2020
INTERIM REPORT
Stock Code: 06198.HK 601298.SH
- For identification purpose only
CONTENTS
Page
2 DEFINITIONS
- COMPANY PROFILE
- CORPORATE INFORMATION
8 MANAGEMENT DISCUSSION AND ANALYSIS
29 OTHER INFORMATION
36 CONSOLIDATED BALANCE SHEET (UNAUDITED)
39 COMPANY BALANCE SHEET (UNAUDITED)
41 CONSOLIDATED INCOME STATEMENT (UNAUDITED)
43 COMPANY INCOME STATEMENT (UNAUDITED)
44 CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
46 COMPANY CASH FLOW STATEMENT (UNAUDITED)
48 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
50 COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
52 NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
239 SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS
DEFINITIONS
The following expressions have the meanings set out below unless the context requires otherwise:
"Articles of Association" | the articles of association of the Company, as amended from time to time |
"Board" | the board of directors of the Company |
"CFS" | container freight station, of which, container freight station at loading ports refers |
to the location designated by carriers for the receiving of cargo to be loaded into | |
containers by the carrier, while container freight station at discharge or destination | |
ports refers to the location designated by carriers for de-vanning of containerized cargo | |
"Company" | Qingdao Port International Co., Ltd. (青島港國際股份有限公司), a joint stock company |
established in the PRC with limited liability on 15 November 2013 | |
"Consolidated Group | companies (including their branches) and their subsidiaries which are consolidated into |
Companies" | in the consolidated financial statements of the Company |
"Corporate Governance Code" | the Corporate Governance Code and Corporate Governance Report as set out in |
Appendix 14 to the Hong Kong Listing Rules | |
"COSCO SHIPPING Group" | China COSCO Shipping Corporation Limited (中國遠洋海運集團有限公司), a company |
established in the PRC with limited liability and the ultimate controlling shareholder of | |
COSCO SHIPPING Ports and Shanghai China Shipping Terminal, holding approximately | |
21% equity interests in the Company as at 30 June 2020 | |
"COSCO SHIPPING Ports" | COSCO SHIPPING Ports Limited (中遠海運港口有限公司), a limited liability company |
established in Bermuda with its shares listed on the Main Board of the Hong Kong | |
Stock Exchange (Stock Code: 1199), holding approximately 20% equity interests in the | |
Company as at 30 June 2020 | |
"Director(s)" | the director(s) of the Company |
"Domestic Shares" | the ordinary domestic share(s) of the Company with a nominal value of RMB1.00 each |
in the share capital of the Company | |
"Gratuitous Transfer | the Gratuitous Transfer Agreement of the Equity Interests in Qingdao Port (Group) |
Agreement" | Co., Ltd. among Shandong Port Group Co., Ltd., the State-owned Assets Supervision & |
Administration Commission of Qingdao Municipal Government, and the State-owned | |
Assets Supervision & Administration Commission of Weihai Municipal Government 《( 山 | |
東省港口集團有限公司與青島市人民政府國有資產監督管理委員會及威海市人民政府國有 | |
資產監督管理委員會關於青島港(集團)有限公司之股權無償劃轉協議》) dated 22 August | |
2019 | |
"Group", "we", "our" or "us" | the Company and its branches and subsidiaries; when references are made to |
operational data such as throughput, including joint ventures and associates of the | |
Company |
Interim Report 2020 | 2 |
DEFINITIONS
"Haiwan Liquid Chemical" | Qingdao Haiwan Liquid Chemical Port Operation Co., Ltd. (青島海灣液體化工港務有 |
限公司), a joint venture in which the Company holds 50% equity interests, which is | |
mainly engaged in the business of providing liquid bulk handling and ancillary services | |
"Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
"Hong Kong Stock Exchange" | The Stock Exchange of Hong Kong Limited |
"Huaneng Qingdao" | Huaneng Qingdao Port Operation Co., Ltd. (華能青島港務有限公司), a joint venture |
in which the Company holds 49% equity interests, which is mainly engaged in the | |
business of dry bulk cargo and break bulk cargo handling and ancillary services | |
"Hong Kong Listing Rules" | the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong |
Limited | |
"Model Code" | the Model Code for Securities Transactions by Directors of Listed Issuers as set out in |
Appendix 10 to the Hong Kong Listing Rules | |
"New H Shares Placing" | the issue of the 243,000,000 new H shares of the Company by way of placing pursuant |
to the special mandate granted by the 2017 first extraordinary general meeting, the | |
2017 first domestic shareholders' class meeting and the 2017 first H shareholders' class | |
meeting of the Company held on 10 March 2017 | |
"PRC" or "China" | the People's Republic of China, and for the purpose of this report, excluding Hong |
Kong, Macau and Taiwan | |
"QDOT" | Qingdao Port Dongjiakou Ore Terminal Co., Ltd. (青島港董家口礦石碼頭有限公司), |
a joint venture in which the Company holds 30% equity interests, which is mainly | |
engaged in the business of providing ore, coal and other cargo handling and ancillary | |
services | |
"QDP" | Qingdao Port (Group) Co., Ltd. (青島港(集團)有限公司), the controlling shareholder |
of the Company, holding approximately 54% equity interests in the Company as at 30 | |
June 2020 | |
"Qingdao Finance" | Qingdao Port Finance Co., Ltd. (青島港財務有限責任公司), a subsidiary jointly |
established by the Company (holding 70% equity interests) and QDP (holding 30% | |
equity interests), which is mainly engaged in the provision of depository services, | |
credit granting services, financial and financing advisory services, credit assurance | |
services and relevant consulting and agency services; trade receivables collection and | |
payment services; and internal fund transfer and settlement services formulation of | |
proposals for the corresponding settlement and clearing services and other financial | |
services to QDP and its member companies |
3 | Qingdao Port International Co., Ltd. |
DEFINITIONS
"Qingdao SASAC" | the State-owned Assets Supervision & Administration Commission of Qingdao |
Municipal Government (青島市人民政府國有資產監督管理委員會) | |
"Qingdao Shihua" | Qingdao Shihua Crude Oil Terminal Co., Ltd. (青島實華原油碼頭有限公司), a joint |
venture in which the Company holds 50% equity interests, which is mainly engaged in | |
the business of providing liquid bulk handling and ancillary services | |
"Qingwei Container" | Weihai Qingwei Container Terminal Co., Ltd. (威海青威集裝箱碼頭有限公司), a joint |
venture in which the Company holds 49% equity interests, which is mainly engaged in | |
the business of providing container handling and ancillary services | |
"QQCT" | Qingdao Qianwan Container Terminal Co., Ltd. (青島前灣集裝箱碼頭有限責任公司), a |
joint venture in which the Company holds 51% equity interests (it is not consolidated | |
into consolidated financial statements of the Company as the Company does not | |
have control over it), which is mainly engaged in the business of providing container | |
handling and ancillary services | |
"SFO" | Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) |
"Shandong Free Trade Zone" | China (Shandong) Pilot Free Trade Zone |
"Shandong Port Group" | Shandong Port Group Co., Ltd. (山東省港口集團有限公司) |
"Shanghai China Shipping | Shanghai China Shipping Terminal Development Co., Ltd. (上海中海碼頭發展有限公司), |
Terminal" | a company established in the PRC and a wholly-owned subsidiary of COSCO SHIPPING |
Ports | |
"Supervisor(s)" | the supervisor(s) of the Company |
"Supervisory Committee" | supervisory committee of the Company |
"TEU" | an abbreviation of Twenty-Foot Equivalent Unit, an international measuring unit with |
the standard a container with a length of 20 feet, a width of 8 feet and a height of 8 | |
feet and 6 inches, also known as the international unit of standard container | |
"Weihai SASAC" | the State-owned Assets Supervision & Administration Commission of Weihai Municipal |
Government (威海市人民政府國有資產監督管理委員會) | |
"West United" | Qingdao Qianwan West Port United Terminal Co., Ltd. (青島前灣西港聯合碼頭有限 |
責任公司), a joint venture in which the Company holds 51% equity interests (it is not | |
consolidated into consolidated financial statements of the Company as the Company | |
does not have control over it), and which is mainly engaged in the business of | |
providing dry bulk cargo and break bulk cargo handling and ancillary services |
- The Chinese name(s) of the PRC entities have been translated into English in this interim report for reference only. In the event of any discrepancies between the Chinese names of the PRC entities and their respective English translations, the Chinese version shall prevail.
- Certain amounts and percentage figures included in this report have been subject to rounding.
Interim Report 2020 | 4 |
COMPANY PROFILE
The Port of Qingdao commenced operations in 1892 and is one of the largest comprehensive ports in the world. It occupies a central position among ports in Northeast Asia and is an important hub of international trade in the West Pacific.
The Company was established on 15 November 2013. It was listed on the Main Board of the Hong Kong Stock Exchange on 6 June 2014 and was listed on the Main Board of the Shanghai Stock Exchange on 21 January 2019.
The Group is the primary operator of the Port of Qingdao and operates four port areas in Qingdao, including Qingdao Qianwan Port Area, Huangdao Oil Port Area, Dongjiakou Port Area and Dagang Port Area. It is mainly engaged in the handling of different types of cargoes such as container, metal ore, coal and crude oil and the provision of ancillary services, logistics and port value-added services, port ancillary services and financial services.
As of 30 June 2020, the Group operated 86 berths at the Port of Qingdao, which included 56 special berths dedicated to handling a single type of cargo and 30 multi-purpose berths capable of handling metal ore, coal and other general cargo.
Leveraging on the natural deep-water capacity and industry-leading facilities and equipment, services and management, the Group can accommodate the world's largest container vessels, iron ore vessels and oil tankers. The Group also possesses world-leading stevedoring efficiency, with the single-machine average operating rate of 44.6 units per hour for fully automatic container terminal and the single-machine loading and unloading rate continuing to maintain at 3,200 tons per hour for iron ore.
5 | Qingdao Port International Co., Ltd. |
CORPORATE INFORMATION
CHINESE NAME OF THE COMPANY | TELEPHONE |
青島港國際股份有限公司 | 86-532-82982133 |
ENGLISH NAME OF THE COMPANY | FACSIMILE |
Qingdao Port International Co., Ltd. | 86-532-82822878 |
LEGAL REPRESENTATIVE | |
Mr. JIA Funing | qggj@qdport.com |
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG
- Headquarters in the PRC: No. 12 Jingba Road Huangdao District, Qingdao Shandong Province, PRC
-
Principal Place of Business in Hong Kong: 31/F, Tower Two, Times Square
1 Matheson Street, Causeway Bay Hong Kong
DATES OF LISTING
6 June 2014 (H shares)
21 January 2019 (A shares)
PLACES OF LISTING
Main Board of The Stock Exchange of Hong Kong Limited (H shares)
Main Board of the Shanghai Stock Exchange (A shares)
ABBREVIATED CHINESE STOCK NAME
青島港 (applied to both H shares and A shares)
ABBREVIATED ENGLISH STOCK NAME
Qingdao Port (only applied to H shares)
STOCK CODES
06198 (H shares)
601298 (A shares)
WEBSITE
http://www.qingdao-port.com
BOARD OF DIRECTORS
-
Executive Directors
Mr. JIA Funing (Chairman)
Mr. WANG Xinze (General Manager) - Non-executiveDirectors
Mr. SU Jianguang (Vice Chairman) Mr. FENG Boming
Mr. WANG Jun Ms. WANG Fuling - Independent Non-executive Directors
Ms. LI Yan Mr. JIANG Min Mr. LAI Kwok Ho
Interim Report 2020 | 6 |
CORPORATE INFORMATION
SUPERVISORY COMMITTEE
Mr. ZHANG Qingcai (Chairman)
Mr. WANG Yaping
Mr. YANG Qiulin
Mr. LIU Shuiguo
Mr. XIA Xiliang
Ms. WANG Xiaoyan
JOINT COMPANY SECRETARIES
Mr. LIU Yongxia (appointed on 20 July 2020)
Ms. LEUNG Suet Wing (appointed on 20 July 2020) Mr. CHEN Fuxiang (resigned on 20 July 2020)
AUTHORISED REPRESENTATIVES
Mr. JIA Funing (appointed on 10 June 2020) Mr. LIU Yongxia (appointed on 20 July 2020) Mr. LI Fengli (resigned on 10 June 2020)
Mr. CHEN Fuxiang (resigned on 20 July 2020)
-
Remuneration Committee
Mr. LAI Kwok Ho (Chairman) Mr. SU Jianguang
Ms. LI Yan
H SHARE REGISTRAR
Computershare Hong Kong Investor Services Limited
Shops 1712-1716
17th Floor, Hopewell Center
183 Queen's Road East, Wanchai
Hong Kong
LEGAL ADVISERS
-
As to Hong Kong law
Freshfields Bruckhaus Deringer 55th Floor, One Island East Taikoo Place, Quarry Bay Hong Kong
SPECIAL COMMITTEES OF THE BOARD | (2) As to PRC law | |
(1) Strategy and Development Committee | Jia Yuan Law Offices | |
Mr. JIA Funing (Chairman) | F408 Ocean Plaza | |
158 Fuxing Men Nei Avenue | ||
Mr. WANG Xinze | ||
Xicheng District | ||
Mr. SU Jianguang | ||
Beijing, PRC | ||
Mr. FENG Boming | ||
Mr. WANG Jun | PRINCIPAL BANKERS | |
Ms. WANG Fuling | ||
Mr. JIANG Min | Bank of Qingdao Co., Ltd. | |
(2) | Audit Committee | Bank of Communications Co., Ltd. |
Ms. LI Yan (Chairman) | ||
Ms. WANG Fuling | ||
Mr. LAI Kwok Ho | ||
(3) | Nomination Committee | |
Mr. JIANG Min (Chairman) |
Mr. JIA Funing
Mr. LAI Kwok Ho
7 | Qingdao Port International Co., Ltd. |
MANAGEMENT DISCUSSION AND ANALYSIS
- INTERNATIONAL AND DOMESTIC SITUATION
-
General Situation
In the first half of 2020, the COVID-19 pandemic has made a huge impact on the global economy. The world economy is in deep recession with the international trade shrinking sharply, and the foreign trading environment was severe and complex. The Chinese government responded proactively to the changes in the external environment, and coordinated the epidemic prevention and control and the economic and social development. By virtue of a series of policies such as ensuring "six priorities" (ensuring stability in employment, financial operations, foreign trade, foreign investment, domestic investment, and expectations) and stability in six areas (ensuring security in job, basic people's livelihood, operations of market entities, food and energy, stable industrial and supply chains, and the normal functioning of primary-level governments), the operation and production of enterprises comprehensively recovered. The economy of China displayed a trend from declining to rising with steady recovery. In the first half of 2020, the Gross Domestic Product (GDP) of China decreased by 1.6% (with a decrease of 6.8% in the first quarter and an increase of 3.2% in the second quarter) as compared with the same period in the prior year. The total imports and exports of cargo from January to June 2020 was better than expected, decreasing by 3.2% as compared with the same period in the prior year, and the declining rate was narrowed by 1.7 percentage points as compared with that of the first five months of 2020 (Source: National Bureau of Statistics of the PRC). - Operation of the Port Industry
Affected by the COVID-19 pandemic, in the first half of 2020, the cargo throughput of the coastal ports in China increased by 0.1% as compared to the same period in the prior year, among which, the container throughput decreased by 5.0% as compared to the same period in the prior year. In the first half of 2020, both the cargo throughput and container throughput of the Port of Qingdao still ranked fifth among the national coastal ports, and the foreign trade throughput continued to rank second among the coastal ports of China and first among northern ports of China (Source: Ministry of Transport of the PRC).
-
General Situation
- REVIEW OF BUSINESS AND FINANCIAL RESULTS OF THE GROUP
1. Overall Review
Since the beginning of this year, the Group has actively responded to the severe challenges posed by the COVID-19 pandemic, coordinated the epidemic prevention and control and the production and operation of the port, and made every effort to ensure the stability of the supply chain and industrial chain. In the marine direction, the Group teamed up with the shipping companies to vigorously stabilize the shipping schedule, open new shipping routes, and expand transit business. In the land direction, the Group strengthened the layout of inland ports and sea-rail intermodal transport, deepened the supply-side structural reform of port services, took full advantage of hardware facilities and value-added service resources, continuously optimized port functions, and promoted both quantity and profitability of the port stevedoring businesses, as a result of which the Group's comprehensive competitiveness and influence in the industry were enhanced continuously and the Group's operating results kept a steady growth.
For the six months ended 30 June 2020, the cargo throughput of the Group together with its joint ventures and associates (without taking into account the respective shareholding percentages the Company holds in those joint ventures and associates) reached 263.03 million tons, representing an increase of 4.3% as compared to the same period in the prior year, among which, the container throughput amounted to 10.34 million TEUs, representing an increase of 0.4% as compared to the same period in the prior year.
Interim Report 2020 | 8 |
MANAGEMENT DISCUSSION AND ANALYSIS
The details were as follows:
Comparison of Major Operating Indicators
Unit: RMB' 000
8000000 | ||
7000000 | 6,072,103 | |
6000000 | 5,999,782 | |
5000000 | ||
4000000 | ||
3000000 | 2,327,338 | 2,012,822 |
2,079,061 | 2,008,021 | |
2000000 | ||
668,010 | ||
1000000 | 714,287 | |
0 |
Revenue | Gross prot | Investment income from | Net prot attributable to | |||
associates and joint ventures | shareholders of the Company | |||||
For the six months ended 30 June 2020 | For the six months ended 30 June 2019 | |||||
For the six months ended 30 June 2020, the Group recorded a revenue of RMB6,072 million, representing an increase of RMB72 million, or 1.2%, as compared to the same period in the prior year, mainly due to the increase in the revenue from the liquid bulk handling and ancillary services segment and metal ore, coal and other cargo handling and ancillary services.
For the six months ended 30 June 2020, the Group recorded a gross profit of RMB2,327 million, representing an increase of RMB248 million, or 11.9%, as compared to the same period in the prior year, mainly due to the increase in the gross profit from the liquid bulk handling and ancillary services segment.
For the six months ended 30 June 2020, the Group's investment income from joint ventures and associates amounted to RMB668 million, representing a decrease of RMB46 million, or 6.4%, as compared to the same period in the prior year, mainly due to the decrease in the investment income from the liquid bulk handling and ancillary services segment and metal ore, coal and other cargo handling and ancillary services segment.
For the six months ended 30 June 2020, the general and administrative expenses of the Group was RMB220 million, representing a decrease of RMB42 million, or 16.0%, as compared to the same period in the prior year, mainly due to the reduction of employee benefits caused by the preferential policy of social insurance fee reduction and exemption during the COVID-19 pandemic, and A-share listing related expenses occurred in the same period in the prior year.
9 | Qingdao Port International Co., Ltd. |
MANAGEMENT DISCUSSION AND ANALYSIS
For the six months ended 30 June 2020, the Group recorded a net profit attributable to shareholders of the Company of RMB2,013 million, representing an increase of RMB5 million, or 0.2%, as compared to the same period in the prior year.
2. Segment Review
The business segment results (total profit) of the Group were listed as follows:
Proportion of Each Business Segment Results
Unit: RMB' 000 | |||||||||
For the six months ended 30 June | |||||||||
2020 | 2019 | ||||||||
Business Segments | Amount | Proportion | Amount | Proportion | Change | ||||
Container handling and ancillary services | 489,768 | 17.0% | 507,532 | 18.6% | -3.5% | ||||
Metal ore, coal and other cargo | |||||||||
handling and ancillary services | 249,660 | 8.7% | 276,241 | 10.2% | -9.6% | ||||
Liquid bulk handling and ancillary services | 880,640 | 30.7% | 630,288 | 23.1% | 39.7% | ||||
Logistics and port value-added services | 735,664 | 25.6% | 773,542 | 28.4% | -4.9% | ||||
Port ancillary services | 285,632 | 9.9% | 250,479 | 9.2% | 14.0% | ||||
Financial services | 231,827 | 8.1% | 286,843 | 10.5% | -19.2% | ||||
Total results before inter-segment | |||||||||
elimination | 2,873,191 | 100.0% | 2,724,925 | 100.0% | 5.4% | ||||
Interim Report 2020 10
MANAGEMENT DISCUSSION AND ANALYSIS
Comparison of Each Business Segment Results
Unit: RMB' 000 | |||
1,000,000 | |||
900,000 | 880,640 | ||
800,000 | 773,542 | ||
735,664 | |||
700,000 | 630,288 | ||
600,000 | 507,532 | ||
500,000 | 489,768 | ||
400,000 | 276,241 | 285,632 | 286,843 |
300,000 | 249,660 | 250,479 | 231,827 |
200,000 | |||
100,000 | |||
0 |
Container handling and | Metal ore, coal and | Liquid bulk handling and | Logistics and | Port ancillary services | Financial s rvices |
ancillary services | other cargo handling and | ancillary services | port value-added services | ||
ancillary services |
For the six months ended 30 June 2020 | For the six months ended 30 June 2019 | |
11 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
Breakdown of results of each business segment for the six months ended 30 June 2020
8.1%
9.9%
17.0%
25.6% | 8.7% | ||||||||
30.7% | |||||||||
Interim Report 2020 12
MANAGEMENT DISCUSSION AND ANALYSIS
The business segment results are as follows:
- Container handling and ancillary services
Unit: RMB' 000 | |||||
For the six months | |||||
ended 30 June | |||||
Amount | Percentage | ||||
Item | 2020 | 2019 | Changed | Changed | |
Consolidated Group Companies | |||||
Revenue | 92,564 | 106,668 | -14,104 | -13.2% | |
Cost of sales | 34,879 | 36,610 | -1,731 | -4.7% | |
Gross profit | 57,685 | 70,058 | -12,373 | -17.7% | |
Profit of Consolidated Group | |||||
Companies | 37,727 | 50,594 | -12,867 | -25.4% | |
Joint Ventures | |||||
Revenue | 1,990,328 | 2,011,604 | -21,276 | -1.1% | |
Cost of sales | 727,400 | 750,151 | -22,751 | -3.0% | |
Share of profit of joint ventures | 452,041 | 456,938 | -4,897 | -1.1% | |
Segment result | 489,768 | 507,532 | -17,764 | -3.5% |
Note: Amount of revenue and cost of sales of joint ventures represents the total amount of revenue and cost of sales in the financial information of joint ventures of the Company such as QQCT, Qingwei Container and others, without taking into account the respective shareholding percentages the Company has in those joint ventures. See "Summarized Financial Information of Joint Ventures" for more details on QQCT's financial information.
For the six months ended 30 June 2020, the Group actively innovated in its marketing model and expanded the international transshipment channel to accelerate the construction of the "International Hub Port in Northeast Asia". The main breakthroughs achieved were as follows:
- The Group actively responded to the strike of the COVID-19 pandemic on the global logistics chain and brought into full play its full industry chain service advantages consisting of terminals and logistics, as a result of which the container throughput grew against the trend, fully ensuring the regional industry chain and supply chain stable and smooth; and
- The Group further implemented the headquarters marketing strategy for shipping companies, established the new ecosystem for cooperation with global large shipping companies, and attracted shipping companies to increase shipping routes. 15 new container routes were added and the transit shipment volume increased by over 10% as compared to the same period in the prior year. The Group continued to expand the development pattern of combination of the main and branch line networks and accelerate the transformation and upgrading from a portal port to a hub port.
13 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
For the six months ended 30 June 2020, the revenue of container handling and ancillary services was RMB93 million, representing a decrease of RMB14 million, or 13.2%, as compared to the same period in the prior year; the segment result was RMB490 million, representing a decrease of RMB18 million, or 3.5%, as compared to the same period in the prior year, which was mainly due to the decrease of RMB13 million in the profit of Consolidated Group Companies as compared to the same period in the prior year. The main reason for the decrease in the profit of Consolidated Group Companies was the reduction of the charging standards for harbor dues on cargo and port facility security fees in accordance with the national policies in response to the impact of the COVID-19 pandemic.
- Metal ore, coal and other cargo handling and ancillary services
Unit: RMB' 000 | ||||
For the six months | ||||
ended 30 June | ||||
Amount | Percentage | |||
Item | 2020 | 2019 | Changed | Changed |
Consolidated Group Companies | ||||
Revenue | 1,493,553 | 1,364,330 | 129,223 | 9.5% |
Cost of sales | 1,163,028 | 984,171 | 178,857 | 18.2% |
Gross profit | 330,525 | 380,159 | -49,634 | -13.1% |
Profit of Consolidated Group | ||||
Companies | 241,566 | 242,938 | -1,372 | -0.6% |
Joint Ventures | ||||
Revenue | 837,072 | 846,758 | -9,686 | -1.1% |
Cost of sales | 718,328 | 616,772 | 101,556 | 16.5% |
Share of profit of joint ventures | 8,094 | 33,303 | -25,209 | -75.7% |
Segment result | 249,660 | 276,241 | -26,581 | -9.6% |
Note: Amount of revenue and cost of sales of joint ventures represents the total amount of revenue and cost of sales in the financial information of joint ventures of the Company such as QDOT and West United without taking into account the respective shareholding percentages the Company has in those joint ventures.
For the six months ended 30 June 2020, the Group innovated the marketing, deepened strategic cooperation with its key customers, extended its whole-process logistics and value-added services, and proactively expanded new hinterland markets. The main breakthroughs achieved were as follows:
- The Group continued to expand the ore blending business, with the cargo resource arrival volumes of ore blending from Vale increased by 13% as compared to the same period in the prior year;
Interim Report 2020 14
MANAGEMENT DISCUSSION AND ANALYSIS
- The Group deepened strategic cooperation with Vale and world-renowned steel mills in Japan and South Korea to optimize the supply chain logistics system of the international bulk resources commodities, and built up the international ore transit network and distribution center in Northeast Asia, with the international transfer volume of iron ore in the first half of the year increased by 330% as compared to the same period in the prior year; and
- In June 2020, the Dongjiakou Port Area of the Group officially passed the inspection, obtained nation-level acceptance and was officially open to the foreign shipping companies, which further released the port capacity and provided strong guarantee for market expanding.
For the six months ended 30 June 2020, the revenue of metal ore, coal and other cargo handling and ancillary services was RMB1,494 million, representing an increase of RMB129 million, or 9.5%, as compared to the same period in the prior year, which was mainly due to revenue increase resulting from the whole process logistics transportation business; the segment result was RMB250 million, representing a decrease of RMB27 million, or 9.6%, as compared to the same period in the prior year, which was mainly due to a decrease of RMB25 million in the share of profit of joint ventures as compared to the same period in the prior year. The main reason for the decrease in the share of profit of joint ventures was the cost increase in railway transport volume and corresponding operating costs due to the joint ventures responding to the impact of the change of transportation method "from highway to railway", and the reduction or waiving of the yard storage fees for customers during the COVID-19 pandemic.
- Liquid bulk handling and ancillary services
Unit: RMB' 000 | |||||
For the six months | |||||
ended 30 June | |||||
Amount | Percentage | ||||
Item | 2020 | 2019 | Changed | Changed | |
Consolidated Group Companies | |||||
Revenue | 1,037,666 | 690,917 | 346,749 | 50.2% | |
Cost of sales | 234,046 | 181,942 | 52,104 | 28.6% | |
Gross profit | 803,620 | 508,975 | 294,645 | 57.9% | |
Profit of Consolidated Group | |||||
Companies | 710,494 | 423,043 | 287,451 | 67.9% | |
Joint Ventures | |||||
Revenue | 798,129 | 862,885 | -64,756 | -7.5% | |
Cost of sales | 319,729 | 300,356 | 19,373 | 6.5% | |
Share of profit of joint ventures | 170,146 | 207,245 | -37,099 | -17.9% | |
Segment result | 880,640 | 630,288 | 250,352 | 39.7% |
Note: Amount of revenue and cost of sales of joint ventures represents the total amount of revenue and cost of sales in the financial information of joint ventures of the Company such as Qingdao Shihua and Haiwan Liquid Chemical without taking into account the shareholding percentage of the Company has in those joint ventures. See "Summarized Financial Information of Joint Ventures" for more details on Qingdao Shihua's financial information.
15 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
For the six months ended 30 June 2020, the Group strengthened policy study, persisted in business innovation, and seized opportunity for the continuous growth of crude oil imports benefiting from the low oil price, released the capacities of resources involving terminals, tank areas and oil pipelines. The main breakthroughs achieved were as follows:
- The Group enhanced the organization of production and improved the efficiency of the "Four Distribution Ways" including railway, pipeline, highway and waterway, with a high quality and efficiency in large-sized vessels stevedoring, and the distribution volume increased by 11% as compared to the same period in the prior year; and
- The Group took full advantage of the policies of the Shandong Free Trade Zone, innovated business models to meet customer requirements, completed the first bonded crude oil blending business in the port of Qingdao in China, completed a pilot program for oil supply at outer anchorage, and opened up the channel of tax rebate of domestic low-sulfur fuel export and the supply of bonded fuel for vessels, with the stevedoring volume of fuel for vessels in the first half of the year increased by 33.9% as compared to the same period in the prior year.
For the six months ended 30 June 2020, the revenue of liquid bulk handling and ancillary services was RMB1,038 million, representing an increase of RMB347 million, or 50.2%, as compared to the same period in the prior year, which was mainly due to sharply increased revenue of pipeline transportation and storage driven by the Group taking advantage of the completion and utilization of the Dongjiakou Port - Weifang - Central and Northern Shandong oil pipeline, its branch lines, and the auxiliary tanks. The share of profit of joint ventures amounted to RMB170 million, representing a decrease of RMB37 million, or 17.9%, as compared to the same period in the prior year, which was mainly due to the reduction of the charging standards for harbor dues on cargo and port facility security fees in accordance with national policies in response to the impact of the COVID-19 pandemic, and the proportion of high-rate business decreased as compared to the same period in the prior year. The segment result was RMB881 million, representing an increase of RMB250 million, or 39.7%, as compared to the same period in the prior year, which mainly benefiting from the increase in the volume of the pipeline transportation and ancillary tank storage for the crude oil.
Interim Report 2020 16
MANAGEMENT DISCUSSION AND ANALYSIS
- Logistics and port value-added services
Unit: RMB' 000 | |||||
For the six months | |||||
ended 30 June | |||||
Amount | Percentage | ||||
Item | 2020 | 2019 | Changed | Changed | |
Consolidated Group Companies | |||||
Revenue | 2,184,895 | 2,441,081 | -256,186 | -10.5% | |
Cost of sales | 1,439,044 | 1,673,820 | -234,776 | -14.0% | |
Gross profit | 745,851 | 767,261 | -21,410 | -2.8% | |
Profit of Consolidated Group | |||||
Companies | 699,983 | 741,954 | -41,971 | -5.7% | |
Joint ventures and associates | |||||
Revenue | 364,646 | 361,306 | 3,340 | 0.9% | |
Cost of sales | 274,665 | 266,629 | 8,036 | 3.0% | |
Share of profit of joint ventures | |||||
and associates | 35,681 | 31,588 | 4,093 | 13.0% | |
Segment result | 735,664 | 773,542 | -37,878 | -4.9% |
Note: Amount of revenue and cost of sales of joint ventures and associates represents the total amount of revenue and cost of sales in the financial information of joint ventures and associates of the Company providing logistics and port value-added services, without taking into account the respective shareholding percentages the Company has in those joint ventures and associates.
For the six months ended 30 June 2020, the Group vigorously developed the modern logistics business, continued to improve the port functions, firmly promoted the deep integration of "terminal + logistics", accelerated the construction of a value-added service system incorporating terminal stevedoring, transportation, CFS, agency, bonded warehouse, storage, inspection, and other services, and expanded the modern logistics industry clusters. The main breakthroughs achieved were as follows:
- The Group continued to strengthen the layout of inland ports and sea-rail intermodal transport and pushed forward the implementation of the promotion results in Xi'an, Lanzhou, Urumqi and other regions. In the first half of this year, two inland ports and five sea-rail intermodal lines were newly opened; and
- The Group expanded and strengthened its bonded warehousing business, with a maximum inventory exceeding 450,000 tons since 2020, becoming the largest warehousing center at the port of Qingdao.
17 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
For the six months ended 30 June 2020, the revenue of logistics and port value-added services business amounted to RMB2,185 million, representing a decrease of RMB256 million, or 10.5%, as compared to the same period in the prior year, which was mainly due to the substantial decrease in revenue from highway transportation of liquid bulk cargo resulting from the opening of the Dongjiakou Port - Weifang
- Central and Northern Shandong oil pipeline and its branch lines; the segment result was RMB736 million, representing a decrease of RMB38 million, or 4.9%, as compared to the same period in the prior year, mainly due to the decrease in profit from agency, CFS, warehousing and other businesses affected by the COVID-19 pandemic.
- Port ancillary services
Unit: RMB' 000 | ||||
For the six months | ||||
ended 30 June | ||||
Amount | Percentage | |||
Item | 2020 | 2019 | Changed | Changed |
Consolidated Group Companies | ||||
Revenue | 1,259,522 | 1,392,818 | -133,296 | -9.6% |
Cost of sales | 873,420 | 1,043,666 | -170,246 | -16.3% |
Gross profit | 386,102 | 349,152 | 36,950 | 10.6% |
Profit of Consolidated Group | ||||
Companies | 285,317 | 249,946 | 35,371 | 14.2% |
A joint venture | ||||
Revenue | 1,763 | 5,263 | -3,500 | -66.5% |
Cost of sales | 1,400 | 3,351 | -1,951 | -58.2% |
Share of profit of a joint venture | 315 | 533 | -218 | -40.9% |
Segment result | 285,632 | 250,479 | 35,153 | 14.0% |
Note: Amounts of revenue and cost of sales of a joint venture represent the amount of those in the financial statement of Ocean Bridge International Ports Management Co., Ltd. (海路國際港口運營管理有限公司), without taking into
account of the shareholding percentage held by the Company in the joint venture.
For the six months ended 30 June 2020, the revenue of port ancillary services amounted to RMB1,260 million, representing a decrease of RMB133 million, or 9.6%, as compared to the same period in the prior year, which was mainly due to the combined effects that the construction revenue of the current period decreased as compared to the same period in the prior year due to the gradual completion of Phase II of automated container terminal and other projects, and the port machinery construction revenue of the current period increased as compared to the same period in the prior year profiting from the port machinery upgrading of joint ventures and the Group's active expansion of external customers. The segment results amounted to RMB286 million, representing an increase of RMB35 million, or 14.0%, as compared to the same period in the prior year, mainly due to an increase in the profit of power supply, port machinery construction, information technology, and other businesses.
Interim Report 2020 18
MANAGEMENT DISCUSSION AND ANALYSIS
(6) Financial services
Unit: RMB' 000 | |||||
For the six months | |||||
ended 30 June | |||||
Amount | Percentage | ||||
Item | 2020 | 2019 | Changed | Changed | |
Consolidated Group Companies | |||||
Revenue | 154,348 | 114,287 | 40,061 | 35.1% | |
Cost of sales | 31,695 | 25,636 | 6,059 | 23.6% | |
Gross profit | 122,653 | 88,651 | 34,002 | 38.4% | |
Profit of Consolidated Group | |||||
Companies | 225,536 | 281,813 | -56,277 | -20.0% | |
An Associate | |||||
Revenue | 404,878 | 315,878 | 89,000 | 28.2% | |
Cost of sales | 170,743 | 156,119 | 14,624 | 9.4% | |
Share of profit of an associate | 6,291 | 5,030 | 1,261 | 25.1% | |
Segment result | 231,827 | 286,843 | -55,016 | -19.2% |
Note: Amounts of revenue and cost of sales of an associate represent the amount of those in the financial statement of Qingdao Qingyin Financial Leasing Co., Ltd. (青島青銀金融租賃有限公司), without taking into account of the
shareholding percentage held by the Company in the associate.
The Group innovated in finance and capital service functions and continuously developed new types of businesses to meet the diversified financing needs of its member units. The Group optimized its business structure, appropriately reduced the investment proportion of medium and high-risk products, increased the investment proportion of standardized products, diversified investment risks, and deepened the integration of industry and finance to provide upstream customers with financing services so as to increase customer stickiness and boost the development of the main businesses of terminals. The Group has achieved the transformation of development mode orienting from scale to high quality.
For the six months ended 30 June 2020, the segment result from financial services amounted to RMB232 million, representing a decrease of RMB55 million, or 19.2%, as compared to the same period in the prior year, among which, the profit of Consolidated Group Companies was RMB226 million, representing a decrease of RMB56 million, or 20.0%, as compared to the same period in the prior year, which was mainly due to the increased provision for impairment resulting from the increase in the scale of loans provided by Qingdao Finance, and a decrease in average interest rate of Qingdao Finance's interbank deposits.
19 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
3. Financial Position Analysis
Unit: RMB' 000 | ||||
As at | As at | |||
30 June | 31 December | Amount | Percentage | |
Item | 2020 | 2019 | Changed | Changed |
Cash at bank and on hand | 9,835,276 | 6,846,400 | 2,988,876 | 43.7% |
Other receivables | 3,716,563 | 1,825,685 | 1,890,878 | 103.6% |
Contract assets | 73,676 | 194,623 | -120,947 | -62.1% |
Current portion of non-current assets | 68,940 | 445,754 | -376,814 | -84.5% |
Other current assets | 1,477,973 | 6,214,206 | -4,736,233 | -76.2% |
Long-term receivables | 2,919,249 | 1,528,632 | 1,390,617 | 91.0% |
Other non-current assets | 1,394,319 | 599,314 | 795,005 | 132.7% |
Other payables | 9,855,548 | 7,200,532 | 2,655,016 | 36.9% |
Current portion of non-current liabilities | 2,307,286 | 235,634 | 2,071,652 | 879.2% |
Bonds payable | - | 2,116,900 | -2,116,900 | N/A |
As at 30 June 2020, the Group's cash at bank and on hand increased by RMB2,989 million, or 43.7%, as compared to the beginning of this year, mainly due to the increase of RMB1,049 million from operating activities and the increase of RMB1,450 million from fund-raising activities including absorbing deposits from related parties.
As at 30 June 2020, the Group's other receivables increased by RMB1,891 million, or 103.6%, as compared to the beginning of this year, mainly due to the increase of RMB1,160 million in the Group's loans to related parties and the Group's recognition of dividends of RMB827 million due from joint ventures.
As at 30 June 2020, the Group's contract assets decreased by RMB121 million, or 62.1%, as compared to the beginning of this year, mainly due to the conversion of contract assets into accounts receivable resulting from the completion of Phase II of the automated container terminal project.
As at 30 June 2020, the Group's current portion of non-current assets decreased by RMB377 million, or 84.5%, as compared to the beginning of this year, mainly due to the decrease of loans due within one year provided by the Group to related parties.
As at 30 June 2020, the Group's other current assets decreased by RMB4,736 million, or 76.2%, as compared to the beginning of this year, mainly due to the decrease of RMB4,934 million in interbank certificates of deposit purchased by Qingdao Finance and financial assets purchased under resale agreements by Qingdao Finance.
As at 30 June 2020, the Group's long-term receivables increased by RMB1,391 million, or 91.0%, as compared to the beginning of this year, mainly due to the combined effects of the increase of RMB865 million in financial leasing services and the increase of RMB170 million in loans provided by Qingdao Finance to related parties.
Interim Report 2020 20
MANAGEMENT DISCUSSION AND ANALYSIS
As at 30 June 2020, the Group's other non-current assets increased by RMB795 million, or 132.7%, as compared to the beginning of this year, mainly due to the increase of RMB281 million in the Group's advance payment for equity investment, and the increase of RMB478 million in advance payments for projects including crude oil commercial reserve tanks.
As at 30 June 2020, the Group's other payables increased by RMB2,655 million, or 36.9%, as compared to the beginning of this year, mainly due to the increase of RMB1,566 million in deposits absorbed by Qingdao Finance, and the increase of RMB1,305 million in unpaid dividends that has been declared by the parent company and the subsidiaries as of 30 June 2020.
As at 30 June 2020, the Group's current portion of non-current liabilities increased by RMB2,072 million and the Group's bonds payable decreased by RMB2,117 million, as compared to the beginning of this year, mainly due to that the corporate bonds issued by the Company will become mature in the first half of 2021 so as that the bonds payable of RMB2,117 million should be reclassified to the current portion of non-current liabilities.
4. Cash Flow Analysis
For the six months ended 30 June 2020, the Group's net cash inflow amounted to RMB2,361 million, among which:
- Net cash inflow from operating activities amounted to RMB1,049 million, mainly derived from the operating profit of the Consolidated Group Companies;
- Net cash outflow from investing activities amounted to RMB158 million, mainly comprising of the net cash inflow of RMB4,694 million arising from the recovery of financial investment products such as interbank certificates of deposit and bonds, the cash inflow of RMB232 million arising from receiving of interest income from loans and deposits; the net cash outflow of RMB2,193 million arising from loans to member units, the net cash outflow of RMB1,637 million arising from purchase and construction of long-term assets such as the construction in progress, the net cash outflow of RMB713 million arising from external equity investment, and the net cash outflow of RMB575 million arising from the purchase of term deposits with a fixed term of over three months and structured deposits; and
- Net cash inflow from financing activities amounted to RMB1,450 million, mainly comprising of net cash inflow of RMB1,549 million arising from the deposits-absorbing business of Qingdao Finance, the cash inflow of RMB254 million from short-term borrowings of the Group; the cash outflow of RMB177 million arising from repayment of borrowings such as bank loans; and the cash outflow of RMB120 million arising from repayment of financial leasing.
In order to facilitate the understanding of shareholders of the Company and investors, after eliminating the impact of Qingdao Finance as well as the Group's purchase of financial investment products and the recovery of fixed term deposits with an initial term over three months on the cash flow, the net cash outflow of the Group amounted to RMB1,114 million.
21 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
-
Liquidity and Financial Resources
As at 30 June 2020, the Group's cash at bank and on hand amounted to RMB9,835 million and financial products including interbank deposits amounted to RMB2,698 million. After eliminating the impact of Qingdao Finance, the self-owned cash at bank and on hand and financial products of the Group amounted to RMB11,984 million. After eliminating the impact of Qingdao Finance, the Group's total interest-bearing borrowings amounted to RMB2,512 million, among which, borrowings at fixed interest rates amounted to RMB2,440 million and borrowings at floating interest rates amounted to RMB72 million. The Group continued to optimize its financial policies to ensure continuous operation with best capital structure to provide favorable returns for the shareholders of the Company.
As at 30 June 2020, the amount of the Group's cash at bank and on hand exceeded its interest-bearing borrowings. - Capital Structure
As at 30 June 2020, the total shareholders' equity of the Group amounted to RMB34,670 million, representing an increase of RMB1,073 million as compared to the beginning of this year, among which, the equity interest attributable to the shareholders of the Company increased by RMB726 million and the equity interest of minority shareholders increased by RMB347 million. The increase in the equity interest attributable to the shareholders of the Company was mainly due to the increase of RMB2,013 million in operating profit for the current period and the decrease of RMB1,300 million in declared dividends for 2019.
As at 30 June 2020, the Company had 6,491,100,000 issued shares, comprising of 5,392,075,000 A shares and 1,099,025,000 H shares, representing 83.07% and 16.93% of the total issued share of the Company, respectively. The A share market capitalization and H share market capitalization of the Company were RMB30,627 million and HK$4,528 million, respectively, which were calculated based on the closing price of RMB5.68 per share on the Shanghai Stock Exchange and the closing price of HK$4.12 per share on the Hong Kong Stock Exchange as at 30 June 2020. - Gearing Ratio
Details of the Group's gearing ratio are set out in Note 14 to the financial statements. - Interest Rate and Exchange Rate Risks
As at 30 June 2020, cash at bank and on hand, receivables, payables and external bank borrowings of the Group which were calculated at floating rates amounted to RMB7,135 million, RMB1,635 million, RMB5,730 million and RMB72 million, respectively. The Group assessed the interest rate risk and anticipated that interest rate risk would have no material impact on the Group.
The Group's main business activities are conducted in the PRC and settled mainly in RMB. As of 30 June 2020, the Group's USD deposits were approximately US$106 million, and changes in exchange rates do not have material effect on the Group. The Group will continue to closely monitor interest rate and exchange rate risks. The Group did not enter into any hedging arrangements to hedge against exposures to interest rate and exchange rate risks for the six months ended 30 June 2020.
Interim Report 2020 22
MANAGEMENT DISCUSSION AND ANALYSIS
9. Financial Indicators
For the six months | |||
ended 30 June | |||
Indicators | 2020 | 2019 | Change (+/-) |
Return on total assets | 4.3% | 4.3% | basically unchanged |
Weighted average return on net assets | 6.5% | 6.9% | -0.4 percentage point |
Interest coverage ratio | 30.11 | 24.08 | +6.03 times |
Current ratio | 1.29 | 1.61 | -0.32 |
Quick ratio | 1.27 | 1.56 | -0.29 |
For the six months ended 30 June 2020, the return on total assets of the Group was 4.3%, which basically remained unchanged as compared to the same period in the prior year; the weighted average return on net assets was 6.5%, representing a decrease of 0.4 percentage point as compared to the same period in the prior year, mainly because the increase in average net assets for this period was higher than the increase in profits. The interest coverage ratio of the Group was 30.11 times, representing an increase of 6.03 times as compared to the same period in the prior year, mainly due to the decrease in interest expense for repaying RMB1,384 million in bonds payable in the prior year resulting in the increase in profit before interest and tax. The current ratio of the Group was 1.29, representing a decrease of 0.32 as compared to the same period in the previous year, and the quick ratio of the Group was 1.27, representing a decrease of 0.29 as compared to the same period in the previous year, mainly because the Company's bonds payable will become mature in the first half of 2021, resulting in an increase of RMB2,117 million in the current portion of non-current liabilities.
23 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
Summarized Financial Information of Joint Ventures
Set out below is the summarized financial information of joint ventures which is accounted through equity method, and is material to the Group in the view of the Directors.
Unit: RMB' 000 | ||||||
QQCT | Qingdao Shihua | |||||
For the six months | For the six months | |||||
ended 30 June | ended 30 June | |||||
2020 | 2019 | 2020 | 2019 | |||
Revenue | 1,900,030 | 1,929,353 | 774,391 | 838,063 | ||
Cost of sales | (671,129) | (706,161) | (303,958) | (286,734) | ||
Profit before income tax | 1,170,033 | 1,160,210 | 440,160 | 517,624 | ||
Income tax expenses | (280,457) | (256,688) | (108,229) | (115,548) | ||
Net profit or loss for the period | 889,576 | 903,522 | 331,931 | 402,076 | ||
Minority interests | 5,266 | 8,670 | - | - | ||
Net profit attributable to the | ||||||
shareholders of joint ventures | 884,310 | 894,852 | 331,931 | 402,076 |
Considering the impact of the fair value of identifiable assets and liabilities at acquisition:
Net profit for the period | 851,511 | 864,883 | - | - |
Net profit attributable to the | ||||
shareholders of joint ventures | 846,245 | 856,213 | - | - |
Other distribution | 1,608 | 1,559 | - | - |
Shareholding percentage in joint | ||||
ventures held by the Group | 51% | 51% | 50% | 50% |
Share of profit or loss by the Group | ||||
before elimination (Note) | 443,385 | 448,647 | 165,965 | 201,038 |
Unrealised profit or loss | 686 | (20,537) | 2,458 | 1,778 |
Share of profit by the Group accounted | ||||
for using the equity method | 444,071 | 428,110 | 168,423 | 202,816 |
Note: The fair value of identifiable assets and liabilities of QQCT at the acquisition of QQCT 20% equity interests has been considered in share of profit or loss of joint ventures by the Group before elimination.
Interim Report 2020 24
MANAGEMENT DISCUSSION AND ANALYSIS
The Influence of Qingdao Finance to the Consolidated Financial Statements of the Group
To facilitate the understanding of shareholders of the Company and investors, set out below is a brief summary of the influence on the consolidated balance sheet and consolidated income statement of the Group caused by the deposit absorbing and credit granting businesses of Qingdao Finance.
Unit: RMB' 000 | ||||
As at | As at | |||
30 June | 31 December | |||
Balance sheet | Nature | 2020 | 2019 | |
Other receivables | Provide short-term loans | 1,697,769 | 571,738 | |
Current portion of | Provide long-term loans | |||
non-current assets | due within one year | 66,882 | 227,597 | |
Long-term receivables | Provide long-term loans | 2,919,249 | 1,528,632 | |
Other payables | Absorb deposit | (6,305,247) | (4,764,271) | |
Unit: RMB' 000 | ||||
For the six months | ||||
ended 30 June | ||||
Income statement | Nature | 2020 | 2019 | |
Finance expenses - | Interest income from | |||
interest income | providing loans | 150,378 | 110,227 | |
Finance expenses - | Interest expense from | |||
interest expenses | absorbing deposit | (31,346) | (25,125) |
III. SIGNIFICANT INVESTMENT
For the six months ended 30 June 2020, the significant investment of the Group was RMB1,260 million, mainly used for the Dongjiakou Port - Weifang - Central and Northern Shandong oil pipeline and the auxiliary tanks construction project, Dongjiakou crude oil terminal Phase II project, Dongjiakou crude oil commercial reserve tanks project, and Dongjiakou Port Area bulk cargo berths and storage yards projects and other projects.
25 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
IV. SIGNIFICANT ENTRUSTED WEALTH MANAGEMENT
As at 30 June 2020, the Group did not have any significant entrusted wealth management.
- SIGNIFICANT ACQUISITION AND DISPOSAL OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
On 10 June 2020, the Company and Qingdao Port (Group) Engineering Co., Ltd. (青島港(集團)港務工程有限公司),
a wholly-owned subsidiary of the Company, entered into equity transfer agreements with Shandong Port Financial Holdings Limited (山東港口金融控股有限公司), a wholly-owned subsidiary of QDP, the controlling shareholder of
the Company, transferring 90% and 10% of the equity interests of Qingdao Yongli Company Agency Co., Ltd. (青島永 利保險代理有限公司) to Shandong Port Financial Holdings Limited, respectively, for consideration of RMB54,475,830
and RMB6,052,870, respectively. As of 30 June 2020, the Company and Qingdao Port (Group) Engineering Co., Ltd. did not actually received any payment for the considerations of equity transfer. For details, please refer to the announcement of the Company dated 10 June 2020.
As of the date of this report, the Company and Qingdao Port (Group) Engineering Co., Ltd. have received the total equity transfer payment of RMB60,528,700.
VI. MORTGAGE AND PLEDGE OF ASSETS
As at 30 June 2020, none of the Group's assets was mortgaged or pledged.
VII. CONTINGENT LIABILITIES
As at 30 June 2020, the Group did not have any significant contingent liabilities.
VIII. EMPLOYEES
As at 30 June 2020, the Company had 4,733 employees while the principal subsidiaries of the Company had 3,790 employees. The Group implements a "two match" principle (i) to match the revenue growth with the Company's operation and development, and (ii) to match the growth of labor's remuneration with the increase of labor productivity. The Group links the salaries of employees with the performance results of the Group, and the employees' salaries or its measuring units are adjusted annually in accordance with the employees' working performance, human resources market condition and the economic environment. We basically implement a basic salary plus a performance-based salary system for our senior management. In addition, to actively establish a learning enterprise and cultivate employees with active learning, the Group offers internal trainings on safety and security, business operations and technical skills to the employees to improve their skills related to their positions.
Interim Report 2020 26
MANAGEMENT DISCUSSION AND ANALYSIS
IX. DESCRIPTION OF OTHER OPERATING MATTERS
As Dagang Port Area is planned to be transformed and upgraded into an international home port for cruise liners, the business of Dagang Port Area will be gradually relocated to Dongjiakou Port Area and Qianwan Port Area. In March 2020, Qingdao international home port for cruise liners started construction and the construction was gradually carried on as planned. As of 30 June 2020, the construction of international home port for cruise liners had no effect on the main business of Dagang Port Area.
The government of Qingdao Economic and Technological Development Zone is in the process of adopting a new urban planning scheme that may relocate the port operations in Huangdao Oil Port Area and operations of certain clients around Huangdao Oil Port Area to Dongjiakou Port Area. As at 30 June 2020, the Group did not receive any relocation plan or relevant notice, and did not obtain any information in relation to such relocation of clients and businesses to Dongjiakou Port Area, hence the operation of Huangdao Oil Port Area was not affected.
- SUBSEQUENT EVENTS
There is no material subsequent event undertaken by the Group after 30 June 2020.
XI. OUTLOOK FOR THE SECOND HALF OF 2020
In the second half of 2020, the world economic situation is still complex and severe, with a high instability and uncertainty. However, China has stuck to making progress in stability and coordinated epidemic prevention and economic and social development, adhered to supply-side structural reform, deepened the reform and open, push forward high-quality economic development, and strived to achieve the annual economic and social development goals. At the same time, with integrated policies of the Shandong Free Trade Zone and Shanghai Cooperation Organization (SCO) Local Economic and Trade Cooperation Demonstration Zone, the Group faced both opportunities and challenges for business development. The Group will aim at accelerating the construction of world-class marine port, seize opportunity, continue to deepen the reformation, accelerate the process of transformation and upgrading, prioritize performance, expand the development space, improve the management efficiency comprehensively, and create greater value for shareholders and the society.
Firstly, the Group will continue to improve its operating performance. Actively responding to the impact of COVID-19, the Group will expand the business both on land and sea. For the sea direction, the Group will increase shipping lines, expand container shipping capacity, expand transit business, and strengthen the linkage among ports to jointly build a transit network radiating the Northeast Asian ports groups, and create a domestic trade transit channel linking the north and south. For the land direction, the Group will open railway routes, establish inland ports, expand cargo sources, optimize the layout of inland ports, increase the number of sea-rail intermodal routes, and accelerate the transformation from a portal port to a hub port. The Group will seize opportunities of policy overlay of the Shandong Free Trade Zone and Shanghai Cooperation Organization Local Economic and Trade Cooperation Demonstration Zone, and expand new businesses such as the transit consolidation, bonded refueling, oil blending, cold chain logistics, cross-bordere-commerce, and roll-on-roll-off business. The Group will promote new model such as international transfer of ores and bonded spot crude oil storage, provide comprehensive services to customers, and accelerate the transformation from a logistics port to a trade port.
27 Qingdao Port International Co., Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
Secondly, the Group will continuously enhance development potential. The Group will accelerate the construction of intelligent ports, constantly improving the intelligent operation system of automated terminals. The Group will promote the construction of green ports, accelerate the automatization of terminal yards and build a clean and low-carbon energy system in the ports. The Group will strengthen the construction of key projects and make efforts to promote the construction of the crude oil terminal, the liquid chemical terminal, and the crude oil storage tanks in Dongjiakou Port Area, and the sea-rail intermodal capacity expansion project in Qianwan Port Area. The Group will promote joint ventures and cooperation and attract high-quality enterprises to invest in the construction of ore mixing and blending, timber, grain and other port processing industries and logistics transit bases in Dongjiakou Port Area. The Group will actively expand international development space and promote smooth operation of international projects such as the Vado Ligure Terminal in Italy and the Phase II of Abu Dhabi Khalifa terminals in United Arab Emirates.
Thirdly, the Group will continuously promote management efficiency. The Group will optimize the internal control operation system, improve the level of essential safety management, and improve the ability to resist risks. The Group will improve the modern governance system, further strengthen institutional construction, and enhance the standardization and refinement of management. The Group will innovate human-oriented management, expand career development channels for employees, optimize salary system, and build a professional, compound, scientific and reasonable management team and staff team. The Group will implement measures to reduce expenditure and consumption, promote all-dimensional and whole-process cost reduction and efficiency enhancement. The Group will inherit and innovate corporate culture, carry forward the "spirit of Zhenchao in new era", concentrate on promoting "Liangang Innovation Team", make the typical roles function as the guidance, and build the "Four Strong" (strong politics, strong team, strong work style and strong performance) staff team at the basic level.
Interim Report 2020 28
OTHER INFORMATION
- CORPORATE GOVERNANCE PRACTICES
The Company is committed to maintaining high standards of corporate governance to safeguard the interests of shareholders of the Company and to enhance corporate value.
The Company has complied with all code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Hong Kong Listing Rules for the six months ended 30 June 2020.
- COMPLIANCE WITH MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS AND SUPERVISORS
The Company has adopted the Model Code of Appendix 10 to the Hong Kong Listing Rules as its own code of conduct for securities transactions by Directors and Supervisors. Specific enquiry has been made to all the Directors and Supervisors and each of the Directors and Supervisors has confirmed that he/she has complied with the Model Code throughout the six months ended 30 June 2020.
III. DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
Save as otherwise disclosed in this report, no rights to acquire benefits by means of the acquisition of shares in or debentures of the Company were granted to any Directors or Supervisors or their respective spouse or children under 18 years of age, or were any such rights exercised by them; or was the Company and any of its subsidiaries a party to any arrangement to enable the Directors and Supervisors, or their respective spouse or children under 18 years of age, to acquire such rights in any other body corporate for the period ended 30 June 2020.
IV. CHANGES IN DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S INFORMATION
On 10 January 2020, due to work adjustment, Mr. JIAO Guangjun ceased to act as the vice chairman of the Board, the non-executive Director of the Company, a member of the Strategy and Development Committee of the Board, and a member of the Remuneration Committee of the Board and the authorised representative of the Company under Rule 3.05 of the Hong Kong Listing Rules; Mr. ZHANG Jiangnan ceased to act as the general manager (President) and was re-designated from an executive Director to a non-executive Director of the Company; Ms. JIANG Chunfeng ceased to act as the deputy general manager (Vice President), chief financial officer and re-designated from an executive Director to a non-executive Director of the Company. On the same date, Mr. WANG Xinze ceased to act as the Vice President of the Company and was appointed as the general manager of the Company with a term from 10 January 2020 to the expiration of the Board of the third session; Mr. LI Fengli was re-designated from an executive Director to a non-executive Director of the Company and was appointed as a member of the Remuneration Committee of the Board and the authorised representative of the Company under Rule 3.05 of the Hong Kong Listing Rules. For further details, please refer to the announcement of the Company dated 10 January 2020.
On 6 March 2020, due to work adjustment, Mr. ZHANG Jiangnan and Ms. JIANG Chunfeng ceased to act as the non-executive Directors of the Company and the members of the Strategy and Development Committee of the Board; Mr. LI Wucheng ceased to act as the Supervisor of the Company. For further details, please refer to the announcement of the Company dated 26 March 2020.
29 Qingdao Port International Co., Ltd.
OTHER INFORMATION
On 20 May 2020, due to reaching his retirement age, Mr. CHU Xiaozhong ceased to act as the employee representative Director of the Company, a member of the Strategy and Development Committee of the Board, and a member of the Audit Committee of the Board; due to the adjustment of work arrangements, Mr. ZHANG Wei ceased to act as the non-executive Director of the Company and a member of the Strategy and Development Committee of the Board. On the same date, according to democratic election of the Company, Ms. WANG Fuling was elected as the employee representative Director and was appointed as a member of the Strategy and Development Committee and a member of the Audit Committee of the Board of the third session, with a term from 20 May 2020 to the expiration of the Board of the third session. For further details, please refer to the announcement of the Company dated 20 May 2020.
On 10 June 2020, due to the adjustment of work arrangements, Mr. LI Fengli ceased to act as the non-executive Director of the Company, the chairman of the Board, the chairman of the Strategy and Development Committee of the Board, a member of the Nomination Committee of the Board, a member of the Remuneration Committee of the Board, and the authorised representative of the Company under Rule 3.05 of the Hong Kong Listing Rules. On the same date, Mr. JIA Funing was appointed as the executive Director of the Company, the chairman of the Board, the chairman of the Strategy and Development Committee of the Board, a member of the Nomination Committee of the Board and the authorised representative of the Company under Rule 3.05 of the Hong Kong Listing Rules; Mr. SU Jianguang was appointed as the non-executive Director of the Company, the vice chairman of the Board, a member of the Strategy and Development Committee of the Board and a member of the Remuneration Committee of the Board; Mr. FENG Boming was appointed as the non-executive Director of the Company and a member of the Strategy and Development Committee of the Board; Mr. WANG Xinze was appointed as the executive Director of the Company and a member of the Strategy and Development Committee of the Board; Mr. WANG Jun was appointed as the non-executive Director of the Company and a member of the Strategy and Development Committee of the Board; Mr. XIA Xiliang was appointed as the non-employee representative Supervisor of the Company. All with a term of office with effect from 10 June 2020 to the expiration of the Board and the Supervisory Committee of the third session. For further details, please refer to the announcement of the Company dated 10 June 2020.
Save as disclosed herein, there were no changes to the Directors', supervisors' and chief executive's information as required to be disclosed pursuant to Rule 13.51B(1) of the Hong Kong Listing Rules in this report.
- REVIEW OF FINANCIAL STATEMENTS BY THE AUDIT COMMITTEE
The Audit Committee of the Board has reviewed the unaudited interim results and the interim report of the Company for the six months ended 30 June 2020.
Interim Report 2020 30
OTHER INFORMATION
VI. PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES BY THE COMPANY
No purchase, sale and redemption of any listed securities of the Company were made by the Company or any of its subsidiaries for the six months ended 30 June 2020.
VII. CHANGES AND TERMINATION OF USE OF PROCEEDS FOR INVESTMENT PROJECTS OF A SHARE OFFERING
The Company completed its initial public offering of RMB denominated ordinary shares (A shares) of 454,376,000 shares with a nominal value RMB1.00 per share and was listed on the Shanghai Stock Exchange on 21 January 2019, with the net amount of proceeds of approximately RMB1,978.93 million.
Details of the use of proceeds were as follows: | ||
Unit: RMB' 000 | ||
Investment Projects for Use of Proceeds | Net Amount of Proceeds | |
Dongjiakou Port Area Crude Oil Commercial Reserve Tanks Project | - | |
The Project of Qingdao Port Investment multi-purpose berths and | ||
North Jetty II rear ancillary stacking yards in Dongjiakou Port Area | 1,000,000 | |
Dongjiakou Integrated Logistics Stacking Yard Phase I Project | 180,000 | |
Intelligent Port Area Upgrading Project | 200,000 | |
Port Area Equipment Procurement Project | 302,100 | |
Supplementing working capital | 296,830 | |
Total | ||
1,978,930 | ||
According to the needs of business development of the Group, with the resolution and approval by the Board on 26 March 2020 and by the annual general meeting of the Company held on 10 June 2020, the Company resolved to terminate Dongjiakou Integrated Logistics Stacking Yard Phase I Project and put the unused proceeds of RMB180 million into Port Area Equipment Procurement Project and to remove Dongjiakou Port Area Crude Oil Commercial Reserve Tanks Project from one of the investment projects for use of proceeds, continuing to build this project by self-raised funds or by means of joint ventures.
After the aforesaid change and termination of investment projects for use of proceeds from A share offering have completed, the details of the use of proceeds were as follows:
31 Qingdao Port International Co., Ltd.
OTHER INFORMATION
Unit: RMB' 000 | ||
Investment Projects for Use of Proceeds | Net Amount of Proceeds | |
The Project of Qingdao Port Investment multi-purpose berths and | ||
North Jetty II rear ancillary stacking yards in Dongjiakou Port Area | 1,000,000 | |
Intelligent Port Area Upgrading Project | 200,000 | |
Port Area Equipment Procurement Project | 482,100 | |
Supplementing working capital | 296,830 | |
Total | ||
1,978,930 | ||
For further details, please refer to the Company's announcements dated 26 March 2020 and 10 June 2020, and the circular dated 26 May 2020.
VIII. USE OF PROCEEDS
The net proceeds from the New H Shares Placing of the Company in 2017 were approximately HK$1,035 million, equivalent to approximately RMB912 million, which would be used according to the Company's announcement dated 20 January 2017. As at 31 December 2019, the remaining proceeds of approximately HK$1,034 million were carried forward to this year, which is proposed to be used towards the Company's reserve funds for the acquisition and investment of overseas terminals and the working capital for the operation and management of overseas terminal projects by the terminal project management company jointly established by the Company and COSCO SHIPPING Ports. For the six months ended 30 June 2020, approximately HK$460.45 million of the proceeds had been utilized towards the investment projects in the way as disclosed in the announcement of the Company dated 20 January 2017, which was mainly used to pay for the purchase of shares of COSCO SHIPPING Ports (Abu Dhabi) Limited. The Company will use the remaining raised funds according to the project investment progress and business development. As at the date of this report, there is no detailed schedule for the utilization of the remaining proceeds.
The net proceeds from the Company's issuance of Domestic Shares to Shanghai China Shipping Terminal Development Co., Ltd. were approximately RMB2,600 million. As at 31 December 2019, the remaining proceeds of approximately RMB171 million were carried forward to this year, which is proposed to be used towards the construction of the port facilities in the Dongjiakou Port Area, the optimization of the modern logistics business structure of the Company, the domestic terminals investment and acquisition and the consolidation of the relevant terminal assets in the Port of Qingdao, and the information facility construction of the Company in accordance with the ways as disclosed in the announcement of the Company dated 20 January 2017. For the six months ended 30 June 2020, approximately RMB12 million of the proceeds had been utilized towards the investment projects in the way as disclosed in the announcement of the Company dated 20 January 2017, which was mainly used for the information facility construction of the Company. The Company will utilize the remaining proceeds in accordance with the progress of the investment projects and the business development. As at the date of this report, there is no detailed schedule for the utilization of the remaining proceeds.
Interim Report 2020 32
OTHER INFORMATION
The net proceeds from the initial public offering of A shares of the Company were approximately RMB1,979 million. As at 31 December 2019, the remaining proceeds of approximately RMB1,220 million were carried forward to this year. Taking into account the actual business development and operational needs of the Group, the Company has changed the investment projects for the remaining net proceeds, which have been proposed to be used towards the construction of berths and stacking yards in the Dongjiakou Port Area, intelligent upgrade of port area, equipment procurement, and supplementing working capital. For details, please refer to the Company's announcements dated 26 March 2020 and 10 June 2020 and circular dated 26 May 2020. For the six months ended 30 June 2020, approximately RMB11 million of the proceeds had been utilized towards the investment projects in the way as disclosed in the Company's initial public offering of A shares prospectus and the Company's announcements dated 26 March 2020, 10 June 2020 and circular dated 26 May 2020, which was mainly used for the construction of the Project of Qingdao Port Investment multi-purpose berths and North Jetty II rear ancillary stacking yards in Dongjiakou Port Area and Intelligent Port Area Upgrading Project. The Company will utilize the remaining proceeds in accordance with the progress of the investment projects and the business development. As at the date of this report, there is no detailed schedule for the utilization of the remaining proceeds.
IX. DIVIDENDS
The Board did not recommend the payment of interim dividend for the six months ended 30 June 2020.
- INTERESTS AND SHORT POSITIONS OF THE DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE IN THE SHARES, UNDERLYING SHARES AND DEBENTURES
So far as the directors are aware, as at 30 June 2020, none of the Directors, Supervisors or chief executive of the Company has any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")), (i) which will be required, pursuant to Section 352 of the SFO, to be recorded in the register kept by the Company, or (ii) which will be required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.
33 Qingdao Port International Co., Ltd.
OTHER INFORMATION
XI. INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN THE SHARES AND UNDERLYING SHARES
As at 30 June 2020, so far as the directors are aware, the following persons (other than the Directors, Supervisors and chief executive of the Company) will be taken or deemed to have interests and/or short positions in the shares or underlying shares of the Company which would be required to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.
Approximate | Approximate | |||||||
Approximate | percentage of | percentage of | ||||||
percentage of | shareholding in | shareholding in | ||||||
shareholding in | the total number | the total | ||||||
the registered | of issued A | number of | ||||||
Number of | capital of the | shares of the | issued H shares | |||||
Name | Class of Shares | Capacity/Nature of interest | shares held (1) | Company | Company | of the Company | ||
QDP | A share | Beneficial owner (2) | 3,522,179,000 | (L) | 54.26% | 65.32% | - | |
Shandong Port Group Co., Ltd | A share | Interest in a controlled corporation (2) | 3,522,179,000 | (L) | 54.26% | 65.32% | - | |
COSCO SHIPPING Ports | ||||||||
Development Co., Ltd. | H share | Beneficial owner (5) | 173,313,000 | (L) | 2.67% | - | 15.77% | |
Shanghai China Shipping Terminal | A share | Beneficial owner (3) | 1,015,520,000 | (L) | 15.64% | 18.83% | - | |
Development Co., Ltd | ||||||||
COSCO SHIPPING Ports Limited | A share | Interest in a controlled corporation (3) | 1,111,520,000 | (L) | 17.12% | 20.61% | - | |
H share | Interest in a controlled corporation (5) | 173,313,000 | (L) | 2.67% | - | 15.77% | ||
China COSCO (Hong Kong) Limited | A share | Interest in a controlled corporation (3) | 1,111,520,000 | (L) | 17.12% | 20.61% | - | |
H share | Interest in a controlled corporation (5) | 173,313,000 | (L) | 2.67% | - | 15.77% | ||
COSCO SHIPPING Holdings Co., Ltd. | A share | Interest in a controlled corporation (3) | 1,111,520,000 | (L) | 17.12% | 20.61% | - | |
H share | Interest in a controlled corporation (5) | 173,313,000 | (L) | 2.67% | - | 15.77% | ||
China Ocean Shipping Co., Ltd. | A share | Interest in a controlled corporation (4) | 1,207,520,000 | (L) | 18.60% | 22.39% | - | |
H share | Interest in a controlled corporation (5) | 173,313,000 | (L) | 2.67% | - | 15.77% | ||
China COSCO Shipping Corporation Limited | A share | Interest in a controlled corporation (4) | 1,207,520,000 | (L) | 18.60% | 22.39% | - | |
H share | Interest in a controlled corporation (5) | 173,313,000 | (L) | 2.67% | - | 15.77% | ||
China Life Insurance (Group) Company | H share | Beneficial owner | 180,000,000 | (L) | 2.77% | - | 16.38% | |
Value Partners Group Limited | H share | Interest in a controlled corporation (6) | 87,598,000 | (L) | 1.35% | - | 7.97% | |
Value Partners High-Dividend Stocks Fund | H share | Beneficial owner | 76,208,000 | (L) | 1.17% | - | 6.93% | |
FMR LLC | H share | Interest in a controlled corporation | 77,015,887 | (L) | 1.19% | - | 7.01% |
Interim Report 2020 34
OTHER INFORMATION
Notes:
- The letter "L" denotes long position in such securities.
-
QDP is wholly owned by the State-owned Assets Supervision and Administration Commission of Qingdao Municipal Government. The Company was informed that as at 30 June 2020, QDP held 13,739,000 H shares of the Company via its wholly-owned subsidiary Qingdao Port Financial Holdings Limited, representing approximately 1.25% of the total number of issued H shares of the Company. According to the SFO, the shareholders of the Company only need to submit the disclosure of interests form when certain conditions are reached. As at the date of holding the H shares of the Company by Qingdao Port Financial Holdings Limited, the wholly-owned subsidiary of QDP, and as at the date of this report, the Company had sufficient public float and the issued shares of the Company held by the public is no less than 16.62%, and is therefore in compliance with the Hong Kong Listing Rules.
On 22 August 2019, Shandong Port Group, Qingdao SASAC, Weihai SASAC and QDP entered into the Gratuitous Transfer Agreement of the Equity Interests. Qingdao SASAC will gratuitously transfer 100% equity interests in QDP to Shandong Port Group. After the completion of gratuitous transfer, QDP will become a wholly-owned subsidiary of Shandong Port Group. As of the date of this report, the transfer of the above equity interests has not been completed. For details, please refer to the announcements of the Company dated 22 August 2019, 23 August 2019 and 28 August 2019. The Company will continue to pay attention to this matter and make timely information disclosure. - 96,000,000 A shares and 1,015,520,000 A shares of the Company are directly held by China Shipping Terminal Development Co., Ltd. and Shanghai China Shipping Terminal Development Co., Ltd., respectively. Shanghai China Shipping Terminal Development Co., Ltd. is wholly owned by China Shipping Terminal Development Co., Ltd.. China Shipping Terminal Development Co., Ltd. is wholly owned by COSCO SHIPPING Ports Development Co., Ltd., which is wholly owned by COSCO SHIPPING Ports Limited. COSCO SHIPPING Ports Limited is 49.33% owned by China COSCO (Hong Kong) Limited, which is wholly owned by COSCO SHIPPING Holdings Co., Ltd.. COSCO SHIPPING Holdings Co., Ltd. is 8.33% and 37.89% owned by China COSCO Shipping Corporation Limited and China Ocean Shipping Co., Ltd., respectively. China Ocean Shipping Co., Ltd. is wholly owned by China COSCO Shipping Corporation Limited. As such, each of COSCO SHIPPING Ports Limited, China COSCO (Hong Kong) Limited, COSCO SHIPPING Holdings Co., Ltd., China Ocean Shipping Co., Ltd. and China COSCO Shipping Corporation Limited is deemed to be interested in 1,111,520,000 A shares of the Company.
- In addition to the 96,000,000 A shares and 1,015,520,000 A shares of the Company directly held by China Shipping Terminal Development Co., Ltd. and Shanghai China Shipping Terminal Development Co., Ltd. respectively, there are 96,000,000 A shares of the Company directly held by COSCO Shipping (Qingdao) Co., Ltd., which is wholly-owned by China COSCO Shipping Corporation Limited. As such, China COSCO Shipping Corporation Limited is deemed to be interested in 1,207,520,000 A shares of the Company.
- 173,313,000 H shares of the Company are directly held by COSCO SHIPPING Ports Development Co., Ltd.. COSCO SHIPPING Ports Development Co., Ltd. is wholly owned by COSCO SHIPPING Ports Limited. COSCO SHIPPING Ports Limited is 49.33% owned by China COSCO (Hong Kong) Limited, which is wholly owned by COSCO SHIPPING Holdings Co., Ltd.. COSCO SHIPPING Holding Co., Ltd. is 8.33% and 37.89% owned by China COSCO Shipping Corporation Limited and China Ocean Shipping Co., Ltd., respectively. China Ocean Shipping Co., Ltd. is wholly owned by China COSCO Shipping Corporation Limited. As such, each of COSCO SHIPPING Ports Limited, China COSCO (Hong Kong) Limited, COSCO SHIPPING Holdings Co., Ltd, China Ocean Shipping Co., Ltd. and China COSCO Shipping Corporation Limited is deemed to be interested in 173,313,000 H shares of the Company.
- Such shares of the Company are directly held by Value Partners Limited, which is wholly owned by Value Partners Hong Kong Limited; and Value Partners Hong Kong Limited is wholly owned by Value Partners Group Limited.
Save as disclosed above, as at 30 June 2020, none of the persons had interest or short positions in the shares and underlying shares of the Company which would be required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which will be required, pursuant to Section 336 of the SFO, to be recorded in the register kept by the Company.
35 Qingdao Port International Co., Ltd.
CONSOLIDATED BALANCE SHEET
As at 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
ASSETS | Note 4 | 30 June 2020 | 31 December 2019 | |||
(Unaudited) | ||||||
Current assets | ||||||
Cash at bank and on hand | (1) | 9,835,275,776 | 6,846,399,847 | |||
Financial asset held for trading | (2) | 1,010,148,643 | 952,673,153 | |||
Notes receivable | 61,644,571 | 89,208,129 | ||||
Accounts receivable | (3) | 2,849,676,376 | 2,337,733,076 | |||
Financing receivables | (4) | 470,946,523 | 705,149,454 | |||
Advances to suppliers | 75,961,145 | 65,477,940 | ||||
Other receivables | (5) | 3,716,562,764 | 1,825,685,161 | |||
Inventories | 121,779,487 | 208,760,886 | ||||
Contract assets | 73,675,594 | 194,622,693 | ||||
Current portion of non-current assets | (7) | 68,940,113 | 445,754,126 | |||
Other current assets | (6) | 1,477,972,907 | 6,214,206,368 | |||
Total current assets | 19,762,583,899 | 19,885,670,833 | ||||
Non-current assets | ||||||
Long-term receivables | (7) | 2,919,248,984 | 1,528,631,526 | |||
Long-term equity investments | (8) | 9,342,640,573 | 9,139,130,196 | |||
Other non-current financial assets | (9) | 570,827,707 | 538,096,854 | |||
Investment properties | (10) | 174,727,046 | 177,094,885 | |||
Fixed assets | (11) | 14,608,527,017 | 14,341,335,334 | |||
Construction in progress | (12) | 3,129,869,810 | 2,510,614,143 | |||
Right-of-use assets | (13) | 435,051,375 | 541,354,681 | |||
Intangible assets | (14) | 2,659,232,185 | 2,568,407,616 | |||
Goodwill | 20,686,493 | 20,686,493 | ||||
Long-term prepaid expenses | 25,805,987 | 28,601,553 | ||||
Deferred tax assets | (15) | 907,554,413 | 906,362,986 | |||
Other non-current assets | (17) | 1,394,319,218 | 599,314,295 | |||
Total non-current assets | 36,188,490,808 | 32,899,630,562 | ||||
TOTAL ASSETS | 55,951,074,707 | 52,785,301,395 | ||||
Interim Report 2020 36
CONSOLIDATED BALANCE SHEET
As at 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
LIABILITIES AND SHAREHOLDERS' EQUITY | Note 4 | 30 June 2020 | 31 December 2019 | |||
(Unaudited) | ||||||
Current liabilities | ||||||
Short-term borrowings | (18) | 247,995,780 | 128,596,572 | |||
Notes payable | (19) | 821,815,865 | 1,164,769,783 | |||
Accounts payable | (20) | 1,364,385,500 | 1,411,666,083 | |||
Advances from customers | 62,834,461 | 22,251,659 | ||||
Contract liabilities | (21) | 132,675,092 | 245,532,722 | |||
Employee benefits payable | (22) | 262,088,173 | 308,496,016 | |||
Taxes payable | (23) | 303,403,803 | 248,863,830 | |||
Other payables | (24) | 9,855,547,909 | 7,200,531,814 | |||
(25), (26), | ||||||
Current portion of non-current liabilities | (27) | 2,307,286,405 | 235,633,528 | |||
Total current liabilities | 15,358,032,988 | 10,966,342,007 | ||||
Non-current liabilities | ||||||
Long-term borrowings | (25) | 118,882,988 | 132,882,988 | |||
Bonds payable | (26) | - | 2,116,900,000 | |||
Lease liabilities | (27) | 270,686,680 | 378,301,316 | |||
Long-term payables | 93,133,776 | 43,095,019 | ||||
Provisions | 6,486,130 | 7,053,463 | ||||
Deferred income | (28) | 210,067,328 | 213,850,289 | |||
Long-term employee benefits payable | (29) | 2,416,870,000 | 2,419,020,000 | |||
Deferred tax liabilities | (15) | 22,074,760 | 22,295,437 | |||
Other non-current liabilities | (30) | 2,784,887,421 | 2,888,198,834 | |||
Total non-current liabilities | 5,923,089,083 | 8,221,597,346 | ||||
Total liabilities | 21,281,122,071 | 19,187,939,353 | ||||
37 Qingdao Port International Co., Ltd.
CONSOLIDATED BALANCE SHEET
As at 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
LIABILITIES AND SHAREHOLDERS' EQUITY | Note 4 | 30 June 2020 | 31 December 2019 | |||
(Unaudited) | ||||||
Shareholders' equity | ||||||
Share capital | (31) | 6,491,100,000 | 6,491,100,000 | |||
Capital surplus | (32) | 12,339,391,255 | 12,326,352,961 | |||
Other comprehensive income | (33) | 174,183,342 | 182,668,672 | |||
Specific reserve | 11,912,110 | 3,914,265 | ||||
Surplus reserve | (34) | 1,278,378,901 | 1,278,378,901 | |||
General reserve | (35) | 380,586,794 | 380,586,794 | |||
Undistributed profits | (36) | 10,407,034,391 | 9,694,379,282 | |||
Total equity attributable to shareholders of the Company | 31,082,586,793 | 30,357,380,875 | ||||
Minority interests | 3,587,365,843 | 3,239,981,167 | ||||
Total Shareholders' equity | ||||||
34,669,952,636 | 33,597,362,042 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
55,951,074,707 | 52,785,301,395 | |||||
The accompanying notes form an integral part of these financial statements.
Legal representative: | Principal in charge of accounting: | Head of accounting department: |
Interim Report 2020 38
COMPANY BALANCE SHEET
As at 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
ASSETS | Note 15 | 30 June 2020 | 31 December 2019 | |||
(Unaudited) | ||||||
Current assets | ||||||
Cash at bank and on hand | (1) | 8,977,666,406 | 8,265,088,114 | |||
Notes receivable | 975,536 | 18,667,204 | ||||
Accounts receivable | (2) | 1,265,444,002 | 996,445,768 | |||
Financing receivables | (3) | 249,510,935 | 451,458,292 | |||
Advances to suppliers | 14,234,136 | 25,263,063 | ||||
Other receivables | (4) | 1,315,931,664 | 581,863,915 | |||
Inventories | 52,391,038 | 80,568,215 | ||||
Contract assets | 92,485,404 | 93,879,526 | ||||
Current portion of non-current assets | (5) | 322,609,463 | 624,635,554 | |||
Other current assets | 65,297,523 | 36,686,394 | ||||
Total current assets | 12,356,546,107 | 11,174,556,045 | ||||
Non-current assets | ||||||
Long term receivables | (5) | 1,908,000,000 | 1,858,000,000 | |||
Long-term equity investments | (6) | 14,267,393,169 | 13,991,521,234 | |||
Other non-current financial assets | 71,421,487 | 71,421,487 | ||||
Investment properties | (7) | 1,463,070,866 | 1,489,093,569 | |||
Fixed assets | (8) | 7,787,730,029 | 7,826,781,172 | |||
Construction in progress | (9) | 1,675,870,683 | 1,333,853,492 | |||
Right-of-use assets | 125,002,353 | 126,126,432 | ||||
Intangible assets | (10) | 2,050,993,511 | 2,073,151,241 | |||
Long-term prepaid expenses | 5,989,744 | 3,916,088 | ||||
Deferred tax assets | 33,934,805 | 37,658,479 | ||||
Other non-current assets | 717,528,720 | 261,044,621 | ||||
Total non-current assets | 30,106,935,367 | 29,072,567,815 | ||||
TOTAL ASSETS | 42,463,481,474 | 40,247,123,860 | ||||
39 Qingdao Port International Co., Ltd.
COMPANY BALANCE SHEET
As at 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
LIABILITIES AND SHAREHOLDERS' EQUITY | 30 June 2020 | 31 December 2019 | |||
(Unaudited) | |||||
Current liabilities | |||||
Short-term borrowings | 404,153,458 | 358,239,543 | |||
Notes payable | 255,108,780 | 245,580,933 | |||
Accounts payable | 602,272,359 | 467,119,764 | |||
Advances from customers | 56,839,790 | 15,467,645 | |||
Contract liabilities | 106,476,852 | 135,665,425 | |||
Employee benefits payable | 204,094,351 | 240,552,578 | |||
Taxes payable | 86,509,383 | 56,343,229 | |||
Other payables | 1,934,008,850 | 433,282,327 | |||
Current portion of non-current liabilities | 2,161,917,991 | 83,169,099 | |||
Total current liabilities | 5,811,381,814 | 2,035,420,543 | |||
Non-current liabilities | |||||
Bonds payable | - | 2,116,900,000 | |||
Lease liabilities | 60,221,906 | 80,955,456 | |||
Long-term payables | 42,764,856 | 43,095,019 | |||
Provisions | 6,486,130 | 7,053,463 | |||
Deferred income | 137,262,810 | 140,389,104 | |||
Long-term employee benefits payable | 2,078,760,000 | 2,081,760,000 | |||
Other non-current liabilities | 2,784,834,141 | 2,888,115,299 | |||
Total non-current liabilities | 5,110,329,843 | 7,358,268,341 | |||
Total liabilities | 10,921,711,657 | 9,393,688,884 | |||
Shareholders' equity | |||||
Share capital | 6,491,100,000 | 6,491,100,000 | |||
Capital surplus | 16,268,188,930 | 16,255,150,636 | |||
Other comprehensive income | 191,510,000 | 191,510,000 | |||
Surplus reserve | 1,278,378,901 | 1,278,378,901 | |||
Undistributed profits | 7,312,591,986 | 6,637,295,439 | |||
Total shareholders' equity | |||||
31,541,769,817 | 30,853,434,976 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
42,463,481,474 | 40,247,123,860 | ||||
The accompanying notes form an integral part of these financial statements.
Legal representative: | Principal in charge of accounting: | Head of accounting department: |
Interim Report 2020 40
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
For the six | For the six | |||||||
months ended | months ended | |||||||
Item | Note 4 | 30 June 2020 | 30 June 2019 | |||||
(Unaudited) | (Unaudited) | |||||||
1. | Revenue | (37) | 6,072,103,452 | 5,999,781,980 | ||||
Less: | Cost of sales | (37), (41) | (3,744,765,192) | (3,920,720,639) | ||||
Taxes and surcharges | (38) | (51,263,872) | (52,318,155) | |||||
Selling and distribution expenses | (41) | (14,665,388) | (9,615,312) | |||||
General and administrative expenses | (39), (41) | (220,125,601) | (261,801,061) | |||||
Research and development expenses | (14), (41) | (6,606,855) | (12,997,414) | |||||
Financial expenses | (40) | 105,288,105 | 106,079,532 | |||||
Including: Interest expenses | 98,805,635 | 116,003,926 | ||||||
Interest income | 226,364,485 | 260,939,156 | ||||||
Add: | Other income | (42) | 32,901,118 | 77,625,287 | ||||
Investment income | (43) | 768,169,574 | 774,803,928 | |||||
Including: Investment income from associates | ||||||||
and joint ventures | 668,009,957 | 714,286,642 | ||||||
Gains on changes in fair value | 2,720,249 | 2,663,358 | ||||||
Credit impairment losses | (44) | (73,905,224) | (21,219,798) | |||||
Gains on disposal of assets | 17,371,326 | (1,213,416) | ||||||
2. | Operating profit | 2,887,221,692 | 2,681,068,290 | |||||
Add: | Non-operating income | 5,968,028 | 10,739,883 | |||||
Less: | Non-operating expenses | (5,535,707) | (2,487,948) | |||||
3. | Total profit | 2,887,654,013 | 2,689,320,225 | |||||
Less: | Income tax expenses | (45) | (568,944,486) | (511,333,963) | ||||
4. | Net profit | 2,318,709,527 | 2,177,986,262 | |||||
Classified by continuity of operations | ||||||||
Net profit from continuing operations | 2,318,709,527 | 2,177,986,262 | ||||||
Net profit from discontinued operations | - | - | ||||||
Classified by ownership of the equity | ||||||||
Minority interests | 305,887,088 | 169,965,043 | ||||||
Attributable to shareholders of the Company | 2,012,822,439 | 2,008,021,219 | ||||||
41 Qingdao Port International Co., Ltd.
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
For the six | For the six | |||||||
months ended | months ended | |||||||
Item | Note 4 | 30 June 2020 | 30 June 2019 | |||||
(Unaudited) | (Unaudited) | |||||||
5. | Other comprehensive income, net of tax | (33) | (12,121,900) | 84,282,631 | ||||
Attributable to shareholders of the Company, net of tax | ||||||||
Other comprehensive income items which will not be | ||||||||
subsequently reclassified to profit or loss | ||||||||
Changes in remeasurement of defined benefit | ||||||||
plan obligations | - | 93,986,921 | ||||||
Other comprehensive income items which will be | ||||||||
subsequently reclassified to profit or loss | ||||||||
Changes in fair value of other debt investments | (8,485,330) | (6,851,158) | ||||||
Attributable to minority shareholders, net of tax | (3,636,570) | (2,853,132) | ||||||
6. | Total comprehensive income | 2,306,587,627 | 2,262,268,893 | |||||
Attributable to shareholders of the Company | 2,004,337,109 | 2,095,156,982 | ||||||
Attributable to minority interests | 302,250,518 | 167,111,911 | ||||||
7. | Earnings per share | |||||||
Basic earnings per share (RMB) | (46)(a) | 0.31 | 0.31 | |||||
Diluted earnings per share (RMB) | (46)(b) | 0.31 | 0.31 |
The accompanying notes form an integral part of these financial statements.
Legal representative: | Principal in charge of accounting : | Head of accounting department: |
Interim Report 2020 42
COMPANY INCOME STATEMENT
For the six months ended 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
For the six | For the six | ||||||||
months ended | months ended | ||||||||
Item | Note 15 | 30 June 2020 | 30 June 2019 | ||||||
(Unaudited) | (Unaudited) | ||||||||
1. | Revenue | (12) | 3,005,350,021 | 2,828,636,813 | |||||
Less: | Cost of sales | (12), (13) | (2,155,155,084) | (1,901,535,915) | |||||
Taxes and surcharges | (37,139,111) | (41,061,549) | |||||||
Selling and distribution expenses | (13) | (10,259,925) | (9,015,973) | ||||||
General and administrative expenses | (13) | (128,094,983) | (148,692,301) | ||||||
Research and development expenses | (13) | (1,133,487) | (8,084,523) | ||||||
Financial expenses | 14,724,010 | 59,104,907 | |||||||
Including: Interest expenses | 49,456,044 | 61,755,458 | |||||||
Interest income | 83,027,122 | 158,856,497 | |||||||
Add: | Other income | 14,634,286 | 5,666,208 | ||||||
Investment income | (14) | 1,486,605,805 | 960,811,658 | ||||||
Including: Investment income from associates | |||||||||
and joint ventures | 665,478,800 | 719,546,750 | |||||||
Credit impairment losses | (7,866,389) | (16,888,029) | |||||||
Gains on disposal of assets | 14,337,797 | (1,051,872) | |||||||
2. | Operating profit | 2,196,002,940 | 1,727,889,424 | ||||||
Add: | Non-operating income | 3,960,996 | 7,404,199 | ||||||
Less: | Non-operating expenses | (2,058,696) | (158,725) | ||||||
3. | Total profit | 2,197,905,240 | 1,735,134,898 | ||||||
Less: | Income tax expenses | (15) | (222,441,363) | (228,909,347) | |||||
4. | Net profit | 1,975,463,877 | 1,506,225,551 | ||||||
Classified by continuity of operations | |||||||||
Net profit from continuing operations | 1,975,463,877 | 1,506,225,551 | |||||||
Net profit from discontinued operations | - | - | |||||||
5. | Other comprehensive income, net of tax | - | 81,710,000 | ||||||
Other comprehensive income items that will not be | |||||||||
subsequently reclassified to profit or loss | |||||||||
Changes in remeasurement of defined benefit plan obligations | - | 81,710,000 | |||||||
6. | Total comprehensive income | 1,975,463,877 | 1,587,935,551 | ||||||
The accompanying notes form an integral part of these financial statements.
Legal representative: | Principal in charge of accounting: | Head of accounting department: |
43 Qingdao Port International Co., Ltd.
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
For the six | For the six | ||||||
months ended | months ended | ||||||
Item | Note 4 | 30 June 2020 | 30 June 2019 | ||||
(Unaudited) | (Unaudited) | ||||||
1. Cash flows from operating activities | |||||||
Cash received from sales of goods or rendering of services | 5,777,880,636 | 5,396,460,399 | |||||
Cash received relating to other operating activities | (47)(a) | 195,472,042 | 389,652,247 | ||||
Sub-total of cash inflows | 5,973,352,678 | 5,786,112,646 | |||||
Cash paid for goods and services | (3,027,292,669) | (2,747,201,583) | |||||
Cash paid to and on behalf of employees | (1,035,535,068) | (1,086,161,317) | |||||
Payments of taxes and surcharges | (735,391,595) | (603,997,147) | |||||
Cash paid relating to other operating activities | (47)(b) | (126,312,288) | (381,695,975) | ||||
Sub-total of cash outflows | (4,924,531,620) | (4,819,056,022) | |||||
Net cash flows from operating activities | (48)(a) | 1,048,821,058 | 967,056,624 | ||||
2. Cash flows from investing activities | |||||||
Cash received from disposal of investments | 11,301,116,200 | 5,101,743,039 | |||||
Cash received from returns on investments | 315,546,444 | 246,611,005 | |||||
Net cash received from disposal of fixed assets, | |||||||
intangible assets and other long-term assets | 27,339,910 | 1,946,709 | |||||
Cash received relating to other investing activities | (47)(c) | 1,361,313,463 | 2,343,788,068 | ||||
Sub-total of cash inflows | 13,005,316,017 | 7,694,088,821 | |||||
Cash paid to acquire fixed assets, intangible assets | |||||||
and other long-term assets | (1,637,487,780) | (490,475,018) | |||||
Cash paid to acquire investments | (7,894,720,052) | (4,282,441,879) | |||||
Cash paid relating to other investing activities | (47)(d) | (3,631,526,148) | (1,785,786,284) | ||||
Sub-total of cash outflows | (13,163,733,980) | (6,558,703,181) | |||||
Net cash flows from investing activities | (158,417,963) | 1,135,385,640 | |||||
Interim Report 2020 44
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
For the six | For the six | |||||||
months ended | months ended | |||||||
Item | Note 4 | 30 June 2020 | 30 June 2019 | |||||
(Unaudited) | (Unaudited) | |||||||
3. Cash flows from financing activities | ||||||||
Cash received from capital contributions | 77,450,000 | 1,984,929,768 | ||||||
Including: Cash received from capital contributions | ||||||||
by minority shareholders of subsidiaries | 77,450,000 | 6,000,000 | ||||||
Cash received from borrowings | 254,204,011 | 609,281,406 | ||||||
Cash received relating to other financing activities | (47)(e) | 1,549,216,247 | 645,362,843 | |||||
Sub-total of cash inflows | 1,880,870,258 | 3,239,574,017 | ||||||
Cash repayments of borrowings | (177,426,785) | (1,741,581,767) | ||||||
Cash payments for distribution of dividends, | ||||||||
profits or interest expenses | (114,369,549) | (237,438,107) | ||||||
Including: Cash payments for distribution of profit | ||||||||
to minority shareholders of subsidiaries | (30,660,895) | (49,470,140) | ||||||
Cash paid relating to other financing activities | (47)(f) | (139,367,304) | (69,295,803) | |||||
Sub-total of cash outflows | (431,163,638) | (2,048,315,677) | ||||||
Net cash flows from financing activities | 1,449,706,620 | 1,191,258,340 | ||||||
4. | Effect of foreign exchange rate changes on cash | 21,222,031 | 2,304,699 | |||||
5. | Net increase in cash | (48)(b) | 2,361,331,746 | 3,296,005,303 | ||||
Add: Cash at the beginning of the period | 3,998,246,081 | 4,014,278,650 | ||||||
6. | Cash at the end of the period | (48)(c) | 6,359,577,827 | 7,310,283,953 | ||||
The accompanying notes form an integral part of these financial statements. | ||
Legal representative: | Principal in charge of accounting: | Head of accounting department: |
45 Qingdao Port International Co., Ltd.
COMPANY CASH FLOW STATEMENT
For the six months ended 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
For the six | For the six | |||||
months ended | months ended | |||||
Item | 30 June 2020 | 30 June 2019 | ||||
(Unaudited) | (Unaudited) | |||||
1. Cash flows from operating activities | ||||||
Cash received from sales of goods or rendering of services | 2,398,437,331 | 1,976,453,982 | ||||
Cash received relating to other operating activities | 190,745,161 | 291,172,837 | ||||
Sub-total of cash inflows | 2,589,182,492 | 2,267,626,819 | ||||
Cash paid for goods and services | (1,005,688,780) | (853,562,591) | ||||
Cash paid to and on behalf of employees | (652,507,049) | (685,607,425) | ||||
Payments of taxes and surcharges | (293,338,158) | (276,954,641) | ||||
Cash paid relating to other operating activities | (81,005,918) | (37,111,272) | ||||
Sub-total of cash outflows | (2,032,539,905) | (1,853,235,929) | ||||
Net cash flows from operating activities | 556,642,587 | 414,390,890 | ||||
2. Cash flows from investing activities | ||||||
Cash received from disposal of investments | 4,778,531,500 | 839,516 | ||||
Cash received from returns on investments | 896,686,543 | 302,928,211 | ||||
Net cash received from disposal of fixed assets, | ||||||
intangible assets and other long-term assets | 19,729,268 | 196,599 | ||||
Net cash received from disposal of subsidiaries | ||||||
and other business units | - | 5,990,993 | ||||
Cash received relating to other investing activities | 963,501,443 | 503,377,700 | ||||
Sub-total of cash inflows | 6,658,448,754 | 813,333,019 | ||||
Cash paid to acquire fixed assets, | ||||||
intangible assets and other long-term assets | (343,853,975) | (188,033,548) | ||||
Cash paid to acquire investments | (6,079,759,395) | (1,324,664,839) | ||||
Cash paid relating to other investing activities | (703,000,000) | (175,000,000) | ||||
Sub-total of cash outflows | (7,126,613,370) | (1,687,698,387) | ||||
Net cash flows from investing activities | (468,164,616) | (874,365,368) | ||||
Interim Report 2020 46
COMPANY CASH FLOW STATEMENT
For the six months ended 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
For the six | For the six | ||||||
months ended | months ended | ||||||
Item | 30 June 2020 | 30 June 2019 | |||||
(Unaudited) | (Unaudited) | ||||||
3. | Cash flows from financing activities | ||||||
Cash received from capital contributions | - | 1,978,929,768 | |||||
Cash received from borrowings | 252,000,000 | 186,000,000 | |||||
Sub-total of cash inflows | 252,000,000 | 2,164,929,768 | |||||
Cash repayments of borrowings | (205,800,000) | (1,452,100,000) | |||||
Cash payments for distribution of dividends, profits or | |||||||
interest expenses | (85,707,706) | (151,089,039) | |||||
Cash paid relating to other financing activities | (23,231,550) | (22,514,007) | |||||
Sub-total of cash outflows | (314,739,256) | (1,625,703,046) | |||||
Net cash flows from financing activities | (62,739,256) | 539,226,722 | |||||
4. | Effect of foreign exchange rate changes on cash | 18,241,739 | (260,109) | ||||
5. | Net increase in cash | 43,980,454 | 78,992,135 | ||||
Add: Cash at the beginning of the period | 6,829,500,453 | 6,819,212,991 | |||||
6. | Cash at the end of the period | 6,873,480,907 | 6,898,205,126 | ||||
The accompanying notes form an integral part of these financial statements.
Legal representative: | Principal in charge of accounting: | Head of accounting department: |
47 Qingdao Port International Co., Ltd.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
Attributable to shareholders of the Company | |||||||||||||||||||
Other | Total | ||||||||||||||||||
comprehensive | General | Undistributed | Minority | shareholders' | |||||||||||||||
Item | Note 4 | Share capital | Capital surplus | income | Specific reserve | Surplus reserve | risk reserve | profits | interests | equity | |||||||||
Balance at 31 December 2018 | 6,036,724,000 | 10,777,968,793 | 133,694,188 | 3,399,949 | 986,974,314 | 298,283,806 | 8,742,614,209 | 2,439,864,984 | 29,419,524,243 | ||||||||||
Movements for the six months ended | |||||||||||||||||||
30 June 2019 (Unaudited) | |||||||||||||||||||
Total comprehensive income | |||||||||||||||||||
Net profit | - | - | - | - | - | - | 2,008,021,219 | 169,965,043 | 2,177,986,262 | ||||||||||
Other comprehensive income | (33) | - | - | 87,135,763 | - | - | - | - | (2,853,132) | 84,282,631 | |||||||||
Total comprehensive income | |||||||||||||||||||
for the period | - | - | 87,135,763 | - | - | - | 2,008,021,219 | 167,111,911 | 2,262,268,893 | ||||||||||
Capital contribution and withdrawal | |||||||||||||||||||
by shareholders | |||||||||||||||||||
Ordinary shares held by shareholders | (31), (32) | 454,376,000 | 1,524,553,768 | - | - | - | - | - | - | 1,978,929,768 | |||||||||
Capital contribution by minority | |||||||||||||||||||
shareholders in subsidiaries | - | - | - | - | - | - | - | 6,000,000 | 6,000,000 | ||||||||||
Profit distribution | |||||||||||||||||||
Profit distribution to shareholders | (36) | - | - | - | - | - | - | (2,464,670,670) | (49,470,140) | (2,514,140,810) | |||||||||
Specific reserve | |||||||||||||||||||
Appropriation to safety fund | - | - | - | 26,787,817 | - | - | - | 4,243,938 | 31,031,755 | ||||||||||
Utilization of safety fund | - | - | - | (22,738,389) | - | - | - | (3,997,860) | (26,736,249) | ||||||||||
Recognition of other changes in equity | |||||||||||||||||||
of associates and joint ventures | (32) | - | 12,143,196 | - | - | - | - | - | - | 12,143,196 | |||||||||
Balance at 30 June 2019 (Unaudited) | 6,491,100,000 | 12,314,665,757 | 220,829,951 | 7,449,377 | 986,974,314 | 298,283,806 | 8,285,964,758 | 2,563,752,833 | 31,169,020,796 | ||||||||||
Interim Report 2020 48
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
Attributable to shareholders of the Company | |||||||||||||||||||
Other | Total | ||||||||||||||||||
Share | Capital | comprehensive | Specific | Surplus | General | Undistributed | Minority | shareholders' | |||||||||||
Item | Note 4 | capital | surplus | income | reserve | reserve | risk reserve | profits | interests | equity | |||||||||
Balance at 31 December 2019 | 6,491,100,000 | 12,326,352,961 | 182,668,672 | 3,914,265 | 1,278,378,901 | 380,586,794 | 9,694,379,282 | 3,239,981,167 | 33,597,362,042 | ||||||||||
Movements for the six months ended | |||||||||||||||||||
30 June 2020 (Unaudited) | |||||||||||||||||||
Total comprehensive income | |||||||||||||||||||
Net profit | - | - | - | - | - | - | 2,012,822,439 | 305,887,088 | 2,318,709,527 | ||||||||||
Other comprehensive income | (33) | - | - | (8,485,330) | - | - | - | - | (3,636,570) | (12,121,900) | |||||||||
Total comprehensive income | |||||||||||||||||||
for the period | - | - | (8,485,330) | - | - | - | 2,012,822,439 | 302,250,518 | 2,306,587,627 | ||||||||||
Capital contribution and withdrawal | |||||||||||||||||||
by shareholders | |||||||||||||||||||
Capital contribution by minority | |||||||||||||||||||
shareholders in subsidiaries | - | - | - | - | - | - | - | 77,450,000 | 77,450,000 | ||||||||||
Profit distribution | |||||||||||||||||||
Profit distribution to shareholders | (36) | - | - | - | - | - | - | (1,300,167,330) | (35,086,249) | (1,335,253,579) | |||||||||
Specific reserve | |||||||||||||||||||
Appropriation to safety fund | - | - | - | 27,429,785 | - | - | - | 5,111,444 | 32,541,229 | ||||||||||
Utilization of safety fund | - | - | - | (19,431,940) | - | - | - | (2,341,037) | (21,772,977) | ||||||||||
Recognition of other changes in equity | |||||||||||||||||||
of associates and joint ventures | (32) | - | 13,038,294 | - | - | - | - | - | - | 13,038,294 | |||||||||
Balance at 30 June 2020 (Unaudited) | 6,491,100,000 | 12,339,391,255 | 174,183,342 | 11,912,110 | 1,278,378,901 | 380,586,794 | 10,407,034,391 | 3,587,365,843 | 34,669,952,636 | ||||||||||
The accompanying notes form an integral part of these financial statements.
Legal representative: | Principal in charge of accounting: | Head of accounting department: |
49 Qingdao Port International Co., Ltd.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended 30 June 2020 (All amounts in RMB Yuan unless otherwise stated)
Other | ||||||||||||||||||||
comprehensive | Undistributed | |||||||||||||||||||
Item | Share capital | Capital surplus | income | Specific reserve | Surplus reserve | profits | Total equity | |||||||||||||
Balance at 31 December 2018 | 6,036,724,000 | 14,706,766,468 | 137,710,000 | - | 986,974,314 | 6,479,324,825 | 28,347,499,607 | |||||||||||||
Movements for the six months ended | ||||||||||||||||||||
30 June 2019 (Unaudited) | ||||||||||||||||||||
Total comprehensive income | ||||||||||||||||||||
Net profit | - | - | - | - | - | 1,506,225,551 | 1,506,225,551 | |||||||||||||
Other comprehensive income | - | - | 81,710,000 | - | - | - | 81,710,000 | |||||||||||||
Total comprehensive income | ||||||||||||||||||||
for the period | - | - | 81,710,000 | - | - | 1,506,225,551 | 1,587,935,551 | |||||||||||||
Capital contribution and withdrawal by | ||||||||||||||||||||
shareholders | ||||||||||||||||||||
Ordinary shares held by shareholders | 454,376,000 | 1,524,553,768 | - | - | - | - | 1,978,929,768 | |||||||||||||
Profit distribution | ||||||||||||||||||||
Profit distribution to shareholders | - | - | - | - | - | (2,464,670,670) | (2,464,670,670) | |||||||||||||
Specific reserve | ||||||||||||||||||||
Appropriation to safety fund | - | - | - | 16,640,834 | - | - | 16,640,834 | |||||||||||||
Utilization of safety fund | - | - | - | (16,640,834) | - | - | (16,640,834) | |||||||||||||
Recognition of other changes in equity | ||||||||||||||||||||
of associates and joint ventures | - | 12,143,196 | - | - | - | - | 12,143,196 | |||||||||||||
Balance at 30 June 2019 (Unaudited) | 6,491,100,000 | 16,243,463,432 | 219,420,000 | - | 986,974,314 | 5,520,879,706 | 29,461,837,452 | |||||||||||||
Interim Report 2020 50
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended 30 June 2020
(All amounts in RMB Yuan unless otherwise stated)
Other | |||||||||||||||
comprehensive | Undistributed | ||||||||||||||
Item | Share capital | Capital surplus | income | Specific reserve | Surplus reserve | profits | Total equity | ||||||||
Balance at 31 December 2019 | 6,491,100,000 | 16,255,150,636 | 191,510,000 | - | 1,278,378,901 | 6,637,295,439 | 30,853,434,976 | ||||||||
Movements for the six months ended | |||||||||||||||
30 June 2020 (Unaudited) | |||||||||||||||
Total comprehensive income | |||||||||||||||
Net profit | - | - | - | - | - | 1,975,463,877 | 1,975,463,877 | ||||||||
Other comprehensive income | - | - | - | - | - | - | - | ||||||||
Total comprehensive income for the period | - | - | - | - | - | 1,975,463,877 | 1,975,463,877 | ||||||||
Profit distribution | |||||||||||||||
Profit distribution to shareholders | - | - | - | - | - | (1,300,167,330) | (1,300,167,330) | ||||||||
Specific reserve | |||||||||||||||
Appropriation to safety fund | - | - | - | 14,687,201 | - | - | 14,687,201 | ||||||||
Utilization of safety fund | - | - | - | (14,687,201) | - | - | (14,687,201) | ||||||||
Recognition of other changes in equity | |||||||||||||||
of associates and joint ventures | - | 13,038,294 | - | - | - | - | 13,038,294 | ||||||||
Balance at 30 June 2020 (Unaudited) | 6,491,100,000 | 16,268,188,930 | 191,510,000 | - | 1,278,378,901 | 7,312,591,986 | 31,541,769,817 | ||||||||
The accompanying notes form an integral part of these financial statements.
Legal representative: | Principal in charge of accounting: | Head of accounting department: |
51 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
1 GENERAL INFORMATION
Qingdao Port International Co., Ltd. ("the Company") is a joint stock limited company incorporated in Qingdao City of Shandong Province of the People's Republic of China ("the PRC") on 15 November 2013 (the Company's "Date of Incorporation") by Qingdao Port (Group) Co., Ltd. ("Qingdao Port Group") as the Leading Promoter together with "Other Promoters" including Shenzhen Malai Storage Co., Ltd. ("Malai Storage"), Qingdao Ocean Shipping Co., Ltd. ("Qingdao Ocean") (now renamed as COSCO Shipping (Qingdao) Co., Ltd.), China Shipping Terminal Development Co., Ltd. ("China Shipping Terminal"), Everbright Holdings (Qingdao) Financial Leasing Co., Ltd. (Everbright Holdings Qingdao) and Qingdao International Investment Co., Ltd. ("Qingdao International Investment") (Collectively referred to as "other promoters"), with its registered address at No. 12 Jingba Road, Huangdao District, Qingdao, PRC.
Pursuant to Qingdao State-Owned Assets Supervision & Administration Commission's Reply on Approval of Establishment of Limited Liability Company and Listing of H-Shares By Qingdao Port (Group) Co., Ltd. (Qing Guo Zi Gui [2013] No. 29) and restructuring plan, Qingdao Port Group restructures and establishes a limited liability company. The total share capital of the Company at incorporation is 4,000,000,000 shares (Par value at RMB1). The total capital contributions subscribed by the initiators and the share capital converted are as follows (Amounts in ten thousand Yuan):
Amount of | Share | Capital | ||||||||
Name of promoter | Form of contribution | contribution | capital | surplus | Shareholding | |||||
Qingdao Port Group | Asset and liability | 1,065,228 | 360,000 | 705,228 | 90.0% | |||||
Malai Storage | Cash at bank and on hand | 33,141 | 11,200 | 21,941 | 2.8% | |||||
Qingdao Ocean | Cash at bank and on hand | 28,406 | 9,600 | 18,806 | 2.4% | |||||
China Shipping Terminal | Cash at bank and on hand | 28,406 | 9,600 | 18,806 | 2.4% | |||||
Everbright Holdings | Cash at bank and on hand | |||||||||
Qingdao | 14,203 | 4,800 | 9,403 | 1.2% | ||||||
Qingdao International | Cash at bank and on hand | |||||||||
Investment | 14,203 | 4,800 | 9,403 | 1.2% | ||||||
Total | 1,183,587 | 400,000 | 783,587 | 100.0% | ||||||
The Company issued 705,800,000 foreign-listedH-shares overseas at its Initial Public Offering on 6 June 2014. The issuing price per share is HKD3.76 (approximately RMB2.98). The amount of raised capital less capitalized listing expenses was RMB1,995,921,171, including share capital of RMB705,800,000 (705,800,000 shares, par value at RMB1) and capital surplus of RMB1,290,121,171.
The Company exercised over-allotment option on 2 July 2014 and issued additional 72,404,000 foreign-listed H shares overseas. The issuing price per share was HKD3.76 (approximately RMB2.99). The amount raised in over-allotment was RMB216,167,727, including share capital of RMB72,404,000 (72,404,000 shares, par value at RMB1) and capital surplus of RMB143,763,727.
Furthermore, 77,821,000 state-owned shares held by Qingdao Port Group (equivalent to 10% of the issued H-shares) are converted to H-shares and transferred to the National Council for Social Security Fund of the PRC as a portion of shares in the IPO and over-allotment for sale.
Interim Report 2020 52
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
1 GENERAL INFORMATION (Continued)
The completion of the placing of 243,000,000 new H shares of the Company (the "Placing") took place on 18 May 2017 at the placing price of HK$4.32 per H Share (equivalent to approximately RMB3.81). The number of total share capital of the Company increased to 5,021,204,000 shares as a result of the issue of the Placing Shares.
The Company made private placement of 1,015,520,000 Domestic Shares to Shanghai China Shipping Terminal Development Co., Ltd. ("Shanghai China Shipping Terminal") on 22 May 2017 at a subscription price of RMB5.71 per share. After the completion of the private placement of the Domestic Shares, the number of total issued shares of the Company increased to 6,036,724,000 shares.
On 21 January 2019, the Company completed the initial public offering of 454,376,000 ordinary shares (A shares) and was listed on the main board of Shanghai Stock Exchange with a par value of RMB1.00 per share at the issuing price of RMB4.61 per share. After the completion of the issuance of A shares, the number of total issued shares of the Company increased to 6,491,100,000 shares.
As at 30 June 2020, the total share capital of the Company is 6,491,100,000 shares with par value at RMB1.00, including 5,392,075,000 A-shares and 1,099,025,000 H-shares, accounting for 83.07% and 16.93% respectively of the total share capital of the Company. Qingdao Port Group holds 54.47% shares of the Company in total.
Pursuant to the Gratuitous Transfer Agreement of the Equity Interests in Qingdao Port Group. Among Shandong Port Group Co., Ltd., the State-owned Assets Supervision and Administration Commission of Qingdao Municipal People's Government ("Qingdao SASAC") and the State-Owned Assets Supervision and Administration Commission of Weihai Municipal People's Government (the "Gratuitous Transfer Agreement") signed on 22 August 2019, Qingdao SASAC shall gratuitously transfer 100% equity interests in Qingdao Port Group to Shandong Port Group Co., Ltd. Upon completion of the gratuitous transfer, Qingdao Port Group will become a wholly-owned subsidiary of Shandong Port Group Co., Ltd.. The closing of the gratuitous transfer is subject to the taking effect of the Gratuitous Transfer Agreement, A shares of the Company having being listed for one year, the approval from the State Administration for Market Regulation on the declaration of concentration of business undertakings involved in the gratuitous transfer, and the exemption from the China Securities Regulatory Commission and the waiver from Hong Kong Securities and Futures Commission on the obligation of making a general offer regarding the shares of the Company by Shandong Port Group Co., Ltd. triggered by the gratuitous transfer. As of the date of this announcement, the gratuitous transfer has not been completed yet, the controlling shareholder of the Company is still Qingdao Port Group, and Qingdao SASAC is still the actual controller of the Company.
The scope of business of the Company and its subsidiaries (collectively the "Group") includes port and port-related services such as stevedoring, stacking, logistics of containers, metal ores, coal, crude oil, grains, break bulk cargo, financing service business, and port supporting business like port machinery manufacture, construction, tugboat and barging, and ocean shipping tallying.
For the major subsidiaries included in the scope of consolidation during the reporting period, please refer to Note
6. The newly incorporated subsidiaries in the reporting period are newly established subsidiaries. Subsidiary that is excluded from consolidation for the reporting period includes that already disposed, please refer to Note 5.
The financial statements have been approved for issuance by the Company's Board of Directors on 27 August 2020.
53 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
Accounting policies and accounting estimates are determined based on the features of the Group's production and operation, which mainly include judgement criteria for the impairment of financial assets (Note 2(9)), depreciation of fixed assets (Note 2(13)), amortization of intangible assets (Note 2(16)), early retirement benefits and supplementary retirement benefit's recognition (Note 2(19)), revenue recognition (Note 2(22)) and so on.
The Group's critical judgements applied in determining significant accounting policies are as follows Note 2(30).
-
Preparation basis of financial statements
The financial statements are prepared in accordance with the Accounting Standard for Business Enterprises - Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as the "Accounting Standards for Business Enterprises"); and are also prepared in accordance with the Public Information Disclosure and Compilation Rules for Public Offering of Securities No. 15 - General Provisions for Financial Reporting issued by China Securities Regulatory Commission.
The financial statements are prepared on a going concern basis.
The new Hong Kong Companies Ordinance came into effect on 3 March 2014. Certain disclosures in the financial statements have been adjusted in accordance with requirements in Hong Kong Companies Ordinance. - Preparation basis of consolidated financial statements
Prior to the establishment of the Company, Qingdao Port Group was reorganized under the plan approved by Qingdao SASAC and transferred certain business into the Company; therefore, the matter was deemed as business combination involving enterprises under common control. Pursuant to the Accounting Standards for Business Enterprises, at preparation of the consolidated financial statements of the Group, the assets and liabilities contributed by Qingdao Port Group at the Company's Date of Incorporation remain presented at their original carrying amounts rather than at the appraisal values approved by the competent state-owned assets management authorities in the reorganization. The difference between the appraisal values and the carrying amounts is charged against the shareholders' equity in the consolidated financial statements.
On the other hand, certain subsidiaries of the Company appraised their assets and liabilities in the process of transformation from state-owned enterprises into limited liability companies. In the light of Interpretation No. 1 to the Accounting Standards for Business Enterprises, the assets and liabilities of such reorganized companies shall, on the incorporation dates, be consolidated into the consolidated financial statements of the Group based on the appraisal values approved by the competent state-owned assets management authorities. - Preparation basis of the Company's financial statements
At preparation of the Company's financial statement, the assets and liabilities of Qingdao Port Group that were contributed into the Company are recognized based on the appraisal values approved by the competent state-owned assets management authorities, stated on the Company's financial statements.
- Preparation basis of consolidated financial statements
Interim Report 2020 54
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the six months ended 30 June 2020 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the Consolidated and the Company's financial position as at 30 June 2020 and their financial performance, cash flows and other information for the six months ended 30 June 2020. - Accounting year
The Company's accounting year starts on 1 January and ends on 31 December. - Recording currency
The recording currency is Renminbi (RMB). The financial statements are shown in RMB. - Business combination
-
Business combination involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at the carrying amount. If the acquiree was acquired from the third party by the ultimate controlling party in previous years, it shall be based on the carrying amount of the assets and liabilities of the acquiree (including the goodwill formed by the acquisition of the acquiree by the ultimate controlling party) in the consolidated financial statements of the ultimate controlling party. The difference between the carrying amount of the net assets obtained from the combination and the carrying amount of the consideration paid for the combination is treated as an adjustment to capital surplus (capital premium). If the capital surplus (capital premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. Costs that directly attribute to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issuance of equity or debt securities for the business combination are included in the initially recognized amounts of the equity or debt securities. - Business combination involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition date. When the cost of the combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is recognized as goodwill; when the cost of combination is lower than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is recognized in profit or loss for the current period. Costs directly attribute to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issuance of equity or debt securities for the business combination are included in the initially recognized amounts of the equity or debt securities.
-
Business combination involving enterprises under common control
55 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realized before the combination date is presented separately in the consolidated income statement.
In preparation of the consolidated financial statements, when the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are eliminated from the consolidated financial statements. The portion of subsidiaries' owners' equity and the portion of subsidiaries' net profits and losses and comprehensive incomes for the period not attributable to the Company are recognized as minority interests, net profit attributed to minority interests and total comprehensive incomes attributed to minority interests and presented separately in the consolidated financial statements under shareholders' equity, net profits and total comprehensive income respectively. Unrealized profits and losses resulting from the sales of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to owners of the parent. Unrealized profits and losses resulting from the sales of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to owners of the parent and minority interests in accordance with the allocation proportion of the parent in the subsidiary.
If the accounting treatment of a transaction is inconsistent in the financial statements at the Group level and at the Company or its subsidiary level, adjustment will be made from the perspective of the Group. - Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
Interim Report 2020 56
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Foreign currency translation
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognized in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are capitalized as part of the cost of those assets. Non-monetary items denominated in foreign currencies and measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement. - Financial instruments
Financial instrument is a contract that forms a financial asset of one party and forms a financial liability or equity instrument of the other party. When the Group becomes a party to a financial instrument contract, the relevant financial assets or financial liabilities are recognized. - Financial assets
-
Classification and measurement of financial assets
Based on the business model for financial asset management and the contractual cash flow characteristics of financial assets, the Group classifies the financial assets as: (1) financial assets measured at amortized cost; (2) financial assets at fair value through other comprehensive income; (3) financial assets at fair value through profit or loss.
Financial assets are measured at fair value at initial recognition. For financial assets at fair value through profit and loss, the related transaction costs are directly recognized in profit or loss. For other financial assets, the related transaction costs are included in initially recognized amounts. Accounts receivable or notes receivable arising from sales of products or rendering of services excluding or without regard to significant financing components are initially recognized at the consideration that is entitled to be charged by the Group as expected.
-
Classification and measurement of financial assets
57 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Financial instruments (Continued)
- Financial assets (Continued)
-
Classification and measurement of financial assets (Continued) Debt instruments
Debt instruments held by the Group are instruments that meet the definition of financial liabilities from the perspective of the issuer, and are measured with the following three methods respectively:
Measured at amortized cost:
The Group's business model for financial asset management aims to receive contractual cash flows. The contractual cash flow characteristics of such financial assets are consistent with basic loan arrangement, which means the cash flow generated at certain dates is only the payment for the principal and corresponding interest based on unpaid principal. The interest income of such financial assets is recognized using the effective interest method. Such financial assets mainly comprise cash at bank and on hand, notes receivable, accounts receivable, other receivables, debt investments and long-term receivables. Debt investments and long-term receivables due within 1 year (inclusive) at the balance sheet date are included in the current portion of non-current assets; debt investments with maturities of no more than 1 year (inclusive) at acquisition are included in other current assets.
Measured at fair value through other comprehensive income:
The Group's business model for the financial asset management aims to receive contractual cash flows and hold the financial assets for sale. The contractual cash flow characteristics of such financial assets are consistent with basic loan arrangement. Such financial assets are measured at fair value through other comprehensive income. However, impairment losses or gains, exchange gains or losses and interest income calculated using the effective interest method are included in profit or loss in the current period. Such financial assets mainly comprise financing receivables and other debt investments, etc. Such financial assets are presented as other debt investments. Other debt investments due within 1 year (inclusive) at the balance sheet date are included in the current portion of non-current assets, other debt investments with maturities of no more than 1 year (inclusive) at acquisition are included in other current assets.
-
Classification and measurement of financial assets (Continued) Debt instruments
Interim Report 2020 58
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Financial instruments (Continued)
- Financial assets (Continued)
-
Classification and measurement of financial assets (Continued) Measured at fair value through profit or loss:
Debt instruments not classified as financial assets and measured at amortized cost or at fair value through other comprehensive income are presented as financial assets held for trading at fair value through profit or loss by the Group. At initial recognition, the Group designates a portion of financial assets as those measured at fair value through profit or loss to eliminate or dramatically reduce accounting mismatches.Financial assets with maturities over 1 year and expected to be held over 1 year at the balance sheet date are presented as other non-current financial assets.
Equity instruments
Investments in equity instruments over which the Group exert no control, joint control or significant influence, are presented as financial assets held for trading and are measured at fair value through profit or loss; financial assets expected to be held over 1 year at the balance sheet date are presented as other non-current financial assets. - Impairment
Relevant loss provision is recognized for financial assets measured at amortized cost, investments in equity instruments at fair value through other comprehensive income, contract assets and financial guarantee contracts based on Expected Credit Loss ("ECL").
ECL is recognized when the Group considers reasonable and supportable information that is related to past events, current situation and forecasts on future economic conditions, and calculates probability-weighted amount of the present value of the difference between cash flows of contract receivable and expected cash flows, taking default risk as the weight.
ECL of financial instruments in different stages are measured respectively at each balance sheet date by the Group. Stage 1 includes financial instruments that have not had a significant increase in credit risk since initial recognition. For these assets, loss provisions are provided at 12-month ECL; Stage 2 includes financial instruments that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment. For these financial instruments, lifetime ECL are recognized. Stage 3 includes financial assets that have objective evidence of impairment at the reporting date. For these assets, lifetime ECL are recognized.
-
Classification and measurement of financial assets (Continued) Measured at fair value through profit or loss:
59 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Financial instruments (Continued)
- Financial assets (Continued)
-
Impairment (Continued)
For financial instruments with low credit risk at the balance sheet date, the Group assumes the credit risk of such financial instruments does not increase significantly after the initial recognition, and measures loss provision based on 12-month ECL.
For financial instruments in Stage 1 and Stage 2 and that with low credit risk, interest income is calculated based on gross carrying amount without deduction of impairment provision and the effective interest rate. For financial instruments in the Stage 3, interest income is calculated based on amortized cost by using carrying amount less impairment provision appropriated and the effective interest rate.
For notes receivable, accounts receivable, financing receivables and contract assets caused by sales of goods, rendering of services and other daily operating activities, no matter whether there is a significant financing component, the Group measures their loss provision based on lifetime ECL.
-
Impairment (Continued)
When there is no information at reasonable cost to assess the ECL on the individual basis, the Group classifies receivables into several groups in accordance with their credit risk characteristics and measures ECL on the basis of grouping basis. Basis for grouping is as follows:
Financing receivables and notes receivable group:
Financing receivables group | Bank acceptance notes |
Group A | Trade acceptance notes within the scope of consolidation |
Group B | All other remaining trade acceptance notes from other companies |
other than Group A | |
Accounts receivable group: | |
Group A | Accounts receivable within the scope of consolidation |
Group B | All other remaining accounts receivable from other companies other |
than Group A |
Other receivables and long-term receivables group:
Group A | Other receivables and long-term receivables within the scope of |
consolidation | |
Group B | Loans and payments in advance |
Group C | Interest receivable of bank deposits and dividends receivable |
Group D | All other remaining receivables other than Group A, Group B and |
Group C |
Interim Report 2020 60
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Financial instruments (Continued)
- Financial assets (Continued)
-
Impairment (Continued)
For accounts receivable, notes receivable and financing receivables caused by sales of goods, rendering of services and other daily operating activities that on the grouping basis, the Group calculates the ECL by referring to historical credit loss experience, considering current situation and future economic conditions, and based on the exposure at default ("EAD") and lifetime ECL ratio. For other notes receivables, financing receivables and other receivables on the grouping basis, the Group calculates the ECL by referring to historical credit loss experience, considering current situation and future economic conditions, and based on the EAD and the ECL ratio within 12 months or for the lifetime.
For loans and advances that are accounted for as other receivables, the Group measures loans based on the client's "probability of default" and financial status of the agreed obligations, taking into account EAD and possible future development trends.
Impairment losses provision or reversal is recognised in profit or loss in the current period by the Group. For debt instrument measured at fair value through other comprehensive income, the Group adjusted other comprehensive income accordingly upon the recognition of the impairment losses or gains into profit or loss. - Derecognition
A financial asset is derecognized when any of the below criteria is met: (1) the contractual rights to receive the cash flows from the financial asset expire; (2) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (3) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.
On derecognition of investments in other equity instruments, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognized directly in other comprehensive income, is recognized in retained earnings. On derecognition of other financial assets, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognized directly in other comprehensive income, is recognized in profit of loss in the current period.
-
Impairment (Continued)
61 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Financial instruments (Continued)
-
Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: financial liabilities measured at amortized cost and financial liabilities at fair value through profit or loss.
The financial liabilities of the Group mainly comprise of financial liabilities measured at amortized cost, including notes payable, accounts payable, other payables, borrowings and bonds payable. Such financial liabilities are recognized initially at fair value, net of transaction costs incurred, and subsequently measured using the effective interest method. Such financial liabilities with maturities no more than one year (inclusive) are classified as current liabilities. Other financial liabilities with maturities over one year but are due within one year (inclusive) at the balance sheet date are classified as the current portion of non-current liabilities. Others are classified as non-current liabilities.
A financial liability is derecognized or partly derecognized when the current obligation is discharged or partly discharged. The difference between the carrying amount of the financial liability or the derecognized part of the financial liability and the consideration paid is recognized in profit or loss in the current period. - Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. At valuation, the Group uses valuation techniques that are applicable in the current situation and supported by adequate available data and other information, selects inputs with the same characteristics as those of assets or liabilities considered in relevant transactions of assets or liabilities by market participants, and gives priority to the use of relevant observable inputs. The Group uses unobservable inputs when relevant observable inputs are not available or feasible.
-
Financial liabilities
Interim Report 2020 62
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Inventories
-
Classification
Inventories include amounts of materials and finished goods, spare parts, fuel, low value consumables, and are stated at the lower of cost and net realizable value. - Costing of inventories when issued
Cost of materials, finished goods, fuel and spare parts is determined using weighted average method when issued while low value consumables are charged to cost in full when issued for use. - Basis for determining net realizable values of inventories and method for making provision for decline in the value of inventories
Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. - The Group adopts the perpetual inventory system.
-
Classification
-
Long-termequity investments
Long-term equity investments comprise the Company's long-term equity investments in its subsidiaries, and the Group's long-term equity investments in its joint ventures and associates.
Subsidiaries are the investees over which the Company is able to exercise control. A joint venture is a joint arrangement which is structured through a separate vehicle over which the Group has joint control together with other parties and only has rights to the net assets of the arrangement based on legal forms, contractual terms and other facts and circumstances. An associate is the investee over which the Group has significant influence by participating in the financial and operating policy decisions.
Investments in subsidiaries are presented in the Company's financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in joint ventures and associates are accounted for using the equity method.
63 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Long-termequity investments (Continued)
-
Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity investments acquired through a business combination involving enterprises under common control, the investment cost shall be the absorbing party's share of the carrying amount of owners' equity of the party being absorbed at the combination date; for long-term equity investment acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination cost.
For long-term equity investments acquired not through a business combination: for long-term equity investment acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securities issued. - Subsequent measurement and recognition of related profit and loss
For long-term equity investments accounted for using the cost method, they are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognized as investment income in profit or loss.
For long-term equity investments accounted for using 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 acquisition date, the long-term equity investment is measured at 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 acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Group recognizes the investment income according to its share of net profit or loss of the investee. The Group discontinues recognizing its share of the net losses of an investee after the carrying amounts of the long-term equity investment together with any long-term interests that in substance form part of the investor's net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognizing the investment losses and the provisions. The changes of the Group's share of the investee's owner's equity other than those arising from the net profit or loss, other comprehensive income and profit distribution are recognized in the Group's capital surplus and the carrying amounts of the long-term equity investment are adjusted accordingly. The carrying amount of the investment is reduced by the Group's share of the profit distribution or cash dividends declared by an investee. The unrealized profits or losses arising from the transactions between the Group and its investees are eliminated in proportion to the Group's equity interest in the investees, based on which the investment gain or losses are recognized. Any losses resulting from transactions between the Group and its investees attributable to asset impairment losses are not eliminated.
-
Determination of investment cost
Interim Report 2020 64
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Long-termequity investments (Continued)
-
Subsequent measurement and recognition of related profit and loss (Continued)
When the Group increases the percentage of shareholding in investee due to additional investment, but the investee remains to be an associate or a joint venture, it shall be accounted for using equity method with the updated percentage of shareholding. When the additional 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 additional investment date, the cost of long-term equity investment is not adjusted; when the additional investment cost is less than the Group's share of the fair value of the investee's identifiable net assets at the additional investment date, the difference is included in non-operating income and the cost of the long-term equity investment is adjusted upwards accordingly. While making the adjustment, goodwill relating to the original and additional investment or the amount included in profit or loss should be considered. - Basis for determining existence of control, jointly control or significant influence over investees
Control is the power to govern an investee, so as to obtain variable returns from its involvement with the investee, and has the ability to use its power over the investee to affect the amount of the investor's returns.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities 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. - Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries, joint ventures and associates are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2 (18)).
-
Subsequent measurement and recognition of related profit and loss (Continued)
65 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Investment properties
Investment properties, including land use rights that have already been leased out, buildings that are held for the purpose of leasing, are measured initially at cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are recognized in profit or loss in the period in which they are incurred.
The Group adopts the cost model for subsequent measurement of investment properties. Land use rights are amortized on the straight-line basis over their approved use period of 35-50 years. Buildings are depreciated to their estimated net residual values over their estimated useful lives. The estimated useful lives, the estimated net residual values that are expressed as a percentage of cost and the annual depreciation rates of buildings and land use rights are as follows:
Estimated | Estimated net | Annual depreciation/ | |
useful lives | residual values | amortization rates | |
Buildings | 30 years | 4% | 3.2% |
Land use rights | 35-50 years | - | 2.0%-2.9% |
When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or intangible asset on the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying amount on the date of the transfer. When transferred, carrying amount before transfer shall be recorded as cost after transfer.
The investment property's estimated useful life, net residual value and depreciation method applied are reviewed and adjusted as appropriate at each year-end.
An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sale, transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses is recognized in profit or loss for the current period.
The carrying amount of an investment property is reduced to the recoverable amount if the recoverable amount is below the carrying amount (Note 2 (18)).
Interim Report 2020 66
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Fixed assets
-
Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, port facilities, storage facilities, loading equipment, machinery and equipment, vessels, transportation equipment, communication facilities, office equipment and other equipment.
Fixed assets are recognized when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the time of acquisition. The fixed assets contributed by the State shareholders at the reorganization of the Company into a corporation are recognized based on the evaluated amounts as approved by the state-owned assets administration department.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognized. All the other subsequent expenditures are recognized in profit or loss in the period in which they are incurred. - Depreciation methods of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based on the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows:
-
Recognition and initial measurement of fixed assets
Annual | |||
Estimated | Estimated net | depreciation | |
useful lives | residual values | rates | |
Buildings | 30 years | 4% | 3.2% |
Port facilities | 20-45 years | 4% | 2.1%-4.8% |
Storage facilities | 20-45 years | 4% | 2.1%-4.8% |
Loading equipment | 10 years | 4% | 9.6% |
Machinery and equipment | 5-18 years | 4% | 5.2%-19.2% |
Vessels | 18 years | 5% | 5.3% |
Transportation equipment | 10-12 years | 4% | 8.0%-9.6% |
Communication facilities | 5-8 years | 4% | 12.0%-19.2% |
Office equipment and other equipment | 5-12 years | 4% | 8.0%-19.2% |
The estimated useful life and the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed and adjusted as appropriate at each year-end.
67 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Fixed assets (Continued)
- The carrying amount of a fixed asset is reduced to the recoverable amount if the recoverable amount is below the carrying amount (Note 2(18)).
-
Disposal of fixed assets
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognized in profit or loss for the current period.
- Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalization and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2 (18)). - Borrowing costs
The borrowing costs that are directly attributable to acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be capitalized and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalization of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognized in profit or loss for the current period. Capitalization of borrowing costs is suspended during periods in which the acquisition or construction of an asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
The capitalized amount of specific borrowings intended to be used for the acquisition and construction of qualifying assets is determined by the interest expenses incurred in the period less interest income of the unused borrowings deposited at bank or investment income from temporary investments.
The capitalized amount of general borrowings intended to be used for the acquisition and construction of qualifying assets is determined by the weighted average of the excess of accumulated capital expenditure over capital expenditure of the special borrowings multiplied by the weighted average effective interest rate of the utilized general borrowings.The effective interest rate is the rate at which the future cash flows of the borrowings over the expected lifetime or a shorter applicable period are discounted into the initial recognized amount of the borrowings.
Interim Report 2020 68
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Intangible assets
Intangible assets include land use rights, sea area use rights, computer software, and are measured at cost. The intangible assets contributed by the State shareholders at the reorganization of the Company into a corporation are recognized based on the evaluated amounts as approved by the state-owned assets administration department. - Land use rights
Land use rights are amortized on the straight-line basis over their approved use period of 35-50 years. If the acquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognized as fixed assets. - Sea area use rights
Sea area use rights are initially recorded at their cost on acquisition and amortized on the straight-line basis over their useful lives of 45-50 years. - Computer software
Computer software is initially recorded at its cost on acquisition and amortized on the straight-line basis over its estimated useful life of 5 years. - Periodical review of useful life and amortization method
For an intangible asset with a finite useful life, review of its useful life and amortization method is performed at each year-end, with adjustments made as appropriate. - Research and development
The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at the end of the project.
- Land use rights
69 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Intangible assets (Continued)
-
Research and development (Continued)
Expenditure on the research phase is recognized in profit or loss in the period in which it is incurred. Expenditure on the development phase is capitalized only if all of the following conditions are satisfied: - it is technically feasible to complete the intangible asset so that it will be available for use or sale;
- management intends to complete the intangible asset, and use or sell it;
- it can be demonstrated how the intangible asset will generate economic benefits;
- there are adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and
- the expenditure attributable to the intangible asset during its development phase can be reliably measured.
-
Research and development (Continued)
Other development expenditures that do not meet the conditions above are recognized in profit or loss in the period in which they are incurred. Development costs previously recognized as expenses are not recognized as an asset in a subsequent period. Capitalized expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
-
Impairment of intangible assets
The carrying amount of intangible assets is reduced to its recoverable amount when its recoverable amount is lower than its carrying amount (Note 2 (18)).
Interim Report 2020 70
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Long-termprepaid expenses
Long-term prepaid expenses include the expenditures for improvements to right-of-use assets, and other expenditures that has been incurred but should be recognized as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortized on the straight-line basis over the expected beneficial period and are presented at actual expenditures net of accumulated amortization. - Impairment of long-term assets
Fixed assets, construction in progress, investment properties, right-of-use assets, intangible assets with a finite useful life and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that an asset may be impaired at the balance date. Intangible assets which are not ready for their intended use are tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related asset group or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or a group of asset groups, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognized. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from the carrying amounts of other assets within the asset group or group of asset groups in proportion to the carrying amounts of assets other than goodwill.
Once the above asset impairment loss is recognized, it will not be reversed for the value recovered in the subsequent periods.
71 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits provided in various forms of consideration in exchange for service rendered by employees or compensations for the termination of employment relationship. - Short-termemployee benefits
Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, short-term paid absences. The employee benefit liabilities are recognized in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Employee benefits which are non-monetary benefits are measured at fair value. - Post-employmentbenefits
The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the Group's post-employment benefits mainly include basic pensions, unemployment insurance, corporate annuity and supplemental retirement benefits. The first three items are under defined contribution plans and the last one is under defined benefit plans.
Basic pensions
The Group's employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to prescribed bases and percentage by the relevant local authorities. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognized as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
- Short-termemployee benefits
Interim Report 2020 72
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Employee benefits (Continued)
-
Post-employmentbenefits (Continued) Corporate annuity
Employees who retire on and subsequent to 1 January 2016 enjoy the corporate annuity plan set up by the Group in accordance with State's corporate annuity regulations apart from basic pensions. The annuity is accrued by the Group in proportion to the payroll. During the accounting period in which employees provide services, the amount calculated in line with the above-mentioned proportion is recognized as liabilities and is included into profit or loss for the current period.
Supplemental retirement benefits
According to "the Minutes of the 29th Executive Meeting of the 15th People's Government of Qingdao City" issued by the General Office of Qingdao Municipal Government on 19 August 2013, the Group, besides the pension plan specified by the State, offers supplemental retirement benefits to employees retired or to be retired prior to 31 December 2015 and the surviving family members involved, which is under defined benefit plans. In addition, the Group passed the resolution in 2016 that the Group will, besides the basic pensions and corporate annuity, offer part supplemental retirement benefits to employees retired on and after 1 January 2016. The above supplemental retirement benefits belong to defined benefit plan. The supplemental retirement benefits borne by the Group are recognized as liabilities, actuarially evaluated using projected unit credit method, and presented as the present value of expected future cash outflow. Actuarial gains and losses are included in other comprehensive income in the period when incurred, and past service cost is recognized in the period when incurred. The supplemental retirement benefits are discounted at the interest rate of government bonds that have terms to maturity approximating to the terms of the related supplemental retirement benefits.
The supplemental retirement benefits expected to be paid within one year since the balance sheet date are classified as employee benefits payable.
The supplemental retirement benefits borne by the Company for subsidiaries are deemed as investments in subsidiaries and are recorded into long-term equity investments.
-
Post-employmentbenefits (Continued) Corporate annuity
73 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Employee benefits (Continued)
-
Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits as liabilities and corresponding charge to profit or loss at the earlier of the following dates: when the Group cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; when the Group recognizes costs or expenses related to the restructuring that involves the payment of termination benefits.
Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement arrangements. The early retirement benefits refer to the salaries and social security contributions to be paid to and for the employees who accept voluntary retirement before the normal retirement date prescribed by the State, as approved by the management. The Group pays early retirement benefits to those early retired employees from the early retirement date until normal retirement date. The Group accounts for the early retirement benefits in accordance with the treatment of termination benefits, in which the salaries and social security contributions to be paid to and for the early retired employees from the off-duty date to the normal retirement date are recognized as liabilities with a corresponding charge to the profit or loss for the current period. The differences arising from the changes in the respective actuarial assumptions of the early retirement benefits and the adjustments of benefit standards are recognized in profit or loss in the period when occurred.
The termination benefits expected to be paid within one year since the balance sheet date are classified as employee benefits payable.
The early retirement benefits borne by the Company for subsidiaries are deemed as investments in subsidiaries and are recorded into long-term equity investments.
-
Termination benefits
- Dividend distribution
Cash dividend is recognized as a liability for the period in which the dividend is approved by the shareholders' meeting.
Interim Report 2020 74
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Provisions
Provisions for product warranties, onerous contracts etc. are recognized when the Group has a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditures required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows; the increase in the discounted amount of the provision arising from passage of time is recognized as interest expense.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best estimate.
The financial guarantee contract loss provision recognized by the Group on the basis of expected credit losses is recognized as an estimated liability.
The provisions expected to be settled within one year since the balance sheet date are classified as current liabilities. - Revenue recognition
The Group recognizes revenue at the amount of consideration to which the Group expects to be entitled when customers obtain control of relevant goods or services.
At the beginning date of a contract, the Group should assess the contract to identify the individual contract obligations in the contract, and to confirm whether the individual contract obligations are to be satisfied over time or at a point in time and then recognize the revenue respectively when the individual contract obligations are satisfied.
75 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Revenue recognition (Continued)
-
Rendering of services
The corresponding revenue recognition methods are summarised as follows: - Income from services is recognized based on the progress of completed services over a period of time, including stevedoring of goods (including metal ores, coal, crude oil, grains, break bulk cargo, containers), port management, logistics and transportation, tugboat and barging, ocean shipping tallying, construction and other services, which is determined based on proportion of costs incurred to date to the estimated total costs. On the balance sheet date, the Group re-estimates progress of completed services to reflect the changes of the compliance with the contract.
- Income from stacking of goods like metal ores, coal, crude oil, grains, break bulk cargo, containers is recognized on the straight-line basis over the service period.
-
Rendering of services
When the revenue is recognized according to the progress of completed services by the Group, the amounts with unconditional collection right obtained by the Group are recognized as accounts receivable, and the rest are recognized as contract assets. Meanwhile, loss provision for accounts receivable and contract assets is recognized based on ECL (Note 2 (9)). If the contract amount received or receivable exceeds the amount for the completed services, the difference is recognized as contract liabilities. Contract assets and contract liabilities under the same contract are presented on a net basis.
Contract costs include contract performance costs and contract acquisition costs. Costs for rendering of services are recognized as contract performance costs, and are carried forward to cost of sales from main operations according to the progress of services completed when the revenue is recognized. The Group will recognize the incremental costs incurred in obtaining the contracts as contract acquisition costs. If the carrying amount of contract costs exceeds the residual considerations expected to be obtained from the provision of the services less the costs expected to be incurred, the Group makes provision for impairment for the difference and recognizes it as assets impairment loss.
The Group accesses whether it is the principal or an agent in the transactions regarding whether the Group has the control of goods when transferring the goods to the customer or rendering of services. Provided that the Group has the control of goods (or services) before the transfer of the goods for services, it is the principal and should recognise revenue for the gross amount of consideration received or receivable; otherwise it is the agent and should recognise revenue at the amount of commissions and fees to which the Group expects to be entitled.
-
Sale of goods
Revenue from sales of oil and electricity belongs to contract obligations to be satisfied at a point in time and the corresponding revenue is recognized when the control of goods is transferred to the buyer.
Interim Report 2020 76
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including refund of taxes, financial subsidies, etc.
Government grant is recognized when the conditions attached to it can be complied with and the government grant can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the amount received or receivable. For a government grant in the form of transfer of non-monetary assets, it is measured at fair value; if the fair value is not reliably determinable, the grant is measured at nominal amount.
Government grants related to assets are those obtained for forming long-term assets by purchase, construction or acquisition in other ways. Grants related to income are government grants other than those related to assets.
Government grants related to assets are recorded as deferred income and recognized in profit or loss on a systemic basis over the useful lives of the assets.
Government grants related to income that compensate future costs, expenses or losses are recorded as deferred income and recognized in profit or loss upon the recognition of the related costs, expenses or losses; government grants related to income that compensate incurred costs, expenses or losses are recognized in current profit or loss directly.
The Group uses the same presentation method for similar government grants.
Government grants that are related to ordinary activities are included in operating profit, otherwise, they are recorded in non-operating income or expenses.
77 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognized for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognized for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
Deferred tax assets are only recognized for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, associates and joint ventures will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets are recognized.
Deferred tax assets and liabilities are offset when: - the deferred taxes are related to the same tax payer within the Group and the same taxation authority;
- that tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities.
Interim Report 2020 78
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Leases
Lease refers to a contract in which the lessor transfers the use right of the assets to the lessee in a certain period of time to obtain the consideration.
The Group as a lessee:
The Group recognizes right-of-use assets on the beginning date of the lease period and lease liabilities based on the present value of the unpaid amount of lease payment. Lease payments include fixed payment and the amount to be paid based on reasonable assurance that the purchase option will be exercised or the lease option will be terminated. The flexible rental based on the sales amount is not included in the lease payment and is recognized in profit or loss for the current period when actually incurred. Lease liabilities that are to be paid within one year (inclusive) since the balance sheet date are included in the current portion of non-current liabilities.
The Group's right-of-use assets comprise of port facilities, storage facilities, loading equipment and vessels, etc. Right-of-use assets are initially measured at cost which includes the initially measured amount of lease liabilities, the lease payment and initial direct costs on or before the beginning date of the lease period, deducting the lease incentives already received. If the Group can reasonably assure to obtain the ownership of lease assets when the lease period is due, depreciation is charged over the residual useful life of lease assets. Otherwise, depreciation is charged over the shorter of the lease period and the residual useful life of lease assets. The carrying amounts of right-of-use assets are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts.
For short-term leases with lease periods not exceeding 12 months and leases of low-value assets with low value, the Group chooses not to recognize the right-of-use assets and lease liabilities. And the related rental expense are either recognized over the period of the lease in current profit or loss or capitalized as part of the cost of related assets on a straight-line basis.
79 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Leases (Continued)
The Group as the lessor:
Lease that transfers substantially almost all the risks and rewards incidental to ownership of an lease asset is a finance lease. An operating lease is a lease other than a finance lease. - Operating leases
When the Group leases out self-owned port facilities, storage facilities, buildings and etc., the rental income from the operating lease is recognized on the straight-line basis over the lease period. - Finance leases
As at the beginning date of the lease period, the Group recognizes finance lease receivables for finance leases and derecognizes related assets. Finance lease receivables are included in long-term receivables and finance lease receivables that are to be received within one year (inclusive) since the balance sheet date are included in the current portion of non-current assets.
- Operating leases
- Held for sale and discontinued operations
A non-current asset or a disposal group is classified as held for sale when both of the following conditions are satisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present condition subject to usual practices for sale of such non-current asset or disposal group; (2) the Group has signed a legal binding sale agreement with other parties and has obtained appropriate approval, and the sale is to be completed within one year.
Non-current assets (except for financial assets, investment properties at fair value and deferred tax assets) that meet the recognition criteria for held for sale are recognized at the amount equal to the lower of the fair value less costs to sell and the carrying amount. Any excess of the original carrying amount over the fair value less the costs to sell is recognized as asset impairment losses.
Such non-current assets and assets/liabilities included in disposal groups as classified as held for sale are accounted for as current assets/liabilities, and are presented separately in the balance sheet.
A discontinued operation is a separately identified component of the Group that either has been disposed of or is classified as held for sale, and satisfies one of the following conditions: (1) represents a separate major line of business or geographical area of operations; (2) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with a view to resale.
Profit or loss from the discontinued operations stated in the income statement includes the profit or loss arising from operation and disposal.
Interim Report 2020 80
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Custodian business
Qingdao Port Finance Co., Ltd. ("Qingdao Finance"), a subsidiary of the Company, has custodian business mainly involving entrusted loan. Entrusted loan business refers to the business where under the entrusted loan agreement between Qingdao Finance and customer, Qingdao Finance offers loan ("entrusted loan") to other party under instruction of customer from the fund ("entrusted loan fund") provided by customer. As Qingdao Finance does not assume risk and reward incidental to the entrusted loan and associated entrusted loan fund, the entrusted loan and fund are recorded as off-balance sheet items by their capital, and no provision for impairment loss is made for such entrusted loan. - Specific reserve
According to the regulations of the Ministry of Finance, Administration of Work Safety and relevant local government departments, the Group accrues specific reserve of safety production in light of the actual revenue of dangerous goods stacking and related businesses in the prior year.
Specific reserve is mainly for safety expenses on handling,transportation service and stacking service.
The provision for specific reserve is recognized as relevant cost or profit or loss for the current period, and it is also included in specific reserve. The specific reserve is written down when withdrawal of safety fund is of expense expenditure. If it is capital expenditure, the expenditure incurred is recorded in construction in progress and recognized as fixed assets when the project is completed and is ready for the intended use, and meanwhile, specific reserve is written down at the cost of the fixed assets and accumulated depreciation is recognized at the same amount. Consequently, such fixed assets are not depreciated in subsequent periods. - Segment information
The Group identifies operating segments based on the internal organization structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to generate revenue and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group's management to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial position, operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
81 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below: - Critical accounting estimates and assumption
-
Estimate on useful lives and residual values of fixed assets
The Group's management estimates the expected useful lives and residual values of fixed assets, and review them periodically. The estimates are based on the historical actual useful lives and industry practices of fixed assets with similar nature and function. In the processing of using fixed assets, the economic environment, technical environment and other environment may have a significant impact on the useful lives and expected net residual values of fixed assets; and also changes in the economic environment, technical environment and other environment may also lead significant changes in the expected realization method of economic benefits related to fixed assets. If there are significant changes from previously estimated useful lives and residual values, the amount of depreciation expenses may change. - Actuarial calculation of early retirement and supplemental retirement benefits
The liabilities recognized from early retirement and supplemental retirement benefits by the Group are calculated on an actuarial basis using a number of assumptions. The assumptions include discount rates, salaries and welfare growth rate, and mortality rates, etc. Any differences between the actual results and assumptions are accounted in the current period in accordance with relevant accounting policies. Although the Group considers their assumptions are reasonable, change of experience data and assumptions will affect the amounts of early retirement benefit and supplemental retirement benefits liabilities and other comprehensive income associated with supplemental retirement benefits of the Group.
-
Estimate on useful lives and residual values of fixed assets
Interim Report 2020 82
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
- Critical accounting estimates and judgements (Continued)
- Critical accounting estimates and assumption (Continued)
-
Measurement of ECL
The Group calculates ECL according to exposure at default and ECL rate, and determines ECL rate based on probability of default and loss given default. When determining ECL rate, the Group adopts data like historical credit loss experience in combination with current situation and forward-looking information to adjust historical data. When considering forward-looking information, the Group uses indicators including the risk of economic downturn, the expected increase of unemployment rate, external market environment, technology environment and changes on customer situation. The Group periodically monitors and reviews assumptions relevant to the measurement of ECL. There were no significant changes on the above technological and key assumptions during the six months ended 30 June 2020.
-
Measurement of ECL
- Critical judgements in applying the accounting policies Classification and measurement of financial assets
Significant judgements involved in determining the classification of financial assets include analysis of business mode and characteristics of the contractual cash flows.
The Group determines the business model of financial assets management based on the grouping basis, taking into account the pattern of assessment and reporting the performance of financial assets to key management, risks affecting the performance of financial assets and their management pattern, and relevant management's way of obtaining remuneration.
When assessing whether the contractual cash flow of financial assets are consistent with basic loan arrangement, the Group adopts the following judgements: whether the time distribution or amounts of the principal within the duration will change due to early repayment and other reason; whether the interest only include time value of money, credit risk, other basic loan risk and the consideration of cost and profit. For example, whether the amounts of early repayment only reflect principal unpaid, the interest based on principal unpaid and reasonable compensation paid for early termination of a contract.
83 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
3 TAXATION
- The main categories and rates of taxes applicable to the Group are set out below:
Category | Tax base | Tax rate |
Enterprise income tax (a) | Taxable income | 15%, 20% and 25% |
Value-added tax ("VAT") (b) | Taxable value-added amount (Tax payable is | 6%, 9% and 10%, |
calculated using the taxable sales amount | 11%, 13% and 16% | |
multiplied by the applicable tax rate less | ||
deductible input VAT of the current period) | ||
Taxable revenue amount | 3% and 5% | |
Land use tax | Actual size of the land occupied | RMB3.2-11.2 |
per square meter | ||
per year | ||
City maintenance and construction | Value added tax | 7% |
tax | ||
Educational surcharge | Value added tax | 3% |
- Enterprise income tax
Pursuant to the 'Circular on Enterprise Income Tax Policy concerning Deductions for Equipment and Appliances' (Cai Shui [2018] 54) issued by the State Administration of Taxation, during the period from 1 January 2018 to 31 December 2020, the cost of newly purchased equipment with the original cost less than RMB5 million can be fully deducted against taxable profit in the next month after the asset is put into use, instead of being depreciated annually for tax filing. - VAT
The Company and certain subsidiaries engage in sales of fuel, electromechanical equipment, concrete, electricity, water, etc. and merchandise trade, and also provide services like transportation, stevedoring, port management, tugboat and ocean shipping tallying and leasing of tangible movable properties, etc. The above mentioned businesses are subject to VAT, tax rate for sales of fuel, electromechanical equipment and electricity, merchandise trade as well as leasing of tangible movable properties is 13%; tax rate for services like stevedoring, port management, tugboat, ocean shipping tallying, provision of loans and other services is 6%; tax rate for transport service, income from construction and installation project, transfer of properties like dock, storage yard and land use right and leasing of property is 9%; transfer or leasing of properties obtained before 30 April 2016 are subject to VAT levied at a rate of 5% by simple approach; income from transfer of movable properties such as stevedoring equipment and machinery equipment for which, VAT input was not offset before 31 December 2008, is subject to VAT at a tax rate of 3% but is actually levied at the preferential tax rate of 2%.
Interim Report 2020 84
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
3 TAXATION (Continued)
- Tax incentives
-
Enterprise income tax
In 2019, the Company's subsidiary Qingdao Port Technology Co., Ltd. ("Technology Company") obtained the Certificate of High-tech Enterprises (Certificate No. GR201937100906) jointly issued by Qingdao Municipal Science and Technology Bureau, Qingdao Municipal Finance Bureau, State Administration of Taxation Qingdao Municipal Taxation Bureau. The certificate is valid for 3 years. According to the relevant provisions of Article 28 of the Enterprise Income Tax Law of the People's Republic of China.,the enterprise income tax rate applicable to Technology Company was 15% during the six months ended 30 June 2020.
In accordance with Cai Shui [2008] No. 116 and Cai Shui [2008] No. 46, Datang Port Co., Ltd. ("Datang Port") and Qingdao Port Dongjiakou Multi-purpose Terminal Co., Ltd. ("DMT"), subsidiaries of the Company, applied for public infrastructure projects and obtained the Notice of Tax Matters approved by Huangdao Branch of Qingdao Local Taxation Bureau and Jiaonan State Taxation Bureau of Shandong Province. And it will enjoy a three-year exemption from enterprise income tax since the first year of earning operating income related to the port, followed by three years of 50% tax reduction. For the six months ended 30 June 2020, Datang Port was qualified for 50% tax reduction for the second year, DMT was qualified for 50% tax reduction for the the first year.
For the six months ended 30 June 2020, according to Cai Shui [2019] No. 13, Qingdao Bonded Port Area Gangrong Storage Center Co., Ltd. ("Gangrong Storage"), Qingdao Ocean Shipping Repair Co., Ltd. ("Ocean Shipping Repair"), Qingdao Port Culture & Media Co., Ltd. ("Cultural & Media"), Qingdao Port Engineering Design Institute Co., Ltd. ("Port Engineering Design Institute") and Qingdao Ocean Tally Inspection and Testing Co., Ltd. ("Ocean Tally Inspection"), subsidiaries of the Company, were all small low-profit enterprises. The portion of the annual taxable income of less than RMB1 million shall be deducted into the taxable income by 25%, and the enterprise income tax shall be prepaid at the rate of 20%; the annual taxable income shall exceed RMB1 million but no more than 3 million shall be deducted into the taxable income by 50%, and the enterprise income tax shall be prepaid at the rate of 20%.
-
Enterprise income tax
85 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
3 TAXATION (Continued)
- Tax incentives (Continued)
-
VAT
Pursuant to relevant stipulations of the Announcement on Relevant Policies for Deepening Value-Added Tax Reform ([2019] No. 39) jointly issued by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, and the Announcement on Clarifying the Policies on Additional Value-addedTax Deduction Policy for Life Services ([2019] No. 87) jointly issued by the Ministry of Finance and the State Administration of Taxation, Qingdao Port Properties Co., Ltd. ("Qingdao Port Properties"), a subsidiary of the Company engaged in the life service sector, is eligible for a 15% additional VAT deduction from 1 October 2019 to 31 December 2021. Additionally, Qingdao Port International Logistics Co., Ltd. ("Qingdao Port Logistics"), Qingdao Port Jieyuntong Logistics Co., Ltd.("Jieyuntong Logistics"), Qingdao Port Lianjie International Logistics Co., Ltd. ("Lianjie Logistics"), Qingdao Shengshi International Logistics Co.,Ltd.("Shengshi Logistics"), Qingdao Ocean Shipping Tally Co., Ltd. ("Ocean Shipping Tally"), Ocean Tally Inspection,Qingdao Port Eimskip Coldchain Logistics Co., Ltd. ("Eimskip Coldchain"), Technology Company, Qingdao Port Tongan Security Service Co., Ltd. ("Tongan Security"), subsidiaries of the Company engaged in the production service sector, are eligible for a 10% additional VAT deduction based on deductible input VAT in the current period from 1 April 2019 to 31 December 2021. -
Land use tax
For the six months ended 30 June 2020, according to Cai Shui [2017] No. 33, the Group's warehousing area for bulk commodities is subject to 50% tax reduction of land use tax. According to the Tentative Regulations of the People's Republic of China of Urban Land Use Tax, the Group's land exclusively for ports (ie berths, including quayside, deep-water floating quay, embankment, dam, etc.) is exempted from land use tax. - Property tax and land use tax
For the six months ended 30 June 2020, according to Lu Cai Shui [2020] No. 16 and Lu Cai Shui [2020] No. 25, taxpayers in six industries severely affected by the epidemic including transportation, catering, accommodation, tourism, exhibitions and movie screenings, exempt from property tax and land use tax in 2020. The Company and its subsidiaries Datang Port, General Terminal, Qingdao Port Logistics, Shandong Port Lianhua Pipeline Petroleum Transportation Co., Ltd. ("Lianhua Pipeline") and other companies, as the main business of transportation companies, are exempt from property tax and land use tax.
-
VAT
Interim Report 2020 86
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- Cash at bank and on hand
30 June 2020 31 December 2019
(Unaudited) | ||||
Cash on hand | 30,000 | - | ||
Cash at bank | 9,060,285,207 | 6,124,022,081 | ||
Other cash balances | 774,960,569 | 722,377,766 | ||
9,835,275,776 | 6,846,399,847 | |||
Including: amounts deposited abroad | 27,198,418 | 195,570,450 |
As at 30 June 2020, other cash balances include statutory deposit reserves in the People's Bank of China by Qingdao Finance amounted to RMB722,986,697 (31 December 2019: RMB645,601,882) according to relevant regulations, deposits for the issuance of bank acceptance notes amounted to RMB27,707,941 (31 December 2019: RMB44,867,230), deposits for the issuance of letter of credit amounted to RMB21,107,036 (31 December 2019: RMB31,210,416) the foreign exchange transaction margin deposited by the Group is RMB2,450,138 (31 December 2019: Nil.), and deposits for the issuance of letter of guarantee amounted to RMB708,757 (31 December 2019: RMB698,238).
(2) Financial assets held for trading
30 June 2020 31 December 2019
(Unaudited) | |||
Wealth management products (i) | 1,010,148,643 | 900,997,200 | |
Financial bonds | - | 51,675,953 | |
1,010,148,643 | 952,673,153 | ||
- As at 30 June 2020 and 31 December 2019, wealth management products are the Group's non-principal-guaranteed wealth management products with floating income purchased from commercial banks and other financial institutions.
The Group expects that there is no significant credit risk associated with the amounts and does not expect that there will be any significant losses from non-performance by banks and other financial institutions.
87 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Accounts receivable
30 June 2020 | 31 December 2019 | |||||
(Unaudited) | ||||||
Accounts receivable | 3,054,893,408 | 2,504,148,910 | ||||
Less: Bad debt provision | (205,217,032) | (166,415,834) | ||||
2,849,676,376 | 2,337,733,076 | |||||
The Group's income is partially in form of cash, advances from customers, bank acceptance notes and trade acceptance notes. Remaining sales income is settled primarily with credit terms of 30 to 90 days.
- The ageing of accounts receivables based on their recording dates is analyzed as follows:
30 June 2020 31 December 2019
(Unaudited) | |||
Within 1 year | 2,779,590,619 | 2,302,958,916 | |
1 to 2 tears | 229,686,550 | 173,084,593 | |
2 to 3 years | 23,571,858 | 16,776,392 | |
3 to 4 years | 10,715,372 | - | |
4 to 5 years | 1,320,814 | 1,320,814 | |
More than 5 years | 10,008,195 | 10,008,195 | |
3,054,893,408 | 2,504,148,910 | ||
Accounts receivable are mainly recorded based on the date of transaction. The ageing of accounts receivable represented based on their recording dates is basically the same as the ageing represented based on the dates of invoice.
(b) | As at 30 June 2020, the total amount of top five accounts receivable is analyzed as follows: | |||||||
Provision | % of total | |||||||
Amount | for bad debt | balance | ||||||
Total amount of top five accounts receivable | 1,376,865,193 | (76,634,361) | 45.07% | |||||
(c) | ||||||||
As at 30 June 2020 and 31 December 2019, the Group did not have any receivables that were | ||||||||
derecognized due to the transfer of financial assets. |
Interim Report 2020 88
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Accounts receivable (Continued)
-
Bad debt provision
The Group measures the provision of accounts receivable based on the lifetime ECL regardless of whether there exists a significant financing component.
Bad debt provision of accounts receivable is classified and analyzed as follows:
-
Bad debt provision
30 June 2020 (Unaudited) | |||||||||||||||||
Book value | Bad debt provision | ||||||||||||||||
% of | Lifetime | ||||||||||||||||
Amount | the total | Amount | ECL rate | ||||||||||||||
Bad debt provision on the | |||||||||||||||||
individual basis (i) | 23,413,043 | 0.77% | (20,317,373) | 86.78% | |||||||||||||
Bad debt provision on the | |||||||||||||||||
grouping basis | |||||||||||||||||
Accounts receivable group B (ii) | 3,031,480,365 | 99.23% | (184,899,659) | 6.10% | |||||||||||||
3,054,893,408 | 100.00% | (205,217,032) | |||||||||||||||
31 December 2019 | |||||||||||||||||
Book value | Bad debt provision | ||||||||||||||||
% of | Lifetime | ||||||||||||||||
Amount | the total | Amount | ECL rate | ||||||||||||||
Bad debt provision on the | |||||||||||||||||
individual basis (i) | 23,563,043 | 0.94% | (20,317,373) | 86.23% | |||||||||||||
Bad debt provision on the | |||||||||||||||||
grouping basis | |||||||||||||||||
Accounts receivable group B (ii) | 2,480,585,867 | 99.06% | (146,098,461) | 5.89% | |||||||||||||
2,504,148,910 | 100.00% | (166,415,834) | |||||||||||||||
- As at 30 June 2020, the receivable due from Haikou Nanqing Container Liner Co., Ltd. ("Haikou Nanqing") amounting to RMB1,320,814 and the receivable due from China Commercial Construction (Qingdao) Technology Development Co., Ltd. amounting to RMB22,092,229 are accrued bad debts based on the expected to be uncollectible portion individually due that the Group believes that the above receivables are difficult to recover because the above companies have declared bankruptcy or there are obvious signs of operating difficulties.
89 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Accounts receivable (Continued)
- Bad debt provision (Continued)
- Accounts receivable that are subject to provision for bad debts on the grouping basis are analyzed as follows:
30 June 2020 (Unaudited) | |||||||
Ending balance | Provision for bad debts | ||||||
Lifetime | |||||||
Amount | ECL rate | Amount | |||||
Within 1 year | 2,779,590,619 | 3.79% | (105,343,850) | ||||
1 to 2 years | 207,594,321 | 27.32% | (56,714,768) | ||||
Over 2 years | 44,295,425 | 51.57% | (22,841,041) | ||||
3,031,480,365 | (184,899,659) | ||||||
31 December 2019 | |||||||
Ending balance | Provision for bad debts | ||||||
Lifetime | |||||||
Amount | ECL rate | Amount | |||||
Within 1 year | 2,286,455,617 | 3.73% | (85,338,513) | ||||
1 to 2 years | 167,345,663 | 23.06% | (38,582,849) | ||||
Over 2 years | 26,784,587 | 82.80% | (22,177,099) | ||||
2,480,585,867 | (146,098,461) | ||||||
- For the six months ended 30 June 2020, the provision for bad debts in the current period amounted to RMB38,801,198, and there are no reversal or written off for the current period.
- As at 30 June 2020 and 31 December 2019, the Group had no pledged accounts receivable.
Interim Report 2020 90
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Financing receivables
30 June 2020 31 December 2019
(Unaudited)
Bank acceptance notes | 470,946,523 | 705,149,454 | |
- The Group endorses or discounts part of the bank acceptance notes for its daily fund management purpose and meet the requirements for derecognition. Therefore, the bank acceptance notes are classified as financial assets at fair value through other comprehensive income.
- The Group believes that its bank acceptance notes do not expose to significant credit risk and will not cause significant losses by bank default.
- As at 30 June 2020 and 31 December 2019, the Group had no pledged bank acceptance notes.
- As at 30 June 2020, the bank acceptance notes that the Group has endorsed or discounted but have not yet expired amounted to RMB335,834,591 (31 December 2019: RMB656,590,985) and has been derecognized.
- Other receivables
30 June 2020 31 December 2019
(Unaudited) | ||||
Loans provided to related parties and third parties (i) | 1,733,903,959 | 573,511,898 | ||
Receivables and advances of agent business (ii) | 939,932,461 | 1,113,252,681 | ||
Dividends receivable (iii) | 826,558,344 | - | ||
Port construction fees receivable (iv) | 67,375,887 | 65,504,377 | ||
Interests receivable | 60,567,248 | 42,728,648 | ||
Equity transfer receivable (v) | 60,528,700 | - | ||
Deposits and guarantees | 42,610,684 | 26,290,528 | ||
Lease receivable | 20,512,625 | 12,902,418 | ||
Others | 21,968,236 | 22,513,993 | ||
3,773,958,144 | 1,856,704,543 | |||
Less: Provision for bad debts | (57,395,380) | (31,019,382) | ||
3,716,562,764 | 1,825,685,161 | |||
91 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Other receivables (Continued)
- Loans provided to related parties and third parties are the short-term entrusted loans provided by the Company and short-term loans provided by the Company's subsidiary, Qingdao Finance and funds borrowed from other financial institutions.
- Receivables and advances of agent business are receivables from the Group's shipping agency business and advances to agent purchase of goods on behalf of the Group's clients.
- Dividends receivable are dividends that have been declared but not yet distributed by Qingdao Qianwan Container Terminal Co., Ltd. ("QQCT") and Qingdao Ganghai International Logistics Co., Ltd. ("Ganghai Logistics"), joint ventures of the Company.
- Receivables of port construction fees represent port construction fee from customers collected on behalf in accordance with the Administrative Measures for the Collection and Use of Port Construction Fees jointly issued by the Ministry of Finance and the Ministry of Transport.
- The Company and its subsidiary Qingdao Port (Group) Port Engineering Co., Ltd. ("Qingdao Port Engineering") signed an equity transfer agreement with Shandong Port Financial Holdings Co., Ltd. ("Shangang Financial Holdings") on 10 June 2020. According to the agreement, 90% and 10% of Qingdao Yongli Insurance Agency Co., Ltd. ("Yongli Insurance") held by them will be transferred at a price of RMB54,475,830 and RMB6,052,870 respectively. As at 30 June 2020, the equity transfer payment of RMB60,528,700 has not been paid. Please refer to Note 5(2) for relevant information on the disposal of subsidiaries.
- The ageing of other receivables based on their recording dates is analyzed as follows:
30 June 2020 31 December 2019
(Unaudited) | |||
Within 1 year | 3,763,753,478 | 1,844,161,506 | |
1 to 2 years | 3,847,293 | 5,522,124 | |
2 to 3 years | 618,637 | 2,847,658 | |
More than 3 years | 5,738,736 | 4,173,255 | |
3,773,958,144 | 1,856,704,543 | ||
Interim Report 2020 92
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Other receivables (Continued)
- Loss provisions and the movement in the carrying balance
Stage 1 | ||||||
ECL over the next 12 months | ||||||
(on the grouping basis) | ||||||
Provision for | ||||||
Amount | bad debts | |||||
31 | December 2019 | 1,856,704,543 | (31,019,382) | |||
Increase in the current period (Unaudited) | 1,917,253,601 | (26,375,998) | ||||
30 | June 2020 (Unaudited) | 3,773,958,144 | (57,395,380) | |||
As at 30 June 2020 and 31 December 2019, the Group did not have any other receivables with bad debt provision on the individual basis, and other receivables with bad debt provision on the grouping basis are in the first stage. The analysis is as follows:
30 June 2020 (Unaudited) | 31 December 2019 | ||||||||||||||
Ending balance | Provision for bad debts | Ending balance | Provision for bad debts | ||||||||||||
Amount | Amount | % | Amount | Amount | % | ||||||||||
Group B | |||||||||||||||
Within 1 year | 2,506,470,564 | (36,010,790) | 1.44% | 1,480,649,540 | (11,035,951) | 0.75% | |||||||||
Group C | |||||||||||||||
Within 1 year | 887,125,592 | - | - | 42,728,648 | - | - | |||||||||
Group D | |||||||||||||||
Within 1 year | 370,157,322 | (18,079,192) | 4.88% | 320,783,318 | (16,039,166) | 5.00% | |||||||||
More than 1 years | 10,204,666 | (3,305,398) | 32.39% | 12,543,037 | (3,944,265) | 31.45% | |||||||||
3,773,958,144 | (57,395,380) | 1,856,704,543 | (31,019,382) | ||||||||||||
- For the six months ended 30 June 2020, the provision for bad debts amounted to RMB26,375,998, and there were no written off of the Group's provision for bad debts.
93 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Other receivables (Continued)
- As at 30 June 2020, top five other receivables are analyzed as follows:
Provision for | ||||||||
Nature | Amount | Ageing | % of total | bad debts | ||||
Qingdao Port Investment and | ||||||||
Construction (Group) Co., Ltd. | ||||||||
("QDP Investment Group") | Loan | 901,027,428 | Within 1 year | 23.87% | (21,669,937) | |||
QQCT | Dividends and | |||||||
others | 828,061,599 | Within 1 year | 21.94% | (554,194) | ||||
Weihai Port Group Co., Ltd. | ||||||||
("Weihai Port Group") | Loan | 300,362,500 | Within 1 year | 7.96% | (7,223,794) | |||
Qingdao Port Dongjiakou Ore Terminal | ||||||||
Co., Ltd. ("QDOT") | Loan and others | 232,014,217 | Within 1 year | 6.15% | (4,972,083) | |||
Qingdao Qingyin Financial Leasing | ||||||||
Co., Ltd. ("Qingyin Financial Leasing") | Loan and others | 150,464,167 | Within 1 year | 3.99% | (683,626) | |||
2,411,929,911 | 63.91% | (35,103,634) | ||||||
- As at 30 June 2020 and 31 December 2019, the Group has no other receivables recognized in accordance with the government grants receivable.
- As at 30 June 2020, the Group has no pledged other receivables (31 December 2019: other receivables of the Group with a carrying amount of RMB8,747,455 was pledged as collateral for short-term borrowings of RMB6,970,000 (Note 4(18)).
Interim Report 2020 94
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Other current assets
30 June 2020 31 December 2019
(Unaudited) | |||
Bond reverse repurchase (i) | 851,163,973 | 1,601,446,334 | |
VAT input to be deducted | 287,017,440 | 230,330,634 | |
Certificates of interbank deposits (ii) | 198,308,000 | 4,382,429,400 | |
Income certificates | 140,000,000 | - | |
Prepaid corporate income tax | 1,483,494 | - | |
1,477,972,907 | 6,214,206,368 | ||
- The amounts were bonds purchased by Qingdao Finance, a subsidiary of the Company which were issued by banks and other financial institutions. Such amounts will be resold to the aforementioned institutions at the appointed time. Management held such assets for contract cash flows and the cash flow characteristics of the contract are consistent with the basic loan arrangement. Therefore, such deposit certificates are classified as financial assets measured at amortized cost. As assessed by the Group, the amount is not exposed to significant credit risks and will not cause significant credit losses due to bank default. Financial assets held under resale agreement include interest calculated based on the effective interest rate method.
- The amounts were interbank deposits purchased within 1 year in the current period by Qingdao Finance, a subsidiary of the Company. Management held such deposits for contract cash flows and for resale. Therefore, such assets were classified as financial assets measured at fair value through other comprehensive income. As assessed by the Group, certificates of interbank deposits are not exposed to significant credit risks and will not cause significant credit losses due to bank default. As at 30 June 2020, the original value of the interbank deposits was RMB195,606,800 and changes in fair value recorded in other comprehensive income was RMB2,701,200.
95 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Long-termreceivables
30 June 2020 31 December 2019
(Unaudited) | ||||
Loans provided to related parties (i) | 1,506,337,607 | 1,336,799,281 | ||
Financing leases provided to related parties (ii) | 1,553,613,568 | 688,998,556 | ||
Less: Current portion | (70,469,507) | (457,290,407) | ||
2,989,481,668 | 1,568,507,430 | |||
Loans and financing leases impairment provision | (71,762,078) | (51,412,185) | ||
Less: Current portion | 1,529,394 | 11,536,281 | ||
(70,232,684) | (39,875,904) | |||
2,919,248,984 | 1,528,631,526 | |||
- Loans to related parties include long-term entrusted loans provided by the Company and long-term loans provided by Qingdao Finance, a subsidiary of the Company. The loans and related loan impairment provisions to be recovered within one year are presented as current portion of non-current assets.
- The provision of finance lease to related parties is finance lease services provided by Qingdao Finance, a subsidiary of the Company, to related parties. The finance lease and related impairment provisions to be recovered within one year are presented as current portion of non-current assets.
- Loss provisions and the statement of changes in the carrying balance
Stage 1 | ||||||
ECL over the next 12 months | ||||||
(on the grouping basis) | ||||||
Provision for | ||||||
Amount | bad debt | |||||
31 | December 2019 | 2,025,797,837 | (51,412,185) | |||
Increase in the current period (Unaudited) | 1,034,153,338 | (20,349,893) | ||||
30 | June 2020 (Unaudited) | 3,059,951,175 | (71,762,078) | |||
Interim Report 2020 96
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Long-termreceivables (Continued)
-
Loss provisions and the statement of changes in the carrying balance (Continued)
As at 30 June 2020 and 31 December 2019, the Group did not have any long-term receivables with bad debt provision on the individual basis, and other long-term receivables with bad debt provision on the grouping basis are in the first stage. The analysis is as follows:
-
Loss provisions and the statement of changes in the carrying balance (Continued)
30 June 2020 (Unaudited) | 31 December 2019 | |||||||||||||
Ending | Ending | |||||||||||||
balance | Provision for bad debts | balance | Provision for bad debts | |||||||||||
% of total | % of total | |||||||||||||
Amount | Amount | balance | Amount | Amount | balance | |||||||||
Group B | 3,059,951,175 | (71,762,078) | 2.35% | 2,025,797,837 | (51,412,185) | 2.54% | ||||||||
(8) Long-term equity investments
30 June 2020 31 December 2019
(Unaudited) | |||
Joint ventures (a) | 8,567,660,950 | 8,810,888,278 | |
Associates (b) | 774,979,623 | 328,241,918 | |
9,342,640,573 | 9,139,130,196 | ||
As at 30 June 2020 and 31 December 2019, the Group's management considered that there was no indication that the long-term equity investments may be impaired, therefore no provision for impairment was required.
97 Qingdao Port International Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Long-termequity investments (Continued)
-
Joint ventures
Investments in joint ventures are set out below:
-
Joint ventures
Movements for the current period (Unaudited) | |||||||
Share of net | Share of | Cash | |||||
profit/(loss) | other | dividends/ | Intra-group | ||||
31 December | under | changes | profit | unrealized | 30 June | ||
2019 | equity method | in equity | declared | profit | 2020 | ||
(Unaudited) | |||||||
QQCT (i) | 5,418,699,228 | 443,385,305 | 4,862,482 | (817,783,089) | 686,082 | 5,049,850,008 | |
Qingdao Shihua Crude Oil Terminal Co., Ltd. | |||||||
("Qingdao Shihua") | 1,350,506,838 | 165,965,474 | 5,402,789 | - | 2,457,992 | 1,524,333,093 | |
Qingdao Qianwan West Port United Terminal | |||||||
Co., Ltd. ("West United") (ii) | 396,069,666 | 21,790,549 | 557,020 | - | (1,797,695) | 416,619,540 | |
Weihai Qingwei Container Terminal Co., Ltd. | |||||||
("Qingwei Container") | 138,817,933 | 10,603,079 | - | - | - | 149,421,012 | |
Qingdao Evergreen Container Storage and Transportation | |||||||
Co., Ltd. ("Evergreen Container") | 45,367,884 | 8,787,130 | 244,697 | - | - | 54,399,711 | |
Qingdao Orient International Container Storage and | |||||||
Transportation Co., Ltd. ("Orient Container") | 43,029,653 | 2,806,620 | - | (4,647,191) | - | 41,189,082 | |
Qingdao Haiwan Liquid Chemical Port Operation | |||||||
Co., Ltd. ("Haiwan Liquid Chemical") | 155,490,834 | 1,506,575 | - | - | - | 156,997,409 | |
Ganghai Logistics | 43,206,605 | (759,873) | - | (39,078,111) | - | 3,368,621 | |
Qingdao Shenzhouxing International Transportation | |||||||
Co., Ltd. ("Shenzhouxing Cargo Agency") | 27,315,154 | 4,210,686 | - | - | - | 31,525,840 | |
China Shipping Agency (Qingdao) Co., Ltd. | |||||||
("China Shipping Agency") | 9,364,743 | 727,891 | - | - | - | 10,092,634 | |
Qingdao United International Shipping Agency | |||||||
Co., Ltd. ("United Shipping Agency") | 29,056,920 | 905,538 | - | (1,597,314) | - | 28,365,144 | |
Huaneng Qingdao Port Operation Co., Ltd. | |||||||
("Huaneng Qingdao") | 127,951,921 | (6,345,116) | 71,448 | - | - | 121,678,253 | |
Qingdao Port Dongjiakou IMC Logistics Co., Ltd. | |||||||
("Dongjiakou IMC Logistics") (iii) | 95,371,201 | 9,536,812 | - | (39,516,729) | - | 65,391,284 | |
QDOT | 706,648,965 | (11,563,520) | - | - | (5,904,811) | 689,180,634 | |
Qingdao Port Express Logistics (Linyi) Co., Ltd. | |||||||
("Linyi Express") | 4,191,783 | 54,431 | - | - | - | 4,246,214 | |
Sinotrans Qingdao Port Dongjiakou Logistics Co., Ltd. | |||||||
("Dongjiakou Sinotrans Logistics") | 51,508,035 | 253,107 | - | - | - | 51,761,142 | |
Qingdao Port Lianrong Logistics Co., Ltd. | |||||||
("Lianrong Logistics") | 8,084,348 | 1,170,001 | - | (1,000,000) | - | 8,254,349 | |
Interim Report 2020 98
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2020 (Unaudited) (All amounts in RMB Yuan unless otherwise stated)
4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- Long-termequity investments (Continued)
- Joint ventures (Continued)
Movements for the current period (Unaudited) | ||||||||||||||
Share of net | Share of | Cash | ||||||||||||
profit/(loss) | other | dividends/ | Intra-group | |||||||||||
31 December | under | changes | profit | unrealized | 30 June | |||||||||
2019 | equity method | in equity | declared | profit | 2020 | |||||||||
(Unaudited) | ||||||||||||||
Binzhou Port QDP International Terminal Co., Ltd. | ||||||||||||||
("Binzhou Port QDP International Terminal") | 12,183,331 | 4,507,838 | 1,899,858 | (6,373,217) | - | 12,217,810 | ||||||||
Qingdao PetroChina Storage Company Limited | ||||||||||||||
("PetroChina Storage") | 146,688,204 | 431,141 | - | - | - | 147,119,345 | ||||||||
Ocean Bridge International Port Operation and | ||||||||||||||
Management Co., Ltd. ("Ocean Bridge International") | 1,335,032 | 314,793 | - | - | - | 1,649,825 | ||||||||
8,810,888,278 | 658,288,461 | 13,038,294 | (909,995,651) | (4,558,432) | 8,567,660,950 | |||||||||
- The Company holds 51% equity interest of QQCT. The Company can designate 6 out of 11 board members in QQCT. In accordance with the Articles of Association of QQCT, its significant financial and operating decisions should be passed at the Meeting of Board of Directors by at least 10 out of 11 directors. The Company still cannot unilaterally exercise control over QQCT, therefore QQCT is still accounted for as a joint venture.
- The Company holds 51% equity interest of West United. In accordance with the Articles of Association of West United, its significant financial and operating decisions should be passed at the Meeting of Shareholders, but the Board of Directors is authorized to vote on the main business decisions. The Company can designate 3 out of 5 board members in West United. The significant financial and operational decisions need to be approved by all directors. The Company cannot unilaterally exercise control over West United, therefore, West United is account for as a joint venture.
- The Company holds 51% equity interest of Dongjiakou IMC Logistics. In accordance with the Articles of Association of Dongjiakou IMC Logistics, its significant financial and operating decisions should be passed at the Meeting of Board of Directors. The Company can designate 4 out of 7 board members in Dongjiakou IMC Logistics. The significant financial and operational decisions need to be approved by all directors. The Company cannot unilaterally exercise control over Dongjiakou IMC Logistics, therefore West United is account for as a joint venture.
Information of interests in joint ventures are set out in Note 6(2).
99 Qingdao Port International Co., Ltd.
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Qingdao Port International Co. Ltd. published this content on 18 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 08:54:11 UTC