
available for sale are recognized directly in shareholders’ equity, and upon de-
recognition of the said financial assets, the cumulative amount of changes in the
fair value formerly recorded in shareholder’s equity is reversed into current P&L.
Cash dividends which the investment units have declared issuing related to equity
instruments available for sale investment are included in current profit or loss as
investment income.
(iii) Financial assets impairment
Apart from financial assets measured by fair value and whose changes included in
current profit or loss, the Group conducts, on balance sheet date, check up over
the carrying value of the financial assets. If there is objective evidence that
particular financial assets are impaired, provision for impairment is made.
Objective evidence that a financial asset is impaired, refers to matters that after
initial recognition of the financial asset the actual financial assets incurred, the
estimated future cash flows affected, and the Group can reliably measure the
effect.
Objective evidence proving impairment of available-for-sale equity instruments
investments includes serious or non-temporary decline in fair value with equity
instruments investments. This Group checks separately various available-for-sale
equity instrument investments as of B/S day. In case the fair value of equity
instrument investment on the B/S day is more than 50% (including 50%) of the
initial investment cost or during of fair value being lower than its initial investment
exceeds more than one year (including one year), it indicates that impairment
incurs; In case the fair value of equity instrument investment on the B/S day is
more than 20% (inclusive) but not yet to 50% of the initial investment cost, the
group will take into account other relevant factors such as price volatility, to
determine whether the investment in equity instrument are impaired. The Group
values the initial investment cost of tradable equity tools on weighted average
basis.
78
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
When financial assets carried at amortized cost are impaired, provision for
impairment is made according to the difference of the present value of the
estimated future cash flows (not including the future credit losses that have not yet
occurred) lower than the book value. If there is objective evidence that the
financial assets value has been restored, and it is objectively related with the
events incurred after the confirmation of the loss, the previously recognized
impairment loss is reversed into current profit or loss.
79
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(9) Financial instruments (continued)
(a) Financial assets (continued)
(iii) Financial assets impairment (continued)
When impairment of available for sale financial assets measured by fair value
incurs, the cumulative loss originally included directly in shareholders ' equity due
to decline in the fair value is transferred out and included in the impairment loss.
For available-for-sale debt investments whose impairment loss has been
confirmed, when in future period fair value increases and is objectively related to
the events following the impairment loss confirmation, the impairment loss
previously recognized shall be reversed and accounted for in current P&L. For
impairment loss of available-for-sale equity instruments investments confirmed,
increased fair value in future period is directly carried forward to shareholders '
equity.
When the financial assets available for sales accounted as cost decrease in value,
the difference between the book value and the actual value confirmed by the cash
flow realization in future according to the current market profit rate of similar
financial assets is regarded as value decrease loss, accounted in the current profit
and loss. The occurred value decrease loss is not returned in the next period.
(iv) Termination of recognition of financial assets
When financial assets meet one of the following conditions, recognition is
terminated: (1) contractual right to receive the financial assets cash flow
terminates; (2) the said financial assets have been transferred and the Group has
transferred almost all of the risks and rewards concerning the financial assets
ownership to the transferee; or (3) the financial assets have been transferred,
although the Group has neither transferred nor retained almost all of the risks and
rewards concerning the financial assets ownership, has given up the control over
the Financial assets.
When the Financial assets are derecognized, the difference between the book
value and the sum of the equity price received and the cumulative amount of fair
value change originally booked in equity is booked in current profit or loss.
(b) Financial liabilities
Financial liabilities are classified at the initial recognition into financial liabilities
measured by fair value and booked into current P&L, and other financial liabilities.
Financial liabilities of the group mainly include financial liabilities calculated by fair
value, whose movement booked into current income statement and other financial
liabilities.
80
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Financial Liabilities calculated by fair value, whose movement booked into current
income statement
Financial liabilities calculated by fair value, whose movement booked into current
income statement, refer to the financial Liabilities originated from derivative
financial instruments. Financial Liabilities calculated by fair value, whose
movement booked into current income statement, valued by fair value initially,
followed up by valuing post-amortization cost on the basis of actual interest rate.
Other Financial Liabilities
Other Financial Liabilities include: payables, loans and bonds payable. Payables
include accounts payable, other payables, valued by fair value initially, followed
up by valuing post-amortization cost on the basis of actual interest rate.
81
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(9) Financial instruments (continued)
(b) Financial Liabilities (continued)
Loans and bonds payable are initially valued by the amount of fair value after
deducting transaction expenses, and followed up by valuing post-amortization
cost on the basis of actual interest rate.
Other financial liabilities due less than one year (inclusive) are listed as current
liabilities; those due within more than one year but due within one year from the
balance sheet date (inclusive) are listed as non-current liabilities due within one
year; the rest are listed as non-current liabilities.
When present obligation of financial liabilities is entirely or partially dismantled, the
related financial liabilities or those whose obligation has been dismantled are
terminated as recognition. The difference between the book value of the
terminated and the consideration paid is booked into current P&L.
(c) Confirmation of the fair value of financial instruments
Financial instruments with active market decide their fair value by the quotation on
the active market, while financial instruments without active market decide its fair
value by evaluation technology. When estimating the value, the Group adopt the
applicable value estimation technology with enough data and supported by other
information, select the input value in accordance with the assets or debt feature
considered in the related assets or debt transaction of the participants in the
market. The related observable input value shall take the priority. If it is not
possible and practical to obtain the related observable input value, use the input
value not observable.
(10) Receivables
Receivables refer to accounts receivable and other receivables. The Group
confirms the initial amount of accounts receivable from exported goods or
provided labor by the fair value of contracted agreed upon price receivable from
purchaser or labor acceptor.
(a) Accounts receivable
The Group has changed the accounting estimation of receivable bad debt
provision (Note II (29)) since Jan 1, 2014. The following method is adopted for the
bad debt provision after changing.
82
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimate (continued)
(10) Accounts receivable (continued)
(a) Accounts receivable (continued)
(i) Accounts receivable with big single amount and individual bad debt provision is
made
As of accounts receivable with single big amount, individual test is made on value
depreciation. When proof shows the Group is not able to collect the account
receivable as prescribed, bad debt provision is made.
Standard of single big amount: top 5 of the receivable from third party
Method of bad debt provision being made with big single amount: based on the
difference of the present value of the expected future cash flow of the account
receivable lower than its book value.
(ii) Accounts receivable whose bad debt provision is totally made in group
Accounts receivable not with big single amount, together with accounts receivable
whose value is not decreased after being individual test, are classified into groups
by credit risk features and bad debt provision is made, on the basis of actual loss
rate of prior period accounts receivable of the same or similar kind, with similar
credit risk features, combining present situation.
Credit risk groups are determined by the following criteria:
Group 1 Accounts receivable from related party
Group 2 Accounts receivable from third party
Method of bad debt provision being made by credit risk groups:
Group 1 Bad debt provision shall not be made of accounts
receivable from related party except proof shows the
Group is not able to collect them.
Group 2 Debt age analysis method (considering future
collection)
Among the groups, proportion of accrual on aging analysis basis is listed as
follows:
Term overdue % of provision
1-6 months -
7-12 months 1%
1-2 years 15%
2-3 years 30%
83
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
3-4 years 50%
4-5 years 75%
5 years above 100%
84
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(10) Accounts receivable (continued)
(a) Accounts receivable (continued)
(iii) Accounts receivable not of big single amount but individually provided for bad
debt:
Reason for individual accrual of bad debt provision: proof shows the Group will not
be able to make the accounts receivable on the basis of former clauses.
Method of accrual of bad debt provision: accrued according to the difference
between the present value of its expected future cash flow lower than its book
value
(b) Other receivables
The Group has changed the accounting estimation of receivable bad debt
provision (Note II (29)) since Jan 1, 2014. The following method is adopted for the
bad debt provision after changing.
(i) Other receivables of big single amount and individually provided for bad debt:
As for other receivables of big single amount, individual impairment test is made.
When proof exists to show the Group will not be able to collect them according to
prescribed clauses, bad debt provision is made.
Standard of single big amount: top 5 of the receivable from third party
Method of bad debt provision being made with big single amount: based on the
difference of the present value of the expected future cash flow of the other
receivables lower than its book value.
85
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(10) Accounts receivable (continued)
(b) Other accounts receivable (continued)
(ii) Other accounts receivable whose bad debt provision is totally made in group
Other accounts receivable not with big single amount, together with accounts
receivable whose value is not decreased after being individual test, are classified
into groups by credit risk features and bad debt provision is made, on the basis of
actual loss rate of prior period accounts receivable of the same or similar kind,
with similar credit risk features, combining present situation.
Credit risk groups are determined by the following criteria:
Guarantee deposit (not include quality guarantee
Group 1
deposit)
Group 2 Employee′s loan and reserve fund
Group 3 Other accounts receivable in other nature
The provision method of bad debt provision by credit risk portfolio
Group 1 Except for that the objective evidence proves that the
Group can’t retake the payment according to the original
articles of other receivables, the Group shall not make
bad debt provision for the cash deposit (excluding
quality cash deposit)
Group 2 Bad debt provision shall not be made of accounts
receivable from employee’s loan and reserve fund
except proof shows the Group is not able to collect
them.
Group 3 Debt age analysis method
Among the groups, proportion of accrual on aging analysis basis is listed as
follows:
Term overdue % of provision
1-6 months -
7-12 months 1%
1-2 years 15%
2-3 years 30%
3-4 years 50%
4-5 years 75%
5 years above 100%
86
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(10) Accounts receivable (continued)
(b) Other accounts receivable (continued)
(iii) Bad debt provision of other receivables not of big single amount but individually
provided for bad debt
Reason for individual accrual of bad debt provision: proof shows the Group will not
be able to make the other receivables on the basis of former clauses.
Method of accrual of bad debt provision: accrued according to the difference
between the present value of its expected future cash flow lower than its book
value
(c) Bad debt loss confirmation standard
To the proven non-collectable receivables such as when debtors are dissolved or
bankrupted or insufficient assets to cover debts or insufficient cash flow, bad debt
loss is confirmed and will offset accrued corresponding bad debt provision.
(d) Transfer of receivables
In case of account receivable the Group transfers to financial institutions with no
retrospective rights retained, the difference between the transaction amount and
the moved receivables’ book value and related taxes is taken into current period
income statement.
(11) Stock
(a) Classification
Stock includes raw materials purchased spare parts and semi-products, reported
in the lower between cost and cashable net value.
(b) Valuation method of issuing stock
Cost of goods in stock and semi-products includes raw material cost, direct labour
cost and manufacturing cost calculated in systematic way under normal
productivity.
87
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(c) Basis on deciding cashable present value of stock and accrual of inventory
depreciation reserve:
When stock cost higher than net realizable value, the part less than the net
realizable value is provided as impairment provision. Stock impairment provision
is made based on individual items when cost higher than net realizable value. The
net realizable value of items in normal manufacturing process is calculated on the
amount of estimated selling price deducting future cost, selling expenses and
taxes till the completeness of the manufacture.
(d) The Group's stock inventory system adopts a perpetual inventory system.
88
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates
(11) Stock (continued)
(e) Amortization of perishables and packing materials
Turn-over materials include perishables and packing materials etc. Perishables are
amortized by turns while packing is amortized at one time.
(12) Building contracts
For customized large port equipment with fixed price, because the start and the
finishing of the project are in different accounting years, the Company uses building-
contract method to calculate the revenue and the cost.
(a) If the selling result of individual building contract can be reliably estimated, the
revenue and expenses can be recognized in proportion of completeness on the day
of balance sheet.
(i) Project progress proportion is made on the report day according to the revenue
recognition stage stipulated in the contract. The Company confirmed the following 3
revenue recognition stages:
Stage 1: body steel structure completed and erected;
Stage 2: manufacturing, installation and initial testing completed, product ex-plant
qualification certificate issued, shipping documents acquired, product ready to be
shipped;
Stage 3: product finally delivered after being checked and approved by purchaser,
final delivery certificate issued by purchaser acquired.
The Group will analyze the building contracts completed in prior year and recognize
progress proportion of each revenue recognition stage on the basis of the proportion
of the cost of the revenue recognition stage in real total costs and recognize it as the
progress proportion at various stages in current period.
(ii) For heavy ocean equipment, progress of completeness is recognized by the
proportion of accumulated cost incurred in total expected cost. The accumulated
cost does not include that related to contracted future activities.
(iii) Progress of completeness of steel structures is determined by the proportion of
cumulative tons of processing completed in total tons of processing.
89
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(b) When individual building contract result is not able to be reliably estimated, the
following methods are used:
(i) When contract cost can be covered, contract revenue is recognized according to
real contract cost that can be covered, contract cost is recognized as expenses in
the period when cost incur.
(ii) When contract cost cannot be covered, it can be recognized as expenses
immediately when it incurs; no contract revenue is confirmed.
(c) When expected total contract cost exceeds total revenue, the expected losses
should be immediately recognized as expenses in current period.
90
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(12) Construction contract (continued)
(d) When contract value is settled in installments, the settled installment is recognized
as settled value, which will be transferred and set off with related accumulated costs
and confirmed margin on the day of building contract completed. On the balance
sheet day, when the adding accumulated costs and confirmed margin exceeds the
accumulated settled value, the difference is listed as completed but not yet settled
item in current assets. Otherwise, it will be listed in settled but not completed item in
current liabilities.
(13) Long term equity investment
Long term equity investment including: Long term equity investment into the
Company’s subsidiaries; Long term equity investment into the joint undertaking;
Long term equity investment for which the Group exercises no control or co-
control over the investee company
Subsidiary is the investee company over which the Company exercises control; a
joint undertaking is an investee over which the Company exercises control
together with other parties. Investment to subsidiaries is recorded in the amount
confirmed by cost method in the Company’s individual financial statements, and
consolidated after adjustment in equity method while compiling consolidated
statements.
A joint undertaking is accounted on equity basis; while other long term equity
investments are accounted on cost basis.
(a) Confirmation of investment cost
As of long-term equity investments from enterprise merger: long-term equity
investment obtained from the merger of enterprises under the same controller,
investment costs are recognized by the share of the owner's equity book value as
of the merger date; long-term equity investment obtained from the merger of
enterprises not under the same controller, investment costs are recognized by the
costs of merger.
As of long-term equity investments from other ways rather than enterprise merger:
initial investment costs of long-term equity investment obtained from paying cash
are recognized by the actual purchase price; as of long-term equity investments
from issuing equity securities, their initial costs are recognized by the fair value of
the issued equity securities.
(b) Follow-up valuation and gains/losses recognition method
Long term share investment accounted in cost method is valued by original cost.
91
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Cash dividend or profit announced by the investee is confirmed into current
period’s investment income.
As of long-term equity investment based on equity, when the initial investment
cost is larger than the share of the fair value of recognizable net assets enjoyed of
the investee at the time of the investment, long-term equity investment cost is
recognized by the initial investment cost; when initial investment cost is smaller
than the share of the fair value of recognizable net assets enjoyed of the investee
at the time of the investment, the difference is included in current P&L, and long-
term equity investment cost is adjusted to increase accordingly.
92
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(13) Long term equity investment (continued)
(b) Follow-up valuation and gains/losses recognition method (continued)
In equity method, gains/losses of investment are recognized by the amount of
investee’s current period net profit or net loss share enjoyable or bearable by the
Group. The confirmed investee’s net loss is limited to zero in the book value of the
long term share investment. Whereas when the Group bears extra liability for loss
and when the extra liability meets requirements for stipulated probable events,
investment loss and expected liability is further confirmed. For the movement of
investee’s equity other than net gains/losses, when proportion of hold remains
unchanged, the Group calculates the part it enjoys or bears in accordance with its
proportion of share holding and directly book it into capital reserve. The
announced investee’s distributed profit or cash dividends shall correspondingly
deduct the book value of long term equity investment of the Group at the time of
the announcement. However when cash dividends exceed already confirmed
investment gains but do not exceed that part of the investee’s book value profit
realized after the investment is made which is enjoyed by the Group in proportion
of holding, it is confirmed as current period investment income. Gains/losses from
internal transactions between the Group and the investee enjoyed by the group
according to proportion of share-holding are confirmed as investment gains/losses
after setoff is made. When loss from internal transactions between the Group and
the investee belongs to asset impairment loss, the loss is fully confirmed,
unrealized gains/losses from which will not be set off.
(c) Basis for determining the control or co-control over investee
Control means having the power to decide on investee, and thus obtaining the
variable gains from its operation, with the ability to utilize the power of the investee
to influence the gains amount..
Co-control means enjoying control over certain arrangement according to
contract,. Such arranged activities must be decided upon agreement of the Group
and the other participants that share the control rights.
Significant effect means that the company possesses the right of decision-making
participation in the financial and operating policies of the investee but is not able
to control or co-control with other party the making of such policies.
(d) Long term equity investment impairment
As of long term equity investment in subsidiary or joint undertaking, when
collectable amount is lower than the book value, the book value is decreased to
the collectable amount (Note II (19)).
93
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(14) Real estate as investment
Real estate as investment, including leased-out land use right and land and
buildings for rental purposes as well as buildings in the process of being constructed
or developed for rental in the future, initial measurement is made by cost.
Subsequent expenditure relating to investment real estate, when related economic
benefits are likely to flow into the Group and its cost can be measured reliably, is
accounted into the cost of investment real estate; Otherwise, it is included in the
current profits and losses statements.
Cost models for all investment property is adopted by the Group to undertake
follow-up measures; depreciation or amortization is made for buildings and land use
rights according to their estimated useful life and residual value rate. Investment
real estate rate and years of estimated useful life and residual value depreciation
(amortization) rates are listed below:
Estimated usef Estimated resi Annual depreciation (amortizati
ul life dual value rate on) rate
Building 30 years 0% 3.3%
Land use Land use year 0% Decided by estimated net residual
right s value and land use years
When purpose of investment property changes to self-use, from the date of change,
convert the investment properties to fixed assets or intangible assets. When self-
use property changes to the purpose of earning rentals or for capital appreciation,
from the date of change, convert the fixed assets or intangible assets to investment
properties. Upon conversion, book value before the conversion is recorded as the
converted value.
The anticipated service life of investment real estate, estimated net residual values
and depreciation (amortization) method is reviewed and made appropriate
adjustments at each year end.
When the investment real estate is disposed of, or permanently terminates its use
and no economic benefits are expected from its disposal, terminate the confirming
of the investment real estate. Disposal income of investment property for sale,
transfer, disposal of scrap or being destroyed is charged to current P&L after
deducting its book value and related taxes.
When the recoverable amount of the investment real estate is below its book value,
book value is written down to its recoverable amount (Note II (19)).
94
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(15) Fixed assets
(a) Validation of fixed assets and initial valuation
Fixed assets include buildings and constructions, manufacturing equipment,
transportation facilities, other equipment and office equipment.
Fixed assets are confirmed when financial benefits related will probably flow into the
Group and their costs can be reliably valued. Fixed assets purchased or newly
constructed are initially valued by cost at acquisition. Fixed assets invested by the
state shareholders during the Company’s reconstruction in the form of corporation
are booked by the value appraised by the state-asset managerial authorities
Follow-up expenses related to fixed assets, when related economic benefits will
most probably flow in the Group and related cost can be reliably valued, are
accounted into fixed assets cost; for the replaced part, related book value ceases
confirmation; all other follow-up expenses are booked into current income statement
at the time of incurrence
(b) Fixed assets depreciation method
Depreciation of fixed assets is made in average year method and is accrued by
deducting expected net residual value from purchase value within the expected
years for use. When impairment provision has been made to fixed assets, the
depreciation ratio and amount will be decided on the net book value after
impairment and the remaining years for use.
Since Jan 1, 2014, the Group segmented the category of the fixed assets. The
accounting estimation of partial assets expected years for use and net residual
value is changed (Note II (29)). Fixed assets expected years for use, net residual
value ratio and annual depreciation ratio after changing are listed as below:
Expected Expected net Annual
years for use residual value depreciation ratio
ratio
House and building - 20-40 years 0% 2.5%-5%
costs
Manufacturing equipment Based on Calculated in
3-20 years international average years after
market price purchase value
of wasted less net residual
vessel steel value
Office equipment 0% 20%-33.3%
3-5 years
Transportation means 0% 20%
95
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(other than vessels) 5 years
Vessels 5%/10% 3.6%-9.5%
10-25 years
Double check is made to the estimated life of use, estimated net residual value and
method of depreciation at the end of each report year and necessary adjustment is
made.
96
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(15) Fixed assets (continued)
(c) When collectable amount of fixed assets is lower than its book value, the book
value is deducted to the collectable amount (see Note II (19)).
(d) Disposal of fixed assets
Fixed assets terminate recognition when they are disposed of, or expected to
generate no economic benefits. Difference between disposal income from fixed
assets sales, transfer, waste or damage and the book value and taxes is taken
into current period P&L.
(16) Construction in progress
Construction in progress is booked as project costs in real expenditure. Project
costs consist of building expenses, other necessary expenses which make the
construction in progress reach expected status of use, and loan expenses
occurred before it reaches the condition for use which meets qualification of
capitalization. When the project under construction reaches the expected
condition for use, it is transferred into fixed assets items and depreciation will be
made from the following month.
When collectable amount of construction in progress is lower than its book value,
the book valued is deducted to the collectable amount (see Note II (19)).
(17) Loan expenses
Loan expenses incurred from fixed assets which take rather long period of time to
purchase or manufacture in order to reach their expected state of use or sale are
capitalized and booked into the costs of the said assets at the time when asset
expenditure and loan expenses incur and when purchasing or building activities
start as a necessity to make that asset reach expected usable condition. When
the fixed assets that are purchased or built reached expected usable condition,
capitalization stops and loan expenses that follow are taken into current profit/loss
statement. In case purchasing activities of assets ceases accidentally and term of
cease exceeds 3 months on end, capitalization of loan expenses stops until
purchasing activities resume
Amount of expenses of special loans to be capitalized which are borrowed to
purchase fixed assets applicable to be capitalized is determined by the actual
interest expenses in current period minus interest income of those part not yet
used or by the invest income from temporary investment.
97
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Amount of expenses of general loans to be capitalized which are borrowed to
purchase fixed assets applicable to be capitalized is determined by the weighted
average amount of expenses of accumulated asset expenses exceeding that of
special loans to multiply the weighted average actual interest rate of the general
expenses. Actual interest rate means that used to recognize initial amount of the
loans translated by discounted future cash flow in the expected loan existence
term or short applicable term.
98
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(18) Intangible assets
Intangible assets consist of land use rights, software using cost and proprietary
technology, booked as cost. The evaluation value confirmed by the state-owned
administration department acts as the book value for the intangible assets
invested by the state-owned shareholders at the re-structuring of the Company. If
the price paid for outsourced land and building is difficult to distribute in a
reasonable way between the land use rights and the building, they are all
regarded as fixed assets.
Intangible assets are amortized in straight line method in the following expected
years for use.
(a) Intangible asset amortization years
Expected years for use
Land use rights Years of land use
Software using cost 5 years
Patented
technologies 10 years
(b) Regular double-check of life in use and amortization method
Double check is made by end of each year to expected life in use and
amortization method of intangible assets with limited use of life and adjustment is
thus made.
(c) R&D
Expenses of internal R&D projects are classified into that in research stage and
that in development stage, according to their nature and whether there exists
much uncertainty in the ultimate intangible assets resulted from the R&D.
Expenses in research stage are put into current P&L at occurrence; expenses in
development stage are capitalized when simultaneously satisfying the following
conditions:
It is technically feasible to complete the intangible assets to make them
usable and marketable;
The management has the intention to complete the intangible assets and
to use them or to sell them;
It’s able to prove how the intangible assets yield financial benefits;
Enough technology and financial resources and other resources support
99
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
and will enable the completion of the development of the intangible assets
and make them to be used to sold;
Expenses belonging to the intangible assets can be reliably measured.
Expenses of development stage not satisfying the conditions are put into current
P&L. Development expenses booked into P&L of prior years will not be re-
recognized as assets. Expenses of development stage already capitalized are
shown as development expenses on B/S, to be transferred into intangible assets
from the day when the project reaches its planned goal.
100
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(18) Intangible assets (continued)
(d) Intangible assets impairment
When collectable amount of intangible assets is lower than its book value, the
book valued is deducted to the collectable amount (Note II (19)).
(19) Long-term asset impairment
When signs of impairment exist on B/S day with long term equity investment in
subsidiaries and associates, fixed assets, construction in progress and intangible
assets, simulating test is made to the impairment. Impairment test is made at least
once each year for the intangible assets not reaching the usable state no matter
whether there is sign of impairment. When test result shows collectible amount is
lower than its book value, provision is made on basis of the difference and booked
into impairment loss. The collectible amount is the higher between net amount of
asset’s fair value deducting disposal expenses and the present value of expected
future cash flow. Asset impairment provision is calculated and confirmed by
individual piece of asset. In case collectible amount of individual asset is difficult
to value, collectible amount of asset group to which said individual asset belongs
is confirmed. Asset group refers to the minimum asset portfolio which
independently generates cash in-flow.
Goodwill individually reported in the financial statements, no matter whether there
exists sign of impairment, test of impairment is conducted at least once a year. In
the test, the book value of the goodwill is amortized into the asset group or asset
portfolio beneficiary from the concord effect at enterprise consolidation day. The
lower part of the collectable amount of the asset group or portfolio in which
goodwill is enclosed over the book value, as shown by the test result, is confirmed
as impairment loss. The loss is firstly to compensate the book value of the
goodwill amortized in the asset group or portfolio, and then to compensate the
book value of other assets in the proportion of the book value of other assets
except for the goodwill in the asset group or portfolio.
Once asset impairment provision is made, it shall not be transferred back even
though the asset value is resumed in later period.
(20) Employee remuneration
The employee remuneration is the salary and compensation in various forms
provided by the Group to the employee for the service provided or rescission of
the labor relationship, including short-term remuneration and benefit after
101
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
demission.
(a) Short-term remuneration
Employee’s remuneration consists of salary, bonus, allowance and subsidy,
benefits, medical insurance, work-related injury insurance, maternity insurance
and housing fund, trade union fund and education fund. The Group takes the
actual short-term remuneration as debt during the accounting period when the
employees provide service. It will be booked in the current profit and loss or
related assets cost, in which the non-currency benefit is accounted according to
the fair value.
102
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(20) Employee remuneration (continued)
(b) Benefit after retirement
The Group classifies the benefit after retirement as set drawing plan and set profit
plan. The set drawing plan is the profit plan that the Group deposits the fixed
money to independent foundation and doesn’t have the further payment
obligation. The set profit plan is the profit plan after retirement rather than the set
drawing plan. Within the report period, the Group’s profit plan after retirement is
the basic endowment insurance, supplementary endowment insurance and
unemployment paid for the employee, belonging to the set deposit plan.
Basic pension insurance
The employees of the Group participated in the social basic endowment insurance
implemented by the local labour and social security departments. The Group pays
the endowment insurance to the local social basic endowment insurance
organization on a monthly basis according to the base and proportion specified by
the local social basic endowment insurance organization. After the employee
retires, the local labour and social security departments are responsible to pay the
basic pension to the retired employees. During the accounting period when the
employees provide service, the Group regards the payable amount based on the
social insurance as debt. It shall be booked in the current profit and loss or related
assets cost.
Supplementary endowment insurance
The Group establishes the enterprise annuity plan based on the related policies of
national annuity system. The Group provides annuity according to the proportion
of the total salary. The payment is booked as current profit and loss.
(c) Demission profit
When the Group proposes rescission of the labor relationship with the employee
before the labor contract expires, or proposes compensation proposal to
encourage employees to voluntarily accept labor cuts, and the Group is unable to
unilaterally withdraw the plan on the cancellation of labor relationship or the layoff
proposal, confirmation is made as of liabilities arising compensation estimated
from the cancellation of the labor relationship with the employee, which is included
in the current cost.
(21) Profit and dividends distribution
103
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Cash dividends approved by general annual meeting are confirmed as liabilities
within the period of the approval.
104
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(22) Expected liabilities
When fulfillment of present obligation generated from product quality warranty and
loss contract may possibly cause outflow of financial interest, expected liabilities
are confirmed when the obligation amount can be reliably valued.
Expected liabilities are initially valued by the best estimates to be spent on
fulfillment of related present obligation, combining risks and uncertainty with
probabilities and time value of currency. In case currency’s time value is
significant, best estimate is made by discounted cash flow-out in the future
related. Addition to the book value of expected liabilities generated from recovery
of discount with passing of time is confirmed as interest expense.
The book value of expected liabilities is double-checked and thus adjusted as of
B/S day to reflect present best estimates.
(23) Revenue recognition
Revenue is confirmed by the fair value of the contracted or agreed upon price
related to commodity sales and service providing in routine operating activities of
the Group. Revenue is recorded by the net value after deducting selling discount
and return of sales.
Revenue is confirmed when related benefits can flow into the Group, sales can be
reliably calculated and when revenue meets the special sales income recognition
standards of the following operating activities:
(a) Revenue from sales of large port equipment and ocean heavy equipment is
recognized by the proportion of completeness. (See Note II (12))
(b) Income from ship transportation is recognized at the completion of the voyage.
(c) Income is recognized at the time of delivery for the sale of spare goods or parts.
(d) Interest income is recognized by deposit term and real interest rate.
(e) Operating leasing income is recognized in leasing period by straight line method.
105
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(f) Activities under the construction and transfer of contracts usually include
construction and transfer. As for constructing Item the Group responsible for, in
the construction phase, in accordance with the construction contract standards,
when the results can be estimated reliably, the construction contract revenue
should be valued by the fair value of consideration chargeable, at the same time
to confirm the "Long term receivables", to be written off when payment received
from the owners.
106
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(24) Government subsidy
Government subsidy refers to monetary assets or non-monetary assets obtained
from the government free of charge, including tax return and financial subsidies
etc.
Government subsidy is recognized at receipt when satisfy the Group’s conditions.
Monetary assets are booked by amount received or receivable. Non-monetary
assets are booked by fair value; when fair value is not reliable, amount in name is
used.
Government subsidy related to assets refers to the government subsidy obtained
by the enterprise to use for the construction or make long-term assets in other
forms. The government subsidy related to the gains refers to the subsidy rather
than the government subsidy related to assets.
Government subsidy related with income when used to compensate related
expenses or losses in future periods is recognized as deferred income and is
booked into current P&L in the period when related expenses are recognized.
That used to compensate paid expenses or losses is booked directly into current
P&L.
(25) Deferred corporate tax assets and liabilities
The Company confirms deferred income tax assets and deferred income tax
liabilities by the difference between the taxable base and the book value
(provisional difference). Compensable loss which can compensate future periods’
taxable amount by taxable laws and regulations is confirmed as deferred income
taxable asset. In regard to provisional differences generated from initial
confirmation of assets or liabilities as a result of non-enterprise consolidation
transaction which neither influences accounting profit nor affects taxable amount
(or compensable loss), corresponding deferred income tax assets and deferred
income tax liabilities are not confirmed. On B/S day, deferred income tax assets
and deferred income tax liabilities are calculated by tax rate applicable to the
period of term the assets or liabilities are expected to be collected back.
The confirmation of deferred income tax assets is limited to the taxable amount to
compensate compensable provisional difference, compensable loss and setoff of
tax payment.
107
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Deferred income tax liabilities generated from investment-related provisional
difference of subsidiaries, associates and joint ventures are confirmed as
liabilities, except for when the Group is able to control the return time of
provisional difference and when the provisional difference will not be returned in
foreseen future. Deferred income tax assets generated from investment-related
provisional difference of subsidiaries, associates and joint ventures are confirmed
as deferred income tax assets, when the provisional difference can be transferred
back in the foreseeable future and when possible taxable income which is used to
compensate the provisional difference can be possibly obtained in future.
108
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(25) Deferred corporate tax assets and liabilities (continued)
Deferred income tax assets and deferred income tax liabilities simultaneously
meeting the following conditions are listed in the offset net amount:
Deferred income tax assets and deferred income tax liabilities are related to
the income tax collected to the same tax paying body in the group by the
same taxation collector.
The tax paying body of the Group owns the legal rights to calculated
current period’s income tax assets and current income tax liabilities.
(26) Leases
When all risks and rewards related to assets ownership are actually transferred, the
lease is recognized as financing leasing; other leases are operating ones.
Operating lease expenses are recognized as current expenses on straight line
basis within lease period.
(27) Segment information
Operating segment is determined by the Group's internal organizational structure,
management requirements, internal reporting system; and based on the operating
segment, the reporting segment is determined and the disclosure of information of
the segment is made.
An operating segment is an integral part of the Group which at the same time
meets the following conditions: (1) an integral part in daily activities to generate
revenue, and costs incur; (2) the management of the Group is able to regularly
evaluate the components of the operating results in order to decide to allocate
resources, evaluate their performance; (3) the Group is able to obtain accounting
information about the financial condition, results of operations and cash flows of
the segment. Two or more operating segments have similar economic
characteristics and meet certain conditions, they can be a disclosed for
information as one operating segment.
The Group determines the Group's business as one operating segment to analyze
and evaluate in accordance with the internal organizational structure, regulatory
requirements and internal reporting system.
109
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(28) Important accounting policies change
Ministry of Finance issued Accounting Standard for Business Enterprise No. 39
–Fair Value Measurement, Accounting Standard for Business Enterprise No. 40
–Joint Venture Arrangement, Accounting Standard for Business Enterprise No.
41-Disclosure of Interests in Other Entities and revised Accounting Standard for
Business Enterprise No. 2 Long –term Equity Investments, Accounting Standard
for Business Enterprise No. 9-Employee compensation, Accounting Standard for
Business Enterprise No. 30-Presentation of Financial Statements, Accounting
Standard for Business Enterprise No. 33-Consolidated Financial Statements,
Accounting Standard for Business Enterprise No.37-Presentation of Financial
Instruments and Accounting Standard for Business Enterprise-Basic Standard.
Among, revised Accounting Standard for Business Enterprise No.37-
Presentation of Financial Instruments is carried out since financial statements
2014, revised Accounting Standard for Business Enterprise-Basic Standard is
carried out since published day and other standards are carried out since July 1,
2014.
The standards above are adopted to prepare 2014 financial statements, which
impacts the Group financial statements by the following:
Contents and reasons of Approval procedures Impacted
accounting policies change statements
items name
and amount
Several financial statement items It is approved in the 32nd See the table
are listed according to standards Meeting of the Fifth below
above. In comparison period, Session of the Board, on
financial information has been Oct. 30, 2014
adjusted and list assets liabilities
statements on Jan, 1, 2013
according to application guide
Accounting Standard for
Business Enterprise No.30-
Presentation of financial
statements.
Several disclosure information It is approved in the 32nd No
related to fair value has been Meeting of the Fifth
prepared according to Session of the Board, on
Accounting Standard of Business Oct. 30, 2014
Enterprise No.39-Fair Value
Measurement and related
- 110 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
information in comparison
financial statements do not
adjusted based on this standard.
Several disclosure information It is approved in the 32nd No
related to other body right in Meeting of the Fifth
Group has been prepared Session of the Board, on
according to Accounting Oct. 30, 2014
Standard of Business Enterprise
No.41-Disclosure of Interests in
Other Entities. Except the
disclosure of structure entities
not included in consolidated
financial statements, comparison
financial statements have been
adjusted.
- 111 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(28) Important accounting policies change (continued)
Statement items and amount impacted by the first accounting policies change
above:
Item Dec. 31, 2013 Jan, 1, 2013
Addition/(deduction) Addition/(deduction)
Trading financial assets (121,169,489) (26,009,477)
Financial assets measured at fair
value and its movement listed in
current profit /loss 121,169,489 26,009,477
Other current assets 110,357,163 82,348,033
Taxes and charges payable 110,357,163 82,348,033
Long-term equity investment (27,640,000) (27,640,000)
Financial assets available 27,640,000 27,640,000
Trading financial liabilities (644,404) -
Financial liabilities measured at fair
value and its movement listed in
current profit /loss 644,404 -
Other payables (155,255,304) (41,333,726)
Other non-current flow liabilities (42,916,667) (43,916,667)
Deferred income 198,171,971 85,250,393
Capital reserve (248,889,422) (89,099,161)
Other integrative profit 248,928,049 89,112,134
Difference of transaction of foreign
(38,627) (12,973)
currency statements
Accounting policies change above do not impact the net profit and net assets in
prior years.
- 112 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(29) Important accounting estimate change
With great development of Group business, in order to segment and improve the
Company’s management to payables and fixed assets to response Company’s
financial situation, operating achievements and provide more reliable and correct
accounting information, the Group changes accounting estimates of payable bad
debt preparation, partial fixed assets classification, expected service life and
expected net residual rate from Jan, 1, 2014 based on practical experiences on
payable and fixed assets management in prior years before.
The impact of accounting estimates change to Group 2014 financial statements
are shown as follows:
Accounting estimates Approval Impacted Impacted amount
change procedure statements to Dec. 31, 2014
items and 2014
Great judgment It is approved in Accounts Undercount bad
standard to big single the 25th Meeting receivable debts provision
amount, provided for of the Fifth Other 133,753,620
bad debt separately is Session of the receivables Yuan
changed; credit risk of Board, on Mar. Asset Overcount bad
total bad debt provision 24, 2014 impairment debts provision
accrued in groups is loss 8,661,573 Yuan
defined; at same time,
proportion of accrual of
analysis by ages used
in credit risk groups
(see Note (a)(b)).
Partial fixed assets It is approved in Fixed assets Undercount
classification is defined; the 25th Meeting Operating current
expected service life of of the Fifth costs depreciation
partial fixed assets is Session of the Sales 74,097,327 Yuan
changed; at the same Board, on Mar. expenses
time, estimates method 24, 2014 Management
to residual value rate expenses
are changed to fixed
residual value rate (see
Note (c)) according to
ship steel in
international market.
- 113 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(29) Important accounting estimate change (continued)
Accounting estimates change contents:
(a) Accounts receivable Before change After change
Judgment standard of Judgment standard: Judgment standard:
Big single amount, single amount exceeds top 5 of the third party
provided for bad debt 30,000,000 Yuan accounts receivable
separately
Among account Term overdue % of Term overdue % of
receivable from total provisi provisi
bad debt provision on on
made in groups,
portfolio analysis by 1-6 months - 1-6 months -
ages 7-12 months 10% 7-12 months 1%
1 -2 years 30% 1 -2 years 15%
2-3 years 50% 2-3 years 30%
Above 3 years 100% 3-4 years 50%
4-5 years 75%
Above 5 years 100%
- 114 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting
estimates (continued)
(29) Important accounting
estimate change
(continued)
(b) Other receivables Before change After change
Judgment standard of Judgment standard: Judgment standard: top
other Big single single amount exceeds 5 of the third party
amount, provided for 30,000,000 Yuan accounts receivable
bad debt separately
Among other account No provision made in Judgment standard:
receivable from total groups Group 1: cash deposit
bad debt provision (not including quality
made in groups, cash deposit)
portfolio analysis by Group 2: Employee′s
ages loan and reserve fund
Group 3: Other
accounting receivable
in other nature
Provision foundation
Group 1:Except for that
the objective evidence
proves that the Group
can’t retake the
payment according to
the original articles of
other receivables, the
Group shall not make
bad debt provision for
the cash deposit
(excluding quality
cash deposit)
Group 2:Bad debt
provision shall not be
made of accounts
receivable from
employee’s loan and
reserve fund except
proof shows the
- 115 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Group is not able to
collect them.
Group 3:Debt age
analysis method
- 116 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates
(continued)
(29) Important accounting
estimate change
(continued)
(b) Other receivables Before change After change
(continued)
Credit risks and Not Provision by group In groups, provision
provision of account proportion by debt ages in
receivable from total analysis are shown as
bad debt provision follows
made in groups
(continued)
Term overdue Term
overdue
1-6 months -
7-12 months 1%
1-2 years 15%
2-3 years 30%
3-4 years 50%
4-5 years 75%
Above 5 year
100%
s
(c) Fixed assets Before change After change
Expected Expected net Expected Expected
service life residual service life net
values residual
values
House and building 30 years 0% 20-40 years 0%
Manufacturing 10 years 0% 3-20 years 0%/
equipment Account
accordi
ng to
scrap
steel
price
Office and electrical 5 years 0% 3-5 years 0%
equipment
Transportation 5 years 0% 5 years 0%
tool(except for the
vessel)
Vessel 5-14 years Account 10-25 years 5%/10%
- 117 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
according to
scrap steel
price in the
international
vessel
market
Other equipment 3-5 years 0%/ Account no no
according to
scrap steel
price
- 118 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (continued)
(30) Major accounting estimates and key hypotheses
The Group makes continuous valuation to major accounting estimates and key
judgment adopted. Major accounting estimates and key hypotheses are listed as
follows:
(a) Corporate income tax and deferred income tax
The Company was recognized as a hi-tech enterprise in 2014 and a 15% rate of
corporate income tax is set for the Company according to laws and regulations.
As stipulated by laws and regulations, one qualification for a hi-tech enterprise is
that R&D expenses should not be lower than the designated percentage of the
enterprise’s major operating income, e.g. 3% is required for an enterprise whose
annual sales exceeds 200 million Yuan. When taxation authorities find in the
execution of preferential taxation policies the enterprise fails to meet hi-tech
qualification, they shall remind recognizing authorities to double-check, during
which time the enterprise is suspended from enjoying preferential taxation
policies. Actual expenses of the Company in 2014 on R&D are 695,384,050
Yuan, taking up 3.05% of major operating income of the year. Therefore, the
Company is recognized as a hi-tech and a 15% preferential rate is enjoyed.
Meanwhile, in accordance with related taxation laws and regulations, the
Company added a reduction of R&D expenses totally amounting to 140,225,006
Yuan in the calculation of 2014 corporate tax, which is subject to confirmation by
the taxation authorities. Shall any difference arise, the difference will impact the
corporate tax expenses of the year.
Besides, the Group calculates corporate tax and deferred corporate tax according
to current laws and regulations, having considering applicable regulations on
corporate tax and taxation preference. In normal operating activities, many taxation
events are not finally certain. Therefore the Group has to make significant
judgments while accruing corporate tax. The Group estimates whether it needs to
pay extra tax on expected taxation adjustment items and confirms corresponding
corporate tax liabilities. In case difference occurs between the final confirmation
and initial booking, the difference will exercise influence over the amount of
corporate tax and deferred corporate tax in the duration concerned.
In the valuation of temporary difference, the Group also takes into consideration
the collectability of deferred tax assets. Temporary difference majorly consists of
difference concerning bad debt provision, prepaid expenses not yet approved for
tax deduction, stock impairment reserve and fixed asset depreciation. Recognition
of deferred corporate assets is based on the Group’s estimate or hypothesis that
the deferred corporate assets be returned by means of acquiring sufficient taxable
amount through sustainable operation in the foreseeable future. At the same time,
the Group also takes into consideration the tax rates of deferred tax assets and
deferred income tax liabilities at reversal. Based on historical experience that the
- 119 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
company for many years was honored high-tech enterprise and continuous
investment in R&D items, the Company reasonably estimates in 2015 and beyond
the Company obtains access to high-tech enterprise qualification, so calculation
and confirmation of deferred tax assets and deferred income tax debt is done
according to the preferential tax rate.
- 120 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅱ Major accounting policies and accounting estimates (combined)
(30) Major accounting estimates and key hypotheses (continued)
(a) Corporate income tax and deferred income tax (continued)
The Group has accrued sufficient corporate tax liabilities and deferred corporate tax
based on existing taxation regulations, best current estimate and hypothesis. It is
possible the corporate tax liabilities and deferred corporate tax be adjusted subject
to the possible change of taxation regulations or other related issues.
(b) Building contract
Revenue and cost of the building of large port equipment is recognized by
proportion of completion. The Group makes continuous double-check and revision
over the estimated building contract cost according to cost of the contract actually
incurred and based on historical actual cost of similar product, in order to make
the estimated cost of the building contract close to the actual eventual cost. In
case the actual total cost of the contract differs from the estimated total cost, the
difference will impact the cost confirmed by the Group for the present year.
At the same time, the Group’s management conducts regular impairment tests to
building contracts. In case the expected total cost of the building contract exceeds
total revenue of the contract, expected contract loss provision will be made. The
change of the expected total cost caused by the continuous double check and
revision may influence the book value of the unsettled payment upon completion/
settled payment not completion, as well as the impairment loss in the estimation
change period.
(c) Receivables impairment
The Group’s management continuously watches over the collectability of
receivables to estimate bad debt provision for the receivables, based on actual
analysis (including but not limited to unit debtor’s clearance capability, age of
receivables and future collection etc.). In case anything happens or changes
showing the estimates adopted have changed, estimates will be made and bad
debt provision for the receivables will be made. If the estimates do not match
former estimates, the difference will affect the book value of the receivables and
the impairment loss during the period of estimate change.
- 121 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
II Major accounting policies and accounting estimates (continued)
(30) Major accounting estimates and key hypotheses (continued)
(d) Stock impairment
The Group’s management timely judges the cashable net value of stock to
estimate impairment provision of stock. In case anything happens or changes
showing the stock might not fulfill its value, estimates will be made and bad debt
provision for the stock will be made. If the estimates do not match former
estimates, the difference will affect the book value of the stock and the impairment
loss during the period of estimate change.
(e) Fixed assets service years and net residual value
The management of the Group estimates the expected useful life and estimated
net residual values of fixed assets. The estimate is based on the nature and
features of similar fixed assets by their past actual useful life and residual value.
Such estimates may undergo significant change due to technological innovation
and competition due to action taken by the severe industry cycle; the economic
environment, technological environment, as well as other changes in the
environment in which fixed assets are used may cause significant changes in the
expected way of realization of economic benefits associated with the fixed assets.
(f) Fixed assets and construction in progress impairment
The management of the Group conducts impairment test on fixed assets and
construction in progress showing signs of impairment as of B/S day. Collectable
amount refers to the higher between the net value of the fair value of fixed assets
and construction in progress less disposal expenses and the present value of the
expected future cash flow of the fixed assets and construction in progress. It is
estimated by the best information to acquire to reflect the capital amount (less
disposal cost) generated from sales or disposal of fixed assets or construction in
progress on fair trade basis as of B/S days among informant and willing parties or
cash amount from continuously utilizing the fixed assets or construction in
progress until final disposal. The estimate may be adjusted every time when
impairment test is made. If the re-estimated collectable amount is higher than the
former estimate made by the management of the Group, the Group shall not
reverse formerly accrued impairment loss provision of the fixed assets and
construction in progress.
(g) Accounting estimate of goodwill impairment provision
The Group conducts the impairment test for the goodwill each year. The
- 122 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
collectable amount including the goodwill assets group and portfolio is the current
value of the expected cash flow in the future. The accounting estimate shall be
used for calculation (Note IV (18)).
If the management revises the gross profit rate used in the future cash flow
calculation of the assets group and portfolio and the revised gross profit rate is
lower than the current one, the Group may made the goodwill provision or
increase the impairment provision.
- 123 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
II Major accounting policies and accounting estimates (continued)
(30) Major accounting estimates and key hypotheses (continued)
(g) Accounting estimate of goodwill impairment provision(continued)
If the management revise the pre-tax discount rate used in the cash flow and the
revised pre-tax discount rate is lower than the current one, the Group may make
the goodwill provision or increase the impairment provision.
If the actual gross profit rate or the pre-tax discount rate is higher or lower than the
estimate from the management, the Group can’t return the original goodwill
impairment loss.
III Taxes
Tax types and the ratio applicable to the Group are listed as follows:
(1) VAT
VAT is applicable to the Company’s sales business. Domestic sales output tax
ratio is 17%, export sales output tax ratio is subject to “exemption, compensation,
refund”, refunding ratio is 17%. VAT is applicable to the vessel transport business
revenue with the tax ratio of 11%. VAT is applicable for the equipment rental with
tax ratio of 17%.
The Company’s input tax for purchasing raw materials, partial fixed assets, fuel,
power, transportation fee offsets the output tax. The Company’s VAT payable is
the balance after offset between current period’s input and output taxes.
(2) Business tax
Business tax applied to revenues of the Group from shipping and transportation
with rate of 5%.
Business tax is applicable to the revenues of “construction-transfer” projects with
rate of 3%.
(3) Urban maintenance and construction tax and education surcharge
The Group calculates and pays city maintenance and construction tax and
education surcharge by 7% and 3% of the payment of VAT and business tax
respectively.
- 124 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅲ Taxes (continued)
(4) Corporate income tax
Corporate income tax is calculated and paid in accordance with P.R. China
Corporate Income Tax Law (“Income Tax Law”).
According to the High-tech Enterprise Recognition Management Approaches (Guo
Ke Fa Huo [2008] 172,) and the High-tech Enterprise Recognition Management
Work Guidelines (Guo Ke Fa Huo [2008] 362) and the Notification on Announcing
List of Second Batch of Shanghai Municipality 2011 High-tech Enterprises
Recognition, the Company was recognized as a high-tech enterprise in 2011, and
was awarded the High-tech Enterprise Certificate (certificate number:
GR201431001646). The certificate is valid for 3 years. According to Article 28 of
the Income Tax Law, the Company actually applied a 15% corporate income tax
rate this year (2013: 15%).
Corporate income tax rates enjoyed by the Company and its controlled
subsidiaries:
Registered in Applicable Applicable
tax rate in tax rate in
2014 2013
Shanghai Pudong
The Company New Area 15% 15%
Shanghai Zhenhua Port Machinery Heavy Industry Shanghai
Co., Ltd. Chongming County 25% 25%
Shanghai Zhenhua Heavy Industries Machinery Co., Shanghai
Ltd. Chongming County 25% 25%
Shanghai Zhenhua Port Machinery (Hong Kong) Co.,
Ltd. (note 1) Hong Kong 16.5% 16.5%
Shanghai Pudong
Shanghai Zhenhua Shipping Co. Ltd. New Area 25% 25%
Nantong Zhenhua Heavy Equipment Manufacturing
Co., Ltd. Jiangsu Nantong 25% 25%
Shanghai Zhenhua Heavy Industries Group
(Nantong) Transmission Machinery Co., Ltd.(note
14) Jiangsu Nantong 15% 25%
Shanghai Zhenhua Heavy Industries Group Jiangsu Nantong
(Nantong) Co., Ltd. 25% 25%
Shanghai Zhenhua Heavy Industries Electric Co., Shanghai Pudong
Ltd. New Area 25% 25%
Nantong ZPMC Steel Structure Processing Co., Ltd. Jiangsu Nantong 25% 25%
Jiangyin ZPMC Steel Structure Manufacturing Co.,
Ltd. Jiangsu Jiangyin 25% 25%
Shanghai Zhenhua Heavy Industries Steel Structure Shanghai Pudong
Co., Ltd. New Area 25% 25%
Shanghai Zhenhua Heavy Industries Vessel Shanghai Yangshan
Transport Co., Ltd Bonded Port Area 25% 25%
Shanghai Zhenhua Testing Technology Consulting Shanghai Pudong
Co., Ltd. New Area 25% 25%
Rotterdam, the
ZPMC Netherlands B.V.(note 2) Netherlands 20% n.a.
- 125 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Rotterdam, the
Hotel de Herberg B.V.(note 2) Netherlands 20% n.a.
Los Barrios de
ZPMC Espaa S.L.(note 3) Bureba, Spain 20% n.a.
ZPMC GmbH Hamburg (note 4) Hamburg, Germany 33.76% 33.76%
ZPMC Lanka Company (Private) Limited (note 5) Colombo, SriLanka 28% 28%
ZPMC North Amercia Inc (note 6) State of Delaware,
USA 15% n.a.
ZPMC Korea Co., LTD. (note 7) Busan, South Korea 10% n.a.
ZPMC Engineering Africa (PTY) LTD. (note 8) Natal, South Africa 28% n.a.
ZPMC Engineering (India) Private Limited (note 9) Manharashtra, India 30% n.a.
ZPMC Southeast Asia Holding PTE. LTD.(note 10) Singapore 17% n.a.
ZPMC Engineering (Malaysia) Sdn.Bhd. (note 11) Malaysia 20% n.a.
ZPMC Australia Company ( PTY) LTD. (note 12) The New South
Wales, Australia 30% n.a.
III Taxes (continued)
(4) Corporate income tax (continued)
Registered in Applica Applicabl
ble tax e tax
rate in rate in
2014 2013
Shanghai Zhenhua Port Machinery
General Equipment Co., Ltd (original: Shanghai
China Communications Shanghai Port Pudong New
Machinery Manufacturing Plant Co., Ltd) Area 25% 25%
Shanghai
Shanghai Zhenhua Port Machinery Heavy Pudong New
Industry Co., Ltd Area 25% 25%
Shanghai Zhenhua Heavy Industry Jiangsu
(Group) Zhangjiagang Port Machinery Co., Jingang Port
Ltd. Area, 25% 25%
Jiangsu
Nanjing Ninggao New Channel Co., Ltd. Nanjing 25% 25%
Qidong Marine Company (note 13) Jiangsu
Nantong 15% 15%
Jiangsu Daoda Marine Engineering Co., Jiangsu
Ltd Nantong 25% 25%
Daoda (Holland) Marine Technology Co.,
Ltd (note 2) Holland 20% 20%
Note 1: Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd. is a legal entity
registered in Hong Kong, China. Based on Hong Kong’s taxation
regulations, the company actually fits in a profit tax rate of 16.5% (2012:
16.5%).
- 126 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Note 2: ZPMC Netherlands B.V, Hotel de Herberg B.V. and Daoda (Holland)
Marine Technology Co., Ltd are private limited liability companies
registered in Holland. According to related provisions of the income tax in
Holland, the enterprise revenue tax is collected with the progressive tax
rate in excess of specific amount for the profit of the Company. The tax rate
is 20% for the profit less than 200000 Euro, and 25% for the profit over
200000 Euro. The actual income tax rate is 20% this year.
Note 3: ZPMC Espaa S.L. is limited liability company registered in Spain.
According to related provisions of the income tax in Spain, the enterprise
revenue tax is collected with the progressive tax rate in excess of specific
amount for the profit of the Company. The tax rate is 20% for the profit less
than 200000 Euro, and 25% for the profit over 200000 Euro. The actual
income tax rate is 20% this year.
Note 4: ZPMC GmbH Hamburg is registered in Germany, a limited liability
company; according to Germany’s related provisions of the income tax act,
applicable income tax rate for the year is 32%, and on the basis of the
corresponding income tax amount, 5.5% of solidarity surcharge is imposed;
the actual total income tax rate applicable to 33.76% (33.76%, 2013)
Note 5: ZPMC LANKA COMPANY (PRIVATE) LIMITED is a limited liability
company registered in Sri Lanka; according to the related income tax
provisions of Sri Lanka, the applicable income tax rate is 28%. (28%, 2013)
Note 6: ZPMC North American Inc is a limited liability company registered in USA;
according to the related income tax provisions of USA, the applicable
income tax rate is 15%.
- 127 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
III Taxes (continued)
(4) Corporate income tax (continued)
Note 7: ZPMC Korea Co., LTD. is limited liability company registered in Korea.
According to related provisions of the income tax in Korea, the enterprise
revenue tax is collected with the progressive tax rate in excess of specific
amount for the profit of the Company. The tax rate is 10% for the profit less
than 200 million won, and 20% for the profit over 200 million won. The
actual income tax rate is 10% this year.
Note 8: ZPMC Engineering Africa (PTY) LTD. is a limited liability company
registered in Republic of South Africa; according to the related income tax
provisions of Republic of South Africa, the applicable income tax rate is
28%.
Note 9: ZZPMC Engineering (India) Private Limited is a limited liability company
registered in India; according to the related income tax provisions of India,
the applicable income tax rate is 30%.
Note 10: ZPMC Southeast Asia Holding PTE. LTD. is a limited liability company
registered in Singapore; according to the related income tax provisions of
Singapore, the applicable income tax rate is 17%.
Note 11: ZPMC Engineering (Malaysia) Sdn.Bhd is a limited liability company
registered in Malaysia; according to the related income tax provisions of
Malaysia, the applicable income tax rate is 20%.
Note 12: ZPMC Australia Company (PTY) LTD. is a limited liability company
registered in Australia; according to the related income tax provisions of
Australia, the applicable income tax rate is 30%.
Note 13: Qidong Marine Company is recognized as hi-tech enterprise in October,
2012 and won Hi-tech Enterprise Certificate (No. GR201232001748) with
the valid terms of 3 years. Based on the regulations in Article 28 of Income
Tax Law, the actual applicable enterprise income tax rate is 15% this year
(2013: 15%)
Note 14: Shanghai Zhenhua Heavy Industry Group (Nantong) Drive Machinery is
recognized as hi-tech enterprise in August, 2013 and won Hi-tech
Enterprise Certificate (No. GR201332000207) with the valid terms of 3
years. Based on the communication results with the local tax authorization,
the actual applicable enterprise income tax rate is 15% this year (2013:
25%)
- 128 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements
(1) Monetary capital
Dec. 31, 2014 Dec. 31, 2013
Cash on hand 593,298 495,019
Bank deposit 1,831,618,392 3,002,350,930
Other currency funds 1,381,651,768 512,798,014
In which: total deposit in foreign 280,065,264 330,327,626
countries
3,213,863,458 3,515,643,963
(a) On Dec. 31, 2014, other monetary capital includes:
(i) Restricted deposits amount to 1,346,408,651 Yuan (Dec. 31, 2013: 363,172,156
Yuan), among which, 1,261,718,180 Yuan (Dec. 31, 2013: 283,225,875 Yuan) is
bank time deposit of one year; 84,690,471 Yuan (Dec. 31, 2013: 79,946,281 Yuan)
is the margin deposit for the Group to apply for bank L/C and guarantee letter; and
Foreign exchange clearance capital of 35,243,117 Yuan deposited in the bank
(December 31, 2012: 149,625,858 Yuan).
(b) Cash and cash equivalents recorded in cash flow statements:
Dec. 31, 2014
Monetary capital 3,213,863,458
Less: restricted deposits (i) (1,346,408,651)
Dec. 31, 2014 cash balance 1,867,454,807
Less: Dec. 31, 2013 cash
balance (3,152,471,807)
Net cash decrease (1,285,017,000)
- 129 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(2) Financial assets and debt measured at fair value with its change accounted in
current profit and loss.
Dec. 31, 2014 Dec. 31, 2013
Assets Liabilities Assets Liabilities
Forward foreign exchange contracts
- Fair valuation gains / (losses) 25,735,001 (28,752,000) 121,169,489 (644,404)
On Dec. 31, 2014, in the forward foreign exchange contract established by the Group
with bank but not due:
Total amount of principal in USD for RMB contract is USD 900,000,000 (625,000,000
USD, 2013); agreed exchange rate is 6.1380 to 6.3756(6.1295 to 6.3756, 2013);
contract is due between Feb. 27, 2015 and Dec. 10, 2015 (2013: Feb. 21, 2014 and Apr.
22, 2015)
Closing fair value estimated gains/losses of above forward foreign exchange contracts
are shown in trading bank confirmed amount or the amount based on end-of-year
market exchange rate.
(3) Notes receivable
Dec. 31, 2014 Dec. 31, 2013
Commercial acceptance bills 2,350,000 -
Bank acceptance bills 286,949,440 334,519,241
289,299,440 334,519,241
As of Dec. 31, 2014,the Group had no draft receivable pledged to banks.
Notes receivable the Group has endorsed to any other party but not yet due on Dec.
31, 2014 amounts to:
Terminated Not terminated
Bank acceptance bills 736,843,666 -
Notes receivable the Group have endorsed to any other party but not yet due on Dec.
31, 2014 amounts to 736,843,666 Yuan (Dec. 31, 2013: 326,116,891 Yuan). The
Group has no acceptance bills not due to other parties (Dec 31, 2013: N/A)
- 130 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(4) Interest receivable
Dec. 31, Increase Decrease
2013 report year report year Dec. 31. 2014
Time deposit
interest 5,088,988 104,216,831 (63,650,660) 45,655,159
As of Dec 31, 2014 and 2013, the interest receivable balance is the time deposit
interest not due.
(5) Accounts receivable
Dec. 31, 2014 Dec. 31, 2013
\Accounts receivable 4,475,378,829 4,278,018,396
Less: bad debt provision (858,128,277) (729,115,293)
3,617,250,552 3,548,903,103
The debt age analysis of accounts receivable is as follows:
(a) Aging:
Dec. 31, 2014
One to six months 2,566,020,262
Seven to twelve months 320,780,292
One to two years 746,891,289
Two to three years 184,905,804
Three to four years 137,810,365
Four to Five years 93,290,558
Above Five years 425,680,259
4,475,378,829
Dec. 31, 2013
within one year 3,324,499,186
one to two years 371,402,862
two to three years 211,670,817
above three years 370,445,531
4,278,018,396
- 131 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable (continued)
(b) Accounts receivable listed in type as follows:
Dec. 31, 2014 Dec. 31, 2013
book value balance bad debt provision book value balance bad debt provision
Amount proportion Amount Provi amount amount Proporti
in total sion proporti on of
prop on in accrual
ortion total
Big single amount,
provided for bad
debt separately 107,819,500 2% (107,819,500) 100% 158,184,500 4% (158,184,500) 100%
Total bad debt
provision
accrued in
groups
Credit risk
portfolio
- related party 530,632,817 12% - - 628,967,824 15% - -
- third party 3,686,213,061 83% (601,986,534) 16% 3,453,990,019 80% (536,437,311) 16%
Single amount,
though not
significant,
separate
provision for
bad debt made 150,713,451 3% (148,322,243) 98% 36,876,053 1% (34,493,482) 94%
4,475,378,829 100% (858,128,277) 19% 4,278,018,396 100% (729,115,293) 17%
(c) As of Dec. 31, 2014,Accounts receivable that big single amount, provided for bad
debt separately is as follows:
Provision for Provision
Book balance bad debts proportion Reason
Accounts
107,819,500 (107,819,500) 100% (i)
receivable 1
(i) As of Dec. 31, 2014,Due to a serious funds shortage of the other party, the
Company believes that the receivables are difficult to collect, therefore full amount
prepared for bad debts.
(d) Among account receivable from total bad debt provision made in groups, portfolio
analysis by ages:
Dec. 31, 2014
book value
balance bad debt provision
Amount Amount Proportio
n of
accrual
One to six months 2,348,711,012 - -
- 132 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Seven to twelve months 273,846,369 (2,659,715) 1%
One to two years 372,674,288 (51,856,232) 14%
Two to three years 128,306,367 (38,491,910) 30%
Three to four years 75,898,450 (37,409,225) 49%
Four to five years 61,096,316 (45,889,193) 75%
Above five years 425,680,259 (425,680,259) 100%
3,686,213,061 (601,986,534) 16%
- 133 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable (continued)
(d) Among account receivable from total bad debt provision made in groups, portfolio
analysis by ages(continued):
Dec. 31, 2013
Book value
balance Bad debt provision
Amount Amount Proporti
on of
accrual
Within one year 2,575,305,943 (15,316,076) 1%
One to two years 353,013,426 (102,148,743) 29%
Two to three years 190,309,119 (83,610,961) 44%
Above three years 335,361,531 (335,361,531) 100%
3,453,990,019 (536,437,311) 16%
(e) As of Dec. 31, 2014, major accounts receivable whose single amount not
significant but bad debts provided for:
Book value Bad debt Provision
balance provision proportion Reason
Accounts
50,365,000 (50,365,000) 100% (i)
receivable 1
Accounts
24,476,061 (24,476,061) 100% (ii)
receivable 2
Accounts
19,346,075 (19,346,075) 100% (iii)
receivable 3
Accounts
18,200,475 (18,200,475) 100% (iii)
receivable 4
Accounts
17,183,761 (14,792,553) 86% (iv)
receivable 5
Accounts
10,279,920 (10,279,920) 100% (iii)
receivable 6
Accounts
6,841,945 (6,841,945) 100% (iii)
receivable 7
Accounts
4,020,214 (4,020,214) 100% (iii)
receivable 8
150,713,451 (148,322,243) 98%
- 134 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(i) As of Dec. 31, 2014 as involved in funds shortage of other parties the Company
believes the accounts receivable are difficult to collect, therefore full amount
prepared for bad debts.
(ii) As of Dec. 31, 2014, due to delayed delivery, the Company made bad debt
provision of 24,476,061 Yuan based on the highest fine in the contract.
(iii) As of Dec. 31, 2014 as involved in contract dispute the Company believes the
accounts receivable are difficult to collect, therefore full amount prepared for bad
debts.
(iv) As of Dec. 31, 2014, due to delayed delivery, the Company made bad debt
provision of 14,792,553 Yuan based on the highest fine in the contract.
- 135 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable (continued)
(f) Change of accounts receivable provision bad debt in report period:
Dec.31, 201 Dec. 31,
3 Addition report period Deduction report year 2014
Purchase Accrued Reverse (i) Tra
increasin nsfe
g rred
subsidiari sale
es s
Accounts
receivable
s bad
debt
provision 729,115,293 1,764,800 292,899,738 (165,651,554) - 858,128,277
(i) Reversed bad debt preparation includes: reversed amount impacted by
accounting estimates change of accrued by bad debt preparation is 31,897,934
Yuan. Important receivable or reserved amount are shown as follows:
Reason Former bad debts b Amount of Collection
for return asis and rationality return or mode
or collection
collectio
n
Accounts Vigorous Analysis based on 10,005,000
receivable recovery aging Monetary fund
1
Accounts Vigorous Analysis based on 9,050,000 Monetary fund
receivable recovery aging
2
Accounts Vigorous Analysis based on Monetary fund
receivable recovery aging
3 3,626,115
Accounts Vigorous Analysis based on Monetary fund
receivable recovery aging
4 3,430,000
Accounts Vigorous Analysis based on Monetary fund
receivable recovery aging
5 2,771,682
Accounts Vigorous Analysis based on Monetary fund
receivable recovery aging
6 1,012,576
29,895,373
- 136 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(g) As of Dec. 31, 2014, the accounts receivable summary analysis of top 5 arrears is
shown as following:
Proportion in tot
Bad debt al accounts recei
Amount provision vable
Total accounts
receivables of top
5 941,264,046 (282,353,232) 21%
- 137 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(6)
Other receivables
Dec. 31, 2014 Dec. 31, 2013
Unsettled payment tax
receivable 218,718,216 74,624,008
Export tax rebate 150,221,658 4,604,376
Customs guaranty deposit 69,159,590 9,879,707
Products or field service
temporary loans 59,849,951 82,257,117
Employee’s loans receivable 58,617,676 102,751,964
Bid bond payments 44,281,407 20,684,428
Lease receivables 32,965,403 31,700,229
Payments deposit for third
party receivable 20,326,750 5,436,323
Disposal of assets from
related parties receivable 10,000,000 10,000,000
Deposit receivable 26,500 6,970,500
Receivable from the parent
company’s stock transfer - 672,193,178
Others 82,888,154 82,892,043
747,055,305 1,103,993,873
Less: bad debt provision (27,148,264) (19,652,342)
719,907,041 1,084,341,531
(a) Other receivables debt age analysis
Dec. 31, 2014
One to Six months 510,951,412
Seven to twelve months 132,574,095
One to two years 28,748,240
two to three years 6,668,524
Three to four years 16,182,510
Four to five years 34,007,258
Above five years 17,923,266
747,055,305
Dec. 31, 2013
Within one year 930,838,493
One to two years 48,368,864
Two to three years 6,602,165
Above three years 118,184,351
1,103,993,873
- 138 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(6) Other receivables (continued)
(b) Other receivables listed in type as follows:
Dec. 31, 2014
Book value balance Bad debt provision
Amount Proportion Amount Proportio
in total n in total
Big single amount, provided
for bad debt separately - - - -
Total bad debt provision
accrued in groups
Credit risk portfolio
- Cash deposit (excluding
quality cash deposit) 113,467,497 15% - -
- Employee’s loan and
reverse fund 118,467,627 16% - -
- Others 496,703,490 67% (8,731,573) 2%
Single amount, though not
significant, separate
provision for bad debt made 18,416,691 2% (18,416,691) 100%
747,055,305 100% (27,148,264) 4%
Dec. 31, 2013
Book value balance bad debt provision
Proporti
Proportion on of
Amount of total Amount accrual
Big single amount, provided
for bad debt separately 973,526,495 88% - -
Single amount, though not
significant, separate
provision for bad debt
made 130,467,378 12% (19,652,342) 15%
1,103,993,873 100% (19,652,342) 2%
(c) As of Dec. 31, 2014, the Company did not accrue bad debt provision for other
receivables with big single amount, and provided for bad debt separately
- 139 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(6) Other receivables (continued)
(d) Among other account receivable from total bad debt provision made in groups,
portfolio analysis by ages as follows:
Dec. 31, 2014
book value balance bad debt provision
Amount Amount Proportion of
accrual
One to Six months 376,722,621 - -
Seven to twelve months 107,742,262 (1,077,423) 1%
One to two years 4,218,676 (632,801) 15%
Two to three years 180,855 (54,256) 30%
Three to four years 521,922 (260,961) 50%
Four to five years 2,444,088 (1,833,066) 75%
Above five years 4,873,066 (4,873,066) 100%
496,703,490 (8,731,573) 2%
(e)
As of Dec. 31, 2014, other receivables with single amount, though not significant,
separate provision for bad debt made:
book value bad debt Proportion of
balance provision accrual Reason
Other
receivables 1 5,540,286 (5,540,286) 100% (i)
Other
receivables 2 4,214,642 (4,214,642) 100% (ii)
Other
receivables 3 3,037,042 (3,037,042) 100% (i)
Other
receivables 4 1,779,872 (1,779,872) 100% (i)
Other
receivables 5 1,692,765 (1,692,765) 100% (i)
Others 2,152,084 (2,152,084) 100%
18,416,691 (18,416,691) 100%
(i) As of Dec. 31, 2014, due to project contracts cancellation, the other parties
did not return the money; the Company believes the other receivables are
difficult to collect, therefore fully provided for bad debts.
(ii) As of Dec. 31, 2013, due to bankruptcy of the debtor, the Company believes
the other receivable is difficult to collect, therefore fully provided for bad
debts.
- 140 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(6) Other receivables (continued)
(f) As of Dec. 31, 2014, other account receivable summary analysis of top 5 arrear is
shown as following:
Nature Balance Age Bad debt
Proportion provision
in other
receivable
s
Customs
Company guarantee 69,159,59 Within one y
A deposit 0 ear 9% -
Leasing
Company payment 32,965,40 Within one
B receivable 3 year 4% (264,018)
Company stock right 12,444,08 Within one 2%
C transfer and 8 year and (1,933,066)
equipment four to five
sales years
receivable
Fixed asset
disposal
Company payment 10,000,00 One to two
D receivable 0 years 1% -
Company Unit borrower Within one
E receivable 8,000,000 year 1% -
132,569,08
1 17% (2,197,084)
(g) As of Dec. 31, 2014, the company has no government subsidies confirmed as
receivables. (Dec. 31, 2013: N/A).
(7) Advances
(a) Advances aging provision:
Dec.31, 2014 Dec.31, 2013
proportion proportion in
amount in total amount total
within one
year 1,089,915,302 87% 1,172,845,812 91%
one to two 68,499,834 5% 81,724,316 6%
- 141 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
years
two to
three years 70,546,682 6% 20,102,693 2%
above
three years 22,656,010 2% 10,618,430 1%
1,251,617,828 100% 1,285,291,251 100%
On Dec. 31, 2014, advances older than one year is 161,702,26 Yuan (Dec. 31,
2013: 112,445,439 Yuan), mainly prepayment for the processing payment of the
vessel used in offshore heavy equipment products imported parts and steel
purchase, not yet settled because purchased product not yet completed, steel
purchased not delivered.
(b) As of Dec. 31, 2014, the advances summary analysis of top 5 arrear is shown as
following:
Amount Proportion in total
Total advances balance of top 5 534,488,432 43%
- 142 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(8) Inventories
(a) Inventories classified as follows:
Dec. 31, 2014 Dec. 31, 2013
book value Inventories Book value book value Inventories Book value
balance impairment balance impairment
provision provision
Raw
materials
and
purchase
d parts 3,578,786,315 (373,339,801) 3,205,446,514 3,329,093,383 (314,212,402) 3,014,880,981
Semi
products 1,217,753,009 (130,810,331) 1,086,942,678 3,179,132,774 (179,323,578) 2,999,809,196
Inventorie
s goods 11,153,985 (11,153,985) - 11,153,985 (10,153,985) 1,000,000
4,807,693,309 (515,304,117) 4,292,389,192 6,519,380,142 (503,689,965) 6,015,690,177
Semi products of the Group are marine heavy equipment and semi-products spare
parts in building but order not placed.
The Group management approved the resolution on Dec 30, 2014 that the purpose of a
large floating crane vessel for sales is changed as internal using. Therefore, the
group has transferred the 1,745,748,965 Yuan semi-product to the products in
process. (See Note IV (16)(a))。
(b) Inventories impairment provision:
Dec.31, 2013 accrued report year deduction report year Dec.31, 2014
Provision Purchase
increasin Othe
g rs
subsidiari Return or r
es esell
Raw materials
and
purchased
parts 314,212,402 54,217,364 4,910,035 - - 373,339,801
Semi products 179,323,578 51,035,555 - (99,548,802) - 130,810,331
Inventories
goods 10,153,985 1,000,000 - - - 11,153,985
503,689,965 106,252,919 4,910,035 (99,548,802) - 515,304,117
(c) Inventories impairment provision:
Inventory impairment provision based on Reason for return of
impairment provision in report
year
the difference between the realizable No
value of raw material and purchased parts
raw materials and due to lower product sales price and the
purchased parts book value
- 143 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Semi products
the difference between the realizable value Applicable to the net realizable
of semi products and the book value value is higher than the cost of
production
Inventories goods the difference between the realizable value
of Inventories goods and the book value No
- 144 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(8) Inventories (continued)
(d) Loan expenses Capitalization:
As of Dec. 31, 2014, among the balance of the semi products of marine heavy
equipment for which orders have not been placed, loan expenses capitalization
accumulated(Dec. 31,2013: 257,257,501 Yuan among which, in the year 2013 loan
expenses capitalization amount was 25,116,779 Yuan).
(9) Construction completed account not closed/Account closed construction not
completed
(a)
Construction completed account not closed
Dec. 31, 2014 Dec. 31, 2013
Accumulated cost incurred 35,448,627,163 29,099,060,088
Add: Accumulated margin
confirmed 2,831,462,323 967,952,533
Less: Accumulated settled
payment (30,072,742,242) (23,194,540,452)
Accumulated confirmed
expected contract loss (292,239,376) (106,264,024)
7,915,107,868 6,766,208,145
(b)
Account closed construction not completed
Dec. 31, 2014 Dec. 31, 2013
Accumulated settled payment 14,402,951,125 11,548,874,059
Less: Accumulated confirmed
margin (1,103,905,727) (787,673,553)
Accumulated cost incurred (10,600,431,627) (7,628,070,698)
Add: Accumulated confirmed
expected contract loss 20,778,569 10,089,130
2,719,392,340 3,143,218,938
(c) Expected contract losses
Purchase Addition Deduction
increasing report report Dec. 31, 201
Dec.31, 2013 subsidiari period year 4
- 145 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
es
Constructi
on
completed
account 274,730,7 (156,817,0
not closed 106,264,024 68,061,658 80 86) 292,239,376
Account
closed
constructi
on not 50,049,08 (133,078,1
completed 10,089,130 93,718,453 6 00) 20,778,569
161,780,11 324,779,8 (289,895,1
116,353,154 1 66 86) 313,017,945
- 146 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(9) Construction completed account not closed/Account closed construction not
completed (continued)
(d)
As of Dec. 31, 2014, amount of contracts still in construction is about
48,400,598,010 Yuan(Dec. 31, 2013: 45,269,305,907 Yuan).
Probable fines in case of delay in delivery as contracted:
Dec.31, 2014 Dec.31, 2013
bank issued valid guaranty letter 15,999,993,998 18,636,733,746
2,272,099,932 1,493,449,228
bank not issued guaranty letter 18,272,093,930 20,130,182,974
(10) Other current assets
Dec.31, 2014 Dec.31, 2013
VAT to be deducted (Note IV (26)) 274,503,870 110,357,163
Available-for-sale financial assets
(Notes IV (11))
-
Bank short-term financing
products 5,686,257,756 4,202,678,325
5,960,761,626 4,313,035,488
Bank short-term financial products means that the Company purchased from a
bank with low-risk. Since starting from December 31, 2014, these short-term
financial products are due within the next 12 months, so they are listed as other
current assets in the B/S.
The fair value of the bank short-term financial products is based on the financial
product principal plus expected income as of the balance sheet date. On Dec. 31,
2014, the Company confirmed 265,217,756 Yuan (Dec.31, 2013:139,441,088
Yuan) revenue from the short-term bank financing products, and included in the
other integrated profit (NotesⅣ (37)).
As of Dec. 31, 2014, short-term bank financing products 3,861,040,000 Yuan
(Dec.31, 2013: 3,974,237,236 Yuan) as a pledge to the bank as the
3,870,000,000 Yuan (Dec.31, 2013: 3,980,000,000 Yuan) of short-term borrowing
(NotesⅣ (21)).
- 147 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(11) Available-for-sale financial assets
Dec.31, 2014 Dec.31, 2013
Measured at fair value
-
Available-for-sale equity
instruments (a).(b) 433,180,453 172,770,000
- Bank short-term financing
products(b) (Notes Ⅳ
(10)) 5,686,257,756 4,202,678,325
6,119,438,209 4,375,448,325
Measured as cost
- Available-for-sale equity
instruments (c). 52,640,000 57,640,000
(30,000,000) (30,000,000)
Less: impairment reserve (d) 6,142,078,209 4,403,088,325
Less: assets available
for sale listed in other
current assets (Notes
Ⅳ (10)) (5,686,257,756) (4,202,678,325)
455,820,453 200,410,000
(a) The available-for-sales equity instruments measured at fair value include:
(i) The Group holds 7.93% shares of stock of Jiangxi Huawu Brake Co., Ltd
(Dec 31, 2013: 12.71%) and the initial investment cost is 19,400,000 Yuan.
The available-for-sales equity instruments measured at fair value is
confirmed by the closing price of the last trading day of Shenzhen Stock
Exchange. As of Dec 31, 2014, the Company has confirmed the profit of
147,830,053 Yuan available-for-sales equity instruments, accounted in other
comprehensive profit (Note IV (37)).
(ii) The Group holds 2.16% shares of stock of Qingdao Port International Co.,
Ltd and the initial investment cost is 308,515,588 Yuan.
The available-for-sales equity instruments measured at fair value is
confirmed by the closing price of the last trading day of Hong Kong Stock
Exchange. As of Dec 31, 2014, the Company has confirmed loss of
35,267,766 Yuan for available-for-sales equity instruments, accounted in
other comprehensive profit (Note IV(37)).
- 148 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(11) Available-for-sale financial assets (continued)
(b) The available for sale financial assets analysis measured at fair value as
follows:
Dec.31, 2014 Dec.31, 2013
Available-for-sale equity
instruments
- Fair value 433,180,453 172,770,000
- Cost 320,618,166 19,400,000
- Accumulated in Other
comprehensive income 112,562,287 153,370,000
Bank short-term financing
products
- Fair value 5,686,257,756 4,202,678,325
- Cost 5,421,040,000 4,063,237,236
- Accumulated in Other
comprehensive income 265,217,756 139,441,089
Total
- Fair value 6,119,438,209 4,375,448,325
- Cost 5,741,658,166 4,082,637,236
- Accumulated in Other
comprehensive income 377,780,043 292,811,089
- 149 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the
consolidated financial statements
(continued)
(11) Available-for-sale financial assets (continued)
(c) Analysis on financial assets available for sales and
measured by costs:
Dec. 31, 2013 Addition report Deduction report Dec. 31, 2014 Invested Current year
period year Company cash dividend
shareholding
ratio
Available for sale equity instruments-costs
21st Century Science and Technology
Investment Co., Ltd 30,000,000 - - 30,000,000 8.96% -
Nantong Zhenhua Hongsheng Heavy Forging
Co., Ltd (i) 10,000,000 - (10,000,000) - - -
CCCC Highway Bridges National
Engineering Research Centre Co., Ltd (ii) 8,000,000 5,000,000 - 13,000,000 10% -
CCCC Dredging Technology Equipment State
Engineering Research Center Co., Ltd 6,400,000 - - 6,400,000 8% -
ongchang Lifting Equipment Co., Ltd. of
Shanghai Zhenhua Port Machinery (Group) 800,000 - - 800,000 10% 127,265
Shenyang Elevator Co., Ltd of Shanghai
Zhenhua Port Machinery (Group) 1,500,000 - - 1,500,000 10% 418,595
Ningbo Transmission Machinery Co., Ltd of
Shanghai Zhenhua Port Machinery (Group) 740,000 - - 740,000 7.40% 557,600
Less than 0.0
Shenyin Wanguo Corporate Shares 200,000 - - 200,000 1% -
57,640,000 5,000,000 (10,000,000) 52,640,000 1,103,460
- 150 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Available for sale equity instruments-
impairment reserve
st
21 Century Science and Technology
Investment Co., Ltd (30,000,000) - - (30,000,000)
27,640,000 5,000,000 (10,000,000) 22,640,000
- 151 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the
consolidated financial statements
(continued)
(11) Available-for-sale financial assets (continued)
(c) Available-for-sale financial assets—measured at cost
(continued)
(i) The Company has disposed the long-term stock investment of Nantong Zhenhua Huasheng Heavy Industry with amount of
10,000,000 Yuan this year.
(ii) The Company has increased the long-term stock investment of CCCC Dredging Technology Equipment State Engineering Research
Center Co., Ltd with amount of 5,000,000 Yuan this year, the holding proportion remains.
The available-for-sale financial assets measured in cost are the non-listed stock investment held by the Group. There is no active
market quotation for the investment. The change range of the reasonable count of fair value is higher. The probability of the fair value
estimate can’t be reasonably confirmed, so the fair value can’t be reliably measured. The Group can’t have the plan to dispose the
investment.
- 152 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(11) Available-for-sale financial assets (continued)
(d) The information analysis of available-for-sale financial assets impairment provision
as follows:
Dec 31, 2013 30,000,000
This year provision -
In which: other comprehensive gains input -
This year reduction -
In which: subsequent fair value return -
Dec 31, 2014 30,000,000
(12) Long-term receivables
Dec. 31, 2014 Dec. 31, 2013
Nanjing High Speed
“Construction - transfer” item
receivable
- Principal 5,076,938,969 2,191,444,746
- Interest receivable 262,231,179 26,174,547
5,339,170,148 2,217,619,293
The Group in 2013 undertook the Nanjing to Gaochun New Channel project and
Nanjing-Gaochun Inter-city Rail Transit Phase II (cross-lake section) project
(referred to as "Nanjing High Speed 'Construction - transfer' Item"); total
investment of the project 5,918,800,000 Yuan, the construction of Item for a period
of 2 years, repurchase period is 2.5 years, return on investment 3 - 5 year, bank
loans surface 30% over benchmark interest rate. The Group established a wholly
owned subsidiary Nanjing Ninggao New Channel Construction Co., Ltd.
responsible for the financing and construction management of the said project. By
Dec 31, 2014, the Group predicted that the project will be completed in the second
half year in 2015 and it is predicted to collect the payment of the project in 2016.
As of Dec. 31, 2014, the long-term receivables refer to the investment amount as
principal the Group invested in Nanjing High Speed "Construction - Transfer" Item,
interest receivable subject to confirmation of financing return according to the
contract.
As of Dec. 31, 2014, the long-term receivable is pledged in full amount to the
bank as the guarantee of short-term loan of 500,000,000 Yuan and (Dec 31,
- 153 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
2013: N/A) and long-term loan of 1,687,000,000 Yuan (Dec 31, 2013: N/A) (Note
IV(21), IV(31)).
- 154 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment
Dec.31, 2014 Dec.31, 2013
joint ventures (a) 169,883,948 145,286,585
associates (b) 755,466,135 207,752,345
925,350,083 353,038,930
There are no limits to value realization of the Group’s long term equity
investment.
- 155 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment (continued)
(a) Joint ventures
Report year movement
Net gains/losses
adjusted on
equity basis mpairment pr
Dec.31, 2013Addition of investment Dec.31, 2014 ovision
Jiangsu LongYuan Zhenhua Marine
Engineering Co., Ltd. 145,203,385 - 17,719,256 162,922,641 -
ZPMC Mediterranean Liman Makinalari Ticaret
Anonim Sirketi 83,200 313,902 (69,463) 327,639 -
Zhenhua Marine Energy (Hong Kong) Co., Ltd (i) - 18,743,172 (12,109,504) 6,633,668 -
145,286,585 19,057,074 5,540,289 169,883,948 -
(i) As of May 5, 2014, the wholly-owned subsidiary Shanghai Zhenhua Heavy Industry Vessel Transport Co., Ltd and its
partner jointly invested to establish Zhenhua Marine Energy (Hong Kong) Co., Ltd. The registration capital is
5,969,998 USD and Shanghai Zhenhua Heavy Industry Vessel Transport Co., Ltd invested 3,044,699 USD with
holding proportion of 51%. The company business range is vessel transport. Based on the regulations of the
shareholder agreement, the significant issue shall be agreed by at least 75% shareholders by voting. Therefore,
Shanghai Zhenhua Heavy Industry Vessel Transport Co., Ltd doesn’t have the control rights, but jointly controlling
this company with the partners.
- 156 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment (continued)
(b) Associates
Report year movement
Net gains/losses adjusted on
equity basis Releasing cash div Dec.31, 2014 mpairment pro
Dec.31, 2013Addition of investment idend or profit vision
CCCC Marine Engineering Vessel Technology
Research Centre Co., Ltd 15,000,000 - 79,243 - 15,079,243 -
Shanghai Zhenhua Heavy Industries (Group)
Changzhou Paint Co., Ltd. 14,872,979 - 959,962 (1,483,334) 14,349,607 -
CCCC Estate Yixing Co., Ltd. 177,879,366 - (3,192,556) - 174,686,810 -
CCCC Financing Rental Co., Ltd(i) - 540,000,000 11,350,475 - 551,350,475 -
207,752,345 540,000,000 9,197,124 (1,483,334) 755,466,135 -
(i) On May 8, 2014, the Company invested to participate in establishment of CCCC Financing Rental Co., Ltd. The registration
capital is 1,800,000,000 Yuan. The Company invested 540,000,000 Yuan with holding proportion of 30%. The business of
the company is financing rental.
- 157 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(14) Real estate as investment
Dec.31, 2013 Depreciation and Dec. 31, 2014
amortization report
period
Total purchase value 469,885,167 - 469,885,167
House and building 260,039,373 - 260,039,373
Land use rights 209,845,794 - 209,845,794
Total accumulative
depreciation, amortization
(80,892,901) (14,110,397) (95,003,298)
House and building (46,703,985) (8,785,732) (55,489,717)
Land use rights (34,188,916) (5,324,665) (39,513,581)
Total net book value
388,992,266 (14,110,397) 374,881,869
House and building 213,335,388 (8,785,732) 204,549,656
Land use rights 175,656,878 (5,324,665) 170,332,213
Total depreciation and amortization amount of investment real estate in 2014
amounts to 8,785,732 Yuan and 5,324,665 Yuan included in other operating
expenses (2013: 8,094,509 Yuan and 5,324,665 Yuan).
- 158 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(15) Fixed Assets
Reclassification Accrued report Disposal report Disposal of subsidia
Dec. (Note II(29)(c)) Transfer from Addition report year year ries transferred out
31, Construction in year
2013 progress Dec. 31, 2014
Reclassification
Total purchase
value 22,000,590,079 - 888,469,450 31,759,801 - (145,736,452) 1,442,097,907 24,217,180,785
House and House and building
building 9,498,943,165 - 785,800,606 2,338,983 - (81,740,000) 1,050,139,975 11,255,482,729
Manufacturin Mechanical
g equipment equipment 4,918,020,953 1,372,735,098 38,657,969 - - (44,860,464) 376,760,228 6,661,313,784
Office Office and electrical
equipment equipment 150,064,171 29,533,408 7,590,497 20,350,507 - (2,658,279) 13,539,994 218,420,298
Transportatio Transportation tool
n facilities (except for vessel) 6,775,798,976 (6,477,503,445) 1,947,533 9,070,311 - (16,477,709) 1,657,710 294,493,376
Other -
equipment 657,762,814 (657,762,814) - - - - - -
Vessel - 5,732,997,753 54,472,845 - - - - 5,787,470,598
Total
accumulative
depreciation (7,920,722,970) - - - (1,113,264,240) 60,206,756 (261,596,824) (9,235,377,278)
House and House and building
building (1,878,765,755) - - - (320,300,935) 1,016,171 (145,533,488) (2,343,584,007)
Manufacturin Mechanical
g equipment equipment (2,425,572,420) (1,103,326,062) - - (502,996,153) 40,091,570 (107,258,439) (4,099,061,504)
Office Office and electrical
equipment equipment (122,096,091) (1,099,079) - - (17,520,316) 2,627,731 (7,455,639) (145,543,394)
Transportatio Transportation tool
n facilities (except for vessel) (3,112,109,474) 2,899,768,800 - - (15,903,372) 16,471,284 (1,349,258) (213,122,020)
Other -
equipment (382,179,230) 382,179,230 - - - - - -
- 159 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Vessel - (2,177,522,889) - - (256,543,464) - - (2,434,066,353)
Total net book
value
House and
building 14,079,867,109 - 888,469,450 31,759,801 (1,113,264,240) (85,529,696) 1,180,501,083 14,981,803,507
Manufacturin House and building
g equipment 7,620,177,410 - 785,800,606 2,338,983 (320,300,935) (80,723,829) 904,606,487 8,911,898,722
Office Mechanical
equipment equipment 2,492,448,533 269,409,036 38,657,969 - (502,996,153) (4,768,894) 269,501,789 2,562,252,280
Transportatio Office and electrical
n facilities equipment 27,968,080 28,434,329 7,590,497 20,350,507 (17,520,316) (30,548) 6,084,355 72,876,904
Other Transportation tool
equipment (except for vessel) 3,663,689,502 (3,577,734,645) 1,947,533 9,070,311 (15,903,372) (6,425) 308,452 81,371,356
Total net book -
value 275,583,584 (275,583,584) - - - - - -
Vessel - 3,555,474,864 54,472,845 - (256,543,464) - - 3,353,404,245
- 160 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(15) Fixed Assets (continued)
As of Dec. 31, 2014, the reclassification of fixed assets in the Group is caused by change of group accounting estimate (Note II(29)(c)).
On Dec. 31, 2014, facilities with a purchase value of 2,138,858,322 Yuan (Dec. 31, 2013: 1,608,661,011 Yuan) have been fully
depreciated but still in service.
In 2014, depreciation booked into operating costs, selling expenses and general expenses is respectively 1,021,867,606 Yuan, 822,731
Yuan (Note Ⅳ [42]) and 90,573,903 Yuan (Note Ⅳ(43)) (2013: 1,063,426,861 Yuan, 4,396,487 Yuan and 89,667,665 Yuan).
As of Dec. 31, 2014, real estate property right for houses and buildings with net book value around 3,963,077,361Yuan (purchase value
4,578,015,382Yuan) (Dec. 31, 2013 net book value 3,831,712,492 Yuan, purchase value 4,338,030,054Yuan) are in the process of
approval and therefore certificates are not granted; the management of the Company believes that the house and building with unattained
certificate shall not impose great impact on the major operation of the Group.
On Dec. 31, 2014, the book value of the fixed asset is 259,731,664 Yuan (original price 314,742,493) and the house and building (Dec. 31,
2013: N/A) as the guarantee of 130,000,000 Yuan long-term loan(Dec. 31, 2013: N/A)(Note IV(31)).
(16) Construction in progress
Dec. 31, 2014
Dec. 31, 2013
book value impairmen book value book value impairment book value
balance t provision balance provision
- 161 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Nantong base
infrastructure
construction 22,012,970 - 22,012,970 740,502,262 - 740,502,262
Changxing base
infrastructure
construction 361,078,310 - 361,078,310 392,860,040 - 392,860,040
Base heavy
machinery and
engineering
equipment in
construction 2,418,886,547 - 2,418,886,547 341,561,284 - 341,561,284
Office buildings and
ancillary facilities 355,140 - 355,140 - - -
Nanhui base
infrastructure
construction 3,157,532 - 3,157,532 3,082,850 - 3,082,850
1,478,006,43
2,805,490,499 - 2,805,490,499 1,478,006,436 - 6
- 162 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(16) Construction in progress (continued)
(a) Movement of significant projects in progress
Project Name budget Dec. 31, 2013 Addition report Other addition Transfer into fixed Dec. 31, 2014 Investment Progress Cumulative Including: Loan Capital
period report period assets report year ratio (Note 2) amount of loan amount of loan capitalizati origin
(note 1) against capitalization capitalization on rate
budget report yea report
year
Self funding
Nantong base infrastructure and bank
construction 6,465,698,000 740,502,262 54,146,487 - (772,635,779) 22,012,970 99% 99% - 40,838,784 5.76% loans
Changxing base infrastructu funding and
construction 8,645,540,000 392,860,040 - - (31,781,730) 361,078,310 80% 80% 23,531,836 - - bank loans
Base heavy machinery an
engineering equipment in funding and
construction 2,441,825,053 341,561,284 411,170,975 1,745,748,965 (79,594,677) 2,418,886,547 95% 95% 101,148,165 - - bank loans
Office buildings and ancillar funding and
facilities 5,000,000 - 4,812,404 - (4,457,264) 355,140 100% 100% - - - bank loans
Nanhui base infrastructure
construction funding and
504,500,000 3,082,850 74,682 - - 3,157,532 90% 90% - - - bank loans
1,478,006,436 470,204,548 1,745,748,965 (888,469,450) 2,805,490,499 124,680,001 40,838,784
Note 1: other addition this year is that a large floating crane vessel for sales is changed as internal usage according to the resolution of the management of the
Company.
Note 2: The progress of the project is estimated by budget and accumulated inputs.
- 163 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(17) Intangible Assets
Land use Software Patented
rights using cost Technologi
es Total
Total purchase
value
Dec. 31, 2013 3,381,216,290 34,809,781 65,201,810 3,481,227,881
Addition report
period
Purchase - 639,509 - 639,509
Purchase of
increasing
Subsidiaries 337,850,037 2,727,455 - 340,577,492
3,719,066,327 38,176,745 65,201,810 3,822,444,882
Dec. 31, 2014
Accumulated
amortization
Dec. 31, 2013 (269,009,919) (28,361,183) (24,578,803) (321,949,905)
Addition report
period
Provision (75,501,609) (2,866,305) (6,520,181) (84,888,095)
Purchase of
increasing
Subsidiaries (32,272,224) (570,962) - (32,843,186)
Dec. 31, 2014 (376,783,752) (31,798,450) (31,098,984) (439,681,186)
Book value
Dec. 31, 2014 3,342,282,575 6,378,295 34,102,826 3,382,763,696
Dec. 31, 2013 3,112,206,371 6,448,598 40,623,007 3,159,277,976
In 2014, the Group totally expended 759,691,386 Yuan on R&D (2013:
696,452,611 Yuan). The expenses are not capitalized. Above mentioned intangible
assets do not include any expenditure on R&D.
On Dec. 31, 2014, the book value of intangible assets is 278,828,506 Yuan
(original price: 313,628,134 Yuan) land use rights (Dec. 31, 2013: N/A) as the
guarantee of long-term loan of 130,000,000 Yuan (Dec. 31, 2013: N/A)(Note IV(31))
As of year 2013 and Dec. 31, 2014, the Group has obtained land use right certificates
for all of its land rights.
- 164 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(18) Goodwill
Dec. 31,2013 Addition Dec. 31, 2014
report Deduction
period report year
Goodwill -
Qidong Marine Company - 149,212,956 - 149,212,956
The goodwill added in report period is caused by purchase shares of Qidong
Marine Company (NoteⅤ(1))
As of Dec 31, 2014, the Group did not accrue the goodwill impairment
preparation. In impairment testing, the book value of the goodwill is allocated to
asset group benefited from synergistic effect of expected enterprise consolidation.
The collectable amount in assets group is measured based on five-year period
approved by management and in cash flow forecast method. Cash flow over 5-
year period is calculated based on estimated growth rate.
Key hypotheses of future cash flow discount method:
Growth rate 3%-12.8%
Gross profit rate 11.6%-12%
Discount rate 10%
The weighted average growth rate adopted by management is in accordance with
the forecast data in industrial report and does not exceeding the industrial long-
term average growth rate. The management determines gross rate according to
forecast to historical experience and market development and adopts pre tax rate
which can reflect related assets group with specific risks as discount rate. Above
hypothesis is used to analyze collectable amount of assets group.
- 165 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(19) Deferred corporate tax assets and liabilities
(a) Deferred corporate tax assets before offset
Dec. 31, 2014 Dec. 31, 2013
Compensable Compensable
provisional provisional Deferred
difference and Deferred difference and corporate tax
compensated corporate tax compensated assets
loss assets loss
Assets impairment
provision 1,573,979,904 236,096,986 1,317,085,504 197,562,826
Expected liabilities 191,656,260 28,748,439 175,426,592 26,313,989
Salaries and
wages unpaid 272,277,266 40,841,590 229,281,742 34,392,261
Unpaid interest 578,367,210 86,755,082 412,168,548 61,825,282
Financial debt fair
value change
measure at fair
value with its
change
accounted in
current profit and
loss 28,752,000 4,312,800 644,404 96,661
Movement of fair
value of
financial
liabilities 35,267,767 5,819,181 - -
Compensable loss 454,729,347 68,209,402 918,872,524 137,830,875
3,135,029,754 470,783,480 3,053,479,314 458,021,894
In which:
Amount returned
within 1
year( including 1
year) 2,804,480,498 420,672,075 2,837,336,348 433,675,160
Amount returned
after 1 year
330,549,256 50,111,405 216,142,966 24,346,734
3,135,029,754 470,783,480 3,053,479,314 458,021,894
- 166 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(19) Deferred corporate tax assets and liabilities (continued)
(b) Deferred corporate tax liabilities before offset
Dec. 31, 2014 Dec. 31, 2013
Tax payable Deferred Tax payable Deferred
provisional corporate tax provisional corporate tax
difference liabilities difference liabilities
Fixed assets
depreciation 244,695,939 40,374,830 137,651,126 22,712,436
Financial assets fair
value change
measure at fair
value with its
change
accounted in
current profit
and loss 25,735,001 3,860,250 121,169,489 18,381,989
Financial assets fair
value change
available for
sale 413,047,808 61,957,171 292,811,089 43,921,663
Asset evaluation
increase
generated by
the enterprise
consolidation
under different
control 188,275,408 28,241,309 - -
871,754,156 134,433,560 551,631,704 85,016,088
In which:
Amount returned
within 1
year( including 1
year) 442,090,589 66,313,588 151,416,240 22,712,436
Amount returned after
1 year 429,663,567 68,119,972 400,215,464 62,303,652
871,754,156 134,433,560 551,631,704 85,016,088
(c) Compensable loss of deferred corporate tax assets the Group not confirmed:
Dec. 31, 2014
Dec. 31, 2013
Compensable loss 1,050,720,191 846,984,449
- 167 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(19) Deferred corporate tax assets and liabilities (continued)
(d) Compensable loss of deferred corporate tax assets the Group not confirmed will
be due in the following year:
Dec. 31, 2014 Dec. 31, 2013
2014 - 215,390,423
2015 27,980,847 376,491,070
2016 136,625,528 26,809,700
2017 279,163,521 170,984,177
2018 263,474,446 57,309,079
2019 343,475,849 -
1,050,720,191 846,984,449
(e) Mutual offset amount of deferred corporate tax assets and deferred corporate tax
liabilities:
Dec. 31, 2014 Dec. 31, 2013
Deferred corporate tax
assets 71,636,602 60,031,430
Deferred corporate tax
liabilities 71,636,602 60,031,430
Net value of deferred corporate tax assets and deferred corporate tax liabilities
after offset:
Dec. 31, 2014 Dec. 31, 2013
Deferred Temporary Deferred Temporary
corporate tax difference of corporate tax difference of
assets or compensable assets or compensable
liabilities net amount after liabilities net amount after
value offset or taxes value offset or taxes
payable payable
Deferred
corporate tax
assets 399,146,878 2,660,979,187 397,990,464 2,653,269,781
Deferred
corporate tax
liabilities 62,796,958 397,703,580 24,984,658 151,422,170
- 168 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(20) Assets impairment provision
Dec. 31, 2013 Addition report period Deduction report year Dec. 31, 2014
Disposal of Accrued Reverse transferred
subsidiaries sales
transferred out
Bad debt provision 748,767,635 3,990,540 300,911,235 (168,392,869) - 885,276,541
Including: Accounts
receivable 729,115,293 1,764,800 292,899,738 (165,651,554) - 858,128,277
Other receivable 19,652,342 2,225,740 8,011,497 (2,741,315) - 27,148,264
Expected contract loss 116,353,154 161,780,111 324,779,866 - (289,895,186) 313,017,945
Inventories impairment
provision 503,689,965 4,910,035 106,252,919 (15,109,309) (84,439,493) 515,304,117
Financial assets
impairment
provision available
for sale 30,000,000 - - - - 30,000,000
1,398,810,754 170,680,686 731,944,020 (183,502,178) (374,334,679) 1,743,598,603
(21) Short term loans
Dec. 31, 2014 Dec. 31, 2013
Pledge loans
- RMB loans (a) 4,370,000,000 3,980,000,000
Guaranteed loans
- USD loans (b) 2,227,316,000 1,975,395,600
- RMB loans (c) 500,000,000 500,000,000
Credit loans
- USD loans 8,303,525,245 7,608,469,404
-RMB loans (a) 5,214,500,000 600,000,000
- Euro loans 43,498,520 -
20,658,839,765 14,663,865,004
(a) As of Dec. 31, 2014, bank pledge loans 3,870,000,000 Yuan (Dec. 31, 2013:
3,980,000,000 Yuan)is pledged by the 3,861,040,000 Yuan bank short term
financial products (Dec. 31, 2013: 3,974,237,236 Yuan) (Note Ⅳ (10)). The bank
pledge loan 500,000,000 Yuan (Dec. 31, 2013: N/A) is the pledge of all long-term
receivable of Nanjing Highway “construction-transfer” project.
- 169 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(21) Short term loans (continued)
(b) As of Dec. 31, 2014, bank guarantee loan USD 214,000,000 in RMB
1,309,466,000 Yuan (Dec. 31, 2013: USD 224,000,000, in RMB 1,365,705,600
Yuan), is the bank loan by the Company’s subsidiary guaranteed with the
letters of guarantee issued, within the credit lines awarded to the Company.
As of Dec. 31, 2014, bank guarantee loan USD 150,000,000, in RMB
917,850,000 Yuan (Dec. 31, 2013: USD 100,000,000, in RMB 609,690,000
Yuan), is the bank loan of the Company’s subsidiary, guaranteed by the
Company.
(c) As of Dec. 31, 2014, bank guarantee loan 200,000,000 Yuan (Dec. 31, 2013:
500,000,000), is the bank loan of the Company’s subsidiary, guaranteed by
Nanjing Metro Group Co., Ltd.
The guaranteed loan of bank guarantee loan is 300,000.000 Yuan (Dec 31,
2013: N/A) is the bank loan of the subsidiary of the Company and the Company
provides the guarantee.
Weighted average annual interest rate of loans for the Group is between 1.56%
to 6.72% in 2014 (2013: 1.45% to 6.30%).
(22) Notes payable
Dec. 31. 2014 Dec. 31, 2013
Bank acceptance draft 1,934,231,179 1,218,223,112
Above drafts will be due within one year.
- 170 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(23) Accounts payable
Dec. 31, 2014 Dec. 31, 2013
Material purchase and product
Manufacturing payables 4,481,504,559 3,307,926,338
Equipment purchase payables 96,135,990 120,018,143
Infrastructure building payables 75,226,100 154,235,508
Retention payables 13,161,568 3,309,948
Port use payables 4,318,444 6,620,899
4,670,346,661 3,592,110,836
(a) Accounts payable analyzed by
age:
Dec. 31, 2014 Dec. 31, 2013
Proportion in Proportion in
Amount total Amount total
Within
one year 4,060,341,815 87% 3,360,700,176 94%
Above
one year 610,004,846 13% 231,410,660 6%
4,670,346,661 100% 3,592,110,836 100%
By Dec. 31, 2014, accounts payable aging above 1 year mainly being
payables of imported parts.
(24) Prepayment received
Dec. 31, 2014 Dec. 31, 2013
Goods sale prepayment
received 273,533,666 232,328,686
- 171 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(24) Prepayment received (continued)
Dec. 31, 2014 Dec. 31, 2013
Proportion in Proportion in
Amount total Amount total
Within
one year 242,547,552 89% 197,553,233 85%
Above
one year 30,986,114 11% 34,775,453 15%
273,533,666 100% 232,328,686 100%
By Dec. 31, 2014 and 2013, accounts payable aging above 1 year mainly
being payables of imported parts.
(25) Employee remuneration payable
Dec. 31, 2014 Dec. 31, 2013
Short-term remuneration
payable (a) 243,725,463 200,123,222
Set drawing plan
payable(b) 1,837,472 6,118,076
245,562,935 206,241,298
As of Dec. 31, 2014, there are no payable arrears in the payable employee
Dec. 31, 2013 Purchase of Increase this y Deduction this y Dec 31, 2014
increasing ear ear
subsidiaries
Salary, bonus,
allowance and
subsidy 168,000,000 4,254,348 1,041,009,552 (1,002,288,730) 210,975,170
Staff welfare - - 23,043,151 (23,043,151) -
Social security 1,138,853 181,590 101,111,487 (101,503,836) 928,094
Including: medical
insurance 956,898 92,710 85,344,898 (85,636,743) 757,763
Labor injury fund 110,407 55,646 8,151,596 (8,205,665) 111,984
Birth insurance 71,548 33,234 7,614,993 (7,661,428) 58,347
Housing fund 174,320 249,886 71,044,660 (70,956,081) 512,785
Trade union fund
and employee
education fund 30,540,124 5,667 14,082,743 (13,507,345) 31,121,189
Other 269,925 - 5,697,711 (5,779,411) 188,225
200,123,222 4,691,491 1,255,989,304 (1,217,078,554) 243,725,463
remuneration. The balance at the end of 2015 will be all released or used up.
- 172 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
- 173 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(25) Employee remuneration payable (continued)
(b) Set drawing plan
Dec. 31, 2013 Disposal of Addition report Deduction report
subsidiaries period year Dec. 31, 2014
transferred
out
Pension 2,043,618 317,469 172,662,534 (173,303,696) 1,719,925
Auxiliary
pension 3,934,164 - 65,681,573 (69,615,737) -
Unemployment
fund 140,294 55,708 12,204,606 (12,283,061) 117,547
6,118,076 373,177 250,548,713 (255,202,494) 1,837,472
(26) Taxes and charges payable
(a) Taxes and charges payable are summarized as follows:
Disposal
of Current year
subsidiarie amount
s Current year payable
transferred amount
Dec. 31, 2013 out payable Dec. 31, 2014
Operation tax
payable 53,692,129 - 84,601,316 (33,466,947) 104,826,498
VAT payable (95,587,959) (77,509,684) 102,106,679 (155,024,117) (226,015,081)
Corporate Tax 16,862,085 - 19,693,519 (2,830,320) 33,725,284
Urban Construction 4,581,426 1,858,784 13,684,465 (10,411,335) 9,713,340
Education Addition 3,476,589 1,858,784 12,397,730 (10,111,748) 7,621,355
Individual Income
Tax 5,843,696 503,585 64,546,108 (66,913,068) 3,980,321
Other 4,612,122 3,586,896 50,371,004 (45,758,397) 12,811,625
(6,519,912) (69,701,635) 347,400,821 (324,515,932) (53,336,658)
VAT to be deducted
reclassified to
other current
assets (Note
IV(10)) 110,357,163 274,503,870
103,837,251 221,167,212
(27) Interest payable
Dec. 31, 2014 Dec. 31, 2013
Interest on loan payable 407,214,129 140,459,248
Bond interest payable 188,337,500 277,931,366
595,551,629 418,390,614
- 174 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(28) Dividends payable
Dec. 31, 2014 Dec. 31, 2013
CCCC 502,283 33,472,814
Hong Kong Zhenhua
Engineering Co., Ltd. 346,005 346,005
Macau Zhenhua Bay
Engineering Co., Ltd. 6,593 6,593
854,881 33,825,412
(29)
Other payables
Dec. 31, 2014 Dec. 31, 2013
Construction deposit 137,534,163 123,091,450
Related parties loans 100,000,000 17,107,673
Related parties payables 52,997,700 17,586,085
CCCC investment payment
(i) 25,971,833 25,971,033
Insurance claims - 10,134,482
Other 55,102,608 53,984,514
371,606,304 247,875,237
(i) The Group during the year 2011 completed the cancellation of a subsidiary.
Payable by the Group attributable to shareholders of the subsidiary of another
CCCC liquidation of the investment.
(a) Other payables analyzed in age:
Dec. 31, 2014 Dec. 31, 2013
Proporti
Proportion on in
Amount in total Amount total
Within one year 233,682,690 63% 100,914,161 41%
Above one year 137,923,614 37% 146,961,076 59%
371,606,304 100% 247,875,237 100%
- 175 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
As of Dec. 31, 2014, other payables aged over one year mainly payables to
related parties, deposits to outsourced construction team and quality guarantee
deposit received.
- 176 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(30) Non-current liabilities due within one year
Dec. 31, 2014 Dec. 31, 2013
Long-term loans due within one
year (a) 2,606,660,000 176,810,100
Bonds payable due within one year
(NotesⅣ (32)) - 4,193,487,763
2,606,660,000 4,370,297,863
(a) Long-term loans due within one
year
Dec. 31, 2014 Dec. 31, 2013
Guarantee loan
- USD loans 367,140,000 -
Credit loans
- USD loans 489,520,000 176,810,100
- RMB loans 650,000,000 -
Pledge loans
- RMB loans 1,050,000,000 -
Mortgage loans
- RMB loans 50,000,000 -
2,606,660,000 176,810,100
- 177 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(31) Long term loans
Dec. 31, 2014 Dec. 31, 2013
Guarantee loan
- USD loans (i) 367,140,000 365,814,000
Credit loans
- USD loans 1,162,610,000 1,274,252,100
- RMB loans 1,750,000,000 650,000,000
Pledge loan
- RMB loans (ii) 1,687,000,000 -
Mortgage loan
- RMB loans (iii) 130,000,000 -
5,096,750,000 2,290,066,100
Less: Long-term loans due
within one year (Notes
Ⅳ (30)) (2,606,660,000) (176,810,100)
2,490,090,000 2,113,256,000
(i) As of Dec. 31, 2014, bank guarantee loan USD 40,000,000 (in
244,760,000 Yuan) and USD 20,000,000 (in 122,380,000 Yuan) (Dec.
31,2013 : 40,000,000 USD(243,876,000 Yuan)and 20,000,000 USD
(121,938,000 Yuan)) refer to the bank loans of the Company’s subsidiary,
guaranteed by the letter of guarantee issued by the bank within the credit
lines awarded to the Company. Interest is paid every quarter. Principals
are due by June 19, 2015 and by June 25, 2015 respectively.
(ii) As of Dec. 31, 2014, multiple pledge loans of the bank is 1,687,000,000
Yuan (Dec. 31, 2013: N/A) in total as pledge of Nanjing Highway
“construction-transfer” project long-term receivable in whole amount
(Note IV(12)). The interests are paid quarterly and the principal shall be
paid back from Dec 21, 2015 to Jun 21, 2017.
(iii) As of Dec. 31, 2014, the bank mortgage loan of 130,000,000 Yuan (Dec.
31, 2013: N/A) is the guaranty of the fixed assets with book value of
259,731,664 Yuan (original price 314,742,493 Yuan)(Note IV(15)) and
intangible assets with the book value of 278,828,506 Yuan (original price
313,628,134 Yuan )(Note IV(17)) of the subsidiary. The interests are paid
quarterly and the principal shall be paid back from Jan 19, 2015 and Jan
18, 2016.
- 178 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(31) Long term loans (continued)
(a) Due day of long term loans:
Dec. 31, 2014 Dec. 31, 2013
one to two years 2,333,090,000 1,503,566,000
two to five years 157,000,000 609,690,000
2,490,090,000 2,113,256,000
(b) Lending rate range:
The long-term lending rate range of the Group is 2.56% to 6.91% in 2014
(2013:2.55% to 4.32%)。
- 179 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(32) Bonds payable
Total face value Issuance Addition issu Issuance Returned this
cost es cost year
current amortization
Dec. 31, 2013 period report year Dec. 31, 2014
Issued in 2011
First
Intermediate-
term bills (a) 1,800,000,000 (27,000,000) 1,798,946,331 - 1,053,669 (1,800,000,000) -
Second
Intermediate-
term bills (a) 400,000,000 (6,000,000) 399,691,432 - 308,568 (400,000,000) -
Issued in 2009
First
Intermediate
term bills (a) 3,800,000,000 (45,050,000) 3,797,777,911 (11,400,000) 13,237,490 - 3,799,615,401
Closed
Redirect debt
financing tools
(c) 2,000,000,000 (12,000,000) 1,994,850,000 - 5,150,000 (2,000,000,000) -
7,991,265,674 (11,400,000) 19,749,727 (4,200,000,000) 3,799,615,401
(a) As approved by the Zhong Shi Xie Zhu (2009) MTN16 Notification of Registration Filing from
Association of Traders Among Bank of China, the Company publicly issued its 2009 intermediate-
term bills on Mar. 12, 2009 and Apr. 9, 2009, total amount 1,800,000,000 Yuan, 400,000,000
Yuan, term 5 years, fixed annual interest rate 4.10%, 4.00%, interest to be paid once a year.
(b) As approved by the Zhong Shi Xie Zhu (2011) MTN25 Notification of Registration Filing from
Association of Traders Among Bank of China, the Company publicly issued non-public directive
liability financing instruments on Feb. 4, 2011, total amount 3,800,000,000 Yuan, term 5 years, on
simple annual interest basis, fixed annual interest rate 5.85%, interest to be paid once a year. Cost
of the issuance of the bonds is paid annually.
(c) As approved by the Zhong Shi Xie Zhu (2011) PPN16 Notification of Registration Filing from
Association of Traders Among Bank of China, the Company publicly issued non-public directive
liability financing instruments on Nov. 8, 2011, total amount 2,000,000,000 Yuan, term 3 years, on
simple annual interest basis, fixed annual interest rate 6.46%, interest to be paid once a year. Cost
of the issuance of the bonds is paid annually.
- 180 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial statements (continued)
(33) Expected liabilities
Dec. 31, Addition Increase Deduction Dec. 31, 2014
2013 report of report year
period purchased
subsidiarie
s
Estimated after-
sales service 165,707,79 -
cost 186,334,750 7 (151,478,614) 200,563,933
Product quality
-
cash deposit - 2,466,240 - 2,466,240
Pending litigation
9,026,468
compensation - - (3,300,578) 5,725,890
18,553,58
Other - 870,103 4 (15,935,334) 3,488,353
169,044,14 27,580,05
186,334,750 0 2 (170,714,526) 212,244,416
(34) Deferred income
Dec. 31, 2013 Addition report Deduction Dec. 31, 2014
period report year
Government subsidy 107,479,024 (11,874,864)
(a) 155,255,304 250,859,464
Land compensation
payment (b) 42,916,667 - (1,000,000) 41,916,667
198,171,971 107,479,024 (12,874,864) 292,776,131
- 181 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(a) Government subsidy
Dec. 31, 2013 Addition report Deduction Dec. 31, 2014
period report year
Marine industry equipment 1,000,000 - (1,000,000) -
welding R&D project
Lifting cable layout vessel 51,100,000 50,000,000 (1,100,000) 100,000,000
R&D project
Offshore wind turbine 1,600,000 (1,600,000) -
installation vessel R&D
project
Export project funding - 4,865,410 (4,865,410) -
support
Submarine pipeline laying 14,000,000 13,000,000 - 27,000,000
R&D project
Drilling platform 20,550,000 - (1,000,000) 19,550,000
development project
Marine engineering 10,250,000 - - 10,250,000
positioning system R&D
project
Floating crane R&D project 19,510,000 - - 19,510,000
Transportation positioning 8,000,000 - - 8,000,000
system R&D project
Automated dock R&D 900,000 21,000,000 - 21,900,000
project
Drilling package R&D project - 8,000,000 - 8,000,000
Other R&D projects 28,345,304 10,613,614 (2,309,454) 36,649,464
155,255,304 107,479,024 (11,874,864) 250,859,464
- 182 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(34) Deferred income(continued)
(b) The land compensation income is obtained from the movement construction base
from Shanghai Expo Land Reservation obtained by the subsidiary of the Group in
2007. Such compensation is amortized in 50 years of the land use right on average.
(35) Capital stock
Report year
Dec. 31, 2013 movement Dec. 31, 2014
Shares without
sales limitation
RMB common share 2,768,331,384 - 2,768,331,384
Foreign investment -
Shares listed on
domestic market 1,621,963,200 1,621,963,200
4,390,294,584 - 4,390,294,584
Report year
Dec. 31, 2012 movement Dec. 31, 2013
Shares with
sales limitation -
State corporate shares 2,768,331,384 - 2,768,331,384
Foreign investment -
shares 1,621,963,200 1,621,963,200
4,390,294,584 - 4,390,294,584
(36) Capital reserve
Report year
Dec. 31, 2013 movement Dec. 31, 2014
Capital stock premium 5,415,828,267 - 5,415,828,267
Other Capital reserve
-Purchase subsidiary
Minority interest (711,345) - (711,345)
-Transfer from capital
reserve based on
former norms 128,059,561 - 128,059,561
5,543,176,483 - 5,543,176,483
- 183 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Report year
Dec. 31, 2012 movement Dec. 31, 2013
Capital stock premium 5,415,828,267 - 5,415,828,267
Other Capital reserve
-Purchase subsidiary
Minority interest (711,345) - (711,345)
-Transfer from capital
reserve based on former
norms 128,059,561 - 128,059,561
5,543,176,483 - 5,543,176,483
- 184 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
Ⅳ Notes to major items in the consolidated financial statements (continued)
(37) Other integrated profits
Other integrated profit in assets liabilities Other integrated profits in 2014 income statement
Dec. 31, Tax Dec. 31, Pre-tax Less: other Less: income Tax Tax
2013 attributable to 2014 amount in integrated tax expenses attributable attributable
the parent report period income to the parent to the
company transferred-in company minority
profit or loss shareholde
listed in prior rs
period
Other integrated profits after
reclassification in the profit and
loss
- Fair value change profit or
loss of financial assets
available for sale (Note IV(11),
IV(47)) 248,889,422 72,752,627 321,642,049 438,891,023 300,833,759 65,304,637 72,752,627 -
- Conversion difference of
foreign currency statements 38,627 (2,140,634) (2,102,007) (2,150,514) - - (2,140,634) (9,880)
248,928,049 70,611,993 319,540,042 436,740,509 300,833,759 65,304,637 70,611,993 (9,880)
Other integrated profits in assets liabilities Other integrated profits in 2013 income statement
Dec. 31, Tax Dec. 31, Pre-tax Less: other Less: income Tax Tax
2012 attributable to 2013 amount in integrated tax expenses attributable to attributable
the parent report period income the parent to the
company transferred-in company minority
profit or loss shareholde
listed in prior rs
period
- 185 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
Other integrated profits after
reclassification in the profit and
loss
- air value change profit or loss
of financial assets available for
sale (Note IV(11), IV(47)) 89,099,161 159,790,261 248,889,422 338,177,127 127,660,297 50,726,569 159,790,261 -
- Conversion difference of
foreign currency statements 12,973 25,654 38,627 (60,810) - - 25,654 (86,464)
89,112,134 159,815,915 248,928,049 338,116,317 127,660,297 50,726,569 159,815,915 (86,464)
- 186 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
IV Notes to major items in the consolidated financial statements (continued)
(38) Surplus reserve
Report year
Dec. 31, 2013 movement Dec. 31, 2014
Statutory surplus reserve 1,227,769,193 34,458,164 1,262,227,357
Discretionary surplus
reserve 292,378,668 - 292,378,668
1,520,147,861 34,458,164 1,554,606,025
Report year
Dec. 31, 2012 movement Dec. 31, 2013
Statutory surplus reserve 1,227,769,193 - 1,227,769,193
Discretionary surplus
reserve 292,378,668 - 292,378,668
1,520,147,861 - 1,520,147,861
According to P. R. China Company Law, the Company’s Article of Association
and board meeting decisions, the Company accrues 10% of its net profit as
statutory surplus reserve. When statutory surplus reserve accumulated reached
50% of the Capital stock, the Company can stop accruing. Statutory surplus
reserve can be used to compensate loss upon approval, or to increase Capital
stock. The Company′s statutory surplus reserve is 34,458,164 Yuan in 2014
(2013: no).
(39) Undistributed profit
2014 2013
Amount Amount
Starting undistributed
profit 2,808,057,854 2,668,221,534
Add: net loss /
profit attributable to
parent company
report year 199,386,986 139,836,320
Less: statutory surplus
reserve (34,458,164) -
Closing undistributed
profit 2,972,986,676 2,808,057,854
As of Dec. 31, 2014, undistributed profit includes 85,304,802 Yuan balance of
surplus reserve attributable to parent company’s subsidiaries (Dec. 31, 2013:
76,398,671 Yuan).
- 187 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
IV Notes to major items in the consolidated financial statements (continued)
(40) Operating revenue and operating cost
2014 2013
Major operating income 24,882,003,493 22,922,228,961
Other operating income 187,417,994 279,326,839
25,069,421,487 23,201,555,800
2014 2013
Major operating income 21,537,094,034 21,109,707,588
Other operating income 163,586,891 327,309,539
21,700,680,925 21,437,017,127
(a) Major operating income and major operating cost
In products:
2014 2013
Major operating Major operating Major operating Major operating
income cost income cost
Container cranes 12,295,041,201 10,271,871,264 12,264,473,442 10,797,268,174
Marine heavy
equipment 4,984,474,241 4,387,726,757 4,234,165,039 4,111,296,503
Bulk machinery 3,597,166,505 3,415,989,051 3,063,018,182 2,952,903,243
Nanjing High
Speed
“Construction –
transfer” Item 2,885,494,223 2,441,043,673 2,191,444,746 2,117,812,203
Steel structures
and related
income 852,128,970 834,669,679 872,320,624 846,489,536
Vessel shipping
and others 267,698,353 185,793,610 296,806,928 283,937,929
24,882,003,493 21,537,094,034 22,922,228,961 21,109,707,588
- 188 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
(b) Other operating income and other operating cost
2014 2013
Other operating Other operating Other operating Other operating
income cost income cost
Equipment
leasing and
others 118,963,365 26,592,670 132,344,002 52,135,975
Sales of
materials 68,454,629 136,994,221 146,982,837 275,173,564
187,417,994 163,586,891 279,326,839 327,309,539
- 189 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
Ⅳ Notes to major items in the consolidated financial statements (continued)
(40) Operating revenue and operating cost (continued)
(c) Operating income of the Group from top 10 clients:
Operating income from top 10 construction contract clients is 7,147,657,326
Yuan (for 2013: 7,194,567,015 Yuan), taking 29% (as of 2013: 30%) of total
sales income of the Group. Details are as follows:
Operating revenue Proportion in
total operating
income of the
Group (%)
COMPANY A 2,885,494,223 12%
COMPANY B 1,003,936,074 4%
COMPANY C 806,276,711 3%
COMPANY D 499,415,002 2%
COMPANY E 387,385,197 2%
COMPANY F 332,593,391 1%
COMPANY G 324,649,573 1%
COMPANY H 320,590,724 1%
COMPANY I 294,110,248 1%
COMPANY J 293,206,183 1%
7,147,657,326 28%
(41) Business tax and charges
2014 2013
Business tax 96,747,655 71,503,162
Urban maintenance and
construction tax 15,918,268 11,267,108
Education charges 13,116,005 8,565,077
Others 2,246,849 3,961,137
128,028,777 95,296,484
- 190 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
Ⅳ Notes to major items in the consolidated financial statements (continued)
(42) Selling expenses
2014 2013
Employee remuneration 34,219,144 32,390,264
Travel expenses 18,784,805 21,289,067
Tender expenses 3,203,208 2,327,153
Advert expenses 1,535,805 1,693,853
Exhibition expenses 1,474,690 1,508,423
Office expenses 1,285,563 1,838,344
Fixed assets depreciation (Notes Ⅳ
(15)) 822,731 4,396,487
Other 3,419,411 3,204,113
64,745,357 68,647,704
(43) General expenses
2014 2013
R&D expenses 759,691,386 696,452,611
Employee remuneration 304,421,660 302,860,382
Fixed assets depreciation (NotesⅣ 90,573,903 89,667,665
(15))
Intangible assets amortization 84,888,095 56,420,566
(NotesⅣ(17))
Taxes 62,684,412 44,100,706
Office expenses 35,215,936 38,561,429
PR expenses 13,845,938 18,774,654
Expenses on employing 9,293,455 9,835,000
intermediary
Travel expenses 8,978,957 6,503,661
Informatization expenses 5,648,972 2,213,297
Maintenance expense 4,695,575 6,060,915
Consultation expenses 3,356,139 3,230,257
Insurance expenses 2,364,411 2,391,206
Conference expenses 1,003,676 2,244,944
Other 73,482,617 73,608,246
1,460,145,132 1,352,925,539
- 191 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
IV Notes to major items in the consolidated financial statements (continued)
(44) Financial expenses/(income)-- Net
2014 2013
Interests expenses 1,511,276,971 943,481,809
Less: interest income (340,273,463) (107,046,637)
Foreign exchange loss 170,177,194 109,069,248
Less: foreign exchange income (135,398,670) (370,863,489)
Amortization of issue cost of
intermediate-term bills (Note Ⅳ
(32)) 19,749,727 24,000,000
Other 76,154,695 28,543,524
1,301,686,454 627,184,455
(45) Expenses classified by nature
Operating costs, sales expenses and management expenses in profit
statements are classified by nature as follows:
2014 2013
Expendable raw material and low
value consumables 13,917,581,207 13,875,216,768
External coordination costs 3,340,064,976 3,243,757,916
Employee remuneration (Note IV(25)) 1,506,538,017 1,445,221,775
Depreciation and amortization
expenses (Note IV(14), IV(15),
IV(17)) 1,212,262,732 1,227,330,753
Technical R & D expenses 759,691,386 696,452,611
Transportation expenses 712,312,715 592,810,034
On-site installation expenses 312,726,864 218,978,133
Energy expenses 238,674,830 210,611,836
Rental fee 191,169,869 140,607,331
After-sales costs 83,611,224 219,333,270
Taxes 62,684,412 44,100,706
Office expenses 40,439,919 44,579,413
Travel expenses 27,763,762 27,792,728
Business entertainment expenses 13,845,938 18,774,654
Expenses on employing intermediary 9,293,455 9,835,000
informatization expense 5,648,972 2,213,297
Bidding fee 3,203,208 2,327,153
Other expenses 788,057,928 838,646,992
23,225,571,414 22,858,590,370
- 192 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
Ⅳ Notes to major items in the consolidated financial statements (continued)
(46) Financial expenses/(income)-- Net
2014 2013
Financial assets measured at fair value with
its change accounted in current profit and
loss -
Fair value change loss (Note IV(2)) (95,434,488) 95,160,012
Financial debt measured at fair value with
its change accounted in current profit and
loss-
Fair value change loss (Note IV(2)) (28,107,596) (644,404)
(123,542,084) 94,515,608
(47) Investment gains
2014 2013
On cost basis accounting basis other long
term equity investment income 1,103,460 17,057
On equity basis accounting basis Long
term equity investment gains/ loss
(NotesⅣ (13)(a)(b)) 14,737,413 (3,111,958)
Investment gains from disposal financial
assets available-for-sale–equity tool
period 1,160,044 1,000,000
Investment gains from disposal financial
assets available-for-sale–bank financial
products (NotesⅣ (35)) 278,843,280 150,188,587
Investment gains from disposal of
subsidiaries - 749,942,782
Profit obtained from disposal of the
financial assets available for sale 75,078,789 -
370,922,986 898,036,468
(48) Assets impairment loss
2014 2013
Inventory price reduction loss (Note IV(20)) 91,143,610 305,615,043
Receivable bad debt provision loss (Note
IV(20)) 132,518,366 304,575,957
Predicted contract loss (Note IV(20)) 324,779,866 175,482,951
548,441,842 785,673,951
- 193 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
Ⅳ Notes to major items in the consolidated financial statements (continued)
(49) Non-operating income
2014 2013 Amount
booked into
2014 non-
recurring
gains/losses
Non Current assets
disposal income 14,241,356 260,792,838 14,241,356
Including: land and building
levy compensation
income 14,241,356 260,792,838 14,241,356
Government subsidy (a) 20,316,889 47,458,876 20,316,889
Subsidies provided by
organizations rather than
government 4,865,410 420,000 4,865,410
Other 12,995,059 6,218,237 12,995,059
52,418,714 314,889,951 52,418,714
(a) Government subsidy specifications:
2014 2013 Related to
assets/
Related to gains
Financial allocation 6,388,724 32,358,876 Related to gains
Science and technology 12,928,165 14,100,000
subsidy Related to gains
1,000,000 1,000,000
Land compensation Related to
(NoteⅣ (34)) assets
20,316,889 47,458,876
- 194 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
IV Notes to major items in the consolidated financial statements (continued)
(50) Non-operating expense
2014 2013 Amount booked
into 2014 non-
recurring
gains/losses
Non Current assets
disposal loss 293,220 19,598,889 293,220
Including: Losses from
disposal of fixed assets 293,220 19,598,889 293,220
Other 2,696,435 2,224,583 2,696,435
2,989,655 21,823,472 2,989,655
(51) Corporate income tax expenses
2014 2013
Current period corporate tax 19,693,519 24,853,675
Deferred corporate tax (5,238,959) (38,501,202)
14,454,560 (13,647,527)
2014 2013
Total profit 162,502,961 120,429,095
Corporate tax expenses calculated by the rate
of 15% 24,375,444 18,064,364
Impact of tax rate differences on corporate tax
expenses (7,823,004) 17,990,567
Addition and deduction of technological
development expenses (21,630,183) (21,461,206)
Non-taxable income (505,260) (17,527,692)
Non-deductible cost, expenses and loss 5,329,228 17,710,271
Compensable loss of deferred corporate tax
assets unconfirmed current period 67,271,399 14,327,270
Temporary differences of unconfirmed deferred
income tax (52,915,856) (42,984,705)
Adjustment of final settlement prior year 352,792 233,604
Corporate income tax expenses 14,454,560 (13,647,527)
- 195 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
Unless otherwise specified, the amount units is RMB.
IV Notes to major items in the consolidated financial statements (continued)
(52) Earnings per share
(a) Basic Earnings per share
Basic / earnings per share is calculated by dividing consolidated net / earnings
belonging to common share holders of parent company by the weighted average
number of common shares publicly issued by parent company:
2014 2013
Consolidated net gains belonging to
common share holders of parent
company 199,386,986 139,836,320
weighted average number of common
shares publicly issued by parent company 4,390,294,584 4,390,294,584
Basic Earnings per share 0.05 0.03
(b) Diluted earnings per share
Diluted earnings per share is calculated by the consolidated net earnings
attributable to parent company common shareholders after adjustment upon
diluting potential common shares divided by the average number of common
shares. In 2012 and 2013 the Company had no diluting potential common shares.
Thus, diluted earnings per share equal basic earnings per share.
- 196 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial
statements (continued)
(53) Cash flow statements notes
(a) Cash receipt related with other operational activities
2014 2013
165,257,305 18,507,190
Cash receipt of government allowance
and bonus 115,921,049 154,300,454
Collected house deposit 6,944,000 -
Cash receipt from income from fines 6,310,578 2,767,165
Customs deposits received - 64,227,064
Others 6,736,891 3,751,072
301,169,823 243,552,945
(b) Cash payment related with other operational activities
2014 2013
Selling and general expenses 211,139,582 195,284,562
Financial expenses formality cost 76,154,695 28,543,524
Customs guarantee deposit 59,279,883 -
Others 4,675,491 7,844,198
351,249,651 231,672,284
(c) Cash receipt related with other investment activities
2014 2013
Interest income 63,650,660 135,189,201
- 197 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial
statements (continued)
(53) Cash flow statements notes (continued
(d) Receipt of other cash related to financing activities
2014 2013
Capital invested by minority
shareholders 2,363,230 2,563,812
Related parties loan received 100,000,000 -
Recovery of restricted bank deposits 3,690,587,843 6,157,492,641
3,792,951,073 6,160,056,453
(e) Payment of other cash related to financing activities
2014 2013
Intermediate term notes issuance cost
expenses 11,400,000 17,400,000
Withdrawal share expenditure of original
shareholder of subsidiaries 35,056,927 -
Restricted bank deposits made 4,669,080,148 - 3,479,049,525
4,715,537,075 3,496,449,525
- 198 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IV Notes to major items in the consolidated financial
Ⅳ statements (continued)
(54) Supplementary information of cash flow statements
(a) The net profit adjusted to cash flow from operating activities
2014 2013
Net profit 148,048,401 134,076,622
Add/(less): assets impairment
provision 548,441,842 785,673,951
Fixed assets and Investment
property depreciation 1,127,374,637 1,165,585,522
Intangible assets
amortization 84,888,095 61,745,231
Disposal of fixed assets
and intangible assets net
profit (13,948,136) (241,193,949)
Fair value change
loss/(income) 123,542,084 (94,515,608)
Financial expenses 1,218,289,282 485,873,502
Investment gains (370,922,986) (898,036,468)
Deferred corporate tax
assets increase (1,109,861) (14,540,533)
Deferred corporate tax
liabilities increase (4,129,098) (23,960,669)
Inventories decrease 151,571,257 1,260,208,737
Building contract amount
(increase) / decrease (1,608,507,946) 631,829,824
Operating receivables
increase (3,266,723,128) (2,894,147,723)
Operating payables increase 989,802,505 606,885,310
Net cash flow from operation activities (873,383,052) 965,483,749
Significant investment and capital
raising not involved cash revenue and
expenditure
2014 2013
Inventory–semi-product transferred to
project in process 1,507,237,257 -
Inventory–pick the raw material to 95,952,993 -
- 199 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
project in process
Deferred income tax debt caused by
asset estimate increase 29,725,076 -
- 200 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial
statements (continued)
(54) Supplementary information of cash flow statements
(continued)
(b) Net cash movement
2014 2013
Closing cash balance 1,867,454,807 3,152,471,807
Less: starting cash balance (3,152,471,807) (2,357,608,044)
Net cash (decrease)/increase (1,285,017,000) 794,863,763
(c) Subsidiaries acquisition or disposal
(i) Subsidiaries acquisition
2014
Payable cash and cash equivalents caused in enterprise
merger in this year -
Add: purchase cash and cash equivalents held by
subsidiaries 57,873,562
Net cash received by subsidiaries acquisition 57,873,562
On Feb. 24, 2014, company added investment of 203,000,000 Yuan to Qidong
Marine Company in bank deposits and gained 67% equity and listed in merger
scale.
Price of subsidiaries acquisition in 2014
203,000,000
Fair value of subsidiaries acquisition net assets
2014
Current assets 692,593,586
Non-current assets 1,488,281,942
Current liabilities (1,884,315,325)
Non-current liabilities (216,281,033)
80,279,170
- 201 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅳ Notes to major items in the consolidated financial statements (continued)
(54) Supplementary information of cash flow statements (continued)
(d) Cash
Dec. 31, 2014 Dec. 31, 2013
Including: cash in hand 593,298 495,019
Bank deposits disposable 1,831,618,392 3,002,350,930
Other monetary fund disposable 35,243,117 149,625,858
Closing cash balance 1,867,454,807 3,152,471,807
(55) Foreign currency monetary items
Dec. 31, 2014
Foreign curren
cy balan
ce Rate RMB balance
Monetary fund -
USD 275,169,806 6.1190 1,683,764,043
Euro 18,665,754 7.4556 139,164,396
Singapore dollar 2,383,980 4.6396 11,060,714
Sri Lankan rupee 208,578,798 0.0473 9,865,777
Oman riyal 606,963 16.1109 9,778,720
South Korean won 615,294,624 0.0057 3,507,179
Hong Kong dollar 4,427,905 0.7889 3,493,174
Australian dollar 569,333 5.0174 2,856,571
India rupee 25,874,547 0.0980 2,535,706
Ringgit 465,236 1.7625 819,978
Dirham 351,619 1.6719 587,872
Rand 1,012,113 0.5328 539,254
Canadian dollar 15,464 5.2755 81,580
Pound 2,546 9.5437 24,298
New Zealand Dollar 625 4.8034 3,002
1,868,082,264
IV
Ⅳ Notes to major items in the consolidated financial statements (continued)
(55) Foreign currency monetary items (continued)
Dec. 31, 2014
Foreign Conversi RMB balance
- 202 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
currency on
balance rat
es
Accounts receivable -
USD 239,618,069 6.1190 1,466,222,964
Euro 52,619,085 7.4556 392,306,850
Pound 24,963,067 9.5437 238,240,023
Singapore dollar 20,961,957 4.6396 97,255,096
Canadian dollar 5,267,000 5.2755 27,786,059
Saydu riyal 9,138,151 1.6543 15,117,243
Sri Lankan rupee 34,916,358 0.0473 1,651,544
India rupee 2,751,653 0.0980 269,662
Australian dollar 116,905 5.0174 586,559
Rand 5,342,888 0.5328 2,846,691
Hong Kong dollar 206,033 0.7889 162,539
South Korea won 7,986,326 0.0057 45,522
2,242,490,75
2
Other accounts receivable -
USD 10,362,400 6.1190 63,407,526
Euro 1,895,539 7.4556 14,132,381
Singapore dollar 1,465,134 4.6396 6,797,636
Australian dollar 403,912 5.0174 2,026,588
Canadian dollar 214,564 5.2755 1,131,932
South Korea won 85,944,425 0.0057 489,883
Oman riyal 4,828 16.1109 77,783
88,063,729
Accounts payable
USD 74,435,077 6.1190 455,468,236
Euro 24,675,335 7.4556 183,969,428
Australian dollar 22,236 9.5437 212,214
Hong Kong dollar 20,935 4.6396 97,130
Pound 78,850 0.7889 62,205
Singapore dollar 1,740 5.0174 8,730
639,817,943
- 203 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
IVⅣ Notes to major items in the
consolidated financial statements
(continued)
(55) Foreign currency monetary items
(continued)
Dec. 31, 2014
Foreign Conversi RMB balance
currency on
balance rat
es
Other payables -
USD 498,771 6.1190 3,051,980
Euro 598,154 7.4556 4,459,597
7,511,577
Short-term loan
USD 10,530,841,2
1,721,006,904 6.1190 45
Euro 5,834,342 7.4556 43,498,520
10,574,339,7
65
Long-term loan due within one year
USD 140,000,000 6.1190 856,660,000
Long-term loan-
USD 110,000,000 6.1190 673,090,000
(56) Assets with restricted ownership
Dec. 31, Addition Deduction Dec. 31, 2014
2013 report period report year
Other
monetary
capital 5,771,266,78 (4,788,030,294
restricted 363,172,156 9 ) 1,346,408,651
- 204 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅴ Consolidation scope change
(1) Enterprise consolidation not under the same group
(a) Enterprise consolidation not under the same group this year
Acquiree Acquisition Acquisition Acquisition Acquisition Purchase Determination Acquiree′s Acquiree′s Operating Acquir
time cost equity mode day foundation income from net loss from cash flow cash fl
proportion purchase purchase day from net am
day to year to year end purchase from
end day to year purcha
end day to
end
Qidong Feb.28, 203,000,000 67% Capital Feb.28, Complete 501,546,678 (190,402,381) 440,200,681 11,909
Marine 2014 adding 2014 industrial and
Company acquisition commercial
registration
- 205 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
V Consolidation scope change (continued)
(1) Enterprise consolidation not under the same group (continued)
(b) Consolidation costs and goodwill confirmation as follows:
Shanghai Zhenhua Heavy
Qidong Marine Engineering
Limited Company
Consolidation costs -
Cash 203,000,000
Consolidation costs 203,000,000
Less: gained identifiable net assets fair value share (53,787,044)
Goodwill 149,212,956
(c) Acquiree′s assets and liabilities on purchase day as follows:
(i) Qidong Marine Company
Purchase day Purchase day
Dec. 31, 2013
Fair value Book value Book value
Monetary capital 80,378,362 80,378,362 83,848,500
Receivable 35,439,669 35,439,669 22,748,020
Prepayments 131,129,429 131,129,429 107,915,266
Other receivables 111,973,549 111,973,549 269,221,327
Inventory 122,604,132 122,604,132 131,510,097
Account closed construction not completed 133,558,761 133,558,761 81,097,213
Other current assets 77,509,684 77,509,684 74,861,159
Fixed assets 1,180,501,083 1,004,888,803 1,013,899,279
Intangible assets 307,734,306 285,179,430 286,281,957
Deferred income tax assets 46,553 46,553 46,553
Less: short term loans (769,800,000) (769,800,000) (639,810,000)
Notes payable (10,001,000) (10,001,000) (60,278,350)
Payable (272,237,266) (272,237,266) (256,598,552)
Payment in advance (337,274,010) (337,274,010) (266,194,426)
Account closed construction not completed (134,455,706) (134,455,706) (112,471,062)
Employee remuneration payable (4,342,290) (4,342,290) (7,130,004)
Tax payable (7,808,563) (7,808,563) (6,705,067)
Other payable (254,084,117) (254,084,117) (493,636,020)
Non-current liabilities due within one year (85,000,000) (85,000,000) (35,000,000)
Interest payable (9,312,373) (9,312,373) (2,192,112)
Long term loans (105,000,000) (105,000,000) (165,000,000)
Long term payable (64,917,816) (64,917,816) (65,814,592)
Estimated liabilities (12,825,140) (12,825,140) (19,196,012)
Deferred income tax liabilities (29,725,077) - -
Deferred income (3,813,000) (3,813,000) (2,743,000)
Net assets 80,279,170 (88,162,909) (61,339,826)
Less: minority interest (26,492,126) 29,093,760 -
Gain net assets 53,787,044 (59,069,149) (61,339,826)
V Consolidation scope change(continued)
(1) Enterprise consolidation not under the same group (continued)
- 206 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
(d) Estimation technique adopted by Group is used to determine the fair values of assets
liabilities of Qidong Marine Company on purchase day. Main assets evaluation method
and key hypothesis:
(i) Qidong Marine Company
Asset evaluation method is asset basic method, key hypothesis in using is published
market hypothesis, continuous use hypothesis and continuous operating hypothesis.
Cash flow of Qidong Marine Company from purchase day to Dec.31, 2014
2014
Cash flow net amount caused in
operation 440,200,681
Cash flow net amount caused in
investment (2,991,277)
Cash net amount caused in financing (425,300,000)
Cash net increased amount 11,909,404
Add: Starting cash balance 57,873,562
Closing cash balance 69,782,966
(2) Consolidation scope change for other reasons
On May, 30, 2014, the Company spent 400,000 USD to establish wholly-owned subsidiary
ZPMC North America Inc.
On Oct.15, 2014, Company spent 490,000,000 won to establish subsidiary company ZPMC
Korea CO., LTD with South Korea YONGMOON Company in joint contribution.
On Jan.8, 2014, Company spent 500,000 USD to establish wholly-owned subsidiary ZPMC
Engineering Africa (PTY) LTD.
On Sep. 16, 2014, Company spent 480,000 USD to establish wholly-owned subsidiary ZPMC
Engineering (India) Private Limited.
On Mar. 7, 2014, Company spent 630,000 USD to establish wholly-owned subsidiary ZPMC
Southeast Asia Holding PTE. LTD.
On Mar.24, 2014, Company spent 500,000 Australian dollars to establish wholly-owned
subsidiary ZPMC Australia Company PTY LIMITED.
- 207 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities
(1) Interests in subsidiary
(a) Enterprise group composition
Name Main operating Registered in Shareholding ratio Gain mode
address Business nature
Direct Indirect
Shanghai Zhenhua Port Machinery Heavy Shanghai Chongming Shanghai Machinery 90% - Investment to
Industry Co., Ltd. County Chongming County
manufacturing set up
Shanghai Zhenhua Heavy Industries Machinery Shanghai Chongming Shanghai Machinery 100% - Investment to
Co., Ltd. County Chongming County
manufacturing set up
Shanghai Zhenhua Port Machinery (Hong Hong Kong Hong Kong Trade sales 99.99% - Investment to
Kong) Co., Ltd.
set up
Shanghai Zhenhua Shipping Co. Ltd. Shanghai Shanghai Ship transpo 55% - Investment to
Pudong New Pudong New rtation set up
Area Area
Nantong Zhenhua Heavy Equipment Nantong Nantong Machinery 100% - Investment to
Manufacturing Co., Ltd.
manufacturing set up
Shanghai Zhenhua Heavy Industries Group Nantong Nantong Machinery 100% - Investment to
(Nantong) Transmission Machinery Co., Ltd
manufacturing set up
Shanghai Zhenhua Heavy Industries Group Nantong Nantong Machinery 100% - Investment to
(Nantong) Co., Ltd.
manufacturing set up
Shanghai Zhenhua Heavy Industries Electric Shanghai Shanghai Electrical equipm 100% - Investment to
Co., Ltd.
Pudong New Pudong New ent R&D set up
Area Area
Nantong ZPMC Steel Structure Processing Co., Nantong Nantong Machinery 75% 25% Investment to
Ltd.
manufacturing set up
Jiangyin ZPMC Steel Structure Manufacturing Jiangyin Jiangyin 75% 25% Investment to
Co., Ltd.
Machinery set up
manufacturing
- 208 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Shanghai Zhenhua Heavy Industries Steel Shanghai Shanghai Machinery - 49% Investment to
Structure Co., Ltd.(Note 1)
Pudong New Pudong New manufacturing set up
Area Area
Shanghai Zhenhua Heavy Industries Vessel Shanghai Shanghai Ship transpo 100% - Investment to
Transport Co., Ltd
Yangshan Yangshan rtation set up
Bonded Port Bonded Port
Area Area
Shanghai Zhenhua Testing Technology Shanghai Shanghai Technical 100% - Investment to
Consulting Co., Ltd.
Pudong New Pudong New consultation set up
Area Area
Note 1: Based on constitution of Shanghai Zhenhua Heavy Industries Steel Structure Co., Ltd, Company has right to appoint and dismiss most members in
board of directors. In fact, Company obtains control right, so Company is included in Group financial statements consolidation scale.
- 209 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(1) Enterprise Group composition (continued)
(a) Enterprise Group composition (continued)
Name Main operating Registered in Business Shareholding ratio Gain mode
address nature
Direct Indirect
ZPMC Netherlands B.V. Holland Rotterdam Holland Rotterdam Trade 100% - Investment to set
sales up
Hotel de Herberg B.V. Holland Rotterdam Holland Rotterdam Trade - 100% Investment to set
sales up
ZPMC Espaa S.L. Spanish Los Barrios Spanish Los Barrios Trade - 100% Investment to set
sales up
ZPMC GmbH Hamburg Germany Hamburg Germany Hamburg Trade 100% - Investment to set
sales up
ZPMC Lanka Company (Private) Limited Sri Lanka Sri Lanka Trade 70% - Investment to set
sales up
ZPMC North America Inc USA Delaware USA Delaware Trade 100% - Investment to set
sales up
ZPMC Korea Co., LTD. South Korea Busan South Korea Busan Trade 70% - Investment to set
sales up
ZPMC Engineering Africa (PTY) LTD. Kwazulu-Natal Kwazulu-Natal Trade 100% - Investment to set
Province, Republic of Province, Republic of sales up
South Africa South Africa
ZPMC Engineering (India) Private Limited India Maharashtra India Maharashtra Trade 100% - Investment to set
sales up
ZPMC Southeast Asia Holding PTE. LTD. Singapore Singapore Trade 100% - Investment to set
sales up
- 210 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
ZPMC Engineering (Malaysia) Sdn.Bhd. Malaysia Malaysia Trade - 70% Investment to set
sales up
ZPMC Australia Company (PTY) LTD. New South Wales, New South Wales, Trade 100% - Investment to set
Australia Australia sales up
Nanjing Ninggao New Channel Construction Jiangsu Nanjing Trade 100% - Investment to set
Co., Ltd. Jiangsu Nanjing sales up
Shanghai Zhenhua Port Machinery General Shanghai Pudong Shanghai Pudong Machiner 100% - Enterprise
Equipment Co., Ltd New Area New Area y consolidation
manufact under the same
uring control
- 211 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(1) Interests in subsidiary (continued)
(a) Enterprise Group composition (continued)
Name Main operating Registered in Business Shareholding ratio Gain mode
address nature
Direct Indirect
Shanghai Zhenhua Port Machinery Shanghai Shanghai Machinery - 74.02% Enterprise consolidation under
Heavy Industry Co., Ltd Pudong New Pudong New manufacturin the same control
Area Area g
Shanghai Zhenhua Heavy Industry Zhangjiagang Zhangjiagang Machinery 90% - Enterprise consolidation under
(Group) Zhangjiang Port Machinery Co., jingang county Jingang county manufacturin the same control
Ltd g
Qidong Marine Company Jiangsu Jiangsu Machinery 67% - Enterprise consolidation under
Nantong Nantong manufacturin the different control
g
Jiangsu Daoda Marine Equipment Jiangsu Jiangsu Ship design - Enterprise consolidation under
Technology Co., Ltd Nantong Nantong 100% the different control
Daoda (Holland) Marine Technology Holland Holland Ship design - Enterprise consolidation under
Co., Ltd 100% the different control
(b) Subsidiary exists key minority shareholders′ interests
- 212 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Name Shareholding ratio of 2014 2014 dividend to the minority Dec. 31, 2014
minority 2014 gains and losses attri shareholders Interests of minority
shareholders butable to the minority shar shareholders
eholders
Qidong Marine Company 33% (62,832,786) - 36,350,659
- 213 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(1) Interests in subsidiary (continued)
(b) Subsidiary exists key minority shareholders′ interests (continued)
Main financial information of above important non wholly owned subsidiary:
Dec. 31,2014
Current assets Non-current assets Assets total Current liabilities Non-current liabilitie Liabilities total
s
Qidong Marine Company 757,533,820 1,427,761,956 2,185,295,776 2,169,266,958 126,182,330 2,295,449,288
2014
Operating income Net profit Integrated income amount Operating cash flow
Qidong Marine Company 501,546,678 (190,402,381) (190,402,381) 440,200,681
- 214 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(2) Interests in associates and joint ventures
(a) Basic information of joint venture and associates
Whether it
Main is strategic
operating Registered Operating to Group Shareholding
address in nature operating ratio
Dire Indir
ct ect
– Joint venture
Jiangsu Longyuan Jingsu Na Jingsu Marine No 50% -
Zhenhua Marine ntong Nantong engineering
Engineering Co., Ltd. construction
ZPMC Mediterranean Turkey Turkey Port equipment No 50% -
Liman Makinalari Istanbul Istanbul technology
Ticaret Anonim Sirketi service
Zhenhua Marine Energy Hong Kon Ship No 51% -
(Hong Kong) Co., Ltd g Hong Ko transportation
(Note Ⅳ (13)(a)) ng
–Associates
CCCC Marine Shanghai Shanghai Vessel No 25% -
Engineering Vessel Pudong Pudong technology
Technology Research development
Centre Co., Ltd consultation
CCCC estate Yixing Co., Jiangsu W Jiangsu W Real estate No 20% -
Ltd. uxi uxi development
Shanghai Zhenhua Jiangsu C Paint No 20% -
Heavy Industries hangzhou Jiangsu C manufacturing
(Group) Changzhou hangzhou
Paint Co., Ltd.
CCCC Financial Rental Leasing No 30% -
Co., Ltd. Shanghai Shanghai
Pudong Pudong
The Group adopts equity accounting method
to equity investments above
- 215 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(2) Interests in associates and joint ventures (continued)
(b) Main financial information of important joint ventures
Jiangsu Longyuan Zhenhua Marine
Engineering Co., Ltd. Dec.31, 2014 Dec.31, 2013
Current assets 211,625,542 182,238,190
Among: cash and cash equivalents 39,958,157 73,205,956
Non-current assets 366,512,542 277,965,764
Assets total 578,138,084 460,203,954
Current liabilities 151,900,718 53,080,172
Non-current liabilities 100,392,085 116,717,012
Liabilities total 252,292,803 169,797,184
Interests of minority shareholders - -
Parent company shareholder′s interests 325,845,281 290,406,770
Net assets share accounting base on
shareholding ratio (i) 162,922,641 145,203,385
Adjusting items
- Other - -
Book value invested to joint venture 162,922,641 145,203,385
(i) Based on joint venture consolidation financial statements parent Company’s
amount, the Group accounts assets share according to shareholding ratio.
Amount in joint venture enterprise consolidation financial statements considers
the impaction to joint venture identifiable assets, liabilities fair value and
uniform accounting policies at investment gaining time.
Jiangsu Longyuan Zhenhua Marine
Engineering Co., Ltd. 2014 2013
Operating income 281,732,165 83,915,402
Financial expenses 7,035,737 2,150,023
Income tax expense 5,213,649 -
Net profit /(loss) 35,438,514 (3,706,067)
Other integrated income - -
Integrated income/ (loss) total 35,438,514 (3,706,067)
Receivable associates Company’s equity
of the Group in report period - -
- 216 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(2) Interests in associates and joint ventures (continued)
(c) Main financial information of important associates
Dec. 31. 2014 Dec.31, 2013
CCCC Estate CCCC Estate
CCCC Financial Re CCCC Financial
Yixing Co., Lt Yixing Co.,
ntal Co., Ltd. Rental Co., Ltd
d. Ltd.
Current assets 1,013,691,641 1,597,793,808 890,180,782 -
Non-current assets 6,094,038 1,393,369,897 4,103,850 -
Assets total 1,019,785,679 2,991,163,705 894,284,632 -
Current liabilities 86,351,627 363,662,187 4,887,803 -
Non-current liabilities 60,000,000 789,666,600 - -
Liabilities total 146,351,627 1,153,328,787 4,887,803 -
Interests of minority
shareholders - -
Parent company
shareholder′s interests 873,434,052 1,837,834,918 889,396,829 -
Net assets share
accounting base on
shareholding ratio (i) 174,686,809 551,350,475 177,879,366 -
Adjusting items
- Other - - - -
Book value invested to
associates equity 174,686,809 551,350,475 177,879,366 -
(i) Based on associates consolidation financial statements parent Company’s
amount, the Group accounts assets share according to shareholding ratio.
Amount in joint venture enterprise consolidation financial statements considers
the impaction to associates identifiable assets, liabilities fair value and uniform
accounting policies when the investment is gained.
- 217 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(2) Interests in associates and joint ventures (continued)
(c) Main financial information of important associates (continued)
2014 2013
CCCC Estate CCCC CCCC Estate
CCCC Financial Rental
Yixing Co., Lt Financial Yixing Co.,
Co., Ltd.
d. Rental Co., Ltd. Ltd.
Operating income - 87,247,087 - -
Net (loss)/ profit (16,310,097) 37,841,701 (10,603,170) -
Other integrated income - - - -
Integrated (loss)/income total (16,310,097) 37,841,701 (10,603,170) -
Receivable associates
Company’s equity of the
Group in report period - - - -
(d) Summary information of not important joint ventures and associates
2014 2013
Joint ventures
Investment book value total 6,961,307 83,200
Total of the following items
accounted according to
shareholding proportion
Net (loss)/profit (i) (12,178,967) 11,784
Other integrated income - -
Integrated income total (12,178,967) 11,784
- 218 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
VI Interests in Other Entities (continued)
(2) Interests in associates and joint ventures (continued)
(d) Summary information of not important joint ventures and associates(continued)
2014 2013
Associated enterprise
Investment book
29,428,850 29,872,979
value total
Total of the
following items
accounted according - -
to shareholding
proportion
Net profit (i) 1,039,205 849,926
Other integrated
- -
income
Integrated income
1,039,205 849,926
total
(i) Net profit and other integrated income have considered the adjusting
impaction to associates identifiable assets, liabilities fair value and uniform
accounting policies at investment gaining time.
Ⅶ Related parties and related transaction
(1) Profiles of parent
company
(a) Profiles of parent
company
Registered place Business nature
China No. 88, C Andingmen Wai Port project contracting
Communications Street, Dongcheng District, and related businesses
Corporation Beijing
China Communications Construction Group Corporation is the ultimate
controller of the Company.
(b) Parent company’s registered capital and the movement
- 219 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
2013 Addition report 2014
Name Dec. 31 period Dec. 31
China
Communicat
ions
Corporation 16,174,735,425 - 16,174,735,425
- 220 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(1) Profiles of parent
company (continued)
(c) Parent company’s holding proportion and voting proportion in the Company:
Name 2014 Dec. 31 2013 Dec. 31
Voting Holding Voting
Holding Proportion Proportion Proportion Proportion
China
Communications
Corporation 28.828% 28.828% 28.828% 28.828%
As of Dec. 31, 2014, China Communications Corporation and its controlled Hong
Kong Zhenhua Engineering Co., Ltd. (holding 17.076% stake of the Company)
and Macau Zhenhua Bay Engineering Co., Ltd. (holding 0.325% stake of the
Company) together hold 46.229% of the Company’s stake (Dec. 31, 2013:
46.229%).
(2) Subsidiary profiles
For information of subsidiaries, refer to Note IV。
(3) Joint ventures and associates
For information of Joint ventures and associates, refer to Note Ⅵ
(4) Other related parties
Name Relation with the Group
Hong Kong Zhenhua Engineering Co., Ltd Controlled by the same parent company
Macau Zhenhua Bay Engineering Co., Ltd Controlled by the same parent company
CCCC First Harbor Engineering Co., Ltd. Controlled by the same parent company
No.1 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. Controlled by the same parent company
No.2 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. Controlled by the same parent company
No.5 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. Controlled by the same parent company
Installation Engineering Co., Ltd.of CCCC
First Harbor Engineering Co., Ltd. Controlled by the same parent company
CCCC Second Harbor Engineering Co., Controlled by the same parent company
- 221 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ltd.
No.2 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. Controlled by the same parent company
No.3 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. Controlled by the same parent company
CCCC Second Harbor Engineering Survey
and Design Institute Co., Ltd. Controlled by the same parent company
CCCC Third Harbor Engineering Co., Ltd. Controlled by the same parent company
CCCC Third Harbor Engineering Survey
and Design Institute Co., Ltd. Controlled by the same parent company
CCCC Third Harbor Engineering Xing’an
Construction Engineering Co., Ltd. Controlled by the same parent company
CCCC Fourth Harbor Engineering Co.,
Ltd. Controlled by the same parent company
Hainan CCCC Fourth Construction Co.,
Ltd Controlled by the same parent company
- 222 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(4) Other related parties (continued)
Name Relation with the Group
No.2 Engineering Co., Ltd. of CCCC Controlled by the same parent company
Fourth Harbour Engineering Co., Ltd.
No.1 Engineering Co., Ltd. of CCCC First
Highway Engineering Bureau Co., Ltd. Controlled by the same parent company
No.6 Engineering Co., Ltd. of CCCC First
Highway Engineering Bureau Co., Ltd. Controlled by the same parent company
CCCC Second Highway Engineering
Bureau Co., Ltd Controlled by the same parent company
CCCC Shanghai Equipment Engineering
Co., Ltd. Controlled by the same parent company
CCCC USA Company Controlled by the same parent company
CCCC Tianhe Machinery Manufacturing
Co., Ltd. Controlled by the same parent company
Yueyang Chenglingji Xingang Co., Ltd. Controlled by the same parent company
China Harbor Engineering Co., Ltd. Controlled by the same parent company
China Communications Water Controlled by the same parent company
Transportation Design & Research
Co.,Ltd.
CCCC Highway Consultants Co., Ltd. Controlled by the same parent company
CCCC Tunnel Engineering Co., Ltd. Controlled by the same parent company
Friede & Goldman, Llc. Controlled by the same parent company
China Communications Materials & Controlled by the same parent company
Equipment Co., Ltd.
Shanghai Jiangtian Industrial Co., Ltd. Controlled by the same parent company
Tianjin Dredging Company—Binhai Controlled by the same parent company
Environmental protection Engineering Co.,
Ltd
(5) Related transactions
(a) Related transactions pricing and decision-making procedures
The Group and the related party, the transaction price is based on mutual
agreement and with reference to market price as the pricing basis.
- 223 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(5) Related transactions (continued)
(b) Selling goods to Related party
Related transactions
Related party details 2014 2013
Friede&Goldman,Llc. Selling goods 336,411,736 205,152,024
CCCC Harbor Engineering Co., Selling goods 246,448,541 48,007,343
Ltd.
CCCC Third Harbor Engineering Selling goods 69,723,632 82,764,097
Co., Ltd.
China Communications Water Selling goods 59,823,097 -
Transportation Design &
Research Co.,Ltd.
CCCC Fourth Harbor Engineering Selling goods 59,751,329 6,676,126
Co., Ltd.
China Communications Selling goods 40,062,236 -
Corporation
No.1 Engineering Co., Ltd. of Selling goods 34,362,246 80,146,121
CCCC First Harbor Engineering
Co., Ltd.
Jiangsu LongYuan Zhenhua Selling goods 20,528,920 8,362,205
Marine Engineering Co., Ltd.
CCCC Tunnel Engineering Co., Selling goods 19,658,120 -
Ltd.
CCCC Third Harbor Engineering Selling goods 17,676,832 47,061,169
Survey and Design Institute Co.,
Ltd.
Hainan CCCC Fourth Selling goods 16,347,733 -
Construction Co., Ltd
No.2 Engineering Co., Ltd. of Selling goods 12,868,943 71,007,524
CCCC Fourth Harbor
Engineering Co., Ltd.
No.2 Engineering Co., Ltd. of Selling goods 5,383,422 41,143,743
CCCC Second Harbor
Engineering Co., Ltd.
CCCC Marine Engineering Vessel Selling goods 4,880,342 -
Technical Research Centre Co.,
Ltd
Tianjin Dredging Company— Selling goods 2,649,573 -
Binhai Environmental protection
Engineering Co., Ltd
CCCC Second Harbor Selling goods 1,775,726 -
Engineering Survey and Design
Institute Co., Ltd.
Installation Engineering Co., Ltd.of Selling goods 1,745,283
CCCC First Harbor
No.2 Engineering Co., Ltd. of Selling goods - 8,821,784
CCCC First Harbor Engineering
- 224 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Co., Ltd.
CCCC First Harbor Engineering Selling goods - 114,440,145
Co., Ltd.
950,097,711 713,582,281
(c) Related party provided labor service for the Group
Related party Related 2014 2013
transactions
details
CCCC Second Highway Engineering
Bureau Co., Ltd. providing labor 1,212,974,461 799,509,310
No.3 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co.,
Ltd. providing labor 885,245,579 752,787,495
CCCC Third Harbor Engineering
Co., Ltd. providing labor 190,385,882 99,935,530
CCCC Tunnel Engineering Co., Ltd. providing labor 79,835,548 166,222,974
China Communications Corporation providing labor 62,727,622 68,366,760
CCCC Third Harbor Engineering
Xing’an Construction Engineering
Co., Ltd. providing labor 4,892,308 854,701
Installation Engineering Co., Ltd.of
CCCC First Harbor Engineering
Co., Ltd. providing labor - 9,029,456
2,436,061,400 1,896,706,226
- 225 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(5) Related transactions (continued)
(d) Purchasing goods from related party
Related party Related 2014 2013
transactions
details
CCCC Shanghai Equipment purchasing
Engineering Co., Ltd. goods 94,917,511 125,955,250
Shanghai Zhenhua Heavy
Industries (Group) Changzhou purchasing
Paint Co., Ltd. goods 94,210,385 74,818,457
China Communications Materials purchasing
& Equipment Co., Ltd. goods 33,858,763 168,908,244
China Communications Water
Transportation Design & purchasing
Research Co., Ltd. goods - 136,752
222,986,659 369,818,703
(e) Selling assets or equity to related parties
Related party Related 2014 2013
transactions
details
China Communications equity transfer
Corporation - 840,241,472
No.1 Engineering Co., Ltd. of asset transfer
CCCC First Harbor
Engineering Co., Ltd. - 440,000,000
- 1,280,241,472
(f) Dividend paid to related parties
Related parties Related 2014 2013
transactions
details
CCCC Shareholding Dividend paid 32,970,531 -
- 226 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(5) Related transactions (continued)
(g) Loan from related parties
Related parties Related transactions 2014 2013
details
CCCC Financial Rental Co., Inter-bank borrowing
Ltd 100,000,000 -
(h) Pay interest to related parties
Related parties Related transactions 2014 2013
details
CCCC Financial Rental Co., Pay interest
Ltd 2,950,000 -
(i) Provide guarantee to related parties
Related parties Related Guarantee due dat Whether t
transactio Guarantee a Guarantee start e he Guaran
n mount date tee is impl
emented
Zhenhua Marine Provide
Energy (Hong guarantee
Kong) Co., Ltd 122,380,000 May 26, 2014 May 26, 2015 No
(j) Key executives’ salaries
2014 2013
Key executives’ salaries 11,346,400 11,687,500
Number of key executives of the Group in 2014 is 24 (2013: 26).
- 227 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(6) Balances of receivables and payables from or to related parties
(a) Receivables from related parties:
Dec 31, 2014 Dec 31, 2013
bad
book debt
value provisi book value bad debt
balance on balance provision
Accounts
receivabl CCCC First Harbor 108,136,38 172,550,7
e Engineering Co., Ltd 8 - 80 -
China Harbor Engineering 91,815,59 55,542,75
Co., Ltd. 5 - 9 -
CCCC Third Harbor 64,649,98
Engineering Co., Ltd. 71,896,273 - 4 -
China Communications 58,739,75 42,121,68
Corporation 3 - 0 -
No.1 Engineering Co., Ltd.
of CCCC First Harbor 69,000,00
Engineering Co., Ltd. 44,000,000 - 0 -
China Communications
Water Transportation Design 28,237,00
& Research Co.,Ltd. 0 - 3,890,000 -
CCCC Fourth Harbor 19,047,08
Engineering Co., Ltd. 6 - 6,376,091 -
No.6 Engineering Co., Ltd.
of CCCC First Harbor 16,160,00 16,160,00
Engineering Co., Ltd. 0 - 0 -
90,118,27
Friede & Goldman, Llc. 14,297,643 - 9 -
Hainan CCCC Fourth 11,954,28
Construction Co., Ltd 0 - - -
CCCC Third Harbor
Engineering Survey and 29,000,00
Design Institute Co., Ltd. 9,270,000 - 0 -
CCCC Second Harbor 14,861,01
Engineering Co., Ltd. 8,694,975 - 0 -
No.2 Engineering Co., Ltd.
of CCCC Fourth Harbor
Engineering Co., Ltd. 8,689,705 - - -
No.2 Engineering Co., Ltd.
of CCCC Second Harbor
Engineering Co., Ltd. 8,180,099 - 5,000,000 -
CCCC Marine Engineering
Vessel Technology
Research Centre Co., Ltd 6,810,000 - 1,100,000 -
No.1 Engineering Co., Ltd.
of CCCC First Harbor 6,760,000 - 8,760,000 -
- 228 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Engineering Co., Ltd.
CCCC Second Harbor
Engineering Survey and
Design Institute Co., Ltd. 6,278,000 - - -
Jiangsu LongYuan Zhenhua 41,242,61
Marine Engineering Co., Ltd. 4,158,337 - 5 -
No.2 Engineering Co., Ltd.
of CCCC First Harbor
Engineering Co., Ltd. 4,034,049 - 7,949,765 -
Tianjin Dredging
Company—Binhai
Environmental protection
Engineering Co., Ltd 2,170,000 - - -
CCCC Second Highway
Engineering Bureau Co.,
Ltd. 550,000 - 550,000 -
CCCC Highway Consultants
Co., Ltd. 422,750 - - -
No.5 Engineering Co., Ltd.
of CCCC First Harbor
Engineering Co., Ltd. 52,862 - 52,861 -
Yueyang Chenglingji
Xingang Co., Ltd. 42,000 - 42,000 -
CCCC Tianhe Machinery
Manufacturing Co., Ltd. 26,800 - - -
CCCC Shanghai Equipment
Engineering Co., Ltd. 48,425 - - -
Installation Engineering Co.,
Ltd.of CCCC First Harbor
Engineering Co., Ltd. 160,797 - - -
530,632,81 628,967,8
7 - 24 -
- 229 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(6) Balances of receivables and payables from or to related parties (continued)
(a) Receivables from related parties (continued):
2014 Dec. 31 2013 Dec. 31
bad debt bad debt
Book value provisio book value provisio
balance n balance n
Chin
Accounts Communications
receivable Corporate - - 672,193,178 -
No.1 Engineering
Co., Ltd. of
CCCC First
Harbor
Engineering Co.,
Ltd. 10,000,000 - 10,000,000 -
10,000,000 - 682,193,178 -
Chin
Advanced Communications
payment Corporate 33,675,829 - 18,097,954 -
CCCC Third Harbor
Engineering
Xing’an
Construction
Engineering Co.,
Ltd. 2,200,000 - 2,200,000 -
35,875,829 - 20,297,954 -
(b) Payables to related parties
2014 Dec. 31 2013 Dec. 31
No.3 Engineering Co., Ltd. of
Accounts CCCC Second Harbor
payable Engineering Co., Ltd. 436,381,667 414,405,206
CCCC Second Highway
Engineering Bureau Co., Ltd. 542,740,653 307,151,472
CCCC Third Harbor
Engineering Co., Ltd. 146,654,846 53,290,609
CCCC Tunnel Engineering
Co., Ltd. 54,054,936 58,454,836
Shanghai Zhenhua Heavy
Industries (Group)
Changzhou Paint Co., Ltd. 16,507,869 17,837,158
CCCC Shanghai Equipment
Engineering Co., Ltd. 15,374,859 14,337,357
- 230 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
CCCC Third Harbor
Engineering Xing’an
Construction Engineering
Co., Ltd. 10,051,352 7,189,906
China Communications Water
Transportation Design &
Research Co.,Ltd. 160,000 160,000
China Communications
Materials & Equipment Co.,
Ltd. - 38,616,112
Installation Engineering Co.,
Ltd.of CCCC First Harbor
Engineering Co., Ltd. - 1,633,418
1,221,926,182 913,076,074
Advances No.1 Engineering Co., Ltd. of
CCCC First Harbor
Engineering Co., Ltd. 1,194,097 1,194,097
CCCC Third Harbor
Engineering Xing’an
Construction Engineering
Co., Ltd. 200,000 200,000
1,394,097 1,394,097
- 231 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(6) Balances of receivables and payables from or to related parties (continued)
(b) Payables to related parties (continued)
2014 Dec. 31 2013 Dec. 31
Dividends China Communications
payable Corporation 502,283 33,472,814
Hong Kong Zhenhua
Engineering Co., Ltd. 346,005 346,005
Macau Zhenhua Bay
Engineering Co., Ltd 6,593 6,593
854,881 33,825,412
Interest CCCC Financing Rental Co.,
payable Ltd 171,111 -
Other CCCC Financing Rental Co.,
payables Ltd 100,000,000 -
China Communications
Corporation 31,097,080 25,971,033
Shanghai Jiangtian Industrial
Co., Ltd. 17,586,085 17,586,085
CCCC Second Highway
Engineering Bureau Co., Ltd. 14,796,932 7,971,852
No.3 Engineering Co., Ltd. of
CCCC Second Harbor
Engineering Co., Ltd. 9,052,063 6,981,332
CCCC Third Harbor
Engineering Co., Ltd. 4,437,460 1,419,932
CCCC Tunnel Engineering
Co., Ltd. 1,999,913 734,557
178,969,533 60,664,791
(7) Promises with related parties
The following are promises contracted but not necessarily shown on B/S with related parties
as of B/S day:
Related party provided labor service for
the Group 2014 Dec. 31 2013 Dec. 31
CCCC Second Harbor Engineering Co.,
Ltd 40,226,953 925,472,532
CCCC Third Harbor Engineering Co., Ltd 37,439,931 227,825,813
China Communications Corporation 29,333,629 52,667,257
CCCC Third Harbor Engineering Xing’an
Construction Engineering Co., Ltd. 37,076,943 37,076,943
Installation Engineering Co., Ltd.of
CCCC First Harbor Engineering Co., 29,435,537 29,435,537
- 232 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ltd.
CCCC Tunnel Engineering Co., Ltd 4,543,079 84,378,627
CCCC First Harbor Engineering Co., Ltd. 1,000,000 1,000,000
CCCC Second Highway Engineering
Bureau - 957,934,902
179,056,072 2,315,791,611
- 233 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅶ Related parties and related transaction (continued)
(7) Promises with related parties(continued)
Related party built docks and workshops
for the Group Dec 31, 2014 Dec 31, 2013
CCCC Third Harbor Engineering Co.,
Ltd. 13,750,000 13,750,000
Selling goods or assets to related party Dec. 31, 2014 Dec. 31, 2013
Friede & Goldman, Llc. 238,167,735 280,587,160
Jiangsu LongYuan Zhenhua Marine
Engineering Co., Ltd. 54,635,214 897,809
No.2 Engineering Co., Ltd. of CCCC
Fourth Harbor Engineering Co., Ltd 41,312,416 54,181,359
CCCC Third Harbor Engineering Co.,
Ltd. 37,938,701 20,633,487
Hainan CCCC Fourth Construction Co.,
Ltd 17,710,044 -
CCCC Tunnel Engineering Co., Ltd. 9,119,658 -
No.2 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 9,004,698 6,652,271
China Communications Corporation 8,405,826 -
China Communications Water
Transportation Design & Research
Co.,Ltd. 6,672,629 66,495,726
China Bay Engineering Co., Ltd 5,988,053 5,203,094
No.1 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. 5,966,005 40,328,251
CCCC Third Harbor Engineering Survey
and Design Institute Co., Ltd. 4,515,993 4,220,882
No.2 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. 1,617,636 580,096
CCCC Fourth Harbor Engineering Co.,
Ltd. 333,806 60,085,135
CCCC First Harbor Engineering Co., Ltd. - 130,177
441,388,414 539,995,447
Dec. 31, 2014 Dec. 31, 2013
Invested to the related parties Dec. 31. 2014 Dec. 31, 2013
CCCC USA Company 73,428,000 -
- 234 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅷ Contingencies
As of Dec 31, 2014, the significant contingencies of the Group are as follows:
(1) Suzhong Construction Group Co., Ltd. (Hereinafter referred to as "Suzhong Construction")
contracted the project construction of the Industrial R&D Building in 2008, but the two
sides entered into dispute at settlement upon completion. In September 2013 the
Company filed a request to Shanghai Arbitration Commission for Suzhong Construction to
pay an overdue fine of 7.444 million Yuan due to delays of construction and so on, while in
February 2014 Suzhong Construction filed a counterclaim to Shanghai Arbitration
Commission requesting the Company to pay about 162 million Yuan for the project
settlement and related interest costs; the arbitration case will be initially heard shortly. The
Company believes the said case shall not impose significant impact on the 2014 financial
statements of the Company.
(2) In 2008 the Company and Flour Limited (hereinafter referred to as "Fluor") British wind
power project signed an agreement of sales and installation for wind power steel pipe pile
products for the British Wind Power Project. In the project construction process, the
Company and Fluor, by way of friendly consultations and in the spirit of good cooperation,
maintain dispute handling normal communication mechanism. In June 2010, for the
implementation of the contract, after review by the board of directors of the Company, the
Company and Fluor signed a mutual exemption letter, and in 2011 settled the remaining
payment. Afterwards, Flour produced claim to the Company for quality compensation, and
requested the Company to cash the pay-on-claim quality guarantee bond, while the
Company rejected the claim. On March 20, 2014 Flour cashed the amount of 23,409,750
euro bond. The Company has consulted professional lawyers, and is planning to claim
under the guarantee bond a compensation for principal and interest loss through
corresponding legal procedures
In September 2014, Flour initiated proceedings for the breach caused by the problems
related to the product quality to High Court of Justice, Queen’s Bench Division, The
Technology and Construction Court (hereinafter referred to as “TCC Court of Britain
Queen’s Bench”) and asked the Company for the compensation of 250 million Pounds for
additional test and repair cost, project period delay and related loss. (including the
cashed bond amount of 23,409,750 Euro). The Company didn’t acknowledge the claim
for the compensation from Flour
The Company attached great importance to this case, established special team and hired
senior legal team both at home and abroad to actively advocate the Company’s rights and
protect the Company’s rights from damaged. At present, this case is still in the judgment.
Therefore, the Company is unable to reliably estimate the possible result of the case,
possible loss and profit possibility and amount arising from that. The Company will timely
disclose the related impact based on the progress.
(3) As of Dec. 31, 2014,the Group provided financial guarantee of amount of 19,184,000
Yuan to customer Jiangsu Yanweigang Port Co., Ltd which will be due on Nov 11, 2017.
The amount above reflects the max loss caused to the Group once it breaches the
agreement. The Jiangsu Yanweigang Port Co., Ltd has health finance with no predicted
significant debt breach risk. The Grouo didn’t confirm the debt related to the financial
guarantee.
- 235 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅸ Promises
(1) Capital expense promises
List in the following is the capital expenses promises not yet to be confirmed in the
financial statements but the contracts have been signed on the reporting day.
2014 Dec. 31 2013 Dec. 31
House, building and equipment 82,860,285 92,345,336
(2) Operating leasing Promises
According to non-revocable operating leasing contracts signed, the minimum
rent to be paid is listed as follows:
2014 Dec. 31 2013 Dec. 31
within one year 14,492,026 14,854,526
one to two years 14,849,826 14,492,026
two to three years 15,229,026 14,849,826
above three years 103,934,727 119,163,753
148,505,605 163,360,131
(3) L/C Promises
The company entrusted bank to issue several L/C’s to purchase imported
components or parts. As of Dec. 31, 2014 payable under the L/C’s
amounted to 2,062,335,305 Yuan (Dec. 31, 2013: 1,796,062,094 Yuan).
(4) Investment promise
Based on the agreement signed by the Company and Portunus Liman
Hizmetleri ve Yedek Parca Servis Tic. A.S on Nov 28, 2014, the Company
promised to increased capital of 200000 USD to the joint venture ZPMC
Mediterranean Liman Makinalari Ticaret Anonim Sirketi. As of Dec. 31, 2014,
the company has increased to 51,150 USD.
Based on the agreement signed by the Company and CCCC holding on Dec
19, 2014, the Company promised to increase the capital of 12 million USD to
CCCC USA Company. As of Dec. 31, 2014, the Company didn’t make
investment.
- 236 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅹ Enterprise combination
See Note Ⅴ(1)(2)
Ⅺ Financial risks
Operation of the Group faces various financial risks: market risks (mainly
foreign exchange risks and interest rate risks), credit risks and liquidity risks.
The overall risk control planning of the Group aims at the unpredictability of
financial market, in an attempt to minimize the potential impact on the financial
result of the Group
(1) Market risks
(a) Foreign risks
Major production of the Group is located within the boarder of China, but
major businesses are settled in USD and Euro. Therefore there exist risks
with already-confirmed foreign currency assets and liabilities and future
foreign currency transaction (foreign currency assets and liabilities and foreign
currency transaction are mainly priced by USD and Euro). The Group’s
financial department is responsible for the controlling of the Group’s foreign
currency transaction and the size of foreign currency assets and liabilities, to
minimize foreign risks. Considering above, the Group controls its foreign risks
via establishing time foreign contracts. As of Dec. 31, 2014 and Dec. 31, 2013
status of time foreign contracts not due are shown in Note Ⅳ (2).
- 237 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅺ Financial risks (continued)
(1) Market risks (continued)
(a) Foreign risks (continued)
As of Dec. 31, 2014 and Dec. 31, 2013, RMB amount of the Group’s foreign
currency financial assets and financial Liabilities are listed as follows:
Dec. 31, 2014 (RMB Equivalents)
Other
Foreign
USD Euro monetary Total
Foreign monetary
Financial assets
Monetary capital 1,683,764,043 139,164,396 45,153,825 1,868,082,264
Receivables 1,529,630,490 406,439,231 394,484,760 2,330,554,481
439,638,58
3,213,394,533 545,603,627 5 4,198,636,745
Foreign monetary
financial liabilities -
10,530,841,24
short-term loans 5 43,498,520 - 10,574,339,765
Payables 458,520,216 188,429,025 380,279 647,329,520
Non-current liabilities
due within one
year 856,660,000 - - 856,660,000
Long term loans 673,090,000 - - 673,090,000
12,519,111,46
1 231,927,545 380,279 12,751,419,285
Dec. 31, 2013 (RMB Equivalents)
Other Foreign
USD Euro monetary Total
Foreign monetary
Financial assets
Monetary capital 1,054,621,917 322,790,729 148,402,668 1,525,815,314
Receivables 2,140,090,105 413,722,164 86,917,165 2,640,729,434
3,194,712,022 736,512,893 235,319,833 4,166,544,748
Foreign monetary
financial liabilities -
short-term loans 9,583,865,004 - - 9,583,865,004
Payables 286,193,028 235,478,511 2,138,091 523,809,630
Non-current liabilities
due within one
year 176,810,100 - - 176,810,100
Long term loans 1,463,256,000 - - 1,463,256,000
11,510,124,13
2 235,478,511 2,138,091 11,747,740,734
- 238 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
As of December 31, 2014, regarding all kinds of financial assets and financial liabilities in
USD of the Group, if the Yuan sees an appreciation or depreciation by 1% against the
dollar, while other factors remain unchanged, the Group will increase or decrease the total
profit by approximately 93,057,169 Yuan (December 31, 2013: to reduce or increase the
losses totaling approximately 83,154,121 Yuan).
As of December 31, 2014, regarding the Group's all kinds of financial assets in Euro and
the financial liabilities in Euro, if the RMB sees appreciation or depreciation against Euro
by 1%, while other factors remain unchanged, the Group will reduce or increase the total
profit by approximately 3,136,761 Yuan (December 31, 2013: to increase or reduce the
total amount of losses by 5,010,344 Yuan).
- 239 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅺ Financial risks (continued)
(1) Market risks (continued)
(b) Interest rate risks
Interest rate risks of the Group mainly originate from long-term liabilities with interest
including long term bank loans and bonds payable. Financial liabilities with flexible rates
confront the Group with cash flow interest rate risks, while financial liabilities with fixed rates
put the Group against fair value interest rate risks. The Group fixes the fraction of contracts
with fixed rates and those with flexible rates based on corresponding market environment.
As of Dec. 31, 2014, the Group’s long-term liabilities with interests include only contracts
with flexible rates priced in USD, and contracts with fixed rates priced in RMB and USD.
Amount of contracts with flexible rates priced in USD is 1,284,990,000 Yuan (Dec. 31,
2013: 1,280,349,000 Yuan); and the amount of contracts with fixed rates priced in RMB is
3,567,000,000 Yuan (Dec. 31, 2013: 4,447,777,911 Yuan). and the amount of contracts
with fixed rates priced in USD is 244,760,000 Yuan (Dec. 31,2013: 182,907,000 Yuan).
The financial division of the Group keeps close watch over the interest rates level of the
Group. Since the rise of interest rates will increase the cost of newly added liabilities with
interests, interest expenses on unpaid liabilities with interests priced in flexible rates, and
will significantly impact the financial results of the Group, the management will lower the
rate risks via swap contracts based on current market status. In 2014, the Group had no
such swap arrangements.
As of Dec. 31, 2014 when the rate of long-term liabilities with flexible rates increases or
decreases by 100 basis points while other factors remain unchanged, the Group will
decrease or increase a total interest expenditure of about 12,849,900 Yuan (2013: total
increased or decreased interest expenditure amount being 12,803,490 Yuan).
(2) Credit risks
The Group manages credit risks by portfolio classification. Credit risks mainly originate from
bank loans, accounts receivable, other receivables, notes receivable and other current
assets-bank financial products etc.
Bank deposits of the Group and other current assets-bank financial products are mainly put
in state-owned banks and other large or medium-sized listed banks. Therefore, the Group
believes they suffer no significant credit risks or cause any significant losses as a result of
contract breach of the counterparts.
In addition, speaking of accounts receivable, other receivables, and notes receivable, the
Group established related policies to control credit risks. The Group evaluates clients’ credit
qualification and sets corresponding credit terms on the basis of clients’ financial status,
possibility of obtaining guaranty from a third-party, credit record and other factors including
current market status rating. The Group monitors clients’ credit record on regular basis.
When client is found with bad credit record, the Group will sent out written calls, shorten
credit terms or cancel credit terms, in an attempt to ensure that the Group’s overall credit
- 240 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
risks are within control.
Ⅺ Financial risks (continued)
(3) Liquidity risks
Subsidiaries within the Group are responsible for their own prediction of cash flow. The
financial section of the head office continues to monitor the capital demand for short-term
and long-term capital at the group level after collecting all predictions of subsidiaries, to
ensure sufficient cash reserve and cashable securities. Meanwhile, the financial section of
the head office continues to monitor the financial and non-financial factors prescribed in
credit agreements and loan agreements, to ensure the Group should get sufficient line of
credit from key financial institutions to satisfy capital demand both in short term and long
term.
On Dec. 31, 2014, as of B/S day, various financial assets and liabilities of the Group are
listed as follows by due dates in undiscounted contracted cash flow (principal and interest
included):
Dec. 31,2014
one to two two to five
within one year years years Total
Financial
liabilities
short-term
loans 20,957,384,835 - - 20,957,384,835
Payables 5,041,952,965 - - 5,041,952,965
Notes
payable 1,934,231,179 - - 1,934,231,179
Interest
payable 595,551,629 - - 595,551,629
Dividends
payable 854,881 - - 854,881
Non-current
liabilities
due within
one year 2,714,290,393 - - 2,714,290,393
Long term 2,396,259,89
loans 117,470,593 0 162,154,624 2,675,885,107
Bonds 3,834,580,00
payable 225,387,500 0 - 4,059,967,500
6,230,839,89
31,587,123,975 0 162,154,624 37,980,118,489
On Dec. 31, 2013, as of B/S day, various financial assets and liabilities of the Group are
listed as follows by due dates in undiscounted contracted cash flow (principal and interest
included):
Dec. 31, 2013
one to two two to five
within one year years years Total
- 241 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Financial
liabilities -
short-term
loans 14,862,020,976 - - 14,862,020,976
Payables 3,995,241,377 - - 3,995,241,377
Notes
payable 1,218,223,112 - - 1,218,223,112
Interest
payable 418,390,614 - - 418,390,614
Dividends
payable 33,825,412 - - 33,825,412
Non-current
liabilities
due within
one year 4,510,392,379 - - 4,510,392,379
Long term 1,559,320,87
loans 74,025,188 6 617,505,619 2,250,851,683
Bonds 3,834,580,00
payable 225,387,500 225,387,500 0 4,285,355,000
1,784,708,37 4,452,085,61
25,337,506,558 6 9 31,574,300,553
- 242 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
Ⅻ Fair value estimates
The tire attributed to the fair value measurement results is determined by the min
tire of the input value with significant meaning to the fair value measurement.
Tier One: quotation of the same kind of assets or liabilities on active market.
Tier Two: input value of assets or liabilities observable directly or indirectly except
for market quotation at Tier One.
Tier Three: unobservable input value of related assets and liabilities
(1) Assets continuously measured at fair value
On Dec. 31, 2014, financial assets measured by fair value are listed as follows
based on above 3 tiers:
tier one tier two tier three Total
Financial assets
Financial assets measured at
fair value with the change
accounted in current profit and
loss
- Forward foreign exchange
contracts - 25,735,001 - 25,735,001
Available-for-sale financial
assets
short-term financial products 5,686,257,75 5,686,257,75
- 6 - 6
Available-for-sale equity 433,180,45
instruments 3 - - 433,180,453
Total assets 433,180,45 5,711,992,75 6,145,173,21
3 7 - 0
On Dec. 31, 2014, financial liabilities measured by fair value are listed as follows based on
above 3 tiers:
tier one tier two tier three Total
Financial assets
Financial debt measured at fair
value with the change
accounted in current profit
and loss
Forward foreign exchange
contracts - 28,752,000 - 28,752,000
- 28,752,000 - 28,752,000
- 243 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XII Fair value estimates (continued)
(1) Financial assets measured by fair value
On Dec. 31, 2013, financial assets measured by fair value are listed as follows based on above 3
tiers:
tier one tier two tier three Total
Financial liabilities
Financial assets measured at fair
value with the change
accounted in current profit and
loss
Forward foreign exchange
contracts - 121,169,489 - 121,169,489
Available-for-sale financial assets - - - -
- short-term financial products 4,202,678,32 4,202,678,32
- 5 - 5
- Available-for-sale equity 172,770,00
instruments 0 - - 172,770,000
Total assets 172,770,00 4,323,847,81 4,496,617,81
0 4 - 4
On Dec. 31, 2013, financial liabilities measured by fair value are listed as follows based on above
3 tiers:
tier one tier two tier three total
Financial debt
Financial liabilities
Financial debt measured at fair
value with the change
accounted in current profit
and loss
- Forward foreign exchange
contracts - 644,404 - 644,404
- 644,404 - 644,404
- 244 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XII Fair value estimate (continued)
(1) Continuous assets measured at fair value (continued)
The Group regards the event occurring date transferring between the tires as the
time point for confirmation. There is no transfer between tire 1 and 2 this year.
As for the financial instrument traded on active market, the Group will confirm the
fair value with the quotation in the active market; as for the financial instrument not
traded on active market, the Group confirms the fair value using the value
estimation technology. Cash flow discount model is used as value estimation
model. The input values of the value estimate technology includes the riskless
interest rate and long exchange rate.
Related information of fair value measurement at tire 2:
Value Observable input values
estimate
Dec. 31, 2014 technolog
fair value y Name Scope
Financial assets measured
at fair value with the
change accounted in
current profit and loss
—
Cash flow
USD long exchange discount USD: RMB 6.1380-
contract 25,735,001 model long rate 6.3756
Financial assets available
for sale—
Cash flow Contract agr
Bank short-term financing discount eed profit rat 4.25%-
product 5,686,257,756 model e 6.74%
Financial debt measured at
fair value with the
change accounted in
current profit and loss—
Cash flow
USD long exchange discount USD: RMB l 6.1380-
contract (28,752,000) model ong rate 6.3756
- 245 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XII Fair value estimate (continued)
(2) Assets and debt not measured at fair value but disclosing the fair value
Financial assets and financial debt measured with amortized cost include:
receivables, long-term receivables, short-term loan, payables, long-term loan and
payable bond.
The long-term receivables are the receivables with floating rate. The difference
between the book value and fair value is small. Besides the financial assets and
financial debt below, the difference between the book value and fair value of the
financial assets and financial debt not measured at the fair value is small.
Dec. 31, 2014 Dec. 31, 2013
book value fair value book value fair value
Financial debt
Long-term
loan 2,490,090,000 2,404,939,576 1,930,349,000 2,017,004,376
Bonds payable 3,799,615,401 3,597,598,000 3,797,777,911 3,776,441,036
6,289,705,401 6,002,537,576 5,728,126,911 5,793,445,412
The fair value is confirmed by the quotation in the active market when holding
the payable bond with due investment and active market, which belongs to tire 1.
As for the long-term loan, long-term payables and payables without active
market, the fair value is confirmed by the future cash flow specified in the
contract according to the comparable credit level and the same cash flow rate
provided in the same conditions, which belongs to tire 3.
- 246 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIII Capital management
The capital management policy aims to ensure that the Group could
continuously operate, thus to provide return to the shareholders and profit to
other stakeholders, and maintain the optimal capital structure to reduce the
capital cost.
In order to maintain or adjust the capital structure, the Group may adjust the
dividend amount to the shareholders, return the capital to the shareholder,
release new stock or sell the asset to reduce the debt.
The total capital of the Group is the shareholder rights listed in the consolidation
balance sheet. The Group is not limited by the external forced capital
requirement and utilizes the debt ratio to monitor the capital. This ratio is
calculated by the debt net amount divided by the total capital. The debt net
amount is the total loan (including the short-term loan, other non-current debt
due within one year and long-term loan and the payable bond listed in
consolidation balance sheet) deducting the cash and cash equivalent. The total
capital is the total shareholders’ rights adding the debt net amount.
As of Dec. 31, 2014 and Dec. 31, 2013, the Group debt ratio is shown as below:
Dec 31, 2014 Dec 31, 2013
Debt ratio 65% 60%
- 247 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements
(1) Accounts receivable
Dec. 31, 2014 Dec. 31, 2013
Accounts receivable 6,838,349,694 5,821,700,760
Less: bad debt provision (832,754,361) (702,957,451)
6,005,595,333 5,118,743,309
(a) Accounts receivable debt age as follows:
Dec. 31, 2014
One to six months 4,996,010,253
Seven to twelve months 310,875,441
one to two years 740,928,018
two to three years 180,939,289
three to four years 134,202,122
four to five years 69,767,558
above five years 405,627,013
6,838,349,694
Dec. 31, 2013
within one year 4,924,292,178
one to two years 365,816,488
two to three years 209,602,610
above three years 321,989,484
5,821,700,760
- 248 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(1) Accounts receivable (continued)
(b) Accounts receivable listed in type as follows
Dec. 31, 2014 Dec. 31, 2013
book value balance bad debt provision book value balance bad debt provision
amount Propor amount Prov amount Propor amount Prov
tion in ision tion in ision
total ratio total ratio
Big single
amount,
provided for
bad debt
separately 107,819,500 2% (107,819,500) 100% 158,184,500 3% (158,184,500) 100%
Total bad debt
provision
accrued in
groups
Credit risk
portfolio
- Related party 3,054,340,373 44% - - 2,305,650,780 40% - -
- third party 3,525,476,370 52% (576,612,618) 16% 3,320,989,427 57% (510,279,469) 15%
Single amount,
though not
significant,
separate
provision for
bad debt made 150,713,451 2% (148,322,243) 98% 36,876,053 - (34,493,482) 94%
6,838,349,694 100% (832,754,361) 12% 5,821,700,760 100% (702,957,451) 12%
(c) As of Dec. 31, 2014, the accounts receivable with big single amount, provided for bad
debt separately analysis is as following:
book value balance bad debt provision Provision ratio Reason
Accounts (i)
receivable 1 107,819,500 (107,819,500) 100%
(i) As of Dec. 31, 2014, because the counter-party seriously lacks funds, the
Company concludes the accounts receivable concerned are hard to recover,
therefore full amount is provided for bad debts.
- 249 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(1) Accounts receivable (continued)
(d) Among account receivable from total bad debt provision made in groups, portfolio
analysis by ages
Dec. 31, 2014
book value balance bad debt provision
Provisio
amount ratio amount n ratio
One to six
months 2,228,163,806 63% - -
Seven to twelve
months 266,148,297 8% (2,582,733) 1%
one to two years 367,863,879 10% (51,134,670) 14%
two to three
years 124,339,852 4% (37,301,956) 30%
three to four
years 72,290,207 2% (35,605,104) 49%
four to five years 61,043,316 2% (44,361,142) 73%
above five years 405,627,013 11% (405,627,013) 100%
3,525,476,370 100% (576,612,618) 16%
Dec. 31, 2013
book value balance bad debt provision
Provision
amount ratio amount ratio
within one year 2,472,945,980 75% (14,901,997) 1%
one to two
years 347,427,051 10% (100,425,131) 29%
two to three
years 188,240,912 6% (82,576,857) 44%
above three
years 312,375,484 9% (312,375,484) 100%
3,320,989,427 100% (510,279,469) 15%
- 250 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(1) Accounts receivable (continued)
(e) As of Dec. 31, 2014, accounts receivable with bad debt provision, with not big
single amount but being tested separately for impairment as follows:
book value bad debt proportion Reason
balance provision
Accounts
50,365,000 (50,365,000) 100% (i)
receivable 1
Accounts
24,476,061 (24,476,061) 100% (ii)
receivable 2
Accounts
19,346,075 (19,346,075) 100% (iii)
receivable 3
Accounts
18,200,475 (18,200,475) 100% (iii)
receivable 4
Accounts
17,183,761 (14,792,553) 86% (iv)
receivable 5
Accounts
10,279,920 (10,279,920) 100% (iii)
receivable 6
Accounts
6,841,945 (6,841,945) 100% (iii)
receivable 7
Accounts
4,020,214 (4,020,214) 100% (iii)
receivable 8
150,713,451 (148,322,243) 98%
(i) As of Dec. 31, 2014, because the counter-party seriously lacks funds, the
Company concludes the accounts receivable concerned are hard to recover,
therefore full amount is provided for bad debts.
(ii) As of Dec. 31, 2014, due to delayed delivery, the Company made bad debt
provision of 24,476,061 Yuan based on the highest fine in the contract.
(iii) As of Dec. 31, 2014, due to contract dispute, the Company concludes that
the accounts receivable would be difficult to recover, therefore full amount is
provided for bad debts.
(iv)。As of Dec. 31, 2014, due to delayed delivery, the Company made bad debt
provision of 14,792,553 Yuan based on the highest fine in the contract.
- 251 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(1) Accounts receivable (continued)
(f) The bad debt provision is 287,489,946 Yuan this year, and the accounting policy
change return is 125,585,743 Yuan (Note II (29)). The returned or collected bad debt
provision is 28,467,537 Yuan. The key return or collection amount is shown as
below:
Reason for Former bad Return or collection Return mode
return or debts basis amount
collection and rationality
Anticipated 10,005,000 monetary
Accounts Vigorous not possible capital
receivable 1 recovery to recover
Anticipated 9,050,000
Accounts Vigorous not possible monetary
receivable 2 recovery to recover capital
Anticipated 3,626,115 monetary
Accounts Vigorous not possible capital
receivable 3 recovery to recover
Anticipated 2,771,682 monetary
Accounts Vigorous not possible capital
receivable 4 recovery to recover
Anticipated 1,012,576 monetary
Accounts Vigorous not possible capital
receivable 5 recovery to recover
26,465,373
(g) As of Dec. 31, 2014, the account receivable summary analysis of top 5 arrear is
shown as following:
Bad debt Proportion in
provision total accounts
Balance amount receivable
Total amount of top
5 account
receivables 2,357,204,331 - 34%
- 252 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(2) Other receivables
Dec. 31, 2014 Dec. 31, 2013
Subsidiary current accounts 8,107,242,962 7,403,332,620
Tax for unsettled payment
receivable 181,016,553 74,555,897
Export tax rebate 150,221,658 4,604,376
Customs guarantee deposit 69,159,590 9,879,707
Receivables employees
mutual aid funds 54,992,148 94,735,938
Temporary loan product on-
site service 49,154,799 72,392,144
Bid bond payments 35,531,409 20,684,428
Leasing payment receivable 32,965,403 31,700,229
Unit borrower receivable 20,544,798 19,520,000
Asset disposal payment
receivable from related party 10,000,000 10,000,000
Receivables from parent
company equity for transfer - 403,315,906
Others 27,373,689 34,069,638
8,738,203,009 8,178,790,883
Less: bad debt provision (16,776,791) (12,049,965)
8,721,426,218 8,166,740,918
- 253 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(2) Other receivables (continued)
(a) Other receivables debt age analysis as follows:
Dec. 31, 2014
within one year 8,662,980,841
one to two years 20,087,289
two to three years 5,770,684
three to four years 2,648,467
four to five year 33,797,497
above five years 12,918,231
8,738,203,009
Dec. 31, 2013
within one year 8,036,295,908
one to two years 39,176,687
two to three years 2,328,414
above three years 100,989,874
8,178,790,883
- 254 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(2) Other receivables (continued)
(b) Other receivables classified in category as follows:
Dec. 31, 2014
book value balance bad debt provision
amount Proportio amount Provision
n in total ratio
Big single amount,
provided for bad debt
separately - - - -
Total bad debt provision
accrued in groups
Credit risk portfolio
- Cash deposit 104,691,000 1% - -
- Employee’s loan and
reserve fund 104,146,946 1% - -
- Others 8,517,315,098 98% (4,726,826) -
Single amount, though not
significant, separate
provision for bad debt
made 12,049,965 - (12,049,965) 100%
8,738,203,009 100% (16,776,791) -
Dec. 31, 2013
book value balance bad debt provision
amount Proporti amount Provision
on in tot ratio
al
Big single amount,
provided for bad debt
separately 8,099,912,442 99% - -
Single amount, though not
significant, separate
provision for bad debt
made 78,878,441 1% (12,049,965) 15%
8,178,790,883 100% (12,049,965) -
(c) As of Dec. 31, 2014, the Company did not accrue bad debt provision for other
receivables with big single amount, and provided for bad debt separately
- 255 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(2) Other receivables (continued)
(d) In the total bad debt provision accrued in groups, the portfolio with debt age
analysis method is as follows:
Dec. 31, 2014
book value balance bad debt provision
amount Proporti amount Provisi
on in tot on
al ratio
One to six months 8,401,338,976 99% - -
Seven to twelve
months 107,742,262 1% (1,077,423) 1%
one to two years 4,218,676 - (632,801) 15%
two to three years 180,855 - (54,256) 30%
three to four years 521,922 - (260,961) 50%
four to five years 2,444,088 - (1,833,066) 75%
above five years 868,319 - (868,319) 100%
8,517,315,098 100% (4,726,826) -
(e) As of Dec. 31, 2014, other receivables analysis for the single amount, though not
significant, separate provision for bad debt is as follows:
book value bad debt
balance provision Provision ratio Reason
Other
receivables 1 5,540,286 (5,540,286) 100% (i)
Other
receivables 2 3,037,042 (3,037,042) 100% (i)
Other
receivables 3 1,779,872 (1,779,872) 100% (i)
Other
receivables 4 1,692,765 (1,692,765) 100% (i)
12,049,965 (12,049,965) 100%
(i) As of Dec. 31, 2014, the other receivables concerned are hard to recover, as
believed by the Company, due to cancellation of contract. Therefore, it is fully
provided for bad debts.
- 256 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(2) Other receivables (continued)
(f) As of Dec. 31, 2014, top 5 accounts receivable balance that are collected by arrears
as follows:
Proportion in total bad debt
Nature Amount Age accounts receivable provision
Company Temporary debi Within
A t of subsidiary 2,267,621,681 one year 26% -
Company Temporary
B debit of Within
subsidiary 1,322,213,513 one year 15% -
Company Temporary
C debit of Within
subsidiary 1,250,749,851 one year 14% -
Company Temporary
D debit of Within
subsidiary 886,813,767 one year 10% -
Company Temporary
E debit of Within
subsidiary 732,667,351 one year 8% -
6,460,066,163 73% -
(g) As of Dec. 31, 2014, the company has no government subsidies confirmed as
receivables. (Dec. 31, 2013: N/A).
(3) Long term equity investment
Dec. 31, 2014 Dec. 31, 2013
Subsidiary (a) 5,285,834,533 4,475,486,245
Joint ventures (b) 163,250,280 145,286,585
Associates((c) 756,146,822 208,433,032
6,205,231,635 4,829,205,862
The Company has no limit of long-term investment to cash-in.
- 257 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(3) Long term equity investment (continued)
(a) Subsidiaries
Addition or deduction o
Dec. 31, 2013 f this year Dec. 31, 2014
Addition or deduction
of investment
Shanghai Zhenhua Port Machinery
Heavy Industry Co., Ltd. 4,950,000 - 4,950,000
Shanghai Zhenhua Heavy Industries
Machinery Co., Ltd. 5,014,200 - 5,014,200
Shanghai Zhenhua Port Machinery
(Hong Kong) Co., Ltd. - - -
Shanghai Zhenhua Shipping Co., Ltd. 140,260,673 - 140,260,673
Shanghai Zhenhua Heavy Industries
(Group) Zhangjiagang Port Machinery
Co., Ltd. 4,518,000 - 4,518,000
Nantong Zhenhua Heavy Industry
Equipment Manufacturing Co., Ltd. 854,936,900 - 854,936,900
Nantong Zhenhua Heavy Industry Steel
Structure Processing Co., Ltd. 598,110 - 598,110
Jiangyin Zhenhua Port Machinery Steel
Structure Manufacturing Co., Ltd. 579,983 - 579,983
CCCC Shanghai Port Machinery Plant
Co., Ltd. 2,201,086,744 - 2,201,086,744
Shanghai Zhenhua Heavy Industries
Group (Nantong) Transmission
Machinery Co., Ltd. 300,000,000 - 300,000,000
Shanghai Zhenhua Heavy Industries
Group (Nantong) Co., Ltd. 300,000,000 - 300,000,000
Shanghai Zhenhua Heavy Industries
Electric Co., Ltd. 50,000,000 - 50,000,000
ZPMC GmbH Hamburg 207,940 - 207,940
ZPMC Netherlands B.V. 149,717 - 149,717
Shanghai Zhenhua Heavy Industries
Vessel Transport Co., Ltd. 100,000,000 - 100,000,000
Shanghai Zhenhua Testing Technology
Consulting Co., Ltd. 7,000,000 - 7,000,000
ZPMC LANKA COMPANY (PRIVATE)
LIMITED 6,183,978 - 6,183,978
Nanjing Ninggao New Channel
Construction Co., Ltd. 500,000,000 590,000,000 1,090,000,000
Qidong Marine Co., Ltd (Note 6(1)) - 203,000,000 203,000,000
ZPMC ENGINEERING AFRICA(PTY)
LTD.(Note 6 (1)) - 3,084,000 3,084,000
ZPMC KOREA CO., LTD.( Note 6 (1)) - 2,876,209 2,876,209
ZPMC Engineering (India) Private
Limited (Note 6 (1)) - 2,953,200 2,953,200
ZPMC AUSTRALIA COMPANY PTY
LIMITED (Note 6 (1)) - 2,708,500 2,708,500
ZPMC North America Inc (Note 6 (1)) - 1,850,430 1,850,430
ZPMC SOUTHEAST ASIA HOLDING
PTE. LTD.( Note 6 (1)) - 3,875,949 3,875,949
4,475,486,245 810,348,288 5,285,834,533
- 258 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(3) Long term equity investment (continued)
(b) Joint ventures
Addition or deduction of this year
Addition or deduction of Net gains after Impairment
Dec. 31, 2013 investment adjusting on equity Dec. 31, 2014 provision
Jiangsu LongYuan Zhenhua
Marine Engineering Co., Ltd 145,203,385 - 17,719,256 162,922,641 -
ZPMC Mediterranean Liman Makinalari
Ticaret Anonim Sirketi 83,200 313,902 (69,463) 327,639 -
145,286,585 313,902 17,649,793 163,250,280 -
- 259 -
Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(3) Long term equity investment (continued)
(c) Associates
Addition or deduction of this year
Declaring to release
addition or deduction Net gains after adjusting on cash dividend or pro mpairment
Dec. 31, 2013 of investment equity fit Dec. 31, 2014 provision
CCCC Marine Engineering Vessel
Technology Research Centre Co., Ltd. 15,000,000 - 79,243 15,079,243 -
Shanghai Zhenhua Heavy Industries
(Group) Changzhou Paint Co., Ltd. 15,553,666 - 959,962 (1,483,334) 15,030,294 -
CCCC Real Estate Yixing Co., Ltd. 177,879,366 - (3,192,556) - 174,686,810 -
CCCC Financing & Rental Co., Ltd (i) - 540,000,000 11,350,475 - 551,350,475 -
208,433,032 540,000,000 9,197,124 (1,483,334) 756,146,822 -
(i) As of May, 8, 2014 , the Company invested to establish CCCC Financing & Rental Co., Ltd in the form of equity
participation. The registration capital is 1,800,000,000 Yuan. The Company invested 540,000,000 holding 30% of the
share The main business of the company is financing and rental.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(4) Operating revenue and operating cost
2014 2013
Major operating income 21,787,540,224 20,072,846,485
Other operating income 1,008,007,863 1,180,152,835
22,795,548,087 21,252,999,320
2014 2013
Major operating cost 18,862,864,786 18,565,818,406
Other operating cost 982,442,205 1,215,852,568
19,845,306,991 19,781,670,974
(a) Operating revenue and operating cost
2014 2013
Major operating Major operating Major operating Major operating
income cost income cost
Container cranes 12,209,323,000 10,374,686,526 12,048,100,723 10,707,367,110
Marine heavy
equipment 4,746,257,265 4,149,358,322 4,158,835,128 4,062,662,794
Bulk machinery 3,572,087,888 3,477,985,297 3,008,979,696 2,957,615,427
Steel structures
and related income 1,259,872,071 860,834,641 856,930,938 838,173,075
21,787,540,224 18,862,864,786 20,072,846,485 18,565,818,406
(b) Other operating income and other operating costs
2014 2013
Other operating Other operating Other operating Other operating
income cost income cost
Sales of materials 719,948,839 780,758,903 960,242,197 1,068,189,845
Equipment leasing
and others 288,059,024 201,683,302 219,910,638 147,662,723
1,008,007,863 982,442,205 1,180,152,835 1,215,852,568
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Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(4) Operating revenue and operating cost (continued)
(c) Operating income from top 5 clients
Income from top 5 clients is 3,029,606,375 Yuan (2013:3,597,119,036 Yuan),
taking 13% of total sales income of the Company. (2013:17%), Details as
follows:
Proportion in total
operating revenue of
Operating revenue the Company (%)
COMPANY A 1,003,936,074 4%
COMPANY B 806,276,711 4%
COMPANY C 499,415,002 2%
COMPANY D 387,385,197 2%
COMPANY E 332,593,391 1%
3,029,606,375 13%
(5) Investment gains
2014 2013
Investment gains during holding available-
for-sale financial assets 280,003,324 151,188,587
Gains from disposal of financial assets
available for sales 75,078,789 -
Long term equity investment (loss)/gains on
equity basis (Note XIV (3)) 26,846,917 (3,111,958)
Financial assets profits available for sale
calculated by cost method 1,103,460 -
Cash dividends distributed by the
subsidiaries 68,774 -
Investment gains from disposal of
subsidiaries - 433,778,126
383,101,264 581,854,755
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Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
XIV. Notes to major items in the Company’s statements (continued)
(6) Supplementary information of cash flow statements
(a) Adjust net (loss) / profit to cash flow in operating activities
2014 2013
Net profit/(loss) 344,581,636 (109,688,035)
Add/(less): assets impairment provision 548,851,542 793,738,223
Fixed assets and real estate as
investment depreciation 588,945,530 662,949,380
Intangible assets and real estate
as investment amortization 43,948,438 43,496,658
Disposal of fixed assets,
intangible assets and other long
term assets income (5,825,281) (242,889,793)
Fair value change loss/(income) 109,771,041 (87,557,341)
Financial expense 1,197,636,958 499,251,967
Investment gains (383,101,264) (581,854,755)
Deferred corporate tax assets
increase (1,109,861) (14,540,533)
Deferred corporate tax assets
decrease (18,035,508) -
Inventories decrease 87,836,790 1,097,122,613
Building contract amount
(increase)/ decrease (2,148,611,836) 1,152,584,073
Operating receivables increase (2,129,970,927) (1,845,335,915)
Operating payables increase/
(decrease) 2,482,068,725 (3,646,357)
Net cash flow from operation activities 716,985,983 1,363,630,185
(b) Net cash movement
2014 2013
Closing cash balance 1,272,228,765 2,736,478,139
Less: starting cash balance (2,736,478,139) (2,137,291,866)
Net cash (decrease)/ increase (1,464,249,374) 599,186,273
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Shanghai Zhenhua Heavy Industries Co., Ltd.
2014 Financial Statements Note
(Unless otherwise specified, the amount units is RMB.)
I Non-reoccurring profit and loss statements
2014 2013
Non-current assets disposal net profit 13,948,136 241,193,949
Government subsidy accounted in current profit and loss 20,316,889 47,878,876
Fair value change profit and loss generated by holding
transaction financial assets and transaction financial debt;
investment profit and loss obtained from disposal of
transaction financial assets and transaction financial debt
and financial assets available for sales 286,253,779 326,109,601
Investment profit from disposal of subsidiaries - 749,942,782
Other operating revenue and expense net amounts except
for items above 15,164,034 3,993,654
335,682,838 1,369,118,862
Income tax influence amount (52,493,363) (219,993,088)
Minority shareholder rights influence amount (post tax) (4,221,354) (70,237)
278,968,121 1,149,055,537
Non-reoccurring profit and loss statements preparation basis
It is in accordance with the regulations specified in Information Disclosure
Explanatory Public Notice of Company Issuing Securities No. 1—Non-reoccurring
Profit and Loss [2008], the non-reoccurring profit and loss refers to the transaction
and profit & loss without direct relationship to the normal operation of the Company,
or related to the normal operation but it will influence the correct judgment of the
operation performance and profitability made by the users of the statements.
II Net assets profit ratio and gain (loss) per share
Gain/(loss) per share
Weighted average
net asset gain ratio(%) Basic gain/(loss) per Diluted gain/(loss) per
share share
2014 2013 2014 2013 2014 2013
Net profit attributed
to common
shareholders 1.36% 0.97% 0.05 0.03 0.05 0.03
Net loss deducted
the non-
reoccurring profit
and loss
attributed to
common
shareholders (0.54%) (7.03%) (0.02) (0.23) (0.02) (0.23)
III Supplementary information of accounting policies change
The Group has changed the related accounting policies and traced back the 2013
financial statements according to Enterprise Accounting Standard No. 2—Long Stock
Investment and other 9 standards (refer to Note II(28)) and listed the consolidation and
balance sheet on Jan 1, 2013.
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