D:•751•751_2000_0.pdf

Transcription

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4 [2001] ,000,000 10: , 26,648,820, 2,720,520 23,928, ,648,820

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8 291,843, ,135 / 6,635 / ,796, ,551,472.00

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10 Beijing JingDu Certified Public Accountants Co.,Ltd

11 B B [ ] 5 6 1

12 2 7 8 ( ) 5% 10% 20% 40% % 20%20% 20%20% 20% 50% 50%

13 () (%) % 2.77%-4.85% % 5.39%-19.40% 4-7 3% 13.86%-24.25% 4-8 3% 12.13%-24.25% 4-8 3% 12.13%-24.25% , 3

14 17 1 3% 5% 5% 5% 3% 10% 3% 10% 10% 5% 3% 7% 3% 1% 33% % % % 3% 1.65% 15% 1.65% 4

15 % , , , ,592, , (5,000,000.00) 2,600, , (42,353.85) (17,435.66) (8,628.91) (8,259.00) (4,087.38) (28,447.67) (28,157.51) (900.00) (432.00) (45,883.33) (8,717.83) (8,628.91) (4,129.50) (4,087.38) (37,165.50) (36,786.42) (468.00) 5

16 % % % % % % % % % % % % %

17 1 50, , ,372, ,575, , , ,494, ,748, ,174, ,672, ,641, ,150, , , , , ,971, ,531, ,961, , % 2 40,000, ,000, ( ) 3 a. 114,330, % 6,933, ,121, % 4,924, ,538, % 720, ,476, % 1,447, ,419, % 1,227, ,002, % 1,800, ,090, % 11,567, ,810, % 21,768, ,379, % 20,448, ,410, % 29,941,

18 b. 31,041, ,206, ,320, ,538, ,366, c. 5%(5%) 49,763, % 1,216, ,813, % 1,134, ,413, % 107, ,547, % 354, ,108, % 165, ,768, % 953, ,993, % 6,116, ,492, % 17,451, ,278, % 7,605, ,622, % 19,894, ,497, % 24,277, ,653, % 7,624, ,440, % 8,716, ,543, % 6,008, ,892, % 6,963, ,279, % 10,445, ,149, % 5,660, ,054, % 6,030, ,978, % 45,618, ,531, % 30,109,

19 269,412, ,955, ,194, ,701, ,433, %(5%) [ 1(5)] 30% 5 496, , , , %(5%) 6 69, , , , , ,

20 7 3, , , , , , , , , , , , , , , , , , , , , , a. 2,644, ,655, , ,584, ,655, b. 1,629, % 1,655, , , % ,139, ,655, , c. 598, , , ,

21 a. 327,819, ,505, ,655, , ,891, ,655, [ 24] b. 3,000, % -- 87, (1,607,334.90) 8,000, % , (1,081,606.88) 5,660, % -- (415,678.58) (2,100,141.87) 2,000, % -- (116,738.72) 342, ,000, % -- 13, (1,479,560.81) 8,940, % (746,715.88) 136,000, % -- 59,239, ,853, ,713, % -- 22, (4,991,458.93) 1,629, % 1,655, , ,500, % , , , % -- 5, , ,319, % -- (76,556.34) (76,556.34) 32,700, % -- 14,003, ,003, ,662, ,655, ,931, ,809, c. 598, , , ,

22 9 155,112, , ,641, ,356, ,223, ,803, ,791, ,235, ,648, ,231, , ,302, ,730, ,106, ,837, ,362, , ,439, ,077, ,104, ,011, ,170, ,679, ,723, , ,068, ,340, ,327, ,290, ,378, ,782, ,428, , ,803, ,383, ,454, ,837, ,609, , ,500, ,795, ,824, ,030, ,589, ,433, ,287, ,882, ,856, ,866, ,498, ,347, ,999, ,752, ,938, ,282, ,581,

23 , , , , , , , , , , , , , , , , , , , , , , ,559, ,106, , ,038, , , , , , ,647, ,431, , ,337, ,400, ,894, ,843, ,486, < 1.> -- 17,800, ,243, ,181,

24 150 15,000, # 54,000, ,500, ,900, ,000, ,000, % [ 1(5)] 16 5% 17 64, , , , ,005, , ,201, , , ,443,

25 19 5% [ 1(5)] ,538, ,080, ,063, ,204, ,662, ,058, ,940, , , , , ,012, ,150, ,465, , ,887, ,828, ,000, % 22 USD$ 6,000, ,668, USD$ 14,062, ,410, ,079, ,668, ,410,

26 23 (+,-) 1206,239, ,239, ,368, ,368,000 24,871,000 24,871, ,239, ,239, ,761,000 79,761, ,000, ,000, ,761, ,761, ,000, ,000, ,317, ,317, , ,185, ,355, ,486, ,185, ,672, [1999]57 18,791, ,774, ,277, ,074, ,514, ,700, ,185,

27 25 51,673, ,718, ,392, ,718, ,746, ,464, ,391, ,465, ,857, [ ] ,658, ,266, % 9% 9,718, ,746, ,460, [ ] 27 30% 17

28 ,870, , , ,702, ,926, , ,702, ,326, ,871, ,517, , , ,323, ,155, , , , , , , ,791, ,890, (3,098,954.84) -- 81, , , , , , ,548, , , , ,240, , ,582, ,850, ,783, ,486, ,798, ,363, % 29 32,474, ,046, ,470, ,507, ,935, ,847, ,864, , ,127, ,960, ,802, % 30 25, (395,743.18) (59,873.83) (59,873.83) (9,024,546.03) (1,655,868.21) -- (1,690,742.04) (9,480,163.04) 18

29 74,305, ,926, (59,873.83) (59,873.83) (9,024,546.03) (1,655,868.21) -- 72,590, ,842, , , , , , , , , , , ,873, , , ,173, ,192, ,000, ,577,

30 3,179, ,767, ,751, ,158, ,021, ,194, , , , , , ,000, ,000,000 20

31 181,368, % ,368, % ,213, ,843, ,194, % 5, ,399, % 2 21

32 ,709, ,237, ,690, % 2,072, % 200, % 31,041, % 269,412, % 496, % 1,424, % 21,206, % 44,701, % 4,325, % 6,280, % 6, , % 211,955, % 374, % 190, % 4,484, % 2,377, % 1,643, % 22

33 [ ] ,135 / 6, ,796, ,551,

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45 TIANJIN MARINE SHIPPING CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2000 AND 1999 TOGETHER WITH AUDITORS REPORT The reader is advised that this report has been prepared originally in Chinese. In the event of a conflict between this report and the original Chinese version or difference in interpretation between the versions of the report, the Chinese language report shall prevail.

46 AUDITORS REPORT TO THE SHAREHOLDERS OF TIANJIN MARINE SHIPPING CO., LTD. We have audited the accompanying consolidated balance sheets of Tianjin Marine Shipping Co., Ltd. (the Company ) and its subsidiaries (the Group ) as of December 31, 2000 and 1999, and the related consolidated statements of income, changes in equity and cash flows for the years then ended. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with International Standards on Auditing issued by the International Federation of Accountants. Those Standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in accordance with International Accounting Standards issued by the International Accounting Standards Committee. Without qualifying our opinion, we draw attention to Note 17 to the consolidated financial statements which describes the following significant transactions and balances between the Group and its related parties: a. The Group had an amount due from Tian Hai Group Company, the largest shareholder, of approximately RMB189,171,000 as of December 31, 2000 (1999: approximately RMB321,487,000). b. The Group had amounts due from other related companies of approximately RMB610,127,000 as of December 31, 2000 (1999: approximately RMB221,707,000) of which approximately RMB296,234,000 (1999: RMB152,567,000) and RMB211,724,000 (1999: RMB52,392,000) were due from Tenjin Shipping Co., Ltd. and Tsinlien Transportation Co., Ltd. respectively. These two companies are subsidiaries of Tian Hai Group Company. The amounts due from other related companies are non-interest bearing, unsecured and have no fixed repayment terms. c. Profit before tax of the Group for the year ended December 31, 2000 included income of approximately RMB106,331,000 resulting from one significant transaction with related parties (1999: approximately RMB79,314,000 resulting from three significant transactions with related parties). ARTHUR ANDERSEN & CO Certified Public Accountants Hong Kong, April 25,

47 TIANJIN MARINE SHIPPING CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 1999 (Expressed in thousands of Renminbi) Note ASSETS Non-current assets Property, plant and equipment, net 3 503, ,602 Due from the largest shareholder 17 (c) 189, ,487 Other non-current assets 510 3, , ,191 Current assets Trade receivables, net 5 31, ,341 Due from other related companies 17 (c) 610, ,707 Prepayments and other receivables 106,274 71,033 Cash and cash equivalents 8 154,203 69, , ,484 Total assets 1,595,794 1,323,675 EQUITY AND LIABILITIES Capital and reserves Share capital 6 466, ,000 Capital reserve 6 29,166 29,166 Statutory reserve 7 125, ,210 Retained profits 203, , , ,707 Minority interest 13,327 10,179 Long-term bank borrowings 8 151, ,916 Current liabilities Trade payables 86,032 87,769 Accruals and other payables 80,378 94,434 Short-term bank borrowings 8 382, ,903 Current portion of long-term bank borrowings 8 19,487 8,279 Taxes payable 38,175 28, , ,873 Total equity and liabilities 1,595,794 1,323,675 The accompanying notes form an integral part of these financial statements

48 TIANJIN MARINE SHIPPING CO., LTD. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (Expressed in thousands of Renminbi except for earnings per share data) Note Revenue 9 723, ,888 Operating costs 17(a), (b)(ii) (629,008) (371,453) Gross profit 94,528 65,435 Other operating income 10 13,231 4,075 Administrative expenses (71,240) (72,549) Compensation from overseas agents (subsidiaries of the largest shareholder) 17(b)(i) 106,331 55,828 Management fee income from the largest shareholder 17(b)(ii) - 8,870 Interest income from the largest shareholder 17(b)(iii) - 14,616 Profit from operations 142,850 76,275 Finance cost 11 (54,431) (17,902) Profit before tax 12 88,419 58,373 Income tax expense 13 (13,669) (11,891) Profit after tax 74,750 46,482 Minority interest (898) - Net profit for the year 73,852 46,482 Dividends Earnings per share 15 - Basic RMB0.16 RMB Diluted N/A N/A The accompanying notes form an integral part of these financial statements

49 TIANJIN MARINE SHIPPING CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (Expressed in thousands of Renminbi) Note Share capital Capital reserve Statutory reserve Retained profits Total Balance as of January 1, , ,366 97, , ,225 Net profit for the year ,482 46,482 Appropriation from retained profits - bonus share 6 139, (139,800) - - statutory reserves ,499 (9,499) - Capitalization of capital reserve 6 93,200 (93,200) Balance as of December 31, ,000 29, , , ,707 Net profit for the year ,852 73,852 Appropriation from retained profits - statutory reserves ,465 (18,465) - Balance as of December 31, ,000 29, , , ,559 The accompanying notes form an integral part of these financial statements

50 TIANJIN MARINE SHIPPING CO., LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (Expressed in thousands of Renminbi) Note CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 16(a) (74,865) 181,564 Interest paid (32,482) (30,673) Income taxes paid (12,340) (21,509) Net cash from operating activities (119,687) 129,382 CASH FLOWS FROM INVESTING ACTIVITIES: Increase in investments in associates - (7,434) Purchases of property, plant and equipment (4,817) (33,743) Proceeds from sale of property, plant and equipment 1,770 - Interest received 1,467 1,449 Decrease (increase) in other non-current assets 2,592 (1,782) Net cash from investing activities 1,012 (41,510) CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in long-term borrowings 11,676 (17,479) Increase (decrease) in short-term borrowings 189,549 (47,281) Increase in minority interest 2,250 - Net cash from financing activities 203,475 (64,760) Net increase in cash and cash equivalents 84,800 23,112 Cash and cash equivalents, beginning of year 69,403 46,291 Cash and cash equivalents, end of year 16(b) 154,203 69,403 The accompanying notes form an integral part of these financial statements

51 TIANJIN MARINE SHIPPING CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2000 AND 1999 (Amounts expressed in Renminbi ( RMB ) unless otherwise stated) 1. ORGANIZATION AND OPERATIONS Tianjin Marine Shipping Co., Ltd. (the Company ) was a state-owned enterprise incorporated in the People s Republic of China (the PRC ) in The predecessor of the Company was Tientsin Marine Shipping Company. In September 1992, Tianjin Municipal Government approved the reorganization of the predecessor company into a joint stock company under the present name, and the business licence was granted by the Administration of Industry and Commerce of Tianjin in December In November 1995, the Tianjin Securities Administration Office approved the Company s application for the issuance of PRC listed foreign investment shares ( B shares ). In preparing for the issuance of B shares, the Company underwent a reorganization in 1995, under which Tian Hai Group Company, the largest shareholder, injected into the Company certain businesses, assets and related liabilities. The Company s B shares were listed on the Shanghai Securities Exchange in April On October 7, 1996, pursuant to approval document No. [1996] 147 issued by the Ministry of Foreign Trade and Economic Co-operation of the PRC, the Company was recognized as a foreign invested joint stock limited company. Thereafter, upon approval of Tianjin Securities Administration Office, the shares held by the Company s employees were listed on the Shanghai Securities Exchange in September 1996 and September 1999 ( A shares ). The Company and its subsidiaries (the Group ) are principally engaged in the operations of international short-haul container shipping business and the provision of shipping and freight agency services. The registered office of the Company is located at No. 207 Machang Road, Hexi District, Tianjin, the PRC. The total number of employees of the Group as of December 31, 2000 was approximately 810 (1999: approximately 800). 2. PRINCIPAL ACCOUNTING POLICIES The principal accounting policies adopted in preparing the financial statements of the Group are as follows: (a) Basis of presentation The consolidated financial statements of the Group for the years ended December 31, 2000 and 1999 are prepared in accordance with International Accounting Standards ( IAS ) issued by the International Accounting Standards Committee

52 2. PRINCIPAL ACCOUNTING POLICIES (Cont d) (b) Principles of consolidation The consolidated financial statements include those of the Company and its subsidiaries. All significant intercompany balances and transactions, including intercompany profits and unrealized profits and losses, are eliminated on consolidation. The equity and net income attributable to minority shareholders interests are shown separately in the consolidated balance sheet and consolidated income statement respectively. Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. (c) Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss. The initial cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance and overhaul costs, are recognized as expense in the period in which they are incurred. In situations where it is can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of the asset beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of the asset. Depreciation is calculated using the straight-line method to write off the cost, after taking into account the estimated residual value, of each asset over its expected useful life. The expected useful lives are as follows: Vessels Buildings Machinery and equipment Motor vehicles 9-18 years years 5-8 years 5-8 years The useful lives of assets and depreciation method are reviewed periodically. When assets are sold or retired, their cost and accumulated depreciation and accumulated impairment loss are eliminated from the accounts and any gain or loss resulting from their disposals is included in the consolidated income statement. Construction-in-progress represents plant and equipment under construction and is stated at cost. This includes the costs of construction, plant and equipment and other direct costs plus borrowing costs which include interest charges and exchange differences arising from foreign currency borrowings used to finance these projects during the construction period, to the extent these are regarded as an adjustment to interest costs. Construction-in-progress is not depreciated until such time as the assets are completed and ready for use

53 2. PRINCIPAL ACCOUNTING POLICIES (Cont d) (d) Subsidiaries A subsidiary is a company which the Company controls. Control exists when the Company has the power to govern the financial and operating policies of the subsidiary so as to obtain benefits from its activities. (e) Receivables Receivables are stated at face value, after provision for doubtful accounts. (f) Cash and cash equivalents Cash represents cash in hand and deposits with banks. Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value. (g) Operating leases Leases are classified as operating leases whenever substantially all the risks and rewards incidental to ownership of the leased assets remain with the lessor. Lease payments under operating leases are recognized as an expense in the consolidated income statement on a straight-line basis over the lease term. Aggregate benefit of incentives on operating leases is recognized as a reduction of rental expense over the lease term on a straight-line basis. Assets leased to others under operating leases are presented in the consolidated balance sheets according to the nature of the assets. (h) Provisions A provision is recognized when, and only when an enterprise has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation

54 2. PRINCIPAL ACCOUNTING POLICIES (Cont d) (i) Revenue recognition Revenue is from international short-haul container shipping, commission income from shipping and freight agency services rendered, lease income from vessels under operating leases and interest income, net of business tax. Provided it is probable that the economic benefits associated with a transaction will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognized on the following bases: (i) Revenue from international short-haul container shipping is recognized upon completion of the voyage and unloading of cargoes. (ii) Commission income is recognized when services are rendered. (iii) Lease income from operating leases is recognized on a straight-line basis over the lease term. (iv) Interest income is recognized on a time proportion basis that takes into account the effective yield on the assets. (j) Compensation from overseas agents Compensation from overseas agents is calculated based on the total number of voyages in the year and the estimated amount of loss per voyage resulting from insufficient business, which is agreed by both the Group and the overseas agents. (k) Bunker oil, ship stores and spare parts Bunker oil, ship stores and spare parts are charged to operating expenses as consumed. (l) Drydocking and survey repairing Drydocking and survey repairing expenses are charged to operating expenses as incurred. (m) Taxation The Group provides for income tax on the basis of their profit for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes. Deferred taxation is provided under the balance sheet liability method in respect of significant temporary differences between the tax base of an asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary difference can be utilized

55 2. PRINCIPAL ACCOUNTING POLICIES (Cont d) (n) Foreign currency translations The Group companies maintain their books and records in RMB. Transactions in other currencies are translated into RMB at exchange rates prevailing at the time of transactions. Monetary assets and liabilities denominated in other currencies at the balance sheet date are re-translated at exchange rates prevailing at that date. Non-monetary assets and liabilities in other currencies are translated at historical rates. Exchange differences are recognized in the consolidated income statement in the period in which they arise. (o) Borrowing costs Borrowing costs include interest charges and other costs incurred in connection with the borrowing of funds, including amortization of discounts or premiums relating to borrowings, amortization of ancillary costs incurred in connection with arranging borrowings and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Borrowing costs are expensed as incurred, except when they are directly attributable to the acquisition, construction or production of the property, plant and equipment that necessarily takes a substantial period of time to get ready for its intended use in which case they are capitalized as part of the cost of that asset. Capitalization of borrowing costs commences when expenditures for the asset and borrowing costs are being incurred and the activities to prepare the asset for its intended use are in progress. Borrowing costs are capitalized at the weighted average cost of the related borrowings until the asset is ready for its intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded. (p) Pension scheme Pursuant to the PRC laws and regulations, contributions to the basic old age insurance for the Group s staff are to be made monthly to a government agency based on 26% of the standard salary set by the provincial government, of which 20% is borne by the Group and the remainder is borne by the staff. The government agency is responsible for the pension liabilities relating to such staff on their retirement. The Group accounts for these contributions on an accrual basis

56 2. PRINCIPAL ACCOUNTING POLICIES (Cont d) (q) Financial instruments Financial assets and financial liabilities carried on the balance sheet include cash and cash equivalents, trade and other receivables, trade and other payables, balances with related companies and borrowings. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in Note 2. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interests, dividends, gains, and losses relating to a financial instrument classified as a liability are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group companies have a legally enforceable right to offset and intend to settle either on a net basis or to realize the asset and settle the liability simultaneously. (r) Impairment of assets Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized in the consolidated income statement. The recoverable amount is the higher of an asset s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm s length transaction while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cashgenerating unit. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. The reversal is recorded in the consolidated income statement. (s) Contingencies Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognized in the financial statements but disclosed when an inflow of economic benefits is probable. (t) Subsequent events Post-year-end events that provide additional information about a company s position at the balance sheet date or those that indicate the going concern assumption is not appropriate are reflected in the financial statements. Post-year-end events that are not adjusting events are disclosed in the notes of the financial statements when material

57 3. PROPERTY, PLANT AND EQUIPMENT, NET Vessels Buildings Machinery and equipment Motor vehicles Constructionin-progress Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Cost Balance as of January 1, , ,661 14,907 9,347 4, ,100 Additions 24,779 5,995 1,215 1, ,743 Disposals (32,568) (310) (299) (1,475) - (34,652) Balance as of December 31, , ,346 15,823 9,622 4, ,191 Additions 28 2,479 1,183 1,127-4,817 Transfers - 4, (4,524) - Disposals - (1,641) - (489) - (2,130) Balance as of December 31, , ,708 17,006 10, ,878 Accumulated depreciation Balance as of January 1, ,774 2,444 8,732 8, ,006 Charge for the year 26,692 4,441 2,256 1,758-35,147 Disposals (19,552) (98) (150) (764) - (20,564) Balance as of December 31, ,914 6,787 10,838 9, ,589 Charge for the year 27,053 5,326 2,345 1,248-35,972 Disposals (242) - (242) Balance as of December 31, ,967 12,113 13,183 10, ,319 Net book value Balance as of December 31, , ,595 3, ,559 Balance as of December 31, , ,559 4, , ,602 Approximately RMB185,793,000 (1999: approximately RMB189,563,000) of the Group s buildings and vessels were mortgaged as collateral to support the Company s borrowings which are detailed in Note 8. As of December 31, 2000 and 1999, the amount of construction-in-progress did not include any borrowing costs capitalized. In the opinion of the directors, the recoverable amount of property, plant and equipment as of December 31, 2000 and 1999 was not less than their carrying values

58 4. INVESTMENT IN SUBSIDIARIES As of December 31, 2000, the Company had the following subsidiaries: Percentage of equity Place of interest held Name incorporation Registered capital Direct Indirect Principal activities RMB 000 Zhu Hai Bei Yang Shippin Company Yangzhou Yuyang Shipping Co., Ltd. PRC 34, % - Operations of international short-haul container shipping business PRC 16,000 52% - Operations of international short-haul container shipping business Tianjin TMSC Customs Broker PRC 2, % - Provision of customs declaration services TMSC Shipping Agencies Co. PRC 3, % - Provision of international shipping agency services TMSC Freight Agencies Co. PRC 8, % - Provision of international freight agency services Bohai Foreign Trade Service Co., Ltd. Joint PRC 5,000 60% - Provision of international freight agency services Shanghai TMSC Freight Agencies Co., Ltd. Tianjin TMSC Airtransportation Agencies Co., Ltd. Beijing TMSC North Freight Agency Co., Ltd. Tianjin TMSC Crew Service Co., Ltd Shanghai TMSC Marine Shipping Co., Ltd. PRC 8, % 29.25% Provision of international freight agency services PRC 3,000 83% 17% Provision of international and domestic air-transportation agency services PRC 5,000 46% 54% Provision of international shipping agency services PRC % 33% Provision of crew service PRC 35, % 2.1% Operations of international short-haul container shipping business Asian Pioneer Maritime Limited Republic of Liberia 500 shares without par value 100% - Operations of international short-haul container shipping business Sky Glory Shipping Ltd. Republic of Liberia 500 shares without par value - 100% Operations of international short-haul container shipping business Sky Fortune Shipping Ltd. Republic of Liberia 500 shares without par value - 100% Operations of international short-haul container shipping business Brilliant Star Limited Republic of Liberia 500 shares without par value - 100% Operations of international short-haul container shipping business Sky Star Limited Republic of Liberia 500 shares without par value - 100% Operations of international short-haul container shipping business Except for Shanghai TMSC Marine Shipping Co., Ltd., which was established in 2000, the Company s subsidiaries as of December 31, 2000 were same as those on December 31,

59 5. TRADE RECEIVABLES, NET RMB 000 RMB 000 Trade receivables 112, ,886 Less: provision for doubtful debts (80,358) (60,545) 6. SHARE CAPITAL 31, ,341 As of December 31, 2000, the outstanding share capital represented state-owned shares, legal person shares, A shares and B shares. The details of share capital were as follows: Registered, issued and fully paid: Number of shares RMB 000 RMB 000 (in thousands) Listed - A shares of RMB1 each 79,761 79,761 79,761 79,761 - B shares of RMB 1 each 180, , , ,000 Unlisted - State-owned shares-held by Tian Hai Group Company of RMB1 each 181, , , ,368 - Legal person shares of RMB 1 each 24,871 24,871 24,871 24, , , , ,000 Pursuant to a board resolution dated April 28, 1999 and the approval of shareholders meeting held on June 11, 1999, the profit distribution plan for the year ended December 31, 1998 included bonus shares of 6 shares per 10 shares held appropriated from retained profits (amounting to RMB139,800,000), and capitalization of capital reserve of 4 shares per 10 shares held (amounting to RMB93,200,000). This distribution plan has been reflected in the consolidated financial statements for the year ended December 31,

60 7. RESERVES According to the Company Laws of the PRC and Articles of Association of the Company, the Company is required to provide certain statutory reserves which are appropriated from the net profit as reported in the statutory accounts prepared in accordance with PRC accounting standards and the accounting regulations applicable to joint stock companies ( PRC GAAP ). Accordingly, the Company shall set aside 10% of its net profit for the statutory revenue reserve fund (except where the fund has reached 50% of the Company s registered capital) and 5% to 10% for the statutory common welfare fund. The Company may make appropriations from its net profit to the discretionary revenue reserve fund upon approval by shareholders. These reserves cannot be used for purposes other than those for which they are created and are not distributable as cash dividends without the prior approval by shareholders under certain conditions. The directors have resolved that the statutory common welfare fund is to be utilized to build or acquire capital items, such as dormitories and other facilities for the Group s employees, and cannot be used to pay for staff welfare expenses. Title to these capital items will remain with the Group. For the year ended December 31, 2000, the directors proposed that 10% and 9% respectively (1999:10% and 9%) of the net profit as reported in the statutory accounts be appropriated to statutory revenue reserve fund and statutory common welfare fund, totaling approximately RMB18,465,000 (1999: approximately RMB9,499,000). The resolution is subject to approval by shareholders in the annual general meeting. 8. BANK BORROWINGS (a) Short-term bank borrowings As of December 31, 2000, the Group had short-term bank borrowings granted by various banks amounting to approximately RMB382,244,000 (1999: approximately RMB203,903,000), of which approximately RMB85,400,000 (1999: approximately RMB79,895,000) was secured by US$ bank time deposits and property, plant and equipment of the Group (see Note (c)) and approximately RMB291,844,000 (1999: approximately RMB106,207,000) was guaranteed by Tian Hai Group Company. As of December 31, 2000, short-term bank borrowings bore interest at rates ranging from 5.6% to 7.8% per annum. As of December 31, 1999, short-term bank borrowings equivalent to approximately RMB186,103,000 bore interest at rates ranging from 6.1% to 11.1% per annum and equivalent to approximately RMB17,800,000 bore interest at LIBOR plus 2.5% per annum

61 8. BANK BORROWINGS (Cont d) (b) Long-term bank borrowings RMB 000 RMB 000 Secured bank borrowings Mortgage bank borrowings 166, ,916 Guaranteed bank borrowings - guaranteed by Yangzhou Shipping Agencies Group Company (a subsidiary s another shareholder) 5,000 9,000 - guaranteed by Tian Hai Group Company - 8, , ,195 Current portion of long-term bank borrowings (19,487) (8,279) 151, ,916 As of December 31, 2000, the mortgage bank borrowings were secured by certain property, plant and equipment of the Group (see Note (c)). Long-term bank borrowings equivalent to approximately RMB54,668,000 (1999: RMB17,279,000) bear interest at rates ranging from 6.4% to 7.8% per annum (1999: 7.2%), and equivalent to approximately RMB116,411,000 (1999: approximately RMB130,916,000) bear interest at LIBOR plus 2.5% per annum (1999: LIBOR plus 2.5%). (c) The bank borrowings were secured by the following assets: (i) bank time deposits in US$ equivalent to approximately RMB 28,635,000 (1999: nil); (ii) certain buildings with an aggregate net book value of approximately RMB104,275,000 (1999: approximately RMB103,531,000); (iii) certain vessels amounting to approximately RMB81,518,000 (1999: approximately RMB86,032,000). 9. REVENUE RMB 000 RMB 000 Container shipping income 678, ,141 Commission income 4,858 6,890 Lease income 28,405 - Others 12,249 9, , ,

62 10. OTHER OPERATING INCOME RMB 000 RMB 000 Crew lending profit 262 1,326 Income from container lessees who failed to return the containers on time 9,511 4,309 Interest income on bank deposits 1,467 1,449 Others 1,991 (3,009) 13,231 4, FINANCE COST RMB 000 RMB 000 Interest expense 32,482 30,673 Less: interest capitalized - - Exchange loss (gain) 21,090 (13,379) Others ,431 17,

63 12. PROFIT BEFORE TAX Profit before tax was arrived at after crediting and charging the following: RMB 000 RMB 000 Crediting Interest income on bank deposits (1,467) (1,449) Exchange gain - (13,379) Charging Staff costs - salaries and wages 11,087 8,969 - provision for staff welfare 1,846 1,228 - contribution to defined contribution pension scheme 2,237 1,899 15,170 12,096 Operating lease rentals - vessels 113,084 21,947 - containers 44,967 30,258 - others 1,214 1,544 Depreciation of property, plant and equipment 35,972 35,147 Provision for doubtful debts 19,813 20,765 Bunker oil, ship stores and spare parts 83,500 35,000 Domestic and overseas port charges 307, ,699 Container expenses (excluding operating lease rentals) 24,156 24,054 Interest expense 32,482 30,673 Exchange loss 21, INCOME TAX EXPENSE For the year ended December 31, 2000, income tax rates applicable to the Group companies were as follows: The Company 15% Zhu Hai Bei Yang Shipping Company 15% Group companies incorporated in the Republic of Liberia 0% Other companies 33% The Company is a foreign invested joint stock limited company as approved by the Ministry of Foreign Trade and Economic Co-operation of the PRC (see Note 1). According to relevant PRC tax laws and regulations, foreign invested enterprises in the transportation industry located in old urban area of the Coastal Open Economic Zone are subject to preferential enterprise income tax rate of 15%. Based on the above regulations, the Company is entitled to the preferential enterprise income tax rate of 15%

64 13. INCOME TAX EXPENSE (Cont d) The reconciliation of the statutory tax rate to the effective tax rate was as follows: RMB 000 RMB 000 Accounting profit 88, % 58, % Tax at the statutory tax rate of 15% (1999: 15%) 13,263 15% 8,756 15% Tax effect of expenses that are not deductible in determining taxable profit 5,726 6% 3,135 5% Effect of tax holidays enjoyed by subsidiaries (5,320) (6%) - - Income tax expense 13,669 15% 11,891 20% For the year ended December 31, 2000, there was no significant deferred taxation (1999: Nil). 14. DIVIDENDS RMB 000 RMB 000 Dividends declared before year end - - Dividends declared after year end - - In accordance with relevant regulations of the PRC and the Articles of Association of the Company, the Company declares dividends based on the lower of retained profits as reported in the statutory accounts and the financial statements prepared in accordance with IAS. As the statutory accounts have been prepared in accordance with PRC GAAP, the retained profits as reported in the statutory accounts will be different from the amount reported in the accompanying consolidated financial statement. As of 31 December 2000, the retained profits before final dividends reported in the statutory accounts were approximately RMB229,460,000 (1999: approximately RMB165,658,000)

65 15. EARNINGS PER SHARE Basic earnings per share were calculated based on the consolidated net profit for the year attributable to shareholders of approximately RMB73,852,000 (1999: approximately RMB46,482,000) divided by the weighted average number of shares outstanding during the year ended December 31, 2000 of 466,000,000 shares (1999: 466,000,000 shares). No diluted earnings per share were presented as there were no potential dilutive ordinary shares outstanding during the year. 16. NOTES TO THE CASH FLOW STATEMENTS (a) Reconciliation from profit before tax to cash generated from operations: RMB 000 RMB 000 CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 88,419 58,373 Adjustments for: Provision for doubtful debts 19,813 20,765 Depreciation of property, plant and equipment 35,972 35,147 Loss on disposal of property, plant and equipment ,088 Interest expense 32,482 30,673 Interest income (1,467) (16,065) Operating profit before working capital changes 175, ,981 Decrease in due from the largest shareholder 132, ,320 Decrease (increase) in trade receivables 48,578 (25,047) Increase in due from other related companies (388,420) (87,812) Increase in prepayments and other receivables (35,241) (12,734) (Decrease) increase in trade payables (1,737) 15,041 (Decrease) increase in other current liabilities (5,698) 34,815 Cash generated from operations (74,865) 181,

66 16. NOTES TO THE CASH FLOW STATEMENTS (Cont d) (b) Analysis of the balances of cash and cash equivalents RMB 000 RMB 000 Cash in hand Bank current deposits 119,666 69,230 Bank time deposits 34, ,203 69,403 (c) Non-cash transactions RMB 000 RMB 000 Transfer of investments in and receivable from associates to Tian Hai Group Company (Note 17(b)(iv)) - 98, RELATED PARTY TRANSACTIONS (a) Transactions in the ordinary course of business The following is a summary of significant transactions carried out by the Group with related companies in the ordinary course of business: RMB 000 RMB 000 Container rental expenses 23,121 23,649 Agency commission expenses 1, Container rental income (2,140) (9,856) Agency commission income - (4,939) Crew lending income (4,102) (3,426) The container rental expenses payable to a related company are based on annual container rental agreements signed between the Company and the related company. For the years ended December 31, 2000 and 1999, the related company charged the Group container rental expenses at the following daily rates: US$ US$ 20-foot container foot container

67 17. RELATED PARTY TRANSACTIONS (Cont d) (a) Transactions in the ordinary course of business (Cont d) Pursuant to an agreement between the Company and Tian Hai Group Company effective from October 30, 1995, Tian Hai Group Company provides the Company with certain shipping support services. The consideration payable by the Company to Tian Hai Group Company is determined in accordance with State price or where there is no State price, at market price. Under the same agreement, the Company provides services to Tian Hai Group Company as and when required by the latter at market price. The agreement is valid for a term of five years. During the year ended December 31, 2000, the above agreement was expired and not renewed. The Company and Tian Hai Group Company entered into specific service agreements according to their respective business needs as and when needed. (b) Other transactions with related companies (i) For the years ended December 31, 2000 and 1999, Tenjin Shipping Co., Ltd. ( Tenjin ), an agent in Japan, and Tsinlien Transportation Co., Ltd. ( Tsinlien ), an agent in Hong Kong, respectively agreed to pay the Group compensation for loss because of insufficient business in their respective locations. The compensation is as follows: Original currency RMB equivalent Original currency RMB equivalent Tenjin JP 867,570 67,255 JP 375,100 27,718 Tsinlien US$4,725 39,076 US$3,395 28, ,331 55,828 The compensation is calculated based on the amount per voyage as set out below in respect of the total number of voyages in the year: Original currency RMB equivalent Original currency RMB equivalent Tenjin JP 3, JP 2, Tsinlien US$ US$ Tenjin and Tsinlien are subsidiaries of Tian Hai Group Company

68 17. RELATED PARTY TRANSACTIONS (Cont d) (b) Other transactions with related companies (Cont d) (ii) According to an agreement entered into by the Company and Tian Hai Group Company dated September 8, 1997, after the planned issuance of additional 90,000,000 B shares, the Company would acquire a 80% equity interest in each of the following wholly-owned subsidiaries of Tian Hai Group Company at a total consideration of US$60,000,000. Each of these companies owns a vessel with a capacity of about 700 TEU and is engaged in the operations of international short-haul container shipping business. - Top Genius Maritime Ltd. - Sky Brilliance Shipping Ltd. - Sky Treasure Shipping Ltd. As the issuance of the additional B shares did not proceed as planned, the above three companies were not acquired by the Company. The vessels, however, were managed by the Group during the ten months ended October 31, On October 18, 1999, the Company entered into an agreement of Entrusting Management of Vessels with Tian Hai Group Company. Pursuant to the agreement, Tian Hai Group Company agreed to pay the Group management fees of approximately RMB8,870,000, calculated based on 3% of the value of the three vessels, in respect of the management services provided by the Group in the ten months ended October 31, According to charter agreements entered into in November 1999, the Company chartered the three vessels from the above three companies at a daily rate of US$6,635 (equivalent to approximately RMB55,000) for each vessel. The charter period will expire on January 10, For the year ended December 31, 2000, the Group incurred charter expenses of approximately RMB60,214,000 (1999: RMB9,009,000). (iii) During the year ended December 31, 1999, the Company entered into an agreement with Tian Hai Group Company whereby Tian Hai Group Company agreed to pay the Group interest of approximately RMB14,616,000 calculated on the basis of the average balance of part of the total amount due from Tian Hai Group Company during the year of approximately RMB249,850,000 and an annual average interest rate of 5.85%. According to a new repayment agreement entered into by the Company and Tian Hai Group Company on July 18, 2000 (see (c) below), for the year ended December 31, 2000, Tian Hai Group Company did not have to pay any interest for the amount due to the Group. (iv) (v) On December 10, 1999, the Company entered into an equity transfer agreement with Tian Hai Group Company whereby the Company transferred its equity interests in two associates to Tian Hai Group Company together with an amount due from one of these associates of approximately RMB97,320,000, at a consideration of RMB1,241,000 and RMB97,320,000 respectively. The loss resulting from the transfer was not significant. As of December 31, 2000, the Group had bank borrowings of approximately RMB291,844,000 (1999: approximately RMB114,486,000) that were guaranteed by Tian Hai Group Company; bank borrowings of approximately RMB5,000,000 (1999: approximately RMB9,000,000) were guaranteed by Yangzhou Shipping Agencies Group Company (a subsidiary s another shareholder) (see Note 8)