Annual Report 2017
Stock code: 600320 900947 Stock Name: Zhenhua Heavy Zhenhua
B-share
Shanghai Zhenhua Heavy Industries
Co., Ltd.
Annual Report 2017
Important Notice
I. The Board of Directors, the Board of Supervisors and directors, supervisors and
senior executives of the Company hereby guarantee the truthfulness, accuracy and
completeness of the contents in this annual report; it contains no major omission,
false record or serious misleading statement; they will assume the legal
responsibilities jointly and separately.
II. All directors of the Company are present at the board meeting.
III. Ernst & Young LLP. (Special general partnership) issued the standard unqualified
audit report for the Company.
IV. Zhu Lianyu, the person in charge of the Company, Huang Qingfeng responsible
person for accounting, and Zhu Xiaohuai , the leading accountant of accounting
department (accountant in charge) hereby declare that the financial statements in this
Annual Report are true, accurate and complete.
V. The profit distribution preplan or the common reserves capitalizing preplan during
the reporting period reviewed by the board of directors
Based on the total capital stock of 4,390,294,584 shares by Dec. 31, 2017, distribute RMB 0.5
Yuan (in cash) (including tax) from the undistributed profit by Dec. 31, 2017 to all of the
stockholders, with the total stock dividend of RMB 219,514,729Yuan to be distributed.
Based on the total capital stock of 4,390,294,584 shares by Dec. 31, 2017, transfer 2 shares
per 10 shares from the capital reserves to all of the stockholders, totaling 878,058,917 shares to be
transferred (with the face value of each share of RMB 1 Yuan); after transferring, the total capital
stock of the Company is 5,268,353,501 shares.
VI. Risks declaration of prospective statements
□Applicable √Not applicable
VII. Whether non-operational fund occupancy by the controlling shareholder or its
related parties exists?
No.
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Annual Report 2017
VIII. Does the Company provide the outward guarantees in breach of the stipulated
decision-making process?
No.
IX. Major risk warnings
The Company has described the risks in the annual report in details and the investors shall
pay attention to that. Refer to the related chapters in the directors’ report for the description of the
risk of the Company.
X. Others
□Applicable √Not applicable
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Annual Report 2017
Contents
Chapter I Definition ...............................................................................................4
Chapter II Company Profiles and Key Financial Indicators ....................................4
Chapter III Business Profile.....................................................................................8
Chapter IV Discussion and Analysis of Operation Performance ..............................8
Chapter V Substantial Events...............................................................................21
Chapter VI Changes in Ordinary Shares Capital and Shareholders ......................39
Chapter VII Related Information about Preference Shares ....................................44
Chapter VIIIDirectors, Supervisors, Senior Management and Staff
45
Chapter IX Corporate Governance ........................................................................54
Chapter X Corporate Bonds .................................................................................56
Chapter XI Financial Reports ................................................................................57
Chapter XII Catalogue of Documents available for Inspection ...........................325
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Chapter I Definition
I. Definition
Terms used in this report shall be defined as follows, unless otherwise specified:
Definition of frequently used terms
Company, the Shanghai Zhenhua Heavy Industries Co., Ltd.
Refers to
Company
CCCC Refers to China Communications Construction Company Ltd.
CCCG Refers to China Communications Construction Group
CCCG HK Refers to CCCG (HK) Holding Limited.
Public-Private-Partnership, a cooperation mode between the
government and the social capital, refers to the pooling of
interest, allocation of risks and the long-term cooperation
relationship established between the government and the social
PPP Refers to
capital by means of licensed operation, service procurement and
stock equity cooperation in order to increase the supply capability
of the public goods and services and improve the supply
efficiency.
Reporting period Refers to From Jan. 1, 2017 to Dec. 31, 2017
Chapter II Company Profiles and Key Financial Indicators
I. Company information
Company name in Chinese 上海振华重工 (集团)股份有限公司
Chinese Abbreviation of the Company 振华重工
English name of the Company SHANGHAI ZHENHUA HEAVY INDUSTRIES CO.,LTD.
English Abbreviation of the Company ZPMC
Legal representative Zhu Lianyu
II. Contact information
Board secretary
Name Sun Li
Address No. 3261 Dongfang Road, Shanghai
Tel. 021-50390727
Fax 021-31193316
Email IR@ZPMC.COM
III. Basic information of the Company
Registered address No. 3470, South Pudong Road, Shanghai
Post code of registered address 200125
Office address No. 3261 Dongfang Road, Shanghai
Post code of office address 200125
Website Http://www.zpmc.com
Email IR@ZPMC.COM
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IV. Information disclosure and reference
Designated media for information disclosure Shanghai Securities News, Hong Kong Wen Wei
Po
Website designated by China Security www.sse.com.cn
Regulatory Commission for disclosure of
annual report
Annual report available at of the Company Securities Office
V. Stock Profiles of the Company
Stock Profiles of the Company
Stock type Stock exchange listed Stock Name Stock code Stock before change
at
A-share Shanghai Stock Shanghai Zhenhua 600320 ZPMC Industries
Exchange Heavy
B-share Shanghai Stock Zhenhua B-share 900947 -
Exchange
VI. Others
Ernst & Young (special general
Name
partnership)
Room 01-12, 17th Floor, Anyong
Public accounting firm employed Office address Building, Dongfang Plaza, No.1 Changan
by the Company (domestic) Street, Dongcheng District, Beijing
Name of Yang Lei, Liu Wei
accountants for
signature
VII. Major Accounting Data and Financial Indicators in Last Three Years
(I) Major accounting data
Unit: Yuan Currency: RMB
Year-on-ye
Major accounting data 2017 2016 ar Growth 2015
Rate (%)
Operating Income 21,858,814,000 24,348,087,928 -10.22 23,272,394,677
Net Profit Attributable to 300,195,422 212,419,946 41.32 212,411,967
Shareholders of the
Listed Company
Net Profit Attributable to 277,837,568 157,445,435 76.47 -214,409,604
Shareholders of the
Listed Company after
Non-recurring
Gains/Losses
Net Cash Flow from 1,332,209,274 1,658,422,636 -19.67 -1,831,961,473
Operating Activities
Year-on-ye
End of 2017 End of 2016 ar Growth End of 2015
Rate (%)
Net Asset Attributable to 15,011,306,366 15,196,736,263 -1.22 14,869,572,883
Shareholders of the
Company
Total Assets 67,519,953,829 60,823,819,098 11.01 59,020,752,259
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(II) Major financial indicators
Year-on-year
Major financial indicators 2017 2016 2015
Growth Rate (%)
Basic EPS (Yuan/share) 0.068 0.048 41.67 0.05
Diluted EPS (Yuan/share) 0.068 0.048 41.67 0.05
Basic EPS after Non-recurring Gains/Losses
0.063 0.036 75.00 -0.05
(Yuan/share)
Weighted Average ROE (%) 1.99 1.41 +0.58 base point 1.41
Weighted Average ROE after Non-recurring
1.84 1.05 +0.79 base point -1.45
Gains/Losses (%)
Description of the main accounting data and financial indicators for the first three years at the end of
the reporting period
□Applicable √Not applicable
VIII. Differences in accounting data under domestic and international accounting
standards
(I) Difference between net profit and net assets attributable
to shareholders of listed company in the financial report
synchronously disclosed according to international
accounting standards and domestic accounting
standards.
□Applicable √Not applicable
(II) Difference between net profit and net assets attributable
to shareholders of listed company disclosed in
accordance with the foreign and domestic accounting
standards.
□Applicable √Not applicable
(III) Explanation for differences between the international
and Chinese accounting standards:
□Applicable √Not applicable
IX. Quarterly Major Financial Data in 2017
Unit: Yuan Currency: RMB
Q1 (Jan. to Mar.) Q2 (Apr. to Jun.) Q3 (Jul. to Sep.) Q4 (Oct. to Dec.)
Operating Income 4,223,173,077 6,393,613,804 4,589,496,658 6,652,530,461
Net Profit Attributable to
66,367,907 49,063,413 55,547,130 129,216,972
Shareholders of the Company
Net Profit Attributable to
Shareholders of Listed
65,423,907 44,138,085 44,317,567 123,958,009
Company after Non-recurring
Gains/Losses
Net Cash Flow from 581,290,268 -535,238,734 45,918,788 1,240,238,952
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Operating Activities
Description of difference between quarterly data and disclosed periodic data
□Applicable √Not applicable
X. Non-recurring profit and loss items and amount
√Applicable □Not applicable
Unit: Yuan Currency: RMB
Amount in
Non-recurring Profit and Loss Items Amount in 2017 Amount in 2016
2015
Profit and loss from disposal of non-current
13,285,984 1,340,612 9,338,797
assets
Governmental subsidies included in current
profit and loss, except those closely related to
the Company's normal business operation,
83,502,544 45,042,910 22,847,200
meeting the regulation of national policy and
enjoying constantly in certain quota or quantity
according to a certain standard
Net current profit and loss of the subsidiary
under the same control of the company from 0 0 55,523,666
the beginning to the consolidated day
Except for valid hedging business related with
the Company’s normal operation, profit and
loss from fair value changes in tradable
financial assets, liabilities held and the 20,563,270 23,420,959 445,766,951
investment income from disposal of tradable
financial assets and liabilities and financial
assets available for sale
Other non-operating incomes and expenditures
-70,077,032 6,435,660 15,490,536
except for those above mentioned
Amount affected by minority shareholders’
-14,565,022 -6,708,080 -31,568,397
interest
Amount affected by income tax -10,351,890 -14,557,550 -90,577,182
Total 22,357,854 54,974,511 426,821,571
XI. Items calculated by fair value
√Applicable □Not applicable
Unit: Yuan Currency: RMB
Beginning Closing Impact on Current
Item name Changes
Balance Balance Profit
Trading financial assets -
0 8,438,278 8,438,278 0
equity instrument investment
Trading financial assets -
4,615,775 0 -4,615,775 -4,615,775
derivative financial assets
Equity Instrument available for
313,612,402 178,952,712 -134,659,690 665,346
sale - Jiangxi Huawu
Equity Instrument available for
340,253,175 451,528,660 111,275,485 12,103,621
sale - Qingdao Port
Equity Instrument available for
615,346,381 629,554,373 14,207,992 11,075,670
sale - CRSC
Equity Instrument available for
1,366,388 1,174,000 -192,388 21,866
sale - Shenwan Hongyuan
Total 1,275,194,121 1,269,648,023 -5,546,098 19,250,728
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XII. Others
□Applicable √Not applicable
Chapter III Business Profile
I. Main business, operation model and industry profile of the Company during the
reporting period
The Company is a well-known enterprise in heavy equipment manufacturing industry, and is the
state-owned listed company holding A, B shares, headquartered in Shanghai. There are ten production
bases in Shanghai, Nantong and other cities. Since 1998, it has been in the first place in global container
crane order ranking. To seek for further development, the Company actively explored the large steel
structure and offshore heavy equipment market while consolidated the port machinery market. The
business scope of the Company includes: design, construction, installation and contracting of large port
loading system and equipment, offshore heavy equipment, engineering machinery, engineering ships
and large metal structural parts and their components and spare parts, ship repair; self-produced crane
rental business, sales of the company products; international shipment by available machine special
transportation ships, steel structure engineering professional contracting (in case of involving quota,
permit management, specific regulations, quality inspection, safety inspection and construction
qualification requirements, operate after obtaining corresponding qualification or permit in accordance
with the relevant national regulations).
II. Description of the major changes in main assets of the Company during the reporting
period
□Applicable √Not applicable
III. Analysis on the core competitiveness during the reporting period
√Applicable □Not applicable
There is no significant change in core competitiveness of the Company during the reporting
period.
Chapter IV Discussion and Analysis of Operation Performance
I. Discussion and analysis of the operation performance
In 2017, confronted with the complicated economic situation both at home and abroad, guided
by the development strategy of “One Body Two Wings”, based on the gross working keynote of
“making progress while ensuring stability”, the board of directors and the management of the
Company led all the employees to rise to the challenge and make pioneering efforts, and
successfully achieved the moderate development of the Company and entered into a new stage of
the positive operation in an all-round way through strengthening the operation, continuously
carrying out reforming and innovation and upgrading the management in an all-round way.
During the reporting period, the Company had made great achievements in the adjustment of
the business structure, the business sectors had developed in an orderly manner, risks mitigation
had been achieved an initial success and the profitability had been stably improved. The
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development of our business in port machine is sound and solid, and the products had successfully
entered 99 countries and regions and had continuously taken the first place in the global market
share for 19 years. The ocean engineering had continuously sought for the new opportunity in such
recovering market. The steel structure business had developed in good condition. The general
system contracting had made pleasant progress and many projects had been put into place. The
largest full-auto dock in the world, namely Yangshan Port, being built by the Company as a
participant, was successfully opened in Dec. 2017. At the same time, the Company had
successfully undertaken the general system contracting of many automatic docks at abroad and
thoroughly revealed its comprehensive strength in construction of the automatic dock. The
investment business had gradually closed to the related fields of the primary service of the company
step by step and made great pleasant achievements. As to the electric business, the market share
had been continuously rising through the independently developed EZ brand. The shipping
business had been expanded in an all-round way. The integrated service has a promising outlook.
II. Operation performance during reporting period
In the reporting period, the Company realized operation revenue of RMB 21.859 billion Yuan,
decreased by 10.22%; realized the net profits of RMB 422 million Yuan, increased by 14.34%; the
net profit attributable to parent company was RMB 300 million Yuan, increased by 41.32%.
(I) Major business analysis
Analysis on Changes in the income statement and cash flow
statement
Unit: Yuan Currency: RMB
Item Report Year Prior Year Growth (%)
Operating Income 21,858,814,000 24,348,087,928 -10.22
Operating Cost 18,019,075,299 19,727,663,875 -8.66
Selling expenses 121,457,892 100,435,778 20.93
Management expenses 1,742,167,300 1,759,032,746 -0.96
Financial expenses 758,201,305 1,218,992,788 -37.80
Net cash flow from operating activities 1,332,209,274 1,658,422,636 -19.67
Net cash flow from investment -1,681,611,030 -726,215,078 NA
activities
Net cash flow from financing activities 2,576,865,754 152,344,993 1,591.47
R&D expenses – expensing expenses 702,392,513 851,544,356 -17.52
Asset impairment loss 824,836,448 1,221,116,175 -32.45
Non-operating income 29,343,558 56,993,416 -48.51
Non-operating expenditure 92,116,253 5,514,846 1,570.33
Income tax expense 92,319,416 61,516,908 50.07
Net profit attributable to the owner of 300,195,422 212,419,946 41.32
the parent company
Minority interest 29,247,998 94,924,290 -69.19
Balance arising from the translation of -30,234,827 25,605,643 -218.08
foreign currency financial statements
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1. Revenue and cost analysis
√Applicable □Not applicable
The decrease in operating revenue and operating cost was mainly attributed to the decrease in the
orders of the offshore heavy duty equipment in this year, which resulted in the reduction in operating
revenue/operating cost.
The sales expenses increased due to the expansion and marketing on global market.
The management expenses decreased because the R&D expense decreased this year.
The decrease in financial expenses was mainly attributed to by the increase in the gain on foreign
exchange as a result of the fluctuation of the exchange rate of RMB to USD.
The net cash flow amount in operation changed because the raw materials purchasing expenses
and payment of engineering expenses increased.
The change in the net amount of cash flows from investing activities was mainly attributed to by the
decrease in the payment for the cash flow for investment of this Company.
The increase in the net cash flow from financing activities was mainly attributed to by the increase in
the loan from the bank by this Company in this year.
The decrease in the payment for R&D was attributed to by the one in the payment for R&D of this
Company.
The decrease in the assets impairment loss was mainly attributed to by the decrease in the
provision for impairment and the expected contracted losses.
The decrease in the non-business revenue was mainly attributed to by the change in the accounting
standard as well as the governmental subsidy related to the day-to-day operations of the Company
which was charged to other revenues.
The increase in the non-business revenue was mainly attributed to by the compensation for the
judgment of the case related to British Fluor Wind Power Generation Project.
The increase in the income tax was mainly attributed to by the one in the total profit of this Company
in this year.
The increase in the net profit attributed to the owner of the parent company was mainly attributed to
by the one in the total net profit of the sole subsidiaries under this Company in this year.
The minority interest decreased because the total net profit of the non-wholly owned subsidiaries of
the Company decreased.
The decrease in the conversion difference of foreign currency statements was mainly caused by
the fluctuation of the exchange rate of RMB to USD.
(1). Major business by industry, product and region
Unit: Yuan Currency: RMB
Major business by products
Operatio
Operatio
n
Gross n cost Gross margin
Operating revenue
By product Operation cost margi increase increase over
Income increase
n (%) over prior prior year (%)
over prior
year (%)
year (%)
Container cranes 13,120,859,480 9,940,403,610 24.24 -23.19 -23.93 +0.74
Bulk-cargo 1,615,504,267 1,551,779,298 3.94 -48.8 -49.2 +0.77
machinery parts
Heavy equipment 3,384,886,419 3,084,117,712 8.89 163.44 140.99 +8.49
Steel structure and 1,520,119,032 1,487,522,614 2.14 46.75 58.57 -7.29
related income
Build-transfer , PPP
1,549,820,489 1,548,520,638 0.08 54.2 51.95 +1.48
projects
Vessel shipping and 451,081,492 281,599,002 37.57 -22.26 69.35 -33.77
others
Major business by region
By region Operating Operation cost Gross Operatio Operatio Gross margin
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Income margi n n cost increase over
n (%) revenue increase prior year (%)
increase over prior
over prior year (%)
year (%)
Mainland China 10,142,318,348 9,432,323,323 7.00 11.98 25.99 -10.34
Asia (excluding 5,410,267,855 4,076,972,241 24.64 -38.34 -45.31 +9.60
Mainland China)
America 2,548,717,321 1,860,108,627 27.02 53.47 81.43 -11.25
Europe 462,606,586 201,531,690 56.44 -72.70 -87.12 +48.75
Mainland China 1,372,828,183 1,142,998,882 16.74 -29.23 -8.60 -18.8
(export)
Africa 1,384,873,367 920,862,698 33.51 70.02 52.04 +7.87
Oceania 320,659,519 259,145,413 19.18 59.10 87.27 -12.16
Description of main business by industry, product, and region
√Applicable □Not applicable
Note: the amounts in the “Mainland, China (export)” means operation income exported to the
overseas subsidiaries or affiliates, and then sold to the domestic customers.
(2). Production volume and sales volume analysis table
□Applicable √Not applicable
The Company mainly manufactures and sells the large port equipment, heavy equipment and
steel structure, the “Accounting Standards- Construction Contract” is applicable. The income shall
be confirmed according to the completion percentage method, so this table is not applicable.
(3). Cost analysis statement
Unit: Yuan
Major business by product
Report
Total
period
cost in
Report amount
the
Report period Amount in the compared
same
Product Cost composition period rate in same period last with the
period
amount total year same
last
cost (%) period
year
last year
(%)
(%)
Container Raw material, labor,
9,940,403,610 55.56 13,067,811,357 66.94 -23.93
cranes production costs
Heavy Raw material, labor,
3,084,117,712 17.24 1,279,775,256 6.55 140.99
equipment production costs
Bulk-cargo Raw material, labor,
1,551,779,298 8.67 3,054,772,000 15.64 -49.2
machinery parts production costs
Build-transfer , Raw material, labor,
1,548,520,638 8.65 1,019,082,565 5.22 51.95
PPP projects production costs
Raw material, labor,
Steel structure 1,487,522,614 8.31 938,105,979 4.8 58.57
production costs
Vessel shipping Raw material, labor,
281,599,002 1.57 166,282,313 0.85 69.35
and others production costs
Total 17,893,942,874 100.00 19,525,829,470 100.00 -8.36
Other description of cost analysis
□Applicable √Not applicable
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(4). Main clients and suppliers
√Applicable □Not applicable
The sales of the top five clients reached to RMB 4,021.41 million Yuan which accounted for 18% of
the whole sales, and the related sales among them were RMB 728.95 million Yuan which
accounted for 3% of the whole sales.
The purchase amount of the top five suppliers reached to RMB 1,647.33 million Yuan, which
accounted for 12.04% of the whole.
2. Cost
□Applicable √Not applicable
3. R&D investment
R&D investment table
√Applicable □Not applicable
Unit: Yuan
R&D expense in current period 702,392,513
Capitalized R&D expense in current period 22,968,076
Total R&D expense 725,360,589
Total R&D expenses ratio in operation revenue (%) 3.32
Number of R&D employees 1599
R&D employees’ ratio in the total employees (%) 18.05
Proportion of capitalization of R&D investment (%) 3.17
Statement of situation
√Applicable □Not applicable
The Company had built and accomplished the scientific research and innovation systems of the
research headquarters and 6+1 research branches and effectively established the organizational
structure and operation mode of the research headquarters. It had actively accelerated the
implementation of innovative achievements. It had applied for 208 patents in total, with the growth
rate of 98% on year-on-year basis, with 67 patents approved, among which there were 24 patents of
invention. Many key innovation technologies including the new port machine intelligent R&D
platform, the port machine equipment automation and the offshore wind power installation
multi-function platform had been successfully transformed and put into use. It had accomplished
the reevaluation of the hi-tech enterprise for 2017, with 15% of the income tax debated. There
were 13 projects approved by the ministries and commissions of the state. The project of “Key
Technology for Handling System of Automatic Container Dock” was granted First Prize for Scientific
and Technical Progress in Shanghai City in 2017.
4. Cash flow
√Applicable □Not applicable
The net cash flow from operating activities was RMB 1.332 billion Yuan, mainly due to the
decrease in payment received for sales of goods and rendering of service and decrease in
engineering funds. The net cash flow from the investment activities was RMB -1.682 billion Yuan,
mainly due to the decrease in the expenditure of investment cash flow of the Company. The net
cash flow from the financing activities was RMB 2.577 billion Yuan, mainly due to the increase in
bank borrowings this year.
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(II) Description of non-major business causing significant
change to profit
□Applicable √Not applicable
(III) Assets and liabilities analysis
√Applicable □Not applicable
1. Assets/liabilities statements
Unit: Yuan
Closing balance Proportion Closing Proportion Change
Item of current in total balance of last in total proportion
period assets (%) period assets (%) (%)
Monetary fund 5,770,227,369 8.55 3,597,044,199 5.91 60.42
Financial assets
measured at fair
value with changes 8,438,278 0.01 4,615,775 0.01 82.81
included in current
profit and loss
Notes receivable 420,786,012 0.62 296,920,781 0.49 41.72
Other receivables 996,161,366 1.48 736,554,593 1.21 35.25
Non-current assets 1,896,475,472 2.81 1,384,438,569 2.28 36.99
due within one year
Construction in 1,889,146,009 2.80 4,025,449,461 6.62 -53.07
progress
Goodwill 265,188,465 0.39 149,212,956 0.25 77.72
Accounts payable 6,887,598,171 10.20 5,103,018,897 8.39 34.97
Deposit received 591,727,255 0.88 292,941,206 0.48 102.00
Non-current 2,198,931,219 3.26 799,574,356 1.31 175.01
liabilities due within
one year
Long term loans 6,664,914,383 9.87 3,925,335,497 6.45 69.79
Accrued liabilities 464,888,663 0.69 293,115,783 0.48 58.60
Other non-current 152,954,098 0.23 56,025,416 0.09 173.01
liabilities
Minority equity 1,817,314,295 2.69 1,290,413,687 2.12 40.83
Statement of situation
The monetary fund increased because the account receivable was received and the external
payment was decreased.
The increase in the financial assets measured with the fair value, with the change charged into
current profits and losses, was mainly attributed to the increase in the investment in the equity
instruments of this Company.
The increase in the notes receivable was mainly attributed to the increase in the banker’s
acceptance bill in the loan received by this Company.
The increase in other accounts receivable was mainly attributed to the increase in the taxes for the
receivable but unsettled accounts and the performance bond for bidding.
The increase in non-current assets due within one year was mainly because the increase of the
long-term receivables of “construction-transfer” project was due.
The decrease in the construction in progress was mainly attributed to the completion of the
construction in progress of the Company which changed to the fixed assets.
The increase in the goodwill was mainly attributed to the increase of the goodwill caused by the
acquisition of the companies by this Company.
The increase in the account payable was mainly attributed to the increase in the payment for goods
payable for the procurement of the materials by this Company.
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The increase in the advance payment from customers was mainly attributed to the increase in the
advanced contracted value of this Company in this year.
Non-current liabilities due within one year increased because the long-term loan that due within one
year increased.
The increase in the long-term loans was mainly attributed to the increase in the long-term loans of
this Company from the banks over one year.
The increase in the accrued liabilities was mainly attributed to the increase in after-sale service cost
of this Company and the withheld litigation compensation for British wind power project.
The increase in other non-current liabilities was mainly attributed to the increase in the pending
output tax of this Company.
The minority equity increased because the capital investment of the minority shareholders
increased this year.
2. Restriction on main assets by the end of reporting period
√Applicable □Not applicable
Item Final book value Reasons of restriction
Monetary fund 96,380,368 Bank guarantee deposit
Fixed assets 4,124,080,499 Mortgage of loans
Long-term account payable 2,571,908,986 Mortgage of loans
Total 6,792,369,853 -
3. Others
□Applicable √Not applicable
(IV) Industry operating conditions analysis
√Applicable □Not applicable
During the reporting period, the Company signed the new contract of port machinery with
amount of 2.52 billion USD, decreased by 3.7% on yearly basis. The Company signed new
contracts of ocean engineering products and steel structure with amount of 714 million USD,
increased by 32.96% on yearly basis. The Company signed new contracts of investment business
with amount of RMB 12.35 billion Yuan, increased by 23.24% on yearly basis.
The port machine industry was influenced by the cutback of the global economy and trade, the
investment in the dock equipment was relatively reduced, as a result, the new orders of the
Company in 2017 fell down. In 2018, although the Company expects that the overall recovery of the
port machine industry needs a certain time, the overall market resurgence trend is obvious, the
market will pay more attention to the systematized competitiveness. At the same time, the demand
for newly building ports and docks in the countries and regions along Belt and Road is more intense,
the service life of the in-service port machine expires, the shipping centers and free trade ports are
being built and the port automation is being upgraded and reconstructed, as a result, the market
demand for the port machine and equipment will be driven. In the future, the Company will exert
itself to expand the general contracting of the automatic dock, establish the special automatic dock
popularization group and vigorously generalize the automatic dock system resolutions in an
all-round way so as to guarantee the stable development of the port machine business.
14 / 325
Annual Report 2017
In 2017, the international oil price, rose up after fell down, indicated a wide oscillation rising
trend in overall.. Influenced by the bull of the rise in the oil price, the market retains an optimistic
attitude towards the offshore engineering industry; the offshore engineering equipment market
touches ground and tends to stabilize, however, the offshore equipment manufacturers are still
confronted with the pressure in a short time such as business decline, difficulty in getting profit and
high inventory. In a short period, the Company will continue to adjust the structure, change the
direction and carry out the destocking to deal with the market trough. With respect to the large-sized,
heavy-type and special-type steel structure market, with the in-depth implementation of the national
proposal for “Belt and Road”, the starting of the large-sized capital construction projects at home
and abroad and the recovery of the offshore wind power market, the market capacity increases, the
market changes for the better and the orders increase in a sustainable manner. However, it is also
confronted with the rise in the price of the raw materials, more and more participants and more
and more intense competition. As to the investment business, with the diversification of the services,
it will focus on the policy orientation and risk control.
(V) Investment analysis
1. Overall analysis of external equity investment
√Applicable □Not applicable
Investment amount at the end of reporting period (Yuan) 3,624,674,426
Changes in investment amount (Yuan) 109,680,467
Investment amount over a year earlier (Yuan) 3,514,993,959
Increase or decrease percentage of investment amount (%) 3.12
(1) Major equity investment
□Applicable √Not applicable
(2) Major non-equity investment
□Applicable √Not applicable
(3) Finance assets measured at fair value
√Applicable □Not applicable
Stock ownership held in other listed companies
Gains Owner’s
Short Initial Initial Final and equity
Stock Final book Accounting Source of
form of investment shareholding shareholding losses of movement of
code value account equity
stock cost ratio (%) ratio (%) reporting reporting
period period
Huawu Finance assets Pay in
300095 11,071,606 5.9 5.9 178,952,712 665,346 -134,659,690
Share available-for-sale currency
Finance assets Market
03969 CRSC 617,854,000 1.4 1.4 629,554,373 11,075,670 14,207,992
available-for-sale purchasing
06198
Qingdao Finance assets Market
308,515,588 2.16 1.71 451,528,660 12,103,621 111,275,485
Port available-for-sale purchasing
(H-share)
Share-participating condition of financial companies
Stock Short Initial Initial Final Final Gains Owner’s equity Accounti Source of
15 / 325
Annual Report 2017
code form of investment shareholding sharehol book and movement of ng equity
stock cost ratio (%) ding ratio value losses of reporting account
(%) reporting period
period
Finance
Shenwan
1,174,00 assets Subscript
000166 Hongyua 200,000 ＜0.01 ＜0.01 21,866 -192,388
0 available- ion
n
for-sale
(VI) Major assets and equity sales
□Applicable √Not applicable
(VII) Major holding companies and joint-stock companies
√Applicable □Not applicable
Registered Net
Company name Major product or service Asset scale
capital profit/(loss)
Operation of sea transportation in
coastal waters; ordinary transportation
Shanghai Zhenhua
in the middle and lower reaches of 120,000,000 2,722,835,624 14,844,515
Shipping Co., Ltd
Yangtze River; transportation of port
machinery.
Shanghai Zhenhua
Design, manufacturing and sales of port
Port Machinery 50,000,000 H
machinery, engineering vessel, steel 11,659,509,205 141,063,708
(Hong Kong) Co., KD
structure and other parts
Ltd.
Sales of port loading machine, bulk
cargo and container machine, port
engineering vessels (including floating
Shanghai Zhenhua engineering crane), material handling
Heavy Port mechanical products and parts, sales
2,184,730,000 2,280,424,373 20,307,453
Machinery General and technical services, installation and
Equipment Co., Ltd. maintenance, technical consultation of
all types of machine and equipment,
key parts of the raw materials and
accessories equipment.
Construction and installation of
large-scale port equipment, engineering
vessels, offshore heavy equipment,
Shanghai Zhenhua machinery and equipment, wind power
Heavy Industries generation equipment to use gear box;
300,000,000 2,820,384,054 10,889,450
(Nantong) large slewing bearings, transmission,
Transmitter Co., Ltd dynamic positioning, large anchor
cutter, offshore oil platform lifting device
and components, accessories related
weaving.
Installation of heavy port equipment,
engineering vessels, heavy metal
Nantong Zhenghua structure and its parts; Gear box,
Heavy Equipment container yard crane, super heavy-duty
854,936,900 1,436,283,711 -41,533,182
Manufacturing Co., bridge steel structure, heavy marine
Ltd machinery equipment, weaving,
installation; lease of cranes; contracting
of steel structures etc
Integration design, R&D and
manufacturing of shield machine
Tianhe Mechanical system with diameter of over
Equipment 6m;integration design, R&D and
681,627,100 4,182,299,545 58,140,097
Manufacturing Co., manufacturing of tunnel boring
Ltd of CCCC machine (TBM) system with
diameter of over 5m; design, R&D and
manufacturing of marine machinery and
16 / 325
Annual Report 2017
parts, cranes and parts, bridges and
high damping bracket for buildings;
sales of self-produced products. Whole
sales and import & export business of
marine machinery and parts, cranes
and parts, bridges and high damping
bracket for buildings (if the
state-operated trade commodities,
design quota and license management
is not involved, the related national
rules will prevail);installation,
maintenance, leasing, consulting,
technical services for our
products.(foreign capital proportion is
less than 25%) (as for the items
requiring the approval, carry out the
business activities after obtaining the
approval from the authorities)
Shanghai Zhenhua
Heavy Industries
Qidong Ocean Machinery manufacturing 303,000,000 2,042,858,235 -176,635,961
Engineering Co.,
Ltd
International land, air, maritime freight
forwarding, business, domestic freight
forwarding, undertaking large-scale port
equipment, marine equipment, ocean
Shanghai Zhenhua engineering materials sales, marine
Ocean Engineering construction and engineering and ship 100,000,000 297,910,175 5,125,239
Service Co., Ltd leasing, engaged in import and export
of goods and technologies, transit
trade, trade between enterprises
and trade agents within the free
trade zone.
Nanjing Ninggao
Engaged in construction, investment
New Channel
and management of Ninggao new 100,000,000 1,918,373,079 72,159,919
Construction Co.,
channel project.
Ltd
Zhenhua Pufeng
16,326,531 U
Wind Energy (Hong Offshore wind turbine installation 23,942,973 -32,106,589
SD
Kong) Co., Ltd
CCCC Financial
Financing lease 5,000,000,000 26,580,144,879 272,052,060
Leasing Co., Ltd
China
Communications Construction of port, waterway, 50,000,000
280,386,057 -19,040,428
Construction highway and bridge. USD
USA Inc.
CCCC Estate
Engaged in real estate development. 900,000,000 1,328,507,016 12,425,899
Yixing Co., Ltd.
Steel structure fabrication and
installation, Foundation construction of
offshore wind power facilities,
Jiangsu Longyuan
equipment installation and
Zhenhua Ocean
maintenance, submarine cable system 26,000,000 1,630,604,923 69,370,135
Engineering Co.,
construction, maintenance, marine
Ltd
construction, equipment installation and
maintenance, and installation of
equipment leasing.
Greenland Heavy
91,975,158 U
Lift (Hong Kong) Shipping 837,272,543 17,523,291
SD
Limited
17 / 325
Annual Report 2017
(VIII) Structure entity under the control of the Company
□Applicable √Not applicable
III. Discussion and analysis of the Company’s future development
(I) Sector competition pattern and development trend
√Applicable □Not applicable
In the reporting period, the global economic recovery trend was obvious and the
macro-economic indexes of the main economic entities changed for the better. However, the
factors including the tense situation of geopolitics, the political and economic trend of USA, rise of
the total global debts and the rise of the isolationism intensified the uncertainty of the global political
and economic situation.
Now the economy in China is in the critical period of transforming the development mode,
optimizing the economic structure and transforming the growth power. The report on 19th National
Congress of the Communist Party of China proposed the strategy of vigorously developing the real
economy and building a transportation power, marine power and manufacture power. The overflow
effect of the powerful national strategy will bring the new opportunity to the development of the
Company. Meanwhile, the trend of the in-depth fusion of the information technology with Internet,
big data and AI as the representative and manufacturing industry accelerates the Company to
upgrade the core competition.
The global port machine market pays more attention to the systematized competition. The
competition of the stand-alone market of the traditional port machine is still intense. Belt and Road
proposed that the countries along it should increase the new-type port and the demand for
procurement of the new machine is obvious. The service life of the in-service port machine expires
and the old port machine is in the stage of renewal. The construction of shipping center and free
trade port will release the new demand; the upgrade and reconstruction of the port automation will
become the main force of the port machine market in the future.
The offshore engineering market faces the recovery. Affected by the factors such as the
reduction of output of OPEC and the intensified geopolitical risk, the international oil price firstly fell
down and then rose and it rose up in a wave-like way in a wide range in 2017, WTI oil price was at
USD 40-60 dollars/barrel in the whole year. At the beginning of 2018, the oil price in the world
continues to rise, which increases the drive of the oil enterprise to produce the crude oil and the
optimistic emotion about the “initial recovery” of the offshore engineering continues to increase.
The primary keynote of PPP investment policy turns to prevent the risk and standardize the
project. In 2017, the state successively issued a series of documents and the focus of PPP policy
turned to standardization and risk prevention from the landing rate. State-owned Assets Supervision
and Administration Commission of the State Council took measures to prevent the central
enterprises from the operation risks of participating in PPP. It required that the company should
increase the risk consciousness, pay attention to the market order and management, strictly control
18 / 325
Annual Report 2017
the risk and select the project and carry out the project without ostentation in implementing PPP
project.
Other increment market faces the development opportunity. The offshore transportation and
installation market recovers together with the offshore engineering market. It is expected that the
transportation market of the heavy and large parts for the offshore engineering will bounce back,
water power engineering market and offshore wind power installation market will continue to provide
the good achievements support; the steel structure market, the electric market and the smart city
construction market compete intensely, so the Company shall exert its unique advantages to enter
the high-end differentiated market; the global service market has wide market space.
(II) Development strategy of the Company
√Applicable □Not applicable
With “equipment manufacture” as the main body, “capital operation” and “Internet” as two wings,
it aims to build “Flag + Flagship” of Chinese national industry. “One main body and two wings”
strategy is a new strategy for transformation and upgrade of the Company, based on objective
analysis of development stage and orientation, in combination with the development features of
equipment manufacturing industry, on account of the current and future national and industrial
development trend around “Industry 4.0”, “China Manufacture 2025” and trial reform of state-owned
capital investment company. “Capital operation” will help the Company to extend the industrial chain
of the port machine business and create the full industrial chain of marine heavy industry and
offshore wind power full industrial chain; help the Company and the customers as well as the
partners to form a community of common destiny 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 offer more convenient, efficient, intelligent and
integrated service to the global customers and greatly improve the management level and operation
efficiency of the company.
(III) Business plan
√Applicable □Not applicable
Guide by “one main body and two wings” strategy, with improvement of operation
achievements and profitability as the core, the Company will carry out the reform and innovation
and deepen the fundamental management in an all-round way to realize the stable increase of the
scale of the Company.
The port machine business, with the brand as the assistance, with the customer demand as the
guide, with the market development as the objective, actively seeks for new business point of
growth while continuing to guarantee the global market position. The offshore engineering business
is in the market recovery and the existing risks are gradually eliminated. It aims at the high-end
19 / 325
Annual Report 2017
orientation, makes the overall arrangement in advance and expands the multiple services. The steel
structure business focuses on the market of the high end “heavy, large and special” steel structure
with relatively high value added for key incubation and stable development so as to build the core
capability in a specialized manner. As to the low-end steel structure products with relatively low
value added, improve its own profitability by means of cost reduction and efficiency increase. As to
the marine transportation and installation market, seize the development opportunity of the wind
power and vigorously accelerate the civil-military integration. As to the integrated service, bring the
oversea efforts into full play and properly launch the innovation plan while sustainably stabilizing the
routine business. The electric business shall regard serving the port machine business as the main
goal, hold the core position and market share of the related technology, seize the opportunity and
expand the increment scale. The general system contracting shall bring the brand advantages of
the Company into full play, vigorously accelerate the intelligent development and carry out the
scientific and technical innovation. Further expand the market advantages of the Company in the
field of the general contracting for the automation dock system.
(IV) Possible risks
√Applicable □Not applicable
Market risk: the international economy is still in the declining state with limited growth,
the slow economic development may become the “new ordinary state” in the domestic
market. The industry trend is impacted by the decreasing ore and oil prices. The shipping
capacity is excessive and the port machinery market increased a little. The marine heavy
industry is in the low position in the market. As for the offshore oil and gas service, the large
piece handing and movement transportation market decreases with excessive capacity. The
port machinery market is still in main position in scale and profit contribution, but other
markets are still being cultivated.
Countermeasures: facing the market challenges at home and abroad, the Company will
deepen the reform, consolidate the basic management and enhance the risk resistance, optimize
and adjust the market and business structure, look for increment from strategic opportunities,
business expansion, internal and external cooperation, investment and acquisition, and foreign
projects, to promote the structure adjustment and resources integration and to drive enterprise
sustainable development by transformation and upgrading.
Financial risks: credit risk and exchange rate risk, especially the large scale of
interest-bearing liabilities, increased volatility of the RMB bidirectional fluctuation of
exchange rate and large load capacity.
Countermeasures: Develop rational planning for forward rate look, control exchange rate risk,
emphasis on research on policies and strategies of foreign exchange risk management, pay close
attention to change in exchange rates, regularly complete analysis of exchange rate movements,
conduct strict implementation of financial derivatives related to the approval process, produce good
statistics on product current exchange rate, further reinforce the basic work of foreign exchange
management, and reduce the company’s exchange rate risk. By arranging favorable settlement
terms in the contract (such as the signing of a contract with RMB exchange rate pegged, increase
the prepayments proportion plus early settlement, etc.), or appropriate financial instruments or
means to control and lock the exchange rate risk.
As for credit risk, by reducing raw material reserves, compression of infrastructure spending,
adjusting the Company’s debt structure through a variety of ways (such as medium-term notes,
20 / 325
Annual Report 2017
short-term bonds), reducing financing costs, strengthening the collection of accounts receivable,
gradually reducing the amount of bank debt, reduce business risks.
(V) Others
□Applicable √Not applicable
IV. Explanation of the case and reasons that the Company does not disclose due to rules
not applicable or special reasons
□Applicable √Not applicable
Chapter V Substantial Events
I. Profit distribution plan of ordinary shares or the plan of share capital increase from the
accumulation fund
(I) Formulation, implementation or adjustment of the cash
dividends policy
√Applicable □Not applicable
According to CSRC Notification on Further Implementation of Issues Concerning Listed
Company Cash Dividends Sharing (ZJF [2012] No. 37), as proposed by the 10th meeting of the
Company’s fifth session of Board held on August 21, 2012, amendment would be made to the
Articles of Association of the Company concerning profit distribution and cash dividends policy, and
as result dividends sharing standard and proportion are clear, related decision making program and
mechanism compete, with full maintenance of small shareholders’ legitimate rights and interests,
giving them full excess to expressing their views and demands.
(II) The Company's dividend distribution plan or proposal
for ordinary shares and the plan or proposal for capital
reserves transferred to share capital in recent 3 years
(including the reporting period)
Unit: Yuan Currency: RMB
The ratio of net
Dividend Net profit
Bonus Shares profit attributable
for every Cash Attributable to
share for converted to listed
Bonus 10 shares dividend listed company
every 10 for every 10 company
Year (Yuan) amount shareholders in
shares shares shareholders in
(before (before tax) profit-sharing
(share) (share) profit-sharing
tax) year
year (%)
2017 0 0.5 2 219,514,729 300,195,422 73.12
2016 0 1 0 439,029,458 212,419,946 206.68
2015 0 0 0 0 212,411,967 0
21 / 325
Annual Report 2017
(III) Shares repurchased through cash offer, to be
included in the cash dividend
□Applicable √Not applicable
(IV) If the profit and the profit distributable to common
shareholders by the parent company during the reporting
period is positive but the Company does not lodge the
proposal for profit distribution in cash for ordinary shares,
the Company shall disclose in detail the reasons and the
purpose and use plan of the undistributed profit
□Applicable √Not applicable
II. Commitment performance
(I) Commitments of the actual controllers of the company,
the shareholders, the related parties, the purchaser and
the Company during the reporting period or the ones
lasting the reporting period
□Applicable √Not applicable
(II) Where there is a profit forecast for an asset or project and
the reporting period is still within the profit forecast
period, please explain whether the original earnings
forecast of the assets or the project is achieved and
explain the reason
□Achieved □Not achieved √Not applicable
III. Capital occupied situation and clearing arrears progress in the report period
□Applicable √Not applicable
IV. Explanation of the Company for “non-standard audit report” of the accounting firm
□Applicable √Not applicable
V. Analysis and explanation of the Company on the reasons and impacts of the accounting
policy, the accounting estimate or the correction of the important accounting error
(I) Analysis and explanation of the Company on the reasons
and the impacts of the alteration of the accounting policy
and accounting estimate
√Applicable □Not applicable
1. Alteration of statement mode of losses and gains from assets disposal
In accordance with the requirements of Notice of Modifying and Issuing Financial Statement
Format of Common Enterprise by Ministry of Finance (CK [2017] No. 30), the items separately listed
and reported in the item “gains from assets disposal” in the item “operating profit” in Profit Statement
of this Company as well as the losses and gains from the non-current assets disposal originally
recorded in “non-business revenue” and “non-operating expenses” were altered to be listed and
reported in “Gains from assets disposal”; this Company correspondingly traced back and restated
22 / 325
Annual Report 2017
the comparative profit statement. The alteration of this accounting policy had no effect on the
consolidation and the net profit of the Company as well as the consolidation and the stockholders’
equity of the Company.
2. Alteration of statement mode of government subsidy
In accordance with the requirements of Notice of Issuing and Revising Accounting Standard No.
16------Governmental Subsidy (CK [2017] No. 15), the item “Other Revenue” separately listed and
reported in the item “Operating profit” in Profit Statement of this Company and the governmental
subsidy related to the routine activities of the enterprise were altered to be listed and reported in
“Other revenue” instead of “non-business revenue”; according to the linking regulations of this
standard, this Company adopted Prospective Application for disposal of the governmental subsidy
existing before Jan. 1, 2017 and the newly increased governmental subsidy from Jan. 1, 2017 to the
implementation date of this standard (June 12, 2017) was adjusted according to this standard. The
alteration of this accounting policy had no effect on the consolidation and the net profit of the
Company as well as the consolidation of the stockholders’ equity of the Company.
(II) Analysis and explanation of the Company on the reasons
and impacts of the correction of the important accounting
errors
□Applicable √Not applicable
(III) Communicate with former accounting firm
□Applicable √Not applicable
(IV) Other statement
□Applicable √Not applicable
VI. Appointment and dismissal of accounting firm
Unit: (10,000) Yuan Currency: RMB
Current appointment
Domestic accounting firm Ernst & Young (Special general partnership)
Domestic accounting firm payment 380
Domestic accounting firm audit period 2
Name Payment
Internal control audit accounting firm Ernst & Young (special general
40
partnership)
Appointment and dismissal of accounting firm
□Applicable √Not applicable
Change to appointment accounting firm during auditing period
□Applicable √Not applicable
VII. Risk of listing suspension
(I) Reasons for suspension
□Applicable √Not applicable
(II) Countermeasures to be taken
□Applicable √Not applicable
23 / 325
Annual Report 2017
VIII. Situation and reasons for the termination of listing
□Applicable √Not applicable
IX. Bankruptcy reorganization related matters
□Applicable √Not applicable
X. Substantial lawsuits and arbitrations
□The Company has major litigation and arbitration
□The Company has no major litigation and arbitration
(I) Lawsuits and arbitrations disclosed in the provisional
announcement without subsequent progress
□Applicable √Not applicable
(II) Lawsuits, and arbitrations not disclosed in the
provisional announcement with subsequent progress
√Applicable □Not applicable
Unit:- Currency:-
In the report period:
Suit
(arbitration Suit
Prosecuto Party Suit Execution of
Type of ) Suit (arbitration
r Respondin with (arbitration Suit
suitor Suit (arbitration) profiles constitutes (arbitration ) trail
(applicant g party joint ) amount (arbitration)
arbitration estimated ) progress results and
) liabilities involved judgment
liabilities or impact
not
In 2008, the Company and
Fluor Limited (hereinafter
referred to as “Fluor”)
signed an agreement on
sales and installation for
wind power steel pipe pile
products for the British Wind
On Jan. 11,
Power Project. In the project
2018, the
construction process, the
court made
Company and Fluor, by way
quantized
of friendly consultations and
judgment on
in the spirit of good
this case and
cooperation, maintained the
adjudicated
normal dispute settlement
this Company
and communication
to pay USD
mechanism. In 2010, for the On Jan.
5,893,591
issues in contract execution 11, 2018,
dollars,
process, after reviewed by the court
15,033,681
the board of directors of the made
pounds,
Company, the Company quantized
7,165,740
signed a mutual exemption judgment
Eurodollars,
letter with Fluor, and settled on this
7,259
the remaining payment in case;
Canadian
2011. Afterwards, Flour however,
dollars and
lodged a quality claim the specific
Shanghai RMB 485,346
against the Company, and amount of
Flour Zhenhua About 250 Court to Yuan to Flour.
requested the payment of the legal
Corporati Heavy No Lawsuit million 0 be open On Mar. 16,
the demand quality cost and
on Industries pounds soon 2018, the
guarantee issued by the other
Co., Ltd court made
Company, while the expenses
the judgment
Company rejected the related to
on the interest
claim. On March 20, 2014, the
and
Flour cashed the above judgment
adjudicated
letter of guarantee with the amount will
this Company
amount of 23,409,750 EUR be
to pay
in the bank opening the additionally
3,518,549
letter of guarantee. In judged and
pounds to
September 2014, Flour decided by
Flour.
initiated proceedings for the the court.
However, the
breach attributed to by the
legal cost and
problems related to the
other
product quality to High
expenses
Court of Justice, Queen’s
related to the
Bench Division, the
judgment
Technology and
amount were
Construction Court
additionally
(hereinafter referred to as
measured.
“TCC Court of Britain
Queen’s Bench”) and asked
the Company for the total
compensation of 250 million
Pounds for additional test
and repair cost, project
period delay and other
24 / 325
Annual Report 2017
related loss (including the
cashed letter of guarantee
amount of 23,409,750
EUR). The Company didn’t
acknowledge the claim for
the compensation from
Flour. Since then, the
Company prepared the
evidence disclosure,
witness testimony,
exchange work and other
preparatory work before the
court. From February to
March, April, June of 2016,
British High Court TCC
court was in trial for first
instance on obligation part.
In May 2017, the trial of
quantitative part of this case
was conducted. In July
2017, both parties
exchanged the written final
address. In Aug. 2017, the
proceeding at law for the
quantitative part of this case
was settled.
In 2013, the Company has
signed the
construction and sales
contract about a 6000 ton
piping ship with Petrofac
(JSD6000) Limited
(hereinafter referred to as
Petrofac). On October 9,
2015, Petrofac issued
Contract Termination Letter
with the reason that the
project is delayed and
meets the termination
article. Petrofac asked for
terminating the contract and
requested the Company to
return the prepaid payment
and interest, as well as
assumed the responsibility
of the loss attributed to by
the termination of the We stand
contract. The Company for about
rejected the claim. Petrofac $200
honored the demand million;
guarantee from the opening Petrofac's
Shanghai
bank in December 2015, counter
Zhenhua Petrofac Court to
with total amount of claim calls Not yet Not yet
Heavy (ship-own No Arbitration 0 be open
44,720,000 USD. The for $182 ruled ruled
Industries er) soon
Company established million or
Co., Ltd
special team and hired $213
senior legal team both at million in
home and abroad to actively two
advocate the Company’s different
rights and protect the ways.
Company’s rights from
damaged. The Company
has applied for arbitration to
the London International
Arbitration Court in January
and asked Petrofac to return
the payment of Letter of
Guarantee and
compensated for the loss of
$200 million. After receiving
the arbitration applicant
of the
Company, Petrofac filed a
counterclaim, and asked the
Company for compensating
about 182 million USD or
213 million USD under the
requirements of continuing
or not continuing to
construct the ship.
Industries At the end of February
Shanghai 2014, the Company
Zhenhua completed the increasing
Nantong
Heavy assets for original Jiangsu
Huafu
Industries Daoda Ocean Engineering RMB
Port Co., Court to
Co., Ltd, Co., Ltd, the capital of 67% 368.722 0 Not yet Not yet
Ltd, Li No Lawsuit be open
Shanghai stock, at the same time, Million ruled ruled
Aidong, soon
Zhenhua before February 28, Yuan
Zhao
Heavy 2014, the loss of the
Xiaohua
Industries Company was borne by the
Qidong original shareholders - Li
Marine Aidong, Zhao and Xiaohua
25 / 325
Annual Report 2017
Engineeri of Nantong Huafu Port
ng Co., Co., Ltd. During the
Ltd. subsequent business
process, it was found of the
disclose false of parts of
the company litigation
matters or debt leading to
produce a series of losses,
through the related audit
and adjustment, etc, that
loss of RMB 368.7222
million Yuan should be in
charged in the original
shareholders and the
lawsuit again after an
inconclusive.
Lovanda Industries No Arbitration In 2014, Lovanda signed a The claim 0 Court to Not yet Not yet
Offshore Shanghai construction contract of Lovanda be open ruled ruled
Ltd Zhenhua (ZP14-2125) on one was about soon
Heavy JU2000E offshore drilling USD
Industries platform with this Company, 13,800,00
Co., Ltd which was designed, built, 0 dollars.
commissioned and The cross
delivered by this Company. bill claim of
In the construction process, this
some disputes arose Company:
between Lovanda and this 1) the
Company regarding the other party
construction schedule of should pay
this platform, the extension the last
of delivery time and other sum of
aspects. Lovanda submitted money
to arbitration to London payable
Maritime Arbitrators under the
Association against this contract
Company on Mar. 6, 2017 and its
and proposed to terminate interest
the platform construction arising
contract and required this herefrom,
Company to repay USD totaling
13800000 dollars including USD
the advance cost of 186,200,0
construction, related 00 dollars
expenses and interest. This to this
Company established a party; 2)
special working group and the income
employed the professional of this
domestic and foreign party from
lawyers and experts to the sale of
actively respond to action to the
maintain the legitimate right platform
of this Company. After minus the
receiving the request for cost of
arbitration, this Company sale
took a cross bill application should be
against Lovanda and used for
claimed: 1) the other party deducting
should pay the last sum of the
money payable under the account
contract and its interest payable of
arising herefrom, totaling the other
USD 186,200,000 dollars to party; 3)
this party; 2) the income of Other
this party from the sale of losses,
the platform minus the cost interest
of sale should be used for and other
deducting the account expenses
payable of the other party; that may
3) Other losses, interest and occur in
other expenses that may the future.
occur in the future.
Lovansing Industries No Arbitration In 2014, Lovanda signed a The claim 0 Court to Not yet Not yet
Offshore Shanghai construction contract of Lovanda be open ruled ruled
Ltd Zhenhua (ZP14-2126) on one was about soon
Heavy JU2000E offshore drilling USD
Industries platform with this Company, 13,800,00
Co., Ltd which was designed, built, 0 dollars.
commissioned and The cross
delivered by this Company. bill claim of
In the construction process, this
some disputes arose Company:
between Lovanda and this 1) the
Company regarding the other party
construction schedule of should pay
this platform, the extension the last
of delivery time and other sum of
aspects. Lovanda submitted money
to arbitration to London payable
Maritime Arbitrators under the
Association against this contract
Company on Mar. 6, 2017 and its
and proposed to terminate interest
26 / 325
Annual Report 2017
the platform construction arising
contract and required this herefrom,
Company to repay USD totaling
13,800,000 dollars including USD
the advance cost of 186,200,0
construction, related 00 dollars
expenses and interest. This to this
Company established a party; 2)
special working group and the income
employed the professional of this
domestic and foreign party from
lawyers and experts to the sale of
actively respond to action to the
maintain the legitimate right platform
of this Company. After minus the
receiving the request for cost of
arbitration, this Company sale
took a cross bill application should be
against Lovanda and used for
claimed: 1) the other party deducting
should pay the last sum of the
money payable under the account
contract and its interest payable of
arising herefrom, totaling the other
USD 186,200,000 dollars to party; 3)
this party; 2) the income of Other
this party from the sale of losses,
the platform minus the cost interest
of sale should be used for and other
deducting the account expenses
payable of the other party; that may
3) Other losses, interest and occur in
other expenses that may the future.
occur in the future.
Industries Xinyuda No Arbitration On Jan. 28, 2014, this About USD 0 Court to Not yet Not yet
Shanghai Ocean Company signed 35,250,00 be open ruled ruled
Zhenhua Engineerin Procurement Contract on 0 dollars soon
Heavy g (Hong Main Chord of Spud Leg for
Industries Kong) Co., F&G-JU2000E
Co., Ltd Ltd Self-elevating Drilling
Platform with Xinyuda
Ocean Engineering (Hong
Kong) Co., Ltd (hereinafter
referred to as “Xinyuda
Company”) (Contract No.:
ZP14-2125-0030, based on
which Xinyuda Company
provided one set of main
chord equipment for the
Zhenhai No. 5 Drilling
Platform. The product
provided by Xinyuda
Company had the quality
defects and was in breach
of the requirements of the
contract, as a result, the
construction schedule of
Zhenhai No. 5 Drilling
Platform of this Company
was seriously affected. This
Company had sent many
letters to request Xinyuda
Company to settle the
quality defects, but Xinyuda
Company had not
effectively responded to
them and dealt with these
defects. therefore, based on
the dispute settlement mode
stipulated by the contract,
this Company took a
arbitration against Xinyuda
Company to Hong Kong
International Arbitration
Center on May 9, 2017 and
requested Xinyuda
Company to compensate
this Company for the
expenses for replacement,
repair, removal,
reconstruction and
reinstallation of main chord,
about USD 35,250,000
dollars, and reserved the
rights of compensation for
the losses caused by the
quality of the main chord
under the platform
construction contract and
other losses arising
herefrom.
Industries Xinyuda No Arbitration On Jan. 28, 2014, this About USD 0 Court to Not yet Not yet
27 / 325
Annual Report 2017
Shanghai Ocean Company signed 35,250,00 be open ruled ruled
Zhenhua Engineerin Procurement Contract on 0 dollars soon
Heavy g (Hong Main Chord of Spud Leg for
Industries Kong) Co., F&G-JU2000E
Co., Ltd Ltd Self-elevating Drilling
Platform with Xinyuda
Ocean Engineering (Hong
Kong) Co., Ltd (hereinafter
referred to as “Xinyuda
Company”) (Contract No.:
ZP14-2126-0030, based on
which Xinyuda Company
provided one set of main
chord equipment for the
Zhenhai No. 6 Drilling
Platform. The product
provided by Xinyuda
Company had the quality
defects and was in breach
of the requirements of the
contract, as a result, the
construction schedule of
Zhenhai No. 6 Drilling
Platform of this Company
was seriously affected. This
Company had sent many
letters to request Xinyuda
Company to settle the
quality defects, but Xinyuda
Company had not
effectively responded to
them and dealt with these
defects. therefore, based on
the dispute settlement mode
stipulated by the contract,
this Company took a
arbitration against Xinyuda
Company to Hong Kong
International Arbitration
Center on May 9, 2017 and
requested Xinyuda
Company to compensate
this Company for the
expenses for replacement,
repair, removal,
reconstruction and
reinstallation of main chord,
about USD 35,250,000
dollars, and reserved the
rights of compensation for
the losses caused by the
quality of the main chord
under the platform
construction contract and
other losses arising
herefrom.
(III) Other statements
□Applicable √Not applicable
XI. Punishment and correction of listed company and its directors, supervisors and senior
executives, the controlling shareholder, actual controller and purchasers
□Applicable √Not applicable
XII. Integrity conditions of the Company and its controlling shareholders, actual controller
during the reporting period
□Applicable √Not applicable
28 / 325
Annual Report 2017
XIII. Company equity incentive plans and employee stock ownership plan or other incentive
to the staff and their impacts
(I) Incentive events already disclosed in the provisional
notice but without any progress or change in
subsequent implementation
□Applicable √Not applicable
(II) Incentives not disclosed in the provisional
announcement or with progress in subsequent
implementation
Stock ownership incentive
□Applicable √Not applicable
Other descriptions
□Applicable √Not applicable
Employee stock ownership plan
□Applicable √Not applicable
Other incentive measures
□Applicable √Not applicable
XIV. Magnificent related transactions
(I) Related transactions in connection with routine
operations
1. Events disclosed in the provisional announcement and without
changes or progresses in follow-up implementation
√Applicable □Not applicable
Events overview Index
18th meeting of 6th board of directors approved Shanghai Stock Exchange website:
Proposal for Participating in Investment and www.sse.com.cn and Shanghai Securities
Construction of Rebuilding and Relocation News and Hong Kong Wen Wei Po on Jan 24,
Houses in Rundown Urban Area and 2017.
Supporting Facilities in Dongming County,
Heze City on Jan. 23, 2017.
23rd meeting of 6th board of directors approved Shanghai Stock Exchange website:
Proposal for Investment and Construction of www.sse.com.cn and Shanghai Securities
PPP Project for Bridge and Liquefied Dock In News and Hong Kong Wen Wei Po on June
Yangkou Port Zone, Nantong City on June 22, 23, 2017.
2017.
2. Events disclosed in the provisional announcement and with
changes or progresses in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in the provisional announcement
√Applicable □Not applicable
Unit: Yuan Currency: RMB
Type of Content of Pricing Price of Related Proportion
Related transaction Incidence
related related principle of related transaction in similar
party relation
transaction transaction related transaction amount transaction
29 / 325
Annual Report 2017
transaction amount (%)
CCCC Financial Affiliated Sale of Project income Based on 728,945,754 728,945,754 3.33
Leasing Co., Ltd. company goods market
price
CCCC Tianjin Parent Sale of Project income Based on 471,642,717 471,642,717 2.16
Dredging Co., Ltd. company’s goods market
holding price
subsidiary
Jiangsu Longyuan Affiliated Sale of Project income Based on 439,726,261 439,726,261 2.01
Zhenhua Ocean company goods market
Engineering Co., price
Ltd
CCCC First Harbor Parent Sale of Project income Based on 311,673,509 311,673,509 1.43
Engineering Co., company’s goods market
Ltd. holding price
subsidiary
China Harbor Parent Sale of Project income Based on 232,091,723 232,091,723 1.06
Engineering Co., company’s goods market
Ltd holding price
subsidiary
China Parent Sale of Project income Based on 221,713,310 221,713,310 1.01
Communications company goods market
Construction price
Company Ltd.
Road & Bridge Parent Sale of Project income Based on 97,734,474 97,734,474 0.45
International Co., company’s goods market
Ltd. holding price
subsidiary
CCCC Tunnel Parent Sale of Project income Based on 96,474,819 96,474,819 0.44
Engineering Co., company’s goods market
Ltd. holding price
subsidiary
CCCC Second Parent Sale of Project income Based on 62,392,577 62,392,577 0.29
Harbor Engineering company’s goods market
Co., Ltd. holding price
subsidiary
No.1 Engineering Parent Sale of Project income Based on 57,742,023 57,742,023 0.26
Co., Ltd. of CCCC company’s goods market
Second Harbor holding price
Engineering Co., subsidiary
Ltd.
CCCC Electrical Parent Sale of Project income Based on 56,423,470 56,423,470 0.26
and Mechanical company’s goods market
Engineering holding price
Bureau Co., Ltd. subsidiary
CCCC Second Parent Sale of Project income Based on 51,535,600 51,535,600 0.24
Highway company’s goods market
Engineering Co., holding price
Ltd. subsidiary
Road & Bridge Parent Sale of Project income Based on 44,066,592 44,066,592 0.2
South China company’s goods market
Engineering Co., holding price
Ltd. subsidiary
No.4 Engineering Parent Sale of Project income Based on 36,707,819 36,707,819 0.17
Co., Ltd. Of CCCC company’s goods market
Second Harbor holding price
Engineering Co., subsidiary
Ltd.
No.3 Engineering Parent Sale of Project income Based on 28,130,115 28,130,115 0.13
Co., Ltd. Of CCCC company’s goods market
Second Harbor holding price
Engineering Co., subsidiary
Ltd.
CCCC First Harbor Parent Sale of Project income Based on 27,435,897 27,435,897 0.13
Consultants Co., company’s goods market
Ltd. holding price
30 / 325
Annual Report 2017
subsidiary
CCCC Third Harbor Parent Sale of Project income Based on 23,994,666 23,994,666 0.11
Engineering Co., company’s goods market
Ltd. holding price
subsidiary
China Road & Parent Sale of Project income Based on 23,045,665 23,045,665 0.11
Bridge Corporation company’s goods market
holding price
subsidiary
Chuwa Bussan Co. Parent Sale of Project income Based on 20,992,826 20,992,826 0.1
Ltd. company’s goods market
holding price
subsidiary
CCCC-SHEC Third Parent Sale of Project income Based on 15,152,103 15,152,103 0.07
Highway company’s goods market
Engineering Co. holding price
Ltd. subsidiary
Hainan CCCC Parent Sale of Project income Based on 7,710,256 7,710,256 0.04
Fourth Harbor company’s goods market
Construction Co., holding price
Ltd subsidiary
CCCC Fourth Parent Sale of Project income Based on 5,805,005 5,805,005 0.03
Harbor Engineering company’s goods market
Co., Ltd holding price
subsidiary
CCCC-FHDI Parent Sale of Project income Based on 5,058,462 5,058,462 0.02
Engineering Co., company’s goods market
Ltd holding price
subsidiary
ZPMC Affiliated Sale of Project income Based on 4,167,390 4,167,390 0.02
Mediterranean company goods market
Liman Makinalari price
Ticaret
Anonim Sirketi
CCCC Third Parent Sale of Project income Based on 2,752,482 2,752,482 0.01
Highway company’s goods market
Engineering Co. holding price
Ltd. subsidiary
CCCC Guangzhou Parent Sale of Project income Based on 1,949,573 1,949,573 0.01
Dredging Co. Ltd. company’s goods market
holding price
subsidiary
CCCC-SHEC Parent Sale of Project income Based on 1,729,907 1,729,907 0.01
Second company’s goods market
Engineering Co. holding price
Ltd. subsidiary
No.1 Engineering Sale of Rendering Project income Based on 14,151 14,151 0
Co., Ltd. Of CCCC goods of service market
First Harbor price
Engineering Co.,
Ltd.
CCCC Tianjin Parent Accepting Commissioned Based on 462,492,064 462,492,064 3.38
Dredging Co., Ltd. company’s labor processing for market
holding services the Company price
subsidiary
CCCC Second Parent Accepting Commissioned Based on 161,465,657 161,465,657 1.18
Harbor Engineering company’s labor processing for market
Co., Ltd. holding services the Company price
subsidiary
CCCC First Parent Accepting Commissioned Based on 137,930,629 137,930,629 1.01
Highway company’s labor processing for market
Engineering Co. holding services the Company price
Ltd. subsidiary
CCCC Third Harbor Parent Accepting Commissioned Based on 134,235,980 134,235,980 0.98
Engineering Co., company’s labor processing for market
Ltd. holding services the Company price
31 / 325
Annual Report 2017
subsidiary
CCCC-SHEC Parent Accepting Commissioned Based on 112,198,187 112,198,187 0.82
Second company’s labor processing for market
Engineering Co. holding services the Company price
Ltd. subsidiary
CCCC Fourth Parent Accepting Commissioned Based on 96,055,525 96,055,525 0.7
Highway company’s labor processing for market
Engineering Co. holding services the Company price
Ltd. subsidiary
No.1 Engineering Parent Accepting Commissioned Based on 63,578,055 63,578,055 0.46
Co., Ltd. Of CCCC company’s labor processing for market
First Harbor holding services the Company price
Engineering Co., subsidiary
Ltd.
Shanghai Parent Accepting Commissioned Based on 61,115,756 61,115,756 0.45
Communications company’s labor processing for market
Construction Co. holding services the Company price
Ltd. subsidiary
CCCC Second Parent Accepting Commissioned Based on 30,059,257 30,059,257 0.22
Highway company’s labor processing for market
Consultants Co. holding services the Company price
Ltd. subsidiary
The Second Parent Accepting Commissioned Based on 28,312,923 28,312,923 0.21
Engineering company’s labor processing for market
Company of CCCC holding services the Company price
Fourth Harbor subsidiary
Engineering Co.,
Ltd.
CCCC First Harbor Parent Accepting Commissioned Based on 26,777,335 26,777,335 0.2
Engineering Co., company’s labor processing for market
Ltd. holding services the Company price
subsidiary
Jiangsu Longyuan Affiliated Accepting Commissioned Based on 21,662,715 21,662,715 0.16
Zhenhua Ocean company labor processing for market
Engineering Co., services the Company price
Ltd
No.3 Engineering Parent Accepting Commissioned Based on 17,743,903 17,743,903 0.13
Co., Ltd. Of CCCC company’s labor processing for market
Third Harbor holding services the Company price
Engineering Co., subsidiary
Ltd.
CCCC Water Parent Accepting Commissioned Based on 12,105,094 12,105,094 0.09
Transportation company’s labor processing for market
Planning and holding services the Company price
Design Institute subsidiary
Co., Ltd.
No.2 Engineering Parent Accepting Commissioned Based on 10,427,350 10,427,350 0.08
Co., Ltd. Of CCCC company’s labor processing for market
Third Harbor holding services the Company price
Engineering Co., subsidiary
Ltd.
Installation Parent Accepting Commissioned Based on 5,989,401 5,989,401 0.04
Engineering company’s labor processing for market
Company of CCCC holding services the Company price
First Highway subsidiary
Engineering Co.
Ltd.
CCCC First Harbor Parent Accepting Commissioned Based on 5,858,503 5,858,503 0.04
Consultants Co., company’s labor processing for market
Ltd. holding services the Company price
subsidiary
ZPMC Affiliated Accepting Commissioned Based on 3,548,020 3,548,020 0.03
Mediterranean company labor processing for market
Liman Makinalari services the Company price
Ticaret
Anonim Sirketi
32 / 325
Annual Report 2017
CCCC Highway Parent Accepting Commissioned Based on 1,777,778 1,777,778 0.01
Bridges National company’s labor processing for market
Engineering holding services the Company price
Research Centre subsidiary
Co., Ltd.
CCCC Shanghai Parent Accepting Commissioned Based on 1,727,336 1,727,336 0.01
Dredging Co. Ltd. company’s labor processing for market
holding services the Company price
subsidiary
CTTIC Shanghai Parent Accepting Commissioned Based on 929,915 929,915 0.01
Co., Ltd. company’s labor processing for market
holding services the Company price
subsidiary
CCCC Third Harbor Parent Accepting Commissioned Based on 142,383 142,383 0
Consultants Co. company’s labor processing for market
Ltd. holding services the Company price
subsidiary
CCCC Shanghai Parent Purchase Supply Based on 131,400,593 131,400,593 0.96
Equipment company’s goods materials to the market
Engineering Co., holding Company price
Ltd. subsidiary
ZPMC Changzhou Affiliated Purchase Supply Based on 88,611,099 88,611,099 0.65
Coatings Co., Ltd. company goods materials to the market
Company price
Chuwa Bussan Co. Parent Purchase Supply Based on 42,752,896 42,752,896 0.31
Ltd. company’s goods materials to the market
holding Company price
subsidiary
Shanghai Jiangtian Parent Purchase Supply Based on 15,435,145 15,435,145 0.11
Industrial Co., Ltd company’s goods materials to the market
holding Company price
subsidiary
China Parent Purchase Supply Based on 5,989,665 5,989,665 0.04
Communications company’s goods materials to the market
Materials & holding Company price
Equipment Co., Ltd subsidiary
CCCC Fourth Parent Purchase Supply Based on 4,868,840 4,868,840 0.04
Highway company’s goods materials to the market
Engineering Co. holding Company price
Ltd. subsidiary
Nanjing CCCC Parent Purchase Supply Based on 418,291 418,291 0
Weisanlu River company’s goods materials to the market
Tunnel Co., Ltd holding Company price
subsidiary
CCCC Tianjin Parent Purchase Supply Based on 22,846 22,846 0
Industry and Trade company’s goods materials to the market
Co., Ltd. holding Company price
subsidiary
Zhenhua Ocean Joint Other Vessel leasing Based on 158,746,932 158,746,932 0.73
Energy (Hong venture inflows market
Kong) Co., Ltd price
Jiangsu Longyuan Joint Other Vessel leasing Based on 27,414,329 27,414,329 0.13
Zhenhua Ocean venture inflows market
Engineering Co., price
Ltd
CCCC-FHEC Parent Other Shield leasing Based on 26,525,385 26,525,385 0.12
Urban Traffic company’s inflows market
Engineering Co., holding price
Ltd. subsidiary
CCCC Second Parent Other Shield leasing Based on 6,727,590 6,727,590 0.03
Highway company’s inflows market
Engineering Co., holding price
Ltd. subsidiary
Road & Bridge Parent Other Shield leasing Based on 3,499,733 3,499,733 0.02
International Co., company’s inflows market
Ltd. holding price
33 / 325
Annual Report 2017
subsidiary
CCCC Third Parent Other Shield leasing Based on 2,928,360 2,928,360 0.01
Highway company’s inflows market
Engineering Co. holding price
Ltd. subsidiary
China Parent Other Shield leasing Based on 2,162,605 2,162,605 0.01
Communications company’s inflows market
Construction holding price
Company Ltd. subsidiary
CCCC-SHEC No.4 Parent Other Shield leasing Based on 1,841,219 1,841,219 0.01
Engineering Co., company’s inflows market
Ltd. holding price
subsidiary
CCCC-SHEC No.1 Parent Other Shield leasing Based on 1,336,752 1,336,752 0.01
Engineering Co., company’s inflows market
Ltd. holding price
subsidiary
CCCC First Harbor Parent Other Shield leasing Based on 895,138 895,138 0
Engineering Co., company’s inflows market
Ltd. holding price
subsidiary
Total 4,994,520,330 14.05
Explanation of
Note: May 9, 2016, the Company 2015 Annual General Meeting approved Motion on the
related transaction
Company Signing Framework Agreement with CHINA COMMUNICATIONS CONSTRUCTION CO.,
LTD on Routine Related Transactions. In 2016, our company and its subordinate units and the
China Communications Corporation and its subsidiary bodies could undertake related party
transactions in the daily operation on annual basis with transaction amount not exceeding 11 billion
Yuan. The Annual General Meeting has authorized the Company’s management to handle relevant
specific matters.
(II) Associated transactions of asset or equity acquisition
and sales
1. Events disclosed in the provisional announcement, without
changes or progresses in follow-up implementation
□Applicable √Not applicable
2. Events disclosed in the provisional announcement, with changes
or progresses in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in the provisional announcement
□Applicable √Not applicable
4. When the performance agreement is concerned, the performance
during the reporting period shall be disclosed
□Applicable √Not applicable
(III) Major related transactions of common foreign
investment
1. Events disclosed in the provisional announcement, without
changes or progresses in follow-up implementation
□Applicable √Not applicable
34 / 325
Annual Report 2017
2. Events disclosed in the provisional announcement, with changes
or progresses in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in the provisional announcement
□Applicable √Not applicable
(IV) Current accounts of credits and liabilities with related
parties
1. Events disclosed in the provisional announcement, without
changes or progresses in follow-up implementation
√Applicable □Not applicable
Events overview Index
19th meeting of 6th board of directors approved Shanghai Stock Exchange website:
Proposal for Handling Loan by Mandate of www.sse.com.cnand Shanghai Securities
Budgetary Funds of State-owned Capital to News and Hong Kong Wen Wei Po on Mar.
China Communications Construction Co., Ltd. 29, 2017.
on Mar. 27, 2017.
26th meeting of 6th board of directors approved Shanghai Stock Exchange website:
Proposal for Splitting Credit Extension of This www.sse.com.cnand Shanghai Securities
Company in CCCC Finance Co., Ltd by News and Hong Kong Wen Wei Po on Oct. 31,
Tianhe Mechanical Equipment Manufacturing 2017.
Co., Ltd on Oct. 30, 2017.
2. Events disclosed in the provisional announcement, with changes
or progresses in follow-up implementation
□Applicable √Not applicable
3. Events not disclosed in the provisional announcement
□Applicable √Not applicable
(V) Other
□Applicable √Not applicable
XV. Major contracts and their performance
(I) Entrusting, contracting and leasing
1. Entrusting
□Applicable √Not applicable
2. Contracting
□Applicable √Not applicable
3. Leasing
√Applicable □Not applicable
Unit: Yuan Currency: RMB
35 / 325
Annual Report 2017
Lease Determination Impact on Related
Leased Amount Lease start Rental
Lessor Lessee termination basis of rental the transaction
assets involved date income
date income Company or not
The Shanghai Housing 273,401,305 2012/08/10 2025/07/09 48,361,731 Agreed 48,361,731 No
Company Zhenlong Rental
Asset
Management
Co., Ltd, and
other
companies
(II) Guarantee
√Applicable □Not applicable
Unit: Yuan Currency: RMB
External guarantee of the Company (excluding those for held subsidiaries)
Relationship
Date of Whether Whether
between the Start date Guarantee Whether the Is the
Guaranteed Guarantee guarantee Type of there is guarantee
Guarantor guarantor of maturity Guarantee is guarantee
party amount (date of guarantee counter to related
and listed guarantee date implemented overdue
agreement) guarantee party
company
The Home office Jiangsu 10,790,000 Nov. 11, Nov. 11, May 8, Joint and No No No No
Company Yanwei Port 2014 2014 2018 several
Co., Ltd liability
guarantee
Total guaranties incurred in report period (excluding those for -185,641,287
subsidiaries)
Total Guarantee balance at the end of report period (A) 10,790,000
(excluding those for subsidiaries)
Guarantee of the Company and its subsidiaries to subsidiaries
Total guaranties for subsidiaries incurred in report period -1,053,735,000
Total guaranties for subsidiary balance at the end of report 2,156,286,000
period (B)
Total amount of guarantee of the Company (including those for subsidiaries)
Total guarantee amount (A+B) 2,167,076,000
Proportion in net assets of the Company (%) 12.88
In which:
Amount provided to shareholders, effective controller and its 0
related parties (C)
Amount of debt guarantee directly or indirectly provided for the 2,058,273,000
guaranteed party with the asset-liability ratio exceeding 70% (D)
Amount of guaranties exceeding 50% of net assets (E) 0
Total of the above 3 kinds of guarantee (C+D+E) 2,058,273,000
Explanation of the joint and several liability might undertaken by
undue guarantee
Guarantee Note: the first interim general meeting of stockholders held on September 22, 2008 approved Proposal of Company Providing
status Financing Guarantee to Subsidiary Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd., and agreed to provide financing
explanation support to Hong Kong subsidiary. The bank will issue guarantee for the loan with the upper limit of 500 million USD. The 30th
meeting of fifth Board of Directors, the 20th, 24th, 25th and 26th meeting of sixth Board of Directors approved other guarantees.
(III) Entrusted cash assets management
1. Trust management
(1). General of trust management
□Applicable √Not applicable
Others
□Applicable √Not applicable
(2). Information on individual trust management
36 / 325
Annual Report 2017
□Applicable √Not applicable
Others
□Applicable √Not applicable
(3). Impairment provision for trust management
□Applicable √Not applicable
2. Entrusted loans
(1). General of entrusted loans
□Applicable √Not applicable
Others
□Applicable √Not applicable
(2). Information on individual entrusted loan
□Applicable √Not applicable
Others
□Applicable √Not applicable
(3). Impairment provision for entrusted loans
□Applicable √Not applicable
3. Others
□Applicable √Not applicable
(IV) Other substantial contracts
□Applicable √Not applicable
XVI. Notes to other major issues
□Applicable √Not applicable
XVII. Active fulfillment of social responsibilities
(I) Poverty alleviation of listed company
□Applicable √Not applicable
(II) Social responsibility work
√Applicable □Not applicable
Based on the social responsibility consciousness of “creating the elaborate works for
customers, creating the benefit for the shareholders, creating the happiness for the staff and
creating the harmony for the society”, this Company abides by the lawful and compliant operation,
frankly communicates with the stakeholders, continuously perfects the social responsibility
construction system and sets up the good image of a large-sized state-owned enterprise for fulfilling
its duties and obligations.
The Company persists in building the elaborate works, pursues and carries out the quality
management mode of “being off-land without any debt”, continuously increases the investment in
scientific and technical innovation and advocates the green production and energy-saving
production. It impels the construction of the oversea regional center and deepens the construction
of full-life cycle service and integrated service to make the customers enjoy quicker and high quality
service.
The Company persists in human-oriented principle, strictly abides by the labor laws and
regulations and sticks to equalized and humanized labor policy. It continuously perfects distribution
incentive system and performance evaluation system and establishes the distribution mode
37 / 325
Annual Report 2017
connected with the market. It regularly holds the cultural and sport activities to form good working
and living atmosphere.
The Company pays high attention to the regional cooperative development and continuously
upgrades the joint construction level of government and enterprise, society and enterprise and
university and enterprise as well as the integrated construction of industry, university and institute to
promote the further integration of the cultural spirits of the enterprise into the society.
(III) Environmental information
1. Environmental protection of the listed company and its key
subsidiaries defined as industry of heavy pollution industry
specified by national environmental protection department
√Applicable □Not applicable
Changxing Branch of this Company belongs to the key pollutant-discharge unit issued by the
environmental protection authorities, with the main pollutants including wastewater, waste gas,
smoke dust, volatile organic compounds, general industrial solid wastes and hazardous wastes.
Emission mode: the wastewater is drained after reaching up to the standard through treatment; the
atmospheric pollutants such as waste gas, smoke dust and volatile organic compounds adopt the
combination of organized emission and unorganized emission; the hazardous waste and the solid
waste are transported to the qualified unit for treatment. Changxing Branch has basically
accomplished the reconstruction of pre-treatment coating flow line and actively advanced VOCs end
control, as a result, it has made good achievements in construction and operation of the pollution
prevention and control facilities. According to the prepared environmental emergency preplan, in
combination with the actual conditions of the Company, it perfected the configuration of the
emergency aid equipment and facilities, developed the emergency aid technical training and
practice drilling in a normalized manner and practically improved the emergency response capability
and emergency aid capability. The self-monitoring plan of Changxing Branch: 1. wastewater online
monitoring; 2. entrust the third party to carry out the environmental monitoring; 3. boundary noise
self-measurement.
2. Companies other than those defined as key pollutant-discharge
unit
√Applicable □Not applicable
In 2017, the environmental impact report assessment report on the expansion of output of the
construction project of Nantong Zhenhua Heavy Equipment Manufacturing Co., Ltd from 100000t/a
sand clean paint steel member to 200,000t/a sand clean oil steel member and 2,980t stainless and
non-ferrous metal pipe fittings was approved by Nantong Administration of Environmental
Protection. The construction project met the requirements on environmental protection and obtained
the administrative license of Nantong Administration of Environmental Protection.
3. Other explanations
□Applicable √Not applicable
(IV) Other explanations
□Applicable √Not applicable
XVIII. Convertible bonds
(I) Status of issuance of convertible bonds
□Applicable √Not applicable
(II) Status of holders and underwriter of convertible bonds
during the reporting period
□Applicable √Not applicable
38 / 325
Annual Report 2017
(III) Changes in convertible bonds during the reporting
period
□Applicable √Not applicable
Accumulated conversion of convertible bonds during the reporting period
□Applicable √Not applicable
(IV) Information on all adjustments of conversion price
□Applicable √Not applicable
(V) Liabilities, changes in credit and cash arrangements of
the Company in the future
□Applicable √Not applicable
(VI) Other information about convertible bonds
□Applicable √Not applicable
Chapter VI Changes in Ordinary Shares Capital and Shareholders
I. Changes in ordinary shares capital
(I) Ordinary shares changes statement
1. Ordinary shares changes statement
During the reporting period, there was no change in the total number of ordinary shares and the
equity structure of the Company.
2. Explanation for changes in the ordinary shares
□Applicable √Not applicable
3. Effect of ordinary share changes on the financial index such as
earnings per share and net assets per share in the past one year
or the latest period (if any)
□Applicable √Not applicable
4. Other information deemed to be necessarily disclosed by the
Company or as required by a security supervision institution
□Applicable √Not applicable
(II) Changes in restricted shares
□Applicable √Not applicable
II. Securities issue and listing
(I) Securities issue by the end of the reporting period
□Applicable √Not applicable
Explanation for securities issue by the end of the reporting period (describe the bonds with different
interest rate respectively in the duration):
□Applicable √Not applicable
39 / 325
Annual Report 2017
(II) Changes in total number of ordinary shares,
shareholder structure and assets and liabilities structure
of the Company
□Applicable √Not applicable
(III) Description of status of existing employee shares
□Applicable √Not applicable
III. Shareholders and actual controllers
(I) Total number of shareholders
Total number of shareholders of ordinary shares by the end of reporting period 255,997
Total number of shareholders or ordinary shares at the end of last month prior to 252,635
the disclosure date of annual report
(II) Shareholding profile of top 10 shareholders and top 10
circulating shareholders (or tradable shareholders) by the
end of the reporting period
Unit: share
Shareholding profile of top 10 shareholders
Number of Pledged or frozen
Change in Shares held
Name of Shareholder Proportion restricted Nature of
reporting at the end of Share
(Full Name) (%) shares Quantity shareholder
period the period status
held
CCCG (HK) 763,963,20 Overseas
763,963,200 17.401 0 None 0
HOLDING LIMITED 0 legal person
China State-own
-552,686,1
Communications 712,951,703 16.239 0 None 0 legal person
46
Construction Co., Ltd.
China State-own
552,686,14
Communications 552,686,146 12.589 0 None 0 legal person
6
Construction Group
Central Huijin Assets Unknown
0 74,482,200 1.70 Unknown
Management Co., Ltd
China Securities Unknown
0 56,788,474 1.29 Unknown
Finance Co., Ltd
BOSERA FUNDS - Unknown
Agricultural Bank of
China - BOSARE
0 16,546,600 0.38 Unknown
China Securities
Financial Assets
Management Plan
E FUND Management Unknown
- Agricultural Bank of
China - E FUND
Management China 0 16,546,600 0.38 Unknown
Securities Financial
Assets Management
Plan
DACHENG FUND - Unknown
Agricultural Bank of
China - DACHENG
0 16,546,600 0.38 Unknown
China Securities
Financial Assets
Management Plan
40 / 325
Annual Report 2017
Harvest Fund - Unknown
Agricultural Bank of
China - Harvest China
0 16,546,600 0.38 Unknown
Securities Financial
Assets Management
Plan
GF Fund - Agricultural Unknown
Bank of China - GF
China Securities 0 16,546,600 0.38 Unknown
Financial Assets
Management Plan
Lombarda China Unknown
Fund - Agricultural
Bank of China -
Lombarda China 0 16,546,600 0.38 Unknown
Fund China Securities
Financial Assets
Management Plan
China Asset Unknown
Management -
Agricultural Bank of
China - China Asset
0 16,546,600 0.38 Unknown
Management China
Securities Financial
Assets Management
Plan
Yinhua Fund - Unknown
Agricultural Bank of
China - Yinhua China
0 16,546,600 0.38 Unknown
Securities Financial
Assets Management
Plan
China Southern Asset Unknown
Management -
Agricultural Bank of
China - CSAM China 0 16,546,600 0.38 Unknown
Securities Financial
Assets Management
Plan
ICBC Credit Unknown
Suisse Fund -
Agricultural Bank of
China - ICBC Credit
0 16,546,600 0.38 Unknown
Suisse China
Securities Financial
Assets Management
Plan
Shares held by Top 10 unrestricted shareholders
Number of Type and quantity of shares
Name of Shareholder tradable shares
Type Quantity
held
CCCG (HK) HOLDING LIMITED 763,963,200 B-shares
China Communications Construction Co., Ltd. 712,951,703 A-shares
China Communications Construction Group 552,686,146 A-shares
Central Huijin Assets Management Co.,
74,482,200 A-shares
Ltd
China Securities Finance Co., Ltd 56,788,474 A-shares
BOSERA FUNDS - Agricultural Bank of China -
BOSARE China Securities Financial Assets 16,546,600 A-shares
Management Plan
E FUND Management - Agricultural Bank of
China - E FUND Management China Securities 16,546,600 A-shares
Financial Assets Management Plan
DACHENG FUND - Agricultural Bank of China -
DACHENG China Securities Financial Assets 16,546,600 A-shares
Management Plan
41 / 325
Annual Report 2017
Harvest Fund - Agricultural Bank of China -
Harvest China Securities Financial Assets 16,546,600 A-shares
Management Plan
GF Fund - Agricultural Bank of China - GF China
16,546,600 A-shares
Securities Financial Assets Management Plan
Lombarda China Fund - Agricultural Bank of
China - Lombarda China Fund China Securities 16,546,600 A-shares
Financial Assets Management Plan
China Asset Management - Agricultural Bank of
China - China Asset Management China 16,546,600 A-shares
Securities Financial Assets Management Plan
Yinhua Fund - Agricultural Bank of China -
Yinhua China Securities Financial Assets 16,546,600 A-shares
Management Plan
China Southern Asset Management - Agricultural
Bank of China - CSAM China Securities 16,546,600 A-shares
Financial Assets Management Plan
ICBC Credit Suisse Fund - Agricultural Bank
of China - ICBC Credit Suisse China 16,546,600 A-shares
Securities Financial Assets Management Plan
Explanation of the 1. This Company issued Announcement of Completion of Transfer and Registration of Shares of
above related Shanghai Zhenhua Heavy Industries Co., Ltd Transferred by China Communications
relationship or Construction Co., Ltd through Agreement on Dec. 28, 2017. As of Dec. 27, 2017, CCCC directly
consistent action held 12.589% of the shares of this Company and indirectly held 17.401% of the shares of this
Company through CCCC Hong Kong. In addition, it still held 16.239% of the shares of this
Company through CCCC and became the controlling shareholder of this Company.
2. Among above top 10 shareholders, CCCG (HK) HOLDING LIMITED, China Communications
Construction Group. And China Communications Construction Co., Ltd. Belong to related
companies. The Company is not aware of whether other shareholders have associated
relationship among them or belong to the consistent actionists as defined in the Administrative
Rules on Disclosure of Stock Change Information of Listed Company’s Shareholders.
Number of shares held by top 10 restricted shareholders and restriction conditions
□Applicable √Not applicable
(III) Strategic investors or general legal entities who become
top 10 shareholders due to rights issue
□Applicable √Not applicable
IV. Status of controlling shareholder and actual controller
(I) Controlling shareholder
1 Legal person
√Applicable □Not applicable
Name China Communications Construction Group
Person in charge of the unit or the Liu Qitao
legal representative
Date of incorporation Dec. 8, 2005
Main businesses Undertaking overseas projects and international bidding projects at home;
general contracting for construction of various special ships, leasing and
maintenance of special ship and construction machines; offshore towage
and professional services related to the ocean engineering; technical
consultant services regarding the ship and the supporting port equipment;
engaging in the general contracting of construction projects for ports,
channels, highways and bridges both home and abroad (including technical
and economic consultation of engineering, feasibility study, survey, design,
construction, supervision, procurement and supply for related complete set
of equipment or materials, and equipment installation); undertaking the
general contracting of the construction of industrial and civil works, railway,
metallurgy, petrochemical, tunnel, power, mine, water conservancy, and
municipal works; import and export business; real estate development and
property management; investment and management of transportation, hotel
42 / 325
Annual Report 2017
and tourist industries.
2 Natural person
□Applicable √Not applicable
3 Special statement for the Company without controlling
shareholder
□Applicable √Not applicable
4 Index and date of the changes in controlling shareholders during
the reporting period
√Applicable □Not applicable
This Company issued the Announcement of Completion of Transfer and Registration of Shares
of Shanghai Zhenhua Heavy Industries Co., Ltd Transferred by China Communications
Construction Co., Ltd through Agreement on Dec. 28, 2017. Please refer to www.sse.com.cn and
input the stock code for reference or refer to Shanghai Securities News and Hong Kong Wen Wei
Po on Dec. 28, 2017.
5 Block diagram of property right and control relationship between
the Company and controlling shareholders
√Applicable □Not applicable
(II) Actual controller
1 Legal person
□Applicable √Not applicable
2 Natural person
□Applicable √Not applicable
3 Special statement for the company without actual controller
□Applicable √Not applicable
4 Index and date of the change of actual controller during the
reporting period
□Applicable √Not applicable
43 / 325
Annual Report 2017
5 Block diagram of property right and control relationship between
the Company and actual controller
√Applicable □Not applicable
6 Actual controllers control the company through trust or other
asset management methods
□Applicable √Not applicable
(III) Other information of the controlling shareholder and
the actual controllers
□Applicable √Not applicable
V. Other corporate shareholders holding over 10% shares
□Applicable √Not applicable
VI. Explanation for restricted reduction of the shares
□Applicable √Not applicable
Chapter VII Related Information about Preference Shares
□Applicable √Not applicable
44 / 325
Annual Report 2017
Chapter VIII Directors, Supervisors, Senior Management and Staff
I. Changes in holdings and remuneration
(I) Shareholding changes and remuneration of directors, supervisors and senior
management under employment or retired during report period
√Applicable □Not applicable
Unit: share
Total pre-tax Paid by
remuneration related
Notes to
received from parties of
Shares held remuner
Shares held Change the Company the
Start of at the ation
Name Title (note) Sex Age End of tenure at the end of s in the during Company
Tenure beginning of calculati
year year reporting or not
year on
period
interval
(RMB10,000
Yuan )
Zhu Chairman of the Board, Apr. 21, 0 0 0 Jan. To
Male 48 Apr. 20, 2018 73.74 No
Lianyu Party Secretary 2015 Dec.
Huang Director, President, Apr. 21, 0 0 0 Jan. To
Male 43 Apr. 20, 2018 70.41 No
Qingfeng Deputy Party Secretary 2015 Dec.
Zhang Director 0 0 0
Male 58 Mar. 7, 2018 Apr. 20, 2018 - 0 Yes
Hongwen
Director, Chief Engineer Apr. 21, 0 0 0 Jan. To
Yan Yunfu Male 59 Apr. 20, 2018 56.82 No
2015 Dec.
Liu Director, Vice President Apr. 21, 0 0 0 Jan. To
Male 54 Apr. 20, 2018 56.67 No
Qizhong 2015 Dec.
Dai Director, Vice President Apr. 21, 0 0 0 Jan. To
Male 51 Apr. 20, 2018 57.23 No
Wenkai 2015 Dec.
Zhu Director, CFO 0 0 0
Male 49 Mar. 7, 2018 Apr. 20, 2018 0 No
Xiaohuai
Independent Director Apr. 21, 0 0 0 Jan. To
She Lian Male 59 Apr. 20, 2018 12 No
2015 Dec.
Independent Director Apr. 21, 0 0 0 Jan. To
Gu Wei Male 61 Apr. 20, 2018 12 No
2015 Dec.
Independent Director Apr. 21, 0 0 0 Jan. To
Ling He Male 66 Apr. 20, 2018 12 No
2015 Dec.
Independent Director Apr. 21, 0 0 0 Jan. To
Yang Jun Male 61 Apr. 20, 2018 12 No
2015 Dec.
45 / 325
Annual Report 2017
Bai Independent Director 0 0 0 May to
Female 45 May 9, 2017 Apr. 20, 2018 8 No
Yunxia Dec.
Deputy Party Secretary, 0 0 0
Wang Secretary of Committee July to
Male 45 Mar. 7, 2018 Apr. 20, 2018 22.92 No
Cheng for Discipline Inspection, Dec.
Chairman of Labor Union
Zhang Supervisor Apr. 21, 20,259 20,259 0 Jan. To
Male 56 Apr. 20, 2018 76.07 No
Minghai 2015 Dec.
Xiang Supervisor Apr. 21, 0 0 0 Jan. To
Male 42 Apr. 20, 2018 72.76 No
Xudong 2015 Dec.
Vice President Apr. 21, 0 0 0 Jan. To
Liu Jianbo Male 55 Apr. 20, 2018 56.55 No
2015 Dec.
Vice President Apr. 21, 0 0 0 Jan. To
Zhou Qi Male 46 Apr. 20, 2018 57.18 No
2015 Dec.
Vice President Apr. 21, 89,440 89,440 0 Jan. To
Chen Bin Male 44 Apr. 20, 2018 56.67 No
2015 Dec.
Shan Vice President Apr. 21, 0 0 0 Jan. To
Male 54 Apr. 20, 2018 56.67 No
Jianguo 2015 Dec.
Zhang Vice President Apr. 21, 0 0 0 Jan. To
Male 49 Apr. 20, 2018 56.41 No
Jian 2015 Dec.
Chief Engineer Apr. 21, 0 0 0 Jan. To
Fei Guo Male 56 Apr. 20, 2018 56.7 No
2015 Dec.
Li Chief economist Apr. 21, 0 0 0 Jan. To
Male 43 Apr. 20, 2018 56.23 No
Ruixiang 2015 Dec.
General counsel Apr. 21, 0 0 0 Jan. To
Sun Li Male 46 Apr. 20, 2018 56.67 No
2015 Dec.
Song Former chairman of the Apr. 21, 0 0 0
Male 53 Apr. 28, 2017 - 0 Yes
Hailiang board 2015
Former director Apr. 21, 0 0 0
Chen Qi Female 56 Dec. 27, 2017 - 0 Yes
2015
Former director, CFO, Apr. 21, 0 0 0 Jan. To
Wang Jue Male 54 Dec. 18, 2017 56.67 No
secretary of the board 2015 Dec.
Former chief supervisor, 0 0 0
Deputy party secretary,
Apr. 21, Jan. To
Cui Wei Secretary of Committee Male 42 Aug. 29, 2017 33.15 Yes
2015 June
for Discipline Inspection,
chairman of Labor Union
Total / / / / / 109,699 109,699 0 1085.52 /
Name Main work experiences
46 / 325
Annual Report 2017
Born in 1970, male, Ph.D., professor-level senior engineer; began his career in September 1992, served as engineer, equipment leader of
Zhu overseas project, vice chief of Marine Machine Department, manager of Enterprise Development Department of CCCC First Harbor
Lianyu Engineering Co., Ltd; general manager of CCCC International Shipping Co., Ltd, general manager of Equipment Manufacturing Marine
Heavy Industry Department of China Communications Construction Co., Ltd. Current: Chairman of the Board and secretary of Party.
Born in 1975, male, EMBA, senior engineer; began his career in August 1996, used to be quality project chief, director of field bridge office of
quality management department; deputy manager of after-sales department, general manager of Quality Inspection Company; vice director
Huang
of off-shore office, director of Quality Safety Department, director of Product Service Center and assistant president of the Group; VP of the
Qingfeng
Company from Jan. 2005 and executive vice president and director of Production and Project Management Center since 2014. Current:
Director, President, Deputy party secretary of the Company.
Born in 1960, male, undergraduate, senior engineer; engaged in work in Aug., 1983. Successively serving as deputy general manager of
International Engineering Branch of Zhonggung Headquarters, deputy general manager of Overseas Division and manager of
Comprehensive Department of Zhonggung Group, deputy general manager of Engineering Management Department and Operation &
Zhang Management Department of China Communications Construction Co., Lt, deputy general manager and general manager of Capital
Hongwen Construction Department (Dredging Department) of CCCC, CEO and general manager of Dredging Business Department of Shanghai
International Port (Group) Co., Ltd, director, CEO, temporary member of the Party committee and non-executive director of CCCC Dredging
(Group) Co., Ltd. Now serving as the general manager and director of Equipment Manufacturing & Ocean Heavy Industry Department of
CCCC.
Born in 1959, male, EMBA, professor-level senior engineer; served as Vice Chief of Technical Department, Manager of Mechanical Design
Yan
Department, Vice General Engineer, General Engineer and VP of the Company, and President of Land Heavy Industry Equipment Design
Yunfu
Institute, director of board of the Company since 2004. Current: director and chief engineer.
Liu Born in 1964, male, bachelor degree, senior economist; Vice Manager and Manager of Operating Department, director of the Company
Qizhong since 1997. Current: director and VP of Company.
Dai Born in 1967, male, master of physics, EMBA, senior engineer. Began his career in 1993, served as Vice Manger and Manager of Operating
Wenkai Department, Vice Chief Economist, Chief Economist. Current: director and VP of the Company.
Born in 1969, male, master of MBA, senior account. Successively served as deputy section manager of Financial Division of CCCC
Zhu Shanghai Dredging Co., Ltd, deputy director of Budget and Finance Department, deputy manager, manager of Finance Department of
Xiaohuai CCCC Shanghai Dredging Co., Ltd and concurrently serving as a member of commission for disciplinary inspection, director, chief account,
standing committee member of CCCC Shanghai Dredging Co. Ltd. Now serving as the director and CFO of the company.
Born in 1959, male, professor, doctoral tutor; enjoying special government allowances from the State Council since 1995; deputy director
and Party Secretary of the Department of Business Administration, Wuhan University of Communications Science; chief editor of
"Transportation Enterprise Management" magazine run by Ministry of Transportation; director of Early Warning Management Research
She Lian
Center, Wuhan University of Technology, Professor of Management, doctoral tutor; director of Early Warning Management Research
Center, Huazhong University of Science and Technology, Professor of Management, doctoral tutor; Professor of CEIBS Emergency
Management Institute incumbent National School of Administration, doctoral tutor. Current independent director of the Company.
Born in 1957, male, Ph.D., professor and doctoral tutor; since 1982, has been teaching at Shanghai Maritime University; since the year 2000,
Gu Wei
enjoys special government allowances from the State Council, and the IEEE Society member, MTS Society member and the British Royal
47 / 325
Annual Report 2017
Physical Society member, senior member of China Electro technical Society, senior member of Chinese Society of Naval Architects, senior
member of Chinese Mechanical Engineering Society; is currently director of the Key Laboratory of the Ministry of Transportation's Shipping
Technology and Control Engineering; member of China Electro technical Society's Vessel Electrical Committee; member of the Committee
of Experts of Shanghai Jiaotong Electronics Industry Association; procurement consulting expert of Shanghai Municipal Government;
member of the Committee of Experts of Ministry of Transport East China Sea Rescue Bureau and other duties. Current: independent director
of the Company.
Born in 1952, male, professor, senior editor (Senior professional title) of Liberation Daily, director of Shanghai Journalists Association,
director of Shanghai Institute of Essays, served as member, assistant chief editor, director of Editing Department of the democratic and legal
Ling He magazine agency, vice director and director of Comment Department of Liberation Daily, main editor of Liberation Daily, chief editor of
Liberty Forum; with honor of the first National 100 Journalists, China News first prize for three times, Shanghai News first prize for 15 times.
Current independent director of the Company.
Born in 1957, male, master degree, served as intermediate and Senior court judge of Shanghai Court, president and members of the judicial
committee member, Property Trade Operation Director of Shanghai United Property Rights Exchange, now is the assistant president of
Shanghai United Property Rights Exchange, general manager of Beijing HQ, director of Financial Property Rights Trade Center, arbitrator of
Yang Jun 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. Current: independent director of the Company.
Born in Oct. 1973, female, Doctor of Accounting of Xiamen University, Post-doctor of Accounting, professor and doctoral student’s tutor of
Guanghua School of Management of Peking University. Engaged in work in 1995. Successively serving as the assistant engineer of Kaiyuan
Bai Group under Xi’an Jiaotong University, lecturer of School of Economics and Management of Tongji University, research scholar of Cheung
Yunxia Kong Graduate School of Business. Now serving as the director of Department of Accounting of School of Economics and Management of
Tongji University, research scholar of Investment Center of Cheung Kong Graduate School of Business. Serving as the independent director
of the Company.
Born in 1973, male, undergraduate, senior political worker. Successively serving as secretary of Committee of the Communist Youth League
and secretary of Party Branch of No. 2 Engineering Co., Ltd of CCCC Third Harbor Engineering Co., Ltd; deputy director and director of
Wang Organization Department of CCCC Third Harbor Engineering Co., Ltd; Secretary of the Party Committee and vice general manager of No. 2
Cheng Engineering Co., Ltd of CCCC Third Harbor Engineering Co., Ltd; chairman of board of supervisors and Vice Secretary of the Party
Committee of CCCC Third Harbor Engineering Co., Ltd. Now serving as the Vice Secretary of the Party Committee, Secretary of
Commission for Disciplinary Inspection, chairman of labor union and supervisor of this Company.
Born in1962, male, EMBA, professor-level senior engineer; formerly served as the engineer of Technology Division of Shanghai Port
Machinery Plant; deputy manager of mechanical office, deputy chief engineer, general manager of Shore Bridge No. 1 Company of
Zhang
Mechanical Office, and general manager of Land-based Heavy Industry Co., Ltd. Of Shanghai Zhenhua Heavy Industries Co., Ltd. Current:
Minghai
director of the Company, chief designer and deputy dean of Land-based Heavy Industry Research & Design Institute, and vice chairman of
Logistics Engineering Institution, CMES.
Xiang Born in 1976, male, bachelor degree, senior engineer; served as Vice Director and Vice Manager of Quality Department, General manager
48 / 325
Annual Report 2017
Xudong of Zhenhua Heavy Industry Inspection Co., Ltd. Current: worker’s representative supervisor of the board of supervisors, Vice General
Manager of Zhenhua Heavy Industry Changxin Branch, Secretary of the Party Committee of Changxing Branch, and executive deputy
general manager.
Born in 1963, male, master degree，senior engineer; served as the engineer at technological office of Shanghai Port Machinery Plant;
Liu
assistant director in engineering with Technology Office of Shanghai Container Dock Co. Ltd., deputy general manager and general manager
Jianbo
of ZPMC Changxing Base. Current: VP of the Company and chairman of board of Shanghai Zhenhua Ocean Engineering Service Co., Ltd.
Born in 1972, male, EMBA, senior engineer; was manager and deputy general engineer, general manager and chief engineer of the Electric
Zhou Qi
Appliance Office of the Company; current VP of the Company and chairman of Electric Group of the Company.
Born in 1974, male, EMBA, senior engineer; formerly served as project quality leader of Quality Control Division, deputy manager of tire
crane office of quality control division, manager of quality control division, deputy general manager and general manager of quality
Chen Bin inspection company, vice director of quality and safety office, manager of Quality Safety Division, supervisor of the Company, general
manager of Shanghai Zhenhua Shipment Co., Ltd, president assistant of the Company. Current: VP of the Company and general manager
of Shanghai Zhenhua Ocean Engineering Service Co., Ltd.
Born in 1964, male, bachelor degree; formerly worked in Shanghai Port Machinery Manufacturing Plant and started to work in Shanghai
Shan Zhenhua Port Machinery Co., Ltd since 1992, served as the engineer, chief engineer of Machinery Office, general manager of design
Jianguo company, deputy director and director of Machinery Office, manager of budget assessment department. He is now the VP of the Company
and the dean of Land-based Heavy Industry Research & Design Institute.
Born in 1969, male, MBA, served as technician, production planner and assistant of director of No. 2 Panel beater of Shanghai Port
Zhang Machinery Manufacturing Plant, chief of Changzhou Plant of Shanghai Port Machinery Manufacturing Plant, vice general manager of
Jian Shanghai Port Machinery Co., Ltd, vice general manager of Shanghai Port Machinery Heavy Industry Co., Ltd, general manager, assistant of
president of Port Machinery Co., Ltd. Current: VP of the Company.
Born in 1962, male, EMBA, professor level senior engineer, served as engineer of Shanghai Port Machinery Plant, director of No. 5 electrical
Fei Guo office, vice chief engineer, director of Development Office of Shanghai Zhenhua Port Machinery Co., Ltd, VP and executive director of
Shanghai Zhenhua Heavy Industry Electric Co., Ltd, currently chief engineer of the Company.
Born in 1975, male, bachelor degree, served as the vice manager of Manufacturing Department, vice director of Quality Safety Office of
Li Zhangjiagang Base of Shanghai Machinery Plant; manager of Quality Inspection Company, vice director of Quality and Safety Office, vice
Ruixiang general manager, generally manager, of machinery supporting base, Party branch secretary and president assistant, current chief economist
of the Company and general manager of Ocean Engineering Group.
Born in 1972, male, EMBA, senior engineer; served as project supervisor of Operating Department, vice manager and assistant of General
Sun Li
Manager of the Company, Vice President and director of the Company , currently Chief Legal Counsel of the Company
Born in 1965, male, Ph.D., professor-level senior engineer, began his career in July 1987, served as engineer, Design Office director, Vice
President, President, member of Party Committee, Vice Secretary of the Party Committee, Chairman of the Board and simultaneously
Song
General Manager of CCCC Water Transportation Planning and Design Institute Co., Ltd.; former vice President of China Communications
Hailiang
Construction Co., Ltd. And General Manager of Equipment Manufacturing Marine Heavy Industry Department and Chairman of the Board of
the Company.
49 / 325
Annual Report 2017
Born in 1962, female, master degree, senior engineer; served as the project manager of China Harbor Engineering Co., Ltd. Import and
Export Port Machinery Division, deputy general manager of General manager of the Industry and Trade Business Division of China Harbor
Chen Qi (Group) Co., Ltd., General manager of the Industry and Trade Business Division of China Communications Construction Co., Ltd. She
served as the director of the Company since 2011, former executive general manager of Equipment Manufacturing Marine Heavy Industry
Department of China Communications Construction Co., Ltd.
Born in 1964, male, MBA, CPA and senior accountant; successively held the posts of director and General Accountant of the Financial Office
Wang of No.3 Engineering Co., Ltd. Of CCCC Third Harbor Engineering Co., Ltd., Chief of Audit Department, Chief of Financial Department and
Jue Vice General Accountant; is the Chief Financial Executive and Secretary of the Board of Directors of the Company since November of 2005;
director of Company from 2006 to 2011; former director, CFO and Secretary of the Board of Directors of the Company.
Born in 1976, male, bachelor degree, began his career in 2000, served as deputy director (hosting) of general manager office, legal
consultant office of CCCC First Harbor Co., Ltd, director and minister of Party Work Department and President Affair Office of Zhenhua
Cui Wei
Heavy Industry Co., Ltd; former chief supervisor, deputy secretary of the Party committee, secretary of Commission for Discipline Inspection,
and chairman of Trade Union of the Company.
Other information
□Applicable √Not applicable
(II) Equity incentives granted to the directors and senior management during the reporting
period
□Applicable √Not applicable
II. Positions of the present directors, supervisors and senior management or the ones resigned during reporting period
(I) Position in the firm of the shareholders
√Applicable □Not applicable
Starting date of Expiration date of
Name Name of the firm of the shareholder Post held in the firm of the shareholders
service service
Song Hailiang China Communications Construction Co., Vice president Jan. 27, 2014
Ltd.
Chen Qi China Communications Construction Co., General manager of Industry and Trade Department Dec. 29, 2009
Ltd.
Zhang China Communications Construction Co., General manger of equipment manufacturing and marine heavy Jan. 4, 2018
Hongwen Ltd. industry division
50 / 325
Annual Report 2017
(II) Positions in other companies
√Applicable □Not applicable
Name Name of companies Post held in other company
She Lian CAG CEIBS Emergency Management Institute Professor, doctoral tutor
Shipping Technology and Engineering key Lab of Ministry of
Transportation, Vessel Electrical Committee of China Electrical Director, professor, doctoral tutor, council
Gu Wei
Association, Committee of Experts of Shanghai Transportation member, committee member
Electronics Association, etc.
Jiefang Daily, Shanghai Journalists Association, Shanghai Essays
Ling He Senior editor (Senior professional title), director
Society.
Shanghai United Assets and Equity Exchange, Financial Assets
Exchange, Shanghai International Economic and Trade Arbitration
Commission, Shanghai Arbitration Commission, Shanghai Court of
Assistant president, general manager, director,
Yang Jun Financial Arbitration, Chinese Domain Name Dispute Settlement
arbitrator, expert, director
Center, Intellectual Property Association of China Law Society,
Company Law Association of Shanghai Law Society, Shanghai
Patent/Trademark/Copyright Association.
School of Economics and Management of Tongji University, Director of Accounting Department, research
Bai Yunxia
Investment Centre of Cheung Kong Graduate School of Business scholar
III. Remuneration of directors, supervisors and senior executives
√Applicable □Not applicable
In accordance with the regulations of Articles of Association, the remuneration of Directors and
Decision-making procedures for remuneration
Supervisors are subject to the Annual Shareholder’s General Meeting and the remuneration of the
of directors, supervisors and senior executives
management are assessed and approved by the President.
Calculation basis for remuneration of directors, Basic salary plus performance bonus, combined with assessment utilizing quantizing index of
supervisors and senior executives production and operation.
Former Chairman Song Hailiang and the former director Chen Qi are not paid by the Company,
Actual payment of remuneration to directors,
whereas all other in-service and resigned director, supervisor and senior executives are paid by the
supervisors and senior executives
Company
Total remuneration received by all directors,
RMB 10,855,200 Yuan
supervisors and senior executives
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IV. Particulars about changes of directors, supervisors and senior executives
√Applicable □Not applicable
Name Post Change Reason
Song Hailiang Chairman of the board Resigned Work transfer
Chen Qi Director Resigned Age-related
Zhu Lianyu Chairman of the board Engaged Job demand
Zhang Hongwen Director Elected Job demand
Wang Jue Director, CFO, secretary of the board Resigned Work transfer
Zhu Xiaohuai Director, CFO Elected Job demand
Wang Cheng Supervisor, Deputy Party Secretary, Secretary of Committee Elected Job demand
for Discipline Inspection and Chairman of Labor Union
Bai Yunxia Independent director Elected Job demand
V. Explanation for punishment by securities regulatory institution in past three years
□Applicable √Not applicable
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VI. Employees in Parent Company and key subsidiaries
(I) Particulars about employee
Number of serving staff in Parent Company 3,104
Number of serving staff in key subsidiaries 5,679
Total number of serving staff 8,783
Number of retired employees to be borne by 0
parent company and key subsidiaries
In specialties
Classification Number
Production staff 3,346
Sales staff 212
Technical staff 4,400
Financial staff 130
Administrative staff 695
Total 8783
Education background
Educational level Number (person)
Doctor 22
Master 596
Bachelor 3,521
Junior college 2,286
Technical secondary school 2,358
Total 8,783
(II) Remuneration policies
√Applicable □Not applicable
In line with the Company’s development strategy, continuously perfecting the distribution
incentive and performance assessment system, established and improved the performance
assessment scheme based on the different properties and characteristics of each unit and
division; the implemented salary incentive system is closely linked to the performance
distribution with the unit or division performance, value contribution, industrial characteristics,
growth phase and similar factors, and is comprehensively linked to the staff performance with
position duty and value contribution, and thus initially established the distribution mode
integrating with the market.
(III) Training plan
√Applicable □Not applicable
In line with the Company’s development strategy, gradually establish a rigid staff training
system with systematic, directional and continuous features. At the beginning of each year, the
Company sets up all-staff annual educational and training plan and implements according to the
plan to improve the competence level and professional quality of staff at various levels.
(IV) Labor outsourcing situation
√Applicable □Not applicable
Labor outsourcing hours 8189136 hours
Total Labor outsourcing remuneration RMB 307.53 million Yuan
VII. Others
□Applicable √Not applicable
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Annual Report 2017
Chapter IX Corporate Governance
I. Information about corporate governance
√Applicable □Not applicable
The Company strictly followed the regulations specified in Company law, Securities Law,
Stock Listing Rules, Articles of Association and the legal requirements of China Securities
Regulatory Commission in the report period to standardize the Company’s daily operation,
further established and improved the internal control system, improved the internal control
management and corporate governance structure, strengthened the insider information
management, strengthened the information disclosure, continuously improved the company
governance, made efforts to improve the construction of legal person governance structure, and
gradually established a modern enterprise system, earnestly protected the legal rights and
interests of the company and all the shareholders, ensuring the sustainable and stable
development.
After self-inspection, the staffs who know the insider information didn’t trade the stocks of
the company before significant price information is disclosed. There is no difference between
the company governance and the regulations of China Securities Regulatory Commission.
Whether there is significant difference in corporate governance and relevant regulations of
CSRC? If any, please specify the reasons.
□Applicable √Not applicable
II. Summary of general meeting of shareholders
Website index of the specified Disclosure date of
Session Date website with resolution resolution
publication publication
2016 annual
www.sse.com.cn,
general meeting of May 9, 2017 May10, 2017
Enter the stock code to search
shareholders
Particulars about the general meeting of shareholders
□Applicable √Not applicable
III. Duty fulfillment of directors
(I) Attendance of directors at the meetings of the Board of
Directors and shareholders’ general meetings
Attendance
at genera
Attendance at the meetings of the Board of Directors
meeting o
Independent shareholde
Name of
director or Consecutive
director
not Desired Attendance two
Attendance by Entrusted Times of
attendance times in Absences absences
correspondence attendance attendance
times person in person or
not
Zhu No 11 1 10 0 0 No 1
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Annual Report 2017
Lianyu
Huang No 11 1 10 0 0 No 1
Qingfeng
Yan No 11 1 10 0 0 No 1
Yunfu
Liu No 11 1 10 0 0 No 1
Qizhong
Dai No 11 1 10 0 0 No 1
Wenkai
She Lian Yes 11 1 10 0 0 No 1
Gu Wei Yes 11 1 10 0 0 No 1
Ling He Yes 11 1 10 0 0 No 1
Yang Yes 11 1 10 0 0 No 1
Jun
Bai Yes 5 0 5 0 0 No 0
Yunxia
Song No 4 1 3 0 0 No 0
Hailiang
Chen Qi No 11 1 10 0 0 No 0
Wang No 10 1 9 0 0 No 1
Jue
Explanation for consecutive two absences in Board meetings in person
□Applicable √Not applicable
Number of board meetings in reporting year 11
Including: number of on-site meeting 1
Number of meeting by correspondence 10
Number of meeting combined of on-site & by correspondence 0
(II) Objection proposed by independent director to the
company issues
□Applicable √Not applicable
(III) Others
□Applicable √Not applicable
IV. Dissent expressed by the special committee under the board during duty
performance on related issues of the Company should be disclosed in detail
□Applicable √Not applicable
V. Description of risk found by the Board of Supervisors
□Applicable √Not applicable
VI. Description of the Company for the shareholders that cannot guarantee the
independence and keep the independent operation ability in business, personnel,
assets, organization and finance
□Applicable √Not applicable
Corresponding solution, progress and follow-up plan for horizontal competition by
the Company
□Applicable √Not applicable
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Annual Report 2017
VII. Evaluation system of senior executives, and the establishment and implementation
of incentive system in the report 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 the
cultivation, selection, supervision, assessment, reward and punishment, constraint system for
the company’s senior executives suitable for the actual situation. The Company formulated the
administrative methods for relevant 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”.
The Company assessed the senior executives according to the due diligence and job
performance, the company will gradually improve the existing performance evaluation system
and salary system, 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 performance, and ensure the benefit maximization and
standardize the operation of the company.
VIII. Disclosure of internal control self-assessment report or not
√Applicable □Not applicable
2017 Company Annual Internal Control Evaluation Report will be published on the website of
Shanghai Stock Exchange http://www.sse.com.cn
Explanation of significant internal control deficiency during the reporting period
□Applicable √Not applicable
IX. Explanation of internal control audit report
√Applicable □Not applicable
Ernst & Young LLP (special general partnership), engaged by the Company, had audited
the effectiveness of the internal control of the financial report as of December 31, 2017 and
issued a standard internal control audit report without qualified opinion (see the attachment to
the announcement for details).
Disclose the internal control audit report or not: Yes
X. Others
□Applicable √Not applicable
Chapter X Corporate Bonds
□Applicable √Not applicable
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2017
Chapter XI Financial Reports
I. Audit report
√Applicable □Not applicable
Audit Report
Ernst & Young (2018) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
To all Shareholders of Shanghai Zhenhua Heavy Industries Co., Ltd.,:
I. Audit Opinion
We have audited the financial statements of Shanghai Zhenhua Heavy
Industries Co., Ltd., including the consolidated and the Company’s balance
sheets as of December 31, 2017, consolidated and the Company’s Income
Statement in 2017, statement of changes in stockholder equity, cash flow
statements and notes to the financial statements.
In our opinion, the accompanying financial statements of Zhenhua Heavy
Industries Co., Ltd. has been prepared according to stipulations of the enterprise
accounting norms and present fairly, in all material respects, the financial
position of the consolidation and Zhenhua Heavy Industries Co., Ltd as of
December 31, 2017 and the results of operations and cash flows of
consolidation and the Company for the year 2017.
II. Basis for Audit Opinion
We conducted our audits in accordance with the Audit Standards for
Chinese Registered Accountants. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for Audit of
Financial Statements section of our report. We are independent of the
Company in accordance with the China Code of Ethics for Certified Public
Accountants, and we have fulfilled our other ethical responsibilities in
accordance with the said Code of Ethics. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our
opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of the current
period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. The following
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2017
description of how our audit addressed the key audit matter is also against this
background.
We have fulfilled the responsibilities stated in “Responsibilities of Certified
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, offers a foundation for releasing the auditing opinions of the financial
statements.
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Audit Report (continued)
Ernst & Young (2018) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
III. Key Audit Matters (continued)
Key audit matter: How our audit addressed this key audit
matter:
1. Provision of inventory depreciation reserves
Shanghai Zhenhua Heavy Industries Co., Our procedure mainly included knowing
Ltd. and its subsidiaries (“Group”) are mainly and testing the validity of the control related to
engaged in manufacturing the port container the provision of inventory depreciation
crane; in addition, they are also engaged in the reserves and the method of calculating the net
manufacture of bulk handling machine, realizable value of the Group. We also
offshore heavy-duty machine and large-sized implemented the related auditing procedures
steel structure. Its inventory mainly includes over the inventory such as supervision of
engineering raw materials, outsourcing parts inventory taking to verify the Group had
and components, products in the process and marked the inventory with slow turnover and
inventory goods. Since the production cycle of defectives and taken into full account in
the products of this group is relatively long, the provision of inventory depreciation reserves.
net realizable value of the related inventory In addition, we obtained the computation
may fluctuate with the change in the market sheet of provision of inventory depreciation
demand, resulting in the inventory depreciation reserves on Dec. 31, 2017 from the Group,
risks. The Group withdraws the inventory rechecked the rationality of the calculation
depreciation reserves according to the balance method. As to the key elements such as the
of the inventory cost and the net realizable estimated selling price, the cost that may
value. The net realizable value is determined occur from the inventory to the completion, the
as per the estimated selling price of the estimated selling expenses and the related
inventory minus the cost, the estimated selling taxes, taken into consideration by the Group in
expenses and the related taxes that may occur calculating the net realizable value, we
in the completion on the assumption that the evaluated the rationality of the hypothesis and
management layer adopts a certain estimate the estimates through analyzing the related
and hypothesis in determining the net historical data and comparing the after-date
realizable value. In case of difference between data. We also tested the mathematical
the actual figure and the originally estimated accuracy of the calculation of the provision
figure, the related balance will affect the book amount of the inventory depreciation reserves.
value of the inventory and the depreciation loss
in the estimated fluctuation.
The accounting policy and other
disclosures regarding the inventory are stated
in Note (III) (10), Note (III) (29) and Note (V) (7)
of the financial statement.
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Audit Report (continued)
Ernst & Young (2018) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
III. Key Audit Matters (continued)
Key audit matter: How our audit addressed this key
audit matter:
2．Provision of bad debt reserves of account receivable
The account receivable of the We evaluated the rationality of
Group is mainly from the business accounting estimate related to the
contract on port machine and ocean depreciation reserves, such as the
engineering manufacturing. Since it financial status and credit rating of
involves large contracted value, long the counterpart; checked the aging
construction period, relatively of the account receivable and
complicated technical parameters, the historical repayment record and
implementation of the contract may evaluated whether the financial
be affected by the periodicity of the problems of the counterpart had
economic environment. The account effects on the recovery of the
receivable of the Group is imposed to account receivable; we checked
a certain risk in the recovery in case the related supporting documents
of disputes in contract or the stagnant for the selected samples so as to
industry. As to the bad debt reserves validate the accuracy of the aging of
withdrawn for the account receivable, the account receivable; reviewed
the management layer evaluates the the after-date received payment of
guarantee obtained for the account the account receivable and
receivable, aging of account rechecked the related evidences of
receivable, credit rating and historical the account receivable that could
repayment record of the counterpart not be received and was written off.
based on the financial status of the
counterpart. The provision of the bad
debt reserves needs to adopt the key
accounting estimate, including the
consideration of the credit risk,
historical repayment record and the
existing disputes of the customer.
The accounting policy and other
disclosures related to the account
receivable are stated Note (III) (9),
Note (III) (29) and Note (V) (4) of the
financial statement.
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Audit Report (continued)
Ernst & Young (2018) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
III. Key Audit Matters (continued)
Key audit matter: How our audit addressed this key
audit matter:
3．Confirmation of income from construction contract
Most of the income of the Group We evaluated and tested the
comes from the one of the construction accounting contract cost, contract
contracts on the large-sized port income, achieved node confirmation
equipment, heavy equipment, steel and the internal control over the flow for
structure and construction projects calculating the completion schedule.
customized by the customer. The Group We got the important contracts to verify
adopts the percentage of the total contract income and review
completion method to calculate the income the important contract clauses.
of the construction contracts. As to the Through selecting the samples, we
large-sized port equipment, its completion verified whether the contract cost that
schedule is determined according to the occurred conformed to the certification.
corresponding percentage of completion We implemented the cutoff check
method of the confirmation node of the procedure to validate the cost was
income achieved at the period end of the confirmed in the proper accounting
construction contract. As to the heavy period; as to the large-sized port
equipment and construction period, its equipment, through sampling, we got
completion schedule is determined the certification for the achieved node
according to the ratio of the accumulative and made the sampling for field
contract cost occurring to the expected observation. We evaluated the
total contract cost. As to the fabrication of judgment and estimate of the total
the steel structure, its completion schedule contract cost made by the
is determined according to the ratio of the management. We made sampling to
accumulatively completed processing calculate and check the income
tonnage to the expected total processing determined by the occurred contract
tonnage. The above-mentioned methods cost and the expected total contract
involve the use of the great judgment and cost again. In addition, we implemented
estimate of the management, including the the analysis-oriented recheck
achieved node, expected total contract procedure against the gross profit of
cost, total contract income and expected the key construction contract of the
contract loss. In addition, the income, cost Group.
and realizable gross profit of the contract
may change with the actual conditions,
resulting in great differences in the initial
estimate of the group.
The accounting policy and other
disclosures related to the income of the
construction contract are stated in Note (III)
(11), (III) (29) and (V) (8) and Note (V) (45)
of the financial statement.
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Audit Report (continued)
Ernst & Young (2018) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
IV. Other Information
The management of Shanghai Zhenhua Heavy Industries Co., Ltd.
(hereafter referred to as the management) is responsible for other information.
The other information comprises all of the information included in the annual
report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other
information and we do 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 and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a
material misstatement of other information, we are required to report that fact.
We have nothing to report in this regard.
V. Responsibility of the Management and Those Charged with
Governance for the Financial Statements
The management of the Company is responsible for the preparation of
these financial statements in accordance with Accounting Standards for
Business Enterprises to make them a fair presentation and designing,
implementing and maintaining necessary internal control, to ensure that the
financial statements are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, management is responsible for
assessing the ability of Shanghai Zhenhua Heavy Industries Co., Ltd. to
continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless BOE either
intends to liquidate or to cease operations, or has no realistic alternative but to
do so.
Those charged with governance are responsible for overseeing the
financial reporting process of Shanghai Zhenhua Heavy Industries Co., Ltd.
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Annual Report
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Audit Report (continued)
Ernst & Young (2018) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
VI. CPA’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s 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 auditing 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 influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise
professional judgment and maintain professional scepticism throughout the
audit. We also:
(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
sufficient 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 and the
reasonableness of accounting estimates and related disclosures made
by management.
(4) Conclude on the appropriateness of management’s use of the going
concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that
may cast significant 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 draw attention in our
auditor’s report to the related disclosures in the financial statements, or,
if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of
our auditor’s 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 of the financial
statements, including the disclosures, and whether the financial
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Annual Report
2017
statements represent the underlying transactions and events in a
manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within Shanghai
Zhenhua Heavy Industries Co., Ltd. to express an opinion on the
financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for
our audit opinion.
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Annual Report
2017
Audit Report (continued)
Ernst & Young (2018) SZ No.61249778_B01
Shanghai Zhenhua Heavy Industries Co., Ltd.
VI. CPA’s Responsibility for the Audit of the Financial Statements
(continued)
We communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies 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 communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence and, where applicable,
related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s 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 benefits of such communication.
Ernst & Young LLP. (Special general partnership) Chinese Certified
Public Accountant: Yang Lei
(Engagement partner)
Chinese Certified Public Accountant: Liu Wei
Beijing China Mar. 28, 2018
65 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Balance Sheet
Dec. 31, 2017
RMB Yuan
Assets Note V Dec. 31, 2017 Dec. 31, 2016
Current assets
Monetary fund 1 5,770,227,369 3,597,044,199
Financial assets measured at fair value
with the change accounted in current
profit and loss 2 8,438,278 4,615,775
Notes receivable 3 420,786,012 296,920,781
Accounts receivable 4 3,980,017,611 4,230,746,458
Prepayment 5 1,036,783,170 900,422,234
Dividend receivable 665,346 -
Other receivables 6 996,161,366 736,554,593
Stock 7 7,071,266,879 6,776,086,014
Construction completed account yet has
not been settled 8 13,453,980,326 11,105,813,767
Non-current assets due within one year 9 1,896,475,472 1,384,438,569
Other current assets 10 591,311,853 553,363,139
Total current assets 35,226,113,682 29,586,005,529
Non-current assets
Financial assets available-for-sale 11 1,304,203,905 1,313,572,506
Long-term receivables 12 4,238,704,827 3,791,218,020
Long-term equity investment 13 2,320,470,521 2,201,421,453
Real estate as investment 14 455,063,723 473,380,251
Fixed assets 15 17,335,351,611 15,022,782,366
Construction in process 16 1,889,146,009 4,025,449,461
Intangible assets 17 3,683,165,608 3,744,448,606
Goodwill 18 265,188,465 149,212,956
Long-term deferred expenses 19 7,764,501 10,881,263
Deferred income tax assets 20 618,054,364 505,446,687
Other non-current assets 21 176,726,613 -
Total non-current assets 32,293,840,147 31,237,813,569
Total assets 67,519,953,829 60,823,819,098
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Balance Sheet (continued)
Dec. 31, 2017
RMB Yuan
Liabilities and stockholders’ equity Note V Dec. 31, 2017 Dec. 31, 2016
Current liabilities
Short-term loans 23 25,468,980,401 21,485,919,393
Notes payable 24 1,893,227,482 1,905,121,706
Accounts payable 25 6,887,598,171 5,103,018,897
Advances from customers 26 591,727,255 292,941,206
Amount due from customer for contract work 8 2,508,598,913 2,393,446,122
Employee remuneration payable 27 273,733,207 264,549,756
Tax payable 28 194,948,927 251,000,724
Interest payable 29 118,825,582 140,195,803
Dividend payable 30 31,701,965 31,701,965
Other payables 31 692,680,129 1,225,135,428
Non-current liabilities due within one year 32 2,198,931,219 799,574,356
Other current liabilities 33 - 3,996,025,335
Total current liabilities 40,860,953,251 37,888,630,691
Non-current liabilities
Long-term loans 34 6,664,914,383 3,925,335,497
Long-term payables 35 1,884,986,333 1,618,361,164
Predicted liabilities 36 464,888,663 293,115,783
Deferred income 37 479,174,120 451,036,024
Deferred income tax liabilities 20 183,462,320 104,164,573
Other non-current liabilities 38 152,954,098 56,025,416
Total non-current liabilities 9,830,379,917 6,448,038,457
Total liabilities 50,691,333,168 44,336,669,148
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Balance Sheet (continued)
Dec. 31, 2017
RMB Yuan
Liabilities and stockholders’ equity Note V Dec. 31, 2017 Dec. 31, 2016
Stockholders’ equity
Capital stock 39 4,390,294,584 4,390,294,584
Capital reserves 40 5,526,978,575 5,526,978,575
Other comprehensive income 41 273,892,978 322,403,671
Special reserves 42 1,914,832 -
Surplus reserves 43 1,618,543,971 1,603,122,982
Undistributed profit 44 3,199,681,426 3,353,936,451
Total shareholders’ equity attributable to
parent company 15,011,306,366 15,196,736,263
Minority equity 1,817,314,295 1,290,413,687
Total shareholders’ equity 16,828,620,661 16,487,149,950
Total Liabilities and stockholders’ equity 67,519,953,829 60,823,819,098
The notes of the financial statements are part of the financial statements.
Financial statements signed by:
Legal representative: Accounting principal: Accounting firm
principal:
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Income Statement
Year 2017
RMB Yuan
Note V 2017 2016
Operating revenue 45 21,858,814,000 24,348,087,928
Less: operating cost 45 18,019,075,299 19,727,663,875
Taxes and surcharges 46 114,240,644 152,175,837
Selling expenses 47 121,457,892 100,435,778
Management expenses 48 1,742,167,300 1,759,032,746
Financial expenses 49 758,201,305 1,218,992,788
Assets impairment loss 50 824,836,448 1,221,116,175
Plus: Changes (losses) in fair value/gains 51 (4,615,775) 28,857,808
Gain on investment 52 123,368,931 118,513,425
Including: gains on investment to
affiliated companies and joint ventures 94,274,214 99,395,952
Gains from assets disposal 53 10,749,056 1,340,612
Other revenue 54 76,198,207 -
Operating profit 484,535,531 317,382,574
Plus: Non-operating income 55 29,343,558 56,993,416
Less: Non-operating expense 56 92,116,253 5,514,846
Total profit 421,762,836 368,861,144
Less: income tax expense 58 92,319,416 61,516,908
Net profit 329,443,420 307,344,236
Including: net profit from continuous
operating 329,443,420 307,344,236
Net profit from termination of operation - -
Classification by ownership
Net profit attributable to the shareholders of
parent company 300,195,422 212,419,946
Minority interest income 29,247,998 94,924,290
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Income Statement (continued)
Year 2017
RMB Yuan
Note V 2017 2016
Net amount of other comprehensive income
after tax
Net amount of other comprehensive income
after tax attributable to the shareholders of
parent company 41
Other comprehensive income that will be
reclassified into gains and losses
subsequently
Portion of other comprehensive income to
be reclassified as profit or loss under equity
method (8,449,542) 4,801,990
Fair value change of financial assets
available for sale (9,826,324) 84,335,801
Conversion difference of foreign currency
statements (30,234,827) 25,605,643
(48,510,693) 114,743,434
Net amount of other comprehensive income
after tax attributable to the minority (18,166,833) 7,765,004
Total comprehensive income 262,765,894 429,852,674
Including:
Total comprehensive income attributable to
the shareholders of parent company 251,684,729 327,163,380
Total comprehensive income attributable to
the minority 11,081,165 102,689,294
Earnings per share 59
Basic earnings per share 0.07 0.05
Diluted earnings per share 0.07 0.05
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Changes in Stockholder’s Equity
Year 2017
RMB Yuan
Stockholders’
Minority
Stockholders’ equity attributable to parent company equity
Capital stock Capital reserves Other Surplus reserves Special reserves Undistributed Subtotal Equity Total
comprehensive profit
income
Balance at the
beginning of the
I. year 4,390,294,584 5,526,978,575 322,403,671 1,603,122,982 - 3,353,936,451 15,196,736,263 1,290,413,687 16,487,149,950
Changes for the
II. year
Total
comprehensive
(I) income - - (48,510,693) - - 300,195,422 251,684,729 11,081,165 262,765,894
Shareholders’
contributions and
(II) decrease of capital
Shareholders’
contributions of
1 capital - - - - - - - 513,802,736 513,802,736
(III) Profit distribution
Withdrawal surplus
1 reserves - - - 15,420,989 - (15,420,989) - - -
Distribution to
2 shareholders - - - - - (439,029,458) (439,029,458) (545,570) (439,575,028)
(IV) Special reserves
Withdrawal in this
1 year - - - - 45,958,231 - 45,958,231 5,006,115 50,964,346
2 Use in this year - - - - (44,043,399) - (44,043,399) (2,443,838) (46,487,237)
Balance at the end
III. of the year 4,390,294,584 5,526,978,575 273,892,978 1,618,543,971 1,914,832 3,199,681,426 15,011,306,366 1,817,314,295 16,828,620,661
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Changes in Stockholder’s Equity (continued)
Year 2016
RMB Yuan
Stockholders’ equity attributable to parent company Minority Stockholders’ equity
Capital stock Capital reserves Other Surplus reserves Special reserves Undistributed Subtotal Equity Total
comprehensive profit
income
Balance at the beginning of the
I. year 4,390,294,584 5,526,978,575 207,660,237 1,576,100,786 - 3,168,538,701 14,869,572,883 917,076,421 15,786,649,304
II. Changes for the year
(I) Total comprehensive income - - 114,743,434 - - 212,419,946 327,163,380 102,689,294 429,852,674
Shareholders’ contributions
(II) and decrease of capital
Shareholders’ contributions of
1 capital - - - - - - - 273,048,439 273,048,439
(III) Profit distribution
1 Withdrawal surplus reserves - - - 27,022,196 - (27,022,196) - - -
2 Distribution to shareholders - - - - - - - (2,400,467) (2,400,467)
(IV) Special reserves
1 Withdrawal in this year - - - - 26,851,099 - 26,851,099 - 26,851,099
2 Use in this year - - - - (26,851,099) - (26,851,099) - (26,851,099)
III. Balance at the end of the year 4,390,294,584 5,526,978,575 322,403,671 1,603,122,982 - 3,353,936,451 15,196,736,263 1,290,413,687 16,487,149,950
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flow
Year 2017
RMB Yuan
Note V 2017 2016
I. Cash flows from operating activities:
Cash received from products sales and labor
provision 16,640,760,111 21,354,693,208
Refunds of taxes 889,705,824 917,117,592
Cash from other operating activities 60 382,299,156 437,301,182
Subtotal of cash inflows from operating
activities 17,912,765,091 22,709,111,982
Payment for goods and services 13,683,031,255 18,154,428,952
Cash payment to and for the employee 1,897,864,942 1,782,356,763
Tax payments 477,730,293 525,276,408
Other cash payments relating to operating
activities 60 521,929,327 588,627,223
Subtotal of cash outflows from operating
activities 16,580,555,817 21,050,689,346
Net cash flows from operating activities 61(1) 1,332,209,274 1,658,422,636
II. Cash flows from investing activities
Cash from disposal of investments - 160,000,000
Cash received from obtaining the gains on
investment 23,201,157 53,350,539
Net cash from disposal of fixed assets,
intangible assets and other long-term
assets 98,401,263 13,381,153
Cash received from other investing activities 60 50,163,105 852,787,742
Subtotal of cash inflows from investing
activities 171,765,525 1,079,519,434
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 1,333,961,486 1,157,412,752
Cash payment for investments 286,000,000 648,321,760
Net cash paid for acquiring subsidiaries 61(2) 60,338,410 -
Other cash payments relating to investing
activities 60 173,076,659 -
Subtotal of cash outflows from investing
activities 1,853,376,555 1,805,734,512
Net cash flow used for investing activities (1,681,611,030) (726,215,078)
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Consolidated Statement of Cash Flow (continued)
Year 2017
RMB Yuan
Note 2017 2016
V
III. Cash flows from financing activities:
Cash received from borrowings 33,077,608,125 36,889,288,147
Cash received from issuing bonds - 4,000,000,000
Cash received relating to other financing
activities 60 1,566,959,110 3,038,684,232
Subtotal of cash inflows from financing
activities 34,644,567,235 43,927,972,379
Cash paid for repayments of debts 29,020,665,806 40,386,569,653
Cash payment for dividend distribution,
profit and interest 1,623,289,546 1,247,523,244
Other payments relating to financing
activities 60 1,423,746,129 2,141,534,489
Subtotal of cash outflows from financing
activities 32,067,701,481 43,775,627,386
Net cash flows from financing activities 2,576,865,754 152,344,993
Effect of foreign exchange rate changes on )
IV. cash and cash equivalents (50,822,183 74,727,024
V. Net increase in cash and cash equivalents 2,176,641,815 1,159,279,575
Plus: Cash and cash equivalents at the
beginning of the year 3,497,205,186 2,337,925,611
Balance of cash and cash equivalents at
VI. the end of the year 61(3) 5,673,847,001 3,497,205,186
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance Sheet of the Company
Year 2017
RMB Yuan
Assets Note XII Dec. 31, 2017 Dec. 31, 2016
Current assets
Monetary fund 3,392,595,294 1,972,249,599
Financial liabilities measured at fair value
with the changes accounted in current
4,615,775
profit and loss -
Notes receivable 413,779,017 259,055,935
Accounts receivable 1 6,547,864,759 6,476,087,696
Prepayment 1,173,384,482 1,960,350,424
Dividend receivable 665,346 -
Other receivables 2 13,665,850,616 13,878,003,016
Stock 5,786,210,236 5,589,869,550
Construction completed account yet has
8,583,910,209
not been settled 9,021,852,353
Other current assets 261,325,439 173,417,465
Total current assets 40,263,527,542 38,897,559,669
Non-current assets
Financial assets available-for-sale 221,946,872 356,606,562
Long-term receivables 417,914,193 -
Long-term equity investment 3 8,922,200,826 8,582,775,282
Real estate as investment 455,063,723 473,380,251
Fixed assets 5,231,211,582 5,633,993,352
Construction in process 660,662,593 761,374,018
Intangible assets 1,618,835,106 1,664,941,415
Deferred income tax assets 563,785,515 474,102,945
Total non-current assets 18,091,620,410 17,947,173,825
Total assets 58,355,147,952 56,844,733,494
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Balance Sheet of the Company (continued)
Dec. 31, 2017
RMB Yuan
Liabilities and stockholders’ equity Note XII Dec. 31, 2017 Dec. 31, 2016
Current liabilities
Short-term loans 22,855,801,381 18,095,748,393
Notes payable 1,657,137,654 1,860,260,636
Accounts payable 5,970,208,396 6,072,079,752
Advances from customers 393,410,039 291,785,327
Amount due from customer for contract
3,989,249,948
work 2,922,827,192
Employee remuneration payable 258,990,282 253,913,374
Tax payable 50,220,742 101,878,736
Interest payable 102,690,137 128,368,841
Dividend payable 352,598 352,598
Other payables 1,541,880,536 1,852,554,158
Non-current liabilities due within one
407,455,030
year 1,367,901,030
Other current liabilities - 3,996,025,335
Total current liabilities 37,121,419,987 37,049,672,128
Non-current liabilities
Long-term loans 4,897,199,999 2,891,136,000
Long-term payables 556,387,041 905,899,355
Predicted liabilities 451,128,341 284,982,328
Deferred income 348,455,388 327,313,110
Other non-current liabilities 3,456,670 -
Total non-current liabilities 6,256,627,439 4,409,330,793
Total liabilities 43,378,047,426 41,459,002,921
Shareholders’ equity
Capital stock 4,390,294,584 4,390,294,584
Capital reserves 5,792,527,600 5,792,527,600
Other comprehensive income 140,264,717 264,075,193
Surplus reserves 1,618,035,698 1,602,614,709
Undistributed profit 3,035,977,927 3,336,218,487
Total shareholders’ equity 14,977,100,526 15,385,730,573
Total liabilities and shareholders’ equity 58,355,147,952 56,844,733,494
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Income Statement of the Company
Year 2017
RMB Yuan
Note XII 2017 2016
Operating revenue 4 18,982,284,728 24,248,483,693
Less: operating cost 4 16,062,361,939 20,545,946,108
Taxes and surcharges 44,763,858 62,382,292
Selling expenses 83,481,628 81,744,285
Management expenses 1,090,711,385 1,163,620,534
Financial expenses 1,060,351,306 1,029,965,201
Assets impairment loss 619,199,093 1,208,850,889
Plus: fair value changes (losses)/gains (4,615,775) 27,035,042
Gain on investment 5 156,502,074 102,879,065
Including: Gain on investment in affiliated
companies and joint ventures 94,574,906 99,395,952
Gains /(losses) from assets disposal 1,303,038 (2,996,936)
Other revenue 47,634,541 -
Operating profit 222,239,397 282,891,555
Plus: Non-operating income 3,753,311 7,306,172
Less: Non-operating expense 86,711,533 3,588,333
Total profit 139,281,175 286,609,394
Less: income tax expense (14,928,712) 16,387,434
Net profit 154,209,887 270,221,960
Including: net profit from continuous
270,221,960
operating 154,209,887
Net profit from termination of
-
operation -
Net amount of other comprehensive
income after tax
Other comprehensive income that will be
reclassified into gains and losses
subsequently
Portion of other comprehensive income to
be reclassified as profit or loss under
equity method (8,449,542) 4,801,990
Fair value change of financial assets
(20,432,661)
available for sale (114,460,736)
Conversion difference of foreign currency
699,025
statements (900,198)
(123,810,476) (14,931,646)
Total comprehensive income 30,399,411 255,290,314
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of Changes in Stockholder’s Equity of the Company
Year 2017
RMB Yuan
Other Total
Special Surplus Undistributed
Capital stock Capital reserves comprehensive shareholders’
reserves reserves profit
income equity
Balance at the
beginning of the
I. year 4,390,294,584 5,792,527,600 264,075,193 - 1,602,614,709 3,336,218,487 15,385,730,573
Changes for the
II.
year
Total
(I) comprehensive
income - - (123,810,476) - - 154,209,887 30,399,411
(II) Profit distribution
Withdrawal surplus
1 )
reserves - - - - 15,420,989 (15,420,989 -
Distribution to
2
shareholders - - - - - (439,029,458) (439,029,458)
(III) Special reserves
Withdrawal in this
1
year - - - 25,340,978 - - 25,340,978
2 Use in this year - - - (25,340,978) - - (25,340,978)
Balance at the end
III.
of the year 4,390,294,584 5,792,527,600 140,264,717 - 1,618,035,698 3,035,977,927 14,977,100,526
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Statement of Changes in Stockholder’s Equity of the Company (continued)
Year 2016
RMB Yuan
Other
Capital Special Surplus Undistributed Total shareholders’
Capital stock comprehensive
reserves reserves reserves profit equity
income
Balance at the
beginning of the
I. year 4,390,294,584 5,792,527,600 279,006,839 - 1,575,592,513 3,093,018,723 15,130,440,259
Changes for the
II.
year
Total
(I) comprehensive
income - - (14,931,646) - - 270,221,960 255,290,314
(II) Profit distribution
Withdrawal
1 )
surplus reserves - - - - 27,022,196 (27,022,196 -
(III) Special reserves
Withdrawal in this
1 - - - 14,726,377 - - 14,726,377
year
2 Use in this year - - - (14,726,377 ) - - (14,726,377)
Balance at the
III. end of the year 4,390,294,584 5,792,527,600 264,075,193 - 1,602,614,709 3,336,218,487 15,385,730,573
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Cash Flow Statement of the Company
Year 2017
RMB Yuan
Note XII 2017 2016
I. Cash flows from operating activities
Cash received from products sales and
labor provision 15,763,239,504 18,091,209,000
Refunds of taxes 831,198,628 822,041,413
Cash from other operating activities 292,626,816 395,515,334
Subtotal of cash inflows from operating
19,308,765,747
activities 16,887,064,948
Payment for goods and services 15,196,972,901 17,894,901,564
Cash payment to and for the employee 991,857,309 965,476,776
Tax payments 162,924,111 91,325,029
Other cash payments relating to
operating activities 494,142,751 432,920,475
Subtotal of cash outflows from
operating activities 16,845,897,072 19,384,623,844
Net cash flow from/(used by) operating
activities 6 41,167,876 (75,858,097)
II. Cash flows from investing activities
Cash from disposal of investments - 100,000,000
Cash received from obtaining the gains
on investment 1,160,353 37,716,179
Net cash from the disposal of fixed
assets, intangible assets and other
long-term assets 3,487,103 8,290,642
Subtotal of cash inflows from investing
activities 4,647,456 146,006,821
Cash paid for acquisition of fixed
assets, intangible assets and other
long-term assets 99,333,396 257,016,945
Cash payment for investments 509,898,290 1,222,623,689
Subtotal of cash outflows from
investing activities 609,231,686 1,479,640,634
Net cash flow used for investing
activities (604,584,230) (1,333,633,813)
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Cash Flow Statement of the Company (continued)
Year 2017
RMB Yuan
Note XII 2017 2016
III. Cash flows from financing activities
Cash received from borrowings 28,289,415,519 32,313,411,400
Cash received from issuing bonds - 4,000,000,000
Cash received relating to other
financing activities - 1,817,635,793
Subtotal of cash inflows from
financing activities 28,289,415,519 38,131,047,193
Cash paid for repayments of debts 24,398,943,306 35,132,081,497
Cash paid for dividend distribution,
profit and interest 1,466,838,827 1,032,636,806
Other payments relating to financing
activities 407,455,030 526,482,447
Subtotal of cash outflows from
financing activities 26,273,237,163 36,691,200,750
Net cash flows from financing
activities 2,016,178,356 1,439,846,443
Effect of foreign exchange rate
changes on cash and cash
IV. equivalents (23,870,002) 35,989,736
Net increase in cash and cash
V. equivalents 1,428,892,000 66,344,269
Plus: Cash and cash equivalents at
the beginning of the year 1,872,410,585 1,806,066,316
Balance of cash and cash equivalents
VI. at the end of the year 6 3,301,302,585 1,872,410,585
The notes of the financial statements are part of the financial statements.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements
Dec. 31, 2017
RMB Yuan
I. Basic Information of the Group
Shanghai Zhenhua Heavy Industries Co., Ltd. (hereinafter referred to as
“the Company”) was established in Shanghai, on September 8, 1997 as
part of an exercise to reorganize its predecessor, Shanghai Zhenhua
Port Machinery Company Limited (hereafter referred to as “Zhenhua
Company”). Both the registration place and headquarters address of the
Company are 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
listed foreign investment shares (B-shares) to overseas investors from
July 15, 1997 till July 17, 1997. The B-shares were listed for trading at
Shanghai Stock Exchange on Aug. 5, 1997.
As approved by ZJFXZ (2000) No. 200 of China Securities Regulatory
Commission, the Company added issuing of 88 million RMB common
shares (A- shares) to domestic investors in Dec. 2000. The A-shares
were listed for trading at Shanghai Stock Exchange on Dec 21, 2000.
As approved by ZJFXZ (2004) No.165 of China Securities Regulatory
Commission, the Company issued 114,280,000 A-shares to domestic
investors on Dec. 23, 2004. The said issuances were listed at Shanghai
Stock Exchange respectively on Dec. 31, 2004 and Jan 31, 2005 for
trading.
As approved by ZJFXZ (2007) No. 3466 of China Securities Regulatory
Commission, the Company issued 125,515,000 A-shares to domestic
investors on October 15, 2007. The said issuances were listed at
Shanghai Stock Exchange respectively on October 23, 2007 and
January 23, 2008 for trading.
As approved by ZJXKZ (2009) No.71 document of China Securities
Regulatory Commission, the Company issued non-publicly 169,794,680
A-shares on Sep. 22, 2008 to its controller China Communications
Construction Co., Ltd. (hereafter referred to as “China Communications
Corporation”). A-shares issued non-publicly are circulation stock with
limited sale conditions. From Mar. 20, 2012 on, limitation term expires
for above-mentioned A-shares which are listed at Shanghai Stock
Exchange for trading.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
As of 2017 and Dec. 31, 2016, after all issues of shares and bonus
shares distribution, the capital stock of the Company was increased to
4,390,294,584 shares, par value per share 1 Yuan, totally
4,390,294,584 Yuan.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
I. Basic Information of the Group (continued)
On Dec. 18, 2005, China Road and Bridge Construction Group General
Company combined with the company’s controlling holder China Harbor
Construction (Group) General Company after reorganization into China
Communications Construction (Group) Co. Ltd. (hereafter referred to as
“Communications Group”). In accordance with the Reply to Issue
Concerning Listing of China Communications Construction Co. Ltd.
Entirely after Reorganization on Both Domestic and Overseas Market
(GZGG [2006] No.1063) by State Assets Commission on Aug. 16, 2006,
and the Reply to Issue Concerning Management of State Stock of
China Communications Construction Co. Ltd. (GZCQ [2006] No.1072)
on Sep.30, 2006, which granted the reorganization proposal of
Communications Group, and in addition to the Reply to Approve China
Communications Construction Co. Ltd.’s Announcement of Purchase
Report of Road and Bridge Construction Co. Ltd. and Shanghai
Zhenhua Port Machinery (Group) Co. Ltd. and the Exemption of
Purchase Offer Obligations (ZJGSZ [2006] No. 227), on Oct.8, 2006
Communications Group solely initiated the establishment of China
Communications Construction Co. Ltd. and invested the stock rights of
the Company it held into the newly established Communications
Company. With the completion of reorganization, Communications
Company thus became the controlling shareholder of the Company.
In 2016, the Company was granted Uniform Social Credit Code
91310000607206953D.
On July 18, 2017, the board of directors of China Communications
Construction Company Ltd. approved through discussion Proposal for
Transfer of Some Shares of Shanghai Zhenhua Heavy Industries Co.,
Ltd through Agreement and Associated Transaction and agreed to
transfer totally 1,316,649,346 shares of this Company held by it to
CCCC and CCCG (HK) HOLDING LIMITED (hereinafter referred to as
“CCCG Hong Kong”), accounting for 29.990% of the total shares of this
Company, after that, China Communications Construction Company
Ltd. held 16.239% of the stock equity of this Company. The transfer and
registration of shares was accomplished on Dec. 27, 2017. As of the
date of the transfer of shares, CCCC 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
84 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
of this Company) and held 712,951,703 A-shares of this Company
through China Communications Construction Company Ltd.
(accounting for 16.239% of the total shares of this Company), as a
result, it became the holding shareholder of this Company.
The company and subsidiaries (hereinafter referred to as “the
Company”) mainly engage in: design, construction, installation and
contracting of large port loading system and equipment, offshore heavy
equipment, engineering machinery, engineering ships and large metal
structural parts and their components and spare parts; ship repair;
self-produced crane rental business, sales of the company products;
international shipment by available machine special transportation
ships, steel structure engineering professional contracting.
85 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
I. Basic Information of the Group (continued)
The financial statements were approved by the Company’s board of
directors on Mar. 28, 2018.
The scope of consolidation of the consolidated statements is confirmed
based on the control, and please refer to the 1 in Note VII for the year’s
changing situation and the consolidated subsidiaries consisted in the
scope.
II. Basis of Preparation for Financial Statements
The financial statements are prepared on the basis of Enterprise
Accounting Standards – Basic Standards issued by the Ministry of
Finance and the subsequently issued and revised specific accounting
principles, guidelines, explanation of the accounting standards, and
other related stipulations (hereinafter collectively referred to as
“Enterprise Accounting Standards”).
The financial statements are based on continuous operation.
As of December 31, 2017, the Group’s current liabilities exceed current
assets by about RMB 5.6 billion Yuan. In the preparation of the financial
statements for the year, given the amount of bank credit, financing
record the Group has achieved to obtain, good cooperation relationship
with banks and financial institutions and the operating performance, the
Group still has more than 8 billion Yuan unused upper short-term
commercial paper, the board of directors of the Company considers that
the Group is able to continue to acquire sufficient operating cash flow
and sources of financing, to ensure funds required for repayment of
debt maturity and capital expenditure. Therefore, the board of directors
of the Company ensures that the Group will continue to operate, and
thus to base the preparation of the financial statements for the year on
sustainable operation.
The preparation of the financial statements, in addition to certain
financial instruments, is based on the principle of historical cost
valuation. If an asset is impaired, the impairment provision shall be
made in accordance with the relevant provisions.
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Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates
The Company determines the specific accounting policies and
accounting estimates based on actual operating characteristics, which
mainly reflects in the provision for bad debts receivable, inventory
valuation methods, depreciation of fixed assets, amortization of
intangible assets, measurement model of real estate as investment and
income recognition and measurement and so on.
1. Declaration on Abiding by the Enterprise Accounting Standards
The financial statements follow the requirements of enterprise
accounting standards, which authentically and completely reflect the
financial status on Dec. 31, 2017 and the operating results and cash
flow during 2017 of the Company and the Group.
2. Accounting period
The accounting period is the calendar year, from January 1 to
December 31 each year.
3. Recording currency
RMB is the recording currency of the Group and also the currency used
in the preparation of financial statements. Unless otherwise specified,
the amount unit is RMB.
The subsidiaries, joint ventures and associated enterprises of 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 financial statements.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
4. Business combination
The term “business combination” refers to a transaction or event
combining two or more individual enterprises into a reporting entity. The
enterprise merger is divided into the business combination under the
same control and business combination not under the same control.
Business combination under the same control
The business combination under the same controller refers to the
enterprises involved in the combination will be controlled by the same
party or the same multiple parties before and after the combination, and
which is not temporary. As for the business combination under the same
control, the party who gains the control of other enterprises involved on
the combination day shall be the merging party, and the other
enterprises involved will be the merged party. The combination date
refers to the date on which the merging party actually obtains control of
the merged party.
The assets and liabilities the merging party obtains in the business
combination under the same control (including the goodwill formed by
the acquisition of the ultimate controlling party of the merged party),
shall be processed with relevant accounting treatment according to the
date of merger on the basis of the book value of the financial statements
from the ultimate controlling party. The difference between the book
value of the net assets acquired by the merger party and the merger
consideration paid is adjusted to the capital reserve. When capital
reserve is not sufficient to compensate, retained interest is thus
adjusted.
Business combination not under the same control
The business combination not under the same controller refers to the
enterprises involved will not be controlled by the same party or the
same multiple parties before and after the combination. As for the
business combination not under the same control, the party who gains
the control of other enterprises involved on the combination day shall be
the purchaser, and the other enterprises involved will be the acquiree.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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The combination date refers to the date on which the purchaser actually
obtains the control of the acquiree.
The identifiable assets, liabilities and contingent liabilities obtained in
the business combination not under the same control shall be measured
at fair value on purchase day.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
4. Business combination (continued)
Business combination not under the same control (continued)
The positive difference between the summation of the fair value of the
combined consideration paid by the merger (or fair value of the issued
equity securities) and the held fair value of the equity of the acquiree
before the purchase day and the fair value of the identifiable net assets
obtained in the combination from the acquiree is confirmed as goodwill,
and shall be for subsequent measurement after subtracting the
accumulated impairment losses from the cost. If the summation of the
fair value of the combined consideration paid by the merger (or fair
value of the issued equity securities) and the held fair value of the equity
of the acquiree before the purchase day is smaller than the fair value of
the identifiable net assets of the acquiree, firstly recheck the fair value of
the identifiable assets, liabilities and contingent liabilities of the
acquiree, and the fair value of the combined consideration paid (or fair
value of the issued equity securities), and the measurement of the held
fair value of the equity of the acquiree before the purchase day, after
that, if the summation of the fair value of the combined consideration
paid by the merger (or fair value of the issued equity securities) and the
held fair value of the equity of the acquiree before the purchase day is
still smaller than the fair value of the identifiable net assets obtained in
combination from the acquiree, the difference shall be recorded in the
current profits and losses.
5. Consolidated financial statements
The consolidated scope of consolidated financial statements is based
on control, including the financial statements of the Company and its
subsidiaries as of December 31, 2017. 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 consolidated financial statements, the subsidiary
adopts the accounting period and accounting policies consistent with
the Company. Assets, liabilities, equity, income, expenses and cash
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Notes to Financial Statements (continued)
Dec. 31, 2017
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flows arising from all transactions between the Group’s internal
companies are fully offset at the time of combination.
If the current loss of the minority shareholders of the subsidiary exceeds
the share held by the minority shareholders in the initial shareholders’
equity of the subsidiary company, the balance still offsets the minority’s
equity.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
5. Consolidated financial statements (continued)
For the subsidiaries acquired through business combination under the
same control, the operating results and cash flows of the merged party
shall be included in the consolidated financial statements from the date
of acquisition of control till the termination of control. When preparing
the consolidated financial statements, the financial statements shall be
adjusted based on the fair value of various identifiable assets, liabilities
and contingent liability confirmed on the date of purchase.
For the subsidiaries acquired through business combination under the
same control, the operating results and cash flows of the merged party
shall be included in the consolidated financial statements at the
beginning of the period. When preparing the consolidated financial
statements, relevant items of the financial statements of the previous
period shall be adjusted and the reporting entity formed after the merger
is regarded as having been in existence since the ultimate controlling
party began to implement control.
If changes in the relevant facts and circumstances lead to changes in
one or more of the elements of the control, the Group will reevaluate
whether or not the investee is controlled.
6. Cash and cash equivalents
Cash refers to the Group’s cash in stock and the deposits that are
available for payment at any time; cash equivalents refer to the
investments held by the Group of short-term, highly liquid and readily
convertible to known amounts of cash, with an insignificant risk of
changes in value.
7. Foreign Currency Business and Foreign Currency Statements
Translation
In the case of a foreign currency transaction, the Group changes the
amount of foreign currency into the amount of the recording currency.
At the time of initial confirmation, the foreign currency transaction shall
convert the amount of the foreign currency into the amount of the
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Notes to Financial Statements (continued)
Dec. 31, 2017
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recording currency at the spot rate of the transaction. At the balance
sheet date, the currency exchange rate of the currency denominated
items shall be translated at the spot exchange rate at sight on the
balance sheet date. The resulting transaction difference of settlement
and monetary items, in addition to the difference resulting 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 profits and losses. 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 resulting difference shall be recorded
in the current profits and losses or other comprehensive income
according to the nature of the non-monetary items.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
7. Foreign Currency Business and Translation of Foreign Currency
Statements (continued)
In the case of overseas operations, the Group changes its recording
currency into RMB in preparing the financial statements: for
assets/liabilities items in the balance sheet, exchange rate at sight on
the date of balance sheet is used for translation. As for the items under
the shareholders’ equity, except for those under “undistributed profit”,
other items are translated using the spot exchange rate at the time of
incurrence; the income and expense items in the income statement
shall be translated at the spot exchange rate of the transaction. The
conversion difference of foreign currency statements resulting 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
profits and losses, partial disposal shall be calculated according to the
proportion of disposal.
Foreign currency cash flows shall be translated at the spot exchange
rate on the day of incurrence. Cash flow from offshore subsidiaries is
translated at the spot exchange rate on the day of incurrence. Effect of
exchange rate changes on cash amount is shown separately in the cash
flow statements as an adjustment item.
8. Financial instruments
Financial instrument is the contract that forms the financial assets of an
enterprise and forms financial liabilities or equity instruments of other
enterprises.
Confirmation and Termination of Financial Instruments
The Group identifies a financial asset or financial liability when
becoming a party to a financial instrument contract.
In case of satisfying the following conditions, terminate the confirmation
of financial assets (or part of financial assets or of a group of similar
financial assets), that is to say, write off from its account and balance
sheet:
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Notes to Financial Statements (continued)
Dec. 31, 2017
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(1) The right to receive cash flows from financial assets expires;
(2) The right to receive the cash flow from financial asset has been
transferred, or have assumed the obligation in the “pass-through
agreement” to pay the collected cash flow timely to the third party
in full; and (a) has transferred substantially almost all the risks
and rewards of ownership of the financial asset, or (b) although
does not transfer or retain substantially nearly all of the risks and
rewards of ownership of the financial asset, but has given up the
control over the financial asset.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
In the event that the liability of a financial liability has been fulfilled,
cancelled or expired, the determination of financial liabilities shall be
terminated. If the existing financial liability is replaced by the same
creditor with another financial liabilities of virtually entirely different
terms, or the terms of the existing liabilities are almost entirely modified
substantially, such substitutions or modifications shall be handled as the
termination of the original liability and the recognition of new liabilities,
and the difference shall be included in current profits and losses.
In case of trading financial assets in the conventional way, confirm and
terminate on the basis of trade-date accounting. Trading financial
assets in the conventional way refers to collecting or delivering financial
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
financial assets.
Classification and measurement of financial assets
During initial recognition, the financial assets of the Group shall be
classified into: financial assets measured at fair value with the changes
included into current profits and losses, loans and receivables, and
financial assets available-for-sale. The financial assets are measured at
fair value at the time of initial recognition. As for the financial assets
measured at fair value with the changes included into current profits and
losses, related transaction costs shall be included directly in current
profit or loss, while the related transaction costs of other financial assets
are included in the initially recognized amount.
Subsequent measurement of financial assets is subject to its
classification:
Financial assets measured at fair value with the changes included into
current profits and losses
Financial assets measured at fair value with changes included in current
profits and losses shall include the trading financial assets and the
financial assets designated at the time of initial recognition, which are
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
measured at fair value with changes included in current profits and
losses. Trading financial assets are financial assets that meet one of the
following conditions: getting the financial assets for the purpose of
selling in the short term; belonging to part of a combination of
identifiable financial for centralized management, and there is objective
evidence showing that the company has recently adopted a short-term
profit approach to manage the portfolio; belonging to derivatives, but
excepting for the derivatives that are designated and are effective
hedging tools, the derivatives belongings to financial guarantee
contracts and the derivatives that are linked to equity instrument
investment which has no offer in the active market and its fair value
cannot be measured reliably and must be settled through the delivery of
the equity instrument. For such financial assets, use fair value for
subsequent measurement, all realized and unrealized gains and losses
are included in the current profits and losses. Dividends or interest
income related to the financial assets measured at fair value with
changes included in current profits and losses shall be recorded in
current profits and losses.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
Classification and measurement of financial assets (continued)
Financial assets measured at fair value with the changes included into
current profits and losses (continued)
The equity instrument investment that has no offer in the active market
and whose fair value cannot be measured reliably shall not be
designated as a financial asset measured at fair value with changes
included in current profits and losses.
The financial assets classified as the financial asset measured at fair
value with changes included in current profits and losses by the
enterprise during initial recognition shall not be reclassified as any other
type of financial assets; while other types of financial assets shall not be
reclassified as the financial assets measured at fair value with changes
included in current profits and losses.
In accordance with the above conditions, such financial assets of the
Group mainly include forward foreign exchange contracts.
Loans and receivables
Loans and receivables refer to the non-derivative financial assets with
no quotation on active market and fixed or identifiable recoverable
amount. For such financial assets, adopt the actual interest rate method
for subsequent measurement based on amortized cost, and the gains or
losses arising from its amortization or impairment shall be included in
current profits and losses.
Financial assets available-for-sale
The financial assets available-for-sale refer to the non-derivative
financial assets that are designated as available for sale during initial
recognition, and the financial assets other than those listed above. For
such financial assets, use fair value for subsequent measurement. The
discount or premium shall be amortized using the effective interest
method and be recognized as interest income or expense. In addition to
recognizing the impairment loss and the balance of exchange of foreign
currency monetary financial assets as the current profits and losses, the
changes in fair value of financial assets available-for-sale shall be
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Notes to Financial Statements (continued)
Dec. 31, 2017
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recognized as other comprehensive income, and the cumulative gains
or losses shall be transferred to the current profits and losses until the
financial asset has been derecognized or impaired. Dividends or
interest income related to the financial assets available-for-sale shall be
included in the current profits and losses.
The equity instrument investments that are not quoted in an active
market and whose fair value cannot be reliably measured shall be
measured at cost.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
Classification and Measurement of Financial Liabilities
The financial liabilities of the Group are classified as other financial
liabilities at the time of initial recognition. The related transaction costs
of other financial liabilities shall be included in the initial recognized
amount; actual interest rate method shall be used for subsequent
measurement based on amortized cost.
Financial instruments offset
When meet the following conditions simultaneously, the net amount
after financial assets and financial liabilities offsetting shall be listed in
the balance sheet: having the legal right to offset the recognized
amount, and that legal rights are currently enforceable; the plan is to be
settled in net, or at the same time, realize the financial assets and pay
off the financial liabilities.
Financial guarantee contract
A financial guarantee contract is a contract signed between the
guarantor and the creditor, when the debtor fails to perform the
obligations, the guarantor shall perform the obligation or bear the
liability in accordance with the contract. The financial guarantee contract
is measured at fair value at the time of initial recognition, does not
belong to the financial guarantee contract designated as the financial
liabilities measured at fair value with changes included in the current
profits and losses, after initial recognition, in accordance with the
amount confirmed by the current best estimate of the expenditure
required to perform relevant obligations at the balance sheet date and
the balance after deducting the accumulative amortization determined
in accordance with the revenue recognition principle from the initial
recognized amount, the higher of the two shall be for subsequent
measurement
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
Derivative Financial Instruments
The Group uses derivative financial instruments, such as forward
exchange contracts, to hedge against exchange rate risk. Derivative
financial instruments are initially measured at the fair value on the date
of derivative trading contract signing, with subsequent measurement at
fair value. The derivative financial instrument with positive fair value is
recognized as an asset, and the one with negative fair value is
recognized as a liability. However, the derivative financial instruments,
which are linked to the equity instrument which has no offer in the active
market and its fair value cannot be measured reliably and shall be
settled through the delivery of the equity instrument, shall be measured
at cost.
In addition to the part of an effective hedge in a cash flow hedge
included in other comprehensive income, and rolled out from the current
profits and losses in the event that the hedged item affects the profit or
loss, the gains or losses arising from changes in fair value of derivative
instruments are directly included into the current profits and losses.
Financial assets impairment
The Group checks the book value of the financial assets on balance
sheet date. If there is objective evidence showing that financial assets
are impaired, the provision for impairment shall be made. The objective
evidence for financial assets impairment refers to the items which
actually happened after initial recognition of financial assets, influenced
the estimated future cash flows of the financial assets, and its impact
can be reliably measured by the enterprise. The objective evidences for
impairment of financial assets include: serious financial difficulties
occurred to the issuer or debtor, violating the terms of the contract (such
as default or overdue payment of interest or principal) by the debtor,
likely bankruptcy or other financial restructuring of the debtor, and
reduction in and measurable expected future cash flows shown by
public data.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
Financial assets impairment (continued)
Financial assets measured at amortized cost
In the event of, the book value of the financial asset shall be written
down through the allowance for project value to the present value of
estimated future cash flow (excluding the future credit losses that have
not yet occurred), the amount of write downs shall be recorded in the
current profits and losses. The present value of the expected future
cash flow is determined by discounting based on the original effective
interest rate (the actual interest rate calculated and determined at the
time of initial recognition) of the financial asset, and the value of
collateral shall also be taken into account. The interest income after
impairment shall be calculated and determined using the discount rate
used to discount future cash flows in the light of the determination of
impairment losses as the interest rate. For loans and receivables, if
there is no real expectation for future recovery and all collaterals have
been realized or transferred to the Group, the loans and receivables and
related impairment provisions shall be written off.
If the amount of individual financial assets is significant, individual
impairment test shall be conducted. If there is objective evidence to
prove that the impairment has occurred, the impairment loss shall be
recognized and included in current profit and loss. As for individual
financial asset with no significant amount, the impairment test shall be
conducted in the portfolio of financial assets with similar credit risk
features or conducted separately. As for the financial assets (including
the financial assets with or without significant amount) with no
impairment in separate test, impairment test shall be conducted again in
the portfolio of financial assets with similar credit risk features. The
financial assets which have suffered from an impairment loss in any
single amount shall not be included in any portfolio of financial assets
with similar risk features for any impairment test.
When the Group have confirmed the impairment losses on financial
assets measured at amortized cost, if there is any objective evidence
showing that the financial assets value has been restored, and it is
objectively related with the events incurred after the confirmation of the
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Notes to Financial Statements (continued)
Dec. 31, 2017
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loss, the previously recognized impairment loss shall be reversed into
current profit or loss. However, the book value after the reversal shall
not exceed the amortized cost of the financial asset at the reversal date,
assuming that the impairment provision is not included.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
Financial assets impairment (continued)
Financial assets available-for-sale
If there is objective evidence for financial asset impairment, the
cumulative losses originally included in other comprehensive income
due to the decline in the fair value, shall be transferred out and included
in the current profits and losses. The transferred cumulative loss refers
to the balance after deducting the recovered principal and the amortized
amount, current fair value and the impairment loss originally included in
the profits and losses from the initial acquisition cost of the financial
assets available-for-sale.
The objective evidences for proving impairment of available-for-sale
equity instruments investments includes serious or non-temporary
decline in fair value. “Serious” shall be judged according to the extent of
fair value the cost, and “non-temporary” shall be judged according to the
duration of fair value below the cost. If there is any objective evidence of
impairment, the transferred aggregate losses shall be the balance after
deducting the current fair value and the impairment loss originally
included in the profits or losses from the acquisition cost. The
impairment losses of equity instrument investment available for sale
shall not be carried back through profit or loss, and the increase in fair
value after impairment shall be recognized directly in other
comprehensive income.
It needs to judge when determining what is “serious” or
“non-temporary”. The Group shall judge according to the degree or
duration of the fair value below cost as well as other factors.
For the debt instruments investment available for sale, the impairment
shall be assessed in the same manner as the financial assets measured
at amortized cost. However, the transferred aggregate losses shall be
the balance after deducting the current fair value and the impairment
loss originally included in the profits or losses from the acquisition cost.
The interest income after impairment shall be calculated and recognized
in accordance with the discount rate used to discount future cash flows
during the determination of impairment losses.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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As for the debt instruments available for sale of which impairment
losses have been recognized, if, in the subsequent accounting period,
the fair value rises and is objectively related to events that occur after
the impairment losses were recognized, the previously recognized
impairment losses shall be reversed and included in the current profits
and losses.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
8. Financial instruments (continued)
Financial assets measured at cost
If there is objective evidence showing the impairment of financial
assets, the difference between the book value of financial assets and
the present value determined by discounting the future cash flows
according to the market return of similar financial assets at that time
shall be recognized as impairment loss and included in current profits
and losses. Once recognized, the impairment loss shall not be carried
back.
Transfer of financial assets
If the Group has transferred almost all risks and rewards of the
ownership of the financial assets to the transferee, the recognition of
such financial assets shall be terminated. If almost all risks and rewards
of the ownership of the financial assets are retained, the recognition of
such financial assets shall not be terminated.
When the Group has neither transferred nor retained almost all risks
and rewards of the ownership of financial assets, handle respectively in
the following manners: if the control over the financial asset is given up,
stop recognizing the financial assets and recognize assets and liabilities
arising; if the control is not given up, recognize related financial assets
and liabilities accordingly according to the extent of its continued
involvement in the transferred financial assets.
In case of continued involvement in the manner of providing financial
security for the transferred financial assets, recognize the assets formed
by the continued involvement in accordance with the lower of the book
value of the financial asset and the amount of financial guarantee. The
amount of financial guarantee refers to the maximum amount to be
repaid in the considerations received.
9. Receivables
The receivables include accounts receivable and other receivables. As
for the receivables from sales of goods or rendering of service, the fair
value of the contract or agreement price receivable from the buyer or
the service receiver shall be regarded as the initial recognition amount.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
9. Receivables (continued)
(a) Accounts receivable
Accounts receivable with significant single amount and separate
provision for bad debits
As for the accounts receivable with significant single amount, separate
impairment test shall be done. When there is objective evidence
showing that the Group is unable to recover the money according to the
original provisions of account receivables, the provision for bad debt
shall be made.
Judgment standard for significant single amount: top 5 of the
receivables from non-related party.
Method for making of provision of bad debt with significant single
amount: based on the difference of the present value of the expected
future cash flow of the account receivable less than its book value.
Reason for the provision of bad debt for single item: there is objective
evidence showing that the Group is unable to recover the money
according to the original provisions of account receivables.
Method for provision of bad debt: according to the difference of the
present value of its expected future cash flow less than its book value
Accounts receivable with the provision for bad debt based on portfolio of
credit risk features
Accounts receivable with insignificant single amount, together with the
unimpaired accounts receivable after individual test, shall be classified
into groups by credit risk features, and the provision of bad debt shall be
determined on the basis of actual loss rate of the accounts receivable
group with similar credit risk features in previous year and in
combination with present situations.
The basis for determining the credit risk portfolio is as follows:
Group 1 Accounts receivables from related party
Group 2 Accounts receivables from non-related party
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Notes to Financial Statements (continued)
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The method for making provision of bad debt based on credit risk
portfolio is as follows:
Group 1 The provision of bad debt shall not be made for the
accounts receivable from related party except that there is objective
evidence showing that the Group is unable to recover the money
according to the original provisions of account receivables
Group 2 Aging analysis method (future collection considered)
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
9. Receivables (continued)
(a) Accounts receivable (continued)
Accounts receivable with the provision for bad debt based on portfolio of
credit risk characteristics (continued)
In the group, the proportion of provision based on aging analysis method is
listed as follows:
Age Proportion
Within 6 months -
7~12 months 1%
1~2 years 15%
2~3 years 30%
3~4 years 50%
4~5 years 75%
Over 5 years 100%
(b) Other receivables
Other receivables with significant single amount but for separate provision of
bad debt
As for the other receivables with significant single amount, separate
impairment test shall be done. When there is objective evidence
showing that the Group is unable to recover the money according to the
original provisions of other receivables, the provision for bad debt shall
be made.
Judgment standard for significant single amount: top 5 of the receivables from
non-related party.
Method for provision of bad debt: according to the difference of the
present value of its expected future cash flow less than its book value
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
9. Receivables (continued)
(b) Other receivables (continued)
Other receivables with insignificant single amount but for individual
withdrawal of the provision of bad debt
Reason for the provision of bad debt for single item: there is objective
evidence showing that the Group is unable to recover the money
according to the original provisions of other receivables.
Method for withdrawal of the provision of bad debt: according to the
difference of the present value of the expected future cash flow of other
receivable less than its book value
Other receivables with the provision for bad debt withdrawn by group
Other receivable with insignificant single amount, together with the
unimpaired other receivables after individual test, shall be classified into
groups by credit risk features, and the provision of bad debt shall be
determined on the basis of actual loss rate of the collection of receivable
with similar credit risk features in previous year and in combination with
present situations.
The basis for determining the credit risk portfolio is as follows:
Group 1 Guarantee deposit (excluding quality guarantee deposit)
Group 2 Personal loan and petty fund of the employee
Group 3 Other receivables of other natures
The method for making provision of bad debt based on credit risk
portfolio is as follows:
Group 1 The provision of bad debt shall not be made for the
guarantee deposit (excluding quality guarantee deposit) except that
there is objective evidence showing that the Group is unable to recover
the money according to the original provisions of other receivables
Group 2 The provision of bad debt shall not be made for the
individual loan and petty fund of the employee except that there is
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
objective evidence showing that the Group is unable to recover the
money according to the original provisions of other receivables
Group 3 Aging analysis method
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
9. Receivables (continued)
(b) Other receivables (continued)
Other receivables with the provision for bad debt withdrawn by group
(continued)
In the group, the proportion of provision based on aging analysis
method is listed as follows:
Age Proportion
Within 6 months -
7~12 months 1%
1~2 years 15%
2~3 years 30%
3~4 years 50%
4~5 years 75%
Over 5 years 100%
10. Inventory
Inventory includes raw materials, purchased spare parts, goods in
process and merchandise inventory, etc.
Inventories are initially measured at cost. Inventory costs include
purchase costs, processing costs and other costs. The actual cost is
determined by the weighted average method when sending out the
inventory. Turn-over materials include low-value consumption goods
and the packing, etc.; the low-value consumption goods are amortized
by installment while packing is amortized at one time.
The inventory system shall be perpetual inventory system.
At the balance sheet date, inventories are measured at the lower of the
cost and net realizable value, for the cost that is higher than the net
realizable value, the provision for depreciation of inventories shall be
included in the current profits and losses. If the influence factors of the
provision for depreciation of inventories before have disappeared,
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making the net realizable value of inventories higher than the book
value, in the amount of original provision for depreciation of inventories,
the previously reduced amount shall be recovered and the reversed
amount shall be recorded in the current profits and losses.
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
10. Inventory (continued)
Net realizable value is the amount that the estimated selling price of the
inventory minus the cost that would incur at the time of completion, the
estimated cost of sales and relevant taxes and fees in daily activities.
For the provision for decline in value of inventories, the raw materials
shall be by category while the finished goods shall be by individual
inventory item.
11. Construction contract
For customized production of large port equipment, heavy equipment,
steel structure product and construction project, because the
commencement and completion dates usually in different fiscal years,
the Group shall use construction contract calculate the revenue and
cost.
(a) If the result of individual construction contract can be reliably estimated,
the revenue and cost of the construction project can be recognized on
balance sheet date with completeness construction method according
to the schedule of contract. Reliable estimation of the result of
construction contract means that the economic benefit related to the
contract is likely to flow into the group, and the actual contract cost can
be clearly distinguished and measured reliably. In the case of a fixed
cost contract, the following conditions should be satisfied: the total
contract revenue can be measured reliably, and the contract completion
progress and the cost to be taken for the completion of the contract can
be reliably determined. The amount of total contract revenue includes
the initial revenue stipulated in the contract and income resulting from
contract change, claim, and award, etc. The Group determines the
contract completion progress by the following methods:
(i) As for large port equipment, the completion rate shall be
determined according to the completion percentage
corresponding to the revenue recognition node of the
construction contract reached at the end of the term. The Group
has established the following three revenue recognition nodes:
First node: the main steel structure completed and erected;
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Notes to Financial Statements (continued)
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Second node: manufacturing, installation and initial
commissioning completed, product ex-factory qualification
certificate issued, shipping documents acquired, product ready
for shipping;
Third node: the product is delivered after final inspection by the
buyer and the final delivery certificate issued by the buyer is
obtained.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
11. Construction contract (continued)
The Group will analyze the construction contracts completed in
prior year by product category, and will calculate and determine
the completion percentage that should be recognized when
reaching the revenue recognition node, and take it as the
completion percentage to be recognized at various stages in
current period.
(ii) For heavy equipment and construction project, the progress of
completion shall be determined by the proportion of accumulated
contract cost incurred in total expected contract cost. The
accumulated contract cost does not include that related to future
activities of the contract.
(iii) The completion progress of steel structure manufacturing shall
be determined by the proportion of cumulative processing
tonnage completed in total processing tonnage.
(b) If reliable estimation of the results of individual construction contract is
unavailable, the following shall be used:
(i) If the contract cost can be recovered, the contract revenue shall
be recognized according to the actual contract cost that can be
recovered, and the contract cost is recognized as contract
expense in the period when cost incurs.
(ii) When contract cost cannot be recovered, it shall be recognized
as contract expense immediately when it incurs other than
contract revenue.
(c) When expected total contract cost exceeds total revenue, the expected
losses should be immediately recognized as current profits and losses.
(d) When contract value is settled in installments, the settled installment is
recognized as settled value, which will be transferred and set off with
related accumulated costs and confirmed margin after the settlement of
construction contract. On the balance sheet date, when the sum of
accumulated costs and confirmed margin is greater than the
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Notes to Financial Statements (continued)
Dec. 31, 2017
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accumulated settled value, the difference shall be listed as the
construction completed account yet has not been settled is current
assets. Otherwise, it shall be listed in the amount due from customer for
contract work in current liabilities.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
12. Long-term equity investment
Long-term equity investment includes the equity investments in
subsidiaries, joint ventures and associated enterprises.
Long-term equity investments are initially measured by the initial
investment cost on acquisition. Long term equity investments obtained
by business combination under the same control take the share of the
book value in the consolidated financial statements acquired by the
merging party owner on the combination day as the initial investment
cost; the difference between the initial investment cost and the book
value of the combined consideration is adjusted to the capital reserves
(when sufficient for write-downs, write down the retained earnings); as
for other comprehensive income prior to the date of combination, when
handling the investment, it shall carry out the accounting treatment on
the same basis of the relevant assets or liabilities directly disposed by
the invested entity, as for the shareholders’ equity recognized due to the
changes in other shareholders’ equity except for net profit or loss, other
comprehensive income and profit distribution in the invested entity, it
shall be transferred to current profits and losses during disposal of the
investment. In which, if it is still long-term equity investment after
disposal, carry forward in proportion, if it is converted to the financial
instruments, then carry forward fully.
Long-term equity investments obtained by business combination not
under the same control shall take the combined cost as the initial
investment cost (if the business combination not under the same control
is realized by two or more transactions in steps, take the sum of the
book value of equity investments held by acquiree prior to purchase
date and newly increased investment cost on purchase date as the
initial investment cost), and the combined cost includes the sum of the
assets paid by the purchaser, the liabilities incurred or assumed, the fair
value of the equity securities issued; as for other comprehensive
income prior to the purchasing date recognized by the equity method
accounting, such investment shall be handled by using the same basis
as the investee for handling relevant assets or liabilities directly. As for
the shareholders’ equity recognized due to the changes in other
shareholders’ equity except for net profit or loss, other comprehensive
income and profit distribution in the invested entity, it shall be
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Notes to Financial Statements (continued)
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transferred to current profits and losses during disposal of the
investment. In which, if it is still long term equity investment after the
disposal, carry forward in proportion, and if it is converted to the
financial instruments, then carry forward fully. When equity investments
held prior to the purchasing date as financial instrument included in the
cumulative changes in fair value of other comprehensive income is
counted according to the cost method, it shall be transferred fully into
the current profit and loss. As for the long term equity investments
acquired other than long term equity investments formed by the
business combination, the initial investment cost shall be determined
according to the following methods: obtained by making payment in
cash, it shall take the actual purchase price paid and the directly related
costs and taxes with the acquisition of long term equity investment and
other necessary expenses as the initial investment; obtained by issue of
equity securities, the fair value of the issue of equity securities shall be
taken as the initial investment cost.
The Company can measure the long-term equity investments controlled
by the investment enterprises with cost method in individual financial
statement of the Company. Control means having the power over the
investee and enjoying variable gains through participating in related
activities of the investee, and having the ability to utilize the power over
the investee to influence the return amount.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
12. Long-term equity investment (continued)
When the cost method is used, the long-term equity investment is priced
at the initial investment cost. The cost of the long-term equity
investment shall be adjusted if the investment is added or withdrawn.
The cash dividends or profits declared by the invested entity shall be
recognized as the current gain on investment.
If the Group has a joint control or significant influence on the invested
entity, the long-term equity investment shall be accounted by the equity
method. Joint control means enjoying control over certain arrangement
according to contract, and such arranged activities must be decided
upon agreement of the Group and the other participants that share the
control rights. Significant effect means that the company possesses the
right of decision-making participation in the financial and operating
policies of the investee but is not able to control or jointly control with
other parties the making of such policies.
When using the equity method, if the initial cost of a long-term equity
investment larger than the share of fair value of identifiable net assets of
the invested enterprise, it shall be included in the initial investment cost
of long-term equity investment; if the initial cost of a long-term equity
investment less than the share of fair value of identifiable net assets the
invested enterprise, the difference shall be included in the current profits
and losses and the cost of the long-term equity investment shall also be
adjusted.
When using the equity method, after obtaining a long-term equity
investment, in accordance with the share of other comprehensive
income and net income achieved by the invested entity which should be
enjoyed or shared, respectively confirm the investment profit and loss
and other comprehensive income, and adjust the book value of the
long-term equity investment. In confirmation of the share of the net profit
or loss of the invested entity, based on the fair value of the identifiable
assets of the invested entity when obtaining the investment, in
accordance with the Group's accounting policies and accounting
periods, offset the internal transaction gains and losses between
affiliated enterprises and joint ventures and attribute to the investing
party in accordance with the enjoyed proportion (but the loss of internal
transactions is an impairment loss of assets, which should be fully
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Notes to Financial Statements (continued)
Dec. 31, 2017
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recognized), confirm the net profit of the invested entity after
adjustment, except for the assets that are invested or sold to form a
business. In accordance with the portion of the profits or cash dividends
declared by the investee entity, the book value of the long-term equity
investment shall be reduced accordingly. The Group confirms the net
losses of the invested enterprise, the book value of the long-term equity
investment and other long-term interests in the net investment of the
invested entity is reduced to zero, except for which the Group bears
extra liability for loss. For the other changes in the equity of the invested
entity other than net gains/losses, other comprehensive income and
profit distribution, the book value of the long-term equity investment
shall be adjusted and included in the shareholders’ equity.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
12. Long-term equity investment (continued)
For the disposal of long term equity investment, the difference between
the book value and the actual purchase price shall be included in
current profits and losses. Accounting treatment shall be carried out for
the long-term equity investments accounted for using the equity
method, terminating the equity method, and relevant other
comprehensive income accounted for using original equity on the same
basis of direct disposal of relevant assets or liabilities by the invested
entity. The shareholders’ equity recognized by the changes in other
shareholder’s equity of the invested entity other than net profit or loss,
other comprehensive income and profit distribution shall be transferred
fully into the current profits and losses; in case of still using the equity
method, carry out the accounting treatment for other comprehensive
income related to the original equity accounting shall on the same basis
of direct disposal of relevant assets or liabilities by the invested entity
and transfer into the current profits and losses in proportion, and the
shareholders’ equity recognized by the changes in other shareholder’s
equity of the invested entity other than net profit or loss, other
comprehensive income and profit distribution shall be transferred into
the current profits and losses in proportion.
13. Real estate as investment
Real estate as investment refers to real estate held for purposes of
earning rentals or capital gain, including leased-out land use right and
leased-out buildings.
Initial measurement of the real estate as investment shall be made by
cost. The subsequent expenditure relating to investment real estate,
when economic benefits related to such assets are likely to flow into the
Group and its cost can be measured reliably, shall be included in the
cost of real estate as investment. Otherwise, it shall be included in
current profits and losses at the time of incurrence.
Cost models for all investment property are adopted by the Group to
undertake follow-up measures. Depreciation or amortization is made for
buildings and land use rights according to their estimated useful life and
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Notes to Financial Statements (continued)
Dec. 31, 2017
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residual value rate. The estimated useful life, net residual value rate and
annual depreciation (amortization) rate of the real estate as investment
are listed below:
Estimated useful life Estimated net residual value rate Annual depreciation
(amortization) rate
Building 30 years 0% 3.3%
Land use right Land use years 0% Calculated and determined
based on the estimated residual
value rate and land use years
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
13. Real estate as investment (continued)
The estimated useful life, estimated net residual values and
depreciation (amortization) method of the investment real estate shall
be reviewed and adjusted appropriately by the Group at the end of each
year.
When the purpose of the real estate as investment is changed to
self-use, from the date of change, convert the real estate as investment
to fixed assets or intangible assets. When the purpose of self-use real
estate is changed to earning rentals or for capital appreciation, from the
date of change, convert the fixed assets or intangible assets to real
estate as investment. Upon conversion, the book value before the
conversion shall be recorded as the entry value after conversion.
14. Fixed assets
Fixed assets shall only be recognized when the economic interests
related is likely to flow into the Group and their costs can be reliably
measured. In case of meeting the recognition condition, the subsequent
expenditure relating to fixed assets shall be included in the cost of fixed
assets, and stop recognizing the book value of the replaced part;
otherwise, it shall be included in current profits and losses at the time of
incurrence.
The initial measurement of a fixed asset shall be made at its cost. The
cost of purchasing a fixed asset consists of the purchase price, relevant
taxes, and other expenditures incurred before making the fixed asset
reaching the expected conditions for use and attributable directly to
such asset.
In addition to the formation of the extracted safety production cost, the
depreciation of fixed assets is calculated and withdrawn by straight-line
method, and the service life, expected net residual value rate and
annual depreciation rate of the fixed assets are as follows:
Service life Estimated net residual value rate Annual depreciation rate
House and building 20-40 years 0% 2.5%-5%
Machinery equipment 3-20 years 0%/based on the Determined based on the
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Notes to Financial Statements (continued)
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price of scrap steel based on the estimated
residual value rate and service life
Office and 3-5 years 0% 20%-33.3%
electronic equipment
Means of transport (other than vessels)5 years 0% 20%
Vessels 10-30 years 5%/10% 3%-9.5%
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
14. Fixed assets (continued)
Depreciation for fixed assets under financing lease is calculated in
accordance with the same policy as fixed assets. If the acquisition of
ownership of the leased asset at the expiration of the lease period can
be confirmed rationally, depreciation shall be accrued within the service
life of the leased asset. If not, depreciation shall be accrued within lease
term or the service life of the leased asset, whichever is shorter.
The Group shall check the estimated life of use, estimated net residual
value and method of depreciation at the end of each report year and
make necessary adjustments.
15. Construction in process
The cost of construction in process is determined based on actual
project expenditure, including necessary project expenditures occurred
in construction period, capitalized loan expenses before making the
construction in progress reach expected status of use and other
relevant expenses.
When the construction in progress reaches the expected condition for
use, it shall be transferred into fixed assets.
16. Borrowing cost
Borrowing cost refers to the interest and other relevant costs arising
from the borrowing by the Group, including the interest on borrowings,
the amortization of the discount or premium, auxiliary expenses and the
exchange difference arising from the foreign currency borrowings.
The borrowing cost directly attributable to the purchase, construction or
production of assets eligible for capitalization shall be capitalized, while
other borrowing costs shall be included in current profits and losses.
The assets eligible for capitalization refers to assets such as fixed
assets and investment real estate which take a rather long period of
time to purchase, construct or manufacture in order to reach their
expected state of use or sale.
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When the following conditions are also met, the borrowing cost can be
capitalized:
(1) Asset expenditures have incurred;
(2) Borrowing costs have incurred;
(3) Purchasing, constructing or manufacturing activities necessity to
make that asset reach expected usable or salable condition has
started.
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
16. Borrowing cost (continued)
When the purchased, built or manufactured fixed asset reached
expected usable or salable condition, stop capitalization. The
subsequent borrowing costs shall be included in current profits and
losses.
The amount of interest capitalization in each accounting period during
the capitalization period is determined by the following method:
(1) The special borrowings shall be determined based on the
amount that the interest expense actually incurred in the current
period less the temporary deposit interest income or the
investment income.
(2) The general borrowing occupied is determined by multiplying the
weighted average of accumulated assets expenditures expenses
exceeding that of special borrowings by the weighted average
interest rate of the general borrowings occupied.
In case purchasing, building or manufacturing activities of assets
ceases accidentally for reasons other than reaching expected usable or
salable status and term of cease exceeds 3 months on end,
capitalization of borrowing cost shall be stopped. The borrowing costs
occurring during the term of cease shall be recognized as cost and
included in current profits and losses until purchasing, building or
manufacturing activities resume.
17. Intangible assets
Intangible assets are recognized when financial benefits related will
probably flow into the Group and their costs can be reliably valued, and
initial measurement is taken at cost. However, intangible assets
acquired in business combination under the same control can be
measured reliably, that is, intangible assets are recognized as intangible
assets separately and measured at fair value. The evaluation value
confirmed by the state-owned authority shall be the book value for the
intangible assets invested by the state-owned shareholders at the
re-structuring of the Company.
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Notes to Financial Statements (continued)
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Service life of intangible assets shall be confirmed based on the term in
which they can bring benefits to the Company. If the term in which
intangible assets bring benefits to the Company cannot be expected,
such assets shall be confirmed as intangible assets with uncertain
service life.
The service life of intangible assets is shown as follows:
Service life
Land use right Land service life
Software use cost 5 years
Proprietary technology 10 years
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
17. Intangible assets (continued)
Land use right obtained by the Group is usually accounted for as
intangible assets. For self-developed and self-constructed buildings,
relevant land use right and the buildings shall be regarded as intangible
assets and fixed assets respectively. If the price paid for outsourced
land and building is difficult to distribute in a reasonable way between
the land use rights and the building, they are all regarded as fixed
assets.
Intangible assets with limited service life are amortized in straight line
method in the expected years for use. Double check is made by the
Group at the end of each year to expected life in use and amortization
method of intangible assets with limited use of life and necessary
adjustment is thus made.
The Group classifies the expenses of the internal R & D project into
expenses in research phase and expenses in development phase.
Expenditure in research phase shall be included in the current profits
and losses at the time of incurrence. Expenses in development stage
are capitalized when simultaneously satisfying the following conditions:
It is technically feasible to complete the intangible assets to make them
usable and marketable; the management has the intention to complete
the intangible assets and to use them or to sell them; the ways
intangible assets yield financial benefits. It’s able to prove the products
manufacturing by intangible assets exist in the market, or intangible
assets are in the market, or intangible intended to be used for interior;
there are enough technology and financial resources and other
resources supports to complete the development of the intangible
assets, with the ability to use and sell; the expenses attributable to such
development stage of intangible assets can be reliably measured. The
development expenditures not satisfying the above conditions are
included in current profits and losses when incurred.
18. Assets impairment
The assets impairment, except for inventories, deferred income tax and
financial assets, shall be determined as follows:
The Group will determine whether there is sign of impairment for assets
on the balance sheet date. If there is sign of impairment, the Group will
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Notes to Financial Statements (continued)
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estimate recoverable amount and conduct impairment test. Impairment
test is made at least once at the end of each year for goodwill formed
because of enterprise merger no matter whether there is sign of
impairment. Impairment test shall also be made at least once each year
for the intangible assets not reaching the usable state.
The recoverable amount is the higher between net amount of asset’s
fair value deducting disposal expenses and the present value of
expected future cash flow. Recoverable amount is estimated by
individual piece of asset. In case recoverable amount of individual asset
is difficult to value, recoverable amount of asset group to which they
said individual asset belongs is confirmed. An asset group can be
recognized on the basis that its main cash in-flow is independent of that
of other assets or asset groups.
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
18. Assets impairment (continued)
When the recoverable amount of the asset or asset group is lower than
its book value, the Group shall reduce its book value to the recoverable
amount, the amount written down is included in the current profits and
losses, and the corresponding asset impairment provision shall be
withdrawn.
In terms of goodwill impairment test, the book value of goodwill formed
by the business combination shall be amortized to the relevant asset
group by reasonable means from the date of purchase; it shall be
amortized to relevant combination of asset groups when it is difficult to
amortize to relevant asset group. The relevant asset group or
combination of asset groups is the one that can benefit from the synergy
effect of the business combination, and is not larger than the reporting
subsection determined by the Group.
For impairment test of relevant asset groups or combination of asset
groups that contain goodwill, if there is a sign of impairment, the
impairment test on the asset group or the asset group that does not
include goodwill is performed first. Then calculate the recoverable
amount and confirm corresponding impairment loss. Next, impairment
test is made to relevant asset groups or combination of asset groups
that contain goodwill. If the recoverable amount is lower than the book
value of the asset. The impairment loss is firstly to compensate the book
value of the goodwill amortized in the asset group or portfolio, and then
to compensate the book value of other assets in the proportion of the
book value of other assets except for the goodwill in the asset group or
portfolio.
Once asset impairment provision is made, it shall not be transferred
back in the following accounting period.
19. Long-term deferred expenses
Long-term deferred expenses shall be amortized by straight-line
method, and the amortization period is as follows:
Amortization period
Improvement of leased fixed asset Expected benefit period
for operation
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Notes to Financial Statements (continued)
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20. Employee compensation
The employee compensation refers to all forms of remuneration or
compensation that the Group pays for obtaining the service to be
provided by the employees or severing labor relation, mainly including
short-term compensation, post-service welfare, dismissal welfare and
other long-term employee benefits. The benefits provided by the Group
to the employee’s spouse, children, dependent and survivor of the
deceased employee are also contained in the employee compensation.
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
20. Employee compensation (continued)
Short-term compensation
During the accounting period when the employees provide service, the
actual short-term compensation shall be recognized as liability and
included in current profit and loss or related assets cost.
Post-service welfare (defined contribution plans)
The Group shall buy endowment insurance and unemployment
insurance managed by the local government and open annuity for
employees. The corresponding expenditure shall be included in related
asset cost or current profits and losses at the time of incurrence.
21. Predicted liabilities
In addition to contingent consideration or contingent liability of business
combination not under the same control, when a contingency related
liability meets the following conditions, the Group recognizes it as an
estimated liability:
(1) This liability is the current liability of the Group;
(2) The fulfillment of the liability may cause outflow of economic
interests;
(3) The amount can be reliably measured.
Expected liabilities are initially valued by the best estimates to be spent
on fulfillment of related present obligation, combining risks and
uncertainty with probabilities and time value of currency. The book
value of expected liabilities is double-checked and thus adjusted on
Balance sheet date to reflect present best estimates. Where there is
conclusive evidence that the book value does not reflect the current
best estimate, the book value is adjusted in accordance with the current
best estimate.
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Notes to Financial Statements (continued)
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III. Major Accounting Policies and Accounting Estimates (continued)
22. Revenue
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.
(a) Revenue from sales of large port equipment, ocean heavy equipment, product of
steel structure and construction project is recognized by the proportion of
completion, please refer to Note III. 11.
(b) Income from ship transportation is recognized at the completion of the voyage.
(c) Income is recognized at the time of delivery for the sale of spare goods or parts.
(d) Interest income is recognized by term for using monetary fund of the Group by others
and real interest rate.
(e) Operating leasing income is recognized in leasing period by straight line method.
(f) Activities under the construction and transfer of contracts usually include construction
and transfer. As for constructing item the Group responsible for, in the
construction phase, in accordance with the construction contract standards, when
the results can be estimated reliably, the construction contract revenue should be
valued by the fair value of consideration chargeable, at the same time to confirm
the “Long term receivables”, to be written off when payment received from the
owners.
23. Government subsidy
Government subsidies are recognized when they are able to meet the
conditions attached and can be received. Where government subsidies
are monetary assets, they are measured in amounts received or
receivable. Where the government subsidies are non-monetary assets,
they shall be measured at fair value; if the fair value cannot be reliably
obtained, it shall be measured in nominal amount.
According to government documents, for long-term assets for the
purposes of purchasing and constructing or formed in other ways,
relevant subsidy shall be recognized as government subsidy related to
assets; if it is not clear in the government documents, judgment shall be
based on the basic conditions necessary to obtain the subsidy. If the
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
basic condition is that long-term assets are for the purposes of
purchasing and constructing or formed in other ways, the subsidy is
recognized as government subsidy related to assets. Otherwise, it shall
be recognized as government subsidy related to income.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
23. Government subsidy (continued)
Government subsidy related to the income when used to compensate
related cost expenses or losses in future periods is recognized as
deferred income and is booked into current P&L in the period when
related expenses are recognized. That used to compensate paid
expenses or losses is booked directly into current P&L.
Asset-related government subsidy shall write down the book value of
relevant asset or recognized as deferred income, and shall be included
in the profits and losses by installments in reasonable and systemic way
within the service life of the asset (but the government subsidy
measured based on nominal amount shall be directly included in current
profits and losses); of relevant assets are sold, transferred, retired or
damaged before the end of service life, the balance of undistributed
deferred income shall be transferred to profits and losses in the period
of assets disposal.
24. Income tax
Income tax includes current income tax and deferred income tax. In
addition to the goodwill adjustment arising from the merger of the
enterprise, or transactions or relevant matters directly included in the
shareholder’s equity, the income tax expenses or income shall be
included in the current profits and losses.
The Group’s income tax liabilities or assets formed during the current
period and previous period shall be measured by the amount of income
tax payable or returned in accordance with the provisions of the Tax
Law.
According to the temporary difference between the book value and tax
base of assets and liabilities on balance sheet date, the temporary
differences arising from the difference between the book value and tax
base of the item that is not recognized as the asset and liability but
which tax base can be determined according to tax law, the Group shall
withdraw the deferred income tax using the balance sheet liability
method.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
24. Income tax (continued)
The deferred income tax liabilities are recognized on the basis of
various taxable temporary differences, unless:
(1) Taxable temporary differences arise from the following
transaction: The initial recognition of goodwill or the initial
recognition of assets or liabilities arising from transactions with
the following characteristics: the transaction is not an enterprise
merger, and the accounting profits, taxable income and
deductible loss are not affected when the transaction occurs.
(2) For investment-related taxable temporary differences of
subsidiaries, associates and joint ventures, the time of the
temporary difference reversal can be controlled and the
temporary difference will not likely be transferred back in the
foreseeable future.
For deductible temporary differences, deductible losses and tax credits
to be carried forward to subsequent year, and the Group will confirm the
deferred income tax assets arising therefrom to the extent that it is likely
to obtain the amount of future taxable income that is used to offset
temporary differences, deductible losses and tax credits, unless:
(1) Deductable temporary differences arise from the following
transaction: the transaction is not business combination, and the
accounting profits, taxable income and deductible loss are not
affected when the transaction occurs.
(2) Deferred income tax assets generated from investment-related
provisional difference of subsidiaries, associates and joint
ventures are confirmed as deferred income tax assets, when the
temporary difference is able to be transferred back in the
foreseeable future and when possible taxable income which is
used to compensate the provisional difference can be possibly
obtained in future.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
24. Income tax (continued)
On Balance sheet date, deferred income tax assets and deferred
income tax liabilities are calculated by tax rate applicable to the period
of term the assets or liabilities are expected to be collected back in
accordance with regulations of tax law, and reflect income tax effect
from the way that assets or liabilities are expected to be collected back.
On Balance sheet date, the Group reviews the book value of the
deferred income tax assets, and if it is likely that taxable income
obtained in future periods is not enough to deduct the benefits from
book value of the deferred income tax assets, the carry value of
deferred income tax assets shall be written down. On the balance sheet
date, the Group reevaluates unrecognized deferred income tax assets
and recognizes the deferred income tax assets to the extent that
sufficient taxable income is likely to be transferred back to all or part of
the deferred income tax assets.
When all of the following conditions are met, the net amount deferred
income tax assets and deferred income tax liabilities after offset shall be
listed: the Company is legally authorized to settle the income tax assets
and liabilities of the current period at net amounts; the deferred income
tax assets and liabilities are related to the income tax levied by the
same tax authority on the same tax payer, or such on different tax
payers but in the future period of the reversal of each important deferred
income tax assets and liabilities, the involved tax payers intend to settle
the income tax assets and liabilities of the current period at net amounts
or obtain assets and repay debts at the same time.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
25. Lease
A lease substantially transferring all risks and remuneration related to
the ownership of the assets is a financing lease. Others are operating
leases.
As the lessee of operating lease
The rental expenses of operating leases are included in the asset cost
or the current P&L based on straight-line method in the lease period.
As the lessor of operating lease
The rental income of the operating lease is included in the asset cost or
the current P&L based on straight-line method in the lease period.
As the lessee of financial lease
As for the assets financed by leasing, on the beginning date of lease
term, the lower one of the fair value of the leased asset and the
minimum rental payment the present value is accounted in the book as
the leased assets; the minimum lease payment shall be the entry value
of long-term payables; the difference shall be the unrecognized
financing charges, which shall be amortized in each period within the
leasing term based on actual interest rate method. Contingent rental is
included in the current profits and losses statements at the time of
incurrence.
Leaseback
Leaseback for financing 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.
26. Profit distribution
The cash dividends of the Company are recognized as liabilities after
approval by the general meeting of shareholders.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
27. Safe production cost
The safe production cost extracted in accordance with the regulations
shall be included into the cost of relevant products or current profit or
loss, and shall also be included in the special reserves; it shall be
processed separately when used by distinguishing whether to form fixed
asset or not: in case of belonging to expense expenditure, write down
the special reserves directly; in case of forming fixed assets, collect the
expenditures incurred and recognize the fixed assets when reaching
expected usable status, and write down the equivalent special reserves
and recognize equivalent accumulated depreciation at the same time.
28. Fair value measurement
The Group measures the derivative financial instruments and listed
equity instruments investments at fair value on each balance sheet
date. Fair value refers to the price that a market participant gains or pay
for sale of an asset or transfer of a liability in an orderly transaction
occurring on the measurement date. For relevant assets or liabilities
measured by fair value, the orderly transaction for sale of an asset or
transfer of a liability is assumed to be conducted in the main market. If it
relevant assets or liability measured by fair value do not exist in the
market, the transaction is assumed to be conducted in the most
advantageous market for relevant assets or liabilities. The main market
(or the most advantageous market) is the trading market in which the
Group is able to enter on the measurement date. The Group assumes
that market participants intend to realize their maximum economic
benefits when pricing the assets or liabilities.
For non-financial assets measured by fair value, the ability of market
participants to put the assets in best use for economic benefit or to sell
the assets to other market participants that can put the assets in best
use for economic benefits.
Estimation technique that is applicable and supported by sufficient
available data and other information is adopted. Priority is given to the
observed input value, and the unobservable input value is used only if
the observable input value cannot be obtained or is not practicable.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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For assets and liabilities measured or disclosed at fair value in the
financial statements, fair value level shall be determined by the input
value of lowest level, which is important for the fair value measurement
as a whole: the input value of the first level is the unadjusted quotation
on the active market of the same assets or liabilities that can be
obtained on the measurement date; the input value of the second level
is the input value that may be observed directly or indirectly by the
relevant assets or liabilities except the first level input value; the input
value of the third level is the unobservable input value of the relevant
assets or liabilities.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates (continued)
28. Fair value measurement (continued)
On each balance sheet date, the Group reevaluates the assets and
liabilities that continue to be measured at fair value as recognized in the
financial statements to determine whether a conversion has occurred at
the fair value level.
29. Major accounting judgments and estimates
For the preparation of financial statements, the management is required
to make judgments, estimates and assumptions that will affect the
presentation amount of income, costs, assets and liabilities and
disclosure thereof, as well as disclosure of contingent liabilities on
Balance sheet date. However, the results of these assumptions and
uncertainties may result in significant adjustments to the carrying
amount of future affected assets or liabilities.
Uncertainty of estimates
The following key assumptions about the future on the balance sheet
date and other key sources of estimate uncertainty may lead to
significant adjustments in the carrying amount of assets and liabilities
during future accounting periods.
Construction contract
Construction contract is adopted to calculate its revenue and cost for
large port equipment and construction projects. During the course of the
project, the group shall continuously review and revise the expected
total cost of the construction contract based on the situation of actual
cost of the construction contract and the actual cost of the similar
products in the reference, so that the expected total cost of the contract
is approximate to its final actual cost. If there is a discrepancy between
the expected total cost and the actual total cost of contracts in the
future, the discrepancy will affect the cost confirmed by the Group this
year.
At the same time, the Group management regularly performs
impairment testing on construction contracts. If the expected total cost
of the construction contract exceeds the total contract income, the
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
contract expected loss shall be calculated and withdrawn. Changes of
the expected total cost due to continuous review and revision may
affect the carrying value of the construction completed amount not
closed/construction uncompleted amount closed and impairment losses
during the estimated changes.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
29. Major accounting judgments and estimates (continued)
Uncertainty of estimates (continued)
Impairment of account receivables
The management of the Group continues to pay attention to the
recoverable extent of the receivables, and estimates the bad debt
reserves of the accounts receivable based on the analysis of the actual
conditions (including but not limited to the repayment capacity of the
debtor, the age of the accounts receivable, the collection after the
period). In case of any event or change, if the estimate adopted is
changed, the estimate shall be adjusted accordingly, and the
appropriate bad debt reserve for receivables shall be accrued. If the
expected amount is different from the original estimate, the difference
will affect the book value of the receivable and the impairment loss
during the estimated change.
Inventory impairments
The management shall estimate the net realizable value of inventories
in time so as to estimate inventory falling price reserves. If any event or
circumstance changes, it is necessary to use the estimate to prepare
the inventory falling price if the inventory is not likely to realize the
relevant value. If the expected amount is different from the original
estimate, the difference will affect the book value of the inventories and
the impairment loss during the estimated change.
Service life and the net residual value of fixed assets
Expected service life and the net residual value of fixed assets are estimated
by the Group. These estimates are based on the actual service life and
net residual value of fixed assets similar in nature and function.
Technological innovation and the actions taken by competitors due to
severe industry cycles may cause major changes to such estimates;
changes in the economic environment, technical environment and other
environmental changes in service life of fixed assets may also lead to
significant changes in the expected implementation of the economic
benefits associated with fixed assets.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates
(continued)
29. Major accounting judgments and estimates (continued)
Uncertainty of estimates (continued)
Impairment of non-current assets except for financial assets (except for
goodwill)
The Group determines whether there is any indication of possible
impairment of non-current assets other than financial assets on the
balance sheet date. For non-current assets except financial assets,
when there are indications that its carrying amount is not recoverable,
an impairment test is conducted. Impairment is indicated when the book
value of the asset or asset group is higher than the recoverable amount,
that is, the higher one between the net amount of the fair value less the
disposal expenses and the present value of the expected future cash
flows.Net amount gained by fair value less disposal expenses shall be
determined by the price in sale agreement of similar assets in fair
transaction or market price observed less the incremental cost
attributable to the assets. The management must estimate the expected
future cash flow of the asset or asset group and select the appropriate
discount rate to determine the present value of the future cash flow
when estimating the present value of future cash flow.
Goodwill impairment
Impairment test for goodwill shall be conducted at least annually. This
requires estimate of the present value of the future cash flows of the
asset group or the asset group to which goodwill is distributed. The
Group shall estimate the expected future cash flow of asset or asset
group and select the appropriate discount rate to determine the present
value of the future cash flow when estimating present value of future
cash flow.
Income tax and deferred income tax
The Company was recognized as a high-tech enterprise in 2014, with a
three-year period of validity. The company calculated and paid the
enterprise income tax at the rate of 15% according to the relevant
income tax laws. According to the relevant regulations, one condition for
the qualification of high-tech enterprises is that the proportion of R & D
expenditure in sales income must not be lower than the specified
proportion, in which the proportion is 3% for enterprise with annual sales
income more than 200 million Yuan. If the final determination result
given by tax authority in charge is different from that of the company, the
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
difference will affect the income tax expenses of the year.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
III. Major Accounting Policies and Accounting Estimates
(continued)
29. Major accounting judgments and estimates (continued)
Uncertainty of estimates (continued)
Income tax and deferred income tax (continued)
In addition, the Group calculates enterprise income tax and deferred
income tax in accordance with current tax laws and takes into
consideration applicable income tax provisions and tax preferences.
There is uncertainty in the final tax treatment for some of the
transactions and events involved in normal operations. The Group
needs to make significant judgments when the income tax is calculated
and withdrawn. The Group shall estimate whether additional taxes need
to be paid in respect of future tax adjustments for tax purposes so as to
confirm corresponding income tax liabilities. If the final determination
result of these tax matters is different from the originally entered
amount, the difference will affect the amount of income tax and deferred
income tax for the period of final recognition.
When evaluating temporary differences, the Group also considers the
possibility that deferred income tax assets can be recovered. The
temporary differences mainly include the effects of deductible losses,
asset impairment provision, unrealized profits of internal transactions,
expected liabilities that have not been approved before tax, interest not
yet paid, wages and salaries, financial assets whose changes are
measured at fair value and included in current profits and losses, and
changes in the fair value of liabilities. The confirmation of the deferred
income tax assets is based on the estimation of the Group and
assumes that the deferred income tax assets are reversed through the
Group’s continuous operation in the foreseeable future. At the same
time, the Group also takes into account the deferred tax assets and the
tax rate at which the deferred income tax liabilities are reversed. Based
on the experience gained by the Company for many years, as well as
the continuous input into the research and development projects, the
Company is expected to obtain the qualification of high-tech enterprises
the year and beyond, and hereby calculate and recognize the deferred
income tax assets and deferred income tax liabilities at the preferential
tax rate.
The Group has calculated and withdrawn income tax liabilities and
deferred income tax items of this year based on current tax laws and
current best estimates and assumptions. In the future, tax liabilities and
deferred income tax items may need to be adjusted due to changes of tax
laws or related circumstances.
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Notes to Financial Statements (continued)
Dec. 31, 2017
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III. Major Accounting Policies and Accounting Estimates (continued)
30. Changes in accounting policies and accounting estimates
Changes in accounting policies
Alteration of statement mode of losses and gains from assets disposal
In accordance with requirements of Notice on Modifying and Issuing
Financial Statement Format of Common Enterprise by Ministry of
Finance (CK [2017] No. 30), the items separately listed and reported in
the item “gains from assets disposal” in the item “operating profit” in
Profit Statement of this Company as well as the losses and gains from
the non-current assets disposal originally recorded in “non-business
revenue” and “non-operating expenses” were altered to be listed and
reported in “Gains from assets disposal”; this Company correspondingly
traced back and restated the comparative profit statement. The
alteration of this accounting policy had no effect on the consolidation
and the net profit of the Company as well as the consolidation and the
stockholders’ equity of the Company.
Alteration of statement mode of government subsidy
In accordance with the requirements of Notice on Issuing and Revising
Accounting Standard No. 16------Governmental Subsidy (CK [2017] No.
15), the item “Other Revenue” separately listed and reported in the item
“Operating profit” in Profit Statement of this Company and the
governmental subsidy related to the routine activities of the enterprise
were altered to be listed and reported in “Other revenue” instead of
“non-business revenue”; according to the linking regulations of this
standard, this Company adopted Prospective Application for disposal of
the governmental subsidy existing before Jan. 1, 2017 and the newly
increased governmental subsidy from Jan. 1, 2017 to the
implementation date of this standard (June 12, 2017) was adjusted
according to this standard. The alteration of this accounting policy had
no effect on the consolidation and the net profit of the Company as well
as the consolidation of the stockholders’ equity of the Company.
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IV. Taxation
1. Main taxes and tax rates
VAT – The Group’s product sales business is applicable to
VAT. Among which, the domestic product sales
output tax ratio is 17%, export sales output tax ratio
is subject to “exemption, counteraction, refund”, the
applicable refunding ratio is 17%, 15% and 13%.
The Group’s vessel transport business revenue is
applicable to VAT with the tax ratio of 11%; the
equipment rental is applicable to VAT with tax ratio
of 17%; the equipment rental is applicable to the
VAT’s simple collection method, and the tax ratio
halved is 2%; the Group’s rental housing is
applicable to the VAT’s simple collection method.
Since May 1, 2016, the ratio is 5%; the
“Construction-Transfer” project is applicable to
VAT, the ratio is 11%. The above output tax shall
calculate and pay VAT after deducting the amount
of input tax deductible, except for the applicable
VAT’s simple collection method.
Business tax – The original business tax rate applicable to
revenues from house rental of the Group was 5%.
The original business tax rate applicable to the
income and interest income from
“Construction-Transfer” projects was 3%. The
business tax was replaced by VAT from May 1,
2016.
Urban maintenance – The Group calculates and pays by 7% and 3%
of
and construction tax the actual payment of turnover tax
respectively.
and educational surtax
Corporate income tax –Corporate income tax is calculated and paid
in accordance with P.R. China Corporate Income
Tax Law (“Income Tax Law”). The Company was
recognized the High-tech enterprise in 2014, with
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Notes to Financial Statements (continued)
Dec. 31, 2017
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the certificate valid for 3 years. Afterwards, in
accordance with relevant regulations in High-tech
Enterprise Recognition Management Approaches
(GKFH [2016] No. 32) and the High-tech Enterprise
Recognition Management Work Guidelines (GKFH
[2016] No. 195) and the Notification on Announcing
List of Second Batch of Shanghai Municipality 2017
High-tech Enterprises Recognition, the Company
replied and passed the reexamination in 2017, and
was awarded the High-tech Enterprise Certificate
(certificate number: GR201731002345). The
certificate shall be valid for 3 years. According to
the regulations in Article 28 of the Income Tax Law,
the Company actually applied the corporate income
tax rate of 15% this year (2016: 15%).
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
The applicable income tax rates of the Company and the controlling
subsidiaries are as follows:
Registration place 2017 2016
Applicable tax rate Applicable tax
rate
The Company Pudong New Area, 15% 15%
Shanghai
Shanghai Zhenhua Port Machinery Chongming District, 25% 25%
Heavy Industry Co., Ltd. Shanghai
Shanghai Zhenhua Port Machinery Hong Kong 16.5% 16.5%
(Hong Kong) Co., Ltd. (Note 1)
Shanghai Zhenhua Shipping Co., Ltd. Pudong New Area, 25% 25%
Shanghai
Nantong Zhenhua Heavy Industry Nantong, Jiangsu 25% 25%
Equipment Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Group Nantong, Jiangsu 15%
15%
(Nantong) Transmission Machinery
Co., Ltd. (Note 2)
Nantong Zhenhua Heavy Industries Pudong, Shanghai 15% 25%
Electric Co., Ltd. (Note 2)
Jiangyin Zhenhua Port Machinery Steel Jiangyin, Jiangsu 25% 25%
Structure Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Steel Pudong, Shanghai 25%
25%
Structure Co., Ltd.
Shanghai Zhenhua Ocean Engineering Yangshan, Shanghai 25% 25%
Services Co., Ltd. (former: Shanghai Bonded port
Zhenhua Heavy Industries Vessel
Transport Co., Ltd)
Shanghai Zhenhua Testing Technology Pudong, Shanghai 25% 25%
Consulting Co., Ltd.
Shanghai Zhenhua Port Machinery Pudong, Shanghai 25% 25%
General Equipment Co., Ltd
Shanghai Port Machinery Heavy Pudong, Shanghai 25% 25%
Industries Co., Ltd.
Shanghai Zhenhua Heavy Industries (Group) Jingang, Jiangsu 25%
25%
Zhangjiagang Port Machinery Co., Ltd. Port area
Shanghai Zhenhua Heavy Industries Nantong, Jiangsu 15% 15%
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Notes to Financial Statements (continued)
Dec. 31, 2017
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Qidong Ocean Engineering Co., Ltd. (Note 2)
Jiangsu Daoda Ocean Engineering Nantong, Jiangsu NA 25%
Co., Ltd. (Note 18)
Jiahua Shipment Co., Ltd (Note 1) Hong Kong 16.5% 16.5%
Zhenhua Pufeng Wind Power Hong Kong 16.5% 16.5%
(Hong Kong) Co., Ltd (Note 1)
CCCC Tianhe Mechanical Equipment Changshu, Jiangsu 15% 15%
Manufacturing Co., Ltd (Note 2)
Fujian CCCC Qianda Heavy Fuzhou, Fujian 25% 25%
Industries Co., Ltd.
Najing Ninggao New Channel Nanjing, Jiangsu 25% 25%
Construction Co., Ltd.
CCCC Investment & Development Nantong, Jiangsu 25% 25%
Qidong Co., Ltd.
CCCC Liyang Urban Investment and Liyang Jiangsu 25% 25%
Construction Co., Ltd.
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
The applicable income tax rates of the Company and the controlling
subsidiaries are as follows (continued):
Registration place 2017 2016
Applicable tax rate Applicable tax
rate
CCCC (Huaian) Construction Development Huaian, Jiangsu 25%
25%
Co., Ltd.
CCCC Zhengjiang Investment Construction Zhenjiang, Jiangsu 25%
25%
Management Development Co., Ltd
CCCC Rudong Construction Nantong, Jiangsu 25% NA
Development Co., Ltd
ZPMC Netherlands Rotterdam, Netherlands20% 20%
Coperatie U.A. (Note 3)
ZPMC Netherlands B.V. (Note 3) Rotterdam, Netherlands 20% 20%
Verspannen B.V (Note 3) Rotterdam, Netherlands 20% NA
ZPMC Espana S.L. (Note 4) Spain 28% 28%
Los Barrios
ZPMC GmbH Hamburg (Note 5) Hamburg Germany32.28% 32.28%
ZPMC Lanka Company Colombo, Sri Lanka17.5% 17.5%
(Private) Limited (Note 6)
ZPMC North America Inc. (Note 7) Delaware, USA 15% 15%
ZPMC Korea Co., Ltd. (Note 8) Pusan, Korea 10% 10%
ZPMC Engineering Africa The Republic of South28% 28%
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Notes to Financial Statements (continued)
Dec. 31, 2017
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(Pty) Ltd. (Note 9) Africa
KwaZulu - Natal
ZPMC Engineering Strabang, 30% 30%
(India) Private Limited (Note10) Mahala, India
ZPMC Southeast Singapore 17% 17%
Asia Holding Pte. Ltd. (Note 11)
ZPMC Engineering Malaysia 20% 20%
(Malaysia) Sdn. Bhd. (Note 12)
ZPMC Australia Company New South Wales, 30% 30%
(Pty) Ltd. (Note 13) Australia
ZPMC Brazil Servio Rio de Janeiro, Brazil25% 25%
Portuários LTDA (Note 14)
ZPMC Limited Liability Moscow, Russia 20% 20%
Company (Note 15)
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Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
The applicable income tax rates of the Company and the controlling
subsidiaries are as follows (continued)：
Registration place 2017 2016
Applicable tax rate Applicable tax
rate
ZPMC NA East Coast Inc. (Note 7) Delaware, USA 15% 15%
ZPMC NA Huston Inc. (Note 7) Delaware, USA 15% 15%
ZPMC Middle East FZE (Note 16) Dubai, UAE 0% 0%
ZPMC UK LTD (Note 17) Cardiff, UK 20% 20%
Greenland Heavylift (Hong Kong) Hong Kong 16.5% NA
Limited (Note 1)
GPO Grace Limited (Note 19) Marshall Islands 0% NA
GPO Amethyst Limited (Note 19) Marshall Islands 0% NA
GPO Sapphire Limited (Note 19) Marshall Islands 0% NA
GPO Emerald Limited (Note 19) Marshall Islands 0% NA
GPO Heavylift Limited (Note 20) Cayman Islands 0% NA
GPO Heavylift AS (Note 21) Oslo, Norway 0% NA
Note 1： Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd.,
Jiahua Shipping Co., Ltd, Zhenhua Pufeng Wind Power (Hong
Kong) Co., Ltd and Greenland Heavylift (Hong Kong) Limited
are legal entities registered in Hong Kong, China. Based on
Hong Kong’s taxation regulations, the actual profits tax rate
applicable to such companies is 16.5% (2016: 16.5%).
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Notes to Financial Statements (continued)
Dec. 31, 2017
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IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note 2： Shanghai Zhenhua Heavy Industry Group (Nantong) Drive
Machinery was recognized as hi-tech enterprise in August,
2013 and won Hi-tech Enterprise Certificate (No.
GR201632001352) in 2016, with the valid term of 3 years.
Shanghai Zhenhua Heavy Industries Electric Co., Ltd was
recognized as hi-tech enterprise in November, 2017 and won
Hi-tech Enterprise Certificate (No.: GR201731003143) with the
valid terms of 3 years. ZMPC Qidong Ocean Engineering
Company was recognized as hi-tech enterprise in November,
2015 and won Hi-tech Enterprise Certificate
(No.GF201532000832) with the valid term of 3 years. Tianhe
Mechanical Equipment Manufacturing Co., Ltd of CCCC was
recognized as hi-tech enterprise in August, 2015 and won
Hi-tech Enterprise Certificate (No. GF201532000389) with the
valid term of 3 years. In accordance with relevant provisions in
Article 28 of the Income Tax Law, the Company actually
applied a 15% corporate income tax rate this year (2016:
Shanghai Zhenhua Heavy Industries Group (Nantong)
Transmission Machinery Co., Ltd., CCCC Tianhe Mechanical
Equipment Manufacturing Co., Ltd. and ZMPC Qidong Ocean
Engineering Co., Ltd. was 15%, while Shanghai Zhenhua
Heavy Industries Electric Co., Ltd was 25%).
Note 3： ZPMC Netherlands Coperatie U.A., ZPMC Netherlands B.V.
and Verspannen B.V. are private limited liability companies
registered in Holland. According to related provisions of the
income tax in Holland, the enterprise revenue tax is collected
with the progressive tax rate in excess of specific amount for
the profit of the Company. The tax rate is 20% for the profit
less than 200,000EUR, and 25% for the profit over 200,000
EUR. The actual income tax rate is 20% this year (2016:
20%).
Note 4： ZPMC Espana S.L. is the limited liability company registered
in Spain. According to related provisions of the income tax in
Spain, the enterprise revenue tax is collected with the
progressive tax rate in excess of specific amount for the profit
156 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
of the Company. The tax rate is 25% for the consolidated
profits of the Company less than 300,000 EUR, and 28% for
the profit over 300,000EUR. The actual income tax rate is 28%
this year. (2016: 28%).
157 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note 5： ZPMC GmbH Hamburg is registered in Germany, a limited
liability company; according to related provisions of income tax
law in Germany, the applicable income tax rate for the year is
30.6%, and on the basis of the corresponding income tax
amount, 5.5% of solidarity surcharge is imposed; the actual
total applicable income tax rate is 32.28% (2016: 32.28%).
Note 6： ZPMC Lanka Company (Private) Limited is a limited liability
company registered in Sri Lanka; according to the related
income tax provisions of Sri Lanka, the applicable income tax
rate is 17.5% (2016: 17.5%).
Note 7： ZPMC North America Inc., ZPMC NA East Coast Inc. and
ZPMC NA Huston Inc. are the limited liability companies
registered in USA; according to the related income tax
provisions of USA, the applicable income tax rate is 15%
(2016: 15%).
Note 8： ZPMC Korea Co., Ltd. is a limited liability company registered
in Korea. According to related provisions of the income tax in
Korea, the enterprise revenue tax is collected with the
progressive tax rate in excess of specific amount for the profit
of the Company. The tax rate is 10% for the profit less than
200 million KRW, and 20% for the profit between 200 million
KEW and 20,000 million KRW, and 22% for the profit over 200
million KRW. The actual income tax rate is 10% this year
(2016: 10%).
Note 9： ZPMC Engineering Africa (PTY) LTD. is a limited liability
company registered in Republic of South Africa; according to
the related income tax provisions of Republic of South Africa,
the applicable income tax rate is 28% (2016: 28%).
Note 10: ZPMC Engineering (India) Private Limited is a limited liability
company registered in India; according to the related income
158 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
tax provisions of India, the applicable income tax rate is 30%
(2016: 30%).
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note 11：ZPMC Southeast Asia Holding PTE. LTD. is a limited liability
company registered in Singapore; according to the related
income tax provisions of Singapore, the applicable income tax
rate is 17% (2016: 17%).
Note 12：ZPMC Engineering (Malaysia) Sdn. Bhd. is a limited liability
company registered in Malaysia; according to the related
income tax provisions of Malaysia, the applicable income tax
rate is 20% (2016: 20%).
Note 13：ZPMC Australia Company (Pty) Ltd. is a limited liability
company registered in Australia; according to the related
income tax provisions of Australia, the applicable income tax
rate is 30% (2016: 30%).
Note 14: ZPMC Brazil Servio Portuários LTDA is a limited liability
company registered in Brazil, and former ZPMC Brazil
Holdings Ltda. was cancelled in 2017. According to the related
income tax provisions of Brazil, the applicable income tax rate
is 25% (2016: 25%).
Note 15：ZPMC Limited Liability Company is a limited liability company
registered in Russia; according to the related income tax
provisions of Russia, the applicable income tax rate is 20%
(2016: 20%).
Note 16：ZPMC Middle East FZE is a limited liability company registered
in Dubai, United Arab Emirates; according to the related
income tax provisions of Dubai, United Arab Emirates, the
applicable income tax rate is 0% (2016: 0%).
Note 17：ZPMC UK LTD is a limited liability company registered in
Cardiff, UK; according to the related income tax provisions of
Cardiff, the applicable income tax rate is 20% (2016: 20%).
159 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IV. Taxation (continued)
1. Main taxes and tax rates (continued)
Note 18 ： Jiangsu Marine Equipment Technology Co., Ltd. was
cancelled in 2016, and the applicable income tax rate in 2016
was 25%.
Note 19：GPO Grace Limited, GPO Amethyst Limited, GPO Sapphire
Limited and GPO Emerald Limited are limited liability
companies registered in Marshall Islands. In accordance with
relevant provisions of income tax law of Marshall Islands, the
applicable income tax rate for the Company in the year is 0%
(2016: not applicable).
Note 20：GPO Heavylift Limited is a limited liability company registered
in Cayman Islands. In accordance with relevant provisions of
income tax law of Cayman Islands, the applicable income tax
rate for the Company in the year is 0% (2016: not applicable).
Note 21：GPO Heavylift AS is a limited liability company registered in
Oslo, Norway. In accordance with relevant provisions of
income tax law of Norway, the applicable income tax rate for
the Company in the year is 0% (2016: not applicable).
V. Notes to Main Items of Consolidated Financial Statements
1. Monetary fund
2017 2016
Cash on hand 1,365,865 774,626
Bank deposit 5,672,481,136 3,496,430,560
Other monetary funds 96,380,368 99,839,013
5,770,227,369 3,597,044,199
160 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
1. Monetary fund (continued)
As of Dec, 31, 2017, the other monetary funds, including the restricted
deposit of RMB 96,380,368 Yuan, were the margin deposit that our
Group applied to banks for letters of credit and bank guarantees (Dec,
31, 2016: RMB 99,839,013 Yuan).
As of Dec, 31, 2017, the monetary fund deposited abroad by the Group
is RMB 637,201,842 Yuan (Dec, 31, 2016: RMB 621,197,660 Yuan).
As of Dec, 31, 2017, the bank deposit included deposit money and
short-term fixed deposit. The interest income from bank deposits shall
be obtained in accordance with the current interest rate. Deposit term
for the short term fixed deposit is 7 days, and the interest income shall
be obtained in accordance with the fixed time deposit interest rate.
2. Financial assets measured at fair value with changes included in
current profits and loss
2017 2016
Trading financial assets
-Equity instrument
(i)
investment 8,438,278 -
-Derivative financial assets - 4,615,775
8,438,278 4,615,775
(i) As of Dec. 31, 2017, the trading financial
assets - equity instrument investment held by the Company was acquired
at the acquisition of Greenland Heavylift (Hong Kong) Limited. The faire
value of purchase right corresponding to 1% stock rights can be
purchased with 1 USD at any time in the future.
161 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
3. Notes receivable
2017 2016
Banker acceptance bill 395,649,259 286,220,781
Commercial acceptance bill 25,136,753 10,700,000
420,786,012 296,920,781
As of Dec. 31, 2017, the notes receivable of RMB 32,340,000 Yuan
(Dec. 31, 2016: none) had been pledged to the bank as a pledge to
open a new bank acceptance bill.
The notes receivable that have been endorsed or discounted but not yet
matured on the balance sheet date are as follows:
2017 2016
Derecognition Non- Derecognition Non-
derecognition derecognition
Bank acceptance
bill 1,519,002,534 - 471,132,348 4,390,096
4. Accounts receivable
The aging analysis of accounts receivables is as follows:
2017 2016
Within 6 months 2,301,189,821 2,412,791,452
7~12 months 402,959,451 762,252,912
1~2 years 874,631,229 864,213,900
2~3 years 390,411,499 363,374,243
3~4 years 257,848,181 383,314,678
4~5 years 316,465,411 136,097,550
Over 5 years 771,913,799 648,577,646
5,315,419,391 5,570,622,381
Less: provision for bad debt of
accounts receivable 1,335,401,780 1,339,875,923
3,980,017,611 4,230,746,458
162 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
4. Accounts receivable (continued)
The changes in provision for bad debt of accounts receivable are as
follows:
Opening balance Proportion in Reversal in Write-off in current Closing balance
current year current year year
2017 1,339,875,923 248,322,946 (252,797,089) - 1,335,401,780
2016 1,136,848,761 209,863,641 (4,997,815) (1,838,664) 1,339,875,923
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Amount Propo Provisio
Provision Prop
rtion n
Amount proportion Amount ortion Amount
(%) proportio
(%) (%)
n (%)
With significant
single amount and
for separate
provision for bad
debt 182,649,892 3 182,649,892 100 159,594,037 3 159,594,037 100
Provision for bad
debt by credit risk
portfolio
-related party 837,635,985 16 - - 567,576,374 10 - -
-Non-related party 4,079,011,980 77 936,630,354 23 4,557,809,557 82 895,607,566 20
In significant single
amount bur for
separate provision
for bad debt 216,121,534 4 216,121,534 100 285,642,413 5 284,674,320 100
5,315,419,391 100 1,335,401,780 25 5,570,622,381 100 1,339,875,923 24
As of Dec. 31, 2017, the accounts receivable with significant single
amount and for separate provision for bad debt is as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Contract
Accounts receivable 1 182,649,892 182,649,892 100 disputes
As of Dec. 31, 2016, the accounts receivable with significant single
amount and for separate provision for bad debt is as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Contract
Accounts receivable 1 159,594,037 159,594,037 100 disputes
163 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
4. Accounts receivable (continued)
The accounts receivable of non-related party for the provision for bad
debt by aging analysis method is as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Proporti Proportio
Amount Amount Amount Amount
on (%) n (%)
Within 6
months 1,686,464,114 - - 2,127,697,593 - -
7~12
months 426,601,821 4,266,018 1 691,765,805 6,917,658 1
1~2 years 754,431,295 113,164,694 15 668,819,686 100,322,953 15
2~3 years 371,207,128 111,362,139 30 302,286,737 90,686,021 30
3~4 years 226,157,120 113,078,560 50 101,304,733 50,652,291 50
4~5 years 77,566,235 58,174,676 75 75,625,443 56,719,083 75
Over 5
years 536,584,267 536,584,267 100 590,309,560 590,309,560 100
4,079,011,980 936,630,354 23 4,557,809,557 895,607,566 20
As of Dec. 31, 2017, the accounts receivable with insignificant single
amount but for separate provision for bad debt is as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Counter-party in funds
Accounts receivable 1 107,819,500 107,819,500 100 shortage
Counter-party in funds
Accounts receivable 2 50,365,000 50,365,000 100 shortage
Accounts receivable 3 26,136,865 26,136,865 100 Contract disputes
Accounts receivable 4 10,730,715 10,730,715 100 Contract disputes
Accounts receivable 5 7,802,300 7,802,300 100 Contract disputes
Accounts receivable 6 6,990,320 6,990,320 100 Contract disputes
Accounts receivable 7 3,355,177 3,355,177 100 Contract disputes
Accounts receivable 8 2,083,103 2,083,103 100 Contract disputes
Accounts receivable 9 838,554 838,554 100 Contract disputes
216,121,534 216,121,534 100
164 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
4. Accounts receivable (continued)
As of Dec. 31, 2016, the accounts receivable with insignificant single
amount but for separate provision for bad debt is as follows:
Book balance Provision for bad Provision
debt proportion Reason
%
Accounts receivable Counter-party in
1 107,819,500 107,819,500 100 funds shortage
Accounts receivable Counter-party in
2 50,365,000 50,365,000 100 funds shortage
Accounts receivable
3 27,748,069 27,748,069 100 Contract disputes
Accounts receivable
4 21,932,297 21,932,297 100 Contract disputes
Accounts receivable
5 19,480,920 18,512,827 95 Contract disputes
Accounts receivable
6 17,735,070 17,735,070 100 Contract disputes
Accounts receivable
7 10,049,240 10,049,240 100 Contract disputes
Accounts receivable
8 7,664,629 7,664,629 100 Contract disputes
Accounts receivable
9 7,421,237 7,421,237 100 Contract disputes
Accounts receivable
10 7,306,800 7,306,800 100 Contract disputes
Accounts receivable
11 4,557,644 4,557,644 100 Contract disputes
Accounts receivable
12 3,562,007 3,562,007 100 Contract disputes
285,642,413 284,674,320 100
As of Dec. 31, 2017, the accounts receivable of the top five balances
collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of total
provision for bad balance of
debt accounts
receivable %
Total accounts receivable of the top
five balances 777,865,552 279,069,695 15
165 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
As of Dec. 31, 2016, the accounts receivable of the top five balances
collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of total
provision for bad balance of
debt accounts
receivable%
Total accounts receivable of the top
five balances 862,228,750 382,166,701 15
166 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
5. Prepayment
The aging analysis of prepayment is as follows:
2017 2016
Book balance Proportion Book balance Proportion
(%) (%)
Within 1 year 819,125,581 79 743,820,095 83
1~2 years 108,191,230 10 72,700,327 8
2~3 years 28,266,965 3 41,846,911 4
Over 3 years 81,199,394 8 42,054,901 5
1,036,783,170 100 900,422,234 100
As of Dec. 31, 2017, the repayment of the company with the age over
one year was RMB 217,657,589 Yuan (Dec. 31, 2016: RMB
156,602,139Yuan), mainly the prepayment for the procurement of
imported parts, which has not been yet settled because the purchased
imported parts have not been delivered.
As of Dec. 31, 2017, the prepayment of the top five balances collected
by debtor is summarized and analyzed as follows:
Amount Proportion in total Proportion of total
prepayment balance of
amount% accounts
receivable%
Total prepayment of the top five 20
balances 210,805,030 4
As of Dec. 31, 2016, the prepayment of the top five balances collected
by debtor is summarized and analyzed as follows:
Amount Proportion in total Proportion of total
prepayment balance of
amount% accounts
receivable%
Total prepayment of the top five 5
balances 265,464,546 29
167 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
6. Other receivables
The aging analysis of other receivables is as follows:
2017 2016
Within 6 months 1,076,997,530 722,015,188
7~12 months 31,600,949 3,320,248
1~2 years 239,277,814 5,050,048
2~3 years 2,061,944 17,396,586
3~4 years 5,438,287 3,690,767
4~5 years 3,007,066 223,263
Over 5 years 15,616,617 22,533,895
1,374,000,207 774,229,995
Less: Provision for bad debt of
other receivables 377,838,841 37,675,402
996,161,366 736,554,593
The changes of provision for bad debt of other receivables are as
follows:
Opening balance Proportion in Reversal in Write-off in Closing
current year current year current year balance
2017 37,675,402 347,764,450 (7,601,011) - 377,838,841
2016 28,062,537 9,612,865 - - 37,675,402
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Provisio
Provision
Proportion Proportion n
Amount Amount proportio Amount Amount
(%) (%) proporti
n (%)
on (%)
With significant single amount and
separate provision for bad debt 366,281,031 26 354,460,071 97 23,410,851 3 7,023,255 30
Provision for bad debt by credit risk
features portfolio
- Guarantee deposit
(excluding quality guarantee
deposit) 408,645,730 30 - - 227,641,095 30 - -
- Personal borrowing and petty
fund of employee 117,930,613 9 - - 119,097,936 15 - -
- Others 465,113,551 34 7,349,488 2 386,333,011 50 12,905,045 3
With insignificant single amount but
2 100
for separate provision for bad debt 16,029,282 1 16,029,282 100 17,747,102 17,747,102
1,374,000,207 100 377,838,841 27 774,229,995 100 37,675,402 5
168 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
6. Other receivables (continued)
As of Dec. 31, 2017, the other receivables with significant single amount
and separate provision for bad debt are as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Counter-party
in funds
Other receivables1 164,124,678 164,124,678 100 shortage
Contract
Other receivables2 150,327,138 150,327,138 100 disputes
Contract
Other receivables3 51,829,215 40,008,255 77 disputes
366,281,031 354,460,071 97
As of Dec. 31, 2016, the other receivables with significant single amount
and separate provision for bad debt are as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Contract
Other receivables1 23,410,851 7,023,255 30 disputes
The situations of other receivables of the Group with the provision for
bad debt based on aging analysis method are followings:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Proportion Proportion
Amount Amount Amount Amount
(%) (%)
Within 6
months 455,410,636 - - 357,174,789 - -
7~12
months 993,082 9,931 1 2,872,043 28,720 1
1~2 years 191,090 28,664 15 1,530,100 229,515 15
2~3 years 658,927 197,678 30 14,946,482 4,483,945 30
3~4 years 195,769 97,884 50 3,203,035 1,601,517 50
4~5 years 2,594,866 1,946,150 75 180,855 135,641 75
Over 5
years 5,069,181 5,069,181 100 6,425,707 6,425,707 100
465,113,551 7,349,488 2 386,333,011 12,905,045 3
169 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
6． Other receivables (continued)
As of Dec. 31, 2017, the situations of other receivables with insignificant
single amount but for separate provision for bad debt are as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Counter-part
Other receivables 1 4,214,642 4,214,642 100 y bankruptcy
Contract
Other receivables 2 3,037,042 3,037,042 100 cancellation
Contract
Other receivables 3 1,692,765 1,692,765 100 cancellation
Contract
Other receivables 4 1,539,600 1,539,600 100 cancellation
Contract
Other receivables 5 1,170,282 1,170,282 100 cancellation
Contract
Others 4,374,951 4,374,951 100 cancellation
16,029,282 16,029,282 100
As of Dec. 31, 2016, the situations of other receivables with insignificant
single amount but for separate provision for bad debt are as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Contract
Other receivables 1 5,540,286 5,540,286 100 cancellation
Counter-part
y
Other receivables 2 4,214,642 4,214,642 100 bankruptcy
Contract
Other receivables 3 3,037,042 3,037,042 100 cancellation
Contract
Other receivables 4 1,692,765 1,692,765 100 cancellation
Others 3,262,367 3,262,367 100
17,747,102 17,747,102 100
170 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
6． Other receivables (continued)
The classification of other receivables by nature is as follows:
2017 2016
Bid and performance bond 509,244,563 153,797,532
Unpaid taxed receivable 359,755,913 169,252,637
Guarantee liability repayment (i) 164,124,678 -
Money on call for product field
service 83,673,256 93,565,532
Deposit receivable 45,458,548 6,742,361
Staff borrowings receivable 34,257,357 43,553,963
Lease payment receivable 33,434,668 33,434,668
The third party’s funds advanced
receivable 26,010,084 39,969,061
Customs guarantee deposit 4,269,756 71,148,199
Export rebates 4,258,496 63,023,350
Others 109,512,888 99,742,692
1,374,000,207 774,229,995
(i) In 2016, the Group provided the loan guarantee of 25.51 million USD for the
joint venture Zhenhua Ocean Energy (Hong Kong) Co., Ltd. The
guarantee expired on Apr. 14, 2017. As Zhenhua Ocean Energy (Hong
Kong) Co., Ltd failed to repay the matured loan principal, the Group
fulfilled the guarantee obligation and paid 25.1178 million USD to the bank,
with the closing balance equivalent to RMB 164,124,678 Yuan.
171 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
6． Other receivables (continued)
As of Dec. 31, 2017, the top five other receivables are as follows:
Closing balance Proportion in Nature Age Closing
the total balance of
balance of provision for
other bad debt
receivables
(%)
Other Performance Within
receivables 1 176,800,000 13 bond one year -
Guarantee
Other liability Within
receivables 2 164,124,678 12 repayment one year 164,124,678
Other Performance 1~2
receivables 3 150,327,138 11 bond years 150,327,138
Advance
Other money for 1~2
receivables 4 51,829,215 4 another years 40,008,255
Other Within
receivables 5 46,715,000 3 Bid bond one year -
589,796,031 43 354,460,071
As of Dec. 31, 2016, the top 5 other receivables are as follows:
Closing balance Proportion in Nature Age Closing
the total balance of
balance of provision for
other bad debt
receivables
(%)
Customs
Other guarantee Within 1
receivables 1 71,148,199 9 deposit year -
Other Within 1
receivables 2 50,000,000 6 Bid bond year -
Other Within 1
receivables 3 50,000,000 6 Bid bond year -
Other Lease Within 1
receivables 4 33,434,668 5 payment year -
Advance
Other money for 2~3
receivables 5 23,410,851 3 another years 7,023,255
227,993,718 29 7,023,255
172 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
7. Inventory
2017 2016
Book balance Falling price Book value Book balance Falling price Book value
reserves reserves
Raw material
and purchased
parts 2,160,945,988 78,519,214 2,082,426,774 2,851,653,926 141,839,752 2,709,814,174
Unfinished
products 6,492,603,460 1,516,893,869 4,975,709,591 5,190,856,986 1,124,585,146 4,066,271,840
Merchandise
inventory 24,284,499 11,153,985 13,130,514 11,153,985 11,153,985 -
8,677,833,947 1,606,567,068 7,071,266,879 8,053,664,897 1,277,578,883 6,776,086,014
The unfinished products of the Group mainly refer to the marine heavy
equipment products and prepared parts that are already under
construction but not yet signed sales orders.
The changes in inventory falling price reserves are as follows:
2017
Reduction in
current year
Beginning Proportion in Reversal or Closing balance
amount current year write-off
Raw material and
purchased parts 141,839,752 10,050,143 (73,370,681) 78,519,214
Unfinished products 1,124,585,146 414,123,334 (21,814,611) 1,516,893,869
Merchandise inventory 11,153,985 - - 11,153,985
1,277,578,883 424,173,477 (95,185,292) 1,606,567,068
2016
Reduction in
current year
Beginning Proportion in Reversal or Closing balance
amount current year write-off
Raw material and
purchased parts 324,784,792 4,565,125 (187,510,165) 141,839,752
Unfinished products 232,214,158 892,370,988 - 1,124,585,146
Merchandise inventory 11,153,985 - - 11,153,985
568,152,935 896,936,113 (187,510,165) 1,277,578,883
173 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
7. Inventory (continued)
The information of inventory falling price reserves is as follows:
Particular basis for determining Reason for reversal or write
off-of
net realizable value inventory falling price
reserves in current year
Raw material and Difference between net realizable value of Steel price rise or
for sale
purchased parts raw materials and purchased parts and the
book value due to the decline in product prices
Unfinished products Difference between the net realizable value Value recovery or disposal
and the book value of unfinished products
Merchandise inventory Difference between the net realizable value None
and the book value of merchandise inventory
8. Construction completed account yet has not been settled/Amount
due from customer for contract work
Construction completed account yet has not been settled
2017 2016
Accumulated costs incurred 51,707,541,499 41,699,798,181
Plus: Accumulated gross profit
recognized 5,478,940,652 4,502,784,376
Less: Accumulated settled cost 43,565,127,875 34,669,961,103
Accumulated recognized
expected contract loss 167,373,950 426,807,687
13,453,980,326 11,105,813,767
Amount due from customer for contract work
2017 2016
Accumulated settled cost 11,936,912,116 18,189,689,578
Less: Accumulated gross profit
recognized 1,047,746,429 2,105,056,605
Accumulated costs incurred 8,502,920,498 13,716,197,938
Plus: Accumulated recognized
expected contract loss 122,353,724 25,011,087
2,508,598,913 2,393,446,122
174 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
8. Construction completed account yet has not been settled/Amount
due from customer for contract work (continued)
Expected contract loss
Opening Increase in Reduction in Closing
2017
balance current year current year balance
Completed but not
settled 426,807,687 114,395,849 (373,829,586) 167,373,950
Settled but not
completed 25,011,087 103,234,343 (5,891,706) 122,353,724
451,818,774 217,630,192 (379,721,292) 289,727,674
Opening Increase in Reduction in Closing
2016
balance current year current year balance
Completed but not
settled 302,295,092 315,817,045 (191,304,450) 426,807,687
Settled but not
completed 101,149,431 73,576,110 (149,714,454) 25,011,087
403,444,523 389,393,155 (341,018,904) 451,818,774
As of Dec. 31, 2017, the total amount of contracts still in construction
(VAT not included) was about RMB 32,334,004,931 Yuan (Dec. 31,
2016: 38,629,601,047 Yuan).
In case of failing to fulfill the obligations as contracted, the total penalty
may be imposed:
2017 2016
Valid letter of guarantee signed by the bank 15,315,071,475 19,456,969,669
No letter of guarantee signed by the bank 4,101,363,500 281,462,898
19,416,434,975 19,738,432,567
9. Non-current assets due within one year
2017 2016
Long-term receivables mature within one
year
(Note V, 12) 1,896,475,472 1,384,438,569
175 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
10. Other current assets
2017 2016
Input tax to be deducted 591,311,853 553,363,139
11. Financial assets available-for-sale
2017 2016
Book balance Depreciation Book value Book balance Depreciation Book value
reserves reserves
Available-for-sale
equity instruments
Measured at fair
value 1,261,209,745 - 1,261,209,745 1,270,578,346 - 1,270,578,346
Measured at
cost 72,994,160 30,000,000 42,994,160 72,994,160 30,000,000 42,994,160
1,334,203,905 30,000,000 1,304,203,905 1,343,572,506 30,000,000 1,313,572,506
Financial assets available-for-sale measured at fair value:
2017 2016
Cost of available-for-sale equity
instruments 937,641,194 937,641,194
Changes in fair value
accumulated included in other
comprehensive income 323,568,551 332,937,152
1,261,209,745 1,270,578,346
176 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
11. Financial assets available-for-sale (continued)
Available-for-sale equity instruments measured at fair value include
(continued):
(i) The Group holds 5.9% shares of stock of Jiangxi Huawu Brake Co., Ltd (Dec
31, 2016: 5.9%) and the initial investment cost was RMB 11,071,606Yuan.
The available-for-sales equity instruments measured at fair value shall be
confirmed by the closing price on the last trading day of Shenzhen Stock
Exchange. As of Dec 31, 2017, the Company had confirmed the
accumulated revenue of RMB 167,881,106 Yuan for available for-sales
equity instruments, included in other comprehensive income.
The Group received the cash dividends of RMB 665,346 Yuan from
Jiangxi Huawu Brake Co., Ltd, included in the gain on investment.
(ii) The Group holds 1.71% (Dec 31, 2016: 2.16%) shares of stock of Qingdao
Port International Co., Ltd and the initial investment cost was RMB
308,515,588 Yuan.
The available-for-sales equity instruments measured at fair value is
confirmed by the closing price on the last trading day of Hong Kong Stock
Exchange. As of Dec 31, 2017, the Company has confirmed the revenue
of RMB 143,013,072 Yuan for the available-for-sale equity instruments,
included in other comprehensive income.
The Group received the cash dividends of RMB 12,103,621 Yuan from
Qingdao Port International Co., Ltd, included in the gain on investment.
(iii) The Group holds 1.40% (Dec 31, 2016: 1.40%) shares of stock of CRSC
and the initial investment costs was RMB 617,854,000 Yuan.
The available-for-sale equity instruments measured at fair value is
confirmed by the closing price on the last trading day of Hong Kong Stock
Exchange. As of Dec 31, 2017, the Company has confirmed the revenue
of RMB 11,700,373 Yuan for the available-for-sale equity instruments,
included in other comprehensive income.
The Group received the cash dividends of RMB 11,075,670 Yuan from CRSC, accounted
in investment income.
177 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
11. Financial assets available-for-sale (continued)
Financial assets available-for-sale measured at fair value (continued):
(iv) The Group holds less than 0.01% shares of stock of Shenwan Hongyuan
Group and the initial investment cost is RMB 200,000 Yuan.
The available-for-sales equity instruments measured at fair value is
confirmed by the closing price on the last trading day of Shenzhen Stock
Exchange. As of Dec 31, 2017, the Company has confirmed the revenue
of RMB 974,000 Yuan for the available-for-sale equity instruments,
accounted in other comprehensive income
The Group received the cash dividends of RMB 21,866 Yuan from
Shenwan Hongyuan Group, accounted in investment income.
Financial assets available-for-sale measured at cost ：
2017
Book balance
Opening Increase Reduction Closing Shareh Cash
in current in current olding bonus in
year year ratio current
(%) year
21st Century Science and
Technology Investment Co., Ltd. 30,000,000 - - 30,000,000 8.96 -
CCCC Highway Bridges National
Engineering Research Centre
Co., Ltd. 13,000,000 - - 13,000,000 10 -
CCCC Dredging Technology
Equipment State Engineering
Research Center Co., Ltd. 6,400,000 - - 6,400,000 3.2 -
Longchang Lifting Equipment
Co., Ltd. of Shanghai Zhenhua
Port Machinery (Group) 800,000 - - 800,000 10 -
Shenyang Elevator Co., Ltd of
Shanghai Zhenhua Port
Machinery (Group) 1,500,000 - - 1,500,000 10 2,691,286
ZMPC Ningbo Transmission
Machinery Co., Ltd 1,296,000 - - 1,296,000 10 -
Hunan Fengri Power & Electric
Co., Ltd. 19,998,160 - - 19,998,160 6.38 -
72,994,160 - - 72,994,160 2,691,286
Available-for-sale equity
instruments-Depreciation
reserves
21st Century Science and
Technology Investment Co., Ltd. (30,000,000) - - (30,000,000) -
42,994,160 - - 42,994,160 2,691,286
178 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
11. Financial assets available-for-sale (continued)
Financial assets available-for-sale measured at cost (continued)：
2016
Book balance
Beginning of Increase Reductio End of the Sharehol Cash
year in current n in year ding bonus
year current ratio (%) in
year current
year
21st Century Science and
Technology Investment Co., Ltd. 30,000,000 - - 30,000,000 8.96 -
CCCC Highway Bridges National
Engineering Research Centre Co.,
Ltd. 13,000,000 - - 13,000,000 10 -
CCCC Dredging Technology
Equipment State Engineering
Research Center Co., Ltd. 6,400,000 - - 6,400,000 3.2 -
Longchang Lifting Equipment Co.,
Ltd. of Shanghai Zhenhua Port
Machinery (Group) 800,000 - - 800,000 10 -
Shenyang Elevator Co., Ltd of
Shanghai Zhenhua Port Machinery
(Group) 1,500,000 - - 1,500,000 10 -
ZMPC Ningbo Transmission
Machinery Co., Ltd 1,296,000 - - 1,296,000 10 -
Hunan Fengri Power & Electric
Co., Ltd. 19,998,160 - - 19,998,160 6.38 -
72,994,160 - - 72,994,160 -
Available-for-sale equity
instruments-Depreciation reserves
21st Century Science and
Technology Investment Co., Ltd. (30,000,000) - - (30,000,000) -
42,994,160 - - 42,994,160 -
The available-for-sale financial assets measured at cost are the
non-listed stock investment held by the Group. There is no active
market quotation for the investment. The change range of the
reasonable count of fair value is higher. The probability of the fair value
estimate can’t be reasonably confirmed, so the fair value can’t be
reliably measured. The Group has no plan to dispose the investment.
179 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
12. Long-term receivables
2017 2016
“Construction-Transfer”
project receivables
- Capital 5,893,243,470 5,142,731,788
- Interest receivable 241,936,829 32,924,801
6,135,180,299 5,175,656,589
Less: Long-term receivables
mature within one year
(9 of Note V) 1,896,475,472 1,384,438,569
4,238,704,827 3,791,218,020
The Group in 2013 undertook the Nanjing to Gaochun New Channel
Project and Nanjing-Gaochun Inter-city Rail Transit Phase II (cross-lake
section) project; total investment of the project was RMB 5,918,800,000
Yuan, with the construction period of 2 years and the buy-back period of
2.5 years, and the return on investment shall be 30% higher than the
benchmark interest rate of 3-5 years’ bank loan. The Group established
a wholly owned subsidiary Nanjing Ninggao New Channel Construction
Co., Ltd. responsible for the financing and construction management of
the said project. By October, 2015, the entire line was open to traffic.
The returned payments shall be reclassified to the long-term
receivables mature within one year in 2018 according to the contract
terms.
The Group undertook Jiangsu Qidong Lvsi Port Surrounded PPP
Project in 2015, with total investment of RMB 2 billion Yuan. The project
construction period is 2 years, and the buy-back period shall be 10
years, the return on investment shall be 30% higher than the benchmark
interest rate of over 5 years’ bank loan. The Group, CCCC Tianjin
Waterway Bureau Co., Ltd. and Jiangsu Qidong Lvsi Port Economic
Development Zone Management Committee jointly established CCCC
Qidong Investment Development Co., Ltd. responsible for the project
investment, financing and construction management.
180 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
The Group undertook the Phase I of infrastructure and public utilities
projects of Jiangsu Zhongguancun Science and Technology Industrial
Park in 2015. The project total investment is RMB 3.7 billion Yuan, with
the construction period of 2 years and the buy-back period of 4 years,
the return on investment shall be 30% higher than the benchmark
interest rate of over 5 years’ bank loan. The Group, CCCC Shanghai
Dredging Co., Ltd., CCCC East China Investment Co., Ltd., CCCC
Second Highway Survey Design and Research Institute Co., Ltd. and
Jiangsu Zhongguancun Science and Technology Industrial Park
Administrative Committee jointly established CCCC Liyang Urban
Investment Construction Co., Ltd. responsible for the project
investment, financing and construction management.
181 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
12. Long-term receivables (continued)
The Group undertook Zhenjiang campus life mating project in 2016,
with total investment of 6 billion Yuan. The project construction period is
2 years, and the buy-back period is 3 years, the return on investment is
the annual rate 7%. The Group, CCCC Second Harbor Engineering Co.,
Ltd., CCCC Highway Planning and Design Institute Co., Ltd., CCCC
East China Investment Co., Ltd. and Zhenjiang Higher Education
Investment Development (Group) Co., Ltd. jointly established CCCC
Zhenjiang Investment Construction Management Development Co., Ltd.
responsible for the project investment, financing and construction
management.
The Group undertook the Huaiyin port east district and transportation
infrastructure projects in Huaian City in 2016. The total investment is
RMB 2.855 billion Yuan, with the construction period of 2 years and the
buy-back period of 6 years, the return on investment shall be the bank
loans benchmark interest rate for over 5 years. The Group, CCCC Third
Harbor Engineering Co., Ltd., CCCC First Highway Survey and Design
Institute Co., Ltd., CCCC East China Investment Co., Ltd. and Huaian
Huaiyin Traffic Investment Co., Ltd. jointly established CCCC Huaian
Construction Development Co., Ltd. responsible for the project
investment, financing and construction management.
The project undertook the renovation and resettlement housing and
supporting facilities construction project for shanty town in the core area
of Dongming County in 2017. The total investment of the project is RMB
2.7 billion Yuan, the construction period is 3 years, the buy-back period
is 3 years, and the gain on investment shall be the annual interest rate
of 6.5%. The Group, CCCC Water Transportation Planning and Design
Institute Co., Ltd. and CCCC First Harbor Engineering Co., Ltd. are
jointly responsible for the investment, financing, construction and
management of the project.
The Group, CCCC Third Highway Engineering Co. Ltd. and CCCC
Highway Consultants Co., Ltd. jointly signed the investment and
construction cooperation agreement on Xiashesi – Yinsuhe – Huashi
Highway Project Phase I of Xiangtan City in 2017, with the total
investment of RMB 2.0 billion Yuan, the construction period of 3 years
182 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
and the buy-back period of 12. Within the term of cooperation, the return
on project capital shall be calculated 20% above the benchmark interest
rate for over 5 years’ loan recognized by People’s Bank of China for
corresponding period.
The Group, CCCC East China Investment Co., Ltd., Shanghai Zhenhua
Port Machinery (Hong Kong) Co., Ltd. and CCCC Second Harbor
Engineering Co., Ltd. jointly established the project company CCCC
Rudong Construction and Development Co., Ltd., and signed the
cooperative contract on Bridges and Liquefaction Dock Project in
Nantong Yangkou Port Area with Jiangsu Yangkou Port Affairs Co., Ltd.
authorized by the People’s Government of Rudong County on in June,
2017, with the predicted total investment of RMB 1.77 billion Yuan, the
construction period of 2 years and the buy-back period of 10 years. The
gain on investment shall be 15% above the benchmark interest rate for
over 5 years’ loan of People’s Bank of China for corresponding period.
183 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
12. Long-term receivables (continued)
As of Dec. 31, 2017, the long-term receivables refereed to the
investment amount as principal the Group invested in above
“Construction – Transfer” project, interest receivable was subject the
financing return confirmed by contract.
As of Dec. 31, 2017, the long-term receivables of Jiangsu Qidong Lvsi
Port Surrounded PPP Project, Huaian Huaiyin Port Area East Operation
Area and Transportation Infrastructure Project and Infrastructure and
Public Utilities Project Phase I of Jiangsu Zhongguancun Science and
Technology Industrial Park were RMB 2,571,908,986 Yuan (Dec. 31,
2016: RMB 2,996,201,650 Yuan), which had been pledged to the bank
as the guarantee for the long-term loans of RMB 1,066,150,000 Yuan
(Dec. 31, 2016: long-term loans of RMB 727,000,000Yuan), please
refer to 34(ii) in Note V.
The aging analysis of long-term receivables is as follows:
2017 2016
Within 1 year 2,274,432,739 1,956,609,083
1~2 years 1,935,013,530 518,450,490
2~3 years 518,450,490 2,700,597,016
Over 3 years 1,407,283,540 -
6,135,180,299 5,175,656,589
Less: Long-term receivables
mature within one year 1,896,475,472 1,384,438,569
4,238,704,827 3,791,218,020
184 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
13. Long-term equity investment
2017 2016
Joint venture 268,510,756 200,209,849
Associated enterprise 2,051,959,765 2,001,211,604
2,320,470,521 2,201,421,453
Joint venture:
2017
Change in current year
Opening Additional Negative Investment Closing Depreciatio
balance investment investment profit and balance n reserves
loss under at the end of
equity year
method
Jiangsu LongYuan
Zhenhua Ocean
Engineering Co., Ltd 196,624,211 - - 34,685,071 231,309,282 -
CCCC Tianhe Xi’an
Equipment
Manufacturing Co.,
Ltd (iii) - 30,000,000 - (179,653) 29,820,347 -
ZPMC
Mediterranean
Liman Makinalari
Ticaret Anonim
Sirketi 2,835,358 - - 939,788 3,775,146 -
Zhenhua Shende
Ocean Engineering
Installation Co., Ltd.
(iv) - 2,976,740 - - 2,976,740 -
Zhenhua Ocean
Energy (Hong Kong)
Co., Ltd. (i) - - - - - -
Cranetech Global
Sdn. Bnd. (ii) 750,280 - - (121,039) 629,241 -
200,209,849 32,976,740 - 35,324,167 268,510,756 -
185 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
13. Long-term equity investment (continued)
2016
Change in current year
Opening Additional Negative Investment Closing Depreciati
balance investment investment profit and balance on
loss under reserves
equity at the end
method of year
Jiangsu Longyuan
Zhenhua Ocean
Engineering Co., Ltd 171,577,489 - - 25,046,722 196,624,211 -
ZPMC
Mediterranean
Liman Makinalari
Ticaret Anonim
Sirketi 3,059,427 - - (224,069) 2,835,358 -
Zhenhua Ocean
Energy (Hong Kong)
Co., Ltd. (i) - - - - - -
Cranetech Global
Sdn. Bnd.(ii) 750,280 - - - 750,280 -
175,387,196 - - 24,822,653 200,209,849 -
Joint venture (continued):
(i) On May 5, 2014, the subsidiary of the
Company and the partner invested to establish Zhenhua Ocean Energy
(Hong Kong) Co., Ltd (Zhenhua Ocean Energy).The registered capital is
5,969,998 USD;, the subsidiary of the Company contributed 3,044,699
USD, holding 51% of the shares. The company focused on the vessel
transportation business. Based on the regulations of the shareholder
agreement, the significant issues of the company shall be agreed by at
least 75% shareholders via voting. The Group has no control rights but
joint controls the company together with the partner.
On January 20, 2016, the Group and RBF HK Limited (other shareholder
of Zhenhua Ocean Energy) singed the exit contract about Zhenhua Ocean
Energy. The Group has the rights to sell 51% of the total shares of
Zhenhua Ocean Energy to RBF HK Limited when meeting the related
articles of the exit contract; or purchased 32.5% of the total shares of
Zhenhua Ocean Energy from RBF HK Limited. RBF HK Limited began to
execute its right of holding 51% shares of Zhenhua Ocean Energy on
June 2, 2016, in accordance with the signed exit contract, but ultimately
failed to meet all the share delivery conditions of exiting the contract
agreement, the purchase rights has been expired on November 23, 2016.
186 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
13. Long-term equity investment (continued)
Joint venture (continued)：
In March, 2017, the Group once again signed an exit framework
agreement with RBF HK Limited on the sale of Zhenhua Ocean
Energy held by the Group. Under this agreement, RBF HK Limited
had the right to exercise its right of purchasing the shares of
Zhenhua Ocean Energy held by the Group before Sept. 30, 2017;
however, the right was ultimately unfilled and expired automatically.
By Dec. 31, 2017, there was no equity purchase agreement in
process between this Group and RBF HK Limited.
(ii) On July 30, 2015, the subsidiary of the Company and the partner
invested to establish Cranetech Global Sdn. Bhd. The registered
capital is 1,000,000 MYR; the subsidiary of the Company
contributed 499,999 MYR, holding 49.99% of the shares. The
company focused on the spare parts sales. Based on the
regulations of the shareholder agreement, the significant issues of
the company shall be agreed by both parties. Therefore, the Group
controls the company together with the partner.
(iii) On May 5, 2017, the subsidiary of the Company and the partner
jointly established CCCC Tianhe Xi’an Mechanical Equipment
Manufacturing Co., Ltd. The registered capital of the company is
RMB 300 million Yuan, of which, the contribution its subsidiary is
RMB 3,000,000 Yuan, with the shareholding ratio of 50%. The
company is mainly engaged in machinery manufacture of tunnel
boring machine. Based on the regulations of the shareholder
agreement, the significant issues of the company shall be agreed
by both parties. Therefore, the Group controls the company
together with the partner.
(iv) On Nov. 22, 2017, the Company sold 20% stock right of its original
subsidiary Zhenhua Shende Ocean Engineering Installation Co.,
Ltd. at the price of 400,000 USD. After alternation, the registered
capital of the company became 2,000,000 USD for the
shareholding ratio of 50%. The company is mainly engaged in
187 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
shipping business. Based on the regulations of the shareholder
agreement, the significant issues of the company shall be agreed
by both parties. Therefore, the Group controls the company
together with the partner.
188 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
13. Long-term equity investment (continued)
Associated enterprise：
2017
Change in current year
Additional Investment Other Declaration of Depreci
investment profit and comprehen cash dividend ation
Opening loss under sive or profit Closing reserves
balance equity income balance at the
method adjustment end of
year
CCCC Financial Leasing
Co., Ltd. (i) 1,605,244,853 - 73,336,694 (30,964) - 1,678,550,583 -
CCCC Real Estate Yixing
Co., Ltd. 175,614,528 - 2,485,179 - - 178,099,707 -
CCCC South American
Regional Company SARL
(ii) 114,321,760 - (13,520,543) (4,605,830) - 96,195,387 -
China Communications
Construction USA
Inc.(iii) 75,612,903 - (4,569,705) (3,812,748) - 67,230,450 -
CCCC Ocean Engineering
Vessel Technology
Research Centre Co., Ltd 15,645,518 - 204,026 - - 15,849,544 -
Changzhou Paint Co., Ltd.
of Shanghai Zhenhua Heavy
Industries Co., Ltd 14,772,042 - 1,014,396 - - 15,786,438 -
ZPMC Southeast Asia
Pte. Ltd (iv) - 247,656 - - - 247,656 -
2,001,211,604 247,656 58,950,047 (8,449,542) - 2,051,959,765 -
2016
Change in current year
Opening Additional Investment Other Declaration of Closing Depre
balance investment profit and loss comprehen cash dividend balance ciation
under equity sive income or profit reserv
method adjustment es at
the
end of
year
CCCC Financial Leasing Co.,
Ltd. (i) 1,141,740,698 420,000,000 75,648,845 255,310 (32,400,000) 1,605,244,853 -
CCCC Real Estate Yixing Co.,
Ltd. 174,697,785 - 916,743 - - 175,614,528 -
CCCC South American
Regional Company SARL
(ii) - 114,321,760 - - - 114,321,760 -
China Communications
Construction USA
Inc.(iii) 75,413,782 - (4,347,559) 4,546,680 - 75,612,903 -
CCCC Ocean Engineering
Vessel Technology Research
Centre Co., Ltd 15,269,200 - 376,318 - - 15,645,518 -
Changzhou Paint Co., Ltd. of
Shanghai Zhenhua Heavy
Industries Co., Ltd 14,626,156 - 1,978,952 - (1,833,066) 14,772,042 -
1,421,747,621 534,321,760 74,573,299 4,801,990 (34,233,066) 2,001,211,604 -
189 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
13. Long-term equity investment (continued)
(i) On May 29, 2015, the Company increased the capital to CCCC
Financial Leasing Co., Ltd. of RMB 540,000,000 Yuan. After the
capital increase, the Group’s investment costs to CCCC Financial
Leasing Co., Ltd. increased to RMB 1,080,000,000 Yuan. The
holding proportion remained unchanged at 30%. As of May 31,
2016, the Company increased the capital to CCCC Financial
Leasing Co., Ltd. of RMB 420,000,000 Yuan. After the capital
increase, the Group’s investment costs to CCCC Financial Leasing
Co., Ltd. increased to RMB 1,500,000,000 Yuan. The holding
proportion remained unchanged at 30%.
(ii) On Dec. 15, 2016, the Company invested 16,480,000 USD
(equivalent to RMB 114,321,760 Yuan) to share CCCC South
American Regional Company SARL. The registration capital is
103,000,000 USD, equivalent to RMB 114,321,760 Yuan, holding
16% of the share. The company focuses on port construction
business. Based on the regulations of the shareholder agreement,
the Company has the right to designate one director to that
company and implement significant impact to that company.
(iii) On Oct. 8, 2015, the Company participated and invested to
establish China Communications Construction USA Inc. The
registered capital is 50,000,000 USD, of which, the Company’s
contribution is 12,000,000 USD, equivalent to RMB 76,206,000
Yuan, holding 24% of the share. The company focuses on port
construction business.
(iv) On Dec. 21, 2017, the Company sold 30% stock rights of its original
subsidiary ZPMC Southeast Asia Pte. Ltd at the price of 186,321
SGD. After alternation, the registered capital of the company was
620,770 SGD, and the shareholding ratio of the Company changed
from 70% to 40%. The company focuses on port construction
business.
190 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements (continued)
14. Real estate as investment
Subsequent measurement with cost model:
2017
Housing & Land use right Total
buildings
Original cost
Opening and closing
balance 397,820,689 209,845,794 607,666,483
Accumulated depreciation
and amortization
Opening balance 84,123,319 50,162,913 134,286,232
Provision 12,991,865 5,324,663 18,316,528
Closing balance 97,115,184 55,487,576 152,602,760
Book value
At the end of year 300,705,505 154,358,218 455,063,723
At the beginning of year 313,697,370 159,682,881 473,380,251
191 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
14. Real estate as investment (continued)
Subsequent measurement with cost model (continued)：
2016
Housing & Land use right Total
buildings
Original cost
Opening balance 260,039,373 209,845,794 469,885,167
Fixed assets transfer-in 137,781,316 - 137,781,316
Closing balance 397,820,689 209,845,794 607,666,483
Accumulated depreciation
and amortization
Opening balance 63,874,113 44,838,246 108,712,359
Fixed assets transfer-in 9,647,865 - 9,647,865
Provision 10,601,341 5,324,667 15,926,008
Closing balance 84,123,319 50,162,913 134,286,232
Book value
At the end of year 313,697,370 159,682,881 473,380,251
At the beginning of year 196,165,260 165,007,548 361,172,808
192 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
14. Real estate as investment (continued)
As of Dec. 31, 2017, the real estate as investment not completing the
certificate of title is as follows:
Book value Reason for not
completing the certificate
of title
Relevant formalities of
property right are still in
Housing & buildings 273,401,305 process
15. Fixed assets
2017
Housing & Machinery Office and Means of Vessels Total
buildings equipment electronic transport
equipment (except for
vessels)
Original cost
Opening
balance 11,650,983,133 6,718,732,274 241,095,395 273,277,738 7,429,855,803 26,313,944,343
Purchase 2,793,908 40,259,218 14,773,519 11,944,155 669,393,206 739,164,006
Construction
in process
transfer-in 24,021,338 377,168,935 1,003,053 950,265 2,542,295,845 2,945,439,436
Disposal or
scrap (1,962,638) (74,923,742) (8,823,895 ) (11,380,895) (323,453,989) (420,545,159 )
Change in
exchange rate - - - - (66,561,579) (66,561,579 )
Closing
balance 11,675,835,741 7,061,236,685 248,048,072 274,791,263 10,251,529,286 29,511,441,047
Accumulated
depreciation
Opening
balance 3,105,519,139 4,790,498,563 171,293,007 185,091,350 3,038,759,918 11,291,161,977
Provision 382,349,971 429,564,030 20,591,575 11,357,767 378,659,028 1,222,522,371
Disposal or
scrap (355,570) (67,093,654) (7,118,467 ) (9,999,797) (248,325,464) (332,892,952 )
Change in
exchange rate - - - - (4,701,960) (4,701,960 )
Closing
balance 3,487,513,540 5,152,968,939 184,766,115 186,449,320 3,164,391,522 12,176,089,436
Book value
At the end of
year 8,188,322,201 1,908,267,746 63,281,957 88,341,943 7,087,137,764 17,335,351,611
At the
beginning of
year 8,545,463,994 1,928,233,711 69,802,388 88,186,388 4,391,095,885 15,022,782,366
193 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
15. Fixed assets (continued)
2016
Housing & Machinery Office and Means of Vessels Total
buildings equipment electronic transport
equipment (except for
vessels)
Original cost
Opening
balance 11,616,605,396 6,773,564,936 230,069,174 263,556,659 7,044,013,015 25,927,809,180
Purchase 151,768,037 35,813,084 16,754,535 25,392,444 96,717,619 326,445,719
Construction in
process transfer-in 21,998,269 28,683,570 - - 299,120,833 349,802,672
Transferred to
investment real
estate (137,781,316) - - - - (137,781,316)
Disposal or
scrap (1,607,253) (119,329,316) (5,728,314) (15,671,365 ) (9,995,664) (152,331,912)
Closing balance 11,650,983,133 6,718,732,274 241,095,395 273,277,738 7,429,855,803 26,313,944,343
Accumulated
depreciation
Opening
balance 2,733,703,550 4,473,964,112 159,312,835 183,537,690 2,721,754,117 10,272,272,304
Provision 381,944,729 428,237,329 17,429,109 16,885,021 324,332,721 1,168,828,909
Transferred to
investment real
estate (9,647,865) - - - - (9,647,865)
Disposal or
scrap (481,275) (111,702,878) (5,448,937) (15,331,361 ) (7,326,920) (140,291,371)
Closing balance 3,105,519,139 4,790,498,563 171,293,007 185,091,350 3,038,759,918 11,291,161,977
Book value
At the end of
year 8,545,463,994 1,928,233,711 69,802,388 88,186,388 4,391,095,885 15,022,782,366
At the beginning
of year 8,882,901,846 2,299,600,824 70,756,339 80,018,969 4,322,258,898 15,655,536,876
As of Dec. 31, 2017, the following fixed assets were taken as loan
mortgage:
Borrowing
Original cost Book value Nature Amount
Machinery
equipmen Long-term
t 1,403,907,681 437,072,634 payables 447,048,030
Long-term
Vessel 4,455,152,847 3,687,007,865 payables 2,103,131,945
5,859,060,528 4,124,080,499 2,550,179,975
194 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
15. Fixed assets (continued)
As of Dec. 31, 2016, the following fixed assets were taken as loan
mortgage:
Borrowing
Original cost Book value Nature Amount
Machinery Long-term
equipment 1,403,907,681 555,450,350 payables 575,223,848
Long-term
Vessel 2,532,724,844 1,882,864,040 payables 1,507,146,538
3,936,632,525 2,438,314,390 2,082,370,386
As of Dec. 31, 2017 and Dec. 31, 2016, the book value of fixed assets
for operating lease was as follows:
2017 2016
Vessel 1,733,818,283 1,882,864,040
As of Dec. 31, 2017, the fixed assets not completing the certificate of
title were as follows:
Book value Reason for not completing the
certificate of title
Relevant formalities are still in
Housing & buildings 2,825,816,582 process
16. Construction in process
Dec. 31, 2017 Dec. 31, 2016
Book balance Depreciation Book value Book balance Depreciati Book value
reserves on
reserves
Infrastructure
construction of
Nantong Base 53,508,755 - 53,508,755 53,892,601 - 53,892,601
Infrastructure
construction of
Changxing Base 30,242,212 - 30,242,212 16,743,055 - 16,743,055
Large machinery
and engineering 1,123,208,028 - 1,123,208,028 3,202,580,355 - 3,202,580,355
195 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
equipment of the
base under
construction
Shield machine
parts project 74,507,300 - 74,507,300 55,402,134 - 55,402,134
Infrastructure
construction of
Nanhui Base 3,893,442 - 3,893,442 5,888,313 - 5,888,313
Large mechanical
reconstruction and
upgrading project 603,786,272 - 603,786,272 690,943,003 - 690,943,003
1,889,146,009 - 1,889,146,009 4,025,449,461 - 4,025,449,461
196 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
16. Construction in process (continued)
The changes of major construction in process in 2017 are as follows:
Opening Increase in Transfer-in fixed Transfer-in Closing balance
balance current year assets in current intangible
Budget year (15 in Note assets in current
V) year (17 in Note
V)
Infrastructure construction
of Nantong Base 6,465,698,000 53,892,601 7,993,285 (8,377,131) - 53,508,755
Infrastructure construction
of Changxing Base 8,645,540,000 16,743,055 18,781,424 (5,037,121) (245,146) 30,242,212
Large machinery and
engineering equipment of
the base under
construction 4,832,518,861 3,202,580,355 728,933,794 (2,808,306,121) - 1,123,208,028
Shield machine parts
project 99,956,500 55,402,134 44,296,307 (25,191,141) - 74,507,300
Infrastructure construction
of Nanhui Base 504,500,000 5,888,313 1,329,915 (3,324,786) - 3,893,442
Large mechanical
reconstruction and
upgrading project 709,925,368 690,943,003 8,046,405 (95,203,136) - 603,786,272
4,025,449,461 809,381,130 (2,945,439,436) (245,146) 1,889,146,009
The changes of major construction in process in 2016 are as follows:
Opening Increase in Transfer-in fixed Transfer-in Closing balance
balance current year assets in current intangible assets
Budget
year (15 in Note in current year
V) (17 in Note V)
Infrastructure construction
of Nantong Base 6,465,698,000 29,440,311 28,515,986 (4,063,696) - 53,892,601
Infrastructure construction
of Changxing Base 8,645,540,000 32,251,760 6,100,428 (21,609,133) - 16,743,055
Large machinery and
engineering equipment of
the base under
construction 3,916,155,861 2,889,709,277 639,000,626 (322,437,123) (3,692,425) 3,202,580,355
Office building and
ancillary facilities 5,000,000 606,274 - (606,274) - -
Shield machine parts
project 99,956,500 - 55,402,134 - - 55,402,134
Infrastructure construction
of Nanhui Base 504,500,500 3,893,441 1,994,872 - - 5,888,313
Large mechanical
reconstruction and
upgrading project 700,000,000 621,470,441 70,559,008 (1,086,446) - 690,943,003
3,577,371,504 801,573,054 (349,802,672) (3,692,425) 4,025,449,461
The changes of major construction in process in 2017 are as follows:
Proportion of Work Accumulative Including: Interest Interest Source of funds
project investment progress(Not amount of interest capitalization in capitalization
in budget% e 1)% capitalization current year rate in current
year%
Infrastructure construction of Own funds and
Nantong Base 99 99 - - - bank loans
Infrastructure construction of Own funds and
Changxing Base 82 82 23,531,836 - - bank loans
Large machinery and engineering
equipment of the base under Own funds and
construction 85 85 96,492,705 - - bank loans
Shield machine parts project 99 99 5,762,616 5,494,319 4.75 Bank loans
Infrastructure construction of
Nanhui Base 91 91 - - - Own funds
Large mechanical reconstruction
and upgrading project 98 98 - - - Own funds
125,787,157 5,494,319
197 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
16. Construction in process (continued)
The changes of major construction in process in 2016 are as follows:
Proportion of Work Accumulative Including: Interest Source of
project progress( amount of Interest capitalizatio funds
investment in Note 1)% interest capitalizatio n rate in
budget% capitalization n in current current
year year%
Own funds
Infrastructure construction and bank
of Nantong Base 99 99 - - - loans
Own funds
Infrastructure construction and bank
of Changxing Base 82 82 23,531,836 - - loans
Large machinery and
engineering equipment of Own funds
the base under and bank
construction 87 87 96,492,705 - - loans
Office building and
ancillary facilities 100 100 - - - Own funds
Shield machine parts
project 55 55 268,297 268,297 4.75 Bank loans
Infrastructure construction
of Nanhui Base 91 91 - - - Own funds
Large mechanical
reconstruction and
upgrading project 99 99 - - - Own funds
120,292,838 268,297
Note 1: The work progress shall be estimated based on the budget and
accumulated investments.
17. Intangible assets
Land use right Software usage Know-how Total
fee
Original cost
Opening balance 4,262,474,969 52,118,848 65,201,810 4,379,795,627
Construction in process
transfer-in - 245,146 - 245,146
Purchase 34,603,859 2,682,840 - 37,286,699
Closing balance 4,297,078,828 55,046,834 65,201,810 4,417,327,472
Accumulated amortization
Opening balance 555,310,659 35,762,796 44,273,566 635,347,021
Provision 86,920,486 6,688,876 5,205,481 98,814,843
Closing balance 642,231,145 42,451,672 49,479,047 734,161,864
Book value
At the end of year 3,654,847,683 12,595,162 15,722,763 3,683,165,608
At the beginning of year 3,707,164,310 16,356,052 20,928,244 3,744,448,606
198 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
17. Intangible assets (continued)
2016
Land use right Software usage Know-how Total
fee
Original cost
Opening
balance 4,246,345,484 46,219,868 65,201,810 4,357,767,162
Construction in
process transfer-in - 3,692,425 - 3,692,425
Purchase 16,129,485 2,206,555 - 18,336,040
Closing balance 4,262,474,969 52,118,848 65,201,810 4,379,795,627
Accumulated
amortization
Opening
balance 467,548,195 33,094,826 37,686,275 538,329,296
Provision 87,762,464 2,667,970 6,587,291 97,017,725
Closing balance 555,310,659 35,762,796 44,273,566 635,347,021
Book value
At the end of
year 3,707,164,310 16,356,052 20,928,244 3,744,448,606
At the beginning
of year 3,778,797,289 13,125,042 27,515,535 3,819,437,866
In 2017, the Group totally expended RMB 702,392,513 Yuan on R&D
(2016: RMB 851,544,356 Yuan, see Note V (48)).The expenses were
not capitalized. Above mentioned intangible assets as of Dec. 31, 2017
and Dec. 31, 2016 excluded any expenditure on R&D
As of Dec. 31, 2017, there was no mortgage of the loan in the intangible
assets.
As of Dec. 31, 2017, the intangible assets not completing the certificate
of title were as follows:
Book value Reason for not completing the
certificate of title
Application for property right under
Land use right 395,895,729 approval
199 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
18. Goodwill
2017
Opening Increase in Reduction Closing
balance current year in current balance
year
Zhenhua Heavy
Industries Qidong
Ocean Engineering Co.,
Ltd 149,212,956 - - 149,212,956
Verspannen B.V. - 5,412,807 - 5,412,807
Greenland Heavylift
(Hong Kong) Limited - 110,562,702 - 110,562,702
149,212,956 115,975,509 - 265,188,465
2016
Opening Increase in Reduction in Closing
balance current year current year balance
Zhenhua Heavy
Industries Qidong Ocean
Engineering Co., Ltd 149,212,956 - - 149,212,956
The Group acquired Verspannen B.V. and Greenland Heavylift (Hong
Kong) Limited (“GHHL”) respectively in April 2017 and June 2017,
forming the goodwill of RMB 5,412,807 Yuan and RMB 110,562,702
Yuan respectively. The calculation process is given in Note VI.1.
As of Dec, 31, 2017, the Group did not accrue the goodwill depreciation
reserves. In impairment testing, the book value of the goodwill is
allocated to asset group portfolio benefiting from synergistic effect of
expected business combination.
The goodwill acquired from business combination has been distribution
to the following asset group for impairment testing:
Heavy equipment asset group
GHHL semi-submerged ship transport assets group
200 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Heavy equipment asset group
The recoverable amount of heavy equipment asset group is measured
based on five-year budget approved by the management and shall be
measured with cash flow forecast method. Cash flow over 5-year period
shall be calculated based on the estimated growth rate.
201 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
18. Goodwill (continued)
Main assumptions based on future cash flow discount method:
Growth rate in forecast period 9.09%-14.37%
Perpetual growth rate 3%
Gross profit rate 13.87%-15.28%
Discount rate 11%
GHHL semi-submerged ship transport assets group
The recoverable amount of GHHL semi-submerged ship transport
assets group is determined based on the expected future cash flow of
the asset group, and the expected future cash flow is determined
according to the cash flows based on the customized short-distance
and long-distance transport service contract revenue expected to be
obtained within the service life of vessel and general charter party
revenue
Main assumptions based on future cash flow discount method:
Number of customized short-distance
and long-distance transport service
contracts expected to be obtained 3 /year/vessel;
Vessel utilization rate of general charter party 65%
Charter rate of general charter party 65,000 USD/day
Discount rate 11%
The distributions of the book value of goodwill to asset groups are as follows:
Heavy equipment asset group GHHL semi-submerged ship transport assets group Total
2017 2016 2017 2016 2017 2016
Book amount of goodwill 154,625,763 149,212,956 110,562,702 - 265,188,465 149,212,956
The perpetual growth rate adopted by the management is consistent
with the forecast data contained in the industry report, and shall not
exceed the long-term average growth rate of the industry. Based on the
historical experience and the forecasts of market development, the
management determines the budget gross profit rate and adopts the
pretax interest rate which can reflect the specific 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.
202 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
19. Long-term deferred expenses
2017
Opening Increase in Amortizatio Other Closing
balance current n in current reductions balance
year year
Improvement
expenditure of fixed
assets under
operating lease 10,881,263 - (3,116,762) - 7,764,501
2016
Opening Increase in Amortization Other Closing
balance current year in current reductions balance
year
Improvement
expenditure of fixed
assets under
operating lease 4,592,043 9,545,510 (3,256,290) - 10,881,263
20. Deferred income tax assets/liabilities
Deferred income tax assets before offset:
2017 2016
Deductible Deferred income Deductible Deferred income
temporary tax assets temporary tax assets
difference difference
Assets depreciation
reserves 3,492,989,876 526,410,350 3,034,109,090 455,116,363
Unrealized profit of
internal transaction 93,487,825 14,515,523 141,961,692 22,041,889
Predicted liabilities 451,642,802 67,746,420 285,223,845 42,783,577
Unpaid wages and
salaries 27,824,781 4,173,717 27,802,006 4,170,301
Unpaid interest 102,690,137 15,403,520 128,368,841 19,255,326
Deferred income 90,237,676 13,535,651 47,536,247 7,130,437
Special reserves 1,234,252 185,138 - -
Deductible loss 8,441,406 1,266,211 6,815,216 1,022,282
4,268,548,755 643,236,530 3,671,816,937 551,520,175
203 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
20. Deferred income tax assets/liabilities (continued)
Deferred income tax liabilities not offset:
2017 2016
Taxable Deferred Taxable Deferred
temporary income tax temporary income tax
differences liabilities differences liabilities
Depreciation of fixed assets 814,903,900 134,459,143 409,482,226 74,116,286
Changes in fair value of the
financial assets measured at
fair value with changes
included in current profits
and losses - - 4,615,775 692,369
Changes in fair value of
financial assets
available-for-sale 323,568,551 50,953,384 332,937,152 50,495,661
Assets appreciation from
business combination under
the same control 154,879,706 23,231,959 166,224,963 24,933,745
1,293,352,157 208,644,486 913,260,116 150,238,061
The net amounts of deferred income tax assets and deferred income tax
liabilities after offset are listed as follows:
2017 2016
Offset amount Balance after Offset amount Balance after
offset offset
Deferred income tax
assets 25,182,166 618,054,364 46,073,488 505,446,687
Deferred income tax
liabilities 25,182,166 183,462,320 46,073,488 104,164,573
The unrecognized deductible loss and temporary difference of deferred
income tax assets are as follows:
2017 2016
Deductible temporary difference 154,900,393 42,779,534
Deductible loss 1,336,383,846 1,276,126,566
1,491,284,239 1,318,906,100
204 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
20. Deferred income tax assets/liabilities (continued)
The unrecognized deductible loss of deferred income tax assets shall
mature or be returned in the following years:
2017 2016
2017 - 185,000,368
2018 257,678,634 262,745,183
2019 320,476,005 341,404,744
2020 373,462,715 373,462,715
2021 111,737,653 113,513,556
2022 273,028,839 -
1,336,383,846 1,276,126,566
21. Other non-current assets
2017 2016
Advance payment for vessels 148,060,378 -
Advance payment for office 28,666,235 -
buildings
176,726,613 -
205 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
22. Assets depreciation reserves
2017
Reduction in current year
Opening Proportion in Reversal Write-off Closing
balance current year balance
Provision for bad
debt 1,377,551,325 596,087,396 (260,398,100) - 1,713,240,621
Including:
accounts
receivable 1,339,875,923 248,322,946 (252,797,089) - 1,335,401,780
Other
receivables 37,675,402 347,764,450 (7,601,011) - 377,838,841
Expected contract
loss 451,818,774 217,630,192 (143,381,459 ) (236,339,833) 289,727,674
Inventory falling
price reserves 1,277,578,883 424,173,477 (9,275,058) (85,910,234) 1,606,567,068
Depreciation
reserves of
available –for-sale
financial assets 30,000,000 - - - 30,000,000
3,136,948,982 1,237,891,065 (413,054,617) (322,250,067 ) 3,639,535,363
2016
Reduction in current year
Opening balance Proportion in Reversal Write-off Closing
current year balance
Provision for bad
debt 1,164,911,298 219,476,506 (4,997,815) (1,838,664) 1,377,551,325
Including: accounts
receivable 1,136,848,761 209,863,641 (4,997,815) (1,838,664) 1,339,875,923
Other
receivables 28,062,537 9,612,865 - - 37,675,402
Expected contract
loss 403,444,523 389,393,155 (186,569,706) (154,449,198) 451,818,774
Inventory falling
price reserves 568,152,935 896,936,113 (93,122,078) (94,388,087) 1,277,578,883
Depreciation
reserves of
available –for-sale
financial assets 30,000,000 - - - 30,000,000
2,166,508,756 1,505,805,774 (284,689,599) (250,675,949) 3,136,948,982
206 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
23. Short-term loans
2017 2016
Debt of honor 22,214,681,401 18,618,358,297
Guarantee loan (i) 3,254,299,000 2,863,171,000
Pledged loan (ii) - 4,390,096
25,468,980,401 21,485,919,393
On Dec. 31, 2017, the annual interest rate of above loans was
1.1%~4.79% (Dec. 31, 2016: 0.81%~5.65%).
(i) As of Dec. 31, 2017, the bank guarantee loan of 265,000,000 USD,
equivalent to RMB 1,731,563,000 Yuan (Dec. 31, 2016: 191,500,000
USD, equivalent to RMB 1,328,435,500 Yuan) 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 of Dec. 31, 2017, the bank guarantee loan of RMB 1,000,000,000
Yuan (Dec. 31, 2016: RMB 900,000,000 Yuan) was the bank loan
borrowed by the Company, and the subsidiaries of Company provided joint
and several liability repayment guarantee.
As of Dec. 31, 2017, the bank guarantee loan of 80,000,000 USD,
equivalent to RMB 522,736,000 Yuan (Dec. 31, 2016: 91,500,000 USD,
equivalent to RMB 634,735,500 Yuan) was the bank loan borrowed by the
Company, and the subsidiaries of Company provided joint and several
liability repayment guarantee.
(ii) As of Dec. 31, 2017, the Company had no pledged loan (Dec. 31, 2016:
RMB 4,390,096 Yuan). Refer to Note V (3).
207 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
24. Notes payable
2017 2016
Bank acceptance bill 1,893,227,482 1,905,121,706
25. Accounts payable
2017 2016
Material purchase and product
manufacturing payables 6,189,910,557 4,853,217,936
Equipment and vessel purchase
payables 303,044,496 121,413,650
Infrastructure payables 81,145,537 86,257,192
Quality guarantee deposit
payable 309,201,127 37,826,248
Port charge payable 4,296,454 4,303,871
6,887,598,171 5,103,018,897
The aging analysis of accounts payable is as follows:
2017 2016
Amount Proportion in Amount Proportion in
total total
amount% amount%
Within 1 year 5,301,236,729 77 3,749,654,509 73
Over 1 year 1,586,361,442 23 1,353,364,388 27
6,887,598,171 100 5,103,018,897 100
As of Dec. 31, 2017, the accounts payable aged over 1 year were
mainly the purchase receivable for imported parts, which had not been
liquidated.
208 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
26. Advances from customers
2017 2016
Advances for product sales
received 591,727,255 292,941,206
The aging analysis of advances from customers is as follows:
Dec. 31, 2017 Dec. 31, 2016
Amount Propor Amount Propor
tion in tion in
total total
amoun amoun
t% t%
Within 1 year 474,250,196 80 268,730,790 92
Over 1 year 117,477,059 20 24,210,416 8
591,727,255 100 292,941,206 100
As of Dec. 31, 2017, the advances from customers aged over 1 year
mainly included the hull construction and spare parts sales money
received in advance, which had not been liquidated.
V. Notes to Main Items of Consolidated Financial Statements
(continued)
27. Employee remuneration payable
2017 2016
Short-term compensation 272,766,860 263,414,249
Post-employment welfare
(defined contribution plans) 966,347 1,135,507
273,733,207 264,549,756
209 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
27. Employee remuneration payable (continued)
The short-term compensation is as follows:
2017
Opening Increase in Reduction in Closing
balance current year current year balance
Wage, bonus, allowance
and subsidy 228,974,939 1,331,833,695 (1,323,727,003) 237,081,631
Employee welfare
expense - 46,449,241 (46,449,241) -
Social insurance charges 620,676 118,832,051 (118,898,275) 554,452
Including: medical
insurance premiums 515,155 100,110,487 (100,180,148) 445,494
Industrial injury
insurance premiums 73,131 9,302,735 (9,306,528) 69,338
Birth insurance
premium 32,390 9,418,829 (9,411,599) 39,620
Housing fund 463,700 116,585,167 (116,569,481) 479,386
Labor union expenditure
and staff training
expense 33,354,934 26,132,282 (24,946,183) 34,541,033
Other short-term
compensations - 6,230,457 (6,120,099) 110,358
263,414,249 1,646,062,893 (1,636,710,282) 272,766,860
2016
Opening Increase in Reduction in Closing
balance current year current year balance
Wage, bonus, allowance
and subsidy 222,647,867 1,223,482,995 (1,217,155,923) 228,974,939
Employee welfare
expense - 24,847,047 (24,847,047) -
Social insurance charges 747,129 123,657,388 (123,783,841) 620,676
Including: medical
insurance premiums 614,763 104,976,902 (105,076,510) 515,155
Industrial injury
insurance premiums 98,397 8,787,233 (8,812,499) 73,131
Birth insurance
premium 33,969 9,893,253 (9,894,832) 32,390
Housing fund 435,294 113,233,900 (113,205,494) 463,700
Labor union expenditure
and staff training
expense 32,476,555 19,136,815 (18,258,436) 33,354,934
Other short-term
compensations - 8,424,852 (8,424,852) -
256,306,845 1,512,782,997 (1,505,675,593) 263,414,249
210 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
27. Employee remuneration payable (continued)
The defined contribution plans are as follows:
2017
Opening Increase in Reduction in Closing
balance current year current year balance
Basic endowment
insurance premium 1,079,153 212,439,518 (212,577,142) 941,529
Supplementary
endowment
insurance premium - 49,316,808 (49,316,808) -
Unemployment
insurance expense 56,354 6,880,759 (6,912,295) 24,818
1,135,507 268,637,085 (268,806,245) 966,347
2016
Opening Increase in Reduction in Closing
balance current year current year balance
Basic endowment
insurance premium 1,429,703 216,311,014 (216,661,564) 1,079,153
Supplementary
endowment
insurance premium - 48,394,936 (48,394,936) -
Unemployment
insurance expense 86,062 11,665,639 (11,695,347) 56,354
1,515,765 276,371,589 (276,751,847) 1,135,507
28. Tax payable
2017 2016
VAT 58,341,748 72,920,316
Corporate income tax 98,206,405 142,223,431
Individual income tax 12,386,558 4,734,973
Urban maintenance and construction
tax 1,758,287 2,720,271
Educational surtax 2,018,432 2,561,018
Others 22,237,497 25,840,715
194,948,927 251,000,724
211 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
29. Interest payable
2017 2016
Loan interest 118,825,582 79,127,386
Bond interest - 61,068,417
118,825,582 140,195,803
30. Dividend payable
2017 2016
CCCC Tianjin Dredging Co., Ltd. 25,079,494 25,079,494
Chuwa Bussan Co. Ltd. 6,269,873 6,269,873
Zhenhua (Hong Kong)
Engineering Co., Ltd, 346,005 346,005
Zhenhua Harbour Construction
Co., Ltd. 6,593 6,593
31,701,965 31,701,965
As of Dec. 31, 2017, the dividend payable aged over 1 year of RMB
31,701,965 Yuan (Dec. 31, 2016: RMB 31,701,965 Yuan) was because
the minority shareholder of related party had not requested for actual
payment by the Group.
212 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
31. Other payables
2017 2016
Engineering deposit and quality
guarantee deposit 225,779,472 278,510,650
Payables to related party 133,772,685 308,637,187
Investment section payable to
China Communications
Construction Company Ltd. (i) 100,971,833 100,971,833
Borrowings from related party 38,700,000 523,000,000
Others 193,456,139 14,015,758
692,680,129 1,225,135,428
(i) The Group completed the cancellation of a subsidiary in the year
2011. RMB 25,971,833 Yuan in the balance was the investment
liquidation fund payable by the Group and attributable to China
Communications Construction Company Ltd., another shareholder
of the subsidiary; meanwhile, the Group completed the merger and
acquisition of the subsidiary of CCCC under the same control in
2015, and RMB 75,000,000 Yuan in the balance was the purchase
fund payable by the Group to China Communications Construction
Company Ltd.
The aging analysis of other payables is as follows:
Dec. 31, 2017 Dec. 31, 2016
Amount Propor Amount Propo
tion% rtion
%
Within 1 year 355,748,932 51 978,705,261 80
Over 1 year 336,931,197 49 246,430,167 20
692,680,129 100 1,225,135,428 100
As of Dec. 31, 2017, the other payables aged over 1 year were mainly the
investment section payable to China Communications Construction
Company Ltd., payable deposit and quality guarantee deposited
collected from outsourcing engineering team and payables to related
party.
213 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
32. Non-current liabilities due within one year
2017 2016
Long-term loans due within one year (Note V. 34) 1,343,956,000 270,000,000
Long-term payables due within one year (Note V.
35) 854,975,219 529,574,356
2,198,931,219 799,574,356
33. Other current liabilities
2017 2016
2016 short-term commercial paper Series 1 - 1,998,695,891
2016 Super & Short-term Commercial
Paper Series 1 - 1,997,329,444
- 3,996,025,335
The short-term bonds payable are as follows:
Total par value Issue cost Issue cost Repayment in Dec. 31, 2017
amortization current period
2017
2016 short-term
commercial
paper Series 1 2,000,000,000 (4,000,000) 4,000,000 2,000,000,000 -
2016 Super &
Short-term
Commercial
Paper Series 1 2,000,000,000 (3,450,000) 3,450,000 2,000,000,000 -
Total par value Issue cost Issue cost Repayment in Dec. 31, 2016
amortization current period
2016
2016
short-term
commercial
paper Series
1 2,000,000,000 (4,000,000) 2,695,891 - 1,998,695,891
2016 Super &
Short-term
Commercial
Paper Series
1 2,000,000,000 (3,450,000) 779,444 - 1,997,329,444
214 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
33. Other current liabilities (continued)
As approved by NAFMII ZSXZ (2016) No. SCP321 Notice on
Acceptance of Registration, the Document of National Association of
Financial Market Institutional Investors (NAFMII), the registered amount
for issuing Super & Short-term Commercial Paper by the Company was
RMB 10,000,000,000 Yuan which would be valid for 2 years from Oct.
19, 2016.
The Company issued 2016 short-term commercial paper Series 1 of
RMB 2,000,000,000 Yuan on Apr. 28, 2016, with the tenor of 1 year and
the coupon annual rate of 3.7%, the maturity date would be Apr. 29,
2017 and the capital with interest would be repaid at maturity.
The Company issued the 2016 Super & Short-term Commercial Paper
Series 1 of RMB 2,000,000,000 Yuan on Oct. 28, 2016, with the tenor of
270 days and the coupon annual rate of 3.2%, the maturity date would
be July 28, 2017 and the capital with interest would be repaid at
maturity.
The bonds above have no mortgage or guarantee.
34. Long-term loans
2017 2016
Debt of honor 6,616,010,383 3,121,485,497
Guarantee loan (i) 326,710,000 346,850,000
Pledged loan (ii) 1,066,150,000 727,000,000
8,008,870,383 4,195,335,497
Less: Long-term loans due
within one year
Debt of honor (971,446,000) -
Guarantee loan (326,710,000) -
Pledged loan (45,800,000) (270,000,000)
(1,343,956,000) (270,000,000)
6,664,914,383 3,925,335,497
215 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
34. Long-term loans (continued)
As of Dec. 31, 2017, the annual interest rate of the above loans was
1.20% - 5.13% (Dec. 31, 2016: 1.20% - 6.89%).
(i) As of Dec. 31, 2017, the bank guarantee loan of 50,000,000
USD, equivalent to RMB 326,710,000 Yuan (Dec. 31, 2016:
50,000,000 USD, equivalent to RMB 346,850,000 Yuan), was
the bank loan borrowed by the subsidiary of the Company in
Hong Kong, and the guarantee was provided by the Company.
The interest shall be paid quarterly and the principal shall be paid
at maturity on July 27, 2018.
(ii) As of Dec. 31, 2017, the total amount of multiple pledged loans of
RMB 1,066,150,000Yuan (Dec. 31, 2016: RMB 727,000,000
Yuan) took the long-term accounts receivable of the
“construction-transfer” project of the Group as pledge (Note V,
12). The interest shall be paid quarterly, and the principal shall be
paid at maturity between June 21, 2020 and Dec. 31, 2026 (Dec
31, 2016: the principal shall be paid respectively between June
21, 2017 and Nov. 25, 2018).
35. Long-term payables
2017 2016
Sale and leaseback financing fund (i) 2,550,179,975 2,082,370,386
“Construction-transfer” project funds (ii) 108,466,881 65,565,134
Engineering quality guarantee deposit 81,314,696 -
Less: Sale and leaseback financing fund
due within one year
(Note V, 32) (854,975,219) (529,574,356)
1,884,986,333 1,618,361,164
216 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
35. Long-term payables (continued)
(i) Dec. 31, 2017, the long-term payables of RMB 2,550,179,975
Yuan (Dec. 31, 2016: 2,082,370,386 Yuan) were obtained from
the vessel with the book value of RMB 3,687,007,865 Yuan (Dec.
31, 2016: RMB 1,882,864,040 Yuan) (Note V, 15) and the
mechanical equipment with book value of RMB 437,072,634
Yuan (Dec. 31, 2016: RMB 555,450,350 Yuan) (Note V, 15) in
sale and leaseback transaction way from the financial leasing
company, with the financing maturity of 4~6 years (Dec. 31,
2016: 4~6 years). The Group pays the sale and leaseback
financing fund on schedule each year 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 “construction-transfer”
project agreed that part of the project payments would be paid to
the Construction Party after the final acceptance of the
“construction-transfer” project within a certain term. The Group
expects that the above “Construction-transfer” project will be paid
between 2020 and 2022.
36. Predicted liabilities
2017
Opening Increase in Reduction in
Closing balance
balance current year current year
Estimated after-sales
service cost 290,216,116 285,144,031 (198,844,436 ) 376,515,711
Product quality assurance 241,517 524,561 (251,616 ) 514,462
Litigation compensation (i) - 85,200,340 - 85,200,340
Others 2,658,150 - - 2,658,150
293,115,783 370,868,932 (199,096,052 ) 464,888,663
2016
Opening Increase in Reduction in Closing
balance current year current year balance
Estimated
after-sales service
cost 216,306,557 235,780,889 (161,871,330) 290,216,116
Product quality
assurance 1,176,471 - (934,954) 241,517
Others 2,658,150 - - 2,658,150
220,141,178 235,780,889 (162,806,284) 293,115,783
217 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
36. Predicted liabilities (continued)
(i) In 2008, the Company and Fluor Limited (hereinafter referred to
as “Fluor”) signed an agreement on sales and installation for
wind power steel pipe pile products for the British Wind Power
Project. In the project construction process, the Company and
Fluor, by way of friendly consultations and in the spirit of good
cooperation, maintained the normal dispute settlement and
communication mechanism. In 2010, for the issues in contract
execution process, after reviewed by the board of directors of the
Company, the Company signed a mutual exemption letter with
Fluor, and settled the remaining payment in 2011. Afterwards,
Flour lodged a quality claim against the Company, and requested
the payment of the demand quality guarantee issued by the
Company, while the Company rejected the claim. On March 20,
2014, Flour cashed the above letter of guarantee with the
amount of 23,409,750 EUR in the bank opening the letter of
guarantee.
In September 2014, Flour initiated proceedings for the breach
attributed to by the problems related to the product quality to High Court of
Justice, Queen’s Bench Division, the Technology and Construction Court
(hereinafter referred to as “TCC Court of Britain Queen’s Bench”) and
asked the Company for the total compensation of 250 million Pounds for
additional test and repair cost, project period delay and other related loss
(including the cashed letter of guarantee amount of 23,409,750 EUR). The
Company didn’t acknowledge the claim for the compensation from Flour.
Since then, the Company prepared the evidence disclosure, witness
testimony, exchange work and other preparatory work before the court.
From February to March, April, June of 2016, British High Court TCC
court was in trial for first instance on obligation part. In May 2017, the trial
of quantitative part of this case was conducted. In July 2017, both parties
exchanged the written final address. In Aug. 2017, the proceeding at law
for the quantitative part of this case was settled.
On Jan. 11, 2018, the court made quantized judgment on this case
and adjudicated this Company to pay USD 5,893,591 dollars, 15,033,681
pounds, 7,165,740 Euro dollars, 7,259 Canadian dollars and RMB
485,346 Yuan to Flour. On Mar. 16, 2018, the court made the judgment on
the interest and adjudicated this Company to pay 3,518,549 pounds to
Flour. However, the legal cost and other expenses related to the judgment
amount were additionally measured. The above amount is equivalent to
RMB 85,200,340 Yuan.
218 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
37. Deferred income
2017
Opening Increase in Reduction in Closing
balance current year current year balance
Governmental
subsidy 370,780,323 69,526,880 (64,068,935) 376,238,268
Land compensation 80,255,701 25,030,000 (2,349,849) 102,935,852
451,036,024 94,556,880 (66,418,784) 479,174,120
2016
Opening Increase in Reduction in Closing
balance current year current year balance
Governmental
subsidy 323,237,563 70,020,819 (22,478,059) 370,780,323
Land compensation 82,188,384 - (1,932,683) 80,255,701
405,425,947 70,020,819 (24,410,742) 451,036,024
As of Dec. 31, 2017, the liabilities involving governmental subsidy were
as follows:
Opening Newly Included in Other Closing
balance increase in other changes balance
current year revenues of
current year
Hoisting and pipe laying ship R&D project 92,500,000 - - - 92,500,000
Submarine pipeline laying R&D project 41,125,500 175,000 - - 41,300,500
Automated dock R&D project 25,620,000 - (800,000) - 24,820,000
Floating crane R&D project 19,510,000 - (1,370,200) - 18,139,800
Intelligent equipment for container yard 17,945,000 13,500,000 (30,000,000) - 1,445,000
Deep sea drilling ship and auxiliary
equipment research project 14,860,000 - - - 14,860,000
50000 ton semi-submerged ship R&D
project 14,000,000 - (373,333) - 13,626,667
Drilling platform R&D project 12,810,000 - - (3,420,000) 9,390,000
Transportation positioning system R&D
project 10,000,000 - - - 10,000,000
Comprehensive standardization of
intelligent manufacturing of ocean
engineering equipment 10,000,000 7,000,000 - - 17,000,000
Research and development of large-scale
underwater robot work-system 9,208,000 - - (675,000) 8,533,000
ocean engineering positioning system R&D
project 9,192,339 - (1,495,018) - 7,697,321
Drilling package R&D project 8,400,000 8,560,000 - (2,550,000) 14,410,000
Manufacturing process optimization R&D
project in ocean engineering field 8,000,000 - - - 8,000,000
Nantong Transmission R&D project 7,200,000 - (7,200,000) - -
219 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Intelligent transportation system of
Automatic Guided Vehicle (AGV) 6,000,000 - - - 6,000,000
CCC DCM ship achievement
transformation project 5,906,250 1,000,000 (2,875,000) - 4,031,250
Development and industrialization of large
deep water crane piping ship 5,572,000 - - - 5,572,000
Self-elevating platform central control
system 3,500,000 2,370,000 (2,060,000) - 3,810,000
Finishing intelligent production line of
special gear shaft for port machinery 2,560,000 - - - 2,560,000
Intelligent electric differential traction bridge
crane 1,444,000 - - (321,100) 1,122,900
Intelligent manufacturing workshop for
crane box of automated terminal - 16,860,000 - (2,688,204) 14,171,796
Retractable boarding trestle system R&D
project - 2,160,300 - - 2,160,300
Others 45,427,234 17,901,580 (5,158,580) (3,082,500) 55,087,734
370,780,323 69,526,880 (51,332,131) (12,736,804) 376,238,268
220 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
37. Deferred income (continued)
As of Dec. 31, 2016, the liabilities involving governmental subsidy are
as follows:
Opening Newly increase Included in Other changes Closing
balance in current year non-operatin balance
g business
of current
year
Hoisting and pipe laying ship R&D
project 92,500,000 - - - 92,500,000
Submarine pipeline laying R&D project 43,125,500 - (2,000,000) - 41,125,500
Automated dock R&D project 25,620,000 - - - 25,620,000
Floating crane R&D project 19,510,000 - - - 19,510,000
Intelligent equipment for container yard 5,985,000 12,600,000 - (640,000) 17,945,000
Deep sea drilling ship and auxiliary
equipment research project 5,360,000 9,500,000 - - 14,860,000
50000 ton semi-submerged ship R&D
project 14,000,000 - - - 14,000,000
Drilling platform R&D project 13,650,000 3,040,000 - (3,880,000) 12,810,000
Transportation positioning system R&D
project 8,000,000 2,000,000 - - 10,000,000
Comprehensive standardization of
intelligent manufacturing of ocean
engineering equipment 5,300,000 4,700,000 - - 10,000,000
Research and development of
large-scale underwater robot
work-system 7,000,000 3,000,000 - (792,000) 9,208,000
ocean engineering positioning system
R&D project 10,250,000 - (1,057,661) - 9,192,339
Drilling package R&D project 8,000,000 400,000 - - 8,400,000
Manufacturing process optimization
R&D project in Ocean Engineering field - 8,000,000 - - 8,000,000
Nantong Transmission R&D project 17,900,000 - (10,700,000) - 7,200,000
Intelligent transportation system of
Automatic Guided Vehicle (AGV) - 6,000,000 - - 6,000,000
CCC DCM ship achievement
transformation project - 7,000,000 (1,093,750) - 5,906,250
Development and industrialization of
large deep water crane piping ship 5,340,000 232,000 - - 5,572,000
Self-elevating platform central control
system - 3,500,000 - - 3,500,000
Finishing intelligent production line of
special gear shaft for port machinery - 3,200,000 - (640,000) 2,560,000
Intelligent electric differential traction
bridge crane - 2,030,000 - (586,000) 1,444,000
Other R&D projects 41,697,063 4,818,819 (960,751) (127,897) 45,427,234
323,237,563 70,020,819 (15,812,162) (6,665,897) 370,780,323
The above governmental subsidies are related to income.
Other changes in current year are the R&D subsidies allocated to the
partner in accordance with the research and development agreement.
221 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Land compensation refers to the land compensation acquired by the
subsidiary of the Company, which shall be amortized over the 50 years’
land use term.
222 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
38. Other non-current liabilities
2017 2016
Stay-recognition tax 152,954,098 56,025,416
On balance sheet date, the income of some construction contracts and
interest income of “construction-transfer” projects of the Company had
not reached the time point of the VAT liability. In accordance with the
requirements of the Provisions on Accounting Treatment of VAT (CK
2016 No. [22]), the Group reclassified the ending credit balance of the
item “Tax payable - Stay-recognition tax” from “Tax payable” to “Other
non-current liabilities” and listed in the balance sheet.
39. Capital stock
2017
Changes in current year
Issue of Issue Share Other Closing
new of increase s balance
Opening Subtot
shares bonus from
balance al
share accumulati
on fund
Unrestricted
shares
-RMB common
stock 2,768,331,384 - - - - - 2,768,331,384
-Foreign capital
stock listed in
China 1,621,963,200 - - - - - 1,621,963,200
4,390,294,584 - - - - - 4,390,294,584
2016
Changes in current year Closing
balance
Issue of Issue Share Other
new of increase s
Opening Subtot
shares bonus from
balance al
share accumulati
on fund
Unrestricted shares
-RMB common
stock 2,768,331,384 - - - - - 2,768,331,384
-Foreign capital
stock listed in
China 1,621,963,200 - - - - - 1,621,963,200
4,390,294,584 - - - - - 4,390,294,584
223 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
40. Capital reserves
2017
Opening Increase Reductio Closing
balance in current n in balance
year current
year
Capital stock premium 5,415,833,470 - - 5,415,833,470
Other capital reserves
-Business combination
under the same control (16,203,111) - - (16,203,111)
- Acquisition of minority
shareholders’ equity of the
subsidiary (711,345) - - (711,345)
-Capital reserves
transferred-in from original
system 128,059,561 - - 128,059,561
5,526,978,575 - - 5,526,978,575
2016
Opening Increase Reductio Closing
balance in current n in balance
year current
year
Capital stock premium 5,415,833,470 - - 5,415,833,470
Other capital reserves
-Business combination
under the same control (16,203,111) - - (16,203,111)
- Acquisition of minority
shareholders’ equity of the
subsidiary (711,345) - - (711,345)
- Capital reserves
transferred-in from original
system 128,059,561 - - 128,059,561
5,526,978,575 - - 5,526,978,575
224 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
41. Other comprehensive income
Accumulative balance of other comprehensive income attributable to
parent company in balance sheet table:
Jan. 1, 2016 Changes Dec. 31, 2016 Changes Dec. 31, 2017
Other comprehensive
income that will be
reclassified into gains and
losses subsequently
Shares in other
comprehensive income of
the invested party to be
reclassified to the profits
and losses under equity
method 1,256,397 4,801,990 6,058,387 (8,449,542) (2,391,155)
Fair value changes in
financial assets available for
sale 198,105,686 84,335,801 282,441,487 (9,826,324) 272,615,163
Converted difference in
foreign currency statements 8,298,154 25,605,643 33,903,797 (30,234,827) 3,668,970
207,660,237 114,743,434 322,403,671 (48,510,693) 273,892,978
Current amount of other comprehensive income in income statement:
2017
Pretax amount Less: Less: income Attributable to Attributable to
incurred Included in tax parent minority
other company shareholders’
comprehensiv equity
e income in
prior period
and
transferred
into profits
and losses of
current period
Other comprehensive income that will
be reclassified into gains and losses
subsequently
Shares in other comprehensive
income of the invested party to be
reclassified to the profits and losses
under equity method (8,449,542) - - (8,449,542 ) -
Fair value changes in financial assets
available for sale (9,368,601) - 457,723 (9,826,324 ) -
Converted difference in foreign
currency statements (48,401,660) - - (30,234,827 ) (18,166,833)
(66,219,803) - 457,723 (48,510,693 ) (18,166,833)
225 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
2016
Pretax amount Less: Less: income Attributable to Attributable to
incurred Included in tax parent minority
other company shareholders’
comprehensi equity
ve income in
prior period
and
transferred
into profits
and losses of
current period
Other comprehensive income that will
be reclassified into gains and losses
subsequently
Shares in other comprehensive
income of the invested party to be
reclassified to the profits and losses
under equity method 4,801,990 - - 4,801,990 -
Fair value change of financial assets
available for sale 101,395,326 - 17,059,525 84,335,801 -
Converted difference in foreign
currency statements 33,370,647 - - 25,605,643 7,765,004
139,567,963 - 17,059,525 114,743,434 7,765,004
226 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
42． Special reserves
Opening Increase in Reduction in Closing
balance current year current year balance
Safe production
cost - 45,958,231 (44,043,399) 1,914,832
According to the relevant requirements of the Administrative Measures
for the Extraction and Use of Safe Production Costs, the enterprises
engaged in large - scale machinery manufacture, engineering
construction, etc., shall draw safe production costs according to the
standards. Increase and decrease the safe production cost of the Group
in current year in accordance with relevant requirements.
43. Surplus reserves
2017
Opening Increase in Reduction in Closing balance
balance current year current year
Statutory
surplus
reserves 1,310,744,314 15,420,989 - 1,326,165,303
Discretionary
surplus
reserves 292,378,668 - - 292,378,668
1,603,122,982 15,420,989 - 1,618,543,971
2016
Opening Increase in Reduction in Closing
balance current year current year balance
Statutory
surplus
reserves 1,283,722,118 27,022,196 - 1,310,744,314
Discretionary
surplus
reserves 292,378,668 - - 292,378,668
1,576,100,786 27,022,196 - 1,603,122,982
227 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
In accordance with P. R. China Company Law, the Company’s Article of
Association and board meeting resolutions, the Company accrues 10%
of its net profit as statutory surplus reserve. When the accumulated
amount of statutory surplus reserve reaches 50% or more of the capital
stock, the Company can stop accruing. Statutory surplus reserve can be
used to compensate loss upon approval, or to increase capital stock.
The Company’s statutory surplus reserve was RMB 15,420,989 Yuan in
2017 (2016: RMB 27,022,196 Yuan).
228 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
44. Undistributed profit
2017 2016
Opening undistributed profit 3,353,936,451 3,168,538,701
Net profit attributable to the
shareholders of parent company 300,195,422 212,419,946
Less: Statutory surplus reserves
withdrawn (15,420,989 ) (27,022,196)
Common stock dividends
payable (439,029,458) -
Ending undistributed profit 3,199,681,426 3,353,936,451
45. Operating revenue and cost
2017 2016
Cost Revenue Cost
Revenue
Main business 21,642,271,179 17,893,942,874 24,143,396,762 19,525,829,470
Other
business 216,542,821 125,132,425 204,691,166 201,834,405
21,858,814,000 18,019,075,299 24,348,087,928 19,727,663,875
Main business income and cost are listed below:
2017 2016
Main business Main business Main business Main business
income cost income cost
Container cranes 13,120,859,480 9,940,403,610 17,082,391,036 13,067,811,357
Bulk machine
members 1,615,504,267 1,551,779,298 3,154,983,915 3,054,772,000
Heavy equipment 3,384,886,419 3,084,117,712 1,284,872,909 1,279,775,256
Steel structures
and related income 1,520,119,032 1,487,522,614 1,035,829,290 938,105,979
“Construction–tran
sfer” project 1,549,820,489 1,548,520,638 1,005,087,825 1,019,082,565
Vessel shipping
and others 451,081,492 281,599,002 580,231,787 166,282,313
21,642,271,179 17,893,942,874 24,143,396,762 19,525,829,470
229 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
45. Operating revenue and cost (continued)
Other business income and cost are listed below:
2017 2016
Other business Other business Other Other
income cost business business cost
income
Sales of materials 58,465,010 58,551,465 81,273,472 139,919,381
Equipment leasing
and others 158,077,811 66,580,960 123,417,694 61,915,024
216,542,821 125,132,425 204,691,166 201,834,405
46. Taxes and surcharges
2017 2016
Housing property tax 52,506,650 48,028,255
Land use tax 27,395,297 16,874,815
Stamp tax 14,088,249 9,661,367
Urban maintenance and
construction tax 9,591,497 15,645,413
Educational surtax 8,764,726 12,504,639
Business tax - 47,494,080
Others 1,894,225 1,967,268
114,240,644 152,175,837
230 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
47. Selling expenses
2017 2016
Employee compensation 58,860,634 53,604,675
Travel expenses 28,710,299 24,261,692
Sales service expenses 6,616,534 3,561,444
Office expenses 5,997,281 5,063,286
advertising and publicity costs 4,332,045 1,370,622
Bidding and tendering expenses 2,394,084 1,582,134
Exhibition fees 2,038,404 2,866,724
Others 12,508,611 8,125,201
121,457,892 100,435,778
231 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
48. Management expenses
2017 2016
Technical R&D expenses 702,392,513 851,544,356
Employee compensation 480,979,047 435,509,342
Expenses on employing
intermediary 143,878,907 76,540,843
Intangible assets amortization 96,889,767 97,017,725
Depreciation of fixed assets 74,485,191 73,752,507
Office expenses 47,525,626 43,843,424
Consulting fees 26,877,773 18,030,885
Travel expenses 26,332,516 21,821,209
Management and security fees 22,892,275 15,116,607
Informatization expense 17,283,659 13,574,204
Business entertainment
expenses 14,644,990 15,921,003
Management and cleaning fee 14,560,712 13,862,656
Insurance expense 7,083,929 7,865,652
Maintenance charge 5,019,467 6,483,287
Taxes - 39,216,370
Others 61,320,928 28,932,676
1,742,167,300 1,759,032,746
232 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
49. Financial expenses
2017 2016
Interest expenditure 1,162,344,297 1,095,191,900
Less: Interest income 293,152,359 308,686,445
Less: Amount of interest
capitalization 5,494,319 268,297
Exchange (gains)/losses (180,764,448) 369,552,810
Bond issue cost discount
amortization 3,974,665 7,869,961
Others 71,293,469 55,332,859
758,201,305 1,218,992,788
The capitalized amount of borrowing cost has been included in the
construction in process.
50. Assets impairment loss
2017 2016
Loss on inventory valuation
(Note V, 22) 414,898,419 803,814,035
Loss on bad debt (Note V, 22) 335,689,296 214,478,691
Expected contract loss (Note V,
22) 74,248,733 202,823,449
824,836,448 1,221,116,175
233 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
51. Gain/loss from fair value changes
2017 2016
Financial assets measured at fair
value with changes included in
current profits and losses (Note V,
2) (4,615,775) 3,939,693
Financial liabilities measured at
fair value with changes included in
current profits and losses - 24,918,115
(4,615,775) 28,857,808
52. Gain on investment
2017 2016
Long-term equity investment
income under equity method (Note
V, 13) 94,274,214 99,395,952
Gain on investment from the
disposal of long-term equity
investment 2,536,928 -
Gain on investment from holding
the equity instrument of
financial assets
available-for-sale (Note V, 11) 23,866,503 17,010,628
Gain on investment of financial
assets available-for-sale under
cost method (Note V, 11) 2,691,286 -
Investment income of bank
financing products - 2,101,669
Investment income from the
disposal of the equity
instrument of financial assets
available-for-sale - 5,176
123,368,931 118,513,425
234 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
53. Gains from assets disposal
2017 2016
Gains from assets disposal 17,491,522 6,649,827
Loss on assets disposal (6,742,466) (5,309,215)
10,749,056 1,340,612
54. Other revenue
The governmental subsidies related daily activities are as follows:
2017 2016 Related to
asset/income
Financial Related to
appropriations 71,702,575 - income
Technological Related to
subsidies 2,145,783 - income
Land compensation 2,349,849 - Related to assets
76,198,207 -
235 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
55. Non-operating income
2017 2016 Included in
on-recurring
profit and
loss of
current
period
Governmental subsidy (Note) 7,304,337 45,042,910 7,304,337
Insurance indemnity income 12,383,293 45,531 12,383,293
Others 9,655,928 11,904,975 9,655,928
29,343,558 56,993,416 29,343,558
The governmental subsidies included in current profits and losses are
as follows:
2017 2016 Related to
asset/income
Related to
Financial appropriations (Note) 7,304,337 39,982,226 income
Related to
Technological subsidies - 3,128,000 income
Related to
Land compensation - 1,932,684 assets
7,304,337 45,042,910
Note: The governmental subsidies or financial appropriations in 2007
are unrelated to daily activities.
56. Non-operating expenditures
2017 2016 Included in on-recurring profit
and loss of current period
Litigation compensation 85,200,340 - 85,200,340
Overdue fine expenditure 2,402,174 3,474,664 2,402,174
External donation 225,279 20,000 225,279
Others 4,288,460 2,020,182 4,288,460
92,116,253 5,514,846 92,116,253
236 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
57. Cost classification by nature
The supplementary information about the Group’s operating costs,
selling expenses and management expenses classified by nature are as
follows:
2017 2016
Raw material and low value
consumables consumed 12,641,926,856 14,371,771,965
Employee compensation expense
(Note V, 27) 1,914,699,978 1,789,154,586
Depreciation and amortization
charge
(Note V, 14, 15, 17, 19) 1,342,770,504 1,285,028,932
External coordination cost 1,092,912,581 1,277,245,080
Transportation cost 762,378,145 671,016,351
Technical R&D expenses(Note V,
48) 702,392,513 851,544,356
On-site installation expenses 337,664,631 216,944,442
Energy cost 222,598,174 298,219,379
Rental charge 183,475,422 172,780,365
Expenses on employing
intermediary 143,878,907 76,540,843
After-sales cost 109,885,037 127,301,003
Travel expenses 55,042,815 46,082,901
Office expenses 53,522,907 48,906,710
Informatization expense 17,283,659 13,574,204
Business entertainment expenses 14,644,990 15,921,003
Bidding and tendering expenses 2,394,084 1,582,134
Taxes (Note V, 48) - 39,216,370
Other expenses 285,229,288 284,301,775
19,882,700,491 21,587,132,399
237 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
58. Income tax expenses
2017 2016
Current income tax expenses 126,087,069 136,856,233
Deferred income tax expenses (33,767,653) (75,339,325)
92,319,416 61,516,908
V. Notes to Main Items of Consolidated Financial Statements
(continued)
58. Income tax expenses (continued)
The relationship between income tax expenses and total profit is listed
below:
2017 2016
Total profit 421,762,836 368,861,144
Income tax expense calculated based on the
applicable tax rate (Tax rate: 15%) 63,264,425 55,329,171
Some subsidiaries applied to the influence of
different tax rate 23,000,890 21,202,805
Profits and losses attributable to the joint
venture and associated enterprise (27,662,116) (14,966,483)
Non-taxable income (9,386) (108,251)
Non-deductible expenses 3,546,281 2,972,594
Final settlement and adjustment for previous
year 5,138,773 (8,933,223)
Use the deductible loss of the previous year (7,493,909) (10,334,298)
Unrecognized impact of deductible temporary
difference and deductible loss 53,606,776 39,776,493
Weighted deduction of technological
development cost (21,072,318) (23,421,900)
Income tax expenses calculated based on the
effective tax rate of the Group 92,319,416 61,516,908
59. Earnings per share
The basic earnings per share shall be calculated in accordance with the
current net profits of the ordinary shareholders of the company divided
by the weighted average of the common stock issued.
238 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
The calculations of basic earnings per share and diluted earnings per
share are as follows:
2017 2016
Consolidated net profit attributable to
common shareholders of parent
company 300,195,422 212,419,946
Weighted average of outstanding
common stock 4,390,294,584 4,390,294,584
Basic earnings per share 0.07 0.05
239 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
59. Earnings per share (continued)
In 2017 and 2016, the Company had no diluted potential common stock,
so the diluted earnings per share were equal to the basic earnings per
share.
60. Notes to items in cash flow statement
2017 2016
Cash from other operating activities
Customs guarantee deposit
received 185,539,292 297,589,755
Cash received from governmental
subsidy and grants 124,377,444 97,318,883
Employee loan recovered 9,296,606 4,488,988
Cash received from penalty incomes 7,234,130 532,240
Others 55,851,684 37,371,316
382,299,156 437,301,182
2017 2016
Other cash payments relating to
operating activities
Customs guarantee deposit paid 118,660,849 264,666,758
Selling and management expenses 240,550,811 201,911,238
Financial expenses commission 28,677,981 55,332,859
R&D subsidy paid to cooperation 26,613,797
units 12,736,804
Others 121,302,882 40,102,571
521,929,327 588,627,223
240 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
60. Notes to items in cash flow statement (continued)
2017 2016
Cash received from other investing
activities
Interest income 50,163,105 852,787,742
2017 2016
Other cash payments relating to
investing activities
Repayment on behalf due to
obligation of guarantee 173,076,659 -
2017 2016
Cash received relating to other
financing activities
Restricted bank deposits received 326,925,000 344,790,000
Related party borrowings received 1,034,005,000 2,420,845,793
Minority shareholders’ contributions
of capital 206,029,110 273,048,439
1,566,959,110 3,038,684,232
2017 2016
Cash paid relating to other financing
activities
Restricted bank deposits saved 323,466,355 326,925,000
Issue cost expenditure of short-term
and super short-term commercial
paper and super - 7,450,000
Overseas loan expenditure under
domestic guarantee 42,615,488 38,776,961
Related party loans repaid 1,057,664,286 1,768,382,528
1,423,746,129 2,141,534,489
241 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
61. Supplementary information of cash flow statements
(1) Supplementary information of cash flow statements
Adjust the net profit to the cash flow from operating activities:
2017 2016
Net profit 329,443,420 307,344,236
Plus: Assets depreciation reserves 824,836,448 1,221,116,175
Real estate as investment and
depreciation of fixed assets 1,240,838,899 1,184,754,917
Intangible assets and long-term
amortization 101,931,605 100,274,015
Net income from disposal of fixed assets
and intangible assets (10,749,056) (1,340,612)
Losses/gains on fair value changes 4,615,775 (28,857,808)
Financial expenses 747,304,445 1,256,194,822
Gain on investment (123,368,931) (118,513,425)
Net increase in deferred income tax )
assets (less the liabilities) (33,767,653 (75,339,325)
Increase in inventories (710,079,284) (1,794,200,703)
Increase in construction contract payment (2,070,922,668) (409,587,873)
Increase/decrease in operating )
receivables (979,057,110 94,234,166
Increase/decrease in operating payables 2,009,268,552 (77,655,949)
Increase in special reserves 1,914,832 -
Net cash flows from operating activities 1,332,209,274 1,658,422,636
2017 2016
Endorsement of bank acceptance bill
received from sales of goods and
services 3,030,329,565 2,038,671,320
Changes in cash and cash equivalents:
2017 2016
5,673,847,00
Closing balance of cash and cash equivalents 1 3,497,205,186
Less: Opening balance of cash and cash 3,497,205,18
equivalents 6 2,337,925,611
2,176,641,81
Net increase in cash and cash equivalents 5 1,159,279,575
242 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
61. Supplementary information of cash flow statements (continued)
(2) Information on acquisition or disposal of subsidiaries and other
business units
Information on acquisition subsidiary
2017 2016
Price for acquisition of subsidiary 61,873,500 -
Less: acquisition of cash and cash
equivalents held by the subsidiary 1,535,090 -
Net cash paid for acquisition of
subsidiaries and other business units 60,338,410 -
(3) Cash and cash equivalents
2017 2016
Cash
Cash on hand 1,365,865 774,626
- bank deposit available for payment at
any time 5,672,481,136 3,496,430,560
- Other monetary fund available for
payment at any time - -
-
Balance of cash and cash equivalents
at the end of the year 5,673,847,001 3,497,205,186
243 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
62. Assets with restricted ownership and use right
2017 2016
Monetary fund(Note V, 1) 96,380,368 99,839,013 Note 1
Fixed assets (Note V, 15) 4,124,080,499 2,438,314,390 Note 2
Long-term
receivables(Note V, 12) 2,571,908,986 2,996,201,650 Note 3
6,792,369,853 5,534,355,053
Note 1: As of Dec. 31, 2017, the restricted monetary fund of RMB
96,380,368 Yuan was the margin deposit saved by the Group for
applying to the bank for letter of credit and bank guarantee (Dec,
31, 2016: RMB 99,839,013Yuan).
Note 2: As of Dec. 31, 2017, the vessel with the book value of RMB
3,687,007,865 Yuan (Dec. 31, 2016: RMB 1,882,864,040 Yuan)
and the mechanical equipment with the book value of RMB
437,072,634 Yuan (Dec. 31, 2016: RMB 555,450,350 Yuan) had
been used for sale and lease-back transaction with the financial
leasing company, with the financing term of 4 to 6 years.
Note 3: As of Dec. 31, 2017, the long-term accounts receivable of
“construction-transfer” project of CCCC Investment Qidong Co.,
Ltd、CCCC Liyang Urban Construction Co., Ltd and CCCC Huaian
Construction Development Co., Ltd with the book value of RMB
2,571,908,986 Yuan (Dec. 31, 2016: RMB 2,996,201,650 Yuan)
had been used as the pledge for obtaining bank loans.
244 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
63. Foreign currency monetary items
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Monetary fund
USD 425,144,321 6.5342 2,777,978,022 356,373,402 6.9370 2,472,162,288
EUR 18,173,433 7.8023 141,794,576 25,423,957 7.3068 185,767,768
SGD 1,228,561 4.8831 5,999,186 20,744,399 4.7995 99,562,745
NZD 625 4.6327 2,895 625 4.8191 3,012
HKD 45,494,381 0.8359 38,028,753 18,540,418 0.8945 16,584,404
GBP 2,968,594 8.7792 26,061,880 1,462,267 8.5094 12,443,017
KEW 2,021,852,290 0.0061 12,333,299 2,038,285,822 0.0058 11,822,058
OMR 606,629 18.1404 11,004,493 567,011 18.0060 10,209,598
Yen 47,374,873 0.0579 2,743,005 144,285,734 0.0596 8,598,131
ZAR 31,696,233 0.5277 16,726,102 14,635,312 0.5083 7,439,129
LKR 140,778,939 0.0424 5,969,027 168,823,164 0.0463 7,816,513
AUD 978,149 5.0928 4,981,517 1,190,016 5.0157 5,968,763
INR 20,869,322 0.1020 2,128,671 23,686,064 0.1023 2,422,824
BRL 165,211 1.9725 325,879 708,428 2.1357 1,512,989
Ruble 3,757,976 0.1135 426,530 12,938,990 0.1161 1,502,217
MYR 534,419 1.5779 843,260 838,089 1.5507 1,299,625
CAD 392 5.2009 2,039 423 5.1406 2,176
AED 654,883 1.7790 1,165,037 - - -
3,048,514,171 2,845,117,257
2017 2016
Original Exchange Equivalent to Original Exchang Equivalent to
currency rate RMB currency e rate RMB
Accounts
receivable
USD 237,611,976 6.5342 1,552,604,174 382,943,787 6.9370 2,656,481,050
EUR 59,375,663 7.8023 463,266,735 50,412,079 7.3068 368,350,979
SGD 19,780,477 4.8831 96,590,047 62,524,894 4.7995 300,088,229
QAR 17,363,477 2.0746 36,022,269 - - -
CAD 4,132,514 5.2009 21,492,792 5,248,147 5.1406 26,978,624
SAR 6,510,484 1.7423 11,343,216 5,865,574 1.8497 10,849,552
ZAR 18,087,082 0.5277 9,544,553 1,631,102 0.5083 829,089
KEW 1,368,788,719 0.0061 8,349,611 142,923,050 0.0058 828,954
GBP 868,960 8.7792 7,628,774 3,311,616 8.5094 28,179,865
LKR 50,117,375 0.0424 2,124,977 67,543,175 0.0463 3,127,249
AUD 224,642 5.0928 1,144,057 272,129 5.0157 1,364,917
INR 5,460,783 0.1020 557,000 181,114 0.1023 18,526
Ruble 4,893,519 0.1135 555,414 481,395 0.1161 55,890
HKD 13,500 0.8359 11,285 196,859 0.8945 176,090
BRL - - - 4,828 2.1357 10,311
AED - - - 6,268,825 1.8890 11,841,810
2,211,234,904 3,409,181,135
245 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
63. Foreign currency monetary items (continued)
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Other
receivables
USD 34,192,234 6.5342 223,418,895 3,989,080 6.9369 27,671,849
EUR 362,703 7.8023 2,829,918 12,329 7.3070 90,088
SGD 507,308 4.8831 2,477,236 - - -
INR 23,073,417 0.1020 2,353,489 - - -
Ruble 15,955,229 0.1135 1,810,918 - - -
ZAR 3,027,546 0.5277 1,597,636 - - -
BRL 552,575 1.9725 1,089,954 - - -
AUD 172,003 5.0928 875,977 103,710 5.0157 520,178
KEW 86,341,866 0.0061 526,685 5,285,609 0.0058 30,657
GBP - - - 195,990 8.5094 1,667,757
236,980,708 29,980,529
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Accounts
payable
USD 166,604,576 6.5342 1,088,627,620 120,343,389 6.9370 834,822,091
EUR 71,504,046 7.8023 557,896,018 38,684,841 7.3068 282,662,394
4,402,716,49 0.0579 254,917,285
Yen 4 161,884,564 0.0596 9,648,320
SGD 1,650,625 4.8831 8,060,167 20,934 4.7995 100,475
GBP 428,331 8.7792 3,760,404 67,565 8.5094 574,938
KEW 552,903,279 0.0061 3,372,710 - - -
ZAR 4,835,147 0.5277 2,551,507 - - -
Ruble 12,311,200 0.1135 1,397,321 - - -
AUD 10,018 5.0928 51,020 10,018 5.0157 50,247
1,920,634,052 1,127,858,465
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Other
payables
36,885,08 6.5342
USD 6 241,014,529 4,985,404 6.9370 34,583,748
EUR 3,706,727 7.8023 28,920,996 10,092,794 7.3509 74,191,119
SGD 1,096,576 4.8831 5,354,690 1,501,789 4.7995 7,207,838
36,964,22 0.1020 - - -
INR 5 3,770,351
GBP 178,694 8.7792 1,568,790 - - -
HKD - - - 17,000 0.8945 15,207
280,629,356 115,997,912
246 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
V. Notes to Main Items of Consolidated Financial Statements
(continued)
63. Foreign currency monetary items (continued)
2017 2016
Original Exchange Equivalent to Original Exchang Equivalent to
currency rate RMB currency e rate RMB
Short-term
loans
USD 825,116,556 6.5342 5,391,476,600 837,000,000 6.9370 5,806,269,000
EUR 50,000,000 7.8023 390,115,000 67,901,197 7.3068 496,140,465
5,781,591,600 6,302,409,465
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent
currency rate RMB currency rate to RMB
Long-term loans due within one year
USD 50,000,000 6.5342 326,710,000 - - -
EUR 20,000,000 7.8023 156,046,000 - - -
482,756,000 -
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Long-term payables due within one year
USD 18,285,714 6.5342 119,482,512 17,604,054 6.9370 122,119,326
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Long-term
loans
USD - - - 50,000,000 6.9370 346,850,000
EUR - - - 20,000,000 7.3068 146,136,000
- 492,986,000
2017 2016
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB currency rate RMB
Long-term
payables
USD 174,285,714 6.5342 1,138,817,712 93,253,088 6.9370 646,896,674
247 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope
1. Business combination not under the same control
(1) In 2017, the Group acquired 50% stock equity of Greenland Heavylift (Hong Kong)
Limited through paying the cash of 7,500,000USD (equivalent to RMB
50,829,000Yuan) to the original shareholders of Greenland Heavylift (Hong Kong)
Limited and through increasing the capital of 56,000,000USD (equivalent to RMB
379,523,200 Yuan) to Greenland Heavylift (Hong Kong) Limited, and also
obtained the right to buy its 1% stock equity with 1 USD at any time in the future.
The purchase date was set for June 30, 2017.
In accordance with the acquisition agreement, the chairman of the board of
directors appointed by the Group has super voting power in the voting rights of the
board of director, and the Group also has the right to buy its 1% stock equity with 1
USD at any time in the future, therefore, the Group has control power over
Greenland Heavylift (Hong Kong) Limited substantially.
The fair value and book value of the recognizable assets and liabilities
of Greenland Heavylift (Hong Kong) Limited on purchase date are as
follows:
248 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope (continued)
1. Business combination not under the same control (continued)
June 30, 2017 June 30, 2017
Fair value Book value
Monetary fund 1,535,090 1,535,090
Receivables 110,130 110,130
Other receivables and prepayment 3,622,474 3,622,474
Other non-current assets 252,077,771 252,077,771
Other payables (7,074,536) (7,074,536)
Deferred income (6,923,077) (6,923,077)
243,347,852 243,347,852
Capital increase invested 379,523,200 379,523,200
Minority shareholders’ equity (311,519,832) (311,519,832)
311,351,220 311,351,220
Goodwill arising from purchase 110,562,702
Value of 1% stock equity recognized
and to be purchased at 1 USD 8,438,278
in the future
430,352,200 Note
Note: the amount includes the cash of 7,500,000 USD paid to the
original shareholders during business combination and the capital
increase of 56,000,000 USD to Greenland Heavylift (Hong Kong)
Limited by the Group.
The business performance and cash flows of Greenland Heavylift
(Hong Kong) Limited from the date of purchase to the end of the year
are listed below:
249 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope (continued)
1. Business combination not under the same control (continued)
June, 30, 2017~
Dec. 31, 2017
Operating revenue 85,079,934
Net profit 17,523,291
Net cash flows 39,479,155
(2) In the year 2017, the Group acquired the 100% stock equity of Verspanen B.V. with
the cash of 1,500,000EUR (equivalent to RMB 11,044,500 Yuan) and the
purchase date was set for Apr. 30, 2017.
The fair value and book value of the recognizable assets and liabilities of
Verspanen B.V. are listed below:
Apr. 30, 2017 Apr. 30, 2017
Fair value Book value
Accounts receivable 3,198,602 3,198,602
Other receivables and prepayment 32,012 32,012
Inventory 2,220,585 2,220,585
Other current assets 49,945 49,945
Fixed assets 4,695,840 4,695,840
Short-term loans (1,104,069) (1,104,069)
Accounts payable (2,893,803) (2,893,803)
Employee remuneration payable (263,932) (263,932)
Other payables (159,678) (159,678)
Deferred income tax liabilities (143,809) (143,809)
5,631,693 5,631,693
Goodwill arising from purchase 5,412,807
11,044,500
250 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VI. Changes in consolidation scope (continued)
1. Business combination not under the same control (continued)
The business performance and cash flows of Verspanen B.V. from the date of
purchase to the end of the year are listed below:
Apr. 30, 2017~
Dec. 31, 2017
Operating revenue 9,150,537
Net profit 157,021
Net cash flows 271,442
2. Changes in consolidation scope for other reasons
Nantong Zhenhua Heavy Industries Steel Structure Processing Co.,
Ltd., an original subsidiary of the Company, was cancelled on May 24,
2017.
On June 15, 2017, the Company, CCCC Second Harbor Engineering
Co., Ltd. and Jiangsu Yangkou Port Affairs Co., Ltd. jointly invested and
incorporated the holding subsidiary CCCC Rudong Construction and
Development Co., Ltd. with the cash of 10,000,000 USD. As of Dec. 31,
2017, the shareholding ratio of the Group in the subsidiary was 73%.
Hotel De Herberg B.V., an original subsidiary of the Company, was
cancelled on June 19, 2017.
On Nov. 22, 2017, the Company sold 20% shares of its original
subsidiary Zhenhua Shende Ocean Engineering Installation Co., Ltd. to
another shareholder Offshore Tech, LLC of the subsidiary for 400,000
USD in cash. As of Dec. 31, 2017, the shareholding ratio of the
Company in the original subsidiary was 50%, and the original subsidiary
was changed to the joint venture of the Company.
On Nov. 22, 2017, the Company sold 30% shares of its original
subsidiary ZPMC Southeast Asia Pte. Ltd to another shareholder of the
subsidiary Satomas PTE LTD for 186,231 SGD in cash. As of Dec. 31,
2017, the shareholding ratio of the Company in the original subsidiary
was 40%, and the original subsidiary was changed to the affiliated
company of the Company.
251 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
ZPMC Brazil Holdings LTDA., an original subsidiary of the Company,
was cancelled on Dec. 12, 2017.
252 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities
1. Interests in subsidies
The information of the Company’s subsidiaries is as follows:
Main business location Registered in Business nature Shareholding ratio (%) Gaining
way
Direct Indirect
Shanghai Zhenhua Port Machinery Chongming, Shanghai Chongming, Shanghai Machinery manufacture94.76% -Invest to set
up
Heavy Industry Co., Ltd
Shanghai Zhenhua Port Machinery Hong Kong Hong Kong Trade & sales 99.99% -Invest to set
up
(Hong Kong) Co., Ltd
Shanghai Zhenhua Shipping Co., Ltd. Pudong, Shanghai Pudong, Shanghai Shipping 55% -Invest to set
up
Nantong Zhenhua Heavy Equipment Nantong, Jiangsu Nantong, Jiangsu Machinery manufacture 100% -Invest to set
up
Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy Industries Co., Ltd. Nantong, Jiangsu Nantong, Jiangsu Machinery manufacture 100% -Invest to set
up
Drive Mechanism Company (Nantong)
Shanghai ZPMC Electric Co., Ltd. Pudong, Shanghai Pudong, Shanghai Electrical equipment R&D100% -Invest to set
up
Jiangyin Zhenhua Port Machinery Steel Jiangyin, Jiangsu Jiangyin, Jiangsu Machinery manufacture 75% 25%Invest to set
up
Structure Fabrication Co., Ltd
ZMPC Steel Structure Co., Ltd (Note 1) Pudong, Shanghai Pudong, ShanghaiMachinery manufacture - 49%Invest to set
up
Shanghai Zhenhua Ocean Engineering Yangshan Bonded Port Area,Yangshan Bonded Port Shipping 100% -Invest to set
up
Service Co., Ltd Shanghia Area, Shanghai
ZPMC Inspection Technology Pudong, Shanghai Pudong, ShanghaiTechnical consulting 100% -Invest to set
up
Consulting Co., Ltd
ZPMC Netherlands Coperatie U.A. Rotterdam, NetherlandsRotterdam, Netherlands Trade & sales 100% -Invest to set
up
ZPMC Netherlands B.V. Rotterdam, NetherlandsRotterdam, Netherlands Trade & sales 100% -Invest to set
up
Verspannen B.V. Rotterdam, NetherlandsRotterdam, Netherlands Machinery manufacture - 100% Business
Combination not
under the same control
ZPMC Espana S.L. Los Barrios Los Barrios Trade & sales - 100%Invest to set
up
Spain Spain
ZPMC GmbH Hamburg Hamburg Germany Hamburg Germany Trade & sales 100% -Invest to set
up
ZPMC Lanka Company Colombo, Sri Lanka Colombo, Sri Lanka Trade & sales 70% -Invest to set
up
(Private) Limited
ZPMC North America Inc. Delaware, USA Delaware, USA Trade & sales 100% -Invest to set
up
ZPMC Korea Co., Ltd. Pusan, Korea Pusan, Korea Trade & sales 70% -Invest to set
up
ZPMC Engineering Africa (Pty) Ltd. Kwazulu-Natal Province,Kwazulu-Natal Province, Trade & sales 100% -Invest to set
up
Republic of South AfricaRepublic of South Africa
ZPMC Engineering (India) Private Maharashtra State, Maharashtra State, Trade & sales 100% -Invest to set
up
Limited India India
ZPMC Southeast Asia Singapore Singapore Trade & sales 100% -Invest to set
up
Holding Pte. Ltd.
ZPMC Engineering (Malaysia) Malaysia Malaysia Trade & sales - 70%Invest to set
up
Sdn. Bhd.
253 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
ZPMC Australia Company (Pty) Ltd. New South Wales, Australia New South Wales, Trade & sales 100% -Invest to set
up
Australia
ZPMC General Equipment Co., Ltd. Pudong, Shanghai Pudong, ShanghaiMachinery manufacture 100% - Business
combination
under the same control
Shanghai Port Machinery Heavy Pudong, Shanghai Pudong, ShanghaiMachinery manufacture - 74.02% Business
Industries Co., Ltd. combination
under the same control
ZPMC Zhangjiagang Zhangjiagang, JiangsuZhangjiagang, JiangsuMachinery manufacture 90% - Business
Port Machinery Co., Ltd. combination
under the same control
Nanjing Ninggao New Channel Co., Ltd. Nanjing, Jiangsu Nanjing, Jiangsu Trade & sales 100% -Invest to set
up
Shanghai Zhenhua Heavy Industries Qidong
Marine Engineering Co., Ltd. Nantong, Jiangsu Nantong, JiangsuMachinery manufacture 67% - Business
Engineering Co., Ltd. combination not under
the same control
Jiahua Shipment Co., Ltd Hong Kong Hong Kong Shipping - 70%Invest to set
up
Zhenhua Pufeng Wind Power Hong Kong Hong Kong Shipping - 51%Invest to set
up
(Hong Kong) Co., Ltd.
ZPMC Brazil Servio Portuários LTDA Rio DE Janeiro, BrazilRio DE Janeiro, Brazil Trade & sales 80% -Invest to set
up
ZPMC Limited Liability Company Moscow, Russia Moscow, Russia Trade & sales 85% -Invest to set
up
ZPMC NA East Coast lnc. Virginia Delaware, USA Trade & sales - 100%Invest to set
up
ZPMC NA Huston lnc. Texas Delaware, USA Trade & sales - 100%Invest to set
up
254 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidies (continued)
The information of the Company’s subsidies is as follows (continued):
Main business location Registered in Business nature Shareholding ratio Gaining way
Direct indirect
CCCC Tianhe Mechanical Equipment Changshu, Jiangsu Changshu, JiangsuMachinery manufacture 32.51% - Business
Manufacturing Co., Ltd. (Note 2) combination
under the same control
Fujian CCCC Qianda Heavy Fuzhou, Fujian Fuzhou, FujianMachinery manufacture - 51% Business
Industry Co., Ltd. combination
under the same control
CCCC Investment Development Nantong, Jiangsu Nantong, Jiangsu Engineering construction47.50% -Invest to set
up
Qidong Co., Ltd (Note 3)
CCCC Liyang Urban Investment Liyang, Jiangsu Liyang, Jiangsu Engineering construction 48% -Invest to set
up
and Construction Co., Ltd (Note 4)
ZPMC UK LD Cardiff, UK Cardiff, UK Trade & sales 100% -Invest to set
up
ZPMC Middle East Fze Dubai, UAE Dubai, UAE Trade & sales 100% -Invest to set
up
CCCC (Huaian) Construction and Huaian, Jiangsu Huaian, Jiangsu Engineering construction - 76.02%Invest to set
up
Development Co., Ltd
CCCC Zhenjiang Investment Construction,
Management and Development Co., Ltd Zhenjiang, Jiangsu Zhenjiang, Jiangsu Engineering construction 70% -Invest to set
up
CCCC Rudong Construction and Rudong, Jiangsu Rudong, Jiangsu Engineering construction - 72.91%Invest to set
up
Development Co., Ltd.
Greenland Heavylift (Hong Kong)
Limited (Note 5) Hong Kong Hong Kong Shipping - 50% Business
combination not
under the same control
GPO Grace Limited Marshall Islands Marshall Islands Shipping - 100% Business
combination not under
the same control
GPO Amethyst Limited Marshall Islands Marshall Islands Shipping - 100% Business
combination not
under the same control
GPO Sapphire Limited Marshall Islands Marshall Islands Shipping - 100% Business
combination
not under the same control
GPO Emerald Limited Marshall Islands Marshall Islands Shipping - 100% Business
combination
not under the same control
GPO Heavylift Limited Cayman Islands Cayman Islands Shipping - 60% Business
combination
not under the same control
GPO Heavylift AS Oslo, Norway Oslo, Norway Shipping - 100% Business
combination not
under the same control
Note 1: In accordance with the Articles of Association of ZMPC Steel Structure Co., Ltd, the Group shall have the
right to appoint and remove most members of the company’s board of directors and, in essence, control the
company, so it shall be incorporated into the financial statements of the Group.
Note 2: The Group obtained 55.98% of the shareholders’ meeting and 80% of the board’s voting rights of the
company via amendment of Articles of Association of CCCC Tianhe Mechanical Equipment Manufacturing Co.,
Ltd., reconstruction of board of directors and signing the agreement for concerted action with China
Communications Corporation (one of the shareholders of CCCC Tianhe Mechanical Equipment Manufacturing Co.,
Ltd.). In accordance with the regulations in the Articles of Association o the company, the Group has obtained the
control rights of the company, and thus the company shall be in the consolidation scope of the Group.
255 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Note 3: By signing the agreement for concerted action with CCCC Tianjin Dredging Co., Ltd., the Group has
obtained 95% voting power of the shareholders meeting and 100% voting power of the board of directors. In
accordance with the regulations in the Articles of Association o the company, the Group has obtained the control
rights of the company, and thus the company shall be in the consolidation scope of the Group.
Note 4: By signing the agreement for concerted action with CCCC Shanghai Dredging Co. Ltd. and CCCC East
China Investment Co., Ltd., the Group has obtained 76% voting power of the shareholders meeting and 71% voting
power of the board of directors. In accordance with the regulations in the Articles of Association o the company, the
Group has obtained the control rights of the company, and thus the company shall be in the consolidation scope of
the Group.
Note 5: In accordance with the acquisition agreement, the chairman of the board of directors appointed by the
Group has super voting power in the voting rights of the board of director, and the Group also has the right to buy its
1% stock equity with 1 USD at any time in the future. The Group has control power substantially and the company
shall be included in the consolidation scope of the financial statement of the Group.
256 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidies (continued)
The information of the Company’s subsidies is as follows (continued):
The subsidiaries with important minority shareholders’ equity are as
follows:
2017
Minority Minority Interest Provision of Accumulated
shareholder shareholders income to special minority
s’ ’ minority reserves for shareholders
shareholdin contributions shareholder minority ’ equity at
g ratio % of capital s shareholders the end of
year
CCCC Tianhe
Mechanical -
Equipment
Manufacturing Co.,
Ltd. 67.49 39,217,954 2,562,277 603,423,242
CCCC Zhenjiang
Investment, 60,000,000
Construction,
Management and
Development Co, Ltd. 30.00 16,811,568 - 319,814,122
Greenland Heavylift
(Hong Kong)Limited 50.00 309,405,935 (413,193) - 308,992,742
2016
Minority Minority Interest Provision of Accumulated
shareholder shareholder income to special minority
s’ s’ minority reserves for shareholders
shareholdin contributions shareholder minority ’ equity at
g ratio % of capital s shareholders the end of
year
CCCC Tianhe
Mechanical -
Equipment
Manufacturing Co.,
Ltd. 67.49 57,388,211 - 561,643,011
CCCC Zhenjiang
Investment, 243,000,000
Construction,
Management and
Development Co, Ltd. 30.00 2,554 - 243,002,554
257 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
1. Interests in subsidies (continued)
The information of the Company’s subsidies is as follows (continued):
The table below lists the main financial information of above
subsidiaries, which is the amount before mutual offset between
enterprises of the Group:
2017
Current assets Non-current Total assets Current liabilities Non-current Total liabilities
assets liabilities
CCCC Tianhe
Mechanical
Equipment
Manufacturing Co.,
Ltd. 2,313,171,638 1,869,127,907 4,182,299,545 (2,460,195,680 ) (828,278,015) (3,288,473,695)
CCCC Zhenjiang
Investment
Construction,
Management and
Development Co., Ltd 13,909,597 1,074,783,059 1,088,692,656 (22,645,579 ) - (22,645,579)
Greenland Heavylift
(Hong Kong)Limited 47,188,656 790,083,887 837,272,543 (218,380,034 ) - (218,380,034)
2017
Operating Net profit Total Net cash inflows
revenue comprehensive from operating
income activities
CCCC Tianhe Mechanical Equipment
Manufacturing Co., Ltd. 1,152,898,050 58,140,097 58,140,097 49,468,222
CCCC Zhenjiang Investment
Construction, Management and
Development Co., Ltd 5,241,278 56,038,562 56,038,562 -
Greenland Heavylift
(Hong Kong) Limited 85,079,934 17,523,291 (2,977,632 ) 31,723,925
2016
Current assets Non-current Total assets Current liabilities Non-current Total liabilities
assets liabilities
CCCC Tianhe
Mechanical
Equipment
Manufacturing Co.,
Ltd. 1,498,862,582 1,224,395,571 2,723,258,153 (1,660,805,166) (230,591,014) (1,891,396,180)
CCCC Zhenjiang
Investment
Construction,
Management and
Development Co., Ltd 10,145,273 800,097,533 810,242,806 (234,292) - (234,292)
2016
Operating Net profit Total Net cash inflows
revenue comprehensive from operating
income activities
CCCC Tianhe Mechanical Equipment
Manufacturing Co., Ltd. 1,101,425,520 85,197,056 85,197,056 35,261,157
CCCC Zhenjiang Investment
Construction, Management and
Development Co., Ltd 7,226,075 8,515 8,515 949,212
258 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises
Main business location Registered in Business nature Registered capital Shareholding ratio Accounting treatment
Direct Indirect
Joint venture
Jiangsu Longyuan Zhenhua Nantong, Jiangsu Nantong, Jiangsu Ocean Engineering RMB 260,000,000 50% -Equity method
Ocean Engineering Co., Ltd. construction Yuan
ZPMC Mediterranean Istanbul, Turkey Istanbul, Turkey Port equipment 50,000 50% -Equity method
Liman Makinalari technical services TRL
Ticaret Anonim Sirketi
Zhenhua Ocean Energy (Hong Kong)Hong Kong Hong Kong Shipping 5,969,998 - 51% Equity method
Co., Ltd. (Note 1) USD
Cranetech Global Malaysia Malaysia Port equipment 1,000,000 - 49.99%Equity method
Sdn. Bhd. technical services MYR
ZPMC – OTL Marine Hong Kong Hong Kong Shipping 2,000,000 - 50%Equity method
Construction Co., Ltd. USD
CCCC Tianhe Xi’an Equipment Xi’an Shaanxi Xi’an Shaanxi Machinery manufacture RMB 300,000,000 - 50%Equity method
Manufacturing Co., Ltd. Yuan
Associated enterprise
CCCC Ocean Engineering Vessel Pudong, Pudong, Ship technology RMB 60,000,000 25% -Equity method
Technology Research Centre Co., Ltd Shanghai Shanghaidevelopment and consutancy Yuan
CCCC Real Estate Yixing Co., Ltd. Quxi, Wuxi, Real estate development RMB 900,000,000 20% -Equity method
Jiangsu Jiangsu Yuan
Shanghai Zhenhua Heavy IndustriesChangzhou, Changzhou, Paint production RMB 3,000,000 20% -Equity method
(Group) Changzhou Paint Co., Ltd. Jiangsu Jiangsu Yuan
CCCC Financial Leasing Co., Ltd. Pudong, pudong, Financial leasing RMB 5,000,000,000 30% -Equity method
Shanghai Shanghai Yuan
China Communications USA USA Port, water way, highway 50,000,000 24% -Equity method
Construction USA Inc. and bridge construction USD
CCCC South American USA USA Port, water way, highway 103,000,000 16% -Equity method
Regional Company SARL and bridge construction USD
(Note 2)
ZPMC Southeast Asia Singapore Singapore Trade & sales 787,760 - 40%Equity method
Pte. Ltd USD
259 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises (continued)
Note 1: On May 5, 2014, the subsidiary of the Company and the partner invested to establish
Zhenhua Ocean Energy (Hong Kong) Co., Ltd. The registered capital was 5,969,998 USD and
the subsidiary of the Company contributed 3,044,699 USD, holding 51% of the shares. The
company focused on the vessel transportation business. Based on the regulations of the
shareholder agreement, the significant issues of the company shall be agreed by at least 75%
shareholders via voting. Therefore, the Group has no control rights but controls the company
jointly with the partner.
Note 2: On Dec. 15, 2016, the Company invested 16,480,000 USD (in RMB 114,321,760 Yuan)
to buy shares of CCCC South American Regional Company SARL. The registration capital was
103,000,000 USD (in RMB 114,321,760 Yuan) and the shareholding ratio of the Company was
16%. The company focuses on port construction business. Based on the regulations of the
shareholder agreement, the Company has the right to designate one director to that company
and implement significant impact to that company.
Main financial information of significant associated enterprises:
The amount in the consolidated financial statements of the associated
enterprise has taken into account the impacts of fair value of the
recognizable assets and liabilities of associated enterprise in the
acquisition of investments and the impact of unifying accounting
policies.
CCCC Financial Leasing Co., Ltd. 2017 2016
Current assets 14,519,134,477 9,420,615,029
Non-current assets 12,061,010,402 13,727,208,395
Total assets 26,580,144,879 23,147,823,424
(10,051,593,07
Current liabilities (8,365,784,476 4)
Non-current liabilities (11,116,733,773 (7,249,806,724)
(17,301,399,79
Total liabilities (19,482,518,249 8)
Minority shareholders’ equity 1,502,458,020 495,607,449
Shareholders’ equity attributable to parent
company 5,595,168,610 5,350,816,177
Shares of net assets based on the
shareholding ratio 1,678,550,583 1,605,244,853
Book value of investments in associated
enterprise 1,678,550,583 1,605,244,853
260 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises (continued)
CCCC Financial Leasing Co., 2017 2016
Ltd.
Operating revenue 1,173,817,052 780,323,172
Financial expenses-Interest
income 11,277,025 5,790,545
Financial expenses-Interest
expenditure 23,808,003 8,495,925
Income tax expenses 89,532,048 85,261,887
Net profit 272,052,060 251,014,262
Net amount of other
comprehensive income after tax (848,960) 580,861
Total comprehensive income 271,097,816 258,329,639
Total comprehensive income
attributable to parent company 244,352,430 252,162,817
Dividends received - 32,400,000
Insignificant information summary of joint ventures and associated
enterprises:
Joint venture
2017 2016
Total book value of investments 268,510,756 200,209,849
Total amount calculated by
shareholding ratio
Net profit 35,324,167 24,822,653
Other comprehensive income - -
Total comprehensive income 35,324,167 24,822,653
261 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VII. Interests in Other Entities (continued)
2. Equity in joint ventures and associated enterprises (continued)
Insignificant information summary of joint ventures and associated
enterprises (continued):
Associated enterprise
2017 2016
Total book value of investments 373,409,182 395,966,751
Total amount calculated by
shareholding ratio
Net profit (14,386,647) (1,075,546)
Other comprehensive income (8,418,578) 4,546,680
Total comprehensive income (22,805,225) (3,471,134)
262 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments
1. Classification of financial instruments
The book values of various financial instruments on balance sheet date are as
follows:
Dec. 31, 2017
Financial assets
Financial assets
Available-for-sal
measured at fair Loan and e
value with Total
changes included Financial asset
in current profits Accounts s
and losses receivable
Monetary fund - 5,770,227,369 - 5,770,227,369
Financial assets
measured at fair
value with changes
included in current
profits and losses 8,438,278 - - 8,438,278
Notes receivable - 420,786,012 - 420,786,012
Accounts - -
receivable 3,980,017,611 3,980,017,611
Other receivables - 627,877,201 - 627,877,201
Non-current assets - -
due within 1 yeas 1,896,475,472 1,896,475,472
Financial assets -
available-for-sale 1,304,203,905 1,304,203,905
Long-term -
receivables 4,238,704,827 - 4,238,704,827
8,438,278 16,934,088,492 1,304,203,905 18,246,730,675
Financial liabilities
Other
Financial liabilities
Short-term loans 25,468,980,401
Notes payable 1,893,227,482
Accounts payable 6,887,598,171
Interest payable 118,825,582
Dividend payable 31,701,965
Other payables 692,680,129
Non-current liabilities due within one year 2,198,931,219
Long-term loans 6,664,914,383
Long-term payables 1,884,986,333
45,841,845,665
263 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
1. Classification of financial instruments (continued)
Dec. 31, 2016
Financial assets
Financial assets
Loan and Available-for-sal
measured at fair e
value with Accounts Financial asset Total
changes included receivable s
in current profits
and losses
Monetary fund - 3,597,044,199 - 3,597,044,199
Financial assets
measured at fair
value with changes
included in current
profits and losses 4,615,775 - - 4,615,775
Notes receivable - 296,920,781 - 296,920,781
Accounts receivable - 4,230,746,458 - 4,230,746,458
Other receivables - 433,130,407 - 433,130,407
Non-current assets
due within 1 year - 1,384,438,569 - 1,384,438,569
Financial assets
available-for-sale - - 1,313,572,506 1,313,572,506
Long-term
receivables - 3,791,218,020 - 3,791,218,020
4,615,775 13,733,498,434 1,313,572,506 15,051,686,715
264 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
1. Classification of financial instruments (continued)
Dec. 31, 2016(continued)
Financial liabilities
Other
Financial liabilities
Short-term loans 21,485,919,393
Notes payable 1,905,121,706
Accounts payable 5,103,018,897
Interest payable 140,195,803
Dividend payable 31,701,965
Other payables 1,225,135,428
Non-current liabilities due within one year 799,574,356
Other current liabilities 3,996,025,335
Long-term loans 3,925,335,497
Long-term payables 1,618,361,164
40,230,389,544
2. Transfer of Financial Assets
Transferred financial assets derecognized as a whole but involved
continuously
As of December 31, 2017, the book value of the bank acceptance bill
that the Group had endorsed to the supplier for clearing the accounts
payable was RMB 1,519,002,534 Yuan (Dec. 31, 2016: RMB
471,132,348 Yuan), with the maturity term of 1~12 months. In
accordance with the relevant provisions of the Negotiable Instruments
Law, if the acceptance bank refuses to pay, its holder is entitled to
recourse to the Group (”continue to be involved”).The Group considers
that the Group has transferred almost all of its risks and rewards and
therefore terminates the book value of its settled accounts payable in
connection with it. The maximum losses and undiscounted cash flows
that continue to be involved are equal to their book value. The Group
considers that continuous involvement of fair value is not important.
265 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
2. Transfer of Financial Assets (continued)
Transferred financial assets derecognized as a whole but involved
continuously (continued)
In 2017, the Group failed to recognize any gain or loss (2016: none) on
above-mentioned transfer date of financial assets. The Group had no
income or expense recognized in current year or accumulatively due to
overall termination of recognition but continuous involvement. The
endorsement of bank acceptance bill was roughly balanced in current
year.
3. Risks of financial instruments
Major financial instruments of the Group include bank loans, mortgage
loan formed from sale and lease-back, other interest-bearing borrowings
and monetary fund, and the like. The main purpose of these financial
instruments is to finance for the operation of the Group. The Group has
various other financial assets and liabilities directly arising from
operations, such as accounts receivable, long-term receivables and
accounts payable, etc.
The Group’s operations face various financial risks: credit risk, liquidity
risk and market risk (mainly exchange rate risk and interest rate
risk).The Group’s overall risk management plan addresses the
unpredictability of financial markets and seeks to reduce the potential
adverse impact on the Group’ s financial performance.
Credit risk
The Group manages the credit risks by category based on portfolio.
Credit risks mainly originate from notes receivables, accounts
receivable, other receivables, available-for-sale financial assets and
long-term receivables etc.
Other financial assets of the Group include monetary fund,
available-for-sale financial assets and other receivables, whose credit
risks arise from that the counterparty default and the maximum exposure
is equal to the carrying amount of these instruments. The Group also
266 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
faces credit risk for providing financial security, as disclosed in Note XI 2
(3).
Since the Group is trading only with a recognized and credibility third
party, no collateral is required. The credit risks shall be managed in
centralized manner according to the customer/counterparty, geographic
region and industry. Since the Group’s customers of accounts
receivable and long-term receivables are widely dispersed across
sectors and industries, there is no significant credit risk concentration
within the Group. The Group does not hold any collateral or other credit
enhancements to the balance of accounts receivable and long-term
receivables.
267 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Credit risk (continued)
Bank deposits of the Group in 2017 and 2016 are mainly saved in
state-owned banks and other large or medium-sized listed banks. The
Group holds that there is no significant credit risk and no great loss
caused by the default of counterparty.
In addition, as for the notes receivable, accounts receivable, long-term
receivables and other receivables, the Group has established related
policies to control the credit risks exposure. The Group evaluates the
clients’ credit qualification and sets corresponding credit terms on the
basis of clients’ financial status, possibility of obtaining guaranty from a
third-party, credit record and other factors including current market
status rating. The Group monitors clients’ credit record on regular basis.
When client is found with bad credit record, the Group will sent out
written calls, shorten credit terms or cancel credit terms, in an attempt to
ensure the Group’s overall credit risks within the range of control.
On December 31, 2017, the term analysis of financial assets with
maturity due to no impairment of either individual or combination was
analyzed as follows:
2017
Not overdue
Overdue
Total No Within 1 1~2 years 2~3 years 3 years and
depreciation year above
Monetary
fund 5,770,227,369 5,770,227,369 - - - -
Notes
receivable 420,786,012 420,786,012 - - - -
Receivables 2,524,100,099 2,229,191,240 17,223,670 139,468,191 12,056,612 126,160,386
Other
receivables 981,986,979 981,986,979 - - - -
Non-current
assets due
within 1 year 1,896,475,472 1,896,475,472 - - - -
Long-term
receivables 4,238,704,827 4,238,704,827 - - - -
2016
268 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
Not overdue
Overdue
Total No Within 1 1~2 years 2~3 years 3 years and
depreciation year above
Monetary
fund 3,597,044,199 3,597,044,199 - - - -
Notes
receivable 296,920,781 296,920,781 - - - -
Receivables 2,695,273,967 2,405,484,653 70,487,107 18,329,699 58,173,966 142,798,542
Other
receivables 703,913,820 703,913,820 - - - -
Non-current
assets due
within 1 year 1,384,438,569 1,384,438,569 - - - -
Long-term
receivables 3,791,218,020 3,791,218,020 - - - -
269 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Credit risk (continued)
As of December 31, 2017, accounts receivable nor overdue or impaired
were related to a large number of decentralized customers who had no
default record recently.
As of December 31, 2017, the accounts receivable overdue but not
impaired were related to a large number of independent customers
bearing good transaction records with the Group. Based on past
experiences, the Group considered that no provision for impairment was
required since the credit quality had not changed significantly and was
still considered recoverable.
Liquidity risk
Subsidiaries within the Group are responsible for their own prediction of
cash flow. The financial section of the head office continues to monitor
the capital demand for short-term and long-term capital at the group
level after collecting all predictions of subsidiaries, to ensure sufficient
cash reserve and cashable securities. Meanwhile, the financial section
of the head office continues to monitor the financial and non-financial
factors prescribed in credit agreements and loan agreements, to ensure
the Group should get sufficient line of credit from key financial
institutions to satisfy capital demand both in short term and long term.
As of Dec. 31, 2017, the various financial liabilities of the Group are
listed as follows by due dates in undiscounted contracted cash flow
(principal and interest included):
2017
Within 1 year 1~2 years 2-5 years 5 years and Total
above
25,899,118,58 - - -
Short-term loans 0 25,899,118,580
Notes payable 1,893,227,482 - - - 1,893,227,482
Accounts payable 6,890,814,503 - - - 6,890,814,503
Interest payable 118,825,582 - - - 118,825,582
Dividend payable 31,701,965 - - - 31,701,965
Other payables 693,597,496 - - - 693,597,496
Non-current liabilities due
within 1 year 2,607,918,346 - - - 2,607,918,346
Long-term loans - 3,068,866,936 3,639,532,692 410,067,125 7,118,466,753
Long-term payables - 969,702,730 962,927,475 - 1,932,630,205
38,135,203,95
4 4,038,569,666 4,602,460,167 410,067,125 47,186,300,912
270 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Liquidity risk (continued)
As of Dec. 31, 2016, the various financial liabilities of the Group are
listed as follows by due dates in undiscounted contracted cash flow
(principal and interest included):
Within 1 year 1~2 years 2-5 years 5 years and Total
above
Short-term
loans 21,839,991,371 - - - 21,839,991,371
Notes payable 1,905,121,706 - - - 1,905,121,706
Accounts
payable 5,103,018,897 - - - 5,103,018,897
Interest
payable 140,195,803 - - - 140,195,803
Dividend
payable 31,701,965 - - - 31,701,965
Other
payables 1,244,199,969 - - - 1,244,199,969
Non-current
liabilities due
within 1 year 835,619,032 - - - 835,619,032
Other current
liabilities 4,123,027,778 - - - 4,123,027,778
Long-term
loans - 1,869,935,509 2,202,260,025 58,345,000 4,130,540,534
Long-term
payables - 543,599,402 1,219,108,721 - 1,762,708,123
35,222,876,521 2,413,534,911 3,421,368,746 58,345,000 41,116,125,178
Market risk
Interest rate risk
The interest rate risks of the Group mainly originate from long-term
interest-bearing liabilities including long-term bank loans and long-term
payables. Financial liabilities with flexible rates confront the Group with
cash flow interest rate risks, while financial liabilities with fixed rates put
the Group against fair value interest rate risks. The Group fixes the
fraction of contracts with fixed rates and those with flexible rates based
on corresponding market environment. As of Dec. 31, 2017, the Group’s
long-term interest-bearing liabilities mainly included the contracts with
flexible rates priced in USD and contracts with fixed rates priced in RMB.
271 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
Market risk (continued)
Interest rate risk (continued)
The risk of market interest rate changes which the Group faces is mainly
related to the long-term liabilities bearing the interest at floating rate.
The financial division of the Group keeps close watch over the interest
rates level of the Group. Since the rise in interest rates will increase the
cost of newly added liabilities with interests, interest expenses on unpaid
liabilities with interests priced in flexible rates, and will significantly and
adversely impact the financial results of the Group, so the management
will control the rate risks via swap contracts based on the latest market
status. In 2016 and 2017, the Group had no such swap arrangements.
The following table shows the sensitivity analysis of the interest rate risk,
reflecting the effect of the reasonable and possible changes in the
interest rate on net profits and losses (through the impact on loan with
floating rate) and the net amount of other comprehensive income after
tax.
2017
Base point Net profit and loss Net amount of Total
other shareholders’
comprehensive equity
income after tax
Increase/(decreas Increase/(decreas Increase/(decreas Increase/(decreas
e) e) e) e)
RMB 100 (40,838,071) - (40,838,071)
RMB (100) 40,838,071 - 40,838,071
2016
Base point Net profit and loss Net amount of Total
other shareholders’
comprehensive equity
income after tax
Increase/(decreas Increase/(decreas Increase/(decreas Increase/(decrea
e) e) e) se)
RMB 100 (19,483,309) - (19,483,309)
RMB (100) 19,483,309 - 19,483,309
272 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
3. Risks of financial instruments (continued)
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 currency. The Group’s main production is located in China,
but the main business is settled in USD and EUR. Therefore, the foreign
currency assets and liabilities recognized by the Group and the future
foreign currency transactions (foreign currency assets and liabilities and
the pricing currency denominated in foreign currency transactions are
mainly USD and EUR). The Financial Department of the Group’s
headquarters is responsible for monitoring the size of the Group’ s
foreign currency transactions and foreign currency assets and liabilities
to minimize the exposure to foreign currency risks.
The following table shows the sensitivity analysis of the exchange rate
risk, reflecting the impact of reasonable and possible changed in USD
exchange rate on net profit and loss (due to changes in the fair value of
monetary assets and monetary liabilities) and net amount of other
comprehensive income after tax (due to changes in the fair value of
forward exchange contracts) based on the assumption of no change in
other variables.
2017
USD Exchange Net profit and Net amount of Total shareholders’
rate loss other equity
comprehensive
income after tax
Increase/(decrease Increase/(decrea Increase/(decreas Increase/(decrease
)% se) e) )
Appreciation of RMB
against USD 1 32,343,556 - 32,343,556
Depreciation of RMB
against USD (1) (32,343,556) - (32,343,556)
2016
USD Exchange Net profit and loss Net amount of Total
rate other shareholders’
comprehensive equity
income after tax
Increase/(decrease Increase/(decrea Increase/(decreas Increase/(decreas
)% se) e) e)
Appreciation of RMB
against USD 1 26,232,074 - 26,232,074
Depreciation of RMB
against USD (1 ) (26,232,074) - (26,232,074)
273 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
VIII. Risks Related to Financial Instruments (continued)
4. Capital management
The objective of the Group’s capital management policy is to ensure that
the Group is able to operate on a continuous basis to provide returns to
shareholders and to benefit other stakeholders while maintaining the
best capital structure to reduce capital costs.
To maintain or adjust the capital structure, the Group may adjust the
dividend amount 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 listed in the
consolidated balance sheet. The Group is not subject to mandatory
external capital requirements and utilizes debt ratio monitoring capital.
This ratio is calculated by dividing the net debt by total capital. The net
debt is the total borrowing (including short-term loans included in the
consolidated balance sheet, other non-current liabilities due within one
year, other current liabilities, long-term loans, other payable and
interest-bearing liabilities in long-term payables) minus cash and cash
equivalents. The total capital is the total shareholders’ equity plus net
debt.
On Dec. 31, 2017 and Dec. 31, 2016, the debt ratio of the Group was listed
below:
Dec. 31, 2017 Dec. 31, 2016
Debt ratio 65% 64%
IX. Disclosure of Fair Value
The tire attributed to the fair value measurement results is determined
by the min tire of the input value with significant meaning to the fair
value measurement.
Tier One: unadjusted quotation of the same kind of assets or liabilities
on activate market.
Tier Two: input value of assets or liabilities observable directly or
indirectly except for market quotation at Tier One.
Tier Three: unobservable input value of related assets and liabilities
274 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IX. Disclosure of Fair Value (continued)
1. Assets and liabilities measured at fair value
On Dec. 31, 2017, the assets continuously measured at fair value are
listed as follows based on above 3 tiers:
Input value used for fair value measurement
Quotation on Important Important
active market observable unobservabl
input value e input value
(Tire one) (Tire two) (Tire three) Total
Financial assets
Financial assets measured
at fair value with changed
included in current profits
and losses
Equity instrument
investment - - 8,438,278 8,438,278
Financial assets
available-for-sale
Available-for-sale equity - -
instruments 1,261,209,745 1,261,209,745
1,261,209,745 - 8,438,278 1,269,648,023
On Dec. 31, 2016, the assets continuously measured at fair value are
listed as follows based on above 3 tiers:
Input value used for fair value measurement
Quotation on Important Important
active market observable unobservabl
input value e input value
(Tire one) (Tire two) (Tire three) Total
Financial assets
Financial assets measured
at fair value with changed
included in current profits
and losses
Forward exchange
contract - 4,615,775 - 4,615,775
Financial assets
available-for-sale
Available-for-sale equity
instruments 1,270,578,346 - - 1,270,578,346
1,270,578,346 4,615,775 - 1,275,194,121
275 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IX. Disclosure of Fair Value (continued)
1. Assets and liabilities measured at fair value (continued)
The Group regards the event occurring date transferring between the
tires as the time point for confirmation. There is no transfer between the
tires this year.
As for the financial instrument traded on active market, the Group will
confirm the fair value with the quotation on active market; as for the
financial instrument not traded on active market, the Group confirms the
fair value using the value estimation technology. Cash flow discount
model is used as value estimation model. The input values of the value
estimate technology includes the risk-free interest rate and long
exchange rate.
Information on the fair value measurement at tire two is as follows:
Dec. 31, 2016 Observable input value
Fair value Valuation Name Scope
techniqu
e
Financial assets measured
at fair value with changed
included current profits Cash KEW to
and losses flow USD 1,145.45
Forward
- Forward exchange Discount exchange
contract in USD 4,615,775 model rate 1,145.50
The important unobservable input values measured at fair vale at tire three are as
follows:
Dec. 31, 2017 Unobservable input value
Fair value Valuation Name Weighted
techniqu average
e
Financial assets measured
at fair value with changed
included current profits
and losses
Cash
Trading financial assets – flow Weighted
equity instruments discount average
investment 8,438,278 model capital cost 7.8%
276 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
IX. Disclosure of Fair Value (continued)
2. Assets and liabilities disclosed at fair value
The financial assets and liabilities measured at amortized cost of the
Group mainly include monetary fund, notes receivable, receivables,
long-term receivables, non-current assets due within one year,
short-term loans, notes payable, payables, long-term loans, non-current
liabilities due within one year and bond payables.
The long-term receivables of the Group are the receivables with floating
rate, and the difference between the book value and fair value is small.
The management has evaluated the monetary fund, notes receivable,
accounts receivables, notes payable and accounts payable, and the fair
value is equal to the book value due to short remaining term.
The following is the book value and fair value of all kinds of financial
instruments other than the equity instruments that have little difference
between the carrying value and the fair value, and are not quoted in the
active market and whose fair value cannot be measured reliably:
2017 2016
Book value Fair value Book value Fair value
Financial
liabilities
-Long-term
loans 6,664,914,383 6,631,970,361 3,925,335,497 3,905,480,658
-Long-term
payables 1,884,986,333 1,911,741,919 1,618,361,164 1,638,536,115
8,549,900,716 8,543,712,280 5,543,696,661 5,544,016,773
As for the long-term loans and long-term payables, the fair value shall
be confirmed by the future cash flow specified in the contract according
to the present value after discount based on the interest rate with
comparable credit level and the almost same cash flow rate provided in
the same conditions on market.
277 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions
1. Parent company
Registered Business nature Registered Shareholding ratio in Voting proportion in
in capital the Company (%) the Company (%)
Port project contracting 5,855,423,8
CCCC Beijing and related business 30 46.229 46.229
China Communications
Construction Company Port project contracting 16,174,735,
Ltd. Beijing and related business 425 46.229 46.229
On July 18, 2017, the board of directors of China Communications
Construction Company Ltd. approved through discussion Proposal for
Transfer of Some Shares of Shanghai Zhenhua Heavy Industries Co.,
Ltd through Agreement and Associated Transaction and agreed to
transfer totally 1,316,649,346 shares of this Company held by it to
CCCC and CCCG (HK) HOLDING LIMITED (hereinafter referred to as
“CCCG Hong Kong”), accounting for 29.990% of the total shares of this
Company, after that, China Communications Construction Company
Ltd. held 16.239% of the stock equity of this Company. The transfer and
registration of shares was accomplished on Dec. 27, 2017. As of the
date of the transfer of shares, CCCC 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 this Company) and held 712,951,703 A-shares of this Company
through China Communications Construction Company Ltd.
(accounting for 16.239% of the total shares of this Company), as a
result, it became the holding shareholder of this Company.
The final controlling party of the Company in both 2017 and 2016 is
China Communications Construction Company Ltd.
2. Subsidiary
Please refer to Note VII.1 for details of subsidiaries.
3. Joint venture and associated enterprise
Please refer to Note VII.2 for details of joint venture and associated
enterprises.
278 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
4. Other related parties
Related party relationship
Friede & Goldman, LLC. Controlled by the same final
controlling party
Zhenhua Harbour Construction Co., Ltd. Controlled by the same final
controlling party
Hainan CCCC Fourth Harbor Construction Co., Ltd Controlled by the same final
controlling party
Road & Bridge International Construction Co., Ltd. Controlled by the same final
controlling party
Nanjing CCCC Weisanlu River Tunnel Co., Ltd Controlled by the same final
controlling party
Shanghai Jiangtian Industrial Co., Ltd Controlled by the same final
controlling party
Shanghai Communications Construction Co. Ltd. Controlled by the same final
controlling party
Zhenhua (Hong Kong) Engineering Co., Ltd, Controlled by the same final
controlling party
Yueyang Chenglingji New Port Co., Ltd. Controlled by the same final
controlling party
China Harbor Engineering Co., Ltd Controlled by the same final
controlling party
China Communications Materials & Equipment Co., Ltd Controlled by the same final
controlling party
China Road & Bridge Corporation Controlled by the same final
controlling party
Chuwa Bussan Co. Ltd. Controlled by the same final
controlling party
CCCC Finance Co., Ltd Controlled by the same final
controlling party
CCCC Second Highway Engineering Co., Ltd. Controlled by the same final
controlling party
CCCC Second Highway Consultants Co. Ltd. Controlled by the same final
controlling party
CCCC Second Harbor Engineering Co., Ltd. Controlled by the same final
controlling party
CCCC Third Highway Engineering Co. Ltd. Controlled by the same final
controlling party
CCCC Third Harbor Engineering Co., Ltd. Controlled by the same final
controlling party
CCCC Third Harbor Consultants Co. Ltd. Controlled by the same final
controlling party
(To be continued)
279 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
4. Other related parties (continued)
Related party relationship
(Continued)
CCCC Fourth Highway Engineering Co. Ltd. Controlled by the same final
controlling party
CCCC Fourth Harbor Engineering Co., Ltd Controlled by the same final
controlling party
CCCC-FHDI Engineering Co., Ltd Controlled by the same final
controlling party
CCCC First Highway Engineering Co. Ltd. Controlled by the same final
controlling party
CCCC First Harbor Engineering Co., Ltd. Controlled by the same final
controlling party
CCCC First Harbor Consultants Co., Ltd. Controlled by the same final
controlling party
CCCC-SHEC Second Engineering Co. Ltd. Controlled by the same final
controlling party
CCCC-SHEC Third Highway Engineering Co. Controlled by the same final
Ltd. controlling party
CCCC-SHEC No.4 Engineering Co., Ltd. Controlled by the same final
controlling party
CCCC-SHEC No.1 Engineering Co., Ltd. Controlled by the same final
controlling party
CCCC-SHEC Railway Engineering Co., Ltd. Controlled by the same final
controlling party
China Communications Second Navigational Controlled by the same final
Bureau Second Engineering Co., Ltd. controlling party
No.3 Engineering Co., Ltd. of CCCC Second Controlled by the same final
Harbor Engineering Co., Ltd. controlling party
No.4 Engineering Co., Ltd. of CCCC Second Controlled by the same final
Harbor Engineering Co., Ltd. controlling party
No.1 Engineering Co., Ltd. of CCCC Second Controlled by the same final
Harbor Engineering Co., Ltd. controlling party
CCCC Highway Bridges National Engineering Controlled by the same final
Research Centre CO., Ltd. controlling party
CCCC Guangzhou Dredging Co. Ltd. Controlled by the same final
controlling party
CCCC International Shipping Co., Ltd. Controlled by the same final
controlling party
CCCC Marine Construction & Development Co., Controlled by the same final
Ltd. controlling party
CTTIC Shanghai Co., Ltd. Controlled by the same final
controlling party
280 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
CCCC East China Investment Co., Ltd. Controlled by the same final
controlling party
CCCC Electrical and Mechanical Engineering Controlled by the same final
Bureau Co., Ltd. controlling party
Road & Bridge South China Engineering Co., Ltd. Controlled by the same final
controlling party
Road & Bridge International Co., Ltd. Controlled by the same final
controlling party
CCCC Nanjing Traffic Engineering Management Controlled by the same final
Co., Ltd. controlling party
(To be continued)
X. Related Party Relationships and
Transactions (continued)
4. Other related parties (continued)
Related party relationship
(Continued)
No.2 Engineering Co., Ltd. of CCCC Third Harbor Controlled by the same final
Engineering Co., Ltd. controlling party
No.3 Engineering Co., Ltd. of CCCC Third Harbor Controlled by the same final
Engineering Co., Ltd. controlling party
XING AN JI Engineering Co., Ltd. of CCCC Third Controlled by the same final
Harbor Engineering Co., Ltd. controlling party
CCCC Shanghai Dredging Co. Ltd. Controlled by the same final
controlling party
CCCC Shanghai Equipment Engineering Co., Controlled by the same final
Ltd. controlling party
CCCC Dredging (Group) Co., Ltd. Controlled by the same final
controlling party
CCCC Water Transportation Planning and Controlled by the same final
Design Institute Co., Ltd. controlling party
CCCC Fourth Harbor Engineering Institute Co., Controlled by the same final
Ltd. controlling party
The Second Engineering Company of CCCC Controlled by the same final
Fourth Harbor Engineering Co., Ltd. controlling party
CCCC Tunnel Engineering Co., Ltd. Controlled by the same final
controlling party
CCCC Tianjin Dredging - Binhai Environmental Controlled by the same final
Protection Engineering Co., Ltd. controlling party
CCCC Tianjin Port Waterway Prospection & Controlled by the same final
Design Research Institute Co., Ltd. controlling party
CCCC Tianjin Industry and Trade Co., Ltd. Controlled by the same final
controlling party
CCCC Tianjin Dredging Co., Ltd. Controlled by the same final
281 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
controlling party
CCCC Wuhan Harbour Engineering Design and Controlled by the same final
Research Co. Ltd controlling party
The Sixth Engineering Co., Ltd. of CCCC First Controlled by the same final
Highway Engineering Co., Ltd. controlling party
Installation Engineering Company of CCCC First Controlled by the same final
Highway Engineering Co. Ltd. controlling party
CCCC-FHEC Urban Traffic Engineering Co., Ltd. Controlled by the same final
controlling party
No.1 Engineering Co., Ltd. of CCCC First Harbor Controlled by the same final
Engineering Co., Ltd. controlling party
Second Engineering Co., Ltd. of CCCC First Controlled by the same final
Harbor Engineering Co., Ltd. controlling party
CCCC Leasing JIA HUA ER Co., Ltd. Controlled by the same final
controlling party
CCCC Leasing JIA HUA YI Co., Ltd. Controlled by the same final
controlling party
282 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party
The transaction price between the Group and the related party is based on
mutual agreement and with reference to market price.
(1) Goods and service transaction with related party
Selling goods/providing service to related party
2017 2016
CCCC Financial Leasing Co., Ltd. 728,945,754 20,652,755
CCCC Tianjin Dredging Co., Ltd. 471,642,717 155,198,269
Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 439,726,261 16,648,649
CCCC First Harbor Engineering Co., Ltd. 311,673,509 8,219,845
China Harbor Engineering Co., Ltd 232,091,723 147,800,178
China Communications Construction
Company Ltd. 221,713,310 11,627,327
Road & Bridge International Co., Ltd. 97,734,474 81,639,431
CCCC Tunnel Engineering Co., Ltd. 96,474,819 144,526,777
CCCC Second Harbor Engineering Co., Ltd. 62,392,577 389,557,043
No.1 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 57,742,023 -
CCCC Electrical and Mechanical
Engineering Bureau Co., Ltd. 56,423,470 -
CCCC Second Highway Engineering Co.,
Ltd. 51,535,600 11,802,499
Road & Bridge South China Engineering
Co., Ltd. 44,066,592 -
No.4 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 36,707,819 -
No.3 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 28,130,115 69,043,050
CCCC First Harbor Consultants Co., Ltd. 27,435,897 -
CCCC Third Harbor Engineering Co., Ltd. 23,994,666 81,407,370
China Road & Bridge Corporation 23,045,665 179,013,839
Chuwa Bussan Co. Ltd. 20,992,826 193,053,287
CCCC-SHEC Third Highway Engineering
Co. Ltd. 15,152,103 -
Hainan CCCC Fourth Harbor Construction
Co., Ltd 7,710,256 19,279,683
CCCC Fourth Harbor Engineering Co., Ltd 5,805,005 17,389,362
(To be continued)
283 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
(1) Goods and service transaction with related party (continued)
Selling goods/providing service to related party (continued)
2017 2016
(Continued)
CCCC-FHDI Engineering Co., Ltd. 5,058,462 121,403,077
ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
Sirketi 4,167,390 -
CCCC Third Highway Engineering
Co. Ltd. 2,752,482 22,068,890
CCCC Guangzhou Dredging Co. Ltd. 1,949,573 -
CCCC-SHEC Second Engineering
Co. Ltd. 1,729,907 37,101,137
No.1 Engineering Co., Ltd. of CCCC
First Harbor Engineering Co., Ltd. 14,151 -
CCCC International Shipping Co.,
Ltd. - 233,003,192
CCCC Third Harbor Consultants Co.,
Ltd. - 175,876,344
China Communications Second
Navigational Bureau Second
Engineering Co., Ltd. - 62,720,000
Second Engineering Co., Ltd. of
CCCC First Harbor Engineering Co.,
Ltd. - 42,279,112
Friede & Goldman, LLC. - 26,755,168
CCCC Fourth Harbor Engineering
Institute Co., Ltd. - 26,568,685
CCCC East China Investment Co.,
Ltd. - 10,697,446
CCCC Highway Bridges National
Engineering Research Centre CO.,
Ltd. - 4,829,060
Zhenhua (Hong Kong) Engineering
Co., Ltd, - 134,656
3,076,809,146 2,310,296,131
284 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
(1) Goods and service transaction with related party (continued)
Related party provides service for the Group
2017 2016
CCCC Tianjin Dredging Co., Ltd. 462,492,064 331,677,108
CCCC Second Harbor Engineering Co., -
Ltd. 161,465,657
CCCC First Highway Engineering Co.
Ltd. 137,930,629 -
CCCC Third Harbor Engineering Co.,
Ltd. 134,235,980 64,290,666
CCCC-SHEC Second Engineering Co.
Ltd. 112,198,187 -
CCCC Fourth Highway Engineering Co.
Ltd. 96,055,525 75,048,039
No.1 Engineering Co., Ltd. of CCCC 22,573,250
First Harbor Engineering Co., Ltd. 63,578,055
Shanghai Communications Construction 21,633,168
Co. Ltd. 61,115,756
CCCC Second Highway Consultants
Co., Ltd. 30,059,257 91,221,324
The Second Engineering Company of
CCCC Fourth Harbor Engineering Co.,
Ltd. 28,312,923 -
CCCC First Harbor Engineering Co.,
Ltd. 26,777,335 -
Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 21,662,715 14,565,939
No.3 Engineering Co., Ltd. of CCCC
Third Harbor Engineering Co., Ltd. 17,743,903 -
CCCC Water Transportation Planning
and Design Institute Co., Ltd. 12,105,094 -
No.2 Engineering Co., Ltd. of CCCC
Third Harbor Engineering Co., Ltd. 10,427,350 -
Installation Engineering Company of
CCCC First Highway Engineering Co.
Ltd. 5,989,401 -
CCCC First Harbor Consultants Co.,
Ltd. 5,858,503 -
ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
Sirketi 3,548,020 -
(To be continued)
285 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
(1) Goods and service transaction with related party (continued)
Related party provides service for the Group (continued)
2017 2016
(Continued)
CCCC Highway Bridges National
Engineering Research Centre CO.,
Ltd. 1,777,778 -
CCCC Shanghai Dredging Co. Ltd. 1,727,336 -
CTTIC Shanghai Co., Ltd. 929,915 17,094
CCCC Third Harbor Consultants Co.,
Ltd. 142,383 56,913
China Communications Construction
Company Ltd. - 13,661,221
CCCC Second Highway Engineering
Co., Ltd. - 7,079,715
CCCC Tianjin Industry and Trade
Co., Ltd. - 296,154
CCCC East China Investment Co.,
Ltd. - 247,863
Shanghai Jiangtian Industrial Co.,
Ltd - 25,173
1,396,133,76
6 642,393,627
286 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued)
(1) Goods and service transaction with related party (continued)
Purchase products from related party
2017 2016
CCCC Shanghai Equipment
Engineering Co., Ltd. 131,400,593 100,037,221
ZMPC Changzhou Paint Co., Ltd. 88,611,099 120,664,901
Chuwa Bussan Co. Ltd. 42,752,896 182,477,645
Shanghai Jiangtian Industrial Co., Ltd 15,435,145 -
China Communications Materials &
Equipment Co., Ltd 5,989,665 14,248
CCCC Fourth Highway Engineering
Co. Ltd. 4,868,840 2,993,504
Nanjing CCCC Weisanlu River
Tunnel Co., Ltd 418,291 72,175
CCCC Tianjin Industry and Trade
Co., Ltd. 22,846 -
CCCC Tianjin Port & Waterway
Prospection & Design Research
Institute Co., Ltd. - 2,169,230
289,499,375 408,428,924
(2) Dividend paid to related party
2017 2016
China Communications Construction
Company Ltd. 126,563,785 502,283
Zhenhua (Hong Kong) Engineering
Co., Ltd, 74,967,750 -
Zhenhua Harbour Construction Co.,
Ltd. 1,428,570 -
202,960,105 502,283
287 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued)
(3) Saving money in/(drawing money from) related party
2017 2016
China Communications
Construction Company Ltd. 20,206,089 -
CCCC Finance Co., Ltd (185,697,167) 528,772,323
(165,491,078) 528,772,323
(4) Borrowings to related party
2017 2016
CCCC Finance Co., Ltd 1,150,000,000 300,000,000
CCCC Leasing JIA HUA YI Co.,
Ltd. 991,005,000 -
CCCC Financial Leasing Co.,
Ltd. 43,000,000 2,120,845,793
2,184,005,000 2,420,845,793
(5) Interest collected from related party
2017 2016
CCCC Finance Co., Ltd 1,527,782 513,218
China Communications
Construction Company Ltd. 143,106 -
1,670,888 513,218
288 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued)
(6) Interest paid to related party
2017 2016
CCCC Financial Leasing Co., Ltd. 61,295,275 46,047,152
CCCC Finance Co., Ltd 22,784,195 11,201,250
CCCC Leasing JIA HUA YI Co., Ltd. 18,155,201 8,819,415
CCCC Leasing JIA HUA ER Co., Ltd. 18,155,201 8,819,415
120,389,872 74,887,232
(7) Related party leasing
Rental income as lessor
Type of leasing 2017 2016
assets
Zhenhua Ocean Energy (Hong
Kong) Co., Ltd Vessel 158,746,932 169,580,194
Jiangsu Longyuan Zhenhua Ocean -
Engineering Co., Ltd Vessel 27,414,329
CCCC First Navigational Bureau
Urban Traffic Engineering Co., Ltd. Shield 26,525,385 -
CCCC Second Highway -
Engineering Co., Ltd. Shield 6,727,590
Road & Bridge International Co.,
Ltd. Shield 3,499,733
CCCC Third Highway Engineering -
Co. Ltd. Shield 2,928,360
China Communications
Construction Company Ltd. Shield 2,162,605 1,606,804
CCCC-SHEC No.4 Engineering Co.,
Ltd. Shield 1,841,219 -
CCCC-SHEC No.1 Engineering Co.,
Ltd. Shield 1,336,752 -
CCCC First Harbor Engineering Co.,
Ltd. Shield 895,138 -
CCCC Tunnel Engineering Co., Ltd. Shield - 125,440,000
No.2 Engineering Co., Ltd. of CCCC
Third Harbor Engineering Co., Ltd. Shield - 501,755
232,078,043 297,128,753
289 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
5. Main transactions between the Group and related party (continued)
(8) Compensation of key executives
2017 2016
Compensation of key executives 10,855,200 14,574,800
The number of key executives of the Group in 2017 was 26 (2016: 24).
The compensation of the newly added executives and the resigned
executives are calculated according to the tenure. The compensation
shall be calculated on a yearly basis for other employees.
6. Commitments with related parties
The following are the commitments contracted but not necessarily listed
on balance sheet relating to related parties on balance sheet date:
Related parties provided labor service for the 2017 2016
Group
CCCC Tianjin Dredging Co., Ltd. 927,318,851 1,344,348,653
CCCC Fourth Highway Engineering Co. Ltd. 734,725,379 835,973,095
CCCC First Highway Engineering Co. Ltd. 590,349,313 -
CCCC Third Harbor Engineering Co., Ltd. 326,513,794 387,588,088
No.1 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. 74,178,156 139,829,924
CCCC Second Highway Consultants Co., Ltd. 10,832,844 34,418,446
CCCC Tunnel Engineering Co., Ltd. 5,265,067 5,265,067
Shanghai Communications Construction Co.
Ltd. - 650,837
2,669,183,404 2,748,074,110
Leased assets to the related party 2017 2016
Zhenhua Ocean Energy (Hong Kong)
Co., Ltd 1,363,334,924 1,522,081,855
290 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
6. Commitments with related parties (continued)
Selling goods/providing service to related party
2017 2016
CCCC Financial Leasing Co., Ltd. 558,387,580 41,121,422
CCCC Electrical and Mechanical Engineering
Bureau Co., Ltd. 210,243,196 -
No.3 Engineering Co., Ltd. of CCCC Second
Harbor Engineering Co., Ltd. 117,245,158 69,043,050
China Communications Construction Company
Ltd. 114,814,493 -
CCCC Second Highway Engineering Co., Ltd. 70,783,170 55,801,029
China Harbor Engineering Co., Ltd 52,196,041 -
CCCC Tunnel Engineering Co., Ltd. 50,732,292 11,054,256
CCCC Second Harbor Engineering Co., Ltd. 47,304,779 126,518,010
Jiangsu Longyuan Zhenhua Ocean Engineering
Co., Ltd 46,426,694 -
Road & Bridge International Co., Ltd. 43,462,687 74,183,233
No.4 Engineering Co., Ltd. of CCCC Second
Harbor Engineering Co., Ltd. 24,471,879 -
CCCC Tianjin Dredging Co., Ltd. 23,885,509 495,528,226
No.1 Engineering Co., Ltd. of CCCC Second
Harbor Engineering Co., Ltd. 19,181,054 -
Road & Bridge South China Engineering Co.,
Ltd. 16,531,032 -
CCCC Third Harbor Engineering Co., Ltd. 9,069,488 11,620,766
CCCC Water Transportation Planning and
Design Institute Co., Ltd. 6,672,629 6,672,629
No.1 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. 5,264,957 5,264,957
China Road & Bridge Corporation 4,521,227 28,043,324
Chuwa Bussan Co. Ltd. 4,443,667 13,138,761
CCCC Third Harbor Consultants Co. Ltd. 4,130,393 -
CCCC-SHEC Third Highway Engineering Co.
Ltd. 1,060,291 -
CCCC Third Highway Engineering Co. Ltd. 80,867 1,127,786
CCCC First Harbor Engineering Co., Ltd. 25,180 341,880
Hainan CCCC Fourth Harbor Construction Co.,
Ltd 13,248 7,723,504
CCCC-SHEC Second Engineering Co. Ltd. 7,727 1,541,429
CCCC International Shipping Co., Ltd. - 26,318,763
(To be continued)
291 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
6. Commitments with related parties (continued)
Selling goods/providing service to related party (continued)
2017 2016
(Continued)
Friede & Goldman, LLC. - 11,000,000
CCCC-FHDI Engineering Co., Ltd - 5,058,462
Second Engineering Co., Ltd. of
CCCC First Harbor Engineering Co.,
Ltd. - 4,528,473
CCCC Fourth Harbor Engineering
Institute Co., Ltd. - 36,103
1,430,955,238 995,666,063
Standby leasing agreement signed with the related party
On December 16, 2015, the Company signed ship rental standby
agreement with CCCC Rental Jiahuayi Co., Ltd and CCCC Rental
Jiahuaer Co., Ltd (collectively referred to as “CCCC Jiahua”), with the
rental term from March 5, 2016 to December 5, 2021.The contract will
come into effect when the ship rental agreement signed by the
subsidiary of the Company and CCCC Jiahua can’t be performed
normally. As of Dec. 31, 2017, the maximum payment amount of the
contract was RMB 604,861,711 Yuan (Dec. 31, 2016: RMB
737,304,000 Yuan).
292 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
7. Balance of receivables from related parties
2017 2016
Book Provision Provision for
balance for bad debt Book balance bad debt
Accounts receivable
CCCC First Harbor Engineering Co., 243,038,11
Ltd. 7 - 72,345,219 -
CCCC Tunnel Engineering Co., Ltd. 62,548,820 - - -
No.4 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 61,000,000 - - -
CCCC Second Harbor Engineering
Co., Ltd. 54,546,226 - 31,166,430 -
Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 40,731,949 - 37,087,652 -
No.3 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 36,245,810 - - -
China Communications Construction
Company Ltd. 34,548,987 - 58,509,343 -
CCCC Financial Leasing Co., Ltd. 33,507,250 - - -
CCCC-FHDI Engineering Co., Ltd. 29,592,000 - 88,776,000 -
Zhenhua Ocean Energy (Hong Kong)
Co., Ltd. 27,901,034 - - -
CCCC Third Harbor Engineering Co.,
Ltd. 27,387,519 - 32,184,194 -
The Second Engineering Company of
CCCC Fourth Harbor Engineering Co.,
Ltd. 24,901,085 - 5,233,497 -
CCCC First Harbor Consultants Co.,
Ltd. 17,736,000 - - -
Friede & Goldman, LLC. 16,205,750 - 16,718,142 -
CCCC First Navigational Bureau
Urban Traffic Engineering Co., Ltd. 15,268,940 - - -
China Communications Second
Navigational Bureau Second
Engineering Co., Ltd. 12,761,828 - 5,700,505 -
CCCC Fourth Harbor Engineering Co.,
Ltd 12,000,000 - 24,670,995 -
CCCC Third Highway Engineering Co.
Ltd. 11,901,177 - - -
Road & Bridge International
Construction Co., Ltd. 11,429,413 - - -
CCCC Second Highway Engineering
Co., Ltd. 11,311,717 - - -
Road & Bridge South China
Engineering Co., Ltd. 11,279,627 - - -
ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
Sirketi 11,000,668 - - -
CCCC-SHEC Third Highway
Engineering Co. Ltd. 7,422,819 - - -
The Sixth Engineering Co., Ltd. of
CCCC First Highway Engineering Co.,
Ltd. 6,098,300 - 6,098,300 -
Second Engineering Co., Ltd. of
CCCC First Harbor Engineering Co.,
Ltd. 5,219,557 - 5,053,317 -
Road & Bridge International Co., Ltd. 4,544,688 - 9,032,783 -
CCCC-SHEC No.4 Engineering Co.,
Ltd. 4,384,226 - - -
(To be continued)
293 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
7. Balance of receivables from related parties (continued)
2017 2016
Provision Provision
Book for bad for bad
balance debt Book balance debt
Accounts receivable (continued)
(Continued)
CCCC-SHEC Second
Engineering Co. Ltd. 1,438,507 - 1,438,507 -
CCCC Ocean Engineering
Vessel Technology Research
Centre Co., Ltd 1,100,000 - 1,100,000 -
Installation Engineering
Company of CCCC First
Highway Engineering Co. Ltd. 253,297 - 253,297 -
CCCC Third Harbor Consultants
Co., Ltd. 150,000 - 6,000,000 -
CCCC Tianjin Industry and
Trade Co., Ltd. 56,700 - 140,711 -
CCCC Shanghai Equipment
Engineering Co., Ltd. 52,777 - 45,635 -
Yueyang Chenglingji New Port
Co., Ltd. 44,900 - 48,680 -
CCCC-SHEC Railway
Engineering Co., Ltd. 26,297 - - -
No.1 Engineering Co., Ltd. of
CCCC First Harbor Engineering
Co., Ltd. - - 100,793,713 -
China Harbor Engineering Co.,
Ltd - - 33,636,903 -
CCCC Water Transportation
Planning and Design Institute
Co., Ltd. - - 18,382,000 -
CCCC Highway Bridges
National Engineering Research
Centre CO., Ltd. - - 5,650,000 -
No.2 Engineering Co., Ltd. of
CCCC Third Harbor Engineering
Co., Ltd. - - 5,008,691 -
CCCC Tianjin Dredging - Binhai
Environmental Protection
Engineering Co., Ltd. - - 2,170,000 -
XING AN JI Engineering Co., Ltd
of CCCC Third Harbor
Engineering Co., Ltd - - 331,860 -
837,635,985 - 567,576,374 -
294 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
2017 2016
Provision Provision
Book for bad for bad
balance debt Book balance debt
Monetary fund
CCCC Finance Co., Ltd 479,650,805 - 663,820,190 -
China Communications
Construction Company Ltd. 20,349,195 - - -
500,000,000 - 663,820,190 -
295 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
7. Balance of receivables from related parties (continued)
2017 2016
Notes receivable
CCCC First Harbor Engineering Co., Ltd. 49,000,000 -
CCCC Second Harbor Engineering Co., Ltd. 796,000 -
49,796,000 -
2017 2016
Provision for Provision
Book balance bad debt Book balance for bad debt
Other receivables
CCCC Financial Leasing Co., Ltd. 176,800,000 - - -
Zhenhua Ocean Energy (Hong Kong)
Co., Ltd. 164,124,678 164,124,678 - -
China Communications Construction
Company Ltd. 62,004,518 - - -
CCCC Nanjing Traffic Engineering
Management Co., Ltd. 6,500,000 - - -
Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd - - 1,750,622 -
CCCC Second Harbor Engineering Co.,
Ltd. - - 100,000 -
409,429,196 164,124,678 1,850,622 -
2017 2016
Provision for Provision
Book balance bad debt Book balance for bad debt
Prepayment
CCCC First Harbor Engineering Co., 10,000,000 - - -
Ltd.
Chuwa Bussan Co. Ltd. 6,680,981 - - -
CCCC Fourth Highway Engineering 6,000,003 - - -
Co. Ltd.
The Second Engineering Company of 5,000,000 - - -
CCCC Fourth Harbor Engineering
Co., Ltd.
CCCC Third Harbor Engineering Co., 5,000,000 -
Ltd. - -
CCCC East China Investment Co., - -
Ltd. 7,210,205 -
32,680,984 - 7,210,205 -
296 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties
2017 2016
Accounts payable
Chuwa Bussan Co. Ltd. 254,526,575 358,758,413
CCCC-SHEC Second Engineering Co. Ltd. 184,712,479 -
CCCC Tianjin Dredging Co., Ltd. 181,111,928 92,096,212
CCCC Second Harbor Engineering Co., Ltd. 178,914,819 -
CCCC Third Harbor Engineering Co., Ltd. 148,448,390 115,648,769
No.3 Engineering Co., Ltd. of CCCC Second Harbor Engineering 134,081,469
Co., Ltd. 221,168,711
CCCC First Highway Engineering Co. Ltd. 109,392,836 -
CCCC Fourth Highway Engineering Co. Ltd. 97,685,283 81,806,205
Shanghai Communications Construction Co. Ltd. 47,138,300 9,675,865
CCCC Second Highway Consultants Co. Ltd. 41,215,576 48,804,871
CCCC Shanghai Equipment Engineering Co., Ltd. 29,563,161 14,170,536
No.1 Engineering Co., Ltd. of CCCC First Harbor Engineering Co., 25,348,030
Ltd. 11,410,703
CCCC Second Highway Engineering Co., Ltd. 23,175,061 149,221,661
Shanghai Zhenhua Heavy Industries (Group) Changzhou Paint Co., 17,929,841
Ltd. 8,725,170
The Second Engineering Company of CCCC Fourth Harbor 15,626,120
Engineering Co., Ltd. -
CCCC Tunnel Engineering Co., Ltd. 14,678,757 29,059,546
CCCC Water Transportation Planning and Design Institute Co., Ltd. 14,162,960 160,000
No.3 Engineering Co., Ltd. of CCCC Third Harbor Engineering Co., 13,760,366
Ltd. -
XING AN JI Engineering Co., Ltd. of CCCC Third Harbor 10,051,352
Engineering Co., Ltd. 10,051,352
Shanghai Jiangtian Industrial Co., Ltd 9,942,274 4,380
CCCC Ocean Engineering Vessel Technology Research Centre 9,363,830
Co., Ltd 9,363,830
Installation Engineering Company of CCCC First Highway 7,007,599
Engineering Co. Ltd. -
No.2 Engineering Co., Ltd. of CCCC Third Harbor Engineering Co., 5,000,000
Ltd. -
China Communications Construction Company Ltd. 4,388,938 8,777,876
CCCC Tianjin Port Waterway Prospection & Design Research 2,999,400
Institute Co., Ltd. -
Jiangsu Longyuan Zhenhua Ocean Engineering Co., Ltd 2,079,751 17,042,149
CCCC Shanghai Dredging Co. Ltd. 2,020,983 -
CCCC First Harbor Consultants Co., Ltd. 1,367,890 -
CTTIC Shanghai Co., Ltd. 1,088,000 -
CCCC Wuhan Harbour Engineering Design and Research Co. Ltd 700,000 -
CCCC Tianjin Industry and Trade Co., Ltd. - 1,178,100
CCCC East China Investment Co., Ltd. - 290,000
China Communications Materials & Equipment Co., Ltd - 16,670
1,587,481,968 1,187,431,019
297 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties (continued)
2017 2016
Advances from customers
CCCC Tianjin Dredging - Binhai 65,257,080 -
Environmental Protection Engineering
Co., Ltd.
CCCC Tunnel Engineering Co., Ltd. 45,095,030 -
CCCC First Highway Engineering Co. 15,614,964 -
Ltd.
CCCC-SHEC Railway Engineering Co., 9,564,373 -
Ltd.
CCCC Second Highway Engineering 1,000,000 -
Co., Ltd.
Cranetech Global Sdn. Bhd. 218,242 -
CCCC Shanghai Dredging Co. Ltd. 13,690 -
China Harbor Engineering Co., Ltd - 736,500
Jiangsu Longyuan Zhenhua Ocean - 366,574
Engineering Co., Ltd
CCCC Shanghai Equipment - 100,000
Engineering Co., Ltd.
136,763,379 1,203,074
2017 2016
Dividend payable
CCCC Tianjin Dredging Co., Ltd. 25,079,494 25,079,494
Chuwa Bussan Co. Ltd. 6,269,873 6,269,873
Zhenhua (Hong Kong) Engineering Co.,
Ltd, 346,005 346,005
Zhenhua Harbour Construction Co.,
Ltd. 6,593 6,593
31,701,965 31,701,965
2017 2016
Interest payable
CCCC Finance Co., Ltd 869,396 -
CCCC Financial Leasing Co., Ltd. 47,971 132,917
917,367 132,917
298 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties (continued)
2017 2016
Other payables
China Communications Construction
Company Ltd. 102,784,486 103,327,306
CCCC Dredging (Group) Co., Ltd. 88,219,383 -
CCCC Financial Leasing Co., Ltd. 39,499,033 100,000,000
CCCC Marine Construction & Development
Co., Ltd. 17,472,600 -
CCCC Third Harbor Engineering Co., Ltd. 12,285,000 3,195,324
Shanghai Jiangtian Industrial Co., Ltd 4,586,085 16,754,583
China Harbor Engineering Co., Ltd 3,625,000 -
CCCC Tianjin Dredging Co., Ltd. 2,861,844 2,000,000
CCCC Third Highway Engineering Co. Ltd. 1,172,612 -
Nanjing CCCC Weisanlu River Tunnel Co., Ltd 306,974 -
CCCC Water Transportation Planning and
Design Institute Co., Ltd. 199,812 -
Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 143,395 143,395
Shanghai Zhenhua Heavy Industries (Group)
Changzhou Paint Co., Ltd. 100,000 99,606
CCCC Shanghai Equipment Engineering Co.,
Ltd. 89,000 89,000
CCCC First Harbor Engineering Co., Ltd. 87,893 -
The Second Engineering Company of CCCC
Fourth Harbor Engineering Co., Ltd. 11,401 -
No.3 Engineering Co., Ltd. of CCCC Second
Harbor Engineering Co., Ltd. - 7,912,758
CCCC Tunnel Engineering Co., Ltd. - 1,819,211
CCCC Second Highway Engineering Co., Ltd. - 1,437,244
273,444,518 236,778,427
2017 2016
Notes payable
CCCC Shanghai Equipment Engineering
Co., Ltd. 4,885,855 -
2017 2016
Short-term loans
CCCC Finance Co., Ltd 350,000,000 100,000,000
299 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
X. Related Party Relationships and Transactions (continued)
8. Balance of payables to related parties (continued)
2017 2016
Long-term loans
CCCC Finance Co., Ltd 500,000,000 -
2017 2016
Non-current liabilities due within one
year
CCCC Financial Leasing Co., Ltd. 407,455,030 407,455,030
CCCC Leasing JIA HUA YI Co., Ltd. 387,778,932 61,059,663
CCCC Leasing JIA HUA ER Co., Ltd. 59,741,257 61,059,663
854,975,219 529,574,356
2017 2016
Long-term payables
CCCC Leasing JIA HUA YI Co., Ltd. 896,118,857 323,448,337
CCCC Financial Leasing Co., Ltd. 556,387,041 905,899,356
CCCC Leasing JIA HUA ER Co., Ltd. 242,698,858 323,448,337
CCCC Tianjin Dredging Co., Ltd. 108,466,881 65,565,134
1,803,671,637 1,618,361,164
300 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies
1. Important commitments
(1) Capital expenditure commitments
The following is the capital expenditure commitment signed by the
Group but not necessarily listed on balance sheet on the balance sheet
date:
Dec. 31, 2017 Dec. 31, 2016
Housing, buildings and
machinery equipment 89,659,929 225,842,432
(2) Operating leasing commitments
In accordance with the signed and irrevocable operating leasing
contract, the minimum rental payable by the Company in the future is
summarized as follows:
Dec. 31, 2017 Dec. 31, 2016
Within 1 year 59,932,787 56,483,290
1~2 years 58,309,091 55,894,180
2~3 years 23,591,704 56,409,123
Over 3 years 37,717,614 60,507,528
179,551,196 229,294,121
(3) L/C commitments
The company has entrusted the bank to issue several L/C to purchase
imported components and parts. As of Dec. 31, 2017, the unpaid
amount under the L/Cs was about RMB 1,783,453,627 Yuan (Dec. 31,
2016: RMB 2,464,170,714 Yuan).
301 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies (continued)
2. Contingencies
As of Dec. 31, 2017, the major contingencies of the Group were listed
below:
(1) In 2013, the Company signed the construction and sales contract
on a 6000 tons piping ship with Petrofac (JSD6000) Limited
(hereinafter referred to as Petrofac).The Company kept normal
contact with Petrofac in the process of the construction. On
October 9, 2015, Petrofac issued Contract Termination Letter
with the reason that the project was delayed and met the
termination articles. Petrofac asked for terminating the contract
and requested the Company to return the prepaid payment and
interest, as well as assumed the responsibility of the loss caused
by the termination of the contract. The Company rejected the
claim. Petrofac honored the demand guarantee issued by the
Company for the project from the opening bank in December
2015, with total amount of 44,720,000 USD.
The Company attached great importance to this case,
established special team and hired senior legal team both at
home and abroad to actively advocate the Company’s rights and
protect the Company’s rights from damaged. The Company had
applied for arbitration to the London Court of International
Arbitration in January 2016, and asked Petrofac to return the
payment of Letter of Guarantee and compensated for the loss in
total of 200 million USD. After receiving the arbitration applicant
of the Company, Petrofac filed a counterclaim, and asked the
Company for compensating about 182 million USD or 213 million
USD under the requirements of continuing or not continuing to
construct the ship. At present, the arbitration court has been
organized. The Company has submitted attribution schedule by
negotiation with Petrofac, with two rounds of arbitration
documents on respective opinions. The trail of the case has not
yet initiated officially as of the date of this financial statement,
and the relative materials are still in preparation, such as
evidentiary document, testimony of witnesses and expert report.
Therefore, the Company is unable to reliably estimate the
possible result of the case, loss and profit possibility and amount
arising from that. The Company will timely disclose the related
impact based on the progress.
302 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies (continued)
2. Contingencies (continued)
(2) On Jan. 27, 2014, Lovanda offshore Ltd (hereafter referred to as
“Lovanda”) and Lovansing offshore Ltd (hereafter referred to as
“Lovansing” signed the construction contracts (ZP14-2125 and
ZP14-2126) on two JU2000E offshore drilling platforms
respectively with this Company, which were designed, built,
commissioned and delivered by this Company. In the
construction process, some disputes arose between Lovanda
and this Company and Lovansing and the Company regarding
the construction schedule of this platform, the extension of
delivery time and other aspects.
Lovanda and Lovansing submitted to arbitration to London
Maritime Arbitrators Association against this Company on Mar. 6,
2017 and proposed to terminate the platform construction
contract and required this Company to repay USD 13,800,000
dollars under each contract (27,600,000USD in total) including
the advance cost of construction, related expenses and interest.
This Company attached great importance to this event and
established a special working group and employed the
professional domestic and foreign lawyers and experts to actively
respond to action to maintain the legitimate right of this Company.
On June 23, 2017, the Company submitted the written defense in
arbitration and counterclaim application, and claimed the
following under each contract: 1) the other party should pay the
last sum of money payable under the contract and its interest
arising herefrom, totaling USD 186,200,000 dollars to this party;
2) the income of this party from the sale of the platform minus the
cost of sale should be used for deducting the account payable of
the other party; 3) other losses, interest and other expenses that
may occur in the future.
As of Dec. 31, 2017, the basic arbitration documents of the two
arbitration cases have been submitted and the arbitral court has
set the basic timetable for subsequent arbitration proceedings
(including: disclosure, witness’ testimony and experts report),
and it is tentatively scheduled to hold a court on January 7, 2019.
Therefore, the Company is unable to reliably estimate the
possible result of the case, loss and profit possibility and amount
arising from that. The Company will timely disclose the related
impact based on the progress.
303 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XI. Commitments and Contingencies (continued)
2. Contingencies (continued)
(3) On Dec. 31, 2017, the Group provided financial guarantee for its
client, Jiangsu Yanwei Port Co., Ltd with the expiry date of May 8,
2018 and the amount of RMB 10,790,000 Yuan. The above
amount reflects the maximum loss to the Group due to the
company’s default. Jiangsu Yanwei Port Co., Ltd is in good
financial condition and there is no risk of significant financial
default, so the Group has not recognized the predicted liabilities
related to financial guarantee.
XII. Notes to items in the Company’s financial statements
1. Accounts receivable
2017 2016
Accounts receivable 7,854,910,710 7,787,866,391
Less: Provision for bad debt 1,307,045,951 1,311,778,695
6,547,864,759 6,476,087,696
304 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
1. Accounts receivable (continued)
Aging of accounts receivable is analyzed as follows:
2017 2016
Within 6 months 4,930,564,378 4,697,825,773
7~12 months 306,925,951 754,026,913
1~2 years 896,868,082 846,748,647
2~3 years 387,732,209 347,663,847
3~4 years 257,418,171 377,828,003
4~5 years 321,232,163 132,261,040
Over 5 years 754,169,756 631,512,168
Subtotal 7,854,910,710 7,787,866,391
Less: Provision for bad debt 1,307,045,951 1,311,778,695
6,547,864,759 6,476,087,696
Changes in provision for bad debt of accounts receivable:
Opening balance Proportion in Reversal in Write-off in Closing balance
current year current year current year
2017 1,311,778,695 240,888,409 (245,621,153) - 1,307,045,951
2016 1,108,321,774 203,456,921 - - 1,311,778,695
305 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
1. Accounts receivable (continued)
The accounts receivable is analyzed by types as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Provisi Provis
Propor on Propo ion
Amount Amount proport
tion Amount rtion Amount propor
(%) ion (%) tion
(%) (%)
With significant
individual amount and
separate provision for
bad debt 182,649,892 2 182,649,892 100 - - - -
Total Provision for bad
debt by credit risk
features group
- Related party 4,000,779,449 51 - - 3,350,449,306 43 - -
- Non-related party 3,455,359,835 44 908,274,525 26 3,992,180,635 51 867,510,413 22
With insignificant
single amount but for
separate provision for
bad debt 216,121,534 3 216,121,534 100 445,236,450 6 444,268,282 100
7,854,910,710 100 1,307,045,951 17 7,787,866,391 100 1,311,778,695 17
As of Dec. 31, 2017, the accounts receivable with significant single
amount and for separate provision for bad debt is as follows:
Book Provision for Provision
Reason
balance bad debt proportion%
Contract
Accounts receivable 1 182,649,892 182,649,892 100 disputes
As of Dec. 31, 2016, there is no account receivable with significant
single amount and separate provision for bad debt.
306 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
1. Accounts receivable (continued)
The Company’s accounts receivable of non-related parties with provision for
bad debt based on aging analysis method is as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Proportion (%
Amount Amount Proportion (%)
Amount Amount )
Within 6 months 1,257,505,519 - - 1,638,214,661 - -
7~12 months 281,527,110 2,815,271 1 669,637,393 6,696,374 1
1~2 years 736,866,863 110,530,029 15 649,760,167 97,704,025 15
2~3 years 361,064,289 108,319,287 30 293,717,341 88,115,202 30
3~4 years 225,727,110 112,863,555 50 95,818,058 47,909,029 50
4~5 years 75,690,244 56,767,683 75 71,788,934 53,841,700 75
Over 5 years 516,978,700 516,978,700 100 573,244,081 573,244,083 100
3,455,359,835 908,274,525 26 3,992,180,635 867,510,413 22
As of Dec. 31, 2017, the accounts receivable with insignificant single
amount but for separate provision for bad debt is as follows:
Book balance Provision for Provision
bad debt proportion Reason
%
Accounts Counter-party in
receivable1 107,819,500 107,819,500 100 funds shortage
Accounts receivable Counter-party in
2 50,365,000 50,365,000 100 funds shortage
Accounts receivable
3 26,136,865 26,136,865 100 Contract disputes
Accounts receivable
4 10,730,715 10,730,715 100 Contract disputes
Accounts receivable
5 7,802,300 7,802,300 100 Contract disputes
Accounts receivable
6 6,990,320 6,990,320 100 Contract disputes
Accounts receivable
7 3,355,177 3,355,177 100 Contract disputes
Accounts receivable
8 2,083,103 2,083,103 100 Contract disputes
Accounts receivable
9 838,554 838,554 100 Contract disputes
216,121,534 216,121,534 100
307 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
1. Accounts receivables (continued)
As of Dec. 31, 2016, the accounts receivable with insignificant single
amount but for separate provision for bad debt is as follows:
Book balance Provision for bad Provision
Reason
debt proportion%
Accounts receivable 1 159,594,037 159,594,037 100 Contract disputes
Accounts receivable 2 107,819,500 107,819,500 100 Contract disputes
Counter-party in
Accounts receivable 3 50,365,000 50,365,000 100 funds shortage
Accounts receivable 4 27,748,069 27,748,069 100 Contract disputes
Accounts receivable 5 21,932,297 21,932,297 100 Contract disputes
Accounts receivable 6 19,480,920 18,512,752 95 Contract disputes
Accounts receivable 7 17,735,070 17,735,070 100 Contract disputes
Accounts receivable 8 10,049,240 10,049,240 100 Contract disputes
Accounts receivable 9 7,664,629 7,664,629 100 Contract disputes
Accounts receivable
10 7,421,237 7,421,237 100 Contract disputes
Accounts receivable
11 7,306,800 7,306,800 100 Contract disputes
Accounts receivable
12 4,557,644 4,557,644 100 Contract disputes
Accounts receivable
13 3,562,007 3,562,007 100 Contract disputes
445,236,450 444,268,282 100
As of Dec. 31, 2017, the accounts receivable of the top five balances
collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of
provision for total balance of
bad debt accounts
receivable
Total accounts receivable of the
top five balances 3,125,544,790 189,686,898 40%
As of Dec. 31, 2016, the accounts receivable of the top five balances
collected by debtor is summarized and analyzed as follows:
Balance Amount of Proportion of
provision for total balance of
bad debt accounts
receivable
Total accounts receivable of the
top five balances 2,641,634,401 42,868,900 34%
308 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
2. Other receivables
The aging analysis of other receivables is as follows:
2017 2016
Within 1 year 13,624,001,088 13,861,142,297
1~2 years 188,472,977 4,247,938
2~3 years 1,420,864 14,168,062
3~4 years 5,223,339 3,685,185
4~5 years 2,557,426 180,855
Over 5 years 7,814,381 15,281,311
Subtotal 13,829,490,075 13,898,705,648
Less: Provision for bad debt 163,639,459 20,702,632
13,665,850,616 13,878,003,016
The changes of provision for bad debt of other receivables are as follows:
Opening balance Proportion in Reversal in Write-off in Closing balance
current year current year current year
2017 20,702,632 150,537,838 (7,601,011) - 163,639,459
2016 18,581,021 2,121,611 - - 20,702,632
The analysis of other receivables by category is as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Propor Provision Propor Provision
Amount tion Amount proportion Amount tion Amount proportion
(%) (%) (%) (%)
With significant single
amount and separate
provision for bad debt 150,327,138 1 150,327,138 100 - - - -
Total Provision for bad debt
by credit risk features group
-Guarantee fund
(excluding quality guarantee
deposit) 152,659,281 1 - - 99,337,723 1 - -
Individual borrowing and
petty cash of employee 101,743,565 1 - - 102,865,415 1 - -
-Others 13,415,037,536 97 3,589,766 - 13,685,062,135 98 9,262,257 -
With in significant amount
but for separate provision for
bad debt 9,722,555 - 9,722,555 100 11,440,375 - 11,440,375 100
13,829,490,075 100 163,639,459 1 13,898,705,648 100 20,702,632 -
309 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
2. Other receivables (continued)
As of Dec. 31, 2017, the other receivables with significant single amount
and separate provision for bad debt are as follows:
Book balance Provision for bad Provision
Reason
debt proportion%
Contract
Accounts receivable 1 150,327,138 150,327,138 100 disputes
As of Dec. 31, 2016, the other receivable without significant single
amount and separate provision for bad debt are as follows:
The Company’s other receivables with provision for bad debt based on aging
analysis are as follows:
2017 2016
Book balance Provision for bad debt Book balance Provision for bad debt
Proportion Proportion
Amount Amount Amount Amount
(%) (%)
Within 6 months 13,410,431,991 - - 13,662,394,513 - -
7~12 months 382,748 3,827 1 2,834,483 28,345 1
1~2 years 41,810 6,272 15 747,938 112,191 15
2~3 years 20,847 6,254 30 11,881,104 3,564,331 30
3~4 years 100,843 50,422 50 3,202,985 1,601,492 50
4~5 years 2,145,226 1,608,920 75 180,855 135,641 75
Over 5 years 1,914,071 1,914,071 100 3,820,257 3,820,257 100
13,415,037,536 3,589,766 - 13,685,062,135 9,262,257 -
As of Dec. 31, 2017, the situations of other receivables with insignificant
single amount but for separate provision for bad debt are as follows:
Book balance Provision for bad Provision proportion
Reason
debt (%)
Contract
Other receivables 1 3,037,042 3,037,042 100 cancellation
100 Contract
Other receivables 2 1,692,765 1,692,765 cancellation
100 Contract
Other receivables 3 1,170,282 1,170,282 cancellation
Others 3,822,466 3,822,466 100
9,722,555 9,722,555 100
310 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
2. Other receivables (continued)
As of Dec. 31, 2016, the situations of other receivables with insignificant
single amount but for separate provision for bad debt are as follows:
Book Provision for Provision
Reason
balance bad debt proportion (%)
Contract
cancellatio
Other receivables 1 1,692,765 1,692,765 100 n
100 Contract
cancellatio
Other receivables 2 1,170,282 1,170,282 n
100 Contract
cancellatio
Other receivables 3 5,540,286 5,540,286 n
100 Contract
cancellatio
Other receivables 4 3,037,042 3,037,042 n
11,440,375 11,440,375 100
Other receivables are analyzed by nature as follows:
2017 2016
Intercourse funds of subsidiaries 13,097,601,236 13,429,629,328
Bid and performance bond 298,716,662 29,189,524
Taxes on outstanding accounts
receivable 198,696,002 119,175,846
Money on call for product field
service 68,190,281 60,496,560
Staff borrowings receivable 33,553,284 42,368,855
Lease payment receivable 33,434,668 33,434,668
Customs guarantee deposit 4,269,756 71,148,199
Export rebates - 55,755,562
Others 95,028,186 57,507,106
13,829,490,075 13,898,705,648
311 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
2. Other receivables (continued)
As of Dec. 31, 2017, the top five other receivables are as follows:
Closing balance Proportion in Nature Age Closing
the total balance of
balance of provision
other for bad
receivables (%) debt
Other receivables Intercourse funds Within one
1 4,454,183,823 32 of subsidiaries year -
Other receivables Intercourse funds Within one
2 2,833,394,077 21 of subsidiaries year -
Other receivables Intercourse funds Within one
3 1,682,180,082 12 of subsidiaries year -
Other receivables Intercourse funds Within one
4 1,523,899,699 11 of subsidiaries year -
Other receivables Intercourse funds Within one
5 1,362,916,621 10 of subsidiaries year -
11,856,574,302 86 -
As of Dec. 31, 2016, the top 5 other receivables are as follows:
Closing balance Proportion in Nature Age Closing
the total balance of
balance of provision
other for bad debt
receivables
(%)
Intercourse
Other receivables funds of Within 1
1 4,370,239,666 31 subsidiaries year -
Intercourse
Other receivables funds of Within 1
2 2,518,908,707 18 subsidiaries year -
Intercourse
Other receivables funds of Within 1
3 2,092,489,070 15 subsidiaries year -
Intercourse
Other receivables funds of Within 1
4 2,077,530,443 15 subsidiaries year -
Intercourse
Other receivables funds of Within 1
5 1,458,611,248 10 subsidiaries year -
12,517,779,134 89 -
3. Long-term equity investment
312 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
2017 2016
Subsidiary 6,634,723,602 6,381,423,422
Joint venture 235,084,428 199,459,569
Associated enterprise 2,052,392,796 2,001,892,291
8,922,200,826 8,582,775,282
XII. Notes to items in the Company’s financial statements (continued)
3. Long-term equity investment (continued)
(1) Subsidiary
2017
Dec. 31, 2016 Changes in current year Dec., 31, 2017
Additional or Negative investment
Shanghai Zhenhua Port Machinery
Heavy Industry Co., Ltd. 9,964,200 - 9,964,200
Shanghai Zhenhua Port Machinery
(Hong Kong) Co., Ltd. - - -
Shanghai Zhenhua Shipping Co., Ltd. 140,260,673 - 140,260,673
ZMPC Zhangjiagang Port Machinery
Co., Ltd. 4,518,000 - 4,518,000
Nantong Zhenhua Heavy Equipment
Manufacturing Co., Ltd. 854,936,900 - 854,936,900
Nantong Zhenhua Heavy Industries
Steel Structure Processing Co., Ltd. 598,110 (598,110) -
Jiangyin Zhenhua Port Machinery
Steel Structure Fabrication Co., Ltd 579,983 - 579,983
ZPMC General Equipment Co., Ltd. 2,201,086,744 - 2,201,086,744
ZMPC Drive Mechanism Company
(Nantong) 600,000,000 - 600,000,000
Shanghai ZPMC Electric Co., Ltd. 50,000,000 - 50,000,000
ZPMC GmbH Hamburg 207,940 - 207,940
ZPMC Netherlands Cooperatie 15,618,079 11,044,500 26,662,579
Shanghai Zhenhua Ocean
Engineering Service Co., Ltd 100,000,000 - 100,000,000
ZPMC Inspection Technology
Consulting Co., Ltd. 7,000,000 - 7,000,000
ZPMC Lanka Company (Private)
Limited 6,183,978 - 6,183,978
Nanjing Ninggao New Channel
Construction Co., Ltd. 1,098,000,000 - 1,098,000,000
Shanghai Zhenhua Heavy Industries
Qidong Marine Engineering Co., Ltd. 203,000,000 - 203,000,000
ZPMC Engineering Africa
(Pty) Ltd. 3,084,000 - 3,084,000
ZPMC Korea Co., Ltd. 2,876,209 - 2,876,209
ZPMC Engineering (India)
Private Limited 2,953,200 - 2,953,200
313 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
ZPMC Australia Company
(Pty) Limited 2,708,500 - 2,708,500
ZPMC North America Inc. 18,564,520 - 18,564,520
ZPMC Southeast Asia Holding
Pte. Ltd. 3,875,949 - 3,875,949
(To be continued)
314 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
3. Long-term equity investment (continued)
(1) Subsidiary (continued)
Dec. 31, 2016 Changes in current yearDec. 31, 2017
Additional or negative investment
(Continued)
ZPMC Brazil Holdings Ltda. 2,936,771 (2,936,771) -
ZPMC Brazil Servio
Portuários LTDA - 2,936,771 2,936,771
ZPMC Limited Liability Company 4,357,626 2,853,790 7,211,416
CCCC Liyang Urban Investment and
Construction Co., Ltd 183,000,000 - 183,000,000
CCCC Tianhe Mechanical Equipment
Manufacturing Co., Ltd. 242,542,999 - 242,542,999
CCCC Investment Development
Qidong Co., Ltd 47,500,000 100,000,000 147,500,000
CCCC Zhenjiang Investment
Construction, Management and
Development Co., Ltd 567,000,000 140,000,000 707,000,000
ZPMC Middle East Fze 5,271,120 - 5,271,120
ZPMC UK LD 2,797,921 - 2,797,921
6,381,423,422 253,300,180 6,634,723,602
2016
Dec. 31, 2015 Changes in current yearDec., 31, 2016
Additional or negative investment
Shanghai Zhenhua Port Machinery
Heavy Industry Co., Ltd. 4,950,000 5,014,200 9,964,200
Shanghai Heavy Industries
Mechanical Components Co., Ltd. 5,014,200 (5,014,200) -
Shanghai Zhenhua Port Machinery
(Hong Kong) Co., Ltd. - - -
Shanghai Zhenhua Shipping Co., Ltd. 140,260,673 - 140,260,673
ZMPC Zhangjiagang Port Machinery
Co., Ltd. 4,518,000 - 4,518,000
Nantong Zhenhua Heavy Equipment
Manufacturing Co., Ltd. 854,936,900 - 854,936,900
Nantong Zhenhua Heavy Industries
Steel Structure Processing Co., Ltd. 598,110 - 598,110
Jiangyin Zhenhua Port Machinery
Steel Structure Fabrication Co., Ltd 579,983 - 579,983
ZPMC General Equipment Co., Ltd. 2,201,086,744 - 2,201,086,744
ZMPC Drive Mechanism Company
(Nantong)
300,000,000 300,000,000 600,000,000
(To be continued)
315 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
3. Long-term equity investment (continued)
(1) Subsidiary (continued)
Dec. 31, 2015 Changes in current yearDec. 31, 2016
Additional or negative investment
(Continued)
Shanghai ZMPC (Nantong) Co., Ltd. 300,000,000 (300,000,000) -
Shanghai ZPMC Electric Co., Ltd. 50,000,000 - 50,000,000
ZPMC GmbH Hamburg 207,940 - 207,940
ZPMC Netherlands B.V. 2,334,799 13,283,280 15,618,079
Shanghai Zhenhua Ocean
Engineering Service Co., Ltd 100,000,000 - 100,000,000
ZPMC Inspection Technology
Consulting Co., Ltd. 7,000,000 - 7,000,000
ZPMC Lanka Company(Private)
Limited 6,183,978 - 6,183,978
Nanjing Ninggao New Channel
Construction Co., Ltd. 1,098,000,000 - 1,098,000,000
Shanghai Zhenhua Heavy Industries
Qidong Marine Engineering Co., Ltd. 203,000,000 - 203,000,000
ZPMC Engineering Africa
(Pty) Ltd. 3,084,000 - 3,084,000
ZPMC Korea Co., Ltd. 2,876,209 - 2,876,209
ZPMC Engineering (India) Private
Limited 2,953,200 - 2,953,200
ZPMC Australia Company
(Pty) Limited 2,708,500 - 2,708,500
ZPMC North America Inc. 18,564,520 - 18,564,520
ZPMC Southeast Asia Holding
Pte. Ltd. 3,875,949 - 3,875,949
ZPMC Brazil Holdings Ltda. 2,985,272 (48,501) 2,936,771
ZPMC Limited Liability Company 4,357,626 - 4,357,626
CCCC Liyang Urban Investment and
Construction Co., Ltd 183,000,000 - 183,000,000
CCCC Tianhe Mechanical Equipment
Manufacturing Co., Ltd. 242,542,999 - 242,542,999
CCCC Investment Development
Qidong Co., Ltd 47,500,000 - 47,500,000
CCCC Zhenjiang Investment
Construction, Management and
Development Co., Ltd - 567,000,000 567,000,000
ZPMC Middle East Fze - 5,271,120 5,271,120
ZPMC UK LD - 2,797,921 2,797,921
5,793,119,602 588,303,820 6,381,423,422
316 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
3. Long-term equity investment (continued)
(2) Joint venture
2017
Change in current year
Opening Additional Negative Gain on Closing Depreciation
balance investmen investme investment balance reserves at
t nt under equity the end of
method year
Joint venture
Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 196,624,211 - - 34,685,071 231,309,282 -
ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
Sirketi 2,835,358 - - 939,788 3,775,146 -
199,459,569 - - 35,624,859 235,084,428 -
2016
Change in current year
Opening Additional Negative Gain on Closing Depreciation
balance investmen investme investment balance reserves at
t nt under equity the end of
method year
Joint venture
Jiangsu Longyuan Zhenhua Ocean
Engineering Co., Ltd 171,577,489 - - 25,046,722 196,624,211 -
ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
Sirketi 3,059,427 - - (224,069) 2,835,358 -
174,636,916 - - 24,822,653 199,459,569 -
317 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
3. Long-term equity investment (continued)
(3) Associated enterprise
2017
Change in current year
Opening Addition Investment Other Declaration Closing Deprecia
balance al profit and comprehen of cash balance tion
investme loss under sive income dividend or reserves
nt equity adjustment profit at the
method end of
year
CCCC Ocean
Engineering Vessel
Technology Research
Centre Co., Ltd 15,645,518 - 204,026 - - 15,849,544 -
Shanghai Zhenhua Heavy
Industries (Group)
Changzhou Paint Co.,
Ltd. 15,452,729 - 1,014,396 - - 16,467,125 -
CCCC Real Estate Yixing
Co., Ltd. 175,614,528 - 2,485,179 - - 178,099,707 -
CCCC Financial Leasing
Co., Ltd. 1,605,244,853 - 73,336,694 (30,964) - 1,678,550,583 -
China Communications
Construction USA Inc. 75,612,903 - (4,569,705) (3,812,748) - 67,230,450 -
CCCC South American
Regional Company SARL 114,321,760 - (13,520,543) (4,605,830) - 96,195,387 -
2,001,892,291 - 58,950,047 (8,449,542) - 2,052,392,796 -
2016
Change in current year
Opening Additional Investment Other Declaration Closing Deprecia
balance investment profit and comprehe of cash balance tion
loss under nsive dividend or reserves
equity income profit at the
method adjustme end of
nt year
CCCC Ocean
Engineering Vessel
Technology Research
Centre Co., Ltd 15,269,200 - 376,318 - - 15,645,518 -
Shanghai Zhenhua
Heavy Industries
(Group) Changzhou
Paint Co., Ltd. 15,306,843 - 1,978,952 - (1,833,066) 15,452,729 -
CCCC Real Estate
Yixing Co., Ltd. 174,697,785 - 916,743 - - 175,614,528 -
CCCC Financial
Leasing Co., Ltd. 1,141,740,698 420,000,000 75,648,845 255,310 (32,400,000) 1,605,244,853 -
China
Communications
Construction USA Inc. 75,413,782 - (4,347,559) 4,546,680 - 75,612,903 -
CCCC South
American
Regional Company
SARL - 114,321,760 - - - 114,321,760 -
1,422,428,308 534,321,760 74,573,299 4,801,990 (34,233,066) 2,001,892,291 -
318 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
4. Operating revenue and cost
2017 2016
Income Cost Income Cost
Main business 17,846,043,724 14,996,960,714 22,901,854,062 19,219,649,675
Other
business 1,136,241,004 1,065,401,225 1,346,629,631 1,326,296,433
18,982,284,728 16,062,361,939 24,248,483,693 20,545,946,108
2017 2016
Main business Main business Main business Main business
income cost income cost
Container cranes 12,618,126,602 9,875,036,341 16,966,005,765 13,385,624,468
Bulk machine
members 1,575,845,709 1,587,582,829 3,133,488,466 3,134,543,276
Heavy equipment 2,118,361,222 2,020,870,244 1,773,587,826 1,760,404,529
“Construction–tran
sfer” project 50,908,132 44,850,390 - -
Steel structures
and related income 1,482,802,059 1,468,620,910 1,028,772,005 939,077,402
17,846,043,724 14,996,960,714 22,901,854,062 19,219,649,675
Other business income and cost are listed below:
2017 2016
Other business Other business Other Other business
income cost business cost
income
Sales of
materials 877,119,802 868,901,948 1,063,590,327 1,110,261,460
Equipment
leasing and
others 259,121,202 196,499,277 283,039,304 216,034,973
1,136,241,004 1,065,401,225 1,346,629,631 1,326,296,433
319 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
5. Gain on investment
2017 2016
Investment income from long-term
equity verified by cost method 58,570,536 400,633
Investment gains from long-term equity
verified by equity method 94,574,906 99,395,952
Investment gains from
available-for-sale financial assets
during holding period 3,356,632 1,112,890
Gain on investment in bank’s financial
products - 1,969,590
156,502,074 102,879,065
6. Supplementary information of cash flow statement
Reconciliation of net profit to cash flows from operating activities:
2017 2016
Net profit 154,209,887 270,221,960
Plus: Assets impairment provision 619,199,093 1,208,850,889
Real estate as investment and
depreciation of fixed assets 499,700,815 510,588,106
Intangible assets amortization 53,126,664 53,045,981
Net (gains) losses on disposal of fixed
assets and intangible assets (1,303,038) 2,996,936
Losses/(gains) from changes in fair
value gains 4,615,775 (27,035,042)
Financial expenses 882,094,629 1,504,100,506
Gain on investment (156,502,074) (102,879,065)
Net increase of deferred income tax
assets (-liabilities) (69,483,616) (70,957,061)
Increase of inventories (613,086,964) (295,457,421)
Increase (decrease) of construction
contract price (1,332,273,798) 321,427,489
Decrease /(increase) of operating items
receivable 435,650,557 (2,249,861,228)
Decrease of operating items payable (434,780,054) (1,200,900,147)
Net cash flows from/(used for)
operating activities 41,167,876 (75,858,097)
320 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XII. Notes to items in the Company’s financial statements (continued)
6. Supplementary information of cash flow statement (continued)
Net alteration of cash and cash equivalents:
2017 2016
Closing balance of cash and cash
equivalents 3,301,302,585 1,872,410,585
Less: Opening balance of cash and
cash equivalents 1,872,410,585 1,806,066,316
Net increase in cash and cash
equivalents 1,428,892,000 66,344,269
XIII. Events after balance sheet date
As of the date of approval of this financial statement, this Company had no
events after balance sheet date to be disclosed.
XIV. Other important matters
1. Report by branches
The Group determines the operating branch based on internal organizational
structure, management requirement and internal report system, determine the report
branch based on business branch, and disclose the information of branch.
Operating branch refers to the components that the Group coincides with all the
following requirements: (1) it may earn revenues and incur expenses in daily activities; (2)
its operating results are regularly reviewed by the Group’s management to make decisions
about resource to be allocated to the branch and assess its performance; (3) The Group is
able to obtain its accounting information regarding financial position, operating results and
cash flows, etc. Two operating branches or above, with same economic characteristics
and meeting relative requirements, can be integrated to a new one.
The Group identifies the business as an operating branch based on internal
organization structure, management requirement and internal report system, and carry out
analysis and assessment.
321 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XIV. Other important matters (continued)
1. Report by branches (continued)
Products and labor service
Income from external transaction
2017 2016
Container crane 13,120,859,480 17,082,391,036
heavy equipment 3,384,886,419 1,284,872,909
Bulk machine part 1,615,504,267 3,154,983,915
Building-transfer project 1,549,820,489 1,005,087,825
Steel structure and related income 1,520,119,032 1,035,829,290
Shipping and others 451,081,492 580,231,787
Sales materials 58,465,010 81,273,472
Equipment leasing and others 158,077,811 123,417,694
21,858,814,000 24,348,087,928
Geographic information
Income from external transaction
2017 2016
Chinese Mainland 10,358,861,169 9,261,862,587
Asia (excluding Chinese Mainland) 5,410,267,855 8,774,618,285
America 2,548,717,321 1,660,773,333
Chinese Mainland (export sales) 1,372,828,183 1,939,957,027
Europe 462,606,586 1,694,807,875
Other 1,705,532,886 1,016,068,821
21,858,814,000 24,348,087,928
Income from external transaction ascribes to the area where custom located.
322 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
XIV. Other important matters (continued)
1. Report by branches (continued)
Geographic information (continued)
Total non-current assets
2017 2016
Chinese Mainland 18,215,467,783 19,820,827,959
Asia (excluding mainland
China) 5,114,032,367 3,418,721,827
Others 40,991,302 37,392,161
23,370,491,452 23,276,941,947
Non-current asset ascribes to the local area, excluding financial asset and deferred
income tax assets.
2. Comparative data
As stated in Note III. 30, due to the change in the statement mode of the losses and
gains from the assets disposal, the accounting disposal and statements for several items
as well as the amount in the financial statements had been modified to meet the new
requirements. Correspondingly, some comparative data had been reclassified and restated
to conform to the requirements of the statements and the accounting disposal of this year.
323 / 325
Shanghai Zhenhua Heavy Industries Co., Ltd.
Notes to Financial Statements (continued)
Dec. 31, 2017
RMB Yuan
1. Details of non-recurring profit and loss
2017 2016
Gains from disposal of non-current assets 13,285,984 1,340,612
Government subsidy included in the current
profits and losses (except for those which
closely associated with normal business
operations, in line with national policies and
regulations, and continuous enjoyment in
accordance with certain standards in terms of
unified quota or ration) 83,502,544 45,042,910
Holding of trading financial assets and
liabilities
Profit and loss from change of fair values due
to the holding of trading financial assets and
liabilities, and investment incomes obtained
from the disposals of trading financial assets
and liabilities and available-for-sale financial
assets 20,563,270 23,420,959
Other non-operating incomes and
expenditures except above items (70,077,032) 6,435,660
Income tax influence (10,351,890) (14,557,550)
Minority shareholders’ equity influence (after
tax) (14,565,022) (6,708,080)
22,357,854 54,974,511
2. Return on net assets and earnings per share
Earnings per share
Weighted average return Basic earnings per share Diluted earnings per share
on net assets yield %
2017 2016 2017 2016 2017 2016
Net profit attributive to holders of
common shares of the Company
1.99 1.41 0.07 0.05 0.07 0.05
Net profit attributive to holders of
common shares of the Company
after deducting the non-recurring
profit and loss 1.84 1.05 0.06 0.04 0.06 0.04
324 / 325
Chapter XII Catalogue of Documents available for Inspection
Inspection Financial statements signed and sealed by legal representative, responsible
Documents person for accounting, and chief accountant.
Catalogue
Inspection Original copies of audit report sealed by accounting firm and signed and sealed
Documents by Certified Public Accountant.
Catalogue
Inspection Original copies of all documents and announcements disclosed on newspaper
Documents designated by China Securities Regulatory Commission within report period
Catalogue
Chairman of the board: Zhu Lianyu
Date of submission upon approved by the Board of Directors: Mar. 28, 2018
325 / 325
