深基地Ｂ(200053)2008年年度报告（英文版）

SHENZHEN CHIWAN PETROLEUM SUPPLY BASE CO LTD 2008’S ANNUAL REPORT Important Notes: 1． The directors, supervisors and senior managers guarantee that there exists no omission, misstatement, or misleading information in this annual report. The directors, supervisors and senior managers are responsible, individually and jointly, for the authenticity, accuracy and integrity of the information herein. There is no director, supervisor or senior manager who cannot guarantee the authenticity, accuracy and integrity of the content of this annual reportor does not agree with this report. Mr. Stephen Stanley, the vice chairman of the board, was absent of the meeting for other business and authorized Mr. Fong Yue Kwong to vote on behalf of him. All the other directors were present on the meeting. 2． The Annual Report is written in both English and Chinese. In case of conflict between the two versions, Chinese version shall prevail. 3． RSM China presented audit reports with standard and non-reserved opinion for the Company. 4． Mr. Han Guimao, Chairman of the Board, and Mdm. Yu Zhongxia, Deputy Financial Controller, guarantee the authenticity and integrity of the financial result of this annual report. 1 Catalogue PART I. Company Profile 3 PART II. Highlights for Accounting and Business Data 4 PART III. Changes for Contributed Capital and Shareholders 5 PART IV. Information of Directors, Supervisors, Senior Managers 8 PART V. Corporate Governance 13 PART VI. Review of Shareholders’ General Meetings 18 PART VII. The Board Report 18 PART VIII. The Supervisory Committee Report 23 PART IX. Significant Events 24 PART X. Financial Statements 28 PART XI. Documents Available for Verification 28 2 PART I. Company Profile: Company’s name in English Shenzhen Chiwan Petroleum Supply Base Co. Ltd. (“Chiwan Base”) Company’s name in Chinese 深圳赤湾石油基地股份有限公司（深基地） Legal Representative Mr. Han Guimao Secretary of the Board Mr. Fu Jialin Securities Representative Mr. Song Tao Tel 0755-26694211 Fax 0755-26694227 E-mail Address sa@chiwanbase.com Office Address 14/F, Chiwan Petroleum Building, Chiwan, Nanshan District, Shenzhen, PRC Post Code 518068 E-mail Address sa@chiwanbase.com Website of the Company http://www.chiwanbase.com Designated Newspapers for “Securities Times”, ”Wen Wei Po” Information Disclosure Website for Publishing the http://www.cninfo.com.cn Annual Report Place where the Annual Secretary Department of Chiwan Base Report is available Stock Exchange Shenzhen Stock Exchange Stock Series Chiwan Base -B Stock Code 200053 Date of Initial Registration 24th July 1995 Initial Registration Address Chiwan, Shekou, Shenzhen City, PRC Registration Number for 440301501124066 Business License Number of Taxation 440301618833899 (N) Registration 440305618833899 (L) Certified Public Accountants Zhongrui Yuehua Certified Public Accountants Co., Ltd 8-9 /F Block A Corporation Bldg.No.35 Finance Street Xicheng District Beijing PRC 3 PART II. Highlights of the Accounting and Business Data I. Accounting Data (Unit: RMB) Increase/decr 2008 2007 2006 ease（％） Before After Before After adjustment After adjustment adjustment adjustment adjustment Revenue 282,881,630.74 233,589,293.00 233,589,292.67 21.10% 194,905,934.00 194,905,934.00 Profit before tax 78,032,297.74 121,334,080.00 118,552,341.65 -34.18% 149,009,457.00 149,009,457.00 Net profit 68,739,276.90 112,170,424.00 109,388,685.44 -37.16% 139,259,693.00 139,259,693.00 Net profit after deducting 70,967,537.54 112,486,304.00 109,704,565.03 -35.31% 140,042,077.00 140,042,077.00 non-recurring gains&losses Net cash flows from 242,532,579.82 155,310,359.00 155,310,358.80 56.16% 107,725,133.00 107,725,133.00 operating activities Increase/decr End of 2008 End of 2007 End of 2006 ease（％） Before After Before After adjustment After adjustment adjustment adjustment adjustment Total assets 2,269,548,271.28 1,694,964,593.00 1,692,182,854.46 34.12% 1,284,606,108.00 1,284,606,108.00 Shareholders’ equity 886,063,910.86 856,548,016.00 853,766,277.29 3.78% 814,177,465.00 814,177,465.00 Share capital 230,600,000.00 230,600,000.00 230,600,000.00 0.00% 230,600,000.00 230,600,000.00 Note: The Shareholders’ equity was deducted of Minorities. According to the regulations of Enterprise Accounting Standards, the Company has implemented the new accounting standards since January 1, 2007. There are no differences of net profits and net assets compared with IFRS. II. Main Financial Indices (Unit: RMB) Increase/decre 2008 2007 2006 ase（％） Before After After Before After adjustment adjustment adjustment adjustment adjustment EPS 0.30 0.49 0.47 -36.17% 0.60 0.60 Diluted EPS 0.30 0.49 0.47 -36.17% 0.60 0.60 EPS after deducting non-recurring 0.31 0.49 0.48 -35.42% 0.61 0.61 gains&losses Fully diluted ROE 7.76% 13.10% 12.81% -5.05 percent 17.10% 17.10% Weight average ROE 7.92% 13.52% 13.03% -5.11 percent 17.96% 17.96% Fully diluted ROE after deducting of 8.01% 13.13% 12.85% -4.84 percent 17.20% 17.20% non-recurring gains & loses Weight average ROE after deducting of 8.17% 13.56% 13.07% -4.89 percent 18.06% 18.06% non-recurring gains & loses Net cash flows per share 1.05 0.67 0.67 56.72% 0.47 0.47 from operating activities Increase/decre End of 2008 End of 2007 End of 2006 ase（％） 4 Before Before After After After adjustment adjustment adjustme adjustment adjustment nt Shareholders’ equity per 3.84 3.71 3.70 3.78% 3.53 3.53 share Items included in the non-recurring gains & losses RMB Notes Disposal of non-current assets -1,045,777.74 Government subsidies calculated into the profit 496,666.73 Net gains from other non-operating activities -502,596.75 Influence on income tax 1,176,552.88 Total -2,228,260.64 - III. Changes of Shareholders’ Equity (Unit: RMB) Contributed Statutory surplus Discretional Item Capital Reserves Retained Earnings Minorities Equity capital Reserve Surplus Reserves Year-begin 230,600,000.00 209,117,427.91 121,230,503.08 47,472,612.00 245,345,734.30 853,766,277.29 Increase 11,523,156.67 7,967,343.17 3,868,472.09 68,739,276.90 112,704,805.66 204,803,054.49 Decrease 59,800,615.26 59,800,615.26 Year-end 230,600,000.00 220,640,584.58 129,197,846.25 51,341,084.09 254,284,395.94 112,704,805.66 998,768,716.52 Reasons of change: The increment of Statutory Surplus Reserve was drawn in accordance with the company’s Article of Association. Statutory Surplus Reserves is 10% of the net profit. Discretional Surplus Reserves is calculated as 5% of the net profit of last year. PART III. Changes of Contributed Capital and Particulars about Shareholders I. Changes of Contributed Capital: Illustration for Changes of Contributed Capital: (Unit: share) Change in number of shares Before Conversion of After change Share Bonus reserves Others Subtotal change allotment shares to shares 1. Non-tradable shares a. Promoters’ shares including State owned shares Ownership by Domestic legal entities 119,420,000 119,420,000 Ownership by Foreign legal entities Others b. Shares raised from legal entities c. Employee’s shares d. Preferred shares 5 Total 119,420,000 119,420,000 2. Tradable shares a. A shares b. B shares 111,180,000 111,180,000 c. Shares traded in Overseas’ Market d. Others Total 111,180,000 111,180,000 3. Total of shares 230,600,000 230,600,000 II. Share Issue and List: The Company issued, at the par value of RMB 1.00 per share, a total number of 230.6 million shares of common B shares in June 1995, according to the approval of Shenzhen Securities and Exchange Commission. The total shares include 119.42 million non-tradable A shares, 51.18 million non-tradable B-shares for foreign promoters, and 60 million public traded B-shares for ordinary investors. The public traded B shares were issued on June 23rd, 1995 at a price of HK$2.82 per and the fully diluted P/E of 10.5. The B shares became public listed on July 28th, 1995. The Company haven’t issued any employees’ shares ever since. The number and the frame of the Company’s shares remained unchanged this year. III. Particulars about Shareholders (December 31, 2008) Total number of shareholders 7,988 Holding information of top ten shareholders Ratio Un-tradable Impawned or Name（full name） Character Shares （％） shares frozen CHINA NANSHAN DEVELOPMENT Domestic legal (GROUP) INCORPORATION 51.79 119,420,000 119,420,000 0 entity owned OFFSHORE JOINT SERVICES (BASES) Foreign investment COMPANY OF SGP. PTE LTD shareholder 22.19 51,180,000 0 0 GUOTAI JUNAN SECURIES HONG KONG LIMITED Other 2.95 3,276,975 0 Unknown CHINA MECHANTS SECURITIES (HONGKONG) LTD Other 2.06 2,292,343 0 Unknown LIN XI Other 0.63 701,800 0 Unknown SUN LI FENG Other 0.53 587,141 0 Unknown LIN QIAO CHAI Other 0.48 532,200 0 Unknown BNP PARIBAS PRIVATE BANK 0.43 SINGAPORE BRANCH Other 483,000 0 Unknown MORGAN STANLEY & CO 0.43 INTERNATIONAL PLC Other 473,243 0 Unknown CHEN WEN Other 0.39 430,969 0 Unknown Holding information of top ten tradable shareholders Name（full name） shares Type（A、B、H or other） OFFSHORE JOINT SERVICES (BASES) COMPANY OF SGP. PTE LTD 51,180,000 B GUOTAI JUNAN SECURIES HONG KONG LIMITED 3,276,975 B CHINA MECHANTS SECURITIES (HONGKONG) LTD 1,739,000 B LIN XI 701,800 B 6 SUN LI FENG 587,141 B LIN QIAO CHAI 532,200 B BNP PARIBAS PRIVATE BANK SINGAPORE BRANCH 473,243 B MORGAN STANLEY & CO INTERNATIONAL PLC 473,243 B CHEN WEN 430,969 B YANG DONG MEI 420,000 B Among the top ten shareholders, the domestic legal entity shareholder, China Nanshan Development (Group) Incorporation has no affiliated relations with other Explanation for the Affiliated Relations or Unitedshareholders and does not fall into the scope of united Action of the Top Ten Shareholders action person stipulated by “Regulation of Information Disclosure of the Change of Shareholding of listed company”. It is unknown that whether other tradable-share shareholders fall into the scope of united action person. IV. Profiles of Major Legal Entity Shareholders 4.1) Information about the controlling shareholder of the Company Company Name: China Nanshan Development (Group) Incorporation (“CNDI”) Legal representative: Fu Yuning Date of registration: Sept 28, 1982 Business scope: land development; port service and transportation, as well as related industry, commerce, real estate and tourism and bonded warehouses Registered Capital: RMB 500 million 4.2) Controlling graph 7 State-Owned Assets Supervision and Administration Commission of the State Council 100％ China Merchants Group State-Owned State-Owned China National Offshore Oil Assets Assets Corporation 55.766％ Supervision and Supervision 100％ Administration and Commission of Administration China Merchants Holdings Shenzhen Commission of (International) Company Municipal Guangdong Limited Government Province 100％ 100％ 100％ China Silverflow Shenzhen Guangdong China China HK Clifford Merchants Co., Ltd. Investment Petro-Trade National Ocean Wong (Nanshan) Holdings Development Offshore Oilfields Investment Holdings Co., Ltd. Corporation Oil Services Co.,Ltd Ltd Investment (Hong Co.,Ltd Kong) Limited (COOS) 36.52% 0.50% 26.10% 23.49% 7.83% 1.64% 3.92% China Nanshan Development (Group) Incorporation 51.79% Shenzhen Chiwan Shenzhen Chiwan Petroleum Supply Base 48.21% Tradable Shareholders Co. Ltd. (B Shares) 4.3) Shareholders (above 5%) of Holding Shareholder Shareholder I China Merchants Holdings (International) Co Ltd Legal representative: Fu Yuning Date of registration: May 28, 1991 Business scope: Investment and holdings, a company listed in HK Stock Exchange Registered Capital: HKD 500 million Shareholder II Shenzhen Investment Holding Co Ltd Legal representative: Chen Hongbo Date of registration: Oct 13, 2004 Business scope: 1. provision of guarantees to state-owned enterprises in Shenzhen; 8 2. management of equity interests in state-owned enterprises other than those directly supervised and managed by the State-owned Assets Supervision and Administration Commission of Shenzhen; 3. asset restructuring, transformation and capital operation of the relevant enterprises; 4. investment; 5. other activities authorized by the State-owned Assets Supervision and Administration Commission of Shenzhen Registered Capital: RMB 4.6 billion Shareholder III Guangdong Petro-trade Development Corp Legal representative: Chen Qiang Date of registration: Sept 7, 1993 Business scope: provision of comprehensive service for oil and gas exploitation; industry investment and development; transportation agency; sale of industrial production materials, petroleum products, construction materials, feedstuff, wood chips, furniture and electrical appliances; purchase of agricultural by-products. Registered Capital: RMB 112,773,000 Shareholder IV China National Offshore Oil Corporation Legal representative: Fu Chengyu Date of registration: Sept 7, 1993 Business scope: cooperation with foreign partners for oil and gas exploitation in China's offshore areas Registered Capital: RMB 94.9 billion 4.4) Other shareholders with shares of 10% or above: Company Name: Offshore Joint Services (Bases) Company Of Singapore Pte Ltd (“OJSB”) Date of registration: Feb 28, 1984 Date of registration: Singapore Registered Capital: 13 million SGP Dollars Business scope: investing in the companies engaged in the supply of services and facilities to offshore petroleum industry. PART IV. Information of Directors, Supervisors and Senior Managers I. Brief information Name Position Gender Age Office Term Han Guimao Chairman Male 58 2007.5—2010.5 Stephen John Stanley Vice Chairman Male 50 2007.5—2010.5 Fong Yue Kwong Director Male 56 2007.5—2010.5 Wang Fen Director Female 54 2007.5—2010.5 Yuan Yuhui Director Male 58 2007.9—2010.5 Cui Wei Director/General Manager Male 52 2007.5—2010.5 Lin Shaodong Independent Director Male 63 2007.5—2010.5 9 Zhang Limin Independent Director Male 53 2007.5—2010.5 Zhou Chengxin Independent Director Male 53 2007.5—2010.5 Cui Zhongfu Independent Director Male 47 2007.9—2010.5 Liu Fu Supervisor (Convener) Male 63 2007.5—2010.5 Lee Whye Yee Supervisor Female 41 2008.5—2010.5 Fan Zhaoping Supervisor Male 54 2007.5—2010.5 Guo Songhua Supervisor Female 50 2007.5—2010.5 Liu Wei Employee Supervisor Male 43 2007.5—2010.5 Ye Sengsheng Employee Supervisor Male 32 2007.5—2010.5 Ren Yongping Deputy GM Male 56 2004.4—2010.5 Huang Donger Deputy GM Male 57 2002.5—2010.5 Fu Jialin Board Secretary Male 47 2002.5—2010.5 Brief information (continued) Shares held Shares held Whether receiving Total remuneration Name at the at the remuneration from shareholder (RMB’0000) year-begin year-end or other relative companies Han Guimao 10000 10000 yes Stephen·Stanley yes Fong Yue Kwong yes Wang Fen 10000 10000 yes Yuan Yuhui yes Cui Wei 60.95 no Lin Shaodong 6.00 no Zhang Limin 6.00 no Zhou Chengxin 6.00 no Cui Zhongfu 6.00 no Liu Fu yes Lee Whye Yee yes Fan Zhaoping 11600 11600 yes Guo Songhua yes Liu Wei 31.39 no Ye Sengsheng 25.37 no Ren Yongping 10000 10000 45.36 no Huang Donger 43.54 no Fu Jialin 31.67 no Total 41600 41600 262.28 - The Company doesn’t have the stock promoting plan. Note: During the period dating from Feb.10 to Mar. 20, 2009, some directors, supervisors and senior managers have purchased shares of the Company. The details are as follows: Shares Purchasing Shares holding Name holding amounts Purchasing way date after before Purchasing in the secondary Cui Wei - 2009.2.10 market with self-owned 97000 97000 -2009.3.20 funds Ren Yongping 10000 2009.2.10 65900 Purchasing in the secondary 75900 market with self-owned 10 -2009.3.20 funds 2009.2.10 Purchasing in the secondary Huang Donger - 63700 market with self-owned 63700 -2009.3.20 funds 2009.2.10 Purchasing in the secondary Fu Jialin - 45100 market with self-owned 45100 -2009.3.20 funds 2009.2.10 Purchasing in the secondary Liu Wei - 34800 market with self-owned 34800 -2009.3.20 funds Six of above directors or supervisors hold posts in CNDI as follows: Mr. Han Guimao as the Senior Vice President since March 2002; Mr. Liu Fu as the Vice Chairman since May 2003; Mdm. Wang Fen as the President since March 2002; Mr. Fan Zhaoping as the Senior Vice President since Dec. 1998; Mr. Yuan Yuhui as the Senior Vice President since Oct. 2002; Mdm. Guo Songhua as the Financial Controller since Sept. 2007; II. Resume for Directors, Supervisor and Senior Managers Directors Mr.Han Guimao, aged 58, graduated from architecture of Tsinghua University. Started from 1976, he worked in the First Design Institute of China Railway Ministry. He was the deputy GM of Shenzhen Branch of the Second Construction Bureau of China Railway Ministry in 1983 and the executive deputy GM of Shenzhen Nanshan CBD Development Company in 1992. Since 1994, he jointed CNDI as the assistant general manager, and now, he is the senior vice president of CNDI. Mr. Stephen John Stanley, aged 50, Australian. He jointed Toll Holdings Limited in 1999, as the Director for Strategy, Mergers and Acquisitions. He is responsible for strategy, portfolio review, marketing growth initiatives involving acquisitions, joint ventures and major business development opportunities. Mr Stanley has 20 years experience in the logistics industry with approximately 13 years of Asian international logistics experience involved in executive, operational, marketing and general management positions. Mr. Fong Yue Kwong, aged 56, master degree, president of Jurong Port of Singapore. He was the first general manager of the Company from 1984 to 1989 and has been the director of the Company Board since 1992. Mdm. Wang Fen, aged 54, MBA. She jointed CNDI since 1982 and held various posts. Since 1994, she was the vice president and senior vice president of CNDI. Now she is the president of CNDI and the chairman of Shenzhen Chiwan Wharf Holdings Ltd. Mr. Yuan Yuhui, aged 58, MBA. He jointed CNDI in 1989 as director of the General Manager’s Office. Now, he is the senior vice president of CNDI in responsible of administration, legal matters and business development. He was the board secretary from 1993 to 2000 and director of Shenzhen Chiwan Wharf Holdings Co Ltd since 1994. He is as the Company’s director since Sept 2007. Mr. Cui Wei, aged 52, MBA of the University of San Francisco and bachelor degree of University of International Business and Economics of Beijing. He jointed the Company in 1991 as assistant general manager, CFO and board secretary in 1995, deputy GM in 2002 and currently the executive deputy GM. He has currently taken the post of general manager since Dec 2007 and director since May 2007. Mr. Lin Shaodong, aged 63, expert on offshore petroleum field. He had been ever as the general manager and party chief of Bohai Oil Field Company, chief economist of CNOOC, chairman of 11 CNOOC Investment & Holdings Ltd and China Offshore Oilfields Services Ltd. and AEGON-CNOOC Life Insurance Co., Ltd. He also had been as the vice chairman of the board of CNDI from July 2001 to July 2003 and director of the third board of the Company from November 2001 to Sept 2003. He retired in Dec 2005. At present, he is the special advisor of China Offshore Oilfields Services Ltd and independent director of AEGON-CNOOC Life Insurance Co., Ltd as well as the director of the Company since May 2007. Mr. Zhang Limin, aged 53, doctor degree of accounting, doctorial tutor and professor of Management Institute of Sun Yat-Sen University. He is vice president of China Auditing Society and Guangdong Auditing Society, member of Accounting firm Governance Committee, and independent director of Shenzhen Changcheng Investment Holding Co.,Ltd, Shenzhen Airport Co., Ltd, and Shenzhen Expressway Co.,Ltd as well as of the Company since May 2007. Mr. Zhou Chengxin, aged 53, doctor degree of law, director of Shenzhen Legal Research Institute, member of the legal committee of the Forth Shenzhen Municipal People’s Congress, expert of the consultation committee for Shenzhen municipal Committee of the Communist Party and government, arbitrator of China International Economic and Trade Arbitration Commission, and the local arbitration commissions of Shenzhen, Zhuhai, Shanghai and other branches, part-time practicing lawyer at Guangdong Zhongan Law Firm. And he is the independent director of Shenzhen Nanshan Power Station Limited Company, Shenzhen Tellus Holding Limited Company and China Aviation Sanxin Co., Ltd as well as of the Company since May 2007. Mr Cui Zhongfu, aged 47, Currently the Vice Chairman and Secretary General of China Federation of Logistics and Purchasing, adjunct professor of Nankai University. He got a bachelor degree at Zhongnan University of Economics in 1983 and a master degree at Renmin University of China in 1986. He was a lecturer of the Management Cadre College of the Ministry of Mechanical Industry of China from 1983 to 1990. After 1990, He worked in several governmental departments as section chief, such as the Port Administration Office of the State Council, Bureau of Economic Operation of the State Economic and Trade Commission and the National Development and Reform Commission. At present, he is the independent director of Sinotrans Air Transportation Development Co Ltd. as well as of the Company since Sept 2007. Supervisors Mr. Liu Fu, aged 63, senior engineer and offshore petroleum expert. He is the chairman of CNOOC Investment & Holdings Ltd, vice chairman of CNDI. He was director of the fourth Board of Directors and is convener of supervisory committee of the Company since May 2007. Mdm. Lee Whye Yee, aged 41, Singaporean, MBA and CPA. She had previously worked in APLL-Asia & Middle East as Financial Controller, Nokia (China) Investment Co. Ltd as Business Controller and other multi-national companies. She has rich experience in auditing, financial management and controllership. At present, she is director of Offshore Joint Services (Bases) Company of SGP. Pte Ltd and CFO of Toll Asia. She is as the supervisor since May 2008. Mr. Fan Zhaoping, aged 54, master degree in economics in the Research Institute of the Ministry of Finance of China. He was the financial manger of the Company since 1988. Now, he is the senior vice president of CNDI and is supervisor of the Company since May 2007. Mdm. Guo Songhua, aged 50, senior economist and Registered Financial Planner, master degree of University of Manchester. She jointed CNDI in 1994 and currently is Financial Controller and the general manager of the Finance Department of CNDI. She has taken the post of supervisor of the Company since May 2007. Mr. Liu Wei, aged 43, master degree of logistics and supply chain management of Chinese University of Hongkong. He was the deputy GM of Shanghai Baowan, manager of the Logistic Development Department of the Company. At present, he is the general manager of petroleum logistics supply division of the Company. He is as the employee supervisor since May 2007. Mr. Ye Sensheng, aged 32, graduated from Human Resource Management Course in Renmin University of China. He jointed the Company in Sept 2005. Now, he is manager of HR Department 12 of the Company and as the employee supervisor since May 2007. Senior Managers Mr. Ren Yongping, aged 56, graduated from China Finance College, worked in department of revenue in Hebei government and was the financial manager in Chiwan Warf, general manger of Chiwan Foodstuff Port and general manager of Chiwan Warehouse Co. Now he is deputy general manager of the Company. Mr. Huang Donger, aged 57, port mechanical engineer and registered safety officer, graduated at Wuhan Water Transportation Engineering College majored in crane design. He had studied container pier management in Hamburger. He was manger of operation department of the Company,. Now he is deputy general manager of the Company. Mr. Fu Jialin, aged 47, master of University of Alberta in Canada in 1993, graduated at Beijing University of Aeronautics and Astronautics in 1982. He had been the assistant general manager of development and research department of CNDI, deputy manager of Chixiao Component Houses Co Ltd, and general manger of Dongguan Nanshan Construction Material Co Ltd. Now he is the Board Secretary of the Company. III. Annual Salary of Directors, Supervisor and Senior Managers 1) Decision Procedure and Basis Salary standard of the Company was decided and approved by the Board of Directors. Four independent directors, one director as well as General Manager, two employee supervisors and all the other senior executives draw their salaries, bonuses and other welfares from the Company, while all the others draw the payment from their respective shareholder party instead of the Company. 2) Changes of directors, supervisors and senior management In May 2008, Mdm Lee Whye Yee was elected as supervisor of the 5th Supervisory Committee by the approval of the annual shareholders meeting of 2007. In Dec 2008, Mr.Ren Yongping was approved as the candidate of director of 5th Board by the 7th tele-communication meeting of the 5th Board. In Oct 2008, Mr Huang Fanzhi, ex-director, Deputy GM and CFO has resigned for personal reasons. VI. Information of Other Employees As at 31 December 2008, the Company had 403 employees with 64 management personnel. Among them, there are 26 with master degree or above, 71 with bachelor degree, and 306 with lower degree. The Company need to pay remuneration and fees for one retiree. PART V. Corporate Governance 1. General information of Corporate Governance during the reporting period The Company strictly implements the PRC Company Law, the Securities Law and other laws, and regulations issued by the CSRC; continuously improves the legal person administration system, makes every effort to build modern enterprise system and regulates its operation. According to “Administration Guideline for listed Company”, the Board of Directors explained the practice situation of the legal person administration of the company as follows: 1) In aspect of shareholders and shareholders’ general meeting: the company’s administration structure can ensure the equal status of all shareholders, especially the minority shareholders, and can ensure shareholders fully exercised their legal rights. The convening 13 procedure, the qualification of the person attending the meeting and the voting procedure of the meeting are in accordance with the stipulation of “Company Law”, “Regulatory Opinion for General Meeting of Listed Company”, “Articles of Association”. 2) In aspect of relations between the control shareholder and the Company: the Company’s control shareholders attached importance to the listed company, gave energetic support, exercised shareholder’s rights and undertook shareholder’s obligation legally. The Company is independent of its control shareholder in terms of business, assets, organization, employees and finance. The Company undertakes responsibilities and risks independently. 3) In aspect of directors and Board of Directors: the Company elects directors strictly in line with the election procedure as regulated in the Articles of Association of the Company. The AOA stipulates that accumulative total voting system should be used in the Board election. All the directors shall exercise their duties loyally, bona fide and diligently. Both the number of directors and composition of the Board shall comply with relevant laws and regulations. The Company has established the independent director system, employed three independent directors taking charge of the special committee of the Board in accordance with the requirements of the CSRC and the Shenzhen Securities Regulatory Office. 4) In aspect of supervisors and Supervisory Committee: Both the election of the Company’s shareholder supervisors and employee supervisors shall comply with relevant laws and regulations. The member and the composition of the Supervisory Committee can ensure the Supervisory Committee to supervise and inspect directors, senior managers and the finance of the Company independently and efficiently. The Supervisory Committee stipulates Rules of Procedure of the Supervisory Committee. The meeting of the Supervisory Committee shall comply with the stipulated procedure. 5) In aspect of person having correlative benefit: the company respects the legal rights of banks and other creditors, employees, consumers, suppliers, communities and other persons who have correlative benefit. The company shall cooperate actively with them so as to achieve continuous and healthy development. 6) In aspect of information disclosure and transparency: The Company stipulates the regulation of information disclosure and authorizes the secretary of the Board and the authorized representative to take charge of securities affairs and information disclosure, and also to welcome the visit and inquiry of the shareholders. The Company discloses the relevant information in a real, accurate, complete and timely way strictly according to the law, regulations and the Articles of Association and the Company ensures all the shareholders to have equal opportunity in obtaining the information. Moreover, the Company timely disclosed the detailed information of the largest shareholder or concrete controller and changes in their shareholdings According to “Administration Guideline for listed Company”, the Board of Directors took the opinion that the practice situation of the Company’s administration is basically in accordance with the requirement of “Administration Guide Line for listed Company” after improving each systems of the Company according to the requirement of the CSRC’s Shenzhen Regional Office. 2. Information of Independent Directors’ Performance According to the requirement of the CSRC and Shenzhen Securities Regulatory Office, the company employed four specialists as independent directors, majored in law, accounting and professional area of the company. The Company established three special committees of the Board of Directors and made and improved “Detailed Work Rules of Nomination and Salary Committee of the Board of Directors”, “Detailed Work Rules of Strategy and Development 14 Committee the Board of Directors” and “Detailed Work Rules of Audit Committee of the Board of Directors”. During the period under review, in accordance with the requirement of CSRC’s “Guidance Opinion for Listed Company to Establish of Independent Directors System”， “Articles of Association” and “Work System of Independent Director” the Company’s independent directors exercised their duties, took part in the decision-making of the Company’s importance affairs, heard of the business and operating report from the management, reviewed the operating and investments on the spot, and presented independent director’s opinion and fully exerted the function of independent director. The information of independent directors to attend the directors’ meetings is as follows: The number The of directors’ The number of The number Name number of Reference meetings to authorizing of absence presence be present Lin Shaodong 7 7 0 0 Zhang Limin 7 7 0 0 Zhou Chengxin 7 7 0 0 Cui Zhongfu 7 7 0 0 3. The Company is independent of its control shareholder in terms of business, assets, organization, employees and finance, and has independent and integrated ability of operation and management. 1) In the aspect of operation, the business of the Company is entirely independent of its control shareholder. The control shareholder and its subordinate units did not engage in the business that are the same or similar to the business of the listed company. 2) In the aspect of employees, the employees of the Company are independent of the control shareholder. The senior managements, the leading official of the finance and the secretary of the Board do not occupy any position in the control shareholder. 3) In the aspect of assets, the assets invested by the control shareholder is independent, integrated and has clear ownership. 4) In the aspect of organization, the Company’s Board of Directors, Supervisory Committee and other intern organizations operate independently. There is no affiliated relation between the control shareholder and its functional departments as well as the Company and the Company’s functional departments. The control shareholder and its subordinate organization do not give any plan and instruction as to the operation to the Company and its subordinate organization or intervene the independence of the Company’s management by other means. 5) In the aspect of finance, the Company establishes the regulatory system of finance and accounting and makes it in accordance with correlative laws and regulations. The control shareholder will not intervene the Company’s finance and accounting affairs. 4. Special activities on corporate governance of the Company 1) The performance of special activities on corporate governance During the reporting period, in accordance with the requirements of CSRC No.27 Announcement and the Notice on further promoting special activities on the corporate Governance of Listed Companies (Shen Zheng Gong Si Zi [2008] No. 62), the Company carried out self examination on corporate governance and made rectification and improvement correspondingly. There is no existence that controlling shareholder or its associated parties occupying the Company's funds and no infringement any interests of the Company. In line with the disclosure rules in periodic report, the “Capital transactions table of related parties of listed companies” will be submitted to the CSRC Shenzhen Bureau quarterly to protect small shareholders’ interests. The Board held 5th tele-communication meeting on Jul 29, 2008 which approved the Rectification report on special 15 activities of corporate governance and self examination report on capital transactions of controlling shareholder and its associated parties. All the details were published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on Jul 31, 2008. The Internal Auditing System was approved by the 3rd meeting of the Board on Apr 23, 2008 and appointed Auditing Department deputy manager. 2) Achievements by this special activity Though the special activities, the Company has improved the internal control rules, further raised the sense of the directors, supervisors and senior managers in performing their duties according to rules, and as a result, the Company’s internal control system functions better than before and its ability for internal control is further strengthened. 5. Construction of internal control system The existing internal control system has been established. It can meet the requirements of manufacturing, management and development. It also can meet the requirements of advancing operation benefit and effectiveness of the Company, ensuring the safety of company assets and the trueness, integrity and equity of company information. It has supplied strong secure for carrying out law and internal regulation. The internal control system will be continuously perfected to follow the company development and the change of laws and regulations. These systems will be also carried out during the practice. 6. Self-evaluation for internal control system 1). Summary ⅰ. The organizational structure of the Company’s internal control According to prescription of related laws and regulations, the Company established and completed the Company Governance Structure, including Shareholders’ Meeting, Board of Directors, Supervisory Committee and Senior Management. Moreover, the Board of the Directors sets up three special committees, including Strategic and Developmental Committee, Auditing Committee, Nomination and Remuneration Committee. ⅱ.Construction of internal control system In the report period, in accordance with the newly-promulgated laws and regulations, the Company modified and improved the rules and procedures for systems. At the same time, under the implementation of administration improvement requirements from the CSRC, the Company enhanced and improved its operations. The existing internal control system has been established. It can meet the requirements of manufacturing, management and development. It also can meet the requirements of advancing operation benefit and effectiveness of the Company, ensuring the safety of company assets and the trueness, integrity and equity of company information. It has supplied strong secure for carrying out law and internal regulation. The internal control system will be continuously perfected to follow the company development and the change of laws and regulations. These systems will be also carried out during the practice. ⅲ. The statement of the setting-up of audit department, employees and internal control work The Company has set up audit department with two employees responsible for Auditing Committee. Meanwhile, an internal auditing and controlling system have been established. The operational activities which include sales, collection of account receivables, purchase, payment, cost and expense, fixed assets management, construction management, information disclosure, human resource management and etc, are strictly carried out by the processes and procedures under the audit and internal control system, thus the risks are effectively controlled. Furthermore, under monitoring of Audit Committee, the Board of Directors supervises the internal control of the 16 Company system, and ensures it can be established. ⅳ.the key activities and results of internal control of 2008 During the reporting period, in accordance with the requirements of CSRC No.27 Announcement and the Notice on further promoting special activities on the corporate Governance of Listed Companies (Shen Zheng Gong Si Zi [2008] No. 62), the Company carried out self evaluation on corporate governance and made rectification and improvement correspondingly. The Board held 5th tele-communication meeting on Jul 29, 2008 which approved the Rectification report on special activities of corporate governance and self evaluation report on capital transactions of controlling shareholder and its associated parties. With the improvement of the whole corporate governance system and further strengthening on standardized operation for directors, supervisors and senior management, the overall governance has been improved and perfected. The Company accepted the on-spot routine inspection conducted by Shenzhen Securities Regulatory Bureau of the CSRC on 2nd July, 2008. Shenzhen Bureau has showed its acceptance and satisfaction with the Company’s current corporate governance and internal control. ⅴ. Overall comment on internal control of the Company The internal control system of the Company is logical and complete, and it is feasible and effective in the actual operation. The work of internal control is a lasting project, and the Company will strictly follow the requirements in the Internal Control Guidelines for Listed Companies and keep improving its internal control system to ensure the Company secure operations and protection for the interest of shareholders. 2) Key internal control activities 1. Shareholding structure and ownership proportion of subsidiaries Shenzhen Chiwan Petroleum Supply Base Co. Ltd. 100% 60% 32% 20% Shanghai Blogis Shenyang Blogis Kunshan Blogis Guangzhou Blogis Shenzhen Blogis Tianjin Blogis Langfang Blogis Nanjing Blogis Wuhan Blogis Chengdu Longquan Blogis Chengdu Xindu Blogis CSE CPEC Holding Subsidiaries Associated ⅱ. The internal control of holding subsidiaries The company manages its holding subsidiaries strictly according to the related laws, regulations and relevant prescriptions. The Company also sets up corresponding assignment and performance assessment system for its subsidiaries’ directors, supervisors and senior executors. And it establishes a set of operational management systems and requires managements of the subsidiaries stays within the management framework. Each functional department set up by the Company fully supervises the 17 subsidiaries on aspects of human resource, operation, purchase, finance, production, project construction, and significant contract as well as law affairs. ⅲ. The internal control of related party transactions The Company strictly conformed to the stock listing rules and regulations of the Shenzhen Stock Exchange for its related party transaction. The contract price of the related party transactions is on the basis of public bidding price, it is open and fair. ⅳ. External guarantee: There is no external guarantee in the report period. ⅴ. Usage of raised capital: There is no matter relevant to the usage of raised capital. ⅵ. Significant investment: For any significant investment the Company made, it must be legal, prudent, secure, and effective. The risks must be under control. The limit of the approval authority for the Board of Director and Shareholders’ General Meeting on significant investment is clearly stated in Articles of Association, and the Company has also made strict examination and decision making procedure. The Company focuses on its main business, there are no investment occurred apart form the core business. ⅶ. Information disclosure: In accordance with security laws and regulations, the Company establishes Management Measures on Information Disclosure; the document details the principle, content, procedure and secrecy of information disclosure and defines responsibility investigation mechanism. The Company ensures the information disclosure to the investors in fair, accurate and in time. 3) The problems and plans of improvement in key controlling activities The Company’s Board of Directors takes measures for the internal control as follows: ⅰ. to further standardize the relationship with controlling shareholder According to the requirements of Ministry of Finance, the Company provides financial report monthly to controlling shareholder for the purpose of the preparation of its consolidated financial statements. In line with the requirements of notice on further supervising non-compliance of corporate governance standards of listed companies, the Board of Directors has approved this proposal on submitting of Monthly Financial Statements to the Substantial Shareholder. The independent directors gave their opinions on this issue. At the same time the Company timely provides the insiders’ list to CSRC Shenzhen Bureau for profile. ⅱ.to improve the holding subsidiaries’ management system and their corporate governance. ⅲ. to strengthen training. The Company will organize the directors, supervisors, senior management and other employees to learn the knowledge related to internal control in order to improve their execution of internal control system. ⅳ. to strengthen the ability of internal audit and improve capacity of internal risk prevention and control. PART VI. Review of Shareholders’ General Meetings The Company convened twice shareholders’ general meetings during the period under review, the details of which are as follows: 1. The annual shareholders’ general meeting for the year 2007 was held on the 16th floor of Chiwan Petroleum Building, Shenzhen, between 9:30-11:00 am on May 16, 2008. The Public Notice and Legal Opinions were published on May 17, 2008 in Securities Times, Wen Wei Po and http://www.cninfo.com.cn. 18 2. The first extraordinary shareholders’ general meeting for the year 2008 was held on the 16th floor of Chiwan Petroleum Building, Shenzhen, between 9:30-11:30 am on Oct. 24, 2008. The Public Notice and Legal Opinions were published on Oct. 25, 2008 in Securities Times, Wen Wei Po and http://www.cninfo.com.cn. PART VII. The Board Report I Analysis of the Business and Operating i. Brief Information of Business During the reporting period, the Company has achieved the revenue of RMB 282.88 million increased by 21% YoY, and cash flow generated from operating activities reached RMB 242.53million increased by 56% while net profit of RMB 68.74 million decreased by 37% comparing to the same period last year. The decrease of net profit is mainly caused by the following reasons: (1) sharply decrease of investment income from CSE Net profit of CSE was RMB 15.5 million decreased RMB 102.84 million. The investment income of contribution was RMB 4.96 million to the Company decreased RMB 32.89 million by 87% comparing to the same period of last year. (2) increase of financial costs As at the end of 2008, with the increase of investments, the Company has interest-bearing loans of RMB 855 million. The interest costs rose to RMB 45.89 million or 121% increase. (3) the increase of management expenses for developing logistics business The total management expenses reached RMB 59.42 million increased RMB 16.12 million, 37% increased comparing to the same period of last year, including: tax increased of RMB 7.28 million for the increase of land-using-tax ratio and new lands properties; The start-up costs of Baowan Logistics increased RMB 6.65 million. The capital reserves increased of RMB 11.52 million, which caused by 40% equities transfer with Tianjin Baowan, Langfang Baowan, Wuhan Baowan, Chengdu Xindu Baowan, Chengdu Longquan Baowan, Shenyang Baowan and Nanjing Baowan. Net cash flow generated from operating activities was RMB 242.53 million. Deducted the supplementary investment from CNDI to Baowan in cash of RMB 85.09 million, the actual cash flow from operation activities was RMB 157.44 million. ii. Review of Business Sectors Offshore Petroleum Service Turnover of Division of offshore petroleum service got 24% growth to reach RMB 182.44 million year-on-year. Net profit achieved a 14% increase to reach RMB 82.84 million. Baowan Logistics Service Shanghai Baowan 19 For almost all the warehouses were rent out, revenue and net profit of Shanghai Baowan enjoyed a growth to RMB 66.56 million and RMB 37.17 million increased by 11% and 15% respectively. The total income from value added logistics services reached RMB 2.15 million with a growth of 147%. Shenzhen Baowan Upon the impact of macro economic situation worsening and the decrease of freight quantities of Chiwan Port, the revenue of Shenzhen Baowan decreased to RMB 19.04 million by 9%. The rental income was RMB 12.71 million increased by 5%, while the operation quantities decreased to 0.41 million statistical ton by 23%. By the means of controlling costs and adjusting costumers, the net profit increased to RMB 4.02 million by 10%. Kunshan Baowan: Since all the warehouses of Kunshan Baowan were put into operation in July 2008, revenue and net profit achieved RMB 8.50 million RMB-1.02 million respectively. At the end of year 2008, the rental ratio was 50%. Until now, Kunshan Baowan has been engaging in the business. Guangzhou Baowan: With full occupancy rate, turnover achieved RMB 6.35 million with a net profit of RMB 0.59 million. Offshore Engineering Chiwan Sembawang Engineering (32% equity): The revenue of CSE decreased to RMB 792 million by 16% and the net profit decreased to RMB 15.50 million by 86% (included investment income of RMB 51.84 million from Penglai Jutal, the net profit of Chiwan Yard was RMB -36.34 million), which attributed to the Company with RMB 4.96 million. Chiwan Offshore Petroleum Equipment Repair & Manufacture Co (20% equity): The revenue of CPEC achieved RMB 36.32 million increased by 28%. Net profit achieved RMB 3.35 million with investment income of RMB 0.67 million attributed to the Company. iii. Status of the Investments and the Construction Progress The constructions of Shanghai Baowan have been completed and put into use. A new warehouse was planned to be started in the second half of 2009 and to be completed in 2010. Three warehouses (about 20,000 m2) of Guangzhou Baowan had been put into use in 2006. The other part had not been started for the reason of land property till the end of 2008. The Company is engaging on impelling the project. All the warehouses (about 130,000 m2) of Kunshan Baowan were completed by the end of July 2008. The construction of Tianjin Baowan (about 146,000 m2) was planned to be completed in Jul 2009. Three warehouses (about 32,000 m2) of Chengdu Xindu Baowan was planned to be put into use on the end of March 2009, the other three warehouses (about 33,000 m2)would be completed by the end of May 2009. 20 Ten warehouses (about 109,000 m2) of Chengdu Longquan Baowan were planned to be constructed. Thereinto five warehouses (about 52,000 m2) would be started in April 2009 and be completed in May 2010. Nine warehouses (about 86,000 m2) of Nanjing Baowan were planned to be started in June 2009 and to be completed in June 2010. The project of Shenyang Baowan was terminated for detection of underground minerals. The Company was engaging on taking back the refunds for land property. The Company is engaging on preparatory work of the other projects. iv. Key Tasks of Business of 2009 Baowan Logistics Service In 2009, the physical economy will be further affected by the development of the financial crisis. The demand for high-end warehouse facilities will tend to shrink and the rental rate will be affected negatively. The Company should adapt to the major changes of business environments and pace the construction of the logistic parks accordingly. Market development should become a priority and basis for the logistics park project development. Blogis shall concentrate its resources to support the marketing work in KunShan, TianJian and ChengDu XinDu which will roll out in stages in 2009. The Company stressed that the management of the above-mentioned profit centers shall try their best to improve the occupancy rates at market rental rates. Meanwhile, Blogis shall enhance their interaction with and service for the current clients in the parks. The company decided to develop the projects in ChengDu LongQuan and NanJing in phases based on the market research result, as well as to start marketing the facilities before the project construction. The Logistics Parks had been emphasized as key task in the nation’s Developing Layout for Logistics. Industry Upgrading, Urbanization and slowing down projects development of opponents, the development cost becomes relatively lower in the first tier cities due to the financial crisis. These will bring Blogis a strategic development opportunity in the first tier cities such as Beijing, ShangHai, GuangZhou, SuZhou, etc. Offshore Petroleum Service The new offshore supply base by CNOOC is expected to be put into operation after 2010 and some of our current customers may move to the new base. Moreover, the E&P activities will shrink as the oil price is still in the low level and this will reduce the company’s operating volume. The Company will enhance the clients management by actively attracting new offshore oil service companies and adding more service functions for the clients. The Company shall expand the sales contribution from non-oil business and stabilize current non-oil customers to make up the decline in revenue from oil business. Moreover the Company shall improve the customer satisfaction by providing high quality service and setting up formalized service standard so as to improve the company’s core competence. Offshore Engineering CSE Chiwan Yard suffered its first operating loss in 2008 after 8 profitable years. The management team of the Company will help CSE to strive for breakeven by taking corrective measures in 2009. 21 II. Application of the Proceeds The company had invested US$20.5 million raised from stock market in its 1995 floatation in the projects approved by AGM. All projects had been completed by the end of 1996 and the results of which were disclosed accordingly. There is no application in this reporting period. III. Report on the Routine of Board of Directors 3.1. Board Meetings and Resolutions The Board had held seven meetings in the reporting period. 1) The 4th tele-communication meeting of the fifth Board of Directors was held by facsimile on February 28, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on March 1, 2008. 2) The 3rd meeting of the fifth Board of Directors was held on the 16th floor of Chiwan Petroleum Building, Shenzhen on April 23, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on April 25, 2008. 3) The 4th meeting of the fifth Board of Directors was held on the 16th floor of Chiwan Petroleum Building, Shenzhen on April 25, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on April 28, 2008. 4) The 5th tele-communication meeting of the fifth Board of Directors was held by facsimile on July 29, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on July 31, 2008. 5) The 5th meeting of the fifth Board of Directors was held on the 16th floor of Chiwan Petroleum Building, Shenzhen on August 27, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on August 29, 2008. 6) The 6th tele-communication meeting of the fifth Board of Directors was held by facsimile on October 29, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on October 31, 2008. 7) The 7th tele-communication meeting of the fifth Board of Directors was held by facsimile on December 22, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on December 24, 2008. 3.2 Information of Audit Committee’s Performance (1)The performance of internal auditing During the report period, the Audit Committee held a special meeting hearing about summary report of internal auditing of the Company in 2008 and work plan for year 2009. (2) Maintaining regular communication with auditors and following progress of auditing closely During the auditing period, the committee maintained regular communication with financial department and auditor following progress of auditing closely and held a meeting discussed with the auditors about auditing plan, scope, focus points and the incurred problems and resolutions. After the auditor submitted the draft of audit report, the committee reviewed the finance report and presented written opinion. The committee summarized the working of auditor that RSM auditor firm completed the annual audit work successfully. (3) Examination proposals for annual report RSM completed annual auditing work as schedule and presented audit report with standard and 22 non-reserved opinion for the Company. The Committee held a meeting to examine the proposal of annual finance report of year 2008 and submit the opinion for the appointment of accounting firm of 2009 to the Board. 3.3 Information of Nomination and Emolument Committee’ Performance 1) Before examining and reviewing the proposal of appointment Mr Ren Yongping as the candidate of director of the 5th Board of the Company in Dec 2008, the Committee had evaluated his resume, education background and capability considering his performance in accordance with the request of duties of Director and agreed to table it to the Board for approval. 2) The Committee held a meeting on Feb 16, 2009 to hear about the introduction of compensation system of the Company and its management. IV. Implement for the resolutions of shareholders meeting On the reporting period, the Board of Directors implemented all the resolutions approved by the general shareholders’ meeting, and engaged in operating and investments of the Company. The Company proposed to declare a cash dividend of RMB2.08 for each 10 shares held, payable in HKD for B shareholders on July 17, 2008. The Company’s distribution of cash dividends for the past three years: Cash dividend Net profit ratio 2007 48,090,707.00 109,388,685.44 43.96% 2006 68,128,335.00 136,256,670.00 50.00% 2005 63,099,156.46 114,725,739.03 55.00% V. Dividend Distribution Preplan for the Year 2008 In accordance with the audited report by RSM China Certified Public Accountants, the consolidated net profit for the year 2008 is RMB68,739,276.90. The Parent company’s net profit for the year 2008 is RMB79,673,431.68. To conform to the Articles of the Company and relevant rules and regulations of PRC, choosing the parent company’s net profit as the base of distribution, the Board of Directors would like to propose the dividends distribution plan as follows: (1) Profit Distribution RMB the Parent the Parent Consolidated net company's net company profit% profit% Retained Earning B/F 120,021,084.86 Net profit for the year 2008 79,673,431.68 Less: Statutory surplus public reserve 7,967,343.17 10.00% 11.59% Discretionary public reserve 3,983,671.58 5.00% 5.80% Dividends (tax included) 39,836,715.84 50.00% 57.95% The balance 27,885,701.09 35.00% 40.57% Retained earnings 147,906.785.95 (2) The cash dividend for the year 2008 RMB1.72 for every ten shares (tax included) or RMB39,663,200 in total would be paid by the Company and for this purpose the conversion will be based on the closing rate between 23 HK$ and RMB announced by the People’s Bank of China on the first working day after the resolution is passed by the AGM. VI. Estimated Profit Distribution Policy for 2009 The estimated profit distribution policy for the year 2009 is as follows: (1) The Company will conduct profit distribution once in 2009; (2) Approximately 30%-70% of net profit realized in 2009 will be distributed as dividend; (3) The distribution will take the form of cash bonus. VII. The Company does not plan to transfer Capital - Reserves into share capital for the year 2009. PART VIII. The Supervisory Committee Report I. Supervisory Committee Meetings Corporation Supervisory Committee convened four meetings in the reporting period. 1) The 3rd meeting of the fifth supervisory committee was held on the 16th floor of Chiwan Petroleum Building, Shenzhen, on April 23, 2008. The Public Notice was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on April 25, 2008. 2) The 4th meeting of the fifth supervisory committee was held on the 16th floor of Chiwan Petroleum Building, Shenzhen, on April 23, 2008. The meeting had approved the resolution on the first quarterly report of Y2008. 3) The 5th meeting of the fifth Supervisory Committee was held by facsimile on the 16th floor of Chiwan Petroleum Building, Shenzhen, on August 27, 2008. The meeting had approved the resolution on the interim report of Y2008 4) The 3rd tele-communication meeting of the fifth Supervisory Committee was held by facsimile. The meeting had approved the resolution on the third quarterly report of Y2008. II. Opinions Formed by the Supervisory Committee as to the Company’s operation in the Reporting Period as follows: 1) The Company’s decision procedures were both healthy and lawful. The Company’s management systems and internal control procedures were in place. The meeting also confirmed that neither the directors nor senior managers had acted in contravention of the laws, regulations, Articles of Association or detrimental to the interest of the company. 2) The Supervisory Committee carefully reviewed the financial report of the company and confirmed that the company was in good financial situation. The meeting further confirmed that the audit report prepared by the independent auditors RSM gave a true and fair presentation of the Company’s financial performance by offering clear opinion in the audit report for the year 2008. 3) In 2008 the Company did not raise capital or engage in any acquisition. 4) All the affiliated transactions in 2008 were conducted in market principle and the Company’s interests were safeguarded. PART IX. Significant Events 24 1) The Company did not experience any significant lawsuit or arbitration in the reporting year. 2) During the reporting period, there was no director, supervisor, senior manager who was fined or penalized by Securities Supervisory and Administration Authorities of PRC. 3) Investments: The Annual Shareholders’ General Meeting for the year 2007 was held on May 16, 2008. The meeting reviewed and approved the resolution of: “Resolution on the project of Guangzhou Baiyun Baowan Logistic Park”, “Resolution on the project of Zhengzhou Baowan Logistic Park”, “Resolution on the project of Nanjing Baowan Logistic Park” and “Resolution on the project of Shenyang Baowan Logistic Park”. The further information was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn. 4) Transactions with relative party: On October 29, 2008, the sixth tele-communication meeting of the fifth Board of Directors reviewed and approved the resolution on transaction of the entrusted loan from CNDI of RMB 230 million for 1 year term with total interests cost of RMB 13.998 million. The further information was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on October 31, 2008. As bank's benchmark rate lowered, to protect the minorities’ profit, the above mentioned loan rate has decreased to 5.60% accordingly with decrease of interest expense (RMB 1.06 million) upon both parties’ agreement. The first extraordinary shareholders’ meeting of 2008 was held on October 24, 2008. The meeting reviewed and approved the resolutions on associated transactions of Wall Panels for Tianjin and Xindu, of the Construction Contract for Donggaodi Project and of BLOGIS’ equity transferring to CNDI. For carrying through the business development strategy and ensuring the construction of Tianjin Baowan Logistics Park and Chendu Xindu Baowan Logistics Park, Tianjin Baowan and Chendu Xindu Baowan, the subsidiaries of the Company, have purchased wall panels with a total price of RMB 26.25 million from Chixiao which was selected after tender biding procedure. The further information was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on August 29, 2008. For carrying through the business development strategy and ensuring the construction of Donggaodi project, after tender biding procedure, Chixiao was chosen to be the provider with a total price of RMB 28.953 million. The further information was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on August 29, 2008. For carrying through the business development strategy, ensuring the BLOGIS’s rapid growth, and getting a good financing resource while reducing the company’s financial risk, the Company has transferred transfer 40% equities of Tianjin Baowan, Langfang Baowan, Wuhan Baowan, Nanjing Baowan, Shenyang Baowan, Chengdu Longquan Baowan and Chengdu Xindu Baowan. The total price was RMB 108.23 million after auditing and evaluation. Both parties agreed to invest BLOGIS projects proportionately to the joint venture companies according to the project construction budget. The further information was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn on August 29, 2008 and October 9, 2008. The Company had received all of the transfer payment and supplementary investment. The transferring of Shenyang project has been terminated because of the discovery of underground coal resources in accordance with the relevant provisions of the government. For the rest six subsidiaries have been completed all the procedures of equity transferring. 25 5) For carrying through the business development strategy and reducing the financial costs, the Company raised short term fund bonds of RMB 400 million through CNDI as the leader. The further information was published in Securities Times, Wen Wei Po and http://www.cninfo.com.cn. 6) Considered the costs, professionals and the ranking in CICPA, after the tender biding procedure, approved by the Auditing Committee, Board of Directors and the Shareholders Meeting, the Company chose RSM as the auditor of the Company in 2008 with a cost of RMB 640,000, which serves the Company the first year. 7) The Company maintained its autonomy in personnel and financial management and possesses integrated assets. 8) The Company did not entrust, contract or lease other company’s assets or was entrusted, contracted or leased with its own assets. 9) There were neither other significant contract signed nor significant guarantee event happened in the reporting year. 10) Mandated financing Currency: RMB’0000 Mandating Term Way of Sum of Mandatary Profit amount Starting time Expiration time payment withdrawal China By Merchant 3,000 2007-12-12 2008-01-29 10 3,010 convention Bank Total 3,000 - - - 10 3,010 11) The Company has no equity of financial companies and the companies planning to come into the market. 12) There were no changes in the Company’s name or stock’s short form in the reporting period. 13) Index for published announcements: Date Disclosure Items Disclosed Media Resolution for the 7th tele-communication Securities Times, Wen Wei Po and Dec 24,2008 meeting of the 5th Board http://www.cninfo.com.cn The Associated Transaction for the entrusted Securities Times, Wen Wei Po and Oct 31,2008 loan of RMB 230 million http://www.cninfo.com.cn Resolution for the 6th tele-communication Securities Times, Wen Wei Po and Oct 31,2008 meeting of the 5th Board http://www.cninfo.com.cn Resolution for the 1st extraordinary General Securities Times, Wen Wei Po and Oct 25,2008 Shareholders Meeting of 2008 http://www.cninfo.com.cn Securities Times, Wen Wei Po and Oct 16,2008 Notice for a Director’s resignation http://www.cninfo.com.cn 26 Performance Notice for deficit about Securities Times, Wen Wei Po and Oct 9,2008 55-55% http://www.cninfo.com.cn Notice for convening the 1st extraordinary Securities Times, Wen Wei Po and Oct 9,2008 General Shareholders Meeting of 2008 http://www.cninfo.com.cn Asset assessment reports for Blogis Securities Times, Wen Wei Po and Oct 9,2008 Logistics equity transferring http://www.cninfo.com.cn Securities Times, Wen Wei Po and Sept 9,2008 Acquirement of short-term bonds http://www.cninfo.com.cn The Associated Transaction for construction Securities Times, Wen Wei Po and Aug29,2008 contract of Donggaodi Project http://www.cninfo.com.cn The Associated Transaction for wall panels Securities Times, Wen Wei Po and Aug29,2008 contract for Tianjin and Xindu Projects http://www.cninfo.com.cn The Associated Transaction for Securities Times, Wen Wei Po and Aug29,2008 transferring40% equity of Blogis Logistics http://www.cninfo.com.cn Securities Times, Wen Wei Po and Aug29,2008 Interim Report for Y08 and its abstract 2008 http://www.cninfo.com.cn Resolution for the 5th meeting of the 5th Securities Times, Wen Wei Po and Aug29,2008 Board http://www.cninfo.com.cn Notice on Chiwan Logistics renamed to Securities Times, Wen Wei Po and Aug22,2008 Shenzhen Blogis Logistics http://www.cninfo.com.cn Resolution for the 5th tele-communication Securities Times, Wen Wei Po and Jul 31,2008 meeting of the 5th Board http://www.cninfo.com.cn Securities Times, Wen Wei Po and Jul 9,2008 Performance Notice http://www.cninfo.com.cn Securities Times, Wen Wei Po and Jul 7,2008 Dividend distribution Plan for 2007 http://www.cninfo.com.cn Notice on the donation to Sichuan Securities Times, Wen Wei Po and May22,2008 quake-stricken area http://www.cninfo.com.cn Resolution for the Annual General Securities Times, Wen Wei Po and May17,2008 Shareholders Meeting of 2007 http://www.cninfo.com.cn Securities Times, Wen Wei Po and Apr 28,2008 The first quarterly report of 2008 http://www.cninfo.com.cn Notice for convening Annual General Securities Times, Wen Wei Po and Apr 25,2008 Shareholders Meeting of 2007 http://www.cninfo.com.cn Securities Times, Wen Wei Po and Apr 25,2008 Investment Notice for Shenyang Project http://www.cninfo.com.cn Securities Times, Wen Wei Po and Apr 25,2008 Investment Notice for Zhengzhou Project 对 http://www.cninfo.com.cn Investment Notice for Guangzhou Baiyun Securities Times, Wen Wei Po and Apr 25,2008 Project http://www.cninfo.com.cn Securities Times, Wen Wei Po and Apr 25,2008 Annual Report for 2007and its abstract http://www.cninfo.com.cn Resolution for the 3rd meeting of the 5th Securities Times, Wen Wei Po and Apr 25,2008 Supervisory Committee http://www.cninfo.com.cn Resolution for the 3rd meeting of the 5th Securities Times, Wen Wei Po and Apr 25,2008 Board http://www.cninfo.com.cn Securities Times, Wen Wei Po and Apr 17,2008 Progress report on Nanjing Project http://www.cninfo.com.cn Securities Times, Wen Wei Po and Mar 1,2008 Investment Notice for Nanjing Project http://www.cninfo.com.cn Resolution for the 4th tele-communication Securities Times, Wen Wei Po and Mar 1,2008 meeting of the 5th Board http://www.cninfo.com.cn 27 14) Reception, investigation and interview situation of company during report period According to pertinent regulations of listed company information disclosures direct of Shenzhen bourse and Working system in management of investor relation of company, we always carry out the principle of equity, justice and publicity when receiving, investing, interviewing and developing activities to fair play total investors, guarantee all investors enjoying right to learn the truth and other lawful rights and interests, to introduce and reflect practical situation of the company objectively, really and insider dealing. Information Time Location Method Investor Topics discussed provided individual investor Development of Annual report Jul 3, 2008 logistics parks of Y07 Dec1st, 2008 1st Conference individual investor Brochure of the Brief Room on the 14 Field Company research introduction of Dec 9, 2008 floor individual investor business None operation Dec16, 2008 Shenzhen Huaqiang Guaranty & Investment Co Ltd None 15) During the reporting period, the Company made all necessary disclosures. No significant events that should be disclosed were missing. PART X. Audit Report and Finance Report（Attached） Audited by RSM China PART XI. Documents Available for Verification: 1. Original copy of Annual Report carrying the signature of the Chairman; 2. Original copy of Auditor’s Statements sealed by CPA and signed by registered accountants; 3. Original copy and press release of all the documents disclosed in 2008 in the newspapers specified by the China Securities Regulatory Commission; 4. Articles of Association; 5. Other related documents. Chairman of the Board: Mr. Han Guimao Shenzhen Chiwan Petroleum Supply Base Co., Ltd. Dated: 21st April 2009 28 Report of the Auditors To the Shareholders of Shenzhen Chiwan Petroleum Supply Base Co., Ltd: We have audited the accompanying financial statements of Chiwan Petroleum Supply Base Co., Ltd (the “Company”), which comprise the company and consolidated balance sheets as at 31 December 2008, and the company and consolidated income statements, the company and consolidated statements of changes in shareholders' equity and the company and consolidated cash flow statements for the year then ended, and the notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements in accordance with the Accounting Standards for Business Enterprises and the “Accounting System for Business Enterprises”. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with China Auditing Standards. Those standards require that we comply with ethical requirement and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriate of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 29 Opinion In our opinion, the financial statements of Shenzhen Chiwan Petroleum Supply Base Co., Ltd have been prepared in accordance with Accounting Standards for Business Enterprises, and present fairly, in all material respects, the Company's and consolidated financial position as of 31 December 2008, and the Company's and consolidated results of operations and cash flows for the year then ended. Zhongrui Yuehua Chinese Public Accountant: Certified Public Accountants Co., Ltd. Chinese Public Accountant: Beijing PRC 30 CONSOLIDATED BALANCE SHEET Dec 31, 2008 Jan 1 ,2008 Items Consolidated Parent company Consolidated Parent company Current assets: Cash and cash equivalents 131,387,928.04 80,240,914.36 84,572,921.25 76,940,780.32 Notes receivable Accounts receivable 30,058,340.97 18,180,431.33 23,694,142.47 16,839,579.05 Prepayments in advance 1,253,214.62 666,692.87 4,735,088.00 864,354.21 Interest receivable 37,260,777.76 Other receivable 4,101,625.86 383,229,928.01 4,850,408.00 215,723,576.54 Inventories 1,426,789.13 1,292,411.92 1,945,104.59 1,768,257.36 Non-current asset due in 1 year Other current assets 30,000,000.00 30,000,000.00 Total current assets 168,227,898.62 520,871,156.25 149,797,664.31 342,136,547.48 Non-current assets: Long-term accounts receivable Long-term share equity 279,739,030.03 803,892,802.16 274,106,680.87 824,180,453.00 investment Investment Property 479,508,264.36 96,941,237.80 291,487,282.64 100,852,443.18 Fixed assets 146,384,412.87 44,629,869.67 155,125,664.00 53,463,989.50 Construction in progress 339,240,607.25 29,866,123.04 123,695,460.88 537,644.00 Construction material Disposal of fixed assets Intangible assets: 412,695,502.70 27,390,042.79 251,692,797.55 41,548,317.11 Deferred income tax assets 2,796,005.65 36,963.88 767,493.41 Other non-current assets: 440,956,549.80 381,154,260.00 445,509,810.80 253,060,000.00 Total non-current assets: 2,101,320,372.66 1,383,911,299.34 1,542,385,190.15 1,273,642,846.79 Total assets: 2,269,548,271.28 1,904,782,455.59 1,692,182,854.46 1,615,779,394.27 Current liabilities: Short-term loans 855,000,000.00 855,000,000.00 448,953,212.44 448,953,212.44 Notes payable Account payable 1,311,094.09 1,039,045.63 1,695,705.32 965,415.65 Received in advance 390,724.80 383,063.50 Employees’ wage payable 15,252,748.28 13,787,725.01 12,547,383.60 11,322,212.76 Tax payable 11,772,839.61 9,547,357.13 7,500,045.82 5,740,578.05 Interest payable 1,419,943.75 1,419,943.75 1,128,497.08 1,128,497.08 Others payables 358,055,082.99 185,091,297.21 101,012,595.91 102,862,070.85 Non-current liability due in 1 230,000,000.00 230,000,000.00 year Other current liabilities Total current liabilities 1,243,202,433.52 1,065,885,368.73 803,220,503.67 800,971,986.83 Non-current liabilities: Long-term loans Deferred income tax liability 3,388,161.10 3,388,161.10 Other non-current liabilities 27,577,121.24 27,577,121.24 31,807,912.40 31,807,912.40 Total non-current liabilities 27,577,121.24 27,577,121.24 35,196,073.50 35,196,073.50 Total liabilities 1,270,779,554.76 1,093,462,489.97 838,416,577.17 836,168,060.33 Shareholders’ equity Share capital 230,600,000.00 230,600,000.00 230,600,000.00 230,600,000.00 Capital reserves 220,640,584.58 208,453,861.91 209,117,427.91 208,453,861.91 Less : Treasury Stock Surplus reserves 180,538,930.34 180,538,930.34 168,703,115.08 168,703,115.08 Undistributed profits 254,284,395.94 191,727,173.37 245,345,734.30 171,854,356.95 Difference for foreign currency translation Total shareholders’ equity 886,063,910.86 811,319,965.62 853,766,277.29 779,611,333.94 attributable to the parent company Minority 112,704,805.66 Total shareholders’ equity 998,768,716.52 811,319,965.62 853,766,277.29 779,611,333.94 Total Liabilities and Equities 2,269,548,271.28 1,904,782,455.59 1,692,182,854.46 1,615,779,394.27 31 CONSOLIDATED INCOME STATEMENT Jan 1-Dec 31, 2008 Jan 1-Dec 31, 2007 Items Consolidated Parent company Consolidated Parent company I. Total business revenue 282,881,630.74 182,438,959.00 233,589,292.67 147,006,323.62 Incl. Business revenue 282,881,630.74 182,438,959.00 233,589,292.67 147,006,323.62 Interest income II. Total business cost 209,585,274.59 144,018,826.10 153,168,490.14 101,538,868.99 Incl. Business cost 93,283,287.05 55,641,559.82 77,936,880.27 47,366,512.25 Interest cost Business tax and surcharge 13,286,460.69 7,703,836.27 11,239,519.17 6,438,343.00 Sales expense Administrative expense 59,424,839.15 38,015,618.62 43,304,731.75 27,784,321.87 Financial expense 43,526,965.67 42,644,267.43 20,912,131.66 20,181,761.64 Impairment loss of assets 63,722.03 13,543.96 -224,772.71 -232,069.77 Investment income (“-” for 5,787,649.35 51,356,389.44 38,519,151.75 38,519,151.75 loss) Incl. Investment income 5,632,349.16 5,632,349.16 38,399,151.75 38,399,151.75 from affiliates Exchange gains(“-” for loss) III. Operational profit (“-” for loss 79,084,005.50 89,776,522.34 118,939,954.28 83,986,606.38 Plus: Non-operating income 1,032,847.39 161,875.12 522,346.37 449,128.35 Less: Non-operating expenditure 2,084,555.15 1,848,452.10 909,959.00 165,902.30 Incl. Loss from disposal of 1,045,777.74 1,005,380.48 -90,606.11 -48,197.49 non-current assets IV. Gross profit (“-” for loss) 78,032,297.74 88,089,945.36 118,552,341.65 84,269,832.43 Less: Income tax expenses 9,293,020.84 8,416,513.68 9,163,656.21 6,900,391.63 V. Net profit (“-” for net loss) 68,739,276.90 79,673,431.68 109,388,685.44 77,369,440.80 Net profit attributable to the 68,739,276.90 79,673,431.68 109,388,685.44 77,369,440.80 owners of parent company Minor shareholders’ equity VI. Earnings per share: (I) Basic earnings per share 0.30 0.47 (II) Diluted earnings per 0.30 0.47 share Consolidated cash flow statement Jan 1-Dec 31, 2008 Jan 1-Dec 31, 2007 Items Consolidated Parent company Consolidated Parent company I. Net cash flow from business operation Cash received from sales of 273,687,056.53 178,137,030.26 237,739,115.41 151,941,770.14 products & providing of services Received tax return Other cash received for 89,300,843.11 248,532,984.88 10,628,238.84 890,915.22 business activities Sub-total of cash inflow from 362,987,899.64 426,670,015.14 248,367,354.25 152,832,685.36 business activities Cash paid for purchasing of 24,977,672.46 14,599,668.44 19,965,982.30 11,866,812.39 merchandise and services Cash paid to or for staffs 38,534,738.55 27,211,761.79 29,221,498.20 19,257,794.24 Taxes paid 36,418,655.16 23,577,744.32 24,812,973.86 13,777,993.98 Other cash paid for business 20,524,253.65 344,373,572.03 19,056,541.09 35,563,728.84 activities Sub-total of cash outflow 120,455,319.82 409,762,746.58 93,056,995.45 80,466,329.45 from business activities Net cash flow from business 242,532,579.82 16,907,268.56 155,310,358.80 72,366,355.91 operation II. Cash flow from investing Cash received from disposal 30,000,000.00 30,000,000.00 61,724,687.00 of investments 32 Cash received from 100,000.20 100,000.20 61,724,687.00 investment Net cash received from disposal of fixed assets, intangible 166,580.00 138,000.00 1,081,405.00 975,927.00 assets, and other long-term assets Net cash received from disposal of subsidiaries and other 124,227,962.33 124,227,962.33 operational units Other cash received for 65,985,077.86 2,323,454.23 1,093,497.26 940,604.00 investment activities Sub-total of cash inflow due 220,479,620.39 156,789,416.76 63,899,589.26 63,641,218.00 to investment activities Cash paid for construction of fixed assets, intangible assets and 440,009,010.59 155,249,773.87 359,772,829.34 139,988,511.42 other long-term assets Cash paid for investment 90,000,000.00 34,455,000.00 174,455,000.00 Net cash paid for getting subsidiaries and other operational units Other cash paid for investment 51,039,596.47 activities Sub-total of cash outflow from 491,048,607.06 245,249,773.87 394,227,829.34 314,443,511.42 investment activities Net cash flow from investment -270,568,986.67 -88,460,357.11 -330,328,240.08 -250,802,293.42 III. Cash flow from financing Cash received from investment Incl. Cash received from minor shareholders Cash received from loans 1,075,000,000.00 1,075,000,000.00 347,520,943.00 347,520,943.44 Other cash received fro m financing activities Sub-total of cash inflow from 1,075,000,000.00 1,075,000,000.00 347,520,943.00 347,520,943.44 financing activities Repayment for debts 898,953,212.44 898,953,212.44 40,000,000.00 40,000,000.00 Cash paid for dividend or 102,185,910.81 102,185,910.81 90,746,547.58 87,259,411.56 interests Incl. Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities Sub-total of cash outflow 1,001,139,123.25 1,001,139,123.25 130,746,547.58 127,259,411.56 from financing activities Net cash flow from 73,860,876.75 73,860,876.75 216,774,395.42 220,261,531.88 financing IV. Influence of exchange rate alternation on cash and cash 1,090,536.89 1,092,345.84 207,570.00 116,815.00 equivalents V. Net increase of cash and cash 46,915,006.79 3,400,134.04 41,964,084.14 41,942,409.37 equivalents Plus: Balance of cash and cash equivalents at the beginning 84,362,921.25 76,730,780.32 42,398,837.11 34,788,370.95 of term VI. Balance of cash and cash 131,277,928.04 80,130,914.36 84,362,921.25 76,730,780.32 equivalents at the end of term 33 Consolidated statement of changes in equity 2008 Equity attributable to shareholders of the parent company Less: Unappropriate Share capital Capital reserve Treasury Earned surplus O d profit shares I. Balance at 31 December 2007 230,600,000.00 209,117,427.91 - 168,981,288.90 247,849,298.70 1.Add：Changes in accounting policies - - - - - 2.Correction of prior periods errors - - - -278,173.82 -2,503,564.40 II.Balance at 1 January 2008 230,600,000.00 209,117,427.91 - 168,703,115.08 245,345,734.30 III.Changes for the year 11,523,156.67 8,938,661.64 - - 11,835,815.26 (I) Net profit 68,739,276.90 - - - (II) Gains and losses directly 11,523,156.67 recognised in shareholders' equity - - - - Implications of changes in other owner’s equity of investees using - - - - - equity method others 11,523,156.67 34 Subtotal of (I) and (II) 11,523,156.67 - - - 68,739,276.90 (III) Owner’s contributions and reduction in capital - - - - - 1. Capital contribution from owners - - - - - 2. Share-based payment recognised in shareholders' equity - - - - - 3. Others - - - - (IV) Profit distribution - - - 11,835,815.26 -59,800,615.26 1. Transfer to surplus reserve - - - 11,835,815.26 -11,835,815.26 2. Distribution to shareholders - - - - -47,964,800.00 3. Others - - - - - (V) Transfer within shareholders' equity - - - - - IV. Balance at 31 December 2008 254,284,395.94 230,600,000.00 220,640,584.58 - 180,538,930.34 35 2007 Equity attributable to shareholders of the parent company Capital Less:Treasury earned Unappropri Share capital reserve shares surplus profit I. Balance at 31 December 2007 230,600,000.00 210,890,300.91 - 154,153,337.00 218,533,82 1.Add：Changes in accounting policies - - - - 2.Correction of prior periods errors - - - - II.Balance at 1 January 2008 230,600,000.00 210,890,300.91 - 154,153,337.00 218,533,82 III.Changes for the year - -1,772,873.00 - 14,549,778.08 26,811,90 (I) Net profit - - - - 109,388,68 (II) Gains and losses directly recognised in shareholders' equity - -1,772,873.00 - - Implications of changes in other owner’s equity of investees using equity method - -1,772,873.00 - - Subtotal of (I) and (II) 36 - -1,772,873.00 - - 109,388,68 (III) Owner’s contributions and reduction in capital - - - - 1. Capital contribution from owners - - - - 2. Share-based payment recognised in shareholders' equity - - - - 3. Others - - - - (IV) Profit distribution - - - 14,549,778.08 -82,576,77 1. Transfer to surplus reserve - - - 14,549,778.08 -14,549,77 2. Distribution to shareholders - - - - -68,027,00 3. Others - - - - (V) Transfer within shareholders' equity - - - - IV. Balance at 31 December 2008 230,600,000.00 209,117,427.91 - 168,703,115.08 245,345,73 37 SHENZHEN CHIWAN PETROLEUM SUPPLY BASE CO., LTD NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (All amounts in Rmb Yuan unless otherwise stated) 1．COMPANY BACKGROUND AND PRINCIPAL ACTIVITIES Shenzhen Chiwan Petroleum Supply Base CO., LTD (ʺthe Companyʺ) is found by restructuring of Shenzhen Chiwan Base CO., LTD, with the license of Shen Fu Ban Han (1995) NO.112 issued by General Office of the People’s Government of Shenzhen Municipality. The Company is approved by the license of Shen Fu Ban Han (1995) NO.112 issued by General Office of the People’s Government of Shenzhen Municipality and the license of Shenzhen Ban Fu NO.33 issued from Stock Management General Office of the People’s Government of Shenzhen Municipality on 11 May 1995 and 16 June 1995, respectively. The Company launches the foreign investment shares (B‐Shares) listed inside China. After launching, the total shares are 230,600 thousand ordinary shares, with the value of RMB￥1Yuan for each. The total value of shares are worth RMB ￥230,600,000.00Yuan. The shares of the Company were listed on Shenzhen Stock Exchange since 28 July 1995, according to Shenzhen shi zi (1995) NO.14 > issued by Shenzhen Stock Exchange. The Company registered address is Shenzhen, Guangzhou province, the Peopleʹs Republic of China. The controlling shareholder of the Company is China Nanshan Development (Group) Incorporation (Nanshan Group), which holds 51.79% of the Company shares. 38 The scope of business operating and principle activities for the Company and the subsidiaries (the Group) are providing the services in docks and ports; yards, warehouses and offices leasing; providing labor services, goods assembling and transporting, equipment leasing; water, power and oil supplying; logistical services for offshore petroleum; bonded warehouses and yards operation. The Company’s financial statements have been approved by the Company board since 17 April 2009. 2. DECLARATION FOR THE ACCOUNTING STANDARDS The financial statement for the Group are prepared based on > issued from Ministry of Finance People’s Republic of China and other accounting standards, which truly and fully reflected about the Company financial situation, operating results and cash flow etc. 3. BASIS OF PREPARATION The Group’s financial statements have been prepared on the base of the Companyʹs ʺgoing concernedʺ, according to the transactions and issues actually took placed, and following > issued from Ministry of Finance People’s Republic of China and other accounting standards . 4. PRINCIPAL ACCOUNTING POLICIES 4.1-Accounting period The Companyʹs accounting year starts on 1 January and ends on 31 December. 39 4.2-Recording currency The recording currency of the Company is the Renminbi (Rmb). 4.3-Basis of accounting and measurement bases The Company follows the accruals basis of accounting. Assets are initially recorded at actual costs on acquisition, can be measured at replacement costs, net present value, current costs and fair value with sufficient reliability. 4.4-The definition of cash equivalents The cash equivalents are the short‐term (expired in three months from the date of purchase), high liquidate investments that are readily convertible into known amounts of cash and which are subject to insignificant risks of changes in value. 4.5-Foreign currency translation In the initial measurement for foreign currency transactions in the Group, the foreign currency transactions are translated into Rmb at the exchange rates stipulated by the Peopleʹs Bank of China (ʺthe stipulated exchange ratesʺ) on the first day of the month in which the transactions took place. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Rmb at the stipulated exchange rates at the balance sheet date. 40 Exchange differences arising from these translations are expensed, except for those attributable to foreign currency borrowings that have been taken out specifically for the construction of non‐current assets, which are capitalized as part of the non‐current assets costs, in accordance with >. Non –monetary items that are measured in terms of history cost in a foreign currencies are translated into Rmb at the stipulated exchange rates at the date of transaction took placed. Non –monetary items carried at fair value that are denominated in foreign currencies are translated into Rmb at the exchange rates prevailing on the date when the fair value was determined. Translation differences arising from the use of the different exchange rates are recognized in profit or loss for the period or the capital surplus. 4.6 Financial assets and financial liabilities a‐The classification of financial assets and liabilities In the initial measurement, the Group classifies the financial assets and financial liabilities as followings, according to the Group’s operation situation and the needs for the risk management 1) A financial asset at fair value through profit or loss. 2) Held –to‐maturity investments 3) Loan and receivables 4) Available‐ for‐ sale financial assets 5) Other financial liabilities 41 The Group initially measures the financial assets and financial liabilities at the fair value. For the financial asset and financial liabilities at fair value through profit and loss, the related transaction fees are expensed. For other financial assets and financial liabilities, the related transaction fees are capitalized as initial measurement. b‐The measurement of financial assets and liabilities The Group should recognize a financial asset or a financial liability on its balance sheet when, and only when, it becomes a party to the contractual provisions of the instrument. The Group initially measures the financial assets and financial liabilities at the fair value. For the financial asset and financial liabilities at fair value through profit and loss, the related transaction fees are expensed. For other financial assets and financial liabilities, the related transaction fees are capitalized as initial measurement. The subsequent measurement of financial assets and financial liabilities are: 1) A financial asset at fair value through profit or loss is measured at the fair value at the subsequent to initial measurement. Any gain or loss is recognized in profit or loss for the period. 2) Held –to‐maturity investment and account receivables are carried at amortized cost using the effective interest method. When derecognizing, any impairment loss and gain or loss at amortization are recognized at the profit or loss in the period. 42 3) At the balance date subsequent to initial recognition, available‐for‐sale financial assets are measured at fair value. Changes in fair value, except the impairment loss and exchange differences arising from monetary financial assets, are recognized in equity, until the financial asset is disposed, at which time, the cumulative gain or loss previously recognized in equity is removed from equity and recognized in profit or loss. 4) For the financial instrument that do not have a quoted market price in an active market and whose fair value can not be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost. 5) The subsequent to initial measurement for the other financial liabilities are measured at the amortized cost. c‐The fair value method for the financial assets and financial liabilities The financial assets and financial liabilities at the active market, the quoted price is determined as the fair value. In the inactive market, the estimation for the value is adopted to determine the fair value. d‐The impairment loss for the financial assets and the provision for impairment loss 1) The scope and evidence for impairment At the balance sheet date, the assets, but the financial assets at the fair value through profit and loss, are assessed by the Group to make a provision for any impairment, if there is any objective evidence indicating. The financial assets are impaired where there is the objective evidence that, as a result of one or more events that occurred 43 after the initial measurement of the financial assets, the estimated future cash flows of the financial assets have been impacted, which can be reliably measured by the Group. 2) Provision for impairment loss of financial assets For financial assets carried at the amortized costs, if there is the objective evidences indicate that the financial assets are impaired, the carrying amount of the financial asset is reduced by the present value of future estimated cash flow (exclude the loss of the future goodwill). The reduction in the carrying amount is recognized in profit and loss for the period. The impairment test was carried out for the financial asset with the material value. If there is the objective evidence that the financial assets are impaired, the impairment loss is recognized as the profit and loss for the period. The impairment tests are carried out or carried out separately, respectively for the financial asset with the immaterial value, including financial combination with the similarity credit risks. The non‐impaired assets tested in the separate impairment tests (including the single items with the significant amount and non‐significant amount financial assets), which includes the financial combination with the similarity credit risks, will being tested for impairment again. The impaired assets tested in the separate impairment tests, excluding in the impairment tests for the financial combination with the similarity credit risks. For the impaired financial assets, exclude the financial combination with the similarity credit risks, if there is the objective evidence that the impaired assets are recovered from the impairment loss, and related to the impairment events, the reduction in the carrying amount can be reversed to recognize as profit and loss for the period. However, the reversed amount 44 can not beyond the amortized costs without the impairment loss. The impairment tests and provision for the account receivable are referred to the Notes 4.7 Account Receivables. 4.7 Account Receivables a‐The recognition and measurement for the account receivables The account receivables include the account receivables and other receivables. The account receivables are composed by the labor services provided by the Company and recognized at the fair value agreed at the contract. The account receivables are presented by the amortized costs net of bad debts under the effective interest method. b‐The recognition of the provision for the bad debts At each balance sheet date, the Group should assess whether there are any indications that the value of an asset may be impaired. The following indications should be considered in deciding whether there has in fact been an impairment of an asset. 1) The debtors suffered the financial difficulties 2) The debtors went against the agreement （in terms of the interests and principal delay repayment） 3) The debtors went through the bankruptcy or financial reconstructured. 4) Other objective evidence indicated the devaluation for the account receivables 45 c‐The method of provision for bad debts At the balance sheet date, the account receivables with the material value were being impairment tested by the Group. If there is the objective evidence that the account receivables are impaired, the differences between the present value of future cash flow and its carrying amount is recognized as impairment loss and make the provision for the bad debts. If the present value of short‐term cash flow is little less than the carrying amount, the future cash flow do not need to be discounted to the present value in the impairment tests. For the account receivables with the immaterial value and the non‐impairment account receivables, the impairment loss is allocated, pro rata to the balance of the account receivable. The percentage of the provision for the impairment loss is 1%. If there is the objective evidence that the impaired account receivables are recovered from the impairment loss, and related to the impairment events, the reduction in the carrying amount can be reversed to recognize as profit and loss for the period. However, the reversed amount can not beyond the amortized costs without the impairment loss. 4.8-Inventories a‐the component of inventories Inventories include materials, repair fitting and low cost consumables. 46 b‐the measurements of inventories Inventories are recorded at their cost on acquisition. The costs of the inventories include the cost of purchase, the cost of produce and other expenses. The cost of the inventories which are taken away for produce is determined by using the weighted average method. c‐the measurements of low cost consumables Low cost consumables are amortized at 50% when purchased, another 50% are amortized when issued for. d‐The counting of inventories is subsequent connected with the last counting. e‐the measurements of the provision for declines in the value of inventories At the balance sheet date, the inventories are measured at the lower of the cost and net realizable value. Net realizable value is the actual or estimated selling price less all costs to complete and all necessary to make the sale The provisions for the impairment loss have been made to individual item by the Group. At the balance sheet date, if the costs of the inventories are higher than the net realized value, the provision for impairment loss was recognized as the profit or loss for the period. If the elements influenced the impairment of inventories are no longer exits, the impairment loss was reversed and recognized as the profit or loss for the period. 47 4.9 Long-term equity investments a‐The initial measurement of long‐term equity investments The long‐term equity investments achieved by the Company through the common control of a business combination, in accordance with long‐term equity investment obtained by the merging parties, are recognized as the initial investment cost at the amount of the ownerʹs equity share of book value. Long‐term equity investments achieved through the common control of a business combination are identified by the initial measurement, in accordance with the combined costs. Long‐term equity investments acquired by others determine the value of the initial investment cost by classifying different ways of the actual payment of cash, issue equity securities at fair value, and investment contract or agreement. Initial investment costs include long‐term equity investment which is directly related to the costs, taxes and other necessary expenditures. b‐Subsequence measurement and revenue recognition of long‐term equity investment 1) The long‐term equity investments, which is able to be exercised control, but do not have joint control or significant influence by the companyʹs investment unit, at no quotation in an active market, where the fair value measurement should not reliable, are accounted for using the cost method. Long‐term equity investments using the cost method are accounted in accordance with the initial investment cost. The cost of long‐term equity investment are adjusted by any additional or returns on investment. Declared cash dividends or profits assigned by the investment units, are recognized as investment income at 48 current period. Only the allocation of the accumulated net profits after investment are recognized by the Company as investment income, any obtained profits or cash dividends in excess of this amount are recognized as the initial part of the recovery of investment costs. 2) Long‐term equity investments on the investment unit with joint control or significant influence with the Company are measured using the equity method of accounting. The long‐term equity investment of the initial investment cost should not be adjusted if the initial investment cost of long‐term equity investment is greater than the fair value of identifiable net assets in investment units when the timing of being invested. If the initial investment cost of long‐term equity investment is less than the fair value of identifiable net assets in investment units when the timing of being invested, the difference are recognized as profit or loss in the current period, at the same time adjusted to the cost of long‐term equity investment. Using the equity method, net profit or loss from investment units after being invested is recognized as the long‐term investment gains and losses and adjusted to the book value of equity investment. Net profit or loss of the investment unit is recognized on the base of the fair value of the identifiable assets of investment unit, in accordance with the Company accounting policies and accounting period, and offset the amount of insider trading with the percentage of shareholding in the partnership and joint venture corporate (if insider trading losses belong to the loss of assets for impairment, the losses should be 49 recognized in full). If the debit balances of long‐term equity investment exist before the implementation date, the investment gains and losses are recognized net of the debit balances, which are amortized by original straight‐line method. The book value of long‐term equity investment is reduced by the certain amount in accordance with the profit or distributable cash dividends declared by the investment units. The investment losses are recognized by the Company to the extent of written‐down the book value of long‐term equity investment and investment gains from the investment units to zero, unless the Company has the obligation for additional losses. The book value of equity long‐term investment is reduced by the amount changed on shareholders’ equity in investment units, which excludes from the net profits or losses in investment units, in accordance with the profit or cash dividends distributed by the declaration from the investment units, and recognized as the shareholders’ equity, which will transfer to the profit or loss for the current period when disposal of investment unit, pro rata. c‐The basis to determining common control and significant impact 1) The basis of determining common control include: any one of the joint venture parties should not have sole control of the joint ventureʹs production and operation activities; the basic operations in the joint venture are agreed by all parties in that joint venture. 2) the basis of determining a significant impact include: the Company owned directly or through subsidiaries indirectly more than 20% (on and above), but less than 50% of the investment unit voting shares, unless there is clear evidence that the circumstances under which participation should not be involved in 50 production and management decision‐making and no major impaction, are considered as the significant impact on investment unit. The Company, who owns less than 20% (excluding 20%) of investment unit voting shares, is generally not considered to have a significant impact on the investment units. 4.10 Investment real estate The investment in real estate of the Group includes rental buildings. The cost model is adopted by the Group for subsequence measurement in investment real estate. The method of the average number of years is used for depreciation of real estate investment. Its expected useful life, the net residual value of the rate and annual depreciation rates are as follows: Expected Rate of annual Items Expected useful life Residual value depreciation Buildings 10-45 years 5%,10% 2%-9.5% 4.11 Non‐current assets a‐The definition of non‐current assets The non‐current assets are tangible assets held by the Company for more than one accounting period for use in the production or supply of goods or services, for rental to others, or for administrative purposes. The non‐current assets are recognized if: 1) The result of the past events and from which future economic benefits are expected to flow to the enterprise. 2) The cost of the non‐current assets can be measured reliably. 51 b‐The classification and depreciation of non‐current assets The method of average number of years is used for depreciation of non‐current assets. The life of all types of non‐current assets, expected net residual value, and annual depreciation rates are as follows: Expected Rate of annual Items Expected useful life Residual value depreciation Housing and building 5-50 years 5%、10% 1.8%-9.5% Port facilities 50 years 5% 1.9% Machinery and 3-20 years 5%、10% 4.5%-31.7% equipment Transport 3-14 years 5%、10% 6.4%-31.7% Renovation of 2-5 years - 20%-50% non-current assets Office and other 3-5 years 5%、10% 18%-31.7% equipment The non‐current assets with impairment losses are depreciated based on the amount of its original price less the expected net residual value, the accumulated depreciation, net of the impairment losses, and expected useful life. The costs of non‐current assets reached the expected useful condition but not yet for the completion are determined by estimated value, which are the base of the depreciation. After completion, the original estimated value are adjusted by actual costs, but the amount of depreciation provided does not need to be adjusted At the end of each financial year, the Group reviews the useful life of non‐current assets, estimated residual value and method of depreciation, and adjusts if necessary. 4.12 Construction in progress 52 The constructions in progress of the Company are the construction costs, other necessary expenditures to make the construction in progress to reach the useful conditions, as well as capitalized borrowing costs which incurred to bring the non‐current assets to the working conditions. The construction in progress is recorded at the actual cost which actually incurred. The construction in progress is transferred to non‐current assets when the assets are ready for their intended use. 4.13 Intangible assets a‐The initial measurement Intangible assets include the right to use land and terminal, computer software and trademark, etc. At reconstruction of the Group, the land use rights are accounted as the assessed value; the land use rights achieved by paying the price, are accounted as the amount of actual payment of the purchase price; the right to use land and terminal obtained through long‐term rental of terminals and land are accounted as the amount of actual payment of the purchase price; the computer software are accounted as the amount of actual payment of the purchase price. b‐The subsequence measurement 1) The estimated useful life of intangible assets 53 The intangible assets owned or controlled by the Group with the contractual rights or other statutory rights, have the useful life no longer than contractual rights or other statutory rights; the renewal period are included in the useful life if the contractual rights or other statutory right are be to renewed at maturity due to the continuation of contracts, and there is evidence that the renewal does not require the Company to pay large costs; The useful life of intangible assets which is uncertain provided in the contract or law are determined through the historical experience or the hiring of experts, where the benefit that the intangible assets bring to the Company still can not be assessed, the Company consider the impairment assets with uncertain useful life. 2) Review of intangible assets useful life At the end of each financial year, the Group reviews the useful life of intangible assets, estimated residual value and method of depreciation, and adjusts if necessary. 3) Amortization of intangible assets The methods of amortizing intangible assets adopted by the Company are as follows: 1) The right to use land and pier At reconstruction of the Group, the land use rights are assessed by straight‐line method with the useful life of 14 years. The land use rights achieved by paying the price are accounted with straight‐line method with the useful life of 50 years. The right to use land and terminal obtained through long‐term rental of terminals and land are accounted with 54 straight‐line method with the useful life of 14‐25 years within expected benefit gained period. 2) The rights to use computer software and trademark The rights to computer software and trademark are used the straight‐line method to amortize with, the expected length of 2‐5year and 10‐year respectively. The indefinite life of intangible assets does not being amortized, but being tested for impairment at the end of each year. 4.14 Impairment of Assets a‐ The scope of application Impairment of assets described in this note mainly include long‐term equity investment (not including long‐term equity investment without common control or significant influence, no quotation in an active market, and reliable measurement for the fair value), investment in real estate (excluding real estate investment with the fair value measurement mode), non‐current assets, construction in progress, and intangible assets etc. b‐ The possibility of assets impairment At the balance sheet date, the Group reviews whether there is any possibility for assets impairment. The goodwill formed by mergers and the intangible assets with indefinite life are tested for impairment annually, irrespective of whether there are signs indicated. Existence of the following signs, indicating that the impairment of assets may exist: 55 1) The current market value of assets were declined significantly higher than the expected normal usage; 2) The economic, technological or law environment, in which Group operates, as well as the significant changes of current market position in the near future, will have a negative impact on the Company; 3) The market interest rates or other market rates of return at the current period has increased, thus affecting the discount rate of the present value of future cash flows assessed by the Groupʹs, resulting in a significant reduction in the recoverable amount of assets; 4) There is evidence that the asset has been outdated or has been physical damage; 5) The assets has been or will be idle, termination, or to be disposal ahead of schedule; 6) The Group internal report evidence that the assetʹs economic performance has been lower than or lower than expected, such as the net cash flow or achieve an operating profit (or loss) created by the assets is far below (or above) the estimated amount of money ; 56 7) Other signs of impairment for assets indicate. c‐ The measurement of recoverable amount of assets The recoverable amount is estimated since signs of asset impairment exist. The recoverable amount is identified at the higher of the fair value of assets net of the cost of disposal of assets and the expected future net present value of cash flow. d‐ The recognition of asset impairment losses If the recoverable amount is less than its book value, the book value of assets is written down to its recoverable amount, and the amount of write‐downs recognized as an asset impairment losses, which is recognized as provision for impairment charged to the profit or loss in the current period. Once the impairment loss of asset was recognized, the depreciation or amortization expenses in the remaining year will be adjusted accordingly, so that the book value of assets will be accessed in the remaining useful life (net of expected net residual value). Once the asset impairment loss was confirmed, it can not be reversed in future. 4.15 other long‐term assets Other long‐term prepaid assets are the leasing of land use right with the period of more than one year since the balance sheet date, which are recorded according to the actual price paid, and at the beginning of the leasing period transfer to the intangible assets with the average amortization for the expected period. 57 4.16 Borrowing Costs a‐ The principle of capitalization of borrowing costs Borrowing costs include interest on borrowings, amortization of the discount or premium, ancillary costs, as well as exchange differences from foreign currency borrowing, etc. Borrowing costs incurred by the Group directly attributable to assets purchased or production, are capitalized and recognized at the cost of related assets; other borrowing costs are recognized as expense when incurred. Capitalization of borrowing costs should commence when: 1) expenditure has been incurred, which including cash, transfer of non‐cash assets or assume the form of interest‐bearing debt related to purchase or construction assets eligible for capitalization; 2) borrowing costs have been incurred; 3) activities that are necessary to prepare the asset for its intended use or sale are in progress. b‐ Capitalizing period of borrowing costs Borrowing costs Incurred for the purchase or construction of production are eligible for capitalization as cost since the assets is ready to be used or available for sale; since the assets is ready to be used or available for sale borrowing costs are expensed in the current period. The irregular interruption of process of purchase assets or production which are eligible for capitalization incurred and the interruption of the time more than 3 58 consecutive months, then suspended of borrowing costs capitalized. The period of suspension of borrowing costs capitalized are not included. c‐The calculation of capitalization of borrowing costs At capitalization period, the amount of capitalization interest (including amortization of discount or premium) in each accounting period, is recognized in accordance with the following: 1) For borrowings specifically made to acquire assets or production, the net amount of the interest actually incurred for the period, less interest income from the unused part of borrowing deposited into the bank or from a temporary investment is accounted for capitalization. 2) For borrowings generally made to acquire assets or production, the amount of interest capitalized is calculated by the weighted average rate based on the amount net of the cumulative capital expenditure from capital expenditure from specified borrowings multiplied by the capitalization rate in general borrowing. d‐ Determination of interest rates Capitalization rate should be determined under the weighted average rate of general borrowing. 4.17 Employee benefits payable Employees’ payment include wages, bonuses, allowances and subsidies, welfare, social insurance and housing accumulation fund, trade union funding and funding for 59 education and other expenses related to the services for employees. Employees’ payment is recognized by the Groupʹs as a liability since the services provided by the employees incurred at the accounting period. The Group joins the social security system in accordance with the regulations established by a government agency, which includes the basic pension insurance, medical insurance and housing accumulation fund and other social security system. The corresponding expenditure is recognized as the cost of related assets or expensed in the current period in the period incurred. 4.18 Revenues a‐ Services provided Revenue from labor services provided by the Group is recognized by the percentage of completion method at balance sheet date, if the amount can be reliable estimated. The measurement of volume of working done can be measured by the Group in accordance with the progress of the labor transaction completed. Income in the labor services provided is recognized, only when the associated economic benefits are likely to flow to the enterprise, and services‐related revenue and costs can be reliable measured. b‐The recognition of revenue from transferring the usage right of the assets 1)The principle Revenue from transferring the usage right of the assets including the income from operating lease and interest income, etc, which are met following conditions, can be 60 recognized: A. economic benefits related transaction flow into the Company; B. The amount of revenue can be measured reliably. 2)The approach a) The income from operating lease is recognized using the straight‐line method in related leasing period. The income from operating lease received more than one year in advance is recognized as deferred income and appropriated using the straight‐line method in accordance with the number of years termed in leasing contract. b) The amount of interest income is based on actual interest rates which are the Groupʹs interest rates applied to outside borrowers. 4.19 Leasing a‐The classification The lease of the Group is classified as finance leases and operating leases at the start date of leasing. b‐ The reorganization of finance leases and operating leases It gives the following lists of situations in which a lease would normally be classified as a financial lease. 1) the lease transfers ownership of assets to the lessee by the end of the lease term; 2) the lessee buy has the option to buy the asset at a price expected to be lower than fair 61 value at that time, where it is assumed that the Group will exercise its right to buy the assets, at the beginning of the lease; 3) the lease term is for the major part of the economic life of the asset, even if the title is not transferred; 4)at the beginning of the lease, the present value of minimum lease payments from leasee or received by the leasor is approximately equal to the fair value of the leased asset; 5) the unique nature of the leased asset is used by the Group (or lessee)only, if no modification. Operating lease is the lease other than finance leases. c‐The accounting treatment of operating lease For operating lease, the lease payment recognized as gains or losses in current period by the lessor or the lessee in accordance with the straight‐line method during the lease term. Initial direct expenses incurred by the lessor or the lessee are recognized as gains and losses in the current period. Contingency lease payments are recognized as profit and loss in current period when incurred. 4.20 Government grants a‐ Recognition of government grant 62 Government grants should not be recognized in the income statement until: 1) The conditions for receipt have been complied with 2) There is reasonable assurance that the grants will be received. b‐ The measurement of government grants 1) The amount of the government grants for the monetary assets received or receivable is measured at monetary amount in financial statement. The amount of government grants for non‐monetary assets is measured at the fair value; if the fair value can not be reliably measured, the notional amount (Rmb 1 Yuan) is used for measurement. 2) Government grants related to assets are recognized as deferred income and appropriated in the useful life of assets, which is realized in profits and losses in the current period. However, government grants measured in notional amount are directly recognized into the current profit and loss. Government grants related to revenue‐making are treated with the different situations: to compensate the coming expenses or losses, the government grants are recognized as deferred income and charged into profit and loss in current period; to compensate the expenses or losses incurred, the government grants are charged into profit and loss in current period directly. 3) The repayment of government grants is treated differently according to the different situations: 63 Repayment of a grant related to income should be applied first against any unamortized deferred credit set up in respect of the grant. To the extent that the repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment should be recognized immediately as an expense. 4.21 Income tax a‐Accounting method for income tax The balance sheet liability method is accounted for the tax in the Group. b-Temporary differences Temporary differences are the difference between the tax base and the carrying value of an asset or liability, as well as those not recognized as asset or liability in accounting but can be recognized in accordance with the provisions of tax laws. Temporary differences may be either taxable or deductible. c‐ Recognition of deferred tax assets The deferred tax assets should be recognized for all deductible temperature differences to the extent that it is probable that the taxable profit will be available against which the deductible temporary difference can be utilized, unless the deductible temperature differences arising from: 1) The transaction incurred beyond the scope of merger do not affect neither the accounting profit nor taxable profit 64 2) Deductible temporary differences related with subsidiaries, joint ventures and partnership are recognized as deferred tax assets, only satisfying the following conditions: temporary differences in the foreseeable future is likely to be recovered, and the future taxable income will be likely to offset deductible temporary differences. d‐Recognition of deferred tax liabilities The deferred tax liabilities are recognized for taxable temporary differences, unless the taxable temporary differences arising from the following: The initial recognition of goodwill, and assets or liabilities resulting from transactions with the following characteristics: the transaction incurred beyond the scope of merger do not affect neither the accounting profit nor taxable profit; the timing of reversal of deductible temporary differences related with subsidiaries, joint ventures and partnership can be controlled, and its amount are likely not to be reversed in the foreseeable future. e Impairment of deferred tax asset The book value of deferred tax assets should be reviewed at the balance sheet date. If there is no sufficient taxable profit to offset deferred tax assets, the carrying value of the deferred tax assets will be reduced. The reduction in the carrying value will be debited to the ownerʹs equity, as well as deferred tax assets originally recognized as the ownerʹs equity. For other situations, the amount reduced should be recognized as the tax expenses 65 for the current period. The reduction in carrying value of deferred tax assets can be reversed if the taxable profits are sufficient. 4.22 Segment Reporting The Groupʹs financial report is formed by business divisions. Transfer price among segments is referenced to market prices, the indirectly expenses of the segments are appropriated to segments at the percentage of income contributed from segments. 5. THE MAIN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND CORRECTIONS OF PRIOR PERIOD ERRORS The significant accounting estimation and key assumption are assessed on going concerned basis, based on the historical experience and other factors. No major adjustment of significant accounting estimation and key assumption related to carrying amount of assets and liabilities for the next fiscal year was found by the Company 5.1 No major changes in accounting policies or accounting estimation are made in the current year by the Company. 5.2 Correction of prior period error The Penglaizhen Jutal Offshore Engineering Heavy Industries Co., Ltd. (hereinafter referred to as ʺPenglai Jutal Companyʺ), which is the associate of Shenzhen Chiwan 66 Sembawang Engineering Co., Ltd. which is the subsidiary of the Company are carried out the examination showed the revenue for the year 2007 should be reduced by RMB 10,874,446.15 Yuan and the provision for the bad debts for the year 2007 should be increased by RMB1,544,028.06 Yuan. To collection this errors, investment income for the year 2007 is reduced by RMB 2,781,738.22 Yuan, income from long‐term equity investment is reduced by RMB 2,781,738.22 Yuan, surplus reserves is reduced by RMB 2,781,173.82 Yuan, unappropriated profit is reduced by RMB 2,503,564.40 Yuan 6. TAXES 6.1 Turnover tax Items Tax rate Tax VAT 6%、17% Revenue from water charges/Tariff revenue 3%、5% Business tax Office rental income /Handling and port management income /Warehousing storage revenue Taxable amount of VAT is the output amount of VAT net of the input amount of VAT; sales tax is accounted on the taxable profit. 6.2 The tax for city construction maintenance and education expenses levies The tax for city maintenance construction is paid at7%, 5%, 1% of the actual taxable turnover; the tax for education expenses levies is paid at 3%of the actual taxable turnover. 67 6.3 Income tax Name of the Company and subsadiries Income tax rate （1）The Company 18% （2）BLOGIS(Shenzhen)Co.,Ltd（Shenzhen Baowan） 18% （3）BLOGIS(Guangzhou)Co.,Ltd（Guangzhou Baowan） 25% （4）BLOGIS(Tianjin)Co.,Ltd（Tianjin Baowan） 25% （5）BLOGIS(Langfang)Co.,Ltd（Langfang Baowan） 25% （6）BLOGIS(Wuhan)Co.,Ltd（Wuhan Baowan） 25% （7）BLOGIS(Xindu)Co.,Ltd（Xindu Baowan） 25% （8）BLOGIS(Longquan)Co.,Ltd（Longquan Baowan） 25% （9）BLOGIS(Shenyang)Co.,Ltd（Shenyang Baowan） 25% （10）BLOGIS(Nanjing)Co.,Ltd（Nanjing Baowan） 25% （11）BLOGIS(Kunshan)Co.,Ltd（Kunshan Baowan） 2.5% （Note①） （12）BLOGIS(Shanghai)Co.,Ltd（Shanghai Baowan） 2.5% （Note①） Note①： The income tax for these subsidiaries is taxed at 2.5% of the totoal revenue according to income tax for the storage industry in 2008. 7. THE CONSOLIDATION AND CONSOLIDATED FINANCIAL STATEMENTS 7.1 The consolidation There is no consolidaton took placed in the Company at the current year. 7.2 Consolidated Financial Statements a‐The scope of consolidation 1)Principles of recognition The scope of consolidation of consolidated financial statements shall be determined on the basis of control. The term “control” refers to the power of an enterprise to govern the financial and operating policies of another enterprise so as to obtain benefits from its 68 business activities. When a parent company is holding more than 50% of the voting rights of an investee entity, or less than 50% of the voting rights but the control in fact, the investee shall be included in the scope of consolidation of consolidated financial statements. 69 2)The determination of subsidiary companies status and consolidation scope in the year 2008 in Registere The Business Actual Registered d capital Organisation Name of subsidiary nature of scope controllor address (Million/ code business RMB ) C ( I. Subsidaries achieved from the combination of the companies under the commol control Warehousing, Nanshan Shenzhen Baowan Shenzhen Service 3,441.00 61885906-0 4 storage Group II. Subsidaries achieved by other ways Shanghai Warehousing, Nanshan Shanghai Service 16,000.00 76057836-6 1 Baowan(Note①) storage Group Guangzhou Warehousing, Nanshan Guangzhou Service 5,000.00 76954322-3 4 Baowan(Note②) storage Group Tianjin Warehousing, Nanshan Tianjin Service 4,980.00 78334845-9 2 Baowan(Note③) storage Group Warehousing, Nanshan Kunshan Baowan Kunshan Service 12,000.00 79231068-X 1 storage Group Langfang Warehousing, Nanshan Langfang Service 5,000.00 79546095-8 3 Baowan(Note③) storage Group Wuhan Warehousing, Nanshan Wuhan Service 3,000.00 66346615-1 1 Baowan(Note③) storage Group Longquan Chengdu Service 5,000.00 Warehousing, Nanshan 66530615-1 3 70 in Registere The Business Actual Registered d capital Organisation Name of subsidiary nature of scope controllor address (Million/ code business RMB ) C ( Baowan(Note③) storage Group Xindu Warehousing, Nanshan Chengdu Service 3,000.00 66533423-2 1 Baowan(Note③) storage Group Shenyang Warehousing, Nanshan Shenyang Service 3,000.00 66715283-8 1 Baowan(Note③) storage Group Nanjing Warehousing, Nanshan Nanjing Service 5,000.00 67133602-3 3 Baowan(Note④) storage Group Note①： The 90% shares of this company are held by the Company directly, 10% shares of this company a Companyʹs wholly‐owned subsidiary of Shenzhen Bao Bay; Note②： The 90% shares of this company are held by the Company directly, 10% shares of this company a Companyʹs wholly‐owned subsidiary of Shanghai Bao Bay; Note③： The 40% of this subsidiary’s shares are transferred to the Nanshan Group by the Company who o before. Until 31 December 2008,this subsidiary is constructed in‐progress. Note④： The Nanjing Bao Bay is the newly formed subsidiary in April 2008, whose 40% of shares are tran subsidiary is still in the planning phase. 71 b‐ The preparation of consolidated financial statements Consolidated financial statements are prepared on the base of the parent company and subsidiaries financial statements, with the adjustment of long‐term equity investment to subsidiaries under the equity method, net of the parent company equity investment from the subsidiaries and the inter‐group significant transactions. Minority interest is allocated under the item of ʺminority interestʺ in consolidated balance sheets of the ownerʹs equity. Minority gains and losses is allocated under the item to the ʺminority shareholdersʺ in net profit of consolidated income statement. The accounting policies of susidaries is need to be changed to consistant with the parent company one, if they are differ. c‐Minority Interests 31 December 2008 31 December 2007 RMB RMB Nanshan Group 112,704,805.66 - 8.NOTES TO THE MAIN ITEMS 8.1 Currency funds 31 December 2008 31 December 2007 Original Exchange Original Exchange amount rate RMB amount rate RMB Cash in 12,595.25 1.00 12,595.25 4,852.12 1.00 4,852.12 hand -RMB -HK$ 3,184.12 0.88 2,802.03 3,424.00 0.94 3,218.56 Cash in 15,397.28 8,070.68 hand-total Cash in 130,786,587.61 1.00 130,783,587.61 80,983,330.33 1.00 80,983,330.33 bank-RMB Cash at 65,840.46 6.83 449,690.34 354,262.06 7.30 2,586,113.04 bank-US$ Cash at 33,241.83 0.88 29,252.81 835,539.57 0.94 785,407.20 bank-HK$ Cash at 131,262,530.76 84,354,850.57 bank-total Other monetary 110,000.00 1.00 110,000.00 210,000.00 1.00 210,000.00 assets-RMB 72 31 December 2008 31 December 2007 Original Exchange Original Exchange amount rate RMB amount rate RMB Other monetary 110,000.00 210,000.00 assets-total Total 131,387,928.04 84,572,921.25 8.2 Accounts receivable a‐ Disclosure of accounts receivable by client categories is as follows: Category 31 December 2008 The Carrying percentage Amount % of total Provision for bad debts amount of the bad RMB balance RMB RMB debts provision Individually significant 20,351,319.41 67.03% 203,513.20 20,147,806.21 1% accounts Other insignificant 10,010,641.17 32.97% 100,106.41 9,910,534.76 1% accounts Total 30,361,960.58 100.00% 303,619.61 30,058,340.97 Category 31 December 2007 The Carrying percentage Amount % of total Provision for bad debts amount of the bad RMB balance RMB RMB debts provision Individually significant 11,995,200.62 50.12% 119,952.01 11,875,248.61 1% accounts Other insignificant 11,938,276.63 49.88% 119,382.77 11,818,893.86 1% accounts Total 23,933,477.25 100.00% 239,334.78 23,694,142.47 b‐The ageing of accounts receivable and related provisions for bad debts is analyzed below: 31 December 2008 31 December 2007 73 Amount % of Provision for Amount % of Provision for RMB total bad debts RMB total bad debts balance RMB balance RMB Within 1 year 29,901,945.90 98.48% 299,019.46 23,445,073.39 97.96% 234,450.74 Between 1 and 2 years 139,526.79 0.46% 1,395.27 403,588.51 1.69% 4,035.89 Between 2 and 3 years 235,672.54 0.78% 2,356.73 18,840.00 0.08% 188.40 Between 3 and 4 years 18,840.00 0.06% 188.40 65,975.35 0.27% 659.75 Between 4 and 5 years 65,975.35 0.22% 659.75 - - - Total 30,361,960.58 100.00% 303,619.61 23,933,477.25 100.00% 239,334.78 c‐The list of first fifth larger debtors Amount The Name of Debtors % of total Ageing RMB Shenzhen Weisheng Offshore 6,608,245.83 21.76% With in 1 year Oil Technology Co.,Ltd Shenzhen ST-ANDA Logistics 6,284,739.53 20.70% With in 1 year Kunshan Haohaizi Children’s 3,370,186.27 11.10% With in 1 year Appliance Co.,Ltd Complant International 2,331,246.96 7.68% With in 1 year Transportation Shenzhen Co.,Ltd CACT Operators Group 1,756,900.82 5.79% With in 1 year Total 20,351,319.41 67.03% d‐ Accounts receivable above including receivable from related parties 1,362,854.98 (RMB), accounting for the total amount of accounts receivable to 4.49%.(The disclosure is in 10.3(f) of NOTES) f‐There are no accounts receivable from shareholders holding over 5% (inclusive) of the Company shares. 74 8.3 Prepayment The ageing of prepayment is analyzed below: Ageing 31 December 2008 31 December 2007 Amount Amount % of total % of total RMB RMB Within 1 year 845,476.49 67.46% 4,113,695.00 86.88% Above 3 years 407,738.13 32.54% 621,393.00 13.12% Total 1,253,214.62 100.00% 4,735,088.00 100.00% There is no prepayment from shareholders holding over 5% (inclusive) of the Company shares. 8.4 Other receivables a‐ Disclosure of accounts receivable by client categories is as follows: Category 31 December 2008 Provision Carrying Amount % of total for bad amount RMB balance debts RMB RMB Individually significant - - - - receivables Other insignificant 4,101,625.86 100.00% - 4,101,625.86 receivables Total 4,101,625.86 100.00% - 4,101,625.86 Category 31 December 2007 Provision Carrying Amount % of total for bad amount RMB balance debts RMB RMB Individually significant - - - - receivables Other insignificant 4,850,970.80 100.00% 562.80 4,850,408.00 receivables Total 4,850,970.80 100.00% 562.80 4,850,408.00 75 b‐The ageing of other receivables and related provisions for bad debts is analyzed below: 31 December 2008 31 December 2007 Ageing Amount % of Provision Amount % of Provision RMB total for bad RMB total for bad balance debts balance debts RMB RMB Within 1 year 2,924,640.16 71.30% - 4,748,346.80 97.88% 150.00 Between 1 1,112,914.35 27.13% - 61,344.00 1.26% - and 2 years Between 2 60,691.35 1.48% - 25,000.00 0.52% 250.00 and 3 years Between 3 3,380.00 0.09% - 16,280.00 0.34% 162.80 and 4 years Total 4,101,625.86 100.00% - 4,850,970.80 100.00% 562.80 c‐There are no other receivables from shareholders holding over 5% (inclusive) of the Company shares. 8.5 Inventories 31 December 2008 Including: Provision capitalized for Carrying Category Amount borrowing obsolete amount RMB costs stocks RMB RMB RMB Materials and maintenance 1,425,264.13 - - 1,425,264.13 fittings Low cost 1,525.00 - - 1,525.00 consumables Total 1,426,789.13 - - 1,426,789.13 8.5 Inventories‐ continued Category 31 December 2007 Amount Including: Provision Carrying RMB capitalized for amount 76 borrowing obsolete RMB costs stocks RMB RMB Materials and maintenance 1,810,934.59 - - 1,810,934.59 fittings Low cost 134,170.00 - - 134,170.00 consumables Total 1,945,104.59 - - 1,945,104.59 Note：As at 31 December 2008,the cost of inventoryt is not higher than net realizable value. 8.6 Other current assets 31 December 2008 31 December 2007 Item RMB RMB China Merchants Bank Financial Products - 30,000,000.00 Total - 30,000,000.00 Other current assets are the financial instruments purchased from the China Merchants Bank at the date of 12 December 2007 with the period of 40 days,until 19 January 2008. 8.7 Long-term equity investment a‐ Long‐term equity investment classified by items 31 December 2007 Increase Decrease 31 December 2008 Items RMB RMB RMB RMB Joint venture investment 274,106,680.87 5,632,349.16 279,739,030.03 Other equity investment - - - - Less: Impairment of long-term equity - - - - investment Total 274,106,680.87 5,632,349.16 - 279,739,030.03 b‐ Joint venture investment details The Propor nature Investment tion of Registere Registered Sharehol Investee of holding voting d address capital ding ratio busines period rights s Chiwan Offshore Shen Service 30 2million US$ 20% 20% Petroleum zhen industry 77 Equipment Repair and Manufacture Co., Ltd. (Note①) Shenzhen Chiwan Service Sembawang Shen 30millionUS$ industry 28 32% 32% Engineering Co., zhen Ltd. (Note ②) b‐ Joint venture investment details‐continued Total net assets Total revenues for Net profit for the Investee 31 December 2008 the period period (RMB) (RMB) (RMB) Chiwan Offshore Petroleum Equipment Repair and 19,508,810.45 36,322,077.65 3,354,813.40 Manufacture Co., Ltd. (Note ①) Shenzhen Chiwan Sembawang 859,803,962.31 791,873,925.27 15,504,332.74 Engineering Co., Ltd. (Note ②) Note ① : Main business of Chiwan Offshore Petroleum Equipment Repair and Manufacture Co., Ltd. is providing equipment inspection, maintenance and repair services for the South China Sea oil exploration and exploitation Note ② : Main business of Shenzhen Chiwan Sembawang Engineering Co., Ltd. is providing after‐sales service for the products (including self‐produced ones) that being used in marine engineering, land‐based industry and civil engineering. Note ②： Main business of Sembawan is providing the products used for marine engineering, land industrial and civil engineering and after‐sales services for those products, as well as the export business with non‐quota permits and non‐franchised merchandise. 78 c‐ Long‐term equity investment accounted for using equity method The The cost of changes the in equity Cash investm Initial 31 of bonu 31 ent investment December invested s December Investee increas amount 2007 parity(exl obtai 2008 ed(decr RMB RMB udes the ned RMB eased) cash in the bonus) current year Chiwan Offshore Petroleum Equipment Repair 3,312,000.00 3,930,799.41 - 670,962.68 - 4,601,762.09 and Manufacture Co., Ltd Shenzhen Chiwan Sembawang 79,488,000.00 270,175,881.46 - 4,961,386.48 - 275,137,267.94 Engineering Co., Ltd Total 82,800,000.00 274,106,680.87 - 5,632,349.16 - 279,739,030.03 d‐As at 31 December 2008, the carring amount of long‐term equity investment is not higher than net realizable value. 8.8 Investment real estate a‐ Investment real estate details 31 December 31 December Items 2007 Increase Decrease 2008 RMB RMB RMB RMB Investment real estate accounted by cost model 291,487,282.64 188,020,981.72 - 479,508,264.36 in subsequent measurement Less: Impairment of - - - investment real estate Total 291,487,282.64 188,020,981.72 - 479,508,264.36 b‐ Investment real estate accounted by cost model in subsequent measurement 31 December 2007 Increase Decrease 31 December 2008 Items RMB RMB RMB RMB COST 79 31 December 2007 Increase Decrease 31 December 2008 Items RMB RMB RMB RMB Buildings(Note) 408,454,145.05 202,158,978.24 - 610,613,123.29 ACCUMULATED DEPRECIATION AND ACCUMULATED AMORTIZATION Buildings 116,966,862.41 14,137,996.52 - 131,104,858.93 IMPAIRMENT OF INVESTMENT REALESTATE Buildings - - - - NET BOOK VALUE Buildings 291,487,282.64 188,020,981.72 - 479,508,264.36 Total 291,487,282.64 188,020,981.72 - 479,508,264.36 Note：1) Among those, the real estate warrant related to the houses and buildings with the original amount of RMB 331,092,566.09 Yuan is not settled down since the related lincese for land use right are not achieved, referring to the Note 8.11 2)Untill 31 Decembre 2008, there is no such situation as the carrying amount of real estate investment is higher than the net recoverable amount. 8.9 Non-current assets a‐ Non‐current assets details 31 December 31 December Items 2007 Increase Decrease 2008 RMB RMB RMB RMB COST Buildings (Note ①) 111,742,712.80 2,181,204.40 9,975.91 113,913,941.29 Port facilities 45,460,529.33 45,460,529.33 Machinery and 64,903,162.20 4,102,705.00 10,152,229.49 58,853,637.71 equipment Motor vehicles 16,617,196.67 2,361,386.80 2,624,642.15 16,353,941.32 Renovation of 12,823,937.28 496,237.91 13,320,175.19 non-current assets Office appliances and other 42,185,964.89 1,745,201.59 1,967,404.90 41,963,761.58 non-current assets Total (Note ②) 293,733,503.17 10,886,735.70 14,754,252.45 289,865,986.42 ACCUMULATED DEPRECIATION Buildings 18,466,826.21 4,754,404.21 9,477.11 23,211,753.31 Port facilities 27,734,926.48 920,822.88 28,655,749.36 Machinery and 48,363,722.04 3,126,439.32 9,356,015.13 42,134,146.23 equipment 80 31 December 31 December Items 2007 Increase Decrease 2008 RMB RMB RMB RMB Motor vehicles 9,921,264.15 1,574,768.66 2,424,085.59 9,071,947.22 Renovation of 11,556,254.34 900,098.38 12,456,352.72 non-current assets Office appliances and other 22,564,845.95 7,089,465.64 1,702,686.88 27,951,624.71 non-current assets Total 138,607,839.17 18,365,999.09 13,492,264.71 143,481,573.55 IMPAIRMENT OF NON-CURRENT ASSETS Buildings Port facilities Machinery and equipment Motor vehicles Renovation of non-current assets Office appliances and other non-current assets Total NET BOOK VALUE Buildings 93,275,886.59 90,702,187.98 Port facilities 17,725,602.85 16,804,779.97 Machinery and 16,539,440.16 16,719,491.48 equipment Motor vehicles 6,695,932.52 7,281,994.10 Renovation of 1,425,982.88 863,822.47 non-current assets Office appliances and other 19,462,819.00 14,012,136.87 non-current assets Total 155,125,664.00 146,384,412.87 Note ①： Among those, the real estate warrant related to the houses and buildings with the original amount of RMB 13,603,766.88 Yuan is not settled down since the related lincese for land use right are not achieved, referring to the Note 8.11 Note ②：。Among those, the building and equipments with the original amount of RMB 36,972,562.07 Yuan are still in used although those have been depreciated to the net residual value. 81 b‐ Construction in progress transfer into non‐current assets The timing of The amount of classified as classified as Items non-current assets non-current assets Parking autotoll systems of 25 August 2008 412,850.00 Petroleum Building Logistics Park Project of Kunshan 31 March 2008 1,930,000.00 Baowan High-level warehouse fire fighting 30 July 2008 259,804.19 system Forklift studio conversion 30 November 2008 65,680.18 Total 2,668,334.37 c‐ Untill 31 Decembre 2008, there is no such situation as the carrying amount of non‐current asset is higher than the net recoverable amount. 82 8.10 Construction in progress a‐ Construction in progress details Current Current year year 31 Current Other transfer transfer Budget December year reduction Items into into RMB 2007 additions s non-curre investment RMB RMB RMB nt assets real estate RMB RMB East Heights H 38,560,000.00 262,844.00 29,604,769.34 1,490.3 Warehouse Parking autotoll systems of 274,800.00 138,050.00 412,850.00 Petroleum Building D3 Warehouse Roof 661,040.00 661,040.00 Replacement Logistics Park Project of Xindu 157,000,000.00 21,784.00 81,101,748.52 Baowan Logistics Park Project of Wuhan 315,000,000.00 45,000.00 2,800.00 Baowan Logistics Park Project of Longquan 202,000,000.00 6,771,035.80 Baowan Logistics Park Project of Tianjin 348,200,000.00 1,259,888.15 207,281,636.11 Baowan 83 Logistics Park Project of Nangjing 313,000,000.00 4,574,370.00 Baowan The second phase project of Shanghai 230,000,000.00 7,929,893.68 5,002,953.87 11,190,000.00 1,742,847.5 Bao wan Logistics Park Project of Kunshan 292,000,000.00 113,765,054.02 85,702,488.39 1,930,000.00 189,702,386.24 Baowan Logistics Park Project of Shenyang 186,000,000.00 289,634.03 Baowan High-level warehouse fire 259,804.19 259,804.19 fighting system Forklift studio 65,680.18 65,680.18 conversion Other projects 136,197.03 55,234.40 Total 123,695,460.88 421,511,244.83 2,668,334.37 201,553,426.24 1,744,337.8 Including: capitalized 2,513,118.00. 7,411,391.42 6,348,226.66 borrowing costs b‐The capitalization rate is 6.51% for the year 2008 (4.93% for the year 2007) c‐Untill 31 Decembre 2008, there is no such situation as the carrying amount of construction–in‐progres amount. 84 8.11 Intangible assets a‐ Intangible assets details Current 31 Current year year Current year Initial costs December Items additions transfer amortization RMB 2007 RMB –out RMB RMB RMB The first phase of land use 156,985,250.36 17,754,283.81 - - 11,213,231.88 right（Note ①） The first phase of the dock 22,319,972.81 2,524,282.20 - - 1,594,283.64 （Note ①） Prepaid rent 36,110,385.42 21,064,392.72 - - 1,444,415.52 （Note ①） Guangzhou BaowanLand use 14,821,763.29 13,819,757.56 408,856.09 - 296,429.40 right Shanghai Baowan Land use 115,112,393.81 107,256,261.82 2,839,347.45 - 3,391,096.02 right（Note ②） Kunshan Baowan Land use 60,240,779.60 59,134,521.56 - - 1,206,826.92 right Tianjin Baowan Land use 139,964,130.77 - 139,964,130.77 - 2,813,349.36 right Shenyang Baowan Land use 29,920,759.44 29,870,640.91 - - 601,422.36 right（Note ③） Longquan Baowan Land use 40,718,533.71 - 40,718,533.71 - 407,185.34 right（Note ④） Trademark 231,354.98 207,888.22 - - 25,579.80 Software 318,976.80 60,768.75 151,680.00 - 86,022.63 Total 616,744,300.99 251,692,797.55 184,082,548.02 - 23,079,842.87 Note ①： The 1st instalment land use right and right to use the terminal were invested as the capital by th 85 the shareholders for the Company since the year 1984 for the usage period of 25 years and are expired at July for the period of 25 years is recognized as the long‐term lease payment from the Nanshan Group who is Company. The licenses of usage right for the land which coveres the scope of watershed Chiwan ( including invested by theNanshan Group’s shareholder Shenzhen Investment Management Company and the Nansh are not achieved yet, due to the historical issues. Until the date of audit report, the Company only has the ter and plans. Since the Nanshan Group have not achieved the licenses for the above land usage, it will take the f expenditures and liabilities related to the absence of licenses, which were agreed by the Nanshan Group an January 1995 and 18 July 1997. Note ②： Among this land used by Shanghai Baowan, the licenses for the 2nd and 3rd instalment land usag 70,843,112.21Yuan are not achieved yet. Note ③： This is for the Shenyang Bao Bay land use rights. Since the mineral ballast problem, the land can referring to Notes 14.1 (1). Note ④：This usage right for the land of Longquan Baowan has not achieved its licenses until the 31 Decem b‐Untill 31 Decembre 2008, there is no such situation as the carrying amount of intangiable assets is higher t 86 8.12 Deferred tax assets a‐ Deferred tax assets details 31 December 31 December 2007 2008 Items RMB RMB Deferred tax assets arising from the difference between the tax base of an 2,796,005.65 767,493.41 asset and its carrying value Deferred tax assets arising from the difference between the tax base of a - - liability and its carrying value Total 2,796,005.65 767,493.41 b‐ Deductible temporary differences 31 December 31 December 2007 2008 Items RMB RMB Accounts receivable 223,004.20 - Intangible assets 13,636.18 - Organization costs 277,395.80 396,279.68 Loss allowed to be reversed 10,717,314.48 2,546,884.88 Total 11,231,350.66 2,943,164.56 8.13 Other non‐current assets 31 December 2008 31 December 2007 Items RMB RMB Lease payment for land and port 378,094,260.00 250,000,000.00 （Note①） Terminal usage fees （Note①） 3,060,000.00 3,060,000.00 Land usage rights paid in 59,802,289.80 192,449,810.80 advances（Note②） Total 440,956,549.80 445,509,810.80 Note①：This is the payment for the usage of land paid by the Company in advance, referring to the Note 8.10. The usage right for the 1st instalment land will be expired in 14 July 2009 invested by the Nanshan Group. The “agreement to use the premises” was signed by the Company and Nanshan Group at 18 July 2006. The usage rights 87 for the land and ports of the Nanshan Group with 315,708.55 square kilometers will be excised for the period of 25 years between 15 July 2009 to 14 July 2034 by the Company in the terms of leasing since it is expired at 15 July 2009. The payment for the usage of land paid in advanced are transferred to intangiable assets and amortised in related beneficial period. Note②： Thoes payments in advance are related to the land of Nanjing Baowan, Xindou Baowan, Langfang Baowan and Guangzhou Baowan, amoung which the Block A of Guangzhou Baowan project land is referring to the Notes14.2(2) 8.14 Provision for the impairment losses of assets 31 Current Current year reductions 31 December year Amount Amount December 2007 additions reversed impaired Total 2008 Items RMB RMB RMB RMB RMB RMB Provision for bad 239,897.58 64,284.83 562.80 562.80 303,619.61 debts Including ： Accounts 239,334.78 64,284.83 - - 303,619.61 receivables Other receivables 562.80 - 562.80 562.80 - Total 239,897.58 64,284.83 562.80 562.80 303,619.61 8.15 Short‐term borrowings a‐ Short‐term borrowings details 31 December 2008 31 December 2007 Items RMB RMB Credit loans 455,000,000.00 248,953,212.44 Other loans 400,000,000.00 200,000,000.00 Total 855,000,000.00 448,953,212.44 The entrust loan of RMB 230,000,000.00 Yuan is borrowed from the Nanshan Group through Merchants Bank by the Company with the period of 1 year from 26 Novermber 2008 to 26 Novermber2009 at the rate of 5.60%. Other loans are the short‐term liquidity financing loans with the amount of RMB 4 billions Yuan at the rate of 5.6% borrowed from the Nanshan Group with the period 88 from 3 September 2008 to 31 Augest 2009. 8.16 Employee benefits payable 31 December 31 December 2007 Accruals Payments 2008 Items RMB RMB RMB RMB Wages or salaries, bonuses, 12,245,832.51 33,745,219.64 30,709,197.18 15,281,854.97 allowances, subsidies Staff welfare 161,269.09 1,201,429.70 1,362,698.79 Social security 2,392.79 4,131,615.75 4,128,480.43 5,528.11 contributions Union running costs and 137,889.21 880,731.50 1,053,951.66 35,330.95 employee education costs Housing Fund - 1,608,320.74 1,607,624.59 696.15 Total 12,547,383.60 41,567,317.33 38,861,952.65 15,252,748.28 8.17 Tax payable 2008 2007 Category of tax Tax rate RMB RMB VAT 17%/6% -219,178.41 -119,372.00 Sales tax 5%/3% 1,135,220.59 874,444.00 Income tax 25%/18%/2.5% 10,037,736.94 5,794,245.82 Tax for city maintenance and 7%、5%、1% 29,957.84 18,687.00 construction Personal tax 87,626.23 255,911.00 Others 701,476.42 676,130.00 Total 11,772,839.61 7,500,045.82 8.18 Other payables a‐ Other payables details 31 December 2008 31 December 2007 Items RMB RMB Project fee payable 229,538,300.91 74,062,766.68 Deposits payable 16,538,746.30 17,058,370.20 Land usage fee 2,583,851.92 4,583,853.09 89 31 December 2008 31 December 2007 Items RMB RMB payable Short-term 85,094,238.95 borrowings repayable Others 24,299,944.91 5,307,605.94 Total 358,055,082.99 101,012,595.91 b‐The short‐term borrowing with the amount of RMB 85,432,947.63 Yuan borrowed from the Company’s shareholders with 51.76% voting shares occupies 23.86% of the year end balance for other payables at 31 December 2008, referring to the Note 10.3 (6) c‐The project fee payable to the related parties with the amount of RMB 20,269,260.68 Yuan occupies 5.66% of the year end balance for other payables at 31 December 2008, referring to the Note 10.3 (6) 8.19 Non‐current liabilities due within one year a‐ long‐term liabilities due within one year 31 December 2008 31 December 2007 Items RMB RMB Long-term borrowings due within one - 230,000,000.00 year Long-term bonds payable due within - - one year Long-term accounts payable due within - - one year Total 230,000,000.00 90 b‐ Long‐term borrowings due within one year Currency Nature of 31 December 2008 31 December 2007 Bank Name borrowings RMB RMB China Merchants RMB Entrust loans 230,000,000.00 Bank The entrust loan with the amount of RMB 230,000,000.00Yuan borrowed from the Nanshan Group through Merchants Bank has been reimbursed since this financial period. 8.20 Deferred tax liabilities a‐ Deferred tax liabilities details 31 December 2008 31 December 2007 Items RMB RMB Deferred tax liabilities arising from the difference between the tax base of an - 3,388,161.10 asset and its carrying value Deferred tax liabilities arising from the difference between the tax base of a - - liability and its carrying value Total - 3,388,161.10 b‐ Deductible temporary differences 31 December 31 December 2008 2007 Items RMB RMB Value increased by assessment - 18,823,117.22 The deferred tax assets arising from the increased value assessed when restructing of the Company to the limited company have been taxed by instalment and completed in the year 2008, according tothe license of Shen Fu Ban Han (1995) NO.112 issued by General Office of the People’s Government of Shenzhen Municipality. 8.21 Other non‐current liabilities 31 December 2007 31 December Increase Current year 31 December 91 RMB 2007 RMB transfer into 2008 RMB income RMB Rent 31,807,912.40 - 4,230,791.16 27,577,121.24 8.22 Share capital 31 December 2008 31 December 2007 Items Amounts Amounts % % RMB RMB Restricted tradable shares Sponsors 119,420,000.00 51.79% 119,420,000.00 51.79% -Domestic legal person 119,420,000.00 51.79% 119,420,000.00 51.79% shares Tradable shares of foreign capital shares 111,180,000.00 48.21% 111,180,000.00 48.21% listed domestically Total 230,600,000.00 100.00% 230,600,000.00 100.00% 8.23 Capital reserve 31 December 31 December 2007 Increase Decrease 2008 Items RMB RMB RMB RMB Capital premium 111,367,624.16 - - 111,367,624.16 Other capital surplus 97,749,803.75 11,523,156.67（Note①） - 109,272,960.42 Total 209,117,427.91 11,523,156.67 - 220,640,584.58 Note①：As 7.2 represented, the company transferred the 40% shares of the serven wholly‐owned subsidiaries of Tianjin Baowan,,Langfang Baowan,,Wuhan Baowan, Xindu Baowan, Longquan Baowan, Shenyang Baowan,Nanjing Baowan to the Nanshan Group, resulting to add RMB 11,523,156.67 Yuan to other capital surplus. The details represented in 10.3c‐ The shares of subsidiaries transferred to the related parties 8.24 Surplus reserve 31 December Decreas 31 December 2007 Increase e 2008 Items RMB RMB RMB RMB Statutory 121,230,503.0 7,967,343.17（Note 129,197,846.2 surplus 8 ①） 5 reserves Random surplus 3,868,472.09（Note 47,472,612.00 51,341,084.09 reserve ②） 92 168,703,115.0 180,538,930.3 11,835,815.26 Total 8 4 Note ①： According to “Peopleʹs Republic of China Company Law” and the Companyʹs Article, the statutory surplus reserves is provided at the amount of RMB7,967,343.17 Yuan based on 10 percent of the companyʹs net profit; Note②： The Random surplus reserve for the Company, which is usually propsaled by the Board Meeting and approved by the General Meeting, with the amount of RMB 3,868,472.09 Yuan is decided to make the provision based on the 5% of net profit for the year 2007 at the year 2008 Board Meeting. 8.25 Unappropriated profit a- Changes of unappropriated profit 31 December 2008 31 December 2007 RMB RMB Unappropriated profits at end 247,849,298.70 218,533,826.94 of last year Add:Changes in accounting - - policies Pre-error correction -2,503,564.40 - Unappropriated profits at 245,345,734.30 218,533,826.94 beginning of year Add: Net profit of the year 68,739,276.90 109,388,685.44 Losses covered by the surplus - - reserve Other transfer-in - - Appropriation to statutory 7,967,343.17 7,736,944.08 surplus reserve（Note①） Appropriation to discretionary 3,868,472.09 6,812,834.00 surplus reserve（（Note②） ） Appropriation to shareholders 47,964,800.00 68,027,000.00 （Note①） Gains or losses of minority - - shareholders Unappropriated profits at end 254,284,395.94 245,345,734.30 of year Note①：Referring to the Note 8.24; 93 Note②：Referring to the Note 8.24; Note③： The cash bonus of RMB 47,964,800.00 Yuan is distributed to all the shareholders based on RMB 2.08 Yuan (including tax) to every 10 shares, which came form the net profits for the year 2007 and 230,600,000 issued shares (with the value of RMB 1 Yuan for each), according to the approval from the General Meeting. b‐ Appropriation to surplus reserve of subsidaries Amount attributable to Subsidary name 2008 parent company RMB RMB Shenzhen Baowan 737,199.96 737,199.96 Guangzhou Baowan 58,535.68 58,535.68 Shanghai Baowan 3,722,449.27 3,722,449.27 Total 4,518,184.91 4,518,184.91 8.26 Operating revenues and costs a‐Operating revenues 2008 2007 Items RMB RMB Main operating revenues 282,574,482.03 233,589,292.67 Other operating revenues 307,148.71 - Total of operating revenues 282,881,630.74 233,589,292.67 Main operating costs 93,258,294.20 77,936,880.27 Other operating costs 24,992.85 - Total of Operating costs 93,283,287.05 77,936,880.27 b‐Main operating revenues/costs/profit details 2008 Main operating Main operating Main operating revenues costs profit RMB RMB RMB Storage 168,400,544.59 62,775,515.11 105,625,029.48 Port management 92,050,280.81 26,265,889.45 65,784,391.36 94 2008 Main operating Main operating Main operating revenues costs profit RMB RMB RMB Office lease 22,123,656.63 4,216,889.64 17,906,766.99 Total 282,574,482.03 93,258,294.20 189,316,187.83 Less ： Internal deduction Total 282,574,482.03 93,258,294.20 189,316,187.83 b‐Main operating revenues/costs/profit details‐continued 2008 Main operating Main Main operating revenues operating profit RMB costs RMB RMB Storage 146,004,080.75 51,135,014.77 94,869,065.98 Port management 67,716,225.12 22,704,426.12 45,011,799.00 Office lease 19,868,986.80 4,097,439.38 15,771,547.42 Total 233,589,292.67 77,936,880.27 155,652,412.40 Less：Internal - - - deduction Total 233,589,292.67 77,936,880.27 155,652,412.40 The amount of operating income from the top five customers was RMB 91,630,692.49Yuan, which accounts for 32.43% of the total operating income. 8.27 Business taxes and levies 2008 2007 Items Amounts Amounts Rate RMB Rate RMB Business 3%/5% 12,489,877.09 3%/5% 10,362,682.08 tax Others 796,583.60 876,837.09 Total 13,286,460.69 11,239,519.17 95 8.28 Financial expenses 2008 2007 Items RMB RMB Interest expenses 45,894,423.78 20,744,095.11 Less: Interest income 2,256,441.75 1,093,497.34 Exchange losses - 2,315,049.12 Less: 238,064.85 1,090,350.23 Exchange income Others 127,048.49 36,835.00 Total 43,526,965.67 20,912,131.66 8.29 Impairment loss of assets 2008 2007 Items RMB RMB Bad debt loss 63,722.03 -224,772.71 8.30 Investment income 2008 2007 Items RMB RMB Chiwan Offshore Petroleum Equipment 670,962.68 545,085.34 Repair and Manufacture Co., Ltd. Shenzhen Chiwan Sembawang Engineering 4,961,386.48 37,854,066.41 Co., Ltd. Others 155,300.19 120,000.00 Total 5,787,649.35 38,519,151.75 The reduction in investment income of RMB 32,731,502.40 Yuan for current period compared to the previous year, which is 84.97 percent less. The main reasons for reduction are the worse operating results of the associate Sembawang. 96 8.31 Non-operating income a‐ Non‐operating income details 2008 2007 Items RMB RMB Gains on disposal of 105,291.50 267,900.21 fixed assets Government grants 496,666.73 - Penalty income 5,080.04 - Compensation income 348,440.49 - Others 77,368.63 254,446.16 Total 1,032,847.39 522,346.37 b‐Government grants 2008 2007 Including: Including: Government Government grants grants recognised recognised Amount Amount in in RMB RMB profit or profit or loss for the loss for the period period RMB RMB Financial incentives 490,666.73 490,666.73 - - (Note①) Dependents 6,000.00 6,000.00 - - resettlement Total 496,666.73 496,666.73 - - Note①：Kunshan Baowan received financial incentives from local Govement。 8.32 Non-operating expenses 2008 2007 RMB RMB Losses on disposal of fixed 1,151,069.24 177,294.10 assets Endowment spending 815,780.12 4,000.00 Penalty expenses - 44,051.00 97 2008 2007 RMB RMB Compensation expenses 5,661.03 602,000.00 Oters 112,044.76 82,613.90 Total 2,084,555.15 909,959.00 8.33 Income tax expenses 2008 2007 RMB RMB Current tax expenses 14,709,694.18 11,173,538.53 Deferred tax expenses -5,416,673.34 -2,009,882.32 Total 9,293,020.84 9,163,656.21 8.33 Income tax-continued 2008 2007 RMB RMB Accounting profit/loss 78,032,297.74 118,552,341.65 Add:Effect of income adjustment for tax 30,211,027.11 -28,865,742.14 purposes Income tax expenses 108,243,324.85 89,686,599.51 Current tax expenses 14,709,694.18 11,173,538.53 Deferred tax expenses -5,416,673.34 -2,009,882.32 Including: Changes of deferred tax liabilities (excluding the amount 2,028,512.24 767,493.41 directly transferred into owner's equity) Including: Changes of deferred tax iabilities (excluding the amount -3,388,161.10 -1,242,388.91 directly transferred into owner's equity) Total 9,293,020.84 9,163,656.21 8.34 Earnings per share 2008 2007 RMB RMB Consolidated net profit for the 68,739,276.90 109,388,685.44 current period attributable 98 to ordinary shareholders of the parent company Weighted average number of ordinary shares issued during 230,600,000 230,600,000 the period Basic EPS 0.30 0.47 Diluted EPS 0.30 0.47 8.35 Other cash receipts relating to operating activities 2008 2007 RMB RMB Account payable/receivable 85,094,238.95 8,182,027.77 Others 4,206,604.16 2,446,211.07 Total 89,300,843.11 10,628,238.84 8.36 Other cash payments related operating activities 2008 2007 RMB RMB Office expenses 11,494,410.44 11,142,106.09 Others 9,029,843.21 7,914,435.00 Total 20,524,253.65 19,056,541.09 8.37 Supplementary information to the cash flow statemen a‐ Reconciliation of net profit to cash flow from operating activities 2008 2007 RMB RMB (1) Reconciliation of net profit to cash flow from operating activities Net profit 68,739,276.90 109,388,685.44 Add: Provision for asset impairment 63,722.03 -224,772.71 Depreciation of fixed assets 32,503,995.61 30,093,197.00 Amortisation of intangible assets 23,079,842.87 18,066,718.00 Amortisation of long-term prepaid - - expenses Losses on disposal of fixed assets, 1,045,777.74 -90,606.11 intangible assets and 99 2008 2007 RMB RMB other long-term assets (less gains) Write-off of fixed assets - - Losses on changes in fair values (less - - gains) Financial expenses 43,399,917.18 20,912,132.36 Losses arising from investments (less -5,787,649.35 -38,519,151.75 gains) Decrease in deferred tax assets (less -2,028,512.24 -767,493.41 increase)） Increase in deferred tax liabilities (less -3,388,161.10 -1,242,388.91 decrease) Decrease in inventories 518,315.46 -277,735.29 Decrease in operating receivables (less -5,679,138.39 2,134,844.97 increase) Increase in operating payables (less 89,493,908.05 15,836,929.21 decrease) Others 571,285.06 - Net cash flow from operating activities 242,532,579.82 155,310,358.80 (2) Significant investing and financing activities that do not involve Conversion of debt into capital - - Convertible bonds due within one year - - Fixed assets acquired under finance - - leases (3) Net changes in cash and cash equivalents: Closing balance of cash 131,277,928.04 84,362,921.25 Less: Opening balance of cash 84,362,921.25 42,398,837.11 Add: Closing balance of cash equivalents - - Less: Opening balance of cash - - equivalents Net increase in cash and cash equivalents 46,915,006.79 41,964,084.14 b‐ Cash and cash equivalents 2008 2007 RMB RMB (1) Cash Cash on hand 15,397.28 8,070.68 Bank demand deposits 131,262,530.76 84,354,850.57 Other monetary funds that can be - - 100 2008 2007 RMB RMB readily withdrawn on demand (2) Cash equivalents - - Including ： Investments in debt - - securities due within three months (3)Cash and cash equivalent balances 131,277,928.04 84,362,921.25 Including：Restricted cash and cash equivalents of the Parent Company - - and subsidiaries within the Group 8.38 Segment reporting Handling and Operating Storage port Total lease RMB management RMB RMB RMB Operating income 22,352,456.24 168,603,672.69 91,925,501.81 282,881,630.74 Including: Revenue arising from 22,352,456.24 168,603,672.69 91,925,501.81 282,881,630.74 external transactions Add: Non-distribution - - - - revenues Operating expenses 12,666,457.07 75,423,829.74 29,051,232.15 117,141,518.96 Segment profit 9,685,999.17 93,179,842.95 62,874,269.66 165,740,111.78 (loss) Less ： Non-distribution - - - 86,656,106.28 expenses Operating profit 9,685,999.17 93,179,842.96 62,874,269.66 79,084,005.50 (loss) Segment assets 113,731,263.11 2,060,662,567.69 83,295,010.95 2,257,688,841.75 Add ： Non-distribution - - - 11,859,429.53 assets Total assets 113,731,263.11 2,060,662,567.69 83,295,010.95 2,269,548,271.28 Segment liabilities 27,577,121.24 1,215,311,778.91 1,299,292.09 1,244,188,192.24 Add ： Non-distribution - - - 26,591,362.52 liabilities Total liabilities 27,577,121.24 1,215,311,778.91 1,299,292.09 1,270,779,554.76 101 Handling and Operating Storage port Total lease RMB management RMB RMB RMB Depreciation and 5,709,702.21 43,914,816.44 5,959,319.83 55,583,838.48 amortisation Impairment losses 5,035.12 37,979.73 20,707.18 63,722.03 recognised Capital expenditure 847,553.00 604,520,622.83 7,305,231.41 612,673,407.24 Note: Since all the revenues are from Chinese territory, therefore the information about geographical segment is not disclosed. 9. NOTES TO THE MAIN ITEMS OF PARENT COMPANY 9.1 Accounts receivables a‐ Accounts receivables classified by items Category 31 December 2008 The Provision Carrying percentage Amount % of total for bad amount of the bad RMB balance debts RMB debts RMB provision Individually significant 10,951,810.87 59.64% 109,518.11 10,842,292.76 1% accounts Other insignificant 7,412,261.18 40.36% 74,122.61 7,338,138.57 1% accounts Total 18,364,072.05 100.00% 183,640.72 18,180,431.33 Category 31 December 2007 The Provision Carrying percentage Amount % of total for bad amount of the bad RMB balance debts RMB debts RMB provision Individually significant 7,931,841.95 46.63% 79,318.42 7,852,523.53 1% accounts Other insignificant 9,077,833.86 53.37% 90,778.34 8,987,055.52 1% accounts Total 17,009,675.81 100.00% 170,096.76 16,839,579.05 102 b‐The ageing of accounts receivable and related provisions for bad debts is analyzed below: 31 December 2008 31 December 2007 Amount % of total Provision Amount % of total Provision RMB balance for RMB balance for Ageing bad bad debts debts RMB RMB Within 1 17,904,057.37 97.50% 179,040.57 year 16,686,831.78 98.10% 166,868.32 Between 1 139,526.79 0.76% 1,395.27 and 2 years 238,028.68 1.40% 2,380.29 Between 2 235,672.54 1.28% 2,356.73 and 3 years 18,840.00 0.11% 188.40 Between 3 18,840.00 0.10% 188.40 and 4 years 65,975.35 0.39% 659.75 Between 4 65,975.35 0.36% 659.75 and 5 years - 0.00% - Total 18,364,072.05 100.00% 183,640.72 17,009,675.81 100.00% 170,096.76 c‐The list of first fifth larger debtors Amount The Name of Debtors % of total Ageing RMB Shenzhen Weisheng Offshore 6,608,245.83 30.61% Within 1 year Oil Technology Co.,Ltd CACT Operators Group 1,756,900.82 8.14% Within 1 year Shenzhen CNOOC Platform 1,159,003.40 5.37% Within 1 year Repairing and Installing CO.,Ltd Shenzhen Chiwan Offshore Between 1 and Petroleum Equipment Repair 744,215.10 3.45% 4 years and Manufacture Co., Ltd ConocoPhillips China Inc. 683,445.72 3.17% Within 1 year Total 10,951,810.87 59.64% e‐ Accounts receivable above including receivable from related parties 1,362,854.98 (RMB), accounting for the total amount of accounts receivable to 7.42%.(The disclosure is in 10.3(f) of NOTES) f‐There are no accounts receivables from shareholders holding over 5% (inclusive) of 103 the company shares. 9.2 Dividends receivable 31 December 2008 31 December 2007 Companies RMB RMB Shanghai Baowan 30,151,839.10 - Shenzhen Baowan 6,634,799.66 - Guangzhou Baowan 474,139.00 - Total 37,260,777.76 - 9.3 Other receivables a‐ Other receivables classified by items 31 December 2008 Provision Carrying Category Amount % of total for bad amount RMB balance debts RMB RMB Individually significant 379,422,083.17 99.01% - 379,422,083.17 receivables Other insignificant 3,807,844.84 0.99% - 3,807,844.84 receivables Total 383,229,928.01 100.00% - 383,229,928.01 31 December 2007 Provision Carrying Category Amount % of total for bad amount RMB balance debts RMB RMB Individually significant 214,561,807.54 99.46% - 214,561,807.54 receivables Other insignificant 1,161,769.00 0.54% - 1,161,769.00 receivables Total 215,723,576.54 100.00% - 215,723,576.54 b‐The ageing of other receivables and related provisions for bad debts is analyzed below: Ageing 31 December 2008 31 December 2007 104 Amount % of total Provision Amount % of Provision RMB balance for bad RMB total for bad debts balance debts RMB RMB Within 1 275,777,066.34 71.96% - 134,524,764.69 62.36% - year Between 1 49,412,805.67 12.89% - 29,801,963.77 13.81% - and 2 years Between 2 11,643,207.92 3.04% - 51,396,848.08 23.83% - and 3 years Between 3 46,396,848.08 12.11% - 0.00% - and 4 years Total 383,229,928.01 100.00% - 215,723,576.54 100.00% - c‐The list of first fifth larger debtors Amount The Name of Debtors % of total Ageing RMB Within 2 BLOGIS(Tianjin)Co.,Ltd 188,898,590.00 49.29% year Within 1 BLOGIS(Kunshan)Co.,Ltd 103,105,015.61 26.90% year Within 4 BLOGIS(shanghai)Co.,Ltd 64,379,641.92 16.80% year Within 3 BLOGIS(Guangzhou)Co.,Ltd 16,404,744.38 4.28% year Within 1 BLOGIS(Chengdu)Co.,Ltd 6,634,091.26 1.73% year Total 379,422,083.17 99.01% d‐ Other receivables at the year end include receivable from related parties up to RMB381,814.043.03 Yuan , which accountes 99.63%.of the total other receivable e‐There are no other receivables from shareholders holding over 5% (inclusive) of the Company shares. 9.4 Long‐term equity investment a‐ Long‐term equity investment classified by items 31 December 2007 Increase Decrease 31 December 2008 Items RMB RMB RMB RMB Subsidiary investment 550,073,772.13 90,000,000.00 115,920,000.00 524,153,772.13 Joint venture investment 274,106,680.87 5,632,349.16 - 279,739,030.03 105 Other equity investment - - - - Less: Impairment of long-term equity - - - - investment Total 824,180,453.00 95,632,349.16 115,920,000.00 803,892,802.16 b‐ Joint venture investment details (NOTES TO THE MAIN ITEMS8.7) c‐ Long‐term equity investment accounted by the cost method Initial 31 31 investment December December Investee amount 2007 Increase Decrease 2008 RMB RMB RMB RMB RMB Shanghai 144,000,000.00 144,000,000.00 144,000,000.00 Baowan Guangzhou 45,000,000.00 45,000,000.00 45,000,000.00 Baowan Tianjin 29,880,000.00 49,800,000.00 19,920,000.00 29,880,000.00 Baowan Kunshan 120,000,000.00 120,000,000.00 120,000,000.00 Bawan Langfang 30,000,000.00 10,000,000.00 40,000,000.00 20,000,000.00 30,000,000.00 Baowan Wuhan 18,000,000.00 30,000,000.00 12,000,000.00 18,000,000.00 Baowan Longquan 30,000,000.00 50,000,000.00 20,000,000.00 30,000,000.00 Baowan Xindu 18,000,000.00 30,000,000.00 12,000,000.00 18,000,000.00 Baowan Shenyang 18,000,000.00 30,000,000.00 12,000,000.00 18,000,000.00 Baowan Nangjing 30,000,000.00 50,000,000.00 20,000,000.00 30,000,000.00 Baowan Shenzhen 41,834,700.07 41,273,772.13 41,273,772.13 Baowan Total 524,714,700.07 550,073,772.13 90,000,000.00 115,920,000.00 524,153,772.13 106 d‐ Untill 31 Decembre 2008, there is no such situation as the carrying amount of long‐term equity investment is higher than the net recoverable amount. e‐ The Company does not have any oversea investment. There is no major restriction for the realization and income remitted of the long‐term equity investment. 9.5 Operating revenues and costs a‐Operating revenues 2008 2007 RMB RMB Main operating 182,438,959.00 147,006,323.62 revenues Other operating - - revenues Total of operating 182,438,959.00 147,006,323.62 revenues Main operating 55,641,559.82 47,366,512.25 costs Other operating - - costs Total of 55,641,559.82 47,366,512.25 Operating costs b‐Main operating revenues/costs/profit details 2008 Main operating Main Main operating revenues operating costs profit RMB RMB RMB Storage 83,209,324.11 33,511,784.83 49,697,539.28 Port management 83,055,277.43 20,386,837.63 62,668,439.80 Office lease 16,174,357.46 1,742,937.36 14,431,420.10 Total 182,438,959.00 55,641,559.82 126,797,399.18 b‐Main operating revenues/costs/profit details‐continued 2007 107 Main operating Main Main revenues operating costs operating RMB RMB profit RMB Storage 75,279,411.06 29,539,129.76 45,740,281.30 Port management 57,848,658.57 16,084,445.13 41,764,213.44 Office lease 13,878,253.99 1,742,937.36 12,135,316.63 Total 147,006,323.62 47,366,512.25 99,639,811.37 c‐ The amount of operating income from the top five customers was RMB 91,630,692.49Yuan, which accounts for 50.23% of the total operating income. 9.6 Investment income 2008 2007 RMB RMB Shanghai Baowan 30,151,839.10 - Guangzhou Baowan 474,139.00 - Shenzhen Baowan 6,634,799.66 - Chiwan Offshore Petroleum Equipment 670,962.68 545,085.34 Repair and Manufacture Co., Ltd. Shenzhen Chiwan Sembawang 4,961,386.48 37,854,066.41 Engineering Co., Ltd. Equity transferred(10.3(c)) 8,307,962.33 - Others 155,300.19 120,000.00 Total 51,356,389.44 38,519,151.75 9.7 Provision for the impairment losses of assets 31 Current Current year reductions 31 December year Amount Amount December Total 2007 additions Reversed impaired 2008 RMB RMB RMB RMB RMB RMB Provision for bad 170,096.76 13,543.96 - - - 183,640.72 debts 9.8 Supplementary information to the cash flow statemen a‐ Reconciliation of net profit to cash flow from operating activities 2008 2007 RMB RMB (1) Reconciliation of net profit to cash flow from operating activities： Net profit 79,673,431.68 77,369,440.80 108 2008 2007 RMB RMB Add: Provision for asset impairment 13,543.96 -232,069.77 Depreciation of fixed assets 14,359,701.11 14,765,782.00 Amortisation of intangible assets 14,309,954.32 14,273,931.00 Amortisation of long‐term prepaid - - expenses Losses on disposal of fixed assets, intangible assets and 1,005,380.48 -48,197.00 other long‐term assets (less gains) Write‐off of fixed assets - - Losses on changes in fair values (less - - gains) Financial expenses 42,536,530.41 20,181,761.64 Losses arising from investments (less -51,356,389.44 -38,519,151.75 gains) Decrease in deferred tax assets (less -36,963.88 - increase)） Increase in deferred tax liabilities (less -3,388,161.10 -1,242,388.91 decrease) Decrease in inventories 475,845.44 -296,419.36 Decrease in operating receivables (less -167,829,148.82 4,443,748.90 increase) Increase in operating payables (less 84,627,847.09 -18,562,151.42 decrease) Others 2,515,697.31 232,069.78 Net cash flow from operating 16,907,268.56 72,366,355.91 activities b‐ Cash and cash equivalents 2008 2007 RMB RMB Net changes in cash and cash equivalents: Closing balance of cash 80,130,914.36 76,730,780.32 Less: Opening balance of cash 76,730,780.32 34,788,370.95 Add: Closing balance of cash - - equivalents Less: Opening balance of cash - - equivalents Net increase in cash and cash 3,400,134.04 41,942,409.37 equivalents 109 10. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS 10. 1Related party relationships a‐Identification standard of related parties If a party has the power to control, jointly control or exercise significant influence over another party, they are regarded as related parties. Two or more parties are also regarded as related parties if they are subject to control, joint control or significant influence from the same party. b‐Parent company of the Company Parent Proportion Organisation Place of Nature of Registered Proportion of company of voting code registration business capital shareholdings name power Land Shenzhen, Nanshan development/ 500,000,000.00 618832976 guangdong 51.79% 51.79% group Port RMBYuan province transportation c‐ Subsidiaries of the Company Please see Note 7.2(1) for details of the subsidiaries. d‐ The following are other related parties which have transactions with the Company while no control relationship exists: Organisation Related party code relationships Shenzhen Chiwan Sembawang 61880960‐2 Engineering Co., Ltd. Associated companies Chiwan Offshore Petroleum Equipment Repair and Manufacture 61887962‐7 Co., Ltd. Associated companies Shenzhen Chiwan Wharf Holdings Controlled by the same 61883296‐8 Co.,Ltd parent company Shenzhen Nanshan Development Controlled by the same 61883297‐6 Incorporation parent company Controlled by the same 78833212‐2 Chixiao Enterprises Co.,Ltd. parent company 110 Shenzhen Chixiao Project Subsidiary of Chixiao 61883136‐7 Construction Co.,Ltd Enterprises Co.,Ltd. Shenzhen Chixiao Building Subsidiary of Chixiao 61881595‐7 Technology Co.,Ltd（Note①） Enterprises Co.,Ltd. Subsidiary of Shenzhen Chiwan Wharf Holdings Shenzhen Chiwan Cargo Co.,Ltd 61883349-3 Ltd Subsidiary of Shenzhen Chiwan Container Terminal Chiwan Wharf Holdings Co.,Ltd(CCT） 61881700-4 Ltd Subsidiary of Shenzhen Shenzhen Chiwan Eastern Logistics Chiwan Wharf Holdings Ltd. 72616516-2 Ltd Note①：The name of “Shenzhen component House Co.,Ltd”has been changed to“Shenzhen Chixiao Building Technology Co.,Ltd on 18 September, 2008. 10.2 Pricing policies The companyʹs pricing policies on the services provided or received to related parties, or the rental services are based on the terms from negociation between both parties. 10.3 Related party transactions a‐ Labor services received 2008 2007 RMB RMB Nanshan group 10,477,789.10 6,914,933.00 Shenzhen Chixiao Building Technology Co.,Ltd 42,021,826.40 10,337,610.00 Shenzhen Chixiao Project Construction Co.,Ltd 24,722,244.47 9,171,440.00 Total 77,221,859.97 26,423,983.00 1) The East Heights Land (including 109,473 square meters of land at the east of Chiwan first road) leased from the Nanshan by the Group,is used as the base supporting land for main business of oil and its logistics, with the lease period of 20 years since 1st September, 2006 until 31st August 2026. 111 2)The steel structure engineering materials of the Bao Bay Kunshan are provided by the Shenzhen Chixiao Building Technology Co.,Ltd commissioned by in 2007 with the project fee of RMB 35.16 million Yuan. The storage enclosure plates of Xindu Bao Bay and the Tianjin Bao Bay, are provided by the Shenzhen Chixiao Building Technology Co.,Ltd commissioned by the Group, with the amount of RMB 26.25 million Yuan for Tianjin Bao Bay and RMB 12.96 million Yuan for Xindu Bao Bay in 2008. 3)The Shenzhen Chixiao Project Construction Co.,Ltd is commissioned as the constructor for the project of East Heights Land by the Company in 2008, who is commissioned to carry out the construction, steel construction and fire‐proof workings, as well as the materials purchase, production and installation, with the project fee of RMB 28.953 millionYuan. b‐ Labor services provided 2008 2007 RMB RMB Amount Percentage Amount Percentage RMB % RMB % Shenzhen Nanshan 1,078,223.23 0.38% 0.00% Development Incorporation Shenzhen Chiwan Cargo 246,886.00 0.09% 0.00% Co.,Ltd Chiwan Container Terminal 5,100.00 0.00% 0.00% Co.,Ltd(CCT） Shenzhen Chiwan Wharf 1,750,174.65 0.62% 1,585,504.00 0.68% Holdings Co.,Ltd Nanshan group 3,235,084.15 1.14% 4,158,400.00 1.78% Chiwan Offshore Petroleum Equipment Repair and 1,989,238.04 0.70% 2,061,200.00 0.88% Manufacture Co., Ltd. Shenzhen Chiwan Sembawang Engineering 8,257,312.65 2.92% 8,773,694.47 3.76% Co., Ltd. 112 2008 2007 RMB RMB Amount Percentage Amount Percentage RMB % RMB % Total 16,562,018.72 5.85% 16,578,798.47 7.10% c‐ The shares of subsidiaries transferred to the related parties In order to expanse the business scope of Bao Bay Logistics Park and reduce the liquidate rate, the 40% shares of the serven wholly‐owned subsidiaries (referring to the Serven Subsidiaries)of Tianjin Bao Bay, Langfang Bao Bay, Wuhan Bao Bay, Xindu Bao Bay, Longquan Bao Wan, Wan Bao Shenyang, Nanjing Bao Bay are transferred to the Nanshan Group, according with the agreement of shareholding transfer signed in November 2008 (referring to the Note 7.2). The equity transfer price is RMB 124,227,962.33 Yuan based on the assessment value for the Seven subsidiaries at the 30 June, 2008 date as a benchmark date, which is paid in December 2008 by the Nanshan Group. The process of transfer was completed in December 2008. The adjustment value of capital reserve is RMB11,523,156.67 Yuan , which result form the amount net of the disposal price listed in consolidated statements and net assets of disposal subsidiary The parent company confirmed the transfer value of the earnings of the equity as RMB 8,307,962.33 Yuan. The details are as follows: 40% of 0% of net Capital Investment the value of Transfer Name of registered assets at reserve income 40% shares price subsidiary capital transfer day adjusted of parent until 30 RMB RMB RMB RMB company June 2008 113 RMB RMB Tianjin 19,920,000.00 17,994,959.44 28,112,488.19 10,117,528.75 8,192,488.19 28,112,488.19 Baowan Langfang Bao wan 20,000,000.00 19,802,601.76 19,832,288.11 29,686.35 -167,711.89 3,832,288.11 （Note①） Wuhan 12,000,000.00 11,986,964.01 11,986,769.63 -194.38 -13,230.37 11,986,769.63 Baowan Longquan 20,000,000.00 19,403,432.29 19,787,043.96 383,611.67 -212,956.04 19,787,043.96 Baowan Xindu 12,000,000.00 11,884,892.71 11,958,915.80 74,023.09 -41,084.20 11,958,915.80 Baowan Shenyang Baowan 12,000,000.00 11,638,285.55 12,562,548.44 924,262.89 562,548.44 12,562,548.44 （Note②） Nanjing 20,000,000.00 19,993,669.90 19,987,908.20 -5,761.70 -12,091.80 19,987,908.20 Baowan Total 115,920,000.00 112,704,805.66 124,227,962.33 11,523,156.67 8,307,962.33 108,227,962.33 Note①： The registered capital of Langfang Bao Bay is RMB 50,000,000.00 Yuan paid by the Company in instalments. The actual amount contributed by the Company is RMB 10,000,000.00 Yuan until 30 June 2008. The amount of RMB 40,000,000.00 Yuan is contributed at the second instalment by the Company at 22 September 2008. Therefore, the actual transfer price of Langfang Bao Bay is RMB 16,000,000.00 Yuan higher than the value of assessment at the benchmark date. Note②: Until the day audit report approved, Shenyang Baowan ʹs changes of registration in the Trade and Industry is still in process. d‐ Other significant transactions between the Company and related parties in the year: Type of 2008 2007 Notes transaction RMB RMB NOTES TO Prepaid land Nanshan group 128,094,260.00 50,000,000.00 THE MAIN lease payments ITEMS8.13 NOTES TO Nanshan group Short‐term loan 200,000,000.00 100,000,000.00 THE MAIN ITEMS8.15 Nanshan group Interest of 16,920,333.37 8,098,083.32 114 borrowings Interest of Nanshan group 11,015,030.61 12,346,666.72 entrust loan 1）The “agreement to use the premises” was signed by the Company and Nanshan Group at 18 July 2006. The usage rights for the land and ports of the Nanshan Group with 315,708.55 square kilometers will be excised for the period of 25 years between 15 July 2009 to 14 July 2034 by the Company in the terms of leasing since it is expired at 15 July 2009. The payment for the usage of land is RMB 381,154,260.00 Yuan ralted to the land with 315,708.55 square meters, which has been paid until 31 December 2008. 2)The short‐term liquidity financing loans with the amount of RMB 4 billions Yuan at the rate of 5.6% is borrowed from the Nanshan Group, which related interes is RMB 16,920,333.37 Yuan. 3）The entrust loan with the amount of RMB 230,000,000.00 Yuan is borrowed form the Nanshan Group through Merchants Bank with the period of 1 year from 26 November 2008 to 26 November 2009 at the rate of 5.6%. The interes of entrust loan payable is RMB11,015,030.61 Yuan for the year 2008. e‐ Compensation for key management personnel 2008 2007 RMB RMB Compensation for key 3,189,859.58 2,298,417.00 management personnel f‐ Balance due to/from related parties 31 31 December December Items 2008 Conditions 2007 Securited RMB RMB or not Accounts receivable Shenzhen Chiwan Sembawang 618,639.88 803,708.54 Engineering Co., Ltd. Chiwan Offshore Petroleum 744,215.10 642,098.22 115 31 31 December December Items 2008 Conditions 2007 Securited RMB RMB or not Equipment Repair and Manufacture Co., Ltd. Accounts receivable total 1,362,854.98 1,445,806.76 Provision for accounts receivable Shenzhen Chiwan Sembawang 6,186.4 8,037.09 Engineering Co., Ltd. Chiwan Offshore Petroleum Equipment Repair and 7,442.15 6,420.98 Manufacture Co., Ltd. Provision for accounts 13,628.55 14,458.07 receivable total Accounts payable Shenzhen Chixiao Building 40,592.00 27,184.00 Technology Co.,Ltd Shenzhen Chixiao Project 60,000.00 60,000.00 Construction Co.,Ltd Accounts payable total 100,592.00 87,184.00 Other payables Nanshan group 85,432,947.63 348,226.80 Chiwan Offshore Petroleum Equipment Repair and 185,787.64 179,815.26 Manufacture Co., Ltd. Shenzhen Chiwan Wharf 172,403.43 168,436.84 Holdings Co.,Ltd Shenzhen Chiwan Eastern 16,652.51 17,364.15 Logistics Ltd. Shenzhen Nanshan 28,877.38 10,007.68 Development Incorporation Shenzhen Chixiao Building 19,338,613.40 - Technology Co.,Ltd Shenzhen Chixiao Project 508,503.68 508,503.68 Construction Co.,Ltd Chixiao Enterprises Co.,Ltd. 18,422.64 18,422.64 Other payables total 105,702,208.31 1,250,777.05 Interest payable Nanshan group 1,077,999.99 689,058.31 Other non-current assets 253,060,000.0 Nanshan group 381,154,260.00 0 116 31 31 December December Items 2008 Conditions 2007 Securited RMB RMB or not Short-term Borrowings 200,000,000.0 Nanshan group 630,000,000.00 0 Long-term Borrowings 230,000,000.0 Nanshan group 0 11. Contingencies Until 31st December 2008, the Company does not need to make any disclosure to the material contigent matters. 12. Commitments Until 31st December 2008, the Company does not need to make any disclosure to the material commitments matters. 13. Events after the balance sheet date 13.1In April 2009, the resolution about the profit distribution for the year 2008 will be proposled at the General Meeting by the Board is that the cash dividend of amount of RMB Yuan (tax included) for each 10 shares owned by shareholder, based on the total of 230,600,000 shares. The above-mentioned profit distribution has will to be approved by the General Meeting of the Company. 13.2 Other events 14. Other significant events 14.1 Going concerned events 1) Shen Yang Bao Bay project site: on 22 September 2008, Shenyang Xinchengzi Development Zone notified the Company that the mineral may not be able to meet the requirements of the project site due to the issue of pressure. For the careful consideration, the Company decided to withdraw investment funds and reinvest until 117 found a suitable land which is still in process. 2) the Block A of Guangzhou Baowan (area of 115,438 sq m) project site: on 30 December 2008, the Board of the Guangzhou Development Zone decided to withdraw the land usage rights on Block A in Guangzhou Yun Po Industrial Area and at the same time propose the compensation scheme to refund the land already paid. After the negociation with the Construction Bureau of the Guangzhou Development Zone and the special meeting held by Luogang district government on31 March 2009 ,the Company was notified that Block A would be continually used as logistics in Guangzhou Bao Bay development site which is currently handling the relevant procedures. 14.2 Capital expenditure Until the balance sheet date, the following items signed by contracts are not recognized as capital expenses in the financial statement. 31 December 2008 31 December 2007 RMB RMB Buildings,machines and 88,597,928.85 126,217,031.00 equipments Intangible assets 108,925,000.00 223,821,778.00 Total 197,522,928.85 350,038,809.00 14.3 Leases Accoding to the contract of operating lease signed, the minimum lease payment in future are summarized as following: 31 December 2008 31 December 2007 RMB RMB 118 Within 1 year (including 1 year) 12,910,521.72 13,085,101.00 Between 1 and 2 year (including 2 years） 13,044,343.50 12,677,377.00 Between 2 and 3 years (including 3 years） 13,044,343.50 13,038,922.00 Above 3 years 229,575,801.89 242,492,109.00 Total 268,575,010.61 281,293,509.00 14.4Until 31December 2008, the Company's current liabilities are RMB 1,074,974,534.90 Yuan more than the current assets, due to the logistics parks in different location are in process and involve large investment at the pre-investment period when the profit is not generated. The management of the Company confirmed there is no significant impact on the Company’s going concerns. 119 SUPPLEMENTARY INFORMATION Extraordinary gains and losses The extraordinary gains and losses has been prepared by the Company in accordance with information disclosure and Presentation Rules for Companies Making Public Offering No. 1 Extraordinary gains and losses（2008 version）issued by China Securities Regulatory commission. 2008 2007 Item RMB RMB Net profit attributable to ordinary shareholders 68,739,276.90 109,388,685.44 Profit or loss from disposal of non-current -1,045,777.74 90,606.11 assets(Including: Amortization of impairment assets) Government grants charged into the profit or loss for the current period(Exluding those related to the operation of 496,666.73 - company with the consecutive fixed amount according to the regulation) Other non-operating income/ expenses -502,596.75 -478,218.84 Total -1,051,707.76 -387,612.73 Less：Related tax effect（NOTE①） 1,176,552.88 -71,733.14 Extraordinary net gains and losses -2,228,260.64 -315,879.59 Extraordinary net gains and losses attributable to the - - minority shareholders Extraordinary net gains and losses attributable to -2,228,260.64 -315,879.59 ordinary shareholders Net profit attributable to ordinary shareholders after 70,967,537.54 109,704,565.03 deducting extraordinary gains and losses effects The net profits changed by extraordinary net gains and losses -3.24% -0.29% Note： "+" represents gains or revenues,"-" represents losses or expenditures. Note①：The amount influenced on the 2008 income tax contains the amount of RMB1,495,433.22 Yuan equity transferred earnings confirmed by the parent compay. 120 Relevant financial indicators The return on net assets and EPS has been prepared by the Company in accordance with “Public Offering Made for Securities Companies about Information disclosure and Presentation Rules No. 9 ‐ Calculation and disclosure of Return on Net Assets and Earnings per Share” issued by China Securities Regulatory commission. Return on net Earnings per share（RMB assets（%） Yuan/per share） Profit for the Reporting Fully Weighted reporting period period diluted Average Basic EPS Diluted EPS RMB RMB Calculated based 2008 7.76 7.92 0.30 0.30 on net profit attributable to 2007 12.81 13.03 0.47 0.47 ordinary equity holders Calculated based 2008 8.01 8.17 0.31 0.31 on net profit attributable to ordinary equity holders after 2007 12.85 13.07 0.48 0.48 extraordinary gains and losses 121