(a joint stock limited liability company incorporated in the People's Republic of China)

Stock Code : 3369

2020

Interim Report

IMPORTANT NOTICE

  1. The Board, the supervisory committee, the directors, supervisors and senior management of QHD Port hereby warrant that the contents of this interim report are true, accurate and complete, and there are no false representations, misleading statements or material omissions, and are jointly and severally responsible for the legal liabilities of the Company.
  1. All directors of QHD Port have attended the Board meeting.
  1. The interim report of the Company is unaudited.

IV.

CAO Ziyu, the head of QHD Port, GUO Xikun, the chief financial officer, and XIE Hui, the head of accounting department

(Accounting Officer) have declared that they warrant the truthfulness, accuracy and completeness of the financial

statements in this interim report.

  1. The profit distribution proposal or proposal to transfer capital reserve to share capital for the reporting period as considered by the Board
    Not Applicable

VI.

Statement for the risks involved in the forward-looking statements

√ Applicable □ Not applicable

Forward-looking statements, such as future plans and development strategies described in this report do not constitute an

actual commitment of the Company to investors. Investors should be aware of investment risks.

VII.

Is there any misappropriation of funds by the Controlling Shareholder and its related parties for non-operating

purposes

No

VIII.

Is there any external guarantee made in violation of the required decision-making procedures

No

IX.

Warning of major risks

The Company has described relevant risks in this report. Please refer to "V. (II) Potential Risks" of "Section IV Business

Discussion and Analysis" in this report for more details.

  1. Others
    □ Applicable √ Not applicable

CONTENTS

Section I

Definitions

2

Section II

Company Profile and Major Financial

3

Indicators

Section III

Business Highlights

6

Section IV

Business Discussion and Analysis

9

Section V

Significant Events

20

Section VI

Changes in Ordinary Shares and

44

Particulars of Shareholders

Section VII

Information of Preference Shares

50

Section VIII Directors, Supervisors and Senior

51

Management

Section IX

Corporate Bonds

52

Section X

Review Report

53

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

1

SECTION I DEFINITIONS

In this report, unless the context otherwise requires, the following terms have the meanings as follows:

DEFINITIONS OF COMMONLY USED TERMS

QHD Port

Qinhuangdao Port Co., Ltd.* (秦皇島港股份有限公司), a joint stock limited liability company

incorporated under the laws of the PRC on 31 March 2008

Company or the Company

Qinhuangdao Port Co., Ltd.* and its subsidiaries

Hebei Port, HPG, controlling shareholder or

Hebei Port Group Co., Ltd.* (河北港口集團有限公司), a limited liability company incorporated

QHD Port Group

under the laws of the PRC, previously known as Qinhuangdao Port Group Co., Ltd.* (秦皇島港務

集團有限公司), which directly holds 54.27% equity interest of the Company

Reporting Period

the six months ended 30 June 2020

corresponding period of 2019

the six months ended 30 June 2019

CSRC

China Securities Regulatory Commission

SSE

Shanghai Stock Exchange

Stock Exchange

The Stock Exchange of Hong Kong Limited

Hong Kong Listing Rules

the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited

Corporate Governance Code

the Corporate Governance Code set out in Appendix 14 to the Hong Kong Listing Rules

Model Code

Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to

the Hong Kong Listing Rules

Prospectus

the Prospectus for the Initial Public Offering and Listing of A Shares of Qinhuangdao Port Co.,

Ltd. issued by the Company on SSE on 13 July 2017

HPG Finance

Hebei Port Group Finance Company Limited (河北港口集團財務有限公司)

Cangzhou Mineral Port

Cangzhou Huanghuagang Mineral Port Co., Ltd.* (滄州黃驊港礦石港務有限公司), a company

established in the PRC with limited liability on 10 April 2012, with 97.59% of its equity interest

held by the Company as at the date of this report

Caofeidian Coal Port

Tangshan Caofeidian Coal Stevedoring Co., Ltd.* (唐山曹妃甸煤炭港務有限公司), a company

established in the PRC with limited liability on 29 October 2009, with 51.00% of its equity interest

held by the Company as at the date of this report

Cangzhou Bohai Port

Cangzhou Bohai Port Co., Ltd.* (滄州渤海港務有限公司), a company established in the PRC with

limited liability on 31 October 2007, with 96.08% of its equity interest held by the Company as at

the date of this report

A Share(s)

the domestic listed RMB ordinary share(s) in the share capital of QHD Port with a nominal value

of RMB1.00 each, which are listed on the SSE

H Share(s)

Hong Kong listed ordinary share(s) in the share capital of QHD Port with a nominal value of

RMB1.00 each, which are listed on the Stock Exchange

Harbor

land and water surface of the port within the territory of the port and demarcated by the

administrative agency of local government

Qinhuangdao Port

Qinhuangdao Port in Qinhuangdao City, Hebei Province

Caofeidian Port

Caofeidian Port Zone in Tangshan Port, Tangshan City, Hebei Province

Huanghua Port

Huanghua Port in Cangzhou City, Hebei Province

Throughput

a measure of the volume of cargo handled by a port. Where cargoes are transshipped, each

unloading and loading process is measured separately as part of throughput

Terminal

designated for mooring vessels, loading and unloading cargoes and boarding travelers

Berth

the place of a dock designated for a vessel to moor

Bulk cargo

loose commodity cargo that is transported in volume size including dry bulk cargo and liquid bulk

cargo

General cargo

a general terms for cargoes of various varieties, nature and packaging forms

TEU

a statistical conversion unit for containers, a container of twenty feet in length (i.e. one TEU)

Economic hinterland or Hinterland

Hinterland connected with the port by means of transportation, a territory scope in the port where

cargoes are generated from or cargoes to be transshipped through the port are consumed

Daqin Railway

the railway line from Hanjialing Station in Datong County, Shanxi Province to the Liucun South

Station in Qinhuangdao City, Hebei Province

Board or Board of Directors

The board of directors of QHD Port

Director(s)

Director(s) of QHD Port

Audit Committee

the Audit Committee of the Board

2

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION II COMPANY PROFILE AND MAJOR FINANCIAL INDICATORS

I. PROFILE OF THE COMPANY

Company name

秦皇島港股份有限公司

(in Chinese)

Abbreviation in Chinese

秦港股份

Company name (in English)

QINHUANGDAO PORT CO., LTD.

Abbreviation in English

QHD PORT

Legal representative

CAO Ziyu

of the Company

II. CONTACT PERSON AND CONTACT METHOD

Secretary to the Board

Securities

Representative

Name

MA Xiping

ZHANG Nan

35 Haibin Road,

35 Haibin Road,

Address

Qinhuangdao,

Qinhuangdao,

Hebei Province

Hebei Province

Telephone

0335-3099676

0335-3099676

Facsimile

0335-3093599

0335-3093599

E-mail

qggf@portqhd.com

qggf@portqhd.com

III. CHANGES IN BASIC INFORMATION

Registered address

35 Haibin Road, Haigang District,

of the Company

Qinhuangdao, Hebei Province

Postal code of registered

066001

address of the Company

Business address of

35 Haibin Road, Haigang District,

the Company in the PRC

Qinhuangdao, Hebei Province

Postal code of the business

address of the Company

066001

in the PRC

Website address of

www.portqhd.com

the Company

E-mail

qggf@portqhd.com

Enquiry index for changes

Not Applicable

during the reporting period

IV. CHANGE PROFILE OF INFORMATION DISCLOSURE AND PLACE FOR INSPECTION

Name of media of information

disclosure designated by the Securities Times Company

Website designated by the

CSRC for publication of www.sse.com.cn interim report

International website designated

by the Stock Exchange www.hkexnews.hk for information disclosure

Place where interim report of

The Securities Department

the Company is available for

of the Company

inspection

For details on change in designated

media of information disclosure,

Enquiry index for changes

please refer to the Announcement

on Change in Designated Media of

during the reporting period

Information Disclosure published

on SSE on 19 August 2020

(Announcement no.: 2020-021)

V. SHARES OF QHD PORT

Stock

Types of

Stock exchanges

Stock

Stock

abbreviation

Shares

of listing

abbreviation

codes

before

changes

Shanghai

A Shares

Stock

QHD PORT

601326

Not Applicable

Exchange

The Stock

H Shares

Exchange

QHD PORT

03369

Not Applicable

of Hong Kong

Limited

VI. OTHER RELEVANT INFORMATION □ Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

3

SECTION II COMPANY PROFILE AND MAJOR FINANCIAL INDICATORS

VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY

  1. Major accounting data

Unit: Yuan Currency: RMB

Increase/decrease for

For the

the Reporting Period

as compared to the

Reporting Period

Corresponding period

corresponding period

Major accounting data

(January - June)

of last year

of last year (%)

Operating revenue

2,995,402,079.12

3,390,705,885.07

-11.66

Net profit attributable to Shareholders of the listed Company

575,741,812.29

549,099,796.92

4.85

Net profit attributable to Shareholders of the listed Company after

deducting non-recurring profits and losses

554,253,555.09

517,397,115.31

7.12

Net cash flow generated from operating activities

1,271,720,867.36

1,526,884,323.54

-16.71

Increase/decrease for

the end of the

End of the

Reporting Period as

compared to the end of

Reporting Period

End of last year

last year (%)

Net assets attributable to Shareholders of the listed Company

14,744,134,191.58

14,610,442,895.38

0.92

Total assets

25,475,843,345.17

25,479,855,440.54

-0.02

(II)

Major financial indicators

Increase/decrease for

For the

the Reporting Period

as compared to the

Reporting Period

Corresponding period

corresponding period

Major financial indicators

(January - June)

of last year

of last year (%)

Basic earnings per share (RMB/Share)

0.10

0.10

0

Diluted earnings per share (RMB/Share)

0.10

0.10

0

Basic earnings per share after deducting non-recurring profits and

losses (RMB/Share)

0.10

0.09

11.11

Decrease by

Weighted average return on net assets (%)

3.86%

3.87%

0.01 percentage point

Weighted average return on net assets after deducting non-recurring

Increase by

profits and losses (%)

3.71%

3.65%

0.06 percentage point

Description of major accounting data and financial indicators of the Company

  • Applicable √ Not applicable

VIII. DIFFERENCE IN ACCOUNTING DATA BETWEEN DOMESTIC AND OVERSEAS ACCOUNTING STANDARDS

□ Applicable √ Not applicable

4

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION II COMPANY PROFILE AND MAJOR FINANCIAL INDICATORS

IX.

NON-RECURRING PROFIT AND LOSS ITEMS AND THEIR AMOUNTS

√ Applicable □ Not applicable

Unit: Yuan Currency: RMB

Non-recurring profit and loss items

Amount

Note (if applicable)

Profit or loss on disposal of non-current assets

683,884.29

Tax refund or exemption in relation to documents of unauthorized approval

or without formal approval or of incidental nature

Government grants recognized in profit or loss (except for the government

grants that are closely related to the business of the Company and received

in accordance with the uniform state's regulations)

28,406,800.68

Fund possession cost paid by non-financial enterprises and recorded

under current profit and loss

The excess of the fair value of identifiable net assets acquired over the cost for

acquisition of subsidiaries, associates and joint ventures

Profit/loss of non-monetary asset swap

Profit/loss from entrusted investment or asset management

1,296,562.42

Provision for impairment of assets due to force majeure i.e. natural disaster

Profit/loss from debt restructuring

Corporate restructuring expenses, i.e. expenses on employee placement,

integration costs, etc.

Profit/loss from the excess of the fair value of a transaction of unfair consideration

Current net profit/loss of subsidiaries resulting from merger of enterprises under

common control from the beginning of the period to the date of merger

Profit/loss from contingencies irrelevant to the normal operations of the Company

Profit/loss from the change of fair value of financial assets held for trading,

derivative financial assets, financial liabilities held for trading, derivative

financial liabilities and investment income from the disposal of financial assets

held for trading, derivative financial assets, financial liabilities held for trading,

derivative financial liabilities and other debt investment except for those gain/

loss relating to the hedging transactions under company's normal operating

business

Write back of the provision for impairment of accounts receivable,

contract assets that is individually tested for impairment

2,007,863.00

Profit/loss from external entrusted loans

Profit/loss from changes in fair value of investment properties using the

fair value model for subsequent measurement

Effects of one-off adjustment to current profit/loss in accordance with laws

and regulations on taxation and accounting, etc.

Income of entrustment fees from entrusted operations

Other non-operating income or expenses other than the above items

-3,469,284.18

Other profit or loss items that fall within the meaning of non-recurring

profit and loss

Impact on non-controlling interests

-505,276.88

Impact on income tax

-6,932,292.13

Total

21,488,257.20

X. OTHERS

□ Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

5

SECTION III BUSINESS HIGHLIGHTS

  1. PRINCIPAL BUSINESS, OPERATING MODEL AND INDUSTRY DEVELOPMENT OF THE COMPANY DURING THE REPORTING PERIOD
    1. Principal Business
      The Company provides highly integrated port services including stevedoring, stacking, warehousing, transportation and logistics services. We handle various types of cargoes mainly including coal, metal ores, oil and liquefied chemicals, containers, general cargoes and other goods.
  1. Operating Model
    1. Procurement Model
      The Company is mainly engaged in stevedoring and stacking cargo, port management and relevant supporting services, and as compared with production enterprises, it has less demand of raw materials. Major purchases of the Company include resources, stevedoring and transportation equipment.
      The purchase of resources includes materials, low-value consumables, energy (including water and electricity) and accessories, among which, the purchase of energy accounts for the majority of the total purchase of the Company. All of the above production materials shall be independently purchased by the Company through entering into relevant contracts. Resources of more than RMB100,000 and qualified for tendering shall be purchased by the Company by way of tendering, and resources of more than RMB500,000 shall be purchased through public tendering. Resources of under RMB100,000, which are not subject to tendering, shall be purchased through comparison of quality and price, business negotiation and catalogue procurement.
      The purchase of stevedoring and transportation equipment will be conducted by the technology and equipment department, resource supply center and various primary units according to the type of equipment.
    2. Production Model
      Main production processes of the Company include cargo stevedoring, cargo stacking and handling within the port, and stevedoring of cargos by road transportation.
      The Company has a complete production operation system and organizational management system, complete terminal and logistics facilities and ancillary machinery equipment system, complete and independent information operation, management and network system for the operation of various production businesses.
    3. Marketing Model
      The Company has an independent marketing system to continuously improve its service level, maintain its existing customer base, and actively explore new customer resources.
      1. Marketing Model of Coal Business
        The Company has an independent marketing system for its coal business, and the port coal business is directly managed by the Company's production department with no distribution and agency system. The Company has set up offices in Taiyuan and Hohhot, covering the whole hinterland of cargo sources and coordinating cargo flow.
        The Company mainly negotiated business by attending transportation conferences of various industries and order placing meetings across the country, and adopted the mode of mutual visits between ports and customers. At the same time, the Company continued to improve its service quality, carried out in-depth marketing work, established and improved its online marketing system to provide "one-stop" services to customers. The Company will adjust and optimize the existing business model according to the changes in the market situation, actively communicate with customers, carry out various featured businesses such as coal blending business, special facilities, quasi-liner shipping and online business platform, enter into long-term port operation contracts with major coal shipping enterprises and end users of coal, jointly determine the base of annual transshipment volume, and appropriately provide reserved stacking yards and berths to facilitate coal transshipment by customers using port resources.
      2. Marketing Model of Business of Other Types of Cargo
        The Company made reference to the marketing model of coal to determine the marketing model of business of other cargo types, so as to establish an extensive and stable sales network, actively explore business opportunities in the economic hinterland and establish stable and long-term cooperation relationship with customers.

6

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION III BUSINESS HIGHLIGHTS

  1. Industry Overview

Port is the hub of resource allocation and plays a vital role in the transportation system. The port industry is an important fundamental industry for national economic and social development and is closely related to the development of macro economy. Port plays an important role in meeting the transportation need of national energy, raw materials and other bulk materials, supporting economic, social and trade development, improving people's living standards, and enhancing the comprehensive strength of the country.

The cargoes for transshipment at ports are divided into five major categories, namely dry bulk cargo, liquid bulk cargo, general cargo, containers and Ro-Ro vehicles. Transportation of bulk cargo in bulk and general cargo in container is conducive to enhancing transport efficiency and reducing transport costs, which has become the development trend in the global marine transportation industry.

With the continuous expansion of the functions of ports, port enterprises have gradually developed from a pure sea-land cargo transshipment provider to an integrated logistics service provider, providing integrated logistics support for the transportation by vessels, vehicles and trains as well as the storage, driving the formation of a port-surrounding industrial park with processing, wholesale, distribution, storage and other functions near the ports, which greatly enhanced the competitiveness of the ports as integrated transportation connection points.

The Company is a large-scale public terminal operator for dry bulk cargoes in the world. Qinhuangdao Port is an important port of the "West-East coal transportation" and "North-South coal transportation" in coal transportation in China, and has maintained a leading position in terms of the amount of water discharged from coal for many years. With the implementation of the cross-port operation strategy, Caofeidian Coal Port has been put into operation in the past few years and the business of Cangzhou Mineral Port continues to develop. The Company has carried out diverse business strategy and intensified its efforts in ore, container and general cargo.

  1. MATERIAL CHANGES IN MAJOR ASSETS OF THE COMPANY DURING THE REPORTING PERIOD
    √ Applicable □ Not applicable

Please refer to "III. (III) Analysis of assets and liabilities" of "Section IV Business Discussion and Analysis" for the details of changes in major assets.

Including: overseas assets of 63,011,911.94 (Unit: Yuan, Currency: RMB), representing 0.25% of the total assets.

  1. ANALYSIS OF THE CORE COMPETITIVENESS DURING THE REPORTING PERIOD
    √ Applicable □ Not applicable
  1. The Company is a leading public terminal operator for dry bulk cargoes in the world. It implements the cross-port operation strategy of Qinhuangdao Port, Tangshan Port and Cangzhou Port,
    and operates Qinhuangdao Port, which is an important port for seaborne coal in China, and continuously expands the business in Tangshan region and Cangzhou region.
    As an important port of the "West-East coal transportation" and "North-South coal transportation" in coal transportation in China, Qinhuangdao Port plays an important role in ensuring the safety of national energy transportation. In recent years, the Company has further expanded its business in Tangshan Caofeidian and Cangzhou Huanghua Port. The Phase 2 of coal terminal project in Caofeidian Port Zone of Tangshan Caofeidian Coal Port Co., Ltd.*, a subsidiary of the Company, officially commenced operation in 2019. The construction of Phase 1 (expansion) of metal ores terminal project in the bulk cargo area of Huanghua Port in Cangzhou City officially started in June 2020.
  2. The economic hinterland of the Company covers a wide range of areas with large service radius, and has a solid foundation for development.
    The economic hinterland of the Company mainly includes upstream and downstream part: the upstream part mainly comprise North China, Northeast China and Northwest China, as well as Shandong and Henan which are important production bases of energy and raw materials in China. Meanwhile, they are also important bases of heavy chemical industry of China, providing sufficient supply for the business development of the Company; while the downstream part mainly comprise Shanghai, Jiangsu, Zhejiang, Fujian, Guangdong and other provinces (cities).The above-mentioned provinces (cities) are not only the main areas where resources are consumed in China, but also the areas where resources are scarce. Strategic materials such as oil, coal, iron ore and grain are required to be imported in large quantities or transported from other regions of China.
    The Company has continuously improved its economic service capacity for the Hinterland, and has opened a number of inland ports, container depots and new routes, further enhancing its service capacity for the port Hinterland in the "Three Norths" area and central and southern Hebei.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

7

SECTION III BUSINESS HIGHLIGHTS

  1. The Company has superior port resources and transportation conditions in bulk or sparse shipping
    The Bohai Rim region is located along the northern coast of China, with the coastline length accounting for approximately one-third of the country, and where more than 40 ports are widely distributed. The ports have good natural conditions, marine transportation, railways, highways and air transportation routes are highly concentrated, forming a three-dimensionalland-sea-air transportation network centered on ports, and the collection and distribution are convenient. Daqin Railway, which relies on the Qinhuangdao and Caofeidian ports of the Company, is the largest modern and professional coal transportation line in the world in terms of annual transportation volume. The Company continues to promote the construction of the "transformation from road haulage to rail-freight transport" project to open new special railway lines, thereby further enhancing the railway port dredging capacity.
  2. The Company has targeted at large-scalehigh-quality customers and constantly promotes marketing and continuously improves service quality
    Our customers are mainly large-scale coal, electricity and steel enterprises, including National Coal Group, National Energy Investment Group, Zhejiang Energy Group, Yitai Group, Datong Coal Mine Group, Shougang Group and Hebei Iron & Steel Group.
    The Company has strengthened the implementation of grid-based marketing, further consolidated the responsibility system of account managers, optimized the business handling process of online business halls, and made every effort to meet the personalized reasonable requirements of customers and improve customer satisfaction.
  3. The Company constantly enhances its efforts in technology innovation and project construction.
    The Company has completed the construction of the supporting security system for the cloud data center of the Smart Port Demonstration Project of the Ministry of Transport, the online optimization of the intelligent production management platform, and the development of customer APP infrastructure. The network hall e-commerce platform has been promoted and applied in three places, namely Qinhuangdao, Caofeidian, and Cangzhou, and realized the entire online process of coal, metal ore, general and other cargoes and other businesses. The Company has promoted unmanned transformation and intelligent entrance system, so that trucks enter the port more safely and efficiently. The Company has intensified the renewal of equipment and facilities to improve operational efficiency.
  4. The Company promotes to reduce costs and increase efficiency, continuing to improve the operation and management levels.
    The Company has made full use of national policies, reduced taxation and financing costs. The Company has increased the integration of internal units, optimized the management structure, and withdrawn from loss-making investment companies. The Company has paid close attention to key cost control and reduced operating costs through transformation of management technology. The Company improved the salary management system and further optimized the salary structure. The Company has strengthened audit and supervision, and promoted the establishment of the compliance management system.
  5. The Company has been committed to building green and safe ports.
    The Company has invested in the construction of shore power facilities, enhanced the effort in updating mobile machinery, and carried out special treatment of mobile pollution sources. The Company has carried out the greening improvement project in the harbor to improve the greening level of the harbor. The Company has consolidated its responsibility for safe production, carried out the construction of a dual control system for safety risk identification and hidden danger management, and concentrated on rectifying hidden dangers in safe production.

8

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

  1. INDUSTRY OVERVIEW
    1. General Situation
      In the first half of 2020, in the face of the severe challenges posed by the outbreak of the COVID-19 epidemic (the "Epidemic"), all citizens across China conscientiously implemented the decisions and deployments of the Committee of the Communist Party and the State Council, as well as coordinated and facilitated the works on epidemic prevention and control and economic and social development. The situation of epidemic prevention and control continued to improve, with resumption of work, production and commercial activities proceeded smoothly. The effects of macroeconomic policies have gradually emerged, and economic growth has turned from negative to positive, reflecting a steady recovery in overall economy. In the first half of the year, China's GDP amounted to RMB45,661.4 billion on a constant price basis, representing a decrease of 1.6% as compared to the corresponding period of last year. In particular, the added value of the primary industry was RMB2,605.3 billion, representing an increase of 0.9%; the added value of the secondary industry was RMB17,275.9 billion, representing a decrease of 1.9%; and the added value of the tertiary industry was RMB25,780.2 billion, representing a decrease of 1.6%. In the second quarter, China's GDP was RMB25,011 billion on a constant price basis, representing an increase of 3.2% as compared to the corresponding period of last year, and a decline of 6.8% as compared to the first quarter. The economic growth rate has turned from negative to positive, while the overall economy is showing a rapid recovery trend.
    2. Overview of Port Industry in the PRC
      In the first half of 2020, with the implementation of regular epidemic prevention and control and various works on transportation for economic and social development started producing their effects, the major indicators of China's port industry have continued to recover and improve. According to the statistics from the Ministry of Transport, the cargo throughput in ports reached 6.75 billion tonnes during the first half of the year, representing a year-on-year increase of 0.6%. In particular, cargo throughout grew by 5.2% in the second quarter, maintaining growth for three consecutive months since April. In terms of different segments, the throughput of domestic trade decreased by 0.1%, while the throughput of foreign trade increased by 2.2%. The throughput of containers reached 120 million TEUs, representing a year-on-year decrease of 5.4%.
      For coal business, the accelerated recovery of coal production, rapid growth in imports and steady supply had provided secured energy supply for the continuous restoration of economic and social order. In the first half of 2020, the national raw coal output was 1.81 billion tonnes, representing a year-on-year increase of 0.6%. Coal imports were 170 million tonnes, representing a year-on-year increase of 12.7%, with growth rate 6.9 percentage points higher than that of the corresponding period of last year. During the first half of the year, the epidemic affected economic and social development in short run, thus adversely affected the coal demand to a certain extent. According to statistics published by China Electricity Council, the thermal power generation of national scale power plant was 2,434.3 billion kWh in the first half of the year, representing a year-on-year decrease of 1.6%, with growth rate declined by 1.8 percentage points as compared to the corresponding period of last year. During the first half of the year, the volume of coal railway shipment was 1.12 billion tonnes, representing a year-on-year decrease of 6.8%. As a result, there was a decline in domestic trade coal shipment in ports in Northern China during the first half of the year as compared to last year.
      For iron ore business, steel output grew steadily. There was greater demand in iron ores, and the import volume of iron ores has increased significantly. In the first half of the year, the national output of pig iron, crude steel and steel reached 432.68 million tonnes, 499.01 million tonnes and 605.84 million tonnes, representing a year-on-year increase of 2.2%, 1.4% and 2.7%, respectively. In the first half of the year, 547 million tonnes of imported iron ores were inspected by customs, representing an increase of 9.6% as compared to the corresponding period of last year. As driven by import growth, iron ore loading and unloading volume in major coastal ports of Northern China recorded growth to a different extent.
      For oil business, in the first half of the year, crude oil production reached 96.5 million tonnes, representing a year-on-year increase of 1.5%. Import growth remained steady. The volume of imported crude oil reached 269 million tonnes, representing a year-on-year increase of 9.9%. Due to the growth in foreign trade imported crude oil, during the first half of the year, the crude oil throughput in most of the coastal ports has increased as compared to last year.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

9

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

II DISCUSSION AND ANALYSIS OF OPERATIONS

During the Reporting Period, the Company achieved a total cargo throughput of 175.60 million tonnes, representing a decrease of 14.29 million tonnes or 7.53% as compared to the throughput of 189.89 million tonnes in the corresponding period of 2019.

The throughputs generated from each of the ports of the Company are as follows:

First half year of 2020

First half year of 2019

Percentage of

Percentage of

Increase/

Throughput

total throughput

Throughput

total throughput

(decrease)

Increase/

(million tonnes)

(%)

(million tonnes)

(%)

(million tonnes)

(decrease) (%)

Qinhuangdao Port

89.70

51.08

107.88

56.81

(18.18)

(16.85)

Caofeidian Port

52.21

29.73

50.09

26.38

2.12

4.23

Huanghua Port

33.69

19.19

31.92

16.81

1.77

5.55

Total

175.60

100.00

189.89

100.00

(14.29)

(7.53)

During the Reporting Period, the Company achieved a cargo throughput of 89.70 million tonnes in Qinhuangdao Port, representing a decrease of 18.18 million tonnes or 16.85% from 107.88 million tonnes for the corresponding period of 2019. The decrease was mainly due to the impacts of the Epidemic, the decline in power consumption of downstream enterprises due to insufficient operation, the decrease in the daily consumption of power plants as compared with the corresponding period of last year and the decline in coal demand. As a result, coal throughput in Qinhuangdao Port has dropped greatly.

The Company achieved a cargo throughput of 52.21 million tonnes in Caofeidian Port, representing an increase of 2.12 million tonnes or 4.23% from 50.09 million tonnes for the corresponding period of 2019. The increase was mainly due to the increase in infrastructure investments, as supported by national economic policies, stimulated the demand for iron and steel, thus driving the import and export of iron ore.

The Company achieved a cargo throughput of 33.69 million tonnes in Huanghua Port, representing an increase of 1.77 million tonnes or 5.55% from 31.92 million tonnes for the corresponding period of 2019. The increase was mainly due to the stable ore demand of steel enterprises in the Hinterland of the port, the improvement of port railway and automobile transportation efficiency, and the transfer of some ore sources from the surrounding ports to the water source of Huanghua Port.

The cargo throughput of each type of cargoes handled by the Company is set out below:

First half year of 2020

First half year of 2019

Percentage of

Percentage of

Increase/

Throughput

total throughput

Throughput

total throughput

(decrease)

Increase/

(million tonnes)

(%)

(million tonnes)

(%)

(million tonnes)

(decrease) (%)

Coal

100.12

57.02

119.52

62.94

(19.40)

(16.23)

Metal ore

57.47

32.73

52.80

27.81

4.67

8.84

Oil and liquefied chemicals

1.14

0.65

1.41

0.74

(0.27)

(19.15)

Container

6.71

3.82

8.26

4.35

(1.55)

(18.77)

General and other cargoes

10.16

5.78

7.90

4.16

2.26

28.61

Total

175.60

100.00

189.89

100.00

(14.29)

(7.53)

10

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

  1. Dry bulk cargoes handling services
    The dry bulk cargoes handling services of the Company mainly include coal and metal ores handling services. During the Reporting Period, the Company recorded a total dry bulk cargoes throughput of 157.59 million tonnes, representing a decrease of 14.73 million tonnes or 8.55% from 172.32 million tonnes for the corresponding period of 2019.
    During the Reporting Period, the Company achieved a total coal throughput of 100.12 million tonnes, representing a decrease of 19.40 million tonnes or 16.23% from 119.52 million tonnes for the corresponding period of 2019. Such decrease was mainly due to the downward pressure on the economy caused by the epidemic. In addition, substantial amount of imported coal was cleared and landed during the first half of the year, resulting in sluggish domestic trade coal demand.
    During the Reporting Period, the Company achieved a total metal ores throughput of 57.47 million tonnes, representing an increase of 4.67 million tonnes or 8.84% from 52.80 million tonnes for the corresponding period of 2019. Such increase was mainly due to the increase in the demand for ore from steel mills in the Hinterland as driven by the national economic policies, and the significant increase in volume of "transformation from road haulage to rail-freight transport".
  2. Oil and liquefied chemicals handling services
    During the Reporting Period, the Company recorded a total oil and liquefied chemicals throughput of 1.14 million tonnes, representing a decrease of 0.27 million tonnes or 19.15% from 1.41 million tonnes for the corresponding period of 2019. The decrease was mainly due to the prolong suspension of operation of asphalt plants in the Hinterland during the Reporting Period as affected by the epidemic and fluctuations in the international crude oil market.
  3. Container services
    During the Reporting Period, the Company recorded a total container throughput of 610,641 TEUs, equivalent to a throughput of 6.71 million tonnes, representing increases in the number of containers handled and throughput of 32,638 TEUs (i.e. 5.65%) as compared with the number of containers handled and throughput of 578,003 TEUs and 8.26 million tonnes for the corresponding period of 2019, respectively. Such increase was mainly due to the launch of "Huanghua Port-Tianjin Port" daily service resulting in significant increase in container throughput.
  4. General cargoes handling services
    During the Reporting Period, the Company recorded a total throughput of general and other cargoes of 10.16 million tonnes, representing an increase of 2.26 million tonnes or 28.61% from 7.90 million tonnes for the corresponding period of 2019. Such increase was mainly due to the strong demand in infrastructure market of Southern China and the steady and continuous growth of the Company's sea-rail intermodal transportation business.
  5. Ancillary port services and value-added services
    The Company also provides a variety of ancillary port services and value-added services. Ancillary port services of the Group include tugging, tallying, trans-shipping, and shipping agency services. Our value-added services mainly include towing, tallying, coal blending and tariff-free warehouse and export supervisory warehouse services. In the first half year of 2020, the revenue of ancillary port services and value-added services of the Company amounted to RMB49,660,000, representing a decrease of RMB3,970,000 or 7.40% from RMB53,630,000 for the corresponding period of 2019.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

11

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

  1. OPERATING RESULTS OF MAJOR BUSINESSES FOR THE REPORTING PERIOD
    1. Analysis of major operating business
      1. Analysis of the changes in the relevant items in income statement and statement of cash flows
      Unit: Yuan Currency: RMB

Amount for the

Change in

Amount for the

corresponding period

proportion

Item

Reporting Period

of last year

(%)

Operating revenue

2,995,402,079.12

3,390,705,885.07

-11.66

Operating costs

1,782,650,850.89

1,891,445,242.95

-5.75

Selling expenses

0.00

61,464.53

-100.00

Administrative expenses

305,437,657.13

614,301,550.89

-50.28

Financial expenses

138,894,242.03

155,620,529.30

-10.75

Research and development expenses

3,076,399.45

3,871,210.49

-20.53

Net cash flows from operating activities

1,271,720,867.36

1,526,884,323.54

-16.71

Net cash flows from investing activities

-594,719,758.08

-169,537,081.38

-250.79

Net cash flows from financing activities

-634,023,684.44

-463,745,860.91

-36.72

Principal Operations of the Company by Industries, Products and Regions

Unit: Yuan Currency: RMB

Principal Operations by Industries

Increase/decrease

Increase/decrease

Increase/decrease

of revenue as

of operating cost

of gross profit

compared with

as compared

margin as

that in the

with that in the

compared with

corresponding

corresponding

that in the

Gross profit

period of last year

period of last year

corresponding

By industries

Revenue

Operating cost

Margin (%)

(%)

(%)

period of last year

Service in relation to coal

Decreased by 7.22

and relevant products

2,171,866,194.98

1,224,502,038.89

43.62

-17.69

-5.60

percentage points

Service in relation to metal ore

Increased by 2.43

and relevant products

504,440,332.91

334,357,852.21

33.72

1.91

-1.69

percentage points

Service in relation to general

Increased by 57.6

and other cargoes

207,377,652.74

132,895,195.40

35.92

65.13

-13.04

percentage points

Decreased by 3.79

Container service

37,984,737.32

35,607,229.73

6.26

-12.93

-9.26

percentage points

Service in relation to

Decreased by 15.11

liquefied cargoes

26,217,509.87

26,711,747.79

-1.89

-23.1

-9.71

percentage points

Increased by 0.44

Revenue from others

47,515,651.30

28,576,786.87

39.86

-11.41

-12.04

percentage point

Principal Operations by Regions

Increase/decrease

Increase/decrease

Increase/decrease

of revenue as

of operating cost

of gross profit

compared with

as compared

margin as

that in the

with that in the

compared with

corresponding

corresponding

that in the

Gross profit

period of last year

period of last year

corresponding

By regions

Revenue

Operating cost

Margin (%)

(%)

(%)

period of last year

Decreased by 3.73

Qinhuangdao

2,055,467,181.64

1,040,578,148.95

49.38

-21.31

-12.35

percentage points

Increased by 1.55

Others

939,934,897.48

742,072,701.94

21.05

4.54

2.66

percentage points

Reasons for changes in revenue: During the Reporting Period, revenue of the Company amounted to RMB2,995.4021 million, representing a decrease of 11.66% as compared to the corresponding period of last year, mainly due to the decrease in coal throughput of Qinhuangdao Port as affected by the Epidemic.

12

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

Reasons for changes in operating costs: During the Reporting Period, operating costs of the Company amounted to RMB1,782.6509 million, representing a decrease of 5.75% as compared to the corresponding period of last year, mainly due to the year-on-year decrease in labor costs attributable to the combined effect of employees who leave their posts and wait for retirement as well as the national social security relief policy during the Epidemic.

Reasons for changes in management expenses: During the Reporting Period, the Company's administrative expenses amounted to RMB305,437,700, representing a decrease of 50.28% as compared to the corresponding period of last year, mainly due to the provision for costs on employees who leave their posts and wait for retirement in the previous period.

Reasons for changes in financial costs: During the Reporting Period, the Company's financial costs amounted to RMB138,894,200, representing a decrease of 10.75% as compared to the corresponding period of last year, mainly due to the decrease in the amount of loans during the Reporting Period.

Reasons for changes in net cash flows from operating activities: During the Reporting Period, the Company's net cash flows generated from operating activities amounted to RMB1,271,720,900, representing a decrease of 16.71% as compared to the corresponding period of last year, mainly due to the decrease in cash generated from the sale of goods and provision of services attributable to the decrease in revenue as compared to the corresponding period of last year.

Reasons for changes in net cash flows from investing activities: During the Reporting Period, the Company's net cash flows generated from investing activities mounted to RMB-594,719,800, representing a decrease of 250.79% as compared to the corresponding period of last year, mainly due to the fact that Caofeidian Coal Port, a subsidiary of the Company, received disposal payments for land held for sale in the previous period, as well as the increase in time deposits with maturity of more than three months of the Company during the Reporting Period.

Reasons for changes in net cash flows from financing activities: During the Reporting Period, the Company's net cash flows from financing activities amounted to RMB-634,023,700, representing a decrease of 36.72% as compared to the corresponding period of last year, mainly due to the increase in shareholder dividends paid in the Reporting Period as compared to the corresponding period of last year.

  1. 2. Others

    1. Detailed explanation of major changes in the structure or sources of Company's profits
      • Applicable √ Not applicable
    3. Others
      • Applicable √ Not applicable
  2. Description of material changes in profits from non-major business
    • Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

13

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

  1. Analysis of assets and liabilities √ Applicable □ Not applicable

1. Assets and liabilities

Unit: Yuan

Proportion of the

Proportion of the

Percentage change

in the amount

amount at the end

amount at the

at the end of

of the Reporting

end of last year

the Reporting Period

Amount at the end

Period with respect

with respect to

as compared to

Items

to the total assets

Amount at the

the total assets

that at the end of

of the Reporting Period

(%)

end of last year

(%)

last year (%)

Description

Cash and bank balances

3,077,521,029.15

12.08

2,805,072,385.39

11.01

9.71

Financial assets held for trading

170,000,000.00

0.67

0.00

0.00

-

Bills receivable

194,097,706.00

0.76

172,344,886.06

0.68

12.62

Accounts receivable

92,362,178.38

0.36

81,480,463.58

0.32

13.35

Prepayments

13,562,578.41

0.05

10,763,773.91

0.04

26.00

Other receivables

154,734,310.25

0.61

47,843,613.54

0.19

223.42

Inventories

199,504,371.88

0.78

186,149,733.94

0.73

7.17

Other current assets

91,463,591.39

0.36

108,861,397.06

0.43

-15.98

Long-term equity investments

2,941,119,723.03

11.54

2,933,977,826.03

11.51

0.24

Other equity investments

817,446,118.17

3.21

792,793,162.66

3.11

3.11

Fixed assets

13,864,957,576.55

54.42

14,386,455,466.64

56.46

-3.62

Construction in progress

844,131,138.54

3.31

818,663,594.98

3.21

3.11

Right-of-use assets

130,017,661.39

0.51

136,087,991.44

0.53

-4.46

Intangible assets

2,406,602,150.64

9.45

2,442,851,949.55

9.59

-1.48

Long-term prepaid expenses

75,767,646.93

0.30

67,553,845.97

0.27

12.16

Deferred tax assets

367,099,832.83

1.44

410,276,375.66

1.61

-10.52

Other non-current assets

35,455,731.63

0.14

78,678,974.13

0.31

-54.94

Short-term borrowings

194,294,833.98

0.76

151,811,497.31

0.60

27.98

Accounts payable

316,070,261.78

1.24

164,642,529.63

0.65

91.97

Contracts liabilities

494,366,165.84

1.94

526,176,060.80

2.07

-6.05

Employee benefits payable

644,651,418.47

2.53

641,772,243.05

2.52

0.45

Taxes payable

171,475,269.71

0.67

136,546,991.12

0.54

25.58

Other payables

548,250,264.46

2.15

618,070,938.59

2.43

-11.3

Non-current liabilities due within one year

824,951,163.06

3.24

698,268,300.47

2.74

18.14

Long-term borrowings

5,669,237,997.98

22.25

5,883,682,492.98

23.09

-3.64

Lease liabilities

3,685,042.35

0.01

7,521,511.19

0.03

-51.01

Long-term payable

238,400,000.00

0.94

238,400,000.00

0.94

0

Long-term employee benefits payable

432,047,411.64

1.70

532,928,001.35

2.09

-18.93

Provisions

28,356,993.00

0.11

33,860,000.00

0.13

-16.25

Deferred income

225,443,509.36

0.88

243,113,352.90

0.95

-7.27

Deferred income tax liabilities

20,942,962.56

0.08

14,779,723.68

0.06

41.70

14

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

Other details:

    1. Accounts receivable as at 30 June 2020 amounted to RMB170,000,000.00, mainly due to the purchase of wealth management products by Qinhuangdao Xin'gangwan Container Terminal Co. Ltd, a subsidiary of the Company.
    2. Other receivables as at 30 June 2020 amounted to RMB154,734,300.00, representing an increase of 223.42% from the beginning of the year, mainly due to the increase in dividend receivables by the Company.
    3. Other non-current assets as at 30 June 2020 amounted to RMB35,455,700.00, representing a decrease of 54.94% from the beginning of the year, mainly due to settlement and refund of income tax of Cangzhou Mineral Port, a subsidiary of the Company, and the use of deductible input VAT by Cangzhou Mineral Port and Caofeidian Coal Port, subsidiaries of the Company.
    4. Accounts payable as at 30 June 2020 amounted to RMB316,070,300.00, representing an increase of 91.97% from the beginning of the year, mainly due to the increase in repair costs payable by the Company and the increase in other operating amounts.
    5. Lease liabilities as at 30 June 2020 amounted to RMB3,685,000.00, representing a decrease of 51.01% from the beginning of the year, mainly due to a portion of them classified into non-current liabilities due within one year based on its liquidity.
    6. Deferred income tax liabilities as at 30 June 2020 amounted to RMB20,943,000.00, representing an increase of 41.70% from the beginning of the year, mainly due to the difference between tax base and accounting base in fair value of other equity instruments of the Company.
  2. Restrictions on major assets as at the end of the Reporting Period
    • Applicable √ Not applicable
  4. Other Explanation
    √ Applicable □ Not applicable
    1. Gross Profit Margin
      During the Reporting Period, gross profit of the Company amounted to RMB1,212.7512 million, representing a decrease of 19.11% as compared to the corresponding period of last year. Gross profit margin of the Company for the Reporting Period was 40.49%, representing a decrease of 3.73 percentage points as compared to the corresponding period of last year.
    2. Tax and Surcharges
      During the Reporting Period, the tax and surcharges of the Company amounted to RMB172,526,100, representing a decrease of 7.52% as compared to the corresponding period of last year, mainly due to the decrease in environmental protection tax during the Reporting Period.
    3. Other Income
      During the Reporting Period, the Company's other income amounted to RMB29,572,700, representing an increase of 38.05% as compared to the corresponding period of last year, mainly due to the increase in the Company's value-added tax additional deduction and other government subsidies.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

15

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

  1. Investment Income
    During the Reporting Period, the Company's investment income amounted to RMB95,061,400, representing a decrease of 30.57% as compared to the corresponding period of last year, mainly due to the decrease in net profits of associates and joint ventures of the Company as compared to the corresponding period of last year attributable to the influence of the Epidemic.
  2. Gain on Disposal of Assets
    During the Reporting Period, the Company's gain on disposal of assets amounted to RMB482,400, representing a decrease of 69.86% as compared to the corresponding period of last year, mainly due to the increase in income from the disposal of Cangzhou Huanghuagang Mineral Port Co., Ltd., a subsidiary of the Company during the prior period, and there is no such income from disposal during the Reporting Period.
  3. Net Non-operating Revenue and Expenses
    During the Reporting Period, the Company's net non-operating revenue and expenses amounted to RMB-3,267,800, representing a decrease of 191.46% as compared to the corresponding period of last year, mainly due to the increase in donation.
  4. Income Tax Expense
    The Company's income tax expenses increased by RMB11,141,200 to RMB198,029,600 for the Reporting Period from RMB186,888,400 for the corresponding period of last year. The Company's effective income tax rate increased to 27.84% for the Reporting Period from 26.51% for the corresponding period of last year, mainly due to the fact that Cangzhou Huanghuagang Mineral Port Co., Ltd., a subsidiary of the Company, ceased to benefit from the "3+3 tax holiday" tax incentives during the Reporting Period.
  5. Net Profit
    The Company's net profit for the Reporting Period amounted to RMB513,215,600, representing a decrease of 0.96% as compared to the corresponding period of last year, of which the net profit attributable to owners of the parent company amounted to RMB575,741,800, representing an increase of 4.85% as compared to the corresponding period of last year. The decrease in net profit was mainly due to the combined effect of the decrease in revenue attributable to the decreased throughput of the Company as affected by the Epidemic, as well as the provision for costs on employees who leave their posts and wait for retirement for the corresponding period of last year, thus the net profit dropped slightly as compared to the previous period.
    The Company's net profit margin was 19.22%, representing an increase of 3.03 percentage points as compared to the corresponding period of last year.
  6. Bank Loans and Other Borrowings
    The details of bank borrowings and other borrowings of the Company as at 30 June 2020 are set out in "17. Short-term borrowings", "23. Non-current liabilities due within one year" and "24. Long-term borrowings" of Section X "V. Notes to Key Items of the Consolidated Financial Statements".
  7. Exchange Rate Risks
    The operations of the Group are mainly located in the PRC, and substantially all of business assets, liabilities, operating revenue and expenses are denominated in or settled in RMB, while debts denominated in foreign currencies are mainly used to pay overseas agency fees. As such, the Group has not adopted any foreign exchange hedging arrangement.
  8. Pledge of Assets and Contingent Liabilities
    The Company has no pledge of assets and contingent liabilities during the Reporting Period.
  9. Capital Commitments
    Details of the Company's capital commitments during the Reporting Period are set out in Section X "X. Commitments".

16

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

(13)

Management of Working Capital

30 June 2020

30 June 2019

Current ratio

1.25

1.03

Quick ratio

1.16

0.95

Turnover days of trade receivables

16.23

8.99

Turnover days of trade payables

24.27

41.19

As at 30 June 2020, the Company's current ratio and quick ratio were 1.25 and 1.16, respectively, representing an increase as compared with the current ratio of 1.03 and quick ratio of 0.95 as at 30 June 2019. The turnover days of trade receivables for the Reporting Period was 16.23 days and the turnover days of trade payables was 24.27 days, representing an increase of 7.24 days and a decrease of 16.92 days, respectively, as compared with the turnover days of trade receivables (8.99 days) and the turnover days of trade payables (41.19 days) for the corresponding period of 2019. The above indicators were within a reasonable range.

(IV)

Investment Analysis

  1. Overall analysis of external equity investments √ Applicable □ Not applicable

As at the end of the Reporting Period, the closing balance of external equity investments of the Company was RMB2,941,119,700, representing an increase of RMB7,141,900 or 0.24% from the beginning of the Reporting Period. For details of such changes refer to "8. Long-term Equity Investments" set out in Section X "V. Notes to Key Items of the Consolidated Financial Statements" of the report.

  1. Substantial equity investments
    • Applicable √ Not applicable
  3. Substantial non-equity investments
    • Applicable √ Not applicable
  5. Financial assets measured at fair value √ Applicable □ Not applicable
    For details, please refer to "30. Fair Value Measurement" of Section X "III. Major Accounting Policies and Accounting Estimates" and "1. Assets and Liabilities Measured at Fair Value" of Section X "VIII. Disclosure of Fair Value".

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

17

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

  1. Sales of substantial assets and equity interest
    □ Applicable √ Not applicable

(VI) Analysis of major controlled companies and investees

  • Applicable □ Not applicable

Cangzhou Mineral Port is a substantial subsidiary of the Company. It was incorporated on 10 April 2012, with a registered capital of RMB2,715,348,200. Its headquarters is located in Bohai New District, Cangzhou City, Hebei Province. It mainly engages in stevedoring and stacking business. As at 30 June 2020, the total assets of Cangzhou Mineral Port was RMB8,751,150,800, of which the net assets were RMB5,623,382,400. For the six months ended 30 June 2020, the revenue of Cangzhou Mineral Port was RMB709,927,800, and the operating profit was RMB65,143,500. Net profit was RMB47,347,200, accounting for 8.22% of net profit attributable to the parent company.

Caofeidian Coal Port is a substantial subsidiary of the Company. It was incorporated on 29 October 2009, with a registered capital of RMB1,800,000,000. Its headquarters is located in Caofeidian Industrial Park, Tangshan City, Hebei Province. It mainly engages in business including providing terminal facilities, stevedoring and storage services. As at 30 June 2020, the total assets of Caofeidian Coal Port was RMB5,434,016,800, of which the net assets were RMB1,169,748,900. For the six months ended 30 June 2020, the revenue of Caofeidian Coal Port was RMB221,167,200 and the operating profit was RMB-131,380,000. Net loss was RMB131,380,000, accounting for -22.82% of net profit attributable to the parent company.

Tangshan Caofeidian Shiye Port Co., Ltd.* (唐山曹妃甸實業港務有限公司) is a substantial investee of the Company. It was incorporated on 4 September 2002, with a registered capital of RMB2,000,000,000. Its headquarters is located in Caofeidian Industrial Park, Tangshan City, Hebei Province. It mainly engages in businesses including operation of port business and investment in infrastructure. As at 30 June 2020, the total assets of Tangshan Caofeidian Shiye Port Co., Ltd. was RMB7,317,111,300, of which the net assets were RMB4,253,660,900. For the six months ended 30 June 2020, the revenue of Tangshan Caofeidian Shiye Port Co., Ltd. was RMB883,724,400, and the operating profit was RMB391,815,000. Net profit was RMB296,598,700, and the Company's share of investment income in proportion to shareholding accounted for 18.05% of net profit attributable to the parent company.

(VII) Structured entities under the control of the Company

  • Applicable √ Not applicable

IV. PROSPECTS IN THE SECOND HALF OF 2020

In the second half of 2020, as domestic Epidemic has been effectively under control while the economy is recovering, the Company will take multiple measures to improve our production and operation, and mitigate the adverse impacts of the Epidemic on the Company, thus realizing continuous and stable growth of annual performance.

Coal business: Firstly, in the first half of the year, with the continuous improvement of Epidemic prevention and control in China and the steady recovery of economic operation, the growth rate of electricity consumption and port throughput across China increased month by month. It is expected that the prosperity of China's coal industry will show a steady and positive trend in the second half of 2020. Secondly, in the second half of the year, China's level-control policy on imported coal may step up. Demands for foreign traded coal will partially transfer to the domestic traded market, while the demands for domestic traded coal will continue to maintain a progressing trend. Thirdly, in the second half of 2020, the traffic volume of the Daqin Railway will achieve restorative growth. As the main hub port of Daqin Railway, the follow-up supply of goods will continue to be guaranteed. Fourthly, upon the completion of expansion and renovation of Mongolia-Hebei Railway, the cargo storage capacity of railway will be further enhanced, which will be conducive to the throughput growth of Caofeidian Coal Port, a controlled subsidiary of the Company. To conclude, it is expected that the coal throughput of the Company will remain stable.

Metal ores business: The Company will continue to promote the iron ore "transformation from road haulage to rail-freight transport", and actively strive for the source of goods by fulfilling railway delivery conditions. The Company will enhance its cooperation with four major mining companies and traders, and accurately understand demands of our customers, striving to provide quality service projects.

Oil and liquefied chemicals business: The Company will pay close attention to the production of offshore oil platform, fuel oil processing project of asphalt plant, and land bridge transit project of Beijing railway, aiming to increase crude oil volume. The Company will enhance cooperation with storage and transportation companies in nearby regions so as to improve our product oil transfer business. The Company will also actively pay visit to customers, investigate surrounding markets, and put greater efforts in market development.

Container business: The Company will jointly develop market with railway and shipment companies, and strive to expand the cargo sources of "dry bulk to containers". We will stabilize the cross-border multimodal sea-rail transport business and vigorously promote the development of freight sources along the sea rail corridor. The Company will strive to open new routes, diversify our routes allocation and improve our port radiation.

General and other cargo business: The Company will continue to enhance its efforts in solicitation of cargoes and market development to secure more cargo resources. Through proper implementation of "transformation from road haulage to rail-freight transport", the Company will vigorously promote the development of freight sources along the sea rail corridor and the sea-rail transport business. We will improve port operation efficiency, and continuously improve the quality of customer service.

18

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION IV BUSINESS DISCUSSION AND ANALYSIS

  1. OTHER DISCLOSURES
  1. Caution and explanation as to the possibility of anticipated accumulated net profits being losses from the beginning of the year to the end of next reporting period or significant changes over the corresponding period of last year
    □ Applicable √ Not applicable
  1. Potential risks
    √ Applicable □ Not applicable

The development of the port industry is highly correlated with the macroeconomic situation. The growth of the Company's business volume depends largely on the economic and trade growth rate. With the slowdown of economic growth and the replacement of old growth drivers with new ones and other economic and industrial development trends, the ports predominantly in dry bulk require the adjustment on the structure of cargoes and upgrade on industry structure. In addition, a series of national strategies and policies are introduced one after another, such as the Coordinated Development of Beijing-Tian-Hebei Area, One belt and One Road Initiative, Xiong'an New Area, Free Trade Area and Reform on State-owned Enterprises. A new development pattern with priority on domestic circulation and mutual reinforcement between domestic and international circulations is under gradual development. These have injected vitality in regional economic development and also provided outer elements for the transformation development of ports. Recently, the Company mainly has the following risk exposures:

    1. Under the macro circumstance of the increase in UHV power transmission and the substitution effect of clean energy, the general demand in domestic traded market of coal may continue to be limited.
    2. As the global Epidemic is still severe, the increasing downward pressure on the external economy will restrict China's economic development to a certain extent
    3. Under the background of a slowdown in the overall demand for coal, the competition in Bohai Rim area may be more severe.
    4. Upon the opening of Mangolia-Hebei Railway, certain upstream resources will be transported directly by railways to terminals or, with further improvement of supporting facilities, subdivided step by step to the downstream of coal areas in Bohai Rim area.
  2. Other Disclosures
    □ Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

19

SECTION V SIGNIFICANT EVENTS

  1. SUMMARY OF GENERAL MEETINGS

Media in which resolutions

Session of meeting

Date

were disclosed

Date of disclosure

2019 annual general meeting

5 June 2020

www.sse.com.cn

6 June 2020

www.hkexnews.hk

5 June 2020

Explanation of General Meetings

  • Applicable □ Not applicable

QHD Port convened the 2019 annual general meeting on 5 June 2020. 9 resolutions, namely the Resolution Regarding the Report of the Board of Directors of the Company for 2019, the Resolution Regarding the Report of the Supervisory Committee of the Company for 2019, the Resolution Regarding the Final Financial Report of the Company for 2019, the Resolution Regarding the 2019 Profit Distribution Plan and the Declaration of Final Dividend of the Company, the Resolution Regarding the Re-appointment of the Auditor of the Company for the Year 2020 and the Audit Fees for the Year 2020, the Resolution Regarding the Re-appointment of the Internal Control Auditor of the Company for the Year 2020 and the Internal Control Audit Fees for the Year 2020, the Resolution Regarding the Directors' 2019 Annual Remuneration, the Resolution Regarding the Supervisors' 2019 Annual Remuneration and the Resolution Regarding the Change of the Business Scope of the Company and Amendments to the Articles of Association of the Company were considered and approved.

  1. PLANS FOR PROFIT DISTRIBUTION OR COMMON RESERVE CAPITALIZATION
  1. Plans For Profit Distribution or Common Reserve Capitalization for the Half Year

Distribution or capitalization

No

20

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

  1. FULFILLMENT OF COMMITMENTS ON A SHARES
  1. Undertakings made by undertaking parties, including the actual controller, Shareholders, related parties, acquirers of QHD Port and the Company given or subsisting in the Reporting Period

√ Applicable □ Not applicable

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Undertakings in

Lock-up of

HPG

The shares of QHD Port held by it will not be transferred or managed by

relation to IPO

shares

others, nor will it be repurchased by QHD Port within 36 months from the

date of this issuance. If the closing price of the shares of QHD Port is

lower than the issue price for 20 consecutive trading days within 6 months

after the listing of the shares of QHD Port, or the closing price is lower

than the issue price at the end of 6 months after the listing, the lock-up

period of the shares of QHD Port held by it shall be automatically extended

for 6 months. The issue price refers to the issue price of the shares to be

issued by QHD Port. In the event that QHD Port carries out ex-rights or ex-

dividends due to reasons such as profit distribution, conversion of capital

reserve into share capital, additional issuance and placing after listing,

such ex-rights or ex-dividends shall be dealt with in accordance with the

relevant provisions of the stock exchange.

36 months from

Yes

Yes

the listing date of

A shares of QHD

Port

Lock-up of

Qinhuangdao

The shares of QHD Port held by it will not be transferred or managed by

shares

Port

others, nor will it be repurchased by QHD Port within 36 months from the

Administration

date of this issuance.

Office of Shanxi

Provincial

People's

Government

36 months from

Yes

Yes

the listing date of

A shares of QHD

Port

Intention to sell

HPG

The shares of QHD Port held by it may be reduced within two years

down

after the expiry of the lock-up period, subject to the satisfaction of the

following conditions: from the date of the Issuance of QHD Port to the

date of publication of the indicative announcement in relation to the

reduction of shareholding, they are able to timely and effectively perform

their obligations under the public undertakings at the time of the Issuance;

In addition, the average trading price of the shares of QHD Port for the

20 consecutive trading days prior to the publication of the indicative

announcement in relation to the reduction of shareholding is higher than the

Issue Price, among which, the average trading price of the shares of QHD

Port for the 20 preceding trading days is calculated as: the average trading

price of the shares of QHD Port for the 20 trading days prior to the date of

the indicative announcement in relation to the reduction of shareholding =

the total trading amount of the shares of QHD Port for the 20 trading days

prior to the date of the indicative announcement in relation to the reduction

of shareholding/the total trading volume of the shares of the Issuer for

the 20 trading days prior to the date of the indicative announcement in

relation to the reduction of shareholding. Within two years after the expiry

of the lock-up period, the total number of shares to be reduced each year

shall not exceed 10% of the total number of shares of QHD Port held by

it. In the event of conversion of capital reserve or undistributed profit into

share capital of QHD Port during the year of reduction, the calculation

base of total share capital at the end of the previous year shall be adjusted

accordingly. The number of available reduction units cannot be calculated

on a cumulative basis, and the number of unsold reduction units in the

current year cannot be accumulated to the following year. In addition, the

price of reduction in shareholding shall not be lower than the issue price

of the shares to be issued by QHD Port. If QHD Port carries out ex-rights

or ex-dividend activities due to profit distribution, conversion of capital

reserve into share capital, additional offering and placing after listing, it

shall deal with ex-rights or ex-dividend activities in accordance with the

relevant provisions of the stock exchange. After the expiration of the lock-

up period, if it is determined to reduce its shareholding in QHD Port in

accordance with the law, it shall publish an indicative announcement of the

reduction through QHD Port three trading days in advance, and specify the

number or range of the reduction and the execution period of the reduction

in the announcement.

2 years after the

Yes

Yes

expiration of the

lock-up period

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

21

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Intention to sell

State-owned

The shares of QHD Port held by it may be reduced within two years

down

Assets

after the expiry of the lock-up period, subject to the satisfaction of the

Supervision

following conditions: from the date of the Issuance of QHD Port to the

and

date of publication of the indicative announcement in relation to the

Administration

reduction of shareholding, they are able to timely and effectively perform

Commission

their obligations under the public undertakings at the time of the Issuance;

of People's

In addition, the average trading price of the shares of QHD Port for the

Government of

20 consecutive trading days prior to the publication of the indicative

Qinhuangdao

announcement in relation to the reduction of shareholding is higher than the

City

issue price, among which, the average trading price of the shares of QHD

Port for the 20 preceding trading days is calculated as: the average trading

price of the shares of QHD Port for the 20 trading days prior to the date of

the indicative announcement in relation to the reduction of shareholding =

the total trading amount of the shares of QHD Port for the 20 trading days

prior to the date of the indicative announcement in relation to the reduction

of shareholding/the total trading volume of the shares of the Issuer for the

20 trading days prior to the date of the indicative announcement in relation

to the reduction of shareholding. Within two years after the expiry of the

lock-up period, the total number of shares to be reduced each year shall

not exceed 50% of the total number of shares held by it in QHD Port. In

the event of conversion of capital reserve or undistributed profit into share

capital of QHD Port during the year of reduction, the calculation base

of total share capital at the end of the previous year shall be adjusted

accordingly. The number of available reduction units cannot be calculated

on a cumulative basis, and the number of unsold reduction units in the

current year cannot be accumulated to the following year. In addition, the

price of reduction in shareholding shall not be lower than the issue price

of the shares to be issued by QHD Port. If QHD Port carries out ex-rights

or ex-dividend activities due to profit distribution, conversion of capital

reserve into share capital, additional offering and placing after listing, it

shall deal with ex-rights or ex-dividend activities in accordance with the

relevant provisions of the stock exchange. After the expiration of the lock-

up period, if it is determined to reduce its shareholding in QHD Port in

accordance with the law, it shall publish an indicative announcement of the

reduction through QHD Port three trading days in advance, and specify the

number or range of the reduction and the execution period of the reduction

in the announcement.

2 years after the

Yes

Yes

expiration of the

lock-up period

Dealing with

HPG

In order to avoid competition with QHD Port and its controlled enterprises,

Long term

No

Yes

horizontal

HPG issued the Non-competition Undertaking to QHD Port on 10 August

competition

2015, which irrevocably undertakes and guarantees as follows: 1. None

of the controlling enterprises of HPG and HPG (Other than QHD Port)

is or will be engaged in any business or activity in any form, directly

or indirectly, in competition with or likely to be in competition with the

principal businesses currently and in the future engaged by QHD Port

and its controlling enterprises, both within and outside the PRC; HPG

undertakes to use its best endeavors to procure that the companies

in which HPG holds equity interests do not or will not engage in or

participate in any form of business or activity which competes or is

likely to compete, directly or indirectly, with the principal business of

QHD Port and its controlled enterprises within or outside the PRC.

22

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

  1. If HPG or the holding enterprise of HPG other than QHD Port identifies any new business opportunity that competes or may compete, directly or indirectly, with the principal business of QHD Port or its holding enterprise, it shall immediately notify QHD Port in writing and use its best endeavors to procure that such business opportunity is first offered to QHD Port or its holding enterprise on reasonable and fair terms and conditions.
  2. If QHD Port or its controlled enterprises abandon such competing new business opportunities and HPG or its controlled enterprises engage in such competing business other than QHD Port, QHD Port or its controlled enterprises shall have the right to acquire any equity interests, assets and other interests in the aforesaid competing business (including but not limited to Jiangsu Guoxin) from HPG or its controlled enterprises at any time, either on a one-off or multiple occasions, or by QHD Port to entrust, lease or contract to operate the assets or businesses of HPG or its controlled enterprises other than QHD Port in the aforesaid competing business in a manner permitted by national laws and regulations.
  3. When HPG and HPG's holding enterprises other than QHD Port intend to transfer, sell, lease, license or otherwise transfer or permit to use assets and businesses that compete or are likely to compete, directly or indirectly, with the principal businesses of QHD Port or its holding enterprises (including but not limited to Jiangsu Guoxin), HPG and HPG's holding enterprises other than QHD Port will provide QHD Port or its holding enterprises with pre-emptive rights, and undertake to use their best efforts to procure HPG's shareholding enterprises to provide pre-emptive rights to QHD Port or its holding enterprises in the above circumstances.
  4. From the date of this letter of undertaking, HPG undertakes to indemnify QHD Port or its controlled entities against all actual losses, damages and expenses suffered by HPG or its controlled entities as a result of any breach of any terms of this letter of undertaking.
  5. This letter of undertaking shall terminate upon the earlier of:
    1. Any holding enterprise of HPG and HPG directly or indirectly holds less than 30% of the total number of shares of QHD Port (On an aggregated basis); or
    2. The shares of QHD Port shall cease to be listed on the SSE and other internationally recognized stock exchanges (Except for the suspension of trading of the shares of QHD Port for any reason).

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

23

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Disclosure of

QHD Port

If the CSRC or other competent authorities determine that there are

Long term

No

Yes

information

false representations, misleading statements or material omissions in the

undertaking

prospectus and such circumstances have a material and substantial impact

on the determination of whether QHD Port is subject to the conditions of

Issuance as prescribed by the laws, Qinhuangdao Port will repurchase all

the new shares issued under this Issuance in accordance with the following

methods: 1) If the above circumstances occur during the stage when the

new shares issued under this issuance by QHD Port are issued but not

traded, QHD Port will return the proceeds raised from this Issuance to the

investors who have paid the subscription monies according to the issue

price plus bank deposit interest for the same period within 5 working

days from the date of the above circumstances. 2) If the above situation

occurs after the new shares to be issued by QHD Port have been listed

and traded, QHD Port will convene a board meeting within 15 trading days after the competent authorities such as the CSRC or the People's Court have made a final determination or effective judgment on the existence of the above-mentioned facts of QHD Port, formulate a share repurchase plan for the new shares to be issued and submit it to the general meeting for consideration and approval, and repurchase all the new shares to be issued under the Issuance through the trading system of the SSE in accordance with the specific share repurchase plan considered and approved by the Board and the general meeting at a price not lower than the issue price of the shares to be issued under the issuance plus interest on current bank deposits for the relevant period from the issuance of shares to the repurchase or such other price as recognized by the CSRC. In case of any ex-right or ex-dividend activities such as profit distribution, conversion of capital reserve into share capital, additional issuance and placing of shares of QHD Port after the issuance and before the repurchase, the above issue price shall be the ex-right and ex-dividend price. Should there be any false representation, misleading statement or material omission in the prospectus of QHD Port which results in losses suffered by investors in securities trading, QHD Port shall compensate the investors in full and in a timely manner according to the final decision or effective judgment of the competent authorities such as the CSRC or the People's Court.

24

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Disclosure of

HPG

HPG, the controlling shareholder of QHD Port, undertakes that if the

Long term

No

Yes

information

prospectus of QHD Port contains false representations, misleading

undertaking

statements or material omissions, which have material and substantial

impact on the determination of the issue conditions as stipulated by

the laws, it will repurchase the transferred original restricted shares in

accordance with the laws after the competent authorities such as the

CSRC or the People's Court have made the final determination or effective

judgment of the aforesaid facts in the prospectus of QHD Port. The

repurchase price shall not be lower than the issue price of the shares of

QHD Port plus interest on bank demand deposits for the relevant period

from the Issuance of the shares to the Issuance of the repurchase offer or

such other price as recognized by the CSRC, and shall be implemented

in accordance with the procedures stipulated by relevant laws and

regulations. If there is any ex-right or ex-dividend activities such as profit

distribution, conversion of capital reserve into share capital, additional

issuance or distribution of shares after listing of QHD Port, the above

issue price shall be the ex-right or ex-dividend price. If the prospectus

of QHD Port contains any false record, misleading statement or material

omission which causes losses to the investors in securities trading, it

will compensate the investors in full and in a timely manner according

to the final decision or effective judgment of the competent authorities

such as the CSRC or the People's Court. In the event that there is any

false representation, misleading statement or material omission in the

prospectus of QHD Port, which has material and substantial impact on

the determination of whether the issue conditions stipulated by the laws

of the People's Republic of China have been fulfilled by the competent

authorities such as the CSRC or the People's Court, which have made the

final determination or effective judgment of the issuer, it has undertaken to

procure QHD Port to perform the decision-making procedures for the share

repurchase, and in the event that QHD Port convenes a general meeting

to resolve on the share repurchase, it has undertaken to vote for the share

repurchase at the general meeting.

Disclosure of

Directors of

If there are false representations, misleading statements or material

Long term

No

Yes

information

QHD Port

omissions in the prospectus of QHD Port that result in losses suffered by

undertaking

investors in securities trading, and the competent authorities such as the

CSRC or the People's Court have made a final determination or effective

judgment on the aforesaid facts in the prospectus of QHD Port, they will

compensate the investors for the direct losses actually suffered by them

in accordance with the scope of compensation, compensation standards,

compensation amount and other factors determined by such final

determination or effective judgment. If there is any false representation,

misleading statement or material omission in the prospectus of QHD Port,

which has material and substantial impact on the determination of whether

the issuance conditions stipulated by the laws by QHD Port have resulted

in losses to investors in securities trading, and if the final determination or

effective judgment of the above facts of QHD Port has been made by the competent authorities such as the CSRC or the People's Court, at the time of convening the relevant board of directors to resolve on the repurchase of shares, QHD Port undertakes to vote in favor of the relevant resolution in relation to the repurchase of shares.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

25

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Disclosure of

Supervisors

If there are false representations, misleading statements or material

Long term

No

Yes

information

and senior

omissions in the prospectus of QHD Port that result in losses suffered by

undertaking

management of

investors in securities trading, and the competent authorities such as the

QHD Port

CSRC or the People's Court have made a final determination or effective

judgment on the aforesaid facts in the prospectus of QHD Port, they will

compensate the investors for the direct losses actually suffered by them

in accordance with the scope of compensation, compensation standards,

compensation amount and other factors determined by such final

determination or effective judgment.

Undertakings to

Directors

The directors and senior management of QHD Port have made

Long term

No

Yes

fill the diluted

and senior

undertakings on the effective implementation of the remedial measures for

immediate return

management of

returns of the Company in accordance with the relevant requirements of

QHD Port

the CSRC, details of which are as follows:

Not to transfer to other entities or individuals for free or under unfair

conditions, nor otherwise to prejudice the interests of QHD Port; To

restrict job-related consumption; The assets of QHD Port will not be used

for investment and consumption activities unrelated to the performance

of their duties; The remuneration system formulated by the Board of

Directors or the Remuneration Committee is linked to the implementation

of the remedial measures for returns of QHD Port; If QHD Port proposes

to implement an equity incentive, it will link the exercise conditions of

the equity incentive formulated by QHD Port with the implementation of

the remedial measures for returns of QHD Port; The Company will duly

implement the relevant remedial measures for returns formulated by QHD

Port, and if there is any breach of such undertakings which causes losses

to QHD Port or investors, it will be liable for the compensation to QHD

Port and investors in accordance with the laws; Prior to the completion

of the offering and listing of QHD Port, if the CSRC imposes other new

regulatory requirements in relation to the remedial measures for returns and

its undertakings, and such undertakings fail to meet such requirements of

the CSRC, it will make supplemental undertakings in accordance with the

latest requirements of the CSRC.

Resolving title

HPG

QHD Port leased from HPG the properties without building ownership

Long term

No

Yes

defects such as

certificates, and HPG issued an undertaking letter, undertaking that it is the

properties

sole owner of such properties, and that there are no third party rights or

any ownership disputes on such properties, and it is entitled to lease such

properties to QHD Port; In the event that HPG or any third party causes

any interruption or interference to the leasing and use of such properties by

QHD Port or any third party due to the reasons for the ownership of such

properties, which causes economic loss or other burden to QHD Port, HPG

undertakes to compensate or bear any loss or burden caused to QHD Port

by the aforesaid reasons.

26

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Proposal on

Directors

Within three years after the listing of A shares, if not due to force majeure,

stabilizing share

(excluding

the closing price of A shares is lower than the latest audited net asset

price

independent

per share for 20 consecutive trading days (If, after the date of the latest

Directors)

audit, the net assets or the number of Shares have changed due to profit

and senior

distribution, conversion of capital reserve into share capital, additional

management of

issuance, placement of shares, etc., the net asset per share shall be

HPG and QHD

adjusted accordingly), and the Company's situation meets the requirements

Port

of laws, administrative regulations, departmental rules, normative

documents and regulatory authorities for changes in share capital such as

repurchase and increase in share capital, which will trigger the obligation of

controlling shareholders, directors (Excluding independent directors, same

below) and senior management to increase in shareholding (Hereinafter

referred to as "trigger obligation to increase shareholding"). Specific

measures of this plan include:

1) Within 10 trading days after the obligation to acquire additional shares

is triggered, the controlling shareholder shall notify the Company in writing

as to whether he/she has any specific plan to acquire additional A shares,

and the Company shall make an announcement. If there is any specific

plan, the information including the number of shares to be acquired, price

range and completion time shall be disclosed, and the total amount of

additional shares to be acquired under the plan shall not be less than

RMB50,000,000.

2) If the controlling shareholder fails to announce the aforesaid specific

plan for increase in shareholding as scheduled, or expressly indicates that

there is no plan for increase in shareholding, the Board of Directors will

announce whether there is any specific plan for share repurchase within 20

trading days after the obligation for increase in shareholding is triggered for

the first time. If any, the information including the number of shares to be

repurchased, price range and completion time shall be disclosed, and the

total amount of such repurchase shall not be less than RMB50,000,000.

3) If the Board of Directors fails to announce the aforesaid share

repurchase plan as scheduled, or the aforesaid share repurchase plan

fails to be approved at the general meeting due to various reasons, the

directors and senior management of the Company shall, within 30 trading

days after the obligation to increase shareholding is triggered for the first

time (If there is N trading day to restrict the trading of shares by directors

and senior management, the directors and senior management shall, within

30 + N trading day after the obligation to increase shareholding is triggered

for the first time) or within 10 trading days after the aforesaid plan fails to

be approved at the general meeting (if there is N trading day to restrict

the trading of shares by directors and senior management during the

period, the directors and senior management shall, within 10 + N trading

days after the aforesaid plan fails to be approved at the general meeting,

unconditionally increase their shareholding in the Company's shares in A,

and their respective accumulated amount of increase in shareholding shall

not be less than 20% of the total remuneration received from the Company

in the preceding year.

Shareholders who individually or jointly hold more than 3% of the Shares

may submit a proposal in relation to the share repurchase plan of the

Company to the Board of Directors for consideration and approval at the

general meeting.

36 months from

Yes

Yes

the listing date of

A shares of QHD

Port

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

27

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

The restrictive measures in this plan include:

For the controlling shareholders, if the specific plan for increase in shareholding has been announced but cannot be actually performed due to subjective reasons, the Company shall withhold the cash dividend payable to the controlling shareholder in an amount equivalent to the obligation of the controlling shareholder to increase shareholding until the controlling shareholder fulfills its obligation to increase shareholding; If the obligation to increase shareholding has been triggered twice consecutively and the controlling shareholder has failed to propose a specific plan for increase in shareholding, the Company may retain the cash dividend payable to the controlling shareholder in an amount equivalent to the obligation to increase shareholding by the controlling shareholder for the purpose of the share repurchase plan, and the controlling shareholder shall lose its right of recourse to the corresponding amount of cash dividend; If the controlling shareholder has abstained from voting or voted against the share repurchase plan proposed by board of directors, the Company may retain the cash dividend payable to the controlling shareholder in an amount equivalent to the obligation of the controlling shareholder to increase shareholding for the next share repurchase plan, and the controlling shareholder shall lose the right of recourse to the corresponding amount of cash dividend.

The Directors and senior management of the Company shall actively perform their obligation of increasing shareholding. If an individual fails to perform his/her obligation of increasing shareholding according to the relevant agreement of this plan due to subjective reasons during his/her term of office, the Company shall perform his/her obligation of increasing shareholding on his/her behalf with a salary equivalent to the amount of his/her obligation of increasing shareholding; If an individual fails to perform his/her obligation to increase shareholding for two consecutive times during his/her term of office, the controlling shareholder or the Board of Directors shall propose to the shareholders' general meeting to approve the change of the relevant director, and the board of directors shall propose to dismiss the relevant senior management.

If the Company and its controlling shareholder (s), Directors and senior management are unable to perform their obligations to increase shareholding or repurchase shares within a certain period by virtue of the minimum shareholding ratio of public Shareholders as required under securities regulatory regulations, such as the listing rules of the place in which the Shares are listed, the relevant responsible parties may be exempted from the abovementioned punishments but shall proactively take other measures to stabilize the share price.

28

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Restraint

QHD Port

QHD Port will strictly perform all the public undertakings made by QHD

Long term

No

Yes

measures

Port in relation to the Issuance and actively accept social supervision. In

for failure to

the event that the undertaking of QHD Port fails to be performed, is unable

perform the

to be performed or is unable to be performed on schedule (except for

undertaking by

reasons beyond the control of QHD Port due to objective reasons such

the undertaking

as changes in relevant laws and regulations, policies, natural disasters

party

and other force majeure), QHD Port will take the following measures: 1)

to timely and fully disclose the specific reasons for the failure to perform,

the failure to perform or the failure to perform on schedule by QHD Port;

2) provide supplemental undertakings or alternative undertakings to the

investors of QHD Port to protect the interests of the investors as much as

possible; 3) submitting the above supplemental undertaking or alternative

undertaking to the general meeting of QHD Port for consideration; 4)

QHD Port will impose penalties in the form of reduction or suspension

of remuneration or allowances or demotion of duties on the relevant

responsible person; At the same time, QHD Port will immediately cease

the formulation or implementation of major asset purchases and disposals,

as well as capital operation activities such as issuance of new shares,

issuance of corporate bonds and major asset restructuring until QHD Port

has fulfilled the relevant undertakings; 5) to publicly explain the specific

reasons for non-performance of the undertakings at the general meeting

and the media designated by the CSRC for disclosure, and apologize to

the shareholders and the public investors.

If the undertaking of QHD Port fails to be performed, is unable to be

performed or is unable to be performed on schedule due to objective

reasons beyond the control of QHD Port, such as changes in relevant

laws and regulations, policies, natural disasters and other force majeure,

QHD Port will adopt the following measures: 1) timely and fully disclose

the specific reasons for the failure, inability or inability to perform the

undertaking of QHD Port; 2) provide supplemental undertakings or

alternative undertakings to the investors of QHD Port to protect the

interests of the investors of QHD Port as much as possible; 3) to publicly

explain the specific reasons for non-performance of the undertaking and

apologize to the shareholders and public investors at the general meeting

and the media designated by the CSRC for disclosure.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

29

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Restraint

HPG, State-

It will strictly comply with all public undertakings made in relation to

Long term

No

Yes

measures

owned Assets

the Issuance of QHD Port and actively accept social supervision. If its

for failure to

Supervision

undertaking is not performed, is proved to be unable to be performed or is

perform the

and

unable to be performed on schedule (other than due to objective reasons

undertaking by

Administration

beyond its control, such as relevant laws and regulations, policy changes,

the undertaking

Commission

natural disasters and other force majeure), it will take the following

party

of People's

measures: 1) fully disclose the specific reasons for his failure to perform,

Government of

being unable to perform or being unable to perform on schedule through

Qinhuangdao

QHD Port in a timely manner; 2) provide supplemental undertakings or

City

alternative undertakings to QHD Port and its investors to protect the

interest of QHD Port and its investors as much as possible; 3) submitting

the above supplemental undertaking or alternative undertaking to the

general meeting of QHD Port for consideration; 4) the proceeds obtained

by it from the breach of the undertaking shall belong to QHD Port and thus

cause losses to QHD Port or the investors, it shall compensate QHD Port

or the investors in accordance with the law, and shall be compensated

in accordance with the following procedures: ① the cash dividends

payable to it shall be directly used by QHD Port for the execution of the

outstanding undertaking or to compensate for the losses incurred by QHD

Port or the investors due to the non-performance of the undertaking; ② If

it reduces its shareholding prior to the full performance of its undertaking

or the completion of compensation, it shall transfer the funds received

from the reduction to the Board of Directors of QHD Port for specific

performance of its undertaking or for compensation until it has fulfilled its

undertaking or made up for the losses of the Company and the investors. If

its commitments cannot be performed, cannot be performed or cannot be

performed on schedule due to objective reasons beyond its control, such

as changes in relevant laws and regulations, policies, natural disasters and

other force majeure, it will take the following measures: 1) timely and fully

disclose the specific reasons for its failure, inability or inability to perform

on schedule through QHD Port; 2) provide supplemental undertakings

or alternative undertakings to QHD Port and its investors to protect the

interest of QHD Port and its investors as much as possible.

30

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Restraint

Executive

It will strictly perform all its public undertakings in relation to the issue of

Long term

No

Yes

measures

Directors,

QHD Port and actively accept social supervision. If his undertaking fails

for failure to

non-executive

to be performed, is proved to be unable to be performed or is unable to

perform the

Directors

be performed on schedule (other than due to objective reasons beyond

undertaking by

and senior

his control such as relevant laws and regulations, policy changes,

the undertaking

management of

natural disasters and other force majeure), he/she will take the following

party

QHD Port

measures: 1) fully disclose the specific reasons for his/her undertaking

failing to perform, being unable to perform or being unable to perform on

schedule through QHD Port in a timely manner; 2) provide supplemental

undertakings or alternative undertakings to QHD Port and its investors to

protect the interest of QHD Port and its investors as much as possible; 3)

submitting the above supplemental undertaking or alternative undertaking

to the general meeting of QHD Port for consideration; 4) in the event that

he/she fails to put forward the specific plan for increase in shareholding

as stated in the share price stabilization plan, or fails to implement the

plan for increase in shareholding as disclosed, he/she shall irrevocably

authorize QHD Port to withhold 20% of the total remuneration received

from QHD Port for the previous year and perform the obligation of increase

in shareholding on his/her behalf; 5) the gains from the breach of the

undertaking shall belong to QHD Port and thus cause losses to QHD

Port or the investors, and shall compensate QHD Port or the investors in

accordance with the following procedures: if I receive remuneration from

QHD Port, I agree that QHD Port shall cease to pay remuneration to it and

use it directly to execute the undertaking or to compensate the losses

incurred by QHD Port or the investors due to the non-performance of the

undertaking.

In the event of any failure, failure or inability to perform on schedule due

to objective reasons beyond its control, such as changes in relevant laws

and regulations, policies, natural disasters and other force majeure, I

will take the following measures: 1) timely and fully disclose the specific

reasons for the failure to perform, failure to perform or failure to perform on

schedule by QHD Port; 2) provide supplemental undertakings or alternative

undertakings to QHD Port and its investors to protect the interest of QHD

Port and its investors as much as possible.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

31

SECTION V SIGNIFICANT EVENTS

If not

If not

Whether

Whether

performed

performed

there is a time

strictly

timely,

timely,

Time and

limit for

performed in

describe

describe

Undertaking

Type of

Undertaking

term of

performance

a timely

the specific

plans in next

background

undertaking

party

Content of undertaking

undertaking

or not

manner

reasons

steps

Restraint

Independent

It will strictly perform all its public undertakings in relation to the issue of

Long term

No

Yes

measures

non-executive

QHD Port and actively accept social supervision. If his undertaking fails

for failure to

Directors and

to be performed, is proved to be unable to be performed or is unable to

perform the

supervisors of

be performed on schedule (other than due to objective reasons beyond

undertaking by

QHD Port

his control such as relevant laws and regulations, policy changes,

the undertaking

natural disasters and other force majeure), he/she will take the following

party

measures: 1) fully disclose the specific reasons for his/her undertaking

failing to perform, being unable to perform or being unable to perform on

schedule through QHD Port in a timely manner; 2) provide supplemental

undertakings or alternative undertakings to QHD Port and its investors to

protect the interest of QHD Port and its investors as much as possible; 3)

submitting the above supplemental undertaking or alternative undertaking

to the general meeting of QHD Port for consideration; 4) the gains from the

breach of the undertaking shall belong to QHD Port and thus cause losses

to QHD Port or the investors, and shall compensate QPCL or the investors

in accordance with the following procedures: if I receive remuneration from

QHD Port, I agree that QHD Port shall cease to pay remuneration to it, and

this will be directly used to execute the undertaking or to compensate the

losses incurred by QHD Port or the investors due to the non-performance

of the undertaking. In the event of any failure, failure or inability to perform

on schedule due to objective reasons beyond its control, such as changes

in relevant laws and regulations, policies, natural disasters and other force

majeure, I will take the following measures: 1) timely and fully disclose the

specific reasons for the failure to perform, failure to perform or failure to

perform on schedule by QHD Port; 2) provide supplemental undertakings

or alternative undertakings to QHD Port and its investors to protect the

interest of QHD Port and its investors as much as possible.

32

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

IV. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRMS

Description of appointment and dismissal of accounting firms

  • Applicable □ Not applicable

On 5 June 2020, the Resolution Regarding the Re-appointment of the Auditor of the Company for the Year 2020 and the Audit Fees for the Year 2020 was considered and approved at the 2019 annual general meeting of QHD Port, which approved the re-appointment of Ernst & Young Hua Ming LLP as the auditor of the Company for the year 2020, who will hold office until the conclusion of the 2020 annual general meeting, and the audit fees of RMB4 million (inclusive of tax) for the financial statements for 2020. At the meeting, the Resolution Regarding the Re-appointment of the Internal Control Auditor of the Company for the Year 2020 and the Internal Control Audit Fees for the Year 2020 was considered and passed to agree the reappointment of Ernst & Young Hua Ming LLP as the internal control auditor of the Company for the year 2020, who will hold office until the conclusion of the 2020 annual general meeting. The total internal control audit fees for the year 2020 will be RMB0.7 million (inclusive of tax).

Description of change of accounting firms during the audit period

  • Applicable √ Not applicable

The Company's description of "Non-Standard Auditors' Report" of the accounting firm

  • Applicable √ Not applicable

The Company's description of "Non-Standard Auditors' Report" on the financial report in the annual report for the previous year issued by the accountant

  1. □ Applicable √ Not applicable

  2. MATTERS RELATING TO BANKRUPTCY AND REORGANISATION

Applicable √ Not applicable

VI. MATERIAL LITIGATIONS AND ARBITRATIONS

    • The Company had material litigations and arbitrations during the Reporting Period □ The Company had no material litigation and arbitration during the Reporting Period
  2. Litigation and arbitration issues that have been disclosed in the provisional announcements and without subsequent development
    • Applicable □ Not applicable

Summary and type of event

Query index

On 30 January 2018, Cangzhou Bohai Port, a controlled subsidiary of the Company, received a summons issued by the Intermediate People's Court of Cangzhou City, Hebei Province, in which the plaintiff is China Construction Sixth Engineering Division, the defendant is Cangzhou Bohai Port, and the case is about a construction contract dispute with amount of RMB33,864,106.08 and the related interests. During the first instance of the trial, the claim from China Construction Sixth Engineering Division was dismissed, the case acceptance fee of RMB289,791 was borne by the plaintiff China Construction Sixth Engineering Division.

On 14 September 2018, Cangzhou Bohai Port received a subpoena issued by the High People's Court of Hebei Province [Case No.: (2018) Ji Min Zhong No. 869] and a statement of appeal.

On 17 October 2018, Cangzhou Bohai Port received the civil judgment ((2018) Ji Min Zhong No. 869) from the High People's Court of Hebei Province, pursuant to which the High People's Court of Hebei Province would revoke the civil judgment (2018) Ji Min Chu No. 91 and send the case to the Intermediate People's Court of Cangzhou City for retrial.

On 2 January 2020, Cangzhou Bohai Port received a civil judgement ((2018) Ji 09 Min Chu No. 395) from the Intermediate People's Court of Cangzhou City, and on 14 January 2020, Cangzhou Bohai Port filed an appeal.

Please refer to the relevant announcements published on the website of the SSE, China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily by QHD Port: Announcement on Litigation of Controlling Subsidiaries (Announcement No: 2018- 004), Announcement on the Progress of Controlling Subsidiaries' Litigation (Announcement No: 2018- 020), Announcement on the Progress of Controlling Subsidiaries' Litigation (Announcement No: 2018- 028), Announcement on the Progress of Controlling Subsidiaries' Litigation (Announcement No: 2018-031), Announcement on the Progress of Controlling Subsidiary's Litigation (Announcement No: 2020-001) and Litigation Announcement published on the website of the Stock Exchange on 31 January, 29 June, 18 September and 18 October 2018 and 3 January 2020.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

33

SECTION V SIGNIFICANT EVENTS

  1. Litigation and arbitration issues that have not been disclosed in the provisional announcement or with subsequent development
    □ Applicable √ Not applicable
  1. Other Description
    □ Applicable √ Not applicable

VII. PENALTY AND RECTIFICATION AGAINST THE COMPANY AND ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING SHAREHOLDERS, BENEFICIAL CONTROLLER AND ACQUIRER

  • Applicable √ Not applicable

VIII. EXPLANATION ON INTEGRITY OF THE COMPANY, ITS CONTROLLING SHAREHOLDERS AND BENEFICIAL CONTROLLER DURING THE REPORTING PERIOD

  • Applicable □ Not applicable

During the reporting period, QHD Port and its controlling shareholders, beneficial controllers did not have refusal to implement effective judgments of a court or failure to meet debt repayment schedules in a relatively large amount.

IX. SHARE INCENTIVE SCHEME, EMPLOYEE SHARE SCHEME OR OTHER INCENTIVE MEASURES FOR EMPLOYEES AND THEIR IMPACTS

  1. Incentives disclosed in extraordinary announcements without progress or change in the follow-up implementation
    □ Applicable √ Not applicable
  1. Incentives not disclosed in extraordinary announcements or with progress in the follow-up implementation

Share incentive

  • Applicable √ Not applicable

Other descriptions

  • Applicable √ Not applicable

Employee share scheme

  • Applicable √ Not applicable

Other incentive measures

□ Applicable √ Not applicable

34

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

  1. MATERIAL RELATED/CONNECTED TRANSACTIONS
  1. Related/connected transactions related to daily operation
    1. Matters disclosed in extraordinary announcements without progress or change in the follow-up implementation
      □ Applicable √ Not applicable
    2. Matters disclosed in extraordinary announcements with progress or change in the follow-up implementation √ Applicable □ Not applicable
      Leasing Framework Agreement
      Considered and approved at the fourth meeting of the fourth session of the Board of QHD Port, on 28 September 2018, the Company entered into the Leasing Framework Agreement with HPG, with effect from 1 January 2019 to 31 December 2021. According to the Leasing Framework Agreement, HPG (including subsidiaries and units, same as in the following section) leased its properties, civil construction facilities, equipment and other assets managed by HPG to the Company (including subsidiaries and units, same as in the following section). The pricing principle of the rentals is cost plus reasonable profit of lease target. Pursuant to which, the Company paid the rentals of a maximum amount of RMB121,529,200 per annum to HPG. They agreed that the total rentals paid by the Company to HPG shall decrease according to the corresponding cost plus reasonable profit of such assets, for the purpose of certain discontinued assets in accordance with the Leasing Framework Agreement. For the details of the Leasing Framework Agreement, please refer to the Announcement on Related Transactions in Ordinary Course of Business (Announcement No. 2018-030) on the website of the SSE on 29 September 2018 and the Renewal of Continuing Connected Transactions, Major Transactions and Discloseable Transaction on the website of the Stock Exchange on 28 September 2018 published by QHD Port.
      In the first half of 2020, the Company incurred the rental of RMB58,069,365.52 according to the Leasing Framework Agreement
      General Services Agreement
      Considered and approved by the first extraordinary general meeting of 2018, on 28 September 2018, the Company entered into General Services Agreement with HPG, with effect from 1 January 2019 to 31 December 2021. Pursuant to the General Services Agreement, the Company offers general services to HPG mutually and the price of each service shall be determined according to the following principles and orders: (1) Government Price: At all times, government price is applicable to any specific service and product, and such products and services will be provided according to applicable government price(whether national or regional); (2) Government Guidance Price: Price shall be determined within the scope of the government guidance price if there is a standard of government guidance fee;
      (3) Market Price: The price will be determined with reference to the market price at that time if there is no above two pricing standards but the price of same or similar products, technology and services provided by independent third parties during the ordinary course of business on normal commercial terms; The management of the two parties shall refer to at least two comparable transactions with independent third parties when determining whether the transaction price of any product under the General Services Agreement is the market price; (4) Agreement Price: The charging standard will be determined according to reasonable costs plus reasonable profits of services provided where there is no above standards. The management shall refer to at least two comparable transactions with independent third parties when determining reasonable profits of the relevant services under the General Services Agreement, not higher than 15% of the cost in principle, save as otherwise agreed in the specific agreement.
      Pursuant to General Services Agreement, HPG provides the following services to the Company: (1) Social Services: employee education, training, medical service, printing and other related or similar services; (2) Living services: property management services (including elevator maintenance, etc.), office rental, office supplies and other daily rental, water and heat supply, sanitation, greening and other related or similar services; and (3) Production Logistic Services: labor service, equipment manufacturing, survey and design, supervision, port construction, real estate development, project agent construction, port engineering maintenance and communication service, water supply, material supply and other related or similar services; The Company will provide the following services to HPG: port service, port electricity management, transportation service, software service, labor service, lease service, material supply service and other related or similar services. For details of the General Services Agreement, please refer to the Announcement on Related Transactions in Ordinary Course of Business (Announcement No. 2018-030) on the website of the SSE on 29 September 2018 and the Renewal of Continuing Connected Transactions, Major Transactions and Discloseable Transaction on the website of the Stock Exchange on 28 September 2018 published by QHD Port.
      The Company provides services to HPG with the amount of the annual caps of RMB150,000,000, RMB158,000,000 and RMB166,000,000 in 2019, 2020 and 2021 respectively; HPG provides services to the Company with the amount of the annual caps of RMB550,000,000, RMB578,000,000 and RMB607,000,000 in 2019, 2020 and 2021 respectively.
      In the first half of 2020, the Company provided services to HPG, with an amount of RMB36,391,447.90; HPG provided services to the Company, with an amount of RMB123,893,035.63.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

35

SECTION V SIGNIFICANT EVENTS

Financial Services Framework Agreement

Considered and approved by the first extraordinary general meeting of 2018, on 28 September 2018, the Company entered into Financial Services Framework Agreement with HPG Finance, with effect from 1 January 2019 to 31 December 2021. Pursuant to the Financial Services Framework Agreement, HPG Finance provides services to the Company, including deposit services, loan services, settlement services and settlement related auxiliary business, entrusted loan services, bill discount, guarantee services, financial and financing consultation services, credit verification services and relevant consultancy and agency services, and other financial services ("Other Financial Services") provided by financial companies according to applicable laws and regulations; Of which, the daily maximum balance of deposits and interest income for 2019, 2020 and 2021 is RMB4 billion, and the daily maximum balance of loan and interest expenses for 2019, 2020, 2021 is RMB1 billion, and the total charges of Other Financial Services for 2019, 2020 and 2021 is RMB90,000,000.

The price and charges of HPG Finance's services is required to be determined by consideration between two parties and comply with the following requirements:

  1. Deposit services:
    HPG Finance absorbs the interest rate of the Company's deposits, which shall be determined in compliance with the relevant requirements of the People's Bank of China, the benchmark deposit rate (if any) regularly issued by the People's Bank of China and determined interest rate when relevant commercial banks provide the same type of deposit services at the same period to HPG Finance and its subsidiaries and units as well as ordinary commercial items, and not lower than the deposit interest rate of same type when HPG and its subsidiaries and units (except for the Company) place the deposits in HPG Finance in the same period.
  2. Loan services:
    The loan interest rate provided to the Company by HPG Finance, shall be in compliance with the relevant requirements of the People's Bank of China ("PBOC") and the benchmark loan rate (if any) regularly issued by the PBOC and determined interest rate when relevant commercial banks provide the same type of loan services at the same period to HPG Finance and its subsidiaries and units as well as ordinary commercial items, and not higher than the loan interest rate of same type when HPG Finance the loan to HPG and its subsidiaries and units (except for the Company) in the same period.
  3. Other Financial Services:
    1. Settlement Services: settlement services and settlement related auxiliary business (free of charges).
    2. The fees charged by HPG Finance for the provision of discounted bills, entrusted loans, guarantee services, financial and financing consultation, credit verification grant and relevant consultancy and agency services as well as other financial services provided by HPG Finance in accordance with the applicable laws and regulations, shall be determined according to the following standards:
      1. the fees shall be in accordance with the relevant benchmark rates mandatorily determined by the PBOC or the CBRC (if any); and
      2. if there is no such provision, the service fees charged by HPG Finance for the provision of such financial services to the Company shall not be higher than those charged by the relevant domestic commercial banks for the provision of the same type of financial services to the Company in the same period, and shall not exceed those charged by HPG Finance for the provision of the same type of financial services to HPG and its subsidiaries and units (other than the Company) in the same period. The service fees shall be paid by the Company in one lump sum or by installment in accordance with specific circumstances. For details of the Financial Services Framework Agreement, please refer to the Announcement on Related Transactions in Ordinary Course of Business (Announcement No. 2018-030) on the website of the SSE on 29 September 2018 and the Renewal of Continuing Connected Transactions, Major Transactions and Discloseable Transaction on the website of the Stock Exchange on 28 September 2018 published by QHD Port.
        For the six months ended 30 June 2020, the maximum deposit balance of deposit service (namely maximum daily deposit and interest income balance) and the maximum amount of loan granted in respect of loan service (namely maximum daily loan and interest balance) at the actual transaction date were RMB2,712,527,970.93 and RMB554,000,000.00, respectively. In terms of Other Financial Services, the actual transaction amount was RMB0.00.

3. Events not disclosed in extraordinary announcements

□ Applicable √ Not applicable

36

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

  1. Connected transactions in relation to acquisition of assets or acquisition or disposal of equity
    1. Events disclosed in extraordinary announcements without further development or change in subsequent implementation
      • Applicable √ Not applicable
    3. Events disclosed in extraordinary announcements and with further development or change in subsequent implementation
      • Applicable √ Not applicable
    5. Events not disclosed in extraordinary announcements
      • Applicable √ Not applicable
    7. Results which are relating to result agreements and shall be disclosed for the Reporting Period
      • Applicable √ Not applicable
  1. Material connected transactions relating to joint external investments
    1. Matters disclosed in extraordinary announcements without progress or change in the subsequent implementation
      • Applicable √ Not applicable
    3. Matters disclosed in extraordinary announcements with progress or change in the subsequent implementation
      • Applicable √ Not applicable
    5. Matters which were not disclosed in extraordinary announcements
      • Applicable √ Not applicable

(IV)

Related creditor's right and debt transactions

1.

Matters disclosed in extraordinary announcements without progress or change in the subsequent implementation

□ Applicable √ Not applicable

2.

Matters disclosed in extraordinary announcements with progress or change in the subsequent implementation

√ Applicable □ Not applicable

Caofeidian Coal Port, a controlled subsidiary of the Company, will carry out factoring business with Jigang Commercial

Factoring (Tianjin) Co., Ltd., an indirectly controlled subsidiary of Hebei Port Group Co., Ltd., the controlling

shareholder of the Company, for a period of three years from the effective date of the Factoring Business Cooperation

Framework Agreement signed by both parties. The annual factoring amount shall not exceed RMB300 million, which

can be recycled. The financing rate shall not exceed 6% (finance interest + service fee). For details of this matter,

please refer to the "Announcement on the Related Party Transaction in relation to the Factoring Business to be Carried

Out by a Controlled subsidiary" of QHD Port published on the SSE on 29 August 2019 (Announcement No.: 2019-024).

As of 30 June 2020, the daily cap for the factoring business between Caofeidian Coal Port and Jigang Commercial

Factoring (Tianjin) Co., Ltd. was RMB24,164,700. During the Reporting Period, the financing interest and handling fees

amounted to RMB717,100 in aggregate.

3.

Matters not disclosed in extraordinary announcements

□ Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

37

SECTION V SIGNIFICANT EVENTS

  1. Other material connected transactions
    □ Applicable √ Not applicable

(VI) Others

  • Applicable √ Not applicable

XI. MATERIAL CONTRACTS AND THEIR EXECUTION

  1. Trust, contracting and lease matters
    • Applicable √ Not applicable
  3. Guarantee
    • Applicable √ Not applicable
  5. Other material contracts
    • Applicable √ Not applicable

XII. POVERTY ALLEVIATION MEASURES OF THE LISTED COMPANY

  • Applicable □ Not applicable

1. Targeted poverty alleviation programs

  • Applicable □ Not applicable

Under the guidance of General Secretary Xi Jinping's important instructions on winning the battle against the epidemic prevention and control as well as the decisive battle against poverty, the Company has implemented the "Four Continuing Requirements", adhering to development-oriented poverty alleviation, cultivating leading industries in poor villages, expanding income-increasing projects, and stabilizing support for poverty alleviation. The Company has promoted the sales of poverty alleviation products, enhanced the development capabilities of poverty alleviation industries, and improved the mechanism for preventing poverty and return to poverty; strengthened the leadership of party building to help, stimulate organic growth momentum, and created an "unchanged work team" to fully achieve the goal of poverty alleviation.

2. Overview of targeted poverty alleviation during the Reporting Period

√ Applicable □ Not applicable

In the first half of 2020, the Company earnestly implements the work arrangement of the central, provincial and municipal governments for poverty alleviation. The Company coordinated the prevention and control of the epidemic and assisted in the villages, giving full play to the advantages of the port, implementing classified policies, and taking the initiative to achieve initial results in consolidating the results of poverty alleviation. The senior management of the Company inspected the poverty-stricken villages, voluntarily made research and build connections in terms of poverty alleviation and held the scheduling meeting of poverty alleviation to provide guidance for poverty alleviation. Work teams resided in the poverty-stricken villages were full of enthusiasm, kept motivated and cooperated with the township party committee to strengthen and improve poverty alleviation in a planned way and by steps. Through fulfilling the duties, improving service standards, focusing on the industry and pursuing for development, there was a constant improvement of satisfaction from the public. The assistance units and the persons responsible for the assistance visited the poverty-stricken homes on time to publicize poverty alleviation policies and knowledge of epidemic prevention and control, and sent them the warmth of the party and the care of society.

38

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

3.

Achievements of targeted poverty alleviation

√ Applicable □ Not applicable

Unit: RMB0' 000

Currency: RMB

Indicator

Amount and details

  1. Overall situation

Including:

1.

Funds

0.64

2.

Worth of materials

43.85

3.

Number of beneficiaries in recorded poor

267

population (person)

II.

Contribution to segments

1.

Poverty alleviation by industrial development

Including:

1.1

Type of industrial poverty alleviation project

√ Agriculture and forestry

□ Tourism

□ E-commerce

□ Assets income

□ Science and technology

□ Others

1.2

Number of industrial poverty alleviation projects (unit)

1

1.3

Contribution to industrial poverty alleviation projects

1.4

Number of beneficiaries in recorded poor population (person)

2.

Poverty alleviation by transfer of employment

Including:

2.1

Invested amount to vocational skills training

2.2

Number of person for vocational skills training (person/time)

2.3

Number of registered poor households who were

helped to be employed (person)

3.

Poverty alleviation by relocation

Including:

3.1

Number of people helped to relocate and find a job (person)

4.

Poverty elimination through education

Including:

4.1

Invested amount to endow poor students

0.04

4.2

Number of endowed poor students (person)

1

4.3

Invested amount to improve the educational

resources of poor areas

5.

Poverty alleviation through improvement in health

Including:

5.1

Invested amount of medical resources in impoverished areas

6.

Poverty alleviation through ecological protection

Including:

6.1

Type of projects

□ Conduct ecological

protection

□ Establish compensation

method for ecological

protection

□ Set up non-profit

positions for ecology

□ Other

6.2

Invested amount

7.

Basic income guarantee

Including:

7.1

Contributions to helping left behind children,

0.6

women and the elderly

7.2

Number of left behind children, women and the elderly

30

helped (person)

7.3

Contributions to helping poor physically disabled people

7.4

Number of poor physically disabled people (person)

8.

Social poverty alleviation

Including:

8.1

Invested amount of east-west cooperation for poverty alleviation

8.2

Invested amount to targeted poverty alleviation work

8.3

Public poverty alleviation fund

9.

Other projects

Including: 9.1. Number of projects (item)

5

9.2. Invested amount

43.85

9.3. Number of people documented as poor people who

267

were helped to be out of poverty (person)

9.4. Descriptions of other items

Poverty alleviation consumption

by way of donation with

purchase of 398,000, home's

appearance improvement

donations for villagers of 13,000, household visits with sympathy supplies of 19,500, anti-epidemic supplies donations of 5,600, and donations to the seriously ill and poverty stricken households of 2,400.

  1. Achievements and honors (content, level)

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

39

SECTION V SIGNIFICANT EVENTS

4. Staged progress of the fulfilment of social responsibility regarding targeted poverty alleviation

√ Applicable □ Not applicable

The Company regards poverty alleviation as the top priority in fulfilling its social responsibility. In the first half of 2020, the senior management of the Company went to the front line of poverty alleviation five times to supervise and promote poverty alleviation work, held poverty alleviation scheduling meetings and on-site meetings to study and solve real problems, visited poor households, and visited village cadres. The Company fully supported the work teams in villages to carry out epidemic prevention and control work, donating epidemic prevention supplies such as tents, masks, and temperature guns worth more than RMB5,600. The Company conducted poverty alleviation consumption in depth by establishing "Poverty Alleviation Consumption Care Counters" in corporate canteens. Through poverty alleviation consumption, Shuanghesheng Ecological Agricultural Products Co., Ltd. was promoted to establish 40 acres of "Poverty Alleviation Demonstration Base for Centralized Raw Material Purchasing", which was an useful attempt to form an effective poverty alleviation industry, and improve employment and the income of the poor. The Company guided village collective enterprises to standardize operations and continue improve their management level; carried out the activities of "Grasping Party Building, Preventing Epidemic, Promoting Poverty Alleviation, and Protecting a Well-off Society", to make up for shortcomings, strengthen the team, increase the party spirit, and continuously improve the organization and combat effectiveness of the two committees; organized 23 persons responsible for assistance to pair up to help 94 poor households, solved production and life problems, and promoted epidemic prevention and control and poverty alleviation policies, which gained wide public recognition.

5. Subsequent targeted poverty alleviation programs

√ Applicable □ Not applicable

2020 is the year to finish the battle against poverty alleviation and make decisive achievements. Work teams of the Company resided in the poverty-stricken villages will fully implement the requirements of strategic arrangement for poverty alleviation efforts of the central, provincial and municipal governments, striving to successfully complete the national poverty alleviation census. The Company will coordinate with township party committees, township governments and the two village committees to prepare well for the "Provincial Examination" and "National Examination", fulfill their duties such as village-resident assistance and pair assistance with high quality, establish poverty alleviation workshops, extend the industrial chain of agricultural and sideline products, and consolidate the results of poverty alleviation; actively carry out "poverty alleviation consumption" to enhance the organic growth momentum for poverty alleviation, and establish the long-termanti-poverty mechanism, step up efforts in the "spiritual assistance", strengthen the effectiveness of poverty reduction, so as to complete the annual poverty alleviation task with high quality.

XIII. CONVERTIBLE CORPORATE BONDS

  • Applicable √ Not applicable

XIV. INFORMATION ON ENVIRONMENTAL PROTECTION OF THE COMPANY

  1. Environmental protection of the Company and its subsidiaries categorized as major sewage discharge enterprises as published by the environmental protection department
    √ Applicable □ Not applicable

1. Information about pollution discharge

√ Applicable □ Not applicable

The Company is the key pollutant discharge unit of Qinhuangdao City in 2020. In the first half of 2020, the Company did not discharge production waste water. Unorganized and organized sources of dust reached the discharged standard and met the requirements of sewage permission.

2 Construction and operation of pollution prevention facilities

√ Applicable □ Not applicable

In the first half of 2020, the Company completed the main construction of shore power at Berths 706#, 707#, 901# and 902#. At the same time, the Company continued to strengthen the use and management of the original environmental protection equipment and facilities, strengthen the management, use, maintenance and repair of environmental protection equipment and facilities, and ensure the operation effect. At present, all pollution prevention equipment and facilities function well.

40

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

3. Environmental impact assessment of construction projects and other permits granted by environmental protection administrative departments

√ Applicable □ Not applicable

The Company strictly abode by the requirements of pollution permit management. The pollutant sewage reached the discharge standard. The pollution prevention equipment and facilities functioned well.

4. Contingency plans for environmental emergencies

√ Applicable □ Not applicable

The Company organized a comprehensive emergency drill for production safety accidents and environmental emergencies on 14 July 2020, strengthened the summary and evaluation of emergency drills, further improved the emergency management system, trained our emergency team, and enhanced the ability to handle sudden emergency.

5. Environmental self-monitoring plans

√ Applicable □ Not applicable

The Company prepared the environment monitoring program on its own according to the monitoring requirements of pollutant discharging units. Monitoring data showed that all pollutants had reached the discharge standard.

  1. 6. Other information about environmental protection should be made public

    □ Applicable √ Not applicable

  2. Information on environmental protection of companies not categorized as major sewage discharge enterprises
    □ Applicable √ Not applicable
  1. Reasons for undisclosed information on environmental protection of companies not categorized as major sewage discharge enterprises
    □ Applicable √ Not applicable

(IV) Disclosed information on subsequent progress or changes of environmental protection in the Reporting Period

□ Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

41

SECTION V SIGNIFICANT EVENTS

XV. COMPLIANCE WITH CORPORATE GOVERNANCE CODE

During the Reporting Period, to the knowledge of the Directors of QHD Port, the Company has complied with the code provisions of the Corporate Governance Code without any deviation from such code provisions.

XVI. COMPLIANCE WITH MODEL CODE

During the Reporting Period, QHD Port has adopted the Model Code as the conduct code for securities transactions by the Directors and Supervisors of QHD Port to regulate the securities transactions of the Directors and Supervisors. Following specific enquiries made by all Directors and Supervisors, they have confirmed that they have fully complied with the required standards set out in the Model Code.

XVII. USE OF PROCEEDS

The H Shares of the QHD Port have been listed and traded on the Stock Exchange since 12 December 2013. After deducting related expenses, the net proceeds from H shares of QHD Port amounted to HK$3,823 million. The use of proceeds from H shares disclosed in the section "Future Plans and Use of Proceeds" in the H share prospectus from the QHD Port's listing of H shares in December 2013 to nowadays (except for working capital and general corporate purposes) has been completed as planned, with the actual investment amount slightly more than the allocated amount set out in the H share prospectus. In order to increase the efficiency of the use of proceeds from H shares, the Board of Directors of QHD Port considers that it is necessary to adjust the use of proceeds from H shares of the plan and has already made a resolution to approve the adjustment of the unused proceeds from H shares into working capital and general corporate purposes. The Board believes that the above all adjustments to the use of proceeds from H shares will increase the flexibility of the Company's financial management and reduce other financing costs as well as in line with the overall interests of the QHD Port and its Shareholders. For details, please refer to the announcement published on the website of the Stock Exchange on 27 October 2017.

  1. As of 30 June 2020, HK$3,797,107,800 of the proceeds from H shares have been used by the Company and HK$61,491,000 of the proceeds from H shares remain unused, including the self-raised funds for the payment of the listing expenses of HK$24,017,400 and the net interest income relating to the proceeds from H share offering of HK$11,825,600. The specific use of proceeds from H shares is as follows:

Currency unit: ten thousand of Hong Kong dollars

Difference

between the

actual Investment

amount and

the amount of

Proceeds

Amount of

proceeds

allocated as

allocated as

Amount of

proceeds not

set out in the

set out in the

proceeds from

from fund

prospectus

No.

Use disclosed in the prospectus

prospectus (a)

fund raising (b)

raising (c)

(d=a-b-c)

1

Procurement of stackers for coal

5,124.00

-

5,124.00

0

handling services in Qinhuangdao Port

to replace aging equipment

2

Procurement of diesel locomotive

1,139.00

634.01

430.62

74.37

3

Construction of ore berths in Huanghua

244,408.18

232,534.70

-

11,873.48

Port

4

Repayment of bank loans

94,003.14

102,580.18

-

-8,577.04

5

Working capital and general corporate

37,601.26

43,961.89

-

-6,360.63

purposes

Total

382,275.58

379,710.78

5,554.62

-2,989.82

Notes:

  1. The "Amount of proceeds from fund raising" annotated as column (b) in the table (totaling HK$3,797,107,800) represents the amount of proceeds from H shares actually used;
  2. The "Amount of proceeds not from fund raising" annotated as column (c) in the table (totaling HK$55,546,200) represents the amount paid (for the contents disclosed in the section headed "Future Plans and Use of Proceeds" in the H share prospectus) with internal resources of the Company; and
  3. The "Difference between the actual amount of proceeds used and the amount of proceeds allocated as set out in the H share prospectus" annotated as column (d) in the table (totaling HK$-29,898,200) represents the difference between the actual amount allocated to the intended purposes (including amounts paid from the proceeds from H shares and amounts paid with the Company's internal resources) and the expected amount of proceeds from the Global Offering allocated to the intended purposes.

42

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION V SIGNIFICANT EVENTS

  1. As of 30 June 2020, the balance of proceeds from the H shares of HK$61,491,000 included the followings:
    The difference between the actual amount of proceeds used and the amount of proceeds allocated as set out in the H share prospectus in the amount of HK$-29,898,200;
    Amount of proceeds not from fund raising for the payment of the equipment in the investment projects in the amount of HK$55,546,200;
    Self-raised funds for the payment of the listing expenses of HK$24,017,400 and the net interest income relating to the proceeds in the amount of HK$11,825,600. The "self-raised funds for the payment of the listing expenses of HK$24,017,400" represents the amount paid with internal resources of QHD Port for the purpose of listing expenses; and the "net interest income relating to the proceeds in the amount of HK$11,825,600" represents the net interest income generated from the proceeds from H shares of QHD Port and kept in the designated bank account for the proceeds from H shares (the "Designated Account").
    The balance of proceeds from H shares of HK$61,491,000 are expected to be used for the working capital and general corporate purposes of the Company in the next four years, including the payment of dividend to the shareholders of H Shares, if any, and the payment of relevant fees to the overseas intermediaries in relation to the listing of H Shares. "The balance of proceeds from H shares" shall represent the balance of proceeds from H shares kept in the Designated Account.
    The Company would like to further explain how to reconcile the amount of HK$-29,898,200 with the amount of HK$61,491,000 (being the balance kept in the Designated Account): The amount of HK$55,546,200 and the amount of HK$24,017,400 were paid with the internal resources of the Company and not paid from the Designated Account. Together with the net interest income in the amount of HK$11,825,600 arising from the proceeds from H shares, all such items and the amount of HK$-29,898,200 had been aggregated to arrive at the amount of HK$61,491,000, being the balance kept in the Designated Account.
    The shares of QHD Port have been listed and traded on the SSE on 16 August 2017. For the Use of Proceeds of A Shares of the Company in the first half of 2020, please refer to the special item on the storage and actual use of raised funds in the first half of 2020 disclosed on the website of the SSE on 29 August 2020.

XVIII. EXPLANATION ON OTHER SIGNIFICANT EVENTS

  1. Explanation, reasons and impacts of the changes in accounting policy, accounting estimation and auditing method when compared with the previous accounting period
    □ Applicable √ Not applicable
  1. Explanation, correction amounts, reasons and impacts of retroactive restatement made for the corrections to the substantial accounting errors during the Reporting Period
    □ Applicable √ Not applicable
  1. Others
    □ Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

43

SECTION VI CHANGES IN ORDINARY SHARES AND PARTICULARS OF SHAREHOLDERS

  1. CHANGES IN SHARE CAPITAL
  1. Changes in shares
    1. Table for changes in shares
      During the Reporting Period, there were no changes in the total number of shares and share capital structure of the Company.
    2. Explanation on the changes in shares
      □Applicable √ Not applicable
    3. Impacts on financial indicators including earnings per share, net assets per share, etc. from changes in shares during the period from the end of the Reporting Period to the issuance of interim report (if any)
      □Applicable √ Not applicable
    4. Other information on the disclosure of which is deemed necessary by the Company or is required by securities regulatory authorities
      □Applicable √ Not applicable
  1. Changes in shares subject to selling restrictions
    □Applicable √ Not applicable
  1. PARTICULARS OF SHAREHOLDERS
  1. Total number of Shareholders:

Total number of ordinary Shareholders as at the end of the Reporting Period (Person)

79,899

44

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION VI CHANGES IN ORDINARY SHARES AND PARTICULARS OF SHAREHOLDERS

  1. Table of shareholding of the top 10 Shareholders and top 10 Shareholders with tradable shares (or Shareholders not subject to selling restrictions) as at the end of the Reporting Period

Unit: share

Shareholding of the top 10 Shareholders

Number of

Shares held

Change

at the end

Number of

Pledged or frozen

during the

of the

Shares subject

Reporting

Reporting

Percentage

to selling

Status of

Nature of

Name of Shareholder (full name)

Period

Period

(%)

restrictions

Shares

Amount

Shareholder

Hebei Port Group Co., Ltd.

3,032,528,078

54.27

3,032,528,078

Nil

State-owned

(河北港口集團有限公司)

legal person

HKSCC Nominees Limited

-274,050

827,520,382

14.81

Unknown

Overseas

(香港中央結算（代理人）有限公司)

legal person

Qinhuangdao Municipal People's Government

621,455,485

11.12

Nil

Country

State-owned Assets Supervision and

Administration Commission

(秦皇島市人民政府國有資產監督管理委員會)

Hebei Jiantou Traffic Investment Co., Ltd.

209,866,757

3.76

Nil

State-owned

(河北建投交通投資有限責任公司)

legal person

Daqin Railway Co., Ltd. (大秦鐵路股份有限公司)

42,750,000

0.77

Nil

State-owned

legal person

COSCO SHIPPING (Tianjin) Co., Ltd.*

41,437,588

0.74

Nil

State-owned

(中遠海運（天津）有限公司)

legal person

Shougang Group Co., Ltd. (首鋼集團有限公司)

41,437,588

0.74

Nil

State-owned

legal person

China Life Investment Holdings Company Limited

41,437,588

0.74

Nil

State-owned

(國壽投資控股有限公司)

legal person

Datong Coal Mine Group Co., Ltd.

41,437,588

0.74

Nil

State-owned

(大同煤礦集團有限公司)

legal person

National Council for Social Security Fund (Transfer

41,247,362

0.74

41,247,362

Nil

Others

Account No.1) (全國社會保障基金理事會轉持一戶)

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

45

SECTION VI CHANGES IN ORDINARY SHARES AND PARTICULARS OF SHAREHOLDERS

Shareholding of top 10 Shareholders not subject to selling restrictions

Number of tradable

Types and number of Shares

shares held not

subject to selling

Types of

Number of

Name of Shareholder

restrictions

shares

shares

HKSCC Nominees Limited (香港中央結算（代理人）有限公司) Note

827,520,382

Overseas-listed

827,520,382

foreign shares

Qinhuangdao Municipal People's Government State-owned

621,455,485

RMB-denominated

621,455,485

Assets Supervision and Administration Commission

ordinary shares

(秦皇島市人民政府國有資產監督管理委員會)

Hebei Jiantou Traffic Investment Co., Ltd.

209,866,757

RMB-denominated

209,866,757

(河北建投交通投資有限責任公司)

ordinary shares

Daqin Railway Co., Ltd. (大秦鐵路股份有限公司)

42,750,000

RMB-denominated

42,750,000

ordinary shares

COSCO SHIPPING (Tianjin) Co., Ltd.* (中遠海運（天津）有限公司)

41,437,588

RMB-denominated

41,437,588

ordinary shares

Shougang Group Co., Ltd. (首鋼集團有限公司)

41,437,588

RMB-denominated

41,437,588

ordinary shares

China Life Investment Holdings Company Limited

41,437,588

RMB-denominated

41,437,588

(國壽投資控股有限公司)

ordinary shares

Datong Coal Mine Group Co., Ltd. (大同煤礦集團有限公司)

41,437,588

RMB-denominated

41,437,588

ordinary shares

HKSCC Limited (香港中央結算有限公司)

14,385,981

RMB-denominated

14,385,981

ordinary shares

LU Huazhi

6,637,602

RMB-denominated

6,637,602

ordinary shares

Explanations on the connections or parties acting in concert among the aforesaid Shareholders

The Company is not aware of the existence of any connections or parties acting in concert among the aforesaid Shareholders falling within the requirements of the Administrative Measures on Takeover of Listed Companies

Explanations on the shareholders of preferred shares whose

Not Applicable

voting rights have been restored and the number of Shares

held

Notes: As at the end of the Reporting Period, HPG held 71,303,000 H Shares of QHD Port through HEBEI PORT GROUP International (Hong Kong) Co., Ltd., an overseas wholly-owned subsidiary, accounting for 1.28% of the total share capital of QHD Port. Those shares are included in total shares held by HKSCC Nominees Limited.

46

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION VI CHANGES IN ORDINARY SHARES AND PARTICULARS OF SHAREHOLDERS

Number of Shares held by top 10 shareholders subject to selling restrictions and information on the selling restrictions

  • Applicable □Not applicable

Unit: share

Shares subject to trading moratorium

available for listing and trading

The number

Number of

additional

of shares subject

Time available

shares available

Name of shareholders

to selling

for listing

for listing

No.

subject to selling restrictions

restrictions held

and trading

and trading Trading moratorium

1

HPG (河北港口集團有限公司)

3,032,528,078

16 August 2020

36 months from the

date of QHD Port's

listing

2

National Council for Social Security

41,247,362

16 August 2020

36 months from the

Fund (Transfer Account No.1)

date of QHD Port's

(全國社會保障基金理事會轉持一戶)

listing

3

Qinhuangdao Port Management Office

30,538,764

16 August 2020

36 months from the

of the People's Government of

date of QHD Port's

Shanxi Province (山西省人民政府駐

listing

秦皇島港務管理辦公室)

Explanations on the connections or parties

The Company is not aware of the existence of any connections or parties acting in

acting in concert among the aforesaid

concert among the aforesaid Shareholders falling within the requirements of the

Shareholders

Administrative Measures on Takeover of Listed Companies

  1. Strategic investors or general legal persons became one of the top 10 Shareholders as a result of the placing of the new Shares
    □Applicable √ Not applicable
  1. CHANGES IN CONTROLLING SHAREHOLDER OR DE FACTO CONTROLLERS
    □Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

47

SECTION VI CHANGES IN ORDINARY SHARES AND PARTICULARS OF SHAREHOLDERS

IV. INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS IN SHARES OF QHD PORT

As at 30 June 2020, so far as the Directors and Supervisors of QHD Port are aware, other than the Directors, Supervisors, the senior management of QHD Port and their respective associates, the following persons had or deemed to have an interest or short position in the Shares, underlying Shares and debentures which was recorded in the register required to be kept by QHD Port pursuant to Section 336 of the SFO:

Approximate

percentage

of the total

number of

Approximate

relevant class

percentage

Number of

Class of

of issued share

to total issued

capital of

share capital

Long position/

Name of Shareholders

Shares held

Capacity

Shares

QHD Port

of QHD Port

short position

State-owned Assets Supervision

3,032,528,078

Interest of

A Share

63.74%

54.27%

Long position

& Administration Commission

(Note 1)

controlled

of the People's Government of

corporation

Hebei Province

HPG

3,032,528,078

Beneficial owner

A Share

63.74%

54.27%

Long position

Qinhuangdao Municipal People's

621,455,485

Beneficial owner

A Share

13.06%

11.12%

Long position

Government State-owned

Assets Supervision and

Administration Commission

HPG

71,303,000

Interest of

H Share

8.59%

1.28%

Long position

(Note 2)

controlled

corporation

HEBEI PORT GROUP

71,303,000

Beneficial owner

H Share

8.59%

1.28%

Long position

International (Hong Kong) Co.,

(Note 2)

Ltd.

Fosun International Holdings Ltd.

49,714,000

Interest of

H Share

5.99%

0.89%

Long position

(Note 3)

controlled

corporation

Fosun Holdings Limited

49,714,000

Interest of

H Share

5.99%

0.89%

Long position

(Note 3)

controlled

corporation

Fosun International Limited

49,714,000

Interest of

H Share

5.99%

0.89%

Long position

(Note 5)

controlled

corporation

Guo Guangchang

49,714,000

Interest of

H Share

5.99%

0.89%

Long position

(Note 3)

controlled

corporation

China Shipping (Group) Company

44,296,500

Interest of

H Share

5.34%

0.79%

Long position

(Note 4)

controlled

corporation

China Shipping (Hong Kong)

44,296,500

Interest of

H Share

5.34%

0.79%

Long position

Holdings Co., Limited

(Note 4)

controlled

corporation

China Shipping Ports

44,296,500

Beneficial owner

H Share

5.34%

0.79%

Long position

Development Co., Ltd.

Fosun Financial Holdings Limited

41,481,500

Interest of

H Share

4.99%

0.74%

Long position

(Note 5)

controlled

corporation

Spinel Investment Limited

41,481,500

Interest of

H Share

4.99%

0.74%

Long position

(Note 5)

controlled

corporation

Peak Reinsurance Holdings

41,481,500

Interest of

H Share

4.99%

0.74%

Long position

Limited

(Note 5)

controlled

corporation

Peak Reinsurance Company

41,481,500

Beneficial owner

H Share

4.99%

0.74%

Long position

Limited

48

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION VI CHANGES IN ORDINARY SHARES AND PARTICULARS OF SHAREHOLDERS

Notes:

  1. State-ownedAssets Supervision & Administration Commission of the People's Government of Hebei Province is the controlling shareholder of HPG, and therefore, is deemed to be interested in 3,032,528,078 Shares of QHD Port under the SFO;
  2. HPG, the controlling shareholder of HEBEI PORT GROUP International (Hong Kong) Co., Ltd., is deemed to be interested in 71,303,000 Shares of QHD Port under the SFO;
  3. In accordance with the Disclosure of Interests Online System of the Stock Exchange, Guo Guangchang (the direct controlling shareholder of Fosun International Holdings Ltd.), Fosun International Holdings Ltd. (the direct controlling shareholder of Fosun Holdings Limited), Fosun Holdings Limited (the direct controlling shareholder of Fosun International Limited) were deemed to be interested in 49,714,000 Shares of QHD Port respectively under the SFO;
  4. China Shipping (Group) Company (direct controlling shareholder of China Shipping (Hong Kong) Holdings Co., Limited) and China Shipping (Hong Kong) Holdings Co., Limited (direct controlling shareholder of China Shipping Ports Development Co., Ltd.) were deemed to be interested in 44,296,500 Shares of QHD Port respectively under the SFO; and
  5. In accordance with the Disclosure of Interests Online System of the Stock Exchange, Fosun International Limited (the direct controlling shareholder of Fosun Financial Holdings Limited), Fosun Financial Holdings Limited (the direct controlling shareholder of Spinel Investment Limited), Spinel Investment Limited (the direct controlling shareholder of Peak Reinsurance Holdings Limited) and Peak Reinsurance Holdings Limited (the direct controlling shareholder of Peak Reinsurance Company Limited) were deemed to be interested in 41,418,500 Shares of QHD Port respectively under the SFO;

Save as disclosed above, as at 30 June 2020, so far as the Directors, supervisors and senior management of QHD Port are aware, no other persons or substantial Shareholders of the Company (as defined in the Hong Kong Listing Rules) had or deemed to have an interest or short position in the Shares or underlying Shares (as the case may be) of QHD Port which was required to be disclosed to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV under the SFO.

  1. PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF QHD PORT

Neither QHD Port nor its subsidiaries purchased, sold or redeemed any of the listed securities of QHD Port during the Reporting Period.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

49

SECTION VII INFORMATION OF PREFERENCE SHARES

□Applicable √ Not applicable

50

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION VIII DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

  1. PARTICULARS OF CHANGES IN SHAREHOLDING
  1. Particulars of changes in shareholding of current and resigned Directors, Supervisors and senior management during the Reporting Period

  1. □Applicable √ Not applicable Other descriptions

    □Applicable √ Not applicable

  2. Share incentives granted to Directors, Supervisors and senior management during the Reporting Period
    □Applicable √ Not applicable
  1. Directors', Supervisors' and Senior Management's interests and short positions in the Shares, underlying Shares and debentures of QHD Port and its associated corporations
    As at 30 June 2020, as far as the Directors are aware, none of the Directors, Supervisors or chief executives of QHD Port and their respective associates had, or was deemed to have, any interest or short position in Shares, underlying Shares and debentures of QHD Port and its associated corporations (within the meaning of Part XV of the SFO) which were required to be recorded in the register kept by QHD Port under Section 352 of the SFO or which were required to be notified to QHD Port and the Stock Exchange pursuant to the Model Code.
  1. CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE COMPANY
    □Applicable √ Not applicable

Description of changes of Directors, Supervisors and senior management of the Company

  1. □Applicable √ Not applicable

  2. INDEPENDENT NON-EXECUTIVE DIRECTORS AND AUDIT COMMITTEE

On 30 June 2020, there are four independent non-executive Directors in QHD Port, one of whom is professional in the accounting field and has experience in financial management.

QHD Port has established the Audit Committee according to the requirements of the Hong Kong Listing Rules with written terms of its reference. The Audit Committee has reviewed the unaudited interim financial report of QHD Port for the six months ended 30 June 2020.

IV. OTHER EXPLANATIONS

□Applicable √ Not applicable

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

51

SECTION IX CORPORATE BONDS

□Applicable √ Not applicable

52

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

SECTION X REVIEW REPORT

Ernst & Young Hua Ming (2020) Zhuan Zi No. 61063699_E05

Qinhuangdao Port Co., Ltd.

To the Shareholders of Qinhuangdao Port Co., Ltd.:

We have reviewed the accompanying financial statements of Qinhuangdao Port Co., Ltd. (the "Company") and its subsidiaries, which comprised the consolidated and Company's balance sheets as at 30 June 2020, and the consolidated and Company's income statements, and Company's statements of changes in shareholders' equity and Company's cash flow statements for the six months then ended, and notes to the financial statements (hereinafter collectively referred to as the "Interim Financial Statements"). The preparation of the Interim Financial Statements is the responsibility of the Company's management. Our responsibility is to deliver a report on review of these Interim Financial Statements based on our review.

We conducted our review in accordance with China Certified Public Accountant Review Standard No.2101-Review of Financial Statements. This Standard requires us to plan and perform the review to obtain limited assurance about whether the Interim Financial Statements are free from material misstatements. A review is limited primarily to procedures as enquiry of entity's personnel and analytical review procedures applied to the financial information and thus provides less assurance than an audit. We have not performed an audit, and therefore we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the Interim Financial Statements of Qinhuangdao Port Co., Ltd. are not prepared, in all material respects, in accordance with the Accounting Standards for Business Enterprises No. 32 - Interim Financial Reporting, and cannot present fairly, in all material respects, the Company's financial position, operating performance and cash flows.

Ernst & Young Hua Ming LLP

Chinese Certified Public Accountant: Wang Tianqing

(Project Partner)

Chinese Certified Public Accountant: Zhou Lan

Beijing, PRC

28 August 2020

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

53

CONSOLIDATED BALANCE SHEET

30 June 2020

RMB

Assets

30 June 2020

31 December 2019

Note V

(Unaudited)

Current assets

Cash and bank balances

1

3,077,521,029.15

2,805,072,385.39

Financial assets held for trading

2

170,000,000.00

-

Bills receivable

3

194,097,706.00

172,344,886.06

Accounts receivable

4

92,362,178.38

81,480,463.58

Prepayments

13,562,578.41

10,763,773.91

Other receivables

5

154,734,310.25

47,843,613.54

Inventories

6

199,504,371.88

186,149,733.94

Other current assets

7

91,463,591.39

108,861,397.06

Total current assets

3,993,245,765.46

3,412,516,253.48

Non-current assets

Long-term equity investments

8

2,941,119,723.03

2,933,977,826.03

Other equity investments

9

817,446,118.17

792,793,162.66

Fixed assets

10

13,864,957,576.55

14,386,455,466.64

Construction in progress

11

844,131,138.54

818,663,594.98

Right-of-use assets

12

130,017,661.39

136,087,991.44

Intangible assets

13

2,406,602,150.64

2,442,851,949.55

Long-term prepaid expenses

75,767,646.93

67,553,845.97

Deferred tax assets

14

367,099,832.83

410,276,375.66

Other non-current assets

15

35,455,731.63

78,678,974.13

Total non-current assets

21,482,597,579.71

22,067,339,187.06

Total assets

25,475,843,345.17

25,479,855,440.54

The accompanying notes form part of these financial statements.

54

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

CONSOLIDATED BALANCE SHEET

30 June 2020

RMB

Liabilities and shareholders' equity

30 June 2020

31 December 2019

Note V

(Unaudited)

Current liabilities

Short-term borrowings

17

194,294,833.98

151,811,497.31

Accounts payable

18

316,070,261.78

164,642,529.63

Contract liabilities

19

494,366,165.84

526,176,060.80

Employee benefits payable

20

644,651,418.47

641,772,243.05

Taxes payable

21

171,475,269.71

136,546,991.12

Other payables

22

548,250,264.46

618,070,938.59

Non-current liabilities due within one year

23

824,951,163.06

698,268,300.47

Total current liabilities

3,194,059,377.30

2,937,288,560.97

Non-current liabilities

Long-term borrowings

24

5,669,237,997.98

5,883,682,492.98

Lease liabilities

25

3,685,042.35

7,521,511.19

Long-term payable

26

238,400,000.00

238,400,000.00

Long-term employee benefits payable

27

432,047,411.64

532,928,001.35

Provisions

28

28,356,993.00

33,860,000.00

Deferred income

29

225,443,509.36

243,113,352.90

Deferred tax liabilities

14

20,942,962.56

14,779,723.68

Total non-current liabilities

6,618,113,916.89

6,954,285,082.10

Total liabilities

9,812,173,294.19

9,891,573,643.07

Shareholders' equity

Share capital

30

5,587,412,000.00

5,587,412,000.00

Capital reserve

31

5,207,544,792.61

5,207,544,792.61

Other comprehensive income

32

218,792,375.79

181,333,327.86

Special reserve

33

131,387,984.82

108,030,468.84

Surplus reserve

34

1,334,346,000.28

1,334,346,000.28

Retained profit

35

2,264,651,038.08

2,191,776,305.79

Total equity attributable to shareholders of the parent

14,744,134,191.58

14,610,442,895.38

Minority interests

919,535,859.40

977,838,902.09

Total shareholders' equity

15,663,670,050.98

15,588,281,797.47

Total liabilities and shareholders' equity

25,475,843,345.17

25,479,855,440.54

The financial statements have been signed by:

Person in charge of

Legal representative:

Business operation:

Chief financial officer:

Head of accounting department:

Cao Ziyu

Yang Wensheng

Guo Xikun

Xie Hui

The accompanying notes form part of these financial statements.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

55

CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2020

RMB

For the

For the

six months ended

six months ended

30 June 2020

30 June 2019

Note V

(Unaudited)

(Unaudited)

Revenue

36

2,995,402,079.12

3,390,705,885.07

Less: Operating costs

36

1,782,650,850.89

1,891,445,242.95

Tax and surcharges

37

172,526,083.16

186,562,331.58

Sales costs

-

61,464.53

Administrative expenses

38

305,437,657.13

614,301,550.89

Research and development costs

39

3,076,399.45

3,871,210.49

Financial costs

40

138,894,242.03

155,620,529.30

Including: Interest costs

157,048,041.65

172,667,504.47

Interest income

17,454,727.14

17,074,459.78

Add: Other income

41

29,572,679.41

21,421,796.40

Investment income

42

95,061,438.50

136,914,025.04

Including: Investment income from associates

and joint ventures

88,664,876.08

113,679,555.02

Credit impairment loss

43

(3,420,348.14)

2,744,275.23

Gain in disposal of assets

44

482,413.23

1,600,453.26

Operating profit

714,513,029.46

701,524,105.26

Add: Non-operating income

45

618,888.00

4,026,517.43

Less: Non-operating expenses

46

3,886,701.12

453,580.38

Total profit

711,245,216.34

705,097,042.31

Less: Income tax expenses

48

198,029,587.94

186,888,367.23

Net profit

513,215,628.40

518,208,675.08

Classified by business continuity

Net profit from continuing operations

513,215,628.40

518,208,675.08

Classified by ownership

Net profit attributable to shareholders of the parent

575,741,812.29

549,099,796.92

Minority interests

(62,526,183.89)

(30,891,121.84)

The accompanying notes form part of these financial statements.

56

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2020

RMB

For the

For the

six months ended

six months ended

30 June 2020

30 June 2019

Note V

(Unaudited)

(Unaudited)

Other comprehensive income, net of tax

40,268,345.10

6,650,436.88

Other comprehensive income attributable to shareholders of the parent,

net of tax

32

37,459,047.93

11,332,641.66

Other comprehensive income not to be reclassified to profit or loss

Other comprehensive income not to be taken to profit or loss using

the equity method

21,329,842.60

-

Changes in fair value of

Investments in other equity instruments

15,680,419.46

10,555,752.37

Those other comprehensive income to be reclassified to profit or loss

Other comprehensive income to be taken to profit or loss using

the equity method

(444,541.53)

592,349.45

Exchange differences on foreign currency translation

893,327.40

184,539.84

Other comprehensive income attributable to minority shareholders,

net of tax

32

2,809,297.17

(4,682,204.78)

Total comprehensive income

553,483,973.50

524,859,111.96

Including:

Total comprehensive income attributable to shareholders

of the parent

613,200,860.22

560,432,438.58

Total comprehensive income attributable to minority shareholders

(59,716,886.72)

(35,573,326.62)

Earnings per share

49

Basic and diluted earnings per share

0.10

0.10

The accompanying notes form part of these financial statements.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

57

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

RMB

For the six months ended 30 June 2020 (Unaudited)

Equity attributable to shareholders of the parent

Other

Total

comprehensive

shareholders'

Note V

Share capital

Capital reserve

income

Special reserve

Surplus reserve

Retained profits

Sub-total

Minority interests

equity

I.

Current period's opening balance

5,587,412,000.00

5,207,544,792.61

181,333,327.86

108,030,468.84

1,334,346,000.28

2,191,776,305.79

14,610,442,895.38

977,838,902.09

15,588,281,797.47

II.

Changes during the period

(I)

Total comprehensive income

1.

Net profit

-

-

-

-

-

575,741,812.29

575,741,812.29

(62,526,183.89)

513,215,628.40

2.

Other comprehensive income

-

-

37,459,047.93

-

-

-

37,459,047.93

2,809,297.17

40,268,345.10

(II)

Profit distribution

1.

Distribution to Shareholders

35

-

-

-

-

-

(502,867,080.00)

(502,867,080.00)

-

(502,867,080.00)

(III)

Special reserve

1.

Accrual

-

-

-

33,526,470.79

-

-

33,526,470.79

1,702,046.24

35,228,517.03

2.

Usage

-

-

-

(10,168,954.81)

-

-

(10,168,954.81)

(288,202.21)

(10,457,157.02)

III.

Current period's closing balance

5,587,412,000.00

5,207,544,792.61

218,792,375.79

131,387,984.82

1,334,346,000.28

2,264,651,038.08

14,744,134,191.58

919,535,859.40

15,663,670,050.98

The accompanying notes form part of these financial statements.

58

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

RMB

For the six months ended 30 June 2019 (Unaudited)

Equity attributable to shareholders of the parent

Other

Total

comprehensive

shareholders'

Note V

Share capital

Capital reserve

income

Special reserve

Surplus reserve

Retained profits

Sub-total

Minority interests

equity

I.

Current period's opening balance

5,587,412,000.00

5,202,818,808.47

(1,091,254.83)

80,726,967.97

1,235,538,930.68

1,789,566,768.00

13,894,972,220.29

1,093,485,641.26

14,988,457,861.55

II.

Changes during the period

(I)

Total comprehensive income

1.

Net profit

-

-

-

-

-

549,099,796.92

549,099,796.92

(30,891,121.84)

518,208,675.08

2.

Other comprehensive income

-

-

11,332,641.66

-

-

-

11,332,641.66

(4,682,204.78)

6,650,436.88

(II)

Profit distribution

1.

Distribution to Shareholders

35

-

-

-

-

-

(430,230,724.00)

(430,230,724.00)

-

(430,230,724.00)

(III)

Special reserve

1.

Accrual

-

-

-

34,860,561.19

-

-

34,860,561.19

1,509,741.80

36,370,302.99

2.

Usage

-

-

-

(13,160,232.76)

-

-

(13,160,232.76)

(384,380.08)

(13,544,612.84)

(IV)

Others

-

4,725,984.14

-

-

-

-

4,725,984.14

(4,725,984.14)

-

III.

Current period's closing balance

5,587,412,000.00

5,207,544,792.61

10,241,386.83

102,427,296.40

1,235,538,930.68

1,908,435,840.92

14,051,600,247.44

1,054,311,692.22

15,105,911,939.66

The accompanying notes form part of these financial statements.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

59

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

RMB

For the

For the

six months ended

six months ended

30 June 2020

30 June 2019

Note V

(Unaudited)

(Unaudited)

I. Cash flows from operating activities

Cash received from sale of goods or rendering of services

3,094,176,943.23

3,604,948,187.50

Refund of taxes and levies

-

18,768,652.40

Cash received relating to other operating activities

50

23,550,181.47

34,973,653.18

Sub-total of cash inflows

3,117,727,124.70

3,658,690,493.08

Cash paid for goods and services

511,324,399.09

638,474,853.44

Cash paid to and on behalf of employees

820,670,776.65

878,067,406.30

Cash paid for all taxes

375,486,422.35

536,824,133.40

Cash paid relating to other operating activities

50

138,524,659.25

78,439,776.40

Sub-total of cash outflows

1,846,006,257.34

2,131,806,169.54

Net cash flows from operating activities

50

1,271,720,867.36

1,526,884,323.54

II. Cash flows from investing activities

Cash received from return of investment

544,868,314.16

565,376,008.74

Cash received from investment income

16,396,562.42

57,685,342.91

Net cash received from disposal of fixed assets,

intangible assets and other long-term assets

1,913,562.86

190,910,153.73

Cash received relating to other investing activities

50

15,523,116.22

14,075,064.86

Sub-total of cash inflows

578,701,555.66

828,046,570.24

Cash paid for acquisition of fixed assets, intangible assets

and other long-term assets

215,352,999.58

413,707,642.88

Cash paid for investments

958,068,314.16

577,876,008.74

Cash paid relating to other investing activities

50

-

6,000,000.00

Sub-total of cash outflows

1,173,421,313.74

997,583,651.62

Net cash flows from investing activities

(594,719,758.08)

(169,537,081.38)

The accompanying notes form part of these financial statements.

60

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

RMB

For the

For the

six months ended

six months ended

30 June 2020

30 June 2019

Note V

(Unaudited)

(Unaudited)

III. Cash flows from financing activities

Cash received from borrowings

213,014,322.00

411,200,000.00

Sub-total of cash inflows

213,014,322.00

411,200,000.00

Cash paid for repayments of borrowings

257,942,000.00

699,662,000.00

Cash paid for distribution of dividends or profits and

for interest expenses

585,180,653.08

173,188,081.30

Cash paid relating to other financing activities

50

3,915,353.36

2,095,779.61

Sub-total of cash outflow

847,038,006.44

874,945,860.91

Net cash flows from financing activities

(634,023,684.44)

(463,745,860.91)

IV. Effect of foreign exchange rate changes on cash and cash

equivalents

1,793,835.14

401,210.85

V. Net increase in cash and cash equivalents

44,771,259.98

894,002,592.10

Add: Balance of cash and cash equivalents at the beginning of

the period

2,115,226,869.17

1,984,473,726.56

VI. Balance of cash and cash equivalents at the end of the period

51

2,159,998,129.15

2,878,476,318.66

The accompanying notes form part of these financial statements.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

61

BALANCE SHEET

30 June 2020

RMB

Assets

Note XIII

30 June 2020

31 December 2019

(Unaudited)

Current assets

Cash and bank balances

2,173,815,128.03

1,939,401,202.52

Bills receivable

91,200,000.00

98,732,091.00

Accounts receivable

1

52,099,714.74

40,947,899.72

Prepayments

4,271,764.88

1,697,546.98

Other receivables

95,672,573.40

607,924.51

Inventories

130,823,253.79

125,905,679.48

Other current assets

-

38,411.46

Total current assets

2,547,882,434.84

2,207,330,755.67

Non-current assets

Long-term equity investments

2

9,438,307,734.76

9,430,895,512.09

Investments in other equity instruments

3

634,095,207.47

617,086,598.02

Fixed assets

3,871,180,382.59

4,030,558,073.57

Construction in progress

31,985,491.59

24,481,805.29

Right-of-use assets

11,655,550.59

15,540,733.92

Intangible assets

389,257,394.79

390,737,372.27

Deferred tax assets

323,009,306.68

347,613,518.50

Other non-current assets

19,068,464.07

26,591,859.93

Total non-current assets

14,718,559,532.54

14,883,505,473.59

Total assets

17,266,441,967.38

17,090,836,229.26

The accompanying notes form part of these financial statements.

62

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

BALANCE SHEET

30 June 2020

RMB

Liabilities and shareholders' equity

30 June 2020

31 December 2019

(Unaudited)

Current liabilities

Short-term borrowings

70,069,736.11

80,163,252.78

Accounts payable

145,379,734.94

69,608,872.13

Contract liabilities

375,599,953.33

404,641,998.27

Employee benefits payable

610,130,118.29

611,203,208.77

Taxes payable

139,545,647.89

101,279,397.97

Other payables

134,500,032.30

65,378,838.95

Non-current liabilities due within one year

8,895,472.54

8,619,266.69

Total current liabilities

1,484,120,695.40

1,340,894,835.56

Non-current liabilities

Lease liabilities

3,685,042.35

7,521,511.19

Long-term payable

238,400,000.00

238,400,000.00

Long-term employee benefits payable

399,575,174.92

494,454,519.70

Deferred income

224,749,183.51

242,419,027.05

Deferred tax liabilities

11,835,712.38

7,583,560.02

Total non-current liabilities

878,245,113.16

990,378,617.96

Total liabilities

2,362,365,808.56

2,331,273,453.52

Shareholders' equity

Share capital

5,587,412,000.00

5,587,412,000.00

Capital reserve

5,197,336,468.67

5,197,336,468.67

Other comprehensive income

199,252,644.00

165,610,885.84

Special reserve

101,208,301.66

82,639,037.09

Surplus reserve

1,334,207,655.51

1,334,207,655.51

Retained profit

2,484,659,088.98

2,392,356,728.63

Total shareholders' equity

14,904,076,158.82

14,759,562,775.74

Total liabilities and shareholders' equity

17,266,441,967.38

17,090,836,229.26

The accompanying notes form part of these financial statements.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

63

INCOME STATEMENT

For the six months ended 30 June 2020

RMB

For the

For the

six months ended

six months ended

30 June 2020

30 June 2019

Note XIII

(Unaudited)

(Unaudited)

Revenue

4

2,010,896,286.99

2,441,643,158.80

Less: Operating costs

4

1,009,506,924.01

1,129,987,099.22

Business tax and surcharges

102,176,996.58

122,145,342.29

Administrative expenses

250,871,677.05

553,229,918.28

Research and development cost

3,076,399.45

3,871,210.49

Financial costs

(12,540,275.45)

3,565,404.42

Including: Interest expense

1,856,127.86

15,967,892.70

Interest income

13,452,482.80

12,295,489.83

Add: Other income

28,420,558.72

20,525,874.72

Investment income

5

88,938,573.16

116,864,841.55

Including: Investment income from associates and joint ventures

88,938,573.16

116,864,841.55

Credit impairment loss

1,351,249.26

7,122,224.09

Operating profits

776,514,946.49

773,357,124.46

Add: Non-operating income

424,697.40

3,926,635.31

Less: Non-operating expenses

3,153,181.51

360,948.53

Total profit

773,786,462.38

776,922,811.24

Less: Income tax expenses

178,617,022.03

177,133,446.99

Net profit

595,169,440.35

599,789,364.25

Including: Net profit from continuing operations

595,169,440.35

599,789,364.25

Other comprehensive income, net of tax

33,641,758.16

16,021,417.00

Other comprehensive income not to be reclassified to profit or loss

Changes in fair value of investments in other equity instruments

12,756,457.09

15,429,067.55

Other comprehensive income not to be taken to profit

or loss using the equity method

21,329,842.60

-

Those other comprehensive income to be reclassified to profit or loss

Other comprehensive income to be taken to profit or loss using

the equity method

(444,541.53)

592,349.45

Total comprehensive income

628,811,198.51

615,810,781.25

The accompanying notes form part of these financial statements.

64

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

RMB

For the six months ended 30 June 2020 (Unaudited)

Other

Total

Comprehensive

shareholders'

Share capital

Capital reserve

income

Special reserve

Surplus reserve

Retained profits

equity

I.

Current period's opening balance

5,587,412,000.00

5,197,336,468.67

165,610,885.84

82,639,037.09

1,334,207,655.51

2,392,356,728.63

14,759,562,775.74

II.

Changes during the period

(I)

Total comprehensive income

1.

Net profit

-

-

-

-

-

595,169,440.35

595,169,440.35

2.

Other comprehensive income

-

-

33,641,758.16

-

-

-

33,641,758.16

(II)

Profit distribution

1.

Distribution to shareholders

-

-

-

-

-

(502,867,080.00)

(502,867,080.00)

(III)

Special reserve

1.

Accrual

-

-

-

26,269,027.88

-

-

26,269,027.88

2.

Usage

-

-

-

(7,699,763.31)

-

-

(7,699,763.31)

III.

Current period's closing balance

5,587,412,000.00

5,197,336,468.67

199,252,644.00

101,208,301.66

1,334,207,655.51

2,484,659,088.98

14,904,076,158.82

For the six months ended 30 June 2019 (Unaudited)

Other

Total

Comprehensive

shareholders'

Share capital

Capital reserve

income

Special reserve

Surplus reserve

Retained profits

equity

I.

Current period's opening balance

5,587,412,000.00

5,197,336,468.67

(26,185,253.11)

63,494,074.77

1,235,400,585.91

1,933,323,826.24

13,990,781,702.48

II.

Changes during the period

(I)

Total comprehensive income

1.

Net profit

-

-

-

-

-

599,789,364.25

599,789,364.25

2.

Other comprehensive income

-

-

16,021,417.00

-

-

-

16,021,417.00

(II)

Profit distribution

1.

Distribution to shareholders

-

-

-

-

-

(430,230,724.00)

(430,230,724.00)

(III)

Special reserve

1.

Accrual

-

-

-

26,888,656.83

-

-

26,888,656.83

2.

Usage

-

-

-

(9,981,403.49)

-

-

(9,981,403.49)

III.

Current period's closing balance

5,587,412,000.00

5,197,336,468.67

(10,163,836.11)

80,401,328.11

1,235,400,585.91

2,102,882,466.49

14,193,269,013.07

The accompanying notes form part of these financial statements.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

65

STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

RMB

For the

For the

six months ended

six months ended

30 June 2020

30 June 2019

(Unaudited)

(Unaudited)

  1. Cash flows from operating activities

Cash received from sales of goods or rendering of services

2,082,388,082.75

2,632,108,413.07

Refund of taxes and levies

-

18,768,652.40

Cash received relating to other operating activities

18,305,438.55

17,945,081.81

Sub-total of cash inflows

2,100,693,521.30

2,668,822,147.28

Cash paid for goods and services

287,988,065.71

360,331,142.50

Cash paid to and on behalf of employees

704,050,600.40

755,404,329.31

Cash paid for all taxes

288,761,765.94

410,655,700.26

Cash paid relating to other operating activities

96,457,925.77

62,206,594.38

Sub-total of cash outflows

1,377,258,357.82

1,588,597,766.45

Net cash flows from operating activities

723,435,163.48

1,080,224,380.83

II.

Cash flows from investing activities

Cash received from return of investment

489,568,314.16

200,000,000.00

Cash received from investment income

10,000,000.00

51,337,662.89

Net cash received from disposal of fixed assets, intangible assets

and other long-term assets

713,956.03

3,177,339.02

Sub-total of cash inflows

500,282,270.19

254,515,001.91

Cash paid for acquisition of fixed assets, intangible assets

and other long-term assets

57,136,422.51

44,211,540.45

Cash paid for investments

739,568,314.16

118,000,000.00

Cash paid relating to other investing activities

-

6,000,000.00

Sub-total of cash outflows

796,704,736.67

168,211,540.45

Net cash flows from investing activities

(296,422,466.48)

86,303,461.46

  1. Cash flows from financing activities

Cash received from borrowings

-

150,000,000.00

Sub-total of cash inflows

-

150,000,000.00

Cash paid for repayments of borrowings

10,000,000.00

550,000,000.00

Cash paid for distribution of dividends or profits and for interest expenses

429,774,950.28

16,088,523.34

Cash paid relating to other financing activities

3,915,353.36

2,095,779.61

Sub-total of cash outflow

443,690,303.64

568,184,302.95

Net cash flows from financing activities

(443,690,303.64)

(418,184,302.95)

IV.

Effect of foreign exchange rate changes on cash and cash equivalents

1,091,532.15

309,497.31

V.

Net (decrease)/increase in cash and cash equivalents

(15,586,074.49)

748,653,036.65

Add: Balance of cash and cash equivalents at the beginning of the period

1,433,401,202.52

1,251,209,101.92

VI.

Balance of cash and cash equivalents at the end of the period

1,417,815,128.03

1,999,862,138.57

The accompanying notes form part of these financial statements.

66

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. GENERAL INFORMATION

Qinhuangdao Port Co., Ltd. (the "Company") is a joint stock company with limited liability incorporated in Hebei Province, the People's Republic of China on 31 March 2008. The H shares and A shares of the Company were listed on The Stock Exchange of Hong Kong Limited on 12 December 2013 and the Shanghai Stock Exchange on 16 August 2017 respectively. The office address and headquarter of the Company is located at 35 Haibin Road, Haigang District, Qinhuangdao, Hebei Province.

The main operating activities of the Company and its subsidiaries (collectively referred to as the "Group") are: provision of terminal facilities for vessels and provision of port services such as loading and discharging, stacking, warehousing, transportation, container stacking and less than container load services; other port related services such as tugboat service, lease and repair of harbor facilities, equipment and machinery, cargo weighing, freight forwarding, port tallying and provision of power and electrical engineering services; and import and export services of goods. The Group's port services mainly handle coal and metal ores as well as other types of cargo including oil and liquefied chemicals and general cargo and containers.

The parent and ultimate parent of the Group is Hebei Port Group Co., Ltd. ("HPG"), which was established in the People's Republic of China.

These financial statements have been approved by the board of directors of the Company by resolutions on 28 August 2020.

The consolidation scope of these consolidated financial statements is determined on the basis of control, and the consolidation scope for the period is consistent with that in the previous year.

  1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

These interim financial statements have been prepared in accordance with "Accounting Standards for Business Enterprises No. 32 - Interim Financial Reporting" issued by the Ministry of Finance. The accounting policies adopted in these interim financial statements are consistent with the accounting policies adopted when the Group prepared the financial statements for the year ended 2019. These interim financial statements should be read in conjunction with financial statements of the Group for the year ended 2019.

The financial statements have been prepared on a basis that the Group will be able to continue as a going concern.

These financial statements (except for certain financial instruments) have been prepared under the historical cost convention. If the assets are impaired, corresponding provisions for impairment shall be made according to relevant rules.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

67

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

The Group adopts specific accounting policies and accounting estimates according to the actual production and management features, which include provision for bad debt of receivables, accounting method for inventories, provision for fixed assets depreciation, intangible assets amortization, long-term equity investment impairment provisions and recognition and measurement of revenue.

  1. Statement of Compliance with Accounting Standards for Business Enterprises
    These financial statements are prepared in accordance with the Accounting Standards for Business Enterprises and present fairly and fully the financial position of the Company and the Group as at 30 June 2020 and their financial performance and cash flows for the six months ended 30 June 2020.
  2. Accounting Period
    The accounting year for the Group is from 1 January to 31 December of each calendar year, except for that the accounting period of the interim financial statements is from 1 January to 30 June.
  3. Functional Currency
    The Group's reporting and presentation currency is Renminbi ("RMB"). Unless otherwise stated, the unit of the currency is RMB yuan.
    The reporting currencies of the subsidiaries of the Group operating overseas are subject to their respective principal economic environment, and will be denominated in RMB for the preparation of the financial statements.

68

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    4. Business Combinations
    Business combinations are classified into business combinations under common control and business combinations not under common control.
    Business combinations under common control
    A business combination under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For a business combination under common control, the party that, on the combination date, obtains control of another entity participating in the combination is the merging party, while that other entity participating in the combination is the merged party. The combination date is the date on which the merging party effectively obtains control of the merged party.
    Assets and liabilities (including goodwill arising from the acquisition of the merged party by the ultimate controller) that are obtained by the merging party in a business combination under common control shall be accounted for based on their carrying amounts in the financial statements of the ultimate controller at the combination date. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued) by the merging party shall be adjusted to share premium under capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
    Business combinations not under common control
    A business combination not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the combination. For a business combination not under common control, the party that, on the acquisition date, obtains control of another entity participating in the combination is the acquirer, while that other entity participating in the combination is the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
    The acquirer shall measure the acquiree's identifiable assets, liabilities and contingent liabilities acquired in the business combination at their fair values on the acquisition date.
    Where the aggregate of the fair value of the consideration paid (or the fair value of the equity securities issued) and fair value of equity interest in the acquiree held before the acquisition date exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference shall be recognized as goodwill. Goodwill is subsequently measured at cost less any accumulated impairment losses. Where the aggregate of the fair value of the consideration paid (or the fair value of the equity securities issued) and fair value of equity interest in the acquiree held before the acquisition date is less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, reassessment of the measurement of these items is conducted first, if the sum of the fair value of this consideration and other items mentioned above is still lower than the fair value of the net assets acquired, the difference is recognized in profit or loss for the current period.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

69

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    1. Consolidated Financial Statements
      The consolidation scope of consolidated financial statements is determined on the basis of control, including the financial statements of the Company for the six months ended 30 June 2020 and all of its subsidiaries. A subsidiary is an entity (including an enterprise, a separable part of an investee, a structural body controlled by the Company, etc.) that is controlled by the Company.
      In preparation of consolidated financial statements, the subsidiaries use the same accounting year and accounting policies as those of the Company. All assets, liabilities, interests, income, fees and cash flows resulting from intra-group transactions are eliminated on consolidation in full.
      Where the amount of losses for the current period attributed to the minority shareholders of a subsidiary exceeds the minority shareholders' portion of the opening balance of shareholders' equity of the subsidiary, the excess amount is allocated against minority interests.
      For subsidiaries acquired through a business combination not under common control, the operating results and cash flows of the acquiree are included in the consolidated financial statements from the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. In preparing consolidated financial statements, adjustments shall be made to the subsidiaries' financial statements based on the fair values of the identifiable assets, liabilities and contingent liabilities determined at the acquisition date.
      For subsidiaries acquired through a business combination under common control, the operating results and cash flows of the acquiree are included in the consolidated financial statements from the beginning of the combination year. In preparing and comparing consolidated financial statements, adjustments shall be made to related items of prior year's financial statements, as if the reporting entities after the combination had existed from the date when the combining entities first came under control of the ultimate controlling party.
      Where change in relevant facts and conditions lead to the change in one or more control elements, the Group will reevaluate its control over the investee.
      Change in non-controlling interests that does not result in the loss of control over the subsidiary is accounted for as an equity transaction.
    2. Classifications of Joint Arrangement and Joint Operations
      Joint arrangement is classified as joint operations and joint ventures. Joint operation refers the joint arrangement where the joint venture parties are entitled to the underlying assets of the relevant arrangement and assume liabilities of the joint arrangements. Joint venture refers the joint arrangement where the joint venture party is only entitled to the right of the net assets of the arrangements.
      The joint venture parties recognize in relation to its interest in a joint operation: its assets, including its share of any assets held jointly; its liabilities, including its share of any liabilities incurred jointly; its revenue from the sale of its share of the output arising from the joint operation; its share of the revenue from the sale of the output by the joint operation; its expenses, including its share of any expenses incurred jointly.

70

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    1. Cash and Cash Equivalents
      Cash comprises the Group's cash on hand and deposits that can be readily withdrawn on demand for payment purposes. Cash equivalents are short-term, highly liquid investments held by the Group, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
    2. Foreign Currency Transactions and Translation of the Financial Statements Prepared in Foreign Currencies
      The Group translates the amounts of foreign currency transactions occurred into its functional currency.
      Foreign currency transactions are recorded on initial recognition, in their functional currencies, by applying to the foreign currency amounts at the spot exchange rates at the transaction dates. At the balance sheet date, foreign currency monetary items are translated using the spot exchange rates at the balance sheet date. All the resulting exchange differences are taken to profit or loss for the current period, except for those relating to foreign currency borrowings specifically for acquisition and construction of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs. Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rates prevailing on the transaction dates, while the amounts denominated in the functional currencies do not change. Non-monetary foreign currency items measured at fair value are translated at the spot exchange rates prevailing at the date on which the fair values are determined. The exchange differences thus resulted are recognized in profit or loss or as other comprehensive income for the current period, depending on the nature of the non-monetary item.
      For foreign operations, the Group translates all amounts of functional currencies into RMB for the preparation of the financial statements. For assets and liabilities in the balance sheet, spot exchange rates at the balance sheet date are used for translation, while, for shareholder's equity, spot exchange rates prevailing on the transaction dates are adopted for items other than "retained profits". For items of income and expenses in the income statement, average exchange rates for the period during which the transactions occur are adopted. Translation differences of functional currencies resulting from the translations mentioned above are recognized as other comprehensive income. For the disposal of foreign operations, other comprehensive incomes relating to foreign operations transfer to profit or loss for the current period for disposal, subject to the ratio of disposal.
      Foreign currency cash flows and cash flows of overseas subsidiaries are translated using the average exchange rate for the period during which the cash flows occur. The effect of exchange rate changes on cash is separately presented as an adjustment item in the statement of cash flows.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

71

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    9. Financial instruments
    A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
    Recognition and derecognition of financial instruments
    The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of a financial instrument.
    The Group derecognizes and writes off a financial asset (or part of a financial asset, or part of a group of similar financial assets) from its account and balance sheet when the following conditions are met:
    1. the rights to receive cash flows from the financial asset have expired;
    2. the Group has transferred its rights to receive cash flows from the financial asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through" arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the financial asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the financial asset, but has transferred control of the financial asset.

If the underlying obligation of a financial liability has been discharged or cancelled or has expired, the financial liability is derecognized. If an existing financial liability is replaced by the same creditor with a new financial liability that has substantially different terms, or if the terms of an existing financial liability are substantially revised, such replacement or revision is accounted for as the derecognition of the original liability and the recognition of a new liability, and the resulting difference is recognized in profit or loss for the current period.

Regular way purchases or sales of financial assets are recognized and derecognized on the transaction date. Regular way purchases or sales of financial assets mean that the financial assets are received or delivered under the terms of a contract within a period as specified by regulations or conventions in the marketplace. Transaction date is the date that the Group commits to purchase or sell the asset.

Classification and Measurement of Financial Assets

The financial assets of the Group are classified at the initial recognition based on the business model of the Group's corporate management financial assets and the contractual cash flow characteristics of the financial assets: financial assets measured at fair value through profit or loss (FVTPL), financial assets measured at amortized cost, and financial assets measured at fair value through other comprehensive income (FVTOCI). Financial assets are measured at fair value at the initial recognition. However, if the accounts receivable or bills receivable arising from the sale of goods or provision of services do not contain significant financing components or do not take into account financing components not exceeding one year, initial measurement shall be made based on the transaction price.

In the case of financial assets at fair value through profit or loss, relevant transaction costs are directly charged to profit or loss for the current period; transaction costs relating to financial assets of other categories are included in the amount initially recognized.

72

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    9. Financial instruments (Continued)
    Classification and Measurement of Financial Assets (Continued)
    The subsequent measurement of financial assets depends on its category as follows:
    Debt Instrument Investment Measured at Amortized Cost
    Financial assets are classified as financial assets measured at amortized cost if they meet the following conditions: the business model for managing the financial assets is targeted at collecting contractual cash flows; the contractual terms of the financial assets stipulate that cash flows in specific dates are solely for the payments of the principals and interests incurred from the outstanding principals. Such financial assets are recognized as interest income using the effective interest rate method. The gains or losses arising from the derecognition, modification or impairment are recognized in profit or loss for the period. Such financial assets mainly include cash and bank balances, bills receivable, accounts receivable and other receivables.
    Debt instrument investment at fair value through other comprehensive income
    Financial assets are classified as financial assets measured at fair value through other comprehensive income if they meet the following conditions: The Group's business model for managing the financial assets is targeted at both the collection of contractual cash flows and the sale of financial assets; the contractual terms of the financial assets stipulate that cash flows in specific dates are solely for the payments of the principals and interests incurred from the outstanding principals. Such financial assets are recognized as interest income using the effective interest rate method. Except for interest income, impairment losses and exchange differences which are recognized in profit or loss for the period, other changes in fair value are included in other comprehensive income. When the financial assets are derecognized, cumulative gains or losses previously recognized in other comprehensive income are transferred and included in retained earnings. Such financial assets are presented as other debt investments. Other debt investments due within one year from the balance sheet date are presented as non-current assets due within one year, and other debt investments with the original maturity within one year are presented as other current assets.
    Equity instrument investment at fair value through other comprehensive income
    The Group irrevocably chooses to designate certain non-trading equity instrument investments as financial assets measured at fair value through other comprehensive income, and only the relevant dividend income (except for dividend income recovered as part of investment cost) is included in the profit or loss for the period. Subsequent changes in fair value are included in other comprehensive income, and no impairment provision is required. When the financial assets are derecognized, cumulative gains or losses previously recognized in other comprehensive income are transferred and included in retained earnings. Such financial assets are presented as investments in other equity instruments.
    Financial assets are classified as held-for-trading financial assets if they meet one of the following conditions: the purpose of obtaining the relevant financial asset is mainly for the sale or repurchase in the near future; they are part of a portfolio of identifiable financial instruments that are centrally managed, and there is objective evidence that the company has recently adopted short-termprofit-making mode; they are derivatives, except for derivatives that are designated as effective hedging instruments and derivatives that qualify for financial guarantee contracts.
    Financial assets measured at fair value through profit or loss
    Financial assets other than the above-mentioned financial assets measured at amortized cost and financial assets measured at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. For such financial assets, fair value is used for subsequent measurement, and all changes in fair value are recognized in profit or loss for the period. Such financial assets are presented as held-for-trading financial assets, and financial assets that are due more than one year from the balance sheet date and are expected to be held for more than one year are presented as other non-current financial assets.
    All affected financial assets are reclassified, if and only if the Group changes its business model for managing financial assets.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

73

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    9. Financial instruments (Continued)
    Classification and measurement of financial liabilities
    The Group's financial liabilities are, on initial recognition, classified into the following categories: financial liabilities at fair value through profit or loss, and other financial liabilities. For financial liabilities at fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the current period, and transaction costs relating to other financial liabilities are included in the amount initially recognized.
    The subsequent measurement of financial liabilities depends on its category as follows:
    Financial liabilities at fair value through profit or loss
    Financial liabilities at fair value through profit or loss include financial liabilities held for trading and those designated upon initial recognition at fair value through profit or loss.
    Financial liabilities are classified as held-for-trading financial liabilities if they meet one of the following conditions: the purpose of bearing the relevant financial liability is mainly for the sale or repurchase in the near future; they are part of a portfolio of identifiable financial instruments that are centrally managed, and there is objective evidence that the company has recently adopted short-termprofit-making mode; they are derivatives, except for derivatives that are designated as effective hedging instruments and derivatives that qualify for financial guarantee contracts. Held-for-trading financial liabilities (including derivatives that are financial liabilities) are subsequently measured at fair value, except for hedge accounting, all changes in fair value are recognized in profit or loss for the period.
    Other financial liabilities
    For such financial liabilities, the actual interest rate method is adopted and the subsequent measurement is carried out according to the amortized cost.
    Financial instrument impairment
    On the basis of expected credit losses, the Group performs the impairment treatment on financial assets and contract assets measured at amortized cost, and confirms the loss provision.
    Credit loss refers to the difference between all contractual cash flows receivable from the contract and all cash flows expected to be received by the Group at the original effective interest rate, that is, the present value of all cash shortages. Among them, financial assets that have been credit-depleted by the Group or purchased by the Group shall be discounted according to the actual interest rate adjusted by the financial assets.

74

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    9. Financial instruments (Continued)
    Financial instrument impairment (Continued)
    For receivables that do not contain significant financing components and contractual assets, the Group uses a simplified measurement method to measure loss provision based on the amount of expected credit losses equivalent to the entire duration of the life.
    For receivables with significant financing components and contractual assets, the Group uses a simplified measurement method to measure loss provisions based on the amount of expected credit losses equivalent to the entire duration of the life.
    In addition to the financial assets described above using the simplified measurement method, the Group assesses whether its credit risk has increased significantly since the initial recognition on each balance sheet date, if the credit risk has not increased significantly since the initial recognition, it is at the first stage, and the Group measures loss allowance according to the amount of expected credit loss in the next 12 months, and calculates the interest income according to the book balance and the actual interest rate; if the credit risk has increased significantly since the initial recognition, but no credit impairment occurs, it is at the second stage, and the Group measures loss allowance at the full lifetime expected credit loss, and calculates the interest income according to the book balance and the actual interest rate; if the credit impairment occurs after the initial recognition, it is at the third stage, and the Group measures loss allowance at the full lifetime expected credit loss, and calculates the interest income according to the amortized cost and the actual interest rate. For financial instruments with relatively low credit risk only on the balance sheet date, the Group assumes that its credit risk has not increased significantly since the initial recognition.
    The Group assesses the expected credit losses of financial instruments based on individual items and portfolios. The Group assesses the expected credit losses of the receivables based on the combination of aging, taking into account the credit risk characteristics of different customers.
    In assessing expected credit losses, the Group considers reasonable and evidenced information about past events, current conditions and future economic forecasts.
    The Group's criteria for judging the significant increase in credit risk, the definition of assets with credit impairment, and the assumption of expected credit loss measurement are disclosed in Note VII. 3.
    When the Group no longer reasonably expects to be able to fully or partially recover the contractual cash flows of financial assets, the Group directly writes down the carrying amount of the financial assets.
    Offsetting of financial instruments
    Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when both of the following conditions are satisfied: the Group has a legal right to set off the recognized amounts and the legal right is currently enforceable; the Group intends either to settle on a net basis, or to realize the financial assets and settle the financial liabilities simultaneously.
    Transfers of financial assets
    If the Group transfers substantially all the risks and rewards of ownership of the financial asset, the Group derecognizes the financial asset; if the Group retains substantially all the risks and rewards of ownership of the financial asset, the Group does not derecognize the financial asset.
    If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, it accounts for the transactions as follows: if the Group has not retained control, it derecognizes the financial asset and recognizes any resulting assets or liabilities; if the Group has retained control, it continues to recognize the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability.
    When the entity's continuing involvement takes the form of guaranteeing the transferred asset, the extent of the entity's continuing involvement is the lower of the carrying amount of the asset and finance guarantee amount. The finance guarantee amount refers to the maximum amount of the consideration received that the entity could be required to repay.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

75

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    1. Inventories
      Inventories include raw materials, fuels, spare parts, low-cost consumables, finished goods.
      Inventories are initially carried at the actual cost. Cost of inventories comprises all costs of purchase, costs of conversion and other costs. The actual cost of inventories transferred out is determined by using the weighted average method. Low-cost consumables and spare parts are amortized by using one-off amortization method.
      The Group adopts perpetual inventory system.
      At the balance sheet date, inventories are stated at the lower of cost and net realizable value. If the cost of inventories is higher than the net realizable value, a provision for decline in value of inventories is recognized in profit or loss for the current period. If factors that previously resulted in the provision for decline in value of inventories no longer exist and result in the net realizable value higher than their carrying amount, the amount of the write-down is reversed to the extent of the amount of the provision for the inventories and is recognized in profit or loss for the current period.
      Net realizable value is the estimated selling price in the ordinary course of business deducted by the estimated costs to completion, the estimated selling expenses and the related taxes. Provision is considered on a category basis for inventories in large quantity and with relatively low unit prices and on an individual basis for all other inventories.
    2. Long-termEquity Investments
      Long-term equity investments include equity investments in subsidiaries, joint ventures and associates.
      Long-term equity investments were initially recorded at initial investment cost on acquisition. For long-term equity investments acquired through the business combination of entities under common control, the initial investment cost shall be the share of carrying value of the owners' equity of the merged party at the date of combination as stated in the consolidated financial statements of the ultimate controlling party. Any difference between the initial investment cost and the carrying value of the consideration for the combination shall be dealt with by adjusting the capital reserve (if the capital reserve is insufficient for setting off the difference, such difference shall be further set off against retained profits). Upon disposal of the investment, other comprehensive income prior to the date of combination shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the investee. Shareholders' equity recognized as a result of changes in shareholders' equity other than the net profits or losses, other comprehensive income and profit allocation of the investee shall be transferred to current profit and loss upon disposal of the investment. Items which remain long-term equity investments after the disposal shall be accounted for on a pro-rata basis, while items reclassified as financial instruments following the disposal shall be accounted for in full. For long-term equity investments acquired through the business combination of entities not under common control, the initial investment cost shall be the cost of combination (for business combinations of entities not under common control achieved in stages through multiple transactions, the initial investment cost shall be the sum of the carrying value of the equity investment in the acquired party held prior to the date of acquisition and new investment cost incurred as at the date of acquisition). The cost of combination shall be the sum of assets contributed by the acquiring party, liabilities incurred or assumed by the acquiring party and the fair value of equity securities issued. Upon disposal of the investment, other comprehensive income recognized under the equity method held prior to the date of acquisition shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the investee. Shareholders' equity recognized as a result of changes in shareholders' equity other than the net profits or losses, other comprehensive income and profit allocation of the investee shall be transferred to retained profits upon disposal of the investment. Items which remain long-term equity investments after the disposal shall be accounted for on a pro-rata basis, while items reclassified as financial instruments following the disposal shall be accounted for in full. The accumulated fair value change of equity investments held prior to the date of acquisition and included in the other comprehensive income as investments in other equity instruments shall be transferred in full to retained profits upon the change to cost accounting. The initial investment cost of long-term equity investments other than those acquired through business combination shall be recognized in accordance with the following: for those acquired by way of cash payments, the initial investment cost shall be the consideration actually paid plus expenses, tax amounts and other necessary outgoings directly related to the acquisition of the long-term equity investments; for those acquired by way of issuance of equity securities, the initial investment cost shall be the fair value of the equity securities issued.

76

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    11. Long-term Equity Investments (Continued)
    For a long-term equity investment where the Company can exercise control over the investee, the Company uses the cost accounting method in the Company's financial statements. Control refers to having the power over the investee, the entitlement to variable returns through the participation in the relevant activities of the investee, and the ability to affect the amount of returns by using its power over the investee.
    Under the cost method, the long-term equity investment is measured at its initial investment cost. For addition or reduction of investments, the cost of long-term equity investments is adjusted. Cash dividends or profits declared to be distributed by the investee should be recognized as investment income in the current period.
    The equity method is adopted in accounting for long-term equity investments when the Group holds joint control, or exercises significant influence on the investee. Joint control is the relevant agreed sharing of control over an arrangement, and relevant activities of such arrangement shall be decided upon the unanimous consent of the parties sharing control. Significant influence is the power to participate in decision making in the financial and operating policies of the investee but is not the power to control or joint control with other parties over those policies.
    Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investing enterprise's interest in the fair values of the investee's identifiable net assets at the acquisition date, such excess is included in the initial investment cost of the long-term equity investment. Where the initial investment cost is less than the investing enterprise's interest in the fair values of the investee's identifiable net assets at the acquisition date, the difference is charged to profit or loss for the current period, and the cost of the long-term equity investment is adjusted accordingly.
    Under the equity method, the Group recognizes, upon acquisition of the long-term equity investment, its share of the net profits or losses and other comprehensive income made by the investee as investment income or losses and other comprehensive income, and adjusts the carrying amount of the investment accordingly. The Group recognizes its share of the investee's net profits or losses, except that the assets invested or disposed of constitute a business, after making appropriate adjustments to the investee's net profits based on the fair value of the investee's identifiable assets at the acquisition date, using the Group's accounting policies and periods, and eliminating the portion of the profits or losses arising from internal transactions with its associates and joint ventures, attributable to the investor according to its share ratio (but impairment losses for assets arising from internal transactions shall be recognized in full). The carrying amount of the long-term equity investment is reduced based on the Group's share of any profit distributions or cash dividends declared by the investee. The Group shall discontinue recognizing its share of the losses of the investee after the carrying amount of the long-term equity investment together with any long-term interests that in substance forms part of the Group's net investment in the investee are reduced to zero, except to the extent that the Group has incurred obligations to assume additional losses. The Group also adjusts the carrying amount of long-term equity investments for other changes in shareholders' equity of the investees (other than the net profits or losses, other comprehensive income and profit allocation of the investee), and includes the corresponding adjustment in equity.
    On disposal of the long-term equity investments, the difference between book value and actual proceeds received is recognized in profit or loss for the current period. For long-term equity investments under equity method, when the use of the equity method is discontinued for disposal, other comprehensive income previously accounted for under the equity method shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the investee. Shareholders' equity recognized as a result of changes in shareholders' equity other than the net profits or losses, other comprehensive income and profit allocation of the investee shall be transferred in full to current profit and loss. If the equity method remains in use, other comprehensive income previously accounted for under the equity method shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the investee and transferred to current profit and loss on a pro-rata basis. Shareholders' equity recognized as a result of changes in shareholders' equity other than the net profits or losses, other comprehensive income and profit allocation of the investee shall be transferred to current profit and loss on a pro-rata basis.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

77

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    12. Fixed Assets
    A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the Group and the cost of the asset can be measured reliably. Subsequent expenditures incurred for a fixed asset that meets the recognition criteria shall be included in its cost, and the carrying amount of the component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditures shall be recognized in profit or loss for the period during which they are incurred.
    Fixed assets are initially measured at cost and the effect of any expected costs of abandoning the assets is considered. The cost of a purchased fixed asset comprises the purchase price, relevant taxes and any other directly attributable expenditure for bringing the asset to working condition for its intended use.
    Depreciation of fixed assets is calculated using the straight-line method. The useful lives, estimated net residual value ratio and annual depreciation rate of fixed assets are as follows:

Estimated net

Annual

Useful life

residual value ratio

depreciation rate

Buildings

20

- 35 years

3%

2.77 - 4.85%

Terminal facilities

20

- 30 years

3%

3.23 - 4.85%

Machinery and equipment

6

- 20 years

3%

4.85 -16.17%

Vessels and transportation equipment

6

- 10 years

3%

9.70 -16.17%

Office and other equipment

6 years

3%

16.17%

Where individual component parts of an item of fixed assets have different useful lives or provide benefits to the enterprise in different patterns, different depreciation rates are applied.

The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least at each financial year-end, and makes adjustments if necessary.

13. Construction in Progress

Construction in progress is recognized based on the actual construction expenditures incurred. It consists of all types of expenditures necessarily to be incurred, capitalized borrowing costs on related borrowed funds before the asset is ready for its intended use, and other related expenditures during the period of construction.

Construction in progress is transferred to fixed assets or intangible assets when the asset is ready for its intended use.

78

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    14. Borrowing Costs
    Borrowing costs are interest and other costs incurred by the Group in connection with the borrowings. Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs, and exchange differences arising from foreign currency borrowings.
    The borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized. Other borrowing costs are recognized in profit or loss for the current period. Assets qualifying for capitalization refer to fixed assets necessarily taking a substantial period of time for acquisition or construction to get ready for their intended use.
    The capitalization of borrowing costs commences only when all of the following conditions are satisfied:
    1. expenditures for the asset are being incurred;
    2. borrowing costs are being incurred;
    3. activities relating to the acquisition or construction of the asset that are necessary to prepare the asset for its intended use have commenced.

Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed becomes ready for its intended use. Any borrowing costs subsequently incurred are recognized in profit or loss for the current period.

During the capitalization period, the amount of interest to be capitalized for each accounting period shall be determined as follows:

  1. where funds are borrowed for a specific purpose, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any temporary interest earned from deposits or investment income.
  2. where funds are borrowed for a general purpose, the amount of interest to be capitalized is determined by multiplying the weighted average of the excess amounts of accumulated expenditure on asset over the expenditure of specific-purpose borrowings by the weighted average interest rate.

Capitalization of borrowing costs is suspended when the acquisition or construction of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use, while the interruption lasts for more than three consecutive months. Borrowing costs incurred during these periods are recognized as expenses in profit or loss for the current period until the acquisition or construction is resumed.

15. Right-of-use Assets

Right-of-use assets of the Group mainly comprise properties and buildings, terminal facilities and machinery and equipment.

On the commencement date of the lease term, the Group recognizes its right to use the leased asset over the lease term as the right-of-use asset, including: the initial measurement amount of the lease liability; the payment on or before the commencement date of the lease term The amount of the lease payment, if there is a lease incentive, deducting the relevant amount of the lease incentives already enjoyed; the initial direct expenses incurred by the lessee; the cost expected to be incurred by the lessee to dismantle and remove the leased assets, restore the site where the leased assets are located at or recover the leased assets to the status as agreed in the lease terms. The Group's subsequent years of averaging method is used to depreciate the right-of-use assets. If it is reasonable to determine the ownership of the leased asset at the expiration of the lease term, the Group will depreciate the remaining useful life of the leased asset. If it is not reasonable to determine that the leasehold asset can be acquired at the expiration of the lease term, the Group depreciates during the shorter period between the lease term and the remaining useful life of the leased asset.

When the Group re-measures the lease liability based on the present value of the changed lease payments and adjusts the book value of the right-of-use asset accordingly. If the book value of the right-of-use asset has been reduced to zero, the lease liability still needs to be further reduced. The Group accounts for the remaining amount in the current profit or loss.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

79

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    16. Intangible Assets
    An intangible asset shall be recognized only when its related economic benefits will probably flow to the Group and its costs can be measured reliably. Intangible assets are measured initially at cost. However, intangible assets acquired in a business combination not under common control with a fair value that can be measured reliably are recognized separately as intangible assets and measured at fair value.
    The useful life of an intangible asset is determined according to the period over which it is estimated to generate economic benefits for the Group. An intangible asset is regarded as having an indefinite useful life when the period over which the asset is estimated to generate economic benefits for the Group is uncertain.
    The useful lives of the intangible assets are as follows:

Useful lives

Land use rights

40-50 years

Sea area use rights

50 years

Software

5-10 years

The Group accounts for its land use rights and sea area use rights as intangible assets. For buildings such as plants that are developed and constructed by the Group, the relevant land use rights and buildings are accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated, all of the land use rights and buildings are accounted for as fixed assets.

Intangible assets with finite useful lives are amortized over the useful lives on the straight-line basis. The Group reviews the useful lives and the amortization method of intangible assets with finite useful lives, and adjusts if appropriate, at least at the end of each year.

The Group classifies the expenditure on an internal research and development project into expenditure on the research phase and expenditure on the development phase. Expenditure on the research phase of an internal research and development project is recognized in profit or loss for the period in which it is incurred. Expenditure on the development phase is capitalized when the Group can demonstrate all of the following: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; how the intangible asset will generate probable future economic benefits, including that the Group can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, that if it is to be used internally, the usefulness of the intangible asset; the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and its ability to measure reliably the expenditure attributable to the intangible asset during its development phase. Expenditure on the development phase that does not meet the above criteria is recognized in profit or loss for the current period in which it is incurred.

17. Asset Impairment

The impairment of an asset other than inventories, deferred income tax and financial assets is determined as follows:

The Group assesses at the balance sheet date whether there is any indication that an asset may be impaired. If any indication exists that an asset may be impaired, the Group will estimate the recoverable amount of the asset and perform test for impairment. Goodwill arising from a business combination is tested for impairment at least at the end of each year, irrespective of whether there is any indication that the asset may be impaired. Intangible assets that have not been ready for intended use are tested for impairment each year.

The recoverable amount of an asset is the higher of its fair value less disposal costs and the present value of the future cash flows estimated to be derived from the asset. The Group estimates the recoverable amount on individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the asset group to which the asset belongs. Identification of an asset group is based on whether major cash inflows generated by the asset group are largely independent from cash inflows of other assets or asset groups.

When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The reduction in carrying amount is recognized in profit or loss for the current period and a provision for impairment loss of the asset is recognized accordingly.

Once the above asset impairment loss is recognized, it cannot be reversed in the subsequent accounting periods.

80

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    18. Long-term Prepaid Expenses
    Long-term prepaid expenses are amortized on a straight-line basis over the beneficial period and the amortization period is as follow:

Amortization Period

Afforestation costs

3 years

Dredging costs

3-5 years

19. Employee Benefits

Employee benefits are all forms of considerations given by the Group in exchange for services rendered by its employees or for the termination of employment. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits. The benefits provided by the Group to employees' spouse, children, dependents, families of deceased employees and other beneficiaries also belong to employee benefits.

Short-term employee benefits

In the accounting period which services are rendered by the employees, short-term employee benefits are actually recognized as liabilities and charged to profit or loss or related costs of assets for the current period.

Post-employment benefits (defined contribution plans)

Employees of the Group participate in the endowment insurance and unemployment insurance plans managed by local governments as well as enterprise annuity, and the relevant expenditure is recognized, when incurred, in the cost of relevant asset or profit or loss for the current period.

Termination benefits

Where the Group provides termination benefits to its employees, the employee remuneration liabilities arising from termination benefits are recognized in profit or loss for the current period upon the occurrence of the earlier of the following: termination benefits provided as a result of termination of employment plan or downsizing proposal cannot be unilaterally withdrawn by an entity; or reorganization-related costs or expenses involving payment of termination benefits are recognized by an entity.

Other long-term employee benefits

Other long-term benefits provided to the employees are net debt liabilities or net assets of other long-term employee benefits recognized or measured according to the requirements applicable to post-employment benefits. Changes arising from the measurement will be recognized in profit or loss or cost of relevant assets for the current period.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

81

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    1. Lease Liabilities
      On the commencement date of the lease term, the Group recognizes the present value of the lease payments that have not been paid as lease liabilities, except for short-term leases and low-value asset leases. In calculating the present value of the lease payments, the Group uses the leased interest rate as the discount rate; if the interest rate of the lease cannot be determined, the lessee's incremental borrowing rate is used as the discount rate. The Group calculates the interest expense of the lease liability for each period of the lease term based on the fixed periodic interest rate and recognizes it in profit or loss for the current period, unless otherwise specified in the cost of relevant asset. The variable lease payments that are not included in the measurement of the lease liabilities are recognized in profit or loss when incurred, unless otherwise specified in the cost of relevant asset.
      After the commencement date of the lease period, when the actual fixed payment amount changes, the expected amount of the guarantee residual value changes, the index or ratio used to determine the lease payment amount changes, or the evaluation results or actual exercise of rights of the purchase option, the renewal option or the termination option change, the Group re-measures the lease liability based on the present value of the changed lease payments.
    2. Provisions
      Except for contingent consideration and contingent liability assumed in a business combination not under common control, the Group recognizes an obligation related to a contingency as a provision when all of the following conditions are satisfied:
      1. the obligation is a present obligation of the Group;
      2. it is probable that an outflow of economic benefits from the Group will be required to settle the obligation;
      3. the amount of the obligation can be measured reliably.

A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation, with comprehensive consideration of factors such as the risks, uncertainty and time value of money relating to a contingency. The carrying amount of a provision is reviewed at each balance sheet date. If there is clear evidence that the carrying amount does not reflect the current best estimate, the carrying amount is adjusted to the best estimate.

22. Revenue from Contracts with Customers

The revenue is recognized when the Group has fulfilled its performance obligations in the contract, that is, the customer obtains control of the relevant goods or services. Obtaining control of the relevant goods or services means being able to dominate the use of the good or the provision of the service and obtains substantially all of its economic benefits.

Contracts for the sales of goods

The contract for the sale of goods between the Group and the customers usually includes performance obligations of transferring the goods. The Group generally recognizes revenue at a point of time when the customer obtains the control of the relevant goods based on the following factors. This includes obtaining the current collection rights of the goods, the transfer of the main risks and rewards of the ownership of the goods, the transfer of the legal ownership of the goods, the transfer of the physical assets of the goods, and the acceptance of the goods by the customer.

Contracts for the provision of service

The service contract between the Group and the customers usually includes performance obligations such as port operations services. The Group conducts an analysis based on the terms of the contract and the substance of the transaction. The comprehensive judgment service is performed within a certain period of time or at a certain point of time. For the performance obligations to be fulfilled within a certain period of time, the Group recognizes the revenue based on the progress of the performance, except for the progress of the performance that cannot be reasonably determined. The Group determines the progress of the performance of the services provided in accordance with the input method. For the progress of the performance that cannot be reasonably determined, when the costs incurred by the Group are expected to be compensated, the revenue is recognized based on the amount of costs incurred until the progress of the performance can be reasonably determined. For performance obligations performed at a certain point of time, the Group recognizes the revenue when the customer obtains relative control right of the service.

82

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    1. Contract Liabilities
      The Group presents contract assets or contract liabilities in the balance sheet based on the relationship between the fulfillment of performance obligations and customer payments.
      Contract liabilities
      The Group's obligation to transfer goods to customers for consideration received or receivable from customers is presented as contract liabilities, such as payments received by the enterprise prior to the transfer of the promised goods.
      The Group will offset the contract assets and contract liabilities under the same contract and present them on a net basis.
    2. Government Grants
      Government grants are recognized when all respective conditions will be complied with and the grant will be received. The government grant is measured as the amount received or receivable where it takes the form of a cash asset, or at fair value where it is not a cash asset. Where the fair value cannot be reliably determined, it should be measured at nominal value.
      In accordance with the stipulations of the government documents, government grants applied towards acquisition or construction or the formation of long-term assets in other manners are asset-related government grants. Those unspecified in the documents refer to the exercise of judgement based on the basic conditions for receiving the asset related grant applied towards acquisition or construction or the formation of long-term assets in other manners. All other grants are recognized as income-related government grants.
      Government grants relating to income which are used to compensate relevant cost expenses or losses in subsequent periods are recognized as deferred income and are accounted in profit and loss in the current period where relevant cost expenses or losses are recognized; those used to compensate relevant cost expenses or losses in the current period are directly accounted in profit and loss in the current period.
      Government grants relating to assets are recognized in deferred income and accounted in profit or loss in stages in a reasonable and systematic method during the service lives of the relevant assets (however, those measured in nominal values shall be recorded in profit and loss in the current period). Where the relevant assets are sold, transferred, scrapped or damaged before the end of their service lives, the unallocated balance of related deferred income shall be transferred to the profit or loss of the period where the relevant assets are disposed.
    3. Income Tax
      Income tax comprises current and deferred income tax. Income tax is recognized as an expense or income in profit or loss for the current period, or otherwise recognized directly in shareholders' equity if it arises from goodwill on a business combination or relates to a transaction or event which is recognized directly in shareholders' equity.
      The Group measures a current tax liability or asset arising from the current and prior periods based on the amount of income tax estimated to be paid or returned and calculated in accordance with the requirements of relevant tax laws.
      The Group recognizes deferred tax based on temporary differences using balance sheet liability method. Temporary differences are differences between the carrying amount of assets or liabilities in the balance sheet and their tax base on the balance sheet date. Temporary differences also include the differences between the carrying amounts and tax bases of items not recognized as assets or liabilities where the tax base can be calculated according to the relevant tax regulations.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

83

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    25. Income Tax (Continued)
    Deferred income tax liabilities are recognized for all taxable temporary differences, except:
    1. where the taxable temporary differences arise from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or deductible tax loss.
    2. in respect of taxable temporary differences associated with investments in subsidiaries, joint ventures and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not be reversed in the foreseeable future.

A deferred income tax asset is recognized for deductible temporary differences, and unused deductible tax losses and tax credits that can be carried forward, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, deductible tax losses and tax credits can be utilized, except:

  1. where the deductible temporary difference arises from a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or deductible tax loss.
  2. in respect of the deductible temporary differences associated with investments in subsidiaries, joint ventures and associates, a deferred income tax asset is only recognized to the extent that it is probable that the temporary differences will be reversed in the foreseeable future and taxable profit will be available against which the deductible temporary differences can be utilized in the future.

At the balance sheet date, deferred income tax assets and liabilities are measured at the tax rates that are estimated to apply to the period when the asset is recovered or the liability is settled, according to the requirements of tax laws. The measurement of deferred income tax assets and deferred income tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the balance sheet date, to recover the assets or settle the liabilities.

The carrying amount of deferred income tax assets is reviewed at the balance sheet date and reduced to the extent that taxable profit is no longer sufficient in future periods to allow the deferred income tax assets to be utilized. Unrecognized deferred income tax assets are reassessed at the balance sheet date and are recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be recovered.

When all of the following conditions are satisfied simultaneously, the deferred income tax assets and deferred income tax liabilities are listed as the net amount after offsetting: the Group have a legal right to settle current tax assets and liabilities on a net basis; the deferred taxes are related to the same tax payer within the Group and the same taxation authority, or related to different tax payers but during the period when each of the significant deferred income tax assets and deferred income tax liabilities are reversed and the tax payer involved intends to settle the current income tax asset and current income tax liability on a net basis, or simultaneously obtain assets and pay off the debts.

84

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    26. Leases
    Identification of leases
    On the contract start date, the Group assesses whether the contract is a lease or includes a lease. If one of the parties transfers the right to control the use of one or more identified assets for a certain period of time in exchange for consideration, the contract is leased or included lease. In order to determine whether the contract has transferred the right to control the use of the identified assets within a certain period of time, the Group assesses whether the customers in the contract are entitled to almost all of the economic benefits arising from the use of the identified assets during the period of use and have the right to leading the use of identified assets during this period of use.
    Identification of separate leases
    Where the contract contains multiple separate leases, the Group will split the contract and separate the leases for accounting treatment. The right to use the identified asset constitutes a separate lease in the contract if the following conditions are met:
    1. The lessee can profit from using the asset alone or in conjunction with other resources that are readily available;
    2. The asset does not have a high degree of dependency or a high degree of association with other assets in the contract.

Disaggregation of lease and non-lease components

The Group (when as the lessee and the lessor) shall split the lease component and non-lease components when the contract contains both of them.

Assessment of leasing period

The lease term is the period during which the Group has the right to use the leased asset and is irrevocable. The Group has the option to renew the lease, that is, it has the right to choose to renew the lease, and it is reasonable to determine that the option will be exercised. The lease term also includes the period covered by the option to renew the lease. The Group has the option to terminate the lease, that is, it has the right to choose to terminate the lease of the asset, but it is reasonable to determine that the option will not be exercised. The lease term includes the period covered by the termination of the lease option. In the event of a major event or change within the Group's controllable range, and affecting whether the Group reasonably determines that the option will be exercised, the Group determines whether it will reasonably exercise the option to renew the lease, purchase option or terminate the lease option.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

85

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    26. Leases (Continued)
    As a lessee
    For the general accounting treatment of the Group as a lessee, refer to Note III. 15 and Note III. 20.
    Lease changes
    The lease change including change of lease scope, lease consideration, and lease term change outside the original contract terms, including the increase or termination of the use rights of one or more leased assets, and the extension or shortening of the lease period stipulated in the contract.
    If the lease changes and meets the following conditions, the Group will account for the lease change as a separate lease:
    1. The lease change expands the lease by increasing the right to use one or more leased assets;
    2. The increased consideration and the individual price of the enlarged portion of the lease are equivalent to the amount adjusted for the contract.

If the lease change is not accounted for as a separate lease, the Group re-determines the lease term on the effective date of the lease change and discounts the changed lease payments using the revised discount rate to re-measure the lease liability. When calculating the present value of the lease payment after the change, the Group adopts the lease interest rate of the remaining lease period as the discount rate; if the lease interest rate of the remaining lease period cannot be determined, the Group's incremental increase will be made on the effective date of the lease change.

Regarding the impact of the above adjustment of lease liabilities, the Group distinguishes between the following cases for accounting treatment:

  1. If the lease change results in a narrower lease or a shorter lease term, the Group reduces the book value of the right-of-use asset to reflect the termination or complete termination of the lease. The Group recognizes the related gains or losses that partially terminate or completely terminate the leases into the current profits and losses.
  2. For other lease changes, the Group adjusts the book value of the right-of-use assets accordingly.

Short-term lease and Low value asset leasing

The Group will be on the commencement date of the lease term, the lease term is not more than 12 months, and the lease that does not include the purchase option is recognized as a short-term lease; the lease with a lower value when the single leased asset is a new asset is recognized as a low value. If the Group subleases or expects to sublease the leased assets, the original lease is not recognized as a low value asset lease. The Group does not recognize the right-of-use assets and lease liabilities for short-term leases and low-value asset leases, which is included in the related asset cost or current profit or loss on a straight-line basis over the lease term.

86

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    26. Leases (Continued)
    As a lessor
    Leases that transfer substantially all of the risks and rewards associated with the ownership of the leased asset on the lease start date are finance leases, and all other leases are operating leases.
    As an operating lease lessor
    Rental income from operating leases is recognized on a straight-line basis over the lease term in profit or loss.
    A lessor shall account for a modification to an operating lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.
    Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
    As lessee of an operating lease
    Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term and either included in the cost of the related asset or charged to profit or loss of the current period. Contingent rents are charged to profit or loss in the period in which they arise.
    As lessor of an operating lease
    Rental income under an operating lease is recognized by a lessor on a straight-line basis over the lease term, through profit or loss. Contingent rents are charged to profit or loss in the period in which they arise.
    As the lessee of a finance lease
    An asset held under a finance lease is recognized at the lower of its fair value as at the effective date of lease and the present value of the minimum lease payments, and the minimum lease payment is recorded as the carrying amount of long-term payables. The difference between the recorded amount of the leased asset and the recorded amount of the payable is accounted for as unrecognized finance cost, which is amortized using the effective interest rate method during each period over the lease term. Contingent rental payments are charged to profit or loss in the period in which they actually arise.
    For fixed assets acquired under finance leases, the basis for provision of leased assets depreciation is the same as that of self-owned fixed assets. When it can be reasonably determined that the ownership of a leased asset will be transferred at the end of the lease term, it is depreciated over the period of expected use; otherwise, the lease asset is depreciated over the shorter period of the lease term and the period of expected use.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

87

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    1. Discontinued Operations
      A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and can be distinguished from other components within the Group:
      1. the component represents a separate major line of business or an individual geographical area of operations;
      2. is part of a single coordinated plan to disposal of a separate major line of business or an individual geographical area of operations;
      3. is a subsidiary acquired exclusively for the purpose of resale.
    3. Profit Distribution
      Cash dividend of the Company is recognized as a liability upon being approved at the shareholders' general meeting.
    4. Production Safety Expenses
      Production safety expenses appropriated pursuant to the related regulations is recognized in the cost of the relevant products or in profit or loss for the current period, and also in the specialized reserve. The cost shall be handled according to whether a fixed asset is formed. The cost incurred through expenditure will be reduced directly from the specialized reserve. The cost incurred for a fixed asset shall be pooled and recognized as a fixed asset when it reaches the working condition for its intended use; meanwhile an equivalent amount shall be deducted from the specialized reserve and recognized as accumulated depreciation.
    5. Fair Value Measurement
      The Group measures its financial assets held for trading and non-listed equity instrument investment at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement of the related assets and liabilities at fair value is based on the presumption that the orderly transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market is accessible by the Group as at the measurement date. The Group uses the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
      A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset at its highest and best use or by selling it to another market participant that would use the asset at its highest and best use.
      The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other supporting information are available to measure fair value, giving priority to the use of relevant observable inputs, and using unobservable inputs only when observable inputs are unavailable or not feasible to obtain.
      All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 - based on quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date; Level 2 -based on observable input, either directly or indirectly, of relevant assets or liabilities other than level 1 inputs; Level 3 - based on unobservable input of relevant assets or liabilities.
      For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization at each balance sheet date.

88

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    31. Significant Accounting Judgments and Estimates
    The preparation of the financial statements requires the management to make judgments, estimates and assumptions that will affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent liabilities at the balance sheet date. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.
    Judgment
    During the application of the Group's accounting policies, the management made the following judgments that had a significant impact on the amounts recognized in the financial statements:
    The business model
    The classification of financial assets at initial recognition depends on the business model of the Group's management of financial assets. When judging the business model, the Group considers taking into account the way in which financial asset performance is evaluated by company and reported to key managers, the risks affecting financial asset performance, and how they are managed, and the way in which the relevant business managers receive compensation. In assessing whether to target contractual cash flow, the Group needs to analyze and judge the reasons, time, frequency and value of the sale of the financial asset before its maturity date.
    The contractual cash flow characteristics
    The classification of financial assets at initial recognition depends on the contractual cash flow characteristics of the financial assets. When it is necessary to judge whether the contractual cash flow is only the payment of the principal and the interest based on the outstanding principal, the correction of the time value of the currency is included. In the assessment, it is necessary to judge whether there is a significant difference compared with the benchmark cash flow, and for the financial assets including the prepayment characteristics, it is necessary to judge whether the fair value of the early repayment characteristics is very small.
    Whether a contract is or contains a lease
    The Group entered into a lease agreement relating to the assets for office buildings and vehicles. In the opinion of the Group, according to the lease agreement, suppliers of the assets have substantial replacement rights for office buildings and vehicles. The lease agreement did not grant the rights to change the usage purpose of the assets and the way of use to the Group, and did not grant the group to operate the assets on its own or in a manner that is determined by the Group. The Group also did not participate in the design of the assets, accordingly the lease agreement includes not the lease, which the Group considers to accept the service.
    Lease term - lease contracts with renewal options
    The Group determines the lease term as the non-cancellable term of the lease to use the leased assets, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew, considering all relevant factors that create an economic incentive for it to exercise the renewal and include significant event or change in circumstances between the commencement date of the lease and exercise date of the renewal option. The Group believes that leased assets are significant to the operation of the Group and alternate assets are not easily accessible. The Group can reasonably determine that it will exercise renewal options, accordingly the lease term includes the period covered by renewal options.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

89

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (CONTINUED)
    31. Significant Accounting Judgments and Estimates (Continued)
    Uncertainty of estimation
    The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that may cause a material adjustment to the carrying amounts of assets and liabilities within the future accounting periods, are discussed below.
    Impairment of financial instruments
    The Group uses the expected credit loss model to assess the impairment of financial instruments. The application of the expected credit loss model requires significant judgments and estimations, and all reasonable and evidenced information, including forward-looking information, should be considered. In making such judgments and estimations, the Group infers the expected changes in the debtor's credit risk based on the historical repayment data in combination with economic policies, macroeconomic indicators, and industry risks.
    Impairment of non-current assets other than financial assets (other than goodwill)
    The Group assesses whether there are any indication of impairment for all non-current assets other than financial assets at the balance sheet date. For intangible assets with an indefinite useful life, in addition to the annual impairment test, when there is an indication of impairment, the impairment test is also carried out. Other non-current assets other than financial assets are tested for impairment when there is an indication that the carrying amount is not recoverable. Where the carrying amount of an asset or asset group is higher than its recoverable amount (i.e., the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from it), it is indicated that such asset or asset group is impaired. The fair value less costs to sell is determined with reference to the price in the relevant sales agreement or an observable market price of similar assets in an arm's length transaction, adjusted for incremental costs that would be directly attributable to the disposal of the asset or asset group. When calculating the present value of expected future cash flows from an asset or asset group, management shall estimate the expected future cash flows from the asset or asset group and choose a suitable discount rate to determine the present value of future cash flows.
    Fair value of unlisted equity investments
    The valuation of unlisted equity investments is determined by applying the valuation method which the Group opts based on its judgements. The Group make an estimation mainly in accordance with the current situation of market on each date of balance sheets. The judgements based on the market situation on the date of balance sheets and valuation method adopted may subject to the changes in the market, which will lead to the different actual results in the next year.
    Deferred income tax assets
    Deferred income tax assets are recognized for all unused tax losses to the extent that it is probable that sufficient taxable profit could be generated against deductible losses. Significant management judgments are required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
    Useful lives and residual values of fixed assets
    The Group's management determines the estimated useful lives and residual values of fixed assets and related depreciation charges. This estimate is based on the historical experience of the actual useful lives and residual values of fixed assets with similar nature and functions. It can change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charges where useful lives and residual values are less than previous estimations, or it will write off or write down the fixed assets technically obsolete or abandoned or sold.
    Allowance for inventories
    Allowance for inventories represents the provision for impairment of inventories where costs are higher than net realizable value. The management's judgments and estimates are required for determining inventory impairment on the basis of clear evidence, purpose of holding the inventories, effect of subsequent events and other factors. The difference between the actual results and the original estimates and the changes in estimates will affect the carrying amount of inventories and the provision or reversal of impairment on inventories.

90

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

IV. TAXATION

1. Major Categories of Taxes and Respective Tax Rates

Value-added tax

-

The Group is subject to VAT at tax rate of 13% on the taxable sales; the Group's

("VAT")

related port service revenues are taxable to output VAT at tax rate of 6%, and is levied

after deducting deductible input VAT for the current period.

City maintenance and

-

It is levied at 7% of VAT paid actually.

construction tax

Enterprise income tax

-

It is levied at 25% on the taxable profit, except for certain subsidiaries of the Group

established in Mainland China which enjoy tax preferences. Income tax rate of overseas

subsidiaries is 16.5%.

Property tax

-

Property tax on self-occupied properties of the Group is calculated at the applicable

tax rate of 1.2% using the tax base of 70% of the initial cost of the properties; lease

properties are taxable on the tax base of rental income at the applicable tax rate of

12%.

Land use tax

-

It is levied in accordance with unit tax amount prescribed in the tax law based on the

actual area of land used by the taxpayer.

Environmental

-

Pursuant to the "Environmental Protection Tax Law of the People's Republic of China"

protection tax

issued by the Ministry of Ecology and Environment of the People's Republic of China

on 17 April 2017, from 1 January 2018 onwards, the taxable amount of the Group's

taxable pollutants shall be paid in accordance with the applicable taxable amount

stipulated by the Environmental Protection Tax Law.

2. Tax Preferences

Enterprise income tax

According to the Implementation Rules of the PRC Enterprise Income Tax Law (Order No.512 of the State Council) and the Circular on the Implementation of the Catalogue of the Key Public Infrastructure Projects Supported by the State and Entitled for Preferential Tax Treatment 《( 國家稅務總局關於實施國家重點扶持的公共基礎設施項目企業所得稅優惠問題 的通知》) (Guo Shui Fa [2009] No.80), Tangshan Caofeidian Coal Port Co., Ltd. ("Caofeidian Coal"), a subsidiary of the Group, is eligible for tax preferences for public infrastructure projects under key support of the State. Income derived by Caofeidian Coal from the investment in, and the operation of, public infrastructure projects under key support from the State is eligible for a tax exemption for the first year to the third year, and a 50% reduction in enterprise income tax for the fourth year to the sixth year, starting from the year in which the project first generates operating income. Caofeidian Coal first generated its operating income in 2015, and started to be entitled to the tax preferences of enterprise income tax. It enterprise income tax for the period was levied with a 50% reduction.

Land use tax

Pursuant to the Provisional Regulations of the People's Republic of China on Land Use Tax in respect of Urban and Town Land 《( 中華人民共和國城鎮土地使用稅暫行條例》) and the Announcement of the Ministry of Finance and the State Taxation Administration on the Extended Implementation of the Preferential Policies on Land Use Tax in respect of Urban and Town Land for Bulk Commodity Storage Facility of Logistics Companies 《( 財政部、國家稅務總局關於繼續 實施物流企業大宗商品倉儲設施用地城鎮土地使用稅優惠政策的公告》) (Cai Shui [2020] No. 16), during the period from 1 January 2020 to 31 December 2022, urban and town land use tax will be reduced by 50% of the rate applicable to the standards of such land owned in respect of bulk commodity storage facilities owned by logistics companies (including self-owned and leased land). In respect of land used for bulk commodity storage facilities owned by the Company and Cangzhou Huanghuagang Mineral Port Co., Ltd. and Caofeidian Coal, subsidiaries of the Company, land use tax will be reduced by 50%.

VAT

Pursuant to the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform 《( 關於深化增值稅改 革有關政策的公告》(Notice [2019] No. 39 from the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs) printed and issued by the Ministry of Finance, the State Taxation Administration and the General Administration of Customs, the taxable amount of the Group will be deducted according to the current deductible input VAT plus 10% from 1 April 2019 to 31 December 2021.

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

91

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. NOTES TO KEY ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS
    1. Cash and Bank Balances

30 June 2020

31 December 2019

(Unaudited)

Cash on hand

41,079.53

27,704.54

Bank deposits

3,071,157,049.62

2,798,722,280.85

Other cash and bank balances

6,322,900.00

6,322,400.00

3,077,521,029.15

2,805,072,385.39

Less: Restricted bank deposits

26,322,900.00

41,845,516.22

Time deposits with maturity of more than three months

891,200,000.00

648,000,000.00

Cash and cash equivalents

2,159,998,129.15

2,115,226,869.17

Including: Frozen bank deposits from pending lawsuits

20,000,000.00

35,523,116.22

Secured bank deposits from bidding deposits

6,322,900.00

6,322,400.00

26,322,900.00

41,845,516.22

As at 30 June 2020, the cash and bank balances deposited overseas by the Group were equivalent to RMB63,000,005.16 (31 December 2019: RMB61,962,648.95).

Interest income earned on current deposits is calculated by using the current deposit interest rate. The deposit periods for short-term time deposits vary from 3 months to 1 year depending on the cash requirements of the Group and earn interest at the respective deposit rates.

2.

Financial Assets Held for Trading

30 June 2020

31 December 2019

(Unaudited)

Financial assets at fair value through profit or loss Debt

instrument investments (Note)

170,000,000.00

-

Note: Qinhuangdao Xin'gangwan Container Terminal Co., Ltd. (秦皇島港新港灣集裝箱碼頭有限公司), a subsidiary of the Group, purchased two wealth management products from China Minsheng Banking Corp., Limited and Bank of Communications Co., Ltd. with the principal of RMB150,000,000 and RMB20,000,000, with the maturity date of 17 July 2020 and 7 August 2020, respectively. The profit margin is expected to be approximately 4.10% and 3.50% respectively.

3. Bills Receivable

30 June 2020

31 December 2019

(Unaudited)

Commercial acceptance notes

52,000,000.00

-

Bank acceptance notes

142,097,706.00

172,344,886.06

194,097,706.00

172,344,886.06

Less: Provision for bad debts

-

-

194,097,706.00

172,344,886.06

As at 30 June 2020, no bills receivable of the Group was pledged or discounted (31 December 2019: nil).

As at 30 June 2020, the Group did not transfer the bills receivable to accounts receivable due to non-performance of drawers (31 December 2019: nil).

As at 30 June 2020, the Group did not have bills receivable which were endorsed but undue as at the balance sheet date (31 December 2019: RMB13,375,481.11).

92

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. NOTES TO KEY ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    4. Accounts Receivable
    The credit period of accounts receivable is usually not more than 90 days. The accounts receivable bear no interest. An aged analysis of the accounts receivable is as follows:

30 June 2020

31 December 2019

(Unaudited)

Within 1 year

98,057,599.11

88,727,519.18

1 to 2 years

26,337.16

147,686.32

2 to 3 years

94,186.22

140,716.39

Over 3 years

3,876,077.43

3,896,601.43

102,054,199.92

92,912,523.32

Less: Provision for bad debts

9,692,021.54

11,432,059.74

92,362,178.38

81,480,463.58

30 June 2020 (Unaudited)

Balance

Provision for bad debts

Carrying amount

Percentage

Amount

Percentage

Amount

of provision

(%)

(%)

Provision for bad debts made

individually

946,943.74

1

946,943.74

100

-

Provision for bad debts made

by portfolio of credit risk

characteristics

101,107,256.18

99

8,745,077.80

9

92,362,178.38

102,054,199.92

100

9,692,021.54

9

92,362,178.38

31 December 2019

Balance

Provision for bad debts

Carrying amount

Percentage

Amount

Percentage

Amount

of provision

(%)

(%)

Provision for bad debts made

individually

2,892,625.54

3

2,892,625.54

100

-

Provision for bad debts made

by portfolio of credit risk

characteristics

90,019,897.78

97

8,539,434.20

9

81,480,463.58

92,912,523.32

100

11,432,059.74

12

81,480,463.58

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

93

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. NOTES TO KEY ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    4. Accounts Receivable (Continued)
    Accounts receivable which are subject to provision for bad debts made by portfolio of credit risk characteristics is as follows:

30 June 2020 (Unaudited)

31 December 2019

Estimated

Expected

Lifetime

Estimated

Expected

Lifetime

balance arising

credit

expected

balance arising

credit

expected

from default

loss ratio (%)

credit loss

from default

loss ratio (%)

credit loss

Within 1 year

97,110,655.37

5

4,780,367.89

85,834,893.64

5

4,465,259.80

1 to 2 years

26,337.16

42

11,008.94

147,686.32

42

62,202.34

2 to 3 years

94,186.22

82

77,623.54

140,716.39

82

115,370.63

Over 3 years

3,876,077.43

100

3,876,077.43

3,896,601.43

100

3,896,601.43

101,107,256.18

8,745,077.80

90,019,897.78

8,539,434.20

For the six months ended 30 June 2020, the provision for bad debts of the Group was RMB221,819.09 (2019: RMB2,822,231.20) and the recovered or reversed bad debts provision was RMB1,961,857.29 (2019: RMB4,054,910.45).

For the six months ended 30 June 2020, the Group had no accounts receivable actually written off (2019: nil).

As at 30 June 2020, no accounts receivable of the Group was pledged (31 December 2019: nil).

As at 30 June 2020, the top five amounts of accounts receivable are as follows (unaudited):

Carrying amount

Provision for bad debts

Percentage

Amount

Percentage

Amount

of provision

(%)

(%)

China Qinhuangdao Ocean Shipping

Agency Co., Ltd.

(中國秦皇島外輪代理有限公司)

17,447,757.93

17.10

872,387.90

5

Hebei Jidong Hexin Logistics Co., Ltd.

(河北冀東和信物流有限公司)

14,916,066.18

14.62

745,803.31

5

Qinhuangdao Sea Shipping Agency

Co., Ltd.

(秦皇島之海船務代理有限公司)

12,848,452.00

12.59

642,422.60

5

Anyang Iron & Steel Co., Ltd.

(安陽鋼鐵股份有限公司)

8,796,061.30

8.62

439,803.07

5

Penavico QHD Logistics Co., Ltd.

(秦皇島外代物流有限公司)

5,143,787.00

5.04

257,189.35

5

59,152,124.41

57.97

2,957,606.23

As at 31 December 2019, the top five amounts of accounts receivable are as follows:

Carrying amount

Provision for bad debts

Percentage

Amount

Percentage

Amount

of provision

(%)

(%)

Hebei Jidong Hexin Logistics Co., Ltd.

(河北冀東和信物流有限公司)

24,901,095.90

26.80

1,245,054.80

5

China Qinhuangdao Ocean Shipping Agency

Co., Ltd. (中國秦皇島外輪代理有限公司)

18,721,035.00

20.15

936,051.75

5

Qinhuangdao Sea Shipping Agency Co., Ltd.

(秦皇島之海船務代理有限公司)

5,597,760.00

6.02

279,888.00

5

Qinhuangdao COSCO Shipping Container

Shipping Agency Co., Ltd.

(秦皇島中遠海運集裝箱船務代理有限公司)

5,041,445.58

5.43

252,072.28

5

Jinji International Container Terminal Co., Ltd.

(津冀國際集裝箱碼頭有限公司)

3,424,110.28

3.69

171,205.51

5

57,685,446.76

62.09

2,884,272.34

94

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. NOTES TO KEY ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    5. Other Receivables

30 June 2020

31 December 2019

(Unaudited)

Dividend receivable

94,500,000.00

-

Other receivables

60,234,310.25

47,843,613.54

154,734,310.25

47,843,613.54

Dividend receivable

30 June 2020

31 December 2019

(Unaudited)

Tangshan Caofeidian Shiye Port Co., Ltd. (唐山曹妃甸實業港務有限公司)

94,500,000.00

-

Other receivables

30 June 2020

31 December 2019

(Unaudited)

Assets transfer consideration

28,251,656.60

27,816,839.00

Equity transfer consideration receivable

21,425,195.83

21,425,195.83

Sea area use rights transfer consideration receivable

13,574,687.00

-

Utilities receivable

4,213,066.34

1,378,710.68

Deposits receivable

753,384.00

378,454.00

Other

1,087,896.37

755,603.58

69,305,886.14

51,754,803.09

Less: Provision for bad debts

9,071,575.89

3,911,189.55

60,234,310.25

47,843,613.54

An aged analysis of other receivables is as follows:

30 June 2020

31 December 2019

(Unaudited)

Within 1 year

42,971,963.16

46,908,158.97

1 to 2 years

21,506,045.44

102,459.02

2 to 3 years

110,436.90

4,657,455.83

Over 3 years

4,717,440.64

86,729.27

69,305,886.14

51,754,803.09

Less: Provision for bad debts

9,071,575.89

3,911,189.55

60,234,310.25

47,843,613.54

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

95

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. NOTES TO KEY ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    5. Other Receivables (Continued)
    Other receivables (Continued)
    Changes in bad debts provision for other receivables based on the expected credit loss in the next 12 months were as follows:
    For the six months ended 30 June 2020 (unaudited)

Stage 3

Credit-impaired

Stage 1

Stage 2

financial assets

12m ECL

Lifetime ECL

(Lifetime ECL)

Total

Opening balance

3,911,189.55

-

-

3,911,189.55

Current period's opening balance -

Transfer to Stage 3

-

-

-

-

Provision for the period

5,197,986.30

-

-

5,197,986.30

Reversal during the period

(37,599.96)

-

-

(37,599.96)

Write-off during the period

-

-

-

-

Closing balance

9,071,575.89

-

-

9,071,575.89

2019

Stage 3

Credit-impaired

Stage 1

Stage 2

financial assets

12m ECL

Lifetime ECL

(Lifetime ECL)

Total

Opening balance

1,989,110.91

-

-

1,989,110.91

Current year's opening balance -

Transfer to Stage 3

(120,269.09)

-

120,269.09

-

Provision for the year

3,120,804.88

-

-

3,120,804.88

Reversal during the year

(1,078,457.15)

-

-

(1,078,457.15)

Write-off during the year

-

-

(120,269.09)

(120,269.09)

Closing balance

3,911,189.55

-

-

3,911,189.55

Changes in bad debts provision for other receivables were as follows:

Provision

Reversal

Write-off

Opening

for the

during the

during the

Closing

balance

period/year

period/year

period/year

balance

For the six months ended

30 June 2020 (unaudited)

3,911,189.55

5,197,986.30

(37,599.96)

-

9,071,575.89

2019

1,989,110.91

3,120,804.88

(1,078,457.15)

(120,269.09)

3,911,189.55

For the six months ended 30 June 2020, the Group had no other receivable actually written off (2019: RMB120,269.09).

96

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. NOTES TO KEY ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    5. Other Receivables (Continued)
    Other receivables (Continued)
    As at 30 June 2020, the top five amounts of other receivables are as follows (unaudited):

Percentage of

Closing

total balance

balance

Closing

of other

of bad debt

balance

receivables (%)

Nature

Aging

provision

Bohai New Zone Sub-bureau of the

Cangzhou Municipal Bureau of Land

and Resources

Assets transfer

(滄州市國土資源局渤海新區分局)

23,222,539.00

33.51

consideration

Within 1 year

1,161,126.95

Bohai Jinji Port Investment Development

Equity transfer

Co., Ltd. (渤海津冀港口投資發展有限公司)

21,425,195.83

30.91

consideration

Within 3 years

6,227,084.83

Sea area use rights transfer consideration

Cangzhou Port Group Co., Ltd.

Refund and

(滄州港務集團有限公司)

13,575,482.65

19.59

Utilities

Within 1 year

678,774.13

Han Huang Railway Co., Ltd.

Assets transfer

(邯黃鐵路有限責任公司)

4,629,317.60

6.68

consideration

Within 2 years

461,180.88

Jinji International Container Terminal Co.,

Ltd. (津冀國際集裝箱碼頭有限公司)

3,684,378.71

5.32

Utilities

Within 1 year

184,218.94

66,536,913.79

96.01

8,712,385.73

As at 31 December 2019, the top five amounts of other receivables are as follows:

Percentage of

Closing

total balance

balance

Closing

of other

of bad debt

balance

receivables (%)

Nature

Aging

provision

Bohai New Zone Sub-bureau of the

Cangzhou Municipal Bureau of Land

and Resources

Assets transfer

(滄州市國土資源局渤海新區分局)

23,222,539.00

44.87

consideration

Within 1 year

1,161,126.95

Bohai Jin-Ji Port Investment and

Development Company Limited

Equity transfer

(渤海津冀港口投資發展有限公司)

21,425,195.83

41.40

consideration

Within 3 years

2,205,861.25

Han Huang Railway Co., Ltd.

Assets transfer

(邯黃鐵路有限責任公司)

4,594,300.00

8.88

consideration

Within 1 year

229,715.00

Jinji International Container Terminal Co.,

Ltd. (津冀國際集裝箱碼頭有限公司)

1,365,296.70

2.64

Utilities

Within 1 year

68,264.84

CCCC First Harbour Consultants Co., Ltd.

(中交第一航務工程勘察設計院有限公司)

282,792.46

0.55

Advances

Within 1 year

14,139.62

50,890,123.99

98.34

3,679,107.66

As at 30 June 2020, the Group had no government grants receivable (31 December 2019: nil).

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

97

NOTES TO FINANCIAL STATEMENTS

For the six months ended 30 June 2020

RMB

  1. NOTES TO KEY ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.

Inventories

30 June 2020 (unaudited)

31 December 2019

Provision

Carrying

Provision

Carrying

Balance

for impairment

amount

Balance

for impairment

amount

Materials

61,339,806.92

3,746,641.99

57,593,164.93

60,279,175.84

4,181,062.02

56,098,113.82

Fuels

1,761,568.06

-

1,761,568.06

2,489,709.73

-

2,489,709.73

Spare parts

136,655,000.27

2,822,674.79

133,832,325.48

125,992,099.79

3,394,019.48

122,598,080.31

Low-cost consumables

6,340,144.59

22,831.18

6,317,313.41

4,258,614.45

23,164.93

4,235,449.52

Finished goods

-

-

-

728,380.56

-

728,380.56

206,096,519.84

6,592,147.96

199,504,371.88

193,747,980.37

7,598,246.43

186,149,733.94

Change in allowance for inventories is as follows:

For the six months ended 30 June 2020 (unaudited)

Opening

Provision

Decrease during the period

Closing

balance

for the period

Reversal

Write-off

balance

Materials

4,181,062.02

-

-

(434,420.03)

3,746,641.99

Spare parts

3,394,019.48

-

-

(571,344.69)

2,822,674.79

Low-cost consumables

23,164.93

-

-

(333.75)

22,831.18

7,598,246.43

-

-

(1,006,098.47)

6,592,147.96

2019

Opening

Provision

Decrease during the year

Closing

balance

for the year

Reversal

Write-off

balance

Materials

4,319,128.82

-

-

(138,066.80)

4,181,062.02

Spare parts

3,422,881.22

-

-

(28,861.74)

3,394,019.48

Low-cost consumables

25,249.83

-

-

(2,084.90)

23,164.93

7,767,259.87

-

-

(169,013.44)

7,598,246.43

7.

Other current assets

30 June 2020

31 December 2019

(Unaudited)

Deductible input VAT

90,895,018.39

106,632,857.34

Prepaid enterprise income tax

-

1,097,865.47

Other

568,573.00

1,130,674.25

91,463,591.39

108,861,397.06

98

QINHUANGDAO PORT CO., LTD. INTERIM REPORT 2020

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Qinhuangdao Port Co. Ltd. published this content on 14 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 September 2020 08:54:03 UTC