Shanghai Zhenhua Heavy Industries Co., Ltd.
FINANICAL STATEMENTS & AUDITORS REPORT 2013
Shanghai Zhenhua Heavy Industries Co., Ltd.
FINANICAL STATEMENTS & AUDITORS REPORT 2013
FINANICAL STATEMENTS & AUDITORS REPORT 2013
Page
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 -141
Supplementary information
Auditors’ Report
PricewaterhouseCoopers Zhongtian Shen Zi (2014) 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 2013, the 2013’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.
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(Page 2 of 2)
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 2013 and of the results of its operations and its
cash flows for the year then ended.
PricewaterhouseCoopers China Limited
(special general partnership) CPA___________________
Zhao Bo
Shanghai, China
Mar. 24, 2014 CPA___________________
Jin Wen
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company's Balance Sheet on Dec. 31, 2013
(In RMB yuan except for otherwise specified)
Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012
Assets Notes
Consolidated Consolidated Company Company
Current assets
Monetary capital V (1) 3,515,643,963 5,380,769,224 3,098,787,795 5,140,007,496
Tradable financial assets V (2) 121,169,489 26,009,477 107,398,445 19,196,699
Bills receivable V (3) 334,519,241 115,069,863 331,519,241 115,069,863
Interest receivable V (4) 5,088,988 33,231,552 5,088,988 33,231,552
Account receivable V (5)、XIII (1) 3,548,903,103 3,710,721,111 5,118,743,309 4,470,459,959
Advances V (7) 1,285,291,251 995,684,680 1,810,482,001 1,469,746,463
Other receivables V (6)、XIII (2) 1,084,341,531 413,305,303 8,166,740,918 7,492,431,701
Stock V (8) 6,015,690,177 7,581,683,025 4,940,313,059 6,343,052,035
Completed not settled V (9) 6,766,208,145 6,620,155,339 5,620,521,199 5,740,676,634
Other current assets V (10) 4,202,678,325 1,000,000,000 4,202,678,325 1,000,000,000
Total current assets 26,879,534,213 25,876,629,574 33,402,273,280 31,823,872,402
Non-current assets
Financial assets available for
sale V (11) 172,770,000 124,222,545 172,770,000 124,222,545
Long-term receivables V (12) 2,217,619,293 - - -
Long term equity investment V (13)、XIII (3) 380,678,930 203,719,472 4,856,645,862 4,243,869,183
Real estate as investment V (14) 388,992,266 402,411,440 388,992,266 402,411,440
Fixed assets V (15) 14,079,867,109 14,075,197,757 7,076,923,256 7,339,176,130
Construction in progress V (16) 1,478,006,436 3,692,553,744 724,832,092 1,145,271,492
Intangible assets V (17) 3,159,277,976 2,021,511,880 1,301,763,322 1,339,935,316
Deferred corporate tax
assets V (18) 397,990,464 383,449,931 397,990,464 383,449,931
Total non-current assets 22,275,202,474 20,903,066,769 14,919,917,262 14,978,336,037
Total assets 49,154,736,687 46,779,696,343 48,322,190,542 46,802,208,439
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Wang Jue Accounting department chief: Sun Guangbo
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company's Balance Sheet on Dec. 31, 2013 (Cont’d)
(In RMB yuan except for otherwise specified)
Liabilities and shareholder's equity Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012
Notes
Consolidated Consolidated Company Company
Current liabilities
Short-term loan V (20) 14,663,865,004 11,936,687,998 11,944,593,404 9,966,183,748
Trading financial liabilities V (2) 644,404 - 644,404 -
Notes payable V (21) 1,218,223,112 980,906,529 918,223,112 980,906,529
Accounts payable V (22) 3,592,110,836 2,603,418,685 4,914,219,485 4,272,986,149
Advances from customers V (23) 232,328,686 1,035,763,588 269,282,825 1,211,974,729
Account closed construction not
completed V (9) 3,143,218,938 2,389,804,893 4,061,856,201 3,053,896,148
Payroll V (24) 206,241,298 37,550,139 199,934,578 34,284,485
Taxes payable V (25) (6,519,912) (46,966,814) (18,233,465) 22,985,239
Interest payable V (26) 418,390,614 315,058,291 412,168,548 306,693,557
Dividends payable V (27) 33,825,412 33,825,412 33,323,129 33,323,129
Other payables V (28) 403,130,541 292,150,492 956,983,354 526,815,563
Non-current liabilities due within
one year V (29) 4,370,297,863 3,667,922,000 4,370,297,863 3,234,222,500
Total current liabilities 28,275,756,796 23,246,121,213 28,063,293,438 23,644,271,776
Non-current liabilities
Long term loans V (30) 2,113,256,000 873,684,500 1,747,442,000 496,554,500
Bonds payable V (31) 3,797,777,911 7,984,665,674 3,797,777,911 7,984,665,674
Expected liabilities V (32) 186,334,750 193,307,685 175,426,592 188,568,114
Deferred corporate tax liabilities V (18) 24,984,658 20,747,048 - -
Other non-current liabilities V (33) 42,916,667 43,916,667 - -
Total non-current liabilities 6,165,269,986 9,116,321,574 5,720,646,503 8,669,788,288
Total liabilities
34,441,026,782 32,362,442,787 33,783,939,941 32,314,060,064
Owner's equity
Capital stock V (34) 4,390,294,584 4,390,294,584 4,390,294,584 4,390,294,584
Capital reserve V (35) 5,792,065,905 5,632,275,644 6,038,874,023 5,879,083,762
Surplus reserve V (36) 1,520,147,861 1,520,147,861 1,519,639,588 1,519,639,588
Undistributed profit V (37) 2,808,057,854 2,668,221,534 2,589,442,406 2,699,130,441
Foreign currency statements
translation difference 38,627 12,973 - -
Total owner's equity belong to
parent co. 14,510,604,831 14,210,952,596 14,538,250,601 14,488,148,375
Minority interest V (38) 203,105,074 206,300,960 - -
Total owner's equity 14,713,709,905 14,417,253,556 14,538,250,601 14,488,148,375
Total liabilities and owner's equity 49,154,736,687 46,779,696,343 48,322,190,542 46,802,208,439
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Wang Jue Accounting department chief: Sun Guangbo
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company’s P/L Statement 2013
(In RMB yuan except for otherwise specified)
2013 2012 2013 2012
Item Notes
Consolidated Consolidated Company Company
I. Operating income
V (39)、XIII (4) 23,201,555,800 18,255,152,096 21,252,999,320 19,103,893,394
Less: operating cost
V (39)、XIII (4) (21,437,017,127) (17,362,670,351) (19,781,670,974) (18,371,210,552)
business tax and addition V (40) (95,296,484) (32,504,700) (7,065,816) (15,332,480)
selling expenses V (41) (68,647,704) (49,290,059) (60,390,117) (40,468,899)
general and administrative
expenses V (42) (1,352,925,539) (1,126,863,747) (1,059,203,931) (832,392,572)
financial expenses-net
amount V (43) (627,184,455) (680,506,612) (650,420,469) (607,580,493)
asset impairment provision V (44)、V (19) (785,673,951) (394,362,789) (793,738,223) (389,548,762)
Add: Gains from fair value
movement (loss) V (45) 94,515,608 (33,379,693) 87,557,341 (37,464,534)
Investment income V (46)、XIII (5) 898,036,468 141,093,032 581,854,755 141,092,172
Including: loss in investment
in associates and
joint ventures (3,111,958) 21,445,467 (3,111,958) 21,445,467
II. Operating loss
(172,637,384) (1,283,332,823) (430,078,114) (1,049,012,726)
Add: non-operating income V (47) 314,889,951 132,357,962 296,870,540 115,196,301
Less: non-operating expenses V (48) (21,823,472) (20,215,602) (19,078,648) (17,631,878)
Including: loss from disposal
of non-current assets (19,598,889) (4,728,848) (17,292,087) (2,431,905)
III. profit / Total loss 120,429,095 (1,171,190,463) (152,286,222) (951,448,303)
Less: Corporate tax expenses
V (49) 13,647,527 72,132,581 42,598,187 73,611,911
IV. Net profit / loss
134,076,622 (1,099,057,882) (109,688,035) (877,836,392)
Net profit / loss belonging to
shareholders of parent
company V (37) 139,836,320 (1,043,665,841) (109,688,035) (877,836,392)
Minority interest V (38) (5,759,698) (55,392,041) - -
V. gains / (losses)/per share
Fundamental gains /( losses) V (50) 0.03 (0.24) n.a n.a
Diluted gains /(losses) V (50) 0.03 (0.24) n.a n.a
VI. Other composite income V (51) 159,815,915 13,239,831 159,790,261 13,226,858
VII. Total composite income / loss
293,892,537 (1,085,818,051) 50,102,226 (864,609,534)
total income / loss attributable
to parent company's
shareholders 299,652,235 (1,030,426,010) 50,102,226 (864,609,534)
total loss attributable to minority
shareholders (5,759,698) (55,392,041) - -
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Wang Jue Accounting department chief: Sun Guangbo
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Consolidated and Company Cash Flow Statement 2013
(In RMB yuan except for otherwise specified)
2013 2012 2013 2012
Item Notes
Consolidated Consolidated Company Company
I. Cash flow from operating activities
Cash from sales of commodities and
services 19,399,598,391 19,484,381,214 18,478,654,094 18,749,419,246
Taxes and expense return 629,736,552 729,927,160 629,736,552 724,352,407
Cash from other operation related
activities V (52)(a) 243,552,945 91,487,465 231,479,730 67,094,317
Total cash flow-in 20,272,887,888 20,305,795,839 19,339,870,376 19,540,865,970
Cash paid for commodities and
services (17,547,227,019) (15,491,972,477) (16,959,587,038) (15,208,859,643)
Cash paid for/to staff (1,336,945,044) (1,194,374,585) (812,025,989) (708,490,664)
Taxes and expenses paid (217,867,205) (240,044,247) (43,373,625) (63,243,228)
Other cash payment for other
operation-related activities V (52)(b) (231,672,284) (313,800,532) (182,527,728) (256,410,075)
Total cash flow-out (19,333,711,552) (17,240,191,841) (17,997,514,380) (16,237,003,610)
Net cash flow from operating activities V (53)(a)、XIII (6)(a) 939,176,336 3,065,603,998 1,342,355,996 3,303,862,360
II. Cash flow from investment
activities
Cash received from investments 4,763,990,000 6,504,000,000 4,763,990,000 6,504,000,000
Net cash receipt from disposal of fixed
assets, construction in progress and
intangible assets 452,808,255 641,152,359 452,270,384 630,035,822
Net cash flow-in purchasing subsidiary IV(3)(a) 159,394,016 - 100,828,977 -
Cash from collection of investment
income 151,205,644 119,647,565 151,188,587 119,646,705
Other cash receipt related to
investment activities V (52)(c) 137,753,013 96,930,003 108,069,251 95,718,208
Total cash flow-in from investment
activities 5,665,150,928 7,361,729,927 5,576,347,199 7,349,400,735
Cash paid for purchase of fixed
assets, construction in progress and
intangible assets (345,935,942) (219,185,221) (61,937,688) (184,804,201)
Cash paid for investment (8,007,227,235) (7,533,400,000) (8,513,411,213) (7,675,757,657)
Total cash flow-out for investment
activities (8,353,163,177) (7,752,585,221) (8,575,348,901) (7,860,561,858)
Net cash flow from investment
activities (2,688,012,249) (390,855,294) (2,999,001,702) (511,161,123)
III. Cash flow from capital raising
activities
Cash from loans 23,726,574,867 28,620,549,068 21,312,148,267 25,697,865,818
Other cash received from financing
activities V (52)(d) 6,157,492,641 3,465,537,200 6,157,492,641 3,465,537,200
Total cash flow-in from capital raising
activities 29,884,067,508 32,086,086,268 27,469,640,908 29,163,403,018
Cash paid for clearing debts (22,876,376,591) (26,820,433,243) (20,849,157,341) (24,021,029,993)
Cash paid for distributed dividends,
profit or interest (967,541,716) (1,159,196,607) (868,202,063) (1,036,131,810)
Other cash paid related to financing
activities V (52)(e) (3,496,449,525) (6,416,214,488) (3,496,449,525) (6,416,214,488)
Total cash flow-out in capital raising
activities (27,340,367,832) (34,395,844,338) (25,213,808,929) (31,473,376,291)
Net cash flow from capital-raising
activities 2,543,699,676 (2,309,758,070) 2,255,831,979 (2,309,973,273)
IV. Impact on cash flow by exchange
rate change - - - -
V (53)(b)、XIII
V. Net addition of cash (6)(b) 794,863,763 364,990,634 599,186,273 482,727,964
Add: starting balance of cash 2,357,608,044 1,992,617,410 2,137,291,866 1,654,563,902
V (53)(c)、XIII
VI. Closing balance of cash (6)(b) 3,152,471,807 2,357,608,044 2,736,478,139 2,137,291,866
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Wang Jue Accounting department chief: Sun Guangbo
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
2013 Consolidated Shareholder’s Equity Movement Statements
(In RMB yuan except for otherwise specified)
Equity Belonging to Parent Company
Total
foreign currency shareholder’s
Item Notes Capital
Minority interest
Capital Surplus Undistributed translation equity
stock reserve reserve profit difference
Starting balance on Jan. 1, 15,503,127,43
2012 4,390,294,584 5,619,048,786 1,520,147,861 3,711,887,375 - 261,748,827 3
Movement in 2012
(1,043,665,84
Net Loss V (37) - - - 1) - (55,392,041) (1,099,057,882)
Other comprehensive
income
- Net change of fair value
of financial assets
available for sale V (35) - 13,226,858 - - - - 13,226,858
- Difference of foreign
currency statement
translation - - - - 12,973 - 12,973
- Distribution to
shareholders
- Distribution to
shareholders V (38) - - - - - (55,826) (55,826)
Closing balance on Dec. 31, 14,417,253,55
2012 4,390,294,584 5,632,275,644 1,520,147,861 2,668,221,534 12,973 206,300,960 6
Starting balance on Jan.1, 14,417,253,55
2013 4,390,294,584 5,632,275,644 1,520,147,861 2,668,221,534 12,973 206,300,960 6
Movement in 2013
Net Profit V (37) - - - 139,836,320 - (5,759,698) 134,076,622
Other comprehensive
income
- Net change of fair value of
financial assets
available for sale V (35) - 159,790,261 - - - - 159,790,261
- Difference of foreign
currency statement
translation - - - - 25,654 - 25,654
Added capital from
shareholders V (38) - - - - - 2,563,812 2,563,812
Closing balance on Dec. 31, 14,713,709,90
2013 4,390,294,584 5,792,065,905 1,520,147,861 2,808,057,854 38,627 203,105,074 5
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Accounting responsible person: Wang Jue Accounting department chief: Sun Guangbo
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
2013 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 Jan. 1, 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
Starting balance on Jan. 1, 2013 4,390,294,584 5,879,083,762 1,519,639,588 2,699,130,441 14,488,148,375
Movement amount in 2013
Net Loss - - - (109,688,035) (109,688,035)
Other comprehensive income
- Net change of fair value of financial
assets available for sale - 159,790,261 - - 159,790,261
Closing balance on Dec. 31, 2013 4,390,294,584 6,038,874,023 1,519,639,588 2,589,442,406 14,538,250,601
Attached notes is part of the financial statements.
Enterprise legal representative: Song Hailiang Acounting responsible person: Wang Jue Accounting department chief: Sun Guangbo
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(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(34)).
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.
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.
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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. 24, 2014 through approval by the Company’s
board of directors.
II. Major accounting policies and accounting estimates
(1) Basis of preparation for financial statements
(a) Standards and rules for financial statements establishment
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).
(b) Going concern basis
As of December 31, 2013, the Group's current liabilities exceed current assets by about
1,400,000,000 yuan. In the preparation of the financial statements for the year, given the
amount of bank credit, financing record the Group has achieved to obtain, good
cooperation relationship with banks and financial institutions and the operating
performance, the board of directors of the Company consider that the Group is able to
continue to acquire sufficient operating cash flow and sources of financing, to ensure
funds required for repayment of debt maturity and capital expenditure. Therefore, the
board of directors of the Company ensures that the Group will continue to operate, and
thus to base the preparation of the financial statements for the year on sustainable
operation. The annual financial statements do not include any adjustment of the Group
and the Company which fails to meet the conditions included in continuous operation.
(2) Declaration on abiding by the Enterprise Accounting Standards
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SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
The Company follows the requirements of enterprise accounting standards in preparing
2013 financial statements, which authentically and completely reflect the consolidated and
the Company’s financial status on Dec. 31 of 2013 and the consolidated and the
Company’s operating result and cash flow during 2013.
(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.
(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.
- 11 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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
- 12 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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.
- 13 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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.
Objective evidence that a financial asset is impaired, refers to matters that after initial
recognition of the financial asset the actual financial assets incurred, the estimated future
cash flows affected, and the Group can reliably measure the effect.
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. The Group values the initial investment cost of tradable equity tools on
weighted average basis.
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.
- 14 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(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.
(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,
- 15 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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%
- 16 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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.
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
- 17 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
Stock includes raw materials purchased spare parts and semi-products, reported in the
lower between cost and cashable net value.
(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 the
- 18 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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.
A joint undertaking is accounted on equity basis; while other long term equity investment is
accounted on cost basis.
- 19 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(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
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
- 20 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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 va annual depreciation (amort
life lue rate ization) rate
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
- 21 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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.
(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.
- 22 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
Fixed assets expected years for use, net residual value ratio and annual depreciation ratio
are listed as below:
Expected years for Expected net residual Annual depreciation ratio
use value ratio
House and building - costs 30 years 0% 3.3%
Manufacturing equipment 10 years 0% 10%
Office equipment 5 years 0% 20%
Transportation means (other 5 years 0% 20%
than vessels)
Vessels 5-14 years Based on Calculated in average
international market years after purchase
price of wasted value less net residual
vessel steel value
Other equipment 3-5 years 0%/ settled by price 20%/determined by
of wasted steel expected net residual
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
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
- 23 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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.
- 24 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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.
- 25 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(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.
When the Group proposes rescission of the labor relationship with the employee before
the labor contract expires, or proposes compensation proposal to encourage employees to
voluntarily accept labor cuts, while the Group has formulated a formal plan on the
cancellation of labor relationship or voluntary layoff proposal and will be implemented, and
the Group is unable to unilaterally withdraw the plan on the cancellation of labor
relationship or the layoff proposal, confirmation is made as of liabilities arising
compensation estimated from the cancellation of the labor relationship with the employee,
which is included in the current cost.
Except for compensation from concellation of labor relations with 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
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
- 26 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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.
- 27 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(f) Activities under the construction and transfer of contracts usually includes construction
and transfer. As for constructing Item the Group responsible for, in the construction phase,
in accordance with the construction contract standards, when the results can be estimated
reliably, the construction contract revenue should be valued by the fair value of
consideration chargable, at the same time to confirm the "Long term receivables", to be
written off when payment received from the owners.
(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
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.
- 28 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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
- 29 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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. At the same time, the Group also takes into consideration the taxe
rates of deferred tax assets and deferred income tax liabilities at reversal. Based on
historical experience that the company for many years was hornored high-tech enterprise
and continuous investment in R&D items, the Company reasonably estimates in 2014 and
beyond the Company obtains access to high-tech enterprise qualification, so calculation and
confirmation of deferred tax assets and deferred income tax debt is done according to the
preferential tax rate.
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
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,
- 30 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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.
- 31 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
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
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 (2012: 15%).
- 32 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
Corporate income tax rates enjoyed by the Company and its controlled subsidiaries:
Registered in Applicable tax Applicable tax
rate in 2013 rate in 2012
Shanghai Pudong New
The Company Area 15% 15%
Shanghai Zhenhua Port Machinery Heavy Industry Shanghai Chongming
Co., Ltd. County 25% 25%
Shanghai Zhenhua Heavy Industries Machinery Co., Shanghai Chongming
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% 25%
Nantong Zhenhua Heavy Equipment Manufacturing
Co., Ltd. Jiangsu Nantong 25% 25%
Nantong ZPMC Steel Structure Processing Co., Ltd. Jiangsu Nantong 25% 25%
Jiangyin ZPMC Steel Structure Manufacturing Co.,
Ltd. Jiangsu Jiangyin 25% 25%
Shanghai Zhenhua Heavy Industries Steel Structure Shanghai Pudong New
Co., Ltd. Area 25% 25%
China Communications Shanghai Port Machinery Shanghai Pudong New
Manufacturing Plant Co., Ltd. Area 25% 25%
Shanghai Pudong New
Shanghai Port Machinery Heavy Industry Co., Ltd. Area 25% 25%
Shanghai Zhenhua Heavy Industries (Group) Port Area, Jingang Town,
Zhangjiagang Co., Ltd. Jiangsu 25% 25%
Shanghai Zhenhua Heavy Industries Group
(Nantong) Transmission Machinery Co., Ltd. Jiangsu Nantong 25% 25%
Shanghai Zhenhua Heavy Industries Group Jiangsu Nantong
(Nantong) Co., Ltd. 25% 25%
Shanghai Pudong New
Shanghai Zhenhua Heavy Industries Electric Co., Ltd. Area 25% 25%
Shanghai Zhenhua Heavy Industries Vessel Shanghai Yangshan
Transport Co., Ltd. Bonded Port Area 25% 25%
Shanghai Zhenhua Testing Technology Consulting Shanghai Pudong New
Co., Ltd. Area 25% 25%
ZPMC Netherlands B.V. (note 2) Rotterdam, the Netherlands Note 2 Note 2
ZPMC GmbH Hamburg (note 3) Hamburg, Germany 15.83% 15.83%
ZPMC LANKA COMPANY (PRIVATE) LIMITED
(note 4) Colombo, Sri Lanka 15% n.a
Nanjing Ninggao New Channel Construction Co., Ltd. Jiangsu Nanjing 25% 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% (2012：16.5%).
Note 2: 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 company did
not conduct actual business in the year, and therefore not taxable amount exists.
Note 3: 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%.
Note 4: ZPMC LANKA COMPANY (PRIVATE) LIMITED is a limited liability company
registered in Sri Lanka; according to the related income tax provisions of Sri Lanka,
the applicable income tax rate is 15%.
- 33 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(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 Engaged in processing and sales of Limited Liability Cao 73404797-5
Heavy Industry Co., Ltd. subsidiary Chongming making a large container crane and Company Weizhong
County reduction gear; ship manufacturing,
processing, sales
Shanghai Zhenhua Heavy directly controlled Shanghai Machinery 5,000,000 Engaged in precision metal cutting Limited Liability Cao 72939252-0
Industries Machinery Co., subsidiary Chongming making and cold processing Company Weizhong
Ltd. County
Shanghai Zhenhua Port directly controlled Hong Kong Trade and HK$ 50,000,000 Design, construction, sales of all Limited Liability n.a n.a
Machinery (Hong Kong) Co., subsidiary sales types of port equipment engineering Company (note 1) (note 1)
Ltd. ship steel structure and other parts
Shanghai Zhenhua Shipping Co. directly controlled shipping 120,000,000 Ocean international shipping Limited Liability Cao Wenfa 63060851-2
Ltd. subsidiary transportation business, domestic coastal and the Company
Yangtze River medium and
Shanghai downstream ordinary cargo
Pudong New transport, shipping port machinery
Area equipment
- 34 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Type of Subsidiary Registered in Type of Registered capital Business Scope Enterprise Type Legal person Organizational
business Code
Nantong Zhenhua Heavy directly controlled Nantong Machinery 854,936,900 Cargo storage and handling; Limited Liability Cao 791959022
Equipment Manufacturing Co., subsidiary making container; installation of large port Company Weizhong
Ltd. equipment, engineering ships and
large pieces of metal structures and
components, fittings; gear box,
container yard bridge, severe bridge
steel, offshore wind power equipment
manufacturing; offshore oil platform
of manufacturing, installation; marine
heavy machinery equipment
manufacture, installation of crane
rental business; professional;
contracting of steel structure
engineering
Shanghai Zhenhua Heavy directly controlled Nantong Machinery 300,000,000 Construction and installation of large Limited Liability Zhang 579480946
Industries Group (Nantong) subsidiary making port equipment, engineering ships, Company Jianyong
Transmission Machinery Co., offshore heavy equipment,
Ltd. mechanical equipment, wind power
generation equipment with gearbox;
relates to and weaving large slewing
bearing, transmission mechanism,
dynamic positioning, large anchor
winch, uplift of offshore oil platform
device and components, fittings
- 35 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Type of Subsidiary Registered in Type of business Registered Business Scope Enterprise Type Legal person Organizational
capital Code
Shanghai Zhenhua Heavy directly controlled Nantong Machinery making 300,000,000 Designing, construction and limited liability Cao 578199167
Industries Group subsidiary installation of large-scale port company Weizhong
(Nantong) Transmission equipment, engineering Vessels, sea
Machinery Co., Ltd. heavy 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 Heavy directly controlled Shanghai Electric 50,000,000 Industrial automation equipment, limited liability Fei Guo 575871173
Industries Electric Co., Ltd. subsidiary Pudong New equipment R&D electrical equipment R & D, design, company
Area 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.
- 36 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements (Cont’d)
(1) Subsidiaries (Cont’d)
(a) Subsidiaries obtained through establishing or investment (Cont’d)
Type of Registered in Type of Registered capital Business Scope Enterprise Type Legal person Organizational
Subsidiary business Code
Nantong Zhenhua Heavy Equipment Directly + Nantong Machinery 100,000 USD Installation of large port facilities, limited liability Chang 79195616-3
Manufacturing indirectly making engineering vessel and large metal company Jianhua
Co., Ltd. controlled structure and parts; leasing of
subsidiary cranes; contracting of steel structure
project
Jiangyin ZPMC Steel Directly + Jiangyin Machinery 100,000 USD The production of port machinery limited liability Liu Jianbo 79863516-X
Structure Manufacturing indirectly making spare parts; steel structure company
Co., Ltd. controlled production engineering, mechanical
subsidiary equipment, electrical equipment
installation; and provide technical and
after-sales service
Shanghai Zhenhua Heavy Industries Indirectly Shanghai Machinery 150,000 USD Production and sales of steel limited liability Cao 66938205-5
Steel Structure controlled Pudong New making structure, port machinery parts; to company Weizhong
Co., Ltd. subsidiary Aera undertake the mechanical equipment,
electrical equipment installation;
provide related technical and after-
sales service
ZPMC GmbH Hamburg directly Hamburg, Trade and 25,000 Euro Sales, transport, maintenance limited liability Li Chenhao n.a
controlled Germany sales of port equipment, ship steel company (note 1)
subsidiary
structure parts and other parts
ZPMC Netherlands B.V. directly Rotterdam, the Trade and 18,000 Euro Port equipment technical service, limited liability Li Chenhao n.a
controlled Netherlands sales sales, spare parts, offshore company (note 1)
subsidiary installation and steel structure
- 37 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements (continued)
(1) Subsidiaries (continued)
(a) Subsidiaries obtained through establishing or investment (continued)
Type of Registered in Type of Registered capital Business Scope Enterprise Type Legal person Organizational
Subsidiary business Code
Shanghai Zhenhua Heavy Industries directly Shanghai Vessel 100,000,000 International land, air, maritime one-person Cao 599716952
Vessel Transport Co., Ltd. controlled Yangshan transport freight forwarding business, limited liability Weizhong
subsidiary Bonded Port domestic freight forwarding, company
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 Testing directly Shanghai technology 7,000,000 technical development, technical one-person Huang 59972206-8
Technology Consulting Co., Ltd. controlled Pudong New consulting consultancy, technical services, limited liability Qingfeng
subsidiary Area transfer of technology in the field of company
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
- 38 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements (continued)
(1) Subsidiaries (continued)
(a) Subsidiaries obtained through establishing or investment (continued)
Type of Registered in Type of Registered capital Business Scope Enterprise Type Legal person Organizational
Subsidiary business Code
ZPMC LANKA COMPANY directly Sri Lanka Trade and 184,594,480 Rupee Technical services, port limited liability Chen Jiaqing n.a
(PRIVATE) LIMITED controlled sales equipment sales, provide spare company (note 1)
subsidiary parts, offshore installation and
after sale service
Nanjing Ninggao New Channel directly Nanjing Trade and 100,000,000 Construction, investment, limited liability Song Hailiang 07071327-6
Construction Co., Ltd. controlled sales management of Ninggao New company
subsidiary Channel project; construction,
investment, operation of rail
transportation project
Note 1: The companies concerned are subsidiaries registered overseas or in Hong Kong, so there is no Legal person or Organizational Code with the
companies concerned.
- 39 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements (continued)
(1) Subsidiaries (continued)
(a) Subsidiaries obtained through establishing or investment (continued)
Paid at end of year Balance of net investment Share Voting Consolid Minority interest Amount of minority interest
to subsidiary in nature Proportion Proportion (% ated or to offset minority gains and
(%) not losses
Shanghai Zhenhua Port Machinery Heavy Yes
Industry Co., Ltd. 4,950,000 - 90% 90% 1,026,725 -
Shanghai Zhenhua Heavy Industries Machinery Yes
Co., Ltd. 5,014,200 - 100% 100% - -
Shanghai Zhenhua Port Machinery (Hong Yes
Kong) Co., Ltd. - - 99.99% 99.99% - -
Shanghai Zhenhua Shipping Co. Ltd. 66,000,000 - 55% 55% Yes 99,630,871 (5,943,499)
Nantong Zhenhua Heavy Equipment Yes
Manufacturing Co., Ltd. 854,936,900 - 100% 100% - -
Shanghai Zhenhua Heavy Industries Group Yes
(Nantong) Transmission Machinery Co., Ltd. 300,000,000 - 100% 100% - -
Shanghai Zhenhua Heavy Industries Group Yes
(Nantong) Co., Ltd. 300,000,000 - 100% 100% - -
Shanghai Zhenhua Heavy Industries Electric Co., Yes
Ltd. 50,000,000 - 100% 100% - -
Nantong ZPMC Steel Structure Processing Co., USD 100,000 Yes
Ltd. - 100% 100% - -
Jiangyin ZPMC Steel Structure Manufacturing USD 100,000 Yes
Co., Ltd. - 100% 100% - -
Shanghai Zhenhua Heavy Industries Steel USD 73,500 Yes
Structure Co., Ltd.(i) - 49% 49% 743,509 -
ZPMC GmbH Hamburg EURO 25,000 - 100% 100% Yes - -
ZPMC Netherlands B.V. EURO 18,000 - 100% 100% Yes - -
Shanghai Zhenhua Heavy Industries Vessel 100,000,000 Yes
Transport Co., Ltd. - 100% 100% - -
Shanghai Zhenhua Testing Technology 7,000,000 Yes
Consulting Co., Ltd. - 100% 100% - -
ZPMC LANKA COMPANY(PRIVATE) Yes
LIMITED(NotesIV(2)) USD 1,001,000 - 70% 70% 2,799,099 -
Nanjing Ninggao New Channel Construction Co., - Yes
Ltd.(NotesIV(2)) 500,000,000 100% 100% - -
- 104,200,204 (5,943,499)
(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.
- 40 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements (continued)
(1) Subsidiaries (continued)
(b) Subsidiaries acquired from consolidation of enterprises under the same controller
Type of Subsidiary Registered in Type of Registered capital Business Scope Enterprise Type Legal Organizational
business person Code
China Communications directly controlled Shanghai Machinery 2,184,730,000 Sales of port machinery including limited liability Cao 13220596-4
Shanghai Port Machinery subsidiary Pudong New making cranes, bulk and container machinery, company Weizhong
Manufacturing Plant Co., Ltd. Area port engineering vessel (incl. barge
crane vessels), cargo carrying
machinery and parts; sales of key parts
of various machinery equipment, raw
materials and auxiliary materials,
instrumentation, technical service,
installation and maintenance, technical
consulting
Shanghai Port Machinery Heavy indirectly controlled Shanghai Machinery 18,120,000USD The production of Port Crane and limited liability Cao 75613245-X
Industry Co., Ltd. subsidiary Pudong New making accessories, material handling company Weizhong
Area machinery and accessories, tunnel
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
- 41 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements (continued)
(1) Subsidiaries (continued)
(b) Subsidiaries acquired from consolidation of enterprises under the same controller (continued)
Type of Subsidiary Registered in Type of Registered capital Business Scope Enterprise Type Legal Organizational
business person Code
Shanghai Zhenhua Heavy directly controlled Jinxiang Machinery 15,000,000 Port Crane handling, bulk imited liability Xing 25150291-0
Industries (Group) Zhangjiagang subsidiary Town making containers and machinery company Xiaojian
Port Machinery Co., Ltd. Zhangjiagang
products manufacturing,
processing and maintenance
and renovation business
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 Port Machinery Heavy
Industry Co., Ltd. USD 13,412,424 - 74% 74% Yes 99,545,199 (1,926,127)
Shanghai Zhenhua Heavy Industries
(Group) Zhangjiagang Assembly Co.,
Ltd. 13,500,000 - 90% 90% Yes (640,329) -
98,904,870 (1,926,127)
- 42 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IV Consolidation and Consolidated Statements (continued)
(2) Entities newly consolidated and entities no longer consolidated in report year
(a) Companies newly consolidated from report year on
Dec. 31, 2013 2013
net assets net profit
ZPMC LANKA COMPANY (PRIVATE)
LIMITED 9,330,336 784,295
Nanjing Ninggao New Channel
Construction Co., Ltd. 506,801,114 6,801,114
516,131,450 7,585,409
Newly incorporated companies, consolidated in report year into the Group's statements
(b) Entities no longer consolidated
net assets on net profit from year start
disposal day till disposal day
Shanghai Jiangtian Industrial Co., Ltd. 90,298,690 230,472
Shanghai Jiangtian Industrial Co., Ltd. is a subsidiary no longer consolidated becasue of
loss of control in equity as a resulf of equity sale. (NotesIV(3))
(3) Companies deduced due to loss of equity control caused by equity sale
Equity sale day Profit and loss basis
Shanghai Jiangtian Industrial Nov. 17, 2013 For calculation, see Notes
Co., Ltd. IV(3)(c)
As of Nov. 17, 2013, the Group had transferred the 100% equity of wholely-owned
subsidiary Shanghai Jiangtian Industrial Co., Ltd. (hereafter "the disposed company") to
its parent company CCCC. Equity sale day refers to the completion day of related equity
trade.
- 43 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(a) Disposal price and cash flow listed as follows:
Amount
Disposal price 840,241,472
Cash or cash equivalent received from disposal 168,048,294
Less: cash or cash equivalent the disposed company held (8,654,278)
Net cash amount received from disposal 159,394,016
(b) Net assets of the disposed company listed as follows:
Disposal day Dec. 31, 2012
Current assets 26,266,386 21,040,389
Non-current assets 83,979,707 88,999,376
Current liabilities (19,947,403) (19,971,547)
Net assets 90,298,690 90,068,218
(c) Disposal gains/losses calculated as follows:
Amount
Disposal price 840,241,472
Less: net assets of the disposed company on disposal day (90,298,690)
Investment gains from disposal 749,942,782
(d) Revenue, expenses and profit of the disposed company from Jan. 1, 213 to disposalday
of Nov. 17, 2013:
Amount
Revenue 18,992,946
Less: costs and expenses (18,762,474)
Total profit 230,472
Less: income tax -
Net profit 230,472
- 44 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements
(1) Monetary capital
Dec. 31, 2013 Dec. 31, 2012
Foreign
currency Exchange Foreign currency Exchang
amount rate RMB amount amount e rate RMB amount
Cash on
hand–
RMB - - 371,575 - - 371,354
USD 9,391 6.0969 57,256 10,178 6.2855 63,974
EUR 5,507 8.4189 46,363 8,913 8.3176 74,135
CAD 2,814 5.7259 16,113 2,814 6.3184 17,780
NZD 625 4.9526 3,095 580 5.1298 2,975
HKD 785 0.7862 617 183 0.8109 148
495,019 530,366
Bank deposits
–
RMB - - 1,638,281,200 - - 1,344,242,943
USD 150,243,299 6.0969 916,018,370 134,979,417 6.2855 848,413,126
EUR 38,175,701 8.4189 321,397,409 13,690,863 8.3176 113,875,122
GBP 11,636,698 10.0556 117,013,980 35,916 10.1611 364,946
Rs 176,738,593 0.0460 8,129,975 - - -
HKD 712,984 0.7862 560,548 1,072,605 0.8109 869,775
MAD 287,919 1.8909 544,426 - - -
Singapore
dollar 45,459 4.7857 217,553 37,314 5.0929 190,036
CAD 12,443 5.7259 71,247 1,009 6.3184 6,375
Omani Rial 3,430 16.3824 56,192 3,477 16.1687 56,219
AUD 8,351 5.4301 45,347 6,495 6.5363 42,453
KRW 2,575,955 0.0057 14,683 2,090,270,880 0.00585 12,228,085
3,002,350,930 2,320,289,080
other currencies
capital –
RMB - - 351,175,874 - - 2,074,593,147
USD 22,724,055 6.0969 138,546,291 156,596,963 6.2855 984,290,211
AUD 2,076,089 5.4301 11,273,371 - - -
CAD 1,816,994 5.7259 10,403,926 3 6.3184 19
EUR 159,992 8.4189 1,346,957 128,204 8.3176 1,066,350
SGD 10,781 4.7857 51,595 - - -
GBP - - - 5 10.1611 51
512,798,014 3,059,949,778
3,515,643,963 5,380,769,224
(a) On Dec. 31, 2013, other monetary capital includes:
(i) Restricted deposits amount to 363,172,156 yuan (Dec. 31, 2012: 3,023,161,180 yuan), among
which, 283,225,875 yuan (Dec. 31, 2012: 2,000,000,000 yuan) is bank time deposit of one year;
report year end, no bank time deposit pledged to banks (Dec. 31, 2012: 938,404,869 yuan);
79,946,281 yuan (Dec. 31, 2012: 84,756,311 yuan) is the margin deposit for the Group to apply
for bank L/C and guarantee letter; and
(ii) foreign exchange clearance capital of 149,625,858 yuan deposited in the bank (December 31,
2012: 36,788,598 yuan).
(b)
- 45 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(1) Monetary capital (continued)
(b) Cash and cash equivalents recorded in cash flow statements:
Dec. 31, 2013
Monetary capital 3,515,643,963
Less: restricted deposits (i) (363,172,156)
Dec. 31, 2013 cash balance 3,152,471,807
Less: Dec. 31, 2012 cash balance (2,357,608,044)
Net cash addition 794,863,763
(2) Trading financial assets and liabilities
Dec. 31, 2013 Dec. 31, 2012
Assets liabilities Assets liabilities
Forward foreign exchange contracts - Fair
valuation gains / (losses) 121,169,489 (644,404) 26,009,477 -
On Dec. 31, 2013, 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 625,000,000USD; agreed exchange
rate is 6.1295 to 6.3756; contract is due between Feb. 21, 2014 and Apr. 22, 2015 The
Group's entitled to early delivery and purchase reverse contracts settled on a net.
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.
- 46 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(3) Notes receivable
Dec. 31, 2013 Dec. 31, 2012
Bank acceptance bills 334,519,241 115,069,863
As of Dec. 31, 2013，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, 2013 amounts to
326,116,891 yuan(Dec. 31, 2012：842,415,554 yuan).
Top 14s of Notes receivable the Group has endorsed to any other party but not yet due on Dec. 31, 2013:
Draft date Maturity Date Amount
Drawer1 2013-10-29 2014-4-25 11,000,000
Drawer 2 2013-9-26 2014-3-26 9,000,000
Drawer 3 2013-10-29 2014-4-25 9,000,000
Drawer 4-14(i) 55,000,000
84,000,000
(i) On December 31, 2013, tied top four notes receivable the Group has endorsed to
other party but has not yet expired amount to 5000000 yuan each, a total of
55,000,000 yuan, the issue date varying from July 5, 2013 to December 4, 2013,
expiration dates varying from February 26, 2014 to June 4, 2014.
(4) Interest receivable
Dec. 31. Increase repor Decrease
2012 t year report year Dec. 31. 2013
time deposit
Interest
receivable 33,231,552 53,196,981 (81,339,545) 5,088,988
- 47 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable
Dec. 31, 2013 Dec. 31, 2012
Accounts receivable 4,278,018,396 4,149,044,610
Less: bad debt provision (729,115,293) (438,323,499)
3,548,903,103 3,710,721,111
(a) Aging:
Dec. 31, 2013 Dec. 31, 2012
within one year 3,324,499,186 3,114,499,639
one to two years 371,402,862 613,198,850
two to three years 211,670,817 196,713,343
above three years 370,445,531 224,632,778
4,278,018,396 4,149,044,610
(b) Accounts receivable listed in type as follows:
Dec. 31, 2013 Dec. 31, 2012
book value balance bad debt provision book value balance bad debt provision
proporti proporti
proportion Proportion
amount on in amount amount on in amount
in total of accrual
total total
Big single amount,
provided for bad
debt separately 158,184,500 4% (158,184,500) 100% - - - -
Total bad debt
provision
accrued in
groups
Credit risk
portfolio
- related party 628,967,824 15% - - 745,701,760 18% - -
- third party 3,453,990,019 80% (536,437,311) 16% 3,355,082,485 81% (401,927,631) 12%
Single amount,
though not
significant,
separate
provision for
bad debt made 36,876,053 1% (34,493,482) 94% 48,260,365 1% (36,395,868) 75%
4,278,018,396 100% (729,115,293) 17% 4,149,044,610 100% (438,323,499) 11%
- 48 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable (continued)
(c) As of Dec. 31, 2013，Accounts receivable that big single amount, provided for bad debt separately is
as follows:
Provision for bad
Book balance debts Provision proportion Reason
Accounts receivable 1 107,819,500 (107,819,500) 100% (i)
Accounts receivable 2 50,365,000 (50,365,000) 100% (ii)
158,184,500 (158,184,500) 100%
(i) As of Dec. 31, 2013，Due to a serious funds shortage of the other party, the Company
believes that the receivables are difficult to collect, therefore full amount prepared for bad
debts.
(ii) As of Dec. 31, 2013，Due to a serious funds shortage of the other party, the Company
believes that the receivables are difficult to collect, therefore full amount prepared for bad
debts.
(d) Among account receivable from total bad debt provision made in groups, portfolio
analysis by ages:
Dec. 31, 2013 Dec. 31, 2012
book value balance bad debt provision book value balance bad debt provision
Propo Propo
rtion rtion
propor propo
amount amount of amount amount of
tion rtion
accru accru
al al
within one
year 2,575,305,943 75% (15,316,076) 1% 2,652,997,300 79% (32,752,614) 1%
one to two
years 353,013,426 10% (102,148,743) 29% 339,389,384 10% (91,777,886) 27%
two to
three years 190,309,119 5% (83,610,961) 44% 152,595,343 5% (67,296,673) 44%
above
three years 335,361,531 10% (335,361,531) 100% 210,100,458 6% (210,100,458) 100%
3,453,990,019 100% (536,437,311) 16% 3,355,082,485 100% (401,927,631) 12%
- 49 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable (continued)
(e) As of Dec. 31, 2013, major accounts receivable whose single amount not significant but
bad debts provided for:
Provision
Book value balance Bad debt provision Reason
proportion
Accounts
19,754,355 (19,754,355) 100% (i)
receivable1
Accounts
17,121,698 (14,739,127) 86% (ii)
receivable2
36,876,053 (34,493,482) 94%
(i) As of Dec. 31, 2013, 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, 2013, due to delayed delivery, the Company made bad debt provision of
14,739,127 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 debts Return or collection amount Amount of return
return or basis of accumulative bad debt or collection
collection provision amount
Accounts Vigorous Not expected to 12,658,756 12,658,756
receivable1 recovery recover
Accounts Vigorous Not expected to
receivable2 recovery recover 5,145,000 5,145,000
Accounts Vigorous Not expected to
receivable3 recovery recover 4,037,432 4,037,432
Accounts Vigorous Not expected to
receivable4 recovery recover 2,867,000 2,867,000
Accounts Vigorous Not expected to
receivable5 recovery recover 2,785,384 2,785,384
Accounts Vigorous Not expected to
receivable6 recovery recover 1,900,315 1,900,315
Accounts Vigorous Not expected to
receivable7 recovery recover 1,717,998 1,717,998
Accounts Vigorous Not expected to
receivable8 recovery recover 1,358,000 1,358,000
Accounts Vigorous Not expected to
receivable9 recovery recover 1,160,000 1,160,000
Accounts Vigorous Not expected to
receivable10 recovery recover 1,000,000 1,000,000
34,629,885 34,629,885
(g) Accounts receivable from shareholding units holding 5% (inclusive) stake of the
Company as follows:
Dec. 31, 2013 Dec. 31, 2012
bad debt
amount provision amount bad debt provision
CCCC 42,121,680 - 48,408,090 -
- 50 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable (continued)
(h) Account receivable from related parties:
Dec. 31, 2013 Dec. 31, 2012
Proportion Relation
bad debt Proportion in bad debt
Relation with the Group amount in total amount with the amount
provision total (%) provision
(%) Group
CCCC First Harbor 172,550,780 4.03% - 113,640,319 2.74% -
Engineering Co., Controlled by the same
Ltd. parent company
Friede & Controlled by the same 90,118,279 2.11% - 179,199,606 4.32% -
Goldman,Llc parent company
CCCC First Harbor 69,000,000 1.61% - 129,000,000 3.11% -
Engineering First
Engineering Co., Controlled by the same
Ltd. parent company
CCCC Third 64,649,984 1.51% - 8,490,297 0.20% -
Harbor
Engineering Co., Controlled by the same
Ltd. parent company
China Harbour 55,542,759 1.30% - 152,838,218 3.68% -
Engineering Co., Controlled by the same
Ltd. parent company
CCCC Parent company 42,121,680 0.98% - 48,408,090 1.17% -
Jiangsu Longyuan Joint Venture 41,242,615 0.96% - 42,517,974 1.02% -
Zhenhua Marine
Engineering Co.,
Ltd.
CCCC Third 29,000,000 0.68% - - - -
Harbor
Engineering
Survey and
Design Institute Controlled by the same
Co., Ltd. parent company
CCCC First 16,160,000 0.38% - 24,000,000 0.58% -
Highway
Engineering
Sixth
Engineering Co., Controlled by the same
Ltd. parent company
14,861,010 0.35% - 12,530,000 0.30% -
CCCC Second
Harbor
Engineering Co.,
Ltd. Controlled by the same
parent company
8,760,000 0.20% - 18,800,000 0.45% -
CCCC Third
Harbor
Engineering Co.,
Ltd. Controlled by the same
parent company
CCCC First Harbor 7,949,765 0.19% - - - -
Engineering
Second
Engineering Co., Controlled by the same
Ltd. parent company
CCCC Fourth 6,376,091 0.15% - 2,120,000 0.05% -
Harbor
Engineering Co., Controlled by the same
Ltd. parent company
CCCC Second 5,000,000 0.12% 5,000,000 0.12%
Harbor
Engineering
Second
Engineering Co., Controlled by the same
Ltd. parent company
CCCC Water 3,890,000 0.09% - - - -
Transportation
Planning and
Design Institute Controlled by the same
Co., Ltd. parent company
- 51 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
CCCC Ships and Associates 1,100,000 0.03% - - - -
Ocean
Engineering
technology
research center
Co., Ltd.
CCCC Second 550,000 0.01% - 1,209,000 0.03% -
Highway
Engineering Controlled by the same
Bureau Co., Ltd. parent company
CCCC First Harbor 52,861 0.00% - - - -
Engineering Fifth
Engineering Co., Controlled by the same
Ltd. parent company
Yueyang 42,000 0.00% - 42,000 0.00% -
Chenglingji
Xingang Co., Controlled by the same
Ltd. parent company
CCCC Tianhe - - - 6,178,742 0.15% -
Machinery
Equipment
Manufacturing Controlled by the same
Co., Ltd. parent company
CCCC Tianjin - - - 1,051,764 0.03% -
Dredging Co., Controlled by the same
Ltd. parent company
CCCC Highway - - - 422,750 0.01% -
Consultants Co., Controlled by the same
Ltd. parent company
CCCC Shanghai - - - 144,000 0.00% -
Equipment
Engineering Co., Controlled by the same
Ltd. parent company
CCCC First Harbor - - - 109,000 0.00% -
Engineering
Survey and
Design Institute Controlled by the same
Co., Ltd. parent company
628,967,824 14.70% - 745,701,760 17.96% -
- 52 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(5) Accounts receivable (continued)
(i) As of Dec. 31, 2013, top 5 accounts receivable balance as follows:
Proportion in
Relation with the total accounts
Group amount Age receivable
related 172,550,780 within one 4%
year to two
COMPANY A years
COMPANY B third party 131,449,164 within one 3%
year
COMPANY C third party 130,762,776 within one 3%
year
COMPANY D third party 128,195,050 within one 3%
year
COMPANY E third party 118,304,248 within one 3%
year
681,262,018 16%
(j) Accounts receivable include the following foreign currency balance:
Dec. 31, 2013 Dec. 31, 2012
Foreign Foreign
currency Exchange translated in currency Exchange translated in
amount rate RMB amount rate RMB
USD 338,691,316 6.0969 2,064,967,085 382,845,104 6.2855 2,406,372,901
EUR 46,041,894 8.4189 387,622,101 45,027,884 8.3176 374,523,928
SAR 17,704,806 1.8200 32,222,747 10,896,267 1.6613 18,101,968
CAD 3,450,000 5.7259 19,754,355 3,450,000 6.3184 21,798,480
GBP 1,257,969 10.0556 12,649,633 2,132,597 10.1611 21,669,531
AUD 1,759,022 5.4301 9,551,665 577,502 6.5363 3,774,726
SGD 1,065,393 4.7857 5,098,651 27,174,649 5.0929 138,397,770
HKD 206,025 0.7862 161,977 448,983 0.8109 364,080
2,532,028,214 2,985,003,384
- 53 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(6) Other receivables
Dec. 31, 2013 Dec. 31, 2012
Receivable from the parent company’s
stock transfer (a) 672,193,178 -
Employees mutual aid funds receivable 102,751,964 121,259,154
Products or field service temporary
loans 82,257,117 63,144,436
Unsettled payment tax receivable 74,624,008 82,694,087
Lease receivables 31,700,229 -
Bid bond payments 20,684,428 8,404,428
Disposal of assets from related parties
receivable(NotesV (47)(a)) 10,000,000 -
Customs guaranty deposit 9,879,707 74,106,771
Deposit receivable 6,970,500 6,603,911
Payments deposit for third party
receivable 5,436,323 539,624
Export tax rebate 4,604,376 1,516,922
Government subsidy payments - 300,000
Others 82,892,043 64,901,698
1,103,993,873 423,471,031
Less: bad debt provision (19,652,342) (10,165,728)
1,084,341,531 413,305,303
(a) The balance of the accounts receivable refers to the balance of un-recovered transfer of
equity of subsidiary to Parent Company. (NotesIV(3))
(b) Other receivables debt age analysis:
Dec. 31, 2013 Dec. 31, 2012
within one year 930,838,493 244,631,610
one to two years 48,368,864 49,675,161
two to three years 6,602,165 4,504,972
above three years 118,184,351 124,659,288
1,103,993,873 423,471,031
- 54 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(6) Other receivables (continued)
(c) Other receivables listed in type as follows:
Dec. 31, 2013 Dec. 31, 2012
book value balance bad debt provision book value balance bad debt provision
amount proporti amount Proport amount proport amount Propo
on in ion of ion in rtion
total accrual total of
accru
al
Big single
amount,
provided for
bad debt
separately 973,526,495 88% - - 341,204,448 81% - -
Single amount,
though not
significant,
separate
provision for
bad debt
made 130,467,378 12% (19,652,342) 15% 82,266,583 19% (10,165,728) 12%
1,103,993,873 100% (19,652,342) 2% 423,471,031 100% (10,165,728) 2%
(d) As of Dec. 31, 2013, the Company did not accrue bad debt provision for other receivables with
big single amount, and provided for bad debt separately
(e) As of Dec. 31, 2013, other receivables with single amount, though not significant, separate
provision for bad debt made:
book value Proportion of
balance bad debt provision accrual reason
Other receivables1 5,540,286 (5,540,286) 100% (i)
Other receivables2 4,794,642 (4,794,642) 100% (ii)
Other receivables3 3,037,042 (3,037,042) 100% (i)
Other receivables4 1,779,872 (1,779,872) 100% (i)
Other receivables5 1,692,765 (1,692,765) 100% (i)
Others 2,807,735 (2,807,735) 100%
19,652,342 (19,652,342) 100%
(i) As of Dec. 31, 2012, due to project contracts cancellation, the other did not return the money,
the Company believes the other receivable is difficult to collect, therefore fully provided for
bad debts.
(ii) As of Dec. 31, 2013, 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 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(6) Other receivables (continued)
(f) Other receivables actually written off report year:
Written off Whether Resulting from
Other receivables nature amount Reason related trasactions
The company A declared
Company bankruptcy and it’s No
A Unit contacts 4,222,950 uncollectible
(g) Other receivables from shareholders holding over 5% (inclusive) voting rights of the Company's stake:
Dec. 31, 2013 Dec. 31, 2012
Bad debt Bad debt
Amount provision Amount provision
CCCC (note 1) 672,193,178 - - -
Note 1: Equity transfer amount receivable of CCCC is expected to be recovered before
June. 30, 2014.
(h) Other receivables from related parties:
Dec. 31, 2013 Dec. 31, 2012
Relation with Bad debt Bad debt
the Group Amount provision Amount provision
Parent
CCCC company 672,193,178 - - -
CCCC First Harbor Related
Engineering First parties
Engineering Co., Ltd. 10,000,000 - - -
682,193,178 - - -
(i) As of Dec. 31, 2012, top 5 other receivable balance:
Proportion in total
Relation with the other receivables
Group amount age
COMPANY A Parent company 672,193,178 within one year 61%
COMPANY B Third party 31,700,229 within one year 3%
above three
COMPANY C Third party 19,520,000 years 2%
COMPANY D Related parties 10,000,000 within one year 1%
COMPANY E Third party 9,879,707 within one year 1%
743,293,114 68%
- 56 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(6) Other receivables (continued)
(j) Other receivables include the following foreign currency balance:
Dec. 31, 2013 Dec. 31, 2012
Foreign Excha Foreign
currency nge translated in currency Exchan
amount rate RMB amount ge rate translated in RMB
USD 12,321,511 6.0969 75,123,020 6,962,212 6.2855 43,760,984
EUR 3,100,175 8.4189 26,100,063 4,144,474 8.3176 34,472,077
other
currencies - - 7,478,137 - - 3,904,101
108,701,220 82,137,162
(7) Advances
(a) Advances aging provision:
Dec. 31, 2013 Dec. 31, 2012
proportion in
amount total amount proportion in total
within one year 1,172,845,812 91% 933,606,289 94%
one to two
years 81,724,316 6% 34,693,207 3%
two to three
years 20,102,693 2% 10,920,907 1%
above three
years 10,618,430 1% 16,464,277 2%
1,285,291,251 100% 995,684,680 100%
On Dec. 31, 2013, advances older than one year is 112,445,439 yuan (Dec. 31, 2011:
62,078,391 yuan), mainly prepayment for imported parts and 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
Vessel body built under
entrustment not
COMPANY A Third party 414,927,769 32% completed
Purchase steel not
COMPANY B Third party 99,080,170 8% shipped in
Vessel body built under
entrustment not
COMPANY C Third party 50,740,090 4% completed
Purchase steel not
COMPANY D Third party 42,372,134 3% shipped in
Purchase steel not
COMPANY E Third party 41,107,416 3% shipped in
648,227,579 50%
- 57 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(7) Advances (continued)
(c) Prepayments to the shareholders holding 5% (inclusive) shares of the Company:
Dec. 31, 2013 Dec. 31, 2012
Bad debt Bad debt
Amount provision Amount provision
CCCC 18,097,954 - 53,000,886 -
(d) Advances to related parties:
Dec. 31, 2013 Dec. 31, 2012
Relation Amount Proportion in Bad Amount Proportion in Bad
with the total (%) debt total (%) debt
Group provis provi
ion sion
Parent
CCCC company 18,097,954 1% - 53,000,886 5% -
CCCC Third Harbour Controlled
Engineering Xing’ by the
an Construction same
Engineering Co., parent
Ltd. company 2,200,000 0% - 1,200,000 0% -
20,297,954 1% - 54,200,886 5% -
(e) Advances include the following foreign currency:
Dec. 31, 2013 Dec. 31, 2012
Foreign currency Exchange Translated in Foreign currency Exchange Translated in
amount rate RMB amount rate RMB
USD 31,784,082 6.0969 193,784,368 32,563,696 6.2855 204,679,111
EUR 5,974,744 8.4189 50,300,775 7,646,003 8.3176 63,596,395
JPY 43,020,000 0.0578 2,486,556 42,991,143 0.0730 3,138,353
GBP 20,496 10.0556 206,100 20,496 10.1611 208,262
SGD 20,935 4.7857 100,186 - - -
246,877,985 271,622,121
- 58 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(8) Inventories
(a) Inventories classified as follows:
Dec. 31, 2013 Dec. 31, 2012
book value Inventories Book value book value Inventories Book value
balance impairment balance impairment
provision provision
Raw
materials
and
purchase
d parts 3,329,093,383 (314,212,402) 3,014,880,981 3,742,221,273 (192,858,005) 3,549,363,268
Semi
products 3,179,132,774 (179,323,578) 2,999,809,196 4,106,788,751 (78,181,917) 4,028,606,834
Inventorie
s goods 11,153,985 (10,153,985) 1,000,000 11,176,059 (9,035,000) 2,141,059
Turnover
materials - - - 1,571,864 - 1,571,864
6,519,380,142 (503,689,965) 6,015,690,177 7,861,757,947 (280,074,922) 7,581,683,025
Semi products of the Group are marine heavy load equipment in building but order not placed.
(b) Inventories impairment provision:
accrued report deduction report year
year transferred
Dec. 31, 2012 reverse sales Dec. 31, 2013
Raw materials
and
purchased
parts 192,858,005 121,354,397 - - 314,212,402
Semi products 78,181,917 223,554,505 (40,412,844) (82,000,000) 179,323,578
Inventories
goods 9,035,000 1,118,985 - - 10,153,985
280,074,922 346,027,887 (40,412,844) (82,000,000) 503,689,965
(c) Inventories impairment provision:
Inventory impairment provision Reason for return of impairment Proportion of the return in the
based on provision in report year balance
the difference between the No No
raw materials realizable value of raw material
and and purchased parts due to
purchased lower product sales price and the
parts book value
the difference between the Applicable to the net realizable 35%
realizable value of semi products value is higher than the cost of
Semi products and the book value production
the difference between the No No
Inventories realizable value of Inventories
goods goods and the book value
- 59 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(8) Inventories (continued)
(d) Loan expenses Capitalization:
As of Dec. 31, 2013, among the balance of the semi products of marine heavy equipment
for which orders have not been placed, loan expenses capitalization accumulated amount is
257,257,501 yuan (Dec. 31, 2012：308,095,572 yuan)，among which, in the year 2013 loan
expenses capitalization amount was 25,116,779 yuan (year 2012: 136,291,096 yuan).
(9) Construction completed account not closed/Account closed construction not completed
(a) Construction completed account not closed–
Dec. 31, 2013 Dec. 31, 2012
Accumulated cost incurred 29,099,060,088 28,751,935,572
Add: Accumulated margin confirmed 967,952,533 729,784,438
Less: Accumulated settled payment (23,194,540,452) (22,735,291,782)
Accumulated confirmed expected
contract loss (106,264,024) (126,272,889)
6,766,208,145 6,620,155,339
Account closed construction not completed –
Dec. 31, 2013 Dec. 31, 2012
Accumulated settled payment 11,548,874,059 9,400,685,405
Less: Accumulated confirmed margin (787,673,553) (300,301,358)
Accumulated cost incurred (7,628,070,698) (6,725,128,004)
Add: Accumulated confirmed expected
contract loss 10,089,130 14,548,850
3,143,218,938 2,389,804,893
Expected contract losses–
Addition report deduction report
Dec. 31, 2012 period year Dec. 31, 2013
Construction
completed
account not
closed 126,272,889 166,946,093 (186,954,958) 106,264,024
Account closed
construction not
completed 14,548,850 8,536,858 (12,996,578) 10,089,130
140,821,739 175,482,951 (199,951,536) 116,353,154
- 60 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(9) Construction completed account not closed/Account closed construction not completed
(continued)
(b) As of Dec. 31, 2013, amount of contracts still in construction is about 45,269,305,907 yuan
(excluding VAT) (Dec. 31, 2012: 33,987,708,174 yuan).
Probable fines in case of delay in delivery as contracted:
Dec. 31, 2013 Dec. 31, 2012
bank issued valid guaranty letter 18,636,733,746 14,350,312,450
bank not issued guaranty letter 1,493,449,228 1,939,619,957
20,130,182,974 16,289,932,407
(10) Other current assets
Dec. 31, 2013 Dec. 31, 2012
Available-for-sale financial assets (NotesV
(11))
- Bank short-term financing products 4,202,678,325 1,000,000,000
Bank short-term financial products means that the Company purchased from a bank
with low-risk. Since starting from December 31, 2013, these short-term financial
products are due within the next 12 months, so they are listed as other current assets in
the B/S.
The fair value of the bank short-term financial products is based on the financial product
principal plus expected income as of the balance sheet date. On Dec. 31, 2013, the
Company confirmed 139,441,088 yuan revenue from the short-term bank financing
products, and included in the other capital reserve (NotesV (35)).
As of Dec. 31, 2013, short-term bank financing products 3,974,237,236 yuan (Dec. 31,
2012: no) as a pledge to the bank as the 3,980,000,000 yuan of short-term borrowing
(NotesV (20)).
- 61 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(11) Available-for-sale financial assets
Dec. 31, 2013 Dec. 31, 2012
Available-for-sale equity
instruments (a) 172,770,000 124,222,545
Bank short-term financing
products (NotesV (10)) 4,202,678,325 1,000,000,000
4,375,448,325 1,124,222,545
Less: impairment reserve - -
4,375,448,325 1,124,222,545
Less: assets available for sale
listed in other current
assets (NotesV (10)) (4,202,678,325) (1,000,000,000)
172,770,000 124,222,545
(a) Available-for-sale equity instruments refer to the 12.71% (Dec. 31, 2012：12.99%) 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. As of Dec. 31, 2013, total share of
102.29million shares(Dec.31, 2012: 7.7million shares). The Company's equit has lifted of
restrictions on sale since July 29, 2013, Can circulate freely.
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. Due to the increase in
stock prices, the company recognized gains on available for sale financial assets of
48,547,452 yuan, directly charged to other capital reserve on Dec. 31, 2013.( NotesV (35))
- 62 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(11) Available-for-sale financial assets (continued)
(b) Available-for-sale financial assets related information as follows:
Dec. 31, 2013 Dec. 31, 2012
Available-for-sale equity instruments
172,770,000 124,222,545
- Fair value
19,400,000 19,400,000
- Cost
- Accumulated in Other 153,370,000 104,822,545
comprehensive income
Bank short-term financing products
4,202,678,325 1,000,000,000
- Fair value
4,063,237,236 1,000,000,000
- Cost
- Accumulated in Other 139,441,089 -
comprehensive income
Total
4,375,448,325 1,124,222,545
- Fair value
4,082,637,236 1,019,400,000
- Cost
- Accumulated in Other 292,811,089 104,822,545
comprehensive income
(12) Long-term receivables
Dec. 31, 2013 Dec. 31, 2012
Nanjing High Speed ―Construction -
transfer‖ item receivable
- Principal 2,191,444,746 -
- Interest receivable 26,174,547 -
2,217,619,293 -
The Group in 2013 undertook the Nanjing to Gaochun New Channel project and Nanjing-
Gaochun Inter-city Rail Transit Phase II (cross-lake section) project (referred to as
"Nanjing High Speed 'Construction - transfer' Item"); total investment of the project
5,918,800,000 yuan, the construction of Item for a period of 2 years, repurchase period is
2.5 years, return on investment 3 - 5 year, bank loans surface 30% over benchmark
interest rate. The Group established a wholly owned subsidiary Nanjing Ninggao New
Channel Construction Co., Ltd. (NotesIV (2) (a)) responsible for the financing and
construction management of the said project.
As of Dec. 31, 2013, the long-term receivables refer to the investment amount as principal
the Group invested in Nanjing High Speed "Construction - Transfer" Item, interest
receivable subject to confirmation of financing return according to the contract.
- 63 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment
Dec. 31, 2013 Dec. 31, 2012
joint ventures (a) 145,286,585 147,056,419
associates (b) 207,752,345 29,023,053
other Long term equity 57,640,000 57,640,000
investment(c)
410,678,930 233,719,472
Less: Long term equity investment (30,000,000) (30,000,000)
impairment provision
380,678,930 203,719,472
There are no limits to value realization of the Group’s long term equity investment.
- 64 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment (continued)
(a) Joint ventures
Report year movement
Net gains/losses Remark on the
accounting addition or adjusted on equity Voting discrepancy between accrued report
basis initial Dec. 31, deduction of basis Dec. 31, Holding rights holding ratio and voting impairment year impairment
investment 2012 investment (Notes V(46)) 2013 ratio ratio rights ratio provision provision
Jiangsu
Longyuan
Zhenhua Marine Equity
Engineering Co., Ltd. method 130,000,000 147,056,419 - (1,853,034) 145,203,385 50% 50% n.a - -
ZPMC Mediterranean
Liman Makinalari
Ticaret Anonim Sirketi Equity
(i) method 71,416 - 71,416 11,784 83,200 50% 50% n.a - -
147,056,419 71,416 (1,841,250) 145,286,585 - -
(i) The Companyand Portunus Liman Hizmetleri ve Yedek Parca Servis Tic.A.S jointly incorporated the joint venture ZPMC Mediterranean
Liman Makinalari Ticaret Anonim Sirketi, with registered capital of 50,000 Turkey lira, each holding 50%. The company mainly engaged in the
sale, transport, repair of all kinds of port equipment, engineering ship steel structure and other parts.
- 65 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment (continued)
(b) Associates
Report year movement
Dec. 31, 2012 Remark on the
accrued
accounting addition or Net gains/losses Voting discrepancy
initial Dec. 31, Holding impairment report year
basis deduction of adjusted on equity basis rights between holding
investment 2013 ratio provision impairment
investment (Notes V(46)) ratio ratio and voting
provision
rights ratio
CCCC Marine
Engineering Vessel
Technology Research Equity
Centre Co., Ltd. method 15,000,000 15,000,000 - - 15,000,000 25% 25% n.a - -
Shanghai Zhenhua
Heavy Industries
(Group) Changzhou Equity
Paint Co., Ltd. method 13,056,256 14,023,053 - 849,926 14,872,979 20% 20% n.a - -
CCCC estate Yixing Co., Equity
Ltd.(i) method 180,000,000 - 180,000,000 (2,120,634) 177,879,366 20% 20% n.a - -
29,023,053 180,000,000 (1,270,708) 207,752,345 - -
(i) On May 7, 2013, the Company and CCCC Real Estate Co., Ltd., China Road and Bridge Engineering Company Limited, CCCC Yunze Junhang
Company Limited jointly funded the establishment of the CCCC Estate Yixing Co., Ltd. The company's registered capital is 900,000,000 yuan, the
Company invested 180.000.000 yuan, holding 20%. The company mainly engaged in sale of commercial housing, rental housing, building
materials and housing construction.
- 66 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment (continued)
(c) Other long term equity investment
Remark on the
accrued
accounting Report discrepancy cash dividends
initial Dec. 31, Dec. 31, Holding impairment report year
basis year Voting rights ratiobetween holding announced
investment 2012 2013 proportion provision impairment
movement ratio and voting current year
provision
rights ratio
21 Century Science and
Technology Investment Co., Cost
Ltd. Method 30,000,000 30,000,000 - 30,000,000 8.96% 8.96% n.a (30,000,000) - -
Nantong Zhenhua Hongcheng
Heavy Load Forging Co., Cost
ltd. Method 10,000,000 10,000,000 - 10,000,000 5% 5% n.a - - -
CCCC Highway Long and
Large Bridge Construction
State Project Research Cost
Centre Co., Ltd. Method 8,000,000 8,000,000 - 8,000,000 10% 10% n.a - - -
CCCC Dredging Technology &
Equipment State Project Cost
Research Centre Co., Ltd. Method 6,400,000 6,400,000 - 6,400,000 8% 8% n.a - - -
Shanghai Zhenhua Port
Machinery (Group)
Longchang Lift Equipment Cost
Co. Ltd. Method 500,000 800,000 - 800,000 10% 10% n.a - - -
Shanghai Zhenhua Port
Machinery (Group) Cost
Shenyang Lift Co., Ltd. Method 500,000 1,500,000 - 1,500,000 10% 10% n.a - - -
Shanghai Zhenhua Port
Machinery (Group) Ningbo
Transmission Machinery C., Cost
Ltd. Method 300,000 740,000 - 740,000 7.40% 7.40% n.a - - -
Cost Less than Less than
SW Legal Person Shares
Method 200,000 200,000 - 200,000 0.01% 0.01% n.a - - -
57,640,000 - 57,640,000 (30,000,000) - -
- 67 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(13) Long term equity investment (continued)
(d) Long term equity investment impairment provision
Dec. 31, 2012 Addition and deduction Dec. 31, 2013
report period
Other long term equity
investment--
21 Century Science and
Technology Investment
Co., Ltd. 30,000,000 - 30,000,000
(e) Investment in joint ventures and associates
Dec. 31, 2013 2013
Holding Voting operating net profit
Total assets Total liabilities Net assets
ratio ratio revenue
Joint ventures-
Jiangsu Longyuan
Zhenhua Marine
Engineering Co., Ltd. 50% 50% 460,203,954 167,270,224 292,933,730 83,915,402 (3,706,067)
ZPMC Mediterranean
Liman Makinalari
Ticaret Anonim Sirketi 50% 50% 4,419,459 5,123,244 (703,785) 7,015,067 23,569
Associates-
CCCC Marine
Engineering Vessel
Technology Research
Centre Co., Ltd. 25% 25% 60,000,000 - 60,000,000 18,868 111,971
Shanghai Zhenhua
Heavy Industries
(Group) Changzhou
Paint Co., Ltd. 20% 20% 193,469,744 118,210,798 75,258,946 189,254,530 4,249,622
CCCC estate Yixing Co.,
Ltd. 20% 20% 893,019,143 3,622,313 889,396,830 - (10,603,170)
- 68 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(14) Real estate as investment
Depreciation and
Dec. 31, 2012 amortization report Dec. 31, 2013
period
Total purchase value 469,885,167 - 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
(67,473,727) (13,419,174) (80,892,901)
House and building (38,609,476) (8,094,509) (46,703,985)
Land use rights (28,864,251) (5,324,665) (34,188,916)
Total net book value
402,411,440 (13,419,174) 388,992,266
House and building 221,429,897 (8,094,509) 213,335,388
Land use rights 180,981,543 (5,324,665) 175,656,878
Total depreciation and amortization amount of investment real estate in 2013 amounts to
8,094,509 yuan and 5,324,665 yuan included in other operating expenses (2012: non).
- 69 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(15) Fixed Assets
Transfer from Disposal of
Dec. 31, 2012 Construction in subsidiaries Dec. 31, 2013
Addition report year Accrued report year Disposal report year
progress transferred out
Total purchase value 21,064,483,254 1,417,241,404 35,177,970 - (360,706,606) (155,605,943) 22,000,590,079
House and building 8,839,758,259 867,157,344 3,529,043 - (67,774,083) (143,727,398) 9,498,943,165
Manufacturing equipment 4,423,756,978 518,940,639 9,987,111 - (23,572,679) (11,091,096) 4,918,020,953
Office equipment 149,832,278 32,265 1,611,701 - (1,412,073) - 150,064,171
Transportation facilities 7,027,274,377 197,436 10,543,443 - (261,428,831) (787,449) 6,775,798,976
Other equipment 623,861,362 30,913,720 9,506,672 - (6,518,940) - 657,762,814
Total accumulative
depreciation (6,989,285,497) - - (1,157,491,013) 139,092,300 86,961,240 (7,920,722,970)
House and building (1,686,740,729) - - (303,553,910) 36,420,373 75,108,511 (1,878,765,755)
Manufacturing equipment (2,041,906,180) - - (416,051,824) 21,294,488 11,091,096 (2,425,572,420)
Office equipment (112,476,169) - - (11,031,341) 1,411,419 - (122,096,091)
Transportation facilities (2,808,693,318) - - (377,770,500) 73,592,711 761,633 (3,112,109,474)
Other equipment (339,469,101) - - (49,083,438) 6,373,309 - (382,179,230)
Total net book value 14,075,197,757 1,417,241,404 35,177,970 (1,157,491,013) (221,614,306) (68,644,703) 14,079,867,109
House and building 7,153,017,530 867,157,344 3,529,043 (303,553,910) (31,353,710) (68,618,887) 7,620,177,410
Manufacturing equipment 2,381,850,798 518,940,639 9,987,111 (416,051,824) (2,278,191) - 2,492,448,533
Office equipment 37,356,109 32,265 1,611,701 (11,031,341) (654) - 27,968,080
Transportation facilities 4,218,581,059 197,436 10,543,443 (377,770,500) (187,836,120) (25,816) 3,663,689,502
Other equipment 284,392,261 30,913,720 9,506,672 (49,083,438) (145,631) - 275,583,584
- 70 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(15) Fixed Assets (continued)
On Dec. 31, 2013, facilities with a purchase value of 1,608,661,011 yuan (Dec. 31, 2011:
1,045,350,667 yuan) have been fully depreciated but still in service.
In 2013, depreciation booked into operating costs, selling expenses and general
expenses is respectively 1,063,426,861 yuan, 4,396,487 yuan (Note V [41]) and
89,667,665 yuan (Note V (42)) (2012: 1,146,854,296 yuan, 4,925,548 yuan and
53,951,436 yuan).
As of Dec. 31, 2013, real estate property right for houses and buildings with net book
value around 1,426,014,487 yuan (purchase value 1,721,991,144 yuan) (Dec. 31, 2012
net book value 1,549,770,850 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.
(16) Construction in progress
Dec. 31, 2013 Dec. 31, 2012
book value impairmen book value impairment
book value book value
balance t provision balance provision
Nantong
base
infrastructure
construction 740,502,262 - 740,502,262 2,530,550,178 - 2,530,550,178
Changxing
base
infrastructure
construction 392,860,040 - 392,860,040 526,322,159 - 526,322,159
Base heavy
machinery
and
engineering
equipment in
construction 341,561,284 - 341,561,284 630,581,771 - 630,581,771
Nanhui base
infrastructure
construction 3,082,850 - 3,082,850 3,333,079 - 3,333,079
Jiangyin site
rebuilding - - - 1,766,557 - 1,766,557
1,478,006,436 - 1,478,006,436 3,692,553,744 - 3,692,553,744
- 71 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(16) Construction in progress (continued)
(a) Movement of significant projects in progress
Including:
Investme Loan
Transfer into Transfer into Cumulative amount of
Addition report nt ratio Progress capitalizatio Capital
Project Name budget fixed assets intangible assets amount of loan loan
Dec. 31, 2012 period Dec. 3, 2013 against (Note 1) n rate report origin
report year report year capitalization capitalization
budget year
report year
Nantong base
infrastructure construction 2,530,550,178 204,560,326 (785,306,046) (1,209,302,196) 740,502,262 98% 98% 492,033,917 121,996,645 5.34% self funding
Changxing base
infrastructure construction 526,322,159 34,883,089 (168,345,208) - 392,860,040 80% 80% 155,567,587 290,527 5.34% self funding
Base heavy 2,500,000,000 630,581,771 169,510,493 (458,530,980) - 341,561,284 95% 95% 157,536,295 5,105,058
machinery and
engineering equipment
in construction 5.34% self funding
Nanhui base
infrastructure constru 504,500,000 3,333,079 91,419 (341,648) - 3,082,850 90% 90% 5,124,988 - 5.34% self funding
Office buildings and
ancillary facilities 3,000,000 - 2,950,965 (2,950,965) - - 100% 100% - - 5.34% self funding
Jiangyin site rebuilding 54,030,000 1,766,557 - (1,766,557) - - 99% 99% - - 5.34% self funding
3,692,553,744 411,996,292 (1,417,241,404) (1,209,302,196) 1,478,006,436 810,262,787 127,392,230
Note 1: The progress of the project is estimated by budget and accumulated inputs.
- 72 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(17) Intangible Assets
Disposal of
Transfer from
Other addition Amortization subsidiaries
Construction in
Dec. 31, 2012 report period report year transferred out in Dec. 31, 2013
progress
report year
Total purchase
value 2,293,964,535 1,209,302,196 143,077 - (22,181,927) 3,481,227,881
Land use rights 2,194,096,021 1,209,302,196 - - (22,181,927) 3,381,216,290
Software use
cost 34,666,704 - 143,077 - - 34,809,781
patented
technologies 65,201,810 - - - - 65,201,810
Total cumulative
amortization (272,452,655) - - (56,420,566) 6,923,316 (321,949,905)
Land use rights (228,744,021) - - (47,189,214) 6,923,316 (269,009,919)
Software use
cost (26,830,492) - - (1,530,691) - (28,361,183)
Patented
technologies (16,878,142) - - (7,700,661) - (24,578,803)
Total book value 2,021,511,880 1,209,302,196 143,077 (56,420,566) (15,258,611) 3,159,277,976
Land use rights 1,965,352,000 1,209,302,196 - (47,189,214) (15,258,611) 3,112,206,371
Software use
cost 7,836,212 - 143,077 (1,530,691) - 6,448,598
Patented
technologies 48,323,668 - - (7,700,661) - 40,623,007
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 2013, the Group totally expended 696,452,611 yuan on R&D (2012: 662,070,789 yuan). The
expenses are not capitalized. Above mentioned intangible assets do not include any expenditure
on R&D.
As of year 2012 and Dec. 31, 2013, the Group has obtained land use right certificates for all of its
land rights.
- 73 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(18) Deferred corporate tax assets and liabilities
(a) Deferred corporate tax assets before offset
Dec. 31, 2013 Dec. 31, 2012
Compensable Deferred Compensable
Deferred corporate provisional corporate tax provisional difference
tax difference and assets and compensated
assets compensated loss loss
Assets impairment
provision 197,562,826 1,317,085,504 120,794,822 805,298,815
Expected liabilities 26,313,989 175,426,592 28,285,217 188,568,114
Salaries and wages
unpaid 34,392,261 229,281,742 5,020,001 33,466,676
Unpaid interest 61,825,282 412,168,548 46,004,034 306,693,557
Movement of fair value of
financial liabilities 96,661 644,404 - -
Compensable loss 137,830,875 918,872,524 201,948,744 1,346,324,974
458,021,894 3,053,479,314 402,052,818 2,680,352,136
(b) Deferred corporate tax liabilities before offset
Dec. 31, 2013 Dec. 31, 2012
Deferred Tax payable Deferred Tax payable
corporate tax provisional corporate tax provisional
liabilities difference liabilities difference
Fixed assets
depreciation 22,712,436 137,651,126 19,622,940 118,926,910
Fair value movement
of marketable
financial assets 18,381,989 121,169,489 4,003,611 26,009,477
Movement of fair
value available-for-
sale financial
assets booked into
capital reserve 43,921,663 292,811,089 15,723,384 104,822,545
85,016,088 551,631,704 39,349,935 249,758,932
(c) Compensable loss of deferred corporate tax assets the Group not confirmed:
Dec. 31, 2013 Dec. 31, 2012
Compensable loss 846,984,449 1,005,601,558
- 74 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(18) Deferred corporate tax assets and liabilities (continued)
(d) Compensable loss of deferred corporate tax assets the Group not confirmed will be due in
the following year:
Dec. 31, 2013 Dec. 31, 2012
2013 - 3,462,951
2014 215,390,423 235,545,448
2015 376,491,070 433,962,841
2016 26,809,700 96,822,985
2017 170,984,177 235,807,333
2018 57,309,079 -
846,984,449 1,005,601,558
(e) Mutual offset amount of deferred corporate tax assets and deferred corporate tax liabilities:
Dec. 31, 2013 Dec. 31, 2012
Deferred corporate tax assets 60,031,430 18,602,887
Deferred corporate tax liabilities 60,031,430 18,602,887
Net value of deferred corporate tax assets and deferred corporate tax liabilities after offset:
Dec. 31, 2013 Dec. 31, 2012
Deferred Temporary Deferred Temporary
corporate tax difference of corporate tax difference of
assets or compensable assets or compensable
liabilities net amount after offset liabilities net amount after offset
value or taxes payable value or taxes payable
Deferred
corporate tax
assets 397,990,464 2,653,269,781 383,449,931 2,556,332,889
Deferred
corporate tax
liabilities 24,984,658 151,422,170 20,747,048 125,739,685
- 75 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(19) Assets impairment provision
Dec. 31, 2012 Addition report Deduction report year Dec. 31, 2013
period
Disposal of
subsidiaries
Reverse Transferred sales
transferred
out
Bad debt provision 448,489,227 339,205,842 (34,629,885) (4,222,950) (74,599) 748,767,635
Including: Accounts
receivable 438,323,499 325,496,278 (34,629,885) - (74,599) 729,115,293
Other receivables 10,165,728 13,709,564 - (4,222,950) - 19,652,342
Expected contract loss 140,821,739 175,482,951 - (199,951,536) - 116,353,154
Inventories impairment
provision 280,074,922 346,027,887 (40,412,844) (82,000,000) - 503,689,965
Long term equity
investment
impairment provision 30,000,000 - - - - 30,000,000
899,385,888 860,716,680 (75,042,729) (286,174,486) (74,599) 1,398,810,754
(20) Short term loans
Dec. 31, 2013 Dec. 31, 2012
Pledge loans
- RMB loans (a) 3,980,000,000 -
- USD loans - 942,825,000
Guaranteed loans
- USD loans (b) 1,975,395,600 1,907,649,250
- RMB loans (c) 500,000,000 -
Credit loans
- RMB loans 600,000,000 3,485,000,000
- USD loans 7,608,469,404 5,601,213,748
14,663,865,004 11,936,687,998
(a) As of Dec. 31, 2013, bank pledge loans 3,980,000,000 yuan is pledged by the 3,974,237,236
yuan bank short term financial products (Dec. 31, 2012: nil) (Note V (11)).
- 76 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(20) Short term loans (continued)
(b) As of Dec. 31, 2013, bank guarantee loan USD 224,000,000 in RMB 1,365,705,600 yuan
(Dec. 31, 2012: USD 253,500,000, in RMB 1,593,374,250 yuan), is the bank loan by the
Company’s subsidiary guaranteed with the letters of guarantee issued, within the credit
lines awarded to the Company.
As of Dec. 31, 2013, bank guarantee loan USD100,000,000, in RMB 609,690,000 yuan
(Dec. 31, 2012: USD 50,000,000, in RMB 314,275,000 yuan), is the bank loan of the
Company’s subsidiary, guaranteed by the Company.
(c) As of Dec. 31, 2013, bank guarantee loan 500,000,000 yuan (Dec. 31, 2012: non), is the
bank loan of the Company’s subsidiary, guaranteed by Nanjing Metro Group Co., Ltd.
Weighted average annual interest rate of loans for the Group in 2013 is 3.436% (2012:
3.547%).
(21) Notes payable
Dec. 31, 2013 Dec. 31, 2012
Bank acceptance draft 1,218,223,112 980,906,529
Above drafts will be due within one year.
(22) Accounts payable
Dec. 31, 2013 Dec. 31, 2012
Material purchase and product 3,307,926,338 2,283,678,397
Manufacturing payables
Infrastructure building payables 154,235,508 190,628,937
Equipment purchase payables 120,018,143 119,559,155
Port use payables 6,620,899 6,442,641
Retention payables 3,309,948 3,109,555
3,592,110,836 2,603,418,685
(a) As of Dec. 31, 2013, the balance contains no payables to shareholders who hold 5%
(inclusive) of the Company’s voting share.
- 77 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(22) Accounts payable (continued)
(b) Accounts payable to related parties:
Dec. 31, 2013 Dec. 31, 2012
CCCC Second Harbour Engineering
Third Engineering Co., Ltd. 414,405,206 -
CCCC Second Highway Engineering
Bureau Co., Ltd. 307,151,472 -
CCCC Tunnel Engineering Co., Ltd. 58,454,836 -
CCCC Third Harbor Engineering
Co., Ltd. 53,290,609 252,892
China Transportation Materials Co.,
Ltd. 38,616,112 -
Shanghai Zhenhua Heavy Industries
(Group) Changzhou Paint Co.,
Ltd. 17,837,158 5,205,406
CCCC Shanghai Equipment
Engineering Co., Ltd. 14,337,357 2,119,853
CCCC Third Harbour Engineering
Xing’an Construction
Engineering Co., Ltd. 7,189,906 3,185,045
CCCC First Harbor Engineering
Installation Co., Ltd. 1,633,418 -
CCCC Water Transportation
Planning and Design Institute Co.,
Ltd. 160,000 -
913,076,074 10,763,196
(c) Accounts payable analysed by
age:
Dec. 31, 2013 Dec. 31, 2012
Amount Total of ratio Amount Total of ratio
Within one
year 3,360,700,176 94% 2,416,147,478 93%
Above one
year 231,410,660 6% 187,271,207 7%
3,592,110,836 100% 2,603,418,685 100%
By Dec. 31, 2013, accounts payable aging above 1 year mainly being payables of
imported parts.
- 78 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(22) Accounts payable (continued)
(d) Accounts payable includes the following foreign currency balance:
Dec. 31, 2013 Dec. 31, 2012
Foreign Foreign
currency Exchan Translated in currency Exchange Translated in
amount ge rate RMB amount rate RMB
USD 46,369,932 6.0969 282,712,838 55,193,948 6.2855 346,921,560
EUR 26,771,933 8.4189 225,390,227 21,107,258 8.3176 175,561,729
SGD 323,110 4.7857 1,546,308 - - -
AUD 68,082 5.4301 369,692 - - -
HKD 188,850 0.7862 148,474 - - -
GBP 7,321 10.0556 73,617 - - -
510,241,156 522,483,289
(23) Prepayment received
Dec. 31, 2013 Dec. 31, 2012
Goods sale prepayment received 232,328,686 1,035,763,588
(a) As of Dec. 31, 2013, the balance contains no prepayments from shareholders who hold
5% (inclusive) of the Company’s voting share.
(b) Prepayment from related parties:
Dec. 31, 2013 Dec. 31, 2012
CCCC First Harbor Engineering First 30,000,000
Engineering Co., Ltd. 1,194,097
CCCC Third Harbour Engineering
Xing’an Construction Engineering
Co., Ltd. 200,000 200,000
CCCC Third Harbor Engineering Co., - 1,610,000
Ltd.
1,394,097 31,810,000
- 79 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(23) Prepayment received (continued)
(c) Prepayment analysed by age:
Dec. 31, 2013 Dec. 31, 2012
Amount Total of ratio Amount Total of ratio
Within one
year 197,553,233 85% 1,015,607,231 98%
Above one
year 34,775,453 15% 20,156,357 2%
232,328,686 100% 1,035,763,588 100%
As of the year 2012 and Dec. 31, 2013, prepayment paid in over one year old mainly
consisting of the prepayment for sales of spare goods and parts not settled.
(d) Prepayment includes the following foreign currency balance:
Dec. 31, 2013 Dec. 31, 2012
Foreign Foreign
currency Exchang Translated in currency Exchang Translated in
amount e rate RMB amount e rate RMB
USD 14,521,739 6.0969 88,537,591 85,247,794 6.2855 535,825,009
EUR 1,066,159 8.4189 8,975,886 661,772 8.3176 5,504,355
AUD 175,190 5.4301 951,299 - - -
CAD 17,486 5.7259 100,123 17,486 6.3184 110,484
HKD 86,000 0.7862 67,613 86,000 0.8109 69,737
GBP 1,532 10.0556 15,405 5,619 10.1611 57,095
98,647,917 541,566,680
- 80 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(24) Employee remuneration payable
Dec. 31, 2012 Addition Deduction Disposal of Dec. 31,
report period report year subsidiaries 2013
transferred out
Salary, bonus,
allowance and
subsidy - 1,054,452,574 (886,098,716) (353,858) 168,000,000
Staff welfare - 20,073,436 (20,050,693) (22,743) -
Social security 3,168,429 266,565,030 (266,291,217) (119,477) 3,322,765
Including: medical
insurance 937,261 81,470,027 (81,411,760) (38,630) 956,898
Pension 1,954,928 160,068,976 (159,909,060) (71,226) 2,043,618
Unemploymen
t fund 164,253 12,606,361 (12,624,879) (5,441) 140,294
Labor injury
fund 51,682 6,427,760 (6,367,416) (1,619) 110,407
Birth insurance 60,305 5,991,906 (5,978,102) (2,561) 71,548
Auxiliary pension 7,620,807 40,664,799 (44,273,092) (78,350) 3,934,164
Housing fund 253,018 47,045,454 (47,102,617) (21,535) 174,320
Trade union fund and
employee
education fund 26,490,685 12,054,272 (7,971,135) (33,698) 30,540,124
Other 17,200 4,366,210 (4,113,485) - 269,925
37,550,139 1,445,221,775 (1,275,900,955) (629,661) 206,241,298
As of Dec. 31, 2013, salaries and bonus payable to employees do not include those postponed in
payment, expected to be paid off in the year 2014.
(25) Taxes and charges payable
Taxes and charges payable are summarized as follows:
Disposal of
Current year subsidiarie
Current year
Dec. 31, 2012 amount s Dec. 31, 2013
amount paid off
payable transferred
out
VAT to deduct (53,983,994) 99,430,516 (141,034,481) - (95,587,959)
Individual Income
Tax 3,140,893 63,746,891 (61,043,875) (213) 5,843,696
Corporate Tax 240,165 24,853,678 (7,987,061) (244,697) 16,862,085
Education
Addition 1,373,082 8,475,025 (6,367,798) (3,720) 3,476,589
Urban
Construction 1,403,766 11,056,986 (7,874,116) (5,210) 4,581,426
(Pending
deduction)/
Payable
business tax (2,740,024) 66,692,474 (10,228,670) (31,651) 53,692,129
Other 3,599,298 25,467,389 (24,454,565) - 4,612,122
(46,966,814) 299,722,959 (258,990,566) (285,491) (6,519,912)
- 81 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(26) Interest payable
Dec. 31, 2013 Dec. 31, 2012
Interest on loan payable 140,459,248 37,126,925
Bond interest payable 277,931,366 277,931,366
418,390,614 315,058,291
(27) Dividends payable
Dec. 31, 2013 Dec. 31, 2012
CCCC 33,472,814 33,472,814
Hong Kong Zhenhua
Engineering Co., Ltd. 346,005 346,005
Macau Zhenhua Bay
Engineering Co., Ltd. 6,593 6,593
33,825,412 33,825,412
(28) Other payables
Dec. 31, 2013 Dec. 31, 2012
Government subsidy 155,255,304 41,333,726
Construction deposit 123,091,450 98,013,423
CCCC investment payment (i) 25,971,033 25,971,033
Related parties payables 17,586,085 16,092,898
Related parties loans 17,107,673 -
Insurance claims 10,134,482 10,134,482
Construction warranty deposit - 65,692,853
Other 53,984,514 34,912,077
403,130,541 292,150,492
(i) The Group during the year 2011 completed the cancellation of a subsidiary. Payable
by the Group attributable to shareholders of the subsidiary of another CCCC liquidation
of the investment.
- 82 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(28) Other payables (continued)
(a) On Dec. 31, 2013, other payables payable to shareholders and other related parties
who hold 5% (inclusive) voting shares of the Company are as follows:
(i) Dec. 31, 2013 Dec. 31, 2012
CCCC 25,971,033 42,063,931
(b) Related parties’ other accounts payable：
(ii) Dec. 31, 2013 Dec. 31, 2012
CCCC 25,971,033 42,063,931
Shanghai Jiangtian Industrial 17,586,085 -
Co., Ltd.
CCCC Second Highway 7,971,852 -
Engineering Bureau Co., Ltd.
CCCC Second Harbour 6,981,332 -
Engineering Third Engineering
Co., Ltd.
CCCC Third Harbor Engineering 1,419,932 -
Co., Ltd.
CCCC Tunnel Engineering Co., 734,557 -
Ltd.
60,664,791 42,063,931
(c) Other payables analyzed in age:
Dec. 31, 2013 Dec. 31, 2012
Total of Total of
Amount ratio Amount ratio
Within one
year 226,282,465 56% 137,927,899 47%
Above one
year 176,848,076 44% 154,222,593 53%
403,130,541 100% 292,150,492 100%
As of Dec. 31, 2013, other payables aged over one year mainly payables to related
parties, deposits to outsourced construction team and quality guarantee deposit received.
- 83 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(28) Other payables (continued)
(d) Other payables include the following balance of foreign currency
Dec. 31, 2013 Dec. 31, 2012
Foreign Foreign
currency Exchan Translated in currency Exchange Translated in
amount ge rate RMB amount rate RMB
USD 570,813 6.0969 3,480,190 554,924 6.2855 3,487,975
EUR 1,198,290 8.4189 10,088,284 203,611 8.3176 1,693,555
13,568,474 5,181,530
(29) Non-current liabilities due within one year
Dec. 31, 2013 Dec. 31, 2012
Long-term loans due within one year (a) 176,810,100 3,667,922,000
Bonds payable due within one year (NotesV
(31)) 4,193,487,763 -
4,370,297,863 3,667,922,000
(a) Long-term loans due within one year
Dec. 31, 2013 Dec. 31, 2012
Guarantee loan
- USD loans - 433,699,500
Credit loans
- USD loans 176,810,100 1,854,222,500
- RMB loans - 1,380,000,000
176,810,100 3,667,922,000
Starting day of Closing day of Curre Rate (%) Dec. 31, 2013
loans loans ncy Foreign RMBAmount
currency
amount
A
bank 2012-4-12 2014-4-10 USD Libor+4.0% 20,000,000 121,938,000
B
bank 2012-5-30 2014-5-30 USD 4.32% 9,000,000 54,872,100
176,810,100
- 84 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(30) Long term loans
Dec. 31, 2013 Dec. 31, 2012
Guarantee loan
- USD loans (i) 365,814,000 810,829,500
Credit loans
- USD loans 1,274,252,100 2,350,777,000
- RMB loans 650,000,000 1,380,000,000
2,290,066,100 4,541,606,500
Less: Long-term loans due within
one year (NotesV (29)) (176,810,100) (3,667,922,000)
2,113,256,000 873,684,500
(i) As of Dec. 31, 2013, bank guarantee loan USD 40,000,000 (in
RMB243,876,000 yuan) and USD 20,000,000 (in RMB121,938,000 yuan) refer to
the bank loans of the Company’s subsidiary, guaranteed by the letter of
guarantee issued by the bank 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. (Dec. 31, 2012: bank guarantee loan USD 40,000,000 (in
RMB251,420,000 yuan) and USD20,000,000 (in RMB125,710,000 yuan) refer to
the bank loans of the Company’s subsidiary, guaranteed by the letter of
guarantee issued by the bank 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. Bank guarantee loan USD 69,000,000 (in
RMB433,699,500 yuan) refer to the bank loans of the Company’s subsidiary,
guaranteed by the letter of guarantee issued by the bank within the credit lines
awarded to the Company. Interest is paid every quarter. Principal was due for
repayment in 2013.
- 85 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(30) Long term loans (continued)
(a) Top 5 long term loans:
Dec. 31, 2013
Starting day of Closing day of Curren Foreign
Rate (%)
loans loans cy currency
amount RMBAmount
A bank 2013-8-15 2015-8-14 RMB 4.3% - 600,000,000
B bank 2012-6-21 2015-6-19 USD Libor+2.3% 40,000,000 243,876,000
C bank 2012-12-6 2015-12-6 USD Libor+3.1% 30,000,000 182,907,000
D bank 2013-10-25 2015-10-23 USD 3.0% 30,000,000 182,907,000
E bank 2013-7-1 2016-6-12 USD Libor+2.8% 25,000,000 152,422,500
1,362,112,500
(b) Due day of long term loans:
Dec. 31, 2013 Dec. 31, 2012
one to two years 1,503,566,000 182,279,500
two to five years 609,690,000 691,405,000
2,113,256,000 873,684,500
(c) Weighted average annual interest rate:
Weighted average annual interest rate of long-term loans of the Group in 2013 is 3.046%
(2012: 3.043%).
(31) Bonds payable
Dec. 31, 2013 Dec. 31, 2012
Bank’s medium-term notes 5,996,415,674 5,989,815,674
Debt financing instruments 1,994,850,000 1,994,850,000
7,991,265,674 7,984,665,674
Less: bonds due and payable within
one year (NotesV (29)) (4,193,487,763) -
3,797,777,911 7,984,665,674
- 86 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(31) Bonds payable (continued)
Addition issues Issuance cost
Total face value Issuance cost Dec. 31, 2012 Dec. 31, 2013
current period amortization
report year
Issued in 2009
First Intermediate-term
bills (a) 1,800,000,000 (27,000,000) 1,793,546,331 - 5,400,000 1,798,946,331
Second Intermediate-
term bills (a) 400,000,000 (6,000,000) 398,491,432 - 1,200,000 399,691,432
Issued in 2011
First Intermediate-term
bills (b) 3,800,000,000 (22,250,000) 3,797,777,911 (11,400,000) 11,400,000 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
7,984,665,674 (17,400,000) 24,000,000 7,991,265,674
(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.
- 87 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(32) Expected liabilities
Addition Deduction
Dec. 31, 2012 report report year Dec. 31, 2013
period
Estimated after-
sales service cost 178,851,035 64,663,046 (57,179,331) 186,334,750
Other 14,456,650 - (14,456,650) -
193,307,685 64,663,046 (71,635,981) 186,334,750
(33) Other non-current liabilities
Addition Deduction
Dec. 31, 2012 report report year Dec. 31, 2013
period
Land
compensation (a) 43,916,667 - (1,000,000) 42,916,667
(a) Other non-current liabilities refer to the compensation payment obtained in 2007 by the
Group’s subsidiary from Shanghai World Expo Land Reserve Centre. The said
compensation is amortized in even years according to land use term of 50 years.
(34) Capital stock
Dec. 31, 2013 Report year movement Dec. 31, 2012
Shares without sales
limitation ---
RMB common shares 2,768,331,384 - 2,768,331,384
Foreign investment -
shares listed on
domestic market 1,621,963,200 1,621,963,200
4,390,294,584 - 4,390,294,584
- 88 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(34) Capital stock (continued)
Report year
Dec. 31, 2011 movement Dec. 31, 2012
Circulating after listing
of shares restricted
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
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.
- 89 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(35) Capital reserve
Addition report Deduction report
Dec. 31, 2012 period (a) year (a) Dec. 31, 2013
Capital stock premium 5,415,828,267 - - 5,415,828,267
Other Capital reserve
－Available-for-sale
financial assets fair
value change (Notes
V(46)) 103,763,237 338,177,127 (150,188,587) 291,751,777
－Available-for-sale
financial assets fair
value change related
Deferred corporate tax
impac (15,723,384) (50,726,569) 22,528,290 (43,921,663)
－purchase subsidiary
Minority interest (711,345) - - (711,345)
－Transfer from capital
reserve based on former
norms 129,118,869 - - 129,118,869
5,632,275,644 287,450,558 (127,660,297) 5,792,065,905
(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
Dec. 31, 2011 period (a) report 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
- 90 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(36) Surplus reserve
Report year
Dec. 31, 2012 movement Dec. 31, 2013
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
Report year
Dec. 31, 2011 movement 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
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 2013 (2012: no).
(37) Undistributed profit
2013 2012
Amount Appropriati Amount Appropriati
on or on or
allocation allocation
ratio ratio
Starting undistributed profit 2,668,221,534 3,711,887,375
Add: net loss / profit
attributable to parent
company report year 139,836,320 (1,043,665,841)
Less: statutory surplus
reserve - 10% - 10%
Closing undistributed profit 2,808,057,854 2,668,221,534
As of Dec. 31, 2013, undistributed profit includes 76,398,671 yuan balance of surplus
reserve attributable to parent company’s subsidiaries (Dec. 31, 2012: 69,896,384 yuan).
- 91 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(38) Minority interest
Minority interest attributable to subsidiaries:
investment
Increased
Dec. 31, 2012 gains Dec. 31, 2013
investment
/(loss)
Shanghai Port Machinery Heavy
Industry Co., Ltd. 101,471,326 - (1,926,127) 99,545,199
Shanghai Zhenhua Shipping Co.
Ltd. 105,574,370 - (5,943,499) 99,630,871
Shanghai Zhenhua Port
Machinery Heavy Industry Co.,
Ltd. 996,878 - 29,847 1,026,725
Shanghai Zhenhua Heavy
Industries Steel Structure Co.,
Ltd. 666,671 - 76,838 743,509
Shanghai Zhenhua Heavy
Industries (Group)
Zhangjiagang Co., Ltd. (2,408,285) - 1,767,956 (640,329)
ZPMC LANKA COMPANY
(PRIVATE) LIMITED - 2,563,812 235,287 2,799,099
206,300,960 2,563,812 (5,759,698) 203,105,074
(39) Operating revenue and operating cost
2013 2012
Major operating income 22,922,228,961 17,911,019,990
Other operating income 279,326,839 344,132,106
23,201,555,800 18,255,152,096
2013 2012
Major operating cost 21,109,707,588 17,050,819,359
Other operating cost 327,309,539 311,850,992
21,437,017,127 17,362,670,351
(a) Major operating income and major operating cost
(i) In products:
2013 2012
Major operating Major operating Major operating Major operating
income cost income cost
Container cranes 12,264,473,442 10,797,268,174 10,665,511,120 9,802,797,463
Marine heavy
equipment 4,234,165,039 4,111,296,503 3,458,011,185 3,333,677,227
Bulk machinery 3,063,018,182 2,952,903,243 2,907,233,682 2,889,954,429
Nanjing High
Speed
―Construction
– transfer‖
Item 2,191,444,746 2,117,812,203 - -
Steel structures 872,320,624 846,489,536 640,310,882 749,503,259
Vessel shipping
and others 296,806,928 283,937,929 239,953,121 274,886,981
22,922,228,961 21,109,707,588 17,911,019,990 17,050,819,359
- 92 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(39) Operating revenue and operating cost (continued)
(a) Major operating income and major operating cost (continued)
(ii) In regions:
2013 2012
Major operating Major operating Major operating Major operating
income cost income cost
Asia (excluding
Mainland China) 7,846,459,461 7,004,711,224 3,808,763,314 3,560,857,624
Mainland China 6,421,156,627 6,208,543,425 5,514,344,061 5,350,212,132
America 4,092,730,033 3,785,004,130 3,251,058,441 3,124,271,416
Europe 2,578,325,273 2,422,302,228 2,751,062,479 2,802,729,625
Mainland China
(Export)(Note1) 872,958,359 745,615,595 931,882,457 786,877,331
Africa 746,562,797 631,635,376 949,993,166 790,053,379
Oceania 364,036,411 311,895,610 703,916,072 635,817,852
22,922,228,961 21,109,707,588 17,911,019,990 17,050,819,359
Note 1: In this part, amounts listed in the 2013 and 2012 Mainland China (export) item refer
to the major operating income and cost the Company firstly exports to its overseas
subsidiary or related party and the latter sells to domestic customers.
(b) Other operating income and other operating cost
2013 2012
Other operating Other Other operating Other
income operating cost income operating cost
Sales of
materials 146,982,837 275,173,564 237,399,092 263,914,351
Equipment
leasing and
others 132,344,002 52,135,975 106,733,014 47,936,641
279,326,839 327,309,539 344,132,106 311,850,992
- 93 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(39) Operating revenue and operating cost (continued)
(c) Operating income of the Group from top10 clients:
Operating income from top 10 construction contract clients is 7,194,567,015 yuan (for 2012:
2,897,862,074 yuan), taking 30% (as of 2012: 16%) of total sales income of the Group.
Details are as follows:
Operating revenue Proportion in total operating
income of the Group (%)
COMPANY A 2,191,444,746 9%
COMPANY B 1,126,665,069 5%
COMPANY C 702,443,948 3%
COMPANY D 657,171,711 3%
COMPANY E 571,551,760 2%
COMPANY F 539,286,548 2%
COMPANY G 443,614,357 2%
COMPANY H 351,398,987 2%
COMPANY I 317,935,969 1%
COMPANY J 293,053,920 1%
7,194,567,015 30%
(40) Business tax and charges
2013 2012
Business tax 71,503,162 11,168,140
Urban maintenance and construction tax 11,267,108 9,361,479
Education charges 8,565,077 7,721,766
Others 3,961,137 4,253,315
95,296,484 32,504,700
- 94 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(41) Selling expenses
2013 2012
Employee remuneration 32,390,264 19,272,884
Travel expenses 21,289,067 15,903,041
Fixed assets depreciation (Notes V(15)) 4,396,487 4,925,548
Tender expenses 2,327,153 1,985,052
Office expenses 1,838,344 106,126
Exhibition expenses 1,508,423 2,844,926
Advert expenses 1,693,853 2,279,231
Other 3,204,113 1,973,251
68,647,704 49,290,059
(42) General expenses
2013 2012
R&D expenses 696,452,611 598,968,230
Employee remuneration 302,860,382 208,360,215
Fixed assets depreciation (NotesV (15)) 89,667,665 53,951,436
Intangible assets amortization (NotesV 56,420,566 59,834,778
(17))
Taxes 44,100,706 45,697,985
Office expenses 38,561,429 35,893,490
PR expenses 18,774,654 26,698,101
Expenses on employing intermediary 9,835,000 7,910,493
Travel expenses 6,503,661 7,178,011
Maintenance expenses 6,060,915 1,924,398
Consultation expenses 3,230,257 3,319,818
Insurance expenses 2,391,206 2,131,064
Conference expenses 2,244,944 9,066,864
Information expenses 2,213,297 3,571,896
Other 73,608,246 62,356,968
1,352,925,539 1,126,863,747
- 95 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(43) Financial expenses/(income)-- Net
2013 2012
Interests expenses－ 943,481,809 824,432,963
Including: loans from bank, short-term
financing bonds and Interest Intermediate-
term bills 943,481,809 824,432,963
Less: interest income (107,046,637) (130,161,555)
Foreign exchange loss 109,069,248 106,173,538
Less: foreign exchange income (370,863,489) (181,222,675)
Amortization of issue cost of short-term
financing bonds and intermediate-term
bills (Note V (31)) 24,000,000 23,450,000
Other 28,543,524 37,834,341
627,184,455 680,506,612
(44) Assets impairment loss
2013 2012
Inventories impairment loss (NotesV (19)) 305,615,043 143,826,788
Receivables loss due to Bad debt provision
(NotesV (19)) 304,575,957 62,890,682
Expected contract loss (NotesV (19)) 175,482,951 187,645,319
785,673,951 394,362,789
(45) Income from fair value movement -- Net
2013 2012
Trading financial Assets －
Fair value movement (losses) /gains (Note
V (2)) 95,160,012 (35,669,293)
Trading financial Liabilities －
Fair value movement gains (Note V (2)) (644,404) 2,289,600
94,515,608 (33,379,693)
- 96 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(46) Investment gains
2013 2012
On cost basis accounting basis other long term
equity investment income 17,057 860
On equity basis accounting basis Long term
equity investment gains/ loss (NotesV
(13)(a)(b)) (3,111,958) 21,445,467
Investment gains from disposal financial assets
available-for-sale–equity tool period 1,000,000 500,000
Investment gains from disposal financial assets
available-for-sale–bank financial products
(NotesV (35)(a)) 150,188,587 119,146,705
Investment gains from disposal of subsidiaries
(NotesIV(3)(c)) 749,942,782 -
898,036,468 141,093,032
(47) Non-operating income
2013 2012 Amount booked
into 2013 non-
recurring
gains/losses
Non Current assets disposal
income 260,792,838 101,780,247 260,792,838
Including: land and building
levy compensation
income - 77,867,212 -
other Fixed assets
disposal income(a) 260,792,838 23,913,035 260,792,838
Government subsidy(b) 47,878,876 28,730,126 47,878,876
other 6,218,237 1,847,589 6,218,237
314,889,951 132,357,962 314,889,951
(a) The Company sold the ―Zhenfu 7‖ 4000 tons barge crane at a price of 440 million yuan to
related parties CCCC First Harbor Engineering First Engineering Co., Ltd. The barge crane
was used as hoisting item in the Company’s daily production and managed as fixed assets.
On Dec. 31, 2013 the unrecovered sales amount remains 10,000,000 yuan(NotesV (6)).
- 97 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(47) Non-operating income (continued)
(b) Government subsidy specifications:
2013 2012
Financial allocation 32,778,876 19,586,301
Science and technology subsidy 14,100,000 8,143,825
Land compensation 1,000,000 1,000,000
47,878,876 28,730,126
Fiscal funding mainly include government financial subsidies and local fiscal incentives,
which belongs to the government grants related to income; technology grants including
subsidies of the key science and technology R&D items allocated by the Ministry of
Science and Technology and the Ministry of Industry and Information Technology, which
belongs to the government grants related to income. Compensation for land belongs to the
government grants related to assets (NotesV (33)).
(48) Non-operating expense
2013 2012 Amount booked
into 2013 non-
recurring
gains/losses
Non Current assets disposal
loss 19,598,889 4,728,848 19,598,889
Including: Losses from
disposal of fixed assets 19,598,889 4,728,848 19,598,889
Other 2,224,583 15,486,754 2,224,583
21,823,472 20,215,602 21,823,472
- 98 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(49) Corporate income tax expenses
2013 2012
Current period corporate tax 24,853,675 1,611,269
Deferred corporate tax (38,501,202) (73,743,850)
(13,647,527) (72,132,581)
2013 2012
Total profit / (loss) 120,429,095 (1,171,190,463)
Corporate tax expenses calculated by the rate of
15% 18,064,364 (175,678,569)
Impact of tax rate differences on corporate tax
expenses 17,990,567 177,636
Addition and deduction of technological
development expenses (21,461,206) (24,626,407)
Non-taxable income (17,527,692) (858)
Non-deductible cost, expenses and loss 17,710,271 3,414,006
Compensable loss of deferred corporate tax assets
unconfirmed current period 14,327,270 88,162,173
Temporary differences of unconfirmed deferred
income tax - 28,571,452
Deductible losses using early unconfirmed deferred
income tax (42,984,705) -
Adjustment of final settlement prior year 233,604 7,847,986
Corporate income tax expenses (13,647,527) (72,132,581)
- 99 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(50) 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:
2013 2012
Consolidated net gains / (loss ) belonging to
common share holders of parent company 139,836,320 (1,043,665,841)
weighted average number of common shares
publicly issued by parent company 4,390,294,584 4,390,294,584
Basic Earnings / (loss) per share 0.03 (0.24)
(b) Diluted earnings / (loss) per share
Diluted earnings / (loss) per action is calculated by the consolidated net earnings / (loss)
attributable to parent company common shareholders after adjustment upon diluting
potential common shares divided by the average number of common shares. In 2012 and
2013 the Company had no diluting potential common shares. Thus, diluted earnings / (loss)
per share equal basic earnings / (loss) per share.
(51) Other comprehensive income
2013 2012
Asset earnings amount from available-for-sale
financial 338,177,127 134,707,715
Less: income tax impact from available-for-sale
financial assets (50,726,569) (20,206,158)
Net amount of other comprehensive earning
converted into current P&L in current year (127,660,297) (101,274,699)
Foreign currency translation difference 25,654 12,973
159,815,915 13,239,831
- 100 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements
(continued)
(52) Cash flow statements notes
(a) Cash receipt related with other operational activities
2013 2012
Cash receipt of government allowance and
bonus 154,300,454 63,512,311
Net recoveries of staff fraternity amounts 18,507,190 -
Customs deposits received 64,227,064 -
Cash receipt from income from fines 2,767,165 1,847,589
Payment received for insurance
compensation - 23,372,999
Others 3,751,072 2,754,566
243,552,945 91,487,465
(b) Cash payment related with other operational activities
2013 2012
Selling and general expenses 195,284,562 185,142,731
Financial expenses formality cost 28,543,524 37,834,341
Customs guarantee deposit - 73,497,127
Net expenses of Mutual Assistance
Association loans - 3,340,431
Others 7,844,198 13,985,902
231,672,284 313,800,532
(c) Cash receipt related with other investment activities
2013 2012
Interest income 135,189,201 96,930,003
Capital contributions from minority
shareholders 2,563,812 -
137,753,013 96,930,003
(d) Receipt of other cash related to financing activities
2013 2012
Recovery of restricted bank deposits 6,157,492,641 3,465,537,200
- 101 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements
(continued)
(52) Cash flow statements notes (continued)
(e) Payment of other cash related to financing activities
2013 2012
Intermediate term notes issuance cost
expenses 17,400,000 17,400,000
Restricted bank deposits made 3,479,049,525 6,398,814,488
3,496,449,525 6,416,214,488
(53) Supplementary information of cash flow statements
(a) The net profit / (loss) adjusted to cash flow from operating activities
2013 2012
Net profit / (loss) 134,076,622 (1,099,057,882)
Add/(less): assets impairment provision 785,673,951 394,362,789
Fixed assets and Investment
property depreciation 1,165,585,522 1,205,731,280
Intangible assets and Investment
property amortization 61,745,231 59,834,778
Disposal of fixed assets and
intangible assets ( income)/
loss (241,193,949) (97,051,399)
fair value change (income) / loss (94,515,608) 33,379,693
Financial expenses 485,873,502 704,641,700
investment gains (898,036,468) (141,093,032)
Deferred corporate tax assets
increase (14,540,533) (71,738,500)
Deferred corporate tax liabilities
increase (23,960,669) 328,802
Inventories increase / (decrease) 1,260,208,737 (1,402,482,118)
Building contract amount
( increase) / decrease 631,829,824 1,191,275,779
Operating receivables (increase) /
decrease (2,894,147,723) 920,181,286
Operating payables increase 580,577,897 1,367,290,822
Net cash flow from operation activities 939,176,336 3,065,603,998
- 102 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(53) Supplementary information of cash flow statements (continued)
(b) Net cash movement
2013 2012
Closing cash balance 3,152,471,807 2,357,608,044
Less: starting cash balance (2,357,608,044) (1,992,617,410)
Net cash increase 794,863,763 364,990,634
(c) Cash
Dec. 31, 2013 Dec. 31, 2012
Cash 3,152,471,807 2,357,608,044
Including: cash in hand 495,019 530,366
Bank deposits disposable 3,002,350,930 2,320,289,080
Other monetary funds disposable 149,625,858 36,788,598
Closing cash balance 3,152,471,807 2,357,608,044
- 103 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
V Notes to major items in the consolidated financial statements (continued)
(54) Assets with restricted ownership
Addition report Deduction report
Dec. 31, 2012 period year Dec. 31, 2013
Other monetary
capital
restricted 3,023,161,180 5,464,521,287 (8,124,510,311) 363,172,156
VI Related parties and related transaction
(1) Profiles of parent company
(a) Profiles of parent company
Name Type Registered place Legal Type of Organizational
representat business code
ives
China Corporate No. 88, C Liu Qitao Port project 710934369
Communicat Company Andingmen Wai contracting and
ions Street, Dongcheng related businesses
Corporation District, Beijing
China Communications Construction Group Corporation is the ultimate controller of the
Company.
(b) Parent company’s registered capital and the movement
2012 Addition report period 2013
Name Dec. 31 Dec. 31
China
Communications
Corporation 14,825,000,000 - 14,825,000,000
(c) Parent company’s holding proportion and voting proportion in the Company:
Name 2013 Dec. 31 2012 Dec. 31
Voting Holding
Holding Proportion Proportion Proportion Voting Proportion
China Communications
Corporation 28.828% 28.828% 28.828% 28.828%
As of Dec.31, 2013, China Communications Corporation and its controlled Hong Kong
Zhenhua Engineering Co., Ltd. (holding 17.076% stake of the Company) and Macau
Zhenhua Bay Engineering Co., Ltd. (holding 0.325% stake of the Company) together hold
46.229% of the Company’s stake (Dec. 31, 2012: 46.229%).
- 104 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(2) Subsidiary profiles
For information of subsidiaries, refer to Note IV.
(3) Joint ventures and associates
Legal
Holdin
Type Registered representat Registered Voting Organizational
Name Type of business g ratio code
place ives capital ratio
Joint ventures –
Jiangsu Longyuan Marine
Limited Jiangsu
Zhenhua Marine Fei Zhi engineering 260,000,000 50% 50% 555857534
company Nantong
Engineering Co., Ltd. construction
ZPMC Mediterranean
Limited Turkey n.a port machinery 50,000 Turkish
Liman Makinalari 50% 50% n.a (note 1)
company Istanbul (note 1) technical service lira
Ticaret Anonim Sirketi
Associates –
real estate
CCCC Real Estate Limited Jiangsu Sui Jian
operation and 900,000,000 20% 20% 06764341-4
Yixing Co., Ltd. company Wuxi bo
development
Shanghai Zhenhua
Heavy Industries (Group)Limited Jiangsu Zhou Fa
Pain production 49,800,000 20% 20% 72419768-9
Changzhou Paint Co., company Changzhou hua
Ltd.
CCCC Marine vessel
Engineering Vessel technology
Limited Shanghai Chen Y
Technology development 60,000,000 25% 25% 055874741
company Pudong un
Research Centre Co., and
Ltd. consulting
- 105 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(4) Other related parties
Name Organizational
Relation with the Group code
Hong Kong Zhenhua Engineering Co., Ltd. Controlled by the same parent company n.a (note 1)
Macau Zhenhua Bay Engineering Co., Ltd. Controlled by the same parent company n.a (note 1)
CCCC Shanghai Dredging Co., Ltd. Controlled by the same parent company 13222855X
CCCC First Harbor Engineering Co., Ltd. Controlled by the same parent company 103061068
No.1 Engineering Co., Ltd. of CCCC First Harbor Engineering Controlled by the same parent company
Co., Ltd. 103622427
No.2 Engineering Co., Ltd. of CCCC First Harbor Engineering Controlled by the same parent company
Co., Ltd. 163570841
No.5 Engineering Co., Ltd. of CCCC First Harbor Engineering Controlled by the same parent company
Co., Ltd. 105252888
Installation Engineering Co., Ltd.of CCCC First Harbor Controlled by the same parent company
Engineering Co., Ltd. 23879981X
CCCC First Harbor Engineering Survey and Design Institute 401360728
Co., Ltd. Controlled by the same parent company
CCCC Second Harbor Engineering Co., Ltd. Controlled by the same parent company 177685391
No.2 Engineering Co., Ltd. of CCCC Second Harbor
Engineering Co., Ltd. Controlled by the same parent company 778492034
No.3 Engineering Co., Ltd. of CCCC Second Harbor Controlled by the same parent company
Engineering Co., Ltd. 141379843
CCCC Third Harbor Engineering Co., Ltd. Controlled by the same parent company 132660027
CCCC Third Harbor Engineering Survey and Design Institute Controlled by the same parent company
Co., Ltd. 132211555
CCCC Third Harbour Engineering Xing’an Construction Controlled by the same parent company
Engineering Co., Ltd. 133832150
CCCC Fourth Harbour Engineering Co., Ltd. Controlled by the same parent company 190432129
No.2 Engineering Co., Ltd. of CCCC Fourth Harbour Controlled by the same parent company
Engineering Co., Ltd. 190432495
No.1 Engineering Co., Ltd. of CCCC Second Highway 10264769X
Engineering Bureau Co., Ltd. Controlled by the same parent company
No.6 Engineering Co., Ltd. of CCCC Second Highway 103620456
Engineering Bureau Co., Ltd. Controlled by the same parent company
CCCC Second Highway Engineering Bureau Co., Ltd. Controlled by the same parent company 220521254
CCCC Shanghai Equipment Engineering Co., Ltd. Controlled by the same parent company 134616310
CCCC Shanghai Dredging Equipment Industry Co., Ltd. Controlled by the same parent company 133597103
CCCC Tianjin Dredging Co., Ltd. Controlled by the same parent company 103061113
Tianjin China Communications Bomaike Marine Vessel Heavy 666122741
Industry Co., Ltd. Controlled by the same parent company
CCCC Tianhe Machinery Manufacturing Co., Ltd. Controlled by the same parent company 552530122
Yueyang Chenglingji Xingang Co., Ltd. Controlled by the same parent company 661668630
China Harbor Engineering Co., Ltd. Controlled by the same parent company 710933796
China Communications Water Transportation Design & Controlled by the same parent company
Research Co.,Ltd. 400007594
CCCC Highway Consultants Co., Ltd. Controlled by the same parent company 100011866
CCCC Tunnel Engineering Co., Ltd. Controlled by the same parent company 710933470
Friede & Goldman, Llc. Controlled by the same parent company n.a (note 1)
China Communications Materials & Equipment Co., Ltd. Controlled by the same parent company 102027271-1
Shanghai Jiangtian Industrial Co., Ltd. Controlled by the same parent company 13380509-9
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.
- 106 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(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.
(b) Selling goods to Related party
Related 2013 2012
Related party transacti amount Proportion in amount Proportion in
ons same kind same kind
details
Selling 205,152,024 0.89% 346,400,234 1.93%
Friede & Goldman, Llc. goods
CCCC First Harbor Selling 114,440,145 0.50% 409,262,264 2.28%
Engineering Co., Ltd. goods
CCCC Third Harbor Selling 82,764,097 0.36% 36,392,562 0.20%
Engineering Co., Ltd. goods
No.1 Engineering Co., Selling 80,146,121 0.35% - -
Ltd. of CCCC First goods
Harbor Engineering
Co., Ltd.
No.2 Engineering Co., Selling 71,007,524 0.31% - -
Ltd. of CCCC Fourth goods
Harbour Engineering
Co., Ltd.
China Harbor Selling 48,007,343 0.21% 290,815,565 1.62%
Engineering Co., Ltd. goods
CCCC Third Harbor Selling 47,061,169 0.21% - -
Engineering Survey goods
and Design Institute
Co., Ltd.
No.2 Engineering Co., Selling 41,143,743 0.18% - -
Ltd. of CCCC goods
Second Harbor
Engineering Co., Ltd.
No.2 Engineering Co., Selling 8,821,784 0.04% - -
Ltd. of CCCC First goods
Harbor Engineering
Co., Ltd.
Jiangsu Longyuan Selling 8,362,205 0.04% 88,536,202 0.49%
Zhenhua Marine goods
Engineering Co., Ltd.
CCCC Fourth Harbour Selling 6,676,126 0.03% - -
Engineering Co., Ltd. goods
CCCC Shanghai Selling - - 128,409,573 0.72%
Dredging Co., Ltd. goods
CCCC Tianjin Dredging Selling - - 100,787,687 0.56%
Co., Ltd. goods
CCCC Shanghai Selling - - 5,458,020 0.03%
Equipment goods
Engineering Co., Ltd.
China Communications Selling - - 2,964,862 0.02%
Corporation goods
CCCC Second Harbor Selling - - 2,371,795 0.01%
Engineering Co., Ltd. goods
713,582,281 3.12% 1,411,398,764 7.86%
- 107 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(c) Related party provided labour service for the Group
Related 2013 2012
Related party transacti amount Proportion in amount Proportion in
ons same kind
same kind
details
CCCC Second providing 799,509,310 3.79% - -
Highway labour
Engineering
Bureau Co., Ltd.
No.3 Engineering providing 752,787,495 3.57%
Co., Ltd. of CCCC labour
Second Harbor
Engineering Co.,
Ltd.
CCCC Tunnel providing 166,222,974 0.79% - -
Engineering Co., labour
Ltd.
CCCC Third Harbor providing 99,935,530 0.47% - -
Engineering Co., labour
Ltd.
China providing 68,366,760 0.32% 45,299,902 0.27%
Communications labour
Corporation
Installation providing 9,029,456 0.04% - -
Engineering Co., labour
Ltd.of CCCC First
Harbor
Engineering Co.,
Ltd.
CCCC Third Harbour providing 854,701 0.00% - -
Engineering labour
Xing’an
Construction
Engineering Co.,
Ltd.
Tianjin China providing - - 78,539,419 0.46%
Communications labour
Bomaike Marine
Vessel Heavy
Industry Co., Ltd.
1,896,706,226 8.98% 123,839,321 0.73%
(d) Purchasing goods from related party
Related 2013 2012
Related party transactions amount Proportion in amount Proportion in
details same kind same kind
China Communications purchasing 168,908,244 1.16% - -
Materials & Equipment goods
Co., Ltd.
CCCC Shanghai purchasing 125,955,250 0.87% 61,510,825 0.68%
Equipment Engineering goods
Co., Ltd.
Shanghai Zhenhua Heavy purchasing 74,818,457 0.51% 78,436,778 0.86%
Industries (Group) goods
Changzhou Paint Co.,
Ltd.
China Communications purchasing 136,752 0.00% - -
Water Transportation goods
Design & Research
Co., Ltd.
369,818,703 2.54% 139,947,603 1.54%
- 108 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(e) Related party built docks and workshops for the Group
Related 2013 2012
Related party transactio amount Proportion in amount
ns same kind Proportion in
details same kind
CCCC Shanghai providing - - 2,882,000 0.83%
Dredging labour
Equipment
Industry Co.,
Ltd.
CCCC Third providing - - 160,500 0.05%
Harbor labour
Engineering
Co., Ltd.
- - 3,042,500 0.88%
(f) Selling assets or equity to related parties
2013 2012
Related party Related amount Proportion in amount Proportion in
transactio same kind same kind
ns
details
China equity 840,241,472 100% - -
Communications transfer
Corporation
No.1 Engineering Co., asset 440,000,000 99% - -
Ltd. of CCCC First transfer
Harbor Engineering
Co., Ltd.
(g) Key executives’ salaries
2013 2012
Key executives’ salaries 11,687,500 11,020,011
Number of key executives of the Group in 2013 is 26 (2012: 26).
- 109 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(6) Balances of receivables and payables from or to related parties
(a) Receivables from related parties:
2013 Dec. 31 2012 Dec. 31
book value bad debt book value bad debt
balance provision balance provision
Accounts 172,550,780 - 113,640,319 -
receivable CCCC First Harbor Engineering Co., Ltd.
Friede & Goldman, Llc. 90,118,279 - 179,199,606 -
No.1 Engineering Co., Ltd. of CCCC First 69,000,000 - 129,000,000 -
Harbor Engineering Co., Ltd.
CCCC Third Harbor Engineering Co., Ltd. 64,649,984 - 8,490,297 -
China Harbor Engineering Co., Ltd. 55,542,759 - 152,838,218 -
China Communications Corporation 42,121,680 - 48,408,090 -
Jiangsu Longyuan Zhenhua Marine 41,242,615 - 42,517,974 -
Engineering Co., Ltd.
CCCC Third Harbor Engineering Survey 29,000,000 - - -
and Design Institute Co., Ltd.
No.6 Engineering Co., Ltd. of CCCC 16,160,000 - 24,000,000 -
Second Highway Engineering Bureau
Co., Ltd.
CCCC Second Harbor Engineering Co., 14,861,010 - 12,530,000 -
Ltd.
No.1 Engineering Co., Ltd. of CCCC 8,760,000 - 18,800,000 -
Second Highway Engineering Bureau
Co., Ltd.
No.2 Engineering Co., Ltd. of CCCC First 7,949,765 - - -
Harbor Engineering Co., Ltd.
CCCC Fourth Harbour Engineering Co., 6,376,091 - 2,120,000 -
Ltd.
No.2 Engineering Co., Ltd. of CCCC 5,000,000 - 5,000,000 -
Second Harbor Engineering Co., Ltd.
China Communications Water 3,890,000 - - -
Transportation Design & Research
Co.,Ltd.
CCCC Marine Engineering Vessel 1,100,000 - - -
Technology Research Centre Co., Ltd.
CCCC Second Highway Engineering 550,000 - 1,209,000 -
Bureau Co., Ltd.
No.5 Engineering Co., Ltd. of CCCC First 52,861 - - -
Harbor Engineering Co., Ltd.
Yueyang Chenglingji Xingang Co., Ltd. 42,000 - 42,000 -
CCCC Tianhe Machinery Manufacturing - - 6,178,742 -
Co., Ltd.
CCCC Tianjin Dredging Co., Ltd. - - 1,051,764 -
CCCC Highway Consultants Co., Ltd. - - 422,750 -
CCCC Shanghai Equipment Engineering - - 144,000 -
Co., Ltd.
CCCC First Harbor Engineering Survey - - 109,000 -
and Design Institute Co., Ltd.
628,967,824 - 745,701,760 -
Other China Communications
receivables Corporation 672,193,178 - - -
No.1 Engineering Co., Ltd. of
CCCC First Harbor Engineering
Co., Ltd. 10,000,000 - - -
682,193,178 - - -
China Communications
Advances Corporation 18,097,954 - 53,000,886 -
CCCC Third Harbour Engineering
Xing’an Construction
Engineering Co., Ltd. 2,200,000 - 1,200,000 -
20,297,954 - 54,200,886 -
- 110 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(b) Payables to related parties
2013 Dec. 31 2012 Dec. 31
No.3 Engineering Co., Ltd. of CCCC
Advances Second Harbor Engineering Co., Ltd. 414,405,206 -
CCCC Second Highway Engineering
Bureau Co., Ltd. 307,151,472 -
CCCC Tunnel Engineering Co., Ltd. 58,454,836 -
CCCC Third Harbor Engineering Co., Ltd. 53,290,609 252,892
China Communications Materials &
Equipment Co., Ltd. 38,616,112 -
Shanghai Zhenhua Heavy Industries
(Group) Changzhou Paint Co., Ltd. 17,837,158 5,205,406
CCCC Shanghai Equipment Engineering
Co., Ltd. 14,337,357 2,119,853
CCCC Third Harbour Engineering Xing’an
Construction Engineering Co., Ltd. 7,189,906 3,185,045
Installation Engineering Co., Ltd.of CCCC
First Harbor Engineering Co., Ltd. 1,633,418 -
China Communications Water
Transportation Design & Research
Co.,Ltd. 160,000 -
913,076,074 10,763,196
Accounts No.1 Engineering Co., Ltd. of CCCC First
payable Harbor Engineering Co., Ltd. 1,194,097 30,000,000
CCCC Third Harbour Engineering Xing’an
Construction Engineering Co., Ltd. 200,000 200,000
CCCC First Harbor Engineering Co., Ltd. - 1,610,000
1,394,097 31,810,000
Dividends
payable China Communications Corporation 33,472,814 33,472,814
Hong Kong Zhenhua Engineering Co., Ltd. 346,005 346,005
Macau Zhenhua Bay Engineering Co., Ltd. 6,593 6,593
33,825,412 33,825,412
Other
payables China Communications Corporation 25,971,033 42,063,931
Shanghai Jiangtian Industrial Co., Ltd. 17,586,085 -
CCCC Second Highway Engineering
Bureau Co., Ltd. 7,971,852 -
No.3 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 6,981,332 -
CCCC Third Harbor Engineering Co., Ltd. 1,419,932 -
CCCC Tunnel Engineering Co., Ltd. 734,557 -
60,664,791 42,063,931
- 111 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(7) Promises with related parties
Listed The following are promises contracted but not necessarily shown on B/S with related
parties as of B/S day:
Related party provided labour service for the Group 2013 Dec. 31 2012 Dec. 31
CCCC Second Highway Engineering
Bureau 957,934,902 -
CCCC Second Harbor Engineering 925,472,532 -
CCCC Third Harbor Engineering 227,825,813 -
CCCC Tunnel Engineering Co., Ltd. 84,378,627 -
China Communications Corporation 52,667,257 104,749,263
CCCC Third Harbour Engineering Xing’an
Construction Engineering Co., Ltd. 37,076,943 28,967,434
Installation Engineering Co., Ltd.of CCCC
First Harbor Engineering Co., Ltd. 29,435,537 -
CCCC First Harbor Engineering Co., Ltd. 1,000,000 1,000,000
Tianjin China Communications Bomaike
Marine Vessel Heavy Industry Co.,
Ltd. - 1,282,051
2,315,791,611 135,998,748
Related party built docks and workshops for the Group 2013 Dec. 31 2012 Dec. 31
CCCC Third Harbor Engineering Co., Ltd. 13,750,000 13,750,000
Selling goods or assets to related party 2013 Dec. 31 2012 Dec. 31
Friede & Goldman, Llc. 280,587,160 371,586,291
China Communications Water
Transportation Design & Research
Co.,Ltd. 66,495,726 -
CCCC Fourth Harbour Engineering Co.,
Ltd. 60,085,135 -
No.2 Engineering Co., Ltd. of CCCC
Fourth Harbour Engineering Co., Ltd. 54,181,359 -
No.1 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. 40,328,251 440,000,000
CCCC Third Harbor Engineering Co., Ltd. 20,633,487 55,483,009
No.2 Engineering Co., Ltd. of CCCC
Second Harbor Engineering Co., Ltd. 6,652,271 -
China Harbor Engineering Co., Ltd. 5,203,094 72,612,045
CCCC Third Harbor Engineering Survey
and Design Institute Co., Ltd. 4,220,882 -
Jiangsu Longyuan Zhenhua Marine
Engineering Co., Ltd. 897,809 878,259
No.2 Engineering Co., Ltd. of CCCC First
Harbor Engineering Co., Ltd. 580,096 -
CCCC First Harbor Engineering Co., Ltd. 130,177 1,302,906
CCCC Tianjin Dredging Co., Ltd. - 77,648
China Communications Corporation - 103,784,931
539,995,447 1,045,725,089
- 112 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
VII. Contingencies
(1) Suzhong Construction Group Co., Ltd. (Hereinafter referred to as "Suzhong Construction")
contracted the project construction of the Industrial R&D Building in 2008, but the two
sides entered into dispute at settlement upon completion. In September 2013 the
Company filed a request to Shanghai Arbitration Commission for Suzhong Construction to
pay an overdue fine of 7.444 million yuan due to delays of construction and so on, while in
February 2014 Suzhong Construction filed a counterclaim to Shanghai Arbitration
Commission requesting the Company to pay about 162 million yuan for the project
settlement and related interest costs; the arbitration case will be initially heard shortly. The
Company believes the said case shall not impose significant impact on the 2013 financial
statements of the Company.
(2) In 2008 the Company and Flour Limited (hereinafter referred to as "Fluor") British wind
power project signed an agreement of sales and installation for wind power steel pipe pile
products for the British Wind Power Project. In the project construction process, the
Company and Fluor, by way of friendly consultations and in the spirit of good cooperation,
maintain dispute handling normal communication mechanism. In June 2010, for the
implementation of the contract, after review by the board of directors of the Company, the
Company and Fluor signed a mutual exemption letter, and in 2011 settled the remaining
payment. Afterwards, Flour produced claim to the Company for quality compensation, and
requested the Company to cash the pay-on-claim quality guarantee bond, while the
Company rejected the claim. On March 20, 2014 Flour cashed the amount of 23,409,750
euro bond. The Company has consulted professional lawyers, and is planning to claim
under the guarantee bond a compensation for principal and interest loss through
corresponding legal procedures.
- 113 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
VIII 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.
2013 Dec. 31 2012 Dec. 31
House, building and equipment 92,345,336 156,329,122
(2) Operating leasing Promises
According to non-revocable operating leasing contracts signed, the minimum rent to be
paid is listed as follows:
2013 Dec. 31 2012 Dec. 31
within one year 14,854,526 16,536,126
one to two years 14,492,026 16,854,526
two to three years 14,849,826 15,158,692
above three years 119,163,753 134,013,579
163,360,131 182,562,923
(3) L/C Promises
The company entrusted bank to issue several L/C’s to purchase imported
components or parts. As of Dec.31, 2013 payables under the L/C’s amounted to
1,796,062,094 yuan (Dec. 31, 2012: 1,668,474,175 yuan).
- 114 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
IX B/S future events
(1) Significant external investments
(a) The Group and Jiangsu Daoda Offshore Heavy Industry Company Limited signed an
investment increment agreement in February 2014. According to the agreement, the
Group added investment by 203,000,000 yuan into Jiangsu Daoda Offshore Heavy
Industry Company Limited, and acquired a 67% stake in the company. The deal got
approval by the Company's twenty-third meeting of the fifth board of directors on January
29, 2014. As of the date of approval for reporting of the financial statements, the
transaction had been completed.
(b) The Company considered and adopted the "Motion on Equity Participation in CCCC
Financing and Leasing Company Limited" on March 24, 2014 at the twenty-fifth meeting
of the fifth board of directors, by which the Company, together with its parent company
China Communications Corporation, related party Chuwa Bussan Co., Ltd. and CCCC
International (Hongkong) Holding Company Limited, jointly funded the establishment of
CCCC Financing and Leasing Company Limited (tentative name, subject to Industrial
and Commercial registration authority for final approval); the company's registered capital
being 5,000,000,000 yuan, of which, the Company invested 1,500,000,000 yuan, holding
30%. The matter still needs to submit to the 2013 annual shareholders meeting for
adoption.
(2) Significant accounting estimate changes
With the business expansion, in order to refine and improve the management of fixed
assets and receivables of the Company, reflect the Company's financial position,
operating results in more objective and more accurate way and provide more reliable,
accurate accounting information, in reference to the Group's prior practical annual
experience in the management of accounts receivable and fixed assets, the Group made
changes in accounting estimates of receivables' bad debt provision and part of the fixed
asset classification, the expected service life and expected net salvage value rate starting
from January 1, 2014. This mentioned changes have been approved by the Company's
twenty-fifth meeting of the fifth board of directors on March 24, 2014.
Because the amount and structure of the receivables as of December 31, 2014 and the
amount of movement of fixed assets in 2014 cannot be accurately predicted, the Group
relied on receivables of 2013 as of Dec. 31and amount and structure of fixed assets, for
the initial estimates. It is forecasted the changes in accounting estimates will increase
2014 annual consolidated gross profit by about 140,000,000 yuan.
X Other Events
The Group entered in 2009 with Spanish ADHK Company into contract with total value of
USD 2.2 billion for purchase of heavy load equipment. The project in 2013 achieved no
substantial progress. As of Dec. 31, 2012, the Group has invested 508,910,320 yuan to
prepare materials and production, but income and cost are not yet recognized. In 2013,
Group digested or transferred assets investment into other project totaling 120,571,200
yuan, and wrote off 82,000,000 yuan of stock; for some stock with signs of impairment, a
provision of inventory impairment of 70,779,502 yuan was made. As of Dec. 31, 2013,
remaining net assets investment amounts to 235,559,618 yuan, to be regarded as the
Company's inventory.
- 115 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
XI 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) Foreign 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 foreign risks. Considering above, the Group controls its foreign
risks via establishing time foreign contracts. As of Dec. 31, 2013 and Dec. 31, 2012
status of time foreign contracts not due are shown in Note V (2).
As of Dec. 31, 2013 and Dec. 31, 2012, RMB amount of the Group’s foreign
currency financial assets and financial Liabilities are listed as follows:
Dec. 31, 2013 (RMB Equivalents)
Other
Foreign
USD Euro monetary Total
Foreign monetary
Financial assets - -
Monetary capital 1,054,621,917 322,790,729 148,402,668 1,525,815,314
Receivables 2,140,090,105 413,722,164 86,917,165 2,640,729,434
3,194,712,022 736,512,893 235,319,833 4,166,544,748
Foreign monetary
financial liabilities - -
short-term loans 9,583,865,004 - - 9,583,865,004
Payables 286,193,028 235,478,511 2,138,091 523,809,630
Non-current liabilities
due within one
year 176,810,100 - - 176,810,100
Long term loans 1,463,256,000 - - 1,463,256,000
11,510,124,132 235,478,511 2,138,091 11,747,740,734
- 116 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(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
As of December 31, 2013, regarding all kinds of financial assets and financial liabilities in
USD of the Group, if the yuan sees an appreciation or depreciation by 1% against the
dollar, while other factors remain unchanged, the Group will increase or decrease the total
profit by approximately 83,154,121 yuan (December 31, 2012: to reduce or increase the
losses totaling approximately 76,808,028 yuan).
As of December 31, 2013, regarding the Group's all kinds of financial assets in Euro and
the financial liabilities in Euro, if the RMB sees appreciation or depreciation agaginst Euro
by 1%, while other factors remain unchanged, the Group will reduce or increase the total
profit by approximately 5,010,344 yuan (December 31, 2012: to increase or reduce the
total amount of losses by 3,467,563 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
confront the Group with cash flow interest rate risks, while financial liabilities with fixed
rates put the Group against fair value interest rate risks. The Group fixes the fraction of
contracts with fixed rates and those with flexible rates based on corresponding market
environment. As of Dec. 31, 2013, 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 and USD. Amount of contracts with flexible rates priced in USD is 1,280,349,000
yuan (Dec. 31, 2012: 873,684,500 yuan); and the amount of contracts with fixed rates
priced in RMB is 4,447,777,911 yuan (Dec. 31, 2012: 7,984,665,674 yuan). and the
amount of contracts with fixed rates priced in USD is 182,907,000 yuan (Dec. 31,2012:
No).
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 2013, the Group had no
such swap arrangements.
As of Dec. 31, 2013 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
- 117 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
decrease or increase a total interest expenditure of about 12,803,490 yuan (2012: total
increased or decreased interest expenditure amount being 8,736,845 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.
- 118 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
On Dec. 31, 2013, 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. 31,2013
within one year one to two years two to five years no limit Total
Financial assets
Monetary capital 3,515,643,963 - - - 3,515,643,963
Receivables 4,633,244,634 - - - 4,633,244,634
Notes receivable 334,519,241 - - - 334,519,241
Interest
receivable 5,088,988 - - - 5,088,988
Available-for-sale
financial assets 4,202,678,325 - - 172,770,000 4,375,448,325
12,691,175,151 - - 172,770,000 12,863,945,151
Financial
liabilities-
short-term loans 14,862,020,976 - - - 14,862,020,976
Payables 3,995,241,377 - - - 3,995,241,377
Notes payable 1,218,223,112 - - - 1,218,223,112
Interest payable 418,390,614 - - - 418,390,614
Dividends
payable 33,825,412 - - - 33,825,412
Non-current
liabilities due
within one year 4,510,392,379 - - - 4,510,392,379
Long term loans 74,025,188 1,559,320,876 617,505,619 - 2,250,851,683
Bonds payable 225,387,500 225,387,500 3,834,580,000 - 4,285,355,000
25,337,506,558 1,784,708,376 4,452,085,619 - 31,574,300,553
- 119 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
On Dec. 31, 2012, 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 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
- 120 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(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, 2013 Dec. 31, 2012
book value fair value book value fair value
Financial liabilities -
Long term loans 1,930,349,000 2,017,004,376 873,684,500 818,922,763
Bonds payable 3,797,777,911 3,776,441,036 7,984,665,674 7,943,115,828
5,728,126,911 5,793,445,412 8,858,350,174 8,762,038,591
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:
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.
- 121 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
On Dec. 31, 2013, financial assets and liabilities measured by fair value are listed as
follows based on above 3 tiers:
tier one tier two tier three Total
Financial assets-
Trading financial assets
- Forward foreign
exchange contracts - 121,169,489 - 121,169,489
Available-for-sale financial
assets
- Available-for-sale
equity instruments 172,770,000 - - 172,770,000
- short-term financial
products - 4,202,678,325 - 4,202,678,325
172,770,000 4,323,847,814 - 4,496,617,814
Financial liabilities -
Trading financial liabilities
- Forward foreign
exchange contracts - 644,404 - 644,404
- 644,404 - 644,404
On Dec. 31, 2012, financial assets and liabilities measured by fair value are listed as
follows based on above 3 tiers:
tier one tier two tier 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
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.
- 122 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
XII Assets and liabilities measured by fair value
Dec. 31, 2012 Fair value change Cumulative fair Dec. 31, 2013
gains/losses value change into
report year equity
Financial assets-
Trading financial assets 26,009,477 95,160,012 - 121,169,489
Available-for-sale financial
assets 1,124,222,545 - 187,988,540 4,375,448,325
1,150,232,022 95,160,012 187,988,540 4,496,617,814
Financial liabilities -
Trading financial liabilities - 644,404 - 644,404
- 123 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
XIII Notes to major items in the Company’s statements
(1) Accounts receivable
Dec. 31, 2013 Dec. 31, 2012
Accounts receivable 5,821,700,760 4,872,828,464
Less: bad debt provision (702,957,451) (402,368,505)
5,118,743,309 4,470,459,959
(a) Accounts receivable debt age as follows:
Dec. 31, 2013 Dec. 31, 2012
within one year 4,924,292,178 3,933,909,917
one to two years 365,816,488 610,326,899
two to three years 209,602,610 123,351,362
above three years 321,989,484 205,240,286
5,821,700,760 4,872,828,464
(b) Accounts receivable listed in type as follows:
Dec. 31, 2013 Dec. 31, 2012
book value balance bad debt provision book value balance bad debt provision
amount ratio amount ratio amount ratio amount ratio
Big single amount,
provided for bad
debt separately 158,184,500 3% (158,184,500) 100% - - - -
Total bad debt
provision accrued
in groups Credit
risk portfolio
- Related party 2,305,650,780 40% - - 1,617,791,219 33% - -
- third party 3,320,989,427 57% (510,279,469) 15% 3,206,776,880 66% (365,972,637) 11%
Single amount,
though not
significant,
separate
provision for bad
debt made 36,876,053 0% (34,493,482) 94% 48,260,365 1% (36,395,868) 75%
5,821,700,760 100% (702,957,451) 12% 4,872,828,464 100% (402,368,505) 8%
- 124 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(c) As of Dec. 31, 2013, the Company had no accounts receivable with big single amount, provided for
bad debt
book value balance bad debt provision proportion Reason
Accounts receivable 1 107,819,500 (107,819,500) 100% (i)
Accounts receivable 2 50,365,000 (50,365,000) 100% (ii)
158,184,500 (158,184,500) 100%
(i) As of Dec. 31, 2013, because the counter-party seriously lacks funds, the Company concludes
the accounts receivable concerned are hard to recover, therefore full amount is provided for bad
debts.
(ii) As of Dec. 31, 2013, because the counter-party seriously lacks funds, the Company concludes
the accounts receivable concerned are hard to recover, therefore full amount is provided for bad
debts.
(d) Among account receivable from total bad debt provision made in groups, portfolio analysis by ages
Dec. 31, 2013 Dec. 31, 2012
book value balance bad debt provision book value balance bad debt provision
amount ratio amount ratio amount ratio amount ratio
within one
year 2,472,945,980 75% (14,901,997) 1% 2,556,309,118 80% (31,728,187) 1%
one to two
years 347,427,051 10% (100,425,131) 29% 336,517,434 10% (90,916,301) 27%
two to
three years 188,240,912 6% (82,576,857) 44% 123,242,362 4% (52,620,183) 43%
above
three years 312,375,484 9% (312,375,484) 100% 190,707,966 6% (190,707,966) 100%
3,320,989,427 100% (510,279,469) 15% 3,206,776,880 100% (365,972,637) 11%
(e) As of Dec. 31, 2013, accounts receivable with bad debt provision, with not big single amount but
being tested separately for impairment as follows:
book value balance bad debt provision proportion Reason
Accounts (i)
receivable1 19,754,355 (19,754,355) 100%
Accounts (ii)
receivable2 17,121,698 (14,739,127) 86%
36,876,053 (34,493,482) 94%
(i) As of Dec. 31, 2013, due to contract dispute, the Company concludes that the accounts
receivable would be difficult to recover.
(ii) As of Dec. 31, 2013, due to delayed delivery, the Company made bad debt provision of
14,739,127yuan based on the highest fine in the contract.
- 125 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(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 debts Return or collection amount Amount of return or
return or basis of accumulative bad debt collection
collection provision amount
Anticipated not
Accounts Vigorous possible to
receivable 1 recovery recover 12,658,756 12,658,756
Anticipated not
Accounts Vigorous possible to
receivable 2 recovery recover 2,785,384 2,785,384
Anticipated not
Accounts Vigorous possible to
receivable 3 recovery recover 1,900,315 1,900,315
Anticipated not
Accounts Vigorous possible to
receivable 4 recovery recover 1,717,998 1,717,998
Anticipated not
Accounts Vigorous possible to
receivable 5 recovery recover 1,160,000 1,160,000
Anticipated not
Accounts Vigorous possible to
receivable 6 recovery recover 1,000,000 1,000,000
21,222,453 21,222,453
(g) Accounts receivable from shareholding units holding 5% (inclusive) stake of the Company as
follows:
Dec. 31, 2013 Dec. 31, 2012
bad debt
amount bad debt provision amount provision
China Communications
Corporation 39,794,900 - 48,408,090 -
- 126 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(h) Account receivable from related parties:
Dec. 31, 2013 Dec. 31, 2012
Name Relation with the amount Proportion in bad amount Proportion in bad
Company total (%) debt total (%) debt
pro. pro.
Shanghai Zhenhua Heavy subsidiary 642,375,373 11.03% - 203,028,952 4.17% -
Industries Group (Nantong)
Co., Ltd.
Shanghai Zhenhua Heavy subsidiary 351,160,520 6.03% - 144,454,055 2.96% -
Industries Machinery Co.,
Ltd.
Shanghai Zhenhua Heavy subsidiary 257,242,260 4.42% - 116,635,791 2.39% -
Industries Group
(Nantong) Transmission
Machinery Co., Ltd.
Nantong Zhenhua Heavy subsidiary 177,575,445 3.05% - 103,223,799 2.12% -
Industry Equipment
Manufacturing Co., Ltd.
CCCC First Harbor Controlled by 172,550,780 2.96% - 113,640,319 2.33% -
Engineering Co., Ltd. the same
parent
company
Shanghai Zhenhua Port subsidiary 163,050,326 2.80% - 68,602,656 1.41% -
Machinery Heavy Industry
Co., Ltd.
Friede & Goldman, Llc Controlled by 90,118,279 1.55% - 179,199,606 3.68% -
the same
parent
company
No.1 Engineering Co., Ltd. of Controlled by 69,000,000 1.19% - 129,000,000 2.65% -
CCCC First Harbor the same
Engineering Co., Ltd. parent
company
Shanghai Zhenhua Heavy subsidiary 65,711,778 1.13% - 40,926,943 0.84% -
Industries (Group)
Zhangjiagang Port
Machinery Co., Ltd.
CCCC Third Harbor Controlled by 64,649,984 1.11% - 8,490,297 0.17% -
Engineering Co., Ltd. the same
parent
company
China Harbor Engineering Controlled by 55,542,759 0.95% - 152,838,218 3.14% -
Co., Ltd. the same
parent
company
Shanghai Zhenhua Heavy subsidiary 42,513,871 0.73% - 592,255 0.01% -
Industries Electric Co., Ltd.
Jiangsu Longyuan Zhenhua Joint ventures 41,044,792 0.71% - 42,508,950 0.87% -
Marine Engineering Co., Ltd. –
China Communications parent 39,794,900 0.68% - 48,408,090 0.99% -
Corporation company
CCCC Third Harbor Controlled by 29,000,000 0.50% - - - -
Engineering Survey and the same
Design Institute Co., Ltd. parent
company
CCCC Second Harbor Controlled by 14,861,010 0.26% - 12,530,000 0.26% -
Engineering Co., Ltd. the same
parent
company
No.2 Engineering Co., Ltd. of Controlled by 7,949,765 0.14% - - - -
CCCC First Harbor the same
Engineering Co., Ltd. parent
company
CCCC Fourth Harbour Controlled by 6,376,091 0.11% - 2,120,000 0.04% -
Engineering Co., Ltd. the same
parent
company
Shanghai Zhenhua Shipping subsidiary 6,200,848 0.11% - 6,200,848 0.13% -
Co., Ltd.
No.2 Engineering Co., Ltd. of Controlled by 5,000,000 0.09% 5,000,000 0.10% -
CCCC Second Harbor the same
Engineering Co., Ltd. parent
company
- 127 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
China Communications Controlled by 3,890,000 0.07% - - - -
Water Transportation Design the same
& Research Co.,Ltd. parent
company
Yueyang Chenglingji Xingang Controlled by 42,000 0.00% - 42,000 0.00% -
Co., Ltd. the same
parent
company
Shanghai Zhenhua (Hong subsidiary - - - 180,337,600 3.70% -
Kong) Co., Ltd.
ZPMC GmbH Hamburg subsidiary - - - 52,248,584 1.07% -
CCCC Tianhe Machinery Controlled by - - - 6,178,742 0.13% -
Manufacturing Co., Ltd. the same
parent
company
CCCC Tianjin Dredging Co., Controlled by - - - 1,051,764 0.02% -
Ltd. the same
parent
company
CCCC Highway Consultants Controlled by - - - 422,750 0.01% -
Co., Ltd. the same
parent
company
CCCC First Harbor Controlled by - - - 109,000 0.00% -
Engineering Survey and the same
Design Institute Co., Ltd. parent
company
2,305,650,781 39.62% - 1,617,791,219 33.19% -
- 128 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(i) As of Dec. 31, 2013 top 5 accounts receivable balance as follows:
Relation with the amount age Proportion in
Company total accounts
receivable
COMPANY A subsidiary 642,375,373 within one 11%
year
COMPANY B subsidiary 351,160,520 within one 6%
year
COMPANY C subsidiary 257,242,260 within one 4%
year
COMPANY D subsidiary 177,575,445 within one 3%
year
COMPANY E Controlled by the 172,550,780 within one 3%
same parent company year/one to
two years
1,600,904,378 27%
(2) Other receivables
Dec. 31, 2013 Dec. 31, 2012
Subsidiary current accounts 7,403,332,620 7,139,556,944
Receivables from parent company
equity for transfer 403,315,906 -
Receivables employees mutual aid
funds 94,735,938 109,243,885
Tax for unsettled payment receivable 74,555,897 82,694,087
Temporary loan product on-site
service 72,392,144 49,731,163
Leasing payment receivable 31,700,229 -
Bid bond payments 20,684,428 8,404,428
Unit borrower receivable 19,520,000 19,520,000
Asset disposal payment receivable
from related party 10,000,000 -
Customs guarantee deposit 9,879,707 74,106,771
export tax rebate 4,604,376 1,516,922
Government subsidy payments - 300,000
Others 34,069,638 7,357,501
8,178,790,883 7,492,431,701
Less: bad debt provision (12,049,965) -
8,166,740,918 7,492,431,701
- 129 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(a) Other receivables debt age analysis as follows:
2013 Dec. 31 2012 Dec. 31
within one year 8,036,295,908 7,334,862,889
one to two years 39,176,687 37,843,761
two to three years 2,328,414 3,239,561
above three years 100,989,874 116,485,490
8,178,790,883 7,492,431,701
(b) Other receivables classified in category as follows:
Dec. 31, 2013 Dec. 31, 2012
book value balance bad debt provision book value balance bad debt
provision
amount ratio amount ratio amount proportio amount ratio
n in total
Big single amount,
provided for bad
debt separately 8,099,912,442 99% - - 7,455,332,850 100% - -
Single amount,
though not
significant,
separate
provision for bad
debt made 78,878,441 1% (12,049,965) 15% 37,098,851 - - -
8,178,790,883 100% (12,049,965) - 7,492,431,701 100% - -
(c) As of Dec. 31, 2013, 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, 2013, other receivables with not significant single amount but individual bad
debt provision is made:
book value balance bad debt provision proportion
Other receivables 1 5,540,286 (5,540,286) 100%
Other receivables 2 3,037,042 (3,037,042) 100%
Other receivables 3 1,779,872 (1,779,872) 100%
Other receivables 4 1,692,765 (1,692,765) 100%
12,049,965 (12,049,965) 100%
As of Dec. 31, 2013, the other receivables concerned are hard to recover, as beleived by the
Company, due to concellation of contract. Therefore, it is fully provided for bad debts.
- 130 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(e) Other receivables from shareholding units holding 5% (inclusive) stake of the Company as
follows:
Dec. 31, 2013 Dec. 31, 2012
bad debt bad debt
amount provision amount provision
China
Communicati
ons
Corporation 403,315,906 - - -
(f) Other receivables from related parties:
Dec. 31, 2013 Dec. 31, 2012
Relation amount Proportion in bad amount Proportion in bad
with the total (%) debt total (%) debt
Company pro. pro.
Nantong Zhenhua Heavy subsidiary 2,127,502,833 26.01% - 1,953,091,300 26.07% -
Industry Equipment
Manufacturing Co., Ltd.
Shanghai Zhenhua Heavy subsidiary 1,746,172,998 21.35% - 1,799,416,525 24.02% -
Industries Group
(Nantong) Co., Ltd.
Shanghai Zhenhua Port subsidiary 1,156,838,302 14.14% - 463,616,727 6.19% -
Machinery (Hong Kong)
Co., Ltd.
Shanghai Zhenhua subsidiary 1,048,649,135 12.82% - 1,163,793,850 15.53% -
Shipping Co., Ltd.
Shanghai Zhenhua Heavy subsidiary 595,793,870 7.28% - 827,164,637 11.04% -
Industries Group
(Nantong) Transmission
Machinery Co., Ltd.
China Communications parent 403,315,906 4.93% - -
Corporation company
Shanghai Zhenhua Heavy subsidiary 350,391,941 4.28% - 728,923,905 9.73% -
Industries Machinery Co.,
Ltd.
Shanghai Zhenhua Heavy subsidiary 176,383,531 2.16% - 71,294,761 0.95% -
Industries (Group)
Zhangjiagang Port
Machinery Co., Ltd.
Shanghai Zhenhua Port subsidiary 161,230,823 1.97% - - - -
Machinery Heavy
Industry Co., Ltd.
ZPMC GmbH Hamburg subsidiary 16,222,290 0.20% - 176,274 0.00% -
Shanghai Zhenhua Port subsidiary 13,538,320 0.17% - 126,445,956 1.69% -
Machinery Heavy
Industry Co., Ltd.
No.1 Engineering Co., Ltd. Controlled by 10,000,000 0.12% - -
of CCCC First Harbor the same
Engineering Co., Ltd. parent
company
ZPMC Netherlands B.V.i.o. subsidiary 7,299,486 0.09% - 4,686,661 0.06% -
subsidiary 3,309,091 0.04% - 86,726 0.00% -
Shanghai Jiangtian Controlled by - - - 831,502 0.01% -
Industrial Co., Ltd. the same
parent
company
CCCC Marine Engineering Associates - - - 28,120 0.00% -
Vessel Technology
Research Centre Co.,
Ltd.
7,816,648,526 95.56% - 7,139,556,944 95.29% -
- 131 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(g) On Dec. 31, 2013, top 5 of amount other receivables:
Relation with the amount age Other
Company receivables
total proportion
COMPANY A within one
subsidiary 2,127,502,834 year 26%
within one
COMPANY B subsidiary 1,746,172,998 year 21%
COMPANY C within one
subsidiary 1,156,838,302 year 14%
COMPANY D within one
subsidiary 1,048,649,135 year 13%
COMPANY E within one
subsidiary 595,793,870 year 7%
6,674,957,139 81%
(3) Long term equity investment
2013 Dec. 31 2012 Dec. 31
subsidiary(a) 4,475,486,245 4,039,669,024
Joint ventures –(b) 145,286,585 147,056,419
Associates(c) 208,433,032 29,703,740
OthersLong term equity
investment(d) 27,440,000 27,440,000
4,856,645,862 4,243,869,183
There are no limits to value realization of the company’s long term equity investment.
- 132 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(a) Subsidiaries
initial investment Dec. 31, 2012 Addition report Dec. 31, 2013 Ratio of Remarks on Depreciatio accrued
period Holding voting difference between n reserve report year
ratio rights proportion of shares Depreciation
Accounting basis and voting rights reserve
Shanghai Zhenhua Port Machinery Heavy On cost basis 4,950,000 4,950,000 - 4,950,000 90% 90% n.a - -
Industry Co., Ltd.
Shanghai Zhenhua Heavy Industries Machinery On cost basis 5,014,200 5,014,200 - 5,014,200 70% 70% n.a - -
Co., Ltd.
Shanghai Zhenhua Port Machinery (Hong Kong) On cost basis - - - - 99.99% 99.99% n.a - -
Co., Ltd.
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 (Group) On cost basis - 4,518,000 - 4,518,000 90% 90% n.a - -
Zhangjiagang Port Machinery Co., Ltd.
Nantong Zhenhua Heavy Industry Equipment On cost basis 854,936,900 854,936,900 - 854,936,900 100% 100% n.a - -
Manufacturing Co., Ltd.
Nantong Zhenhua Heavy Industry Steel Structure On cost basis 598,110 598,110 - 598,110 100% 100% n.a - -
Processing Co., Ltd.
Jiangyin Zhenhua Port Machinery Steel Structure On cost basis 579,983 579,983 - 579,983 100% 100% n.a - -
Manufacturing Co., Ltd.
CCCC Shanghai Port Machinery Plant Co., Ltd. On cost basis 2,201,086,744 2,201,086,744 - 2,201,086,744 100% 100% n.a - -
Shanghai Jiangtian Industrial Co., Ltd. (notes On cost basis 70,366,757 70,366,757 (70,366,757) - - - n.a - -
IV(3))
Shanghai Zhenhua Heavy Industries Group On cost basis 300,000,000 300,000,000 - 300,000,000 100% 100% n.a - -
(Nantong) Transmission Machinery Co., Ltd.
Shanghai Zhenhua Heavy Industries Group On cost basis 300,000,000 300,000,000 - 300,000,000 100% 100% n.a - -
(Nantong) Co., Ltd.
Shanghai Zhenhua Heavy Industries Electric Co., On cost basis 50,000,000 50,000,000 - 50,000,000 100% 100% n.a - -
Ltd.
ZPMC GmbH Hamburg On cost basis 207,940 207,940 - 207,940 100% 100% n.a - -
ZPMC Netherlands B.V. On cost basis 149,717 149,717 - 149,717 100% 100% n.a - -
Shanghai Zhenhua Heavy Industries Vessel On cost basis 100,000,000 100,000,000 - 100,000,000 100% 100% n.a - -
Transport Co., Ltd.
Shanghai Zhenhua Testing Technology On cost basis 7,000,000 7,000,000 - 7,000,000 100% 100% n.a - -
Consulting Co., Ltd.
ZPMC LANKA COMPANY (PRIVATE) On cost basis 6,183,978 - 6,183,978 6,183,978 70% 70% n.a - -
LIMITED(notes IV(2))
Nanjing Ninggao New Channel Construction Co., On cost basis 500,000,000 - 500,000,000 500,000,000 100% 100% n.a - -
Ltd. (notes IV(2))
4,039,669,024 435,817,221 4,475,486,245 - -
- 133 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(b) Joint ventures
Addition report period
Accounti initial investment Dec. 31, 2012 Dec. 31, 2013 Holding Remarks on Depreciation accrued report
ng basis proporti Proporti difference between reserve year
addition or Net gains after on on of proportion of Depreciation
deduction of adjusting on voting shares and voting reserve
investment equity(Notes XIII(5)) rights rights
Jiangsu Longyuan Zhenhua
Marine Engineering Co., Ltd. On equity
basis 130,000,000 147,056,419 - (1,853,034) 145,203,385 50% 50% n.a - -
ZPMC Mediterranean Liman
Makinalari Ticaret Anonim
On equity
Sirketi (notes V(13)(a))
basis 71,416 - 71,416 11,784 83,200 50% 50% n.a - -
130,071,416 147,056,419 71,416 (1,841,250) 145,286,585 - -
- 134 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(c) Associates
Addition report period
Accounting initial investment Dec. 31, 2012 addition or deduction Net gains after Dec. 31, 2013 Holding Remarks on Depreciation accrued
basis of investment adjusting on equity proportio difference between reserve report year
(Notes XIII(5)) n Proportion proportion of Depreciation
of voting shares and voting reserve
rights rights
CCCC Real Estate On equity 180,000,000 - 180,000,000 (2,120,634) 177,879,366 20% 20% n.a - -
Yixing Co., Ltd. basis
Shanghai Zhenhua On equity 13,736,943 14,703,740 - 849,926 15,553,666 20% 20% n.a - -
Heavy Industries basis
(Group) Changzhou
Paint Co., Ltd.
CCCC Marine On equity 15,000,000 15,000,000 - - 15,000,000 25% 20% n.a - -
Engineering Vessel basis
Technology
Research Centre
Co., Ltd.
29,703,740 180,000,000 (1,270,708) 208,433,032 - -
- 135 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(d) Other long term equity investment
initial Dec. 31, 2012 Addition report Dec. 31, 2013 Holding Proportio Remarks on Depreciation accrued
investment period proporti n of difference between reserve report year
Accounting on voting proportion of shares Depreciation cash dividends
basis rights and voting rights reserve announced
Nantong Zhenhua Hongcheng Heavy On cost 10,000,000 10,000,000 - 10,000,000 5% 5% n.a - - -
Load Forging Co., ltd. basis
Shanghai Zhenhua Port Machinery On cost 500,000 800,000 - 800,000 10% 10% n.a - - -
Longchang Lift Equipment Co. Ltd. basis
Shanghai Zhenhua Port Machinery On cost 500,000 1,500,000 - 1,500,000 10% 10% n.a - - -
(Group) Shenyang Lift Co., Ltd. basis
Shanghai Zhenhua Port Machinery On cost 300,000 740,000 - 740,000 7.40% 7.40% n.a - - -
(Group) Ningbo Transmission basis
Machinery Co. Ltd
CCCC Highway Long and Large On cost 8,000,000 8,000,000 - 8,000,000 10% 10% n.a - - -
Bridge Construction State Project basis
Research Centre Co., Ltd.
CCCC Dredging Technology & On cost 6,400,000 6,400,000 - 6,400,000 10% 10% n.a - - -
Equipment State Project Research basis
Centre Co., Ltd.
27,440,000 - 27,440,000 - - -
- 136 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(4) Operating revenue and operating cost
2013 2012
Major operating income 20,072,846,485 17,502,524,063
Other operating income 1,180,152,835 1,601,369,331
21,252,999,320 19,103,893,394
2013 2012
Major operating cost 18,565,818,406 16,798,037,342
Other operating cost 1,215,852,568 1,573,173,210
19,781,670,974 18,371,210,552
(a) Major operating income and major operating cost
(i) In products:
2013 2012
Major operating Major operating Major operating Major operating
income cost income cost
Container
cranes 12,048,100,723 10,707,367,110 10,577,300,304 9,818,111,697
Marine heavy
equipment 4,158,835,128 4,062,662,794 3,425,115,151 3,331,334,313
Bulk machinery 3,008,979,696 2,957,615,427 2,868,417,172 2,909,024,128
Steel structures 856,930,938 838,173,075 631,691,436 739,567,204
20,072,846,485 18,565,818,406 17,502,524,063 16,798,037,342
(ii) In regions
2013 2012
Major operating Major operating Major operating Major operating
income cost income cost
Asia (excluding
Mainland China) 7,746,484,045 6,978,332,660 3,773,104,834 3,559,098,213
America 4,040,582,642 3,767,509,442 3,209,572,843 3,072,142,688
Mainland China 3,782,022,044 3,738,245,234 5,221,247,763 5,130,205,260
Europe 2,545,473,623 2,395,798,784 2,724,992,976 2,803,607,358
Mainland
China(export) 861,835,588 744,375,598 924,361,622 796,642,941
Africa 737,050,491 630,806,445 949,894,192 799,039,878
Oceania 359,398,052 310,750,243 699,349,833 637,301,004
20,072,846,485 18,565,818,406 17,502,524,063 16,798,037,342
- 137 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(In RMB yuan except for otherwise specified)
(b) Other operating income and Other operating cost
2013 2012
Other operating Other operating Other operating Other operating
income cost income cost
Sales of materials 960,242,197 1,068,189,845 1,414,508,987 1,431,817,655
Equipment leasing
and others 219,910,638 147,662,723 186,860,344 141,355,555
1,180,152,835 1,215,852,568 1,601,369,331 1,573,173,210
(c) Operating income from top 5 clients
Income from top 5 clients is 3,597,119,036 yuan (2012: 2,021,921,087 yuan), taking 17%
of total sales income of the Company. (2012, taking up 11%). Details as follows:
Operating revenue Proportion in total operating
revenue of the Company
(%)
COMPANY A 1,126,665,069 5%
COMPANY B 702,443,948 3%
COMPANY C 657,171,711 3%
COMPANY D 571,551,760 3%
COMPANY E 539,286,548 3%
3,597,119,036 17%
(5) Investment gains
2013 2012
Long term equity investment (loss)/gains on equity basis
(Notes XIII (3)) (3,111,958) 21,445,467
Investment gains during holding available-for-sale
financial assets 151,188,587 119,646,705
Investment loss from disposal of subsidiaries 433,778,126 -
581,854,755 141,092,172
- 138 -
SHANGHAI ZHENHUA HEAVY INDUSTRIES CO., LTD.
Notes to the FINANCIAL STATEMENTS for the Year 2013
(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
2013 2012
Net loss (109,688,035) (877,836,392)
Add/(less): assets impairment provision 793,738,223 389,548,762
Fixed assets and Real estate as
investment depreciation 662,949,380 751,310,134
Intangible assets and Real estate as
investment amortization 43,496,658 44,236,057
Disposal of fixed assets, intangible assets
and other long-term assets income (242,889,793) (98,519,968)
Fair value change (income )/loss (87,557,341) 37,464,534
Financial expense 499,251,967 601,227,019
Investment gains (581,854,755) (141,092,172)
Deferred corporate tax assets increase (14,540,533) (71,738,500)
Inventories (decrease)/ increase 1,097,122,613 (802,593,729)
Building contract amount decrease 1,152,584,073 993,465,338
Operating receivables increase (1,845,335,915) (486,596,728)
Operating payables ( decrease) /
increase (24,920,546) 2,964,988,005
Net cash flow from operation activities 1,342,355,996 3,303,862,360
(b) Net cash movement
2013 2012
Closing cash balance 2,736,478,139 2,137,291,866
Less: starting cash balance (2,137,291,866) (1,654,563,902)
Net cash increase 599,186,273 482,727,964
- 139 -
