Stock Code: 600320 900947
Stock Name: Zhenhua Heavy Zhenhua B-share
Shanghai Zhenhua Heavy Industries Co., Ltd.
Annual Report 2020
CONTENTS
Section ISection IISection IIISection IVSection VSection VISection VIISection VIIISection IXSection XSection XISection XII
De?nitions
Company Pro?le and Principal Financial Indexes
Business Pro?le
Discussion and Analysis of the Performance
Important Events
Changes in Ordinary Shares and Shareholders' Situation
Preferred Shares
Directors, Supervisors, Senior Executives and Employees
Corporate Governance
Related Information on Corporate Bonds
Financial Report
List of Reference Documents
Section I Definitions
I. De?nitions
The terms used in this report shall be de?ned as follows, unless otherwise speci?ed:
De?nitions of high frequency terms
Newspaper designated by the Company for information disclosure
Shanghai Securities News, Hong Kong Wen Wei Po
Website designated by China Securities Regulatory Commission (CSRC) for publishing the annual report of the Company
www.sse.com.cn
Placementlocation ofthe annualreportofthe Company Securities A?airs O?ce
(I) Main accounting data
Unit: Yuan Currency: CNY
(II) Major ?nancial indexes
Unit: Yuan Currency: CNY
Notes to di?erences between the quarterly data and the data in periodically disclosed reports
√ Applicable □ Not Applicable
Unit: Yuan Currency: CNY
□Applicable √ Not Applicable
Section III Business Profile
I. Main business, business model of the Company and the industrial pro?le during the reporting period
The Company is a famous heavy-duty equipment manufacturer, and a state-owned listed company on A and B shares, with the headquarters in Shanghai and multiple production bases in Shanghai and Nantong. It is also the biggest port heavy-duty machinery equipment manufacturer in the world. The business scope of ZPMC mainly covers: marine heavy industry, heavy special steel structure, marine transportation and installation, system integration, engineering general contracting, electrical product, software development and integration, investment and financing business, integrated services. While constantly consolidating its traditional business advantages, it is also actively expanding smart industries, livelihood consumption, integrated development and digital industries.
The business scope of the Company covers: design, construction, installation and contracting of large port loading and unloading system and equipment, o?shore heavy equipment, engineering machinery, engineering vessels and large metal structural parts and their parts and components; ship repair; leasing of equipment; leasing of self-owned houses; leasing of self-produced crane; sales of the products made by the sales company; international sea transportation by special purpose vessels that can be transported with the whole equipment; specialized contracting of steel structure engineering; construction of electric construction engineering; and construction of electromechanical installation and construction engineering; research and development, installation and sales of oil and gas exploration equipment and mechanical engineering equipment; design of marine engineering buildings; technology development, technical consulting, technical services, and technology transfer in the fields of computer software and information, computer network, mechanical technology, environmental protection technology, new energy technology, intelligent technology; installation and maintenance of railway and urban rail transportation equipment and accessories; property management; loading, unloading, handling and storage; parking lot (warehouse) operation and management; import and export business of goods and technologies (In case of quota, license management, special regulations, quality inspection, safety inspection and construction quali?cation requirements involved, it shall not carry out the business activities before obtaining the corresponding quali?cations or licenses in accordance with the relevant national regulations).[Items subject to approval according to law can be carried out only after such approval is granted by the competent authorities]In recent years, the traditional ports are gradually upgraded towards automation, digitization and intelligence, and are transforming to the new operation mode of “smart port” and “green port”. Accordingly, the port machinery and equipment are also developing towards high e?ciency, automation, digitization, intelligence, “green” model and environmental protection. By increasing the investment in scienti?c and technological research and development, deepening the cooperation with strategic customers and cross-industry cooperation, ZPMC has actively expanded new business ?elds and further strengthened its competitive advantage while consolidating its leading position in the industry.
II. Explanation for major changes in prime assets of the Company during the reporting period
□Applicable √ Not Applicable
III. Analysis of the core competitiveness during the reporting period
√ Applicable □ Not Applicable
1 Leading R&Dcapability
The Company has adhered to the top-level design of scienti?c and technological innovation and made overall planning of the science and technology innovation system. The design and R&D center of the Company has been building a scienti?c and technological innovation system with the ZPMC characteristics from many aspects, actively expanded the cooperation space of open innovation alliance, focused on the key technical challenges in the development, strengthened the organic connection of innovation chain and industrial chain with the market demand, and has built an open technology innovation alliance or collaborative innovation platform with many domestic and foreign universities, scienti?c research institutions and enterprises.
In 2020, the Company applied for 231 patents, including 99 invention patents and 132 utility models, and was granted 186 patents, including 39 invention patents and 140 utility models; it was also granted 5 international patents, 41 software copyright registrations, and 2 drawing works registrations. In 2020, the “Research and Application of Key Technologies for Yangshan Phase IV Super-Large Automated Container Terminal” won the Grand Prize of the Award for Progress in Science and Technology of Shanghai City, and the “Research and Application of Key Technologies of Super-Large Quayside Bridge for 3E Container Ships” won the Second Prize of the Award for Progress in Science and Technology of Shanghai City. Furthermore, the Company has actively participated in national, industrial and local standardization activities and undertook 63 international, national, industrial, local and group standards, of which 40 have been issued.
2 Intelligentmanufacturing capability in continuous upgrading
In order to improve the product quality and production e?ciency, with intelligent equipment and intelligent workshop as the breakthrough points, the Company has carried out pilot transformation and upgrading of intelligent manufacturing in several production bases. The automation and intelligent manufacturing were ?rstly implemented in the key manufacturing of standardized parts, such as box girder components related steel structure and mechanical accessories in query-side container crane which was the main product of the Company. In the way of promotion, the Company took the construction of intelligent workshop as the starting point to make experiments in building the automated, information-based and e?cient production process for quayside bridge box girder components; through the introduction of advanced processing equipment with data acquisition function such as built-in PLC, intelligent welding robot, RGV unmanned transport vehicle and other intelligent equipment, as well as in combination with information integration technology, it realized the interconnection between equipment and the visual management of production site. Through the preliminary building of intelligent workshop, it solved the problem of low automation level in large-scaled lifting equipment manufacturing industry, greatly reduced the over dependence on workers, reduced labor cost, and provided guarantee for the control of the quality stability of products, which was of great reference signi?cance for promoting the adjustment and upgrading of related industrial structure in the same industry.
3 Globalmarketing network and digitalsupply chain platform
The Company has always focused on global development, actively explored the world market, and constantly strengthened the global network layout of overseas branches. It has established 28 overseas branches in the world, established good partnership and solid cooperation foundation with local enterprises and upstream and downstream enterprises of the industry, and continuously exerted its localization advantages. Based on its global operation and service network, the Company has provided integrated and lean operation and lifecycle service for global customers in a fast, accurate and comprehensive way. The Company has a service team composed of more than 1000 high-quality professionals on the site all over the world, which can provide e?cient solutions and perfect spare parts service support and supply goods to the world in the shortest time. Terminexus, a wholly-owned subsidiary of the Company, has built the ?rst digital supply chain platform in port machinery industry.
Section IV Discussion and Analysis ofthe Performance
I. Discussion and Analysis of the Performance
In 2020, under the guidance of the long-term goal of building a world excellent company with international competitiveness and the established strategies, the Company has overcome COVID-19 and other unfavorable factors, enhanced the con?dence in development, persisted in reform and innovation, and promoted the epidemic prevention and control, production and capacity resume, market extension, reform and innovation, environmental protection construction, risk resolution, poverty alleviation and Party building, which ensured the stable development of the Company.
During the reporting period, the port machinery business of the Company went on expanding and stabilized the basic development of the Company. The Company products have entered 104 nations and regions, and the Company has won the bidding for some key projects including Adani, Maersk (Ivory Coast), COSCO Haikou and Xiuying Port. Intelligent straddle carrier, ship loader and reach stacker development by the Company have achieved “zero” breakthrough in the market. In offshore business, inventory elimination and new signing of projects were advanced simultaneously, and the sales of core accessories such as shield machine gearbox were good. In steel structure business, it has implemented many high-quality projects, including Ivory Coast Bridge, Vanuatu Bridge, Guangdong Jieyang wind power pipe pile, Xiamen Second Passage, etc. The o?shore service business has actively expanded the business in the ?eld of o?shore wind power general contracting. The electrical business has been promoted in an orderly manner, and EZ electronic control has entered 83 nations and regions; the advantages of PV brand are gradually emerging; the intelligent manufacturing project has made great progress. The integrated service business directly faced the challenge of the spread of overseas epidemic, and completed the main tasks of comprehensive production and operation objectives. In investment business, the secondary operation of existing project has achieved remarkable results.
Emerging business made new progress. In smart parking business, it won Hengyang smart parking project and the multi-storey parking project of Shanghai Shuguang Hospital, and the economic bene?ts gradually improved. In the livelihood consumption business, it has actively explored such ?elds as old residential area renovation, smart campus construction, and the leasing and sales of prefabricated construction modules, among which the scale of service car business in Xiong’an area further increased. The integrated development business continued to improve the qualification, the transformation advantages of main business continued to show, and the key projects are implemented and progressing orderly. The digital business is gradually expanding, and the operation quality and e?ciency of Terminexus e-commerce platform continues to be optimized.
II.Performance during the reporting period
During the reporting period, the Company realized the operating revenue amounting to RMB 22,655,000,000, representing a year-on-year decrease of 7.89%; the net pro?t attributable to the shareholders of the listed company was RMB 422,000,000, with a year-on-year decrease of 18%; the basic earnings per share was RMB 0.08,with a year-on-year decrease of 18.37%.
1 Analysis ofthe performance
1. Analysis table of changes in the related items in pro?t statement and cash ?ow statement
Unit: Yuan Currency: CNY
2. Analysis of revenue and cost
√ Applicable □ Not Applicable
The decrease in operating revenue was mainly caused by the delay of some foreign projects a?ected by the epidemic.The decrease in operating cost was mainly caused by the decrease in operating revenue.
The decrease in selling and distribution expenses was mainly caused by the decrease in travel expenses a?ected by the epidemic.
The decrease in general and administrative expenses was mainly caused by the decrease in employee compensation.
The decrease in the research and development expenditures was mainly caused by the decrease in the expensed expenditures for research and development projects of the Company.
The decrease in financial expenses was mainly caused by the decrease in interest expense on bank loans of the Company.
The increase in the investment income was mainly caused by the increase in the investment income from the disposal of held-for-trading ?nancial assets of the Company.
The change in credit impairment loss was mainly caused by the increase in the Company’s provision for bad debts of accounts receivable.
The change in asset impairment loss was mainly caused by the increase in the Company’s provision for inventory depreciation.
The decrease in the income from disposal of assets was mainly caused by the decrease in the net gains from the disposal of ?xed assets.
The changes in the net cash ?ows from operating activities were mainly caused by the decrease of tax returns received by the Company.
The changes in the net cash flows from investing activities were mainly caused by the investment recovery by the Company and the increase in the cash received from investment income.
The changes in the net cash ?ows from ?nancing activities were mainly caused by the increase in cash received by the Company from bank borrowings.
(1) Main businesses by sectors, products and regions
Unit: Yuan Currency: CNY
Main business by products
Main business by regions
Notes to the main business by sectors, products and regions
1)The amount listed in “Mainland China (export sales)” in “Main business by regions” was the main operation income from the export sales of this Company to the overseas subsidiaries of the Company and then sales to the related projects of the domestic customers.
2)A?ected by the outbreak of COVID-19, the Company’s overseas projects were delayed, resulting in the decrease in overseas operating revenue by regions.
(2) Analysis table of cost-volume-pro?t relationship
□Applicable √ Not Applicable
(3) Cost analysis table
Unit: Yuan
By products
Other information about cost analysis
None
(4) Particulars about main customers and suppliers
√ Applicable □ Not Applicable
The sales volume of top 5 customers was RMB 4.18657 billion, accounting for 19% of total annual sales volume; the sales volume of the related parties in that of top 5 customers was RMB 897.72 million, accounting for 4% of total annual sales volume.
The purchase amount of top 5 suppliers was RMB 2.95671 billion, accounting for 12% of total annual purchase amount; the purchase of the related parties in that of top 5 suppliers was RMB 645.33 million, accounting for 3% of total annual purchase amount.
Other description
None
3. Expenses
√ Applicable □ Not Applicable
The decrease in selling and distribution expenses was mainly caused by the decrease in travel expenses a?ected by the epidemic.
The decrease in general and administrative expenses was mainly caused by the decrease in employee compensation.
The decrease in the research and development expenditures was mainly caused by the decrease in the expensed expenditures for research and development projects of the Company.
The decrease in financial expenses was mainly caused by the decrease in interest expense on bank loans of the Company.
4. Investment in R&D
(1) Detail table of investment in R&D
√ Applicable □ Not Applicable
Unit: Yuan
Currentexpensed investmentin R&D 737,468,137
Currentcapitalized investmentin R&D 111,203,919
Totalinvestmentin R&D 848,672,056
Proportion oftotalinvestmentin R&Din operating revenue (%) 3.75
NumberofR&Demployees in the Company 1,617
Proportion ofnumberofR&Demployees in the totalemployees ofthe Company (%) 18.6
Proportion ofcapitalized investmentin R&D(%) 13.10
(2) Explanation
□Applicable √ Not Applicable
5. Cash ?ow
√ Applicable □ Not Applicable
The net cash flows from operating activities were RMB 819 million, mainly caused by the decrease of tax returns received by the Company. The net cash flows from investing activities were RMB -1.204 billion, mainly caused by the investment recovery and the increase in cash received from investment income. The net cash ?ows from ?nancing activities were RMB 349 million, mainly caused by the increase in the cash received from borrowings by the Company.
2 Explanation forthe signi?cantchanges in pro?ts due to non-main business
□Applicable √ Not Applicable
3 Analysis ofassets and liabilities
√ Applicable □ Not Applicable
1. Assets and liabilities
Unit: Yuan
Other description
The increase in accounts receivable was mainly caused by the adjustment of the beginning amount under new revenue standard.
The increase in inventories was mainly caused by the reclassification of outstanding payments for construction completed under new revenue standard implemented by the Company.
The decrease in outstanding payments for construction completed was mainly caused by the reclassification of outstanding payments for construction completed under new revenue standard implemented by the Company.
The increase in contract assets was mainly caused by the reclassification of outstanding payments for construction completed under new revenue standard implemented by the Company.
The increase in the non-current assets due within one year was mainly caused by the increase in the long-term receivables due within one year.
The increase in deferred income tax assets was mainly caused by the impact of the adjustment of undistributed pro?ts at the beginning of the year under new revenue standard on enterprise income tax.
The increase in other non-current assets was mainly caused by the reclassi?cation of the contract warranty balance under new revenue standard implemented by the Company.
The increase in other non-current ?nancial assets was mainly caused by the fair value of the remaining equity after the Company lost the control of Tianhe Mechanical Equipment Manufacturing Co., Ltd.
The decrease in advances from customers was mainly caused by the reclassi?cation of advances from customers under new revenue standard implemented by the Company.
The increase in contract liabilities was mainly caused by the reclassi?cation of amount settled for uncompleted work and advances from customers under new revenue standard implemented by the Company.
The decrease in amount settled for uncompleted work was mainly caused by the reclassi?cation of amount settled for uncompleted work under new revenue standard implemented by the Company.
The decrease in payroll payable was mainly caused by the decrease in the accrued bonus of the Company.
The decrease in other payables was mainly caused by the Company’s payment of investment funds and other funds to CCCC.
The decrease in the non-current liabilities due within one year was mainly caused by the decrease in the long-term bank borrowings due within one year.
The increase in long-term borrowings was mainly caused by the increase in long-term bank borrowings of the Company.
The decrease in estimated liabilities was mainly caused by the decrease in estimated after-sales service cost of the products.
2. Particulars about main restricted assets by the end of the reporting period
√ Applicable □ Not Applicable
3. Other description
□Applicable √ Not Applicable
4 Analysis ofoperationalinformation ofthe industry
√ Applicable □ Not Applicable
During the reporting period, the value of the newly concluded contracts by the Company on the port machinery was USD 2.933 billion, which was basically the same as that in 2019. The value of the newly concluded contracts on marine engineering products and steel structure was USD 1.041 billion, with a year-on-year decrease of 28.84%, among which the one on steel structure was USD 503 million. The value of the newly concluded contracts on investment business was RMB 2.886 billion, with a year-on-year increase of 41.7%.
In the port machinery industry, a?ected by COVID-19, the investment progress of overseas customers is slowing down, and the number of overseas orders is decreasing. Due to the development needs, domestic customers have increased their investments in port machinery and equipment, and the proportion of newly signed domestic orders has increased. The increase in market demand for traditional new equipment has slowed down. Businesses such as the construction of automated terminals, after-sales maintenance and renovation of existing equipment have become new bright spots in the market. With the o?cial commercialization of 5G technology, the cutting-edge technologies such as 5G, arti?cial intelligence and big data will accelerate the transformation and upgrading of the port and shipping industry.
In the offshore industry, as the country attaches more importance to the development of the marine economy, the demand for o?shore supporting services such as energy exploitation, transportation, and installation will increase to a certain extent, but the trend of international oil prices still brings uncertainty to the recovery time of the o?shore industry.
The steel structure industry bene?ted from the increase in investment in infrastructure, and the overall situation of the industry is more optimistic. At present, the Company focuses on the development of large, heavy and special steel structure business, and the development trend is sound. However, due to the low access threshold, the competition is ?ercer, and the e?ciency needs to be further improved.
The investment industry continues to be optimized, driving the entire industry chain to a new development track. Domestic investment in industries such as manufacturing, infrastructure, and green energy has entered a stage of high-quality development. For a long period of time in the future, funds will continue to be biased towards the common bene?t of supply and demand, advanced manufacturing and livelihood construction with multiplier e?ects, infrastructure construction, and other ?elds.
For emerging industries, the exploration and application of 5G and digital technologies will continue to empower manufacturing. The reconstruction of old communities, the construction of prefabricated buildings, and the construction of smart cities are in line with the needs of the times and present strong development potential. With the support of national policies, the integrated development industry has gradually optimized its market environment, gradually consolidated its industrial foundation and integrated its content.
5 Analysis ofinvestment
1. Overall analysis of external equity investment
√ Applicable □ Not Applicable
(1) Signi?cant equity investment
□Applicable √ Not Applicable
(2) Signi?cant non-equity investment
□Applicable √ Not Applicable
(3) Financial assets measured at fair value
√ Applicable □ Not Applicable
Stock equity held in other listed companies
Stock equity held in ?nancial enterprises
6 Sales ofsigni?cantassets and equities
□Applicable √ Not Applicable
7 Analysis ofthe primary holding companies and the joint-stock companies
√ Applicable □ Not Applicable
Unit: Yuan
8 Particulars aboutstructured entities controlled by the Company
□Applicable √ Not Applicable
III. Discussion and analysis of the future development of the Company
1 Industrialstructure and trend
√ Applicable □ Not Applicable
The development of port machinery industry is closely related to the development of shipping industry. The recovery and high-quality development of shipping industry will further promote the port construction, in particular, the trend of digital development and the demand for epidemic prevention and control will speed up the intelligent development of ports.
The proposal of “building a maritime power” has brought new opportunities for the development of o?shore industry. As one of the new energy sources, offshore wind power will attract enterprises to increase resource investment and construction, and further promote the collaborative development of offshore engineering equipment manufacturing and marine economy.
Under the background of rapid development of 5G and other emerging technologies, “new infrastructure” has become an important driving force for the transformation of traditional infrastructure and the development of digital economy in China and even in the world. The new integrated development mode of public transport and urban construction fields such as railway, highway and airport will bring opportunities for the transformation and upgrading of traditional infrastructure industry.
The “Belt and Road” initiative has been recognized and supported by the countries along the line. It is in the deep development period and brings new dynamic to the adjustment of regional planning, the optimization of industrial layout and the reconstruction of supply value. The new development pattern of “Mutual promotion of domestic and international dual circulation, with domestic grand circulation being the mainstay” will accelerate the construction and development of important national strategic areas, and will also bring huge market opportunities for the transformation and upgrading of manufacturing industry, the development of smart industry, people’s livelihood consumption business, and digital industry, etc.
2 Developmentstrategy ofthe Company
√ Applicable □ Not Applicable
By taking “equipment manufacturing” as the entity, “capital operation” and “Internet” as two wings, it aims to build “Flag + Flagship” of Chinese national industry. “One Entity with Two Wings” strategy is a new strategy for transformation and upgrade of the Company after objectively analyzing the development stage and orientation of the Company, based on national and industrial development trend at present and in future, around “Industry 4.0” and “Made in China 2025”, by ?rmly seizing the development opportunities of the reform of state-owned enterprises “Double Hundred Action”, in combination with the development features of equipment manufacturing industry. “Capital operation” will help the Company to extend the industrial chain of the port machine business and create the whole industrial chain of marine heavy industry and o?shore wind power; help the Company and the customers as well as the partners to form a community of a shared future with the capital as the tie. The digitized transformation and upgrade of the Company under “Internet” can accelerate the upgrade of the information system in an all-round way and create the cloud platform through the top information-oriented design of the Company to o?er more convenient, e?cient, intelligent and integrated service to the global customers. Meanwhile, by using 5G technology as a carrier, we continue to enrich the concept of "Internet" and use smart port construction as a breakthrough to further expand the rich connotation of "+ 5G" and apply 5G technology to various ?elds such as strategy, design, manufacturing, products, services, etc. to promote the quality revolution, e?ciency revolution, power revolution of the Company.
3 Operation plan
√ Applicable □ Not Applicable
Guided by the new development concept for businesses, the Company will closely follow the national development strategy, seize the new market opportunities brought by the new development pattern, and continuously enhance its core competitiveness through scientific market research, comprehensive deepening of reform, and increasing scientific and technological innovation.
For port machinery business of the Company, it will aim to maintain the leading position in the industry, and seize the global intelligent terminal development opportunity to popularize the intelligent terminal; in the meanwhile, it will pay close attention to the new changes in the industry, the new needs of users and the new trends of competitors brought by the domestic port integration; make overall arrangement of the internal resources, innovate the business model, increase the communication with users, and implement high-end di?erentiated competition. O?shore business will adhere to di?erentiated development and promote the implementation of high-quality o?shore projects based on the industry development trend while improving the performance ability and promoting the resolution of o?shore asset risks. Steel structure business will focus on the opportunities such as economic dual circulation, aim at key areas, expand business channels and enhance the added value of steel structure products. The marine service business will rationalize the allocation of resources on the premise of ensuring the competitive advantage of the Company’s primary business, and will pay great attention to the latest policies of the state on offshore wind power business, and achieve economic benefits with professional industrial chain through strategic cooperation and di?erentiated competition. Electrical business will systematically summarize and analyze the existing business, steadily promote electrical related business, and continue to promote EZ brand. For general contracting business, it will give full play to the advantages of the existing projects, actively expand other projects in the region and improve the business scale. For investment business, it will further highlight the main business, strengthen the lifecycle management of investment projects, and improve the scienti?city and rate of return of the investment.
In emerging industries, the smart industry should take advantage of the development trend of arti?cial intelligence, big data, cloud computing and other technologies, and continue to march into the ?eld of intelligent transportation and smart city construction. People’s livelihood consumption should seize the mass market and promote di?erentiated development. Integrated development should follow the national policy, identi?es the market position, and fully embodies the corporate social responsibility. Digital industry should grasp the development trend of 5G, continuously accumulate data, and take the advantages of data to create scale and e?ciency.
4 Potentialrisks
√ Applicable □ Not Applicable
Market risk: it mainly includes macroeconomic and industry cycle ?uctuation risk. The main business of the Company is closely related to the operation and development of macro economy and the industry cycle of the shipping industry. The slowdown of global economy, the trade friction between China and USA and the challenges from the deglobalization trend on the global economy impose some uncertainties on the development of the Company. Although the shipping industry is slightly resuscitative, the recovery speed is still uncertain, and the Company’s upstream customers are still cautious about the new capital investment in ports and terminals.
Countermeasures: the Company will establish a management system for the scienti?c study and judgment of the macro political and economic situation, identify the systematic risks in time, and make risk response plans in advance. In the meanwhile, the Company will focus on user needs, optimize products, improve services, look for increment from the stock, and continuously optimize its business structure and pro?t model.
Financial risk: it mainly includes interest rate and exchange rate change risk. The Company’s interest rate risk mainly comes from interest-bearing liabilities. In addition, a certain proportion of overseas business brings a certain scale of foreign exchange revenue and expenditure to the Company.
Countermeasures: the Company will strengthen the dynamic study and judgment of capital situation, further strengthen the overall capital management, broaden ?nancing channels and rationalize ?nancing costs. For exchange rate risk control, the Company will control exchange rate risks through locking in the forward exchange rate, gradually reduce the foreign exchange liabilities, pay attention to the research on policies and strategies of foreign exchange risk management, closely concern the changes in exchange rates, regularly analyze the trend of exchange rate, strictly conduct the approval procedure related to the transaction of the ?nancial derivatives, do well in statistics of the products, currencies and exchange rates, further tamp the basic work of the foreign exchange management and reduce the Company’s exchange rate risk.
Since its outbreak, COVID-19 has had a certain impact on the Company’s production and operation. The company is deeply aware of the arduousness, complexity and long-term nature of epidemic prevention and control, and will always take epidemic prevention and control as the primary guarantee for promoting the daily production and operation of the enterprise. The Company will pay close attention to and analyze the epidemic situation at home and abroad, and carry out normalized epidemic prevention and control.
5 Others
□Applicable √Not applicable
V. Explanation for non-disclosure in accordance with the accounting standard due to being not applicable to the provisions of the standard or state secret and business secrete and other special reasons
□Applicable √Not applicable
Section V ImportantEvents
I. Proposal for pro?t distribution of ordinary shares or convention of capital reserves into bonus shares
1 Formulation,implementation oradjustmentofcash dividend distribution policies
√Applicable □Not applicable
According to the requirements of the Circular on Further Implementation of Relevant Matters Concerning Cash Dividend Distribution of Listed Companies (ZJF [2012] No. 37) issued by the CSRC, as proposed by the 10th meeting of the Company’s ?fth session of Board held on August 21, 2012, amendments were made to the Articles of Association of the Company concerning pro?t distribution and cash dividends policy, and as a result, the dividend distribution standard and proportion became clearer, related decision making process and mechanism were compete, and the minority shareholders’ legal rights and interests were fully protected, giving them the opportunity to fully express their views and demands.
On August 18, 2020, the A-share profit distribution plan of the Company for 2019 was completed by distributing dividends in cash.
On August 27, 2020, the B-share profit distribution plan of the Company for 2019 was completed by distributing dividends in cash.
2 The Company’s plan or proposalfor pro?tdistribution ofordinary shares,plan or proposalfor the conventionofcapitalreserves into bonus shares in recent3 years (including the reporting period)
Unit: Yuan Currency: CNY
3 Shares repurchased by o?erin cash and included in cash dividends
□Applicable √Not applicable
4 Ifthe pro?tis positive in the reporting period and the pro?tofthe parentcompany available for distributionto the ordinary shareholders is positive but the Company does not represent the plan or proposalfor profitdistribution ofordinary shares in cash,the Company shalldisclose in detailthe reasons and the purpose and useplan ofthe undistributed pro?t
√Applicable □Not applicable
The reason for not representing the plan or proposal for pro?t distribution of ordinary shares in cash though the pro?t is positive and the pro?t of the parent company available for distribution to the ordinary shareholders is positive in the reporting period
Purpose and use plan of the
undistributed pro?t
According to the relevant provisions of the Circular on Further Implementation of Relevant Matters Concerning Cash Dividend Distribution of Listed Companies and the Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies issued by the CSRC, and the articles of association, in order to ensure the long-term healthy and sustainable development of the Company and safeguard the shareholders’ long-term interests, the Company will not distribute pro?ts or transfer capital reserve to share capital in view of the business performance in 2020.
For business development.
II. Ful?llment of commitments
1 Commitments ofthe actualcontroller,shareholders,related parties,acquirer,companies ofthe Company in thereporting period orongoing atthe period-end
□Applicable √Not applicable
2 Ifthere is earnings forecastfor the assets or projects ofthe Company and the reporting period is stillin theearnings forecastperiod,the Company shallexplain whether the assetor projectreaches the originalearningsforecastand give the reasons
□Reached □Failing to reach √Not applicable
3 Ful?llmentofcommitments on the performance and its impacts on goodwillimpairmenttest
□Applicable √Not applicable
III. Fund occupation and progress in returning scheme during the reporting period
□Applicable √Not applicable
IV. Explanation of the Company for Accounting Firm’s “auditors’ report with nonstandard opinions”
□Applicable √Not applicable
V. Analysis and explanation of the Company of the causes and the impacts of the major changes in accounting policies and accounting estimates or correction of signi?cant accounting errors
1 Analysis and explanation ofthe Company on the causes and the impacts ofthe changes in accounting policiesand accounting estimates
√Applicable □Not applicable
See V.44 in Section XI for details.
2 Analysis and explanation ofthe cause ofcorrection ofsigni?cantaccounting errors and their impacts by theCompany
□Applicable √Not applicable
3 Communication with formerCPA?rm
□Applicable √Not applicable
4 Otherdescription
□Applicable √Not applicable
VI. Engagement and dismissal of the public accounting ?rm
Unit: Yuan Currency: CNY
Particulars about the engagement and dismissal of the accounting ?rm
□Applicable √Not applicable
Particulars about reappointment of the accounting ?rm in the auditing period
□Applicable √Not applicable
VII. Risk of suspension of the listing
1 Cause forshares suspended fromlisting
□Applicable √Not applicable
2 Countermeasures to be taken by the Company
□Applicable √Not applicable
VIII. Termination of the listing and its reasons
□Applicable √Not applicable
IX. Events related to bankruptcy and reorganization
□Applicable √Not applicable
X. Major lawsuit and arbitration issues
√Existence of major lawsuit and arbitration in the year □No major lawsuit or arbitration in the year
1 Lawsuitand arbitration already disclosed in provisionalannouncement,withoutfollow-up progress
□Applicable √Not applicable
2 Lawsuitand arbitration notdisclosed in provisionalannouncement,orwith follow-up progress
√Applicable □Not applicable
Unit: 10,000Yuan Currency: CNY
In the reporting period:
3 Otherdescription
□Applicable √Not applicable
XI. Punishment to the listed Company and its directors, supervisors, senior executives, controlling shareholder, actual controller and acquirer and the recti?cation
□Applicable √Not applicable
XII. Particulars about the credit conditions of the Company and its controlling shareholder and the actual controller during the reporting period
□Applicable √Not applicable
XIII. The Company’s equity incentive plan, employee stock ownership plan or other incentives to the employees and their impacts
1 Related incentives disclosed in provisional announcement, without progress or change in follow-upimplementation
□Applicable √Not applicable
2 Incentives notdisclosed in provisionalannouncementorwith follow-up progress
Equity incentive
□Applicable √Not applicable
Other description
□Applicable √Not applicable
Information about employee stock ownership plan
□Applicable √Not applicable
Other incentives
□Applicable √Not applicable
XIV. Material related transactions
1 Related transactions relevantto routine business
1. Events disclosed in provisional announcement, without progress or changes in follow-up implementation
□Applicable √Not applicable
2. Events disclosed in the provisional announcement, with progress or changes in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in provisional announcements
√Applicable □Not applicable
Unit: Yuan Currency: CNY
2 Related transactions arising fromacquisition oro?ering ofassets orstock equity
1. Events disclosed in provisional announcement, without progress or changes in follow-up implementation
□Applicable √Not applicable
2. Events disclosed in the provisional announcement, with progress or changes in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in provisional announcements
□Applicable √Not applicable
4. Where agreed performance is involved, the performance achievement during the reporting period should be disclosed
□Applicable √Not applicable
3 Materialrelated transactions with jointexternalinvestments
1. Events disclosed in provisional announcement, without progress or changes in follow-up implementation
√Applicable □Not applicable
Summary of eventsQuery index
On August 28, the 16th meeting of the 7th board of directors deliberated and passed the Proposal on Capital Increase and Related Party Transactions of CCCC Yancheng Construction Development Co., Ltd.
Website of Shanghai Stock Exchange: www.sse.com.cn, and
Shanghai Securities News and Hong Kong Wen Wei Po on
August 29, 2020
On August 28, the 16th meeting of the 7th board of directors deliberated and passed the Proposal on Giving up the Priority of Capital Increase Right of Subsidiaries and Related Party Transactions
Website of Shanghai Stock Exchange: www.sse.com.cn, and
Shanghai Securities News and Hong Kong Wen Wei Po on
August 29, 2020
2. Events disclosed in the provisional announcement, with progress or changes in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in provisional announcements
□Applicable √Not applicable
4 Currentassociated rights ofcreditand liabilities
1. Events disclosed in provisional announcement, without progress or changes in follow-up implementation
□Applicable √Not applicable
2. Events disclosed in the provisional announcement, with progress or changes in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in provisional announcements
□Applicable √Not applicable
5 Others
□Applicable √Not applicable
XV. Material contracts and their performance
1 Trusteeship,contracting and leasing matters
1. Trusteeship
□Applicable √Not applicable
2. Contracting
□Applicable √Not applicable
3. Leasing
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Leasing explanation
None
2 Guarantee
√Applicable □Not applicable
Unit: Yuan Currency: CNY
External guarantee of the Company (excluding guarantee to the subsidiaries)
Guarantee of the Company and its subsidiaries to the subsidiaries
Total amount of guarantee to the subsidiaries incurred during the reporting period-241,324,194Total balance of guarantee to the subsidiaries at the end of the reporting period (B)1,810,341,787
Total amount of guarantee of the Company (including guarantee to the subsidiaries)
Total amount of guarantee (A+B)1,810,341,787Proportion of total amount of guarantee in the net assets of the Company (%)10.60
Including:
Amount of guarantee to the shareholders, the actual controller and related parties (C)
Amount of debt guarantee directly or indirectly provided to the guaranteed party with the asset-liability ratio over 70% (D)
1,446,253,214
Amount of guarantee exceeding 50% of net assets (E)
Total guarantee amount of the above three items (C+D+E)1,446,253,214Explanation for the joint and several repayment liabilities for the undue guarantee
Description of guaranteeThe Proposal for Providing Financing Guarantee to the Subsidiary Shanghai Zhenhua Port Machinery
(Hong Kong) Co., Ltd. Was approved upon deliberation by the Company at the 1st provisional general
meeting for 2008 held in September 22, 2008, which agreed to provide the ?nancial support to the
subsidiary in Hong Kong and provided the guarantee with the upper limit of USD 500 million for the
loan it applied for through the bank. Guarantees provided by the Company to subsidiaries during the
reporting period refer to the guarantees to subsidiaries in Hong Kong. Other guarantee matters were
approved upon deliberation at the 30th meeting of the 5th Board of Directors.
3 Consigned cash assets management
1. Consigned ?nancing
(1) General information of consigned ?nancing
□Applicable √Not applicable
Other information
□Applicable √Not applicable
(2) Information on individual consigned ?nancing
□Applicable √Not applicable
Other information
□Applicable √Not applicable
(3) Provision for impairment of consigned ?nancing
□Applicable √Not applicable
2. Consigned loans
(1) General information of consigned loans
□Applicable √Not applicable
Other information
□Applicable √Not applicable
(2) Individual consigned loans
□Applicable √Not applicable
Other information
□Applicable √Not applicable
(3) Provision for impairment of consigned loans
□Applicable √Not applicable
3. Other information
□Applicable √Not applicable
4 Othermaterialcontracts
□Applicable √Not applicable
XVI. Particulars about other important events
□Applicable √Not applicable
XVII. Particulars about actively performing social responsibilities
1 Poverty alleviation ofthe listed company
√Applicable □Not applicable
1. Targeted poverty alleviation program
√Applicable □Not applicable
According to the requirements of the “Decision of the Central Committee of the Communist Party of China and the State Council on Winning the Battle Against Poverty”, in order to implement the enterprise social responsibility, the Company established a leading group for poverty alleviation and development and actively carried out the targeted poverty alleviation, and completed the task of partner assistance in Tue Township, Lanping County, Nujiang Prefecture, Yunnan Province.
2. Summary of annual targeted poverty alleviation
√Applicable □Not applicable
In 2020, taking the principle of “Poverty Alleviation after Education” as the main working concept, the Company centralized the resource to donate a number of indoor and outdoor facilities for Tue Town Kindergarten, including desks and chairs, siesta bed, all-in-one teaching machine, water dispenser and suspended ?oor, by which the local education resource lack was improved. In the early stage of the outbreak of COVID-19, the Company donated a batch of materials to Lanping County where Tue Town is located to help them ?ght against COVID-19. It ordered a batch of work clothes from the clothing companies in Yingjisha County, Xinjiang to create employment and increase income for the ?led and registered households, and actively cooperated with the designated poverty alleviation villages and towns to carry out the training on appropriate traditional Chinese medicine technology for rural doctors and the training on industrialization development of plateau characteristic agricultural products. In addition, the Company carried out the poverty alleviation through consumption and employment there, and participated in the free construction project of Nujiang Dukou Bridge, helping the local infrastructure construction. The Company won the title of “Targeted Poverty Alleviation Star Enterprise granted” by Lanpei County Committee of the CPC and Lanping County People’s government in 2020.
3. E?ectiveness of targeted poverty alleviation
√Applicable □Not applicable
Unit: 10,000Yuan Currency: CNY
I. General condition
Including: 1. Funds178.08
II. Itemized investment
1. Transfer employment for poverty alleviation
Including: 1.1 Investment in vocational skills training2.85
1.2 Number of trainees for vocational skills training (person/time)28
1.3 Number of employed people from ?led and registered poor households (person)
5
2. Poverty alleviation through education
2.1 Investment in improving the education resources in poor areas41.743. Poverty alleviation through health improvement
Including: 3.1 investment in medical and health resources in poor areas2.514. Other items
4.1 Description of other itemsOverall poverty alleviation funds of CCCG: RMB 600,000;
cost of customized work clothes from Yingjisha County,
Xinjiang: RMB 381,200; poverty alleviation funds from
external units: RMB 50,000; purchase of agricultural
products from poor areas: RMB 206,200; joint investment
in poverty alleviation through consumption with external
units: RMB 72,400
III. Awards (content and level)
Targeted Poverty Alleviation Star Enterprise (county-level)
4. Subsequent targeted poverty alleviation program
√Applicable □Not applicable
In combination with the poverty alleviation requirements of “Continuing to take responsibilities, to implement policies, to provide support and to supervise after overcoming poverty”, the Company will continue to improve its political position, enhance the social responsibility as a central enterprise, strengthen the support and publicity, and help Tue Township in Lanping county to continue to do a good job in compulsory education and labor transfer in the “post poverty alleviation” era, so as to improve its hematopoietic capacity and create a development outlook with high level of labor force and good quality of the whole people.
Based on the investigations of poverty alleviation, the Company plans to carry out the poverty alleviation work in 2021 in the following aspects:I. Poverty alleviation through Party Building. The Party branch of ZPMC will carry out partner assistance with Yongchang Community Party branch of Lanping County and Tue Township Party branch.
II. Poverty alleviation through education. By using big data and other methods, it will establish a student growth database for Tue Center Primary School and Zhenhua Kindergarten to record the growth status, and will develop new “post poverty alleviation” measures with modern means. At the same time, the Company will strengthen the one-to-one support propaganda in ZPMC and will continue to do well in poverty alleviation education.
III. Poverty alleviation through employment. The Company will provide industrial worker jobs for the surplus labor force in Tue Township and provide relevant training and teaching, so as to help them grow rapidly and to provide assistance for the Company’s production base and domestic and foreign port and terminal production operations.
2 Ful?llmentofsocialresponsibility
√Applicable □Not applicable
The Company actively performed the social responsibility, enhanced the responsibility management to create the benefit for shareholders, upgraded the operation quality to create the high quality products for users, responded to the “Belt and Road” initiative and “Made in China 2025 Strategy” with the actual action, implemented the development strategy with equipment manufacturing as the center and capital operation and Internet+ as two wings. In addition to the traditional dominant plates such as port machinery, ocean engineering, system EPC and ocean transportation of heavy cargoes, the Company also developed the intelligent industry, livelihood consumption, integrated development and digital industry, to make contribution to the development of entity economy and the construction of the well-o? society.
Adhering to the concept of "open development and all-win harmony", the Company speeded up the pace of "going global", actively promoted the layout of overseas regional centers, and built Terminexus digital intelligent platform, to provide faster and more e?cient services to global users. Every year, the Company may hold the forum on intelligent solutions of wharf to discuss the development plan with the global professionals. The Company made full use of the platform of China International Import Expo to achieve mutual bene?t and common development with global enterprises.
The Company paid more attention to the green and sustainable development, actively invested in the research and development of green products, promoted the "change from oil into electricity" technology of dock equipment, and optimized the environmental protection properties of existing equipment; built intelligent terminals to achieve "zero emission" from terminals and provided equipment support for the development of clean energy such as solar and wind power. The Company further increased the investment in environmental protection, improved the existing production equipment and facilities, and innovate the green production process; strengthened the long-term mechanism for green environmental protection management, created the environmental protection culture with vitality, set up the special training for environmental protection, enhance the environmental protection awareness of the sta?, and laid a green foundation for promoting the high-quality development of the Company.
The Company always adhered to the principle of "people-oriented", strengthened the humanistic care for employees, built a career development platform for employees; strengthened the communication with the community where the Company is located through activities such as party building and association building; released the Social Responsibility Report regularly to show the development trend of the enterprise; carried out the targeted poverty alleviation, promoted the poverty alleviation month by month, and implemented ?xed-point poverty alleviation tasks.
3 EnvironmentalInformation
1. Information about environmental protection of the Company and its subsidiaries as the key pollutant discharge units published by environmental protection department
√Applicable □Not applicable
(1) Emission information
√Applicable □Not applicable
During the reporting period, under the guidance of Xi Jinping's ecological civilization thought, the Company conscientiously implemented the signi?cant national and local decisions and arrangements on eco-environmental protection, and actively promoted the environmental compliance regulation action and took environmental pollution control as the key work in the year-round. The Company implemented the subject responsibility and leadership responsibility at all levels, took the initiative to improve the position and awareness of ecological environmental protection, adhered to the general requirements of “full coverage, zero tolerance, strict law enforcement and practical e?ect”, studied and solved the outstanding problems that restricted the environmental protection work of the Company in accordance with the national laws, regulations and industry standards, and promoted the environmental recti?cation and improved the environmental management level.
During the reporting period, the total permitted amount of main pollutants in waste gas of the Company and its major subsidiaries: 1.13 tons of sulfur dioxide, 2.41 tons of nitrogen oxide, 71.10 tons of particulate matter (total amount control implemented in some subsidiaries), and 309.27 tons of VOCs; annual actual emissions: 1.09 tons of sulfur dioxide, 2.10 tons of nitrogen oxide, 69.32 tons of particulate matter (actual emissions of the subsidiaries implementing total amount control: 23.89 tons), and 254.92 tons of VOCs; total permitted amount of main pollutants in wastewater: 480.33 tons of COD and 35.51 tons of ammonia nitrogen; annual actual emissions: 178.80 tons of COD and 10.32 tons of ammonia nitrogen. All indicators were in line with the total emission control indicators of the emission permit. According to the supervision monitoring by environmental protection department and the self-monitoring of the enterprise, all kinds of pollutants discharged by the Company meet the corresponding emission limits speci?ed in the national “Integrated Emission Standard of Air Pollutants” (GB 16297-1996), “Integrated Wastewater Discharge Standard” (GB8978-1996), “Emission Standards of Pollutants for Shipbuilding Industry” (DB31/934-2015), “Emission Standards for Odor Pollutants” (GB14554-1993), “Integrated Emission Standard of Air Pollutants” (DB31/933-2015), “Emission Standards for Odor Pollutants” (DB31/1025-2016), “Integrated Emission Standard of Air Pollutants” (GB 16297-1996), “Emission Standard of Air Pollutants for Boiler” (DB31/387-2018), and the “Integrated Emission Standard of Air Pollutants” (DB31/933-2015) of Shanghai City, “Emission Standard of Air Pollutants for Industrial Kiln and Furnace” (DB31/860-2014), “Integrated Wastewater Discharge Standard” (DB31/199-2018) and “Emission Standard for Industrial Enterprises Noise at Boundary” (GB12348-2008).
For details of the pollutant emissions of the Company and major subsidiaries, see the table below:
Remark: - in the table indicates that the enterprise does not implement total amount control(2) Construction and operation of pollution control facilities
√Applicable □Not applicable
Based on the existing laws and regulations and the requirements of industrial policies, the Company and its subsidiaries have comprehensively carried out environmental compliance recti?cation activities, strengthened the performance of duties for ecological environmental protection, guided employees to give full play to their subjective initiative, and strengthened supervision, so as to ensure the compliance and control of the control objectives.
According to the latest environmental protection requirements and the distribution of pollution sources, the Company and its subsidiaries strengthened the comprehensive treatment of waste gas and wastewater pollutants during the reporting period. Changxing Base (including Shanghai Zhenhua Heavy Industries Co., Ltd. Changxing Branch, Shanghai Zhenhua Port Machinery Heavy Industries Co., Ltd., Shanghai Zhenhua Heavy Industries Port Machinery General Equipment Co., Ltd.) has mainly implemented the recti?cation project of waste gas treatment facilities in painting workshop, workshop and out?eld welding fume treatment recti?cation project, non-road mobile machinery renovation project, rainwater and sewage diversion reconstruction project, initial rainwater collection and treatment project, ambient air automatic monitoring system construction project, the upgrading of environmental protection facilities for galvanizing workshop of Changxing Branch, painting shed construction project, hazardous waste warehouse construction project, and paint work construction project, etc. Nantong Zhenhua Heavy Equipment Manufacturing Co., Ltd has focused on the new paint workshop project and installed three VOCs automatic monitoring systems. Shanghai Zhenhua Heavy Industries Co., Ltd Nantong Branch, ZPMC Transmission Machinery (Nantong) Co., Ltd and ZPMC Qidong Marine Engineering Co., Ltd have completed the installation of 5 VOCs automatic monitoring systems, and promoted the renovation of painting line.
The Company has attached great importance to the operation and management of environmental protection facilities, established a complete management system, formulated and improved the management system, and all subsidiaries have worked in strict accordance with ISO14001 environmental management system standards. At present, the environmental control facilities of the Company have fully covered the waste gas, waste water, noise and solid wastes, and all kinds of pollution control facilities are in normal operation.
(3) Environmental impact assessment (EIA) of construction project and other administrative licenses for environmental protection
√Applicable □Not applicable
All the new, reconstruction and expansion projects of the Company strictly implement the relevant management regulations of “Three Simultaneities” for environmental protection of national and local construction projects, and the projects have gone through the procedures of environmental impact assessment and completion acceptance. See the table below for details:
According to the requirements of the “Interim Provisions on the Administration of Pollutant Emission Permit” and the “Technical Speci?cation for Application and Issuance of Pollutant Emission Permit” of the state, the Company and its subsidiaries have successively applied for pollutant emission permits since 2015 and applied for the change of pollutant emission permits according to regulations, and have obtained the “Pollutant Emission Permit” issued by local ecological and environmental protection department. In strict accordance with the requirements of emission permit, the Company continued to discharge pollutant as permitted, carried out self-monitoring, established accounts, reported regularly and made information public.
(4) Emergency proposal for environmental accident
√Applicable □Not applicable
In order to prevent the occurrence of sudden environmental pollution incidents and to control and deal with them quickly and e?ectively after the occurrence, in accordance with the “Environmental Protection Law of the People’s Republic of China”, “Law of the People’s Republic of China on the Prevention and Control of Water Pollution”, “Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution”, “Law of the People's Republic of China on the Prevention and Control of Solid Waste Pollution”, “Measures for the Administration of Recording the Emergency Plan for Emergent Environmental Events of Enterprises and Institutions (Trial Implementation)”, “Guidelines for the Compilation of Risk Assessment Report on Environmental Emergencies in Enterprises (Trial Implementation)”, the Company assessed the existing environmental risks, prepared the emergency plans for subsidiaries, and ?led them with the local ecological and environmental protection department. During the reporting period, Shanghai Zhenhua Heavy Industries Co., Ltd. Changxing Branch, Shanghai Zhenhua Port Machinery Heavy Industries Co., Ltd, and Shanghai Zhenhua Heavy Industries Co., Ltd. Nantong Branch started and completed the revision, evaluation and ?ling of the emergency plan for environmental emergencies.
(5) Self-monitoring scheme for environment
√Applicable □Not applicable
In accordance with the requirements of the emission permits and technical guidelines for self-monitoring of pollutant discharge units, all subsidiaries have carried out regular self-monitoring of environmental protection, and released self-monitoring information on provincial and municipal information disclosure platforms such as national pollution source monitoring information management and sharing platform and Shanghai enterprise information disclosure platform.
During the reporting period, the Company has built ?ve new boundary environmental monitoring stations in Changxing base (including Shanghai Zhenhua Heavy Industries Co., Ltd. Changxing Branch, Shanghai Zhenhua Port Machinery Heavy Industries Co., Ltd., Shanghai Zhenhua Heavy Industries Port Machinery General Equipment Co., Ltd.), which have been equipped with advanced environmental monitoring equipment to improve the accuracy of monitoring; the Company has changed the monitoring management mode, taken monitoring, over standard analysis, recti?cation, tracking and supervision as the important functions of environmental monitoring, and realized the closed-loop management of over standard problems. In the meanwhile, it conscientiously carried out self-monitoring and released self-monitoring data and related information in a timely, complete and truthful manner according to national and local requirements. The self-monitoring announcement rate in the reporting period reached 100%.
(6) Other environmental information to be disclosed
□Applicable √Not applicable
2. Particulars about the environmental protection of the companies other than those de?ned as key pollutant- discharge entities
√Applicable □Not applicable
The main pollutants of the subsidiaries other than the key emission entities such as Shanghai Port Machinery Heavy Industry Co., Ltd, subordinate to the Company: wastewater (COD, ammonia nitrogen), waste gas (particulate matter, VOCs), solid waste, noise, etc. Discharge mode: the wastewater was discharged up to the standard after treatment and some units have set up sewage treatment facilities; the atmospheric pollutants such as the particulate matter and VOCs in waste gas were discharged in the manner of organized discharge; it is required to renovate spraying exhaust gas treatment facilities and provide workshop dust removal devices, etc.; the solid wastes and the hazardous wastes were handed over to the quali?ed entities for treatment; plant boundary noise was discharged up to the standard.
3. Description of the reasons for failing to disclose the environmental information by the companies other than the key pollutant discharge entities
□Applicable √Not applicable
4. Description of the follow-up progress and changes in the contents of environmental information disclosed during the reporting period
□Applicable √Not applicable
(IV) Other description
√Applicable □Not applicable
In August 2020, All-China Environment Federation sued the Company and Shanghai Zhenhua Heavy Industries Co., Ltd. Changxing Branch to Shanghai No. 3 Intermediate People’s Court for air pollution liability dispute, with the case No. (2020) H 03 MC 274. Changxing Branch and the Company attached great importance to this event and established a special working group to actively communicate with the Federation. So far, the Court has not arranged any trial procedures.
XVIII. Information about convertible corporate bonds
□Applicable √Not applicable
Section VI Changes in Ordinary Shares and Shareholders'Situation
I. Changes in ordinary shares capital
1 Table ofchanges in ordinary shares
1. Table of changes in ordinary shares
The total number of shares of the Company's ordinary shares and the structure of its share capital remained unchanged during the reporting period.
2. Notes to changes in ordinary shares
□Applicable √Not applicable
3. E?ect of changes in ordinary shares on ?nancial indicators such as earnings per share and net asset per share for the latest year and period (if any)
□Applicable √Not applicable
4. Other contents that the Company deems necessary to be disclosed or required to be disclosed by the securities regulatory authority
□Applicable √Not applicable
2 Changes in shares with restrictive conditions forsales
□Applicable √Not applicable
II. Issuance and listing of securities
1 Securities issuance by the reporting period
□Applicable √Not applicable
Particulars about the issuance of securities during the reporting period (for bonds of di?erent interest rates within the duration, please state them respectively)
□Applicable √Not applicable
2 Changes in totalordinary shares ofthe Company and the shareholderstructure,as wellas the assets and liabilities
□Applicable √Not applicable
3 Existing internalemployee ownership
□Applicable √Not applicable
III. Shareholders and actual controller
1 Totalnumberofshareholders
Totalofordinary shareholders by the end ofthe reporting period 228,621
Totalofordinary shareholders by the end ofthe month previous to the disclosure date ofannualreport 232,566
2 Table ofthe shares held by top 10 shareholders,top 10 holders ofmarketable shares (orshareholders withouttrading limited conditions)by the end ofreporting period
Unit: share
Shares held by top 10 shareholders
Shareholdings of top 10 shareholders without trading limited conditions
Shareholdings of top 10 shareholders without trading limited conditions
Among the above top 10 shareholders, CCCG (HK) Holding
Limited, China Communications Construction Group Co.,
Ltd. and China Communications Construction Company
Notes to the related relation or consistent actions of the above-mentioned shareholders
Ltd. are related companies. It was unknown to the
Company whether there was related relation or concerted
actor speci?ed in the Management Method on Information
Disclosure for Shareholding Change of the Shareholders of
Listed Companies.
Explanation on preferred stock holders with recovered voting rights and
number of stocks held by them
Shareholding quantity of top ten shareholders with sales restriction and the sales restriction
□Applicable √Not applicable
3 Strategic investors orlegalpersons becoming the top 10 shareholders due to placementofnewshares
□Applicable √Not applicable
□Applicable √Not applicable
V. Other legal person shareholder holding more than 10%
□Applicable √Not applicable
VI. Particulars about restriction on reduction in shares held
□Applicable √Not applicable
Section VII Preferred Shares
□Applicable √Not applicable
√Applicable □Not applicable
Unit: share
NameMain working experiences
Born in 1969, male, master, senior economist, senior engineer. He began his career in August, 1989 and has successively served as deputy director of CCCC Fourth Harbor Engineering Co., Ltd, vice general manager of CCCC Investment Co., Ltd, secretary of the Party committee, chairman and general manager of CCCC Nansha Investment Development Co., Ltd. and CCCC Urban Investment Holding Co., Ltd, general manager and secretary of CPC Working Committee of CCCC South China regional headquarters, general manager of the Strategic Development Department of China Communications Construction Company Ltd. (CCCC), general manager of the Investment Division of CCCC, director of the board o?ce and general manager of the Strategic Development Department of China Communications Construction Group Co., Ltd. (CCCG) and CCCC. Currently, he is the assistant to the general manager of CCCG, and chairman and general manager (president) of the Company.
Liu Chengyun
Liu Qizhong
Born in 1964, male, bachelor, senior economist. He successively served as the manager of Operating Department and the vice president of the Company, and serves as the director of the Company since March 2004. Currently, he is the director and vice president of the Company.
Born in 1969, male, master of MBA, senior accountant. He began his career in July 1991 and successively served as the section member and vice section manager of Financial Division of CCCC Shanghai Dredging Co., Ltd, vice director of Budget and Finance Department, vice manager (in charge of the work) or manager of Finance Department, and member of commission for disciplinary inspection of CCCC Shanghai Dredging Co., Ltd, and the director, chief accountant and Party committee standing member of CCCC Shanghai Dredging Co. Ltd. Currently, he is the director and CFO of the Company.
Zhu Xiaohuai
Born in 1970, male, doctor of laws, senior lawyer. He successively served as a lawyer assistant and lawyer in Shanghai Foreign Trade Law Firm, a teacher of civil and commercial law in East China University of Political Science and Law, a senior partner and chief lawyer of Shanghai Zhongmao Law Firm, and co-chairman, senior partner and lawyer in the head o?ce management committee of Guantao Law Firm. Currently, he is the independent director of the Company.
Sheng Leiming
Zhang Hua
Born in 1973, male, Ph.D. Economics, associate professor of ?nance. He successively served as a researcher, lecturer, assistant professor and associate professor at China Europe International Business School. Currently, he is the independent director of the Company.
Yang JunBorn in 1957, male, master degree. He successively served as intermediate and senior court judge of Shanghai Court, president and member of the judicial committee member, Property Trade Operation Director of Shanghai United Property Rights Exchange. Now he is the assistant president of Shanghai United Property Rights Exchange, general manager of Beijing HQ, director of Financial Property Rights Trade Center, arbitrator of China International Economic and Trade Arbitration Commission, Shanghai International Economic and Trade Arbitration Commission, arbitrator of Shanghai Arbitration Commission, Shanghai Financial Arbitration Court, expert of China domain name dispute resolution center, director of Intellectual Property Association of China Law Society, director of Company Law Research Society of Shanghai Law Society, director of Shanghai Patent/Trademark/Copyright Association. Currently, he is the independent director of the Company.
Born in 1976, male, Ph. D. He had served as a teacher in School of Software, Peking University since 2005 and now he is a professor. He is mainly engaged in the research in Internet business model innovation and corporate development strategy. Currently, he is the independent director of the Company.
Zhao Zhanbo
Ji LinhongBorn in 1962, male, Ph. D. He successively served as the assistant and the lecturer of Department of Precision Instrument of Tsinghua University; assistant professor of Department of Precision Engineering of Faculty of Engineering of the University of Tokyo, the Postdoctoral Researcher in Ministry of Education, Culture, Sports, Science and Technology of Japan. He had acted as vice director of Department of Precision Instrument of Tsinghua University, vice director of Department of Mechanical Engineering of Tsinghua University, director of Design Engineering Research Institute of Tsinghua University, director of Experiment & Teaching Center of Mechanical Engineering, and vice director of State Key Lab of Tribology, Tsinghua University and so on. Now he serves as a professor and a doctoral tutor in Department of Mechanical Engineering, Tsinghua University. He is mainly engaged in digitalized design and system optimization of complicated mechanical system and the intelligent and biological mechanical design. Currently, he is the independent director of the Company.
NameMain working experiences
Born in October 1973, female, Ph. D from Xiamen University, post-doctor in accounting of Guanghua School of Management, Peking University, professor of accounting, doctoral tutor, engaged in work in 1995. She successively served as the assistant engineer of Kaiyuan Group under Xi’an Jiaotong University, lecturer of School of Economics and Management of Tongji University, research scholar of CKGSB. Now, she acts as the director of Department of Accounting, School of Economics and Management, Tongji University and the research scholar of Investment Center of CKGSB. Currently, she is the independent director of the Company.
Bai Yunxia
Born in 1973, male, master of engineering, senior political worker. He successively served as the vice secretary or secretary of league committee, and vice secretary or secretary of Party Branch of No. 2 Engineering Co., Ltd of CCCC Third Harbor Engineering Co., Ltd; vice director and director of Organization Department of CCCC Third Harbor Engineering Co., Ltd; secretary of the Party Committee and vice general manager of No. 2 Engineering Co., Ltd of CCCC Third Harbor Engineering Co., Ltd; chairman of board of supervisors, vice secretary of the Party Committee, secretary of Committee for Discipline Inspection and chairman of labor union of CCCC Third Harbor Engineering Co., Ltd. Currently, he is the vice secretary of the Party Committee, secretary of Commission for Disciplinary Inspection, chairman of labor union and chairman of board of supervisors of the Company.
Wang Cheng
Born in 1976, male, bachelor, senior engineer. He successively served as the designer of No.2 Design Institute of Jiangnan Shipyard (Group) Co., Ltd, vice director and vice manager of the Quality Department of ZPMC, and general manager of ZPMC Inspection Co., Ltd. Currently, he is the sta? representative supervisor of the board of supervisors, vice general manager of ZPMC Port Machinery Group, and the secretary of the Party committee and executive vice general manager of Changxing Branch.
Xiang Xudong
You HuaBorn in 1963, male, bachelor, senior accountant. He successively served as the assistant director and deputy director of Finance Department of China Harbour Engineering Company Limited, and ?nance manager of CHUWA Bussan Company Limited (Japan); general manager of the Finance Department and director of Capital Settlement Center, deputy chief accountant and general manager of Finance Department of China Harbour Engineering Company(Group); general manager of Capital Department and director of Capital Settlement Center of CCCG; director and chief accountant of China Harbour Engineering Company Limited; director, vice general manager and chief accountant of CCCC Investment Co., Ltd; director, general manager and deputy Secretary of Party Committee of CCCC Finance Co., Ltd. Since December 2019, he has been a full-time outside director of CCCG. He is now a supervisor of the Company.
Liu JianboBorn in 1963, male, bachelor, senior engineer. He successively served as the engineer at technological o?ce of Shanghai Port Machinery Plant; assistant director in engineering technology department of Shanghai Container Dock Co. Ltd., project director of ship operation department and chief engineer of engineering department of Shanghai ZPMC, and vice general manager of and general manager of ZPMC Changxing Base. Currently, he is the vice president of the Company.
Zhou QiBorn in 1972, male, EMBA, professor-level senior engineer. He successively served as the technician, manager, deputy chief engineer, general manager of the Electric Appliance O?ce and chief engineer of the Company. Currently, he is the vice president of the Company.
Chen BinBorn in 1974, male, EMBA, senior engineer. He successively served as the project quality leader of Quality Control Division, vice manager of tire crane o?ce of quality control division, manager of quality control division, vice general manager and general manager of quality inspection company, vice director and vice chief engineer of quality safety o?ce, manager of quality safety division, supervisor and president assistant of the Company. Currently, he is the vice president and safety director of the Company.
Born in 1964, male, bachelor, senior engineer. He successively served as the technician in Shanghai Port Machinery Manufacturing Plant, the engineer and chief engineer of ZPMC Machinery O?ce, general manager and vice chief engineer of No.4 design o?ce of design company, vice director and director of ZPMC Machinery O?ce, manager of budget assessment department and the dean of ZPMC Land-based Heavy Industry Research & Design Institute. Currently, he is the vice president of the Company.
Shan Jianguo
Born in 1969, male, MBA, senior engineer. He successively served as the technician, production planner and assistant director of No. 2 Panel beater of Shanghai Port Machinery Manufacturing Plant, director of gearbox branch of Shanghai Port Machinery Manufacturing Plant, vice director and member of the Party committee of Shanghai Port Machinery Manufacturing Plant, vice general manager of Shanghai Port Machinery Heavy Industry Co., Ltd, general manager and president assistant of ZPMC Operation O?ce. Currently, he is the vice president of the Company.
Zhang Jian
Fei GuoBorn in 1962, male, EMBA, professor-level senior engineer. He successively served as the engineer of Shanghai Port Machinery Plant, electrical engineer of the Technology Department, director of No. 5 Electrical O?ce, vice chief engineer, chief engineer, director of Development O?ce and vice president of ZPMC. Currently, he is the chief engineer of the Company.
Born in 1975, male, bachelor, senior economist. He successively served as the director of Technical Process Department, trainee manager of Manufacturing Department and manager of Quality Assurance Department of Zhangjiagang Base of Shanghai Port Machinery Plant; project leader, o?ce manager, vice director of Quality Safety O?ce, vice general manager and general manager of mechanical supporting base, secretary of Party Branch, vice chief economist, general manager of budget assessment department, general manager of Material and Equipment Procurement Department and president assistant of ZPMC quality inspection company. Currently, he is the chief economist of the Company.
Li Ruixiang
Sun LiBorn in 1972, male, EMBA, senior engineer. He successively served as the project leader and vice manager of Operation Department, vice director of Operation O?ce and director of O?-Shore O?ce, general manager assistant, vice president and director of the Company. Currently, he is the chief legal counsel, secretary of the board and chief compliance o?cer of the Company.
Born in 1970, male, Ph.D., professor-level senior engineer. He began his career in September 1992 and successively served as the engineer, equipment leader of overseas projects, vice chief of Marine Machine Department, manager of Enterprise Development Department of CCCC First Harbor Engineering Co., Ltd; the general manager of CCCC International Shipping Co., Ltd and the vice general manager of the Equipment Manufacturing Marine Heavy Industry Department of China Communications Construction Co., Ltd. He resigned as director and chairman of the board of the Company on March 19, 2021.
Zhu Lianyu
Born in 1975, male, EMBA, senior engineer. He began his career in July 1996 and successively served as the chief of Quality Inspection Department, vice director of Quality Inspection No.2 Department, vice general manager of quality inspection company, vice general manager of after-sales service department, general manager of quality inspection company; vice director of O?-Shore O?ce, vice director and director of Quality Safety O?ce, director of Product Service Center, president assistant, vice president and president of the Company. He resigned as the director and president of the Company on Feb. 26, 2021.
Huang Qingfeng
√Applicable □Not applicable
Statement of the position held in other entities
Specialties
Education background
Education levelNumber (person)
Doctor18Master707Undergraduate4,220
Junior College2,001
Technical secondary school567
High school and below1,189
Total
8,702
√Applicable □Not applicable
Totaloflaboroutsourcing hours 7,310,088 hours
Totaloflaboroutsourcing remuneration RMB392,856,400.00
VII. Others
□Applicable √Not applicable
□Applicable √Not applicable
IV. As for the important suggestions and advices raised by the special interest committees under the Board of Directors while performing their duties in the reporting period, where there is any objection, the details shall be disclosed
□Applicable √Not applicable
V. Description of the risks found by the board of supervisors
□Applicable √Not applicable
VI. Particulars about the inability of the Company and its controlling shareholders to guarantee the independence and keep independent operation capacity with regard to business, personnel, assets, institution, ?nance, etc.
□Applicable √Not applicable
Where there is horizontal competition, the corresponding solutions, job schedule and follow-up wok plan of the Company□Applicable √Not applicable
VII. Establishment and implementation of the assessment mechanism and incentive mechanism for senior executives during the reporting period
√Applicable □Not applicable
The Company appoints the directors, supervisors and senior executives in accordance with the provisions of Company Law and the Articles of Association, has built up a preliminary cultivation, selection, supervision, assessment, reward and punishment, constraint system for the Company’s senior executives suitable for the actual situation. The Company formulated corresponding administrative methods for senior executives. According to the production and development need of the Company, the senior executives are appointed, resigned and assessed following the principles of “being from top to bottom integrating the virtue and talent”, and are subject to annual appraisal by the Company according to the due diligence and job performance. The Company will gradually improve the existing performance evaluation system and salary system, and promote medium and long term incentive system for all senior executives and the core technical personnel of the Company, to continue to stimulate the enthusiasm of the senior executives, to create new achievements, and to ensure the bene?t maximization and standard operation of the Company.
VIII. Disclosure of self-evaluation report on internal control or not
√Applicable □Not applicable
Ernst & Young LLP (special general partnership), engaged by the Company, had audited the e?ectiveness of the internal control of the ?nancial statement as of December 31, 2020 and issued a standard internal control audit report with clean opinion (see the attachment to the announcement for details).
Description of the important de?ciencies in internal control during the reporting period
□Applicable √Not applicable
IX. Particulars about the audit report on internal control
√Applicable □Not applicable
Ernst & Young LLP (special general partnership), engaged by the Company, had audited the e?ectiveness of the internal control of the ?nancial statement as of December 31, 2020 and issued a standard internal control audit report with clean opinion (see the attachment to the announcement for details).
Audit report on internal control disclosed or not: Yes
Opinion type of internal control audit report: standard with clean opinion
X.Others
□Applicable √Not applicable
Section X Related Information on Corporate Bonds
□Applicable √Not applicable
Ernst & Young (2021) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
We have audited the ?nancial statements of Shanghai Zhenhua Heavy Industries Co., Ltd. (hereinafter referred to as the "Company"), which comprise the consolidated balance sheet and the Company's balance sheet as at December 31, 2020, the consolidated income statement and the Company's income statement, the consolidated statement of changes in shareholders’ equity and the Company's statement of changes in owners’ equity and the consolidated statement of cash ?ows and the Company's statement of cash ?ows for the year then ended as well as the notes to the ?nancial statements.
In our opinion, the ?nancial statements of the Company attached are prepared, in all material respects, in accordance with the Accounting Standards for Business Enterprises, and fairly present the consolidated financial position and the Company's financial position as at December 31, 2020 and the consolidated operating results and cash flows and the Company's operating results and cash ?ows for the year then ended.
We conducted our audit in accordance with Chinese Certified Public Accountants Auditing Standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of this auditors' report. According to the Code of Ethics for Certi?ed Public Accountants of China, we are independent of the Company, and we have ful?lled other responsibilities in the aspect of code of ethics. We believe that the audit evidence we have obtained is su?cient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most signi?cance in our audit of the financial statements for the current period. The response to these matters is based on the overall audit of the financial statements and the formation of audit opinions. We do not express our opinions on these matters separately. The following description of how our audit addressed the key audit matter is also against this background.
We have ful?lled the responsibilities stated in “Responsibilities of Certi?ed Public Accountant for Auditing of Financial Statement” in this report, including the responsibilities related to these key auditing matters. Correspondingly, our auditing work includes the implementation of the auditing procedure designed for dealing with the great misstatement risks of the financial statement to be evaluated. The results from the implementation of the auditing procedure by us, including the procedure to be implemented for the following key auditing matters, o?ers a foundation for releasing the auditing opinions of the ?nancial statements.
1. Inventory depreciation reserves
2.Provision for bad debts of accounts receivable
The accounts receivable of Shanghai Zhenhua Heavy Industries Co., Ltd. is mainly from the business contract on port machine and ocean engineering manufacturing. Since it involves large contracted value, long construction period, relatively complicated technical parameters, the implementation of the contract may be a?ected by the periodicity of the economic environment. The accounts receivable has certain risk in the recovery in case of any dispute in contract or the industry is in recession. The provisions for bad debts of accounts receivable are recognized on the basis of estimated credit losses, involving major judgment and estimates. The management of analyzed the ?nancial position of counter parties, guarantee acquired for accounts receivable, historical repayment records of accounts receivable, as well as the credit rating and future economic situations of counter parties for evaluating the credit risk of accounts receivable.As of December 31, 2020, in the consolidated ?nancial statements, the balance of accounts receivable was RMB 9.10 billion and the provision for bad debts of accounts receivable was RMB 1.87 billion; in the ?nancial statements of the Company, the balance of accounts receivable was RMB 17.14 billion and the provision for bad debts of accounts receivable was RMB 1.80 billion.The accounting policy and other disclosures regarding the provision for bad debts of accounts receivable are stated in Note V (12), Note V (43), Note VII (5) and Note XVII (1) of the ?nancial statements.
Our procedure mainly included the evaluation of the accounting estimate relating to the depreciation reserves, such as the ?nancial status and credit rating of the counterpart; checked the account age of accounts receivable and historical repayment record and evaluated whether the ?nancial problems of the counter party had e?ects on the recovery of the accounts receivable; for the accounts receivable evaluated based on the portfolio, we rechecked the management's setting of credit risk features portfolio, checked the key information such as account age and credit record of each portfolio by sampling, and rechecked the basis of management's evaluation of credit risk and expected credit loss amount based on the credit risk features portfolio, including testing historical default data and checking the actual credit loss in the current year; rechecked the disclosure of bad debt provision for accounts receivable in ?nancial statements.
3. Revenue recognition
Our procedure mainly included evaluating and testing
the management's internal control related to revenue
recognition. Selected the sales contract with signi?cant
amount, checked the important contract terms related
Most of the revenue of Shanghai Zhenhua Heavy Industries Co., Ltd. comes from the one of the construction contracts on the large-sized port equipment, heavy equipment, steel structure and construction projects customized by the customer.Since January 1, 2020, the new revenue standard has been applied, and the management has read and analyzed the contracts of various revenue types according to the requirements of ?ve step method. The performance obligations included in the manufacturing contract on large-sized port equipment, heavy equipment and some steel structure products did not meet the conditions of performance obligations within a certain period of time, therefore, based on comprehensive consideration of various factors, the revenue was recognized at the time of control transfer of relevant products.In 2020, in the consolidated ?nancial statements, the operating revenue was RMB 22.66 billion; in the ?nancial statements of the Company, the operating revenue was RMB 21.79 billion.The accounting policy and other disclosures regarding the operating revenue are stated in Note V (38), Note V (43), Note V (44), Note VII (74) and Note XVII (4) of the ?nancial statements.
to revenue recognition according to the ?ve step
requirements of the new revenue standard, and
evaluated the management’s accounting judgment
and estimate on performance obligations, revenue
recognition amount (including variable consideration)
and the recognition at a certain time point or within
a period of time. Through selecting the samples, we
veri?ed whether the contract revenue recognized in the
year conformed to the revenue recognition conditions;
implemented the cuto? check procedure to validate
the revenue was con?rmed in the proper accounting
period. For the revenue recognized in a certain period
of time, we evaluated the judgment and estimate of the
total contract cost and total processing amount made
by the management, and made sampling to calculate
and check the income determined by the occurred
contract cost and the expected total contract cost
again; implemented the analysis procedure against
the changes in revenue and gross pro?t of various
businesses; rechecked the disclosure of revenue
recognition in ?nancial statements.
4 OtherInformation
The management of Shanghai Zhenhua Heavy Industries Co., Ltd. shall be responsible for other information. The other information comprises information of the annual report, but excludes the ?nancial statements and our auditors' report.
Our opinion on the ?nancial statements does not cover the other information, and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the ?nancial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditors' report, we conclude that there is a material misstatement of this other information, we are required to report that fact. In this regard, we have nothing to report.
5 Responsibilities ofthe Managementand Those Charged with Governance forthe FinancialStatements
The Management is responsible for preparing the financial statements in accordance with the requirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for designing, implementing and maintaining internal control that is necessary to ensure that the ?nancial statements are free from material misstatements, whether due to frauds or errors.
In preparing the financial statements, the Management is responsible for assessing the Company’s going-concern ability, disclosing the matters related to going concern (if applicable) and using the going-concern assumption, unless the Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's ?nancial reporting process.
6 Auditors'Responsibilities forthe Auditofthe FinancialStatements
Our objectives are to obtain reasonable assurance about whether the ?nancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the audit standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to in?uence the economic decisions of users taken on the basis of these ?nancial statements.
During the process of an audit conducted in accordance with audit standards, we exercise professional judgment and maintain professional scepticism throughout the audit. Meanwhile, we also implement the following work:(1)Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is su?cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2)Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
(3)Evaluate the appropriateness of accounting policies used by and the reasonableness of accounting estimates and related disclosures made by the management.
(4)Conclude on the appropriateness of the Management's use of the going concern basis of accounting. Based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signi?cant doubt on the ability of Shanghai Zhenhua Heavy Industries Co., Ltd. to continue as a going concern. If we conclude that a material uncertainty exists, we are required to, in our auditors' report, draw attention of the users of statements to the related disclosures in the ?nancial statements; if such disclosures are inadequate, we should modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause Shanghai Zhenhua Heavy Industries Co., Ltd. to cease to continue as a going concern.
(5)Evaluate the overall presentation, structure and content (including the disclosures) of the ?nancial statements, and evaluate whether the ?nancial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6)Obtain su?cient appropriate audit evidence regarding the ?nancial information of the entities or business activities within the Company to express an opinion on the ?nancial statements. We are responsible for the direction, supervision and performance of the group audit, and bear full responsibility for our audit opinion.
We communicate with those charged with governance regarding the planned scope and timing of the audit, signi?cant audit ?ndings and other matters, including any signi?cant de?ciencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them in regard to all relationships and other matters that may reasonably be thought to a?ect our independence, and related safeguards (if applicable).
From the matters communicated with those charged with governance, we determine those matters that were of most signi?cance in the audit of the ?nancial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest bene?ts of such communication.
Beijing, ChinaCerti?ed Public Accountant of China: Liu Wei
Ernst & Young LLP.
(Engagement Partner)
(Special General Partnership)
Certi?ed Public Accountant of China:Gu Chengli
March 30, 2021
II. Financial Report
Consolidated Balance Sheet
As at December 31, 2020
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Unity: Yuan Currency: CNY
Current assets:
Non-current assets:
Consolidated Balance Sheet(Continued)
As at December 31, 2020
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Unity: Yuan Currency: CNY
Current liabilities:
Non-current liabilities:
Consolidated Balance Sheet(Continued)
As at December 31, 2020
Unity: Yuan Currency: CNY
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Owners’ equity (or shareholders’ equity):
Legal Representative:Person in charge of accounting work:
Person in charge of
accounting agency:
Balance Sheet of the Parent Company
As at December 31, 2020
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Unity: Yuan Currency: CNY
Current assets:
Non-current assets:
Current liabilities:
Short-term borrowings14,351,318,05016,511,846,099Held-for-trading ?nancial liabilities
Derivative ?nancial liabilities
Notes payable3,897,225,892
4,115,677,123
Balance Sheet of the Parent Company(Continued)
As at December 31, 2020
Unity: Yuan Currency: CNY
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Non-current liabilities:
Owners’ equity (or shareholders’ equity):
Legal Representative:Person in charge of accounting work:
Person in charge of
accounting agency:
Consolidated Income Statement
January to December in 2020
Unity: Yuan Currency: CNY
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Income Statement(Continued)
January to December in 2020
Unity: Yuan Currency: CNY
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
In case of business combination under common control in current period, the net pro?t realized by the combined party before combination was RMB 0, and the net pro?t realized by the combined party in the previous period was RMB 0.
Legal Representative:Person in charge of accounting work:
Person in charge of
accounting agency:
Income Statement of Parent Company
January to December in 2020
Unity: Yuan Currency: CNY
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Legal Representative:Person in charge of accounting work:
Person in charge of
accounting agency:
Consolidated Statement of Cash Flows
January to December in 2020
Unity: Yuan Currency: CNY
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
I. Cash ?ow from operating activities:
II. Cash ?ows from investment activities:
III. Cash ?ows from ?nancing activities:
808,250,000
Consolidated Statement of Cash Flows(Continued)
January to December in 2020
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
Unity: Yuan Currency: CNY
Legal Representative:Person in charge of accounting work:
Person in charge of
accounting agency:
Statement of Cash Flows of the Parent Company
January to December in 2020
Unity: Yuan Currency: CNY
Prepared by: Shanghai Zhenhua Heavy Industries Co., Ltd.
I. Cash ?ow from operating activities:
II. Cash ?ows from investment activities:
III. Cash ?ows from ?nancing activities:
Legal Representative:Person in charge of accounting work:
Person in charge of
accounting agency:
ConsolidatedStatementofChangesinOwners’Equity Unity:YuanCurrency:CNY
January to December in 2020
) Unity:YuanCurrency:CNY
Person in charge of accounting agency:
Continued
(
Consolidated Statement of Changes in Owners’ Equity
JanuarytoDecemberin2020 2019
Person in charge of accounting work:
StatementofChangesinOwners’EquityoftheParentCompany Unity:YuanCurrency:CNY
2020
January to December in 2020
) Unity:YuanCurrency:CNY
Person in charge of accounting agency:
Continued
(
Statement of Changes in Owners’ Equity of the Parent Company
JanuarytoDecemberin2020 2019
Person in charge of accounting work:
III.Company pro?le 1 Company pro?le
√Applicable □Not applicable
Shanghai Zhenhua Heavy Industries Co., Ltd. (hereinafter referred to as “the Company”) is a joint-stock company limited established on September 8, 1997 through restructuring Shanghai Zhenhua Port Machinery Company Limited (hereinafter referred to as “Zhenhua Company”). Both the registration place and the address of the headquarters are in Shanghai City, P. R. China.
As approved by ZWFZ (1997) No.42 Document issued by the Securities Commission under the State Council, the Company issued 100 million domestically-listed shares held by the foreign investors (B-share) from July 15, 1997 till July 17, 1997. The B-shares were listed for trading at Shanghai Stock Exchange on Aug. 5, 1997.
As approved by ZJFXZ (2000) No. 200 Document of China Securities Regulatory Commission, the Company additionally issued of 88 million common shares (RMB denominated) (A-share) held by the domestic investors in December 2000. The A-shares were listed for trading at Shanghai Stock Exchange on Dec. 21, 2000.
As approved by ZJFXZ (2004) No.165 Document of China Securities Regulatory Commission, the Company additionally issued 114,280,000 A-shares held by the domestic investors on December 23, 2004. The additionally issued A-shares were listed at Shanghai Stock Exchange respectively for trading on December 31, 2004 and January 31, 2005.
As approved by ZJFXZ (2007) No. 346 Document of China Securities Regulatory Commission, the Company additionally issued 125,515,000 A-shares held by the domestic investors on October 15, 2007. The additionally issued A-shares were listed at Shanghai Stock Exchange for trading on October 23, 2007 and January 23, 2008 respectively.
As approved by ZJXKZ (2009) No.71 Document of China Securities Regulatory Commission, the Company privately placed 169,794,680 A-shares on Sept. 22, 2008 to its controller China Communications Construction Co., Ltd. (hereinafter referred to as “China Communications Corporation”). A-shares privately placed were the tradable shares with limited trading conditions. From Mar. 20, 2012 on, the term of trading limitation expired for above-mentioned A-shares which were listed at Shanghai Stock Exchange for trading.
By December 31, 2020, after all issuances of the shares and bonus shares distributed in the past year, the total shares of the Company amounted to 5,268,353,501 shares, par value per share was RMB 1. The share capital totaled up to RMB 5,268,353,501.
On December 18, 2005, China Road and Bridge Construction Group General Company and the Company’s former controlling shareholder China Harbor Construction (Group) General Company were merged into China Communications Construction (Group) Co. Ltd after restructuring (hereafter referred to as “CCCG”). In accordance with the O?cial Reply to Overall Reorganization and Overseas-listed and Domestically-listed Share of China Communications Construction Co. Ltd. (GZGG [2006] No.1063 Document) by State-owned Assets Supervision and Administration Commission of the State Council on Aug. 16, 2006, the reorganization proposal of China Communications Construction (Group) Co., Ltd approved in the O?cial Reply to the Issues Concerning Management of State-owned Stock Equity of China Communications Construction Co. Ltd. (GZCQ [2006] No.1072 Document) on Sept. 30, 2006 and the O?cial Reply to Approval of China Communications Construction Co. Ltd.’s Announcement of Purchase Report of Road and Bridge Construction Co. Ltd. and Shanghai Zhenhua Port Machinery (Group) Co. Ltd. and Exemption of Their Obligations for Purchase by O?er (ZJGSZ [2006] No. 227 Document), CCCG solely initiated the incorporation of China Communications Construction Co. Ltd. on Oct. 8, 2006 and invested the stock equity of the Company held into the newly incorporated China Communications Co., Ltd. With the completion of reorganization, China Communications Co., Ltd thus became the controlling shareholder of the Company.
In 2016, the Company was granted the Uniform Social Credit Code of 91310000607206953D.
On July 18, 2017, the board of directors of China Communications Construction Co., Ltd. discussed and approved the Proposal for Transfer of Some Shares of Shanghai Zhenhua Heavy Industries (Group) Co., Ltd by Agreement and Associated Transaction and agreed to transfer totally 1,316,649,346 shares of this Company held by it to CCCG and CCCG (Hong Kong) Holdings Co., Ltd. (hereinafter referred to as “CCCG Hong Kong”), accounting for 29.990% of the total shares of this Company, after that, China Communications Construction Co., Ltd. held 16.239% of the stock equity of this Company. The transfer and registration of shares was accomplished on December 27, 2017. On the date of the transfer of shares, CCCG directly held 552,686,146 A-shares of this Company (accounting for 12.589% of the total shares of this Company), indirectly held 763,963,200 B-shares of this Company through CCCG (Hong Kong) (accounting for 17.401% of the total shares of the Company) and held 712,951,703 A-shares of this Company through China Communications Construction Co., Ltd. (accounting for 16.239% of the total shares of this Company), as a result, it became the controlling shareholder of the Company.
The Company and its subsidiaries (hereinafter collectively referred to as “the Group”) was mainly engaged in design, construction, installation and contracting of large-sized port handling system and equipment, o?shore heavy-duty equipment, engineering machinery, engineering vessel and large-sized metal structural members and their parts and components; repair of vessel; leasing of self-produced crane, sales of the self-produced products; international shipment by available special transportation vessel and specialized contracting for steel structure engineering.
The ?nancial statements have been approved by the resolution of the Board of Directors of the Company on March 30, 2021.
2 Scope ofconsolidated ?nancialstatements
√Applicable □Not applicable
The consolidation scope of the consolidated ?nancial statements is determined based on control. For the changes in the current period and the main subsidiaries included in the scope of consolidation, please see Note IX.
IV. Basis of preparation for ?nancial statements
1 Basis ofpreparation
The financial statements are prepared on the basis of the Accounting Standards for Business Enterprise– Basic Standards issued by the Ministry of Finance and the subsequently issued and revised specific accounting principles, guidelines, explanations and other related regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprise”).
2 Going concern
√Applicable □Not applicable
The ?nancial statements of the Company have been presented on a going concern basis.
As of December 31, 2020, the current liabilities of the Group were about RMB 1.8 billion beyond the current assets. At the time of preparing the ?nancial statements for the current year, in view of the facts that the Group has obtained the bank credit line and the ?nancing record and it has established good cooperation relationship with all banks and ?nancial institutions with good operation status, the Board of Directors of the Company believes that, the Group may continue acquiring su?cient ?nancing sources and operating cash ?ows to guarantee the funds required for operation, repayment of expired debts and capital expenditures. Therefore, the Board of Directors of the Company ?rmly believes to prepare the annual ?nancial statements for the current year on a basis of going-concern.
While preparing the ?nancial statements, except for some ?nancial instruments, the valuation principle of historical cost shall be adopted. If the assets are impaired, the provision for impairment is made in accordance with relevant provisions.
V. Principal accounting policies and accounting estimates
Speci?c accounting policies and accounting estimates tips
√Applicable □Not applicable
The Company determines the speci?c accounting policies and accounting estimates based on actual production and operation characteristics, which are mainly re?ected in the provision for bad debts receivable, inventory valuation methods, business accounting of construction contracts, depreciation of ?xed assets, amortization of intangible assets, measurement model of investment properties and income recognition and measurement and so on.
1 Statementon compliance with the Accounting Standards forBusiness Enterprises
The ?nancial statements meet the requirements of the Accounting Standards for Business Enterprises, and truly and completely re?ect the ?nancial position of the Company and the Group as at December 31, 2020, and the operating results and cash ?ows for the year then ended.
2 Accounting period
The Group adopts calendar year as the accounting year, which commences on January from the 1, and ends on December 31 of each year.
3 Operating cycle
□Applicable √Not applicable
4 Functionalcurrency
RMB is the recording currency of the Group and also the currency used in the ?nancial statements. Unless otherwise speci?ed, the ?nancial statements are presented in RMB.
The subsidiaries, joint ventures and associates under the Group shall, on the basis of the main economic environment in which they operate, decide their own recording currency, and convert them into RMB when preparing ?nancial statements.
5 Accounting treatmentofbusiness combination undercommon controland notundercommon control
√Applicable □Not applicable
Business combinations are classi?ed into business combination under common control and business combination not under common control.
Business combination under common control
The business combination under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or the same parties both before and after the business combination and on which the control is not temporary. In a business combination under common control, the party which obtains control of other combining enterprise on the combination date is the absorbing party, the other combining enterprise is the combined party. The combination date refers to the date on which the combining party actually obtains control on the combined party.
The assets and liabilities that the combining party obtains in a business combination under common control(including the goodwill formed by the acquisition of the combined party by the ultimate controlling party), are subject to the corresponding accounting treatment in accordance with the carrying amount in the ?nancial statements of the ultimate controlling party on the combination date. The di?erence between the carrying amount of the net assets obtained from the combination and the carrying amount of the consideration paid (or total par value of the shares issued) for the combination is treated as an adjustment to capital premium in the capital reserves and the capital reserves carried out under the former system. If the capital premium is not su?cient to absorb the di?erence, the remaining balance is adjusted against retained earnings.
Business combination not under common control
The business combination not under common control is a business combination in which all of the combining enterprises are not controlled by the same party or the same parties before and after the combination. As for the business combination not under common control, the party which obtains the control of other combining enterprises on the acquisition date is the acquirer, and the other combining enterprises is the acquiree. The acquisition date refers to the date on which the acquirer actually obtains control on the acquiree.
The identifiable assets, liabilities and contingent liabilities obtained of the acquiree in the business combination not under common control shall be measured at fair value on the acquisition date.
The positive balance between the sum of the fair value of the combined consideration paid (or fair value of the issued equity securities) and the fair value of the held stock equity of the acquiree before the acquisition date and the fair value of the identi?able net assets obtained in the combination from the acquiree is con?rmed as goodwill, and shall be accounted for subsequent measurement after subtracting the accumulated impairment losses from the cost. If the sum of the fair value of the combined consideration paid (or fair value of the issued equity securities) and the fair value of the held stock equity of the acquiree before the acquisition date is smaller than the fair value of the identi?able net assets of the acquiree obtained in the combination, firstly recheck the measurement of the fair value of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree, and the fair value of the combined consideration paid (or fair value of the issued equity securities), and the fair value of the held stock equity of the acquiree before the acquisition date, after that, if the sum the fair value of the combined consideration paid (or fair value of the issued equity securities) and the fair value of the held stock equity of the acquiree before the acquisition date is still smaller than the fair value of the identi?able net assets obtained in combination from the acquiree, the balance shall be included in the current pro?t or loss.
6 Preparation ofconsolidated ?nancialstatements
√Applicable □Not applicable
The consolidation scope of consolidated ?nancial statements is determined on the basis of control, covering the ?nancial statements of the Company and all the subsidiaries. A subsidiary is a subject which is controlled by the Company (including the enterprise, the separable part of the invested entity, and the structural entity controlled by the Company).
When preparing the consolidated ?nancial statements, the subsidiary adopts the accounting period and the accounting policies consistent with the Company. Assets, liabilities, equity, income, expenses and cash ?ows arising from all transactions between the Group’s internal companies are fully o?set at the time of combination.
If the current losses borne by the minority shareholders of the subsidiary exceed the shares held by the minority shareholders in the initial shareholders’ equity of the subsidiary, the balance still o?sets the minority’s equity.
For the subsidiaries acquired in business combination not under common control, the operating results and the cash ?ows of the acquiree shall be included in the consolidated ?nancial statements on the date of acquisition of control till the termination of control. When preparing the consolidated ?nancial statements, the ?nancial statements of subsidiaries shall be adjusted based on the fair value of various identi?able assets, liabilities and contingent liability con?rmed on the acquisition date.
For the subsidiaries acquired in business combination under common control, the operating results and the cash ?ows of the combined party shall be included in the consolidated ?nancial statements at the beginning of the combination period. When preparing the consolidated ?nancial statements, relevant items of the previous ?nancial statements shall be adjusted and the reporting entity formed after the consolidation is regarded as existed since the ultimate controlling party begins to implement control.
If changes in the relevant facts and circumstances lead to changes in one or more control elements, the Group will re-evaluate whether or not the investee is controlled.
The Group disposes of the equity investment in the subsidiaries step by step through multiple transactions until the loss of control. If the above-mentioned transactions are part of a package transaction, the transactions are treated as a transaction dealing with the equity investment of the subsidiary and losing control. However, before the loss of control, the di?erence between the disposal price and the book value of the long-term equity investment corresponding to the disposed equity is recognized as other comprehensive income in individual ?nancial statements and transferred to the current pro?t or loss when the control is lost. If the above-mentioned transactions are not part of a package transaction, accounting treatment shall be carried out for each transaction separately according to whether the control is lost or not. If the control is lost, the remaining equity is re-measured at fair value at the date when control is lost. The di?erence between the sum of the consideration received on disposal and the fair value of remaining equity and the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according to the original proportion of shareholders' equity, is included in the pro?t or loss in the period in which control is lost. If goodwill is involved, the amount of the goodwill shall be deducted when calculating and determining the pro?t or loss on the disposal of the subsidiary. Other comprehensive income related to the equity investment of the original subsidiary shall be accounted on the same basis as the subsidiary’s direct disposal of relevant assets or liabilities when the control is lost. The shareholders’ equity recognized due to changes in shareholders’ equity other than net pro?t or loss, other comprehensive income and pro?t distribution related to the original subsidiary shall be transferred to current pro?t or loss when the control is lost.
7 Classi?cation ofjointventure arrangementand methods ofjointoperation accounting treatment
□Applicable √Not applicable
8 Recognition criteria ofcash and cash equivalents
Cash is the Group’s cash on hand and the deposits that can be readily drawn on demand. Cash equivalents are short-term, highly liquid investments held by the Group that are readily convertible to known account of cash and which are subject to an insigni?cant risk of changes in value.
9 Foreign currency transactions and transaction of?nancialstatements denominated in foreign currency
√Applicable □Not applicable
In the case of a foreign currency transaction, the Group translates the amount of foreign currency into the amount of the recording currency.
At the time of initial con?rmation, the amount of foreign currency transaction shall be translated into the amount of the recording currency at the spot rate of the transaction date. On the date of balance sheet, the currency exchange rate of the currency denominated items shall be translated at the spot rate on the date of balance sheet. The transaction di?erence of settlement and monetary items arising therefrom, in addition to the di?erence arising from foreign currency special borrowing relating to the assets of which the purchase and construction conform to the capitalized conditions, which shall be handled in accordance with the principle of capitalization of borrowing costs, shall be included in the current pro?t or loss. The foreign currency non-currency items calculated on historical cost basis are still translated at spot rate on the date of transaction, not changing the amount of its recording currency. The foreign currency non-monetary items measured at fair value shall be translated at the spot rate on fair value determination date, and the di?erence arising therefrom shall be included in the current pro?t or loss or other comprehensive income according to the nature of the non-monetary items.
In the case of overseas business, the Group translates its recording currency into RMB in preparing the financial statements: for assets/liabilities in the balance sheet, spot exchange rate on the date of balance sheet is used for translation. As for the items under the shareholders’ equity, except for those under “undistributed pro?ts”, other items are translated using the spot exchange rate at the time of occurrence; the income and expense items in the income statement shall be translated at the spot exchange rate of the transaction. The conversion di?erence of foreign currency statements arising from above translation shall be recognized as other comprehensive income. When disposing overseas operations, other comprehensive income related to the overseas operation shall be transferred into the current pro?ts and losses, partial disposal shall be calculated according to the proportion of disposal.
Foreign currency cash ?ows shall be translated at the spot exchange rate on the day of occurrence of the cash ?ow. Cash ?ow from overseas subsidiaries is translated at the spot exchange rate on the day of occurrence of the cash ?ow. E?ect of changes in exchange rate on cash amount is shown separately in the cash ?ow statements as an adjustment item.
10 Financialinstruments
√Applicable □Not applicable
Financial instrument is the contract that forms the ?nancial assets of an enterprise and the ?nancial liabilities or equity instruments of the other entities.
Recognition and de-recognition of ?nancial instruments
The Group recognizes a ?nancial asset or ?nancial liability when becoming a party to a ?nancial instrument contract.
Once the following conditions are satis?ed, the Group will de-recognize ?nancial assets (or part of ?nancial assets or of a portfolio of similar ?nancial assets), i.e. writing o? from its account and balance sheet:
(1) The right to receive cash ?ows from ?nancial assets expires;
(2) The right to receive the cash ?ow from ?nancial asset has been transferred, or have assumed the obligation in the “pass-through agreement” to pay the collected cash ?ow timely to the third party in full; and (a) has transferred substantially almost all the risks and rewards of ownership of the ?nancial asset, or (b) although does not transfer or retain substantially nearly all of the risks and rewards of ownership of the ?nancial asset, but has given up the control over the ?nancial asset.
In the event that the liability of a ?nancial liability has been ful?lled, cancelled or expired, the ?nancial liabilities shall be de-recognized. If the existing ?nancial liability is replaced by the same creditor with another ?nancial liabilities of virtually entirely di?erent terms, or the terms of the existing liabilities are almost entirely modi?ed substantially, such substitutions or modi?cations will be handled as the derecognition of the original liability and the recognition of new liabilities, and the di?erence will be included in current pro?t or loss.
In case of trading ?nancial assets in the conventional way, such ?nancial assets will be recognized and de-recognized on the trading day. Trading ?nancial assets in the conventional way refers to collecting or delivering ?nancial assets within the time limit prescribed in the law or the prevailing practice in accordance with the terms and conditions of the contract. Trading day is the date on which the Group commits to buy or sell ?nancial assets.
Classi?cation and measurement of ?nancial assets
At the initial recognition, the Group's ?nancial assets, based on the Group's management model of ?nancial assets and the contract cash ?ow characteristics of ?nancial assets, are classi?ed as ?nancial assets measured at fair value through the current pro?t or loss, ?nancial assets measured at amortized cost, and ?nancial assets measured at fair value through the other comprehensive income.
Financial assets are measured at fair value at initial recognition, while the accounts receivable or notes receivable arising from sales of goods or rendering of services, excluding the significant financing composition or the financial composition for over one year, are initially measured at the transaction price.
For financial assets measured at fair value through the current profit or loss, relevant transaction costs are directly included in the current pro?t or loss, while the transaction costs relevant to other ?nancial assets are included in the initial recognition amount.
The subsequent measurement of ?nancial assets depends on the classi?cation thereof:
Investment in debt instruments measured at cost
Financial assets simultaneously meet the following conditions are classified as the financial assets measured at amortized cost: the management model of such ?nancial assets aims at the collection of contract cash ?ows; according to the terms in the contract for such ?nancial assets, the cash ?ows generating on the special date are paid at the interest for the principal and the unpaid principal. Such ?nancial assets are recognized as interest income by the e?ective rate method, and the gains or losses from the derecognition, modi?cation or impairment thereof are in the current pro?t or loss.
Investment in debt instruments measured at fair value through other comprehensive income
If ?nancial assets meet the following conditions at the same time, the Group classi?es them as ?nancial assets at fair value through other comprehensive income: the Group’s business model for the management of the financial assets is aimed at both the collection of contract cash ?ow and the sale of the ?nancial assets; the contractual terms of the ?nancial asset stipulate that the cash ?ow generated at a particular date is only the payment of the principal and interest based on the outstanding principal amount. The interest income of such ?nancial assets is recognized by the e?ective interest method. At derecognition of ?nancial assets, the accumulated gains or losses previously included in other comprehensive income are transferred from the other comprehensive income to the current pro?t or loss.
Investment in equity instruments measured at fair value through the other comprehensive income
The Group irrevocably chooses to designate some non-trading equity instruments as the ?nancial assets measured at fair value through the other comprehensive income, and only include the relevant dividends revenue (except for that partially recovered as the investment cost) in the current pro?t or loss, and the subsequent changes in fair values in the other comprehensive income, without the provision for impairment. At derecognition of ?nancial assets, the accumulated gains or losses previously included in other comprehensive income are transferred from the other comprehensive income to the retained earnings.
Financial assets measured at fair value through the current pro?t or loss
The ?nancial assets other than the ?nancial assets measured at amortized cost and the ?nancial assets measured at fair value through the other comprehensive income are classi?ed as the ?nancial assets measured at fair value through the other comprehensive income. For such ?nancial assets, the subsequent measurement is made at fair value, and changes in fair value are included in the current pro?t or loss.
Classi?cation and measurement of ?nancial liabilities
At the initial recognition, the Group’s financial liabilities are classified as: financial liabilities measured at fair value through the current pro?t or loss, and other ?nancial liabilities. For ?nancial liabilities measured at fair value through the current pro?t or loss, relevant transaction costs are directly included in the current pro?t or loss, while the transaction costs relevant to other ?nancial liabilities are included in the initial recognition amount.
The subsequent measurement of ?nancial liabilities depends on the classi?cation thereof:
Financial liabilities measured at fair value through the current pro?t or loss
Financial liabilities measured at fair value through the current pro?t or loss include the trading ?nancial liabilities (including the derivative instruments belonging to ?nancial liabilities), and the ?nancial liabilities measured at fair value through the current pro?t or loss. The subsequent measurement of the trading ?nancial liabilities (including the derivative instruments belonging to ?nancial liabilities) is made at fair value, and changes in fair value are included in the current pro?t or loss. For the ?nancial liabilities measured at fair value through the current pro?t or loss, the subsequent measurement is made at fair value, and the changes in fair value are included in the current pro?t or loss except that the changes in fair value caused by the changes in the Group's credit risks are included in the other comprehensive income; if including the changes in fair value caused by the changes in the Group's credit risks in the other comprehensive income may cause or exacerbate the accounting mismatch in pro?t or loss, the Group will include all changes in fair value (including the amounts a?ected by the changes in the Group’s credit risks) in the current pro?t or loss.
Other ?nancial liabilities
The subsequent measurement of such ?nancial liabilities is made at amortized cost by the e?ective rate method.
Impairment of ?nancial instruments
Based on the expected credit losses, the Group makes the provision for impairment and recognizes the loss provisions for the ?nancial assets measured amortized cost and the investment in debt instruments measured at fair value through the other comprehensive income.
For the receivables excluding signi?cant ?nancing component, the Group measures the loss provision based on the amount equivalent to the expected credit loss over the whole duration by the simpli?ed measurement method.
Except for the above financial assets subject to the simplified measurement method, on each balance sheet date, the Group makes assessment on whether the credit risk in financial assets has had significant increase after the initial recognition. If the credit risk does not signi?cantly increase after the initial recognition, standing at the ?rst level, the Group will measure the loss provision based on the amount of expected credit loss over the next 12 months, and calculate the interest income based on the book balance at the e?ective interest rate; if the credit risk has signi?cantly increased after the initial recognition without any credit impairment, standing at the second level, the Group will measure the loss provision based on the amount equivalent to the expected credit loss over the whole duration; in case of any credit impairment after the initial recognition, standing at the third level, the Group will measure the loss provision based on the amount of expected credit loss over the whole duration, and calculate the interest income based on the amortized cost at the e?ective interest rate. For ?nancial instruments only with relatively low credit risk on the balance sheet date, the Group assumes that such credit risk does not signi?cantly increase after the initial recognition.
The Group evaluates the expected credit loss of ?nancial instruments individually and by portfolio. After taking the credit risk characteristics of di?erent customers into account, the Group evaluated the expected credit loss on accounts receivable by the aging portfolio.
For the Group’s disclosure of the judgment standards for signi?cant increase of credit risk, de?nition of assets with credit impairment and assumption of the measurement of expected credit loss, see Note X for details.
When the Group ceases to expect reasonably the contract cash ?ows of ?nancial assets which can be recovered in whole or in part, the Group will directly write o? the book balance of such ?nancial assets.
Financial instrument o?set
Financial assets and ?nancial liabilities are presented in the balance sheet at the net amount after mutual o?set when the following conditions are met simultaneously: possess the legal right to o?set the recognized amount and such right is currently executable; intend to settle at net amount, or cash such ?nancial assets or liquidate such ?nancial liabilities.
Financial guarantee contracts
A ?nancial guarantee contract refers to the contract where the issuer shall pay the speci?c amount to the contract holder su?ering losses when the speci?c debtor fails to repay debts according to the ?nancial guarantee clauses. The ?nancial guarantee contracts are measured at fair value at initial recognition. Financial guarantee contracts other than those the ?nancial liabilities measured at fair value through the current pro?t or loss are subsequently measured at the higher between the amount of expected credit loss reserve determined on the balance sheet date and the balance of the initially recognized amount deducting the accumulated amortization amount determined in the revenue recognition principle.
Derivative ?nancial instruments
The Group carries out the exchange rate risk hedging by using derivative ?nancial instruments, such as the forward exchange contract and the foreign exchange option contract. Derivative financial instruments are initially measured at their fair values on date of signing relevant derivative transaction contracts and subsequently measured at their fair values. Derivative ?nancial instrument with positive fair value is recognized as an asset, and that with negative fair value is recognized as a liability.
Gains or losses from changes in fair values of derivative instruments are directly included in the current pro?t or loss, unless they are related to the hedging accounting.
Transfer of ?nancial assets
If the Group has transferred nearly all the risks and rewards associated with the ownership of ?nancial assets to the transferee, such ?nancial assets will be de-recognized; if the Group retains nearly all the risks and rewards associated with the ownership of ?nancial assets, such ?nancial assets will continuously recognized.
If the Group neither transfers nor retains nearly all the risks and rewards associated with the ownership of the ?nancial assets, the following treatments will be adopted based on different circumstances: if the Group has given up its control over the ?nancial assets, the ?nancial assets will be derecognized, and the assets and liabilities arising therefrom will be recognized; if the Group does not give up its control over the ?nancial assets, the ?nancial assets will be recognized to the extent of its continuing involvement in the transferred ?nancial assets, while relevant liabilities are recognized accordingly.
11 Notes receivable
Determination and accounting treatment of the expected credit loss of notes receivable
□Applicable √Not applicable
12 Accounts receivable
Determination and accounting treatment of the expected credit loss of accounts receivable
□Applicable √Not applicable
13 Receivables ?nancing
□Applicable √Not applicable
14 Otherreceivables
Determination and accounting treatment of the expected credit loss of other receivables
□Applicable √Not applicable
15 Inventories
√Applicable □Not applicable
Inventories include the raw materials, outsourcing components and parts, goods in process, stock commodities and contract performance cost.
Inventories are initially measured at the cost. The inventory cost includes the procurement cost, processing cost and other cost. The actual cost of inventory in transit is determined by the weighted average method.
Perpetual inventory system is adopted for inventories.
On the balance sheet date, the inventory is measured at its cost or its net realizable value, whichever is lower; if the cost is higher than the net realizable value, the provision for inventory depreciation will be made and included in the current pro?t or loss. If the previous factor for the provision for inventory depreciation has been eliminated, resulting that the net realizable value of the inventory is higher than the cost of the same, the amount written down will be reversed in the amount of provision for inventory depreciation originally made, and the reversed amount will be included in the current pro?t or loss.
The net realizable value, in the routine activities, refers to amount of the estimated selling price of inventory minus the estimated cost to completion, estimated selling expense and relevant taxes and surcharges. At the time of making the provision for inventory depreciation, the provision for depreciation of raw materials is made by category, and that of goods in process, stock commodities and contract performance cost is made by each single inventory item.
Construction contract (only applicable to year 2019)
For large port equipment, heavy equipment and steel products as well as construction projects customized for customers, as the commencement dates and the completion dates are usually in different accounting years, the Group accounts for their revenue and costs by the construction contract.
(a) If the outcome of a construction contract can be estimated reliably, the revenue and cost of such construction contract will be recognized on the balance sheet date based on the progress of completion by the percentage-of-completion method. The outcome of a construction contract can be estimated reliably means that the economic benefit relevant to the contract is likely to ?ow in the Group, and the actually incurred contract cost can be clearly distinguished and reliably measured; for ?xed price contracts, the following conditions should be also met: The total contract revenue can be reliably measured, and the progress of completion and the cost to complete the contract can be reliably determined. Total contract revenue includes the initial cost speci?ed in the contract and the revenue from contract change, claim and award. The Group determines the progress of contract completion by the following ways:(i) For large port equipment, the progress of completion is determined at the percentage of completion corresponding to the time-point for recognizing the revenue of the construction contract at the end of the period. The Group has determined the following three revenue recognition time-points:
Time-point 1: The manufacturing of main steel structure has been completed and set upright;
Time-point 2: The product manufacturing, installation and preliminary debugging have been completed, the factory quali?cation certi?cates for products have been issued, the bill of loading has been obtained, and the product delivery has been prepared;Time-point 3: The products have been delivered to the purchaser upon the purchaser’s inspection, and the delivery certi?cate issued by the purchaser has been obtained.
The Group analyzes construction contracts completed in the previous year by the category of product, and determines the percentage of completion to be recognized at each revenue recognition time-point, based on the proportion of the cost at the each revenue recognition time-point mentioned above in the total actual cost, and takes such percentage of completion as that to be recognized at each revenue recognition time-point in the current period.
(ii) For heavy equipment and construction projects, the completion of completion is determined based on the proportion of the contract cost accumulated incurred in the total estimated contract costs. The accumulated incurred contract cost does not include the relevant contract costs in the future activities.
(iii) For steel structure manufacturing, the progress of completion is determined based on the proportion of the accumulatively completed processing tonnage in the total estimated processing tonnage.
(b) If the outcome of an individual construction contract cannot be estimated reliably, the treatment will be taken separately in following situations:
(iv) If the contract cost is recoverable, it will be recognized based on the actual contract cost recoverable as the contract expense in the period when such cost is incurred.
(v) If the contract cost is not recoverable, it will be recognized as contract expense when it is incurred, without contract revenue recognition.
(c) If the total estimated contract cost is more than the total estimated contract revenue, the estimated loss will be immediately recognized as the current pro?t or loss.
(d) For the contract price by installment, the settled price is presented, and will be reversed based on relevant accumulated incurred cost and the accumulated recognized gross pro?t after the settlement of construction contract. On the balance sheet date, the di?erence between the sum of the accumulated incurred cost and the accumulated recognized gross pro?t and the settled price (the former is larger) is presented as the completed but not settled construction payment in the current assets; in case the latter is larger, such di?erence will be presented as the settled but not completed construction payment in the current liabilities.
16 Contractassets
(1) Recognition method and criteria of contract assets
√Applicable □Not applicable
The Group presents contract assets or liabilities in the balance sheet according to the relationship between the fulfillment of performance obligations and customer payments. After offsetting the contract assets and contract liabilities under the same contract, the Group presents them in net amount.
Contract assets
Contract assets refer to the right to receive consideration for goods or services transferred to customers, and the right depends on factors other than the passage of time.
For details of the Group’s determination and accounting treatment method of expected credit loss of contract assets, please refer to Note V.
(2) Determination and accounting treatment of the expected credit loss of contract assets
□Applicable √Not applicable
17 Assets held forsale
□Applicable √Not applicable
18 Debtinvestment
(1) Determination and accounting treatment of the expected credit loss of debt investment
□Applicable √Not applicable
19 Otherdebtinvestment
(1) Determination and accounting treatment of the expected credit loss of other debt investment
□Applicable √Not applicable
20 Long-termreceivables
(1) Determination and accounting treatment of the expected credit loss of long-term receivables
□Applicable √Not applicable
21 Long-termequity investments
√Applicable □Not applicable
Long-term equity investments include the equity investments in subsidiaries, joint ventures and associates.
Long-term equity investments are initially measured at the initial investment cost. The initial investment cost of a long-term equity investment acquired through the business combination under common control is recognized at book value of owners' equity acquired from the combinee on the combination date in the consolidated ?nancial statements of the ultimate controller; the di?erence between the initial investment cost and the book value of the combination consideration is used to adjust the capital reserves (if the capital reserves are insu?cient to o?set, the retained earnings will be o?set); for the other comprehensive income before the combination date, at the disposal of such investment, the accounting treatment identical to that for the direct treatment of relevant assets or liabilities by the investee is adopted; the shareholders’ equity recognized on account of the change in other shareholders’ equity of the investee other than net pro?t or loss, other comprehensive income and pro?t distribution is transferred in the current pro?t or loss at the disposal of such investment; in which, after such disposal, if such investment is still the long-term equity investment, it will be carried forward in proportion; if it is converted into the ?nancial instrument, it will be carried forward in full.
The initial investment cost of a long-term equity investment acquired through business combination not under common control is recognized at the combination cost (if the business combination not under common control is realized through several transactions by step, the sum of the book value of the equity investment of the acquiree held before the acquisition date and the cost of investment newly added on the acquisition date is recognized as the initial investment cost), and the combination cost includes the asset paid by the acquiree, liability incurred or borne by the acquiree, and the fair values of issued equity securities; for the other comprehensive income held before the acquisition date and recognized due to the accounting under equity method, at the disposal of such investment, the accounting treatment identical to that for the direct treatment of relevant assets or liabilities by the investee is adopted; the shareholders’ equity recognized on account of the change in other shareholders’ equity of the investee other than net pro?t or loss, other comprehensive income and pro?t distribution is transferred in the current pro?t or loss at the disposal of such investment; in which, after such disposal, if such investment is still the long-term equity investment, it will be carried forward in proportion; if it is converted into the ?nancial instrument, it will be carried forward in full. The accumulated changes in fair values of the equity investments held before the acquisition date, which was included in the other comprehensive income as the ?nancial instruments, are fully transferred in the retained earnings (from 2019) or the current pro?t or loss (before 2019), on the accounting at cost. For long-term equity investments acquired not through business combination, their initial investment costs are determined by the following ways: if the long-term equity investment is acquired through cash payment, the initial investment cost will be the sum of the acquisition price actually paid and the costs, taxes and other necessary costs, which are directly relevant to the long-term equity investment; if the long-term equity investment is acquired by issuing equity securities, the initial investment cost will be the fair value of the equity securities issued.
The long-term equity investments where the Company could control the investee shall be accounted in individual ?nancial statements of the Company under the cost method. Control means the power owned over the investee and enjoys the variable return through participating in activities related to the investee, and has the ability to a?ect its return by using the power over the investee.
Under the cost method, long-term equity investments are valuated at initial investment cost. The Company shall increase or recover the investment to adjust the cost of long-term equity investments. Cash dividends or pro?ts declared and distributed by the investee should be recognized as investment income in the current period.
If the Group has joint control over or signi?cant in?uence on the investees, long-term equity investments are accounted for with the equity method. Joint control refers to the control shared over an arrangement in accordance with the relevant stipulations, and the decision-making of related activities of the arrangement should not be made before the party sharing the control right agrees the same. Signi?cant in?uence refers to the power to participate in making decisions on the ?nancial and operating policies of the investee, but not the power to control, or jointly control, the formulation of such policies with other parties.
For long-term equity investments measured under the equity method, if the initial investment costs are higher than the investor's attributable share of the fair value of the investee's identi?able net assets, the initial costs of the long-term equity investments shall be recognized; if the initial investment costs are lower than the investor's attributable share of the fair value of the investee's identi?able net assets, the di?erence shall be recognized in current pro?t and loss and at the same time the adjustment will be made to the initial costs of the long-term equity investments.
Where the equity method is adopted, after the long-equity investments are acquired, the Company shall, according to the shares of net pro?t and loss and other comprehensive income realized by the investee which the Company shall enjoy or bear, recognize the pro?t and loss on the investments and other comprehensive income and adjust the book value of the long-term equity investments. When recognizing the share of net pro?t or loss of the investee that the Group shall enjoy, based on fair value of various identifiable assets and others of the investee on acquisition and according to accounting policies and accounting periods of the Group, the Group shall write o? the part of incomes from internal transactions with associates and joint ventures which are attributable to the investor according to the shareholding ratio (but the loss from internal transactions is the asset impairment loss, its total amount shall be recognized) and then recognize the pro?t and loss on investments on such basis, except those assets investments or sale constitute business. The Group shall, in the light of the pro?ts or cash dividends that the investee declares to distribute, calculate the part it should share and reduce the book value of the long-term equity investment correspondingly. Recognition of the net loss in the investee shall be within the limit that the book value of long-term equity investments and other long-term interests which substantially form the net investment in the investee are reduced to zero, unless the Group is obliged to bear extraneous losses; For other changes in shareholder's equity of the investee excluding net losses or pro?ts, other comprehensive income or pro?t distribution, the book value of long-term equity investments will be adjusted and included in shareholder's equity.
For disposal of long-term equity investments, the difference between the book value and the actual price shall be included in the current investment income. For long-term equity investments recognized under equity method, when the equity method is no longer adopted due to the disposal, accounting treatment should be made for other comprehensive income previously recognized under the equity method by using the same basis for the investee to directly dispose the relevant assets or liabilities. Shareholder's equity recognized from the investee's changes in other shareholder’s equity other than net pro?t or loss, other comprehensive income and pro?t distribution should all transferred to the current pro?ts or losses. If the equity method is still adopted, the relevant other comprehensive income accounted by the original equity method shall be accounted on the same basis as the invested entity's direct disposal of relevant assets or liabilities, and shall be transferred to the current pro?t or loss in proportion. The shareholders’ equity recognized due to changes in shareholders’ equity of the investee other than net pro?t or loss, other comprehensive income and pro?t distribution shall be transferred to the current pro?t or loss according to corresponding proportion.
The Group disposes of the equity investment in the subsidiaries step by step through multiple transactions until the loss of control. If the above-mentioned transactions are part of a package transaction, the transactions are treated as a transaction dealing with the equity investment of the subsidiary and losing control. However, before the loss of control, the di?erence between the disposal price and the book value of the long-term equity investment corresponding to the disposed equity is recognized as other comprehensive income in individual ?nancial statements and transferred to the current pro?t or loss when the control is lost. If the above-mentioned transactions are not part of a package transaction, accounting treatment shall be carried out for each transaction separately. If the control is lost, in the individual financial statements, for the remaining equity, if the remaining equity after disposal can jointly control or has a signi?cant impact on the original subsidiary, it shall be recognized as long-term equity investment, and the accounting treatment shall be carried out according to relevant provisions on the conversion of cost method into equity method; otherwise, it shall be recognized as a ?nancial instrument, and the di?erence between the fair value and the book value on the date of loss of control is included in the current pro?t or loss.
22 Investmentproperties
Investment properties refer to properties that are held for the purposes of earning rental income, capital appreciation, or some combination thereof, including land use rights and buildings that have been leased out.
The investment property shall be initially measured at cost. Subsequent expenses related to investment properties, if the economic bene?ts associated are likely to ?ow in and its cost can be measured reliably, should be recorded in the cost of investment property. Otherwise, such subsequent expenses should be included in current pro?ts or losses upon occurrence.
The subsequent measurement of an investment property shall be conducted by the Group under the cost method, and the land use right and buildings shall be amortized and depreciated according to the expected useful life and net residual rate of the investment property. The expected useful lives, net residual value rate and annual depreciation (amortization) rate of the investment properties are as follows:
The Group shall review estimated useful lives, estimated net residual value and depreciation (amortization) methods of the investment properties at the end of each year and shall make adjustment when necessary.
When an investment property is changed for self-use, upon change, the investment property shall be converted into ?xed assets or intangible assets. When the self-use property is changed to earn rentals or for capital appreciation, upon change, ?xed assets or intangible assets shall be converted into investment properties. When there is a conversion, the book value before the conversion shall be regarded as the book value after the conversion.
23 Fixed assets
(1) Recognition criteria
√Applicable □Not applicable
Fixed assets will only be recognized when the economic bene?ts relating to the ?xed assets may ?ow into the Group and the costs of the ?xed assets can be measured reliably. If the subsequent disbursements relevant to a ?xed asset meet the recognition conditions, they shall be recorded in the cost of ?xed asset, and the book value of the replaced part shall be derecognized; otherwise, they shall be recorded in the current pro?ts and losses.
Fixed assets are initially measured at cost. The costs of externally acquired ?xed assets comprise their purchase prices, related taxes and surcharges and any attributable expenditure incurred to prepare the asset for its intended use.
(2) Depreciation method
Except for the ?xed assets form by using withdrawn safe production costs, the provisions for the depreciation of ?xed assets are made by straight-line method, and the useful lives, expected net salvage value and annual depreciation rates of various ?xed assets are as follows:
√Applicable □Not applicable
(3) Identi?cation basis, valuation and depreciation method of ?xed assets under ?nancing lease
√Applicable □Not applicable
The fixed assets acquired under financing leases adopt the same depreciation policies for the provision for the depreciation of leased assets as those of its own ?xed assets. Where it can be reasonably certain that the Company will obtain ownership of the leased asset at the expiry of the lease term, the leased assets are depreciated over the useful life; where it cannot be reasonably certain that the Company can obtain ownership of the leased asset at the end of the lease term, the leased assets are depreciated at the shorter of the lease term and the use life of the leased assets.
The Group shall review useful lives, estimated net residual value and depreciation methods of the ?xed assets at the end of each year and shall make adjustment when necessary.
24 Construction in progress
√Applicable □Not applicable
The Group recognizes the cost of the construction in progress at the actually incurred expenditures, including all types of necessary expenditures incurred during the construction period, the capitalized borrowing costs incurred prior to the time when the construction is brought to the expected conditions for use and other relevant costs.
The construction in progress is converted into ?xed assets after it reaches the expected conditions for use.
25 Borrowing costs
√Applicable □Not applicable
Borrowing costs refer to the interest and other relevant costs of the Company due to borrowings, including the interest of borrowings, the amortization of discount or premium, auxiliary expenses, exchange di?erences incurred by foreign currency borrowings, etc.
The Group capitalizes the borrowing costs of acquisition or construction or production which may directly belong to assets that are eligible for capitalization; and other borrowing costs are included in the current pro?t or loss. Assets eligible for capitalization refer to ?xed assets, investment property, inventories and other assets which may reach their intended use or sale status only after long-time acquisition and construction or production activities.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:
(1) The asset disbursements have already incurred;
(2) The borrowing costs have already incurred; and
(3) Purchase, construction or manufacturing activities that are necessary to prepare the asset for its intended use or sale have already started;Capitalization of borrowing costs should cease when the acquired and constructed or produced assets eligible for capitalization have reached the working condition for their intended use or sale. The borrowing costs incurred thereafter shall be included in the current pro?t or loss.
During the period of capitalization, the capitalized amount on interest of each accounting period shall be determined in accordance with the following provisions:(1) The interest of special borrowings to be capitalized should be determined according to the actually incurred interest expenses in the current period less the interest income on deposits or the investment income;(2) The interest of general borrowings to be capitalized should be calculated by multiplying the weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special borrowings by the weighted average rate of used general borrowings.
If the acquisition and construction or production activities of assets eligible for capitalization are abnormally interrupted due to the matters other than necessary procedures for such assets to reach the working conditions for its intended use or sale and such circumstance lasts for more than three months, the capitalization of borrowing costs should be suspended. Borrowing costs incurred during the interruption are recognized as the current pro?t or loss and continue to be capitalized until the acquisition, construction or production of the asset restarts.
26 Biologicalassets
□Applicable √Not applicable
27 Oiland gas assets
□Applicable √Not applicable
28 Right-of-use assets
□Applicable √Not applicable
29 Intangible assets
(1) Valuation method, service life and impairment test
√Applicable □Not applicable
Intangible assets will be recognized only when relevant economic bene?ts may well ?ow into the Group and the costs of intangible assets can be measured reliably, and initially measured at costs. However, if the fair value of the intangible assets acquired in the business combination not under common control can be reliably measured, it should be recognized as intangible assets and measured at fair value separately. When the Company reconstructs its corporate system, for the intangible assets invested by the shareholders of the state-owned shares, the evaluation value con?rmed by the state-owned assets management department shall be served as the book value.
The useful life of an intangible asset is determined based on the period during which it can bring economic bene?ts to the Group. If the said period cannot be predicted, it will be recognized as an intangible asset with inde?nite useful life.
The useful lives of all kinds of intangible assets are determined as follows:
Useful life
Land use rightLand useful lives
Software use fees5 years
Proprietary technology10 years
The land use rights acquired by the Group are usually accounted as intangible assets. For the plants and other buildings developed and constructed by the Company, relevant land use rights and constructions shall be respectively accounted as intangible assets and ?xed assets. For externally purchased land and buildings, the related payments are distributed in the land use right and buildings; those di?cult to be distributed shall be all handled as ?xed assets.
For the intangible assets with limited useful life, their amount shall be amortized at the straight-line method over its useful life. The Group will reexamine the useful lives and amortization method of intangible assets with limited useful lives, and make adjustments when necessary at the end of each year.
(2) Accounting policy of internal R & D expenditures
√Applicable □Not applicable
The Group's expenditures for its internal research and development projects are classi?ed into research expenditures and development expenditures. The expenditures in research phase will be included in the current profit or loss on occurrence. The development expenditures will be capitalized only when all of the following conditions are satisfied simultaneously: It is feasible technically to ?nish intangible assets for use or sale; It is intended to ?nish and use or sell the intangible assets; The usefulness of methods for intangible assets to generate economic bene?ts shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally; It is able to ?nish the development of the intangible assets, and able to use or sell the intangible assets, with the support of su?cient technologies, ?nancial resources and other resources; and the expenditures attributable to the intangible asset during its development phase can be measured reliably. Development expenditures that do not meet the above conditions are included in the current pro?t or loss on occurrence.
30 Assetimpairment
√Applicable □Not applicable
The Group recognizes the asset impairment under the following methods except for inventories, contract assets and assets related to contract cost, deferred income tax and ?nancial assets:The Group shall, on the balance sheet date, make a judgment on whether there is any indication that the assets may impair. If such indication does exist, the Group shall estimate the recoverable amount and carry out an impairment test. Impairment tests for goodwill caused by business combination shall be conducted at the end of every year whether they have signs of impairment or not. Impairment tests for intangible assets not reaching usable condition shall be conducted every year.
The recoverable amounts of assets are the higher of their fair values less costs to sell and the present values of the future cash ?ows expected to be derived from the assets. The Group shall, on the basis of single item assets, estimate the recoverable amount. Where it is di?cult to do so, it shall determine the recoverable amount of the group assets on the basis of the asset group to which the asset belongs. The recognition of an asset group shall base on whether the main cash in?ow generated from the asset group is independent of those generated from other assets or other group assets.
Where the recoverable amount of an asset or an asset group is lower than its book value, the book value of the asset or asset group shall be written down to their recoverable amounts. The write-downs are recorded into the current pro?t or loss and the provision for asset impairment are made accordingly at the same time.
When the Company makes an impairment test of goodwill, it shall, as of the purchasing day, apportion the book value of the goodwill formed by business combination to the relevant asset groups by a reasonable method. Where it is di?cult to do so, it shall be apportioned to the relevant portfolio of asset groups .The related asset group or combination of asset groups shall be the asset group or combination of asset groups that can bene?t from the synergy e?ect of business combination, and shall be smaller than the reporting segments as determined by the Group.
When making an impairment test on the relevant asset groups or combination of asset groups containing goodwill, if any indication shows that the asset groups or combinations of asset groups related to the goodwill may be impaired, the Group shall ?rst conduct an impairment test on the asset groups or combinations of asset groups not containing goodwill, calculate the recoverable amount and recognize the corresponding impairment loss. Then, the Group shall conduct an impairment test on the asset groups or asset groups portfolio containing goodwill, and compare it book value and recoverable amount: if the recoverable amount is lower than book value, the amount of impairment losses should be ?rstly used to deduct book value of goodwill allocated to the asset group or the asset group portfolio, and then deduct book value of other assets according to the proportion of the book value of other assets other than the goodwill in the asset group or the asset group portfolio.
Once the loss of assets impairment is recognized, it is not allowed to be reversed even if the value can be recovered in subsequent period.
31 Long-termdeferred expenses
√Applicable □Not applicable
Long-term deferred expenses shall be amortized at the straight-line method, and the amortization period is set out as follows:
Amortization period
Improvement of ?xed assets acquired under the operating leaseExpected bene?cial period
32 Contractliabilities
(1) Recognition method of contract liabilities
√Applicable □Not applicable
The Group presents contract assets or liabilities in the balance sheet according to the relationship between the performance of contract obligations and customer payments. After o?setting the contract assets and contract liabilities under the same contract, the Group presents them in net amount.
Contract liabilities
Contract liability refers to the obligation to transfer goods or services to customers for the consideration received or receivable from customers, such as the money received by enterprises before transferring the promised goods or services.
33 Employee compensation
Employee compensations refer to multiform remuneration or compensation o?ered of the Group in order to get services provided by its employees or sever the labor relation. Employee compensation mainly includes short-term employee compensation, post-employment bene?ts, dismissal bene?ts and other long-term employee bene?ts. The welfare provided by the Company to employees' spouses, children, dependents, family dependants of the deceased employee and other bene?cial owners also belong to employee compensation.
Short-term compensation
(1) Accounting treatment of short-term compensation
√Applicable □Not applicable
During the accounting period of an employee' providing services, the short-term compensation actually incurred is recognized as liabilities and includes them in the current pro?t or loss or the related asset costs.
(2) Accounting treatment of post-employment bene?ts
√Applicable □Not applicable
The employees of the Group participated in the endowment insurance and unemployment insurance managed by the local government, and also participated in the enterprise annuity, and the corresponding expenses were included in the relevant asset costs or the current pro?t or loss when incurred.
(3) Accounting treatment of termination bene?ts
□Applicable √Not applicable
(4) Accounting treatment of other long-term employee bene?ts
□Applicable √Not applicable
34 Lease liabilities
□Applicable √Not applicable
35 Estimated liabilities
√Applicable □Not applicable
Except for contingent consideration and contingent liabilities assumed in business combination not under the same control, when the obligations related to contingencies meet the following conditions, the Group recognizes them as estimated liabilities:
(1) This obligation is a present obligation of the Group;
(2) The performance of such obligation is likely to result in out?ow of economic bene?ts from the Group;
(3) The amount of the obligation can be measured reliably.
The estimated liabilities are initially measured as the best estimate of expenses required for the performance of relevant present obligations by considering comprehensively the risks with respect to contingencies, uncertainties and the time value of money. On each balance sheet date, the Group shall review the book value of estimated liabilities. The Company shall make corresponding adjustments to re?ect the current best estimate if there is any conclusive evidence indicating that such book value cannot re?ect the current best estimate.
36 Share-based payment
□Applicable √Not applicable
37 Preferred shares,perpetualbonds and other?nancialinstruments
√Applicable □Not applicable
After the maturity of the perpetual bonds issued by the Group, the Group has the right to extend them for an unlimited number of times. For the coupon interest of the perpetual bonds, the Group has the right to postpone the payment, and the group has no contractual obligation to pay cash or other ?nancial assets. They are classi?ed as equity instrument.
38 Revenue
(1) Accounting policies for revenue recognition and measurement
√Applicable □Not applicable
Revenue from contracts with customers (applicable from January 1, 2020)
The Group recognizes revenue when it ful?lls the performance obligation in the contract, that is, when the customer obtains control over the relevant goods or services. The acquisition of control of relevant goods or services means to be able to dominate the use of the goods or the rendering of the services and obtain almost all the economic bene?ts from them.
Manufacturing contracts on large-sized port equipment, heavy equipment and steel structure products
The manufacturing contracts on large-sized port equipment, heavy equipment and steel structure products between the Group and customers usually only include the performance obligations of transferring large-sized port machinery and equipment, heavy equipment and steel structure products customized for customers.
The large-sized port equipment, heavy equipment and steel structure products provided by the Group during the performance of the contract are irreplaceable, however, most of the large-sized port equipment, heavy equipment sales contracts and the manufacturing contracts of some steel structure products do not stipulate that the Group has the right to collect money for the performance part that has been completed so far in the whole contract period. This part of the contract does not meet the performance obligation conditions within a certain period of time, and the Group takes it as the performance obligation at a certain point of time. The Group generally recognizes the revenue at the time point of control transfer of relevant port machinery and equipment, heavy equipment and steel structure products on the basis of comprehensive consideration of the following factors: the current right to receive payment of goods, the transfer of main risks and rewards in the ownership of goods, the transfer of legal ownership of goods, the transfer of physical assets of goods, and the acceptance of the goods by customers.
In addition, based on the terms of sales contracts on individual large-sized port equipment and heavy equipment and the manufacturing contracts on some steel structure products, the Group has the right to collect money for the performance part that has been completed so far during the whole contract period. The Group takes it as the performance obligation to perform in a certain period of time, and recognizes the revenue according to the performance progress. Based on input method, the Group determines the corresponding performance progress of large-sized port equipment and heavy equipment contracts according to the proportion of the cost incurred in the total estimated cost. By output method, the Group determines the performance progress of the steel structure manufacturing contract according to the proportion of the accumulated processing tons to the estimated total processing tons.
Contracts on rendering of shipping and lifting services
The service contracts between the Group and its customers mainly involve special shipping services and hoisting services. The revenue of special shipping services rendered by the Group is recognized by time period method, and the progress of performance obligations is determined according to the proportion of the number of days transported in the total estimated days of transportation. The revenue of shipping service shall be recognized when the service is completed.
Material sales contract
The material sales contract between the Group and customers usually only includes the performance obligation of transferring spare parts and other materials. The Group generally recognizes the revenue at the time of control transfer of relevant spare parts and other materials on the basis of comprehensive consideration of the following factors: the current right to receive payment of goods, the transfer of main risks and rewards in the ownership of goods, the transfer of legal ownership of goods, the transfer of physical assets of goods, and the acceptance of the goods by customers.
Rendering of building services
The building service contract between the Group and customers usually includes the performance obligation of infrastructure construction. As the customer can control the assets under construction during the performance by the Group, the Group takes them as the performance obligations within a certain period of time, and recognizes the revenue according to the performance progress, except that the performance progress cannot be reasonably determined. By input method, the Group determines the performance progress of the services based on the cost incurred. If the performance progress cannot be reasonably determined and the cost incurred by the Group is expected to be compensated, the revenue shall be recognized according to the cost amount incurred until the performance progress can be reasonably determined.
Build and transfer contract (BT contract)
Activities under the BT contracts usually include build and transfer. With respect to the building services provided by the Group, during the building period, the revenue of construction service contracts is recognized in accordance with the above accounting policies. The construction contract revenue is measured at the fair value of the consideration receivable, and the “long-term receivables” are recognized and measured at the same time by e?ective interest rate method and the amortized cost, and o?set upon receipt of payment of the project owner.
Franchise contract (“BOT” contract)
The activities under BOT contract usually include build, operate and transfer. At the build stage, the contract revenue of construction services shall be recognized in accordance with the above accounting policies for providing build service contracts. The revenue of construction contract is measured at the fair value of the consideration received or receivable, and the ?nancial assets or intangible assets are recognized while the revenue is recognized as follows:(1) Within a certain period after the completion of the infrastructure as stipulated in the contract, if the Group can unconditionally collect a certain amount of monetary funds or other ?nancial assets from the contract awarding party, the ?nancial assets are recognized at the same time as revenue;(2) According to the contract, the Group has the right to collect fees from the service recipients within a certain period of operation after the completion of the relevant infrastructure. However, if the amount of fees is uncertain, the right does not constitute an unconditional right to receive cash, the Group recognizes the intangible assets while recognizing the revenue, and amortizes it by tra?c ?ow method or straight-line method in the period from the date of completion acceptance of the project to the expiration of operation period and its extension period or the termination of franchise.
If the Group does not provide actual construction services but contracts infrastructure construction to other parties, the revenue from construction services will not be recognized; they are respectively recognized as ?nancial assets or intangible assets according to the project price paid in the construction process as well as the contract provisions.
In the operation stage, when services are provided, recognize the corresponding revenue; Daily maintenance or repair expenses incurred shall be recognized as current expenses. Daily maintenance or repair expenses incurred shall be recognized as current expenses.
According to the provisions of the contract, in order to maintain a certain service capacity of the relevant infrastructure or maintain a certain state of use before it is handed over to the contract awarding party, the current obligations undertaken by the Group in the estimated expenses are recognized as an estimated liability.
Variable consideration
If there is variable consideration in the contract, the Group shall determine the best estimate of variable consideration according to the expected value or the most likely amount, but the transaction price including variable consideration shall not exceed the amount that the accumulated recognized revenue is highly unlikely to have a signi?cant reversal when the relevant uncertainty is eliminated. On each balance sheet date, the Group re-estimates the amount of variable consideration to be included in the transaction price.
Warranty obligations
According to the contract and legal provisions, the Group provides quality assurance for the goods sold or the assets built. For the guarantee type quality assurance that the goods sold to customers meet the established standards, the Company shall perform accounting treatment in accordance with Note VII. For the service quality assurance for a separate service provided in addition to guaranteeing that the goods sold meet the established standards, the Group shall take it as a single performance obligation, allocate part of the transaction price to the service quality assurance according to relative proportion of the single selling price of the goods and service quality assurance, and recognize the revenue when the customer acquires service control right. In assessing whether quality assurance provides a separate service in addition to ensuring that the goods sold meet established standards, the Group shall consider whether the quality assurance is legal requirement, quality assurance period and the nature of the Group’s commitment to perform the tasks.
Principal responsible person/agent
The Group determines whether it is the principal responsible person or the agent in the transaction according to whether it has the right to control the goods or services before transferring them to customers. In case the Group can control the goods and other products before transferring them to customers, the Group shall be the principal responsible person and recognize the revenue according to the total consideration received or receivable. Otherwise, the Group shall be the agent and recognize the revenue according to the amount of commission fees or handling charges that it is expected to be entitled to receive, and the amount shall be recognized according to the net amount of the total consideration received or receivable after deducting the price payable to other relevant parties, or according to the ?xed commission amount or proportion.
Contract changes
When there are changes in the sales contract or construction contract between the Group and the customer:
(1) If the contract changes increase the clearly distinguishable goods or construction services and contract price, and the added contract price re?ects the separate price of the new goods or construction services, the Group will take such contract change as a separate contract for accounting;(2) If the contract change does not fall under the above (1), and there is a clear distinction between the transferred goods or construction services and the non-transferred goods or construction services on the date of contract change, the Group will regard it as the termination of the original contract, in the meanwhile, the non-performance part of the original contract and the changes will be incorporated into a new contract for accounting treatment;(3) If the contract change does not fall under the above (1), and there is no clear distinction between the transferred goods or construction services and the non-transferred goods or construction services on the date of contract change, the Group will take the changes as an integral part of the original contract for accounting treatment. As for the impact on the recognized revenue, the current revenue shall be adjusted on the date of contract change.
(2) Di?erences in revenue recognition accounting policies caused by di?erent business models of similar businesses□Applicable √Not applicable
39 Contractcost
√Applicable □Not applicable
The Group’s assets related to contract cost include contract performance cost and contract acquisition cost. According to the liquidity, they are presented in inventories, other current assets and other non-current assets respectively.
If the incremental cost incurred by the Group to get the contract is expected to be recovered, it shall be recognized as an asset as the contract acquisition cost, unless the amortization period of the asset does not exceed one year.
The cost incurred by the Group in performing the contract, which is not applicable to the specification scope of inventories, ?xed assets or intangible assets and meets the following conditions simultaneously, shall be recognized as an asset as the contract performance cost:(1) The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing expenses (or similar expenses), costs clearly borne by the customer and other costs incurred solely as a result of the contract;
(2) The cost increases the enterprise’s resources for ful?lling its performance obligations in the future;
(3) The cost is expected to be recovered.
The Group’s assets related to contract cost are amortized on the same basis as the recognition of income related to the assets, and are included in the current pro?t or loss.
If the book value of the assets related to contract cost is higher than the di?erence between the following two items, the Group will make provision for impairment of the excess part and recognize it as the loss of asset impairment:(1) The remaining consideration expected to be obtained by the enterprise due to the transfer of goods or services related to the assets;
(2) The cost expected to be incurred for the transfer of relevant goods or services
If the factors of impairment in the previous period change later, so that the di?erence between (1) and (2) is higher than the book value of the asset, the original provision for impairment of the asset shall be reversed and included in the current pro?t or loss, but the book value of the asset after reversal shall not exceed the book value of the asset on the reversal date without provision for impairment.
Revenue (applicable to 2019)
Revenue shall be recognized when related benefits are likely to flow into the Group, the amount can be reliably calculated, and the following conditions are met synchronously.
(a) Revenue from sales of large-scale port equipment, ocean heavy equipment, product of steel structure and construction project is recognized by the percentage-of-completion method. Please refer to Note III. 10.
(b) Revenue from ship transportation is recognized at the completion of the voyage.
(c) Income is recognized at the time of delivery for the sale of spare goods or parts and other materials.
(d) The interest income is recognized based on the time and e?ective interest rate for others to use the monetary funds of the Group.
(e) The revenue from operating lease is recognized in each period under the straight-line method during the lease term.
(f)Activities underthe construction and transferofcontracts usually include construction and transfer.With respecttothe construction projects forwhich the Group is responsible,during the construction period,in accordance with principals ofthe construction contract,when the outcome can be reliably estimated,the construction contractrevenue is measured atthefairvalue ofthe consideration receivable,with long-termreceivables recognized atthe same time and o?setupon receiptofpaymentofthe projectowner. 40 Governmentsubsidies
√Applicable □Not applicable
Government subsidies shall be recognized only if the Company is able to comply with the conditions for the government subsidies, and is likely to receive the government subsidies. If a government subsidy is a monetary asset, it shall be measured at the amount received or receivable. If a government subsidy is a non-monetary asset, it shall be measured at its fair value; and if its fair value cannot be obtained in a reliable way, it shall be measured at a nominal amount.
If the government subsidies shall be used for the construction or the generation in otherwise of the long-term assets as required by the government documents, they are the assets-related government subsidies; If government documents have no relevant provisions, and such government subsidies are based on the condition of the construction or the generation in otherwise of the long-term assets judged on the basis of basic conditions required for obtaining such government subsidies, they shall be deemed as the assets-related government subsidies, other government subsidies in addition to the said ones shall be deemed as the income-related government subsidies.
Income-related government subsidies which are used to compensate for relevant costs or losses in subsequent periods will be recognized as deferred income, and will be included in the current pro?t or loss or be used to write o? relevant costs in the period when relevant costs or losses are recognized.
If assets-related government subsidies are recognized as deferred income, they shall be included in profit or loss by stages by a reasonable and systematic method within the useful lives of relevant assets. (However, the government subsidies measured at nominal amounts are directly included in the current pro?t or loss); if the relevant assets are sold, transferred, scrapped or damaged before the end of their useful lives, the undistributed balance of relevant deferred income is transferred to the pro?t or loss from the current period of asset disposal.
41 Deferred income tax assets/deferred income tax liabilities
√Applicable □Not applicable
Income tax includes the income tax of the current period and deferred income tax. Except that the adjusted goodwill arising from business combination or the deferred income tax related to transactions or events directly recognized in shareholder’s equity shall be included in shareholder’s equity, other current income tax and deferred income tax shall be included in current pro?t and loss as income tax expenses.
The current income tax liabilities or assets incurred in the current period or prior periods shall be measured by the Group in light of the expected payable or refundable amount of income taxes according to the tax law.
Deferred income tax is accrued under the balance sheet liability method by the Group based on the temporary di?erence between book value of assets and liabilities on the balance sheet date and tax base, as well as the balance between the book value of items which have not been recognized as assets or liabilities but the tax base can be determined according to the tax law and the tax base.
Taxable temporary di?erences are recognized as deferred income tax liabilities, except that:
(1) Taxable temporary di?erences are generated in the following transactions: the initial recognition of goodwill, or the initial recognition of assets or liabilities arising from transactions with the following characteristics: the transaction is not a business combination and will not a?ect accosting pro?ts, nor a?ect the taxable income or deductible losses when the transaction occurs.
(2) For taxable temporary di?erences related to the investments in subsidiaries, joint ventures and associates, the time for the reversal of the taxable temporary di?erences can be controlled and the taxable temporary di?erences are likely not to be reversed in the foreseeable future.
For deductible temporary differences, deductible losses and tax credits that can be carried forward to subsequent periods, deferred tax assets arising therefrom are recognized to the extent that future taxable income will be probable to be available against the deductible temporary di?erences, deductible losses and tax credits, unless the deductible temporary di?erences arise from the following transactions:(1) The deductible temporary difference is generated in the following transaction: the transaction is not a business combination and it will a?ect neither accounting pro?ts nor the taxable income (or deductible losses) when occurred.
(2) For the deductible temporary di?erences arising from investments in subsidiaries, associates and joint ventures, the deferred income tax assets will be accordingly recognized when meeting the following conditions at the same time: the temporary di?erences may be reversed in the foreseeable future and they can be used to o?set the taxable income of deductible temporary di?erences in the future.
On the balance sheet date, the Company shall measure deferred income tax assets and deferred income tax liabilities at the applicable tax rate during the period for expected recovery of assets or settlement of liabilities and re?ect the impacts of the income tax by means of expected recovery of assets or settlement of liabilities on the balance sheet date.
On the balance sheet date, the Group reviews the book value of deferred income-tax assets. If it is unlikely to obtain su?cient taxable income to o?set the bene?t of the deferred income-tax assets, the book value of the deferred income-tax assets will be written down. On the balance sheet date, the Group re-evaluates unrecognized deferred income tax assets, and deferred income tax assets are recognized to the extent that it is likely to obtain su?cient taxable income for all or part of the deferred income tax assets to be reversed.
Deferred income tax assets and deferred income tax liabilities meeting the following conditions simultaneously will be presented by net amount after o?set: when the Company has the statutory right to balance current income tax assets and current income tax liabilities with net amounts, and deferred income tax assets and deferred income tax liabilities are related to the income tax which are imposed on the same taxpayer by the same tax collection authority or on di?erent taxpayers, but, in each important future period in connection with the reversal of deferred income tax assets and liabilities, the involved taxpayer intends to settle the current income tax assets and liabilities on a net amount basis, or obtain assets at the time of discharging liabilities.
42 Lease
(1) Accounting treatment methods of operating lease
√Applicable □Not applicable
Lease under which all the risks and rewards related to the ownership of assets are materially transferred is recognized as ?nancing lease, with the rest as operating lease.
As the leasee of operating lease
Rental payment for operating lease in each stage during the rental period should be included into related asset costs or the current pro?t or loss by the straight-line method;
As a lessor of operating lease
Rental income from the operating lease in each stage during the lease term should be recognized as the current pro?t or loss by the straight-line method.
(2) Accounting treatment methods of ?nance lease
√Applicable □Not applicable
As the lessee of ?nance lease
At the commencement of the lease term, assets acquired under ?nance lease shall be recorded at the lower of their fair values and the present values of the minimum lease payments, and the Company shall recognize the book value of long-term payables at the minimum lease payments, and shall record the di?erences between book value of the leased assets and the long-term payables as unrecognized ?nance charges, which are amortized at the e?ective interest method in each stage during the lease term. The contingent rental is included in the current pro?ts or losses when actually occurring.
Leaseback
Leaseback for ?nancing purposes will be treated as a whole, which is accounted by mortgage loan, on the condition that asset sale is related to lease transaction and can be repurchased when the lease term expires, that is to say, the accounting treatment shall be conducted as per mortgage loan.
(3) Determination and accounting treatment methods of lease under the new lease standard
□Applicable √Not applicable
43 Otheraccounting policies and accounting estimates
√Applicable □Not applicable
1.Pro?t distribution
The Company's cash dividends are recognized as liabilities after approval at the general meeting.
2.Work safety expenses
The Company withdraws the work safety expenses according to provisions, includes them in the cost of related products or the current profit or loss, and includes them in special reserves at the same time. The costs are handled separately depending on whether they form fixed assets: when withdrawn work safety expenses are used within the prescribed range and belong to expenses, such costs shall be directly deducted from special reserves; where a ?xed asset is formed, the expenses incurred through collection are recognized as the ?xed asset when it is ready for its intended use, and the equivalent special reserve is written o? and the equivalent accumulated depreciation is con?rmed.
3.Fair value measurement
The Group measures the derivative financial instruments and equity instrument investment at fair value on each balance sheet date. Fair value is the price received from sales of an asset or paid for transfer of a liability by a market participant in an orderly transaction on the measurement date. The Group measures the relevant assets or liabilities at fair value, assuming that the sale of assets or transfer of liabilities is orderly carried out in the main market of the relevant assets or liabilities. Where there is no main market, the Group should assume that the transaction is carried out in the most advantageous market related to the assets or liabilities. The main market (or the most advantageous market) is the trading market that can be entered by the Company on the measurement date. The Group adopts the assumption used for realizing its utmost economic bene?t when the market participants price the asset or liability.
When the Company measures non-financial assets at fair value, it should consider a market participant’s ability to generate economic benefit by using the asset or by selling it to another market participant who will use the asset in its highest and best use.
When the Group uses the valuation techniques, it has considered the valuation techniques that are applicable in the current situation and are supported by enough available data and other information. The Company gives priority to the observable inputs when using valuation techniques, and those unobservable inputs are used only under the circumstance when it is impossible or unobservable inputs to obtain relevant observable inputs.
For assets and liabilities measured at or disclosed by their fair value in the financial statements, the level of the measurement result of fair value shall subject to the lowest level which the input having great significance to the entire measurement of fair value belongs to: Level 1 inputs refer to quoted prices (unadjusted) in active markets for identical assets or liabilities available on the measurement date; Level 2 inputs refer to inputs that are directly or indirectly observable for the assets or liabilities other than Level 1 inputs; Level 3 inputs refer to unobservable inputs of the relevant assets or liabilities.
On each balance sheet date, the Group reevaluates the assets and liabilities continuously measured at fair value and recognized in the ?nancial statements in order to determine whether there is a conversion among the levels of fair value measurement.
4.Signi?cant accounting judgment and estimate
The preparation of financial statements requires the management to make judgments, estimates and assumptions. These judgments, estimates and assumptions will a?ect the reported amounts and disclosures of income, expenses, assets and liabilities, and the disclosure of contingent liabilities on the balance sheet date. The results from the uncertainties of these assumptions and estimates may lead to signi?cant adjustments to the book amount of assets or liabilities that are a?ected in the future.
Judgment
Determination of the performance progress of construction contracts (only applicable to transfer of control over a period of time)The Group determines the performance progress of the construction contracts by input method. To be more speci?c, the Group determines the performance progress according to the proportion of the cumulative actual construction cost to the estimated total cost, while the cumulative actual cost includes the direct cost and indirect cost in the process of transferring goods to customers. The Group believes that the construction contract price with customers is determined on the basis of construction cost, and the proportion of the actual construction cost to the estimated total cost can truly re?ect the performance progress of construction services. In view of the long duration of construction contracts, which may span several accounting periods, the Group will recheck and revise the budget with the progress of the construction contracts, and adjust the amount of revenue recognized accordingly.
Uncertainty of estimation
The following are other key sources of the uncertainty of the key assumptions and estimates in the future on the balance sheet date, which may lead to major adjustments in the book value of the assets and liabilities of next ?scal year.
Impairment of ?nancial instruments and contract assets
The Group adopts the expected credit loss model to assess the impairment of financial instruments and contract assets. The application of the expected credit loss model requires signi?cant judgments and estimates. It must consider all reasonable and evidence-based information, including forward-looking information. In making such judgments and estimates, the Group infers expected changes in debtors' credit risk based on historical repayment data combined with economic policies, macroeconomic indicators, industry risks and other factors. Di?erent estimates may a?ect the provision for impairment, and the amount of impairment that has been provided may be not equal to the actual amount of future impairment losses.
Inventory impairments
The management shall estimate the net realizable value of inventories in time so as to estimate the provision for depreciation of inventories. If any event or circumstance changes, it is necessary to use the estimate to make the provision for depreciation of inventories if the inventory is not likely to realize the relevant value. If the expected amount is di?erent from the original estimate, the relevant di?erence will a?ect the book value of the inventories and the impairment loss during the estimated change.
Impairment of non-current assets other than ?nancial assets (other than goodwill)
On the balance sheet date, the Group judges whether there are any signs of possible impairment of non-current assets other than ?nancial assets. Non-current assets other than ?nancial assets are tested for impairment when there is an indication showing that their book amounts are irrecoverable. When the book value of an asset or asset group is higher than the recoverable amount, that is, the higher of the net amount from fair value less the disposal expense and the present value of the estimated future cash ?ow, it indicates that the impairment occurred. The net amount after the fair value minus the disposal expenses is determined by reference to the sales agreement price of similar assets in the fair trade or the observable market price, minus the incremental cost directly attributable to the disposal of the asset. When estimating the present value of future cash ?ows, management must estimate the expected future cash ?ows of the asset or asset group and select an appropriate discount rate to determine the present value of future cash ?ows.
Impairment of goodwill
The Group tests whether the goodwill is impaired at least annually. This requires an estimate of the present value of the future cash ?ows of the asset group or combination of asset groups to which goodwill is allocated. When estimating the present value of future cash flows, the Group needs to estimate the cash flow generated by future asset groups or combination of asset groups, and select the appropriate discount rate to determine the present value of future cash ?ows. See Note VII (28) for details.
Fair value of unlisted equity investments
The valuation of unlisted equity investments is an estimated future cash ?ow discounted at the current discount rate of other ?nancial instruments with similar contract terms and risk characteristics. This requires the Group to estimate the expected future cash ?ow, credit risk, ?uctuation and discount rate; therefore, there is some uncertainty.
44 Changes in signi?cantaccounting policies and accounting estimates
(1) Changes in signi?cant accounting policies
√Applicable □Not applicable
Other description
The main impacts of the adjustments caused by the above changes in accounting policies on the ?nancial statements are as follows:
The Group
2020
The Company
2020
(2) Changes in accounting estimates
□Applicable √Not applicable
(3) The first implementation of new revenue standard and new lease standard for the adjustment of the financial statements at the beginning of the ?rst execution year since 2020
√Applicable □Not applicable
Consolidated Balance Sheet
Unit: Yuan Currency: CNY
Current assets:
Non-current assets:
Disbursement of loans and advances
Debt investment
Other debt investments
Long-term receivables5,227,728,4205,227,728,420
Long-term equity investments2,873,673,7452,873,673,745
Other equity instrument investment61,981,26861,981,268
Other non-current ?nancial assets
Investment properties418,425,533418,425,533
Fixed assets21,454,967,29921,454,967,299
Construction in progress4,380,489,8884,380,489,888
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets3,506,541,3663,506,541,366
Development expenditures
Goodwill268,434,934268,434,934
Long-term deferred expenses1,444,6361,444,636
Current liabilities:
Non-current liabilities:
Reserve fund for insurance contracts
Long-term borrowings8,413,339,9868,413,339,986
Bonds payable
Including: preferred stock
Perpetual bond
Lease liabilities
Long-term payables1,741,945,6361,741,945,636
Long-term payroll payable
Estimated liabilities484,000,772484,000,772
Deferred income458,722,579458,722,579
Deferred income tax liabilities89,856,72789,856,727
Other non-current liabilities376,626,821376,626,821
Owners’ equity (or shareholders’ equity):
Notes to the adjustment of each item:
□Applicable √Not applicable
Balance Sheet of the Parent Company
Unit: Yuan Currency: CNY
Current assets:
ItemDecember 31, 2019January 1, 2020Adjustments
Non-current assets:
Current liabilities:
Non-current liabilities:
Owners’ equity (or shareholders’ equity):
Notes to the adjustment of each item:
□Applicable √Not applicable
(4) Description of the retrospective adjustment of previous comparative data under the initial implementation of new revenue standard and new lease standard since 2020
□Applicable √Not applicable
45 Others
□Applicable √Not applicable
VI. Taxes
1 Main tax categories and tax rates
Main tax categories and tax rates
√Applicable □Not applicable
Where there are taxpayers with di?erent enterprise income tax rates, the disclosure shall be stated
√Applicable □Not applicable
Name of taxpayerIncome tax rate (%)
The Company15%Shanghai Zhenhua Port Machinery Heavy Industries Co., Ltd.25%Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd.16.50%Shanghai Zhenhua Shipping Co., Ltd25%Nantong Zhenhua Heavy Equipment Manufacturing Co., Ltd.25%Shanghai Zhenhua Heavy Industries Group (Nantong) Transmitter Co., Ltd.15%ZPMC Electric Co., Ltd.15%Shanghai Zhenhua Ocean Engineering Service Co., Ltd25%ZPMC Machinery Equipment Services Co., Ltd.25%Shanghai Zhenhua Heavy Industries Port Machinery General Equipment Co., Ltd.25%Shanghai Port Machinery Heavy Industry Co., Ltd25%ZPMC Zhangjiagang Port Machinery Co., Ltd.25%ZPMC Qidong Marine Engineering Co., Ltd.25%Jiahua Shipping Co., Ltd. 16.50%Zhenhua Pufeng Wind Energy (HongKong) Co., Ltd.16.50%CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd15%Nanjing Ninggao New Channel Construction Co., Ltd25%CCCC Investment & Development Qidong Co., Ltd.25%CCCC Liyang Urban Investment and Construction Co., Ltd.25%CCCC (Huaian) Construction Development Co., Ltd.25%CCCC Zhenjiang Investment Construction Management Development Co., Ltd.25%CCCC Rudong Construction Development Co., Ltd.25%ZPMC Netherlands Coöperatie U.A.25%ZPMC Netherlands B.V.25%Verspannen B.V.25%ZPMC Espana S.L.30%ZPMC Italia S.r.l24%ZPMC GmbH Hamburg32.25%ZPMC Lanka Company (Private) Limited24%
Name of taxpayerIncome tax rate (%)
ZPMC North America Inc.8.84%ZPMC Korea Co., Ltd.20%ZPMC Engineering Africa (Pty) Ltd.28%ZPMC Engineering (India) Private Limited22%ZPMC Southeast Asia Holding Pte. Ltd.17%ZPMC Engineering (Malaysia) Sdn. Bhd.24%ZPMC Australia Company (Pty) Ltd.30%ZPMC Brazil Serviço Portuários LTDA25%ZPMC Limited Liability Company20%ZPMC NA East Coast lnc.8.84%ZPMC Middle East FZE0%ZPMC UK LD20%Greenland Heavylift (Hong Kong) Limited16.5%GPO Grace Limited0%GPO Amethyst Limited0%GPO Sapphire Limited0%GPO Emerald Limited0%GPO Heavylift Limited0%GPO Heavylift AS0%GPO Heavylift Pte Ltd17%ZPMC Latin America Holding Corporation25%Terminexus Co., Ltd.16.5%CCCC Yongjia Construction Development Co., Ltd.25%CCCC Zhenhua Lvjian Technology (Ningbo) Co., Ltd.25%ZPMC Hotel Co., Ltd.25%Xiong’an Zhenhua Co., Ltd.25%ZPMC Fuzhou O?shore Construction Co., Ltd. 25%CCCC (Dongming) Investment and Construction Co., Ltd.25%
Remark 1: Shanghai Zhenhua Heavy Industries Group (Nantong) Heavy Gear Reducer Co., Ltd won the Hi-tech Enterprise Certi?cate (No. GR201932001426) in 2019, with the valid term of 3 years. Shanghai Zhenhua Port Machinery Heavy Industries Co., Ltd. was recognized as a hi-tech enterprise in December, 2019 and won the Hi-tech Enterprise Certi?cate (No.: GR201931004259) with the valid term of 3 years. The company's tax rate was 15% last year and 15% this year. Shanghai Zhenhua Heavy Industries Electric Co., Ltd was recognized as a hi-tech enterprise in November, 2017 and won the Hi-tech Enterprise Certi?cate (No.: GR202031001911) after reexamination in November, 2020, with the valid term of 3 years. CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd. was recognized as hi-tech enterprise in August, 2015 and won the Hi-tech Enterprise Certi?cate (No. GR201832001451) after reexamination in 2018, with the valid term of 3 years. In accordance with relevant provisions in Article 28 of the Income Tax Law, the actually applicable enterprise income tax rate for these companies in this year was 15% (2019: 15%).
2 Tax preferences
□Applicable √Not applicable
3 Others
□Applicable √Not applicable
VII.Notes to the main items of the consolidated ?nancial statements
1 Monetary funds
√Applicable □Not applicable
Unit: Yuan Currency: CNY
As at December 31, 2020, the other monetary funds, including the restricted deposit of RMB 50,332,396 (as at December 31, 2019: RMB 242,272,475), were the money appropriated that was collected from the overseas projects and deposited in the overseas regulatory accounts and the cash deposit deposited for application to the bank for the letter of credit and letter of guarantee.
As at December 31, 2020, the overseas monetary fund deposited by the Group was RMB 829,760,121 (Dec. 31, 2019: RMB 888,185,684).
As at December 31, 2020, the bank deposits were current deposits. The interest income from current deposits is calculated as per the interest rate of the current deposits.
2 Held-for-trading ?nancialassets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Including:
Including:
Other description:
√Applicable □Not applicable
(i) As at December 31, 2020, the held-for-trading ?nancial assets - derivative ?nancial assets – equity options held by the Group refers to the fair value of the right obtained at the time of acquiring Greenland Heavylift (Hong Kong) Limited to purchase 1% of its equity of at the price of USD 1.
(ii) As at December 31, 2020, the listed company share investments held by the Group include 5.88% equity of Jiangxi Huawu Brake Co., Ltd., 1.59% equity of Qingdao Port International Co., Ltd., 1.16% equity of CRSC, 0.45% equity of COSCO Shipping Holdings Co., Ltd. and 0.001% equity of Shenwan Hongyuan Group Co., Ltd.
3 Derivative ?nancialassets
□Applicable √Not applicable
4 Notes receivable
(1) Presentation of notes receivable by category
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Notes receivable pledged by the Company at the end of the period
□Applicable √Not applicable
(3) Notes receivable endorsed or discounted by the Company at the end of the period and not yet due on the balance sheet date
□Applicable √Not applicable
(4) Notes transferred to accounts receivable by the Company at the end of the period due to drawer’s failure in performance
□Applicable √Not applicable
(5) Disclosure by bad debt calculation method
□Applicable √Not applicable
Individual provision for bad debts:
□Applicable √Not applicable
Provision for bad debts by portfolio:
□Applicable √Not applicable
If the provision for bad debts is calculated based on the general model of expected credit loss, please refer to other receivables for disclosure:
□Applicable √Not applicable
(6) Provision for bad debts
□Applicable √Not applicable
(7) Notes receivable actually written o? in the current period
□Applicable √Not applicable
Other description
□Applicable √Not applicable
5 Accounts receivable
(1) Disclosure by aging
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Within 1 year
Including: subitem within 1 year
(2) Disclosure by bad debt calculation method
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Including:
Provision for bad debts by portfolio8,440,850,412931,345,383,157167,095,467,255Including
Including:
Provision for bad debts by portfolio9,529,023,401931,185,453,913128,343,569,488Including
Individual provision for bad debts:
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of individual provision for bad debts:
√Applicable □Not applicable
As at December 31, 2019, the accounts receivables with individual provision for bad debts are as follows:
Provision for bad debts by portfolio:
□Applicable √Not applicable
If the provision for bad debts is calculated based on the general model of expected credit loss, please refer to other receivables for disclosure:
□Applicable √Not applicable
(3) Provision for bad debts
□Applicable √Not applicable
The recovered or reversed provision for bad debts with signi?cant amount:
□Applicable √Not applicable
(4) Accounts receivable actually written o? in the current period
□Applicable √Not applicable
(5) Top 5 accounts receivable in terms of ending balance presented by debtor
√Applicable □Not applicable
As at December 31, 2020, top 5 accounts receivable in terms of ending balance presented by debtor summarized and analyzed as follows:
As at December 31, 2019, top 5 accounts receivable in terms of ending balance presented by debtor summarized and analyzed as follows:
(6) Accounts receivable derecognized due to the transfer of ?nancial assets
□Applicable √Not applicable
(7) Amount of assets and liabilities formed by transferring accounts receivable and continuing involvement
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
Changes in the provision for bad debts of accounts receivable are as follows:
Accounts receivable with provision for bad debts accrued by credit risk features portfolio are as follows:
6 Receivables ?nancing
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Increase or decrease and changes in fair value of receivables ?nancing in the current period:
□Applicable √Not applicable
If the provision for bad debts is calculated based on the general model of expected credit loss, please refer to other receivables for disclosure:
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
Notes receivable that had been endorsed or discounted and not matured on the balance sheet date are as follows:
7 Advances to suppliers
(1) Presentation of advances to suppliers by account age
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Explanation of the reasons why the advances to suppliers with the aging over one year and a signi?cant amount is not settled in time:As at December 31, 2020, the advances to suppliers of the Company with the aging over one year was RMB 280,954,766 (as at December 31, 2019: RMB 332,346,115), mainly the advances to suppliers for the procurement of imported parts, which has not been yet settled because the purchased imported parts have not yet received.
(2) Top 5 advances to suppliers in terms of ending balance presented by prepaid object
√Applicable □Not applicable
As at December 31, 2020, top 5 advances to suppliers in terms of ending balance presented by debtor summarized and analyzed as follows:
As at December 31, 2019, top 5 advances to suppliers in terms of ending balance presented by debtor summarized and analyzed as follows:
Other description
□Applicable √Not applicable
8 Otherreceivables
Item presentation
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
Interest receivable
(1) Classi?cation of interest receivable
□Applicable √Not applicable
(2) Signi?cant overdue interest
□Applicable √Not applicable
(3) Provision for bad debts
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
Dividends receivable
(4) Dividends receivable
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(5) Signi?cant dividends receivable aging over 1 year
□Applicable √Not applicable
(6) Provision for bad debts
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
Other receivables
(7) Disclosure by aging
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Within 1 year
Including: subitem within 1 year
Sub-total of items within 1 year836,659,9031-2 years26,116,2122-3 years82,447,437Over 3 years
3-4 years193,114,1034-5 years1,556,265Over 5 years12,274,182
Total1,152,168,102
100 0
(8) Classi?cation by nature of funds
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(9) Provision for bad debts
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of signi?cant changes in book balance of other receivables with changes in loss provision in the current period
□Applicable √Not applicable
The amount of provision for bad debts in the current period and the basis for assessing whether the credit risk of ?nancial instruments has increased signi?cantly:
□Applicable √Not applicable
(10) Provision for bad debts
□Applicable √Not applicable
(11) Other receivables actually written o? in the current period
□Applicable √Not applicable
(12) Top 5 other receivables in terms of ending balance presented by debtor
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(13) Receivables involving government subsidies
□Applicable √Not applicable
(14) Other receivables derecognized due to transfer of ?nancial assets
□Applicable √Not applicable
(15) Amount of assets and liabilities formed by transferring other receivables and continuing involvement
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
9 Inventories
(1) Classi?cation
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Provision for inventory depreciation and provision for impairment of contract performance cost
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(3) Description of the amount of capitalized borrowing costs included in ending balance of inventories
□Applicable √Not applicable
(4) Description of the current amortization amount of contract performance cost
□Applicable √Not applicable
Other description
√Applicable □Not applicable
Provision for inventory depreciation is as follows:
The write-o? of provision for depreciation of goods in process mainly included the drilling platforms and ?oating cranes originally planned for sale, which were changed for self-use according to the resolution of the Company’s management.
Total amount of possible penalties for failure to ful?ll the obligations as contracted:
10 Contractassets (Applicable since Jan.1,2020)
(1) Particulars about contract assets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Amount of and reason for signi?cant changes in book value during the reporting period□Applicable √Not applicable
(3) Provision for impairment of contract assets in current period
√Applicable □Not applicable
Unit: Yuan Currency: CNY
If the provision for bad debts is calculated based on the general model of expected credit loss, please refer to other receivables for disclosure:
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
Remark 1: When the Group sells equipment to customers and provides relevant installation services, it constitutes a single performance obligation. When the Group recognizes revenue at the time of ful?lling its performance obligations, the Company’s unconditional (i.e., only depending on the passage of time) right to collect consideration from customers shall be presented as receivables. The non-invoiced contract warranty balance is the right to conditionally collect the consideration from the customer. Therefore, the Company recognizes the non-invoiced contract receivables as contract assets, and the contract assets will form unconditional collection right after the expiration of the warranty and will be transferred to the receivables.
Remark 2: The Group provides customers with infrastructure construction services and steel structure product manufacturing, and recognizes revenue within a period of time to form contract assets. The contract assets will form unconditional collection right at the time of project settlement and are transferred in receivables. The customers shall settle accounts with the Group on the performance progress of engineering construction services and the delivery of steel structure products under contract provisions, and pay the contract price according to the credit period speci?ed in the contract after settlement. The part of the income amount recognized by the Group according to the performance progress exceeding the settled price is recognized as contract assets, and the part of the settled price exceeding the income amount recognized by the Group according to the performance progress is recognized as contract liabilities.
The contract assets with provision for impairment loss by credit risk features portfolio are as follows:
In this year, the performance progress of relevant construction contracts of the Group increased, and some of the performance progress had not been settled, resulting in the increase in the book value of contract assets.
11 Assets held forsale
□Applicable √Not applicable
12 Non-currentassets due within one year
√Applicable □Not applicable
Unit: Yuan Currency: CNY
104 4
Important debt investment and other debt investments due at the end of the period:
□Applicable √Not applicable
Other description
None
13 Othercurrentassets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description
None
14 Debtinvestment
(1) Particulars about debt investment
□Applicable √Not applicable
(2) Important debt investment at the end of the period
□Applicable √Not applicable
(3) Provision for impairment
□Applicable √Not applicable
The amount of provision for impairment in the current period and the basis for assessing whether the credit risk of ?nancial instruments has increased signi?cantly
□Applicable √Not applicable
Other description
□Applicable √Not applicable
15 Otherdebtinvestments
(1) Particulars about other debt investments
□Applicable √Not applicable
(2) Important other debt investments at the end of the period
□Applicable √Not applicable
(3) Provision for impairment
□Applicable √Not applicable
The amount of provision for impairment in the current period and the basis for assessing whether the credit risk of ?nancial instruments has increased signi?cantly
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
16 Long-termreceivables
(1) Long-term receivables
√Applicable □Not applicable
Unit: Yuan Currency: CNY
As at December 31, 2020 and December 31, 2019, the account receivable from “Building – Transfer” project was the principal invested in above “Building– Transfer” project by the Group, and the amount of interest receivable was the ?nancing return recognized based on the contract.
As at December 31, 2020, the long-term accounts receivable were RMB 5,614,309,162 (as at December 31, 2019: RMB 4,482,230,928), which had been pledged to the bank as the guarantee for the long-term borrowings of RMB 1,947,736,154 (as at December 31, 2019: Long-term borrowings of RMB 1,420,127,942).
(2) Provision for bad debts
□Applicable √Not applicable
The amount of provision for bad debts in the current period and the basis for assessing whether the credit risk of ?nancial instruments has increased signi?cantly
□Applicable √Not applicable
(3) Long-term receivables derecognized due to transfer of ?nancial assets
□Applicable √Not applicable
(4) Amount of assets and liabilities formed by transferring long-term receivables and continuing involvement
□Applicable √Not applicable
Other description
√Applicable □Not applicable
Aging analysis of long-term receivable is as follows:
17 Long-termequity investments
√Applicable □Not applicable
Unit: Yuan Currency: CNY
I. Joint ventures
Jiangsu Longyuan Zhenhua Marine Engineering Co., Ltd
260,880,65315,179,788276,060,441
II. Associates
Other description
Joint ventures:
(i) On May 5, 2014, the subsidiary of the Company and the partner invested to establish Zhenhua Marine Energy (Hong Kong) Co., Ltd (Zhenhua Marine Energy). The registered capital is USD 5,969,998. The subsidiary of the Company contributed USD 3,044,699 with the shareholding ratio of 51%. Zhenhua Marine Energy focused on the vessel transportation business. Based on the regulations of the shareholder agreement, the important events of such company shall be agreed by at least 75% shareholders via voting. Hence, the Group has no control right but jointly controls Zhenhua Marine Energy together with the partner.
(ii) On June 4, 2020, CCCC, the controlling shareholder of the Company, increased the investment amounting to RMB 1,000,000,000 to CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd., the holding subsidiary of the Company. On the same day, the persons acting in concert agreement between CCCC and the Company was terminated. Therefore, on June 4, 2020, the proportion of voting rights enjoyed by the Company was changed to 16.52%, and the Company no longer had control over CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd. Since June 4, 2020, the Group would no longer include CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd. into the scope of combination. Therefore, the two joint ventures of CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd., i.e. CCCC Tianhe Xi'an Equipment Manufacturing Co., Ltd. and CCCC Nanjing Tra?c Engineering Management Co., Ltd., are no longer joint ventures of the Group at the end of this year.
Associates:
(i) On May 31, 2016, the Company and other shareholders increased the capital amounting to RMB 420,000,000 to CCCC Financial Leasing Co., Ltd. in the same proportion. After the capital increase, the investment costs of the Company to CCCC Financial Leasing Co., Ltd. Increased to RMB 1,500,000,000 with the unchanged shareholding ratio of 30%.
(iv) On June 23, 2020, the Company invested to establish CCCC Xiongan Urban Construction Development Co., Ltd. The registered capital was RRMB 100,000,000. The Company contributed RMB 15,000,000 with the shareholding ratio of 15%. The company was mainly engaged in the engineering construction. According to relevant provisions of the Articles of Association, the Company has the right to appoint one director to CCCC Xiongan Urban Construction Development Co., Ltd, and can exert signi?cant in?uence on the company.
18 Otherequity instrumentinvestment
(1) Particulars about other equity instrument investment
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Equity instrument investment not held for trading
√Applicable □Not applicable
Unit: Yuan Currency: CNY
108 8
Other description:
□Applicable √Not applicable
19 Othernon-current?nancialassets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
√Applicable □Not applicable
On December 31, 2020, the Group’s ?nancial assets measured at fair value through the current pro?t or loss are the fair value of the Company’s 16.52% equity in CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd.
20 Investmentproperties
Measurement model of investment properties
(1) Investment properties with cost measurement mode
Unit: Yuan Currency: CNY
I. Original book value
1. Balance as at December 31, 2019397,820,689209,845,794607,666,4832. Increase in current period68,064,51768,064,517(1) Outsourcing
(2) Transfer-in of inventories, ?xed assets and
construction in progress
(3) Increase in business combination
(4) Debt restructuring for debt repayment68,064,51768,064,5173. Decrease in current period
II. Accumulative depreciation and amortization
1. Balance as at December 31, 2019123,057,91566,183,035189,240,9502. Increase in current period13,511,7355,370,79618,882,531(1) Provision or amortization13,511,7355,370,79618,882,5313. Decrease in current period
(1) Disposal
(2) Other transfer-out
4. Balance as at December 31, 2020136,569,65071,553,831208,123,481
III. Provision for impairment
IV. Book value
1. Book value at the end of the period329,315,556138,291,963467,607,5192. Book value at the beginning of the period274,762,774143,662,759418,425,533
(2) Investment property without certi?cate of title
□Applicable √Not applicable
Other description
√Applicable □Not applicable
Remark 1: the newly added property in this year is the property received from customers in debt restructuring for debt repayment. The book value is recognized by the fair value of the abandoned creditor's rights and other costs directly attributable to the assets such as taxes. As of December 31, 2020, the ownership of the property has been changed.
21 Fixed assets
Item presentation
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
Fixed assets
(1) Particulars about ?xed assets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
I. Original book value
1. Balance as at December 31, 2019
11,569,317,8168,430,886,826270,788,319258,377,19413,994,101,71034,523,471,865
2. Increase in current period30,571,004734,689,50230,120,87416,609,9721,229,829,9112,041,821,263(1) Purchase11,773,442228,582,28327,602,74016,609,9723,835,965288,404,402
II. Accumulated depreciation
III. Provision for impairment
IV. Book value
6,837,308,3631,425,966,03269,723,68678,967,17011,408,636,14619,820,601,397
2. Book value at the beginning of the period
7,530,984,5672,891,369,04862,857,27774,085,05510,895,671,35221,454,967,299
(2) Temporary idle ?xed assets
□Applicable √Not applicable
(3) Fixed assets acquired under ?nance leases
□Applicable √Not applicable
(4) Fixed assets leased out through operating lease
√Applicable □Not applicable
Unit: Yuan Currency: CNY
ItemBook value at the end of the period
Vessel4,314,276,451
(5) Fixed assets without certi?cate of title
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
√Applicable □Not applicable
As at December 31, 2020, the following ?xed assets were taken as loan mortgage:
As at December 31, 2019, the following ?xed assets were taken as loan mortgage:
As at December 31, 2020 and December 31, 2019, the book values of ?xed assets for operating lease were as follows:
As at December 31, 2020, the ?xed assets with pending certi?cate of title were as follows:
Liquidation of ?xed assets
□Applicable √Not applicable
22 Construction in progress
Item presentation
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
Construction in progress
(1) Particulars about construction in progress
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Changes of major construction in progress
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(3) Provision for impairment of construction in progress in the current period
□Applicable √Not applicable
Other description
□Applicable √Not applicable
Engineering materials
(4) Particulars about engineering materials
□Applicable √Not applicable
23 Productive biologicalassets
(1) Productive biological assets with cost measurement model
□Applicable √Not applicable
(2) Productive biological assets measured by fair value
□Applicable √Not applicable
Other description
□Applicable √Not applicable
24 Oiland gas assets
□Applicable √Not applicable
25 Right-of-use assets
□Applicable √Not applicable
26 Intangible assets
(1) Particulars about intangible assets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
I. Original book value
II. Accumulated amortization
III. Provision for impairment
IV. Book value
3,309,585,83436,292,0491,572,8313,347,450,714
2. Book value at the beginning of the period
3,478,984,98524,373,8203,182,5613,506,541,366
At the end of the period, the proportion of intangible assets formed through internal R&D in the balance of intangible assets is 0.
In 2020, total technology research and development expenses of the Group amounted to RMB 737,468,137 (2019: RMB 887,096,178). These technology research and development expenses are not capitalized.
(2) Land use right without certi?cate of title
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
27 Developmentexpenditures
□Applicable √Not applicable
28 Goodwill
(1) Original book value of goodwill
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Remark 1: The decrease in the current year was caused by the translation di?erences of foreign currency statement.
(2) Provision for impairment of goodwill
□Applicable √Not applicable
(3) Information about the asset group or portfolio of the goodwill
□Applicable √Not applicable
(4) Explain the goodwill impairment test process, key parameters (such as the growth rate during forecast period when estimating the present value of future cash ?ow, growth rate during stable period, pro?t rate, discount rate, forecast period, if applicable) and the recognition method of goodwill impairment loss
□Applicable √Not applicable
(5) Impact of goodwill impairment test
□Applicable √Not applicable
Other description
√Applicable □Not applicable
As at December 31, 2020, the Group had no provision for the impairment of goodwill. When the impairment test is conducted, the book value of goodwill is amortized to the asset group portfolio expected to bene?t from the synergistic e?ect of business combination.
The goodwill acquired through business combination has been distributed to the following asset groups for impairment test:• Heavy equipment asset group
• Semi-submerged ship transport assets group of Greenland Heavylift (Hongkong) Limited (GHHL)Heavy equipment asset group
The recoverable amount of heavy equipment asset group is measured based on the ?ve-year budget approved by the management and shall be measured with cash ?ow forecast method. Cash ?ow over 5-year period shall be calculated based on the estimated growth rate.
The main assumptions of the future cash ?ow discount method:
GHHL semi-submerged ship transport assets group
The recoverable amount of GHHL semi-submerged ship transport assets group combination is determined based on the expected future cash ?ow of the asset group, and the expected future cash ?ow is determined according to the cash ?ow forecast based on the transport service contract revenue expected to be obtained within the service life of vessel.
The main assumptions of the future cash ?ow discount method:
3 /year/vessel
Vessel utilization rate of general charter party65%Charter rate of general charter partyUSD 68,000/ dayPre-tax discount rate11.9%
The distributions of the book value of goodwill to asset groups are as follows:
The perpetual growth rate adopted by management does not exceed the industry's long-term average growth rate. Based on the historical experience and the forecasts of market development, the management determines the budget gross pro?t rate and adopts the pretax interest rate which can re?ect the speci?c risk of relevant asset group portfolio as the discount rate. The above assumptions are used to analyze the recoverable amount of the asset group portfolio.
29 Long-termdeferred expenses
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
2019
30 Deferred income tax assets/liabilities
(1) Deferred income tax assets before o?setting
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Deferred income tax liabilities before o?setting
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(3) Deferred income tax assets or liabilities presented by net amount after o?set
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(4) Details of unrecognized deferred income tax assets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(5) The deductible losses on the unrecognized deferred income tax assets will become due in the following years
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
31 Othernon-currentassets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
The changes in the provision for impairment of the contract warranty balance receivable are as follows:
32 Short-termborrowings
(1) Classi?cation of short-term borrowings
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of the classi?cation of short-term borrowings:
As at December 31, 2020, the annual interest rate on the aforesaid borrowings ranges from 0.50% to 5.66% (as at December 31, 2019: 2.7% to 5.66%).
(i) As at December 31, 2020, the bank guarantee loan amounting to USD 171,651,399, equivalent to RMB 1,120,008,214 (as at December 31, 2019: USD 195,420,669, equivalent to RMB 1,363,293,671) was the bank loans borrowed by the subsidiary of the Company, which was guaranteed by the letter of guarantee issued by the bank for the Company within the scope of credit.
As at December 31, 2020, the bank guarantee loan amounting to RMB 1,201,026,819 (as at December 31, 2019: 0) was the bank loans borrowed by the Company, with joint and several liability repayment guarantee provided by its subsidiaries.
(2) Overdue outstanding short-term borrowings
□Applicable √Not applicable
The important overdue outstanding short-term borrowings are as follows:
□Applicable √Not applicable
Other description
□Applicable √Not applicable
33 Held-for-trading ?nancialliabilities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
34 Derivative ?nancialliabilities
□Applicable √Not applicable
35 Notes payable
(1) Presentation of notes payable
√Applicable □Not applicable
Unit: Yuan Currency: CNY
The total amount of notes payable due and unpaid at the end of the period was RMB 0.
36 Accounts payable
(1) Presentation of accounts payable
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Important accounts payable aging over 1 year
□Applicable √Not applicable
Other description
√Applicable □Not applicable
Aging analysis of accounts payable is as follows:
As at December 31, 2020, the accounts payable with the aging over 1 year were mainly the payables for imported parts, which had not been taken for ?nal settlement.
37 Advances fromcustomers
(1) Presentation of advances from customers
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(i) The advances from customers for goods in this year shall be accounted as contract liabilities after the implementation of new revenue standard.
(2) Important advances from customers with the aging over 1 year
□Applicable √Not applicable
Other description
√Applicable □Not applicable
Aging analysis of advances from customers is as follows:
38 Contractliabilities (Applicable fromJanuary 1,2020)
(1) Particulars about contract liabilities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Amount of and reason for signi?cant changes in book value during the reporting period
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
In the current year, the products corresponding to the advances from customers for goods by the Group have not been delivered, resulting in an increase in the book value of contract liabilities.
39 Payrollpayable
(1) Presentation of payroll payable
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Presentation of short-term compensation
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(3) Presentation of de?ned contribution plans
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
40 Tax payable
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
Not applicable
41 Otherpayables
Item presentation
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
Interest payable
(1) Presentation by category
□Applicable √Not applicable
Dividends payable
(2) Presentation by category
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other explanations, including important dividends payable that have not been paid for more than one year, the reasons for non-payment shall be disclosed:As at December 31, 2020, the reason for the dividend payable with the aging over 1 year amounting to RMB 352,598 (as at December 31, 2019: RMB 31,701,965) was that the shareholders of the Company had not requested for actual payment by the Group.
Other payables
(1) Other payables presented by nature
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Important other payables with the aging over 1 year
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
(i) The Group completed the cancellation of a subsidiary in 2011. RMB 25,971,833 in the balance was the investment liquidation fund payable by the Group and attributable to CCCC who was another shareholder of the subsidiary; meanwhile, the Group completed the merger and acquisition of the subsidiary of CCCC under the common control in 2015, and RMB 75,000,000 in the balance was the purchase fund payable by the Group to CCCC. As of December 31, 2020, all relevant payments have been completed.
Aging analysis of other payables is as follows:
As at December 31, 2020, the other payables with the aging over 1 year were mainly the payable deposit and quality guarantee deposit collected from outsourcing engineering team and payables to related party.
42 Liabilities held forsale
□Applicable √Not applicable
43 Non-currentliabilities due within one year
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
44 Othercurrentliabilities
Other current liabilities
□Applicable √Not applicable
Increase or decrease of short-term bonds payable:
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
45 Long-termborrowings
(1) Classi?cation of long-term borrowings
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of the classi?cation of long-term borrowings:
None
Other description, including interest rate range:
√Applicable □Not applicable
As at December 31, 2020, the annual interest rate on the aforesaid borrowings ranges from 1.20% to 5.46% (as at December 31, 2019: 2.95% to 5.46%).
(i) As at December 31, 2020, the bank guarantee loan amounting to USD 50,000,000, equivalent to RMB 326,245,000 (as at December 31, 2019: USD 50,518,682, equivalent to RMB 352,428,432), was the bank loan borrowed by the Company's subsidiary Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd. and the guarantee was provided by the Company. The interest shall be paid quarterly and the principal shall be repaid on July 10, 2023.
As at December 31, 2020, the bank guarantee loan amounting to RMB 470,970,505 (as at December 31, 2019: RMB 1,973,532,215), was the bank loan borrowed by the Company. The Company’s subsidiary ZPMC Port Machinery General Equipment Co., Ltd., provided the joint and several liability repayment guarantee. The interest shall be paid quarterly and the principal will be due on November 10, 2021.
(ii) As at December 31, 2020, the total amount of multiple pledged loans amounting to RMB 1,947,736,154 (as at December 31, 2019: RMB 1,420,127,942) took the long-term accounts receivable of the “building-transfer” project of the Group as pledge. The interest shall be paid quarterly, and the principal shall be repaid between July 29, 2021 and August 27, 2033 (as at December 31, 2019: the principal shall be repaid between December 15, 2020 and December 23, 2029).
46 Bonds payable
(1) Bonds payable
□Applicable √Not applicable
(2) Increase or decrease of bonds payable: (excluding preferred shares, perpetual bonds and other ?nancial instruments classi?ed as ?nancial liabilities)
□Applicable √Not applicable
(3) Conditions and time for conversion of convertible bonds
□Applicable √Not applicable
(4) Description of other ?nancial instruments classi?ed as ?nancial liabilities
Basic information of outstanding preferred shares, perpetual bonds and other ?nancial instruments at the end of the period
□Applicable √Not applicable
Changes in outstanding preferred shares, perpetual bonds and other ?nancial instruments at the end of the period
□Applicable √Not applicable
Description of the basis for classifying other ?nancial instruments as ?nancial liabilities:
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
47 Lease liabilities
□Applicable √Not applicable
48 Long-termpayables
Item presentation
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
√Applicable □Not applicable
(i) As at December 31, 2020, the long-term payables of RMB 1,807,890,037 (December 31, 2019: RMB 2,250,543,212) were obtained from the vessel with the book value of RMB 2,821,018,550 (as at December 31, 2019: vessels of RMB 5,439,133,909, machinery equipment of RMB 255,113,376) in leaseback way from the financial leasing company, with the maturity date from December 5, 2021 to September 24, 2031 (December 31, 2019: from April 11, 2020 to September 24, 2031). The Group will pay the leaseback financing fund on schedule each year to the financial leasing company in accordance with the contract terms. The Group takes the above series of transactions as mortgage loans for accounting treatment.
(ii) The Group and the construction party of “building-transfer” project agreed that part of the project payments would be paid to the construction party after the ?nal acceptance of the “building-transfer” project within a certain term.
Long-term payables
(1) Presentation of long-term payables by nature
□Applicable √Not applicable
Special payables
(2) Presentation of special payables by nature
□Applicable √Not applicable
49 Long-termpayrollpayable
□Applicable √Not applicable
50 Estimated liabilities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description, including relevant important assumptions and estimates of important estimated liabilities:
None
51 Deferred income
Deferred income
√Applicable □Not applicable
Unit: Yuan Currency: CNY
As at December 31, 2020, liability items involved in government subsidies:
√Applicable □Not applicable
Unit: Yuan Currency:CNY
Other description:
√Applicable □Not applicable
Remark 1: the government subsidies of RMB 556,923 and land compensation of RMB 60,448,960 in decreases in this year was due to the change of consolidation scope.
The above government subsidies are related to income.
Land compensation refers to the land compensation acquired by a subsidiary ofthe Company,which shallbe amortizedoverthe 50 years’land use term. 52 Othernon-currentliabilities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
On balance sheet date, the revenue of some construction contracts and interest income of “building-transfer” projects of the Company had not reached the time point of the VAT liability.
53 Share capital
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
54 Otherequity instruments
(1) Basic information of outstanding preferred shares, perpetual bonds and other ?nancial instruments at the end of the period
√Applicable □Not applicable
As of December 31, 2020, the details of the Group’s outstanding perpetual bonds are as follows:
The Group issued the perpetual notes on December 24, 2020, with a term of 2+N (2) years, which will survive for a long time before the Group redeems in accordance with the terms of issue, and will mature when the issuer redeems in accordance with the terms of issue. The initial coupon of perpetual notes is 5.06%. In accordance with the terms of issue of medium-term notes, the Company has the right to distribute cash interest annually at annual interest rate and has no contractual obligation to repay the principal or pay any interest free of charge. Except for compulsory interest payment, on each interest payment date of medium-term notes, the Group may, at its own option, postpone the payment of current interest and all deferred interest and its fruits in accordance with this clause to the next interest payment date, and is not limited by the number of deferred interest payments. On the reset date of the coupon rate of medium-term notes, the Company has the right to redeem the medium-term notes at face value plus interest payable (including all deferred interest payments). The Group deems that the notes do not meet the de?nition of ?nancial liabilities and therefore classi?es it as other equity instruments.
(2) Changes in outstanding preferred shares, perpetual bonds and other ?nancial instruments at the end of the period√Applicable □Not applicable
Description of the increase and decrease of other equity instruments in the current period, reasons for changes, and basis for relevant accounting treatment:
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
55 Capitalreserves
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description, including the increase and decrease in the current period and the reasons for changes:
None
56 Treasury stock
□Applicable √Not applicable
57 Othercomprehensive income
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description, including the adjustment of the initial recognition amount of the e?ective part of pro?t or loss of cash ?ow hedging converted into the hedged item:
None
58 Specialreserves
√Applicable □Not applicable
2020
Unit: Yuan Currency: CNY
2019
Other description, including the increase and decrease in current period and the reasons for changes:
According to the relevant requirements of the Administrative Measures for the Withdrawal and Use of Work Safety Expenses, the enterprises engaged in large - scale machinery manufacture and engineering construction shall withdraw the work safety expenses according to the standards. The increase and decrease in current year was the work safety expenses withdrawn and used by the Group for the reporting year in accordance with relevant requirements.
59 Surplus reserves
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of surplus reserves, including the increase and decrease in current period and the reasons for changes:In accordance with the Company Law of the People Republic of China, the Company’s Article of Association and the resolutions of the Board of Directors, the Company withdrew 10% of its net pro?t as statutory surplus reserves. When the accumulated amount of statutory surplus reserves reaches 50% or more of the share capital, the Company can stop the withdrawal.
The statutory surplus reserves can be used to compensate loss upon approval, or to increase share capital. The statutory surplus reserves withdrawn by the Company amounted to RMB 33,792,383 in 2020 (2019: RMB 64,436,155).
60 Undistributed pro?ts
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Details of undistributed pro?t at the beginning of adjustment period:
1. Due to the retroactive adjustment of Accounting Standards for Business Enterprises and related new regulations, the impact on undistributed pro?ts at the beginning of the period was RMB 0.
2. The impact of changes in accounting policies on undistributed pro?ts at the beginning of the period was RMB -1,399,694,619.
3. The impact of correction of major accounting errors on undistributed pro?ts at the beginning of the period was RMB 0.
4. The impact of change of consolidation scope caused by the common control on undistributed pro?ts at the beginning of the period was RMB 0.
5. The total impacts of other adjustment on undistributed pro?ts at the beginning of the period were RMB 0.
61 Operating revenue and operating costs
(1) Operating revenue and operating costs
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Primary business revenue and cost are presented as below:
Other business revenue and cost are presented as below:
(2) Details of operating revenue
Unit: Yuan Currency: CNY
(3) Income from contracts
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Type of goods
By region of operation
Market or customer type
Contract type
By time of goods transfer
By contract term
By sales channel
Description of income from contracts:
□Applicable √Not applicable
(4) Performance obligations
√Applicable □Not applicable
The information about the performance obligations of the Group is as follows:
Sales of port machinery, heavy equipment and steel structure products
The Group performs its obligations when delivering port machinery to customers and obtaining pre-delivery certi?cate or other relevant delivery certi?cates. The Group performs its obligations when delivering heavy equipment to customers and obtaining the handover protocol or other relevant delivery certi?cate. For the steel structure product manufacturing contract that meets the performance obligations within a certain period of time, the Group performs its performance obligations within the time of transferring the steel structure product; for the steel structure product manufacturing contract that does not meet the performance obligation within a certain period of time, the Group performs its performance obligations when the steel structure product is delivered and signed by the owner. The contract price is usually paid according to the payment schedule agreed in the contract. After the delivery of the goods, the customer usually retains a certain proportion of the quality guarantee deposit, which is usually paid after the expiration of the quality guarantee period. The Group provides guaranteed warranty for the above products.
Building services
The Group performs its performance obligations within the time of providing services, and the contract price is usually paid within 30 days after the settlement of the project. The customer usually retains a certain proportion of the quality guarantee deposit, which is usually paid after the expiration of the quality guarantee period.
Shipping services
The Group performs its performance obligations within the time of providing transportation services. The contract price is usually paid within the period from 3 days before unloading to 30 days after unloading.
(5) Apportionment to remaining performance obligations
□Applicable √Not applicable
Other description:
The revenue recognized in the current year and included in the book value of contract liabilities at the beginning of the year is as follows:
2020
Advances from customers for goods5,570,531,698 Amount settled for uncompleted work 289,457,020
Total5,859,988,718
The revenue recognized in the current year for the performance obligations that have been performed (or partially performed) in the previous period is as follows:
62 Taxes and surcharges
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
63 Selling and distribution expenses
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
64 Generaland administrative expenses
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
Not applicable
65 Research and developmentexpenses
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
66 Financialexpenses
√Applicable □Not applicable
Unit: Yuan Currency:CNY
Other description:
The capitalized amounts of borrowing costs have been included in the construction in progress.
67 Otherincome
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
(i) and (ii) are related to income, while (iii) is related to assets.
68 Investmentincome
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
69 Netexposure hedging gain
□Applicable √Not applicable
70 Income fromfairvalue change
√Applicable □Not applicable
Unit: Yuan Currency: CNY
140 0
Other description:
None
71 Creditimpairmentloss
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
72 Assets impairmentlosses
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
73 Income fromdisposalofassets
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
74 Non-operating income
Non-operating income
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Government subsidies included in current pro?t or loss
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
75 Non-operating expenditure
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
Supplementary information on the classification by nature of the operating costs, selling and distribution expenses, general and administrative expenses, and research and development expenses of the Group is as follows:
76 Income tax expenses
(1) Table of income tax expenses
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Accounting pro?t and income tax expenses adjustment process
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
77 Othercomprehensive income
□Applicable √Not applicable
78 Cash ?owstatementitems
(1) Other cash received related to operating activities
√Applicable □Not applicable
Unit: Yuan Currency:CNY
Description of other cash received related to operating activities：
None
(2) Other cash paid related to operating activities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of other cash paid related to operating activities :
None
(3) Other cash received related to investing activities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of other cash received related to investing activities:
None
(4) Other cash paid related to investing activities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of other cash paid related to operating activities :
None
(5) Other cash received related to ?nancing activities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of other cash received related to ?nancing activities:
None
(6) Other cash paid related to ?nancing activities
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of other cash paid related to ?nancing activities :
None
79 Furtherinformation on cash ?owstatement
(1) Further information on cash ?ow statement
√Applicable □Not applicable
Unit: Yuan Currency: CNY
1. Reconciliation from net pro?ts to cash ?ows from operating activities:
2. Signi?cant investment and ?nancing activities not involving cash deposit and withdrawal:
3. Net changes in cash and cash equivalents:
Endorsement transfer of notes:
(2) Net cash paid to acquire subsidiaries in current period
□Applicable √Not applicable
(3) Net cash received from disposal of subsidiaries in current period
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
(4) Composition of cash and cash equivalents
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
80 Notes to items in statementofowner's equity
State the name of "other" items and the amount of adjustment to the ending balance of previous year:
□Applicable √Not applicable
81 Assets with ownership oruse rights restricted
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
Remark 1: As at December 31, 2020, other monetary funds, including the restricted monetary fund of RMB 50,332,396 (as at December 31, 2019: RMB 242,272,475), were the special payment collected for overseas project and deposited in overseas supervision account and the margin deposit deposited by the Group for applying to the bank for letter of credit and bank guarantee.
Remark 2: As at December 31, 2020, the vessel with the book value of RMB 2,821,018,550 (December 31, 2019: the vessel of RMB 5,439,133,909 and the mechanical equipment of RMB 255,133,376) had been used for leaseback with the ?nancial leasing company, with the ?nancing term of 3 - 12 years.
Remark 3: As at December 31, 2020, the long-term receivables of “building-transfer” project of RMB 5,614,309,162 (December 31, 2019: RMB 4,482,230,928) were used as the pledge for obtaining bank loans.
82 Foreign currency monetary items
(1) Foreign currency monetary items
√Applicable □Not applicable
Unit: Yuan
Other description:
None
(2) Description of overseas business entities, including the disclosure of main overseas business locations, recording currency and selection basis for important overseas business entities, as well as the reasons for changes in recording currency
□Applicable √Not applicable
83 Hedging
□Applicable √Not applicable
84 Governmentsubsidies
(1) Basic information of government subsidies
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Return of government subsidies
□Applicable √Not applicable
Other description:
Not applicable
85 Others
□Applicable √Not applicable
VIII. Changes in consolidation scope
1 Business combination notundercommon control
□Applicable √Not applicable
2 Business combination undercommon control
□Applicable √Not applicable
3 Counterpurchase
□Applicable √Not applicable
4 Disposalofsubsidiaries
Whether there is single disposal of investment in subsidiaries, i.e. loss of control:
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
Remark 1: On June 4, 2020, CCCC, an a?liated company controlled by the same parent company, increased the investment amounting to RMB 1,000,000,000 to CCCC Tianhe Mechanical Equipment Manufacturing Co., Ltd., the holding subsidiary of the Company. On the same day, CCCC signed the capital and share increase agreement with CCCC Tianjin Dredging Co., Ltd. (shareholder of the Company and CCCC Tianhe) and Chuwa Bussan Co. Ltd.; as stipulated in the agreement, the persons acting in concert agreement between CCCC and ZPMC was terminated. According to the latest articles of association of CCCC Tianhe, CCCC has the right to appoint all directors of CCCC Tianhe. Therefore, on June 4, 2020, the proportion of voting rights enjoyed by CCCC was changed to 61.12% and the proportion of voting rights enjoyed by the Company was changed to 16.52%, so the Company no longer had control over CCCC Tianhe. Since June 4, 2020, CCCC Tianhe would no longer be included into the scope of combination of the Group, but would be accounted as ?nancial assets measured at fair value through current pro?t or loss. Relevant ?nancial information of CCCC Tianhe is listed as follows:
From the beginning of the year to the disposal date
Operating revenue283,306,846Operating cost166,238,694Net loss(1,224,958)
5 Changes in consolidation scope due to otherreasons
Description of the changes (such as new subsidiary, liquidation of subsidiary) in consolidation scope due to other reasons and relevant information:
□Applicable √Not applicable
6 Others
□Applicable √Not applicable
IX.Interests in otherentities 1 Interests in subsidiaries
(1) Subsidiaries of the Group:
√Applicable □Not applicable
The shareholding ratio in subsidiaries is di?erent from the proportion of voting rights:
None
The basis for holding half or less of the voting rights but still controlling the invested entity, and the basis for holding more than half of the voting rights but not controlling the invested entity:
None
The basis for control of the important structured entities included in the consolidation scope:
None
Basis for determining whether the Company is an agent or a principal:
None
Other description:
Remark 1: By signing the agreement for concerted action with CCCC Tianjin Dredging Co., Ltd., the Group had obtained 95% voting power in the board of shareholders and 100% voting power in the board of directors of such company (CCCC Investment & Development Qidong Co., Ltd.). In accordance with the regulations of the articles of association of such company, the Group had obtained the control right thereof, thus, such company was included in the Group’s sconsolidation scope.
Remark 2: By signing the agreement for concerted action with CCCC Shanghai Dredging Co. Ltd. and CCCC East China Investment Co., Ltd., the Group had obtained 76% voting power in the board of shareholder and 71% voting power in the board of directors of such company (CCCC Liyang Urban Investment and Construction Co., Ltd.). In accordance with the regulations of the articles of association of such company, the Group had obtained the control rights thereof, thus, such company was included in the Groups’ consolidation scope.
Remark 3: By signing the agreement for concerted action with CCCC Highway Consultants Co. Ltd. and CCCC Equipment Manufacturing Marine Heavy Industry Division, the Group had obtained 50% voting power in the board of shareholders and 60% voting power of the board of directors of such company (CCCC Zhenhua Lvjian Technology (Ningbo) Co., Ltd.). In accordance with the regulations of the articles of association of such company, the Group had obtained the control right thereof, thus, such company was included in the Group’s consolidation scope.
Remark 4: In accordance with the acquisition agreement, the Group held two of the four seats in the board of directors of such company (Greenland Heavylift (Hong Kong) Limited), including chairman of the board. As required in the articles of association of such company, the chairman of the board has super voting power when the voting of the board is deadlocked. In addition, Group also has the right to buy 1% equity of such company at USD 1 at any time in the future. Therefore, the Group has the substantial control over such company, and such company was included in the Group’s consolidation scope for the ?nancial statements.
(2) Major non-wholly-owned subsidiaries
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of the di?erence between the shareholding ratio of minority shareholders and the proportion of voting right ratio in subsidiaries:
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
Subsidiaries with signi?cant minority equity:
2020
2019
(3) Main ?nancial information of major non-wholly-owned subsidiaries
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
(4) Major restrictions on the use of assets of enterprise group and the repayment of debts of enterprise group
□Applicable √Not applicable
(5) Financial support or other supports provided to structured entities included in the scope of consolidated ?nancial statements
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
2 Transactions in which the owner's equity share ofa subsidiary changes and the subsidiary is stillundercontrol
□Applicable √Not applicable
1.Equity in joint ventures and associates
√Applicable □Not applicable
(1) Major joint ventures or associates
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Joint ventures
Associates
Description of the di?erence between shareholding ratio and proportion of voting rights in joint venture or associates:None
Basis for holding less than 20% of voting rights but having signi?cant in?uence, or holding 20% or more of voting rights but not having signi?cant in?uence:
None
(2) Main ?nancial information of major joint ventures:
□Applicable √Not applicable
158 8
(3) Main ?nancial information of major associates:
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description
None
(4) Summary of ?nancial information of insigni?cant joint ventures and associates:
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Joint ventures:
Total book value of investment277,261,963312,812,059Total number of following items by shareholding ratio
-- Net pro?t11,542,45817,192,511-- Other comprehensive income
-- Total comprehensive income11,542,45817,192,511
Associates:
Total book value of investment881,820,163775,158,808Total number of following items by shareholding ratio
-- Net pro?t8,917,6894,309,481-- Other comprehensive income-27,392,214-2,315,141-- Total comprehensive income-18,474,5251,994,340
Other description
None
(5) Description of the significant restrictions on the ability of joint ventures or associates to transfer funds to the Company
□Applicable √Not applicable
(6) Excess loss of joint ventures or associates
□Applicable √Not applicable
(7) Unrecognized commitments related to joint venture investment
□Applicable √Not applicable
(8) Contingent liabilities related to investment in joint ventures or associates
□Applicable √Not applicable
3 Signi?cantjointoperation
□Applicable √Not applicable
4 Equity in structured entities notincluded in the scope ofconsolidated ?nancialstatements
Description of structured entities not included in the scope of consolidated ?nancial statements:
□Applicable √Not applicable
5 Others
□Applicable √Not applicable
X. Risks related to ?nancial instruments
√Applicable □Not applicable
1 Classi?cation of?nancialinstruments
The book values of various ?nancial instruments on the balance sheet date:
160 0
2020
Financial assets
Financial liabilities
2019
Financial assets
Financial liabilities
2 Transferof?nancialassets
Transferred ?nancial assets derecognized as a whole but involved continuously
As at December 31, 2020, the book value of the bank acceptance bill given by the Group upon endorsement to the supplier for accounts payable settlement amounted to RMB 571,531,799 (December 31, 2019: RMB 738,496,754). As at December 31, 2020, the maturity term of such bill was 1 - 12 months. In accordance with the relevant provisions of the Negotiable Instruments Law, if the acceptance bank refuses to pay, the bill holder shall be entitled to recourse to the Group (“continue to be involved”).The Group considered that it had transferred almost all risks and rewards of such bill, therefore, the aforesaid book value and the book value of relevant settled accounts payable should be derecognized as a whole. The maximum losses and undiscounted cash ?ows that continue to be involved were equal to the book value. The Group considered that the fair value with continuous involvement was insigni?cant.
In 2020, the Group failed to recognized relevant gain or loss on the date of transfer of the above ?nancial assets (Year 2019: None).The Group had no income or expense which had been recognized for the current year or accumulatively as it had been derecognized as a whole but continued to be involved in the financial assets. The endorsement of bank acceptance bill receivable happened in this year evenly.
3 Financialinstrumentrisks
Various ?nancial instrument risks the Group faces during the routine activities mainly include the credit risk, liquidity risk and market risk (including the exchange rate risk and interest rate risk). Main ?nancial instruments of the Group include the monetary funds, equity investment, borrowings, notes receivable, accounts receivable, accounts receivable ?nancing, long-term receivables, notes payable and accounts payable.
The Group's overall risk management plan is targeted at the unpredictability of ?nancial market, trying to minimize the potential adverse in?uence on the Group’s ?nancial results.
Credit risk
The Group manages the credit risks by the classi?cation of portfolios. The credit risk is mainly from accounts receivable ?nancing, accounts receivable, other receivables and long-term receivables.
Other ?nancial assets of the Group include monetary funds, held-for-trading ?nancial assets, other equity investment instruments and other non-current ?nancial assets, of which credit risks are from the counterpart's default, and the maximum exposure is equal to the book amount of these instruments.
The Group only trade with the authorized third parties in good standing. Credit risks are managed in a centralized manner by customer/counterpart, geographic region and industry. As the Group’s customers of accounts receivable and long-term receivables are widely dispersed across sectors and industries, there is no signi?cant credit risk concentration within the Group. The Group did not hold any collateral or other credit enhancements for the balance of accounts receivable and long-term receivables, but did the same for the balance of long-term receivables.
As the counterparts of monetary funds, receivables ?nancing and derivative ?nancial instruments are banks in good standing and having relatively higher credit rating, these ?nancial instruments have low credit risk.
In addition, as for the receivables ?nancing, accounts receivable ?nancing, accounts receivable, other receivables, and long-term accounts receivable, the Group has set relevant policies to control the credit risk exposure. The Group, based on the customers' ?nancial positions, the possibility of obtaining guarantees from the third party, credit records and other factors such as the current market conditions, evaluates the credit quali?cations of customers and set the credit period accordingly. The Group will monitor customers’ credit records periodically; as for the customers with bad credit records, the Group will take measures, such as requesting a payment in writing, shortening the credit period or canceling the credit term, to ensure that the Group's overall credit risks are within the controllable scope.
Judgment criteria for signi?cant increase in credit risk
On each balance sheet date, the Group will evaluate the credit risks of relevant ?nancial instruments to con?rm whether they have had significant increase or not after the initial recognition. On such confirmation, the Group will consider the reasonable and well-founded information which can be obtained without paying unnecessary surcharge or e?ort, including the information on qualitative and quantitative analysis based on the Group’s historical date, external credit risk rating and perspectiveness. Based on the individual financial instrument or portfolio of financial instruments with similar credit risk characteristics, the Group determines the changes in default risk in ?nancial instruments during the estimated duration by comparing the default risks in ?nancial instruments on the balance sheet date with those on the initial recognition date.
In case of one or more quantitative or qualitative standards, the Group will consider that the credit risk of a ?nancial instrument has had signi?cant increase:
(1) The quantitative standard mainly refers to the situation that the reporting date is overdue for certain days.
(2) The qualitative standard mainly refers to the situation that the debtor encounters any significant and adverse operating or ?nancial change, or prepares the list of warning customers.
De?nition of assets with credit impairment
In order the determine whether there is credit impairment, the Group adopts a de?nition standard to keep pace with the internal credit risk management target regarding relevant ?nancial instruments, and takes the quantitative and qualitative indicators into account. The Group mainly considers the following factors on evaluating whether the debtor has had credit impairment:
(1)The issuer or the debtor su?ers signi?cant ?nancial di?culties;
(2)The debtor violates any contract, such as default or delay in repayment of interest or principal;
(3)Considering the economic or contractual reasons relevant to the debtor’s financial difficulty, the debtor makes concession which it will not make in any other circumstance;
(4)The debtor is likely to go bankrupt or carry out other ?nancial reorganization;
(5)The active market of such ?nancial assets disappears due to the issuer’s or the debtor’s ?nancial di?culty;
(6)A ?nancial asset is purchased or generated through the substantial discount, and such discount re?ects the fact of credit loss.
The credit impairment of ?nancial assets may be caused by several events, not just one event which can be individually identi?ed.
Parameters for the measurement of expected credit loss
Based on the information whether the credit risk has had signi?cant increase or there is credit impairment, the Group makes the provision for impairment of expected credit losses of various assets for 12 months or the entire duration. Key parameters for the measurements of expected credit loss include the probability of default, loss given default and exposure at default. Considering the quantitative analysis on historical statistical data (including the rating of the counterpart, way of guarantee and category of collateral) and prospective information, the Group builds models for probability of default, loss given default and exposure at default.
Relevant de?nitions:
(1)The probability of default refers to the probability that the debtor may fail to perform the payment obligation over the next 12 months or the entire duration. The Group’s probability of default is adjusted based on the credit loss model, adding the prospective information to re?ect the debtor's probability of default in the current macroeconomic environment; (2)The loss given default refers to the expectation made by the Group regarding the degree of loss on default risk exposure. As the type of counterpart, way of recourse and priority as well as collateral may be di?erent, the loss given default may also be di?erent. The loss given default refers to the percentage of the risk exposure loss at default, calculated based on the term of future 12 months or the entire duration; (3)The exposure at default refers to the amount paid by the Group at default over the next 12 months or the entire remaining duration.
The prospective information is involved in the evaluation on significant change in credit risk and the calculation of expected credit loss. Through the historical data analysis, the Group identi?es the key economic indicators a?ecting the credit risks in various types of business and the expected credit loss.
The impact of these economic indicators on the probability of default and the loss given default is di?erent for di?erent type of business. In such course, the Group makes the reference to the authoritative predictive values, expect these economic indicators based on results of those values, and determine the impact of these economic indicators on the probability of default and the loss given default.
2020
The maximum risk exposure and the year-end classi?cation of credit risk degrees regarding the Group’s ?nancial assets and contract assets are as follows:
2019
164 4
Liquidity risk
Subsidiaries within the Group are responsible for their own cash-flow prospects. The financial section of the head o?ce continues to monitor the short-term and long-term capital demands at the group level after collecting the cash ?ows prospects of all subsidiaries, to guarantee the sufficient cash reserve and cashable securities. Meanwhile, the financial section of the head office continues to monitor the financial and non-financial indicators prescribed in credit-granting agreements and loan agreements, to ensure that the Group can get su?cient line of credit from major ?nancial institutions, so as to satisfy the short-term and long-term capital demands of all subsidiaries of the Group.
As at December 31, 2020, the various financial liabilities of the Group are listed as follows by due dates based on undiscounted contracted cash ?ows (including principal and interest):
2020
As at December 31, 2019, the various financial liabilities of the Group are listed as follows by due dates based on undiscounted contracted cash ?ows (including principal and interest):
2019
Market risk
Interest rate risk
The Group’s interest rate risk is mainly from such long-term interest-bearing liabilities as long-term bank borrowings and long-term payables. Floating-rate ?nancial liabilities expose the Group to cash ?ow interest rate risk while ?xed-rate ?nancial liabilities expose the Group to fair value interest rate risk. The Group determines the relative proportion of contracts with ?xed interest rate and contracts with ?oating interest rate according to the current market environment. As at December 31, 2020, the Group’s long-term interest-bearing liabilities mainly were the ?oating rate contracts priced in USD, and the ?xed rate contracts priced in RMB.
The market interest rate ?uctuating risks that the Group encounters are mainly relevant to the long-term liabilities where the interest is calculated at the ?oating interest rate.
The ?nance department in the headquarters of the Group continues monitoring and controlling the interest rate level of the Group. The increase in interest rate will increase the costs of the new interest-bearing debts and the interest expenses of interest-bearing debts failing to be paid up by the Group and subject to the interest calculation at ?oating interest rate, and will, signi?cantly and adversely, a?ect the Group's ?nancial results; the management will control partial interest rate risk based on the newest market situation through the swap contract and other interest rate swap arrangements. In 2020 and 2019, the Group had no interest rate swap arrangement.
The following table shows the sensitivity analysis of the interest rate risk, re?ecting the e?ect of the reasonable and possible changes in the interest rate on net pro?t or loss (through the impact on loan with ?oating interest rate) and the net amount of other comprehensive income after tax, based on the assumption of no change in other variables.
2020
2019
Exchange rate risk
The Group is exposed to transactional exchange rate risk. Such risks are due to sales or purchases made by the operating entity in currencies other than its functional currency. The Group’s main production is within the territory of China, but its sales and purchase is settled in USD. However, there still were foreign exchange risks in the foreign currency assets and liabilities and future foreign currency transactions that have been recognized by the Group (foreign currency assets and liabilities and foreign currency transactions are priced mainly in USD). The ?nance department of the Headquarters of the Group is responsible for supervising the scale of the Group's foreign currency transactions and foreign currency assets and liabilities to minimize the foreign exchange risks.
The following table is a sensitivity analysis of exchange rate risk, re?ecting the assumption that all other variables will remain the same, when the USD exchange rate changes reasonably and possibly, it will a?ect the net pro?t or loss (due to the change in fair value of monetary assets and liabilities) and other comprehensive income, net of tax (due to the change in fair value of forward foreign exchange contract).
2020
2019
Price risk of equity instrument investment
The price risk of equity instrument investment refers to the risk that the fair value of equity securities decreases due to the change of stock index level and individual securities value. As at December 31, 2020, the Group was exposed to the price risk of equity instrument investment arising from the individual equity instrument investment classi?ed as equity instrument investment measured at fair value through the current profit or loss. The listed equity instrument investment held by the Group is listed on the stock exchanges of Shanghai, Shenzhen and Hong Kong, and measured at the market quotation on the balance sheet date.
The market stock indexes of the following stock exchanges at the closing of the trading day closest to the balance sheet date, as well as their respective highest and lowest closing points in the year:
166 6
The following table shows the sensitivity of the Group's net pro?t or loss to the change of 1% of the fair value of equity instrument investment (based on the book value on the balance sheet date) under the assumption that all other variables remain unchanged.
2020
2019
4 Capitalmanagement
The Group’s objectives of capital management policy are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and bene?ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The total capital of the Group is the shareholders' equity as listed in the consolidated balance sheet. The Group is not subject to external mandatory capital requirements and makes use of the asset-liability ratio to monitor capital. This ratio is calculated by the net debt divided by total capital. The net debt is the total borrowing (including Short-term borrowings listed in the consolidated balance sheet, other non-current liabilities due within one-year, Long-term borrowings, other payables and interest-bearing liabilities in long-term payables) minus cash and cash equivalents. The total capital is the total shareholders’ equity plus net debt.
As at December 31, 2020 and December 31, 2019, the liability ratio of the Group is listed as follows:
XI. Fair value disclosure
1 Ending fairvalue ofassets and liabilities measured atfairvalue
√Applicable □Not applicable
Unit: Yuan Currency: CNY
I. Continuous fair value measurement
II. Non-continuous fair value measurement
2 The basis fordetermining the marketvalue ofcontinuous and non-continuous fairvalue measurementitems atlevel1
□Applicable √Not applicable
3 Valuation techniques and the qualitative and quantitative information ofimportantparameters for continuousand non-continuous fairvalue measurementitems atlevel2
√Applicable □Not applicable
The Group regards the date when the conversion of levels occurs as the time point of the conversion of all levels. There was no conversion among levels in this year.
Where there is an active market traded for a ?nancial instrument, the Group shall adopt the quoted price in the active market to determine the fair value thereof; where there is no active market traded for a ?nancial instrument, the Group shall adopt value appraisal techniques to determine its fair value. The valuation models used are discounted cash ?ow model and market comparable company model. The input value of valuation techniques mainly includes the weighted average cost of capital, liquidity discount, price to book ratio of comparable companies.
Relevant information about the measurement of fair value at level 2 is as follows:
4 Valuation techniques and the qualitative and quantitative information ofimportantparameters for continuousand non-continuous fairvalue measurementitems atlevel3
√Applicable □Not applicable
The signi?cant and unobservable input value of fair value measurement at Level 3 is as follows:
5 For continuous fair value measurementitems atlevel3,the adjustmentinformation between beginning andending book value and the sensitivity analysis ofunobservable parameters
□Applicable √Not applicable
6 For continuous fair value measurement items,if there is conversion between different levels in the currentperiod,the reasons forconversion and the policies fordetermining the conversion time
□Applicable √Not applicable
7 Changes in valuation technology in the currentperiod and reasons forchanges
□Applicable √Not applicable
8 Fairvalues of?nancialassets and ?nancialliabilities notmeasured atfairvalue
□Applicable √Not applicable
9 Others
√Applicable □Not applicable
Assets and liabilities disclosed at fair value
The management has evaluated the monetary funds, accounts receivables, notes payable and accounts payable, and the fair value is equal to the book value due to short remaining term.
The long-term receivables of the Group are the receivables with ?oating rate, and the di?erence between the book value and fair value is small.
As for the long-term borrowings and long-term payables, the book value shall be determined by the future cash ?ow speci?ed in the contract after discounting according to the interest rate which has comparable credit rating on the market and provides almost the same cash ?ow under the same conditions, and the di?erence between the book value and such fair value is small.
Adjustment and level conversion of fair value measurement
In this year, there was no transfer of fair value measurement of ?nancial assets and ?nancial liabilities between level 1 and level 2, and there was no transfer into or out of the level 3.
XII Related parties and related party transactions
1 Parentcompany
√Applicable □Not applicable
Unit: 10,000 Yuan Currency: CNY
Description of the parent company of the Company
None
The ?nal controlling party of the Company is the China Communications Construction Group Co., Ltd.
Other description:
None
2 Subsidiaries
For details of subsidiaries of the Company, please refer to the notes.
√Applicable □Not applicable
For details of subsidiaries, please refer to Note IX (1).
3 Jointventures and associates
For details of major joint ventures and associates, please refer to Note IX (2).
□Applicable √Not applicable
Other joint ventures or associates that have related party transactions with the Company in the current period or formed balance in the previous period are as follows
□Applicable √Not applicable
Other description
□Applicable √Not applicable
4 Otherrelated parties
√Applicable □Not applicable
Name of other related partiesRelationship with related party
China Communications Construction Company Ltd.Controlled by the same parent company China Harbour Engineering Co., Ltd.Controlled by the same parent company CCCC Finance Company Ltd.Controlled by the same parent company
Name of other related partiesRelationship with related party
CCCC Second Highway Engineering Co., Ltd.Controlled by the same parent company CCCC Second Highway Consultants Co., Ltd.Controlled by the same parent company CCCC Second Harbor Engineering Co., Ltd.Controlled by the same parent company CCCC Second Harbor Consultants Co., Ltd.Controlled by the same parent company CCCC Third Highway Engineering Co. Ltd.Controlled by the same parent company CCCC Third Harbor Engineering Co., Ltd.Controlled by the same parent company CCCC Third Harbor Consultants Co., Ltd.Controlled by the same parent company CCCC Fourth Highway Engineering Co., Ltd.Controlled by the same parent company CCCC Fourth Harbor Engineering Co., LtdControlled by the same parent company CCCC Fourth Harbor Consultants Co., Ltd.Controlled by the same parent company CCCC First Highway Engineering Co., Ltd.Controlled by the same parent company CCCC First Highway Consultants Co., Ltd.Controlled by the same parent company CCCC First Harbor Engineering Co., Ltd.Controlled by the same parent company CCCC-FHEC Urban Tra?c Engineering Co., Ltd.Controlled by the same parent company CCCC First Harbor Consultants Co., Ltd.Controlled by the same parent company CCCC - SHEC Second Highway Engineering Co., Ltd.Controlled by the same parent company CCCC - SHEC Third Highway Engineering Co., Ltd.Controlled by the same parent company CCCC - SHEC Fourth Highway Engineering Co., Ltd.Controlled by the same parent company CCCC - SHEC Railway Construction Co., LtdControlled by the same parent company CCCC - SHEC Electrical Engineering Co., Ltd.Controlled by the same parent company CCCC SHEC Chengdu Urban Construction Engineering Co., Ltd.Controlled by the same parent company No.2 Engineering Co., Ltd. of CCCC Second Harbor Engineering Co., Ltd.Controlled by the same parent company No.3 Co. of The Second Navigational Engineering Bureau, CCCCControlled by the same parent company No.4 Engineering Co., Ltd. of CCCC Second Harbor Engineering Co., Ltd.Controlled by the same parent company The First Construction Company of CCCC Second Harbor Engineering Co., LtdControlled by the same parent company CCCC-SHEC Construction Engineering Co., LtdControlled by the same parent company Zhen Hwa Harbour Construction Co., Ltd.Controlled by the same parent company Beijing Rate Electronic Technology Developing Co., Ltd.Controlled by the same parent company CCCC Guidu Highway Construction Co., Ltd.Controlled by the same parent company Road & Bridge International Co., Ltd.Controlled by the same parent company Shanghai Waterway Logistics Co., LtdControlled by the same parent company Shanghai Jiangtian Industrial Co., Ltd.Controlled by the same parent company Shanghai Communications Construction Contracting Co., Ltd.Controlled by the same parent company Shanghai Interlink Road & Bridge Engineering Co., Ltd.Controlled by the same parent company Shanghai Zhensha Longfu Machinery Co., Ltd.Controlled by the same parent company Shanghai China Communications Water Transportation Design & Research Co., Ltd.Controlled by the same parent company CCCC Tianjin Dredging Co., Ltd.Controlled by the same parent company
Wuhan Hangke Logistics Company LimitedControlled by the same parent company Hong Kong Marine Construction LimitedControlled by the same parent company Zhenhua Engineering Co., Ltd.Controlled by the same parent company Xiangtan CCCC Infrastructure Investment and Construction Co., Ltd.Controlled by the same parent company Yueyang Chenglingji New Port Co., Ltd.Controlled by the same parent company China Communications Materials & Equipment Co., Ltd.Controlled by the same parent company China Road & Bridge CorporationControlled by the same parent company China Highway Engineering Consultants CorporationControlled by the same parent company Chuwa Risheng (Beijing) International Trade Co., LtdControlled by the same parent company Chuwa Bussan Co., Ltd.Controlled by the same parent company CCCC (Xiamen) Information Co., LtdControlled by the same parent company
Name of other related partiesRelationship with related party
CCCC (Zhoushan) Dredging Co., Ltd.Controlled by the same parent companyCCCC North Industrial Co., Ltd.Controlled by the same parent companyCCCC Highway Consultants Co., Ltd.Controlled by the same parent companyCCCC Highway Bridges National Engineering Research Centre Co., Ltd.Controlled by the same parent companyCCCC Guangzhou Dredging Co., Ltd.Controlled by the same parent companyCCCC International (Hong Kong) Holdings LimitedControlled by the same parent companyCCCC International Shipping Co., LtdControlled by the same parent companyCCCC Marine Engineering & Technology Research Center Co., Ltd.Controlled by the same parent companyCCCC East China Investment Co., Ltd.Controlled by the same parent companyCCCC Electrical and Mechanical Engineering Co., Ltd.Controlled by the same parent companyCCCC Infrastructure Maintenance Group Co., Ltd.Controlled by the same parent companyRoad & Bridge East China Engineering Co., Ltd.Controlled by the same parent companyRoad & Bridge South China Engineering Co., LtdControlled by the same parent companyRoad & Bridge International Co., Ltd.Controlled by the same parent companyCCCC Nanjing Tra?c Engineering Management Co., Ltd.Controlled by the same parent companyCCCC Financial Leasing (Guangzhou) Co., LtdControlled by the same parent companyCCCC Financial Leasing Co., LtdControlled by the same parent companyNo.2 Engineering Co., Ltd. of CCCC Third Harbor Engineering Co., Ltd.Controlled by the same parent companyNo.3 Engineering Co., Ltd. of CCCC Third Harbor Engineering Co., Ltd.Controlled by the same parent companyConstruction Materials Co., Ltd, CCCC Third Harbor Engineering Co., Ltd.Controlled by the same parent companyXing An Ji Engineering Co., Ltd. of CCCC Third Harbor Engineering Co., Ltd.Controlled by the same parent companyCCCC Shanghai Harbor Engineering Design & Research Institute Co., Ltd.Controlled by the same parent companyCCCC Shanghai Dredging Co., Ltd.Controlled by the same parent companyCCCC Shanghai Channel Equipment Industry Co., Ltd.Controlled by the same parent companyCCCC Shanghai Equipment Engineering Co., Ltd.Controlled by the same parent companyCCCC Worldcom (Chongqing) Heavy Industries Co., Ltd.Controlled by the same parent companyCCCC National Engineering Research Center of Dredging Technology and Equipment Co., Ltd.
Controlled by the same parent company
CCCC Water Transportation Planning and Design Institute Co., Ltd.Controlled by the same parent companyNo. 2 Engineering Co., Ltd. of CCCC Fourth Highway Engineering Co., Ltd.Controlled by the same parent companyNo.2 Engineering Co., Ltd. of CCCC Fourth Harbor Engineering Co., Ltd.Controlled by the same parent companyThe Third Engineering Company of CCCC Fourth Harbor Engineering Co., LtdControlled by the same parent companyCCCC Tunnel Engineering Company LimitedControlled by the same parent companyHainan Industry Co., Ltd. of CCCC Tianjin Dredging Co., Ltd.Controlled by the same parent companyBinhai Environmental Protection Dredging Co., Ltd. of CCCC Tianjin Dredging Co., Ltd.Controlled by the same parent companyCCCC Tianhe Mechanical Equipment Manufacturing Co., LtdControlled by the same parent companyCCCC Tianhe Xi’an Equipment Manufacturing Co., Ltd.Controlled by the same parent companyCCCC Tianjin Port Waterway Prospection & Design Research Institute Co., Ltd.Controlled by the same parent companyCCCC Tianjin Industry and Trade Co., Ltd.Controlled by the same parent companyCCCC Tianjin Dredging Co., Ltd.Controlled by the same parent companyCCCC WuHan Harbour Engineering Design and Research Co., Ltd.Controlled by the same parent companyCCCC Xi’an Road Construction Machinery Co., Ltd.Controlled by the same parent companyCCCC Xingyu Technology Co., LtdControlled by the same parent companyCCCC Xiongan Financial Leasing Co., LtdControlled by the same parent companyCCCC Yancheng Construction Development Co., Ltd.Controlled by the same parent companyNo.8 Engineering Co., Ltd. of CCCC First Highway Engineering Co., Ltd.Controlled by the same parent companyNo. 6 Engineering Co., Ltd. of CCCC First Highway Engineering Co., Ltd.Controlled by the same parent companyNo. Three Engineering Co., Ltd. of CCCC First Highway Engineering Co., Ltd.Controlled by the same parent company
Other description
None
5 Related party transactions
(1) Purchase and sales of goods, and rendering and receipt of labor services
Purchase of goods/receipt of labor services
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Sales of goods/rendering of labor services
√Applicable □Not applicable
Description of related party transactions of purchase and sales of goods, rendering and receipt of labor services
□Applicable √Not applicable
(2) Trusteeship/contracting and entrustment/outsourcing
Trusteeship/contracting of the Company:
□Applicable √Not applicable
Description of the trusteeship/contracting with related parties
□Applicable √Not applicable
Entrustment/outsourcing of the Company
□Applicable √Not applicable
Management/outsourcing with related parties
□Applicable √Not applicable
(3) Leases with related parties
The Company as the lessor
□Applicable √Not applicable
The Company as the lessee:
□Applicable √Not applicable
Description of leases with related parties
□Applicable √Not applicable
(4) Guarantees with related parties
The company as the guarantor
□Applicable √Not applicable
The company as the guaranteed party
□Applicable √Not applicable
Description of the guarantees with related parties
□Applicable √Not applicable
(5) Lendings with related parties
□Applicable √Not applicable
(6) Assets transfer and debt restructuring of related parties
□Applicable √Not applicable
(7) Remuneration of key management personnel
√Applicable □Not applicable
Unit: 10,000 Yuan Currency: CNY
(8) Other related party transactions
√Applicable □Not applicable
1) Paying dividends to related parties
2) Deposits in (withdrawal of deposits from) related parties
3) Borrowings from related parties
4) Interest collected from related parties
5) Interest paid to related parties
6 Accounts receivable and payable by related parties
(1) Receivables
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(2) Payables
√Applicable □Not applicable
7 Commitments with related parties
√Applicable □Not applicable
The Group's commitments related to related party contracted for but not provided in the balance sheet as at the balance sheet date:
Standby leasing agreement signed with the related parties
On December 16, 2015, the Company signed ship rental standby agreement with CCCC Leasing Jiahua No.1 Co., Ltd and CCCC Leasing Jiahua No.2 Co., Ltd (collectively referred to as “CCCC Jiahua”), with the rental term from March 5, 2016 to December 5, 2021.The contract would come into e?ect when the ship rental agreement signed by the subsidiary of the Company and CCCC Jiahua couldn’t be performed normally. As at December 31, 2020, the maximum payment amount of the contract was RMB 246,081,944 (as at December 31, 2019: RMB 390,667,201).
8 Others
√Applicable □Not applicable
Monetary funds deposited in the related parties
XIII Share-based payment
1 Generalofshare based payment
□Applicable √Not applicable
2 Equity-settled share-based payments
□Applicable √Not applicable
3 Cash-settled share-based payments
□Applicable √Not applicable
4 Modi?cation and termination ofshare-based payment
□Applicable √Not applicable
5 Others
□Applicable √Not applicable
XIV Commitments and contingencies
1 Signi?cantcommitments
√Applicable □Not applicable
Signi?cant external commitments, nature and amount on the balance sheet date
(1) Matters related to capital expenditure commitments
Commitments related to capital expenditure contracted for but not provided in the ?nancial statements as at the balance sheet date:
(2) Commitments related to operating lease
According to the irrecoverable operating lease contract concluded, the Group will at least pay rental as follows:
(3) L/C commitments
The Group had entrusted the bank to issue several L/Cs to purchase imported components and parts. As at December 31, 2020, the unpaid amount under the L/Cs was about RMB 1,397,778,837 (as at December 31, 2019: RMB 1,698,125,301).
2 Contingencies
(1) Signi?cant contingencies on the balance sheet date
√Applicable □Not applicable
In August 2020, All-China Environment Federation sued the Company and Shanghai Zhenhua Heavy Industries Co., Ltd. Changxing Branch (hereinafter referred to as “Changxing Branch”) to Shanghai No. 3 Intermediate People’s Court for air pollution liability dispute, with the case No. (2020) H 03 MC 274.
Changxing Branch and the Company attached great importance to this event and established a special working group to actively communicate with the Federation. The Company and the Federation reached a settlement intention and jointly expressed such intention to the court. On January 25, 2021, Shanghai No. 3 Intermediate People’s Court entrusted Nanjing Institute of Environmental Sciences, MEE (hereinafter referred to as “Nanjing Institute”) to evaluate the damages, deductible exemption items and deductible deduction items involved in this case. According to the current progress, the Company judges that the case is likely to be settled by settlement. According to the current practice of environmental civil public interest litigation in China, the Company preliminarily judges that if the deductible items are supported by the court, the amount of alternative restoration costs will be reduced to a certain extent.
As of the approval date of the ?nancial statements, Nanjing Institute has not yet carried out the appraisal work, the settlement agreement has not been reached, and the case has not entered the formal hearing stage. Therefore, the Company is unable to make a reliable estimate of the result of the case and the possibility and amount of the loss caused by the case. The Company will continue to follow up the impact of the case.
(2) If the company has no signi?cant contingencies to be disclosed, it shall also explain:
□Applicable √Not applicable
3 Others
□Applicable √Not applicable
XV Post balance sheet events
1 Signi?cantnon-adjustmentevents
□Applicable √Not applicable
2 Pro?tdistribution
□Applicable √Not applicable
3 Sales return
□Applicable √Not applicable
4 Description ofotherpostbalance sheetevents
□Applicable √Not applicable
XVI.Other signi?cant events
1 Correction ofprevious accounting errors
(1) Retrospective restatement
□Applicable √Not applicable
(2) Prospective application
□Applicable √Not applicable
2 Debtrestructuring
√Applicable □Not applicable
The group and the debtor signed the Debt Repayment Framework Agreement, which agreed to use a newly developed commercial property and three sets of self-owned equipment of the debtor to o?set the loan owed. When the debt-o?setting assets had no right defects and the ownership change had been completed, the rights and obligations of both parties shall be terminated, and the claims and debts shall be extinguished. As of December 31, 2020, the ownership transfer of the debt-o?setting property had been completed. The Group recognized the fair value of the abandoned claims according to the fair value of the property received, and reversed the bad debt provision for accounts receivable of RMB 64,230,500.
3 Assets exchange
(1) Non-monetary assets exchange
□Applicable √Not applicable
(2) Other assets exchange
□Applicable √Not applicable
4 Pension plan
□Applicable √Not applicable
5 Discontinuing operations
□Applicable √Not applicable
6 Segments
(1) Determination basis and accounting policies of reporting segment
√Applicable □Not applicable
The Group determines operating segments based on internal organization structure, management requirements and internal reporting system, determines reporting segments based on operating segments, and disclose the information of the segments.
Operating segment refers to the component part of the Group that meet the following requirements: (1) it can generate income and expenses in daily activities; (2) the management of the Group can regularly evaluate its operating results to determine its allocation of resources and to evaluate its performance; (3) the Group is able to obtain its accounting information regarding ?nancial position, operating results and cash ?ows, etc. If two or more operating segments have similar economic characteristics, and have met a certain conditions, they will be merged into one operating segment.
The Group identi?ed the business as an operating segment for analysis and assessment based on internal organization structure, management requirement and internal report system.
(2) Financial information of reporting segment
□Applicable √Not applicable
(3) If the Company has no reporting segments or cannot disclose the total assets and liabilities of each reporting segment, the reasons shall be stated
□Applicable √Not applicable
(4) Other description
√Applicable □Not applicable
Product and labor information
Income from external transactions
Geographic information
Income from external transactions
The income from external transaction is attributable to where the customer is located.
Total non-current assets
The non-current assets are attributable to where they are located, excluding financial assets, long-term equity investment, goodwill, deferred income tax assets and other non-current assets.
7 Othersigni?canttransactions and events with impacts on investors'decisions
□Applicable √Not applicable
8 Others
□Applicable √Not applicable
XVII. Notes to main items of the ?nancial statements of the parent company
1 Accounts receivable
(1) Disclosure by aging
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Within 1 year
Including: subitem within 1 year
(2) Disclosure by bad debt calculation method
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Including:
Provision for bad debts by portfolio16,476,048,946961,274,320,722815,201,728,22415,325,782,241951,090,238,346714,235,543,895Including
Total17,137,035,456/1,803,709,232/15,333,326,22416,079,178,626/1,681,280,731/14,397,897,895
Individual provision for bad debts:
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of individual provision for bad debts:
√Applicable □Not applicable
As at December 31, 2019, the accounts receivables with individual provision for bad debts are as follows:
Provision for bad debts by portfolio:
□Applicable √Not applicable
If the provision for bad debts is calculated based on the general model of expected credit loss, please refer to other receivables for disclosure:
□Applicable √Not applicable
(3) Provision for bad debts
□Applicable √Not applicable
The recovered or reversed provision for bad debts with signi?cant amount:
□Applicable √Not applicable
(4) Accounts receivable actually written o? in the current period
□Applicable √Not applicable
Write-o? of important accounts receivable
□Applicable √Not applicable
(5) Top 5 accounts receivable in terms of ending balance presented by debtor
√Applicable □Not applicable
As at December 31, 2020, top 5 accounts receivable in terms of ending balance presented by debtor summarized and analyzed as follows:
190 0
As at December 31, 2019, top 5 accounts receivable in terms of ending balance presented by debtor are summarized and analyzed as follows:
(6) Accounts receivable derecognized due to the transfer of ?nancial assets
□Applicable √Not applicable
(7) Amount of assets and liabilities formed by transferring accounts receivable and continuing involvement
□Applicable √Not applicable
Other description:
√Applicable □Not applicable
Accounts receivable with provision for bad debts accrued by credit risk features portfolio are as follows:
Changes in the provision for bad debts of accounts receivable are as follows:
2 Otherreceivables
Item presentation
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
□Applicable √Not applicable
Interest receivable
(1) Classi?cation of interest receivable
□Applicable √Not applicable
(2) Signi?cant overdue interest
□Applicable √Not applicable
(3) Provision for bad debts
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
Dividends receivable
(4) Dividends receivable
□Applicable √Not applicable
(5) Signi?cant dividends receivable aging over 1 year
□Applicable √Not applicable
(6) Provision for bad debts
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
Other receivables
(1) Disclosure by aging
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Within 1 year
Including: subitem within 1 year
(2) Classi?cation by nature of funds
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(3) Provision for bad debts
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Description of signi?cant changes in book balance of other receivables with changes in loss provision in the current period:
□Applicable √Not applicable
The amount of provision for bad debts in the current period and the basis for assessing whether the credit risk of ?nancial instruments has increased signi?cantly:
□Applicable √Not applicable
(4) Provision for bad debts
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Those with signi?cant reversal or recovery amount of provision for bad debts:
□Applicable √Not applicable
(5) Other receivables actually written o? in the current period
□Applicable √Not applicable
(6) Top 5 other receivables in terms of ending balance presented by debtor
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(7) Receivables involving government subsidies
□Applicable √Not applicable
(8) Other receivables derecognized due to transfer of ?nancial assets
□Applicable √Not applicable
(9) Amount of assets and liabilities formed by transferring other receivables and continuing involvement
□Applicable √Not applicable
Other description:
□Applicable √Not applicable
3 Long-termequity investments
√Applicable □Not applicable
Unit: Yuan Currency: CNY
(1) Investment in subsidiaries
√Applicable □Not applicable
Unit: Yuan Currency: CNY
194 4
(2) Investment in joint ventures and associates
√Applicable □Not applicable
Unit: Yuan Currency: CNY
I. Joint ventures
II. Associates
Other description:
Not applicable
4 Operating revenue and operating costs
(1) Operating revenue and operating costs
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other business revenue and cost are listed as follows:
(2) Income from contracts
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Type of goods
By region of operation
Market or customer type
Contract type
By time of goods transfer
By contract term
By sales channel
Total21,728,104,844
Description of income from contracts:
□Applicable √Not applicable
(3) Performance obligations
□Applicable √Not applicable
(4) Apportionment to remaining performance obligations
□Applicable √Not applicable
Other description:
None
196 6
5 Investmentincome
√Applicable □Not applicable
Unit: Yuan Currency: CNY
Other description:
None
6 Others
□Applicable √Not applicable
XVIII Supplementary information
1 Items ofnon-recurring pro?torloss in currentperiod
√Applicable □Not applicable
Unit: Yuan Currency: CNY
For the non-recurring profit or loss items defined by the Company according to the "Explanatory Announcement on Information Disclosure of Companies O?ering Securities to the Public No. 1 - Non-recurring Pro?t or Loss", and the recurring profit or loss items defined by the non-recurring profit or loss items listed in "Explanatory Announcement on Information Disclosure of Companies O?ering Securities to the Public No. 1 – Non-recurring Pro?t or Loss”, reasons shall be explained.
□Applicable √Not applicable
2 Return on netassets and earnings pershare
√Applicable □Not applicable
3 Di?erences in accounting data underdomestic and overseas accounting standards
□Applicable √Not applicable
4 Others
□Applicable √Not applicable
Section XII ListofReference Documents
List of Reference Documents
Financial statements a?xed with the signature and seal of legal representative, person in charge of accounting work and person in charge of accounting agency
List of Reference Documents
Original auditors' report stamped by the accounting ?rm and signed and stamped with the certi?ed public
accountants.
List of Reference Documents
Original copies of the documents and announcement of the Company published on the newspaper designated
by the CSRC in the reporting period.
Chairman: Liu Chengyun
Date of reporting approved by the Board of Directors: March 30, 2021
Revision information
□Applicable √Not applicable