Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
SHENZHEN CHIWAN WHARF HOLDINGS LIMITED
SEMI-ANNUAL REPORT 2017
Date of disclosure: 25 August 2017
Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Section I Important Reminders, Contents & Definitions
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Shenzhen Chiwan Wharf Holdings Limited (hereinafter referred to as “the
Company”) warrant that this report is factual, accurate and complete without any false record,
misleading statement or material omission. And they shall be jointly and severally liable for that.
Liu Bin, managing director, Zhang Fang, CFO, and Li Xiaopeng, financial manager, hereby
confirm that the Financial Report enclosed in this report is factual, accurate and complete.
All the directors attended the board meeting for the review of this report.
The future plans, development strategies and some other forward-looking statements mentioned in
this report shall not be considered as virtual promises of the Company to investors. And investors
are kindly reminded to pay attention to possible risks.
Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by the
Company for information disclosure. And all information about the Company shall be subject to
what’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention to possible
risks.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into
share capital.
This report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Contents
Section I Important Reminders, Contents & Definitions ..................................................................... 1
Section II Company Profile & Financial Highlights ............................................................................ 4
Section III Business Highlights ........................................................................................................... 6
Section IV Performance Discussion and Analysis ............................................................................... 7
Section V Significant Events ............................................................................................................. 14
Section VI Share Changes & Particulars about Shareholders............................................................ 22
Section VII Preference Shares ........................................................................................................... 27
Section VIII Directors, Supervisors and Senior Management Staff .................................................. 28
Section IX Corporate Bonds .............................................................................................................. 29
Section X Financial Report ................................................................................................................ 30
Section XI Documents Available for Reference ................................................................................ 30
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Definitions
Term Refers to Definition
Company, the Company or Chiwan
Refers to Shenzhen Chiwan Wharf Holdings Limited
Wharf
CMPort Refers to China Merchants Port Holdings Company Limited
CND Group Refers to China Nanshan Development (Group) Inc.
Malai Storage Refers to Shenzhen Malai Storage Co., Ltd.
Keen Field Enterprises Limited, a wholly-funded
KFEL Refers to
subsidiary of China Merchants Holdings (International)
The CSRC Refers to China Securities Regulation Commission
The Company Law Refers to The Company Law of the People’s Republic of China
The Securities Law Refers to The Securities Law of the People’s Republic of China
The Articles of Association of Shenzhen Chiwan
The Articles of Association Refers to
Wharf Holdings Limited
The cninfo website Refers to www.cninfo.com.cn
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Section II Company Profile & Financial Highlights
I Basic information about the Company
Stock name Chiwan Wharf A, Chiwan Wharf B Stock code 000022, 200022
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 深圳赤湾港航股份有限公司
Abbreviation (if any) 深赤湾
Company name in English (if any) Shenzhen Chiwan Wharf Holdings Limited
Abbreviation (if any) Chiwan Wharf
II Contact information
Board Secretary Securities Representative
Name Mr. Wang Yongli Ms. Hu Jingjing and Ms. Chen Dan
Address 8/F, Chiwan Petroleum Building, Shenzhen, PRC
Tel. +86 755 26694222 +86 755 26694222
Fax +86 755 26684117 +86 755 26684117
E-mail cwh@szcwh.com cwh@szcwh.com
III Other information
1. Ways to contact the Company
The registered address, office address and their zip codes, website address and email address of the Company did
not change during the reporting period. The said information can be found in the 2016 Annual Report.
2. About information disclosure and the place where this report is kept
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for
disclosing this report and the place where this report is kept did not change during the reporting period. The said
information can be found in the 2016 Annual Report.
IV Major accounting data and financial indicators
Does the Company need to adjust retrospectively or restate accounting data?
□ Yes √ No
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Unit: RMB
Reporting period Same period of last year YoY +/-（％）
Operating revenues 929,608,498.91 904,809,652.24 2.74%
Net profit attributable to
276,407,832.70 266,535,506.97 3.70%
shareholders of the Company
Net profit attributable to
shareholders of the Company before 275,545,048.09 264,716,384.31 4.09%
extraordinary gains and losses
Net cash flows from operating
419,531,779.91 368,657,243.80 13.80%
activities
Basic EPS (RMB/share) 0.429 0.413 3.87%
Diluted EPS (RMB/share) 0.429 0.413 3.87%
Weighted average ROE (%) 5.76% 5.88% -0.12%
As at the end of the
As at the end of last year +/-（％）
reporting period
Total assets 6,784,421,548.53 6,620,476,709.79 2.48%
Net assets attributable to
4,671,374,937.86 4,709,815,552.89 -0.82%
shareholders of the Company
V Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
No such differences
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
No such differences
3. Reasons for accounting data differences under Chinese and overseas accounting standards
□ Applicable √ Not applicable
VI Items and amounts of extraordinary gains and losses
Unit: RMB
Item Amount Note
Gains/losses on the disposal of non-current assets (including the offset part
-448,433.95
of the asset impairment provisions)
Government grants recognized in the current period, except for those
acquired in the ordinary course of business or granted at certain quotas or 498,801.18
amounts according to the government’s unified standards
Non-operating income and expense other than the above 1,614,224.70
Less: Income tax effects 334,195.42
Minority interests effects (after tax) 467,611.90
Total 862,784.61 --
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Section III Business Highlights
I Main business during the reporting period
Is the Company subject to any disclosure requirements for special industries?
No.
We are principally engaged in the handling, warehousing and transportation of containers and bulk cargoes, as
well as the provision of related services. We have 6 container berths and 7 bulk cargo berths in Chiwan Port
(Shenzhen), 3 container berths in Mawan Port (Shenzhen) and 5 bulk cargo berths in Machong Port (Dongguan).
We also have an investment in Laizhou Wharf in Shandong Province.
In the reporting period, the global economy continued to pick up and recovery of international trade accelerated,
but there was still no sign of strong structural growth. The port industry saw faster growth in handling. As a
regional hub for container and bulk cargo carriers, the Company maintained a stable market position and achieved
growth in operating results in the period.
II Material changes in main assets
1. Material changes in main assets
□ Applicable √ Not applicable
2. Main assets overseas
□ Applicable √ Not applicable
III Core competitiveness analysis
Upon more than 3 decades of development, the Company has gathered a pool of experienced professionals and an
excellent managerial team, with its business management highly recognized by shareholders and clients. With
stable client sources and efficient business process flows, the Company is considered a leader in the sector in
terms of operating efficiency. As a mature listed port company in China, the Company owns an excellent brand
and reputation in the market.
Material changes as below in the Company’s core competitiveness during the reporting period:
1. In April 2017, the freight forwarder under the Company bought 50 AMT tow trucks especially designed for
port operations, which have effectively improved the container handling services.
2. In June 2017, alteration of Berth 7# at the Chiwan Wharf was completed and the new berth went into trial
operation, boasting a docking capacity of 70,000-ton ships and a significant increase in unloading efficiency.
These improvements in resource capacity will further increase the Company’s competitiveness and provide
guarantee for its continuously stable development.
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Section IV Performance Discussion and Analysis
I Summary
In the first half of 2017, the global economy continued to pick up, prices of bulk commodities were generally on
the rise and recovery of international trade accelerated, but the global economy lacked momentum in recovery and
there was still no sign of strong structural growth. China furthered its supply-side structural reform and its
innovation-driven development strategy, and was able to bring its economic growth up to 6.9%. Its foreign trade
was improving, with the total volume up 19.6% compared to the same period of last year. As a result, the
country’s port industry saw faster growth in handling. The country’s coastal ports above the designated size
registered a cargo throughput of 4.31 billion metric tons, representing a year-on-year growth of 7.3% (5.6
percentage points higher than the same period of last year), and a container throughput of 0.1 billion TEU, up
7.8% from a year earlier (5.4 percentage points higher than the same period of last year).
In the reporting period, having the big picture in mind, the Company seized market opportunities and forged
ahead, and this was rewarded by increases in its main operating indicators. To be specific, the Company achieved
a cargo throughput of 34.99 million metric tons, a year-on-year increase of 7.4%, which generated operating
revenues of RMB0.93 billion, up 2.7% from the same period of last year, and net profits attributable to the
Company (as the parent company) of RMB0.28 billion, representing a 3.7% growth from a year earlier.
1. Container handling business
In the reporting period, growth in international trade stimulated transport demand; growth in container handling
capacity slowed down but overcapacity still existed; and there were increasing large ships, with 8,000 TEU and
greater ships accounting for 47% of container ships. Freighters witnessed increasing integration and federation.
The three major shipping federations have officially begun operation in this April, with their combined container
shipping capacity taking up as much as 74% of the global capacity. As a result, the shipping industry would be
more centralized and the freight rates would generally remain stable.
In the Pearl River Delta, competition in container handling has intensified and shipping federations have re-
adjusted their shipping routes. All ports in Shenzhen combined achieved a container throughput of 11.865 million
TEU, up 3.8% from the same period of last year, lower than the national average. Under such circumstances, the
Company adopted effective measures to cope with adjustments in freighters’ shipping routes in order to ensure
stability in its business. It strengthened business solicitation and tried to establish relationship with new shipping
routes to offset the decline in its cargo transit business caused by the freighters’ federations’ adjustments to their
shipping routes. As a result, at the end of the reporting period, the shipping routes in cooperation with the
Company increased by 21 on a year-on-year basis, all Asian routes. Meanwhile, the Company continued to
improve its logistics service and wharf services to attract cargo sources from the hinterland, which helped increase
the handled local container volume by 6.4% from a year earlier. In the fierce local competition, the Company
realized a container throughput of 2.488 million TEU, increasing 1.8% compared to the same period of last year,
which accounted for 21% of the Shenzhen market, flat with the same period of last year.
2. Bulk cargo handling business
Along with the recovery of China’s economy in the reporting period, the domestic imports of both grain and
fertilizer showed signs of increase, creating market opportunities for stable growth in the Company’s bulk cargo
handling business. In the period, the Company achieved a bulk cargo throughput of 11.233 million metric tons, a
31.1% year-on-year growth.
The Company adopted a business strategy of working on both domestic and foreign trade. Due to the Company’s
efforts in expanding its domestic corn handling business and its international grain and feedstuff handling
business, its grain and feedstuff throughput was up 28% compared to the same period of last year, of which the
international throughput went up 22% while the domestic throughput increased by 1.7 times, securing its leading
position in the field of grain and feedstuff handling, as well as its position as a preferred discharge port for
international grain and feedstuff, in the Pearl River Delta. In the meantime, in order to ensure sustained growth in
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
the grain and feedstuff handling business, the Company vigorously tried to attract new clients from nearby
businesses, solidify quality cargo sources, improve its comprehensive port services, further cooperation with
clients and satisfy various needs of clients.
By paying close attention to changes in the fertilizer market and staying in close contact with fertilizer clients, the
Company’s fertilizer throughput increased significantly by 62.1% compared to the same period of last year, of
which the imported compound fertilizer handled by the Company accounting for over 50% of the national total,
keeping the Company in a leading position in this respect. In the meanwhile, the Company’s fertilizer handling
business registered stable growth due to its efforts in, among other things, expanding the exported urea and
imported pure sodium carbonate handling business, widening and extending channels and providing various
value-added port services.
3. Support services and investment management
The Company’s business of support tow truck, tugboat, customs clearance and barge services operated smoothly,
with a year-on-year profit increase. Meanwhile, the Company’s main joint ventures, including China Overseas
Harbour Affairs (Laizhou) Co., Ltd., China Merchants Bonded Logistics Co., Ltd. and China Merchants Holdings
(International) Information Technology Co., Ltd., contributed flat returns to the Company compared to the same
period of last year.
The Company’s business results are set out as follows:
Reporting period Same period of last year
Main business indicator YoY +/-%
(January-June 2017) ( January-June 2016)
Total throughput (thousand tons) 34,990 32,585 7.4%
Among which:
2,488 2,444 1.8%
Container throughput (thousand TEU)
Bulk cargo throughput (thousand 11,233 8,567 31.1%
tons)
Hours charged for tow trucks 588 547 7.5%
(thousand hours)
Hours charged for tugboats (hour) 17,152 16,790 2.2%
During the reporting period, the Company carried out the tasks set for the year, with the focus on internal
management improvement, better service quality and efficiency increase. It completed management restructuring
of the Headquarters for more professional division of functions; strengthened budgetary management for more
effective operational control; optimized operating procedures using the internet technology to increase the
operating efficiency; encouraged innovations in process and procedure and finished multiple technical alterations;
and optimized the capital and debt structure to reduce finance costs.
In the second half of 2017, the world economy is expected to continue to recover, and China’s economy and
foreign trade are likely to see more stability and improvement. However, risks still exist, including inflation
pressure, changes in the monetary policies of main economies and trade protectionism. These uncertainties may
cause more volatility in the port industry and pose certain challenges to the Company. In container handling, the
regional competition and freighters’ adjustments to their shipping routes exert pressure on the Company’s
business growth. To deal with that, the Company will pay close attention to certain clients’ merger and acquisition
progress, be more flexible in business negotiation, try to attract new shipping routes, and be as cooperative as it
can in the Tonggu Channel widening and dredging program conducted to improve the channel conditions, so as to
maintain stability in the Company’s container handling business. In bulk cargo handling, the Company will keep
an eye on market and policy changes, maintain an aggressive business strategy, secure and increase the
Company’s market position, and accelerate the berth and warehouse alteration at the Chiwan Wharf, as well as the
building of support warehousing facilities at the Machong Wharf, so as to improve the Company’s overall
resource capability to seize more and better opportunities for business growth. As for internal management, the
Company will continue to work on lean management, innovation, resource integration, organizational
construction and risk control, and carry out various tasks according to its annual plan, trying to achieve its annual
targets.
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
II Main business analysis
See “I Summary” above.
YoY movements in financial highlights:
Unit: RMB
Same period of last Main reasons for
Reporting period YoY +/-%
year movements
Operating revenues 929,608,498.91 904,809,652.24 2.74%
Operating costs 535,972,835.46 492,158,524.59 8.90%
Administrative expenses 72,324,731.18 81,947,868.71 -11.74%
Interest cost decreased as
the average balance of
Finance costs 10,152,388.82 14,253,614.35 -28.77%
interest-bearing debts
decreased
Corporate income tax expenses 58,896,433.80 49,661,006.76 18.60%
R&D expenses 17,130,145.36 15,986,053.06 7.16%
Net cash flows from operating
419,531,779.91 368,657,243.80 13.80%
activities
Net cash flows from investing Higher payments for
7,493,810.29 16,665,254.18 -55.03%
activities engineering
Net cash flows from financing
-254,949,011.51 -664,817,669.11 61.65% Lower debt repayments
activities
Net increase in cash and cash Loans and repayments
167,505,798.54 -277,266,096.67 -39.59%
equivalents decreased
No major changes occurred to the profit structure or sources of the Company during the reporting period.
Breakdown of main business
Unit: RMB
Increase/decrea Increase/decrea
Increase/decrea
se of operating se of gross
Gross se of operating
Operating revenues over profit rate over
Operating costs profit rate costs over the
revenues the same the same
(%) same period of
period of last period of last
last year (%)
year (%) year (%)
Classified by industry:
Cargo handling 865,384,374.34 497,194,719.83 42.55% 2.48% 8.35% -6.82%
Classified by region:
Mainland
917,481,142.33 525,832,851.29 42.69% 1.57% 9.06% -8.44%
China
III Non-core business analysis
Amount In total profit (%) Source/reason Recurring or not
Profit from jointly-run and associated
Investment gains 69,509,957.45 18.33% Yes
companies
Impairment provision made for accounts
Asset receivable from Hanjin Shipping
-1,908,239.31 -0.50% No
impairment (China) Co., Ltd last year has been
received in the current period.
Non-operating Gains from disposal of non-current
2,407,216.29 0.63% No
revenues assets, government subsidies, etc.
Non-operating
742,624.36 0.20% Loss from disposal of non-current assets No
expenses
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
IV Assets and liabilities
1. Major changes in asset composition
Unit: RMB
End of Reporting Period End of same period of last year Proportion
reason for
In total In total change
Amount Amount major change
assets (%) assets (%) （%）
Monetary
593,542,501.41 8.75% 405,872,026.99 6.12% 2.63%
funds
Accounts
243,504,003.91 3.59% 243,122,948.05 3.67% -0.08%
receivable
Inventories 17,926,504.16 0.26% 17,882,080.33 0.27% -0.01%
Investing real
23,233,997.73 0.34% 26,286,805.06 0.40% -0.06%
estate
Long-term
equity 1,463,702,326.87 21.57% 1,439,244,037.52 21.72% -0.15%
investment
Fixed assets 2,990,556,886.41 44.08% 3,118,183,948.02 47.05% -2.97%
Construction in
183,708,222.05 2.71% 42,297,498.37 0.64% 2.07%
progress
2. Assets and liabilities measured at fair value
Gain/loss on Cumulative
Impairment Purchased Sold amount
fair value fair value
Opening provisions in amount in in the Closing
Item change in the change
amount the reporting the reporting reporting amount
reporting recorded into
period period period
period equity
Financial
assets
3. Available-
for-sale
8,550,000 1,250,000 9,800,000
financial
assets
Total of the
8,550,000 1,250,000 9,800,000
above
Financial
0 0
liabilities
Major changes in measurement attributes of main assets in reporting period
□ Yes √ No
3. Restricted asset rights as of the end of this reporting period
No such cases.
V Investments
1. General situation
□ Applicable √ Not applicable
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
2. Major equity investments made in reporting period
□ Applicable √ Not applicable
3. Major non-equity investments ongoing in reporting period
□ Applicable √ Not applicable
4. Investments in financial assets
(1) Securities investment
Gain/los Purch
Account s on fair Cumulativ ased
Variety Name Initial Gain/los Sour
ing value e fair value in Sold in
of Code of of Opening s in Closing Account ce of
securitie securities securiti investment measure book value changes changes curre current
current book value ing title fund
ment in recorded nt period
s es cost period s
model current into equity perio
period d
Availabl Self-
Domesti
Jiangsu Fair e-for- own
c and
600377 Express 1,120,000 value 8,550,000 - 1,250,000 - - - 9,800,000 sale ed
foreign
way method financial fund
stock
assets s
Availabl Self-
Domesti
Petroch e-for- own
c and Cost
400032 emical 3,500,000 382,200 - - - - - 382,200 sale ed
foreign method
A1 financial fund
stock
assets s
Availabl Self-
Domesti
e-for- own
c and Guang Cost
400009 27,500 17,000 - - - - - 17,000 sale ed
foreign Jian 1 method
financial fund
stock
assets s
Other holding securities
investment at the end of the - -- - - - - - - -- --
period
Total 4,647,500 -- 8,949,200 - 1,250,000 - - - 10,199,200 -- --
Disclosure date of
announcement of Board of
Directors for review and N/A
approval of securities
investment
Disclosure date of
announcement of
shareholder meeting for
N/A
review and approval of
securities investment (if
any)
(2) Investments in financial derivatives
No such cases in reporting period
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
VI Sale of major assets and equity interests
1. Sale of major assets
No such cases in reporting period
2. Sale of major equity interests
□ Applicable √ Not applicable
VII Main controlled and joint stock companies
Main subsidiaries and joint stock companies with over 10% effect on the Company’s net profit
Unit: RMB
Company Main Registered Operating
Company name Industries Total assets Net assets Operating profit Net profit
variety business capital revenues
Chiwan
Transporta
Container Container USD 95.3
Subsidiary tion 2,113,878,611.62 1,889,401,766.52 326,262,590.52 107,164,195.28 82,862,059.33
Terminal Co., handling million
industry
Ltd.
Shenzhen
Transporta
Chiwan Harbor Container RMB288.
Subsidiary tion 807,502,721.37 543,696,810.41 152,434,693.48 57,721,674.87 49,629,785.75
Container Co. handling 2 million
industry
Ltd.
Dongguan Handling
Transporta
Chiwan Wharf and storage RMB 450
Subsidiary tion 1,111,954,316.79 796,513,543.77 159,643,720.20 57,430,594.68 43,662,466.15
Company of bulk million
industry
Limited cargos
Dongguan Handling
Transporta
Chiwan and storage RMB 400
Subsidiary tion 942,130,607.71 596,958,848.76 127,467,843.51 45,192,651.22 39,550,211.03
Terminal Co., of bulk million
industry
Ltd. cargos
Subsidiaries obtained or disposed in the reporting period:
□ Applicable √ Not applicable
VIII Structured bodies controlled by the Company
□ Applicable √Not applicable
IX Performance forecast for January-September 2017
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-
beginning to the end of the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks facing the Company and countermeasures
1. External risks
External risks are mainly caused by the uncertainty of macroeconomic recovery and the increasingly fierce
competition between the regional ports. The main business of the Company has a comparatively stronger
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
extraversion. The potential risk factors of macroeconomic recovery will bring a bad effect on container shipping
market and bulk cargo demand and it will be a big challenge to maintain the stable port operation. The Company
is under great pressure with the excess capacity of Pearl River Delta regional ports, the intensified homogeneous
competition between the ports, and shunt risks of the business, as well as the downward port tariff.
The Company will pay attention to the study and judgment of external operating environmental changes, and
strengthen the early-warning ability of business operating risks, and plan the effective measurements in advance to
positively face the market changes and find opportunities from the challenges to maintain the stability of core
business. Strengthening dominant position of the Company in the district further and enhance the coordination
with other ports to avoid vicious competition of low prices and maintain good market order. At the same time, the
Company should optimize and improve the allocation of ports resources, enhance the comprehensive
competitiveness to build benchmarking enterprise in the industry.
2. Internal risks
Internal risks are mainly caused by the increasing operating cost and comparatively single business structure. The
prices of land, labor forces, and other production factors are continuously increasing, and operating cost of wharf
also increase rigidly, so the profit space of the Company is squeezed. The conventional handling business of the
Company takes a large proportion with single profit source. The business extension ability needs to be
strengthened.
By continuously pushing forward lean management, the Company will deeply dig out and improve the utilization
efficiency of existing resources, and increase the investment of science and technology R&D, pay attention to the
technological renovation, and reduce the labor forces to improve quality and increase efficiency. Implementing
“Building the Regional 1st Level’s Port Integrated Servicer”development strategy combined with the existing
advantages and based on ports’ main business, the Company will expand ports’ integrated service, develop new
growth points of profit and build a harbor ecosphere.
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Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017
Section V Significant Events
I Annual and special meetings of shareholders convened during the reporting period
1. Meetings of shareholders convened during the reporting period
Investor Index to disclosed
Meeting Type Convened date Disclosure date
participation ratio information
For details of relevant
resolution
2016 Annual Annual announcement(annou
Meeting of Meeting of 75.43% 5 Jun. 2017 6 Jun. 2017 ncement No: 2017-
Shareholders Shareholders 019) , see
www.cninfo.com.c
n
2. Special meetings of shareholders convened at request of preference shareholders with resumed voting
rights
□ Applicable √ Not applicable
II Proposal for profit distribution and converting capital reserve into share capital for the
Reporting period
For the reporting period, the Company plans not to distribute cash dividends or bonus shares or convert capital
reserve into share capital.
III Commitments of the Company’s actual controller, shareholders, related parties and
acquirer, as well as the company and other commitment makers, fulfilled in the reporting
period or still ongoing at period-end
Date of
Commitmen Type of Period of
Commitment Contents commitment Fulfillment
t maker commitment commitment
making
In order to enhance the CND Group proposed in
shareholding confidence Mar. 2009 to the Company
of tradable share holders, and encourage the core and Carrying out the Equity management and key Inventive Plan of Shenzhen personnel so that the Chiwan Wharf Holdings interests of the Limited>, which was management and all the reviewed and approved in Share reform commitment CND Group Other shareholders can coincide, 5 Apr. 2006 Standing the general meeting of the CND made a commitment Company in May 2009. The to entrust, through the Board of Directors of the general meeting of the Company was authorized to Company, the Board of formulate and carry out an Directors of the Company equity incentive plan at a to formulate and carry out proper timing according to an equity incentive plan at applicable laws and a proper timing after the regulations. In Jun. 2014, 14 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 completion of the share according to division reform according (Trial) for State Holding to applicable laws and Listed Companies to Carry regulations. out Equity Inventive> jointly promulgated by the State-owned Assets Supervision and Administration Commission of the State Council and the Ministry of Finance, as well as Methods (Trial) for Equity Incentive of Listed Companies> promulgated by CSRC, the equity incentive plan could not be successfully formulated due to policy and regulation changes, as well as some restrictions. Therefore, the Company has decided not to formulate and carry out the equity incentive plan for now. The Board of Directors will continue to follow and study relevant policies and regulations, and reconsider formulating and carrying out a new equity incentive plan according to the actual situation of the Company and executing the decision- making procedure. Concerning horizontal competition, it is 1. Commitments about promised that share custody; the horizontal Commitmen 2. Commitment about competition t on guaranteeing the issue will be horizontal independency of the solved through competition, Company; ways such as CMPort 17 Sept. 2012 In the process of execution related-party 3. Commitment about asset transactions horizontal competition; reorganization and capital and in the coming 3- occupation 4. Commitment about 5 years. And the Commitment in the regulating related-party other three acquisition report or the transactions commitments report on equity changes are subject to the share custody period. 1. Commitment about Commitmen guaranteeing the t on independency of the horizontal Company; Whenever Malai Malai competition, 2. Commitment about Storage holds 27 Dec. 2012 In the process of execution Storage related-party horizontal competition; the Company’s transactions and shares and capital 3. Commitment about occupation regulating related-party transactions Commitment in asset reorganization Commitment in IPO or refinancing Equity incentive commitment 15 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 CND Group irrevocably and unconditionally agrees that if Chiwan Wharf suffers from any loss, expense, liability, demanded compensation or law suit due to any actual or potential illegality or unenforceability in any Other commitments made 20 Mar. 2011 CND Group Other land use agreement or Standing In the process of execution to minority shareholders relevant documents signed or to be signed by CND Group or other related problems, CND Group promises to give full immunity to the recipient party of the land use right and its inheritor and the recipient person regarding the aforesaid matters. Executed on time or not Yes Explain in detail specific reasons for failing to fulfill commitment and plan for N/A next step in case of commitment unfulfilled on time IV Engagement and disengagement of CPAs firm Has the semi-annual financial report been audited? □Yes √ No This Semi-Annual Report is unaudited. V Explanation given by the Board of Directors, Supervisory Board regarding the “non- standard auditor’s report” issued by the CPAs firm for the reporting period □ Applicable √ Not applicable VI Explanations given by Board of Directors regarding “modified auditor’s report” issued for last year □ Applicable √ Not applicable VII Bankruptcy and restructuring No such cases in the reporting period. VIII Legal matters No such cases in the reporting period Other legal matters: 16 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 □ Applicable √ Not applicable IX Punishments and rectifications No such cases in the reporting period X Credit conditions of the Company as well as its controlling shareholder and actual controller □ Applicable √ Not applicable XI Equity incentive plans, employee stock ownership plans or other incentive measures for employees No such cases in the reporting period XII Significant related-party transactions 1. Related-party transactions relevant to routine operation Wheth Settleme Pricing Approve Type Content Proporti er nt principle d of the of the Transactio on in exceed method of the transacti Disclo Related Relatio related related- Transaction n amount same ed the of the Similar market Disclosure related- on sure party nship -party party price (RMB’0,0 kind of approv related- price index party amount date transac transacti 00) transacti ed party transacti (RMB’0 tion on ons amoun transacti on ,000) t on See Annou ncement N o. 2017- Mutual Payment 28 CND Shareh Land 007 on Lease negotiati 35,087,942.41 3,508.79 80.44% 6,000 No by 35,087,942.41 Mar. www.cnin Group older use fee on month 2017 fo.com.cn for details. Total -- -- 3,508.79 -- 6,000 -- -- -- -- -- Details about return of large- No amount sales Where the Company classifies and estimates the total amount of routine related-party transactions No for the reporting period, explain the actual implementation during the reporting period (if any) Explain why the transaction price is greatly different from the N/A market price (if applicable) 2. Related-party transactions arising from assets or equities acquisition and sale of assets No such cases in the reporting period 17 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 3. Related-party transactions arising from joint investment in external parties No such cases in the reporting period 4. Credits and liabilities with related parties No such cases in the reporting period 5. Other significant related-party transactions Unit: RMB’0,000 Whether there was Related Type of Reason for non- Opening Closing Relation Increase Decrease party credit/liability credit/liability operating balance balance capital occupation The director of the Company Receivable CDF holds the from related Deposits No 121.19 22,011.89 22,112.50 20.58 position of party vice president of CDF Index to the current announcements about the said related-party transactions disclosed Title of current announcement Disclosure date Disclosure website Announcement about the Estimating the Amount For details, see 28 Mar. 2017 of the 2017 Daily Related Transactions www.cninfo.com.cn XIII Particulars about the non-operating occupation of funds by the controlling shareholder and other related parties of the Company No such cases in the reporting period XIV Significant contracts and fulfillment thereof 1. Trusteeship, contracting and leasing (1) Trusteeship No such cases in the reporting period. (2) Contracting No such cases in the reporting period. 18 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 (3) Leasing No such cases in the reporting period. 2. Significant guarantees No such cases in the reporting period. 3. Other significant contracts □Applicable√Not applicable XV Social responsibilities 1. Particulars of the fulfillment of social responsibilities of targeted poverty alleviation No such cases in the reporting period. And there is no such intention for the Company to carry out targeted poverty alleviation for the time being. 2. Particulars of environmental protection Whether the Company and its subsidiaries are pollutant discharging units released by the Department of Environmental Protection No XVI Other significant events In the reporting period, the Company disclosed the following significant events on Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn: Announcement No. Title Date Announcement on Voluntary Information Disclosure of Business 2017-001 2017-01-12 Volume Data of December 2016 Announcement on Voluntary Information Disclosure of Business 2017-002 2017-02-09 Volume Data of January 2017 Announcement on Voluntary Information Disclosure of Business 2017-003 2017-03-10 Volume Data of February 2017 Announcement on Resolutions of the Seventh Meeting of the Eighth 2017-004 2017-03-28 Board of Directors Announcement on Resolutions of the Seventh Meeting of the Eighth 2017-005 2017-03-28 Supervisory Committee 2017-006 Abstract of Annual Report 2016 2017-03-28 Announcement on Expected Routine Related-Party Transactions for 2017-007 2017-03-28 2017 Statement of Independent Director Nominees of the Ninth Board of 2017-008 2017-03-28 Directors Statement of Independent Director Candidates of the Ninth Board of 2017-009 2017-03-28 Directors 2017-010 Announcement on Voluntary Information Disclosure of Business 2017-04-11 19 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Volume Data of March 2017 2017-011 Announcement on Abnormality of Stock Price 2017-04-13 Announcement on Resolutions of the First Special Meeting of the 2017-012 2017-04-28 Eighth Board of Directors in 2017 2017-013 The Text of Quarter One Report 2017 2017-04-28 Announcement on Related-Party Transactions about Signing 2017-014 Financial Service Agreement with Sinotrans & CSC Finance Co., 2017-04-28 Ltd. Announcement on Related-Party Transactions about renewing the 2017-015 2017-04-28 Financial Service Agreement with Zhongkai Finance Co., Ltd. 2017-016 Notice of Annual General Meeting 2016 2017-04-28 Announcement on Voluntary Information Disclosure of Business 2017-017 2017-05-10 Volume Data of April 2017 Indicative Announcement on Convening Annual General Meeting 2017-018 2017-05-27 2016 2017-019 Announcement on Resolutions of Annual General Meeting 2016 2017-06-06 Announcement on Resolutions of the First Meeting of the Ninth 2017-020 2017-06-06 Board of Directors Announcement on Resolutions of the First Meeting of the Ninth 2017-021 2017-06-06 Supervisory Committee Announcement on Voluntary Information Disclosure of Business 2017-022 2017-06-07 Volume Data of May 2017 Announcement on the Due Payment of 2016 Phase III Short-term 2017-023 2017-06-09 Financing Bonds XVII Internal control progress Pursuant to the “Internal Control Rules for Enterprises” and the mating guidelines, the Company officially implemented internal control, with details as follows: 1. Preparation phase (1) The Company updated the name list of the members of internal control task groups. The chairman of the board was the head of the internal control project, with general managers, divisional leaders and departmental leaders as the members for the internal control steering committee. At the Company level, important professionals of all functional departments were the members for the task group. At the level of a subsidiary, the task group was headed by the general manager of the subsidiary, with important professionals in the subsidiary as the members for the task group. (2) The work plan for internal control of 2017 was worked out. (3) The subjects and internal control processes included in the internal control improvement task for 2017 were determined. According to its own business characteristics and importance and based on the internal control process improvement results of the previous years, subjects included in the internal control improvement task for 2017 were: the Company, Chiwan Container Terminal Co., Ltd., Shenzhen Chiwan Wharf Container Co. Ltd., Dongguan Chiwan Wharf Company Limited, Dongguan Chiwan Terminal Company Limited and Shenzhen Chiwan Tugboat Transportation Co.,Ltd. Internal control processes included in the internal control improvement and self-evaluation task for 2017 were: the organizational structure, development strategy, human resources, social responsibilities, corporate culture, capital operation, procurement, asset management, marketing, R&D, engineering projects, guarantees, outsourcing, financial reporting, overall budget, contract management, internal information transmission and the information system. (4) Work flow charts were sent down to confirm the specific work and schedules for the members of the internal control task groups. (5) External and internal trainings were organized for members of the internal control task groups. 20 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 2. Implementation phase (1) The internal control task groups of the Headquarters and the subsidiaries have reviewed the flow chart risk matrix assessment of last year, and have re-described work flows within the internal control improvement scope according to business changes this year so as to formulate an internal control risk matrix and a core flow chart for the Company for 2017. (2) The internal control task groups of the Headquarters and the subsidiaries have carried out a walk-through test on the effectiveness of the internal control design to look for defects. 3. Internal control audit The resolution of hiring Deloitte Touche Tohmatsu (special general partnership) as the Company’s internal audit firm of 2017 was approved by the Seventh Meeting of the Eighth Board of Directors held on March 24, 2017 and Annual General Meeting 2016 held on June 5, 2017. The Company carried out internal control work according to the time schedule of the 2017 internal control program of work. The progress of the project was in accordance with the plan of the work plan. There was no difference or delay. XVIII Significant evens of subsidiaries □Applicable√Not applicable XIX The registration form of activities such as researches, communication and interviews received in the reporting period Type of Main contents discussed and Time Place Way Object object materials provided Telephone Individual communic Individual Basis conditions of operating, From January 2017 to Office of the investor ation investment and financial situation of the end of June 2017 Company Institutional the Company Reception Institution investor 21 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Section VI Share Changes & Particulars about Shareholders I Changes in shares 1. Changes in shares Unit: share Before Increase/decrease (+, -) After Capitalizatio Percen New Bonus Percen Number n of capital Other Subtotal Number tage shares shares tage reserve I Restricted shares 304,538 0.05% 0 0 0 53,825 53,825 358,363 0.06% 1. Shares held by the 0% 0 0 0 0 0 0 0 0% State 2. Share held by state- 0% 0 0 0 0 0 0 0 0% owned corporations 3. Shares held by other 304,538 0.05% 0 0 0 53,825 53,825 358,363 0.06% domestic investors Among which: Shares held by 0 0% 0 0 0 0 0 0 0% domestic corporations Shares held by 304,538 0.05% 0 0 0 53,825 53,825 358,363 0.06% domestic individuals 4. Shares held by 0% 0% 0 0 0 0 0 0 0 foreign investors Among which: Shares 0% 0% held by foreign 0 0 0 0 0 0 0 corporations Shares 0% 0% held by foreign 0 0 0 0 0 0 0 individuals 99.95 99.94 644,459,192 0 0 0 -53,825 -53,825 644,405,367 II Non-restricted shares % % 1. Renminbi common 72.10 72.10 464,866,612 0 0 0 -562 -562 464,866,050 shares % % 2. Domestically listed 27.85 27.84 179,592,580 0 0 0 -53,263 -53,263 179,539,317 foreign shares % % 3. Overseas listed 0% 0% 0 0 0 0 0 0 0 foreign shares 4. Others 0 0% 0 0 0 0 0 0 0% III Total shares 644,763,730 100% 644,763,730 100% Reasons for share changes: On June 5, 2017, the Company held the Annual General Meeting 2016 for general election. The former director Qu Jiandong, the former executive Zhao Qiang and Nie Qi left office at the end of their terms. The shares they held were locked up in full. Approval of the change in shares □ Applicable √ Not applicable Reason for the change in shares □ Applicable √ Not applicable 22 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes over the last year and last period □ Applicable √ Not applicable Other contents that the Company considered necessary or were required by the securities regulatory authorities to disclose □ Applicable √ Not applicable 2. Changes in restricted shares Unit: share Amount of The Number of Number of lifted increased restricted restricted restricted restricted Name of shares at the shares at the Date of lifting of shares in shares in Reason shareholder beginning of end of the restricted shares the the the reporting reporting reporting reporting period period period period lifting all the Lock-in by regulation restricted shares six Qu Jiandong 84,408 0 28,136 112,544 for leaving office months after leaving office Lock up 75% of the total number of Zhang 55,712 0 0 55,712 shares each year - Jianguo while he is the director Lock up 75% of the total number of Yuan Yuhui 10,530 0 0 10,530 shares each year - while he is the independent director Lock up 75% of the total number of Ni Keqin 21,909 0 0 21,909 shares each year - while he is the supervisory director lifting all the Lock-in by regulation restricted shares six Zhao Qiang 11,328 0 3,775 15,103 for leaving office months after leaving office lifting all the Lock-in by regulation restricted shares six Nie Qi 65,745 0 21,914 87,659 for leaving office months after leaving office Lock up 75% of the total number of Zhao 48,716 0 0 48,716 shares each year - Chaoxiong while he is the executive Lock up 75% of the total number of Wang 3,739 0 0 3,739 shares each year - Yongli while he is the executive 23 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Lock up 75% of the total number of Zhang Fang 2,451 0 0 2,451 shares each year - while he is the executive Total 304,538 0 53,825 358,363 -- -- II Issuance and listing of securities □ Applicable √ Not applicable III Total number of shareholders and their shareholding Unit: share Total number of preference Total number of common 45,296 (34,647 A-shareholders and 10,649 B- shareholders with resumed 0 shareholders at period-end shareholders) voting rights at period-end (if any) Shareholding of common shareholders holding more than 5% shares or the top 10 of common shareholders Increase Number of and Number of Holdin Nature of shareholding decrease of shares held Number of shares Name of g Pledged or shareholde at the end of shares subject to held subject to frozen shares shareholder percent r the reporting during trading trading moratorium age (%) period reporting moratorium period CHINA State- NANSHAN owned 32.52% 209,687,067 0 0 209,687,067 0 DEVELOPMENT corporation (GROUP) INC. SHENZHEN Domestic MALAI non-state- 25% 161,190,933 0 0 161,190,933 0 STORAGE CO., owned LTD. corporation KEEN FIELD Foreign ENTERPRISES 8.58% 55,314,208 0 0 55,314,208 0 corporation LIMITED CMBLSA RE FTIF Foreign TEMPLETON 7.43% 47,914,954 0 0 47,914,954 Unknown corporation ASIAN GRW FD GTI 5496 Foreign NORGES BANK 0.43% 2,802,863 1,142,301 0 2,802,863 Unknown corporation BBH A/C VANGUARD EMERGING Foreign 0.41% 2,617,518 0 0 2,617,518 Unknown MARKETS corporation STOCK INDEX FUND CHINA State- MERCHANTS owned 0.38% 2,479,573 28,514 0 2,479,573 Unknown SECURITIES corporation (HK) CO., LTD. 24 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 SINO-ITALY ASSETS MANAGEMENT- ICBC- STRATEGIC Other 0.27% 1,772,663 1,772,663 0 1,772,663 Unknown SELECTION ASSETS MANAGEMENT PRODUCTS NO. 55 CANADA POST CORPORATION Foreign 0.25% 1,631,396 0 0 1,631,396 Unknown REGISTERED corporation PENSION PLAN TEMPLETON Foreign ASIAN 0.25% 1,628,170 -257,000 0 1,628,170 Unknown corporation GROWTH FUND Strategic investors or the general legal person due to the placement of new shares N/A become the top 10 shareholders（if any） Explanation on associated China Merchants Port Holdings Company Limited (CMPort) is a shareholder of China relationship or/and persons Nanshan Development (Group) Inc., and Shenzhen Malai Storage Co., Ltd. and Keen acting in concert among the Field Enterprises Limited are both wholly-funded subsidiaries of CMPort. Other than above-mentioned that, the Company does not know whether the other non-restricted shareholders are shareholders: related parties or not. Particulars about shares held by top 10 common shareholders not subject to trading moratorium Number of shares held not subject to Type of share Name of shareholder trading moratorium at the end of the Type of share Amount period CHINA NANSHAN DEVELOPMENT 209,687,067 A-share 209,687,067 (GROUP) INC. SHENZHEN MALAI STORAGE CO., 161,190,933 A-share 161,190,933 LTD. KEEN FIELD ENTERPRISES LIMITED 55,314,208 B-share 55,314,208 CMBLSA RE FTIF TEMPLETON 47,914,954 B-share 47,914,954 ASIAN GRW FD GTI 5496 NORGES BANK 2,802,863 B-share 2,802,863 BBH A/C VANGUARD EMERGING 2,617,518 B-share 2,617,518 MARKETS STOCK INDEX FUND CHINA MERCHANTS SECURITIES 2,479,573 B-share 2,479,573 (HK) CO., LTD. SINO-ITALY ASSETS MANAGEMENT- ICBC-STRATEGIC SELECTION 1,772,663 A-share 1,772,663 ASSETS MANAGEMENT PRODUCTS NO. 55 CANADA POST CORPORATION 1,631,396 B-share 1,631,396 REGISTERED PENSION PLAN TEMPLETON ASIAN GROWTH FUND 1,628,170 B-share 1,628,170 Explanation on associated relationship China Merchants Port Holdings Company Limited (CMPort) is a among the top ten shareholders of tradable shareholder of China Nanshan Development (Group) Inc., and Shenzhen share not subject to trading moratorium, as Malai Storage Co., Ltd. and Keen Field Enterprises Limited are both well as among the top ten shareholders of wholly-funded subsidiaries of CMPort. Other than that, the Company does tradable share not subject to trading not know whether the other non-restricted shareholders are related parties moratorium and top ten shareholders, or or not. explanation on acting-in-concert Particular about shareholder participate in N/A 25 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 the securities lending and borrowing business (if any) None of the top ten common shareholders and the top ten common shareholders not subject to trading moratorium of the Company carried out any agreed buy-back in the reporting period. IV Change of the controlling shareholder or the actual controller No such cases in the reporting period. 26 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Section VII Preference Shares □ Applicable √ Not applicable The Company had no preference shares in the reporting period. 27 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Section VIII Directors, Supervisors and Senior Management Staff I Changes in the shareholdings of directors, supervisors and senior management staff □ Applicable √ Not applicable There was no change in shareholding of Directors, Supervisors, Senior Management Staffs and Employees, for details, please refer to 2016 Annual Report II Particulars about Changes of Directors, Supervisors and Senior Executives Name Position Type of change Date of change Reason for change Qu Jiandong leave his post for the leave his post for the expiration Director 2017-06-05 expiration of his term of his term leave his post for the leave his post for the expiration Zhao Qiang GM 2017-06-05 expiration of his term of his term leave his post for the leave his post for the expiration Nie Qi Vice GM 2017-06-05 expiration of his term of his term 28 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Section IX Corporate Bonds Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this Report or were due but could not be redeemed in full? No. 29 Shenzhen Chiwan Wharf Holdings Limited Semi-Annual Report 2017 Section X Financial Report I Auditor’s report The semi-annual financial report has not been audited by a CPAs firm. II Financial statements (see the attached) Section XI Documents Available for Reference I The 2017 Semi-Annual Report carrying the signature of Liu Bin, the Managing Director; II The 2017 Semi-Annual Financial Report carrying the signatures of the Company’s Legal Representative, Chief Financial Officer and Financial Manager; and III Original copies of all documents and announcements disclosed during the reporting period on Securities Times, Ta Kung Pao and www.cninfo.com.cn. For and on behalf of the Board Liu Bin Managing Director Shenzhen Chiwan Wharf Holdings Limited Dated 25 August 2017 30 SHENZHEN CHIWAN WHARF HOLDINGS LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Contents Pages The Company and consolidated balance sheets 2-3 The Company and consolidated income statements 4-5 The Company and consolidated cash flow statements 6-7 The Company and consolidated statements of changes in shareholders' equity 8-9 Notes to the financial statements 10 - 97 -1- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED AT 30 JUNE 2017 Consolidated Balance Sheet Unit: RMB LIABILITIES AND ASSETS Notes 30 Jun. 2017 31 Dec. 2016 SHAREHOLDERS' EQUITY Notes 30 Jun. 2017 31 Dec. 2016 Current Assets: Current Liabilities: Cash and bank balances (V)1 593,542,501.41 426,036,702.87 Short-term borrowings - - Notes receivable (V)2 - 500,000.00 Accounts payable (V)20 98,590,197.10 89,444,597.10 Accounts receivable (V)3 243,504,003.91 173,934,496.63 Receipts in advance (V)21 129,822,174.32 30,668,212.67 Prepayments (V)4 1,804,143.70 2,639,758.53 Employee benefits payable (V)22 57,049,136.82 88,578,492.26 Interest receivable (V)5 1,264,914.26 - Taxes payable (V)23 59,511,807.19 48,504,829.80 Dividends receivable (V)6 420,000.00 - Interest payable (V)24 6,371,260.30 2,567,260.28 Other receivables (V)7 18,699,162.98 26,647,869.01 Dividends payable (V)25 319,802,810.47 - Inventories (V)8 17,926,504.16 14,771,410.09 Other payables (V)26 75,105,519.60 74,590,394.09 Non-current liabilities due Other current assets (V)9 19,698,853.34 16,832,212.36 - - within one year Total current assets 896,860,083.76 661,362,449.49 Other current liabilities (V)27 - 250,000,000.00 Non-current Assets: Total current liabilities 746,252,905.80 584,353,786.20 Available-for-sale financial assets (V)10 23,709,200.00 22,459,200.00 Non-current Liabilities: Long-term equity investments (V)11 1,463,702,326.87 1,490,427,656.53 Bonds payable (V)28 298,629,041.09 298,331,506.85 Investment property (V)12 23,233,997.73 23,646,913.77 Special payables (V)29 33,327,666.64 34,326,860.44 Fixed assets (V)13 2,990,556,886.41 3,036,813,842.54 Deferred income (V)30 60,823,779.90 64,613,319.88 Construction in progress (V)14 183,708,222.05 164,604,358.31 Deferred tax liabilities (V)18 2,170,000.00 1,857,500.00 Intangible assets (V)15 992,031,529.45 1,010,767,451.01 Total non-current liabilities 394,950,487.63 399,129,187.17 Goodwill (V)16 10,858,898.17 10,858,898.17 TOTAL LIABILITIES 1,141,203,393.43 983,482,973.37 Long-term prepaid expenses (V)17 53,905,084.94 54,944,476.64 SHAREHOLDERS' EQUITY: Deferred tax assets (V)18 12,172,333.47 12,221,758.47 Share capital (V)31 644,763,730.00 644,763,730.00 Other non-current assets (V)19 133,682,985.68 132,369,704.86 Capital reserve (V)32 167,480,381.25 167,480,381.25 Total non-current assets 5,887,561,464.77 5,959,114,260.30 Other comprehensive income (V)33 (7,102,146.43) (8,039,646.43) Special reserve (V)34 8,162,628.00 4,145,765.65 Surplus reserve (V)35 520,074,434.56 520,074,434.56 Unappropriated profit (V)36 3,337,995,910.48 3,381,390,887.86 Total shareholders' equity attributable to 4,671,374,937.86 4,709,815,552.89 equity holders of the parent Minority interests 971,843,217.24 927,178,183.53 TOTAL SHAREHOLDERS' EQUITY: 5,643,218,155.10 5,636,993,736.42 TOTAL LIABILITIES AND TOTAL ASSETS 6,784,421,548.53 6,620,476,709.79 6,784,421,548.53 6,620,476,709.79 SHAREHOLDERS' EQUITY The accompanying notes form part of the financial statements. The financial statements on pages 2 to 97 were signed by the following: Legal Representative：Liu Bin Chief Financial Officer：Zhang Fang Head of Accounting Department：Li Xiaopeng -2- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED AT 30 JUNE 2017 Balance Sheet of the Company Unit: RMB LIABILITIES AND ASSETS Notes 30 Jun. 2017 31 Dec. 2016 SHAREHOLDERS' EQUITY Notes 30 Jun. 2017 31 Dec. 2016 Current Assets: Current Liabilities: Cash and bank balances 58,389,908.02 97,401,657.09 Accounts payable 17,674,905.37 15,743,751.91 Accounts receivable (XIV)1 24,161,523.24 14,730,412.29 Receipts in advance - - Prepayments - 175,000.00 Employee benefits payable 38,826,304.69 53,761,846.04 Interest receivable - - Taxes payable 4,995,268.84 1,906,748.15 Dividends receivable 420,000.00 134,702,787.76 Interest payable 7,052,536.22 5,657,953.71 Other receivables (XIV)2 563,789,045.88 582,452,104.00 Dividend payable 357,411,350.73 37,608,540.65 Inventories 371,317.52 394,234.74 Other payables 307,787,199.55 358,982,632.32 Other current assets 1,904,089.65 997,740.76 Other current liabilities - 250,000,000.00 Total current assets 649,035,884.31 830,853,936.64 Total current liabilities 733,747,565.40 723,661,472.78 Non-current Assets: Non-current Liabilities: Available-for-sale financial assets 23,709,200.00 22,459,200.00 Bonds payable 298,629,041.09 298,331,506.85 Long-term receivables 11,004,284.75 11,004,284.75 Long-term payables 151,378,000.00 116,662,000.00 Long-term equity investments (XIV)3 2,012,601,688.02 2,032,600,191.97 Deferred tax liabilities 2,170,000.00 1,857,500.00 Investment property 13,358,471.82 13,600,159.92 Total non-current liabilities 452,177,041.09 416,851,006.85 Fixed assets 209,696,916.29 179,815,891.12 TOTAL LIABILITIES 1,185,924,606.49 1,140,512,479.63 Construction in progress 2,615,787.94 29,437,068.97 SHAREHOLDERS' EQUITY Intangible assets 61,422,417.52 62,890,018.39 Share capital 644,763,730.00 644,763,730.00 Long-term prepaid expenses 4,066,779.79 4,156,590.13 Capital reserve 240,001,254.59 240,001,254.59 Total non-current assets 2,338,475,546.13 2,355,963,405.25 Other Comprehensive Income 6,610,000.00 5,672,500.00 Special reserve 1,314,835.73 1,027,543.25 Surplus reserve 520,074,434.56 520,074,434.56 Unappropriated profit 388,822,569.07 634,765,399.86 TOTAL SHAREHOLDERS' 1,801,586,823.95 2,046,304,862.26 EQUITY TOTAL LIABILITIES AND TOTAL ASSETS 2,987,511,430.44 3,186,817,341.89 2,987,511,430.44 3,186,817,341.89 SHAREHOLDERS' EQUITY The accompanying notes form part of the financial statements. -3- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED FOR THE YEAR ENDED 30 JUNE 2017 Consolidated Income Statement Unit: RMB ITEM Notes Jan.-Jun. 2017 Jan.-Jun. 2016 I. Total operating income (V)37 929,608,498.91 904,809,652.24 Less: Operating costs (V)37 535,972,835.46 492,158,524.59 Business taxes and levies (V)38 5,099,769.02 3,167,942.41 Administrative expenses (V)39 72,324,731.18 81,947,868.71 Financial expenses (V)40 10,152,388.82 14,253,614.35 Impairment losses of assets (V)41 (1,908,239.31) 288,044.16 Add: Investment income (V)42 69,509,957.45 69,300,256.41 Including: Income from investments in associates (V)42 60,092,957.45 63,008,068.56 and joint ventures II. Operating profit 377,476,971.19 382,293,914.43 Add: Non-operating income (V)43 2,407,216.29 2,639,213.81 Including: Gains from disposal of non-current assets (V)43 293,053.57 321,539.16 Less: Non-operating expenses (V)44 742,624.36 501,465.63 Including: Losses from disposal of non-current assets (V)44 741,487.52 497,708.60 III. Gross profit 379,141,563.12 384,431,662.61 Less: Income tax expenses (V)45 58,896,433.80 49,661,006.76 IV. Net profit 320,245,129.32 334,770,655.85 Net profit attributable to shareholders of the parent 276,407,832.70 266,535,506.97 Profit or loss attributable to minority shareholders 43,837,296.62 68,235,148.88 V. Amount of Other Comprehensive Net Income After Tax: (V)46 937,500.00 (307,500.00) Amount of other comprehensive net income after tax attributable 937,500.00 (307,500.00) to equity holders of the parent (I) Other comprehensive income that will not be reclassified - - subsequently to profit or loss (i) Change as a result of remeasurement of the net defined - - benefit plan liability or asset (ii) Share of other comprehensive income of the investee under the equity method that will not be reclassified to profit or - - loss (II) Other comprehensive income that will be reclassified 937,500.00 (307,500.00) subsequently to profit or loss (i) Share of other comprehensive income of the investee under - - the equity method that will be reclassified to profit or loss (ii) Gains or losses on changes in fair value of available-for-sale 937,500.00 (307,500.00) financial assets (iii) Translation differences of financial statements denominated - - in foreign currencies Amount of other comprehensive net income after tax attributable - - to minority shareholders VI. Total comprehensive income attributable to: 321,182,629.32 334,463,155.85 Shareholders of the parent 277,345,332.70 266,228,006.97 Minority shareholders 43,837,296.62 68,235,148.88 VII. Earnings per share: (I) Basic earnings per share 0.429 0.413 (II) Diluted earnings per share 0.429 0.413 The accompanying notes form part of the financial statements. -4- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED FOR THE YEAR ENDED 30 JUNE 2017 Income Statement of the Company Unit: RMB ITEM Notes Jan.-Jun. 2017 Jan.-Jun. 2016 I. Total operating income (XIV)4 120,036,337.34 105,710,030.13 Less: Operating costs (XIV)4 61,993,764.64 64,949,950.84 Business taxes and levies 1,295,149.90 1,547,777.62 Administrative expenses 30,763,723.53 33,379,091.02 Financial expenses (3,567,095.64) 5,094,574.72 Impairment loss of assets (7,730.22) 1,895.24 Add: Investment income (XIV)5 43,578,170.47 49,037,666.37 Including: Income from investments in associates (XIV)5 34,161,170.47 42,745,478.52 and joint ventures II. Operating profit 73,136,695.60 49,774,407.06 Add: Non-operating income 551,196.35 1,631,374.22 Including: Gains from disposal of non-current assets 304,464.57 171,539.16 Less: Non-operating expenses 224,356.40 232,526.52 Including: Losses from disposal of non-current assets 223,219.56 232,526.52 III. Gross profit 73,463,535.55 51,173,254.76 Less: Income tax expenses (396,443.74) (22,956.92) IV. Net profit 73,859,979.29 51,196,211.68 V. Amount of Other Comprehensive Net Income After Tax: 937,500.00 (307,500.00) (I) Other comprehensive income that will not be - - reclassified subsequently to profit or loss (i) Change as a result of remeasurement of the net - - defined benefit plan liability or asset (ii) Share of other comprehensive income of the investee under the equity method that will not be reclassified to - - profit or loss (II) Other comprehensive income that will be reclassified 937,500.00 (307,500.00) subsequently to profit or loss (i) Share of other comprehensive income of the investee under the equity method that will be reclassified to - - profit or loss (ii) Gains or losses on changes in fair value of available- 937,500.00 (307,500.00) for-sale financial assets (iii) Translation differences of financial statements - - denominated in foreign currencies VI. Total comprehensive income 74,797,479.29 50,888,711.68 The accompanying notes form part of the financial statements. -5- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED FOR THE YEAR ENDED 30 JUNE 2016 Consolidated Cash Flow Statement Unit: RMB ITEM Notes Jan.-Jun. 2017 Jan.-Jun. 2016 I. Cash Flows from Operating Activities: Cash receipts from sales of goods and rendering of services 992,636,284.58 909,202,402.61 Other cash receipts relating to operating activities (V)48(1) 30,298,093.23 5,778,446.67 Sub-total of cash inflows 1,022,934,377.81 914,980,849.28 Cash payments for goods purchased and services received 309,960,731.31 257,633,025.65 Cash payments to and on behalf of employees 193,009,250.76 184,930,609.51 Payments of all types of taxes 66,501,423.23 57,624,012.99 Other cash payments relating to operating activities (V)48(2) 33,931,192.60 46,135,957.33 Sub-total of cash outflows 603,402,597.90 546,323,605.48 Net Cash Flows from Operating Activities (V)49(1) 419,531,779.91 368,657,243.80 II. Cash Flows from Investing Activities: Cash receipts from investments income 93,324,546.74 77,197,846.38 Net cash receipts from disposal of fixed assets, intangible assets 2,650,703.87 1,916,084.08 and other long-term assets Sub-total of cash inflows 95,975,250.61 79,113,930.46 Cash payments to acquire or construct fixed assets, intangible 88,481,440.32 62,448,676.28 assets and other long-term assets Sub-total of cash outflows 88,481,440.32 62,448,676.28 Net Cash Flows from Investing Activities 7,493,810.29 16,665,254.18 III. Cash Flows from Financing Activities: Cash receipts from borrowings 30,000,000.00 100,000,000.00 Cash receipts from issue of bonds - - Sub-total of cash inflows 30,000,000.00 100,000,000.00 Cash repayments of borrowings 280,000,000.00 744,466,721.71 Cash payments for distribution of dividends or profit or interest 4,933,219.18 20,324,960.51 Including: Payments for distribution of dividends or profit to - - minorities Other cash payments relating to financing activities (V)48(3) 15,792.33 25,986.89 Sub-total of cash outflows 284,949,011.51 764,817,669.11 Net Cash Flows from Financing Activities (254,949,011.51) (664,817,669.11) IV. Effect of Foreign Exchange Rate Changes on Cash and Cash (4,570,780.15) 2,229,074.46 Equivalents V. Net Increase (Decrease)in Cash and Cash Equivalents 167,505,798.54 (277,266,096.67) Add: Opening balance of Cash and Cash Equivalents (V)49(2) 426,036,702.87 683,138,123.66 VI. Closing Balance of Cash and Cash Equivalents (V)49(2) 593,542,501.41 405,872,026.99 The accompanying notes form part of the financial statements. -6- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED FOR THE YEAR ENDED 30 JUNE 2017 Cash Flow Statement of the Company Unit: RMB ITEM Notes Jan.-Jun. 2017 Jan.-Jun. 2016 I. Cash Flows from Operating Activities: Cash receipts from sales of goods and rendering of services 114,863,518.00 115,849,225.53 Other cash receipts relating to operating activities 424,203,588.78 462,768,621.77 Sub-total of cash inflows 539,067,106.78 578,617,847.30 Cash payments for goods purchased and services received 31,930,629.72 31,533,042.73 Cash payments to and on behalf of employees 61,467,607.51 63,282,140.23 Payments of all types of taxes 4,414,781.60 4,088,453.58 Other cash payments relating to operating activities 457,615,731.81 368,439,595.82 Sub-total of cash outflows 555,428,750.64 467,343,232.36 Net Cash Flows from Operating Activities (XIV)8 (16,361,643.86) 111,274,614.94 II. Cash Flows from Investing Activities: Cash receipts from investments income 197,859,462.18 151,872,638.18 Net cash receipts from disposal of fixed assets, intangible assets 2,693,776.59 1,677,137.08 and other long-term assets Cash receipts from disposal of subsidiaries and other business units - - Sub-total of cash inflows 200,553,238.77 153,549,775.26 Cash payments to acquire or construct fixed assets, 3,621,231.58 2,409,879.75 intangible assets and other long-term assets Sub-total of cash outflows 3,621,231.58 2,409,879.75 Net Cash Flows from Investing Activities 196,932,007.19 151,139,895.51 III. Cash Flows from Financing Activities: Cash receipts from borrowings 64,715,999.99 219,658,000.00 Cash receipts from issue of bonds - - Sub-total of cash inflows 64,715,999.99 219,658,000.00 Cash repayments of borrowings 280,000,000.00 600,000,000.00 Cash payments for distribution of dividends or profit or interest 4,933,219.18 19,798,230.88 Other cash payments relating to financing activities 15,792.33 25,986.89 Sub-total of cash outflows 284,949,011.51 619,824,217.77 Net Cash Flows from Financing Activities (220,233,011.52) (400,166,217.77) IV. Effect of Foreign Exchange Rate Changes on Cash 650,899.12 (3,471,028.83) and Cash Equivalents V. Net Increase(Decrease) in Cash and Cash Equivalents (39,011,749.07) (141,222,736.15) Add: Opening balance of Cash and Cash Equivalents 97,401,657.09 331,615,767.60 VI. Closing Balance of Cash and Cash Equivalents 58,389,908.02 190,393,031.45 The accompanying notes form part of the financial statements. -7- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED FOR THE YEAR ENDED 30 JUNE 2017 Consolidated Statement of Changes in Shareholders' Equity Unit: RMB Amount of Jan.-Jun.2017 Amount of last year Attributable to shareholders of the parent Attributable to shareholders of the parent Other Total Other Total comprehensive Surplus Unappropriated Minority shareholders' comprehensive Special Unappropriated Minority shareholders' ITEM Share capital Capital reserve income Special reserve reserve profit Others interests equity Share capital Capital reserve income reserve Surplus reserve profit Others interests equity I. Closing balance of the preceding year 644,763,730.00 167,480,381.25 (8,039,646.43) 4,145,765.65 520,074,434.56 3,381,390,887.86 - 927,178,183.53 5,636,993,736.42 644,763,730.00 165,564,739.15 (7,889,646.43) 3,719,755.58 520,074,434.56 3,113,367,524.19 - 789,709,893.07 5,229,310,430.12 Add: Changes in accounting policies - - - - - - - - - - - - - - - - - - Corrections of prior period errors - - - - - - - - - - - - - - - - - - Others - - - - - - - - - - - - - - - - - - II. Opening balance of the year 644,763,730.00 167,480,381.25 (8,039,646.43) 4,145,765.65 520,074,434.56 3,381,390,887.86 - 927,178,183.53 5,636,993,736.42 644,763,730.00 165,564,739.15 (7,889,646.43) 3,719,755.58 520,074,434.56 3,113,367,524.19 - 789,709,893.07 5,229,310,430.12 III. Changes for the year - - 937,500.00 4,016,862.35 - (43,394,977.38) - 44,665,033.71 6,224,418.68 - 1,915,642.10 (150,000.00) 426,010.07 - 268,023,363.67 - 137,468,290.46 407,683,306.30 (I) Total comprehensive income - - 937,500.00 - - 276,407,832.70 - 43,837,296.62 321,182,629.32 - - (150,000.00) - - 532,376,492.97 - 137,473,210.75 669,699,703.72 (II) Owners’ contributions and reduction in capital - - - - - - - - - - - - - - - - - - 1. Capital contribution from shareholders - - - - - - - - - - - - - - - - - - 2. Share-based payment recognised in shareholders' equity - - - - - - - - - - - - - - - - - - 3. Others - - - - - - - - - - - - - - - - - - (III) Profit distribution - - - - - (319,802,810.08) - - (319,802,810.08) - - - - - (264,353,129.30) - - (264,353,129.30) 1. Transfer to surplus reserve - - - - - - - - - - - - - - - - - - 2. Transfer to general reserve - - - - - - - - - - - - - - - - - - 3. Distributions to shareholders - - - - - (319,802,810.08) - - (319,802,810.08) - - - - - (264,353,129.30) - - (264,353,129.30) 4. Others - - - - - - - - - - - - - - - - - - (IV) Transfers within shareholders' equity - - - - - - - - - - - - - - - - - - 1. Capitalisation of capital reserve - - - - - - - - - - - - - - - - - - 2. Capitalisation of surplus reserve - - - - - - - - - - - - - - - - - - 3. Loss made up by surplus reserve - - - - - - - - - - - - - - - - - - 4. Others - - - - - - - - - - - - - - - - - - (V) Special reserve - - - 4,016,862.35 - - - 827,737.09 4,844,599.44 - - - 426,010.07 - - - (4,920.29) 421,089.78 1. Withdrawn in the period - - - 9,845,498.98 - - - 1,953,624.81 11,799,123.79 - - - 19,844,261.39 - - - 3,842,861.21 23,687,122.60 2. Utilized in the period - - - (5,828,636.63) - - - (1,125,887.72) (6,954,524.35) - - - (19,418,251.32) - - - (3,847,781.50) (23,266,032.82) (VI) Others - - - - - - - - - - 1,915,642.10 - - - - - - 1,915,642.10 IV. Closing balance of the year 644,763,730.00 167,480,381.25 (7,102,146.43) 8,162,628.00 520,074,434.56 3,337,995,910.48 - 971,843,217.24 5,643,218,155.10 644,763,730.00 167,480,381.25 (8,039,646.43) 4,145,765.65 520,074,434.56 3,381,390,887.86 - 927,178,183.53 5,636,993,736.42 The accompanying notes form part of the financial statements. -8- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED FOR THE YEAR ENDED 30 JUNE 2017 Statement of Changes in Shareholders' Equity of the Company Unit: RMB Amount of Jan.-Jun.2017 Amount of last year Other Other comprehensive Unappropriated Total shareholders' comprehensive Unappropriated Total shareholders' ITEM Share capital Capital reserve income Special reserve Surplus reserve profit equity Share capital Capital reserve income Special reserve Surplus reserve profit equity I. Closing balance of the preceding year 644,763,730.00 240,001,254.59 5,672,500.00 1,027,543.25 520,074,434.56 634,765,399.86 2,046,304,862.26 644,763,730.00 239,043,433.54 5,822,500.00 1,465,450.61 520,074,434.56 703,644,298.05 2,114,813,846.76 Add: Changes in accounting policies - - - - - - - - - - - - - - Corrections of prior period errors - - - - - - - - - - - - - - Others - - - - - - - - - - - - - - II. Opening balance of the year 644,763,730.00 240,001,254.59 5,672,500.00 1,027,543.25 520,074,434.56 634,765,399.86 2,046,304,862.26 644,763,730.00 239,043,433.54 5,822,500.00 1,465,450.61 520,074,434.56 703,644,298.05 2,114,813,846.76 III. Changes for the year - - 937,500.00 287,292.48 - (245,942,830.79) (244,718,038.31) - 957,821.05 (150,000.00) (437,907.36) - (68,878,898.19) (68,508,984.50) (I) Total comprehensive income - - 937,500.00 - - 73,859,979.29 74,797,479.29 - - (150,000.00) - - 195,474,231.11 195,324,231.11 (II) Owners’ contributions and reduction - - - - - - - - - - - - - - in capital 1. Capital contribution from shareholders - - - - - - - - - - - - - - 2. Share-based payment recognised in - - - - - - - - - - - - - - shareholders' equity 3. Others - - - - - - - - - - - - - - (III) Profit distribution - - - - - (319,802,810.08) (319,802,810.08) - - - - - (264,353,129.30) (264,353,129.30) 1. Transfer to surplus reserve - - - - - - - - - - - - - - 2. Transfer to general reserve - - - - - - - - - - - - - - 3. Distributions to shareholders - - - - - (319,802,810.08) (319,802,810.08) - - - - - (264,353,129.30) (264,353,129.30) 4. Others - - - - - - - - - - - - - - (IV) Transfers within shareholders' equity - - - - - - - - - - - - - - 1. Capitalisation of capital reserve - - - - - - - - - - - - - - 2. Capitalisation of surplus reserve - - - - - - - - - - - - - - 3. Loss made up by surplus reserve - - - - - - - - - - - - - - 4. Others - - - - - - - - - - - - - - (V) Special reserve - - - 287,292.48 - - 287,292.48 - - - (437,907.36) - - (437,907.36) 1. Transfer to special reserve in the period - - - 1,119,925.68 - - 1,119,925.68 - - - 2,621,610.60 - - 2,621,610.60 2. Utilized in the period - - - (832,633.20) - - (832,633.20) - - - (3,059,517.96) - - (3,059,517.96) (VI) Others - - - - - - - - 957,821.05 - - - - 957,821.05 IV. Closing balance of the year 644,763,730.00 240,001,254.59 6,610,000.00 1,314,835.73 520,074,434.56 388,822,569.07 1,801,586,823.95 644,763,730.00 240,001,254.59 5,672,500.00 1,027,543.25 520,074,434.56 634,765,399.86 2,046,304,862.26 The accompanying notes form part of the financial statements. -9- SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (I) GENERAL INFORMATION OF THE COMPANY Shenzhen Chiwan Wharf Holdings Limited (hereinafter referred to as the "Company") was a stock limited company incorporated on 16 January 1993. The headquarters of the Company is located in Shenzhen Guangdong Province. The Company and its subsidiaries (collectively the "Group") are principally engaged in the provision of cargo handling, warehousing, land and sea transportation services, cargo packing, agency business and other services. The scope of consolidated financial statements in the current period involves 10 subsidiaries. See Note (VII) "Equity in other entities" for details. (II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS Basis of preparation of financial statements The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance (MoF) including the new and modified ones in 2014. In addition, the Group has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15-General Provisions on Financial Reporting (Revised in 2014). Basis of accounting and principle of measurement The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are measured at fair value, the Group adopts the historical cost as the principle of measurement of the financial statements. Upon being restructured into a stock company, the fixed assets and intangible assets initially contributed by the state-owned shareholders are recognized based on the valuation amounts confirmed by the state-owned assets administration department. Where assets are impaired, provisions for asset impairment are made in accordance with the relevant requirements. Where the historical cost is adopted as the measurement basis, assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. Liabilities are recorded at the amount of proceeds or assets received or the contractual amounts for assuming the present obligation, or, at the amounts of cash or cash equivalents expected to be paid to settle the liabilities in the normal course of business. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using valuation technique. Fair value measurement and/or disclosure in the financial statements are determined according to the above basis. - 10 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continueed Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. Going Concern The Group evaluated its going concern ability within 12 months since 30 Jun. 2017. No events or circumstances are noted, which could cause significant doubt upon the entity's ability to continue as going concern. Hence, the financial statements have been prepared on a going concern basis. (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES All the following significant accounting policies and accounting estimates are based on Accounting Standards for Business Enterprises. 1.Statement of compliance with the ASBE The financial statements of the Company have been prepared in accordance with ASBE, and present truly and completely, the Company's and consolidated financial position as of 30 June 2017, and the Company's and consolidated results of operations and cash flows for six months ended 30 June 2017. 2. Accounting period The Group has adopted the calendar year as its accounting year, e.g. from 1 January to 31 December. . 3. Operating cycle Buginese cycle is referred to the period from which an enterprise buys assets to manufacture to the date it achieves cash or cash equivalents. 4. Functional currency Renminbi ("RMB") is the currency of the primary economic environment in which the Company and its subsidiaries operate. Therefore, the Company and its subsidiaries choose RMB as their functional currency. The Group adopts RMB to prepare its financial statements. - 11 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 5. The accounting treatment of business combinations involving or not involving enterprises under common control Business combinations are classified into business combinations involving enterprises under common control and business combinations not involving enterprises under common control. 5.1 Business combinations involving enterprises under common control A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. Assets and liabilities obtained shall be measured at their respective carrying amounts as recorded by the combining entities at the date of the combination. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination is adjusted to the share premium in capital reserve. If the share premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. Costs that are directly attributable to the combination are charged to profit or loss in the period in which they are incurred. 5.2 Business combinations not involving enterprises under common control and goodwill A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination. The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquire. Where a business combination not involving enterprises under common control is achieved in stages that involve multiple transactions, the cost of combination is the sum of the consideration paid at the acquisition date and the fair value at the acquisition date of the acquirer's previously held interest in the acquiree. The intermediary expenses (fees in respect of auditing, legal services, valuation and consultancy services, etc.) and other administrative expenses attributable to the business combination are recognized in profit or loss in the periods when they are incurred. The acquiree's identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business combination that meet the recognition criteria shall be measured at fair value at the acquisition date. - 12 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 5. The accounting treatment of business combinations involving or not involving enterprises under common control - continued 5.2 Business combinations not involving enterprises under common control and goodwill - continued Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where the cost of combination is less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the acquirer reassesses the measurement of the fair values of the acquiree's identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination. If after that reassessment, the cost of combination is still less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the acquirer recognizes the remaining difference immediately in profit or loss for the current period. Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presented separately in the consolidated financial statements. 6. Preparation of consolidated financial statements The scope of consolidation in the consolidated financial statements is determined on the basis of control. Control exists when the investor has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power over the investee to affect its returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes of the above elements of the definition of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiaries and ceases when the Group loses control of the subsidiary. For a subsidiary already disposed of by the Group, the operating results and cash flows before the date of disposal (the date when control is lost) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate. For subsidiaries acquired through a business combination involving enterprises not under common control, the operating results and cash flows from the acquisition date (the date when control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate. - 13 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 6. Preparation of consolidated financial statements - continued No matter when the business combination occurs in the reporting period, subsidiaries acquired through a business combination involving enterprises under common control are included in the Group's scope of consolidation as if they had been included in the scope of consolidation from the date when they first came under the common control of the ultimate controlling party. Their operating results and cash flows from the date when they first came under the common control of the ultimate controlling party are included in the consolidated income statement and consolidated statement of cash flows, as appropriate. The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on the uniform accounting policies and accounting periods set out by the Company. All significant intra-group balances and transactions are eliminated on consolidation. The portion of subsidiaries' equity that is not attributable to the parent is treated as minority interests and presented as "minority interests" in the consolidated balance sheet under shareholders' equity. The portion of net profits or losses of subsidiaries for the period attributable to minority interests is presented as "minority interests" in the consolidated income statement under the "net profit" line item. When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders' portion of the opening balance of shareholders' equity of the subsidiary, the excess amount is still allocated against minority interests. Acquisition of minority interests or disposals of interests in a subsidiary that do not result in the loss of control over the subsidiary are accounted for as equity transactions. The carrying amounts of the parent's interests and minority interests are adjusted to reflect the changes in their relative interests in the subsidiary. The difference between the amount by which the minority interests are adjusted and the fair value of the consideration paid or received is adjusted to shareholders' equity (capital reserve). If the capital reserve is not sufficient to absorb the difference, the excess are adjusted against retained earnings. When the Group loses control over a subsidiary due to disposal of equity investment or other reason, any retained interest is re-measured at its fair value at the date when control is lost. The difference between (i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii) the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according to the original proportion of ownership interests is recognized as investment income in the period in which control is lost, and the goodwill is offset accordingly. Other comprehensive income associated with investment in the former subsidiary is reclassified to investment income in the period in which control is lost. - 14 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 7.Types of joint arrangements and the accounting treatment of joint operation There are two types of joint arrangements - joint operations and joint ventures. The classification of joint arrangements under is determined based on the rights and obligations of parties to the joint arrangements by considering the structure, the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method by the Group, which is detailed in Note(III) 13.3.2 A long-term equity investment accounted for using the equity method. The Group as a joint operator recognizes the following items in relation to its interest in a joint operation: (1) its solely-held assets, including its share of any assets held jointly; (2) its solely- assumed liabilities, including its share of any liabilities incurred jointly; (3) its revenue from the sale of its share of the output arising from the joint operation; (4) its share of the revenue from the sale of the output by the joint operation; and (5) its solely-incurred expenses, including its share of any expenses incurred jointly. The Group accounts for the recognised assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the requirements applicable to the particular assets, liabilities, revenues and expenses. 8. Recognition criteria of cash and cash equivalents Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 9. Foreign currency transactions 9.1 Transactions denominated in foreign currencies A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange rate on the date of the transaction. At the balance sheet date, foreign currency monetary items are translated into RMB using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss for the period, except that (1) exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period; (2) exchange differences related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting; (3) exchange differences arising from change in the carrying amounts other than the amortized cost of available-for-sale monetary items are included in other comprehensive income. - 15 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 9. Foreign currency transactions- continued 9.1 Transactions denominated in foreign currencies - continued Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional currency at the spot exchange rates on the dates of the transactions; the amounts in functional currency remain unchanged. Foreign currency non-monetary items measured at fair value are re-translated at the spot exchange rate on the date the fair value is determined. Difference between the re-translated functional currency amount and the original functional currency amount is treated as changes in fair value including changes of exchange rate and is recognized in profit and loss or included in other comprehensive income. 10. Financial instruments Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. For financial assets and financial liabilities at fair value through profit or loss, transaction costs are immediately recognized in profit or loss. For other financial assets and financial liabilities, transaction costs are included in their initial recognized amounts. 10.1 Effective interest method The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability (or a group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period, using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial asset or financial liability (without considering future credit losses), and also considers all fees paid or received between the parties to the contract giving rise to the financial asset and financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts etc. 10.2 Classification, recognition and measurement of financial assets On initial recognition, the Group's financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss ("FVTPL"), held-to-maturity investments, loans and receivables, and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. - 16 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 10. Financial instruments - continued 10.2 Classification, recognition and measurement of financial assets - continued 10.2.1 Financial Assets at Fair Value through Profit or Loss ("FVTPL") Financial assets at fair value through profit or loss ("FVTPL") include financial assets held for trading and those designated as at fair value through profit or loss. A financial asset is classified as held for trading if one of the following conditions is satisfied: (1) it has been acquired principally for the purpose of selling in the near term; or (2) on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking; or (3) it is a derivative that is not designated and effective as a hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured. A financial asset may be designated as at FVTPL upon initial recognition only when one of the following conditions is satisfied: (1) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; or (2) the financial asset forms part of a group of financial assets or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis; or (3) eligible hybrid instruments that contain embedded derivatives. Financial assets at FVTPL are subsequently measured at fair value. Any gains or losses arising from changes in the fair value and any dividend or interest income earned on the financial assets are recognized in profit or loss. 10.2.2 Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group's management has the positive intention and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit or loss. - 17 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 10. Financial instruments - continued 10.2 Classification, recognition and measurement of financial assets - continued 10.2.3 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets classified as loans and receivables by the Group include notes receivable, accounts receivable, interest receivable, dividends receivable, and other receivables. Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit or loss. 10.2.4 Available-for-sale financial assets Available-for-sale financial assets include non-derivative financial assets that are designated on initial recognition as available for sale, and financial assets that are not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments. Available-for-sale financial assets are subsequently measured at fair value, and gains or losses arising from changes in the fair value are recognized as other comprehensive income and included in the capital reserve, except that impairment losses and exchange differences related to amortized cost of financial assets are recognized in profit or loss, until the financial assets are derecognized, at which time the gains or losses are released and recognized in profit or loss. Interests obtained and the dividends declared by the investee during the period in which the available-for-sale financial assets are held, are recognized in investment gains. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, and derivative financial assets that are linked to and must be settled by delivery of such unquoted equity instruments are measured at cost. 10.3 Impairment of financial assets The Group assesses at each balance sheet date the carrying amounts of financial assets other than those at fair value through profit or loss. If there is objective evidence that a financial asset is impaired, the Group determines the amount of any impairment loss. Objective evidence that a financial asset is impaired is evidence that, arising from one or more events that occurred after the initial recognition of the asset, the estimated future cash flows of the financial asset, which can be reliably measured, have been affected. - 18 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 10. Financial instruments - continued 10.3 Impairment of financial assets - continued Objective evidence that a financial asset is impaired includes the following observable events: (1) Significant financial difficulty of the issuer or obligor; (2) A breach of contract by the borrower, such as a default or delinquency in interest or principal payments; (3) The Group, for economic or legal reasons relating to the borrower's financial difficulty, granting a concession to the borrower; (4) It becoming probable that the borrower will enter bankruptcy or other financial reorganizations; (5) The disappearance of an active market for that financial asset because of financial difficulties of the issuer; (6) Upon an overall assessment of a group of financial assets, observable data indicates that there is a measurable decrease in the estimated future cash flows from the group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. Such observable data includes: - Adverse changes in the payment status of borrower in the group of assets; - Economic conditions in the country or region of the borrower which may lead to a failure to pay the group of assets; (7) Significant adverse changes in the technological, market, economic or legal environment in which the issuer of equity instruments operates, indicating that the cost of the investment in the equity instrument may not be recovered by the investor; (8) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost; (9) Other objective evidence indicating there is an impairment of a financial asset. - Impairment of financial assets measured at amortized cost If financial assets carried at cost or amortized cost are impaired, the carrying amounts of the financial assets are reduced to the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The amount of reduction is recognized as an impairment loss in profit or loss. If, subsequent to the recognition of an impairment loss on financial assets carried at amortized cost, there is objective evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the impairment is recognized, the previously recognized impairment loss is reversed. However, the reversal does not result in a carrying amount of the financial asset that exceeds what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed. - 19 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 10. Financial instruments - continued 10.3 Impairment of financial assets - continued - Impairment of financial assets measured at amortized cost - continued For a financial asset that is individually significant, the Group assesses the asset individually for impairment. For a financial asset that is not individually significant, the Group assesses the asset individually for impairment or includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset (whether significant or not), it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets for which an impairment loss is individually recognized are not included in a collective assessment of impairment. - Impairment of available-for-sale financial assets When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value previously recognized directly in other comprehensive income is reclassified from the capital reserve to profit or loss. The amount of the cumulative loss that is reclassified from capital reserve to profit or loss is the difference between the acquisition cost (net of any principal repayment and amortization) and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss. If, subsequent to the recognition of an impairment loss on available-for-sale financial assets, there is objective evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the impairment is recognized, the previously recognized impairment loss is reversed. The amount of reversal of impairment loss on available-for-sale equity instruments is recognized as other comprehensive income and included in the capital reserve, while the amount of reversal of impairment loss on available-for-sale debt instruments is recognized in profit or loss. - Impairment of financial assets measured at cost If an impairment loss has been incurred on an investment in unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, or on a derivative financial asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the carrying amount of the financial asset is reduced to the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The amount of reduction is recognized as an impairment loss in profit or loss. The impairment loss on such financial asset is not reversed once it is recognized. - 20 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 10. Financial instruments - continued 10.4 Transfer of financial assets The Group derecognizes a financial asset if one of the following conditions is satisfied: (1) the contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or (3) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability. The extent of the Group's continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset. For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognized in other comprehensive income, is recognized in profit or loss. If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset is allocated between the part that continues to be recognized and the part that is derecognized, based on the respective fair values of those parts. The difference between (1) the carrying amount allocated to the part derecognized; and (2) the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to the part derecognized which has been previously recognized in other comprehensive income, is recognized in profit or loss 10.5 Classification, recognition and measurement of financial liabilities Debt and equity instruments issued by the Group are classified into financial liabilities or equity on the basis of the substance of the contractual arrangements and definitions of financial liability and equity instrument. On initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities. - 21 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 10. Financial instruments - continued 10.5.1 Financial liabilities at fair value through profit or loss Financial liabilities at FVTPL consist of financial liabilities held for trading and those designated as at FVTPL on initial recognition. A financial liability is classified as held for trading if one of the following conditions is satisfied: (1) It has been acquired principally for the purpose of repurchasing in the near term; or (2) On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking; or (3) It is a derivative, except for a derivative that is a designated and effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured. A financial liability may be designated as at FVTPL upon initial recognition only when one of the following conditions is satisfied: (1) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring liabilities or recognizing the gains or losses on them on different bases; or (2) the financial liability forms part of a group of financial liabilities or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis; or (3) eligible hybrid instruments that contain embedded derivatives. Financial liabilities at FVTPL are subsequently measured at fair value, and any gains or losses arising from changes in the fair value or any dividend or interest expense related with the financial liabilities are recognized in profit or loss. 10.5.2 Other financial liabilities For a derivative liability that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, it is subsequently measured at cost. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with gains or losses arising from derecognition or amortization recognized in profit or loss. - 22 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 10. Financial instruments - continued 10.5 Classification and recognition of financial liabilities - continued 10.5.3 Financial guarantee contracts A financial guarantee contract is a contract by which the guarantor and the lender agree that the guarantor would settle the debts or bear obligations in accordance with terms of the contract in case the borrower fails to settle the debts. Financial guarantee contracts that are not designated as financial liabilities at fair value through profit or loss, are initially measured at their fair values less the directly attributable transaction costs. Subsequent to initial recognition, they are measured at the higher of: (i) the amount determined in accordance with Accounting Standard for Business Enterprises No. 13 - Contingencies; and (ii) the amount initially recognized less cumulative amortization recognized in accordance with the principles set out in Accounting Standard for Business Enterprises No. 14 - Revenue. 10.6 Derecognition of Financial Liabilities The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part of it) is discharged. An agreement between the Group (an existing borrower) and an existing lender to replace the original financial liability with a new financial liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. When the Group derecognizes a financial liability or a part of it, it recognizes the difference between the carrying amount of the financial liability (or part of the financial liability) derecognized and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in profit or loss. 10.7 Offsetting financial assets and financial liabilities Where the Group has a legal right that is currently enforceable to set off the recognized amounts, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset with the net amount presented in the balance sheet. Except for the circumstances above, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset. 10.8 Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The issuance including refinancing, repurchase, sale or cancellation of equity instrument of the Group is recognized as movement of shareholders' equity. The Group does not recognize any changes in the fair value of equity instruments. Transaction costs associated with equity transactions are deducted from shareholders' equity. The distributions made by the Group to holders of the equity instruments are recognized as profit distribution. Any issuance of stock dividends do not affect the shareholders' equity. - 23 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 11. Receivables 11.1 Receivables that are individually significant and for which bad debt provision is individually assessed Basis or monetary criteria for Top five balances of receivables are deemed as individually significant determining individually significant receivables by the Group. receivables For receivables that are individually significant, the Group assesses the Provision methods for receivables that receivables individually for impairment; for a financial asset that is not are individually significant and for impaired individually, the Group includes the asset in a group of financial assets with similar credit risk characteristics and collectively which bad debt provision is assesses them for impairment. Receivables for which an impairment individually assessed loss is individually recognized are not included in a collective assessment of impairment. 11.2 Receivables for which bad debt provision is collectively assessed on a credit risk portfolio basis Basis for determining a portfolio Portfolio 1 The portfolio primarily includes amounts due from related parties of the Group, deposits and petty cash etc. Portfolio 2 This portfolio excludes amounts due from related parties of the Group, deposits and petty cash etc. Bad debt provision methods for a portfolio Portfolio 1 Specific Identification Method Portfolio 2 Aging Analysis Method Portfolios that use aging analysis for bad debt provision: Provision proportion for Provision proportion for Aging accounts receivable (%) other receivables (%) Within 90 days (inclusive) 0 0 More than 91 days but not exceeding 183 days 0-3 0-3 More than 184 days but not exceeding year 5 5 More than 1 year but not exceeding 2 years 20 20 More than 2 years but not exceeding 3 years 50 50 More than 3 years 100 100 11.3 Accounts receivable that are not individually significant but for which individual bad debt provision is individually assessed: Reasons for making individual bad debt provision As objective evidence indicates the Group is unable to collect the receivables under original terms, the company makes individual bad debt provision. Bad debt provision methods Under bad debt provision method, the provision is recognized by the differences between the expected present value of future cash flows and carrying value. - 24 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 12. Inventories 12.1 Categories of inventories Inventories include spare parts, fuel, and low value consumables. Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditures incurred in bringing the inventories to their present location and condition. 12.2 Valuation method of inventories upon delivery The actual cost of inventories upon delivery is calculated using the weighted average method. 12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of inventories At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the cost of inventories is higher than the net realizable value, a provision for decline in value of inventories is made. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, after taking into consideration the purposes of inventories being held and effect of post balance sheet events. Provision for decline in value of other inventories is made based on the excess of cost of inventory over its net realizable value on an item-by-item basis. After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period. 12.4 Inventory count system The perpetual inventory system is maintained for stock system. 12.5 Amortization methods for low cost and short-lived consumable items and packaging materials Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method. - 25 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 13. Long-term equity investments 13.1 Basis for determining joint control and significant influence over investee Control is archived when the Group has the power over the investee and has rights to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating policy decisions relating to the activity require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. When determining whether an investing enterprise is able to exercise control or significant influence over an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be considered. 13.2 Determination of investment cost For a long-term equity investment acquired through a business combination involving enterprises under common control, the investment cost of the long-term equity investment is the attributable share of the carrying amount of the shareholders' equity of the acquiree at the date of combination. The difference between the initial investment cost and the carrying amount of cash paid, non-cash assets transferred and liabilities assumed shall be adjusted to capital reserve. If the balance of capital reserve is not sufficient, any excess shall be adjusted to retained earnings. If the consideration of the combination is satisfied by the issue of equity securities, the initial investment cost of the long-term equity investment shall be the share of party being absorbed of the owners' equity in the consolidated financial statements of the ultimate controlling party at the date of combination. The aggregate face value of the shares issued shall be accounted for as share capital. The difference between the initial investment cost and the aggregate face value of the shares issued shall be adjusted to capital reserve. If the balance of capital reserve is not sufficient, any excess shall be adjusted to retained earnings. For a long-term equity investment acquired through business combination not involving enterprises under common control, the investment cost of the long-term equity investment acquired is the cost of acquisition. The absorbing party's or purchaser's intermediary expenses (fees in respect of auditing, legal services, valuation and consultancy services, etc.) and other administrative expenses attributable to the business combination are recognized in profit or loss in the periods when they are incurred. The long-term equity investment acquired otherwise than through a business combination is initially measured at its cost. When the entity is able to exercise significant influence or joint control (but not control) over an investee due to additional investment, the cost of long-term equity investments is the sum of the fair value of previously-held equity investments determined in accordance with Accounting Standard for Business Enterprises No.22–Financial Instruments: Recognition and Measurement of (CAS 22) and the additional investment cost. - 26 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 13. Long-term equity investments - continued 13.3 Subsequent measurement and recognition of profit or loss 13.3.1 A long-term equity investment accounted for using the cost method Long-term equity investments in subsidiaries are accounted for using the cost method in the Company's separate financial statements. A subsidiary is an investee that is controlled by the Group. Under the cost method, a long-term equity investment is measured at initial investment cost. Additional or withdrawing investment would affect the cost of long-term equity investment. Investment income is recognized in the period in accordance with the attributable share of cash dividends or profit distributions declared by the investee. 13.3.2 A long-term equity investment accounted for using the equity method The Group accounts for investment in associates and joint ventures using the equity method. An associate is an entity over which the Group has significant influence and a joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group's share of the fair value of the investee's identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group's share of the fair value of the investee's identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of the long- term equity investment is adjusted accordingly. Under the equity method, the Group recognizes its share of the other comprehensive income and net profit or loss of the investee for the period as other comprehensive income and investment income or loss respectively for the period, and the carrying amount of the long-term equity investment is adjusted accordingly. The carrying amount of the investment shall be reduced by the portion of any profit distributions or cash dividends declared by the investee that is distributed to the investing enterprise. The investing enterprise shall adjust the carrying amount of the long-term equity investment for other changes in owners' equity of the investee (other than net profits or losses, other comprehensive income and profit distribution), and include the corresponding adjustment in capital reserve. The Group recognizes its share of the investee's net profit or loss based on the fair value of the investee's individually identifiable assets at the acquisition date after making appropriate adjustments. Where the accounting policies and accounting period adopted by the investee are different from those of the investing enterprise, the investing enterprise shall adjust the financial statements of the investee to conform to its own accounting policies and accounting period, and recognise other comprehensive income and investment income or losses based on the adjusted financial statements. Unrealized profits or losses resulting from the Group's transactions and assets invested or sold that are not recognized as business transactions with its associates and joint ventures are recognized as investment income or loss to the extent that those attributable to the Group's, equity interest are eliminated. However, unrealized losses resulting from the Group's transactions with its associates and joint ventures which represent impairment losses on the transferred assets are not eliminated. - 27 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 13. Long-term equity investments - continued 13.3 Subsequent measurement and recognition of profit or loss - continued 13.3.2 A long-term equity investment accounted for using the equity method - continued The Group discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of its net investment in the investee are reduced to zero. Except that if the Group has incurred obligations to assume additional losses, a provision is recognized according to the obligation expected, and recorded in the investment loss for the period. Where net profits are subsequently made by the investee, the Group resumes recognizing its share of those profits only after its share of the profits exceeds the share of losses previously not recognized. 13.4 Disposal of long-term equity investments On disposal of a long-term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is recognized in profit or loss for the period. For long-term equity investments accounted for using the equity method, if the remaining interest after disposal is still accounted for using the equity method, other comprehensive income previously recognised for using the equity method is accounted for on the same basis as would have been required if the investee had directly disposed of related assets or liabilities, and transferred to profit or loss for the period on a pro rata basis; owners' equity recognised due to changes in other owners' equity of the investee (other than net profit or loss, other comprehensive income and profit distribution) is transferred to profit or loss for the period on a pro rata basis. For long-term equity investments accounted for using the cost method, if the remaining interest after disposal is still accounted for using the cost method, other comprehensive income previously recognised for using the equity method or in accordance with the standards for the recognition and measurement of financial instruments before obtaining the control over the investee, is accounted for on the same basis as would have been required if the investee had directly disposed of related assets or liabilities, and transferred to profit or loss for the period on a pro rata basis; changes in other owners' equity in the investee's net assets recognised under the equity method (other than net profit or loss, other comprehensive income and profit distribution) is transferred to profit or loss for the period on a pro rata basis. 14. Investment properties Investment property is property held to earn rentals or for capital appreciation or both. It includes a land use right that is leased out; a land use right held for transfer upon capital appreciation; and a building that is leased out. An investment property is measured initially at cost. Subsequent expenditures incurred for such investment property are included in the cost of the investment property if it is probable that economic benefits associated with an investment property will flow to the Group and the subsequent expenditures can be measured reliably, other subsequent expenditures are recognized in profit or loss in the period in which they are incurred. - 28 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 14. Investment properties - continued The Group uses the cost model for subsequent measurement of investment property, and adopts a depreciation or amortization policy for the investment property which is consistent with that for buildings or land use rights. When an investment property is sold, transferred, retired or damaged, the Group recognizes the amount of any proceeds on disposal net of the carrying amount and related taxes in profit or loss for the period. 15. Fixed assets 15.1 Recognition criteria for fixed assets Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognized only when it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Fixed assets are initially measured at cost. Upon being restructured into a stock company, the fixed assets initially contributed by the state-owned shareholders are recognized based on the valuation amounts confirmed by the state-owned assets administration department. Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable that economic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the replaced part is derecognized. Other subsequent expenditures are recognized in profit or loss in the period in which they are incurred. 15.2 Depreciation of each category of fixed assets A fixed asset is depreciated over its useful life using the straight-line method starting from the month subsequent to the one in which it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of each category of fixed assets are as follows: Estimated Estimated Annual Category useful lives residual value depreciation rate Port and terminal facilities 5 - 50 years 10% 1.8%-18% Container yards and buildings 5 - 40 years 10% 2.25%-18% Mechanical equipment 5 - 15 years 10% 6%-18% Motor vehicles, cargo ships and tugboats 5 - 20 years 10% 4.5%-18% Other equipment 5 years 10% 18% Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life. - 29 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 15. Fixed assets - continued 15.3 Other explanations If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized in profit or loss for the period. The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least once at each financial year-end, and account for any change as a change in an accounting estimate. 16. Construction in progress Construction in progress is measured at its actual costs. The actual costs include various construction expenditures during the construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs. Construction in progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready for intended use. 17. Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally and when the interruption is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition, construction or production of the asset is resumed. Other borrowing costs are recognized as an expense in the period in which they are incurred. Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable to the general-purpose borrowings. - 30 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 17. Borrowing Costs - continued During the capitalization period, exchange differences related to a specific-purpose borrowing denominated in foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are recognized in profit or loss in the period in which they are incurred. 18. Intangible assets Intangible assets include land use rights, sea area use rights and computer software. An intangible asset is measured initially at cost. Upon being restructured into a stock company, the intangible assets initial contributed by the state-owned shareholders are recognized based on the valuation amounts confirmed by the state-owned assets administration department. When an intangible asset with a finite useful life is available for use, its original cost is amortized over its estimated useful life. Residual Category Amortization method Estimated useful lives(year) value (%) Land use rights Straight-line method 20-50 - Computer software Straight-line method 5 - Sea area use rights Straight-line method 5-50 - Coastal line use rights Straight-line method 41.9-44.3 - For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of the period, and makes adjustments when necessary. 19. Impairment of long-term assets The Group assesses at the balance sheet date whether there is any indication that the long-term equity investments, investment properties measured at cost method, construction in progress, fixed assets and intangible assets with a finite useful life may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefinite useful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether there is any indication that the assets may be impaired. Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted for as an impairment loss and is recognized in profit or loss. - 31 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 19. Impairment of long-term assets - continued Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment testing, goodwill is considered together with the related assets groups, i.e., goodwill is reasonably allocated to the related assets groups or each of assets groups expected to benefit from the synergies of the combination. In testing an assets group with goodwill for impairment, an impairment loss is recognized if the recoverable amount of the assets group or sets of assets groups (including goodwill) is less than its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill allocated to such assets group or sets of assets groups, and then to the other assets of the group pro-rata basis on the basis of the carrying amount of each asset (other than goodwill) in the group. Once the impairment loss of above-mentioned asset is recognized, it shall not be reversed in any subsequent period. 20. Long-term prepaid expenses Long-term prepaid expenses represent expenses incurred that should be borne and amortized over the current and subsequent periods (together of more than one year). Long-term prepaid expenses are amortized using the straight-line method over the expected periods in which benefits are derived. 21. Employee benefits 21.1 The accounting treatment of short-term employee benefits Actually occurred short-term employee benefits are recognised as liabilities, with a corresponding charge to the profit or loss for the period or in the costs of relevant assets in the accounting period in which employees provide services to the Group. Staff welfare expenses incurred by the Group are recognised in profit or loss for the period or the costs of relevant assets based on the actually occurred amounts when it actually occurred. Non-monetary staff welfare expenses are measured at fair value. Payment made by the Group of social security contributions for employees such as premiums or contributions on medical insurance, work injury insurance and maternity insurance, etc. and payments of housing funds, as well as union running costs and employee education costs provided in accordance with relevant requirements, are calculated according to prescribed bases and percentages in determining the amount of employee benefits and recognised as relevant liabilities, with a corresponding charge to the profit or loss for the period or the costs of relevant assets in the accounting period in which employees provide services. - 32 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 21、Employee benefits - continued 21.2 The accounting treatment of post-employment benefits All the post-employment benefits are defined contribution plans. The contribution payable to the defined contribution plan is recognised as liabilities, with a corresponding charge to the profit or loss for the period or in the costs of relevant assets in the accounting period in which employees provide services to the Group. 21.3 The accounting treatment of termination benefits When the Group provides termination benefits to employees, employee benefit liabilities are recognised for termination benefits, with a corresponding charge to the profit or loss for the period at the earlier of: (1) when the Group cannot unilaterally withdraw the offer of termination benefits because of the termination plan or a curtailment proposal; and (2) when the Group recognizes costs or expenses related to restructuring that involves the payment of termination benefits. 22. Provisions Provisions are recognised when the Group has a present obligation related with contingencies, it is probable that the Group will be required to settle that obligation causing an outflow of economic benefits, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at balance sheet date, taking into account the risks, uncertainties and time value of money surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows where the effect of the time value of money is material. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable should not exceed the carrying amount of provisions. 23. Revenue 23.1 Revenue from rendering of services The Group provides load and unload services, tugboat and trailer services, logistics agency and other related harbor services to customers. Revenue from rendering of services is recognized when (1) the amount of revenue can be measured reliably; (2) it is probable that the associated economic benefits will flow to the enterprise; and (3) the associated costs incurred or to be incurred can be measured reliably. - 33 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 23. Revenue - continued 23.2 Rental income - continued The operating lease income of investment property should be recognized in the lease term at the price stated in contract or agreements using the straight-line method. 23.3 Interest income Interest income is calculated based on the length of time for which the Group's cash is used by others and the applicable interest rate. 24. Government grants Government grants are transfer of monetary assets or non-monetary assets from the government to the Group at no consideration. A government grant measured at a nominal amount is recognized immediately in profit or loss for the period. A government grant is recognized only when the Group can comply with the conditions attached to the grant and the Group will receive the grant. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. 24.1 The accounting treatment of government grants related to assets A government grant, such as special funds for modern logistics project and special funds for energy-saving and emission reduction of transportation, related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset. 24.2 The accounting treatment of government grants related to income A government grant relating to income, if used to compensate the related expenses or losses to be incurred in subsequent periods, such as financial support funds of business tax converted to VAT and reward for energy saving, is determined as deferred income and recognised in profit or loss over the periods in which the related costs are recognized; if used to compensate the related expenses or losses already incurred, is recognised immediately in profit or loss for the period. 25. Deferred tax assets/ deferred tax liabilities The income tax expenses include current income tax and deferred income tax. 25.1 Current income tax At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws. - 34 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 25. Deferred tax assets/ deferred tax liabilities - continued 25.2 Deferred tax assets and deferred tax liabilities For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between the nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. However, for temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates applicable in the period in which the asset is realized or the liability is settled according to tax laws. Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise from transactions or events that are directly recognized in other comprehensive income or in equity, in which case they are recognized in other comprehensive income or in equity, and when they arise from business combinations, in which case they adjust the carrying amount of goodwill. At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Any such reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available. - 35 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 25. Deferred tax assets/ deferred tax liabilities - continued 25.3 Offset of income tax When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis. When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis. 26. Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. 26.1 The accounting treatment of operating leases 26.1.1 The Group as lessee under operating leases Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are either included in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit or loss for the period. Contingent rents are charged to profit or loss in the period in which they are actually incurred. 26.1.2 The Group as lessor under operating leases Rental income from operating leases is recognized in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs with more than an insignificant amount are capitalized when incurred, and are recognized in profit or loss on the same basis as rental income over the lease term. Other initial direct costs with an insignificant amount are charged in profit or loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the period in which they actually arise. - 36 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 27. Safety Production Cost According to the Administrative Rules on Provision and Use of Enterprise Safety Production Cost jointly issued by the Ministry of Finance and the State Administration of Work Safety on 14 February 2012 (filed as Cai Qi [2012] No. 16), safety production cost set aside by the Group is directly included in the cost of relevant products or recognized in profit or loss for the period, as well as the special reserve. When safety production cost set aside is utilized, if the costs incurred can be categorized as expenditure, the costs incurred should be charged against the special reserve. If the costs set aside are used to build up fixed assets, the costs should be charged to construction in progress, and reclassified to fixed assets when the safety projects are ready for intended use. Meantime, expenditures in building up fixed assets are directly charged against the special reserve with the accumulated depreciation recognized at the same amount. Depreciation will not be made in the future period on such fixed assets. 28. Critical judgments in applying accounting policies and key assumptions and uncertainties in accounting estimates In the application of accounting policies as set out in Note (III), the Company is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that cannot be measured accurately, due to the internal uncertainty of the operating activities. These judgments, estimates and assumptions are based on historical experiences of the Company's management as well as other factors that are considered to be relevant. Actual results may differ from these estimates. The Company regularly reviews the judgments, estimates and assumptions on a going concern basis. Changes in accounting estimates which only affect the current period should be recognized in current period; changes which not only affect the current but the future periods should be recognized in current and future periods. At the balance sheet date, key assumptions and uncertainties that are likely to lead to significant adjustments to the book values of assets and liabilities in the future are: Goodwill impairment For the purpose of impairment testing, the present value of the expected future cash flows of the assets group or portfolio including goodwill shall be calculated, and such expected future cash flows shall be estimated. Meantime, a pre-tax rate shall be determined that should reflect the time value of money on the current market and the specific asset risks. - 37 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (III) THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued 28. Critical judgments in applying accounting policies and key assumptions and uncertainties in accounting estimates - continued Recognition of deferred tax The Group calculates and makes provision for deferred income tax liabilities according to the profit distribution plan of subsidiaries, associates and the joint ventures subject to the related law. For retained earnings which are not allocated by the investment company, since the profits will be used to invest the company's daily operation and future development, no deferred income tax liabilities are recognized. If the actually distributed profits in the future are more or less than those expected, corresponding deferred tax liabilities will be recognized or reversed at the earlier of profits distribution date and the declaration date, in the profit and loss of the current period. Deferred tax assets are recognized based on the deductible temporary difference and the corresponding tax rate, to the extent that it has become probable that future taxable profit will be available for the deductible temporary difference. If in the future the actual taxable income does not coincide with the amount currently expected, the deferred tax assets resulting will be recognized or reversed in the period when actually incurred, in profit or loss. (IV) TAXES 1. Major taxes and tax rates Taxes Tax basis Tax rate Enterprise income tax Taxable income 25% Load and unload income, tugboat income, trailer income, 6% warehousing income and agency income Taxable income from vehicle maintenance and utilities supplies 13% and17% on ships in shore Value-add Tax Taxable income from sales of scraps and rental income from 3% tangible property Taxable income from leases of immovable property and labor 5% and 6% dispatching (Note 2) Urban maintenance and 5% and 7 % VAT construction tax (Note 1) Education surcharges VAT 3% Regional education surcharges VAT 2% Entities using different enterprise income tax rate: Name of entity Enterprise income tax rate Chiwan Wharf Holdings (HK) Limited 16.50% Chiwan Shipping (HK) Company Limited 16.50% Xuanyun Development Company Limited 16.50% - 38 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (IV) TAXES - continued 1. Major taxes and tax rates - continued Note 1: The subsidiaries set up in Shenzhen are subject to an city maintenance and construction tax rate of 7%, and those set up in Dongguan are subject to an city maintenance and construction tax rate of 5%. Note 2: Pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation ("SAT")on Full Launch of the Pilot Scheme on Levying Value-added Tax in Place of Business Tax (filed as Cai Shui [2016] No. 36), a full implementation of replacing business tax with VAT has been launched. Therefore, the Group is subject to VAT at 5% and 6% respectively for rental income from immovable property and income from labor dispatching since 1 May 2016. Pursuant to the Interim Measures on Management of VAT Collection on Immovable Property Leases Provided by Taxpayers released by SAT(filed as the notice of SAT 2016 No.16), the Group, are entitled to VAT tax rate at 5% based on simple tax method for immovable property leasing since 1 May 2016. 2. Tax preference On 8 July 2014, Machong Branch of National Taxation Bureau in Dongguan City approved that Dongguan Chiwan Terminal Co., Ltd ("DGT"), a subsidiary of the Group, was subject to tax preference of "3-year exemption followed by 3-year half reduction" commencing from 2014. DGT is exempted from income tax in 2016 (2016: exempted from enterprise income tax). According to Doc. [2013] No.3 issued by Shekou Local Taxation Bureau In Shenzhen, the profits derived from berth 13A# of Shenzhen Chiwan Harbour Container Co., Ltd ("CHCC"), was subject to tax preference of "3-year exemption followed by 3-year half reduction" commencing from 2012. 2016 is the fifth profit-making year of berth 13A#, hence, the tax rate of 12.5% was adopted to calculate its enterprise income tax. (2016: 12.5%). According to the joint verification by Science and Technology Innovation Commission of Shenzhen Municipality, Finance Commission of Shenzhen Municipality, Shenzhen Provincial Office, SAT and Shenzhen Local Taxation Bureau, Chiwan Container Terminal Co., Ltd ("CCT"), a subsidiary of the Group, is a high-tech enterprise, and was subject to tax preference of 3-year enterprise income tax rate of 15% commencing from 2014. The high-tech certificate of Chiwan Container Terminal Co., Ltd., a subsidiary of the Company, expired at the end of 2016 and the subsidiary was going through a review for that certificate in the first half of 2017. Therefore, out of the principle of prudence, the income tax rate for the subsidiary was reported at 25% for this year. According to the Notice on Taxable Services Subject to "VAT" Tax Rate of Zero and Exemption issued by the Ministry of Finance and State Administration of Taxation (filed as Cai Shui [2011] No.131), and approvals released by Shekou National Taxation Bureau in Shenzhen (filed as Shen Guo Shui She Jian Mian Bei [2015] No.0419, [2015] No.0575 and [2015] No.0755 respectively), CCT, CHCC and Shenzhen Chiwan International Freight Agency Co., Ltd, the subsidiaries of the Group, are exempted from VAT when providing logistics support service to overseas enterprises except for warehousing service. - 39 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS 1. Cash and bank balances Unit: RMB Item Closing balance Opening balance Cash: RMB 1,282.79 20,664.46 USD 480.98 492.53 HKD 7,555.68 7,786.85 Subtotal 9,319.45 28,943.84 Bank deposit: RMB 316,148,677.71 225,166,179.45 USD 243,709,449.24 175,236,570.78 HKD 19,714,770.66 25,531,313.32 Subtotal 579,572,897.61 425,934,063.55 Other cash and bank balances (Note) RMB 13,960,284.35 73,695.48 USD - - HKD - - Subtotal 13,960,284.35 73,695.48 Total 593,542,501.41 426,036,702.87 Including: The total amount of funds deposited in overseas 6,573,964.58 11,778,425.97 Note: The balance of other cash and bank balances is mainly the amount deposited in the securities settlement account of China Merchants Securities Co., Ltd and bank guarantee deposit of DGT. 2. Notes receivable Unit: RMB Category Closing balance Opening balance Bank acceptance bills - 500,000.00 Note: No notes receivable pledged, endorsed or discounted at the year end. 3. Accounts receivable (1) Disclosure of accounts receivable by categories Unit: RMB Closing balance Opening balance Carrying amount Bad debt provision Carrying amount Bad debt provision Proporti Proporti Proportio Proporti Item Amount on (%) Amount on (%) Book value Amount n (%) Amount on (%) Book value Accounts receivable that are individually significant and for which bad debt provision has - - - - - - - - - - been assessed individually Accounts receivable for which bad debt provision has been assessed by credit risk portfolios Portfolio 1 8,629,958.62 3.50 - - 8,629,958.62 4,527,585.51 2.54 - - 4,527,585.51 Portfolio 2 235,090,646.20 95.38 216,600.91 0.09 234,874,045.29 169,922,044.73 95.41 515,133.61 0.30 169,406,911.12 Subtotal of portfolios 243,720,604.82 98.88 216,600.91 0.09 243,504,003.91 174,449,630.24 97.95 515,133.61 0.30 173,934,496.63 Accounts receivable that are not individually significant but for which bad debt provision has 2,768,544.64 1.12 2,768,544.64 100.00 - 3,647,046.03 2.05 3,647,046.03 100.00 - been assessed individually Total 246,489,149.46 100.00 2,985,145.55 1.21 243,504,003.91 178,096,676.27 100.00 4,162,179.64 2.34 173,934,496.63 - 40 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 3. Accounts receivable - continued (1) Disclosure of accounts receivable by categories - continued Accounts receivable portfolios for which bad debt provision has been assessed using the aging analysis approach: Unit: RMB Closing balance Opening balance Carrying Bad debt Proportion Carrying Bad debt Proportion Aging amount provision (%) Book value amount provision (%) Book value Within 1 year 234,715,478.17 125,525.47 0.05 234,589,952.70 169,810,253.50 477,141.52 0.28 169,333,111.98 More than 1 year but not 354,390.73 70,878.14 20.00 283,512.59 91,873.93 18,374.79 20.00 73,499.14 exceeding 2 years More than 2 years but not 1,160.00 580.00 50.00 580.00 600.00 300.00 50.00 300.00 exceeding 3 years More than 3 years 19,617.30 19,617.30 100.00 - 19,317.30 19,317.30 100.00 - Total 235,090,646.20 216,600.91 0.09 234,874,045.29 169,922,044.73 515,133.61 0.30 169,406,911.12 (2) Bad debt provision, reversal and written-off Unit: RMB bad debt Decrease Item Opening balance provision Reversal Write-off Closing balance Accounts receivable 4,162,179.64 456,427.17 1,633,461.26 - 2,985,145.55 (3) There are no accounts receivables that have been written off during the year. (4) Top five balances of accounts receivable classified by debtor: Unit: RMB Proportion of the amount to the Relationship with total accounts Name of customer the Company Amount receivable (%) Bad debt provision Customer A Customer 54,209,574.08 21.99 1,443.60 Customer B Customer 33,974,868.00 13.78 - Customer C Customer 14,546,864.86 5.90 - Customer D Customer 9,432,338.45 3.83 - Customer E Customer 7,905,330.53 3.21 - Total 120,068,975.92 48.71 1,443.60 4. Prepayments (1) Prepayments presented by aging Unit: RMB Closing balance Opening balance Aging Amount Proportion (%) Amount Proportion (%) Within 1 year 1,804,143.70 100.00 2,464,758.53 93.37 More than 1 year - - - - but not exceeding 2 years More than 2 years but not - - 175,000.00 6.63 exceeding 3 years Total 1,804,143.70 100.00 2,639,758.53 100.00 - 41 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 4. Prepayments - continued (2) Top five balances of prepayments classified by entities Unit: RMB Proportion of the closing balance to Relationship with Closing the total Entities the Company balance prepayments (%) The People's Property Insurance Company (Group) of Supplier 680,511.80 37.72 China Limited, Shenzhen Branch China Life Insurance Co., Ltd Shenzhen Branch Supplier 555,913.81 30.82 Kingdee software (China) Co., Ltd. Supplier 252,391.51 13.99 CMBL Supplier 150,000.00 8.31 Shaoguan Hydraulic Parts Factory Co Ltd Supplier 50,960.00 2.82 Total 1,689,777.12 93.66 (3) The Group has no significant aging over one year prepayment. 5. Interest receivable (1) Interest receivable Unit: RMB Category Closing balance Opening balance Fixed term deposit 1,264,914.26 - (2) The Group has no significant overdue interest. 6. Dividends receivable (1) Dividends receivable Unit: RMB Impairment Opening Closing appeared or Item balance Increase Decrease balance not China Overseas Harbor Affairs - - No (Laizhou) Co., Ltd. 54,159,674.42 54,159,674.42 China Ocean Shipping Agency - - No (Shenzhen) Company Limited 8,997,000.00 8,997,000.00 Jiang Su Ninghu Expressway - 420,000.00 - 420,000.00 No Company Limited MEDIA PORT INVESTMENTS LIMITED - 30,167,872.32 30,167,872.32 - No Total - 93,744,546.74 93,324,546.74 - (2) The Group has no dividends receivable aging more than one year. - 42 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 7. Other receivables (1) Disclosure of other receivables by categories: Unit: RMB Closing balance Opening balance Carrying amount Bad debt provision Carrying amount Bad debt provision Proportion Proportion Proportion Proporti Category Amount (%) Amount (%) Book value Amount (%) Amount on (%) Book value Other receivables that are individually significant and for which bad debt - - - - - - - - - - provision has been assessed individually Other receivables for which bad debt provision has been assessed by credit risk portfolios Portfolio 1 11,290,093.48 58.61 100,000.00 0.89 11,190,093.48 9,736,887.93 34.85 100,000.00 1.03 9,636,887.93 Portfolio 2 7,972,493.98 41.39 463,424.48 5.81 7,509,069.50 18,205,610.78 65.15 1,194,629.70 6.56 17,010,981.08 Subtotal of portfolios 19,262,587.46 100.00 563,424.48 2.92 18,699,162.98 27,942,498.71 100.00 1,294,629.70 4.63 26,647,869.01 Other receivables that are not individually significant but for which bad debt provision - - - - - - - - - - has been assessed individually Total 19,262,587.46 100.00 563,424.48 2.92 18,699,162.98 27,942,498.71 100.00 1,294,629.70 4.63 26,647,869.01 Other receivables portfolios for which bad debt provision has been assessed using the aging analysis Unit: RMB Closing balance Opening balance Carrying Bad debt Proportion Carrying Bad debt Proportio Aging amount provision (%) Book value amount provision n (%) Book value Within 1 year 7,509,069.50 - - 7,509,069.50 17,704,281.50 723,624.26 4.09 16,980,657.24 More than 1 year - - - - 37,904.80 7,580.96 20.00 30,323.84 but not exceeding 2 years More than 2 years - - - - - - - - but not exceeding 3 years More than 3 years 463,424.48 463,424.48 100.00 - 463,424.48 463,424.48 100.00 - Total 7,972,493.98 463,424.48 5.81 7,509,069.50 18,205,610.78 1,194,629.70 6.56 17,010,981.08 (2) Increase, reverse and write-off of bad debt provision Unit: RMB Decrease Translate foreign currency Item Opening balance Increase Reversal Write-off statements Closing balance Other receivable 1,294,629.70 - 731,205.22 - - 563,424.48 (3) Other receivable has not been written off during the year. (4) Disclosure of other receivables by nature Unit: RMB Item Closing balance Opening balance Temporary payments 6,704,948.86 7,216,846.26 Deposits 4,927,605.99 4,021,619.49 Others 7,630,032.61 16,704,032.96 Total 19,262,587.46 27,942,498.71 - 43 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 7. Other receivables - continued (5) Top five balances of other receivables classified by creditors Unit: RMB Proportion of the amount to the total accounts receivable Name of company Nature of the fund Amount Aging (%) Bad debt provision More than 2 year but Temporary payments not exceeding 3 years Nanshan Group 2,822,760.39 14.65 - from related parties and more than 3 years Finance Department of Deposits and guarantee 1,600,000.00 more than 3 years 5.73 - Ministry of Transport Temporary payments MSC 970,762.13 Within one year 5.04 - from related parties Temporary payments CMBL 2,180,743.58 Within one year 11.32 - from related parties Shenzhen Nanhai Grain Land rents 1,066,345.02 Within one year 5.54 - Industrial Co., Ltd. Total 8,640,611.12 44.86 - 8. Inventories (1) Categories of inventories Unit: RMB 30 Jun. 2017 31 Dec. 2016 Provision for Provision for decline in value of decline in value of Item Carrying amount inventories Book value Carrying amount inventories Book value Spare parts 18,075,502.40 972,744.93 17,102,757.47 15,138,488.70 972,744.93 14,165,743.77 Fuel 662,550.11 - 662,550.11 605,666.32 - 605,666.32 Low priced and easily 161,196.58 - 161,196.58 - - - worn articles Total 18,899,249.09 972,744.93 17,926,504.16 15,744,155.02 972,744.93 14,771,410.09 (2) Provision for decline in value of inventories Unit: RMB Decrease Item Opening balance Increase Reversal Write-off Closing balance Spare parts 972,744.93 - - - 972,744.93 9、Other current assets Unit: RMB Item Closing balance Opening balance Added-value tax to be certified and deducted 19,698,853.34 16,832,212.36 - 44 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 10. Available-for-sale financial assets (1) Available-for-sale financial assets Unit: RMB Closing balance Opening balance Carrying Provision for Carrying Provision for Item amount impairment Book value amount impairment Book value Available-for-sale 26,837,500.00 3,128,300.00 23,709,200.00 25,587,500.00 3,128,300.00 22,459,200.00 equity instruments Measured at fair value 9,800,000.00 - 9,800,000.00 8,550,000.00 - 8,550,000.00 Measured at cost 17,037,500.00 3,128,300.00 13,909,200.00 17,037,500.00 3,128,300.00 13,909,200.00 Total 26,837,500.00 3,128,300.00 23,709,200.00 25,587,500.00 3,128,300.00 22,459,200.00 (2) Available-for-sale financial assets measured at fair value at the end of the year Unit: RMB Classification of available-for-sale financial assets Available-for-sale equity instruments Cost of equity instruments 1,120,000.00 Fair value 9,800,000.00 Accumulated amount of changes in fair value included in the other 8,680,000.00 comprehensive income Provision amount for impairment - Note: The available-for-sale financial assets held by the Company represent the circulating shares of Jiang Su Ninghu Expressway Company Ltd at the end of the year. (3) Available-for-sale financial assets measured at cost at the end of the year Unit: RMB Carrying amount Provision for impairment Proportion of ownership Cash interests in dividends Opening Closing Opening Closing the investee for the Investees balance Increase Decrease balance balance Increase Decrease balance (%) period Shenzhen Petro-chemical 3,500,000.00 - - 3,500,000.00 3,117,800.00 - - 3,117,800.00 0.26 - Industry (Group) Company Limited Guangdong Guang Jian 27,500.00 - - 27,500.00 10,500.00 - - 10,500.00 0.02 - Group Company Limited China Ocean Shipping Agency (Shenzhen) 13,510,000.00 - - 13,510,000.00 - - - - 15.00 8,997,000.00 Company Limited Total 17,037,500.00 - - 17,037,500.00 3,128,300.00 - - 3,128,300.00 8,997,000.00 Note: The available-for-sale financial assets measured at cost are equity investments of Shenzhen Petro-chemical Industry (Group) Company Limited, Guangdong Guang Jian Group Company Limited and China Ocean Shipping Agency (Shenzhen) Company Limited. None of the stocks of above-mentioned companies are traded in market or fair value could be measured reliably, hence, the Group measures these equity investments under cost method. (4) Movements of available-for-sale financial assets in the reporting period Unit: RMB Category Available-for-sale equity instruments Provision amount for impairment at the beginning of the year 3,128,300.00 Increase in the current year - Decrease in the current year - Provision amount for impairment at the end of the year 3,128,300.00 - 45 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 11. Long-term equity investments Unit: RMB Changes Investment profit Reconciling items from Cash dividends or Closing value of Accounting or loss under equity other comprehensive Other equity profits announced of Provision for provision for Investee method Investment cost Opening balance Increase Decrease method income movements issuance impairment Others Closing balance impairment I. Joint ventures China Overseas Harbor Affairs (Laizhou) Co., Ltd.(Note 1) Equity method 749,655,300.00 794,981,306.22 - - 29,155,806.47 - - 54,159,674.42 - - 769,977,438.27 - II. Associates China Merchants Holdings (International) Information Technology - Equity method 1,875,000.00 14,595,240.92 - - 2,267,364.00 - - - - - 16,862,604.92 Company Ltd. - CMBL Equity method 280,000,000.00 339,931,866.76 - - 5,476,000.01 - - - - - 345,407,866.77 - MediaPortInvestmentsLimited("MPIL") (Note 2) Equity method 139,932.00 340,919,242.63 - - 23,193,786.97 - - 32,658,612.69 - - 331,454,416.91 - Subtotal 282,014,932.00 695,446,350.31 - - 30,937,150.98 - - 32,658,612.69 - - 693,724,888.60 - Total 1,031,670,232.00 1,490,427,656.53 - - 60,092,957.45 - - 86,818,287.11 - - 1,463,702,326.87 Note 1: The Company holds 40% equity interests in China Overseas Harbor Affairs (Laizhou) Co., Ltd. (hereinafter "COHA (Laizhou)"). According to its articles of incorporation, significant matters such as operating decisions can be passed only when jointly approved by directors of the Company and the other ventures. Therefore, COHA (Laizhou) is deemed to be under common control of Chiwan Wharf and the other shareholders; accordingly COHA (Laizhou) is accounted for as a joint venture. Note 2: On 30 September 2002, China Merchants Holdings (International) Company Limited (the "CMHI", a listed company in Hong Kong) and Shenzhen South Oil (Group) Company Limited (the "SSOG") entered into an agreement called "Agreement on Cooperation and Development of Mawan Port" (the "Development Agreement") to incorporate three joint ventures, namely Shenzhen Mawan Wharf Co., Ltd.("SMW"), SMP and Shenzhen Mawan Terminals Co., Ltd. ("SMT") (together referred to as "Mawan Companies"), to construct and operate the berth 0#, 5#, 6#, 7# and 8# in Mawan Port. According to the Development Agreement, CMHI and the Group will jointly set up Media Port Investments Limited (the "MPIL") with equal percentage of equity held respectively. MPIL then incorporates the abovementioned three joint ventures together with SSOG, and MPIL has 60% equity in each of the three joint ventures. - 46 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 12. Investment properties (1) Investment properties measured under cost method Unit: RMB Opening Closing carrying carrying Item amount Increase Decrease amount I. Total original carrying amount 43,579,258.14 - - 43,579,258.14 1. Buildings 14,947,127.30 - - 14,947,127.30 2. Land use right 28,632,130.84 - - 28,632,130.84 II. Total accumulated depreciation 19,932,344.37 412,916.04 - 20,345,260.41 and amortization 1. Buildings 5,463,497.40 156,179.82 - 5,619,677.22 2. Land use right 14,468,846.97 256,736.22 - 14,725,583.19 III. Total net book value of investment 23,646,913.77 - - 23,233,997.73 property 1. Buildings 9,483,629.90 - - 9,327,450.08 2. Land use right 14,163,283.87 - - 13,906,547.65 IV. Total accumulated amount of provision for impairment losses of - - - - investment property 1. Buildings - - - - 2. Land use right - - - - V. Total carrying value of 23,646,913.77 - - 23,233,997.73 investment property 1. Buildings 9,483,629.90 - - 9,327,450.08 2. Land use right 14,163,283.87 - - 13,906,547.65 Note: Depreciation and amortization for the current period is RMB412,916.04. (2) Investment properties without ownership certificates As of 30 Jun. 2017, the Group has not obtained any ownership certificates of investment properties. For buildings located within the scope of Chiwan watershed with net book value of RMB20,080,637.54 (original carrying amount: RMB40,030,725.05), the underlying reasons and management's resolutions for obtaining certificates of title are set out in Note (V) 15, and the rest certificates of title are under the process of application. - 47 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 13. Fixed assets (1) Fixed assets Unit: RMB Opening carrying Closing carrying Item amount Increase Decrease amount I. Total original carrying amount 5,505,843,686.69 50,057,165.28 29,432,067.51 5,526,468,784.46 Including: Port and terminal facilities 1,991,871,480.44 21,041,986.99 - 2,012,913,467.43 Container yards and buildings 1,063,057,243.72 - - 1,063,057,243.72 Mechanical equipment 2,059,095,193.73 18,560,645.16 18,016,696.05 2,059,639,142.84 Motor vehicles, cargo ships and tugboats 276,010,110.61 10,138,675.04 11,407,030.37 274,741,755.28 Other equipment 115,809,658.19 315,858.09 8,341.09 116,117,175.19 II. Total accumulated depreciation 2,411,610,375.19 93,366,465.87 26,484,411.97 2,478,492,429.09 Including: Port and terminal facilities 477,002,365.71 20,813,743.88 - 497,816,109.59 Container yards and buildings 283,028,128.52 12,356,696.03 - 295,384,824.55 Mechanical equipment 1,409,426,856.11 50,759,507.35 16,215,026.43 1,443,971,337.03 Motor vehicles, cargo ships and tugboats 156,226,016.48 6,508,846.79 10,266,327.34 152,468,535.93 Other equipment 85,927,008.37 2,927,671.82 3,058.20 88,851,621.99 III. Total net book value of fixed assets 3,094,233,311.50 - - 3,047,976,355.37 Including: Port and terminal facilities 1,514,869,114.73 - - 1,515,097,357.84 Container yards and buildings 780,029,115.20 - - 767,672,419.17 Mechanical equipment 649,668,337.62 - - 615,667,805.81 Motor vehicles, cargo ships and tugboats 119,784,094.13 - - 122,273,219.35 Other equipment 29,882,649.82 - - 27,265,553.20 IV. Total provision for impairment losses 57,419,468.96 - - 57,419,468.96 Including: Port and terminal facilities 4,261,599.48 - - 4,261,599.48 Container yards and buildings 53,157,869.48 - - 53,157,869.48 Mechanical equipment - - - - Motor vehicles, cargo ships and tugboats - - - - Other equipment - - - - V. Total carrying value of fixed assets 3,036,813,842.54 - - 2,990,556,886.41 Including: Port and terminal facilities 1,510,607,515.25 - - 1,510,835,758.36 Container yards and buildings 726,871,245.72 - - 714,514,549.69 Mechanical equipment 649,668,337.62 - - 615,667,805.81 Motor vehicles, cargo ships and tugboats 119,784,094.13 - - 122,273,219.35 Other equipment 29,882,649.82 - - 27,265,553.20 Note 1: The increase of total original carrying amount for current period consists of new acquisition of RMB10,738,341.33, an increase of RMB39,318,823.95 of amount transferred from construction in progress. The decrease of total original carrying amount for current period consists of a decrease of RMB29,427,124.42 resulting from disposal of fixed assets. - 48 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 13. Fixed assets - continued Note 2: The increase in accumulated depreciation for current period consists of charge for the current year of RMB93,306,636.81. The decrease in accumulated depreciation for current period consists of a decrease of RMB26,484,411.97 resulting from disposal of fixed assets . Note 3: As of 30 Jun. 2017, the Group has no fixed assets that used as collateral. Note 4: As of 30 Jun. 2017, the certificates of title for the Group's buildings with a net book value of RMB316,680,114.53 (total original carrying amount: RMB442,079,399.52) have not yet been obtained. For buildings located within the scope of Chiwan watershed with net book value of RMB30,751,333.69 (original carrying amount: RMB118,989,052.62), the underlying reasons and management's solutions for obtaining certificates of title are set out in Note (V) 15, and the rest certificates of title are under the process of application. (2) Other issues Unit: RMB Item Amount Note The original amounts of fixed assets fully depreciated but still 638,624,344.81 in use at 30 Jun. 2016 Closing original amount of temporary idle fixed assets - Fixed assets disposed or retired in the current year Original amount of fixed assets disposed or retired 29,427,124.42 in the current year Net book value of fixed assets disposed or retired 2,942,712.45 in the current year Gain or loss on disposal or retire of fixed assets (448,433.95) 14. Construction in progress (1) Details of construction in progress are as follows: Unit: RMB Closing Balance Opening Balance Provision for Provision for Item Carrying amount impairment Book value Carrying amount impairment Book value Relavent construction work of 50.86 meters coastline, 5,302,912.96 - 5,302,912.96 5,130,743.15 - 5,130,743.15 Machong Port Bulk grain warehouses Phase III,Machong Port 198,113.21 - 198,113.21 198,113.21 - 198,113.21 Bulk grain warehouses Phase II,Machong Port 161,069,706.65 - 161,069,706.65 123,199,182.41 - 123,199,182.41 Technological transformation of Berth 7# , Chiwan Port - - - 20,061,782.13 - 20,061,782.13 Others 17,137,489.23 - 17,137,489.23 16,014,537.41 - 16,014,537.41 Total 183,708,222.05 - 183,708,222.05 164,604,358.31 - 164,604,358.31 - 49 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 14. Construction in progress - continued (2) Changes in significant construction in progress Unit: RMB Proportion of Interest accumulated Amount of Including: capitalisation Transfer to fixed Decrease in construction accumulated capitalised rate for the Budget Opening Increase in the and intangible the current investment in Construction capitalised interest for the currentperio Item amount balance current period assets period Closing balance budget progress interest current period d (%) Capital source Relavent construction work of 50.86 meters 36,000,000.00 5,130,743.15 172,169.81 - - 5,302,912.96 14.73 14.73 - - - Self-funding coastline, Machong Port Bulk grain warehouses Phase III, 680,000,000.00 198,113.21 - - - 198,113.21 0.03 0.03 - - - Self-funding Machong Port Bulk grain warehouses Phase II, 320,000,000.00 123,199,182.41 37,870,524.24 - - 161,069,706.65 50.33 50.33 1,214,868.30 1,107,689.13 4.35 Self-funding Machong Port Technological transformation of Berth 7# , Chiwan Port 29,500,000.00 20,061,782.13 3,102,424.93 23,164,207.06 - - 78.52 100.00 - - - Self-funding Others 168,029,423.62 16,014,537.41 17,345,423.40 16,154,616.89 67,854.69 17,137,489.23 19.85 19.85 - - - Self-funding Total 1,233,529,423.62 164,604,358.31 58,490,542.38 39,318,823.95 67,854.69 183,708,222.05 1,214,868.30 1,107,689.13 - 50 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 15. Intangible assets Unit: RMB Opening carrying Closing carrying Item amount Increase Decrease amount I. Total original carrying amount 1,604,710,188.11 - - 1,604,710,188.11 Land use rights - prepaid under lease (Note 2) 1,200,267,573.00 - - 1,200,267,573.00 Land use rights - prepaid under investment (Note 2) 122,623,476.00 - - 122,623,476.00 Land use rights - purchased 116,702,512.59 - - 116,702,512.59 Computer software 33,176,476.52 - - 33,176,476.52 Sea area use rights 71,940,150.00 - - 71,940,150.00 Coast line use rights 60,000,000.00 - - 60,000,000.00 II. Total accumulated amortization 593,942,737.10 18,735,921.56 - 612,678,658.66 Land use rights - prepaid under lease (Note 2) 488,732,433.09 13,877,084.00 - 502,609,517.09 Land use rights - prepaid under investment (Note 2) 59,881,130.78 1,388,439.66 - 61,269,570.44 Land use rights - purchased 8,861,845.00 1,193,113.08 - 10,054,958.08 Computer software 24,089,592.09 864,122.94 - 24,953,715.03 Sea area use rights 9,833,948.08 719,401.50 - 10,553,349.58 Coast line use rights 2,543,788.06 693,760.38 - 3,237,548.44 III.Total net carrying amount of intangible assets 1,010,767,451.01 - - 992,031,529.45 Land use rights - prepaid under lease (Note 2) 711,535,139.91 - - 697,658,055.91 Land use rights - prepaid under investment (Note 2) 62,742,345.22 - - 61,353,905.56 Land use rights - purchased 107,840,667.59 - - 106,647,554.51 Computer software 9,086,884.43 - - 8,222,761.49 Sea area use rights 62,106,201.92 - - 61,386,800.42 Coast line use rights 57,456,211.94 - - 56,762,451.56 IV.Total provision for impairment - - - - Land use rights - prepaid under lease - - - - Land use rights - prepaid under investment - - - - Land use rights - purchased - - - - Computer software - - - - Sea area use rights - - - - Coast line use rights - - - - V.Total carrying value of intangible assets 1,010,767,451.01 - - 992,031,529.45 Land use rights - prepaid under lease (Note 2) 711,535,139.91 - - 697,658,055.91 Land use rights - prepaid under investment (Note 2) 62,742,345.22 - - 61,353,905.56 Land use rights - purchased 107,840,667.59 - - 106,647,554.51 Computer software 9,086,884.43 - - 8,222,761.49 Sea area use rights 62,106,201.92 - - 61,386,800.42 Coast line use rights 57,456,211.94 - - 56,762,451.56 Note 1: The amortization for the current period is RMB18,735,921.56. - 51 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 15. Intangible assets - continued Note 2: The Group has obtained the land use right for berth and container yard located in Chiwan watershed area with original amount of RMB1,400,288,984.00 from Nanshan Group. The tenure ranging between 20 - 50 years. The land with a total area of 1,049,946.00 square meters consists of an area of 2.2 square kilometers invested by Shenzhen Investment Holding Corporation, a stockholder of Nanshan Group, and a land arising from marine reclamation by Nanshan Group. The land use rights for the plot of 270,692 sq. meters (original amount: RMB122,623,476.00) was contributed by Nanshan Group as capital injection at corporate restructuring of the Company. The rest land use rights were obtained from Nanshan Group by long-term leasing. Since Nanshan Group has yet obtained official certificates of land use rights for the above lands so far, the Group has no certificates of title for relevant land and buildings either. On 20 March 2001, 18 June 2003 and 29 September 2004, Nanshan Group made commitments on all the land use rights obtained by the Group from it as of the commitment date respectively: Nanshan Group has no right to withdraw the commitment and will unconditionally consent that, if the Group suffers loss, bears expense and liability, is claimed for compensation or runs into lawsuit, for any actually or potentially illegal and non-executable issues arising from land use right agreements and their relevant documents which signed or will be signed by the Group, Nanshan Group guarantees that the acquiring party and its inheritor of those land use right will be fully exempted from above issues. Hence, directors of the Company believe there is no significant impairment risk in respect of the absence of land use right certificate and no significant contingent liability. The management notes that Nanshan Group is positively approaching relevant government authorities to solve the above historical land problem; however, it cannot predict the exact time to obtain legal certificates of title for above land and relevant building property ownership certificates. 16. Goodwill Unit: RMB Increase for the Decrease for the Investee Opening balance current period current period Closing balance Chiwan Container Terminal 10,858,898.17 - - 10,858,898.17 Company Limited Note: The goodwill arose from the acquisition of the minority interests in Chiwan Container Terminal Company Limited in prior years, being the difference of the additional cost of investment and the Group's share of the fair value of the identifiable net assets in Chiwan Container Terminal Company Limited. Based on past years' operation performance and development forecast of the Company, the management holds the opinion that these is no need to allocate impairment to goodwill arising from the investment of Chiwan Container Terminal Company Limited. - 52 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 17. Long-term prepaid expenses Unit: RMB Residual useful Item Opening balance Increase Amortization Other decreases Closing balance Original Cost life Construction expenditure of 54,889,173.04 - 1,028,452.20 - 53,860,720.84 71,991,655.56 26 years Tonggu sea-route (Note ) Golf membership 55,303.60 - 10,939.50 - 44,364.10 2,028,316.60 1-6 years Total 54,944,476.64 - 1,039,391.70 - 53,905,084.94 74,019,972.16 Note 1: In 2007, Shenzhen municipal government launched the construction work of the public sea route connecting Tonggu sea route, Shekou port area, Chiwan port area, Mawan port area, Qianhaiwan port area and Dachanwan port area ("Connecting Sea Route"). In compliance with the government resolution, 60% of dredging expenditure would be born by the investee companies while the remaining 40% born by the government. 35% of the expenditure born by the investee companies was assumed by the port operators in Western Shenzhen port , and the allocation portion to each operator was determined on the basis of function, waterfront length, and berthing ship of each port operator. The Tonggu sea route construction expenses allocated to the Group is amortized on a straight-line basis over 35 years of the expected useful lives of Connecting Sea Route starting from 2008 when the Tonggu Sea Route is put into use. 18. Deferred tax assets and deferred tax liabilities (1) Deferred tax assets that are presented at the net amount without offsetting Unit: RMB Closing balance Opening balance Deductible temporary Deductible temporary Deferred tax Item differences Deferred tax assets differences assets Deferred income 24,550,555.40 6,137,638.85 24,550,555.40 6,137,638.85 Provision for impairment losses of assets 5,947,568.77 1,294,075.11 5,947,568.77 1,294,075.11 Depreciation of fixed assets and amortization 620,721.18 146,555.33 620,721.18 146,555.33 of intangible assets Organization costs 21,347,408.91 4,410,860.21 21,347,408.91 4,410,860.21 Others 1,105,415.87 183,203.97 1,303,115.87 232,628.97 Total 53,571,670.13 12,172,333.47 53,769,370.13 12,221,758.47 (2) Deferred tax liabilities that are presented at the net amount without offsetting Unit: RMB Closing balance Opening balance Taxable temporary Deferred tax Taxable temporary Item differences liabilities differences Deferred tax liabilities Depreciation of fixed assets and - - - - amortization of intangible assets Change in fair value of available- for-sale financial assets 8,680,000.00 2,170,000.00 7,430,000.00 1,857,500.00 Total 8,680,000.00 2,170,000.00 7,430,000.00 1,857,500.00 (3) Deferred tax assets or liabilities that are presented at the net amount after offsetting Unit: RMB Closing amount of Closing amount of Opening amount of Opening amount of deferred tax assets and deferred tax assets or deferred tax assets and deferred tax assets or Item liabilities that are offset liabilities after offsetting liabilities that are offset liabilities after offsetting Deferred tax assets - 12,172,333.47 - 12,221,758.47 Deferred tax liabilities - 2,170,000.00 - 1,857,500.00 - 53 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 18. Deferred tax assets and deferred tax liabilities - continued (4) Details of unrecognized deferred tax assets Unit: RMB Item Closing balance Opening balance Deductible temporary differences 96,800,856.43 102,828,757.97 Deductible losses 177,001,767.54 177,001,767.54 Total 273,802,623.97 279,830,525.51 Note: Deferred tax assets are not recognized for the above-mentioned deductible temporary differences and deductible losses due to uncertainty whether sufficient taxable profits will be available in the future. (5) Deductible losses for unrecognized deferred tax assets will be expired in the following years Unit: RMB Year Closing balance Opening balance Note 2017 30,345,268.82 30,345,268.82 2018 75,300,266.59 75,300,266.59 2019 49,621,628.48 49,621,628.48 2020 3,145,611.79 3,145,611.79 2021 18,588,991.86 18,588,991.86 Total 177,001,767.54 177,001,767.54 19. Other non-current assets Unit: RMB Item Closing balance Opening balance Land Use Right (Note) 132,334,704.86 132,369,704.86 Prepayments on construction 1,348,280.82 - Total 133,682,985.68 132,369,704.86 Note: On March and October 2006, November 2007 and September 2014, the Company entered into Cooperation Framework Agreement on Usage of Coastline and Land for 2#- 5# Berth at Machong Port in Dongguan and its supplementary agreements with Dongguan Humen Port Administration Commission. The Company purchased use rights of coastline and land with a total area of 800,000 square meters, including waters with depth of 700 meters from the front of terminal, and coastline from berth 2# to berth 5# with a total length of 1,200 meters at Dongguan Machong Port at a consideration of RMB260,000,000. As the Group has not obtained the use right certificates for the above land, the relevant prepayments were therefore recognized as other non-current assets. - 54 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT – continued 20. Accounts payable (1) Details of accounts payable Unit: RMB Item Closing balance Opening balance Service 44,252,639.72 46,961,672.78 Material purchase 35,888,557.79 21,834,346.04 Rental 10,656,649.21 10,891,405.40 Construction 5,994,820.46 9,619,783.53 Equipment 1,797,529.92 137,389.35 Total 98,590,197.10 89,444,597.10 (2) There is no significant accounts payable agaed more than one year at the end of the year. 21. Receipts in advance Unit: RMB Item Closing balance Opening balance Service fee receipt in advance 129,822,174.32 30,668,212.67 22. Employee benefits payable (1) Employee benefits payable Unit:RMB Increase for the Decrease for the Item Opening balance current period current period Closing balance I. Short-term benefits 86,581,824.26 147,850,324.24 177,383,011.68 57,049,136.82 II. Post-employment benefits - defined contribution plans - 18,728,233.34 18,728,233.34 - III. Termination benefits 1,996,668.00 2,410,127.69 4,406,795.69 - Total 88,578,492.26 168,988,685.27 200,518,040.71 57,049,136.82 (2) Short-term benefits Unit:RMB Increase for the Decrease for the Item Opening balance current period current period Closing balance I. Wages and salaries, bonuses, allowances and subsidies 74,217,691.80 123,073,122.72 152,633,213.65 44,657,600.87 II. Staff welfare - 3,992,171.99 3,992,171.99 - III. Social insurance charges 535.54 5,250,958.47 5,251,494.01 - Including: Medical insurance - 4,212,709.87 4,212,709.87 - Work injury insurance 535.54 581,301.87 581,837.41 - Maternity insurance - 456,946.73 456,946.73 - IV. Housing funds - 9,672,140.58 9,672,140.58 - V. Labor union and employee education funds 12,363,596.92 3,424,022.14 3,396,083.11 12,391,535.95 VI. Others - 2,437,908.34 2,437,908.34 - Total 86,581,824.26 147,850,324.24 177,383,011.68 57,049,136.82 Note: There are no amounts in arrears under the employee benefits payable. - 55 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT – continued 22. Employee benefits payable- continued (3) Post-employement benefits - defined contribution plans Unit: RMB Increase for the Decrease for the Item Opening balance current period current period Closing balance I. Basic pension (Note 1) - 13,061,176.94 13,061,176.94 - II. Unemployment insurance (Note 1) - 213,805.12 213,805.12 - III. Enterprise annuity plan (Note 2) - 5,453,251.28 5,453,251.28 - Total - 18,728,233.34 18,728,233.34 - Note 1: The Group participates in the social security contributions and the unemployment insurance plan established by government institutions as required. According to such plans, the Group contributes 14% ( 13% for staffs without Shenzhen householder register ) , 2% (1% for staffs in Dongguan City) respectively to such plans based on the employee's basic salary each month. During the year, the Group is obliged to contribute RMB 11,945,008.55 and RMB 208,267.51 respectively to the social security contributions and the unemployment insurance plan (2015: RMB 11,277,331.36 and RMB 338,221.02). As at 30 Jun. 2016, the Group have no outstanding contributions to be paid to the social security contributions and the unemployment insurance plan. Note 2: On 3 June 2008, the Group participated in a group defined enterprise annuity plan of Nanshan Group approved by Shenzhen municipal government. This supplementary pension contributions were paid into a managed account through Nanshan Group. 23. Taxes payable Unit: RMB Item Opening balance Increase Decrease Closing balance Enterprise income tax 20,001,270.23 57,211,155.05 45,847,403.00 31,365,022.28 Withholding tax (Note) 21,288,297.33 - - 21,288,297.33 Value-added-tax 3,472,562.39 13,170,091.84 14,561,842.79 2,080,811.44 Others 3,742,699.85 17,068,122.05 16,033,145.76 4,777,676.14 Total 48,504,829.80 87,449,368.94 76,442,391.55 59,511,807.19 Note: The amount represents the withholding tax provided by the Group at the rate of 5% or 10% when paying out dividends to foreign shareholders and Chiwan Wharf Holdings (H.K.) Limited located in Hong Kong. - 56 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 24. Interest payable Unit: RMB Item Closing balance Opening balance Interest on corperate debentures 6,371,260.30 1,952,876.72 Interest on short-term borrowings - 614,383.56 Total 6,371,260.30 2,567,260.28 25. Dividends payable Unit: RMB Item Closing balance Opening balance Ordinary share dividends 319,802,810.47 - Including: Nanshan Group 104,004,785.23 - Shenzhen Malai Warehouse Co., Ltd. 79,950,702.77 - Public A Shares 46,619,189.19 - Public B Shares 89,228,133.28 - 26. Other payables (1) Other payables presented by the nature of amount Unit: RMB Item Closing balance Opening balance Amount payable for construction and quality warranty 26,627,528.10 37,664,828.31 Temporary receipts 33,281,789.88 11,011,631.18 Security expense payable 3,643,939.46 7,942,731.71 Deposits received 4,781,811.05 4,424,738.15 Others 6,770,451.11 13,546,464.74 Total 75,105,519.60 74,590,394.09 (2) Significant other payables aged more than one year There is no significant other payables agaed more than one year at the end of the year. - 57 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 27.Other current liabilities (1) Short-term bonds payable Unit: RMB Item Closing balance Opening balance Short-term bonds payable - 250,000,000.00 (2) Changes in short-term bonds payable: Unit: RMB Interest Amount issued accrued at par Discount or Term of in the current during the premium Repayment in the Closing Name of bond Face value Date of issue the bond Amount of issue Opening balance period year amortization current year balance 16 Chiwan port SCP003(Note) 250,000,000.00 07/12/2016 180days - 250,000,000.00 - 4,193,835.62 - 250,000,000.00 - Total 250,000,000.00 - 250,000,000.00 - 4,193,835.62 - 250,000,000.00 - Note: According to the Notice of Registration Acceptance (filed as Zhong Shi Xie Zhu [2015] No. SCP121) issued by China's Interbank Market Dealers Association received by the Company on 5 June 2015, the Association approved the Company's short-term financing registration of RMB 1.6 billion in total. 28. Bonds payable (1) Bonds payable Unit: RMB Item Closing balance Opening balance Corporate bonds 298,629,041.09 298,331,506.85 (2) Changes of bonds payable: Unit: RMB Repayment Amount Discount or in the Term of the issued in the Interest accrued at premium current Name of bonds Face value Date of issue bond Amount of issue Opening balance current year par during the year amortization year closing balance 13 ChiWan 01(Note) 300,000,000.00 11/10/2016 3 years 300,000,000.00 298,331,506.85 - 4,418,383.58 297,534.24 - 298,629,041.09 Total 300,000,000.00 298,331,506.85 - 4,418,383.58 297,534.24 - 298,629,041.09 Note: According to the Notice of Registration Acceptance (filed as Zhong Shi Xie Zhu [2016] MTN No. 325) issued by the China's Interbank Market Dealers Association received by the Company on 6 August 2016. The Company is entitled to issue mid-term bills no more than RMB 800,000,000 with an effective period of 2 years. - 58 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VI) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 29. Special payables Unit: RMB Item Opening balance Increase Decrease Closing Balance Reason Refunds of Harbor Construction Fee 34,326,860.44 - 999,193.80 33,327,666.64 Note Note: The item is refunds of harbor construction fee from Shenzhen Traffic Bureau. According to Measures of Harbor Construction Fee Management released by Ministry of Finance, the funds should be managed in separate account and can be only used on fundamental facilities' construction of marine transportation. 30. Deferred income Unit: RMB Closing Item Opening balance Increase Decrease Balance Reason Deferred income 64,613,319.88 200,643.74 3,990,183.72 60,823,779.90 Including: Berth priority right 35,636,464.68 200,643.74 3,491,382.54 32,345,725.88 Note 1 Government grants related 28,976,855.20 - 498,801.18 28,478,054.02 Note 2 to assets Total 64,613,319.88 200,643.74 3,990,183.72 60,823,779.90 Less: Non-current liabilities due within - - - - one year Including: Berth priority right - - - - Government grants related - - - - to assets Deferred income 64,613,319.88 - - 60,823,779.90 Note 1: This item represents berth priority right with total amounts to USD14,000,000 that agreed in the contract signed in 2003. The Group should satisfy the berthing requirement of contracted customers in priority during the contract period. According to the contract, the berth priority right should be amortized over twenty years on the straight-line basis. Note 2: The item represents the government grants received by the Group which is based on the Announcement Released by National Development and Reform Commission about 2010 Investment Plans within Budget of Grains and Modern Logistics Program (NDRC[2010] No.1263), the Announcement Released by Guangdong Provincial Department of Finance about 2012 Provincial Special Funds to Guide the Development of Modern Service Project (Guangdong Production Letter [2012] No. 621) and Transportation of energy saving special funds Interim Measures (Finance Building [2011] No. 374),Nanshan District, Shenzhen, energy saving projects funded sub contract, Announcement Released by Reform and Development Commission of Guangdong Province and the Grain Bureau of Guangdong Province about 2015 Investment Plans within Budget of Grains and Modern Logistics Program (GDRC[2015] No.521), Measures Released by Dongguan Government about Grants Management to Special Fund Program for the Development of National and Provincial Industries (DGM[2013]No.162), Interim Measures Released by Shenzhen Government about the Management to Special Fund used in Recycling Economy and Energy Savings, and the Reply of Ministry of Transport to Implementation Program of Building 19 Regional Projects such as the Construction of a Green Recycling Low-carbon Transportation City by Beijing Government (Transportation Law Letter[2014]No.499) . The government grants shall be amortized on the straight-line basis over the useful life of the related assets. - 59 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VI) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 30. Deferred income - continued Programs related with government grants: Unit: RMB The amount included Related to New subsidy of in operating income Other assets/Related to Liability Program Opening balance the year of the year changes Closing Balance income Special funds for modern 23,193,044.06 - 83,478.24 - 23,109,565.82 Related to assets logistics project Special funds for the development of modern 1,357,511.80 - 26,022.60 - 1,331,489.20 Related to assets service guide Special funds for energy- saving and emission 1,770,000.00 - 180,000.00 - 1,590,000.00 Related to assets reduction of transportation Green carbon harbor thematic projects subsidy granted by 66,299.40 - 9,300.30 - 56,999.10 Related to assets central government Reward for energy saving 1,806,666.62 - 100,000.02 - 1,706,666.60 Related to assets Subsidy for electric buses 783,333.32 - 100,000.02 - 683,333.30 Related to assets Total 28,976,855.20 - 498,801.18 - 28,478,054.02 - 60 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 31. Share capital Unit: RMB Changes for the period New issue of Capitalisation of Opening balance share Bonus issue surplus reserve Others Subtotal Closing balance 2017: I. Restricted tradable shares 1. State-owned shares - - - - - - - 2. State-owned legal person - - - - - - - shares 3. Other domestic shares 305,100.00 - - - 53,825.00 53,825.00 358,925.00 4. Other foreign shares - - - - - - - Total restricted tradable shares 305,100.00 - - - 53,825.00 53,825.00 358,925.00 II. Non-restricted tradable shares 1. Ordinary shares denominated 464,866,050.00 - - - (562.00) (562.00) 464,865,488.00 in RMB 2. Foreign capital shares listed 179,592,580.00 - - - (53,263.00) (53,263.00) 179,539,317.00 domestically 3. Foreign capital shares listed - - - - - - - overseas 4. Others - - - - - - - Total non-restricted tradable 644,458,630.00 - - - (53,825.00) (53,825.00) 644,404,805.00 shares III. Total shares 644,763,730.00 - - - - - 644,763,730.00 2016: I. Restricted tradable shares 1. State-owned shares - - - - - - - 2. State-owned legal person - - - - - - - shares 3. Other domestic shares 431,094.00 - - - (125,994.00) (125,994.00) 305,100.00 4. Other foreign shares - - - - - - - Total restricted tradable shares 431,094.00 - - - (125,994.00) (125,994.00) 305,100.00 II. Non-restricted tradable shares 1. Ordinary shares denominated 464,866,999.00 - - - (949.00) (949.00) 464,866,050.00 in RMB 2. Foreign capital shares listed 179,465,637.00 - - - 126,943.00 126,943.00 179,592,580.00 domestically 3. Foreign capital shares listed - - - - - - - overseas 4. Others - - - - - - - Total non-restricted tradable 644,332,636.00 - - - 125,994.00 125,994.00 644,458,630.00 shares III. Total shares 644,763,730.00 - - - - - 644,763,730.00 - 61 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 32. Capital reserve Unit: RMB Items Opening balance Increase Decrease Closing balance 2017: Capital premium 163,560,083.00 - - 163,560,083.00 Including: Capital contributed by investors 163,560,083.00 - - 163,560,083.00 Exercised conversion option of convertible corporate bonds - - - - Debt converted into capital - - - - Differences arising from business combination involving enterprises under common control - - - - Equity acquisition from minority shareholders of subsidiaries - - - - Capital reserve converted into capital - - - - Other capital reserve 3,920,298.25 - - 3,920,298.25 Including: Equity split from convertible corporate bonds - - - - Fair value of equity-settled share-based equity instrument - - - - Surplus of compensation granted by government for relocation in the public interests - - - - Transfer from capital reserve under the previous accounting system (2,781,133.00) - - (2,781,133.00) Others 6,701,431.25 - - 6,701,431.25 Total 167,480,381.25 - - 167,480,381.25 2016: Capital premium 163,560,083.00 - - 163,560,083.00 Including: Capital contributed by investors 163,560,083.00 - - 163,560,083.00 Excised conversion option of convertible corporate bonds - - - - Debt converted into capital - - - - Differences arising from business combination involving enterprises under common control - - - - Equity acquisition from minority shareholders of subsidiaries - - - - Capital reserve converted into capital - - - - Other capital reserve 2,004,656.15 1,915,642.10 - 3,920,298.25 Including: Equity split from convertible corporate bonds - - - - Fair value of equity-settled share-based equity instrument - - - - Surplus of compensation granted by government for relocation in the public interests - - - - Transfer from capital reserve under the previous accounting system (2,781,133.00) - - (2,781,133.00) Others 4,785,789.15 1,915,642.10(note) - 6,701,431.25 Total 165,564,739.15 1,915,642.10 - 167,480,381.25 Note：This is the capital reserve recoginized on pro rata basis of ownership interest held by the Group due to the changes of other equity of the associate of the Group, China Merchant Bonded Logistics. - 62 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 33. Other comprehensive income Unit: RMB Amount incurred in current year Less: Amount included in other Post-tax comprehensive amount Post-tax Amount income in the prior attributable to amount before income periods that is shareholders attributable tax incurred in transferred to profit Less: income of the to minority Item Opening balance current year or loss for the period tax expenses Company holders Closing balance 2017 I. Other comprehensive income that will not be - - - - - - - reclassified subsequently to profit or loss Including: Change as a result of remeasurement of - - - - - - - the net defined benefit plan liability or asset Share of other comprehensive income of the investee under the equity method that will not be - - - - - - - reclassified to profit or loss II. Other comprehensive income that will be (8,039,646.43) 1,250,000.00 - 312,500.00 937,500.00 - (7,102,146.43) reclassified subsequently to profit or loss Including: Share of other comprehensive income of the investee under the equity method that will 100,000.00 - - - - - 100,000.00 be reclassified to profit or loss Gains or losses on changes in fair value of 5,572,500.00 1,250,000.00 - 312,500.00 937,500.00 - 6,510,000.00 available-for-sale financial assets Gains or losses on reclassification of held-to- maturity investments to available-for-sale - - - - - - - financial assets Effective portion of gains or losses on - - - - - - - cash flow hedges Translation differences of financial statements (13,712,146.43) - - - - - (13,712,146.43) denominated in foreign currencies Total (8,039,646.43) 1,250,000.00 - 312,500.00 937,500.00 - (7,102,146.43) 2016 I. Other comprehensive income that will not be - - - - - - - reclassified subsequently to profit or loss Including: Change as a result of remeasurement of - - - - - - - the net defined benefit plan liability or asset Share of other comprehensive income of the investee under the equity method that will not - - - - - - - be reclassified to profit or loss II. Other comprehensive income that will be (7,889,646.43) (200,000.00) - (50,000.00) (150,000.00) - (8,039,646.43) reclassified subsequently to profit or loss Including: Share of other comprehensive income of the investee under the equity method that will 100,000.00 - - - - - 100,000.00 be reclassified to profit or loss Gains or losses on changes in fair value of 5,722,500.00 (200,000.00) - (50,000.00) (150,000.00) - 5,572,500.00 available-for-sale financial assets Gains or losses on reclassification of held-to- maturity investments to available-for-sale - - - - - - - financial assets Effective portion of gains or losses on - - - - - - - cash flow hedges Translation differences of financial statements (13,712,146.43) - - - - - (13,712,146.43) denominated in foreign currencies Total (7,889,646.43) (200,000.00) - (50,000.00) (150,000.00) - (8,039,646.43) 34. Special reserve Unit: RMB Item Opening balance Increase Decrease Closing balance 2017: Production safety fee 4,145,765.65 9,845,498.98 5,828,636.63 8,162,628.00 2016: Production safety fee 3,719,755.58 19,844,261.39 19,418,251.32 4,145,765.65 - 63 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 35. Surplus reserve Unit: RMB Item Opening balance Increase Decrease Closing balance 2017: Statutory surplus reserve 520,074,434.56 - - 520,074,434.56 2016: Statutory surplus reserve 520,074,434.56 - - 520,074,434.56 Note: In accordance with the Company Law of the PRC and the Company's Articles of Association, the Company should appropriate 10% of net profit for the year to the statutory surplus reserve, and the Company can cease appropriation when the statutory surplus reserve accumulates to more than 50% of the registered capital. The statutory surplus reserve can be used to make up for the loss or increase the paid-in capital after approval. 36. Unappropriated profit Unit: RMB Proportion of appropriation or Item Amount allocation 2017: Before adjustment: Unappropriated profit at the end of prior year 3,381,390,887.86 Adjustment: Total unappropriated profit at the beginning of year - After adjustment: Unappropriated profit at the beginning of year 3,381,390,887.86 Add: Net profit attributable to shareholders of the Company for the year 276,407,832.70 Less: Appropriation to statutory surplus reserve - Note1 Appropriation to discretionary surplus reserve - Appropriation to general risk reserve - Ordinary shares' dividends payable 319,802,810.08 Note2 Ordinary shares' dividends converted into share capital - Unappropriated profit at the end of the year 3,337,995,910.48 2016: Before adjustment: Unappropriated profit at the end of prior year 3,113,367,524.19 Adjustment: Total unappropriated profit at the beginning of year - After adjustment: Unappropriated profit at the beginning of year 3,113,367,524.19 Add: Net profit attributable to shareholders 532,376,492.97 of the parent company for the year Less: Appropriation to statutory surplus reserve - Appropriation to discretionary surplus reserve - Appropriation to general risk reserve - Ordinary shares' dividends payable 264,353,129.30 Ordinary shares' dividends converted into share capital - Unappropriated profit at the end of the year 3,381,390,887.86 Note 1: Appropriation to statutory surplus reserve According to the Articles of Association, the Company is required to transfer 10% of its net profit to the statutory surplus reserve. The Company can cease appropriation when the statutory surplus reserve accumulated to more than 50% of the register capital. - 64 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 36. Unappropriated profit - continued Note 2: Cash dividends approved by shareholders' meeting during the year Pursuant to the resolution of shareholders’ meeting on 5 June 2017, on the basis of 644,763,730 issued shares for the year ended 31 December 2016, dividends of RMB4.96 for every 10 shares were distributed to all shareholders, which amounted to RMB 319,802,810.08. Note 3: Appropriation to surplus reserve made by subsidiaries As of 30 Jun. 2017, the balance of the Group's unappropriated profit included appropriation to surplus reserve made by subsidiaries amounting to RMB587,698,230.64 (31 December 2016: RMB587,698,230.64). 37. Operating income and operating costs Unit: RMB Jan.-Jun. 2017 Jan.-Jun. 2016 Item Income Cost Income Cost Principal operating 912,048,648.43 535,264,027.24 892,403,001.57 490,985,319.24 Other operating 17,559,850.48 708,808.22 12,406,650.67 1,173,205.35 Total 929,608,498.91 535,972,835.46 904,809,652.24 492,158,524.59 38. Business taxes and levies Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Business tax - 1,499,967.15 City construction and maintenance tax 770,184.01 861,254.66 Education surcharges 649,751.23 718,325.63 Others 1,509,581.95 88,394.97 Building taxes 2,170,251.83 - Total 5,099,769.02 3,167,942.41 39. Administrative expenses Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Employee benefits 53,881,018.25 60,212,414.71 Taxes 3,698.28 2,893,986.34 Depreciation expenses 1,578,761.13 1,436,738.38 Amortization of intangible assets 487,581.23 426,838.44 Others 16,373,672.29 16,977,890.84 Total 72,324,731.18 81,947,868.71 - 65 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 40. Financial expenses Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Interest expense 8,737,219.20 21,509,775.01 Less: Capitalized interest expenses 1,107,689.13 - Less: Interest income 4,186,596.08 3,395,655.74 Exchange differences 6,393,283.53 (4,428,671.94) Less: Capitalized exchange differences - - Others 316,171.30 568,167.02 Total 10,152,388.82 14,253,614.35 41. Impairment losses of assets Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 I. Bad debt losses (1,908,239.31) 288,044.16 II. Write-down of inventories - - III. Impairment on available-for-sale financial assets - - IV. Impairment on held-to-maturity investments - - V. Impairment on long-term equity investments - - VI. Impairment on investment properties - - VII. Impairment on fixed assets - - VIII. Impairment on construction materials - - IX. Impairment on construction in progress - - X. Impairment on bearer biological assets - - XI. Impairment on oil and gas assets - - XII. Impairment on intangible assets - - XIII. Impairment on goodwill - - XIV. Others - - Total (1,908,239.31) 288,044.16 42. Investment income (1) Details of investment income Unit: RMB Jan.-Jun. 2017 Jan.-Jun. 2016 Long-term equity investments income under equity method 60,092,957.45 63,008,068.56 Investment income on available-for-sale financial assets 9,417,000.00 6,292,187.85 Total 69,509,957.45 69,300,256.41 (2) Details of long-term equity investments income under equity method Unit: RMB Reasons for increases or decreases in the current Investee Jan.-Jun. 2017 Jan.-Jun. 2016 compared to the prior period MPIL 23,193,786.97 16,389,086.06 Net profit of investee fluctuates. China Overseas Harbor Affairs (Laizhou) Co.,Ltd 29,155,806.47 37,197,754.16 Net profit of investee fluctuates. CMBL 5,476,000.01 7,747,007.96 Net profit of investee fluctuates. China Merchants Holdings (international ) Information Technology Co.,Ltd 2,267,364.00 1,674,220.38 Net profit of investee fluctuates Total 60,092,957.45 63,008,068.56 - 66 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENT - continued 43. Non-operating income (1) Non-operating income Unit: RMB Amount recognized as non-recurring gain and loss in the Item Jan.-Jun. 2017 Jan.-Jun. 2016 current period Government grants 498,801.18 419,197.16 498,801.18 Gains on disposal of non-current assets 293,053.57 321,539.16 293,053.57 Including: Gains on disposal of fixed assets 293,053.57 140,891.16 293,053.57 Insurance compensation income - 1,421,480.12 - Others 1,615,361.54 476,997.37 1,615,361.54 Total 2,407,216.29 2,639,213.81 2,407,216.29 (2) Government grants Unit: RMB Related to assets/Related to Item Jan.-Jun. 2017 Jan.-Jun. 2016 income Local government subsidy for new-energy vehicles - 20,000.00 Related to income Special funds for modern logistics project 83,478.24 83,478.24 Related to assets Special funds for guiding the development of the 26,022.60 26,022.60 Related to assets modern service sector Reward for energy saving 100,000.02 - Related to assets Special funds for energy saving and emission 180,000.00 280,000.02 Related to assets reduction in transportation Central government subsidy for low-carbon green 9,300.30 9,696.30 Related to assets port project Subsidy for electric buses 100,000.02 - Related to assets Total 498,801.18 419,197.16 44. Non-operating expenses Unit: RMB Amount recognized as non-recurring gain and loss in the current Item Jan.-Jun. 2017 Jan.-Jun. 2016 period Total losses on disposal of non-current assets 741,487.52 497,708.60 741,487.52 Including: Losses on disposal of fixed assets 741,487.52 393,008.61 741,487.52 Donations contributed - - - Amercement outlay - 862.00 - Others 1,136.84 2,895.03 1,136.84 Total 742,624.36 501,465.63 742,624.36 - 67 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 45. Income tax expenses Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Current tax expense 58,847,008.80 49,661,006.76 Deferred income tax 49,425.00 - Total 58,896,433.80 49,661,006.76 Reconciliation of income tax expenses to the accounting profit is as follows: Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Accounting profit 379,141,563.12 384,431,662.61 Income tax expenses calculated at 25% (the prior year: 25 %) 94,785,390.78 96,107,915.65 Effect of expenses that are not deductible for tax purposes 13,943.60 1,056,319.90 Effect of tax-free income (17,377,489.36) (17,325,064.10) Effect of unrecognized deductible losses and deductible temporary (2,173,730.24) (31,720.53) differences for tax purposes Effect of different tax rates of subsidiaries operating in other jurisdictions (253,656.69) (153,427.70) Effect of tax preference policy (11,986,902.50) (31,303,251.96) Withholding income tax (Note) 1,632,930.63 1,844,132.60 Effect of previous unrecognized deductible temporary differences (5,744,052.41) (533,897.10) of deferred income tax Income tax expenses 58,896,433.80 49,661,006.76 Note: Withholding income tax was accrued at the rate of 5% or 10% for dividend payable to Chiwan Wharf Holdings (H.K.) Limited, declared by those PRC subsidiaries of which Chiwan Wharf Holdings (H.K.) Limited is a shareholder. 46. Other comprehensive income Please refer to Note (V) 36. 47. Borrowing cost Unit: RMB Jan.-Jun. 2017 Jan.-Jun. 2016 Amount of borrowing Amount of borrowing costs capitalized Capitalization costs capitalized Capitalization Item during the year rate during the year rate Construction in progress 1,107,689.13 4.35% - - Sub-total of borrowing costs capitalized during the year 1,107,689.13 - - - Borrowing costs recognized in profit or loss during the year 7,629,530.07 - 21,509,775.01 - Total of borrowing costs during the year 8,737,219.20 - 21,509,775.01 - - 68 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 48. Notes to items in the cash flow statement (1) Other cash receipts relating to operating activities Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Government grants 20,000.00 - Tonggu sea-route expenses 14,469,500.00 - Interest income 3,498,376.84 3,480,587.17 Insurance indemnity 143,442.01 589,702.77 Refunds of harbor construction fee 361,547.93 187,255.90 Others 11,805,226.45 1,520,900.83 Total 30,298,093.23 5,778,446.67 (2) Other cash payments relating to operating activities Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Port expenses 1,840,742.84 3,110,545.07 Office expenses & utilities 1,813,506.04 3,452,774.73 Consulting & auditing 1,163,253.24 958,941.16 Entertainment 1,175,602.09 1,286,439.91 Verhicles 1,295,699.65 1,384,524.03 Property insurance 1,683,669.16 961,760.89 Travel & accommodation 604,205.21 990,291.95 River channel occupation fee - 14,469,500.00 Others 24,354,514.37 19,521,179.59 Total 33,931,192.60 46,135,957.33 (3) Other cash payments relating to financing activities Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Debt issue costs 15,792.33 25,986.89 - 69 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 49. Supplementary information to the cash flow statement (1) Supplementary information to the cash flow statement Unit: RMB Supplementary Jan.-Jun. 2017 Jan.-Jun. 2016 1. Reconciliation of net profit to cash flows from operating activities: Net profit 320,245,129.32 334,770,655.85 Add: Provision for impairment losses of assets (1,908,239.31) 288,044.16 Depreciation of fixed assets 93,053,985.18 96,908,007.22 Depreciation and amortization of investment property 412,916.04 460,990.32 Amortization of intangible assets 18,735,921.56 19,233,130.89 Amortization of long-term prepaid expenses 1,039,391.70 1,045,225.04 Losses on disposal of fixed assets , intangible assets and other 448,433.95 176,169.44 long-term assets Financial expenses 14,320,347.84 17,480,007.18 Losses (gains) arising from investments (69,509,957.45) (69,300,256.41) Decrease(Increase) in deferred tax assets 49,425.00 - Decrease(Increase) in inventories (3,155,094.07) (581,772.67) Decrease(Increase) in operating receivables (42,492,788.96) (46,999,409.75) Increase(Decrease) in operating payables 88,292,309.11 15,176,452.53 Net cash flows from operating activities 419,531,779.91 368,657,243.80 2. Significant investing and financing activities that do not involve cash receipts and payments: Conversion of debt into capital - - Convertible bonds due within one year - - Fixed assets acquired under finance leases - - 3. Net changes in cash and cash equivalents: Closing balance of cash 593,542,501.41 405,872,026.99 Less: Opening balance of cash 426,036,702.87 683,138,123.66 Add: Closing balance of cash equivalents - - Less: Opening balance of cash equivalents - - Net increase(Decrease) in cash and cash equivalents 167,505,798.54 (277,266,096.67) (2) Composition of cash and cash equivalents Unit: RMB Item Closing balance Opening balance I. Cash 593,542,501.41 426,036,702.87 Including: Cash on hand 9,319.45 28,943.84 Bank deposits 579,572,897.61 425,934,063.55 Other monetary funds 13,960,284.35 73,695.48 II. Cash equivalents - - III. Closing balance of cash and cash equivalents 593,542,501.41 426,036,702.87 50. Asset with restricted ownership or use right The Group has no assets with restricted ownership or use right. - 70 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued 51. Foreign currency monetary items Unit: RMB Closing balance of original Exchange Item currency rate Closing amount in RMB Cash and bank balances 263,432,256.56 Including: HKD 22,724,192.12 0.8679 19,722,326.34 USD 35,975,131.41 6.7744 243,709,930.22 Interest Receivable 2,816,790.51 Including: USD 415,799.26 6.7744 2,816,790.51 Accounts Receivable (1,316,749.70) Including: HKD 22,344,682.27 0.8679 19,392,949.74 USD (3,057,052.94) 6.7744 (20,709,699.44) Other Receivables 599,710.86 Including: HKD 122,698.97 0.8679 106,490.44 Accounts Payable 72,806.51 6.7744 493,220.42 Including: HKD 3,104,958.40 0.8679 2,694,793.40 Other Payable (857,378.38) Including: HKD (32,185.64) 0.8679 (27,933.92) USD (122,438.07) 6.7744 (829,444.46) (VI) CHANGES IN CONSOLIDATION SCOPE There is no change in consolidation scope during the year. - 71 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VII) EQUITY IN OTHER ENTITIES 1. Interests in subsidiaries (1) Composition of the Group Unit: RMB Registered Balance of other items Proportion of ownership Interest (%) Capital(in ten Actual capital substantively constituting Indirect Proportion of Principal place of Place of Nature of thousand Yuan unless contribution at the net investments in the Direct ownership ownership voting power Consolidated Full name of the subsidiary business incorporation business otherwise stated) end of the period subsidiary interest interest (%) or not Approach of acquiring Shenzhen Chiwan International Freight Logistics support Established through Shenzhen, PRC Shenzhen, PRC 550.00 5,500,000.00 - 100.00 - 100.00 Y Agency Company Limited services investment Established through Chiwan Wharf Holdings (H.K.) Limited Hong Kong SAR, PRC Hong Kong SAR, PRC Investment HKD 1,000,000.00 1,070,000.00 11,004,285.00 100.00 - 100.00 Y investment Dongguan Chiwan Wharf Logistics support Established through Dongguan, PRC Dongguan, PRC 45,000.00 382,500,000.00 - 85.00 - 85.00 Y Company Limited services investment Dongguan Chiwan Terminal Logistics support Established through Dongguan, PRC Dongguan, PRC 40,000.00 400,000,000.00 - 100.00 - 100.00 Y Company Limited services investment Established through Hinwin Development Company Limited Hong Kong SAR, PRC Hong Kong SAR, PRC Investment HKD 10,000.00 6,278,500.00 94,014,181.00 100.00 - 100.00 Y investment Combination involving Shenzhen Chiwan Harbor Container Logistics support Shenzhen, PRC Shenzhen, PRC 28,820.00 250,920,000.00 - 100.00 - 100.00 Y enterprises under Co., Ltd services common control Combination involving Shenzhen Chiwan Transportation Logistics support Shenzhen, PRC Shenzhen, PRC 1,500.00 7,000,000.00 - 100.00 - 100.00 Y enterprises under Co., Ltd services common control Combination involving Logistics support Chiwan Container Terminal Co., Ltd Shenzhen, PRC Shenzhen, PRC USD 95,300,000.00 485,990,004.00 - 55.00 - 55.00 Y enterprises under services common control Combination involving Shenzhen Chiwan Shipping Logistics support Shenzhen, PRC Shenzhen, PRC 2,400.00 24,000,000.00 - 100.00 - 100.00 Y enterprises under Transportation Co., Ltd. services common control Combination involving Logistics support Chiwan Shipping (Hong Kong) Ltd. Hong Kong SAR, PRC Hong Kong SAR, PRC HKD 800,000.00 856,000.00 - 100.00 - 100.00 Y enterprises under services common control - 72 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VII) EQUITY IN OTHER ENTITIES - continued 1. Interests in subsidiaries- continued (2) Material non-wholly-owned subsidiaries Unit: RMB Proportion of ownership Profit or loss attributable Payments for dividends interest held by the to minority shareholders to minority shareholders Closing balance of Name of the subsidiary minority shareholders at the end of the period in the current period minority interest 2017 Dongguan Chiwan Wharf Company Limited 15% 6,549,369.92 - 121,612,422.30 Chiwan Container Terminal Co., Ltd 45% 37,287,926.70 - 850,230,794.94 Total 43,837,296.62 - 971,843,217.24 2016 Dongguan Chiwan Wharf Company Limited 15% 8,269,117.04 - 115,005,875.45 Chiwan Container Terminal Co., Ltd 45% 129,204,093.71 95,677,829.00 812,172,308.08 Total 137,473,210.75 95,677,829.00 927,178,183.53 (3) Significant financial information of material non-wholly-owned subsidiaries Unit: RMB Closing balance Opening balance Current Non-current Non-current Name of the subsidiary Current assets Non-current assets Total assets liabilities liabilities Total liabilities Current assets Non-current assets Total assets Current liabilities liabilities Total liabilities Dongguan Chiwan Wharf 66,924,257.63 1,045,030,059.16 1,111,954,316.79 290,999,718.48 24,441,054.54 315,440,773.02 27,675,293.15 1,027,159,564.62 1,054,834,857.77 277,814,404.40 24,550,555.38 302,364,959.78 Company Limited Chiwan Container Terminal Co., Ltd 576,471,800.96 1,537,406,810.66 2,113,878,611.62 156,473,119.70 68,003,725.40 224,476,845.10 389,403,217.21 1,575,821,422.22 1,965,224,639.43 87,814,329.79 72,582,958.32 160,397,288.11 Unit: RMB Jan.-Jun. 2017 Jan.-Jun. 2016 Cash flows from operating Cash flows from operating Name of the subsidiary Operating income Net profit Total comprehensive income activities Operating income Net profit Total comprehensive income activities Dongguan Chiwan Wharf 159,643,720.20 43,662,466.15 43,662,466.15 35,258,020.10 137,362,432.71 32,992,167.94 32,992,167.94 41,785,806.63 Company Limited Chiwan Container Terminal Co., Ltd 326,262,590.52 82,862,059.33 82,862,059.33 190,279,725.34 374,877,558.79 140,636,274.86 140,636,274.86 164,272,446.41 (4) No entities are added to the scope of consolidation in the current year. - 73 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VII) EQUITY IN OTHER ENTITIES - continued 2. Interests in joint ventures and associates (1) Material joint ventures or associates Unit: RMB Proportion of ownership Proportion of voting power in the Accounting method Principal interests held by the Group (%) investee held by the Group (%) of investments in place of Place of Nature of joint ventures and Investee business incorporation business 30 Jun. 2017 31 Dec. 2016 30 Jun. 2017 31 Dec. 2016 associates China Overseas Harbor Affairs Warehousing Laizhou Laizhou 40.00 40.00 40.00 40.00 Equity method (Laizhou) Co., Ltd and logistics MPIL Shenzhen British Virgin Islands Investments 50.00 50.00 50.00 50.00 Equity method (2) Financial information of material joint venture Unit: RMB China Overseas Harbor Affairs (Laizhou) Co., Ltd 30 Jun. 2017/ 31 Dec. 2016/ Jan.-Jun. 2017 Jan.-Jun. 2016 Current assets 400,211,214.81 472,412,233.11 Including: cash and cash equivalent 348,455,534.05 428,471,301.05 Non-current assets 1,573,625,586.20 1,746,234,554.37 Total assets 1,973,836,801.01 2,218,646,787.48 Current liabilities 241,883,098.17 60,897,644.03 Non-current liabilities - 172,396,000.00 Total liabilities 241,883,098.17 233,293,644.03 Minority interests 1,385,120.46 974,119.24 Total equity attributable to shareholders of 1,730,568,582.38 1,984,379,024.21 the parent company Net assets calculated based on the proportion of 692,227,432.95 793,751,609.68 ownership interest Adjustments - Goodwill - - - Unrealized Profits Resulting from Intragroup - - Transactions - Others 77,750,005.32 1,229,696.54 Carrying amounts of equity investments in Joint Venture 769,977,438.27 794,981,306.22 Operating income 198,791,298.68 205,506,077.48 Financial expenses (2,636,003.23) (1,208,317.13) Tax expenses 25,348,743.97 17,586,815.81 Net profit 72,846,811.50 93,016,705.73 Other comprehensive income - - Total comprehensive income 72,846,811.50 93,016,705.73 Dividends received from joint ventures 54,159,674.42 36,132,189.03 in the current year - 74 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VII) EQUITY IN OTHER ENTITIES- continued 2. Interests in joint ventures and associates - continued (3) Financial information of material associates Unit: RMB MPIL 30 Jun. 2017/ 31 Dec. 2016/ Jan.-Jun. 2017 Jan.-Jun. 2016 Current assets 274,983,620.28 216,977,210.88 Including: cash and cash equivalent 175,748,639.85 160,156,678.41 Non-current assets 1,416,682,757.04 1,274,297,269.88 Total assets 1,691,666,377.32 1,491,274,480.76 Current liabilities 304,628,043.03 299,257,041.62 Non-current liabilities 6,677,923.17 4,031,799.53 Total liabilities 311,305,966.20 303,288,841.15 Minority interests 552,230,300.95 452,668,593.90 Total equity attributable to shareholders of the parent company 828,130,110.18 735,317,045.71 Net assets calculated based on the proportion 414,065,055.10 367,658,522.86 of ownership interest Adjustments - Goodwill - - - Unrealized Profits Resulting from - - Intragroup Transactions - Others (82,610,638.19) (26,739,280.23) Carrying amounts of equity investments in Joint Venture 331,454,416.91 340,919,242.63 Operating income 294,856,119.93 242,222,181.42 Financial expenses 3,533,766.50 8,015,452.44 Tax expenses 17,791,571.03 11,674,494.48 Net profit 84,676,438.72 53,437,416.76 Other comprehensive income - Total comprehensive income 84,676,438.72 53,437,416.76 Dividends received from joint ventures in the current year 32,658,612.69 36,572,459.27 (4) Summarized financial information of immaterial associates Unit: RMB 30 Jun. 2017/ 30 Jun. 2016/ Jan.-Jun. 2017 Jan.-Jun. 2016 Associates: Total carrying amounts of investment 362,270,471.68 354,527,107.68 Aggregate of following items calculated based on the proportion of ownership interest - Net profit 7,743,364.01 9,421,228.34 - Other comprehensive income - - - Total comprehensive income 7,743,364.01 9,421,228.34 (5) As at 30 Jun. 2017, the long-term equity investments of the Group were not subject to restriction on disposal or remittance of return on investments. - 75 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Group's major financial instruments include Cash and bank balances, available-for-sale financial assets, borrowings, equity investments, account receivables, account payables, bond payables etc. Details of these financial instruments are disclosed in Note (V). The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure the risks are monitored at a certain level. The Group adopts sensitivity analysis techniques to analyze how the entity's profit or loss and for the period and shareholders' equity would have been affected by changes in the relevant risk variables that were reasonably possible. As it is unlikely that risk variables will change in an isolated manner, and the interdependence between risk variables will have significant effect on the amount ultimately influenced by the changes in a single risk variable, the following items are based on the assumption that each risk variable has changes on a stand-alone basis. 1. Risk management objectives and policies The Group's risk management objectives are to achieve proper balance between risks and yield, minimize the adverse impacts of risks on the Group's operation performance, and maximize the benefits of the shareholders and other equity investors. Based on these risk management objectives, the Group's basic risk management strategy is to identify and analyze the industry's exposure to various risks, establish appropriate bottom line for risk tolerance, implement risk management, and monitors these exposures to ensure the risks are monitored at a certain level. 1.1 Market risk 1.1.1 Currency risk Currency risk is the risk that losses will occur because of changes in foreign exchange rates. The Group's exposure to the currency risk is primarily associated with USD and HKD. Several of the Group's subsidiaries have purchases and sales denominated in HKD while the Group's other principal activities are denominated and settled in RMB. As at 30 Jun. 2017, the balance of the Group's assets and liabilities are both denominated in functional currency, except that balance of assets set out below is in HKD and USD. Currency risk arising from the foreign currency balance of assets and liabilities may have impact on the Group's performance. Unit: RMB Item Closing balance Opening balance Cash and bank balances 263,432,256.56 200,776,163.48 - HKD 19,722,326.34 25,539,100.17 - USD 243,709,930.22 175,237,063.31 Accounts receivable (717,038.84) 26,594,259.65 - HKD 19,499,440.18 7,223,373.15 - USD (20,216,479.02) 19,370,886.50 Short-term borrowings - - - HKD - - Accounts payable 1,837,415.02 2,183,342.35 - HKD 2,666,859.48 2,519,094.88 - USD (829,444.46) (335,752.53) - 76 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VIII ) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued 1. Risk management objectives and policies - continued 1.1 Market risk - continued 1.1.1 Currency risk - continued The Group closely monitors the effects of changes in the foreign exchange rates on the Group's currency risk exposures, to minimize the company's currency risk. According to the current risk exposure and judgment of the exchange rate movements, management considers the probable heavy loss resulted from foreign exchange rate fluctuation to be fairly low. Sensitivity analysis on currency risk The assumption for the sensitivity analysis on currency risk is that all the cash flow hedges and hedges of a net investment in a foreign operation are highly effective. On the basis of the above assumption, where all other variables are held constant, the reasonably possible changes in the foreign exchange rate may have the following pre-tax effect on the profit or loss for the period or equity: Unit: RMB Jan.-Jun. 2017 Jan.-Jun. 2016 Effect on Effect on Changes in Effect on shareholders' Effect on shareholders' Item exchange rate profits equity profits equity 5% appreciation All foreign currencies 13,043,890.14 13,043,890.14 8,645,464.36 8,645,464.36 against RMB 5% depreciation All foreign currencies (13,043,890.14) (13,043,890.14) (8,645,464.36) (8,645,464.36) against RMB 1.1.2 Interest rate risk - changes in cash flows Risk derived from changes in cash flows of financial instruments is mainly related to bank loan with floating interest rate. Details are disclosed in Note (V) 20. This Group takes the measure of maintaining the floating interest rate of the bank loan, as a way to reduce the interest rate risk arising from changes in fair value. Sensitivity analysis of interest rate risk Sensitivity analysis of interest rate risk is based on the following assumptions: Fluctuations of market interest rate can affect the interest income or expense of a financial instrument with floating interest rate. For a financial instrument at fair value with fixed interest rate, the fluctuations of market interest rate can only affect its interest income or expense. For a derivative financial instrument recognized as hedging instrument, the fluctuations of market interest rate affects its fair value and interest rate hedging estimation are effective and efficient. Market interest rate at the balance sheet date is adopted to calculate fair value changes of derivative financial instruments and other financial assets and liabilities under discounted cash flow method. - 77 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued 1. Risk management objectives and policies - continued 1.1 Market risk - continued 1.1.3 Other price risk Available-for-sale financial assets are measured at fair value by the Group at the balance sheet date. Hence the Group takes risk of changes in the securities market. The Group closely monitors the effects of changes in the foreign exchange prices on the Group's equity investment securities. The Group has not taken any measures to reduce prices risk of equity investment securities. 1.2 Credit risk As at 30 Jun. 2017, the Group's maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees issued by the Group is arising from the carrying amount of the respective recognized financial assets as stated in the consolidated balance sheet. For financial instruments measured at fair value, the carrying amount reflects the exposure to risks but not the maximum exposure to risks; the maximum exposure to risks would vary according to the future changes in fair value. In order to minimize the credit risk, the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the management of the Group considers that the Group's credit risk is significantly reduced. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings. The Company adopted necessary policies to make sure that all clients and customers are attributed with merit credit records. - 78 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (VIII) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued 1. Risk management objectives and policies - continued 1.3 Liquidity risk In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group's operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilization of bank borrowings and ensures compliance with loan covenants. The following is the maturity analysis for financial assets and financial liabilities held by the Group which is based on undiscounted remaining contractual obligations: Unit: RMB More than 5 Item Carrying amount Total amount Within one year 1-5 years years The non-derivative financial assets Cash and bank balances 593,542,501.41 593,542,501.41 593,542,501.41 - - Accounts receivable 243,504,003.91 243,504,003.91 243,504,003.91 - - Interest receivable 1,264,914.26 1,264,914.26 1,264,914.26 Other receivables 18,699,162.98 18,699,162.98 18,699,162.98 - - Available-for-sale financial 23,709,200.00 23,709,200.00 23,709,200.00 - - assets The non-derivative financial liabilities Accounts payable 98,590,197.10 98,590,197.10 98,590,197.10 - - Interest payable 6,371,260.30 6,371,260.30 6,371,260.30 - - Dividends payable 319,802,810.47 319,802,810.47 319,802,810.47 - - Other payable 75,105,519.60 75,105,519.60 75,105,519.60 - - Bonds payable 298,629,041.09 298,629,041.09 - 298,629,041.09 - (IX) FAIR VALUE 1. Closing balance of assets and liabilities measured at fair value Unit: RMB Closing Balance Item Level 1 Level 2 Level 3 Total Measurements at fair value continuously Available-for-sale financial assets: 9,800,000.00 - - 9,800,000.00 - Equity instruments (Note) 9,800,000.00 - - 9,800,000.00 Total assets measured at fair value continuously 9,800,000.00 - - 9,800,000.00 Note: The available-for-sale financial assets held by the Company represent the fair value of the circulating shares of Jiang Su Ninghu Expressway Company Ltd at the end of the year. - 79 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (IX) FAIR VALUE - continued 2. Basis for determining the market price measured at fair value at level I continuously The market price of assets and liabilities measured at fair value at level I continuously is determined by the Shanghai stock exchange closing price of equity instruments at 30 Jun. 2017. 3. Information of financial assets and financial liabilities that are not measured at fair value The management considers that the carrying amount of financial assets and liabilities measured at amortized cost is approximately equal to the fair value of financial assets and liabilities. (X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS 1. Parent of the Company Unit: RMB Proportion of the entity's ownership Proportion of the entity's Related party Type of the Place of Legal Nature of interests held by the voting power held by the Name of the parent relationship entity incorporation representative business Issued share capital parent (%) parent (%) Listed in Hong CMHI Parent company Hong Kong Li Xiao Peng Port shipping HKD34,766,421,285 - 66.10(Note) Kong Note: CMHI obtained 8.58% equity of the Company via its subsidiary Jing Feng Company, 25% equity via its subsidiaries Shenzhen Malai Warehouse Co., Ltd., and obtained another 32.52% equity by entrustment of Nanshan Group's stock, totally holding 66.10% of the voting shares, so CMHI is the parent company of the Company. 2. Subsidiaries of the Company The general background and other related information of the subsidiaries are set out in Note (VII) 1. 3. Associates and joint ventures of the Company The general background and other related information of the associates and joint ventures are set out in Note (VII) 2. - 80 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued 4. Other related parties of the Company Relationships between other related Name of other related parties parties and the Company Shenzhen Haiqin Engineering Management Co., Ltd. (Haiqin Engineering) Controlled by the same parent company SMT Controlled by the same parent company SMP Controlled by the same parent company China Merchants Port Services (Shenzhen) Co., Ltd ("CMPS") Controlled by the same parent company Shekou Container Terminals Limited ("SCT") Controlled by the same parent company Shenzhen Haixing Harbor Development Co.,Ltd("Haixing") Controlled by the same parent company Shenzhen Huxing Tug Service Co., Ltd.("Huxing Tug") Controlled by the same parent company Shenzhen Lianda Tug Service Co., Ltd.("Lianda Tug") Controlled by the same parent company Malai Warehouse Controlled by the same parent company China Merchants Container Services Ltd.("China Merchants Container") Controlled by the same parent company SMW Controlled by the same parent company Hidoney Controlled by the same parent company Shenzhen China Merchants Qianhaiwan Property Co., Ltd. ("Qianhai Property") Controlled by the same parent company China Merchants International Cold Chain (Shenzhen) Co., Ltd ("CMCCL") Controlled by the same ultimate actual controller Ocean Shipping Agency Controlled by the same ultimate actual controller Shenzhen China Merchants Shangzhi Investment Co., Ltd.("China Merchants Shangzhi ") Controlled by the same ultimate actual controller Shenzhen China Merchants International Shipping Agency Co., Ltd.("Shipping Agency") Controlled by the same ultimate actual controller Youlian Shipyard (Shekou) Co. Ltd.("Youlian Shipyard") Controlled by the same ultimate actual controller Shenzhen China Merchants Property Management Co., Ltd.("China Merchants Property") Controlled by the same ultimate actual controller Guangzhou International Ocean Shipping Agency Co., Ltd. ("International Ocean Controlled by the same ultimate actual controller Shipping") China Ocean Shipping Tally Shenzhen Co., Ltd. ("Ocean Shipping Tally") Controlled by the same ultimate actual controller China Merchants Houlder Insurance Co., Ltd. ("Houlder Insurance") Controlled by the same ultimate actual controller Hoi Tung (Shanghai) Co., Ltd. Controlled by the same ultimate actual controller Hoi Tung (Shenzhen) Co., Ltd. Controlled by the same ultimate actual controller Sheanzhen South China Liquefied Gas Marine Co., Ltd.(South China Liquefied Gas) Controlled by the same ultimate actual controller China Marine Shipping Agency, Shenzhen Co., Ltd. ("CMSA") (Note) Controlled by the same ultimate actual controller Sinoway Shipping Ltd. ("Sinoway") (Note) Controlled by the same ultimate actual controller China Merchants Heavy Industry Shenzhen Co., Ltd. ("CMHI") Controlled by the same ultimate actual controller Shenzhen Chiwan Petroleum Supply Base Co., Ltd.("Chiwan Base ") Influenced significantly by parent company Zengcheng Xinkang property Co., Ltd.("Zengcheng Xinkang") Influenced significantly by parent company Shenzhen Baowan international logistics Co., Ltd.("Baowan Logistics") Influenced significantly by parent company Shenzhen Chiwan Property Management Co., Ltd.("Chiwan Property") Influenced significantly by parent company Shenzhen Xuqin Industrial Development Co., Ltd.(“Xuqin”) Influenced significantly by parent company Shenzhen Chiwan Oriental Logistics Co., Ltd.("Chiwan Oriental Logistics") Influenced significantly by parent company CDFC Influenced significantly by parent company Invetsor that has significant influence on the Nanshan Group company Influenced significantly by the ultimate actual China Merchant Bank Co., Ltd.("CMB") controller Note: On 28 December 2015, State-owned Assets Supervision and Administration Commission("SASAC") released an approval to transfer Sinotrans&CSC Holdings Co., Ltd.("Sinotrans & CSC"), as a whole, into China Merchants Group Co., Ltd .("CMG") for free. On 24 Februrary 2016, SASAC confirmed that CMG is the controller shareholder of Sinotrans & CSC. Therefore, the Company included the subsidiaries of Sinotrans& SCS, CMSA and Sinoway as its related parties since 24 February 2016. - 81 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued 5. Related party transactions (1) Provision and receipt of services Unit: RMB Pricing and decision- Content of related party making procedures of Related parties transaction related party transactions Jan.-Jun. 2017 Jan.-Jun. 2016 Receipt of services : Haixing Load and unload service Negotiation 1,700,226.46 2,050,908.52 Sinotrans Shenzhen Marine Shipping Agency Co., Ltd. (“SSMSA”) Technical service fee Negotiation 1,976,679.00 1,747,860.00 China Merchants Holdings (International) Information Technology Company Ltd Technical service fee Negotiation 1,074,056.62 1,138,679.23 Property management Chiwan Property Negotiation 1,022,057.59 925,553.89 service SMT Load and unload service Negotiation 748,800.00 556,560.00 Property management Zengcheng Xinkang Negotiation 159,666.73 393,625.32 service Xuqin Landscape Engineering Negotiation 422,920.75 311,998.48 SMW Load and unload service Negotiation 1,159,412.08 250,330.19 CMBL Load and unload service Negotiation 1,003,449.45 243,745.29 Ocean Shipping Agency Agency service Negotiation 250,650.00 243,675.00 Lianda Tug Tugboat service Negotiation 203,305.19 163,684.43 Sinotrans Dongguan Logistics Co., Ltd. (“SDL”) logistics service Negotiation - 163,633.97 Haiqin Engineering Project management Negotiation 1,694,536.21 138,578.13 Property management China Merchants Property Negotiation 1,153,153.32 125,089.30 service SMP Load and unload service Negotiation 63,533.89 97,000.75 SCT Trailer service etc. Negotiation 2,273,719.92 69,056.60 Total 14,906,167.21 8,619,979.10 Rendering of services: SCT Trailer service etc. Negotiation 7,339,564.71 7,206,689.95 Ocean Shipping Agency Tugboat service Negotiation 7,224,052.83 5,885,342.17 SMT Trailer service etc. Negotiation 8,728,097.72 5,873,774.53 SMP Tugboat service Negotiation 2,910,447.25 3,490,884.45 Sinotrans Shenzhen Marine Shipping Agency Co., Ltd. (“SSMSA”) Trailer service etc Negotiation 1,697,221.51 1,981,700.67 Shipping Agency Trailer service etc. Negotiation 1,537,334.91 1,283,371.50 China Overseas Harbour Affairs (Laizhou) Co., Ltd Labor dispatch service Negotiation - 736,553.60 International Ocean Shipping Berthage fee Negotiation 455,734.78 417,729.46 Lianda Tug Tugboat service Negotiation 280,898.54 268,439.64 Youlian Shipyard Tugboat service Negotiation 228,868.87 121,635.85 CMCCL Trailer service Negotiation - 118,620.75 CMBL Trailer service Negotiation - 39,004.71 Ocean Shipping Tally Others Negotiation - 32,233.58 Sinoway Shipping Ltd. (“Sinoway Shipping”) Load and unload service Negotiation 35,252.88 31,055.44 China Marine Shipping Agency Guangdong Co., Ltd. (“CMSA Guangdong”) Load and unload service Negotiation - 28,296.23 Zengcheng Xinkang Others Negotiation 1,820.31 2,701.97 COFCO & CM (Shenzhen) Grain Electronic Trading Center Load and unload service Negotiation 627,197.62 - China Merchants Heavy Industry Shenzhen Co., Ltd. ("CMHI") Tugboat service Negotiation 16,796.23 - Sinotrans Shenzhen Logistics Co., Ltd. Others Negotiation 10,787.74 - Sinotrans Shenzhen Customs Broker Co., Ltd Others Negotiation 7,287.74 - Total 31,101,363.64 27,518,034.50 - 82 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued 5. Related party transactions - continued (2) Leases with related parties The Group as the lessor: Unit: RMB Lease income Lease income recognised in the recognised in the Name of lessee Type of leased assets current year previous year CMBL Crane 932,038.83 932,038.86 Total 932,038.83 932,038.86 The Group as the lessee: Unit: RMB Lease payment Lease payment recognised in recognised in the previous Name of lessor Type of leased assets the current year year Nanshan Group Land, Office and packing yard 35,087,942.41 32,410,191.19 Malai Warehouse Office 4,960,034.15 4,642,399.87 Chiwan Base Office 772,310.94 2,706,819.39 CMPS Former Bay port lands 1,634,130.06 1,584,900.00 China Merchants Shangzhi Buildings 725,718.42 377,448.18 Qianhai Property Staff dormitory - 108,696.18 Baowan Logistics Warehouse 54,182.99 42,400.76 SCT Crane - 401,285.71 SMW Warehouse 384,863.11 - Total 43,619,182.08 42,274,141.28 (3) Transfers of assets involved with related parties Unit: RMB related party Related trade Jan.-Jun. 2017 Jan.-Jun. 2016 Transfer-out of empty forklifts and SMW - 129,227.69 computers (4) Compensation for key management personnel Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Compensation for key management personnel 4,641,702.52 4,504,067.50 - 83 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued 6. Amounts due from/to related parties Unit: RMB Item Related parties Closing balance Opening balance Cash and bank CMB 227,204,466.31 244,449,550.95 China Development Finance Company LTD. 205,769.88 1,211,887.57 Total 227,410,236.19 245,661,438.52 Accounts receivable SCT 1,433,780.90 29,340.00 Ocean Shipping Agency 3,387,002.00 2,138,014.00 SMT 2,156,746.56 1,097,931.17 SSMSA 388,366.40 568,815.80 SMP 597,218.76 278,192.54 Shipping Agency 582,697.00 390,704.00 Sinoway 19,085.00 24,588.00 CMBL 11,160.00 - International Ocean Shipping 53,902.00 - Total 8,629,958.62 4,527,585.51 Other receivables SMP 282,027.61 1,366,290.52 SMT 669,136.63 870,864.34 CMBL 2,180,743.58 2,437,813.73 Nanshan Group 3,175,200.09 1,054,300.09 SCT 278,748.50 16,994.00 Qianhai Property 704,172.00 654,480.00 Xuqin 3,000.00 323,000.00 China Merchants Shangzhi 176,299.20 176,299.20 Chiwan Base 135,621.91 135,621.91 China Merchants Property - 5,294.00 COLOMBO International Container 129,070.78 - Others 62,809.00 62,809.00 Total 7,796,829.30 7,103,766.79 Accounts payable Nanshan Group 14,629,308.23 10,090,213.25 Haixing 515,946.00 575,625.00 SSMSA 892,138.71 743,962.71 Xuqin 702,412.35 793,251.50 SCT 401,415.00 - China Merchants Holdings Company Ltd 99,675.65 99,675.65 China Merchants Holdings (International) 29,000.00 - Information Technology Company Ltd. Zengcheng Xinkang - 207,845.50 CMPS 839,997.00 - Hoi Tung (Shanghai) Company Limited - 188,945.00 Chiwan Base 139,400.00 - Total 18,249,292.94 12,699,518.61 Dividends payable Nanshan Group 104,004,785.23 - Malai Warehouse 79,950,702.77 - Total 183,955,488.00 - - 84 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued 6. Amounts due from/to related parties - continued Unit: RMB Item Related parties Closing balance Opening balance Other payables SMT 2,109,987.55 5,173,198.89 SMP 1,325,496.73 647,066.08 China Merchants Holdings (International) 815,800.00 42,900.00 Information Technology Company Ltd. CMPS 839,997.00 - Chiwan Base 689,477.50 - China Merchants Shangzhi 1,057,795.20 117,532.80 Nanshan Group 193,487.63 155,593.03 SCT 133,980.95 247,360.66 Haiqin Engineering 742,184.61 389,509.73 Chiwan Property 62,264.92 14,100.90 China Merchants Group 8,570.12 - China Merchants Property - 3,626.34 Xuqin 67,426.00 51,624.65 International Ocean Shipping 10,000.00 10,000.00 Qianhai Property 327,240.00 - Total 6,854,233.71 6,852,513.08 (XI) COMMITMENTS AND CONTINGENCIES 1. Significant commitments (1) Capital commitments Unit: RMB Item Closing balance Opening balance Capital commitments that have been entered into but have not been recognised in the financial statements: - Commitment for acquisition of long-term assets 110,517,815.86 151,991,708.93 -Commitment for foreign investment 56,136,194.00 56,136,194.00 Total 166,654,009.86 208,127,902.93 (2) Operating lease commitments As of the balance sheet date, the Group had the following commitments in respect of non- cancellable operating leases: Unit: RMB Item Closing balance Opening balance Minimum lease payments under non-cancellable operating leases: 1st year subsequent to the balance sheet date 60,436,842.46 58,325,261.82 2nd year subsequent to the balance sheet date 28,923,889.60 54,599,108.85 3rd year subsequent to the balance sheet date 386,662.62 656,227.25 More than 3 years 323,171.29 - Total 90,070,565.96 113,580,597.92 2. Contingencies No material contingencies that should be disclosed by the Group. - 85 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XII) EVENTS AFTER THE BALANCE SHEET 1. Profit appropriation Unit: RMB Item Amount Proposed distribution of profits or dividends (Note) 319,802,810.08 Note: Please refer to Note (V) 39. (XIII) OTHER SIGNIFICANT EVENTS 1. Annuity plan On 3 June 2008, the Group participated in the enterprise annuity plan of Nanshan Group approved by Shenzhen government. Funds involved were deposited in the managed account coordinated by Nanshan Group. Staffs would be qualified to participant the annuity plan if the following requirements are met: (i)Staff with labor contracts signed. (ii)Staff with basic pension participated in. (iii)On-the job and in-service staff with probation expired. (iv)Voluntarily participated in the plan and perform the obligation of payment. The Group and staffs share the payment of the supplementary pension. Excess payment would not be allowed so as to keep the payment made by the Group and total payment made by the Group and the individual under the limit of one-twelfth and the one-sixth of the prior year's gross payroll respectively. 2. Segment reporting (1) Basis for determining and accounting treatments of reporting segments Subject to the Group's in-house infrastructure, management requirements and internal reporting system, the operation businesses of the Group are classified into four business segments. The Group's management periodically evaluates the operating results of these segments to make decisions about resources to be allocated to the segments and assess their performance. On the basis of such business segments, the Group determined three reporting segments including load and unload services, trailer and tugboat business, agency services and other segments, which are classified based on the nature of business. Major products and services delivered or provided by each of the reporting segments are load and unload services, trailer and tugboat business, agency services and other segments. Segment information is disclosed in accordance with the accounting policies and measurement standards adopted by each segment when reporting to management. The measurement basis is consistent with the accounting and measurement basis in the preparation of the financial statements. - 86 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIII) OTHER SIGNIFICANT EVENTS - continued 2. Segment reporting - continued (2) Segment financial information Unit: RMB Load and unload services Trailer and tugboat business Agency and other services Unappropriated items Inter-segment deduction Total Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Operating income Revenue arising from external 865,384,374.34 844,465,634.31 49,878,666.71 46,615,750.31 14,345,457.86 13,728,267.62 - - - - 929,608,498.91 904,809,652.24 transactions Revenue arising from inter-segment - - 33,158,187.84 30,707,142.71 - - - - (33,158,187.84) (30,707,142.71) - - transactions Total segment operating income 865,384,374.34 844,465,634.31 83,036,854.55 77,322,893.02 14,345,457.86 13,728,267.62 - - (33,158,187.84) (30,707,142.71) 929,608,498.91 904,809,652.24 Reconciling items: Operating Income in the financial statements 929,608,498.91 904,809,652.24 Operating cost 497,194,719.83 458,877,279.34 61,369,223.59 56,538,338.80 10,551,079.86 7,450,049.16 - - (33,142,187.82) (30,707,142.71) 535,972,835.46 492,158,524.59 Segment operating profits 368,189,654.51 385,588,354.97 21,667,630.96 20,784,554.22 3,794,378.00 6,278,218.46 - - (16,000.02) - 393,635,663.45 412,651,127.65 Reconciling items: Business taxes and surcharges 4,261,580.04 2,081,550.23 108,304.02 125,688.62 9,377.58 685,817.25 - - 720,507.38 274,886.31 5,099,769.02 3,167,942.41 Administrative expenses 52,148,830.54 57,605,219.02 5,921,650.84 6,952,748.64 2,375,212.07 3,001,025.95 11,879,037.73 14,388,875.10 - - 72,324,731.18 81,947,868.71 Financial expenses 9,957,541.29 6,084,491.80 (762,020.47) (760,243.01) 198,656.84 (561,181.41) 758,211.16 9,490,546.97 - - 10,152,388.82 14,253,614.35 Impairment losses of assets (1,710,539.31) 288,044.16 (197,700.00) - - - - - - - (1,908,239.31) 288,044.16 Investment Income - - - - - - 302,202,787.63 301,993,086.59 (232,692,830.18) (232,692,830.18) 69,509,957.45 69,300,256.41 Operating profit 303,532,241.95 319,529,049.76 16,597,396.57 14,466,359.97 1,211,131.51 3,152,556.67 289,565,538.74 278,113,664.52 (233,429,337.58) (232,967,716.49) 377,476,971.19 382,293,914.43 Non-operating income 2,295,857.98 2,488,565.79 111,358.31 120,000.02 - 30,648.00 - - - - 2,407,216.29 2,639,213.81 Non-operating expenses 224,356.40 500,603.63 518,267.96 862.00 - - - - - - 742,624.36 501,465.63 Gross profit 305,603,743.53 321,517,011.92 16,190,486.92 14,585,497.99 1,211,131.51 3,183,204.67 289,565,538.74 278,113,664.52 (233,429,337.58) (232,967,716.49) 379,141,563.12 384,431,662.61 Income tax expenses 53,152,811.68 44,125,732.88 4,047,621.74 3,646,374.51 63,069.75 44,766.77 1,632,930.63 1,844,132.60 - - 58,896,433.80 49,661,006.76 Net profit 252,450,931.85 277,391,279.04 12,142,865.18 10,939,123.48 1,148,061.76 3,138,437.90 287,932,608.11 276,269,531.92 (233,429,337.58) (232,967,716.49) 320,245,129.32 334,770,655.85 - 87 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIII) OTHER SIGNIFICANT EVENTS - continued 2. Segment reporting - continued (2) Segment financial information - continued Unit: RMB Load and unload services Trailer and tugboat business Agency and other services Unappropriated items Inter-segment deduction Total Jan.-Jun. Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Jan.-Jun. 2017 Jan.-Jun. 2016 Total segment assets 7,963,065,099.65 5,430,595,832.96 214,437,576.01 210,588,801.07 23,106,697.18 36,184,102.36 6,633,151,638.01 7,535,075,833.13 (8,049,339,462.32) (6,585,683,289.43) 6,784,421,548.53 6,626,761,280.09 Total assets in the financial 7,963,065,099.65 5,430,595,832.96 214,437,576.01 210,588,801.07 23,106,697.18 36,184,102.36 6,633,151,638.01 7,535,075,833.13 (8,049,339,462.32) (6,585,683,289.43) 6,784,421,548.53 6,626,761,280.09 statements Total segment liabilities 2,334,819,894.52 1,470,340,168.48 116,970,014.74 114,510,739.19 12,669,458.57 26,199,615.99 170,616,779.95 1,764,787,576.27 (1,493,872,754.35) (2,052,120,486.34) 1,141,203,393.43 1,323,717,613.59 Total liabilities in the financial 2,334,819,894.52 1,470,340,168.48 116,970,014.74 114,510,739.19 12,669,458.57 26,199,615.99 170,616,779.95 1,764,787,576.27 (1,493,872,754.35) (2,052,120,486.34) 1,141,203,393.43 1,323,717,613.59 statements Supplementary information Depreciation 89,519,119.36 91,078,964.84 5,890,089.17 5,890,089.17 316,828.10 316,828.10 83,115.21 83,115.21 - - 95,809,151.84 97,368,997.32 Amortization 19,618,097.53 20,121,115.31 - 8,748.12 - - 157,175.70 142,659.36 - - 19,775,273.23 20,272,522.79 Interest income 14,654,057.22 1,173,650.03 212,306.96 210,552.90 6,467.63 403,115.28 21,265,871.78 (4,195,616.76) (31,952,107.51) 5,803,954.29 4,186,596.08 3,395,655.74 Interest expense 11,621,275.13 (5,924,339.39) - (65,254.86) - - 11,652,818.46 21,970,301.28 (13,429,185.26) 5,803,954.29 9,844,908.33 21,784,661.32 Investment income from long-term equity investment - - - - - - - - 60,092,957.45 63,008,068.56 60,092,957.45 63,008,068.56 under equity method Long-term equity investment - - - - - - - - under equity method 1,463,702,326.87 1,439,244,037.52 1,463,702,326.87 1,439,244,037.52 Non-current assets other than long-term equity investment 4,311,287,038.27 4,303,834,271.18 117,493,640.22 120,159,617.69 84,470.81 16,188,638.70 307,839,267.10 180,875,139.97 (312,845,278.50) (162,765,586.89) 4,423,859,137.90 4,458,292,080.65 - 88 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIII) OTHER SIGNIFICANT EVENTS - continued 2. Segment reporting – continued (3) Segment revenue from external transactions by source and non-current assets by geographical location Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Revenue from external transactions with domestic customers 917,481,142.33 903,301,572.23 Revenue from external transactions with Hong Kong customers 12,127,356.58 1,508,080.01 Total 929,608,498.91 904,809,652.24 Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Non-current assets sourced from Mainland of PRC 4,387,973,511.00 4,433,998,794.69 Non-current assets sourced from Hong Kong 4,093.43 6,850.61 Total 4,387,977,604.43 4,434,005,645.30 (4) Degree of reliance on major customers The total operating income derived from the top five clients of the Group is RMB377,015,687.69 , occupying 40.56% of the Group's total operating income. (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS 1. Accounts receivable (1) Disclosure of accounts receivable by categories Unit: RMB Closing balance Opening balance Carrying amount balance Bad debt provision Carrying amount balance Bad debt provision Proportion Proportion Proportion Proportion Category Amount (%) Amount (%) Carrying value Amount (%) Amount (%) Carrying value Accounts receivable that are individually significant and for - - - - - - - - - - which bad debt provision has been assessed individually Accounts receivable for which bad debt provision has been assessed by credit risk portfolios Portfolio 1 2,262,003.80 9.36 - - 2,262,003.80 63,999.00 0.43 - 63,999.00 - Portfolio 2 21,899,519.44 90.64 - - 21,899,519.44 14,666,413.29 99.57 - - 14,666,413.29 Subtotal of 24,161,523.24 100.00 - - 24,161,523.24 14,730,412.29 100.00 - - 14,730,412.29 portfolios Accounts receivable that are not individually significant but for - - - - - - - - - - which bad debt provision has been assessed individually Total 24,161,523.24 100.00 - - 24,161,523.24 14,730,412.29 100.00 - - 14,730,412.29 - 89 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 1. Accounts receivable - continued (1) Disclosure of accounts receivable by categories - continued Accounts receivable portfolios for which bad debt provision has been assessed using the aging analysis approach: Unit: RMB Closing balance Opening balance Carrying Bad debt Proportion Carrying amount Bad debt Proportion Aging amount balance provision (%) Carrying value balance provision (%) Carrying value Within 1 year 21,899,519.44 - - 21,899,519.44 14,666,413.29 - - 14,666,413.29 (2) Top five balances of accounts receivable classified by debtor: Unit: RMB Proportion of the closing Relationship balance to the Closing balance with the total accounts of bad debt Name of entity Company Closing balance receivable (%) provision Customer F Customer 7,358,127.15 30.45 - Customer G Customer 6,188,829.45 25.61 - Customer H Customer 2,763,000.00 11.44 - Customer I Customer 2,000,000.00 8.28 - Customer J Customer 1,512,486.82 6.26 - Total 19,822,443.42 82.04 - 2. Other receivables (1) Disclosure of other receivables by categories Unit: RMB Closing balance Opening balance Carrying amount balance Bad debt provision Carrying amount balance Bad debt provision Proportion Proporti Proportion Proportion Category Amount (%) Amount on (%) BCarrying value Amount (%) Amount (%) BCarrying value Other receivables that are individually significant and for which bad debt provision has been - - - - - - - - - - assessed individually Other receivables for which bad debt provision has been assessed by credit risk portfolios Portfolio 1 562,507,733.83 99.70 - - 562,507,733.83 581,387,532.80 99.75 - - 581,387,532.80 Portfolio 2 1,664,768.65 0.30 383,456.60 23.03 1,281,312.05 1,455,758.02 0.25 391,186.82 26.87 1,064,571.20 Subtotal of portfolios 564,172,502.48 100.00 383,456.60 0.07 563,789,045.88 582,843,290.82 100.00 391,186.82 0.07 582,452,104.00 Other receivables that are not individually significant but for - - - - - - - - - - which bad debt provision has been assessed individually Total 564,172,502.48 100.00 383,456.60 0.07 563,789,045.88 582,843,290.82 100.00 391,186.82 0.07 582,452,104.00 - 90 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 2. Other receivables - continued (1) Disclosure of other receivables by categories - continued Other receivables portfolios for which bad debt provision has been assessed using the aging analysis Unit: RMB Closing balance Opening balance Carrying Bad debt Proportion Carrying Carrying Bad debt Proportion Carrying Aging amount balance provision (%) value amount balance provision (%) value Within 1 year 1,281,312.05 - - 1,281,312.05 1,034,396.62 149.26 0.01 1,034,247.36 More than 1 year but - - - - 37,904.80 7,580.96 20.00 30,323.84 not exceeding 2 years More than 2 years but - - - - - - - - not exceeding 3 years More than 3 years 383,456.60 383,456.60 100.00 - 383,456.60 383,456.60 100.00 - Total 1,664,768.65 383,456.60 23.03 1,281,312.05 1,455,758.02 391,186.82 26.87 1,064,571.20 (2) Disclosure of other receivables by nature Unit: RMB Item Closing balance Opening balance Temporary payments 5,205,270.86 2,095,061.81 Deposits 479,634.90 306,791.32 Others 558,487,596.72 580,441,437.69 Including: amounts due from subsidiaries 552,166,847.60 580,057,981.09 Total 564,172,502.48 582,843,290.82 (3) Top five balances of other receivables classified by debtor: Unit: RMB Proportion of the amount to the Closing balance total accounts of bad debt Name of entity Nature of the fund Amount Aging receivable (%) provision Dongguan Chiwan Terminal Temporary payment due 305,375,000.00 Within one year 54.13 - Company Limited. from subsidiaries Dongguan Chiwan Wharf Temporary payment due 246,791,847.60 Within one year 43.74 - Co., Ltd. from subsidiaries Chiwan Wharf Holdings Temporary payment due More than three 2,850,941.50 0.51 - (H.K.) Limited. from subsidiaries year Temporary payment due Nanshan Group 2,822,760.39 Within one year 0.50 - from related parties Temporary payment due CCT 695,498.23 Within one year 0.12 - from related parties Total 558,536,047.72 99.00 - - 91 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 3. Long-term equity investments Unit: RMB Changes Reconciling items from Closing other Cash dividends or balance of Investment income under comprehensive Other equity profits announced Provision for provision for Investee Opening balance Increase Decrease equity method income movements of issuance impairment Others Closing balance impairment I. Subsidiaries Shenzhen Chiwan International Freight Not Agency 5,500,000.00 - - Not applicable Not applicable Not applicable - - 5,500,000.00 - applicable Company Limited Shenzhen Chiwan Harbor Container Not 250,920,000.00 - - Not applicable Not applicable Not applicable - - 250,920,000.00 - Company Limited applicable Shenzhen Chiwan Transportation Not 7,000,000.00 - - Not applicable Not applicable Not applicable - - 7,000,000.00 - Company Limited applicable Not Chiwan Wharf Holdings (H.K.) Limited 1,070,000.00 - - Not applicable Not applicable Not applicable - - 1,070,000.00 - applicable Shenzhen Chiwan Tugboat Company Not 24,000,000.00 - - Not applicable Not applicable Not applicable - - 24,000,000.00 - Limited applicable Chiwan Container Terminal Company Not 421,023,199.85 - - Not applicable Not applicable Not applicable - - 421,023,199.85 - Limited applicable Not Dongguan Chiwan Wharf Company Limited 186,525,000.00 - - Not applicable Not applicable Not applicable - - 186,525,000.00 - applicable Dongguan Chiwan Terminal Company Not 175,000,000.00 - - Not applicable Not applicable Not applicable - - 175,000,000.00 - Limited applicable Subtotal 1,071,038,199.85 - - - 1,071,038,199.85 - II. Associates - CMHI 14,595,240.92 2,267,364.00 - - 16,862,604.92 - CMBL 151,985,444.98 2,738,000.00 - - 154,723,444.98 - Subtotal 166,580,685.90 5,005,364.00 - - 171,586,049.90 - III. Joint ventures China Overseas Harbor Affairs (Laizhou) 794,981,306.22 29,155,806.47 - (54,159,674.42) 769,977,438.27 - Co., Ltd Total 2,032,600,191.97 34,161,170.47 - (54,159,674.42) 2,012,601,688.02 - - 92 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 4. Operating income and operating costs Unit: RMB Jan.-Jun. 2017 Jan.-Jun. 2016 Item Income Cost Income Cost Principal operating 103,342,484.62 61,542,231.02 90,048,025.87 64,585,052.56 Other operating 16,693,852.72 451,533.62 15,662,004.26 364,898.28 Total 120,036,337.34 61,993,764.64 105,710,030.13 64,949,950.84 5. Investment income Details of investment income Unit: RMB Item Jan.-Jun. 2017 Jan.-Jun. 2016 Income from long-term equity investments under equity method 34,161,170.47 42,745,478.52 Investment income on available-for-sale financial assets, etc. 9,417,000.00 6,292,187.85 Total 43,578,170.47 49,037,666.37 - 93 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 6. Related party transactions (1) Provision and receipt of services Unit: RMB Pricing and decision- making procedures of Content of related party related party transaction transactions Jan.-Jun. 2017 Jan.-Jun. 2016 Receipt of services : Chiwan Shipping (Hong Kong) Ltd Agency service Negotiation 461,799.81 940,321.59 Xuqin Landscape engineering Negotiation 416,694.34 179,068.96 Property management Chiwan Property Negotiation 175,675.19 148,751.65 service Haiqin Engineering Engineering Management Negotiation 145,848.28 138,578.13 China Merchants Holdings (International) Information Technical service Negotiation 63,584.93 74,339.65 Technology Company Ltd Shenzhen Chiwan Tugboat Company Limited Tugboat services Negotiation 12,166.04 13,766.04 Shenzhen Chiwan International Freight Agency Agency service Negotiation 13,007.98 5,368.30 Company Limited Haixing Load and unload service Negotiation 47,518.00 - Total 1,336,294.57 1,500,194.32 Rendering of services: Dongguan Chiwan Wharf Company Limited Labor dispatch service Negotiation 5,189,549.19 11,552,504.65 China Overseas Harbour Affairs (Laizhou) Co., Ltd Labor dispatch service Negotiation - 736,553.60 SSMSA Load and unload service Negotiation 24,659.43 125,799.71 Shipping Agency Berthage fee , etc, Negotiation - 76,144.33 Ocean Shipping Tally Load and unload service Negotiation - 32,233.58 Ocean Shipping Agency Load and unload service Negotiation - 18,736.79 Dongguan Chiwan Terminal Company Limited Labor dispatch service Negotiation 3,953,940.28 - COFCO & CM (Shenzhen) Grain Electronic Trading Center Load and unload service Negotiation 627,197.62 - Total 9,795,346.52 12,541,972.66 - 94 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 6. Related party transactions - continued (2) Leases with related parties The Group as the lessee: Unit: RMB Lease payment recognised in Lease payment recognised in Name of lessor Type of leased assets the current year the previous year Land, Office and packing Nanshan Group 4,165,980.04 3,764,963.47 yard Chiwan Base Office 772,310.94 786,661.42 Malai Warehouse Office 2,104,514.22 1,622,229.74 SCT Crane - 360,000.00 Total 7,042,805.20 6,533,854.63 7. Amounts due from/to related parties Unit: RMB Item Related parties Closing balance Opening balance China Merchants Bank 25,771,062.09 19,265,421.23 Cash and bank China Development Finance Co., Ltd. 205,769.88 1,211,887.57 balances Total 25,976,831.97 20,477,308.80 Accounts SSMSA - 44,129.00 receivable Shipping Agency - 19,870.00 Total - 63,999.00 Other receivables Dongguan Chiwan Terminal Company Limited 305,375,000.00 361,632,988.72 Dongguan Chiwan Wharf Company Limited 246,791,847.60 214,500,000.00 Chiwan Wharf Holdings (H.K.) Limited 2,850,941.50 2,851,360.05 Nanshan Group 2,823,660.39 1,022,760.39 Shenzhen Chiwan Tugboat Company Limited 94,268.78 - Chiwan Base 135,621.91 135,621.91 China Merchants Shangzhi 58,766.40 58,766.40 Chiwan Container Terminal Company Limited 695,498.23 725,678.44 CHCC 296,575.90 309,683.43 Chiwan Property 150.00 150.00 Hiwin 38,270.45 38,270.45 Total 559,160,601.16 581,275,279.79 - 95 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 7. Amounts due from/to related parties - continued Item Related parties Closing balance Opening balance Long-term Chiwan Wharf Holdings (H.K.) Limited 11,004,284.75 11,004,284.75 receivables Accounts Nanshan Group 4,238,274.40 2,906,947.14 payable Xuqin 702,412.35 785,059.00 Chiwan Shipping (Hong Kong) Ltd 354,680.93 - Total 5,295,367.68 3,692,006.14 Other payables Shenzhen Chiwan Harbour Container Company Limited 127,229,139.72 243,733,114.96 Chiwan Container Terminal Company Limited 73,876,018.86 9,697,899.00 Shenzhen Chiwan Transportation Company Limited 37,801,078.98 46,897,834.66 Dongguan Chiwan Wharf Company Limited 13,567,675.68 13,260,132.40 Shenzhen Chiwan Tugboat Company Limited 20,247,549.59 24,912,752.12 Dongguan Chiwan Terminal Company Limited 15,370,363.68 10,133,892.96 Shenzhen Chiwan International Freight Agency 1,006,117.10 975,053.00 Company Limited Chiwan Shipping (Hong Kong) Ltd 160,677.46 1,183,964.01 Nanshan Group 59,845.95 58,539.14 China Merchants Shangzhi 352,598.40 - Xuqin 35,741.00 10,000.00 China Merchants Holdings (International) Information 35,400.00 6,400.00 Technology Company Ltd. Chiwan Property 19,321.90 - Haiqin Engineering - 389,509.47 Total 289,761,528.32 351,259,091.72 Long-term Chiwan Wharf Holdings (H.K.) Limited 151,378,000.00 116,662,000.00 payables Interests payable Shenzhen Chiwan Transportation Company Limited 131,478.11 1,500,827.59 Shenzhen Chiwan Tugboat Company Limited 181,693.54 97,332.08 Shenzhen Chiwan Harbour Container Company Limited 208,854.27 1,492,533.76 Chiwan Container Terminal Company Limited 159,250.00 - Total 681,275.92 3,090,693.43 Note: The Company collectively manages and coordinates the use of the capital within the Group. The subsidiaries deposit their funds with the Company, and apply for fund when needed. The Company collects fund usage expenses based on the actual financing costs incurred. - 96 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (XIV) NOTES TO THE KEY ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued 8. Supplementary information to the cash flow statement Unit: RMB Supplementary information Jan.-Jun. 2017 Jan.-Jun. 2016 1. Reconciliation of net profit to cash flows from operating activities: Net profits 73,859,979.29 51,196,211.68 Add: Provision for impairment losses of assets (7,730.22) - Depreciation of fixed assets 4,996,839.58 6,151,059.41 Depreciation and amortization of investment property 241,688.10 289,762.32 Amortization of intangible assets 1,467,600.87 1,675,610.86 Amortization of long-term prepaid expenses 89,810.34 89,810.34 Losses(Profits) on disposal of fixed assets, intangible assets (81,245.01) 60,987.36 and other long-term assets Financial expenses 9,366,137.76 22,414,459.22 Loss (Gains) arising from investments (43,578,170.47) (49,037,666.37) Decrease (Increase) in deferred tax assets - - Decrease(Increase) in inventories 22,917.22 (35,787.10) Decrease (Increase) in operating receivables 9,406,947.17 127,664,188.41 Increase (Decrease) in operating payables (72,146,418.49) (49,194,021.19) Net cash flows from operating activities (16,361,643.86) 111,274,614.94 2. Net changes in cash and cash equivalents: Closing balance of cash 58,389,908.02 190,393,031.45 Less: Opening balance of cash 97,401,657.09 331,615,767.60 Net increase (decrease) in cash (39,011,749.07) (141,222,736.15) - 97 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED SUPPLEMENTARY INFORMATION TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2017 1. BREAKDOWN OF EXTRAORDINARY GAINS AND LOSSES Unit: RMB Item Amounts Description Profit or loss on disposal of non-current assets (448,433.95) Tax refunds or reductions with ultra vires approval or without official - approval documents Government grants recognized in profit or loss (except for grants that are closely related to the Company's business and are in amounts and quantities fixed in 498,801.18 accordance with the national standard) Money lending income earned from non-financial institutions in profit or loss - The excess of attributable fair value of identifiable net assets over the consideration - paid for subsidiaries, associates and joint ventures Profit or loss on exchange of non-monetary assets - Profit or loss on entrusted investments or assets management - Provision of impairment losses for each asset due to force majeure, e.g. acts of God - Profit or loss on debt restructuring - Business restructuring expenses, e.g., expenditure for layoff of employees, - integration expenses, etc. Profit or loss relating to the unfair portion in transactions with unfair - transaction price Net profit or loss of subsidiaries recognized as a result of business combination of enterprises under common control from the beginning of the period up - to the business combination date Profit or loss arising from contingencies other than those related to normal operating - business Profit or loss on changes in the fair value of financial assets and financial liabilities held for trading and investment income on disposal of held-for-trading financial - assets, held-for-trading financial liabilities and available-for-sale financial assets, other than the effective hedging activities relating to normal operating business Reversal of provision for accounts receivable that are tested for impairment - losses individually Profit or loss on entrusted loans - Profit or loss on changes in the fair value of investment properties that are - subsequently measured using the fair value model Effects on profit or loss of one-off adjustment to profit or loss for the period - according to the requirements by tax laws and accounting laws and regulations Custodian fees earned from entrusted operation - Other non-operating income or expenses other than above 1,614,224.70 Other profit or loss that meets the definition of non-recurring profit or loss - Tax effects (334,195.42) Effects of minority interest (after tax) (467,611.90) Total 862,784.61 2. RETURN ON NET ASSETS AND EARNINGS PER SHARE ("EPS") The return on net assets and EPS have been prepared by Shenzhen Chiwan Wharf Co., Ltd in accordance with Information Disclosure and Presentation Rules for Companies Making Public Offering No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised in 2010) issued by China Securities Regulatory Commission. Unit: RMB Weighted average return on net EPS Profits incurred in the current period assets (%) Basic EPS Diluted EPS Net profit for the current period attributable to ordinary shareholders 5.76 0.429 0.429 Net profit attributable to ordinary shareholders after deducting extraordinary gains and 5.74 0.427 0.427 losses
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