China International Marine Containers (Group) Co., Ltd.
2011
Annual Report
23 March 2012
Section I Important Statement and Contents
Important Statement
The Board of Directors, the Board of Supervisor, as well as directors, supervisors and
senior management of China International Marine Containers (Group) Co., Ltd.
(hereinafter referred to as ―the Company”) hereby undertake that the information and
data contained in this report are free from false records, misleading statements or
significant omission, and we shall assume individual and joint liabilities for the
authentication, accuracy and integrity of the contents in this report.
No directors, supervisors or senior management have any objection to the authenticity,
accuracy or integrity of the contents of this annual report.
This report has been audited by KPMG which has issued auditor‘s report with
unqualified opinion.
Mr. Li Jianhong, the Chairman of the Board, Mr. Mai Boliang, the President of the
Company and Mr. Jin Jianlong, the General Manager of Financial Management Dept.,
hereby undertake that the financial report in this annual report is true and complete.
This report consists of Chinese and English versions and in case of discrepancy
between these two versions, the Chinese version shall prevail.
Contents
Section I. Important Statement and Contents 1
Section II. General Information 2
Section III. Financial and Business Highlights 4
Section IV. Shareholders and Changing of Share Capital 6
Section V. Directors, Supervisors, Senior Management and Employees 11
Section VI. Corporate Governance Structure 22
Section VII. The Shareholders‘ General Meeting 30
Section VIII. Report of the Board of Directors 31
Section IX. Report of the Board of Supervisors 65
Section X. Significant Events 67
Section XI. Financial Report 78
Section XII. Documents for Reference 303
1
Section Ⅱ General Information
I. Statutory Chinese and English names and abbreviations:
Chinese name: 中国国际海运集装箱（集团）股份有限公司
Chinese abbreviation: 中集集团
English name: CHINA INTERNATIONAL MARINE CONTAINERS (GROUP) CO.,
LTD
English abbreviation: CIMC
II. Legal representative: Li Jianhong
III. Board secretary: Yu Yuqun
Tel: (86) 755-2669 1130
Fax: (86) 755-2682 6579
Representative for securities affairs: Wang Xinjiu
Tel: (86) 755-2680 2706
Fax: (86) 755-2681 3950
Address: CIMC R&D Center, 2 Gangwan Avenue, Shekou, Nanshan District,
Shenzhen
Zip code: 518067
E-mail: shareholder@cimc.com
IV. Registered address: 8/F, CIMC R&D Center, 2 Gangwan Avenue, Shekou, Nanshan
District, Shenzhen, Guangdong
Office address: CIMC R&D Center, 2 Gangwan Avenue, Shekou, Nanshan District,
Shenzhen, Guangdong
Zip code: 518067
Website: http://www.cimc.com
V. Newspapers designated by the Company for information disclosure: ―China
Securities Journal‖, ―Securities Times‖, ―Shanghai Securities News‖ and ‖Ta Kung
Pao‖.
Website designated by CSRC for information disclosure: http://www.cninfo.com.cn
Places where annual report is made available: Financial Management Dept.
VI. Stock exchange on which the Company are listed: Shenzhen Stock Exchange
Stock short form and code: CIMC (000039), CIMC B (200039)
VII. Other relevant information:
1. Date of initial registration: Jan., 1980
2. Place of initial registration: Shenzhen Administration for Industry and Commerce
3. Latest change in registration: 19 Nov. 2008
4. Place of registration after change: Shenzhen Administration for Industry and
Commerce
5. Corporate business license: 440301501119369
Tax registration No.: State Tax 440301618869509; Local Tax 440305618869509
6. Organization code: 61886950-9
7. Name and office address of certified public accountants engaged by the Company:
KPMG
Office address: 38/F, Yuehai Tianhe Town Plaza, 208 Tianhe Road, Guangzhou
2
Zip code: 510620
8. Primary Banks Connected:
China Development Bank
The Export-Import Bank of China
China Construction Bank
Bank of Communications
China Merchants Bank
Bank of China
Shenzhen Development Bank
The Hongkong and Shanghai Banking Corporation Limited
Citibank, N.A.
Standard Chartered Bank
ING Bank
Nanyang Commercial Bank
3
Section III Financial and Business Highlights
I. Key accounting data as of year 2011
Unit: RMB‘000 Yuan
No. Item Amount
1 Total profit 5,022,706
2 Operating profit 4,735,293
Net profit attributable to shareholders of listed
3
company 3,690,926
Net profit excluding non-recurring gain/loss
4 3,579,162
(Note)
5 Net cash flow from operating activities 2,254,437
Note: Items of non-recurring gains/losses
Unit: RMB‘000 Yuan
Items of non-recurring gains and losses Amount
Gains and losses from non-current asset disposal 13,000
Governmental subsidy 267,349
Capital occupation fee from non-financial corporate that written into current gains and
losses 8,665
Gains and losses from changes in fair value of transaction financial assets and
transaction financial liabilities and investment income from disposal of transaction
financial assets, transaction financial liabilities and financial assets available for sale
besides valid hedging business relating to normal operating business -152,179
Gains and losses from the cost of corporate combination is less than the attributable
share of the fair value of identifiable net assets of the merged entity
Other non-operating income and expenditure 20,350
Impact on income tax -32,450
Impact on equity of minority shareholders -12,971
Total 111,764
II. Impact on net profit and net assets from adjustment in compliance with IAS
Unit: RMB‘000 Yuan
Net profit Net assets
Amount of this Amount of last Amount at the Amount at the
period period period-end period-begin
As per IAS 3,694,148 3,007,463 18,627,826 16,219,107
As per PRC GAAP 3,690,926 3,001,851 18,633,154 16,223,057
Items to be adjusted based on IAS
Other 3,222 5,612 -5,328 -3,950
As per IAS 3,222 5,612 -5,328 -3,950
Explanation for Mainly of the amortization of the estimated increase of former fixed assets,
difference intangible assets.
III. Key accounting data and financial indicators in the recent 3 years
Unit: RMB‘000 Yuan
Items 2011 2010 Increase/decre 2009
ase (%)
Operating revenue 64,125,053 51,768,316 23.87% 20,475,507
Operating profit 4,735,293 3,438,168 37.73% 1,320,470
Total profit 5,022,706 3,674,607 36.69% 1,465,385
4
Net profit attributable to
shareholders of parent 3,690,926 3,001,851 22.96% 958,967
company
Net profit excluding non-recurring
gain/loss attributable to 3,579,162 2,791,507 28.22% -281,787
shareholders of parent company
Shareholders‘ equity attributable
18,633,154 16,223,057 14.86% 14,198,208
to shareholders of parent company
Net cash flow from operating
2,254,437, 1,482,901 52.03% 969,685
activities
Basic EPS (RMB Yuan) 1.39 1.13 23.01% 0.36
Diluted EPS (RMB Yuan) 1.37 1.13 21.24% 0.36
Basic EPS after deducting non-
recurring gain and loss (RMB 1.34 1.05 27.62% -0.11
Yuan)
Weighted average return on equity 21.00% 20% 1.00% 7%
Weighted average return on equity
after deducting non-recurring gain 20.00% 18% 2.00% -2%
and loss
Net cash flow from operating
0.85 0.56 51.24% 0.36
activities per share (RMB Yuan)
Items 31 Dec. 2011 31 Dec. 2010 Increase/decre 31 Dec. 2009
ase year-on-
year (%)
Total assets 64,361,714 54,130,649 18.90% 37,358,383
Total liability 42,748,042 34,923,949 22.40% 21,531,752
Total share capital（share） 2,662,396,051 2,662,396,051 0.00% 2,662,396,051
Ratio of asset-liability 66.42% 64.52% 1.90% 57.64%
Net assets per share attributable to
shareholders of parent company 7.00 6.09 14.94% 5.33
(RMB Yuan)
5
Section IV Shareholders and Changing of Share Capital
I. Changes in share capital
(I) Changes in share capital as at 31 Dec. 2011
1. Statement on changes in share capital
Unit: Share
Before this change Increase/decrease (+/-) After this change
Issuance
Number of Ratio Bonus Number of Ratio
of new Others Subtotal
shares (%) shares shares (%)
share
I. Shares subject to
trading 620,177 0.02 0 0 -247,351 -247,351 372,826 0.01
moratorium
1. Shares held by
0 0 0 0 0 0 0 0
state
2. Shares held by
state-owned 0 0 0 0 0 0 0 0
corporations
3. Shares held by
other domestic 0 0 0 0 0 0 0 0
investors
Including: Shares
held by domestic
0 0 0 0 0 0 0 0
non-state-owned
corporations
Shares held by
domestic natural 0 0 0 0 0 0 0 0
person
4. Shares held by
0 0 0 0 0 0 0 0
overseas investors
Including: Shares
held by overseas 0 0 0 0 0 0 0 0
corporations
Shares held by
overseas natural 0 0 0 0 0 0 0 0
person
5. Shares held by
620,177 0.02 0 0 -247,351 -247,351 372,826 0.01
senior management
II. Shares not
subject to trading 2,661,775,874 99.98 0 0 247,351 247,351 2,662,023,225 99.99
moratorium
1. RMB
ordinary shares (A- 1,231,297,165 46.25 0 0 247,351 247,351 1,231,544,516 46.26
share)
2. Domestically
listed foreign shares 1,430,478,709 53.73 0 0 0 0 1,430,478,709 53.73
(B-share)
3. 3. Overseas listed
0 0 0 0 0 0 0 0
foreign shares
4. Others 0 0 0 0 0 0 0 0
III. Total number
2,662,396,051 100.00 0 0 0 0 2,662,396,051 100.00
of shares
Note: The total share capital of the Company is 2,662,396,051 shares, including
1,231,915,542 A Renminbi common shares (A shares) and 1,430,480,509 domestically
listed foreign shares (B shares).
2. Statement on changes in shares subject to trading moratorium
6
Unit: Share
Number of
Number of
Number of shares Number of
shares
shares released shares Date of
subject to
Name of subject to from subject to releasing
trading Reason
shareholder trading trading trading trading
moratorium
moratorium moratorium moratorium moratorium
increased in
at year-begin in current at year-end
current year
year
Mai Shares held by Naught
371,026 123,676 123,676 371,026
Boliang senior executives
Li Ruiting 247,351 247,351 0 0 was locked by
China Securities
Depository and
Clearing Limited
Liu Xuebin 1,800 600 600 1,800 Shenzhen Branch
according to
relevant
regulations
Total 620,177 371,627 124,276 372,826
(II) Share issuing and listing
1. The Company didn‘t issue any shares or derivative securities in the past 3 years by
the end of the reporting period.
2. During the reporting period, total number of shares of the Company and its structure
remained unchanged.
3. Up till the end of reporting period, the Company has no inner staff shares.
II. Shareholders and actual controller
(I). Shares held by major shareholders (as at 31 Dec. 2011)
Unit: share
Total number of 210,117 shareholders, including 174,069 ones of A-share，36,048 ones of
shareholders B-share
Shares held by the top ten shareholders
Shares Number
Sharehold subject to of
Shareholding at
Name of shareholder Nature ing ratio trading pledged
period end
(%) moratorium or frozen
held shares
China Merchants (CIMC) Investment Foreign
25.54% 679,927,917 0 0
Limited investor
Foreign
COSCO Container Industries Limited 16.23% 432,171,843 0 0
investor
Foreign
COSCO Container Industries Limited 5.57% 148,320,037 0 0
investor
CMBLSA RE FTIF TEMPLETON ASIAN Foreign
3.42% 91,120,810 0 0
GRW FD GTI 5496 investor
LONG HONOUR INVESTMENTS Foreign
0.95% 25,322,106 0 0
LIMITED investor
GUOTAI JUNAN SECURITIES Foreign
0.95% 25,313,120 0 0
(HONGKONG) LIMITED investor
New China Life Insurance Co., Ltd–
Dividend Distribution–Individual Other 0.60% 15,950,000 0 0
Dividend-018L-FH002 Shen
Bank of China–E Fund Shenzhen Stock
Other 0.50% 13,339,467 0 0
Exchange 100 Exchange Traded Fund
7
TEMPLETON EMERGING MARKETS Foreign
0.48% 12,801,432 0 0
INVESTMENT TRUST investor
BBH A/C VANGUARD EMERGING Foreign
0.40% 10,546,598 0 0
MARKETS STOCK INDEX FUND investor
ICBC–Rongtong SSE 100 Index Fund Other 0.35% 9,340,556 0 0
Shares held by the top ten shareholders holding shares not subject to trading moratorium
Number of shares not subject to
Name of shareholders Type of shares
trading moratorium
Domestically
China Merchants (CIMC) Investment Limited 679,927,917
listed foreign share
RMB common
COSCO Container Industries Limited 432,171,843
share
Domestically
COSCO Container Industries Limited 148,320,037
listed foreign share
CMBLSA RE FTIF TEMPLETON ASIAN Domestically
91,120,810
GRW FD GTI 5496 listed foreign share
LONG HONOUR INVESTMENTS Domestically
25,322,106
LIMITED listed foreign share
GUOTAI JUNAN SECURITIES Domestically
25,313,120
(HONGKONG) LIMITED listed foreign share
New China Life Insurance Co., Ltd–Dividend
RMB common
Distribution–Individual Dividend-018L- 15,950,000
share
FH002 Shen
Bank of China–E Fund Shenzhen Stock RMB common
13,339,467
Exchange 100 Exchange Traded Fund share
TEMPLETON EMERGING MARKETS Domestically
12,801,432
INVESTMENT TRUST listed foreign share
BBH A/C VANGUARD EMERGING Domestically
10,546,598
MARKETS STOCK INDEX FUND listed foreign share
RMB common
ICBC–Rongtong SSE 100 Index Fund 9,340,556
share
1. Association relationship and acting-in-concert person relation exist
between COSCO Container Industries Limited and Long Honour
Investments Limited, where COSCO Container Industries Limited is
subordinate wholly-owned subsidiary of COSCO Pacific Limited under
COSCO Group; Long Honour Investments Limited is subordinate wholly-
Explanation on associated owned subsidiary of COSCO Hong Kong (hereinafter refer to as ―COSCO
relationship among the top Hong Kong‖)under COSCO Group; These two and other shareholders are
ten shareholders or acting- not acting-in-concert person specified in ―Regulatory Provisions on
in-concert Disclosure of Information on Shareholding Change of Shareholders for
Listed Companies‖.
2. The Company is not aware of whether association relationship exists
between other shareholders and whether they are acting-in-concert person
as specified in ―Regulatory Provisions on Disclosure of Information on
Shareholding Change of Shareholders for Listed Companies‖.
(II) Corporate shareholders with shareholding ratio exceeding 10%
1. None of shareholders with shareholding ratio exceeding 30% (controlling
shareholders)
Name of Sharehold Date of Registered Business
Director Equity structure
shareholder ing ratio incorporation capital scope
25.54% Huang 1995.1.17
Qianru, Wholly-owned by
China Merchants China Merchants Investment
Zhang HKD
(CIMC) Investment Holdings and
Rizhong 10,000
Limited (International) holdings
and Limited
LinWuliu
8
COSCO Container 21.8% 2004.4.26
Industries Limited Chen Keng, Investment
Wholly-owned by
Zhang Jie and USD 1 and
COSCO Pacific
Xu Jian holdings
(1) China Merchants (CIMC) Investment Limited is the wholly-owned subsidiary of
China Merchants Holdings (International) Limited. China Merchants Group Limited
holds 55.14% equity of China Merchants Holdings (International) Limited. China
Merchants (CIMC) Investment Limited holds 25.54% equity of CIMC. Therefore
China Merchants (CIMC) Holdings Limited actually holds 25.54% equity of CIMC.
(2) As a liability limited company incorporated in British Virgin Islands, COSCO
Container Industries Limited is a wholly-owned subsidiary under COSCO Pacific
Limited. COSCO Pacific Investment Holdings Limited holds 42.71 ％ equity of
COSCO Pacific Limited. COSCO Pacific Investment Holdings Limited is a subordinate
wholly-owned subsidiary under China COSCO Holdings Limited and COSCO Group
holds 54.55% equity of China COSCO Holdings Limited. COSCO Container Industries
Limited held 21.80% equity of CIMC through COSCO Containers Industries Limited;
Long Honour Investments Limited is a subordinate wholly-owned subsidiary under
COSCO Hong Kong and holds 0.95% equity of CIMC.
Property and controlling relation between actual controller and CIMC
100% SASAC 100%
COSCO 100% China Merchants Group Limited
54.55%
China COSCO Holdings Co., Ltd. 55.14%
100% COSCO (Hong Kong) Group Ltd.
COSCO Pacific Investment Holdings China Merchants Holdings (International)
Limited Limited
42.71% 100%
COSCO Pacific Limited 100%
100% Long Honour Investments Limited
China Merchants (CIMC) Investment
COSCO Container Industries Limited
0.95%
Limited
21.8% CIMC 25.54%
2 The Company has no controlling shareholder. In the reporting period, China
Merchants (CIMC) Investment Limited and COSCO Container Industries Limited
remained unchanged.
9
Shares subject to trading moratorium held by the top ten shareholders and trading
moratorium
Unit: Share
Quantity of shares Date of Additional shares
Name of
subject to trading list for to be listed for Trading moratorium
shareholders
moratorium trade trade
Mai Boliang 494,702 Shares held by
— — Senior management
Liu Xuebin 2,400
was frozen by China
Securities
Depository and
Clearing Limited
Shenzhen Branch
according to relevant
regulations
10
Section V Directors, Supervisors, Senior Management and Employees
I. Directors, supervisors and Managements
(I) Basic information
Name Title Gender Age Office term Total Whether
remuneration/ receive
allowance remuneration
received from from the
the Company shareholders
(RMB‘0000) or other
organizations
Li Jianhong Chairman Male 56 Apr. 2010-Apr. 2013 - Yes
Sun Jiakang Vice chairman Male 52 Aug.2011-Feb. 2012. - Yes
Apr. 2010-Jul. 2011
Xu Minjie Vice chairman Male 53
Mar. 2012-Apr. 2013
- Yes
Director and
Mai Boliang
president
Male 52 Apr. 2010- Apr. 2013 957.74 No
Wang Hong Director Male 49 Apr. 2010-Apr. 2013 - Yes
Wang Xingru Director Male 47 Aug. 2011-Apr. 2013 - Yes
Independent Male 56 No
Ding Huiping
director
Apr. 2010-Apr. 2013 12
Independent No
Jin Qingjun
director
Male 54 Apr. 2010-Apr. 2013 12
Independent No
Xu Jing‘an
director
Male 70 Apr. 2010-Apr. 2013 12
Lv Shijie Chief supervisor Male 47 Apr. 2010-Apr. 2013 - Yes
Huang Qianru Supervisor Female 59 Apr. 2010-Apr. 2013 - Yes
Feng No
Wanguang
Staff supervisor Male 65 Apr. 2010-Apr.2013 162.32
Zhao No
Qingsheng
Vice president Male 59 Apr. 2010-Apr. 2013 293.10
Li Ruiting Vice president Male 64 Apr. 2010-Mar. 2011 154.67 No
Wu Fapei Vice president Male 53 Apr. 2010-Apr. 2013 186.52 No
Li Yinhui Vice president Male 44 Apr. 2010-Apr. 2013 182.65 No
Liu Xuebin Vice president Male 53 Apr. 2010-Apr. 2013 338.21 No
Yu Ya Vice president Male 55 Apr. 2010-Apr. 2013 190.52 No
Secretary to the
Yu Yuqun Board of Male 46 Apr. 2010-Apr. 2013 195.12 No
Directors
General
manager of
Jin Jianlong
Financial
Male 57 Apr. 2010-Apr. 2013 158.82 No
Management
General
manager of
Zeng Beihua
Capital
Female 56 Apr. 2010-Apr. 2013 173.05 No
Management
Total — — — — 3,028.72 —
Shares of the company held by directors, supervisors and senior management
Shareholding at the Shareholding at the end Reason for change in
Name
beginning of the year of the year shareholding
Mai Boliang 494,702 494,702 —
Liu Xuebin 2,400 2,400 —
Total 497,102 497,102 —
(II) Main work experience of current directors, supervisors and senior
management
11
1. Members of Board of Directors
Mr. Li Jianhong, Chairman of the Company, is currently Director, President of China
Merchants Group Limited. Mr. Li holds such degrees as MBA from University of East
London and master of economic administration from Jilin University and holds the title
of senior technical title of senior economist. He ever work for China Ocean Shipping
(Group) Company (hereinafter refer to as ―COSCO Group‖) and took the post of
Factory Director of COSCO Nantong Shipyard, of General Manager of COSCO
Industry Company, and of Assistant President, Chief Economist and Vice President of
COSCO Group, of Chairman of COSCO Corporation (Singapore) Limited, of
Chairman of the Board of Sino-Ocean Land Holdings Limited, of Chairman of COSCO
Shipyard Group Co., Ltd., as well as of President for China business of Nantong
COSCO KHI Ship Engineering Co., Ltd.. Meanwhile, Mr. Li Mr. also has been director
of COSCO Holding Limited, COSCO Pacific Limited and COSCO International
Holdings Limited (all of which are listed in Hongkong Exchanges and Clearing
Limited) Li is also vice director of China Society of Naval Architecture and Offshore
engineering and Vice President of China Association of National Shipbuilding Industry
etc. He has been awarded the Third Session of National Outstanding Young
Entrepreneur in 1993, Model Worker of National Transportation System in 1994 and
National Mode Worker in 1995. He has been Director of the Company since March
1995 and acts as Director of the Company again since 25 October 2010.
Mr. Sun Jiakang, Vice Chairman from Aug. 2011 to Jan. 2012. Currently, he takes
posts of Deputy GM, the Party Committee member of COSCO Group. He graduated
from Dalian Maritime College in 1982, majoring in Ship Navigation Management of
Navigation Department, gaining Bachelor Degree in Engineering. Then he successively
gained the Bachelor Degree in Economics from People‘s University of China in 1987,
Master Degree in Economics from Dalian Maritime University in 2001 and Doctor of
Philosophy in Management from Preston University, USA in 2005. Mr. Sun is also a
senior engineer. Mr. Sun is also a senior engineer.
Mr. Sun joined COSCO Group in 1982, he successively worked as Vice Chief of
Marine Division in Tianjin COSCO Co., Ltd., Vice Manager and Manager of
Containers Lines Department III as well as Manager of Containers Lines Department II
in CIMC, General Manager, Assistant of CEO of Transportation Department and
concurrently Spokesman in COSCO Group, Vice CEO of COSCO (Hongkong) Group,
Vice Chairman of the Board and concurrently General Manager in COSCO Pacific
Limited, General Manager and Vice Secretary of CPC in COSCO Containers Lines Co.,
Ltd. and Vice General Manager and Vice Secretary of CPC (Concurrent), etc. in
COSCO Holding Limited.
Mr. Sun Jiakang has rich experience in international shipping and logistic management.
Now he is the director of BIMCO, Box Club, World Shipping Council and Swedish
Club, Chairman of China in Germanischer Lloyd Group, Vice Chairman of Logistics
Association China, Member of Maritime Arbitration Commission of China Council for
the Promotion of International Trade, Standing Director of China Institute of
Navigation, Standing Director of China Shipowners Association and Chairman of
12
Container Transportation Commission. He is also one of the excellent people in the
sixty-year history of Chinese Marine Shipping Industry, Senior Member of The Hong
Kong Institute of Directors and Member of International WHO‘S WHO of
professionals, and concurrently Visiting Professor in Dalian Maritime University,
Shanghai Maritime University and Qingdao Oceanshipping Mariners College. In Jan.
2008, he was elected as the Member of the 13th Session of Shanghai National People‘s
Congress and Member of Standing Committee of National People‘s Congress. Since
Aug. 2011, he has been Vice President of the Company. In Feb. 2012, he resigned from
Director and Vice President of the Company due to work reason.
Mr. Xu Minjie, Vice Chairman. He is currently Deputy GM, member of the Party
Committee of COSCO Group. Mr. Xu graduated from ship navigation in Qingdao
Ocean Shipping Mariners College and obtained MBA degree from Shanghai Maritime
University and master‘s degree in management from Maastricht School of Management
in Netherlands. Mr. Xu is a senior engineer and started work in May 1977. Mr. Xu
joined COSCO Group in 1980, he successively acted as assistant officer, third officer,
second officer, chief officer and captain in Shanghai International Freight Forwarders
Association, and also department manager of ocean shipping, Department Manager of
Container Freight Dept, Operation Dept and Ocean Shipping Export Dept etc. and
Deputy GM in COSCO Shanghai, as Deputy GM, GM and member of the Party
Committee, Vice Secretary of the Party Committee of COSCO Shanghai International
Ocean Freight & Forwarding Company; GM, Vice Secretary of the Party Committee of
COSCO Shanghai International Ocean Freight & Forwarding Company (Cosfre
Shanghai for short); as General Manager of Freight Dept. in COSCO Group; GM of
COSCO Pacific Limited; Vice President, member of the Party Committee of COSCO
Group. Mr. Xu once acted as Vice Chairman of Shanghai International Freight
Forwarders Association from Dec. 1998 to Sep. 2003. From Jun. 2005 to Jan. 2007, he
served as Director of China Communications and Transportation Association. From
Apr. 2007, Mr. Xu has been the Company‘s Director; in Jun. 2011, Mr. Xu Minjie
resigned from the post of Director of the Company due to work change. From Mar.
2012, he was re-elected Director and Vice Chairman of the Company.
Mr. Mai Boliang, is Director and president of the Company. He graduated from
mechanical engineering of South China University of Technology and served as
technician and Manager and Deputy Manager of Product Technical Dept. since 1982.
He began to serve as president of the Company in 1992 and act as Director of the
Company since Mar. 1994.
Mr. Wang Hong, Director. He is currently General Manager of Strategy Research
Department of China Merchants Group Limited, concurrently Director of China
Merchants Holdings (International) Co., Ltd., Director of China Merchants Property
Development Co., Ltd., as well as Director of China Merchants Energy Shipping Co., Ltd.
Mr. Wang graduated from turbine management in Dalian Maritime University in 1982
and then continued his study in the Graduate School of University of Science and
13
Technology Beijing and Gradual School of Chinese Academy of Social Sciences and
achieved MBA degree and PHD of management respectively. He ever served as Marine
engineer of COSCO Guangzhou Ocean Shipping Company, General Manager of
CIESCO (China Communications Import & Export Corporation) Ocean Shipping Dept.,
General Manager of CIESCO Financial Dept and CIESCO General Manager,
Managing Director of Hoi Tung Marine Machinery Suppliers Limited, General
Manager of Performance Appraisal Dept., HR Dept. and Strategy Research Dept. in
China Merchants Group, standing Vice General Manager, CEO (concurrent) of China
Merchants Holdings (International) Co., Ltd., Chairman of China Merchants Holdings
Pacific Limited and Vice Chairman in Shanghai International Port (Group) Co., Ltd. He
began to act as the Company‘s Director since April 2007.
Mr. Wang Xingru, Director. Currently he acts as Executive Director, Vice Chairman
and Managing Director of the Board, Chairman of Investment and Strategy, Chairman
of Investment & Strategic Planning Council and member of Executive Board,
Remuneration Council and Nominating Council of COSCO Pacific Limited. He
graduated in Shangdong University of Technology with a master degree on engineering
and acted as an excellent senior engineer with a high score. Mr. Wang joined COSCO
in 1991, successively took posts of standing deputy GM of Tianjin United Ocean
Shipping Development Co., Ltd., deputy GM of COSCO Industry Co., GM of COSCO
Shipyard Co., Ltd., non-independent and non-executive director of COSCO Corp.
(Singapore). Now Mr. Wang takes posts of vice president of Ocean Engineering and
Equipment Committee of CANSI. He was ever elected as president of Ship Repair
Committee of CANSI, vice president of CANSI. He has more than 20 years experience
on operation and administration of shipping and related industries, with affluent
experience on corporate operation and administration as well as assets operation. He
enjoys a good reputation in industry for his brilliant eyesight and administration skill.
Mr. Wang is in charge of the leadership of overall administration, development strategy,
corporate management, and finance administration etc. of COSCO Pacific Limited. He
has been Director of the Company since Aug. 2011.
Mr. Ding Huiping, Independent Director. Currently, he is a professor and doctor tutor
of School of Economics and Management in Beijing Jiaotong University, is director of
Chinese Enterprise Competitive Power Research Center in Beijing Jiaotong University.
He concurrently acts as independent director of CRBC International Co., Ltd. He
graduated from Northeastern University with bachelor of engineering degree in Feb.
1982. He went to Sweden for study in 1987, got licentiate of engineering in 1991, got
economics doctor degree in 1992 and then has been postdoctoral researcher. He
returned to China in 1994, and then has been working in School of Economics and
Management of Northern Jiaotong University (now named Beijing Jiaotong University)
till now. Mr. Ding once concurrently acted as independent director of China Merchants
Bank, Huadian Power International Corporation Limited and Shandong Luneng
Taishan Cable Co., Ltd. His research direction: finance, decision-making of investment
& financing and enterprise evaluation and administration on enterprise economy and
14
innovation. Mr. Ding has been acted as Independent Director of the Company since
April 2010.
Mr. Jin Qingjun, Independent Director, is a master and securities lawyer. He currently
holds such positions as partner of King & Wood Law Firm, visiting professor of China
University of Politic Science and Law, arbitrator of Shenzhen Arbitration Committee,
arbitrator of China International Economic and Trade Arbitration Commission,
member of Appeals Review Committee of Shenzhen Stock Exchange, legal advisor of
Washington Court of Appeals in China, legal advisor for many financial institutions,
securities companies and listed companies at home and abroad, member of China Law
Society, China International Law Society, China Maritime Law Society and Inter-
Pacific Bar Association. Mr. Jin once worked as lawyer in Johnson Stokes & Master
and British Law Firm, full-time lawyer of Zhongxin Law Firm, founder and executive
partner of Shenzhen Xinda Law Firm. As one of the first lawyers in China to obtain
accreditation as lawyer, Mr. Jin is mainly engaged in legal affairs in such sectors as
finance, securities, investment, intellectual property, real estate, corporation,
bankruptcy and litigation and has made outstanding contribution in securities, funds,
banking, merger and acquisition. In Apr. 2007, he began to serve as Independent
Director.
Mr. Xu Jing’an, independent director. He graduated from Fudan University News
Department in 1964 and then worked in Central Marxist-Leninist Research Institute,
Central Policy Research Institute, State Planning Commission, Office of Economic
Policy Reform under State Council and State System Reform Commission. Mr. Xu
served as Vice Director of China Economic System Reform Research Commission in
1985 and Director of Shenzhen Economic Reform Commission and Vice Director of
Shenzhen Stock Exchange in 1987. Currently, he serves as Chairman of Xu Jing An
Investment Consultants, Chairman and research fellow of Shenzhen New Century
Civilization Research Institute. In April 2007, he began to serve as Independent
Director.
2. Members of the Board of Supervisors
Mr. Lu Shijie, Chief Supervisor. He took the post of Chief Financial Officer in
COSCO Pacific Limited in Jan. 2008. Mr. Lu Shijie is a member of Hong Kong
Institute of Certified Public Accountants, American Institute of Certified Public
Accountants, the Chartered Institute of Management Accountants and Certified
Management Accountants of Canada. Mr. Lu Shijie is MBA of University of Ottawa
and holds bachelor degree in administration in University of York. He once acted as
CFO and General Manager in listed company in Hong Kong and American
multinational Company, for example, in New World TMT, Wang On Group Limited
and Hong Kong Plastics Department of General Electric Company. He has been acting
as supervisor of the Company since Jun. 2009.
Ms. Huang Qianru, supervisor. She now serves as Vice General Manager of China
15
Merchants Holdings (International) Co., Ltd., taking charge of the company‘s financial
affairs. In 2004, she joined China Merchants Holdings (International) Co., Ltd. She has
been Independent Director (Non-executive) in China Gas Holdings Ltd. in late 2003,
and assigned as Chairman of the Board (Non-executive) of China Gas Holdings Ltd. in
Mar. 2011. Previously, Mr. Huang has had an over-15-year experience of working as a
top executive in many globally famous investment banks such as Societe Generale,
Deutsche Morgan Grenfell, Samuel Montague and Bear Stearns Asia, providing
financial consulting and financing services for not less than 50 companies in the
Greater China Region and Asia. And Ms. Huang has an MBA degree granted by
University of Asia Oriental, Macau. She has been supervisor of the Company since Jun.
2009.
Mr. Feng Wanguang, staff supervisor. Mr. Feng graduated from foundry major in
Mechanical Engineering Department of South China University of Technology. Mr.
Feng began to work in Shekou Huamei Steelworks in Jan. 1982. Mr. Feng worked in
Shekou Industrial District Organization Dept from Jan. 1983 to Sep. 1986. Mr. Feng
worked in Hongda Glasses Co., Ltd. as General Manager from Sep. 1986 to Jan. 1987.
Mr. Feng worked in China Merchants (Hong Kong) HR Dept and Board Office as Vice
General Manager from Jan. 1987 to Sep. 1996. Mr. Feng worked in China Merchants
Zhangzhou Development Zone as Vice General Manager and Vice CPC Secretary from
Sep. 1996 to Apr. 1999; Vice CPC Secretary in CIMC from Apr. 1999 till now. Mr.
Feng began to serve as supervisor since May 2002.
3. Senior management
Mr. Mai Boliang, director and President, please referred to the above introduction on
directors.
Mr. Zhao Qingsheng, Vice President. Mr. Zhao Graduated from Wuhan University of
Water Transportation Engineering (Wuhan University of Technology), majoring in
marine engineer. He is currently Vice President of the Company. Mr. Zhao joined
China Merchant Group in 1983 and served as General Manager of the Enterprise Dept.
in China Merchant Group from 1991 to 1995, Deputy General Manager of China
Merchants Holdings (International) Co., Ltd. from 1995 to 1999, and Vice Chairman of
the Company from 1997 to 1999. He has been Vice President of the Company since
1999.
Mr. Li Ruiting, Vice President. Mr. Li graduated from South China University of
Technology with bachelor degree in mechanical manufacturing. He is a senior engineer
and is currently the Company‘s Vice President. Mr. Li began to serve the Company in
1987, and ever took the post of Manager of the Company‘s Technology Dept. and QC
Dept., of Deputy General Manager and General Manager of Shenzhen Southern CIMC
Containers Manufacture Co., Ltd. and of General Manager of Shanghai CIMC Reefer
Containers Co., Ltd. Mr. Li has been the Company‘s Vice President since 1995. In
terms of Mr. Li Ruiting already fulfilled conditions for retirement that the Board agreed
16
to dismiss Mr. Li Ruiting from his post of Vice President in Mar. 2011.
Mr. Wu Fapei, Vice President. Mr. Wu graduated from South China University of
Technology with bachelor degree in mechanical manufacturing and master degree in
engineering. He used to be teacher and associate professor of School of Business
Administration in South China University of Technology and Deputy General Manager
of Nanhua Bicycle Ronghui Co., Ltd. in Zhaoqing Guangdong. He joined the Company
in 1996 and began to serve as Manager of Information Management Dept. in December
1996, Assistant President of CIMC in December 1998 and Secretary to the Board of
CIMC in Dec. 1999. He began to serve as Vice President of CIMC in Mar. 2004.
Mr. Li Yinhui, Vice President. Mr. Li obtained bachelor‘s degree in history from Jilin
University, MBA degree from School of Business in Nanjing University, and PHD in
economics from Jilin University. He worked in Central Committee of Chinese
Communist Youth League in 1991; worked in State Commission of Foreign Trade and
Economic Cooperation from May 1993 to Mar. 2003; and in Ministry of Commerce in
Mar. 2003. He served as Vice President of CIMC (part-time) from Oct. 2002 to Oct.
2003 and began to his work as Vice President of CIMC in Mar. 2004.
Mr. Liu Xuebin, Vice President. Mr. Liu graduated from Shenzhen University with a
bachelor‘s degree in management. He joined the Company in 1982, and ever worked as
Deputy Manager of the Company‘s Purchasing Dept., Deputy General Manager of
Nantong CIMC-SMOOTH SAIL Container Co., Ltd., Deputy General Manager of
Container Branch of CIMC Group, and General Manager of Xinhui CIMC Container
Co., Ltd. In 1997, he began to serve as General Manager of Shenzhen Southern CIMC
Containers Manufacture Co., Ltd., and in Dec. 1998, he also took post of the Assistant
President of the CIMC and Chairman of Xinhui CIMC Container Co., Ltd. at the same
time. In Mar. 2004, he began to serve as Vice President of CIMC.
Mr. Yu Ya, Vice President of the Company, Vice Secretary of the Party Committee and
General Manager of Public affairs Dept. Mr. Yu graduated from Mechanical
Engineering Department of Tianjin Light Industry Vocational Technical College, MBA
of Nanjing University. He used to serve as Secretary of Minister, Vice-Director of
office department in the Light Industry Dept (later it was China Light Industry
Association). Then he served as Deputy General Manager and General Manager of
China National Food Industry (Group) Corp., Vice-president of Sinolight Corporation,
and Executive Director、Vice-Executive President of Capgemini in Greater China. Mr.
Yu joined the company in Aug.2007, and served as the Vice secretary of the Party
Committee and General Manager of Public affairs Dept. He began to serve as Vice
President of CIMC since Mar. 2010.
Mr. Yu Yuqun, Secretary to the Board. Mr. Yu obtained bachelor and master‘s degrees
in economics from Beijing University. He once worked in the State Price Control
Bureau. He joined the Company in 1992 and first worked as Deputy Manager and then
17
Manager of Financial Affaires Dept., responsible for securities affaires and fund
management. He has been Secretary to the Board of the Company since March 2004.
Mr. Jin Jianlong, General Manager of Financial Dept., a certified accountant. He
graduated from Maanshan Institute of Iron and Steel Technology in Jul. 1985, majoring
in accounting. From Aug. 1975 to Apr. 1989, he worked in Hangzhou Iron & Steel
Works as Section Chief of the Financial Dept. He joined the Company in 1989, and
first worked as Manager of the Financial Management Dept. of CIMC, and then of the
Financial Management Dept. of Shenzhen Southern CIMC Containers Manufacture Co.,
Ltd.. He has been the Company‘s General Manager of Financial Management since Oct.
2001.
Ms. Zeng Beihua, General Manager of Cash management Dept. Ms. Zhen graduated
from Wuhan University, majoring in accounting. Ms. Zhen joined the company in 1989,
and ever took the post of the General Manager of Financial Dept.、Deputy General
Manager of CIMC Vehicle (Group) Corp., while General Manager of CIMC Vehicle
Financing Lease Co., Ltd., General Manager of CIMC Finance Corp. She served as the
General Manager of Cash Dept. of the company since Dec. 2009.
(III) Concurrent positions held by Directors, Supervisors and Senior Management
in organizations other than shareholder’s company
Relations with the
Organizations for concurrent Company
Name and title Title
positions (controlling
related/non-related)
Li Jianhong/Chairman China Merchants Group Limited Non-related Director and president
Chairman of China Merchants Naught Chairman
Energy Shipping Co., Ltd.
China Merchants Holdings Related Managing Director and
(International) Co., Ltd Vice Chairman of the
Board
Sun Jiakang/ COSCO Group Related Deputy GM, member
Vice Chairman of the Party Committee
China COSCO Holdings Co., Ltd. Related Executive Director
Xu Minjie/Vice Chairman COSCO Group Related Deputy GM, member
of the Party Committee
COSCO Container Lines Non-related Chairman
Company Limited
COSCO Logistics Co., Ltd Non-related Chairman
COSCO Korea Co., Ltd. Non-related Chairman
Concurrent positions in 30
Mai controlling subsidiaries such as Controlling
Chairman/Director
Boliang/Director/President CIMC Vehicle Group and subsidiary
Shenzhen South CIMC Limited
Wang Hong/Director General Manager of
China Merchants Group Limited Related
Planning Department
China Merchants Holdings
Related Director
(International) Co., Ltd
China Merchants Energy Shipping
Non-related Director
Co., Ltd.
China Merchants Property Non-related Director
Development Co., Ltd
18
Wang Xingru /Director COSCO Pacific Limited Related Vice president of the
Board and Director,
GM
COSCO Pacific Investment
Non-related Director
Holdings Limited
COSCO H.K. Investment Co., Ltd Non-related Director
Concurrent positions in 34 Non-related Director/Chairman
subsidiaries such as COSCO
Pacific Limited
Concurrent positions in 8 joint Director/Chairman/Vice
control entities and affiliated Chairman
Non-related
companies under COSCO Pacific
Limited
Ding Huiping/Independent Beijing Jiaotong University Non-related Professor and doctor
Director tutor of School of
Economics and
Director of Chinese
Enterprise Competitive
Power Research Center
in Beijing Jiaotong
University
CRBC International Co., Ltd Non-related Independent Director
Jin Qingjun/Independent King & Wood Law Firm Non-related
Senior partner
Director
Invesco Great Wall Fund
Non-related Independent Director
Management Company Limited
Gemdale (Group) Co., Ltd. Non-related Independent Director
China United Travel Co., Ltd. Non-related Independent Director
China University of Politic Non-related
Part-time professor
Science and Law
School of Law of Tsinghua
Non-related Part-time professor
University
Shenzhen Arbitration Committee Non-related Arbitrator
China International Economic and
Non-related Arbitrator
Trade Arbitration Commission
Xu Jing‘an/Independent Xu Jing An Investment Non-related Chairman
Director Consultants and
Shenzhen New Century Non-related Chairman, research
Civilization Research Institute fellow
Shenzhen Nanshan Power Station Non-related Independent Director
Co., Ltd.
Lv Shijie/Chief Supervisor COSCO Pacific Limited Related CFO
Concurrent positions in 8 Director/Chairman
subsidiary companies of COSCO Non-related
Pacific Limited
Concurrent positions in two joint Non-related Director
control entities and affiliated
companies under COSCO Pacific
Limited
China Merchants Holdings Related Director, Deputy GM
Huang Qianru/Supervisor
(International) Co., Ltd
Feng Controlling
CIMC Holdings (B.V.I.) Limited Director
Wanguang/Supervisor subsidiary
Zhao Qingsheng/Vice Concurrent positions in 52 Controlling Chairman/Director
President companies such as Shenzhen subsidiary
South CIMC Limited and CIMC
Enric Energy Equipment Holdings
Limited
Wu Fapei/Vice President Concurrent positions in 44 Controlling Chairman/Director
19
controlling subsidiaries such as subsidiary
CIMC Vehicle (Group) Corp. and
CIMC Finance Co., Ltd
Liu Xuebin/Vice President Concurrent positions in 6 Controlling Chairman/Director
controlling subsidiaries such as subsidiary
Shenzhen South CIMC Limited
Li Yinhui/Vice President Concurrent positions in 7 Controlling Chairman/Director
controlling subsidiaries such as subsidiary
CIMC Vehicle Group
Yu Ya/ Vice President Concurrent positions in 10 Controlling Chairman/Director
controlling subsidiaries such as subsidiary
CIMC Raffles Ocean Engineering
(Singapore)Co., Ltd.
Concurrent positions in 25 Controlling Director
controlling subsidiaries such as subsidiary
Yu Yuqun /Secretary to the CIMC Enric Energy Equipment
Board Holdings Limited and Shenzhen
CIMC-Tianda Airport Support
Co., Ltd.
Jin Jianlong/General Concurrent positions in 92 Controlling Director
Manager of Financial controlling subsidiaries such as subsidiary
Management Shenzhen South CIMC Limited
and Enric Energy Equipment
Holdings Limited
Zeng Beihua/ Manager of Concurrent positions in 20 Controlling Director
Capital Management controlling subsidiaries such as subsidiary
Department CIMC Finance Co., Ltd. and
CIMC Vehicle Financing Lease
Co., Ltd.
(IV) Remuneration for directors, supervisors and senior management
Procedure and basis to determine remuneration for directors, supervisors and senior
management:
As stipulated in the Articles of Association, the remuneration for directors and
supervisors is determined by shareholders meetings and that for senior management is
determined by the Board of Directors. In the reporting period, CIMC senior
management get paid in CIMC or subsidiaries.
CIMC has established a complete remuneration system and incentive mechanism. First,
we implement annual-salary system for directors, supervisors and senior management
who work for and get paid from CIMC. Secondly, CIMC board of directors formulates
―CIMC Leading Group Measurement and Management Regulations‖ at the beginning
of each year to implement performance measurement for relevant personnel and
determine performance-based incentive amount at the end of each year. Shareholders‘
meeting authorizes the Board of Directors to determine the remuneration of chairman
and President Mai Boliang in compliance with ―CIMC Leading Group Measurement
and Management Regulations‖ and president formulates proposals for performance-
based bonus for other senior management subject to approval by Remuneration Council
under the Board of Directors.
Of the 8 directors, Mr. Mai Boliang holds the position as president and gets paid in
CIMC and CIMC paid no remuneration to any other directors in the reporting period.
Based on approval by the shareholders meeting and board of directors, independent
directors Ding Huiping, Jin Qingjun and Xu Jing‘an received RMB 120,000 as subsidy
20
for independent directors in reporting period, while CIMC paid no remuneration to any
other independent directors in the reporting period. As staff supervisor, Mr. Feng
Wanguang gets paid in CIMC and no remuneration was paid to other supervisors in the
reporting period.
Details on remuneration (before tax) of current directors, supervisors and senior
management please see basic information above about the directors, supervisors and
senior management.
(V) Changes in Directors, Supervisors and Senior
Xu Minjie, Director of the Six Board of Directors, resigned from the post of Director of
the Company on 13 Jul. 2011, due to work change. According to Articles of
Association, directors of the Board of the Company still require one more. Then the
Board nominated Mr. Sun Jiakang, Mr. Wang Xingru as candidate for the Six Board of
Directors. On the First Special Shareholders‘ General Meeting 2011 convened on 11
Aug. 2011, Mr. Sun Jiakang and Mr. Wang Xingru were elected Directors of the Six
Board of Directors. On 2 Feb. 2012, due to work change, Mr. Sun Jiakang resigned
from posts of Director and Vice Chairman of the Company. The First Special
Shareholders‘ General Meeting was convened on 1 Mar. 2012, of which approved a
proposal to electing Mr. Xu Minjie as Director of the Six Board of Directors. On 6 Mar.
2012, the Fifth Session of the Six Board of Directors elected Mr. Xu Minjie as Vice
President of the Company.
II. About the employees of the Company
(I) Number of employees
By 31 Dec. 2011, the number of employees of the Company is 64,530.
(II) Composition
Post composition Education status
Managemen Technolog Productio Junior
Doctor Master Bachelor
college
Others
t y n workers
Number 9301 4893 50336 23 664 6584 7028 50231
Proportion
(%) 14.4% 7.6% 78% 0.04% 1.03% 10.21% 10.90% 77.85%
The Company does not need to bear expense for retired employees.
21
Section VI Corporate Governance Structure
I. Corporate governance
In the reporting period, the Company constantly perfected corporate governance and
standardized operation of the Company strictly in accordance with the provisions in such
laws and regulations as the Company Law, Code of Corporate Governance for Listed
Companies, Guideline for Establishing Independent Director System in Listed Companies,
Rules for the General Meeting of Shareholders of Listed Companies and Guidelines for
the Articles of Association of Listed Companies. Corporate governance was based on the
regulators in the rules of procedure of shareholders‘ general meeting, the Board‘s meeting
and Supervisors‘ meeting, as well as work rules for president, and through the roles of
special committee of the Board, thus assuring the duties performance and responsibility
fulfillment of the meetings held by the shareholders, directors and supervisors. Interests
of the shareholders and the Company were protected and corporate governance which
complied with the requirements of modern enterprise management was initially
established.
In accordance with regulations and requirements on corporate governance of listed
companies stipulated by CSRC, CSRC Shenzhen Bureau and Shenzhen Stock Exchange,
the Company positively communicated with securities supervisory department, provided
feedback and submitted materials and reports on relevant check and enquiry issues,
specific check, implement of system required by supervision department. Meanwhile, the
Company implemented and revised relevant systems; they were Registration and
Administration System on Persons with Inside Information, Management System on
Financing Capital and Management System on Related-party Transactions.
The Company actively participated in trainings for directors and supervisors of listed
companies organized by regulatory ministry. The Company organized all directors,
supervisors and senior management as well as shareholders holding over 5% shares of the
Company, strictly obey relevant laws, statutes, regulations and cases to purchase and sell
shares of the Company without violating, improved self-discipline and restraint
consciousness on relevant action of the above personnel.
As for implement of administrative system on inside information and persons with inside
information, the Board of the Company and secretary to the Board are in charge of
administrative work of inside information; the Finance Administration Dept. is in charge
daily procedure of registration and record of inside information. The Company is strictly
in line with regulations and requirements stipulated in system, so as to conduct efficient
supervision for inside carry-over and disclosure of inside information. Upon self-
examination, there were no particulars about persons with inside information took
advantages of inside information to purchase and sell shares of the Company before the
disclosure of major sensitive information that shall have an impact on the share price of
the Company in 2011. The annual secretary to the Board of the Company 2011 received
public accomplishment from CSRC Shenzhen Bureau in respect of standardized
corporate governance.
II. Performance of the Independent Directors
22
(I) Particulars about the independent directors attending the Board meetings:
Name of Independent Due presence Presence in Entrusted
Absence (times)
Directors (times) person (times) presence (times)
Ding Huiping 18 18 0 None
Jin Qingjun 18 18 0 None
Xu Jing‘an 18 18 0 None
(II) Duty performance
In compliance with requirements of regulatory documents as Guideline for Establishing
Independent Director System in Listed Companies, the Articles of Association and Work
Details for Independent Directors, the Independent Director, being reasonably cautious,
diligently performed their duty to protect the overall interests of the Company, especially
legal interests of minority shareholders. They attended the Board‘s meetings on time,
reviewed carefully documents of the meetings and actively carried out investigation and
inspected subsidiaries of the Company to gather information needed for the decision-
making and gave clear opinions on the affairs discussed. They also paid special attention
to the auditor‘s report and reports of the Company by public media, kept themselves
informed of the Company‘s operation and management status, and significant events
happened or contingent and their influence. They timely reported to the Board the
problems existing in the operation of the Company and submitted annual duty report to
the Shareholders‘ General Meeting of the Company,
In the reporting period, the Independent Directors carefully deliberated the significant
events which required their independent opinions and submitted opinion letters in writing.
The significant events included:
1. Special statement and independent opinion on external guarantee in 2010;
2. Independent opinion on particulars of derivatives investment and risk control in 2010;
3. Independent opinion on particulars of execution of daily related-party transactions in
2010 and prediction of daily related-party transactions in 2011;
4. Independent opinion on resignation of senior management;
5. Independent opinion on daily related-party transactions;
6. Independent opinion on Self-appraisal Report on Internal Control of CIMC 2010;
7. Independent opinion on remuneration of directors and senior management of the
Company;
8. Independent opinion on engagement of accounting firm;
9. Independent opinion from Independent Directors on nomination and election of
candidate for director to the Six Board of Directors;
10. Specific statement and independent opinion on relevant events of the first half of
2011;
11. Independent opinion on relevant events concerning granting stock option in stock
option incentive plan;
12. Independent opinion on particulars of derivatives investment and control of risk of the
Company from Jan. 2011 to Sep. 2011.
(III). Independent role of Independent Directors in the Annual Report
Strictly in accordance with the requirements stipulated in Public Notice on Preparation of
Annual Report 2011 and Relevant Work by CSRC, the Independent Directors diligently
performed their duties as independent directors when preparing the Annual Report 2011.
23
1. Independent Directors heard the report on the operational condition 2011 by the
management staff in ways such as meeting of the Board. Independent Directors inspected
Enric (Bengbu) Compressor Co., Ltd. and C & C Truck Co., Ltd., and listened to report on
annual operational condition 2011 by the General Manager respectively.
2. Independent Directors communicated thoroughly with Klynveld Peat Marwick Goerdeler Co., Ltd.
(hereinafter refer to as ―KPMG‖) on personnel of auditing team, the auditing plan, risk evaluation, test
of fraud and its evaluation method as well as the key point of the auditing work 2011, and the two
parties reached agreement on these items. Independent Directors examined and approved the
Arrangement of the Companys Audit Work 2011.
3. Independent Directors heard reports on the preparation stage, drafting stage and concluding stage of
annual report auditing by KPMG respectively;
4. Independent Directors communicated with KPMG on the preliminary examination
opinions on the Auditors Report, and agreed on the preliminary examination opinions
that KPMG had issued on audit report without reservations.
5. Independent Directors carefully deliberated the holding procedure and the documents
required for the Six Session of the Six Board of Directors held on 21 Mar. 2011 for
deliberating the annual report. They believed that the notice on the convening and
procedures of the Board‘s meeting for deliberating the annual report were in compliance
with requirements of relevant rules and regulations; and that the annual report, auditor‘s
report, financial statement and other documents on the resolutions to be discussed were
complete and in compliance with the requirements of relevant rules and regulations.
III. Particulars about the Company’s separated from the controlling shareholder in
respect of business, personnel, assets, organization and financing.
Majority shareholders for CIMC include China Merchants (CIMC) Investment Limited
and COSCO Container Industries Limited. CIMC was separated from the controlling
shareholder in business, personnel, assets, organization and financing as well as
independent accounting and independent bearing of liabilities and risks.
(I) In aspect of personnel: the Company was independent and complete in labor,
personnel and salary management and absolutely independent from the majority
shareholders. All senior managements received remuneration in the listed Company and
none of them holds a double position in the controlling shareholders entities.
(II) In aspect of assets: the Company‘s assets were complete, and there was the clear
property right relationship between the Company and the controlling shareholder. The
Company owns an independent management of the assets and there exist no such things
as the majority shareholders possessed or controlled the assets or intervened in the
operation management of the asset of the listed company.
(III) In aspect of financing: the Company owned independent financial department,
established independent accounting system and financial management system, opened
independent bank account, paid tax in line with laws independently.
(IV) In aspect of organization: the Company‘s Board of Directors, the Board of
24
Supervisors and other internal organizations are complete and operate independently.
Shareholders exercised their rights according to the law and bear relevant liabilities and
did not intervene in the operation activities of the Company directly or indirectly beyond
the shareholders‘ general meeting.
(V) In aspect of business: the Company‘s systems of production, purchase, auxiliary
production and sales are completely independent. Intangible assets as industrial property
right, trademarks and other proprietary technology were independently owned by the
Company. There existed no such thing as the Company and the majority shareholders as
well as their subsidiaries produced and sold the same products and there was no direct or
indirect competition in business between them.
In the reporting period, there was no illegitimated governance problem such as providing
private information to majority shareholders or actual controllers in the Company.
IV. Establishment and improvement of the internal control system
(I) General situation
CIMC has established a series of procedures and systems for the Shareholders‘ General
Meeting, the Board of Directors and the Board of Supervisors to exercise their decision-
making power, executing power and supervisory power. In addition, the Board of
Directors has established three special committees for audit, remuneration &
measurement and strategy respectively. These special committees perform their roles to
discuss and decide on significant affairs of the Company in compliance with relevant
working rules.
The Board of Directors supervises the establishment, improvement and implementation
of the internal control system via the Audit Committee. The Audit Committee assists in
formulating and reviewing the internal control system and reviews and supervises
significant related-party transactions. The Board of Supervisors reviews internal control
status and provides audit proposals.
In terms of corporate governance and internal control, the Audit & Supervision
Department assists the Board of Directors in recognizing and evaluating material risks
and assists the Group in improving its risk management and internal control system;
assists the Group in maintaining an efficient internal control system through the
evaluation of the efficiency and continued improvement of internal control system;
implementing duties of examination and evaluation, consultation and service. The Audit
& Supervision Department regularly submits report concerning audit work of internal
control system to the audit committee, the Board of Supervisors under the Board and
management team of the Group.
In strict compliance with the Company Law, the Code of Corporate Governance for
Listed Companies, the Guiding Opinion on Establishing Independent Director System in
Listed Companies, the Rules for Listing Shares in Shenzhen Stock Exchange, the
25
Guidelines for Fair Information Disclosure of Listed Companies, the Guidelines of
Shenzhen Stock Exchange for Internal Control of Listed Companies, the Several
Provisions on Strengthening Protection of Rights and Interests of Public Shareholders,
the Decisions on Amending Some Provisions on Cash Dividends by Listed Companies,
the Regulations on Takeover of Listed Companies, the Guidelines of Shenzhen Stock
Exchange for Management over Listed Companys Shares Held by Its Directors,
Supervisors and Senior Executives and Changes Thereof, and other relevant laws and
regulations by the state, CSRC and other supervisory authorities, the Company continued
to improve its corporate governance and standardized its operation. According to
Guidelines for Internal Control of Listed Companies in Shenzhen Stock Exchange, the
Company launched establishment of internal control system in Jun. 2007. Based on the
advanced COSO's Internal Control - Integrated Framework, the internal control system of
the Company ranges from management of controlling subsidiaries, management of
investment, information disclosure, related-party transactions, purchase and payment,
sales and collection, human resources, fixed assets, financial statement, monetary capital,
costs, information system and other management procedure for major business. The
Company has set up construction committee of internal control system (hereinafter refer
to as ―the committee‖). On 21 Feb. 2011, the Company made adjustment to the members
of the Committee, newly elected persons responsible for relevant functions and persons
responsible for main industrial block, so as to ensure an efficient operation of internal
control system.
Early this year, the Company was combined into 22 pilot key listed companies that are
the first batch of pioneers of internal control implementation criterion in Shenzhen by
CSRC that the Company drafted plan to upgrade the construction of internal control
system: by 2011, each industrial block of the Company shall coated with an internal
control system; by 2012, each subordinated entity enterprises of the Company shall
coated with an internal control system.
In the reporting period, the Company divided the upgrading plan of construction of
internal control system into three steps:
1. In line with the spirit of Internal Control Standards and its Supporting Indexes issued
by the Ministry of Commerce of the People‘s Republic of China CSRC, the State
Administration of Taxation, the State Administration for Industry & Commerce of the
People‘s Republic of China, and the State Administration of Foreign Exchange, the Audit
and Supervision Department of the Company set up a work team to draw up training
materials and gathered each entities for training; the work team compared the 18
operation indexes with the internal control system previously constructed by the
Company and made a development and some innovation as combining with actual
business of the Company. As a result, the 18 operation indexes expanded to 24
application modules and thereby formed a template file. The Group adapted to new work
requirements related to internal control system, improved the process of rolling work plan
(from monthly to weekly), and internally audited the first-stage software for audit work in
IT platform.
26
2. The Company shall open experimental units of internal control in typical enterprises of
each business block, establish a set of completed RCM module applicable for each
enterprise block, of which includes each important procedures such as organization
structure, strategy of development, comprehensive budget, purchase, sales, financial
statement and so on. Supervisory team of the Group and experimental units shall inspect
the differences between the existing control procedures and supporting guidelines,
analysis flaw of the existing procedures, define evaluation rules for flaw of internal
control (which including qualitative and quantitative criteria) according to supporting
guideline on compare of internal control. They shall identify flaw of internal control on
the basis of common discussion and thereof to accomplish 35 rules of internal control.
3. Supervisory team of the Group shall carry out draft of RCM and sample tests to
internal control team of each unit, while internal control team of each unit should inspect
differences between the existing control procedures and supporting guidelines analysis
flaw of the existing procedures, identify flaw of internal control. In respect of enterprise
that confirmed of internal control flaw, timely implement of rectify and improving is a
must. Rectify and improving work includes adjustment of arrangement of organization
and procedure, amendment of policies and systems, adjustment and training of personnel,
accountability of loss on internal control etc.. The said enterprise shall assure rectify and
improving of material flaw reach a mark through self-examination and internal review, so
as to perfect an overall check and realignment of internal control from top to bottom of
the Group. In accordance with requirements of the Announcement on Conducting Work
Affairs Related to Experimental Projects of Internal Control Standards of Listed
Companies in Shenzhen Administration Area (Shen-Zheng-Ju-Gong-Si-Zi [2011] No.31),
the Company reported the progress of internal control to Shenzhen Securities Regulatory
Bureau on schedule.
In 2011, the Company put further efforts in integrating its rules into a consistent system
and relevant management. It held special meetings and appointed specialized functional
organs to prescribe the establishing, reviewing and approving, and issuing processes for
rules, as well as to examine, revise and terminate the Company‘s internal operation rules
and basic management rules. By continuously improving various management rules, the
Company tried to standardize its internal business processes and management so as to
control risks arising from the course of operation.
(II) Particulars concerning corporate governance and rectification plan
From Oct. to Dec. 2010, the Shenzhen CSRC Bureau carried out an on-site examination
in the Company and stated formal supervision opinions in Apr. 2011. In line with
opinions and requirements by the Shenzhen CSRC Bureau, the Company adopted
targeted and efficient solutions, in a result, the Company finished rectify and improving
in time. The Company convened the Six Session of the Eighth Board of Directors for
2011 and the 3rd Session of the Six Board of Supervisors for 2011 on 30 Jun. 2011, of
which reviewed and approved Summary Report on Rectify and Improving Concerning
27
the On-site Examination by Shenzhen CSRC Bureau.
In 2011, the Company didn‘t have pending corporate governance issues.
(III) Establishment and execution of the Company‘s internal control rules for financial
reports
The financial management system of the Company is sound and effectively executed.
The system is divided into four grades, i.e. rules, provisions, methods and specific rules
(signed and issued by the President) and guidelines (signed and issued by department
chiefs), covering management over accounting, funds, budgets, payments, internal
transactions and events, etc..
The Company has established unified accounting policies for the Group. As for
subsidiaries abroad which adopt IFRS for accounting, they are brought under the Group‘s
unified accounting policies in the consolidation. In this way, it can be ensured that all
entities consolidated are accounted for under the same accounting policies. If a change of
key accounting policies is required or needed, approval from the Board of Directors must
be obtained. And change of ordinary accounting policies must be approved by the top
management.
Any change of the accounting estimates or correction of material accounting errors must
be approved by the management. And there have been no correction of material
accounting errors in the past three years.
As for asset impairment tests, the Company has explicit stipulations for the process and
approval of asset impairment recognition, which the Company has been strictly abided by.
Besides, checks and re-checks are carried out on a frequent basis.
In Mar. 2010, the Company established the Accountability Mechanism of CIMC for
Material Errors in Annual Report Preparation and Disclosure and the Financial
Principal Mechanism of CIMC, which were reviewed and approved at the Eighth Session
of the Six Board of Directors for 2010. Neither material defects had been found
concerning the Company‘s internal control, no significant accounting correction of errors
or amendment of prediction of performance on financial reports by the end of 2011.
(IV) Horizontal competition and related-party transactions
Horizontal competition arises between the Company and the subsidiary of China
Merchants Group (the controlling shareholder of the Company‘s first majority
shareholder). One of the Group‘s four core business—the offshore engineering
business—is partially the same with or similar to the business of the said subsidiary of
China Merchants Group commenced and developed its offshore engineering equipment
business earlier than the Company. Later, the Company also gained the opportunity to
acquire an offshore engineering enterprise—Yantai Raffles, thereof took offshore
engineering enterprise as a business of the Company. As a result, the horizontal
competition was unavoidable due to objective circumstances. Despite the fact that China
28
Merchants Group does not hold shares of the Company directly, the Company will still
communicate with its first majority shareholder in terms of the emphasis points and target
markets of the Company‘s offshore engineering business, so as to avoid direct
competition.
Product selling and purchasing activities in the container business arise between the
Company and a subsidiary of China Ocean Shipping (Group) Company—the Company‘s
majority shareholder. For more details, see the part of related-party transactions in Note
Ⅵ. 5. to the financial statements for the year.
V. Senior management performance evaluation, motivating and restraining
mechanism
CIMC has established a set of performance measurement, motivating and restraining
mechanism under which the remuneration for senior management is connected with
corporate performance and personal performance.
To ensure standard, healthy and sustainable development for CIMC, attract talented
people, maintain the stability of the senior management team and safeguard the interests
of all shareholders, CIMC formulated CIMC Leading Group Management and
Management Regulations based on medium and long-term strategic targets. Based on this,
CIMC formulates measurement targets at year beginning and determines total
remuneration at year end according to the accomplishment of various targets. The
shareholders‘ meeting authorizes the Board of Directors to determine the remuneration
for director and President Mr. Mai Boliang in compliance with CIMC Leading Group
Measurement and Management Regulations. For remuneration of other senior
management personnel, President formulates proposals and submits them to
Remuneration Council under the Board of Directors for approval.
On 17 Sept. 2010, the Stock Incentive Drafted Plan of China International Marine
Containers (Group) Co., Ltd. (Revised) was reviewed and approved at the First Special
Shareholders‘ General Meeting for 2010. On 26 Jan. 2011, the Company officially
accomplished the registration of stock options for the first phase, with a number of 54
million stock options. On 21 Sept. 2011, the 13th Session of the Sixth Board of Directors
for 2011 was convened, where the Resolution on Matters Concerning Granting Reserved
Options According to the Stock Option Incentive Plan was reviewed and approved. On
17 Nov. 2011, the registration of 6,000,000 options which were reserved for granting was
completed.
Implementation of stock incentive plan will be good for: establishment share and
restraining system on interest among shareholders, management team and backbone;
management team will balance short-term goal and long-term goal better: attract and
keep excellent administrative talent and backbone of business; durative creation of
incentive value will assure long-term stable healthy development and strengthen
competitive power of the Company.
29
Section VII The Shareholders’ General Meeting
Ⅰ. Annual shareholders’ general meeting
The Company convened the 2010 Annual Shareholders‘ General Meeting in Shenzhen on
13 Apr. 2011.
The public notice on the resolutions made at the meeting was published on Securities
Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao (HK) dated
14 Apr. 2011.
Ⅱ. Special shareholders’ general meetings
The First Special Shareholders‘ General Meeting for 2011 was convened in Shenzhen on
11 Aug. 2011.
The public notice on the resolutions made at the meeting was published on Securities
Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao (HK) dated
12 Aug. 2011.
30
Section VIII Report of the Board of Directors
I. Discussion and analysis by the management
(I) Changes in the industry and the influence thereof
After a growth rebound in 2010, the global economy continued to suffer from the
economic crisis and the European Debt Crisis in 2011. Developed countries, especial the
Euro zone, saw falling market demand, and economic growth in emerging countries also
slowed down as a result. With a tight economic policy, the year 2011, the second half in
particular, witnessed a drop in both China‘s fixed asset investment and export growth rate.
Economic growth in China encountered quite a slowdown. Meanwhile, due to two major
factors, i.e. falling trade growth and a surplus in shipping capacity, the global shipping
market slumped into lows again in the latter half of 2011. Compared with last year,
growth in the global economy, international trade and market demand for containers
decreased further.
In face of a complex and changeable operating environment, the Group adopted flexible
and effective operating strategies and measures. With common effort in all business
segments, the Company‘s business results for 2011 hit a record high. At the same time,
the Group carried forward its strategic upgrading, management upgrading and
organizational reform, boosting breakthroughs in the strength of the Company and all of
its business segments.
The year 2011 saw great fluctuations in the global container market. In terms of the
container business segment, the management seized up the situation, adjusted strategies,
created more competitive edges, pre-empted opportunities and improved the core strength
of the business, bringing new highs to the sales income and net profit generated in this
segment. In terms of the road transportation vehicle segment, domestic market demand
slowed down in growth and overseas markets saw partial recovery. The management
carried out the management policy that had been set, and took effective measures to
reform management and adjusted the organization. As a result, the operating objective for
this segment for 2011 was achieved. As for the energy, chemical & food equipment
segment, the management precisely predicted the strong growth of market demand and
seized opportunities to expand its production capacity in time, carry out proactive
marketing & planning and employ a ―one step first‖ new product development strategy,
which effectively expanded overseas markets, solidified the market position of CIMC‘s
best products, and achieved even greater growth in the sales income and operating profit
in this segment. Concerning the offshore engineering segment in 2011, the management
focused on pushing forward production and delivery in related to the existing orders,
adjusted the management system, improved the basic management level, and at the same
time made great effort in looking for new orders. And now the offshore engineering
segment has gradually walked into a healthy development track.
Cold chain logistics is a new industry with great potential. Although China lags behind in
developing cold chain logistics, it has now attached importance to the industry and
unveiled support policies for it. The Group has great prospects in cold chain equipments.
In search for coordinated development, it will integrate its resources of multi-modal
combined transportation reefer containers, reefer trucks and other refrigerators in which
31
CIMC has experience and competitiveness.
About the container industry: Throughout the year 2011, the prices and number of
containers demanded kept rising, but with a first-fast-and-then-slow feature. For 2011,
over 3.20 million TEU of containers were manufactured globally, including over 2.70
million TEU of dry cargo containers, rising close to 10% year on year; about 0.15 million
TEU of reefer containers and about 0.09 million TEU of special-purposed containers,
both decreasing slightly over last year. In terms of prices, the price for a TEU was
between US$ 2,600 and US$ 3,000 in the first half of the year and dropped to around
US$ 2,300-2,600 in the second half of the year. Due to greater new shipping need, old
container replacement need, release of previously accumulated need and other factors, the
strong demand for containers in the second half of 2010 lasted in the first half of 2011.
But starting from the second half of 2011, the shipping market turned weak and demand
had been largely released in the demand peak not long ago, so the container market
plummeted.
About the road transportation vehicle industry: Affected by the European debt crisis
and appreciation of Renminbi, China‘s export to the American and European countries
slid in 2011. The continuous weakness of container throughput in China‘s ports caused a
decreasing demand for flat-bed trucks. Due to a slowing-down domestic economy, a tight
credit and the slowdown in growth of fixed asset investment, domestic needs for special
vehicles encountered a soft growth. Market demand for semi-trailers went down about
30% on a year-on-year basis, refitted vehicles down about 10%, while demand for tank
semi-trailers remained comparatively stable. Throughout the year, the domestic semi-
trailer industry as a whole saw a general loss, with competition becoming fiercer for
some sub-products.
As for policy changes for the industry, the State Council unveiled the Road Safety Rules
in March 2011 and further restricted overloaded vehicles. In June, the State Council
introduced 8 supporting measures to boost logistical development, and at the same time,
the five ministries carried out a special check-up for illegal and irrational road fee
charging. These measures further reduced highway & bridge charges and taxes for
logistics enterprises, boosting transportation of agricultural products and development of
logistics vehicles and reefer trucks.
About the energy & chemical & food equipment and service industry: Natural gas
has become an important primary energy and clean energy for the world. Due to limited
source, natural gas only accounts for about 4% in the primary energy chart in China,
much lower than the global average ratio. China has an enormous potential demand for
natural gas. During China‘s 12th five-year plan for development, China considers natural
gas an important tool to adjust the energy structure and reduce coal consumption. The
weight of natural gas will increase from 4% in 2010 to around 8% in 2015. Domestic
demand for natural gas is expected to reach 230 billion cubic meters by 2015 and 350
billion cubic meters by 2020.
In recent years, especially when the second phase of the west-east natural gas
transmission project is completed and some coastal LNG receiving stations are also
completed one by one, short supply in natural gas is eased and needs start to rise. With
the energy-saving and emission-reducing policy, as well as a rising energy supply,
32
equipments related to natural gas have great prospects. Demand growth has moved into
an expressway. Automobiles powered by CNG and LNG in particular have been
introduced and encouraged worldwide. The government introduced the ―Clean Vehicle
Plan‖ in 1999. Later, it unveiled and adopted a series of documents for special plans and
policies to encourage development of natural gas automobiles such as the 11th Five-year
Plan for Energy Development and the Natural Gas Utilization Policy, with the latter
policy unveiled in 2007 to make developing gas-powered automobiles a priority and try
to set up a healthy, green transportation system that went with the sustainable
development.
Along with rapid development in the coal chemical, petrochemical and basic chemical
industries, domestic demand for chemical equipments kept growing rapidly. More and
more large-scaled and energy-saving chemical equipments appeared. More equipments
needed to be upgraded and replaced. Demand in new fields such as polysilicon also grew.
And the international market was further expanded. All these enabled the chemical
equipment industry to keep a rapid development.
Due to the debt crisis and a saturated market, Europe recorded a growth slowdown in
demand for alcoholic drinks, other kinds of drinks and other liquefied food equipments.
However, strong economic growth, rising consumption and accelerated urbanization in
developing countries such as China and India continued to boost rapid development in
the liquefied food industry. It is expected that in the coming five years, the total output in
China‘s liquefied food industry will grow at an annual rate of 12-15%. And development
in the liquefied food industry will surely stimulate demand in the transportation, storage
and processing equipment industry.
About the offshore engineering equipment industry: Oil fields onshore and in the
shallow sea which are easy to be exploited have basically become dried. As such, the gap
in the future oil demand can only be filled by oil and gas resources offshore, particularly
those in deep sea. According to IEA prediction, oil will remain the biggest energy source
for consumption until 2030. For the past 10 years, 53% of China‘s new oil output comes
from offshore oil. And offshore oil and gas output has taken up over 25% of the total oil
and gas output in China.
Therefore, the global offshore engineering market has great potential for growth. About
US$ 300 billion is invested in exploiting offshore oil and gas every year in the global
offshore engineering market. According to a rough estimate from ODS, an offshore
engineering analysis authority, new global demand for offshore engineering platforms
and auxiliary ships for the coming five years will be around US$ 56.5 billion and US$ 50
billion respectively. According to its 12th five-year plan for development, China National
Offshore Oil Corp. will invest RMB 200 billion in deep-water oil and gas exploitation.
After years of lows, thanks to economic recovery and the rebound of crude oil prices, the
second half of 2011 saw a gradual recovery in the global offshore engineering market.
Orders for offshore engineering equipment, especially drilling devices, increased
significantly. Judging from the competition in the deep-water platform building industry,
South Korea and Singapore still take the lead, with China being one of the new
competitors. Currently, China has some strength in developing the offshore engineering
equipment industry, but the overall capability is still at a low level. Therefore, it has a
33
great chance to grow. In 2010, the offshore engineering industry was included as a
strategic emerging industry in China‘s 12th five-year plan for development. In 2011, the
government formulated the Innovation & Development Strategy for the Offshore
Engineering Equipment Industry (2011-2020) as a medium-and long-term development
plan for the industry. The plan put forward five major strategic tasks to gradually
establish offshore engineering equipment makers with the ability to design and build such
equipments independently, and to give more support to the industry over the fiscal policy,
the taxation policy and financial service. It is thus expected that as the government
support policy towards the industry is carried out, global offshore engineering equipment
manufacturing bases will move to China in the coming few years and China will take up
a much larger share in the global offshore equipment market.
A brief analysis to the influence of changes in macro-policies and the sector on the
Company’s finance is set out below:
Global economic recovery slowed down in 2011, with increasing uncertainty and risk.
Concerning the domestic economy, with a tight monetary policy and credit control,
investment in fixed assets gradually slid, dragging down economic growth. Complex and
changeable internal and external environment put great pressure on the Group‘s operation.
Proactively dealing with the said pressure, the Group adopted flexible operating strategies
and effective measures. As a result, the Group managed to maintain a healthy state in
terms of the financial structure, investment & acquisition, capital management, etc., and
capital turnover and cash collection both improved over last year. Thanks to strong
demand for containers and energy and chemical equipments, prices for the Group‘s main
products rose, the annual average rate of production capacity utilization was high, the
business scale further expanded and the overall business performance hit a record high.
As at 31 Dec. 2011, the total assets of the Company stood at RMB 64.362 billion, up
18.90% as compared to 2010; total liabilities at RMB 42.748 billion, up 22.40% on a
year-on-year basis; the debt ratio at 66.42% at the year-end, representing a year-on-year
increase; and net cash flows from operating activities at RMB 2.255 billion, representing
a significant increase over 2010.
In 2011, international financial liquidity became loose, with inflation pressure and foreign
exchange uncertainties. The Chinese monetary policy turned around with a tightening
domestic liquidity. The Company carried out a prudent strategy on finance and risk
control, made full use of its own financial business, and looked for a balance between
business expansion and financial risk control. Meanwhile, it improved capital utilization
centralization and efficiency, continued to keep a rational debt structure, effectively
controlled risks and ensured capital safety. It also, based on its business development
needs, used the leasing operation, financial products and foreign exchange instruments in
a rational and flexibly way. In the debt structure, short-term borrowings from external
parties took up a smaller proportion in the total liabilities and long-term borrowings rose
significantly. In 2011, despite fluctuations in the global economy and China‘s macro-
control of tightening the monetary policy, the Company successfully issued the first phase
of medium-term notes of RMB 4 billion and obtained a syndicated financing of US$ 300
million. The Company continued to cooperate with main banks and obtained support
from them. It signed strategic cooperation agreements with 8 domestic and foreign banks‘
34
head offices, and signed an agreement with China Development bank concerning a credit
line of US$ 3.6 billion for the ―going global‖ strategy, which supported the Group‘s
overseas business expansion and reduced financing cost.
(Ⅱ) Business Review
1. General Performance
For 2011, the Company achieved revenue of RMB 64.125 billion (RMB 51.768 billion
for 2010), representing an increase of 23.87% over 2010; and net profits attributable to
the Company‘s shareholders reaching RMB 3.691 billion (RMB 3.002 billion for 2010), a
rise of 22.96% on a year-on-year basis. Both the revenue and profits hit a record high.
Movements in Financial Highlights
Unit: RMB‘000
Items 2011 2010 Change（％）
Revenue 64,125,053 51,768,316 23.87%
Total profits 5,022,706 3,674,607 36.69%
Net profits attributable to the 3,690,926 3,001,851 22.96%
Company‘s shareholders
Analysis:
The revenue, total profits and net profits attributable to the Company‘s shareholders all
experienced a huge surge. In 2011, especially the first half of the year, demand for
containers was still at a peak. In the dry-cargo container business of the Group, the price
and number of containers both rose, the gross profit rate remained at a high level and
profitability improved considerably. The energy, chemical and liquefied food equipment
business continued to rebound, with an unexpectedly profit growth. And loss reduction
was successfully materialized in the offshore engineering business.
2. Business bases, products, services and capacities
The Company and its subsidiaries (jointly referred to as ―the Group‖ hereinafter) is
mainly engaged in manufacture and services in relation of modern traffic transportation
equipments, energy, food, chemical and offshore engineering equipment. In particular,
these equipments are mainly involved in design, manufacture and service for dry cargo
containers meeting international standards, refrigeration containers, regional special
containers, tank containers, container wood floor, modularized housing containers, road
tank transportation autos, gas equipments and static storage tank, road transportation
vehicles as well as offshore engineering equipment. Other than the above, the Group is
also engaged in manufacture and service of logistic equipments, manufacture of airport
equipments and freight train, real estate development, financial leasing, etc. The Group
has been trying, with the industrial chains in all business segments as the core, to
proactively expand application fields and provide quality and safe products, as well as
systematic solutions and other technical service for clients.
Container business: The Group remained No.1 in the world by its quantity of production
and sales, and was able to produce the entire series of container products with self-owned
intellectual property. Included in its products and services were ISO dry cargo containers,
35
special refrigeration containers, other various special containers, pallet containers and
modularized housing containers, as well as container wood floor and container service. It
has already been equipped with an annual production capacity over 2 million TEU; 18
industrial parks for container manufacturing in South China, East China, North China,
Chongqing and other regions of China, including over 10 dry-cargo container bases
located in the coastal region and Chongqing in China; refrigeration container
manufacture bases located in Shanghai, Yangzhou and Qingdao; special container
manufacture bases located in Nantong, Yangzhou, Xinhui and Qingdao. As for container
wood floor business, certain domestic production bases were respectively located in
Shenzhen, Jiangmen, Xuzhou and Jiashan; as for container demurrage business, the
Group has already owned many container service enterprises, forming a service network
covering the main line ports of the coast of China.
Road transportation vehicles business: capable to provide a product range covering 11
series and more than 1,000 varieties, including container skeleton semi trailer, platform
car, bulk lorry, tank truck, self-discharging wagon, refrigeration van, normal cabin
vehicle, curtain-side vehicle, mixer, pump vehicle, car carrier, fire fighting truck and
rubbish disposal vehicle, etc. The annual capacity exceeded 200,000 units, ranking the
No. 1 position both in the world and China. The Group now has 22 production bases and
24 companies for selling and distribution services, covering North America, Thailand,
Central China, East China, South China, North China, Northwest China, Northeast China
and other regions, as well as more than 400 service stations. As such, a business layout
featuring interactions between China and the US and between China and the Europe,
rationality and mutual support has taken shape, with the Group‘s products sold to
mainstream markets such as the US and Japan.
Energy, chemical, food equipment and service business: major products and services
included: static storage tank, tank transportation equipment, craftwork procedure
equipment, engineering undertaking technology service.
Specific products include:
(1) Static storage tank: low-temperature fixed storage tank for LNG and industrial gas,
stainless storage tank for liquid food and chemical storage tank, etc;
(2) Tank transportation equipment: international standard/special liquid tank container
and gas tank container; LPG tank transportation vehicle, low temperature tank
transportation vehicle and storage tank for LNG and industrial gas; CNG wrecker, and
CNG pressure container in high-pressured bottle;
(3) Craftwork procedure equipment: ferment tank for food and beverage, bright beer tank;
chemical reactor, tower facility, heat exchanger, and air vaporizer, etc;
(4) Engineering contract technology service: overall contract engineering regarding to
processing and allocation of liquid foods (bear and juices), LNG city peak-regulation
satellite station, LNG gasification station, LNG filling station, bottles of LNG supply
station, and LNG car system reform and various LNG and industrial gas application
projects; CNG and LNG filling systems, natural gas compressor and special compressors;
36
provision of EP+CS (design, purchase, construct and supervision) technology
engineering services in fields of storage and disposal regarding to LNG receivers, LPG
and other petroleum chemical gas.
At present, in terms of the food equipment business, the Group owns 15 manufacturing
bases and R&D centers in China, Europe and other regions, giving rise to a business
layout featuring interactions between China and Europe, rationality and mutual support.
Major enterprises of which CIMC was the controlling shareholder consisted of CIMC
Enric Holdings Limited and TGE GAS ENGINEERING GmbH. TGE GAS
ENGINEERING GmbH was a German independent contractor which had 26 years
engineering contract experiences regarding to low-temperature liquefied gas reserve station.
Business bases of Enric were mainly distributed in Langfang, Shijiazhuang, Bangbu, Jingmen, Beijing,
Nantong, and Zhangjiagang in China, and Holland, Belgium and Denmark in Europe. Nantong
CIMC Tank Equipment Co., Ltd. has already become the biggest tank container
manufacturer in the world.
Offshore engineering equipment business: Manufacturing bases of the Group for
offshore engineering equipment are located in Yantai, Haiyang and Longkou, Shandong
province. In January 2010, the Company realized shareholding in Yantai Raffles Shipyard
Limited which was incorporated in Singapore in 1994 with principal business of
constructing various ships for offshore petroleum and natural gas market, which equipped
the company with accumulated professional knowledge and construction experiences in
respect of diversified oceanic and offshore projects. Its main products included jack-up
drilling platform, semi-submersible drilling platform, crane ship, pipe-laying vessel,
floating production storage and offloading (FPSO), floating storage and offloading (FSO),
offshore supply vessel, offshore steel structure, shuttle propelled tugboat and luxury
pleasure-boat, etc.. Currently, the Group has Yantai Offshore Engineering Research
Institute and Shanghai CIMC Offshore Engineering Research Center. The Offshore Oil
Drilling Platform R&D Center of the National Energy Administration, a key member in
China‘s offshore engineering sector, is also established within the Group.
The manufacture bases of airport equipments are located in Shenzhen and Beijing,
involving development, design, manufacture, installment and repair services for
passenger boarding bridge, boarding bridge for liner, guiding system for aircraft parking,
flight special vehicles, airport shuttles, flight goods disposal system, automatic storage
and logistic system, as well as automatic parking system. Shenzhen CIMC-TianDa
Airport Support Co., Ltd. (hereinafter referred to as ―CIMC Tianda‖), a subsidiary of the
Group, was one of the major airport ground equipments suppliers of the world.
Other business: the manufacture bases of logistics equipments were located in Dalian
and Tianjin; the manufacture base of railway equipments was located in Dalian; the
financial leasing business was mainly in Shenzhen; and business of property development
was mainly in Shanghai, Yangzhou, Zhenjiang and Jiangmen (in Guangdong Province).
37
3. Operation of principal businesses of the Company
Products whose contribution to principal business income or principal business profit of
the Group exceeded 10% mainly referred to containers and road transportation vehicles.
Breakdown and Movements of Revenue and Operating Profits
Unit: RMB 0‘000
Increase or
Increase or Increase or
Classified decrease of
Operating decrease of decrease of
according to Operating operating
Revenue profit margin revenue over operating cost
industries or cost profit margin
(%) last year over last year
products over last year
（%） （%）
（%）
3,507,155 2,807,325 19.95% 37.86% 37.04% 0.47%
Containers
Road
transportation 1,719,868 1,474,352 14.28% 3.41% 3.44% -0.02%
vehicles
Energy,
chemicals and
852,847 702,736 17.60% 59.39% 59.33% 0.03%
liquefied food
equipments
Offshore
57,658 94,993 -64.75% -76.41% -70.74% -31.92%
engineering
Airport
57,103 35,581 37.69% 66.67% 46.45% 8.60%
equipments
Others 334,460 188,582 43.62% 62.50% 58.75% 1.33%
Offset due to
-116,585 -81,096
consolidation
Total 6,412,506 5,222,473 18.56% 23.87% 19.79% 2.78%
Classified
Proportion taken in YoY movements in
according to Operating income
total incomes (%) income (%)
regions
China 2,245,048.00 35.01% 16.72%
America 560,682.00 8.74% 32.96%
Europe 1,577,821.00 24.61% -0.15%
1,805,767.00 28.16% 55.45%
Asia
Others 223,187.00 3.48% 148.52%
Total 6,412,505.00 100.00% 23.87%
38
——Business of container manufacturing and service
The Group is currently the only container manufacturing and service enterprise that can
provide whole series of containers, including dry cargo containers, refrigeration
containers, tank containers, as well as other kinds of special purpose containers, and owns
complete and independent intellectual properties. Besides, the Group has 18 container
manufacturing bases in coastal areas and areas along rivers, enabling it to quickly deliver
containers to not only each container quay and yard in China, but also to major ports and
clients all around the world at low cost and good quality. Besides, CIMC had established
container service sites in major costal port cities and inland container logistic centers in
China, which formed perfect container service system and provided container service and
application system covering the whole product cycle for clients.
In 2011, the Group closely monitored the container market, quickly responded to market
changes, gave play to its collaboration advantage, coordinated internal resources and
dealt well with the complex and changeable market environment. The container business
recorded the best performance in the 30 years of the development of this business. For the
year, the container business generated a sales income of RMB 35.04 billion, up 38.26%
over last year, and generated net profits of RMB 3.629 billion, up 19.42% over last year.
The production & sales volumes and operating revenues of the dry-cargo container and
reefer container business segments hit a record high. And sales incomes and net profits
generated in the special-purposed container, modularization and wood flooring business
segments recorded significant year-on-year growth.
Dry-cargo containers generated a sales income of RMB 21.747 billion, representing a
year-on-year growth of 11.23%; reefer containers a sales income of RMB 6.276 billion,
up 71.57% over last year; and special-purposed containers a sales income of RMB 6.624
39
billion, an increase of 88.51% as compared with last year. In 2011, 1.413 million TEU
standard dry-cargo containers were sold, an increase of 9.13% as compared with 1.296
million TEU in 2010. 0.1775 million TEU reefer containers and 77,100 TEU special-
purposed containers were sold in the year, respectively increasing 106.88% from 85,800
million TEU in 2010 and 24.56% from 61,900 TEU in 2010.
In 2011, significant achievements were made in the container business in terms of
improving the core capability and exploring new space for business development. The
strength of plants was reinforced in an all-round way by promoting lean manufacture and
the ―ONE‖ management mode, upgrading technologies and equipments, and cultural
construction. Meanwhile, the Group carried out a strategic upgrading operation,
formulating development plans, making strategic adjustments, pointing the strategic
development direction for product and manufacturing technologies, proactively
expanding new business and increasing input for it.
In particular, the Group kept improving itself internally and externally through service
extension, technological upgrading, innovations in the business mode and the production
organizational mode, etc., proactively exploring new growing space for business, so as to
seize strategic opportunities ahead of others and lead the future development of the
industry. A container automatic production line was built in Shenzhen—―the Dream
Works‖—to focus on water paint, bamboo flooring, modularization, etc. as a priority.
At present, profound changes have taken place in the internal and external environments
for the container industry and the fierce competition continues. As restriction on
resources goes tighter, the low-carbon environmental protection standard becomes stricter,
the requirement for the working environment is more stringent and the labor cost keeps
rising, the industry will encounter great challenges ahead. In recent years, the Group has
been more and more aware of the severe situation and has been taking proactive measure
to deal with that. The Group has been devoting great effort in upgrading the
manufacturing mode, exploring the transformation of the production & management
mode in the container business, and looking for a sustainable and healthy development
path.
As a new business mode, the modularized building and container house business is more
and more welcomed in the market. The year 2011 continued to record progress in the
Group‘s modularized building and container house business, with income from the
modularized building business already exceeding US$ 100 million. The Group provides
container businesses such as new-for-old service, re-design for old containers,
maintenance, and rent of second-hand containers. Meanwhile, it has developed
technologies and business of using second-hand containers as modularized houses,
creating a whole new way of building, i.e. ―integrated design + on-site installation‖. The
Group is also trying to make itself a service provider integrating design, structural
manufacture, decoration and after-sales service for modularized houses. Xinhui CIMC,
one of the affiliated companies of the Group, won the first mine camp project order from
BHPB in Mar. 2009, and won another camp project order valuing A$ 60 million from
FMG, the third biggest iron ore miner later in April. At present, CIMC has become one of
40
the mainstream camp providers in Australia.
——Road transport vehicle manufacturing and service business
CIMC Vehicle Group, one of the affiliated companies of the Group, is the largest
manufacturer of road transport vehicles in China, with an annual capacity exceeding
200,000 units. CIMC‘s business of road transport vehicle had set its strategic vision as
providing top-ranking logistics equipment and service in land routes for global
customers by replying on China‘s advantage. As the strategic development direction,
CIMC Vehicle Group focused on a complete value chain process of product design and
development, product manufacturing and delivery, sales and service, as well as customer
follow-up and feedback. CIMC Vehicle Group constantly insisted on creating
sustainable value for customers, keeping improving customer satisfaction, and leading
sustainable and healthy development in the industry.
In 2011, the European economy remained weak, and growth of the Chinese economy
slowed down, with shrinking investments in fixed assets. In the second half of the year,
domestic demand for special-purposed vehicles declined even faster. Under such
circumstances, with ensuring profit and improving profitability as the core objective and
guidance, CIMC Vehicle Group adjusted its operating strategies in a timely manner
according to market changes and managed to basically accomplish the annual operating
goals. Throughout the year, this business segment generated a sales income of RMB
16.725 billion and net profit of RMB 0.513 billion, down 0.17% and 12.65%
respectively over last year. 152,400 units of vehicles were sold in the year, representing
a slight year-on-year decrease. Meanwhile, due to a weakening logistics demand and a
tighter credit, sales of semi-trailers, bulk lorries and flat-bed trucks decreased
considerably on a year-on-year basis. Thanks to strong infrastructure demand in China,
rapid recovery of the North America market, growing demand from emerging markets
and other favorable factors, the refitted vehicle business and the export business both
gave a good performance. Besides, through carrying out focused plans and moves, the
North America-based Vanguard successfully stopped loss.
In 2011, domestic markets for the Group‘s main vehicle products were further expanded.
Market shares of logistics vehicles (including bulk lorries, flat-bed trucks, vans, liquid
tank trucks and reefer containers) remained stable. And the market share of refitted
vehicles (self-unloading trucks, mixer trucks and powder tank trucks) climbed higher to
top the industry.
In the year, the Group continued to push forward strategic transformation in its vehicle
business, emphasizing the value direction of taking profitability improvement as the
core, starting from the marketing system, refining terminal marketing channels,
reinforcing internal management and increasing the operating efficiency. The Group
continued to improve the marketing channel system to reinforce the penetration in end
users. The ―One Hundred Store Plan‖ was carried forward. Upon official operation of
the five major stores, the Group continued to build the regular chain. It now has over 40
stores in the regular chain, promoting direct sales through subordination, lease and other
means. The Group promoted the management mode of unified service, i.e. to transform,
41
within the marketing system, from separate service by plants to unified service mainly
by the five major stores. By the end of 2011, nearly 300 signed service stations were
built. Except for remote areas, a service station like this can basically reach any spot
within 100 kilometers. The Group also continued to improve the vehicle logistics park
mode and made investment to complete the second-phase project of the Chengdu
Logistics Park. At the same time, the operating efficiency of distribution channels was
increased through building an information platform for the service system and other
measures. During the year, CIMC Vehicle Group continued to push forward integration
of resources and finished the planned disposal of idle assets.
In 2011, CIMC Vehicle Group increased its investment in developing new products.
Now it is running the European BSG project, with the purpose of making use of the
advanced European technological resources, developing and introducing to China the
third generation semi-trailer technologies, and preparing itself for launching brand
products in the European market. Meanwhile, it developed a new generation of drop-
side semi-trailers and increased investment to expand the relevant production capacity.
As a new business segment resulted from the extension of the Group‘s industrial chain,
the development strategy of ―make high-end products, provide quality service and
establish a top-class brand‖ was set for the heavy truck manufacturing business. In face
of the first year of negative growth for the heavy truck industry of China since 2005,
C&C Trucks put forward the operating strategy of ―high-end positioning, competing
over differentiation and developing unique comprehensive strength to bring new value
to clients‖, adjusting the old operating strategy. It shrank markets and the production
line, united resources from the best heavy truck industrial chain of the Chinese heavy
truck industry, and tried to lay a preliminary foundation for future breakthroughs and
sustained growth of the heavy truck business through effective measures such as
developing customer-tailed products and launching star products in high-end logistics,
commercial concrete mixing and construction-specialized heavy truck markets,
particularly the LNG heavy truck market.
——Energy, chemicals, food equipment and service business
The Group operates the energy, chemical and liquefied food equipment business via the
platform of CIMC Enric Holding Limited (―CIMC Enric‖). The year 2011 recorded an
unexpectedly fast growth of this business segment. This was mainly because the Group
seized opportunities when LNG demand soared and the tank container market continued
to recover in 2011, increased the production capacity in a forward-looking manner, and
increased the utilization rate of the capacity. As a result, operating revenue and net profit
generated in this business segment rose significantly on a year-on-year basis. For 2011,
this business segment generated operating revenue of RMB 8.284 billion, up 58.42%
over last year, and net profit of RMB 0.493 billion, representing a sharp rise of 159.59%
on a year-on-year basis.
Energy (LNG, CNG and LPG) equipments: In 2011, the Group recorded aggregate
sales income of RMB4.484 billion from energy equipments, up 34.45% over last year. At
present, the Group is able to provide CNG, LNG and LPG products with the most
42
complete specifications and the richest varieties. Via the project general contractor—
TGE GAS TGE Gas Engineering GmbH（―TGE GAS‖）at which the Group holds a
60% stake, the Group greatly improved its systematic integration and engineering ability
in the whole natural gas industrial chain and was able to provide ―one-stop‖ systematic
solutions for clients in terms of natural gas development and application. This equipment
manufacturing and engineering business has effectively solved the ―last kilometer‖
problem beyond natural gas lines and thus significantly propelled promotion and usage of
natural gas in China.
In the coming few years, there will be more and more overland gas pipelines and
coastwise LNG terminal stations being put into operation in China. Therefore, it is
another business development goal of the Group to further expand the production
capacity for energy equipments, so as to meet the demand resulted from the increasing
gas resources. The Group plans to achieve the relevant business goals via internal growth,
i.e. to expand the existing plants and construct new production lines. The Group is
currently building a light spiralwound production line in Shijiazhuang, expanding LNG
production facilities in Zhangjiagang and Jingmen LPG production plants, and making
investment to increase the production capacity of the Nantong tank container production
base.
Upon the acquisition of Nantong CIMC Transport Equipment Co., Ltd. (―Nantong
Transport‖), the Group further increased its production capacity for energy equipments,
which brought about synergetic effect and increased the Group‘s competitiveness. In
2011, TGE GAS, where the Group holds a 60% stake, generated operating revenue of
RMB 1.226 billion, up 35.62% over last year. In 2010, TGE GAS won an EPC contract
for the Zhejiang Ningbo LNG receiving station tank project from China National
Offshore Oil Corp., as well as an EPC contract for the second-phase construction
expansion of the Portugal-based SINES LNG receiving station project. The said two
projects are running well, with the safety management and quality well received by
clients. They are expected to be completed and delivered in the middle of 2012, earlier
than the contractual delivery date.
Chemical equipments: In 2011, the chemical equipment business recorded operating
income of RMB 3.027 billion, up 136.67% over the same period of last year. The major
production bases of chemical equipments include Nantong CIMC Tank Equipment Co.,
Ltd. and Dalian CIMC Heavy Chemical Equipment Co., Ltd., etc..
Nantong CIMC Tank Equipment Co., Ltd. (Nantong Tank) is mainly engaged in the
business of manufacturing international standard tank containers. Due to the recovery of
global economy, the demand of the chemical logistics equipment market closely
associated with chemical raw materials and refined chemicals realized recovery growth,
its income and profits in 2011 continued to increase substantially, returning back to the
prosperity before the financial crisis. Now Nantong Tank is actively designed the special
tank, carbon steel gas tank, wrapped bottle, accumulator, CNG steel cylinder and nuclear
capacitor as well as other new products, which will significantly contribute to increase
income.
43
The 1st phase project of Dalian CIMC Heavy Chemical Equipment Co., Ltd. (Dalian
Heavy Chemical) has already owned the annual production capacity of 9,000 tons. Its
main products include gasifier in the coal gasification equipment, ethylene cracking
furnace in the ethylene equipment, large-scale synthetic ammonia, high-pressure
equipment in the chemical fertilizer equipment, oil refining hydrogenation,
hydrocracking, key equipments in the methanol device and evaporator in the sea water
desalination device etc.
Liquid Food Equipments: In 2011, the liquid food equipment business recorded
operating income of RMB 0.772 billion, up 37.61% over the same period of last year.
Netherlands-based Holvrieka Holding B.V. is one of the leading suppliers of exclusive
stainless steel static storage tanks and tank terminal equipments in Europe, under which,
there are four production bases, namely Netherlands-based Emmen, Netherlands-Sneek,
Denmark-based Danmark and Belgium-based NV. It offers a wide range of services to the
liquid, gas and powder bulk tank transport sector in Europe including petrochemicals,
beer, juice, milk and other food and beverage industries, such as all tank equipments and
bulk water tank ships involved by orange juice from the juice, road transport to orange
juice docks. Holvrieka (China) Co., Ltd. is the production base of Holvrieka of the Group
in China, mainly engaged in manufacturing of stainless steel static storage tanks and
crafts tanks used to store beer, fruit juice and other food and chemical products. Now it
has owned a capacity of producing 1,000 units of large storage tanks annually.
In 2011, CIMC Enric fully realized the necessity and importance to develop engineering
business at the same time of strengthening the equipments manufacturing business. The
overall market scale of energy and chemical engineering business is big, which is also the
natural extension of the tank equipment manufacturing business. At present, basing on
the development of large storage project, gas station project and gas treatment project,
CIMC Enric is exploring the new areas in well-head gas or methane recovery project
from the treatment of medium-to-small sized liquefied gas, etc.. In 2011, TGE GAS
successfully acquired Technodyne （ TD ） Company in British, and formed the core
competiveness of mechanical design in domestic low temperature tanks area. Besides,
CIMC Enric also successfully acquired Nanjing Yangzi Petrochemical Design
Engineering Company in Jan. 2011, which significantly improved the ability of R&D,
design and project contracting in the area of energy and chemicals storage project;
through the construction of the EPC contract project of large storage tanks for LNG
receiving station by TGE, CIMC Enric enhanced its project management ability.
In 2011, CIMC Enric continued to strengthen the development of new technology and
new products. It conducted research on 20 new products and applied for more than 80
patents, which mainly included the new products such as CNG ship application project,
wrapped bottle for high-pressure long-tube trailer and refrigerant gas tank for tank
container. Besides, CIMC adopted new technology to reduce the weight of natural gas
storage tanks, industrial gas storage tanks and low temperature tank trucks for industrial
gas, which not only increased its competiveness but also improved its market share.
44
In 2011, CIMC Enric also actively carried out effective collaboration with other business
segments of the Group and among its own segmented business, as well as strengthened
the exploration of international market.
——Offshore engineering business
CIMC Raffles Offshore (Singapore) Co., Ltd. (SCRO), the subsidiary of the Group, and
its subsidiary, Yantai CIMC Raffles Offshore Co., Ltd. (YCRO) rank top offshore
engineering equipment manufacturers in the world, and have been involved in global
competitions in international market of offshore engineering. Its main products include
jack up, semi-submersible and auxiliaries to offshore engineering. In 2011, offshore
engineering business of the Group recorded a sales income of RMB 0.577 billion, down
76.41% over the same period of last year, with a loss of RMB 1.116 billion. Main reasons
for losses on offshore engineering business: on one hand, it‘s caused by the excessive
expenditure for the costs and expenses of the delivered projects in 2011; on the other
hand, the amount of completed works by YCRO in 2011 reduced substantially over the
same period of last year, causing the idling of the main infrastructure and relevant
resources, thus the depreciation and amortization of fixed assets were relevant large.
In 2011, after increasing investment on CIMC Raffles by joining in the second allotment
of new shares and acquiring the whole shares of Zhang Liren family held in CIMC
Offshore Holdings Limited, up to Jan. 2012, the Company‘s equities held in CIMC
Raffles Offshore (Singapore) Limited reached 88.58%.
Offshore engineering business of the Group basically defined its development directions
in three main product lines, namely semi-submersibles, jack ups, and special offshore
engineering vessels. The strategic layout of ―one center and three bases‖ made up by
Yantai, Haiyang, Longkou and Offshore engineering Research Center was completed and
being developed. In terms of construction of production bases, Yantai Base was mainly
applied for concentrated supply, approximation, and debugging. Haiyang Base and
Longkou Base respectively acted as semi-submersible construction base and jack up
construction base. HCRO had the ability to produce two semi-submersibles drilling
platforms per year, while the annual production capacity of four jack ups drilling
platforms had been formed by LCRO.
The year of 2011 saw the offshore engineering business of the Group get towards a new
stage, the Group continued to successfully advance its delivery of orders. Of which,
except the COSL 3#, the external orders received near the year of 2006 had all delivered
to customers.
In Apr. 2011, SS Amazonia, the second deep-water semi-submersibles drilling platform
established for Schahin in Brazil, was successfully delivered in Yantai; In May 2011,
Super M2 H196, the first jack ups drilling platform constructed by LCRO, was
successfully delivered to use; In Jun. 2011, STORNES, the flexible fallpipe vessel
constructed for Van Oord Marine Services BV in Holland, was successfully delivered in
45
Yantai. In Dec. 2012, COSL INNOVATOR, the second deep-water semi-submersibles
drilling platform constructed by general contracting for the subsidiary of COSL —COSL
Drilling Europe AS (CDE) by Yantai CIMC Raffles Offshore Ltd., (hereinafter referred
as ―YCRO‖) was delivered. Then, YCRO had successfully delivered the 5th deep-water
semi-submersibles drilling platform. And the delivered platforms had already begun to
work: in 4 Jun. 2011, SS PANTANAL, the deep-water semi-submersibles drilling
platform constructed for Schahin in Brazil by CIMC Raffles begun to work offshore in
Brazil; in Oct. 2011, COSLPIONEER, the first deep-water semi-submersibles drilling
platform delivered by CIMC Raffles begun to provide drilling service for Statoil in the
Sleipner Oilfield of North Sea, Norway, and successfully completed the work for the first
well, as well as drilled out the oil in Jan. 2012. All the above means that the Group has
the ability to mass construct the deep-water semi-submersibles drilling platforms.
In terms of enlargement of new orders, CIMC Raffles began to gain an encouraging
breakthrough since the second half year of 2011. Up to Feb. 2012, the total contract
amount of the in-hand orders (excluding self-constructing projects) of CIMC Raffles
exceeded USD 1.5 billion. In Jul. 2011, CIMC Raffles signed a general contract on
constructing two 50,000-ton multi-function semi-submersibles ships with United Faith
Group Limited. In Dec. 2011, CIMC Raffles signed a general contract on constructing the
deep-water semi-submersibles drilling platform—COSL PROSPECTOR with COSL
Drilling Europe AS (CDE), which was expected to delivered in the third quarter of 2014.
In Feb. 2012, CIMC Raffles signed a general contract on constructing the deep-water
semi-submersibles drilling platform—North Dragon in North Sea, Norway with North
Sea Rigs As.
CIMC raffles had established a R&D and design team of 800 people by structuring
Yantai CIMC Offshore Engineering Research Institute and Shanghai CIMC Marine and
Engineering Research Center, constructed a R&D and design platform integrated with
R&D and design, which operated through the whole process of basic design, detailed
design and production design, and independently completed analysis and design for
several DP2 and DP3 products, which won high evaluation from ship owners and
classification societies. In Jul. 2010, the Group was named and branded for the ―National
Energy Marine Petroleum Drill Platform R&D (Experiment) Center‖ by the National
Bureau of Energy, which meant that the Group gained its national industrial status in
several respects of scientific research offshore engineering, and thus acquired the
qualification to undertake R&D, experiments, and manufacturing in important national
offshore engineering equipment. As such, the leading advantage of the Group in domestic
offshore engineering was strengthened, which enlarged the space for in-depth
anticipation of the Group in future national energy development. The Company will
continually strengthen construction of CIMC Offshore engineering Research Institute,
further attract high-end talent, and build an international advanced design and R&D
platform for offshore engineering equipment.
——Other businesses
Airport ground equipments business: After the slump in 2010, Tianda Airport Support Ltd.
(CIMC Tianda), whose 70% equities is held by the Company, began to enter the rising
46
channel with fast growth, and the position of boarding bridges ranking as the No. 1 for
comprehensive strength worldwide, besides, it also gained substantial breakthrough and
progress in the business of airport ground vehicles, automatic garage and automatic
transmission equipment. In 2011, CIMC Tianda realized a sales income of RMB 0.571
billion, up 66.48% from RMB 0.343 billion in the same period of last year; and 208 sets
of boarding bridges were sold, recording a year-on-year increase of 76.3%.
In 2011, the boarding bridges business of CIMC Tianda basically got over the influence
of financial crisis in 2010 and made a big progress, with doubled and redoubled growth in
the amounts of orders for boarding bridges. Due to the intense competition, the market
shares of boarding bridges business in China declined to some extent, but the competition
began to have some relieve from the second half year of 2011; then, the market shares of
boarding bridges business in international market increased substantially; and boarding
bridges began to enter the markets of 9 new countries and areas for the first time.
Under the drive of industrial upgrading in China and other factors, the average annual
growth of the market demands for automatic logistics system stands at about 20%.
Therefore, in accordance with the strategic development plan, CIMC Tianda actively
explored new business area, and began to enter the market of airport baggage handling
system, the automatic storage and transmission business outside the airport on the base of
the original airport cargo handling system, with a good start. Due to the fast development,
problem of parking in cities became increasingly serious, causing fast growth of demands
for solid garage. In addition to conduct the sales of equipments, the Company also overall
enlarged the project of garage in cities with the mode of BOT/BOO, and it has gained
many projects. In the future, the Company will dedicate to create a parking industry chain
of investment—manufacturing—operation.
Xinfa Airport Equipment Ltd. (hereinafter referred as ―Xinfa‖) was established in 1997,
which is a professional manufacturing enterprise involved in the R&D, manufacturing
and service of airport apron bus and other ground support equipments (GSE). In 2011,
CIMC Tianda increased investment on Xinfa and gained the controlling right with 70%
equities of Xinfa. After the acquisition of Xinfa, CIMC Tianda would enrich its airport
equipments production lines, and create a good synergistic effect in terms of market and
manufacturing, etc.. In the future, CIMC Tianda will increase input on R&D and
gradually integrate and expand relevant products and business basing on the said R&D
platform, it dedicates to develop into a comprehensive GSE company.
Logistic equipment and service business: The Group is committed to providing special
logistic equipment and comprehensive logistic solutions for customer from different
trades. Our logistic equipment products mainly include pallet containers for automobiles,
logistic, foods, chemical, and agriculture, stainless steel IBC (Intermediate Bulk
Container) applicable in chemical and foods fields, and various special logistic
equipments, such as wind power product logistic, commercial car assembly logistic
equipment, and offshore container. The Group‘s logistics industry is separated into
47
manufacturing business and service business, and it currently owns 2 manufacturing
bases, Tianjin and Dalian, 3 service bases, Shenzhen, Wuhu and Guangxi. At present, the
Group‘s annual production capacity of pallet containers amounts to 1.3 million set, and it
is the biggest supplier for steel pallet containers and IBC as well as one of the leading
supplier for pallet containers in the world.
The Group realized a sales income of RMB 1.654 billion in 2011, up by 44.61% from
RMB 1.144 billion in the same period of last year. In 2011, the main products in China
centralized in automobile parts industry, such as turnover box for engines or steel casting.
With the development of automobile industry and the upgrade of the logistics mode of
automobile industry in China, the requirements for the turnover efficiency of parts were
higher and the relevant demands also increased significantly. Under the condition of
maintaining the stable development of logistics equipments manufacturing business, the
rent of steel pallet containers, a special business of logistics service, and the solution for
the transportation of busdeck had gained a big progress in the year, with the service
business increasing over 100%.
Taking advantage of the opportunity and policy support of ―National the Fifth-five Year
Plan‖, logistics service business is making efforts to become the important support for
logistics industry. In Jun. 2011, eight measurements to promote the health development of
logistics industry were proposed in the session of state council, which mainly included
relieving the tax burden for logistics enterprise, strengthening the land policy, advancing
the innovation and application of logistic technology, etc.. Besides, the Ministry of
Finance and State Administration of Taxation issued the pilot program on changing the
land use tax and turnover tax to value added tax, so as to strengthen the policy support for
logistics industry.
In 2011, the Group focused on investing on and upgrading the production line, soft and
business system in logistics industry, so as to expand its production capacity, enhance
efficiency and improve the working environment.
Financial service business: CIMC Finance Co., Ltd. and CIMC Financing and Leasing
Co., Ltd., both consist the financial business segment of the Group, provide financing,
financial and operating collaborative services inside and outside the Group, which can
give full play to the function of regulation and allotment for the capital pool of the Group.
Besides, they gradually inset in the overall value chain of the main business of the Group
through the organic infiltration with the strategic industries of offshore engineering,
energy & chemical equipments, vehicles and modular construction, etc., so as to make
contribution for the Company.
In 2011, under the circumstances of unstable global economic environment and deflated
financial policy from the national macro control, the Group‘s financial segment provided
low-cost capital and operating security to effectively support the operation of every
business. At the end of the year, the collecting ratio of the Group‘s domestic collectable
48
funds exceeded 80%, which effectively enhance the operating efficiency and function of
the Group‘s capital. In 2011, the Group gained a sales income of RMB 0.575 billion from
its financial business segment and a net profit of RMB 0.44 billion, both increasing
significantly as compared to last year.
CIMC Finance Co., Ltd. could provide financial service for the Group‘s member
enterprises at low interest rates and save their financing costs. CIMC Financing and
Leasing Co., Ltd. fully displayed its operational collaborative ability to become the
important drive for the Group‘s extension to service from the business mode. Under the
negative circumstances of global financial crisis and the deflated monetary policy in
China, CIMC Financing and Leasing Co., Ltd. made close collaboration with various
industrial segments and fully displayed CIMC‘s advantage in China, so as to provide
solutions on the sales of goods and financing, as well as strengthen the relationship with
the customers, thus improved the competiveness of the Group.
Others: Dalian CIMC Railway Equipment Co., Ltd., the subsidiary of the Group,
dedicates to the exploration on railway equipment business. In 2011, it realized a sales
income of RMB 0.165 billion with a substantial increase over the same period of last year.
Besides, the Company also has minor real estate development business, which is mainly
in Jiangmen, Yangzhou and Zhenjiang, etc..
4. R&D
The CIMC technology center became a state-level enterprise technology center in 2001.
In 2010, National Energy Marine Petroleum Drill Platform R&D Center settled down in
CIMC Group. At present, under the CIMC technology center, there are 5 research
institutes, 17 technology branch centers, 5 state post-doctoral research stations, 1 post-
doctoral innovation base, and more than 20 laboratories including engineering
laboratories and material laboratories. Therein, 7 technology branch centers are
provincial and municipal technology centers, and 2 laboratories are CNAL certified
laboratories.
In 2011, a total of 688 categories of new products were developed in all industries under
the Group. Sales volume of new products and significantly improved products accounted
for more than 20%. The Group presided and anticipated in the preparation of more than
20 provisions of international, domestic and industrial technology standards, and declared
more than 351 patents, of which 120 patents were for inventions.
5. Suppliers and customers
In the reporting period, the total amount of purchase by the Group from the top five
suppliers was RMB 6.696 billion, accounting for 28.96% of the total annual purchase.
The total amount of sales income achieved by the Group from the top five customers was
RMB 11.604 billion in the year, accounting for 18.10% of the total sales income of the
Group.
6. Analysis on Financial Status of the Company
49
(1) Analysis on Changes of Assets and Liabilities
Unit: RMB‘000
Amount as at Amount as at 31 Variation
Item Main influential factors
31 Dec. 2011 Dec. 2010 (%)
Changes in fair values of short-term
Transactional financial
186,134 525,661 -64.59% stock investments and derivative
assets
financial instruments
Notes receivable 1,030,528 508,585 102.63% Business growth
Non-current assets due
2,635,287 1,185,502 122.29% Growth in financial leasing
within 1 year
Long-term receivables 2,311,235 1,336,257 72.96% Growth in financial leasing
Fair value changes of derivative
financial instruments and
Transactional financial
31,107 3,810 716.46% reclassification of current and non-
liabilities (current)
current transactional financial
liabilities
Interest payable for the medium-
Interest payable 152,067 13,168 1054.82% term notes issued in the year
increased.
Dividend payable to minority
Dividend payable 116,253 16,046 624.50% shareholders of subsidiaries
increased.
Fair value changes of derivative
financial instruments and
Transactional financial
74,836 154,292 -51.50% reclassification of current and non-
liabilities (non-current)
current transactional financial
liabilities
Financing need increased due to
Long-term borrowings 6,572,585 3,912,148 68.00%
business growth.
Bonds payable 3,988,438 - - MTN was issued during the year.
Foreign exchange
-566,755 -2,055,682 72.43% Change of the recording currency
difference
Business tax and surtaxes 344,723 76,892 348.32% Business growth
Changes in fair values of short-term
(loss)/gain on fair value stock investments and derivative
-100,577 234,918 -142.81%
changes
financial instruments
Investment income in 2010 included
Investment income 108,693 38,641 181.29% income from disposing long-term
equity investment
More government subsidies were
Non-operating income 370,193 292,019 26.77%
received in the year.
Income tax expense 1,363,768 823,748 65.56% Business growth
—Accounting measure for major assets of the Company:
When preparing financial statements, the Company usually adopts historical cost
accounting except for the following assets and liabilities which are measured by fair
value:
50
① Financial assets and liabilities (including transactional ones) measured by fair
value, whose variations are recorded in profits and losses of the current period
Unit: RMB‘000
Gain/loss Accumulative
Impairment
from fair fair value
Opening provision for Closing
Item value changes changes
amount reporting amount
in reporting recorded into
period
period equity
Financial assets:
Including:
1. Financial assets measured by
fair value, whose changes are 512,560 -152,736 - - 176,383
recorded into profits and losses
of current period
Of which: Derivative financial 119,069 -86,378 - - 32,691
assets
2. Financial assets available for 768,467 - 503,276 - 571,954
sale
3.Hedging instrument 13,101 - 12,784 - 9,751
Subtotal of financial assets 1,294,128 -152,737 516,060 - 758,088
Financial liabilities -158,102 52,159 - - -105,943
Investing real estate - - - -
Production biological assets - - - -
Others - - - -
Total 1,136,026 -100,577 516,060 - 652,145
51
② For financial assets available for sale, please refer to Note 5 (10) to the financial
statements
—Analysis on changes and influence of main assets measured by fair value:
Unit: RMB‘000
Effect on
Balance as Balance as Direct
Item in Recognition gain/loss
Contents at 31 Dec. at 31 Dec. effect on Notes
statements of fair value for current
2011 2010 net assets
year
Transactional Stock
equity Market 143,692 393,491 -33,905 - investment in
instrument price secondary
investment market
Financial
derivative
Quotation
Transactional Derivative products
from 32,691 119,069 -86,378 -
financial financial relating to
financial
assets instrument exchange rate
institution
and interest
rate
Quotation
Exchange rate
Cash flow from 9,751 13,101 - 12,784 hedging
hedging financial
product
institution
Financial
derivative
Quotation
Derivative Derivative products
from 105,943 158,102 52,159 -
financial financial relating to
financial
liabilities instrument exchange rate
institution
and interest
rate
Equities of
China
Financial Market Merchants
Strategic
assets price and 571,954 768,467 13,030 503,276 Bank, etc.
equity
available for assessed held by the
investment
sale value Company for
strategic
purposes
For more details, please refer to ―3. Risk Analysis, Sensitivity Analysis and Fair Value
Recognition Methods for Financial Instruments‖ under ―Note 11 Other Significant
Events‖ to the financial statements.
(2) Analysis on changes in expense and income tax:
Unit: RMB‘000
Increase/decreas
Item 2011 2010 Main influential factors
e (%)
Production scale expanded, and
Administrative 3,767,221 2,734,364 37.77% labor cost for administration
expenses
increased.
Financial 783,699 669,783 17.01% Interest expenses increased.
expenses
Profits increased, and income tax
Income tax 1,363,768 823,748 65.56% expenses of the current period
correspondently increased.
52
(3) Analysis on changes of cash flows
Unit: RMB‘000
Increase/de
Item 2011 2010 Main influential factors
crease (%)
Cash flows from
operating activities
2,254,437 1,482,901 52.03% Sales scale expanded.
Cash flows from Cash received from borrowings
financing activities
4,507,951 477,409 844.25% increased.
7. Business Performance of Major Holding Subsidiaries and Joint Ventures
(1) Major holding subsidiaries
Major holding subsidiaries of CIMC include about 60 controlling subsidiaries for
container business, over 80 controlling subsidiaries for road transportation vehicle
business, 30 subsidiaries for energy, chemical and food equipments, 1 subsidiary for
airport equipment, 1 subsidiary for railway freight transportation equipments, 4
subsidiaries for logistics equipments and service, 3 subsidiaries for offshore engineering,
13 subsidiaries for real estates, 4 subsidiaries for financial industry and 13 subsidiaries
for other industries. For business performance of the said subsidiaries, please refer to ―3.
Status of Main Operations‖ of the previous section of this report.
(2) Major joint ventures
As at 31 Dec. 2011, CIMC holds 10% equity of China Railway International United
Container Co., Ltd. With a registered capital of RMB 4.2 billion, China Railway
International United Container specializes in building and operating railway container
centers, as well as relevant services.
CIMC holds 5% equity of Communications Schroder Fund Management Co., Ltd., with
its registered capital standing at RMB 200 million. For the year 2011, the Company
achieved an investment income of RMB 10 million from this joint venture.
8. Entities controlled by the Company for special purposes
The Company does not control any entity for special purposes.
(III) Outlook of the Company’s Future Development
1. Economic Environment and Policies
In 2012, the global economy faces a large uncertainty, and the world is at the crossroad
for reformation. As for American economy, it needs to reduce the proportion of financial
and service industries in the overall economic body, while strengthen manufacturing
industry, i.e. ―eliminate financialization‖. As for Europe, it needs to cut financial deficit
for a long time, reform its old labor system and reduce its welfare, so as to increase its
competitiveness, i.e. ―eliminate welfare‖. While as for China, it faces the economic
transition under the new circumstance, which shall get rid of the reliance on real estate
industry, i.e. ―eliminate capitalization or real estate industry‖. Besides, as for developed
economic bodies, European debt crisis will still be one of the key factors to affect the
global economic, trading and financial market. Subject to the economic & policy
mechanism and welfare & social system, as well as other structural factors under the
53
framework of Euro Zone, it is predicted that the European debt crisis is hard to be solved
quickly and stably. Amecian economic growth mode is still pulled by consumption and
employment, it is predicted that the modest recovery situation will continue, while
maintain slow growth in the future years. And the prospect of Japanese economic growth
is weak. Under the circumstance of globalization, the economic growth speed for
emerging market in 2012 will also slowdown. In 2012, Chinese government will change
its focus of economic work from controlling inflation to stable increase. ―Making
progress while ensuring stability‖ is the general tone of economic policy fixed in the
central economic working conference, government needs to continue to stimulate
domestic demand and protect people‘s livelihood; and encourage and pull the
development of emerging industries, such as strategic emerging industry and modern
service industry, so as to realize the upgrade for Chinese economy and industry.
It is a year of slowdown, transformation, adjustment and transition for economy in 2012.
So the group‘s new challenge faced in the future will be on how to deal with the global
economic fluctuation and the slowdown in exports. Although there are still some
fluctuation and uncertainty in the global economy and market in 2012, many industries
are still filled with growth momentum; the various opportunities embodied in Chinese
ecomony during the process of transformation and upgrade, and the increasing economic
& market potential for the emerging economic bodies under the global circumstance, also
means that the Group faces a new-round development opportunity. So the Group will
continue to make deep research on the prospect of relevant industries, seak and hold the
medium to long term growing opportunities. The Group‘s general business principle
fixed in 2012 is: strengthen confidence and make progress while ensuring stability; put
eyes on the future and lay a solid platform.
2. Development trends in the industry and market
In 2012, there are still many uncertainties in the recovery of global economy and trade.
Global insight, a research institute, predicted that the actual increase of global economic
would slow down to 2.9%. International Monetary Fund (abbreviation as IMF) predicted
that the increase of global business of goods for 2012 would slow down to 5.8% from the
8.4% in 2011. Energy Information Administration (abbreviation as EIA) predicted that
the global demands for oil would increase by 1.4% in 2012.
(1) As for the container business, due to the American economy recovers slowly,
European debt problems tends to last for longer, and the emerging economic bodies also
suffers a lot in their economy, it is predicted that the increase of Global GDP will
decrease prominently on a year-on-year basis. Therefore, the growth rate of global
business of containers will decrease as compared with the year of 2011. In accordance
with the prediction from Clarkson, a British dynamic analysis institution for shipbuilding
and shipping, the global business of containers will reach 163 million TEU in 2012 with
its growth rate deceasing to 7.7%. Besides, the global demand for containers will have a
certain decrease.
54
In 2012, there are many global new ships with containers to be delivered, so as the freight
capacity will increase by 7% to 9%. The oversupply situation in shipping industry has no
fundamental change, and the financial status of the mainstream shipping company is bad,
it is predicted that the shipping industry will continue to adopt the procurement strategy
by using rent instead of purchase in 2012, the procurement proportion from containers
leasing companies will still keep at a high level. Due to the demands for containers have
been adjusted through the cross-year off season, the price of container lingers at a low
level, the demands for containers arising from the new ships delivered to use and the
renewal and elimination of old containers will form a basic support for the overall
demands for containers in 2012. It is predicted that there is a lack of demands for reefer
containers.
(2) As for road transport vehicle manufacturing and service business, it‘s very likely that
the economic growth of the global core economic bodies will slowdown in the future two
years, and it‘s very possible that Chinese economy will enter into a medium-to-low-speed
growth cycle. Besides, it is predicted that American economy will recover slowly, and
European economy is likely to appear negative increase, which will put a certain pressure
on the growth of demands for semi-trailer in European and North American market. And
it‘s predicted that the demands for Chinese special vehicles will have a small decrease on
a year-on-year basis. Of which, it is possible to maintain a certain increase in the semi-
trailer market with the core demands from logistics, which is mainly because the
demands have been through the adjustment of large scale decrease in the second half year
of 2011, and the government has increased its support of capital and tax for logistics
industry. In 2012, China will continue to regulate the real estate market, and it‘s limited
for local government to further enlarge the scale of infrastructure, so there is a severe
challenge for the two main pillars of Chinese refitted vehicles market, thus Chinese
refitted vehicles market will face an adjustment.
(3) As for business of energy, chemical, food equipments and service, in China, with the
acceleration of industrialization and urbanization, the bottleneck of energy supply
especially natural gas supply will further ease, the relevant demands will increase
significantly, so as to drive the substantial increased demands for natural gas storage
equipments, liquefied natural gas receiving stations and engineering service business.
With the overall recovery of global economy, it is predicted that the demands for liquid
tank containers will maintain a stable increase. In the aspect of demands for chemical
equipments, the demands are mainly from the domestic market, because during the period
of the twelfth-five-year plan, it will reform a lot of large scale oil refineries and fertilizer
plants as well as build up many petrochemical production bases. In additional, the start of
the new technologies, such as joint circulatory power generation with coal combined oil
and coal gasification and etc., will bring the new increased demands for chemical
equipment industry. It is predicted that the Group‘s business of energy, chemical, food
equipments and service will maintain a growth rate of 10%.
(4) As for offshore engineering equipment business, due to the factors such as the price of
55
oil keeps at a high level and the exploitation of ocean oil in the world strengthens, there
are large demands in the global offshore engineering market in the future. Besides, large
demands for offshore engineering equipment will arised from the core area markets, such
as North Sea, Gulf of Mexico, Brazil, Southeast Asia, West Africa, etc.; with the
increasing exploitation of ocean resources especially South China Sea, and under the
guidance of the Development Plan of National Energy Strategy, Shipbuilding Industry
and Offshore Engineering Equipment during the Period of Twelfth-five-year Plan, the
three major gas companies in China will accelerate to carry out their plan of exploration
and investment on the ocean oil and gas resources. In the future, the large demands for
offshore engineering equipment will push the global offshore engineering industry to
move to China, and then drive Chinese offshore engineering enterprise to an accelerated
growth. At present, the global market, especially high-end offshore products area, has
still been dominated by South Korea, and Singapore, the traditional offshore business
powers. However, because of its lower cost, financing advantage and improvement of
design and construction capacity, offshore business begins to be accepted by the global
customers. As an offshore engineering enterprise with the business record of initially
mass constructing the deep-water semi-submersible drilling platform in China, the
Goup‘s offshore business will meet a development opportunity. In international market,
CIMC Raffles has established solid business relationship with many famous companies
in this trade in offshore regional markets like North Europe, Middle East, Russia, Brazil,
West Africa and Southeast Asia, to improve its industrial influence. In the future, CIMC
Raffles will mainly explore the said segmented regional markets. However, in domestic
market, it will continue to consolidate the relations with the three major gas companies,
paying attention to investment demands and business opportunities to achieve a
substantial breakthrough. In 2012, the Group will adopt focused business strategy for its
offshore engineering business by vigorously developing orders, paying special attention
to internal management, controlling cost and ensuring the safety. Moreover, it will try its
best to break out the record of orders, realize the sale of self-builted projects and further
reduce the business losses.
3. Overall business objectives and measures taken to achieve them
In 2012, CIMC will take the large adjustment for global economy as an opportunity to
accelerate business structure adjustment and strategic upgrading, and to conduct
systematic transformation in terms of development strategies, business mode, enterprise
culture, organizational structure, operation flow, human resources, etc., as well as
advance the layered management and meticulous management, so as to create a
―cumulative and continuous improving mechanism‖, and further lay a new foundation for
the continuous benign development of the Group.
As for CIMC, due to the slowdown of the economic recovery, the intensify of medium-
to-low-speed growth cycle and economic fluctuation, it is a good opportunity to affect or
change the industrial structure, and it is also a good opportunity to deeply develop the
market and explore relevant business potential, moreover, it is a good opportunity to
further push the reformation and improve self capacity. Meanwhile, it also brings higher
56
requirements and challenge on realizing the development goal of upgrading the industry,
optimizing the content, improving the capacity and being a world class enterprise for
CIMC. The Group‘s general business principle fixed in 2012 is: strengthen confidence
and make progress while ensuring stability; put eyes on the future and lay a solid
platform.
As for the container business, CIMC will carry out the layered management, and
strengthen the service and cooperation; give full play to the staffs‘ intelligence and ability
with the people orientation. Besides, through the R & D on technonogy and management,
CIMC will break the bottleneck for manufacturing industry, such as increasing cost,
environmental protection problem, labor intensive problem, etc.; and it will also optimize
the allotment of resources, enhance the assets operational efficiency in the business area
and improve the decision-making level.
As for the vehicle business, CIMC will carry out the business unit management, continue
to advance the ―Plan on Opening Hundreds of Stores‖ for its sales and service network,
implement the construction of brand system, and explore European market, as well as
improve the business operational efficiency in North America.
As for business of energy, chemical and liquid food, CIMC will consolidate and enhance
the market influence of present main equipment manufacturing products through
improving the operational and management efficiency of low-temperature equipment,
giving full play to the productivity of the newly bulit and expandingly built production
bases and production lines, intensify the development of special tank container, etc.; it
will strengthen the project business through business cooperation, sino-european
interaction, the improvement of project management ability; besides, it will make more
efforts to explore the project business, especially the low-temperature tank project, gas
station project, the project on the storage of medium-to-small sized liquefied petroleum
gas or petchemical gas, gas treatment project and petrochemical spherical tank project.
4. Capital expenditure and financing plan
Considering changes of the economic situation and operation environment, as well as the
Group‘s need for strategic upgrading and business development, a capital expenditure
about RMB 4.577 billion is expected for the year 2012, and various financing
arrangement will be considered.
5. Risk factors in future development
In 2012, CIMC‘s business environment still exist the potential risks as follows:
(1) The global economy grows slowly. And it needs a long tine to solve the debt crisis in
Euro Zone, which has some uncertainty; the risk of high oil price in the world arising
from geopolitics and military conflict is possible to be an obstacle for the global
economic recovery. Besides, the financial market is unstable, which existing the risk of
foreign exchange fluctuation. (2) Affected by the regulation on real estate and the weak
demands from foreign market, Chinese economy faces the risk of the decrease in
57
investment and exports. (3) Renminbi continues to appreciate, which will further increase
pressure on the weak exports, and even affect Chinese economy with heavy reliance on
exports. (4) In order to support the increase in domestic demands, increasing expenditure
and tax reduction will be taken into consideration in the financial policy, which will
promote the investment on people‘s livelihood and the construction of infrastructure.
However, the monetary credit policy will only be micro structural adjustment, which is
hard to release significantly. (5) Under the guidance of constructing harmonious society
and the view of scientific development, the government‘s governing ideas and policies is
under significant change, the traditional manufacturing business faces a greater challenge.
It also faces a series of issues on how to enhance production efficiency, improve labor
condition, save resources and decrease energy consumption, as well as environmental
protection. (6) The global container business tends to grow slowly with increasing
fluctuation; the global shipping market is still under the circumstance of long-term suplus
of freight capacity. (7) Besides, the factors such as resources, oil price, environment,
traffic have a more and more restraint on the development of vehicles industry, and the
railway construction and separation of passengers and freight has a negative impact on
the trunk line road cargo freight and also brings the risks of decreasing demands for road
transport vehicles. (8) Moreover, the offshore engineering equipment industry is an
industry with high input, high threshold and long-term circle, which existing investment
risk. With the offshore engineering industry being included into the ―Strategic Emerging
Industries‖ and gaining the support of policies, there will be more traditional ship
building enterprises enter into the offshore engineering equipment industry, so as to
possibly increase the industrial competitiveness.
II. Investments in the reporting period
(I) The Company did not raise funds in the reporting period. Nor there existed application
of previously raised funds.
(II) Investments with non-raised funds in reporting period
1. Acquiring equities: In the reporting period, the Company paid a total of RMB 117.41
million for acquiring equities of some enterprises.
2. Establishing new subsidiaries or increasing investment in subsidiaries: In the reporting
period, the Company paid a total of RMB 1.297 billion for establishing new subsidiaries
or increasing investment in subsidiaries.
3. Investment in fixed assets: The year of 2011 saw a net increase of RMB 1.08 billion in
the Company‘s fixed assets (including construction in progress).
4. As at 31 Dec. 2011, balance of the Company‘s short-term securities investment stood at
RMB 143.69 million.
Unit: RMB0‘000
Project Accumulative
Shareholding ratio of
Project progress in investment at
the Company (%)
2011 year-end
Acquisition of equities of Technodyne International
Limited 60% Finished 48.56
58
Acquisition of equities of Nantong Yongxin Logistics
100% Finished 3
Co., Ltd.
Acquisition of equities of Wanshida Special Purpose
60% Finished 22
Vehicle
Acquisition of equities of Gadidae AB Finished 43.85
Newly establishment of Ningbo Ensile Import & Export
100% Finished 1
Co., Ltd.
Newly establishment of Shenzhen CIMC Modular
100% Finished 5
Housing Co., Ltd.
Newly establishment of Shenzhen CIMC Investment
100% Finished 60
Co., Ltd.
Newly establishment of Shenzhen Tianyi Investment
100% Finished 90
Co., Ltd.
Newly establishment of Zhumadian CIMC Huajun
80% Finished 20
Foundry Co., Ltd.
Newly establishment of Chengdu Jihaixin Trading Co.,
80% Finished 4.5
Ltd.
Newly establishment of Shenzhen CIMC Vehicles Park
80% Finished 5
Investment Management Co., Ltd.
Newly establishment of CIMC Shipbuilding and
100% Finished 50
Offshore Engineering Design & Research Institute
Increased investment on Yantai Offshore Engineering
100% Finished 120
Research Institute
Increased investment on Shenzhen CIMC Intelligent
100% Finished 16
Technology Co., Ltd.
Increased investment on Tianjin CIMC Container Co.,
100% Finished 170
Ltd.
Increased investment on Nantong CIMC Transportation
85% Finished 28.96
& Storage Equipment Co., Ltd.
Increased investment on Holvrieka (China) Co., Ltd. 100% Finished 63.87
Increased investment on CIMC Vehicles (Group) Co.,
80% Finished 315.29
Ltd.
Increased investment on CIMC Raffles Offshore
54.71% Finished 347.13
(Singapore) Limited
Total 1,414.16
III. Routine Work of the Board of Directors
(I) Board meetings and resolutions made
Time Session Resolutions made Disclosure
The 1st Session of Resolution on Jointly Investing on CIMC
31 Jan. 2011 the 6th Board of Good Luck Logistics Co., Ltd. (temporary
Directors for 2011 name)
The 2nd Session of Resolution on Establishing Zhongshan CIMC
1 Mar. 2011 the 6th Board of Logistics Equipment Manufacturing Co., Ltd.
Directors for 2011 (name planned to be used)
59
The 3rd Session of 1. Public Notice on Resolutions of the 3rd Public notice on
the 6th Board of Session of the 6th Board of Directors for Year 23 Mar. 2011
Directors for 2011 2011;
2. Proposal on Providing Guarantees for Bank
Credits and projects for Subsidiaries in 2011;
3. Proposal on Credit Guarantee Provision in
2011 by CIMC Vehicle (Group) Co., Ltd. and
Its Controlled Subsidiaries for Dealers and
Customers;
4. Proposal on Controlled Subsidiaries‘
Providing Guarantees for Bank Credits
21 Mar. 2011
Granted to the Company‘s Subsidiaries in
2011;
5. Resolution on the Financing Arrangment in
2011;
6. Proposal on Execution of Daily Related
Transactions in 2010 and Expected Daily
Transactions in 2011;
7. Resolution on Work Plan of Implementing
Internal Control Regulations for China
International Marine Containers (Group) Co.,
Ltd..
The 4th Session of Resolution on Jointly Investing on Establishing Public notice on
15 Apr. 2011 the 6th Board of Super-Refrigeration Equipment (Shanghai) 18 Apr. 2011
Directors for 2011 Co., Ltd. (name planned to be used)
The 5th Session of Resolution on the First Quarterly Report for
25 Apr. 2011 the 6th Board of 2011
Directors for 2011
The 6th Session of Resolution on Summary of the Rectification Public notice on 7
30 Jun. 2011 the 6th Board of Report on On-site Checks by the Shenzhen Jul. 2011
Directors for 2011 CSRC
The 7th Session of 1. Resolution on Increasing Investment on
the 6th Board of CIMC Vehicle (Group) Co., Ltd.;
Directors for 2011 2. Resolution on the Establishment of
21 Jul. 2011
Shenzhen CIMC Investment Co., Ltd.;
3. Resolution on the Establishment of
Shenzhen Tianyi Investment Co., Ltd.
The 8th Session of 1. Resolution on Adjusting the Stock Option Public notice on
the 6th Board of Exercise Price of the Stock Incentive Plan; 26 Jul. 2011
Directors for 2011 2. Resolutions made at the 8th Session of the 6th
Board of Directors for 2011;
22 Jul. 2011
3. Independent Opinion by Independent
Directors on Nomination of Director
Candidates to Fill in Gap of the Sixth Board of
Directors.
The 9th Session of 1. Resolution on Electing the Director to
the 6th Board of Preside Over the First Special Shareholders‘
2 Aug. 2011 Directors for 2011 General Meeting;
2. Resolution on the Adjustment for the
Organization of the Group Headquarter
The 10th Session Resolution on the Election of the Vice Public notice on
of the 6th Board of Chairman of the Board and the By-election of 17 Aug. 2011
16 Aug. 2011
Directors for 2011 the Members for the Strategy Committee and
Audit Committee
The 11th Session Resolution on the Semi-annual Report for 2011
22 Aug. 2011 of the 6th Board of
Directors for 2011
The 12th Session 1. Resolution on the Evalution Method for the
of the 6th Board of Internal Control of China International Marine
26 Aug. 2011 Directors for 2011 Containers (Group) Co., Ltd.
2. Resolution on the Engagement of the CPAs
Firm for Auditing the Internal Control
The 13th Session 1. Resolution on Matters Concerning Granting Public notice on
21 Sept. 2011 of the 6th Board of Reserved Options According to the Stock 23 Sept. 2011
Directors for 2011 Option Incentive Plan
60
The 14th Session Resolution on the Investment on the G3 Semi-
21 Oct. 2011 of the 6th Board of Trailer Technology and Manufacturing Projects
Directors for 2011 in Europe
The 15th Session Resolution on the Third Quarterly Report for
27 Oct. 2011 of the 6th Board of 2011
Directors for 2011
The 16th Session Resolution on Revising the Management Public notice on
of the 6th Board of System on Raised Fund of CIMC; 17 Nov. 2011
Directors for 2011 Resolution on Revising the Management
System on the Inside Information and Insiders
of CIMC;
14 Nov. 2011 Resolution on Revising the Implementation
Rules for the Audit Committee under the Board
of Directors
Resolution on Revising the Rules of the
Annual Report Work for the Audit Committee
under the Board of Directors
The 17th Session No resolution made
17 Nov. 2011 of the 6th Board of
Directors for 2011
The 18th Session Resolution on the Establishment of CIMC
1 Dec. 2011 of the 6th Board of Shipbuilding and Offshore Engineering Design
Directors for 2011 & Research Institute
(II) Execution on resolutions of shareholders’ general meetings by the Board of
Directors
1. The Board of Directors faithfully executed the resolutions of the shareholders‘ general
meetings during the report year:
The Proposal on Register and Issuance of Semi-period Notes was reviewed and approved
at the 2nd Special Shareholders‘ General Meeting for 2010, which has been reviewed and
approved by National Association of Financial Market Institutional Investors, and now
the first-phase issuance of 4 billion shares has been finished.
2. Implementation of the profit distribution scheme for 2010 by the Board of Directors
The Profit Distribution Scheme for 2010 was reviewed and approved at the 2010 Annual
Shareholders‘ General Meeting held on 13 Apr. 2011. According to the Scheme, based on
the total 2,662,396,051 shares of the Company, a cash dividend of RMB 3.5 (tax included;
after tax, actual cash dividend for every 10 shares for individual shareholders, investment
funds and QFIIs stands at RMB 3.15.) is distributed for every 10 shares. On 3 Jun. 2011,
all parts of the profit distribution had been done.
(III) Duty performance of three special committees under the Board
The Audit Committee, the Compensation and Appraisal Committee and the Strategy
Committee under the Board of Directors conscientiously performed their duties according
to the Administration Rules for Listed Companies, the Articles of Association of the
Company, Rules of Procedure for Board of Directors as well as the office power and
obligations stipulated in the implementation rules for the special committees.
Duty performance of Audit Committee
1. During the reporting period, the Audit Committee convened special meetings for
discussing periodical financial reports of the Company; it also communicated with the
auditors and issued the review comments on the financial report.
61
Since the commencement of the annual report audit for 2011, the Audit Committee
convened 3 meetings and it actively made the audit arrangement with the auditors. It
reviewed the progress of the financial statements and the self-appraisal report on internal
control twice and issued relevant comments. It kept contact with auditors and paid much
attention to the audit progress so as to make sure that the audit would be accomplished on
time.
2. Summary report by Audit Committee on 2011 audit conducted by KPMG
Pursuant to the Notification on Doing Well for the formulation, disclosure and audit
works of Annual Report 2011 from China Securities Regulatory Commission, the audit
carried out by KPMG is hereby summarized as follows:
(1) Firstly, about preparation before the audit:
Formulating audit plan:
The 2011 audit lasted five months from the preliminary audit in early Nov. 2011 to the
completion of the preliminary audit, which was scheduled as follows:
From Nov. 2011 to Dec. 2011, preliminary audit was conducted on main subsidiaries.
On 8 Dec. 2011, KPMG communicated with the management and the Audit Committee
on the preliminary audit.
On 1 Jan. 2012, KPMG began to enter CIMC and its subsidiaries for audit. On 21 Mar.
2012, KPMG completed all the audit work and issued preliminary opinions on the audit
for the financial statements and the internal control, which was approved by the Board of
Directors on 22 Mar. 2012.
Reviewing unaudited financial statements:
Before the entry of auditors, the Audit Committee carefully reviewed the progress of the
financial Statements and Self-appraisal Report on Internal Control prepared by the
Company.
(2) Secondly, about the audit process:
Beginning from Nov. 2011, KPMG conducted preliminary audit on main subsidiaries.
From 1 Jan. 2012, KPMG conducted full audit on CIMC Headquarters and its
subsidiaries.
On 9 Mar. 2012, KPMG reported to the Audit Committee about the completion stage of
the audit.
On 21 Mar. 2012, KPMG submitted the Preliminary Opinions on the Audit of the
Financial Statements and Self-appraisal Report on Internal Control for 2011 to the Audit
Committee.
On 22 Mar. 2012, KPMG officially issued the Auditor‘s Report.
(3) Thirdly, about the audit results
KPMG issued the Auditor‘s Report for the Financial Statements in 2011 and the Auditor‘s
Report for Internal Control in 2011 for the Company with an unqualified opinion.
The Audit Committee was of the view that KPMG had done a good job in auditing the
Company‘s 2011 annual financial statements.
62
Duty performance of Compensation and Appraisal Committee
During the reporting period, the Compensation and Appraisal Committee convened one
special meeting, at which the following matters were reviewed and discussed:
1. Issuing the audit opinion on the Appraisal Results for Management Team for 2010 and
Appraisal Measures for Management Team for 2011.
2. Issuing the audit opinion on the Disclosure for the Compensation of Directors,
Supervisors and Senior Management Staffs for 2010.
Duty Performance of Strategy Committee
During the reporting period, the Investment Examination Committee under the Strategy
Committee convened four special meetings on investment projects, thoroughly examining
significant investments and acquisition projects of the Company, which provided strong
basis for decision-making of the Board of Directors.
(IV) Statement of the Board of Directors on the responsibility of internal control
The Board of Directors is responsible for the establishment, improvement and effective
implementation of internal control. Generally speaking, the existing internal control rules
and system of the Group are complete, rational, effective and sound, with no material
internal control defects. All units within the Group that have established the internal
control system are able to control risks effectively. And the internal control system can
guarantee the healthy operation and the all the Company‘s businesses and help the
Company control operating risks, which meets the relevant requirements of the Guideline
of Shenzhen Stock Exchange for Internal Control of Listed Companies. The self-
evaluation report of the Company on its internal control factually and objectively presents
the actual current situation of its internal control establishment, execution and supervision.
For more details, see the ―Self-evaluation Report on Internal Control for 2011‖ disclosed
by the Company.
IV. Preplan for profit distribution or capitalization of capital reserve for 2011
As audited by KPMG, for the year 2011, the Company achieved a consolidated net profit
of RMB 3,690,926,328.16 after tax and minority interests. Based on the share capital of
2,662,396,051 shares as at 31 Dec. 2011, the earnings per share stood at RMB 1.39.
As per the Articles of Association of the Company and the current accounting standard,
the net profit of parent company was RMB 921,094,812.71 for the year 2011, and after
10% of the net profit, namely RMB 92,109,481.27, had been withdrawn as statutory
surplus reserve, the parent company‘s profit available for distribution to shareholders as
at 31 Dec. 2011 stood at RMB 1,267,957,978.87 as recorded in the statements. The profit
distribution and dividend declaration preplan is hereby proposed as: Based on the total
share capital of 2,662,396,051 shares as at 31 Dec. 2011, a cash dividend of RMB 4.60
(tax included) will be distributed for every 10 shares, representing a total dividend of
RMB 1,224,702,183.46.
63
After the said profit distribution, retained profit of the Company will stand at RMB
43,255,795.41. The above preplans are to be submitted to the Annual Shareholders‘
General Meeting 2011 for examination and approval before implementation.
Cash bonus of the Company over the past three years
Unit: RMB
Ratio to net profit
Net profit attributable to Profit available for
Cash bonus (tax attributable to owners of
Year owners of listed company distribution for the
included) listed company under
under consolidated statements year
consolidated statements
2010 931,838,617.85 3,001,851,000 31.04% 1,579,889,000
2009 319,487,526.12 958,967,000 33.32% 1,932,874,000
2008 399,359,407.65 1,406,908,000 28.39% 1,064,613,000
Ratio of accumulative cash bonus to average annual net profit in past
92.26%
three years (%)
V. Other matters that need to be disclosed
(I) Foreign-currency financial assets and liabilities held by the Company
Unit: RMB Thousand
Accumulative
Impairment
Gain/loss from fair fair value
Opening provision for
Item value changes in changes Ending amount
amount reporting
reporting period recorded into
period
equity
Financial assets:
Of which: 1. Financial assets
measured at fair value with
349,300 -113,850 176,383
changes recorded into gain/loss
for current period
Including: derivative financial
119,069 -86,378 - - 32,691
assets
2. Loans and receivables 5,815,450 -75,345 13,746,828
3. Financial assets available for
9,066 -870 7,799
sale
4. Held-to-maturity
investments
5. Hedging 13,101 - 12,784 - 9,751
Subtotal of financial assets 6,186,917 -113,850 11,914 -75,345 13,940,761
Financial liabilities -12,293,652 52,159 -9,559,296
(II) Media designated for information disclosure
The Company has designated China Securities Journal, Shanghai Securities News,
Securities Times and Ta Kung Pao (HK) as media for its information disclosure.
64
Section IX Report of the Board of Supervisors
I. Meetings of the Board of Supervisors and resolutions made
Date Session of meeting Resolutions made
st 1. Resolution on the 1st Session of the 6th Board of Supervisors for Year
The 1 Session of the
2011
21 Mar. 2011 6th Board of
2. Review opinion on Self-evaluation Report on Internal Control of CIMC
Supervisors for 2011
for 2010
The 2nd Session of the Supervision opinion on 1st Quarterly Report 2011 of CIMC
5 Apr. 2011 6th Board of
Supervisors for 2011
The 3rd Session of the Resolution on Summary of the Rectification Report on On-site Checks by
30 Jun. 2011 6th Board of the Shenzhen CSRC
Supervisors for 2011
The 4th Session of the Supervision opinion on Semi-annual Report 2011 of CIMC
22 Aug. 2011 6th Board of
Supervisors for 2011
The 5th Session of the Supervision opinion on Matters Concerning Granting Reserved Options
21 Sept. 2011 6th Board of According to the Stock Option Incentive Plan
Supervisors for 2011
The 6th Session of the Supervision opinion on the 3rd Quarterly Report 2011 of CIMC
27 Oct. 2011 6th Board of
Supervisors for 2011
II. Independent opinion on events of the Company in 2011 by the Board of
Supervisors
The Board of Supervisors of the Company issued independent opinion on the following
events:
(I). Legitimate operation of the Company
1. The Board of Supervisors of the Company, on the basis of Company Law and Articles
of Association, carefully performed its duties. The supervisors sat in on the Board
Meetings as non-voting delegates and supervised the convening procedures, decision
making procedures of the general meetings of shareholders and board of directors as well
as the execution of the resolutions made in the general meetings of shareholders and the
decision making of the Company; the Board of Supervisors is of the view that during the
reporting period, the decision making procedures were consistent with the law, the
internal control procedures were consummated; there was no behavior of the directors,
chairman and senior management staff which violated the Articles of Association or
damaged the Company‘s interest; there was no behavior of power abusing or damaged
the interest of the shareholders or employees.
2. In accordance with the Guideline of Internal Control in Listed Company Stipulated by
Shenzhen Stock Exchange, the Board of Supervisors fully inspected on the internal
control of the Company and issued the following supervision opinions: the current
internal control system is in line with the requirements of relevant laws, rules and
stipulations at present, as well as meet the requirement of effective risk control in all the
material aspects; the Self-assessment Report of Internal Control of CIMC for Y2011
reflects the particulars on the establishment, operation, inspection and supervision of the
Company‘s internal control objectively and truly.
65
3. In accordance with the requirements of Supervision opinion on the On-site Checks for
CIMC by the Shenzhen CSRC (Shen-Zheng-Ju-Gong-Si-Zi [2011] No. 47), the Board of
Supervisors reviewed and approved the Summary of the Rectification Report on On-site
Checks by the Shenzhen CSRC.
4. On 17 Sept. 2010, the Stock Option Incentive Plan of China International Marine
Containers (Group) Co., Ltd. (Revised) (hereinafter referred as ―Stock Option Incentive
Plan‖), and for the reserved options of the Stock Option Incentive Plan, the Board of
Supervisors supervised the list of grantees and grant day of the reserved options of the
Stock Option Incentive Plan reviewed and approved by the Board, and then issued the
opinions as follows:
(1) After the supervision on the list of grantees of the reserved options of the Stock
Option Incentive Plan, we are of the opinion: the core technical (business) staff, fixed as
the incented objects in accordance with the Stock Option Incentive Plan of China
International Marine Containers (Group) Co., Ltd. (Revised), all meet the qualification
stipulated in Company Law, Articles of Association as well as other laws, rules and
stipulations, who also meet the conditions of incented objects stipulated by
Administration of Stock Option Incentive of Listed Company (Trial), Memorandum of
the Spervision on Stock Option Incentive No. 1, No. 2 and No. 3, so whose qualifications
as the incented objects for this reserved options of the Company are legal and effective.
(2) After supervising the matters of authorization, we are of the opinion: the grant day for
the reserved options of the Stock Option Incentive Plan is 22 Sept. 2011, meanwhile, the
Company will made authorization to the incented objects of the reserved options in
accordance with relevant stipulations, and finish the registration, announcement and other
relevant procedures. And the above arrangement is in line with the requirements of the
Administration of Stock Option Incentive of Listed Company (Trial), Memorandum of
the Spervision on Stock Option Incentive No. 1, No. 2 and No. 3 and Stock Option
Incentive Plan of China International Marine Containers (Group) Co., Ltd. (Revised),
which is legal and effective.
(II) The examination on the Company‘s finance
The Board of Supervisors examined the Company‘s business and finance in 2011, as well
as the annual financial report, the semi-annual report and other documents submitted by
the Board of Directors. And it is of the opinion that the financial report has presented the
Company‘s financial status and operating results in a factual and fair manner. In the
reporting period, KPMG issued a standard unqualified auditor‘s report for the Company‘s
Financial Report 2011. And it believes that the audit opinion issued by KPMG is
objective.
66
2011 Annual Report
Section X Significant Events
I. Significant lawsuits and arbitrations
SS PANTANAL, the deep-water semi-submersible drilling platform constructed for
Schahin in Brazil by a subsidiary of the Company – YCRO was delivered in Nov. 2010.
In 2011, SCHAHIN couldn‘t pay the contract amount in accordance with the construction
contract on time, thus YCRO filed a lawsuit application on three companies of SCHAHIN
Group including SCHAHIN HOLDINGS SA, to require a claim on the overdue contact
amount of USD 65 million.
The Company is optimistic on the prospect of the lawsuit, and will adopt active legal acts
to protect the interest of shareholders from any harm. However, the case has not been in
session or settled, which still has some uncertainty, and the result may have a certain
influence on the Company‘s profit in 2012 or during the later period.
II. Significant acquisition and sales of assets
In Oct. 2011, CIMC Raffles, on the basis of one additional share for every two existing
shares, issued 205,173,750 shares of renounceable non-underwritten additional shares at an
issue price of USD 0.5 for each additional share, and the gross proceeds amounted to USD
102.6 million. Of which, the Company acquired 202,342,343 shares with USD 101 million
through CIMC OFFSHORE, the controlled subsidiary of its wholly own subsidiary—
CIMC HK, so after the allotment of shares, the Company‘s shareholding proportion in
CIMC Raffles would reach 54.7%.
In Jan. 2012, the Company acquired 131,093,400 shares, the total shares of the Zhang
Family held in CIMC Offshore Holdings Liminted, with USD 114 million, thus its
shareholding proportion in CIMC Raffles Offshore (Singapore) Limited reached 88.58%.
III. Significant related transactions
During the reporting period, no significant related transaction occurred in 2011. For details
of relevant information, please refer to ―Note VI Related Party Relationships and
Transactions‖ in the Notes to the Financial Statements.
IV. Significant contracts and execution
1. During the reporting period, the Company did not hold in trust, contract or lease any
significant assets from other companies, nor did it put in trust, contract or lease its
significant assets to other companies.
2. As approved at the Second Special Shareholders‘ General Meeting for 2010 on 15 Nov.
2010, the Company plans to issue medium-term notes (MTN) with a term of five years and
a ceiling of RMB six billion to institutional investors in the national inter-bank bond market.
On 4 May 2011, the Company received the Notice on Accepting Registration issued by the
National Association of Financial Market Institutional Investors, which meant that the
registration of the Company‘s MTN was accepted. Up to now, the issuance of the first-
phase MTN as 4 billion shares has been finished. For details, please refer to the public
notices disclosed on China Securities Journal, Shanghai Securities News, Securities Times,
67
2011 Annual Report
Ta Kung Pao (HK) and www.cninfo.com.cn dated 10 May 2011 and 19 May 2011
(Announcement No. [CIMC] 2011-015 and [CIMC] 2011-016).
3. Significant guarantee contracts
(1) The Company provided guarantees on operational capital for its subsidiaries. The
Company is an overall listed company, who provided guarantees on operational capital
within budgets for its subsidiaries for the purpose of demands of business and development.
The Company signed a General Agreement on Annual Credit of Head Office with the Bank
according to the annual budget approved by the Board of Directors. The various financing
activities of the subsidiaries must be within the annual credit in the General Agreement.
The Company, as approved by the Board of Directors, provided credit guarantee for the
subsidiaries with the total annual credit. As 31 Dec. 2011, the balance of the guarantee
provided by the Company for its subsidiaries was RMB 1,376.68 million. No overdue
external guarantee existed in the Company and holding subsidiaries.
(2) The Company did not provide any external guarantees to its shareholders, actual
controller and other related parties.
(3) As at 31 Dec. 2011, the balance of guarantee provided by the Company amounted to
RMB 2,340.28 million, accounting for 12.56% of the net assets at the end of 2011, direct or
indirect guarantee amount for liabilities of subsidiaries whose assets liability ratio was over
70% was RMB 743.72 million.
5. During the reporting period, the Company did not entrust any person to conduct cash
assets management.
V. Special explanation and independent opinion made by Independent Directors on
relevant events
(I) Special explanation and independent opinion made by Independent Directors in respect
of appropriations of funds of the Company by its related parties and external guarantee
We believed that the Company has strictly followed the requirements of relevant rules and
regulations to standardize the behaviors of external guarantee with perfect decision-making,
and reached the effective financial risk control. There was no behavior of external
guarantee provided by the Company for its shareholders, actual controller and other related
parties in the Company. Both guarantees the Company provided for its subsidiaries and
guarantees CIMC Vehicle and its holding subsidiaries provided for their dealers and clients
are for the sake of promoting business development of the Group and demands of products
sales. The above-mentioned guarantees did not harm benefits of the Company and
shareholders.
(II) Special explanation and independent opinion made by Independent Directors on the
Company‘s derivatives investment and risk control
In our opinion, the Company strictly complied with the requirements of relevant rules and
regulations issued by supervision department, as well as the principle of prudence, to
68
2011 Annual Report
standardize derivatives investment. The internal approval system and operating process on
business was perfect. And risk control was valid.
VI. Performance on the stock option incentive scheme
(I) Implementation of the stock option incentive scheme of CIMC
On 28 Dec. 2009, the 16th Session of the 5th Board of Directors for year 2009 of CIMC and
the 7th Session of the 5th Board of Supervisors for year 2009 of CIMC were held, at which
the Stock Option Incentive Scheme of China International Marine Containers (Group) Co.,
Ltd. (Draft), the Appraisal Measures for Implementing Stock Option Incentive Scheme of
China International Marine Containers (Group) Co., Ltd. and the Proposal on Submitting
the Shareholders‘ General Meeting to Authorize the Board of Directors to Transact Matters
Related with Stock Option Incentive Scheme of CIMC were reviewed and approved. And
the independent directors issued The Independent Opinion on the Stock Option Incentive
Scheme of China International Marine Containers (Group) Co., Ltd. (Draft) by the
Independent Directors.
On 1 Sept. 2010, the Company convened the 5th Session of the 6th Board of Directors for
Year 2010 and the 3rd Session of the 6th Board of Supervisors for Year 2010, which
reviewed and approved Proposal on Revising the Stock Option Incentive Scheme of China
International Marine Containers (Group) Co., Ltd (Draft), and amended the original
incentive scheme. With unanimous review by CSRC, on 17 Sep. 2010, the 1st Special
Shareholders‘ Meeting for Y2010 of the Company reviewed and passed the Stock Option
Incentive Scheme of China International Marine Containers (Group) Co., Ltd. (hereafter
referred to as Incentive Scheme of Stock Option).
The amount of the Company‘s stock option granted to grantees in this scheme was 60
million shares, accounting for 2.25% of the total share capital of the Company, of which 54
million was initially granted. And the grantees were core technical (business) staff and
middle management staff, amounted to 181. And the initial exercise price was RMB 12.39
per share. After the implementation of the dividends distribution plan for 2010, the exercise
price was adjusted to RMB 12.04 per share with the grant day as 28 Sept. 2010, which was
finished the registration for stock option on 26 Jan. 2011; the reserved options amounted to
6 million shares, and the grantees were core technical (business) staff and middle
management staff, amounted to 48, and the exercise price was RMB 17.57 per share with
the grant day as 22 Sept. 2011, which was finished the registration on 17 Nov. 2011.
The valid period of this stock option incentive scheme was ten years since the initial grant
date of the stock option, which was divided into two periods to exercise, and the first
exercise period was from the initial trade date after two years since the grant date to the last
trade date within four years since the grant date, and it was allowed to exercise no more
than 25% of the total granted stock options; the second exercise period was from the initial
trade date after four years since the grant date to the last trade date of this plan, and it was
allowed to exercise no more than 75% of the total stock options. The large-scale stock
option incentive and the strict exercise conditions would integrate the interest of the
69
2011 Annual Report
Company and that of the staffs themselves, so as to stimulate the staffs‘ enthusiasm
significantly, and thus input endless energy to the development of the Company.
Particulars on the stock option incentive for the directors, supervisors and senior executives
Exercise amount
Grant amount
Name Position Grant day during the Exercise price
(share)
reporting period
Mai Boliang President 3,800,000 28 Sept. 2010 0 12.04
Zhao Qingsheng Vice president 1,500,000 28 Sept. 2010 0 12.04
Liu Xuebin Vice president 1,500,000 28 Sept. 2010 0 12.04
Li Ruiting Vice president 1,300,000 28 Sept. 2010 0 12.04
Wu Fapei Vice president 1,000,000 28 Sept. 2010 0 12.04
Li Yinhui Vice president 1,000,000 28 Sept. 2010 0 12.04
Yu Ya Vice president 1,000,000 28 Sept. 2010 0 12.04
Secretary to the Board
Yu Yuqun 1,000,000 28 Sept. 2010 0 12.04
of Directors
General manager of
Jin Jianlong 1,000,000 28 Sept. 2010 0 12.04
Financial Management
General manager of
Zeng Beihua 1,000,000 28 Sept. 2010 0 12.04
Capital Management
Total - 14,100,000 28 Sept. 2010 0 -
(II) Performance on Equity Trust Scheme of CIMC Vehicle (Group) Co., Ltd.
1. The Shareholders‘ General Meeting of the Company held on 17 Oct. 2007 reviewed and
approved the Proposal on Shares Trust Plan of CIMC Vehicles (Group) Co., Ltd., the
Company‘s wholly owned subsidiary. In accordance with the plan, the Company‘s senior
management staffs involving in the vehicles business and the core staffs of the Company‘s
subsidiary CIMC Vehicles (Group) Co., Ltd. held 20% of this subsidiary with increasing
capital as RMB 220.7 million through China Resources SZITIC Trust Co., Ltd..
2. The Shareholding Plan of Core Staffs in CIMC Vehicles (Group) Co., Ltd. was
implemented in 2007 through the establishment of Shares Trust Plan, of which the first
phase of distributed shares totaling 43 million shares, accounting for 19.48% in the total
beneficiary shares of the Shares Trust Plan. The second phase of beneficiary shares of
Shares Trust Plan of CIMC Vehicles (Group) Co., Ltd. was distributed with the total shares
as 72.25 million shares, representing 32.74% in the total beneficiary shares of the Shares
Trust Plan. In 2011, the third phase of beneficiary shares of Shares Trust Plan of CIMC
Vehicles (Group) Co., Ltd. was distributed with the total shares as 66.075 million shares,
representing 29.94% in the total beneficiary shares of the Shares Trust Plan.
As to 31 Dec. 2011, the distributed shares of Shares Trust Plan of CIMC Vehicles (Group)
Co., Ltd. were 181.325 million shares, accounting for 82.16% in the total beneficiary
shares of the Shares Trust Plan.
VII. Commitment made by the Company or shareholders holding more than 5% of
shares and performance thereof
(I) For the relevant commitment made by the Company, please refer to ―Section IX. 1‖ in
the ―Notes to the Financial Statements‖.
(II) Commitment made by COSCO Container Industrial Limited in the Share Merger
70
2011 Annual Report
Reform on listing of shares subject to trading moratorium and the performance thereof
(1) COSCO Container Industries Limited committed that the original non-tradable shares
held by it would not be sold at Shenzhen Stock Exchange or transferred according to
relevant regulations within 12 months since the first transaction day after implementation
of the share merger reform.
(2) COSCO Container Industries Limited further committed that, after expiration of the
above commitment, the non-tradable shares sold through listing at Shenzhen Stock
Exchange in accordance with the relevant provisions would not exceed 5% of total shares
of CIMC within 12 months and not exceed 10% within 24 months.
The Board of Directors and CITIC Securities considered that up to date, COSCO Container
Industries Limited has strictly performed relevant commitments in the Share Merger
Reform.
VIII. Other investment events
(I) Securities investment
Unit: RMB
Proportion
Number of to total
Profits and
Short Initial shareholding securities
Stock Stock Closing book losses in the
No. form of investment at the investment
variety code value at the reporting
Stock (RMB Yuan) period-end
period
(share) period-end
（%）
Su Weifu
1 B 200581 49,461,422.81 3,000,000 48,155,580.00 33.51% -25,049,118.85
B
Inotrans
2 H 00368 Shipping 20,071,869.76 2,996,500 4,591,306.22 3.20% -2,607,595.72
Limited H
3 S G05.SI GoodPack 100,745,074.00 13,500,000 90,562,653.30 63.03% -38,481,285.43
Other securities investment at the
606,300.00 - 383,130.00 - -220,000.00
period-end
Profit and loss from selling securities
- - - - 32,453,000.00
investment
Total 170,884,666.57 - 143,692,669.52 - -33,905,000.00
(II) Equity of other listed companies held by the Company
Unit: RMB
Ratio to
Profits and
equity of
Stock Short form of losses in the Change of
Initial investment invested Closing book value
code Stock reporting owners‘ equity
company
period
(%)
China
600036 Merchants 25,461,492.90 0.53% 136,814,000.00 3,342,540.00 -8,125,830.00
Bank
China
600999 Merchants 57,517,510.73 0.90% 427,341,000.00 9,687,345.60 -141,601,349.21
Securities
OEL Otto Energy 13,480,167.09 1.19% 7,799,000.00 - -456,000.00
Total 96,459,170.72 - 571,954,000.00 13,029,885.60 -150,183,179.21
(III) Equity of Pre-IPO and unlisted financial enterprises held by the Company
71
2011 Annual Report
Naught
(VI) Derivatives investment
As at 31 Dec. 2011, main financial instrument held by the Company
included foreign exchange forwards or option contract and interest
rate swap contract. Risk of interest rate swap contract was nearly
related to fluctuation of interest rate. Risk of foreign exchange
Analysis on risks and control measures of derivatives forwards or option contract related to of risk from exchange rate
positions held in the reporting period (including but market and certainty of future cash flow from foreign currency
not limited to market risk, liquidity risk, credit risk, income. Control measures of derivative instrument showed in the
operation risk, law risk, etc.) following: carefully select and determine the type and amount of
new derivative instrument; aimed at derivative transaction, the
Company formulated strict and regular internal system of
examination and approval and operation process, and defined
procedure of examination and approval to control relevant risks.
Changes of market prices or fair values of the
The Group‘s profit and loss from change in fair value of derivative
invested derivatives in the reporting period And the
financial instrument was RMB -34,219,000 from Jan to Dec. 2011.
analysis on the fair value of the derivatives should
Fire value of derivative financial instrument was recognized
disclose the specific use methods and the relevant
according to market quote from the external financial institution.
assumptions and parameters.
Whether significant changes occurred to the
Company‘s accounting policy and specific accounting
No
principles of derivatives in the reporting period than
that of the previous reporting period
In our opinion, the Company strictly complied with the requirements
Specific opinion from independent directors, sponsors of relevant rules and regulations issued by supervision department,
or financial consultants on the Company‘s derivatives as well as the principle of prudence, to standardize derivatives
investment and risk control investment. The internal approval system and operating process on
business was perfect. And risk control was valid.
Positions of derivatives investment as at the end of reporting period
Unit RMB
Proportion of closing
Profit and loss
contract amount to net
Opening contract Closing contract in the reporting
Type of contract assets of the Company at
amount amount period
the end of reporting
（RMB‘0000）
period（%）
1. Forward foreign
4,673,302,392.70 3,931,523,232.00 -87,384,000.00 25.08%
exchange contract
2. Interest rate swaps 2,370,373,304.01 2,677,882,500.00 -6,908,000.00 12.72%
3. Option contracts-
370,908,516.65 230,332,520.00 60,073,000.00 1.99%
JPY
Total 7,414,584,213.36 6,839,738,252.00 -34,219,000.00 39.79%
IX. Engagement and disengagement of CPA Firm
During the reporting period, as approved by the Annual Shareholders‘ General Meeting
2010 held on 13 Apr. 2011, the Company reengaged KPMG as the Company‘s accountants
for providing auditing to the accounting statements for 2011.
2011 2010
Forensic
Forensic
Name of CPA Continuous examination
Audited items examination
Firm service life fee for
Audit fee fee for internal Audit fee
internal
control
control
72
2011 Annual Report
The consolidated
financial statements
of the Group
prepared in
KPMG RMB 6.35 RMB 3.6 RMB 5.35
accordance with 18 -
million million million
China Accounting
Standard for
Business Enterprise
X. During the reporting period, none of the Company, its Board of Directors and its
directors was subject to administrative punishment by CSRC.
XI. Events after the balance sheet date
Naught
XII. Interviews and visits in the reporting period
During the reporting period, the Company received in aggregate 91 batches of visitors for
visiting, investigation and visiting plants by various institutional investors, such as fund
companies, investment companies and securities companies, and individual investors etc.
The Company did not disclose, reveal or divulge to any institutional investors and
individual investors any material information not generally available to the public.
Topics discussed and information
Time Location Means Investors
provided
The business structure of the
Company, the recent status in the
China Merchants
5 Jan. 2011 The Company Field research industry, the main business status,
Securities
investment progress, outlook for the
industry in 2011
Shanghai Chongyang
6 Jan. 2011 The Company Field research Investment Ditto
Management Co. Ltd
Merrill Lynch, Goldman
7 Jan. 2011 The Company Field research Ditto
Sachs
Customer RCM of
Deutsche Bank,
One-to-many
7 Jan. 2011 Beijing Fidelity, Neuberger Ditto
conference
Berman, Invesco HK,
Be
Tangshan Ruiyin
Eastern
12 Jan. 2011 Field research International Trade Co., Ditto
factory
Ltd., Bosera Funds
13 Jan. 2011 The Company Field research Triskele Capital Ditto
Daiwa Securities, Nikko
17 Jan. 2011 The Company Field research Asset Management Ditto
Co.,Ltd
Oriental Patron
19 Jan. 2011 The Company Field research Securities, Great Wall Ditto
Securities
Goldman Sachs, CITIC-
20 Jan. 2011 The Company Field research Ditto
PRUDENTIAL FUND
UOB Assets
24 Jan. 2011 The Company By telephone Ditto
Management
Customer of Guosen
Securities, Lombarda
15 Feb. 2011 The Company Field research Ditto
China Fund, China
AMC
One-to-many China AMC ， Harvest
16 Feb. 2011 Shenzhen Ditto
conference Fund
73
2011 Annual Report
18 Feb. 2011 The Company Field research Value Partners Ditto
Customers of CICC,
23 Feb. 2011 The Company Field research Ditto
Sinolink Securities
Fuh Hwa Securities
23 Mar. 2011 The Company Field research Ditto
Investment Trust
JP Morgan and its Explanation for the Company‘s
23 Mar. 2011 The Company Field research
customers business performance in 2010
China
One-to-many China Merchants Explanation for the Company‘s
23 Mar. 2011 Merchants
conference Securities and its fund business performance in 2010
Securities
The business structure of the
Company, the recent status in the
24 Mar. 2011 The Company Field research Bosera Funds industry, the main business status,
investment progress, outlook for the
industry in 2011
24 Feb. 2011 The Company Field research Morgan Stanley Ditto
CITIC Securities, China
28 Mar. 2011 The Company Field research Ditto
Merchants Fund
29 Mar. 2011 The Company Field research GF Securities Ditto
Liuhe Capital,
30 Mar. 2011 The Company Field research Ditto
Huashang Fund
Theleme Parterners
31 Mar. 2011 The Company Field research Ditto
Capital
Taishin Securities
8 Apr. 2011 The Company By telephone Ditto
Investment Trust
14 Apr. 2011 The Company Field research HSBC Ditto
Standard Chartered
Bank, Huatai United
15 Apr. 2011 The Company Field research Securities, Assets Ditto
Management of General
Electric Company
Winnington Capital
27 Apr. 2011 The Company By telephone Ditto
Assets Management
27 Apr. 2011 The Company Field research Morgan Stanley Ditto
Clients of Goldman
Sachs: Changsheng
Fund Management,
China International
Fund Management Co., Business structure of the Company‘s
Ltd, China Life marine industry, recent industry, main
5 May 2011 The Company Field research
Insurance Asset businesses, business performance in
Management Company 2010, industry outlook for 2011
Ltd., DACHENG
FUND
MANAGEMENT CO.,
LTD
Business structure of the Company‘s
Morgan Stanley,
marine industry, recent industry, main
Tangshan Ruiyin
6 May 2011 The Company Field research businesses, investment progress,
International Trade Co.,
business performance in 2010,
Ltd.
industry outlook for 2011
DnB NOR Asset
9 May 2011 The Company By telephone Ditto
Management
11 May 2011 The Company Field research DIAM CO., LTD Ditto
Target Asset
13 May 2011 The Company By telephone Ditto
Management
Mirae Asset Global
16 May 2011 The Company Field research Investment, Chang Xin Ditto
Asset Management
Business structure of the Company‘s
marine industry, recent industry, main
17 May 2011 Yantai Field research GE Asset Management
businesses, business performance in
2010, industry outlook for 2011
Business structure of the Company‘s
17 May 2011 The Company Field research CICC marine industry, recent industry, main
businesses, investment progress,
74
2011 Annual Report
business performance in 2010,
industry outlook for 2011
Merrill Lynch, UBS
18 May 2011 The Company Field research Ditto
SDIC
Jeffries, Shenyin &
One-to-many
19 May 2011 The Company Wanguo Securities and Ditto
conference
its customer
NOMURA
23 May 2011 The Company By telephone Ditto
SECURITIES
27 May 2011 The Company Field research CHINA POST FUND Ditto
30 May 2011 The Company Field research CITIC Securities Ditto
31 May 2011 The Company Field research Hengtai Securities Ditto
1 Jun. 2011 The Company By telephone ROCIM Ditto
1 Jun. 2011 The Company Field research Haitong Securities Ditto
DACHENG FUND
3 Jun. 2011 The Company Field research MANAGEMENT CO., Ditto
LTD
China Southern Fund,
9 Jun. 2011 The Company Field research Ditto
Penghua Fund
Strategic committee of
One-to-many
10 Jun. 2011 Shanghai HUATAI UNITED Ditto
conference
SECURITIES
UBS Fundmental
13 Jun. 2011 The Company Field research Ditto
Investment Group
Customer INVESCO of
Tangshan Ruiyin
20 Jun. 2011 Yantai Field research Ditto
International Trade Co.,
Ltd.
The Royal Bank of
21 Jun. 2011 The Company Field research Scotland Asset Ditto
Management Limited
Haitong ;
Eastern One-to-many AllianceBernstein ;
22 Jun. 2011 Ditto
factory conference Principal ; Shadowfax;
UBP ; GS
China International
Fund Management Co.,
Ltd, China AMC,
DACHENG, Rising
Investment, Guotai
One-to-many Securities, Yingda Ditto
22 Jun. 2011 Yantai
conference Securities, BOC, CICC,
Changjin Asset,
Hengshenyun ， Yinhua
Fund ， Guosen
Securities
One-to-many
23 Jun. 2011 Qingdao Customer of UBS Ditto
conference
One-to-many Customer of Essence
24 Jun. 2011 Shanghai Ditto
conference Securities
CLSA Asia-Pacific
Markets, KGI,
29 Jun. 2011 The Company Field research Ditto
Guangzhou Securities
Research Institute
30 Jun. 2011 The Company By telephone Daiwa Securities Ditto
The Company‘s business structure,
The Company Goldman Sachs
5 Jul. 2011 Field research profile, main business status, industry
building Hongkong
status and outlook for 2011
The Company Dongguan Secutities,
6 Jul. 2011 Field research Ditto
building Great Wall Securities
The Company
11 Jul. 2011 Field research Goldman Sachs Ditto
building
Essence Securities, UBS
The Company
12 Jul. 2011 Field research Huachuang, Hengtai Ditto
building
Securities
75
2011 Annual Report
One-to-manyClient of China
13 Jul. 2011 Xiamen Ditto
conferenceSecurities Co., Ltd.
Zeal Asset Management
The Company Limited, Fuh Hwa
14 Jul. 2011 Field research Ditto
building Securities Investment
Trust Co., Ltd.
The Company
19 Jul. 2011 Field research Bosera Funds Ditto
building
The Company Wanjia Asset
21 Jul. 2011 Field research Ditto
building Management Co., Ltd.
The Company
24 Aug. 2011 Field research J．P．Morgan Ditto
building
The Company Chang Xin Asset
25 Aug. 2011 Field research Ditto
building Management Co., Ltd.
Shanghai Rising
The Company
31 Aug. 2011 Field research Investment Ditto
building
Management Limited
The Company Shenzhen Wudang
5 Sept. 2011 Field research Ditto
building Asset Management Ltd.
One-to-many
14 Sept. 2011 Hong Kong Client of Jefferies Ditto
conference
The Company The Royal Bank of
21 Sept. 2011 Field research Ditto
building Scotland Group PLC
The Company Anfuda Investment Co.,
22 Sept. 2011 Field research Ditto
building Ltd.
The Company Matthews from Mingji
27 Sept. 2011 Field research Ditto
building Int'l Industrial Limited
JS Cresvale
The Company
29 Sept. 2011 Field research International Securities Ditto
building
Limited
The Company Client of Morgan
30 Sept. 2011 By phone Ditto
building Stanley
The Company
30 Sept. 2011 Field research Guodu Securities Ditto
building
Client of Morgan Business structure of the Company‘s
The Company Stanley, ROBECO marine industry, recent industry, main
18 Oct. 2011 Field research
building businesses, investment progress,
industry outlook for 2011
The Company Industrial Securities Ditto
18 Oct. 2011 Field research
building
Client of BOC Ditto
The Company
25 Oct. 2011 Field research International (China)
building
Limited
Client of Morgan Ditto
Stanley—Keywise
Capital Management
Beijing Ltd., China
The Company
28 Oct. 2011 Field research Investment Corporation,
building
Huayan Times
Consulting
(Beijing)Company
Limited
The Company Xiangcai Securities Ditto
1 Nov. 2011 Field research
building
The Company Client of The Royal Ditto
8 Nov. 2011 Field research
building Bank of Scotland
Client of China Ditto
The Company Merchants Holdings
10 Nov. 2011 Field research
building (International)
Company Limited
The Company Standard Chartered Ditto
15 Nov. 2011 Field research
building Bank
The Company Western Securities, GF Ditto
16 Nov. 2011 Field research
building Securities
The Company Ditto
17 Nov. 2011 Field research Rising Securities
building
76
2011 Annual Report
The Company Ditto
18 Nov. 2011 Field research Northeast Securities
building
Investment Summit of Ditto
25 Nov. 2011 Hongkong Field research JFR Technology Co.,
Ltd. in Hongkong
Strategic committee of Ditto
1 Dec. 2011 Shenzhen Field research
Huatai Securities
The Company CICC Ditto
12 Dec. 2011 Field research
building
Strategic committee of Summary of the economic business
China Merchants in 2011 and outlook of the financial
One-to-many
13 Dec. 2011 Shenzhen Securities and strategic environment in 2012
conference
committee of GF
Securities
One-to-many Strategic committee of Ditto
15 Dec. 2011 Shenzhen
conference Essense Securities
77
2011 Annual Report
China International Marine Containers
(Group) Co., Ltd.
ENGLISH VERSION OF FINANCIAL STATEMENTS
FOR THE YEAR 1 JANUARY 2011 TO 31 DECEMBER 2011
IF THERE IS ANY CONFLICT OF MEANING BETWEEN THE CHINESE
AND ENGLISH VERSIONS, THE CHINESE VERSION WILL PREVAIL
78
2011 Annual Report
Auditors’ Report
KPMG-C (2012) AR No.0034
All shareholders of China International Marine Containers (Group) Co., Ltd.:
We have audited the accompanying financial statements of China International Marine
Containers (Group) Co., Ltd. (―the Company‖), which comprise the consolidated balance
sheet and balance sheet as at 31 December 2011, the consolidated income statement and
income statement, the consolidated cash flow statement and cash flow statement, the
consolidated statement of changes in shareholders‘ equity and statement of changes in
shareholders‘ equity for the year then ended, and notes to the financial statements.
Management’s Responsibility for the Financial Statements
The Company‘s management is responsible for the preparation and fair presentation of these
financial statements. This responsibility includes: (1) preparing these financial statements in
accordance with Accounting Standards for Business Enterprises issued by the Ministry of
Finance of the People‘s Republic of China, and fairly presenting them; (2) designing,
implementing and maintaining internal control which is necessary to enable that the financial
statements are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with China Standards on Auditing for Certified Public
Accountants. Those standards require that we comply with China Code of Ethics for
Certified Public Accountants, and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor‘s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the entity‘s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity‘s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
79
2011 Annual Report
Auditors’ Report (continued)
KPMG-C (2012) No.0034
Opinion
In our opinion, the financial statements present fairly, in all material respects, the
consolidated financial position and financial position of the Company as at 31 December
2011, and the consolidated financial performance and financial performance and the
consolidated cash flows and cash flows of the Company for the year then ended in
accordance with the requirements of Accounting Standards for Business Enterprises issued
by the Ministry of Finance of the Peoples Republic of China.
KPMG Huazhen Certified Public Accountants
Registered in the People‘s Republic of
China
Lee Yuen Mei
China Beijing Liang Jiebing
22 March 2012
80
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated balance sheet as at 31 December 2011
Item Note 2011 2010
Current assets:
Cash at bank and on hand V.1 7,788,126 4,655,696
Financial assets held
for trading V.2 186,134 525,661
Bills receivable V.3 1,030,528 508,585
Accounts receivable V.4 8,110,784 8,129,836
Prepayments V.6 1,930,496 2,433,447
Interest receivable 2,020 4,732
Other receivables V.5 2,709,665 2,236,272
Inventories V.7 15,468,352 13,423,747
Non-current assets
due within one year V.8 2,635,287 1,185,502
Other current assets V.9 865,633 688,030
Total current assets 40,727,025 33,791,508
Non-current assets:
Available-for-sale
financial assets V.10 571,954 768,467
Long-term receivables V.11 2,311,235 1,336,257
Long-term equity
Investments V.12 1,957,187 1,548,332
Investment properties V.13 126,983 77,356
Fixed assets V.14 10,885,435 10,006,466
Construction in progress V.15 1,898,330 1,697,664
Intangible assets V.16 3,172,222 3,218,571
Goodwill V.17 1,207,504 1,168,594
Long-term deferred
expenses V.18 34,892 27,978
Deferred tax assets V.19 704,098 489,456
Other non-current assets V.20 764,849 -
Total non-current assets 23,634,689 20,339,141
Total assets 64,361,714 54,130,649
The notes on pages 97 to 301 form part of these financial statements.
81
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated balance sheet as at 31 December 2011
(continued)
Item Note 2011 2010
Current liabilities:
Short-term loans V.23 8,030,912 8,309,309
Financial liabilities
held for trading V.24 31,107 3,810
Bills payable V.25 3,295,226 2,538,623
Accounts payable V.26 7,328,966 9,117,500
Advances from customers V.27 2,662,742 1,935,731
Employee benefits payable V.28 2,012,608 1,365,532
Taxes payable V.29 916,118 789,155
Interest payable V.30 152,067 13,168
Dividends payable V.31 116,253 16,046
Other payables V.32 3,393,837 2,388,367
Provisions V.33 736,179 649,573
Non-current liabilities
due within one year V.34 2,560,318 2,844,521
Total current liabilities 31,236,333 29,971,335
Non-current liabilities
Financial liabilities
held for trading V.24 74,836 154,292
Long-term loans V.35 6,572,585 3,912,148
Notes payables V.36 3,988,438 -
Long-term payables V.37 86,846 118,858
Special payables V.38 8,940 16,442
Deferred tax liabilities V.19 581,500 572,866
Other non-current liabilities V.39 198,564 178,008
Total non-current liabilities 11,511,709 4,952,614
Total non-current liabilities 42,748,042 34,923,949
The notes on pages 97 to 301 form part of these financial statements.
82
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated balance sheet as at 31 December 2011
(continued)
Item Note 2011 2010
Shareholders‘ equity
Share capital V.40 2,662,396 2,662,396
Capital reserve V.41 799,261 1,349,420
Surplus reserve V.42 2,953,160 3,577,588
Retained earnings V.43 12,785,092 10,689,335
Translation differences
of financial statements
denominated in
foreign currency (566,755) (2,055,682)
Total equity attributable to
shareholders of the
Company 18,633,154 16,223,057
Minority interests 2,980,518 2,983,643
Total equity 21,613,672 19,206,700
Total liabilities and
Shareholders‘ equity 64,361,714 54,130,649
These financial statements have been approved by the Board of Directors of the Company on
22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301 form part of these financial statements.
83
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Balance sheet as at 31 December 2011
Item Note 2011 2010
Current assets
Cash at bank and on hand XII.1 430,350 419,945
Financial assets held
for trading XII.2 - 162,298
Bills receivable - 31,000
Dividends receivable XII.3 5,403,255 4,243,437
Other receivables XII.4 6,798,779 4,175,168
Total current assets 12,632,384 9,031,848
Non-current assets
Available-for-sale
financial assets XII.5 564,155 759,401
Long-term equity
Investments XII.6 4,341,151 3,662,478
Fixed assets 137,642 144,692
Construction in progress 14,457 25,224
Intangible assets 22,246 23,109
Long-term deferred
expenses 5,683 4,999
Deferred tax assets VII.15 71,554 -
Total non-current assets 5,156,888 4,619,903
Total assets 17,789,272 13,651,751
The notes on pages 97 to 301 form part of these financial statements.
84
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Balance sheet as at 31 December 2011 (continued)
Item Note 2011 2010
Current liabilities
Short-term loans XII.7 363,009 480,897
Financial liabilities held
for trading XII.8 21,290 556
Bills payable XII.9 - 200,000
Employee benefits payable XII.10 671,840 368,275
Taxes payable XII.11 63,652 59,080
Interest payable XII.12 133,106 5,522
Other payables 72,733 9,407
Non-current liabilities
due within one year XII.13 1,094,352 2,729,353
Total current liabilities 2,419,982 3,853,090
Non-current liabilities
Financial liabilities held
for trading XII.8 74,836 136,846
Long-term loans XII.14 4,223,180 2,473,381
Debenture payables V.36 3,988,438 -
Deferred tax liabilities VII.15 - 50,291
Total non-current 8,286,454 2,660,518
Liabilities
Total liabilities 10,706,436 6,513,608
The notes on pages 97 to 301 form part of these financial statements.
85
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Balance sheet as at 31 December 2011 (continued)
Item Note 2011 2010
Shareholders‘ equity
Share capital V.40 2,662,396 2,662,396
Capital reserve XII.16 199,322 852,264
Surplus reserve V.42 2,953,160 3,577,588
Retained earnings 1,267,958 1,579,889
Translation differences
of financial statements
denominated in
foreign currency - (1,533,994)
Total equity 7,082,836 7,138,143
Total liabilities and
Shareholders‘ equity 17,789,272 13,651,751
These financial statements have been approved by the Board of Directors of the Company on
22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301 form part of these financial statements.
86
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated income statement
for the year ended 31 December 2011
Item Note 2011 2010
I.Operating income V.44 64,125,053 51,768,316
II. Less: Operating costs V.44 52,224,731 43,597,815
Business taxes and Surcharges V.45 344,723 76,892
Selling and distribution
expenses V.46 1,867,900 1,250,243
General and administrative
expenses V.47 3,767,221 2,734,364
Financial expenses V.48 783,699 669,783
Impairment loss V.51 409,602 274,610
Add: (Losses) / gains from
changes in fair value V.49 (100,577) 234,918
Add: Investment income V.50 108,693 38,641
Including: Income
from investment in
associates and jointly
controlled enterprises 44,120 102,938
III.Operating profit 4,735,293 3,438,168
Add: Non-operating
Income V.52 370,193 292,019
Less: Non-operating
Expenses V.53 82,780 55,580
Including: Losses from
disposal of non-current
assets 286 20,551
IV.Profit before income tax 5,022,706 3,674,607
Less: Income tax expenses V.54 1,363,768 823,748
V.Net profit for the year 3,658,938 2,850,859
Attributable to:
Shareholders of the
Company 3,690,926 3,001,851
Minority shareholders (31,988) (150,992)
The notes on pages 97 to 301 form part of these financial statements.
87
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated income statement
for the year ended 31 December 2011 (continued)
Item Note 2011 2010
VI.Earnings per share:
Basic earnings per share
(RMB) V.55 1.39 1.13
Diluted earnings per share
(RMB) V.55 1.37 1.13
VII.Other comprehensive
income V.56 (486,403) (536,354)
for the comprehensive
VIII.Totalyear
income for the year 3,172,535 2,314,505
Attributable to:
Shareholders of the Company 3,302,938 2,506,058
Minority interests (130,403) (191,553)
These financial statements have been approved by the Board of Directors of the Company on
22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301 form part of these financial statements.
88
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Income statement for the year ended 31 December 2011
Item Note 2011 2010
I.Operating income 946 1,503
II. Less:Operating costs 50 81
Business taxes and surcharges 12,906 -
General and administrative
expenses 671,689 315,962
Financial expenses 259,050 7,884
Impairment loss 322 -
Add: Gains from changes in
fair value XII.17 2,191 48,668
Add: Investment income XII.18 1,784,513 178,396
III.Operating profit / (loss) 843,633 (95,360)
Add: Non-operating
Income 1,871 25,973
Less: Non-operating
Expenses 737 469
Including: Gains / (losses)
from disposal of non-current
assets 557 (9)
IV.Profit / (loss) before
income tax 844,767 (69,856)
Less: Income tax expenses XII.19 (76,328) (36,359)
V.Net profit / (loss) for the
Year 921,095 (33,497)
VI.Other comprehensive
income for the year XII.20 (149,727) (486,714)
VII.Total comprehensive
income for the year 771,368 (520,211)
These financial statements have been approved by the Board of Directors of the Company on
22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301 form part of these financial statements.
89
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated cash flow statement
for the year ended 31 December 2011
Item Note 2011 2010
I.Cash flows from operating activities:
Cash received from sale of
goods and rendering of services 66,772,464 53,883,978
Refund of taxes 3,606,931 1,600,081
Cash received relating to other
operating activities V.57(1) 363,735 199,730
Sub-total of cash inflows 70,743,130 55,683,789
Cash paid for goods and services 59,108,743 47,042,184
Cash paid to and for employees 4,454,158 3,525,509
Cash paid for all types of taxes 1,637,178 1,091,435
Cash paid relating to
other operating activities V.57(2) 3,288,614 2,541,760
Sub-total of cash outflows 68,488,693 54,200,888
Net cash inflow from operating activities V.58(1) 2,254,437 1,482,901
II.Cash flows from investing activities:
Cash received from disposal of investments 342,872 105,461
Cash received from return on investments 42,550 47,637
Net cash received from disposal of
fixed assets, intangible assets
and other long-term assets 85,898 67,182
Cash received from disposal of subsidiaries - 21,076
Cash received relating
to other investing activities V.57(3) 220,654 64,240
Sub-total of cash inflows 691,974 305,596
Cash paid for acquisition of fixed assets,
intangible assets and other long-term
assets 2,998,389 2,116,817
Cash paid for acquisition of investments 1,179,827 582,250
Cash paid for acquisition of subsidiaries V.58(2) 89,818 336,831
Sub-total of cash outflows 4,268,034 3,035,898
Net cash outflow from investing activities (3,576,060) (2,730,302)
The notes on pages 97 to 301 form part of these financial statements.
90
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated cash flow statement
for the year ended 31 December 2011 (continued)
Item Note 2011 2010
III.Cash flows from financing activities
Cash received from investors 83,049 97,548
Including: Cash received from minority
shareholders of subsidiaries 83,049 97,548
Cash received from borrowings 29,180,931 20,120,944
Cash received relating to other
financing activities - 216,684
Sub-total of cash inflows 29,263,980 20,435,176
Cash repayments of borrowings 22,895,986 19,119,035
Cash paid for dividends, profit
distributions or interest 1,797,341 838,732
Including: Dividends and profits paid to
minority shareholders
of subsidiaries 100,652 56,057
Cash paid relating to other financing activities V.57(4) 62,702 -
financing cash outflows
Sub-total ofactivities 24,756,029 19,957,767
Net cash inflow from financing activities 4,507,951 477,409
IV.Effect of foreign exchange rate
changes on cash and cash equivalents (420,490) 170,882
V.Net increase / (decrease) in cash
and cash equivalents V.58(1) 2,765,838 (599,110)
Add: Cash and cash equivalents
at the beginning of the year 3,797,415 4,396,525
VI.Cash and cash equivalents at
the end of the year 6,563,253 3,797,415
These financial statements have been approved by the Board of Directors of the Company on
22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301 form part of these financial statements.
91
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Cash flow statement for the year ended 31 December 2011
Item Note 2011 2010
I.Cash flows from operating activities:
Cash received relating to
other operating activities 10,977,238 8,533,690
Cash paid to and for employees 117,690 78,051
Cash paid for all types of taxes 26,820 218,517
Other cash paid relating to
operating activities 13,828,276 7,720,814
Sub-total of cash outflows 13,972,786 8,017,382
Net cash (outflow) / inflow from
operating activities XII.21 (2,995,548) 516,308
II.Cash flows from investing activities:
Cash received from disposal
of investments 292,788 84,266
Cash received from
return on investments 465,415 472,880
Net cash received from disposal of
fixed assets and intangible assets 1,209 101
Net cash received from disposal of
subsidiary - 15,488
Cash received relating
to other investing activities 308,980 240,217
Sub-total of cash inflows 1,068,392 812,952
Cash paid for acquisition of fixed assets
and other long-term assets 21,933 35,846
Cash paid for acquisition
of investments 152,887 211,812
Cash paid for subsidiary establishment and
increase of capital 679,695 74,118
Sub-total of cash outflows 854,515 321,776
Net cash inflow from investing activities 213,877 491,176
The notes on pages 97 to 301form part of these financial statements.
92
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Cash flow statement for the year ended 31 December 2011
(continued)
Item Note 2011 2010
III.Cash flows from financing activities:
Cash received from borrowings and
subtotal of cash inflows 9,201,687 1,743,522
Cash repayments of borrowings 5,216,339 1,970,531
Cash paid for dividend, profit
distributions or interest 1,193,264 489,171
Sub-total of cash outflows 6,409,603 2,459,702
Net cash inflow/ (outflow) from financing
activities 2,792,084 (716,180)
IV.Effect of foreign exchange rate
changes on cash and cash equivalents - (11,523)
V.Net increase / (decrease) in
cash and cash equivalents XII.21 10,413 279,781
Add: cash and cash equivalents at
the beginning of the year 417,461 137,680
VI.Cash and cash equivalents at
the end of the year XII.21 427,874 417,461
These financial statements have been approved by the Board of Directors of the Company on
22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301form part of these financial statements.
93
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated statement of changes in shareholders‘ equity
for the year ended 31 December 2011 (continued)
2011 2010
Attributable to shareholders of the Company Attributable to shareholders of the Company
Translation Translation
differences of differences of
Item financial financial
statements statements
denominated denominated
Share Capital Surplus Retained in foreign Minority Share Capital Surplus Retained in foreign Minority
Note capital reserve reserve earnings currency interests Total equity capital reserve reserve earnings currency interests Total equity
I.Balance at 1 January 2,662,396 1,349,420 3,577,588 10,689,335 (2,055,682) 2,983,643 19,206,700 2,662,396 1,557,703 3,577,588 8,229,532 (1,829,011) 1,628,423 15,826,631
II.Changes in equity for the
Year
(I) Net profit for the year - - - 3,690,926 - (31,988) 3,658,938 - - - 3,001,851 - (150,992) 2,850,859
(II)Other comprehensive
income for the year V.56 - (146,828) - - (241,160) (98,415) (486,403) - (269,122) - - (226,671) (40,561) (536,354)
Sub-total of (I)&(II) - (146,828) - 3,690,926 (241,160) (130,403) 3,172,535 - (269,122) - 3,001,851 (226,671) (191,553) 2,314,505
(III) Shareholders‘
contributions
and decrease of capital
1. Contributions by
minority Shareholders V.41 - (58,964) - - - 353,660 294,696 - - - - - 97,548 97,548
2. Acquisition of
minority interests of subsidiary - - - - - - - - 1,274 - - - (1,274) -
3. Increase in minority
interests resulted from
acquisition of
subsidiary - - - - - - - - - - - - 1,528,694 1,528,694
4. Decrease in minority
interests resulted from
disposal of subsidiary - - - - - - - - - - - - (13,956) (13,956)
5.Decrease in retained earings
resulted from acquisition of
minority interest V.43(2) - - - (19,843) - (29,856) (49,699) - - - (222,560) - (33,803) (256,363)
6. Increase in shareholders‘
equity resulted from
share-based payments VII.2 - 117,805 - - - 4,333 122,138 - 59,565 - - - 10,991 70,556
The notes on pages 97 to 301form part of these financial statements.
94
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Consolidated statement of changes in shareholders‘ equity
for the year ended 31 December 2011 (continued)
2011 2010
Attributable to shareholders of the Company Attributable to shareholders of the Company
Translation Translation
differences of differences of
Item financial financial
statements statements
denominated denominated
Share Capital Surplus Retained in foreign Minority Share Capital Surplus Retained in foreign Minority
Note capital reserve reserve earnings currency interests Total equity capital reserve reserve earnings currency interests Total equity
(IV)Appropriation of profits
1.appropriation of statutory surplus
reserve V.42 - - 92,110 (92,110) - - -
2. Distributions to
shareholders V.43(1) - - - (931,839) - (200,859) (1,132,698) - - - (319,488) - (41,427) (360,915)
(V)Effect of functional currency
change II.4 - (462,172) (716,538) (551,377) 1,730,087 - - - - - - - - -
III.Balance at 31 December 2,662,396 799,261 2,953,160 12,785,092 (566,755) 2,980,518 21,613,672 2,662,396 1,349,420 3,577,588 10,689,335 (2,055,682) 2,983,643 19,206,700
These financial statements have been approved by the Board of Directors of the Company on 22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301form part of these financial statements.
95
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Statement of changes in shareholders‘ equity
for the year ended 31 December 2011 (continued)
RMB‘000
2011 2010
Translation Translation
differences of differences of
financial financial
Item
statements statements
denominated denominated
Capital Surplus Retained in foreign Capital Surplus Retained in foreign
Note Share capital reserve reserve earnings currency Total Share capital reserve reserve earnings currency Total
I.Balance at 1 January 2,662,396 852,264 3,577,588 1,579,889 (1,533,994) 7,138,143 2,662,396 1,045,202 3,577,588 1,932,874 (1,266,301) 7,951,759
II.Changes in equity for the year
(I) Net profit / (losses) for the year - - - 921,095 - 921,095 - - - (33,497) - (33,497)
(II) Other comprehensive income
for the year XII.20 - (149,727) - - - (149,727) - (219,021) - - (267,693) (486,714)
Sub-total of (I)&(II) - (149,727) - 921,095 - 771,368 - (219,021) - (33,497) (267,693) (520,211)
(III)Shareholders‘ contributions
and decrease of capital
1.Increase in shareholders‘
equity resulted from
share-based payment VII.2 - 105,164 - - - 105,164 - 26,083 - - - 26,083
(IV)Appropriation of profits
1.Appropriation for surplus
reserve V.42 - - 92,110 (92,110) - - - - - - - -
2.Distribution to shareholders V.43(1) - - - (931,839) - (931,839) - - - (319,488) - (319,488)
(V) Effect of functional currency
change II.4 - (608,379) (716,538) (209,077) 1,533,994 - - - - - - -
III.Balance at 31 December 2,662,396 199,322 2,953,160 1,267,958 - 7,082,836 2,662,396 852,264 3,577,588 1,579,889 (1,533,994) 7,138,143
These financial statements have been approved by the Board of Directors of the Company on 22 March 2012.
Legal representative‘s [The person in charge of The head of the Company stamp
authorised person accounting affairs accounting department
The notes on pages 97 to 301form part of these financial statements.
96
2011 Annual Report
China International Marine Containers (Group) Co., Ltd.
Notes to the financial statements
(Expressed in thousands of Renminbi Yuan unless otherwise indicated)
I COMPANY STATUS
China International Marine Containers (Group) Co., Ltd. (the ―Company‖), formerly
―China International Marine Containers Co., Ltd.‖, was a Sino-foreign joint venture
set up by China Merchants Group, the East Asiatic Company (Denmark) and Ocean
Containers Inc.(USA). In December 1992, as approved by ―Shen Fu Ban Fu [1992]
1736‖ issued by the General Office of the People‘s Government of Shenzhen and
―Shen Ren Yin Fu Zi (1992) 261‖ issued by Shenzhen Special Economic Zone
Branch of People‘s Bank of China, the Company was restructured as an incorporated
company set up by directional subscription and was renamed as ―China International
Marine Containers Co., Ltd.‖ by the original corporate shareholders of the Company.
On 31 December 1993 and 17 January 1994 respectively, the Company issued
ordinary shares denominated in Renminbi for domestic investors (A Shares) and for
foreign shares issued domestically (B Shares), and commenced trading on Shenzhen
Stock Exchange. Pursuant to ―Shen Fu Ban Fu [1993] 925‖ issued by the General
Office of the People‘s Government of Shenzhen and ―Shen Zheng Ban Fu [1994] 22‖
issued by Shenzhen Securities Administration Office.
On 1 December 1995, as approved by the State Administration of Industry and
Commerce, the Company changed its name to ―China International Marine
Containers (Group) Co., Ltd‖. Up to 31 December 2011, the share capital of the
Company amounted to 2,662,396,051 shares. Please refer to Note V.40 for details of
the share capital.
The principal activities of the Company and its subsidiaries (together referred to as
the ―Group‖) are the manufacturing of modern transportation facilities, facilities for
energy, food, chemistry and rendering of relative services. Detailed activities are the
manufacturing and repairing of containers and other relevant business; utilizing the
Group‘s equipment to process and manufacture various parts, structure components
and relevant machines; providing cutting, punching, moulding, riveting surface
treatment (including sand/paint spraying, welding and assembly) and other processing
services; developing, manufacturing and selling of various high-tech and high
performance special vehicles and semi-trailers; leasing of containers; developing,
production and sales of high-end fuel gas equipments such as pressure container and
compressor; providing integrated services for natural gas distribution; production of
static container and pot-type wharf equipments and providing EP+CS (engineering
procurement and construction supervision) technical service for the storage and
processing of LNG, LPG and other petrochemical gases. Apart from the above, the
Group is also engaged in manufacturing of logistic equipment and related services,
marine projects, railway trucks production and property development, etc.
CIMC Enric Holdings Limited, the subsidiary of the Group, is listed in the Main
Board of the Stock Exchange of Hong Kong Limited. The principal activities of the
Group are the design, development, manufacturing, engineering and sales of, and the
provision of technical maintenance service for, a wide spectrum of transportation,
storage and processing equipment that is widely used in energy, chemical and liquid
food industries.
97
2011 Annual Report
II. BASIS OF PREPARATION
1. BASIS OF FINANCIAL REPORTING
The financial statements have been prepared on the basis that the Company will
continue to operate throughout the next accounting period until 31 December 2011 as
a going concern.
2. STATEMENT OF COMPLIANCE
The financial statements have been prepared in accordance with the requirements of
―Accounting Standards for Business Enterprises—Basic Standard‖ and 38 Specific
Standards issued by the Ministry of Finance (MOF) of the People‘s Republic of
China (PRC) on 15 February 2006, and application guidance, bulletins and other
relevant accounting regulations issued subsequently (collectively referred to as
―Accounting Standards for Business Enterprises‖ or ―CAS‖). These financial
statements present truly and completely the consolidated financial position and
financial position of the Company as at 31 December 2011, and the consolidated
financial performance and financial performance and the consolidated cash flows and
cash flows of the Company for the year then ended.
These financial statements also comply with the disclosure requirements of
―Regulation on the Preparation of Information Disclosures of Companies Issuing
Public Shares, No. 15: General Requirements for Financial Reports‖ as revised by the
China Securities Regulatory Commission (CSRC) in 2010.
3. ACCOUNTING YEAR
The accounting year of the Group is from 1 January to 31 December.
4. FUNCTIONAL CURRENCY
Functional currency is determined by the Company and its subsidiaries on the basis of
the currency in which major income and costs are denominated and settled.
The functional currency of the Company and certain subsidiaries domiciled in PRC
was U.S dollar for the year of 2010 and prior years. Due to the fact that Renminbi
becomes the currency in which major income and costs are denominated and settled,
the functional currency of the Company and these subsidiaries was changed to be
Renminbi starting from 1 January 2011. Hong Kong and certain overseas subsidiaries
use local currencies as their functional currencies. Foreign currencies are defined as
currency other than functional currency.
Financial statements of the Company are presented in Renminbi. For subsidiaries
using currencies other than Renminbi as their functional currencies, the Company
translates the financial statements of these subsidiaries into Renminbi (see Note II.8).
98
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
5. ACCOUNTING TREATMENTS FOR BUSINESS COMBINATIONS
INVOLVING ENTERPRISES UNDER AND THOSE NOT UNDER
COMMON CONTROL
(1) Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business
combination in which all of the combining enterprises are ultimately controlled by the
same party or parties both before and after the business combination, and that control
is not transitory. The assets and liabilities obtained are measured at the carrying
amounts as recorded by the enterprise being combined at the combination date. The
difference between the carrying amount of the net assets obtained and the carrying
amount of consideration paid for the combination (or the total face value of shares
issued) is adjusted to capital premium in the capital reserve. If the balance of the
capital premium is insufficient, any excess is adjusted to retained earnings. Any costs
directly attributable to the combination shall be recognised in profit or loss for the
current period when occurred. The combination date is the date on which one
combining enterprise effectively obtains control of the other combining enterprises.
(2) Business combinations involving enterprises not under common control
A business combination involving enterprises not under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by
the same party or parties both before and after the business combination.
Where 1) the aggregate of the fair value at the acquisition date of assets transferred
(including the acquirer‘s previously held equity interest in the acquiree), liabilities
incurred or assumed, and equity securities issued by the acquirer, in exchange for
control of the acquiree, exceeds 2) the acquirer‘s interest in the fair value at the
acquisition date of the acquiree‘s identifiable net assets, the difference is recognised
as goodwill (see Note II.18). Where 1) is less than 2), the difference is recognised in
profit or loss for the current period. The costs of the issuance of equity or debt
securities as a part of the consideration paid for the acquisition are included as a part
of initial recognition amount of the equity or debt securities. Other acquisition-related
costs arising from the business combination are recognised as expenses in the periods
in which the costs are incurred. The difference between the fair value and the carrying
amount of the assets transferred is recognised in profit or loss. The acquirees
identifiable asset, liabilities and contingent liabilities, if satisfying the recognition
criteria, are recognised by the Group at their fair value at the acquisition date. The
acquisition date is the date on which the acquirer effectively obtains control of the
acquiree.
99
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
6. PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
The scope of consolidated financial statements is based on control and the
consolidated financial statements comprise the Company and its subsidiaries. Control
is the power to govern the financial and operating policies of an enterprise so as to
obtain benefits from its operating activities. In assessing control, potential voting
rights, such as warrants and convertible bonds, that are currently exercisable or
convertible, are taken into account. The financial position, financial performance and
cash flows of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases.
Where a subsidiary was acquired during the reporting period, through a business
combination involving enterprises under common control, the financial statements of
the subsidiary are included in the consolidated financial statements as if the
combination had occurred at the date that the ultimate controlling party first obtained
control. The opening balances and the comparative figures of the consolidated
financial statements are also restated. In the preparation of the consolidated financial
statements, the subsidiarys assets and liabilities based on their carrying amounts are
included in the consolidated balance sheet, and financial performance is included in
the consolidated income statement, respectively, from the date that the ultimate parent
company of the Company obtains the control of the subsidiary to be consolidated.
Where a subsidiary was acquired during the reporting period, through a business
combination involving enterprises not under common control, the identifiable assets
and liabilities of the acquired subsidiaries are included in the scope of consolidation
from the date that control commences, base on the fair value of those identifiable
assets and liabilities at the acquisition date.
For a business combination not involving enterprises under common control and
achieved in stages, the Group remeasures its previously-held equity interest in the
acquiree to its fair value at the acquisition date. The difference between the fair value
and the carrying amount is recognised as investment income for the current period;
the amount recognised in other comprehensive income relating to the previously-held
equity interest in the acquiree is reclassified as investment income for the current
period.
Where the Company acquires a minority interest from a subsidiary‘s minority
shareholders or disposes of a portion of an interest in a subsidiary without a change in
control, the difference between the amount by which the minority interests are
adjusted and the amount of the consideration paid or received is adjusted to the
capital reserve (capital surplus) in the consolidated balance sheet. If the credit balance
of capital reserve (capital surplus) is insufficient, any excess is adjusted to retained
earnings.
100
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
6. PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Where the Company acquired a minority interest from a subsidiary‘s minority
shareholders before 7 August 2008, any excess of the investment cost for acquiring
the minority interest over the Group‘s interest in the fair value of the identifiable net
assets of the minority interest acquired is recognised as goodwill. Where the
Company acquired a minority interest from a subsidiary‘s minority shareholders, the
difference between the investment cost for acquiring the minority interest and the
corresponding reduction of minority interest in the consolidated financial statements,
is adjusted to the capital reserve in the consolidated balance sheet except for the
portion that has been recognised as goodwill. If the credit balance of capital reserve is
insufficient, any excess is adjusted to retained earnings.
When the Group loses control of a subsidiary due to the disposal of a portion of an
equity investment, the Group derecognises assets, liabilities, minority interests and
other related items in owners‘ equity in relation to that subsidiary. The remaining
equity investment is remeasured at its fair value at the date when control is lost. Any
gains or losses therefore incurred are recognised as investment income for the current
period when control is lost.
Minority interest is presented separately in the consolidated balance sheet within
shareholders‘ equity. Net profit or loss attributable to minority shareholders is
presented separately in the consolidated income statement below the net profit line
item.
When the amount of loss for the current period attributable to the minority
shareholders of a subsidiary exceeds the minority shareholders‘ portion of the
opening balance of shareholders‘ equity of the subsidiary, the excess is allocated
against the minority interests.
When the accounting period or accounting policies of a subsidiary are different from
those of the Company, the Company makes necessary adjustments to the financial
statements of the subsidiary based on the Company‘s own accounting period or
accounting policies. Intra-group balances and transactions, and any unrealised profit
or loss arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements. Unrealised losses resulting from intra-group
transactions are eliminated in the same way as unrealised gains but only to the extent
that there is no evidence of impairment.
7. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand, demand deposits, and short-term,
highly liquid investments, which are readily convertible into known amounts of cash
and are subject to an insignificant risk of change in value.
101
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
8. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF
FINANCIAL STATEMENTS DENOMINATED IN FOREIGN
CURRENCY
When the Group receives capital in foreign currencies from investors, the capital is
translated to functional currency at the spot exchange rate at the date of the receipt.
Other foreign currency transactions are, on initial recognition, translated to functional
currency at the rates that approximate the spot exchange rates at the dates of the
transactions.
A spot exchange rate is an exchange rate quoted by the People‘s Bank of China. A
rate that approximates the spot exchange rate is a rate determined under a systematic
and rational method, normally the average exchange rate of the current period or the
weighted average exchange rate.
Monetary items denominated in foreign currencies are translated to functional
currency at the spot exchange rate at the balance sheet date. The resulting exchange
differences, except for those arising from the principal and interest of specific foreign
currency borrowings for the purpose of acquisition, construction or production of
qualifying assets (see Note II.16), are recognised in profit or loss. Non-monetary
items denominated in foreign currencies that are measured at historical cost are
translated to functional currency using the foreign exchange rate at the transaction
date. Non-monetary items denominated in foreign currencies that are measured at fair
value are translated using the foreign exchange rate at the date the fair value is
determined; the resulting exchange differences are recognised in profit or loss, except
for the differences arising from the translation of available-for-sale financial assets,
which are recognised as other comprehensive income in capital reserve.
The assets and liabilities of foreign operation are translated to functional currency at
the spot exchange rates at the balance sheet date. The equity items, excluding
―Retained earnings‖, are translated to functional currency at the spot exchange rates
at the transaction dates. The income and expenses of foreign operation are translated
to functional currency at the rates that approximate the spot exchange rates at the
transaction dates. The resulting translation differences are recognised in a separate
component of equity. Upon disposal of a foreign operation, the cumulative amount of
the translation differences recognised in equity which relates to that foreign operation
is transferred to profit or loss in the period in which the disposal occurs.
9. FINANCIAL INSTRUMENTS
Financial instruments include cash at bank and on hand, derivatives, investments in
debt and equity securities other than long-term equity investments (see Note II.12),
receivables, payables, loans, borrowings, debentures payable and share capital.
102
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
9. FINANCIAL INSTRUMENTS (CONTINUED)
(1) Recognition and measurement of financial assets and financial liabilities
A financial asset or financial liability is recognised in the balance sheet when the
Group becomes a party to the contractual provisions of a financial instrument.
The Group classifies financial assets and liabilities into different categories at initial
recognition based on the purpose of acquiring assets or assuming liabilities: financial
assets and financial liabilities at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale financial assets and other
financial liabilities.
Financial assets and financial liabilities are measured initially at fair value. For
financial assets and financial liabilities at fair value through profit or loss, any related
directly attributable transaction costs are charged to profit or loss; for other categories
of financial assets and financial liabilities, any related directly attributable transaction
costs are included in their initial costs. Subsequent to initial recognition financial
assets and liabilities are measured as follows:
- Financial assets and financial liabilities at fair value through profit or loss
(including financial assets or financial liabilities held for trading)
A financial asset or financial liability is classified as at fair value through
profit or loss if it is acquired or incurred principally for the purpose of selling
or repurchasing it in the near term or if it is a derivative, unless the derivative
is a designated and effective hedging instrument, or a financial guarantee
contract or a derivative that is linked to and must be settled by delivery of an
unquoted equity instrument (without a quoted price from an active market)
whose fair value cannot be reliably measured.
Subsequent to initial recognition, financial assets and financial liabilities at
fair value through profit or loss are measured at fair value, and changes
therein are recognised in profit or loss.
- Receivables
Receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market.
Subsequent to initial recognition, receivables are measured at amortised cost
using the effective interest method.
103
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
9. FINANCIAL INSTRUMENTS
(1) Recognition and measurement of financial assets and financial liabilities
(continued)
- Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that
are designated upon initial recognition as available for sales and other
financial assets which do not fall into any of the above categories.
Available-for-sale financial assets whose fair value cannot be measured
reliably are measured at cost subsequent to initial recognition. Other
available-for-sale financial assets are measured at fair value subsequent to
initial recognition and changes therein, except for impairment losses and
foreign exchange gains and losses from monetary financial assets, which are
recognised directly in profit or loss, are recognised as other comprehensive
income in capital reserve. When an investment is derecognised, the
cumulative gain or loss is reclassified from equity to profit or loss. Dividend
income from the available-for-sale equity instruments is recognised in profit
or loss when the investee declares the dividends.
- Other financial liabilities
Financial liabilities other than the financial liabilities at fair value through
profit or loss are classified as other financial liabilities.
Other financial liabilities include the liabilities arising from financial
guarantee contracts. Financial guarantees are contracts that require the Group
(i.e. the guarantor) to make specified payments to reimburse the beneficiary of
the guarantee (the holder) for a loss the holder incurs because a specified
debtor fails to make payment when due in accordance with the terms of a debt
instrument. Where the Group issues a financial guarantee, subsequent to initial
recognition, the guarantee is measured at the higher of the amount initially
recognised less accumulated amortisation and the amount of a provision
determined in accordance with the principles of contingencies (see Note
II.21).
Except for the liabilities arising from financial guarantee contracts described
above, subsequent to initial recognition, other financial liabilities are
measured at amortised cost using the effective interest method.
104
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
9. FINANCIAL INSTRUMENTS
(2) Offsetting a financial asset against a financial liability
Financial assets and financial liabilities are presented separately in the balance sheet
and are not offset. However, a financial asset and a financial liability are offset and
the net amount presented in the balance sheet when both of the following conditions
are satisfied:
- the Group has a legal right to set off the recognised amounts and the legal
right is currently enforceable; and
- the Group intends either to settle on a net basis, or to realise the financial asset
and settle the financial liability simultaneously.
(3) Determination of fair value
If there is an active market for a financial asset or financial liability, the quoted price
in the active market is used to establish the fair value of the financial asset or
financial liability.
If no active market exists for a financial instrument, a valuation technique is used to
establish the fair value. Valuation techniques include using recent arm‘s length market
transactions between knowledgeable, willing parties, reference to the current fair
value of another instrument that is substantially the same, discounted cash flow
analysis, option pricing models, and etc. The Group calibrates the valuation technique
and tests it for validity periodically.
(4) Derecognition of financial assets and financial liabilities
A financial asset is derecognised if the Group‘s contractual rights to the cash flows
from the financial asset expire or if the Group transfers substantially all the risks and
rewards of ownership of the financial asset to another party.
Where a transfer of a financial asset in its entirety meets the criteria for derecognition,
the difference between the two amounts below is recognised in profit or loss:
- the carrying amount of the financial asset transferred;
- the sum of the consideration received from the transfer and any cumulative
gain or loss that has been recognised directly in equity.
The Group derecognises a financial liability (or part of it) only when the underlying
present obligation (or part of it) is discharged, cancelled or expires.
105
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
9. FINANCIAL INSTRUMENTS (CONTINUED)
(5) Impairment of assets
The carrying amounts of financial assets (other than those at fair value through profit
or loss) are reviewed at each balance sheet date to determine whether there is
objective evidence of impairment. If any such evidence exists, an impairment loss is
recognised.
Objective evidences that a financial asset is impaired includes but is not limited to
evidence arising from the following events:
(a) significant financial difficulty of the issuer or obligor;
(b) a breach of contract by the borrower, such as a default or delinquency in
interest or principal payments;
(c) it becoming probable that the borrower will enter bankruptcy or other financial
reorganisations;
(d) the disappearance of an active market for that financial asset because of
financial difficulties of the issuer;
(e) significant changes with an adverse effect that have taken place in the
technological, market, economic or legal environment in which the issuer
operates, indicating that the cost of the investment in the equity instrument
may not be recovered by the investor;
(f) a significant or prolonged decline in the fair value of an investment in an
equity instrument below its cost.
For the calculation method of impairment of receivables, refer to Note II.10, The
impairment of other financial assets are measured as follows:
- Available-for-sale financial assets
Available-for-sale financial assets are assessed for impairment on an
individual basis. When an available-for-sale financial asset is impaired, the
cumulative loss arising from decline in fair value that has been recognised
directly in equity is reclassified to profit or loss even though the financial
asset has not been derecognised.
If, after an impairment loss has been recognised on an available-for-sale debt
instrument, the fair value of the debt instrument increases in a subsequent
period and the increase can be objectively related to an event occurring after
the impairment loss was recognised, the impairment loss is reversed through
profit or loss. An impairment loss recognised for an investment in an equity
instrument classified as available-for-sale is not reversed through profit or loss.
106
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
9. FINANCIAL INSTRUMENTS (CONTINUED)
(6) Equity instrument
An equity instrument is a contract that proves the ownership interest of the assets
after deducting all liabilities in the Company.
The consideration received from the issuance of equity instruments net of transaction
costs is recognised in shareholders‘ equity.
Consideration and transaction costs paid by the Company for repurchasing self-issued
equity instruments are deducted from shareholders‘ equity.
10. IMPAIRMENT OF RECEIVABLES
Receivables are assessed for impairment both on an individual basis and on a
collective group basis.
Where impairment is assessed on an individual basis, an impairment loss in respect of
a receivable is calculated as the excess of its carrying amount over the present value
of the estimated future cash flows (exclusive of future credit losses that have not been
incurred) discounted at the original effective interest rate. All impairment losses are
recognised in profit or loss.
The assessment is made collectively where receivables share similar credit risk
characteristics (including those having not been individually assessed as impaired),
based on their historical loss experiences, and adjusted by the observable figures
reflecting present economic conditions.
If, after an impairment loss has been recognised on receivables, there is objective
evidence of a recovery in value of the financial asset which can be related objectively
to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss. A reversal of an impairment loss
will not result in the asset‘s carrying amount exceeding that which would have been
determined had no impairment loss been recognised in prior years.
107
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
10. IMPAIRMENT OF RECEIVABLES (CONTINUED)
(a) Receivables that are individually significant and impairment provided on an
individual basis:
Criteria of provision for Individually significant receivables are the
receivable that are receivables with the individual amount over
individually significant RMB10 million (inclusive) or accounting to 5% or
and impairment provided more of the total receivables.
on an individual basis.
Method of provision for An impairment loss is calculated as the excess of
receivable that are its carrying amount over the present value of the
individually significant estimated future cash flows (exclusive of future
and impairment provided credit losses that have not been incurred)
on an individual basis. discounted at the original effective interest rate.
(b) Receivable that are individually insignificant but impairment provided on an
individual basis:
Criteria of provision for Within the receivables whose amounts are
receivables that are individually insignificant, impairment is assessed
individually insignificant on an individual basis for the overdue receivables
but impairment provided unpaid after collection efforts or with unique
on an individual basis. characteristics.
Method of provision for An impairment loss is calculated as the excess of
receivable that are its carrying amount over the present value of the
individually insignificant estimated future cash flows (exclusive of future
but impairment provided credit losses that have not been incurred)
on an individual basis. discounted at the original effective interest rate.
108
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
10. IMPAIRMENT OF RECEIVABLES (CONTINUED)
(c) Receivables that are assessed for impairment on a collective group basis:
The assessment is made collectively where receivables share similar credit
risk characteristics, including those having not been individually assessed as
impaired.
Determination method of Accounts receivable are divided into six groups of
the group based on credit containers, vehicles, energy and chemistry
risk characteristics equipment, offshore engineering, other business, and
due from related parties, land lease prepayments and
operating deposits according to the industry and
business nature of customers and the characteristics
of the receivables. As to offshore engineering
groups, the relevant receivables within credit period
have lower credit risk after the grouping based on
credit risk characteristics according to individual
credit risk assessment and historical data. No
provision is provided accordingly. As to other groups
like due from related parties, land lease prepayments
operating deposits, and etc, if the credit risk is
assessed low after grouping based on the assessment
on credit risk and their historical loss experience, no
impairment loss is recognised for those groups.
Group 1 Containers
Group 2 Trailers
Group 3 Tank equipments
Group 4 Other business
Methods of provision for receivables assessed on a collective group basis
(based on an ageing analysis, a percentage of the total balance and others).
Containers Provision is determined based on an ageing analysis.
Trailers Provision is determined based on an ageing analysis.
Tank equipments Provision is determined based on an ageing analysis.
Other business Provision is determined based on an ageing analysis.
For the above groups, provision is made based on their respective ageing
analysis follows:
Percentage of total accounts receivable
Ageing (%)
Group 1 Group 2 Group 3 Group 4
Within 1 year
(inclusive) 5% 1.5 - 5% 5% 5%
1 to 2 years
(inclusive) 30% 1.5 - 10% 30% 30%
2 to 3 years
(inclusive) 100% 1.5 - 30% 100% 100%
Over 3 years 100% 100% 100% 100%
Note: Aforesaid ageing group, the provision of Group 2 is determined based
on natural age, while others are determined based on the overdue age.
109
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
11. INVENTORIES
(1) Classification
Inventories include raw materials, work in progress, semi-finished goods, finished
goods and reusable materials. Reusable materials include low-value consumables,
packaging materials and other materials, which can be used repeatedly but do not
meet the definition of fixed assets.
(2) Cost of inventories
Cost of inventories is calculated using the weighted average method.
(3) The underlying factors in the determination of net realisable value of inventories
and the basis of provision for decline in value of inventories
Inventories are initially measured at cost. Cost of inventories comprises all costs of
purchase, costs of conversion and other expenditures incurred in bringing the
inventories to their present location and condition. Borrowing costs directly related
to the production of qualifying inventories are also included in the cost of inventories
(see Note II.16). In addition to the purchasing cost of raw materials, work in progress
and finished goods include direct labour costs and an appropriate allocation of
production overheads.
At the balance sheet date, inventories are carried at the lower of cost and net
realisable value.
Net realisable value is the estimated selling price in the normal course of business less
the estimated costs to completion and the estimated expenses and related taxes
necessary to make the sale. The net realisable value of materials held for use in the
production of inventories is measured based on the net realisable value of the finished
goods in which they will be incorporated. The net realisable value of the quantity of
inventory held to satisfy sales or service contracts is based on the contract price. If the
quantities of inventories specified in sales contracts are less than the quantities held
by the Group, the net realisable value of the excess portion of inventories shall be
based on general selling prices.
Any excess of the cost over the net realisable value of each class of inventories is
recognised in profit or loss as a provision for diminution in the value of inventories.
(4) Inventory system
The Group maintains a perpetual inventory system.
110
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
11. INVENTORIES (CONTINUED)
(5) Amortisation of reusable material including low-value consumables and packaging
materials
Reusable materials including low-value consumables and packaging materials are
amortised in full when received for use. The amounts of the amortisation are included
in the cost of the related assets or profit or loss.
12. LONG-TERM EQUITY INVESTMENTS
(1) Investment cost
(a) Long-term equity investments acquired through a business combination
- The initial investment cost of a long-term equity investment obtained
through a business combination involving entities under common
control is the Company‘s share of the carrying amount of the
subsidiary‘s equity at the combination date. The difference between
the initial investment cost and the carrying amounts of the
consideration given is adjusted to share premium in capital reserve. If
the balance of the share premium is insufficient, any excess is adjusted
to retained earnings.
- For a long-term equity investment obtained through a business
combination not involving enterprises under common control, if it is
achieved in stages, the initial cost comprises the carrying value of
previously-held equity investment in the acquiree immediately before
the acquisition date, and the additional investment cost at the
acquisition date; if it is achieved otherwise, the initial investment cost
comprises the aggregate of the fair value of assets transferred,
liabilities incurred or assumed, and equity securities issued by the
Company, in exchange for control of the acquiree.
(b) Long-term equity investments acquired otherwise than through a business
combination
- An investment in a subsidiary acquired otherwise than through a
business combination is initially recognised at actual payment cost if
the Group acquires the investment by cash, or at the fair value of the
equity securities issued if an investment is acquired by issuing equity
securities, or at the value stipulated in the investment contract or
agreement if an investment is contributed by shareholders.
111
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) Subsequent measurement
(a) Investments in subsidiaries
In the Company‘s separate financial statements, long-term equity investments
in subsidiaries are accounted for using the cost method. Except for cash
dividends or profit distributions declared but not yet distributed that have been
included in the price or consideration paid in obtaining the investments, the
Company recognises its share of the cash dividends or profit distributions
declared by the investee as investment income irrespective of whether these
represent the net profit realised by the investee before or after the investment.
The investments in subsidiaries are stated in the balance sheet at cost less
impairment losses.
In the Group‘s consolidated financial statements, investments in subsidiaries
are accounted for in accordance with the principles described in Note II. 6.
(b) Investment in jointly controlled enterprises and associates
A jointly controlled enterprise is an enterprise which operates under joint
control (see NoteII.12(3)) in accordance with a contractual agreement between
the Group and other parties.
An associate is an enterprise over which the Group has significant influence
(see NoteII.12(3)).
An investment in a jointly controlled enterprise or an associate is subsequently
accounted for using the equity method, unless the investment is classified as
held for sale (see Note II.28).
The Group makes the following accounting treatments when using the equity
method:
- Where the initial investment cost of a long-term equity investment
exceeds the Group‘s interest in the fair value of the investee‘s
identifiable net assets at the date of acquisition, the investment is
initially recognised at the initial investment cost. Where the initial
investment cost is less than the Group‘s interest in the fair value of the
investee‘s identifiable net assets at the date of acquisition, the
investment is initially recognised at the investor‘s share of the fair
value of the investee‘s identifiable net assets, and the difference is
charged to profit or loss.
112
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) Subsequent measurement (continued)
(b) Investment in jointly controlled enterprises and associates (continued)
- After the acquisition of the investment, the Group recognises its share
of the investee‘s profit or loss after deducting the amortisation of the
debit balance of equity investment difference, which was recognised
by the Group before the first-time adoption of CAS, as investment
income or losses, and adjusts the carrying amount of the investment
accordingly. The debit balance of the equity investment difference is
amortised using the straight-line method over the period of 10 years in
accordance with previous accounting standards. Once the investee
declares any cash dividends or profit distributions, the carrying
amount of the investment is reduced by that amount attributable to the
Group.
The Group recognises its share of the investee‘s net profits or losses
after making appropriate adjustments to align the accounting policies
or accounting periods with those of the Group based on the fair values
of the investee‘s identifiable net assets at the date of acquisition.
Unrealised profits and losses resulting from transactions between the
Group and its associates or jointly controlled enterprises are
eliminated to the extent of the Group‘s interest in the associates or
jointly controlled enterprises. Unrealised losses resulting from
transactions between the Group and its associates or jointly controlled
enterprises are eliminated in the same way as unrealised gains but only
to the extent that there is no evidence of impairment.
- The Group discontinues recognising its share of net losses of the
investee after the carrying amount of the long-term equity investment
and any long-term interest that in substance forms part of the Group‘s
net investment in the associate or the jointly controlled enterprise is
reduced to zero, except to the extent that the Group has an obligation
to assume additional losses. Where net profits are subsequently made
by the associate or jointly controlled enterprise, the Group resumes
recognising its share of those profits only after its share of the profits
equals the share of losses not recognised.
- The Group adjusts the carrying amount of the long-term equity
investment for changes in owners‘ equity of the investee other than
those arising from net profits or losses, and recognises the
corresponding adjustment in equity.
113
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) Subsequent measurement (continued)
(c) Other long-term equity investments
Other long-term equity investments refer to investments where the Group
does not have control, joint control or significant influence over the investees,
and the investments are not quoted in an active market and their fair value
cannot be reliably measured.
Such investments are initially recognised at the cost determined in accordance
with the same principles as those for jointly controlled enterprises and
associates, and then accounted for using the cost method. Cash dividends or
profit distributions declared by subsidiaries and attributed to the Company
shall be recognised as investment income irrespective of whether these
represent the net profit realised by the investee before or after the investment,
except those that have been declared but unpaid at the time of acquisition and
therefore included in the price paid or the consideration.
(3) Basis for determining the existence of joint control or significant influence over an
investee
Joint control is the contractual agreed sharing of control over an investee‘s economic
activity, and exists only when the strategic financial and operating decisions relating
to the activity require the unanimous consent of the parties sharing the control. The
following evidences shall be considered when determining whether the Group can
exercise joint control over an investee:
no single venturer is in a position to control the operating activities
unilaterally;
operating decisions relating to the investee‘s economic activity require the
unanimous consent of the parties sharing the control;
if the parties sharing the control appoint one venturer as the operator or
manager of the joint venture through the contractual arrangement, the operator
must act within the financial and operating policies that have been agreed by
the venturers in accordance with the contractual arrangement.
114
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(3) Basis for determining the existence of joint control or significant influence over an
investee (continued)
Significant influence is the power to participate in the financial and operating policy
decisions of an investee but is not control or joint control over those policies. The
following one or more evidences shall be considered when determining whether the
Group can exercise significant influence over an investee:
representation on the board of directors or equivalent governing body of the
investee;
participation in policy-making processes;
material transactions between the investor and the investee;
interchange of managerial personnel; or
provision of essential technical information.
(4) Method of impairment testing and measuring
For the method of impairment testing and measuring for subsidiaries, jointly
controlled enterprises and associates, refer to Note II.20.
For other long-term equity investments, the carrying amount is required to be tested
for impairment at the balance sheet date. If there is objective evidence that the
investments may be impaired, the impairment shall be assessed on an individual
basis. The impairment loss is measured as the amount by which the carrying amount
of the investment exceeds the present value of estimated future cash flows discounted
at the current market rate of return for a similar financial asset. Such impairment loss
is not reversed. The other long-term equity investments are stated at cost less
impairment losses in the balance sheet.
13. INVESTMENT PROPERTIES
Investment properties are properties held either to earn rental income or for capital
appreciation or for both. Investment properties are accounted for using the cost model
and stated in the balance sheet at cost less accumulated depreciation, amortisation and
impairment losses. An investment property is depreciated or amortised, less its
estimated residual value, using the straight line method over its estimated useful life,
unless the investment properties are classified as held for sale (see Note II.28). For
the method of impairment testing and measuring, refer to Note II.20.
115
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
13. INVESTMENT PROPERTIES (CONTINUED)
The useful lives, residual value rate and depreciation / amortisation rate of each class
of investment properties are as follows:
Depreciation
residual / Amortisation
useful life value rate(%) rate (%)
Land use rights 29 - 50 years - 2 - 3.4%
Plant and buildings 20 - 30 years 10% 3 - 4.5%
14. FIXED ASSETS
(1) Recognition
Fixed assets represent the tangible assets held by the Group for use in the production
of goods or supply of services, for rental to others or for operation and administrative
purposes with useful lives over one year.
The cost of a purchased fixed asset comprises the purchase price, related taxes, and
any directly attributable expenditure for bringing the asset to working condition for its
intended use. The cost of self-constructed assets is measured in accordance with the
policy set out in Note II.15.
Where parts of an item of fixed asset have different useful lives or provide benefits to
the Group in different patterns thus necessitating use of different depreciation rates or
methods, each part is recognised as a separate fixed asset.
The subsequent costs including the cost of replacing part of an item of fixed assets are
recognised in the carrying amount of the item if the to recognise fixed assets criteria
are satisfied, and the carrying amount of the replaced part is derecognised. The costs
of the day-to-day servicing of fixed assets are recognised in profit or loss as incurred.
Fixed assets are stated in the balance sheet at cost less accumulated depreciation and
impairment losses.
116
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
14. FIXED ASSETS (CONTINUED)
(2) Depreciation
Fixed assets are depreciated using the straight-line method over their estimated useful
lives, unless the fixed asset is classified as held for sale (see Note II.28). The
estimated useful lives, residual values and depreciation rates of each class of fixed
assets are as follows:
Residual Depreciation
period value Depreciation
Classes (years) rate rate
Plants and buildings 20 - 30 years 10% 3 - 4.5%
Machinery and equipment 10 -12 years 10% 7.5 -9%
Office and other equipment 3 - 5 years 10% 18%
Motor vehicles 5 years 10% 18%
Dock, wharf 50 years 10% 1.8%
Offshore engineering equipment 15 - 30 years 10% 3 - 6%
Useful lives, residual value and depreciation methods are reviewed at least at each
year-end.
(3) For the method of impairment testing and measuring, refer to Note II.20.
(4) Criteria of recognition and method of measuring for fixed assets under a finance
lease
For criteria of recognition and method of measuring for fixed assets under a finance lease, refer to
Note II 27(3).
(5) Disposal
The carrying amount of a fixed asset shall be derecognised:
on disposal; or
when no future economic benefits are expected to be generated from its use or
disposal.
Gains or losses arising from the retirement or disposal of an item of fixed asset are
determined as the difference between the net disposal proceeds and the carrying
amount of the item and are recognised in profit or loss on the date of retirement or
disposal.
117
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
15. CONSTRUCTION IN PROGRESS
The cost of self-constructed assets includes the cost of materials, direct labour,
capitalised borrowing costs (see Note II.16), and any other costs directly attributable
to bringing the asset to working condition for its intended use.
A self-constructed asset is included in construction in progress before it is transferred
to fixed asset when it is ready for its intended use. No depreciation is provided against
construction in progress. Construction in progress is stated in the balance sheet at cost
less impairment losses (see Note II.20).
16. BORROWING COSTS
Borrowing costs incurred directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised as part of the cost of the asset.
Except for the above, other borrowing costs are recognised as financial expenses in
the income statement when incurred.
During the capitalisation period, the amount of interest (including amortisation of any
discount or premium on borrowing) to be capitalised in each accounting period is
determined as follows:
- Where funds are borrowed specifically for the acquisition, construction or
production of a qualifying asset, the amount of interest to be capitalised is the
interest expense calculated using effective interest rates during the period less
any interest income earned from depositing the borrowed funds or any
investment income on the temporary investment of those funds before being
used on the asset.
118
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
16. BORROWING COSTS (CONTINUED)
- Where funds are borrowed generally and used for the acquisition, construction
or production of a qualifying asset, the amount of interest to be capitalised on
such borrowings is determined by applying a capitalisation rate to the
weighted average of the excess amounts of cumulative expenditures on the
asset over the above amounts of specific borrowings. The capitalisation rate
is the weighted average of the interest rates applicable to the general-purpose
borrowings.
The effective interest rate is determined as the rate that exactly discounts
estimated future cash flow through the expected life of the borrowing or,
when appropriate, a shorter period to the initially recognised amount of the
borrowings.
During the capitalisation period, exchange differences related to the principal
and interest on a specific-purpose borrowing denominated in foreign currency
are capitalised as part of the cost of the qualifying asset. The exchange
differences related to the principal and interest on foreign currency
borrowings other than a specific-purpose borrowing are recognised as a
financial expense in the period in which they are incurred.
The capitalisation period is the period from the date of commencement of
capitalisation of borrowing costs to the date of cessation of capitalisation,
excluding any period over which capitalisation is suspended. Capitalisation of
borrowing costs commences when expenditure for the asset is being incurred,
borrowing costs are being incurred and activities of acquisition, construction
or production that are necessary to prepare the asset for its intended use or sale
are in progress, and ceases when the assets become ready for their intended
use or sale. Capitalisation of borrowing costs is suspended when the
acquisition, construction or production activities are interrupted abnormally
and the interruption lasts over three months.
119
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
17. INTANGIBLE ASSETS
Intangible assets are stated in the balance sheet at cost less accumulated amortisation
(where the estimated useful life is finite) and impairment losses (see Note II.20). For
an intangible asset with finite useful life, its cost less residual value and impairment
loss is amortised on the straight-line method or other more appropriate methods that
can reflect the pattern in which the asset‘s economic benefits are expected to be
realised over its estimated useful life, unless the intangible asset is classified as held
for sale (see Note II.28).
The respective amortisation periods for such intangible assets are as follows:
Amortisation periods (years)
Land use rights 20 - 50
Maritime space use rights 40 - 50
Technological know-how and trademarks 5 - 10
Timber concession rights 20
Customer relationships 3-8
Customer contracts 3-4
An intangible asset is regarded as having an indefinite useful life and is not amortised
when there is no foreseeable limit to the period over which the asset is expected to
generate economic benefits for the Group. At the balance sheet date, the Group does
not have any intangible assets with indefinite useful lives.
Expenditures on an internal research and development project are classified into
expenditures on the research phase and expenditures on the development phase.
Research is original and planned investigation undertaken with the prospect of
gaining new scientific or technical knowledge and understanding. Development is
the application of research findings or other knowledge to a plan or design for the
production of new or substantially improved materials, devices, products or processes
before the start of commercial production or use.
Expenditures on research phase are recognised in profit or loss when incurred.
Expenditures on development phase are capitalised if development costs can be
measured reliably, the product or process is technically and commercially feasible,
and the Group intends to and has sufficient resources to complete development.
Capitalised development costs are stated at cost less impairment losses (see Note
II.20). Other development expenditures are recognised as expenses in the period in
which they are incurred.
120
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
18. GOODWILL
Goodwill represents the excess of cost of acquisition over the acquirer‘s interest in
the fair value of the identifiable net assets of the acquiree under the business
combination involving entities not under common control.
Goodwill is not amortised and is stated at cost less accumulated impairment losses
(see Note II.20). On disposal of an asset group or a set of asset groups, any
attributable amount of purchased goodwill is written off and included in the
calculation of the profit or loss on disposal.
19. LONG-TERM DEFERRED EXPENSE
Long-term deferred expenses are amortised on a straight-line method within the
beneficial period:
Item Amortisation period
Water and electricity
capacity enlargement expenses 5-10 years
Rental 2-10 years
Others 5-10 years
20. IMPAIRMENT OF ASSETS OTHER THAN INVENTORIES,
FINANCIAL ASSETS AND OTHER LONG-TERM INVESTMENTS
The carrying amounts of the following assets are reviewed at each balance sheet date
based on the internal and external sources of information to determine whether there
is any indication of impairment:
- fixed assets
- construction in progress
- intangible assets
- investment properties measured using a cost model
- long-term equity investments in subsidiaries, associates and jointly controlled
enterprises
- goodwill and etc.
If any indication exists that an asset may be impaired, the recoverable amount of the
asset is estimated. In addition, the Group estimates the recoverable amounts of
goodwill at no later than each year-end, irrespective of whether there is any indication
of impairment. Goodwill is allocated to each asset group or set of asset groups, which
is expected to benefit from the synergies of the combination for the purpose of
impairment testing.
121
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
20. IMPAIRMENT OF ASSETS OTHER THAN INVENTORIES,
FINANCIAL ASSETS AND OTHER LONG-TERM INVESTMENTS
(CONTINUED)
The recoverable amount of an asset, asset group or set of asset groups is the higher of
its fair value less costs to sell and its present value of expected future cash flows.
An asset group is the smallest identifiable group of assets that generates cash inflows
that are largely independent of the cash inflows from other assets or asset groups. An
asset group is composed of assets directly relating to cash-generation. Identification
of an asset group is based on whether major cash inflows generated by the asset group
are largely independent of the cash inflows from other assets or asset groups. In
identifying an asset group, the Group also considers how management monitors the
Group‘s operations and how management makes decisions about continuing or
disposing of the Group‘s assets.
An asset‘s fair value less costs to sell is the amount determined by the price of a sale
agreement in an arm‘s length transaction, less the costs that are directly attributable to
the disposal of the asset. The present value of expected future cash flows of an asset
is determined by discounting the future cash flows, estimated to be derived from
continuing use of the asset and from its ultimate disposal, to their present value using
a pre-tax discount rate.
If the result of the recoverable amount calculating indicates the recoverable amount of
an asset is less than its carrying amount, the carrying amount of the asset is reduced to
its recoverable amount. That reduction is recognised as an impairment loss and
charged to profit or loss for the current period. A provision for impairment of the
asset is recognised accordingly. For impairment losses related to an asset group or a
set of asset groups first reduce the carrying amount of any goodwill allocated to the
asset group or set of asset groups, and then reduce the carrying amount of the other
assets in the asset group or set of asset groups on a pro rata basis. However, the
carrying amount of an impaired asset will not be lower than the greatest amount of its
individual fair value less costs to sell (if determinable), the present value of expected
future cash flows (if determinable) and zero.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
122
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
21. PROVISIONS AND CONTINGENT LIABILITIES
A provision is recognised for an obligation related to a contingency if the Group has a
present obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Where the effect of time
value of money is material, provisions are determined by discounting the expected
future cash flows.
In terms of a possible obligation resulting from a past transaction or event, whose
existence will only be confirmed by the occurrence or non-occurrence of uncertain
future events or a present obligation resulting from a past transaction or event, where
it is not probable that the settlement of the above obligation will cause an outflow of
economic benefits, or the amount of the outflow cannot be estimated reliably, the
possible or present obligation is disclosed as a contingent liability.
22. SHARE-BASED PAYMENTS
(1) Classification
Share-based payment transactions in the Group are classified as equity-settled share-
based payments and cash-settled share-based payments.
(2) Method to determine the fair value of equity instruments
Fair value of stock option is estimated based on binomial lattice model. Contract term
of the stock option is used as the input variable of this model. And the binomial lattice
model includes estimation of early execution of the option. The following factors are
taken into account when using the binomial lattice model: (1) exercise price of the
option; (2) vesting period; (3) current price of basic stocks; (4) expected fluctuation
of stocks; (5) expected dividends of stocks; (6) risk-free rate within the option term.
(3) Basis of the best estimate of the number of equity instruments expected to vest
At each balance sheet date during the vesting period, the Group makes the best
estimation according to the latest information of the number of employees who are
granted to vest and revises the number of equity instruments expected to vest. On
vesting date, the estimate shall be equal to the number of equity instruments that
ultimately vested.
123
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
22. SHARE-BASED PAYMENTS (CONTINUED)
(4) Accounting treatment for share-based payment
- Equity-settled share-based payments
Where the Group uses shares or other equity instruments as consideration for
services received from the employees, the payment is measured at the fair
value of the equity instruments granted to the employees at the grant date. If
the equity instruments granted to employees vest immediately, the fair value
of the equity instruments granted is, on grant date, recognised as relevant cost
or expenses with a corresponding increase in capital reserve. If the equity
instruments granted to employees do not vest until the completion of services
for a vesting period, or until the achievement of a specified performance
condition, the Group, at each balance sheet date during the vesting period,
makes the best estimation according to the latest information of the number of
employees who are granted to vest and revises the number of equity
instruments expected to vest. Based on the best estimation, the Group
recognises the services received for the current period as related costs or
expenses, with a corresponding increase in capital reserve, at an amount equal
to the fair value of the equity instruments at the grant date.
For share-based payment transactions among entities within the group of
companies (comprising the ultimate parent of the Group and all of its
subsidiaries), the Group receiving services recognises the transaction as an
equity-settled share-based payment transaction when the Group has no
obligation to settle the transaction.
- Cash-settled share-based payments
Where the Group receives services from employees by incurring a liability to
deliver cash or other assets for amounts that are determined based on the price
of shares or other equity instruments, the service received from employees is
measured at the fair value of the liability incurred. If the rights under a cash-
settled share-based payment do not vest until the completion of services for a
vesting period, or until the achievement of a specified performance condition,
the Group, at each balance sheet date during the vesting period, recognises the
services received for the current period as related costs or expenses, with a
corresponding increase in liability, at an amount equal to the fair value of the
liability based on the best estimate of the outcome of vesting.
For share-based payment transactions among entities within the group of
companies (comprising the ultimate parent of the Group and all of its
subsidiaries), the Group receiving services recognises the transaction as a
cash-settled share-based payment transaction if it has an obligation to settle
the transaction and the awards granted to its employees are the equity
instruments of other entities within the same group.
124
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
23. REVENUE RECOGNITION
Revenue is the gross inflow of economic benefit in the periods arising in the course of
the Group‘s ordinary activities when the inflows result in increase in shareholders‘
equity, other than increase relating to contributions from shareholders. Revenue is
recognised in profit or loss when it is probable that the economic benefits will flow to
the Group, the revenue and costs can be measured reliably and the following
respective conditions are met:
(1) Sale of goods
Revenue from sale of goods is recognised when all of the general conditions stated
above and following conditions are satisfied:
- The significant risks and rewards of ownership of goods have been transferred
to the buyer
- The Group retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold.
Revenue from the sale of goods is measured at the fair value of the considerations
received or receivable under the sales contract or agreement.
(2) Rendering of services
Revenue from rendering of services is measured at the fair value of the considerations
received or receivable under the contract or agreement.
At the balance sheet date, where outcome of a transaction involving the rendering of
services can be estimated reliably, revenue from the rendering of services is
recognised by reference to the stage of completion of the transaction based on the
progress of work performed
Where outcome of rendering of services cannot be estimated reliably, if the costs
incurred are expected to be recoverable, revenues are recognised to the extent that the
costs incurred that are expected to be recoverable, and an equivalent amount is
charged to profit or loss as service cost; if the costs incurred are not expected to be
recoverable, the costs incurred are recognised in profit or loss and no service revenue
is recognised.
125
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
23. REVENUE RECOGNITION (CONTINUED)
(3) Revenue from construction contracts
Where the outcome of a construction contract can be estimated reliably, contract
revenue and contract expenses associated with the construction contract are
recognised at the balance sheet date using the percentage of completion method.
The stage of completion of a contract is determined based on completion of a physical
proportion of the contract work.
When the outcome of a construction contract cannot be estimated reliably:
- If the contract costs can be recovered, revenue is recognised to the extent of
contract costs incurred that can be recovered, and the contract costs are
recognised as contract expenses when incurred;
- If the contract costs cannot be recovered, the contract costs are recognised as
contract expenses immediately when incurred, and no contract revenue is
recognised.
Construction contract revenue includes initial revenue stipulated by contract and
increased amount generated by contract alteration.
Increased amount cannot be recognized as contract revenue unless the following
contract alteration terms are all satisfied:
- Client accepts and confirms the increased amount generated by contract
alteration;
- Increased amount can be reliably measured.
Contract anticipated loss is recognised when estimated total construction contract cost
exceeds contract revenue. Provision should be made for contract anticipated loss and
charged into profit and losses for the current period.
(4) Interest income
Interest income is recognised on a time proportion basis with reference to the
principal outstanding and the applicable effective interest rate.
126
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
24. EMPLOYEE BENEFITS
Employee benefits are all forms of considerations given and other relevant
expenditures incurred in exchange for services rendered by employees. Except for
termination benefits, employee benefits are recognised as a liability in the period in
which the associated services are rendered by employees, with a corresponding
increase in the cost of relevant assets or expenses in the current period.
(1) Social insurance and housing fund
Pursuant to the relevant laws and regulations of the PRC, employees of the Group
participate in the social insurance system established and managed by government
organisations. The Group makes social insurance contributions - including
contributions to basic pension insurance, basic medical insurance, unemployment
insurance, work-related injury insurance, maternity insurance and etc. - as well as
contributions to housing fund, at the applicable benchmarks and rates stipulated by
the government for the benefit of its employees. The social insurance and housing
fund contributions are recognised as part of the cost of assets or charged to profit or
loss on an accrual basis. Except for the above contributions, the Group does not have
any other obligations in this respect.
(2) Termination benefits
When the Group terminates the employment relationship with employees before the
employment contracts expire, or provides compensation as an offer to encourage
employees to accept voluntary redundancy, a provision for the termination benefits
provided is recognised in profit or loss when both of the following conditions have
are satisfied:
- The Group has a formal plan for the termination of employment or has made
an offer to employees for voluntary redundancy, which will be implemented
shortly
- The Group is not allowed to withdraw from termination plan or redundancy
offer unilaterally.
127
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
25. GOVERNMENT GRANTS
Government grants are transfers of monetary assets or non-monetary assets from the
government to the Group at no consideration except for the capital contribution from
the government as an investor in the Group. Special funds such as investment grants
allocated by the government, if clearly defined in official documents as part of
―capital reserve‖ are dealt with as capital contributions, and not regarded as
government grants.
A government grant is recognised when there is reasonable assurance that the grant
will be received and that the Group will comply with the conditions attaching to the
grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at
the amount that is received or receivable. If a government grant is in the form of a
transfer of a non-monetary asset, it is measured at its fair value.
A government grant related to an asset is recognised initially as deferred income and
amortised to profit or loss on a straight-line basis over the useful life of the asset. A
grant that compensates the Group for expenses to be incurred in the subsequent
periods is recognised initially as deferred income and recognised in profit or loss in
the same periods in which the expenses are recognised. A grant that compensates the
Group for expenses incurred is recognised in profit or loss immediately.
26. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities arise from deductible and taxable temporary
differences respectively, being the differences between the carrying amounts of assets
and liabilities for financial reporting purposes and their tax bases, which include the
deductible losses and tax credits carry forward to subsequent periods. Deferred tax
assets are recognised to the extent that it is probable that future taxable profits will be
available against which deductible temporary differences can be utilised.
Deferred tax is not recognised for the temporary differences arising from the initial
recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither accounting profit nor taxable profit (or tax loss). Deferred tax
is not recognised for taxable temporary differences arising from the initial recognition
of goodwill.
At the balance sheet date, the amount of deferred tax recognised is measured based on
the expected manner of recovery or settlement of the carrying amount of the assets
and liabilities, using tax rates that are expected to be applied in the period when the
asset is recovered or the liability is settled in accordance with tax laws.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date.
The carrying amount of a deferred tax asset is reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow the benefit of the
deferred tax asset to be utilised. Such reduction is reversed to the extent that it
becomes probable that sufficient taxable profits will be available.
128
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
26. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
At the balance sheet date, deferred tax assets and liabilities are offset if all the
following conditions are met:
- the taxable entity has a legally enforceable right to set off current tax assets
against current tax liabilities, and
- they relate to income taxes levied by the same tax authority on either the same
taxable entity; or different taxable entities which either intend to settle the
current tax liabilities and assets on a net basis, or to realize the assets and
settle the liabilities simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to be settled or
recovered.
27. OPERATING AND FINANCE LEASES
A lease is classified as either a finance lease or an operating lease. A finance lease is a
lease that transfers substantially all the risks and rewards incidental to ownership of a
leased asset to the lessee, irrespective of whether the legal title to the asset is
eventually transferred. An operating lease is a lease other than a finance lease.
(1) Operating lease charges
Rental payments under operating leases are recognised as costs or expenses on a
straight-line basis over the lease term.
(2) Assets leased out under operating leases
Fixed assets leased out under operating leases, except for investment properties (see
Note II.13) are depreciated in accordance with the Group‘s depreciation policies
described in Note II.14(2). Impairment losses are provided for in accordance with the
accounting policy described in Note II.20. Other leased out assets under operating
leases are amortised using the straight-line method. Income derived from operating
leases is recognised in the income statement using the straight-line method over the
lease term. If initial direct costs incurred in respect of the assets leased out are
material, the costs are initially capitalised and subsequently amortised in profit or loss
over the lease term on the same basis as the lease income. Otherwise, the costs are
charged to profit or loss immediately.
129
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
27. OPERATING AND FINANCE LEASES (CONTINUED)
(3) Assets acquired under finance leases
When the Group acquires an asset under a finance lease, the asset is measured at an
amount equal to the lower of its fair value and the present value of the minimum lease
payments, each determined at the inception of the lease. At the commencement of the
lease term, the minimum lease payments are recorded as long-term payables. The
difference between the value of the leased assets and the minimum lease payments is
recognised as unrecognised finance charges. Initial direct costs that are attributable to
a finance lease incurred by the Group are added to the amounts recognised for the
leased asset. Depreciation and impairment losses are accounted for in accordance
with the accounting policies described in Notes II.14(2) and II.20, respectively.
If there is a reasonable certainty that the Group will obtain ownership of a leased
asset at the end of the lease term, the leased asset is depreciated over its estimated
useful life. Otherwise, the leased asset is depreciated over the shorter of the lease term
and its estimated useful life.
Unrecognised finance charge under finance lease is amortised using an effective
interest method over the lease term. The amortisation is accounted for in accordance
with principles of borrowing costs (see Note II.16).
At the balance sheet date, long-term payables arising from finance leases, net of the
unrecognised finance charges, are presented as long-term payables or non-current
liabilities due within one year, respectively, in the balance sheet.
(4) Assets leased out under finance leases
At the commencement of the lease term, the Group recognises the aggregate of the
minimum lease receipts determined at the inception of a lease and the initial direct
costs as finance lease receivable. The difference between the aggregate of the
minimum lease receipts, the initial direct costs, and the aggregate of their present
value is recognised as unearned finance income.
Unearned finance income is allocated to each accounting period during the lease term
using the effective interest method. At the balance sheet date, finance lease
receivables, net of unearned finance income, are presented as long-term receivables
or non-current assets due within one year, respectively in the balance sheet.
130
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
28. ASSETS HELD FOR SALE
A held-for-sale asset is classified as held for sale when the Group has made a decision
and signed a non-cancellable agreement on the transfer of the asset with the transferee,
and the transfer is expected to be completed within one year. Such non-current assets
may be fixed assets, intangible assets, and investment properties subsequently
measured using the cost model, long-term equity investment etc. but not include
financial assets and deferred tax assets. Non-current assets held for sale are stated at
the lower of carrying amount and net realisable value. Any excess of the carrying
amount over the net realisable value is recognised as impairment loss. At balance
sheet date, non-current assets held for sale are still presented under corresponding
asset classification as they were.
29. HEDGE ACCOUNTING
Hedge accounting is a method which recognises the offsetting effects on profit or loss
of changes in the fair values of the hedging instrument and the hedged item in the
same accounting period(s).
Hedged items are the items that expose the Group to risks of changes in fair value or
future cash flows and that are designated as being hedged. The Group‘s hedged item
include a forecast transaction that is settled with a fixed amount of foreign currency
and expose the Group to foreign currency risk.
A hedging instrument is a designated derivative whose changes in fair value or cash
flows are expected to offset changes in the fair value or cash flows of the hedged item.
For a hedge of foreign currency risk, a non-derivative financial asset or non-
derivative financial liability may also be used as a hedging instrument.
The hedge is assessed by the Group for effectiveness on an ongoing basis and judged
whether it has been highly effective throughout the accounting periods for which the
hedging relationship was designated. A hedge is regarded as highly effective if both
of the following conditions are satisfied:
- at the inception and in subsequent periods, the hedge is expected to be highly
effective in achieving offsetting changes in fair value or cash flows
attributable to the hedged risk during the period for which the hedge is
designated;
- the actual results of offsetting are within a range of 80% to 125%.
131
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
29. HEDGE ACCOUNTING (CONTINUED)
- Cash flow hedges
A cash flow hedge is a hedge of the exposure to variability in cash flows. The
portion of the gain or loss on the hedging instrument that is determined to be
an effective hedge is recognised directly in shareholders‘ equity as a separate
component. That effective portion is adjusted to the lesser of the following in
absolute amounts:
- the cumulative gain or loss on the hedging instrument from inception of the
hedge
- The cumulative change in present value of the expected future cash flows on
the hedged item from inception of the hedge
The portion of the gain or loss on the hedging instrument that is determined to be an
ineffective hedge is recognised in profit or loss.
If a hedge of a forecast transaction subsequently results in the recognition of a non-
financial asset or non-financial liability, the associated gain or loss is removed from
shareholders‘ equity and recognised in profit or loss in the same period during which
the financial asset or financial liability affects profit or loss. However, if the Group
expects that all or a portion of a net loss recognised directly in shareholders‘ equity
will not be recovered in future accounting periods, it reclassifies into profit or loss the
amount that is not expected to be recovered.
If a hedge of a forecast transaction subsequently results in the recognition of a
financial asset or a financial liability, the associated gain or loss is removed from
equity and recognised in profit or loss in the same period during which the financial
asset or financial liability affects profit or loss. However, if the Group expects that all
or a portion of a net loss recognised directly in shareholders‘ equity will not be
recovered in future accounting periods, it reclassifies into profit or loss the amount
that is not expected to be recovered.
For cash flow hedges, other than those covered by the preceding two policy
statements, the associated gain or loss is removed from shareholders‘ equity and
recognised in profit or loss in the same period or periods during which the hedged
forecast transaction affects profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the hedge
no longer meets the criteria for hedge accounting, the Group will discontinue the
hedge accounting treatments prospectively. In this case, the gain or loss on the
hedging instrument that remains recognised directly in shareholders‘ equity from the
period when the hedge was effective shall not be reclassified into profit or loss and is
recognised in accordance with the above policy when the forecast transaction occurs.
If the forecast transaction is no longer expected to occur, the gain or loss on the
hedging instrument that remains recognised directly in shareholders‘ equity from the
period when the hedge was effective shall be reclassified into profit or loss
immediately.
132
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
30. DIVIDENDS APPROPRIATED TO INVESTORS
Dividends or distributions of profits proposed in the profit appropriation plan which
will be authorised and declared after the balance sheet date, are not recognised as a
liability at the balance sheet date but disclosed in the notes separately.
31. RELATED PARTIES
If a party has the power to control, jointly control or exercise significant influence
over another party, or vice versa, or where two or more parties are subject to common
control or joint control from another party, they are considered to be related parties.
Related parties may be individuals or enterprises. Enterprises with which the
Company is under common control only from the State and that have no other related
party relationships are not regarded as related parties of the Group. Related parties of
the Group and the Company include, but are not limited to:
(a) the Company‘s parent;
(b) the Company‘s subsidiaries;
(c) enterprises that are controlled by the Company‘s parent;
(d) investors that have joint control or exercise significant influence over the
Group;
(e) enterprises or individuals if a party has control, joint control over both the
enterprises or individuals and the Group;
(f) joint ventures of the Group, including subsidiaries of joint ventures ;
(g) associates of the Group, including subsidiaries of associates;
(h) principal individual investors and close family members of such individuals;
(i) key management personnel of the Group and close family members of such
individuals;
(j) key management personnel of the Company‘s parent and close family
members of such individuals; and
(k) close family members of key management personnel of the Company‘s parent;
and
(l) other enterprises that are controlled or jointly controlled by principal
individual investors, key management personnel of the Group, and close
family members of such individuals.
133
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
31. RELATED PARTIES (CONTINUED)
Besides the related parties stated above determined in accordance with the
requirements of CAS, the following enterprises and individuals are considered as (but
not restricted to) related parties based on the disclosure requirements of
Administrative Procedures on the Information Disclosures of Listed Companies
issued by the CSRC:
(m) enterprises or persons that act in concert that hold 5% or more of the
Company‘s shares;
(n) individuals and close family members of such individuals who directly or
indirectly hold 5% or more of the Company‘s shares, supervisors for listed
companies and their close family members;
(o) enterprises that satisfy any of the aforesaid conditions in (a), (c) and (m)
during the past 12 months or will satisfy them within the next 12 months
pursuant to a relevant agreement;
(p) individuals who satisfy any of the aforesaid conditions in (i), (j) and (n) during
the past 12 months or will satisfy them within the next 12 months pursuant to
a relevant agreement; and
(q) enterprises, other than the Company and subsidiaries controlled by the
Company, which are controlled directly or indirectly by an individual defined
in (i), (j), (n) or (p), or in which such an individual assumes the position of a
director or senior executive.
134
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
32 SEGMENT REPORTING
Reportable segments are identified based on operating segments which are
determined based on the structure of the Group‘s internal organisation, management
requirements and internal reporting system. An operating segment is a component of
the Group that meets the following conditions:
- It engages in business activities from which it may earn revenues and incur
expenses
- Its financial performance are regularly reviewed by the Group‘s management
to make decisions about resource to be allocated to the segment and assess its
performance
- The Group is able to obtain its financial information regarding financial
position, financial performance and cash flows, etc.
Two or more operating segments may be aggregated into a single operating segment
if the segments have same or similar economic characteristics, and are similar in
respect of the following aspects:
- the nature of each product and service;
- the nature of production processes;
- the type or class of customers for the products and services;
- the methods used to distribute the products or provide the services;
- the legal and regulatory impact on manufacturing of products and rendering of
services.
Inter-segment revenues are measured on the basis of actual transaction price for such
transactions for segment reporting, and segment accounting policies are consistent
with those for the consolidated financial statements.
33 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements requires management to make estimates and
assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
135
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
33 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
(CONTINUED)
Notes V.17, VII and XI.3 contain information about the assumptions and their risk
factors relating to impairment of goodwill, share-based payments and fair value of
financial instruments. Other key sources of estimation uncertainty are as follows:
(1) Impairment of receivables
As described in Note II.10, receivables that are measured at amortised cost are
reviewed at each balance sheet date to determine whether there is objective evidence
of impairment. If any such evidence exists, impairment loss is recognised. Objective
evidence of impairment includes observable data that comes to the attention of the
Group about loss events such as a significant decline in the estimated future cash flow
of an individual debtor or the portfolio of debtors, and significant changes in the
financial condition that have an adverse effect on the debtor. If there has been a
change in the factors used to determine the provision for impairment which indicates
that the value of the receivables has recovered, the impairment loss recognised in
prior years is reversed.
(2) Provision for diminution in value of inventories
As described in Note II.11, the net realisable value of inventories is under
managements regular review, and as a result, provision for diminution in value of
inventories is recognised for the excess of inventories‘ carrying amounts over their
net realisable value. When making estimates of net realisable value, the Group takes
into consideration the use of inventories held on hand and other information available
to form the underlying assumptions, including the inventories market prices and the
Groups historical operating costs. The actual selling price, the costs of completion
and the costs necessary to make the sale and relevant taxes may vary based on the
changes in market conditions and product saleability, manufacturing technology and
the actual use of the inventories, resulting in the changes in provision for diminution
in value of inventories. The net profit or loss may then be affected in the period when
the provision for diminution in value of inventories is adjusted.
(3) Impairment of assets except inventories, financial assets and other long-term equity
investment
As described in Note II.20, assets such as fixed assets, intangible assets and
investment properties are reviewed at each balance sheet date to determine whether
the carrying amount exceeds the recoverable amount of the assets. If any such
indication exists, an impairment loss is recognised.
136
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
33 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
(CONTINUED)
(3) Impairment of assets except inventories, financial assets and other long-term equity
investment (continued)
The recoverable amount of an asset (asset group) is the greater of its fair value less
costs to sell and its present value of expected future cash flows. Since a market price
of the asset (the asset group) cannot be obtained reliably, the fair value of the asset
cannot be estimated reliably. In assessing value in use, significant judgements are
exercised over the asset‘s production, selling price, related operating expenses and
discounting rate to calculate the present value. All relevant materials which can be
obtained are used for estimation of the recoverable amount, including the estimation
of the production, selling price and related operating expenses based on reasonable
and supportable assumption.
(4) Depreciation and amortisation of assets such as fixed assets, intangible assets and
investment properties
As described in Note II.13, 14 and 17, investment properties, fixed assets and
intangible assets are depreciated and amortised over their useful lives after taking into
account residual value. The useful lives of the assets are regularly reviewed to
determine the depreciation and amortisation costs charged in each reporting period.
The useful lives of the assets are determined based on historical experiences of
similar assets and the estimated technical changes. If there have been significant
changes in the factors used to determine the depreciation or amortisation, the rate of
depreciation or amortisation is revised prospectively.
(5) Warranty provisions
As described in Note V.33, the Group makes provisions under the warranties it gives
on the sale of its products based mainly on the Groups recent claim experience.
Because it is possible that the recent claim experience may not be indicative of future
claims that the Group will receive in respect of past sales, a considerable level of
managements judgement is required and exercised to estimate the provision. Any
increase or decrease in the provision will affect profit or loss in future years.
137
2011 Annual Report
II. BASIS OF PREPARATION (CONTINUED)
33 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
(CONTINUED)
(6) Construction contract
As described in Note II.23, contract revenue and contract profit are recognised based
on the stage of completion of a contract which is determined with reference to the
proportion of the physical construction work completed to the total estimated
construction work. Where a contract is completed substantially and its contract
revenue and contract expenses to completion can be reliably measured, the Group
estimates contract revenue and contract expenses with reference to its recent
construction experience and the nature of the construction contracts. For a contract
that is not completed substantially, contract revenue that should be recognised based
on its stage of completion, is not recognised and disclosed in the financial statements.
Therefore, at the balance sheet date, actual total contract revenue and total contract
cost may be higher or lower than the estimated total contract revenue and total
contract cost and any change of estimated total contract revenue and total contract
cost may have financial impact on future profit or loss.
(7) Income taxes
Determining income tax provisions involves judgement on the future tax treatment of
certain transactions. The Group carefully evaluates tax implications of transactions
and tax provisions are set up accordingly. The tax treatment of such transactions is
reconsidered periodically to take into account all changes in tax legislations. Deferred
tax assets are recognised for tax losses not yet used and temporary deductible
differences. As those deferred tax assets can only be recognised to the extent that it is
probable that future taxable profit will be available against which the unused tax
credits can be utilised, management‘s judgment is required to assess the probability of
future taxable profits. Management‘s assessment is constantly reviewed and
additional deferred tax assets are recognised if it becomes probable that future taxable
profits will allow the deferred tax asset to be recovered.
138
2011 Annual Report
III. TAXATION
1. MAIN TAXES AND TAXES RATES
Types of tax Taxable base Tax rate
Value added tax The output VAT calculated based on taxable income from 17%
(VAT) sales of goods and rendering of service, after subtracting
the deductable input VAT of the period, is VAT payable
Business tax Taxable operating income 3 - 5%
Urban maintenance
and construction tax Business tax payable and VAT payable 7%
Income tax Taxable income Note1
The Netherlands / Calculated based on revenue arising from sales of goods
Australia service tax and rendering of service, less deductible or refundable
rate taxes for purchase of goods 10 -19%
Note1: The income tax rates applicable to the Group for the year are as follows:
2011 2010
The Company 24% 22%
Domestic subsidiaries 12 - 25% 10 - 25%
Subsidiaries registered in Hong Kong 16.5% 16.5%
Subsidiaries registered in British Virgin Islands - -
Subsidiary registered in Suriname 36% 36%
Subsidiary registered in Cambodia 20% 20%
Subsidiary registered in US 15 - 35% 15 - 35%
Subsidiary registered in Germany 31.6% 31.6%
Subsidiary registered in Britain 28% 26%
Subsidiary registered in Australia 30% 30%
Subsidiary registered in the Netherlands 25.5% 25.5%
Subsidiary registered in Belgium 34% 34%
Subsidiary registered in Denmark 25% 28%
Subsidiary registered in Finland 26% 26%
Subsidiary registered in Poland 19% 19%
Subsidiary registered in Thailand 30% 30%
Subsidiary registered in Singapore 17% 17%
139
2011 Annual Report
III. TAXATION (CONTINUED)
2. TAX PREFERENCE
The Group‘s subsidiaries that are entitled to preferential tax treatments are as follows:
Local
Statutory Preferential
Name of enterprises tax rate rate Reasons
1 Shenzhen CIMC - Tianda 24% 15% Recognised as high-tech
Airport Support Co., Ltd enterprises, in 2010 entitled to
15% preferential rate
2 Shanghai CIMC Yangshan 25% 12.5% Entitled to tax holiday of
Logistics Equipment Co., Ltd ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
3 Tianjin CIMC Special Vehicle Co., Ltd 24% 12% Entitled to tax holiday of
―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
4 CIMC SHAC (Xi‘An) Special Vehicle 25% 12.5% Entitled to tax holiday of
Co., Ltd ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
5 Gansu CIMC Huajun Vehicle Co., Ltd. 25% 12.5% Entitled to tax holiday of
―two-year exemption and
three-year reduction‖, and 2011
is the fifth profit making year
6 Ianermongolia Holonbuir CIMC Wood 25% 12.5% Entitled to tax holiday of
Co., Ltd ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
7 Tianjin CIMC Containers Co., Ltd 25% 12.5% Entitled to tax holiday of
―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
8 Shanghai CIMC Yangshan Container 25% 12.5% Entitled to tax holiday of
Service Co.,Ltd ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
9 Zhangjiagang CIMC Sanctum 25% 15% Recognised as high-tech
Cryogenic Equipment Co., Ltd Enterprises in 2010, entitled
to 15% preferential rate
10 Zhumadian CIMC Huajun Vehicle 25% 15% Recognised as high-tech
Co., Ltd. Enterprises in 2010, entitled
to 15% preferential rate
11 Yangzhou Tonglee Reefer Equipment 25% 12.5% Entitled to tax holidays of
Co., Ltd ―two-year exemption and
three-year reduction‖, and 2011
is the fifth profit making year
140
2011 Annual Report
III. TAXATION (CONTINUED)
2. TAX PREFERENCE (CONTINUED)
Local
Statutory Preferential
Name of enterprises tax rate rate Reasons
12 Yangzhou Tonglee Reefer Container 25% 12.5% Entitled to tax holidays of
Co., Ltd ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
13 Yangzhou CIMC Tonghua 25% 12.5% Entitled to tax holidays of
Tank Equipment Co., Ltd ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
14 Enric (Bengbu) Compressor Co., Ltd 25% 15% Recognised as high-tech
enterprises in 2011, entitled
to 15% preferential rate
15 Shanghai CIMC Reefer 25% 15% Recognised as high-tech
Containers Co., Ltd. enterprises in 2011, entitled
to 15% preferential rate
16 Nantong CIMC Special Transportation 25% 15% Recognised as high-tech
Equipment Manufacture Co., Ltd. enterprises in 2011, entitled
to 15% preferential rate
17 Xinhui CIMC Special Transportation 25% 15% Recognised as high-tech
Equipment Co., Ltd. enterprises in 2010, entitled
to 15% preferential rate
18 Dalian CIMC Logistics 25% 15% Recognised as high-tech
Equipment Co., Ltd. enterprises in 2011, entitled
to 15% preferential rate
19 Shenzhen CIMC Special 25% 15% Recognised as high-tech
Vehicle Co., Ltd. enterprises in 2011, entitled
to 15% preferential rate
20 CIMC Vehicle (Shandong) Co. Ltd 25% 15% Recognised as high-tech
enterprises in 2010, entitled
to 15% preferential rate
21 Qingdao CIMC Special 25% 12.5% Entitled to tax holidays of
Vehicle Co., Ltd. ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
22 Luoyang CIMC Lingyu 25% 15% Recognised as high-tech
Automobile Co., Ltd. enterprises in 2010, entitled
to 15% preferential rate
23 Dalian CIMC Railway 24% 12% Entitled to tax holiday of
Equipment Co., Ltd. ―two-year exemption and
three-year reduction‖, and 2011
is the fifth profit making year
141
2011 Annual Report
III. TAXATION (CONTINUED)
2. TAX PREFERENCE (CONTINUED)
Local
Statutory Preferential
Name of enterprises tax rate rate Reasons
24 Wuhu CIMC RuiJiang Automobile 25% 15% Recognised as high-tech
Co., Ltd enterprises in 2011, entitled
to 15% preferential rate
25 CIMC Vehicle (Liaoning) Co., Ltd. 25% 12.5% Entitled to tax holiday of
―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
26 Chongqing CIMC Logistics Equipments 25% 12.5% Entitled to tax holiday of
Co., Ltd. ―two-year exemption and
three-year reduction‖, and 2011
is the fourth profit making year
27 Yangzhou CIMC Tong Hua Special 25% 15% Recognised as high-tech
Vehicles Co., Ltd enterprises in 2011, entitled
to 15% preferential rate
28 Shijiazhuang Enric Gas Equipment 25% 15% Recognised as high-tech
Co., Ltd. enterprises in 2011, entitled
to 15% preferential rate
29 Enric (Lang fang )Energy Equipment 25% 15% Recognised as high-tech
integration Co.,Ltd. enterprises in 2010, entitled
to 15% preferential rate
30 Jingmen Hongtu Special Aircraft 25% 15% Recognised as high-tech
Manufacturing Co., Ltd enterprises in 2011, entitled
to 15% preferential rate
31 Yantai CMIC Raffles 25% 15% Recognised as high-tech
offshore Ltd enterprises in 2009, entitled
to 15% preferential rate
32 Nantong CIMC Tank 25% 15% Recognised as high-tech
Equipment Co., Ltd enterprises in 2011, entitled
to 15% preferential rate
Corporate income tax law of the PRC (―New Tax Law‖) became effective on 1
January 2008. The statutory income tax rate for the Company and its domestic
subsidiaries will be 25%. According to the Notice for Transitional Preferential Tax
Policies of Enterprise, Income Tax Law(Guo Fa [2007] No. 39) issued by the State
Council, the tax rate for the companies which were previously entitled to preferential
tax rates will gradually transition to the statutory tax rate of 25% within 5 years. The
tax rate for the enterprises which are entitled to preferential tax rate of 15% will be
18% in 2008, 20% in 2009, 22% in 2010, 24% in 2011 and 25% in 2012; the tax rate
for the enterprises whose applicable tax rates were 24% and above or equal to 25%
will be 25% starting from 2008.
142
2011 Annual Report
III. TAXATION (CONTINUED)
2. TAX PREFERENCE (CONTINUED)
Effective from 1 January 2008, the companies which are previously entitled to tax
holidays of ―two-year exemption and three-year reduction‖ and ―one-year exemption
and two-year reduction‖ will continue to enjoy the tax holidays until their expirations.
The reduced tax rates will be based on the applicable tax rate in the transitional period.
The applicable tax rate will be the statutory tax rate after the expirations of tax
holidays.
On 6 December 2007, State Council of People‘s Republic of China promulgated
detailed implementation rules of the New Tax Law. According to the implementation
rules started from 1 January 2008, a withholding tax is applied on dividends
distributed by foreign-invested enterprises to Hong Kong or other overseas investors
with a tax rate of 5% or 10%, respectively. Therefore, at 31 December 2011,
temporary difference caused by the Group‘s subsidiaries‘ undistributed profits
amounted to RMB 3,665,929,000 (2010: RMB 2,490,010,000). Accordingly, deferred
tax liabilities amounting to RMB 313,946,000 (2010: RMB 187,213,000) were
recognised by the Group at year end.
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED
FINANCIAL STATEMENTS
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES
All subsidiaries of the Group were established or acquired through combination not
under common control. There is no acquisition of subsidiaries through combination
under common control.
In the reporting period, the number of companies included in the scope of
consolidation added up to 284. Except for the subsidiaries listed as below, the number
of other subsidiaries held by the Group was 147, with paid-in capital amounting to
RMB 57,775,000. Other subsidiaries mainly included those engaged in
manufacturing or service provision, which have relatively small scale of operation
and the paid-in capital was below RMB 20 million or USD 3 million. Other
subsidiaries also included those investment holding companies with no operating
activities registered in Hong Kong, British Virgin Islands or other overseas countries.
143
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination
(i) Domestic subsidiaries:
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
1 Shenzhen Southern Corporation Guangdong, USD 16,600,000.00 Manufacture, repair and sale of USD 16,600,000.00 100.00% 100.00% Yes - -
CIMC Containers China container, container stockpiling
Manufacture business
Co., Ltd. (SCIMC)
2 Shenzhen Southern Corporation Guangdong, USD 16,600,000.00 Manufacture and repair of container USD 16,600,000.00 100.00% 100.00% Yes - -
CIMC Eastern China design and manufacture of new-style
Logistics Equipment special road and port mechanical
Manufacturing equipment;
Co., Ltd. (SCIMCEL)
3 Xinhui CIMC Corporation Guangdong, USD 24,000,000.00 Manufacture, repair and sale of USD 16,800,000.00 70.00% 70.00% Yes 47,444 -
Container China containers
Co., Ltd.(XHCIMC)
4 Nantong CIMC Corporation Jiangsu, USD 7,700,000.00 Manufacture, repair and sale of USD 5,467,000.00 71.00% 71.00% Yes 69,014 -
Shunda Containers China containers
Co., Ltd. (NTCIMC)
5 Tianjin CIMC Corporation Tianjin, USD 50,000,000.00 Manufacture and sale of container USD 50,000,000.00 100.00% 100.00% Yes - -
Containers China as well as relevant technical advisory;
Co., Ltd.(TJCIMC) container stockpiling business
6 Dalian CIMC Corporation Dalian, USD 17,400,000.00 Manufacture and sale of container USD 17,400,000.00 100.00% 100.00% Yes - -
Containers China as well as relevant technical advisory;
Co., Ltd. (DLCIMC) container stockpiling business
7 Ningbo CIMC Corporation Ningbo, USD 15,000,000.00 Manufacture and sale of container USD 15,000,000.00 100.00% 100.00% Yes - -
Logistics Equipment China as well as relevant technical advisory;
Co., Ltd.(NBCIMC) container stockpiling business
144
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
8 Taicang CIMC Corporation Jiangsu, USD 40,000,000.00 Manufacture and repair of container USD 40,000,000.00 100.00% 100.00% Yes - -
Containers China
Co., Ltd.(TCCIMC)
9 Yangzhou Runyang Corporation Jiangsu, USD 20,000,000.00 Manufacture, repair and sale of container USD 20,000,000.00 100.00% 100.00% Yes - -
Logistics Equipments China
Co., Ltd.(YZRYL)
10 Shanghai CIMC Yangshan Corporation Shanghai, USD 20,000,000.00 Manufacture and sale of container USD 20,000,000.00 100.00% 100.00% Yes - -
Logistics Equipments China as well as relevant technical advisory
Co., Ltd.(SHYSLE)
11 Shanghai CIMC Reefer Corporation Shanghai, USD 31,000,000.00 Manufacture and sale of refrigeration USD 28,520,000.00 92.00% 92.00% Yes 57,913 -
Containers Co., Ltd. China and heat preservation device of reefer
( SCRC ) container, refrigerator car and heat
Preservation car
12 Nantong CIMC Special Corporation Jiangsu, USD 10,000,000.00 Manufacture, sale and repair of various USD 7,100,000.00 71.00% 71.00% Yes 76,304 -
Transportation China trough, tank as well as various
Equipment Manufacture special storing and transporting
Co., Ltd. (NTCIMCS) equipments and parts
13 Xinhui CIMC Special Corporation Guangdong, USD 16,600,000.00 Manufacture and sale of various USD 16,600,000.00 100.00% 100.00% Yes - -
Transportation China container, semi-finished container
Equipment product and relevant components
Co., Ltd. (XHCIMCS) and parts; providing leasing
and maintenance service
14 Nantong CIMC Tank Corporation Jiangsu, USD 25,000,000.00 Manufacture and sale of various USD 25,000,000.00 78.22% 100.00% Yes Note 1 -
Equipment Co., Ltd China container, semi-finished container
(NTCIMCT) relevant components and parts
145
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
15 Dalian CIMC Railway Corporation Liaoning, USD 20,000,000.00 Design, manufacture and sale of various USD 20,000,000.00 100.00% 100.00% Yes - -
Equipment China railway freight equipment products such
Co., Ltd (DLCIMCS) as railway container flat car, open
wagon and hopper wagon
16 Nantong CIMC Large-sized Corporation Jiangsu, USD 43,000,000.00 Design, production and sale of tank USD 43,000,000.00 100.00% 100.00% Yes - -
Tank Co., Ltd. China relevant parts; undertaking tank-related
general contracting projects
17 Shenzhen CIMC Special Corporation Guangdong, RMB 200,000,000.00 Development, production and sales of RMB 160,000,000.00 80.00% 100.00% Yes Note 6 -
Vehicle Co., China various special-use vehicles, as well
Ltd.(CIMCSV) as relevant components and parts
18 Qingdao CIMC Special Corporation Shandong, RMB 62,880,000.00 Development, production and sales of RMB 55,875,168.00 88.86% 100.00% Yes Note 6 -
Vehicle Co., China various special-use vehicles, refitting
Ltd.(QDSV) vehicles, special vehicles, trailer series
as well as relevant components and
parts
19 Yangzhou CIMC Tonghua Corporation Jiangsu, USD 17,500,000.00 Development and production of various USD 14,000,000.00 80.00% 100.00% Yes Note 6 -
Tank Equipment Co., China trailer, special-use vehicles and tank
Ltd. (YZTHT) equipment as well as components and
parts
20 Shanghai CIMC Vehicle Corporation Shanghai, RMB 90,204,082.00 Development, construction, operation RMB 72,163,265.60 80.00% 100.00% Yes Note 6 -
Logistics Equipments China leasing, sales of warehousing and
Co., Ltd. (SHL) auxiliary facilities; property
21 Beijing CIMC Vehicle Corporation Beijing, RMB 20,000,000.00 Construction and operation of RMB 16,000,000.00 80.00% 100.00% Yes Note 6 -
Logistics Equipments China auxiliary warehousing equipments
Co., Ltd. (BJVL) management and relevant service
22 CIMC Vehicle (Liaoning) Corporation Liaoning, RMB 40,000,000.00 Development and production of various RMB 32,000,000.00 80.00% 100.00% Yes Note 6 -
Co., Ltd. (LNVS) China trailer, special-use vehicles as well
as components and parts
146
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
23 Tianjin CIMC Special Corporation Tianjin, RMB 30,000,000.00 Production and sales of box car, RMB 24,000,000.00 80.00% 100.00% Yes Note 6 -
Vehicles Co., China mechanical products, metal
Ltd.(TJXV) structure member; relevant advisory
service
24 CIMC -SHAC (Xi‘An) Corporation Xi‘An, RMB 50,000,000.00 Development and production of various RMB 30,000,000.00 60.00% 75.00% Yes Note 6 -
Special Vehicle Co., Ltd. China trailer, special vehicle and the
(XASV) components and parts; providing
relevant technical service
25 Gansu CIMC Huajun Corporation Gansu, RMB 25,000,000.00 Refitting of special vehicles, manufacture RMB 20,000,000.00 80.00% 100.00% Yes Note 6 -
Vehicle Co., Ltd. China of trailer and fittings as well automobile
(GSHJ) fittings; sales of relevant materials
26 Xinhui CIMC Composite Corporation Guangdong, USD 16,000,000.00 Production, development, processing USD 12,800,000.00 80.00% 100.00% Yes Note 6 -
Material Manufacture China and sales of various composite plate
CO., LTD (XHCM) products such as plastics, plastic alloy
27 Qingdao CIMC Eco- Corporation Shandong, RMB 137,930,000.00 Development, manufacture, sales and RMB 56,275,440.00 40.80% 51.00% Yes Note 6 -
Equipment Co., Ltd. China service for garbage treatment truck
(QDHB) and the components and parts
28 Shanghai CIMC Special Corporation Shanghai, RMB 30,000,000.00 Development and production of box RMB 24,600,000.00 82.00% 100.00% Yes Note 6 -
Vehicle Co., Ltd. China trailer, box car as well as relevant
(SHCIMCV) mechanical products
29 CIMC Financing and Corporation Guangdong, RMB 20,000,000.00 Finance lease business; disposal and RMB 20,000,000.00 100.00% 100.00% Yes - -
Leasing Co., Ltd. China maintenance for residual value of
(CIMCVL) leased property; advisory and
warranty for leasing transaction
30 Qingdao Refrigeration Corporation Shandong, USD 25,000,000.00 Manufacture and sales of various USD 20,000,000.00 80.00% 100.00% Yes Note 6 -
Transport Equipment China refrigeration, heat preservation and
Co., Ltd. (QDRV) other transport equipments and spare parts
147
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
31 Nantong CIMC Tank Corporation Jiangsu, USD 10,000,000.00 Manufacture and repair of large-sized USD 8,500,000.00 85.00% 100.00% Yes Note 6 -
Equipment Co., China tank, production of various
Ltd. (NTCY) pressurization tank car, special
pressurization trough, tank and parts
32 Shenzhen CIMC – Tianda Corporation Guangdong, USD 13,500,000.00 Production and operation of various USD 9,450,000.00 70.00% 70.00% Yes 89,075 -
Airport Support Ltd. China airport-purpose electromechanical
(TAS) equipment products
33 Xinhui CIMC Wood Corporation Guangdong, USD 15,500,000.00 Production of container-purpose wood USD 15,500,000.00 100.00% 100.00% Yes - -
Co., Ltd. China floor and relevant products of various
(XHCIMCW) specifications; providing relevant
technical advisory service
34 Inner Mongolia Holonbuir Corporation Inner USD 12,000,000.00 Production and sales of various USD 12,000,000.00 100.00% 100.00% Yes - -
CIMC Wood Co., Ltd. Mongolia, container wood floors and wood
(NMGW) China products for transport equipments
35 Jiaxing CIMC Wood Corporation Zhejiang, USD 5,000,000.00 Production and sales of container USD 5,000,000.00 100.00% 100.00% Yes - -
Co., Ltd. (JXW) China wood floors, wood products for
transport equipments and other
wood products
36 Xuzhou CIMC Wood Corporation Jiangsu, RMB 50,000,000.00 Production and sales of container RMB 50,000,000.00 100.00% 100.00% Yes - -
Co., Ltd (XZW) China wood floor; purchasing and
sales of timber
37 Shenzhen Southern CIMC Corporation Guangdong, USD 5,000,000.00 Engaged in container transshipment, USD 5,000,000.00 100.00% 100.00% Yes - -
Containers Service China stockpiling, devanning, vanning,
Co., Ltd. (SCIMCL) maintenance
148
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
38 Ningbo CIMC Container Corporation Ningbo, RMB 30,000,000.00 Goods traffic; goods package RMB 30,000,000.00 100.00% 100.00% Yes - -
Service Co., Ltd. China , sorting,examination and
(NBCIMCL) logistics advisory service
39 Shanghai CIMC Yangshan Corporation Shanghai, USD 7,000,000.00 Container transshipment, stockpiling, USD 5,600,000.00 80.00% 80.00% Yes 5,364 1,179
Container Service Co., China devanning, vanning, and warehousing;
Ltd. (SHYLE) container maintenance, try-off
and technical service
40 CIMC Shenfa Corporation Shanghai, RMB 204,122,966.00 Investment, construction and operation RMB 204,122,966.00 100.00% 100.00% Yes - -
Development Co., China for infrastructure; real estate
Ltd.(CIMCSD) development and operation
41 CIMC Vehicle (Xinjiang) Corporation Xinjiang, RMB 80,000,000.00 Production and sales of mechanical RMB 64,000,000.00 80.00% 100.00% Yes Note 6 -
Co., Ltd. (SJ4S) China equipments as well as
relevant technical development
42 CIMC Vehicle (Group) Corporation Guangdong, USD 168,000,000.00 Development, production and USD 134,400,000.00 80.00% 80.00% Yes Note 6 -
Co., Ltd. (HI) China sales of various high-tech and
high-performance special
vehicle and trailer series
43 Qingdao CIMC Special Corporation Shandong, USD 11,500,000.00 Manufacture and sale of various USD 11,500,000.00 100.00% 100.00% Yes - -
Reefer Co., China container, semi-finished container
Ltd.(QDCSR) product and relevant components
and parts
44 Tianjin CIMC Logistics Corporation Tianjin, USD 5,000,000.00 Design, manufacture, sale, maintenance USD 5,000,000.00 100.00% 100.00% Yes - -
Equipments Co., Ltd. China and relevant technical advisory
(TJCIMCLE) for logistics equipments and
relevant components and parts
45 Dalian CIMC Logistics Corporation Dalian, USD 14,000,000.00 Design, manufacture, sale, maintenance USD 14,000,000.00 100.00% 100.00% Yes - -
Equipment Co., Ltd. China and relevant technical advisory
(DLL) for international trade, entrepot
trade, logistics equipment
149
2011 Annual Report
and pressure vessel
150
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
46 Chongqing CIMC Corporation Chongqing, USD 8,000,000.00 Design, manufacture, lease, maintenance USD 8,000,000.00 100.00% 100.00% Yes - -
Logistics Equipments China of container, special container, other
Co., Ltd. (CQLE) logistic equipment and relevant
components and parts
47 Dalian CIMC Heavy Corporation Liaoning, USD 33,700,000.00 International trade, entrepot trade, USD 33,700,000.00 100.00% 100.00% Yes - -
Logistics Equipments China design, manufacture, sale, and relevant
Co., Ltd.(DLZH) technical advisory of pressure vessel;
manufacture and installation, other
service of relevant components
and parts of pressure vessel
48 Shenzhen CIMC Corporation Guangdong, RMB 20,000,000.00 Design, development, sale, surrogate RMB 20,000,000.00 100.00% 100.00% Yes - -
Intelligent Technology China of electron production, software
Co., Ltd.(CIMC Tech) and system
49 CIMC Taicang Corporation Jiangsu, RMB 90,000,000.00 Research and development, RMB 90,000,000.00 100.00% 100.00% Yes - -
refrigeration equipment China production and sale of reefer
logistics Co., Ltd.(TCCRC) container and special container
50 Hunan CIMC Bamboo Corporation Hunan, RMB 28,000,000.00 Manufacturing and sale of bamboo RMB 28,000,000.00 100.00% 100.00% Yes - -
Industry Development China and wood product
Co., Ltd.(HNW)
51 CIMC Jidong Corporation Hebei, RMB 70,000,000.00 Sale of car and car components RMB 42,000,000.00 60.00% 75.00% Yes Note 6 -
(Qinhuangdao) Vehicles China and parts
Manufacture Co.,
Ltd(QHDV)
52 CIMC Energy Chemical Corporation Guangdong, RMB 5,000,000.00 Design and development projects RMB 5,000,000.00 100.00% 100.00% Yes - -
Engineering technology China for energy, chemical food related
Co., Ltd. equipment; contractor techniques
transfer
151
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
53 CIMC Management and Corporation Guangdong, RMB 50,000,000.00 design of marketing activities scheme RMB 50,000,000.00 100.00% 100.00% Yes - -
Training(Shenzhen) China organization of academic and
Co., Ltd. commercial conference and
exhibition
54 Yangzhou Lijun Industry Corporation Jiangsu, RMB 70,000,000.00 Production and sales of mechanical RMB 70,000,000.00 100.00% 100.00% Yes - -
and Trade Co., Ltd. China equipments and relevant components
( ―Yangzhou Lijun‖ ) and parts; technical advisory and other
service
55 Yangzhou Taili Special Corporation Jiangsu, RMB 70,000,000.00 Design, manufacturing and maintenance RMB 70,000,000.00 100.00% 100.00% Yes - -
Equipment Co., Ltd. China of containers, board square cabin
( ―Yangzhou Taili‖ ) and relevant components and parts;
relevant advisory and service
56 Yantai CIMC Marine Corporation Shandong, RMB 150,000,000.00 Research and development of RMB 150,000,000.00 100.00% 100.00% Yes - -
Engineering Academe China marine operation platform and
Co., Ltd. other marine engineering service
(―MEA‖)
57 Shanghai Lifan Container Corporation Shanghai, RMB 1,000,000.00 Refitting and maintenance of RMB 420,000.00 42.00% 60.00% Yes 550 -
Service Co., Ltd. China containers; providing containers
( ―Shanghai Lifan‖ ) information system management and
advisory service
58 CIMC Wood Development Corporation Guangdong, RMB 150,000,000.00 Development, production and sales RMB 150,000,000.00 100.00% 100.00% Yes - -
Co., Ltd. China of wood products for various modern
( ―CIMCWD‖ ) transportation equipment
152
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(i) Domestic subsidiaries (continued):
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
59 Shenzhen CIMC Skyspace Corporation Shenzhen, RMB 254,634,066.00 Real estate development RMB 254,634,066.00 90.00% 90.00% Yes Note 2 -
Real Estate Development China
Co., Ltd (CIMC Tianyu)
60 Yangzhou CIMC grand space Corporation Jiangsu, RMB 25,000,000.00 Real Estate Development, RMB 23,500,000.00 94.00% 94.00% Yes Note 2 -
Real Estate Development China sales and leasing
Co., Ltd (CIMC Haoyu)
Note IV. 1(4)
61 Jiangmen CIMC skyspace Corporation Guangdong, RMB 30,000,000.00 Real estate development, projects RMB 15,000,000.00 90.00% 90.00% Yes Note 2 -
Real Estate China sale of decoration
Co.,Ltd. (―Jiangmen Dichan‖) and building materials
Note IV. 1(4)
62 Ningbo Runxin Container Corporation Ningbo RMB 5,000,000.00 Cleaning and repair of containers, RMB 3,000,000.00 60.00% 60.00% Yes （528） -
Co., Ltd China stockpiling, vanning and devanning
service.
63 Chengdu CIMC Vehicle Corporation Sichuan RMB 60,000,000.00 Development, production and sale of RMB 48,000,000.00 80.00% 80.00% Yes Note 6 -
Co., Ltd China various special-use vehicles, as well as
(―CD Vehicle‖) Warehouse equipment
64 CIMC Finance Company Corporation Guangdong RMB 500,000,000.00 Providing financial service RMB 500,000,000.00 100.00% 100.00% Yes - -
（‖Finance Company‖） China
65 Shenzhen CIMC Investment Corporation Shenzhen RMB 75,000,000.00 Investment, sale and leasing RMB 75,000,000.00 100.00% 100.00% Yes - -
Holding company China of containers and container property
(―SZ Investment Holding‖)
66 Zhumadian CIMC Huajun Corporation Henan RMB 10,000,000.00 Sales and repair of RMB 8,000,000.00 80.00% 80.00% Yes Note 6 -
Vehicle Trading Co.,Ltd China various vehicles, as well
(―HJQM‖ ) as relevant components
and parts
153
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(ii) Overseas Subsidiaries
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
67 Zhumadian CIMC Huajun Corporation Henan RMB 20,000,000.00 casting manufacturing for RMB 20,000,000.00 80.00% 100.00% Yes Note 6 -
Casting Co. Ltd.(HJCAST) China Vehicle and coal mining machinery
68 Ocean Engineering Corporation Shanghai RMB 50,000,000.00 Design and research of RMB 50,000,000.00 100.00% 100.00% Yes - -
Design & Research China marine operation platform
Institute of CIMC and other ocean engineering
(SHOE)
69 Shenzhen CIMC Corporation Shenzhen RMB 60,000,000.00 Equity investment RMB 60,000,000.00 100.00% 100.00% Yes - -
Investment China investment management
Co., Ltd (SZ Investment)] and related investment business
70 Shenzhen Sky Capital Corporation Shenzhen RMB 90,000,000.00 Equity investment RMB 90,000,000.00 100.00% 100.00% Yes - -
Co., Ltd(SESKYC) China investment management
and related investment business
71 CIMC Holdings
(B.V.I.) Limited British Virgin USD 34,001.00 Investment USD 34,001.00 100.00% 100.00% Yes - -
(CIMC BVI) Islands
72 CIMC Tank Equipment Hong Kong HKD 4,680,000.00 Investment HKD 4,680,000.00 100.00% 100.00% Yes - -
Investment Holdings Co., Ltd.
73 CIMC-SMM Vehicle (Thailand) Thailand Baht 260,000,000.00 Production and operation of Baht 213,200,000.00 82.00% 82.00% Yes 10,823 -
CO., LTD. (Thailand V) various special vehicles
74 CIMC Vehicle Investment Hong Kong USD 50,000.00 Investment USD 40,000.00 80.00% 100.00% Yes Note 6 -
Holding Co., Ltd.
(CIMC Vehicle)
75 CIMC Europe BVBA Belgium EUR 18,550.00 Investment EUR 18,550.00 100.00% 100.00% Yes - -
( ―BVBA‖ )
154
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(ii) Overseas Subsidiaries
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Registration original original RMB000 RMB000
Name place currency Business scope currency
76 China International Hong Kong HKD 2,000,000.00 Investment HKD 2,000,000.00 100.00% 100.00% Yes - -
Marine Containers
(Hong Kong) Limited
( ―CIMC Hong Kong‖ )
77 CIMC Burg B.V. Holland EUR 60,000,000.00 Investment EUR 48,000,000.00 80.00% 80.00% Yes Note 3 Note 3
( ―BV‖ )
78 Tacoba Forestry Consultant Forestry N.V Suriname SF 3,000,000.00 Sale of wood SF 3,000,000.00 100.00% 100.00% Yes - -
( ―Tacoba‖ )
79 Charm Wise Limited Hong Kong USD 1.00 Investment USD 1.00 100.00% 100.00% Yes - -
( ―Charm Wise‖ )
80 Gold Terrain Assets Limited British Virgin USD 1.00 Investment USD 1.00 100.00% 100.00% Yes - -
( ―GTA‖ ) Islands
81 Full Medal British Virgin USD 50,000.00 Investment USD 39,110.00 78.22% 100.00% Yes Note 1 -
Holdings Ltd. Islands
(―Full Medal‖)
82 Charm Ray Holdings Limited Hong Kong HKD 1.00 Investment HKD 0.78 78.22% 100.00% Yes Note 1
( ―Charm Ray‖ )
83 Charm Beat British Virgin USD 1.00 Investment USD 1.00 100.00% 100.00% Yes - -
Enterprises Limited Islands
( ―Charm Beat‖ )
84 Sharp Vision Hong Kong HKD 1.00 Investment HKD 1.00 100.00% 100.00% Yes - -
Holdings Limited
( ―Sharp Vision‖ )
85 Sound Winner British Virgin USD 10,000.00 Investment USD 7,822.00 78.22% 100.00% Yes Note 1 -
Holdings Limited Islands
( ―Sound Winner‖ )
155
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(1) Subsidiaries obtained through establishment or business combination (continued)
(ii) Overseas Subsidiaries (continued)
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Registration original original RMB000 RMB000
Name place currency Business scope currency
86 Grow Rapid Limited Hong Kong HKD 1.00 Investment HKD 1.00 100.00% 100.00% Yes - -
( ―Grow Rapid‖ )
87 Powerlead Holding Ltd. British Virgin USD 10.00 Investment USD 10.00 100.00% 100.00% Yes - -
( ―Powerlead‖ ) Islands
88 Cooperatie Vela U.A. Holland EUR 18,000.00 Investment EUR 14,080.00 78.22% 100.00% Yes Note 1 -
89 Vela Holding B.V. Holland EUR 18,000.00 Investment EUR 14,080.00 78.22% 100.00% Yes Note 1 -
90 CIMC Financial Hong Kong HKD 500,000.00 Finance Lease HKD 500,000.00 100.00% 100.00% Yes - -
Leasing (HK) Ltd
(―Financial Leasing‖)
91 CIMC Offshore Hong Kong HKD 342,860,173.00 Investment HKD 211,766,773.00 61.76% 61.76% Yes Note 5 Note 5
Holdings Limited
( “CIMC Offshore” )
156
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(2) The Group does not have subsidiaries obtained through combination under common control.
(3) Subsidiaries acquired through combinations under non-common control:
(i) Domestics Subsidiaries
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Registration original original RMB000 RMB000
Name place currency Business scope currency
1 Luoyang CIMC Lingyu Corporation Henan, RMB 60,000,000.00 Production and sales of passenger RMB 36,000,000.00 60.00% 75.00% Yes Note 6 -
Automobile CO., LTD. China car, tank car; machining; operation
(LYV) of import and export business
2 Wuhu CIMC RuiJiang Corporation Anhui, RMB 100,000,000.00 Development, production and sales RMB 60,000,000.00 60.00% 75.00% Yes Note 6 -
Automobile CO LTD China of various special vehicles, ordinary
(WHVS) mechanical products and metal
structure parts
3 Liangshan Dongyue CIMC Corporation Shandong, RMB 90,000,000.00 Production and sales of mixing RMB 54,000,000.00 60.00% 75.00% Yes Note 6 -
Vehicle Co., Ltd. China truck, special vehicle and
(LSDYV) components and parts
4 Qingdao CIMC Container Corporation Shandong, USD 27,840,000.00 Manufacture and repair of container, USD 27,840,000.00 100.00% 100.00% Yes - -
Manufacture Co., Ltd China processing and manufacture of various
(QDCC) mechanical parts, structures and
equipment
5 Qingdao CIMC Reefer Corporation Shandong, USD 39,060,000.00 Manufacture and sale of refrigeration USD 39,060,000.00 100.00% 100.00% Yes - -
Container Manufacture China and heat preservation device of reefer
Co., Ltd.(QDCRC) container, refrigerator car and heat
preservation car; providing relevant technical
advisory and maintenance service
6 Tianjin CIMC North Corporation Tianjin, USD 15,469,300.00 Manufacture and sale of container USD 15,469,300.00 100.00% 100.00% Yes - -
Ocean Container China as well as vehicle, ship, equipment
Co., Ltd.(TJCIMC) and steel structure specially used
for container; warehousing and after
sales service for container
157
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(3) Subsidiaries acquired through combinations under non-common control (continued):
(i) Domestics Subsidiaries (continued)
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
7 Shanghai CIMC Baowell Corporation Shanghai, USD 28,500,000.00 Manufacture and sale of container USD 27,000,900.00 94.74% 100.00% Yes 17,942 -
Industries Co. Ltd China as well as relevant technical advisory
(SBWI)
8 CIMC Vehicle (Shandong) Corporation Shandong, RMB 18,930,100.00 Development and manufacture of RMB 15,144,080.00 69.61% 87.01% Yes Note 6 -
Co. Ltd.(KGR) China refrigerator car, tank car, trailer, box car,
special vehicles and various series
products
9 Zhangzhou CIMC Corporation Fujian, USD 23,000,000.00 Manufacture and sale of container USD 23,000,000.00 100.00% 100.00% Yes - -
Container Co., Ltd. China as well as relevant technical advisory
(ZZCIMC)
10 Yangzhou CIMC Corporation Jiangsu, RMB 294,234,000.00 Development, production and sales of RMB 235,387,200.00 80.00% 100.00% Yes Note 6 -
Tong Hua Special Vehicles China various special-use vehicles, refitting
Co., Ltd. (YZTH) vehicles, special vehicles, trailer
series as well as relevant components
and parts
11 Zhumadian CIMC Corporation Henan, RMB 85,340,000.00 Refitting of special vehicles, RMB 68,272,000.00 80.00% 100.00% Yes Note 6 -
Huajun Vehicle Co. Ltd. China sales of trailer and fittings;
(HJCIMC) sales of vehicle-related materials
12 Zhangjiagang CIMC Corporation Jiangsu, RMB 144,862,042.01 Development, manufacture and RMB 113,311,089.26 78.22% 100.00% Yes Note 1 -
Sanctum Cryogenic China installation of deep freezing unit,
Equipment Machinery petrochemical mechanical equipment,
Co., Ltd. (SDY) tank container, pressure vessel
Note IV.1(4)
13 Donghwa Container Corporation Shanghai, USD 4,500,000.00 Container cargo devanning, vanning; USD 3,150,000.00 70.00% 70.00% Yes 26,759 -
Transportation China canvass for cargo; allotment and
Service Co., Ltd. (DHCTS) customs declaration; container
maintenance and stockpiling; supply
of components and parts
158
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(3) Subsidiaries acquired through combinations under non-common control (continued):
(i) Domestics Subsidiaries (continued)
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
14 Yangzhou Tonglee Corporation Jiangsu, USD 24,500,000.00 Manufacture and sale of reefer USD 24,500,000.00 100.00% 100.00% Yes - -
Reefer Container China container and special container;
Co., Ltd. (TLC) providing relevant technical advisory
and maintenance service
15 Qingdao Kooll Corporation Shandong, RMB 20,000,000.00 Container warehousing, stockpiling, RMB 16,000,000.00 80.00% 80.00% Yes 1,090 188
Logistics Co., Ltd China devanning, vanning, load and unload,
(QDHFL) cleaning, maintenance; goods processing
16 Enric (Bengbu) Compressor Corporation Anhui, HKD 60,808,385.00 Manufacturing base of NG compressor HKD 47,564,318.74 78.22% 100.00% Yes Note 1 -
Co.,Ltd. China and related products
(Enric Bengbu)
Note IV.1(4)
17 Shijiazhuang Enric Corporation Hebei, USD 7,000,000.00 Manufacturing pressure vessel USD 5,475,400.00 78.22% 100.00% Yes Note 1 -
Gas Equipment China
Co., Ltd.
(―Shijiazhuang Enric‖)
Note IV.1(4)
18 Enric (Lang fang ) Corporation Hebei, HKD 50,000,000.00 Manufacturing and exploiting HKD 39,110,000.00 78.22% 100.00% Yes Note 1 -
Energy Equipment China Energy Equipment integration
integration Co.,Ltd.
(Langfang Enric)
Note IV.1(4)
19 Enric ( Beijing )Energy Corporation Beijing, HKD 40,000,000.00 Manufacturing and exploiting HKD 31,288,000.00 78.22% 100.00% Yes Note 1 -
TechnologyCo.,Ltd China Energy Equipment integration
(Beijing Enric)
Note IV.1(4)
20 CIMC Enric (Jingmen) Corporation Hubei, HKD 50,000,000.00 Sales of chemical and gas machineries HKD 39,110,000.00 78.22% 100.00% Yes Note 1 -
Energy Equipment China and equipments as well as after sales
Co., Ltd. services; research and development
159
2011 Annual Report
Note IV.1(4) of energy conservation techniques
160
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(3) Subsidiaries acquired through combinations under non-common control (continued):
(i) Domestics Subsidiaries (continued)
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Entity Registration original original RMB000 RMB000
Name type place currency Business scope currency
21 Jingmen Hongtu Special Corporation Hubei, RMB 20,000,000.00 Development and sales of flight RMB 12,516,000.00 62.58% 80.00% Yes Note 1 -
Aircraft manufacturing China vehicle manufacturing techniques,
Co., Ltd design, production and sales of
Note IV.1(4) specialized motor vehicles, tanks
and pressure vessel
22 Ningguo CIMC Wood Corporation Anhui USD 1,300,,000.00 Construction of offshore project USD 780,000.00 60.00% 60.00% Yes 4,249 -
Co., Ltd. China and supplime
( ―NGCIMCW‖ )
23 Yantai CMIC Raffles Corporation Shandong RMB 1,042,690,000.00 Construction of dock; Designation, RMB 570,455,699.00 54.71% 54.71% Yes Note 5 Note 5
offshore Ltd China production of ship; production
(YCRO) of equipment of pressure and offshore
oil platform
24 Yantai CIMC Raffles Corporation Shandong RMB 125,980,000.00 Construction of ship aswell as component; RMB 68,923,658.00 54.71% 54.71% Yes Note 5 Note 5
ship Co., Ltd China Sales of container and offshore oil platform,
(―YCRS‖) channel and steel production
25 Haiyang CIMC Raffles Corporation Shandong RMB 200,000,000.00 Construction of dock; Designation, RMB 109,420,000.00 54.71% 54.71% Yes Note5 Note 5
offshore Ltd. China production of ship; production
(―HCRO‖) of equipment of pressure and offshore
oil platform
26 Longkou CIMC Raffles Corporation Shandong RMB 290,000,000.00 Construction of offshore project RMB 158,659,000.00 54.71% 54.71% Yes Note 5 Note 5
offshore engineering China and suppliment
Co., Ltd (―LCRO‖)
27 Shandong Master Special Corporation Shandong RMB 22,000,000.00 manufacture and sales of mixing truck, RMB 13,200,000.00 60.00% 60.00% Yes Note 6 -
Vehicle Manufacturing China special vehicle and components and parts
Co., Ltd (―SDMV‖)
28 CIMC Rolling Stock Corporation Australia AUD 50,000.00 Sales of vehicles AUD 50,000.00 100.00% 100.00% - - -
Australia Pty Ltd.
161
2011 Annual Report
(CIMC Aus)
162
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(3) Subsidiaries acquired through combinations under non-common control (continued):
(ii) Overseas Subsidiaries
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Registration original original RMB000 RMB000
Name place currency Business scope currency
29 Enric Energy Equipment Cayman Islands HKD 120,000,000.00 Investment holding HKD 93,864,000.00 78.22% 100.00% Yes Note 1 -
Holdings Limited
(Enric)
30 Burg Industries B.V. Holland EUR 3,403,351.62 Investment EUR 2,722,681.30 80.00% 100.00% Yes Note 3 Note 3
31 Holvrieka Holding B.V. Holland EUR 12,000,000.00 Investment EUR 9,386,400.00 78.22% 100.00% Yes Note 1 -
32 Holvrieka Ido B.V. Holland EUR 136,200.00 Sales of tank equipment EUR 106,535.64 78.22% 100.00% Yes Note 1 -
33 Holvrieka Nirota B.V. Holland EUR 680,670.32 Production, assembly and EUR 532,420.32 78.22% 100.00% Yes Note 1 -
sale of tank equipment
34 Noordkoel B.V. Holland EUR 500,000.00 Sales of tank equipment EUR 391,100.00 78.22% 100.00% Yes Note 1 -
35 Beheermaatschappij Holland EUR 453,780.22 Investment EUR 453,780.22 80.00% 100.00% Yes Note 3 Note 3
Burg B.V.
36 Burg Carrosserie B.V. Holland EUR 90,756.04 Production of road transport vehicle EUR 72,604.83 80.00% 100.00% Yes Note 3 Note 3
37 Exploitatiemaatschappij Holland EUR 79,411.54 Trade, financing and leasing EUR 63,529.63 80.00% 100.00% Yes Note 3 Note 3
Intraprogres B.V of road transport vehicle
38 Hobur Twente Holland EUR 226,890.11 Production and sale of oil EUR 181,512.09 80.00% 100.00% Yes Note 3 Note 3
B.V. and components and parts
39 Burg Service Holland EUR 250,000.00 Assembly and repair of road EUR 200,000.00 80.00% 100.00% Yes Note 3 Note 3
B.V. transport vehicle and tank
equipment
40 LAG Trailers N.V. Belgium BEF 30,000,000.00 Manufacturing trailer BEF 24,000,000.00 80.00% 100.00% Yes Note 3 Note 3
41 Holvrieka N.V. Belgium BEF 40,000,000.00 Manufacturing tank equipment BEF 31,288,000.00 78.22% 100.00% Yes Note 1 -
163
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(3) Subsidiaries acquired through combinations under non-common control (continued):
(ii) Overseas Subsidiaries (continued)
Amount of loss
Amount for current
Actual investment and of period attributable
actual net amount of Shareholding Voting minority to minority
Investment of the percentage rights Within interest at shareholders
company at the end consolidation the end of that allocated to
Registered capital of the year scope the year minority interests
Currency Amount of Currency Amount of
Registration original original RMB000 RMB000
Name place currency Business scope currency
42 Immoburg N.V. Belgium BEF 10,000,000.00 Manufacturing road transport vehicle BEF 8,000,000.00 80.00% 100.00% Yes Note 3 Note 3
43 Holvrieka Danmark A/S Denmark DKr 1,000,000.00 Manufacturing tank equipment DKr 782,200.00 78.22% 100.00% Yes Note 1 -
44 Direct Chassis LLC USA USD 10,000,000.00 Manufacturing and sales of USD 6,000,000.00 60.00% 100.00% Yes 15,008 -
( ―DCEC‖ ) special vehicles
45 CIMC TGE Gas investment Luxemburg EUR 50,000.00 Investment holding EUR 30,000.00 60.00% 60.00% Yes Note 4 Note 4
SA (―TGE SA‖)
46 TGE Gas Engineering GmbH Germany EUR 1,000,000.00 Provide EP+CS(Design, Purchase and EUR 600,000.00 60.00% 100.00% Yes Note 4 Note 4
(―TGE Gas‖) Construction Supervision) or other
technical project services in LNG,LPG
and storage and disposal of other
47 CIMC Raffles Offshore Singapore SGD 624,541,970.96 Production of various ship for offshore SGD 341,686,912.31 54.71% 54.71% Yes Note 5 Note 5
(Singapore) Limited oil and gas, including jack-up drilling
(―Raffles‖) platforms, semi-submersible drilling
Platforms, FPSOs,FSOs
48 CIMC Raffles Investments Hongkong HKD 2.00 Investment HKD 1.09 54.71% 54.71% Yes Note 5 Note 5
Limited China
49 CIMC Raffles Leasing Pte Ltd. Singapore SGD 2.00 Leasing of marine ship SGD 1.09 54.71% 54.71% Yes Note 5 Note 5
50 Caspian Driller Pte. Ltd. Singapore USD 30,000,000.00 Leasing of marine ship USD 16,413,000.00 54.71% 54.71% Yes Note 5 Note 5
51 Technodyne International Limited Singapore GBP 1.00 Research and development of GBP 0.60 60% 60% Yes Note 4 Note 4
(―Technodyne‖) Energy equipment
52 Gadidae AB. Sweden SEK 1000.00 Investment holding SEK 547.10 54.71% 54.71% Yes Note 5 Note 5
53 Perfect Victor Hongkong USD 1.00 Investment holding USD 1.00 100.00% 100.00% Yes - -
Investments Limited China
(―Perfect Victor‖)
164
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. COMPANY STATUS OF INVESTMENT IN SUBSIDIARIES (CONTINUED)
(3) Subsidiaries acquired through combinations under non-common control (continued):
(ii) Overseas Subsidiaries (continued)
Note 1 Enric and its subsidiaries‘ minority interests amounted to RMB 743,446,000.
Note 2 CIMC Tianyu and its subsidiaries‘ minority interests amounted to RMB 82,598,000.
Note 3 Burg and its subsidiaries‘ minority interests amounted to RMB 102,212,000, against which RMB14,408,000 of loss attributed to minority shareholders was allocated.
Note 4 TGE and its subsidiaries‘ minority interests amounted to RMB 70,931,000, against which RMB1,982,000 of loss attributed to minority shareholders was allocated.
Note 5 CIMC Offshore, Raffles and its subsidiaries‘ minority interests amounted to RMB 753,070,000, against which RMB511,276,000 of loss attributed to minority shareholders was allocated.
Note 6 HI and its subsidiaries‘ minority interests amounted to RMB 799,399,000.
(4) Subsidiaries whose shareholding held by the Company differs from their voting rights
(i) Enric Energy Equipment Holdings Limited (Enric)
The ordinary shares that the Company hold in Enric take 56.59% of Enric‘s outstanding ordinary shares. Accompany with the convertible
preferential shares that the Company hold, the Company‘s shareholding in Enric changed to 78.22%. Enric‘s issued convertible preferential
shares enjoy the same rights for dividend distribuftion as ordinary shares while have no voting rights. Therefore the Company‘s shareholding
percentage in Enric is 78.22% while the voting right is 56.59%.
(ii) Except for the subsidiary mentioned above in (i), the Company‘s voting rights in its indirect-owned subsidiaries which are held by the
Company‘s non-wholly owned subsidiaries were presented according to the voting rights of its subsidiaries.
2. There are no entities set up for special purpose or operating entities controlled through entrusted operation and lease.
3. Changes in the scope of consolidation for the consolidation financial statements
Newly purchared (see Note IV.6) and established subsidiaries in the year change the scope of the consolidation financial statements.
165
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
4. Subsidiaries newly included in the scope of consolidation and excluded
from the scope of consolidation for the current year
(1) Subsidiaries newly included in the scope of consolidation, special purpose entity,
business entities that having control through being enstusted to manage or leasing
Net asset as at Net
Basis to identify 31 December profit/(loss)
Company Name control Notes 2011 for 2011
Gadidae AB Over half of (77,419) (113,853)
Technodyne voting rights in IV.6 9,960 (4,989)
Perfect Victor the Board of 123,519 123,519
HJCAST directors 4,443 (15,557)
SHOE 50,000 -
SZ investment 60,053 53
SESKYC 90,079 79
Others Note 1 34,159 (382)
Note 1: Other subsidiaries newly included in the scope of consolidation mainly
comprised of Qingdao Dechangyuan Transportation Co., Ltd., Yangzhou
Dechangyuan Transportation Co., Ltd. and other 9 subsidiaries.
(2) There was no significant subsidiary, special purpose entity, business entity that
having control through being enstusted to manage or leasing that was excluded from
the scope of consolidation for the current year.
5. There is no acquisition through combination under common control for
the current year (2010: Nil).
166
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
6. The Group’s acquisition through combination not under common control
for the current year
(1) Technodyne
Acquiree Goodwill amount Calculation method of goodwill
Technodyne RMB 30,371,000 TGE GAS, the Company‘s subsidiary,
acquired 100% of the equity interests of
Technodyne, the fair value of the
identifiable net assets of which at the
acquisition date amounted to EUR
2,013,000 (RMB 18,189,000). The excess
amount of acquisition cost over fair value
amounting to EUR 3,360,000 (RMB
30,371,000) was recognised as goodwill.
TGE Gas, a subsidiary of the Company (60.00% equity interests held by the
Company), paid EUR 5,373,000 (RMB 48,560,000) as an acquisition cost for 100%
of the equity interests of Technodyne on 2 February 2011.
Technodyne was incorporated in the United Kingdom of Great Britain in July 1997
and located in Eastleigh. Technodyne mainly engages in research and development of
energy and chemical equipment. Before the acquisition, the controlling parties of
Technodyne are Punj Lloyd Pte Limited, Brian John Thompsin and John Michael
Haworth.
Financial information of Technodyne is as follows:
Net operating cash
Sales from acquisition Net loss from outflow flows from
date to 31 December acquisition date to 31 acquisition date to 31
Amount 2011 December 2011 December 2011
RMB‘000 23,155 4,989 14,370
167
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
6. The Group’s acquisition through combination not under common control
for the current year (continued)
(1) Technodyne (continued)
Acquiree‘s identifiable assets and liabilities:
Items 2 February 2011
Carrying amount Fair value
Cash at bank and on hand 2,494 2,494
Accounts receivable 3,055 3,055
Other receivables and prepayments 13,575 13,575
Fixed assets and construction in progress 389 389
Intangible assets - 6,914
Short-term loans (596) (596)
Accounts payable and bills payable (3,561) (3,561)
Other payables and accrued expenses (1,600) (1,600)
Taxes payables (264) (264)
Deferred tax liabilities - (2,217)
Identifiable net assets total 13,492 18,189
For the above identifiable assets which have an active market, the quoted prices in the
active market are used to establish their fair values; if there is no active market, their
fair values are estimated based on the market price of the same or similar types of
assets which have an active market; if there is no active market for even the same
asset or similar types of assets, valuation techniques will be used to determine the fair
value.
For the above identifiable liability, the payable amount or the present value of the
payable amount is its fair value.
168
2011 Annual Report
IV. BUSINESS COMBINATIONS AND THE CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
7. There is no loss of control of subsidiaries through significant sales of
interests of the Group for the current year.
8. There is no reverse acquisition of the Group for the current year.
9. There is no consolidation by merger of the Group for the current year.
10. Exchange rate for foreign operating entities’ major financial statement
items
Benchmark rate
Average exchange rate on reporting date
2011 2010 2011 2010
USD 6.4503 6.7465 6.3009 6.5897
EUR 9.0377 8.8378 8.1625 8.7979
HKD 0.8287 0.8682 0.8107 0.8477
JPY 0.0810 0.0777 0.0811 0.0810
169
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CASH AT BANK AND ON HAND
2011 2010
Original Exchange RMB Original Exchange RMB
currency Rate equivalent currency Rate equivalent
‘000 ‘000 ‘000 ‘000
Cash on hand
RMB 1,187 1.0000 1,187 1,866 1.0000 1,866
USD 51 6.3009 321 45 6.5897 298
HKD 320 0.8107 259 63 0.8477 54
JPY 197 0.0811 16 678 0.0810 54
AUD 1 6.4093 6 12 6.7050 83
EUR 76 8.1625 620 49 8.7979 434
Others 6 104
Subtotal 2,415 2,893
----------- -----------
Deposits with banks
RMB 3,352,210 1.0000 3,352,210 1,643,202 1.0000 1,643,202
USD 393,243 6.3009 2,477,785 220,781 6.5897 1,454,878
HKD 295,813 0.8107 239,816 151,076 0.8477 128,071
JPY 141,873 0.0811 11,506 426,769 0.0810 34,562
AUD 21,299 6.4093 136,512 7,636 6.7050 51,200
EUR 44,062 8.1625 359,656 45,072 8.7979 396,537
Others 77,279 33,068
Subtotal 6,654,764 3,741,518
----------- -----------
Other monetary funds
RMB 1,118,610 1.0000 1,118,610 844,869 1.0000 844,869
USD 1,958 6.3009 12,337 10,079 6.5897 66,416
Subtotal 1,130,947 911,285
----------- -----------
Total 7,788,126 4,655,696
As at 31 December 2011, restricted cash at bank and on hand of the Group amounted
to RMB1,224,873,000 (2010: RMB 858,281,000). Refer to Note V.22 for details.
As at 31 December 2011, Finance Company, the subsidiary of the Group, had deposit
with central bank and deposits with banks and non-bank financial institutions
totalling of RMB 3,340,071,000 (2010: RMB 1,438,988,000). Finance Company is a
finance institution authorised by the People‘s Bank of China.
170
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2. FINANCIAL ASSETS HELD FOR TRADING
(1) Classification
Note 2011 2010
1. Equity securities
investments held for trading 143,692 393,491
2. Derivative financial assets
- forward contract (3) 32,691 119,069
3. Hedging instrument 9,751 13,101
Total 186,134 525,661
(2) There is no material restriction of the investment in financial assets held for trading.
(3) Details of derivative financial assets held for trading
As at 31 December 2011, the Group had certain open forward contracts (mainly
unsettled forward contracts) denominated in U.S. dollars. The nominal value of these
contracts amounted to USD 457 million. The Group had other unsettled forward
contracts of Japanese Yuan, Euro, Norwegian Krone and Australian Dollar. The
nominal value of these amounted to JPY 1,091 million, EUR 9,5 million, NOK 126
million and AUD 8.63 million respectively. Pursuant to these forward contracts, the
Group and the Company are required to buy / sell foreign currencies, such as USD,
Euro, Japanese Yuan, and etc. of contracted nominal value at agreed rates in
exchange of RMB at the contract settlement dates. These forwards contracts will be
settled on a net basis by comparing the market rates at the settlement dates and the
agreed rates. The settlement dates of the aforesaid forwards contracts range from 6
January 2012 to 17 December 2012.
As at 31 December 2011, the Group recognised the aforesaid forwards contracts in
their fair values of RMB 32,691,000 as held-for-trading financial assets and RMB
4,816,000 as held-for-trading financial liabilities. Transaction costs on realisation
have not been considered when calculating the fair values.
171
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3. BILLS RECEIVABLE
(1) Classification of bills receivable
2011 2010
Bank acceptance bills 924,183 396,670
Commercial acceptance bills 106,345 111,915
Total 1,030,528 508,585
All of the above bills receivable are due within one year.
No amount due from shareholders who hold 5% or more of the voting rights of the
Company is included in the above balance of bills receivable.
(2) As at the year end, the Group had no pledged bills receivable.
(3) At 31 December 2011, there were no amount transferred to accounts receivable
from acceptance bills due to non-performance of the issuers by the Group and no
outstanding amount endorsed by the Group.
At 31 December 2011, the outstanding bills receivables endorsed by the Company
are:
Issuer Issuing Date Due date Amount Notes
Baotou Bei Ben 6 September 2011 6 March 2012 8,900 Bank acceptance bill
Heavy-Duty Truck
Co., Ltd.
Guangdong Fuwa Heavy 11 October 2011 11 April 2012 5,000 Commercial acceptance
Industry Co., Ltd. bill
Shaxi Hande Axle 25 November 2011 25 May 2012 5,000 Bank acceptance bill
Co., Ltd.
Guangdong Fuwa Heavy 29 September 2011 29 March 2012 4,000 Bank acceptance bill
Industry Co., Ltd.
Erdos Shengbang 16 September 2011 16 March 2012 3,000 Bank acceptance bill
Decoration Engineering
Co., Ltd.
Total 25,900
172
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. ACCOUNTS RECEIVABLE
(1) Accounts receivable disclosed by customer categories:
Customer Type 2011 2010
Containers group 3,418,813 3,604,026
Trailers group 1,754,595 1,934,155
Tank equipments group 1,497,937 1,175,611
Offshore engineering group 1,152,280 1,242,446
Airport ground facilities group 246,873 247,412
Others 359,836 158,669
Subtotal 8,430,334 8,362,319
Less: provision for bad
and doubtful debts (319,550) (232,483)
Total 8,110,784 8,129,836
(2) An ageing analysis of accounts receivable is as follows:
Category 2011 2010
Within 1 year (inclusive) 7,732,052 7,662,297
1 to 2 years (inclusive) 433,462 542,292
2 to 3 years (inclusive) 169,828 94,341
More than 3 years 94,992 63,389
Subtotal 8,430,334 8,362,319
Less: provision for bad
and doubtful debts (319,550) (232,483)
Total 8,110,784 8,129,836
The ageing is counted starting from the date the accounts receivable is recognised.
173
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. ACCOUNTS RECEIVABLE (CONTINUED)
(3) Accounts receivable disclosed by categories:
2011 2010
Provision for bad and Provision for bad and
Gross carrying amount Gross carrying amount
Category Note doubtful debts doubtful debts
Amount Percentage Amount Percentage Amount Percentage Amount Percentage
RMB000 (%) RMB000 (%) RMB000 (%) RMB000 (%)
Individually significant and Impairment
provided individually (4) 1,107,112 13.13% 174,011 15.72% 121,099 1.44% 44,677 36.89%
Individually significant and Impairment
provided individually (5) 49,777 0.59% 20,547 41.28% 56,718 0.67% 25,232 44.49%
Assessed for impairment collectively *
Containers group (6) 3,405,170 40.40% 3,723 0.11% 3,597,341 43.03% 1,455 0.04%
Trailers group (6) 1,665,282 19.75% 58,587 3.52% 1,827,394 21.85% 92,824 5.08%
Tank equipments group (6) 1,395,742 16.56% 49,374 3.54% 1,168,797 13.98% 59,206 5.07%
Offshore engineering group 247,266 2.93% - - 1,230,957 14.72% - -
Air ground facilities group (6) 234,755 2.78% 12,735 5.42% 247,412 2.96% 8,944 3.62%
Others (6) 325,230 3.86% 573 0.18% 112,601 1.35% 145 0.13%
Subtotal 7,273,445 86.28% 124,992 1.72% 8,184,502 97.89% 162,574 1.99%
Total 8,430,334 100.00% 319,550 3.79% 8,362,319 100.00% 232,483 2.78%
Note*: This category includes accounts receivable individually tested but not impaired.
There were no collaterals that the Group held for accounts receivable that were made impairment aforesaid.
174
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. ACCOUNTS RECEIVABLE (CONTINUED)
(3) Accounts receivable disclosed by categories (continued):
Individually significant items represent accounts receivable with an individual
amount over RMB 10,000,000 (inclusive) or the book value of which account for 5%
(inclusive) of the total accounts receivable in individual financial statements included
in the consolidated financial statement.
The analysis of the Group‘s accounts receivable by original currency is as follows:
Currency 2011 2010
Original Exchange Original Exchange
currency rate Amount currency rate Amount
000 USD000 000 USD000
RMB 2,588,052 1.0000 2,588,052 2,546,871 1.0000 2,546,871
USD 797,360 6.3009 5,024,086 808,506 6.5897 5,327,812
HKD 2,099 0.8107 1,702 20,121 0.8477 17,057
JPY 155,654 0.0811 12,624 53,378 0.0810 4,323
AUD 41,157 6.4093 263,789 4,160 6.7050 27,893
EUR 54,309 8.1625 443,299 45,679 8.7979 401,879
Others - - 96,782 - - 36,484
8,430,334 8,362,319
(4) An analysis of accounts receivable individually significant and impairment
provided individually is as follows:
Provision for bad
Category Amount and doubtful debts Provision rate Reason
Trailers group 62,135 28,408 45.72%
Tank equipments group 102,195 18,246 17.85%
Offshore engineering group 896,587 107,114 11.95%
Airport equipments group 12,119 3,636 30.00%
Others 34,076 16,607 48.74%
Total 1,107,112 174,011 15.72% Note 1
Note 1: Provision was made based on the credit risk assessment of customers and
historical loss experiences.
175
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. ACCOUNTS RECEIVABLE (CONTINUED)
(5) An analysis of accounts receivable individually insignificant but impairment
provided individually is as follows:
Category Amount Provision for Provisio Reason
bad and n rate
doubtful debts
Containers group 13,643 2,735 20.05% Provision is made
Trailers group 27,178 14,079 51.80% based on the estimated
8,426 3,574 42.42% recoverable amount
Offshore engineering group
according to
Others 530 159 30.00% assessment of credit
Total 49,777 20,547 41.28% risk and historical data
(6) An ageing analysis of account receivable assessed for impairment collectively is as
follows:
2011 2010
Amount Percentage Provision Amount Percentage Provision
Ageing (%) for bad and (%) for bad and
doubtful doubtful
debts debts
Within 1 year 6,649,283 78.87% 34,096 6,432,794 76.93% 62,713
1 to 2 years 247,577 2.94% 13,569 383,213 4.58% 22,117
2 to 3 years 69,382 0.82% 17,390 81,648 0.98% 21,854
More than 3 years 59,937 0.71% 59,937 55,890 0.67% 55,890
Total 7,026,179 83.34% 124,992 6,953,545 83.16% 162,574
The ageing is counted starting from the date the account receivable is recognised.
(7) The recovery of provision within this year
There were no accounts receivable for which a full provision or a significant
provision was made in previous years while were recovered in full or in significant
amount during the year (2010: Nil).
(8) Actual written-off of accounts receivable within this year
There were no material actual written-off of accounts receivable during the year
(2010: Nil).
176
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. ACCOUNTS RECEIVABLE (CONTINUED)
(9) Accounts receivable due from the five biggest debtors of the Group are as follows:
Relationship Percentage in
with the Amount total accounts
Company Name company RMB000 Ageing receivable (%)
1. A.P. Moller-Maersk A/S None 1,055,530 Within 1 year 12.52%
2. Soratu Drilling LLC None 532,677 Within 1 year 6.32%
3. United Arab Shipping Co. None 485,378
Kuwait Within 1 year 5.76%
4. Baerfield Drilling LLC None 363,910 Within 1 year 4.32%
5. Cronos Containers Ltd. None 310,480 Within 1 year 3.68%
Total - 2,747,975 ─ 32.60%
The total amount of the Group‘s top 5 accounts receivable at 31 December 2010 was
RMB 2,018,771,000, 24.14% of the total accounts receivable.
(10) Accounts receivable due from shareholders who hold 5% or more of the voting
rights of the Company
No amount due from shareholders who hold 5% or more of the voting rights of the
Company is included in the above balance of accounts receivable (2010:Nil).
(11) Accounts receivable due from related parties
The Group‘s accounts receivable due from related parties amount to RMB
109,096,000(2010: RMB 89,035,000), accounting for 1.30% of the total accounts
receivable (2010: 1.06%).
Percentage in
total accounts
receivable
Company name Relationship with the Company Amount (%)
Sumitomo Corporation Group
（‖Sumitomo‖） Minority shareholders of subsidiaries 9,181 0.11%
Xiamen Hongji Container
Development Co., Ltd. (―XMHJ‖) Associate company 86,595 1.03%
GXNFWL Associate company 4,261 0.05%
Shaanxi Heavy Duty Automobile Co.,
Ltd(―SXHDA‖) Minority shareholders of subsidiaries 9,059 0.11%
Total 109,096 1.30%
177
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. ACCOUNTS RECEIVABLE (CONTINUED)
(12) Derecognition of accounts receivable due to transferring of financial assets
Gain or loss due to
Item Amount derecognition
Derecognition due to soldout 166,790 -
There were no derecognition of accounts receivable due to transferring of financial
assets in the Group as at 31 December 2010.
(13) Amount of assets and liabilities recognised due to the continuing involvement of
securitised accounts receivable
There were no securitised accounts receivable during the year (2010: Nil).
As at 31 December 2011, restricted accounts receivable amounted to RMB
471,026,000 (2010: RMB962,096,000). Refer to Note V.22.
178
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER RECEIVABLES
(1) Other receivables by categories:
Customer Type 2011 2010
Amounts due from related parties 980,115 557,348
Loans 562,343 427,445
Drawback tax receivable 312,888 786,039
Prepayment for land and equipment 86,475 73,336
Deposit 105,533 72,004
Fixed term and secured principle investment 415,000 -
Others 367,742 421,717
Subtotal 2,830,096 2,337,889
Less: provision for bad
and doubtful debts (120,431) (101,617)
Total 2,709,665 2,236,272
Raffles entered into loan agreement with Sea Biscuit International Inc (―Sea
Biscuit‖), whereby the total amount borrowed by Sea Biscuit from Raffles is USD
66,126,000 (RMB 416,651,000) as at 31 December 2011. The repayment is expected
to be settled in cash. As a result, the amount due from Sea Biscuit was recorded as
other receivables by Raffles.
The Group has made provision of RMB 12,602,000 for the amount above as at 31
December 2011.
Raffles completed its acquisition of Gadidae AB (formerly known as Consafe MSV
AB) on 31 January 2011. Since December 2007, Gadidae AB had been making loans
to its associate, Marine Subsea & Consafe (―MSC‖), which amounted to USD
35,625,000 (RMB 224,470,000) as at 31 December 2011. Raffles recognised interest
income according to loan agreement and recorded expenses paid on behalf of MSC
with total amount of USD 10,116,000 (RMB 63,747,000) from 2007 to 31 January
2011.
179
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER RECEIVABLES
(2) The ageing analysis of other receivables is as follows:
Category 2011 2010
Within 1 year (Inclusive) 1,584,992 1,827,466
1 to 2 years (Inclusive) 484,326 253,754
2 to 3 years (Inclusive) 513,136 151,166
More than 3 years 247,642 105,503
Subtotal 2,830,096 2,337,889
Less: provision for bad
and doubtful debts (120,431) (101,617)
Total 2,709,665 2,236,272
The ageing is counted starting from the date the other receivable is recognised.
180
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. OTHER RECEIVABLES (CONTINUED)
(3) Other receivables by categories:
2011 2010
Provision for bad and Provision for bad and
Category Note Amount Percentage doubtful debts Amount Percentage doubtful debts
USD000 (%) Amount Percentage USD000 (%) Amount Percentage
USD000 (%) USD000 (%)
Individually significant other receivables (4) 1,953,906 69.04% 71,176 3.64% 950,622 40.66% 58,574 6.16%
Insignificant other receivables (5) 876,190 30.96% 49,255 5.62% 1,387,267 59.34% 43,043 3.10%
Total 2,830,096 100.00% 120,431 4.26% 2,337,889 100.00% 101,617 4.35%
There were no collaterals that the Group held for other receivables that were made impairment aforesaid.
Individually significant items represent other receivables with an individual amount over RMB 10,000,000 (inclusive) or the book value
of which account for 5% (inclusive) of the total other receivables in individual financial statements included in the consolidated financial
statement.
181
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER RECEIVABLES (CONTINUED)
(4) An analysis of individually significant other receivables assessed for impairment
individually are as follows:
Provision
for bad and
doubtful Provision
Category Amount debts rate Reasons
Individually significant: - -
Capital increment amount due from
subsidiaries 122,438 - - Note 1
Amounts due from associates 455,889 - - Note 1
Receivables arising from transfer of equity
386,385
investment - - Note 1
Receivables arising from purchase of land
20,099 - -
use right Note 1
Receivables arising from financing to third
495,412 12,602 2.54%
parties Note 1
Receivables arising from fixed term and
415,000 - -
secured principle investment
Others 58,683 58,574 99.81% Note 2
Total 1,953,906 71,176 3.64%
Note 1: The estimated risk of loss is relatively low. The provision for bad and
doubtful debts is individually assessed based on the recoverability of
individual balance.
Note 2: Provision was made based on the credit risk assessment of creditors and
historical loss experiences.
(5) An analysis of individually insignificant other receivables but assessed for
impairment recognised individually is as follows:
The Group assessed impairment of the insignificant other receivable and made
provision of impairment of RMB 49,255,000 as at 31 December 2011.
(6) Provision written back or recovered
There were no other receivables for which a full provision or a significant provision
was made in the previous years while were recovered in full or in significant amount
during the year (2010: Nil).
(7) The recovery of other receivables by restructuring within this year
There were no other receivables recovered during the year by means of restructuring.
182
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER RECEIVABLES (CONTINUED)
(8) Actual written-off of other receivables within this year
There were no material actual written-off of other receivables during the year (2010:
Nil).
(9) Other receivables due from the five biggest debtors of the Group are as follows:
Relationship Percentage in
with the Amount total other
Company Name company RMB000 Aging receivables (%)
1. Sea Biscuit None 416,651 1 to 2 years 14.72%
Minority 315,735
2. Leung Kee Holding Ltd. ( ―Leung shareholders of
Kee‖) subsidiaries Within 1 year 11.16%
1 to 3 years and more
3. MSC Associate 288,217 than 3 years 10.18%
4. Agricultural Bank of China
Co., Ltd. Shenzhen Pingshan
Branch None 290,000 Within 1 year 10.25%
5. Shanghai Fengyang Real Estate
Development Co., Ltd (―Shanghai 1to 3 years and more
Fengyang‖) Associate 167,672 than 3 years 5.92%
Total ─ 1,478,275 ─ 52.23%
The Group‘s top 5 other receivables as at 31 December 2010 amounted to
RMB821,398,000, accounting for 35.13% of the total other receivables.
(10) Other receivables due from shareholders who hold 5% or more of the voting rights
of the Company
No amount due from shareholders who hold 5% or more of the voting rights of the
Company is included in the above balance of other receivables.
183
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER RECEIVABLES (CONTINUED)
(11) Other receivables due from related parties
Percentage in
total other
Relationship with the Amount receivables
Company Name company RMB000 (%)
Minority shareholders of
1. P.G.M Holding B.V.(PGM) subsidiaries 122,438 4.33%
2. Shanghai Fengyang Associate 167,672 5.92%
3. Shenzhen Merchant Property Significant shareholder of
Development Co., Ltd(―SZMPD‖) the Group 70,650 2.50%
Minority shareholders of
4. Leung Kee subsidiaries 315,735 11.16%
5. C & C Trucks Co., Ltd. (―C&C
Trucks‖) Associate 10,790 0.38%
6.MSC Associate 288,217 10.18%
7. Others ─ 4,613 0.16%
Total ─ 980,115 34.63%
The Group‘s other receivables due from related parties as at 31 December 2010
amounted to RMB 557,348,000, accounting for 23.84% of total other receivables.
(12) Derecognition of other receivables due to transferring of financial assets
There are no derecognition of other receivables due to transferring of financial assets
during the year (2010: Nil).
(13) Amount of assets and liabilities recognised due to the continuing involvement of
securitised other receivables
There were no securitised other receivables during the year (2010: Nil).
184
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. PREPAYMENTS
(1) Prepayments by category are as follows:
2011 2010
Raw material 1,433,583 1,832,516
Construction Cost 506,620 600,546
Other 87,033 97,472
Subtotal 2,027,236 2,530,534
Less: provision for bad
and doubtful debts (96,740) (97,087)
Total 1,930,496 2,433,447
(2) The ageing analysis of prepayments is as follows:
2011 2010
Amount Percentage Amount Percentage
RMB000 % RMB000 %
Within 1 year (inclusive) 1,577,538 77.82% 2,156,578 85.22%
1 and 2 years (inclusive) 114,381 5.64% 57,744 2.28%
2 and 3 years (inclusive) 36,279 1.79% 280,565 11.09%
More than 3 years 299,038 14.75% 35,647 1.41%
Subtotal 2,027,236 100.00% 2,530,534 100.00%
Less: provision for bad
debts (96,740) 4.77% (97,087) 3.84%
Total 1,930,496 95.23% 2,433,447 96.16%
The ageing is counted starting from the date of recognition of prepayments.
Prepayments aged over 1 year included steel purchase prepayment made to a supplier
in total of RMB 92,140,000 in 2008. The supplier has not delivered the steels within
due date for its own reasons. As at 31 December 2011, the Group had made full
provision of RMB 87,640,000 for unsettled balances.(2010: RMB 87,640,000).
Other than the prepayments mentioned above, the remaining prepayments aged over 1
year mainly represented equipment purchase prepayment for offshore engineering
projects. The prepayments are not settled because the construction period of the
offshore engineering project usually last more than 1 year.
185
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. PREPAYMENTS (CONTINUED)
(3) The Group’s top 5 prepayments are as follows:
Relations Percentage
hip with of the total
the Amount prepayments Time of Reason for
Company name company RMB’000 (%) recognition unsettlement
equipments not
1. THRUSTMASTER OF yet received
EXAS, INC None 169,363 8.35% 2010 to 2011 within due date
equipments not
yet received
2. EMER International Ltd None 106,041 5.23% 2011 within due date
projects not yet
3. Friede & Goldman completed within
Marketing BV None 97,492 4.81% 2011 due date
services not yet
4. OJSC 'Krasnye Barrikady' completed within
Shipyard None 89,548 4.42% 2011 due date
materials not yet
5.Tian Jin Yinze sheet metal received within
Co., Ltd. None 87,640 4.32% 2008 due date
Total ─ 550,084 27.13% - ─
(4) Prepayments due from shareholders who hold 5% or more of the voting rights of
the Company
No amount due from shareholders who hold 5% or more of the voting rights of the
Company is included in the above balance of prepayments (2010: Nil).
186
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
7. INVENTORIES
(1) Inventories by categories
Category 2011 2010
Cost amount Provision Carrying Cost Provision Carrying
for amount amount for amount
diminution diminution
in value in value
Raw materials 4,816,337 (221,791) 4,594,546 5,230,667 (89,821) 5,140,846
Work in progress 1,698,356 (23,079) 1,675,277 1,728,783 (21,816) 1,706,967
Finished goods 3,156,015 (68,790) 3,087,225 3,193,352 (41,032) 3,152,320
Consignment stocks 320,254 (158) 320,096 339,038 (95) 338,943
Spare parts 57,526 - 57,526 43,434 - 43,434
Low-valued consumables 37,097 - 37,097 21,696 - 21,696
Materials in transit 10,920 - 10,920 12,487 - 12,487
Completed properties held for
sale 38,072 - 38,072 25,835 - 25,835
Properties under development 591,783 - 591,783 449,938 - 449,938
Ship under construction 5,078,579 (102,237) 4,976,342 2,096,854 (106,932) 1,989,931
Offshore engineering
equipment 79,468 - 79,468 541,350 - 541,350
Total 15,884,407 (416,055) 15,468,352 13,683,434 (259,687) 13,423,747
The Group‘s closing balances of inventories included capitalised borrowing cost
amounting to RMB164,010,000 (2010: Nil). The interest rate per annum at which the
borrowing costs were capitalised was 5.73%.
As at 31 December 2011, the Group had inventories with restricted ownership
amounting to RMB7,671,000 (2010: Nil).
(2) Inventories movement for the year is as follows:
Opening
balance at Effect of Closing
the foreign balance at
beginning of Additions for Diminutions exchange the end of
Category the year the year for the year rate changes the year
Raw materials 5,230,667 56,051,491 (56,411,455) (54,366) 4,816,337
Work in progress 1,728,783 47,973,246 (47,986,433) (17,240) 1,698,356
Finished goods 3,193,352 54,840,895 (54,874,529) (3,703) 3,156,015
Consignment stocks 339,038 4,490,062 (4,508,846) - 320,254
Ship under construction 2,096,854 3,144,238 - (162,513) 5,078,579
Other 1,094,740 1,382,715 (1,648,806) (13,783) 814,866
Subtotal 13,683,434 167,882,647 (165,430,069) (251,605) 15,884,407
Less: provision for
diminution in value
of inventories (259,687) (199,138) 37,777 4,993 (416,055)
Total 13,423,747 167,683,509 (165,392,292) (246,612) 15,468,352
187
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
7. INVENTORIES (CONTINUED)
(3) Provision for diminution in value of inventories
Opening Effect of Closing
Category balance at the Provision Written back foreign balance
beginning made for during the year exchange at the end
of the year the year Reversal Write-off rate changes of the year
RMB000 RMB000 RMB000 RMB000 RMB000 RMB000
Raw materials 89,821 151,573 (6,691) (12,519) (393) 221,791
Work in progress 21,816 4,686 (2,313) (1,312) 202 23,079
Finished goods 41,032 42,679 (5,880) (8,925) (116) 68,790
Consignment stocks 95 200 (42) (95) - 158
在建船舶 106,923 - - - (4,686) 102,237
Total 259,687 199,138 (14,926) (22,851) (4,993) 416,055
(a) The provision for diminution in value of the Group‘s inventories during the
year was recognised mainly for the price drop of certain products and the
slow-moving or waste materials.
(b) Written back of provision for diminution in value of the Group‘s inventories
during the year is as follows:
Percentage of
Basis of provision for provision written back
Category
diminution in value Reasons for written over total inventories
of inventories back of provision balance at year end
Net realisable value was Inventories were used
lower than book value or sold and the net
realisable value
Raw materials ascended 0.14%
Net realisable value was Inventories were used
lower than book value or sold and the net
realisable value
Work in progress ascended 0.14%
Net realisable value was Inventories were used
lower than book value or sold and the net
realisable value
Finished goods ascended 0.19%
Net realisable value was Inventories were used
lower than book value or sold and the net
realisable value
Consignment stocks ascended 0.01%
188
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
8. NON-CURRENT ASSETS DUE WITHIN ONE YEAR
2011 2010
Finance leases 2,488,562 758,786
Sales of goods by instalments 168,709 446,031
Others 2,478 -
Subtotal 2,659,749 1,204,817
Less: Provision for impairment (24,462) (19,315)
Total 2,635,287 1,185,502
9. OTHER CURRENT ASSETS
2011 2010
Tax deductible/ withheld 857,885 684,560
Other 7,748 3,470
Total 865,633 688,030
10. AVAILABLE-FOR-SALE FINANCIAL ASSETS
2011 2010
Available-for-sale equity instruments 571,954 768,467
During the year, available-for-sale financial assets held by the Group and the
Company included shares of China Merchants Bank and of China Merchants
Securities Co., Ltd, with a carrying value of RMB136,814,000 and RMB427,341,000
respectively. Besides, the Group and the Company held equity investment of Otto
Energy Limited of RMB7,799,000.
189
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11. LONG-TERM RECEIVABLES
Item 2011 2010
Finance Leases 1,888,126 934,554
including: Unearned finance income 431,044 75,060
Sales of goods by instalment 455,835 406,161
Others 9,240 13,528
Subtotal 2,353,201 1,354,243
Less: Provision for impairment (41,966) (17,986)
Total 2,311,235 1,336,257
The total future minimum lease receipts under finance leases after the balance sheet
date, which are based on contractual undiscounted cash flows (including interest
payments computed using contractual rates or, if floating, based on rates current at the
balance sheet date), are receivable as follows:
2011 2010
Within 1 year (inclusive) 2,725,141 867,858
1 and 2 years (inclusive) 878,900 428,028
2 and 3 years (inclusive) 450,400 284,333
Over 3 years 979,633 303,918
Subtotal 5,034,074 1,884,137
Less: Unearned finance income 657,386 190,797
Total 4,376,688 1,693,340
Derecognition of long term receivables due to transferring of financial assets
Gain or loss due to
Item Amount derecognition
Derecognition of long term receivables
under finance leases due to soldout 1,461,931 164,468
190
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS
(1) As at 31 December 2011, the Group’s long-term equity investments by categories
are as follows:
2011 2010
Investments in joint ventures 33,282 39,812
Investments in associates 1,534,672 1,119,285
Other long-term equity investments 392,300 392,300
Subtotal 1,960,254 1,551,397
Less: Provision for impairment (3,067) (3,065)
Total 1,957,187 1,548,332
191
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) An analysis of long-term equity investments movement of the year is as follows:
Initial Balance at the Additions Balance at the The Company Whether voting right is Impairment Dividend
Shareholding Provision for
Investee investment beginning of during the end of the subsidiaries voting different from the loss of the receivable/receive
percentage (%) impairment
cost the year year year right (%) shareholding interest year d of the year
Equity method—Joint ventures
Yangzhou Maxi-CUBE
Tong Composite Co., Ltd
(―MST‖) - 14,497 (14,497) - - - N/A - - 2,593
RuiJi Logistics
(Wuhu) Co., Ltd
(―WHRJL‖) 9,884 10,020 791 10,811 50.00% 50.00% N/A - - -
GXNFWL 15,000 15,295 4,574 19,869 50.00% 50.00% N/A - - -
Supercool (Shanghai)
Refrigeration Equipment
Co. Ltd
(―SCSCRC‖) 3,600 - 2,602 2,602 50.00% 50.00% N/A - - -
Subtotal 28,484 39,812 (6,530) 33,282 - - 2,593
Equity method —Associates
KYH 27,625 120,753 1,017 121,770 31.83% 31.83% N/A - - 2,638
TJCIMCZL 21,403 41,115 1,930 43,045 36.00% 36.00% N/A - - -
DLJLL 16,844 37,693 1,121 38,814 30.00% 30.00% N/A - - -
Xiamen Haitou 11,479 13,999 2,813 16,812 45.00% 45.00% N/A - - -
TJZL 302,144 467,681 11,916 479,597 38.22% 38.22% N/A - - 11,466
NBBL 3,579 3,533 (37) 3,496 21.00% 21.00% N/A - - 735
XYW 2,916 2,850 (70) 2,780 20.00% 20.00% N/A - - -
Shanghai Fengyang 12,000 84,313 50,098 134,411 40.00% 40.00% N/A - - -
TRS Transportkoeling 12,030 13,133 (1,262) 11,871 32.00% 32.00% N/A - - 1,188
Eurotank Oy 6,946 8,204 (292) 7,912 40.00% 40.00% N/A - - 800
XMHLC 6,153 5,087 200 5,287 49.00% 49.00% N/A - - -
C&C TRUCKS 540,000 102,065 352,923 454,988 45.00% 45.00% N/A - - -
TSC 167,591 167,161 - 167,161 14.60% 14.60% N/A - - -
XMHJ 4,900 4,900 1,975 6,875 49.00% 49.00% N/A - - -
Consafe - 6,315 (6,315) - - - N/A - - -
HBIO 9,000 18,884 (268) 18,616 30.00% 30.00% N/A - - -
Vostok 16,474 16,474 (722) 15,752 25.00% 25.00% N/A - - -
SJKJ 6,072 5,125 358 5,483 30.00% 30.00% N/A - - -
MSC 2 - 2 2 40.00% 40.00% N/A 2 2 -
Subtotal 1,167,158 1,119,285 415,387 1,534,672 2 2 16,827
192
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) An analysis of long-term equity investments movement of the year is as follows (continued):
Initial Balance at the Additions Balance at the The Company Whether voting right is Impairment Dividend
Shareholding Provision for
Investee investment beginning of during the end of the subsidiaries voting different from the loss of the receivable/receive
percentage (%) impairment
cost the year year year right (%) shareholding interest year d of the year
Costing method
BOCM Schroder Stolt
Fund Management 8,125 8,125 - 8,125 5.00% 5.00% N/A - - 10,000
Donghua Container 270 270 - 270 5.00% 5.00% N/A - - 100
China Railway United
Logistics 380,780 380,780 - 380,780 10.00% 10.00% N/A - - -
Guangdong Samsung 1,365 1,365 - 1,365 0.09% 0.09% N/A 1,365 - -
Beihai Yinjian 1,700 1,700 - 1,700 1.01% 1.01% N/A 1,700 - -
Jinmen General
Aviation Company
Limited 60 60 - 60 39.00% 39.00% N/A - - -
Subtotal 392,300 392,300 - 392,300 3,065 - 10,100
Total 1,587,942 1,551,397 408,857 1,960,254 ─ ─ ─ 3,067 2 29,520
As at 31 December 2011, there is no need for the Group to made provision for long-term equity investments in joint ventures and
associates based on the provision testing result that compared the estimated recoverable amount and book value of long-term equity
investments in joint ventures and associates.
On January 2010, CIMC Hong Kong, a subsidiary of the Group, and Raffles entered into an agreement to act in concert with Mr. Brian
Chang, a shareholder and director of TSC, in respect of the exercise of their voting rights in TSC Offshore Group Ltd (―TSC‖) with
CIMC Hong Kong empowered as the ultimate decision maker. Accordingly, the Group had significant influence over TSC with effect
from 31 January 2010 and investment in TSC is accounted for using the equity method. The concerted action agreement ceased after
CIMC Hong Kong acquired the shares of TSC from Raffles in May 2011. However, the Group remains significance influence over TSC
since Mr. Yu Yuquan, the Group‘s secretary of the Board, was assigned as non-executive director of TSC on 15 March 2011. Therefore
the accounting method of the investment in TSC remains for subsequent measurement.
193
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(3) Information for major joint ventures and associates is as follows:
Investee Total assets Total liabilities Net assets Total revenue Net profit/(loss)
at year end at year end at year end for the year for the year
RMB000 RMB000 RMB000 RMB000 RMB000
a. Joint ventures
WHRJL 41,771 20,162 21,609 47,618 1,582
GXNFWL 65,710 25,968 39,742 40,899 5,416
SCSCRC 5,680 477 5,203 606 (1,997)
b. Associates
KYH 1,098,615 716,040 382,575 1,756,152 23,908
TJCIMCZL 126,067 6,498 119,569 35,260 5,360
DLJLL 247,618 136,159 111,459 47,755 3,738
Xiamen Haitou 68,025 30,665 37,360 85,550 6,229
TJZL 2,045,342 921,131 1,124,211 5,538,289 61,186
NBBL 21,724 5,080 16,644 45,534 3,281
XYW 27,490 20,034 7,456 - (3)
Shanghai Fengyang 1,003,099 667,072 336,027 309,030 125,245
XMHLC 12,968 2,178 10,790 6,559 441
C&C TRUCKS 2,893,206 1,873,457 1,019,749 266,098 (113,372)
TSC 1,715,391 624,122 1,091,269 892,826 22,228
XMHJ 172,279 158,248 14,031 79,605 4,031
SJKJ 29,503 11,228 18,275 56,506 1,275
Vostok 49,823 588 49,235 1,070 (5,328)
HBIO 84,385 22,540 61,845 98,532 194
MSC 10 537,248 (537,238) - (71)
(a) As at 31 December 2011, the fair value of investment in TSC amounting to
RMB 88,775,000 (2010: RMB156,551,000).
(4) There is no restriction on the ability of the invested enterprises to transfer funds to
the Group.
194
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
13. INVESTMENT PROPERTIES
Buildings Land use rights Total
RMB RMB RMB
Cost:
Balance at the beginning of the year 32,172 64,051 96,223
Additions during the year 57,008 - 57,008
Disposal during the year (15,102) - (15,102)
Balance at the end of the year 74,078 64,051 138,129
------------------ ------------------ ------------------
Less: Accumulated
depreciation or amortisation
Balance at the beginning of the year 11,108 7,759 18,867
Charge for the year 1,732 1,722 3,454
Written back during the year (11,175) - (11,175)
Balance at the end of the year 1,665 9,481 11,146
------------------ ------------------ ------------------
Carrying amounts:
At the end of the year 72,413 54,570 126,983
At the beginning of the year 21,064 56,292 77,356
The depreciation and amortisation charged for investment properties in 2011 were
RMB: 3,454,000. There was no provision for impairment for investment properties in
2011.
195
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14. FIXED ASSETS
(1) Fixed assets by categories
Offshore
Office & engineering
Plant & Machinery & other Motor special Dock &
buildings equipment equipment vehicles equipment Port Total
RMB RMB RMB RMB RMB RMB RMB
Cost:
Balance at the
beginning of 5,701,348 6,184,262 717,369 762,974 613,499 563,676 14,543,128
Additions during
the year 70,198 129,141 28,836 25,452 49 35,543 289,219
Additions due to
business combination - - 389 - - - 389
Transfer from
construction
in progress 515,756 597,192 46,313 38,214 2,929 353,682 1,554,086
Disposal during
the year (72,499) (181,928) (31,585) (23,264) - - (309,276)
Effect of the foreign
exchange rate changes (65,433) (33,437) (13,093) (3,903) (17,006) (8,337) (141,209)
Balance at the end of
the year 6,149,370 6,695,230 748,229 799,473 599,471 944,564 15,936,337
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less: Accumulated
depreciation
Balance at the
beginning of the year 1,355,622 2,140,279 413,954 271,557 44,406 80,631 4,306,449
Charge for the year 217,785 445,407 65,533 42,901 30,730 15,342 817,698
Written off on disposal (38,540) (157,636) (21,438) (16,764) - - (234,378)
Effect of the foreign
exchange rate changes (21,567) (14,991) (7,871) (3,303) (1,235) (21) (48,988)
Balance at the end of
the year 1,513,300 2,413,059 450,178 294,391 73,901 95,952 4,840,781
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less: Provision for
impairment
Balance at the beginning
of the year 149,699 79,783 573 158 - - 230,213
Charge for the year 2,269 5,384 129 - - - 7,782
Written off on disposal (22) (20,764) (176) (146) - - (21,108)
Effect of the foreign
exchange rate changes (6,487) (279) - - - - (6,766)
Balance at the end of
the year 145,459 64,124 526 12 - - 210,121
---------- ---------- ---------- ---------- ---------- ---------- ----------
Carrying amounts:
At the end of the year 4,490,611 4,218,047 297,525 505,070 525,570 848,612 10,885,435
At the beginning of
the year 4,196,027 3,964,200 302,842 491,259 569,093 483,045 10,006,466
196
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14. FIXED ASSETS (CONTINUED)
(1) Fixed assets by categories (continued)
As at 31 December 2011, restricted fixed assets of the Group amounted to RMB
87,439,000. Refer to Note V.22 for details.
In 2009, as a result of change of governmental land use plan and management
operation strategy, part of buildings and machineries of the containers segment would
be dismantled or disposed. Also, as a result of decrease in demand in the European
and American market and the corresponding poor performance in operation and
continuing downturn in property market, indication existed that some of machineries
and buildings in the Netherland belonging to the trailers segment might be impaired.
Therefore, the Group performed impairment test for these fixed assets. Based on the
result of the test, the Group made RMB 168,461,000 of provision for impairment for
the aforesaid fixed assets. The recoverable amount is determined as either its fair
value less costs to sell or its present value of expected future cash flows.
If there is an active market for aforesaid fixed assets, net realisable value is the quoted
price in the active market less the estimated selling expenses according to the
management‘s disposal plan. The realisable value of fixed assets, which have no
value in use and are pending for dismantling, is their fair value less the estimated
disposal expenses.
For fixed assets still in use and without an active market, the realisable value is the
present value of expected future cash flows, which is calculated based on the
discounting rate. The benchmark rate of bank loans will be adopted as the
discounting rate.
(2) As at the end of 2011, the Group had no temporarily idle fixed assets.
(3) Fixed assets held under finance leases
2011 2010
Accumulated Carrying Accumulated Carrying
Item Cost depreciation amount Cost depreciation amount
Machinery and equipment 314,463 (34,139) 280,324 308,118 (23,974) 284,144
Motor vehicles 1,293 (1,077) 216 1,352 (856) 496
Offshore engineering
special equipment 214,737 (34,842) 179,895 220,326 (11,120) 209,206
197
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14. FIXED ASSETS (CONTINUED)
(4) Fixed assets leased out under operating leases
Item Net book value
RMB000
Plant & buildings 13,956
Machinery and equipment 630
Total 14,586
(5) Fixed assets held for sale at the year end
As at 31 December 2011, there were no fixed assets held for sale (2010: Nil).
(6) Fixed assets with pending certificates for ownership
Expected time of
Carrying getting certificate of
Item amount Reasons for pending ownership
RMB000
Factory 474,822 Certificate being in the progress By the end of 2012
158,316 Incomplete procedure, certificate By the end of 2012
Workshop
being in the progress
164,146 Put to use, certificate being in the September 2012
Office building
progress
54,361 Lack of reporting materials, under By the end of 2012
Warehouse
preparation
Dormitory and Put to use, certificate being in the June 2012
Canteen 17,541 process
Others Certificate being in the progress By the end of 2012
44,045
Total 913,231
198
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
15. CONSTRUCTION IN PROGRESS
(1) Construction in progress
2011 2010
Carrying Carrying
Item Cost Impairment amount Cost Impairment amount
DLZH Plant Project - - - 18,774 - 18,774
Nantong CIMC Special Transportation 5,874 - 5,874 3,367
- 3,367
Equipment Third Workshop Project
Enric Roller-type Rotary Machine and Top- - - - 1,601
- 1,601
and-bottom Machine
KGR Vehicle Installation Project - - - 3,427 - 3,427
Nantong Sunda Container Complete-line - - - 198
- 198
and Coating-line project
Dalian Heavy Logistics Equipments - - - 185
- 185
Pressure Vessels Project
Enric First Stage Project - - - 8,672 - 8,672
Dalian Heavy Logistics Production Line 13,962 - 13,962 17,324
- 17,324
equipment
CIMC Grand Sky Light Hotel Project - - - 36,337 - 36,337
XHCIMCS Production Line and Power 7,129 - 7,129 13,298
- 13,298
Facilities Reconstruction Project
Enric Heavy Pressure Vessel Workshop 22,452 - 22,452 12,777 - 12,777
Xinhui Wood Factory 5th and 6th Project 1,678 - 1,678 13,200 - 13,200
Southern Salt Square 2nd Stage Project - - - 39,815 - 39,815
LYLY vehicle 2nd Phase Project - - - 8,800 - 8,800
Head office residential facilities for Haigong - - - 19,453
- 19,453
research center
YZTL Steel Structure Factory Project - - - 8,218 - 8,218
Enric 3rd Phase Project 1,651 - 1,651 7,213 - 7,213
Eastern Logistic 3rd Phase Project 291,621 - 291,621 36,355 - 36,355
Raffles Offshore Drilling Platform - - - 304,892
- 304,892
outfitting quay project
Raffles harbor basin project 119,218 - 119,218 82,851 - 82,851
Raffles Dredging Offshore Project 38,588 - 38,588 38,588 - 38,588
Raffles No1 and No 2 slideway project 89,168 - 89,168 99,275 - 99,275
Raffles sea route project 30,920 - 30,920 11,718 - 11,718
Raffles Longmen Crane Project - - - 22,018 - 22,018
Raffles Plant Road Project - - - 10,243 - 10,243
Raffles Jack-up Drilling Platform 810,879 - 810,879 541,542 - 541,542
Raffles Canteen Project 11,979 - 11,979 - - -
MEA 1st stage R&D Project 76,793 - 76,793 - - -
TAS New Plant Project 21,758 - 21,758 - - -
Shijiazhuang Enric 2nd Phase Project 68,327 - 68,327 - - -
Others 286,333 - 286,333 337,523 - 337,523
Total 1,898,330 - 1,898,330 1,697,664 - 1,697,664
199
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
15. CONSTRUCTION IN PROGRESS (CONTINUED)
(1) Construction in progress (continued)
The carrying amounts of construction in progress at the end of the year included
capitalised borrowing cost of RMB 41,780,000 (2010: RMB17,912,000). The
interest rate adopted for determining capitalised at borrowing cost for the current year
was 5.36% (2010: 5.09%).
As at 31 December 2011, there were no construction in progress of the Group with
restrictions in ownership (2010: RMB36,337,000). Refer to Note V.22 for details.
200
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSTRUCTION IN PROGRESS (CONTINUED)
(2) The Group’s major construction projects in progress were set out as follows:
Including: Effect of the
Balance at the Percentage of Accumulated current year foreign
beginning of Additions Transfer to Other Balance at the current input capitalised capitalised Capitalised Sources of exchange rate
Project Budget the year fixed assets deduction end of the year over budget(%) Progress borrowing cost borrowing cost rate(%) funds changes
DLZH Plant Project 170,705 18,774 14,751 (33,525) - - 89.95% 100.00% 5,196 - 4.78% Bank Loan -
Nantong CIMC Special Transportation Equipment Third 35,519 3,367 10,425 (7,918) - 5,874 66.17% 98.00% - - 0.00% -
Self-funding
Workshop Project
Enric Roller-type Rotary Machine and Top-and-bottom 10,336 1,601 10,404 (12,005) - - 100.00% 100.00% - - 0.00% -
Self-funding
Machine
Enric First Stage Project 51,950 8,672 8 (8,680) - - 88.78% 100.00% - - 0.00% Self-funding -
Dalian Heavy Logistics Production Line Equipment 143,392 17,324 9,800 (13,162) - 13,962 30.54% 30.54% - - 0.00% Self-funding -
CIMC Grand Sky Light Hotel Project 86,000 36,337 34,281 (70,618) - - 81.91% 100.00% 610 176 5.09% Bank Loan -
XHCIMCS Production Line and Power Facilities 19,802 13,298 10,232 (16,401) - 7,129 118.82% 91.53% - - 0.00% -
Self-funding
Reconstruction Project
Enric Heavy Pressure Vessel Workshop 25,570 12,777 9,675 - - 22,452 87.80% 87.80% - - 0.00% Self-funding -
XHW 5th and 6th stage Factory 32,831 13,200 2,863 (14,385) - 1,678 48.92% 57.66% - - 0.00% Bank Loan -
Southern Salt Square Project 66,520 39,815 - (39,815) - - 59.85% 100.00% - - 0.00% Self-funding -
LYLY vehicle 2nd Phase Project 19,620 8,800 5,137 (13,937) - - 70.93% 100.00% - - 0.00% Self-funding -
Head office residential facilities for Haigong research center 19,769 19,453 - (19,453) - - 98.40% 100.00% - - 0.00% Self-funding -
YZTL Steel Structure Factory Project 19,000 8,218 19,328 (27,546) - - 101.73% 100.00% - - 0.00% Self-funding -
Enric 3rd Phase Project 28,132 7,213 10,994 (16,556) - 1,651 64.71% 64.71% - - 0.00% Self-funding -
Eastern Logistic 3rd Phase Project 350,000 36,355 315,575 (60,309) - 291,621 90.16% 90.70% - - 0.00% Self-funding -
Raffles Offshore Drilling Platform 400,523 304,892 26,290 (322,213) - - 82.68% 100.00% 28,614 16,593 5.76% Bank Loan (8,969)
outfitting quay project
Raffles harbor basin project 163,859 82,851 38,776 - (95) 119,218 72.75% 72.75% - - 0.00% Self-funding (2,314)
Raffles Dredging Offshore Project 62,445 38,588 - - - 38,588 61.00% 62.00% - - 0.00% Self-funding -
Raffles No1 and No 2 slideway project 119,822 99,275 18 (40,035) - 59,168 86.25% 86.25% - - 0.00% Self-funding (90)
Raffles sea route project 73,737 11,721 19,199 - - 30,920 41.00% 41.00% - - 0.00% Self-funding -
Raffles Longmen Crane Project 32,772 22,018 4,869 (26,881) - - 86.68% 100.00% - - 0.00% Bank Loan (6)
Raffles Plant Road Project 11,265 10,243 645 (10,874) - 96.65% 100.00% - - 0.00% Self-funding (14)
Raffles Jack-up Drilling Platform 1,214,370 541,542 300,020 - - 810,879 74.00% 74.00% 34,216 34,216 5.76% Self-funding (30,683)
Raffles Canteen 15,190 9,046 2,933 - - 11,979 79.00% 79.00% - - 0.00% Self-funding -
Project MEA 1st stage R&D 350,000 642 76,151 - - 76,793 21.00% 45.00% - - 0.00% Self-funding
Project TAS new Plant Project 30,000 339 21,419 - - 21,758 72.52% 72.52% - - 0.00% Self-funding -
Shijiazhuang Enric Gas 2nd Project 75,000 - 68,327 - - 68,327 91.10% 91.10% - - 0.00% Self-funding -
Total 1,366,361 1,012,120 (754,313) (95) 1,581,997 68,636 50,985 (42,076)
(3) Provision for impairment
As at There was no provision for impairment for work in progress in 2011 (2010: Nil)
201
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
16. INTANGIBLE ASSETS
(1) Intangible assets by categories
Technical
know-how Timber
Land use and concession Customer Customer Maritime use
rights trademarks rights relationships contracts rights Total
RMB RMB RMB RMB RMB RMB RMB
Cost:
Balance at the beginning
of the year 2,871,554 811,573 236,992 108,736 136,128 26,642 4,191,625
Additions during the year 153,804 92,664 - - - 53,129 299,597
Additions due to business - - - 1,338 5,576 - 6,914
Disposal during the year (50,096) (3,844) - - - - (53,940)
Effect of the foreign
exchange rate changes 3,624 (22,882) (10,351) (6,104) (5,130) 313 (40,530)
Balance at the end of
the year 2,978,886 877,511 226,641 103,970 136,574 80,084 4,403,666
Less: Accumulated
amortisation
Balance at the beginning
of the year 266,250 368,783 95,425 48,843 83,864 5,055 868,220
Charge for the year 76,506 145,620 3,351 20,256 3,411 3,791 252,935
Written off on disposal (17,829) (3,717) - - - - (21,546)
Effect of the foreign
exchange rate changes 3,052 (9,268) (4,241) (4,462) (5,461) (1) (20,381)
Balance at the end of
the year 327,979 501,418 94,535 64,637 81,814 8,845 1,079,228
Less: Provision for
impairment
Balance at the beginning
of the year - - 104,834 - - - 104,834
Charge for the year - - - - 52,264 - 52,264
Written off on disposal - - - - - - -
Effect of the foreign
exchange rate changes - - (4,882) - - - (4,882)
Balance at the end of
the year - - 99,952 - 52,264 - 152,216
Carrying amounts:
At the end of the year 2,650,907 376,093 32,154 39,333 2,496 71,239 3,172,222
At the beginning of
the year 2,605,304 442,790 36,733 59,893 52,264 21,587 3,218,571
202
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
16. INTANGIBLE ASSETS (CONTINUED)
(1) Intangible assets by categories (continued)
As at 31 December 2011, there were no intangible assets without certificates of
ownership.
As at 31 December 2011, the Group had intangible assets with restriction in
ownership amounting to RMB127,844,000. (2010: RMB156,607,000).
The timber concession right amounting to RMB116,769,000, in respect of the
450,000 acres in Suriname was acquired by Topco Forestry N.V, a wholly owned
subsidiary of Gold Terrain Assets Limited, a subsidiary of the Group Since around
75,000 acres of the forest in the above timbe concession rights were located in a
nature reservation zone, the government of Suriname took back the timber concession
rights in 2003. The Group had negotiated with the Suriname government for a plan to
substitute the original 75,000 acres with other forest locations. Since there were no
clear results of the negotiation, a full provision for impairment of RMB13,303,000
was made to this part of timber concession rights.
In 1998, Silveroad Wood Products Limited, a wholly owned subsidiary of Gold
Terrain Assets Limited purchased 315,460 acres of timber concession rights in
Cambodia amounting to RMB110,022,000. The government of Cambodia has
suspended all timber concession rights in its region, including those of the Group
since 2001. In view of this, full provision for impairment amounting to
RMB86,649,000 was made on the carrying value of the above timber concession
rights.
Regarding the client contracts obtained in 2012 through the acquisition of Raffles, the
Group had preformed impairment test based on the execution of these contracts in
2011 and consequently made a full impairment loss of RMB 52,264,000.
The Group acquired Technodyne in 2011 (refer to Note IV.6 (1)). The intangible
assets of Technodyne recorded in the consolidated financial statements are based on
the revaluated fair value. Intangible assets over 1 million of Technodyne as at 31
December 2011 are as follows:
Recorded Value revaluation method
EUR RMB
000 000
- Client contracts 617 5,576 discounted cash flow
- Client relationships 148 1,338 discounted cash flow
765 6,914
As at 31 December 2011, there were no intangible assets with indefinite useful lives.
203
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
17. GOODWILL
Effect of
Balance at the foreign
the exchange Balance at Provision
Name of investee or beginning rate the end of for
goodwill items Note of the year Additions Deduction changes the year impairment
Enric (2)(a) 607,004 - - - 607,004 -
TGE SA (2)(b) 180,749 - - (4,785) 175,964 -
IV. 6
Technodyne (1) - 30,371 - (2,941) 27,430 -
Gadidae AB (1) - 12,254 (12,254) - - 12,254
Others 380,841 21,995 - (5,730) 397,106 11,578
Total 1,168,594 64,620 (12,254) (13,456) 1,207,504 23,832
(1) The Group acquired 100% equity interest of Technodyne for the consideration of
EUR 5,373,000, equivalent to RMB 48,560,000, in 2011. After the acquisition, the
excess amount of acquisition cost over the fair value of the identifiable net assets of
Technodyne, which at the acquisition date amounted to RMB 30,371,000, was
recognised as goodwill.
Raffles (the Group holding 54.71% equity interest), a subsidiary of the Company
acquired 64% equity interest of Gadidae AB for the consideration of USD6,953,000
(RMB 43,849,000) in 2011. Upon the foresaid combination, Raffles hold 100% equity
interest of Gadidae AB, along with 36% equity interest acquired before. The excess
amount of acquisition cost over Raffles‘ interest in the fair value of the identifiable
net assets of Gadidae AB, which at the acquisition date amounted to USD 1,900,000,
equivalent to RMB 12,254,000, was recognised as goodwill.
In the acquisition of Gadidae AB, Raffles recognised goodwill of RMB 12,254,000
base on the assumption that MSC, an associate of Gadidae AB, would generate
sufficient future income in the leasing contract with a third party. However, Gadidae
AB is unlikely to receive profits from MSC as at 31 December 2011 due to the lease
agreement between the third party and MSC expired with no indication of renewal.
Consequently, Raffles made full impairement provision on the goodwill of RMB
12,254,000.
204
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
17. GOODWILL
(2) Impairment test for asset group including goodwill
The Group‘s allocation of goodwill to asset group according to operation segments or
business segments is as follows:
Item 2011 2010
Container Industry group 127,524 127,524
Trailers group 77,752 77,752
Tank equipments industry group 868,869 841,439
Asset groups with insignificant allocation
133,359 121,879
percentage of goodwill group
Total 1,207,504 1,168,594
(a) Goodwill attributable to Enric
The Group paid RMB1,094,076,000 as acquisition cost for acquiring 41.55%
equity interest in Enric in 2007. The excess of acquisition cost over the
Group‘s interest in the fair value of Enric‘s identifiable assets and liabilities
was recognised as goodwill attributable to Enric. As at 31 December 2011,
goodwill attributable to Enric amounted to RMB607,004,000.
The recoverable amount of Enric is determined based on the present value of
expected future cash flows. The present value of expected future cash flows
was calculated based on the most recent ten-year financial budgets approved
by management of the Group and a discounting rate of 7.05%. The cash flows
beyond the ten-year budget period was assumed to keep stable. There was no
impairment considered necessary for the goodwill based on the calculations.
As key assumptions on which management has made the future cash
projections are subject to change, management believes that any adverse
change in the key assumptions would cause the carrying amount exceeding its
recoverable amount.
The calculation of present value of expected future cash flows of Enric was
based on key assumptions of 19% of gross profit ratio and 10% of operating
sales growth, which was determined by management on the basis of past
performance before the budget period.
205
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
17. GOODWILL (CONTINUED)
(b) Goodwill attributable to TGE SA
The Group paid RMB243,096,000 as acquisition cost for the 60% equity
interests in TGE SA in 2008. The excess of acquisition cost over the Group‘s
interest in the fair value of TGE SA‘s identifiable assets and liabilities was
recognised as goodwill attributable to TGE SA. As at 31 December 2011,
goodwill attributable to TGE SA amounted to RMB175,964,000.
The recoverable amount of TGE SA is determined based on the present value
of expected future cash flows. The present value of expected future cash flows
was calculated based on the most recent ten-year financial budgets approved
by management of the Group and a discounting rate of 7.05%. The cash flows
beyond the ten-year budget period was assumed to keep stable. There was no
impairment considered necessary for the goodwill based on the calculations.
As key assumptions on which management has made the future cash
projections are subject to change, management believes that any adverse
change in the key assumptions would cause the carrying amount exceeding its
recoverable amount.
The calculation of present value of expected future cash flows of TGE SA was
based on key assumptions of 9% of gross profit ratio and 5% of operating
sales growth, which was determined by management on the basis of past
performance before the budget period.
18. LONG-TERM DEFERRED EXPENSES
Effect of
the foreign
Balance at exchange Balance at Reasons
the beginning Other rate the end of for other
Item of the year Additions Amortisation deduction changes the year deduction
Water and
electricity
capacity
enlargement
expenses 1,178 980 (586) - - 1,572 None
Rental 6,040 4,161 (3,390) - - 6,811 None
Others 20,760 23,467 (17,717) - (1) 26,509 None
Subtotal 27,978 28,608 (21,693) - (1) 34,892 None
less: provision for
impairment - - - - - - None
Total 27,978 28,608 (21,693) - (1) 34,892 None
206
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
19. DEFERRED TAX ASSETS AND LIABILITIES
(1) Deferred tax assets or liabilities after offsetting and corresponding deductable or
taxable timing differences
Deductible/(tax Deferred tax Deductible/(tax Deferred tax
able) temporary assets/(liabiliti able) temporary assets/(liabiliti
Item difference 2011 es) 2011 difference 2010 es) 2010
Deferred tax assets:
Provisions for impairment 917,376 183,799 634,562 133,922
Provisions 498,649 97,469 453,035 91,669
Employee benefits payable 1,314,557 309,184 885,946 198,409
Accrued expenses 495,601 96,826 288,965 46,405
Tax losses carry-forward 651,188 123,537 895,395 153,362
Movement for fair value of financial
assets held for trading/hedging
instruments 96,958 24,156 137,488 33,001
Others 146,182 16,156 66,668 21,285
Subtotal 4,120,511 851,127 3,362,059 678,053
Offsetting amount (599,278) (147,029) (810,909) (188,597)
Net amount after offsetting 3,521,233 704,098 2,551,150 489,456
Deferred tax liabilities:
Movement for fair value of financial
assets held for trading/hedging
instruments (26,046) (5,763) (77,324) (16,046)
Available-for-sale financial assets (499,820) (120,437) (723,531) (172,414)
Movement for fair value of hedging
instrument (12,784) (3,196) (14,070) (3,858)
Revaluation gain through combination (537,605) (163,771) (990,755) (276,049)
Estimated dividend income earned for
non-resident foreign enterprises (3,665,929) (313,946) (2,490,010) (187,213)
Others (463,670) (121,416) (591,535) (105,883)
Subtotal (5,205,854) (728,529) (4,887,225) (761,463)
Offsetting amount 599,278 147,029 810,909 188,597
Net amount after offsetting (4,606,576) (581,500) (4,076,316) (572,866)
(2) Unrecognised deferred tax assets
Item 2011 2010
Tax losses carry-forward 330,324 361,682
Impairment losses of timber Concession rights 53,205 55,769
Others 35,572 170,765
Total 419,101 588,216
207
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
19. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
(3) Expiry dates of tax credit for unrecognised deferred tax assets are as follows:
Year 2011 2010 Note
2011 - 89,119
2012 31,464 42,477
2013 210,243 225,447
2014 353,630 289,578
2015 423,272 525,845
More than 5 years 357,743 392,779 Note 1
Total 1,376,352 1,565,245
At 31 December 2011, the Group had no unrecognised deferred tax liabilities.
Note 1: By the end of 2010 and 2011, unrecognised deferred tax assets aged over 5
years (inclusive) arising from deductible tax losses resulted from foreign
subsidiaries‘ operating losses. Deductible tax losses generated from Hong
Kong, the United States of America, the United Kingdom of Great Britain
and Australia can be offset with future profit indefinitely; deductible tax
losses generated from the Netherlands can be offset in the subsequent nine
years.
20. OTHER NON-CURRENT ASSETS
Item 2011 2010
Prepayment for land use right 764,849 -
208
2011 Annual Report
21. PROVISIONS FOR IMPAIRMENT
Balance at
the Charge Decrease exchange Effect of
beginning for the during the year Foreign the end Balance at
of the year year Reversal Write off rate changes of the year
Item Note RMB000 RMB000 RMB000 RMB000 RMB000 RMB000
Receivables V.4 232,483 169,615 (71,563) (11,676) 691 319,550
Other Receivables V.5 101,617 42,938 (20,684) 2,063 (5,503) 120,431
Prepayments V.6 97,087 37 - (382) (2) 96,740
Inventories V.7 259,687 199,138 (14,926) (22,851) (4,993) 416,055
Non-current assets V.8
due within one year 19,315 5,148 - - (1) 24,462
Long-term V.11
receivables 17,986 29,119 (1,522) (3,587) - 41,996
Long-term equity V.12
Investments 3,065 2 - - - 3,067
Fix assets V.14 230,213 7,782 - (21,108) (6,766) 210,121
Intangible assets V.16 104,834 52,264 - - (4,882) 152,216
Goodwill V.17 11,578 12,254 - - - 23,832
Total 1,077,865 518,297 (108,695) (57,541) (21,456) 1,408,470
Please refer to the respective notes of the assets for reasons of the provisions.
209
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
22. RESTRICTED ASSETS
As at 31 December 2011, assets with restrictions in their ownership are as follows:
Effect of
Balance at Decrease foreign Balance at
the beginning Additions during exchange the end
Item Note of the year for the year the year rate changes of the year
RMB000 RMB000 RMB000 RMB000 RMB000
Assets guaranteed
- Cash at bank
and on hand V.1 858,281 1,723,088 (1,217,609) (138,887) 1,224,873
- Accounts
receivable V.4 962,096 283,947 (743,496) (31,521) 471,026
- Inventories V.7 - 7,671 - - 7,671
- Fix assets V.14 161,120 58,252 (130,440) (1,493) 87,439
- Construction
in progress V.15 36,337 - (36,337) - -
- Intangible assets V.16 156,607 13,907 (36,656) (6,014) 127,844
Total 2,174,441 2,086,865 (2,164,538) (177,915) 1,918,853
The above inventories, fixed assets and intangible assets were secured for bank loans.
Accounts receivable was pledged for borrowings. Refer to Note V.23, Note V.34 and
Note V.35 for short-term and long-term secured loans analysis.
210
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
23. SHORT-TERM LOANS
(1) Short-term loans by categories:
Item Note 2011 2010
Guarantee loans (a)
- RMB 2,760,263 3,836,026
- USD 2,401,895 450,471
- JPY 1,733 10,021
- GBP - 38,343
- EUR - 76,351
- SGD 376 4,710
Subtotal 5,164,267 4,415,922
Secured loans
- USD - 86,325
- EUR - 17,346
- SGD - 624
Subtotal - 104,295
Pledge loans
- USD - 962,096
Subtotal - 962,096
Loans on credit
- RMB 572,336 672,125
- USD 1,386,579 1,536,746
- EUR 203,957 194,247
- HKD 682,994 423,878
- AUD 20,779 -
Subtotal 2,866,645 2,826,996
Total 8,030,912 8,309,309
(a) As at 31 December 2011, guarantee loans of the Group included bank loans
amounting to RMB2,229,917,000 guaranteed by the Company for its
subsidiaries, RMB54,751,000 guaranteed by HI for its subsidiaries,
RMB333,919,000 guaranteed by Enric for its subsidiaries and
RMB,545,680,000 guaranteed by Raffles for its subsidiaries.
(b) As at 31 December 2011, no amount due to shareholders who hold 5% or
more of the voting rights of the Company or related parties was included in
the above balance of short-term loans.
(2) As at 31 December 2011, the Group had no past due and un-repaid short-term loans.
211
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
24. FINANCIAL LIABILITIES HELD FOR TRADING
Item Note 2011 2010
Current:
Derivative financial liabilities
- foreign future contracts V.2.(3) 4,816 3,810
- swap contract for interest rate V.24(1) 8,138 -
- foreign exchange option V.24(2) 18,153 -
Subtotal 31,107 3,810
Non-current:
Derivative financial liabilities
- swap contract for interest rate V.23.(1) 74,836 76,066
- foreign exchange option V.23.(2) - 78,226
Subtotal 74,836 154,292
Total 105,943 158,102
(1) As at 31 December 2011, the Company and subsidiaries separately had 10 and 4
unsettled interest rate swap contracts denominated in U.S. dollars. The nominal value
of these contracts amounted to USD425,000,000. The maturity dates of these interest
rate swap contracts range from 23 November 2012 to 29 December 2018. As at 31
December 2011, the Group recognised on the foresaid contracts in their fair values of
RMB82,974,000 (including RMB77,973,000 of fair value recognised by the
Company) as expenses and financial liabilities held for trading. Transaction costs on
realisation have not been considered when calculating the fair values.
(2) As at 31 December 2011, the Company had 1 unsettled forward contracts
denominated in Japanese Yen. The nominal value of these contracts amounted to
Japanese Yen 2,840,000,000. Pursuant to these forward contracts, the Company is
entitled to buy U.S. dollar at an amount equivalent to contracted nominal value at
agreed rates where the market spot rates at the settlement dates are higher than the
agreed rates. These forwards contracts are not executed where the market spot rates
at the settlement dates are equal to or lower than the agreed rates. The settlement date
of the aforesaid forward contract is 29 June 2012.
As at 31 December 2011, the Company recognised the aforesaid forwards contract in
its fair value of RMB18,153,000 as expenses and financial liabilities held for trading.
Transaction costs on realisation haven not been considered when calculating the fair
values.
212
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
25. BILLS PAYABLE
2011 2010
Bank acceptance bills 1,184,861 2,435,043
Commercial acceptance bills 2,110,365 103,580
Total 3,295,226 2,538,623
The above bills are due within one year.
26. ACCOUNTS PAYABLE
(1) The Group’s accounts payable is as follows:
Item 2011 2010
Raw materials suppliers 7,328,966 9,117,500
As at 31 December 2011, there was no individual major accounts payable aged over
one year.
Group‘s accounts payable is analysed by currencies as follows:
Currency 2011 2010
Original Exchange Original Exchange
currency rate RMB currency rate RMB
‘000 ‘000 ‘000 ‘000
RMB 5,870,263 1.0000 5,870,263 5,806,328 6.5897 5,806,328
USD 151,009 6.3009 951,496 443,815 1.0000 2,924,606
HKD 19,969 0.8107 16,189 200,411 7.7734 169,893
JPY 7,082 0.0811 574 43,843 81.37 3,551
EUR 43,272 8.1625 353,209 17,757 0.7490 156,227
AUD 18,870 6.4093 120,946 8,255 0.9828 55,350
Others 16,289 1,545
Total 7,328,966 9,117,500
(2) No amount due to shareholders who hold 5% or more of the voting rights of the
Company or related parties is included in the balance of accounts payable.
213
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
27. ADVANCES FROM CUSTOMERS
(1) The Group’s advances from customers is as follows:
2011 2010
Advances for goods 1,310,878 811,674
Advances for construction 955,546 620,826
Advances for property 396,318 502,573
Others - 658
Total 2,662,742 1,935,731
No amount due to shareholders who hold 5% or more of the voting rights of the
Company is included in the balance of advances from customers.
As at 31 December 2011, there was no significant advances aged over one year.
28. EMPLOYEE BENEFITS PAYABLE
Effect of
Balance at Accrued Paid foreign Balance at
the beginning during during exchange the end
Item of the year the year the year rate changes of the year
RMB000 RMB000 RMB000 RMB000 RMB000
Salaries, bonus, and
allowances 781,343 4,250,221 (3,586,165) (3,716) 1,441,683
Senior management bonus 269,475 119,476 (16,947) - 372,004
Severance payment 79 6,095 (2,227) (1) 3,946
Cash-settled
share-based payments - 504 - (12) 492
Social insurances
and others 314,635 728,682 (848,819) (15) 194,483
Total 1,365,532 5,104,978 (4,454,158) (3,744) 2,012,608
Please refer to Note VII for cash-settled shared-based payments.
As at 31 December 2011, there was no delayed payment of employee benefits.
As at 31 December 2011, aforesaid ―social insurances and others‖ included labour
union fees and employee education fees amounting to RMB30,626,000. The non-
monetary benefits during the year amounted to RMB55,000.
Salaries, bonus and allowances payables represent salaries accrued for current month
and bonus accrued for subsidiaries in accordance with the result of annual
performance and the performance assessment plan of the Group. According to the
requirement of the performance assessment plan, annual accrued bonus would be paid
over three years based on the percentage determined by the management, therefore,
there was a balance of such accrued bonus at the end of the year.
214
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
28. EMPLOYEE BENEFITS PAYABLE (CONTINUED)
Senior management bonus is determined on the assessment of certain key
performance index. The above bonus is proposed by Chief Executive Officer of the
Group and the payment is subject to review and approval by board chairman and vice
board chairman of the Group. The balance of senior management bonus payable was
unpaid balance accrued in prior years.
29. Taxes payable
2011 2010
VAT payable 52,069 66,744
Business tax payable 17,697 8,533
Income tax payable 663,749 590,029
Withholding tax 68,833 79,699
Urban maintenance and construction
tax payable 38,936 2,051
Education surcharges payable 27,740 2,254
Other 47,094 39,845
Total 916,118 789,155
30. INTEREST PAYABLE
2011 2010
Interest payable for long-term loan 12,224 3,120
Interest payable for short-term loan 17,810 10,048
Interest payable for corporate bonds 122,033 -
Total 152,067 13,168
31. DIVIDENDS PAYABLE
2011 2010
Minority shareholders of subsidiaries 116,253 16,046
215
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
32. OTHER PAYABLES
(1) The analysis of the Group’s other payables is as follows:
Item Notes 2011 2010
Quality guarantees 305,596 141,932
Advance received 899,441 469,371
Transportation expenses 280,289 256,492
Equipment or land use rights 160,047 395,583
Accruals 656,916 532,578
Housing maintenance fees 34,933 11,096
Current account with
subsidiary‘s minority 46,698 245,728
Professional and training fees 19,221 17,833
Insurances 19,662 10,000
Advance received for shipbuilding V.32(4) 424,051 -
Royalties 1,614 4,187
Others 545,369 303,567
Total 3,393,837 2,388,367
The analysis of the Group‘s other payables by currencies is as follows:
Currency 2011 2010
Original Exchange Original Exchange
currency rate RMB currency rate RMB
‘000 ‘000 ‘000 ‘000
RMB 1,404,982 1.0000 1,404,982 721,950 1.0000 721,950
USD 252,612 6.3009 1,591,679 170,943 6.5897 1,126,461
HKD 330,546 0.8107 267,974 254,149 0.8477 215,448
JPY 126,276 0.0811 10,241 264,082 0.0810 21,387
EUR 10,770 8.1625 87,908 27,106 8.7979 238,476
AUD 4,602 6.4093 29,496 9,582 6.7050 64,245
Others 1,557 400
Total 3,393,837 2,388,367
216
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
32. OTHER PAYABLES (CONTINUED)
(2) Other payables due to shareholders or related parties who hold 5% or more of the
voting rights of the Company:
Organization name Relationship with the Group 2011 2010
Minority shareholder of
1. Gasfin Investment S.A. (―Gasfin‖) subsidiary 38,698 20,806
2. Bright Touch Investment Limited (―Bright Minority shareholder of
Touch‖) subsidiary - 60,231
Minority shareholder of
3. Leung Kee subsidiary - 104,919
Minority shareholder of
4. Yantai Shipyard subsidiary - 46,497
5. Wuhu Ruijiang Investment Co., Minority shareholder of
Ltd.(―WHRJI‖) subsidiary 8,000 -
6.HBIO Associate 58,305 -
7. MSC Associate 424,051 -
Total 529,054 232,453
(3) Significant other payables aged over one year:
As at 31 December 2011, significant other payables aged over one year represented
quality guarantee, vehicle mortgage guarantee and various deposits.
(4) As at 31 December 2011, the significant other payables is as follows:
Raffles and Gadidae AB entered into a shipbuilding contract, which was terminated
afterwards, for the construction and sale of a submersible drilling rig from Raffles to
Gadidae AB in 2007. Subsequently Gadidae AB and MSC entered into a contract
which Gadidae AB would sell this vessel to MSC. Gadidae AB received USD
67,300,000, equivalent to RMB 424,051,000, progress billing from MSC in 2007.
217
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
33. PROVISIONS
Effect of
Balance at Payment Reversal foreign Balance at
the beginning Charges during during exchange the end
of the year for the year the year the year rate changes of the year
Note RMB000 RMB000 RMB000 RMB000 RMB000 RMB000
Current
Warranties for
product quality (1) 555,341 340,940 (54,071) (162,516) (15,860) 663,834
Guarantees for
third parties (2) 12,478 9,274 (2,047) (1,217) (431) 18,057
Others 81,754 6,724 (19,603) (13,290) (1,297) 54,288
Total 649,573 356,938 (75,721) (177,023) (17,588) 736,179
(1) The Group provides after-sales repair warranty to the customers, ranging from
two to seven years for containers, one year for trailers, one to seven years for
tank equipments, one to two years for airport ground facilities and one year
for offshore business after delivery of vessels. The Group will provide repair
and maintenance services in accordance with sales contracts during the
warranty period in the event of any non-accidental breakdown or quality
problems. The balance of ―Provisions - Warranties for product quality‖
represents the Group‘s estimated obligation for such warranties of products
sold out during the year and in the previous fiscal years.
(2) The amount represents the possible loss for a bank guarantee letter issued by
the Company‘s subsidiary - TAS.
218
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
34. NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
(1) The analysis of the Group’s non-current liabilities due within one year by
categories is as follows:
Item 2011 2010
Long-term loans due within one year
- Credit loans 1,094,352 2,729,353
- Pledge loans (a) 649,072 -
- Guarantee loans (b) 750,000 17,584
Subtotal 2,493,424 2,746,937
Long-term payables due within year 66,894 97,584
Total 2,560,318 2,844,521
(a) As at 31 December 2011, the Group‘s long term loans due within one year
include pledge loans of Raffles amounting to RMB649,072,000, which was
pledged by accounts receivables of Raffles and 100% equity interest of
LCRO, a subsidiary of Raffles.
(b) As at 31 December 2011, the Group‘s long term loans due within one year
include guarantee loans amounting to RMB50,000,000 guaranteed by HI for
its subsidiaries and RMB 700,000,000 guaranteed by Raffles for its
subsidiaries.
219
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
34. NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
(2) The analysis of the Group’s non-current liabilities due within one year by
categories is as follows:
(a) The analysis of the Group‘s non-current liabilities by currencies due within
one year is as follows:
2011 2010
Annual Original Exchange Annual Original Exchange
interest rate currency rate RMB interest rate currency rate RMB
000 000 000 000
Bank loans
- RMB PBOC*‘s 895,000 1.0000 895,000 4.01% ~ 4.73% 2,000,000 1.0000 2,000,000
Benchmark Rate~
PBOC‘s
Benchmark Rate
+10%
- USD LIBOR+55BP 248,500 6.3009 1,565,774 LIBOR+90BP 100,000 6.5897 658,970
~LIBOR+2.08%
- HKD - - 0.8107 - HKIBOR+17BP 20,743 0.8477 17,584
- EUR EURIBOR+65BP 4,000 8.1625 32,650 EURIBOR 8,000 8.7979 70,383
+65BP
Total 2,493,424 2,746,937
* PBOC stands for People‘s Bank of China
As at 31 December 2011, there was no renewal of past due long-term included in the
balance of long-term loans due within one year.
220
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
34. NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR (CONTINUED)
(2) The analysis of the Group’s non-current liabilities due within one year by categories is as follows: (continued)
(b) As at 31 December 2011, the top five long-term loans due within one year are as follows:
2011 2011 2010 2010
Initial date of the Maturity date of the
Lender Currency Interest rate (%) Original Original
loans loans RMB RMB
currency Currency
1.China
Development 19/06/2009 18/06/2012 USD LIBOR +2.08% 80,000 504,702 - -
Bank
2. Bank of
21/07/2009 17/07/2012 RMB PBOC Benchmark Rate 500,000 500,000 - -
Communications
3. China
Development 12/12/2007 21/06/2012 USD 6-month LIBOR+90BP 60,000 378,054 - -
Bank
4. China
Development 12/12/2007 21/12/2012 USD 6-month LIBOR+90BP 60,000 378,054 - -
Bank
5. Bank of China 19/10/2009 19/10/2012 USD 3-month LIBOR+55BP 48,500 305,594 - -
Total 2,066,404 -
(3) Long-term payables due within one year
As at 31 December 2011, long-term payables due within one year included net financial leasing payable of RMB 66,894,000, which is
total amount of RMB 73,234,000 minus unrecognised financing expenses of RMB 6,340,000.
As at 31 December 2010, long-term payables due within one year included net financial leasing payable of RMB 97,584,000, which is
total amount of RMB 107,499,000 minus unrecognised financing expenses of RMB 9,915,000.
The Group had no financial leasing guaranteed by independent third parties.
221
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
34. NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR (CONTINUED)
(3) Long-term payables due within one year (continued)
As at 31 December 2011, long-term payable due within one year was as follows:
Interest Ending Requirement
Lender Period Initial Cost Interest Rate (%) Payable Balance
1.China Merchant Finance Leasing Ltd. from 19 September 2010 to 19 September 2013 312,300 PBOC Benchmark 6,340 66,894 Nil
Rate -8.00%
222
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
35. LONG-TERM LOANS
(1) The analysis of the Group’s long-term loans is as follows:
Item Note 2011 2010
Bank loans
- Credit loans 4,424,142 2,534,754
- Guarantee loans (a) 344,500 772,202
- Secured loans (c) 1,371,698 460,146
- Pledge loans (b) 432,245 145,046
Total 6,572,585 3,912,148
Long-term loans in original currencies are as follows:
2011 2010
Annual Original Exchange Annual Original Exchange
interest rate currency rate RMB interest rate currency rate RMB
000 000 000 000
Bank loans
- RMB PBOC*‘s 3,642,400 1.0000 3,642,400 3.51% 1,438,770 1.0000 1,438,770
Benchmark ~ 5.85%
Rate+10%~
PBOC‘s
Benchmark
Rate -5%
- USD LIBOR+55BP~ 383,206 6.3009 2,414,544 LIBOR+30~ 370,000 6.5897 2,438,189
4.88% 185BP
- HKD HKIBOR+1.7 634,451 0.8107 514,350 HKIBOR - - -
% ~ 2.3% +17~33BP
-AUD - 201 6.4093 1,291 - - 6.7050 -
-EUR - - 8.1625 - EURIBOR 4,000 8.7979 35.189
+65BP
Total 6,572,585 3,912,148
223
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
35. LONG-TERM LOANS
(1) The analysis of the Group’s long-term loans is as follows:
(a) As at Dec 31, 2011, Raffles, the subsidiary of the Group borrowed
RMB310,000,000 secured with its marine space using right, and CIMC
Tianyu borrowed RMB34,500,000 secured with the land use right and
buildings owned by Huayu Hotel, a subsidiary of CIMC Tianyu.
(b) As at 31 December 2011, the Group‘s pledge loan borrowed by Raffles
amounted to USD68,600,000, equivalent to RMB432,245,000, which was
pledged by equity interest of Caspin Driller Pte. Ltd., a subsidiary of Raffles.
(c) As at 31 December 2011, the Group‘s long-term guarantee loans included
bank loans amounting to RMB1,027,130,000, guaranteed by the Company for
its subsidiaries; RMB150,000,000 guaranteed by Raffles for its subsidiaries;
RMB194,568,000, guaranteed by Enric for its subsidiaries.
(d) No amount due to the shareholders who hold 5% or more of the voting rights
of the Company is included in the above balance of long-term loans.
224
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
35. LONG-TERM LOANS (CONTINUED)
(2) The analysis of the Group’s long-term loans is as follows: (continued)
(a) As at 31 December 2011, the top five long-term loans are as follows:
2011 2010
Initial date of the Maturity date of the
Lender Currency Interest rate (%) Original Original
loans loans RMB RMB
currency currency
000 000 000 000
1. China Development Bank 6-month
12/12/2007 10/12/2013 USD LIBOR +90BP 150,000 945,135 270,000 1,701,243
2. ABN AMRO LIBOR + 711,057
30/04/2011 30//04/2014 USD 1.5%~1.7% 112,850 - -
st
3. The Export-Import Bank of 4.76% for the 1 500,000
China quarter and will be
reviewed every
01/02/2011 01/02/2014 RMB quarter 500,000 - 11,527
4. China Development Bank 30/11/2011 30/11/2018 USD 4.88% 68,601 432,245 - 1,701,243
5. The Export-Import Bank of 20/01/2011 07/01/2014 RMB 4.76% for the 1st 400,000
China quarter and will be
reviewed every
quarter 400,000 - -
Total 2,988,437 1,701,243
As at 31 December 2011, there was no renewal of past due long-term bank loans included in the above balance of long-term
loans.
225
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
36. DEBENTURES PAYABLE
Balance at the Addition Decrease Balance at the
Item beginning of the year during the year during the year end of the year
medium-term notes-
11 CIMC MTN1 - 3,988,438 - 3,988,438
(1) The analysis of debentures payable is set out as follows:
Balance of
interest Balance of
payable at interest
the payable at Balance at
Issuance beginning Interest Interest the end of the end of
Debenture name Face value Issuance date Period amount of the year accrued paid the year the year
medium-term
notes -11CIMC
MTN1 4,000,000 23 May 2011 5 years 4,000,000 - (11,562) - (11,562) 3,988,438
The company issued medium-term notes (MTN) on 20 May 2011 with a ceiling of
RMB 6 billion to institutional investors in the national inter-bank bond market. The
first phase of MTN with a total amount of RMB 4 billion, a term of five years from
23 May 2011 to 22 May 2016, par value of RMB 100 per note and fixed interest rate
of 5.23% per annum was successfully issued publicly. Interest is to be paid on 23rd
May each year in the arrears until redemption and par value is to be paid on 23 May
2016. The notes are unsecured and targets institutional investors in the national inter-
bank market. China Merchants Bank Co., Ltd. is the lead underwriter. Book building
and centralised placing were adopted for this issue. The MTN recorded as debenture
was subsequently measured at amortized cost using the effective interest.
37. Long-term payable
Item Note 2011 2010
Financial Leasing payables (2) 86,846 118,858
226
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
37. Long-term payable (continued)
(1) As at 31 December 2011, the top three of long-term payables (including all
long-term payable) were as follows:
Interest Interest Ending Requirement
Lender Period Initial Cost Payable Balance
Rate (%)
1. CMB from 19 312,300 PBOC 1,746 53,179 Nil
Financial September 2010 benchmar
Leasing Co., to 19 September k rate-8%
Ltd. 2013
2. Bank of from 20 17,397 3.13% - 17,397 Nil
America December 2011
to 20 September
2018
3.Bank of from 4 16,270 3.15% - 16,270 Nil
America November 2011
to 4 September
2018
Total 1,746 86,846
As at 31 December 2011, balance of the long-term payable of the Group
included balance amounting to RMB33,667,000 denominated in USD. There
was no balance denominated in foreign currency as at 31 December 2010.
(2) Breakdown of financial leasing payable
As at 31 December 2011, the total future minimum lease payments under
finance leases, which are based on contractual undiscounted cash flows
(including interest payments computed using contractual rates or, if floating,
based on rates current at the balance sheet date), were as follows:
2011 2010
Within 1 year (inclusive) 73,234 107,499
After 1 year but within 2 (inclusive) 54,925 73,234
After 2 year but within 3 (inclusive) - 51,675
After 3 years 33,667 -
Subtotal 161,826 232,408
Less: unrecognised finance charges (8,086) (15,966)
Carrying amounts 153,740 216,442
Please refer to note V.35 for net financial leasing payable due within one year
minus unrecognised financing expenses.
227
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
37. Long-term payable (continued)
The Group had no financial leasing guaranteed by third party in the year.
The Group had no amount due to shareholders who hold 5% or more of the voting
rights of the Company or related parties.
38. SPECIAL PAYABLES
Effect of
Balance at Additions Settlements foreign Balance at
the beginning during during exchange the end
Item of the year the year the year rate changes of the year
Project funds 16,442 2,566 10,068 - 8,940
39. OTHER NON-CURRENT LIABILITIES
2011 2010
Deferred income 198,564 178,008
40. SHARE CAPITAL
The Company‘s share capital status at 31 December is as follows:
Change of
Balance at the shares subject
beginning Additions to selling Balance at the
of the year during the year restriction end of the year
Shares subject to
selling restriction
- Shares held by
overseas legal
persons - - - -
- Share held by
domestic natural
persons 620 - (247) 373
Shares not subject to
selling restriction
- RMB denominated
ordinary shares 1,231,297 - 247 1,231,544
- Domestically listed
foreign shares 1,430,479 - - 1,430,479
2,662,396 - - 2,662,396
The face value of the aforesaid shares was RMB 1.00 per share.
228
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
41. CAPITAL RESERVE
Balance at Additions Settlements Effect of Balance at
the beginning during during functional the end
Item of the year the year the year currency change of the year
Share premiums 201,222 - - - 201,222
Other capital reserves
- Property revaluation
reserve 54,979 - - (11,225) 43,754
- Exchange reserve on
foreign currency
capital 866 - - (174) 692
- Donated non-cash
assets reserve 324 - - (67) 257
- Net changes in fair
value of
available-for-sale
financial assets 727,466 - (195,700) (28,490) 503,276
- Effective portion of
changes in fair value
of cash flow hedges 14,070 - (745) (541) 12,784
- Deferred tax effect (176,272) 46,922 - 6,594 (122,756)
- Equity settled
share-based
payment 82,432 117,805 (3,283) 196,954
- Capital reserves due
to minority
shareholders‘
contribution 88,251 - - (9,227) 79,024
- Capital reserves
due to acquiring
minority
shareholders‘
equity 256,078 - - (8,964) 247,114
- Decreased capital
reserves due to
minority shareholders‘ - - (58,964) - (58,964)
contributor
- Others 100,004 2,695 - (406,795) (304,096)
1,349,420 167,422 (255,409) (462,172) 799,261
229
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
42. SURPLUS RESERVE
Balance at Additions Settlements Effect of Balance at
the beginning during during functional the end
Item of the year the year the year currency change of the year
Statutory surplus
reserve 1,331,198 92,110 - (260,240) 1,163,068
Discretionary
surplus reserve 2,246,390 - - (456,298) 1,790,092
Total 3,577,588 92,110 - (716,538) 2,953,160
43. RETAINED EARNINGS
Item Note Amount Appropriation
proportion
Retained earnings brought forward 10,689,335 ─
Add: profit attributable to shareholders of the
Company 3,690,926 ─
Less: appropriation to statutory surplus reserve 10% of the net
profit was
appropriated to
statutory surplus
(92,110) reserve
Dividends of ordinary shares (1) (931,839) ─
Decrease in retained earnings resulted from
acquiring minority interest (2) (19,843) ─
Decrease in retained earnings resulted from
functional currency change (551,377) ─
Retained earnings carry forward (3) 12,785,092 ─
(1) Dividends of ordinary shares declared during the year
Pursuant to the shareholders‘ approval at the Shareholders‘ Meeting on 13 April 2011,
a cash dividend of RMB 0.35 per share (2010: RMB 0.12 per share) totaling
RMB931,839,000 (2010: RMB319,488,000) was declared and paid to the Company‘s
ordinary shareholders on 31 May 2011.
230
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(2) Decrease from acquisition of minority interests
CMICHK, a wholly-owned subsidiary of the Company, entered in an equity transfer
agreement on 25 August 2011 with Jiaozhou Economic and Technological
Development and Construction Corporation (―JZETDC‖), the minority equity holder
of the Company‘s subsidiary QDCRC. Pursuant to the agreement, CIMC Hong Kong
acquired 10.70% equity interest of QDCRC from JZETDC at a cash consideration of
USD7,190,000 (RMB46,099,000). After the transaction, the share of equity in interest
in QDCRC held by CIMC Hong Kong increased from 68.23% to 78.93%. Therefore,
the direct or indirect share of equity in interest in QDCRC held by CIMC Hong Kong
increased from 89.30% to 100%. Because share premium was insufficient to be
reversed, retained earnings amounting to RMB18,686,000 of CIMC Hong Kong were
reversed based on the excess of acquisition cost for the additional equity interest over
CIMCHKI‘s share of the carrying value of QDCRC‘s net assets amount for the
additionally acquired equity interest.
According to the equity transfer agreement entered into between Enric, a subsidiary
of the Company, and He Hongxing, a minority shareholder of Jingmen Hongtu
Machinery Manufacturing Company Limited (―JMHT‖), a subsidiary of Enric, Enric
purchased 40.00% equity of JMHT from He Hongxing in the consideration of RMB
3,600,000. After the equity transfer, Enric increased its equity interest in JMHT from
60% to 100%. The excess amount of additional investment cost over Enric‘s
additional interest in the carrying amount of the net assets of JMHT amounting to
RMB 1,157,000 should have been adjusted to share premium in capital reserve.
However, as the balance of the share premium was insufficient, the excess was
adjusted to retained earnings.
(3) Retained earnings at the end of the year
As at 31 December 2011, the retained earnings attributable to the Company included
an appropriation of RMB674,381,000 to surplus reserve made by the subsidiaries
(2010: RMB583,087,000).
231
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
44 OPERATING INCOME AND OPERATING COST
(1)
Item 2011 2010
Operating income 62,799,402 50,663,426
Other operating income 1,325,651 1,104,890
Operating cost 52,224,731 43,597,815
There was no individual construction contract whose revenue amounted to more than
10% of the total operating income.
(2) Operating income and operating cost (by industries and by products)
2011 2010
Operating Operating
Industry income Operating cost income Operating cost
Containers 34,531,285 27,861,725 24,949,668 20,210,417
Trailers 16,492,375 14,229,990 16,255,487 14,019,450
Tank equipments 8,087,583 6,683,434 5,081,191 4,225,770
Offshore Engineering 540,920 918,822 2,391,112 3,218,922
Air ground facilities 544,289 350,893 307,079 229,260
Others 2,602,950 1,664,405 1,678,889 1,161,946
Total 62,799,402 51,709,269 50,663,426 43,065,765
(3) Operating income and operating cost (by regions)
2011 2010
Operating Operating Operating Operating
Regions income cost income cost
P.R China 57,619,027 47,211,361 47,521,140 40,261,708
America 1,762,144 1,620,224 956,129 917,356
Europe 2,153,273 1,881,668 1,670,704 1,444,836
Asia 192,147 168,113 106,315 92,736
Others 1,072,811 827,903 409,138 349,129
Total 62,799,402 51,709,269 50,663,426 43,065,765
The regional operating income and operating cost is determined on the location at
which the services were provided or the goods were delivered.
232
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
44. OPERATING INCOME AND OPERATING COST (CONTINUED)
(4) Operating income of top five customers in 2011 is as follows:
Percentage
of total
operating
Customer Operating income income (%)
1. A.P. Moller-Maersk A/S 4,621,630 7.21%
2. TAL International Container Corperation 2,229,910 3.48%
3. Mediterranean Shipping Co. S.A. 1,897,313 2.96%
4. Compagnie Maritime. d‘ Affretement 1,493,308 2.33%
5. Cronos Containers Ltd. 1,362,007 2.12%
Total 11,604,168 18.10%
The Group‘s operating income of top five customers in 2010 totaled
RMB12,871,529,000, accounting for 24.86% of total operating income.
45. BUSINESS TAXES AND SURCHARGES
Category 2011 2010 Taxation basis and rate
Business tax 89,765 43,947 3% - 5% of operating income
Urban maintenance
And construction tax 114,746 23,527 7% of VAT and business tax paid
Education fee
and surcharges 84,051 5,150 3% - 5% of VAT and business tax paid
Land appreciation Tax 14,009 511 Appreciation amount in transferring
property and applicable tax rate
Others 42,152 3,757
344,723 76,892
46. SELLING AND DISTRIBUTION EXPENSES
Category 2011 2010
Transportation and distribution charges 944,824 623,084
External sales commission 83,486 64,320
Employ benefit 213,927 180,967
Warranty 164,388 41,405
Others 461,275 340,467
Total 1,867,900 1,250,243
233
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
47. GENERAL AND ADMINISTRATIVE EXPENSES
Category 2011 2010
Low-value consumables and materials consumed 87,845 60,271
Rental 66,302 43,411
Depreciation 170,771 147,697
Employ Benefit 1,283,015 891,417
Taxes and surcharges 140,576 118,005
Agency fee 141,716 158,554
Technology development costs 359,597 226,503
Amortisation 233,689 249,010
Performance Bonus and president bonus 487,499 289,171
Share-based payment expenses 122,642 70,556
Office expenditure, entertainment fee and others 673,569 479,769
Total 3,767,221 2,734,364
48. FINANCIAL EXPENSES
2011 2010
Interest expenses from loans and payables 903,749 472,312
Less: Borrowing costs capitalised 240,988 12,717
Interest income from deposits and receivables (217,942) (69,085)
Net exchange losses / (gains) 208,872 225,878
Other financial expenses 130,008 53,395
Total 783,699 669,783
234
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
49. (LOSSES) / GAINS FROM CHANGES IN FAIR VALUE
Sources of gain/loss
from changes in fair value 2011 2010
Financial assets held for trading
- Changes in fair value during the year
1. Gains from changes in fair value of
held for trading investments (33,905) 171,617
2. (Losses) / gains from changes in fair value
of derivative financial instrument (86,378) 94,032
- Income for derecognised
financial assets held for trading (32,453) (13,540)
Subtotal (152,736) 252,109
Financial liabilities held for trading
- Changes in fair value during the year
1. Gains / (losses) from changes
in fair value of derivative
financial instrument 52,159 (17,191)
Total (100,577) 234,918
235
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
50. INVESTMENT INCOME
(1) The analysis of the Group’s investment income is as follows:
Category Note 2011 2010
Long-term equity investments
in cost method (2) 10,100 7,458
Long-term equity investments
in equity method (3) 44,120 102,938
Gains / (losses) on disposal of long-term
equity investments 13,286 (144,206)
Investment gains of held-for-trading
financial assets - 2,280
Investment gains of available-for-sale
financial assets 13,030 18,452
Gains on sale of
held-for-trading
financial assets 32,453 13,540
Gains on sale of available-for-sale
financial assets - 40,641
Others (4,296) (2,462)
Total 108,693 38,641
(2) Long-term investments in cost method with individual investment income over 5%
of total investment income or less than 5% but ranked the top five investment
income for the year are as follows:
Reasons for variances
Investee 2011 2010 between two years
BOCM Schroder Stolt Fund More cash dividend was distributed
Management 10,000 7,458 during the year
No cash dividend distribution during
Stolt-Nielsen Limited 100 - the year
Total 10,100 7,458 ─
236
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
50. INVESTMENT INCOME (CONTINUED)
(3) Long-term investments in equity method with individual investment income over
5% of total investment income or less than 5% but ranked the top five investment
income for the year of 2011 are as follows:
Reasons for variances
Investee 2011 2010 between two years
TJCIMCZL Changes in profit and loss of the
23,385 87,698 investee
Shanghai Fengyang Changes in profit and loss of the
50,098 20,010 investee
KYH Changes in profit and loss of the
7,610 8,696 investee
NCIMCL Changes in profit and loss of the
4,574 3,549 investee
Xiamen Haitou Changes in profit and loss of the
2,813 3,049 investee
Total 88,480 123,002 ─
Note1: Only top five investees with largest profits before income tax are listed
above.
Note2: There was no significant restriction on the remittance of investment income
to the investor.
51. IMPAIRMENT LOSSES
Item 2011 2010
Accounts receivable 98,052 70,744
Prepayments 37 61,176
Other receivables 22,254 48,660
Inventories 184,212 57,610
Non-current assets due within one year 5,148 8,932
Long-term receivables 27,597 9,785
Long-term equity Investments 2 -
Fixed assets 7,782 17,703
Intangible assets 52,264 -
Goodwill 12,254 -
Total 409,602 274,610
237
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
52. NON-OPERATING INCOME
(1) The analysis of the Group’s non-operating income is as follows:
Amount
included in
non-operating
income /
losses for
Item Note 2011 2010 the year
Gains on disposal of
fixed assets 9,150 1,452 9,150
Gains on disposal of
intangible assets 18,646 1,315 18,646
Compensation income 14,757 24,607 14,757
Penalty income 4,265 8,307 4,265
Gains on fixed assets
surplus 254 128 254
Government grants (2) 267,349 93,685 267,349
Recovery due to
accrual of contingent
consideration on
enterprise combination - 40,805 -
Gain on enterprise
combination - 84,166 -
Others 55,772 37,554 55,772
Total 370,193 292,019 370,193
(2) Government grants
Item 2011 2010
Financial subsidies 265,819 92,370
Tax refund 1,530 1,315
Total 267,349 93,685
238
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
53. NON-OPERATING EXPENSES
Amount
included in
non-operating
income /
losses for
Item 2011 2010 the year
Losses on disposal of
fixed assets 28,082 23,318 28,082
Donation expenses 1,911 2,751 1,911
Penalty expenses 1,939 2,173 1,939
Compensation expenses 1,827 4,974 1,827
Others 49,021 22,364 49,021
Total 82,780 55,580 82,780
54. INCOME TAX
2011 2010
Current tax expenses for the year 1,477,811 853,500
Deferred taxation (114,043) (29,752)
Total 1,363,768 823,748
239
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
54. INCOME TAX (CONTINUED)
(2) Reconciliation between income tax expenses and accounting profits is as follows:
Item 2011 2010
Profits before taxation 5,022,706 3,674,607
Expected income tax expenses
at applicable tax rates 1,255,677 884,453
Effect of tax incentive (281,600) (150,204)
Tax effect of non-
deductible expenses 61,881 28,983
Tax effect of non-
taxable income (25,814) (75,642)
Tax effect of utilisation of tax
losses not recognised
in prior years (52,029) (247,273)
Tax effect of unrecognised tax losses 215,727 167,057
Deductible temporary differences of
unrecognised deferred tax assets 88,809 120,945
Effect of tax rate change on deferred tax 12,144 17,224
Tax refund for income tax annual filing (35,098) (17,966)
Domestic purchased equipment tax refund (2,662) (8,022)
Income tax accruals for profit of foreign
holding companies in current year 126,733 104,193
Income tax expenses 1,363,768 823,748
55. CALCULATION OF EARNINGS PER SHARE AND DILUTED
EARNINGS PER SHARE
(1) Basic earnings per share
The calculation of basic earnings per share is based on the consolidated profit
attributable to ordinary equity shareholders of the Company during the year and the
weighted average ordinary shares in issue:
2011 2010
Consolidated profit attributable to ordinary
equity shareholders of the Company 3,690,926 3,001,851
Weighted average of ordinary shares in issue (‘000) 2,684,722 2,666,555
Basic earnings per share 1.37 1.13
240
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
55. CALCULATION OF EARNINGS PER SHARE AND DILUTED
EARNINGS PER SHARE
(1) Basic earnings per share (continued)
Calculation of weighted average
number of ordinary shares 2011 2010
Issued ordinary shares at 1 January (‘000) 2,662,396 2,662,396
Weighted average number of ordinary
shares at 31 December (‘000) 2,662,396 2,662,396
(2) Diluted earnings per share
The calculation of diluted earnings per share is based on the consolidated profit
attributable to ordinary equity shareholders of the Company during the year and the
adjusted weighted average of ordinary shares in issue:
Note 2011 2010
Consolidated profit attributable
to ordinary equity shareholders
of the Company (diluted) (a) 3,690,926 3,001,851
Weighted average of ordinary
shares in issue (diluted) (‘000) (b) 2,684,722 2,666,555
Diluted earnings per share 1.39 1.13
(a) Calculation of Consolidated profit attributable to ordinary equity shareholders
of the Company (diluted):
2011 2010
Consolidated profit attributable
to ordinary equity shareholders
of the Company 3,690,926 3,001,851
(b) Calculation of weighted average number of ordinary shares (diluted):
2011 2010
Issued ordinary shares at 1 January (‘000) 2,662,396 2,662,396
Effect of share options (‘000) 22,326 4,159
Weighted average number of ordinary
shares at 31 December (diluted) (‘000) 2,684,722 2,666,555
241
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
55. CALCULATION OF EARNINGS PER SHARE AND DILUTED
EARNINGS PER SHARE (CONTINUED)
(2) Diluted earnings per share
The board of directors the Company was authorised to grant 60,000,000 shares
(2.25% of the total issued shares 2,662,396,051 of the Company) to the senior
management and other staff. According to the share options plan in Note VII.2, there
is no exercisable share options during the year. Please refer to note VII for the details
of share options.
56. OTHER COMPREHENSIVE INCOME
Item 2011 2010
1. Losses on available-for-sale financial assts (195,700) (257,827)
Less: Effect of income tax arising from
available-for-sale financial assets (45,517) (46,652)
Amount recognised in other
comprehensive income in prior
period transferred to profit and loss
in current period - 51,388
Subtotal (150,183) (262,563)
2. Gain on cash flow hedges financial
instrument 3,162 6,531
Less: Effect of income tax arising from
cash flow hedges financial
instrument (119) (864)
Amount recognised in other
comprehensive income in prior
period transferred to profit and loss
in current period 2,621 14,026
Subtotal 660 (6,631)
3. Effect of foreign exchange rate changes (339,575) (267,232)
4. Others 2,695 72
Total (486,403) (536,354)
242
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
57. NOTES TO CASH FLOW STATEMENT
(1) Other cash received from operating activities
Item Amount
Cash received from government grants related to assets 20,556
Cash received from government grants related to income 265,819
Cash received from penalty 4,265
Cash received from quality compensation 14,757
Others 58,338
Total 363,735
(2) Other cash paid for operating activities
Item Amount
Cash paid for transportation expenses 944,824
Cash paid for rental, insurance and other selling expenses 447,602
Cash paid for technical development fee 359,597
Cash paid for warranty 54,071
Cash paid for commission of external sales 83,486
Cash paid for entertainment 109,777
Cash paid for travelling, office expenses and other expenses in
ordinary operation 1,289,257
Total 3,288,614
(3) Other cash paid for investing activities
Item Amount
RMB000
Interest income received from deposits and receivables 220,654
(3) Other cash paid for financing activities
Item Amount
Cash paid for finance leases 62,702
243
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
58. INFORMATION TO CASH FLOW STATEMENT
(1) Supplement to cash flow statement:
1 Reconciliation of net profit to cash flow from operating activities:
Supplement 2011 2010
Net profit 3,658,938 2,850,859
Add: Impairment for assets 409,602 274,610
Depreciation of fixed assets 817,698 1,149,802
Amortisation of intangible assets 252,935 209,506
Amortisation of long-term deferred
expenses and investment
properties 25,147 25,218
Losses on disposal of fixed assets,
intangible assets and other
long-term assets 286 20,551
Reverse of gains from accrued
contingent consideration of
enterprise combination - (40,805)
Gains from enterprise combination - (84,166)
Losses / (Gains) on changes in fair
value 100,577 (234,918)
Financial expenses 444,819 390,510
Investment income (108,693) (38,641)
Share-based payment expenses 122,642 70,556
Increase in deferred tax assets (173,074) (191,493)
Increase in deferred tax liabilities 19,705 170,592
Increase in gross inventories (2,223,824) (5,245,471)
Increase in operating receivables (2,333,121) (3,917,112)
Increase in operating payables 1,544,272 5,883,231
Effect of foreign exchange rate
changes (303,472) 190,072
Net cash inflow from operating activities 2,254,437 1,482,901
2 Significant investment or finance activities not related to cash is as follows:
Item 2011 2010
Assets acquired under finance leases - 216,442
244
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
58. INFORMATION TO CASH FLOW STATEMENT (CONTINUED)
(1) Supplement to cash flow statement (continued):
3 Cash and cash equivalents held by the Group is as follows:
Item 2011 2010
Cash at bank and on hand at the end
of the year 6,563,253 3,797,415
Less: Cash at bank and on hand at the
beginning of the year 3,797,415 4,396,525
Net increase / (decrease) of cash at bank
and on hands 2,765,838 (599,110)
(2) Information on acquisition of subsidiaries and other business units during the year
Item 2011 2010
1. Consideration for acquiring subsidiaries
and other business units 92,409 1,110,516
2 Cash and cash equivalents paid for
acquiring subsidiaries and other business
units 92,409 1,110,516
Less: Cash and cash equivalents held by
subsidiaries and other business
units 2,591 773,685
Less: Cash and cash equivalents already
paid - -
3. Net cash paid for the acquisition 89,818 336,831
4. Non-cash assets and liabilities held by
the acquired subsidiaries and other
business units
Current assets 312,006 5,763,900
Non-current assets 8,796 3,573,722
Current liabilities (263,258) (5,278,977)
Non-current liabilities (2,217) (1,592,747)
Minority interest - (95,164)
245
2011 Annual Report
V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
58. INFORMATION TO CASH FLOW STATEMENT (CONTINUED)
(3) Cash and cash equivalents held by the Group is as follows
Item 2011 2010
Cash at bank and on hand
Including: Cash at bank 2,415 2,893
Bank deposits available on demand 6,197,423 3,741,518
Other monetary funds available on demand 363,415 53,004
Closing balance of cash and cash equivalents 6,563,253 3,797,415
Note: Aforesaid ―Cash at bank and on hand‖ excluded restricted cash and short-term
investment.
VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
1. The company does not have immediate holding company.
2. For the information on the subsidiaries of the company, refer to Note IV.1.
3. For the information about the associates and joint ventures of the Group,
refer to Note V.12(3).
246
2011 Annual Report
VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
(CONTINUED)
4. OTHER RELATED PARTIES RELATIONSHIPS
Organisation name Relationship with the Group Organisation code
Florens Container Services Ltd. Subsidiary of significant shareholder N/A
Florens Container Corporation S.A. Subsidiary of significant shareholder N/A
Florens Maritime Limited Subsidiary of significant shareholder N/A
Shenzhen China Merchants Real
Estated Co., Ltd Subsidiary of significant shareholder 61884513-6
Shenzhen CIMC Skyspace
Real Estate Development Minority shareholder of subsidiary 71526714-7
Gasfin Minority shareholder of subsidiary N/A
WHRJI Minority shareholder of subsidiary 78858986-8
PGM Minority shareholder of subsidiary N/A
COSCO Countainer Industries Limited Significant shareholder N/A
China Merdant International Ltd. Significant shareholder N/A
Bright Touch Minority shareholder of subsidiary N/A
Yantai Shipyard Minority shareholder of subsidiary N/A
Xiamen Haitou Associates of the Group 66473091-1
XMHJ Associates of the Group 55624298-8
DLJLL Associates of the Group 71696834-0
GXNFWL Associates of the Group 56158545-9
HBIO Associates of the Group 66934186-X
Qingdao Global International Airline
Services Ltd. Minority shareholder of subsidiary 74722427-2
Leung Kee Minority shareholder of subsidiary N/A
C & C Trucks Associates of the Group 68685184-5
Shaanxi Heavy Duty Automobile Co., Ltd. Minority shareholder of subsidiary 74127207-0
MSC Associates of the Group N/A
Sumitomo Minority shareholder of subsidiary N/A
Note: Significant shareholders represent shareholders holding more than 5%
(inclusive) of the Company‘s shares.
247
2011 Annual Report
VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
(CONTINUED)
5. TRANSACTIONS WITH RELATED PARTIES
The following transactions with related parties were conducted under normal
commercial terms or relevant agreements.
(1) Purchase of goods and receiving of services
The Group
2011 2010
Nature of Transaction Percentage Percentage
Related party Pricing Mechanism
transaction details Amount on similar Amount on similar
deals (%) deals (%)
Other related Purchase of
party Purchase raw material 12,990 0.03% 5,802 0.03%
Other related Receiving Processing
conducted under
party services services normal non- 3,745 0.73% - -
Key related party
management transaction
staff Remuneration commercial terms 30,568 - 20,758 -
The Company
2011 2010
Nature of Transaction Pricing Percentage Percentage
Related party
transaction details Mechanism Amount on similar Amount on similar
deals (%) deals (%)
Key management staff Remuneration 30,568 - 20,758 -
(2) Sales of goods and provision of services
The Group
2011 2010
Nature of Transaction Percentage Percentage
Related party Pricing Mechanism
transaction details Amount on similar Amount on similar
deals (%) deals (%)
conducted under
normal non-
related party
Other related Sales of transaction
party Sales containers commercial terms 2,408,908 4.74% 1,542,395 6.18%
248
2011 Annual Report
VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
(CONTINUED)
5. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
(3) Funding
The Group
Earned interest
income/recognised
Funding interest expense
Related party amount Initial date Maturity date during the year Note
Borrowings
19 September Not fixed
Gasfin 38,698 2008 repayment date 256 Shareholder loans
Lending
25 December Not fixed
Shanghai Fengyang 167,672 2007 repayment date 8,665 Shareholder loans
Not fixed
XYW 3,952 20 June 2006 repayment date - Shareholder loans
Advance payment
for capital
14 August Not fixed injection to
PGM 122,438 2009 repayment date - subsidiary
1 December Not fixed
MSC 288,217 2007 repayment date - Shareholder loans
The Company
Earned interest
income/recognise
Funding d interest expense
Related party amount Initial date Maturity date during the year Note
Lending
25 December Not fixed
Shanghai Fengyang 167,672 2007 repayment date 8,665 Shareholder loans
(4) Other related party transactions
(i) Sale of a subsidiary
In 2007, CIMC Shenfa Development Co., Ltd. (―CIMCSD‖), a subsidiary of
the Group and Shenzhen China Merchants Real Estate Co., Ltd., entered into a
share transfer agreement, in which CIMCSD will transfer 60% of the equity of
Shanghai Fengyang to Shenzhen China Merchants Real Estate Co., Ltd for a
price of RMB 353,250,000. As at 31 December 2011, RMB 70,650,000 of the
total price had not been paid.
249
2011 Annual Report
VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
(CONTINUED)
5. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
(4) Other related party transaction s(continue)
(ii) Purchase of minority shareholder interest yet to be completed
CIMC Hong Kong, a wholly own subsidiary of the Group had entered into an
agreement with Leung Kee Bright Touch, and Yantai Shipyard, minority
shareholders of CIMC Offshore, to acquire a total of 38.24% equity of CIMC
Offshore for the consideration of USD 113,724,000, equivalent to RMB
716,556,000. After the equity transaction, CIMC Hong Kong will increase its
equity interest in CIMC Offshore from 61.76% to 100%. The purchase of
minority shareholder interest is yet to be completed as at 31 December 2011
and CIMC Hong Kong has recorded payment USD 50,000,000 (RMB
315,735,000) to Leung Kee in other receivables.
(iii) Share options granted to key management personnel
The Company adopted a new share options scheme since 28 September 2010
(see note VII). Details of share options granted to key management personnel
are as follows:
Name Position Number of granted share options
(in‘000)
Mai Boliang President, Chairman 3,800
Zhao Qingsheng Vice Chairman 1,500
Li Ruiting Vice Chairman 1,300
Wu Fapei Vice Chairman 1,000
Li Yinhui Vice Chairman 1,000
Yu Ya Vice Chairman 1,000
Liu Xuebin Vice Chairman 1,500
General Manager of Finance
Jin Jianliong 1,000
Department
General Manager of Treasury
Zeng Beihua 1,000
Department
Yu Yuqun Secretary of the Board 1,000
Total 14,100
250
2011 Annual Report
VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
(CONTINUED)
5. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
(4) Other related party transactions (continued)
(iii) Share options granted to key management personnel (continued)
Some key management personnel were not only granted the above share
options of the Company but also were granted share options of Enric, the
subsidiary of the Company. Details are as follows:
Number of granted
Name Position share options (in000)
Zhao Qingsheng Vice Chairman 1,450
Wu fapei Vice Chairman 500
General Manager of 1,100
Jin Jianliong Finance Department
Yu Yuquan Secretary of the Board 1,100
合计 4,150
For detailed information for fair value of the granted share options aforesaid,
please refer to Note VII.
251
2011 Annual Report
VI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
(CONTINUED)
6. THE BALANCES WITH RELATED PARTIES AS AT 31 DECEMBER
ARE SET OUT AS FOLLOWS:
Receivables:
The Group
Caption Note 2011 2010
Accounts receivable V.4 109,096 89,035
Other receivables V.5 980,115 557,348
Payables:
The Group
Caption Note 2011 2010
Accounts payable 2,334 1,263
Other payables V.32 529,054 232,453
VII. SHARE-BASED PAYMENTS
1. INFORMTION ABOUT SHARE-BASED PAYMENTS
RMB000
Total equity instruments granted during the year 83,555
Total equity instruments exercised during the year -
Total equity instruments forfeited during the year 45,769
The exercise price of outstanding share options at 1. Equity-settled share options granted
the end of the year and residual life of the share by Enric in 2009 and 2011: HKD4 and
options contracts HKD2.48 per share respectively, the
residual life of contract is 7.83 and
9.82 years respectively;
2. Equity-settled share options granted
by Raffles in 2007 and 2008: from
USD 1.64 to USD 4.39 per share, the
residual life of contract is 0.5 and 5.72
years respectively; cash-settle share
options granted by Raffles in 2011:
RMB 17.57 per share, the residual life
of contract is 3.75 and 8.75 years.
3. Equity-settled share options granted by
the Company in 2010 and 2011:
RMB12.04 and RMB 17.57 per share
respectively, the residual life of
contracts is both 8.74 years
The price of other outstanding equity instruments
at the end of the year and residual life of relevant -
contracts
252
2011 Annual Report
VII. SHARE-BASED PAYMENTS (CONTINUED)
1. INFORMTION ABOUT SHARE-BASED PAYMENTS (CONTINUED)
Expenses recognised for the year arising from share-based payments are as follows:
2011 2010
Equity-settled share-based payment 122,138 70,556
Cash-settled share-based payment 504 -
Total 122,642 70,556
2. INFORMATION ON EQUITY-SETTLED SHARE-BASED PAYMENT
(1) Information on equity-settled share-based payment of Enric
Enric, a subsidiary of the Company, carried out a share options plan (the ―Plan I‖),
which was approved by the shareholders‘ meeting on 11 November 2009. According
to the Plan, the key management personnel and other employees in Enric were
granted share options of Enric at nil consideration to subscribe for shares of Enric.
The options are 50% exercisable after one year from the date of grant and are then
100% exercisable after two years from the date of grant. Each option gives the holder
the right to subscribe for one ordinary share in Enric. The total number of share
options granted was 43,750,000, with the exercise price of HKD 4 per share.
Enric carried out another share options plan (the ―Plan II‖), which was approved by
the shareholders‘ meeting on 28 October 2011. According to Plan II, the board of
directors of the Company was authorised to grant share options to the key
management personnel and other employees of Enric at nil consideration to subscribe
for shares of Enric. The options are 40% exercisable after one year from the date of
grant and, 70% exercisable after 2 years from the date of grant, and then 100%
exercisable after 3 years from the date of grant. Each option gives the holder the right
to subscribe for one ordinary share in Enric. The total number of share options
granted was 38,200,000, with exercise price of HKD 2.48 per share.
253
2011 Annual Report
VII. SHARE-BASED PAYMENTS (CONTINUED)
2. INFORMATION ON EQUITY-SETTLED SHARE-BASED PAYMENT
(2) Information on equity-settled share-based payment of the Company
A share options scheme (the ―Scheme‖) was approved in the shareholders‘ meeting of
the Company held on 28 September 2010. According to the Scheme, the board of
directors of the Company was authorised to grant share potions to the key
management personnel and other employees to subscribe for shares of the Company.
The effective period of the Scheme is ten years from the first grant date of share
options. The options are exercisable in two periods. The options are 25% exercisable
from the first transaction date after 24 months since the grant date to the last
transaction date after 48 months since grant date. The remaining 75% are exercisable
from the first transaction date after 48 months since grant date to the last transaction
date of the Scheme. Each option gives the holder the right to subscribe for one
ordinary share in the Company. The total number of share options granted was
60,000,000, 54,000,000 among which were for the initial grant with exercise price of
RMB 12.39 per share while the remaining 6,000,000 options were for reservation
with exercise price of HKD 4 per share.
As mentioned in Note V.43(1), the Company distributed a cash dividend of RMB 0.35
per share on 31 May 2011 to ordinary shareholders which was approved by the
Shareholders‘ General Meeting on 13 April 2011. In accordance with the Scheme,
upon the implementation of the annual dividend distribution plan for 2010, the Board
of Directors would adjust the exercise price of the aforementioned 54,000,000 share
options granted on 29 September 2010. The adjusted exercise price is RMB 12.04 per
share.
According to the resolution approved by the Shareholders‘ General Meeting on 22
September 2011, the aforementioned 6,000,000 share options for reservation in the
Scheme on 28 September 2010 were granted with exercise price of RMB 17.57 per
share.
(3) Information on equity-settled share-based payment of Raffles
As mentioned in Note IV 6(1), before Raffles was acquired by the Company, Raffles
carried out a share option plan approved by the shareholders‘ meeting on 21 June
2006. According to the share options plan, the board of directors was authorised to
grant share options to the key management personnel and other employees to
subscribe for shares of Raffles. Each eligible participant purchased the share options
at the cost of SGD 1. The numbers of options were 6,355,003 and 1,154,003 granted
in 2007 and 2008 respectively by the board of directors, with the exercise prices of
from USD 1.64 to USD1.65, from NOK 10.50 to NOK 26.00, and from USD 1.6425
to USD 1.65. The longest effective period of the share options plan was ten years
from the first grant date of share options.
254
2011 Annual Report
VII. SHARE-BASED PAYMENTS (CONTINUED)
2. INFORMATION ON EQUITY-SETTLED SHARE-BASED PAYMENT
(4) Fair value of share options and data input in the valuation model is as follows:
Fair value of share option is estimated based on binomial lattice model. Contract term
of the share option is used as the input variable of this model. And the binomial lattice
model includes estimation of early execution of the option.
The followings are data of fair value of share options and factors taken into account
when using the binomial lattice model:
(a) Enric
2011 2010
Fair value of share options HKD 0.96 -
to HKD 1.08
Current share price HKD 2.48 -
Exercise price RMB 2.48 -
Expected fluctuation of stocks 55.98% -
Vesting period 10 years -
Expected dividends 2.67% -
Risk-free rate 1.566% -
Enric had no share option granted in 2010.
(b) the Group
2011 2010
Fair value of share options RMB 6.06 RMB 4.08
and RMB 8.57 and RMB 6.80
Current share price RMB 16.84 RMB 13.21
Exercise price RMB 17.57 RMB 12.39
Expected fluctuation of stocks 45% 45%
Vesting period 10 years 10 years
Expected dividends 0.00% 0.60%
Risk-free rate 3.87% and 3.95% 2.60% and 3.40%
255
2011 Annual Report
VII. SHARE-BASED PAYMENTS (CONTINUED)
2. INFORMATION ON EQUITY-SETTLED SHARE-BASED PAYMENT
(5) Basis of the best estimate of the number of equity instruments expected to vest is as
follows:
At each balance sheet date during the vesting period, the Company makes the best
estimation according to the latest information of the number of employees who are
granted to vest and revises the number of equity instruments expected to vest. On
vesting date, the estimate shall be equal to the number of equity instruments that
ultimately vested.
There was no significant difference of estimation between current year and last year.
Accumulated amount recognised in
capital reserve for equity-settled
share-based payments 196,954
Total expenses recognised for
equity-settled share-based
payments for current year 122,138
Including:
- attributable to the Company 105,164
- attributable to Enric 13,681
- attributable to Raffles 3,293
There is no share option exercised for the year. (2010: Nil).
256
2011 Annual Report
VII. SHARE-BASED PAYMENTS (CONTINUED)
3. INFORMATION ON CASH-SETTLED SHARE-BASED PAYMENT
According to the approved Share Appreciation Rights Scheme (draft) Revised
(―Scheme‖) during the board meeting of Raffles held on 27 September 2011, a
subsidiary of the Group, Raffles adopted Share Appreciation Rights (―SARs‖) which
is to grant the relevant incentive recipients the right to receive incentive amount in
cash from Raffles upon the satisfaction of relevant financial performance of Raffles.
Incentive amount is the excess of fair market price of A share of the Company on a
particular date over the exercise price.
The scope of incentive recipients of this scheme: the appointed senior management
who is non-Chinese nationality of Raffles and its subsidiaries or associates as well as
person(s) who made special contribution to the company in the discretion of the board.
Accordingly, the there are 4 incentive recipients in the scope with total 760,000 SARs
granted.
The Scheme is conditional, which sets stipulations for appraisal result of incentive
recipients‘ performance, misconduct activity and financial performance standards of
the Group to fulfill.
The SARs are exercisable in 2 installments periods after 2 years from the rights grant
date upon the satisfaction of exercisable conditions.
(1) The SARs are up to 25% exercisable from the first transaction date after 24
months since grant date to the last transaction date after 48 months since grant date.
(2) The remaining SARs up to 75% are exercisable from the first transaction date
after 48 months since grant date to the last transaction date of the Scheme.
Raffles will write off the unexercised SARs after each exercise period expires if the
SARs being requested for exercise by the grantee satisfying exercise conditions is less
than the number of effective SARs during each period.
Raffles will write off unexercised SARs, which was granted but invalid due to un-
satisfaction of the exercise condition during the exercise period, after each period
expires.
The amount of accrued liabilities to cash-settled share-based payment amounted to
RMB 504,000 as at 31 December 2011 and the expenses recognised for cash-settle
share-based payment was 504,000 for 2011.
257
2011 Annual Report
VIII. CONTINGENCIES
1. CONTINGENT LIABILITIES
Raffles and its subsidiaries entered into shipbuilding and leasing contract with buyers
for the construction, sale and lease of the vessel, of which the contract clauses involve
compensation for delivery postponement and termination terms and conditions. As at
31 December 2011, buyers and Raffles were in the process of negotiating reduction in
compensation for delivery postponement and continuing execution of the contract due
to the fact that delivery date or lease commencing date of certain projects were behind
schedule in the contracts. Raffles did not provision for the compensation for delivery
postponement based on the judgment of the Group‘s management from the
negotiation.
Based on negotiation result, as at 31 December 2011 the maximum amount of the
compensation for delivery postponement of contracted delivery date that Raffles may
need to bear is USD 4,500,000, equivalent to RMB28,354,000.
While the actual amount of compensation for delivery postponement in future is
subject to the actual delivery date in the future, the maximum amount of the
compensation for delivery postponement from contracted delivery date to future
estimated actual delivery date that Raffles may need to bear is USD 20,290,000,
equivalent to RMB127,845,000.
2. GUARANTEES PROVIDED FOR OTHER ENTITIES
During the year, HI signed contracts with China Construction Bank, Bank of China,
China Merchants Bank and China Everbright Bank, to provide guarantees in respect
of banking facilities granted to customers who drew down loans under banking
facilities to settle outstanding payables arising from purchase of trailers from the
Group. As at 31 December 2011, the Group has the above outstanding guarantees
totaling RMB963,600,000 (2010: RMB1,044,329,000).
3. Bills issued but not recorded on books, outstanding letter of credit and
performance guarantee
The Group does not recognise bills payable or letter of credit issued as deposits.
Corresponding inventories, prepayment and bills receivable are recognised at the
earlier of delivery of the goods by the suppliers and the maturity of the bill issued.
As at 31 December 2011, the Group had bills issued to suppliers but not recorded on
books and outstanding letter of credit totaling RMB710,862,0000. (2010:
RMB772,281,000).
As at 31 December 2011, Raffles had outstanding balance of performance guarantees
issued by bank totaling to USD495,248,000, equivalent to RMB3,120,658,000,
among which balance issued for ship buyer was USD491,064,000, equivalent to
RMB3,094,289,000 and balance issued to supplier was USD4,184,000 equivalent to
RMB26,369,000. (2010:RMB738,890,000).
258
2011 Annual Report
VIII. CONTINGENCIES(CONTINUED)
3. Bills issued but not recorded on books, outstanding letter of credit and
performance guarantee (continued)
As at 31 December 2011, TAS had outstanding balance of performance guarantees
issued by bank totaling to RMB207,006,000. The balance included RMB84,765,000
of performance guarantee, RMB11,160,000 of bid guarantee, RMB6,558,000 of
quality guarantee and RMB104,523,000 of guarantee issued to suppliers. (2010:
RMB112,307,000).
4. Significant outstanding litigation
Raffles and its subsidiaries entered into a contract to build semi submersible oil
drilling rig named SS PANTANAL and SS AMAZONIA for SCHAHIM Group which
incorporated in Brazil, and delivered the rig on November 2010 and April 2011
respectively. Raffles and its subsidiaries lodged a law suit against SCHAHIM Group,
which included SCHAHIN HOLDINGS SA and other two subsidiaries, to claim the
overdue milestone of USD 64,861,000, equivalent to RMB 408,682,000 as
SCHAHIN Group failed to pay the amount. The company is optimistic on the
litigation result and will take positive legal act in favor of shareholders' interests,
however, the case has yet hold hearing or come to any conclusion which would cause
uncertainties to the profits of 2012 or subsequent periods.
259
2011 Annual Report
IX. COMMITMENTS
1. SIGNIFICANT COMMITMENTS
(1) Capital commitments
Item 2011 2010
Significant fixed assets purchase contracts
entered into under performance
or preparation of performance 316,805 501,727
Investment contracts entered into but
not performed or performed partially 401,516 -
Significant contracts entered
into for Ships to be manufactured
for sales or lease 1,602,307 1,281,930
External investment approved by
the Board of Directors 546,888 -
Total 2,867,516 1,783,657
(2) Operating lease commitments
As at 31 December, the total future minimum lease payments under non-cancellable
operating leases of properties, fixed assets and so on were payable as follows:
Item 2011 2010
Within 1 year (inclusive) 73,225 47,578
After 1 year but within 2 years (inclusive) 35,470 46,365
After 2 years but within 3 years (inclusive) 27,849 22,437
After 3 years 121,050 104,998
Total 257,594 221,378
260
2011 Annual Report
X. NON-ADJUSTING POST BALANCE SHEET EVENTS
1. INFORMATION ABOUT PROFIT DISTRIBUTIONS AFTER
BALANCE SHAEET DATE
Dividend proposed to be distributed after
balance sheet date Note 1 1,224,702
(1) Dividend for ordinary shares proposed after balance sheet date
Board of directors proposed to distribute cash dividend of RMB 0.46 per share (2010:
RMB 0.35 per share) to ordinary shareholders of the Company on 22 March 2012,
totally RMB 1,224,702,000 (2010: RMB 931,839,000). The proposal is pending for
approval of the Shareholders Meeting. The cash dividend proposed after the balance
sheet date had not been recognised as a liability at the balance sheet date.
2. ACQUISITION OF MINORITY INTERESTS
CIMC Hong Kong, the subsidiary of the Company, made the remaining payment as
mentioned in Note VI.5(4)(ii), amounting to USD63,724,000, equivalent to
RMB402,194,000, to Leung Kee, Bright Touch and Yantai Shipyard in January 2012,
and completed relevant procedures of equity transfer. Therefore, the aforementioned
acquisition of CIMC Offshore‘s minority interest made by CIMC Hong Kong was
complete.
261
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS
1. FINANCE LEASE
Please read Note V.11 and Note V.37 for reference of the Group‘s Accounts
Receivables and Accounts Payables related to finance lease.
2. SEGMENT REPORTING
In accordance with the Group‘s internal organisation structure, management
requirement and internal reporting process, eight reportable segments are identified
by the Group including containers, trailers, energy chemistry and food equipment,
marine projects, airport facilities, logistic equipments and services, railway trucks
manufactory and property development. Each reportable segment is an independent
business segment providing different products and services. Independent management
is applied to individual business segment as different technical and market strategy
are adopted. The Group reviews the financial information of individual segment
regularly to determine resources allocation and performance assessment.
(1) Segment revenue, expenses, assets and liabilities
In order to assess the segment performance and resources allocation, the Group‘s
management review segment revenue, expenses, assets and liabilities of each segment
regularly. The preparation basis of such information is detailed as follows:
Segment assets include tangible assets, intangible assets, other long-term assets and
accounts receivable, etc, but exclude deferred tax assets and other un-allocated
headquarter assets. Segment liabilities include payables, bank loans, provision,
special payables and other liabilities, while deferred tax liabilities are exclude.
Segment profit represents revenue (including external operating income and inter-
segment operating income), offsetting segment expenses, depreciation and
amortisation, impairment losses, interest expenses and income attributable to
individual segment. Transactions conducted among segments are under normal non-
related party transaction commercial terms. The Group does not allocate non-
operating income/expenses and income tax expenses to individual segment.
262
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
2. SEGMENT REPORT (CONTINUED)
(1) Segmentprofits, loses, assets and liabilities (continued)
Information to be disclosed on each of the Group‘s reportable segment (including management‘s periodically reviewed information and
disclosure required by accounting standard) that the Group uses in measuring segments‘ profit/ (losses), assets and liabilities is set out as
follows:
USD‘000
Energy chemistry Elimination
And food Offshore Airport between Unallocated
Item Containers Trailers equipment business facilities others segments items Total
2011 2011 2011 2011 2011 2011 2011 2011 2011
External transaction 35,039,953 16,724,683 8,283,673 576,576 571,030 2,929,138 - - 64,125,053
Inter segment transaction 31,597 473,993 244,800 - - 415,459 (1,165,849) - -
Investment income / (losses) in
joint ventures and associates 31,975 (49,745) - (262) - 55,341 - 6,811 44,120
Impairment loss
for the year 152,478 4,492 9,260 206,936 7,782 28,654 - - 409,602
Depreciation and amortisation
expenses 341,017 252,195 288,143 146,325 3,556 64,544 - - 1,095,780
Interest income 44,632 14,107 19,061 8,779 273 107,860 - 23,230 217,942
Interest expenses 30,955 84,680 21,917 154,440 16 79,425 - 291,328 662,761
Segment operating profit / (losses) 4,719,961 691,488 613,504 (1,174,147) 55,493 1,127,478 - (1,011,071) 5,022,706
Income tax expenses 1,090,818 178,714 120,283 (57,762) 11,846 33,740 - (13,871) 1,363,768
Net profit / (losses) 3,629,143 512,774 493,221 (1,116,385) 43,647 1,093,738 - (997,200) 3,658,938
Segment total assets 13,662,205 10,982,265 9,087,139 15,184,945 563,804 11,465,921 - 3,415,435 64,361,714
Segment total liabilities 5,901,562 3,675,676 3,745,818 11,497,409 263,767 6,604,023 - 11,059,787 42,748,042
Supplementary information:
- Segment expenditures
other than depreciation
and amortization 142,333 5,463 6,881 13,233 14,029 26,491 - 84,079 292,509
- Long-term equity investment
of joint ventures and associates 622,096 480,254 - 201,528 - 134,411 - 129,665 1,567,954
- Segment expenditures raising from
additions of non-current assets 1,401,736 488,759 803,762 1,146,280 26,753 260,025 - - 4,127,315
263
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
2. SEGMENT REPORT (CONTINUED)
(1) Segment profits, loses, assets and liabilities (continued)
Information to be disclosed on each of the Group‘s reportable segment (including management‘s periodically reviewed information and
disclosure required by accounting standard) that the Group uses in measuring segments‘ profit/ (losses), assets and liabilities is set out as
follow (continued):
Energy chemistry Elimination
And food Offshore Airport between Unallocated
Item Containers Trailers equipment business facilities others segments items Total
2011 201 2011 2011 2011 2011 2011 2011 2011
External transaction 25,342,782 16,628,173 5,229,401 2,444,034 342,614 1,781,312 - - 51,768,316
Inter segment transaction 97,190 3,380 121,397 - - 276,957 (498,924) - -
Investment income / (losses) in
joint ventures and associates 92,744 (23,444) - 4,770 - 20,091 - 8,777 102,938
Impairment loss
for the year 21,245 104,638 (2,935) 104,658 4,122 42,882 - - 274,610
Depreciation and amortisation
expenses 368,754 556,793 292,187 181,564 3,619 47,600 - - 1,450,517
Interest income 19,740 15,335 14,707 8,575 142 2,713 - 7,873 69,085
Interest expenses 27,937 50,977 24,618 157,288 479 10,885 - 187,411 459,595
Segment operating profit / (losses) 3,893,013 708,565 159,096 (1,228,362) 30,515 130,811 - (19,031) 3,674,607
Income tax expenses 551,978 151,533 92,400 (85,984) 5,249 106,831 - 1,741 823,748
Net profit / (losses) 3,341,035 557,032 66,696 (1,142,378) 25,266 23,980 - (20,772) 2,850,859
Segment total assets 13,854,245 10,966,282 6,330,323 11,977,241 473,042 6,030,049 - 4,499,467 54,130,649
Segment total liabilities 6,825,058 5,304,438 2,550,273 9,526,301 210,660 1,826,904 - 8,680,315 34,923,949
Supplementary information:
- Segment expenditures
other than depreciation
and amortization - - 39,683 4,790 - - - 86,126 130,599
- Long-term equity investment
of joint ventures and associates 582,167 143,029 - 208,833 - 84,311 - 140,757 1,159,097
- Segment expenditures raising from
additions of non-current assets 1,245,268 1,215,549 1,019,849 1,999,667 117,203 283,419 - 61,455 5,942,410
264
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
2. SEGMENT REPORT (CONTINUED)
(2) Geographic information
The following table sets out information about the geographical information of the
Group‘s revenue from external customers and the Group‘s non-current assets
(excluding financial assets and deferred tax assets, same for the below). The
geographical locations of customers are based on the location at which the services
were provided or the goods were delivered. The geographical locations of the
specified non-current assets are based on the physical location of the assets (for fixed
assets), or the location of the business to which they are allocated (for intangible
assets and goodwill), or the location of operations of the associates and joint ventures.
Geographic information
Country/Region Revenue from external
customers Non-current assets
2011 2010 2011 2010
P.R.China 22,450,481 19,234,663 18,496,639 16,177,074
Asia (exclusive of China) 5,606,815 4,217,055 36,863 42,840
America 15,778,210 15,802,084 325,886 295,449
Europe 18,057,672 11,616,461 1,143,609 1,180,426
Others 2,231,875 898,053 44,405 49,172
Total 64,125,053 51,768,316 20,047,402 17,744,961
第 265 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS
The Group has exposure to the following risks from its use of financial instruments in
the normal course of the Group‘s operations, which mainly include:
Credit risk
Liquidity risk
Interest rate risk
Foreign currency risk
This note presents information about the Group‘s exposure to each of the above risks
and their sources, the Group‘s objectives, policies and processes for measuring and
managing risks and etc.
The Group aims to seek the appropriate balance between the risks and benefits from
its use of financial instruments and to mitigate the adverse effects that the risks of
financial instruments have on the Groups financial performance. Based on such
objectives, the Group‘s risk management policies are established to identify and
analyses the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group‘s activities.
The internal audit department of the Group undertakes both regular and ad-hoc
reviews of risk management controls and procedures.
(1) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial
loss for the other party by failing to discharge an obligation. The Group‘s credit risk is
primarily attributable to cash at bank, receivables, debt investments and derivative
financial instruments entered into for hedging purposes and etc. Exposure to these
credit risks are monitored by management on an ongoing basis.
The cash at bank of the Group is mainly held with well-known financial institutions.
Management does not foresee any significant credit risks from these deposits and
does not expect that these financial institutions may default and cause losses to the
Group.
In respect of receivables, the risk management committee of the Group has
established a credit policy under which individual credit evaluations are performed on
all customers to determine the credit limit and terms applicable to the customers.
These evaluations focus on the external ratings of the customers and their bank credit
records where available and previous payment records (if available). Receivables are
due within from 30 to 90 days from the date of billing. Normally, the Group does not
obtain collateral from customers, but earnest or prepayment money is requested
sometimes due to the customer‘s situation.
第 266 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS
(1) Credit risk (continued)
Most of the Group‘s and the Company‘s customers have been transacting with the
Group or the Company for a long time, and losses have occurred infrequently. In
monitoring customer credit risk, customers are grouped according to some factors,
such as ageing and maturity date. This Group has made the provision for the
significant overdue receivables at 31 December 2011.
Guideline from the Group basis to the assets of associates and jointly controlled,
profit forecast of development project provide fund to associates and jointly
controlled entity and continue to monitor the project progress and its operating to
ensure the recoverability of the fund.
In addition, the debtors of the Group that are neither past due nor impaired mainly
due to a wide range of customers for whom there was no recent history of default.
The Group‘s exposure to credit risk is influenced mainly by the individual
characteristics and industries of each customer rather than country or area in which
the customers operate and therefore significant concentrations of credit risk arise
primarily when the Group has significant exposure to individual customers. At the
balance sheet date, the Group and the Company had a certain concentration of credit
risk, as 25.40% (2010: 19.47%) of the total accounts receivable and other receivables
were due from the five largest customers of the Group.
Investments are normally made only in liquid securities quoted on a recognised stock
exchange, except where entered into for long-term strategic purposes. Transactions
involving derivative financial instruments are made with counterparties of sound
credit standing and with whom the Group has a signed netting ISDA agreement
(International Swap Derivative Association). Given their high credit standing,
management does not expect any investment counterparty to fail to meet its
obligations.
The maximum exposure to credit risk is represented by the carrying amount of each
financial asset, including derivative financial instruments, in the balance sheet.
Except for the financial guarantees given by the Group as set out in Note VIII, the
Group and the Company do not provide any other guarantees which would expose the
Group or the Company to credit risk. The maximum exposure to credit risk in respect
of these financial guarantees at the balance sheet date is disclosed in Note VIII.
第 267 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(2) Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in
meeting obligations associated with financial liabilities. The Company is responsible
for the cash management, including short term investment of cash surpluses and the
raising of loans to cover expected cash demands, for individual subsidiaries subject to
approval by the Company‘s board when the borrowings exceed certain predetermined
levels of authority. The Group‘s policy is to regularly monitor its liquidity
requirements and its compliance with lending covenants, to ensure that it maintains
sufficient reserves of cash, readily realisable marketable securities and adequate
committed lines of funding from major financial institutions to meet its liquidity
requirements in the short and longer term.
The following tables show the remaining contractual maturities at the balance sheet
date of the Group‘s financial assets and financial liabilities, which are based on
contractual undiscounted cash flows (including interest payments computed using
contractual rates or if floating, based on prevailing interest rates at 31 December) and
the earliest date the Group can be required to pay:
2011
Contractual undiscounted cash flow
Balance sheet
More than 2
Item carrying
More than 1 years but
amount
Within 1 year year but less less than 5 More than 5
or on demand than 2 years years years Total
Financial assets
Cash at bank and on hand 7,788,126 - - - 7,788,126 7,788,126
Accounts receivable and
other receivables 10,820,449 - - - 10,820,449 10,820,449
Long-term receivables 3,002,110 1,330,588 889,346 631,378 5,853,422 4,946,522
Subtotal 21,610,685 1,330,588 889,346 631,378 24,461,997 23,555,097
Financial liabilities
Short-term loans (8,030,912) - - - (8,030,912) (8,030,912)
Debentures payable (209,200) (209,200) (4,627,600) - (5,046,000) (3,988,438)
Accounts payable and
other payables (10,722,803) - - - (10,722,803) (10,722,803)
Long-term loans (2,556,258) (1,295,764) (5,147,355) (453,339) (9,452,716) (9,066,009)
Long-term payables (73,234) (54,925) - (33,667) (161,826) (153,740)
Subtotal (21,592,407) (1,559,889) (9,774,955) (487,006) (33,414,257) (31,961,902)
Net total 18,278 (229,301) (8,885,609) 144,372 (8,952,260) (8,406,805)
第 268 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(2) Liquidity risk (continued)
2010
Contractual undiscounted cash flow
Balance sheet
More than 2
Item carrying
More than 1 years but
amount
Within 1 year year but less less than 5 More than 5
or on demand than 2 years years years Total
Financial assets
Cash at bank and on hand 4,655,696 - - - 4,655,696 4,655,696
Accounts receivable and
other receivables 10,366,108 - - - 10,366,108 10,366,108
Long-term receivables 1,319,429 765,552 583,136 91,122 2,759,239 2,521,759
Subtotal 16,341,233 765,552 583,136 91,122 17,781,043 17,543,563
Financial liabilities
Short-term loans (8,309,309) - - - (8,309,309) (8,309,309)
Accounts payable and
other payables (11,505,867) - - - (11,505,867) (11,505,867)
Long-term loans (2,852,174) (419,619) (1,678,482) (2,098,101) (7,048,376) (6,659,085)
Long-term payables (107,499) (71,161) (53,746) - (232,406) (216,442)
Subtotal (22,774,849) (490,780) (1,732,228) (2,098,101) (27,095,958) (26,690,703)
Net total (6,433,616) 274,772 (1,149,092) (2,006,979) (9,314,915) (9,147,140)
(3) Interest rate risk
The Group determines the appropriate weightings of the fixed and floating rate
interest-bearing instruments based on the current market conditions and performs
regular reviews and monitoring to achieve an appropriate mix of fixed and floating
rate exposure.
第 269 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(3) Interest rate risk (continued)
(a) As at 31 December, the Group held the following interest-bearing financial
instruments:
2011 2010
Item Annual interest Annual interest
rate Amount rate Amount
Fixed rates interest-bearing
financial instruments
Financial assets
-Long-term receivables 4.20% - 19.89% 2,311,235 6.63% - 24.17% 1,336,257
-Long-term receivables due within
one year 4.20% - 19.89% 2,635,287 6.63% - 24.17% 1,185,502
Financial liabilities
-Short-term loans 3.28% - 7.20% (2,980,294) 2.34% - 4.30% (8,309,308)
-Long-term debenture payable 5.23% (3,988,438) - -
Total (2,022,210) (5,787,549)
Item 2011 2010
Annual interest Annual interest
rate Amount rate Amount
Variable rates interest-bearing
financial instruments
Financial assets
-Cash and cash equivalents 0.50%~4.40% 7,788,126 0.40%-3.90% 4,655,696
Financial liabilities
-Long-term loans due within one
year Note V.34 (2,493,424) Note V.34 (2,746,937)
-Long-term loans Note V.35 (6,572,585) Note V.34 (3,912,148)
LIBOR+0.33% - (5,050,618) - -
PBOC*‘s
Benchmark Rate
-Short-term loans + 10%
-Long-term payables Note V.37 (86,846) Note V.37 (118,858)
-Long-term payables within one
year Note V.34 (66,894) Note V.34 (97,587)
Total (6,482,241) (2,219,834)
第 270 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(3) Interest rate risk (continued)
(b) Sensitivity analysis
As at 31 December 2011, it is estimated that a general increase / decrease of
75 basis points in interest rates, with all other variables held constant, would
increase/decrease the Group‘s net profit by RMB 36,463,000 (2010: RMB
12,487,000), and equity by RMB 36,463,000 (2010: RMB 12,487,000).
The sensitivity analysis above indicates the instantaneous change in the net
profit and equity that would arise assuming that the change in interest rate had
occurred at the balance sheet date and had been applied to re-measure those
financial instruments held by the Group which expose the Group to fair value
interest rate risk at the balance sheet date. In respect of the exposure to cash
flow interest rate risk arising from floating rate non-derivative instruments
held by the Group at the balance sheet date, the impact on the net profit and
equity is estimated as an annualised impact on interest expense or income of
such a change in interest rates. The analysis was performed on the same basis
for the previous year.
第 271 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(4) Foreign currency risk
The major currency received by the Group is USD and the major currency paid out is
RMB. In order to avoid the risks resulting from the fluctuation of the exchange rate
of RMB, in respect of accounts receivable and payables denominated in foreign
currencies, the Group ensures that its net exposure is kept to an acceptable level by
buying or selling foreign currencies at spot rates when necessary to address short-
term imbalances.
(a) Besides the exposure to currency risk arising from financial assets and
financial liabilities disclosed in Note V.2 and V.24, the Group‘s exposure as at
31 December to currency risk arising from recognised assets or liabilities
denominated in foreign currencies is follows. For presentation purposes, the
amounts of the exposure are shown in RMB, translated using the spot rate at
the balance sheet date. Differences resulting from the translation of the
financial statements denominated in foreign currency are excluded.
Item 2011 2010
USD EUR HKD JPY USD EUR HKD JPY
Cash at bank
and on hand 2,490,443 360,276 240,075 11,522 1,521,592 396,971 128,125 34,616
Accounts receivable 5,024,086 443,299 1,702 12,624 5,327,812 401,879 17,057 4,323
Short-term loans (3,788,474) (203,957) (682,994) (1,733) (3,035,638) (287,944) (423,878) (10,021)
Long-term loans (2,414,544) - (514,350) - (2,438,189) (35,189) - -
Accounts payable (951,496) (353,209) (16,189) (574) (2,924,606) (156,227) (169,893) (3,551)
Provisions (446,176) (5,873) - - (294,478) (25,644) (23,472) -
Non-current
liabilities due
within one year (1,565,774) (32,650) - - (658,970) (70,383) (17,584) -
Gross balance
sheet exposure (1,651,935) 207,886 (971,756) 21,839 (2,502,477) 223,463 (489,645) 25,367
(b) The following are the exchange rates for Renminbi against foreign currencies
applied by the Group and the Company:
Item Average exchange rate Benchmark exchange rate
2011 2010 2011 2010
USD 6.4503 6.7465 6.3009 6.5897
EUR 9.0377 8.8378 8.1625 8.7979
HKD 0.8287 0.8682 0.8107 0.8477
JPY 0.0810 0.0777 0.0811 0.0810
第 272 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(4) Foreign currency risk (continued)
(c) Sensitivity analysis
Assuming all other risk variables remained constant, 2.33%, 2.00%, 2.40%
and 1.00% strengthening of the RMB against the USD, EUR, HK dollar and
Japanese Yen respectively at 31 December 2011 (4%, 3%, 4% and 10%
strengthening of the RMB against the USD, EUR, HK dollar, and Japanese
Yen respectively at 31 December 2010) would have increased (decreased)
equity and net profit by the amount shown below; whose effect is in RMB and
translated using the spot rate at the balance sheet date:
RMB000
Item Equity Net profit
31 December 2011
USD 28,868 28,868
EUR (3,118) (3,118)
HKD 17,492 17,492
JPY (164) (164)
Total 43,078 43,078
31 December 2010
USD 75,074 75,074
EUR (5,028) (5,028)
HKD 14,689 14,689
JPY (1,903) (1,903)
Total 82,832 82,832
2.33%, 2.00%, 2.40% and 1.00% weakening of the RMB against USD, EUR,
HK dollar and Japanese Yen respectively at 31 December 2011 (4%, 3%, 4%
and 10% weakening of the RMB against the USD, EUR, HK dollar, and
Japanese Yen respectively at 31 December 2010) would have had the equal
but opposite effect on the amounts shown above, on the basis that all other
variables remain constant.
第 273 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(4) Foreign currency risk (continued)
(c) Sensitivity analysis (continued)
The sensitivity analysis above assumes that the change in foreign exchange
rates had been applied to re-measure those financial instruments held by the
Group which expose the Group to foreign currency risk at the balance sheet
date, the analysis excludes differences that would result from the translation of
the financial statements denominated in foreign currency. The analysis is
performed on the same basis for the previous year.
The above sensitive analysis does not include exposure to currency risk
arising from foreign future contracts, Japanese Yen exchange option and swap
contact for interest rate disclosed in Note V.2 and V.24 about financial assets
and financial liabilities, but the change in exchange rate may have effect on
shareholders‘ equity and net profit.
(5) Other price risks
Other price risks are stock price risk. As at 31 December 2011, the Group held
41,978,498 tradable shares of China Merchants Securities and 11,526,000 tradable
shares of China Merchants Bank.
As at 31 December 2011, it is estimated that a general increase/decrease of composite
index of Shanghai A-share 21.69% (2010: 14.31%), or 609 point (2010: 469 point),
with all other variables held constant, would increase/decrease the Group‘s
shareholders‘ equity by RMB 93,043,000 (2010: RMB 81,501,000).
The sensitivity analysis above arise assuming that the change in composite index of
Shanghai A-share occurred at the balance sheet date is reasonable and had been
applied to re-measure those investments in securities held by the Group. The
sensitivity analysis is also based on another assumption, namely, the fair value of the
investments in securities held by the Group is relevant to composite index of stock
market, and available-for-sales securities investment has same risk factor as trading
securities investment, and all other variables held constant. 21.69% change in
composite index of Shanghai A-share is a reasonable expectation of the Group for the
period from the balance date to the next balance sheet date. The analysis was
performed on the same basis for 2008.
第 274 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(6) Fair values
(a) Financial instruments carried at fair value
The following table presents the carrying value of financial instruments
measured at fair value as at 31 December 2011 across the three levels of the
fair value hierarchy. The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on the basis of
the lowest level input that is significant to the fair value measurement in its
entirety. The levels are defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices);
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
As at 31 December 2011
Assets Note Level 1 Level 2 Level 3 Total
Financial liabilities held for
trading
Held for trading V.2 143,692 - - 143,692
Derivative financial assets V.2 - 32,691 - 32,691
Hedging Instrument V.2 - 9,751 - 9,751
Subtotal 143,692 42,442 - 186,134
Available-for-sale
financial assets V.10 571,954 - - 571,954
Subtotal 571,954 - - 571,954
Total 715,646 42,442 - 758,088
Liabilities Note Level 1 Level 2 Level 3 Total
Financial liabilities held for
trading
Derivative financial
liabilities V.24 - (105,943) - (105,943)
Total - (105,943) - (105,943)
第 275 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(6) Fair values
(a) Financial instruments carried at fair value (continued)
As at 31 December 2010
Assets Note Level 1 Level 2 Level 3 Total
Financial assets held for
trading
Held for trading V.2 393,491 - - 393,491
Derivative financial assets V.2 - 119,069 - 119,069
Hedging Instrument V.2 - 13,101 - 13,101
Subtotal 393,491 132,170 - 525,661
Available-for-sale
financial assets V.10 768,467 - - 768,467
Subtotal 768,467 - - 768,467
Total 1,161,958 132,170 - 1,294,128
Liabilities Note Level 1 Level 2 Level 3 Total
Financial liabilities held for
trading
Derivative financial
liabilities V.24 - (158,102) - (158,102)
Total - (158,102) - (158,102)
During the year ended 31 December 2011, there were no significant transfers
between instruments in Level 1 and Level 2.
During the year ended 31 December 2011, there were no changes in valuation
technique of fair value.
(b) Fair value of other financial instruments (the carrying amounts are not
measured at fair value
All financial instruments are carried at amounts not materially different from
their fair values as at 31 December 2011.
第 276 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(7) Estimation and assumption of fair values
The following summarises the major methods and assumptions used in estimating the
fair values of financial assets and liabilities held for trading, available-for-sale
financial assets, and items set out in Note XI.3.(6) that measured at fair value on the
balance sheet date.
(a) Equity investments
Fair value is based on quoted market prices at the balance sheet date for
financial assets and liabilities held for trading (excluding derivatives), and
available-for-sale financial assets if there is an active market.
(b) Receivables
The fair value is estimated as the present value of the future cash flows,
discounted at the market interest rates at the balance sheet date.
(c) Loans, debenture payable, long-term payables and other non-derivatives
financial liabilities
The fair value is estimated as the present value of future cash flows,
discounted at the market rate of interest at the balance sheet date.
(d) Derivatives
The fair value of forward exchange contracts is either based on their listed
market prices or by discounting the contractual forward price and deducting
the current spot rate. The fair value of interest rate swaps is based on broker
quotes. The quotes are tested for reasonableness by discounting estimated
future cash flows based on the terms and maturity of each contract and using
market interest rates for a similar interest rate instrument at the measurement
date.
(e) Financial guarantees
The fair value of financial guarantees issued is determined by reference to fees
charged in an arm‘s length transaction for similar services, when such
information is obtainable, or is otherwise estimated by reference to interest
rate differentials, by comparing the actual rates charged by lenders when the
guarantee is made available with the estimated rates that the lenders would
have charged, had the guarantees not been available, where reliable estimates
of such information can be made.
第 277 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
3. RISK ANALYSIS, SENSITIVITY ANALYSIS, AND FAIR VALUES OF
FINANCIAL INSTRUMENTS (CONTINUED)
(7) Estimation and assumption of fair values (continued)
(f) Interest rates used for determining fair value
The interest rates used to discount estimated cash flows are based on same
term loans‘ rates announced by People‘s Bank of China at the balance sheet
date plus an adequate credit spread and are as follows:
Interest rates Interest rates
used in 2011 used in 2010
Long-term loans 1.03% - 6.10% 0.85% - 5.23%
Receivables 6.10% - 7.05% 5.35% - 6.40%
4. ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
Balance at the Change in fair Accumulated Provision of
Item beginning of value of the change in fair impairment for Balance at the
the year year value in equity the year end of the year
Financial assets
1 Financial
assets at
fair value
through
profit or
loss
(excluding
derivative
financial
assets) 393,491 (66,358) - - 143,692
2. Derivative
financial
instrument 119,069 (86,378) - - 32,691
3. Hedging
Instrument 13,101 - 12,784 - 9,751
4. Available-
for-sale
financial
assets 768,467 - 503,276 - 571,954
Subtotal 1,294,128 (152,736) 516,060 - 758,088
-
Financial
liabilities (158,102) 52,159 - - (105,943)
第 278 页
2011 Annual Report
XI. OTHER SIGNIFICANT MATTERS (CONTINUED)
5. FINANCIAL ASSETS AND LIABILITIES IN FOREGIN CURRENCIES
Balance at Accumulated
the Change in change in Provision of Balance at
Item
beginning of fair value of fair value in impairment the end of the
Note the year the year equity for the year year
Financial assets
1. Financial assets at
fair value through
profit or loss
(excluding
derivative financial
assets) 230,231 (27,472) - - 143,692
2. Derivative financial
instrument (1) 119,069 (86,378) - - 32,691
3. Hedging
Instrument 13,101 - 12,784 - 9,751
4. Loans and
receivables (2) 5,815,450 - - (162,938) 7,910,913
5. Available-for-sales 9,066 - (870) - 7,799
Subtotal 6,186,917 (113,850) 11,914 (162,938) 8,104,846
Financial liabilities (3) (12,293,652) 52,159 - - (13,495,209)
Note: (1) Derivative financial instrument in foreign currency includes foreign
currency future contract.
(2) Loans and receivables in foreign currency includes accounts receivable,
other receivables, prepayments and long-term receivable denominated in
foreign currencies.
(3) Financial liabilities includes foreign currency loans, accounts payable,
other payables, advances from customers, long term payables, interest
rate swap contracts and stock option contracts.
第 279 页
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
1. CASH AT BANK AND ON HAND
2011 2010
Original Exchange Original Exchange
currency rate RMB currency rate RMB
000 000 000 000
Cash at bank
RMB 98,805 1.0000 98,805 293,010 1.0000 293,010
USD 15,909 6.3009 100,239 2,953 6.5897 19,457
HKD 58 0.8107 47 94 0.8477 79
JPY 141,750 0.0811 11,496 384,917 0.0810 31,172
EUR 35 8.1625 288 2 8.7979 17
Subtotal 210,875 343,735
----------- -----------
Other momentary funds
RMB 217,099 1.0000 217,099 73,726 1.0000 73,726
USD 377 6.3009 2,376 377 6.5897 2,484
Subtotal 219,475 76,210
----------- -----------
Total 430,350 419,945
As at 31 December 2011, restricted cash at bank and on hand of the Company was
RMB 2,476,000 (2010: RMB 2,484,000).
第 280 页
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
2. Financial assets held for trading
(1) Financial assets held for trading by categories:
Category 2011 2010
1、 Equity securities investments
held for trading - 162,298
3. DIVIDENDS RECEIVABLE
2011 2010
SCIMC 722,920 560,378
SCIMCEL 551,157 149,861
XHCIMC 3,595 1,726
QDCC 24,967 34,355
DLCIMC 55,361 55,361
NBCIMC 37,168 32,001
SCRC 54,186 84,097
XHCIMCS 228,775 155,179
QDCSR 27,461 22,635
DLL 104,674 46,248
CIMC Hong Kong 3,113,070 3,043,364
TCCIMC 21,202 23,831
ZZCIMC 57,125 23,333
TJCIMCLE 16,540 6,253
SBWI 49,826 -
QDCRC 918 4,815
SHYSLE 21,115 -
TJCIMC 20,237 -
TJCIMCN 44,762 -
HI 246,836 -
SHENZHEN SOUTH CIMC
LOGISTICS CO., LTD (―SZSCIMCL‖) 1,360 -
Total 5,403,255 4,243,437
No amount due from shareholders who hold 5% or more of the voting rights of the
Company is included in the above balance of dividends receivable.
第 281 页
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
4. OTHER RECEIVABLES
(1) Other receivables by customers’ categories:
Category 2011 2010
Amounts due from
related parties 6,776,661 4,171,470
Deposits 444 804
Others 26,550 7,448
Subtotal 6,803,655 4,179,722
Less: provision for bad and doubtful debts (4,876) (4,554)
Total 6,798,779 4,175,168
(2) The ageing analysis of other receivables is as follows:
Category 2011 2010
Within 1 year 6,652,704 4,030,771
1 to 2 years 2,000 -
2 to 3 years - 148,951
More than 3 years 148,951 -
Subtotal 6,803,655 4,179,722
Less: provision for bad and doubtful debts (4,876) (4,554)
Total 6,798,779 4,175,168
The aging is counted starting from the date the other receivable is recognised.
第 282 页
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY (CONTINUED)
4. OTHER RECEIVABLES (CONTINUED)
(3) Other receivables by categories:
2011 2010
Provision for bad and Provision for bad and
Gross carrying amount Gross carrying amount
Category Note doubtful debts doubtful debts
Amount Percentage Amount Percentage Amount Percentage Amount Percentage
(%) (%) (%) (%)
Individually significant other receivables (4) 6,776,307 99.60% - - 4,157,910 99.48% - -
Other insignificant other receivables (5) 27,348 0.40% 4,876 17.83% 21,812 0.52% 4,554 20.88%
Total 6,803,655 100.00% 4,876 0.07% 4,179,722 100.00% 4,554 0.11%
There are no collaterals the Group holds for accounts receivable that made impairment aforesaid.
Individually significant items represent other receivables which individual amount over RMB 10,000,000 (inclusive) or the book value
of which account for 5% (inclusive) of the total other receivables in individual financial statements grouped in the consolidated financial
statement.
第 283 页
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
4. OTHER RECEIVABLES (CONTINUED)
(4) An analysis of other receivables individually significant and assessed for
impairment individually is as follows:
There are no other receivables individually significant and individually assessed for
impairment at the year end. (2010: Nil).
(5) An analysis of individually insignificant but assessed for impairment individually is
as follows:
There are no other receivables individually insignificant but assessed for impairment
individually at the year end. (2010: Nil).
(6) Written-back or recovery of accounts receivable during the year
There were no other receivables for which a full provision or a significant provision
was made in previous years while were recovered in full or in significant amount
during the year (2010: Nil).
(7) Write-off of other receivables during the year
There was no material write-off of other receivables during the year (2010: Nil).
(8) Other receivables due from the five largest debtors of the Group are as follows:
Relationship Proportion in
with the total other
Debtor Company RMB000 Aging receivables (%)
1. Total amounts due from
subsidiaries Subsidiaries 6,608,635 Within 1 year 97.13%
2. Shanghai Fengyang Real
Estate Development Co., Ltd Associates 167,672 1 to 3 years 2.46%
3. Yantai Hi-tech Industrial
Park Finance Bureau Nil 20,000 Within 1 year 0.29%
4. Xietong Ltd. Nil 2,000 1 to 2 years 0.03%
5. Ping An Insurance (Group)
Company Of China ,Ltd. Nil 860 Within 1 year 0.01%
Total 6,799,167 99.92%
The Group‘s top 5 other receivables at the end of 2010 amounted to RMB
4,170,753,000, accounting for 99.78% of the total other receivables.
284
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
4. OTHER RECEIVABLES (CONTINUED)
(9) Status of share holders holding to 5% or above voting rights, in the Company’s
other receivables
No balance of other receivables due from shareholders who hold 5% or more of the
voting rights of the Group as at balance sheet date.
(10) Receivables due from related parties
Percentage in
Relationship with the total other
Related party Company Amount receivables (%)
Associates Associates 167,672 2.64%
Subsidiaries Subsidiaries 6,608,635 97.13%
Minority shareholders
of associates and
Others subsidiaries 354 0.01%
Total ─ 6,776,661 99.60%
(11) Derecognition of other receivables due to transferring of financial assets
There was no derecognition of other receivables due to transferring of financial assets
of the Company (2010: Nil).
(12) Amount of assets and liabilities recognised due to the continuing involvement of
securitised other receivables
There were no securitised other receivables during the year (2010: Nil).
285
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
5. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Item 2011 2010
Available-for-sale equity instruments 564,155 759,401
Detailed analysis for the Group‘s available-for-sale financial assets, refer to Note V.10.
6. LONG-TERM EQUITY INVESTMENTS
(1) As at 31 December 2010, the Company’s long-term equity investments are as
follows:
Item 2011 2010
Investments to subsidiaries 3,949,644 3,273,573
Investment to associates 2,602 -
Other long-term equity investments 391,970 391,970
Subtotal 4,344,216 3,665,543
Less: provision of impairment (3,065) (3,065)
Total 4,341,151 3,662,478
286
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY (CONTINUED)
6. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) The Company’s investments on subsidiaries are as follows:
Dividend
Initial Balance at the Additions Balance at Shareholding The Company Whether voting right receivable/
investment beginning of the during the the end of the percentage subsidiaries is defferent from the Provision for Impairment received of the
Investee cost year year year (%) voting right(%) shareholding interest impairment loss of the year year
Costing method – Investment in subsidiaries:
SCIMC 82,042 82,042 - 82,042 100.00% 100.00% - - - 162,542
SCIMCEL 82,042 82,042 - 82,042 100.00% 100.00% - - - 414,435
XHCIMC 36,500 36,500 - 36,500 100.00% 100.00% - - - 2,883
CIMB
Yuandong 114,249 114,249 - 114,249 100.00% 100.00% - - - -
TJCIMC 75,421 81,333 (5,912) 75,421 100.00% 100.00% - - - 20,237
TJCIMCn 239,960 75,780 164,180 239,960 100.00% 100.00% - - - 44,762
QDCC 60,255 60,225 - 60,225 100.00% 100.00% - - - 26,845
DLCIMC 48,764 48,764 - 48,764 100.00% 100.00% - - - -
NBCIMC 24,711 24,711 - 24,711 100.00% 100.00% - - - 38,175
SBWI 66,558 66,558 - 66,558 94.75% 100.00% IV.1.4.ii - - 49,826
TCCIMC 131,654 131,654 - 131,654 100.00% 100.00% - - - 101,230
ZZCIMC 100,597 100,597 - 100,597 100.00% 100.00% - - - 57,125
SHYSLE 78,955 78,955 - 78,955 100.00% 100.00% - - - 21,115
CQVL 39,499 39,499 - 39,499 100.00% 100.00% - - - -
SCRC 200,892 200,892 - 200,892 92.00% 100.00% - - - 113,471
QDCRC 54,225 54,225 - 54,225 100.00% 100.00% - - - 4,897
XHCIMCS 82,026 82,026 - 82,026 100.00% 100.00% - - - 79,718
DLL 46,284 46,284 - 46,284 100.00% 100.00% - - - 58,565
QDCSR 12,743 12,743 - 12,743 100.00% 100.00% - - - 7,730
287
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY (CONTINUED)
6. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) As at 31 December 2010, the Company’s investments on subsidiaries are as follows (continued):
Dividend
Initial Balance at the The Company Whether voting right is receivable/
investment beginning of the Additions Balance at the Shareholding subsidiaries voting defferent from the Provision for Impairment loss of received of the
Investee cost year during the year end of the year percentage (%) right(%) shareholding interest impairment the year year
Costing method – Investment in subsidiaries (continued):
TJCIMCLE 16,459 16,459 - 16,459 100.00% 100.00% - - - 11,316
CIMC Hong Kong 1,690 1,690 - 1,690 100.00% 100.00% - - - 207,175
CIMC (USA) 171,397 171,397 - 171,397 100.00% 100.00% - - - -
CIMCSD 162,686 162,686 - 162,686 100.00% 100.00% - - - 75,550
HI 496,863 276,148 220,715 496,863 80.00% 80.00% - - - 246,836
CIMC TEI - 24 (24) - - - - - - -
CIMC Tech 13,726 2,526 11,200 13,726 100.00% 100.00% - - - -
TCCRC 59,792 59,792 - 59,792 100.00% 100.00% - - - -
CIMCWD 108,544 108,544 - 108,544 100.00% 100.00% - - - -
CIMC Management
and
Training(Shenzhen) 48,102 48,102 - 48,102 100.00% 100.00% - - - -
DLZH 111,083 111,083 - 111,083 100.00% 100.00% - - - -
MEA 111,703 21,703 90,000 111,703 100.00% 100.00% - - - -
SZW 3,472 3,472 - 3,472 100.00% 100.00% - - - -
TLC 81,548 81,548 - 81,548 100.00% 100.00% - - - -
SZSCIMCL 21,717 21,717 - 21,717 100.00% 100.00% - - - 1,360
SZ investment 72,401 72,401 - 72,401 100.00% 100.00% - - - -
Finance Company 482,590 482,590 - 482,590 100.00% 100.00% - - - -
CIMC Vehicle
Finance and Leasing
Co., Ltd. 185,700 185,700 - 185,700 100.00% 100.00% - - - -
QDSV 26,912 26,912 - 26,912 80.00% 100.00% IV.1.4.ii - - -
SHGYTY 40,000 - 40,000 40,000 100.00% 100.00% - - - -
CIMCI 60,000 - 60,000 60,000 100.00% 100.00% - - - -
SZSKYC 90,000 - 90,000 90,000 100.00% 100.00% - - - -
Tianjin Kangde
Logistics Equipment
Co., Ltd 5,912 - 5,912 5,912 100.00% 100.00% - - - -
Subtotal 3,949,644 3,273,573 676,071 3,949,644 - - - - - 1,745,793
288
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY (CONTINUED)
6. LONG-TERM EQUITY INVESTMENTS (CONTINUED)
(2) As at 31 December 2010, the Company’s investments on subsidiaries are as follows (continued):
Initial Balance at the Additions Balance at Shareholding The Company Whether voting right is Dividend
investment beginning of during the the end of the percentage subsidiaries voting different from the Provision for Impairment receivable/recei
Investee cost the year year year (%) right(%) shareholding interest impairment loss of the year ved of the year
Equity method – Associates
SCSCRC 3,600 - 2,602 2,602 50.00% 50.00% - - - -
Total 3,600 - 2,602 2,602 - - - - - -
Costing method – Other long-term equity investment
China Railway
United
Logistics 380,780 380,780 - 380,780 10.00% 10.00% - - - -
Beihai Yinjian 1,700 1,700 - 1,700 1.01% 1.01% - 1,700 - -
Guangdong
Samsung 1,365 1,365 - 1,365 0.09% 0.09% - 1,365 - -
BOCM
Schroder Stolt
8,125 8,125 - 8,125
Fund
Management 5.00% 5.00% - - - 10,000
Subtotal 391,970 391,970 - 391,970 - - - 3,065 - 10,000
Total 4,345,214 3,665,543 678,673 4,344,216 - - - 3,065 - 1,755,793
Information for the Company‘s subsidiaries see note IV.
289
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
7. SHORT-TERM LOANS
2011 2010
Credit loans
- RMB 363,009 480,897
As at 31 December 2011, balance of short-term loan includes balance of USD
10,000,000, equivalent to RMB 63,009,000.
8. FINANCIAL LIABILITIES HELD FOR TRADING
Note 2011 2010
Current:
Derivative financial liabilities
- Foreign exchange forward contract V.2.3 - 556
- Interest swap contract V.24.1 3,137 -
- Foreign exchange option contracts V.24.2 18,153 -
Subtotal 21,290 556
Non-current:
Derivative financial liabilities
- Swap contract for interest rate V.24.1 74,836 58,620
- Foreign exchange option contracts V.24.2 - 78,226
Subtotal 74,836 136,846
Total 96,126 137,402
9. Bills payable
2011 2010
Bank acceptance bills - 200,000
The above bills are due within one year.
No amount due to the shareholders who hold 5% or more of the voting rights of the
Group in included in the above balance of bills payable.
290
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
10. EMPLOYEE BENEFITS PAYABLE
Balance at Accrued Paid Balance at
the beginning during during the end
Item of the year the year the year of the year
Salaries, bonuses, and
allowances 98,857 284,497 (83,354) 300,000
Senior management bonus 269,475 119,476 (16,947) 372,004
Social insurances
and others (57) 17,282 (17,389) (164)
Total 368,275 421,255 (117,690) 671,840
11. TAXES PAYABLE
2011 2010
Income tax payable 1,867 1,743
Withholding individual income tax 58,191 58,384
Others 3,594 (1,047)
Total 63,652 59,080
12. INTEREST PAYABLE
Item 2011 2010
Interest on long-term loans
where principal repay at maturity 10,348 3,120
Interest on short-term loan 725 2,402
Interest on corporate bonds 122,033 -
Total 133,106 5,522
291
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
13. NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
(1) The analysis of the Company’s non-current liabilities due within one year by
categories is as follows:
2011 2010
Long-term loans due within one year
- Credit loans 1,094,352 2,729,353
(2) The analysis of the Company’s non-current liabilities by currencies due within one
year is as follows:
Annual interest rate 2011 2010
Original Exchange Original Exchange
currency rate RMB currency rate RMB
Bank loans
- RMB 3.51%~4.73% - 1.0000 - 2,000,000 1.0000 2,000,000
- USD LIBOR+55~90BP 168,500 6.3009 1,061,702 100,000 6.5897 658,970
- EUR EURIBOR+65BP 4,000 8.1625 32,650 8,000 8.7979 70,383
1,094,352 2,729,353
As at 31 December 2011, there was no renewal of past due long-term bank loans
which was included in the above non-current liabilities due within one year (2010:
Nil).
292
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY (CONTINUED)
13. NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR (CONTINUED)
(a) As at 31 December 2011, the top four long-term loans due within one year is as follows:
2011 2010
Interest rate
Lender Initial date Maturity date Currency Original Exchang Original Exchang
(%)
currency e rate RMB currency e rate RMB
000 000 000 000
1. China Development 6-month
Bank 2007.12.2 2012.12.21 USD LIBOR+90BP 60,000 6.3009 378,054 100,000 6.5897 658,970
2. China Development 6-month
Bank 2007.12.12 2012.06.21 USD LIBOR+90BP 60,000 6.3009 378,054 - 6.5897 -
3-month
3. Bank of China 2009.10.19 2012.10.19 USD LIBOR+55BP 48,500 6.3009 305,594 - 6.5897 -
4.The Export-Import EURIBOR+6
Bank of China 2007.06.18 2012.06.18 EUR 5BP 4,000 8.1625 32,650 - 8.7979 -
Total 1,094,352 658,970
(b) As at 31 December 2011, there was no overdue loan of non-current liabilities due within one year(2010:Nil).
293
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
14. LONG-TERM LOANS
(1) Long-term loans by categories:
2011 2010
Bank loans
- Credit loans 4,223,180 2,473,381
(2) The analysis of the Company’s long-term loans by currencies as follows:
Annual interest rate 2011 2010
Original Exchange Original Exchange
currency rate USD currency rate USD
000 000 000 000
Bank loans
- RMB 3.51%~4.23% 2,963,000 1.0000 2,963,000 - 1.0000 -
- USD LIBOR+55~185BP 200,000 6.3009 1,260,180 370,000 6.5897 2,438,189
- EUR EURIBOR+65BP - 8.1625 - 4,000 8.7979 35,192
Total 4,223,180 2,473,381
No amount due to the shareholders who hold 5% or more of the voting rights of the
Company is included in the above balance of long-term loans (2010: Nil).
294
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY (CONTINUED)
14. LONG-TERM LOANS (CONTINUED)
(3) As at 31 December 2010, the top four long-term loans is as follows:
2011 2010
Borrower Initial date Maturity date Currency Interest rate (%) Original Exchange Original Exchange
currency rate USD currency rate USD
‘000 ‘000 ‘000 ‘000
1. China Development 6 Months
Bank 2007.12.12 2013.12.10 USD LIBOR+90BP 150,000 6.3009 945,135 270,000 6.5897 1,779,219
2. The Export-Import 1st quarter 4.76%，
Bank of China 2011.02.01 2014.02.01 RMB reviewed every quarter 500,000 1.0000 500,000 - 1.0000 -
3. The Export-Import 1st quarter 4.76%，
Bank of China 2011.06.15 2014.06.15 RMB reviewed every quarter 400,000 1.0000 400,000 - 1.0000 -
4. The Export-Import 1st quarter 4.76%，
Bank of China 2011.01.20 2014.01.07 RMB reviewed every quarter 400,000 1.0000 400,000 - 1.0000 -
5. The Export-Import 1st quarter 5.48%，
Bank of China 2011.08.10 2014.08.10 RMB reviewed every quarter 300,000 1.0000 300,000 - 1.0000 -
6. The Export-Import 1st quarter 5.48%，
Bank of China 2011.07.25 2014.07.18 RMB reviewed every quarter 300,000 1.0000 300,000 - 1.0000 -
Total 2,845,135 1,779,219
As at 31 December 2011, there was no renewal of past due long-term bank loans which was include in the above long-term loans
(2010:Nil).
295
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
15. DEFERRED TAX ASSETS AND LIABILITIES
(1) Deferred tax assets and liabilities after offsetting
Deductible/(tax
Deductible/(tax Deferred tax able) Deferred tax
able) temporary assets/(liabiliti temporary assets/(liabiliti
Item difference 2011 es) 2011 difference 2010 es) 2010
Deferred tax assets:
Employee benefits payable 671,840 167,960 368,275 92,069
Movement for fair value of
financial assets held for
trading/derivative financial
instruments 96,126 24,031 137,402 32,977
Subtotal 767,966 191,991 505,677 125,046
Offsetting amount (499,820) (120,437) (505,677) (125,046)
Net amount after offsetting 268,146 71,554 - -
Deferred tax liabilities:
Movement for fair value of
financial assets held for
trading/derivative financial
instruments - - (45,854) (9,383)
Movement for fair value of
available-for-sale financial
assets charged to equity (499,820) (120,437) (723,531) (165,954)
Subtotal (499,820) (120,437) (769,385) (175,337)
Offsetting amount 499,820 120,437 505,677 125,046
Net amount after offsetting (263,708) (50,291)
As at 31 December 2011, there was no unrecognised deferred tax liabilities for the
Company.
296
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
16. CAPITAL RESERVE
Balance at Additions Settlements Effect of change Balance at
the beginning during during of functional the end
Note of the year the year the year currency of the year
Share premiums 212,656 - - - 212,656
Other capital reserves
- Property revaluation
reserve 54,979 - - (11,225) 43,754
- Exchange reserve
on foreign
currency capital 861 - - (174) 687
- Donated non-cash
assets reserve 108 - - (21) 87
- Net changes in fair
value of
available-for-sale
financial assets 723,531 - (195,244) (28,467) 499,820
- Deferred tax effect (165,954) 45,517 - - (120,437)
-Amount of share-based
payments charged
to equity 26,083 105,164 - - 131,247
-Effect of change of
functional currency (568,492) (568,492)
852,264 150,681 (195,244) (608,379) 199,322
17. GAINS FROM CHANGES IN FAIR VALUE
2011 2010
Financial assets held for trading
- Changes in fair value during the year (22,399) 53,501
Including: Gains / losses from
changes in fair value of
derivative financial instrument - -
- Transfer to investment losses for
derecognition of financial assets
held for trading (16,687) (7,647)
Financial liabilities held for trading
- Changes in fair value
during the year 41,277 2,814
Including: Gains / losses from
changes in fair value of
derivative financial instrument 41,277 2,814
Total 2,191 48,668
297
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
18. INVESTMENT INCOME
(1) The analysis of the Company’s investment income is as follows:
Note 2011 2010
Long-term equity investments
in cost method (2) 1,755,793 158,145
Long-term equity loss on investments (998) -
in equity method
Losses on disposal of long-term
equity investment 1 (1,680)
Investment gains on
available-for-sale financial assets 13,030 18,452
Investment losses on sale of
held-for-trading financial assets 16,687 (7,647)
Gains on sale of available-for-sale
financial assets - 11,126
Total 1,784,513 178,396
(2) Long-term investments in cost method with individual investment income over 5%
of total investment income or less than 5% but the top five investment income for
the year are as follows:
Reasons for variances between
Investee 2011 2010 two years
Dividend distributed in 2011 is
SCIMCEL 414,435 - more than that in 2010
Dividend distributed in 2011 is
HI 246,836 - more than that in 2010
Dividend distributed in 2011 is
CIMC Hong Kong 207,175 - more than that in 2010
Dividend distributed in 2011 is
SCIMC 162,542 - more than that in 2010
Dividend distributed in 2011 is
SCRC 113,471 86,098 more than that in 2010
Total 1,144,459 86,098 ─
Note 1: There was no significant restriction on the remittance of investment income
to the investor
298
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
19. INCOME TAX
2011 2010
Current tax expenses for the year - -
Deferred taxation movement (76,328) (36,359)
Total (76,328) (36,359)
Reconciliation between income tax expenses and accounting profits/(loss) is as
follows:
The Company
Item 2011 2010
Profits before taxation 844,767 (69,855)
Expected income tax expenses
at applicable tax rates 202,744 (15,368)
Tax effect of non-
deductible expenses 3,897 2,458
Tax effect of tax losses of
unrecognised deferred tax assets 145,229 30,012
Effect of tax rate change on
deferred tax (3,920) (14,609)
Tax effect of non-
taxable income (424,278) (38,852)
Income tax expenses (76,328) (36,359)
20. Other comprehensive income / (losses)
Item 2011 2010
1. (losses) / Gain on available-for-sale financial
assts (195,244) (261,621)
Less: Effect of income tax arising from
available-for-sale financial assets (45,517) (53,726)
Amount recognised in other
comprehensive income in prior period
transferred to profit and loss in current
period - 11,126
2. Effect of foreign exchange rate changes - (267,693)
Total (149,727) (486,714)
299
2011 Annual Report
XII. SUPPLEMENTARY INFORMATION TO THE HOLDING COMPANY
(CONTINUED)
21. INFORMATION TO CHAS FLOW STATEMENT
(1) Supplement to cash flow statement:
Supplement 2011 2010
1. Reconciliation of net profit(loss) to cash flow
from operating activities:
Net profit 921,095 (33,497)
Add: Impairment 322 -
Depreciation of fixed assets 16,183 11,953
Amortisation of intangible assets 684 992
Amortisation of long-term deferred expenses 1,880 2,557
Gains on disposal of fixed assets and
intangible assets (557) (18,962)
Gains on changes in fair value (2,191) (48,668)
Financial expense / ( income) 223,620 (59,260)
Investment gains (1,784,513) (178,396)
Expenses recognised by share-based
payments 105,164 26,083
Increase in deferred tax assets (66,945) (45,958)
(Decrease)/increase in deferred tax liabilities (9,383) 9,599
(Increase)/decrease in operating receivables (2,572,738) 703,590
Increase in operating payables 171,831 146,244
Effect of foreign exchange rate changes - 31
Net cash (outflows) / inflow from operating
activities (2,995,548) 516,308
2. Net movement in cash and cash equivalents:
Closing balance of cash and cash equivalents 427,874 417,461
Less: Opening balance of cash and cash equivalents 417,461 137,680
Net decrease of cash and cash equivalents 10,413 279,781
(2) Cash and cash equivalents held by the Group is as follows:
Item 2011 2010
1 Cash at bank and on hand
Including: Bank deposits available on demand 210,875 343,735
Other monetary funds available
on demand 216,999 73,726
2 Closing balance of cash and cash equivalents 427,874 417,461
Note: Aforesaid ―Cash at bank and on hand‖ excluded restricted cash and short-term
investment.
300
2011 Annual Report
SUPPLEMENTARY INFORMATION
1. EXTRAORDINARY GAIN AND LOSS IN 2010
Item
RMB000 Note
Disposal of non-current assets
Government grants charge to profit and loss (excluded
government grants closely related to business and applied to all
similar businesses according to national unity or quantitative
standards) 13,000
Capital occupied interests from non-financial enterprises charged
into current profit and loss 267,349
Gains on movement of fair value of financial assets held for
trading and financial liabilities; gains on disposal of financial
assets held for trading, financial liabilities and available-for-
sale financial assets (excluding hedge financial instruments
related to ordinary business of the Group) 8,665
The Group’s interest in gains from the excess of the fair value
of identifiable net assets of the acquiree over the acquisition
cost (152,179)
Other non-operating income / expenses 20,350
Effect of income tax (32,450)
Effect of minority shareholder equity (after tax) (12,971)
Total 111,764
Note: Aforesaid extraordinary gain and loss were presented at amount before
taxation.
2. Reconciliation statements of differences in financial statements prepared
under different GAAPs
(1) The effect of the difference between PRC GAAP and IFRS on consolidated net
profit and equity attributable to shareholders of the Group is analysed as follows:
RMB‘000
Profit Equity
2011 2010 2011 2010
Amounts under PRC GAAP 3,690,926 3,001,851 18,633,154 16,223,057
Adjustments under IFRS GAAP:
Others 3,222 5,612 (5,328) (3,950)
Amounts under IFRS GAAP 3,694,148 3,007,463 18,627,826 16,219,107
Adjustments include current year depreciation and amortisation of fixed assets and
intangible assets revaluated in 2011.
301
2011 Annual Report
SUPPLEMENTARY INFORMATION (CONTINUED)
3. EARNINGS PER SHARE AND RETURN ON NET ASSETS
In accordance with Interpretive Pronouncement on the Preparation of Information
Disclosures of Companies Issuing Public Shares No. 9 – Earnings per share and
return on net assets (2010 revised) and relevant requirements of accounting standard,
the calculation of earnings per share and return on net assets of the Group is listed as
follows:
Weighted average Earnings per share
Profit return on net assets Basic earnings per Diluted earnings per
(%) share share
RMB000 RMB000
Profit attributable to ordinary
equity shareholders 21% 1.39 1.37
Profit attributable to ordinary
equity shareholders net of
20%
extraordinary gain and loss 1.34 1.33
302
2011 Annual Report
Section 12. Content of Documents Available for Reference
I. The text of annual report with signature of Chairman of the Board.
II. Accounting statements carrying signatures and seal of Legal Representative, Chief
Officer in charge of accounting and person in charge of accounting firms (Chief Accountant).
III. Original of the Audit Report carrying official seal of accounting firm, signatures and seals
of certified public accountants.
IV. Originals of documents and announcements disclosed on the newspaper designated by
China Securities Regulatory Commission during the reporting period.
V. Full text of Articles of Association;
303
