深赤湾Ａ(000022)深赤湾Ｂ2001年年度报告（英文版）

cStock code: 000022 (200022) Short form of the stock: Shen Chiwan A/Shen Chiwan B No. 2002-008 SHENZHEN CHIWAN WHARF HOLDINGS LIMITED 2001 ANNUAL REPORT SUMMARY Important Notice: The Board of Directors of Shenzhen Chiwan Wharf Holdings Limited (hereinafter referred to as the “Company”) individually and collectively accepts responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions nor errors which would render any statement misleading. This report has been prepared in Chinese version and English version respectively. In the event of difference in interpretation between the two versions, the Chinese report shall prevail. I. COMPANY PROFILE 1. Company's Name in Chinese 深圳赤湾港航股份有限公司 Company's Name in English Shenzhen Chiwan Wharf Holdings Limited (CWH) 2. Legal Representative Ms. Wang Fen, Chairwoman of the Board 3. Company Secretary Ms. Pei Jiangyuan Authorized Representative Ms. He Yingban and Mr. Tang Qingsong Address 11/F., Chiwan Petroleum Building Port of Chiwan, Shenzhen, PRC Tel +86 755 6835506, 6694620 Fax +86 755 6684117 E-mail szchiwan@public.szptt.net.cn 4. Place of Registration Port of Chiwan, Shenzhen, PRC Offices 11-12/F., Chiwan Petroleum Building, Port of Chiwan, Shenzhen, PRC Post Code 518068 E-mail szchiwan@public.szptt.net.cn 5. Newspaper for Information "Securities Times" and "Ta Kung Pao” Release Website for Annual Report http:\\www.cninfo.com.cn Annual Report Preparation Secretariat of the Board of Directors 6. Stock Exchange Shenzhen Stock Exchange Short Form of the Stock Shen Chiwan A/Shen Chiwan B Stock Code 000022/200022 7. Other information Date of Original Registration 19 July 1990 Place of Registration Chiwan, Shenzhen Business Registration Number Qi-Gu-Yue-Shen-Zong-Zi No. 102793 Tax Registration Number Guo-Shui-Shen-Zi No. 440301618832968 1 Di-Shui-Deng-Zi No. 440305618832968 Accounting Firm (Domestic) PricewaterhouseCoopers Room 3706, Shun Hing Square, Di Wang Commercial Centre 5002 Shennan Road East Shenzhen, 518068, PRC Accounting Firm (Overseas) PricewaterhouseCoopers 23rd Floor Sunning Plaza 10 Hysan Avenue Hong Kong II. FINANCIAL AND BUSINESS HIGHLIGHTS (I) Profit and breakdown for 2001 (RMB) Profit before tax 118,573,040 Net profit 73,824,569 Gross profit 193,984,617 Operating profit 143,165,592 Share of result of associates 1,946,370 Net cash flow from operating activities 189,923,346 Increase/decrease in cash and cash equivalents 20,596,504 * Net profit for 2001 of Shenzhen Chiwan Wharf Holdings Limited ("the Company”) was calculated under Chinese Accounting Standards to be RMB 86,829,223, while under International Accounting Standards to be RMB 73,824,569. A discrepancy of RMB 13,004,654 exists between the results of the two calculations since that assets devaluation provision, which was drawn according to the new accounting rules issued by the Finance Ministry, has to be displayed in adjusting the financial statements for the past years under Chinese Accounting Standards, while is to be calculated as the profit and loss for the reporting period under International Accounting Standards. (II) Financial Indicators 2001 (RMB) 2000(RMB) 1999 (RMB) Sales 478,756,052 448,441,809 431,566,147 Net profit 73,824,569 82,561,186 72,446,700 Total assets 2,222,759,643 2,251,825,648 1,746,261,896 Shareholders’ equity including minority interests 1,153,494,051 1,129,118,317 1,092,877,082 Earnings per share 0.194 0.216 0.190 Weighted average monthly earnings per share 0.194 0.216 0.190 Net assets per share 3.023 2.960 2.865 Net cash flow per share from operating activities 0.498 0.495 0.319 Return on net assets 6.40% 7.31% 6.63% (III) Changes of Shareholders' Equity in 2001 1. Changes of shareholders' equity Share Capital Surplus Statutory Retained Shareholders' Item premium reserve reserve welfare fund profit equity Initial amount 381,517,000 406,340,474 253,977,961 42,503,484 49,560,937 1,129,118,317 2 Increase 0 0 30,390,228 4,341,461 39,438,124 74,169,813 Decrease 0 0 0 0 49,560,937 49,560,937 Ending amount 381,517,000 406,340,474 284,368,189 46,844,945 39,438,124 1,153,494,051 2.Reason for the above changes Shareholders' equity was increased due to the drawing of surplus reserve, statutory welfare fund and retained profit in 2001. III. CHANGES IN SHARE CAPITAL AND SHAREHOLDERS (I) Changes in Share Capital 1. Change in the stock of shares of the Company Change in amount of shares (+,-) Before the change Rights Bonus Reserves New Others Subtotal After the shares to stocks issue change I. Unlisted Shares 1. Promoters’ shares 224,470,000 224,470,000 Including: State-owned share Domestic juristic person’s shares 224,470,000 224,470,000 Foreign juristic person’s shares Others 2. Raised juristic person’s shares 3. Shares held by senior executives 164,500 -43,000 -43,000 121,500 4. Preference shares or others Total Unlisted shares 224,634,500 -43,000 -43,000 224,591,500 II. Listed Shares 1. RMB ordinary shares 50,435,500 +43,000 +43,000 50,478,500 2.Domestically listed foreign shares 106,447,000 106,447,000 3. Overseas listed foreign shares 4. Others Total Listed shares 156,882,500 +43,000 +43,000 156,925,500 III. Total shares 381,517,000 381,517,000 2. Issuance and listing of shares a) The company was approved to issue 310,470,000 RMB ordinary shares at a par value of RMB 1.00 per share in February 1993, with 224,470,000 being the promoters ' shares; 46,000,000 shares (the "A shares”) being issued to PRC investors (of which 6,000,000 shares were allotted to the employees of the Company), and 40,000,000 shares (the "B shares”) being issued to overseas investors. The A shares were issued at RMB 3.10 per share and the B shares at RMB 3.18 per share, which were payable at HKD 2.83 per share. On 5 May 1993, the Company's A and B shares were listed and traded on the Shenzhen Stock Exchange. b) On June 1994, bonus shares were issued in a proportion of "one bonus share for every ten shares”. As a result, the total volume of the Company's shares rose to 341,517,000. On 16 June and 21 June 1994, respectively, 4,600,000 bonus A shares 3 and 4,000,000 bonus B shares were listed and traded on the Shenzhen Stock Exchange. c) On 22 June 1995, the Company's promoter, China Nanshan Development (Group) Incorporation (CND), converted all of its 22,447,000 bonus shares to B shares, which were sold to overseas investors at an average price of HKD3.54 per share, and then listed and traded on the Shenzhen Stock Exchange. d) In December 1995, the Company issued 40,000,000 B shares to overseas investors at HKD2.90 per share, which were listed on the Shenzhen Stock Exchange on 15 December 1995. Consequently, the total volume of the Company's shares rose to 381,517,000. e) Total amount of the Company's shares and the shareholding structure were not changed during the reporting period. f) The Company was approved to issue 6,000,000 Employees’ Shares at an issuing price of RMB3.10 per share in February 1993. The shares were put in trust with Shenzhen Securities Registration Co. Ltd. in March 1993. After bonus shares were issued in June 1994, Employees’ Shares rose to 6,600,000, among which 600,000 bonus shares were allowed to be traded on 16 June 1994. On 1st August 1994, the Company's Employees’ Shares totaling 6,000,000 were allowed to become tradable, except those held by Directors, Supervisory Committee Members and senior management personnel according to relevant rules. Employees’ shares totaled 43,000 held by Mr. Fu Yuning were transferred to A shares during the reporting period since he was approved to resign as Director of the Company in May 2001. Accordingly, Employees’ Shares decreased from 164,500 to 121,500, while A shares increased from 50,435,500 to 50,478,500. (II) Shareholders 1. As at the end of 2001, 61,996 shareholders of the Company were recorded, with one shareholder being domestic legal entity, 40,440 being shareholders of A Shares and 21,555 being shareholders of B Shares. 2. Top ten shareholders Series Amount of Percen- Number Code Name Shares tage 1 00038657 CND 224,470,000 58.84% 2 00265943 CHEUNG KIT 1,095,260 0.29% 3 91169505 ZHENG YUYAO 511,565 0.13% 4 00292293 YICHU DEVELOPMENT CO., LTD. 426,200 0.11% 5 0077173385 WEI SHANGKUI 394,915 0.10% 6 91257039 LIU LIAOYUAN 364,500 0.09% 7 00206417 CMTB/NIKKO GREAT CHINA OPEN FUND 334,299 0.09% 8 00305765 WANG SHAOZHU 330,000 0.09% 9 00260561 SURE WIDE INTERNATIONEL LIMITED 325,022 0.09% 4 10 00305187 GUAN LIPING 322,400 0.08% Total 228,574,161 59.91% Note: a) The above-mentioned amount of shares are the figures recorded at the end of 2001. b) CND being domestic legal entity and the fifth shareholder Wei Shangkui being shareholder of A shares, the other eight shareholders among the top ten are all shareholders of B shares. The Company is not aware of any relationship existing among the top ten shareholders. c) CND is the only shareholder holding more than 5% of the Company's shares. Shares held by CND was not changed within the reporting year. CND did not pledge or freeze its shares in 2001. 3. Information about the controlling shareholder of the Company Company name: China Nanshan Development (Group) Incorporation (CND) Legal representative: Dr. Fu Yuning Date of establishment: 28 Sep. 1982 Business scope: Land development, port services and transportation, as well as related bonded warehousing, industry, commerce, property and tourism. Registered Capital: RMB500,000,000 Shareholding structure: Place of Shareholders’ Name of shareholders registration Equity China Merchants (Nanshan) Holdings Limited Hong Kong 29.757% Shenzhen Investment Holding Corporation PRC 26.103% Guangdong Petro-Trade Development Corp. PRC 23.493% China Offshore Oil Nanhai East Corp. PRC 7.831% BOCI Capital Limited Hong Kong 6.761% Clifford Wong Investment Company Ltd. Hong Kong 3.915% China Ocean Oilfields Service (HK) Ltd. Hong Kong 1.644% Silverflow Co., Ltd. Hong Kong 0.496% 4. Within the reporting year, the controlling shareholder of the Company was not changed. 5. No. 1 shareholder of the controlling shareholder of the Company The controlling shareholder of the company is China Merchants (Nanshan) Holdings Limited, whose 100% equity is held by China Merchants International Co., Ltd. (company listed in Hong Kong Stock Exchange) directly and indirectly. Information on China Merchants International Co., Ltd. is set out as follows: Date of establishment: 28 May 1991 Date of registration: June 25, 1997 Legal Representative: Fu Yuning Registered capital: HKD 300,000,000 Business scope: port business, transportation infrastructure facilities construction, and industrial manufacture. 5 Shareholding structure: China Merchants Incorporation holds 53.15% through its wholly owned subsidiary; and the public holds 46.85% IV. DIRECTOR, SUPERVISORY COMMITTEE MEMBB, SENIOR EXECUTIVE AND STAFF (I) General Information Chairman, Ms. Wang Fen, 47 years of age, MBA. Having taken part in the development of Chiwan Port ever since 1982. Previously, acted as Director of General Manager Office, Manager of Business Department of CND, and General Manager of Shenzhen Chiwan Godown Co., Ltd. Appointed as the Vice President of CND in 1994 and then Senior Vice President participating and taking charge of the development and management of CND's investment. Now, Executive Vice President of CND. Elected Director of the Company in March 1993, Vice Chairman of the Company in December 1998, and Chairman of the Company in August 2000. Her present term started from May 1999 and ends in May 2002. Holding 34,100 shares of the Company without any change in 2001. Director, Mr. Fan Zhaoping, 48 years of age. Got Bachelor Degree in Economics at the State's Finance University and Master's Degree in Economics at the Research Institute of Finance Ministry of China, then worked as assistant researcher there. As an experienced finance manager, Mr. Fan took the position of Financial Manager at Shenzhen Chiwan Petroleum Supply Base Co., Ltd. in 1988, and Manager of the Finance Department of CND in 1991, then Manager of the Investment Department and Vice President of CND. Now Senior Vice President of CND. Appointed as the Company's Chief Financial Officer in March 1993 and resigned from the post in September 1999. Director of the Company since April 1995 with the present term starting from May 1999 and ending in May 2002. Holding 28,600 shares of the Company without any change in 2001. Director, Mr. Yuan Yuhui, 52 years of age, university graduate. Previously, Translator and Assistant Director of Textile Science Research Institute of Hebei Province. Worked in the Business Department of CND in 1989, and then Director of General Manager Office. Now Vice President of CND in charge of the administration, law affairs, research and development issues of CND. Appointed as the Company Secretary in March 1993 and resigned from the post in December 2000. Director of the Company since April 1995 with the present term starting from May 1999 and ending in May 2002. Holding nil shares of the Company. Director, Mr. Han Guimao, 52 years of age, graduated from Construction Department of Tsing Hua University. Mr. Han has been working in the field of construction and engineering for over 30 years. Mr. Han first took a job at Tianjin Second Construction Company in 1969, then worked for the First Designing Institute of the Railway Ministry in 1976, and was working from 1983 to 1992 as Deputy General Manager in the Shenzhen Branch of the Second Engineering Bureau of the Railway Ministry (which ranks among the top ten construction and engineering bureaus in China), then took the position of Executive Deputy General Manager in Shenzhen Nanshan Centre-Zone Development Co. Vice President of CND since 1994 in charge of general planning, construction and engineering, as well as construction material industry of CND. Being 6 Director of the Company since May 1998 with the present term starting from May 1999 and ending in May 2002. Holding nil shares of the Company. Director, Mr. Liu Zhangjun, 48 years of age. Got Bachelor Degree in Mechanics from Tongji University and Ph.D Degree in Mechanics at Cambridge University of the United Kingdom. Previously, Head of the Intelligence Import Office in Shenzhen Municipal Personnel Bureau and Manager of the Human Resources Department of CND. General Manager of the Company since August 2000 and Director of the Company since April 1995 with the present term starting from May 1999 and ending in May 2002. Holding nil shares of the Company. Director, Mr. Zheng Shaoping, 39 years of age. Got Bachelor Degree in Shipping and then graduated from Postgraduate School of Dalian Shipping University with a major in Marine Trade Law. Previously, Manager of Business Section, Deputy General Manager and then General Manager of Shenzhen Chiwan Harbour Container Co. Now General Manger of Chiwan Container Terminal Co., Ltd. (CCT). Deputy General Manager of the Company since December 1998 and Director of the Company since May 1999 with the present term ending in May 2002. Holding nil shares of the Company. Supervisory Committee Member, Mr. Li Heihu, 56 years of age, university graduate. Previously, Director of Economy Research Institute of Social Science Academy of Gansu Province, Deputy Chief of the Law Commission of the People's Congress of Gansu Province. Assistant General Manager and concurrently Manager of Research Department of Shenzhen Investment Holding Corporation (SIHC) since 1993. Appointed as the Vice Director of the State Assets Administration Office of Shenzhen and Deputy General Manager of SIHC in June 1994, and then as Director of the State Assets Administration Office of Shenzhen in 1996. Now Chairman of SIHC since August 1998 and Vice Chairman of CND since December 1998. Elected as the Chairman of the Company's Third Supervisory Committee in May 1999 with the present term ending in May 2002. Holding nil shares of the Company. Supervisory Committee Member, Ms. Mary-Jean Wong, 44 years of age, university graduate. Now Director of Lucliff (Canada) Company and of Max Return Consultancy (HK) Company, Executive Director of HK Clifford Wong Investment Company Ltd., and Director of CND. Elected as member of the Company's Supervisory Committee in May 1996 with the present term starting from May 1999 and ending in May 2002. Holding nil shares of the Company. Supervisory Committee Member, Mr. Zhang Ning, 42 years of age, Master’s Degree. Previously, Deputy Manager, and then Manager of the Operation Department of CCT , and later appointed as the Assistant General Manager of CCT. Now Deputy General Manager of CCT. Elected as the employees' representative in the Third Supervisory Committee in May 1999 with the present term ending in May 2002. Holding nil shares of the Company. Deputy General Manager, Mr. Lu Baodi, 56 years of age, college graduate. Previously, cargo controller and Deputy General Manager of Shenzhen Chiwan Harbour Company. Deputy General Manager of the Company since March 1993 with the present term commencing in May 1999 and ending in May 2002. Holding 30,800 shares of the Company without any change in 2001. 7 Deputy General Manager, Ms. Chen Yonglian, 59 years of age, university graduate. Previously, Deputy General Manager of Shell Trading (Chiwan) Joint Venture Co., Ltd., and Deputy General Manager of Shenzhen Chiwan Harbour Company. Deputy General Manager of the Company since March 1993 with the present term commencing in May 1999 and ending in May 2002. Holding 28,000 shares of the Company without any change in 2001. Chief Financial Officer, Mr. Zhang Jianguo, 38 years of age, university graduate. Previously, Financial Manager of Shenzhen Chiwan Petroleum Supply Base Co., Ltd. Appointed as the Financial Manager of the Company in October 1997 and Chief Financial Officer of the Company in September 1999 with the present term ending in May 2002. Holding nil shares of the Company. Company Secretary, Ms. Pei Jiangyuan, 30 years of age, Master’s Degree. Previously worked as the Executive Secretary for the Company’s Chairman. Appointed as the Company Secretary in March 2001 with the present term ending in May 2002. Holding nil shares of the Company. (II) Salary The above-listed persons did not get any emolument, social benefits, or any other preferential treatment from the Company in taking their positions as the Company’s Directors and Supervisory Committee Members in 2001. Director Ms. Wang Fen, Mr. Fan Zhaoping, Mr. Yuan Yuhui and Mr. Han Guimao got their salaries at CND. Supervisory Committee Member Mr. Li Heihu and Ms. Mary-Jean Wong got salaries from shareholders of CND. Director Mr. Liu Zhangjun and Mr. Zheng Shaoping got their annual salaries totaling RMB 520,000 from the Company according to their positions as the General Manager and Deputy General Manager. Total amount of the annual salaries of top three management personnel is RMB 750,000. Total amount of the annual salaries of all the Directors, Supervisory Committee Member and senior management staff, who get their salaries from the Company, accounted for RMB 1,380,000 in 2001, among which three got salaries from RMB 80,000 to RMB 160,000 and four from RMB 210,000 to RMB 270,000. (III) The Board of Directors appointed Ms. Pei Jiangyuan as the Board Secretary in March 2001, and approved Mr. Zhou Jian’s resignation as the Company’s Director in April 2001. Resignation reports presented by Dr. Fu Yuning and Mr. Zhou Jian were approved at the 2000 Annual Shareholders’ General Meeting. (IV) Staff As of 31 December 2001, the Company had 1,205 employees, with 285 being university graduate, 52 financial clerks, 80 sales person, 58 technicians, 66 management personnel, and the others being staff for production. Twenty-seven retired employees were recorded. 8 V. ADMINISTRATIVE STRUCTURE (I) Administrative Structure In strictly implementing the PRC Company Law, the Securities Law as well as other laws and regulations issued by China Securities Regulatory Commission (‘CSRC”), the Company keeps on improving the Company’s corporate structure by setting up systems for modern enterprise so as to standardize the operation of the Company. The Company established Articles of Association, Working Rules for Annual Shareholders’ General Meeting, Working Rules for Board of Directors, Rules of Meeting Procedures of Board of Directors, Working Rules for the Supervisory Committee, Rules of Meeting Procedures of Supervisory Committee and Working Rules of General Manager, which conform with “Corporate Principle for Listed Companies” issued by CSRC and Finance Ministry of the State on January 7, 2002. Details are set out as follows: 1. Shareholders and Annual Shareholders’ General Meeting The Company ensures that all the shareholders, especially small or medium shareholders are equal and they could enjoy their full rights. During the reporting period, the Company established Working Rules for Annual Shareholders’ General Meeting. The Company called and held Annual Shareholders’ General Meeting strictly in compliance with the rules for shareholders’ general meeting. Related party transactions were conducted fairly and relevant pricing basis were released thoroughly. 2. Relationship between the controlling shareholder and the Company Controlling shareholder of the Company operated in line with rules in 2001 and did not intervene decision or operation of the Company directly or indirectly exceeding authority of the shareholders’ general meeting. The Company is absolutely independent in personnel, assets, finance, organization and business from its controlling shareholder. Details are set out as follows. The Company has basically separated its staff from its controlling shareholder. Chairman, Dr. Fu Yuning was promoted in 1999 to be the Chairman of CND due to working needs. Senior management personnel of the Company did not take positions at its ultimate shareholding company. No financial clerks took corresponding jobs at the associated companies The Company possesses its own self-governed assets and independent operation system. Assets of the controlling shareholder in the Company (fixed assets such as land-use rights, property and large equipment, etc. being included) were converted through assets evaluation into stock of shares, which the Company has full rights to hold, use and dispose whatsoever. The Company has set up its own financial department as well as the independent normative accounting system and the financial management system on its subsidiary companies. The Company has its own bank accounts and does not share the same bank account with its controlling shareholder. The Company has been paying tax according to the law on its own behalf. 9 Management of the Company on its human resources and staff salary is absolutely independent. Controlling shareholder has handed its wharf-related business thoroughly to the Company to operate and does not engage in the same market with the Company, thus has no competition with the Company. 3. Directors and the Board of Directors The Company has elected directors strictly according to the Articles of Association. Number and qualification of the Board of Directors conforms to relevant laws and regulations. Board of Directors has set up working rules and rules of meeting procedures. All Directors attended the Board meetings and shareholders’ general meeting in a positive and responsible manner, participated enthusiastically relevant training so as to know better about laws and regulations as well rights and obligation of Directors. The Company is seeking candidates for Independent Director so as to set up Rules for Independent Directors and Special Committee of the Board of Directors according to relevant regulations. 4. Supervisors and the Supervisory Committee Numbers and qualification of Supervisory Committee Members are in compliance with requirements of laws and regulations. The Supervisory Committee has established the Rules of Meeting Procedures of Supervisory Committee. The supervisors have performed seriously their duties, taken responsible attitude to all the shareholders, and supervised the financial affairs, the duties performed by the Company’s directors, managers and other senior executives in terms of compliance with the laws and regulations. 5. Performance valuation, encouragement and binding mechanism for senior management staff 6. Relevant beneficiaries The Company has been fully respecting and safeguarding the legal rights and interests of the banks and other creditors, staff, consumers and other parties of related interests; developed the Company in a consistent and healthy way. 7. Information release: The Company has authorized the Company Secretary to take charge of disclosing information, receiving the visit and inquiry of the shareholders. The Company has been disclosing the relevant information in a real, accurate, complete and timely way strictly according to the law, regulations and the Articles of Association, ensured all the shareholders to have equal opportunity to obtain the information. Ever since its establishment, the Company has been operating in a standard way according to the requirement of Company Law and other laws and regulations. The Company will keep on doing so according to the “Corporate Principle for Listed Companies” issued by CSRC and Finance Ministry of the State on January 7, 2002 so as to safeguard the interests of shareholders and relevant beneficiaries. 10 (II) Performance of Independent Directors The Company will establish Independent Director system before June 30, 2002 according to “Guiding Opinion on Establishing Independent Director System in Listed Company” issued by CSRC. For the time being, Board of Directors of the Company is drafting and revising relevant rules, and also seeking candidates for Independent Director. VI. ANNUAL SHAREHOLDERS’ GENERAL MEETING The Company disclosed the Notice of the Annual Shareholders’ General Meeting for 2000 in the specified newspapers on 12 April 2001. On 14 May 2001, the meeting was held as scheduled at the Conference Room on 10/F, Chiwan Petroleum Building, Shenzhen. Nineteen participants, including shareholders (or shareholders’ authorized proxies), Directors, Supervisory Committee members and senior management staff, representing 225,194,446, shares, or 59.02% of the total 381,517,000 shares, with 224,672,000 being A shares (81.68% of the total A shares), and 522,446 being B shares (0.5% of the total B shares), which conformed to the Company Law and the Company's Articles of Association. The meeting was presided by Ms. Wang Fen, Chairman of the Board of Directors. Following proposals were reviewed and passed by voting at the meeting. 1. To approve the working report of the Board of Directors for the year of 2000; 2. To approve the working report of the Supervisory Committee for the year of 2000; 3. To approve the financial statement for the year of 2000; 4. To approve the profit distribution plan for the year of 2000; The Company achieved a net profit of RMB 82,561,186.26 in 2000. Retained profit of RMB 24,225.17 at the beginning of 2000 being taken in, profit to be distributed for 2000 amounted to RMB 82,585,411.43. According to relevant rules and regulation of the State and the Company’s Articles of Association, following profit distribution plan was approved a. RMB 8,256,118.62, i.e.10% of the net profit for 2000 was to be drawn for Statutory Surplus Reserve; b. 5% of the net profit for 2000 totaling RMB 4,128,059.31 was to be drawn for Statutory Welfare Fund; c. After the above drawing of Statutory Surplus Reserve and Statutory Welfare Fund, profit distributable to shareholders amounted to RMB 70,201,233.50. 25% of the net profit for 2000 totaling RMB 20,640,296.57 was to be drawn for Discretionary Surplus Reserve. A cash dividend of RMB 0.129 per share (pre- tax) totaling RMB 49,215,693.00 will be paid for the total 381,517,000 shares as at the end of 2000, with the balance of RMB345,243.93 being retained for the next year. d. The Company has no plan to convert its reserves into equity for 2000. 11 5. To approve the re-appointment of Zhong Tianqin Certified Public Accountants and PricewaterhouseCoopers as the Company’s accounting firms for the year of 2001; 6. To approve the “Working Rules of the Annual Shareholders’ General Meeting”, “Working Rules of the Board of Directors”, and “Working Rules of the Supervisory Committee”; 7. To approve Dr. Fu Yuning’s resignation as the Company’s Director; 8. To approve the amendment of Article 72, Article 93 and Article 112 of the Articles of Association of the Company, 9. To approve the proposal for the authorization on the Board of Directors regarding investment limits, bank loans and guarantee. 10. To approve Mr. Zhou Jian’s resignation as the Company’s Director. Shenzhen Nanshan Public Notaries notarized the meeting. Lawyer Mr. Zhou Weiping of Haiwen & Partners presented his opinion at the meeting as that convening, procedure and voting of the meeting, as well as qualifications of attendants and of the shareholder putting forward new proposal were all conformed with relevant laws, regulations and the Company’s Articles of Association. The above resolutions were released on the “Securities Times” and “South China Morning Post” on 15 May 2001. No special shareholders’ meeting was held in 2001. VII. REPORT OF THE BOARD OF DIRECTORS (I) Performance in 2001 1. Core business The Company is engaged mainly in the handling, warehousing and transportation of containers as well as bulk and general cargoes at the terminals of Chiwan Port in Shenzhen, and also in other services. The Port of Chiwan is one of the important ports where foreign trade of Shenzhen Port is handled. The company achieved a throughput of 13,500,000 tons in 2001, 35% up compared with 2000, or 20.4% of the total volume in Shenzhen during the year, 2% up compared with 2000. Container through at the Port of Chiwan rose 40.8% up to 901,200 TEU in 2001, enjoying an 18% share in the container handling market in Shenzhen. Throughput of bulk and general cargo of the Company in 2001 increased by 3.1% to 5,590,000 tons, which shared almost the same one-third market as 2000 in business of bulk and general cargo in Shenzhen. a) Breakdown of turnover Unit: RMB Operation Business RMB Percentage Container handling 240, 117, 407 48.72% Bulk and general cargo handling 156, 890, 933 31.84% Land transportation transportation 43, 607, 249 8.85% 12 Marine transportation transportation 21, 609, 705 4.38% Agency agency 30, 599, 319 6.21% Subtotal 492, 824, 613 100.00% Business offset -14, 068, 561 Total 478, 756, 052 b) Breakdown of profit Unit: RMB Operation Business RMB Percentage Container business handling 126,619,519 66.90% Bulk and general cargo business handling 51,936,965 27.44% Land transportation transportation 3,300,656 1.74% Marine transportation transportation -277,218 -0.14% Agency agency 7,690,024 4.06% Subtotal 189,269,946 100.00% Business offset 4,714,671 Total 193,984,617 c) Financial highlights for core businesses, which accounts for over 10% of the turnover and profit Unit: RMB Operation Income Cost Gross Profit Container business 240,117,407 113,497,888 52.73% Bulk and general cargo Business 156,890,933 104,953,968 33.10% 2. Results of wholly-owned subsidiaries and joint ventures a) Chiwan Container Terminal Co., Ltd. (CCT) CCT, the name of which was changed from Shenzhen Kaifeng Terminal Co., Ltd (KFT) on 13 December 2001, holds 50% of the company’s equity interests directly and 4% indirectly. With a registered capital of USD 44,000,000, CCT is engaged mainly in handling containers and warehousing cargos, especially in international container lines calling the terminal. With 8 new international container lines during the reporting year, container throughput of CCT achieved 643,700 TEU, 43% up compared with 2000. Within the year the total assets of CCT was RMB 1,161,799,414, with a net profit of RMB 74,448,779. b) Shenzhen Chiwan Harbour Container Co. As a subsidiary of CWH, with a registered capital of RMB 15,000,000, the company is engaged in the accommodation service for container barges for import and export trade, coastal foreign trade and domestic trade. During the reporting year, container throughput achieved 253,300 TEU, 32% up compared with 2000. Within the year, the total assets of the company were RMB 241,794,511, with a net profit of RMB 11,084,177. c) Harbor Division 13 Being a non-juristic person independent accounting unit directly under CWH, the company is engaged in fertilizer handling for export trade in bulk and in bags and warehousing business. During the reporting period, throughput of bulk and general cargo achieved 4,415,400 tons, 7.24% up compared with 2000. Within the year, the total assets of the company were RMB 336,579,928, with a net profit of RMB 12,815,390. d) Shenzhen Chiwan Terminal Co., Ltd Being a subsidiary of CWH, with a registered capital of RMB 50,000,000, the company is engaged mainly in the handling and stacking of steel products, lumbers and grains for import and export. During the reporting period, throughput of bulk and general cargo achieved 1,473,200 tons, 12.05% up compared with 2000. Within the year, the total assets of the company were RMB 160,944,740, with a net profit of RMB 14,956,693. e) Shenzhen Chiwan Trans-Grains Terminal Limited Holding 100% of CWH’s equity interests directly and indirectly, with a registered capital of RMB 45,000,000, the company is engaged in the business of handling, warehousing and packing grains, supplying related service for holding and warehousing grains for Shenzhen Chiwan Terminal Co., Ltd. During the reporting period, the stacking volume of grains achieved 13,606,200 tons per day, 62.57% up compared with 2000. Within the year, the total assets of the company were RMB 79,797,499, with a net profit of RMB 7,273,414. f) Shenzhen Chiwan Transportation Company Being a subsidiary of CWH, with a registered capital of RMB 7,000,000, the company is engaged in container transportation service on land and at Chiwan Port. During the reporting period, the volume of land container transportation achieved 3,760,000 TEU.km, 15.34% up compared with 2000. Within the year, the total assets of the company were RMB 61,464,527, with a net profit of RMB 1,415,890. g) Shenzhen Chiwan Shipping & Transportation Company The company is, as a subsidiary of CWH, with a registered capital of RMB 6,000,000, engaged in tugboat service at Chiwan Port and container barge transportation service plying Hong Kong n and Shenzhe. During the reporting period, 9151 hours were charged for tugboat, 16.41% up compared with 2000. By the end of the report period, the total assets of the company were RMB 28,158,273. Within the year, the company withdrew the provision for devaluation of fixed assets of RMB 9,244,090, with a net profit of RMB -3,308,170. h) Shenzhen Chiwan International Freight Agency Company As a subsidiary of CWH, with a registered capital of RMB 5,000,000, the company is engaged mainly in freight forwarding agent and custom declaration service. During the reporting year, the volume of container agent reached almost the same 10225 TEU as in 2000.The total assets of the company were RMB 10,455,919, with a net profit of RMB 337,269.21 within the year. i) Shenzhen Chiwan Oriental Logistics Co., Ltd The company, with a registered capital of RMB10,000,000, holds 100% of CWH’s equity interests directly and indirectly. Core business of the company is comprehensive logistics and related transportation. Operated in 2001, the company is still in its’ 14 beginning stage. At the end of the reporting period, total assets of the company were RMB 7,939,676.76, with a net profit of RMB –2,456,509. . j) Chiwan Wharf Holdings (Hong Kong) Ltd. The company is a wholly-owned subsidiary of CWH registered in Hong Kong and is a joint venture with a registered capital of HKD 1,000,000. At the end of 2001, total assets of this company were RMB 96,068,222, with a net profit of RMB 154,088. Chiwan Shipping (Hong Kong) Ltd., a wholly-owned subsidiary, is engaged in international shipping, entrepot trade and transportation agent related to business of Chiwan Wharf Holdings Ltd. During the reporting year, barge transportation plying Shenzhen and Hong Kong achieved 51,192 TEU, 11.39% up compared with 2000. k) Shenzhen Joint Favour Marine Shipping Agency Co., Ltd. With 51% of CWH’s equity interests and a registered capital of RMB 5,000,000, the company is engaged during the reporting period mainly in agent business of domestic ships. Then with the First Class Shipping Agency Certificate gained in the middle of 2001, the company expanded its’ business scope to ships from both domestic and overseas. There will be more and more space for expansion and profit with the rapid increase of calling of vessels in foreign trade due to the fast development of ports in Shenzhen. At the end of the reporting period, the company had the total assets of RMB 5,020,992, with a net profit of RMB 167,074. 3.Major customers Sales (operating income) of the top five customers are totaled to RMB 172,439,400, 36% of the company’s gross sales (operating income). (II) Investments in 2001 1. Utilization of proceeds No funds were raised in 2001. The last proceeds had been used up by the end of 1996. 2. Other investments a) Investments in fixed assets During the reporting year, almost RMB 145.5m was invested in fixed assets, 15.9% down compared with 2000, i.e. RMB 27.5m less than last year, among which RMB 49.2m in the infrastructure facilities such as Phase II of grain silos, and RMB 96.29m in the handling and transportation equipment at the port. Main reasons for the decrease of investment include: a) that the base of investment in 2000 was biggish; b) that upgrading of computer systems in Chiwan Container Terminal Co., Ltd. wasn’t completed until 2002. For the sake of efficiency and capacity improvement at ports, the company will keep on increasing the investment in equipment. b) Project investments In investing RMB 5m with China Merchants Holdings (International) Co., Ltd (“CMHI”), in which the Company accounted for 37.5%, CMHI and the Company set up “Shenzhen Wharf Holdings Network System Co., Ltd” in November 2001. By making use of computer technology, the new company will develop and establish the operation platform for electronic exchange system, which will satisfy the exchange need for 15 electronic data information between enterprises at ports and the customs, perfect the environment for marine transportation and cargos, and make favorable rewards to investors. During the reporting period, berth 8 at Mawan Port, investment of which was shared by the Company and CMHI in 2000, is under project designing and application for approval. (III) Financial Status Unit RMB1,000 2001 2000 +/- Total assets 2,222,759.6 2,251,825.6 -1.29% Long-term liabilities 194,308.0 284,590.0 -31.72% Shareholders’ equity 1,153,494.1 1,129,118.3 2.16% Profit from main business 193,984.6 180,825.4 7.28% lines Net profit 73,824.6 82,561.2 -10.58% Main causes of the changes: (1) Decrease in long-term liabilities was due to the repay of long-term bank loan. (2) Increase in shareholders’ equity was due to the profit realized in 2001. (3) Increase in profit from main business lines was due to the increase of container business as well as the cost reduction arising from the optimization in structure of bulk and general cargo. (4) Decrease in net profit was due to the drawing of provisions for devaluation of fixed assets as well as the amortization of balance organization expenses, which was amortized originally in installation, stated in the gains and losses as of the report period. (IV) Impact of Changes in Production and Operation Environment and Macro Policies on the Company 1. container terminal business China entering WTO will promote exportation of light industry products, textile products, mechanical equipment and electronic products out of China. Decrease in tariff and increase in quota certificate for importation of many important merchants will lead to the constant increase in cargo importation. Enjoying the most advanced market economy and outward economy in China, and accounting about 40% of the total import and export volume of China, Southern China, the largest container producing area, will supply sufficient import and export cargoes for Shenzhen Port. According to relevant articles of WTO, any members of WTO can’t set barriers in mode and route of cargoes transportation to other members, which will promote the reform of supervisory system in our country and create favorable conditions for international accommodation of cargoes at ports. All these factors will provide wider space and more opportunities for the Company’s sustainable development in container terminal business. 16 2. Bulk and general cargo terminal business Our country has promised after the entry into WTO to further increase the quota for fertilizer and grains, especially for the latter. Southern China is the important area for fertilizer utilization and grains selling and import for fertilizer and grains is the main business at Chiwan Port, thus business of bulk and general cargo terminals of the Company has a promising prospect. (V) Business Plan for 2002 The Company’s business objective for 2002 is: operating income RMB 569.44m, operating cost RMB 316.81m, and investment in fixed assets about RMB 215m. The company will focus on: 1. Continuing to explore on its container terminal business so that container throughput will increase by 20% up compared with2001 to over 1m tons, and the speed of increase will be equal to or over the average level of Shenzhen Port. 2. Keeping on developing the business of bulk and general cargoes with emphasis on expanding fertilizer and grains importation business, further optimizing capital structure, enhancing benefit rewarding and meanwhile, making research and exploration on market so as to seize the possible new commercial opportunities in wharf holdings market of bulk and general cargoes due to China’s entry into WTO. 3. Further optimizing the capital structure in land transportation business, decreasing operating cost, and devoting itself to innovating administrative mode for the sake of obvious recovery in economic results; business of marine transportation will keep on providing related service for the Company. 4. Taking full advantages of resources of the Company and collecting strengths of land transportation, freight agency and warehousing to make substantial progress in exploring on logistics business in 2002. (VI) Routine Work of the Board of Directors 1. Board meetings and resolutions The fifth meeting of the Third Board of Directors of the Company took place in the following sequence on 9 April 2001. • To review and approve the Chairman’s Working Report for 2000; • To review and approve the Annual Report of the Company for 2000 and the Abstract; • To review and approve the Company’s Financial Statements for 2000, which was to be submitted for review to the 2000 Annual Shareholders’ General Meeting; • To discuss and approve the profit and dividend distribution plan for 2000 as follows. The Company achieved a net profit of RMB 82,561,186.26 in 2000. Retained profit of RMB 24,225.17 at the beginning of 2000 being taken in, profit to be distributed for 2000 is set as RMB 82,585,411.43. According to relevant rules and regulation of the State and the Company’s Articles of Association, following profit and dividend 17 distribution plan was approved and to be submitted to the Annual Shareholders’ General Meeting for review. 1. RMB 8,256,118.62, i.e.10% of the net profit for 2000, to be drawn for Statutory Surplus Reserve; 2. 5% of the net profit for 2000 totaling RMB 4,128,059.31 to be drawn for Statutory Welfare fund; 3. After the above drawing of Statutory Surplus Reserve and Statutory Welfare Fund, profit distributable to shareholders amounted to RMB 70,201,233.50; 25% of the net profit for 2000 totaling RMB 20,640,296.57 was to be drawn for Discretionary Surplus Reserve. A cash dividend of RMB0.129 per share (pre-tax) totaling RMB 49,215,693.00 will be paid for the total 381,517,000 shares as at the end of 2000, with the balance of RMB 345,243.93 being retained for the next year. The Company has no plan to convert its reserves into equity for 2000. • To set as follows the profit distribution policy for 2001, which is to be proposed according to the actual status by the Board of Directors to the Annual Shareholders’ General Meeting for review. 1. Profit for 2001will be distributed for only once; 2. After drawing of statutory surplus reserve and welfare fund according to the Articles of Association of the Company, no less than 60% of the net profit for 2001 will be distributed; 3. Dividend will be distributed in cash or bonus shares or both. • To review and approve the re-appointment of Zhong Tianqin Certified Public Accountants (former name being Tianqin Certified Public Accountants) and PricewaterhouseCoopers as the Company’s accounting firms for the year 2001, and to resolve to submit the appointment proposal to the Annual Shareholders’ General Meeting for 2000 for review; • To review and approve the re-appointment of Mr. He Fei and Mr. Zhou Weiping of Haiwen & Partners as the Company’s solicitors for the year 2001; • To approve the appointment of Independent Directors of the Company; • To review and approve the “Working Rules of the Annual Shareholders’ General Meeting”, “Working Rules of the Board of Directors”, “Rules of Meeting Procedures of the Board of Directors”, “Working Rules of the General Manager”, and to resolve to submit the “Working Rules of the Annual Shareholders’ General Meeting” and “Working Rules of the Board of Directors” to the 2000 Annual Shareholders’ General Meeting for discussion; • To review and approve the amendment of Article 93 and Article 112 of the Articles of Association of the Company, which was to submitted to the 2000 Annual Shareholders’ General Meeting for review; 18 • To resolve the Annual Shareholders’ General Meeting for 2000 to be held at the Conference Room on 10th Floor of Chiwan Petroleum Building located at the Port of Chiwan in Shenzhen PRC at 9:30a.m. on Monday 14th May 2001. The sixth meeting of the Third Board of Directors was held on 17 August 2000 with the following resolutions being passed thereat. a) To approve the Company’s Interim Report for 2001 and the Abstract; b) To approve no interim dividend to be distributed and no reserves be transferred into stocks; Within the range of their responsibilities and powers, Directors held 16 special Board meetings and passed resolutions on the Company’s operation and management as well as on many other significant issues, such as on bank loan facility, appointment of the Company Secretary, change of newspaper for the Company’s announcements, and change of the domestic accounting firm etc. 2. Execution of the resolutions passed at the Annual Shareholders’ General Meeting The Board had completed the dividends distribution for 2000 before 14 July 2001 in accordance with relevant resolution passed at the 2000 Annual Shareholders’ General Meeting. 3. Profit Distribution Plan for 2001 Audited by Puhua Yongdao Zhongtian Certified Public Accountants Co., Ltd. in accordance with International Standards on Auditing, the Company achieved a net profit of RMB 86,829,223 (“domestic audited profit”) in 2001. According to PricewaterhouseCoopers Certified Public Accountants, the net profit was RMB 73,824,569 (“overseas audited profit”). According to relevant rules and regulation of the State and the Company’s Articles of Association, following profit and dividend distribution plan was approved and to be submitted to the Annual Shareholders’ General Meeting for review. a) RMB 8,682,922, i.e.10% of the domestic audited profit for 2001, to be drawn for Statutory Surplus Reserve; b) 5% of the domestic audited profit for 2001 totaling RMB 4,341,461 to be drawn for Statutory Welfare Fund; c) 25% of the domestic audited profit for 2001 totaling RMB 21,707,306 to be drawn for Discretionary Surplus Reserve; d) After the above drawing of Statutory Surplus Reserve, Statutory Welfare Fund and Discretionary Surplus Reserve from domestic and overseas audited profit respectively, profit distribution to shareholders, according to the principle of taking the lower amount between the overseas auditing results and domestic auditing results as the base of profit distribution, amounted respectively to RMB 52,097,534 and RMB 39,092,880. A cash dividend of RMB 0.102 per share (pre-tax) totaling RMB 38,914,734.00 will be paid for the total 381,517,000 shares as at the end of 2001, with the balance from both domestic and overseas audited profit of RMB 13,182,800 and 178,146 being retained for the next year. e) The Company has no plan to convert its reserves into equity for2001. 19 To set the profit distribution policy for 2002, which is to be proposed according to the actual status by the Board of Directors to the Annual Shareholders’ General Meeting for review. 4. Other Issues The Company’s Third Board of Directors resolved on November 6, 2001 to change the Company’s overseas newspaper for announcements to “Ta Kung Pao” instead of “South China Morning Post”. VIII. REPORT BY THE SUPERVISORY COMMITTEE Within the reporting year, in accordance with the “Company Law” of PRC and the Company’s Articles of Association, the Supervisory Committee conducted examination and supervision, carried out its rights and obligations as well as delegated its representatives to attend the Board Meeting and gave its opinions upon the Company’s policy-making regarding some significant issues. The Supervisory Committee held two meetings in 2001. The fifth meeting of the Third Supervisory Committee was held on 9 April 2001 to To review and pass the Chairman’s Working Report for 2000; To review and pass the Annual Report of the Company for 2000 and the Abstract; To review and pass the Company’s Financial Statements for 2000; To review and pass the Working Report of the Supervisory Committee for the year of 2000; and To discuss and approve “Working Rules of the Supervisory Committee” and “Rules of Meeting Procedures for the Supervisory Committee”, and to resolve to submit “Working Rules of the Supervisory Committee” to the Annual Shareholders’ General Meeting for 2000 for discussion. The sixth meeting of the Third Supervisory Committee was held on 17 August 2001 with the following resolutions being passed thereat. • To approve the Company’s Interim Report for 2001 and the Abstract; • To approve no interim dividend to be distributed and no reserves be transferred into stocks for 2001. As audited by Zhong Tianqin Certified Public Accountants, net profit accumulated in the previous years and surplus public reserve withdrew in the previous years were decreased respectively by RMB 13,004,652.92 and RMB 5,201,861.17 as effected by the retrospective adjustment on accounting pursuant to the new Accounting Standards for Enterprise. Retained profit at the beginning of the year 2001 after the adjustment, amounting to RMB –7,457,547.82, shall be offset with the surplus public reserve. Interim net profit as of 2001 was RMB 25,855,915.03; distributable profit as of 2001 was RMB 25,855,915.03. The Company decided to conduct neither profit distribution nor capital public reserve transferring into share capital for 2001. 20 The Committee expressed its independent opinions on the following issues: a) By supervising the Company’s production and operation, as well as the decision- making and management, the Committee confirmed that during the year 2001 the Company did not, in the above activities, demonstrate any behavior which might have violated the laws and regulations of the country, and that the Company had set up perfect intra-control system. By supervising the behaviors of the Company’s Directors and senior management personnel as they were exercising their authorities, the Committee confirmed that, during the year 2001, the Company’s Directors and senior management personnel had not, in their daily business and management activities, demonstrated any behavior which might have violated the laws, regulations, the Company’s Articles of Association, or the resolutions passed at the Shareholders’ Meetings. They had neither abused their authorities, nor infringed upon the interests of the shareholders, the Company or its employees. b) With no reserved opinions contained therein, the Auditor's Statement for 2001 presented by the Company’s domestic and overseas accounting firms truly reflected the Company's financial status and business performance. c) No funds were raised during the reporting year. The last proceeds (by issuing 40,000,000 B Shares in December 1995) had been used up by the end of 1996. Actual usage and amount of the proceeds were in conformity with the original plan. d) Related party transactions in 2001 were conducted fairly in conformity with market prices (see Financial Statements for details), and have not impaired the interests of the Company. IX. SIGNIFICANT EVENTS (I) The Company had no significant lawsuits or arbitration cases involved in 2001. (II) The Company did not conduct any significant acquisition or sale of assets, or any merger and consolidation in 2001. (III) Related Party Transactions 1. Land-use fees The Company and its subsidiaries leased several plots of land and some offices from the controlling shareholder (CND) and Shenzhen Chiwan Petroleum Supply Base Co., Ltd. in 2001 at the land use fees stated as follows, which was settled according to the generally-accepted market price. Name 2001 2000 CND 17,216,412 4,864,933 Shenzhen Chiwan Petroleum Supply Base Co., Ltd. 611,306 543,793 2. Temporary Land Lease Contract According to Temporary Land Lease Contract signed between Shenzhen Chiwan Harbour Container Co., a subsidiary of the Company and CND, the former leased from the latter a piece of land covering a total area of 104,276.90 sq. m. located in Southern end of Tutou port commencing from Aug. 1, 2000 to Dec. 31, 2002 at the generally- accepted market rental of RMB 7.00 per sq. m per month. Based on the actual demand, the former returned a part of the land covering an area of 20,000 sq. m. on May 1, 2001. 21 So actual rented area was 84,276.90 sq. m. since May and the due rental as of 2001 amounted to RMB 5,389,260. 3. Guarantee CND offered the Company with guarantee for loans amounting to RMB 379,608,000, duration from May 8, 2000 to Nov. 27, 2006. 4. Supervision on Projects During the reporting period, the Company and its subsidiaries paid RMB 537,232 to Shenzhen Haiqin Engineering Supervision Co. Ltd. for the supervision on projects. 5. Equity Assignment The Company assigned the whole equity of Guangzhou Xinkang Real Estate Development Co., Ltd., including contributed capital, allotment rights and liabilities, etc., to CND at the market generally-accepted price of RMB 29.5 million. As at the assignment basis date, June 30, 2001, carrying amount of the rights and liabilities was respectively RMB 16,489,647 and RMB 2,730,000. As appraised by Guangzhou Zengcheng Zhongyu Real Estate Appraisal Co., Ltd. with ZYPZ [2002] No. 00104 Assets Appraisal Report, net assets of Guangzhou Xinkang Real Estate Development Co., Ltd. as at June 30, 2001 was RMB 128,036,997 based on the market price and its 21.44% equity valued RMB 27,451,132. Thus, the Company realized a investment income of RMB 10,280,353 from this equity assignment, which has been paid by Dec. 31, 2001. The equity assignment was approved in the Board meeting on Dec. 21, 2001. 6. Assignment of Fixed Assets Feb. 28, 2001, Shenzhen Chiwan Harbour Container Co. assigned 15 cement transfer vehicles, net value amounting to RMB 4,594,629, to Shenzhen Gangchuang Architecture Material Co., Ltd. at the price of RMB 4.4 million. (IV) Material Contract and the Implementation 1. The Company did not hold in trust, contract or lease the assets from other companies in 2001, nor did it put in trust, contract or lease its assets to other companies. 2. In the report period, the Company did not offer material guarantee to other companies for bank loan. 3. Entrusted Financing The Company entered into an agreement with China Southern Securities Co., Ltd. (CSSC) in November 2000 to contribute RMB30,000,000 from November 28 2000 to November 28 2001 to an investment fund (Fund) managed by CSSC, which will be invested in shares and debentures listed in the PRC. Under the agreement, the Company would shoulder any profit and loss of such investment after paying CSSC remuneration for such investment at 2.5% of the net value of the assets as well as bonus according to the value increase of the assets. Such investment was approved by the Third Board of Directors on November 25, 2000. Upon the expiration of the agreement, principle of such investment was reclaimed. The Company has no such investment plan in 2002. 4. Other material matters Oct. 16, 2001, the Company signed contract and prepared Articles of Association with CMHI to incorporate a joint venture named “Shenzhen Wharf Holdings Network System Co., Ltd”, with registered capital at RMB 5 million, 37.5% from the Company. Feb. 15, 2001, the Company signed contract prepared Articles of Association with Market Mix Investments Limited, a subsidiary of CMHI, to incorporate a joint venture named “Senzhen Wharf International Port Co., Ltd.”, with registered capital at RMB 108.81 million, 51% of which was invested by the Company in forms of fixed assets of 8 berth at Mawan Port valuing RMB 51 million and cash RMB 4.5 million. Relevant registration procedure of the company was undergoing. 22 (V) Commitment and the Implementation 1. Profit distribution policy for 2001 was examined and adopted in the 5th Meeting of the 3rd Board of Directors dated April 9, 2001: (1) Profit for 2001 will be distributed for only once; (2) After drawing of statutory surplus reserve and welfare fund according to the Articles of Association of the Company, no less than 60% of the net profit for 2001 will be distributed; (3) Dividend will be distributed in cash or bonus shares or both. (4) Actual distribution preplan is to be proposed according to the actual status by the Board of Directors to the Annual Shareholders’ General Meeting for review. Preplan of profit distribution and dividend distribution plan for 2001 approved in the 7th Meeting of the 3rd Board of Directors dated April 5, 2002 is in conformity with the Company’s commitment as stated above, pending to the examination and approval in the Annual Shareholders’ General Meeting. 2. It was decided in the 5th Meeting of the 3rd Board of Directors dated April 9, 2001 to entrust the Company’s administrative group to appoint three independent director based on the opinion and nomination from the Directors, pending to the examination in the Extraordinary Shareholders’ General Meeting 2001. As regulated in the Guiding Opinion on Establishing Independent Director System in Listed Company released by the CSRC on Aug. 16, 2001, at least two independent directors should be appointed in listed company ended June 30, 2001 and at least one third of the Board members should be independent directors ended June 30, 2003. The Company is searching for the right person strictly in line with the regulation and complete the appointment of two independent directors before June 30, 2002. (VI) Since the business license of Zhong Tianqin Certified Public Accountants was to be withdrawn by the Finance Ministry due to its misfeasance, the Company’s Third Board of Directors resolved on November 21 2001 to dismiss Zhong Tianqin Certified Public Accountants so as to ensure the normal conducting of the Company’s audit report, and to appoint PricewaterhouseCoopers Zhongtian Certified Public Accountants as the Company’s domestic accounting firm for the Company in 2001 and the overseas accounting firm, PricewaterhouseCoopers Certified Public Accountants, remained unchanged. Remunerations of the Company’s accounting firms were discussed and approved by the Board of Directors as follows: Unit: RMB’000 2001 2000 Zhong PricewaterhouseCoopers PricewaterhouseCoopers Zhong PricewaterhouseCoopers Tianqin Zhongtian (domestic) (overseas) Tianqin (overseas) Audit RMB RMB 185 RMB 385 RMB 390 HKD 390 expenses 404 Other -- -- -- -- HKD 30 expenses 7. During the reporting year, the Company and its Directors were not involved in any punishment from the supervising authority. 8. Article 72, Article 93 and Article 112 of the Company’s Articles of Association were approved to be amended at the 2000 Annual Shareholders’ General Meeting of the Company, which was announced on “Securities Times” and “South China Morning Post” on May 15, 2001. 23 X. FINANCIAL STATEMENTS (I) Report of the International Auditors (please refer to the attachment) (II) Consolidated Financial Statements (please refer to the attachment) (III) Notes to the Consolidated Financial Statements (please refer to the attachment) XI. DOCUMENTS AVAILABLE FOR REFERENCE 1. Financial Statements carrying the signatures of the Company's legal representative, the Chief Financial Officer and the person in charge of accounting; 2. Original copy of Auditor's Statement sealed by CPA and signed by registered accountants; 3. Original copy and press release of all the documents disclosed in 2001 on “Securities Times”, “South China Morning Post” and “Ta Kung Pao”; and 4. Original copy of the Annual Report signed by the Chairman. Board of Directors of Shenzhen Chiwan Wharf Holdings Limited April 9, 2002 24 25 Attachment: REPORT OF THE INTERNATIONAL AUDITORS TO THE MEMBERS OF SHENZHEN CHIWAN WHARF HOLDINGS LIMITED (Incorporated as a joint stock limited company in the People’s Republic of China) We have audited the accompanying consolidated balance sheet of Shenzhen Chiwan Wharf Holdings Limited (the “Company”) and its subsidiaries (the “Group”) as of 31st December 2001 and the related consolidated income and cash flow statements for the year then ended. These consolidated financial statements set out on pages 2 to 30 are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the consolidated financial statements present fairly in all material respects the financial position of the Group as of 31st December 2001, and of the results of its operations and its cash flows for the year then ended in accordance with International Accounting Standards. PricewaterhouseCoopers Certified Public Accountants Hong Kong, 26 SHENZHEN CHIWAN WHARF HOLDINGS LIMITED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2001 Notes 2001 2000 RMB RMB Revenue 3 478,756,052 448,441,809 Operating costs (284,771,435) (267,616,389) ───────── ───────── 193,984,617 180,825,420 Administrative expenses (59,805,215) (45,184,597) Other operating income 8,986,190 10,909,305 ───────── ───────── Operating profit 4 143,165,592 146,550,128 Finance expenses - net 6 (36,819,275) (28,478,144) Gain on disposal of an associated undertaking 7 10,280,353 - Share of results before tax of associates 1,946,370 3,783,829 ───────── ───────── Profit before tax 118,573,040 121,855,813 Tax 8 (7,523,736) (9,325,804) ───────── ───────── Profit after tax 111,049,304 112,530,009 Minority interests 26 (37,224,735) (29,968,823) ───────── ───────── Net profit 73,824,569 82,561,186 ═════════ ═════════ Earnings per share 9 0.194 0.216 ═════════ ═════════ - 27 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED CONSOLIDATED BALANCE SHEET AS AT 31ST DECEMBER 2001 Notes 2001 2000 ─────────────────────── ─────────────────────── RMB RMB RMB RMB ASSETS Non-current assets Property, plant and equipment 11 1,794,592,310 1,655,359,818 Investment property 12 19,411,508 - Construction-in-progress 13 11,668,948 180,673,465 Intangible assets 14 (2,865,130) (2,470,434) Investments in associates 15 22,115,497 42,422,978 Available-for-sale investments 16 60,227,000 60,928,354 ─────── ────── 1,905,150,133 1,936,914,181 Current assets Inventories 17 18,531,049 17,255,241 Amount due from related 29(c) 5,331,806 - companies Other receivables and prepayments 28,066,567 29,615,826 Trade receivables 103,509,920 96,233,594 Investment fund 18 - 30,000,000 Cash and cash equivalents 19 162,170,168 141,806,806 ────── ────── 317,609,510 314,911,467 ─────── ──────── Total assets 2,222,759,643 2,251,825,648 ═══════ ════════ EQUITY AND LIABILITIES Capital and reserves Share capital 25 381,517,000 381,517,000 Reserves 27 732,538,927 698,040,380 Retained earnings 39,438,124 49,560,937 ────── ────── 1,153,494,051 1,129,118,317 Minority interests 26 362,847,219 326,058,994 Non-current liabilities Long-term bank borrowings 20 194,308,000 284,590,000 ────── ────── 194,308,000 284,590,000 Current liabilities Trade payables 29,623,975 24,864,472 Other payables and accrued 32,360,538 91,927,876 expenses Taxation 8 5,309,444 6,707,432 Short-term bank borrowings 20 442,406,940 386,590,000 Amount due to holding company 29(b) 2,409,476 1,968,557 ───── ────── 512,110,373 512,058,337 ───────── ───────── Total equity and liabilities 2,222,759,643 2,251,825,648 ══════════ ══════════ - 28 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED 31ST DECEMBER 2001 Share capital Reserves Retained (note 25) (note 27) earnings Total RMB RMB RMB RMB Balance at 1st January 2000 381,517,000 667,079,885 44,280,197 1,092,877,082 Profit for the year - - 82,561,186 82,561,186 Transfer from retained profits to reserves - 33,024,474 (33,024,474) - Dividend paid for 1999 - - (44,255,972) (44,255,972) Currency translation differences - (2,063,979) - (2,063,979) ──────── ───────── ───────── ───────── Balance at 31st December 2000 381,517,000 698,040,380 49,560,937 1,129,118,317 ════════ ═════════ ═════════ ══════════ Balance at 1st January 2001 381,517,000 698,040,380 49,560,937 1,129,118,317 Profit for the year - - 73,824,569 73,824,569 Transfer from retained profits to reserves - 34,731,689 (34,731,689) - Dividend paid for 2000 - - (49,215,693) (49,215,693) Currency translation differences - (233,142) - (233,142) ───────── ───────── ───────── ───────── Balance at 31st December 2001 381,517,000 732,538,927 39,438,124 1,153,494,051 ═════════ ═════════ ═════════ ═════════ - 29 - SHENZHEN CHIWAN WHARF HOLDINGS LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2001 Notes 2001 2000 RMB RMB Cash flows from operating activities Cash generated from operations 28 235,739,625 212,658,866 Interest received 1,762,976 5,087,524 Interest paid (38,355,786) (23,557,288) Income tax paid (9,223,469) (5,441,972) ───────── ───────── Net cash from operating activities 189,923,346 188,747,130 ---------------- ---------------- Cash flows from investing activities Purchase of property, plant and equipment (79,162,536) (232,853,236) Payments for construction-in-progress (71,169,843) (167,699,715) Disposal of an associated undertaking 29,500,000 - Acquisition of available-for-sale investments - (56,180,000) Acquisition of an associated undertaking - (13,000,000) Acquisition of investment fund - (30,000,000) Disposal of investment fund 30,000,000 - Disposal of property, plant and equipment 2,729,934 1,648,800 Dividend received 2,207,830 - ───────── ───────── Net cash used in investing activities (85,894,615) (498,084,151) ---------------- ---------------- Cash flows from financing activities Proceeds from short-term borrowings 450,564,435 664,161,020 Proceeds from long-term borrowings 68,608,000 286,180,000 Repayments of short-term borrowings (400,952,459) (462,000,000) Repayments of long-term borrowings (152,000,000) (99,355,920) Capital contribution from minority investors of a subsidiary 26 72,702,784 - Repayment of cash advance to minority investors of a subsidiary 26 (72,460,258) - Dividends paid to minority investors of a subsidiary 26 (679,036) (10,415,000) Dividends paid 10 (49,215,693) (44,255,972) ───────── ───────── Net cash (used in)/from financing activities (83,432,227) 334,314,128 ---------------- ---------------- Increase in cash and cash equivalents 20,596,504 24,977,107 ═════════ ═════════ Movement in cash and cash equivalents: Cash and cash equivalents at 1st January 141,806,806 118,893,678 Increase 20,596,504 24,977,107 Effect of exchange rate changes (233,142) (2,063,979) ───────── ───────── Cash and cash equivalents at 31st December 19 162,170,168 141,806,806 ═════════ ═════════ - 30 - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 General and basis of preparation Shenzhen Chiwan Wharf Holdings Limited (the “Company”) was incorporated on 16th January 1993 in the People’s Republic of China (the “PRC”) as a joint stock limited company. The Company and its subsidiaries (the “Group”) are principally engaged in bulk and general cargo packing, cargo handling, container terminal services, bonded warehouse operation, arranging land and sea transportation for customers. The consolidated financial statements are prepared in accordance with and comply with International Accounting Standards (“IAS”) issued by the International Accounting Standards Committee. This basis of accounting differs from that used in the preparation of the statutory consolidated financial statements in the PRC (the “PRC consolidated financial statements”). The PRC consolidated financial statements of the Company and its subsidiaries comprising the Group have been prepared in accordance with the accounting principles and regulations as applicable in the PRC. Restatements have been made as are appropriate to these PRC consolidated financial statements to conform with IAS. Differences arising from the restatement are not incorporated in the accounting records of the Company and its subsidiaries. The consolidated financial statements are prepared under the historical cost convention except as disclosed in the accounting policies below. 2 Principal accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below: (a) Consolidation (i) The consolidated financial statements comprise the consolidation of financial statements of the Company and its subsidiaries as at 31st December 2001 and of the results for the year then ended. (ii) Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations, have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date of disposal. All intercompany transactions, balances and unrealised surpluses and deficits on transactions between Group companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made of minority interests. A listing of the Group’s principal subsidiaries is set out in note 30. (b) Investments in associated undertakings Investments in associated undertakings are accounted for by the equity method of accounting. These are undertakings over which the Group has between 20% and 50% of the voting rights, and over which the Group exercises significant influence, but which it does not control. Provisions are recorded for long-term impairment in value. Equity accounting involves recognising in the consolidated income statement the Group’s share of the associates’ profit or loss for the year. The Group’s interest in the associates is carried in the consolidated balance sheet at an amount that reflects its share of the net assets of the associates. A listing of the Group’s principal associated undertakings is shown in note 15. (c) Foreign currencies - 31 - Income statements of foreign entities are translated into the Group’s reporting currency at average exchange rates for the year and the balance sheets are translated at the year end exchange rates ruling on 31st December. Exchange differences arising from the retranslation of the net investment in foreign subsidiaries and associated undertakings are taken to ‘translation reserve’ in shareholders’ equity. On disposal of the foreign entity, such translation differences are recognised in the consolidated income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group maintains its books and accounting records in Renminbi. Foreign currency transactions in Group companies are accounted for at the exchange rates prevailing at the date of the transactions. Foreign currency monetary assets and liabilities are translated at the applicable exchange rates prevailing at the balance sheet date. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement. (d) Financial assets and liabilities Financial assets and liabilities carried on the consolidated balance sheet include cash and bank balances, trade receivables, other receivables and prepayments, amount due from related companies, investment fund, available-for-sale investments, trade payables, other payables and accrued expenses, amount due to holding company and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. (e) Intangible assets Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of net assets of the acquired subsidiary/associated undertaking at the date of acquisition. Goodwill on acquisition is reported in the consolidated balance sheet as an intangible asset and is amortised using the straight-line method over its estimated useful life of 10 years. Where an indication of impairment exists, the carrying amount of goodwill is assessed and written down immediately to its recoverable amount. Negative goodwill Negative goodwill represents the excess of the fair value of the net identifiable assets acquired over the cost of acquisition. Negative goodwill is presented in the same balance sheet classifications as goodwill. It represents the amount not exceeding the fair values of acquired identifiable non-monetary assets and is recognised as income on a systematic basis over the remaining weighted average useful life (10 years) of the identifiable acquired depreciable or amortisable assets.. (f) Long-term investments At 1st January 2001 the Group adopted IAS 39 and classified its investments into the following categories: (i) Trading; (ii) Held-to-maturity; and (iii) Available-for-sale. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading investments and included in current assets. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale; these are included in non-current assets unless management has the express intention of holding the investment for less than twelve months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case - 32 - they are included in current assets. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. During the current year, the Group did not hold any trading and held-to-maturity investments. For those investments that an active market exists, the available-for-sale investments are measured at their fair values. For those that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, available-for-sale investments are measured at amortised cost using the effective interest rate method if they have a fixed maturity, or are measured at cost if they do not have a fixed maturity. Gains and losses on disposals of available-for-sale investments are determined by comparing proceeds with carrying amount and are included in operating profit. (g) Property, plant and equipment All property, plant and equipment is recorded at cost less accumulated depreciation and impairment loss. Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values (which are estimated at 10% of cost) over their estimated useful life as follows: Land use rights 20 - 40 years Buildings 5 - 40 years Harbour facilities 50 years Plant, machinery and equipment 5 - 15 years Motor vehicles, cargo ships and tugboats 5 - 20 years Furniture and fixtures 5 years Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into account in determining operating profit. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised, during the period of time that is required to complete and prepare the property, plant and equipment for its intended use, as part of the cost of the asset. (h) Investment property Investment property is recorded at cost less accumulated depreciation less impairment loss. Depreciation is calculated on the straight-line method to write off the cost of investment property to their residual values over their estimated useful life of 40 years. Where the carrying amount of investment property is greater than its fair value, it is written down to its recoverable amount. The fair value of investment property is determined by the discounted cash flow method based on the reasonable anticipative investment return rate. (i) Construction-in-progress Construction-in-progress represents fixed assets under construction and is stated at cost. This includes the cost of construction as well as interest charges and exchange differences, if any, arising from borrowings used to finance the construction during the construction period. Depreciation is not provided on construction-in-progress until the related asset is completed and transferred for intended use. - 33 - (j) Accounting for operating leases - where a group company is the lessee Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the consolidated income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. (k) Accounting for operating leases - where a group company is the lessor Assets leased out under operating leases are included in property, plant and equipment in the consolidated balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income is recognised on a straight-line basis over the lease term. (l) Inventories Inventories are stated at the lower of cost or net realisable value. Cost is determined by the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads, but excludes interest expense. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. (m) Trade receivables Trade receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified. (n) Investment fund Investment fund is carried at fair value. Fair value is based on quoted market prices of investments included in the fund at the balance sheet date. Realised and unrealised gains and losses arising from changes in the fair value of the investment fund is included in the income statement in the period in which they arise. (o) Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments, and bank overdrafts. In the balance sheet, bank overdrafts are included in borrowings in current liabilities. (p) Borrowings Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. The fair value of borrowings is estimated by applying a discounted cash flow approach using current market interest rates for similar indebtedness. (q) Pension obligations The Group’s contributions to a defined contribution pension plan are charged to the consolidated income statement in the year to which they relate. (r) Taxation PRC income tax is provided at the rates applicable to enterprises in the Shenzhen Special Economic Zone of the PRC, based on the income for financial reporting purposes, adjusted for income and expenses items which are not assessable or not deductible for income tax purposes. - 34 - Hong Kong income tax is provided at the rates applicable to subsidiaries in Hong Kong, based on the income for financial reporting purposes, adjusted for income and expenses items which are not assessable or not deductible for income tax purposes. Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred income tax. (s) Revenue recognition Sales are recognised upon delivery of products and customer acceptance, if any, or performance of services, net of sales taxes and discounts and after eliminating sales within the Group. Other revenues earned by the Group are recognised on the following bases: Interest income - on an accrual basis. Rental income - on an accrual basis. Dividend income - when the right to receive payment is established. 3 Segment information (a) Primary reporting format - business segments The Group is organised into two main business segments in the PRC: (i) Harbour related services - provides loading and unloading services, storage services, port management services and harbour agency services; and (ii) Transportation services - provides trucking and shipping services. Year ended 31st December 2001 Harbour related services Transportation services Total RMB RMB RMB Revenue 412,162,358 66,593,694 478,756,052 Segment result 149,043,227 (593,469) 148,449,758 Unallocated costs (5,284,166) ───────── Operating profit 143,165,592 Finance expenses - net (36,819,275) Share of results before tax of associates 1,946,370 1,946,370 Gain on disposal of an associated undertaking 10,280,353 10,280,353 ───────── Profit before tax 118,573,040 Tax (7,523,736) ───────── Profit after tax 111,049,304 Minority interests (37,224,735) ───────── Net profit 73,824,569 ═════════ Segment assets 2,045,773,354 94,643,792 2,140,417,146 Associates 22,115,497 22,115,497 Unallocated assets 60,227,000 ───────── Consolidated total assets 2,222,759,643 ═════════ Segment liabilities (497,858,981) (14,251,392) (512,110,373) Unallocated liabilities (194,308,000) ───────── Consolidated total liabilities (706,418,373) ═════════ Capital expenditure 79,616,210 16,751,796 96,368,006 Depreciation 78,503,411 9,574,093 88,077,504 Amortisation 1,418,961 - 1,418,961 Impairment charge 950,000 10,203,933 11,153,933 ═════════ - 35 - Revenue 383,848,212 64,593,597 448,441,809 Segment result 141,039,784 7,856,963 148,896,747 Unallocated costs (2,346,619) ───────── Operating profit 146,550,128 Finance expenses - net (28,478,144) Share of results before tax of associates 3,783,829 3,783,829 ───────── Profit before tax 121,855,813 Tax (9,325,804) ───────── Profit after tax 112,530,009 Minority interests (29,968,823) ───────── Net profit 82,561,186 ═════════ Segment assets 2,055,625,126 92,849,190 2,148,474,316 Associates 42,422,978 42,422,978 Unallocated assets 60,928,354 ───────── Consolidated total assets 2,251,825,648 ═════════ Segment liabilities (488,400,751) (23,657,586) (512,058,337) Unallocated liabilities (284,590,000) ───────── Consolidated total liabilities (796,648,337) ═════════ Capital expenditure 481,428,847 14,133,376 495,562,223 Amortisation 1,418,961 - 1,418,961 Depreciation 67,297,704 8,928,520 76,226,224 ═════════ There are no sales or other transactions between the business segments. Unallocated costs represent corporate expenses. Segment assets consist primarily of property, plant and equipment, construction- in-progress, intangible assets, inventories, receivables and operating cash, and exclude investments. Segment liabilities comprise operating liabilities and exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions to property, plant and equipment, and intangible assets. (b) Secondary reporting format - geographical segments The Group provides the above services in the PRC, its country of incorporation. (c) Analysis of sales 2001 2000 RMB RMB Revenue from services 478,756,052 448,441,809 ═════════ ═════════ Revenue arising from interest is disclosed in note 6. Revenue arising from operating lease rental is disclosed in note 4. - 36 - 4 Operating profit The following (income) / expenses have been included in arriving at operating profit: 2001 2000 RMB RMB Depreciation on property, plant and equipment (note 11) - owned assets 87,127,492 76,226,224 - owned assets leased out under operating leases 503,200 - - investment property (note 12) 446,812 - Amortisation of intangible assets – goodwill (included in operating expenses) (note 14) 1,418,961 1,418,961 Negative goodwill recognised as income (included in other operating income) (1,024,265) (144,970) (note 14) Operating lease rentals - land and buildings 21,505,141 15,878,706 - plant, machinery and equipment 840,448 4,980,330 - cargo ships and tugboats 3,152,208 1,756,098 Gain on disposal of an associated undertaking (note 7) (10,280,353) - Gain on disposal of property, plant and equipment (681,502) (1,304,639) Costs of inventories recognised as expenses (included in operating costs) 38,709,883 39,196,296 Staff costs (note 5) 97,342,660 85,870,112 Doubtful debts provision 1,778,834 93,650 Repairs and maintenance expenditure on property, plant and equipment 11,953,803 15,015,413 Deferred income - amortisation of rental received in advance - (280,398) Rental income - owned assets (3,323,352) (3,505,569) - investment property (1,051,375) - Impairment charge of property, plant and equipment (included in operating costs) (note 11) 10,203,933 - Impairment charge of construction-in-progress (included in operating costs) (note 13) 950,000 - 5 Staff costs 2001 2000 RMB RMB Wages and salaries 89,433,017 80,676,435 Pension costs - defined contribution scheme (note 21) 7,909,643 5,193,677 ──────── ──────── 97,342,660 85,870,112 ════════ ════════ The average number of employees in 2001 was 2,547 (2000: 2,606), of whom 1,477 (2000: 1,511) were part- time. 6 Finance expenses - net 2001 2000 RMB RMB Interest income 1,762,976 5,087,524 Net foreign exchange transaction gains/(losses) 162,747 (9,320,096) Interest expenses on bank borrowings (40,063,799) (32,229,028) Less: Interest expenses capitalised in construction- -in-progress (note 13) 1,708,013 8,671,740 (38,355,786) (23,557,288) - 37 - Others (389,212) (688,284) ───────── ───────── (36,819,275) (28,478,144) ═════════ ═════════ 7 Gain on disposal of an associated undertaking This represented profit arising from disposal of the Group’s 21.44% equity interest in Guangzhou Xinkang Real Estate Development Company Ltd (“Xinkang Real Estate”). Pursuant to an agreement dated 21st December 2001 between the Company and China Nanshan Development (Group) Incorporation (“Nanshan Development”), the holding company of the Group, the Group’s entire 21.44% equity interest in Xinkang Real Estate together with the amount due from Xinkang Real Estate were disposed of / transferred to Nanshan Development for a total consideration of RMB29,500,000. Such consideration was fully settled in cash before the year end. 8 Tax 2001 2000 RMB RMB PRC income tax (note a) Company and subsidiaries 7,128,831 8,747,150 Share of tax of associates 281,954 468,127 Hong Kong profits tax (note b) 112,951 110,527 ──────── ──────── 7,523,736 9,325,804 ════════ ════════ (a) In accordance with the relevant income tax laws applicable to enterprises operating in the Shenzhen Special Economic Zone of the PRC, the profits of the Group companies are fully exempted from income tax for five years commencing from the first profit making year of operation followed by a 50% exemption for the immediate next five years (“tax preferential period”), after which the profits of the companies are taxable at the full rate which is currently 15%. As at 31st December 2001, the Group companies with remaining tax preferential period status and the tax reductions involved were as follows: Remaining tax 2001 preferential tax rate years Shenzhen Chiwan Harbour Container Company 1 7.5% Limited Shenzhen Chiwan Terminal Company Limited 3 7.5% Chiwan Container Terminal Company Limited (formerly known as “Shenzhen Kaifeng Terminal Company Limited”) - Phase 1 3 7.5% - Phase 2 8 - Shenzhen Chiwan Grains Terminal Company Limited 6 - Business taxes are levied at 3.03% to 5.05% on the Group’s service income. Deferred taxation has not been provided as there are no significant temporary differences. - 38 - (b) Hong Kong taxation represents the amount provided at the rate of 16% (2000: 16%) on the estimated assessable profits for the year. (c) The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the basis tax rate of the home country of the Company as follows: 2001 2000 RMB RMB Profit before tax 118,573,040 121,855,813 ═════════ ═════════ Income tax provision calculated at the effective tax rate of 15% (2000: 15%) 17,785,956 18,278,372 Effect of different tax rate in other country 10,395 14,076 Effect on tax losses of subsidiaries 378,919 562,361 Effect of tax preferential period (13,216,880) (10,257,426) Income not subject to tax (35,064) (207,834) Expenses not deductible for tax purposes 2,600,410 936,255 ───────── ───────── Tax charge 7,523,736 9,325,804 ═════════ ═════════ (d) The tax liabilities in the consolidated balance sheet included the following: 2001 2000 RMB RMB Income tax 3,125,431 5,107,118 Business taxes, value-added tax and other surcharges 2,184,013 1,600,314 ──────── ──────── 5,309,444 6,707,432 ════════ ════════ 9 Earnings per share Basic earnings per share is calculated by dividing the consolidated profit attributable to shareholders by the number of ordinary shares in issue during the year. 2001 2000 Net profit attributable to shareholders RMB 73,824,569 RMB 82,561,186 Number of ordinary shares in issue 381,517,000 381,517,000 Earnings per share RMB 0.194 RMB 0.216 ═══════════ ═══════════ Diluted earnings per share for both years were not disclosed as there were no dilutive potential ordinary shares. 10 Dividend per share A dividend of RMB0.102 per share amounting to a total dividend of RMB38,914,734 in respect of 2001 is to be proposed. These financial statements do not reflect this dividend payable, which will be accounted for in shareholders’ equity as an appropriation of retained earnings in the year ending 31st December 2002. The dividends declared in respect of 2000 and 1999 were, respectively, RMB49,215,693 and RMB44,255,972. - 39 - 11 Property, plant and equipment Plant, Mo machinery vehic Land use Harbour and cargo sh rights Buildings facilities equipment and tugbo RMB RMB RMB RMB RM Cost At 1st January 2001 1,199,839,974 221,201,800 451,356,185 394,129,023 203,117,7 Transfers (note 13) - 26,471,727 106,213,429 80,458,860 7,701,5 Additions - 3,816,561 208,484 6,561,424 7,446,4 Disposals - - - (951,825) (21,029,6 ───────── ───────── ───────── ───────── ────── At 31st December 2001 1,199,839,974 251,490,088 557,778,098 480,197,482 197,236,0 ---------------- ---------------- ---------------- ---------------- ----------- Accumulated depreciation At 1st January 2001 543,253,477 45,564,919 51,198,220 91,659,429 94,216,0 Charge for the year 19,669,085 7,525,478 10,270,897 30,954,301 17,077,2 Disposals - - - (677,137) (13,955,3 Impairment charge - - - 410,693 9,793,2 ───────── ───────── ───────── ───────── ────── At 31st December 2001 562,922,562 53,090,397 61,469,117 122,347,286 107,131,1 ---------------- ---------------- ---------------- ---------------- ----------- Net book value At 31st December 2001 636,917,412 198,399,691 496,308,981 357,850,196 90,104,8 ═════════ ═════════ ═════════ ═════════ ══════ At 31st December 2000 656,586,497 175,636,881 400,157,965 302,469,594 108,901,6 ═════════ ═════════ ═════════ ═════════ ══════ During the year, management has assessed the carrying amounts of the above assets and provisions were mad on some of the assets under the categories plant, machinery and equipment and motor vehicles, cargo ships an In addition to its own land, the Group also leased from China Nanshan Development (Group) Incor the Company’s holding company, several plots of land. The land owned by Nanshan Development wa Holding Corporation in 1982, which holds a 25% interest in share capital of Nanshan Development. At th not provide for a mechanism for issuing official land use right certificate. However, certain formal land Shenzhen Municipal Planning and Land Bureau such as an outline “red line sketch” planning document in r Nanshan Development had agreed on 9th December 1992 to indemnify the Group from any losses arising o use right issues. On expiry of the lease terms, the Company will negotiate with Nanshan Development to extend the lease terms of the land years. The Directors expect that the lease terms can be extended. - 40 - 12 Investment property 2001 RMB Cost At 1st January 2001 - Transferred from construction-in-progress (note 13) 19,858,320 ───────── At 31st December 2001 19,858,320 ───────── Accumulated depreciation At 1st January 2001 - Charge for the year 446,812 ───────── At 31st December 2001 446,812 ───────── Net book value At 31st December 2001 19,411,508 ═════════ At 31st December 2000 - ═════════ Independent valuer has not been employed to determine the fair value of the investment property. Its fair value as at 31st December 2001 was determined by management of the Company to be RMB20,751,000 using discounted cash flow method. 13 Construction-in-progress 2001 2000 RMB RMB At 1st January 180,673,465 51,324,777 Additions 71,169,843 254,037,247 Interest expenses capitalised (note 6) 1,708,013 8,671,740 Transferred to property, plant and equipment (note 11) (221,074,053) (133,360,299) Transferred to investment property (note 12) (19,858,320) - Impairment charge (950,000) - ───────── ───────── At 31st December 11,668,948 180,673,465 ═════════ ═════════ A capitalisation rate of 5.58% (2000:5.85%) was used, representing the borrowing cost of the loans used to finance the project. During the year, management has assessed the carrying amount of construction-in-progress and provision was made to recognise the impairment losses. - 41 - 14 Intangible assets Goodwill Negative Total goodwill RMB RMB RMB Cost At 1st January 2001 and 31st December 2001 14,728,112 (8,757,950) 5,970,162 ──────── ──────── ──────── Accumulated amortisation At 1st January 2001 8,585,566 (144,970) 8,440,596 Charge for the year 1,418,961 (1,024,265) 394,696 ──────── ──────── ──────── At 31st December 2001 10,004,527 (1,169,235) 8,835,292 ──────── ──────── ──────── Net book value At 31st December 2001 4,723,585 (7,588,715) (2,865,130) ════════ ════════ ════════ At 31st December 2000 6,142,546 (8,612,980) (2,470,434) ════════ ════════ ════════ 15 Investments in associated undertakings 2001 2000 RMB RMB Share of net assets, other than goodwill 12,204,406 27,929,637 Amounts due from associated undertakings 9,911,091 14,493,341 ──────── ──────── 22,115,497 42,422,978 ════════ ════════ The amounts due from associated undertakings are unsecured, interest-free and have no fixed terms of repayment. The principal associates, all of which are unlisted, are: Country of Percentage of Name establishment/ interest held incorporation Shenzhen Chiwan Godown Co., Ltd (“SCG”) PRC 50% Shenzhen (Shekou) Xinwan Shipping Co., Ltd (“SXS”) PRC 49% Chiwan Wharf Network System Co., Ltd (“CWNS”) PRC 37.5% There were no changes in the percentage of equity interests in SCG and SXS during the two years ended 31st December 2001. CWNS is an undertaking newly established during the year. In 2001, the entire equity interest in Guangzhou Xinkang Real Estate Development Ltd was transferred to Nanshan Development. Details of this disposal transaction are set out in note 7. 16 Available-for-sale investments 2001 2000 RMB RMB Unlisted investments, at cost 60,227,000 61,159,354 Less: Provision for impairment - (231,000) ──────── ──────── 60,227,000 60,928,354 - 42 - ════════ ════════ Available-for-sale investments represented investments in PRC and overseas companies of not more than 20% of their paid up capital at 31st December 2001. Available-for-sale investments of the Group have neither a quoted market price in an active market nor a fixed maturity, and are measured at cost less provision for impairment. 17 Inventories 2001 2000 RMB RMB Raw materials (at cost) 5,753,796 6,385,564 Spare parts (at cost) 12,777,253 10,869,677 ──────── ──────── 18,531,049 17,255,241 ════════ ════════ 18 Investment fund Prior year balance represented a designated amount contributed to an investment fund (the “Fund”) which was managed by a securities company in Shenzhen and the Fund was invested in shares and debentures listed in the PRC. The Fund was redeemed at cost in full during the year, no gain or loss arose from such redemption. 19 Cash and cash equivalents 2001 2000 RMB RMB Cash at banks and in hand 122,426,168 83,699,916 Short-term bank deposits 39,744,000 58,106,890 ───────── ───────── 162,170,168 141,806,806 ═════════ ═════════ The weighted average effective interest rate on short-term bank deposits was 1.82% per annum (2000: 3.81% per annum). 20 Borrowings 2001 2000 RMB RMB Current Bank borrowings (note a) 435,516,940 385,000,000 Current portion of long-term bank borrowings (note b) 6,890,000 1,590,000 ───────── ───────── 442,406,940 386,590,000 Non-current Long-term bank borrowings (note b) 194,308,000 284,590,000 ───────── ───────── Total borrowings 636,714,940 671,180,000 ═════════ ═════════ (a) Short-term bank loans, which bear interest at a rate of 5.85% per annum (2000: 5.85% per annum), are repayable within one year. Short-term bank loans of RMB233,000,000 (2000: RMB 295,000,000) are guaranteed by Nanshan Development. - 43 - (b) Loans of RMB138,000,000 and RMB8,608,000 from a bank bearing interest at 5.94% and 6.21% per annum (2000: 5.94% and 6.21% per annum) respectively are repayable on 9th June 2003 and 27th November 2006 respectively. Both loans are guaranteed by Nanshan Development. Another bank loan of HK$45,000,000 (RMB equivalent 47,700,000) bearing interest at HIBOR+1.5% per annum (2000: HIBOR+1.5% per annum) was obtained by a wholly owned subsidiary and is guaranteed by China Merchants Holdings (International) Co., Ltd, a related company. The loan is repayable in 8 installments from 2nd February 2001 with the last installment due on 2nd February 2005. Maturity of long-term bank borrowings: 2001 2000 RMB RMB Between 1 and 2 years 153,900,000 6,890,000 Between 2 and 5 years 40,408,000 247,700,000 Over 5 years - 30,000,000 ───────── ───────── 194,308,000 284,590,000 ═════════ ═════════ (c) The Group has the following undrawn committed borrowing facilities: 2001 2000 RMB RMB Fixed rate - expiring within one year 170,000,000 370,000,000 ═════════ ═════════ 21 Pension scheme In accordance with certain regulations of the Shenzhen Municipal Government, all enterprises established in Shenzhen are required to contribute to a retirement insurance fund administered by the Shenzhen Municipal Government at rates ranging from 7% to 12% (2000: 7% to 12%) of the basic salaries of the Group’s existing PRC staff. The retirement insurance fund is fully responsible for payments to retired staff. 22 Financial assets and liabilities (a) Interest rate risk The interest rates and terms of repayment of loans are disclosed in note 20. Other financial assets and liabilities do not have material interest rate risk. (b) Credit risk Cash and bank balances Substantial amounts of the Group’s cash balances are deposited with reputable banks in the PRC. Trade receivables The Group does not have a significant exposure to any individual customer or counterparty. The major concentration of credit risk arises from exposures to a substantial number of trade receivables mainly in the PRC. (c) Foreign exchange risk The Group’s transactions are primarily denominated in Renminbi and there is no material foreign exchange risk. - 44 - The Group has no material foreign exchange risk in respect of the subsidiaries’ net monetary assets denominated in foreign currencies. (d) Fair values Financial assets of the Group include cash and bank balances, trade receivables, other receivables and prepayments, amount due from related companies and available-for-sale investments. Their fair values are not materially different from their carrying amounts. Financial liabilities of the Group include bank loans, trade payables, other payables and accrued expenses and amount due to holding company. The carrying amounts of short-term loans are estimated to approximate their fair values based on the nature or short-term maturity of these instruments. The fair value of long-term bank loans is estimated by applying a discounted cash flow approach using current market interest rates for similar indebtedness. The fair value is not materially different from the carrying amount. 23 Commitments (a) Capital commitments Capital expenditure contracted for at the balance sheet date but not recognised in the consolidated financial statements is as follows: 2001 2000 RMB RMB Plant, machinery and equipment 21,521,761 10,327,200 Land and buildings 19,769,590 21,353,000 Harbour facilities 11,000,000 22,750,155 Others 23,226,200 1,122,000 ──────── ──────── 75,517,551 55,552,355 ════════ ════════ - 45 - 24 Operating leases The future minimum lease payments under non-cancellable operating leases in respect of a cargo ship, tugboats and the use of land leased from Nanshan Development, are as follows: 2001 2000 RMB RMB Not later than 1 year 29,153,854 4,978,835 Later than 1 year and not later than 5 years 9,555,748 900,000 ──────── ──────── 38,709,602 5,878,835 ════════ ════════ The future minimum lease payments receivable under non-cancellable operating leases are as follows: 2001 2000 RMB RMB Not later than 1 year 2,519,011 2,519,011 Later than 1 year and not later than 5 years 10,076,046 10,076,046 Later than 5 years 35,266,163 37,785,174 ──────── ──────── 47,861,220 50,380,231 ════════ ════════ 25 Share capital The registered, issued and fully paid share capital of the Company at the balance sheet date was as follows: 2001 2000 RMB RMB A shares of RMB 1 each issued to: Nanshan Development 224,470,000 224,470,000 PRC investors 50,600,000 50,600,000 ───────── ───────── 275,070,000 275,070,000 B shares of RMB 1 each issued to foreign investors 106,447,000 106,447,000 ───────── ───────── 381,517,000 381,517,000 ═════════ ═════════ The A and B shares carry equal rights with respect to the distribution of the Company’s assets and profits and rank pari passu in all other respects. - 46 - 26 Minority interests 2001 2000 RMB RMB At 1st January 326,058,994 303,491,390 Capital contribution by minority investors of a subsidiary 72,702,784 - Share of net profits of subsidiaries 37,224,735 29,968,823 Payments of dividends (679,036) (10,415,000) Repayment of cash advance to minority investors of a subsidiary (72,460,258) - Exchange difference on loan from minority investors - 3,013,781 ───────── ───────── At 31st December 362,847,219 326,058,994 ═════════ ═════════ 27 Reserves Share Capita Surplus Statutory public Translation premium reserves reserves welfare fund Tota reserve (note (b)) (note (b)) (note (c)) (note (d)) RMB RMB RMB RMB RMB RMB At 1st January 2000 250,956,191 155,384,283 225,081,546 38,375,425 (2,717,560) 667,079,885 Transfer from retained earnings to reserves: Statutory surplus reserve - - 8,256,118 - - 8,256,118 Statutory public welfare fund - - - 4,128,059 - 4,128,059 Discretionary surplus reserve - - 20,640,297 - - 20,640,297 Currency translation differences - - - - (2,063,979) (2,063,979) ──────── ──────── ───────── ──────── ───────── ──────── At 31st December 2000 250,956,191 155,384,283 253,977,961 42,503,484 (4,781,539) 698,040,380 ════════ ════════ ═════════ ════════ ═════════ ════════ At 1st January 2001 250,956,191 155,384,283 253,977,961 42,503,484 (4,781,539) 698,040,380 Transfer from retained earnings to reserves: Statutory surplus reserve - - 8,682,922 - - 8,682,922 Statutory public welfare fund - - - 4,341,461 - 4,341,461 Discretionary surplus reserve - - 21,707,306 - - 21,707,306 Currency translation differences - - - - (233,142) (233,142) ──────── ──────── ───────── ──────── ───────── ──────── At 31st December 2001 250,956,191 155,384,283 284,368,189 46,844,945 (5,014,681) 732,538,927 ════════ ════════ ═════════ ════════ ═════════ ════════ (a) Pursuant to the relevant PRC regulations and the articles of association of the Company, profit after taxation shall be appropriated in the following sequence: (i) make up accumulated losses; (ii) transfer 10% of the profit after tax to the statutory surplus reserve. When the balance of the statutory surplus reserve reaches 50% of the paid up share capital, such transfer needs not be made. (iii) transfer 5% to 10% of the profit after tax to the statutory public welfare fund. For the year ended 31st December 2001, a 5% of the profit after tax is recommended (2000: 5%). (iv) transfer to the discretionary surplus reserve on amount approved by the shareholders in general meetings. (v) distribute dividends to shareholders. - 47 - The amounts of transfers to the statutory surplus reserve and statutory public welfare fund shall be based on profit after tax in the statutory accounts prepared in accordance with PRC accounting standards. (b) Share premium and capital reserves According to the relevant PRC regulations, share premium and capital reserves can only be used to increase share capital. (c) Statutory surplus reserve and discretionary surplus reserve According to the relevant PRC regulations, statutory surplus reserve and discretionary surplus reserve can be used to make up losses or to increase share capital. Except for the reduction of losses incurred, any other usage should not result in the statutory surplus reserve falling below 25% of the registered capital. (d) Statutory public welfare fund According to the relevant PRC regulations, the use of statutory public welfare fund is restricted to capital expenditure for employees’ collective welfare facilities. Staff welfare facilities are owned by the Group. The statutory public welfare fund is not normally available for distribution to shareholders except in liquidation. Once the capital expenditure on staff welfare facilities has been made, an equivalent amount must be transferred from the statutory public welfare fund to discretionary surplus reserve. (e) Profit distribution Pursuant to the relevant PRC regulations and the articles of association of the Company, profit distributable to shareholders shall be the lower of the accumulated profit distributable to shareholders determined according to the PRC accounting standards as stated in the PRC statutory accounts and the accumulated profit distributable to shareholders adjusted according to IAS. 28 Cash generated from operations Reconciliation of profit before tax to cash generated from operations: 2001 2000 RMB RMB Profit before tax 118,573,040 121,855,813 Adjustments for: Depreciation (note 11, 12) 88,077,504 76,226,224 Amortisation of intangible assets (note 14) 394,696 1,273,991 Reversal of impairment of available-for-sale investments (231,000) - Impairment of property, plant and equipment (note 11) 10,203,933 - Impairment of construction-in-progress (note 13) 950,000 - Doubtful debts provision 1,778,834 93,650 Amortisation of rental received in advance (note 4) - (280,398) Gain on disposal of property, plant and equipment (note 4) (681,502) (1,304,639) Interest expenses (note 6) 38,355,786 23,557,288 Interest income (note 6) (1,762,976) (5,087,524) Gain on disposal of an associated undertaking (note 7) (10,280,353) - Share of results before tax of associates (1,946,370) (3,783,829) Increase in inventories (1,275,808) (5,234,915) (Increase)/decrease in trade receivables, other receivables and prepayments (7,505,901) 9,152,075 Increase in amount due from related companies (5,331,806) - Decrease/(increase) in trade payables, other payables and accrued expenses 5,980,629 (5,537,818) Increase in amount due to holding company 440,919 1,728,948 ───────── ───────── - 48 - Cash generated from operations 235,739,625 212,658,866 ═════════ ═════════ 29 Related party transactions The Company is controlled by China Nanshan Development (Group) Incorporation (incorporated in the PRC) which owns 58.84% of the Company’s shares. (a) Save as those related party transactions disclosed in other notes in these financial statements, in the normal course of business, the Group had the following material transactions with related companies during the year: 2001 2000 RMB RMB Payment to Nanshan Development, the holding company - lease of docking sites and stacking yards 14,796,466 5,097,359 - rental of office buildings 2,419,946 826,071 - purchase of land use rights - 177,414,300 Proceeds from Nanshan Development, the holding company - disposal of an associated undertaking 29,500,000 - Payment to Shenzhen Chiwan Petroleum Supply Base Co., Ltd., a fellow subsidiary - rental of office buildings 611,306 543,793 Payment to Shenzhen Nanshan Engineering Construction Co., a fellow subsidiary - construction of berth and stacking yards - 6,789,833 Payment to Shenzhen Haiqin Engineering Supervision Co., Ltd., a fellow subsidiary - fee for engineering supervision 1,081,760 537,232 Receivable from Shenzhen Gangchuang Construction Co,. Ltd, a fellow subsidiary - disposal of property, plant and equipment 4,400,000 - Transactions with the related parties were carried out on commercial terms and conditions at market prices. (b) Amounts due to holding company The amount due to holding company is unsecured, interest-free and repayable within one year. (c) Amounts due from related companies The amounts due from related companies are unsecured, interest-free and repayable within one year. (d) Directors’ remuneration During the years ended 31 December 2000 and 2001, no amounts have been paid to the Directors of the Company. 30 Principal subsidiary undertakings Place/country of Percentage of Name incorporation/ interest held establishment Direct subsidiaries Chiwan Wharf Holdings (H.K.) Limited Hong Kong 100% Shenzhen Chiwan Grains Terminal Company Limited PRC 100% Shenzhen Chiwan Harbour Container Company Limited PRC 100% Shenzhen Chiwan International Freight Agency Company Limited PRC 100% Shenzhen Chiwan Shipping and Transportation Company PRC 100% Shenzhen Chiwan Terminal Company Limited PRC 100% Shenzhen Chiwan Transportation Company PRC 100% - 49 - Shenzhen Zhennan Packaging Company Limited PRC 100% Shenzhen Joint Favour International Marine Shipping Agency PRC 51% Chiwan Container Terminal Company Limited (formerly known as “Shenzhen Kaifeng Terminal Company Limited”) * PRC 50% * Shenzhen Chiwan Oriental Logistics Co. Ltd. PRC 100% Indirect subsidiary Chiwan Shipping (H.K.) Company Limited Hong Kong 100% * As the Group controls over 50% of the voting power of the board of this company, it is treated as a subsidiary. There were no changes in the percentage ownership interests in the subsidiary undertakings during the two years ended 31st December 2001. 31 Approval of the consolidated financial statements The consolidated financial statements were approved by the board of directors on SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED 31ST DECEMBER 2001 The impact of IAS and other adjustments on the PRC statutory financial statements are as follows: Consoli Consolidated profit for the year net assets as at ended 31st December 31st December 2001 2001 RMB RMB As per the PRC statutory financial statements 86,829,223 1,114,271,657 Impact of IAS and other adjustments: Proposed dividend in respect of 2001 to be taken up in 2002 - 38,914,734 Impairment charge on property, plant and Equipment and construction-in-progress recognised in current year (11,436,213) - Others (1,568,441) 307,660 ───────── ───────── As restated after IAS and other adjustments 73,824,569 1,153,494,051 ═════════ ═════════ - 50 -