Shanghai Zhenhua Heavy Industries Co., Ltd.
FINANICAL STATEMENTS & AUDITORS REPORT 2012
Shanghai Zhenhua Heavy Industries Co., Ltd.
FINANICAL STATEMENTS & AUDITORS REPORT 2012
FINANICAL STATEMENTS & AUDITORS REPORT 2012
AUDITOR’S REPORT 1-2
Consolidated and Company's B/S 3-4
Consolidated and Company's P/L 5
Consolidated and Company's Cash Flow Statements 6
Consolidated Shareholder's Equity Movement Statements 7
Company Shareholder's Equity Movement 8
Finanical Statements Notes 9 -131
Supplementary information
Auditors’ Report
PricewaterhouseCoopers Zhongtian Shen Zi (2013) No. 10027
(Page 1 of 2)
TO THE SHAREHOLDERS OF SHANGHAI ZHENHUA HEAVY INDUSTRIES CO.,
LTD.
We have audited the accompanying consolidated as well as company’s financial
statements of Shanghai Zhenhua Heavy Industries Co., Ltd. (―Zhenhua Heavy
Industries‖) including the company’s and the consolidated balance sheets as of 31
December 2012, the 2012’s P&L, shareholders’ equity movement statements, cash
flow statements and notes to the financial statements.
I. The Management’s responsibilities on the Statements
Preparing and fairly stating financial statements are the responsibilities of the
management of Shanghai Zhenhua Heavy Industries Co., Ltd. These responsibilities
include:
(1) The preparation of financial statements in accordance with the provisions of the
corporate accounting standards, and to achieve a fair reflection.
(2) Design, implement and maintain the necessary internal controls, to material
misstatement due to fraud or error in the financial statements.
II. The CPA’s Responsibilities
Our responsibilities are to provide audit opinions based on our auditing. We
conducted the audit on the basis of China CPA Norms, which require us to abide by
professional virtues and norms to plan and conduct audit to ensure there exist no
serious reporting errors in the financial statements.
The audit Includes implementing the audit procedures to acquire financial
statements figures and audit evidence. Audit procedures are chose based on CPA’s
judgment, including the estimate of risks for possible misreports due to cheating or
errors. When estimating risks, certified public accountants consider internal control
related to the financial statements preparation and fair presentation, in order to
design audit procedures that are appropriate, but not to provide opinions on
effectiveness of the interior controls. The audit also Includes the evaluating of the
appropriateness of utilization of accounting policies and accounting estimates by the
management, and the evaluating of the total reporting of the financial statements.
We believe we have acquired sufficient and appropriate audit evidences, which
provide the basis for the auditor’s opinions.
III. Auditor’s Opinions
In our opinion, the accompanying financial statements of Zhenhua Heavy Industries
has been prepared according to stipulations of the enterprise accounting norms and
present fairly, in all material respects, the financial position of the Consolidation and
Zhenhua Heavy Industries as of 31 December 2012 and of the results of its
operations and its cash flows for the year then ended.
PricewaterhouseCoopers China Limited
CPA___________________
Zhao Bo
Shanghai, China
Mar. 25, 2013 CPA___________________
Jin Wen
-2- 3
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company's Balance Sheet on Dec. 31, 2012
(In RMB yuan except for otherwise specified)
Dec. 31, 2012 Dec. 31, 2011
Dec. 31, 2012 Dec. 31, 2011
Assets Notes Consolidated Consolidated
Company Company
Current assets
Monetary capital V (1) 5,380,769,224 2,053,780,508 5,140,007,496 1,715,727,000
Trading financial assets V (2) 26,009,477 61,678,770 19,196,699 58,950,833
Notes receivable V (3) 115,069,863 80,556,568 115,069,863 73,936,000
Interest receivable V (4) 33,231,552 - 33,231,552 -
Account receivable V (5)、XII(1) 3,710,721,111 4,788,249,121 4,470,459,959 4,787,993,130
Prepayment V (7) 995,684,680 1,067,669,515 1,469,746,463 1,617,441,524
Other receivables V (6)、XII(2) 413,305,303 809,660,285 7,492,431,701 7,022,737,011
Stock V (8) 7,581,683,025 6,186,736,599 6,343,052,035 5,552,767,684
Construction completed
account not closed V (9) 6,620,155,339 7,385,580,108 5,740,676,634 6,084,049,074
Other current assets V (10) 1,000,000,000 - 1,000,000,000 -
Total current assets 25,876,629,574 22,433,911,474 31,823,872,402 26,913,602,256
Non-current assets
Financial assets
available for sale V (11) 124,222,545 108,661,535 124,222,545 108,661,535
Long term equity
investment V (12)、XII(3) 203,719,472 152,874,005 4,243,869,183 4,050,666,059
Real estate as
investment V (13) 402,411,440 - 402,411,440 -
Fixed assets V (14) 14,075,197,757 14,254,180,211 7,339,176,130 7,334,580,482
Construction in progress V (15) 3,692,553,744 4,552,618,260 1,145,271,492 1,903,609,713
Intangible assets V (16) 2,021,511,880 2,245,508,706 1,339,935,316 1,548,581,623
Deferred corporate tax
assets V (17) 383,449,931 311,711,431 383,449,931 311,711,431
Total non-current assets 20,903,066,769 21,625,554,148 14,978,336,037 15,257,810,843
Total assets 46,779,696,343 44,059,465,622 46,802,208,439 42,171,413,099
Attached notes is part of the financial
statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Lu Jianzhong
Accounting department chief: Wang Jue
-3-
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company's Balance Sheet on Dec. 31, 2012 (Cont’d)
(In RMB yuan except for otherwise specified)
Liabilities and shareholder's
Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011
equity Notes
Consolidated Consolidated Consolidated Company
Company
Current liabilities
Short-term loan V (19) 11,936,687,998 8,036,435,881 9,966,183,748 5,809,067,731
Trading financial liabilities V (2) - 2,289,600 - 2,289,600
Notes payable V (20) 980,906,529 577,862,463 980,906,529 577,862,463
Accounts payable V (21) 2,603,418,685 2,255,724,884 4,272,986,149 2,514,388,587
Advances from customers V (22) 1,035,763,588 115,627,343 1,211,974,729 88,840,844
Account closed construction
not completed V (9) 2,389,804,893 1,946,769,101 3,053,896,148 2,386,618,468
Payroll V (23) 37,550,139 29,568,385 34,284,485 26,168,495
Taxes payable V (24) (46,966,814) (461,588,744) 22,985,239 (400,030,098)
Interest payable V (25) 315,058,291 298,404,816 306,693,557 289,486,947
Dividends payable V (26) 33,825,412 53,453,390 33,323,129 52,951,107
Other payables V (27) 292,150,492 869,378,012 526,815,563 1,142,386,265
Non-current liabilities due
within one year V (28) 3,667,922,000 3,571,294,900 3,234,222,500 3,571,294,900
Total current liabilities 23,246,121,213 17,295,220,031 23,644,271,776 16,061,325,309
Non-current liabilities
Long term loans V (29) 873,684,500 3,083,527,600 496,554,500 2,648,765,500
Bonds payable V (30) 7,984,665,674 7,978,615,674 7,984,665,674 7,978,615,674
Expected liabilities V (31) 193,307,685 133,639,971 188,568,114 129,948,707
Deferred corporate tax
liabilities V (17) 20,747,048 20,418,246 - -
Other non-current liabilities V (32) 43,916,667 44,916,667 - -
Total non-current liabilities 9,116,321,574 11,261,118,158 8,669,788,288 10,757,329,881
Total liabilities
32,362,442,787 28,556,338,189 32,314,060,064 26,818,655,190
Owner's equity
Capital stock V (33) 4,390,294,584 4,390,294,584 4,390,294,584 4,390,294,584
Capital reserve V (34) 5,632,275,644 5,619,048,786 5,879,083,762 5,865,856,904
Surplus reserve V (35) 1,520,147,861 1,520,147,861 1,519,639,588 1,519,639,588
Undistributed profit V (36) 2,668,221,534 3,711,887,375 2,699,130,441 3,576,966,833
Foreign currency
statements translation
difference 12,973 - - -
Total owner's equity
belong to parent co. 14,210,952,596 15,241,378,606 14,488,148,375 15,352,757,909
Minority interest V (37) 206,300,960 261,748,827 - -
Total owner's equity 14,417,253,556 15,503,127,433 14,488,148,375 15,352,757,909
Total liabilities and owner's
equity 46,779,696,343 44,059,465,622 46,802,208,439 42,171,413,099
Attached notes is part of the financial
statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Lu Jianzhong
Accounting department chief: Wang Jue
-4-
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company’s P/L Statement 2012
(In RMB yuan except for otherwise specified)
2012 2011 2012 2011
Item Notes
Consolidated Consolidated Company Company
I. Operating income 18,255,152,09 19,129,251,01 19,103,893,39
V (38)、XII(4) 6 2 4 20,609,405,156
Less: operating cost (17,362,670,35 (18,171,294,30 (18,371,210,55 (19,930,794,26
V (38)、XII(4) 1) 3) 2) 5)
business tax and addition V (39) (32,504,700) (29,275,293) (15,332,480) (6,994,339)
selling expenses V (40) (49,290,059) (59,378,293) (40,468,899) (41,153,684)
General and (1,126,863,747 (1,130,888,776
administrative expenses V (41) ) ) (832,392,572) (724,193,244)
financial
income/expenses - net
amount V (42) (680,506,612) 151,425,776 (607,580,493) 118,688,497
asset impairment
provision V (43)、V (18) (394,362,789) (269,782,394) (389,548,762) (272,163,908)
Add: Gains from fair value
movement (loss) V (44) (33,379,693) 33,444,020 (37,464,534) 27,097,603
Investment income V (45)、XII(5) 141,093,032 13,049,092 141,092,172 3,378,503
Including: loss in
investment in
associates and
joint ventures 21,445,467 (1,931,190) 21,445,467 (1,931,190)
II. Operating loss (1,283,332,823 (1,049,012,726
) (333,449,159) ) (216,729,681)
Add: non-operating income V (46) 132,357,962 385,977,803 115,196,301 350,958,285
Less: non-operating
expenses V (47) (20,215,602) (4,763,931) (17,631,878) (3,133,046)
Including: loss from
disposal of non-current
assets (4,728,848) (2,507,372) (2,431,905) (2,431,905)
III. loss / Total profit (1,171,190,463
) 47,764,713 (951,448,303) 131,095,558
Less: Corporate tax
expenses
V (48) 72,132,581 (18,109,717) 73,611,911 (11,642,689)
IV. Net loss / profit (1,099,057,882
) 29,654,996 (877,836,392) 119,452,869
Net loss / profit belonging to
shareholders of parent (1,043,665,841
company V (36) ) 30,294,335 (877,836,392) 119,452,869
Minority interest V (37) (55,392,041) (639,339) - -
V. losses / (gains)/per share
Fundamental losses /( gains) V (49) (0.24) 0.01 n.a. n.a.
Diluted gains /(losses) V (49) (0.24) 0.01 n.a. n.a.
VI. Other composite income /
(loss) V (50) 13,239,831 (74,766,524) 13,226,858 (74,766,524)
VII. Total composite loss/income (1,085,818,051
) (45,111,528) (864,609,534) 44,686,345
total loss/ income
attributable to parent (1,030,426,010
company's shareholders ) (44,472,189) (864,609,534) 44,686,345
total loss attributable to
minority shareholders (55,392,041) (639,339) - -
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Lu Jianzhong
Accounting department chief: Wang Jue
-5-
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company Cash Flow Statement 2012
(In RMB yuan except for otherwise specified)
2012 2011 2012 2011
Item Notes
Consolidated Consolidated Company Company
I. Cash flow from operating activities
Cash from sales of commodities
and services 19,484,381,214 17,448,282,731 18,749,419,246 16,091,027,539
Taxes and expense return 729,927,160 1,026,235,686 724,352,407 1,008,456,500
Cash from other operation related
activities V (51)(a) 91,487,465 88,040,229 67,094,317 45,642,528
Total cash flow-in 20,305,795,839 18,562,558,646 19,540,865,970 17,145,126,567
Cash paid for commodities and
services (15,491,972,477) (15,349,294,037) (15,208,859,643) (17,113,474,176)
Cash paid for/to staff (1,194,374,585) (1,197,439,772) (708,490,664) (673,679,935)
Taxes and expenses paid (240,044,247) (255,792,544) (63,243,228) (34,291,245)
Other cash payment for other
operation-related activities V (51)(b) (313,800,532) (218,114,554) (256,410,075) (157,286,979)
Total cash flow-out (17,240,191,841) (17,020,640,907) (16,237,003,610) (17,978,732,335)
Net cash flow from operating
activities V (52)(a)、XII(6)(a) 3,065,603,998 1,541,917,739 3,303,862,360 (833,605,768)
II. Cash flow from investment
activities
Cash received from investments 6,504,000,000 - 6,504,000,000 -
Net cash receipt from disposal
of fixed assets, construction in
progress and intangible assets 641,152,359 111,954,830 630,035,822 48,375,543
Net cash flow-in purchasing
subsidiary V (52)(c) - 53,138,976 - 21,100,000
Cash from collection of
investment income 119,647,565 2,364,427 119,646,705 6,425,935
Other cash receipt related to
investment activities V (51)(c) 96,930,003 13,651,786 95,718,208 12,018,237
Total cash flow-in from
investment activities 7,361,729,927 181,110,019 7,349,400,735 87,919,715
Cash paid for purchase of fixed
assets, construction in progress and
intangible assets (219,185,221) (701,552,307) (184,804,201) (320,358,094)
Cash paid for investment (7,533,400,000) (101,514,200) (7,675,757,657) (116,514,200)
Other cash paid for
investment-related activities V (51)(d) - (1,003,879) - -
Total cash flow-out for
investment activities (7,752,585,221) (804,070,386) (7,860,561,858) (436,872,294)
Net cash flow from
investment activities (390,855,294) (622,960,367) (511,161,123) (348,952,579)
III. Cash flow from capital raising
activities
Cash from loans 28,620,549,068 14,093,288,841 25,697,865,818 12,128,108,891
Cash receipt from bond issues - 5,783,150,000 - 5,783,150,000
Other cash received from
financing activities V (51)(e) 3,465,537,200 - 3,465,537,200 -
Total cash flow-in from capital
raising activities 32,086,086,268 19,876,438,841 29,163,403,018 17,911,258,891
Cash paid for clearing debts (26,820,433,243) (19,381,998,620) (24,021,029,993) (15,647,664,270)
Cash paid for distributed
dividends, profit or interest (1,159,196,607) (627,415,207) (1,036,131,810) (425,989,506)
Other cash paid related to
financing activities V (51) (f) (6,416,214,488) - (6,416,214,488) -
Total cash flow-out in capital
raising activities (34,395,844,338) (20,009,413,827) (31,473,376,291) (16,073,653,776)
Net cash flow from capital-raising
activities (2,309,758,070) (132,974,986) (2,309,973,273) 1,837,605,115
IV. Impact on cash flow by exchange
rate change - - - -
V. Net addition of cash V (52)(b), XII(6)(b) 364,990,634 785,982,386 482,727,964 655,046,768
Add: starting balance of cash 1,992,617,410 1,206,635,024 1,654,563,902 999,517,134
VI. Closing balance of cash V (52)(d), XII(6)(b) 2,357,608,044 1,992,617,410 2,137,291,866 1,654,563,902
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Lu Jianzhong
Accounting department chief: Wang Jue
-6-
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
2012 Consolidated Shareholder’s Equity Movement Statements
(In RMB yuan except for otherwise specified)
Equity Belonging to Parent Company
Total
foreign Minority
Item Notes shareholder’s
currency interest
equity
Capital Surplus Undistributed translation
Capital stock reserve reserve profit difference
Starting balance on Jan. 1,
-
2011 4,390,294,584 5,676,010,609 1,508,202,574 3,693,538,327 326,659,182 15,594,705,276
Movement in 2011
Net Profit V (36) - - - 30,294,335 - (639,339) 29,654,996
Other comprehensive -
income - - - - - -
- Net change of fair value
of financial assets
available for sale V (34) - (74,766,524) - - - - (74,766,524)
- Purchase of subsidiary
minority interest
V (34) - (195,299) - - - - (195,299)
Added or Lessed capital
from owners
- Financial allocation -
credited by shareholders V (34) - 18,000,000 - - - 18,000,000
-
Minority equity movement by
change of subsidiaries
consolidated V (37) - - - - - (60,281,636) (60,281,636)
Profit Distribution
-Accrued surplus reserve V (35) - - 11,945,287 (11,945,287) - - -
- Distribution to -
shareholders V (37) - - - - (3,989,380) (3,989,380)
Closing balance on Dec. 31, -
2011 4,390,294,584 5,619,048,786 1,520,147,861 3,711,887,375 261,748,827 15,503,127,433
Starting balance on Jan.1, -
2012 4,390,294,584 5,619,048,786 1,520,147,861 3,711,887,375 261,748,827 15,503,127,433
Movement in 2012
Net Loss V (36) - - - (1,043,665,841) - (55,392,041) (1,099,057,882)
Other comprehensive -
income - - - - - -
- Net change of fair value of
financial assets
available for sale V (34) - 13,226,858 - - - - 13,226,858
Profit Distribution - - - - - -
-Distribution to shareholders V (37) - - - - - (55,826) (55,826)
foreign currency
translation difference - - - - 12,973 - 12,973
Closing balance on Dec. 31,
2012 4,390,294,584 5,632,275,644 1,520,147,861 2,668,221,534 12,973 206,300,960 14,417,253,556
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Lu Jianzhong
Accounting department chief: Wang Jue
-7-
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
2012 Company Shareholder’s Equity Movement Statements
(In RMB yuan except for otherwise specified)
Total
Capital Surplus Undistributed shareholder’s
Item Notes capital stock reserve reserve profit equity
Starting balance on Dec. 31, 2011 4,390,294,584 5,922,623,428 1,507,694,301 3,470,055,370 15,290,667,683
Movement in 2011
Net Profit - - - 119,452,869 119,452,869
Other comprehensive income
- Net change of fair value of financial
assets available for sale - (74,766,524) - - (74,766,524)
Added or Lessened capital from owners
- Financial allocation credited by
shareholders - 18,000,000 - - 18,000,000
Profit Distribution
-Accrued surplus reserve - - 11,945,287 (11,945,287) -
Impact of long-term equity investment
changing from cost basis to equity basis - - - (596,119) (596,119)
Closing balance on Dec. 31, 2011 4,390,294,584 5,865,856,904 1,519,639,588 3,576,966,833 15,352,757,909
Starting balance on Dec. 31, 2012
4,390,294,584 5,865,856,904 1,519,639,588 3,576,966,833 15,352,757,909
Movement in 2012
Net Loss - - - (877,836,392) (877,836,392)
Other comprehensive income
- Net change of fair value of financial
assets available for sale - 13,226,858 - - 13,226,858
Closing balance on Dec. 31, 2012 4,390,294,584 5,879,083,762 1,519,639,588 2,699,130,441 14,488,148,375
Attached notes is part of the financial
statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Lu Jianzhong
Accounting department chief: Wang Jue
-8-
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
I. General information
Shanghai Zhenhua Heavy Industries Co., Ltd. (hereinafter ―the Company‖ or ―Parent
Company‖) was established in Shanghai, on 8 September 1997 as part of an exercise to
reorganise its predecessor, Shanghai Zhenhua Port Machinery Company Limited. The
Company is registered in P. R. China’s Shanghai.
As approved by ZhengWeiFaZi (1997) No. 42 document issued by the Securities
Commission under the State Council, the Company issued 100 million listed foreign
investment shares (B-shares) to overseas investors from July 15, 1997 till July 17, 1997.
The B-shares were listed for trading at Shanghai Stock Exchange on Aug. 5, 1997.
As approved by GongsiZi (2000) No. 200 of China Securities Regulatory Commission, the
Company added issuing of 88 million RMB common shares (A-shares) to domestic
investors in Dec. 2000. The A-shares were listed for trading at Shanghai Stock Exchange
on Dec. 21, 2000.
In accordance with ZhenJianFaXingZi (2004) No. 165 by China Securities Regulatory
Commission, the Company issued 114,280,000 A-shares to domestic investors on Dec.
23, 2004. The said issuances were listed at Shanghai Stock Exchange respectively on
Dec. 31, 2004 and Jan. 31, 2005 for trading.
In accordance with ZhenJianFaXingZi (2007) No. 346 by China Securities Regulatory
Commission, the Company issued 125,515,000 A-shares to domestic investors on Oct. 15,
2007. The said issuances were listed at Shanghai Stock Exchange respectively on Oct.
23, 2007 and Jan. 23, 2008 for trading.
As approved by CSRC Zheng Jian Xuke (2009) No. 71 document, the Company issued
non-publicly 169,794,680 A-shares on Sep. 22, 2008, to its controller China
Communications Construction Co., Ltd. (―China Communications Corporation‖). From Mar.
20, 2012 on, limitation term expires for above-mentioned A-shares which are listed at
Shanghai Stock Exchange for trading (Note V(33)).
As of Dec. 31, 2012, after all issues of shares and bonus shares distribution, capital stock
of the Company is increased to 4,390,294,584 shares, par value per share 1 yuan, totally
4,390,294,584 yuan.
-9-
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
I. General information (Continue)
On Dec. 18, 2005, China Road and Bridge Construction Group General Company
combined with the company’s controlling holder China Harbor Construction (Group)
General Company after reorganization into China Transportation Construction (Group) Co.
Ltd. (hereafter called Communications Group). In accordance with the Reply to Issue
Concerning Listing of China Communications Construction Co. Ltd. Entirely after
Reorganization on Both Domestic and Overseas Market (Guozi Gaige [2006] No. 1063)
by State Assets Commission on Aug. 16, 2006, Reply to Issue Concerning Management
of State Stock of China Communications Construction Co. Ltd. (Guozi Chanquan [2006]
No. 1072) on Sep. 30, 2006, which granted the reorganization proposal of
Communications Group, and in addition to the Reply to Approve China Communications
Construction Co. Ltd.’s Announcement of Purchase Report of Road and Bridge
Construction Co. Ltd. and Shanghai Zhenhua Port Machinery (Group) Co. Ltd. and the
Exemption of Purchase Offer Obligations (Zhengjian Gongsi Zi [2006] No. 227), on Oct. 8,
2006 Communications Group solely initiated the establishment of China Communications
Construction Co. Ltd. (hereafter Communications Company), and invested the stock
rights of the Company it held into the newly established Communications Company. With
completion of reorganization, Communications Company thus becomes the controlling
shareholder of the Company.
The Company and its subsidiaries (jointly called ―the Group‖) are engaged in design,
building, installation of heavy port handling system and machinery, heavy ocean
equipment, engineering machinery, engineering vessels, large metal structures &
components, parts; leasing of self-manufactured cranes; sales of self-produced products;
professional contracting of international ocean shipping and steel structure engineering
with special vessels for whole-machine transportation.
This financial report is disclosed on Mar. 25, 2013 through approval by the Company’s
board of directors.
- 10 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
II. Major accounting policies and accounting estimates
(1) Basis of preparation for financial statements
The financial statements are prepared on the basis of Enterprise Accounting Standards –
Basic Standards and 38 concrete accounting standards issued on Feb. 15, 2006,
guidelines and explanation of the accounting standards, and other related stipulations
(hereafter totally called ―Enterprise Accounting Standards‖) and CSSRC’s Listed Company
with Public Securities Information Disclosure Coding Rules No. 15 – General Rules on
Financial Report (Revised in 2010).
(2) Declaration on abiding by the Enterprise Accounting Standards
The Company follows the requirements of enterprise accounting standards in preparing
2012 financial statements, which authentically and completely reflect the consolidated and
the Company’s financial status on Dec. 31 of 2012 and the consolidated and the
Company’s operating result and cash flow during 2012.
(3) Accounting period
Calendar year, from January 1 till December 31.
(4) Recording currency
RMB is the monetary currency of the Group.
(5) Enterprise merger
(a) Merger of enterprises under the same controller
Merger consideration paid and the net assets acquired by the merger party are valued by
book value. The difference between the book value of the net assets acquired by the
merger party and the merger consideration paid is adjusted to the capital reserve. When
capital reserve is not sufficient to compensate, retained interest is thus adjusted. Direct
expenses related to enterprise merger are booked into current P&L at the time of
incurrence. Transaction expenses from issuing equity securities or liability securities for
the purpose of enterprise merger are booked into initially recognized amount of equity
securities or liability securities.
- 11 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Merger of enterprises not under the same controller
Merger cost of the merger party and recognizable net assets acquired in the merger are
valued by fair value. The difference of the merger cost larger than fair value of the
recognizable assets of the purchased on purchase day is confirmed as goodwill. The
difference of the merger cost smaller than fair value of the recognizable assets of the
purchased on purchase day is booked into current P&L. Direct expenses related to
enterprise merger are booked into enterprise merger cost. Transaction expenses from
issuing equity securities or liability securities for the purpose of enterprise merger are
booked into initially recognized amount of equity securities or liability securities.
(6) Preparation of consolidated statements
The consolidated statements consist of those of the Company and the consolidated
subsidiaries.
Subsidiary is consolidated from the date on which effective control over the subsidiary is
exercised by the Company; subsidiary is no longer consolidated from the date when that
control ceases. All material inter company transactions, balance and unrealized profit on
transactions between group companies are compensated. In the consolidated statements,
minority interests which are not owned by the Company are listed under shareholder’s
equity as individual entry.
When there exists discrepancy between accounting policies adopted by subsidiaries and
the Company, statements of subsidiaries are adjusted according to the Company’s
policies upon consolidation. When subsidiary acquired through merger of enterprise not
under the same controller, its financial statements are adjusted on the basis of fair value
of the recognizable net assets as of purchase day.
All significant accounts’ balance, transaction and unrealized profit within the Group are
off-set in preparation of the consolidated statements. Owners’ equity of subsidiaries and
that part of the current net profit and loss not attributable to the Company is shown under
shareholders’ equity and net profit in consolidated financial and current net profit and loss
statements as minority interest and minority gains and losses.
In case of loss of control over the original subsidiary due to disposal of partial equity
investment or other reason, in the consolidated financial statements, the remaining equity
is re-measured at fair value over the day of loss of control. The sum of consideration
obtained by the disposal of equity and the fair value of the remaining equity, minus the net
assets of the share enjoyed in the original subsidiary since the date of purchase, is
booked as return on investment in the period when loss of control incurs. Other
comprehensive income related with investments in the equity of the original subsidiaries,
is reversed to current investment income at the incurrence of loss of control.
(7) Cash and cash equivalents
- 12 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Cash and cash equivalents comprise cash on hand, deposits readily available for the
payment of and investment holdings of short-term, highly liquid and readily convertible to
known amounts of cash, with an insignificant risk of changes in value.
(8) Foreign currency translation
(a) Foreign currency transaction
Transactions denominated in foreign currencies are translated into RMB by the sight rate
on the transaction day.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet
date are translated into RMB at the exchange rates at sight. Exchange differences from
special borrowing of foreign currency for the purpose of purchasing or manufacturing
assets meeting qualifications for loan expenses capitalization are capitalized during the
period of capitalization; other exchange differences are directly booked into current P&L.
Non-currency items of foreign currency calculated on historical cost basis are translated at
the rate at sight on the date of transaction. Amount of impact of exchange rate fluctuation
on cash amount is separated in the cash flow statements.
(b) Foreign currency financial statements translation
For Assets/liabilities items in the Assets/liabilities statements for business operating
abroad, exchange rate at sight on the Assets/liabilities statements date is used for
translation. In the shareholders ' equity, except retained earnings items, other items are
translated using the spot exchange rate at the time of incurrence. Overseas operating
revenues and expenses items in the income statements are translated using spot
exchange rate on the day of incurrence. Difference of foreign currency statement
translation mentioned above is shown as a separate item in the shareholders ' equity.
Overseas operation cash flow items are translated by the spot exchange rate on the day
of cash flows incurrence. Effect of exchange rate changes on cash amount is shown
separately in the cash flow statements.
(9) Financial instruments
(a) Financial assets
(i) Classification on financial instruments
Financial assets are classified at the beginning of recognition into: Financial assets
calculated by fair value whose movement booked into current income statement,
Receivables, Available-for-sale financial assets. Classification of financial assets is
determined by the intention and capability of the group in holding the financial assets.
Financial assets calculated by fair value, changes of which booked into current income
statement
- 13 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Financial assets calculated by fair value, whose movement booked into current income
statement, refer to the financial assets originated from derivative financial instruments,
which are shown in B/S as marketable financial assets.
Receivables
Receivables are non-derivative financial assets which have no quotation on active
market, whose collectable amount is fixed or can be determined.
Available-for-sale financial assets
Available-for-sale financial assets are marketable non-derivative financial assets fixed at
the beginning of recognition and financial assets not classified into Others.
Available-for-sale financial assets to be sold within 12 months from B/S day are booked
in B/S as Other current assets.
(ii) Recognition and Measurement
Financial assets at the time when the Group becomes a party to the contract of financial
instruments are recognized in the balance sheet at fair value. Of the financial assets
whose amount initially recognized fair value and changes into current profit or loss
statement, related transaction costs incurred at acquisition are included directly in current
profit or loss; other financial assets transaction costs are included in the initially
recognized amount.
Financial assets measured at fair value and whose changes booked into current profit or
loss and financial assets available-for-sale are subsequently measured at fair value, but
equity instrument investments which are not quoted in an active market and whose fair
value can not be reliably measured are measured at cost; receivables are measured by
cost after amortization, using the effective interest rate method.
Changes in fair value of financial assets measured by fair value and whose changes
include in the current profit or loss are included in current profit or loss as gains/losses
of fair value change; interest or cash dividends in the asset holding period, as well as
disposal gains and losses at disposal are included in the current profit and loss.
In addition to impairment losses and the exchange gains and losses from foreign
currency monetary financial assets, fair value changes of financial assets available for
sale are recognized directly in shareholders’ equity, and upon de-recognition of the said
financial assets, the cumulative amount of changes in the fair value formerly recorded in
shareholder’s equity is reversed into current P&L. Cash dividends which the investment
units have declared issuing related to equity instruments available for sale investment are
included in current profit or loss as investment income.
(iii) Financial assets impairment
Apart from financial assets measured by fair value and whose changes included in
current profit or loss, the Group conducts, on balance sheet date, check up over the
carrying value of the financial assets. If there is objective evidence that a particular
financial assets is impaired, provision for impairment is made.
- 14 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Objective evidence proving impairment of available-for-sale equity instruments
investments includes serious or non-temporary decline in fair value with equity
instruments investments. This Group checks separately various available-for-sale equity
instrument investment as of B/S day. In case the fair value of equity instrument
investment on the B/S day is more than 50% (including 50%) of the initial investment cost
or during of fair value being lower than its initial investment exceeds more than one year
(including one year), it indicates that impairment incurs; In case the fair value of equity
instrument investment on the B/S day is more than 20% (inclusive) but not yet to 50% of
the initial investment cost, the group will take into account other relevant factors such as
price volatility, to determine whether the investment in equity instruments are impaired.
When financial assets carried at amortized cost is impaired, provision for impairment is
made according to the difference of the present value of the estimated future cash flows
(not including the future credit losses that have not yet occurred) lower than the book
value. If there is objective evidence that the financial assets value has been restored, and
it is objectively related with the events incurred after the confirmation of the loss, the
previously recognized impairment loss is reversed into current profit or loss.
When impairment of available for sale financial assets incurs, the cumulative loss
originally included directly in shareholders ' equity due to decline in the fair value is
transferred out and included in the impairment loss. For available-for-sale debt
investments whose impairment loss has been confirmed, when in future period fair value
increases and is objectively related to the events following the impairment loss
confirmation, the impairment loss previously recognized shall be reversed and accounted
for in current P&L. For impairment loss of available-for-sale equity instruments
investments confirmed, increased fair value in future period is directly carried forward to
shareholders ' equity.
(iv) Termination of recognition of financial assets
When financial assets meet one of the following conditions, recognition is terminated: (1)
contractual right to receive the financial assets cash flow terminates; (2) the said financial
assets have been transferred and the Group has transferred almost all of the risks and
rewards concerning the financial assets ownership to the transferee; or (3) the financial
assets have been transferred, although the Group has neither transferred nor retained
almost all of the risks and rewards concerning the financial assets ownership, has given
up the control over the Financial assets.
When the Financial assets are derecognized, the difference between the book value and
the sum of the equity price received and the cumulative amount of fair value change
originally booked in equity is booked in current profit or loss.
- 15 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Financial Liabilities
Financial liabilities are classified at the initial recognition into financial liabilities measured
by fair value and booked into current P&L, and other financial liabilities. Financial
liabilities of the group mainly include other financial liabilities such as payables, loans and
bonds payable.
Financial Liabilities calculated by fair value, whose movement booked into current income
statement
Financial liabilities calculated by fair value, whose movement booked into current income
statement, refer to the financial Liabilities originated from derivative financial instruments
and the said liabilities are listed in B/S as marketable financial Liabilities. Financial
Liabilities calculated by fair value, whose movement booked into current income
statement, valued by fair value initially, followed up by valuing post-amortization cost on
the basis of actual interest rate.
Other Financial Liabilities
Other Financial Liabilities include: payables, loans and bonds payable.
Payables include accounts payable, other payables, valued by fair value initially, followed
up by valuing post-amortization cost on the basis of actual interest rate.
Loans and bonds payable are initially valued by the amount of fair value after deducting
transaction expenses, and followed up by valuing post-amortization cost on the basis of
actual interest rate.
Other financial liabilities due less than one year (inclusive) are listed as current liabilities;
those due within more than one year but due within one year from the balance sheet date
(inclusive) are listed as non-current liabilities due within one year; the rest are listed as
non-current liabilities.
When present obligation of financial liabilities is entirely or partially dismantled, the
related financial liabilities or those whose obligation has been dismantled are terminated
as recognition. The difference between the book value of the those terminated and the
consideration paid is booked into current P&L.
(c) Confirmation of the fair value of financial instruments
Financial instruments with active market decide their fair value by the quotation on the
active market, while financial instruments without active market decide its fair value by
evaluation technology. Evaluation technology includes prices used by latest market
transaction among all parties who are willing to trade and are familiar with the situation,
referring to current fair value of actually the same other financial assets and cash flow
discounting methods etc. When evaluation technology is utilized, observable market
parameter should be used as much as possible to decrease the use of parameters
specially related with the Group.
(10) Receivables
Receivables refer to accounts receivable and other receivables. The Group confirms the
initial amount of accounts receivable from exported goods or provided labor by the fair
- 16 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
value of contracted agreed upon price receivable from purchaser or labor acceptor.
(a) Accounts receivable
As of accounts receivable, bad debt provision is made in the following way:
(i) Accounts receivable with big single amount and individual bad debt provision is made
As of accounts receivable with single big amount, individual test is made on value
depreciation. When proof shows the Group is not able to collect the account receivable as
prescribed, bad debt provision is made.
Standard of single big amount: single amount exceeds 30,000,000 yuan.
Method of bad debt provision being made with big single amount: based on the difference
of the present value of the expected future cash flow of the account receivable lower than
its book value.
(ii) Accounts receivable whose bad debt provision is totally made in groups:
Accounts receivable not with big single amount, together with accounts receivable whose
value is not decreased after being individual test, are classified into groups by credit risk
features and bad debt provision is made, on the basis of actual loss rate of prior period
accounts receivable of the same or similar kind, with similar credit risk features, combining
present situation.
Credit risk groups are determined by the following criteria:
Group 1 Accounts receivable from related party
Group 2 Accounts receivable from third party
Method of bad debt provision being made by credit risk groups:
Group 1 Bad debt provision shall not be made of accounts receivable from
related party except proof shows the Group is not able to collect
them.
Group 2 Debt age analysis method (considering future collection)
Among the groups, proportion of accrual on aging analysis basis is listed as follows:
Term overdue % of provision
1－6 months -
7－12 months 10%
1－2 years 30%
2－3 years 50%
3 years above 100%
(iii) Accounts receivable not of big single amount but individually provided for bad debt:
Reason for individual accrual of bad debt provision: proof shows the Group will not be
able to the accounts receivable on the basis of former clauses.
- 17 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Method of accrual of bad debt provision: accrued according to the difference between the
present value of its expected future cash flow lower than its book value
(b) Other receivables
As of other receivables, bad debt provision is made as follows:
(i) Other receivables of big single amount and individually provided for bad debt:
As for other receivables of big single amount, individual impairment test is made. When
proof exists to show the Group will not be able to collect them according to prescribed
clauses, bad debt provision is made.
Standard of single big amount: single amount exceeds 30,000,000 yuan.
Method of bad debt provision being made with big single amount: based on the difference
of the present value of the expected future cash flow of the other receivables lower than
its book value.
(ii) Bad debt provision of other receivables not of big single amount but individually provided
for bad debt:
Reason for individual accrual of bad debt provision: proof shows the Group will not be
able to the other receivables on the basis of former clauses.
Method of accrual of bad debt provision: accrued according to the difference between the
present value of its expected future cash flow lower than its book value
(c) Bad debt loss confirmation standard
To the proven non-collectable receivables such as when debtors dissolved or bankrupt or
insufficient assets to cover debts or insufficient cash flow, bad debt loss is confirmed and
will offset accrued corresponding bad debt provision.
(d) Transfer of receivables
In case of account receivable the Group transfers to financial institutions with no
retrospective rights retained, the difference between the transaction amount and the
moved receivables’ book value and related taxes is taken into current period income
statement.
(11) Stock
(a) Classification
Stock includes raw materials purchased spare parts and semi-products, reported in the
lower between cost and cashable net value.
- 18 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Valuation method of issuing stock
Cost of goods in stock and semi-products includes raw material cost, direct labor cost and
manufacturing cost calculated in systematic way under normal productivity.
(c) Basis on deciding cashable present value of stock and accrual of inventory depreciation
reserve:
When stock cost higher than net realizable value, the part less than the net realizable
value is provided as impairment provision. Stock impairment provision is made based on
individual items when cost higher than net realizable value. The net realizable value of
items in normal manufacturing process is calculated on the amount of estimated selling
price deducting future cost, selling expenses and taxes till the completeness of the
manufacture.
(d) The Group's stock inventory system adopts a perpetual inventory system.
(e) Amortization of perishables and packing materials
Turn-over materials include perishables and packing materials etc. Perishables are
amortized by turns while packing is amortized at one time.
(12) Building contracts
For customized large port equipment with fixed price, because the start and the finishing
of the project are in different accounting years, the Company uses building-contract
method to calculate the revenue and the cost.
(a) If the selling result of individual building contract can be reliably estimated, the revenue
and expenses can be recognized in proportion of completeness on the day of balance
sheet.
(i) Project progress proportion is made on the report day according to the revenue recognition
stage stipulated in the contract. The Company confirmed the following 3 revenue
recognition stages:
Stage 1: body steel structure completed and erected;
Stage 2: manufacturing, installation and initial testing completed, product ex-plant
qualification certificate issued, shipping documents acquired, product ready to be shipped;
Stage 3: product finally delivered after being checked and approved by purchaser, final
delivery certificate issued by purchaser acquired.
The Group will analyze the building contracts completed in prior year and recognize
progress proportion of each revenue recognition stage on the basis of the proportion of
- 19 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
the cost of the revenue recognition stage in real total costs and recognize it as the
progress proportion at various stages in current period.
(ii) For heavy ocean equipment, progress of completeness is recognized by the proportion of
accumulated cost incurred in total expected cost. The accumulated cost does not include
that related to contracted future activities.
(iii) Progress of completeness of steel structures is determined by the proportion of cumulative
tons of processing completed in total tons of processing.
(b) When individual building contract result is not able to be reliably estimated, the following
methods are used:
(i) When contract cost can be covered, contract revenue is recognized according to real
contract cost that can be covered, contract cost is recognized as expenses in the period
when cost incur.
(ii) When contract cost can not be covered, it can be recognized as expenses immediately
when it incurs; no contract revenue is confirmed.
(c) When expected total contract cost exceeds total revenue, the expected losses should be
immediately recognized as expenses in current period.
(d) When contract value is settled in installments, the settled installment is recognized as
settled value, which will be transferred and set off with related accumulated costs and
confirmed margin on the day of building contract completed. On the balance sheet day,
when the addition of accumulated costs and confirmed margin exceeds the accumulated
settled value, the difference is listed as completed but not yet settled item in current
assets. Otherwise, it will be listed in settled but not completed item in current liabilities.
(13) Long term equity investment
Long term equity investment including: Long term equity investment into the Company’s
subsidiaries; Long term equity investment into the joint undertaking; Long term equity
investment for which the Group exercises no control or co-control over the investee
company, with no quotation on active market, whose fair value can not be reliably valued
(hereafter ―Others long term equity investment‖)
Subsidiary is the investee company over which the Company exercises control; a joint
undertaking is an investee over which the Company exercises control together with other
parties.
Iinvestment to subsidiaries is recorded in the amount confirmed by cost method in the
Company’s individual financial statements, and consolidated after adjustment in equity
method while compiling consolidated statements.
- 20 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
A joint undertaking is accounted on equity basis; while other long term equity investment
is accounted on cost basis.
(a) Confirmation of investment cost
As of long-term equity investments from enterprise merger: long-term equity investment
obtained from the merger of enterprises under the same controller, investment costs are
recognized by the share of the owner's equity book value as of the merger date; long-term
equity investment obtained from the merger of enterprises not under the same controller,
investment costs are recognized by the costs of merger.
As of long-term equity investments from other ways rather than enterprise merger: initial
investment costs of long-term equity investment obtained from paying cash are
recognized by the actual purchase price; as of long-term equity investments from issuing
equity securities, their initial costs are recognized by the fair value of the issued equity
securities.
(b) Follow-up valuation and gains/losses recognition method
Long term share investment accounted in cost method is valued by original cost. Cash
dividend or profit announced by the investee is confirmed into current period’s investment
income.
As of long-term equity investment based on equity, when the initial investment cost is
larger than the share of the fair value of recognizable net assets enjoyed of the investee at
the time of the investment, long-term equity investment cost is recognized by the initial
investment cost; when initial investment cost is smaller than the share of the fair value of
recognizable net assets enjoyed of the investee at the time of the investment, the
difference is included in current P&L, and long-term equity investment cost is adjusted to
increase accordingly.
In equity method, gains/losses of investment are recognized by the amount of investee’s
current period net profit or net loss share enjoyable or bearable by the Group. The
confirmed investee’s net loss is limited to zero in the book value of the long term share
investment. Whereas when the Group bears extra liability for loss and when the extra
liability meets requirements for stipulated probable events, investment loss and expected
liability is further confirmed. For the movement of investee’s equity other than net
gains/losses, when proportion of hold remains unchanged, the Group calculates the part it
enjoys or bears in accordance with its proportion of share holding and directly book it into
capital reserve. The announced investee’s distributed profit or cash dividends shall
correspondingly deduct the book value of long term equity investment of the Group at the
time of the announcement. However when cash dividends exceed already confirmed
investment gains but do not exceed that part of the investee’s book value profit realized
after the investment is made which is enjoyed by the Group in proportion of holding, it is
confirmed as current period investment income. Gains/losses from internal transactions
between the Group and the investee enjoyed by the group according to proportion of
- 21 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
share-holding are confirmed as investment gains/losses after setoff is made. When loss
from internal transactions between the Group and the investee belongs to asset
impairment loss, the loss is fully confirmed, unrealized gains/losses from which will not be
setoff.
(c) Basis for determining the control or co-control over investee
Control means having the power to decide on investee’s financial and operating policies,
and thus obtaining gains from its operation. When deciding whether being able to control
over the investee, potential voting rights of the investee including current transferable
company bonds, current executive warranty etc. will also be considered.
Co-control means enjoying control over certain economic event according to contract,
which only exists when investors unanimously agree who share the control over the
financial and operating policies only concerning the said economic event.
Significant effect means that the company possesses the right of decision-making
participation in the financial and operating policies of the investee but is not able to control
or co-control with other party the making of such policies.
(d) Long term equity investment impairment
As of long term equity investment in subsidiary or joint undertaking, when collectable
amount is lower than the book value, the book value is decreased to the collectable
amount (Note II (19)). When other long term equity investment experiences impairment,
impairment loss is determined by the difference of the book value over the present value
determined by the discounted future cash flow of similar financial assets from current
market earning ratio. Once impairment loss is determined, recovered value in future
periods shall not be returned.
(14) Real estate as investment
Investment real estate, including leased-out land use right and land and buildings for
rental purposes as well as buildings in the process of being constructed or developed for
rental in the future, initial measurement is made by cost. Subsequent expenditure relating
to investment real estate, when related economic benefits are likely to flow into the Group
and its cost can be measured reliably, is accounted into the cost of investment real estate;
Otherwise, it is included in the current profits and losses statements.
Cost models for all investment property is adopted by the Group to undertake follow-up
measures; depreciation or amortization is made for buildings and land use rights
according to their estimated useful life and residual value rate. Investment real estate rate
and years of estimated useful life and residual value depreciation (amortisation) rates are
listed below:
estimated useful estimated residual v annual depreciation (amortizat
life alue rate ion) rate
- 22 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
building 30 years 0% 3.3%
land use right land use years 0% Decided by estimated net
residual value and land use
years
When purpose of investment property changes to self-use, from the date of change,
convert the investment properties to fixed assets or intangible assets. When self-use
property changes to the purpose of earning rentals or for capital appreciation, from the
date of change, convert the fixed assets or intangible assets to investment properties.
Upon conversion, book value before the conversion is the recorded as the converted
value.
The anticipated service life of investment real estate, estimated net residual values and
depreciation (amortisation) method is reviewed and made appropriate adjustments at
each year end.
When the investment real estate is disposed of, or permanently terminates its use and no
economic benefits are expected from its disposal, terminate the confirming of the
investment real estate. Disposal income of investment property for sale, transfer, disposal
of scrap or being destroyed is charged to current P&L after deducting its book value and
related taxes.
When the recoverable amount of the investment real estate is below its book value, book
value is written down to its recoverable amount (Note II (19)).
(15) Fixed assets
(a) Validation of fixed assets and initial valuation
Fixed assets consist of tangible assets related to operation with rather high individual
value, for use of at least above one year owned or held for manufacturing goods,
providing service, leasing or business management, including bbuildings and
constructions, manufacturing equipment, transportation facilities, other equipment and
office equipment.
Fixed assets are confirmed when financial benefits related will probably flow into the
Group and their costs can be reliably valued. Fixed assets purchased or newly
constructed are initially valued by cost at acquisition. Fixed assets invested by the state
shareholders during the Company’s reconstruction in the form of corporation are booked
by the value appraised by the state-asset managerial authorities.
Follow-up expenses related to fixed assets, when related economic benefits will most
probably flow in the Group and related cost can be reliably valued, are accounted into
fixed assets cost; for the replaced part, related book value ceases confirmation; all other
follow-up expenses are booked into current income statement at the time of incurrence.
- 23 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Fixed assets depreciation method
Depreciation of fixed assets is made in average year method and is accrued by deducting
expected net residual value from purchase value within the expected years for use. When
impairment provision have been made to fixed assets, the depreciation ratio and amount
will be decided on the net book value after impairment and the remained years for use.
Fixed assets expected years for use, net residual value ratio and annual depreciation ratio
are listed as below:
Expected years Expected net Annual depreciation
for use residual value ratio ratio
House and building - 30 years 0% 3.3%
costs
Manufacturing 10 years 0% 10%
equipment
Office equipment 5 years 0% 20%
Transportation means 5 years 0% 20%
(other than vessels)
Vessels 5-14 years Based on Calculated in
international average years after
market price of purchase value less
wasted vessel net residual value
steel
Other equipment 3-5 years 0%/ settled by 20%/determined by
price of wasted expected net residual
steel value and expected
life of use
Double check is made to the estimated life of use, estimated net residual value and
method of depreciation at the end of each report year and necessary adjustment is made.
(c) When collectable amount of fixed assets is lower than its book value, the book valued is
deducted to the collectable amount (see Note II (19)).
(d) Disposal of fixed assets
Fixed assets terminate recognition when they are disposed of, or expected to generate no
economic benefits. Difference between disposal income from fixed assets sales, transfer,
waste or damage and the book value and taxes is taken into current period P&L.
(16) Construction in progress
Construction in progress is booked as project costs in real expenditure. Project costs
consist of building expenses, other necessary expenses which make the construction in
progress reach expected status of use, and loan expenses occurred before it reaches the
condition for use which meets qualification of capitalization. When the project under
- 24 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
construction reaches the expected condition for use, it is transferred into fixed assets
items and depreciation will be made from the following month.
When collectable amount of construction in progress is lower than its book value, the book
valued is deducted to the collectable amount (see Note II (19)).
(17) Loan expenses
Loan expenses incurred from fixed assets which take rather long period of time to
purchase or manufacture in order to reach their expected state of use or sale are
capitalized and booked into the costs of the said assets at the time when asset
expenditure and loan expenses incur and when purchasing or building activities start as a
necessity to make that asset reach expected usable condition. When the purchased or
built fixed asset reached expected usable condition, capitalization stops and loan
expenses that follow are taken into current profit/loss statement. In case purchasing
activities of assets ceases accidentally and term of cease exceeds 3 months on end,
capitalization of loan expenses stops until purchasing activities resumes.
Expenses of other loans are accounted into current period’s income statement.
Amount of expenses of special loans to be capitalized which are borrowed to purchase
fixed assets applicable to be capitalized is determined by the actual interest expenses in
current period minus interest income of those part not yet used or by the invest income
from temporary investment.
Amount of expenses of general loans to be capitalized which are borrowed to purchase
fixed assets applicable to be capitalized is determined by the weighted average amount of
expenses of accumulated asset expenses exceeding that of special loans to multiply the
weighted average actual interest rate of the general expenses. Actual interest rate means
that used to recognize initial amount of the loans translated by discounted future cash flow
in the expected loan existence term or short applicable term.
(18) Intangible assets
Intangible assets consist of land use rights and software use cost. They are booked in
really paid price or in the estimated value at the re-structuring of the Company, and are
amortized in straight line method in the following expected years for use:
Paid price in purchasing land and building is distributed between building and land use
right. When difficult to distribute, it is recognized as fixed assets.
(a) Intangible asset amortization years
- 25 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Expected years for use
Land use rights years of land use
Software use cost 5 years
Patented technologies 10 years
(b) Regular double-check of life in use and amortization method
Double check is made by end of each year to expected life in use and amortization
method of intangible assets with limited use of life and adjustment is thus made.
(c) Research and Development
Expenses of internal research and development projects are classified into that in
research stage and that in development stage, according to their nature and whether
there exists much uncertainty in the ultimate intangible assets resulted from the research
and development.
Expenses in research stage are put into current P&L at occurrence; expenses in
development stage are capitalized when simultaneously satisfying the following
conditions:
It is technically feasible to complete the intangible assets to make them usable and
marketable;
The management has the intention to complete the intangible assets and to use them
or to sell them;
It’s able to prove how the intangible assets yield financial benefits;
Enough technology and financial resources and other resources support and will
enable the completion of the development of the intangible assets and make them to
be used to sold;
Expenses belonging to the intangible assets can be reliably measured.
Expenses of development stage not satisfying the conditions are put into current P&L.
Development expenses booked into P&L of prior years will not be re-recognized as assets.
Expenses of development stage already capitalized are shown as development expenses
on B/S, to be transferred into intangible assets from the day when the project reaches its
planned goal.
(d) Intangible asset impairment
When collectable amount of intangible assets is lower than its book value, the book
valued is deducted to the collectable amount (Note II (19)).
(19) Long-term asset impairment
- 26 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
When signs of impairment exist on B/S day with long term equity investment in
subsidiaries and associates, fixed assets, construction in progress and intangible assets,
simulating test is made to the impairment. When test result shows collectible amount is
lower than its book value, provision is made on basis of the difference and booked into
impairment loss. The collectible amount is the higher between net amount of asset’s fair
value deducting disposal expenses and the present value of expected future cash flow.
Asset impairment provision is calculated and confirmed by individual piece of asset. In
case collectible amount of individual asset is difficult to value, collectible amount of asset
group to which the said individual asset belongs is confirmed. Asset group refers to the
minimum asset portfolio which independently generates cash in-flow.
Goodwill individually reported in the financial statements, no matter whether there exists
sign of impairment, test of impairment is conducted at least once a year. In the test, the
book value of the goodwill is amortized into the asset group or asset portfolio beneficiary
from the concord effect at enterprise consolidation day. The lower part of the collectable
amount of the asset group or portfolio in which goodwill is enclosed over the book value,
as shown by the test result, is confirmed as impairment loss. The loss is firstly to
compensate the book value of the goodwill amortized in the asset group or portfolio, and
then to compensate the book value of other assets in the proportion of the book value of
other assets except for the goodwill in the asset group or portfolio.
Once asset impairment provision is made, it shall not be transferred back even though the
asset value is resumed in later period.
(20) Employee remuneration
Employee’s remuneration consists of salary, bonus, allowance and subsidy, benefits,
social security and housing fund, trade union fund and education fund and other expenses
related to services provided by employees.
Staff remuneration is confirmed by employee service period and booked into related asset
cost and expenses based on beneficial objects of the services provided by employees.
(21) Profit and dividends distribution
Cash dividends approved by general annual meeting are confirmed as liabilities within the
period of the approval.
(22) Expected liabilities
When fulfillment of present obligation generated from product quality warranty may
possibly cause outflow of financial interest, expected liabilities are confirmed when the
obligation amount can be reliably valued.
Expected liabilities are initially valued by the best estimates to be spent on fulfillment of
related present obligation, combining risks and uncertainty with probabilities and time
- 27 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
value of currency. In case currency’s time value is significant, best estimate is made by
discounted future cash flow-out thus related. Addition to the book value of expected
liabilities generated from recovery of discount with passing of time is confirmed as interest
expense.
The book value of expected liabilities is double-checked and thus adjusted as of B/S day
to reflect present best estimates.
(23) Deferred corporate tax assets and liabilities
The Company confirms deferred income tax assets and deferred income tax liabilities by
the difference between the taxable base and the book value (provisional difference).
Compensable loss which can compensate future periods’ taxable amount by taxable laws
and regulations is confirmed as deferred income taxable asset. In regard to provisional
differences generated from initial confirmation of assets or liabilities as a result of
non-enterprise consolidation transaction which neither influences accounting profit nor
affects taxable amount (or compensable loss), corresponding deferred income tax assets
and deferred income tax liabilities are not confirmed. On B/S day, deferred income tax
assets and deferred income tax liabilities are calculated by tax rate applicable to the
period of term the assets or liabilities are expected to be collected back.
The confirmation of deferred income tax assets is limited to the taxable amount to
compensate compensable provisional difference, compensable loss and setoff of tax
payment.
Deferred income tax liabilities generated from investment-related provisional difference of
subsidiaries, associates and joint ventures are confirmed as liabilities, except for when the
Group is able to control the return time of provisional difference and when the provisional
difference will not be returned in foreseen future. Deferred income tax assets generated
from investment-related provisional difference of subsidiaries, associates and joint
ventures are confirmed as deferred income tax assets, when the provisional difference is
able to be transferred back in the foreseeable future and when possible taxable income
which is used to compensate the provisional difference can be possibly obtained in future.
Deferred income tax assets and deferred income tax liabilities simultaneously meeting the
following conditions are listed in the offset net amount:
Deferred income tax assets and deferred income tax liabilities are related to the
income tax collected to the same tax paying body in the group by the same taxation
collector.
The tax paying body of the Group owns the legal rights to calculated current period’s
income tax assets and current income tax liabilities.
(24) Revenue recognition
- 28 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Revenue is confirmed by the fair value of the contracted or agreed upon price related to
commodity sales and service providing in routine operating activities of the Group.
Revenue is recorded by the net value after deducting VAT, business discount, selling
discount and return of sales.
Revenue is confirmed when related benefits can flow into the Group, sales can be reliably
calculated and when revenue meets the special sales income recognition standards of the
following operating activities:
(a) Revenue from sales of large port equipment and ocean heavy equipment is recognized by
the proportion of completeness. (See Note II (12))
(b) Income from ship transportation is recognized at the completion of the voyage.
(c) Income is recognized at the time of delivery for the sale of spare goods or parts.
(d) Interest income is recognized by deposit term and real interest rate.
(e) Operating leasing income is recognized in leasing period by straight line method.。
(25) Government subsidy
Government subsidy refers to monetary assets or non-monetary assets obtained from the
government free of charge, including tax return and financial subsidies etc.
Government subsidy is recognized at receipt when satisfy the Group’s conditions.
Monetary assets are booked by amount received or receivable. Non-monetary assets are
booked by fair value; when fair value is not reliable, amount in name is used.
Government subsidy related to assets is confirmed as deferred income and is evenly
allocated in the use life of related assets and booked into current P&L. Government
subsidy measured in named amount is booked into current P&L.
Government subsidy related with income when used to compensate related expenses or
losses in future periods is recognized as deferred income and is booked into current P&L
in the period when related expenses are recognized. That which is used to compensate
paid expenses or losses is booked directly into current P&L.
(26) Leases
When all risks and rewards related to assets ownership are actually transferred, the lease
is recognized as financing leasing; other leases are operating ones. Operating lease
expenses are recognized as current expenses on straight line basis within lease period.
(27) Purchase of minority equity from subsidiary
- 29 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
After obtaining control over the subsidiary, obtaining the whole or partial minority equity
enjoyed by minority shareholders, assets and liabilities of the subsidiary are reflected by
the amount continuously calculated from the date of purchase or merger. Capital reserve
(or capital premium) is adjusted by the difference between added long-term equity
investment due to purchase of minority equity and the net asset share continuously
calculated from purchase day or merger day enjoyed in the subsidiary in proportion of the
added share holding. When capital reserve (or capital premium) is insufficient to setoff,
retained profit is adjusted.
(28) Segment information
Operating segment is determined by the Group's internal organizational structure,
management requirements, internal reporting system; and based on the operating
segment, the reporting segment is determined and the disclosure of information of the
segment is made.
An operating segment is an integral part of the Group which at the same time meets the
following conditions: (1) an integral part in daily activities to generate revenue, and costs
incur; (2) the management of the Group is able to regularly evaluate the components of
the operating results in order to decide to allocate resources, evaluate their performance;
(3) the Group is able to obtain accounting information about the financial condition, results
of operations and cash flows of the segment. Two or more operating segments have
similar economic characteristics and meet certain conditions, they can be an disclosed for
information as one operating segment.
The Group determines the Group's business as one operating segment to analyze and
evaluate in accordance with the internal organizational structure, regulatory requirements
and internal reporting system.
(29) Major accounting estimates and key hypotheses
The Group makes continuous valuation to major accounting estimates and key judgement
adopted. Major accounting estimates and key hypotheses are listed as follows:
(a) Corporate income tax and deferred income tax
The Company was recognized as a hi-tech enterprise in 2011 and a 15% rate of corporate
income tax is set for the Company according to laws and regulations. As stipulated by
laws and regulations, one qualification for a hi-tech enterprise is that R&D expenses
should not be lower than the designated percentage of the enterprise’s major operating
income, e.g. 3% is required for an enterprise whose annual sales exceeds 200 million
yuan. When taxation authorities find in the execution of preferential taxation policies the
enterprise fails to meet hi-tech qualification, they shall remind recognizing authorities to
double-check, during which time the enterprise is suspended from enjoying preferential
- 30 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
taxation policies. Actual expenses of the Company in 2012 on R&D are 577,218,548 yuan,
taking up 3% of major operating income of the year. Therefore, the Company is
recognized as a hi-tech and a 15% preferential rate is enjoyed. Meanwhile, in
accordance with related taxation laws and regulations, the Company added a reduction of
R&D expenses totally amounting to 164,176,045 yuan in the calculation of 2012 corporate
tax, which is subject to confirmation by the taxation authorities. Shall any difference arise,
the difference will impact the corporate tax expenses of the year.
Besides, the Group calculates corporate tax and deferred corporate tax according to current
laws and regulations, having considering applicable regulations on corporate tax and
taxation preference. In normal operating activities, many taxation events are not finally
certain. Therefore the Group has to make significant judgements while accruing corporate
tax. The Group estimates whether it needs to pay extra tax on expected taxation adjustment
items and confirms corresponding corporate tax liabilities. In case difference occurs
between the final confirmation and initial booking, the difference will exercise influence over
the amount of corporate tax and deferred corporate tax in the duration concerned.
In the valuation of temporary difference, the Group also takes into consideration the
collectability of deferred tax assets. Temporary difference majorly consists of difference
concerning bad debt provision, prepaid expenses not yet approved for tax deduction, stock
impairment reserve and fixed asset depreciation. Recognition of deferred corporate assets
is based on the Group’s estimate or hypothesis that the deferred corporate assets be
returned by means of acquiring sufficient taxable amount through sustainable operation in
the foreseeable future.
The Group has accrued sufficient corporate tax liabilities and deferred corporate tax based
on existing taxation regulations, best current estimate and hypothesis. It is possible the
corporate tax liabilities and deferred corporate tax be adjusted subject to the possible
change of taxation regulations or other related issues.
(b) Building contract
Revenue and cost of the building of large port equipment is recognized by proportion of
completion. When the sales result of an individual building contract can be reliably
estimated, revenue and cost related to the building contract is recognized on
completeness progress in percentage on the B/S. Completeness progress is recognized
by the percentage of revenue confirmation point of the contract as of the end of report
period. The Group makes analysis annually of building contracts completed in prior year
on the basis of product category, and confirms the completeness percentage at various
confirmation points of revenue calculated by the percentage of cost against the overall
cost at the said revenue point, using it as the corresponding completeness percentage of
each revenue point for the year. In case actual cost of the building contract incurred at the
revenue confirmation point as of report period end differs from the percentage of
completeness at the revenue confirmation point after the analysis of the products in
- 31 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
category, the difference will impact on the revenue and cost confirmed by the Group in
report year.
In addition, the Group makes continuous double-check and revision over the estimated
building contract cost according to cost of the contract actually incurred and based on
historical actual cost of similar product, in order to make the estimated cost of the building
contract close to the actual eventual cost. In case the actual total cost of the contract
differs from the estimated total cost, the difference will impact the cost confirmed by the
Group for the present year.
At the same time, the Group’s management conducts regular impairment tests to building
contracts. In case the expected total cost of the building contract exceeds total revenue of
the contract, expected contract loss provision will be made.
(c) Receivables impairment
The Group’s management continuously watches over the collectability of receivables to
estimate bad debt provision for the receivables, based on actual analysis (including but
not limited to unit debtor’s clearance capability, age of receivables and future collection
etc.). In case anything happens or changes showing the estimates adopted have changed,
estimates will be made and bad debt provision for the receivables will be made. If the
estimates do not match former estimates, the difference will affect the book value of the
receivables and the impairment loss during the period of estimate change.
(d) Stock impairment
The Group’s management timely judges the cashable net value of stock to estimate
impairment provision of stock. In case anything happens or changes showing the stock
might not fulfil its value, estimates will be made and bad debt provision for the stock will be
made. If the estimates do not match former estimates, the difference will affect the book
value of the stock and the impairment loss during the period of estimate change.
(e) Fixed assets service years and net residual value
The management of the Group estimates the expected useful life and estimated net
residual values of fixed assets. The estimate is based on the nature and features of similar
fixed assets by their past actual useful life and residual value. Such estimates may
undergo significant change due to technological innovation and competition due to action
taken by the severe industry cycle; the economic environment, technological environment,
as well as other changes in the environment in which fixed assets are used may cause
significant changes in the expected way of realization of economic benefits associated
with the fixed assets.
(f) Fixed assets and construction in progress impairment
The management of the Group conducts impairment test on fixed assets and construction
in progress showing signs of impairment as of B/S day. Collectable amount refers to the
higher between the net value of the fair value of fixed assets and construction in progress
- 32 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
less disposal expenses and the present value of the expected future cash flow of the fixed
assets and construction in progress. It is estimated by the best information to acquire to
reflect the capital amount (less disposal cost) generated from sales or disposal of fixed
assets or construction in progress on fair trade basis as of B/S days among informant and
willing parties or cash amount from continuously utilizing the fixed assets or construction
in progress until final disposal. The estimate may be adjusted every time when impairment
test is made. If the re-estimated collectable amount is higher than the former estimate
made the management of the Group, the Group shall not reverse formerly accrued
impairment loss provision of the fixed assets and construction in progress.
III Taxes
Tax bearing of the Group is listed as follows:
(1) VAT
VAT is applicable to the Company’s sales. Domestic sales output tax ratio is 17%, export
sales output tax ratio is subject to ―exemption, compensation, refund‖, refunding ratio is
17%.
The Company’s input tax for purchasing raw materials, fuel, power (commodity,
transportation fee) offsets the output tax. The Company’s VAT payable is the balance after
offset between current period’s input and output taxes.
For shipping income and rental income of the Group, prior to January 1, 2012, business
tax was applicable, tax rates 3% and 5% respectively. According to Ministry of Finance
and State Administration of Taxation’s Notification on Pilot Programme for VAT Replacing
Business Tax (Caishui "2011" No. 110) and Ministry of Finance and State Administration
of Taxation’s Notification on Piloting of VAT Replacing Business Tax in the Sector of
Transportation and Certain Areas in the Sector of Service in Shanghai (Caishui "2011" No.
111), from January 1, 2012 on, VAT applies to the Group’s shipping income, tax rate 11%;
VAT applies to equipment rental revenue, at the rate 17%.
(2) Business tax
Business tax applied to revenues of the Group from shipping and transportation, rate
being 5%.
(3) Urban maintenance and construction tax and education surcharge
The Group calculates and pays city maintenance and construction tax and education
surcharge by 7% and 3% of the payment of VAT and business tax respectively.
(4) Corporate income tax
- 33 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Corporate income tax is calculated and paid in accordance with P.R. China Corporate
Income Tax Law (―Income Tax Law‖).
According to the High-tech Enterprise Recognition Management Approaches (Guo Ke Fa
Huo [2008] 172,) and the High-tech Enterprise Recognition Management Work Guidelines
(Guo Ke Fa Huo [2008] 362) and the Notification on Announcing List of Second Batch of
Shanghai Municipality 2011 High-tech Enterprises Recognition, the Company was
recognized as a high-tech enterprise in the year 2011, and was awarded the High-tech
Enterprise Certificate (certificate number: GF201131000599). The certificate is valid for 3
years. According to Article 28 of the Income Tax Law, the Company actually applied a
15% corporate income tax rate this year (2011: 15%).
Meanwhile, on the basis of the new corporate tax law, subsidiaries of the Company
registered in Pudong New Area and Economy and Technology Zone will gradually adopt
the rate of 25% in the 5 years’ period from 2008 till 2012. Applicable income tax rate
current year is 25% (2011: 24%). Other domestic subsidiaries of the Group adopts 25%
rate (2011: 25%).
In conformity to Guofa (2007) No. 39 document State Council’s Notification on
Implementing Transmitting Favorable Taxation Policy, enterprises who formerly enjoyed
fixed-period exemption or deduction of tax policy continue to enjoy former favorable policy
till expiration of former period upon implementation of the new taxation law. For such
enterprises who have not yet been profitable thus not yet enjoyed any favorable policy,
the period of enjoying former favorable policy starts from the year 2008.
Corporate income tax rates enjoyed by the Company and its controlled subsidiaries:
Registered in Applicable Applicable
tax rate in tax rate in
2012 2011
Shanghai Pudong New
The Company Area 15% 15%
Shanghai Zhenhua Port Machinery Heavy Shanghai Chongming
Industry Co., Ltd. County 25% 25%
Shanghai Zhenhua Heavy Industries Shanghai Chongming
Machinery Co., Ltd. County 25% 25%
Shanghai Zhenhua Port Machinery (Hong
Kong) Co., Ltd. (note 1) Hong Kong 16.5% 16.5%
Shanghai Pudong New
Shanghai Zhenhua Shipping Co. Ltd. Area 25% 24%
Nantong Zhenhua Heavy Equipment
Manufacturing Co., Ltd. (note 2) Nantong 25% 15%
Nantong ZPMC Steel Structure Processing
Co., Ltd. (note 3) Nantong 25% 24%
Jiangyin ZPMC Steel Structure
Manufacturing Co., Ltd. (note 4) Jiangying 25% 12%
Shanghai Zhenhua Heavy Industries Steel Shanghai Pudong New
Structure Co., Ltd. Area 25% 25%
China Communications Shanghai Port Shanghai Pudong New
Machinery Manufacturing Plant Co., Ltd. Area 25% 24%
Shanghai Jiangtian Industrial Co., Ltd. Shanghai Pudong New 25% 24%
- 34 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Area
Shanghai Port Machinery Heavy Industry Shanghai Pudong New
Co., Ltd. Area 25% 24%
Shanghai Zhenhua Heavy Industries (Group) Port Area, Jingang
Zhangjiagang Co., Ltd. Town, Jiangsu 25% 25%
Shanghai Zhenhua Heavy Industries Group
(Nantong) Transmission Machinery Co.,
Ltd. Nantong 25% 25%
Shanghai Zhenhua Heavy Industries Group Nantong
(Nantong) Co., Ltd. 25% 25%
Shanghai Zhenhua Heavy Industries Electric Shanghai Pudong New
Co., Ltd. Area 25% 25%
Shanghai Zhenhua Heavy Industries Vessel Shanghai Yangshan
Transport Co., Ltd. Bonded Port Area 25% n.a.
Shanghai Zhenhua Testing Technology Shanghai Pudong New
Consulting Co., Ltd. Area 25% n.a.
Rotterdam, the
ZPMC Netherlands B.V. (note 5) Netherlands note 5 n.a.
ZPMC GmbH Hamburg (note 6) Hamburg, Germany 15.83% n.a.
Note 1: Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd. is a legal entity
registered in Hong Kong, China. Based on Hong Kong’s taxation regulations, the
company actually fits in a profit tax rate of 16.5% (2011：16.5%).
Note 2: According to High-tech Enterprise Recognition Managing Measures
(Guokefahuo[2008] No. 172) and Enterprise Recognition Managing Guides
(Guokefahuo[2008] No. 362), Notice on Announcing Jiangsu 4th 2009 List of
Enterprises to be Recognized as High-tech Ones, Nantong Zhenhua Heavy-load
Equipment Manufacturing Co., Ltd. Is recognized in 2009 as a High-tech
enterprise and obtained High-tech Enterprise Certificate (No. GR200932001125),
valid 3 years. According to Article 28 of Income Tax Law, actual rate applicable in
the year 2011 is 15%. In the year 2012, the Company is recognized as a high-tech
enterprise and the actual applicable corporate income tax is 25%.
Note 3: Nantong ZPMC Steel Structure Processing Co., Ltd. is a manufacturer with foreign
investment registered in Nantong Economy and Technology Development Zone.
As approved by taxation authorities, the company enjoys a preferential tax policy
which is ―two exemptions and three half-reductions‖. The year 2006 is the first
profitable year of the company. In compliance with stipulations of the taxation law,
the company enjoys 25% corporate tax rate for report year (24% for 2011).
Note 4: Jiangyin ZPMC Steel Structure Processing Co., Ltd. is a manufacturer with foreign
investment registered in Jiangyin Economy and Technology Development Zone.
As approved by taxation authorities, the company enjoys a preferential tax policy
which is ―two exemptions and three half-reductions‖. The year 2007 is the first
profitable year of the company. In compliance with stipulations of the new
taxation law, the company ends the tax preferential term and the actual
applicable corporate income tax rate for report year is 25% (12% for 2011).
Note 5: ZPMC Netherlands B.V, registered in the Netherlands, a private limited liability
company; according to Netherlands related provisions of the income tax act,
profits of the company is taxed on the basis of extra progressive rates. The
- 35 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
company did not conduct actual business in the year, and therefore not taxable
amount exists.
Note 6: ZPMC GmbH Hamburg is registered in Germany, a limited liability company;
according to Germany’s related provisions of the income tax act, applicable
income tax rate for the year is 15%, and on the basis of the corresponding income
tax amount, 5.5% of solidarity surcharge is imposed; the actual total income tax
rate applicable to 15.83%.
- 36 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements
(1) Subsidiaries
(a) Subsidiaries obtained through establishing or investment
Type of Subsidiary Registered in Type of Registered capital Business Scope Enterprise Type Legal Organizational
business person Code
Shanghai Zhenhua Port Machinery directly controlled Shanghai Machinery 5,500,000 manufacture & sales of Large limited liability Cao 73404797-5
Heavy Industry Co., Ltd. subsidiary Chongming making container cranes & Gear-box gears company Weizhong
County
Shanghai Zhenhua Heavy directly controlled Shanghai Machinery 5,000,000 engaging in precision casting metal limited liability Cao 72939252-0
Industries Machinery Co., Ltd. subsidiary Chongming making cutting and cold processing company Weizhong
County
Shanghai Zhenhua Port directly controlled Hong Kong trade and HK$ 50,000,000 Design, manufacture And sale of limited liability n.a n.a
Machinery (Hong Kong) Co., Ltd. subsidiary sales steel Structures and spare parts for company (note 1) (note 1)
cranes
Shanghai Zhenhua Shipping Co. directly controlled Shanghai shipping 120,000,000 Near ocean shipping, national costal limited liability Cao Wenfa 63060851-2
Ltd. subsidiary Pudong New transportation and Changjiang M & L Shipping of company
Area port Machinery
- 37 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Type of Registered Type of Registered Business Scope Enterprise Legal Organizational
Subsidiary in business capital Type person Code
Nantong Zhenhua Heavy directly controlled Nantong Machinery 854,936,900 Cargo storage and handling; limited liability Cao 791959022
Equipment Manufacturing subsidiary making container loading and company Weizhong
Co., Ltd. unloading;
installation of large port
facilities, engineering vessel
and large metal structure and
parts; leasing of cranes;
contracting of steel structure
project; gear box, container
bridge, extra-heavy bridge
steel structure, offshore wind
power equipment
manufacturing; offshore oil
platform, manufacture,
installation; sea heavy
machinery and equipment
manufacturing, installation;
crane Leases business; steel
structure engineering
contractor
Shanghai Zhenhua directly controlled Nantong Machinery 300,000,000 Construction and installation of limited liability Zhang 579480946
Heavy Industries subsidiary making large-scale port equipment, company Jianyong
Group (Nantong) engineering Vessels, sea
Transmission heavy equipment, machinery
and equipment, wind power
Machinery Co., Ltd. generation equipment with the
gearbox; large slewing
bearings, transmission,
dynamic positioning, large
anchor cutter, offshore oil
platform lifting device and
components, accessories
related to and weaving
- 38 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Type of Registered in Type of Registered Business Scope Enterprise Legal Organizational
Subsidiary business capital Type person Code
Shanghai Zhenhua directly controlled Shanghai Vessel tra 100,000,000 International land, air, maritime one-person Cao 599716952
Heavy Industries subsidiary Yangshan nsport freight forwarding business, limited liability Weizhong
Vessel Transport Co., Bonded Port domestic freight forwarding, company
Ltd. Area undertaking large-scale port
equipment, marine equipment,
marine engineering materials
sales, marine construction and
engineering and ship leasing,
engaged in import and export
of goods and technologies,
transit trade, trade between
enterprises and trade agents
within the free trade zone
Shanghai Zhenhua directly controlled Shanghai technology 7,000,000 technical development, one-person Huang Qi 59972206-8
Testing Technology subsidiary Pudong New consultin technical consultancy, limited liability ngfeng
Consulting Co., Ltd. Area g technical services, transfer of company
technology in the field of
testing; construction
engineering testing,
construction project
management services, physical
and chemical testing of metallic
materials and consulting,
except metal, mechanical
equipment, ships and steel
structure equipment (subject to
special approval)
non-destructive testing
services, test equipment sales,
maintenance, and self-owned
equipment rental (except
financial leases), engaged in
the import and export of goods
and technology business
- 39 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Type of Registered Type of Registered Business Scope Enterprise Legal Organizational
Subsidiary in business capital Type person Code
Shanghai Zhenhua directly controlled Nanton Machinery 300,000,000 Construction and installation limited liability Cao 578199167
Heavy Industries subsidiary making of large-scale port company Weizhong
Group (Nantong) equipment, engineering
Transmission Vessels, sea heavy
Machinery Co., Ltd. equipment, machinery and
equipment, wind power
generation equipment with
the gearbox; large slewing
bearings, transmission,
dynamic positioning, large
anchor cutter, offshore oil
platform lifting device and
components, accessories
related to and weaving
Shanghai Zhenhua directly controlled Shanghai Electric 50,000,000 Industrial automation limited liability Fei Guo 575871173
Heavy Industries subsidiary Pudong equipment equipment, electrical company
Electric Co., Ltd. New Area R&D equipment R & D, design,
commissioning, electrical,
electrical equipment, computer
hardware and software
research and development,
processing, sales, technical
services, systems integration,
in goods and technology import
and export business.
- 40 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Type of Registered in Type of Registered Business Scope Enterprise Legal Organizationa
Subsidiary business capital Type person l Code
Nantong Zhenhua Heavy Directly + Nantong Machinery USD 100,000 Installation of large port limited liability Chang Jia 79195616-3
Equipment Manufacturing indirectly making facilities, engineering vessel company nhua
Co., Ltd. controlled and large metal structure and
subsidiary parts; leasing of cranes;
contracting of steel structure
project
Jiangyin ZPMC Steel Directly + Jiangyin Machinery USD 100,000 The production of port limited liability Wang Jue 79863516-X
Structure Manufacturing indirectly making machinery spare parts; steel company
Co., Ltd. controlled structure production
subsidiary engineering, mechanical
equipment, electrical
equipment installation; and
provide technical and
after-sales service
Shanghai Zhenhua Heavy Indirectly Shanghai Machinery USD 150,000 Production and sales of steel limited liability Cao 66938205-5
Industries Steel Structure controlled Pudong New making structure, port machinery parts; company Weizhong
Co., Ltd. subsidiary Area to undertake the mechanical
equipment, electrical
equipment installation; provide
related technical and
after-sales service
ZPMC Netherlands B.V. directly Rotterdam, trade and Euro 18,000 Port equipment technical limited liability Li Chenha n.a
controlled the sales service, sales, spare parts, company o (note 1)
subsidiary Netherlands offshore installation and steel
structure
ZPMC GmbH Hamburg directly Hamburg, trade and Euro 25,000 Sales, transport, maintenance limited liability Li n.a
controlled Germany sales of port equipment, ship steel company Chenhao (note 1)
subsidiary structure parts and other parts
Note 1: The above subsidiary is an entity registered overseas or in Hong Kong, so there is no legal representative or organizational code.
- 41 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Paid at end of Balance of net Share Voting Consolida Minority interest Amount of minority
year investment to subsidiary Proportion Proportion ted or not interest to offset minority
in nature (%) (%) gains and losses
Shanghai Zhenhua Port Machinery
Heavy Industry Co., Ltd. 4,950,000 - 90% 90% Yes 996,878 -
Shanghai Zhenhua Heavy Industries
Machinery Co., Ltd. 5,014,200 - 100% 100% Yes - -
Shanghai Zhenhua Port Machinery (Hong
Kong) Co., Ltd. - - 99.99% 99.99% Yes - -
Shanghai Zhenhua Shipping Co. Ltd. 66,000,000 - 55% 55% Yes 105,574,370 (50,865,979)
Nantong Zhenhua Heavy Equipment
Manufacturing Co., Ltd. 854,936,900 - 100% 100% Yes - -
Shanghai Zhenhua Heavy Industries Group
(Nantong) Transmission Machinery Co., Ltd.
300,000,000 - 100% 100% Yes - -
Shanghai Zhenhua Heavy Industries
Group (Nantong) Co., Ltd. 300,000,000 - 100% 100% Yes - -
Shanghai Zhenhua Heavy Industries
Electric Co., Ltd. 50,000,000 - 100% 100% Yes - -
Nantong ZPMC Steel Structure Processing USD 100,00
Co., Ltd. 0 - 100% 100% Yes - -
Jiangyin ZPMC Steel Structure USD 100,000
Manufacturing Co., Ltd. - 100% 100% Yes - -
Shanghai Zhenhua Heavy Industries Steel
Structure Co., Ltd. (1) USD 73,500 - 49% 49% Yes 666,671 -
Shanghai Zhenhua Heavy Industries
Vessel Transport Co., Ltd.(Note IV (2)) 100,000,000 - 100% 100% Yes - -
Shanghai Zhenhua Testing Technology
Consulting Co., Ltd.( Note IV (2)) 7,000,000 - 100% 100% Yes - -
-
ZPMC GmbH Hamburg(Note IV (2)) Euro 25,000 100% 100% Yes - -
-
ZPMC Netherlands B.V.(Note IV (2)) Euro 18,000 100% 100% Yes - -
- (50,865,979)
107,237,919
I: Based on Articles of Association of Shanghai Zhenhua Heavy Industries Steel Structure Co., Ltd., the Company is entitled to appoint majority of board members of the former
and thus actually owns control over the former. Therefore the former is consolidated into the Group.
- 42 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Subsidiaries acquired from consolidation of enterprises under the same controller
Type of Registered Type of Registered capital Business Scope Enterpri Legal Organizatio
Subsidiary in business se Type person nal Code
directly controlled Shanghai Machinery 2,184,730,000 Sales of port machinery including limited Cao 13220596-4
subsidiary Pudong making cranes, bulk and container liability Weizhong
New Area machinery, port engineering vessel company
(incl. barge crane vessels), cargo
carrying machinery and parts; sales
of key parts of various machinery
China Communications equipment, raw materials and
Shanghai Port Machinery auxiliary materials, instrumentation,
Manufacturing Plant Co., technical service, installation and
Ltd. maintenance, technical consulting
Shanghai Jiangtian Directly + Shanghai Commerce 157,000,000 Organizing construction of composite limited Wang Jue 13380509-9
Industrial Co., Ltd. indirectly Pudong and trade buildings; business info consulting; sale liability
controlled Nes Area and service of mechanic & electric company
subsidiary equipment & product, building material,
decorating material, hardware, goods,
metal; toll park; affiliating branches
Shanghai Port Machinery indirectly Shanghai Machinery USD 18,120,000 The production of Port Crane and limited Cao 75613245-X
Heavy Industry Co., Ltd. controlled Pudong making accessories, material handling liability Weizhong
subsidiary Nes Area machinery and accessories, tunnel company
machinery, high-speed railway
equipment, steel structure fabrication,
repair, design and manufacture of
various types of large-scale projects
vessel (including floating cranes) and
marine engineering equipment sales
since producing products, and provide
installation, maintenance services and
technical advice
- 43 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Subsidiaries acquired from consolidation of enterprises under the same controller (Cont’d)
Type of Registered in Type of Registered capital Business Scope Enterprise Legal Organizational
Subsidiary business Type person Code
Shanghai Zhenhua Directly Jinxiang Town Machinery 15,000,000 Port Crane handling, bulk limited liability Xing Xiaoj 25150291-0
Heavy Industries controlled Zhangjiagang making containers and machinery company ian
products manufacturing,
(Group) Zhangjiagang subsidiary
processing and maintenance
Port Machinery Co., and renovation business
Ltd.
Paid at end of year Balance of net investment to Share Voting Consolidated Minority interest Amount of minority interest
subsidiary in nature Proportio Proportion or not to offset minority gains and
n (%) (%) losses
China Communications
Shanghai Port Machinery
Manufacturing Plant Co., Ltd. 2,184,730,000 - 100% 100% Yes - -
Shanghai Jiangtian Industrial
Co., Ltd. 157,000,000 - 100% 100% Yes - -
Shanghai Port Machinery Heavy
Industry Co., Ltd. USD 13,412,424 - 74% 74% Yes 101,471,326 (4,765,541)
Shanghai Zhenhua Heavy
Industries (Group)
Zhangjiagang Assembly Co.,
Ltd. 13,500,000 - 90% 90% Yes (2,408,285) -
- 99,063,041 (4,765,541)
(i) The Company directly holds 30.12% stake in Shanghai Zhenhua Heavy Industries (Group) Zhangjiagang Co., Ltd., and via internal equity transfer within the Group, the
59.88% stake of Shanghai Zhenhua Heavy Industries (Group) Zhangjiagang Co., Ltd. held indirectly by the Company’s subsidiary China Communications Shanghai Port
Machinery Manufacturing Plant Co., Ltd. is transferred to the Company for direct holding, thus the Company totally holds 90% of the stake.
- 44 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(2) Companies newly consolidated from report year on
(a) Companies newly consolidated from report year on
Net asset as of Dec. 31, Net profit 2012
2012
Shanghai Zhenhua Heavy Industries Vessel
Transport Co., Ltd. 100,101,501 101,501
Shanghai Zhenhua Testing Technology
Consulting Co., Ltd. 7,000,000 -
ZPMC GmbH Hamburg 3,281,350 3,060,433
ZPMC Netherlands B.V. 149,717 -
110,532,568 3,161,934
The above companies are newly established subsidiaries of the Group, and in current period
consolidated into the scope of the Group's financial statements.
- 45 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
V. Notes to major items in the consolidated financial statements
1. Monetary capital
Dec. 31, 2012 Dec. 31, 2011
Foreign Foreign
currency Exchang currency Exchan
amount e rate RMB amount amount ge rate RMB amount
Cash in
Inventories
–
RMB - - 371,354 - - 361,245
Euro 8,913 8.3176 74,135 2,574 8.1625 21,010
USD 10,178 6.2855 63,974 3,780 6.3009 23,817
Canadian
dollar 2,814 6.3184 17,780 2,814 6.1777 17,384
NZD 580 5.1298 2,975 636 4.9072 3,121
HK dollar 183 0.8109 148 785 0.8107 636
530,366 427,213
Bank
deposits –
RMB - - 1,344,242,943 - - 1,020,791,068
USD 134,979,417 6.2855 848,413,126 125,760,335 6.3009 792,403,295
Euro 13,690,863 8.3176 113,875,122 5,059,205 8.1625 41,295,761
Won 2,090,270,880 0.00585 12,228,085 134,781,386 0.0055 741,298
HK dollar 1,072,605 0.8109 869,775 905,012 0.8107 733,693
Pound 35,916 10.1611 364,946 6,737 9.7116 65,427
Singapore
dollar 37,314 5.0929 190,036 298,826 4.8496 1,449,187
Omani Rial 3,477 16.1687 56,219 4,814 16.3823 78,864
Australian
dollar 6,495 6.5363 42,453 248,645 6.4093 1,593,640
Canadian
dollar 1,009 6.3184 6,375 483 6.1777 2,984
2,320,289,080 1,859,155,217
other currencies
capital –
RMB - - 2,074,593,147 - - 54,611,606
USD 156,596,963 6.2855 984,290,211 6,178,462 6.3009 38,929,871
Euro 128,204 8.3176 1,066,350 7,036,747 8.1625 57,437,447
Pound 5 10.1611 51 4,450,259 9.7116 43,219,135
Canadian
dollar 3 6.3184 19 3 6.1777 19
3,059,949,778 194,198,078
5,380,769,224 2,053,780,508
On Dec. 31, 2012, other monetary capital includes:
(a) Restricted deposits amount to 3,023,161,180 yuan (as of December 31, 2011: 61,163,098 yuan), including:
2,000,000,000 yuan (December 31, 2011: nil) of time deposits with a term of 6 months; 149,296,773USD (equivalent to
RMB938,404,869) of time deposits (December 31, 2011: nil) is pledged to banks as guarantee for the
150,000,000USD (equivalent to RMB942,825,000 yuan) short-term loan (Note v (19) (a)); 84,756,311 (December 31,
2011: 61,163,098 yuan) deposits of the Group at the bank for letters of credit and bank guarantees; as well as the
(b) foreign exchange clearance capital of 36,788,598 yuan deposited in the bank (December 31, 2011: 133,034,980
yuan).
- 46 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Cash and cash equivalents recorded in cash flow statements:
Dec. 31, 2012
Monetary capital 5,380,769,224
Less: restricted deposits (a) (3,023,161,180)
Dec. 31, 2012 cash balance 2,357,608,044
Less: Dec. 31, 2011 cash balance (1,992,617,410)
Net cash addition 364,990,634
(2) Trading financial assets and liabilities
Dec. 31, 2012 Dec. 31, 2011
Assets liabilities Assets liabilities
Forward foreign exchange contracts -
Fair valuation gains / (losses) 26,009,477 - 61,678,770 (2,289,600)
On Dec. 31, 2012, in the forward foreign exchange contract established by the Group with bank but
not due:
Total amount of principal in USD for RMB contract is USD 300,000,000; agreed exchange
rate is 6.3880 to 6.4425; contract is due between Apr.15, 2013 and Oct. 16, 2013.
Closing fair value estimated gains/losses of above forward foreign exchange contracts are
shown in transactional bank confirmed amount or the amount based on end-of-year market
exchange rate.
- 47 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(3) Notes receivable
Dec. 31, 2012 Dec. 31. 2011
Bank acceptance bills 115,069,863 74,956,568
Commercial acceptance bills - 5,600,000
115,069,863 80,556,568
As of Dec. 31, 2012, the Group had had no draft receivable pledged to banks.
Notes receivable the Group has endorsed to any other party but not yet due on Dec. 31, 2012
amounts to 842,415,554 yuan (Dec. 31, 2011: 1,840,665,855 yuan).
(4) Interest receivable
Increase report Decrease report
Dec. 31. 2011 year year Dec. 31. 2012
time deposit
Interest receivable - 114,614,259 (81,382,707) 33,231,552
(5) Accounts receivable
Dec. 31. 2012 Dec. 31. 2011
Accounts receivable
4,149,044,610 5,162,419,159
Less: bad debt provision (438,323,499) (374,170,038)
3,710,721,111 4,788,249,121
(a) Aging:
Dec. 31. 2012 Dec. 31. 2011
within one year 3,114,499,639 4,203,553,157
one to two years 613,198,850 660,027,241
two to three years 196,713,343 167,537,854
above three years 224,632,778 131,300,907
4,149,044,610 5,162,419,159
- 48 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Accounts receivable listed in type as follows:
Dec. 31. 2012 Dec. 31. 2011
book value balance bad debt provision book value balance bad debt provision
Propor
proport proporti
proportion tion of
amount ion in amount amount on in amount
in total accrua
total total
l
Big single amount,
provided for bad debt - - - - 50,062,845 1% (14,325,188) 29%
separately
Total bad debt
provision accrued
in groups
Credit risk portfolio
- related party 745,701,760 18% - - 1,333,821,618 26% - -
- third party 3,355,082,485 81% (401,927,631) 12% 3,778,534,696 73% (359,844,850) 10%
Single amount,
though not
significant, 48,260,365 1% (36,395,868) 75% - - - -
separate provision
for bad debt made
4,149,044,610 100% (438,323,499) 13% 5,162,419,159 100% (374,170,038) 7%
(c) As of Dec. 31, 2012, the Company has no accounts receivable with significant single amount and bad debt provided
for .
- 49 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(d) Among account receivable from total bad debt provision made in groups, portfolio
analysis by ages:
Dec. 31, 2012 Dec. 31, 2011
book value balance bad debt provision book value balance bad debt provision
Propo
Propor
Propor rtion
proporti tion of
amount amount tion of amount of amount
on accrua
accrual accru
l
al
within one
year 2,652,997,300 79% (32,752,614) 1% 2,881,307,626 77% (22,984,525) 1%
one to two
years 339,389,384 10% (91,777,886) 27% 651,486,309 17% (150,033,418) 23%
two to
three years 152,595,343 5% (67,296,673) 44% 114,439,854 3% (55,526,000) 49%
above
three years 210,100,458 6% (210,100,458) 100% 131,300,907 3% (131,300,907) 100%
3,355,082,485 100% (401,927,631) 12% 3,778,534,696 100% (359,844,850) 10%
(e) As of Dec. 31, 2012, major accounts receivable whose single amount not significant but bad debts provided for:
book value balance bad debt provision proportion of accrual reason
Accounts
receivable1 21,798,480 (21,798,480) 100% (i)
Accounts
receivable2 26,461,885 (14,597,388) 55% (ii)
48,260,365 (36,395,868) 75%
(i) As of Dec. 31, 2012, as involved in contract dispute the Company believes the accounts receivable are difficult to
collect, therefore full amount prepared for bad debts.
(ii) As of Dec. 31, 2012, due to delayed delivery, the Company made bad debt provision of 14,597,388 yuan based on
the highest fine in the contract.
(f) Account of accounts receivable fully provided for bad debts in relatively big proportion in prior yeas but
fully collected or returned in current year or collected or returned in large proportion:
Reason for Former bad Return or collection amount Amount of return
return or debts basis of accumulative bad debt or collection
collection provision amount
Accounts Vigorous debt age 7,629,126 7,629,126
receivable1 recovery
Accounts Vigorous debt age 2,044,894 2,044,894
receivable2 recovery
Accounts Vigorous debt age 1,934,493 1,934,493
receivable3 recovery
Accounts Vigorous debt age 1,500,000 1,500,000
receivable4 recovery
Accounts Vigorous debt age 1,165,871 1,165,871
receivable5 recovery
14,274,384 14,274,384
- 50 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(g) Accounts receivable from shareholding units holding 5% (inclusive) stake of the Company as
follows:
Dec. 31, 2012 Dec. 31, 2011
bad debt bad debt
amount provision amount provision
CCCC 48,408,090 - 142,471,837 -
- 51 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(h) account receivable from related parties:
Dec. 31, 2012 Dec. 31, 2011
provision
bad
Proportion
Proportion in bad debt
Relation with the Group amount in total amount
(%) total (%) provision
debt
Controlled by the same parent
Friede & Goldman, Llc. company 179,199,606 4.32% - - - -
China Harbour Engineering Controlled by the same parent
Co., Ltd. company 152,838,218 3.68% - - - -
CCCC First Harbor
Engineering First Controlled by the same parent
Engineering Co., Ltd. company 129,000,000 3.11% - 221,050,000 4.28% -
CCCC First Harbor Controlled by the same parent
Engineering Co., Ltd. company 113,640,319 2.74% - 723,312,417 14.01% -
Controlled by the same parent
CCCC company 48,408,090 1.17% - 142,471,837 2.76% -
Jiangsu Longyuan
Zhenhua Marine Controlled by the same parent
Engineering Co., Ltd. company 42,517,974 1.02% - 92,075,758 1.78% -
CCCC First Highway
Engineering Sixth Controlled by the same parent
Engineering Co., Ltd. company 24,000,000 0.58% - 24,800,000 0.48% -
CCCC First Highway
Engineering First Controlled by the same parent
Engineering Co., Ltd. company 18,800,000 0.45% - 19,800,000 0.38% -
CCCC Second Harbor Controlled by the same parent
Engineering Co., Ltd. company 17,530,000 0.42% - 26,030,000 0.50% -
CCCC Third Harbor Controlled by the same parent
Engineering Co., Ltd. company 8,490,297 0.20% - 23,480,000 0.45% -
CCCC Tianhe Machinery Controlled by the same parent
Manufacturing Co., Ltd. company 6,178,742 0.15% - 10,000,000 0.19% -
CCCC Fourth Harbour Controlled by the same parent
Engineering Co., Ltd. company 2,120,000 0.05% - 2,120,000 0.04% -
Second Highway
Engineering Bureau Co., Controlled by the same parent
Ltd. company 1,209,000 0.03% - 2,778,000 0.05% -
CCCC Tianjin Dredging Controlled by the same parent
Co., Ltd. company 1,051,764 0.03% - 27,254,606 0.53% -
CCCC Highway Controlled by the same parent
Consultants Co., Ltd. company 422,750 0.01% - - - -
CCCC Shanghai
Equipment Engineering Controlled by the same parent
Co., Ltd. company 144,000 0.00% - - - -
CCCC First Harbor
Engineering Survey and Controlled by the same parent
Design Institute Co., Ltd. company 109,000 0.00% - 109,000 0.00% -
Yueyang Chenglingji Controlled by the same parent
Xingang Co., Ltd. company 42,000 0.00% - 42,000 0.00% -
CCCC Shanghai Dredging Controlled by the same parent
Co., Ltd. company - - - 10,000,000 0.19% -
In CCCC Fourth Harbour
Engineering Survey and Controlled by the same parent
Design Institute Co., Ltd. company - - - 8,498,000 0.16% -
17.96
745,701,760 % - 1,333,821,618 25.80% -
- 52 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(i) As of Dec. 31, 2012, top 5 accounts receivable balance as follows:
Proportion in
Relation with total accounts
the Group amount Age receivable
COMPANY related
A 179,199,606 within one year 4%
COMPANY related
B 152,838,218 within one year 4%
COMPANY third party
C 138,336,323 within one year 3%
COMPANY related within one year to two
D 129,000,000 years 3%
COMPANY
E third party 115,350,000 within one year 3%
714,724,147 17%
(j) Accounts receivable include the following foreign currency balance:
Dec. 31, 2012 Dec. 31, 2011
Foreign
currency Exchang translated in Foreign currency Exchang
amount e rate RMB amount e rate translated in RMB
USD 382,845,104 6.2855 2,406,372,901 195,017,926 6.3009 1,228,788,449
8.1625
Euro 45,027,884 8.3176 374,523,928 31,695,238 258,712,380
Canadian 3,450,000 6.1777 21,313,065
dollar 3,450,000 6.3184 21,798,480
Saudi 9,946,137 1.8200 18,101,969
currency 10,896,267 1.6613 18,101,968
Singapor 7,267,245 4.8496 35,243,231
e dollar 27,174,649 5.0929 138,397,770
Australian 180 6.4093 1,154
dollar 577,502 6.5363 3,774,726
5,680,500 9.7116 55,166,744
Pound 2,132,597 10.1611 21,669,531
206,025 0.8107 167,025
HK dollar 448,983 0.8109 364,080
26,728,066,000 0.0055 147,004,363
Won - 0.0059 -
1,764,498,380
2,985,003,384
- 53 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(6) Other receivables
Dec. 31, 2012 Dec. 31, 2011
Employees mutual aid funds
receivable 121,259,154 110,181,375
Unsettled payment tax receivable 82,694,087 -
Customs guaranty deposit 74,106,771 609,644
Temporary loan project on-site
service 63,144,436 94,599,819
Bid bond payments 8,404,428 11,424,428
export tax rebate 1,516,922 7,091,675
payments deposit for third party
receivable 539,624 360,060
Government subsidy payments 300,000 300,000
Receivables land and housing assets
levy compensation (Notes V(46)) - 497,240,591
Others 71,505,609 99,281,200
423,471,031 821,088,792
Less: bad debt provision (10,165,728) (11,428,507)
413,305,303 809,660,285
(a) Other receivables debt age analysis:
Dec. 31, 2012 Dec. 31, 2011
within one year 244,631,610 657,800,639
one to two years 49,675,161 4,711,071
two to three years 4,504,972 74,053,035
above three years 124,659,288 84,524,047
423,471,031 821,088,792
- 54 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Other receivables listed in type as follows:
Dec. 31, 2012 Dec. 31, 2011
book value balance bad debt provision book value balance bad debt provision
amount proport amount Proportio amount total amount Pro
ion in n of proporti port
total accrual on ion
of
acc
rual
Big single
amount,
provided for
bad debt
separately 341,204,448 81% - - 702,021,785 85% - -
Single amount,
though not
significant,
separate
provision for
bad debt made 82,266,583 19% (10,165,728) 12% 119,067,007 15% (11,428,507) 10%
423,471,031 100% (10,165,728) 2% 821,088,792 100% (11,428,507) 1%
(c) As of Dec. 31, 2012, the Company did not accrue bad debt provision for other receivables
with big single amount, and provided for bad debt separately
(d) As of Dec. 31, 2012, other receivables with single amount, though not significant,
separate provision for bad debt made:
book value bad debt Proportion
balance provision of accrual reason
Other receivables1 9,017,592 (9,017,592) 100% (i)
Other receivables2 715,651 (715,651) 100%
Others 432,485 (432,485) 100%
10,165,728 (10,165,728) 100%
(i) As of Dec. 31, 2012, due to bankruptcy of the debtor, the Company believes the other
receivable is difficult to collect, therefore fully provided for bad debts.
- 55 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(e) Accounts receivable fully provided for bad debts in prior year, or with high proportion of bad debt
provision accrual but fully collected or reversed in report year, or large proportion collected or reversed
in report year
Collection or for bad debt Collected or reversed prior cumul amount collect
reversal provision ative bad debt provision amoun ed or reverse
reason basis t d
Other more effort on individual
receivables1 collection recognition 1,138,442 1,138,442
Others more effort on individual
collection recognition 124,337 124,337
1,262,779 1,262,779
(f) As of Dec. 31, 2012, other receivables do not contain the amount from shareholders
holding above 5% (including 5%).
(g) As of Dec. 31, 2012, top 5 other receivable balance:
Proportion in total
Relation with other receivables
the Group amount age
COMPANY within one
A third party 74,106,771 year 18%
COMPANY above three
B third party 19,520,000 years 5%
COMPANY above three
C third party 8,957,592 years 2%
COMPANY above three
D third party 6,285,500 years 1%
COMPANY within one
E third party 5,832,000 year 1%
114,701,863 27%
(h) Other receivables include the following foreign currency balance:
Dec. 31, 2012 Dec. 31, 2011
Article I. Foreign Excha Foreign
currency nge translated in currency Exchan translated in
amount rate RMB amount ge rate RMB
USD 6,962,212 6.2855 43,760,984 11,125,982 6.3009 70,103,700
Euro 4,144,474 8.3176 34,472,077 1,928,709 8.1625 15,743,087
other
currencies - - 3,904,101 - - 3,040,604
82,137,162 88,887,391
- 56 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(7) Advances
(a) Advances aging provision:
Dec. 31, 2012 Dec. 31, 2011
proportion in proportion in
amount total amount total
within one
year 933,606,289 94% 1,001,653,822 94%
one to two
years 34,693,207 3% 45,097,043 4%
two to three
years 10,920,907 1% 19,244,725 2%
above three
years 16,464,277 2% 1,673,925 -
995,684,680 100% 1,067,669,515 100%
On Dec. 31, 2012, advances older than one year is 62,078,391 yuan (Dec. 31, 2011：
66,015,693 yuan), mainly payment for contracted processing for marine heavy product and
for steel purchase, not yet settled because purchased product not yet completed, steel
purchased not delivered.
(b) As of Dec. 31, 2012, top 5 advances:
Proportion in
Relation with the Group Amount total Reason of unsettlement
COMPANY Purchase steel not
A third party 270,142,478 27% shipped in
COMPANY Purchase steel not
B third party 102,133,771 10% shipped in
COMPANY 53,000,886 5% Entrusted processing,
C related party not completed
50,740,090 5% Vessel body built under
COMPANY entrustment not
D third party completed
COMPANY Purchase steel not
E third party 45,014,696 5% shipped in
521,031,921 52%
(c) As of Dec. 31, 2012, advances do not include any to shareholders holding 5% (inclusive)
shares of the Company.
- 57 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(d) Advances to related parties:
Dec. 31, 2012 Dec. 31, 2011
Relation with amount Proport bad amount Proportion
the Group ion in debt in total (%)
provision
bad debt
total provi
sion
(%)
CCCC Investment Controlled by
& Engineering the same
Company parent
Limited company 53,000,886 5% - - - -
CCCC Third Harbour
Engineering
Xing’an Controlled by
Construction the same
Engineering Co., parent
Ltd. company 1,200,000 - - 2,145,650 - -
Tianjin China
Communications Controlled by
Bomaike Marine the same
Vessel Heavy parent
Industry Co., Ltd. company - - - 41,265,536 4% -
CCCC Shanghai Controlled by
Dredging the same
Equipment Industry parent
Co., Ltd. company - - - 7,412,000 1% -
54,200,886 5% - 50,823,186 5% -
(e) Advances include the following foreign currency
Dec. 31, 2012 Dec. 31, 2011
Foreign Foreign
currency Exchang translated in currency Exchan translated in
amount e rate RMB amount ge rate RMB
USD 32,563,696 6.2855 204,679,111 21,792,559 6.3009 137,312,735
Euro 7,646,003 8.3176 63,596,395 7,913,871 8.1625 64,596,972
Yen 42,991,143 0.0730 3,138,353 - - -
Pound 20,496 10.1611 208,262 - - -
271,622,121 201,909,707
- 58 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(8) Inventories
(a) Inventories classified as follows:
Dec. 31, 2012 Dec. 31, 2011
book value Inventories Book value book value Inventories Book value
balance impairment balance impairment
provision provision
raw
materials
and
purchase
d parts 3,742,221,273 (192,858,005) 3,549,363,268 3,145,256,244 (104,631,648) 3,040,624,596
Semi
products 4,106,788,751 (78,181,917) 4,028,606,834 3,161,617,575 (31,616,486) 3,130,001,089
Inventorie
s goods 11,176,059 (9,035,000) 2,141,059 11,163,852 - 11,163,852
turnover
materials 1,571,864 - 1,571,864 4,947,062 - 4,947,062
7,861,757,947 (280,074,922) 7,581,683,025 6,322,984,733 (136,248,134) 6,186,736,599
Semi products of the Group are marine heavy load equipment in building but order not placed.
(b) Inventories impairment provision:
accrued
report year
Dec. 31, 2011 deduction report year Dec. 31, 2012
transferred
reverse sales
raw materials
and
purchased
parts 104,631,648 88,226,357 - - 192,858,005
Semi products 31,616,486 46,565,431 - - 78,181,917
Inventories
goods - 9,035,000 - - 9,035,000
136,248,134 143,826,788 - - 280,074,922
(c) Inventories impairment provision:
Inventory impairment Reason for return of Proportion of the return
provision based on impairment provision in in the balance
report year
the difference between the No No
realizable value of raw
raw materials material and purchased
and parts due to lower product
purchased sales price and the book
parts value
the difference between the No No
realizable value of semi
products and the book
Semi products value
the difference between the No No
realizable value of
Inventories Inventories goods and the
goods book value
- 59 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(d) Loan expenses Capitalization:
As of Dec. 31, 2012, among the balance of the semi products of marine heavy equipment for
which orders have not been placed, loan expenses capitalization accumulated amount is
308,095,572 yuan (Dec. 31, 2011：178,787,008 yuan)，among which, in the year 2012 loan
expenses capitalization amount was 136,291,096 yuan (year 2011: 132,440,599 yuan).
(9) Construction completed account not closed/Account closed construction not completed
(a) Construction completed account not closed –
Dec. 31, 2012 Dec. 31, 2011
Accumulated cost incurred 28,751,935,572 26,526,761,121
Add: Accumulated margin confirmed 729,784,438 1,019,691,910
Less: Accumulated settled payment (22,735,291,782) (20,053,676,533)
Accumulated confirmed
expected contract loss (126,272,889) (107,196,390)
6,620,155,339 7,385,580,108
Account closed construction not completed –
Dec. 31, 2012 Dec. 31, 2011
Accumulated settled payment 9,400,685,405 7,641,391,924
Less: Accumulated confirmed margin (300,301,358) (204,205,135)
Accumulated cost incurred (6,725,128,004) (5,501,358,165)
Add: Accumulated confirmed
expected contract loss 14,548,850 10,940,477
2,389,804,893 1,946,769,101
Expected contract losses –
Addition deduction
Dec. 31, 2011 report period report year Dec. 31, 2012
Construction
completed
account not
closed 107,196,390 161,460,939 (142,384,440) 126,272,889
Account
closed
construction
not
completed 10,940,477 26,184,380 (22,576,007) 14,548,850
118,136,867 187,645,319 (164,960,447) 140,821,739
- 60 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) As of Dec. 31, 2012, amount of contracts still in construction is about 33,987,708,174 yuan
(excluding VAT) (Dec. 31, 2011: 24,936,205,482 yuan).
Probable fines in case of delay in delivery as contracted:
Dec. 31, 2012 Dec. 31, 2011
bank issued valid guaranty letter 14,350,312,450 12,461,270,162
bank not issued guaranty letter 1,939,619,957 1,063,766,987
16,289,932,407 13,525,037,149
(c) Loan expenses capitalization:
As of Dec. 31, 2012, among balance of Construction completed account not
closed/Account closed construction not completed, loan expenses capitalization
accumulated amount is 13,628,195 yuan (Dec. 31, 2011: 4,719,891 yuan), among which
the year 2012 loan expenses capitalization amount was 5,500,090 yuan (Year 2011:
10,817,721 yuan).
(10) Other current assets
Dec. 31, 2012 Dec. 31, 2011
Available-for-sale financial assets
(note V (11)) 1,000,000,000 -
(11) Available-for-sale financial assets
Dec. 31, 2012 Dec. 31, 2011
Available-for-sale equity
instruments (a) 124,222,545 108,661,535
Bank short-term financing products (b) 1,000,000,000 -
1,124,222,545 108,661,535
Less: impairment reserve - -
1,124,222,545 108,661,535
Less: assets available for sale listed in
other current assets (1,000,000,000) -
124,222,545 108,661,535
- 61 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Available-for-sale equity instruments refer to the 12.99% equity the Group held of Jiangxi
Hua Wu Brake Co., Ltd. (hereafter "Jiangxi Hua Wu") of. Initial investment cost is
19,400,000 yuan. As licensed by the China Securities Regulatory Commission Zheng Jian
Xuke [2010]889, Jiangxi Hua Wu in July 2010 issued 19.5 million RMB common shares
(A-shares) to domestic investors with public offerings, and listed on Shenzhen Stock
Exchange for transactions. Shares the Company held of Jiangxi Hua Wu shall not be
assigned or delegated management of others within 36 months from the date of listing.
Fair value of the available-for-sale equity instruments is determine based on the closing
price the last trading day of the year at Shenzhen Stock Exchange, deducting the
discount as a result of loss of liquidity during sales limits. Due to the increase in stock
prices this year, the company recognized gains on available for sale financial assets of
15,561,010 yuan, directly charged to other capital reserve (Note V (34)).
(b) Bank short-term financial products means that the Company purchased from a bank with
low-risk. Since starting from December 31, 2012, these short-term financial products are
due within the next 12 months, so they are listed as other current assets in the B/S.
As of Dec. 31, 2012, 1,000,000,000 yuan of bank short-term financial products are the
legal person RMB financial products purchased from China Construction Bank
Corporation. This type of products do not guarantee the principal, with floating income,
investment term being 351 days, expected annual proceeds around 4.95%.
Fair value of the above bank financial products is based on the principal of the
investment and the expected proceeds as of B/S day.
(12) Long term equity investment
Dec. 31, 2012 Dec. 31, 2011
joint ventures (a) 147,056,419 126,577,749
associates (b) 29,023,053 13,056,256
other Long term equity 57,640,000 43,240,000
investment(c)
233,719,472 182,874,005
Less: Long term equity
investment impairment provision (30,000,000) (30,000,000)
203,719,472 152,874,005
There are no limits to value realization of the Group’s long term equity investment.
- 62 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Joint ventures
Report year movement
Net gains/losses Remark on the accrued
accounting addition or adjusted on cash other Voting discrepancy between report year
basis initial deduction of equity basis dividends equity Dec. 31, Holdin rights holding ratio and impairment impairment
investment Dec. 31, 2011 investment (Notes V(45)) announced movement 2012 g ratio ratio voting rights ratio provision provision
Jiangsu
Longyuan
Zhenhua Marine
Engineering
Co., Ltd. equity 130,000,000 126,577,749 - 20,478,670 - - 147,056,419 50% 50% n.a - -
As of June 18, 2010, the Group and China Longyuan Power Group Corporation jointly set up Jiangsu Longyuan Zhenhua Marine Engineering Co., Ltd.
(―Jiangsu Longyuan‖), with a registered capital of 260,000,000 yuan, each party holding 50% stake. Jiangsu Longyuan mainly operates in the building and
installation of steel structures; facilities infrastructure construction, facilities installation and maintenance of marine wind power; construction and
maintenance of sea bottom cable systematic projects; marine engineering construction, facilities installation and maintenance; installation equipment
leasing.
The Group and China Longyuan Power Group Corporation paid in the first installment of investment in May 2010 to Jiangsu Longyuan, each paid
30,000,000 yuan while each paid in 100,000,000 yuan in July 2011 to Jiangsu Longyuan as the second installment.
- 63 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Associates
Report year movement
Net
Remark on the accrued
accounting addition or gains/losses cash other Holdi Voting
initial Dec. 31, Dec. 31, discrepancy between impairment report year
basis deduction of adjusted on dividends equity ng rights
investment 2011 2012 holding ratio and provision impairment
investment equity basis announced movement ratio ratio
voting rights ratio provision
(Notes V(45))
CCCC Marine
Engineering
Vessel
Technology
Research
Centre Co.,
Ltd.(i) equity 15,000,000 - 15,000,000 - - - 15,000,000 25% 25% n.a - -
Shanghai
Zhenhua
Heavy
Industries
(Group)
Changzhou
Paint Co.,
Ltd. equity 13,056,25613,056,256 - 966,797 - - 14,023,053 20% 20% n.a - -
13,056,256 15,000,000 966,797 - - 29,023,053 - -
(i) On October 9, 2012, the Group, together with CCCC, CCCC Tianjin Dredging Co Ltd, CCCC Shanghai Dredging Co. Ltd., CCCC Guangzhou
Dredging Co. Ltd. and Shanghai Ship and Shipping Research Institute, jointly funded the establishment of CCCC Marine Ship Technology
Research Centre Co ., Ltd. The company's registered capital is 60,000,000 yuan, of which the Group invested 15,000,000 yuan, with the
proportion of shareholding of 25%. The company is mainly engaged in marine technology development consulting; it has not yet formally
opened for business.
- 64 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(c) Other long term equity investment
Remark on the cash
account discrepancy accrued dividends
ing between holding report year announced
basis initial Dec. 31, Report year Dec. 31, Holding ratio and voting impairment impairmen current year
investment 2011 movement 2012 proportion rights ratio provision t provision
21 Century Science and Cost
Technology Investment Co., Ltd. 30,000,000 30,000,000 - 30,000,000 8.96% n.a (30,000,000) - -
Nantong Zhenhua Hongcheng Cost n.a
Heavy Load Forging Co., ltd. 10,000,000 10,000,000 - 10,000,000 5% - - -
Shanghai Zhenhua Port Cost n.a
Machinery (Group) Longchang
Lift Equipment Co. Ltd. 500,000 800,000 - 800,000 10% - - -
Shanghai Zhenhua Port Machinery Cost n.a
(Group)
Shenyang Lift Co., Ltd. 500,000 1,500,000 - 1,500,000 10% - - -
Shanghai Zhenhua Port Cost n.a
Machinery (Group) Ningbo
Transmission Machinery Co. Ltd 300,000 740,000 - 740,000 7.40% - - -
Shenyin & Wanguo Legal Person Cost Less than n.a
Shares 200,000 200,000 - 200,000 0.01% - - 860
CCCC Highway Long and Large Cost n.a
Bridge Construction State
Project Research Centre Co.,
Ltd. (i) 8,000,000 - 8,000,000 8,000,000 10% - - -
CCCC Dredging Technology & Cost n.a
Equipment State Project
Research Centre Co., Ltd. (ii) 6,400,000 - 6,400,000 6,400,000 8% - - -
43,240,000 14,400,000 57,640,000 (30,000,000) - 860
- 65 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(i) On April 20, 2012, the Group, together with CCCC, CCCC Highway Consultants Co., Ltd.、,
CCCC Second Harbour Engineering Co., Ltd., CCCC Second Highway Engineering Co., Ltd.
And Chongqing Wanqiao Transport Science and Technology Development Co., Ltd., jointly
funded CCCC Highway Long and Large Bridge Construction State Project Research Centre
Co., Ltd., with a registered capital of 80,000,000 yuan, of which the Group contributed
8,000,000 yuan, holding 10% of stake. The company is mainly engaged in engineering project
management.
(ii) On June 4, 2012, the Group, together with CCCC,CCCC Shanghai Dredging Co., Ltd., CCCC
Tianjian Dredging Co., Ltd., CCCC Guangzhou Dredging Co., Ltd. and CCCC Fourth Harbor
Engineering Institute Co., Ltd., jointly funded CCCC Dredging Technology & Equipment State
Project Research Centre Co., Ltd., with a registered capital of 80,000,000, of which the
Group contributed 6,400,000 yuan, a stake of 8%; the company is mainly engaged in dredging
blowing and filling projects.
(d) Long term equity investment impairment provision
Addition
Dec. 31, 2011 deduction Dec. 31, 2012
report
report year
period
Other long term equity
investment-
21 Century Science and
Technology Investment 30,000,000 - - 30,000,000
Co., Ltd.
(e) Investment in joint ventures and associates
Dec. 31, 2012 2012
Hold Total assets Total Net assets operating
ing Voting liabilities revenue net profit
ratio ratio
joint ventures -
Jiangsu Longyuan
Zhenhua Marine
Engineering Co., Ltd. 50% 50% 368,333,908 71,363,657 296,970,251 216,656,880 40,957,340
associates -
CCCC Marine
Engineering Vessel
Technology
Research Centre
Co., Ltd. 25% 25% 60,000,000 - 60,000,000 - -
Shanghai Zhenhua
Heavy Industries
(Group) Changzhou
Paint Co., Ltd. 20% 20% 183,584,735 110,529,504 73,055,231 197,814,752 6,433,342
- 66 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(13) Real estate as investment
Dec. 31, Transfer from Transfer from Dec. 31,
2011 fixed assets intangible assets 2012
report year report year
Total purchase value
- 260,039,373 209,845,794 469,885,167
House and building -
260,039,373 - 260,039,373
Land use rights -
- 209,845,794 209,845,794
Total accumulative -
depreciation,
amortization
(38,609,476) (28,864,251) (67,473,727)
House and building -
(38,609,476) - (38,609,476)
Land use rights
- - (28,864,251) (28,864,251)
Total net book value -
221,429,897 180,981,543 402,411,440
House and building -
221,429,897 - 221,429,897
Land use rights -
- 180,981,543 180,981,543
Total book value -
221,429,897 180,981,543 402,411,440
House and building -
221,429,897 - 221,429,897
Land use rights -
- 180,981,543 180,981,543
Total depreciation and amortization amount of investment real estate in 2012 amounts to
38,609,476 yuan and 28,864,251 yuan (2011: nil).
In 2012, the Group converted house and building with book value o f 221,429,897 yuan
(purchase price 260,039,373 yuan) land use rights of 180,981,543 yuan (purchase value
209,845,794 yuan) for the purpose of self-use. From the day of purpose change,
corresponding fixed assets and intangible assets are accounted as investment real estate.
- 67 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(14) Fixed Assets
Transfer from Converted to real
Construction in Accrued report estate as
progress Addition report year Disposal report investment in
Jan. 31, 2012 year year report year Dec. 31, 2012
Total purchase value 20,300,875,899 1,193,247,512 101,791,582 - (271,392,366) (260,039,373) 21,064,483,254
House and building 8,340,735,036 741,798,886 22,788,883 - (5,525,173) (260,039,373) 8,839,758,259
Manufacturing
equipment 4,037,698,780 434,093,824 35,513,164 - (83,548,790) - 4,423,756,978
Office equipment 154,765,993 436,398 4,244,696 - (9,614,809) - 149,832,278
Transportation
facilities 7,169,409,114 171,853 2,204,047 - (144,510,637) - 7,027,274,377
Other equipment 598,266,976 16,746,551 37,040,792 - (28,192,957) - 623,861,362
Total accumulative
depreciation (6,046,695,688) - - (1,205,731,280) 224,531,995 38,609,476 (6,989,285,497)
House and building (1,466,256,431) - - (263,388,378) 4,294,604 38,609,476 (1,686,740,729)
Manufacturing
equipment (1,726,167,440) - - (390,476,572) 74,737,832 - (2,041,906,180)
Office equipment (114,584,291) - - (7,493,430) 9,601,552 - (112,476,169)
Transportation
facilities (2,520,190,840) - - (401,134,566) 112,632,088 - (2,808,693,318)
Other equipment (219,496,686) - - (143,238,334) 23,265,919 - (339,469,101)
Total net book value 14,254,180,211 1,193,247,512 101,791,582 (1,205,731,280) (46,860,371) (221,429,897) 14,075,197,757
House and building 6,874,478,605 741,798,886 22,788,883 (263,388,378) (1,230,569) (221,429,897) 7,153,017,530
Manufacturing
equipment 2,311,531,340 434,093,824 35,513,164 (390,476,572) (8,810,958) - 2,381,850,798
Office equipment 40,181,702 436,398 4,244,696 (7,493,430) (13,257) - 37,356,109
Transportation
facilities 4,649,218,274 171,853 2,204,047 (401,134,566) (31,878,549) - 4,218,581,059
Other equipment 378,770,290 16,746,551 37,040,792 (143,238,334) (4,927,038) - 284,392,261
- 68 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
On Dec. 31, 2012, facilities with a purchase value of 1,045,350,667 yuan (Dec. 31, 2011:
911,773,915 yuan) have been fully depreciated but still in service.
In 2012, depreciation booked into operating costs, operating expenses and general
expenses is respectively 1,146,854,296 yuan, 4,925,548 yuan (Note V [40]) and
53,951,436 yuan (Note V (41)) (2011: 1,115,128,834 yuan, 4,943,516 yuan and
56,705,871 yuan).
As of Dec. 31, 2012, real estate property right for houses and buildings with net book
value around 1,549,770,850 yuan (purchase value 1,781,038,820 yuan) (Dec. 31, 2011
net book value 1,609,138,810 yuan, purchase value 1,781,038,820 yuan) are in the
process of approval and therefore certificates are not granted; the management of the
Company believes that the house and building with unattained certificate shall not impose
great impact on the major operation of the Group.
(15) Construction in progress
Dec. 31, 2012 Dec. 31, 2011
book value impairme book value book value balance impairment book value
balance nt provision
provision
Nantong base
infrastructure
construction 2,530,550,178 - 2,530,550,178 2,177,514,070 - 2,177,514,070
Changxing
base
infrastructure
construction 526,322,159 - 526,322,159 1,006,312,014 - 1,006,312,014
Base heavy
machinery and
engineering
equipment in
construction 630,581,771 - 630,581,771 791,250,529 - 791,250,529
Office building &
R&D Building
on Dongfang
Road - - - 569,013,580 - 569,013,580
Nanhui base
infrastructure
construction 3,333,079 - 3,333,079 5,941,510 - 5,941,510
Jiangyin site
rebuilding 1,766,557 - 1,766,557 2,586,557 - 2,586,557
3,692,553,744 - 3,692,553,744 4,552,618,260 - 4,552,618,260
- 69 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Movement of significant projects in progress
Project Name budget 2011 Addition report Transfer into Transfer into 2012 Investme Progress Cumulative Including: loan capital
Dec. 31 period fixed assets intangible Dec. 3 nt ratio (Note 1) amount of loan amount of capital origin
report year assets report against capitalization loan ization
year budget capitalization rate
report year report
year
Nantong base 6,465,698,00 Self
infrastructure construction 0 2,643,067,035 143,141,552 (255,658,409) - 2,530,550,178 94% 94% 370,037,272 133,965,234 5.41% financing
Changxing base 8,645,540,00 Self
infrastructure construction 0 540,759,049 48,040,740 (62,477,630) - 526,322,159 77% 77% 155,277,060 553,724 5.41% financing
Base heavy machinery
and engineering
equipment in 2,500,000,00 Self
construction 0 791,250,529 31,787,411 (192,456,169) - 630,581,771 94% 94% 152,431,237 26,947,019 5.41% financing
Office building & R&D
Building on Dongfang Self
Road 690,600,000 569,013,580 116,537,429 (671,824,094) (13,726,915) - 100% 100% 68,539,414 28,531,979 5.41% financing
Changzhou site Self
rebuilding 504,500,000 5,941,510 7,402,779 (10,011,210) - 3,333,079 84% 84% 5,124,988 - 5.41% financing
Nanhui base Self
infrastructure construction54,030,000 2,586,557 - (820,000) - 1,766,557 97% 97% - - 5.41% financing
189,997,95
Total 4,552,618,260 346,909,911 (1,193,247,512) (13,726,915) 3,692,553,744 751,409,971 6Section 1.011.02 1.03
Note 1: The progress of the project is estimated by budget and accumulated inputs.
- 70 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(16 ) Intangible Assets
Transfer
converted to
from Addition
2011 Amortization real estate as 2012
Dec. 31
Constructio report Dec. 31
report year investment in
n in period
report year
progress
Total purchase 2,486,990,834 13,726,915 3,092,580 - (209,845,794) 2,293,964,535
value
Land use rights 2,387,714,900 13,726,915 2,500,000 - (209,845,794) 2,194,096,021
Software use
34,074,124 592,580 - - 34,666,704
cost
patented
65,201,810 - - - 65,201,810
technologies
Total cumulative
(241,482,128) - - (59,834,778) 28,864,251 (272,452,655)
amortization
Land use rights (208,041,902) - - (49,566,370) 28,864,251 (228,744,021)
Software use
(23,082,264) - - (3,748,228) - (26,830,492)
cost
Patented (10,357,962) - - (6,520,180) - (16,878,142)
technologies
2,245,508,706 13,726,915 3,092,580 (59,834,778) (180,981,543) 2,021,511,880
Total book value
2,179,672,998 13,726,915 2,500,000 (49,566,370) (180,981,543) 1,965,352,000
Land use rights
Software use 10,991,860 - 592,580 (3,748,228) - 7,836,212
cost
Patented 54,843,848 - - (6,520,180) - 48,323,668
technologies
Except for 1997 when added land use right is real cost, other purchase price of land use right
is estimates at reform of the Company as confirmed by State-owned Assets Administration.
In 2012, the Group totally expended 662,070,789 yuan on R&D (2011: 703,636,318 yuan).
The expenses are not capitalized. Above mentioned intangible assets do not include any
expenditure on R&D.
As of Dec. 31, 2012, the Group has obtained land use right certificates for all of its land rights
( Dec. 31, 2011, the Group has obtained land use right certificates for all of kits land rights.
- 71 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(17) Deferred corporate tax assets and liabilities
(a) Deferred corporate tax assets before offset
Dec. 31, 2012 Dec. 31, 2011
Compensable Deferred Compensable
provisional corporate tax provisional
Deferred difference and assets difference and
corporate tax compensated compensated
assets loss loss
Assets impairment
provision 120,794,822 805,298,815 87,106,575 580,710,502
Expected liabilities 28,285,217 188,568,114 19,492,306 129,948,707
Fixed assets
depreciation(I) - - 46,666,462 311,109,744
Salaries and wages
unpaid 5,020,001 33,466,676 3,801,685 25,344,564
Unpaid interest 46,004,034 306,693,557 43,423,040 289,486,947
Movement of fair
value of financial
liabilities - - 343,440 2,289,600
Compensable loss 201,948,744 1,346,324,974 185,949,846 1,239,665,641
402,052,818 2,680,352,136 386,783,354 2,578,555,705
(i) The Company reassessed in report year the deferred income tax resulted from the differences for
the depreciation of fixed assets in accounting and taxation regulations, and in March 2013
the Company talked with the tax authorities on the elimination of the depreciation of fixed
assets tax differences between accounting and taxation regulations.. According to the
communication results, the Company’s existing fixed assets depreciation policy is in
accordance with the relevant provisions of the tax law. Therefore the Company reversed
deferred income tax assets and deferred income tax liabilities of 46666462 yuan and
52840067 yuan respectively related to the depreciation of fixed assets as of the end of
December 31, 2012.
(b) Deferred corporate tax liabilities before offset
Dec. 31, 2012 Dec. 31, 2011
Deferred Tax payable Deferred Tax payable
corporate tax provisional corporate tax provisional
liabilities difference liabilities difference
Fixed assets
depreciation (note
V (17)(a)(I)) 19,622,940 118,926,910 72,808,202 473,286,125
Fair value movement
of marketable
financial assets 4,003,611 26,009,477 9,292,735 61,678,770
Movement of fair
value
available-for-sale
financial assets
booked into
capital reserve 15,723,384 104,822,545 13,389,232 89,261,535
39,349,935 249,758,932 95,490,169 624,226,430
- 72 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(c) Compensable loss of deferred corporate tax assets the Group not confirmed:
Dec. 31, 2012 Dec. 31, 2011
Compensable loss 1,005,601,558 453,516,423
(d) Compensable loss of deferred corporate tax assets the Group not confirmed will be due in
the following year:
Dec. 31, 2012 Dec. 31, 2011
2013 3,462,951 3,462,951
2014 235,545,448 235,545,448
2015 433,962,841 84,349,687
2016 96,822,985 130,158,337
2017 235,807,333 -
1,005,601,558 453,516,423
(e) Mutual offset amount of deferred corporate tax assets and deferred corporate tax liabilities:
Dec. 31, 2012 Dec. 31, 2011
Deferred corporate tax assets 18,602,887 75,071,923
Deferred corporate tax
liabilities 18,602,887 75,071,923
Net value of deferred corporate tax assets and deferred corporate tax liabilities after offset:
Dec. 31, 2012 Dec. 31, 2011
Deferred Temporary Deferred Temporary
corporate tax difference of corporate tax difference of
assets or compensable assets or compensable
liabilities net amount after liabilities net amount after
value offset or taxes value offset or taxes
payable payable
Deferred
corporate tax
assets 383,449,931 2,556,332,889 311,711,431 2,078,076,209
Deferred
corporate tax
liabilities 20,747,048 125,739,685 20,418,246 123,746,943
- 73 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(18) Assets impairment provision
Addition Deduction report year
Dec. 31,
report Transferred sal Dec. 31, 2012
2011 Reverse
period es
Bad debt provision 385,598,545 78,427,845 (15,537,163) - 448,489,227
Including: Accounts
receivable bad debt
provision 374,170,038 78,427,845 (14,274,384) - 438,323,499
Other receivables bad debt
provision 11,428,507 - (1,262,779) - 10,165,728
Inventories impairment
provision 136,248,134 143,826,788 - - 280,074,922
Expected contract loss 118,136,867 187,645,319 - (164,960,447) 140,821,739
Long term equity
investment impairment
provision 30,000,000 - - - 30,000,000
669,983,546 409,899,952 (15,537,163) (164,960,447) 899,385,888
(19) Short term loans
Dec. 31, 2012 Dec. 31, 2011
Pledge loans
- USD loans (a) 942,825,000 -
Guaranteed loans
- USD loans 1,907,649,250 2,227,368,150
Credit loans
- RMB loans 3,485,000,000 10,000,000
- USD loans 5,601,213,748 5,679,749,400
- EURO loans - 119,318,331
11,936,687,998 8,036,435,881
(a) As of Dec. 31, 2012, bank pledge loans USD 150,000,000 (RMB 942,825,000 yuan) (Dec. 31,
2011: nil) is pledged by the USD 149,296,773 (RMB938,404,869 yuan) time deposit (Dec. 31,
2011: nil) (Note V (1)).
(b) As of Dec. 31, 2012, bank guarantee loan USD 253,500,000, in RMB 1,593,374,250 yuan (Dec.
31, 2011: USD 283,500,000, in RMB 1,786,305,150 yuan), is the bank loan by the Company’s
subsidiary Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd., guaranteed with the
letters of guarantee issued by Agricultural Bank of China and Shanghai Pudong Development
Bank, within the credit lines awarded to the Company.
As of Dec. 31, 2012, bank guarantee loan USD50,000,000, in RMB 314,275,000 yuan (Dec.
31, 2011: USD 70,000,000, in RMB 441,063,000 yuan), is the bank loan of the Company’s
subsidiary Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd., guaranteed by the
Company.
Weighted average annual interest rate of loans for the Group in 2011 is 3.547% (2011:
3.450%).
- 74 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
20 Notes payable
Dec. 31, 2012 Dec. 31, 2011
Bank acceptance draft 980,906,529 577,862,463
Above drafts will be due within one year.
(21) Accounts payable
Dec. 31, 2012 Dec. 31, 2011
Material purchase and product 2,286,787,952 1,981,807,764
manufacturing
Infrastructure building 190,628,937 167,276,308
Equipment purchase 119,559,155 100,300,887
Port use expenses 6,442,641 6,339,925
2,603,418,685 2,255,724,884
(a) As of Dec. 31, 2012, the balance contains no payables to shareholders who hold 5%
(inclusive) of the Company’s voting share.
(b) Accounts payable to related parties:
Dec. 31, 2012 Dec. 31, 2011
Shanghai Zhenhua Heavy Industries
(Group) Changzhou Paint Co.,
Ltd. 5,205,406 3,816,469
CCCC Third Harbour Engineering
Xing’an Construction Engineering
Co., Ltd. 3,185,045 22,945,953
CCCC Shanghai Equipment
Engineering Co., Ltd. 2,119,853 16,810,300
CCCC Third Harbor Engineering Co.,
Ltd. 252,892 92,392
CCCC Shanghai Dredging
Equipment Industry Co., Ltd. - 363,645
CCCC Shanghai Dahua Surveying &
Mapping Co., Ltd. - 1,500,000
CCCC First Harbor Engineering Co.,
Ltd. - 1,000,000
10,763,196 46,528,759
(c) By Dec. 31, 2012, accounts payable aging above 1 year amount to 187,271,207 yuan (Dec.
31, 2011: 305,016,263 yuan), mainly being payables of imported parts. Because the
contracted payment is not settled, as of approval release day of this financial statement,
57,897,949 yuan has been paid off (Note VIII).
- 75 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(d) Accounts payable includes the following foreign currency balance:
Dec. 31, 2012 Dec. 31, 2011
Foreign excha Foreign
currency nge translated in currency exchange translated in
amount rate RMB amount rate RMB
USD 55,193,948 6.2855 346,921,560 42,443,478 6.3009 267,432,111
Euro 21,107,258 8.3176 175,561,729 11,522,304 8.1625 94,050,806
522,483,289 361,482,917
(22) Prepayment received
Dec. 31, 2012 Dec. 31, 2011
Goods sale prepayment received 1,035,763,588 115,627,343
(a) As of Dec. 31, 2012, the balance contains no prepayments from shareholders who hold
5% (inclusive) of the Company’s voting share.
(b) Prepayment from related parties:
Dec. 31, 2012 Dec. 31, 2011
CCCC First Harbour Engineering 30,000,000
First Engineering Co., Ltd. -
CCCC Third Harbour Engineering 1,610,000
Co., Ltd. -
CCCC Third Harbour Engineering
Xing’an Construction
Engineering Co., Ltd. 200,000 200,000
31,810,000 200,000
(c) Prepayment analysed by age:
Dec. 31, 2012 Dec. 31, 2011
Amount Total of ratio Amount Total of ratio
Within one
year 1,015,607,231 98% 105,630,533 91%
Above one
year 20,156,357 2% 9,996,810 9%
1,035,763,588 100% 115,627,343 100%
As of Dec. 31, 2012, prepayment paid in over one year old amounts to 20,156,357 yuan
(Dec. 31, 2011: 9,996,810 yuan), mainly consisting of the prepayment for sales of spare
goods and parts not settled.
- 76 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(d) Prepayment includes the following foreign currency balance:
Dec. 31, 2012 Dec. 31, 2011
Foreign excha Foreign excha
currency nge translated in currency nge translated in
amount rate RMB amount rate RMB
USD 85,247,794 6.2855 535,825,009 8,243,878 6.3009 51,943,851
Euro 661,772 8.3176 5,504,355 2,064,888 8.1625 16,854,648
Pound 5,619 10.1611 57,095 653,526 9.7116 6,346,783
Canadi
an
dollar 17,486 6.3184 110,484 17,486 6.1777 108,023
HK
dollar 86,000 0.8109 69,737 86,000 0.8107 69,720
541,566,680 75,323,025
(23) Employee remuneration payable
Dec. 31, Addition deduction Dec. 31, 2012
2011 report period report year
Salary, bonus, allowance
and subsidy - 881,996,914 (881,996,914) -
Staff welfare - 15,737,987 (15,737,987) -
Social security 3,205,371 228,101,931 (228,138,873) 3,168,429
Including: medical
insurance 943,319 69,763,344 (69,769,402) 937,261
pension 1,981,719 137,916,845 (137,943,636) 1,954,928
Unemployment fund 167,016 11,326,590 (11,329,353) 164,253
Labor injury fund 52,743 4,140,893 (4,141,954) 51,682
Birth insurance 60,574 4,954,259 (4,954,528) 60,305
Auxiliary pension 501,585 23,352,287 (16,233,065) 7,620,807
Housing fund 285,674 39,942,765 (39,975,421) 253,018
Trade union fund and
employee education fund 25,474,364 8,172,404 (7,156,083) 26,490,685
other 101,391 5,809,120 (5,893,311) 17,200
29,568,385 1,203,113,408 (1,195,131,654) 37,550,139
As of Dec. 31, 2012, salaries and bonus payable to employees do not include those
postponed in payment, expected to be paid off in the year 2013.
- 77 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(24) Taxes and charges payable
Taxes and charges payable are summarized as follows:
Dec. 31, Current year Current year Dec. 31, 2012
2011 amount amount
payable paid off
(471,353,128
VAT ) 574,179,432 (156,810,298) (53,983,994)
Individual Income
Tax 2,468,102 55,873,204 (55,200,413) 3,140,893
Corporate Tax 1,266,913 1,611,269 (2,638,017) 240,165
Education
Addition 1,178,898 7,782,382 (7,588,198) 1,373,082
Urban
Construction 1,104,849 9,361,479 (9,062,562) 1,403,766
Other 3,745,622 61,119,440 (64,005,788) 859,274
(461,588,744
) 709,927,206 (295,305,276) (46,966,814)
(25) Interest payable
Dec. 31, 2012 Dec. 31, 2011
Interest on loan payable 37,126,925 20,473,450
Interest on Intermediate-term
bills payable 277,931,366 277,931,366
315,058,291 298,404,816
(26) Dividends payable
Dec. 31, 2012 Dec. 31, 2011
CCCC 33,472,814 33,472,814
Hong Kong Zhenhua
Engineering Co., Ltd. 346,005 19,606,950
Macau Zhenhua Bay
Engineering Co., Ltd. 6,593 373,626
33,825,412 53,453,390
- 78 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(27) Other payables
Dec. 31, 2012 Dec. 31, 2011
Construction deposit 98,013,423 112,895,974
Construction warranty deposit 65,692,853 57,069,890
Government subsidy 41,333,726 11,900,041
CCCC investment payment (i) 25,971,033 25,971,033
CCCC Temporary loans (ii) 16,092,898 16,092,898
VAT to be settled (iii) - 604,298,686
construction guarantee deposit - 2,102,963
Other 45,046,559 39,046,527
292,150,492 869,378,012
(i) The Group during the year 2011 completed the cancellation of subsidiary CHEC Shanghai
Port Engineering Equipment Co., Ltd. As of Dec. 31, 2012, payable by the Group
attributable to shareholders of the subsidiary of another CCCC liquidation of the
investment amount of 25,971,033 yuan.
(ii)From the previous year, this Group’s subordinate subsidiary Jiangtian Industrial obtained
16,092,898 loan from the company's parent company CCCC, the loan without mortgage,
free of interest, without a fixed repayment period.
(iii) The Group in 2012 included engineering settlement of projects in the current
taxable amount.
(a) On Dec. 31, 2012, other payables payable to shareholders and other related parties who
hold 5% (inclusive) voting shares of the Company are as follows:
Dec. 31, 2012 Dec. 31, 2011
CCCC 42,063,931 42,063,931
- 79 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Other payables analyzed in age:
Dec. 31, 2012 Dec. 31, 2011
Total of
Amount ratio Amount Total of ratio
Within one
year 137,927,899 48% 837,174,723 96%
One to two
years 150,015,432 51% 32,203,289 4%
Two to three
years 4,207,161 1% - -
292,150,492 100% 869,378,012 100%
As of Dec. 31, 2012, other payables aged over one year amount to 154,222,593 yuan (Dec.
31, 2011: 32,203,289 yuan), mainly payables to CCCC, deposits to outsourced construction
team and quality guarantee deposit received.
(c) Other payables include the following balance of foreign currency
Dec. 31, 2012 Dec. 31, 2011
Foreign excha Foreign
currency nge translated in currency exchange translated in
amount rate RMB amount rate RMB
USD 554,924 6.2855 3,487,975 240,920 6.3009 1,518,013
Euro 203,611 8.3176 1,693,555 30,190 8.1625 246,426
5,181,530 1,764,439
- 80 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(28) Non-current liabilities due within one year
Dec. 31, 2012 Dec. 31, 2011
Guarantee loan
- USD loans (i) 433,699,500 -
Credit loans
- USD loans 1,854,222,500 2,589,669,900
- RMB loans 1,380,000,000 900,000,000
- EURO loans - 81,625,000
3,667,922,000 3,571,294,900
(i) As of Dec. 31, 2012, bank guarantee loan USD69,000,000 (in RMB433,699,500) (Dec. 31,
2011: nil) is the bank loan of the Company’s subsidiary Shanghai Zhenhua Port Machinery
(Hong Kong) Co., Ltd., guaranteed by the letter of guarantee issued by ICBC within the credit
lines awarded to the Company. Interest is paid every quarter. Principal is due by Aug. 5,
2013.
Weighted average annual interest rate of long-term loans due within one year of the Group in
2012 is 3.121% (2011: 2.092%).
(a) Top 5 long-term loans in amount due within 1 year:
Starting day of Closing day of Curre Rate (%) Dec. 31, 2012
loans loans ncy Foreign RMB amount
currency
amount
A bank 2010-1-11 2013-10-28 USD Libor+2% 220,000,000 1,382,810,000
B bank 2011-12-5 2013-6-5 RMB 5% 650,000,000 650,000,000
C bank 2012-2-15 2013-8-15 RMB 5% 590,000,000 590,000,000
D bank 2010-8-6 2013-8-5 USD Libor+2.15% 69,000,000 433,699,500
E bank 2011-5-12 2013-5-13 USD Libor+3.7% 30,000,000 188,565,000
3,245,074,500
(29) Long term loans
Dec. 31, 2012 Dec. 31, 2011
Guarantee loan
- USD loans (i) 377,130,000 -
Credit loans
- USD loans 496,554,500 2,293,527,600
- RMB loans - 790,000,000
873,684,500 3,083,527,600
- 81 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(i) As of Dec. 31, 2012, bank guarantee loan 40,000,000 (in RMB251,420,000 yuan) and
USD20,000,000 (in RMB125,710,000 yuan) (Dec. 31, 2011: nil) refer to the bank loans of
the Company’s subsidiary Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd.,
guaranteed by the letter of guarantee issued by Minsheng Bank Hong Kong Branch within
the credit lines awarded to the Company. Interest is paid every quarter. Principals are due
by June 19, 2015 and by June 25, 2015 respectively.
Weighted average annual interest rate of long-term loans of the Group in 2012 is 3.043%
(2011: 2.597%).
(a) Top 5 long term loans:
Dec. 31, 2012
Starting day Closing day of Foreign
Currency Rate (%)
of loans loans currency
amount RMB amount
A bank 2012-6-21 2015-6-19 USD Libor+2% 40,000,000 251,420,000
B bank 2012-12-7 2015-12-6 USD Libor+3.2% 30,000,000 188,565,000
C bank 2012-4-12 2014-4-10 USD Libor+4.0% 20,000,000 125,710,000
D bank 2012-12-12 2015-12-6 USD Libor+3.2% 20,000,000 125,710,000
E bank 2012-6-26 2015-6-25 USD Libor+2% 20,000,000 125,710,000
817,115,000
(b) Due day of long term loans:
Dec. 31, 2012 Dec. 31, 2011
one to two years 182,279,500 3,083,527,600
two to five years 691,405,000 -
873,684,500 3,083,527,600
- 82 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(30) Bonds payable
Issuance
Addition issu cost
Issuance es current p amortization
Total face value cost Dec. 31, 2011 eriod report year Dec. 31, 2012
Issued in 2009
First
Intermediate-term
bills (a) 1,800,000,000 (27,000,000) 1,788,146,331 - 5,400,000 1,793,546,331
Second
Intermediate-term
bills (a) 400,000,000 (6,000,000) 397,291,432 - 1,200,000 398,491,432
Issued in 2011
First
Intermediate-term
bills (b) 3,800,000,000 (22,250,000) 3,798,327,911 (11,400,000) 10,850,000 3,797,777,911
Closed redirect
debt financing
tools (c) 2,000,000,000 (12,000,000) 1,994,850,000 (6,000,000) 6,000,000 1,994,850,000
Total 7,978,615,674 (17,400,000) 23,450,000 7,984,665,674
(a) As approved by the Zhong Shi Xie Zhu (2009) MTN16 Notification of Registration Filing from
Association of Traders Among Bank of China, the Company publicly issued its 2009
intermediate-term bills on Mar. 12, 2009 and Apr. 9, 2009, total amount 1,800,000,000 yuan,
400,000,000 yuan, term 5 years, fixed annual interest rate 4.10%, 4.00%, interest to be paid
once a year.
(b) As approved by the Zhong Shi Xie Zhu (2011) MTN25 Notification of Registration Filing from
Association of Traders Among Bank of China, the Company publicly issued non-public directive
liability financing instruments on Feb. 4, 2011, total amount 3,800,000,000 yuan, term 5 years, on
simple annual interest basis, fixed annual interest rate 5.85%, interest to be paid once a year.
Cost of the issuance of the bonds is paid annually.
(c) As approved by the Zhong Shi Xie Zhu (2011) PPN16 Notification of Registration Filing from
Association of Traders Among Bank of China, the Company publicly issued non-public directive
liability financing instruments on Nov. 8, 2011, total amount 2,000,000,000 yuan, term 3 years, on
simple annual interest basis, fixed annual interest rate 6.46%, interest to be paid once a year.
Cost of the issuance of the bonds is paid annually.
Above bonds bear no pledge or guaranty.
- 83 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(31) Expected liabilities
2011 Addition deduction 2012
Dec. 31 report period report year Dec. 31
Estimated
after-sales service
cost 133,639,971 143,984,670 (98,773,606) 178,851,035
Other - 14,456,650 - 14,456,650
Total 133,639,971 158,441,320 (98,773,606) 193,307,685
(32) Other non-current liabilities
2011 Addition deduction report 2012
Dec. 31 report year Dec. 31
period
Land - (1,000,000)
compensation (a) 44,916,667 43,916,667
(a) Other non-current liabilities refer to the compensation payment obtained in 2007 by the
Company’s subsidiary Shanghai Port Machinery Plant from Shanghai World Expo Land
Reserve Centre for the land of the subsidiary in Changxing Island Removing Base. The
said compensation is amortized in even years according to land use term.
(33) Capital stock
Report year move
Dec. 31, 2011 ment Dec. 31, 2012
Circulating after li
sting of shares re
stricted shares
Shares with sales limitation -
State corporate shares 220,733,084 (220,733,084) -
Foreign investment shares 763,963,200 (763,963,200) -
Including: Overseas
corporate shares 763,963,200 (763,963,200) -
984,696,284 (984,696,284) -
Shares without sales
limitation ---
RMB common shares 2,547,598,300 220,733,084 2,768,331,384
Foreign investment shares
listed on domestic market 858,000,000 763,963,200 1,621,963,200
3,405,598,300 984,696,284 4,390,294,584
4,390,294,584 - 4,390,294,584
- 84 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
According to the "Shanghai Zhenhua Heavy Industries (Group) Restricted Shares Listing
for Circulation Notification" the Company posted on March 16, 2012, term of restriction
to sales of the outstanding shares of 220733084 shares held by CCCC terminates on
March 20, 2012, circulating starting at Shanghai Stock Exchange’s A share market.
According to Zhengjian Gongsi Zi (2000) No. 140 "Notification on Issue Concerning
Non—B Shares Circulation of Company with Domestically Listed Foreign Investment
Shares (B-shares)" issued by China Securities Regulatory Commission, restriction term of
the foreign legal person shares held by the Company’s foreign investment legal person
shareholder Hong Kong Zhenhua Engineering Co. Ltd. and Macao Zhenhua Harbour
Engineering Co., Ltd. ended on December 25, 2012, starting to circulate on Shanghai
Stock Exchange B share market.
By December 31, 2012, all the original non-Trading shares held by shareholders of the
Company have been listed for circulation.
Report year mo
Dec. 31, 2010 vement Dec. 31, 2011
Shares with sales limitation -
State corporate shares 220,733,084 - 220,733,084
Foreign investment shares 763,963,200 - 763,963,200
Including: Overseas corporate
shares 763,963,200 - 763,963,200
984,696,284 - 984,696,284
Shares without sales limitation
---
RMB common shares 2,547,598,300 - 2,547,598,300
Foreign investment shares
listed on domestic market 858,000,000 - 858,000,000
3,405,598,300 - 3,405,598,300
4,390,294,584 - 4,390,294,584
- 85 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(34) Capital reserve
Addition report Deduction report
Dec. 31, 2011 period (a) year (a) Dec. 31, 2012
Capital stock premium 5,415,828,267 - - 5,415,828,267
Other Capital reserve
－Available-for-sale
financial assets fair
value change (Notes
V(11), V(45)) 88,202,227 134,707,715 (119,146,705) 103,763,237
－Available-for-sale
financial assets fair
value change related
Deferred corporate
tax impact (Notes V
(11)) (13,389,232) (20,206,158) 17,872,006 (15,723,384)
－purchase subsidiary
Minority interest (711,345) - - (711,345)
－Transfer from capital
reserve based on
former norms 129,118,869 - - 129,118,869
5,619,048,786 114,501,557 (101,274,699) 5,632,275,644
(a) Addition report year refer to fair value change of financial assets available for sale – equity tool
and financial assets available for sale – bank financial products. Deduction report year means
fair value change cumulative amount of disposal of financial assets available for sale –bank
financial products transferred out into current P&L.
Addition report Deduction report
Dec. 31, 2010 period year Dec. 31, 2011
Capital stock premium 5,397,828,267 18,000,000 - 5,415,828,267
Other Capital reserve
－Available-for-sale
financial assets fair
value change 176,162,842 - (87,960,615) 88,202,227
－Available-for-sale
financial assets fair
value change
related Deferred
corporate tax
impact (26,583,323) 13,194,091 - (13,389,232)
－purchase subsidiary
Minority interest (516,046) - (195,299) (711,345)
－Transfer from capital
reserve based on
former norms 129,118,869 - - 129,118,869
5,676,010,609 31,194,091 (88,155,914) 5,619,048,786
- 86 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(35) Surplus reserve
Addition report Deduction
Dec. 31, 2011 period report year Dec. 31, 2012
Statutory surplus
reserve 1,227,769,193 - - 1,227,769,193
Discretionary surplus
reserve 292,378,668 - - 292,378,668
1,520,147,861 - - 1,520,147,861
Addition report Deduction
Dec. 31, 2010 period report year Dec. 31, 2011
Statutory surplus
reserve 1,215,823,906 11,945,287 - 1,227,769,193
Discretionary surplus
reserve 292,378,668 - - 292,378,668
1,508,202,574 11,945,287 - 1,520,147,861
According to P. R. China Company Law, the Company’s Article of Association and board
meeting decisions, the Company accrues 10% of its net profit as statutory surplus reserve.
When statutory surplus reserve accumulated reached 50% of the Capital stock, the
Company can stop accruing. Statutory surplus reserve can be used to compensate loss
upon approval, or to increase Capital stock. The Company did not withdraw statutory
surplus reserve due to loss in 2012 (2011: 10% of net profit, amounting to 11,945,287
yuan).
(36) Undistributed profit
2012 2011
proportio
amount n amount proportion
Starting undistributed profit 3,711,887,375 3,693,538,327
Add: net loss / profit
attributable to parent
company report year (1,043,665,841) 30,294,335
Less: statutory surplus
reserve - 10% (11,945,287) 10%
Closing undistributed profit 2,668,221,534 3,711,887,375
As of Dec. 31, 2012, undistributed profit includes 69,896,384 yuan balance of surplus
reserve attributable to parent company’s subsidiaries (Dec. 31, 2011, 69,896,384 yuan).
As stated in the resolutions of the board meeting dated Mar. 25, 2013, the Company is not
to distribute profits, which is subject to approval by the shareholder’s general meeting.
- 87 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(37) Minority interest
Minority interest attributable to subsidiaries:
investment Profit and
gains dividends
Dec. 31, 2011 /(loss) distribution Dec. 31, 2012
Shanghai Port Machinery
Heavy Industries Co., Ltd. 106,236,867 (4,765,541) - 101,471,326
Shanghai Zhenhua Shipping
Co., Ltd. 156,440,349 (50,865,979) - 105,574,370
Shanghai Zhenhua Heavy
Industries (Group)
Zhangjiagang Port
Machinery Co., Ltd. (2,542,177) 133,892 - (2,408,285)
Shanghai Zhenhua Port
Machinery Heavy Industry
Co., Ltd. 968,531 28,347 - 996,878
Shanghai Zhenhua Heavy
Industries Steel Structure
Co., Ltd. 645,257 77,240 (55,826) 666,671
Total 261,748,827 (55,392,041) (55,826) 206,300,960
(38) Operating revenue and operating cost
2012 2011
Major operating income 17,911,019,990 18,847,703,596
Other operating income 344,132,106 281,547,416
18,255,152,096 19,129,251,012
2012 2011
Major operating cost 17,050,819,359 17,979,260,711
Other operating cost 311,850,992 192,033,592
17,362,670,351 18,171,294,303
(a) Major operating income and major operating cost
(i) In products:
2012 2011
Major operating Major operating Major operating Major operating
income cost income cost
Container cranes 10,665,511,120 9,802,797,463 10,371,876,644 9,801,783,004
Marine heavy
equipment 3,458,011,185 3,333,677,227 3,704,435,180 3,381,257,980
Bulk machinery 2,907,233,682 2,889,954,429 3,025,583,606 3,210,322,572
Steel structures 640,310,882 749,503,259 1,487,765,031 1,386,142,375
Vessel shipping
and others 239,953,121 274,886,981 258,043,135 199,754,780
17,911,019,990 17,050,819,359 18,847,703,596 17,979,260,711
(ii) In regions:
- 88 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
2012 2011
Major operating Major operating Major operating Major operating
income cost income cost
Mainland China 5,514,344,061 5,350,212,132 7,465,789,778 7,256,914,542
Asia (excluding
Mainland China) 3,808,763,314 3,560,857,624 5,189,972,547 4,720,679,768
America 3,251,058,441 3,124,271,416 3,374,313,337 2,889,051,384
Europe 2,751,062,479 2,802,729,625 1,153,846,134 1,433,530,755
Africa 949,993,166 790,053,379 683,388,514 651,446,848
Mainland China
(Export)(Note1) 931,882,457 786,877,331 729,840,744 712,950,690
Oceania 703,916,072 635,817,852 250,552,542 314,686,724
17,911,019,990 17,050,819,359 18,847,703,596 17,979,260,711
Note 1: In this part, amounts listed in the 2012 and 2011 Mainland China (export) item refer
to the major operating income and cost the Company firstly exports to its subsidiary
Shanghai Zhenhua Port Machinery (Hong Kong) Co., Ltd. or related party Chuwa Bussan
Co., Ltd., and the latter sells to domestic customers.
(b) Other operating income and other operating cost
2012 2011
Other operating Other operating Other operating Other
income cost income operating cost
Equipment
leasing and
others 106,733,014 47,936,641 102,341,405 21,190,425
Sales of
materials 237,399,092 263,914,351 179,206,011 170,843,167
344,132,106 311,850,992 281,547,416 192,033,592
(c) Operating income of the Group from top10 clients:
Operating income from top 10 construction contract clients is 2,897,862,074 yuan (for 2011:
4,477,722,269 yuan), taking 16% (as of 2011,23%) of total sales income of the Group.
Details are as follows:
- 89 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Operating revenue Proportion in total
operating income of the
Group (%)
COMPANY A 522,752,293 3%
COMPANY B 477,306,483 3%
COMPANY C 454,509,765 2%
COMPANY D 337,724,905 2%
COMPANY E 229,627,643 1%
COMPANY F 186,857,040 1%
COMPANY G 184,112,221 1%
COMPANY H 173,225,697 1%
COMPANY I 170,917,302 1%
COMPANY J 160,828,725 1%
2,897,862,074 16%
(39) Business tax and charges
2012 2011
Business tax 11,168,140 7,793,324
Urban maintenance and construction tax 9,361,479 8,049,917
Education charges 7,721,766 7,308,245
Others 4,253,315 6,123,807
32,504,700 29,275,293
(40) Selling expenses
2012 2011
Employee remuneration 19,272,884 24,278,061
Travel expenses 15,903,041 18,576,820
Fixed assets depreciation (Notes V(14)) 4,925,548 4,943,516
Exhibition expenses 2,844,926 1,373,494
Advert expenses 2,279,231 2,209,346
Tender expenses 1,985,052 943,708
Office expenses 106,126 982,741
Travel expenses 1,255 3,364,828
Other 1,971,996 2,705,779
49,290,059 59,378,293
- 90 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(41) General expenses
2012 2011
R&D expenses 598,968,230 565,212,544
Employee remuneration 208,360,215 282,209,751
Intangible assets amortization (Notes 59,834,778 63,021,297
V(16))
Fixed assets depreciation (Notes V(14)) 53,951,436 56,705,871
Taxes 45,697,985 37,536,026
Office expenses 35,893,490 29,862,843
PR expenses 26,698,101 29,097,994
Conference expenses 9,066,864 4,582,782
Expenses on employing intermediary 7,910,493 6,831,053
Travel expenses 7,178,011 5,242,074
Information expenses 3,571,896 3,398,737
Consultation expenses 3,319,818 3,059,603
Insurance expenses 2,131,064 4,285,526
Maintenance expenses 1,924,398 20,440
Other 62,356,968 39,822,235
1,126,863,747 1,130,888,776
(42) Financial expenses/(income)-- Net
2012 2011
Interests expenses－ 824,432,963 469,228,475
Including: loans from bank, short-term
financing bonds and Interest
Intermediate-term bills 824,432,963 469,228,475
Less: interest income (130,161,555) (13,651,786)
Foreign exchange loss 106,173,538 51,211,609
Less: foreign exchange income (181,222,675) (720,118,097)
Amortization of issue cost of short-term
financing bonds and intermediate-term
bills (Note V (30)) 23,450,000 16,627,911
Other 37,834,341 45,276,112
680,506,612 (151,425,776)
(43) Assets impairment loss
2012 2011
Expected contract loss (Note V (18)) 187,645,319 144,530,717
Inventories impairment loss (Note I (18)) 143,826,788 17,271,696
Bad debt loss(Note V (18)) 62,890,682 107,979,981
394,362,789 269,782,394
- 91 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(44) Income from fair value movement -- Net
2012 2011
Trading financial Assets －
Fair value movement (losses) /gains (Note
V (2)) (35,669,293) 13,838,253
Trading financial Liabilities －
Fair value movement gains (Note V (2)) 2,289,600 19,605,767
(33,379,693) 33,444,020
(45) Investment gains
2012 2011
On cost basis accounting basis other long term
equity investment income 860 1,364,426
On equity basis accounting basis Long term
equity investment gains/ loss (Notes
V(12)(a)) 21,445,467 (1,931,190)
Investment gains from disposal financial assets
available-for-sale–equity tool period 500,000 1,000,000
Investment gains from disposal financial assets
available-for-sale–bank financial products (Notes
V (34)(a)) 119,146,705 -
Investment gains from disposal of subsidiaries - 12,615,856
141,093,032 13,049,092
(46) Non-operating income
2012 2011 Amount booked
into 2012
non-recurring
gains/losses
Non Current assets disposal
income 101,780,247 311,967,649 101,780,247
Including: land and building
levy compensation
income(a) 77,867,212 282,000,890 77,867,212
other Fixed assets
disposal income 23,913,035 29,966,759 23,913,035
Government subsidy(b) 28,730,126 64,641,129 28,730,126
other 1,847,589 9,369,025 1,847,589
132,357,962 385,977,803 132,357,962
(a) The Company in 2011 and the Shanghai Changxing Island Land Reserve Centre (hereafter
"Land Reserve Centre") signed a "Changxing Island SHANGHAI ZHENHUA HEAVY
INDUSTRIES CO., LTD - Industrial Park of Electrical Assembly and Gear Box Assembly
- 92 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Non-residing Levy Compensation Agreement (hereafter "Levy Compensation Agreement").
Under the levy compensation agreement, the Land Reserve Centre impose levying the land
and housing assets of the Company's Industrial Park of Electrical Assembly and Gear Box
Assembly for the construction of residing housing, basic education facilities, roads and
waters. Compensation in total is 593,003,291 yuan, of which land use rights, building and
decorating, ancillary facilities, as well as non-relocation of machinery and equipment
compensation in total 517, 240,591 yuan, compensation for the relocation of equipment and
operating loss and relocation costs in total 75, 762,700 yuan.
In 2011, the Company completed the cancellation of the related real estate warrants, the
procedures for the handover of the land, building and decoration, and ancillary facilities and
non-relocation of machinery and equipment and land reserve centre.
So, the Company recognized in 2011 compensation for expropriation income 282,
000,890 yuan related to land, buildings and renovation, ancillary facilities and
non-relocation of machinery and equipment and other assets.
In the year 2012, the Company completed all of the assets relocation of the Industrial
Park, and completed the transfer procedures with the Land Centre. The Company in 2012
year confirmed relocation compensation income of 77867212 yuan associated with the
relocation of machinery and equipment, operating losses and the cost of the relocation.
As of Dec. 31, 2012, the Company has received all of the compensation paid by the Land
Reserve Centre amounting to 593,003,291 yuan according to the agreements (Notes V
(6))
(b) Government subsidy specifications:
2012 2011
Financial allocation 20,586,301 23,403,684
Science and technology subsidy 8,143,825 41,237,445
28,730,126 64,641,129
(47) Non-operating expense
2012 2011 Amount booked
into 2012
non-recurring
gains/losses
Non Current assets disposal
loss 4,728,848 2,507,372 4,728,848
Including: Losses from
disposal of fixed assets 4,728,848 2,507,372 4,728,848
Donation - 130,000 -
Other 15,486,754 2,126,559 15,486,754
20,215,602 4,763,931 20,215,602
- 93 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(48) Corporate income tax expenses
2012 2011
Current period corporate tax 1,611,269 6,540,118
Deferred corporate tax (73,743,850) 11,569,599
(72,132,581) 18,109,717
2012 2011
Total (loss)/profit (1,171,190,463) 47,764,713
Corporate tax expenses calculated by the rate of
15%
(2011: 15%) (175,678,570) 7,164,707
Impact of tax rate differences on corporate tax
expenses 177,636 1,186,152
Addition and deduction of technological
development expenses (24,626,407) (28,619,693)
Non-taxable income (858) (2,131)
Non-deductible cost, expenses and loss 3,414,006 992,457
Compensable loss of deferred corporate tax
assets unconfirmed current period 88,162,173 19,523,751
Reversal of difference of fixed assets depreciation
in accounting and taxation regulations 28,571,452
Adjustment of final settlement prior year 7,847,987 17,864,474
Corporate income tax expenses (72,132,581) 18,109,717
(49) Earning/ (loss) per share
(a) Basic Earning (loss) per share
Basic (loss) / earnings per share is calculated by dividing consolidated net (loss) / earnings
belonging to common share holders of parent company by the weighted average number of
common shares publicly issued by parent company:
2012 2011
Consolidated net (loss ) / gains belonging to
common share holders of parent company (1,043,665,841) 30,294,335
weighted average number of common shares
publicly issued by parent company 4,390,294,584 4,390,294,584
Basic (loss) / Earnings per share (0.24) 0.01
(b)Diluted (loss) / earnings per share
Diluted (loss) / earnings per action is calculated by the consolidated net (loss) / earnings
attributable to parent company common shareholders after adjustment upon diluting potential
common shares divided by the average number of common shares. In 2012 the Company
- 94 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
had no diluting potential common shares (2011: no). Thus, diluted earnings (loss) per share
equal basic (loss)/earnings per share
(50) Other comprehensive earnings/(loss)
2012 2011
Asset (loss)/earnings amount from available-for-sale
financial 134,707,715 (87,960,615)
Less: income tax impact from available-for-sale
financial assets (20,206,158) 13,194,091
Net amount of other comprehensive earning
converted into current P&L in current year (101,274,699) -
Foreign currency translation difference 12,973 -
13,239,831 (74,766,524)
(51) Cash flow statements notes
(a) Cash receipt related with other operational activities
2012 2011
Cash receipt of government allowance and
bonus 63,512,311 64,425,485
Payment received for insurance compensation 23,372,999 15,245,719
Cash receipt from income from fines 1,847,589 2,192,515
Others 2,754,566 6,176,510
91,487,465 88,040,229
(b) Cash payment related with other operational activities
2012 2011
Selling and general expenses 185,142,731 156,360,002
Customs guarantee deposit 73,497,127 -
Financial expenses formality cost 37,834,341 45,276,112
Net expenses of Mutual Assistance
Association loans 3,340,431 6,916,318
Donations - 130,000
Others 13,985,902 9,432,122
313,800,532 218,114,554
(c) Cash receipt related with other investment activities
2012 2011
Interest income 96,930,003 13,651,786
- 95 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(d) Cash paid related with other investment activities
2012 2011
Refund of minority investment upon disposal of
subsidiaries - 1,003,879
(e) Receipt of other cash related to financing activities
2012 2011
Recovery of restricted bank deposits 3,465,537,200 -
(f) Payment of other cash related to financing activities
2012 2011
Intermediate term notes issuance cost
expenses 17,400,000 -
Restricted bank deposits made 6,398,814,488 -
6,416,214,488 -
(52) Supplementary information of cash flow statements
(a) Supplementary information of cash flow statements
2012 2011
Net (loss)/profit (1,099,057,882) 29,654,996
Add/(less): assets impairment provision 394,362,789 269,782,394
Fixed assets depreciation 1,205,731,280 1,176,778,221
Intangible assets amortization 59,834,778 63,021,297
Disposal of fixed assets and
intangible assets ( income)/
loss (97,051,399) (309,460,277)
fair value change income 33,379,693 (33,444,020)
Financial expenses /(income) 704,641,700 (204,463,691)
investment gains (141,093,032) (13,049,092)
Deferred corporate tax assets
( increase) / decrease (71,738,500) 2,138,214
Deferred corporate tax liabilities
increase / ( decrease) 328,802 (3,762,706)
Inventories ( increase) / decrease (1,402,482,118) 1,088,558,425
Building contract amount
decrease/ ( increase) 1,191,275,779 (893,109,080)
Operating receivables decrease 920,181,286 1,104,098,711
Operating payables increase /
( decrease) 1,367,290,822 (734,825,653)
Net cash flow from operation activities 3,065,603,998 1,541,917,739
- 96 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Net cash movement
2012 2011
Closing cash balance 2,357,608,044 1,992,617,410
Less: starting cash balance (1,992,617,410) (1,206,635,024)
Net cash increase 364,990,634 785,982,386
(c) Disposing subsidiaries
2012 2011
Price of disposing subsidiaries - 61,100,000
Cash from disposing of subsidiaries - 61,100,000
Less: Cash subsidiaries held - (7,961,024)
Net cash spending in disposing subsidiaries - 53,138,976
Net assets of disposed subsidiaries
2012 2011
current assets - 92,985,832
non-current assets - 107,532,094
current liabilities - (111,390,132)
- 89,127,794
(d) Cash
2012 2011
Dec. 31 Dec. 31
Cash 2,357,608,044 1,992,617,410
Including: cash in hand 530,366 427,213
Bank deposits disposable 2,320,289,080 1,859,155,217
Other monetary funds disposable 36,788,598 133,034,980
Closing cash balance 2,357,608,044 1,992,617,410
(53) Assets with restricted ownership
2011 Addition report Deduction report 2012
Dec. 31 period year Dec. 31
Other monetary
capital
restricted 61,163,098 6,415,615,082 (3,453,617,000) 3,023,161,180
VI Related parties and related transaction
- 97 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(1) Profiles of parent company
(a) Profiles of parent company
Type Registered place Legal Type of Organizational
represent business code
atives
China Corporate No. 88, C 710934369
Port project
Communic Company Andingmen Zhou
contracting
ations Wai Street, Jichang
and related
Corporatio Dongcheng
businesses
n District, Beijing
China Communications Construction Group Corporation is the ultimate controller of the
Company.
(b) Parent company’s registered capital and the movement
2011 Addition Deduction 2012
Name Dec. 31 report period report year Dec. 31
CCCC 14,825,000,000 - - 14,825,000,000
(c) Parent company’s holding proportion and voting proportion in the Company:
Name Dec.31, 2012 Dec. 31,2011
Voting
Holding Voting Holding Proportio
Proportion Proportion Proportion n
CCCC 28.828% 28.828% 28.714% 28.714%
As of Dec.31, 2012, China Communications Corporation and its controlled Hong Kong
Zhenhua Engineering Co., Ltd. and Macau Zhenhua Bay Engineering Co., Ltd. together hold
46.229% of the Company’s stake (Dec. 31, 2011: 46.115%).
(2) Subsidiary profiles
For information of subsidiaries, refer to Note IV.
- 98 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(3) Joint ventures and associates
Reg. Legal Registered Holdin Voting Organizational
Name Type Address rep. Biz Type capital g ratio ratio code
Joint ventures –
Jiangsu Longyuan Limite Nanto 260,000,000 50% 50% 555857534
Zhenhua Marine d ng, Marine
Engineering Co., compa Jiangs engineering
Ltd. ny u Fei Zhi construction
Associates –
Shanghai Zhenhua 49,800,000 20% 20% 72419768-9
Heavy Industries
(Group) Limite Chang
Changzhou Paint Co., d zhou,
Ltd. compa Jiangs Zhou Pain
ny u Fahua production
vessel 60,000,000 25% 25% 055874741
CCCC Marine Pudon technology
Engineering Vessel g Chen development
Technology Research Shang Yun and
Centre Co., Ltd. ny hai consulting
- 99 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(4) Other related parties
Name Relation with the Group Organizational
Code
Under control of same parent n.a (Note 1)
company
and holding 17.076% stake of the
Hong Kong Zhenhua Engineering Co., Ltd. Company
Under control of same parent n.a (Note 1)
company
and holding 0.325% stake of the
Macau Zhenhua Bay Engineering Co., Ltd. Company
CCCC Shanghai Dredging Co., Ltd. Controlled by the same parent 13222855X
company
CCCC First Harbor Engineering Co., Ltd. Controlled by the same parent 103061068
company
Second Highway Engineering Bureau Co., Ltd. Controlled by the same parent 220521254
company
Controlled by the same parent 177685391
CCCC Second Harbor Engineering Co., Ltd. company
CCCC Third Harbor Engineering Co., Ltd. Controlled by the same parent 132660027
company
CCCC First Harbor Engineering Survey and Controlled by the same parent 401360728
Design Institute Co., Ltd. company
In CCCC Fourth Harbour Engineering Survey Controlled by the same parent 190519558
and Design Institute Co., Ltd. company
CCCC Shanghai Equipment Engineering Co., Controlled by the same parent 134616310
Ltd. company
CCCC Shanghai Dahua Surveying & Mapping Controlled by the same parent 13378470X
Co., Ltd. company
CCCC Shanghai Dredging Equipment Industry Controlled by the same parent 133597103
Co., Ltd. company
Controlled by the same parent 103061113
CCCC Tianjin Dredging Co., Ltd. company
Tianjin China Communications Bomaike Marine Controlled by the same parent 666122741
Vessel Heavy Industry Co., Ltd. company
CCCC First Highway Engineering Sixth Controlled by the same parent 103620456
Engineering Co., Ltd. company
CCCC First Highway Engineering First Controlled by the same parent 10264769X
Engineering Co., Ltd. company
Controlled by the same parent 778492034
CCCC Second Harbour Engineering Co., Ltd. company
Controlled by the same parent 552530122
CCCC Tianhe Machinery Manufacturing Co., Ltd. company
Controlled by the same parent 661668630
Yueyang Chenglingji Xingang Co., Ltd. company
China Harbor Engineering Co., Ltd. Controlled by the same parent 710933796
company
- 100 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Name Relation with the Group Organizational
Code
Controlled by the same parent
CCCC Fourth Harbour Engineering Co., Ltd. company 190432129
CCCC First Harbour Engineering First Controlled by the same parent
Engineering Co., Ltd. company 103622427
CCCC Third Harbour Engineering Xing’an Controlled by the same parent
Construction Engineering Co., Ltd. company 133832150
Controlled by the same parent
CCCC Highway Consultants Co., Ltd. company 100011866
Friede & Goldman, Llc. Controlled by the same parent
company n.a (Note 1)
Note 1: Companies thus concerned are subsidiaries incorporated overseas or in Hong Kong
or Macau. These companies do not have legal persons or organizational code.
(5) Related transactions
(a) Related transactions pricing and decision-making procedures
The Group and the related party, the transaction price is based on mutual agreement and with
reference to market price as the pricing basis.
- 101 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Selling goods
Related 2012 2011
transact
ions Proportion in Proportion in
related party details amount same kind amount same kind
CCCC First Harbor
Engineering Co., selling
Ltd. goods 409,262,264 2.28% 1,028,498,184 5.46%
Friede selling
&Goldman,Llc. goods 346,400,234 1.93% - -
China Harbor
Engineering Co., selling
Ltd. goods 290,815,565 1.62% - -
CCCC Shanghai
Dredging Co., selling
Ltd. goods 128,409,573 0.72% 124,410,940 0.66%
CCCC Tianjin
Dredging Co., selling
Ltd. goods 100,787,687 0.56% 132,080,012 0.70%
Jiangsu Longyuan
Zhenhua Ocean
Engineering Co., selling
Ltd. goods 88,536,202 0.49% 370,822,424 1.97%
CCCC Third Harbor
Engineering Co., selling
Ltd. goods 36,392,562 0.20% 294,683,306 1.56%
CCCC Shanghai
Equipment
Engineering Co., selling
Ltd. goods 5,458,020 0.03% - -
selling
CCCC goods 2,964,862 0.02% 243,598,406 1.29%
CCCC Second
Harbor
Engineering Co., selling
Ltd. goods 2,371,795 0.01% 20,376,068 0.11%
CCCC Tianhe
Machinery
Manufacturing selling
Co., Ltd. goods - - 42,735,043 0.23%
Yueyang
Chenglingji selling
Xingang Co., Ltd. goods - - 35,897 0.00%
CCCC First
Harbour
Engineering First
Engineering Co., selling
Ltd. goods - - 188,034,188 1.00%
CCCC Fourth
Harbour
Engineering Co., selling
Ltd. goods - - 20,376,068 0.11%
1,411,398,764 7.86% 2,465,650,536 13.09%
- 102 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(c) The following related party provided labor service for the Group
Related 2012 2011
transacti
ons Proportion in Proportion in
related party details amount same kind amount same kind
Tianjin China
Communications
Bomaike Marine
Vessel Heavy providing
Industry Co., Ltd. labor 78,539,419 0.46% 100,979,252 0.56%
providing
CCCC labor 45,299,902 0.27%
CCCC Shanghai
Dredging Equipment providing
Industry Co., Ltd. labor - - 2,044,444 0.01%
CCCC Shanghai Dahua
Surveying & Mapping providing
Co., Ltd. labor - - 1,500,000 0.01%
123,839,321 0.73% 104,523,696 0.58%
(d) Purchasing goods
2012 2011
Related Proportion
transaction in same Proportion in
related party s details amount kind amount same kind
Shanghai Zhenhua
Heavy Industries
(Group)
Changzhou Paint Purchasin
Co., Ltd. g goods 78,436,778 0.86% 18,637,177 0.10%
CCCC Shanghai
Equipment
Engineering Co., Purchasin
Ltd. g goods 61,510,825 0.68% 19,873,357 0.11%
139,947,603 1.54% 38,510,534 0.21%
(e) The following related party built docks and workshops for the Group
2012 2011
Related Proportion
transaction in same Proportion in
related party s details amount kind amount same kind
CCCC Shanghai
Equipment
Engineering Co., providing
Ltd. labor 2,882,000 0.83% 310,808 0.04%
CCCC Third Harbor
Engineering Co., providing
Ltd. labor 160,500 0.05% 2,428,389 0.30%
CCCC Third
Harbour
Engineering
Xing’an
Construction
Engineering Co., providing
Ltd. labor - - 29,354,765 3.68%
3,042,500 0.88% 32,093,962 4.02%
(f) Asset transfer
- 103 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
2012 2011
Related
transactio Proportion in Proportion in
related party ns details amount same kind amount same kind
CCCC Shanghai
Dredging Co., equity
Ltd. transfer - - 40,000,000 65%
(g) Key executives’ salaries
2012 2011
Key executives salaries 11,020,011 10,721,336
Number of key executives of the Group in 2012 is 26 (2011: 25).
- 104 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(6) Balance of receivables and payables of related parties
(a) Receivables from related parties:
Dec. 31, 2012 Dec. 31, 2011
book value bad debt book value bad debt
balance provision balance provision
Accounts
receivable Friede & Goldman, Llc. 179,199,606 - - -
China Harbor Engineering Co.,
Ltd. 152,838,218 - - -
CCCC First Harbor Engineering
First Engineering Co., Ltd. 129,000,000 - 221,050,000 -
CCCC First Harbor Engineering
Co., Ltd. 113,640,319 - 723,312,417 -
CCCC 48,408,090 - 142,471,837 -
Jiangsu Longyuan Zhenhua
Marine Engineering Co., Ltd. 42,517,974 - 92,075,758 -
CCCC First Highway
Engineering Sixth
Engineering Co., Ltd. 24,000,000 - 24,800,000 -
CCCC First Highway
Engineering First Engineering
Co., Ltd. 18,800,000 - 19,800,000 -
CCCC Second Harbor
Engineering Co., Ltd. 17,530,000 - 26,030,000 -
CCCC Third Harbor Engineering
Co., Ltd. 8,490,297 - 23,480,000 -
CCCC Tianhe Machinery
Manufacturing Co., Ltd. 6,178,742 - 10,000,000 -
CCCC Fouth Harbor
Engineering Co., Ltd. 2,120,000 - 2,120,000 -
Second Highway Engineering
Bureau Co., Ltd. 1,209,000 - 2,778,000 -
CCCC Tianjin Dredging Co.,
Ltd. 1,051,764 - 27,254,606 -
CCCC Highway Consultants Co.,
Ltd. 422,750 - - -
CCCC Shanghai Equipment
Engineering Co., Ltd. 144,000 - - -
CCCC First Harbor Engineering
Survey and Design Institute
Co., Ltd. 109,000 - 109,000 -
Yueyang Chenglingji Xingang
Co., Ltd. 42,000 - 42,000 -
CCCC Shanghai Dredging Co.,
Ltd. - - 10,000,000 -
CCCC Fourth Harbour
Engineering Survey and
Design Institute Co., Ltd. - - 8,498,000 -
745,701,760 - 1,333,821,618 -
Advances
CCCC 53,000,886 - - -
CCCC Third Harbour
Engineering Xing’an
Construction Engineering
Co., Ltd. 1,200,000 - 2,145,650 -
Tianjin China Communications
Bomaike Marine Vessel
Heavy Industry Co., Ltd. - - 41,265,536 -
CCCC Shanghai Dredging
Equipment Industry Co., Ltd. - - 7,412,000 -
54,200,886 - 50,823,186 -
- 105 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Payables to related parties:
Dec. 31, 2012 Dec. 31, 2011
Accounts Shanghai Zhenhua Heavy Industries
payable (Group) Changzhou Paint Co., Ltd. 5,205,406 3,816,469
CCCC Third Harbour Engineering
Xing’an Construction Engineering
Co., Ltd. 3,185,045 22,945,953
CCCC Shanghai Equipment
Engineering Co., Ltd. 2,119,853 16,810,300
CCCC Third Harbor Engineering Co.,
Ltd. 252,892 92,392
CCCC Shanghai Dredging Equipment
Industry Co., Ltd. - 1,500,000
CCCC First Harbor Engineering Co.,
Ltd. - 1,000,000
CCCC Shanghai Dredging Equipment
Industry Co., Ltd. - 363,645
10,763,196 46,528,759
Other
payables CCCC 42,063,931 42,063,931
Prepayment CCCC First Harbor Engineering First
received Engineering Co., Ltd. 30,000,000 -
CCCC First Harbor Engineering Co.,
Ltd. 1,610,000 -
CCCC Third Harbor Engineering Co.,
Ltd. Xing’an Construction
Engineering Co., Ltd. 200,000 200,000
31,810,000 200,000
Dividends
payable CCCC 33,472,814 33,472,814
Hong Kong Zhenhua Engineering Co.,
Ltd. 346,005 19,606,950
Macau Zhenhua Bay Engineering Co.,
Ltd. 6,593 373,626
33,825,412 53,453,390
- 106 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(7) Promises with related parties
Listed are promises contracted but not necessarily shown on B/S with related parties as
of B/S day:
Labor receipt Dec. 31, 2012 Dec. 31, 2011
CCCC 104,749,263 -
CCCC Third Harbor Engineering
Co., Ltd. Xing’an Construction
Engineering Co., Ltd. 28,967,434 -
Tianjin China Communications
Bomaike Marine Vessel Heavy
Industry Co., Ltd. 1,282,051 79,821,470
CCCC First Harbor Engineering
Co., Ltd. 1,000,000 -
135,998,748 79,821,470
built docks and workshops for the Group Dec. 31, 2012 Dec. 31, 2011
CCCC Third Harbor Engineering
Co., Ltd. 13,750,000 5,736,024
Selling goods or assets Dec. 31, 2012 Dec. 31, 2011
CCCC First Harbor Engineering
First Engineering Co., Ltd. 440,000,000 -
Friede & Goldman, Llc. 371,586,291 -
CCCC 103,784,931 17,005,439
China Harbor Engineering Co., Ltd. 72,612,045 -
CCCC Third Harbor Engineering
Co., Ltd. 55,483,009 69,135,726
CCCC First Harbor Engineering
Co., Ltd. 1,302,906 90,851,282
Jiangsu Longyuan Zhenhua
Marine Engineering Co., Ltd. 878,259 878,259
CCCC Tianjin Dredging Co., Ltd. 77,648 100,865,335
CCCC Shanghai Dredging Co.,
Ltd. - 99,349,744
CCCC Tianhe Machinery
Manufacturing Co., Ltd. - 10,000,000
1,045,725,089 388,085,785
Investment
s in joint
venture Dec. 31, 2012 Dec. 31, 2011
Jiangsu Longyuan Zhenhua
Marine Engineering Co., Ltd. - 20,000,000
- 107 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
VII Promises
(1) Capital expense promises
List in the following is the capital expenses promises not yet to be confirmed in the
financial statements but the contracts have been signed on the reporting day.
Dec. 31, 2012 Dec. 31, 2011
House, building and equipment 156,329,122 142,178,343
(2) Operating leasing promises
According to non-revocable operating leasing contracts signed, the minimum rent to be
paid is listed as follows:
Dec. 31, 2012 Dec. 31, 2011
within one year 16,536,126 16,235,726
one to two years 16,854,526 16,536,126
two to three years 15,158,692 16,854,526
above three years 134,013,579 149,697,271
182,562,923 199,323,649
(3) L/C promises
The company entrusted bank to issue several L/C’s to purchase imported components or
parts. As of Dec.31, 2012, payables under the L/C’s amounted to 1,668,474,175 yuan
(Dec. 31, 2011: 1,306,148,619 yuan).
VIII B/S future events
Important B/S future events
Item
Item highlights Impact on
financial status
and operating
results
Payment of payables (Notes To pay off big amount payables Assets and
V(21)(c)) aging over 1 year liabilities
decreased by
57,897,949 yuan
- 108 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
IX Other Events
(a) The Group entered in 2009 with Spanish ADHK Company contract with total value of
USD 2.2 billion for purchase of heavy load equipment. As of Dec. 31, 2012, the Group
has invested 508,910,320 yuan (Dec. 31, 2011: 661,552,579 yuan) to prepare materials
and production, but income and cost are not yet recognized. At present, the Company is
taking various measures to gradually digest the already invested assets or put to use in
other projects, in order to reduce uncertainty in fulfilling the contracts and possible impact
of invested assets on the statements of the Group. At the same time, ADHK Company is
talking with related banks for financing arrangements for issues under the contract. In
case ADHK is not able to acquire financing needed, uncertainty is involved in the
contract. The Group will watch closely over the financing arrangements of ADHK
Company and make estimate over impact on financial status of the Group.
X Financial instruments & risks
Operation of the Group faces various financial risks: market risks (mainly foreign
exchange risks and interest rate risks), credit risks and liquidity risks. The overall risk
control planning of the Group aims at the unpredictability of financial market, in an
attempt to minimize the potential impact on the financial result of the Group
(1) Market risks
(a) Forex risks
Major production of the Group is located within the boarder of China, but major
businesses are settled in USD and EURO. Therefore there exist risks with
already-confirmed foreign currency assets and liabilities and future foreign currency
transaction (foreign currency assets and liabilities and foreign currency transaction are
mainly priced by USD and EURO). The Group’s financial department is responsible for
the controlling of the Group’s foreign currency transaction and the size of foreign currency
assets and liabilities, to minimize forex risks. Considering above, the Group controls its
forex risks via establishing time forex contracts. As of Dec. 31, 2012 and Dec. 31, 2011,
status of time forex contracts not due are shown in Note V (2).
As of Dec. 31, 2012 and Dec. 31, 2011, RMB amount of the Group’s foreign currency
financial assets and financial Liabilities are listed as follows:
- 109 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Dec. 31, 2012 (RMB Equivalents)
other
Foreign
USD Euro monetary total
Foreign monetary
Financial assets -
Monetary capital 1,832,767,311 115,015,607 13,778,862 1,961,561,780
Receivables 2,450,133,885 408,996,005 208,010,656 3,067,140,546
4,282,901,196 524,011,612 221,789,518 5,028,702,326
Foreign monetary
financial liabilities -
short-term loans 8,451,687,998 - - 8,451,687,998
Payables 350,409,535 177,255,284 - 527,664,819
Non-current liabilities
due within one
year 2,287,922,000 - - 2,287,922,000
Long term loans 873,684,500 - - 873,684,500
11,963,704,033 177,255,284 - 12,140,959,317
Dec. 31, 2011 (RMB Equivalents)
other Foreign
USD Euro monetary total
Foreign monetary
Financial assets -
Monetary capital 831,356,983 98,754,218 47,905,388 978,016,589
Receivables 1,298,892,149 274,455,467 280,038,155 1,853,385,771
2,130,249,132 373,209,685 327,943,543 2,831,402,360
Foreign monetary
financial liabilities -
short-term loans 7,907,117,550 119,318,331 - 8,026,435,881
Payables 268,950,124 94,297,232 - 363,247,356
Non-current liabilities
due within one
year 2,589,669,900 81,625,000 - 2,671,294,900
Long term loans 2,293,527,600 - - 2,293,527,600
13,059,265,174 295,240,563 - 13,354,505,737
As of Dec. 31, 2012, concerning the Group’s various USD financial assets and USD
financial liabilities，when RMB appreciates or depreciates 1% against USD while other
factors remain unchanged, the Group will decrease or increase a total loss of about
76,808,028 yuan (Dec. 31, 2011: total increased or decreased profit amount being
109,290,160 yuan).
As of Dec. 31, 2012, concerning the Group’s various EURO financial assets and EURO
financial liabilities，when RMB appreciates or depreciates 1% against EURO while other
factors remain unchanged, the Group will increase or decrease a total loss of about
3,467,563 yuan (Dec. 31, 2011: total decreased or increased profit amount being 779,691
yuan).
(b) Interest rate risks
Interest rate risks of the Group mainly originate from long-term liabilities with interest
including long term bank loans and bonds payable. Financial liabilities with flexible rates
- 110 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
confronts the Group with cash flow interest rate risks, while financial liabilities with fixed
rates put the Group against fair value interest rate risks. The Group fixes the fraction of
contracts with fixed rates and those with flexible rates based on corresponding market
environment. As of Dec. 31, 2012, the Group’s long-term liabilities with interests include
only contracts with flexible rates priced in USD, and contracts with fixed rates priced in
RMB. Amount of contracts with flexible rates priced in USD is 873,684,500 yuan (Dec.
31, 2011: 2,293,527,600 yuan); and the amount of contracts with fixed rates priced in
RMB is 7,984,665,674 yuan (Dec. 31, 2011: 8,768,615,674 yuan).
The financial division of the Group keeps close watch over the interest rates level of the
Group. Since the rise of interest rates will increase the cost of newly added liabilities with
interests, interest expenses on unpaid liabilities with interests priced in flexible rates, and
will significantly impact the financial results of the Group, the management will lower the
rate risks via swap contracts based on current market status. In 2012, the Group had no
such swap arrangements.
As of Dec. 31, 2012, when the rate of long-term liabilities with flexible rates increases or
decreases by 100 basis points while other factors remain unchanged, the Group will
decrease or increase a total interest expenditure of about 8,736,845 yuan (2011: total
increased or decreased interest expenditure amount being 22,935,276 yuan).
(2) Credit risks
The Group manages credit risks by portfolio classification. Credit risks mainly originate
from bank loans, accounts receivable, other receivables, notes receivable and other
current assets -bank financial products etc.
Bank deposits of the Group and other current assets -bank financial products are mainly
put in state-owned banks and other large or medium-sized listed banks. Therefore, the
Group believes they suffer no significant credit risks or cause any significant losses as
a result of contract breach of the counterparts.
In addition, speaking of accounts receivable, other receivables, and notes receivable,
the Group established related policies to control credit risks. The Group evaluates
clients’ credit qualification and sets corresponding credit terms on the basis of clients’
financial status, possibility of obtaining guaranty from a third-party, credit record and
other factors including current market status rating. The Group monitors clients’ credit
record on regular basis. When client is found with bad credit record, the Group will sent
out written calls, shorten credit terms or cancel credit terms, in an attempt to ensure that
the Group’s overall credit risks be within control.
(3) Liquidity risks
Subsidiaries within the Group are responsible for their own prediction of cash flow. The
financial section of the head office continues to monitor the capital demand for
short-term and long-term capital at the group level after collecting all predictions of
subsidiaries, to ensure sufficient cash reserve and cashable securities. Meanwhile, the
financial section of the head office continues to monitor the financial and non-financial
factors prescribed in credit agreements and loan agreements, to ensure the Group
should get sufficient line of credit from key financial institutions to satisfy capital demand
both in short term and long term.
- 111 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
As of B/S day, various financial assets and liabilities of the Group are listed as follows by due dates in undiscounted contracted cash flow (principal
and interest included):
Dec. 31, 2012
within one year one to two years two to five years above 5 years no limit total
Financial assets -
Monetary capital 5,380,769,224 - - - - 5,380,769,224
Receivables 4,124,026,414 - - - - 4,124,026,414
Notes receivable 115,069,863 - - - - 115,069,863
Interest receivable 33,231,552 - - - - 33,231,552
Available-for-sale
financial assets 1,000,000,000 - - - 124,222,545 1,124,222,545
10,653,097,053 - - - 124,222,545 10,777,319,598
Financial liabilities
-
short-term loans 12,242,499,133 - - - - 12,242,499,133
Payables 2,895,569,177 - - - - 2,895,569,177
Notes payable 980,906,529 - - - - 980,906,529
Interest payable 315,058,291 - - - - 315,058,291
Dividends payable 33,825,412 - - - - 33,825,412
Non-current
liabilities due within
one year 3,742,130,364 - - - - 3,742,130,364
Long term loans 27,571,974 204,460,410 705,712,909 - - 937,745,293
Bonds payable 447,429,167 4,556,565,277 4,059,967,500 - - 9,063,961,944
20,684,990,047 4,761,025,687 4,765,680,409 - - 30,211,696,143
- 112 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Dec. 31, 2011
one to two two to five above 5
within one year years years years Total
Financial assets
-
Monetary capital 2,053,780,508 - - - 2,053,780,508
Receivables 5,597,909,406 - - - 5,597,909,406
Notes
receivable 80,556,568 - - - 80,556,568
Available-for-sal
e financial
assets - 108,661,535 - - 108,661,535
7,732,246,482 108,661,535 - - 7,840,908,017
Financial
liabilities -
short-term loans 8,168,489,122 - - - 8,168,489,122
Payables 3,125,102,896 - - - 3,125,102,896
Notes payable 577,862,463 - - - 577,862,463
Interest payable 298,404,816 - - - 298,404,816
Dividends
payable 53,453,390 - - - 53,453,390
Non-current
liabilities due
within one
year 3,595,156,923 - - - 3,595,156,923
Long term loans 98,633,551 3,142,709,283 - - 3,241,342,834
Bonds payable 444,977,500 444,977,500 8,611,347,778 - 9,501,302,778
16,362,080,661 3,587,686,783 8,611,347,778 - 28,561,115,222
(4) Fair value
(a) Financial instruments not measured by fair value
Financial assets and liabilities not measured by fair value mainly include: Receivables,
short term loans, payables, long term loans and bonds payable.
Except for financial assets and liabilities listed below, the book value of other financial
assets and liabilities shares very little difference with fair value.
Dec. 31, 2012 Dec. 31, 2011
book value fair value book value fair value
Financial liabilities -
Long term loans 873,684,500 818,922,763 3,083,527,600 2,946,750,383
Bonds payable 7,984,665,674 7,943,115,828 7,978,615,674 7,797,994,472
8,858,350,174 8,762,038,591 11,062,143,274 10,744,744,855
For long term loans and bonds payable not having activating market, fair value is
determined by the present value of contracted future cash flow after being discounted by
comparable market credit class and the interest rate of also the same cash flow under the
same conditions.
(b) Financial instruments measured by fair value
According to the lowest tier of the input value most significant to fair value measuring, fair
value can be classified into the following tiers:
- 113 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Tier One: quotation of the same kind of assets or liabilities on activating market.
Tier Two: input value of assets or liabilities observable directly (e.g. obtaining from price) or
indirectly (e.g. estimated on the basis of price) except for market quotation at Tier One.
Tier Three: input value (unobservable input value) based on variants other than observable
market data.
On Dec. 31, 2012, financial assets and liabilities measured by fair value are listed as
follows based on above 3 tiers:
Tier
Tier One Tier Two Three Total
Financial assets -
Trading financial
assets
- Forward foreign
exchange contracts - 26,009,477 - 26,009,477
Available-for-sale
financial assets
- Available-for-sale
equity instruments - 124,222,545 - 124,222,545
- short-term financial
products - 1,000,000,000 - 1,000,000,000
- 1,150,232,022 - 1,150,232,022
On Dec. 31, 2011, financial assets and liabilities measured by fair value are listed as
follows based on above 3 tiers:
Tier
Tier One Tier Two Three Total
Financial assets -
Trading financial assets
- Forward foreign
exchange contracts - 61,678,770 - 61,678,770
Available-for-sale financial
assets
- Available-for-sale
equity instruments - 108,661,535 - 108,661,535
- 170,340,305 - 170,340,305
Financial liabilities-
Trading financial
liabilities
- Forward foreign
exchange contracts - 2,289,600 - 2,289,600
- 114 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Financial instruments with active market decide their fair value by the quotation on the
active market, while financial instruments without active market decide its fair value by
evaluation technology. Evaluation technology includes prices used by latest market
transaction among all parties who are willing to trade and are familiar with the situation,
referring to current fair value of actually the same other financial assets and cash flow
discounting methods etc. Related evaluation hypotheses also include fraction of payment in
advance, expected credit loss rate, interest rate or discount rate.
XI Assets and liabilities measured by fair value
Dec. 31, Addition Fair value Cumulative Impairme Dec. 31,
2011 report period change fair value nt 2012
gains/losses change into accrued
report year equity current
year
Financial
assets -
Trading
financial
assets 61,678,770 - (35,669,293) - - 26,009,477
Available-fo
r-sale
financial
assets 108,661,535 1,000,000,000 - 135,207,715 - 1,124,222,545
170,340,305 1,000,000,000 (35,669,293) 135,207,715 - 1,150,232,022
Financial
liabilities -
Trading
financial -
assets
and
liabilities 2,289,600 (2,289,600) - - -
- 115 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
XII Notes to major items in the Company’s statements
（1） Accounts receivable
Dec. 31, 2
Dec. 31, 2012 Dec. 31, 2011
Accounts receivable 4,872,828,464 5,123,249,981
Less: bad debt provision (402,368,505) (335,256,851)
4,470,459,959 4,787,993,130
(a) Accounts receivable debt age as follows:
Dec. 31, 2012 Dec. 31, 2011
within one year 3,933,909,917 4,327,437,388
one to two years 610,326,899 564,035,252
two to three years 123,351,362 114,098,618
above three years 205,240,286 117,678,723
4,872,828,464 5,123,249,981
(b) Accounts receivable listed in type as follows:
Dec. 31, 2012 Dec. 31, 2011
book value balance bad debt provision book value balance bad debt provision
proport total prop
ion in propo proporti ortio
amount total amount rtion amount on amount n
Big single
amount,
provided for
bad debt
separately - - - - 50,062,845 1% (14,325,188) 29%
Total bad debt
provision
accrued in
groups Credit
risk portfolio
- related party 1,617,791,219 33% - - 1,456,432,552 28% - -
- third party 3,206,776,880 66% (365,972,637) 11% 3,616,754,584 71% (320,931,663) 9%
Single amount,
though not
significant,
separate
provision for
bad debt
made 48,260,365 1% (36,395,868) 75% - - - -
4,872,828,464 100% (402,368,505) 8% 5,123,249,981 100% (335,256,851) 7%
- 116 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(c) As of Dec. 31, 2012, the Company had no accounts receivable with big single amount,
provided for bad debt
(d) Among account receivable from total bad debt provision made in groups, portfolio analysis by ages:
Dec. 31, 2012 Dec. 31, 2011
book value balance bad debt provision book value balance bad debt provision
amount propo amount Propo amount propo amount Proporti
rtion rtion rtion on of
of accrual
accru
al
within
one year 2,556,309,118 80% (31,728,187) 1% 2,826,704,923 79% (22,958,783) 1%
one to
two
years 336,517,434 10% (90,916,301) 27% 558,272,320 15% (124,932,756) 22%
two to
three
years 123,242,362 4% (52,620,183) 43% 114,098,618 3% (55,361,401) 49%
above
three
years 190,707,966 6% (190,707,966) 100% 117,678,723 3% (117,678,723) 100%
3,206,776,880 100% (365,972,637) 11% 3,616,754,584 100% (320,931,663) 9%
(e) As of Dec. 31, 2012, accounts receivable of the Company with bad debt provision, with not big
single amount but being tested separately for impairment as follows:
book value bad debt Proportion of reason
balance provision accrual
Accounts (i)
receivable1 21,798,480 (21,798,480) 100%
Accounts (ii)
receivable2 26,461,885 (14,597,388) 55%
48,260,365 (36,395,868) 75%
(i) As of Dec. 31, 2012, due to contract dispute, the Company concludes that the accounts receivable
would be difficult to recover.
(ii) As of Dec. 31, 2012, due to delayed delivery, the Company made bad debt provision of
14,597,388 yuan based on the highest fine in the contract.
- 117 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(f) Account of accounts receivable fully provided for bad debts in relatively big proportion in prior yeas
but fully collected or returned in current year or collected or returned in large proportion:
Reason for Former bad Return or collection Amount of return
return or debts basis amount of accumulative or collection
collection bad debt provision
amount
Accounts Vigorous
receivable1 recovery debt age 7,629,126 7,629,126
Accounts Vigorous
receivable2 recovery debt age 2,044,894 2,044,894
Accounts Vigorous
receivable3 recovery debt age 1,934,493 1,934,493
Accounts Vigorous
receivable4 recovery debt age 1,500,000 1,500,000
Accounts Vigorous 1,165,871 1,165,871
receivable5 recovery debt age
14,274,384 14,274,384
(g) Accounts receivable from shareholding units holding 5% (inclusive) stake of the Company as
follows:
Dec. 31, 2012 Dec. 31, 2011
bad debt bad debt
amount provision amount provision
CCCC 48,408,090 - 137,589,437 -
- 118 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(h) Account receivable from related parties:
Dec. 31, 2012 Dec. 31, 2011
Name Relation with amount Proportion in bad amount Proportion in bad
the Company total (%) debt total (%) debt
provi provis
sion ion
Shanghai Zhenhua
Heavy Industries
Group (Nantong) Co.,
Ltd. subsidiary 203,028,952 4.17% - - - -
Shanghai Zhenhua Port subsidiary
Machinery (Hong
Kong) Co., Ltd. 180,337,600 3.70% - 180,779,442 3.53% -
Shanghai Zhenhua subsidiary
Heavy Industries
Machinery Co., Ltd. 144,454,055 2.96% - - - -
Shanghai Zhenhua subsidiary
Heavy Industries
Group (Nantong)
Transmission
Machinery Co., Ltd. 116,635,791 2.39% - - - -
Nantong Zhenhua subsidiary
Heavy Industry
Equipment
Manufacturing Co.,
Ltd. 103,223,799 2.12% - - - -
Shanghai Zhenhua Port subsidiary
Machinery Heavy
Industry Co., Ltd. 68,602,656 1.41% - - - -
ZPMC GmbH Hamburg subsidiary 52,248,584 1.07% - - - -
Shanghai Zhenhua subsidiary
Heavy Industries
(Group) Zhangjiagang
Port Machinery Co.,
Ltd. 40,926,943 0.84% - 2,151,268 0.04% -
Shanghai Zhenhua subsidiary
Shipping Co., Ltd. 6,200,848 0.13% - - - -
Shanghai Zhenhua subsidiary
Heavy Industries
Electric Co., Ltd. 592,255 0.01% - 438,624 0.01% -
Jiangsu Longyuan
Zhenhua Marine
Engineering Co., Ltd. Joint venture 42,508,950 0.87% - 92,075,758 1.80%
Controlled by
the same
parent
Friede & Goldman, Llc. company 179,199,606 3.68% - - - -
Controlled by
the same
China Harbor parent
Engineering Co., Ltd. company 152,838,218 3.14% - - - -
Controlled by
CCCC First Harbour the same
Engineering First parent
Engineering Co., Ltd. company 129,000,000 2.65% - 221,050,000 4.31% -
Controlled by
the same
CCCC First Harbor parent
Engineering Co., Ltd. company 113,640,319 2.33% - 723,312,417 14.12% -
Controlled by
the same
parent
CCCC company 48,408,090 0.99% - 137,589,437 2.69% -
Controlled by
the same
CCCC Second Harbor parent
Engineering Co., Ltd. company 17,530,000 0.36% - 26,030,000 0.51% -
- 119 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
Controlled by
the same
CCCC Third Harbor parent
Engineering Co., Ltd. company 8,490,297 0.17% - 23,480,000 0.46% -
CCCC Tianhe Controlled by
Machinery the same
Manufacturing Co., parent
Ltd. company 6,178,742 0.13% - 10,000,000 0.20% -
Controlled by
the same
CCCC Fourth Harbour parent
Engineering Co., Ltd. company 2,120,000 0.04% - 2,120,000 0.04% -
Controlled by
the same
CCCC Tianjin parent
Dredging Co., Ltd. company 1,051,764 0.02% - 27,254,606 0.53% -
CCCC Highway Controlled by
Consultants Co., Ltd. the same
parent
company 422,750 0.01% - - - -
CCCC First Harbor Controlled by
Engineering Survey the same
and Design Institute parent
Co., Ltd. company 109,000 0.00% - 109,000 0.00% -
Controlled by
the same
Yueyang Chenglingji parent
Xingang Co., Ltd. company 42,000 0.00% - 42,000 0.00% -
Controlled by
the same
CCCC Shanghai parent
Dredging Co., Ltd. company - - - 10,000,000 0.20% -
1,617,791,219 33.19% - 1,456,432,552 28.43% -
- 120 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(i) As of Dec. 31, 2012, top 5 accounts receivable balance as follows:
Proportion in
relation with the total accounts
Company amount age receivable
COMPANY A subsidiary within one 4%
203,028,952 year
COMPANY B subsidiary within one 4%
180,337,600 year
COMPANY C Controlled by the within one 4%
same parent year
company 179,199,606
COMPANY D Controlled by the within one 3%
same parent year
company 152,838,218
COMPANY E within one 3%
subsidiary 144,454,055 year
859,858,431 18%
(2) Other receivables
Dec. 31, 2012 Dec. 31, 2011
Subsidiary current accounts 7,139,556,944 6,282,116,346
Receivables employees mutual
aid funds 109,243,885 102,895,081
Tax for unsettled payment
receivable 82,694,087 -
Customs guarantee deposit 74,106,771 -
Temporary loan product on-site
service 49,731,163 80,322,798
Unit borrower receivable 19,520,000 25,919,999
Bid bond payments 8,404,428 11,424,428
export tax rebate 1,516,922 7,091,675
Government subsidy payments 300,000 300,000
Receivables land and housing
assets levy compensation
(Notes V(45)) - 497,240,591
Others 7,357,501 15,426,093
7,492,431,701 7,022,737,011
Less: bad debt provision - -
7,492,431,701 7,022,737,011
- 121 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Other receivables debt age analysis as follows:
Dec. 31, 2012 Dec. 31, 2011
within one year 7,334,862,889 6,884,397,746
one to two years 37,843,761 3,953,374
two to three years 3,239,561 64,053,035
above three years 116,485,490 70,332,856
7,492,431,701 7,022,737,011
(b) Other receivables listed in type as follows:
Dec. 31, 2012 Dec. 31, 2011
book value balance bad debt book value balance bad debt
provision provision
amount propor amou Prop amount total amou Prop
tion in nt ortion proporti nt ortion
total of on of
accru accru
al al
Big single
amount,
provided for
bad debt
separately 7,455,332,850 100% - - 6,962,574,816 99% - -
Single amount,
though not
significant,
separate
provision for
bad debt
made 37,098,851 - - - 60,162,195 1% - -
7,492,431,701 100% - - 7,022,737,011 100% - -
(c) As of Dec. 31, 2012, the Company did not accrue bad debt provision for other
receivables with big single amount, and provided for bad debt separately
(d) As of Dec. 31, 2012, other receivables with single amount, though not significant,
separate provision for bad debt made:
(e) As of Dec. 31, 2012, other receivables do not contain the amount from shareholders
holding above 5% (including 5%).
- 122 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(f) Other receivables from related parties:
Dec. 31, 2012 Dec. 31, 2011
Relation amount Proportion in bad amount Proportion in bad
with the total (%) debt total (%) debt
Group provi provi
sion sion
Nantong Zhenhua Heavy
Industry Equipment subsidia
Manufacturing Co., Ltd. ry 1,953,091,300 26.07% - 1,828,252,314 26.03% -
Shanghai Zhenhua Heavy
Industries Group (Nantong) subsidia
Co., Ltd. ry 1,799,416,525 24.02% - 1,158,740,675 16.50% -
Shanghai Zhenhua Shipping Co., subsidia
Ltd. ry 1,163,793,850 15.53% - 1,406,757,277 20.03% -
Shanghai Zhenhua Heavy
Industries Group (Nantong)
Transmission Machinery Co., subsidia
Ltd. ry 827,164,637 11.04% - 802,889,613 11.43% -
Shanghai Zhenhua Heavy subsidia
Industries Machinery Co., Ltd. ry 728,923,905 9.73% - 252,649,951 3.60% -
Shanghai Zhenhua (Hong Kong) subsidia
Co., Ltd. ry 463,616,727 6.19% - 68,629,594 0.98% -
Shanghai Port Machinery Heavy subsidia
Industry Co., Ltd. ry 126,445,956 1.69% - 78,137,069 1.11% -
Shanghai Zhenhua Heavy
Industries (Group)
Zhangjiagang Port Machinery subsidia
Co., Ltd. ry 71,294,761 0.95% - 17,612,425 0.25% -
subsidia
ZPMC GmbH Hamburg ry 4,686,661 0.06% - - - -
Shanghai Jiangtian Industrial subsidia
Co., Ltd. ry 831,502 0.01% - 831,502 0.01% -
subsidia
ZPMC Netherlands B.V. ry 176,274 0.00% - - - -
Shanghai Zhenhua Testing
Technology Consulting Co., subsidia
Ltd. ry 86,726 0.00% - - - -
CCCC Marine Engineering
Vessel Technology Research subsidia
Centre Co., Ltd. ry 28,120 0.00% - - - -
Shanghai Zhenhua Port
Machinery Heavy Industry subsidia
Co., Ltd. ry - - - 667,615,926 9.51% -
7,139,556,944 95.29% - 6,282,116,346 89.45% -
(g) On Dec. 31, 2012, top 5 of amount other receivables:
Other
relation with the receivables
Company amount age total proportion
COMPANY A subsidiary within one
1,953,091,300 year 26%
COMPANY B subsidiary within one
1,799,416,525 year 24%
COMPANY C subsidiary within one
1,163,793,850 year 16%
COMPANY D subsidiary within one
827,164,637 year 11%
COMPANY E subsidiary within one
728,923,905 year 10%
6,472,390,217 87%
- 123 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(3) Long term equity investment
Dec. 31, 2012 Dec. 31, 2011
subsidiary(a) 4,039,669,024 3,897,311,367
joint ventures (b) 147,056,419 126,577,749
associates (c) 29,703,740 13,736,943
other Long term equity
investment (d) 27,440,000 13,040,000
4,243,869,183 4,050,666,059
There are no limits to value realization of the company’s long term equity investment.
- 124 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(a) Subsidiaries
Remarks on accrued
Proportion
accounting 2011 Report year 2012 difference between report year
initial investment of voting Depreciati
basis Dec. 31 movement Dec. 31 proportion of shares Depreciatio
rights on reserve
and voting rights n reserve
Shanghai Zhenhua Port Machinery n.a.
Heavy Industry Co., Ltd. On cost basis 4,950,000 4,950,000 - 4,950,000 90% 90% - -
Shanghai Zhenhua Heavy Industries n.a.
Machinery Co., Ltd. On cost basis 5,014,200 5,014,200 - 5,014,200 100% 100% - -
Shanghai Zhenhua Port Machinery n.a.
(Hong Kong) Co., Ltd. On cost basis - - - - 99.99% 99.99% - -
Shanghai Zhenhua Shipping Co., Ltd. On cost basis 140,260,673 140,260,673 - 140,260,673 55% 55% n.a. - -
Shanghai Zhenhua Heavy Industries n.a.
(Group) Zhangjiagang Port Machinery
Co., Ltd. On cost basis - 4,518,000 - 4,518,000 90% 90% - -
Nantong Zhenhua Heavy Industry n.a.
Equipment Manufacturing Co., Ltd. On cost basis 854,936,900 854,936,900 - 854,936,900 100% 100% - -
Nantong Zhenhua Heavy Industry n.a.
Steel Structure Processing Co., Ltd. On cost basis 598,110 598,110 - 598,110 100% 100% - -
Jiangyin Zhenhua Port Machinery n.a.
Steel Structure Manufacturing Co.,
Ltd. On cost basis 579,983 579,983 - 579,983 100% 100% - -
CCCC Shanghai Port Machinery Plant n.a.
Co., Ltd. On cost basis 2,201,086,744 2,201,086,744 - 2,201,086,744 100% 100% - -
Shanghai Jiangtian Industrial Co., Ltd. On cost basis 70,366,757 70,366,757 - 70,366,757 60% 60% n.a. - -
Shanghai Zhenhua Heavy Industries n.a.
Group (Nantong) Transmission
Machinery Co., Ltd. Notes IV(2)) On cost basis 300,000,000 300,000,000 - 300,000,000 100% 100% - -
Shanghai Zhenhua Heavy Industries n.a.
Group (Nantong) Co., Ltd. (Notes
IV(2)) On cost basis 300,000,000 300,000,000 - 300,000,000 100% 100% - -
Shanghai Zhenhua Heavy Industries n.a.
Electric Co., Ltd.(i) On cost basis 15,000,000 15,000,000 35,000,000 50,000,000 100% 100% - -
Shanghai Zhenhua Heavy Industries n.a.
Vessel Transport Co., Ltd.
(Notes IV(2)) On cost basis 100,000,000 - 100,000,000 100,000,000 100% 100% - -
Shanghai Zhenhua Testing n.a.
Technology Consulting Co.,
Ltd.(Notes IV(2)) On cost basis 7,000,000 - 7,000,000 7,000,000 100% 100% - -
ZPMC Netherlands B.V (Notes IV(2)) On cost basis 149,717 - 149,717 149,717 100% 100% n.a. - -
ZPMC GmbH Hamburg (Notes IV (2)) On cost basis 207,940 - 207,940 207,940 100% 100% n.a. - -
3,897,311,367 142,357,657 4,039,669,024 - -
As approved by the Company’s board of directors, on Aug. 20, 2012 the Company completed the added capital investment of 35,000,000 yuan to Shanghai
Zhenhua Heavy Industries Electric Co., Ltd. After the mentioned capital addition, registered capital of the said company is increased from 15,000,000 to
50,000,000 yuan.
- 125 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(b) Joint ventures
Report year movement
Remarks on
difference
Net gains after other Proportio between accrued
accoun addition or adjusting on cash equity Proportio n of proportion of report year
ting initial 2011 deduction of equity(Notes dividends moveme 2012 n of voting shares and voting impairment impairment
basis investment Dec. 31 investment XII(5)) announced nt Dec. 31 shares rights rights provision provision
Jiangsu Longyuan
Zhenhua Marine On
Engineering Co., equity
Ltd. basis 30,000,000 126,577,749 - 20,478,670 - - 147,056,419 50% 50% n.a - -
(c) Associates
Report year movement
Remarks on
difference
Net gains after other Proporti between accrued
account addition or adjusting on cash equity Proporti on of proportion of report year
ing initial 2011 deduction of equity(Notes dividends movemen 2012 on of voting shares and impairment impairment
basis investment Dec. 31 investment XII(5)) announced t Dec. 31 shares rights voting rights provision provision
Shanghai Zhenhua
Heavy Industries
(Group)
Changzhou Paint On equity
Co., Ltd. basis 13,736,943 13,736,943 - 966,797 - - 14,703,740 20% 20% n.a - -
CCCC Marine
Engineering
Vessel
Technology
Research Centre On equity
Co., Ltd. basis 15,000,000 - 15,000,000 - - - 15,000,000 25% 25% n.a - -
13,736,943 15,000,000 966,797 - - 29,703,740 - -
- 126 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(d) Other long term equity investment
Remarks on accrued
Propo difference report
rtion between year
Propor of proportion of impairme impairme cash
accounting initial 2011 Report year 2012 tion of voting shares and nt nt dividends
basis investment Dec. 31 movement Dec. 31 shares rights voting rights provision provision announced
Nantong Zhenhua
Hongcheng Heavy Load On cost
Forging Co., ltd. basis 10,000,000 10,000,000 - 10,000,000 5% 5% n.a - - -
Shanghai Zhenhua Port
Machinery Longchang On cost
Lift Equipment Co. Ltd. basis 500,000 800,000 - 800,000 10% 10% n.a - - -
Shanghai Zhenhua Port
Machinery (Group) On cost
Shenyang Lift Co., Ltd. basis 500,000 1,500,000 - 1,500,000 10% 10% n.a - - -
Shanghai Zhenhua Port
Machinery (Group)
Ningbo Transmission On cost
Machinery Co. Ltd basis 300,000 740,000 - 740,000 7.40% 7.40% n.a - - -
CCCC Highway Long and
Large Bridge
Construction State
Project Research Centre On cost
Co., Ltd. basis 8,000,000 - 8,000,000 8,000,000 10% 10% n.a - - -
CCCC Dredging Technology
& Equipment State
Project Research Centre On cost
Co., Ltd. basis 6,400,000 - 6,400,000 6,400,000 8% 8% n.a - - -
13,040,000 14,400,000 27,440,000 - - -
- 127 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(4) Operating revenue and operating cost
2012 2011
Major operating income 17,502,524,063 18,355,090,974
Other operating income 1,601,369,331 2,254,314,182
19,103,893,394 20,609,405,156
2012 2011
Major operating cost 16,798,037,342 17,728,517,383
Other operating cost 1,573,173,210 2,202,276,882
18,371,210,552 19,930,794,265
(a) Major operating income and major operating cost
(i) In products:
2012 2011
Major operating Major operating Major operating Major operating
income cost income cost
Container
cranes 10,577,300,304 9,818,111,697 10,232,548,047 9,746,398,675
Marine heavy
equipment 3,425,115,151 3,331,334,313 3,669,823,484 3,360,781,559
Bulk machinery 2,868,417,172 2,909,024,128 2,984,940,015 3,203,113,067
Steel structures 631,691,436 739,567,204 1,467,779,428 1,418,224,082
17,502,524,063 16,798,037,342 18,355,090,974 17,728,517,383
128
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(ii) In regions:
2012 2011
Major Major Major operating
operating operating cost Major operating cost
income income
Mainland China 5,221,247,763 5,130,205,260 7,309,703,206 7,199,750,419
Asia (excluding
Mainland China) 3,773,104,834 3,559,098,213 5,125,862,323 4,692,400,225
America 3,209,572,843 3,072,142,688 3,328,967,899 2,896,106,948
Europe 2,724,992,976 2,803,607,358 1,138,484,479 1,455,192,231
Africa 949,894,192 799,039,878 674,204,852 652,222,591
Mainland China
(export) 924,361,622 796,642,941 530,737,629 515,023,235
Oceania 699,349,833 637,301,004 247,130,586 317,821,734
17,502,524,063 16,798,037,342 18,355,090,974 17,728,517,383
(b) Other operating income and other operating cost
2012 2011
Other operating Other operating Other operating Other operating
income cost income cost
Sales of materials 1,414,508,987 1,431,817,655 2,185,470,468 2,200,266,354
Equipment
leasing and
others 186,860,344 141,355,555 68,843,714 2,010,528
1,601,369,331 1,573,173,210 2,254,314,182 2,202,276,882
129
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(c) Operating income from top 5 clients
Income from top 5 clients is 2,021,921,087 yuan (2011: 2,641,927,451 yuan), taking 11%
of total sales income of the Company. (2011, taking up 13%). Details as follows:
Operating revenue Proportion in total
operating revenue of
the Company (%)
COMPANY A 522,752,293 3%
COMPANY B 477,306,483 3%
COMPANY C 454,509,765 2%
COMPANY D 337,724,905 2%
COMPANY E 229,627,642 1%
2,021,921,088 11%
(5) Investment gains
2012 2011
Long term equity investment income on cost
basis - 5,425,934
Long term equity investment loss on equity basis
(Notes XII (3)) 21,445,467 (1,931,190)
Investment gains during holding available-for-sale
financial assets 119,646,705 1,000,000
Investment loss from disposal of subsidiaries - (1,116,241)
141,092,172 3,378,503
130
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2012
(In RMB yuan except for otherwise specified)
(6) Supplementary information of cash flow statements
(a) Adjust net (loss) / profit to cash flow in operating activities
2012 2011
Net (loss) / profit (877,836,392) 119,452,869
Add/(less): assets impairment provision 389,548,762 272,163,908
Fixed assets depreciation 751,310,134 761,594,078
Intangible assets amortization 44,236,057 46,318,682
Disposal of fixed assets, intangible
assets and other long-term
assets income (98,519,968) (307,550,352)
Fair value change (loss)/income 37,464,534 (27,097,603)
Financial expense/(income) 601,227,019 (117,550,094)
Investment gains (141,092,172) (3,378,503)
Deferred corporate tax assets
increase /( decrease) (71,738,500) 1,356,045
Deferred corporate tax liabilities
decrease - (7,007,787)
Inventories (income)/decrease (802,593,729) 1,336,515,348
Building contract amount
decrease /( increase) 993,465,338 (241,958,688)
Operating receivables increase (486,596,728) (1,016,708,291)
Operating payables
increase/( decrease) 2,964,988,005 (1,649,755,380)
Net cash flow from operation activities 3,303,862,360 (833,605,768)
(b) Net cash movement
2012 2011
Closing cash balance 2,137,291,866 1,654,563,902
Less: starting cash balance (1,654,563,902) (999,517,134)
Net cash increase/( decrease) 482,727,964 655,046,768
131
