Dalian Port PDA : INTERIM REPORT 2016

DALIAN PORT (PDA) COMPANY LIMITED‌‌‌‌‌‌‌‌‌‌‌‌‌

大連港股份有限公司

(A sino-foreign joint stock limited company incorporated in the People's Republic of China)

（於中華人民共和國註冊成立之外商投資股份有限公司） (Stock Code 股份代號 : 2880)

Interim Report 2016 中期報告

Contents

2 Management Discussion and Analysis

24 Other Information

1. Report on Review of Financial Statements

2. Consolidated Balance Sheet (Unaudited)

32 Consolidated Income Statement (Unaudited)

34 Consolidated Cash Flow Statement (Unaudited)

1. Consolidated Statement of Changes in Shareholders' Equity (Unaudited)

2. Company Balance Sheet (Unaudited)

1. Company Income Statement (Unaudited)

2. Company Cash Flow Statement (Unaudited)

1. Company Statement of Changes in Shareholders' Equity (Unaudited)

2. Notes to the Financial Statements

226 Supplementary Information to Financial Statements

Management Discussion and Analysis Summary

Due to signs of stabilization in the global economy, the confidence in financial markets rebounded in the first half of 2016 with rallying bulk commodity prices. However, the real economy remained weak with sluggish market demand. Impacted by the continuing downward pressure on China's economy, the growth in investment, consumption, and import and export trade slowed down. In the first half of the year, China's GDP grew by 6.7% year on year, whereas the total value of import and export fell by 3.3% year on year.

In the first half of the year, cargo throughput handled by China's large-scale ports amounted to 5.8 billion tonnes, a year-on-year increase of 2.2%, and a 0.6 percentage point lower than the same period last year. In particular, cargo throughput handled at coastal ports in China was 4.0 billion tonnes, a year-on-year increase of 1.7% while cargo throughput handled by river ports was 1.79 billion tonnes, a year-on-year increase of 3.2%. Container cargo throughput handled by river ports was 94,272,000 TEU, a growth of 2.4% compared to the same period of last year.

The Group is principally engaged in the provision of oil/liquefied chemical terminal and the related logistics services ("Oil Segment"), container terminal and related logistics services ("Container Segment"), automobile terminal and related logistics services ("Automobile Terminal Segment"), ore terminal and related logistics services ("Ore Segment"), general cargo terminal and related logistics services ("General Cargo Segment"), bulk grain terminal and related logistics services ("Bulk Grain Segment"), passenger and roll-on, roll-off terminal and related logistics services ("Passenger and Ro-Ro Segment") and value-added and ancillary port operations ("Value-added Services Segment").

In the first half of 2016, the general information on the macro-economy and industries relevant to the Group's principal business were set out as follows:

Oil Segment: In the first half of 2016, international crude oil price remained lingering at low levels. China gradually liberalized the importation of crude oil from local oil refineries, leading to faster growth in the import volume of crude oil. In the first half of the year, China imported 180 million tonnes of crude oil, an increase of 14.7% as compared to the same period last year. Container Segment: In the first half of 2016, containers throughput handled by China's large-scale ports amounted to

105.326 million TEU, a year-on-year increase of 2.5%, which was 3.6 percentage points lower than the same period last year. Affected by the macro-economy, port production showed a trend of growth slowdown.

Automobile Terminal Segment: In the first half of 2016, the growth in the volume of automobile production and sales volume in China was higher than that of the same period last year but fell below the expectation at the beginning of the year. Automobiles output in the first half of the year was 12,892,000 vehicles, a year-on-year increase of 6.4%. Sales volume was 12,829,000 vehicles, a year-on-year increase of 8.1%. Ore Segment: In the first half of 2016, there was no substantial improvement in the fundamentals of oversupply for iron ores in China. However, affected by factors such as policies, seasonality and the capital market, prices became more elastic, returning to a rational range after a large rebound for a quarter. During the first half of the year, accumulated iron ore imports in China amounted to 490 million tonnes, a year-on-year increase of 9.1%.

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Dalian Port (PDA) Company Limited Interim Report 2016

Management Discussion and Analysis General Cargo Segment: In the first half of 2016, China's large-scale ports handled a total of 280 million tonnes of coal, basically unchanged year-on-year. The output of the crude steel across China in the first half of 2016 reached a total volume of 390 million tonnes, which represented a year-on-year decrease of 4.9%. Bulk Grain Segment: In the first half of 2016, under the influence of national policies and low demand for bulk grain carriages, the volume of corn transshipment at Liaoning port recorded a huge fall of 51% as compared to the same period last year. Passenger and Ro-Ro Segment: In the first half of 2016, due to the continual diversion of maritime passengers towards high-speed rails and airlines, the total number of passengers during the first half of the year was lower than that of the same period of the previous year.

In the first half of 2016, the Group's major business segments had a stable performance. In terms of throughput, the Group handled a total of approximately 29.264 million tonnes of oil and liquefied chemicals, representing an increase of 16.4% as compared to the same period last year, of which 14.735 million tonnes were imported crude oil, representing a decrease of 1.3% as compared to the same period last year. In the Container Segment, the Group handled approximately

5.092 million TEUs, representing an increase of 1.9% on a year-on-year basis, of which approximately 4.691 million TEUs were handled by the Group at Dalian port, representing an increase of 1.5% on a year-on-year basis. In the Automobile Terminal Segment, the Group handled 228,688 vehicles, representing an increase of 0.7% on a year-on-year basis. In the Ore Segment, the Group handled approximately 6.891 million tonnes, representing a decrease of 16.9% on a year-on-year basis. In the General Cargo Segment, the Group handled approximately 14.531 million tonnes of cargoes, representing a decrease of 4.7% on a year-on-year basis. In the Bulk Grain Segment, the Group handled approximately 2.316 million tonnes of bulk grain, representing an increase of 23.9% on a year-on-year basis. In the Passenger and Ro-Ro Segment, the Group transported approximately 1.444 million passengers, representing a year-on-year decrease of 4.4%, and approximately 680,000 vehicles, representing a year-on-year decrease of 10.1%.

OVERALL ANALYSIS OF RESULTS

In the first half of 2016, the Group's profit attributable to owners of the Company amounted to RMB221,088,963.04, representing a decrease of RMB64,943,594.32 or 22.70% as compared with RMB286,032,557.36 in the first half of 2015. The gross profit of the Bulk Grain Segment, the Ore Segment and General Cargo Segment increased this year with a year-on-year decrease in total financial expenses. However, affected by economic condition and policies, the gross profit of the Oil Segment, the Container Segment, the Passenger and Ro-Ro Segment and the Value-added Services segment decreased year on year. The gains from transfer and holding of financial assets also decreased this year on a year-on-year basis. As a result, the net profit attributable to owners of the Company decreased year on year.

In the first half of 2016, the Group's basic earnings was RMB1.74 cents per share, representing a decrease of 38.03% from RMB2.81 cents per share in the first half of 2015.

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Dalian Port (PDA) Company Limited

Interim Report 2016